MIRVAC GROUP — Interim / Quarterly Report 2015

Feb 11, 2015

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES

report1H15 INTERIM REPORT

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Mirvac Property Trust and its controlled entities

Interim Report

For the half year ended 31 December 2014

The consolidated entity comprises Mirvac Property Trust (ARSN 086 780 645) and its controlled entities.

• 01 Directors’ report

• 03 Auditor’s independence declaration

• Financial statements

• 04 Consolidated statement of comprehensive income

• 05 Consolidated statement of financial position

• 06 Consolidated statement of changes in equity

• 07 Consolidated statement of cash flows

• 08 Notes to the consolidated financial statements

• 22 Directors’ declaration 23 Independent auditor’s review report to the unitholders of Mirvac Property Trust

This interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual financial report for the year ended 30 June 2014 and any public announcements made by Mirvac Property Trust during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

MIRVAC GROUP INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Directors’ report

The Directors of Mirvac Funds Limited (ABN 70 002 561 640, AFSL 233121), the Responsible Entity of Mirvac Property Trust (“MPT” or “Trust”) present their report, together with the consolidated report of MPT and its controlled entities (“consolidated entity”) for the half year ended 31 December 2014.

MPT and its controlled entities together with Mirvac Limited and its controlled entities form the stapled entity, Mirvac Group (“Mirvac” or “Group”).

Responsible Entity

The Responsible Entity of the Trust is Mirvac Funds Limited, an entity incorporated in New South Wales. The immediate parent entity of the Responsible Entity is Mirvac Woolloomooloo Pty Limited (ABN 44 001 162 205), incorporated in New South Wales, and its ultimate parent entity is Mirvac Limited (ABN 92 003 280 699), incorporated in New South Wales.

Directors

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

• John Mulcahy

• Susan Lloyd-Hurwitz

• Christine Bartlett (appointed 1 December 2014)

• Peter Hawkins

• James Millar AM

• John Peters

• Elana Rubin.

Operating and financial review

The statutory profit after tax attributable to the stapled unitholders of the Trust for the half year ended 31 December 2014 was $268.5m (December 2013: $273.6m). The operating profit (profit before specific non-cash and significant items) was $211.1m (December 2013: $209.5m).

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 consolidated entity.

The following table summarises key reconciling items between statutory profit after tax attributable to the stapled unitholders of MPT and operating profit. The operating profit information included in the table below has not been subject to any specific review procedures by the consolidated entity’s auditor but has been extracted from note 3 of the accompanying financial statements for the half year ended 31 December 2014, which have been subject to review; refer to page 23 for the auditor’s report on the financial statements.

the fnancial statements.
	31 December	31 December
	2014	2013
	$m	$m
Proft attributable to the stapled unitholders of MPT	268.5	273.6
Specifc non-cash items
Net gain on fair value of investment properties	(52.7)	(70.2)
Net (gain)/loss on fair value of investment properties under construction (“IPUC”)	(0.5)	3.6
Loss on fnancial instruments	1.9	1.8
Straight-lining of lease revenue1	(1.3)	(4.8)
Amortisation of lease ftout incentives2	5.8	6.0
Foreign exchange loss	2.2	0.6
Net gain on fair value of investment properties, derivatives and other specifc non-cash items included in the share of net proft of joint ventures and associates (“JVA”)3	(8.4)	(1.4)
Signifcant items
Net (gain)/loss on sale of non-aligned assets4	(4.4)	0.3
Operating proft (proft before specifc non-cash items and signifcant items)	211.1	209.5

1) Included within Investment properties rental revenue in the consolidated statement of comprehensive income (“SoCI”).

2) Included within Amortisation expenses in the consolidated SoCI.

3) Included within Share of net profit of JVA accounted for using the equity method in the consolidated SoCI.

• 4) Included within Net gain on sale of investments and Net loss on sale of non-aligned investment properties in the consolidated SoCI.

01

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Directors’ report

Financial, capital management and operational highlights

Key financial highlights for the half year ended

31 December 2014 were:

• profit attributable to the stapled unitholders of MPT of $268.5m, a decrease of 1.9 per cent from $273.6m (December 2013);

• operating profit after tax increased to $211.1m[ 1] (December 2013: $209.5m)

• operating cash inflow of $200.6m (December 2013: $209.0m); and

• distributions of $166.4m, representing 4.5 cents per stapled unit (“CPSU”).

Key capital management[ 2] highlights for the half year ended 31 December 2014 were:

• maintained strong liquidity with $768.3m of cash and undrawn committed bank facilities held;

• restructured the syndicated bank loan on more favourable terms, including covenants, and increased its facility from three tranches to four. The revised facility is now $1,400.0m (June 2014: $1,388.0m), with $450.0m maturing in 2015, $350.0m maturing in 2017, $300.0m maturing in 2018 and $300.0m maturing in 2019;

• maintained weighted average debt maturity at 4.3 years;

• maintained average borrowing costs at 5.6 per cent per annum (including margins and line fees); and

• continued to meet all debt covenants.

Key operational highlights for the half year ended 31 December 2014 were:

• acquired $518.9m[ 3] in key strategic assets in the MPT portfolio, including a retail asset at Birkenhead Point Outlet Centre, Drummoyne, NSW, and a portfolio of industrial assets from Altis Real Estate Equity Partnership Fund No. 1 (“Altis”)[ 4] ;

• entered into an agreement for the disposal of City Centre Plaza, Rockhampton QLD for $48.3m, representing a 9.7 per cent premium to 30 June 2014 book value;

• maintained solid portfolio occupancy of 96.6[ 5] per cent within the MPT portfolio;

• leased 54,311 square metres (4.0 per cent of net lettable area) within the MPT portfolio; and

• achieved a 5.13 Star NABERS average energy rating for the office portfolio, in line with Mirvac’s This Changes Everything strategy to reduce carbon emissions.

Outlook[ 6]

While there have been signs of improvement in select property markets, the overall domestic economy has continued to record a sub-trend pace. Despite this, the consolidated entity’s strategy to establish a strong and resilient business, supported by a deliberate weighting to Australia’s largest and strongest performing economy (NSW), means that it is well positioned to perform across the business cycle.

The consolidated entity 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 help to ensure the consolidated entity can continue to meet its strategic objectives without increasing its overall capital management risk profile.

Net current asset deficiency

As at 31 December 2014, the Trust is in a net current liability position of $163.3m. The Trust repays its borrowings with excess cash, but had access to $881.9m of unused borrowing facilities at 31 December 2014. Accordingly, the Directors of the Responsible Entity expect that the Trust will have sufficient cash flows to meet all financial obligations as and when they fall due.

Matters subsequent to the end of the half year

During the period, the Trust entered into an agreement to acquire a portfolio of industrial assets from Altis. This acquisition was settled on 15 January 2015, when four industrial assets were acquired for $213.9m (excluding acquisition costs of $12.3m).

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 03.

Auditor

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

Rounding of amounts

The Trust is an entity of the kind referred to in Class Order 98/0100 issued by the Australian Securities Investment Commission, relating to the rounding off of amounts in the Directors’ report and financial statements. Amounts in the Directors’ report and 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.

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Susan Lloyd-Hurwitz Director

Sydney 12 February 2015

1) Excludes specific non-cash items and significant items.

