MIRVAC GROUP — Regulatory Filings 2003

Oct 22, 2003

$\omega = \omega$

l.

$\sim$

(ABN 92 003 280 699)

CONSOLIDATED FINANCIAL REPORT

30 JUNE 2003

$\overline{a}$ $\frac{1}{2}$

ò, $\frac{1}{2}$

$\mathcal{A}$

PAGE
$1 - 6$
7
8
9
10-37
38
39

$\bar{z}$

$\bar{\mathcal{A}}$

$\mathcal{L}$

$\hat{\mathcal{E}}$

DIRECTORS' REPORT

Your directors present their report on the consolidated entity consisting of Mirvac Limited and the entities it controlled at the end of, or during, the year ended 30 June 2003.

DIRECTORS

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

AJLane	R J Hamilton
P J Biancardi	D J Broit
A Buduls	R A Fortune
G H Lew	BHRNeil
R J Webster

PRINCIPAL ACTIVITIES

The principal continuing activities of the consolidated entity are property development, hotel operations and property investment and management.

EARNINGS PER SHARE	2003 Cents	2002 Cents
Basic earnings per share Nuted earnings per share	15.90 15.90	10.51 10.51
Earnings per security for 2003, included 3.83 cents as a result of a change in accounting policy. Refer note 1.

ORDINARY DIVIDEND

The 2002 ordinary dividend of \$13,304,000 (2.1526 cents per fully paid share) referred to in the directors' report dated 9 September 2002 was paid on 26 July 2002.

10 B BB OBECAUS BEDOF OGING & OGYGIBING YVOY MOS hOLL OF YOR YOUNG	2003	2002
Details of dividends in respect of the current year are as follows:	\$000	\$000
Quarterly ordinary dividends paid as follows:
2.1989 cents per fully paid share paid on 25 October 2002 franked at 30%	13,702
2.0723 cents per fully paid share paid on 26 October 2001 franked at 30%		12.775
1.8285 cents per fully paid share paid on 31 January 2003 franked at 30%	11.394
2,0884 cents per fully paid share paid on 25 January 2002 franked at 30%		12,889
1.8418 cents per fully paid share paid on 24 April 2003 franked at 30%	12,402
2.1044 cents per fully paid share paid on 24 April 2002 franked at 30%		12.997
2.1995 cents per fully paid share paid on 25 July 2003 franked at 30%	14,818
2.1526 cents per fully paid share paid on 26 July 2002 franked at 30%		13.304
Total dividends in respect of the year - 8.0687 cents per fully paid share
(2002: 8.4177 cents per fully paid share)	52.316	51,965

REVIEW OF OPERATIONS

A summary of consolidated revenues and results by significant industry segment is set out below:

	SEGMENT REVENUES		SEGMENT RESULTS
	2003	2002	2003	2002
	\$000	\$000	\$000	\$000
Property Development	1,160,867	769.078	144,781	97,369
Property investment	19.422	47,793	1,079	5,101
Hotels	88,652	91,098	8,516	8,127
Unallocated / Eliminations	30.022	22,850	12,362)	(12,628)
	1,298,963	930,819
Profit from ordinary activities before income tax expense			142,014	97,969
income tax expense			40,184	33,203
Net profit attributable to members of Mirvac Limited			101.830	64.766

÷

DIRECTORS' REPORT (continued)

REVIEW OF OPERATIONS (continued)

Comments on the operations and the results of those operations are set out below:

(a) Property Development

A change in accounting policy as a result of the issue of Urgent Issues Group Abstract 53, which requires the revenues. expenses and profits on pre-sold development projects to be brought to account on a percentage complete basis, resulted in additional revenues of \$331,506 million and profits before tax of \$35.063 million. Excluding the effects of the change in accounting policy, divisional sales revenue to external customers remained fairly consistent with the prior period, although this did not reflect the significant revenue attributed to joint venture profits. Profit before tax (excluding \$35.063 million from the change in accounting policy) increased by 12.6% to \$109.718 million, reflecting the higher profit yielding projects, and higher contributions from joint venture projects, in particular Walsh Bay and Newington.

While the market in general has shown a slow down in demand from investors for residential apartments, sales in the division remain strong particularly in the housing market, with strong pre-sales from owner-occupiers continuing on projects released during the year.

(b) Property Investment and Management

The division provides property management services to the consolidated entity and the stapled trusts at cost. Total sales revenue increased by 8.5 % mainly from car parking operations. Prior year profits before tax included revenue and profits from the sale of an investment asset. The purchase of an investment asset in May 2003, will contribute a full years rental income in the subsequent financial year.

Hotels

Profits after tax increased by 7.8% to \$5.991 million. The result was achieved by an increase in occupancy rates from 72 % to 75%, while the average room rate marginally decreased to \$162, as a result of the change in mix of hotel types, The division continues to focus on increasing domestic corporate and leisure business while maintaining room night demand from Europe and North America, and performed credibly given the external influences of international terrorism, the Middle East War and SARS, which affected the travel industry worldwide.

INTEREST RATE CONTRACTS

As part of the Board's overall risk management policy, the consolidated entity has entered into interest rate contracts to protect its finance facilities from exposure to increasing interest rates. The average rate of maturity of these contracts is 5 years.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Significant changes in the state of affairs of the consolidated entity during the financial year were as follows:

(a) Increase in Contributed Equity from \$398.815 million to \$458.743 million as a result of:	Stapled security price	\$000
Issue of 440.704 fully paid ordinary shares of \$1.3073 each under the distribution reinvestment plan	\$4.07	576
Issue of 3,688,440 fully paid ordinary shares of \$1,3197 each under an employee share scheme	\$4.11	4.868
Issue of 556,044 fully paid ordinary shares of \$1.2747 each under the distribution reinvestment plan	\$3.97	709
issue of 435,000 fully paid ordinary shares of \$1.0923 each under an employee share scheme	\$4.12	475
ssue of 444,175 fully paid ordinary shares of \$1,0720 each under the distribution reinvestment plan	\$4.05	476
Issue of 49,751,244 fully paid ordinary shares of \$1.0653 each under a private institutional placement	\$4.02	52,450
Issue of 6,095 fully paid ordinary shares of \$1.0869 each under an employee share scheme	\$4.10
Issue of 340,901 fully paid ordinary shares of \$1.0778 each under the distribution reinvestment plan	\$4.07	367
Net increase in Contributed Equity		59.928

(b) Issue of Commercial Mortgage Backed Securities

Series 2003 - 1 year Commercial Notes were issued for a total of \$161.000 million on 28 May 2003, as \$137.000 million Class 1 and \$24.000 million Class 2 floating rate notes.

The notes have a scheduled maturity date for repayment on 28 November 2003, at which date it is the intention of the consolidated entity to issue notes for a longer term maturity. Interest is payable monthly in arrears.

The issue of the notes replaced bank-funded debt and will provide longer-term maturity under the Group's borrowing program.

The issue has assisted with reducing the cost of the consolidated entity's debt.

DIRECTORS' REPORT (continued)

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

In July 2003, the Group established a AA Rated Multi-option Pre-sale Securitisation program totalling \$500 million, of which \$225 million was drawn down on 22 July 2003, as \$60 million fixed rate notes and \$165 million floating rate notes, \$125 million of the notes drawn down have a scheduled maturity date for repayment on 15 July 2004, and \$100 million a scheduled maturity date for repayment on 15 June 2005. Interest is payable quarterly in arrears for floating rate notes and semi-annually for fixed rate notes. The issue of the notes replaced bank-funded debt and will provide longer-term maturity under the Group's borrowing program. The issue has assisted with reducing the cost of the consolidated entity's debt.

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

• (a) the consolidated entity's operations in future financial years, or
• (b) the results of those operations in future financial vears, or
• (c) the consolidated entity's state of affairs in future financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

In the coinion of the directors, if would orejudice the interests of the consolidated entity to provide additional information relating to likely developments in the operations of the consolidated entity, and the expected results of those operations in financial years subsequent to 30 June 2003.

ENVIRONMENTAL REGULATIONS

The consolidated entity is subject to significant environmental legislation and associated regulations and Acts. Mirvac is committed to the implementation of responsible and practical management procedures to minimise environmental impacts and provide compliance under the government regulations applicable to all areas within the Group.

Property Development and Construction

Luxedia.
All projects are subject to consents, approvals and licenses which control the development of land. Each project is undertaken
with the guidance of a project specific Statement of Environmental Effects (SEE) or En examines and controls all aspects of development, Each SEE or EIS includes a project specific Environmental Management Plan which quides the construction activities on-site, including handling of waste, materials re-use and recycling, traffic movements, site logistics, hazard protection measures, pollution mitigation (noise, dust, run off), retention of flora & fauna, biodiversity systems for the control of stormwater run off and archaeology, as relevant.

Continual monitoring and compilance with these controls is undertaken within each project as part of Mirvac's Environmental Management System.

During the year, there were some environmental breaches which were of a minor nature resulting in small fines. Breaches were rectified promptly. Mirvac, as standard policy, advises sub-contractors of its environmental policy and monitors each sub-contractor's responsibilities and performance.

Hotel Operations

Mirvac Hotels has undertaken an internal audit for eco efficiency benchmarking for ten of its hotels in Sydney, Melbourne and Brisbane. A range of useful conclusions has arisen from the benchmarking study, which give direction to on-going ecological management strategies. Issues such as impact of hotel occupancy on energy consumption, water use and waste production, impact of efficient water fittings on water usage and impact of individual air conditioners on energy usage have now been neasured, compared and targeted. The audit system is now being expanded to include additional Mirvac hotel properties.

Asset Management

Mirvac has for some years been a partner in the Sustainable Energy Development Authority (SEDA) Energy Smart Business Program and is committed to reducing energy consumption and greenhouse gas emissions. Mirvac's on-going commitment to reducing energy consumption within the investment portfolio has realised a saving equivalent to reducing total greenhouse gas emissions by 9,856 tonnes, the equivalent of taking 2,166 cars off the road.

An action plan for further savings is in place, which targets maintenance, risk control, operational procedures, control of legionella, air quality, waste management, chemical stock control and noise pollution.

Recycling

All activities within the Group implement recycling of work materials and waste minimisation strategies. All new developments include provision for recycling by purchasers, future owners or tenants.

Mirvac's approach to recycling is to minimise waste where possible, re-use when able and recycle as necessary. Several current projects have turned re-use of existing materials into character features, with Walsh Bay as a premier example, Items of industrial heritage and existing tacades have been retained and adaptively re-used within the new buildings and on the foreshore promenade, and sandstone from the site has been laid out as paving and landscape features along Pottinger Street. Recycling of building materials on-site during construction is undertaken as a matter of course, with several recent projects achieving approximately 95% recycling of specific demolished building materials such as concrete, steel, copper and iron.

$\sim$ $\frac{1}{2}$

÷,

DIRECTORS' REPORT (continued)

INFORMATION ON DIRECTORS	PARTICULARS OF DIRECTORS INTERESTS IN STAPLED SECURITIES OF THE GROUP
Director, Experience and Areas of Special Responsibilities	Stapled Securities
The names of the directors of Mirvac Limited in office at the date of this report and details of their qualifications, experience and special responsibilities are set out below.	Quoted
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 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.	67,649
ROBERT J. HAMILTON, A.R.E.I., F.A.P.L. 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 ompany to one of Australia's largest and most respected property groups. He has been on the Mirvac doard since 1987.	13,197,927
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, Investec Wentworth Pty Limited and holds non- executive directorships in STW Communications Group Limited, Ten Network Holdings Limited and the Multiple Scierosis 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. NEL., 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 Remuneration Committee and Nomination Committee. Mr Webster has extensive 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 director of Allianz Australia, Brickworks Ltd and Macquarie Generation. He has been a director of Mirvac since 1997.	12,210

$\overline{\phantom{a}}$

DIRECTORS' REPORT (continued)

MEETINGS OF DIRECTORS

The following table sets out the numbers of meetings of the company's directors (including meetings of committees of directors) held during the year ended 30 June 2003, and the numbers of meetings attended by each director.

	Full Meetings of Board of Directors	Directors' Executive Meetings	Audit Committee Meetings	Remuneration Committee Meetings
Number of meetings held	13	11	6	3
Number of meetings attended by :
A J Lane	13	$\star$	6	з
R J Hamilton	13	11
P J Biancardi	12		6
D J Broit	13	9	$3/3**$
A Buduls	13		6	3
R A Fortune	11	9
GHLevy	13		*
BHRNeil	13	11	$1/3$ **
R J Webster	12			3

not a member of the refevant committee

number of meetings attended and held during the time the director was a member of the committee during the year.

RETIREMENT, ELECTION AND CONTINUATION IN OFFICE OF DIRECTORS

Ms A Buduls and Messrs B H R Neil and R J Webster are directors retiring by rotation who, being eligible, offer themselves for re-election.

DIRECTORS' AND EXECUTIVES' EMOLUMENTS

The Remuneration and Nomination Committee, consisting of non-executive directors, advises the Board on remuneration policies and practices generally, and makes specific recommendations on remuneration packages, incentives and other terms of employment for executive directors, other senior executives and non-executive directors.

During the year, the Board reviewed its Board Committees, including the Remuneration and Nomination Committee. In August 2003, the Board established a separate Nomination Committee, and approved a new Charter for the Remuneration Committee and the new Nomination Committee. Both Committees have three members, all of whom are non-executive, Independent directors. The functions of the new Nomination Committee were previously undertaken by the Remuneration Committee.

Executive remuneration, incentives and other terms of employment are reviewed annually having regard to performance against goals set at the start of the year, relevant comparative information and independent expert advice, where required. As well as a base salary, remuneration packages include superannuation, retirement and termination entitiements, performance-related bonuses and fringe benefits. Executives are also eligible to participate in the Mirvac Employee Ihare Schemes

Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the consolidated entity's diverse operations. Performance related bonuses are available to senior executives and executive directors based on achieving set goals during the year.

