MIRVAC gRoup AnnuAl RepoRt 2013

by mirvac

==> picture [537 x 529] intentionally omitted <==

MIRVAC gRoup AnnuAl RepoRt For the year ended 30 June 2013

Mirvac Group comprises Mirvac Limited (ABN 92 003 280 699) and its controlled entities (including Mirvac Property Trust (ARSN 086 780 645) and its controlled entities).

01 Directors’ report
10 Remuneration report
33 Auditor’s independence declaration
34 Corporate governance statement
44 Financial statements
108 Directors’ declaration
109 Independent auditor’s report to the members of Mirvac Limited
111 Securityholder information
113 Glossary of acronyms
114 Directory

Cover image: 8 Chifley, Sydney NSW Above image: Broadway Shopping Centre, Broadway NSW

Directors’ report

The Directors of Mirvac Limited present their report, together with the consolidated report of Mirvac Group (“Mirvac” or “Group”) for the year ended 30 June 2013. Mirvac comprises Mirvac Limited (“parent entity”) and its controlled entities, which includes Mirvac Property Trust (“MPT” or “Trust”) and its controlled entities.

DIReCtoRs

The following persons were Directors of Mirvac Limited during the whole of the year and up to the date of this report, unless otherwise stated:

James MacKenzie
Susan Lloyd-Hurwitz (appointed as a Director on 5 November 2012)
Nicholas Collishaw (resigned as a Director on 31 October 2012)
Marina Darling
Gregory Dyer (appointed as a Director on 4 September 2012 and resigned as a Director on 5 April 2013)
Peter Hawkins
James Millar AM
John Mulcahy
John Peters
Elana Rubin.

pRInCIpAl ACtIVItIes

The principal continuing activities of Mirvac consist of real estate investment, development and investment management. Mirvac has two core divisions: Investment (comprising MPT) and Development (comprising residential and commercial development).

There are also two business units, Mirvac Investment Management which comprises third party, listed and unlisted funds management; and the property asset management business, Mirvac Asset Management.

DIVIDenDs/DIstRIbutIons

Dividends/distributions paid to stapled securityholders during the year were as follows:

DIVIDenDs/DIstRIbutIons Dividends/distributions paid to stapled securityholders during the year were as follows:
	2013	2012
	$m	$m
June 2012 quarterly dividend/distribution paid on 27 July 2012	82.0	75.2
2.40 cents (2012: 2.20 cents) per stapled security
September 2011 quarterly dividend/distribution paid on 28 October 2011	—	68.3
2.00 cents per stapled security
December 2012 half yearly dividend/distribution paid on 25 January 2013	143.9	68.3
4.20 cents (2012: 2.00 cents) per stapled security
March 2012 quarterly dividend/distribution paid on 27 April 2012	—	68.4
2.00 centsper stapled security
total dividends/distributionspaid	225.9	280.2

The June 2013 half yearly dividend/distribution of 4.50 cents per stapled security totalling $164.9m was paid on 26 July 2013.

Dividends and distributions paid and payable by Mirvac for the year ended 30 June 2013 totalled $308.8m, being 8.70 cents per stapled security (2012: $287.0m – 8.40 cents per stapled security). The payments for the year ended 30 June 2013 and the previous year were distributions made by the Trust.

net CuRRent Asset DefICIenCy

As at 30 June 2013, the Group is in a net current liability position of $19.6m. This includes $172.1m related to bank borrowings due to mature in January 2014. On 3 July, the Group completed the extension and increase of its unsecured syndicated bank facility and it now has no current bank borrowings. Refer to note 20 for further details. Accordingly, the Directors expect that the Group will have sufficient cash flows to meet all financial obligations as and when they fall due.

opeRAtIng AnD fInAnCIAl ReVIew

The statutory profit after tax attributable to the stapled securityholders of Mirvac for the year ended 30 June 2013 was $139.9m (2012: $416.1m). Included in the statutory profit was a provision for loss on inventories totalling $242.9m (2012: $25.0m). The operating profit (profit before specific non-cash and significant items) was $377.6m which is above market guidance provided previously. Operating profit is a financial measure which is not prescribed by Australian Accounting Standards (“AAS”) and represents the profit under AAS adjusted for specific non-cash items and significant items. The Directors consider operating profit to reflect the core earnings of the Group.

The following table on page 02 summarises key reconciling items between statutory profit after tax attributable to the stapled securityholders of Mirvac and operating profit. The operating profit information in the table has not been subject to any specific audit procedures by the Group’s auditor but has been extracted from note 3 of the accompanying financial statements for the year ended 30 June 2013, which have been subject to audit, refer to pages 109 to 110 for the auditor’s report on the financial statements.

mirvac group annual report 2013

Directors’ report

opeRAtIng AnD fInAnCIAl ReVIew / ContInueD

opeRAtIng AnD fInAnCIAl ReVIew / ContInueD
	2013	20121
	$m	$m
proft attributable to the stapled securityholders of Mirvac	139.9	416.1
specifc non-cash items
Net gain on fair value of investment properties	(54.0)	(148.7)
Net loss on fair value of investment properties under construction (“IPUC”)	3.6	15.8
Net loss on fair value of derivative fnancial instruments and associated foreign exchange movements2	12.4	82.0
Security based payment expense3	4.1	8.5
Depreciation of owner-occupied investment properties4	7.5	7.6
Straight-lining of lease revenue5	(17.3)	(15.9)
Amortisation of lease ftout incentives4	10.9	14.4
Net loss on fair value of investment properties, derivatives and other specifc non-cash items included in share of net proft of associates and joint ventures6	4.4	4.5
signifcant items
Impairment of investments including associates and joint ventures	12.3	—
Impairment of loans	18.0	6.0
Provision for loss on inventories	242.9	25.0
Net loss/(gain) from sale of non-aligned assets7	3.7	(0.8)
tax effect
Tax effect of non-cash and signifcant adjustments8	(9.4)	(44.4)
Discontinued operations
Specifc non-cash items and signifcant items included inproft from discontinued operations(net of tax)9	(1.4)	(3.8)
operating proft(proft before specifc non-cash and signifcant items)	377.6	366.3
The statutory and operating proft includes both continuing and discontinued operations; the tables below provide a
breakdown of this information:
	2013	2012
proft attributable to the stapled securityholders of Mirvac	$m	$m
Continuing operations	138.5	384.5
Discontinued operations	1.4	31.6
proft attributable to the stapled securityholders of Mirvac	139.9	416.1
operating proft(proft before specifc non-cash and signifcant items)
Continuing operations	377.6	338.5
Discontinued operations10	—	27.8
operating proft(proft before specifc non-cash and signifcant items)	377.6	366.3

1) Restated to show discontinued operations separately.
2) Total of (Loss)/gain on financial instruments and Foreign exchange loss in the SoCI.
3) Included within Employee benefits expenses in the SoCI.
4) Included within Depreciation and amortisation expenses in the SoCI.
5) Included within Investment properties rental revenue in the SoCI.
6) Included within Share of net profit of associates and joint ventures accounted for using the equity method in the SoCI.
7) Total of Net loss on sale of investments and Net loss on sale of investment properties in the SoCI.
8) Included in Income tax benefit in the SoCI.
9) Included within Profit from discontinued operations (net of tax) in the SoCI.
10) Discontinued operations in SoCI less specific non-cash items and significant items included in profit from discontinued operations (net of tax).

02 mirvac group annual report 2013

financial, capital management and operational highlights Key financial highlights for the year ended 30 June 2013:

profit attributable to the stapled securityholders of Mirvac of $139.9m (2012: $416.1m), a decrease of 66.4 per cent, and was impacted by the impairment of $273.2m (impairment of investments of $12.3m, impairment of loans of $18.0m and provision for loss on inventories of $242.9m) announced by Mirvac on 7 February 2013;
operating profit after tax of $377.6m[ 1] (2012: $366.3m), representing 10.9 cents per stapled security (“cpss”), which was above the market guidance range of 10.7 to 10.8cpss;
operating profit (from continuing operations only) rose by $39.1m (11.6 per cent) to $377.6m;
equity, reserves and retained earnings for the Group rose by 4.5 per cent to $6,010.8m (2012: $5,754.7m) which was driven by the Institutional Placement and Security Purchase Plan undertaken during the year;
operating cash flow of $385.9m, an increase of 21.7 per cent on the previous year, largely attributable to a reduction in borrowing costs, resulting from the proceeds of the sales of the Hotel Management business and related assets used to repay debt; refer to note 38 to the financial statements for more detail;
gearing increased to 23.6 per cent from 22.7 per cent at 30 June 2012; however, this remained within the Group’s target range of 20.0 to 30.0 per cent[ 2] ;
distributions of $308.8m, representing 8.70 cpss; and
net tangible assets (“NTA”)[ 3] per stapled security of $1.62 from $1.66 at 30 June 2012 which was impacted by the Institutional Placement and Security Purchase Plan, and distributions.

Key capital management highlights for the year ended 30 June 2013:

completed a $403.7m (before costs) Institutional Placement and Security Purchase Plan to fund the acquisition of the portfolio of office assets from GE;
issued $150.0m of medium term notes which will mature in December 2017, further diversifying the Group’s sources of debt and increasing the weighted average debt maturity. Refer to note 20 to the financial statements for more details;
maintained strong liquidity with over $800m[ 4] of cash and undrawn committed bank facilities;
the weighted average debt maturity increased to 3.8 years[ 4] ;
reduced average borrowing costs to 5.9 per cent per annum as at 30 June 2013 (including margins and line fees) and reduced by a further 20 basis points when the renewed bank debt facilities became effective;
Key operational highlights for the year ended 30 June 2013:
acquired a portfolio of office assets from GE Real Estate Investments Australia (“GE”) for $584.0m[ 5] ;
strengthened strategic relationships with high quality investment organisations with the sale of a 50.0 per cent interest in 200 George Street, Sydney to AMP Capital and a 50.0 per cent interest in the Treasury Building development in Perth to Keppel REIT;
secured Ernst & Young as an anchor tenant at 200 George Street, Sydney with the professional services firm committing to approximately 74.0 per cent of the building’s net lettable area over a 10 year term;
executed an Agreement for Lease with AGL Energy for office space in a new A grade building, to be developed by Mirvac at 699 Bourke Street in Melbourne;
maintained strong portfolio occupancy of 97.9 per cent[ 6] within the MPT portfolio;
leased 165,188 square metres (11.5 per cent of net lettable area) within the MPT portfolio;
achieved strong levels of residential exchanged contracts of $1,005.4m[ 7] ;
settled 1,809 residential lots ahead of the target of 1,600 to 1,700 lots; and
achieved a 4.6 Star National Australian Built Environment Rating System (“NABERS”) energy portfolio average rating in December 2012, exceeding the target of 4.5 Stars, and six months ahead of the June 2013 target date.

Outlook[ 8]

Whilst economic conditions remained challenging across the markets in which the Group operates, Mirvac remains well placed with its ongoing focus on building a strong and resilient business that is positioned to perform across the business cycle.

The Group’s capital position continued to be robust. The Group remains focused on prudently managing its capital position by monitoring and accessing diversified sources of capital, including equity, domestic and international debt and wholesale capital. This focus will ensure Mirvac can continue to meet its strategic objectives without increasing its overall capital management risk profile.

Mirvac will continue to enhance its capabilities as a world-class Australian property group concentrating on the secure income stream from the carefully structured Investment portfolio and improving the return on invested capital achieved by the Development business.

maintained the BBB credit rating from Standard & Poor’s with the outlook raised to positive;
continued to comfortably meet all debt covenants;
completed a $500.0m capital reallocation following approval by securityholders at the 2012 Annual General Meeting; and
as announced to the market on 3 July 2013, the Group extended the term and increased the size of its unsecured syndicated bank loans, ensuring the Group has no maturities until March 2015.
1) Excludes specific non-cash items, significant items and related taxation.
2) Net debt (at foreign exchanged hedged rate) excluding leases/(total tangible assets – cash). Pro forma as at 3 July 2013 post $1.7 billion syndicated loan transaction.
3) NTA per stapled security based on ordinary securities including Employee Incentive Scheme (“EIS”) securities.
4) Pro forma as at 3 July 2013 post $1.7 billion syndicated loan transaction.
5) Pre-acquisition costs.
6) By area, excluding assets under development, based on 100 per cent of building net lettable area.
7) Total exchanged pre-sales contracts as at 30 June 2013, adjusted for Mirvac’s share of joint ventures, associates and Mirvac’s managed funds.
8) These future looking statements should be read in conjunction with future releases to the Australian Securities Exchange (“ASX”).

mirvac group annual report 2013

Directors’ report

Divisional highlights

Investment

At 30 June 2013, Investment (comprising MPT and a small number of assets held by the Company) had invested capital of $6,776.6m[ 1] , with investments in 68 direct property assets, covering the office, retail and industrial sectors, as well as investments in car parks, a hotel and other funds managed by Mirvac. The asset allocation for MPT invested capital was as follows:

office: 60.4 per cent; – retail: 25.0 per cent;

– industrial: 6.7 per cent; and

– other: 7.9 per cent[ 2] .

For the 12 months to 30 June 2013, MPT’s statutory profit before tax was $464.3m and operating profit before tax was $418.8m, an increase of 3.7 per cent. This increase was driven primarily by the acquisition of seven office assets and reduced interest costs due to non-core asset sales and a decrease in the average interest rate.

While the global economic climate remained challenging, the Trust’s earnings continued to be secured by a strong weighted average lease expiry (“WALE”) profile of 6.9 years[ 3] , 96.2 per cent of financial year 2014 (“FY14”) rent reviews being fixed or linked to the Consumer Price Index (“CPI”), and 72.2 per cent of revenue being derived from multinational, ASX listed and government tenants.

Key highlights for MPT for the year ended 30 June 2013:

achieved 3.5 per cent like-for-like net operating income growth;
maintained high occupancy at 97.9 per cent[ 3] ;
total investment property revaluations provided a net uplift of $50.4m (or 0.8 per cent) over the previous book value for the 12 months to 30 June 2013;
completed 362 leasing deals over 165,188 square metres of net lettable area (11.5 per cent of the portfolio), with major leasing commitments at:
60 Margaret Street, Sydney NSW: lease to Cliftons
(3,469 square metres) for a new five-year lease term;
Bay Centre, Pyrmont NSW: renewal of lease for five years to Veolia (3,097 square metres);
101-103 Miller Street, North Sydney NSW: renewal of lease for five years to Genworth Financial Mortgage Insurance (5,898 square metres);
38 Sydney Avenue, Forrest ACT: renewal of lease for five years to the Department of Broadband, Communications and the Digital Economy (8,975 square metres);
Riverside Quay, Southbank VIC: renewal of lease for 10 years to URS Australia (4,663 square metres);
Nexus Industrial Park (Building 3), Prestons NSW: new lease term to De-Longhi Australia (17,267 square metres); and
Moonee Ponds Central, Moonee Ponds VIC: new 10 year deal over 1,204 square metres with Aldi supermarket, and a 10 year option exercised for Coles across 4,000 square metres.
acquired a portfolio of seven office assets from GE for a value of $584.0 million[ 4] aligning with the “Create and Buy” office strategy. The acquisition comprised:
two A grade landmark assets (Allendale Square, 77 St Georges Terrace, Perth and 90 Collins Street, Melbourne) which increased Mirvac’s core portfolio exposure to the Perth and Melbourne CBDs; and
five Sydney CBD assets located in the strategically significant ‘Alfred, Pitt, Dalley and George Streets’ precinct, restocking Mirvac’s commercial development pipeline with assets that can be held for the long term;
established a second capital partnership with Keppel REIT via the sale of a 50.0 per cent interest in the Treasury Building, Perth on a fund through basis;
further strengthened strategic relationships with a high quality investment organisation, with the sale of a 50.0 per cent interest in 200 George Street, Sydney NSW to AMP Capital;
disposed of seven non-core assets including two office buildings, three industrial properties and two retail centres[ 5] realising $189.7m in gross sale proceeds; and
progressed with commercial developments as detailed in the Commercial highlights section in this Report and achieved the following:
200 George Street, Sydney NSW: secured an anchor tenant with Ernst & Young agreeing to approximately 74.0 per cent of the building’s net lettable area for a 10 year term;
8 Chifley, Sydney NSW: leased a further 2,800 square metres to QBE Insurance Group, and post 30 June, leased 2,594 square metres to Quantium, bringing the total area leased to 70.0 per cent. This development was delivered ahead of schedule and on budget by the Development business with practical completion achieved in July 2013;
699 Bourke Street, Melbourne VIC: secured an anchor tenant with AGL Energy initially planning to occupy up to 15,000 square metres, or 79.0 per cent of the building’s net lettable area for a 10 year term;
Treasury Building, Perth WA: commenced construction on the 30,800 square metre office tower, that will house the WA Government which has pre-committed to a 25 year lease across 98.0 per cent of the tower;
Kawana Shoppingworld, Buddina QLD: commenced construction on Stage 4 which includes a new Aldi supermarket and additional specialty stores, expanding the centre by approximately 9,000 square metres. The project is currently 39.9 per cent leased[ 6] ;
Stanhope Village, Stanhope Gardens NSW: commenced construction on Stage 3 which includes the extension of the Kmart mall and a new Aldi supermarket. The project is 100.0 per cent leased[ 6 ] . Received development application approval for the Stage 4 extension which includes the creation of additional specialty stores and a food court;
Orion Springfield Town Centre, Springfield QLD (Pad Sites): commenced construction with initial tenants trading in December 2012. The Pad Sites will provide a total gross lettable area of 5,108 square metres. The project is 100.0 per cent leased[ 6] ; and
Orion Springfield Town Centre, Springfield QLD (Stage 2): received development application approval for the Stage 2 extension which includes an additional supermarket, specialty stores and commercial suites over approximately 13,000 square metres.
1) By book value, includes assets under development.
2) Includes assets under development, indirect property investments, car parks and a hotel.
3) By area, excluding assets under development, based on 100 per cent of building net lettable area.
4) Pre-acquisition costs.
5) Includes two disposals that occurred post 30 June 2013; Manning Mall, Taree NSW (settled 11 July 2013) and Logan Megacentre, Logan QLD (settled 9 August 2013). 6) By area, includes signed leases and heads of agreement.

04 mirvac group annual report 2013

Divisional highlights / continued

The Group’s focus on corporate responsibility and sustainability continued to deliver results within the Trust’s portfolio, with key achievements:

6.0 Star Green Star Office Design v2 rating for 8 Chifley, Sydney NSW;
4.6 Star NABERS energy portfolio average rating in December 2012, exceeding the target of 4.5 Stars, and six months ahead of the June 2013 target date;
3.4 Star NABERS water portfolio average target six months ahead of schedule, and reached 3.5 Stars in June 2013;
5.5 Star NABERS energy rating for 1 Darling Island, Pyrmont NSW, representing MPT’s second asset to achieve a 5.5 Star rating; and
5.0 Star NABERS energy rating for 339 Coronation Drive, Brisbane QLD. Energy intensity was reduced by 39.0 per cent and greenhouse emissions by 974 tonnes CO2 per annum from 2010.

Outlook[ 1]

Uncertainties surrounding US monetary policy, Chinese economic growth, a softening in white collar employment and the domestic economy transitioning away from mining investment make for a challenging environment. Nonetheless, an improvement in both economic and political stability should result in continued interest for quality products from both domestic and international investors. The office portfolio, with low vacancy rates, high average fixed rent increases, quality tenant profile, manageable expiry profile and long weighted average lease term, continues to be well positioned to deliver strong returns.

In the retail sector, greater consumer caution and a slowing in household income growth have continued to increase pressure on discretionary spending. MPT’s retail portfolio is strongly biased towards non-discretionary spending, such as food. This area of spending continues to be far more resilient and, as a consequence, the Group’s retail assets, located in core locations, should continue to perform strongly.

Overall, the Trust remains focused on providing secure passive income to the Group, with key areas of focus including:

improving the quality of the portfolio via non-aligned asset sales and creating new development product;
extracting the benefit of the Group’s demonstrated competitive advantages in remaining strategically overweight in the office sector; and
focusing on prime sub-regional, neighbourhood and CBD shopping centres located in growth markets.

Investment Management

Mirvac Investment Management (“MIM”) comprises two business activities for segment reporting purposes: third party, listed and unlisted funds management; and, property asset management.

For the year ended 30 June 2013, MIM recorded a statutory loss before tax of $13.7m and an operating loss before tax of $11.9m. MIM’s result was impacted by a decline in management fee income following the exit of funds under management, and a reduction in income from the continued exit of non-core investments and loans.

At 30 June 2013, MIM remained responsible for the management of four wholesale funds: Mirvac Wholesale Residential Development Partnership; Tucker Box Hotel Group; JF Infrastructure Yield Fund; and Australian Sustainable Forestry Investors. MIM also manages the ASX listed Mirvac Industrial Trust and two unlisted residential development funds.

In line with MIM’s continued focus on the rationalisation of its non-core activities, the Group’s equity interest in the US based funds manager, Quadrant Real Estate Advisors, was disposed of on 3 June 2013.

Mirvac Asset Management (“MAM”) provides asset management services primarily for the MPT portfolio. MAM currently manages 68 properties inclusive of the seven recently acquired properties as part of the GE office portfolio acquisition.

Outlook[ 1]

MIM will continue to seek to exit its non-core responsible entity, trustee and investment manager responsibilities as well as the underlying assets as opportunities arise. MAM will seek to continue to expand its asset management services in line with growth in the Investment Division’s portfolio and assets owned by third parties where there are common interests.

Development

Mirvac’s Development business unit operates across national product lines consisting of Residential (comprising Apartments and Masterplanned Communities) and Commercial.

At 30 June 2013, Development had $1,482.5m of invested capital.

For the year ended 30 June 2013, Development’s statutory loss before tax was $236.1m and operating profit before tax was $37.1m. The statutory result was impacted by the provisions announced on 7 February 2013. As part of the regular review of all Development project assumptions, the assessment as at 31 December 2012 provided evidence that specific micro markets had not recovered as previously expected which resulted in a $273.2m reduction in carrying value, made up of provision for loss on inventories ($242.9m), impairment of investments ($12.3m) and impairment of loans ($18.0m). The majority of projects impacted are in QLD representing 72.0 per cent of the provisions and in WA representing 27.0 per cent of the provisions[ 2] .

Residential

In the Group’s core metropolitan markets, the business unit continued to deliver quality residential product, with new release projects targeted at the right price points and right locations. Key highlights across Apartments and Masterplanned Communities were:

Apartments:

Harold Park, Glebe NSW: achieved strong sales with 93.6 per cent of Precinct 1 and 78.8 per cent of Precinct 2 sold (279 and 145 exchanged contracts respectively). The next stage is scheduled for release in the second half of 2013;
Rhodes Waterside, Rhodes NSW: progressed with construction on the final apartment building at the Rhodes precinct with 94.8 per cent sold (221 exchanged contracts);

1) These future looking statements should be read in conjunction with future releases to the ASX.

2) The remaining 1.0 per cent relates to projects outside of Queensland and Western Australia.

mirvac group annual report 2013

Directors’ report

Divisional highlights / continued

Yarra’s Edge, Docklands VIC: completed construction at Yarra Point with 86.6 per cent of the apartment tower sold (174 settled and exchanged contracts). Construction commenced on Mirvac’s seventh tower, Array, with 64.9 per cent sold (133 exchanged contracts). Array is expected to be completed in 2015; and
ERA, Chatswood NSW: construction progressed ahead of schedule and strong sales were achieved with 99.0 per cent sold (291 exchanged contracts).

Masterplanned Communities:

Googong NSW: continued strong sales with 60.3 per cent of the first release sold (307 exchanged contracts);
Elizabeth Hills NSW: continued strong sales with 77.0 per cent sold (318 settled and exchanged contracts); and
Enclave VIC: released the first stage of the project in April 2013 with 81 lots exchanged of the 83 lots released to date.

For the year ended 30 June 2013, Development’s residential pipeline totalled 30,942 lots which was supplemented by the acquisition of a number of key projects that will contribute significantly to Development’s FY15 and beyond pipeline, including:

Dallas Brooks Centre, East Melbourne VIC: reached an agreement with the Masonic Centre of Victoria for the rights to redevelop the Dallas Brooks Centre for predominately residential uses, subject to approvals;
Alex Avenue NSW: secured 298 lots at the Alex Avenue precinct at Schofield. In May 2013, Mirvac released the first stage and achieved strong sales with 42 exchanged contracts; and
Enclave VIC: completed the acquisition of a 50.0 per cent interest in Enclave. On completion, this project will comprise in excess of 200 land lots and built form product.

As at 30 June 2013, Development settled 1,809 residential lots and secured future income of $1,005.4m[ 1] through residential exchange pre-sales contracts.

State based lot settlements by product for the year ended 30 June 2013 were as follows:

State	Apartments	Masterplanned Communities	Total
NSW	14	765	779
QLD	80	200	280
VIC	170	216	386
WA	68	296	364
total	332	1,477	1,809

Commercial

Mirvac’s commercial development activities include office, retail and industrial projects. For the year ended 30 June 2013, Mirvac’s commercial pipeline totalled $2,166.8m.

Key operational highlights for Commercial for the year ended 30 June 2013 were outlined in the MPT highlights section of this Report. Key development milestones and sustainability highlights were:

200 George Street, Sydney NSW: commenced construction during the year with completion due in early 2016. The office tower is expected to achieve a 5.0 Star NABERS energy rating and 5.0 Star Green Star rating;
699 Bourke Street, Melbourne VIC: commenced construction in August 2013 with completion expected in 2015. The A grade office building with premium grade services is designed to achieve a 5.0 Star NABERS and 5.0 Star Green Star rating;
Treasury Building, Perth WA: remained on track with construction for a new A grade commercial building located on the landmark site of the Old Treasury in Perth. The office tower is scheduled for completion in early 2015 and is expected to achieve a 4.5 Star NABERS energy rating and 5.0 Star Green Star rating;
8 Chifley, Sydney NSW: demonstrating the benefits of Mirvac’s integrated model, Development successfully delivered this premium grade asset to the joint owners (MPT and Keppel REIT). The premium office tower achieved a 6.0 Star Green Star Office Design V2 rating and is expected to achieve a 5.0 Star NABERS energy rating. Practical completion was achieved in July 2013;
Stanhope Village, Stanhope NSW: commenced construction on Stage 3 which includes the extension of the Kmart mall and a new Aldi supermarket;
Kawana Shopping Centre, Buddina QLD: commenced construction on Stage 4 which includes a new Aldi supermarket and additional specialty stores, expanding the centre by approximately 9,000 square metres; and
Orion Springfield Shopping Centre, Springfield QLD (Pad Sites): commenced construction with initial tenants trading in December 2012. The remaining Pad Sites are on track for completion by December 2013. The Pad Sites will provide a gross lettable area of 5,108 square metres.

Outlook[ 2]

The outlook for capital city residential markets remains mixed by location. Whilst there has not been a material uplift in demand to date and purchasers maintain a cautious position, the stronger fundamentals should result in a further improvement in the residential property market over time, with the trend towards medium density living continuing, particularly in the south eastern states.

The Division remains on track towards achieving its 2014 recovery, with key areas of focus including:

continuing to improve key metrics including return on invested capital (10.0 plus per cent target) and gross margin (18.0-22.0 per cent target);
strategically restocking the development pipeline; and
improving the strong levels of pre-sales to mitigate future earning risks.

1) Total exchanged pre-sales contracts as at 30 June 2013, adjusted for Mirvac’s share of joint ventures, associates and Mirvac’s managed funds. 2) These future looking statements should be read in conjunction with future releases to the ASX.

06 mirvac group annual report 2013

Risk

As a property group involved in real estate investment, residential and commercial development and investment management, Mirvac faces a number of risks throughout the business cycle which have the potential to affect the Group’s achievement of its targeted financial outcomes. The Group’s objective is to ensure those risks are identified and appropriate strategies are implemented to control or otherwise manage the impact of those risks. Mirvac’s risk management framework is integrated with its day-to-day business processes and is supported by a dedicated Group Risk function. Further information on the Group’s risk management framework is detailed in the Corporate Governance Statement in this Annual Report.

group risks

For the year ended 30 June 2013, the Group continued to review both internal and external risks which have the potential to affect the Group’s targeted financial outcomes and to implement strategies to minimise their impact. As announced on 9 May 2013, as part of Mirvac’s annual strategic review of each business unit, the Group established clear and targeted directional mandates for all areas of operation. Further information on the material risks identified for each of the Investment and Development divisions is outlined below. The Group also introduced a consolidated Group-wide robust capital allocation process that encourages decision making with a focus on Group outcomes rather than divisional outcomes.

At a Group level, Mirvac faces certain risks to the achievement of its financial outcomes, these risks are types of risks that are typical for a property group. These may include debt refinancing and compliance with debt covenants as well as compliance with HSE regulations.

Divisional risks

At a divisional level, the key risks faced by Investment and Development which have the potential to affect the achievement of the financial prospects for the Group include:

office: as detailed in the outlook section for Investment, the demand for office space remains challenging across markets in which the Group operates. This has the potential to impact on the Group’s performance given that office assets represent 60.4 per cent of the MPT portfolio. MPT’s office portfolio metrics comprising a long WALE of 5.2 years, high occupancy of 96.8 per cent, strong like-forlike rent growth of 3.9 per cent, along with the portfolio’s outperformance against the IPD index over three and five years, demonstrate Mirvac’s ability to maintain a strong and robust portfolio through the cycles of demand. The Group seeks to manage uncertainty around commercial office demand in a number of ways including substantial pre-letting of commercial development in advance of construction (for example, the Ernst & Young precommitment of 74.0 per cent of the lettable area at 200 George Street, Sydney, announced in January 2013) and by partially selling-down commercial developments in advance of completion (for example, Treasury Building, Perth and 200 George Street, Sydney);
retail: as detailed in the outlook section for Investment, the current low retail sales growth environment continues to place pressure on retailers. With 25.0 per cent of MPT’s portfolio represented by retail assets, Mirvac is focused on continually refreshing its retail assets (via refurbishment, redevelopment or remixing) to adapt to changing market dynamics. Furthermore, Mirvac maintains a focus on non-discretionary offerings, and a diversified tenancy mix, where no single specialty retailer contributes greater than 1.2 per cent of the total portfolio’s gross rent; and

– residential: as detailed in the outlook section for Development, Australia’s residential market varies from state to state (and within states) with some markets expected to continue to strengthen over the next three years, while activity over the medium term is expected to slow in states with a heavier reliance on resource investment. The Development division is focused on the right product in the right location with diversification of risk across residential sub-markets, across Australia and between asset classes (Apartments and Masterplanned Communities). Weighting to key growth markets such as NSW, which is currently at 51.8 per cent of the portfolio, further mitigates this risk, as do pre-sales.

enVIRonMentAl RegulAtIons

Mirvac and its business operations are subject to compliance with both Federal and State environment protection legislation, and the Board is satisfied that adequate systems are in place for Mirvac’s compliance with the applicable legislation.

Within Mirvac’s health, safety and environment performance reporting systems, including internal and external audits and inspections, Mirvac has not experienced any incidents that have resulted in any significant harm to the environment. There were three infringement notices issued for minor environmental incidents at housing development sites due to the potential for uncontrolled sediment run off. Immediate action was undertaken to rectify all three of these minor environmental infringements.

A key initiative to reduce greenhouse gas emissions was a commitment to achieve an average 4.5 Star NABERS Energy rating on applicable office buildings by June 2013. The Investment Division achieved this target in December 2012, six months ahead of schedule. This has resulted in reduced operating costs, improved environmental performance, demonstrating excellent energy operational and management practices, and high efficiency systems and equipment.

Mirvac is required under National Greenhouse and Energy Reporting Act 2007 (“NGER”) to report annually on greenhouse gas emissions, reductions, removals and offsets, and energy consumption and production figures.

Following the divestment of the Hotel Management business Mirvac no longer triggers the Energy Efficiency Opportunities Act 2006 (“EEO”) threshold and was not required to participate in the year ended 30 June 2013. Mirvac deregistered from EEO on December 2012.

Mirvac is also subject to the commercial Building Energy Efficiency Disclosure Act 2010 . This involves the disclosure of energy efficiency-related information at the point of sale or lease of office space greater than 2,000 square metres.

The Federal Government introduced price on carbon pollution which became effective on 1 July 2012. Mirvac is not a liable entity under the legislation and is marginally affected. The legislation bill provides for increases in the total carbon cap and therefore does not preclude expansion of the number of directly liable entities before the scheme transitions to a cap and trade system in 2015.

mirvac group annual report 2013

Directors’ report

==> picture [124 x 88] intentionally omitted <==

==> picture [125 x 88] intentionally omitted <==

Susan Lloyd-Hurwitz

Marina Darling

Peter Hawkins

James MacKenzie

InfoRMAtIon on DIReCtoRs

Directors’ experience and areas of special responsibilities The members of the Mirvac Board and their qualifications, experience and responsibilities are set out below:

James MacKenzie

BBus, FCA, FAICD – Chair – Independent Non-Executive

Chair of the Nomination Committee Member of the Audit, Risk and Compliance Committee Member of the Human Resources Committee

James MacKenzie was appointed to the Mirvac Board on 7 January 2005 and assumed the role of Chair in November 2005. James was re-elected as a Director and Chair of Mirvac Limited on 15 November 2012.

James has served as a director of a number of public companies listed on both Australian and international stock exchanges. James was a Partner in both the Melbourne and Hong Kong offices of an international accounting firm now part of Deloitte. Subsequently, James led the transformation of the Victorian Government’s Personal Injury Schemes initially as Chief Executive Officer of the Transport Accident Commission (TAC) and later as Chairman of TAC and the Victorian WorkCover Authority (WorkSafe Victoria).

James was appointed as a member of the Australian B20 Group in February 2013 and is currently Co-Vice Chairman of ASX listed Yancoal Australia Ltd.

susan lloyd-Hurwitz

BA(Hons), MBA (Dist) – Chief Executive Officer & Managing Director – Executive

Susan Lloyd-Hurwitz was appointed Chief Executive Officer (“CEO”) & Managing Director on 15 August 2012 and a Director of Mirvac Board on 5 November 2012. Prior to this appointment, Susan was Managing Director at LaSalle Investment Management, where she was responsible for the core investment accounts and funds business lines in the European region, as well as the operation of the business. Susan has also held senior executive positions at MGPA, Macquarie Group and Lend Lease Corporation, working in Australia, the US and Europe.

Susan has been involved in the real estate funds management industry for over 23 years, with extensive experience in fund and portfolio management in both the direct and indirect markets, fund development, mergers and acquisitions, dispositions, research and business strategy.

Susan is also a member of the UWS Foundation Council which supports the University of Western Sydney in its development and contribution to Greater Western Sydney.

Marina Darling

BA (Hons), LLB, FAICD – Independent Non-Executive Member of the Human Resources Committee

Marina Darling was appointed to the Mirvac Board on 23 January 2012.

Marina has previously been a Non-Executive Director of a number of listed companies and other entities including Southern Cross Broadcasting Limited, National Australia Trustees Limited, GIO Holdings Limited, Deacons (Lawyers), Argo Investments and Southern Hydro Limited.

Marina is a Non-Executive Director of Southern Cross Media Group Limited (appointed September 2011).

peter Hawkins

BCA (Hons), FAICD, SFFin, FAIM, ACA (NZ) – Independent Non-Executive

Chair of the Human Resources Committee Member of the Audit, Risk and Compliance Committee Member of the Nomination Committee

Peter Hawkins was appointed a Non-Executive Director of Mirvac on 19 January 2006, following his retirement from the ANZ after a career of 34 years. Prior to his retirement, Peter was Group Managing Director, Group Strategic Development, responsible for the expansion and shaping of ANZ’s businesses, mergers, acquisitions and divestments and for overseeing its strategic cost agenda.

Peter was a member of ANZ’s Group Leadership Team and sat on the boards of Esanda Limited, ING Australia Limited and ING (NZ) Limited, the funds management and life insurance joint ventures between ANZ and ING Group. He was previously Group Managing Director, Personal Financial Services, as well as holding a number of other senior positions during his career with ANZ. Peter was also a Director of BHP (NZ) Steel Limited from 1990 to 1991 and Visa Inc. from 2008 to 2011.

Peter is currently a Non-Executive Director of Westpac Banking Corporation (appointed December 2008).

James Millar AM

BCom, FCA, FAICD – Independent Non-Executive Chair of the Audit, Risk and Compliance Committee Member of the Human Resources Committee

James Millar AM was appointed a Non-Executive Director of Mirvac on 19 November 2009 and is the former Chief Executive Officer and Oceania Area Managing Partner of Ernst & Young. He was also a member of the global board of Ernst & Young.

James commenced his career in the reconstruction practice, conducting some of the largest corporate workouts of the early 1990s. James has qualifications in business and accounting, and is a Fellow of The Institute of Chartered Accountants in Australia.

James is a Non-Executive Director and Chair (appointed May 2012) of Fantastic Holdings Limited and a Non-Executive Director of Fairfax Media Limited (appointed July 2012) and Jetset Travelworld Limited (appointed September 2010).

08 mirvac group annual report 2013

==> picture [125 x 88] intentionally omitted <==

James Millar AM

John Mulcahy

John Peters Elana Rubin

John Mulcahy

PhD (Civil Engineering), FIEAust – Independent Non-Executive

Member of the Audit, Risk and Compliance Committee Member of the Human Resources Committee Member of the Nomination Committee

John Mulcahy was appointed a Non-Executive Director of Mirvac on 19 November 2009 and is the former Managing Director and Chief Executive Officer of Suncorp-Metway Limited (“Suncorp”). Prior to Suncorp, John held a number of senior executive roles at Commonwealth Bank, including Group Executive, Investment and Insurance Services. He also held a number of senior roles during his 14 years at Lend Lease Corporation, including Chief Executive Officer, Lend Lease Property Investment and Chief Executive Officer, Civil and Civic.

John has more than 27 years of management experience in financial services and property investment.

John is currently a Non-Executive Director of ALS Limited (formerly Campbell Brothers Limited) (appointed February 2012), Coffey International Limited (appointed September 2009) and GWA Group Limited (appointed November 2010).

John peters

B Arch, Adv Dip BCM, ARAIA, GAICD – Independent Non-Executive

Member of the Audit, Risk and Compliance Committee

John Peters was appointed a Non-Executive Director of Mirvac on 17 November 2011 and was re-elected as a Director on 15 November 2012.

John brings to the Board 35 years’ experience in architectural design, project management, property development and property management.

For the last 16 years, John has been the principal of a private property development company focused on substantial mixed use developments and redevelopments in South East Queensland. During this period, he has also consulted to various investors and other financial stakeholders in several Queensland development projects.

Prior to this, John was with Lend Lease Corporation for 14 years, where he was Queensland Manager Lend Lease Development, and Director, Lend Lease Commercial.

elana Rubin

BA (Hons), MA, FFin, FAICD, FAIM, – Independent Non-Executive

Member of the Audit, Risk and Compliance Committee Member of the Nomination Committee

Elana Rubin was appointed a Non-Executive Director of Mirvac on 11 November 2010, was re-elected as a Director on 15 November 2012 and has extensive experience in property and financial services.

Elana is the former Executive Director – Investments of the Australian Retirement Fund, and was a Director (2006 to 2013) and Chair (July 2007 to April 2013) of AustralianSuper, one of Australia’s leading superannuation funds.

Elana was previously a Non-Executive Director of TAL (November 2007 to April 2013). She has also been a Director on a number of listed companies and other entities including Tower Australia Ltd and Bravura Solutions Ltd.

She is also a member of the Victorian Council of the Australian Institute of Company Directors.

gregory Dyer

BEc, LLB, ACA – Finance Director – Executive (resigned 5 April 2013)

Gregory Dyer was appointed a Director of Mirvac Board on 4 September 2012 and resigned on 5 April 2013. Prior to this appointment, he was the Chief Financial Officer and a Director at Mulpha Australia Limited (“Mulpha”). He also served as a Non-Executive Director at FKP Property Group (in which Mulpha has a 26 per cent interest) from 4 May 2009 to 30 July 2012. Prior to his role at Mulpha, Gregory was Chief Financial Officer of APN News & Media Limited.

nicholas Collishaw

SAFin, AAPI, FRICS – Managing Director – Executive (resigned 31 October 2012)

Nicholas Collishaw was appointed Managing Director on 26 August 2008. Prior to this appointment, he was the Executive Director – Investment responsible for Mirvac’s Investment operations including MPT, Investment Management and Hotel Management, having been appointed to the Mirvac Board on 19 January 2006. Nicholas resigned as a Director of Mirvac Limited on 31 October 2012.

Company Secretary

natalie Allen

BEc, LLB

Natalie Allen was appointed Company Secretary on 21 January 2013. Natalie joined Mirvac as Group General Counsel in August 2012, and has more than 14 years of legal experience in real estate and equity capital markets. Prior to joining Mirvac, Natalie was the Group General Counsel and Company Secretary at Charter Hall Group, and before this, was General Counsel and Company Secretary for a number of listed and unlisted entities within Macquarie’s Real Estate Funds Division. Natalie is a solicitor of the Supreme Court of NSW and a member of the State Bar of California.

Margaret Mezrani

LLB, FCIS, FCSA (resigned 21 January 2013)

Margaret Mezrani was appointed Company Secretary in November 2011 after joining Mirvac in February 2011. Margaret has had over 15 years’ experience as a company secretary in listed and unlisted companies, including OnePath Wealth Management (formerly ING Australia Group), MLC Wealth Management Group, Promina Group and Westpac Banking Corporation. Margaret resigned as Company Secretary on 21 January 2013.

mirvac group annual report 2013

Directors’ report

MeetIngs of DIReCtoRs

The number of meetings of the Board of Directors and of each standing Board committee of which the relevant Director was a member held during the year ended 30 June 2013 and the number of meetings attended by each Director are detailed below:

					Audit, Risk	and	Human	Human
				Board	Compliance Committee		Resources Committee		Nomination
		Board	Committee1		(“ARCC”)		(“HRC”)		Committee
Directors	A	B	A	B	A	B	A	B	A	B
James MacKenzie	15	15	2	2	6	6	5	6	2	2
Susan Lloyd-Hurwitz4	12	12	2	2	—	—	—	—	—	—
Nicholas Collishaw2	1	3	—	—	—	—	—	—	—	—
Marina Darling	15	15	—	—	—	—	6	6	—	—
Gregory Dyer3	9	9	3	3	—	—	—	—	—	—
Peter Hawkins	15	15	1	1	6	6	6	6	2	2
James Millar AM	15	15	2	2	6	6	6	6	—	—
John Mulcahy	15	15	2	2	6	6	6	6	2	2
John Peters	15	15	2	2	6	6	—	—	—	—
Elana Rubin	15	15	—	—	6	6	—	—	2	2

1) Committees of the Board established to deal with particular purposes during the year.
2) Resigned as a Director on 31 October 2012.

3) Appointed as a Director on 4 September 2012 and resigned as a Director on 5 April 2013.

4) Appointed as a Director on 5 November 2012.

A) Indicates the number of meetings attended during the period the Director was a member of the Board or Committee. B) Indicates the number of meetings held during the period the Director was a member of the Board or Committee.

ReMuneRAtIon RepoRt

The remuneration report comprises the following sections:

1) Highlights for the year ended 30 June 2013
2) Alignment of remuneration strategy and business strategy
3) Mirvac’s approach to executive remuneration design
4) Remuneration components and outcomes for the Senior Executives
5) Five year snapshot of business and executive remuneration outcomes
6) Service agreements for the Senior Executives
7) Non-Executive Directors’ remuneration
8) Additional information

This report covers the key management personnel (“KMP”) of Mirvac. KMP are those people with authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly. In essence, the KMP are responsible for determining and executing Mirvac’s strategy.

Mirvac has previously considered all members of the Executive Leadership Team (“ELT”) to be KMP. However, during the year ended 30 June 2013 (“FY13”) the composition of ELT expanded significantly to include new business heads, as well as heads of support functions. Under the expanded structure, the new ELT members who head business functions are considered KMP, while the heads of support functions are not considered to be KMP.

For Mirvac, the KMP during FY13 were therefore:

– the CEO & Managing Director, Finance Director and members of the ELT who head a business (“Senior Executives”); and – Non-Executive Directors.

For the year ended 30 June 2013, the Senior Executives were:

	Position	Term as KMP
senior executives
Susan Lloyd-Hurwitz	CEO & Managing Director (appointed 5 November 2012)	Part Year
Andrew Butler	Chief Executive Offcer, Investment	Full Year
Brett Draffen	Chief Executive Offcer, Development and Group Strategy	Full Year
Gregory Dyer1	Finance Director (appointed 4 September 2012)	Part Year
Gary Flowers2	Chief Operating Offcer (until 21 January 2013) Group Executive, Business Initiatives (from 22 January 2013)	Full Year
Jonathan Hannam	Group Executive, Capital (appointed 9 January 2013)	Part Year
Bevan Towning3	Chief Executive Offcer,Capital Partnerships(from 9 July2012)	Part Year
former senior executives
Nicholas Collishaw	Managing Director (ceased employment on 31 October 2012)	Part Year
Justin Mitchell	Chief Financial Offcer(ceased employment on 1 October 2012)	Part Year

1) Ceasing employment with Mirvac on 5 September 2013.
2) Ceasing employment with Mirvac on 1 October 2013.
3) Ceasing employment with Mirvac on 20 September 2013.

The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001 .

10 mirvac group annual report 2013

1 HIgHlIgHts foR tHe yeAR enDeD 30 June 2013 (“fy13”)

fixed remuneration	1)	In accordance with its market positioning strategy, Mirvac assesses the remuneration
		levels and mix for Senior Executives to identify where adjustments are appropriate
		based on market benchmarking. As a result, no Senior Executives received an increase to their fxed remuneration during FY13, while two Senior Executives had their fxed remuneration reduced effective 1 July2012.
short-term incentives (“stI”)	2)	To ensure that the STI pool was appropriately aligned to Mirvac’s strategic drivers,
		Mirvac continued with its balanced scorecard of measures for determining the STI
		pool for the year ended 30 June 2013.
	3)	The FY13 STI pool was smaller than the STI pool in the year ended 30 June 2012
		(“FY12”). This was largely due to Mirvac not meeting threshold performance levels
		on the Return on Assets (“ROA”) measure as a result of the impairments announced
		during FY13.
	4)	Consistent with the intention stated in the FY12 Remuneration Report, 25 per cent
		of FY13 STI awards for ELT members will be delivered in the form of Mirvac securities,
		with the remainder paid in cash.
	5)	For FY14 the ROA measure will continue to be calculated in the same manner, but will
		be relabelled as Return on Invested Capital (“ROIC”). This change in terminology will
		ensure consistency between the terms used in Mirvac’s remuneration arrangements
		and those used in Mirvac’s business strategy and external market communications.
	6)	Effective FY14, the ROIC weighting in the balanced scorecard will increase from
		20 per cent to 35 percent, while the weighting for operating earnings will reduce from 50 per cent to 35 per cent. This change refects the increased emphasis in Mirvac’s
		strategyongeneratingreturns on the assets it manages.
Introduction of stI deferral	7)	Commencing from FY14, 25 per cent of STI awards for ELT members will be
		deferred into rights over Mirvac securities. Half of these deferred rights will vest after
		12 months, with the balance vesting after 24 months. No dividends will be payable
		on these deferred rights. The deferred rights are subject to service conditions.
long-term incentives (“ltI”)	8)	The three year performance period for the LTI grants made during the year ended 30 June 2011 fnished on 30 June 2013. None of the performance rights from this
		grant vested as the relative total shareholder return (“TSR”) performance hurdle
		was not met.
	9)	Consistent with the approach used for the FY12 LTI grants, two performance
		measures will again be applied to the LTI grants made during FY13: 50 per cent of
		the LTI allocation will be tested against a relative TSR hurdle and 50 per cent against
		a return on equity (“ROE”) hurdle.
	10)	To ensure that executives are only rewarded when performance hurdles have been
		achieved at the end of the performance period, Mirvac continued with its policy of
		not paying dividends on unvested LTI awards.
	11)	For FY14, ROIC will replace ROE as an LTI hurdle. The rationale behind this is to
		ensure improved alignment between Mirvac’s business strategy, incentive scheme
		measures, and external market communications.
Introduction of incentive	12)	In order to further strengthen Mirvac’s remuneration governance framework, Mirvac
clawback arrangements		has introduced a clawback policy for ELT members and other executives capable of infuencing the results of the Group. The policy gives the HRC the ability to clawback incentives in the event of a material fnancial misstatement. The clawback provisions
		will applyto future unvested STI and LTI awards.
Changes to remuneration mix	13)	In order to facilitate the introduction of STI deferrals, effective FY14, the STI targets for ELT members (other than the Managing Director) will increase by 10 per cent of fxed remuneration, while the LTI targets will reduce by 10 per cent of fxed remuneration.
		The STI and LTI targets for the ManagingDirector will remain unchanged.
non-executive Director fees	14)	The maximum aggregate Non-Executive Director remuneration for FY13 remained
		unchanged from the $1.95m limit approved by securityholders at the 2009 Mirvac
		Annual General Meeting/General Meeting (“AGM”). No increase to this maximum
		remuneration amount isproposed for FY14.

mirvac group annual report 2013

Directors’ report

2 AlIgnMent of ReMuneRAtIon stRAtegy wItH busIness stRAtegy

Mirvac’s remuneration strategy is designed to support and reinforce its business strategy. Linking the at-risk components of remuneration (that is, our STI and LTI schemes) to the drivers that support the business strategy ensures that remuneration outcomes for executives are aligned with the creation of sustainable value for securityholders.