2) The consolidated entity’s capital structure is monitored at the Group level; all items referred to relate to Mirvac Group. 3) Pre-transaction costs.

4) Settled 15 January 2015.

5) By area, excluding assets under development, City Centre Plaza, Rockhampton QLD (held for sale) and includes 8 Chifley Square, Sydney NSW.

6) These future looking statements should be read in conjunction with future releases to the Australian Securities Exchange (“ASX”).

02 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Auditor’s independence declaration

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Auditor’s independence declaration

As lead auditor for the review of Mirvac Property Trust for the half-year ended 31 December 2014, 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 review; and

b) no contraventions of any applicable code of professional conduct in relation to the review.

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

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Matthew Lunn Partner

Sydney 12 February 2015

PricewaterhouseCoopers

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

03

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Consolidated statement of comprehensive income

For the half year ended 31 December 2014

		31 December	31 December
		2014	2013
	Note	$m	$m
Revenue from continuing operations
Investment properties rental revenue	9(b)	296.4	311.9
Interest revenue		10.7	15.4
Other revenue		1.0	—
Total revenue from continuing operations		308.1	327.3
Other income
Net gain on fair value of investment properties		52.7	70.2
Net gain/(loss) on fair value of IPUC		0.5	(3.6)
Share of net proft of JVA accounted for using the equity method	8	26.7	10.6
Netgain on sale of investments		9.5	—
Total other income		89.4	77.2
Total revenue from continuing operations and other income		397.5	404.5
Investment properties expenses	9(b)	71.8	79.3
Amortisation expenses		10.6	10.0
Finance costs	4	30.1	32.5
Net loss on sale of non-aligned investment properties		5.1	0.3
Other expenses		7.0	6.2
Foreign exchange loss		2.2	0.6
Loss on fnancial instruments		1.9	1.8
Proft from continuing operations before income tax		268.8	273.8
Income tax expense		(0.3)	(0.2)
Proft for the half year		268.5	273.6
Other comprehensive income for the half year
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations, net of tax		2.4	0.5
Other comprehensive income for the halfyear		2.4	0.5
Total comprehensive income for the half year		270.9	274.1
Proft for the halfyear is attributable to the stapled unitholders of MPT		268.5	273.6
Total comprehensive income for the half year attributable to the stapled unitholders of	MPT	270.9	274.1
Earnings per stapled unit for proft attributable to the stapled unitholders of MPT
		Cents	Cents
Basic earnings per stapled unit	5	7.27	7.48
Diluted earningsper stapled unit	5	7.26	7.47

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

04 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Consolidated statement of financial position

At 31 December 2014

		31 December	30 June
		2014	2014
	Note	$m	$m
Current assets
Cash and cash equivalents	15(a)	31.1	6.7
Receivables		18.7	21.2
Derivative fnancial assets	6	4.3	6.6
Other fnancial assets at fair value through proft or loss	6	12.2	11.8
Other assets		15.9	7.8
Assets classifed as held for sale	7	298.2	821.0
Total current assets		380.4	875.1
Non-current assets
Receivables		1.1	2.6
Investments accounted for using the equity method	8	390.2	370.1
Other fnancial assets	6	252.1	79.4
Investment properties	9	6,341.6	6,141.1
Intangible assets	10	42.8	42.8
Total non-current assets		7,027.8	6,636.0
Total assets		7,408.2	7,511.1
Current liabilities
Payables		177.3	144.8
Borrowings	11	200.0	200.0
Provisions		166.4	169.8
Total current liabilities		543.7	514.6
Non-current liabilities
Borrowings	11	1,148.4	1,390.3
Total non-current liabilities		1,148.4	1,390.3
Total liabilities		1,692.1	1,904.9
Net assets		5,716.1	5,606.2
Equity
Contributed equity	12	4,757.5	4,752.1
Reserves		9.3	6.9
Retained earnings		949.3	847.2
Equity, reserves and retained earnings attributable to the stapled unitholders of MPT		5,716.1	5,606.2

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

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014 05

Consolidated statement of changes in equity

For the half year ended 31 December 2014

Note	Attributable to the stapled unitholders of MPT Contributed Retained equity Reserves earnings Total $m $m $m $m 4,752.1 6.9 847.2 5,606.2 — — 268.5 268.5 — 2.4 — 2.4 — 2.4 268.5 270.9 5.4 — — 5.4 — — (166.4) (166.4) 5.4 — (166.4) (161.0) 4,757.5 9.3 949.3 5,716.1 5,006.0 7.4 747.0 5,760.4 — — 273.6 273.6 — 0.5 — 0.5 — 0.5 273.6 274.1 1.5 — — 1.5 (0.4) — — (0.4) (300.0) — — (300.0) — — (161.3) (161.3) (298.9) — (161.3) (460.2) 4,707.1 7.9 859.3 5,574.3
Balance 1 July 2014
Proft for the half year Other comprehensive income for the halfyear
Total comprehensive income for the halfyear
Long term incentives plan (“LTIP”), long term incentives (“LTI”), and employee incentive scheme (“EIS”) securities converted, sold, vested or forfeited Distributionsprovided for orpaid 13
Total transactions with owners in their capacity as owners
Balance 31 December 2014
Balance 1 July2013
Proft for the half year Other comprehensive income for the halfyear
Total comprehensive income for the halfyear
LTP, LTIP and EIS units converted, sold, vested or forfeited Contributions of equity, net of transaction costs Recapitalisation Distributionsprovided for orpaid
Total transactions with owners in their capacityas owners
Balance 31 December 2013

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

06 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Consolidated statement of cash flows

For the half year ended 31 December 2014

		31 December	31 December
		2014	2013
	Note	$m	$m
Cash fows from operating activities
Receipts from customers (inclusive of goods and services tax)		332.0	330.2
Payments to suppliers (inclusive ofgoods and services tax)		(115.9)	(104.4)
		216.1	225.8
Interest received		4.4	11.9
Distributions received from JVA		12.1	5.7
Borrowing costs paid		(31.7)	(34.2)
Income taxpaid		(0.3)	(0.2)
Net cash infows from operating activities	15(b)	200.6	209.0
Cash fows from investing activities
Payments for investment properties		(423.5)	(364.1)
Proceeds from sale of investment properties and assets classifed as held for sale		670.4	49.9
Proceeds from loans to entities related to the Responsible Entity		—	350.0
Contributions to JVA		(7.6)	(7.6)
Payments for purchase of other fnancial assets		(10.5)	(10.5)
Proceeds from sale of investments		11.5	—
Proceeds from fnancial assets at fair value throughproft or loss		0.3	—
Net cash infows from investing activities		240.6	17.7
Cash fows from fnancing activities
Proceeds from borrowings		—	705.0
Repayments of borrowings		(15.1)	—
Repayments of borrowings from entities related to Responsible Entity		(889.3)	(1,540.1)
Proceeds from loans from entities related to Responsible Entity		657.4	1,100.0
Payments for contributions of equity, net of transaction costs		—	(0.4)
Payments for recapitalisation		—	(300.0)
Distributionspaid		(169.8)	(164.9)
Net cash outfows from fnancing activities		(416.8)	(200.4)
Net increase in cash and cash equivalents		24.4	26.3
Cash and cash equivalents at the beginningof the halfyear		6.7	5.2
Cash and cash equivalents at the end of the half year	15(a)	31.1	31.5

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

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014 07

Notes to the consolidated financial statements

1 Summary of significant accounting policies

This condensed consolidated interim report for the half year reporting period ended 31 December 2014 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. The financial statements of the consolidated entity consist of the consolidated financial statements of MPT and its controlled entities. 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.

