MIRVAC GROUP — Regulatory Filings 2003

Oct 22, 2003

Mirvac Property Trust and its Controlled Entities

Financial Report

For the year ended 30 June 2003

A.B.N. 29 769 181 534

Mirvac Property Trust and its Controlled Entities

Contents

$\ddot{\cdot}$

	Page
Directors' report	1
Statements of financial performance	5
Statements of financial position	6
Statements of cash flows	7
Notes to the financial report	8
Directors declaration	25
Independent audit report to the unitholders	26

This financial report covers Mirvac Property Trust as an individual entity and the consolidated entity consisting of Mirvac Property Trust and its controlled entities.

The Responsible Entity of the Trust is Mirvac Funds Limited, a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Mirvac Funds Limited Level 5, 40 Miller Street North Sydney NSW 2060

A description of the nature of the consolidated entity's operations and its principal activities is included in the directors' report on pages 1-4.

Mirvac Property Trust and its Controlled Entities Directors' report For the year ended 30 June 2003

The directors of Mirvac Funds Limited (ABN 70002561640), the Responsible Entity of Mirvac Property Trust (" the Trust") present their report together with the financial report of the Trust and the consolidated financial report of the Trust and its controlled entities, for the year ended 30 June 2003.

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 44001162205), incorporated in New South Wales, and its ultimate parent entity is Mirvac Limited (ABN 92003280699), incorporated in New South Wales.

Directors of the Responsible Entity

The following persons were directors of Mirvac Funds Limited during the whole of the financial year and up to the date of this report:

AJ Lane, RJ Hamilton, PJ Biancardi, DJ Broit, A Buduls, RA Fortune, GH Levy, BHR Neil and RJ Webster.

Principal activities

The principal activities of the consolidated entity are investment in income producing commercial, industrial and retail properties.

Significant changes in the state of affairs

On 1 November 2001, the holders of Mirvac Group Stapled Securities approved resolutions to simplify the structure of the Mirvac Group Stapled Securities, subject to certain conditions. Those conditions were satisfied and the simplification was implemented on 13 September 2002. The simplification involved Mirvac Property Trust acquiring all the units of Mirvac Commercial Trust so that the resulting stapled structure consists of one Mirvac Limited share stapled to one Mirvac Property Trust unit. The effect of the acquisition is disclosed in note 20.

Increase in Contributed Equity from \$700.265 million to \$1,390.168 million as a result of:

	3000
Issue of 4,129,535 units at between \$1.6116 and \$3.0295 each under an employee share scheme	7.281
Issue of 1,781,824 units at between \$1.6487 and \$2.9892 each under the distribution reinvestment plan	4,566
Private placement of 49,751,244 units at \$2.9547 each	145,493
Issue of 622,171,046 units at \$1.3037 each to acquire Mirvac Commercial Trust	811,104
Transfer to income reserve to reflect lost capital	(278, 541)
Net increase in Contributed Equity	689.903

Distributions to unitholders

Distributions paid to unitholders during the financial year were as follows:

	107.154	61.988
March 2003 quarterly distribution paid on 24 April 2003 of 5.1082 cents (2002: 2.6540 cents)	33,378	15,794
December 2002 quarterly distributions paid on 31 January 2003 of 5.0715 cents (2002: 2.6337 cents)	30.284	15.710
September 2002 quarterly distribution paid on 25 October 2002 of 4.6511 cents (2001: 2.6135 cents)	27.440	15.578
June 2002 quarterly distribution paid on 26 July 2002 of 2.7148 cents (2001: 2.5528 cents)	16.052	14.906
	S000	\$000
	2003	2002

The June 2003 quarterly distribution of 6.1005 cents (\$41.099 million) declared on 2 June 2003, was paid on 25 July 2003.

Distributions totalling \$136,048,000 were made for the year ended 30 June 2003 (2002: \$65,535,000).

Review of operations

The consolidated entity continues to invest in high quality assets with secure income streams and in accordance with the provisions of the Trust Constitution.

Results

Net loss before revaluation of investments for the year ended 30 June 2003 was \$157,056,000 (2002: profit \$64,924,000). Surplus consideration upon acquisition of Mirvac Commercial Trust is included in the results for the year ended 30 June 2003.

Mirvac Property Trust and its Controlled Entities Directors' report (continued) For the year ended 30 June 2003

Matters subsequent to the end of the financial year

Investment property acquisitions $(a)$

In April 2003, Mirvac Property Trust entered into an agreement to purchase Riverside Quay Building 2, Southbank, Melbourne for a cash consideration of \$27.7 million. The acquisition was completed on 1 July 2003 and has not been brought to account at 30 June 2003.

In July 2003, Mirvac Property Trust entered into two agreements to purchase investment properties. The first agreement is to purchase two adjoining shopping centres in Bundaberg, Queensland for a cash consideration of \$35 million. The second agreement is to purchase an industrial property in Villawood, Sydney for a cash consideration of \$17.3 million. These property acquisitions have not been brought to account in the financial report at 30 June 2003.

(b) Acquisition of a controlled entity

On 22 July 2003, The George Street Trust was established with 100% of its units being issued to the Mirvac Property Trust. On 5 August 2003, The George Street Trust entered into an agreement to purchase a commercial office building at 190 George Street, Sydney, for a cash consideration of \$43 million. These transactions have not been brought to account at 30 June 2003.

At the date of this report, no other matter or circumstance has arisen since 30 June 2003 that has significantly affected, or may significantly affect:

• the operations of the consolidated entity in future financial years; or $(i)$
• the results of those operations in future financial years; or $(ii)$
• the state of affairs of the consolidated entity in future financial years. $(iii)$

Likely developments and expected results of operations

Further information on likely developments in the operations of the consolidated entity and the expected results of those operations have not been included in this report because the Responsible Entity believes it would be likely to result in unreasonable prejudice to the consolidated entity.

Environmental regulation

The operations of the consolidated entity are not subject to any particular or significant environmental regulations under Commonwealth, State or Territory law.

Fees paid to the Responsible Entity or its associates

Fees paid to the Responsible Entity and its associates out of Trust property during the year were \$1,055,000 (2002: \$562,000). Fees charged by the Responsible Entity represent recovery of costs. No fees were paid out of Trust property to the Directors of the Responsible Entity during the year.

Information on Directors of the Responsibility Entity

The names of the directors of Mirvac Funds Limited in office at the date of this report and details of their qualifications, experience and special responsibilities are set out below

Director, experience and areas of special responsibilities	Particulars of Directors' Interests in stapled securities of the Group
ADRIAN J. LANE, B.A. LLB is the non-executive and independent Chairman of The Mirvac Group. Mr Lane brings 40 years of senior legal and commercial experience to the Board, with a strong commitment to good corporate governance and the interests of securityholders. He is a member of the Audit & Compliance Committee and the Remuneration Committee, and is Chairman of the	67,649
Nomination Committee.