Mirvac’s remuneration arrangements support its strategic vision of setting the standard as a world-class Australian property group that attracts the best. The Board has identified drivers that are critical to the achievement of this strategic vision, being:

1) financial performance and capital efficiency;
2) customer and investor satisfaction;
3) high performing people and culture; and
4) health, safety, environment and sustainability (“HSE&S”) leadership.

The at-risk components of executive reward (i.e. Mirvac’s STI and LTI schemes) are directly tied to these four strategic drivers, as shown in the following diagram. This is intended to motivate executives to focus on the areas the Board has identified as most important for delivering the business strategy. Actual remuneration outcomes for executives are directly affected by, and aligned with, Group performance in these areas.

ouR stRAtegIC DRIVeRs...	ARe RefleCteD In	ARe RefleCteD In	AnD ltI peRfoRMAnCe	so MIRVAC’s ACtuAl	so MIRVAC’s ACtuAl	DIReCtly AffeCts wHAt	DIReCtly AffeCts wHAt
	stI peRfoRMAnCe		MeAsuRes...	peRfoRMAnCe...		eXeCutIVes ARe pAID.
	MeAusRes...
Capital effciency and fnancial performance Deliver top 3 AREIT returns.			Relative tsR Measures the performance of Mirvac securities over time, relative to other entities in a comparison group.		from fy11 – fy13: –Mirvac’s TSR was ranked at the 44th percentile relative to its comparison group.
			Roe
			Measures Mirvac’s
		operating earnings Refects how much revenue the business has generated for the year, less operating costs. RoA Measures Mirvac’s proftability relative to its total assets. It is calculated	proftability relative to securityholders’ investment in the Group. Effective FY14 ROIC will replace ROE as the LTI measure.		In fy13: –Operating earnings were $377.6m, up 3% from $366.3m in FY12. –FY13 ROA result was down from FY12 largely due to the impact of the impairments.		CEO & Managing Director STI outcome in FY13 = 98% of target.
		by dividing the company’s annual earnings by its total
		assets. Effective FY14, ROA
		will be relabelled as ROIC.
Customer and investor satisfaction Provide customers and investors an experience that delivers excellence, consistently exceeds expectations and engenders loyalty.		year-on-year improvement in Consumer Confdence index (“CCI”) An external measure of a variety of attributes that contribute to the confdence that institutional investors have in Mirvac.			In fy13: –Mirvac improved against the external investment community confdence benchmark relative to FY12 results.		Average STI in FY13 for other eligible Senior
							Executives
							= 75%
High performing people and culture Have an engaged and		people “scorecard” The balanced scorecard includes measures			In fy13: –Mirvac achieved target on 5 out of 6 of the		of target.
motivated workforce with superior skills and capabilities.		such as talent turnover, diversity targets and employee engagement. Performance is assessed based on the proportion of those measures where			key people measures including a 12% improvement on the employee engagement score from FY12.
Hse&s leadership Be recognised as a		targets were met. Hse&s leadership “scorecard”			In fy13:		LTI vesting outcome in FY13 = 0%
leader in sustainability. Provide workplaces free from harm and		The HSE&S priorities are graded using a traffc light system. Mirvac			–83% of the measures on the HSE&S scorecard were		of target.
supported by a culture where safety remains an		looks at what proportion of those measures are			assessed as ‘green’.
absolute priority.		rated ‘green’.

12 mirvac group annual report 2013

2 AlIgnMent of ReMuneRAtIon stRAtegy wItH busIness stRAtegy / ContInueD

The following table sets out the actual value of the remuneration receivable by the Senior Executives during the year. The figures in this table are different from those shown in the accounting table in section 4(h). The main difference between the two tables is that the accounting table in section 4(h) includes an apportioned accounting value for all unvested LTI grants during the year (some of which remain subject to satisfaction of performance and service conditions and may not ultimately vest). The table below, on the other hand, shows the LTI value based on the awards that actually vested and delivered value to Senior Executives.

to Senior Executives.
	Year	Fixed remuneration $	STI1 $	LTI2 $	Employee loans3 $	Termination benefts $	Other $	Total $
senior executives
Susan Lloyd-Hurwitz4	2013	990,134	724,035	—	—	—	592,7165	2,306,885
Andrew Butler	2013	618,000	401,929	—	650,071	—	8,727	1,678,727
	2012	618,000	308,876	—	604,279	—	8,918	1,540,073
Brett Draffen	2013	900,000	549,423	—	943,311	—	14,403	2,407,137
	2012	1,000,000	464,800	238,584	810,080	—	15,231	2,528,695
GregoryDyer6	2013	583,230	—	—	—	—	8,899	592,129
Gary Flowers	2013	585,000	319,410	—	290,723	—	9,106	1,204,239
	2012	648,900	433,790	126,608	266,158	—	8,962	1,484,418
Jonathan Hannam7	2013	258,619	141,206	—	—	—	8,2138	408,038
Bevan Towning9	2013	588,948	163,800	—	—	—	9,725	762,473
former senior
executives
Nicholas Collishaw	2013	502,745	—	—	895,508	1,188,462	1,280	2,587,995
	2012	1,500,000	1,080,000	1,058,378	773,283	—	24,735	4,436,396
Justin Mitchell	2013	174,956	—	—	650,071	687,580	3,738	1,516,345
	2012	700,001	470,400	88,023	604,279	—	11,403	1,874,106

1) STI values reflect payments to be made in September 2013 in recognition of performance during FY13.
2) LTI amounts represent the value to the participant during FY13 arising from performance rights whose performance period ended 30 June 2013.
3) Amount reported includes amounts forgiven during the year, imputed interest and related fringe benefits tax (“FBT”).
4) Commenced employment with Mirvac on 5 November 2012.
5) Includes relocation expenses and a payment of $530,000 as part compensation for the STI and LTI entitlements the Managing Director forfeited on resigning from her previous employer.
6) Commenced employment with Mirvac on 4 September 2012.
7) Commenced employment with Mirvac on 9 January 2013.
8) Includes relocation expenses.
9) Commenced employment with Mirvac on 9 July 2012.
3 MIRVAC’s AppRoACH to eXeCutIVe ReMuneRAtIon DesIgn

The Board and HRC are responsible for designing remuneration arrangements that support the business strategy.

Remuneration arrangements are designed to enable Mirvac to derive maximum value from its remuneration spend, by attracting, motivating and retaining the individuals who are best equipped to successfully execute the business strategy.

a) How remuneration decisions are made

Board and HRC oversight and accountability

The Board, with assistance from the HRC, is ultimately responsible for ensuring that the remuneration approach at Mirvac is consistent with the business strategy and aligned with the creation of sustainable securityholder value.

The HRC, consisting of five independent Non-Executive Directors, has been delegated responsibility for reviewing the remuneration strategy annually and advises the Board on remuneration policies and practices generally. The HRC also makes specific recommendations to the Board on remuneration packages, incentives and other terms of employment for Non-Executive and Executive Directors, including the Managing Director, and approves the remuneration packages, incentives and other terms of employment for other KMP. More detailed information on the role and responsibilities of the HRC can be found in section 9 of the Corporate Governance Statement, while information on each of the HRC members can be found on page 8 and 9 of the Annual Report.

The HRC regularly reviews the at-risk components of executive remuneration (that is the STI and LTI schemes) to ensure that the executive remuneration approach continues to be appropriately aligned with securityholders’ interests, while also serving to attract, motivate and retain suitably qualified people. The HRC also reviews and approves the performance targets set for the STI and LTI schemes, as well as the assessment of Mirvac’s performance against those targets, which ultimately determines STI and LTI outcomes.

mirvac group annual report 2013

Directors’ report

3 MIRVAC’s AppRoACH to eXeCutIVe ReMuneRAtIon DesIgn / ContInueD

Expert input from management and external advisors

To ensure it has the necessary information to make remuneration decisions, the HRC seeks advice and input from Mirvac’s Group Executive, Services. In addition, the HRC has appointed Ernst & Young as its external remuneration adviser. Ernst & Young’s role in this regard is to provide both information on current market practice and independent input into key remuneration decisions.

Ernst & Young’s terms of engagement include specific measures designed to protect its independence. The HRC recognises that, to effectively perform its role, it is necessary for Ernst & Young to interact with members of Mirvac management, particularly those in the Human Resources team. However, to ensure Ernst & Young remains independent, members of Mirvac’s management are precluded from requesting services that would be considered to be a ‘remuneration recommendation’ as defined by the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011 .

During the year ended 30 June 2013, Ernst & Young provided the HRC with:

guidance in the review and design of executive remuneration strategy;
assistance in drafting of remuneration disclosures;
relative TSR performance calculations; and
market remuneration information which was used as an input to the annual review of KMP and selected executives’ remuneration.

No remuneration recommendations were provided by Ernst & Young or any other advisor during the year.

b) Remuneration principles

The Board and HRC have developed six remuneration principles to ensure remuneration continues to support Mirvac’s business strategy and create value for securityholders through all stages of the business cycle. These principles underpin remuneration decision making at Mirvac and provide a consistent framework to ensure maximum value is derived from remuneration decisions.

Remuneration at Mirvac should:

1) align and contribute to Mirvac’s key strategic business objectives and desired business outcomes;
2) align the interests of employees with those of securityholders;
3) assist Mirvac in attracting and retaining the employees required to execute the business strategy;
4) support Mirvac’s desired performance-based culture;
5) encompass the concept of pay parity and be fair and equitable; and
6) be simple and easily understood.

c) Market positioning

Consistent with these principles, Mirvac has adopted a market positioning strategy designed to attract and retain talented employees, and to reward them for delivering strong performance. The market positioning strategy also supports fair and equitable outcomes between employees.

Definition of market

When determining the relevant market for each role, Mirvac considers the companies from which it sources talent, and to whom it could potentially lose talent. A distinction is made between the market for business roles and the market for corporate roles.

For business roles:

the primary comparison group is the Australian Real Estate Investment Trust (“A-REIT”) sector, plus Lend Lease, FKP Property Group and Australand Property Group; and
the secondary comparison group is a general industry comparison group with a similar market capitalisation (50-200 per cent of Mirvac’s 12 month average market capitalisation).

For corporate roles:

the primary comparison group is a general industry comparison group with a similar market capitalisation (50-200 per cent of Mirvac’s 12 month average market capitalisation) to reflect the greater transferability of skills.

Where disclosed data is unavailable, Mirvac relies on published remuneration surveys covering relevant industries and the broader market.

Targeted market positioning

Fixed remuneration at Mirvac is positioned at the median (50th percentile), with the ability to pay within a range around the median based on criteria such as:

the criticality of the role to successful execution of the business strategy;
assessment of employee performance/potential; and
the employee’s experience level.

Target remuneration is comprised of fixed remuneration, STI and LTI. Target total remuneration at Mirvac is positioned at the median (50th percentile) with the opportunity to earn total remuneration up to the upper quartile (75th percentile) in the event that both the individual and the business achieve stretch targets.

d) Remuneration mix

Mirvac’s remuneration structures strive to fairly and responsibly reward employees, while complying with all relevant regulatory requirements.

A significant portion of total remuneration for executives is variable or at risk if applicable performance targets are not met or exceeded each year. As described further in section 4(b), commencing FY14, 25 per cent of STI awards to ELT members will be deferred into rights over Mirvac securities. This change was introduced to support the introduction of the incentive clawback policy, and to further align pay outcomes with Mirvac’s longer term security price performance.

14 mirvac group annual report 2013

3 MIRVAC’s AppRoACH to eXeCutIVe ReMuneRAtIon DesIgn / ContInueD

In order to facilitate the introduction of STI deferrals, effective FY14, the STI targets for ELT members (other than the Managing Director) will increase by 10 per cent of fixed remuneration, while the LTI targets will reduce by 10 per cent of fixed remuneration. The STI and LTI targets for the Managing Director will remain unchanged. The following graphs compare the remuneration mix at target for the Managing Director and other Senior Executives during FY13 with the mix after the introduction of STI deferral in FY14.

Existing Target Pay Mix

New Target Pay Mix

==> picture [498 x 182] intentionally omitted <==

----- Start of picture text -----

37% 33%
46% 46%
8%
26% 6%
22%
23%
17%
37%
31% 37% 31%
Managing Director Other Senior Executives Managing Director Other Senior Executives
Fixed remuneration Fixed remuneration
Target short-term incentive Target short-term incentive Cash
Long-term incentive Target short-term incentive Deferred
Long-term incentive
----- End of picture text -----

The introduction of STI deferral in FY14 will also serve to ensure executives are rewarded for sustained performance over the longer term.

==> picture [497 x 32] intentionally omitted <==

----- Start of picture text -----

FY14 FY15 FY16
----- End of picture text -----

Fixed Remuneration Short Term Incentive Deferred (12 months) Short Term Incentive – Cash Short Term Incentive Deferred (24 months) Long Term Incentive

The remuneration mix for Senior Executives has a significant weighting towards equity-based remuneration to ensure strong alignment with securityholder interests. The following graph illustrates the cash versus equity remuneration mix for the Managing Director and other Senior Executives following the introduction of STI deferrals in FY14.

Mix of cash vs equity

==> picture [242 x 164] intentionally omitted <==

----- Start of picture text -----

41%
52%
59%
48%
Managing Director Other Senior Executives
Cash
Equity
----- End of picture text -----

mirvac group annual report 2013

Directors’ report

3 MIRVAC’s AppRoACH to eXeCutIVe ReMuneRAtIon DesIgn / ContInueD

Minimum Securityholding Guidelines for ELT members were introduced in FY12 in order to further weight executives’ remuneration mix towards equity. Under the Guidelines, ELT members are expected to establish and maintain a securityholding to the value of:

Level	Minimum securityholding
CEO & Managing Director	100% of fxed remuneration
Other ELT members	50% of fxed remuneration

Executives covered by the Minimum Securityholding Guidelines have five years to build up their securityholding to the suggested level. As at 30 June 2013, progress towards the Minimum Securityholding Guidelines for each continuing Senior Executive was as follows:

Executive was as follows:
		Value of securityholdings	Minimum securityholding
Senior Executives	Date securityholding to be attained	as at 30 June 2013 ($)	guideline ($)
Susan Lloyd-Hurwitz	November 2017	—	1,500,000
Andrew Butler	July 2017	139,796	309,000
Brett Draffen	July 2017	473,606	450,000
Jonathan Hannam	January2018	—	270,000

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes

At Mirvac, the three components of executive remuneration – fixed remuneration, STI and LTI – are weighted so as to direct executives’ focus towards building long-term value for the Group. To earn their at-risk components, executives must first create sustainable value for securityholders.

a) fixed remuneration

Fixed remuneration acts as a base-level reward for a competent level of performance in an executive’s particular role. It includes cash, compulsory superannuation and any salary-sacrifice items (including FBT). The following factors are taken into account when setting fixed remuneration levels at Mirvac:

– the size and complexity of the role;

role accountabilities;
skills and experience of the individual; and
market pay levels for comparable roles.

The opportunity value for the at-risk components of remuneration is determined by reference to fixed remuneration, so Mirvac is conscious that any adjustments to fixed remuneration have a flow-on impact on the executive’s potential STI and LTI awards.

Mirvac regularly considers market remuneration benchmarking information and, having regard to its market positioning strategy and the desired remuneration mix, decides whether to adjust fixed remuneration for each executive. Following a review conducted during FY12, the fixed remuneration levels for two Senior Executive members were reduced effective 1 July 2012. To recognise their acceptance of reduced fixed remuneration, the affected executives received increased LTI awards in the FY13 grants, and will similarly receive an increased award in the FY14 grants. The additional awards will be “at risk” to the executive and subject to applicable performance hurdles and service conditions.

16 mirvac group annual report 2013

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD

b) the stI component – how does it work?

The purpose of STI is to motivate and reward employees for contributing to the delivery of annual business performance as assessed against a balanced scorecard of measures. STI is an annual incentive based on Group, divisional and individual performance. Mirvac’s STI plan has been structured as follows:

eligibility	– Executives and managers at Mirvac are eligible to participate in the STI plan based on their
	responsibility for achieving annual objectives.
	– Other employees are eligible for a discretionary bonus where management recognises that
	exceptional individual performance has been achieved. Commencing FY14, all permanent
	Mirvac employees willparticipate in the STIplan and discretionarybonuses will no longer apply.
stI pool formation	– A gateway requirement of Group operating earnings being at least 90 per cent of target must
	be achieved before any STI payments are made.
	– If the Group operating earnings gateway is satisfed, the size of the STI pool (from which all STI
	payments are made) is determined based on Group performance against a balanced scorecard
	of measures linked to Mirvac’s strategic drivers.
	– For FY14, the ROA measure will continue to be calculated in the same manner, but will be
	relabelled as ROIC. This change will ensure consistency between the terminology used in
	remuneration arrangements and that used when reporting on Mirvac’s performance.
	– Effective FY14, the weighting on the balanced scorecard for the ROIC measure will increase
	from 20 to 35 per cent, while the weighting for the operating earnings measure will reduce from 50 to 35 per cent. This change refects the increased emphasis in Mirvac’s strategy on
	generating returns on the assets it manages. The gateway operating earnings requirement
	willcontinue to apply.
stI individual allocation	– An individual’s STI target opportunity is the amount earned for ‘on target’ Group and individual
	performance. STI awards can range from zero to double the STI target opportunity.
	– FY13 STI targets were 75 per cent of fxed remuneration for the CEO & Managing Director
	and 70 per cent for other Senior Executives. In order to facilitate the introduction of STI
	deferrals, effective FY14, the STI targets for ELT members other than the Manager Director will increase by 10 per cent of fxed remuneration. The STI target for the Managing Director
	will remain unchanged.
	– Once the Group STI gateway has been met, actual STI awards are scaled up or down from the
	individual’s STI target based on Group and individual performance. For employees other than
	the Managing Director and Finance Director, divisional performance is also taken into account when determining the fnal STI award.
	– Effective FY14, all STI awards will be calculated with reference to only Group and individual
	performance (that is, divisional performance will no longer form part of the calculation
	of STI awards).
payment form	– For STI awards made to ELT members with respect to FY13, 25 per cent of the award will be
	paid in the form of Mirvac securities, with the balance paid as cash.
	– ELT members will be expected to retain the securities they receive as part of their STI award
	until theysatisfythe Minimum SecurityholdingGuidelines.
stI deferral	– Commencing FY14, the 25 per cent of any STI award previously paid as securities will instead
	be deferred into rights over Mirvac securities, with the balance paid as cash. Half of these rights
	will vest 12 months after award, with the balance vesting after 24 months.
	– No dividends will be payable on the deferred rights.
	– If the deferred rights vest, entitlements will be satisfed by the purchase of existing securities
	on-market that are then transferred to theparticipant.
termination/	– To be eligible for an STI award the executive must be employed on the award date.
forfeiture	– From FY14, the deferred portion of an STI award will be forfeited in the event that an employee
	resigns or is dismissed for performance reasons prior to the vesting date. Unvested deferred
	STI awards may be retained if an employee leaves due to circumstances such as retirement,
	redundancy, total andpermanent disablement or death.

mirvac group annual report 2013

Directors’ report

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD STI performance measures

Group and divisional STI performance measures are directly linked to Mirvac’s strategic drivers, as shown in the diagram in section 2. A description of each measure, its FY13 weighting and the rationale behind its inclusion in the Group’s balanced scorecard is presented in the following table:

strategic driver	Aligned stI measure(s) explanation of measure weighting% Rationale for using
financial performance and capital effciency	Operating earnings Operating earnings refect how much revenue the business has generated, less its operating costs. 50 Refects the underlying performance of Mirvac’s core business operations and represents a key driver of securityholder value.
	Return on assets ROA is a measure of how proftable a company is relative to its total assets. It is calculated by dividing the company’s annual earnings by its total assets. Effective FY14, the ROA measure will continue to be calculated in the same manner, but will be relabelled as ROIC. 20 Refects how effciently Mirvac is using its assets to generate earnings.
Customer and investor satisfaction	Improvement in Investment community confdence Measures Mirvac’s year-on- year improvement against an independent external benchmark of Investment communityconfdence. 10 Represents how well Mirvac is meeting the expectations of key external stakeholders.
High performing people and culture	Balanced scorecard of people measures The balanced scorecard includes measures such as talent turnover, diversity targets, and employee engagement. Performance is assessed based on the proportion of those measures where targets were met. 10 There is a strong correlation between high levels of employee engagement and total securityholder return.
Hse&s leadership	Balanced scorecard of HSE&S measures The ‘balanced scorecard’ of HSE&S grades a suite of measures using a traffc light system. Measures include lost time injury frequency rate and proportion of waste reused or recycled. Mirvac looked at what proportion of those measures were rated ‘green’, which corresponds to an industry leading level ofperformance. 10 Mirvac is committed to providing a safe workplace for all of its employees and to ensuring its activities do not have an adverse impact on the environment.

For each performance measure on the STI scorecard a threshold, plan and stretch goal is set at the start of the financial year. The STI score for each performance level is calculated according to the following schedule:

	STI score
Performance level	(% Target)
< Threshold	0
Threshold	75
Plan	100
Stretch	150
> Stretch	150

A sliding scale operates between threshold and plan, and between plan and stretch.

18 mirvac group annual report 2013

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD Group and Divisional STI scores

The process for determining the FY13 Group STI and Divisional STI scores was as follows:

==> picture [497 x 284] intentionally omitted <==

----- Start of picture text -----

Operating earnings gateway
Requirement for operating earnings to be at least 90 per cent of target before STI is payable.
Calculation of STI scores for each balanced scorecard measure
Customer & Investor
Operating earnings ROA Satisfaction People scorecard HSE&S scorecard
Calculation of raw Group STI score
Raw Group STI score is a number between 0 and 150 based on weighted average of STI scores for each measure on the balanced scorecard.
HRC determines final Group STI score
HRC can exercise informed judgement to adjust the raw Group STI score up or down in order to ensure payments are consistent
with Mirvac’c renumeration strategy, and appropriately align with performance outcomes.
Divisonal STI scores determined
STI scores are also assigned to divisions, based on an assessment of their relative contribution to the Group result.
----- End of picture text -----

Individual STI score

Each participant is awarded an individual STI score between zero and 150 per cent of their STI target based on an assessment of their personal performance for the year against objectives linked to Mirvac’s strategic drivers.

Calculation of STI awards

Once the Group, Divisional and Individual STI scores are determined, an individual’s STI award is calculated as follows:

==> picture [497 x 58] intentionally omitted <==

----- Start of picture text -----

Group/
Fixed Individual Individual Individual
Divisional
remuneration STI target STI score STI score STI award
----- End of picture text -----

c) the stI component: how was reward linked to performance this year?

STI pool in FY13

The Group operating earnings gateway was achieved in FY13 which meant that an STI pool was formed. The following graph summarises Mirvac’s performance against each of the measures on the balanced scorecard for the year ended 30 June 2013:

==> picture [508 x 180] intentionally omitted <==

----- Start of picture text -----

Stretch
Plan
Threshold
Weighting: 50% Weighting: 10% Weighting: 10% Weighting: 10%
% of Plan Weighting: 20% % of Plan % of Plan % of Plan
awarded = 105% awarded = 76% awarded = 100% awarded = 83%
% of Plan
awarded = 0%
Financial Capital efficiency Customer High performance Health, Safety,
(Operating earnings) (ROA%) and investor people & culture Environment
satisfaction (People scorecard) & Sustainability
(% Improvement (HSE&S scorecard)
on CCI score)
Group performance for FY13
----- End of picture text -----

mirvac group annual report 2013

Directors’ report

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD

In light of Mirvac’s performance against these five measures for the year ended 30 June 2013, the HRC approved an STI pool equivalent to 78 per cent of target, compared to a maximum potential pool of 150 per cent of target. The resulting STI pool for FY13 was $11.2m which represented 3 per cent of Mirvac’s operating profit.

The STI pool in FY13 was smaller than the STI pool in FY12. This was largely due to Mirvac failing to meet the threshold performance levels on the ROA measure in FY13 as a result of the impairments announced during the year.

FY13 STI awards for the Senior Executives

The following table shows the actual STI outcomes for each of the Senior Executives for FY13. Note that the STI maximum for an individual represents double his or her STI target. As noted previously, each individual’s actual STI is based on the Group’s balanced scorecard, adjusted, as appropriate, for divisional and individual performance.

	STI max		STI	Actual STI
	% of fxed remuneration	Actual STI % max	forfeited % max	(total) $
senior executives
Susan Lloyd-Hurwitz	150	49	51	724,035
Andrew Butler	140	46	54	401,929
Brett Draffen	140	44	56	549,423
Gregory Dyer	140	—	100	—
Gary Flowers	140	39	61	319,410
Jonathan Hannam	140	39	61	141,206
Bevan Towning	140	20	80	163,800
former senior executives
Nicholas Collishaw	150	—	100	—
Justin Mitchell	140	—	100	—

d) the ltI component: how does it work?

The purpose of LTI at Mirvac is to:

assist in attracting and retaining the required executive talent;
focus executive attention on driving sustainable long term growth; and
align the interests of executives with those of securityholders.

Mirvac’s LTI plans have changed over time to align with market practice. A summary of previous plans is in section 8.

Mirvac’s current LTI plan, the Long Term Performance (“LTP”) plan, was originally introduced in the year ended 30 June 2008 following approval by securityholders at the 2007 AGM. Securityholders approved an update to the LTP plan at the 2010 AGM.

Key details of the LTP plan are set out in the table below.

eligibility – LTP grants are generally restricted to those executives who are most able to influence securityholder value. Non-Executive Directors are not eligible to participate in the LTP plan.
Instrument – Awards under this plan are made in the form of performance rights. Awards of options have also been made under this plan in previous years. A performance right is a right to acquire one fully paid Mirvac security provided a specified performance hurdle is met.
– No dividends are paid on unvested LTI awards. This ensures that executives are only rewarded when performance hurdles have been achieved at the end of the performance period.
– No loans are made to participants under this plan.
grant value – The maximum LTI opportunities during the year ended 30 June 2013 were equivalent to 150 per cent of fixed remuneration for the CEO & Managing Director, and 100 per cent of fixed remuneration for other Senior Executives.
Effective 1 July 2013, the maximum LTI opportunity for Senior Executives other than the Managing Director will be reduced to 90 per cent of fixed remuneration, with a commensurate increase in STI opportunity to facilitate the introduction of STI deferral. These reductions form part of the adjustments to remuneration mix for ELT members made to facilitate the introduction of STI deferrals.
In determining the value of the performance rights to grant to ELT members, the HRC takes into account the annual retention value associated with participation in the Executive Retention Plan (“ERP”), a legacy LTI plan described in section 8. The fair value of rights granted under the LTP equates to the ELT member’s maximum annual LTI opportunity, less the annual value to the individual associated with their ERP participation.
A table included later in this section sets out full details of the performance rights granted to Senior Executives under the LTP during FY13.

20 mirvac group annual report 2013

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD

performance hurdles	– The HRC reviews the performance conditions annually to determine the appropriate hurdles
	based on Mirvac’s strategy and prevailing market practice. Consistent with the approach used
	for the FY12 LTI grants, two performance measures apply to the LTI grants made during FY13:
	50 per cent of the LTI allocation will be tested against a relative TSR hurdle and 50 per cent
	against a ROE hurdle.
	– Relative TSR is used because it is an objective measure of securityholder value creation and
	is widely understood and accepted by the various key stakeholders. The entities against which
	Mirvac’s TSR performance is compared are shown below.
	– ROE is used as the second performance condition because it is aligned to Mirvac’s strategic drivers, in particular fnancial performance and capital effciency. ROE measures how well
	management has used securityholder funds and reinvested earnings to generate additional
	earnings for securityholders.
	– For FY14, ROIC will replace ROE as an LTI hurdle. The rationale behind this is to ensure
	improved alignment between Mirvac’s business strategy, incentive scheme measures and
	external market communications. Following this change, 50 per cent of the LTI allocation
	will be tested against a relative TSR hurdle and 50per cent against a ROIC hurdle.
Vesting/delivery	– The performance rights offered under the scheme can only be exercised if and when the performance
	conditions are achieved over a three year period. If the performance rights vest, entitlements will be satisfed by, at the Board’s discretion, either an allotment of new securities to participants
	or by the purchase of existing securities on-market that are then transferred to the participant.
	– At the end of the three year performance period, all performance rights that vest are
	automatically converted to Mirvac securities. However, if the performance rights do not vest
	at the end of the three year performance period, they will lapse. There are no further tests of
	the performance conditions.
	– ELT members will be expected to retain the securities they receive as a result of the vesting of
	performance rights until theysatisfythe Minimum SecurityholdingGuidelines.
termination/forfeiture	– If an employee resigns or is dismissed, all their unvested performance rights are forfeited. If an
	employee leaves due to retirement, redundancy, total and permanent disablement or death,
	the HRC determines the number of rights which will lapse or are retained, subject to both the
	original performance period and hurdles.
	– If a change of control event occurs, the HRC determines the number of performance rights that
	vest, if any, takinginto account theperformance from the date ofgrant to the event.
Hedging	– Consistent with the_Corporations Act 2001_, participants are prohibited from hedging their
	unvestedperformance rights or options.

Relative TSR performance hurdle

For the grant made during FY13, the vesting outcome for half of the award will depend on Mirvac’s TSR performance relative to the constituents of the comparison group. To ensure that performance is measured objectively, the HRC receives the relative TSR data from an independent external consultant. The HRC then determines the number of performance rights that will vest, if any, by applying the TSR data to the following vesting schedule:

Performance level	Relative TSR(percentile)	Percentage of TSR-tested rights to vest
<Threshold	<50th	Nil
Threshold	50th	50
Threshold – maximum	50th to 75th	Pro-rata between 50 and 100
Maximum	75th and above	100

The comparison group for assessing relative TSR performance consists of Mirvac’s primary market competitors, including: – the constituents of the S&P/ASX 200 A-REIT Index;

– Lend Lease Corporation Limited;

– Australand Property Group; and

– FKP Property Group.

For the grant made during FY13, the entities comprising the TSR comparison group are:

Number ASX code Entity 1 ABP Abacus Property Group 2 ALZ Australand Property Group 3 BWP BWP Trust 4 CFX CFS Retail Property Trust Group 5 CRF Centro Retail Australia 6 CHC Charter Hall Group 7 CQR Charter Hall Retail REIT 8 CPA Commonwealth Property Offce 9 DXS Dexus Property Group	Number ASX code Entity
	10 FKP FKP Property Group 11 GPT GPT Group 12 GMG Goodman Group 13 IOF Investa Offce Fund 14 LLC Lend Lease Group 15 MGR Mirvac Group 16 SGP Stockland 17 WDC Westfeld Group 18 WRT Westfeld Retail Trust

mirvac group annual report 2013

Directors’ report

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD

ROE performance hurdle

The vesting outcome for the other half of the grant made during FY13 will depend on Mirvac’s average annual ROE performance over the three year performance period. The annual ROE is defined as adjusted earnings of a financial year divided by adjusted equity of the year, where adjusted earnings is defined as:

Statutory Profit;

excluding fair value of derivatives and exchange differences of the financial year; and

including movements in asset revaluation reserve of the financial year

and adjusted equity is defined as:

Average net equity of the financial year

excluding derivative financial assets and liabilities;

excluding the cross currency swap impact in the external borrowings; and excluding non controlling interest.

The adjustments to earnings and equity are made to ensure that rewards reflect management’s contribution to Mirvac’s long term performance.

For the grant made during FY13, the vesting outcome at the end of the three year performance period for the half of the grant for which ROE is the performance measure will be based on the following schedule:

Performance level	Average annual ROE	Percentage of ROE-tested rights to vest
<Threshold	< 7%	Nil
Threshold	7%	50
Threshold – maximum	7% to 11%	Pro-rata between 50 and 100
Maximum	11% and above	100

LTIs granted in FY13

Details of the performance rights granted to Senior Executives under the LTP during FY13 are set out in the table below:

Senior Executives1	Performance measure	Number of performance rightsgranted	Vestingdate	Fair value per performance right($)	Minimum value of grant($)	Maximum value of grant($)2
Susan Lloyd-Hurwitz	TSR	568,650	1 July 2015	0.78	—	443,547
	ROE	568,650	1 July2015	0.66	—	372,466
total		1,137,300			—	816,013
Brett Draffen3	TSR	244,900	1 July 2015	0.78	—	191,022
	ROE	244,900	1 July2015	0.66	—	160,410
total		489,800			—	351,432
Gregory Dyer	TSR	223,000	1 July 2015	0.78	—	173,940
	ROE	223,000	1 July2015	0.66	—	146,065
total		446,000			—	320,005
Gary Flowers4	TSR	187,034	1 July 2015	0.78	—	145,886
	ROE	187,033	1 July2015	0.66	—	122,507
total		374,067			—	268,393
Jonathan Hannam	TSR	99,204	1 July 2015	0.78	—	77,379
	ROE	99,203	1 July2015	0.66	—	64,978
total		198,407			—	142,357
Bevan Towning	TSR	227,461	1 July 2015	0.78	—	177,419
	ROE	227,460	1 July2015	0.66	—	148,986
total		454,921			—	326,405

1) No LTP awards were made to Andrew Bulter, Nicholas Collishaw or Justin Mitchell during the year ended 30 June 2013.
2) The maximum value of the grant has been estimated based on the fair value as calculated at the time of the grant.
3) Brett Draffen’s FY13 LTP award includes a top-up award of 232,558 performance rights granted to reflect the reduction in fixed remuneration effective 1 July 2012.

4) Gary Flowers’ FY13 LTP award includes a top-up award of 148,604 performance rights granted to reflect the reduction in fixed remuneration effective 1 July 2012.

22 mirvac group annual report 2013

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD

Key inputs used in valuing performance rights granted during FY13 were as follows:

	Performance rights
Grant date	17 December 2012
Performance hurdles	Relative TSR and ROE
Performance period start	1 July 2012
Performance testing date	1 July 2015
Security price at grant date	$1.51
Exercise price	$nil
Expected life	2.5 years
Volatility	25%
Risk-free interest rate (per annum)	2.74%
Dividend/distributionyield(per annum)	5.50%

e) the ltI component: how was reward linked to performance this year?

LTI vested in FY13

The LTP grants with a performance period ended 30 June 2013 did not vest as the Group failed to reach the relative TSR performance threshold over the last three years.

performance threshold over	the last three years.
	Rightsgranted in FY11 Rights vested in FY13 Rights forfeited in FY13 % of total Value % of total Value Number Number grant ($)1 Number grant ($)1 88,500 — — — 88,500 100 56,640 452,200 — — — 452,200 100 289,408 380,400 — — — 380,400 100 243,456 2,189,600 — — — 2,189,600 100 1,401,344 179,500 — — — 179,500 100 114,880
senior executives Andrew Butler Brett Draffen GaryFlowers
former senior executives Nicholas Collishaw Justin Mitchell

1) Value of the grant has been estimated based on the fair value as calculated at the time of the grant.

The actual LTI vested presented in the previous table is consistent with the fact that Mirvac’s relative TSR performance was at the 44th percentile relative to the comparison group over the three year performance period. As a result, none of the performance rights vested.

f) Cash retention payments

In order to ensure continuity during the Managing Director transition, the HRC approved the following one-off cash retention payments:

retention payments:
Senior Executives	Amount	Payment date
Andrew Butler	$309,000	1 December 2013
Brett Draffen	$450,000	14 August 2013
GaryFlowers	$292,500	14 August 2013

g) termination payments

Cash payments

There are two types of cash payments Senior Executives may receive on termination: statutory entitlements , such as accrued annual leave and long service leave; and contractual entitlements which include severance payments, and payment in lieu of notice. The contractual severance entitlements for each of the Senior Executives are limited to 12 months fixed remuneration, consistent with the maximum amount permissible without requiring securityholder approval. The following table summarises the contractual severance entitlements for each of the executives who have ceased or will cease employment.

Senior Executives	Date employment ceased/ceasing	Severance entitlement
Nicholas Collishaw	31 October 2012	6 months
Justin Mitchell	1 October 2012	12 months
Gregory Dyer	5 September 2013	9 months
Bevan Towning	20 September 2013	9 months
GaryFlowers	1 October 2013	9 months

mirvac group annual report 2013

Directors’ report

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD

A breakdown of the cash payments received by the two Senior Executives who ceased employment during FY13 is presented in the table below. All payments were consistent with the contractual entitlements disclosed in the FY12 remuneration report.

Component	Nicholas Collishaw	Justin Mitchell
Annual leave	$236,429	$102,273
Longservice leave	$294,865	$118,087
total statutoryentitlements	$531,294	$220,360
Payment in lieu of notice	$438,462	—
Severancepay	$750,000	$687,580
total contractual entitlements	$1,188,462	$687,580
total cashpayment	$1,719,756	$907,940

A breakdown of the severance payments to be received by the three Senior Executives who will cease employment during FY14 is presented in the following table. In each case, the payments will be made in FY14 with all payments being consistent with the executive’s contractual entitlements. The statutory entitlements are not included as they were not known at the time of writing this report.

of writing this report.
Component	GregoryDyer	Bevan Towning	GaryFlowers
Payment in lieu of notice	—	—	—
Severancepay	$525,000	$450,000	$438,750
total contractual entitlements	$525,000	$450,000	$438,750

Treatment of unvested equity awards

The treatment of the unvested performance rights held by the Senior Executives who ceased employment during FY13 is presented in the table below. Any performance rights retained after ceasing employment remain subject to the original performance period and conditions.

performance period and conditions.
Grantyear Vestingdate	Nicholas Collishaw Justin Mitchell
	Number Number Number Number granted retained granted retained
FY11 1 Jul 13 2,189,600 — 179,500 119,666 FY12 1 Jul 14 1,403,900 — 88,429 29,476

1) Performance rights retained from the FY11 LTP award subsequently lapsed due to a failure to meet the performance conditions.

The treatment of the unvested performance rights held by the three Senior Executives who will cease employment during FY14 is presented in the table below. Any performance rights retained after ceasing employment remain subject to the original performance period and conditions.

performance period and conditions.
Grantyear Vestingdate	GregoryDyer Bevan Towning GaryFlowers
	Number Number Number Number Number Number granted retained granted retained granted retained
FY12 1 Jul 14 FY13 1 Jul 15	— — — — 362,990 241,993 446,000 — 454,921 — 374,067 223,758

Treatment of ERP loans

The outstanding ERP loan balance held by the Senior Executives who ceased or will cease employment is repayable within 12 months of their departure (see section 8 for further information on the legacy ERP loans).

Senior Executives	Outstandingbalance on cessation	Repayment date
Nicholas Collishaw	$1,000,000	31 October 2013
Justin Mitchell	$1,300,000	1 October 2013
GaryFlowers	$650,0001	1 October 2014

1) Outstanding balance reduced from $775,000 to $650,000 on 1 July 2013.

Post-severance arrangements

No post-severance arrangements have been entered into with any of the departing Senior Executives.

24 mirvac group annual report 2013

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD

h) total remuneration for senior executives

The table below shows the total remuneration for Senior Executives for FY13, as well as comparative figures for FY12. The information in the table below has been calculated in accordance with the applicable Accounting Standards and, accordingly, it differs from the information in the table in section 2. The main difference between the two tables is that the table in section 2 includes an LTI value based on the awards that actually vested and delivered value to Senior Executives, whereas, in accordance with the Accounting Standards, the table below includes an apportioned accounting value for all unvested LTI grants during the year (some of which remain subject to satisfaction of performance and service conditions and may not ultimately vest).

Year	Post- employ- Short term benefts ment Cash Non- Other Super salary cash Employee short term contri- and fees1 STI2benefts3 loans4benefts5butions $ $ $ $ $ $	Other Termin- Total long term ation remuner- Securitybasedpayment benefts benefts ation Long Cash service Value of Value of settled leave options6 rights6payments7(“LSL”)8 $ $ $ $ $ $
executive Director Susan Lloyd-Hurwitz2013	958,628 724,035 19,153 — 576,660 12,353	— 272,004 — 16,056 — 2,578,889
other senior executives Andrew Butler 2013 2012 Brett Draffen 2013 2012 Gregory Dyer 2013 Gary Flowers 2013 2012 Jonathan Hannam2013 Bevan Towning 2013	549,577 401,929 51,953 650,071 — 16,470 535,540 308,876 66,685 604,279 — 15,775 818,263 549,423 65,267 943,311 — 16,470 884,247 464,800 99,978 810,080 — 15,775 534,690 — 32,071 — — 16,470 546,396 319,410 22,134 290,723 — 16,470 564,672 433,790 68,453 266,158 — 15,775 250,384 141,206 — — 3,851 8,235 572,478 163,800 — — — 16,470	— 21,067 — 8,727 — 1,699,794 — 21,067 — 8,918 — 1,561,140 — 339,840 — 14,403 — 2,746,977 — 256,510 — 15,231 — 2,546,621 — 106,668 — 8,899 — 698,798 — 247,449 — 9,106 — 1,451,688 — 191,967 — 8,962 — 1,549,777 — 47,452 — 4,362 — 455,490 — 108,802 — 9,725 — 871,275
former senior executives Nicholas Collishaw 2013 494,510 — 1,280 895,508 — 8,235 2012 1,484,225 1,080,000 — 773,283 — 15,775 Justin Mitchell 2013 173,359 — 995 650,071 — 4,340 2012 684,226 470,400 — 604,279 — 15,775		— (128,691) (234,000) — 1,188,46292,225,304 — 1,048,352 187,200 24,735 — 4,613,570 — 32,603 — — 687,580101,548,948 — 50,413 — 11,403 — 1,836,496
total 2013 4,898,285 2,299,803 192,853 3,429,684 580,511 115,513 2012 4,152,910 2,757,866 235,116 3,058,079 — 78,875		— 1,047,194 (234,000) 71,278 1,876,042 14,277,163 — 1,568,309 187,200 69,249 — 12,107,604

1) Cash salary and fees includes accrued annual leave paid out as part of salary and salary-sacrifice amounts where applicable.
2) STI payments relate to amounts accrued for the relevant year.
3) Non-cash benefits include salary-sacrificed benefits and related FBT where applicable.
4) Employee loans are interest free and provided for personal use (excludes EIS loans). Disclosed value includes amounts forgiven during the year, imputed interest and related FBT.
5) Includes relocation expenses and a payment of $530,000 as part compensation for the STI and LTI entitlements the CEO & Managing Director forfeited on resigning from her previous employer.
6) Valuation of options and rights is conducted by an external accounting firm. Negative amounts (if any) relate to forfeiture of some or all participation in equity plans due to terminations. Refer to note 34(f) to the financial statements for details.
7) Represents security based payment expense during FY13 in relation to the potential future one-off cash payment linked to Mirvac’s TSR performance offered to the Managing Director following his acceptance of a reduction in fixed remuneration.
8) LSL relates to amounts accrued during the year.
9) Represents payment of 6 months severance, and 76 days payment in lieu of notice, consistent with contractual entitlements.
10) Represents payment of 12 months fixed remuneration, consistent with contractual entitlements.

The following table indicates the proportion of each Senior Executive’s FY13 total remuneration that was performance related:

Total remuneration 2013 $	Remuneration related toperformance Cash Performance Value of Value Value settled related options STI of options of rights payments remuneration granted as $ $ $ $ % of total % of total
executive Director Susan Lloyd-Hurwitz 2,578,889	724,035 — 272,004 — 39 —
other senior executives Andrew Butler 1,699,794 Brett Draffen 2,746,977 Gregory Dyer 698,798 Gary Flowers 1,451,688 Jonathan Hannam 455,490 Bevan Towning 871,275	401,929 — 21,067 — 25 — 549,423 — 339,840 — 32 — — — 106,668 — 15 — 319,410 — 247,449 — 39 — 141,206 — 47,452 — 41 — 163,800 — 108,802 — 31 —
former senior executives Nicholas Collishaw 2,225,304 Justin Mitchell 1,548,948	— — (128,691) (234,000) (16) — — — 32,603 — 2 —
total 14,277,163	2,299,803 — 1,047,194 (234,000) 22 —

mirvac group annual report 2013

Directors’ report

5 fIVe yeAR snApsHot of busIness AnD eXeCutIVe ReMuneRAtIon outCoMes

Over the last five years, Mirvac has moved towards a model which more closely links executive remuneration outcomes with Group performance.

The table below provides summary information on the Group’s earnings and securityholders’ wealth for the five years to 30 June 2013:

30 June 2013:
	fy13	FY12	FY11	FY10	FY09
Operating proft ($m)	377.6	366.3	358.5	275.3	200.8
Proft/(loss) attributable to the stapled securityholders of Mirvac ($m)	139.9	416.1	182.3	234.7	(1,078.1)
Distributions paid ($m)	225.9	280.2	270.2	179.4	194.8
Security price at 30 June ($)	1.61	1.28	1.25	1.32	1.08
Operating EPS – diluted (cents)	10.9	10.7	10.5	9.3	13.4
StatutoryEPS – basic(cents)	4.1	12.2	5.4	8.0	(65.2)

a) How the group’s performance has translated into stI awards

Mirvac only pays STI awards when operating earnings are strong. In FY09, the Group did not meet its operating earnings gateway which resulted in no STI award being made (as can be seen in the following graph). The graph also shows that, in FY11, following the formal introduction of the balanced scorecard approach, the Group STI score was lower than target. This was because, notwithstanding solid operating earnings, the Group did not meet the thresholds for ROA and customer and investor satisfaction. Similarly, while operating earnings increased from FY12 to FY13, the STI pool decreased due to a failure to meet the ROA hurdle.

Operating profit vs Group STI score

b) How the group’s performance has translated into ltI awards

The vesting of the performance rights with performance period ended 30 June 2013 was linked to Mirvac’s TSR performance relative to the comparison group of listed property entities. Mirvac achieved a TSR of 48 per cent over the three year performance period, which positioned it at the 44th percentile relative to the entities in the comparison group. As a result, none of the performance rights vested.

Mirvac TSR (1 July 2010 – 30 June 2013)

==> picture [501 x 213] intentionally omitted <==

----- Start of picture text -----

400 160 80%
60%
300 120
40%
200 80
20%
100 40
0%
0 0 (20%)
FY09 FY10 FY11 FY12 FY13 30 Jun 10 30 Jun 11 30 Jun 12 30 Jun 13
Operating profit Group STI score (% of target) MGR 25th Percentile 50th Percentile 75th Percentile
Operating profit ($m)
Average STI award (% of STI target)
----- End of picture text -----

A summary of vesting under Mirvac’s performance-hurdled equity grants made under the LTP for the last three years is shown in the following table:

shown in the following table:
Grantyear	Performance hurdle	Test date	Vested %	Lapsed %
FY09 LTP	TSR	30 June 2011	—	100
FY10 LTP	TSR and ROE	30 June 2012	38	62
FY11 LTP	TSR	30 June 2013	—	100

26 mirvac group annual report 2013

6 seRVICe AgReeMents foR senIoR eXeCutIVes

Mirvac’s engagement arrangements with its Senior Executives are set out in formal service agreements.

a) service agreements

Each Senior Executive has a formal contract, known as a service agreement. These agreements are of a continuing nature and have no set term of service (subject to the termination provisions). Each agreement covers:

– general duties;

– remuneration and other benefits; and

– termination of employment and termination benefits.