Through the Nomination Committee, the Board exercised discretion in the granting of bonuses, with the Committee reviewing the extent to which senior executives, including the executive directors, had met their key performance indicators (KPIs). KPIs include Total Shareholder Return exceeding the industry sector as well as specifically targeted financial and operational targets.

Remuneration of non-executive directors is determined by the Board on advice from the remuneration committee within the maximum amount approved by the shareholders from time to time.

Details of the nature and amount of each element of the emoluments of each director of Mirvac Limited and each of the five officers of the company and the consolidated entity receiving the highest emoluments are set out in the following tables:

	Directors'
Non-Executive Directors of Mirvac Limited	Base fee	Superannuation	Total
			\$
A J Lane, Chairman	161.481	10.519	172,000
P J Biancardi	78,899	7.101	86,000
A Buduls	85,899	7.730	93.629
GHLew	61,926	5,574	67,500
R J Webster	67,890	6.110	74,000

Included in the non-executive directors' base fee are fees for attendance at various committees and due diligence meetings.

DIRECTORS' REPORT (continued)

DIRECTORS' AND EXECUTIVES' EMOLUMENTS (continued)

Executive Directors of Mirvac Limited	Base Salary	Non-Cash Benefits \$	Super Contributions \$	Bonuses	Total Paid Salary	Employee Loan Interest	Total Emoluments
R J Hamilton - Managing Director	694,481	€	10,519	175,000	880,000	135,913	1,015,913
B H R Neil - Executive Director	477.127	49.993	16,238	150,000	693,358	151,904	845,262
D J Brolt - Finance Director	449.401	81,972	11.537	150.000	692.910	141.890	834,800
R A Fortune - Executive Director	349,481	o	10.519	80.000	440.000	90,639	530.639
Other Executives * of the Consolidated Entity
R P Lynch - Chief Executive Homes NSW	401.613	0	13.387	150.000	565,000	136,150	701.150
C Freeman - Chief Executive Queensland	366,000	0	49,000	100,000	515,000	73,369	588,369
A G Fini - Chief Executive Western Australia	372.881	Ω	32.119	70.000	475,000	49,500	524,500
A J Turner - Chief Executive Hotel Division	253.021	45,460	26,519	50.000	375,000	95.278	470.278
I C Costley - Chief Executive Development NSW	290,750	0	40.000	50.000	380,750	34.155	414,905

$\star$ Other executives are officers who are involved in, and concerned in, or take part in, the management of the affairs of * lirvac Limited and/or related bodies corporate.

INSURANCE OF OFFICERS

During the financial year, the company paid a premium for an insurance policy insuring any past, present, or future director, secretary,
executive officer or employee of the company or its subsidiaries against certain fiab

AUDITOR

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

ROUNDING OF AMOUNTS TO THE NEAREST THOUSAND DOLLARS

The company is of the kind referred to in Class Order 98/0100 issued by the Australian Securities & Investments Commission. The company is or are mail element to all close chuer solution issued by the rubitation becomites a investments Commission.
Telating to the "rounding off" of amounts in the directors' report and financial report. Amounts i

Signed at SYDNEY this twenty fifth day of August 2003, in accordance with a resolution of the directors.

Root

A. J. LANE Chalrman

D. J. BROIT Director

$\ddot{\phantom{a}}$ Ñ.

STATEMENTS OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2003

FOR THE YEAR ENDED 30 JUNE 2003		Consolidated		Parent Entity
	Notes	2003 \$000	2002 \$000	2003 \$000	2002 \$000
Revenue from operating activities Revenue from outside the operating activities	2 2	1,243,494 33,811	864,031 55,303	734 70,533	748 56,689
Total revenue from ordinary activities		1,277,305	919,334	71,267	57,437
Cost of goods sold		(935,364)	(622, 974)	0	0
Employee benefits expense		(73,026)	(65, 432)	(466)	(449)
Depreciation and amortisation expenses	з	(6,903)	(5,940)	0	0
Borrowing costs expense	3	(66,893)	(33, 874)	0	(3)
Other expenses from ordinary activities		(74, 029)	(71,757)	(7,083)	(1,274)
Carrying amount of investment properties and property, plant & equipment sold		(734)	(32,873)	(9)	Đ
hare of net profits of associates and joint ventures		21,658	11,485	0	0
Profit from ordinary activities before Income tax expense		142,014	97,969	63,709	55,711
Income tax expense	4	40,184	33,203	2,613	3,850
Net profit attributable to members of Mirvac Limited		101,830	64,766	61,096	51,861
Net decrement in asset revaluation reserve	26 (b)	0	(3,508)	O	0
Net increment in capital profits reserve	26 (b)	0	3,508	0	0
Net exchange differences on translation of financial report of foreign controlled entity	26 (b)	(814)	1,514	0	0
Total revenues and expenses attributable to members of Mirvac Limited recognised directly in equity		(814)	1,514	0	0
Total changes in equity other than those resulting from transactions with owners as owners		101,016	66,280	61,096	51,861
		Cents	Cents
Basic earnings per share	38	15.90	10.51
Diluted earnings per share	38	15.90	10.51

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

$\mathcal{L}_{\mathbf{z}}$

$\hat{\mathcal{A}}$

$\frac{1}{4}$

$\frac{1}{2}$

STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2003

		Consolidated			Parent Entity
	Notes	2003 \$000	2002 \$000	2003 \$000	2002 \$000
CURRENT ASSETS
Cash assets		28,447	22,956	0	18,000
Receivables	5	218,860	207,083	139,472	28,606
Inventories	6	656,312	203,288	0	0
Other	7	11,551	6,814	2,193	1,705
TOTAL CURRENT ASSETS		915,170	440.141	141,665	48.311
NON-CURRENT ASSETS
Receivables	8	449,468	409,038	795,357	452,439
investments accounted for using the equity method	9	53,385	30,744	0	0
Other financial assets	10	28	28	112,875	109,855
Investment properties	11	122,076	39,498	0	0
Inventories	12	547,732	519,066	0	0
o lant and equipment	13	17,395	16,071	1	0
, ntangibles	14	25,473	26,951	Û	0
Deferred tax assets	15	6,844	7,224	1,595	125
TOTAL NON-CURRENT ASSETS		1,222,401	1,048,620	909,828	562,419
TOTAL ASSETS		2,137,571	1,468,761	1,051,493	610,730
CURRENT LIABILITIES
Payables	16	112,886	117,143	404	619
Interest bearing liabilities	17	86	72	0	0
Current tax liabilities	18	16,226	0	539	2,419
Provisions	19	26,255	22,770	14,821	13,304
Other	20	3,525	2,435	0	0
TOTAL CURRENT LIABILITIES		158,978	142,420	15,764	16,342
NON-CURRENT LIABILITIES
Interest bearing liabilities	21	1,228,409	799,159	376,492	122,722
Payables	22	90,000	0	188,209	69,346
Deferred tax liabilities	23	70,934	66,843	0	0
Provisions	24	2,648	2,365	0	0
TOTAL NON-CURRENT LIABILITIES		1,391,991	868,367	564,701	192,068
TOTAL LIABILITIES		1,550,969	1,010,787	580,465	208,410
NET ASSETS		586,602	477,974	471,028	402,320
EQUITY
Contributed equity	25	458,743	398,815	458,743	398,815
Reserves	26	3,300	4,114	0	0
Retained profits	27	124,559	75,045	12,285	3,505
TOTAL EQUITY		586,602	477,974	471,028	402,320

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

$\hat{\mathcal{L}}$ $\frac{1}{2}$

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2003

UN IIIL ILAN LIBLU SYVYIIL LOVO		Consolidated		Parent Entity
		2003	2002	2003	2002
	Notes	\$000	\$000	\$000	\$000
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)		1.006.259	924,099	59,487	50,787
Payments to suppliers and employees (inclusive of goods and services tax)		1,259,978)	(1.057, 468)	0	(1,699)
		(253,719)	(133,369)	59,487	49,088
Interest received		32,727	22,769	15,533	13,439
Joint venture distributions received		Ð	24,101	0	0
Borrowing costs paid		(64, 154)	(43,309)	Đ	(3)
Income taxes paid		(30, 482)	(18,866)	(5,963)	(4, 813)
Net cash (outflows) / inflows from operating activities	(c)	315,628)	(148, 674)	69,057	57.711
Cash flows from investing activities
Payment for purchase of controlled entity		0	(14,929)	(8,000)	(14,929)
Payment for property, plant and equipment		(7,308)	(6,616)	Û	0
Payment for investment properties		(82, 578)	(5,972)	0	0
Payment for loans to other entities		ß	(2,500)	Û	0
Contributions to joint venture operations / entities		(36, 883)	0	0	Ð
Repayments from joint venture operations/entities		32,888	30,340	0	0
Proceeds from the sale of property and equipment		222	32,534	ō	O
et cash (outflows) / Inflows from investing activities		(93,659)	32,857	(8,000)	(14,929)
Cash flows from financing activities
Proceeds from borrowings		411,000	560,025	253,770	377,136
Repayment of borrowings		٥	(260,000)	(336,605)	(352,740)
Debentures Issued to related parties		Ð	(114, 529)	û	0
Proceeds from issue of shares		52,450	Ð	52,450	$\Omega$
Dividends paid		48.672)	(49, 178)	(48, 672)	(49, 178)
Net cash inflows / (outflows) from financing activities	(b)	414,778	136,318	(79,057)	(24,782)
Net increase / (decrease) in cash held		5,491	20,501	(18,000)	18,000
Cash at the beginning of the financial year	(a)	22,956	2,468	18,000	0
Effect of exchange rate change on cash		$\ddot{\mathbf{0}}$	(13)	$\mathbf{a}$	0
Cash at the end of the financial year	(a)	28,447	22,956	o	18,000

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

a) Reconciliation of Cash
For the purposes of the statements of cash flows, cash includes cash at bank, cash

on hand and investments in money market instruments.

Cash at the end of the financial year as shown in the statements of cash flows is

reconciled to the statement of financial position as follows:
'Cash on hand	208	187	0	0
Cash at bank	26.506	3,378	0	0
Deposits at call	1,733	19,391	O	18,000
Balance per statements of cash flows	28,447	22,956	0	18,000
b) Cash and Non-Cash Financing Activities	O	6,984	O	6,984
Acquisition of controlled entity by means of issue of stapled securities (note 10(a))
Details of the consolidated entity's finance facilities are set out in note 21.
Dividends satisfied by the issue of shares under the dividend / distribution reinvestment plan are shown in note 25.
c) Reconciliation of Net Cash (Outflows)/Inflows from Operating Activities to Profit from Ordinary Activities After Tax
Profit from Ordinary Activities after tax	101.830	64,766	61,096	51,861
Depreciation and amortisation	6.903	5.940	0	0
Increase in provisions	1.964	933	5,000	0
Loss on sale of property, plant and equipment	438	339	a	0
Share of profits of joint ventures not received as distributions	(14,210)	0	0	0
Change in operating assets and liabilities -
Increase / (Decrease) in income taxes payable	16.226	(11, 162)	(1,880)	(1,221)
Increase / (Decrease) in tax effected balances	4,471	23.682	(1,470)	(201)
Increase in receivables	56,944)	(160,751)	(111,354)	(20, 121)
Increase in inventories	(481, 403)	(113,204)	O	0
Increase in creditors	106,080	40.758	118,648	27,368
(Increase) / Decrease in bill discount payable	983	25	(983)	25
Net cash (outflows) / inflows from operating activities	(315, 628)	(148, 674)	69,057	57,711

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

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ₫.

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, and the Corporations Act 2001. Unless otherwise stated, the accounting policies adopted are consistent with those adopted in the previous vear. The financial statements are prepared in accordance with the historical cost convention, except for certain assets which, as noted, are stated at valuations. Comparative information is reclassified where appropriate to enhance comparability.

(a) Principles of Consolidation

The consolidated financial statements comprise the assets and liabilities of all entities controlled by Mirvac Limited ("company" or "parent entity") as at 30 June 2003 and the results of all controlled entities for the year then ended. Mirvac Limited and its controlled entities together are referred to in this financial report as the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full. Outside equity interests in the results and equity of controlled entities are shown separately in the consolidated statement of financial performance and statement of financial position respectively.

Where control of an entity is obtained during a financial year, its results are included in the consolidated statement of financial position from the date on which control commences. .
Where control of an entity ceases during the year its results are included for that part of the year during which control existed.

estments in associates are accounted for in the consolidated financial statements using the equity method. Under this method. ne consolidated entity's share of the post-acquisition profits or losses of associates is recognised as revenue in the consolidated statement of financial performance, and its share of post-acquisition movements in reserves is recognised in consolidated reserves. Associates are those entities over which the consolidated entity exercises significant influence, but not control.

(b) Income Tax

Tax effect accounting procedures are followed whereby the income tax expense in the statement of financial performance is matched with the operating profit after allowing for permanent differences.

The future tax benefit relating to tax losses is not carried forward as an asset unless the benefit is virtually certain of realisation. Income tax on timing differences is transferred to non-current income tax provision accounts at the rates which are expected to apply when those timing differences reverse.

(c) Foreign Currency Translation

(i) Foreign Controlled Entity

As the foreign controlled entity is self sustaining, its assets and liabilities are translated into Australian currency at rates of exchange current at balance date, while its revenues and expenses are translated at the average of rates ruling during the year. The foreign controlled entity is based in New Zealand. The directors consider that it is appropriate to treat the controlled entity se colf-eustaining.

(d) Receivables and Revenue Recognition

(i) Revenue is recognised for the major business activities as follows:

levelopment projects - where a pre-completion exchanged contract exists and the outcome of the project can be reliably isstimated, revenue is recognised by applying the percentage completion method to that proportion of the project represented by the pre-sold exchanged contracts. The threshold for the recognition of profits on pre-sold development projects is generally set at 50% of completion. Each project is assessed to determine whether the different risks and levels of uncertainty associated specifically to the project, require the threshold to be re-assessed so that uncertainties are reduced and the project revenues and expenses can be reliably estimated.