This condensed consolidated interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual financial report for the year ended 30 June 2014 and any public announcements made by MPT during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except as set out below.

Net current asset deficiency

As at 31 December 2014, the Trust is in a net current liability position of $163.3m. The Trust repays its borrowings with excess cash, but had access to $881.9m of unused borrowing facilities at 31 December 2014. Accordingly, the Directors of the Responsible Entity expect that the Trust will have sufficient cash flows to meet all financial obligations as and when they fall due.

a) New and amended standards adopted by the consolidated entity

A number of new or amended standards became applicable for the current reporting period, however, the consolidated entity did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards. There will be some changes to the disclosure in the 30 June 2015 annual report as a consequence of these amendments.

b) Impact of standards issued but not yet applied by the consolidated entity

i) AASB 9 Financial Instruments

This standard addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2018 but is available for early adoption. When adopted, the standard will affect in particular the consolidated entity’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 availablefor-sale debt investments, for example, will therefore have to be recognised directly in profit or loss. In the current reporting period, the consolidated entity did not recognise any such gains in other comprehensive income and did not hold any availablefor-sale debt investments.

There will be no impact on the consolidated entity’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 consolidated entity 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 consolidated entity has not yet decided when to adopt AASB 9. There will be no impact on the consolidated entity’s accounting for financial assets as they are all currently recognised in the consolidated SoCI.

There are no other standards with effective dates in the future that are expected to have a material impact on the consolidated 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 MPT’s accounting policies

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

i) 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 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.

b) Key sources of estimation uncertainty

In preparing the 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 period:

i) Impairment of goodwill

The consolidated entity annually tests whether goodwill has suffered any impairment. Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units (“CGU”) to which goodwill has been allocated. The value in use calculation requires the consolidated 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 is $42.8m (June 2014: $42.8m). There was no impairment loss recognised during the half year (December 2013: $nil).

ii) 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 indication that the investment may be impaired. In determining the value in use of the investment, the consolidated entity 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.

iii) 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 at the end of the reporting period was $12.2m (June 2014: $11.8m) and is disclosed as other financial assets at fair value through profit or loss.

08 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes to the consolidated financial statements

2 Critical accounting judgements and estimates / continued

iv) Valuation of investment properties

The consolidated entity uses judgement in respect of the fair values of investment properties. 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 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 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 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 $6,341.6m (June 2014: $6,141.1m).

v) 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 discounted cash flow (“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 gain on fair value of IPUC was $0.5m (December 2013: net loss of $3.6m). The carrying value of $225.1m (June 2014: $126.0m) at the end of the reporting period is included in investment properties (refer to note 9).

vi) Valuation of derivatives and other financial instruments The consolidated entity 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. The valuation techniques are discussed in detail at note 6 and have been developed in compliance with requirements of AASB 139 Financial Instruments: Recognition and Measurement.

a) Description of business segments

Individual business segments have been identified on the basis of grouping individual products or services subject to similar risks and returns. The main business segments of the consolidated entity are the investments in properties which are leased to third parties for the following uses:

• office — office accommodation;

• retail — retail accommodation;

• industrial — factories and other industrial use accommodation;

• other — hotel and car park facilities accommodation; and

• unallocated — not attributed directly to one of the above segments.

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) Comparative information

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

d) 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 consolidated entity.

e) Segment liabilities

The amounts provided to the CODM with respect to total liabilities are measured in a manner consistent with that of the financial statements. These liabilities are allocated based on the operations of the segment. The consolidated entity’s borrowings and derivative financial instruments are not considered to be specific segment liabilities and are included in unallocated in note 3.

f) Geographical analysis

The consolidated entity operates predominantly in Australia, with an investment in the United States of America.

g) Customer analysis

In total, 66.1 per cent of the consolidated entity’s revenue was derived from Australian Government, ASX listed and multinational tenants (December 2013: 74.6 per cent). In the current period, Westpac Banking Corporation provided 6.5 per cent of the consolidated entity’s revenue (December 2013: 12.1 per cent).

3 Segmental information

Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise financing and other borrowing costs, indirect investments, other income and expenses. The consolidated entity operates predominantly in one geographic segment, Australia.

Segment results are reported in a manner that is consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”). The CODM that makes strategic decisions for the consolidated entity has been identified as the Executive Leadership Team (”ELT”). The ELT allocates resources to and assesses the performance of the operating segments of the consolidated entity. Net operating income is considered a key indicator of analysis when evaluating the consolidated entity’s ability to pay distributions to stapled unitholders.

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014 09

Notes to the consolidated financial statements

3 Segmental information / continued
						Consolidated
	Offce	Retail	Industrial	Other	Unallocated	SoCI
Halfyear ended 31 December 2014	$m	$m	$m	$m	$m	$m
Revenue from continuing operations
Investment properties rental revenue	181.3	96.6	13.0	5.5	—	296.4
Interest revenue	—	—	—	—	10.7	10.7
Other revenue	—	—	—	—	1.0	1.0
Total revenue from continuing operations	181.3	96.6	13.0	5.5	11.7	308.1
Other income
Net gain on fair value of investment properties	30.8	15.5	2.6	3.8	—	52.7
Net gain/(loss) on fair value of IPUC	1.1	(0.6)	—	—	—	0.5
Share of net proft of JVA accounted
for using the equity method	—	—	—	—	26.7	26.7
Netgain on sale of investments	—	—	—	—	9.5	9.5
Total other income	31.9	14.9	2.6	3.8	36.2	89.4
Total revenue from continuing
operations and other income	213.2	111.5	15.6	9.3	47.9	397.5
Investment properties expenses	35.2	33.3	1.6	1.7	—	71.8
Amortisation expenses	7.5	3.0	0.1	—	—	10.6
Finance costs	—	—	—	—	30.1	30.1
Net loss on sale of non-aligned investment properties	4.3	0.6	0.2	—	—	5.1
Other expenses	—	0.2	—	—	6.8	7.0
Foreign exchange loss	—	—	—	—	2.2	2.2
Loss on fnancial instruments	—	—	—	—	1.9	1.9
Proft from continuing operations
before income tax	166.2	74.4	13.7	7.6	6.9	268.8
Income tax expense	—	—	—	—	0.3	0.3
Proft from continuing operations
before income tax	166.2	74.4	13.7	7.6	6.6	268.5
Proft attributable to the stapled
unitholders of MPT	166.2	74.4	13.7	7.6	6.6	268.5
Specifc non-cash items
Net gain on fair value of investment properties	(30.8)	(15.5)	(2.6)	(3.8)	—	(52.7)
Net (gain)/loss on fair value of IPUC	(1.1)	0.6	—	—	—	(0.5)
Loss on fnancial instruments	—	—	—	—	1.9	1.9
Straight-lining of lease revenue1	(1.4)	—	0.1	—	—	(1.3)
Amortisation of lease ftout incentives2	5.6	0.2	—	—	—	5.8
Foreign exchange loss	—	—	—	—	2.2	2.2
Net gain on fair value of investment properties, derivatives and other specifc non-cash items included in share of net proft of JVA3	—	—	—	—	(8.4)	(8.4)
Signifcant items
Net loss/(gain) from sale of non-aligned assets4	4.3	0.6	0.2	—	(9.5)	(4.4)
Operating proft/(loss) (proft before specifc non-cash and signifcant items)	142.8	60.3	11.4	3.8	(7.2)	211.1

• 1) Included within Investment properties rental revenue in the SoCI

• 2) Included within Amortisation expense in the consolidated SoCI.