The termination entitlements for each Senior Executive are limited to 12 months fixed remuneration, consistent with the maximum amount permissible without requiring securityholder approval. In cases of serious and wilful misconduct, or in certain other circumstances, Mirvac can terminate an executive’s employment without notice or payment in lieu of notice.

b) summary of key terms

The key terms of the service agreements for the CEO & Managing Director and other Senior Executives are summarised below:

Contract term	Noticeperiod Termination Employee Group payment1 6 months 6 months 6 months 3 months 3 months 12 months 3 months 3 months 9 months 3 months 3 months 9 months 3 months 3 months 9 months 3 months 3 months 9 months 3 months 3 months 9 months 6 months 6 months 6 months 3 months 3 months 12 months
senior executives Susan Lloyd-Hurwitz No fxed term Andrew Butler No fxed term Brett Draffen No fxed term Greg Dyer No fxed term Gary Flowers No fxed term Jonathan Hannam No fxed term Bevan Towning No fxed term
former senior executives Nicholas Collishaw No fxed term Justin Mitchell No fxed term

1) Payable if Mirvac terminates employee with notice, for reasons other than unsatisfactory performance.

c) Ceo & Managing Director transition arrangements

As part compensation for the STI and LTI entitlements the CEO & Managing Director forfeited on resigning from her previous employer, a sign on payment of $530,000 was paid on commencement of employment with Mirvac, with a further amount of $87,500 payable on 1 July 2014. Under the terms of her employment contract, Mirvac also agreed to reimburse Susan Lloyd-Hurwitz for reasonable costs in connection with her relocation from London to Sydney.

7 non-eXeCutIVe DIReCtoRs’ ReMuneRAtIon

In contrast to Senior Executives remuneration, the remuneration of Mirvac’s Non-Executive Directors is not linked with performance. This is consistent with Non-Executive Directors being responsible for objective and independent oversight of the Group.

a) Remuneration strategy and components

Mirvac Limited’s Constitution provides that Non-Executive Directors may determine their own remuneration but the total amount provided to all Directors (not including the Managing Director and any other Executive Directors) must not exceed the sum agreed by securityholders at a general meeting. The maximum aggregate remuneration of $1.95m per annum was approved by securityholders at the 2009 AGM.

Non-Executive Directors have not received any fees other than those described in this section, and do not receive bonuses or any other incentive payments or retirement benefits. Consistent with this, the Mirvac Limited Chairman did not receive any additional fees for the short period he acted as Executive Chairman in FY13 during the transition in Managing Directors.

The Non-Executive Directors are reimbursed for expenses properly incurred in performing their duties as a Director of Mirvac.

The schedule of fees for Non-Executive Directors during FY13 is set out in the table below and fees are annual fees unless otherwise stated:

otherwise stated:
Board/Committee	$
Mirvac Limited and Mirvac Funds Limited Board Chairman	465,000
Mirvac Limited and Mirvac Funds Limited Board member	185,000
ARCC Chair	36,000
ARCC member	18,000
HRC Chair	30,000
HRC member	10,000
Due Diligence Committee(per diem fee)	4,000

mirvac group annual report 2013

Directors’ report

7 non-eXeCutIVe DIReCtoRs’ ReMuneRAtIon / ContInueD

b) total remuneration for non-executive Directors

b) total remuneration for non-executive Directors
Non-Executive Directors Year	Short term benefts Post-employment1 Cash salary and fees Super contributions Total $ $ $ 476,530 16,470 493,000 464,225 15,775 480,000 178,899 16,101 195,000 75,219 6,770 81,989 216,530 16,470 233,000 205,873 15,775 221,648 214,530 16,470 231,000 219,225 35,775 255,000 228,530 16,470 245,000 184,225 15,775 200,000 178,532 24,468 203,000 110,729 9,672 120,401 186,530 16,470 203,000 184,225 15,775 200,000 1,680,081 122,919 1,803,000 1,443,721 115,317 1,559,038
James MacKenzie 2013 2012 Marina Darling 2013 2012 Peter Hawkins 2013 2012 James Millar AM 2013 2012 John Mulcahy2 2013 2012 John Peters 2013 2012 Elana Rubin 2013 2012
total 2013 2012

1) Relates to payments required under superannuation legislation.

2) John Mulcahy received an additional $32,000 in FY13 for his service on the Mirvac Capital Partners Limited and Mirvac Funds Management Limited boards.

c) non-executive Director Minimum securityholding guidelines

In order to further strengthen the alignment of interests between Non-Executive Directors and securityholders, FY12 saw the introduction of Minimum Securityholding Guidelines. Under the Guidelines, each Non-Executive Director will be required to hold a minimum securityholding of 25,000 Mirvac stapled securities. The securities can be acquired over a two year period.

	Date securityholding	Number of securities	Minimum
Non-Executive Directors	to be attained	held as at 30 June 2013	SecurityholdingGuideline
James MacKenzie	July 2014	138,789	25,000
Marina Darling	July 2014	38,875	25,000
Peter Hawkins	July 2014	596,117	25,000
James Millar AM	July 2014	40,714	25,000
John Mulcahy	July 2014	25,000	25,000
John Peters	July 2014	30,000	25,000
Elana Rubin	July2014	25,917	25,000

8 ADDItIonAl InfoRMAtIon

a) previous ltI plans closed for new grants

Mirvac’s LTI plans have changed over time to align with market practice, while continuing to support Mirvac’s business strategy. The following table sets out Mirvac’s historic LTI plans that are no longer used for new LTI grants (that is, all LTI plans other than the LTP). Further detail of each legacy plan is also provided below.

plan	purpose	Detail
i) Executive Retention Plan (“ERP”)	Interest-free loan program designed	No further awards will be made under
	to assist in retaining employees	this program, consistent with Mirvac’s
	critical to Mirvac’s ongoing success.	intention to eliminate the use of loan
		plans aspart of employee reward.
ii) Employee Incentive Scheme (“EIS”)	Designed to share the benefts of the	Closed to new participants as no
	Group’s performance through the	longer considered to be consistent with
	provision of loans to purchase Mirvac	market practice.
	stapled securities.
iii) Long Term Incentive Plan (“LTIP”)	Loan which was applied to fund the	Closed to new participants. Two
	acquisition of Mirvac’s securities at	performance conditions for vesting:
	market value.	Relative TSR and absolute EPSgrowth.
iv) Executive Incentive Program (“EIP”)	Interest-free loan program designed	Closed to new participants as no
	to assist in retaining employees	longer considered to be consistent with
	critical to Mirvac’s ongoingsuccess.	marketpractice.

28 mirvac group annual report 2013

8 ADDItIonAl InfoRMAtIon / ContInueD

Further detail of these plans follows.

i) ERP

A small number of executives were invited to participate in the ERP. While the loans under this program were offered during FY09, some of the loan amounts were drawn down in FY10. The amounts of the loans range from $500,000 to $2,000,000 and must be secured against property or an unconditional bank guarantee. A progressively increasing forgiveness schedule allows for no more than 50 per cent of the total loan balance in total to be forgiven. The forgiveness schedule for the former Managing Director and other executives is set out below:

for no more than 50 per cent of the total loan balance in total to Director and other executives is set out below:	be forgiven. The forgiveness schedule for the former Managin
Anniversary	Percentage of loan forgiven
	Former ManagingDirector Other executives
1st 2nd 3rd 4th 5th	5 5 10 7.5 15 10 20 12.5 N/A 15
Maximum amount to be forgiven	50 50

The repayment date of the loan is the earlier of the following:

– 12 months after the participant ceases to be employed by Mirvac; or

– 12 months after the fifth anniversary of the loan.

The annual retention value to the individual includes amounts forgiven during the year, imputed interest and related FBT. This value is offset against the value of the individual’s LTI grant in each year until the retention program is complete. As such, any retention grant replaces a portion of the LTI award. On termination, no further amounts are forgiven.

The following table presents the amounts forgiven during FY13 for participating executives, together with the outstanding balance at the end of the year:

balance at the end of the year:
	Loan balance	Amount forgiven	Loan balance	Annual
Senior	1 July 2012 $	during year $	30 June 2013 $	retention value $
executives
Andrew Butler	1,550,000	250,000	1,300,000	650,071
Brett Draffen	1,550,000	250,000	1,300,000	565,079
GaryFlowers1	875,000	100,000	775,000	290,723
former executives
Nicholas Collishaw	1,400,000	400,000	1,000,0002	895,508
Justin Mitchell	1,550,000	250,000	1,300,0003	650,071

1) Forgiveness date for Gary Flowers is 1 July. Therefore, his loan balance reduced from $875,000 to $775,000 on 1 July 2012.

2) Outstanding loan balance is payable by 31 October 2013, being 12 months after Nicholas Collishaw ceased employment with Mirvac.

3) Outstanding loan balance is payable by 1 October 2013, being 12 months after Justin Mitchell ceased employment with Mirvac.

ii) EIS

Until 2006, Mirvac’s long term variable remuneration scheme for employees was the EIS. Open to all permanent employees, allocations were made annually, were unrestricted and fully vested on allotment. Existing arrangements remain in place until all current loans are repaid.

The loans were repayable via distributions received on the securities or upon their sale. If an employee resigns or is dismissed, the outstanding loan balance must be paid when employment ceases. In the event of redundancy, retirement, total and permanent disablement or death, the employee has 12 months after employment ceases in which to repay the loan. If the loan value is greater than the value of the securities when the loan balance is due, the remaining balance is written off and the securities are forfeited.

The EIS is closed to new participants and will be run down until all loans under it are extinguished.

iii) LTIP

The LTIP was introduced in 2006 and approved by securityholders at the 2006 AGM. At this time, loan-funded incentive plans were common for entities with stapled securities due to the prevailing tax rules. Participation in the plan was open to the Managing Director, other Executive Directors, other executives and eligible employees.

Participants were offered an interest-free loan which was applied to fund the acquisition of Mirvac’s stapled securities at market value.

The term of the loan is eight years. Any loan balance outstanding at the end of the eighth year must be repaid at that time. The loan is reduced annually by applying the post-tax amounts of any distributions paid by Mirvac to the outstanding principal. The loans are interest free and non-recourse over their term.

Two performance conditions had to be met before the securities vested in full: relative TSR and EPS growth. The satisfaction of each condition was given an equal weighting in terms of the total number of securities that may vest (that is, 50 per cent of the total securities held by a participant was subject to each performance condition).

On vesting, 53.5 per cent of the original loan to fund the purchase of the vested securities was waived. The remaining balance of the loan will continue to be reduced by post-tax distributions until either the loan has been fully repaid or the eight year term expires, whichever occurs first. If a participant terminates their employment, any outstanding loans must be repaid in full immediately or the underlying securities will be forfeited.

The LTIP is closed to new participants and will be run down until all loans under it are extinguished. At 30 June 2013, 307,831 (2012: 498,074) securities remain on issue under the 2006 plan.

mirvac group annual report 2013

Directors’ report

8 ADDItIonAl InfoRMAtIon / ContInueD

iv) EIP

The final loans amounts under the EIP were drawn down during FY08. The amounts of the loans ranged from $50,000 to $800,000 with Mirvac holding security over the assets purchased with the loan proceeds. A progressively increasing forgiveness schedule applied which allowed the total loan balance to be forgiven if the employee remained employed on the final forgiveness date.

The Chief Executive Officer – Development was the only remaining participant in the scheme during FY13. His outstanding balance of $200,000 was forgiven during the year, meaning that the loan is now completed.

b) Movements in performance rights and options holdings of the senior executives

Details of the movement in the number and value of performance rights held by Senior Executives during the year are set out below:

			Value at			Value of		Value of
	Grant date	Number of rights granted	grant date $	Vesting date	Number of rights vested	rights vested $	Number of rights lapsed1	rights lapsed $2
senior executives
Susan Lloyd-Hurwitz	17 Dec 12	1,137,300	816,013	1 Jul 15	—	—	—	—
Andrew Butler	17 Dec 10	88,500	56,640	1 Jul 13	—	—	88,500	56,640
	12 Dec 11	10,334	6,562	1 Jul 14	—	—	—	—
	17 Dec 12	—	—	1 Jul 15	—	—	—	—
total		98,834	63,202		—	—	88,500	56,640
Brett Draffen	17 Dec 10	452,200	289,408	1 Jul 13	—	—	452,200	289,408
	12 Dec 11	596,347	378,680	1 Jul 14	—	—	—	—
	17 Dec 12	489,800	351,432	1 Jul 15	—	—	—	—
total		1,538,347	1,019,520		—	—	452,200	289,408
GregoryDyer	17 Dec 12	446,000	320,005	1 Jul 15	—	—	—	—
Gary Flowers	17 Dec 10	380,400	243,456	1 Jul 13	—	—	380,400	243,456
	12 Dec 11	362,990	230,499	1 Jul 14	—	—	—	—
	17 Dec 12	374,067	268,393	1 Jul 15	—	—	—	—
total		1,117,457	742,348		—	—	380,400	243,456
Jonathan Hannam	17 Dec 12	198,407	142,357	1 Jul 15	—	—	—	—
Bevan Towning	17 Dec 12	454,921	326,405	1 Jul 15	—	—	—	—
former senior executives
Nicholas Collishaw3	17 Dec 10	2,189,600	1,401,344	1 Jul 13	—	—	2,189,600	1,401,344
	12 Dec 11	1,403,900	891,477	1 Jul 14	—	—	1,403,900	891,477
	17 Dec 12	—	—	1 Jul 15	—	—	—	—
total		3,593,500	2,292,821		—	—	3,593,500	2,292,821
Justin Mitchell4	17 Dec 10	179,500	114,880	1 Jul 13	—	—	179,500	114,880
	12 Dec 11	88,429	56,152	1 Jul 14	—	—	58,953	37,435
	17 Dec 12	—	—	1 Jul 15	—	—	—	—
total		267,929	171,032		—	—	238,453	152,315

1) Includes performance rights granted on 17 December 2010 that lapsed in August 2013 due to a failure to fully satisfy performance conditions.

2) The calculation of the value of performance rights lapsed used the fair value as determined at the time of grant.

3) All rights held by Nicholas Collishaw lapsed on termination.

4) Justin Mitchell retained a pro-rated number of performance rights on ceasing employment, with retained rights remaining subject to the original performance period and conditions.

Details of the movement in the number and value of options held by Senior Executives during the year are set out below:

			Value at		Value of		Value of
	Grant date	Number options granted	grant date $	Number options vested	options vested Lapse $ date	Number options lapsed	options lapsed $
senior executives
Brett Draffen	14 Dec 07	64,570	49,719	—	— 14 Dec 12	64,570	49,719
former executives
Nicholas Collishaw	14 Dec 07	103,310	79,549	—	— 14 Dec 12	103,310	79,549
Justin Mitchell	14 Dec 07	34,437	26,516	—	— 14 Dec 12	34,437	26,516

The relevant interests held in stapled securities of Mirvac by the Senior Executives are detailed in note 33 to the financial statements.

30 mirvac group annual report 2013

8 ADDItIonAl InfoRMAtIon / ContInueD

c) equity instruments held by Directors

Particulars of Directors’ interests in the stapled securities of Mirvac or a related body corporate, are as follows:

		Interests in securities of related
	Mirvac stapled securities	entities or related bodycorporate
Directors
James MacKenzie (direct)	138,789	—
– Mirvac Industrial Trust – units (direct)	—	122,643
– Mirvac Development Fund – Seascapes – units(indirect)	—	300,000
Susan Lloyd-Hurwitz (direct)
– Performance rights	1,137,300	—
Marina Darling (direct)	38,875	—
Peter Hawkins(direct and indirect)	596,117	—
James Millar AM(indirect)	40,714	—
John Mulcahy (indirect)	25,000	—
John Peters(indirect)	30,000	—
Elana Rubin(direct)	25,917	—
former Director
Gregory Dyer (direct)
– Performance rights(lapsingin September 2013)	446,000	—

During FY09, Mirvac introduced a security acquisition plan for Non-Executive Directors whereby they could sacrifice a portion of their Directors’ fees each month and use them to acquire additional Mirvac stapled securities. No Non-Executive Directors acquired securities under this plan during FY13. However, securities purchased in previous years continue to be held in the plan.

d) other directorships

Details of all directorships of other listed companies held by each Director in the three years immediately before 30 June 2013 are as follows:

are as follows:
Directors	Company	Date appointed	Date ceased
James MacKenzie	Gloucester Coal Limited
	(merged with Yancoal effective 27 June 2012)	June 2009	June 2012
	Yancoal Australia Limited	June 2012	Current
	Pacifc Brands Limited	May2008	May2013
Marina Darling	Argo Investments Limited	July 1999	February 2012
	Southern Cross Media GroupLimited	September 2011	Current
Peter Hawkins	Visa Inc.	October 2008	January 2011
	Westpac BankingCorporation	December 2008	Current
James Millar AM	Jetset Travelworld Limited Fantastic Holdings Limited	September 2010 May 2012	Current Current
	Fairfax Media Limited	July2012	Current
John Mulcahy	ALS Limited (formerly Campbell Brothers Limited)	February 2012	Current
	Coffey International Limited	September 2009	Current
	GWA GroupLimited	November 2010	Current
John Peters	Nil
Elana Rubin	TAL Limited(formerlyTower Australia GroupLimited)	November 2007	Delisted May2011

e) options over unissued securities

During FY13, no options over Mirvac stapled securities were issued to executives under the LTIP. Options over 299,169 (2012: 391,076) Mirvac stapled securities were forfeited during the year due to either employees leaving the Group or options reaching the expiration date. As a result of these movements, there are no remaining options held over Mirvac stapled securities under the LTP plan. No securities in the Group or any of its controlled entities were issued during or since FY13 as a result of the exercise of an option over unissued securities. Dilution that may result from securities being issued under Mirvac’s LTI plans is capped at the limit set out in the Australian Securities and Investments Commission’s (“ASIC”) Class Order 03/184, which provides that the number of unissued securities under those plans must not exceed five per cent of the total number of securities of that class as at the time of the relevant offer.

mirvac group annual report 2013

Directors’ report

8 ADDItIonAl InfoRMAtIon / ContInueD

f) other benefits

Fees paid by Mirvac for Directors’ and Officers’ liability insurance are not itemised for each Director as their disclosure would breach the terms of the policy.

Executives and Directors (including Non-Executive Directors) are entitled to participate in arrangements available to directly purchase Mirvac developed residential property, on the same terms and conditions as for other employees within the Group.

g) loans to elt

Information on the loans to members of the ELT who are classified as KMP is disclosed in note 33 to the financial statements. Loans are not provided to Non-Executive Directors.

Non-audit services

Mirvac may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Group are relevant. Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided during the year ended 30 June 2013 are set out in note 37 to the financial statements.

The Board has considered its position and, in accordance with the advice received from the ARCC, is satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The Directors are satisfied that the provision of non-audit services by the auditor, as set out in note 37 to the financial statements, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

Insurance of officers

During the year, Mirvac paid a premium for an insurance policy insuring any past, present or future Director, secretary, executive officer or employee of the Group against certain liabilities. In accordance with commercial practice, the insurance policy prohibits disclosure of the nature of the liabilities insured against and the amount of the premium.

Auditor’s independence declaration

A copy of the auditor’s independence declaration required under section 307C of the Corporations Act 2001 is set out on page 33.

Auditor

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001 .

Rounding of amounts

Mirvac is an entity of the kind referred to in Class Order 98/0100 issued by ASIC, relating to the rounding off of amounts in the financial statements. Amounts in the financial statements have been rounded off to the nearest tenth of a million (“m”) dollars in accordance with that class order.

This statement is made in accordance with a resolution of the Directors.

==> picture [172 x 43] intentionally omitted <==

susan lloyd-Hurwitz Director

Sydney 23 August 2013

all non-audit services have been reviewed by the ARCC to ensure they do not affect the impartiality and objectivity of the auditor; and
none of the services undermines the general principles relating to auditor independence as set out in Accounting Professional & Ethical Standards (“APES”) 110 Code of Ethics for Professional Accountants , including reviewing or auditing the auditor’s own work, acting in a management or a decision-making capacity for the Group, acting as advocate for the Group or jointly sharing economic risk and rewards.

Significant changes in the state of affairs

Details of the state of affairs of the Group are disclosed within the operating and financial review section.

Matters subsequent to the end of the year

On 3 July 2013, the Group completed the extension and increase of its unsecured syndicated bank facility. Refer to note 20 to the financial statements for further details.

No matter or circumstance has arisen since 30 June 2013 that has significantly affected, or may significantly affect:

– the Group’s operations in future years; or

the results of those operations in future years; or
the Group’s state of affairs in future years.

32 mirvac group annual report 2013

AuDitor’s inDepenDence DeclArAtion

==> picture [114 x 87] intentionally omitted <==

As lead auditor for the audit of Mirvac Limited for the year ended 30 June 2013, I declare that to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Mirvac Limited and the entities it controlled during the period.

==> picture [116 x 49] intentionally omitted <==

Matthew lunn Partner

Sydney 23 August 2013

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 DX 77 Sydney, Australia T +61 2 8266 0000, F +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation

mirvac group annual report 2013

corporAte governAnce stAtement

1 IntRoDuCtIon

This section of the Annual Report outlines Mirvac’s governance framework.

Mirvac is committed to ensuring that its systems, procedures and practices reflect a high standard of corporate governance. The Directors believe that Mirvac’s corporate governance framework is critical in maintaining high standards of corporate governance and fostering a culture that values ethical behaviour, integrity and respect to protect securityholders’ and other stakeholders’ interests at all times.

During the year ended 30 June 2013, Mirvac’s corporate governance framework was consistent with the Corporate Governance Principles and Recommendations released by the ASX Corporate Governance Council in August 2007 (“Recommendations”) which were updated in 2010. The table on pages 42 and 43 indicates where specific Recommendations are dealt with in this corporate governance statement. In accordance with the Recommendations, copies of the Group policies referred to in this corporate governance statement are posted to Mirvac’s website: www.mirvac.com/corporate-governance.

2 pRInCIple 1: lAy solID founDAtIons foR MAnAgeMent AnD oVeRsIgHt

a) Responsibilities of the board and management

i) Primary objective of Board

The primary objective of the Board is to build long term securityholder value with due regard to other stakeholder interests. The Board does this by setting strategic direction and context, such as Mirvac’s mission, vision and values, and focusing on issues critical for its successful execution such as personnel, performance and the management of risk. The Board is also responsible for overseeing Mirvac’s corporate governance framework.

ii) Board Charter

In order to promote high standards of corporate governance and to clarify the role and responsibilities of the Board, the Board has formalised its roles and responsibilities into a Board Charter. The Board Charter sets out the Board’s accountabilities and responsibilities, including strategy and planning, personnel, remuneration, capital management and financial reporting, performance monitoring, risk management, audit and compliance, progress in relation to the Group’s diversity objectives and compliance with its Diversity Policy and Board processes and policies. The Board Charter was reviewed and updated in August 2011.

Non-Executive Directors spend approximately 25 to 30 days each year on Board activities and business, including attendance at Board meetings, Board committee meetings, strategy and budget meetings with management, visits to interstate sites and meetings with Mirvac stakeholders. During the year ended 30 June 2013, the Board visited Mirvac offices and sites in Brisbane, Melbourne and Sydney.

The Non-Executive Directors meet regularly without the presence of management, to discuss the operation of the Board and a range of other matters. Relevant matters arising from these meetings are shared with the full Board.

The CEO & Managing Director provides open and detailed reports on Mirvac’s performance and related matters to the Board at each Board meeting. The Finance Director and the Group Financial Controller also provide open and comprehensive reports on Mirvac’s financial performance and other relevant matters such as Mirvac’s debt position and the status of Mirvac’s financing facilities. The Board monitors the decisions and actions of the CEO & Managing Director and the performance of the Group to gain assurance that progress is being made towards attainment of the approved strategies and plans. The Board also monitors the performance of the Group through its Board committees.

A copy of the Board Charter is available on the Group’s website: www.mirvac.com/corporate-governance.

iii) Delegation to Managing Director and senior executives The Board Charter delegates responsibility for the day-to-day management and administration of the Group to the CEO & Managing Director, assisted by the ELT. The CEO & Managing Director and senior executives of the Group operate in accordance with Board-approved policies and the Board Delegations of Authority to Management.

iv) ELT

The ELT was constituted to assist the CEO & Managing Director in the day-to-day management and administration of Mirvac. The ELT Charter sets out the ELT’s responsibilities and delegated authority from the Board via the CEO & Managing Director. The terms of the ELT Charter specify the membership of the ELT, which at 30 June 2013 comprised the CEO & Managing Director, the Chief Executive Officer Development and Group Strategy, Chief Executive Officer – Investment, Group Executive – Business Initiatives, General Counsel and Company Secretary, Group Executive – External Affairs, Group Executive – Capital and Group Executive – Services.

All senior executives have their position descriptions, roles and responsibilities set out in writing, either in their employment contract or as part of the performance management system.

v) Evaluation of performance of senior executives The performance of senior executives is reviewed on an annual cycle, with an interim six monthly review. This is part of Mirvac’s performance management system, which is in place for all Mirvac employees. The performance management system comprises a series of key performance indicators (“KPIs”) which are aligned to Mirvac’s strategic objectives. Performance is measured against the agreed KPIs and against consistency of senior executives’ behaviour against the agreed Mirvac corporate values.

On an annual basis, the Chair and the Board review the performance of the CEO & Managing Director, following a review by the HRC. The CEO & Managing Director is assessed against qualitative and quantitative criteria, including profit performance of Mirvac and achievement of other measures, including safety performance and alignment of Group performance to strategic objectives. In turn, the CEO & Managing Director reviews the performance of her direct reports against their agreed KPIs, which are reviewed by the HRC.

Further information on performance evaluation and remuneration (including assessment criteria) is set out in the remuneration report starting on page 10.

34 mirvac group annual report 2013

3 pRInCIple 2: stRuCtuRe tHe boARD to ADD VAlue

a) structure of the board

Together, the Board members have a broad range of financial and other skills, expertise and experience required to effectively oversee Mirvac’s business. The Board comprises seven Non-Executive Directors and one Executive Director (being the CEO & Managing Director). The Chair of the Board, James MacKenzie, is an independent Non-Executive Director. The skills, experience and expertise of each Director are set out on pages 08 to 09 in the Directors’ report. The Board determines its size and composition subject to the limits imposed by Mirvac’s Constitution, which provide that there be a minimum of three and a maximum of ten Directors.

The Board Charter provides that the Board should comprise:

a majority of independent Non-Executive Directors;
Directors with an appropriate range of skills, experience and expertise;
Directors who have a proper understanding of, and competence to deal with, current and emerging issues of the business; and
Directors who can effectively review and challenge the performance of management and exercise independent judgement.

At each AGM of Mirvac, one-third of the Directors, or if their number is not three or a multiple of three, then the number nearest one-third (but not more than one-third) must retire from office. A Director (other than the CEO & Managing Director) must retire at the conclusion of the third AGM after the Director was last elected or re-elected even if his or her retirement results in more than one-third of all Directors retiring. The CEO & Managing Director and a Director appointed to fill a casual vacancy or as an additional Director are not subject to retirement by rotation and are not to be taken into account in determining the rotation of Directors. A Director appointed to fill a casual vacancy or as an additional Director only holds office until the next AGM, where they must retire and seek election by securityholders at the meeting.

The period of office held by each current Director is as follows:

Directors	Appointed	Last elected or re-elected at an AGM
James MacKenzie (Chair)	January 2005	15 November 2012
Nicholas Collishaw (Managing Director)1	January 2006	N/A
Susan Lloyd-Hurwitz (CEO & Managing Director)3	November 2012	N/A
Marina Darling	January 2012	15 November 2012
Gregory Dyer2	September 2012	15 November 2012
Peter Hawkins	January 2006	17 November 2011
James Millar AM	November 2009	Will stand for re-election at 2013 AGM
John Mulcahy	November 2009	Will stand for re-election at 2013 AGM
John Peters	November 2011	15 November 2012
Elana Rubin	November 2010	17 November 2011

1) Nicholas Collishaw resigned as a Director on 31 October 2012.

2) Gregory Dyer was appointed to the Board on 4 September 2012 and resigned on 5 April 2013.

3) Susan Lloyd-Hurwitz was appointed to the Board on 5 November 2012.

b) Chair’s responsibilities and independence

The Board Charter provides that the Chair of the Board:

is appointed by the Directors;
must be an independent Non-Executive Director; and
must not be the Managing Director of the Group.

The Group’s Chair is James MacKenzie, an independent Non-Executive Director. James was appointed an Executive Director for the period from 24 August 2012 to 5 November 2012. James did not receive any additional remuneration for this role.

c) board independence

The Board only considers Directors to be independent where they are independent of management and free of any other business relationship that could materially interfere with, or could reasonably be perceived to interfere with, the exercise of their unfettered judgement, and otherwise meet the criteria for independence set out in the Recommendations. The Board has determined that material relationships include a Director:

having a security-holding in or being an officer of a company which holds more than five per cent of the Group’s voting stock;
being a principal or employee of a professional advisor to the Group or its entities whose billings exceed five per cent of the advisor’s total revenues; and
being a significant supplier or customer of the Group (that is amounts receivable or payable to the supplier or customer exceed five per cent of the supplier’s total revenue or customer’s total operating costs) or an officer or otherwise associated with a significant supplier or customer.

However, a qualitative assessment of whether any particular relationship could affect a Director’s independence will override these quantitative considerations. The guidelines for assessing the independence of Mirvac’s Directors and Mirvac’s materiality thresholds are contained in full in the Board Charter, which is published on Mirvac’s website: www.mirvac.com/corporate-governance.

mirvac group annual report 2013

corporAte governAnce stAtement

3 pRInCIple 2: stRuCtuRe tHe boARD to ADD VAlue / ContInueD

The ARCC is responsible for reviewing the independence of Directors each year. It is the Board’s view that the status of its Directors as at 30 June 2013 is as follows:

Independent non-executive Directors

James MacKenzie (Chair) Marina Darling Peter Hawkins James Millar AM John Mulcahy John Peters Elana Rubin

executive Director

Susan Lloyd-Hurwitz (CEO & Managing Director)

James MacKenzie was appointed as an Executive Director for the period 24 August 2012 to 5 November 2012 to ensure a smooth transition between Nicholas Collishaw’s departure as Managing Director and Susan Lloyd-Hurwitz’s arrival as CEO & Managing Director. In this period, James acted as Executive Chair, temporarily filling the CEO role. James did not receive any additional remuneration for this role.

Although the technical descriptions in Box 2.1 of the Recommendations have not been met, due to the unusual circumstance and short period of time of the appointment the Board is satisfied that within the spirit of the guidelines and Recommendations, James is and remains independent for all practical purposes, despite this brief period as Executive Chair.

It is therefore the Board’s view that all of its Non-Executive Directors exercised judgement and discharged their responsibilities in an unrestricted and independent manner throughout the year.

d) board committees

The Board also established special purpose committees as required during the year. Membership and terms of reference of these committees are determined for each particular purpose by the Board. Attendances at special purpose committee meetings are included in the Director attendance table on page 10 in the Directors’ report.

All Directors are entitled to attend meetings of the Board committees. Minutes of all Board committee meetings and register of resolutions made by the ELT are provided to the Board. Proceedings of each Board committee meeting are reported by the committee Chair at the subsequent Board meeting. Each committee is entitled to the resources and information it requires to discharge its responsibilities, including direct access to senior executives, employees and advisors as needed.

e) nomination Committee

The Nomination Committee was formed by resolution of the Board, in accordance with the Board Charter. The Nomination Committee is governed by the Nomination Committee Charter, which is available on Mirvac’s website: www.mirvac.com/corporate-governance.

The objective of this Committee is to assist the Board in discharging its responsibilities in respect of the appointment and performance of Board members including the CEO & Managing Director.

The Nomination Committee consists of four members. Members are appointed by the Board. The current members of the Nomination committee are James MacKenzie (Chair), Peter Hawkins, John Mulcahy and Elana Rubin, each an independent Non-Executive Director. Details of meeting attendance of the Non-Executive Director members of the Nomination Committee are contained in the following table:

		Number of	Number of
		Nomination	Nomination
		Committee	Committee
		meetings held	meetings attended
Directors	whilst a member		whilst a member
James MacKenzie	(Chair)	2	2
Peter Hawkins		2	2
John Mulcahy		2	2
Elana Rubin		2	2

The accountabilities and responsibilities of the Nomination Committee are set out in the Nomination Committee Charter. The responsibilities include reviewing NonExecutive Director remuneration, assessing the skills and necessary industry, technical or functional experience required on the Board, conducting searches for new Board members, ensuring succession plans are in place for Board members and assisting the Chair to evaluate the performance of the Board as a whole, as well as individual Non-Executive Directors.

f) Director selection process and board renewal

The Nomination Committee manages the process of recommending preferred Director candidates to the Board. The Committee reviews the skills and necessary industry, technical or functional experience required on the Board and then assesses the extent to which these are represented on the existing Board. If the need for a new candidate is identified, the Committee will conduct a search, using professional assistance if required and recommend a candidate to the Board. This process ensures a diverse range of candidates is considered.

The Board seeks to have a mix of skills and diversity across its members. The mix of skills and diversity the Board is looking to achieve in its membership is 50 per cent female membership by 2020 to reflect the communities and customers Mirvac serves, financial expertise, industry experience, technical expertise related to Mirvac’s current and future business and independence. The skills mix required will change from time to time as Mirvac’s business and environment changes.

A key component of the Board renewal and selection process is ensuring succession plans are in place for Directors. The committee ensures that succession plans are in place to maintain an appropriate mix of skills, experience, expertise and diversity on the Board.

g) board and Director performance evaluation

The performance of the Board, the Board committees and Directors is reviewed and conducted through the Chair with the assistance of an external facilitator.

The Chair provides open and transparent performance feedback to the Board, the Board committees and each individual Director, based on the discussions conducted. The Chair also seeks feedback on the performance of the Board and Directors from the CEO & Managing Director and other members of the ELT. Feedback is also sought on the Chair’s performance.

The Board performance review process for the year ended 30 June 2013 is in progress.

36 mirvac group annual report 2013

3 pRInCIple 2: stRuCtuRe tHe boARD to ADD VAlue / ContInueD

h) Induction

Management and the Board provide new Directors with an induction program. This includes meetings with senior executives, briefings on Mirvac’s strategy, independent meetings with Mirvac’s external auditors, provision of all relevant corporate governance material and policies and discussions with the Chair and other Directors.

i) Continuing education

Directors are provided with continuing education opportunities to update and enhance their skills and knowledge, including office and site visits to understand Mirvac’s operations, and briefings on any key changes to the industry and environment in which Mirvac operates. Directors are also encouraged to access external education including director-related-courses and industry conferences.

j) Access to information, indemnification and independent advice

The Company Secretary provides information and assistance to the Board, and Directors also have access to senior executives at any time to request any relevant information.

Under the relevant Constitutions and relevant Deeds with Directors (and only to the extent permitted by law), Mirvac indemnifies Directors against claims and liabilities incurred in their capacity as Directors of Mirvac.

The Board Charter provides that Directors may obtain independent professional advice, at the expense of Mirvac, with the consent of the Chair (which consent will not be unreasonably withheld or delayed).

k) Conflicts of interest

The Board Charter sets out the obligations of Directors in dealing with any conflicts of interest. Pursuant to the Board Charter, Directors are obliged to:

disclose to the Board any actual or potential conflicts of interest which may exist, or perceived to exist, as soon as they become aware of the issue;
take any necessary and reasonable measures to resolve the
conflict; and
comply with the Corporations Act 2001 (Cth) provisions on disclosing interests and restrictions on voting.

Unless the Board determines otherwise, a Director with any actual or potential conflict of interest in relation to a matter before the Board, does not:

receive any Board papers in relation to that matter; and
participate in any discussion or decision making in relation to that matter.

Related party transactions are governed by the Conflicts of Interest and Related Party Transactions Policy, which is available on Mirvac’s website: www.mirvac.com/ corporate-governance.

Mirvac’s Code of Conduct also sets down guidelines for dealing with conflicts of interest that may arise particularly for executives and other employees.

4 pRInCIple 3: pRoMote etHICAl AnD ResponsIble DeCIsIon MAKIng

a) Responsibilities of the board and management

i) Conduct and ethics – code of conduct

Integrity is one of the Group’s core values. The Group has built a reputation for integrity and in dealing fairly, honestly and transparently with all stakeholders. Mirvac has adopted a code of conduct which espouses its core values and reflects the Recommendations in terms of the matters addressed. The code of conduct applies to the Board, executives and all other employees. A copy of the code is posted to Mirvac’s website: www.mirvac.com/corporate-governance. In addition, Mirvac is committed to maintaining a high standard of ethical business behaviour at all times and requires Mirvac employees to:

treat other Mirvac employees with fairness, honesty and respect;
comply with all laws and regulations;
comply with Mirvac policies and procedures in force from time to time; and
not engage in any improper conduct.

Mirvac has an established Open Line Policy which provides a mechanism for employees to report concerns regarding potentially unethical, unlawful or improper practices or behaviours. The Open Line Policy provides protection for individuals reporting in good faith. A copy of the Open Line Policy is available on Mirvac’s website: www.mirvac.com/ corporate-governance.

ii) Dealings in Mirvac securities

Mirvac has implemented a Security Trading Policy which covers dealings in Mirvac securities by Directors, executives and other designated employees, as well as their respective associates (“Restricted Officers”). Restricted Officers may only deal in Mirvac securities (with prior approval to do so), or in securities of other public, listed entities that are related to Mirvac, outside certain periods as identified in the Policy. Notwithstanding this, no Director, executive or other employee may deal in Mirvac securities if they are in possession of price sensitive information not available to the market. Any securities dealing in the Group by Directors is notified to the ASX within five business days of the dealing. Margin loans and any form of short term speculative dealing in Mirvac securities (including options or derivatives) are prohibited under the Policy.

In 2012, the Board established minimum Mirvac Securityholding Guidelines for Non-Executive Directors which recommend Non-Executive Directors build up to a minimum securityholding level of 25,000 Mirvac stapled securities within two years of appointment. Any purchases of Mirvac securities will be subject to the Security Trading Policy.

As noted in the remuneration report, performance rights or options relating to Mirvac securities are granted to employees in accordance with the Mirvac remuneration strategy. Consistent with the prohibition under the Corporations Act 2001 , the Policy prohibits hedging the value of both unvested awards and vested awards that remain subject to a holding lock.

A copy of the Security Trading Policy is available at Mirvac’s website: www.mirvac.com/corporate-governance.

iii) Political donations

The Election Funding, Expenditure and Disclosures Act 1981 (amended in 2009) prohibits property developers from making political donations. Mirvac has in place a Political Donations Policy, which prohibits the Group and any Mirvac employee from making any political donation on behalf of the Group. During the year ended 30 June 2013, Mirvac made no political donations.

mirvac group annual report 2013

corporAte governAnce stAtement

4 pRInCIple 3: pRoMote etHICAl AnD ResponsIble DeCIsIon MAKIng / ContInueD

b) Diversity

Mirvac has adopted, and is fully compliant with, Recommendations 3.2 to 3.5. The Group’s Diversity Policy can be found on the website at: www.mirvac.com/corporate-governance. As an early adopter of the Recommendations, the Group has continued to demonstrate its ongoing commitment to diversity. Although Mirvac recognises it is still at the early stages of maturity in its diversity journey, Mirvac understands and recognises that diversity represents the key to engaging the full potential of the talented individuals working with Mirvac. While there is still some way to go before Mirvac achieves all its diversity objectives, the steps taken in FY13 have been important and have moved the Group forward.

Mirvac’s commitment to diversity extends beyond the programs and initiatives in place; the Group strives to create a culture in which both visible and tacit differences are recognised and valued. Mirvac believes its competitive advantage lies in creating and maintaining a culture where all employees are able to contribute and fulfil their potential without artificial barriers. Mirvac’s goal is to have a workforce representative of the communities in which Mirvac operates.

The Board, the HRC and management work hand-in-hand to create a culture where individual differences are valued and respected. Mirvac has, and will continue to develop, strategies and programs to promote diversity and inclusion. During FY13, Mirvac focused on gender diversity and identified indigenous, disability, single-parent and ethnic diversity as future priorities. The Board has committed to measurable gender diversity targets and reports on progress each year. The HRC is responsible for the regular review of diversity-related activities.

The Board has appointed the Chair, James MacKenzie, as the diversity program sponsor. The CEO & Managing Director, Susan Lloyd-Hurwitz, chairs the Mirvac Diversity Council. The Mirvac Diversity Council regularly meets to coordinate diversity activities and reports to the HRC regarding diversity initiatives and progress.

Mirvac aspires to ensure diversity outcomes are integrated at every level of its business. With a priority focus on gender, Mirvac’s approach to diversity demonstrates its strong commitment in supporting women entering the workforce, equity in promotion and initiatives to enhance female retention.

A range of initiatives have been undertaken to directly support Mirvac’s Diversity Policy.

The key initiatives implemented, the measurable objectives, and performance against these objectives are set out in the table below:

Initiative	Measureable objective	progress to date	status
Establish a	Establish a leadership	– Sponsor and Chair appointed.	Achieved
women’s network	network and development program for female leaders by November 2011	– Initiative launched (September 2011). – Network established. – Developmentprogram requirements specifed.
Establish an organisation-	Implement Mirvac graduate	– Responsibility assigned to Group General Manager,	Achieved
wide graduate program	program with 50 per cent	Human Resources.
to provide a pipeline of gender diverse talent for future leadershiproles	female graduates by February 2012	– Graduate recruitment policy/ guidelines introduced. – First graduate intake 50% female.
Update recruitment	Implement recruitment	– Responsibility assigned to the HRC.	Ongoing
guidelines to encourage, where possible, a gender balance of shortlisted	policy that all executive recruitment briefs include a guideline for 50 per cent	– Mirvac recruitment policy updated. – Recruitment process review in progress.
candidates	of shortlisted candidates
	to be female
Flexible work	Implement fexible work	– Flexible work arrangements/job design	Ongoing
arrangements/ job	policy by June 2011	policy developed.
design policy		– Policylaunched June 2011.
Conduct a pay parity review	Complete annual pay parity	– First pay parity review conducted (September 2011).	Achieved
and implement measures to achieve gender equity and parity in pay	review and report against internal and external benchmarks	– Second pay parity review conducted (September 2012). – Measures developed to ensure relevant factors
		are considered in relation topaydecisions.
Implement a talent	Implement a women in	– Responsibility assigned to Group General Manager,	Achieved
management program	Mirvac talent management	Human Resources.
for female leaders	program by October 2011	– Talent management program designed and
		implemented (December 2011).
		– High potential women identifed at middle
		management.
		– Development centres conducted to identify
		development needs (June and December 2012).
		– Development Plans developed and implemented.

These initiatives form part of the broader strategy focused on removing barriers to achieving diversity at all levels of the Mirvac workforce.

38 mirvac group annual report 2013

4 pRInCIple 3: pRoMote etHICAl AnD ResponsIble DeCIsIon MAKIng / ContInueD

Proportion of female employees

In line with the Diversity Policy, the tables below outline Mirvac’s female representation and talent turnover targets, and progress against achievement of these targets:

and progress against achievement of these targets:
	Measurable objectives Actuals Actuals
	Target by 2015 Target by 2020 30 June 2009 30 June 2013 % % % %
Women on Mirvac Board Women in senior executive positions (full time equivalent Women in Mirvac (FTE) Women ingraduatepositions(FTE)	(“FTE”))	35 50 14 37.5 35 50 — 33 50 50 43 40 50 50 — 50
		Number of
		Target female Female talent Male talent talent turnover 2014 turnover 2013 turnover 2013
Mirvac employees Mirvac managers Mirvac senior executives		7 7 13 — 2 3 — 1 1

5 pRInCIple 4: sAfeguARD IntegRIty In fInAnCIAl RepoRtIng

a) ARCC

i) ARCC Charter

The ARCC was formed by resolution of the Board, in accordance with the Board Charter. The ARCC is governed by the ARCC Charter, which is available on Mirvac’s website: www.mirvac.com/corporate-governance.

ii) ARCC role

The objective of the ARCC is to assist the Board in fulfilling its corporate governance and oversight responsibilities in relation to the Group’s financial reporting, systems of internal controls and management of risk, internal and external audit functions, compliance obligations and processes for monitoring compliance with relevant laws and regulations and the Group code of conduct. It is the ARCC’s role to ensure that the Group’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable law. The ARCC is also responsible for making recommendations to the Board regarding the selection and appointment of the external auditor and the rotation of external audit engagement partners, as outlined in the Committee Charter and section 8(b) below.

iii) ARCC composition

The ARCC consists of seven members. Members are appointed by the Board and all members are Non-Executive and independent. The members of the ARCC as at 30 June 2013 were six Non-Executive Directors from the Mirvac Board – James Millar AM (Chair), James MacKenzie, Peter Hawkins, John Mulcahy, John Peters and Elana Rubin. The Board has also appointed an additional Non-Executive, independent member who is not a director of Mirvac Board – Paul Barker. Each member of the ARCC has the technical expertise to enable the committee to effectively discharge its mandate. The Chair of the ARCC, James Millar AM, is the former Chief Executive Officer of Ernst & Young. Further details of the Mirvac Board members’ qualifications can be found at pages 08 to 09 in the Directors’ report.

Paul Barker is not a member of the Board; however, he is the Chair of Mirvac Funds Management Limited, the responsible entity for one of Mirvac’s listed funds and he has been appointed a member of the committee due to this role. Paul Barker is independent and is a Chartered Accountant. He has extensive experience in accounting and financial services both in Australia and overseas. Richard Turner was also appointed as an additional Non-Executive, independent member of the ARCC. Richard was not a member of the Board. Richard Turner was previously an independent member of the Mirvac Board, retiring in August 2009. He is a Chartered Accountant by profession and is a former Chief Executive Officer of Ernst & Young with over 35 years with the firm. Richard Turner resigned from the ARCC on 31 August 2012.

The CEO & Managing Director, Finance Director, Group Financial Controller, Chief Risk Officer, Head of Internal Audit as well as representatives of the external and internal auditors are able to attend ARCC meetings. The ARCC regularly meets with the external auditors without management present. Details of meeting attendance of members of the ARCC are contained in the following table:

	Number of ARCC meetings	Number of ARCC meetings
	held whilst a member	attended whilst a member
Mirvac Directors
James Millar AM (Chair)	6	6
Peter Hawkins	6	6
James MacKenzie	6	6
John Mulcahy	6	6
John Peters	6	6
Elana Rubin	6	6
non-Mirvac Directors
Paul Barker	6	6
Richard Turner1	1	1

1) Richard Turner resigned as a Committee member on 31 August 2012

mirvac group annual report 2013

corporAte governAnce stAtement

5 pRInCIple 4: sAfeguARD IntegRIty In fInAnCIAl RepoRtIng / ContInueD

iv) ARCC responsibilities

The ARCC Charter sets out the responsibilities of the ARCC. The ARCC responsibilities include the review of external financial accounting, internal control and risk management, external audit, internal audit, compliance, special investigations and managed investment schemes.

v) Compliance

The ARCC has direct responsibility for monitoring and reviewing the compliance plans of Mirvac’s registered managed investment schemes and wholly-owned controlled entities holding Australian financial services (“AFS”) licences, as well as overseeing their adherence to all applicable laws and regulations.

6 pRInCIple 5: MAKe tIMely AnD bAlAnCeD DIsClosuRe

a) Commitment to disclosure

Mirvac is committed to ensuring:

compliance with the ASX Listing Rules disclosure requirements;
accountability at a senior executive level for that compliance;
facilitation of an efficient and informed market in Mirvac securities by keeping the market appraised through ASX announcements of all material information; and
compliance with the requirements of the Corporations Act 2001 , the ASX Listing Rules and the Recommendations.

b) Continuous Disclosure policy

The Group’s Continuous Disclosure Policy, which was updated during 2013, is designed to support its commitment to a fully informed market in its securities by:

ensuring that Mirvac Group complies with its continuous disclosure obligations under the ASX Listing Rules; and
establishing a system for monitoring compliance with Mirvac’s Group’s continuous disclosure obligations.

A copy of Mirvac’s Continuous Disclosure Policy is available at Mirvac’s website: www.mirvac.com/corporate-governance.