Mr Lane is chairman of The Smith Family and recently retired as a director of Amalgamated Holdings and was chairman of OPSM Group Limited from 1980 to 2002. He has been a Mirvac director since 1996.

ROBERT J. HAMILTON, A.R.E.I., F.A.P.I.

is the Managing Director of The Mirvac Group, Chairman of the Executive Committee and a member of the Nomination Committee.

Mr Hamilton has extensive knowledge of the property investment and development industry and co-founded Mirvac in 1972. Since that time he has overseen its progress from being a Sydney-based development company to one of Australia's largest and most respected property groups. He has been on the Mirvac Board since 1987.

13,197,927

Mirvac Property Trust and its Controlled Entities
Directors' report (continued) For the year ended 30 June 2003

Information on Directors of the Responsibility Entity (continued)

Director, experience and areas of special responsibilities	Particulars of Directors Interests in stapled securities of the Group
PAUL J. BIANCARDI, B Ec, FCA is a non-executive and independent director of The Mirvac Group, and is Chairman of the Audit & Compliance Committee and a member of the Nomination Committee. Mr Biancardi has extensive experience in the areas of finance, taxation and human resources. He is a director of HJ & B Group Limited, Cash Card Australia Limited and Crescent Capital Partners. Mr Biancardi joined the Mirvac Board in 2001.	7,000
DENNIS J. BROIT, DIP. COMM., CPA is an executive director of The Mirvac Group and the Finance Director. He is a member of the Executive Committee. Mr Broit has more than 35 years experience in the property industry with specific expertise in the financing of property development. He has been closely associated with the Group since 1983 and has been a director of Mirvac since 1987.	1,013,971
ANNA BUDULS, B.A., M. Comm is a non-executive and independent director of The Mirvac Group. She is a member of the Audit & Compliance Committee and Chairman of the Remuneration Committee. Ms Buduls has strong experience in investor relations, the media and corporate advisory. She is a director of Freedom Furniture Limited, Macquarie Generation, The Smith Family and HJ & B Group Limited. She has been a director of Mirvac since 1997.	7,660
ROGER A. FORTUNE, F.A.P.I. is an executive director of The Mirvac Group and is a member of the Executive Committee. Mr Fortune has more than 35 years experience in the management of major residential, commercial and retail developments in Australia and overseas and has expertise in the area of hotel management. He has been a director of Mirvac since 1987.	1,116,208
GEOFFREY H. LEVY, B. Comm., LLB, ASIA is a non-executive and independent director of The Mirvac Group. Mr Levy has more than 20 years of experience in the financial and corporate advisory sectors. He is currently Chief Executive Officer of Investec Bank (Australia) Limited and its investment banking subsidiary, Investee Wentworth Pty Limited and holds non-executive directorships in STW Communications Group Limited, Ten Network Holdings Limited and the Multiple Sclerosis Society of NSW. He has also been appointed by the Federal Government as the Chairman of Film Finance Corporation Australia Limited and was formerly a partner of the law firm Freehills. He has been a director of Mirvac since 1997.	33,664
BARRY H.R. NEIL, B.E. (CIVIL) F.A.P.I. is an executive director of The Mirvac Group and Chief Executive Officer of the Investment Division. Mr Neil is a member of the Executive Committee. Mr Neil has more than 30 years of experience in construction and property development and asset management in Australia and overseas. He has been involved in the commercial development and property investment and management operations of Mirvac since 1983. Mr Neil has been a director of Mirvac since 1987.	1,212,309
THE HON. ROBERT J. WEBSTER is a non-executive and independent director of The Mirvac Group, and is a member of the Mr Webster has extensive Remuneration Committee and Nomination Committee. experience in politics and finance, as well as in human resources. Mr Webster is a senior executive of Korn Ferry, chairman of the National Science and Technology Centre and a	12,210

director of Allianz Australia, Brickworks Ltd and Macquarie Generation. He has been a

director of Mirvac since 1997.

Mirvac Property Trust and its Controlled Entities Directors' report (continued) For the year ended 30 June 2003

Indemnification and insurance of officers

Since the end of the previous financial year the Trust has not indemnified, or made a relevant agreement for indemnifying against a liability, any person who is or who has been an officer of the Responsible Entity. No insurance premiums are paid for out of the assets of the Trust in regards to insurance cover provided to Mirvac Funds Limited.

Rounding of amounts to the nearest thousand dollars

The Trust is a registered scheme of the kind referred to in Class Order 98/0100 issued by the Australian Securities & Investments Commission relating to the 'rounding off' of amounts in the directors' report and the financial report. Amounts in the directors' report and financial report have been rounded to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated.

This report is made in accordance with a resolution of the directors.

Á J LANE Chairman

DJBROIT Director

Dated this 25^th day of August 2003 Sydney

Mirvac Property Trust and its Controlled Entities Statements of financial performance For the year ended 30 June 2003

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$\ddot{\cdot}$

		Consolidated		Parent Entity
	Note	2003* \$000	2002 \$000	2003 \$000	2002 \$000
Revenue from ordinary activities
Rental income		187,635	98,931	114,445	84,039
Interest income		515	375	436	363
Distribution income from property trusts Proceeds from sale of an investment	14			48,524	11,947
property	4	17,329
Total revenue from ordinary activities		205,479	99,306	163,405	96,349
Property outgoings		(48, 033)	(23, 386)	(29, 643)	(20, 448)
Borrowing costs expense	$\boldsymbol{2}$	(25, 674)	(10, 056)	(17, 883)	(10,056)
Carrying amount of property sold	4	(14,962)
Other expenses from ordinary activities		(2,376)	(940)	(1, 445)	(921)
Unsuccessful takeover costs		(1,540)	64,924	(1, 540) 112,894	64,924
Surplus consideration arising on		112,894
simplification		(269,950)		(269, 950)
Net (loss)/profit		(157, 056)	64,924	(157, 056)	64,924
Net increment in asset revaluation reserve	13	47,809	7,733	47,809	7,733
Total revenues, expenses and valuation adjustments attributable to unitholders of Mirvac Property Trust recognised directly in equity		47,809	7,733	47,809	7,733
Total changes in equity other than those resulting from transactions with
unitholders as owners		(109, 247)	72,657	(109, 247)	72,657
		Cents	Cents
Basic & diluted earnings per unit		(24.52)	10.53

*Includes the operating results of Mirvac Commercial Trust which was acquired on 13 September 2002 (refer to note 20).

The above statement of financial performance should be read in conjunction with the accompanying notes.