When the outcome of a project cannot be reliably estimated, costs are recognised as an expense as incurred, and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred.

Where it is probable that a loss will arise, the excess of costs over revenue is recognised as an expense immediately.

For development projects, or that part of the project, where no pre-sold exchanged contracts exist, revenue is recognised on settlement of contract of sale. (Refer to note 1(e)).

For certain projects, a securitisation programme enables the consolidated entity to receive a percentage of payment for sales on which contracts have been exchanged, but which have not been completed. In these cases, the proportion of revenue and profit or loss that is recognised depends on the proportion of the development which has been completed when the group receives payment and on the proportion of the sale price received from the financier.

The balance of the payment for sales is received on completion of the project.

The programme which helps the consolidated entity manage its capital effectively, transfers the risk on these contracts to the programme's financier and there is no recourse to the consolidated entity.

÷

$\overline{1}$

J.

$\begin{array}{c} \vdots \ \vdots \ \vdots \end{array}$

$\frac{1}{2}$

Ť, ÷,

ł.

$\overline{\phantom{a}}$

$\frac{1}{2}$

$\begin{array}{c} 1 \ 1 \ 1 \end{array}$

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

$\frac{1}{2}$

÷,

$\frac{1}{2}$

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES $\ddagger$ .

(d) Receivables and Revenue Recognition (continued)

(I) Revenue is recognised for the major business activities as follows (continued):

Change in Accounting Policy for the Recognition of Revenue and Expenses from Development Projects.

In April 2003, the Urgent Issues Group issued Abstract 53 "Pre-Completion Contracts for the Sale of Residential Development Properties", which became applicable for reporting periods ending on or after 18 March 2003. To comply with UIG Abstract 53, the consolidated entity has changed its accounting policy for the measurement of revenues, expenses and profits on development projects, to recognise revenues and expenses in accordance with the percentage of completion method, for that part of the development project for which pre-completion sales contracts have been exchanged. Until 30 June 2002, the revenue and expenses on development projects were not brought to account until settlement. Where revenues and expenses can be reliably estimated, the threshold for recognition of profits on pre-sold development projects is set at 50% of completion.

The change in accounting policy resulted in an increase in revenues and expenses brought to account on development projects and an increase in the carrying value of inventories as follows: Concolidated

	,,,,,,,,,,,,,,,,
	2003
	\$000
consolidated statement of financial performance
Revenue from development projects on percentage completion basis	331,506
Cost of goods sold	(285.692)
Borrowing costs expense	(10,751)
Profit from ordinary activities before income tax expense	35,063
Income tax expense	10,519
Increase in Net profit as a result of the change in accounting policy	24,544
Consolidated statement of financial position
Effect of change in accounting policy on consolidated inventories
Carrying amount of inventories prior to effect of change in accounting policy	1,168,981
Net increase in inventories	35,063
Carrying amount of total inventories at the end of the financial year	1.204.044

Carrying amount of total inventorles at the end of the financial year

The pro-forma consolidated statement of financial performance and the restatement of consolidated inventories and consolidated retained profits, show the information that would have been disclosed had the new accounting policy always been applied.

	Consolidated
	2003	2002
	\$000	\$000
Pro forma consolidated statement of financial performance	(Restated)	(Restated)
otal revenue from operating activities	1,026,266	1,081,259
-Cost of goods sold	736,742)	821,596)
Borrowing costs expense	(61.732)	39,035)
Profit hafore tax	128.569	111,414
Income tax expense	36,151	37,236
Net profit	92,418	74,178
Total changes in equity other than those resulting from transactions with
owners as owners	91,604	75,692
Restatement of consolidated inventories
Previously reported carrying amount of inventories at the end of the
financial year	1.168.981	722.354
Adjustment for change in accounting policy	35,063	13,445
Total restated carrying amount of inventories at the end of the financial year	1,204,044	735,799
Restatement of consolidated retained profits
Retained profits at the beginning of the financial year	84,457	62,244
Net profit	92,418	74,178
Dividends provided for or paid	52,316	51,965)
Retained profits at the end of the financial year	124,559	84,457

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES $\mathbf{1}$ .

(d) Receivables and Revenue Recognition (continued)

(i) Revenue is recognised for the major business activities as follows (continued):

Change in Accounting Policy for the Recognition of Revenue and Expenses from Development Projects (continued)

Restatement of Interim Financial Report

In accordance with Australian Accounting Standard AASB 1029: Interim Financial Reporting, the interim financial report for the half-year ended 31 December 2002 is restated to show the information that would have been disclosed had the new accounting policy been applied in the half-year to 31 December 2002,

Pro forma consolidated statement of financial performance for the half-year ended 31 December 2002	31 Dec 2002 (Restated) \$000
Total revenue from operating activities	689.963
Cost of goods sold	549.214)
Borrowing costs expense	28.609)
ofit before tax	63,959
mcome tax expense	16.363
Net profit	47.596

Total changes in equity other than those resulting from transactions with owners as own: 47.324

Restatement of consolidated inventories as at 31 December 2002

Previously reported carrying amount of inventories at the end of the half-year	985,004
Adjustment for change in accounting policy	6.049
Total restated carrying amount of inventories at the end of the half-year	991,053

Restatement of consolidated retained profits as at 31 December 2002

Retained profits at the beginning of the half-year	75.045
Net profit	47.596
Dividends provided for or paid	( 25.097)
Retained profits at the end of the half-year	97,544

Construction contracts - revenue and expenses are recognised in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. Where it is probable that a loss will arise from a construction contract, the excess of total costs over revenue is recognised as an expense immediately.

When the outcome of a contract cannot be reliably estimated, contract costs are recognised as an expense as incurred, and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred.

ri-lotel and other trade debtors - revenue is recognised when goods and services have been provided to the customer,

Investment properties - revenue is recognised when rental income is due and receivable.

(d) Receivables and Revenue Recognition (continued)

(ii) Receivables

All trade debtors are recognised at the amounts receivable as they are due for settlement no more than 30 days from date of recognition. Collectibility of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful debts is raised where some doubt as to collection exists and in any event where the debt is more than 90 days overdue.

(e) Inventories

Inventories comprise development projects, construction contracts and hotel stock.

(i) Development Projects

Development projects are valued at the lower of cost and recoverable amount.

Cost includes the cost of acquisition, development, borrowing costs, plus recognised profits and foreign exchange differences during development, and is after crediting, where applicable, rental income relating to such projects during the development period. After development is completed, borrowing costs, foreign exchange differences and other holding charges are expensed as incurred. Where a pre-completion exchanged contract exists and the outcome of the project can be reliably estimated, profits are brought to account by applying the percentage completion method to that proportion of the project represented by the pre-sold exchanged contracts. For development projects, or that part of the project, where no pre-sold exchanged contracts exist, profit is recognised on settlement of contract of sale

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(e) Inventories (continued)

(ii) Construction Contracts

Construction work in progress is stated at the aggregate of contract costs incurred to date plus recognised profits less recognised losses and progress billings. If there are contracts where progress billings exceed the aggregate costs incurred plus profits less losses, the net amounts are presented under payables.

Contract costs include all costs directly related to specific contracts, and costs that are specifically chargeable to the customer under the terms of the contract (as determined for development projects). The stage of completion is measured as a percentage complete of the construction contract, conditional upon the receipt of the first progress claim under the contract.

(f) Non-Current Assets

(i) Recoverable Amount of Non-Current Assets

The recoverable amount of an asset is the net amount expected to be recovered through net cash inflows arising from its continued use and subsequent disposal.

$\hat{\mathcal{A}}$ here the carrying amount of a non-current asset is greater than its recoverable amount the asset is written down to its recoverable amount. Where net cash inflows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group of assets. The decrement in the carrying amount is recognised as an expense in net profit or loss in the reporting period in which the recoverable amount write-down occurs.

The expected net cash flows included in determining recoverable amounts of non-current assets are discounted to their present values using a Board-determined, risk adjusted discount rate. The discount rate used was 10% (2002; 10%),

(ii) Revaluation of Non-Current Assets

Subsequent to initial recognition as assets, property, plant and equipment are measured at fair value being the amounts for which the assets could be exchanged between knowledgeable willing parties in an arm's length transaction. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from its fair value at the reporting date.

In respect of the regular revaluations of property, plant and equipment to assess fair market value, the revaluation adjustments are treated as follows: -

Revaluation increments are credited directly to the asset revaluation reserve, unless they are reversing a previous decrement recognised as an expense in net profit or loss, in which case the increment is recognised as revenue in net profit or loss.

Revaluation decrements are recognised as expenses in net profit or loss, unless they are reversing revaluation increments previously credited to, and still included in the balance of, the asset revaluation reserve in respect of that same class of assets, in which case they are debited directly to the asset revaluation reserve.

avaluation increments and decrements are offset against one another within a class of non-current assets.

Potential capital gains tax is not taken into account in determining revaluation amounts unless it is expected that a liability for such tax will crystallise.

Investment Properties

Investment properties comprise investment interests in land and buildings (including integral plant and equipment) held for the purpose of letting to produce rental income, and include hotels and integral plant and equipment.

Investment properties (excluding hotels and integral plant and equipment) of Mirvac Limited and its controlled entities 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 reviewed annually by the directors and if materially different from the carrying value, are either externally valued or adjusted to fair value.

Where a property is acquired during the financial year and not revalued externally at balance date, the costs of acquisition are capitalised and included in the carrying value of the property. Where an unconditional contract has been entered into for the purchase of an investment property, the purchase price including stamp duty is included in the carrying value of the property,

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.

(g) Investments

Investments are recorded at the lower of cost or net realisable value and income is recognised in the statement of financial performance when received

Information determined in accordance with the equity method of accounting is set out in note 31 in respect of investments in associated entities (joint venture partnerships). Associated entities are those entities, other than controlled entities, over which the consolidated entity exercises significant influence, but not control.

(h) Depreciation of Plant and Equipment

Depreciation is calculated so as to write off the net cost of each item of plant and equipment over its expected useful life. The expected useful lives are as follows:

Plant and equipment 3 to 15 years

(i) Leasehold Improvements

The cost of improvements to or on leasehold properties for office premises, is amortised over the unexpired period of the lease or the estimated useful life of the improvement to the consolidated entity, whichever is the shorter. easehold improvements held at the reporting date are being amortised over periods to 10 years.

(i) Leased Non-Current Assets

A distinction is made between finance leases which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets (finance leases), and operating leases under which the lessor effectively retains substantially all such risks and benefits (note 1(t)).

Finance leases are capitalised. A lease asset and liability are established at the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the interest expense.

The lease asset is amortised on a straight line basis over the term of the lease, or where it is likely that the consolidated entity will obtain ownership of the asset, the life of the asset. Lease assets held at the reporting date are being amortised over periods ranging up to 4 vears.

(k) Intangible Assets

Goodwill

Where an entity or operation is acquired, the identifiable net assets acquired are measured at fair value. The excess of the fair value of the cost of acquisition over the fair value of the identifiable net assets acquired, is brought to account as goodwill. Goodwill is amortised using the straight line method, over periods not exceeding twenty years, being the period during which the future benefits are expected to arise.

The unamortised balance of goodwill is reviewed at each balance date, and written off to the statement of financial performance to the extent that the future benefits are no ionoer probable.

(I) Acquisition of Assets

The purchase method of accounting is used for all acquisitions of assets regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their market price as at the acquisition date. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Goodwill is brought to account on the basis described in note 1(k).

(m) Trade and Other Creditors

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 60 days of recognition.

(n) Interest Bearing Liabilities

Commercial notes, debentures, bills of exchange and bank overdrafts, are carried at their principal amounts. Interest is accrued over the period it becomes due and is recorded as other debtors, where prepaid, or other creditors, where payable.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES $\frac{1}{4}$

(o) Dividends

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

(p) Interest Rate Agreements

The consolidated entity has entered into interest rate cap/collar option settlements, and interest rate swap agreements, in order to fix exposure to fluctuations in interest rates.

The net amount receivable or payable under interest rate swap agreements is progressively brought to account over the period to settlement. The amount recognised is accounted for as an adjustment to interest and finance charges during the period and are included in other debtors or other creditors at each reporting date.

Where an interest rate swap is terminated early and the underlying contracted transactions are no longer expected to occur as designated, the gains or losses arising on the swap upon its early termination are recognised in the statement of financial performance as at the date of the termination.

These financial instruments are not held for speculative purposes.

J Joint Ventures

(i) Joint Venture Operations

The proportionate interests in the assets, liabilities and expenses of unincorporated joint venture operations have been included in the financial statements under the appropriate headings. Details of the joint ventures are set out in note 31.

(ii) Joint Venture Entities

Interests in joint venture entities are accounted for using the equity method. Under this method the share of the profits or losses of the entities are recognised in the statement of financial performance, and the share of movements in reserves in the statement of financial position. Details relating to the entities are set out in note 31.

Transactions with the joint venture are eliminated to the extent of the consolidated entity's ownership interest until such time as they are realised by the joint venture entities on consumption or sale.

(r) Employee entitlements

(i) Wages and Salaries and Annual Leave

Liabilities for wages and salaries, annual leave and sick leave are recognised, and are measured at the amount unpaid at the reporting date at pay rates expected to be paid in respect of employees' services up to that date.

(ii) Long Service Leave

A liability for long service leave is recognised, and is measured as the present value of expected future payments to be made in spect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

Expected future payments are discounted using interest rates attaching, as at the reporting date, to national government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash flows.

(iii) Bonuses

A liability for bonuses payable is recognised in other creditors when there is no realistic alternative but to settle the liability and at least one of the following conditions is met:

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

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

(iv) Employee Benefit on-costs

Employee benefit on-costs, including payroll tax, are recognised and included in employee benefit liabilities and costs when the employee benefits to which they relate are recognised as liabilities.