7 pRInCIple 6: RespeCt tHe RIgHts of sHAReHolDeRs

a) Communications policy

All Mirvac ASX announcements are posted to Mirvac’s website including half year and annual reports, results releases, market briefings, notices of meetings and the Mirvac Property Compendium. Teleconferencing and webcasting facilities are provided for market briefings to encourage participation from all stakeholders, regardless of location. Mirvac is committed to rotating the location of its AGMs, to allow securityholders in locations other than Sydney to participate in person. The 2009 AGMs were held in Sydney, the 2010 AGMs were held in Brisbane, the 2011 AGMs were held in Perth and the 2012 AGMs were held in Sydney. The 2013 AGMs will be held in Melbourne. Mirvac encourages all securityholders to attend the AGMs. At those meetings, securityholders are entitled to ask questions about the management of Mirvac. Securityholders are provided with a reasonable opportunity to ask questions of the external auditor at the meetings. The external auditor is also allowed a reasonable opportunity to answer written questions submitted by securityholders to the meetings. The AGMs are webcast each year, with access details posted to Mirvac’s website in advance of the date of the meetings.

Notices of meeting for general meetings are accompanied by explanatory notes to enable securityholders to assess and make an informed decision on the resolutions being put forward at the meetings. Full copies of notices of meetings and explanatory notes are posted on Mirvac’s website.

Securityholders who are unable to attend the meetings may vote by appointing a proxy, using the form attached to the notice of meetings or an online facility. Securityholders are also invited to submit questions in advance of the meetings so that Mirvac can ensure those issues are addressed at the meetings.

Mirvac’s Communications Policy is available at Mirvac’s website: www.mirvac.com/corporate-governance.

8 pRInCIple 7: ReCognIse AnD MAnAge RIsK

a) Risk Management policies

i) Risks

Mirvac is a leading ASX listed, integrated real estate group with activities involving real estate investment, residential and commercial development and investment management. These activities involve risks of varying types and to varying extents. Risk can relate to both threats to existing activities, as well as a failure to take advantage of opportunities that may arise. Mirvac’s objective is to ensure those risks are identified and appropriate measures are implemented to mitigate or otherwise manage the impact those risks may have on the Group’s activities.

ii) Risk Management Policy

In recognition that risk management is a key element of an organisation’s effective corporate governance processes, the Board has adopted a Risk Management Policy and associated procedures for identifying, assessing and managing Mirvac’s strategic, operational, financial and reputational risks.

The objectives of the Policy are to:

provide a systematic approach to risk management aligned to the Group’s strategic objectives;
define the mechanisms by which the Group determines its risk appetite and considers and manages risks; and
articulate the roles and accountabilities for the management, oversight and governance of risk.

The approach defined within this Policy is consistent with the Australian and New Zealand standard on risk management (ISO 31000: 2010). The Policy applies to all legal entities within the Group to enable an enterprise-wide approach to managing risk to be applied.

Supporting this Policy is a framework which has been prepared to guide the various business units in addressing their particular risk exposures through a structured implementation of risk management processes. Although structured, the framework maintains a sufficient degree of flexibility to allow the respective business units to adopt appropriate strategies to address their risk exposures, as risks and their management by designated controls are the responsibility of the business.

A copy of the Risk Management Policy is available at Mirvac’s website: www.mirvac.com/corporate-governance.

iii) Risk management responsibility

The Board determines the overall risk appetite for the Group and has approved strategies, policies and practices to ensure that risks are identified and managed within the context of this risk appetite. The application of the Group’s policies and procedures to manage risk is ultimately the responsibility of the Board, which has in turn delegated specific authority to the ARCC (as more fully detailed in the ARCC Charter).

The ARCC advises the Board on risk management and is responsible for reviewing policies for approval by the Board and for reviewing the effectiveness of the Group’s approach to risk management. Risk management is specifically reviewed at least quarterly by the ARCC.

40 mirvac group annual report 2013

8 pRInCIple 7: ReCognIse AnD MAnAge RIsK / ContInueD

iv) Risk management function

The Board has charged management with the responsibility for managing risk within the Group and the implementation of mitigation measures, under the direction of the CEO & Managing Director supported by senior executives. A Group risk management function, led by the Chief Risk Officer, has been established to facilitate the process by providing a centralised role in advising the various business units on executing risk management and mitigation strategies, as well as consolidating risk reporting to senior executives, the ARCC and ultimately the Board.

v) Role of internal audit

The Group’s risk management systems work alongside its internal control systems to establish an effective control environment to manage business risks. Internal Audit’s role is to evaluate, assess and support continuous improvement of the Group’s internal control system and provide independent reasonable assurance to the ARCC and the Board that material risks are effectively managed. Internal Audit’s focus is on key risks and business drivers which may impact the achievement of the Group’s business objectives. The Internal Audit function is led by the Head of Internal Audit who reports to the Chair of the ARCC and has open access to the ARCC and its Chair at all times.

vi) Operational risks

The CEO & Managing Director, supported by senior executives, is responsible for implementing and maintaining effective risk management and internal control systems for operational risks that arise from the Group’s activities. To ensure consistent and effective practices are employed, each business unit has developed risk registers, detailing the key risks facing the particular business unit.

vii) Financial risks

The Board has approved principles and policies to manage financial risks arising from the Group’s operations, including its financing and treasury management activities. The ARCC reports to the Board in relation to the integrity of the Group’s financial reporting, internal control structure, risk management systems as well as the internal and external audit functions. Mirvac management also provides assurance to the Board and the ARCC as to the effectiveness of the Group’s risk management and internal control systems in relation to financial reporting risks.

The ARCC also oversees, and reports to various boards within the Group on, the specific risks and compliance requirements arising from the activities of the Group’s AFS licensed entities and respective registered managed investment schemes.

b) external auditor relationship

i) Role of ARCC

Mirvac’s ARCC is responsible for overseeing the relationship with the Group’s external auditor, PricewaterhouseCoopers, including the terms of engagement of the external auditor and the scope of the external audit program each year. The ARCC is also responsible for monitoring and evaluating the performance, and independence, of the external auditor and the provision of non-audit services.

ii) Auditor independence

It is the Group’s policy to rotate audit engagement partners on listed companies at least every five years, and in accordance with that policy a new audit engagement partner was introduced for the year ended 30 June 2011.

To maintain auditor independence, the Board has adopted a policy and practice protocol related to non-audit services. A copy of the Non-Audit Services Provided by the Independent External Auditors Policy is available at Mirvac’s website: www.mirvac.com/corporate-governance.

Mirvac’s Policy on Non-Audit Services provided by the Independent External Auditors specifies that Mirvac’s external auditor cannot be engaged to undertake any non-audit services for the Group that results in the external auditor:

creating a mutual or conflicting interest with that of the Group; – auditing their own work;
acting in a management capacity or as an employee;
providing appraisal or valuation and fairness opinions;
performing internal audit services; or
acting as an advocate for the Group.

iii) Certificate of independence

PricewaterhouseCoopers has provided the ARCC with a half yearly and annual certification of its continued independence, in accordance with the requirements of the Corporations Act 2001 , and in particular, confirmed that it did not carry out any services or assignments during the year ended 30 June 2013 that were not compatible with auditor independence.

iv) Non-audit services

In addition to the audit partner rotation and appointment requirements set out in the Group’s policy and in the Corporations Act 2001 , the Chair of the ARCC must approve prior to any non-audit service engagement of the Group’s external auditor, where the fee for the particular engagement exceeds $100,000, or if the annual cumulative fees for all non-audit services exceed, or are likely to exceed, 50% of the auditor’s annual audit fees. Below this amount, the CEO & Managing Director or the Chief Financial Officer may approve the appointment. No work will be awarded to the external auditor if the ARCC (or the Chief Financial Officer or equivalent as applicable) believes such work would give rise to a “self review threat” (as defined in APES 110 Code of Ethics for Professional Accountants ) or would create an actual or perceived conflict of interest for the external auditor or any member of the audit team, or would otherwise compromise the auditor’s independence requirements under the Corporations Act 2001 .

An analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is provided in note 37 to the financial statements.

c) Assurances

The CEO & Managing Director and the Group Financial Controller, who is one of a number of people who together are primarily responsible for financial matters in relation to Mirvac, have provided the following assurance to the Board in connection with the Group’s full year financial statements and reports, namely that in their opinion:

the financial records of the Group for the year ended 30 June 2013 have been properly maintained in accordance with section 286 of the Corporations Act 2001 ;
the Group’s financial statements, and the notes to those statements, for the year ended 30 June 2013 comply with the relevant accounting standards;
the Group’s financial statements, and the notes to those statements, for the year ended 30 June 2013 give a true and fair view of the financial position, operational results and performance of the Group;
the statements referred to in the points above with respect to the integrity of the Group’s financial reports are founded on a sound system of risk management and internal control which implements the policies adopted by the Board; and
Mirvac’s risk management and internal control system is operating effectively in all material respects in relation to financial reporting risks.

The effective control environment established by the Board supports this assurance provided by the CEO & Managing Director and Group Financial Controller. However, it should be noted that associates and joint ventures, which are not controlled by Mirvac, are not covered for the purpose of this assurance or the declaration given under section 295A of the Corporations Act 2001 .

mirvac group annual report 2013

corporAte governAnce stAtement

9 pRInCIple 8: ReMuneRAte fAIRly AnD ResponsIbly

a) HRC

i) HRC Charter

The HRC was formed by resolution of the Board, in accordance with the Board Charter. The HRC is governed by the HRC Charter, which is available on the Group’s website: www.mirvac.com/corporate-governance.

ii) HRC role

The objectives of this Committee are to assist the Board in ensuring the Group:

has coherent remuneration policies and practices which are consistent with the Group’s strategic goals and human resource objectives by attracting and retaining individuals who will create value for securityholders;
fairly and responsibly remunerates Directors and executives, having regard to the performance of the Group, the performance of the individuals and the general remuneration environment;
has effective policies and procedures to attract, motivate and retain appropriately skilled persons to meet the Group’s needs;
has an effective Diversity Policy and regularly reviews progress towards achieving measurable objectives and strategies aimed at improving diversity; and
integrates human capital and organisational issues to the overall business strategy.

iii) HRC composition

The HRC consists of five members. Members are appointed by the Board from the Non-Executive Directors, all of whom are also independent. The members of the HRC as at 30 June 2013 were Peter Hawkins (Chair), James MacKenzie, Marina Darling, James Millar AM and John Mulcahy.

Details of meeting attendance of the Non-Executive Director members of the HRC are contained in the following table:

	Number of HRC	Number of HRC
meetings held whilst		meetings attended
Directors	a member	whilst a member
Peter Hawkins (Chair)	6	6
Marina Darling	6	6
James MacKenzie	6	5
James Millar AM	6	6
John Mulcahy	6	6

iv) HRC responsibilities

The accountabilities and responsibilities of the HRC are set out in the HRC Charter. The HRC’s responsibilities include reviewing remuneration programs and performance targets for the CEO & Managing Director and other Executive Directors and approving these for the senior executives; reviewing and approving the Group’s recruitment, retention and termination policies and procedures for executives and senior management; approving the strategy and principles for people management including remuneration programs, performance management processes and career and skills development initiatives; and reviewing the Group’s Diversity Policy, objectives and strategies and progress towards achieving greater diversity, including reviewing the proportion of women in the workforce at all levels.

v) Remuneration policies

Information on the Group’s remuneration policies and practices is set out in the remuneration report starting on page 10.

b) Distinguish non-executive Director remuneration

The remuneration of Non-Executive Directors is fixed and is paid according to the role in which they serve on the Board and and Board committees. Non-Executive Directors do not participate in other remuneration components such as performance-related short term or long term incentives, options or variable remuneration and do not receive retirement benefits other than superannuation. Information relating to the remuneration of Non-Executive Directors is disclosed in the remuneration report on pages 10 to 32.

10 ConClusIon

The Board is satisfied with its level of compliance with the Recommendations. However, the Board recognises that processes and procedures require continual monitoring and improvement. Mirvac’s corporate governance framework will be updated as changes occur in the regulatory environment, to ensure that it remains effective and compliant.

AsX Corporate governance Council’s principles and Recommendations

Mirvac’s corporate governance statement 2013

All section references in the table below are to the

corporate governance statement unless noted otherwise. All references to the website are references to the corporate governance section of Mirvac’s website at www.mirvac.com/ corporate-governance.

		Mirvac
principles and recommendations	page	compliance
principle 1: lay solid foundations for management and oversight
_Recommendation 1.1:_Establish the functions reserved to the board and those delegated to senior	34	4
executives and disclose those functions.
_Recommendation 1.2:_Companies should disclose the process for evaluating the performance	34	4
of senior executives.
_Recommendation 1.3:_Companies should provide the information indicated in the Guide to	34	4
reportingon Principle 1.
principle 2: structure the board to add value
_Recommendation 2.1:_A majorityof the board should be independent directors.	35	4
_Recommendation 2.2:_The chair should be an independent director.	35	4
_Recommendation 2.3:_The roles of the chair and the chief executive offcer should not be exercised	35	4
bythe same individual.
_Recommendation 2.4:_The board should establish a nomination committee.	36	4
_Recommendation 2.5:_Companies should disclose the process for evaluating the performance of the	36	4
board, its committees and individual directors.
_Recommendation 2.6:_Companies should provide the information indicated in the Guide to	36	4
reportingon Principle 2.

42 mirvac group annual report 2013

10 ConClusIon / ContInueD		Mirvac
principles and recommendations	page	compliance
principle 3: promote ethical and responsible decision making
_Recommendation 3.1:_Companies should establish a code of conduct and disclose the code or a	37	4
summary of the code as to:
– the practices necessary to maintain confdence in the company’s integrity;
– the practices necessary to take into account their legal obligations and the reasonable expectations
of stakeholders; and
– the responsibility and accountability of individuals for reporting and investigating reports
of unethicalpractices.
_Recommendation 3.2:_Companies should establish a policy concerning diversity and disclose the policy	38	4
or a summary of that policy. The policy should include requirements for the board to establish measurable
objectives for achieving gender diversity and for the board to assess annually both the objectives and
progress in achievingthem.
_Recommendation 3.3:_Companies should disclose in each annual report the measurable objectives for	38	4
achieving gender diversity set by the board in accordance with the diversity policy and progress towards
achievingthem.
_Recommendation 3.4:_Companies should disclose in each annual report the proportion of women	39	4
employees in the whole organisation,women in senior executivepositions and women on the board.
_Recommendation 3.5:_Companies should provide the information indicated in the Guide to	39	4
reportingon Principle 3.
principle 4: safeguard integrity in fnancial reporting
_Recommendation 4.1:_The board should establish an audit committee.	39	4
_Recommendation 4.2:_The audit committee should be structured so that it:	39	4
– consists only of non-executive directors;
– consists of a majority of independent directors;
– is chaired by an independent chair, who is not chair of the board; and
– has at least three members.
_Recommendation 4.3:_The audit committee should have a formal charter.	39	4
_Recommendation 4.4:_Provide the information indicated in the Guide to reportingon Principle 4.	39	4
principle 5: Make timely and balanced disclosure
_Recommendation 5.1:_Establish written policies designed to ensure compliance with ASX Listing Rule	40	4
disclosure requirements and to ensure accountability at a senior executive level for that compliance and
disclose thosepolicies or a summaryof thosepolicies.
_Recommendation 5.2:_Provide the information indicated in the Guide to reportingon Principle 5.	40	4
principle 6: Respect the rights of shareholders
_Recommendation 6.1:_Design a communications policy for promoting effective communication with	40	4
shareholders and encouraging their participation at general meetings and disclose their policy or a
summaryof thatpolicy.
_Recommendation 6.2:_Provide the information indicated in the Guide to reportingon Principle 6.	40	4
principle 7: Recognise and manage risk
_Recommendation 7.1:_Establish policies for the oversight and management of material business risks and	40	4
disclose a summaryof thosepolicies.
_Recommendation 7.2:_The board should require management to design and implement the risk	40	4
management and internal control system to manage the company’s material business risks and report
to it on whether those risks are being managed effectively. The board should disclose that management
has reported to it as to the effectiveness of the company’s management of the material business risks.
_Recommendation 7.3:_The board should disclose whether it has received assurance from the chief	41	4
executive offcer (or equivalent) and the chief fnancial offcer (or equivalent) that the declaration provided
in accordance with section 295A of the_Corporations Act 2001_is founded on a sound system of risk
management and internal control and that the system is operating effectively in all material respects in relation to fnancial reportingrisks.
_Recommendation 7.4:_Provide the information indicated in the Guide to reportingon Principle 7.	41	4
principle 8: Remunerate fairly and responsibly
_Recommendation 8.1:_The board should establish a remuneration committee.	42	4
_Recommendation 8.2:_The remuneration committee should be structured so that it:	42	4
– consists of a majority of independent directors;
– is chaired by an independent director; and
– has at least three members.
_Recommendation 8.3:_Clearly distinguish the structure of non-executive directors’ remuneration	42	4
from that of executive directors and senior executives.
_Recommendation 8.4:_Provide the information indicated in the Guide to reportingon Principle 8.	42	4

mirvac group annual report 2013

FinAnciAl stAtements

These financial statements cover the financial statements for the consolidated entity consisting of Mirvac Limited and its controlled entities. The financial statements are presented in Australian currency.

These fnancial statements cover the fnancial statements for the	45 46	Consolidated statement of comprehensive income Consolidated statement of fnancial position	Consolidated statement of comprehensive income Consolidated statement of fnancial position
consolidated entity consisting of Mirvac Limited and its controlled entities. The fnancial statements are presented in Australian currency.	47 48 49	Consolidated statement of changes in equity Consolidated statement of cash fows Notes to the consolidated fnancial statements 1 Summary of signifcant accounting policies
Mirvac Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered offce and principal place of business are:	59 61 65 65 66 68	2 3 4 5 6 7	Critical accounting judgements and estimates Segmental information Revenue from continuing operations and other income Expenses Income tax Earnings per stapled security
Mirvac limited	69	8	Receivables
Level 26	70	9	Derivative fnancial assets
60 Margaret Street Sydney NSW 2000	70 71 71	10 11 12	Inventories Other fnancial assets at fair value through proft or loss Other assets
A description of the nature of the consolidated entity’s operations and its principal activities is included in the Directors’ report on pages 01 to 32, both of which are not part of these fnancial statements.	72 73 73 73 76 76	13 14 15 16 17 18	Assets classifed as held for sale and discontinued operations Investments accounted for using the equity method Other fnancial assets Investment properties Property, plant and equipment Intangible assets
The fnancial statements were authorised for issue by the Directors on 23 August 2013. The Directors have the power to amend and reissue the fnancial statements. Through the use of the internet,	77 78 79 80 80 80 81	19 20 21 22 23 24 25	Payables Borrowings Derivative fnancial liabilities Provisions Other liabilities Contributed equity Reserves
Mirvac has ensured that its corporate reporting is timely and	83 83	26 27	Retained earnings Dividends/distributions
complete. All press releases, fnancial reports and other	83 89	28 29	Controlled entities and deed of cross guarantee Investments in associates
information are available in the Investor Relations section on the Group’s website: www.mirvac.com.	90 93 93	30 31 32	Investments in joint ventures Contingent liabilities Commitments
	94	33	KMP
	97	34	Employee benefts
	99	35	Related parties
	100	36	Financial risk management
	105	37	Remuneration of auditors
	106	38	Notes to the consolidated statement of cash fows
	106 107	39 40	Events occurring after the end of the year Parent entity fnancial information
	108	Directors’ declaration
	109	Independent auditor’s report to the members of Mirvac Limited

44 mirvac group annual report 2013

consoliDAteD stAtement oF comprehensive income

For the year ended 30 June 2013

		2013	2012
	Note	$m	$m
Revenue from continuing operations
Investment properties rental revenue	16	583.1	558.7
Investment management fee revenue		9.1	11.8
Development and construction revenue		822.8	918.4
Development management fee revenue		25.3	19.3
Interest revenue	4	18.8	25.2
Dividend and distribution revenue		0.9	1.2
Other revenue		9.7	13.0
total revenue from continuingoperations		1,469.7	1,547.6
other income
Net gain on fair value of investment properties1	16	54.0	148.7
Share of net proft of associates and joint ventures accounted for using the equity method	14	12.4	13.4
Gain on fnancial instruments	4	33.0	38.8
Net gain on sale of investment properties		—	3.4
Netgain on sale ofproperty, plant and equipment		0.1	—
total other income		99.5	204.3
total revenue from continuingoperations and other income		1,569.2	1,751.9
Net loss on fair value of IPUC	16	3.6	15.8
Net loss on sale of investments		1.0	2.6
Net loss on sale of investment properties		2.7	—
Net loss on sale of property, plant and equipment		—	0.4
Foreign exchange loss		45.4	22.2
Investment properties expenses	16	136.6	126.6
Cost of property development and construction		703.7	804.7
Employee benefts expenses		96.9	94.3
Depreciation and amortisation expenses	5	31.3	34.2
Impairment of investments including associates and joint ventures	5	12.3	—
Impairment of loans	5	18.0	6.0
Finance costs	5	87.1	129.2
Loss on fnancial instruments	5	—	98.6
Selling and marketing expenses		21.9	28.7
Provision for loss on inventories	5	242.9	25.0
Other expenses		51.0	47.2
proft from continuing operations before income tax		114.8	316.4
Income tax beneft	6	23.7	68.1
Proft from continuing operations		138.5	384.5
Proft from discontinued operations(net of tax)	13	1.4	31.6
proft for theyear		139.9	416.1
other comprehensive income for the year
Items that may be reclassifed to proft or loss
Exchange differences on translation of foreign operations, net of tax	25(b)	7.2	3.0
Items that will not be reclassifed to proft or loss
Increment on revaluation of property, plant and equipment	25(b)	14.8	28.4
Deferred tax on share basedpayments expense	25(b)	0.6	0.7
Other comprehensive income for theyear		22.6	32.1
total comprehensive income for theyear		162.5	448.2
Proft for the year is attributable to:
– Stapled securityholders of Mirvac		139.9	416.1
Total comprehensive income for the year is attributable to:
– Stapled securityholders of Mirvac		162.5	448.2
earnings per stapled security for proft from continuing operations attributable to the stapled securityholders of Mirvac		Cents	Cents
Basic earnings per security	7	4.02	11.27
Diluted earningsper security	7	4.01	11.25
earningsper stapled securityforproft attributable to the stapled securityholders of Mirvac		Cents	Cents
Basic earnings per security	7	4.06	12.20
Diluted earningsper security	7	4.05	12.18

The above consolidated statement of comprehensive income (“SoCI”) should be read in conjunction with the accompanying notes.

1) Includes a revaluation decrement of $1.6m (2012: $nil) relating to investment properties classified as owner occupied properties.

mirvac group annual report 2013

As at 30 June 2013

consoliDAteD stAtement oF FinAnciAl position

		2013	2012
	Note	$m	$m
Current assets
Cash and cash equivalents	38	126.4	77.3
Receivables	8	93.7	132.3
Inventories	10	559.9	403.9
Other fnancial assets at fair value through proft or loss	11	12.6	12.7
Other assets	12	17.5	17.7
Assets classifed as held for sale and discontinued operations	13	81.3	—
total current assets		891.4	643.9
non-current assets
Receivables	8	120.3	117.2
Inventories	10	903.3	1,048.9
Investments accounted for using the equity method	14	379.9	357.4
Derivative fnancial assets	9	11.6	—
Other fnancial assets	15	187.1	51.5
Investment properties	16	6,029.6	5,488.5
Property, plant and equipment	17	317.8	307.4
Intangible assets	18	65.7	65.7
Deferred tax assets	6	339.7	330.1
total non-current assets		8,355.0	7,766.7
total assets		9,246.4	8,410.6
Current liabilities
Payables	19	549.9	372.4
Borrowings	20	175.1	2.9
Derivative fnancial liabilities	21	13.4	15.0
Provisions	22	172.3	89.8
Current tax liabilities	6	—	0.2
Other liabilities	23	0.3	0.5
total current liabilities		911.0	480.8
non-current liabilities
Payables	19	148.9	46.1
Borrowings	20	1,992.1	1,822.1
Derivative fnancial liabilities	21	60.4	170.6
Deferred tax liabilities	6	119.6	132.7
Provisions	22	3.6	3.6
total non-current liabilities		2,324.6	2,175.1
total liabilities		3,235.6	2,655.9
net assets		6,010.8	5,754.7
equity
Contributed equity	24	6,745.3	6,334.7
Reserves	25	79.8	64.2
Retained earnings	26	(814.3)	(644.2)
equity, reserves and retained earnings attributable to the stapled securityholders of Mirvac		6,010.8	5,754.7

The above consolidated statement of financial position (“SoFP”) should be read in conjunction with the accompanying notes.

46 mirvac group annual report 2013

consoliDAteD stAtement oF chAnges in equity

For the year ended 30 June 2013

		Attributable to the securityholders of	Attributable to the securityholders of	stapled Mirvac
	Contributed			Retained
	Note	equity $m	Reserves $m	earnings $m	NCI $m	Total $m
Balance 30 June 2011		6,327.4	125.9	(870.1)	12.5	5,595.7
Proft for the year		—	—	416.1	—	416.1
Other comprehensive income for theyear		—	32.1	—	—	32.1
Total comprehensive income for theyear		—	32.1	416.1	—	448.2
EEP securities issued	24	1.5	—	—	—	1.5
LTP, LTIP and EIS securities converted, sold or forfeited	24	5.8	—	—	—	5.8
Security based payment transactions	25	—	4.4	—	—	4.4
Security based compensation	26	—	—	(1.3)	—	(1.3)
Dividends/distributions provided for or paid	26	—	—	(287.0)	—	(287.0)
Deconsolidation of entity	26	—	—	(0.1)	(12.5)	(12.6)
Transfers due to deconsolidation of disposalgroup	26	—	(98.2)	98.2	—	—
Total transactions with owners in their capacityas owners		7.3	(93.8)	(190.2)	(12.5)	(289.2)
Balance 30 June 2012		6,334.7	64.2	(644.2)	—	5,754.7
Proft for the year		—	—	139.9	—	139.9
Other comprehensive income for theyear		—	22.6	—	—	22.6
total comprehensive income for theyear		—	22.6	139.9	—	162.5
EEP securities issued	24	0.7	—	—	—	0.7
LTP, LTIP and EIS securities converted, sold or forfeited	24	13.4	—	—	—	13.4
Contributions of equity, net of transaction costs	24	396.5	—	—	—	396.5
Security based payment transactions	25	—	(6.9)	—	—	(6.9)
Security based compensation	26	—	—	(1.3)	—	(1.3)
Dividends/distributions provided for or paid	26	—	—	(308.8)	—	(308.8)
Transfers in/(out)	26	—	(0.1)	0.1	—	—
total transactions with owners in their capacityas owners		410.6	(7.0)	(310.0)	—	93.6
balance 30 June 2013		6,745.3	79.8	(814.3)	—	6,010.8

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

mirvac group annual report 2013

consoliDAteD stAtement oF cAsh Flows

For the year ended 30 June 2013

		2013	2012
	Note	$m	$m
Cash fows from operating activities
Receipts from customers (inclusive of goods and services tax)		1,810.2	1,918.9
Payments to suppliers and employees(inclusive ofgoods and services tax)		(1,326.5)	(1,464.2)
		483.7	454.7
Interest received		14.0	23.6
Associate and joint ventures dividends/distributions received		23.6	26.2
Dividends/distributions received		0.9	4.8
Borrowingcostspaid		(136.3)	(192.3)
net cash infows from operatingactivities	38(b)	385.9	317.0
Cash fows from investing activities
Payments for property, plant and equipment		(3.6)	(8.4)
Proceeds from sale of property, plant and equipment		0.1	0.2
Payments for investment properties		(711.2)	(91.8)
Proceeds from sale of investment properties and assets classifed as held for sale		139.7	128.3
Payments for loans to related entities		—	(31.7)
Proceeds from loans to related entities		0.1	51.0
Payments for loans to unrelated entities		(42.9)	(12.6)
Proceeds from loans to unrelated entities		8.8	16.5
Contributions to associates and joint ventures		(151.2)	(83.6)
Proceeds from associates and joint ventures		15.7	20.9
Cash impact on controlled entities leaving the Group		—	(4.6)
Proceeds from sale of investments		6.5	23.4
Proceeds from sale of assets classifed as held for sale (sale of hotel management business and related assets)		15.0	275.9
net cash(outfows)/infows from investingactivities		(723.0)	283.5
Cash fows from fnancing activities
Proceeds from borrowings		2,932.1	776.6
Repayments of borrowings		(2,716.6)	(1,693.0)
Proceeds from issue of shares	24(b)	403.7	—
Capital raising costs	24(b)	(7.2)	—
Dividends/distributionspaid		(225.9)	(280.2)
net cash infows/(outfows)from fnancingactivities		386.1	(1,196.6)
Net increase/(decrease) in cash and cash equivalents		49.0	(596.1)
Cash and cash equivalents at the beginning of the year		77.3	673.1
effects of exchange rate changes on cash and cash equivalents		0.1	0.3
Cash and cash equivalents at the end of theyear	38(a)	126.4	77.3

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

48 mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

1 suMMARy of sIgnIfICAnt ACCountIng polICIes

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements of Mirvac consist of the consolidated financial statements of Mirvac Limited and its controlled entities including MPT and its controlled entities.

a) Mirvac – stapled securities

A Mirvac stapled security comprises one Mirvac Limited share “stapled” to one MPT unit to create a single listed security traded on the ASX. The stapled securities cannot be traded or dealt with separately. With the establishment of the Group and its common investors, Mirvac Limited and Mirvac Funds Limited (as responsible entity for MPT) have common directors and operate as Mirvac Group with two core divisions: Investment and Development. The entities forming the stapled group entered into a Deed of Cooperation. This Deed of Cooperation allows that members of the stapled group, where permitted by law, will carry out activities with other members on a cost recovery basis, thereby maintaining the best interests of Mirvac as a whole.

The two Mirvac entities comprising the stapled group, remain separate legal entities in accordance with the Corporations Act 2001 , and are each required to comply with the reporting and disclosure requirements of AAS and the Corporations Act 2001 . In accordance with AAS, Mirvac Limited has been deemed the parent entity of MPT. The stapled security structure will cease to operate on the first to occur of:

Mirvac Limited or MPT resolving by special resolution in general meeting and in accordance with its Constitution to terminate the stapling provisions; or
the commencement of the winding up of Mirvac Limited or MPT.

The ASX reserves the right (but without limiting its absolute discretion) to remove one or more entities with stapled securities from the official list if any of their securities cease to be stapled together, or any equity securities of the same class are issued by one entity which are not stapled to equivalent securities in the other entity or entities.

Net current asset deficiency

b) basis of preparation

These general purpose financial statements have been prepared in accordance with AAS, other authoritative pronouncements of the AASB, Urgent Issues Group Interpretations and the Corporations Act 2001 . Mirvac Group is a for-profit entity for the purpose of preparing the financial statements.

i) Compliance with International Financial Reporting Standards (“IFRS”)

The consolidated financial statements of the Group also comply with IFRS as issued by the International Accounting Standards Board (“IASB”).

ii) Historical cost convention

iii) Critical accounting estimates

The preparation of financial statements in conformity with AAS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying Mirvac’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.

iv) Early adoption of standards

The Group has elected to apply the following pronouncement to the annual reporting period beginning 1 July 2012: AASB 2012–5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle . This includes applying the revised pronouncement to the comparatives in accordance with AASB 108 Accounting Policies , Changes in Accounting Estimates and Errors . None of the items in the financial statements had to be restated as a result of applying this standard. However, the amendments removed the requirement to provide additional comparative information in all relevant notes where line items in the financial statements are affected as a result of a retrospective restatement (for example because of an error). Following the amendments, it is now sufficient if an entity includes a third balance sheet and explains the impact of the restatement on individual line items in the note that sets out the reasons for the restatement. The Group has no restatement to the financial statements during the year ended 30 June 2013.

v) Comparative information

Where necessary, comparative information has been reclassified to achieve consistency in disclosure with current year amounts and other disclosures.

vi) Rounding of amounts

Mirvac is an entity of the kind referred to in Class Order 98/0100 issued by ASIC, relating to the “rounding off” of amounts in the financial report. Amounts in the financial report have been rounded off to the nearest tenth of a million dollars in accordance with that class order.

vii) Goods and services tax (“GST”)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case, it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the consolidated statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from or payable to the taxation authority, are presented as operating cash flow.

viii) New and amended standards adopted by the Group None of the new standards and amendments to standards that are mandatory for the first time for the year beginning 1 July 2012 affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods. However, amendments made to AASB 101 Presentation of Financial Statements effective 1 July 2012 now require the statement of comprehensive income to show the items of comprehensive income grouped into those that are not permitted to be reclassified to profit or loss in a future period and those that may have to be reclassified if certain conditions are met.

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment properties.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

1 suMMARy of sIgnIfICAnt ACCountIng polICIes / ContInueD

c) principles of consolidation

i) Controlled entities

The consolidated financial statements incorporate the assets and liabilities of all controlled entities of Mirvac at 30 June 2013 and the results of all controlled entities for the year then ended. Controlled entities are all those entities (including special purpose entities) over which Mirvac has the power to govern the financial and operating policies, generally accompanying an interest of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether Mirvac controls another entity. Controlled entities are fully consolidated from the date on which control is transferred to Mirvac. They are deconsolidated from the date that control ceases. The acquisition method of accounting is used to account for the business combinations undertaken by Mirvac (refer to note 1(i)). Inter-company transactions and balances between Mirvac entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of controlled entities have been changed where necessary to ensure consistency with the policies adopted by the Group. NCI in the results and equity of controlled entities are shown separately in the consolidated statement of comprehensive income, consolidated statement of financial position and consolidated statement of changes in equity.

ii) Associates

Associates are all entities over which Mirvac has significant influence but not control or joint control, generally accompanying a holding of between 20 per cent and 50 per cent of the voting rights. Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost.

Mirvac’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in reserves is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends/distributions receivable from associates reduce the carrying amount of the investments. When Mirvac’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, Mirvac does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between Mirvac and its associates are eliminated to the extent of Mirvac’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by Mirvac.

As permitted by AASB 128 Investment in Associates , investments in associates within certain asset classes, including infrastructure investments, have been measured at fair value. Changes in fair value are recognised as income or expenses in the consolidated statement of comprehensive income in the year in which the change occurred.

iii) Joint ventures

Interests in joint venture entities and partnerships (“joint ventures”) are accounted for in the consolidated financial statements using the equity method, after initially being recognised at cost. Under the equity method, the share of the profits or losses of the joint ventures are recognised in profit or loss, and the share of movements in reserves is recognised in other comprehensive income.

Profits or losses on transactions establishing joint ventures and transactions with the joint ventures are eliminated to the extent of Mirvac’s ownership interest until such time as they are realised by the joint venture on consumption or sale. However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value (“NRV”) of current assets, or an impairment loss.

iv) Changes in ownership interests

The Group treats transactions with NCI that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling interests and NCI to reflect their relative interests in the controlled entity. Any difference between the amount of the adjustment to NCI and any consideration paid or received is recognised in a separate reserve within equity attributable to the stapled securityholders of Mirvac.

When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purpose of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if Mirvac had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in an associate or joint venture is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

d) segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the ELT.

e) foreign currency translation

i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated financial statements are presented in Australian currency, which is Mirvac Limited’s functional and presentation currency.

ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or they are attributable to part of the net investment in a foreign operation. Translation differences on non monetary financial assets and liabilities held at fair value are reported as part of the fair value gain or loss using the exchange rate applicable at the date fair value is determined. Translation differences on non monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non monetary financial assets such as equities classified as available for sale financial assets are included in a fair value reserve in equity.

50 mirvac group annual report 2013

1 suMMARy of sIgnIfICAnt ACCountIng polICIes / ContInueD

iii) Foreign controlled entities

The results and financial position of entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities at the end of the reporting period are translated at the closing rate at the end of the reporting period;
income and expenses for each consolidated statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rate prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign controlled entity is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences is reclassified to profit or loss, as part of the gain or loss on sale where applicable.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities and translated at the closing rate.

f) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. Mirvac recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised for the major business activities as follows:

i) Development projects and land sales

Revenue from the sale of development projects and land is recognised upon settlement, which has been determined to be when the significant risks and rewards of ownership are transferred to the purchaser. Other revenue from development projects such as project management fees is recognised as services are performed.

ii) Construction contracts

Agreements to develop real estate are only defined as construction contracts when the purchaser is able to specify the main elements of the design of the project. Where this is not the case, the project is treated as a development project. Revenue and expenses are recognised in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. The stage of completion is determined by costs incurred to date as a percentage of total expected cost. Where it is probable that a loss will arise from a construction contract, the excess of total costs over revenue is recognised as an expense immediately. When the outcome of a contract cannot be reliably estimated, contract costs are recognised as an expense as incurred, and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred.

iii) Rental income

Rental revenue for operating leases is recognised on a straight line basis over the term of the lease, except when an alternative basis is more representative of the pattern of service rendered through the provision of the leased premises. Lease incentives offered under operating leases are amortised on a straight line basis in profit or loss.

iv) Recoverable outgoings

Recovery of outgoings as specified in lease agreements is accrued on an estimated basis and adjusted when the actual amounts are invoiced to the respective tenants.

v) Fees

Revenues from the rendering of property funds management, property advisory and facilities management services are recognised upon the delivery of the service to the customers or where there is a signed unconditional contract for the sale or purchase of assets.

vi) Interest

Interest revenue is brought to account when earned, taking into account the effective yield on the financial asset.

vii) Dividends/distributions

Dividends/distributions are recognised as revenue when the right to receive payment is established. This applies even if they are paid out of pre-acquisition profits. However, the investment may need to be tested for impairment as a consequence.

viii) Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate.

g) Income tax

The income tax expense or benefit for the year is the tax payable on the current year’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the controlled entities, associates and joint ventures generate taxable incomes.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

1 suMMARy of sIgnIfICAnt ACCountIng polICIes / ContInueD

Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Mirvac and its whollyowned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are recorded in the consolidated financial statements. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity respectively.

i) Investment allowances

Companies within the Group may be entitled to claim special tax deductions for investments in qualifying assets. The Group accounts for such allowances as tax credits, which means that the allowance reduces income tax payable and current tax expense. A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax assets.

h) leases

Leases of property, plant and equipment where Mirvac has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short term or long term payables. Each lease payment is allocated between the liability and finance costs. The finance costs are charged to the consolidated statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight line basis over the period of the lease. Lease income from operating leases where the Group is a lessor is recognised in income on a straight line basis over the lease term. Refer to note 1(f)(iii).

i) business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a controlled entity comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the controlled entity. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any NCI in the acquiree either at fair value or at the NCI’s proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred, the amount of any NCI in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the controlled entity acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a discount on business combination. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

j) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using the post-tax discount rate that reflects current market assessments of both the time value of money and the risk specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognised for the amount by which the asset’s (or cash generating unit (“CGU”)) carrying amount exceeds its recoverable amount. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (CGUs). The lowest level at which Mirvac allocates and monitors goodwill is at the primary reporting segments level (refer to note 3).

k) Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the consolidated statement of financial position.

l) trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Collectability of trade receivables is reviewed on an ongoing basis. Receivables which are known to be uncollectible are written off. A provision for impairment of trade receivables is established when there is objective evidence that Mirvac will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate.

52 mirvac group annual report 2013

1 suMMARy of sIgnIfICAnt ACCountIng polICIes / ContInueD

Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in profit or loss. When a trade receivable for which an impairment provision had been recognised becomes uncollectible in a subsequent period, it is written off against the provision account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.

m) Mezzanine loans

Mezzanine loans are loans to unrelated parties for predominately real estate property development. These loans are secured by a second ranking mortgage, behind that of the senior lender. Mezzanine loans are recognised initially at fair value. Collectability of loans is reviewed on an ongoing basis and those which are considered uncollectible are written off to profit or loss.

n) Inventories

Inventories comprise development projects, construction contracts and hotel stock.

i) Development projects

Development projects are valued at the lower of cost and NRV. Cost includes the costs of acquisition, development, borrowings and all other costs directly related to specific projects, including an allocation of direct overhead expenses. Upon completion of the contract of sale, borrowing costs and other holding charges are expensed as incurred. Profits on development projects are not brought to account until settlement of the contract of sale.

Borrowing costs included in the cost of land are those costs that would have been avoided if the expenditure on the acquisition and development of the land had not been made. Borrowing costs incurred while active development is interrupted for extended periods are recognised as expenses.

ii) Construction contracts

Construction work in progress is stated at the aggregate of contract costs incurred to date plus recognised profits less recognised losses and progress billings. If there are contracts where progress billings exceed the aggregate costs incurred plus profits less losses, the net amounts are presented under payables. Contract costs include all costs directly related to specific contracts and costs that are specifically chargeable to the customer under the terms of the contract. The stage of completion is measured using the percentage of completion method unless the outcome of the contract cannot be reliably measured.

o) non-current assets (or disposal groups) classified as held for sale

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount, and fair value less costs to sell, except for assets such as deferred tax assets, financial assets and investment properties that are carried at fair value. An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from other assets in the consolidated statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the consolidated statement of financial position.

A disposal group is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of a disposal group are shown as discontinued operations and are presented separately in the consolidated statement of comprehensive income. The comparatives in the consolidated statement of comprehensive income are restated to include the profit or loss of the disposal group in discontinued operations.

p) Investments and other financial assets

i) Classification

Mirvac classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at the end of each reporting period.

– Financial assets at fair value through profit or loss

Financial assets classified as held for trading are included in the category “financial assets at fair value through profit or loss”. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are expected to be settled within 12 months; otherwise, they are classified as non-current.

– Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when Mirvac provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the end of the reporting period which are classified as non-current assets. Loans and receivables are included in receivables in the consolidated statement of financial position, except where the amount relates to the funding of investment structures, which are disclosed separately.

– Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that Mirvac’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available for sale. Held-to-maturity financial assets are included in non-current assets, except for those maturities less than 12 months from the end of the reporting period, which are classified as current assets.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

1 suMMARy of sIgnIfICAnt ACCountIng polICIes / ContInueD

– Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of the investment within 12 months of the end of the reporting period. Investments are designated as available for sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term.

ii) Financial assets – reclassification

The Group may choose to reclassify a non-derivative trading financial asset out of the held-for-trading category if the financial asset is no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables are permitted to be reclassified out of the held-for-trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories if the Group has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification. Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before the reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively.

iii) Recognition and derecognition

Regular way purchases and sales of investments are recognised on trade date, being the date on which Mirvac commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and Mirvac has transferred substantially all the risks and rewards of ownership. When securities classified as available for sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss as gains and losses from investment securities.

iv) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Loans and receivables and held-to-maturity investments are subsequently carried at amortised cost using the effective interest method.

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are presented in profit or loss within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of revenue from continuing operations when the Group’s right to receive payments is established. Interest income from these financial assets is included in the net gain/(loss).

Changes in the fair value of monetary securities denominated in a foreign currency and classified as available for sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income. Changes in the fair value of other monetary and non-monetary securities classified as available for sale are recognised in other comprehensive income. Details on how the fair value of financial instruments is determined are disclosed in note 2(b)(viii).

v) Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (“loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired.

– Assets carried at amortised cost

For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss. Impairment testing of trade receivables is described in note 1(l).

– Assets classified as available-for-sale

If there is objective evidence of impairment for availablefor-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss. Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent period. If the fair value of a debt instrument classified as available for sale increases in a subsequent period and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.

54 mirvac group annual report 2013

1 suMMARy of sIgnIfICAnt ACCountIng polICIes / ContInueD

q) Derivatives and hedging activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Mirvac designates certain derivatives as either (1) hedges of the fair value of recognised assets, liabilities or firm commitments (“fair value hedges”); or (2) hedges of highly probable forecast transactions (“cash flow hedges”). Mirvac documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. Mirvac also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.

i) Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The gain or loss relating to the effective portion of interest rate swaps hedging fixed rate borrowings is recognised in profit or loss within finance costs, together with changes in the fair value of the hedged fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective portion is recognised in profit or loss within other income or other expenses. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity using a recalculated effective interest rate.

ii) Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item will affect profit or loss (for instance, when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventories) or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or liability. When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to profit or loss.

iii) Derivatives that do not qualify for hedge accounting Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in profit or loss.

r) fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end of each reporting period. The quoted market price used for financial assets held by Mirvac is the current bid price; the appropriate quoted market price for financial liabilities is the current asking price.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. Mirvac uses a variety of methods and makes assumptions that are based on market conditions existing at the end of the reporting period. Quoted market prices or dealer quotes for similar instruments are used for long term debt instruments held. Other techniques, such as estimated discounted cash flow (“DCF”), are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to Mirvac for similar financial instruments. Transaction costs are included in the initial carrying amounts of the financial instruments, which are not carried at fair value through profit or loss.

s) property, plant and equipment

Property, plant and equipment comprises land and buildings, plant and equipment and owner-occupied administration properties. Increases in the carrying amounts arising on the revaluation of certain classes of property, plant and equipment are credited, net of tax, in other comprehensive income and accumulated in reserves in equity. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit or loss. Decreases that reverse previous increases of the same asset are first recognised in other comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to profit or loss. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to profit or loss and depreciation based on the asset’s original cost, net of tax, is reclassified from the property, plant and equipment revaluation surplus to retained earnings.

i) Plant and equipment

Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

ii) Owner-occupied properties

Properties are classified as owner-occupied where Mirvac occupies more than 10 per cent of the total lettable area of the individual property. Owner-occupied properties are shown at fair value, less subsequent depreciation for buildings. Fair values are determined by external valuers on a rotation basis with one-half of the portfolio being valued annually. Those assets which are not subject to an external valuation at the end of the reporting period are fair valued internally by management. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is revalued to fair value.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

1 suMMARy of sIgnIfICAnt ACCountIng polICIes / ContInueD

Land is not depreciated. Depreciation on other assets is
calculated using the straight line method to allocate their
cost or revalued amounts, net of their residual values, over
their estimated useful lives, as follows:
– Buildings 40 years
– Plant and equipment 3-15 years
– Offce leasehold improvements 1-10 years.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (refer to note 1(j)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss on a net basis when the risks and rewards pass to the purchaser.

t) Investment properties

i) Investment properties

Investment properties are properties held for long term rental yields and for capital appreciation. Investment properties are carried at fair value, being the amounts for which the properties could be exchanged between willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the same location and condition and subject to similar leases, with any gain or loss arising from a change in fair value recognised in profit or loss. Investment properties are revalued by external valuers on a rotation basis with approximately one-half of the portfolio being valued annually. Investment properties which are not subject to an external valuation at the end of the reporting period are fair valued internally by management. The carrying amount of the investment properties recorded in the consolidated statement of financial position includes components relating to lease incentives.

Investment properties also include properties that are under construction for future use as investment properties. These are carried at fair value unless the fair value cannot yet be reliably determined. Where that is the case, the property will be accounted for at cost until either the fair value becomes reliably determinable or construction is complete. The fair value of IPUC is determined by using estimation models including DCF and residual valuations. The estimated value of future assets is based on the expected future income from the project, using current yields of similar completed properties. The remaining expected costs of completion plus risk adjusted development margin are deducted from the estimated future asset value.

ii) Investment properties under redevelopment Existing investment properties being redeveloped for continued future use are carried at fair value.

iii) Lease incentives

Lease incentives provided under an operating lease by the Group as lessor are recognised on a straight line basis against rental income. As these incentives are repaid out of future lease payments, they are recognised as an asset in the consolidated statement of financial position as a component of the carrying amount of investment properties and amortised over the lease period. Where the investment property is supported by a valuation that incorporates the value of lease incentives, the investment property is revalued back to the valuation amount after the lease incentive amortisation has been charged as an expense.

u) Intangible assets

i) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of Mirvac’s share of the net identifiable assets of the acquired controlled entity, associate or joint venture at the date of acquisition. Goodwill on acquisition of controlled entities is included in intangible assets. Goodwill on acquisition of associates and joint ventures is included in investments in associates and joint ventures respectively. Goodwill acquired in business combinations is not amortised. Instead, goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to CGUs for the purpose of impairment testing. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segments (refer to note 3).

ii) Management rights

Management rights which have an indefinite useful life are not amortised but tested annually for impairment.

v) trade and other payables

These amounts represent liabilities for goods and services provided to Mirvac prior to the end of the year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

w) borrowings and borrowing costs

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual drawdown of the facility, are recognised as prepayments and amortised on a straight line basis over the term of the facility. Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. Borrowings are classified as current liabilities unless Mirvac has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period. Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

x) employee benefits

i) Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the end of the reporting period in which the employees render the related service, are recognised in other creditors and accruals in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

56 mirvac group annual report 2013

1 suMMARy of sIgnIfICAnt ACCountIng polICIes / ContInueD

ii) LSL

The liability for LSL vesting within 12 months of the end of the reporting period is recognised and is measured in accordance with (i) above and included in provisions. The liability for LSL vesting more than 12 months from the end of the reporting period is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of each reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using interest rates attaching, at the end of the reporting period, to national government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash flows.

iii) Security based payments

Security based payments are recognised for the following plans:

– Current LTI

The fair value at grant date is independently determined using a Monte-Carlo simulation that takes into account the exercise price, the vesting and performance criteria, the impact of dilution, the security price at grant date and expected price volatility of the underlying security, the expected dividend yield and the risk-free interest rate for the term of the equity instrument. The fair value is then expensed on a straight line basis over the vesting period of equity instruments.

