MIRVAC GROUP — Regulatory Filings 2005

Aug 31, 2005

CONSISTING OF THE COMBINED FINANCIAL REPORTS OF

MIRVAC LIMITED (ABN 92 003 280 699) AND ITS CONTROLLED ENTITIES

AND

MIRVAC PROPERTY TRUST (ABN 29 769 181 534) AND ITS CONTROLLED ENTITIES

30 JUNE 2005

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CONTENTS	PAGE
Directors' Report	$2 - 12$
Auditors Independence Declaration	13
Combined Statement of Financial Performance	14
Combined Statement of Financial Position	15
Combined Statement of Cash Flows	16
Notes to and Forming Part of the Financial Statements	17-54
Directors' Declaration	55
Independent Audit Report to the Stapled Security Holders of the Mirvac Group	56

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DIRECTORS' REPORT

The directors of Mirvac Limited and Mirvac Funds Limited, as the Responsible Entity for Mirvac Property Trust, present their report for the Mirvac Group (the Group) for the year ended 30 June 2005.

This report includes the results of Mirvac Limited (the Company) and Mirvac Property Trust (the Trust), and the entities they controlled at the end of, or during, the year ended 30 June 2005.

DIRECTORS

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

R J Hamilton
D J Broit
RAFortune

Mr BHR Neil resigned as a director on 21 October 2004, and continued as an executive until 31 December 2004. Mr RH Webster resigned as a director on 7 January 2005. Ms A Buduls resigned as a director on 29 July 2005. Messrs J A C MacKenzie, G J Paramor and R W Turner were appointed on 7 January 2005.

PRINCIPAL ACTIVITIES

The principal continuing activities of the Group are property investment and management, hotel ownership and management and property development. During the year the Group acquired the James Fielding Group which was primarily a property funds management business.

DIVIDENDS / DISTRIBUTIONS

	\$600	\$000
Dividends / distributions paid to security holders during the financial year were as follows:
June 2004 quarterly dividend / distribution paid on 30 July 2004 of 8.20 cents (2003 - 8.30 cents)	58.176	55.917
September 2004 quarterly dividend / distribution paid on 29 October 2004 of 8.30 cents (2003 - 7.90 cents)	59.752	53.537
December 2004 quarterly dividend / distribution paid on 28 January 2005 of 8.30 cents (2004 - 8.00 cents)	60.473	54.735
March 2005 quarterly dividend / distribution paid on 29 April 2005 of 8.60 cents (2004 ~ 8.10 cents)	72.756	56.470
	251.157	220.659

The June 2005 quarterly dividend / distribution of 8.60 cents (\$73.4 million) declared on 30 June 2005, was paid on 29 July 2005.

Dividends and distributions paid and payable by the Group for the year ended 30 June 2005 totalled \$266.4 million, being 33.8 cents per fully paid security (2004 - \$222.9 million - 32.20 cents per fully paid security).

REVIEW OF OPERATIONS

A summary of Group revenues and results by segment is set out below:

	SEGMENT REVENUES		PEGMENT RESOLTS
	2005	2004	2005	2004
	\$000	\$000	\$600	\$000
Property Investment and Management	266,723	234,596	153,937	136,741
Property Development	1,123,981	1,103,554	121,968	161,945
Hotel Ownership and Management	112,002	99,034	14,396	10,560
Funds Management	19,748		5,642
Unallocated / Inter-entity eliminations	(53, 715)	(36, 737)	(25, 802)	(12,993)
	1,468,739	1,400,447
Profit from ordinary activities before income tax expense			270,141	296,253
Income tax expense			(35,753)	(43,555)
Net profit			234,388	252,698
Net profit attributable to outside equity interests			(1,058)
Net profit attributable to the stapled security holders of the Mirvac Group			233,330	252,698

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

(i) Property Investment

Revenue for the year increased by 13.7% to \$266.7 million, with the acquisition of the James Fielding Trust portfolio, five other properties acquired during the year and the effect of a full year's revenue from properties acquired in 2004, contributing to the increase in lettable areas.

Net profit after tax of \$151.4 million was an 11.6% increase on the previous year, including 6 months profit from the James Fielding Trust and its subsidiaries.

$\sim$ $\sim$ $\sim$

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CONTRACT CARL CAR TO AN ARCHITECT

DIRECTORS' REPORT

REVIEW OF OPERATIONS (continued)

(ii) Property Development

Profit after tax decreased by 26.4% to \$85.4 million, reflecting a slowdown in the residential property market in the 2005 financial year, and higher construction costs.

A \$10.7 million provision for loss has been raised in the 2005 financial year for isolated developments.

(iii) Hotels

Profit after tax increased by 30.2% to \$11.8 million as a result of an increase in average room rate from \$166 to \$176, at an average occupancy of 72 percent. The significant increase in profit is also attributable to major refurbishments being carried out in the prior financial year removing the availability of rooms, and hotel start up costs for new hotels being expensed in the prior year. In addition, three new hotel properties added to rooms under management, whilst one property was sold.

(iv) Funds Management

The acquisition of the James Fielding Group has added a funds management business to complement the other property related divisions of the Mirvac Group. Net profit after tax for the funds management division is for the six month period since acquisition on 29 December 2004 and totals \$5.1 million. The major contributor to profit is primarily as a result of investment in the JF Meridian Trust and in its role as responsible entity. It is expected that the revenue and profit results of this division will increase as the Group seeks to diversify more of its business to this division.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

In accordance with the Explanatory Memorandum for the acquisition of the James Fielding Group issued on 12 November 2004, and the subsequent approval of the Scheme by the James Fielding Group security holders on 17 December 2004, the Mirvac Group acquired all the issued shares of James Fielding Group (JFG) on 29 December 2004, the date of the Court approval of the Share Scheme. The acquisition was by way of issue of 0.73 Mirvac Group stapled securities for every JFG stapled securities. The effect of the acquisition is disclosed in note 11.

(a) Increase in Contributed Equity from \$1,978.4 million to \$2,658.7 million as a result of :	\$'000
Issue of 7,402,104 fully paid ordinary securities of \$4.15 each under the distribution reinvestment plan (DRP)	30.717
Issue of 3,036,745 fully paid ordinary securities of \$4.41 each under an employee share scheme	13.392
Issue of 8.686,282 fully paid ordinary securities of \$4.31 each under the DRP	37.441
Issue of 109,389,632 fully paid ordinary securities of \$4.82 each as consideration for the acquisition of JFG	527.258
issue of 8,018,009 fully paid ordinary securities of \$4.67 each under the DRP	37,469
Issue of 7,790,858 fully paid ordinary securities of \$4.36 each under the DRP	33,996
Capital raising costs	(13)
Net increase in contributed equity	680,260

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

At the date of this report, there is no other matter or circumstance which has arisen since 30 June 2005 that has significantly affected or may significantly affect:

(a) the Group operations in future financial years, or

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

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

In the opinion of the directors, it would prejudice the interests of the Group to provide additional information relating to likely developments in the operations of the Group, and the expected results of those operations in financial years subsequent to 30 June 2005.

ENVIRONMENTAL REGULATIONS

The Group 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

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 Environmental Impact Statement (EIS) which examines and controls all aspects of development. Each SEE or EIS includes a project specific Environmental Management Plan which guides 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 compliance with these controls is undertaken within each project as part of Mirvac's Environmental Management System

During the year, there were no significant environmental breaches within any of the Group's activities. There were minor infringements which received immediate rectification. Mirvac, as standard policy, advises sub-contractors of its environmental policy and monitors each sub-contractor's responsibilities and performance.

ENVIRONMENTAL REGULATIONS (continued)

Hotels

Mirvac Hotels are continuing with several sustainability initiatives throughout Australia, ranging from daily monitoring of energy consumption by each hotel to inform energy targets and national eco-efficiency targets, water conservation techniques, building operational and maintenance training; capital expenditure analysis; piloting of renewable energy systems; implementing waste control; researching indoor air quality and participating in community partnerships.

Asset Management

Mirvac continues to implement a range of initiatives throughout the commercial investment portfolio that have resulted in significant reductions in energy consumption, providing financial and environmental benefits. To benchmark these initiatives and the environmental performance of our assets against industry standards, Mirvac has adopted the Australian Building Greenhouse Ration (ARGR) tool

INFORMATION ON DIRECTORS OF MIRVAC LIMITED AND MIRVAC FUNDS LIMITED

Directors Experience and Areas of Special Responsibilities

The names of the directors of Mirvac Limited and Mirvac Funds Limited in office at 31 August 2005 and details of their qualifications, experience and special responsibilities are set out below.

Adrian J. Lane, B.A. LLB,

is the non-executive and independent Chairman of Mirvac Group. Mr Lane brings 40 years of senior legal and commercial experience to the Board, with a strong commitment to good

cornorate governance and the interests of securityholders.

He is a member of the Mirvac Audit Risk and Compliance Committee, and Chairman of both the Remuneration, and Nomination Committees. He is currently Chairman of The Smith Family. He has been a Mirvac director since 1996.

Former directorships of listed entities in last 3 years Amalgamated Holdings - November 1989 to August 2003. OPSM Group Limited - Chairman - 1980 to November 2002.

Interests in other related securities None

Greg J. Paramor, F.A.P.L, F.A.I.C.D.

was appointed Managing Director of Mirvac Group following the acquisition of the James Fielding Group (JFG) in January 2005. He is a member of the Executive Committee.

He has been involved in the real estate and funds management industry for the past 30 years. He has participated in forming property vehicles for public investment since 1981 and was the co founder of Growth Equities Mutual, Paladin Australia and JFG. He has been directly involved in the organisation of approximately \$6 billion of commercial, retail and industrial projects and property securities. He is a past president of the Property Council of Australia and past President of Investment Funds Association and a fellow of the Australian Property Institute. He is a director of a number of organisations and companies including the Garvan Institute of Medical Research and Leighton Properties Pty Limited.

Former directorships of listed entities in last 3 years James Fielding Group - Managing Director - July 2000 to January 2005.

Interests in other related securities James Fielding Industrial Fund - 100,000 units James Fielding Retail Fund - 523,247 units James Fielding Tourist Fund - 100,000 units JF US Industrial Trust - 200,000 units Stadium Australia Trust - 5,000 stapled securities Q1 Construction Guarantee Facility mandated to James Fielding Investments

Robert J. Hamilton, A.R.E.L, F.A.P.I.

is the former Managing Director of the Mirvac Group and a member of the Nomination Committee. Mr Hamilton has extensive knowledge of the property investment and development industry and co-founded Mirvac in 1972. Since that time he has overseen its progress from being a Sydney-based development company to one of Australia's largest and most respected property groups

He has been on the Mirvac Board since 1987. Mr Hamilton has advised that he will retire from the Group and will not stand for election as a director in November 2005.

Former directorships of listed entities in last 3 years None

Interests in other related securities None

PARTICULARS OF DIRECTORS' INTERESTS HELD IN STAPLED SECURITIES OF THE GROUP

93.849

5.351.821

INFORMATION ON DIRECTORS OF MIRVAC LIMITED AND MIRVAC FUNDS LIMITED (continued)

PARTICULARS OF DIRECTORS' INTERESTS HELD IN STAPLED SECURITIES OF THE GROUP

Paul : Blancardi B. Ec. ECA

is a non-executive and independent director of Mirvac and is Chairman of the Audit Risk and Compliance Committee. He is a former taxation partner of PricewaterhouseCoopers (the current auditors of Mirvac Group) and Chairman of Coopers & Lybrand from 1994 to 1997. He left PricewaterhouseCoopers in 1999 and joined the Mirvac Board in 2001. An experienced accountant, he brings extensive knowledge in the areas of finance, taxation and human resources to the Board. He is a director of Crescent Capital Partners. He joined the Mirvac Board in 2001.

Former directorships of listed entities in last 3 years Hamilton James & Bruce Group Limited - Chairman - August 2000 to November 2003.

Interests in other related securities None

Dannis J. Broit, DIP, COMM., CPA.

resigned as Mirvac Group's Finance Director on 9 August 2005 and continues as a non-executive director. Mr Broit has more than 35 years experience in the property industry with specific expertise in the financing of property development, and accountancy. He has been closely associated with the Group since 1983 and has been a Mirvac director since 1987.

Former directorships of listed entities in last 3 years None

Interests in other related securities Nnne

Roger A. Forlune, F.A.P.I.

resigned as an executive director on 31 January 2005 and continues as a non-executive director. He has been a Mirvac director since 1987. Mr Fortune has more than 35 years of experience in the management of major residential, commercial and retail developments in Australia and overseas and has expertise in the area of hotel management. Mr Fortune has advised that he will retire from the Group and will not stand for election as a director in November 2005.

Former directorships of listed entities in last 3 years None

Interests in other related securities None

Geoffrey H. Levy, B.Comm, LLB, ASIA, AO

is a non-executive and independent director of the Mirvac Group. He is a member of the nomination committee. Mr Levy has more than 20 years of experience in the financial and corporate advisory sectors. He is currently Chairman of Invested Bank (Australia) Limited and its investment banking subsidiary, Invested Wentworth Pty Limited. He was formerly a partner of the law firm Freehills. He is the non executive chairman of Miller's Retail Limited and a nonexecutive director of STW Communications Group Limited and Ten Network Holdings Limited. He was appointed an Officer of the Order of Australia in the 2005 Queen's Birthday Honours List. He has been a Mirvac director since 1997.

Former directorships of listed entities in last 3 years Freedom Group Limited - June 1996 to July 2002.

Interests in other related securities None

James A.C.MacKenzie, BBus, FCA, FAICD

is an independent non executive director of Mirvac Group. He is a member of both the Audit Risk and Compliance Committee and the Remuneration Committee.

He has a comprehensive knowledge of the financial services industry, previously holding senior executive positions with ANZ Bank, Norwich Union Australia and the Victorian Transport Accident Commission. Mr MacKenzie was a partner in both the Melbourne and Hong Kong offices of an international accounting firm now part of Deloitte, and he remains involved with Deloitte as a consultant. He is also Chairman of the Victorian WorkCover Authority and of the Victorian Transport Accident Commission. He is a director of the Victorian Major Events Company Limited, Circadian Technologies Limited and Amrad Corporation Limited. He has been a Mirvac director since 2005.

Former directorships of listed entities in last 3 years Child Care Centres Australia Limited - August 2002 to July 2004. Medaire Incorporated - April 2004 to July 2005. James Fielding Group - Chairman - May 2001 to January 2005. interests in other related securities None

7 MM

2.887

32,571

37.654

51.929

INFORMATION ON DIRECTORS OF MIRVAC LIMITED AND MIRVAC FUNDS LIMITED (continued)

Richard Turner, FCA, BEc, AM

is an independent non executive director of Mirvac Group. He is a member of the Audit Risk and Compliance Committee and Nomination Committee. He is a chartered accountant and former CEO of Emst & Young. He is the Chairman of Capital Finance Australia Limited and a director of HBOS Australia Limited, Publishing and Broadcasting Limited, Crown Casino Limited and the Pain Management Institute at Royal North Shore Hospital. He has been a Mirvac director since 2005.

Former directorships of listed entities in last 3 years Bank of Western Australia Limited - October 2002 to September 2004. James Fielding Group - February 2001 to January 2005

Interests in other related securities James Fielding Industrial Fund - 30,000 units Stadium Australia Trust - 2,000 stapled securities

Company Secretary

During the year to 30 June 2005, the Group Company Secretary was Susan Myers, BA, LLB, FCIS. A lawyer, with extensive legal, corporate governance, compliance and company secretarial experience in listed entities. Ms Myers was appointed by the Board and held the position for three years, until her resignation on 30 June 2005. The Assistant Company Secretary, Melanie Hedges and the Chief Financial Officer, Tim Regan have been appointed by the Board jointly as Company Secretary from 1 July 2005 until the recruitment of a replacement.

MEETINGS OF DIRECTORS

The following table sets out the numbers of meetings of directors (including meetings of committees of directors) held during the year ended 30 June 2005, and the numbers of meetings attended by each director.

		Full Meetings of Board of Directors		Meetings of Non-executive Directors		Directors' Executive Committee Meetings		Audit Risk & Compliance Committee Meetings		Remuneration Committee Meetings		Nomination Committee Meetings
	Α	8	А	в	А	в	А	в	А	в	А	в
Number of meetings attended by:
AJLane	15	16						6.	5	5
G J Paramor (appointed 7 January 2005)	5	5
R J Hamilton	16	16			13	14
P J Biancardi	14	16		2			6	6.
D J Broit	15	16			11	14
A Buduls	14	16		2			6	6	5	5
R A Fortune	13	16			€	14
GHLevy	14	16		2
J A C MacKenzie (appointed 7 January 2005).										2
R W Turner (appointed 7 January 2005)		5						2
B H R Neil (resigned 21 October 2004)					5
R J Webster (resigned 7 January 2005)	8	10	2						3	3

A= Number of meetings attended

B= Number of meetings held during the period that the director was appointed

* = not a member of the relevant committee

REMUNERATION REPORT

Principles Used to Determine the Nature and Amount of Remuneration

The Group has undertaken significant change to remuneration processes over the past twelve months with greater focus placed on providing

direct linkage between Group and individual performance and rewards.

Review of our performance management programme gives greater clarity to employees on the key outcomes required for success and provides specific feedback on their performance.

.
The Short Term Incentive scheme has been redesigned to include an overall performance condition for all participants which requires achievement of a minimum of 95% of the Group profit target and 100% of the respective division profit target.

Guidelines for Long Term Incentive awards were undertaken and a more clearly defined, structured programme which is conditional on overall business performance and recognises individual contribution is being introduced for the 2006 financial year.