• 3) Included within Share of net profit of JVA accounted for using the equity method in the consolidated SoCI.

• 4) Included within Net gain on sale of investments and Net loss on sale of non-aligned investment properties in the consolidated SoCI.

10 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes to the consolidated financial statements

3 Segmental information / continued
							Consolidated
	Offce		Retail	Industrial	Other	Unallocated	SoCI
Halfyear ended 31 December 2013		$m	$m	$m	$m	$m	$m
Revenue from continuing operations
Investment properties rental revenue		195.2	93.1	17.6	6.0	—	311.9
Interest revenue		—	—	—	—	15.4	15.4
Total revenue from continuingoperations		195.2	93.1	17.6	6.0	15.4	327.3
Other income
Net gain on fair value of investment properties		37.3	32.0	0.9	—	—	70.2
Net loss on fair value of IPUC		—	(3.6)	—	—	—	(3.6)
Share of net proft of JVA accounted
for usingthe equitymethod		—	—	—	—	10.6	10.6
Total other income		37.3	28.4	0.9	—	10.6	77.2
Total revenue from continuing
operations and other income	232.5		121.5	18.5	6.0	26.0	404.5
Investment properties expenses		38.9	36.2	2.4	1.8	—	79.3
Amortisation expenses		7.0	2.7	0.3	—	—	10.0
Finance costs		—	—	—	—	32.5	32.5
Net loss on sale of non-aligned investment property		—	0.3	—	—	—	0.3
Other expenses		—	—	—	—	6.2	6.2
Foreign exchange loss		—	—	—	—	0.6	0.6
Loss on fnancial instruments		—	—	—	—	1.8	1.8
Proft/(loss) from continuing operations
before income tax		186.6	82.3	15.8	4.2	(15.1)	273.8
Income tax expense		—	—	—	—	(0.2)	(0.2)
Proft/(loss) from continuing operations
before income tax		186.6	82.3	15.8	4.2	(15.3)	273.6
Proft/(loss) attributable to the stapled
unitholders of MPT		186.6	82.3	15.8	4.2	(15.3)	273.6
Specifc non-cash items
Net gain on fair value of investment properties		(37.3)	(32.0)	(0.9)	—	—	(70.2)
Net loss on fair value of IPUC		—	3.6	—	—	—	3.6
Loss on fnancial instruments		—	—	—	—	1.8	1.8
Straight-lining of lease revenue1		(4.0)	—	(0.8)	—	—	(4.8)
Amortisation of lease ftout incentives2		5.4	0.5	0.1	—	—	6.0
Foreign exchange loss		—	—	—	—	0.6	0.6
Net gain on fair value of investment properties, derivatives and other specifc non-cash items included in share of net proft of JVA3		—	—	—	—	(1.4)	(1.4)
Signifcant items
Net loss from sale of non-aligned assets4		—	0.3	—	—	—	0.3
Operating proft/(loss) (proft before specifc non-cash and signifcant items)		150.7	54.7	14.2	4.2	(14.3)	209.5

• 1) Included within Investment properties rental revenue in the SoCI

2) Included within Amortisation expense in the consolidated SoCI.

3) Included within Share of net profit of JVA accounted for using the equity method in the consolidated SoCI.

• 4) Net loss on the sale of non-aligned investment properties in the consolidated SoCI.

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014 11

Notes to the consolidated financial statements

3 Segmental information / continued

						Consolidated
	Offce	Retail	Industrial	Other	Unallocated	SoFP/SoCI
	$m	$m	$m	$m	$m	$m
31 December 2014
Total assets	3,782.3	2,160.5	301.4	97.4	1,066.6	7,408.2
Total liabilities	19.2	55.4	—	4.0	1,613.5	1,692.1
Investments in JVA	—	—	—	—	390.2	390.2
Acquisitions of investment properties
including capital expenditure	72.4	390.7	2.1	4.0	—	469.2
Amortisation expenses	7.5	3.0	0.1	—	—	10.6
31 December 2013
Total assets	4,511.3	1,616.3	304.5	101.3	684.5	7,217.9
Total liabilities	6.2	52.7	6.7	—	1,578.0	1,643.6
Investments in JVA	—	—	—	—	212.7	212.7
Acquisitions of investment properties
including capital expenditure	347.4	45.4	2.2	0.9	—	395.9
Amortisation expenses	7.0	2.7	0.3	—	—	10.0

4 Finance costs

4 Finance costs
	31 December	31 December
	2014	2013
	$m	$m
Interest and fnance charges paid/payable	30.0	29.2
Borrowingcosts amortised	0.1	3.3
Total fnance costs	30.1	32.5
5 Earnings per stapled unit
	31 December	31 December
	2014	2013
	Cents	Cents
Earnings per stapled unit
Basic earnings per stapled unit	7.27	7.48
Diluted earnings per stapled unit	7.26	7.47
	$m	$m
Basic and diluted earnings1
Proft attributable to the stapled unitholders of MPT used in calculating earnings per stapled unit	268.5	273.6
	Number	Number
Weighted average number of stapled units used as denominator1	m	m
Weighted average number of stapled units used in calculating basic earnings per unit	3,692.0	3,660.0
Units issued under EIS	3.7	4.9
Weighted average number of stapled units used in calculating diluted earnings per stapled unit	3,695.7	3,664.9

• 1) Diluted units includes units issued under EIS, but do not 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.

6 Fair value measurement of financial instruments

a) Fair value hierarchy

The fair value of financial assets must be estimated for recognition and measurement or for disclosure purposes. AASB 13 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).

12 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes to the consolidated financial statements

6 Fair value measurement of financial instruments / continued

The following table presents the consolidated entity’s financial assets measured and recognised at fair value at 31 December 2014 and 30 June 2014 on a recurring basis:

and 30 June 2014 on a recurring basis:
	Level one	Level two	Level three	Total
	$m	$m	$m	$m
At 31 December 2014
Assets
Other fnancial assets at fair value through proft or loss
— unlisted securities	—	—	12.2	12.2
Other fnancial assets1	—	—	252.1	252.1
Derivatives used for hedging	—	4.3	—	4.3
	—	4.3	264.3	268.6
At 30 June 2014
Assets
Other fnancial assets at fair value through proft or loss
— unlisted securities	—	—	11.8	11.8
Other fnancial assets1	—	—	79.4	79.4
Derivatives used for hedging	—	6.6	—	6.6
	—	6.6	91.2	97.8

• 1) Primarily relates to the vendor financing arrangement with Blackstone $162.1m (June 2014: $nil) which relates to partial non-receipt of funds for the sale of non-aligned assets. Also included is convertible notes associated with funding Mirvac (Old Treasury) Trust joint venture $90.0m (June 2014: $79.4m). Convertible notes have been issued to fund the development costs of IPUC held by the JVA and they will be converted into equity held by the consolidated entity at the end of the development.