– EEP

Security based charges relating to the securities issued under the EEP are included in profit or loss in the year in which the securities are granted with a corresponding increase to Mirvac’s contributed equity.

– Superseded plans

The fair value of equity instruments granted under the superseded LTI plan and EIS is recognised in employee benefits expenses with a corresponding increase in equity. The fair value is measured at grant date and recognised over the vesting period.

iv) STI

A liability for STI payable is recognised in accruals where there is a present obligation to settle the liability and at least one of the following conditions is met:

there are formal terms for determining the amount of the benefit;
the amounts to be paid are determined before the time of completion of the consolidated financial statements; or
past practice gives clear evidence of the amount of the obligation.

Liabilities for STI are expected to be settled within 12 months and are measured at the amounts expected to be paid when they are settled.

v) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. Mirvac recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

vi) Retirement benefit obligations

Contributions to the defined contribution fund are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

y) provisions

Provisions for legal claims, contracts and make good obligations are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

z) Contributed equity

Ordinary securities are classified as equity. Incremental costs directly attributable to the issue of new securities or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new securities or options, or for the acquisition of a business, are not included in the cost of the acquisition as part of the purchase consideration. In accordance with AASB 2 Share-based Payment , securities issued as part of the LTI plan and EIS are not classified as ordinary securities, until such time as the employee loans are fully repaid or the employee leaves Mirvac. If Mirvac reacquires its own equity instruments, for example, as the result of a security buy-back, those instruments are deducted from equity and the associated securities are cancelled. No gain or loss is recognised in profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.

aa) Distributions

Provision is made for the amount of any distribution declared at or before the end of the year but not distributed at the end of the year.

bb) earnings per security

i) Basic earnings per security

Basic earnings per security is calculated by dividing the profit attributable to securityholders of the Group by the weighted average number of ordinary securities outstanding during the year. In calculating basic earnings per security, securities issued under the EIS have been excluded from the weighted average number of securities.

ii) Diluted earnings per security

Diluted earnings per security adjusts the figures used in the determination of basic earnings per security to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary securities (including those securities issued under the EIS) and the weighted average number of securities assumed to have been issued for no consideration in relation to dilutive potential ordinary securities.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

1 suMMARy of sIgnIfICAnt ACCountIng polICIes / ContInueD

cc) parent entity financial information

The financial information for the parent entity, Mirvac Limited, disclosed in note 40 has been prepared on the same basis as the consolidated financial statements, except as set out below:

i) Investments in controlled entities, associates and joint ventures

Investments in controlled entities, associates and joint ventures are accounted for at cost in the financial statements of Mirvac Limited. Dividends/distributions received from associates and joint ventures are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments.

ii) Tax consolidation legislation

Mirvac Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Mirvac Limited, and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in its own right. In addition to its own current and deferred tax amounts, Mirvac Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Assets or liabilities arising under tax funding agreements within the tax consolidated group are recognised as amounts receivable from or payable to other entities in the Group. Details about the tax funding agreement are disclosed in note 6(d).

Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement is recognised as a contribution to (or distribution from) whollyowned tax consolidated entities. Under the current income tax legislation, MPT is not liable for income tax, provided its taxable income is fully distributed to unitholders each year.

iii) Financial guarantees

Where the parent entity has provided financial guarantees in relation to loans and payables of controlled entities or associates and joint ventures for no compensation, the fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment.

dd) new accounting standards and interpretations

Certain new and amending accounting standards and interpretations have been published that are not mandatory for 30 June 2013 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below:

i) AASB 9 Financial Instruments , AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 , AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) and AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures (effective from 1 January 2015). AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2015 but is available for early adoption. When adopted, the standard will affect in particular the Group’s accounting for its available-for-sale financial assets, since AASB 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading. Fair value gains and losses on available-for-sale debt investments, for example, will therefore have to be recognised directly in profit or loss.

There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The derecognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The Group has not yet decided when to adopt AASB 9.

ii) AASB 10 Consolidated Financial Statements , AASB 11 Joint Arrangements , AASB 12 Disclosure of Interests in Other Entities , revised AASB 127 Separate Financial Statements and AASB 128 Investments in Associates and Joint Ventures , and AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards and AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments (effective 1 January 2013). In August 2011, the AASB issued a suite of five new and amended standards which address the accounting for joint arrangements, consolidated financial statements and associated disclosures. AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements , and Interpretation 112 Consolidation – Special Purpose Entities . The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single definition of control that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns. Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. Control exists when the investor can use its power to affect the amount of its returns. There is also new guidance on participating and protective rights and on agent/principal relationships. The Group has performed a detailed analysis on all its investments in joint ventures and associates and does not expect the new standard to have any significant impact on its composition. AASB 11 introduces a principles based approach to accounting for joint arrangements. The focus is no longer on the legal structure of joint arrangements, but rather on how rights and obligations are shared by the parties to the joint arrangement. Based on the assessment of rights and obligations, a joint arrangement will be classified as either a joint operation or a joint venture. Joint ventures are accounted for using the equity method, and the choice to proportionately consolidate will no longer be permitted. Parties to a joint operation will account for their share of revenues, expenses, assets and liabilities in much the same way as under the previous standard. AASB 11 also provides guidance for parties that participate in joint arrangements but do not share joint control. AASB 11 will not have any impact on the amounts recognised in its financial statements. AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11, and replaces the disclosure requirements currently found in AASB 127 Consolidated and Separate Financial Statements and AASB 128 Investments in Associates and Joint Ventures. Application of this standard by the Group will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to the Group’s investments. Amendments to AASB 128 provide clarification that an entity continues to apply the equity method and does not remeasure its retained interest as part of ownership changes where a joint venture becomes an associate, and vice versa. The amendments also introduce a “partial disposal” concept. The Group does not expect to adopt the new standards before their operative date, which means they apply from 1 July 2013.

58 mirvac group annual report 2013

1 suMMARy of sIgnIfICAnt ACCountIng polICIes / ContInueD

iii) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013). AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair value disclosures. The Group has reviewed its current measurement techniques and there will be no material impact as a result of the new guidance on any of the amounts recognised in the financial statements. However, application of the new standard will impact the type of information disclosed in the notes to the financial statements. The Group does not intend to adopt the new standard before its operative date, which means they apply from 1 July 2013.
iv) AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements (effective 1 July 2013). In July 2011, the AASB decided to remove the individual KMP disclosure requirements from AASB 124 Related Party Disclosures , to achieve consistency with the international equivalent standard and remove a duplication of the requirements with the Corporations Act 2001 . While this will reduce the disclosures that are currently required in the notes to the financial statements, it will not affect any of the amounts recognised in the financial statements. The amendments apply from 1 July 2013 and cannot be adopted early. The Corporations Act 2001 requirements in relation to remuneration reports will remain unchanged for now, but these requirements are currently subject to review and may also be revised in the near future.
v) AASB 2012-3 and AASB 2012-2 Offsetting Financial Assets and Financial Liabilities (amendments to IAS 32) and Disclosures – Offsetting Financial Assets and Financial Liabilities (amendments to IFRS 7) (effective 1 January 2014 and 1 January 2013 respectively). In December 2011, the IASB made amendments to the application guidance in IAS 32 Financial Instruments: Presentation , to clarify some of the requirements for offsetting financial assets and financial liabilities in the consolidated statement of financial position. These amendments are effective from 1 January 2014. They are unlikely to affect the accounting for any of the entity’s current offsetting arrangements. However, the IASB has also introduced more extensive disclosure requirements into IFRS 7 which will apply from 1 January 2013. The AASB has made the equivalent changes to AASB 132 Financial Instruments: Presentation and AASB 7 Financial Instruments: Disclosures . The Group will provide a number of additional disclosures in relation to its offsetting arrangements. The Group intends to apply the new rules for the first time from 1 July 2013.

There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

2 CRItICAl ACCountIng JuDgeMents AnD estIMAtes

Judgements and estimates are continually evaluated, based on historical experience and other factors, including expectations of future events that may have a financial impact and are believed to be reasonable under the circumstances.

a) Critical judgements in applying Mirvac’s accounting policies

The following are the critical judgements that management has made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements:

i) Revenue recognition

The measurement of development revenue, which is recognised when the significant risks and rewards of ownership are transferred to the purchaser, requires management to exercise its judgement in setting selling prices, given due consideration to cost inputs and market conditions. The measurement of construction revenue, which is recognised upon construction contracts on a percentage of completion basis, requires an estimate of expenses incurred to date as a percentage of total estimated costs.

ii) Cost of goods sold

Inventories are expensed as cost of goods sold upon sale. Management uses its judgement in determining the apportionment of cost of goods sold, through either unit entitlement or percentage of revenue, the quantum of cost of goods sold, which includes both costs incurred to date and forecast final costs, and the nature of cost of goods sold, which may include acquisition costs, development costs, borrowing costs and those costs incurred in bringing the inventories to a saleable state.

iii) Provision for loss on inventories

Mirvac is required to carry inventories at the lower of cost and NRV. Through the use of project feasibility assessments, which are based on the most reliable evidence available at the time, and incorporate both quantitative and qualitative factors, such as estimated selling rates and costs to complete, judgement is made concerning estimated NRV, which, in some cases, have resulted in the establishment of a provision.

iv) Investment properties and owner-occupied properties

Mirvac is required to make a judgement to determine whether a property qualifies as an investment property or property, plant and equipment in the cases where part of the building is occupied by the Group. Each property is considered individually. Where more than 10 per cent of the lettable space is occupied by the Group, the property is normally treated as owner-occupied and accounted for as part of property, plant and equipment.

v) Fair value estimation

Where financial assets and liabilities are carried at fair value, the fair value is based on assumptions of future events and involves significant estimates. The basis of valuation is set out in note 1(r); however, the fair values of derivatives reported at the end of the reporting period may differ if there is volatility in market rates, indexes, equity prices or foreign exchange rates in future periods.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

2 CRItICAl ACCountIng JuDgeMents AnD estIMAtes / ContInueD

vi) Security based payment transactions

The Group measures the cost of equity settled securities allocated to employees by reference to the fair value of the equity instruments at the date at which they are granted. As explained in note 34, the fair value is determined by an external valuer using the bionomial simulation pricing method; this method includes a number of judgements and assumptions. These judgements and assumptions relating to security based payments would have no impact on the carrying amounts of assets and liabilities in the consolidated statement of financial position but may impact the security based payment expense taken to profit or loss and equity.

vii) Recognition of deferred tax assets

The recognition of deferred tax assets is based upon whether it is probable that sufficient and suitable taxable profits will be available in the future against which the reversal of temporary differences can be deducted. To determine the future taxable profits, reference is made to the latest available profit forecasts. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the statement of financial position. Deferred tax assets, including those arising from tax losses, capital losses and temporary differences, are recognised only when it is considered probable that they will be recovered. Recoverability is dependent on the generation of sufficient future taxable profits.

b) Key sources of estimation uncertainty

In preparing the consolidated financial statements, management is required to make estimations and assumptions. The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next year:

i) Inventories

The NRV of inventories is the estimated selling price in the ordinary course of business less estimated costs of completion and costs to sell. Such estimates take into consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the reporting period. The key assumptions require the use of management judgement and are reviewed quarterly. During the year, Mirvac expensed $242.9m (2012: $25.0m) in relation to inventories that were carried in excess of the NRV.

ii) Impairment of goodwill

Mirvac annually tests whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1. Determining whether goodwill is impaired requires an estimation of the value in use of the CGUs to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from each CGU and a suitable discount rate in order to calculate the net present value (“NPV”). The carrying amount of goodwill at the end of the reporting period was $63.1m (2012: $63.1m). There was no impairment loss recognised during the year (2012: $nil). Details on the assumptions used are provided in note 18.

iii) Estimated impairment of investments accounted for using the equity method

The investments are tested for impairment, by comparing recoverable amounts (higher of value in use, and fair value less costs to sell) with the carrying amounts, whenever there is an indication that the investment may be impaired. In determining the value in use of the investment, Mirvac estimates the present value of the estimated future cash flows expected to arise from distributions to be received from the investment and from its ultimate disposal. Details of the assumptions used by management in assessing the impairment are provided in notes 29 and 30.

iv) Fair value of investments not traded in active markets

The fair value of investments not traded in an active market is determined by the unit price as advised by the fund manager. The unit price is determined by NPV calculations using future cash flows and an appropriate post-tax discount rate. The carrying value of investments not traded in an active market determined using the above techniques and assumptions is $12.6m (2012: $12.7m) and is disclosed as other financial assets at fair value through profit or loss (refer to note 11).

v) Valuation of investment properties and owneroccupied properties

Mirvac uses judgement in respect of the fair values of investment properties and owner-occupied properties. Investment properties and owner-occupied properties are revalued by external valuers on a rotation basis with approximately one-half of the portfolio being valued annually. Investment properties which are not subject to an external valuation at the end of the reporting period are fair valued internally by management. The assumptions used in the estimations of fair values include expected future market rentals, discount rates, market prices and economic conditions. The reported fair values of investment properties and owner-occupied properties reflect the market conditions at the end of the reporting period. While this represents the best estimation of fair value at the reporting date, actual sale prices achieved (should the investment properties and owner-occupied properties be sold) may be higher or lower than the most recent valuation. This is particularly relevant in periods of market illiquidity or uncertainty. The carrying value at the end of the reporting period for investment properties was $6,029.6m (2012: $5,488.5m) and owner-occupied properties $306.7m (2012: $294.7m). Details on investment properties are provided in note 16 and owner-occupied properties in note 17.

vi) Valuation of IPUC

IPUC are valued at fair value. There are generally no active markets for IPUC and fair value is considered to be the estimated market price that would be paid for the partially completed property, reflecting the expectations of market participants of the value of the property when complete less deductions for the estimated costs to complete, with appropriate adjustments for risk and profit. The fair value is determined on the basis of either DCF or residual methods. Both methods require consideration of the project risks which are relevant to the development process, including but not limited to construction and letting risks. The estimated value of future assets is based on the expected future income from the project, using current yields of similar completed properties. The net loss on fair value of IPUC was $3.6m (2012: $15.8m). The carrying value of $74.9m (2012: $34.2m) at the end of the year was included in investment properties (refer to note 16).

60 mirvac group annual report 2013

2 CRItICAl ACCountIng JuDgeMents AnD estIMAtes / ContInueD

vii) Valuation of security based payment transactions Valuation of security based payment transactions are performed using judgements around the fair value of the equity instruments on the date at which they are granted. The fair value is determined using a Monte-Carlo simulation. Mirvac recognises a security based payment over the vesting period which is based on the estimation of the number of equity instruments likely to vest. At the end of the vesting period, Mirvac will assess the total expense recognised in comparison to the number of equity instruments that ultimately vested.

viii) Valuation of derivatives and other financial instruments Mirvac uses judgement in selecting the appropriate valuation technique for financial instruments not quoted in an active market. Valuation of derivative financial instruments involves assumptions based on quoted market rates adjusted for specific features of the instrument. The valuations of any financial instrument may change in the event of market volatility.

ix) Estimated future taxable profits

Mirvac prepares financial budgets and forecasts on a regular basis which are reviewed, covering a five year period. Budgets and forecasts are prepared on a base case and identified new projects. These forecasts and budgets form the basis of future profitability to support the carrying of the deferred tax asset.

Mirvac’s operating and financial performance is influenced by a variety of general economic and business conditions, which are outside the control of Mirvac, including the level of inflation, interest rates, exchange rates, commodity prices, ability to access funding, oversupply and demand conditions and government fiscal, monetary and regulatory policies. A change in any of the assumptions used in the budgeting and forecasting would have an impact on the future profitability of the Group. For example, adverse fluctuations in interest rates, to the extent that they are not hedged or forecast, may impact Mirvac’s earnings and asset values due to any impact on property markets in which Mirvac operates.

3 segMentAl InfoRMAtIon

a) Description of business segments

Management has determined the segments based on the reports reviewed by the ELT that are used to make strategic decisions. The ELT considers the business from both a product, and within Australia, a geographic perspective. Each division prepares an executive finance report on a monthly basis; this is a detailed report that summarises the following:

historic results of the division, using both statutory profit and operating profit;
future forecast of the division for the remainder of the year; and
key risks and opportunities facing the division.

The ELT assesses the performance of the segments based on a number of measures, both financial and non-financial, which include a measure of operating profit; the use of capital; and success in delivering against KPIs. The ELT has identified two core divisions, Investment and Development. Applying the requirements of AASB 8 Operating Segments , Mirvac has two reportable segments, and in addition one business unit, Investment Management (including MAM), which does not meet the requirements for aggregation and therefore has been shown separately:

i) Investment

The division is made up of MPT and a small number of assets held by the Company which holds investments in properties covering the retail, office, industrial and hotel sectors throughout Australia, held for the purpose of producing rental income, predominately through the Trust, its controlled trusts and corporate entities holding investment properties. Income is also derived from investments in associates including Mirvac Industrial Trust.

ii) Hotel Management

Hotel Management was responsible for management of hotels across Australia and New Zealand. The Hotel Management business was sold on 22 May 2012, as a result only the comparatives are shown.

iii) Investment Management

MIM manages listed and unlisted property funds on behalf of retail and institutional investors. MIM has been disposing of non-core funds over the past three years in line with the Group’s strategy to focus on wholesale investor partnerships, providing capital for the Group’s two core divisions, Investment and Development. MIM also includes MAM. MAM manages assets on behalf of MPT and external property owners across the real estate spectrum.

iv) Development

The division’s primary operations are property development and construction of residential, office, industrial and retail development projects throughout Australia. In addition, project management fees are received from the management of development and construction projects on behalf of associates, joint ventures and residential development funds.

b) Inter-segment transfers

Segment revenues, expenses and results include transfers between segments. Such transfers are on an arm’s length basis and eliminated on consolidation.

c) elimination

The elimination segment includes adjustment to eliminate trading between segments and to transfer balances to reflect correct disclosure of items on a consolidated basis.

d) Comparative information

When necessary, comparative information has been reclassified to achieve consistency in disclosure in current year amounts and other disclosures.

e) operating profit

Operating profit is a financial measure which is not prescribed by AAS and represents the profit under AAS adjusted for specific non-cash items and significant items which management considers to reflect the core earnings of the Group.

f) segment liabilities

The amounts provided to the ELT with respect to total liabilities are measured in a manner consistent with that of the consolidated financial statements. These liabilities are allocated based on the operations of the segment. The Group’s borrowings and derivative financial instruments are not considered to be segment liabilities but rather are managed by the Mirvac Group Treasury.

g) geographical and customer analysis

Mirvac operates predominately in Australia with investments in the United States of America. Materially, all revenue is derived in Australia and all assets are in Australia. No single customer in the current or prior year provided more than 10 per cent of the Group’s revenue.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

3 segMentAl InfoRMAtIon / ContInueD

						total inc.
		Investment				discontinued	Discontinued	Consolidated
Investment 2013 $m		Management $m	Development $m	Unallocated $m	Elimination $m	operations $m	operations $m	soCI $m
Revenue from continuing operations
Investment properties rental revenue	578.1	5.0	—	—	—	583.1	—	583.1
Investment management fee revenue	—	9.1	—	—	—	9.1	—	9.1
Development and construction revenue	—	—	820.8	—	2.0	822.8	—	822.8
Development management fee revenue	—	—	25.8	—	(0.5)	25.3	—	25.3
Interest revenue	9.1	0.9	5.5	3.9	(0.6)	18.8	—	18.8
Dividend and distribution revenue	0.9	—	—	—	—	0.9	—	0.9
Other revenue	2.0	2.8	2.5	4.2	(1.8)	9.7	—	9.7
Inter-segment revenue	37.8	15.1	8.2	—	(61.1)	—	—	—
total revenue from continuingoperations	627.9	32.9	862.8	8.1	(62.0)	1,469.7	—	1,469.7
Net gain(loss) on fair value of investment properties Share of net proft/(loss) of associates and joint ventures accounted for using the equity method (Loss)/gain on fnancial instruments	56.0 10.8 (1.2)	— 2.1 —	— (0.7) —	— 0.2 34.2	(2.0) — —	54.0 12.4 33.0	— — —	54.0 12.4 33.0
Net gain on sale of investments	—	—	—	2.0	—	2.0	(2.0)	—
Net gain on sale of property, plant and equipment	—	—	0.1	—	—	0.1	—	0.1
total other income	65.6	2.1	(0.6)	36.4	(2.0)	101.5	(2.0)	99.5
total revenue from continuing
operations and other income	693.5	35.0	862.2	44.5	(64.0)	1,571.2	(2.0)	1,569.2
Net loss/(gain) on fair value on IPUC	5.6	—	—	—	(2.0)	3.6	—	3.6
Net loss on sale of investments	—	1.0	—	—	—	1.0	—	1.0
Net loss on sale of investment properties	2.7	—	—	—	—	2.7	—	2.7
Foreign exchange loss	1.3	—	—	44.1	—	45.4	—	45.4
Investment properties expenses	145.6	1.9	—	—	(10.9)	136.6	—	136.6
Cost of property development and construction	—	—	703.7	—	—	703.7	—	703.7
Employee benefts expenses	—	18.9	20.9	57.1	—	96.9	—	96.9
Depreciation and amortisation expenses	21.8	0.4	2.5	1.6	5.0	31.3	—	31.3
Impairment of investments including associates and joint ventures	—	—	12.3	—	—	12.3	—	12.3
Impairment of loans	—	—	18.0	—	—	18.0	—	18.0
Finance costs	42.8	16.3	58.6	0.3	(30.9)	87.1	—	87.1
Selling and marketing expenses	—	0.6	20.6	0.7	—	21.9	—	21.9
Provision for loss on inventories	—	—	242.9	—	—	242.9	—	242.9
Other expenses	9.4	9.6	18.8	25.5	(12.3)	51.0	—	51.0
proft/(loss) from continuing operations before income tax	464.3	(13.7)	(236.1)	(84.8)	(12.9)	116.8	(2.0)	114.8
Income tax beneft						23.1	0.6	23.7
proft from continuing operations						139.9	(1.4)	138.5
Proft from discontinued operations(net of tax)						—	1.4	1.4
proft attributable to the stapled securityholders of Mirvac						139.9	—	139.9

62 mirvac group annual report 2013

3 segMentAl InfoRMAtIon / ContInueD	3 segMentAl InfoRMAtIon / ContInueD
			Investment
2013	Investment $m		Management $m	Development $m	Unallocated $m	Elimination $m	Tax $m	total $m
proft/(loss) attributable to the stapled securityholders of Mirvac		464.3	(13.7)	(236.1)	(84.8)	(12.9)	23.1	139.9
specifc non-cash items
Net (gain)/loss on fair value of investment properties		(56.0)	—	—	—	2.0	—	(54.0)
Net loss/(gain) on fair value of IPUC		5.6	—	—	—	(2.0)	—	3.6
Net loss on fair value of derivative fnancial instruments and associated foreign exchange movements1		2.5	—	—	9.9	—	—	12.4
Security based payment expense2		—	—	—	4.1	—	—	4.1
Depreciation of owner-occupied investment properties3		—	—	—	—	7.5	—	7.5
Straight-lining of lease revenue4		(17.3)	—	—	—	—	—	(17.3)
Amortisation of lease ftout incentives5		13.4	—	—	—	(2.5)	—	10.9
Net loss on fair value of investment properties, derivatives and other specifc non-cash items included in share of net proft of associates and joint ventures6		3.6	0.8	—	—	—	—	4.4
signifcant items
Impairment of investments including associates and joint ventures		—	—	12.3	—	—	—	12.3
Impairment of loans		—	—	18.0	—	—	—	18.0
Provision for loss on inventories		—	—	242.9	—	—	—	242.9
Net loss from sale of non-aligned assets7		2.7	1.0	—	—	—	—	3.7
tax effect
Tax effect of non-cash and signifcant adjustments8		—	—	—	—	—	(9.4)	(9.4)
Discontinued operations
Specifc non-cash items and signifcant items included inproft from discontinued operations(net of tax)9		—	—	—	(2.0)	—	0.6	(1.4)
operating proft/(loss) (proft before specifc non-cash and signifcant items)		418.8	(11.9)	37.1	(72.8)	(7.9)	14.3	377.6

1) Total of (Loss)/gain on financial instruments and Foreign exchange loss in the SoCI.

2) Included within Employee benefits expenses in the SoCI.

3) Included within Depreciation and amortisation expenses in the SoCI.

4) Included within Investment properties rental revenue in the SoCI.

5) Included within Depreciation and amortisation expenses in the SoCI.

6) Included within Share of net profit of associates and joint ventures accounted for using the equity method in the SoCI.

7) Total of Net loss on sale of investments and Net loss on sale of investment properties in the SoCI.

8) Included in Income tax benefit in the SoCI.

9) Included within Profit from discontinued operations (net of tax) in the SoCI.

							Total inc.
		Hotel	Investment				discontinued	Discontinued	Consolidated
Investment 2012 $m		Management $m	Management Development $m $m		Unallocated $m	Elimination $m	operations $m	operations1 $m	SoCI $m
Revenue from continuing operations
Investment properties rental revenue	555.2	—	4.7	—	—	(1.2)	558.7	—	558.7
Hotel operating revenue	—	150.7	—	—	—	—	150.7	(150.7)	—
Investment management fee revenue	—	—	14.8	—	—	(0.8)	14.0	(2.2)	11.8
Development and construction revenue	—	—	—	918.4	—	—	918.4	—	918.4
Development management fee revenue	—	—	—	18.3	—	2.8	21.1	(1.8)	19.3
Interest revenue	14.2	0.1	2.2	6.1	3.6	(0.8)	25.4	(0.2)	25.2
Dividend and distribution revenue	4.8	—	—	—	—	—	4.8	(3.6)	1.2
Other revenue	3.6	0.5	3.1	7.2	2.0	(2.8)	13.6	(0.6)	13.0
Inter-segment sales	54.7	0.4	14.7	100.8	0.9	(171.5)	—	—	—
Total revenue from
continuingoperations	632.5	151.7	39.5	1,050.8	6.5	(174.3)	1,706.7	(159.1)	1,547.6
Net gain/(loss) on fair value of
investment properties and owner-occupied hotel management lots and freehold hotels	163.4	—	—	—	—	(14.7)	148.7	—	148.7
Share of net proft of associates and joint ventures accounted for using the equity method Gain on fnancial instruments	8.7 —	— —	2.7 —	0.6 —	0.3 38.8	— —	12.3 38.8	1.1 —	13.4 38.8
Net gain on sale of
investmentproperties	3.4	—	—	—	—	—	3.4	—	3.4
Total other income	175.5	—	2.7	0.6	39.1	(14.7)	203.2	1.1	204.3
Total revenue from continuing
operations and other income	808.0	151.7	42.2	1,051.4	45.6	(189.0)	1,909.9	(158.0)	1,751.9

1) Reclassification of the results of the assets that form part of the disposal group. Refer to note 13 for further information.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

3 segMentAl InfoRMAtIon / ContInueD

							Total inc.
		Hotel	Investment				discontinued	Discontinued	Consolidated
Investment 2012 $m		Management $m	Management $m	Development $m	Unallocated $m	Elimination $m	operations $m	operations1 $m	SoCI $m
Total revenue from continuing
operations and other income	808.0	151.7	42.2	1,051.4	45.6	(189.0)	1,909.9	(158.0)	1,751.9
Net loss on fair value of IPUC	15.8	—	—	—	—	—	15.8	—	15.8
Net loss/(gain) on sale of investment	9.0	—	0.6	—	(24.6)	(0.3)	(15.3)	17.9	2.6
Net loss/(gain) on sale of property, plant and equipment	—	—	—	0.3	(3.4)	—	(3.1)	3.5	0.4
Foreign exchange loss	0.7	—	—	—	21.5	—	22.2	—	22.2
Investment properties expenses	137.5	—	2.9	—	—	(13.8)	126.6	—	126.6
Hotel operating expenses	—	46.7	—	—	—	(1.7)	45.0	(45.0)	—
Cost of property development and construction	—	—	—	889.6	—	(84.9)	804.7	—	804.7
Employee benefts expenses	—	69.5	19.2	18.3	56.5	1.1	164.6	(70.3)	94.3
Depreciation and amortisation expenses	24.9	4.4	0.2	2.7	1.4	5.4	39.0	(4.8)	34.2
Impairment of loans	—	—	—	—	6.0	—	6.0	—	6.0
Finance costs	79.5	1.3	19.6	76.4	6.7	(54.3)	129.2	—	129.2
Loss on fnancial instruments	36.8	—	—	—	61.8	—	98.6	—	98.6
Selling and marketing expenses	—	8.7	0.6	27.7	0.4	—	37.4	(8.7)	28.7
Provision for loss on inventories	—	—	—	25.0	—	—	25.0	—	25.0
Other expenses	8.3	5.6	8.1	21.4	18.7	(9.4)	52.7	(5.5)	47.2
Proft/(loss) from continuing operations before income tax Income tax beneft	495.5	15.5	(9.0)	(10.0)	(99.4)	(31.1)	361.5 54.6	(45.1) 13.5	316.4 68.1
Proft from continuing operations Proft from discontinued operations(net of tax)							416.1 —	(31.6) 31.6	384.5 31.6
Proft attributable to the stapled securityholders of Mirvac							416.1	—	416.1

Proft from continuing operations Proft from discontinued operations(net of tax) Proft attributable to the stapled securityholders of Mirvac	Proft from continuing operations Proft from discontinued operations(net of tax) Proft attributable to the stapled securityholders of Mirvac					416.1 — 416.1	416.1 — 416.1	(31.6) 31.6 —	384.5 31.6 416.1
1) Reclassifcation of the results of the assets		that form part of the disposal group. Refer			to note 13 for	further information.
			Hotel	Investment
20121	Investment Management $m $m			Management Development $m $m		Unallocated $m	Elimination $m	Tax $m	Total $m
Proft/(loss) attributable to the stapled securityholders of Mirvac Specifc non-cash items		495.5	15.5	(9.0)	(10.0)	(99.4)	(31.1)	54.6	416.1
Net (gain)/loss on fair value of investment
properties and owner-occupied hotel management lots and freehold hotels		(163.4)	—	—	—	—	14.7	—	(148.7)
Net loss on fair value of IPUC		15.8	—	—	—	—	—	—	15.8
Net loss on fair value of derivative
fnancial instruments and associated foreign exchange movements2		37.5	—	—	—	44.5	—	—	82.0
Security based payment expense3		—	—	—	—	8.5	—	—	8.5
Depreciation of owner-occupied investment properties, hotels and hotel management lots (including hotel
property, plant and equipment)4		—	—	—	—	—	7.6	—	7.6
Straight-lining of lease revenue5		(15.9)	—	—	—	—	—	—	(15.9)
Amortisation of lease ftout incentives	6	16.6	—	—	—	—	(2.2)	—	14.4
Net loss on fair value of investment
properties, derivatives and other specifc non-cash items included in share of net proft of associates7 Signifcant items		2.8	—	1.7	—	—	—	—	4.5
Impairment of loans		—	—	—	—	6.0	—	—	6.0
Provision for loss on inventories		—	—	—	25.0	—	—	—	25.0
Net (gain)/loss on sale of
non-aligned assets8		(1.8)	—	0.6	—	0.4	—	—	(0.8)
Tax effect
Tax effect of non-cash and
signifcant adjustments		—	—	—	—	—	—	(44.4)	(44.4)
Discontinued operations Specifc non-cash items and signifcant items included in proft from discontinued operations(net of tax)		16.6	1.7	—	0.2	(29.4)	0.6	6.5	(3.8)
Operating proft/(loss) (proft before specifc non-cash and signifcant items)		403.7	17.2	(6.7)	15.2	(69.4)	(10.4)	16.7	366.3

1) Restated to show discontinued operations separately.

2) Total of Gain on financial instruments, Foreign exchange loss and Loss on financial instruments in the SoCI.

3) Included within Employee benefits expenses in the SoCI.

4) Included within Depreciation and amortisation expenses in the SoCI.

5) Included within Investment properties rental revenue in the SoCI.

6) Included within Depreciation and amortisation expenses in the SoCI.

7) Included within Share of net profit of associates and joint ventures accounted for using the equity method in the SoCI.

8) Total of Net gain on sale of investment properties and Net loss on sale of investments in the SoCI.

64 mirvac group annual report 2013

3 segMentAl InfoRMAtIon / ContInueD

							total inc.
		Hotel	Investment				disposal	Discontinued	Consolidated
Investment $m		Management $m	Management $m	Development $m	Unallocated $m	Elimination $m	group $m	operations $m	sofp/soCI $m
30 June 2013
Total assets	7,263.0	—	49.1	2,123.3	296.3	(485.3)	9,246.4	—	9,246.4
Total liabilities	1,358.6	—	8.1	665.0	1,629.1	(425.2)	3,235.6	—	3,235.6
Investment in associates
and joint ventures	201.2	—	6.6	212.6	2.4	(42.9)	379.9	—	379.9
Acquisitions of investments and property, plant and equipment	802.3	—	0.7	1.8	1.5	(6.9)	799.4	—	799.4
Depreciation and amortisation expenses	21.8	—	0.4	2.5	1.6	5.0	31.3	—	31.3
30 June 2012
Total assets	6,622.6	15.8	53.7	1,961.9	381.5	(624.9)	8,410.6	—	8,410.6
Total liabilities	761.2	0.5	9.1	377.4	2,052.8	(545.1)	2,655.9	—	2,655.9
Investment in associates
and joint ventures	147.2	—	9.5	231.7	2.4	(33.4)	357.4	—	357.4
Acquisitions of investments and property, plant and equipment	109.5	2.6	0.6	41.6	1.0	—	155.3	—	155.3
Depreciation and amortisation expenses	24.9	4.4	0.2	2.7	1.4	5.4	39.0	(4.8)	34.2

4 ReVenue fRoM ContInuIng opeRAtIons AnD otHeR InCoMe

4 ReVenue fRoM ContInuIng opeRAtIons AnD otHeR InCoMe
		2013	2012
		$m	$m
Interest revenue
Cash and cash equivalents		1.6	12.7
Associates, joint ventures and related party loans		14.3	11.6
Mezzanine loans		2.9	0.9
total interest revenue		18.8	25.2
gain on fnancial instruments
Gain on interest rate derivatives		4.4	—
Gain on cross currencyderivatives		28.6	38.8
totalgain on fnancial instruments		33.0	38.8
5 eXpenses
		2013	2012
proft before income tax includes the followingspecifc expenses:	Note	$m	$m
Interest and fnance charges paid/payable net of provision release		113.7	168.4
Amount capitalised		(62.0)	(93.0)
Interest capitalised in current and prior years expensed this year net of provision release		32.2	50.2
Borrowingcosts amortised		3.2	3.6
total fnance costs		87.1	129.2
Depreciation
Plant and equipment		4.5	3.5
Owner-occupied freehold hotels		—	1.0
Owner-occupied administrationproperties		7.5	7.0
total depreciation expenses	17	12.0	11.5
Amortisation
Lease ftout incentives		10.9	14.4
Lease incentives		8.4	8.3
total amortisation expenses		19.3	22.7
total depreciation and amortisation expenses		31.3	34.2
loss on fnancial instruments
Loss on interest rate derivatives		—	97.5
Loss on revaluation of assets at fair value throughproft or loss		—	1.1
total loss on fnancial instruments		—	98.6
other charges against assets
Provision for loss on inventories	10	242.9	25.0
Impairment of trade receivables	8	(0.2)	0.2
Impairment of investments including associates and joint ventures	30(d)	12.3	—
Impairment of loans		18.0	6.0
Rental expense relatingto operatingleases		3.9	5.1

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

6 InCoMe tAX

6 InCoMe tAX
	2013	2012
	$m	$m
a) Income tax beneft
Current tax	1.3	3.1
Deferred tax	(24.4)	(57.7)
Income tax beneft	(23.1)	(54.6)
Income tax beneft is attributable to:
Loss from continuing operations	(23.7)	(68.1)
Proft from discontinued operations	0.6	13.5
Aggregate income tax beneft	(23.1)	(54.6)
Deferred income tax beneft included in income tax beneft comprises:
Increase in deferred tax assets	(9.0)	(95.3)
(Decrease)/increase in deferred tax liabilities	(15.4)	37.6
Deferred income tax beneft	(24.4)	(57.7)
b) numerical reconciliation of income tax beneft to prima facie tax payable
Proft from continuing operations before income tax	114.8	316.4
Proft from discontinued operations before income tax	2.0	45.1
Proft before income tax	116.8	361.5
Income tax calculated at 30 per cent	35.0	108.5
tax effect of amounts which are not deductible/(taxable) in calculating taxable income
Non-deductible impairment of goodwill, management rights and other intangible assets	—	0.1
Non-deductible impairment of investments including associates and joint ventures	4.0	—
Non-deductible impairment of loans	6.0	1.3
Other non-deductible/non-assessable items	(0.8)	0.6
Utilisation of prior year tax and CGT losses not previously recognised	(0.9)	(21.6)
De-recognition of net deferred tax asset1	66.4	—
Trust net income not subject to tax	(132.6)	(140.9)
	(22.9)	(52.0)
Overprovided inprioryears	(0.2)	(2.6)
Income tax beneft	(23.1)	(54.6)
c) tax losses
Unused tax and CGT losses incurred by Australian entities for which no deferred tax asset has been recognised	550.8	144.3
potential tax beneft at 30per cent	165.2	43.3

1) During the period, Mirvac has assessed the carrying value of its net deferred asset position and determined that it is prudent to de-recognise part of its net deferred tax asset position on the basis that it may not be considered recoverable with a sufficient degree of certainty. Refer to note 2(a)(vii).

d) tax consolidation legislation

Mirvac Limited and its wholly owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July 2003 (refer to note 1(cc)). On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement which, in the opinion of the Directors, limits the joint and several liability of the wholly owned entities in the case of a default by the head entity, Mirvac Limited. The entities within the tax consolidated group have also entered into a tax funding agreement under which the wholly owned entities fully compensate Mirvac Limited for any current tax payable assumed and are compensated by Mirvac Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Mirvac Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly owned entities’ financial statements. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current inter-company receivables/payables.

66 mirvac group annual report 2013

6 InCoMe tAX / ContInueD

6 InCoMe tAX / ContInueD
							2013		2012
							$m		$m
e) Current tax liabilities
Taxpayable							—		0.2
f) net deferred tax assets
Non-current assets – deferred tax assets
The balance comprises temporary differences attributable to:
Unearned profts with associates							18.1		15.1
Accrued expenses							23.9		23.0
Employee provisions							6.0		6.3
Unearned progress billings							97.0		—
Derivative fnancial instruments							22.1		47.0
Impairment of loans							5.4		4.4
Property, plant and equipment							1.3		5.0
Equity raising costs							0.2		0.6
Tax losses							165.7		228.7
Deferred tax assets							339.7		330.1
Non-current liabilities – deferred tax liabilities
The balance comprises temporary differences attributable to:
Equity accounted investments							10.5		9.1
Inventories							79.0		82.7
Foreign exchange translation gains							28.6		39.1
Other							1.5		1.8
Deferred tax liabilities							119.6		132.7
net deferred tax assets							220.1		197.4
g) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not recognised in proft or loss or other comprehensive income but directly debited or credited to equity:
Current tax – credited directly to equity							—		—
Net deferred tax – credited directlyto equity							0.6		0.7
							0.6		0.7
h) tax expense relating to items of other comprehensive income
Exchange differences on translation of foreign operations							2.3		1.0
							2.3		1.0
Movements in deferred tax
Equity accounted investments $m		Foreign exchange translation gains $m		Unearned profts with associates $m	Unearned Derivative progress fnancial billings instruments $m $m		Impairment of loans $m		Property, plant and equipment $m
Balance 1 July 2011	(9.3)	(46.0)		12.7	—	41.1	8.6		(3.1)
Credited/(charged) to proft or loss	0.2		7.9	2.4	—	5.9	(4.2)		10.3
Credited/(charged) to other
comprehensive income	—		(1.0)	—	—	—		—	—
Charged to equity	—		—	—	—	—		—	—
Acquisition/disposal of controlled entity	—		—	—	—	—		—	(2.2)
Closing balance 30 June 2012	(9.1)	(39.1)		15.1	—	47.0	4.4		5.0
Credited/(charged) to proft or loss	(1.4)	12.8		3.0	97.0	(24.9)	1.0		(3.7)
Credited/(charged) to other
comprehensive income	—		(2.3)	—	—	—		—	—
Charged to equity	—		—	—	—	—		—	—
Closingbalance 30 June 2013	(10.5)	(28.6)		18.1	97.0	22.1	5.4		1.3

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

6 InCoMe tAX / ContInueD

6 InCoMe tAX / ContInueD	6 InCoMe tAX / ContInueD
Equity raising costs $m		Inventories $m	Accrued expenses $m	Employee provisions $m	Tax losses $m	Other $m	Total $m
Balance 1 July 2011	1.1	(32.5)	22.1	7.5	148.8	(6.3)	144.7
Credited/(charged) to proft or loss	(0.5)	(50.2)	1.6	0.6	79.2	4.5	57.7
Credited/(charged) to other
comprehensive income	—	—	—	—	—	—	(1.0)
Charged to equity	—	—	—	—	0.7	—	0.7
Acquisition/disposal of controlled entity	—	—	(0.7)	(1.8)	—	—	(4.7)
Closing balance 30 June 2012	0.6	(82.7)	23.0	6.3	228.7	(1.8)	197.4
Credited/(charged) to proft or loss	(0.5)	3.7	0.9	(0.3)	(63.5)	0.3	24.4
Credited/(charged) to other
comprehensive income	—	—	—	—	—	—	(2.3)
Charged to equity	0.1	—	—	—	0.5	—	0.6
Closingbalance 30 June 2013	0.2	(79.0)	23.9	6.0	165.7	(1.5)	220.1
7 eARnIngs peR stApleD seCuRIty
						2013	2012
						Cents	Cents
basic earnings per stapled security
From continuing operations						4.02	11.27
From discontinued operations1						0.04	0.93
Total basic earningsper stapled securityattributable to the stapled securityholders of Mirvac						4.06	12.20
Diluted earnings per stapled security2
From continuing operations						4.01	11.25
From discontinued operations1						0.04	0.93
Total diluted earningsper stapled securityattributable to the stapled securityholders of Mirvac						4.05	12.18
						$m	$m
basic and diluted earnings2
From continuing operations						138.5	384.5
From discontinued operations1						1.4	31.6
Proft attributable to the stapled securityholders of Mirvac used			in calculating	earningsper security		139.9	416.1
						number	Number
weighted average number of securities used as		denominator2				m	m
Weighted average number of securities used in calculating basic earnings per security						3,448.7	3,409.9
Adjustment for calculation of diluted earnings per security
Securities issued under EIS						5.7	7.4
weighted average number of securities used in		calculatingdiluted earningsper security				3,454.4	3,417.3

1) Includes the results of the discontinued operations. Refer to note 13 for further information.
2) Diluted securities include the options and rights issued under the current LTI plans as the exercise of these equity instruments is contingent on conditions during the vesting period.

68 mirvac group annual report 2013

8 ReCeIVAbles

8 ReCeIVAbles
		Provision for
	Gross $m	impairment $m	Net $m
30 June 2013
Current receivables
Trade receivables	25.5	(0.2)	25.3
Loans to directors and employees	3.6	—	3.6
Amounts due from related parties	25.5	(0.3)	25.2
Amounts due from unrelated parties	28.6	(22.5)	6.1
Mezzanine loans	12.4	(12.4)	—
Accrued income	22.1	—	22.1
Other receivables	12.6	(1.2)	11.4
total current receivables	130.3	(36.6)	93.7
non-current receivables
Loans to directors and employees	6.4	—	6.4
Amounts due from related parties	99.8	(41.5)	58.3
Other receivables	73.6	(18.0)	55.6
total non-current receivables	179.8	(59.5)	120.3
30 June 2012
Current receivables
Trade receivables	27.2	(0.4)	26.8
Amounts due from related parties	37.5	(2.6)	34.9
Amounts due from unrelated parties	38.3	(22.3)	16.0
Mezzanine loans	12.4	(12.4)	—
Accrued income	16.3	—	16.3
Other receivables	38.7	(0.4)	38.3
Total current receivables	170.4	(38.1)	132.3
Non-current receivables
Loans to directors and employees	13.9	—	13.9
Amounts due from related parties	86.2	(39.5)	46.7
Other receivables	56.6	—	56.6
Total non-current receivables	156.7	(39.5)	117.2

Further information in relation to loans to KMP is set out in note 33 and amounts due from related parties is set out in note 35.

a) trade receivables

The average credit period on sales of goods is 30 days. No interest is charged on any outstanding trade receivables. Refer to note 8(d) for details regarding the credit risk of receivables.

b) other receivables

These amounts generally arise from transactions outside of the classification of trade receivables such as GST receivables and other sundry debtors.

c) provision for impairment of trade receivables

Movements in the provision for impairment of trade receivables are detailed below:

other sundry debtors. c) provision for impairment of trade receivables Movements in the provision for impairment of trade receivables are detailed below:
	2013	2012
	$m	$m
Balance 1 July	(0.4)	(2.1)
Amounts written off	—	1.9
Provision for impairment released/(recognised)	0.2	(0.2)
balance 30 June	(0.2)	(0.4)

Mirvac did not have amounts written off (2012: $1.9m) for impaired trade receivables during the current year. This loss has been applied against the provision for impairment of receivables. The creation and release of the provision for impaired receivables have been included in impairment of loans in profit or loss where these relate to the mezzanine loans, and have been included in other expenses in profit or loss where these relate to the impairment of trade receivables.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

8 ReCeIVAbles / ContInueD

d) Credit risk

Receivables consist of a large number of customers. Mirvac does not have any significant credit risk exposure to a single customer or groups of customers. Ongoing credit evaluation is performed on the financial condition of customers and, where appropriate, a provision for impairment of receivables is raised. Mirvac holds collateral in certain circumstances which takes the form of bank guarantees, security deposits, personal guarantee or a mortgage over property until completion. The ageing of receivables is detailed below:

receivables is detailed below:
		2013		2012
	total	provision for	Total	Provision for
	receivables $m	impairment $m	receivables $m	impairment $m
Not past due	239.6	(39.0)	254.7	(20.4)
Renegotiated	—	—	—	—
Past due 1-30 days	11.4	—	14.1	—
Past due 31-60 days	1.6	—	0.5	—
Past due 61-90 days	0.1	(0.1)	0.2	—
Past due 91-120 days	0.1	(0.1)	0.2	—
Past 120 days	57.3	(56.9)	57.4	(57.2)
total	310.1	(96.1)	327.1	(77.6)

Under certain circumstances, Mirvac has not provided for all balances past due as it has been determined that there has not been a significant change in credit quality at the end of the reporting period based upon the customer’s payment history and analysis of the customer’s financial accounts. The Group holds collateral over receivables of $109.0m (2012: $120.9m). The fair value of the collateral held equals the fair value of the receivables for which the collateral is held. The terms of the collateral are if payment due is not received per the agreed terms, Mirvac is able to claim the collateral held.

e) Interest rate risk exposures

Refer to note 36 for Mirvac’s exposure to interest rate risk.