The Group will continue to review its remuneration policies and practices to ensure its policy of competitive, performance based remuneration in order to attract, retain and motivate the best talent in the industries in which it operates.

The Performance Management and Performance Development Programme is a fundamental platform in the remuneration of our executives. At the beginning of each financial year clear objectives are set for each executive in order to provide clarity and focus to the individual and the organisation.

PARTICULARS OF DIRECTORS' INTERESTS HELD IN STAPLED SECURITIES OF THE GROUP

64.396

REMUNERATION REPORT (continued)

Principles Used to Determine the Nature and Amount of Remuneration (continued)

There are a number of common objectives shared by the Executive Committee members including the following subject areas:

• Achievement of Group profit target
• Achievement of divisional orofit faroat
• Training and development of staff
• Adherence to Group Risk Management and OHS&E platforms
• Communication of business performance and objectives to staff

Additional objectives which enhance the overall business strategy relating to the particular division are agreed at the beginning of each year for each Executive Committee member. The objectives are reviewed by the Remuneration Committee.

The executive's performance is evaluated at the end of the year, by their direct manager and reviewed by the next level manager, and a development plan put in place to enhance continued improvement in individual performance and overall contribution. The Managing Director reviews the performance of the Executive Committee members and his direct reports and presents his evaluation to the Remuneration Committee.

The Performance Management and Performance Development tool is utilised across the whole business at all levels of employee.

The Performance Management and Development programme will continue to be refined and will in the coming year include further initiative to provide feedback to executives on their performance and leadership capability.

Structure of Remuneration

The Group seeks to structure remuneration in order to reward individual performance and contribution, reward team performance, overall business performance and to enhance retention. Our remuneration is structured in the following components:

a) Fixed Remuneration

The key drivers of fixed remuneration are:

• individual performance evaluated against predetermined objectives
• The competitive environment for the individual's skills and capabilities.

Fixed remuneration includes superannuation contributions, any additional voluntary superannuation contributions, novated lease costs for motor vehicles and for members of the Executive Committee an annual travel allowance.

Executives have flexibility to allocate components of fixed remuneration to certain benefits. In these circumstances the executive is charged the cost of fringe benefits tax. The cost to the Group is therefore the same.

b) Short Term Variable Remuneration

The key drivers of variable remuneration are:

• Performance against Group and Division profit performance measure against predetermined targets
• Overall business or division performance against predetermined objectives
• Individual contribution to Group or division performance

Short term variable remuneration consists of annual incentive payments based upon predetermined targets and evaluation of individual performance.

Members of the Executive Committee are rewarded based upon the performance of the business unit they lead, the Group performance and their individual nerformance

The Managing Director participates conditional upon the Group achieving a pre-agreed profit target. No Short Term Incentive payments were made to the Managing Director and executive directors in 2005.

c) Long Term variable Remuneration

The Long Term Incentive Schemes are available for all employees and are designed to share the benefit of the performance of the Group through the provision of loans to purchase securities. Loans are repayable via dividend payments or upon the sale of securities. Employees are required to sell the securities and repay loans on termination of employment. The total value of the sold securities is applied to the loan. Loans available to employees under the Employee Incentive Scheme are non-recourse, however there are loans available to eligible employees (including executive directors) which are full recourse subject to an agreed forgiveness schedule.

The key drivers of equity based remuneration are:

• * Overall business performance
• Individual contribution and performance

• Criticality of the role/indiviriual

• Potential of the individual to undertake a more senior role in the longer term

Guidelines (ranges for grants) are provided for the provision of loans which take into account the seniority of the position.

The EIS programme is designed to facilitate retention of staff, explicit alignment to business performance and linkage between employees and other security holders in Miryac. The programme ensures that all security holders, including employees, benefits from increases in total securityholder return.

REMUNERATION REPORT (continued)

Review of Remuneration

a) Each component of remuneration is reviewed annually throughout the Group to account for changes in market practice in the industries in which the Group operates

b) The review is undertaken giving consideration to collected market data from a variety of external sources, individual performance and business performance.

c) Recommendations are submitted by each manager to their manager for approval. Each department manager is responsible for ensuring salary reviews are contained within the annual budget.

d) Recommendations are then reviewed by the Group General Manager Human Resources and the relevant Executive Committee members.

e) Staff who report directly to an Executive Committee member have their salaries reviewed by the Managing Director.

f) Salaries of Executive Directors and members of the Executive Committee are reviewed and approved by the Remuneration Committee.

The salary review process ensures that there are two levels of management approval to all changes in remuneration.

The implementation of the policy involves the provision of market competitive remuneration packages, targeted use of Short Term Incentives in the form of cash bonuses, and awarding of long term incentives in the form of Mirvac securities issued under ioan plans approved by Mirvac securityholders from time to time. Certain key executives are also invited to participate in an Executive Retention Plan that includes periodic forgiveness of loans.

In addition to the above there are a range of other benefits that employees may be offered. These are intended to encourage ongoing skills development and to ennender company lovalty

The Remuneration Committee exercises discretion in relation to payment of remuneration, including bonuses, and the recommendation of the issue of securities under the Employee Incentive Scherne (EIS) to executive directors and key executives. The Remuneration Committee exercises its discretion based on the Remuneration Policy summarised above. The EIS has been approved by securityholders and the payment of equity remuneration to executive directors and to employees is made in accordance with that plan. No individual is directly involved in deciding his or her remuneration.

Remuneration of Directors and Divisional CEOs

Non-executive directors are remunerated by fees, including statutory superannuation. Non-executive directors do not receive options or bonus payments, and they do not particpate in the EIS.

The remuneration of executive directors and the Divisional Chief Executive Officers is reviewed in detail by the Remuneration Committee and approved by the Board. Market competitive remuneration packages are paid to executives and strict criteria need to be met in order to determine the level of each executive's participation in either short or long term incontives. The major criteria include the attainment of personal key objectives (annually set for each individual executive) which involve divisional and Group operational and financial goals.

Retirement Benefits

The only non-executive director entitled to retirement benefits is the Chairman. The benefit, previously in existence for the Chairman, ceased to accrue and is capped at \$361,200 as at 30 June 2003. This is a departure from Recommendation 9.3 of the ASX Principles of Good Corporate Governance and Best Practice Recommendations. The retirement benefit has resulted from an existing agreement between the Group and the Chairman prior to the introduction of the ASX Principles of Good Corporate Governance and Best Practice Recommendations.

The Remuneration Committee

The Remuneration Committee is comprised of independent non-executive directors. The membership of the committee ensures it has financial, management and human resources expertise. The membership of the Remuneration Committee during the year ended 30 June 2005 was:

Anna Buduls (Committee Chairman) - independent non-executive (retired 29 July 2005) Adrian Lane (Committee Chairman) - independent non-executive (appointed Chairman 29 July 2005) Robert Webster - independent non-executive (retired 7 January 2005) James MacKenzie - independent non-executive (appointed 8 February 2005)

The Managing Director and Group General Manager Human Resources attend Committee meetings by invitation. The Group General Manager Human Resources is the Secretary to the Committee.

The Remuneration Committee approves remuneration packages and policies applicable to the Managing Director, directors and senior executives. The total remuneration available for non-executive directors is approved by Mirvac securityholders. The Committee also oversees the Group's employee incentive schemes, performance packages, superannuation entitlements, retirement and termination entitlements and fringe benefits policies. The Committee meets twice a year and as required. In the year to 30 June 2005, the Committee met five times.

Where appropriate, the Committee seeks independent professional advice from third parties. The Charter of the Remuneration Committee was confirmed by the Board in June 2005, and is available on the Mirvac website.

DIRECTORS' REPORT (continued)

BEMUNERATION REPORT (continued)

Details of Remuneration

Oetails of the remuneration of each director of Mirvac Linkled and Mirvac Funds Limited and each of the executives of the Group receiving the highest
Incoluments and with the greatest authority for the strategic direction

$200⁵$

2005		Primary			Post- employment		Total Current	Accrued Retirement		ho nostubA Current Cost of Employment &
Specified Directors	Cash Salary and Fees	Bonuses	Non-Cash Benefits.	Employee Loan? Interest	Super Contributions	Termination Benafits	Employment Cost	Benefits Paid/ Pavable	Note	Future Retirement: Benefits
Executive
G.J.Paramor - Managing Director	394.208		15,000	17,254	5,793		432,255		Ż.	432,255
R J Hamilton	615.346		15,000	51,976	11,585		593,907	700,000		1,393,907
自日只知园	224,592		23,546	83,281	41.802	2,810,913	3,184,194			3,184,194
D. J Broit - Finance Director	483,748		96,972	242.005	14,279		837,094			837,994
Мол-ехесий че
A J Lane - Chaiman	194,417		20,000		11,585		226,002			226,002
P J Biancardi	121, 347				10,921		132,268			132,208
A Buduls	115.000				10.350		\$25,350)			125,350
GHLEW	78,000				7,020		85,020			85,020
J A C Mackenzie	76.527				6,887		83,414			83,414
R W Turner	63,349				5,701		59,050			69,050
RAFormat	252,075	-4	97.255		11,585		360,895	724,605		1,085,500
R J Webster	42,000				3,780		45,780			45,780
Total	2,660,609		267,753	394,606	141.348	2,810,913	6,275,229	1,424,605		7,698,834

l.

y.

l,

Specified Executives	Cash Salary and Fees	Primary Bonuses	Non-Cash Benafits	Employee Loan Interest	Post- employment Suger Contributions	Termination Велекс	Total Current Employment Cost	Accrued Refrement Elements Pald/ Payable	Nate	аповол от Current Cost of Employment & Future Retirement Benedits
N Collishaw	219.207	100,000	15,000	20,416	5,783		360,406			360,408
IC Costley	52,500			25,854	69,965	245,791	386,110			386,110
B Draffen	352,333	100,000	84.132	47,009	33,335		597,009			597,009
A G Fini	417.881	100,000	15,000	94,128)	32,119		659,128			659,128
C Freeman	421.627	150,000	16.110	176,974	27,263		791,974			791,974
A Harrington	142,036	75,000	24,675	11,031	4,827		257.569		CO	257,569)
C Langford	331,927		36,487	52,876	11,585		432,875			432,875
RPLynch	436,813	120,600	15.000	195,682	13.387		780,682			760,682
M V O'Brian	342,755	75,000	60.578	91.134	70,000		639,487			639,487
A Tumer	271,432	20,000	53,983	118.774	39,565		503,774			503.774
Total	$2.988.511$ 740	740,000	300,965	834,898	298,849.	245,791		5.409.014		5,409,014

Note

Nute
1. Represents retinament benefit in recognition of years of service from commencement of employment in 1972, accrued during the year ended 30
3. Represents retirements for period from appointment on 7 January 2005 to

Bonus Payments
Due to the overall Group performance no executive director received a bonus to the year ended 30 June 2005. The Short Term Incentives were primarily based upon achievement of individual objectives for the se

DIRECTORS' REPORT (continued)

REMUNERATION REPORT (continued)

2004 Specified Directors	Cash Salary and Fees	Primary Bonuses	Non-Cash Benefits	Employee Loan! Interest	Post- employment Super Contributions	Теглинарл Beneits	Total Current Employment Cost	Accrued Releement Benefits Paid! Payable	Nole	Addilion of Current Cost of Employment & Future Retirement Burrefits
Executive 尺寸Hamilton 黄托段 Neit DJ Bruit RAFortune	713,998 495.574 466.000 363.998	130,000 120.000 120,000 55,000	47.092 81,972 $\sim$	149,600 214,964 192,074 98.457	11,002 16,334 12,020 11,002		1,004,500 894,964 872,074 528,457	3,600,000 1,000,000		4,604,600 894,964 872,074 1,528,457
Non-executive AJLane P J Biancardi A Buduls GHLew R.J Webster Total	195,000 98,000 102,500 78,000 84,000 2,598,078	$\overline{\phantom{a}}$ 425,000	20,009 149.064	655.095	11,002 8,820 9,225 7,020) 7.560 93,985		226,002 106,820 111,725 85,020 91.560 3,921,222	361,200 4.961.200	$\overline{2}$	587,202 106,820 111,725 65,020 91,560 8,882,422

Specified Enecytives.	Cash Salary and Feet	Primary Bonuses	Non-Cash Benefits	Employee Loan huerost	Post- employment Super Contributions	Termination Benefits	Total Currant Employment Cost	Accrued Relirement Benefits Paid/ Payable	******** Note	Addition of Current Cost of Employment & Future Retirement Benefits
I C Costley	395.000	50,000		69,542	40,000		554,542			554,542
B Draffen	264,001		30,157	39,583	28,556		363,107			363,107
A G Fini	402.881	74.000		75,915	32,119		584,915			584,915
C Freeman	360,575	110,000		157.274	74,426		702.275			702.279
C Langford	279.321	50.000	26.352	44,046	11.002		410,721			410,721
RPiwach	421.613	128,000		177,582	13,387		792,582			732,582
M V O'Brien	265.524	74,000	103.623	65,527	69.996		579,670			679,670
A Tumer	266,538	40,000	45,460	112,474	28,002		492,474			492,474
Total	2.657.259	518,000	205,602	741,943	297,488		4.420.286			4420,2BB

$\sim 10$

$\mathcal{A}^{\mathcal{A}}$

Note
1. Represents relitement benefit in recognition of years of service from commencement of employment in 1972, accrued during the year ended 30
June 2004 and payable only on retirement.
2. Represents relitement bonefit

$\sim$

$\bar{z}$

DIRECTORS' REPORT (continued)

REMUNERATION REPORT Isonimiest

Mirvac's Performance
The following table summarises Mirvad's performance over the last 5 years (skice the stapling of securities took place in June 1999) and highlights the
movement in total security holder return.

. Year Ended 30 June	Revenue 5000	Net Profit after Tax 5000	Olstributions Paid (coss)	Security Price atl Start of Year	Security Price as at End of Year \$	Total Security Holder return (28)
2000	869	133	24.00	3.15	3.39	17.8%
2005	817	160	24.90	3.39	3.72	18.0%
2002	1,016	170	26.20	3.72	4.18	20.1%
2003	1,403	223	29.00	4.18	4.44	13.7%
2004	1.386	263	32.20	4.44	4.30	4.2%
2006	1.431	233	33.80	4.30	3.57	$-10.3%$

÷.

Service Agreements
The following table summarises the individual details of service agreements that are in place for Mirvac's disectors as well as for each of
the senior executives that comprise Mirvac's Executive Committe

Name	Office Held	Tennol Apresiment	Notice Period	Severance Period	Пелимегавол Review Period	Eligible for STI?	Eligible for 1117	Eligible for Fermination SeneR7	Eligible for Other Benefits? (4)
Executive Directors
}G J Paramor	Managing Director	No term	3 months	9 months	12 months	Yes	Yes	No	Yes
(BHRNeR(3)	i£xecutive Director	No term	3 months	9 manths	12 mpniha	Yea	Yes	Yes	Yes
D J Brok	Executive Director	No term	S months	9 months	12 months	Yes	Yes	Yes	Yer
notlimaH (只	Executive Diractor	No term	3 months	9 months	12 months	Yes	Yes	On rethernent	Yes
Non-Executive Directors
A J Lane	Chairman, Non Stands for re- Executive Director	election every Ulisee vears	Nane	None	None	No	No	On refirement	No
A Buduls (1)	Non Executive Director	Stands for re- election every three years	None	None	None	No	No	No	No
jG H Lovy	Non Executive Okestor	Stands for re- election every three years	None	None	Nona	No	No	Np	Nп
R A Fortune	Non Executive Director	No term	3 months	9 months	12 months	Yes	Yes	On retirement	Yes
J A C MacKenzie	Non Sxecutive Director	Stands for re- election every three years	None	None	None	No	No	ND	Na
P J Biancardi	Non Executive Director	Stands for re- election every three years	None	Моле	Мопе	No	No	No	No
IR W Turnor	Non Executive Director	Stands for re- election every three years	None	None	Nane	No	No	No	No
R J Webster (2)	Non Executive Director	Stands for re- election every (three years	None	enoli	None	No	枷	No	No
Specified Executives
AGFini	Executive Committee Member	No serm	3 months	9 regnitis	12 months	Yes	Yes	Nu	Yes
A Harrington	Executive Committee Member	No term	3 months	9 months	12 months	Yas	Yex	No	Yes
A Turner	Executive Committee Member	No term	3 months	9 months	12 months	Yes	Yes	No	Yes
ම Draffen	Executive Committee Member	No term	3 munths	9 months	12 months	Yes	Yes	No	Yes
C Freeman	Executive Committee Member	No terra	3 months	9 months	12 months	Yes	Yes	No	Yes
C Langford	Executive Committee Mensber	No term	3 months	9 months	12 manths	Yos	Yes	No	Yes
M V O'Srien	Executive Committee Mensber	No term	3 months	9 months	12 months	Yes	Yes	ND	Yes
N Collishaw	Eixecutive Committee Wember	No lerm	3 months	9 months	12 months	Yes	Yes	No	Yes
RP Lynch	Executive Committee	Nu terra	3 months	9 muniks	12 months	Yes	Yes	No	Yes

$\hat{\mathcal{A}}$

$\mathcal{L}$

1) Ms A Budul's relited as a director on 29 July 2005.
2) R J Webster refired as a director on 7 January 2005.
3) B H R Neil retined as a director on 21 October 2004, and continued as an emptoyee until 31 December 2004.
4

$\ddot{\phantom{a}}$

$\,$ 1 $\,$

$\bar{z}$

÷.