There were no transfers between levels one, two and three for recurring fair value measurements during the half year. The consolidated entity’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. The consolidated entity did not measure any financial assets at fair value on a non-recurring basis as at 31 December 2014.

b) Valuation techniques used to derive level one, level two and level three fair values

Level one: 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 reporting period. The quoted market price used for financial assets held by the consolidated entity is the current bid price. The consolidated entity holds no level one financial instruments.

Level two: 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. The consolidated entity 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, where the fair values have been determined based on present values and discount rates used were adjusted for counterparty or own credit or debit adjustments.

Credit value adjustments: these are applied to mark-to-market assets based on the counterparty’s credit risk using the observable credit default swaps curve as a benchmark for credit risk.

Debit value adjustments: these are applied to mark-to-market liabilities based on the consolidated entity’s credit risk using the consolidated entity’s credit default swaps curve as a benchmark for credit risk.

Level three: If one or more of the valuation techniques for financial instruments is based on significant unobservable inputs, such instruments are included in level three. This is the case for unlisted securities and other financial assets.

c) Fair value measurements using significant unobservable inputs (level three)

The following table presents the changes in level three instruments for the half year ended 31 December 2014 held by the consolidated entity:

		Other
	Unlisted	fnancial
	securities	assets	Total
	$m	$m	$m
Balance 1 July 2014	11.8	79.4	91.2
Additions	—	172.7	172.7
Gains recognised in other income1	0.4	—	0.4
Balance 31 December 2014	12.2	252.1	264.3
1) Unrealised gain for the half year included in gain on fnancial instruments
that relates to assets held at the end of the halfyear	0.4	—	0.4

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014 13

Notes to the consolidated financial statements

6 Fair value measurement of financial instruments / continued

There were no transfers between the levels of the fair value hierarchy in the six months to 31 December 2014. There were also no changes made to any of the valuation techniques applied as of 30 June 2014.

The main level three inputs used by the consolidated entity in measuring the fair value of financial instruments are derived and evaluated as follows:

• unlisted securities – fair value of the security unit price: these are determined based on the valuation of the underlying assets held by the fund. These valuations are based on discounted net cash inflows from expected future income and/or comparable sales of similar assets; and

• other financial assets – expected cash inflows: these are determined based on the development management agreement with fixed

• repayment terms based on fixed interest rate and agreed project costs.

Sensitivity on changes in fair value of level three financial instruments

For level three unlisted securities, the impact of an increase/decrease in unlisted security unit price on the consolidated entity’s profit for the half year end and on equity if the unit price had been five per cent higher or lower would have been $0.6m (30 June 2014: $0.6m) higher or lower.

7 Assets classified as held for sale

		31 December	30 June
		2014	2014
	Note	$m	$m
Non-current assets held for sale
City Centre Plaza, Rockhampton, QLD1		48.2	—
1 Woolworths Way, Bella Vista NSW2		250.0	—
1 Castlereagh Street, Sydney NSW3		—	69.4
10 Julius Avenue, North Ryde NSW3		—	51.4
12 Julius Avenue, North Ryde NSW3		—	21.3
275 Kent Street, Sydney NSW3,4		—	435.0
33 Corporate Drive, Cannon Hill QLD3		—	15.2
38 Sydney Avenue, Forrest ACT3		—	35.5
John Oxley Centre, 339 Coronation Drive, Milton QLD3		—	53.7
WaverleyGardens ShoppingCentre, Mulgrave VIC3		—	139.5
	9(a)	298.2	821.0

• 1) The sale is subject to a put and call option, and the call is expected to be made in June 2015.

• 2) Contracts exchanged with a related party of the consolidated entity. Settlement expected to occur before 30 June 2015.

• 3) Settlement occurred 1 July 2014.

• 4) 50 per cent interest.

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

8 Investments in JVA entities

8 Investments in JVA entities
	31 December	30 June
	2014	2014
	$m	$m
Consolidated SoFP
Investments accounted for using the equity method
Investments in associates	—	0.5
Investments injoint ventures	390.2	369.6
	390.2	370.1
	31 December	31 December
	2014	2013
	$m	$m
Consolidated SoCI
Share of net proft of JVA accounted for using equity method
Investments in associates	—	0.3
Investments injoint ventures	26.7	10.3
	26.7	10.6

14 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes to the consolidated financial statements

8 Investments in JVA entities / continued

a) Details of MPT’s JVA

Investments in JVA are accounted for using the equity method of accounting. All JVA were established or incorporated in Australia. Information relating to JVA are as follows:

i) Associates

Name of entity Principal activities	Interest Carryingvalue
	31 December 30 June31 December 30 June 2014 2014 2014 2014 % % $m $m
Mirvac Industrial Trust1 Listed property investment trust — 14 — 0.5

• 1) This investment was sold on 3 December 2014.

ii) Joint ventures

Name of entity Principal activities	Interest Carryingvalue
	31 December 30 June31 December 30 June 2014 2014 2014 2014 % % $m $m
Australian Sustainable Forestry and environmental Forestry Investors 1&2 asset manager 25 25 — 1.0 Mirvac 8 Chifey Trust Investment property 50 50 185.5 173.8 Mirvac (Old Treasury) Trust Investment property 50 50 66.5 58.6 Tucker Box Hotel Group Hotel investment 49 49 138.2 136.2
390.2 369.6