(s) Borrowing Costs

Borrowing costs are recognised as expenses in the period in which they are incurred, except as stated in note 1 (e)(i). Borrowing costs include:

• interest on bank overdrafts and short term and long-term borrowings
• amortisation of discounts or premiums relating to borrowings
• amortisation of ancillary costs incurred in connection with the arrangement of borrowings
• certain exchange differences arising from foreign currency borrowings.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.

(t) Operating Leases

$\cdot$

Operating leases are leases under which the lessor effectively retains substantially all risks and benefits incidental to ownership of the leased assets. Operating lease payments are charged to the statement of financial performance in the periods in which they are incurred.

(u) Earnings per Share

(i) Basic Earnings per Share

Basic earnings per share is determined by dividing the net profit after income tax attributable to the members of Mirvac Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of shares outstanding during the year, adjusted for bonus elements in ordinary shares, if any, issued during the year.

(ii) Diluted Earnings per Share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to the dilutive potential ordinary shares.

d Web site costs

.
Costs in relation to feasibility studies during the planning phase of a web site, and ongoing costs of maintenance during the operating phase are considered to be expenses. Costs incurred in building or enhancing a web site, to the extent that they represent probable future economic benefits that can be reliably measured, are capitalised as an asset and amortised over the period of the expected benefits, which approximates 3 years.

(w) Rounding of Amounts

The company is of a 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 off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

$\mathcal{L}^{\text{c}}$

J

NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated			Parent Entity
		2003 \$000	2002 \$000	2003 5000	2002 \$000
2.	REVENUE
	Revenue from Operating Activities
	Sales of goods	899,128	604,044	o	0
	Rental income Services	336 344,030	3,015 256,972	Û 734	0 748
		1,243,494	864,031	734	748
	Revenue from Outside the Operating Activities
	Interest	32,727	22,769	15,533	13,439
	Sale of non-current assets and property management business Dividends	1,084 0	32,534 0	٥ 55,000	0 43,250
	Total revenue from ordinary activities (excluding share of equity	33,811	55,303	70,533	56,689
	accounted net profits of associates and joint ventures).	1,277,305	919,334	71,267	57,437
	included in revenue from services is construction contract revenue of	213,644	127.256	Û	0
3.	PROFIT FROM ORDINARY ACTIVITIES
	(a) Net Gains and Expenses Profit from ordinary activities before income tax expense includes the following specific net gains and expenses.
	Net gains
	Foreign exchange gain Net gain on disposal of investment properties and property management business	2 750	95 283	0 0	0 0
	Expenses
	Borrowing costs
	Interest and finance charges paid	64,154	43,309	0	з
	Less: Amount capitalised Interest capitalised in current and prior year expensed this year	(46,774) 49,513	(22,673) 13,238	0 0	0 0
	Borrowing costs expensed	66,893	33,874	0	3
	Finance lease contingent rentals	84	78	Û	0
	Net loss on disposal of plant and equipment	400	56	٥	0
	Jepreclation Plant & Equipment	4,940	4,204	0	0
	Total Depredation	4,940	4,204	$\mathbf 0$	Ō
	Amortisation
	Goodwill	1,498	1,547	o	0
	Office leasehold improvements	214	189	Ð	0
	Equipment under finance lease Total Amortisation	251 1,963	0 1,736	0 ö	0 ō
	Other charges against assets Provision for loss on projects	(288)	(935)	0	0
	Provision for diminution in value of investment	0	0	5,000	$\pmb{0}$
	Bad & doubtful debts - trade debtors	21	(16)	o	O
	Other Provisions
	Employee entitlements Total other provisions	2,251 2,251	2,689 2,689	0 0	$\frac{0}{0}$
		45	0	0	0
	Foreign exchange loss
	Rental expense relating to operating leases	21,200	19,302	O	0

$\bar{\beta}$

l,

$\bar{z}$ $\hat{\mathcal{L}}$

$\bar{z}$

$\mathcal{A}$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated		Parent Entity
	2003	2002	2003	2002
	\$000	\$000	\$000	\$000
INCOME TAX 4.
(a) income tax expense
The income tax expense for the financial year differs from the
amount calculated on the profit. The differences are reconciled as follows:
Profit from ordinary activities before income tax expense	142,014	97,969	63,709	55,711
Income tax calculated at 30% (2002:30%)	42,604	29,391	19,113	16,713
Tax effect of permanent differences -
Non-deductible and non-assessable items	851	2,262	0	17
Capital profit on sale of building	0	1,233	o	$\Omega$
Rebateable dividends	Ô	0	(16, 485)	(12, 975)
Income tax adjusted for permanent differences	43,455	32,886	2,628	3,755
Over provision in previous year	(3,271)	(336)	(15)	68
Net adjustment to deferred income tax liabilities and assets to reflect
the decrease in company tax rate to 30%	0	653	0	27
Aggregate Income tax expense	40.184	33.203	2,613	3,850
Aggregate income tax expense comprises:
Current tax provision	31,573	11,288	4,095	3,601
Deferred income tax provision	10,564	18,059	Ω	5
Future income tax benefit	1,318	4,192	(1,467)	176
Over provision in prior year	(3,271)	(336)	(15)	68
	40,184	33,203	2,613	3,850
(b) Tax losses
The amount of Future Income Tax Benefit at note 15 attributable to tax losses	0	0	0	0
The benefit of the tax losses will only be obtained if:
the consolidated entity derives future assessable income of a nature and an amount (i)
sufficient to enable the benefit from the deductions for the losses to be realised, or
the losses are transferred to an eligible entity in the consolidated entity, and $(\mathbb{R})$
the concoldered entity continues to comply with the conditions for deductibility. 78B.

he consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation, and

(iv) no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deductions for the losses.

:) Tax consolidation fegislation

virvac Limited and its wholly-owned Australian subsidiaries have decided to implement the tax consolidation legislation from 1 July 2003. The Australian Taxation Office has not yet been notified of this decision.

The entities also intend to enter into a tax sharing agreement, but details of this agreement are yet to be finalised.

As a consequence, Mirvac Limited, as the head entity in the tax consolidated group, will recognise current and deferred tax amounts relating to transactions, events and balances of the wholly-owned Australian controlled group in future financial statements as if those transactions, events and balances were its own, in addition to the current and deferred tax balances arising in relation to its own transactions, events and balances. Amounts receivable or payable under the tax sharing agreement will be recognised separately by Mirvac Limited as tax-related amounts receivable or payable.

The impact on the income tax expense and results of Mirvac Limited is unlikely to be material because of the tax sharing agreement. This is not expected to have a material impact on the consolidated assets and liabilities and results.

The financial effect of the implementation of the legislation has not been recognised in the financial statements for the year ended 30 June 2003.

			Consolidated		Parent Entity
		2003	2002	2003	2002
		\$000	\$000	\$000	\$000
5.	CURRENT ASSETS - RECEIVABLES
	Trade debtors	23,773	36.641	o	0
	Less: Provision for doubtful debts	(204)	( 185)	٥
		23,569	36,456	٥	$\Omega$
	Amounts due from controlled entities	0	O	102,513	27,750
	Amounts due from related entities	143,857	128,861	Ð	743
	Amounts due from associated entities	350	350	û	0
	Income tax refunds	12.824	4,211	3.556	0
	Other debiors	38,260	37.205	33,403	113
		218,860	207,083	139,472	28,606

$\mathbb{R}^2$ $\mathcal{L}$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated		Parent Entity
		2003 \$000	2002 \$000	2003 \$000	2002 \$000
6.	CURRENT ASSETS - INVENTORIES
	Development projects
	Cost of acquisition	221,198	66,070	0	0
	Development costs	317,768	90.314	0 0	0 0
	Rates and taxes	4,164 19,900	1,946 9,361	0	$\circ$
	Borrowing costs capitalised during development Provision for losses	Û	0	0	0
	Construction work in progress (amount due from customers for	563,030	167,691	0	0
	contract work)
	Contract costs incurred and recognised profits less recognised losses	521,695	145,284	0	0
	Less: Progress billings	(429,376)	(110, 730)	0	0
		92,319	34,554	ö	ō
	Amounts totalling \$2,587,000 (2002: \$3,287,000) received as advances on construction contracts in progress are included in consolidated trade creditors. Total progress billings and advances received in relation to construction contracts in progress amount to \$431,963,000 (2002: \$114,017,000)
	totel inventories	963	1,043	o	0
		656,312	203,288	0	0
	Aggregate Carrying Amount of Inventories
	Current - as above	656,312	203,288	0	0
	Non-current (note 12)	547,732	519,066	0	0
		1,204,044	722,354	o	$\mathbf 0$
	Inventories pledged as security Refer to note 21 for information on assets pledged as security.
7.	CURRENT ASSETS - OTHER
	Prepayments	8,026	4,406	2,193	1.705
	Right of Indemnity - deposits held in trust	3,525	2,408	0	0
		11.551	6,814	2,193	1,705
8.	NON-CURRENT ASSETS - RECEIVABLES
	pans to employees *	33,441	24,578	33,441	24,575
	cans to directors of the parent entity	9,709	7.598	9,709	7,598
	Loans to directors of controlled entities *	16,447	12.894	16,447	12,894
	Amounts owing by controlled entities	0	0	735,760	407,372
	Other receivables	27,871	1,968	0	$\mathbf 0$
	Debentures	362,000	362,000	0	0
		449,468	409,038	795,357	452,439
	Loans to employees and directors

* Loans advanced under approved Employee Incentive Share Scheme (note 39) In accordance with the various Employee Share Schemes approved at the annual general meetings of the members of Mirvac Limited, Mirvac Property Trust and Mirvac Commercial Trust held on 9 November 2000 and 1 November 2001, and the Employee Loan Scheme approved by a special resolution of the members of Mirvac Limited on 26 August 1987, Ioans have been made to directors of Mirvac Limited and Mirvac Funds Limited and certain directors and employees of the controlled entities of Mirvac Limited. Loans to the executive directors of Mirvac Limited and Mirvac Funds Limited for Employee Share Scheme issues from July 2002 totalling \$1,792,200 are full recourse loans in the event of a loss on disposal.

Further information in relation to loans to directors is set out in note 40.

Debentures

Debentures issued to Mirvac Commercial Trust and Mirvac Property Trust under the terms of the issue of Commercial Notes borrowings - refer to note 21. Debentures are repayable on 5 June 2006.

NON-CURRENT ASSETS - INVESTMENTS ACCOUNTED FOR USING THE 9. EQUITY METHOD

19

30,744 53,385

$\pmb{0}$

$\pmb{0}$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

NON-CURRENT ASSETS - INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued) 9.

Interests in joint ventures include the following project entities:

Mirvac Lend Lease Village Consortium partnership - "Newington" in NSW: Walsh Bay Partnership - "Walsh Bay" in NSW: Mindarie joint venture arrangement- "Mindarie" in WA: Malestic Quays joint venture arrangement - "Malestic Quays" in WA: Panorama joint venture arrangement -"Panorama" in WA: Ephraim Island joint venture in Queensland; Burswood joint venture in WA,

	Consolidated		Parent Entity
	2003	2002	2003	2002
10. NON-CURRENT ASSETS - OTHER FINANCIAL ASSETS	\$000	\$000	\$000	\$000
Non-traded investments
Shares in controlled entities	0	Ð	117,875	109,855
Provision for diminution in value of investment	o		(5,000)	0
	Ð		112,875	109,855
Shares/units in other corporations	28	28		0
Total non-traded investments - at cost	28 A PERSONAL PROPERTY AND DESCRIPTION AND DESCRIPTION OF A REAL PROPERTY.	28	112.875	109,855

Shares held in controlled entities

		COUNTRY OF	CLASS OF	EQUITY HOLDING
WAME OF ENTITY		INCORP'N	SHARES	2003	2002
				%	$\%$
Mirvac Projects Pty Ltd and its controlled entitles -		AUSTRALIA	ORDINARY	100	100
Ford Mirvac Unit Trust		AUSTRALIA	UNITS	100	100
Mirvac International Pty Ltd and its controlled entity -		AUSTRALIA	ORDINARY	100	100
Mirvac Developments NZ Ltd		NEW ZEALAND	ORDINARY	100	100
Mirvac Parking Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac Precinct 2 Pty Limited	$\pmb{\pm}$	AUSTRALIA	ORDINARY	100	100
Mirvac Projects No.2 Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac Property Advisory Services Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac (Walsh Bay) Pty Limited	$\star$	AUSTRALIA	ORDINARY	100	100
Mirvac Woolloomooloo Pty Ltd and its controlled entities -		AUSTRALIA	ORDINARY	100	100
Mirvac Hotels Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac Funds Limited		AUSTRALIA	ORDINARY	100	100
Newington Homes Pty Limited		AUSTRALIA	ORDINARY	100	100
Planned Retirement Living Pty Ltd		AUSTRALIA	ORDINARY	100	100
Capital Property Management Limited		AUSTRALIA	ORDINARY	100	100
HPA Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac (Beacon Cove) Pty Ltd	÷	AUSTRALIA	ORDINARY	100	100
Mirvac Capital Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac Constructions Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac Constructions (QLD) Pty Ltd	٠	AUSTRALIA	ORDINARY	100	100
Mirvac Constructions (VIC) Pty Ltd	$\frac{1}{2}$ 9ł	AUSTRALIA	ORDINARY	100	100
Mirvac Constructions (WA) Pty Ltd		AUSTRALIA	ORDINARY	100	100
lirvac (Docklands) Pty Ltd	٠	AUSTRALIA	ORDINARY	100	100
firvac Finance Pty Limited (formerly Mirvac International No.2 Pty Ltd).		AUSTRALIA	ORDINARY	100	100
Mirvac Fini Holdings Pty Limited (formerly Fini Holdings P/L)		AUSTRALIA	ORDINARY	100	100
- note 10(a)(ii)	ŧ
Mirvac Fini (WA) Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac Homes (NSW) Pty Ltd	٠	AUSTRALIA	ORDINARY	100	100
Mirvac Homes (QLD) Pty Ltd	٠	AUSTRALIA	ORDINARY	100	100
Mirvac Homes (WA) Pty Ltd	$\star$	AUSTRALIA AUSTRALIA	ORDINARY	100 100	100 100
Mirvac Homes Bullders (VIC) Pty Ltd	÷		ORDINARY
Mirvac International No. 3 Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac JV's Pty Limited (formerly Notron No 341 Pty Limited)	$\star$	AUSTRALIA	ORDINARY	100	100
Mirvac Management Limited		AUSTRALIA AUSTRALIA	ORDINARY ORDINARY	100 100	100
Mirvae Mandurah Pty Limited (incorporated on 3 October 2002)					0
(formerly Gullwing 54 Pty Limited) - note 10 (a) (i)		AUSTRALIA	ORDINARY	100	100
Mirvac Properties Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac Queensland Pty Ltd Mirvac Real Estate Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac Treasury Limited		AUSTRALIA	ORDINARY	100	100
Mirvac Victoria Pty Ltd		AUSTRALIA	ORDINARY	100	100
Mirvac Treasury No 2 Pty Limited (formerly Notron No 342 Pty Limited)		AUSTRALIA	ORDINARY	100	100
Mirvac Treasury No. 3 Limited (incorporated on 23 May 2003)		AUSTRALIA	ORDINARY	100	0
Notron No 340 Pty Limited	$\pm$	AUSTRALIA	ORDINARY	100	100

* Each of these entities has an issued share capital of less than \$1,000.