NON-AUDIT SERVICES

The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the Group are important.

Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided during the vear are set out helow

The board of directors has considered the position and, in accordance with the advice received from the audit committee is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not comprise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor

• none of the services undermine the general principles relating to auditor independence as set out in Professional Statement F1, including reviewing or auditing the auditor's own work, acting in a management or a decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risk and rewards.

A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 13.

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms.

	Consolidated
	2005	2004
	\$	ው Ð
Audit services	730.000	571,500
Other assurance services	387,000	205,000
Taxation services	527,000	414,000
Advisory services	290,000	151,500
	1.934.000 _________	1.342.000

INSURANCE OF OFFICERS

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

ROUNDING OF AMOUNTS TO THE NEAREST THOUSAND DOLLARS

Mirvac Limited and Mirvac Property Trust are entities of the kind referred to in Class Order 98/0100 issued by the Australian Securities & Investments Commission, relating to the "rounding off" of amounts in the financial report. Amounts in the financial report have been rounded off to the nearest thousand dollars in accordance with that class order.

This statement is made in accordance with a resolution of the directors of Mirvac Limited and Mirvac Funds Limited as the Responsible Entity for Mirvac Property Trust.

A. J. LANE

Chairman 31 August 2005

on Bout ∗ء

D. LRROIT Director

PRICEWATERHOUSE COPERS

PricewaterhouseCoopers ABN 52 780 433 757

Darling Park Tower 2 201 Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia www.pwc.com/au Telephone +61 2 8266 0000 Facsimile +61 2 8266 9999

Ŷ.

AUDITORS INDEPENDENCE DECLARATION

As lead auditor for the audit of The Mirvac Group for the year ended 30 June 2005, I declare that, to the best of my knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

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

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

For Hum

B K Hunter Partner

Sydney 31 August 2005

Liability is limited by the Accountant's Scheme under the Professional Standards Act 1994 (NSW)

COMBINED STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2005

	Notes	2005 \$000	2004 \$000
Revenue from operating activities	2	1,419,080	1,378,543
Revenue from outside operating activities (excluding share of net profits of associates and joint ventures)	2	11,880	7,091
Total revenue from ordinary activities		1,430,960	1,385,634
Cost of goods sold		(B42, 307)	(801,578)
Employee benefits expense		(129, 356)	(110, 419)
Depreciation and amortisation expenses	з	(10, 288)	(6.801)
Borrowing costs expense	3	(93, 290)	(89, 723)
Property outgoings		(56, 951)	(54, 142)
Provision for loss on inventory		(10, 733)
Other expenses from ordinary activities		(50, 836)	(41, 156)
Carrying amount of investment properties and property, plant & equipment sold		(4, 837)	(375)
Share of net profits of associates and joint ventures accounted for using equity method	33.34	37,779	14,813
Profit from ordinary activities before related income tax expense		270,141	296,253
Income tax expense	4	(35, 753)	(43, 555)
Net profit		234,388	252,698
Net profit attributable to outside equity interest		(1,058)
Net profit attributable to the stapled securityholders of the Mirvac Group	28	233,330	252,698
Net increase in asset revaluation reserve	27	61,979	20.693
Net exchange differences on translation of financial report of foreign controlled entity	27	1,603	435
Total revenues, expenses and valuation adjustments attributable to the stapled securityholders of the Mirvac Group recognised directly in equity		63,582	21,128
Total changes in equity other than those resulting from transactions with owners as owners		296,912	273,826
		Cents	Cents
Basic earnings per security	39	29.86	36.67
Diluted earnings per security	39	29.86	36.67

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

$\ddot{\phantom{a}}$

$\bar{z}$

$\mathcal{A}^{\mathcal{A}}$

$\sim$

COMBINED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2005

	Notes	2005 \$000	2004 \$000
CURRENT ASSETS
Cash assets		56,028	332,120
Receivables	5	232,730	98,764
Inventories	6	717,369	588,440
Other	7	20,968	19,599
TOTAL CURRENT ASSETS		1,027,095	1,038,923
NON-CURRENT ASSETS
Receivables	8	193,961	87,088
inventories	9	788,329	602,727
investments accounted for using the equity method	10	293,168	79,357
Other financial assets	11	10,498	28
Investment properties	12	2,967,130	2,445,972
Plant and equipment	13	16,665	17,132
Intangible assets	$\overline{14}$	200,171	24,126
Deferred tax assets	15	19,889	7,688
Other	16	6,980	3,379
TOTAL NON-CURRENT ASSETS		4,496,791	3,267,497
TOTAL ASSETS		5,523,886	4,306,420
CURRENT LIABILITIES
Pavables	17	165,744	161,024
Interest bearing liabilities	18	1,165,015	125,016
Current tax liabilities	19	5,072	20,522
Provisions	20	93,840	75,580
Other	21	10,421	5,134
TOTAL CURRENT LIABILITIES		1,440,092	387,276
NON-CURRENT LIABILITIES
Payables	22	54,500	75,500
Interest bearing liabilities	23	919,805	1,529,183
Deferred tax liabilities	24	123,707	71,470
Provisions	25	4,460	2,914
TOTAL NON-CURRENT LIABILITIES		1,102,472	1,679,067
TOTAL LIABILITIES		2.542.564	2,066,343
NET ASSETS		2,981,322	2,240,077
EQUITY
Parent entity interest:
Contributed equity	26	2,658,671	1,978,411
Reserves	27	164,518	104,342
Retained profits	28	127,653	157,324
Total parent entity interest		2,950,842	2,240,077
Outside equity interest in controlled entities	29	30,480
TOTAL EQUITY		2,981,322	2,240,077

$\mathcal{L}^{\mathcal{L}}$

$\mathcal{A}$

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

COMBINED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2005

		2005	2004
	Notes	\$000	\$000
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)		1,224,554	1,634,014
Payments to suppliers and employees (inclusive of goods and services tax)		(1, 105, 467)	(1,274,986)
		119,087	359,028
Interest received		6,560	6,461
Dividends received		1,194
Borrowing costs paid		(120, 475)	(89.024)
Income taxes paid		(35, 319)	(26, 314)
Net cash (outflows) / inflows from operating activities	(b)	(28, 953)	250,151
Cash flows from investing activities
Proceeds from net cash acquired on acquisition of controlled entity	11	35,888
Payments for property, plant and equipment		(9, 144)	(5,566)
Repayments from joint venture operations / entities		32,140	34,579
Contributions to joint venture operations / entities		(82, 985)	(9.890)
Loans to related entities		(59, 774)	(21, 167)
Repayment of loans by related entities		761
Loans to other entities		(23.835)
Repayment of loans by other entities		3,055
Proceeds from the sale of property, plant and equipment		1,290	96
Proceeds from disposal of investment properties		3,573	468
Proceeds on selldown of subsidiary		8,506
Payments for investment properties		(234, 518)	(294, 386)
Net cash outflows from investing activities		(325, 043)	(295, 866)
Cash flows from financing activities
Proceeds from borrowings		505,629	1,208.007
Repayments of borrowings		(298, 400)	(782, 218)
Proceeds from issue of securities			47,136
Dividends / distributions paid		(129, 343)	(128, 501)
Net cash inflows from financing activities		77,886	344,424
Net (decrease) / increase in cash held		(276, 110)	298,709
Cash at the beginning of the financial year		332,120	33,481
Effect of exchange rate change on cash		18	(70)
Cash at the end of the financial year	(a)	56.028	332,120

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

a) Reconciliation of Cash

For the purposes of the statement 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 statement of cash flows
is reconn

is reconciled to the statement of imancial position as follows :
Cash on hand	186	217
Cash at bank	55,251	250,134
Deposits at call	591	81,769
Balance per statement of cash flows	56,028	332,120
b) Reconciliation of Net Cash (Outflows) / Inflows from Operating Activities to Profit from Ordinary Activities After Tax
Profit from ordinary activities after related income tax	234,388	252,698
Depreciation and amortisation	10,288	6,801
Amortisation of deferred expenses	2,421	2.299
Increase in provisions	2,174	1.226
Provision for loss on inventory	10,733
(Profit)/Loss on sale of non-current assets	(26)	(189)
Share of profits of associates and joint ventures not received as distributions	(37, 779)	(14, 813)
Change in operating assets and liabilities, net of effects from purchase of controlled entity -
(Decrease) / Increase in income taxes payable	(15, 429)	4,296
Increase / (Decrease) in tax effected balances	15,875	(308)
(Increase) / Decrease in receivables	(56, 241)	1.013
Increase in inventories	(170, 459)	(10, 177)
Decrease / (Increase) in other assets	5.477	(4,536)
(Decrease) / Increase in creditors	(30, 375)	13,349
(Decrease) in bond / bill discount payable		(1,508)
Net cash inflows / (outflows) from operating activities	(28, 953)	250.151

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2005

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

(a) Basis of Accounting

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.

The accounting policies adopted in preparing the financial statements have been consistently applied by the individual entities comprising the Group financial statements except as otherwise indicated.

The financial statements are prepared in accordance with the historical cost convention, except for certain assets which as noted, are stated at valuation (see note 1(i)). Comparative information is reclassified where appropriate to enhance comparability.

"The Mirvac Group" - Stapled Securities

Mirvac Group Stapled Securities comprise one consolidated Mirvac Limited share and one consolidated Mirvac Property Trust unit to create a sinole listed entity traded on the Australian Stock Exchange. The stapled securities cannot be traded or dealt with separately.

With the establishment of the Mirvac Group and its common investors, the Group has common directors and common business objectives, and operates as a combined entity with four core businesses:

• property investment and management
• property development
• hotel ownership and management
• funds management

The entities forming the stapled group entered into a Deed of Co-Operation which provided that the members consider the interests of the Mirvac Group as a whole, when entering into any agreement or arrangement, or carrying out any act. This Deed of Co-operation means that members of the stapled group, where permitted by law, will carry out activities with other members on a cost recovery basis, thereby maintaining the best interests of the Group as a whole.

The two Mirvac entities comprising the stapled group, remain separate legal entities in accordance with the Corporations Act 2001, and are each required to comply with the reporting and disclosure requirements of Accounting Standards and the Corporations Regulations 2001, Neither of the entities whose securities are stapled is a parent of the other entity and the entities do not have a common parent.

The stapled security structure will cease to operate on the first to occur of:

• any of Mirvac Limited or Mirvac Property Trust resolving by special resolution in general meeting and in accordance with its constitution

• to terminate the stanting provisions: or

• the commencement of the winding up of Mirvac Limited or Mirvac Property Trust.

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

(b) Principles of Aggregation

The financial statements of the Mirvac Group consist of the aggregated financial statements of Mirvac Limited and its controlled entities and Mirvac Property Trust and its controlled entities.

The financial statements are a general purpose financial report, which has been prepared to satisfy the requirements of the Urgent Issues Group Consensus View 13, "The Presentation of the Financial Report of Entities Whose Securities are Stapled".

The aggregated financial statements incorporate an elimination of inter-entity transactions and balances and other adjustments necessary to present the financial statements on a combined basis

Outside equity interests in the results and equity of controlled entities are shown separately in the combined statement of financial performance and statement of financial position respectively.

Where controlled entities have entered or left the Group during the year, their operating results have been included from the date control was obtained until the date control ceased.

Investments in associates are accounted for in the combined financial statements using the equity method except as noted below. Under this method, the Group's share of the post-acquisition profits or losses of associates is recognised as revenue in the combined statement of financial performance, and its share of post-acquisition movements in reserves is recognised in combined reserves. The cumulative post-acquisition movements, including dividends paid by associates are adjusted against the cost of the investment.

Associates are those entities over which the combined entity exercises significant influence, but not control.

Investments in associates within certain asset classes, including infrastructure investments, have been measured at net market value. Changes in net market value are recognised as revenue or expenses in the statement of financial performance in the financial year which the change occurred.

Investments in joint vertures are accounted for as set out in note 1(t).

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) $\ddot{\mathbf{3}}$ .

(c) Income Tax

Tax effect accounting procedures are followed whereby the income tax expense in the statement of financial performance is matched with the accounting 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 cumulative timing differences is set aside to the deferred income tax or the future income tax benefit accounts, at the rates which are expected to apply when those timing differences reverse.

Under current income tax legislation Mirvac Property Trust is not liable for income tax, provided its taxable income is fully distributed to unitholders each financial vear.

The trust is liable for tax on capital gains to the extent that these are not fully distributed to the unitholders.

Tax Consolidation Legislation

Mirvac Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July 2003.

As a consequence, Mirvac Limited, as the head entity in the tax consolidated group, recognises current and deferred tax amounts relating to transactions, events and balances of the wholly-owned Australian controlled entities in this group as if those transactions, events and balances were its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances. Amounts receivable or payable under an accounting tax sharing agreement with the tax consolidated entities are recognised separately as tax-related amounts receivable or payable. Expenses and revenues arising under the tax sharing agreement are recognised as a component of income tax expense / (benefit).

The deferred tax balances recognised by Mirvac Limited in relation to wholly-owned entities joining the tax consolidated group are measured based on their carrying amounts at the level of the tax consolidated group before the implementation of the tax consolidation regime.

(d) Foreign Currency

(i) Foreign Controlled Entity

As a foreign controlled entity of Mirvac Limited 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 of Mirvac Limited consider that it is appropriate to treat the controlled entity as self-sustaining.

(ii) Hedaina

Hedging is undertaken in order to avoid or minimise possible adverse financial effects of movements in exchange rates. Gains or costs arising upon entry into a hedging transaction intended to hedge the transaction, together with subsequent exchange gains or losses resulting from those transactions are deferred in the statement of financial position from the inception of the hedging transaction up to the date of settlement.

(e) Revenue Recognition

Revenue is recognised for the major business activities as follows:

(i) Development Projects

Where a pre-completion exchanged contract exists and the outcome of the project can be reliably estimated, 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 rellably 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(g)).

(ii) 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.

(iii) Hotel Revenue

Revenue is recognised when goods and services have been provided to the customer.

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) $\blacksquare$

(e) Revenue Recognition (continued)

(iv) Rent

Rental revenue for operating leases is recognised on a straight line basis over the term of the lease, except where an alternative basis is more representative of the pattern of service rendered through the provision of the leased premises. Incentives offered under operating leases are recognised in the net consideration received for the use of the asset, irrespective of the timing of payment.

(v) Recoverable Outgoings

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

(vi) Interest

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

(vii) Sale of Non-current Assets

The gross proceeds of asset sales are included as revenue of the Group when control of the asset passes to the purchaser.

The nain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal (including incidental costs).

Any related balance in the asset revaluation reserve is transferred to the capital profits reserve on disposal.

(viii) Channes in Net Market Vatue of Investments

Any changes in net market value are recognised as revenues or expenses in net profit or loss for the period in which the changes occur.

(ix) Fees

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

(f) 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.

(g) 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 the 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.

(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.

(h) 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.

Where 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.

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 1.

(i) Revaluation of Non-Current Assets

Subsequent to initial recognition as assets, land and buildings (including integral plant and equipment) classified as investment properties, are measured at fair value being the amounts for which the assets could be exchanged between knowledgeable willing parties in an arm's length fransaction.

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 investment properties 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.

Revaluation 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 orystallise.

(i) 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.

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

All other properties are carried at external valuation plus capital expenditure incurred since the date of external valuation.

Where a contract has been entered into for the sale of a property investment, the property has been valued at the lower of net realisable value or the latest external valuation.

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.

(k) Investments

Interests in listed and unlisted securities, other than controlled entities and associates in the combined financial statements, are brought to account at cost and dividend income is recognised in the statement of financial performance when receivable. Controlled entities and associates are accounted for in the combined financial statements as set out in note 1(b).

(i) 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 Office leasehold 1 to 10 years

(m) 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 combined entity, whichever is the shorter. Leasehold improvements held at the reporting date are being amortised over periods ranging up to 10 years.

(n) 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(w)).

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 combined 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 years.

NOTES TO THE FINANCIAL STATEMENTS (Continued) Cash on hand

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) $\ddot{\bullet}$

(o) Intangible Assets

(i) 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 goodwith 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 longer probable.

(ii) Management Rights

Management rights are carried at cost. The balance of management rights is reviewed at each balance date for any impairment, and written off to the statement of financial performance to the extent that the future benefits are no longer probable.

(p) Trade and Other Creditors

These amounts represent liabilities for goods and services provided to the combined 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.

(g) Interest bearing liabilities

Commercial notes, 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.

(r) Dividends / Distributions

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

(s) Interest Rate Agreements

The Group has entered into interest rate option agreements, and interest rate swap agreements, in order to fix exposure to fluctuations in interest rates.

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

Where an interest rate swap is terminated early and the hedged anticipated 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.

When the hedged anticipated transactions are still expected to occur as designated, the gains and losses on the swap upon its early termination are deferred and included on a systematic basis in the measurement of these anticipated interest transactions when they occur.

These financial instruments are not held for speculative purposes.

(t) Joint Ventures

(i) Joint Venture Operations

The proportionate interests in the assets, liabilities and expenses of unincorporated joint venture operations have been incorporated in the financial statements under the appropriate headings. Details of the joint venture operations are set out in note 34.

(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 34.

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

(u) Employee benefits

(i) Wages and Salaries, Annual Leave and Sick Leave

Liabilities for wages and salaries, annual leave and sick leave expected to be settled within twelve months of the reporting date are recognised in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) $\blacksquare$

(u) Employee benefits (continued)

(ii) Long Service Leave

The liability for long service leave expected to be settled within twelve months of the reporting date is recognised and is measured in accordance with (i) above.