9 Investment properties

9 Investment properties
			Book value	Capitalisation rate		Discount rate		Date	Last
		31 Dec	30 Jun	31 Dec	30 Jun	31 Dec	30 Jun	of last	external
	Date of	2014	2014	2014	2014	2014	2014	external	valuation
	acquisition	$m	$m	%	%	%	%	valuation	$m
MPT and its controlled entities
1 Darling Island, Pyrmont NSW	Apr 2004	188.9	188.9	7.00	7.00	8.25	8.75	Dec 2014	188.9
1 Woolworths Way
Bella Vista NSW1,2	Aug 2010	—	250.0	—	7.75	—	8.88	Jun 2013	248.0
1-47 Percival Road, Smithfeld NSW	Nov 2002	35.4	32.5	7.75	8.00	9.25	9.50	Dec 2013	31.0
10-20 Bond Street,
Sydney NSW (50% interest)2	Dec 2009	198.4	192.8	6.35	6.63	8.13	8.50	Dec 2013	188.0
101-103 Miller Street &
Greenwood Plaza, North Sydney
NSW (50% interest)	Jun 1994	300.0	289.3	6.25-6.37	6.50-6.75	8.25-8.75	8.50-8.75	Dec 2014	300.0
189 Grey Street, Southbank QLD	Apr 2004	83.4	82.2	7.63	7.63	8.75	9.00	Dec 2013	79.0
1900-2060 Pratt Boulevard
Chicago Illinois USA	Dec 2007	42.4	36.0	7.25	7.25	8.50	8.50	Dec 2013	36.0
191-197 Salmon Street,
Port Melbourne VIC	Jul 2003	77.5	77.5	9.75	9.75	10.00	10.00	Jun 2014	77.5
210 George Street, Sydney NSW	May 2013	26.0	26.0	7.75	7.75	8.75	8.75	Jun 2014	26.0
220 George Street, Sydney NSW	May 2013	57.0	57.0	8.00	8.00	8.75	8.75	Jun 2014	57.0
271 Lane Cove Road,
North Ryde NSW	Apr 2000	31.6	31.4	8.25	8.25	9.25	9.25	Jun 2014	31.4
275 Kent Street,
Sydney NSW (50% interest)2,3,4	Aug 2010	435.5	435.0	6.00	6.00	8.50	8.50	Jun 2012	792.0
3 Rider Boulevard, Rhodes NSW2	Dec 2009	88.4	89.1	8.00	8.00	8.75	8.75	Dec 2014	88.4
340 Adelaide Street, Brisbane QLD2	Dec 2009	55.0	55.3	8.75	8.75	8.75	9.25	Dec 2014	55.0
367 Collins Street, Melbourne VIC	Nov 2013	233.3	228.0	7.00	7.00	8.50	8.75	—	—
37 Pitt Street, Sydney NSW	May 2013	68.0	68.0	8.00	8.00	8.75	8.75	Jun 2014	68.0
40 Miller Street, North Sydney NSW	Mar 1998	105.5	106.4	7.25	7.25	8.75	8.75	Jun 2014	106.4
47-67 Westgate Drive,
Altona North VIC2	Dec 2009	19.1	19.1	9.50	9.50	9.75	9.75	Dec 2013	19.1
477 Collins Street, Melbourne VIC	Nov 2013	72.0	72.0	7.50	7.50	8.75	8.75	—	—
5 Rider Boulevard, Rhodes NSW	Sep 2011	133.0	130.4	7.75	7.75	8.75	8.75	Dec 2014	133.0
51 Pitt Street, Sydney NSW	May 2013	26.0	26.0	8.00	8.00	8.75	8.75	Jun 2014	26.0
54 Marcus Clarke Street,
Canberra ACT	Oct 1987	12.9	14.1	9.75	9.75	9.75	10.50	Dec 2014	12.9

15

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes to the consolidated financial statements

9 Investment properties / continued

					Book value	Capitalisation rate	Capitalisation rate	Discount rate	Discount rate	Date	Last
				31 Dec	30 Jun	31 Dec	30 Jun	31 Dec	30 Jun	of last	external
			Date of	2014	2014	2014	2014	2014	2014	external	valuation
			acquisition	$m	$m	%	%	%	%	valuation	$m
55 Coonara Avenue,
West Pennant Hills NSW2			Aug 2010	70.0	70.0	9.50	9.50	10.00	10.00	Jun 2014	70.0
6-8 Underwood Street, Sydney NSW			May 2013	9.5	9.5	9.00	9.00	9.00	9.00	Jun 2014	9.5
60 Marcus Clarke Street,
Canberra ACT			Sep 1989	48.5	48.5	8.75	8.75	9.50	9.50	Jun 2013	48.5
60 Wallgrove Road,
Eastern Creek NSW			Jan 2014	55.1	55.1	6.00-9.00	6.50-9.50	9.00-10.00	9.00-10.50	Jun 2014	55.1
90 Collins Street, Melbourne VIC			May 2013	181.7	175.5	6.75	6.75	8.50	8.75	Jun 2014	175.5
Aviation House, 16 Furzer
Street, Phillip ACT			Jul 2007	68.0	69.0	7.75	7.75	9.00	9.00	Dec 2013	69.0
Allendale Square, 77 St Georges
Terrace, Perth WA			May 2013	237.0	237.0	8.00	8.00	9.25	9.25	Jun 2014	237.0
Bay Centre, Pirrama Road
Pyrmont NSW			Jun 2001	121.5	115.0	7.25	7.50	8.50	8.75	Dec 2013	110.0
Birkenhead Point Outlet Centre,
Drummoyne NSW5			Dec 2014	305.0	—	6.25-9.00	—	8.75-10.50	—	—	—
Broadway Shopping Centre,
Broadway NSW (50% interest)		6	Jan 2007	286.8	280.0	6.00	6.00	8.75	8.75	Jun 2014	280.0
Cherrybrook Village Shopping
Centre, Cherrybrook NSW2			Dec 2009	87.5	86.7	7.25	7.25	9.25	9.25	Jun 2013	84.6
City Centre Plaza,
Rockhampton QLD1,2			Dec 2009	—	44.0	7.25	8.00	8.50	9.25	Jun 2013	49.0
Como Centre, Cnr Toorak Road
& Chapel Street, South Yarra VIC			Aug 1998	168.5	168.3	8.00-8.50	8.00-8.36	8.75-9.25	9.00-11.00	Jun 2013	159.9
Cooleman Court, Weston ACT2			Dec 2009	52.6	52.0	7.50	7.50	9.00	9.00	Dec 2013	53.0
Harbourside Shopping Centre,
Darling Harbour NSW			Jan 2014	255.0	252.0	6.50	6.75	9.00	8.75	Dec 2014	255.0
Hinkler Central, Bundaberg QLD			Aug 2003	99.0	93.2	7.25	7.75	9.00	9.50	Dec 2014	99.0
Kawana Shoppingworld,		Dec	1993 (50%)
Buddina QLD	& Jun		1998 (50%)	311.0	299.8	6.25	6.50	8.75	9.00	Dec 2014	311.0
Metcentre & 60 Margaret Street,
Sydney NSW (50% interest)			Aug 1998	241.3	238.8	6.50-6.88	6.50-7.00	8.25-8.75	8.50-9.00	Dec 2014	241.3
Moonee Ponds Central,			May 2003 &
Moonee Ponds VIC			Feb 2008	68.0	67.0	7.75	7.75	9.00	9.00	Jun 2014	67.0
Nexus Industry Park (Building 1),
Lyn Parade, Prestons NSW			Aug 2004	20.1	20.5	7.75	7.75	9.25	9.25	Jun 2013	19.2
Nexus Industry Park (Building 2),
Lyn Parade, Prestons NSW			Aug 2004	13.5	13.1	7.50	7.75	9.25	9.25	Dec 2014	13.5
Nexus Industry Park (Building 3),
Lyn Parade, Prestons NSW			Aug 2004	26.1	26.1	7.75	8.00	9.25	9.25	Jun 2013	25.3
Nexus Industry Park (Building 4),
Lyn Parade, Prestons NSW			Aug 2004	38.3	38.2	7.50	7.50	9.25	9.25	Dec 2013	35.8
Nexus Industry Park (Building 5),
Lyn Parade, Prestons NSW			Aug 2004	19.8	19.5	7.50	7.50	9.25	9.25	Dec 2014	19.8
Orion Springfeld Town Centre, Springfeld QLD			Aug 2002	143.0	138.8	6.50	6.75	9.00	9.25	Dec 2014	143.0
Quay West Car Park, 109-111
Harrington Street, Sydney NSW			Nov 1989	29.7	29.3	8.00	8.25	10.00	10.00	Jun 2013	30.5
Rhodes Shopping Centre,
Rhodes NSW (50% interest)			Jan 2007	138.8	130.4	6.75	7.00	9.00	9.25	Jun 2013	125.0
Riverside Quay,			Apr 2002 &
Southbank VIC7			Jul 2003	191.4	208.5	7.50	7.50-7.75	9.00	9.00-10.25	Dec 2013	199.3
Royal Domain Centre, 380		Oct 1995 (50%)
St Kilda Road, Melbourne VIC	& Apr 2001 (50%)			134.7	127.7	7.50	8.00	8.50	9.00	Jun 2013	118.0
Sirius Building, 23 Furzer Street,
Phillip ACT			Feb 2010	250.2	247.0	7.25	7.35	8.75	8.75	Dec 2013	246.5
St Marys Village Centre,
St Marys NSW			Jan 2003	47.0	46.0	7.25	7.75	9.00	9.00	Dec 2014	47.0
Stanhope Village, Stanhope
Gardens NSW			Nov 2003	108.6	101.6	7.00	7.25	9.00	9.00	Dec 2013	97.0
Total investment properties				6,116.5	6,015.1