(a) Acquisition of controlled entities

(i) Mirvac Mandurah Pty Ltd

Mirvac Mandurah Pty Ltd (formerly Gullwing 54 Pty Ltd) was incorporated on 3 October 2002, with a controlled entity owning 75% of the share capital of the company. On 20 June 2003, Mirvac Limited acquired the remaining 25% of the share capital of Mirvac Mandurah Pty Ltd making the company a wholly owned controlled entity of the consolidated group. The company has not traded since incorporation and up to the date of change of control. The fair value of the assets of the controlled entity - Cash of \$100, equalled the cash consideration of \$100 paid for the acquisition.

ł.

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

10. NON-CURRENT ASSETS - OTHER FINANCIAL ASSETS (continued)

(a) Acquisition of controlled entities (continued)

(ii) Mirvao Fini Holdings Pty Ltd (formerly Fini Holdings Pty Limited)

On 4 July 2001, Mirvac Limited acquired a 100% interest in the property development activities of the Fini Group of companies in Western Australia, with the acquisition of Fini Holdings Pty Ltd. The acquisition was by way of issue of stapled securities in The Mirvac Group, the market value at the date of acquisition being \$21,757 million. $\sim$

	ZUUZ
Details of the acquisition are as follows:	\$000
Fair value of net assets of controlled entity	( 4.999)
Acquisition costs	(157)
Goodwill on consolidation	26.913
Consideration by way of issue of stapled securities (note 25(d))	21.757
At the date of acquisition the acquired entity was not trading.

		------------	.
	2003	2002	2003	2002
11. NON-CURRENT ASSETS - INVESTMENT PROPERTIES	\$000	\$000	\$000	\$000
Freehold land and buildings - investment property - At internal valuation (note (i)) Freehold land and buildings and associated plant and equipment - hotel properties	82.073	o
At Directors' valuation 30 June 2003 (note (ii))	40.003				Ω
At Directors' valuation 30 June 2002 (note (ii))		39,498
	122.076	39.498
RECONCILIATION	Hotel	Investment
A reconciliation of the carrying amounts of investment properties at the beginning and end of the current financial vear is set out below:	Properties 5000	Property \$000	Total \$000

Concolidated

Consolidated Carrying amount at 1 July 2002 39,498 Additions 505 82.073 Disposals $\Omega$ 40,003 82,073

Carrying amount at 30 June 2003

Valuations

(i) Internal Valuation at 30 June 2003 - Investment property

Where a property is acquired during the financial year and not revalued externally at balance date, the costs of acquisition are capitalised and included in the carrying value of the property.

(ii) Directors' Valuation at 30 June 2003 and 30 June 2002 - Hotel properties

Freehold land and buildings and associated plant and equipment includes the plant and equipment associated with the operation of hotel management agreements, leasehold strata-titled interests in managed hotels and owned hotels. The basis of valuation by directors of freehold land and buildings is the fair value of the properties.

Non-current assets pledged as security

Jefer to note 21 for information on non-current assets pledged as security.

		Consolidated		Parent Entity
		2003	2002	2003	2002
12.	NON-CURRENT ASSETS - INVENTORIES	\$000	\$000	5000	\$000
	Development projects
	Cost of acquisition	406,285	311,876	o
	Development costs	104.673	164,570
	Rates and taxes	6,615	3,299	a
	Borrowing costs capitalised during development	17,015	19,648	G
	Provision for losses	428)	(715)	0
		534,160	498,678	0
	Construction work in progress (amount due from customers for contract work) Contract costs incurred and recognised profits less recognised losses	13,572	20,388	Ô
		547,732	519,066	о
	13. NON-CURRENT ASSETS - PLANT AND EQUIPMENT
	Office leasehold improvements
	At Cool	4.645	1.445	$\mathbf{a}$

At Cost Less: accumulated amortisation	1,615 553)	1.415 (339)	0	0
	1.062	1.076
Plant and equipment At Cost Less: accumulated depreciation	37,277 (21,083)	30,772 (16, 143)		0
	16,194	14,629		0

Decant Entity

39.498

82,578

$\Omega$ 122,076

$\theta$

$\Omega$

$\sim 10^4$

NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated	Parent Entity
13. NON-CURRENT ASSETS - PLANT AND EQUIPMENT (continued)	2003 \$000	2002 \$000	2003 \$000	2002 \$000
Plant and equipment under finance lease Less: accumulated amortisation	433 (294)	410 (44)	Û Û	0 0
	139	366	Û	0
	17,395	16,071	1	0
SUMMARY: Plant and equipment,
At Cost	38,892	32,187	1	0
Under finance lease	433	410	0	0
Less: accumulated depreciation / amortisation	(21,930)	(16,526)	0	0
	17,395	16,071	1	0
RECONCILIATION	Office Leasehold Improvements	Plant and Equipment	Plant & Equip under finance lease	Total
Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the current financial year are set out below:	\$000	\$000	\$000	\$000
Consolidated Carrying amount at 1 July 2002	1,076	14,629	366	16,071
Additions	230	7,239	24	7,493
Disposals Depreciation / amortisation expense (note 3)	(30) (214)	(734) 4,940)	O 251	(764) (5,405)
Carrying amount at 30 June 2003	1,062	16,194	139	17,395
		Consolidated	Parent Entity
	2003 \$000	2002 \$000	2003 \$000	2002 \$000
14. NON-CURRENT ASSETS - INTANGIBLES
Goodwill on acquisition of businesses and controlled entities	31,285	31,264	0	0
Less: Accumulated amortisation	(5,812)	(4,313)	0	0
	25,473	26,951	0	0
15. NON-CURRENT ASSETS - DEFERRED TAX ASSETS
Future Income tax benefit (note 4(b))	6,844	7,224	1,595	125
URRENT LIABILITIES - PAYABLES
Trade creditors	51,780	56,810	41	124
Other creditors and accruals	60,106	57,333	363	495
Amounts due to related entities	1,000	3,000	0	$\circ$
	112,886	117,143	404	619
17. CURRENT LIABILITIES - INTEREST BEARING LIABILITIES
Lease liabilities - secured (note 33)	86	72	o	0
18. CURRENT LIABILITIES - CURRENT TAX LIABILITIES
income tax	16,226
		0	539	2,419
	16,226	0	539	2,419
19. CURRENT LIABILITIES - PROVISIONS
Employee entitlements (note 39) Dividends	11,434 14,821	9,466 13,304	0 14,821	0 13,304
	26,255	22,770	14,821	13,304
20. CURRENT LIABILITIES - OTHER
Deposits held in trust	3,525	2,435	o	$\circ$

$\frac{1}{4}$

$\Omega$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated		Parent Entity
		2003	2002	2003	2002
		\$000	\$000	\$000	\$000
21.	NON-CURRENT LIABILITIES - INTEREST BEARING LIABILITIES
	Bank overdraft	19,319	0	18,358	13,580
	Commercial notes	850,926	689,901	O	0
	Bills of exchange	358,134	109,142	358,134	109,142
	Lease liabilities (note 33)	30	116	o	0
		1,228,409	799,159	376,492	122,722
	Secured Liabilities
	Included above are the following secured liabilities:
	Bank overdraft	19,319	O	18,358	13,580
	Commercial notes	850,926	689,901	Ω	0
	Bills of exchange	358,134	109,142	358,134	109,142
	Lease liabilities	30	116	0	Ð
	Total secured non-current liabilities	1,228,409	799,159	376,492	122,722
	Security for Borrowings

Commercial Notes (Commercial Mortgage Backed Securities)

Commercial notes rated AAA, AA and A, on issue and repayable on 5 June 2006 total \$690,000,000.

Interest is payable in arrears, quarterly on floating rates of interest and semi-annually on fixed rates of interest.

Series 2003 - 1 year Commercial Notes were issued by a controlled entity of Mirvac Limited for a total of \$161,000,000 on 28 May 2003, as \$137,000,000 Class 1 and \$24,000,000 Class 2 floating rate notes.

The notes have a scheduled maturity date for repayment on 28 November 2003. Interest is payable monthly in arrears.

The Commercial notes due for repayment on 28 November 2003 will be replaced with longer term notes which will extend beyond 30 June 2004. The information memorandum to the capital markets is presently under negotiation and is expected to be released in September 2003.

The notes are secured by a first ranking real property mortgage over specific investment properties of Mirvac Property Trust and Mirvac Commercial Trust, members of the stapled Mirvac Group, and by a fixed and floating charge over some of the assets of the consolidated entity.

Mirvac Funds Limited, as the responsible entity of Mirvac Property Trust and Mirvac Commercial Trust, has a joint and several liability for the notes, and has guaranteed the obligations of Mirvac Limited to the notes issues.

Other bank borrowings

The consolidated entity has syndicated multi-option borrowing facilities totalling \$505,000,000 (2002 - \$505,000,000), and a securitisation facility of \$300,000,000 (2002 - \$300,000,000).

The multi-option facility totalling \$505,000,000 (2002; \$505,000,000) is secured by a floating charge and an equitable charge over the assets and undertakings of Mirvac Limited and its controlled entities.

Subject to the terms of the bank facility agreements, bills of exchange may be drawn at any time. Interest rates are variable and are adjusted on the drawdown of bills of exchange. The weighted average discount rate for bills of exchange (excluding margin ind hedging) over the period was 4.88% (2002 - 4.66%), and the weighted average interest rate for the overdraft facility over the period was 8.00% (2002 - 8.02%).

The securitisation facility may be drawn at any time, interest rates on the facility are variable and are determined at the date of the securitisation.

The facility is expected to extend beyond its current termination date of October 2003, with indicative approvals to extend the period of the facility beyond 30 June 2004.

The Mirvac Limited securitisation facility of \$300,000,000 is secured by a specific charge over the assets securitised. The facility is a 364 day facility which expires on 25 June 2004.

Lease Liabilities

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

	Consolidated		Parent Entity
	2003	2002	2003	2002
	\$000	\$000	\$000	\$000
Financing Arrangements
Commercial notes (Commercial Mortgage Backed Securities) repayable on 5 June 2006	690,000	690.000	∩
Commercial notes (Commercial Mortgage Backed Securities) repayable on 28 November 2003	161.000		a
Total syndicated multi-option borrowing facility available at balance date	505.000	505,000	505.000	255,000
Total bank securitisation facility available at balance date (unutilised 2003 - \$92,678,000; 2002 - \$Nii)	308.000	300.000	300.000	250,000
Total unused bank credit available at balance date - multi-option borrowing facilities	118,000	392.200	118,000	319,200

Assets pledged as security

All the assets of the consolidated entity are pledged as security under a floating charge and an equitable charge for multi-option borrowing facilities.