The liability for long service leave expected to be settled more than twelve months from the reporting date is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the 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, 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.

(v) Borrowing Costs

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

(w) Operating Leases

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.

(x) Earnings per Security

(i) Basic Earnings per Security

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

(ii) Diluted Earnings per Security

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

(y) 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(o).

(z) 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 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.

(aa) Net Current Liabilities

The Group has reclassified \$990 million of non-current interest bearing liabilities to current interest bearing liabilities as a result of bonds maturing during the year ended 30 June 2006, which will be reissued in the normal course of business.

(ab) Comparative Information

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

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) $\ddagger$

(ac) Rounding of Amounts

The Group is of the kind referred to in Class Order 98/0100, issued by the Australian Securities & Investments Commission, relating to the "rounding off" of amounts in the 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.

(ad) Impact of Adopting Australian Equivalents to International Financial Reporting Standards (AIFRS)

The Australian Accounting Standards Board (AASB) has adopted International Financial Reporting Standards (IFRS) for application to reporting periods beginning on or after 1 January 2005. The AASB has issued Australian equivalents to IFRS (AIFRS), and the Urgent Issues Group (UIG) has issued abstracts corresponding to IASB interpretations originated by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee. The adoption of AIFRS will be first reflected in the Group's financial statements for the half-year ending 31 December 2005 and the year ending 30 June 2006.

Entities complying with AIFRS for the first time will be required to restate their comparative financial statements to amounts reflecting the application of AIFRS to that comparative period. Most adjustments required on transition to AIFRS will be made, retrospectively, against opening retained earnings as at 1 July 2004.

The Group has established a project team to manage the transition to AIFRS, including training of staff and system and internal control changes to gather all the required financial information. The project team is chaired by the Chief Financial Officer, and has prepared a timetable for managing the transition, which is currently progressing to plan.

Set out below are the key areas expecting to change on adoption of AIFRS and our best estimate of the quantitative impact of the changes on total equity as at 30 June 2005 and on net profit for the year ended 30 June 2005.

Although the adjustments disclosed in this note are based on management's best knowledge of expected standards and interpretations, and current facts and circumstances, these may change. For example, amended or additional standards or interpretations may be issued by the AASB and the IASB. Therefore, until the Group prepares its first full AIFRS financial statements, the possibility cannot be excluded that the accompanying disclosures may have to be adjusted.

(i) Income Tax

Under AASB 112 Income Taxes, deferred tax balances are determined using the balance sheet method. Deferred tax is the tax expected to be payable or recoverable by the entity, on differences between the tax bases of asset and fiabilities and their carrying value per the statement of financial position. This would result in the recognition of a deferred tax liability in relation to revalued assets (excluding trust revaluations).

This will result in a change to the current accounting policy, under which deferred tax balances are determined using the income statement method, whereby items are only tax-effected if they are included in the determination of pre-tax accounting profit and loss and/or taxable income or loss and current and deferred taxes cannot be recognised directly in equity.

On implementation of AIFRS, an opening adjustment to shareholders equity will be required to recognise the deferred tax liability. The increase in the deferred tax liability in the statement of financial position at 1 July 2004 is $\$1.862.000$ with a corresponding reduction against retained earnings.

For the year ended 30 June 2005 there is a reduction of the deferred tax liability of \$546,000 and an increase in net profit and total equity of \$546,000.

(ii) Investment Properties

Under AASB 140 Investment Property, the Group has elected to measure investment properties at fair value, with any gain or loss arising from changes in fair value, net of applicable tax, recognised through the statement of financial performance.

This will result in a change to the current accounting policy, under which changes in the fair value of investment properties are recognised in the asset revaluation reserve, with no provision recognised for tax unless it is expected that a liability for tax will crystallize.

On transition to AIFRS the balance of the asset revaluation reserve totalling \$113,706,000 will be transferred to retained earnings. If the change required by AASB 140 had been applied for the year ended 30 June 2005, the Group's retained earnings would have been \$161,487,000 higher, net profit would have been \$51,487,000 higher, and the asset revaluation reserve would have been \$161,786,000 lower.

Additionally, share of profits from associates will increase as a result of revaluations being recognised through the statement of financial performance. If the policy had been applied during the year ended 30 June 2005, retained earnings would have been \$7,718,000 higher, net profit would have been \$7,718,000 higher and the asset revaluation reserve lower by the same amount.

(iii) Owner Occupied Investment Properties

Under Australian Generally Accepted Accounting Principals (AGAAP), properties occupied by the Group are classified as investment properties and carried at fair value.

Under AIFRS, where the Group occupies a significant portion of an owned building, the asset will no longer be classified as an investment property but will be reclassified as property, plant and equipment and depreciated. Additionally any owner-managed hotels, including hotel management lots, are considered owner-occupied property, rather than investment property and will be depreciated.

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) $\ddagger$

(ad) Impact of Adopting Australian Equivalents to International Financial Reporting Standards (AIFRS) (continued)

The Group however intends to fair value certain classes of property, plant and equipment including owner occupied investment properties. As a result the depreciation recognised on these properties will be offset by the revaluation increment to the asset revaluation reserve.

On transition to AIFRS, approximately \$302,741,000 will be required to be reclassified to property, plant and equipment from investment properties.

The accumulated depreciation recognised on transition relating to assets carried at cost is \$9,825,000, with the net impact on retained earnings being \$6,878,000 (net of tax effect).

If the policy had been applied during the year ended 30 June 2005, total equity of the Group would have been approximately \$10,306,000 lower (net of revaluation increment), and net profit would have been \$8,982,000 (net of tax effect) lower for the year ended 30 June 2005 as a result of the depreciation charge on these assets measured at cost.

(iv) Intandible Assets - Goodwill

Under AASB 3 Business Combinations, amortisation of goodwill will be prohibited, and will be replaced by annual impairment testing focusing on the cash flows of the related cash generating unit or groups of cash generating units. This will result in a change to the current accounting policy, under which goodwill is amortised on a straight line basis over the period during which the benefits are expected to arise and not exceeding 20 years.

The Group intends to apply the exemption available in AASB 1, allowing it not to apply AASB 3 retrospectively and hence, prior years amortisation would not be written back at the date of transition. If the policy required by AASB 3 had been applied during the year ended 30 June 2005, total equity would have been \$5,059,000 higher and net profit \$5,059,000 higher.

(v) Financial Instruments

The Group will be taking advantage of the exemption available under AASB 1: First-time adoption of Australian Equivalents to International Financial Reporting Standards, to apply AASB 132 and AASB 139 only from 1 July 2005. This allows the Group to apply previous AGAAP to the comparative information of financial instruments within the scope of AASB 132 and AASB 139 for the half year ending 31 December 2005 and full year ending 30 June 2006 financial statements.

Under AIFRS financial instruments will generally be recognised at fair value in the statement of financial position. Derivatives taken out to reduce exposure to fluctuations in floating interest rates may be accounted for as cash flow hedges provided that the hedge designation, documentation and effectiveness tests can be met. If these tests are satisfied the derivative is measured at fair value and gains and losses are reflected directly in equity until the hedged transaction occurs, when they are released to the statement of financial performance. To the extent that the hedges do not satisfy the above tests, then a corresponding portion of the gain or loss is reflected in the statement of financial performance directly.

(vi) Trust Units

Under AASB 132 Financial Instruments, fixed life property trusts are required to classify units on issue as a financial liability rather than equity under AGAAP, Additionally, distributions to unit holders are classified as interest. The directors have resolved that such classification would not be in the best interest of security holders and amended the constitution of the Mirvac Property Trust on 24 June 2005 to avoid such treatment.

(vii) Equity-based Compensation Benefits

Under AASB 2 Share-based Payment, the Group is required to recognise an expense for the fair value of equity instruments, measured at grant date, issued to employees under the Employee Incentive Scheme. The Group intends to apply the exemption available in AASB 1, and will not recognise an expense for equity instruments issued before 7 November 2002 and/or vested by 1 January 2005.

This will result in a change to the current accounting policy under which no expense is recognised for equity-based compensation.

As all equity instruments had vested prior to 1 January 2005 there would be no expense recognised by the Group for the year ended 30 June 2005.

Additionally loans and equity issued under the Employee Incentive Scheme that are non-recourse and held in trust will be derecognised on entry into AIFRS. Cash distributions paid to employee's in relation to these securities will be expensed when paid. If the policy required by AASB 2 had been applied on transition at 1 July 2004 the adjustments required result in a decrease in contributed equity of \$63,087,000, a decrease in receivables of \$50,955,000 and an increase of retained earnings of \$12,132,000.

If the policy required by AASB 2 had been applied during the year ended 30 June 2005, total equity would have been approximately \$50,316,000 lower and employee benefit expense \$2,258,000 higher.

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) $\blacksquare$

(ad) impact of Adopting Australian Equivalents to International Financial Reporting Standards (AIFRS) (continued)

(viii) Lease Incentives

Under AIFRS, lease incentives provided under an operating lease will be required to be recognised as an expense on a straight-line basis against rental income. As these incentives are repaid out of future lease payments, they are recognised as an asset in the consolidated balance sheet as a component of the carrying amount of investment properties and amortised over the lease period.

This will result in a change to the current accounting policy, under which lease incentives, including fit-out, are added to the carrying amount of the investment property.

The value of fit-out on transition to AIFRS which will be separately identified as part of the carrying value of investment property is \$16,797,000 (net of amortisation). For the year ended 30 June 2005, an additional \$16,358,000 in fit-out was capitalised. Net property income will be reduced by amortisation of the lease incentive totaling \$4,200,000.

This amortisation of lease incentives will be offset by an adjustment to income from revaluation of investment property (non-operating profit item) which will maintain the fair value of investment properties. Such treatment results in no net impact on total equity at 1 July 2004, nor net profit for the year ended 30 June 2005.

(ix) Revenue Recognition - Development Projects

Under AIFRS revenue will be recognised in relation to development projects when settlement occurs.

This will result in a change to the current accounting policy, whereby under UIG 53 revenue is recognised by applying the percentage completion method to that proportion of the project represented by pre-sold exchanged contracts.

On transition to AIFRS the adjustments required result in a decrease in total equity of \$14,202,000.

If the policy required by AIFRS had been applied during the year ended 30 June 2005, total equity would have been \$40,179,000 lower and net profit would have been \$25,977,000 lower.

Additionally profits from joint venture developments were recognised in accordance with URS 53 and included in share of profits from associates. If the policy had been applied during the year ended 30 June 2005, total equity would have been \$11,015,000 lower and net profit \$11,015,000 lower.

Reconciliation of equity as presented under AGAAP to that under AIFRS:

	Note	30 June 2005**	1 July $2004*$
		\$000	\$000
Total equity under AGAAP		2,981,322	2.240.077
Recognition of deferred tax liability		(1,316)	(1.862)
Depreciation of owner occupied investment properties/hotels	ίü	(10,306)	(6.878)
Write-back of goodwill amortisation	ł۷	5.059
Derecognition of share capital - employee equity payments	vii	(50,316)	(50, 955)
Share-based payment expense	vii	(2.258)
Reversal of UIG 53 profits	ix	(40.179)	(14,202)
Share of profit from associates - reversal of UIG 53 profits	ix	(11, 015)
Total equity under AIFRS		2.870.991	2,166,180

* This column represents the adjustments as at the date of transition of AIFRS.

** This column represents the cumulative adjustments as at the date of transition to AlFRS and those for the year ended 30 June 2005.

$\overline{\phantom{a}}$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(ad) Impact of Adopting Australian Equivalents to International Financial Reporting Standards (AIFRS) (continued)

Reconciliation of net profit under AGAAP to that under AIFRS:

$\bar{z}$

YEAR ENDED 30 JUNE 2005	Note	Consolidated
		\$000
Net profit as reported under AGAAP		233,330
Adjustment to income tax expense	i	546
Revaluation of investment properties	ji.	51.487
Share of profits from associates - revaluation of investment properties	Ħ	7.718
Depreciation of owner occupied investment properties/hotels	誰	(8.982)
Write-back of goodwill amortisation	i۷	5,059
Share-based payment expense	vii	(2.258)
Amortisation of lease incentives	viii	(4.200)
Revaluation investment properties (offset of amortisation lease incentives)	viii	4.200
Reversal of UIG 53 profits	ÌХ	(25.977)
Share of profit from associates - reversal of UIG 53 profits	iх	(11, 015)
Net profit under AIFRS		249,908

$\hat{\mathcal{A}}$

		2005 \$000	2004 \$000
2.	REVENUE
	Revenue from operating activities
	Sales of goods	756,518 228,145	811,581 207,984
	Rental income Services	159,515	139,347
	Interest on mezzanine loans Construction contract revenue	721 274,181	219,631
		1,419,080	1,378,543
	Revenue from outside the operating activities
	Other interest	5,839	6,461
	Dividends	1,115
	Foreign exchange gains Sale of non-current assets and property management business	63 4,863	66 564
		11,880	7,091
	Revenue from ordinary activities (excluding shares of equity accounted
	net profits of associates and joint ventures)	1,430,960	1,385,634
3.	PROFIT FROM ORDINARY ACTIVITIES
	Net Gains and Expenses Profit from ordinary activities before related income tax expense includes the following specific net gains and expenses:
	Net Gains
	Foreign exchange gain Net gain in disposal of plant & equipment	63 229	66 40
	Net gain on disposal of investment properties and property management business		149
	Net gain on disposal of investments	451
	Expenses Borrowing costs
	Interest and finance charges paid / payable	117,189	98,246
	Less: Amount capitalised	(72, 249)	(63, 118)
	Interest capitalised in current and prior year expensed this year Borrowing costs expensed	48,350 93,290	54,595 89,723
	Finance lease contingent rentals	31	84
	Depreciation
	Plant & Equipment	5,013	5,192
	Total Depreciation	5,013	5,192
	Amortisation Goodwill	5,058	1,347
	Office leasehold improvements	209	248
	Equipment under finance lease Total Amortisation	8 5,275	14 1,609
	Amortisation of deferred expenses	2,421	2,299
	Net loss on disposal of investment properties	203	ų,
	Other charges against assets Provision for loss on projects	10,733
	Bad & doubtful debts - trade debtors	82	317
	Other Provisions
	Employee benefits	3,986	6,226
	Rental expense relating to operating leases	3,242	2,674

$\mathcal{A}^{\mathcal{A}}$

$\sim 10^7$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

	2005 \$000	2004 \$000
4. INCOME TAX

(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

Income tax calculated at 30% (2004: 30%)	81.042	88,876
Tax effect of permanent differences:
Non-deductible and non-assessable items	(50)	745
Capital profit on sale of property	694	(4.430)
Trust net income	(45, 982)	(41,603)
income tax adjusted for permanent differences	35,704	43.588
Over provision in previous year	49	(33)
Income tax expense attributable to profit from ordinary activities	35,753	43,555
Aggregate income tax expense	35.753	43,555
Aggregate income tax expense comprises:
Current tax provision	20.301	60,481
Deferred income tax provision	21,691	(16, 225)
Future income tax benefit	(6, 288)	(668)
Over provision in prior year	49	(33)
	35,753	43,555
(b) Tax Losses

No part of the future income tax benefit shown in note 15 is attributable to tax losses. The directors estimate that the potential future income tax benefit at 30 June 2005 in respect of tax losses not brought to account is

The benefit of the tax losses will only be obtained if:

l,

$\mathcal{L}$

÷.

(i) the combined entity derives future assessable income of a nature and an amount sufficient to enable the benefit from the deductions for the losses to be realised, and

(ii) the combined entity continues to comply with the conditions for deductibility imposed by tax legislation, and

no changes in tax legislation adversely affect the combined entity in realising the $(ii)$ benefit from the deductions for the losses.