Mirvac Property Trust and its Controlled Entities
Statements of financial position As at 30 June 2003

ŀ,

			Consolidated	Parent Entity
	Note	2003* \$000	2002 \$000	2003 \$000	2002 \$000
Current assets
Cash assets		5,034	4,983	1,886	2,794
Receivables	7	19,818	7,482	22,733	13,003
Total current assets		24,852	12,465	24,619	15,797
Non-current assets
Investments	8	1,986,268	1,084,610	1,829,662	1,080,781
Other	9	4,639	2,469	2,161	2,119
Total non-current assets		1,990,907	1,087,079	1,831,823	1,082,900
Total assets		2,015,759	1,099,544	1,856,442	1,098,697
Current liabilities
Payables	10	141,238	96,500	132,921	95,653
Distribution payable to unitholders	11	41,107	16,779	41,107	16,779
Total current liabilities		182,345	113,279	174,028	112,432
Non-current liabilities
Interest bearing liabilities	12	385,000	261,000	234,000	261,000
Total non-current liabilities		385,000	261,000	234,000	261,000
Total liabilities		567,345	374,279	408,028	373,432
Net assets		1,448,414	725,265	1,448,414	725,265
Equity Contributed equity	$\boldsymbol{6}$	1,390,168	700,265	1,390,168	700,265
Reserves	13	58,246	17,392	58,246	17,392
Undistributed income	13		7,608		7,608
Total equity		1,448,414	725,265	1,448,414	725,265

*Includes Mirvac Commercial Trust which was acquired on 13 September 2002 (refer to note 20).

$\overline{\phantom{a}}$

The above statement of financial position should be read in conjunction with the accompanying notes.

Mirvac Property Trust and its Controlled Entities Statements of cash flows For the year ended 30 June 2003

		Consolidated		Parent Entity
	Note	2003* \$000	2002 \$000	2003 \$000	2002 \$000
Cash flows from operating activities
Rental and other property income		205,603	107,848	125,225	91,012
Payments to suppliers		(57, 544)	(36, 726)	(38, 415)	(31, 478)
Interest received		515	376	436	364
Borrowing costs paid		(25, 594)	(9, 828)	(17,671)	(9,828)
Distributions received		÷		57,095	9,964
Net cash inflows from operating activities	20	122,980	61,670	126,670	60,034
Cash flows from investing activities Payment for acquisition of controlled entity,
net of cash acquired Purchases of/additions to investment	20(d)	(150, 138)
properties		(202, 239)	(252, 595)	(189, 426)	(251, 530)
Proceeds from sale of investment property		17,329
Net cash outflows from investing activities		(335, 048)	(252, 595)	(189, 426)	(251, 530)
Cash flows from financing activities
Proceeds from borrowings		124,000	166,000		166,000
Repayment of borrowings				(27,000)
Proceeds from advances from entities related
to the Responsible Entity		42,500	75,000	42,500	75,000
Proceeds from advances from controlled
entity		(107, 154)	(61,988)	729 (107, 154)	(61,988)
Distributions paid Proceeds from issue of units		154,280	14,971	154,280	14,971
Unit issue transaction costs		(1,507)		(1,507)
Net cash inflows from financing activities		212,119.	193,983	61,848	193,983
Net increase/(decrease) in cash held		51	3,058	(908)	2,487
Cash at the beginning of the financial year		4,983	1,925	2,794	307
Cash at the end of the financial year		5,034	4,983	1,886	2,794

Non-cash financing activities

*Includes the cash flows of Mirvac Commercial Trust which was acquired on 13 September 2002 (refer to note 20).

$20(c)$

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

Summary of significant accounting policies $\boldsymbol{I}$ .

This general purpose financial report has been prepared in accordance with Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views, the Corporations Act 2001 and the requirements of the Trust Constitution. Comparative information is reclassified where appropriate to enhance comparability.

Basis of accounting $(a)$

The financial report has been prepared on the basis of historical costs and does not take into account current valuations of assets, except for the regular revaluations of property and other investments described in note 1(c). The accounting policies adopted are consistent with those of the prior year. Comparative information is reclassified where appropriate to enhance comparability.

$(b)$ Constitution of the Trust

The Trust was originally constituted as Mirvac Split Trust (MST) on 9 April 1987 and will terminate on 8 April 2067 unless terminated earlier under the provisions of the Trust Constitution.

$(c)$ Investments

Property

Investment properties comprise investment interests in land and buildings (including integral plant and equipment) held for the purpose of letting to produce rental income. Land and buildings have the function of an investment and are regarded as a composite asset. Accounting Standards do not require investment properties to be depreciated. Accordingly, the buildings and any component thereof (including plant and equipment) are not depreciated.

Expenses capitalised into properties may include the cost of acquisition, additions, refurbishment, redevelopment, borrowing costs and fees incurred.

All the Trust's property investments are revalued by external valuers on the basis of one third of the portfolio being valued annually. Investment properties in the reporting period, which are not due for external valuation, are formally reviewed annually by the Responsible Entity and if materially different from the carrying value, are either externally valued or adjusted to fair value.

The valuations are measured at fair value being the amounts for which assets could be exchanged between knowledgeable willing parties in an arm's length transaction.

Included in costs of any redevelopment are acquisition costs together with borrowing costs incurred on funds used to finance the redevelopment.

Units in Unlisted Trusts

Investments in unlisted property trusts are disclosed at the net asset value (NAV) per unit of the relevant trust at 30 June 2003. The NAV is calculated by deducting from the value of the unlisted unit trust's gross assets the value of the liabilities of the unlisted unit trust.

$\mathbf{I}$ . Summary of significant accounting policies (cont)

$(c)$ Investments (continued)

Revaluations

$\ddot{\phantom{0}}$

Increments from the revaluation of investments (both property and units in unlisted trusts) are transferred direct to an asset revaluation reserve, except to the extent that the increment reverses a revaluation decrement previously recognised as an expense in the statement of financial performance in respect of that same class of assets, it shall be recognised as income in the statement of financial performance for the financial year.

Decrements from the revaluation of investments are brought to account in calculating the net profit or loss for the period and transferred to the asset revaluation reserve before arriving at a distributable income amount, except to the extent that the revaluation decrement reverses a previous increment whereby the decrement is taken direct to the asset revaluation reserve.

$\pm$

Revaluation increments standing in the asset revaluation reserve are transferred to the capital reserve on disposal of the property to which they relate.

$(d)$ Revenue recognition

Rent is brought to account on an accruals basis and, if not received at balance date, is reflected in the statement of financial position as a receivable. Conversely any prepaid rents are recognised in the statement of financial position as a liability.

$(e)$ Expense recognition

Property Expenses consist of rates, taxes, repairs and maintenance and other property outgoings in relation to investment properties where such expenses are the responsibility of the Trusts.

Lease costs and loan establishment costs are amortised on a straight-line basis over the minimum loan and lease period.

Gains or losses on realisation of investments are brought to account in calculating the net profit or loss for the year.

$(f)$ Income tax

Under current income tax legislation, the Trust and its controlled entities are not liable for income tax, provided that the taxable income is fully distributed to unitholders each financial year. The Trust is liable for tax on capital gains in accordance with income tax legislation to the extent that these are not fully distributed.

Pavables $\left( 9\right)$

Payables represent liabilities for goods and services provided to the trust prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually settled within 30 days of recognition.

Receivables $(h)$

Trade debtors are recognised at the amounts receivable as they are due no more than 30 days from the date of recognition. The collectability of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off.