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

Consolidated Parent Entity 2003 2002 2003 2002 $$000$ $s$ ooo \$000 \$000 22. NON-CURRENT LIABILITIES - PAYABLES Other accruals 90,000 $\mathbf 0$ o 69,346 Amounts due to controlled entities $\mathbf 0$ 188,209 n $\mathbf 0$ 90,000 188,209 69,346 23. NON-CURRENT LIABILITIES - DEFERRED TAX LIABILITIES Deferred income tax 70,934 66,843 $\hat{p}$ 70,934 66,843 Ó 24. NON-CURRENT LIABILITIES - PROVISIONS Employee entitlements (note 39) 2,648 2,365 $\mathbf{a}$ 2,648 2,365 O Parent Entity -e CONTRIBUTED EQUITY 2002 2003 \$000 \$000 (i) Paid up capital Ordinary shares fully paid 458,743 398,815 458,743 398,815

(ii) Movements in issued and paid up ordinary share capital of the company during the past two years were as follows:

Details	Date	Note	Number of Shares	lssue Price	Shares \$000
Opening balance	30/6/01		606,095,955		384,733
Private placement of shares	04-07-01		6.102.432	\$1,144	6,984
Securities issued under options	12-07-01		406,452	\$1.220	496
Distribution reinvestment plan Issues	27/07/01	(a)	361,667	\$1,166	422
Securities issued under options	07/09/01		2,623	\$1.220	3
Employee share scheme issues	14/09/01	(b)	3,463,230	\$1,217	4,216
Distribution reinvestment plan issues	26/10/01	(a)	357,679	\$1,183	423
Employee share scheme issues	01/11/01	(b)	399,129	\$1.231	491
Distribution reinvestment plan issues	25/01/02	(a)	355.221	\$1,214	431
Imployee share scheme issues	26/03/02	(b)	55,119	\$1.254	69
Astribution reinvestment plan issues	26/04/02	${a}$	442,395	\$1.236	547
Closing balance	30/6/01		618,041,902		398,815
Distribution reinvestment plan issues	26/07/01	(a)	440.704	\$1.3073	576
Employee share scheme issues	22/08/02	(b)	3,688,440	\$1.3197	4,868
Distribution reinvestment plan issues	25/10/02	(a)	556,044	\$1,2747	709
Employee share scheme issues	07/11/02	(b)	435.000	\$1,0923	475
Distribution reinvestment plan issues	31/01/03	(a)	444,175	\$1.0720	476
Share placement with institutions	18/02/03	(c)	49.751.244	\$1,0653	53,000
Less: Transaction costs associated with institutional placement		(c)			(550)
Employee share scheme issues	21/03/03	(b)	6.095	\$1,0869
Distribution reinvestment plan issues	24/04/03	(a)	340,901	\$1,0778	367
Closing balance	30/06/03		673,704,505		458,743

(a) Dividend / Distribution Reinvestment Plan

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

(b) Employee Share Scheme Issues

During the financial year 4,129,535 ordinary shares (2002: 3,917,478 shares) were issued to employees of Mirvac Limited and its controlled entities. The shares were issued at market price.

The total of ordinary stapled securities issued to employees under the Employee incentive Scheme 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). Information relating to the employee share schemes is set out in note 39.

$\mathbf 0$

$\boldsymbol{0}$

Ó

$\pmb{\mathfrak{g}}$

$\pmb{0}$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

25. CONTRIBUTED EQUITY (continued)

(c) Share placement with institutions

On 18 February 2003. The Mirvac Group issued 49.751.244 stagled securities as an institutional placement. The placement securities were issued at a price of \$4.02 per security, which represented a 2.2% discount.

The funds raised from the private placement were used to retire debt and to fund investment acquisitions and growth opportunities.

(d) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

		Consolidated	Parent Entity
	2003 \$000	2002 \$000	2003 \$000	2002 \$000
26. RESERVES
a) Composition
Asset revaluation reserve		0 0	o	0
Capital profits reserve	4,706	4,706	0	0
Currency fluctuation reserve	(1,406)	(592)	0	0
	3,300	4,114	0	0
b) Movements in Reserves were:
Asset revaluation reserve
Opening balance		3,508 0	Ű	0
Transfer to Capital profits reserve on sale of property		0 (3,508)	0.	0
Closing balance		0 0	0	0
Capital profits reserve
Opening balance	4,706	1,198	o	0
Transfer from Asset revaluation reserve		3,508 0	0	0
Closing balance	4,706	4,706	Û	0
Currency fluctuation reserve
Opening balance	592)	(2,106)	0	0
Increase in reserve due to translation of foreign controlled entity	814	1,514	0	0
Closing balance	(1,406)	(592)	0	0
l'otal reserves	3,300	4,114	0	0

c) Nature and purpose of Reserves

i) Asset revaluation reserve

The asset revaluation reserve is used to record increments and decrements on the revaluation of non-current assets, as described in note 1(f)(ii). The balance standing to the credit of the reserve may be used to satisfy the distribution of bonus shares and is only available for the payment of cash dividends in limited circumstances as permitted by law.

ii) Capital reserve

The capital reserve is used to record the net revaluation increment or decrement on disposal of investment properties. The balance of the reserve may be transferred to retained earnings and used to satisfy distributions to shareholders.

iii) Currency fluctuation reserve

Exchange differences arising on translation of the foreign controlled entity of Mirvac Limited are taken to the foreign currency fluctuation reserve, as described in note 1(c) (i).

27. RETAINED PROFITS

Retained profits at the beginning of the financial year	75.045	62.244	3.505	3,609
Net profit attributable to the shareholders of Mirvac Limited	101,830	64.766	61.096	51.861
Dividends provided for or paid	(52.316)	( 51.965)	52,316	51,965)
Retained profits at the end of the financial year	124.559	75.045	12.285	3.505

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated		Parent Entity
		2003	2002	2003	2002
		\$000	\$000	\$000	\$000
28.	DIVIDENDS
	Ordinary dividends
	Interim dividends paid fully franked @ 30% (2002: 30%)			37,495	38,661
	Dividends proposed fully franked @ 30% (2002: 30%)			14.821	13,304
	Total dividends provided for or paid			52.316	51,965
	Dividends actually paid or satisfied by the issue of shares under the dividend / distribution reinvestment plan during the years ended 30 June 2003 and 2002 were as follows:
	Paid in cash			48.672	49,178
	Satisfied by the issue of shares			2,130	1,823
				50.802	51,001
	The franked portions of the proposed dividends will be franked out of existing franking credits as at the end of the financial year.
	Existing franking credits available			7.567	3,338
	Franking credits available for subsequent financial years based on a
	ax rate of 30% (2002: 30%).	27,207	21,364	7,567	3,338

The above amounts represent the balances of the franking accounts as at the end of the financial year, adjusted for:

(a) franking credits that will arise from the payment of the current tax liability

(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date

(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date, and

(d) franking credits that may be prevented from being distributed in subsequent financial years.

Franking credits at 30 June 2002 for the consolidated entity and parent entity of \$49,848,000 and \$7,788,000 respectively based on after tax profits, were converted so that the opening balances on 1 July 2002 reflected tax paid amounts of \$21,364,000 and \$3,338,000 which are shown as the comparative amounts above.

29. EINANCIAL INSTRUMENTS

(a) Derivative Instruments

Mirvac Limited and certain of its controlled entities are parties to derivative financial instruments in the normal course of business. in order to limit exposure to fluctuations in interest rates.

Under the terms of the Commercial Mortgage Backed Securities issues, Mirvac Limited and a controlled entity of Mirvac Limited were required to enter into fixed interest rate agreements, whereby the controlled entity is obliged to pay a fixed interest rate of 9.25% If interest rates rise above 9.25%, for the period from 5 June 2006 to 5 December 2007. Mirvac Limited has sold an identical contract where it would receive 9,25% if interest rates rise above 9.25% for the period from 5 June 2006 to 5 December 2007.

1terest Rate Contracts

The consolidated entity has entered into fixed interest rate contracts under which it is obliged to pay interest at fixed rates, to protect that part of the borrowing facilities subject to floating rates of interest, from exposure to increasing interest rates. .
The contracts are settled on a net basis, with amounts receivable or payable settled immediately.

Contracts currently in place cover over 67% (2002 - 93.8%) of the debt outstanding. The fixed interest rates range between 5.75% and 5.99% (2002: 6.11% and 6.38%). One contract of \$50.000 million, commencing on 5 June 2005, will revert to floating rates if the 90 day Bill rate exceeds 7.5% for the 90 day period. Other contracts allow the variable interest rate to float between a minimum of 4.25% and a maximum of 5.50%

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

۰.	2003 \$000	2002 \$000
Less than 1 year	Ð	O
2 to 3 years	150,000	50,000
3 to 5 years	150,000	450,000
Over 5 years - 6	400.000	0
۰	700,000 ROLL AND COMPANY FOLLOW CONTROLL FOR A PRODUCTION AND A ROLL FOR ALSO AND RESIDENCE OF A STATE OF A STATE OF A STATE OF	500,000

As these contracts fix exposure to future interest rate movements, any unrealised gains and losses on the contracts,

are deferred and will be recognised in the measurement of the underlying transaction.

The net payment, which represents the present value of the difference between the consolidated entity's fixed interest commitment over the term of the contracts and the current cash rate, which would have occurred if the contracts were terminated at 30 June 2003 was \$18,638,000 (2002: Payment of \$3,080,000).

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

29. FINANCIAL INSTRUMENTS (continued)

(b) Interest Rate Risk Exposure

The consolidated entity'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	Notes	Floating interest	1 year	Over 1 to 5	More than	Non-interest	Total
		rate	or less	years	5 years	bearing
		\$000	\$000	\$000	\$000	\$000	\$000
Financial Assets
Cash		28,447					28.447
Debentures	8			362,000			362,000
Receivables	5,8					306,328	306,328
		28,447	0	362,000	0.	306,328	696,775
Weighted average interest rate		4.70%		6.71%
Financial Liabilities
Payables	16					112,886	112,886
Bank overdraft	21			19,319			19,319
Commercial notes	21	440,000	161,000	249,926			850,926
Bills of exchange	21	358,134					358,134
Lease liabilities	17,21		86	30			116
interest rate contracts (notional principal amounts)		700,000)		700,000			0
		98,134	161,086	969,275	0	112,886	1,341,381
Weighted average interest rate (excluding margin)		4.83%	4,83%	5.64%		×.
Net financial assets / (liabilities)		(69,687)	161,086)	607,275)	0.	193,442	644,606)

				Fixed interest maturing in:
30 June 2002	Notes	Floating interest	1 year	Over 1 to 5	More than	Non-interest	Total
		rate	or less	years	5 years	bearing
		\$000	\$000	\$000	\$000	\$000	\$000
Financial Assets
Cash		22,956			$\ddot{}$		22,956
Debentures	8			362,000			362,000
Receivables	5,8	$\ddot{ }$				254,121	254,121
		22,956	0	362,000	0.	254,121	639,077
Weighted average interest rate		3.77%		6.71%
Tinancial Liabilities
⊶°ayables	16					117,143	117,143
Commercial notes	21	440,000		249,901			689,901
Bills of exchange	21	109,142	٠.			$\bullet$	109,142
Lease liabilities	17.21		72	116			188
Interest rate contracts (notional principal amounts)		500,000)		500,000	m.		0
		49,142	72	750,017	0	117,143	916,374
Weighted average interest rate (excluding margin)		5.02%	7.90%	5.99%
Net financial assets / (liabilities)		26,186)	(72)	388,017)	0	136,978	277,297)

(c) Credit Risk Exposure

The credit risk on financial assets of the consolidated entity which have been recognised on the statement of financial position is the carrying amount net of any provisions for doubtful debts. The consolidated entity does not have any material credit risk to any single debtor or group of debtors under financial instruments entered into by the consolidated entity.

(d) Net Fair Value of Financial Assets and Liabilities

The net fair value of cash and cash equivalents and other non-interest bearing financial assets and financial liabilities of the consolidated entity approximates to their carrying value.

Commercial notes have a net fair value equal to their face value of \$851,000,000.

The net fair value of financial assets or financial liabilities arising from interest rate swap agreements has been determined as the carrying amount, which represents the amount currently receivable or payable at the reporting date.

$\overline{3}$

NOTES TO THE FINANCIAL STATEMENTS (Continued)

FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated		Parent Entity
		2003 \$000	2002 \$000	2003 \$000	2002 \$000
	0. RECEIVABLES AND PAYABLES DENOMINATED IN FOREIGN CURRENCIES
Receivables	Amounts not fully hedged
Current, Non-Current.	New Zealand dollars	2,710	698	0	$\theta$
	New Zealand dollars	0	1,946	$\mathbf 0$	0
Payables Current,
Non-Current.	New Zealand dollars	5	1	0	0
	New Zealand dollars	٥	6	$\ddot{\mathbf{0}}$	0

31. INTERESTS IN JOINT VENTURES

a) Joint Venture Operations

'oint venture operations are aggregated into the financial statements on the basis of the percentage participating interest in the loint venture .
s follows:

The Arbor on Grey Retail Joint Venture

A controlled entity has entered into a joint venture arrangement called The Arbor on Grey Retail Joint Venture to develop a retail property at Southbank, in Brisbane, Queensland.

The controlled entity has a 35% participating interest in the joint venture.

The property is still under development and has not contributed to the profit of the consolidated entity.

	Consolidated		Parent Entity
The consolidated entity's aggregate share of the assets employed in the joint	2003	2002	2003	2002
venture is included in the consolidated statement of financial position under the following classifications: -	\$000	\$000	\$000	\$000
Current Assets - Cash	22	59		Ð
Current Assets - Receivables	106	176
Non-Current Assets - Inventories - Development Costs	674	287
Share of assets employed in joint venture operations	802	522
Total aggregate joint venture operations' contributions to the profit of the consolidated entity

b) Joint Venture Entities

doint venture entities include corporations, partnerships and other entities and are equity accounted and included in Interests in Joint Ventures - refer note 9.

Mirvac Lend Lease Village Consortium / Newington

A controlled entity has entered into a partnership agreement called Mirvac Lend Lease Village Consortium, with an entity related to a shareholder of the company, Lend Lease Corporation Limited. The partnership will develop residential and commercial property known as Newington The Olympic Village.

The controlled entity's interest in the partnership is based on the different precincts within the development site, which determine the partner's participation in the profit or loss of each precinct.

Walsh Bay Partnership

A controlled entity has entered into a partnership agreement called Walsh Bay Partnership, to jointly re-develop an eight hectare waterfront site known as Walsh Bay in Sydney. The controlled entity has a 50% participating interest in the partnership.

Mindarie Joint Venture

A controlled entity has entered into a joint venture arrangement to develop property for residential housing in Perth, Western Australia. The controlled entity has a 15% participating interest in the joint venture.

Majestic Quays Joint Venture

A controlled entity has entered into a joint venture arrangement to develop property for residential housing in Perth, Western Australia. The controlled entity has a 25% participating interest in the joint venture. Where land is purchased from the joint venture, for development by the controlled entity, the development is included in inventories.

Panorama Joint Venture

A controlled entity has entered into a joint venture arrangement to develop property for residential housing in Perth, Western Australia. The controlled entity has a 17% participating interest in the joint venture.