270,141

30,040

296,253

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

		2005 \$000	2004 \$000
5.	CURRENT ASSETS - RECEIVABLES
	Trade debtors Less: Provision for doubtful debts	38,478 (1.022)	52,373 (940)
	Amounts due from related entities Other receivables	37,456 121,785 73,489	51,433 5,760 41,571
		232,730	98,764
	Included in trade debtors are lease commitments receivable on operating leases of investment properties.	7.412	3,525
	Further information in relation to amounts due from related entities is set out in note 41.
6.	CURRENT ASSETS - INVENTORIES
	Development projects Cost of acquisition Development costs and recognised profits Rates and taxes Borrowing costs capitalised during development	214,077 418.622 12,008 27,877	176,476 285,553 9,502 22,385
	Provision for losses and guarantees	(10, 733)
	Construction work in progress (amount due from customers for contract work)	661,851	493,916
	Contract costs incurred and recognised profits less recognised losses Less: Progress billings	390,004 (335, 158)	405,621 (311, 876)
		54,846	93,745
	Hotel inventories	672	779
	Amounts totalling \$13.1 million (2004: \$2.7 million) received as advances on construction contracts in progress are included in combined trade creditors. Total progress billings and advances received in relation to construction contracts in progress amount to \$348.2 million (2004: \$314.6 million).	717,369	588,440
	Aggregate Carrying Amount of Inventories
	Current - as above Non-current (note 9)	717,369 788,329	588,440 602,727
		1,505,698	1,191,167
7.	CURRENT ASSETS - OTHER
	Prepayments Other	10,547 10,421	14,465 5,134
		20,968	19,599
8.	NON-CURRENT ASSETS - RECEIVABLES
	Loans to directors and employees Amounts due from related entities Other receivables	83,823 108,623 1,515	64,810 22,278
		193,961	87,088

Further information in relation to loans to directors and employees is set out in note 38. Further information in relation to amounts due from related entities is set out in note 41. $\mathcal{L}$

$\overline{\phantom{a}}$

$\hat{\mathcal{A}}$

$\mathcal{L}^{\mathcal{L}}$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

		2005 \$000	2004 \$000
9.	NON-CURRENT ASSETS - INVENTORIES
	Development projects Cost of acquisition Development costs and recognised profits Rates and taxes Borrowing costs capitalised during development Provision for losses	505.175 149,001 8,459 42,040 (428)	462.701 96,531 11,063 21,905 (428)
		704,247	591,772
	Construction work in progress (amount due from customers for contract work) Contract costs incurred and recognised profits less recognised losses	84.082	10,955
		788,329 ,,,,,,,,,	602,727
	10. NON-CURRENT ASSETS - INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Shares in associates - accounted for using equity method (note 33) Shares in associates - accounted for at net market value (note 33). Interests in joint ventures (note 34)	155,837 9,958 127,373	79.357
		293,168	79,357
	11. NON-CURRENT ASSETS - OTHER FINANCIAL ASSETS
	Investment Traded on Organised Markets
	Share in other corporations - at cost	6,334
	Non-Traded Investments Shares in other corporations - at cost	4.164	28
		10,498	28

$\sim$

$\sim$

$\sim$

$\hat{\mathcal{A}}$

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

	(a) Shares Held in Controlled Entities of Mirvac Limited

(a) Shares Reig in Controlled Emmiss of Mirvac Charled	COUNTRY OF	CLASS OF	EQUITY HOLDING
NAME OF ENTITY	INCORPORATION	SHARES	2005	2004
			₩	%
Mirvac Projects Pty Ltd Ford Mirvac Unit Trust	AUSTRALIA AUSTRALIA	ORDINARY UNITS	100 100	100 100
Mirvac International Pty Ltd	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	AUSTRALIA	ORDINARY	100	100
Mirvac Projects No.2 Ptv Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac Property Advisory Services Pty Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac (Waish Bay) Pty Limited	AUSTRALIA AUSTRALIA	ORDINARY ORDINARY	100 100	100 100
Mirvac Woolloomooloo Pty Ltd 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
James Fielding Holdings Limited	AUSTRALIA	ORDINARY	100
107 Mount Street Head Trust	AUSTRALIA	UNITS	100
107 Mount Street Sub Trust	AUSTRALIA AUSTRALIA	UNITS ORDINARY	100 100	$\rightarrow$
197 Salmon Street Pty Limited Australian Sustainable Investments Fund	AUSTRALIA	UNITS	35*	÷
James Fielding Infrastructure Yield Fund	AUSTRALIA	UNITS	13"
Domaine Holdings Limited	AUSTRALIA	ORDINARY	100
James Fielding Services Pty Limited	AUSTRALIA	ORDINARY	100
James Fielding Investments Pty Limited	AUSTRALIA	ORDINARY	100
James Fielding Developments Pty Limited	AUSTRALIA	ORDINARY	100
HPAL Holdings Pty Limited Hoxton Park Airport Pty Limited	AUSTRALIA AUSTRALIA	ORDINARY ORDINARY	100 100	٠
Nelson Bay Apartments Pty Limited	AUSTRALIA	ORDINARY	100
Springfield Development Company Pty Limited	AUSTRALIA	ORDINARY	100	$\tilde{\phantom{a}}$
Zimara Enterprises Pty Limited	AUSTRALIA	ORDINARY	100
James Fielding Property Services Pty Limited	AUSTRALIA	ORDINARY	100	$\tilde{\phantom{a}}$
James Fielding Advisory Pty Limited	AUSTRALIA	ORDINARY	100
James Fielding Funds Management Limited JF Meridian Management Limited	AUSTRALIA AUSTRALIA	ORDINARY ORDINARY	100 100	ä,
James Fielding Capital Pty Limited	AUSTRALIA	ORDINARY	100
Hotel Capital Partners Pty Limited	AUSTRALIA	ORDINARY	100
Capital Property Management Limited (liquidated)	AUSTRALIA	ORDINARY	×	100
HPA Pty Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac (Beacon Cove) Pty Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac Cairns International Pty Ltd (Incorporated 24 June 2005) Mirvac Capital Pty Ltd	AUSTRALIA AUSTRALIA	ORDINARY ORDINARY	100 100	100
Mirvac Constructions Pty Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac Constructions (Homes) Pty Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac Constructions (QLD) Pty Limited	AUSTRALIA	ORDINARY	100	100
Mirvac Constructions (VIC) Ply Limited	AUSTRALIA	ORDINARY	100	100
Mirvac Constructions (WA) Pty Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac (Docklands) Pty Ltd	AUSTRALIA AUSTRALIA	ORDINARY ORDINARY	100 100	100 100
Mirvac Finance Pty Limited Mirvac Fini (WA) Pty Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac Fini Holdings Pty Limited	AUSTRALIA	ORDINARY	100	100
Mirvac George Street Pty Limited	AUSTRALIA	ORDINARY	100	100
Mirvac Homes (NSW) Pty Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac Homes (QLD) Pty Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac Homes (WA) Pty Ltd Mirvac Homes Builders (VIC) Pty Ltd	AUSTRALIA AUSTRALIA	ORDINARY ORDINARY	100 100	100 100
Mirvac Interco Limited (Incorporated 16 February 2005)	AUSTRALIA	ORDINARY	100
Mirvac International No. 3 Ptv Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac JV's Pty Limited	AUSTRALIA	ORDINARY	100	100
Mirvac Spare Pty Limited (Incorporated 9 July 2004).	AUSTRALIA	ORDINARY	100
SPV Magenta Pty Limited (Incorporated 9 July 2004)	AUSTRALIA	ORDINARY	100 100
Magenta Unit Trust (Incorporated 9 July 2004) Magenta Shores Golf Club Limited (Incorporated 24 May 2005)	AUSTRALIA AUSTRALIA	ORDINARY ORDINARY	100
Mirvac Mandurah Pty Limited	AUSTRALIA	ORDINARY	100	100
Mirvac Management Limited	AUSTRALIA	ORDINARY	100	100
Mirvac Properties Pty Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac Queensland Pty Ltd	AUSTRALIA	ORDINARY	100	100
Mirvac Real Estate Pty Ltd	AUSTRALIA AUSTRALIA	ORDINARY	100 100	100 100
Mirvac Treasury Limited Mirvac Treasury No. 2 Limited	AUSTRALIA	ORDINARY ORDINARY	100	100
Mirvac Treasury No. 3 Limited	AUSTRALIA	ORDINARY	100	100
Mirvac Victoria Pty Ltd	AUSTRALIA	ORDINARY	100	100

$\mathcal{A}$

$\sim 10^7$

$\mathcal{A}$

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

(b) Units Held in Controlled Entitles of Mirvac Property Trust	COUNTRY OF	CLASS OF	EQUITY HOLDING
NAME OF ENTITY	INCORPORATION	UNITS	2005 %	2004 %
James Fielding Trust	AUSTRALIA	ORDINARY	100
9 Help Street Trust	AUSTRALIA	ORDINARY	100
James Fielding Infrastructure Sustainable Equity Fund	AUSTRALIA	ORDINARY	100
Australian Sustainable Investments Fund	AUSTRALIA	ORDINARY	25*
James Fielding Infrastructure Yield Fund	AUSTRALIA	ORDINARY	$49^*$
Peninsular Homemaker Centre Trust	AUSTRALIA	ORDINARY	100
Springfield Regional Shopping Centre Trust	AUSTRALIA	ORDINARY	67
The Muldrave Trust	AUSTRALIA	ORDINARY	100
Mirvac Commercial Trust	AUSTRALIA	ORDINARY	100	100
Mirvac Property Trust No 2	AUSTRALIA	ORDINARY	$100 -$	100
St. Kilda Road Trust	AUSTRALIA	ORDINARY	100	100
The George Street Trust	AUSTRALIA	ORDINARY	100	100

* The addition of Mirvac Limited and Mirvac Property Trusts interests in these entities are greater than 50%.

Acquisition of controlled entity

On 29 December 2004 the Group acquired 100% control of the James Fielding Group by way of scrip for scrip (securities issued 7 January 2005), for approximately \$537m, including acquisition costs. The operating results of this newly controlled entity have been included in the combined statement of financial performance since the date of acquisition.

James Fielding Group was an ASX listed integrated property investment, funds management, development and management business.

Details of the acquisition are as follows:

	\$'000
Fair value of identifiable net assets of controlled entity acquired
Cash	35,888
Receivables	103,408
Inventories	94,794
Prepayments	1,557
Equity accounted investments	104,379
investment property	293,415
Plant and equipments	456
Intangibles	56,634
Other financial assets	28,466
Deferred tax assets	4.049
Payables	(15,027)
interest bearing liabilities	(224, 605)
Provisions	(19, 262)
Deferred tax liabilities	(28, 209)
	435,943
Less: Outside equity interests	(22, 861)
	413,082
Goodwill on consolidation	123,973
Acquisition costs	(9,798)
Fair value of securities issued as consideration.	527,257 BOISSERSSERSHAVING

$\sim 10$

NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2005

12. NON-CURRENT ASSETS NIVESTMENT PROPERTIES		Cost & Additions	Book Value	Book Value	Last External	Date Last	External Valuer / Notes
AT VALUATION	Date Acquired	to 30/6/05 \$000	30/06/05 \$000	30/06/04 \$000	Valuation \$000	External Valuation
Mirvac Property Trust and Controlled Entitles
67 Albert Street, Chalswood, NSW	01/09/09	59.744	73.000	73,107	73,000	30/06/05	S Young - Savills A Johnston - Savills
30 Cowper Street, Parramatta, NSW	D1/09/58	16,022	19,500	20,619	19,500	30/08/05	P Dale AAPI - CB Richard Elfis M Malloui AAPL - CB Richard Ellis
Quay West Corpark, 111 Harrington Street, Sydney, NSW	30/11/89	37,546	42.017	41,952	41,600 35,500	30/06/03 30/06/04	S Keamey AAPI - PPD Savilis HD McLennan AAPI - Jones Lang LaSalle
Craage City Centre, Summer Street, Orange, NSW Kawana Shoppingworld, Nicklin Way, Buddisa, QLD	05/04/93 09/12/93 &	28,985 99,544	35,608 141,594	35,500 140,349	140,000	30/06/03	T Irving AAPI - CB Richard Ellis
Gippsiand Centre, Cunninghame St, Sale, VIC	06/04/94	34,550	45,000	33,889	45,000	30/06/05	T Forrest AAP) - m3 Property D Magree FAPI - M3 Property
Como Centre, On: Toorak Rd & Chapel St, South Yarra, VIC James Ruse Business Park, 6 Boundary Rd, Northmead, NSW	18/08/98 14/07/94	114,437 19,762	141,300 29,200	117,662 27,780	341,300 29,200	30/06/05 30/06/05	M Revnolds - Colliers International P DAId AAPL-CB Richard Ellis A Bendell GAPI - CB Richard Ellis
20-30 Scrivener Street, Wanvick Farm, NSW	24/12/93	18,526	21.040	21,000	21,006 000,04	30/06/04 31/12/03	C Olson FAPI - Knight Frank P Harding FAPI - Knight Frank
Lovelt Tower, 13 Kellie Street, Waden, ACT	14/07/94 & 28/02/99	47,980	46,138	46,026
The Marriott Hotel, 36 College Street, Sydney NSW	31/12/91	95,098	75,445	75,374	75,290	30/06/03	O Westerfund AAPI ANZPI-CB Richard Ellis S Faafax MRICS AAP/ -CB Richard Ellis
1-19 Hargrave Street, Sydney, NSW	31/12/91	4,351	11,008	5,995	11,000	1/03/05	S Fakfax ARIC AAPI-CB Richard Elis L Tredwell GAPI -CB Richard Ellis
40 Miller St, North Sydney, NSW	31/03/98 18/12/98	59,517 47,177	80,802 54,859	80,294 54,683	80,250 54,500	30/06/03 30/06/03	TM Phelan FAPI - Knight Frank S Kearney AAPI - FPO Sovils
1 Castereagh St, Sydney, NSW 271 Lane Cove Rd, North Ryde, NSW	05/04/00	18,617	25,010	25,000	25,000	01/03/04	TM Phalan PAPI - Kalght Prank
Royal Domain Centre, 380 St Kilda Rd, Melbourne, VIC	04/10/95 & 02/04/01	85,305	94,705	94,546	94,500	31/12/03	D Gowing FAPI - CB Richard Ellis
164 Grey St, South Bank, QLD	29/06/01	8,261	12,000	9,475	12,000	31/03/05	Thomg AAPI - CB Richard Ellis D Mohr AAPI - CB Richard Ellis
Bay Centre, Car Pinama & Edward Sts, Pyrmont NSW	20/06/01 31/10/01	58,944 24,189	73,508 24,189	73,500 24.168	73,300 24,000	30/04/03 34/10/03	S Keamey AAPI - FPD Savilis A Pathifox - FPD Savills
200 George Street, Sydney, NSW 190 George Street, Sydney NSW	05/08/03	45,633	42,192	42,113	42,000	30/09/03	A Pannies - FPD Savils
Unit 23, 177 Pacific Highway, North Sydney, NSW	25/01/02	594	594	504	$\ddot{}$	$\rightarrow$ 30/06/05	Internal Valuation 2005: Note (i) M Reynolds AAPI - Colliers International
Building 1.3 & 7 Riverside Quay, Southbank, VIC John Oxley Centre, 339 Coronation Orive, Million, QLD	15/04/02 31/05/02	84,743 37,075	88,350 43,008	82,847 35,860	86,350 43,000	30/08/05	T Irving AAPI - CB Richard Ellis
Blacktown Mega Centa, Blacktown Road, Blacktown, NSW	30/06/02	30,388	40,000	30,164	40,000	30/06/05	D Mohr AAPI - CB Richard Ellis A Johnston AAPI - Saville
1-47 Percival Road, Smithfield, NSW	22/11/02	20,318	21,135	20,500	20,500	30/06/04	A Pannafex AAPI - Savills M Ward AAPI - FPD Savills
Waverley Gardens Shopping Centre, Cri Police & Jackson Roads	15/11/02	54,845	54,846	53,852	53,850	30/04/03	C Ciurlino AAPI - M3 Property Strategists
Mulgrave, VIC	17/01/03	34,870	34,693	34,725	34,250	30/04/03	D Magree FAPI - M3 Property Strategists S Fox AAPI - MS Property Strategists
The Village Centre, Charles Hackett Drive, St Marys, NSW			24,307	24,172	24,100	30/00/03	C Olson FAPI - M3 Property Strategists J O'Leary FAPI - M3 Property Strategists
Mooney Ponds Central, Homer Street, Mooney Ponds, VIC	20/05/03	25,947		36,632	36,500	36/09/03	D Magree FAPI - M3 Property Strategists T Irving AAPI - CB Richard Ellis
Hinkler Shopping Centre, Maryborough St. Sundaberg, OLD	12/08/03	37,768	37,535		17,300	30/09/03	D Mohr AAP :- CB Richard Ellis A Graham AAPI - Collers International
44 Biloela Street, Villawood, NSW Building 2, Riverside Quay, Southbank, VIC	24/09/03 01/07/03	18,828 29.768	17,856 28,650	17,306 27.931	26,650	30/06/05	M Reynolds AAP! Colliers International
Stanhope Village, Sentry Drive, Stanhope Gardens, NSW	14/11/03	22,425	26,462	24,000	24,000	31/83/04	A Johnson AAPI - FPO Savills
333-343 Frankston-Dandenong Road & 4 Abbotts Road, Dandenong South, VIC	15/01/04	12,456	12,456	12,200	12,200	31/03/04	P Dickinson AAPI - CB Richard Effis
64 Bloeks Street, Villawood NSW	02/02/04 07/05/04	22,698 12,244	22,639 18,000	22,000 12,733	22,000 18,000	31/03/04 30/06/05	M Ward AAPI - M3 Property Strategists A Johnston AAPI - Savills
Ikon Retail, 81 Macleay Street, Potts Point NSW							A Pannatex AAPI - Sawiis
IBM Beilding, 8 Brisbane Ave, Barton, ACT Perpetual Trustees Building, 18 Rudd St, Canberra, ACT	28/06/85 15/10/87	12,020 19,359	12,000 16,091	10.851 15,773	12.000 15,750	30/06/05 30/06/03	P Harding FAPI - Knight Frank P Harding FAPI - Knight Frank
54 Marças Clarke Street, Canberra, ACT	15/10/87	21,625	17,250	14,983	17,250	30/06/05	P Harding FAPI - Knight Frank
St George Centre, 60 Marcus Clarke Street, Canberra, ACT Burns Centre, 28 National Circuit, Forrest, ACT	01/09/09 27/09/90	58,470 18,587	48,170 13,434	47,384 13,434	47,100 13,400	30/06/03 30/06/03	P Harding FAPI - Knight Frank P Harding FAP) - Keight Frank
Arts House, 40 Macquarie Street, Barlon, ACT	6B/12/95	17,085	18,000	16,771	18,000	30/06/05	P Harding PAPI - Knight Frank
36 Sydriey Averius, Forrest, ACT Optus Centre, 101-103 Miller St, North Sydney, NSW	26/06/96 30/06/94	34,169 288,097	36,000 365,000	33,834 381,933	36,000 377,000	30/06/05 30/06/05	P Harding FAPE - Knight Frank TM Phelan FAPI - Knight Frank
							KL Goddard FAPI - Knight Frank
The Metcentre, 60 Margaret St. Sydney, NSW (59% interest) 189 Grey Street	66/08/98 19/04/04	177, 102 40,895	162,932 58,000	157,496	154,000 50,000	30/08/03 30/08/05	P Macadam AAPI - Colliers International Throng AAPI - CB Richard Ellis D Mohr AAP! - CB Richard Bills
Bundaberg Plaza	24/09/04	6,342	6,500		6,500	30/06/05	T 3rving AAPI - CB Richard Ellis D Mohr AAPI - CB Richard Blits
127 Creek Street, Brisbane, QLD	1/05/98	47,188 15,774	48,054 8,300		48,000 8,300	30/06/04 30/06/04	S Pacey, AAPI - DTZ Australia C Plaseate, AAPI - m3 Properly
253 Wellington Road, Mulgrave, ViC 18-20 Compark Circuit, Mulgrave, VIC	1/08/01 1/08/01	82	7,659		7,200	30/06/04	C Plasente, AAPI - 813 Property
101 Granfell Street, Adelaide, SA	1/12/98	23,506	27,925 7,975		27,800 7,400	30/06/04 30/06/04	2 Reapy, FAPI - CB Richard Ellis C Plaseste, AAPL - m3 Property
30-32 Compark Circuit, Mulgrave, V/C 9 Help Street, Chatswood, NSW	1/02/03 1/06/02	6,704 44,563	33,598		34,000	30/06/05	RC Price, AAPI - CB Richard Ellis
Peninsular Homentaker Ctr, 1128 Nepean Hwy, Mornispton, VIC	1/12/03	53,398	56,600		56,600	30/06/05	T Forrest AAPI - m3 Property D Magree FAPI - M3 Property
Capital works in progress Land held for development & deposit on investment property		119,156 128,491	119,156 128,491	36,071 47,183			At cost At cost
Mirvae Limited and Controlled Entities
Endeavour House, 86-102 Moverly Road, Coogee, NSW 55 Lavender Street, Misons Point, NSW	28/05/03 03/07/01	82,083	82,083	82,083 60,605	60,600	31/03/04	Internal Valuation - Note (i) TM Pheian FAPI - Knight Frank
107 Mount Street, North Sydney, NSW	01/02/02	35, 149	34,345		34,000	30/06/04	J Wangs FAPI - Colliers International
251 - 281 Salmon Street, Port Melbourne, VIC	01/07/03	17,250	17,250	٠	17.250	30/B/03	CJ Holroyd AAPI - Charter Keck Crane Internal Valuation - Note (ii)
Other Hotel Properties - Management Lots Forestry Land	Various 81/03/04	47,348 50,200	47,472 50,586	48,186			Internal Valuation - Note (i)
Elimination of inter-group charges			(3, 982)	(2.145)
		2,733.949	2,957,130	2,445,972