$\boldsymbol{I}$ . Summary of principal accounting policies (cont)

$(1)$ Interest rate agreements

The consolidated entity is exposed to changes in interest rates from its activities. It is the Trust's policy to use interest rate swap agreements to hedge this risk. Derivative financial instruments are not held for speculative purposes. Interest payments and receipts under interest rate swap agreements are recognised on an accrual basis in the statement of financial performance, as an adjustment to borrowing cost during the neriod.

Deferred costs $\left(\mathbf{r}\right)$

Deferred costs to the extent that they contribute to the earnings of the Trust in future periods are brought to account over the periods concerned.

$(k)$ Borrowing costs

Borrowing costs are recognised as expenses in the period in which they are incurred except where they relate to investment properties as disclosed in note 1(c). Borrowing costs include:

• Interest on bank overdrafts and short-term and long-term borrowings.

• Amortisation of ancillary costs incurred in connection with the arrangement of borrowings.

$($ l $)$ Interest bearing liabilities

Loans and debentures are carried at their principal amounts. Interest is accrued over the period it becomes due and is recorded as other debtors, where prepaid, or payables where payable.

Principles of consolidation $(m)$

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by the Trust as at 30 June 2003 and the results of all controlled entities for the year then ended. The Trust and its controlled entities together are referred to in the financial report as the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full.

Where control of an entity is obtained during the financial year, its results are included in the consolidated statement of financial performance from the date on which control commences.

$(n)$ Cash flows

For the purposes of the statement of cash flows, cash includes cash at bank, cash on hand and investments in money market instruments.

Distributions $(0)$

Provision is made for the amount of any distribution declared, determined or publicly recommended by the directors on or before the end of the financial year but not distributed at balance date.

Rounding of amounts $(p)$

The Trust is a registered scheme of the kind referred to in Class Order 98/0100 issued by the Australian Securities and Investments Commission relating to the 'rounding off' of amounts in the financial report. Amounts in the financial report have been rounded to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated.

Profit from ordinary activities $2.$

	Consolidated		Parent Entity
	2003	2002	2003	2002
	S000	\$000	\$000	\$000
Profit from ordinary activities includes the following specific net expenses Borrowing costs
Interest and finance charges paid	26,661	11,107	18,870	11,107
Less: Amount capitalised	(987)	(1,051)	(987)	(1,051)
Borrowing costs expense	25,674	10.056	17,883	10.056

$3.$ Auditor's remuneration

				S
Audit or review of the financial report	190,000	90,000	125,000	90,000
Other assurance services	79.900	34,650	47,100	28,275
Taxation and other services	81,700	32,910	50,300	16,910
	351,600	157.560	222,400	135,185

Net gain on sale of investment property $\overline{4}$

	S000	\$000	\$000	\$000
Revenue from ordinary activities includes: cash consideration for the sale of investment property Expenses from ordinary activities includes:	17,329	w	$\bullet$
carrying amount of investment property	14,962
Net gain on sale of investment property	2,367

6.

Parent Entity
2003	2002
	\$000
	16,110
	16,255
	16,391
	16,779
136,048	65,535
136,048	65,535
107,154	61,988
4,566	2,299
111,720	64,287
700,265	682,995
	5,833
	2,299
	8,529
	609
(278, 541)
1,390,168	700,265
	Number
of units	of units
	606,095,955
	3,917,477
	1,516,963
	6,102,432 409,075
	618,041,902
Total distribution 20.9313 cents per fully paid ordinary unit Distributions actually paid or satisfied by the issue of units under the group distribution reinvestment plans during the years ended 30 June (b) (c) (d) (d) (b) (c) (d)	\$000 28,944 31,608 34,397 41,099 7,281 4,566 147,000 (1,507) 811,104 Number 618,041,902 4,129,535 1,781,824 49,751,244 622,171,046 (622, 171, 046) 673,704,505

$\overline{\mathfrak{c}}$ . Unitholders' distributions provided for or paid

6. Contributed equity (cont)

Entitlement of units $(a)$

Ordinary units entitle the holder to participate in distributions and the proceeds on termination of the trust in proportion to the number of and amounts paid on the units held.

Employee Share Scheme Issues $(b)$

During the financial vear 4.129.535 ordinary stapled securities were issued to employees of Mirvac Limited and its controlled entities (2002: 3,917,477 ordinary stapled securities). The securities were issued at market price.

The total of ordinary stapled securities issued to employees under Employee Share Schemes at 30 June 2003 is 17,163,366 (2002: 16,319,676). The market price per ordinary stapled security at 30 June 2003 was \$4.44 (2002: \$4.18).

Distribution Reinvestment Plan $\left( c \right)$

The trust participates in The Mirvac Group distribution reinvestment plan under which holders of ordinary securities, up to a maximum of 30,000 securities, may elect to have all or part of their distribution entitlements satisfied by the issue of ordinary securities rather than by being paid in cash. Units are issued under the plan at a 2% discount to the market price.

The Mirvac Group distribution reinvestment plan commenced operation from the March 2000 quarterly distribution.

$(d)$ Private placement

On 3 July 2001, 6,102,432 ordinary stapled securities were privately placed in connection with the acquisition of Fini Holdings Pty Ltd. The securities were issued at market price.

On 18 February 2003, 49,751,244 ordinary stapled securities were privately placed with institutional investors. The securities were issued at \$4.02, a 2.2% discount to market price.

$\mathcal{I}$ Current receivables

	Consolidated		Parent Entity
	2003	2002	2003 \$000	2002 \$000
	\$000	\$000
Trade and other debtors	5,944	5,153	3,072	4,696
Less: Provision for doubtful debts	(419)	(341)	(243)	(341)
	5,525	4,812	2,829	4,355
Prepayments	3,708	2,285	2.375	2,011
Amounts owing by entities related to the
Responsible Entity	$\bullet$	330		330
Amounts owing by the Responsible Entity	40	55	20	55
Distributions owing from controlled entities			6,970	6,252
Other assets	10,545		10,539
	19.818	7,482	22,733	13.003

For further information regarding these and other financial instruments refer to Note 18 - Financial Instruments.

firvac Property Trust and its Controlled Entities
	lotes to the financial report - cont'd
		. Investments