16 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes to the consolidated financial statements

9 Investment properties / continued

9 Investment properties /	continued
			Book value	Capitalisation rate		Discount rate		Date	Last
		31 Dec	30 Jun	31 Dec	30 Jun	31 Dec	30 Jun	of last	external
	Date of	2014	2014	2014	2014	2014	2014	external	valuation
	acquisition	$m	$m	%	%	%	%	valuation	$m
IPUC
2 Riverside Quay, Southbank7
VIC (50% interest)	Apr 2002	17.1	—	6.00-6.50	—	8.00-9.00	—	—	—
200 George Street, Sydney
NSW (50% interest)	Dec 2012	92.9	68.6	6.25	6.50	8.00	8.75	Dec 2014	92.9
699 Bourke Street, Melbourne
VIC (50% interest)	Jun 2014	41.7	20.4	6.25	6.50	8.75	9.00	—	—
Orion Springfeld land, Springfeld QLD	Aug2002	73.4	37.0	6.50-9.50	6.50-9.50	9.25-10.25	9.25-10.25	Dec 2014	73.4
Total IPUC		225.1	126.0
Total investment properties and	IPUC	6,341.6	6,141.1

• 1) Investment property disposed of or reclassified to held for sale during the period.

• 2) Date of acquisition represents business combination acquisition date.

• 3) Last external valuation represents 100% ownership, prior to sale of 50% interest on 1 Jul 2014.

• 4) No external valuation since Jun 2012, as sale price of 50% interest on 1 Jul 2014 taken as fair value.

• 5) Investment property acquired during the period.

6) Includes 52-60 Francis Street, Glebe NSW (50% interest), acquired during the half year.

7) 50 per cent of 2 Riverside Quay, Southbank VIC disposed of during the period. The remaining 50 per cent was reclassified as IPUC.

a) Reconciliation of carrying amounts of investment properties

a) Reconciliation of carrying amounts of investment properties
		31 December		30 June
			2014	2014
At fair value	Note		$m	$m
Balance 1 July			6,141.1	6,232.9
Additions			144.8	217.7
Acquisitions			324.4	663.2
Disposals			(13.1)	(149.1)
Net gain on fair value of investment properties	15(b)		52.7	39.9
Net gain/(loss) on fair value of IPUC	15(b)		0.5	(9.5)
Net gain/(loss) from foreign currency translation			5.8	(0.9)
Assets classifed as held for sale	7		(298.2)	(821.0)
Amortisation of ftout incentives, leasingcosts and rent incentives			(16.4)	(32.1)
Balance 31 December/30 June			6,341.6	6,141.1

b) Amounts recognised in profit or loss for investment properties

b) Amounts recognised in proft or loss for investment properties
	December	31 December
	2014		2013
	$m		$m
Investment properties rental revenue	296.4		311.9
Investmentproperties expenses	(71.8)		(79.3)
	224.6		232.6

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, Consumer Price Index 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. The consolidated entity’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.

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014 17

Notes to the consolidated financial statements

9 Investment properties / continued

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) Property portfolio

The consolidated entity’s property portfolio is made up as follows:

d) Property portfolio The consolidated entity’s property portfolio is made up as follows:
		31 December		30 June
			2014	2014
	Note		$m	$m
Investment properties per consolidated SoFP	9(a)		6,341.6	6,141.1
Investmentproperties classifed as assets held for sale	7		298.2	821.0
			6,639.8	6,962.1
10 Intangible assets
		31 December		30 June
			2014	2014
			$m	$m
Balance 1 July 2014 and 1 July 2013			42.8	69.5
Impairment of goodwill			—	(24.5)
Derecognition ofgoodwill			—	(2.2)
Balance 31 December 2014/ 30 June 2014			42.8	42.8

a) Allocation of goodwill by business segments

A segment level summary of the goodwill allocations is presented below:

			Offce	Industrial	Unallocated	Total
			$m	$m	$m	$m
Balance	31	December 2014	20.0	5.4	17.4	42.8
Balance	30	June 2014	20.0	5.4	17.4	42.8

b) Key assumptions used for value in use calculations for goodwill

Goodwill is allocated to the consolidated entity’s CGU identified according to business segments.

The recoverable amount of CGU 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 forecasts approved by management covering a 10 year period. For each business segment CGU, no forecast growth rate is assumed as the value in use calculations are based on forecast cash flows from existing investment properties and other investments. The discount rates used are post-tax and reflect specific risks relating to the relevant segments.

	Growth rate 1	Discount rate	Growth rate1	Discount rate
	31 December	31 December	30 June	30 June
	2014	2014	2014	2014
CGU	%pa	%pa	%pa	%pa
Offce	—	8.8	—	8.8
Retail	—	9.0	—	9.0
Industrial	—	9.2	—	9.2
Other	—	10.3	—	10.3

1) The value in use calculation is based on financial budgets and forecasts approved by management covering a 10 year period. No forecast growth rate is assumed as the value in use calculations are based on forecast cash flows from existing investment properties.

The recoverable amount of goodwill exceeds the carrying value at 31 December 2014. 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 recognised during the half year (December 2013: $nil).