$\hat{\mathcal{L}}$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

12. NON-CURRENT ASSETS - INVESTMENT PROPERTIES (continued)	Book Value 30/06/05 \$000	Book Value 30/06/04 \$000
Reconciliation
A reconciliation of the carrying amounts of investment properties at the beginning
and end of the current financial year is set out below:
Carrying amount at 1 July 2004	2.445.972	2.123.059
Arkiitions	529.423	302.576
Disposals	(2,701)	(356)
Transfer to inventory	(59.825)
Revaluation increments	54.261	20,693
Carrying amount at 30 June 2005	2.967.130	2,445,972
	,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

(i) Internal Valuations - Investment Properties

Properties not externally valued during the last twelve months are carried at internal (directors') valuation at 30 June 2005.

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

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

(ii) Internal Valuations - 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 at 30 June 2005.

Non-current Assets Piedged as Security

Refer to note 23 for information on non-current assets pledged as security by the Group.

		2005 \$000	2004 \$000
13.	NON-CURRENT ASSETS - PLANT AND EQUIPMENT
	Office leasehold improvements - at cost Less: accumulated amortisation	1,811 ${864}$	1.510 (655)
		947	855
	Plant and equipment - at cost Less: accumulated depreciation	36,946 (21, 239)	33,524 (17,266)
		15,707	16,258
	Plant and equipment under finance lease Less: accumulated amortisation	104 (93)	104 (85)
		11	19
	Total plant and equipment	16,665	17,132

Reconciliation

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:

	Office Leasehoid Improvements \$000	Plant and Equipment \$000	Plant & Equip under finance lease \$000	Total \$000
Carrying amount at 1 July 2004	855	16.258	19	17.132
Additions	301	8.230	$\blacksquare$	8.531
Disposals	w	(3,768)	$\,$	(3,768)
Depreciation / amortisation expense	(209)	(5.013)	${8}$	(6,230)
Carrying amount at 30 June 2005	947	15,707	11	16,665

NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2005

	2005 \$000	2004 \$000
14. NON-CURRENT ASSETS - INTANGIBLES
Goodwill on acquisition of businesses and controlled entities Less: Accumulated amortisation	155,258 (10, 390)	31.285 (7, 159)
	144,868	24,126
Management rights - at cost	55,303
	200,171	24,126
15. NON-CURRENT ASSETS - DEFERRED TAX ASSETS
Future income tax benefit (see note 4(b))	19,889	7,688
16. NON-CURRENT ASSETS - OTHER
Carbon sequestration rights - at cost Deferred borrowing costs, leasing and other expenses	1,025 5,955	3,379
	6,980	3,379
17. CURRENT LIABILITIES - PAYABLES
Trade creditors	46,337	66.989
Other creditors and accruais Amounts due to related entities	118,407 1,000	93,035 1,000
	165,744	161,024
18. CURRENT LIABILITIES - INTEREST BEARING LIABILITIES
Secured: Bank loans	88,400
Commercial notes	990,000	125,000
Construction finance Lease liabilities (note 36)	86,615	16
	1,165,015	125,016
Details of the security relating to each of the secured liabilities and further information is set out in note 23.

19. CURRENT LIABILITIES - CURRENT TAX LIABILITIES

	Income tax	5.072 ***** ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	20.522
20.	CURRENT LIABILITIES - PROVISIONS
	Employee benefits (note 40)	19,834	17,394
	Dividends / distributions payable	74,006	58,186
		93,840	75,580
	21. CURRENT LIABILITIES - OTHER
	Monies held in trust	10,421 200000000000000000000000000000000000000	5,134
22.	NON-CURRENT LIABILITIES - PAYABLES
	Other accrual - deferred land payment	54,500	75,500

23.

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

	2005 \$000	2004 \$000
NON-CURRENT LIABILITIES - INTEREST BEARING LIABILITIES
Secured:
Bank loans	782.100	301,600
Commercial notes	137,705	1.227.568
Lease liabilities (note 36)	---------------------------------------	15
	919,805	1.529.183

Security for Borrowings

Commercial Notes (Commercial Mortgage Backed Securities - CMBS)

The Group has three issues of commercial notes outstanding under its CMBS program as at 30 June 2005 as follows:

\$160.0 million maturing on 22 October 2005 (2004; \$160.0 million), \$830.0 million maturing on 5 June 2006 (2004: \$830.0 million) and \$138.0 million maturing on 22 October 2008 (2004: \$138.0 million).

Interest is payable either quarterly or semi-annually in arrears in accordance with the terms of the notes.

The notes are secured by a first ranking real property mortgage over specific investment properties of the Group, and by a fixed and floating charge over some of the assets of the Group.

Other Bank Borrowings

The Group has a syndicated multi-option borrowing facility totalling \$1,140.0 million (2004 - \$505.0 million), of which \$330.0 million matures in September 2005, \$230.0 million matures in June 2006, and \$580.0 million matures in April 2007, which is secured by real property mortgages over inventory, a floating charge and an equitable charge over the assets and undertakings of Mirvac Limited and its controlled entities, excluding the assets of James Fielding Holdings Limited and its controlled entities, and a floating charge over the assets and undertakings of Mirvac Property Trust and its controlled entities.

The Group has a syndicated securitisation facility totalling \$50.0 million (2004: \$300.0 million) maturing in September 2005, which is secured by a specific charge over the assets securitised.

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.

Lease Liabilities

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

Financing Arrangements

Securitisation facilities (2)

Other bank facilities

	2005	2004
	\$000	\$000
Total facilities:
Multi Option Pre Sales Securitisation (1)	500,000	500,000
Commercial notes (CMBS)	1,128,000	1,128,000
Project facilities (3)	146,240	33,600
Securitisation facilities (2)	50,000	300,000
Other bank facilities	1.140.000	505,000
	2,964,240	2,466,600

Used at balance date:
Multi Option Pre Sales Securitisation	۰	225,000
Commercial notes (CMBS)	1,127,705	1,128,000
Project facilities	143,815	33,600
Securitisation facilities		٠
Other bank facilities	813.300	268,000
	2.084.820	1,654,600
Bank guarantees at balance date	58.800	42.277
	2,143,620	1,696,877
Unused at balance date:
Multi Option Pre Sales Securitisation (1)	500,000	275,000
	295
Commercial notes (CMBS)
Project facilities (3)	2,425

1. Multi Option Pre Sales Securitisation is a capital markets funding program which has certain asset criteria to be complied with to enable issuance of boods to investors.

2. Securitisation facilities require certain asset criteria to be complied with to enable funding by the bank.

3. Project facilities may be drawn to cover construction costs in accordance with an agreed drawdown schedule subject to quantity surveyor monitoring.

300.000

194,723

769,723

50,000 267,900

820,620

NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2005

23.	NON-CURRENT LIABILITIES - INTEREST BEARING LIABILITIES (continued)		2005 \$000	2004 \$000
	Assets Pledged as Security
	The carrying amount of non-current assets pledged as security are:	Notes
	First ranking real property mortgage
	Investment properties	12	2,682,132	2,382,956
	Floating and equitable charge (assets of Mirvac Limited and controlled entities)
	inventories - (current and non-current)	6 8	1,455,274 867,576	1,191,167 64.810
	Receivables investments accounted for using the equity method	10	122.027	79,357
	investment properties	12	182,653	49,689
	Plant and equipment	13	16,194	17,132
	Total assets pledged as security		5,325,856	3,785,111
24.	NON-CURRENT LIABILITIES - DEFERRED TAX LIABILITIES
	Deferred income tax		123,707	71.470
25.	NON-CURRENT LIABILITIES - PROVISIONS
	Employee benefits (note 40)		4,460 12000000000000000	2,914
			2005	2004
		No.	\$000	\$000
26.	CONTRIBUTED EQUITY
	(i) Paid up capital
	Mirvac Limited - ordinary shares issued	853,791,003	691,701	499.977
	Mirvac Property Trust - ordinary units issued	853,791,003	1,966,970	1,478,434
			2,658,671	1,978,411

$\hat{\mathcal{A}}$

(ii) Movements in paid up capital of the Group for the
years ended 30 June 2004 and 30 June 2005 were as follows:

				Mirvac Limited		Mirvac Property Trust
Details	Issue dates / Issue price Note			No. of shares 000's	s 000's	No. of units 000's	s 000's
Opening balance at 30 June 2003				673,705	458,743	673,705	1,364,068
Distribution reinvestment plan issues	25/07/03	\$4.41	(b)	382	446	382	1,237
Employee share scheme issues	20/08/03	\$4.41	(a)	3,603	4.214	3,603	11,687
Distribution reinvestment plan issues	24/10/03	\$4.11	(b)	6.421	7,000	6,421	19,415
Employee share scheme issues	07/11/03	\$4.25	(a)	95	107	95	298
Distribution reinvestment plan issues	30/01/04	\$4.22	(b)	6.496	7,272	6,496	20,169
Security placement with institutions on underwriting of
distribution reinvestment plan	30/01/04	\$4.22	$\langle c \rangle$	6.460	7.232	6,460	20.058
Distribution reinvestment plan issues	30/04/04	\$4.59	(b)	7,980	9,704	7,980	26,915
Security placement with institutions on underwriting of
distribution reinvestment plan	30/04/04	\$4.59	(c)	4,325	.5.259	4,325	14,587
Balance of securities at 30 June 2004				709,467	499,977	709.467	1,478,434
Distribution reinvestment plan issues	30/07/04	\$4.15	(b)	7,402	8.140	7.402	22,577
Employee share scheme issues	25/08/04	\$4.41	(a)	3.037	3,549	3.037	9.843
Distribution reinvestment plan issues	29/10/04	\$4.31	(b)	8.686	10,596	8.686	26,845
Issued as consideration for acquisition of the James Fielding Group	07/01/05	\$4.82	${d}$	109,390	149,214	109,390	378,044
Distribution reinvestment plan issues	28/01/05	\$4.67	(b)	8.018	10,604	8,018	26,865
Distribution reinvestment plan issues	29/04/05	\$4.36	(b)	7,791	9,621	7.791	24,375
Capital raising costs							(13)
Balance of securities at 30 June 2005				853,791	691,701	853,791	1,966,970

26. CONTRIBUTED EQUITY (continued)

(a) Employee Share Scheme Issues

During the financial year 3,036,745 ordinary stapled securities were issued to employees of Mirvac Limited and its controlled entities (2004; 3,698,294 ordinary stapled securities). The securities were issued at market price.

The total of stapled securities issued to employees under the Employee Incentive Scheme at 30 June 2005 is 21,707,026

(2004: 17.342.778), including 5.791.875 stapled securities issued under the former JFG employee share scheme which converted into Mirvac securities at acquisition date (details of this scheme are described in note 40). The market price per ordinary stapled security at 30 June 2005 was \$3.57 (2004: \$4.30).

(b) Distribution Reinvestment Plan

The distribution reinvestment plan was suspended on 6 June 2005.

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

Under the distribution reinvestment plan, holders of ordinary securities may elect to have all or part of their distribution entitlements satisfied by the issue of new ordinary securities rather than being paid in cash. Securities issued under the plan were issued at a 2% discount to the market price.

(c) Security Placement with Institutions

On 18 February 2003, the Mirvac Group issued 49,751,244 stapled 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.

Securities eligible for issue under the distribution reinvestment plan, and not taken up by securityholders, for the December 2003 and March 2004 quarter distributions, were placed with Merrill Lynch International (Australia) Ltd and JP Morgan Australia Ltd respectively, under underwriting anreements.

The placement securities were issued at the same price as the distribution reinvestment plan issue.

(d) Acquisition of James Fielding Holdings Group

On 29 December 2004, the Mirvac Group acquired the James Fielding Group by way of issue of 0.73 Mirvac securities for 1 James Fielding security. These securities were issued on 7 January 2005.

27. RESERVES	2005 \$000	2004 \$000
a) Composition
Asset revaluation reserve	172,279	113,706
Capital reserve Currency fluctuation reserve	(8,393) 632	(8,393) (971)
	164,518	104,342
Movements in Reserves Were:
Asset Revaluation Reserve
Opening balance Transfer to retained profits	113,706 (3,406)	100.995 (7,982)
Increments on revaluation of investment properties	54.261	20,693
Increments on revaluation of investment properties in associates and joint venture entities	7.718
Closing balance	172,279	113,706
Capital Reserve
Opening balance	(8, 393)	(8,393)
Closing balance	(8,393)	(8,393)
Currency Fluctuation Reserve
Opening balance	(971)	(1,406)
Increase in reserve due to translation of foreign controlled entity	1,603	435
Closing balance	632	(971)
Total reserves	164,518 $\overline{ }$ Broadway Andrew Broad	104,342

27. RESERVES (continued)

b) Nature and Purpose of Reserves

i) Asset Revaluation Reserve

The asset revaluation reserve is used to record increments and decrements on the revaluation of noncurrent assets, as described in note 1(i). 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 and distributions in limited circumstances as permitted by law and by the Trust Constitution.

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 securityholders.

(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(d).

.	2005 \$000	2004 \$000
28. RETAINED PROFITS
Retained profits at the beginning of the financial year	157.324	119.562
Net profit attributable to the stapled security holders of the Mirvac Group	233.330	252,698
Dividends / Distributions provided for or paid	(266, 407)	(222.918)
Aggregate of amounts transferred from reserves	3.406	7,982
Retained profits at the end of the financial year	127,653	157.324

Retained profits at the end of the financial year

29. OUTSIDE EQUITY INTERESTS IN CONTROLLED ENTITIES

Interest in:
Share capital	28,430
Retained profits	2.050
	30,480 .

30. DIVIDENDS / DISTRIBUTIONS PROVIDED FOR OR PAID

Ordinary Stapled Securities - the Mirvac Group

Quarterly ordinary distributions paid as follows:
8.30 cents per fully paid stapled security paid on 29 October 2004	59,752
3.32 cents per stapled security franked at 30%
7.90 cents per fully paid stapled security paid on 24 October 2003.		53.537
3.16 cents per stapled security franked at 30%
8.30 cents per fully paid stapled security paid on 28 January 2005.	60,473
3.32 cents per stapled security franked at 30%
8.00 cents per fully paid stapled security paid on 30 January 2004		54,735
3.20 cents per stapled security franked at 30%
8.60 cents per fully paid stapled security paid on 29 April 2005.	72.756
3.44 cents per stapled security franked at 30%
8.10 cents per fully paid stapled security paid on 30 April 2004		56,470
3.24 cents per stapled security franked at 30%
8.60 cents per fully paid stapled security paid on 29 July 2005	73,426
3.44 cents per stapled security franked at 30%
8.20 cents per fully paid stapled security paid on 30 July 2004.		58.176
3.28 cents per stapled security franked at 30%
Total distribution 33.80 cents per fully paid stapled security (2004; 32.20 cents per stapled security)	266,407	222,918
Dividends / distributions actually paid or satisfied by the issue of securities under the
group distribution / dividend reinvestment plans during the years ended 30 June
2005 and 2004 were as follows:
Paid in cash	111,535	128,501
Satisfied by the issue of securities	139,622	92.158
	251,157	220,659

The franked portions of the proposed dividends will be franked out of existing franking credits as at the end of the financial year.