				Consolidated Entity		Parent Entity
					Book value	Book value	Book value	Date of last	Latest
	Note	Date of	additions Cost &	Book value	30/06/02	30/06/03	30/06/02	external	external	External valuer
		acquisition	to 30/6/03	30/06/03				valuation	valuation
a) INVESTMENT PROPERTIES			\$000	\$000	5000	\$100	\$000		\$000
gis Tower, Chatswood, NSW		1.9.89	54,739	70,405	69,500	70,405	69,500	30/06/02	69,500	D McGrath AAPI	FPDSavills
0 Cowper Street, Parramatta, NSW		1.9.88	15,927	20,601	20,500	20,601	20,500	30/06/02	20,500	A Graham AAPI	Colliers Int 2
uay West Car Park, 111 Harrington Street, Sydney, NSW		30.11.89	37,128	41,600	41,567	41,600	41,567	30/06/03	41,600	S Kearney AAPI	FPDSavills
		5.4.93	28,698	30,129	30,075	30,129	30,075	30/06/01	30,000	JE Burdekin FAPI	Jones Lang
range City Centre, Orange, NSW										B R Stewart GAPI	LaSalle
awana Shoppingworld, Buddina, QLD		9.12.93 (1"50%) 10.6.98 (2 m 50%)	97,950	140,000	95,968	140,000	95,968	30/06/03	140,000	T Irving AAPI D Mohr AAPI	CB Richard Ellis
sippsland Centre, Cunningham Street, Sale, VIC		6.1.94	33,879	33,300	32,500	33,300	32,500	30/06/02	32,500	D Magree FAPI	maproperty
iomo Centre, Car Toorak Road & Chapel Street, South Yarra, VIC		18.8.98	108,591	115,602	115,000	115,602	115,000	30/06/02	115,000	P Crieve AAPI	CB Richard Ellis
arramatta Industrial Estate, Boundary Road, Northmead, NSW		14.7.94	18,684	27,102	27,100	27,102	27,100	30/06/02	27,100	K Kaymaz AAPI	Colliers Int'l
0-30 Scrivener Street, Warwick Farm NSW		24,12.93	17,813	19,986	19,817	19,986	19,817	30/06/01	19,800	J Waugh AAPI	Colliers Jardine
oveti Tower, Keltie Street, Woden, ACT		14.7.94 (1" 50%)	47,831	41,429	41,114	41,429	41,114	30/06/01	41,000	A J Martin AAPI	Jones Lang LaSalle
he Marriott Hotel, College Street and Hargrave Street, Sydney, NSW		28.2.99 (2 nd 50%) 31.12.91	94,852	71,300	72,322			30/06/03	71,300	O Westerlund AAPI ANZPI	CB Richard Ellis
										S Fairfax MRICS AAPI
- 19 Hargrave Street, Sydney, NSW		31.12.91	4,100	8,987	9,000	$\ddagger$		01/03/02	9,000	S Fairfax MRICS AAPI	CB Richard Ellis
0 Miller Street, North Sydney, NSW		31.3.98	59,065	80,250	80,122	80,250	80,122	30/06/03	80,250	T M Phelan FAPI	Knight Frank
Castlereagh Street, Sydney, NSW		18.12.98	46,808	54,500	45,703	54,500	45,703	30/06/03	54,500	S Keamey AAPI	FPDSavills
71 Lane Cove Rd, North Ryde, NSW		5.4.00	18,853	20,111	20,109	20,111	20,109	01/03/01	20,000	TM Phelan FAPI	Knight Frank
loyal Domain Centre, 380 St Kilda Road, VIC		4.10.95 (1" 50%)	84,766	87,299	84,167	$\ddot{\phantom{0}}$	ł	30/06/01	84,000	R J Scrivener PAPI FRICS	Andersen
64 Grey Street, Southbank, QLD		2.4.01 (2*50%) 29.6.01	8,261	9,475	9,500	9,475	9,500	01/03/02	9,500	T Irving AAPI D Mohr AAPI	CB Richard Ellis
ay Centre, Cnr Pirrama & Edward Streets, Pyrmont NSW		29,6.01	59,144	73,500	41,152	73,500	41,152	30/04/03	73,500	S Kearney AAPI	FPDSavills
5 Lavender Street, Milsons Point, NSW		3.7.01	59,626	59,606	59,500	59,606	59,500	01/03/02	59,500	G A Thomson FAPI TM Phelan FAPI	Knight Frank
		31.10.01	23,667	24,009	24,000	24,009	24,000	01/03/02	24,000	A Pannifex FAPI	FPDSavills
00 George Street, Sydney, NSW		25.1.02	594	594	592	594	592			Internal valuation 2003
Jnit 23, 177 Pacific Highway, North Sydney, NSW		15.4.02	82,535	81,164	80,000	81,164	80,000	30/06/02	80,000	M Reynolds AAPI	Colliers Int'l
ohn Oxley Centre, 339 Coronation Drive, Milton, QLD tiverside Quay, Southbank, VIC		31.502	35,319	35,395	35,300	35,395	35,300	30/06/02	35,300	I Irving AAPI D Mohr AAPI	CB Richard Ellis
Nacktown Mega Centa, Blacktown, NSW		30.6.02	30,035	30,035	30,002	30,035	30,002			Internal valuation 2003

$\Xi$

				Consolidated Entity		Parent Entity
	Note	Date of	Cost &	Book value	Book value	Book value	Book value	Date of last	Latest
		acquisition	additions	30/06/03	30/06/02	30/06/03	30/06/02	external	external	External valuer
			to 30/6/03					valuation	valuation
			\$000	SIOO	\$000	\$000	\$000		\$008
1-47 Percival Road, Smithfield NSW		22.11.02	14,220	14,220		14,220				Internal valuation 2003
		15.11.02	53,849	53,850		53,850		30/04/03	53,850	C Ciurlino AAPI	m3property
Waverley Gardens Shopping Centre, Cnr Police & Jackson Roads,										D Magree FAPI
The Village Centre, St Mary's NSW Mulgrave VIC		17.1.03	34,229	34,252		34,252		30/04/03	34,250	C Olson FAPI S Fox AAPI	m3property
Moonee Ponds Central, VIC		20.5.03	25,740	24,100		24,100		30/06/03	24,100	D Magree FAPI JO'Leary FAPI	m3property
	冟	28.6.85	12,250	10,678				30/06/02	10,650	P Harding FAPI	Knight Frank
8 Brisbane Avenue, Canberra ACT	冟	5.10.87	19,050	15,750				30/06/03	15,750	P Harding FAPI	Knight Frank
Perpetual Trustees Building, 10 Rudd Street, Canberra ACT				14,974				30/06/02	14,900	P Harding FAPI	Knight Frank
54 Marcus Clarke Street, Canberra ACT	€	15.10.87	21,565							P Harding FAPI	Knight Frank
St George Centre, 60 Marcus Clarke Street, Canborra ACT	€	1.9.89	57,403	47,100				30/06/03	47,100		Knight Frank
Burns Centre, 28 National Circuit, Canberra ACT	€	27,9.90	18,553	13,400				30/06/03	13,400	P Harding FAPI
Arts House, 40 Macquarie Street, Canberra ACT	€	8.12.95	17,078	16,760				30/06/02	16,750	P Harding FAPI	Knight Frank
	€	26.6.96	29,738	33,805				30/06/02	33,800	P Harding FAPI	Knight Frank
The Optus Centre, 101 - 103 Miller Street, North Sydney NSW 38 Sydney Avenue, Canberra ACT	€	30.6.94	282,394	377,000				30/06/03	377,000	KL Goddard FAPI I M Phelan FAPI	Knight Frank
The Metcentre, 60 Margaret Street, Sydney NSW (50% interest)	Ê	6.8.98	168,170	154,000				30/06/03	154,000	P Macadam AAPI W Doherty AAPI	Colliers Int'l
Total investment properties				1,986,268	1,084,610	1,135,215	919,121
(b) UNITS IN UNLISTED TRUSTS						83,011	83,011
St Kilda Road Trust (80,477,872 units)						77,591	78,649
Mirvac Property Trust No. 2 (103,573,501 units)						533,845	ł
Mirvac Commercial Trust (622,171,046 units)	E					694,447	161,660
Total investment in associated and related trusts and was set for live	Ξ			1.986,268	1,084,610	1,829,662	1,080,781