Ephraim Island Joint Venture

A controlled entity has entered into a joint venture arrangement to develop property for residential housing on Ephraim Island in Queensland. The controlled entity has a 50% participating interest in the joint venture.

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

31. INTERESTS IN JOINT VENTURES (continued)

b) Joint Venture Entities (continued)

Burswood Joint Venture

A controlled entity of Mirvac Limited has acquired a 50% interest in the development company which will develop residential housing at Burswood, In Perth. Western Australia.

Aggregated information relating to the above joint venture entities presented in accordance with the accounting policy described in note 1(q)(ii) is set out below:

	Consolidated		Parent Entity
	2003	2002	2003	2002
	\$000	\$000	\$000	\$000
Retained profits attributable to the entities
At the beginning of the financial year	16,035	28,625	Û	0
At the end of the financial year	30,294	16,035	0	0
Movement in carrying amount of investment in entities
arrying amount at the beginning of the financial year	30,744	65,091	0	0
New capital contributions	36.883	23,221	0	0
Distributions received	(7,448)	(23, 814)	0	0
Repayment of capital contributions	(28, 452)	(45, 239)	0	0
Share of profits from ordinary activities before tax	21,658	11,485	Û	0
Carrying amount at the end of the financial year	53,385	30,744	0	0
Joint Venture Entities - Aggregate share of entities' assets and liabilities
Current assets	98,001	40.643	0	0
Non-current assets	4,969	46,271	0	0
Total assets	102,970	86,914	0	0
	44,486	44,429	0	0
Current liabilities Non-current llabilities	5.099	11,741	0	$\circ$
Total liabilities	49,585	56,170	o	ō
Net Assets	53,385	30,744	0	0
Aggregate share of entities' revenues, expenses and results
Revenues	157,640	92.917	0	0
Expenses	(135,982)	(81, 432)	Û	$\frac{0}{0}$
Profit from ordinary activities before income tax	21,658	11,485	O
Contingent liabilities relating to a partnership
Rental contingent liability	0	2	0	0
Not later than one year	0	2	0	0

(c) Other "Joint Venture Arrangements"

Other joint venture arrangements conducted by the various controlled entities of the group, involve development projects and construction contracts carried out in conjunction with joint venture parties as follows:

Bunker Bay - a construction contract with a development company in Western Australia, which is included in inventories. Docklands - a contract with the Victorian government for the progressive purchase of land in Victoria for development purposes, which is Included in inventories.

Mandurah - a construction management contract with ANZ In Mandurah in Western Australia to develop land, which is included in inventories. Stanhope Gardens - a construction contract with Landcom to construct residential housing in NSW, which is included in inventories. Woodcroft - a construction contract with CSR to construct residential housing in NSW, which is included in inventories.

$\frac{1}{\sqrt{2}}\left( \frac{1}{2}\right)$

NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2003

	Consolidated		Parent Entity
	2003 \$000	2002 \$000	2003 \$000	2002 \$000
32. CONTINGENT LIABILITIES
Contingent liabilities in respect of certain performance guarantees granted in the normal course of business	55,738	52,103	55,738	52,103
No material loss is anticipated.
The consolidated entity has provided performance guarantees which are undeterminable in amount in respect of certain developments. No material losses are anticipated in respect of these contractual obligations.
For contingent liabilities relating to joint ventures refer to note 31.
33. COMMITMENTS FOR EXPENDITURE
Capital Commitments
commitments for the acquisition of property and plant and equipment contracted for at the reporting date but not recognised as liabilities payable;
Not later than one year	6,544	٥	0	0
Later than one year but not later than 5 years Later than 5 years	63,266 O	0 0	0 0	0 0
	69,810	0	0	0
Operating Leases
Commitments in relation to non-cancellable operating leases contracted for at the reporting date but not recognised as liabilities, are payable as follows:
Not later than one year	14,819	11,035	0	0
Later than one year but not later than 5 years	28,640	15,146	0 0	0 0
Later than 5 years	20,205 63,665	9,262 35,443	0	0
Finance Leases
Commitments in relation to finance leases are payable as follows:
Not later than one year	84	101	0	0
-Later than one year but not later than 5 years Later than 5 years	36 Ô	101 0	0 0.	0 0
Minimum lease payments	120 (4)	202 (14)	0 0	0 0
Less: Future finance charges
Provided for in the accounts	116	188	0	0
Representing lease llabilities:
Current (note 17)	86	72	0	o
Non-current (note 21)	30	116	0	0
	146	188	U.	O.

The weighted average interest rate implicit in the leases is 7.7% (2002: 7.9%).

$\overline{a}$

$\ddot{\phantom{a}}$

$\mathcal{C}^{\star}$ $\mathcal{F}_\alpha$

l.

NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2003

34. CONSOLIDATED SEGMENTAL INFORMATION

	Property		Property	Eliminations/	Consolidated
PRIMARY REPORTING - BUSINESS SEGMENTS	Development \$000	Hotels \$000	Investment \$000	Unallocated 5000	Totals \$000
30 JUNE 2003
Sales to external customers	1,135,611	88,643	19,240	0	1,243,494
Intersegment sales	1,135,611	88,643	19,240	0 0	1,243,494
Total sales revenue
Share of net profits of associates and joint ventures Other revenue including sale of investment properties	21,658 3,598	0 9	0 182	0 30,022	21,658 33,811
Total segment revenue	1,160,867	88,652	19,422	30,022	1,298,963
Segment result before interest and income tax	211,648	8,531	1,079	(12,351)	208,907
Net interest allocated	66,867	15	O	11	66,893
Profit/(Loss) from ordinary activities after interest and before income tax expense	144,781	8,516	1,079	(12,362)	142,014
come tax expense applicable to ordinary activities.	40,894	2,525	367	(3,602)	40,184
Net Profit / (Loss)	103,887	5,991	712	(8,760)	101,830
Total Assets	1,423,168	76,490	111,123	526,790	2,137,571
Total Liabilities	956,624	18,605	5,625	570,115	1,550,969
Investments in associates and joint ventures	53,385	0	0	o	53,385
Acquisition of property, plant and equipment, intangibles and other non-current assets	4,737	1,974	82,260	1,051	90.022
Depreciation and amortisation expense	5,405	563	83	852	6,903
30 JUNE 2002
Sales to external customers	757,459	88,843	17,729	0	864,031
Intersegment sales	0 757,459		17,729	0 0	864,031
Total sales revenue Share of net profits of associates and joint ventures	11,485	88,843 0	0	0	11,485
Other revenue including sale of investment properties	134	2,255	30,064	22,850	55,303
Total segment revenue	769,078	91,098	47,793	22,850	930,819
Segment result before interest and income tax	131,214	8,153	5,101	(12,625)	131,843
Net interest allocated	33,845	26	0	3	33,874
Profit/(Loss) from ordinary activities after interest and before income tax expense	97,369	8,127	5,101	(12, 628)	97,969
Income tax expense applicable to ordinary activities	31,690	2,569	2,348	(3,404)	33,203
Net Profit / (Loss)	65,679	5,558	2,753	(9,224)	64,766
Total Assets	852,160	67,999	13,753	554,849	1,488,761
Total Liabilities	365,098	17,006	4,583	624,100	1,010,787
Investments in associates and joint ventures	30,744	0	0	0	30,744
Acquisition of property, plant and equipment, intangibles and other non-current assets	55,746	6,110	186	15,423	77,465

J. $\bar{\mathcal{A}}$

$\frac{1}{2}$

$\hat{\boldsymbol{\gamma}}$

$\sim$

$\overline{\phantom{a}}$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

34. CONSOLIDATED SEGMENTAL INFORMATION (continued)

(a) Business Segments

The consolidated entity is organised into the following business segment divisions.

Property Development - Construction and property development of residential, commercial and retail development projects throughout Australia. Hotels - Hotel ownership and management of high quality branded serviced apartments, hotels and resorts, throughout Australia and New Zealand. Property Investment - Property and asset management and car parking operations throughout Australia.

(b) Geographical Segment

The consolidated entity operates predominantly in Australia.

(c) Inter-segment transfers

Segment revenues, expenses and results include transfers between segments. Such transfers are based on an "arm's-length" basis and are eliminated on consolidation. Concolidated

	2003	2002	2003	2002
35. REMUNERATION OF DIRECTORS	\$	\$	5
ncome paid or payable, or otherwise made available to directors, by entities the consolidated entity and related parties in connection with the management of affairs of the parent entity or its controlled entities *	13,206.645	12,709,000	3.719.743	3,426,000
The numbers of Mirvac Limited directors whose total income from the parent entity or related parties, was within the specified bands are as follows:			2003 No.	2002 No.
$$60,000 - $69,999$
$$70,000 - $79,999$
$$80.000 - $89.999$
$$90,000 - $99,999$
\$160,000 - \$169,999

\$170,000 - \$179,999 \$520,000 - \$529,999 \$530,000 - \$539,999 \$760,000 - \$769,999 \$770.000 - \$779.999 \$830,000 - \$839,999 \$840,000 - \$849,999 \$900,000 - \$909,999 \$1,010,000 - \$1,019,999

* Excluding executives of the parent entity who are only directors of wholly owned Australian controlled entities.

	Executive Officers of Entities in the Consolidated Entity		Executive Officers of the Company
	2003	2002	2003 S	2002 s
36. REMUNERATION OF EXECUTIVES
Amounts received, or due and receivable, by executive officers (including directors) of Mirvac Limited and of the consolidated entity, in connection with the management of the affairs of the consolidated entity, whose income equals or exceeds \$100,000.
Executive officers of the parent entity	3.226.615	2.958.000	3.226.615	2,958,000
Executive officers of other entities in the consolidated entity	9,980,031	9.301.000
	13.206.646	12.259.000	3.226.615	2.958,000

Darant Entity

1

$\ddot{\mathbf{t}}$

$\overline{a}$

1

ŧ

$\overline{1}$

$\ddagger$

1

$\overline{1}$

$\ddot{\bullet}$

$\hat{\boldsymbol{\epsilon}}$

$\chi$ $\bar{\chi}$ $\hat{\tau}_{\infty}$

$\ddot{\phantom{0}}$

$\overline{a}$

NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2003

36. REMUNERATION OF EXECUTIVES (continued)	Executive Officers of Entities in the Consolidated Entity		Executive Officers of the Company
Numbers of executives (including directors) whose remuneration from entities in the consolidated entity and related parties, was within the following bands.	2003 No.	2002 No.	2003 No.	2002 No.
\$100,000 - \$109,999	٠	2
\$120,000 - \$129,999	1	3
\$130,000 - \$139,999	2	2
\$140,000 - \$149,999	4	2
\$150,000 - \$159,999	4 1	1 3
\$160,000 - \$169,999 \$170,000 - \$179,999	2	1
\$180,000 - \$189,999	1	4
\$190,000 - \$199,999	4	2
\$200,000 - \$209,999	1	1
\$210,000 - \$219,999	1 1	3
\$220,000 - \$229,999 \$230,000 - \$239,999	1	1
\$240,000 - \$249,999	4	1
,260,000 - \$269,999	1	1
\$270,000 - \$279,999	1
\$290,000 - \$299,999	1	2 1
\$320,000 - \$329,999 \$330,000 - \$339,999	1	$\blacksquare$
\$340,000 - \$349,999		1
\$350,000 - \$359,999	1	1
\$370,000 - \$379,999	2	1
\$390,000 - \$399,999 \$410,000 - \$419,999	1
\$420,000 - \$429,999		1		$\tilde{\phantom{a}}$
\$430,000 - \$439,999		ŧ
\$470,000 - \$479,999	1
\$490,000 - \$499,999	1	1 1		1
\$520,000 - \$529,999 \$530,000 - \$539,999	1		1
\$560,000 - \$569,999		1
\$580,000 - \$589,999	1
\$690,000 - \$699,999		1
\$700,000 - \$709,999	1	1		1
\$760,000 - \$769,999 \$770,000 - \$779,999		$\ddagger$		1
\$830,000 - \$839,999	1		1	$\overline{\phantom{0}}$
\$840,000 - \$849,999	1		1	$\tilde{\phantom{a}}$
\$900,000 - \$909,999		1		1
\$1,019,000 - \$1,019,999 - سب	1	$\overline{\phantom{a}}$	1	۰
	Consolidated 2003	2002	Parent Entity 2003	2002
37. REMUNERATION OF AUDITORS	\$	\$	\$	\$
During the year the auditor of the parent entity and its related practices earned the following remuneration: PricewaterhouseCoopers - Australian firm
Audit or review of financial reports of the consolidated entity or any entity
of the consolidated entity	438,000	345,000	0	30,000
Other assurance services	92,000	88,000	0	0
Total audit and other assurance services	530,000	433,000	0	30,000
Advisory services	168,000	30,000	0	0
Taxation	434,000	447,000	0	15,000
Total remuneration	1,132,000	910,000	o	45,000
Related practices of PricewaterhouseCoopers Australian firm (including overseas PricewaterhouseCoopers firms)
Audit or review of financial reports of the combined entity or any entity
of the consolidated entity	2,000	0 0	0 0	0 0
Total audit and other assurance services	2,000		0	0
Taxation	40,000	14,000
Total remuneration	42,000	14,000	0.	O

$\hat{\mathcal{A}}$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

37. REMUNERATION OF AUDITORS (continued)

It is the consolidated entity's policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where PricewaterhouseCoopers' expertise and experience with the consolidated entity are important, and on the approval of the Chairman of the Audit & Compliance Committee or the Committee itself, acting on advice from management. Non audit assignments are principally advice on income tax, GST, stamp duty and other indirect taxes.