Franking credits available for subsequent financial years based on a tax rate of 30% total \$10.7 million (2004: 18.7 million on a tax rate of 30%).

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

30. DIVIDENDS / DISTRIBUTIONS PROVIDED FOR OR PAID (continued)

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

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

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

31. EINANCIAL INSTRUMENTS

(a) Derivative Instruments

The entities of the Group are parties to derivative financial instruments in the normal course of business, in order to limit exposure to fluctuations in interest rates.

Under the ferms of the Commercial Mortgage Backed Securities issues, a controlled entity of Mirvac Limited was 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 floating 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.

Interest Rate Contracts

The Group has entered into 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.

The Group has approximately 77% (2004 - 70%) of the gross debt outstanding subject to fixed rates. The fixed interest rates range between 5.25% and 6.09% (2004: 4.37% and 6.09%).

Other contracts allow the variable interest rate to float between a minimum of 4.75% and a maximum of 6.00%.

At 30 June 2005, the principal amounts and periods of expiry of the loans subject to interest rate swaps are as follows:

	2005	2004
	\$000	\$000
Less than 1 year	100,000	50,000
1 to 3 years	200,000	100.000
3 to 5 years	457,000	400,000
5 to 10 years	550,000	250,000
	1.307.000 ka kababatan kabupaten dan kababatan aka aka aka aka aka aka aka aka aka a	800,000

$\sim$

$\sim$ .

$\mathcal{L}$

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 Group'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 2005 was a payment of \$8.6 million (2004; receipt of \$4.9 million).

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

31. FINANCIAL INSTRUMENTS (continued)

(b) Interest Rate Risk Exposure

$\bar{z}$

The Group'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 2005	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		56,028					56,028
Receivables	5,8		÷			426,691	426,691
Other financial assets	11				$\overline{a}$	10,498	10,498
		56,028	٠		۰	437,189	493,217
Weighted average interest rate		5.10%	$\bullet$
Financial Liabilities
Payables	17,22					220,244	220,244
Bank loans	18,23	870,500					870,500
Commercial notes	18,23	840,000	150,000	137,705		۰	1,127,705
Construction finance	18	86,615					86,615
Interest rate swap contracts (notional principal amounts)		(1,307,000)	100,000	657,000	550,000
		490,115	250,000	794,705	550,000	220,244	2,305,064
Weighted average interest rate (excluding margin)		5.71%	5.75%	5.82%	5.71%
Net financial assets / (liabilities)		(434,087) *******	(250,000)	(794, 705)	(550,000)	216,945	(1, 811, 847)

		Fixed interest maturing in:
30 June 2004	Notes	Floating interest	1 year	Over 1 to 5	More than	Non-interest	Total
		rate \$000	or less 5000	years \$000	5 years \$000	bearing \$000	\$000
Financial Assets
Cash		332,120					332,120
Receivables	5,8				$\mathbf{r}$	185,852	185,852
		332,120			۰	185,852	517,972
Weighted average interest rate		5.05%		$\overline{\phantom{a}}$	×.	u
Financial Liabilities
Payables	17,22		$\blacksquare$			236,524	236.524
Bank loans	18,23	301,600					301,600
Commercial notes	18,23	1,005,000	60,000	287,568			1,352,568
Lease liabilities	18,23		16	15			31
Interest rate contracts (notional principal amounts)		(800,000)	50,000	500,000	250,000
		506,600	110,016	787,583	250,000	236,524	1,890,723
Weighted average interest rate (excluding margin)		5.38%	4.90%	5.69%	5.99%	$\mathbf{z}$
Net financial assets / (liabilities)		(174, 480)	(110.016)	(787, 583)	(250,000)	(50, 672)	(1,372,751)

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

31. FINANCIAL INSTRUMENTS (continued)

(c) Credit Risk Exposure

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

(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 Group approximates their carrying value.

Commercial notes have a net fair value equal to their face value of \$1,128.0 million.

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.

(e) Forward Exchange Contracts

The Group is expecting receipt of US dollar proceeds as part of its funds management operations. In order to protect against exchange rate movements the Group has entered into a forward rate agreement to sell US dollars.

At balance date details of the outstanding contract is:

Sell US dollars	Buy Australian dollars	Average Exchange Rate
	2005 \$000	2005 cents
Maturity A in A months	13.000	0.7633

As this contract is hedging anticipated future purchases, any unrealised gain or loss on the contract, together with the cost of the contract, is deferred and will be recognised in the measurement of the underlying transaction provided the underlying transaction is still expected to occur as originally designated.

The following gains, losses and costs have been deferred at 30 June 2005:

	.	2005 \$000
	٠ Realised gains Unrealised gains Total gains	٠
	Unrealised losses Costs of contract Total losses and costs	(89) (89)
	Net losses and costs	(89)
32.	RECEIVABLES AND PAYABLES DENOMINATED IN FOREIGN CURRENCIES	2005 \$000	2004 \$000
	Amounts Not Fully Hedged Receivables Current,
	New Zealand dollars Payables Current, New Zealand dollars	2,899 22	3,614 10

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

33. INVESTMENTS IN ASSOCIATES

Investments in associates are accounted for in the combined financial statements using the equity method of accounting or net market
value. Information relating to associates is set out below.

Name	Principal activities	Ownership Interest
		2005 %	2004 %	2005 \$'000	2004 \$'000
	Associates accounted for using the equity method:
Australian Hotel Trust Australasian Tourist	Hotel management Tourist park management	19.9%	٠	7.785
Park Holdings Pty Ltd		25.0%		9
JF Mendian Trust	Listed property trust	19.0%	۰	147,316
Archbold Rd	Property development	20.0%
177 Salmon St	Property development	20.0%		727
				155,837
	Associates accounted for using net market value method:
IPG Holdings Ltd	Car park management *	9.2%	۰	4,617
BAC Holdoo Ptv Ltd	Aeronautical services *	20.5%	$\blacksquare$	5.341
				9,958
				165.795

* The Mirvac Group owns 61.6% of the James Fielding Yield Fund, which in turn owns 15% of IPG Holdings Ltd, and 33.33% of BAC Holdings Pty Ltd.

(a) investment in associates accounted for in the combined financial statements using the equity method of accounting:

	2005 \$'000	2004 \$'000
Movements in carrying amounts of investments in associates:
Carrying amount at the beginning of the year
Investment acquired as part of JFG acquisition	97,542
Unrealised profits	(1, 397)
Share of increment on revaluation of freehold land	2.738
New investment during the reporting period	60.823
Distributions received	(7, 818)
Share of profit from ordinary operating activities	3.949
Balance at end of the financial year	155,837
Results attributable to associates:
Operating profit before income tax	3,949
Share of income tax expense
Operating profit after income tax	3,949
Less distributions received	(7,318)
Transfer from reserves	1.136
Retained profits/losses attributable to associates on acquisition of controlled entity	3.515
Retained profits attributable to associates at the end of the financial year	782
Reserves attributable to associates:
Asset revaluation reserve:
Balance acquired on acquisition of controlled entity	402
Transfer to retained earnings	(1, 136)
Share of increment	3,874
Balance at the end of the financial year	3,140
Share of associates expenditure commitments:	1.306
Capital commitments	CHARLES CONTINUES FOR
Summary of the performance and financial position of associates: The aggregate profit, assets and liabilities of associates are:
Profit from ordinary activities after income tax	72,367
Total assets	938,057
Total liabilities	237,456

$\mathbb{R}^2$

34. INTERESTS IN JOINT VENTURES

(a) Joint Venture Operations

Joint venture operations are aggregated into the financial statements on the basis of the percentage participating interest in the joint venture as follows:

The Arbor on Grey Retail Joint Venture

$\cdot$

$\overline{\phantom{a}}$

A controlled entity of Mirvac Limited 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 com

The Group's aggregate share of the assets employed in the joint venture is included in the combined statement of financial position under the following classifications:	2005 \$000	2004 \$000
Current Assets - Cash	81	38
Current Assets - Receivables	я	71
Non-Current Assets - Inventories - development costs	1.192	1.135
Share of assets employed in joint venture operations	1.282	1.244
Total aggregate joint venture operation's contribution to the profit of the Group	\%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

$\mathcal{A}^{\mathcal{A}}$

$\bar{z}$

$\sim$

34. INTERESTS IN JOINT VENTURES (continued)

(b) Joint Venture Entities

J,

Joint venture entities include corporations, partnerships and other entities and are equity accounted and included in Interests in Joint Ventures - refer note 10.

Name / Principal activities	Ownership Interest
	2005 %	2004 %	2005 \$'000	2004 \$'000
Joint Ventures accounted for using the equity method:
Mirvac Lend Lease Village Consortium / Newington
Olympic Village	33.0%	33.0%	19,643	21,469
Precinct 1 & 3	50.0%	50.0%
- Property development
MVIC Finance 2 Pty Ltd	50.0%	50.0%	36
- Property development
Walsh Bay Partnership	50.0%	50.0%	10,953	16,927
- Property development
Mindarie Joint Venture	15.0%	15.0%	506	(151)
- Property development
Majestic Quays Joint Venture	25.0%	25.0%
- Property development
Panorama Joint Venture	17.0%	17.0%	17	272
- Property development
Ephraim Island Joint Venture	50.0%	50.0%	34,540	14.850
- Property development
BL Developments Pty Ltd	50.0%	50.0%	25,981	25,990
- Property development
High Sky Pty Ltd	33.3%	0.0%	653
- Property development
HPAL Freehold Pty Ltd	50.0%	0.0%
- Aviation property development
Hoxton Park Airport Development Pty Ltd	50.0%	0.0%
- Aviation property development
BAC Devco Pty Ltd	33.3%	0.0%	(144)
- Aviation property development
Bankstown Development Pty Ltd	50.0%	0.0%
- Aviation property development
James Fielding Infrastructure Pty Ltd	50.0%	0.0%
- Funds management
Perpetual James Fielding Pty Ltd	50.0%	0.0%
- Funds management
Domaine	50.0%	0.0%	4,116
- Funds management
Property Funds Australia	50.0%	$0.0\%$	5,666
- Funds management
JF Aqua Pty Ltd	50.0%	0.0%	9
- Funds management
Arcadis	50.0%	0.0%	1,000
- Funds management	50.0%	0.0%	8.728
Australian Centre for Life Long Learning
- Property development	50.0%	0.0%	(104)
Phoenix Estates Pty Ltd
- Property development
197 Salmon Street Trust	50.0%	0.0%	9,673
- Property investment
Old Wallgrove Road Trust	50.0%	0.0%	8,100
- Property investment
			127,373	79,357

$\sim$

$\ddot{\phantom{a}}$

$\mathcal{L}_{\mathcal{L}}$

$\bar{\bar{z}}$

34. INTERESTS IN JOINT VENTURES (continued)

(b) Joint Venture Entities (continued)

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

	2005 \$000	2004 \$000
Retained profits attributable to the entities
At the beginning of the financial year	46.162	30,294
At the end of the financial year	25,983	46.162
Movement in carrying amount of investment in entities
Carrying amount at the beginning of the financial year	79,357	89,385
Investment acquired as part of JFG acquisition	24,350
New capital contributions	11,557	9,890
Distributions received	(13, 422)	(13, 852)
Repayment of capital contributions	{10,900}	(20, 879)
Unrealised profits	(2, 380)
Share of asset revaluation reserve	4,981 (253)
Amortisation of goodwill Share of operating profits before tax	34,083	14,813
Carrying amount at the end of the financial year	127,373	79,357
Joint Venture Entities - Aggregate Share of Entities' Assets and Liabilities
Current assets	161,540	59,630
Non-current assets	201,594	73,151
Total assets	363,134	132,781
Current liabilities	150,299	41,986
Non-current liabilities	97,322	11,438
Total liabilities	247,621	53,424
Net Assets	115,513	79,357
Aggregate share of entities' revenues, expenses and results
Revenues	164,056	98.693
Expenses	(129, 973)	(83, 880)
Operating profit before income tax	34,083	14,813
Reserves attributable to associates
Asset revaluation reserve
Balance at the beginning of the financial year
Share of increment	4,981
Balance at the end of the financial year	4,981

$\overline{\phantom{a}}$

$\mathcal{L}_{\mathcal{A}}$

NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2005

	2005 \$000	2004 \$000
35. CONTINGENT LIABILITIES
Contingent liabilities in respect of certain performance guarantees granted in the normal course of business	57,758	65,043
Guarantee of the obligations of the JF US Industrial Trust in respect of certain foreign exchange and interest rate hedging arrangements The net position of the current obligation is positive to the Trust and therefore no contingent liability currently exists.
The combined entity has provided performance guarantees which are indeterminable in amount in respect of certain developments.
No material losses are anticipated in respect of these contractual obligations.
36. COMMITMENTS FOR EXPENDITURE
Capital Commitments
Commitments for the acquisition of investment properties, property, plant and equipment contracted for at the reporting date but not recognised as liabilities payable;
Not later than one year Later than one year but not later than 5 years Later than 5 years	177,322 428,929	133,310 58,343
	506,251	191,653
Lease Commitments
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 leter then one year Later than one year but not later than 5 years Later than 5 years	940 1,059	457 425 $\bullet$
	1,999	882
Finance Leases Commitments in relation to finance leases are payable as follows:
Not later than one year Later than one year but not later than 5 years Later than 5 years		16 16
Minimum lease payments Less: Future finance charges		32 (1)
Provided for in the accounts		31
Representing lease liabilities:
Current (note 18) Non-current (note 23)		16 15
		31

$\mathcal{A}^{\text{max}}{\text{max}}$ and $\mathcal{A}^{\text{max}}{\text{max}}$

The weighted average interest rate implicit in the leases in 2004 is 7.7%.

$\mathcal{A}^{\mathcal{A}}$

$\sim$ $\sim$

J.

NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2005

37. AGGREGATED SEGMENTAL INFORMATION

PRIMARY REPORTING - BUSINESS SEGMENTS	Property Investment \$000	Hotels \$000	Property Development \$000	Funds Management \$000	Eliminations/ Unallocated \$000	Combined Totals \$800
30 JUNE 2005
Sales to external customers intersegment sales	259,663 6,596	108,032 350	1,043,218 47,893	14,060	1,124 (54, 839)	1,426,097
Total sales revenue	266,259	108,382	1,091,111	14,060	(53, 715)	1,426,097
Share of net profits of associates and joint ventures Other revenue including sale of investment properties	464	3,620	31,627 1,243	5,688		37,779 4,863
Total segment revenue	266,723	112,002	1,123,981	19,745	(53, 715)	1,468,739
Segment result before interest and income tax	186,878	14,398	177,969	9,988	(25, 802)	363,431
Net interest allocated	32,941	2	56,001	4,346		93,290
Profit/(Loss) from ordinary activities after interest and before related income tax expense	153,937	14,396	121,968	5,642	(25, B02)	270,141
income tax expense	2,499	2,628	36,581	504	(6, 459)	35,753
Net Profit / (Loss)	151,438	11,765	85,387	5,138	(19, 343)	234,388
Total Assets	2,917,393	164,534	1,899,263	442,462	100,234	5,523,886
Total Liabilities	779,758	13,001	1,613,703	74,059	62,043	2,542,564
investments in associates and joint ventures	7,033	4,156	100,359	181,620		293,158
Acquisition of property, plant and equipment, intangibies and other non-current assets	156,024	2,238	4,615	122	444	163,443
Depreciation and amortisation expense	1,745	578	4,437	2,336	1,191	10,288
30 JUNE 2004
Sales to external customers Intersegment safes	227,997 6,040	98,081 780	1,052,405 30,751	$\overline{a}$	(37,571)	1,378,543
Total sales revenue	234,037	98,861	1,083,216		(37,571)	1,378,543
Share of net profits of associates and joint ventures Other revenue including sale of investment properties	559	173	14,813 5,525	٠	٠ 834	14,813 7,091
Total segment revenue	234,596	99,034	1,103,554	٠	(36, 737)	1,400,447
Segment result before interest and income tax	167,734	10,564	220,420		(12,742)	385,976
Net interest allocated	30.993	4	58,475		251	89,723
Profit/(Loss) from ordinary activities after interest and before related income tax expense	136,741	10,560	161,945		(12,993)	296,253
Income tax expense	1,018	1,521	45,920	٠	(4,904)	43,555
Net Profit / (Loss)	135,723	9,039	116,025		(8,089)	252,698
Total Assets	2,435,336	160,468	1,371,965		338,651	4,306,420
Total Liabilities	691,304	16,737	1,105,257	٠	253,045	2,066,343
investments in associates and joint ventures.			79,357	$\blacksquare$	×,	79,357
Acquisition of property, plant and equipment, intangibles and other non-current assets	294,263	9,004	4,013		628	307,908

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

37. AGGREGATED SEGMENTAL INFORMATION (continued)

(a) Business Segments

The combined entity is organised into the following business segment divisions

Property Investment

Investment and asset management of a range of commercial, industrial and retail properties predominantly in Eastern Australia, held for the curpose of producing rental income.

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.

Funds Management

Fees received in capacity as responsible entity of managed funds, specifically ASX fisted entities JF Meridian Trust, JF US Industrial Trust, Stadium Australia Group, unlisted entities managed by James Fielding Direct, James Fielding Infrastructure, and the James Fielding Mezzanine Capital Fund, managed by James Fielding Capital.