$\frac{5}{5}$

$\frac{1}{2}$

$\left\langle v\right\rangle$

Total investment portfolio

Mirvac Property Trust and its Controlled Entities Notes to the financial report - cont'd

$\frac{1}{\sqrt{2}}$

$\begin{pmatrix} 1 & 1 \ 1 & 1 \end{pmatrix}$

r
U

$\bar{\bar{z}}$

8. Investments (cont)

8. Investments (cont)

• Where the Trust's investment properties are shown at external valuations carried out at the date indicated $(i)$ above, the Responsible Entity does not purport that these are the values of the properties at the date of issue of this financial report. Therefore, any properties offered for sale may be sold at prices, which differ from these valuations.
• Internal Valuations at 30 June 2003 investment properties $(ii)$

Properties not externally valued during the last twelve months are carried at internal (directors') valuation by the Responsible Entity at 30 June 2003. All other properties are carried at external valuation plus capital expenditure incurred since the date of external valuation.

The basis of valuation of investment properties is fair value being the amounts for which assets could be exchanged between knowledgeable willing parties in an arm's length transaction.

Investment properties are revalued by external valuers on the basis of one third of the portfolio being valued annually. Investment properties in the reporting period, which are not due for external revaluation, are reviewed annually by the directors and if materially different from the carrying value, are either externally valued or adjusted to fair value.

• These properties were acquired as part of the acquisition of Mirvac Commercial Trust on 13 September 2002 $(iii)$ and were recorded at their fair value as at that date (note 20). However, the directors have decided to disclose in the note above the original date of acquisition and the original cost of, and addition to, these properties as recorded in the books of Mirvac Commercial Trust as they believe this information is more relevant to the users of this financial report.
• $(iv)$ Valuation of controlled entities

The basis of valuation of units in controlled entities is the trust's share of the net assets of the controlled entity at reporting date.

$(v)$ Properties held as security

The whole property portfolio except 23/177 Pacific Highway and Moonee Ponds is secured as part of The Mirvac Group Commercial Mortgage Backed Security issue. Refer Note 12.

Reconciliation $(vi)$

A reconciliation of the carrying amounts of investment properties at the beginning and end of the current financial year is set out below.

	Consolidated	Parent Entity
	2003	2003
	\$000	\$000
Carrying amount at 1 July 2002	1,084,610	919,121
Additions	180,983	168,508
Additions to investment properties through
acquisition of controlled entity (note 20(d))	687,317
Disposal	(14, 451)
Revaluation increments	47.809	47,586
Carrying amount at 30 June 2003	1,986,268	1,135,215

9. Non-current other assets

10.

$II.$

12.

	Consolidated		Parent Entity
	2003 \$000	2002 \$000	2003 \$000	2002 \$000
Deferred borrowing expenses	2,243	667	1,216	667
Less: Accumulated amortisation	(583) 1,660	(95) 572	(266) 950	(95) 572
Other deferred expenses	6,936	4,921	2,736	3,858
Less: Accumulated amortisation	(4,096)	(3,024)	(1, 525)	(2,311)
	2,840	1,897	1,211	1,547
Sundry assets	139
	4,639	2,469	2,161	2,119
Current payables
Trade creditors	7,873	2,379	5,119	2,027
Sundry creditors	5,337	2,888	3,590	2,447
Rent in advance	6,551	2,424	2,965	2,378
Security deposits received	1,585	1,098	1,412	1,098
Amounts owing to entities related to the Responsible Entity		87,711	119,106	87,703
Amounts owing to controlled entities	119,892		729
	141,238	96,500	132,921	95,653
Current provisions
Distributions payable	41,107	16,779	41,107	16,779
Movements:
Opening balance	16,779		16,779
Additional provisions recognised	136,048		136,048
Payments/ units issued	(111, 720)		(111, 720)
Closing balance	41,107		41,107
Non-current interest bearing liabilities
Debentures (secured) Loan from entities related to the	362,000	211,000	211,000	211,000
Responsible Entity (unsecured)	23,000	50,000	23,000	50,000
	385,000	261,000	234,000	261,000

Security for borrowings

A controlled entity of Mirvac Limited has issued \$161,000,000 Commercial Mortgage Backed Securities (CMBS) maturing on 28 November 2003 and \$690,000,000 CMBS maturing on 5 June 2006.

The Commercial Notes are secured by a first ranking real property mortgage over specific properties of the consolidated entity. Mirvac Funds Limited, as the Responsible Entity of Mirvac Property Trust and its controlled entities, has a joint and several liability for the notes, and has guaranteed the obligations of Mirvac Limited to the notes issue.

The consolidated entity has borrowed \$362,000,000 through debentures from a controlled entity of Mirvac Limited as part of group financing. The debentures are scheduled to mature on 5 June 2006. Interest is payable quarterly in arrears on fixed rates of interest.

Reserves and undistributed income 13.

		Consolidated		Parent Entity
		2003 \$000	2002 \$000	2003 \$000	2002 \$000
(a)	Reserves
	Asset revaluation reserve	67,836	26,982	67,836	26,982
	Capital reserve	(9,590)	(9,590)	(9,590)	(9, 590)
	Total reserves	58,246	17,392	58,246	17,392
	Movements:
	Asset revaluation reserve Opening balance	26,982	19,249	26,982	19,249
	Increment on revaluation of investment properties	47,809	7,733	47,809	7,733
	Transfer to undistributed income	(6,955)		(6,955)
	Closing balance	67,836	26,982	67,836	26,982
(b)	Undistributed income Undistributed income at the
	beginning of the financial year	7,608	8,219	7,608	8,219
	Net (loss)/profit	(157, 056)	64,924	(157,056)	64,924
	Transfer from reserves	6,955		6,955
	Transfer from contributed equity to reflect lost capital	278,541		278,541
	Distributions provided for or paid	(136, 048)	(65, 535)	(136, 048)	(65, 535)
	Undistributed income at the end of the financial year		7,608		7,608

Nature and purpose of reserves $(c)$

$(i)$ Asset revaluation reserve

The asset revaluation reserve is used to record increments and decrements on the revaluation of non-current assets, as described in the accounting policy note 1 (c). The balance standing to the credit of the reserve is only available for the payment of distributions in limited circumstances as permitted by the Trust Constitution.