18 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes to the consolidated financial statements

11 Borrowings

11 Borrowings
		31 December		30 June
			2014	2014
	Note		$m	$m
Current
Unsecured
Domestic medium term notes (“MTN”)	11(a)(ii)		200.0	200.0
			200.0	200.0
Non-current
Unsecured
Bank loans			—	14.1
Loan from relatedparty	11(a)(i)		1,148.4	1,376.2
	11(a)(iii)		1,148.4	1,390.3

a) Borrowings

i) Bank loans

During the half year, the bank loan facility was restructured and the consolidated entity can no longer borrow directly from this facility. It is the consolidated entity’s intention to borrow from a related party.

ii) Domestic MTN

The consolidated entity has a total of $200m (June 2014: $200.0m) of domestic MTN outstanding maturing in March 2015. Interest is payable semi-annually in arrears in accordance with the terms of the notes.

iii) Loan from related party

The consolidated entity has access to unsecured loan facilities from a related party of $2,030.3m (June 2014: $2,026.1m). The facilities consist of two individual loans: $30.7m held in US dollars and translated into Australian dollars on a monthly basis, which expires on 7 December 2017 and $2,000.0m which expires on 18 December 2023.

b) Financing arrangements

	31 December	31 December	30 June
		2014	2014
		$m	$m
Total facilities
Bank loans		—	1,388.2
Domestic MTN		200.0	200.0
Loan from relatedparty		2,030.3	2,026.1
		2,230.3	3,614.3
Used at end of the reporting period
Bank loans		—	975.2
Domestic MTN		200.0	200.0
Loan from relatedparty		1,148.4	1,376.2
		1,348.4	2,551.4
Unused at end of the reporting period
Bank loans		—	413.0
Domestic MTN		—	—
Loan from relatedparty		881.9	649.9
		881.9	1,062.9

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014 19

Notes to the consolidated financial statements

11 Borrowings / continued

c) Fair value

	Carryingamount Fair value
	31 December 30 June 31 December 30 June 2014 2014 2014 2014 $m $m $m $m
Included in consolidated SoFP Non-traded financial liabilities Bank loans Domestic MTN Loan from relatedparty	— 14.1 — 14.1 200.0 200.0 201.9 206.6 1,148.4 1,376.2 1,148.4 1,376.2
	1,348.4 1,590.3 1,350.3 1,596.9

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

The carrying value of all borrowings except domestic MTN is considered to approximate their fair value and the impact to the fair value from the difference in the interest rates is considered immaterial. All borrowings are disclosed as level three in the fair value measurement hierarchy. For details on fair value hierarchy, refer to note 6.

i) Included in consolidated SoFP

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.

12 Contributed equity

a) Paid up equity

12 Contributed equity a) Paid up equity
	31	December	30 June
		2014	2014	31 December		30 June
		Units	Units		2014	2014
		m	m		$m	$m
Mirvac Property Trust – ordinary stapled units issued		3,693.8	3,688.5		4,757.5	4,752.1

b) Movements in paid up equity

Movement in paid up equity of MPT for the half year ended 31 December 2014 were as follows:

	Units
	m	$m
Balance 1 July 2014	3,688.5	4,752.1
LTIP, LTI and EIS units converted, sold, vested or forfeited	5.3	5.4
Balance 31 December 2014	3,693.8	4,757.5

c) Reconciliation of units issued on the ASX

Under AAS, units 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 stapled units issued as detailed above are reconciled to stapled units issued on the ASX as follows:

stapled units issued as detailed above are reconciled to stapled units issued on	the ASX as follows:
	31 December	30 June
	2014	2014
	Units	Units
	m	m
Total ordinary stapled units disclosed	3,693.8	3,688.5
Stapled units issued under LTIplan and EIS	3.4	3.8
Total stapled units issued on the ASX	3,697.2	3,692.3
13 Distributions
	31 December	31 December
	2014	2013
Ordinary stapled units	$m	$m
Half yearly ordinary distributions payable/paid as follows:
4.50 CPSU payable on 26 February 2015	166.4	—
4.40 CPSUpaid on 27 February2014	—	161.3
Total distribution 4.50 (December 2013: 4.40) CPSU	166.4	161.3

20 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes to the consolidated financial statements

13 Distributions / continued

Distribution reinvestment plan (”DRP”) was activated for the 31 December 2013 half yearly distribution but was deactivated for the 30 June 2014 half yearly distribution and remains inactive.

Distributions paid/payable or satisfied by issue of stapled units under the Group’s dividend reinvestment plan are as follows:

	31 December	31 December
	2014	2013
	$m	$m
Payable in cash	166.4	115.2
To be satisfed bythe issue of stapled units	—	46.1
Total distribution	166.4	161.3

14 Contingent liabilities

a) Contingent liabilities

The consolidated entity had contingent liabilities at 31 December 2014 in respect of the following:

14 Contingent liabilities a) Contingent liabilities The consolidated entity had contingent liabilities at 31 December 2014 in respect of the following:
	31 December	30 June
	2014	2014
	$m	$m
Claims for damages in respect of injury sustained due to health and safety issues have been made
during the half year. The potential effect of these claims indicated by legal advice is that if the
claims were to be successful against the consolidated entity, they would result in a liability.	0.8	0.7

As part of the ordinary course of business of the consolidated entity, 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 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 consolidated entity does not provide details of these as to do so may prejudice the consolidated entity’s position.

b) JVA

There are no contingent liabilities relating to JVA.

15 Notes to the consolidated statement of cash flows

15 Notes to the consolidated statement of cash fows
		31 December	31 December
		2014	2013
	Note	$m	$m
a) Reconciliation of cash
Cash at the end of the half year as shown in the consolidated statement of cash fows is the same as consolidated SoFP, the detail of which follows:
Cash at bank and on hand		30.9	31.3
Deposits at call		0.2	0.2
Cash and cash equivalents		31.1	31.5
b) Reconciliation of proft attributable to the stapled unitholders of MPT to net cash infows from operating activities
Proft attributable to the stapled unitholders of MPT		268.5	273.6
Net gain on fair value of investment properties	9(a)	(52.7)	(70.2)
Net loss on fair value of IPUC	9(a)	(0.5)	3.6
Amortisation expenses		10.6	10.0
Non-cash lease incentives		(4.3)	(8.1)
Loss on fnancial instruments		1.9	1.8
Foreign exchange loss		2.2	0.6
Net (gain)/loss on sale of non-aligned assets		(4.4)	0.3
Share of net proft of JVA not received as distributions		(14.6)	(10.6)
Change in operating assets and liabilities:
— (Increase)/decrease in receivables		(1.8)	4.0
— (Increase)/decrease in other assets		(5.9)	2.2
— Increase inpayables		1.6	1.8
Net cash infows from operating activities		200.6	209.0

16 Events occurring after the end of the reporting period

During the period, the Trust entered into an agreement to acquire a portfolio of industrial assets from Altis. This acquisition was settled on 15 January 2015, when four industrial assets were acquired for $213.9m (excluding acquisition costs of $12.3m).

No other circumstances have arisen since the end of the half year which have significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future years.

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014 21

Directors’ declaration

In the Directors’ opinion:

• a) the financial statements and notes set out on pages 04 to 21 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 as at 31 December 2014 and of its performance for the financial half year ended on that date; and

• b) there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable.

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

Susan Lloyd-Hurwitz

Director Sydney 12 February 2015

22 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Independent auditor’s review report

to the unitholders of Mirvac Property Trust

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Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Mirvac Property Trust (the Trust), which comprises the consolidated statement of financial position as at 31 December 2014, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors’ declaration for the Mirvac Property Trust Group (the consolidated entity). The consolidated entity comprises both the Trust and the entities it controlled during that half-year.

Directors’ responsibility for the half-year financial report

The directors of Mirvac Funds Limited (the responsible entity) are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Australian Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2014 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of the Trust, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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

23

MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Independent auditor’s review report

to the members of Mirvac Limited

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Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of the Trust is not in accordance with the Corporations Act 2001 including:

a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2014 and of its performance for the half-year ended on that date;

• b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

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PricewaterhouseCoopers

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Matthew Lunn Partner

Sydney 12 February 2015

24 MIRVAC PROPERTY TRUST AND ITS CONTROLLED ENTITIES INTERIM REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014