(b) Geographical Segment

The combined 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.

38. DIRECTOR AND EXECUTIVE DISCLOSURES

Directors

The following persons were directors of Mirvac Limited and Mirvac Funds Limited as responsible entity for Mirvac Property Trust during the financial year:

Chairman - non-executive

AJiane

Executive directors

• G J Paramor, Managing Director (appointed 7 January 2005)
• R J Hamilton
• D J Broit, Finance Director B H R Neil (resigned as a director 21 October 2004)

Non-executive directors

P J Biancardi A Buduls (resigned 29 July 2005) G H Lavy R A Fortune J A C MacKenzie (appointed 7 January 2005) R W Turner (appointed 7 January 2005) R J Webster (resigned 7 January 2005)

Specified Executives

The following persons were the specified executives of the Group during the year ended 30 June 2005.

.
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IV-2015-0	гознон
M V O'Brien	Chief Executive NSW Development
A G Fini	Chief Executive Mirvac Fini	٠
C Freeman	Chief Executive Queensland
RPLynch	Chief Executive Mirvac Homes NSW
B Draffen	Chief Executive Victoria
N Collishaw	Chief Executive Investments
A Harrington	Chief Executive Funds Management
A Turner	Chief Executive Hotels
C Langford	Chief Executive Retail Projects
I Costlev	Chief Executive NSW Development (retired 21 October 2004).

Employer

Mirvac Projects Pty Limited Mirvac Fini (WA) Pty Limited Mirvac Projects Pty Limited Mirvac Constructions Pty Limited Mirvac Projects Pty Limited Mirvac Projects Pty Limited Mirvac Projects Pty Limited Mirvac Projects Pty Limited Mirvac Projects Pty Limited Mirvac Projects Pty Limited

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

38. DIRECTOR AND EXECUTIVE DISCLOSURES (continued)

Stapled Security Holdings

$\mathcal{L}$

The number of securities in the Group held during the financial year by each director and each of the
specified executives of the Group, including their personally-related entities, are set out below:

Balance at Start of the year	Employee Share year	Issues during the Other changes	Balance at End of the year
Specified Directors
RJ Hamilton 13,199,132		(9.997.634) $\ddot{}$	3,201,498
BHR Neil 1,259,357		(1,226,789) à.	32,568
DJ Broit 1.061.053		(2,624) ٧	1,058,429
RA Fortune 1,135,713		20,766	1,156,479
AJ Lane	67,649		67,649
PJ Blancardi	7,000		7,000
A Buduls	8,099	469	8,568
GH Levy	35,597	2,057 $\overline{\phantom{a}}$	37,654
RJ Webster	12,911	248	13,159
G Paramor		5,351,821 (i)	5,351,821
J MacKenzie		51,929 (i)	51,929
R Turner		64,396 (i)	64,396
Specified Executives
RP Lynch	595,320 45,351		640,671
C Freeman	395,320 45,351		440,671
AG Fini	95,320 45,351	2,516,440	2,657,111
MV O'Brien	41,414 45,351		86,765
CD Langford	56,677 22,676		79,353
B Draffen	32,722 17,007		49,729
A Turner	404,178 11,338		415,514
A Harrington		808,603 (i) $\mathbf{w}_i$	808,603
N Collishaw		1,310,233 (i) ٠	1,310,233

J.

(i) Converted into Mirvac securities on the acquisition of the James Fielding Holdings Group.

$\mathbb{R}^2$

$\bar{z}$

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

38. DIRECTOR AND EXECUTIVE DISCLOSURES (continued)

Loans to Directors and Executives

Details of loans made to directors of Mirvac Limited and the specified executives of the combined entity, including their personally-related entities, are set out below:

2005		Balance at the start of the year \$	Interest not charged \$	interest charged \$	Balance at the end of the year S	Number in Group at the end of the year No.
		10,429,876	491,842	176,016	7,903,838
Specified Directors						3
Specified Executives		9,869,477	834,898	244,570	14,041,121	9
2004
Specified Directors		9,706,662	655,095		10,429,876	4
Specified Executives		8,460,987	741,944	$\ddot{}$	9,869,477	8
Individuals with Loans Above \$100,000 During the
Financial Year						Highest
						indebtedness
2005	Note					during the year
						(f) \$
Specified Directors
G J Paramor	(d) (e)		17,254	176,016	483,633 2,768,500	499,500 2,768,500
R J Hamilton	(a)	1,768,173	39,246			1,768,173
	(わ)	433,072	12,730			433,072
BHRNeil	(a)	1,777,994	42,960			1,777,994
	(b)	567,448	5,071			567,448
	$\left( c\right)$	908,150	35,250			908,150
D J Broit	(a)	1,780,782	132,073		1,610,810	1,780,782
	(b) (c)	755,059 1,000,000	39,522 70,500		721,293 1,000,000	755,059 1,000,000
R A Fortune	(a)	1,157,423	77,446	÷	1,051,037	1,157,423
	(b)	281,417	19,789	$\overline{\phantom{a}}$	268,565	281,417
Specified Executives
N Collishaw	(d)		20,416		566.258	601.349
	(e)			64,848	1,004,500	1,004,500
I C Costley	(a)	560,979	12,754			560,979
	(c)	600,000	14,100			600,000
B Draffen	(a)	123,797 250,000	12,786 34,223		188,451	198,797
AGFini	(c) (a)	380,144	37,559		250,000 550,723	250,000 580,144
	$\langle c \rangle$	800,000	56,569		800,000	800,000
C Freeman	(a)	1,149,118	89,370		1,251,561	1,349,118
	(c)	800,000	87,604		800,000	800,000
A Harrington	(d)		11,031		308,444	320,609
	(e)			179,722	2,836,400	2,836,400
C Langford	(a)	189,306 250,000	18,653 34,223		272,547 250,000	289,306 250,000
RPLynch	(c) (a)	1,614,794	120,599		1,671,813	1,814,794
	(c)	800,000	75,083		800,000	800,000
M V O'Brien	(a)	163,369	22,708		346,191	363,369
	${\circlearrowright}$	500,000	68,446		500,000	500,000
A Turner	(a)	1,087,972	76,347		1,044,233	1,137,972
	${C}$	600,000	42,427	À.	600,000	600,000

a) Securities purchased under the Employee Incentive Scheme (EIS) are by interest-free employee loans. The loans are non-recourse in the event of disposal. The stapled securities issued are held as security until the loans are repaid.

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

38. DIRECTOR AND EXECUTIVE DISCLOSURES (continued)

b) Loans advanced after June 2002 to executive directors under the Employee incentive Scheme (EIS) are by interest-free employee foan and are full recourse loans in the event of disposal. The stapled securities issued are held as security until the loans are repaid.

c) Loans made under the Employee Loan Scheme are interest-free employee loans, repayable over periods from 6 to 10 years, and repayable in full upon the member ceasing to be an employee. The loans are secured by mortgage over the property or shares purchased. Loans issued under the Employee Loan Scheme are subject to a periodic forgiveness schedule, and may also be subject to terms set out in the service agreements noted above.

d) Securities issued under the former JFG Employee Incentive Scheme (EIS) and converted to Mirvac securities are by interest-free employee loans. The loans are non-recourse in the event of disposal. The stapled securities issued are held as security until the loans are repaid.

e) Securities issued under the former JFG Employee Incentive Scheme (EIS) and converted to Mirvac securities are interest bearing employee loans. The loans are non-recourse in the event of disposal. The stapled securities issued are held as security until the loans are repaid.

(f) Loan repayments are made partly from distributions and from sales of underlying securities.

No write-downs or allowances for doubtful receivables have been recognised in relation to any loans made to directors or specified executives.

Other Transactions with Directors and director-related entities	2005 s	2004
(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) One director, Mr R J Hamilton, has utilised the construction services of controlled
entities for the construction of a private residential dwelling. Payment for construction services incurred by the controlled entities were fully reimbursed, and are fully indemnified
for any services provided.	2,280,000	3,500,000
(d) Two directors, Messrs D J Broit and G H Levy purchased properties from the combined entity on contracts of sale based on normal commercial terms and conditions.		1,960,100
(e) One director, Ms A Buduls is a director of Hamilton James & Bruce Group Limited which provided corporate recruitment services to the combined entity, at normal commercial
terms and conditions.	13,000	32,400
(f) One director, Mr G Levy is a director of Invested Bank (Australia) Limited which provided due diligence services on the takeover of the James Fielding Group, at normal terms and
conditions.	600,000
(g) One director, Mr A J Lane is a director of The Smith Family to which a donation was made.	20,000
(h) One director, Mr J A C MacKenzie is a director of the Victorian Workcover Authority to which an insurance claim was settled.	113,000
(i) One director, Mr G Paramor is a director of Leighton Properties Pty Limited to which property development fees were paid.	40,510,000
(i) One director, Mr J A C MacKenzie is a consultant for Deloitte to which advisory fees have been paid.	31,000

Other Related Party Interest of Directors

$\mathbf{3}$

(a) One director, Mr G Paramor has interests in the following related entities:

• James Fielding Industrial Fund 100,000 units
• James Fielding Retail Fund 523,247 units
• James Fielding Tourist Fund 100,000 units
• JF US Industrial Trust 200.000 units
• Stadium Australia Trust 5,000 stapled securities
• Q1 Construction Guarantee Facility mandated to James Fielding Investments

• (b) One director. Mr R Turner has interests in the following related entities:

• James Fielding Industrial Fund - 30,000 units

• Stadium Australia Trust - 2,000 stapled securities

	2005	2004
9. EARNINGS PER SECURITY	Cents	Cents
Basic earnings per security	29.86	36.67
Diluted earnings per security	29.86	36.67
	No.	No.
The weighted average number of ordinary securities outstanding during the year used in the calculation of basic earnings per security	781.470.377	689.040.443

лő

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

EMPLOYEE BENEFITS	2005 \$000	2004 \$000
Employee Benefit and Related On-Cost Liabilities
Provision for employee benefits Current (note 20) Non-Current (note 25)	19,834 4,460	17,394 2,914
Aggregate employee benefit and related on-cost liabilities	24.294 ********	20,308
Employee Numbers	No.	No.
Averson pursher of equipment during the financial vest	2.729	2702

The aggregate employee benefit and related on-cost liability includes amounts for annual leave and long service leave. As explained in note 1 (u) (ii), the the amount for long service leave that is expected to be settled more than twelve months from the reporting date is measured at its present value.

Employee Share/Unit Issues

The total of all securities issued under all employee share schemes is limited to 5% of the issued securities of the stapled group in any five year period.

Employee Incentive Scheme (EIS)

The issue of securities under the EIS Scheme was approved by an ordinary resolution at the annual general meeting of the members of Mirvac Limited, Mirvac Property Trust and Mirvac Commercial Trust held on 4 November 2004, 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 securities, which are issued at the market value existing at the date of issue. Purchase of the securities is by employee loan (note 8). All securities are issued on acceptance of the offer by the employee.

3,036,745 ordinary securities (2004: 3,698,294 securities) were issued to employees of Mirvac Limited and its controlled entities during the year. at various market prices per security. Refer to note 26.

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 2004, totalling \$NIL (2004: \$400,000) which are full recourse loans in the event of a loss on disposal.

The total of ordinary stabled securities issued to employees under the Employee Incentive Scheme outstanding as at 30 June 2005 is 15,931,188 (2004: 17,342,778). The market price per ordinary stapled security at 30 June 2005 was \$3.57 (2004: \$4.30).

Former James Fielding Employee Share Plan (JFESP)

The JFESP was approved by an ordinary resolution at the annual general meeting of the James Fielding Group (JFG) on 7 November 2001. The plan allowed JFG to lend funds to employees of JFG to acquire stapled securities. Three allotments were made under the plan. The first allotment on 25 October 2001 of securities was paid for in part by cash by the employee, and in part from an interest free loan advanced by James Fielding Holdings Ltd (JFH). The second allotment issued after 29 October 2003 was paid for by an interest bearing loan advanced by JFH. The rate of interest paid on the loan amount is equal to the gross distribution received each vear from JFG on the securities. A third allotment made on 31 August 2004 was also by means of interest free loans. Loans advanced under the plan are non-recourse. The loan is repayable in certain circumstances including the sale of stapled securities, on the maturity of the loan or on the borrower ceasing to be an employee. On repayment of the loan, the liability of the borrower (after taking into account all repayments) is limited to the market value at that lime of the stapled securities. If a loan has not been repaid on its maturity, the Group may sell the stapled securities.

Under the terms of the acquisition of JFG by the Mirvac Group on 29 December 2005, JFG securities were acquired by the Mirvac Group in exchange for Mirvac securities, which now act as security for loans issued. Distributions on interest free loans are applied by Mirvac to reduce the principal amount outstanding on the loans.

The total of ordinary stapled securities issued to employees under the former JFESP outstanding as at 30 June 2005 is 5,791,875.

Mirvac Executive Share and Option Plan (MESOP)

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

• i) 5% of the Mirvac Group annual pre-tax aggregated net profit: or
• ii) \$2,000,000.

No securities were acquired during the year ended 30 June 2005 (2004; Nil).

At 30 June 2005, the number of acquired securities outstanding under the MESOP was 131,273 (2004; 173,239).

The market price per ordinary stapled security at 30 June 2005 was \$3.57 (2004: \$4.30).

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 2005, loans totalling \$11,425,000 (2004: \$11,575,000) were offered to employees, \$10,630,000 (2004: \$11,115,000) of which were drawn down at 30 June 2005. These loans have a periodic forgiveness schedule.

Superannuation Commitments

Mirvac Limited 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.

NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 30 JUNE 2005

41. RELATED PARTIES

Directors and specified executives

Disclosures relating to directors of Mirvac Limited and Mirvac Funds Limited and specified executives of the combined entity are set out in note 38.

Ownership Interests in Related Parties

Interests held in the following classes of related parties are set out in the following notes:

• (a) Controlled Entities note 11 (a)
• (b) Associates note 33 (c) Joint Ventures - note 34

Transactions with other related parties during the year ended 30 June 2005 consisted of:

a) Loans advanced

• b) Funds and asset management fees for funds and assets under management
• c) Distributions declared by associates
• d) Advisory fees for treasury related matters
• e) Development management fees
• f) Construction contract fees

g) Property management and leasing fees

Aggregate amounts included in the determination of profit from ordinary activities before related income tax that resulted from transactions with each class of other related parties:

	2005	2004
	\$000	\$000
Interest revenue	149	$\mathbf{r}$
Management fee revenue	3,812	٠
Dividend revenue	1,239	$\mathbf{v}$
Construction contract revenue	18.562	22,403
Reimbursment of expenses	1.286	$\blacksquare$
Management fee expense	1,086	۰
Acquisition fees	2,882	$\sim$
Other expense	2,000	$\mathbf{r}$
Aggregate amounts brought to account in relation to other transactions with each class of other related party:
	.

Current receivables	121,785	5,760
Non current receivables	108.623
Current payables	.000	1.000

42. EVENTS OCCURRING AFTER REPORTING DATE

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

DIRECTORS' DECLARATION

In the directors' opinion:

• (a) the financial statements and notes set out on pages 14 to 54 and remuneration disclosures on pages 6 to 11 are in accordance with the Corporations Act 2001, including:
• (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• giving a true and fair view of the Group's financial position as at 30 June 2005 and of its
  performance, as represented by the results of its operations and its cash flows. $\rm (ii)$ for the financial year ended on that date; and
• (b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

The directors have been given the declarations by the managing director and chief financial officer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the directors of Mirvac Limited and Mirvac Funds Limited as the Responsible Entity for Mirvac Property Trust.

A. J. LANE Chairman

$-9$ dnu

D.J. BROIT Director

31 August 2005

PRICEWATERHOUSE COPERS @

Independent audit report to the stapled security holders of The Mirvac Group

Audit opinion

In our opinion, the financial report on pages 14 to 55 and remuneration disclosures, on pages 6 to 11 of The Mirvac Group present fairly, in accordance with AASB 1046 Director and Executive Disclosures by Disclosing Entities (AASB 1046) and other Accounting Standards and other mandatory financial reporting requirements in Australia, the financial position of The Mirvac Group as at 30 June 2005 and the results of its operations and cash flows for the year ended on that date.

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

Scope

The financial report, remuneration disclosures and directors' responsibility

The financial report comprises the combined statement of financial position, combined statement of financial performance, combined statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for The Mirvac Group, for the year ended 30 June 2005. The Mirvac Group comprises both Mirvac Limited and the entities it controlled during that year and Mirvac Property Trust and the entities it controlled during that year.

The Mirvac Group has disclosed information about the remuneration of directors and executives ("remuneration disclosures") as required by AASB 1046, under the heading "remuneration report" on pages 6 to 11 of the directors' report, as permitted by the Corporations Regulations 2001.

The directors of Mirvac Limited and Mirvac Funds Limited, as responsible entity of Mirvac Property Trust, are responsible for the preparation and true and fair presentation of the financial report. 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. The directors are also responsible for the remuneration disclosures contained in the directors' report.

Audit approach

We conducted an independent audit in order to express an opinion to the stapled securityholders of The Mirvac Group. 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 and the remuneration disclosures comply with AASB 1046 and the Corporations Regulations 2001. 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. For further explanation of an audit, visit our website http://www.pwc.com/au/financialstatementaudit.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of The Mirvac Group's financial position, and of its 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:

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• 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.

Our procedures include reading the other information in the Annual 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 conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements.

Purtulum Coops

PricewaterhouseCoopers

$\sim$ Huma

B K Hunter Partner

Sydney 31 August 2005