$(ii)$ Capital reserve

The capital reserve is used to record the realised gains/losses on the sale of non-current assets, as described in Note $1(c)$ . The balance standing to the credit of the reserve is only available for the payment of distributions in limited circumstances as permitted by the Trust Constitution.

14. Investments in controlled entities

	Interest of immediate Parent entity		Distributions received by immediate parent entity
The following Trusts comprise the consolidated entity:	2003 %	2002 %	2003 \$000	2002 \$000
Mirvac Property Trust (parent entity)
Mirvac Property Trust No. 2	100	100	5.746	5,116
380 St Kilda Road Trust	100	100	7.857	6,831
Mirvac Commercial Trust	100	$\bullet$	34.921	$\overline{\phantom{a}}$
			48,524	11.947

Mirvac Property Trust No. 2, 380 St Kilda Road Trust and Mirvac Commercial Trust were constituted in Australia.

15. Related party transactions

$(a)$ The 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, incorporated in New South Wales and its ultimate parent entity is Mirvac Limited, incorporated in Australia.

• Directors of the Responsible Entity $(b)$ The following persons were directors of the Responsible Entity during the financial year: AJ Lane, RJ Hamilton, PJ Biancardi, DJ Broit, A Buduls, RA Fortune, GH Levy, BHR Neil and RJ Webster.
• Responsible Entity's holdings of consolidated units $(c)$ Directors of the Responsible Entity and related parties held 16,659,101 consolidated units in Mirvac Property Trust at 30 June 2003 (2002: 16,182,650).
• $\mathbf{d}$ Responsible Entity's fee

As outlined in the Explanatory Memorandum dated 4 May 1999, as part of the merger of the Mirvac Group, Mirvac Funds Limited reduced its Responsible Entity fees to a recovery of cost basis.

Fees charged by Mirvac Funds Limited for the year to 30 June 2003 were \$1,055,000 (2002: \$562,000) in accordance with the terms contained in the merger proposal in 1999.

Aggregate amounts included in the determination of net profit resulting from transactions with entities related $(e)$ to the Responsible Entity:

		Consolidated	Parent Entity
	2003	2002	2003	2002
	S000	\$000	\$000	\$000
Rental income and commission revenue	17,757	14,090	11,645	10,373
Interest expense	24,868	10,133	17,255	10,133
Property management and other fees expense	4.310	2.037	2,660	1.742

Aggregate amounts brought to account in relation to other transactions with entities related to the Responsible $($ f) $\overline{\mathbf{F}}$ ntity

-------		Consolidated	Parent Entity
	2003 \$000	2002 \$000	2003 \$000	2002 \$000
Capital expenditure and related fees on investment properties	24,646	4.546	16.398	3.940
Purchase of investment properties	17,104	54.541	17,104	54.541

Details of interests in wholly-owned controlled entities are set out in note 14. Details of dealings with these $(g)$ entities are set out below:

Distributions from controlled entities		48,524	11,947

16. Earnings per unit

	Consolidated Entity
	2003	2002
	Cents	Cents
Basic and diluted earnings per unit	(24.52)	10.53
Weighted average number of ordinary units	No.	No.
outstanding during the year	640,500,977	616, 354, 441

$17.$ Segment reporting

The Trust and its controlled entities derive income from investments in property, short-term deposits and securities authorised by the Trust Constitution. All such investments are located in Australia.

18. Financial instruments

Derivative instruments - interest rate swap contracts $(a)$

The Trust is a party to derivative financial instruments in the normal course of business in order to limit exposure to fluctuations in interest rates.

During the financial year, the Trust had an interest rate swap contract under which it was obliged to receive interest at variable rates and pay interest at fixed rates. The contract was settled on a net basis, with the amount receivable or payable settled immediately and recognised as an adjustment to interest expense. The fixed interest paid during the year was 6.11%.

At 30 June 2003, the notional principal amounts and periods of expiry of the loans subject to interest rate swaps are as follows:

Maturity	2003	2002
	\$000	\$000
Less than 1 year	$\bullet$	$\bullet$
$2-3$ years	-
$3 - 5$ years		50,000
	$\blacksquare$	50,000
		THE EXPLORATION CONTINUES IN A STRANGER CONTINUES.

$\bar{z}$ l,

Financial instruments (cont) 18.

$(b)$ Interest rate risk exposures

$\mathbf{r}$

The Trust's exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and liabilities is set out below:

				Fixed interest maturing in:
30 June 2003		Floating interest rate	1 year or less	Over 1 to 5 years	More than 5 years \$000	Non- interest bearing \$000	Total \$000
Financial Assets	Note	\$000	\$000	\$000
Cash		5,034			÷,	$\tilde{}$	5,034
Receivables	7		m	۰	$\overline{\phantom{a}}$	5,565	5,565
		5,034	$\bullet$	$\blacksquare$	$\overline{\phantom{a}}$	5,565	10,599
Weighted average
interest rate		4.70%
Financial Liabilities
Payables	10					141,238	141,238
Interest bearing
liabilities	12	64,000		321,000			385,000
		64,000	$\blacksquare$	321,000	$\omega$	141,238	526,238
Weighted average
interest rate		5.56%		6.17%
Net financial
assets/(liabilities)		(58,966)	۰	(321,000)		(135, 673)	(515, 639)
				Fixed interest maturing in:
30 June 2002		Floating	1 year	Over 1 to	More than	Non-	Total
		interest	or less	5 years	5 years	interest
		rate				bearing
	Note	\$000	\$000	\$000	\$000	\$000	\$000
Financial Assets
Cash		4,983			٠		4,983
Receivables	$\tau$					5,197	5,197
		4,983				5,197	10,180
Weighted average
interest rate		4,46%
Financial Liabilities							96,500
Payables
Interest bearing	10					96,500
liabilities	$12 \,$	90,000	-	171,000			261,000
Interest Rate Swaps		(50,000)	-	50,000	$\ddot{\phantom{1}}$
		40,000	÷.	221,000	$\blacksquare$	96,500	357,500
Weighted average
interest rate		5.68%		6.25%
Net financial assets/(liabilities)		(35, 017)		(221,000)		(91, 303)	(347, 320)

Reconciliation of net financial liabilities to net assets

	2003 \$000	2002 \$000
Net financial liabilities per above tables	(515, 639)	(347,320)
Prepayments	3,708	2,285
Other current assets	10.545
Investments	1,986,268	1,084,610
Other non-current assets	4,639	2,469
Provisions	(41,107)	(16, 779)
Net assets per statement of financial position	1,448,414	725.265

$18.$ Financial instruments (cont)

C) Credit risk exposures

On Balance Sheet financial instruments

The credit risk to the Trust represents the economic loss that would be recognised if counter parties failed to perform as contracted. The consolidated entity is materially exposed to one tenant, Optus Administration Pty Ltd. This exposure was approved by the Responsible Entity following an assessment of Optus' credit worthiness.