9 DeRIVAtIVe fInAnCIAl Assets

9 DeRIVAtIVe fInAnCIAl Assets
	2013	2012
	$m	$m
Current
Interest rate swap contracts – fair value	—	—
non-current
Interest rate swapcontracts – fair value	11.6	—
	11.6	—

a) Instruments used by Mirvac

Refer to note 36 for information on instruments used by Mirvac.

b) Risk exposures

Refer to note 36 for Mirvac’s exposure to foreign exchange, interest rate and credit risk on interest rate swaps.

10 InVentoRIes

10 InVentoRIes
	2013	2012
	$m	$m
Current1
Development projects
Cost of acquisition	167.1	167.9
Development costs	448.6	202.5
Borrowing costs capitalised during development	69.7	61.8
Provision for loss	(125.5)	(84.8)
	559.9	347.4
Construction work in progress (amount due from customers for contract work)
Contract costs incurred and recognised profts less recognised losses	68.5	56.4
Borrowing costs capitalised during construction	—	0.7
Progress billings	(68.5)	(0.6)
	—	56.5
total current inventories	559.9	403.9

1) Lower of cost and NRV.

70 mirvac group annual report 2013

10 InVentoRIes / ContInueD

10 InVentoRIes / ContInueD
	2013	2012
	$m	$m
non-current1
Development projects
Cost of acquisition	674.5	711.6
Development costs	277.6	295.6
Borrowing costs capitalised during development	154.9	151.4
Provision for loss	(203.7)	(109.7)
total non-current inventories	903.3	1,048.9
Aggregate carrying amount of inventories
Current	559.9	403.9
Non-current	903.3	1,048.9
total inventories	1,463.2	1,452.8

1) Lower of cost and NRV.

a) Inventories expense

Inventories expensed as cost of property development and construction during the year ended 30 June 2013 amounted to $703.7m (2012: $804.7m). For inventories that were carried in excess of their NRV, an amount of $242.9m (2012: $25.0m) was expensed as provision for loss on inventories. This resulted from a realignment of future assumptions with current market conditions. The majority of projects are located in Queensland and in Western Australia.

b) Current and non-current inventories

The disclosure of inventories as either current or non-current is determined by the period within which they are expected to be realised. Inventories disclosed as current are expected to be realised within 12 months; all other inventories are expected to be realised beyond 12 months from the reporting date.

11 otHeR fInAnCIAl Assets At fAIR VAlue tHRougH pRofIt oR loss

11 otHeR fInAnCIAl Assets At fAIR VAlue tHRougH pRofIt	oR loss
	2013	2012
	$m	$m
units in unlisted fund
Balance 1 July	12.7	15.5
Loss on revaluation	—	(1.1)
Capital distribution received	(0.1)	(1.7)
balance 30 June	12.6	12.7

Changes in fair values of other financial assets at fair value through profit or loss are recorded as a gain or loss on financial instruments in profit or loss.

a) unlisted securities

Unlisted securities are traded in inactive markets. The fair value of investments that are not traded in an active market is determined by the unit price as advised by the trustee of the fund. Unlisted securities held in the Group are units in JF Infrastructure Yield Fund. James Fielding Trust, a wholly-owned Group entity, owns 12.9m units (22 per cent) of this entity. The fair value of the security is determined based on the value of the underlying assets held by the fund. The assets of the fund are subject to regular external valuations. These valuations are based on discounted net cash inflows from expected future income and/or comparable sales of similar assets. Appropriate discount rates determined by the external valuer are used to determine the present value of the net cash inflows based on a market interest rate adjusted for the risk premium specific to each asset. The fair value is determined using valuation techniques that are not supported by prices from an observable market; so, the fair value recognised in the consolidated financial statements could change significantly if the underlying assumptions made in estimating the fair values were significantly changed.

b) price risk exposures

Refer to note 36 for Mirvac’s exposure to price risk on other financial assets at fair value through profit or loss.

12 otHeR Assets

12 otHeR Assets
	2013	2012
	$m	$m
Prepayments	17.2	17.3
Monies held in trust	0.3	0.4
	17.5	17.7

Monies held in trust relate to holding deposits received in respect of future sales of inventories.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

13 Assets ClAssIfIeD As HelD foR sAle AnD DIsContInueD opeRAtIons

a) Discontinued operations

There were no discontinued operations in relation to the sale of a disposal group as at 30 June 2013 (2012: $17.3m). During the year ended 30 June 2013, Mirvac recognised a gain of $2.0m (net of costs) relating to the purchase price adjustments following the satisfaction of a trigger event in the contract for sale which relates to the sale of the Hotel Management business. During the year ended 30 June 2012, the Group had entered into contracts for the sale of its Hotel Management business and Mirvac Wholesale Hotel Fund following a strategic review of this business.

b) Assets classified as held for sale

Wholesale Hotel Fund following a strategic review of this business. b) Assets classifed as held for sale
	2013	2012
	$m	$m
non-current assets held for sale
Manning Mall, Taree NSW1	31.8	—
Logan Megacentre,Logan QLD2	49.5	—
	81.3	—

1) Settlement occurred on 11 July 2013.

2) Settlement occurred on 9 August 2013.

As part of the Group’s strategy, investment properties that no longer meet the investment criteria and are subject to a contract for sale, are classified as held for sale.

c) financial performance and cash flow information

The financial performance and cash flow information for the discontinued operations for the year ended 30 June 2013 and 30 June 2012 were as follows:

30 June 2012 were as follows:
	2013	2012
	$m	$m
Revenue and other income	—	157.9
Expenses	—	(134.2)
Proft before income tax	—	23.7
Income tax expense	—	(6.4)
Proft after tax from discontinued operations	—	17.3
Gain on sale before income tax	2.0	21.4
Income tax expense	(0.6)	(7.1)
Gain on sale after income tax	1.4	14.3
proft from discontinued operations	1.4	31.6
Cash fow from discontinued operations1
Net cash infow from operating activities	—	10.7
Net cash outfow from investing activities	—	(2.6)
Net cash outfow from fnancingactivities	—	(41.7)
net decrease in cash and cash equivalents from discontinued operations	—	(33.6)
d) Details of the sale
Consideration received or receivable:
Cash	3.2	310.7
Total consideration	3.2	310.7
Recognised in liability2	(1.0)	—
Carryingamount of net assets sold(includingsellingcosts)	(0.2)	(289.3)
gain on sale before income tax	2.0	21.4
Income tax expense	(0.6)	(7.1)
gain on sale after income tax	1.4	14.3

1) The cash flow from discontinued operations does not include the cash flow from proceeds from the sale of Hotel Management business.

2) Subject to satisfaction of a trigger event.

72 mirvac group annual report 2013

14 InVestMents ACCounteD foR usIng tHe equIty MetHoD

14 InVestMents ACCounteD foR usIng tHe equIty MetHoD
		2013	2012
	Note	$m	$m
Consolidated statement of fnancial position
Investments accounted for using the equity method
Investments in associates	29	10.9	10.9
Investments injoint ventures	30	369.0	346.5
		379.9	357.4
Consolidated statement of comprehensive income
Share of net proft/(loss) of associates and joint ventures accounted for using the equity method
Investments in associates	29	0.1	(0.4)
Investments injoint ventures	30	12.3	13.8
		12.4	13.4
15 otHeR fInAnCIAl Assets
		2013	2012
		$m	$m
non-current
Convertible notes issued by Mirvac 8 Chifey Trust		97.2	51.5
Convertible notes issued by Mirvac (Old Treasury) Trust		47.9	—
Heritage Maintenance Annuity– TreasuryBuildingHotel		42.0	—
total other fnancial assets		187.1	51.5

At 30 June 2013, the Group held $145.1m of convertible notes (2012: $51.5m) associated with funding two joint ventures, Mirvac 8 Chifley Trust $97.2m (2012: $51.5m) and Mirvac (Old Treasury) Trust $47.9m (2012: $nil). The Group has an investment accounted for using the equity method in each of the issuing joint ventures. Convertible notes have been issued to fund the development costs of investment property currently under construction held by the Group. Upon completion of each property, the convertible notes may be converted into equity held by the Group and the investment accounted for using the equity method will increase by the value of the convertible notes held.

16 InVestMent pRopeRtIes

16 InVestMent pRopeRtIes
		30 June	Book value 30 June	Capitalisation rate 30 June 30 June		Discount rate 30 June 30 June		Date of last	Last external
	Date of	2013	2012	2013	2012	2013	2012	external	valuation
	acquisition	$m	$m	%	%	%	%	valuation	$m
Mpt and its controlled entities
1 Castlereagh Street, Sydney NSW	Dec 1998	71.0	72.0	7.63	7.63	9.25	9.25	Jun 2012	72.0
1 Darling Island, Pyrmont NSW	Apr 2004	178.2	179.2	7.00	7.00	9.00	9.25	Dec 2012	175.0
1 Hugh Cairns Avenue, Bedford Park SA1,2	Aug 2010	—	16.5	—	9.50	—	10.00	Jun 2011	17.8
1 Woolworths Way, Bella Vista NSW1	Aug 2010	248.0	246.6	7.75	7.75	8.88	9.25	Jun 2013	248.0
1-47 Percival Road, Smithfeld NSW	Nov 2002	30.5	29.0	8.25	8.25	9.75	9.75	Dec 2011	28.3
10 Julius Avenue, North Ryde NSW1	Dec 2009	51.2	53.9	8.50	8.50	9.50	9.25	Jun 2013	51.2
10-20 Bond Street, Sydney NSW (50% interest)1	Dec 2009	181.4	175.1	6.88	6.88	9.00	9.00	Dec 2011	162.0
101-103 Miller Street & Greenwood Plaza,
North Sydney NSW (50% interest)	Jun 1994	272.0	259.0	6.75-7.00	6.75-7.00	9.00-9.25	9.00-9.25	Dec 2012	267.5
12 Julius Avenue, North Ryde NSW1	Dec 2009	23.5	23.4	8.50	8.50	9.50	9.25	Jun 2013	23.5
189 Grey Street, Southbank QLD	Apr 2004	78.6	76.7	7.63	7.63	9.25	9.25	Dec 2011	73.0
19 Corporate Drive, Cannon Hill QLD1,2	Aug 2010	—	23.0	—	8.75	—	9.75	Jun 2011	24.0
190 George Street, Sydney NSW3	Aug 2003	—	40.0	—	8.00	—	9.50	Dec 2011	40.0
1900-2060 Pratt Boulevard, Chicago Illinois USA	Dec 2007	35.0	29.1	7.50	7.50	9.25	9.25	Dec 2011	28.1
191-197 Salmon Street, Port Melbourne VIC	Jul 2003	101.6	102.5	8.00	8.00	9.25	9.25	Jun 2012	102.5
200 George Street, Sydney NSW3	Oct 2001	—	29.1	—	8.00	—	9.50	Dec 2011	27.5
210 George Street, Sydney NSW4	May 2013	26.0	—	8.00	—	9.50	—	—	—
220 George Street, Sydney NSW4	May 2013	57.0	—	8.00	—	9.50	—	—	—
271 Lane Cove Road, North Ryde NSW	Apr 2000	31.3	31.3	8.25	8.25	9.50	9.50	Jun 2012	31.3
275 Kent Street, Sydney NSW1	Aug 2010	830.0	792.0	6.75	6.75	9.00	9.00	Jun 2012	792.0
3 Rider Boulevard, Rhodes NSW1	Dec 2009	84.3	80.9	8.00	8.00	9.25	9.25	Jun 2013	84.3
32 Sargents Road, Minchinbury NSW1,2	Dec 2009	—	23.5	—	8.75	—	9.50	Jun 2011	23.5
33 Corporate Drive, Cannon Hill QLD1	Aug 2010	15.2	16.0	9.00	9.00	10.00	9.75	Jun 2013	15.2
37 Pitt Street, Sydney NSW4	May 2013	67.0	—	8.25	—	9.50	—	—	—
38 Sydney Avenue, Forrest ACT	Jun 1996	35.5	35.0	8.50	8.50	9.50	9.50	Dec 2012	35.5
40 Miller Street, North Sydney NSW	Mar 1998	105.5	103.6	7.25	7.25	9.25	9.25	Jun 2012	103.6
47-67 Westgate Drive, Altona North VIC1	Dec 2009	19.1	19.1	9.75	9.50	10.00	9.75	Dec 2011	19.1
5 Rider Boulevard, Rhodes NSW	Jan 2007	126.9	123.3	8.00	7.63	9.25	9.13	Dec 2012	124.0
51 Pitt Street, Sydney NSW4	May 2013	24.0	—	8.25	—	9.50	—	—	—
52 Huntingwood Drive, Huntingwood NSW1,2	Dec 2009	—	22.0	—	8.50	—	9.75	Jun 2011	22.0

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

16 InVestMent pRopeRtIes / ContInueD

				30 June	Book value 30 June	Capitalisation rate 30 June 30 June	Capitalisation rate 30 June 30 June	Discount rate 30 June 30 June	Discount rate 30 June 30 June	Date of last	Last external
			Date of	2013	2012	2013	2012	2013	2012	external	valuation
			acquisition	$m	$m	%	%	%	%	valuation	$m
54 Marcus Clarke Street, Canberra ACT			Oct 1987	14.7	15.9	9.75	9.50	10.50	9.75	Dec 2012	14.7
54-60 Talavera Road, North Ryde NSW1			Aug 2010	47.0	45.5	7.50	7.50	9.25	9.50	Dec 2012	47.0
55 Coonara Avenue, West Pennant Hills NSW1			Aug 2010	100.5	105.1	8.50	8.50	9.50	9.50	Dec 2012	100.5
6-8 Underwood Street, Sydney NSW4			May 2013	9.0	—	8.25	—	9.50	—	—	—
60 Marcus Clarke Street, Canberra ACT			Sep 1989	48.5	49.6	8.75	8.75	9.50	9.50	Jun 2013	48.5
64 Biloela Street, Villawood NSW2			Feb 2004	—	19.1	—	10.50	—	10.75	Jun 2011	19.1
90 Collins Street, Melbourne VIC4			May 2013	170.0	—	7.25	—	8.75	—	—	—
Allendale Square, 77 St Georges Terrace, Perth WA		4	May 2013	231.0	—	8.25	—	9.50	—	—	—
Aviation House, 16 Furzer Street, Phillip ACT			Jul 2007	68.6	68.3	7.75	7.75	9.50	9.50	Jun 2012	68.3
Bay Centre, Pirrama Road, Pyrmont NSW			Jun 2001	109.2	106.9	7.65	7.65	9.25	9.25	Dec 2011	103.5
Broadway Shopping Centre, Broadway NSW (50% interest)			Jan 2007	255.0	245.0	6.00	6.00	9.00	9.00	Jun 2012	245.0
Cherrybrook Village Shopping Centre, Cherrybrook NSW1			Dec 2009	84.6	80.0	7.25	7.50	9.25	9.50	Jun 2013	84.6
City Centre Plaza, Rockhampton QLD1			Dec 2009	49.0	48.7	8.00	8.00	9.50	9.75	Jun 2013	49.0
Como Centre, Cnr Toorak Road &
Chapel Street, South Yarra VIC			Aug 1998	159.9	153.5	8.00-8.50	7.75-8.75	9.00-11.00	9.29-9.75	Jun 2013	159.9
Cooleman Court, Weston ACT1			Dec 2009	47.6	46.5	7.75	7.75	9.50	9.50	Dec 2011	46.0
Gippsland Centre, Sale VIC			Jan 1994	48.5	49.1	8.50	8.25	9.50	9.50	Dec 2011	49.1
Hinkler Central, Bundaberg QLD			Aug 2003	92.0	91.0	7.75	7.75	9.50	9.50	Dec 2012	92.0
John Oxley Centre, 339 Coronation Drive, Milton QLD			May 2002	56.1	56.0	9.00	9.00	10.00	10.00	Dec 2012	56.0
		Dec 1993 (50%)
Kawana Shoppingworld, Buddina QLD	&	Jun 1998 (50%)		230.7	215.7	6.75	6.75	9.25	9.25	Dec 2011	209.7
Logan Megacentre, Logan QLD2			Oct 2005	—	55.5	—	9.75	—	10.50	Dec 2012	52.0
Moonee Ponds Central (Stage II), Moonee Ponds	VIC		Feb 2008	41.5	40.0	8.50	8.50	9.75	9.75	Jun 2012	40.0
Moonee Ponds Central, Moonee Ponds VIC			May 2003	25.3	25.5	7.75	7.75	9.50	9.50	Jun 2012	25.5
Nexus Industry Park (Building 1),
Lyn Parade, Prestons NSW			Aug 2004	19.2	18.3	8.00	8.13	9.25	9.50	Jun 2013	19.2
Nexus Industry Park (Building 2),
Lyn Parade, Prestons NSW			Aug 2004	14.6	12.5	8.00	8.25	9.50	9.50	Dec 2012	14.4
Nexus Industry Park (Building 3),
Lyn Parade, Prestons NSW			Aug 2004	25.3	23.7	8.00	8.13	9.25	9.50	Jun 2013	25.3
Nexus Industry Park (Building 4),
Lyn Parade, Prestons NSW			Aug 2004	35.0	33.5	8.00	8.00	9.50	9.50	Jun 2012	33.5
Nexus Industry Park (Building 5),
Lyn Parade, Prestons NSW			Aug 2004	17.1	15.5	8.00	8.13	9.50	9.50	Dec 2012	16.4
Orange City Centre, Orange NSW			Apr 1993	48.0	48.0	8.50	8.50	9.75	10.00	Dec 2011	49.0
Orion Springfeld Town Centre, Springfeld QLD			Aug 2002	129.0	124.0	6.75	6.75	9.25	9.25	Dec 2012	128.0
Quay West Car Park, 109-111 Harrington
Street, Sydney NSW			Nov 1989	30.5	29.5	8.50	8.50	10.00	10.00	Jun 2013	30.5
Rhodes Shopping Centre, Rhodes NSW (50% interest)			Jan 2007	125.0	115.0	7.00	7.00	9.25	9.25	Jun 2013	125.0
Riverside Quay, Southbank VIC			Apr 2002 & Jul 2003	194.7	192.1	7.75-8.00	7.75-8.00	9.25-10.00	9.25-10.00	Dec 2011	176.0
Royal Domain Centre,		Oct 1995 (50%)
380 St Kilda Road, Melbourne	&	Apr 2001 (50%)		118.0	110.0	8.00	8.00	9.00	9.00	Jun 2013	118.0
Sirius Building, 23 Furzer Street, Phillip ACT			Feb 2010	246.0	240.0	7.50	7.50	9.50	9.50	Jun 2012	240.0
St Marys Village Centre, St Marys NSW			Jan 2003	44.0	43.0	7.75	7.75	9.00	9.50	Dec 2012	44.0
Stanhope Village, Stanhope Gardens NSW			Nov 2003	87.0	73.8	7.50	7.50	9.25	9.25	Dec 2011	70.5
Waverley Gardens Shopping Centre, Mulgrave VIC			Nov 2002	135.7	132.0	7.75	7.75	9.50	9.50	Dec 2011	131.5
Mirvac limited and its controlled entities
Hoxton Distribution Park,
Hoxton Park NSW (50% interest)			Jul 2010	104.1	91.7	7.25	7.50	9.25	9.25	Jun 2012	99.6
ManningMall, Taree NSW2			Dec 2006	—	33.0	—	8.50	—	9.50	Dec 2011	34.8
total investmentproperties				5,954.7	5,454.3
IpuC
4 Dalley Street & Laneway, Sydney NSW3			Mar 2004	—	2.2	—	6.75	—	9.25	Dec 2011	—
200 George Street, Sydney NSW (50% interest)5			Dec 2012	44.1	—	6.5	—	8.8	—	Dec 2012	37.6
Orion Springfeld land, Springfeld QLD			Aug2002	30.8	32.0	6.50-9.50	6.50-9.25	10.25-10.25	9.25-10.75	Dec 2012	33.0
total IpuC				74.9	34.2
total investment properties and IpuC				6,029.6	5,488.5

1) Date of acquisition represents business combination acquisition date.

2) Investment property disposed of or reclassified to held for sale during the year.

3) 50 per cent of the property disposed of during the year. The remaining 50 per cent was reclassified as IPUC and amalgamated as 200 George Street, Sydney NSW.

4) Investment property acquired during the year.

5) Represents the amalgamated development site of 190 George Street, 200 George Street, and 4 Dalley Street & Laneway, Sydney NSW. Date of acquisition represents date of site amalgamation.

74 mirvac group annual report 2013

16 InVestMent pRopeRtIes / ContInueD

a) Reconciliation of carrying amounts of investment properties

16 InVestMent pRopeRtIes / ContInueD a) Reconciliation of carrying amounts of investment properties
		2013	2012
At fair value	Note	$m	$m
Balance 1 July		5,488.5	5,442.0
Additions		118.4	109.4
Acquisitions		619.0	—
Disposals		(142.4)	(126.2)
Net gain on fair value of investment properties1		55.6	148.7
Net loss on fair value of IPUC	38	(3.6)	(15.8)
Net gain from foreign currency translation		3.0	1.6
Assets classifed as held for sale		(81.3)	—
Sale of asset and transfer to equity accounted investments		—	(49.0)
Transfers from inventories		—	97.3
Transfers of owner-occupied property to property, plant and equipment		—	(31.6)
Deconsolidation of entity		—	(58.7)
Amortisation of ftout incentives,leasingcosts and rent incentive		(27.6)	(29.2)
balance 30 June		6,029.6	5,488.5
b) Amounts recognised in the proft or loss for investment properties
Investment properties rental revenue		583.1	558.7
Investmentproperties expenses		(136.6)	(126.6)
		446.5	432.1

1) Different to SoCI by $1.6m due to revaluation decrement to investment properties classified as owner-occupied properties.

c) Valuation basis

i) Investment properties

Investment properties are carried at fair value. Valuation methods used to determine the fair value include market sales comparison, DCF and capitalisation rate (“CR”). The fair value for a property may be determined by using a combination of these and other valuation methods.

Market sales comparison: The sales comparison approach utilises recent sales of comparable properties, adjusted for any differences including the nature, location and lease profile, to indicate the fair value of a property. Where there is a lack of recent sales, activity adjustments are made from previous comparable sales to reflect changes in economic conditions.

DCF: DCF projections derived from contracted rents, market rents, operating costs, lease incentives, lease fees, capital expenditure and future income on vacant space are discounted at a rate to arrive at a value. The discount rate is a market assessment of the risk associated with the cash flows, and the nature, location and tenancy profile of the property relative to returns from alternative investments, CPI rates and liquidity risk. It is assumed that the property is sold at the end of the investment period at a terminal value. The terminal value is determined by using an appropriate terminal CR. Mirvac’s terminal CR is in the range of an additional nil to 75 basis points above the respective property’s CR.

CR: An assessment is made of fully leased net income based on contracted rents, market rents, operating costs and future income on vacant space. The adopted fully leased net income is capitalised in perpetuity from the valuation date at an appropriate CR. The CR reflects the nature, location and tenancy profile of the property together with current market investment criteria, as evidenced by current sales evidence. Various adjustments, including incentives, capital expenditure, and reversions to market rent, are made to arrive at the property value.

ii) IPUC

There are generally no active markets for IPUC; therefore, a lack of comparable transactions for IPUC usually requires the use of estimation models. The two main estimation models used to value IPUC are residual and DCF valuations. The residual method of determining the value of a property uses the estimated total cost of the development, including construction and associated expenditures, finance costs, and an allowance for developer’s risk and profit is deducted from the end value of the completed project. The resultant figure is then adjusted back to the date of valuation to give the residual value.

d) non current assets pledged as security

There are no non current assets pledged as security by the Group.

e) property portfolio

Mirvac’s property portfolio is made up as follows:

d) non current assets pledged as security There are no non current assets pledged as security by the Group. e) property portfolio Mirvac’s property portfolio is made up as follows:
		2013	2012
	Note	$m	$m
Investment properties per consolidated statement of fnancial position		6,029.6	5,488.5
Properties classifed as assets held for sale	13	81.3	—
Owner-occupiedproperties classifed asproperty, plant and equipment	17	306.7	294.7
		6,417.6	5,783.2

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

17 pRopeRty, plAnt AnD equIpMent

17 pRopeRty, plAnt AnD equIpMent
		Owner-
	Plant and equipment $m	occupied hotel management lots $m	Owner- occupied freehold hotels $m	Owner- occupied properties $m	total $m
2013
Balance 1 July	12.7	—	—	294.7	307.4
Revaluation increment	—	—	—	19.5	19.5
Additions	3.6	—	—	—	3.6
Transfers to other assets	(0.7)	—	—	—	(0.7)
Disposals	—	—	—	—	—
Depreciation expenses	(4.5)	—	—	(7.5)	(12.0)
balance 30 June	11.1	—	—	306.7	317.8
2013
Cost or fair value	40.1	—	—	341.4	381.5
Accumulated depreciation	(29.0)	—	—	(34.7)	(63.7)
net book amount	11.1	—	—	306.7	317.8
2012
Balance 1 July	22.7	58.3	60.3	218.0	359.3
Revaluation increment	—	—	1.4	27.2	28.6
Additions	8.2	—	—	—	8.2
Transfers (to)/from other assets	(1.9)	—	(39.3)	56.5	15.3
Disposals	(9.9)	(57.0)	(20.8)	—	(87.7)
Depreciation expenses1	(6.4)	(1.3)	(1.6)	(7.0)	(16.3)
Balance 30 June	12.7	—	—	294.7	307.4
2012
Cost or fair value	41.3	—	—	322.0	363.3
Accumulated depreciation	(28.6)	—	—	(27.3)	(55.9)
Net book amount	12.7	—	—	294.7	307.4

1) Depreciation expenses for the year ended 30 June 2012 include $4.8m which was included in the results of the discontinued operations.

A reconciliation of the revaluation increment/(decrement) and the asset revaluation reserve is shown in note 25(d).

a) Valuations of owner-occupied properties

Owner-occupied properties are revalued by external valuers on a rotation basis with approximately one-half of the portfolio (including owner-occupied buildings) being valued annually. The basis of valuation of owner-occupied properties is fair value, being the amount for which assets could be exchanged between knowledgeable willing parties in an arm’s length transaction. The valuation basis is consistent with the approach taken for investment properties (refer to note 16(c)). Discount rates range from 8.75 to 10.25 per cent (2012: 9.00 to 10.00 per cent) and capitalisation rates range from 6.00 to 9.75 per cent (2012: 6.50 to 9.00 per cent). The revaluation increment net of applicable deferred income taxes was credited to the asset revaluation reserve in equity (refer to note 25(b)).

b) Historical cost of items carried at fair value

			2013	2012
Owner-occupiedproperties			$m	$m
balance 30 June			249.3	242.7
18 IntAngIble Assets
			Other
	Management		intangible
	rights $m	Goodwill $m	assets $m	Total $m
2013
Balance 1 July	2.6	63.1	—	65.7
balance 30 June	2.6	63.1	—	65.7
2012
Balance 1 July	3.2	69.4	2.1	74.7
Disposal of controlled entity	(0.6)	(6.3)	(2.1)	(9.0)
Balance 30 June	2.6	63.1	—	65.7

76 mirvac group annual report 2013

18 IntAngIble Assets / ContInueD

a) Allocation of intangible assets by operating segment

A segment level summary of the intangible asset allocations is presented below:

		Investment
	Investment $m	Management $m	Total $m
2013
Management rights – indefnite life1	—	2.6	2.6
Goodwill	63.1	—	63.1
balance 30 June	63.1	2.6	65.7
2012
Management rights – indefnite life1	—	2.6	2.6
Goodwill	63.1	—	63.1
Balance 30 June	63.1	2.6	65.7

1) Management rights are primarily held in relation to funds established or rights established by entities acquired by Mirvac. These funds are considered to be open-ended and therefore have no expiry. The Group also holds strategic stakes in these funds in order to protect its interests.

b) Key assumptions used for value in use calculations for goodwill and other intangible assets

The recoverable amount of CGUs is determined using the higher of fair value less cost to sell, and their value in use. The value in use calculation is based on financial budgets and forecasts approved by management covering a five year period. For the Investment Management CGU, cash flows beyond the five year period are extrapolated using the estimated growth rates stated below. For the Investment CGU, no forecast growth rate is assumed as the value in use calculations are based on forecast cash flows from existing projects and investment properties. The growth rate has been adjusted to reflect current market conditions and does not exceed the long term average growth rate for the business in which the CGU operates. The discount rates used are post-tax and reflect specific risks relating to the relevant segments and the countries in which they operate. A terminal growth rate of three per cent has also been applied.

	growth rate1	Discount rate	Growth rate1	Discount rate
	2013	2013	2012	2012
Cgu	%pa	%pa	%pa	%pa
Investment	—2	9.5	—2	9.5
Investment Management	1.0	13.0	1.0	13.0

1) Weighted average growth rate used to extrapolate cash flows beyond the budget period.

2) The value in use calculation is based on financial budgets and forecasts approved by management covering a five year period. No forecast growth rate is assumed as the value in use calculations are based on forecast cash flows from existing projects and investment properties.

The recoverable amount of intangible assets exceeds the carrying value at 30 June 2013. Management considers that for the carrying value to exceed the recoverable amount, there would have to be unreasonable changes to key assumptions. Management considers the chances of these changes occurring as unlikely.

c) Impairment of goodwill

There was no impairment of goodwill (2012: $nil).

d) Impairment of intangible assets

There was no impairment of management rights (2012: $nil). Management rights are primarily held in relation to funds established or rights established by entities acquired by Mirvac. These funds are considered to be open-ended and therefore have no expiry.

19 pAyAbles

19 pAyAbles
	2013	2012
	$m	$m
Current
Trade payables	51.3	32.6
Employee benefts	9.4	10.2
Deferred revenue1	282.3	111.1
Accruals	142.1	157.3
Deferred payment for land	27.1	27.9
Other creditors	35.9	33.3
Amounts due to related entities	1.8	—
	549.9	372.4
non-current
Deferred revenue1	52.4	—
Deferred payment for land	85.0	35.5
Other creditors	11.5	10.6
	148.9	46.1

1) Deferred revenue includes payment received in respect of development contracts that do not meet the requirements to be accounted for as construction contracts.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

20 boRRowIngs

a) borrowings

20 boRRowIngs a) borrowings
		2013	2012
	Note	$m	$m
Current
Unsecured
Bank loans	20(a)(i)	172.1	—
Secured
Lease liabilities	20(a)(iii)	3.0	2.9
Total current		175.1	2.9
non-current
Unsecured
Bank loans	20(a)(i)	1,000.0	1,012.9
Domestic medium term note (“MTN”)	20(a)(ii)	575.0	425.0
Foreign MTN	20(a)(iv)	414.3	378.0
Secured
Lease liabilities	20(a)(iii)	2.8	6.2
		1,992.1	1,822.1

i) Bank loans

Mirvac has unsecured bank facilities totalling $1,560.0m (2012: $1,740.0m). The facility contains three tranches: a $350.0m tranche maturing in January 2014, a $530.0m tranche maturing in January 2015 and a $530.0m tranche maturing in January 2016. There is also a bilateral bank facility of $150.0m (2012: $150.0m) maturing in January 2016. Subject to compliance with the terms, each of these bank loan facilities may be drawn at any time.

ii) Domestic MTN

Mirvac has a total of $575.0m (2012: $425.0m) of domestic MTN outstanding: $200.0m maturing in March 2015, $225.0m maturing in September 2016 and $150.0m maturing in December 2017. Interest is payable either quarterly or semi-annually in arrears in accordance with the terms of the notes.

iii) Lease liabilities

Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

iv) Foreign MTN

Mirvac has a US Private Placement issue made up of US$275.0m maturing in November 2016 and US$100.0m maturing in November 2018. An additional $10.0m maturing in November 2016 was also issued in conjunction with this placement. Interest is payable semi-annually in arrears for all notes. The notes were issued with fixed and floating rate coupons payable in US dollars and swapped back to Australian dollar floating rate coupons through cross currency swaps and interest rate swaps.

b) financing arrangements

b) financing arrangements
	2013	2012
	$m	$m
total facilities
Bank loans	1,560.0	1,740.0
Domestic MTN	575.0	425.0
Foreign MTN	414.3	378.0
	2,549.3	2,543.0
used at end of the reporting period
Bank loans	1,172.1	1,012.9
Domestic MTN	575.0	425.0
Foreign MTN	414.3	378.0
	2,161.4	1,815.9
unused at end of the reporting period
Bank loans	387.9	727.1
Domestic MTN	—	—
Foreign MTN	—	—
	387.9	727.1

78 mirvac group annual report 2013

20 boRRowIngs / ContInueD

c) fair value

20 boRRowIngs / ContInueD c) fair value
Note	Carryingamount Fair value
	2013 2012 2013 2012 $m $m $m $m
Included in consolidated statement of fnancial position Non-traded fnancial liabilities Bank loans Domestic MTN Foreign MTN Lease liabilities not included in consolidated statement of fnancial position Contingent liabilities 31	1,172.1 1,012.9 1,172.1 1,012.9 575.0 425.0 575.0 425.0 414.3 378.0 414.3 378.0 5.8 9.1 5.8 9.1 131.8 106.1 131.8 106.1
	2,299.0 1,931.1 2,299.0 1,931.1

None of the classes above is readily traded on organised markets in standardised form.

i) Included in consolidated statement of financial position

The fair value for borrowings less than 12 months to maturity is deemed to equal the carrying amounts. All other borrowings are discounted if the effect of discounting is material. The fair value of borrowings is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for liabilities with similar risk profiles.

ii) Not included in consolidated statement of financial position

The Group has potential financial liabilities which may arise from certain contingent liabilities as disclosed in note 31. No material losses are anticipated in respect of those contingent liabilities and the fair value disclosed is the estimated amount which would be payable by Mirvac as consideration for the assumption of those contingent liabilities by another party.

d) Changes to financing arrangements

On 3 July 2013, the Group completed the extension and increase of its unsecured syndicated bank facility to $1,700.0m. The transaction is in line with the Group’s stated debt strategy to increase its debt maturity profile and also addresses the Group’s $350.0m facility expiring in January 2014.

The multicurrency revolving facility is made up of two to five year maturities and has extended the Group’s weighted average debt maturity from 3.2 to 3.8 years. Details are as follows:

– two year facility of $680.0m;

– four year facility of $510.0m; and

five year facility of $510.0m.

Eight of Mirvac’s existing banks and one new bank have committed to the facility, providing a diversified group of nine major domestic and international banks. The financial covenants under the new facility remain unchanged.

21 DeRIVAtIVe fInAnCIAl lIAbIlItIes

21 DeRIVAtIVe fInAnCIAl lIAbIlItIes
	2013	2012
	$m	$m
Current
Interest rate swapcontracts – fair value	13.4	15.0
	13.4	15.0
non-Current
Interest rate swap contracts – fair value	17.8	99.5
Cross currencyderivatives – fair value	42.6	71.1
	60.4	170.6

a) Instruments used by Mirvac

Refer to note 36 for information on instruments used by Mirvac.

b) foreign currency and interest rate risk exposures

Refer to note 36 for Mirvac’s exposure to foreign currency and interest rate risk on cross currency swaps.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

22 pRoVIsIons

22 pRoVIsIons
	2013	2012
	$m	$m
Current
Employee benefts – LSL	7.4	7.8
Dividends/distributionspayable	164.9	82.0
	172.3	89.8
non-current
Asset retirement obligations	0.4	0.6
Employee benefts – LSL	3.2	3.0
	3.6	3.6
Movements in each class of provision during the year, other than employee benefts, are set out below:
	2013	2012
Dividend/distributionspayable1	$m	$m
Balance 1 July	82.0	75.5
Interim and fnal dividends/distributions	308.8	287.0
Payments made	(225.9)	(280.5)
balance 30 June	164.9	82.0
Asset retirement obligation2
Balance 1 July	0.6	0.9
Provision release	(0.2)	(0.3)
balance 30 June	0.4	0.6

1) The amounts reported in the provision include dividends/distributions paid/payable to securityholders of the Group and NCI.

2) The asset retirement obligations relate to obligations under lease agreements for office space on expiry of the lease, to return the space to its condition at the commencement of the lease.

23 otHeR lIAbIlItIes

23 otHeR lIAbIlItIes
			2013	2012
			$m	$m
Monies held in trust			0.3	0.5
24 ContRIbuteD equIty
a) paid up equity
	2013	2012	2013	2012
	securities	Securities
	m	m	$m	$m
Mirvac Limited – ordinary shares issued	3,659.9	3,412.0	1,765.2	1,249.8
MPT – ordinaryunits issued	3,659.9	3,412.0	4,980.1	5,084.9
total contributed equity			6,745.3	6,334.7

b) Movements in paid up equity

Movements in paid up equity of Mirvac for the year ended 30 June 2013 were as follows:

Consolidated	Issue date	Issue price $	Note	m	Securities $m
Balance 1 July 2012				3,412.0	6,334.7
Acquisition of GE portfolio		1.69	24(c)	238.9	403.7
EEP securities issued	14 March 2013	1.64	24(d)	0.4	0.7
LTP, LTIP and EIS securities converted, sold or forfeited				8.6	13.4
Less: Transaction costs arisingon issues of securities				—	(7.2)
balance 30 June 2013				3,659.9	6,745.3
Balance 1 July 2011				3,409.3	6,327.4
EEP securities issued	22 March 2012	1.22	24(d)	1.3	1.5
LTP,LTIP and EIS securities converted,sold or forfeited				1.4	5.8
Balance 30 June 2012				3,412.0	6,334.7

Ordinary securities

All ordinary securities were fully paid at 30 June 2013. Ordinary securities entitle the holder to participate in dividends/ distributions and the proceeds on winding up of Mirvac in proportion to the number of and amount paid on the securities held. On a show of hands, every holder of ordinary securities present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each security is entitled to one vote.

80 mirvac group annual report 2013

24 ContRIbuteD equIty / ContInueD

c) Acquisition of ge portfolio

On 23 May 2013, Mirvac acquired a portfolio of office assets from GE, which was largely funded by a fully underwritten $400.0m (before costs) institutional placement of 236.7m securities at $1.69 per stapled security issued on 17 May 2013 and $3.7m Security Purchase Plan of 2.2m securities at $1.69 per stapled security issued on 24 June 2013.

d) ltp, ltIp, eIs and eep issues

i) Current LTP

At 30 June 2013, 23.3m (2012: 33.4m) performance rights and nil (2012: 0.3m) options were issued to participants under the plan. The number of issued rights and options is net of adjustments due to forfeiture of rights and options as a result of termination of employment. During the year, 3.4m performance rights (2012: 0.1m) and no options (2012: nil) vested.

ii) EEP

At 30 June 2013, 5.4m (2012: 5.0m) stapled securities have been issued to employees under the EEP.

iii) Superseded LTI and EIS plans

During the year, no securities were issued to employees of Mirvac Limited and its controlled entities under the superseded LTI plan and EIS (2012: nil). The total number of stapled securities issued to employees under the superseded LTI and EIS at 30 June 2013 was 5.1m (2012: 6.2m). The market price per ordinary stapled security at 30 June 2013 was $1.61 (2012: $1.28). Securities issued as part of the superseded LTI plan and EIS are not classified as ordinary securities, until such time as the vesting conditions are satisfied, employee loans are fully repaid or the employee leaves Mirvac.

e) Reconciliation of securities issued on the AsX

Under AAS, securities issued under the Mirvac employee LTI plans are required to be accounted for as an option and are excluded from total issued equity, until such time as the relevant employee loans are fully repaid or the employee leaves the Group. Total ordinary securities issued as detailed above is reconciled to securities issued on the ASX as follows:

Group. Total ordinary securities issued as detailed above is reconciled	to securities issued on the ASX as follows:
	2013	2012
	securities	Securities
	m	m
Total ordinary securities disclosed	3,659.9	3,412.0
Securities issued under LTIplan and EIS	5.1	6.2
total securities issued on the AsX	3,665.0	3,418.2

f) employee share scheme

Information relating to the employee share scheme, including details of shares issued under the scheme, is set out in note 34.

g) Capital risk management

Refer to note 36 for details of Mirvac’s capital risk management.

25 ReseRVes

a) Reserves

25 ReseRVes a) Reserves
	2013	2012
	$m	$m
Asset revaluation reserve	65.8	51.0
Capital reserve	(0.3)	(0.2)
Foreign currency translation reserve	(3.8)	(11.0)
Security based payments reserve	10.5	16.8
NCI reserve	7.6	7.6
	79.8	64.2

b) Movement in reserves

b) Movement in reserves
		2013	2012
	Note	$m	$m
Asset revaluation reserve
Balance 1 July		51.0	121.6
Increment on revaluation of owner-occupied properties	25(d)	14.8	20.1
Share of other comprehensive income of associates and joint ventures accounted for using the equity method	25(d)	—	8.3
Transfers due to deconsolidation of disposalgroup	25(d)	—	(99.0)
balance 30 June		65.8	51.0
Capital reserve
Balance 1 July		(0.2)	(0.2)
Transfers out to retained earnings	26	(0.1)	—
balance 30 June		(0.3)	(0.2)

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

25 ReseRVes / ContInueD

b) Movement in reserves

25 ReseRVes / ContInueD b) Movement in reserves
		2013	2012
		$m	$m
foreign currency translation reserve
Balance 1 July		(11.0)	(14.8)
Increase in reserve due to translation of foreign operations		9.5	4.0
Deferred tax	6	(2.3)	(1.0)
Transfers due to deconsolidation of disposalgroup		—	0.8
balance 30 June		(3.8)	(11.0)
share based payments reserve
Balance 1 July		16.8	11.7
Expense relating to security based payments		(6.9)	4.4
Deferred tax	6	0.6	0.7
balance 30 June		10.5	16.8
nCI reserve
Balance 1 July		7.6	7.6
balance 30 June		7.6	7.6

c) nature and purpose of reserves

i) Asset revaluation reserve

The asset revaluation reserve is used to record increments and decrements on the revaluation of owner-occupied assets. However, any decrement in excess of previous increments is expensed to profit or loss.

ii) Capital reserve

The capital reserve was prior to the introduction of IFRS, used to record the net revaluation increment or decrement on disposal of investment properties. The balance of the reserve may be transferred to retained earnings and used to satisfy distributions to securityholders.

iii) Foreign currency translation reserve

Exchange differences arising on translation of the foreign controlled operations of the Group are taken to the foreign currency translation reserve, as described in note 1(e).

iv) Security based payment reserve

The security based payment reserve is used to recognise the fair value of securities issued under LTI plans, securities issued under the EEP and any deficit resulting from the sale of securities under LTI plans.

v) NCI reserve

Transactions with NCI that do not result in a loss of control are accounted through equity. The NCI reserve is used to record the difference between the fair value of the NCI acquired or disposed and any consideration paid/received.

d) Reconciliation of movements between property, plant and equipment to asset revaluation reserve

		2013	2012
	Note	$m	$m
Revaluation increment within property, plant and equipment	17	(19.5)	(28.6)
Items adjusted to statement of comprehensive income
Items relating to owner-occupied buildings including ftout and lease amortisation		6.3	8.5
Revaluation shortfall booked to PPE but not to ARR		(1.6)	—
Balance transferred to asset revaluation reserve		(14.8)	(20.1)
Items adjusted directly to reserves
Share of other comprehensive income of associates and joint ventures accounted for using the equity method	29(c)	—	(8.3)
Transfers out to retained earnings		—	99.0
Movement in asset revaluation reserve	25(b)	(14.8)	70.6

82 mirvac group annual report 2013

26 RetAIneD eARnIngs

26 RetAIneD eARnIngs
		2013	2012
	Note	$m	$m
Balance 1 July		(644.2)	(870.1)
Proft for the year attributable to the stapled securityholders of Mirvac		139.9	416.1
Items in other comprehensive income recognised directly in retained earnings
– Movement in security based compensation		(1.3)	(1.3)
– Deconsolidation of entity		—	(0.1)
– Transfers in from asset revaluation reserve	25(b)	—	99.0
– Transfers in from capital reserve	25(b)	0.1	—
– Transfers out to foreign currency translation reserve		—	(0.8)
Dividends/distributionsprovided for orpaid	27	(308.8)	(287.0)
balance 30 June		(814.3)	(644.2)

27 DIVIDenDs/DIstRIbutIons

27 DIVIDenDs/DIstRIbutIons
	2013	2012
ordinarystapled securities	$m	$m
Half yearly/quarterly ordinary distributions paid as follows:
2.00 cents per stapled security paid on 28 October 2011 (unfranked distribution)	—	68.3
4.20 cents per stapled security paid on 25 January 2013 (unfranked distribution)	143.9	—
2.00 cents per stapled security paid on 27 January 2012 (unfranked distribution)	—	68.3
2.00 cents per stapled security paid on 27 April 2012 (unfranked distribution)	—	68.4
4.50 cents per stapled security paid on 26 July 2013 (unfranked distribution)	164.9	—
2.40 centsper stapled security paid on 27 July2012(unfranked distribution)	—	82.0
total dividend/distribution 8.70 cents(2012: 8.40 cents) per stapled security	308.8	287.0

There was no dividend/distribution reinvestment plan in place for either year; all dividends/distributions were satisfied in cash. Franking credits available for subsequent years based on a tax rate of 30 per cent total $15.7m (2012: $9.3m on a tax rate of 30 per cent).