				2003 Conts	2002 Cents
	38. EARNINGS PER SHARE
	Basic earnings per share			15.90	10.51
	Diluted earnings per share			15.90	10.51
	The weighted average number of ordinary shares outstanding during the year			No. 640,500,977	No. 616,354,441
	in the calculation of basic earnings per share
		Consolidated		Parent Entity
39.	EMPLOYEE ENTITLEMENTS	2003 \$000	2002 \$000	2003 \$000	2002 \$000
	Employee Entitlement Liabilities
	Provision for employee entitlements Current (note 19)	11,434	9,466	o
	Non-Current (note 24)	2,648	2,365	O
	Aggregate Employee Entitlement Liability	14,082	11,831	0
	Employee Numbers

Average number of employees during the financial year	L.867	1680

The accrecate employee entitlement liability includes amounts for annual leave and long service leave. As explained in Note 1(r) (ii), the amount for long service leave is measured at its present value.

Employee Share Issues

The total of all shares issued under all employee share schemes is limited to 5% of the issued shares of the parent entity in any five year period.

Employee Incentive Share Scheme (EIS)

The issue of shares under the EIS Scheme was approved by an ordinary resolution at the annual general meeting of the members of the parent entity held on 9 November 2000, for a further three years.

All full time employees (including executive directors) of Mirvac Limited and its controlled entities are eligible to participate in the scheme. Employees are able to acquire ordinary shares, which are issued at the market value existing at the date of issue. Purchase of the shares is by employee loan (note 8). All shares are issued on acceptance of the offer by the employee.

4,129,535 ordinary shares (2002: 3,917,478 shares) were issued to employees of Mirvac Limited and its controlled entities during the year, at various market prices per share. Refer to note 25.

Subject to the conditions for disposal of securities issued under the EIS scheme, loans are non-recourse in the event of disposal, except for EIS loans issued to executive directors of Mirvac Limited and Mirvac Funds Limited from July 2002, totalling \$1,792,200 which are full recourse loans in the event of a loss on disposal.

The total of ordinary stapled securities issued to employees under the Employee Incentive Scheme outstanding as 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).

Mirvac Executive Share and Option Plan (MESOP)

The plan was adopted by a special resolution at the annual general meeting of the members of the parent entity held on 6 November 1996. The MESOP is limited to executives of the company approved by the Board. Participating executives do not receive benefits unless targets are achieved. Funds for the acquisition of fully paid ordinary shares under the MESOP scheme are limited to the lesser of

i) 5% of Mirvac Limited annual pre-tax consolidated net profit: or

ii) \$2,000,000.

The plan was suspended on 30 June 1999 and is inoperative at 30 June 2003.

No securities were acquired during the year ended 30 June 2003 (2002: Nil).

At 30 June 2003, the number of acquired securities outstanding under the MESOP was 278,697 (2002: 372,605).

The market price per ordinary security at 30 June 2003 was \$4.44 (2002: \$4.18).

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

39. EMPLOYEE ENTITLEMENTS (continued)

Employee Loan Scheme

The Employee Loan Scheme was approved by a special resolution of the members of Mirvac Limited on 26 August 1987. Under the terms of the loan scheme, loans are only made to eligible employees (including executive directors), under terms and conditions at the discretion of the directors of Mirvac Limited. Eligibility under the loan scheme is at the discretion of the directors of Mirvac Limited. The total of all loans issued under the loan scheme shall not exceed 2.5% of the total issued share capital and reserves of Mirvac Limited and its controlled entities. Loans are immediately repayable upon the member ceasing to be an employee. At 30 June 2003, loans totalling \$11,100,000 were offered to employees, \$8,356,000 of which were drawn down at 30 June 2003.

Superannuation Commitments

The parent entity and its controlled entities participate in a voluntary accumulation plan. The plan provides lump sum benefits on retirement. disability or death for employees who are invited by their employer to join the plan.

Employees are not required to make contributions but may contribute voluntarily. The employers contribute such amounts as are agreed with the employees concerned. These contributions are legally enforceable. There are sufficient funds available to meet any benefits that would have vested under the plan in the event of termination of the plan or the voluntary or compulsory termination of the employment of any employee.

40. RELATED PARTY DISCLOSURE

Directors

The names of the persons who were directors of the parent entity at any time during the financial year are as follows: A.J.Lane, R.J.Hamilton, P.J Biancardi, D.J Broit, A Buduls, R.A.Fortune, G.H.Levy, B.H.R.Neil and R Webster.

Remuneration and Retirement Benefits

Information relating to remuneration and retirement benefits is set out in note 35.

	Consolidated		Parent Entity
	2003	2002	2003	2002
Loans to 44 Directors of Mirvac Limited and its controlled entities	\$000	\$000	\$000	\$000
Loans to directors of all companies in the consolidated entity disclosed in note 8 comprise:
Secured loans under employee share schemes	20,208	20.492	20,208	20,492
Secured loans under employee loan scheme	5,948		5,948	o
	26,156	20,492	26,156	20,492
Loans advanced during the year - secured under employee share schemes	3,542	4.776	3,542	4.776
Loans advanced during the year - secured under employee loan scheme	5,948		5,948	0
	9,490	4,776	9,490	4,776
Loans repaid during the year - secured under employee share schemes	3,826	2.861	3,826	2,861
Loans repaid during the year - secured under employee loan scheme

The full-time directors of all the companies in the consolidated entity with employee share scheme loans which were advanced, repaid and were outstanding at the end of the year were:

D J Broit, R Bugryn, J Carfi, G Carrier, G Cory, I Costley, P Cotton, D Cracknell, G Dickens, A Fini, R A Fortune, C Freeman, C Gordon, L Grinham, V Guy, R J Hamilton, R Levin, M Lynch, R Lynch, C Maher, R Molino, A Mulder, B H R Neil, M O'Brien, V Patapan, W Petrie, G Ranger, L Raunik, R Rizalli, A Shepherd, P Silsbey, M Sholl, P Shbandhil, W Smith, T Sto M Wallace, P Warwick, C Wieck, G Wood and N Woodward.

The stapled securities issued are held as security until the loans are repaid.

Secured loans are interest free and are made in accordance with the various employee share schemes - note 39.

The full-time directors of all the companies in the combined entity with employee loans which were advanced and outstanding during the year were:

J Carli, D Cracknell, G Dickens, A Fini, C Freeman, R Lynch, C Maher, R Molino, B H R Neil, M O'Brien, L Raunik, W Smith, A Turner, M Wallace and G Wood.

Loans are secured by way of mortgage over property or shares / securities purchased.

Secured loans are interest free and are made in accordance with the employee loan scheme - note 39.

$\frac{1}{2}$

$\bar{z}$

$\mathbb{F}$

$\frac{1}{2}$

$\frac{1}{2}$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

40. RELATED PARTY DISCLOSURE (continued)

Transactions of Directors and director-related entities Concerning Shares

	49 OI Equity	Quoted 2003	$70$ OI Equity	uuoteu 2002
The number of shares of Mirvac Limited held by the directors or their director- related entities from the company as at 19 August 2003 were as follows:
A J Lane	-	67.649	×	67.649
R J Hamilton	1.96%	13,197,927	2.12%	13,086,517
P J Biancardi	$\cdot$	7.000	×	7.000
D J Brolt	0.15%	1.013.971	0.14%	863,932
A Buduls		7.660	$\mathbf{r}$	7.145
R A Fortune	0.17%	1,116,208	0.17%	1.031.208
GHLevy	$\boldsymbol{\star}$	33.664	۰	32.075
BHRNell	0.18%	1,212,309	0.18%	1.083.059
R J Webster		12,210		11,389

Transactions relating to shares are predominantly related to the issue of EIS loans (refer note 8) and participation in the dividend reinvestment plan.

Other Transactions with Directors and director-related entities

(a) Relatives of the directors of Mirvac Limited are employed under normal commercial terms and conditions in administrative roles.

• (b) The directors of Mirvac Limited and Mirvac Funds Limited have the ability to utilise the facilities of the hotels under management at rates offered to all employees.
• (c) Three directors, Messrs DJ Broit, R J Hamilton and BHR Neil, have utilised the construction services of controlled entities for the construction of private residential dwellings. Any payments for construction services incurred by the controlled entities were either received in advance or fully reimbursed, and are fully indemnified for any services provided.
• (d) Four directors, Ms A Buduls, Messrs DJ Broit, GH Levy and BHR Neil have purchased residential properties from controlled entities. The contracts of sale were based on normal commercial terms and conditions.
• (e) The son of one of the directors, Mr RJ Hamilton, purchased a property management business from a controlled entity. The value of the business was determined by an independent valuation, and the contract of sale was based on normal commercial terms and conditions. A director, Mr G H Levy, is a principal of Wentworth Associates Pty Limited and Chief Executive Officer of the investment bank, Invested
• $(f)$ Australia Limited, which provided corporate advisory services to the Combined Entity, at normal commercial terms and conditions. (g) A director, Ms A Buduls, is also a director of Freedom Furniture Limited which leases premises from a related trust, and from which the
• Combined Entity purchases display and office furniture and accessories, on normal commercial terms and conditions. (h) A director, Mr R J Webster is a partner of Korn/Ferry International which provided corporate recruitment services to the Combined
• Entity, at normal commercial terms and conditions.
• Two directors, Mr P J Biancardi and Ms A Buduls are directors of HJ & B Group Limited which provided corporate recruitment services $\left( i\right)$ to the Combined Entity, at normal commercial terms and conditions.

Aggregate amounts of each of the above transactions with directors and director-related entities:

	Consolidated		Parent Entity
	2003 5000	2002 \$000	2003 \$000	2002 \$000
Sale of residential properties and property management business	6.447		о	0
Construction services for domestic residential premises	2.622	500	0	0
Consulting and recruitment services	622			0

		Consolidated
	2003	2002
	\$000	\$000
Other Related Parties

Transactions with related parties were as follows:

(i) Transactions between Mirvac Limited and its related entities with the Mirvac Property Trust and its controlled entities whose Responsible Entity is Mirvac Funds Limited, a controlled entity, consisted of:

Aggregate amounts included in the determination of profit from ordinary activities before income tax -

(a) Property management, leasing fee and commission revenue	4.310	3,395
(b) Property development and construction management revenue	41.456	592
(c) Interest revenue	24,868	20.425
(d) Operating lease rental expense	17.757	12,032
(e) Profit on sale of investment property		932
(f) Responsible entity fee	1.055	1.200

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2003

RELATED PARTY DISCLOSURE (continued) Other Related Parties (continued)	2003 \$000	2002 \$000
(ii) Transactions between Mirvac Limited and its related entities with Lend Lease Corporation Limited and its controlled entities, a shareholder of the company, consisted of:
(a) Construction contract revenue - Mirvac Lend Lease Village Consortium (note 31) (b) (Contributions to) repayments of partnership operations - Mirvac Lend Lease Village Consortium (note 31)	47,379	47,207 23,036
(a) Controlled Entities - note 10 (b) Associates - note 9 (c) Joint Ventures - note 31
	Parent
	2003	2002 \$000
Alholly Owned Group
(a) receipt of dividends and interest, and payment of interest, by Mirvac Limited - (refer notes 2 and 3) (b) loans advanced by, and repaid to, Mirvac Limited (c) consideration payable for tax losses transferred to Mirvac Limited
Current receivable (note 5) - controlled entities (dividends)	102,513	27,750
Non-current receivable (note 8) - controlled entities (loans)		407,372 69.346
	Ownership Interests in Related Parties Interests held in the following classes of related parties are set out in the following notes: Transactions between Mirvac Limited and related entities in the wholly owned group consisted of: The aggregate amounts receivable from and repayable to related parties in the wholly owned group at balance date were as follows : Non-current payable (note 22) - controlled entities (loans)	\$000 735,760 188.209

All the above transactions were made on normal commercial terms and conditions and at market rates, except that there are no fixed terms for repayment of principal on loans advanced by Mirvac Limited, and of those, certain loans do not attract interest.

41. EVENTS OCCURRING AFTER REPORTING DATE

Establishment of \$500 million AA Rated Securitisation Program

In July 2003, the Group established a AA Rated Multi-option Pre-sale Securitisation program totalling \$500 million, of which \$225 million was drawn down on 22 July 2003, as \$60 million fixed rate notes and \$165 million floating rate notes. \$125 million of the notes drawn down have a scheduled maturity date for repayment on 15 July 2004, and \$100 million a scheduled maturity date for repayment on 15 June 2005. Interest is payable quarterly in arrears for floating rate notes and semi-annually for fixed rate notes. The issue of the notes replaced bank-funded debt and will provide longer-term maturity under the Group's borrowing program. The issue has assisted with reducing the cost of the consolidated entity's debt.

Implementation of tax consolidation tegislation

Mirvac Limited and its wholly-owned Australian subsidiaries have decided to implement the tax consolidation legislation as of 1 July 2003. Refer to note 4 (c) for further information.

DIRECTORS' DECLARATION FOR THE YEAR ENDED 30 JUNE 2003

The directors declare that the financial statements and notes set out on pages 7 to 37:

• (a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• (b) give a true and fair view of the company's and 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 company will be able to pay its debts as and when they become due and payable.

Fhis declaration is made in accordance with a resolution of the directors.

Â.

A. J. LANE Chairman

Sydney 25 August 2003

,O Deat

D. J. BROIT Director

Audit Opinion

In our opinion, the financial report of Mirvac Limited:

• * gives a true and fair view, as required by the Corporations Act 2001 in Australia. of the financial position of Mirvac Limited and the Mirvac Limited Group (defined below) as at 30 June 2003, and of its 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, and the Corporations Requlations 2001.

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 Limited (the company) and the Mirvac Limited Group (the consolidated entity), for the year ended 30 June 2003. The consolidated entity comprises both the company and the entities it controlled during that year.

The directors of the company 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 members of the company. 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, and the Corporations Regulations 2001, a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and of their performance as represented by the results of its 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.

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 conductiing our audit, we followed applicable Independence requirements of Australian professional ethical pronouncements and the Coroorations Act 2001.

wanternehopes

PricewaterhouseCoopers Chartered Accountants

n funt

R.K. Hunter Partner

Sydney 25 August 2003