The credit risk on financial assets of the Trust which have been recognised on the statement of financial position, is the carrying amount, net of any provision for doubtful debts,

Off Balance Sheet financial instruments

Credit risk on off balance sheet derivative contracts is minimised as the counter parties to these swap contracts are recognised financial institutions with acceptable credit ratings determined by a recognised ratings agency. The credit risk on swap contracts is limited to the net amount to be received from counter-parties on contracts that are favourable to the entity. Accrued amounts owing by the consolidated entity at 30 June 2003 amounted to \$nil (2002: \$184,000).

$(d)$ Net fair values of financial assets & liabilities

On - Balance Sheet financial instruments

The net fair value of cash and cash equivalents and other non-interest bearing financial assets and financial liabilities of the Trust disclosed in the statement of financial position approximates their carrying value.

Off - Balance Sheet financial instruments

The net fair value of financial liabilities arising from interest rate swaps is \$nil (2002; \$810,000). This amount reflects the estimated proceeds which the Trust would expect to pay or receive to terminate the various contracts (net of transaction costs) or replace the contracts at their current market rates as at 30 June 2003.

19. Capital expenditure commitments

Commitments for capital expenditure on investments contracted for at balance date but not recognised as liabilities.

		Consolidated	Parent Entity
	2003	2002	2003	2002
	\$000	\$000	\$000	\$000
Payable:
Not later than one year	73,920	36,961	68,400	36,961
Later than one year but not later than 5 years	$\bullet\bullet$	$\overline{\phantom{a}}$	$\blacksquare$	$\blacksquare$
	73.920 --------------------	36.961	68,400 CONTENT CONTENTS	36,961

20. Notes to the statement of cash flows

$(a)$ Reconciliation

	Consolidated		Parent Entity
	2003	2002	2003	2002
	\$000	\$000	\$000	\$000
Reconciliation of net profit to net cash inflows from operating activities
Net (loss)/profit	(157,056)	64,924	(157,056)	64,924
Surplus consideration arising on simplification	269,950		269,950
Amortisation of deferred expenses	1,742	1.077	804	895
Receipt pre-acquisition profits			8,592
Profit on sale of property investment Changes in assets and liabilities	(2,367)
(Increase)/decrease in receivables and other assets	1,005	(2,335)	278	(4,035)
(Decrease)/increase in creditors and provisions	9,706	(1,996)	4,102	(1,750)
Net cash inflows from operating activities	122,980	61,670	126,670	60,034

$(b)$ Components of cash

Cash as at the end of the financial year shown in the statement of cashflows is reconciled to the statement of financial position as follows:

∪ash	5.034 ________	$\mathbf{A} \mathbf{A}$ -סי	1.886 -REMAINING PERSON REVOLUTIONS OF DESCRIPTIONS	$70\Delta$ COMMODADORES I LINGUADOS REPE CATURAL ALTERNATI

$(c)$ Non-cash financing activities

Distributions satisfied by the issue of units under the distribution reinvestment plan are set out in Note 5.

$(d)$ Acquisition of controlled entity

On 13 September 2002 Mirvac Property Trust acquired all the units of Mirvac Commercial Trust by issuing one Mirvac Property Trust unit for one Mirvac Commercial Trust unit. This has resulted in surplus consideration of \$269,950,000 which has been included in the statement of financial performance. The operating results of Mirvac Commercial Trust have been included in the consolidated statement of financial performance since the date of acquisition.

Details of acquisition are as follows:

	\$000
Fair value of identifiable net assets of controlled entity acquired
Investment properties	687.317
Trade debtors	4,254
Other non-current assets	2,972
Cash	862
Trade creditors	(3,251)
Loans	(151,000)
	541,154
Surplus consideration arising on simplification	269,950
Units issued as consideration	811,104
Outflow of cash to acquire controlled entity, net of cash acquired
Cash consideration
Less: Balances acquired
Cash	862
Loans	(151,000)
	(150, 138)

21. Events occurring after reporting date

$(a)$ Investment property acquisitions

In April 2003, Mirvac Property Trust entered into an agreement to purchase Riverside Quay Building 2, Southbank, Melbourne for a cash consideration of \$27.7 million. The acquisition was completed on 1 July 2003 and has not been brought to account at 30 June 2003.

In July 2003, Mirvac Property Trust entered into two agreements to purchase investment properties. The first agreement is to purchase two adjoining shopping centres in Bundaberg, Queensland for a cash consideration of \$35 million. The second agreement is to purchase an industrial property in Villawood, Sydney for a cash consideration of \$17.3 million. These property acquisitions have not been brought to account in the financial report at 30 June 2003.

Acquisition of a controlled entity $(b)$

On 22 July 2003, The George Street Trust was established with 100% of its units being issued to Mirvac Property Trust. On 5 August 2003, The George Street Trust entered into an agreement to purchase a commercial office building at 190 George Street, Sydney, for a cash consideration of \$43 million. These transactions have not been brought to account at 30 June 2003.

Mirvac Property Trust and its Controlled Entities Directors' declaration

The directors of Mirvac Funds Limited, the Responsible Entity of Mirvac Property Trust ('the Trust'), declare that the financial statements and notes of the Trust set out on pages 5 to 24:

• (a) comply with Accounting Standards, the Corporation Regulations 2001 and other mandatory professional reporting requirements, and,
• (b) give a true and fair view of the Trust's and the consolidated entity's financial position as at 30 June 2003 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date.

In the Directors' opinion:

• (a) the financial statements and notes are in accordance with the Corporations Act 2001, and
• (b) there are reasonable grounds to believe that the Trust 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.

A J LANE

Director

Dated this 25^th day of August 2003 Sydney

Bat

DJBROIT Director

Mirvac Property Trust and its Controlled Entities Independent audit report to the unitholders

Audit opinion

In our opinion, the financial report of Mirvac Property Trust:

• gives a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial position of $\bullet$ Mirvac Property Trust and the Mirvac Property Trust Group (defined below) as at 30 June 2003, and of their performance for the year ended on that date, and
• is presented in accordance with the Corporations Act 2001, Accounting Standards and other mandatory financial reporting requirements in Australia, the Corporations Regulations 2001 and the Trust Constitution.

This opinion must be read in conjunction with the rest of our audit report.

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for both Mirvac Property Trust (the trust) and the Mirvac Property Trust Group (the consolidated entity), for the year ended 30 June 2003. The consolidated entity comprises both the trust and the entities it controlled during that year.

The directors of Mirvac Funds Limited (the responsible entity) are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit approach

We conducted an independent audit in order to express an opinion to the unitholders of the trust. Our audit was conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the trust's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows.

We formed our audit opinion on the basis of these procedures, which included:

• examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
• assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

When this audit report is included in a document containing the directors' report, our procedures include reading the directors' report to determine whether it contains any material inconsistencies with the financial report.

Mirvac Property Trust and its Controlled Entities Independent audit report to the unitholders - cont'd

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Purtulineborges

PricewaterhouseCoopers Chartered Accountants

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B K Hunter Partner Sydney, 25 August 2003