28 ContRolleD entItIes AnD DeeD of CRoss guARAntee

The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities in accordance with the accounting policy described in note 1(c):

a) Interests in controlled entities of Mirvac

in accordance with the accounting policy described in note 1(c): a) Interests in controlled entities of Mirvac
	Country of		Equity	holding
	establishment	Class of	2013	2012
	/incorporation	units/shares	%	%
name of entity
107 Mount Street Head Trust	Australia	Units	100	100
107 Mount Street Sub Trust	Australia	Units	100	100
197 Salmon Street Pty Limited1	Australia	Ordinary	100	100
A.C.N. 087 773 859 Pty Limited1	Australia	Ordinary	100	100
A.C.N. 110 698 603 Pty Limited1	Australia	Ordinary	100	100
A.C.N. 150 521 583 Pty Limited1	Australia	Ordinary	100	100
A.C.N. 151 466 241 Pty Limited	Australia	Ordinary	100	100
Banksia Unit Trust	Australia	Units	100	100
CN Collins Pty Limited1	Australia	Ordinary	100	100
Domaine Investments Management Pty Limited	Australia	Ordinary	50	50
Fast Track Bromelton Pty Limited1	Australia	Ordinary	100	100
Ford Mirvac Unit Trust	Australia	Units	100	100
Fyfe Road Pty Limited1	Australia	Ordinary	100	100
Gainsborough Greens Pty Limited1	Australia	Ordinary	100	100
Hexham Project Pty Limited1	Australia	Ordinary	100	100
HIR Boardwalk Tavern Pty Limited1	Australia	Ordinary	100	100
HIR Golf Club Pty Limited11	Australia	Ordinary	100	100
HIR Golf Course Pty Limited1	Australia	Ordinary	100	100
HIR Property Management Holdings Pty Limited1	Australia	Ordinary	100	100
HIR Tavern Freehold Pty Limited1	Australia	Ordinary	100	100
Hoxton Park Airport Limited2	Australia	Ordinary	100	100
HPAL Holdings Pty Limited22	Australia	Ordinary	100	100
Industrial Commercial Property Solutions (Constructions) Pty Limited1	Australia	Ordinary	100	100
Industrial Commercial Property Solutions (Finance) Pty Limited1	Australia	Ordinary	100	100
Industrial Commercial Property Solutions (Holdings) Pty Limited1	Australia	Ordinary	100	100
Industrial Commercial Property Solutions (Queensland) Pty Limited1	Australia	Ordinary	100	100
Industrial Commercial Property Solutions Pty Limited1	Australia	Ordinary	100	100

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

28 ContRolleD entItIes AnD DeeD of CRoss guARAntee / ContInueD

	Country of		Equity	holding
	establishment	Class of	2013	2012
	/incorporation	units/shares	%	%
JF ASIF Pty Limited1	Australia	Ordinary	100	100
Magenta Shores Finance Pty Limited1	Australia	Ordinary	100	100
Magenta Shores Unit Trust	Australia	Units	100	100
Magenta Unit Trust	Australia	Units	100	100
MFM US Real Estate Inc	United States	Ordinary	100	100
MGR US Real Estate Inc	United States	Ordinary	100	100
Mirvac (Beacon Cove) Pty Limited1	Australia	Ordinary	100	100
Mirvac (Docklands) Pty Limited1	Australia	Ordinary	100	100
Mirvac (Old Treasury) Pty Limited3	Australia	Ordinary	50	100
Mirvac (Old Treasury Development Manager) Pty Limited1	Australia	Ordinary	100	100
Mirvac (Old Treasury Hotel) Pty Limited1	Australia	Ordinary	100	100
Mirvac (WA) Pty Limited1	Australia	Ordinary	100	100
Mirvac (Walsh Bay) Pty Limited1 Mirvac 8 Chifey Pty Limited	Australia Australia	Ordinary Ordinary	100 50	100 50
Mirvac Advisory Pty Limited1	Australia	Ordinary	100	100
Mirvac Aero Company Pty Limited1	Australia	Ordinary	100	100
Mirvac Blue Trust4	Australia	Units	100	—
Mirvac Capital Investments Pty Limited1	Australia	Ordinary	100	100
Mirvac Capital Partners Limited4	Australia	Ordinary	100	—
Mirvac Capital Pty Limited1 Mirvac Chifey Holdings Pty Limited4	Australia Australia	Ordinary Ordinary	100 100	100 —
Mirvac Commercial Funding Pty Limited1	Australia	Ordinary	100	100
Mirvac Commercial Sub SPV Pty Limited1	Australia	Ordinary	100	100
Mirvac Constructions (Homes) Pty Limited1	Australia	Ordinary	100	100
Mirvac Constructions (QLD) Pty Limited1	Australia	Ordinary	100	100
Mirvac Constructions (SA) Pty Limited1	Australia	Ordinary	100	100
Mirvac Constructions (VIC) Pty Limited1	Australia	Ordinary	100	100
Mirvac Constructions (WA) Pty Limited1	Australia	Ordinary	100	100
Mirvac Constructions Pty Limited1	Australia	Ordinary	100	100
Mirvac Design Pty Limited1	Australia	Ordinary	100	100
Mirvac Developments NZ Limited5	New Zealand	Ordinary	—	100
Mirvac Developments Pty Limited1	Australia	Ordinary	100	100
Mirvac Doncaster Pty Ltd1	Australia	Ordinary	100	100
Mirvac Elderslie Pty Limited1	Australia	Ordinary	100	100
Mirvac ESAT Pty Limited1	Australia	Ordinary	100	100
Mirvac Finance Limited1	Australia	Ordinary	100	100
Mirvac Funds Limited2	Australia	Ordinary	100	100
Mirvac Funds Management Limited2	Australia	Ordinary	100	100
Mirvac George Street Holdings Pty Limited1,4	Australia	Ordinary	100	—
Mirvac George Street Pty Limited1	Australia	Ordinary	100	100
Mirvac Green Trust4	Australia	Units	100	—
Mirvac Group Finance Limited1	Australia	Ordinary	100	100
Mirvac Group Funding Limited1	Australia	Ordinary	100	100
Mirvac Group Funding No.2 Ltd	Australia	Ordinary	100	100
Mirvac Group Funding No.3 Pty Ltd	Australia	Ordinary	100	100
Mirvac Harbourtown Pty Limited1	Australia	Ordinary	100	100
Mirvac Harold Park Pty Ltd1	Australia	Ordinary	100	100
Mirvac Harold Park Trust	Australia	Units	100	100
Mirvac Holdings (WA) Pty Limited1	Australia	Ordinary	100	100
Mirvac Holdings Limited1	Australia	Ordinary	100	100
Mirvac Home Builders (VIC) Pty Limited1	Australia	Ordinary	100	100
Mirvac Homes (NSW) Pty Limited1	Australia	Ordinary	100	100
Mirvac Homes (QLD) Pty Limited1	Australia	Ordinary	100	100
Mirvac Homes (SA) Pty Limited1	Australia	Ordinary	100	100
Mirvac Homes (VIC) Pty Limited1	Australia	Ordinary	100	100
Mirvac Homes (WA) Pty Limited1	Australia	Ordinary	100	100
Mirvac Hotel Services Pty Limited1	Australia	Ordinary	100	100
Mirvac ID (Bromelton) Pty Limited1	Australia	Ordinary	100	100
Mirvac ID (Bromelton) Sponsor Pty Limited1	Australia	Ordinary	100	100
Mirvac Industrial Developments Pty Limited1	Australia	Ordinary	100	100
Mirvac International (Middle East) No. 2 Pty Limited1	Australia	Ordinary	100	100
Mirvac International (Middle East) No. 3 Pty Limited1	Australia	Ordinary	100	100
Mirvac International Investments Limited1	Australia	Ordinary	100	100
Mirvac International No. 3 Pty Limited1	Australia	Ordinary	100	100
Mirvac International Pty Limited1	Australia	Ordinary	100	100

84 mirvac group annual report 2013

28 ContRolleD entItIes AnD DeeD of CRoss guARAntee / ContInueD

	Country of		Equity	holding
	establishment	Class of	2013	2012
	/incorporation	units/shares	%	%
Mirvac JV’s Pty Limited1	Australia	Ordinary	100	100
Mirvac Kent Street Holdings Pty Limited1,4	Australia	Ordinary	100	—
Mirvac Mandurah Pty Limited1	Australia	Ordinary	100	100
Mirvac National Developments Pty Limited1	Australia	Ordinary	100	100
Mirvac Newcastle Pty Limited1	Australia	Ordinary	100	100
Mirvac Old Treasury Holdings Pty Limited1,4 Mirvac Pacifc Pty Limited1	Australia Australia	Ordinary Ordinary	100 100	— 100
Mirvac Parking Pty Limited1	Australia	Ordinary	100	100
Mirvac Parklea Pty Limited1	Australia	Ordinary	100	100
Mirvac Platform Investment Management Pty Limited3	Australia	Ordinary	100	—
Mirvac Precinct 2 Pty Limited1	Australia	Ordinary	100	100
Mirvac Projects Dalley Street Pty Limited1,4	Australia	Ordinary	100	—
Mirvac Projects George Street Pty Limited1,4	Australia	Ordinary	100	—
Mirvac Projects Dalley Street Trust4	Australia	Units	100	—
Mirvac Projects George Street Trust4	Australia	Units	100	—
Mirvac Projects No. 2 Pty Limited1	Australia	Ordinary	100	100
Mirvac Projects Pty Limited1	Australia	Ordinary	100	100
Mirvac Projects (WA) Pty Limited	Australia	Ordinary	100	100
Mirvac Properties Pty Limited1	Australia	Ordinary	100	100
Mirvac Property Advisory Services Pty Limited1	Australia	Ordinary	100	100
Mirvac Property Services Pty Limited1	Australia	Ordinary	100	100
Mirvac Queensland Pty Limited1	Australia	Ordinary	100	100
Mirvac Real Estate Debt Funds Pty Limited1	Australia	Ordinary	100	100
Mirvac Real Estate Pty Limited1	Australia	Ordinary	100	100
Mirvac REIT Management Limited2	Australia	Ordinary	100	100
Mirvac Retail Head SPV Pty Limited1	Australia	Ordinary	100	100
Mirvac Retail Sub SPV Pty Limited1	Australia	Ordinary	100	100
Mirvac Rockbank Pty Limited1	Australia	Ordinary	100	100
Mirvac Services Pty Limited1	Australia	Ordinary	100	100
Mirvac South Australia Pty Limited1	Australia	Ordinary	100	100
Mirvac Spare Pty Limited1	Australia	Ordinary	100	100
Mirvac Spring Farm Limited1	Australia	Ordinary	100	100
Mirvac SPV 1 Pty Limited1,6	Australia	Ordinary	100	100
Mirvac Treasury Limited1	Australia	Ordinary	100	100
Mirvac Treasury No. 3 Limited1	Australia	Ordinary	100	100
Mirvac UK Limited	United Kingdom	Ordinary	100	100
Mirvac UK Services Limited	United Kingdom	Ordinary	100	100
Mirvac Victoria Pty Limited1	Australia	Ordinary	100	100
Mirvac Wholesale Funds Management Limited1	Australia	Ordinary	100	100
Mirvac Wholesale Industrial Developments Limited1	Australia	Ordinary	100	100
Mirvac Woolloomooloo Pty Limited1	Australia	Ordinary	100	100
MRV Hillsdale Pty Limited1	Australia	Ordinary	100	100
MWID (Brendale) Pty Limited1	Australia	Ordinary	100	100
MWID (Brendale) Unit Trust	Australia	Units	100	100
MWID (Mackay) Pty Limited1	Australia	Ordinary	100	100
Newington Homes Pty Limited1	Australia	Ordinary	100	100
Oakstand No. 15 Hercules Street Pty Limited1	Australia	Ordinary	100	100
Pigface Unit Trust	Australia	Units	100	100
Planned Retirement Living Pty Limited1	Australia	Ordinary	100	100
Spring Farm Finance Pty Limited1 Springfeld Development Company Pty Limited1	Australia Australia	Ordinary Ordinary	100 100	100 100
SPV Magenta Pty Limited1	Australia	Ordinary	100	100
Taree Shopping Centre Pty Limited	Australia	Ordinary	100	100
TMT Finance Pty Limited1	Australia	Ordinary	100	100
Tucker Box Management PtyLimited1,7	Australia	Ordinary	100	100
b) Interests in controlled entities of Mpt
10-20 Bond Street Trust	Australia	Units	100	100
1900-2000 Pratt Inc.	USA	Ordinary	100	100
197 Salmon Street Trust	Australia	Units	100	100
275 Kent Street Holding Trust4	Australia	Units	100	—
380 St Kilda Road Trust	Australia	Units	100	100
Bedford Park Offce Trust8 Cannon Hill Offce Trust Chifey Holding Trust4	Australia Australia Australia	Units Units Units	— 100 100	100 100 —

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

28 ContRolleD entItIes AnD DeeD of CRoss guARAntee / ContInueD

	Country of		Equity	holding
	establishment	Class of	2013	2012
	/incorporation	units/shares	%	%
Davey Financial Management Birkdale Fair Trust8	Australia	Units	—	100
Davey Financial Management Pender Place Shopping Centre Trust8	Australia	Units	—	100
George Street Holding Trust4	Australia	Units	100	—
James Fielding Retail Property Sub Trust8	Australia	Units	—	100
James Fielding Trust	Australia	Units	100	100
JF Infrastructure – Sustainable Equity Fund	Australia	Units	100	100
JF Property Trust	Australia	Units	100	100
JFIF New South Wales Trust8	Australia	Units	—	100
JFIF Victorian Trust	Australia	Units	100	100
JFM Hotel Trust	Australia	Units	100	100
Lanyon Marketplace Trust8	Australia	Units	—	100
Meridian Investment Trust No. 1	Australia	Units	100	100
Meridian Investment Trust No. 2	Australia	Units	100	100
Meridian Investment Trust No. 3	Australia	Units	100	100
Meridian Investment Trust No. 4	Australia	Units	100	100
Meridian Investment Trust No. 5	Australia	Units	100	100
Meridian Investment Trust No. 6	Australia	Units	100	100
Mirvac 210 George Street Trust4	Australia	Units	100	—
Mirvac 220 George Street Trust4	Australia	Units	100	—
Mirvac 90 Collins Street Trust4	Australia	Units	100	—
Mirvac Allendale Square Trust4	Australia	Units	100	—
Mirvac Broadway Sub-Trust	Australia	Units	100	100
Mirvac Commercial Trust	Australia	Units	100	100
Mirvac Commercial No.1 Sub Trust	Australia	Units	100	100
Mirvac Commercial No.3 Sub Trust4	Australia	Units	100	—
Mirvac Funds Finance Pty Limited	Australia	Ordinary	100	100
Mirvac Funds Loan Note Pty Limited	Australia	Ordinary	100	100
Mirvac Glasshouse Sub-Trust	Australia	Units	100	100
Mirvac Group Funding No.2 Limited	Australia	Ordinary	100	100
Mirvac Group Funding No.3 Pty Limited	Australia	Ordinary	100	100
Mirvac Industrial Fund	Australia	Units	100	100
Mirvac Lake Haven Sub-Trust8	Australia	Units	—	100
Mirvac Offce Trust	Australia	Units	100	100
Mirvac Pitt Trust4	Australia	Units	100	—
Mirvac Property Trust No. 2	Australia	Units	100	100
Mirvac Real Estate Investment Trust	Australia	Units	100	100
Mirvac Retail Fund8	Australia	Units	—	100
Mirvac Retail Head Trust	Australia	Units	100	100
Mirvac Retail Sub-Trust No. 1	Australia	Units	100	100
Mirvac Rhodes Sub-Trust	Australia	Units	100	100
Mirvac Wholesale Offce Platform Trust4	Australia	Units	100	—
Mt Sheridan Plaza Trust8	Australia	Units	—	100
North Ryde Offce Trust	Australia	Units	100	100
Old Wallgrove Road Trust	Australia	Units	100	100
Old Treasury Holding Trust4	Australia	Units	100	—
Peninsula Homemaker Centre Trust8	Australia	Units	—	100
Pennant Hills Offce Trust	Australia	Units	100	100
Property Performance Fund No. 3	Australia	Units	100	100
Property Performance Fund No. 4	Australia	Units	100	100
Property Performance Fund No. 5 Springfeld Regional Shopping Centre Trust	Australia Australia	Units Units	100 100	100 100
The George Street Trust	Australia	Units	100	100
The Mulgrave Trust Uni No. 1 Offce Trust8	Australia Australia	Units Units	100 —	100 100
WOT CMBS Pty Ltd	Australia	Ordinary	100	100
WOT Holding Trust	Australia	Units	100	100
WOT Loan Note Pty Ltd WOW Offce Trust	Australia Australia	Ordinary Units	100 100	100 100

1) These subsidiaries have been granted relief as at 30 June 2013 from the necessity to prepare financial reports in accordance with Class Order 98/1418 issued by ASIC. 2) These entities are included in the deed of cross guarantee; however, they are still required to lodge separate financial statements. 3) During the year ended 30 June 2013, 50 per cent of the entity was sold and it is currently equity accounted as a joint venture. 4) These entities were established/registered during the year ended 30 June 2013.

5) This entity was de-registered in 17 August 2012.

6) Previously registered as Mirvac International (Middle East) Pty Limited. 7) Previously registered as Mirvac Reserve Pty Limited.

8) This trust was wound up and unit holdings in it were redeemed during the year.

86 mirvac group annual report 2013

28 ContRolleD entItIes AnD DeeD of CRoss guARAntee / ContInueD

c) entities subject to class order

Certain wholly-owned companies incorporated in Australia are permitted to be parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering into the deed, the wholly-owned companies can be relieved from the requirements among other things to prepare a financial report and directors’ report under class order 98/1418 (as amended) issued by ASIC. The entities included at 30 June 2013 are listed in note 28(a). Companies identified in note 28(a) as being included in the class order, are a “closed group” for the purpose of the class order, and as there are no other parties to the deed of cross guarantee that are controlled by the parent entity, they also represent the “extended closed group”. As a condition of the class order, the companies have entered into a deed of cross guarantee. The effect of the deed is that Mirvac Limited has guaranteed to pay any deficiency in the event of winding up of a company in the closed group. The companies in the closed group also have given a similar guarantee in the event that Mirvac Limited is wound up. The consolidated statement of comprehensive income, a summary of movement in consolidated retained earnings and the consolidated statement of financial position for the year ended 30 June 2013 of the entities which are members of the closed group are as follows:

	2013	2012
Consolidated statement of comprehensive income	$m	$m
Revenue from continuing operations
Investment properties rental revenue	15.6	10.5
Hotel operating revenue	—	0.2
Investment management fee revenue	26.1	33.6
Development and construction revenue	820.5	901.5
Development management fee revenue	32.5	20.1
Interest revenue	10.3	11.7
Other revenue	9.6	13.7
total revenue from continuingoperations	914.6	991.3
other income
Net gain on fair value of investment properties	9.6	0.7
Share of net proft of associates and joint ventures accounted for using the equity method	0.1	0.7
Gain on fnancial instruments	34.1	38.8
Netgain on sale ofproperty, plant and equipment	0.1	—
total other income	43.9	40.2
total revenue from continuingoperations and other income	958.5	1,031.5
Net loss on sale of property, plant and equipment	—	0.4
Foreign exchange loss	44.1	21.6
Investment properties expenses	4.3	3.3
Hotel operating expenses	—	1.7
Cost of property development and construction	701.4	789.7
Employee benefts expenses	95.9	93.3
Depreciation and amortisation expenses	4.5	4.2
Impairment of loans	18.0	11.7
Finance costs	81.0	103.1
Loss on fnancial instruments	—	61.8
Selling and marketing expenses	16.3	23.7
Impairment of investment including associates and joint ventures	12.3	—
Provision for loss on inventories	402.1	25.0
Other expenses	53.9	54.2
loss from continuing operations before income tax	(475.3)	(162.2)
Income tax beneft	11.0	68.0
loss from continuing operations	(464.3)	(94.2)
Proft from discontinued operations	1.4	36.5
loss for theyear	(462.9)	(57.7)

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

28 ContRolleD entItIes AnD DeeD of CRoss guARAntee / ContInueD

28 ContRolleD entItIes AnD DeeD of CRoss guARAntee / ContInueD
	2013	2012
summaryof movement in consolidated retained earnings	$m	$m
Balance 1 July	(938.7)	(899.7)
Loss for the year	(462.9)	(57.7)
Security based compensation	(1.2)	—
Transfers in from asset revaluation reserve	—	18.7
balance 30 June	(1,402.8)	(938.7)
	2013	2012
Consolidated statement of fnancialposition	$m	$m
Current assets
Cash and cash equivalents	119.0	73.3
Receivables	466.8	476.8
Inventories	530.6	685.1
Other assets	6.6	7.2
total current assets	1,123.0	1,242.4
non-current assets
Receivables	149.3	186.0
Inventories	628.0	682.1
Investments accounted for using the equity method	188.1	209.9
Derivative fnancial assets	0.7	—
Other fnancial assets	108.9	39.8
Investment properties	104.1	91.8
Property, plant and equipment	11.1	12.7
Intangible assets	2.6	2.6
Deferred tax assets	329.6	326.9
total non-current assets	1,522.4	1,551.8
total assets	2,645.4	2,794.2
Current liabilities
Payables	463.1	329.5
Borrowings	60.4	2.9
Derivative fnancial liabilities	13.4	15.0
Provisions	7.4	7.8
Current tax liabilities	—	0.2
Other liabilities	0.3	0.5
total current liabilities	544.6	355.9
non-current liabilities
Payables	495.3	564.8
Borrowings	1,057.1	1,283.2
Derivative fnancial liabilities	60.4	141.8
Deferred tax liabilities	112.2	132.4
Provisions	3.6	3.6
total non-current liabilities	1,728.6	2,125.8
total liabilities	2,273.2	2,481.7
net assets	372.2	312.5
equity
Contributed equity	1,765.2	1,249.8
Reserves	9.8	1.4
Retained earnings	(1,402.8)	(938.7)
total equity	372.2	312.5

88 mirvac group annual report 2013

29 InVestMents In AssoCIAtes

a) Associates accounted for using the equity method

Investments in associates are accounted for using the equity method of accounting. Information relating to associates is set out below:

is set out below:
			Interest
		2013	2012	2013	2012
Name of entity	Principal activities	%	%	$m	$m
Archbold Road J.V.1	Non-residential development	—	20	—	—
Australian Sustainable
Forestry Investors 1&22	Forestry and environmental asset management	60	60	10.4	10.4
BAC Devco Pty Limited3	Non-residential development	33	33	—	—
FreeSpirit Resorts Pty Limited	Property investment	25	25	—	—
Mindarie Keys Joint Venture4	Residential development	15	15	0.5	0.5
Mirvac Industrial Trust5	Listedpropertyinvestment trust	14	14	—	—
				10.9	10.9

1) This entity was concluded in June 2013.
2) Mirvac equity accounts for this investment as an associate even though it owns more than 50 per cent of the voting or potential voting power due to the fact that it does not have the power to control the entity. A controlled entity of the Group is the project manager of this investment.
3) This entity entered into voluntary administration as of 4 May 2010.
4) Mirvac equity accounts for this investment as an associate even though it owns less than 20 per cent of the voting or potential voting power due to the fact that it has significant influence over this entity, as a controlled entity of the Group is the project manager of this investment.
5) Mirvac equity accounts for this investment as an associate even though it owned less than 20 per cent of the voting or potential voting power due to the fact that it has significant influence over this entity, as a controlled entity of the Group is the responsible entity for the fund.

b) Associates financial summary

b) Associates fnancial summary
		Mirvac			Net	Mirvac
	Proft/ (loss) (100%)	share of proft/ (loss)	Total assets (100%)	Total liabilities (100%)	assets/ (liabilities) (100%)	carrying value of net assets
Name of entity	$m	$m	$m	$m	$m	$m
2013
Archbold Road J.V.1	—	—	—	—	—	—
Australian Sustainable Forestry Investors 1&2	1.1	—	56.3	24.6	31.7	10.4
BAC Devco Pty Limited2	—	—	—	—	—	—
FreeSpirit Resorts Pty Limited	(0.5)	—	5.4	10.0	(4.6)	—
Mindarie Keys Joint Venture	0.5	0.1	6.8	0.9	5.9	0.5
Mirvac Industrial Trust3	3.1	—	244.9	168.8	76.1	—
	4.2	0.1	313.4	204.3	109.1	10.9

1) This entity was concluded in June 2013.
2) This entity entered into voluntary administration as of 4 May 2010. The Group does not expect to recover any amounts and has no further obligation to the entity; therefore, assets and liabilities of the investment are considered to be $nil.
3) The investment was written down to $nil in 2009. The impairment on the loan to this investment was released during the year ended 30 June 2012. The Group did not recognise the share of profit or loss in the investment since it has been fully impaired to $nil.

		Mirvac			Net	Mirvac
	Proft/ (loss) (100%)	share of proft/ (loss)	Total assets (100%)	Total liabilities (100%)	assets/ (liabilities) (100%)	carrying value of net assets
Name of entity	$m	$m	$m	$m	$m	$m
2012
Archbold Road J.V.	—	—	0.1	—	0.1	—
Australian Sustainable Forestry Investors 1&2	(0.8)	(0.5)	59.6	27.9	31.7	10.4
BAC Devco Pty Limited1	—	—	—	—	—	—
FreeSpirit Resorts Pty Limited	(0.9)	—	5.8	10.2	(4.4)	—
Mindarie Keys Joint Venture	0.5	0.1	7.1	1.0	6.1	0.5
Mirvac City Regeneration Limited Partnership2	—	—	—	—	—	—
Mirvac Industrial Trust3	(7.2)	—	227.9	159.6	68.3	—
Mirvac Wholesale Hotel Fund4	—	—	—	—	—	—
	(8.4)	(0.4)	300.5	198.7	101.8	10.9

1) This entity entered into voluntary administration as of 4 May 2010. The Group does not expect to recover any amounts and has no further obligation to the entity; therefore, assets and liabilities of the investment are considered to be $nil.
2) The Group disposed of this investment during the year ended 30 June 2012.
3) The investment was written down to $nil in 2009. The impairment on the loan to this investment was released during the year ended 30 June 2012. The Group did not recognise the share of profit or loss in the investment since the net investment and loan to this investment has been fully impaired to $nil.
4) The investment was disposed of during the year ended 30 June 2012 and the Group’s share of profit/(loss) was included in the results of the discontinued operations. Refer to note 13 for further information.

The carrying amounts reported by the Group have been adjusted for unrealised profit from transactions with the Group. The total amount adjusted is $nil (2012: $nil).

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

29 InVestMents In AssoCIAtes / ContInueD

c) Movements in carrying amounts and aggregate share

				2013	2012
		Note		$m	$m
Movements in carrying amounts
Balance 1 July				10.9	128.6
Equity acquired				—	2.1
Distributions received				(0.1)	(6.3)
Share of proft/(loss) from ordinary operating activities		29(b)		0.1	(1.5)
Deconsolidation of Australian Sustainable Forestry Investors 1&2				—	10.1
Equity sold1				—	(130.4)
Share of increment on revaluation of freehold land, property, plant and equipment		25(b)		—	8.3
balance 30 June		29(a)		10.9	10.9
Mirvac’s aggregate share of associates’ assets and liabilities
Current assets				5.2	46.6
Non-current assets				65.2	64.0
Total assets				70.4	110.6
Current liabilities				5.0	28.2
Non-current liabilities				36.0	53.0
Total liabilities				41.0	81.2
net assets				29.4	29.4
Mirvac’s aggregate share of associates’ revenues, expenses and results
Revenues				10.0	8.7
Expenses				(9.0)	(10.4)
Proft/(loss)before income tax				1.0	(1.7)
Mirvac’s aggregate share of associates’ expenditure commitments
Capital commitments				—	—
fair value of listed investments in associates
Mirvac Industrial Trust				8.1	5.6
1) This relates to Mirvac Wholesale Hotel Fund which was sold	on 22 May 2012.
d) Investment in associates accounted for at fair value
			Interest
		2013	2012	2013	2012
Name of entity	Principal activities	%	%	$m	$m
JF Infrastructure Yield Fund	Infrastructure investment	22	22	12.6	12.7

e) Impairment of investments

During the year, there was no impairment of investments (2012: $nil).

30 InVestMents In JoInt VentuRes

a) Joint ventures accounted for using the equity method

Investments in joint ventures include those in corporations, partnerships and other entities and accounted for in the consolidated financial statements using the equity method of accounting. All joint ventures were incorporated in Australia with the exception of Quadrant Real Estate Advisors LLC which was incorporated in the United States. Information relating to joint ventures is set out below:

			Interest
		2013	2012	2013	2012
Name of entity	Principal activities	%	%	$m	$m
Ascot Chase Nominee Stages 3-5 Pty Ltd	Residential development	50	—	—	—
Australian Centre for Life Long Learning	Non-residential development	50	50	—	—
BL Developments Pty Ltd1	Residential development	50	50	30.8	46.7
City West Property Investments (No.1) Trust	Non-residential development	50	50	9.6	9.4
City West Property Investments (No.2) Trust	Non-residential development	50	50	9.6	9.4
City West Property Investments (No.3) Trust	Non-residential development	50	50	9.6	9.4
City West Property Investments (No.4) Trust	Non-residential development	50	50	9.6	9.4
City West Property Investments (No.5) Trust	Non-residential development	50	50	9.6	9.4
City West Property Investments (No.6) Trust	Non-residential development	50	50	9.6	9.4
Domaine Investment Trust	Non-residential development	50	50	—	—
Ephraim Island Joint Venture	Residential development	50	50	2.7	4.8
Fast Track Bromelton Pty Limited	Non-residential
and Nakheel SPV Pty Limited	development	50	50	27.2	27.2
Googong Township Unit Trust	Residential development	50	50	24.8	25.7

90 mirvac group annual report 2013

30 InVestMents In JoInt VentuRes / ContInueD

			Interest
		2013	2012	2013	2012
Name of entity	Principal activities	%	%	$m	$m
Green Square Consortium Pty Limited	Residential development	50	50	—	—
HPAL Freehold Pty Limited2	Non-residential development	50	50	—	—
Infocus Infrastructure Management Pty Limited	Property investment	50	50	0.6	1.3
Leakes Road Rockbank Unit Trust Mirvac 8 Chifey Trust	Residential development Property investment	50 50	50 50	14.2 38.4	14.3 21.0
Mirvac Lend Lease Village Consortium	Residential development	50	50	0.8	0.7
Mirvac (Old Treasury) Trust	Property investment	50	—	30.2	—
Mirvac Wholesale Residential
Development Partnership Trust	Residential development	20	20	20.2	23.0
MVIC Finance 2 Pty Limited	Residential development	50	50	—	—
Quadrant Real Estate Advisors LLC3	Property investment	—	50	—	2.1
Swanbourne Joint Venture4	Residential development	—	50	—	—
Tucker Box Hotel Group	Hotel investment	50	50	121.5	122.7
Walsh BayPartnership	Residential development	50	50	—	0.6
				369.0	346.5

1) The movement in the carrying value results from an impairment of $12.3m as a result of soft market conditions.
2) This entity is in the process of being wound up.
3) This entity was sold during the year.
4) The partnership was concluded during the year.

b) Joint ventures financial summary

2) This entity is in the process of being wound up. 3) This entity was sold during the year. 4) The partnership was concluded during the year. b) Joint ventures fnancial summary
		Mirvac			Net	Mirvac
	Proft/ (loss) (100%)	share of proft/ (loss)	Total assets (100%)	Total liabilities (100%)	assets/ (liabilities) (100%)	carrying value of net assets
Name of entity	$m	$m	$m	$m	$m	$m
2013
Ascot Chase Nominee Stages 3-5 Pty Ltd	(0.8)	(0.4)	40.2	41.0	(0.8)	—
Australian Centre for Life Long Learning1	0.6	—	92.7	77.8	14.9	—
BL Developments Pty Limited2	(19.0)	—	80.1	5.6	74.5	30.8
City West Property Investments (No.1) Trust	0.3	0.1	19.2	—	19.2	9.6
City West Property Investments (No.2) Trust	0.3	0.1	19.2	—	19.2	9.6
City West Property Investments (No.3) Trust	0.3	0.1	19.2	—	19.2	9.6
City West Property Investments (No.4) Trust	0.3	0.1	19.2	—	19.2	9.6
City West Property Investments (No.5) Trust	0.3	0.1	19.2	—	19.2	9.6
City West Property Investments (No.6) Trust	0.3	0.1	19.2	—	19.2	9.6
Domaine Investment Trust	—	—	—	5.2	(5.2)	—
Ephraim Island Joint Venture3	(12.8)	—	9.9	2.8	7.1	2.7
Fast Track Bromelton Pty Limited
and Nakheel SPV Pty Limited	0.1	0.1	65.7	0.9	64.8	27.2
Googong Township Unit Trust	—	(0.8)	113.0	61.0	52.0	24.8
Green Square Consortium Pty Limited	—	—	6.5	6.5	—	—
HPAL Freehold Pty Limited4	—	0.3	15.0	—	15.0	—
Infocus Infrastructure Management Pty Limited	1.2	0.7	1.8	0.6	1.2	0.6
Leakes Road Rockbank Unit Trust	(0.2)	(0.1)	31.6	3.3	28.3	14.2
Mirvac 8 Chifey Trust	0.7	0.3	279.7	195.5	84.2	38.4
Mirvac Lend Lease Village Consortium	0.2	0.1	4.3	2.0	2.3	0.8
Mirvac (Old Treasury) Trust	2.1	0.7	165.8	95.5	70.3	30.2
Mirvac Wholesale Residential
Development Partnership Trust5	(28.7)	(2.3)	345.8	225.8	120.0	20.2
MVIC Finance 2 Pty Limited	—	—	0.1	—	0.1	—
Quadrant Real Estate Advisors LLC6	3.0	1.5	—	—	—	—
Swanbourne Joint Venture7	3.1	1.6	—	—	—	—
Tucker Box Hotel Group	20.0	10.0	408.7	164.6	244.1	121.5
Walsh BayPartnership	—	—	—	0.1	(0.1)	—
	(28.7)	12.3	1,776.1	888.2	887.9	369.0

1) The Group did not take up further share of profits in the investment because the net investment has been impaired to $nil.
2) Impairment of $12.3m has been taken in this entity during the period. The Group did not take up further share of loss in the investment as the carrying value of the investment is already below the 50 per cent of the net assets of the joint venture.
3) The losses incurred in the investment during the year have already been reflected in the provision made to the investment in the prior years. No further losses were booked in this year.
4) The joint venture is in the process of being wound up. The net assets represent the surplus funds transferred to joint venture partners. The Group has
eliminated this amount which has been included in the statement of financial position as a liability.
5) The Group has taken less than its proportional loss to the profit or loss as the carrying value of the investment is already below the 20 per cent ownership of the net assets of the joint venture.
6) This entity was sold during the year.
7) The partnership has been concluded during the period.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

30 InVestMents In JoInt VentuRes / ContInueD

		Mirvac			Net	Mirvac
	Proft/ (loss) (100%)	share of proft/ (loss)	Total assets (100%)	Total liabilities (100%)	assets/ (liabilities) (100%)	carrying value of net assets
Name of entity	$m	$m	$m	$m	$m	$m
2012
Australian Centre for Life Long Learning1	33.8	—	92.2	77.9	14.3	—
Bankstown Airport Development Pty Limited	—	—	—	—	—	—
BL Developments Pty Limited	0.1	—	102.8	2.4	100.4	46.7
City West Property Investments (No.1) Trust	0.2	0.1	18.9	—	18.9	9.4
City West Property Investments (No.2) Trust	0.2	0.1	18.9	—	18.9	9.4
City West Property Investments (No.3) Trust	0.2	0.1	18.9	—	18.9	9.4
City West Property Investments (No.4) Trust	0.2	0.1	18.9	—	18.9	9.4
City West Property Investments (No.5) Trust	0.2	0.1	18.9	—	18.9	9.4
City West Property Investments (No.6) Trust	0.2	0.1	18.9	—	18.9	9.4
Domaine Investment Trust	—	—	—	5.2	(5.2)	—
Ephraim Island Joint Venture2	(5.8)	—	41.1	21.2	19.9	4.8
Fast Track Bromelton Pty Limited
and Nakheel SPV Pty Limited	0.2	0.1	64.7	—	64.7	27.2
Googong Township Unit Trust	(0.7)	(0.2)	62.5	11.2	51.3	25.7
Green Square Consortium Pty Limited	—	—	1.4	1.4	—	—
HPAL Freehold Pty Limited3	0.2	—	15.1	—	15.1	—
Infocus Infrastructure Management Pty Limited	1.1	0.6	3.0	0.3	2.7	1.3
J F Infrastructure Pty Limited4	(0.1)	—	—	—	—	—
Leakes Road Rockbank Unit Trust	(0.2)	(0.1)	29.2	0.7	28.5	14.3
Mirvac 8 Chifey Trust	0.1	—	148.2	104.0	44.2	21.0
Mirvac Lend Lease Village Consortium	3.0	1.1	7.5	5.3	2.2	0.7
Mirvac Wholesale Residential
Development Partnership Trust2	(62.5)	(1.0)	352.0	208.3	143.7	23.0
MVIC Finance 2 Pty Limited	—	—	0.1	—	0.1	—
New Zealand Sustainable Forestry Investors 1 & 25	0.1	(0.4)	—	—	—	—
Quadrant Real Estate Advisors LLC6	4.4	2.8	11.4	11.1	0.3	2.1
Swanbourne Joint Venture	2.3	—	8.1	0.4	7.7	—
Tucker Box Hotel Group	20.4	10.2	414.2	167.8	246.4	122.7
Walsh BayPartnership	0.3	0.1	—	0.9	(0.9)	0.6
	(2.1)	13.8	1,466.9	618.1	848.8	346.5

1) The Group did not take up further share of profit in the investment because the net investment has been impaired to $nil.
2) The losses incurred in the investment during the year have already been reflected in the provision made to the investment in the prior years. No further losses were booked in this year.
3) The joint venture is in the process of being wound up. The net assets represent the surplus funds transferred to joint venture partners. The Group has eliminated this amount which has been included in the statement of financial position as a liability.
4) The Group has written off the loan to the joint venture which has since been deregistered.
5) The entity disposed of its forestry assets during the year ended 30 June 2011, and was wound up in the year ended 30 June 2012.

6) The carrying amount reflected the Group’s entitlement to the net assets independent of the financial performance of the joint venture.

The carrying amounts reported by the Group have been adjusted for unrealised profit from transactions with the Group. The total amount adjusted is $42.2m (2012: $34.1m).

c) Movements in carrying amounts and aggregate share

The total amount adjusted is $42.2m (2012: $34.1m). c) Movements in carrying amounts and aggregate share
		2013	2012
	Note	$m	$m
Movements in carrying amounts
Balance 1 July		346.5	311.2
Equity acquired		47.8	20.6
Equity sold		(2.3)	—
Repayment of capital		—	(5.0)
Excess loss over equity invested written off against loans		—	(5.7)
Investment impaired	30(d)	(12.3)	—
Distributions received		(22.8)	(18.9)
Deferred revenue (eliminated)/realised		(8.1)	1.7
Share of proft from ordinary operating activities	30(b)	12.3	13.8
Transfers from investment in controlled entities		6.9	7.4
Increase in equity as a result of the acquisitions		—	14.7
Other		1.0	6.7
balance 30 June		369.0	346.5

92 mirvac group annual report 2013

30 InVestMents In JoInt VentuRes / ContInueD

30 InVestMents In JoInt VentuRes / ContInueD
		2013	2012
	Note	$m	$m
Mirvac’s aggregate share of entities’ assets and liabilities
Current assets		170.1	128.0
Non-current assets		606.7	499.9
Total assets		776.8	627.9
Current liabilities		90.0	77.4
Non-current liabilities		286.3	169.2
Total liabilities		376.3	246.6
Net assets		400.5	381.3
Mirvac’s aggregate share of joint ventures’ revenues, expenses and results
Revenues		70.0	130.0
Expenses		(76.7)	(112.3)
(Loss)/proft before income tax		(6.7)	17.7
Mirvac’s aggregate share of joint ventures’ expenditure commitments
Capital commitments		—	—

d) Impairment of investments

In the year ended 30 June 2013, $12.3m (2012: $nil) of impairment provision was taken against the carrying value of the investments in BL Developments Pty Limited as a result of soft market conditions. The impairment loss was recognised within the ‘Impairment of investments including associates and joint ventures’ category within the SoCI. Investments in joint ventures are reviewed at the end of each reporting period for any impairment and written off to the extent that the future benefits are no longer probable and do not support the carrying value of the investment.

31 ContIngent lIAbIlItIes

a) Contingent liabilities

The Group had contingent liabilities at 30 June 2013 in respect of the following:

31 ContIngent lIAbIlItIes a) Contingent liabilities The Group had contingent liabilities at 30 June 2013 in respect of the following:
	2013	2012
	$m	$m
Bank guarantees and performance bonds issued by external parties in respect of certain performance obligations granted in the normal course of business	129.4	103.6
Performance guarantees. The Group has provided guarantees to third parties in respect of the performance of entities within the Group. No material losses are anticipated in respect of these contractual obligations.	2.4	2.5
Claims for damages in respect of injury sustained due to health and safety issues have been made during the year. The potential effect of these claims indicated by legal advice is that if the claims were to be successful against the Group, theywould result in a liability.	1.6	6.6

As part of the ordinary course of business of the Group, disputes can arise with suppliers, customers and other third parties. Where there is a present obligation, a liability is recognised. Where there is a possible obligation, which will only be determined by a future event and it is not considered probable that a liability will arise, they are disclosed as a contingent liability. Where the possible obligation is remote, no disclosure is given. The Group does not provide details of these as to do so may prejudice the Group’s position.

b) guarantees

For information about guarantees given by entities within the Group, including the parent entity, refer to notes 28 and 40.

c) Associates and joint ventures

There are no contingent liabilities relating to associates and joint ventures.

32 CoMMItMents

a) Capital commitments

32 CoMMItMents a) Capital commitments
	2013	2012
	$m	$m
Investment properties
Not later than one year	70.7	69.1
Later than one year but not later than fve years	28.1	15.4
Later than fveyears	—	—
	98.8	84.5
property, plant and equipment
Not later than one year	—	—
Later than one year but not later than fve years	—	—
Later than fveyears	—	—
	—	—

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

32 CoMMItMents / ContInueD

b) lease commitments

32 CoMMItMents / ContInueD b) lease commitments
		2013	2012
	Note	$m	$m
operating leases
Commitments in relation to non-cancellable operating leases contracted for at the reporting date but not recognised as liabilities, are payable as follows:
Not later than one year		9.5	8.7
Later than one year but not later than fve years		18.6	22.1
Later than fveyears		2.2	0.8
		30.3	31.6
finance leases
Commitments in relation to fnance leases are payable as follows:
Not later than one year		3.3	3.5
Later than one year but not later than fve years		2.9	6.7
Later than fve years		—	—
Residual		—	—
Minimum lease payments		6.2	10.2
Less: Future fnance charges		(0.4)	(1.1)
Lease liabilities	20	5.8	9.1

Mirvac leases various plant and equipment with a carrying value of $nil (2012: $nil) under finance leases expiring in less than five years.

33 KMp

a) Determination of KMp

KMP are those people with authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly.

Mirvac has previously considered all members of the Executive Leadership Team (“ELT”) to be KMP. However, during the year ended 30 June 2013 the composition of ELT expanded significantly to include new business heads, as well as heads of support functions. Under the expanded structure, the new ELT members who head business functions are considered KMP, while the heads of support functions are not considered to be KMP.

For Mirvac, the KMP are therefore:

– the CEO & Managing Director, Finance Director and members of the ELT who head a business (“Senior Executives”); and – Non-Executive Directors.

For the year ended 30 June 2013, the Senior Executives were:

– Non-Executive Directors. For the year ended 30 June	2013, the Senior Executives were:
senior executives	Position	Term as KMP
Susan Lloyd-Hurwitz	CEO & Managing Director (appointed 5 November 2012)	Part year
Andrew Butler	Chief Executive Offcer, Investment	Full year
Brett Draffen	Chief Executive Offcer, Development and Group Strategy	Full year
Gregory Dyer1	Finance Director (appointed 4 September 2012)	Part year
Gary Flowers2	Chief Operating Offcer (until 21 January 2013)	Full year
	Group Executive, Business Initiatives (from 22 January 2013)
Jonathan Hannam	Group Executive, Capital (appointed 9 January 2013)	Part year
Bevan Towning3	Chief Executive Offcer,Capital Partnerships(from 9 July2012)	Partyear
former executives
Nicholas Collishaw	CEO & Managing Director (ceased employment on 31 October 2012)	Part year
Justin Mitchell	Chief Financial Offcer(ceased employment on 1 October 2012)	Partyear

1) Ceasing employment with Mirvac on 5 September 2013.

2) Ceasing employment with Mirvac on 1 October 2013.

3) Ceasing employment with Mirvac on 20 September 2013.

b) KMp compensation

1) Ceasing employment with Mirvac on 5 September 2013. 2) Ceasing employment with Mirvac on 1 October 2013. 3) Ceasing employment with Mirvac on 20 September 2013. b) KMp compensation
	2013	2012
	$m	$m
Short term employment benefts	13.1	11.7
Post-employment benefts	0.2	0.2
Security based payments	0.8	1.7
Termination benefts	1.9	—
Other longterm benefts	0.1	0.1
	16.1	13.7

Detailed remuneration disclosures are provided on pages 10 to 32 in the remuneration report.

94 mirvac group annual report 2013

33 KMp / ContInueD

c) equity instrument disclosures relating to KMp

i) Security holdings

The number of ordinary securities in Mirvac held during the year by each Director and other KMP, including their personally-related parties, is set out below. There were no securities granted during the year as compensation.

		Securities
	Balance	issued	Other	balance
2013	1 July	under EEP	changes1	30 June
Directors
James MacKenzie	129,914	—	8,875	138,789
Marina Darling	—	—	38,875	38,875
Peter Hawkins	596,117	—	—	596,117
James Millar AM	40,714	—	—	40,714
John Mulcahy	25,000	—	—	25,000
John Peters	—	—	30,000	30,000
Elana Rubin	10,000	—	15,917	25,917
former Director
Nicholas Collishaw	2,036,512	—	(2,036,512)	—
other KMp
Andrew Butler	139,796	—	—	139,796
Brett Draffen	272,781	—	200,825	473,606
Gary Flowers	—	—	99,300	99,300
other former KMp
Justin Mitchell	153,929	—	(153,929)	—
2012
Directors
James MacKenzie	129,914	—	—	129,914
Nicholas Collishaw	2,036,512	—	—	2,036,512
Peter Hawkins	596,117	—	—	596,117
James Millar AM	40,714	—	—	40,714
Penny Morris	241,136	—	(241,136)	—
John Mulcahy	25,000	—	—	25,000
Elana Rubin	10,000	—	—	10,000
Other KMP
Andrew Butler	139,796	—	—	139,796
Brett Draffen	272,781	—	—	272,781
Justin Mitchell	153,929	—	—	153,929

1) Other changes include additions/disposals resulting from first or final disclosure of a KMP and other changes to security holdings, options and performance rights.

ii) Options

Details of options granted as remuneration and stapled securities issued on the exercise of such options, together with terms and conditions of the options, are provided on pages 28 to 30 in the remuneration report. The number of options over ordinary securities in Mirvac held during the year by each Director and other KMP, including their personally-related parties, is set out below:

is set out below:
	Balance	Options issued	Other	Balance
2013	1 July	under LTP	changes1	30 June	Unvested
former Director
Nicholas Collishaw	103,310	—	(103,310)	—	—
other KMp
Brett Draffen	64,570	—	(64,570)	—	—
other former KMp
Justin Mitchell	34,437	—	(34,437)	—	—
2012
Director
Nicholas Collishaw	2,026,410	—	(1,923,100)	103,310	—
Other KMP
Andrew Butler	—	—	—	—	—
Brett Draffen	603,070	—	(538,500)	64,570	—
Gary Flowers	192,300	—	(192,300)	—	—
Justin Mitchell	367,737	—	(333,300)	34,437	—

1) Other changes include additions/disposals resulting from first or final disclosure of a KMP and other changes to security holdings, options and performance rights.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

33 KMp / ContInueD

iii) Performance rights

33 KMp / ContInueD iii) Performance rights	33 KMp / ContInueD iii) Performance rights	33 KMp / ContInueD iii) Performance rights	33 KMp / ContInueD iii) Performance rights	33 KMp / ContInueD iii) Performance rights
Details of performance rights granted as remuneration and stapled securities issued on the exercise of such rights, together
with terms and conditions of the rights, are provided on pages 10 to 32 in the remuneration report. The number of performance
rights in Mirvac held during the year by each Director and other KMP, including their personally-related parties, is set out below: Rights
	Balance	issued	Other	balance
2013	1 July	under LTP	changes1	30 June
Director
Susan Lloyd-Hurwitz	—	1,137,300	—	1,137,300
former Director
Nicholas Collishaw	5,807,100	—	(5,807,100)	—
other KMp
Andrew Butler	98,834	—	—	98,834
Brett Draffen	1,547,547	489,800	(499,000)	1,538,347
Gregory Dyer	—	446,000	—	446,000
Gary Flowers	1,008,190	374,067	(264,800)	1,117,457
Jonathan Hannam	—	198,407	—	198,407
Bevan Towning	—	454,921	—	454,921
other former KMp
Justin Mitchell	452,029	—	(452,029)	—
2012
Director
Nicholas Collishaw	5,272,800	1,403,900	(869,600)	5,807,100
Other KMP
Andrew Butler	160,700	10,334	(72,200)	98,834
Brett Draffen	1,194,700	596,347	(243,500)	1,547,547
Gary Flowers	732,200	362,990	(87,000)	1,008,190
Justin Mitchell	514,300	88,429	(150,700)	452,029

1) Other changes include additions/disposals resulting from first or final disclosure of a KMP and other changes to security holdings, options and performance rights.

d) loans to Directors and other KMp

Details of loans made to Directors and other KMP (including loans granted under the LTIP and EIS), including their personally-related parties, are set out below:

i) Aggregates for Directors and other KMP

					Directors and
		Balance	Interest not	Balance	other KMP
		1 July $	charged(iv) $	30 June $	at 30 June Number
2013		9,699,639	430,331	6,289,599	5
2012		10,845,858	568,384	9,699,639	5
ii) Individuals with loans above $100,000 during the year
					Highest
		Balance	Interest not	Balance	indebtedness
	Note	1 July $	charged(iv) $	30 June $	during the year $
2013
former Director
Nicholas Collishaw	(i)	636,739	—	—	636,739
	(iii)	1,004,500	—	—	1,004,500
	(v)	1,400,000	79,092	1,000,000	1,400,000
other KMp
Andrew Butler	(i)	328,236	—	323,597	328,236
	(v)	1,550,000	97,784	1,300,000	1,550,000
Brett Draffen	(i)	294,531	—	291,002	294,531
	(ii)	200,000	2,352	—	200,000
	(v)	1,550,000	97,784	1,300,000	1,550,000
Gary Flowers	(v)	875,000	55,535	775,000	875,000
other former KMp
Justin Mitchell	(i)	152,783	—	—	152,783
	(iii)	157,850	—	—	157,850
	(v)	1,550,000	97,784	1,300,000	1,550,000

96 mirvac group annual report 2013

33 KMp / ContInueD

33 KMp / ContInueD
					Highest
		Balance	Interest not	Balance	indebtedness
	Note	1 July $	charged(iv) $	30 June $	during the year $
2012
Director
Nicholas Collishaw	(i)	645,496	—	636,739	645,496
	(iii)	1,004,500	—	1,004,500	1,004,500
	(iv)	1,700,000	113,702	1,400,000	1,700,000
Other KMP
Andrew Butler	(i)	333,910	—	328,236	333,910
	(v)	1,750,000	123,286	1,550,000	1,750,000
Brett Draffen	(i)	298,915	—	294,531	298,915
	(ii)	350,000	17,431	200,000	350,000
	(v)	1,750,000	123,286	1,550,000	1,750,000
Gary Flowers	(v)	950,000	67,393	875,000	950,000
Justin Mitchell	(i)	155,187	—	152,783	155,187
	(iii)	157,850	—	157,850	157,850
	(v)	1,750,000	123,286	1,550,000	1,750,000

i) Securities purchased under the LTIP, EIS and former James Fielding Group (“JFG”) EIS are funded by interest-free employee loans. The loans are non-recourse to the employee in the event of a shortfall on disposal. The securities issued are held as security until the loans are repaid.
ii) Loans made under the employee loan scheme (the EIP) are interest free, repayable over periods from six to 10 years, and repayable in full upon cessation of employment. The loans are secured by mortgage over the property or securities purchased. Loans issued under the employee loan scheme are subject to a periodic forgiveness schedule and may also be subject to terms set out in service agreements.
iii) Securities issued under the former JFG EIS and converted to Mirvac securities are interest bearing employee loans. The loans are non-recourse in the event of disposal. The stapled securities issued are held as security until the loans are repaid.

iv) Interest not charged excludes loans issued under the LTIP and EIS.

v) During the year ended 30 June 2009, several employees were invited to participate in an interest-free loan program (the ERP) which has since been closed to further entry, consistent with Mirvac’s intention to eliminate the use of loan plans as part of employee reward. The amounts of the loans range from $500,000 to $2,000,000 and must be secured against property or unconditional bank guarantee. A progressively increasing forgiveness schedule allows for no more than 50 per cent of the total loan balance to be forgiven after five years of continued service. The repayment date of the loan is the earlier of 12 months after the participant ceases to be employed by Mirvac, or 12 months after the fifth anniversary of the loan. Interest is payable for any period in which the loan remains unpaid after the repayment date.

Other than loans forgiven to specified executives as disclosed in the remuneration report, no write-downs or provision for impairment for receivables have been recognised in relation to any loans made to Directors or specified executives.

e) other transactions with KMp

There are a number of transactions between KMP and the Group. The terms and conditions of these transactions are considered to be no more favourable than in similar transactions on an arm’s length basis. On occasions, Directors and other KMP may purchase goods and services from Mirvac. These purchases are on terms and conditions available to Mirvac employees generally. As set out in the Directors’ report, a number of the Directors of Mirvac are also Directors of other companies. On occasions, the Group may purchase goods and services from or supply goods and services to these entities. These transactions are undertaken on normal commercial terms and conditions and the Director or other KMP does not directly influence these transactions.

34 eMployee benefIts

a) employee benefits and related on-cost liabilities

34 eMployee benefIts a) employee benefts and related on-cost liabilities
		2013	2012
Provision for employee benefts	Note	$m	$m
Annual leave accrual		9.4	10.2
Current LSL	22	7.4	7.8
Non-current LSL	22	3.2	3.0
Aggregate employee benefts and related on-cost liabilities		20.0	21.0

The aggregate employee benefits and related on-cost liabilities include amounts for annual leave and LSL. The amount for LSL that is expected to be settled more than 12 months from the end of the year is measured at its present value.

b) superannuation commitments

Mirvac offers employees based in Australia as part of their remuneration, the ability to participate in a staff superannuation plan managed by AustralianSuper. Employees are able to choose whether to participate in this plan or a qualifying plan of their choice. The plan provides lump sum benefits on retirement, disability or death for employees who are invited by their employer to join the plan. The plan is a defined contribution plan, which complies with relevant superannuation requirements.

c) employee security issues

The total of all securities issued under all employee security schemes is limited to five per cent of the issued securities of the stapled group in any five year period.

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

34 eMployee benefIts / ContInueD

d) ltI plans

i) EEP

The EEP is designed to encourage security ownership across the broader employee population. It provides eligible employees with $1,000 worth of Mirvac securities at nil cost. The plan is open to Australian based employees with more than 12 months of continuous service, who do not participate in other Mirvac equity plans.

Securities acquired under this plan are subject to a restriction on disposal until the earlier of three years after acquisition, or cessation of employment with the Group. Otherwise, holders enjoy the same rights and benefits as other holders of Mirvac’s stapled securities. On termination, employees retain any securities granted to them. At 30 June 2013, 5,418,170 stapled securities (2012: 4,977,254) had been issued to employees under the EEP.

ii) LTP – current plan

The LTP was originally introduced in the year ended 30 June 2008 following approval by securityholders at the 2007 AGM. Securityholders approved an update to the LTP at the 2010 AGM. The purpose of the LTP is to drive performance, retain executives and facilitate executive security ownership.

LTP grants are generally restricted to the executives who are most able to influence securityholder value. Executives are eligible, at the discretion of the HRC, to participate in the LTP. Non-Executive Directors are not eligible to participate in the LTP. Awards under this plan are made in the form of performance rights. Awards of options have also been made under this plan in previous years. A performance right is a right to acquire one fully paid stapled security in Mirvac provided a specified performance hurdle is met. No loans are made to participants under this plan.

The Board reviews the performance conditions annually to determine the appropriate hurdles based on Mirvac’s strategy and prevailing market practice.

This year, the Board determined, on the recommendation of the HRC, the vesting outcome for half of the LTP awards made in the year ended 30 June 2013 will depend on Mirvac’s TSR performance relative to the constituents of the comparison group, with the other half linked to Mirvac’s return on equity performance. TSR was chosen given that it is an objective measure of securityholder value creation, and given its wide level of understanding and acceptance by the various key stakeholders. ROE was chosen as the second performance condition because it is aligned to Mirvac’s strategic drivers, in particular financial performance and capital efficiency. At 30 June 2013, 23,338,483 (2012: 33,395,149) performance rights and nil (2012: 299,169) options had been issued to participants under the LTP. The number of issued rights and options are net of adjustments due to forfeiture of rights and options as a result of termination of employment. A total of 3,435,582 performance rights (2012: 72,727) and nil options (2012: nil) vested during the year ended 30 June 2013.

iii) Superseded plans

There are four old plans now closed for new grants with the introduction of the LTP:

– ERP

A small number of senior executives were invited to participate in the ERP. While the loans under this program were offered during the year ended 30 June 2009, some of the loan amounts were drawn down in the year ended 30 June 2010. The amounts of the loans range from $500,000 to $2,000,000 and must be secured against property or unconditional bank guarantee. A progressively increasing forgiveness schedule allows for no more than 50 per cent of the total loan balance in total to be forgiven.

– EIS

Until 2006, Mirvac’s long-term variable remuneration scheme for employees was the EIS. Open to all permanent employees, allocations were made annually, were unrestricted and fully vested on allotment. Existing arrangements remain in place until all current loans are repaid.

– LTIP

The LTIP was introduced in 2006 and approved by securityholders at the Group’s 2006 AGM. At this time, loan-funded incentive plans were common for entities with stapled securities due to the prevailing tax rules. Participation in the plan was open to the Managing Director, other Executive Directors, other executives and eligible employees. Participants were offered an interest-free loan which was applied to fund the acquisition of Mirvac’s stapled securities at market value. The term of the loan is eight years. Any loan balance outstanding at the end of the eighth year must be repaid at that time. The loan is reduced annually by applying the post-tax amounts of any distributions paid by Mirvac to the outstanding principal. The loans are interest free and non-recourse over their term.

Two performance conditions had to be met before the securities vested in full: Relative TSR and EPS growth. The satisfaction of each condition was given an equal weighting in terms of the total number of securities that may vest (that is, 50 per cent of the total securities held by a participant was subject to each performance condition). On vesting, 53.5 per cent of the original loan to fund the purchase of the vested securities was waived. The remaining balance of the loan will continue to be reduced by post-tax distributions until either the loan has been fully repaid or the eight year term expires, whichever occurs first. If a participant terminates their employment, any outstanding loans must be repaid in full immediately or the underlying securities will be forfeited.

– EIP

The final loans under the EIP were offered during the year ended 30 June 2006. The amounts of the loans range from $50,000 to $800,000 with Mirvac holding security over the assets purchased with the loan proceeds. A progressively increasing forgiveness schedule applied which allowed the total loan balance to be forgiven if the employee remained employed on the final forgiveness date. The total outstanding loan balance under the EIP was $200,000 as at 1 July 2012. This amount was forgiven in accordance with the loan agreement during the year ended 30 June 2013. There are no outstanding loan amounts under the EIP as at 30 June 2013 and no further loans will be made under the EIP.

98 mirvac group annual report 2013

34 eMployee benefIts / ContInueD

e) security based payment expense

Total expenses arising from security based payment transactions recognised during the year as part of employee benefits expenses were as follows:

expenses were as follows:
	2013	2012
	$m	$m
EEP	0.7	1.5
Currentplan – LTP	3.4	7.0
	4.1	8.5

f) fair value of security based payment expense

i) EEP

The nature of the securities allotted under this plan is in substance similar to an option. The assessed fair value is taken to profit or loss as the securities vest immediately.

– Security based payment inputs for the EEP securities issued during the year

	EEP
Grant date	14 March 2013
Security price atgrant date	$1.64

ii) LTP

Fair value at grant date has been independently determined using an option pricing model that takes into account the exercise price, the term of the securities, the current price of the underlying securities, the expected volatility of the security price, the expected dividend/distribution yield and the risk-free interest rate for the term of the security. The fair value of the security based payment expense is calculated using a Monte-Carlo simulation. Assumptions used for the fair value of security based payment expense are as follows:

– Security based payment inputs for the current LTP

In valuing rights linked to the relative TSR measure, the key inputs for the 2013 grant were as follows:

	Performance rights
Grant date	17 December 2012
Performance hurdle	Relative TSR and ROE
Performance period start	1 July 2012
Performance testing date	1 July 2015
Security price at grant date	$1.51
Exercise price	$nil
Expected life	2.5 years
Volatility	25%
Risk-free interest rate (per annum)	2.74%
Dividend/distributionyield(per annum)	5.50%

35 RelAteD pARtIes

a) Controlled entities

Interests in controlled entities are set out in note 28.

b) KMp

Disclosures relating to KMP are set out in note 33.

c) transactions with related parties

The following transactions occurred with related parties:

Interests in controlled entities are set out in note 28. b) KMp Disclosures relating to KMP are set out in note 33. c) transactions with related parties The following transactions occurred with related parties:
	2013	2012
transactions with associates andjoint ventures	$000	$000
Interest income	9,244	2,850
Project development fees	1,306	865
Management and service fees	12,358	46,945
Construction billings	166,325	118,584
Responsible entityfees	7,928	10,165

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

35 RelAteD pARtIes / ContInueD

d) outstanding balances in relation to transactions with related parties

The following balances are outstanding at the end of the year in relation to transactions with related parties:

	2013	2012
	$000	$000
Current receivables
Associates and joint ventures	25,159	29,512
non-current receivables
Associates andjoint ventures	58,348	46,802

No impairment provision (2012: $nil) in respect of receivables has been raised in relation to any outstanding balances, and no other expense has been recognised in respect of impaired receivables due from related parties.

e) terms and conditions

Transactions relating to dividends/distributions are on the same terms and conditions that applied to other securityholders.

The terms of the tax funding agreement are set out note 6(d).

Other transactions were made on normal commercial terms and conditions with variable terms for the repayment and interest payable at market rates on the loans between the parties.

36 fInAnCIAl RIsK MAnAgeMent

Mirvac’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. Mirvac’s overall risk management program seeks to minimise potential adverse effects on the financial performance of Mirvac. The Group uses various derivative financial instruments to manage certain risk exposures, specifically in relation to interest rate and foreign exchange risks on borrowings. Derivatives are exclusively used for hedging purposes and are not held for trading or speculative purposes. Financial risk management is carried out by a central treasury department (“Mirvac Group Treasury”) under policies approved by the Board. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as mitigating foreign exchange, interest rate and credit risks, use of derivative financial instruments and investing excess liquidity. Mirvac Group Treasury identifies, evaluates, reports and manages financial risks in close cooperation with the Group’s operating units in accordance with Board policy.

The Group holds the following financial instruments:

The Group holds the following fnancial instruments:
		2013	2012
	Note	$m	$m
financial assets
Cash and cash equivalents	38(a)	126.4	77.3
Receivables	8	214.0	249.5
Derivative fnancial assets	9	11.6	—
Other fnancial assets at fair value through proft or loss	11	12.6	12.7
Other fnancial assets	15	187.1	51.5
		551.7	391.0
financial liabilities
Payables	19	698.8	418.5
Borrowings	20	2,167.2	1,825.0
Derivative fnancial liabilities	21	73.8	185.6
		2,939.8	2,429.1

The carrying values of trade receivables (less impairment provision) and payables are assumed to approximate their fair values due to their short term nature. Derivative financial assets and liabilities are valued based upon valuation techniques.

a) Market risk

Market risk is the risk that the fair value or future cash flows of a financial asset or financial liability will fluctuate because of changes in market prices. Market risk comprises currency risk, interest rate risk and price risk.

i) Currency risk

Foreign exchange risk refers to the change in value between foreign currencies and the Australian dollar. This change affects the assets and liabilities of Mirvac which are denominated in currencies other than Australian dollars. Mirvac foreign exchange risks arise mainly from:

– borrowings denominated in currencies other than Australian dollars which are predominately US dollars;

investments in offshore operations which are located in the United States and New Zealand;
receipts and payments which are denominated in other currencies; and
foreign exchange risk on derivatives.

100 mirvac group annual report 2013

36 fInAnCIAl RIsK MAnAgeMent / ContInueD

Mirvac manages its foreign exchange risk for its assets and liabilities denominated in other currencies by borrowing in the same currency as that in which the offshore business operates to form a natural hedge against the movement in exchange rates. Mirvac manages its foreign currency note borrowings with cross currency swaps which swap the obligations to pay fixed or floating US dollar principal and interest payments to floating Australian dollar interest payments. Cross currency swaps in place cover 100 per cent of the US dollar denominated note principal outstanding. These swaps have the same maturity profiles as the underlying note obligations. This removes exposure to interest rates in the US market while creating floating exposures in the domestic market that have been managed to meet Mirvac’s target interest rate profile. The foreign currency exchange rate has been fixed for all swaps to A$/US$ 0.7456.

At 30 June 2013, the notional amounts and periods of expiry of the cross currency swap contracts for the Group were:

	2013	2012
	$m	$m
Between three to four years	368.9	—
Between four to fve years	—	368.9
Greater than fveyears	134.1	134.1
	503.0	503.0

All swaps require settlement on a quarterly basis. Translation gains or losses on the net investment in foreign operations are recorded through the foreign currency translation reserve.

sensitivity analysis

Cross currency swaps are in place to manage the foreign exchange exposure on the US dollar debt. These swaps have the same notional principal and maturity profiles as those of the underlying note obligations. Based upon current exposures, there is no material foreign exchange sensitivity in Mirvac.

ii) Interest rate risk

Mirvac’s interest rate risk arises from long term borrowings, cash and cash equivalents (refer to note 38(a)), receivables and derivatives.

borrowings

Borrowings issued at variable rates expose Mirvac to cash flow interest rate risk. Borrowings issued at fixed rates expose Mirvac to fair value interest rate risk. The Group’s policy is to have a minimum of 40 per cent and a maximum of 80 per cent of borrowings subject to fixed or capped interest rates. This policy was complied with at the end of the year. Mirvac manages its cash flow interest rate risk by using interest rate derivatives thereby maintaining fixed rate exposures within the policy range. Such interest rate derivatives have the economic effect of converting borrowings from floating rates to fixed or capped rates or vice versa.

The following table sets out Mirvac’s net exposure to interest rate risk by maturity periods. Exposures arise predominately from liabilities bearing variable interest rates as the Group intends to hold fixed rate liabilities to maturity.

Floating interest rate $m	Fixed interest maturingin Over Over Over Over 1 year 1 to 2 2 to 3 3 to 4 4 to 5 Over 5 or less year(s) years years years years total $m $m $m $m $m $m $m
2013 Bank loans 1,172.1 Domestic MTN — Foreign MTN 404.3 Interest rate swaps (500.0) Lease liabilities —	— — — — — — 1,172.1 — 200.0 — 225.0 150.0 — 575.0 — — — 10.0 — — 414.3 — (150.0) 300.0 100.0 150.0 100.0 — 3.0 2.8 — — — — 5.8
1,076.4	3.0 52.8 300.0 335.0 300.0 100.0 2,167.2
Floating interest rate $m	Fixed interest maturingin Over Over Over Over 1 year 1 to 2 2 to 3 3 to 4 4 to 5 Over 5 or less year(s) years years years years Total $m $m $m $m $m $m $m
2012 Bank loans 1,012.9 Domestic MTN — Foreign MTN 368.0 Interest rate swaps (1,113.8) Lease liabilities —	— — — — — — 1,012.9 — — 200.0 — 225.0 — 425.0 — — — — 10.0 — 378.0 — — (47.9) 200.0 480.0 481.7 — 2.9 3.1 3.1 — — — 9.1
267.1	2.9 3.1 155.2 200.0 715.0 481.7 1,825.0

101

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

36 fInAnCIAl RIsK MAnAgeMent / ContInueD

Derivative instruments used by Mirvac

Mirvac enters into a variety of derivative instruments, although most commonly it uses interest rate swap agreements. Under the swap agreements, Mirvac agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.

Aside from swap agreements, bought and/or sold option agreements are used which allow rates to float between certain ranges and bank cancellable agreements are used which allow the relevant bank to cancel the agreement if certain conditions arise, the benefit of which is lower fixed rates. These derivatives are recorded in the consolidated statement of financial position at fair value in accordance with AASB 139. Derivatives currently in place cover approximately 50.1 per cent (2012: 64.8 per cent) of the loan principal outstanding. The fixed interest rates range between 3.00 and 6.40 per cent (2012: 4.70 and 6.40 per cent) per annum. At 30 June 2013, the notional principal amounts, interest rates and periods of expiry of the interest rate swap contracts held by the Group were as follows:

contracts held by the Group	were as follows:
	Floatingto fxed Fixed to foating 2013 2012 2013 2012 Interest Interest Interest Interest rates rates rates rates %pa $m %pa $m %pa $m %pa $m
Over 1 to 2 year(s) Over 2 to 3 years Over 3 to 4 years Over 4 to 5 years Over 5years	— — — — 8.25 150.0 — — 3.00-5.50 300.0 5.17 102.1 — — 8.25 150.0 4.70 100.0 4.75-5.50 200.0 — — — — 3.35-6.40 300.0 4.70-6.12 480.0 5.50 150.0 — — 3.35 100.0 5.17-6.40 481.7 — — — —
	800.0 1,263.8 300.0 150.0

The contracts require settlement of net interest receivable or payable each reset date (generally 90 days). The settlement dates generally coincide with the dates on which interest is payable on the underlying debt. The contracts are settled on a net basis.

Cash and cash equivalents

Cash held exposes Mirvac to cash flow interest rate risk.

Receivables

The Group’s exposure to interest rate risk for current and non-current receivables is set out in the following table:

Floating interest rate Note $m	Fixed interest maturingin Over Over Over Over 1 year 1 to 2 2 to 3 3 to 4 4 to 5 Non- or less year(s) years years years interest total $m $m $m $m $m bearing $m
2013 Trade receivables 8 — Related party receivables 8 — Loans to Directors and employees 8 — Other receivables 8 30.0	— — — — — 25.3 25.3 4.3 8.7 6.7 16.1 — 47.7 83.5 — — — — — 10.0 10.0 3.5 0.1 0.1 0.2 — 61.3 95.2
30.0	7.8 8.8 6.8 16.3 — 144.3 214.0
2012 Trade receivables 8 — Related party receivables 8 4.7 Loans to Directors and employees 8 — Other receivables 8 41.9	— — — — — 26.8 26.8 7.2 — 16.1 2.0 — 51.6 81.6 — — — — — 13.9 13.9 0.3 0.2 0.1 0.2 5.8 78.7 127.2
46.6	7.5 0.2 16.2 2.2 5.8 171.0 249.5

sensitivity analysis

Mirvac’s interest rate risk exposure arises from long term borrowings, cash held with financial institutions and receivables. Based upon a 50 (2012: 50) basis point increase or decrease in Australian interest rates, the impact on profit after tax has been calculated taking into account all underlying exposures and related derivatives. This sensitivity has been selected as this is considered reasonable given the current level of both short term and long term interest rates.

The impact on the Group’s result of a 50 (2012: 50) basis point increase in interest rates assuming no interest is capitalised would be an increase in profit of $3.8m (2012: increase of $10.2m). The impact on Mirvac’s result of a 50 (2012: 50) basis point decrease in interest rates would be a decrease in profit of $3.7m (2012: decrease of $9.5m). The impact on the Group of a movement in US dollar interest rates would not be material to the profit of the Group.

The interest rate sensitivities of the Group vary on an increase/decrease of 50 basis point movement in interest rates due to the interest rate optionality of a small number of derivatives.

102 mirvac group annual report 2013

36 fInAnCIAl RIsK MAnAgeMent / ContInueD

iii) Price risk

The Group is exposed to equity price risk arising from an equity investment (refer to note 11). The equity investment is held for the purpose of selling in the near term. As this investment is not listed, the fund manager provides a unit price each six months. At the end of the year, if the unit price had been five per cent higher or lower, the effect on profit for the year would have been $0.6m (2012: $0.6m) higher or lower. This investment represents less than one per cent of Mirvac’s net assets and therefore represents minimal risk to the Group.

b) Credit risk

Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument and will cause a financial loss. Mirvac has exposures to credit risk on cash and cash equivalents, receivables and derivative financial assets; the maximum exposure to credit risk is based on the total value of the Group’s financial assets, net of any provision for impairment, as shown in note 8. To help manage this risk, the Group has a policy for establishing credit limits for the entities dealt with which is based on the size or previous trading experience of the entity. Based upon the size or previous trading experience, Mirvac may require collateral, such as bank guarantees in relation to investment properties, leases or deposits taken on residential sales.

Mirvac may also be subject to credit risk for transactions which are not included in the consolidated statement of financial position, such as when Mirvac provides a guarantee for another party. Details of the Group’s contingent liabilities are disclosed in note 31. The credit risk arising from derivatives transactions and cash held with financial institutions exposes the Group if the contracting entity is unable to complete its obligations under the contracts. Mirvac’s policy is to spread the amount of net credit exposure among major financial institutions which are rated the equivalent of A or above from the major rating agencies. Mirvac’s net exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread among approved counterparties. With regard to mezzanine loans, Mirvac monitors all loans advanced on a continuous basis. Formal procedures are in place, which include the regular review of each loan’s status, monitoring of compliance with loan terms and conditions, consideration of historical performance and future outlook of borrowers for realisation. These procedures include the process for the realisation of loans, review and determination of the appropriate carrying value of investments and regular dialogue with the borrowers to ensure material issues are identified as they arise. Refer to note 8 for the management of credit risk relating to receivables.

c) liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities, the ability to close out market positions and the ability to raise funds through the issue of new securities through various means including placements and/or Mirvac’s dividend/distribution reinvestment plan (“DRP”). Mirvac prepares and updates regular forecasts of the Group’s liquidity requirements to ensure that committed credit lines are kept available in order to take advantage of growth opportunities. Surplus funds are generally only invested in highly liquid instruments.

At 30 June 2013, Mirvac has a strong liquidity position with only $175.1m borrowings falling due within the next 12 months and available undrawn facilities of $387.9m. On 3 July 2013, the Group completed the extension and increase of its unsecured syndicated bank facility. Refer to note 20 for further details.

d) Capital risk

Mirvac’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so that it can provide returns to securityholders and meet its strategic objectives without increasing its overall risk profile.

In assessing the optimal capital structure, the Group seeks to maintain an investment grade credit rating of BBB to reduce the cost of capital and diversify its sources of debt capital.

At 30 June 2013, the gearing ratio (net debt including cross currency swaps to total tangible assets less cash) was 23.6 per cent (2012: 22.7 per cent). The Group’s target gearing ratio is 20 to 30 per cent. This may be exceeded in order to take advantage of appropriate opportunities, such as acquisitions as they arise. To manage the Group’s gearing ratio, a number of mechanisms are available. These may include adjusting the amount of dividends/distributions paid to securityholders, adjusting the number of securities on issue (via buy-backs), or the disposal of assets.

Mirvac prepares quarterly consolidated statements of financial position, statements of comprehensive income and cash flow updates for the current year and five year forecasts. These forecasts are used to monitor the Group’s capital structure and future capital requirements, taking into account future market conditions.

AFSL ratios and Queensland Building licences ratios were complied with at 30 June 2013. Mirvac also complied with all its borrowing covenant ratios at 30 June 2013. The gearing ratios were as follows:

	2013	2012
	$m	$m
Net interest bearing debt less cash1	2,133.6	1,873.5
Total tangible assets less cash	9,054.3	8,267.6
gearingratio(%)	23.6	22.7

1) US dollar denominated borrowings translated at cross currency instrument rate and excluding leases.

103

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

36 fInAnCIAl RIsK MAnAgeMent / ContInueD

e) fair value measurement

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. AASB 7 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

quoted prices (unadjusted) in active markets for identical assets or liabilities (level one);
inputs other than quoted prices included within level one that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level two); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level three).

The following table presents the Group’s assets and liabilities measured and recognised at fair value at 30 June 2013 and 30 June 2012:

30 June 2012:
		Level one	Level two	Level three	Total
	Note	$m	$m	$m	$m
2013
Assets
Other fnancial assets at fair value through proft or loss
– unlisted securities	11	—	—	12.6	12.6
Other fnancial assets	15	—	—	187.1	187.1
Derivatives used for hedging	9	—	11.6	—	11.6
		—	11.6	199.7	211.3
liabilities
Derivatives used for hedging	21	—	73.8	—	73.8
		—	73.8	—	73.8
2012
Assets
Other fnancial assets at fair value through proft or loss
– unlisted securities	11	—	—	12.7	12.7
Other fnancial assets	15	—	—	51.5	51.5
		—	—	64.2	64.2
Liabilities
Derivatives used for hedging	21	—	185.6	—	185.6
		—	185.6	—	185.6

The following table presents the changes in level three instruments for the year ended 30 June 2013 held by the Group:

		2013	2012
	Note	$m	$m
Balance 1 July		64.2	15.5
Acquisitions	15	135.6	51.5
Loss on revaluation	11	—	(1.1)
Capital distribution received	11	(0.1)	(1.7)
balance 30 June		199.7	64.2
Total loss for the year included in loss on fnancial instruments that relate to assets held at the end of theyear		—	(1.1)

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end of the year. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level one. The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. Mirvac uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used to estimate fair value for long term debt for disclosure purposes. Other techniques, such as estimated DCF, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the end of the reporting period. These instruments are included in level two and comprise debt investments and derivative financial instruments.

104 mirvac group annual report 2013

36 fInAnCIAl RIsK MAnAgeMent / ContInueD

In the circumstances where a valuation technique for these instruments is based on significant unobservable inputs, such instruments are included in level three. Mirvac’s maturity of net and gross settled derivative and non-derivative financial instruments is provided in the following table. The amounts disclosed in the table are the contractual undiscounted cash flows:

Note	Maturingin Over Over Over Over 1 year 1 to 2 2 to 3 3 to 4 4 to 5 Over 5 or less year(s) years years years years total $m $m $m $m $m $m $m
2013 non-interest bearing Payables 19 Interest bearing Bank loans Domestic MTN Foreign MTN Derivatives Net settled (interest rate swaps) Fixed to foating swaps Gross settled (cross currency swaps) – Outfow –(Infow)	549.9 113.4 — — — 35.5 698.8 198.5 426.5 615.9 — — — 1,240.9 40.3 242.8 26.3 242.3 154.1 — 705.8 21.1 21.2 21.6 310.7 6.5 111.1 492.2 13.0 11.1 4.9 2.2 (0.1) (1.1) 30.0 (10.2) (11.8) (2.8) (2.1) (0.8) — (27.7) — — — — — — — 13.4 14.7 17.9 381.5 5.9 137.4 570.8 (21.1) (21.2) (21.6) (310.7) (6.5) (111.1) (492.2)
	804.9 796.7 662.2 623.9 159.1 171.8 3,218.6
2012 Non-interest bearing Payables 19 Interest bearing Bank loans Domestic MTN Foreign MTN Derivatives Net settled (interest rate swaps) Fixed to foating swaps Gross settled (cross currency swaps) – Outfow –(Infow)	372.4 46.1 — — — — 418.5 31.5 268.2 372.3 436.8 — — 1,108.8 34.5 34.5 234.5 18.0 234.0 — 555.5 19.3 19.3 19.3 19.6 282.7 107.0 467.2 32.2 34.1 30.1 24.2 15.1 6.0 141.7 (6.5) (7.5) (7.2) — — — (21.2) — — — — — — — 16.6 15.8 17.4 18.7 381.3 142.7 592.5 (19.3) (19.3) (19.3) (19.6) (282.7) (107.0) (467.2)
	480.7 391.2 647.1 497.7 630.4 148.7 2,795.8

37 ReMuneRAtIon of AuDItoRs

During the year, the following fees were paid or payable for services provided by the auditor of the Group, its related practices and non-related audit firms:

and non-related audit frms:
	2013	2012
	$000	$000
a) Assurance services
Audit services
Audit and review of fnancial reports	1,827.9	1,814.3
Compliance services and regulatoryreturns	272.9	258.1
Total remuneration for assurance services	2,100.8	2,072.4
b) taxation services
Tax advice and compliance services	139.7	533.2
Total remuneration for taxation services	139.7	533.2
c) Advisory services
Advisoryservices	7.8	—

105

mirvac group annual report 2013

notes to the consoliDAteD FinAnciAl stAtements

38 notes to tHe ConsolIDAteD stAteMent of CAsH flows

38 notes to tHe ConsolIDAteD stAteMent of CAsH flows
		2013	2012
	Note	$m	$m
a) Reconciliation of cash
Cash at the end of the year as shown in the statement of cash fows is the same as the statement of fnancial position, the detail of which follows:
Cash on hand		—	—
Cash at bank		115.1	57.1
Deposits at call		11.3	20.2
Cash and cash equivalents		126.4	77.3
b) Reconciliation of proft attributable to the stapled securityholders of Mirvac to net cash infows from operating activities
Proft attributable to the stapled securityholders of Mirvac	26	139.9	416.1
Share of net proft of associates and joint ventures not received as dividends/distributions		(12.4)	(12.4)
Net gain on sale of investments		(1.0)	(37.0)
Net gain on fair value adjustments on investment properties and owner-occupied hotel management lots and freehold hotels		(54.0)	(148.7)
Net loss on fair value of IPUC	16	3.6	15.8
Net loss/(gain) on sale of investment properties		2.7	(3.4)
Net gain on sale of property, plant and equipment		(0.1)	(3.0)
Depreciation and amortisation expenses	5	31.3	39.0
Impairment of loans	5	18.0	6.0
Impairment of investments	5	12.3	—
Provision for loss on inventories	5	242.9	25.0
Security based payment expense		4.1	8.5
Unrealised (gain)/loss on fnancial instruments		(33.0)	59.8
Unrealised loss on foreign exchange		45.4	22.2
Distributions from associates and joint ventures		23.6	26.2
Change in operating assets and liabilities, net of effects from purchase of controlled entities:
– Increase in income taxes payable		0.4	1.6
– Decrease in tax effected balances		(22.7)	(57.2)
– (Increase)/decrease in receivables		(67.9)	51.7
– Increase in inventories		(252.6)	(183.2)
– Increase in other assets/liabilities		(16.4)	(0.8)
– Increase in payables		322.2	89.5
–(Decrease)/increase inprovisions for employee benefts		(0.4)	1.3
net cash infows from operatingactivities		385.9	317.0

39 eVents oCCuRRIng AfteR tHe enD of tHe yeAR

On 3 July 2013, the Group completed the extension and increase of its unsecured syndicated bank facility. Refer to note 20 for further details.

No other circumstances have arisen since the end of the year which have significantly affected or may significantly affect the operations of Mirvac, the results of those operations, or the state of affairs of Mirvac in future years.

106 mirvac group annual report 2013

40 pARent entIty fInAnCIAl InfoRMAtIon

a) summary financial information

The individual financial statements for the parent entity show the following aggregate amounts:

40 pARent entIty fInAnCIAl InfoRMAtIon a) summary fnancial information The individual fnancial statements for the parent entity show the	following aggregate amounts:
		2013	2012
	Note	$m	$m
statement of fnancial position
Current assets		3,638.1	3,363.9
Total assets		3,975.9	3,981.3
Current liabilities		1,847.5	1,879.7
Total liabilities		2,197.7	2,379.9
equity
Contributed equity	24(a)	1,765.2	1,249.8
Reserves
– Security based payments reserve		10.6	16.8
– Capital reserve		(0.2)	(0.2)
Retained earnings		2.6	335.0
Total Equity		1,778.2	1,601.4
(Loss)/proft for theyear		(331.1)	281.1
Total comprehensive income for theyear		(331.1)	281.1

b) guarantees entered into by the parent entity

The parent entity is party to a deed of cross guarantee, with members of the closed group. Further details are disclosed in note 28(c).

The parent entity has provided a guarantee to a bank in respect of $nil (2012: $3.0m) of borrowings by a joint venture.

c) Contingent liabilities of the parent entity

The parent entity did not have any other contingent liabilities other than the item referred to in note 40(b) at 30 June 2013 or 30 June 2012.

d) Contractual commitments for the acquisition of property, plant and equipment

The parent entity did not have any contractual commitments for the acquisition of property, plant and equipment at 30 June 2013 or 30 June 2012.

107

mirvac group annual report 2013

Directors’ Declaration

a) the financial statements and the notes set out on pages 44 to 107 are in accordance with the Corporations Act 2001 , including: i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
ii) giving a true and fair view of the consolidated entity’s financial position at 30 June 2013 and of its performance for the financial year ended on that date;
b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and
c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in note 28 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 28.

Note 1(b) confirms that the financial statements also comply with IFRS as issued by the IASB.

The Directors have been given the declarations by the CEO & Managing Director and Group Financial Controller required by section 295A of the Corporations Act 2001 .

This declaration is made in accordance with a resolution of the Directors.

==> picture [172 x 43] intentionally omitted <==

susan lloyd-Hurwitz

Director

Sydney 23 August 2013

108 mirvac group annual report 2013

inDepenDent auDitor’s report

to the members of Mirvac Limited

==> picture [114 x 87] intentionally omitted <==

Report on the financial report

We have audited the accompanying financial report of Mirvac Limited (the company), which comprises the statement of financial position as at 30 June 2013, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration for the Mirvac Limited Group (the consolidated entity). The consolidated entity comprises the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the financial statements comply with International Financial Reporting Standards .

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 DX 77 Sydney, Australia T +61 2 8266 0000, F +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation

109

mirvac group annual report 2013

inDepenDent auDitor’s report

to the members of Mirvac Limited / Continued

==> picture [113 x 87] intentionally omitted <==

Auditor’s opinion

In our opinion:

a) the financial report of Mirvac Limited is in accordance with the Corporations Act 2001 , including:
i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its performance for the year ended on that date; and
ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 ; and
b) the financial report and notes also comply with International Financial Reporting Standards as disclosed in note 1.

Report on the remuneration report

We have audited the remuneration report included in pages 10 to 32 of the directors’ report for the year ended 30 June 2013. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion

In our opinion, the remuneration report of Mirvac Limited for the year ended 30 June 2013, complies with section 300A of the Corporations Act 2001 .

==> picture [157 x 30] intentionally omitted <==

pricewaterhouseCoopers

==> picture [117 x 48] intentionally omitted <==

Matthew lunn Partner

Sydney 23 August 2013

110 mirvac group annual report 2013

securityholDer inFormAtion

The information set out below was prepared at 12 August 2013 and applies to Mirvac’s stapled securities (ASX code: MGR). As at 12 August 2013, there were 3,664,938,678 stapled securities on issue.

substantial securityholders

As disclosed in substantial holding notices lodged with the ASX at 12 August 2013:

	Date of last	Number of	Percentage of
Name	notice received	stapled securities	issued capital1
The Vanguard Group, Inc	1/03/2010	186,167,992	6.21%
Commonwealth Bank and its subsidiaries	27/07/2012	191,589,948	5.60%
BlackRock Investment Management (Australia)
Limited and associated BlackRock Group	31/12/2009	154,704,716	5.16%

1) Percentage of issued capital held as at the date notice provided.

Range of securityholders

1) Percentage of issued capital held as at the date notice provided. Range of securityholders
Range	Number of holders	Number of securities
1 to 1,000	6,201	2,923,899
1,001 to 5,000	11,160	30,921,474
5,001 to 10,000	5,819	42,508,941
10,001 to 100,000	6,816	160,360,421
100,001 and over	287	3,428,223,943
total number of securityholders	30,283	3,664,938,678
Range of instalment receipt holders	Number of instalment	Number of
Range	receipts holders	instalment receipts
1 to 1,000	46	27,562
1,001 to 5,000	229	630,403
5,001 to 10,000	250	1,779,111
10,001 to 100,000	661	19,213,423
100,001 and over	67	57,438,616
total number of instalment receipt holders	1,253	79,089,115

111

mirvac group annual report 2013

securityholDer inFormAtion

20 largest securityholders

20 largest securityholders
	Number of	Percentage of
Name	stapled securities	issued equity
HSBC Custody Nominees (Australia) Limited	1,259,005,928	34.4%
J P Morgan Nominees Australia Limited	699,694,244	19.1%
National Nominees Limited	550,152,862	15.0%
Citicorp Nominees Pty Limited	312,347,604	8.5%
BNP Paribas Noms Pty Limited	142,958,763	3.9%
AMP Life Limited	76,207,117	2.1%
J P Morgan Nominees Limited	66,838,725	1.8%
Citicorp Nominees Pty Limited	56,609,693	1.5%
Westpac Custodian Nominees Limited	37,966,248	1.0%
Equity Trustees Limited	19,834,654	0.5%
RBC Investor Services Australia Nominees Pty Limited	12,461,273	0.3%
Bond Street Custodians Limited	11,421,755	0.3%
Aust Executor Trustees SA Limited	11,401,011	0.3%
UBS Wealth Management Australia Nominees Pty Limited	10,981,552	0.3%
HSBC Custody Nominees (Australia) Limited	9,931,360	0.3%
RBC Investor Services Australia Nominees Pty Limited	7,724,639	0.2%
HSBC Custody Nominees (Australia) Limited	6,872,917	0.2%
QIC Limited	6,453,541	0.2%
Suncorp Custodian Services Pty Limited	5,589,373	0.2%
Argo Investments Limited	5,000,551	0.2%
Total for 20 largest securityholders	3,309,453,810	90.3%
Total other securityholders	355,484,868	9.7%
total stapled securities on issue	3,664,938,678	100.0%

Number of securityholders holding less than a marketable parcel: 2,219.

Voting rights

Subject to the Constitutions of Mirvac Limited and of MPT and to any rights or restrictions for the time being attached to any class or classes of shares, units or stapled securities:

on a show of hands, each Member present in person or by proxy, attorney, or representative has one vote; and
on a poll, each Member has:
in the case of a resolution of Mirvac Limited, one vote for each share in Mirvac Limited held; and
in the case of a resolution of MPT, one vote for each whole $1.00 of unit value in MPT held.

Instalment receipt voting rights

Instalment receipt holders have beneficial ownership of stapled securities and their rights as owners of the stapled securities are evidenced by the issue to instalment receipt holders of one instalment receipt for each stapled security. The only change to instalment receipt holders’ normal rights as an owner of stapled securities is that registration of their stapled securities is recorded in the name of Westpac Custodian Nominees Limited, the security trustee, until the final instalment is paid.

The Security Trust Deed passes through to instalment receipt holders the rights as if the holders were a registered stapled securityholder. These rights include the entitlement to receive notices and attend meetings of Mirvac and exercise voting rights on securityholder resolutions put forward. In accordance with the Security Trust Deed, the security trustee has appointed each eligible instalment receipt holder (or their nominee) as its attorney to exercise the proportionate number of votes that attaches to the stapled securities in Mirvac reflecting their holding of instalment receipts.

112 mirvac group annual report 2013

glossAry oF Acronyms

AAS	Australian Accounting Standards
AASB AFS AGM	Australian Accounting Standards Board Australian fnancial services Annual General Meeting/General Meeting
ANZ APES	Australia and New Zealand Banking Group Limited Accounting Professional & Ethical Standards
ARCC A-REIT	Audit, Risk and Compliance Committee Australian Real Estate Investment Trust
ARSN	Australian Registered Scheme Number
ASIC	Australian Securities and Investments Commission
ASX	Australian Securities Exchange
CBD	Central business district
CCI CEO CGU	Consumer Confdence Index Chief Executive Offcer Cash generating unit
CMBS	Commercial mortgage backed securities
CPI	Consumer Price Index
CPSS CR DCF DRP EEO EEP	Cents per stapled security Capitalisation rate Discounted cash fow Dividend/distribution reinvestment plan Energy Effciency Opportunities Act 2006 Employee Exemption Plan
EIP	Executive Incentive Program
EIS ELT EPS ERP	Employee Incentive Scheme Executive Leadership Team Earnings per stapled security Executive Retention Plan
FBT FTE FY08	Fringe benefts tax Full time equivalent Year ended 30 June 2008
FY09	Year ended 30 June 2009
FY10	Year ended 30 June 2010
FY11	Year ended 30 June 2011
FY12	Year ended 30 June 2012
FY13	Year ended 30 June 2013
FY14	Year ending 30 June 2014
FY15	Year ending 30 June 2015
GST	Goods and services tax
HRC	Human Resources Committee
HSE&S	Health, safety, environment and sustainability
IAS	International Accounting Standards
IASB	International Accounting Standards Board
IFRS IPUC ISO	International Financial Reporting Standards Investment properties under construction International Organization for Standardization
JFG KMP KPI LLC LSL	James Fielding Group Key management personnel Key performance indicators Limited Liability Company Long service leave
LTI	Long term incentives
LTIP	Long Term Incentive Plan
LTP	Long Term Performance Plan
MAM	Mirvac Asset Management
MIM	Mirvac Investment Management
MGR	Mirvac Group (and ASX code)
MPT MTN	Mirvac Property Trust Medium term note
NABERS	National Australian Built Environment Rating System
NCI	Non-controlling interest
NGER NPV NRV	National Greenhouse and Energy Reporting Act 2007 Net present value Net realisable value
NTA	Net tangible assets
OOP PPE PwC	Owner-occupied properties Property, plant and equipment PricewaterhouseCoopers
ROA	Return on assets
ROE ROIC SBP SoCI SoFP SPP SPV STI	Return on equity Return on invested capital Share based payments Statement of comprehensive income Statement of fnancial position Security purchase plan Special Purpose Vehicle Short term incentives
TAC TSR	Transport Accident Commission Total securityholder return
WALE WOT	Weighted average lease expiry Westpac Offce Trust

113

mirvac group annual report 2013

Registered office/principal office

Mirvac Group (comprising Mirvac Limited ABN 92 003 280 699 and Mirvac Funds Limited ABN 70 002 561 640, AFSL 233 121 as responsible entity of Mirvac Property Trust ARSN 086 780 645) Level 26 60 Margaret Street Sydney NSW 2000 Telephone +61 2 9080 8000 Facsimile +61 2 9080 8111 www.mirvac.com

securities exchange listing

Mirvac Group is listed on the Australian Securities Exchange (ASX code: MGR)

Directors

James MacKenzie (Chairman) Susan Lloyd-Hurwitz (CEO & Managing Director) Marina Darling Peter Hawkins James Millar AM John Mulcahy John Peters Elana Rubin

Company secretary Natalie Allen

stapled security registry Link Market Services Limited Level 12 680 George Street Sydney NSW 2000 Telephone 1800 356 444

securityholder enquiries Telephone + 61 1800 356 444 Correspondence should be sent to: Mirvac Group C/- Link Market Services Limited Locked Bag 14 Sydney South NSW 1235 Further investor information can be located in the Investor Information tab on Mirvac’s website at www.mirvac.com.

Auditor

PricewaterhouseCoopers 201 Sussex Street Sydney NSW 2000

Annual general/general Meeting Mirvac’s 2013 AGM will be held at 10.00 am (Australian Eastern Daylight Time) on Thursday, 14 November 2013, RACV Club, Level 17, 501 Bourke Street, Melbourne, 3000 VIC.

RECYCLED Paper made from recycled material

Environmentally Responsible Paper This report is printed on ecoStar, an environmentally responsible paper made carbon neutral and manufactured from Forest Stewardship Council (“FSC”) certified 100 per cent post consumer recycled paper, in a process chlorine free environment under the ISO 14001 environmental management system. The greenhouse gas emissions of the manufacturing process, including transportation of the finished product to the paper suppliers warehouse, have been measured by the Edinburgh Centre for Carbon Management and offset by the CarbonNeutral Company.

Electronic version of Annual Report

An electronic version of this report is available on Mirvac’s website at www.mirvac.com.

Securityholders who do not require a printed Annual Report, or who receive more than one copy due to multiple holdings, can help reduce the number of copies printed by advising the registry in writing of changes to their report mailing preferences.

Securityholders who choose not to receive printed reports will continue to receive all other securityholder information, including Notices of Meetings.

114 mirvac group annual report 2013

AI assistant

MIRVAC GROUP — Annual Report 2013

65328_rns_2013-08-22_d8473d96-69cf-478e-a1ab-3ec8d8e1acef.pdf

by mirvac

DIReCtoRs

pRInCIpAl ACtIVItIes

DIVIDenDs/DIstRIbutIons

net CuRRent Asset DefICIenCy

opeRAtIng AnD fInAnCIAl ReVIew

opeRAtIng AnD fInAnCIAl ReVIew / ContInueD

Outlook[ 8]

Divisional highlights

Investment

Divisional highlights / continued

Outlook[ 1]

Investment Management

Outlook[ 1]

Development

Residential

Apartments:

Divisional highlights / continued

Commercial

Outlook[ 2]

Risk

group risks

Divisional risks

enVIRonMentAl RegulAtIons

InfoRMAtIon on DIReCtoRs

James MacKenzie

susan lloyd-Hurwitz

Marina Darling

peter Hawkins

James Millar AM

John Mulcahy

John peters

elana Rubin

gregory Dyer

nicholas Collishaw

Company Secretary

natalie Allen

BEc, LLB

Margaret Mezrani

LLB, FCIS, FCSA (resigned 21 January 2013)

MeetIngs of DIReCtoRs

ReMuneRAtIon RepoRt

2 AlIgnMent of ReMuneRAtIon stRAtegy wItH busIness stRAtegy

2 AlIgnMent of ReMuneRAtIon stRAtegy wItH busIness stRAtegy / ContInueD

Remuneration arrangements are designed to enable Mirvac to derive maximum value from its remuneration spend, by attracting, motivating and retaining the individuals who are best equipped to successfully execute the business strategy.

a) How remuneration decisions are made

Board and HRC oversight and accountability

3 MIRVAC’s AppRoACH to eXeCutIVe ReMuneRAtIon DesIgn / ContInueD

Expert input from management and external advisors

b) Remuneration principles

Remuneration at Mirvac should:

c) Market positioning

Definition of market

Targeted market positioning

d) Remuneration mix

3 MIRVAC’s AppRoACH to eXeCutIVe ReMuneRAtIon DesIgn / ContInueD

Existing Target Pay Mix

New Target Pay Mix

Mix of cash vs equity

3 MIRVAC’s AppRoACH to eXeCutIVe ReMuneRAtIon DesIgn / ContInueD

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes

a) fixed remuneration

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD

b) the stI component – how does it work?

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD Group and Divisional STI scores

Individual STI score

Calculation of STI awards

c) the stI component: how was reward linked to performance this year?

STI pool in FY13

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD

FY13 STI awards for the Senior Executives

d) the ltI component: how does it work?

Relative TSR performance hurdle

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD

ROE performance hurdle

LTIs granted in FY13

4 ReMuneRAtIon CoMponents AnD outCoMes foR tHe senIoR eXeCutIVes / ContInueD

MIRVAC GROUP Annual Report 2013