STOCKLAND — Annual Report 2007

Sep 12, 2007

2007 Annual Report

30 June 2007

Stockland was founded in 1952 by Ervin Graf, as the Stocks and Holdings Group of Companies. Five years later, Graf went public by taking over the smallest company on the Sydney Stock Exchange. In a world first for the real estate sector, we pioneered the development of the stapled security structure when we combined our trust and corporation activities into one stapled security, listed as SGP on the Australian Securities Exchange (ASX).

Importantly, this innovation set us apart from our competitors and helped set up 25 years of continued profit growth. This year, we celebrate 50 years as a publicly listed company and we are now recognised as one of Australia’s largest and most successful diversified property groups.

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Our Our Chairman’s Managing
business performance letter Director’s
message
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Proven track High performing Strategy Leveraging Capital Corporate Ten year
record people and for growth development partnering responsibility performance
culture expertise focus and history
sustainability
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10 12 14 18 20 22 24
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Cover

We have created a world-class fit out at our new Sydney head office in the Piccadilly Centre.

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Financial Directors’ Independent Security
report declaration auditor’s holders
report
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Stockland Annual Report 30 June 2007

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When you consider our achievements and plans for the future, it’s our approach to doing business that sets us apart in our vision to create a world-class, diversified property group.

Stockland Annual Report 30 June 2007

Our business

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Capital
Retirement
Retail
Living
Office Apartments
Integrated
mixed-use
capability
Residential
Industrial
Communities
Business
Parks
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Business model

One integrated platform ensures synergies, economies of scale and knowledge transfer across our global portfolio.

“We are ‘one Stockland’...

Diversity, by asset class and geography, underpins our continued performance through changing market cycles. Our capability is strengthened by the unity of being one diversified company with the strength of one platform.

Stockland Annual Report 30 June 2007

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• Commercial and Industrial: Comprising 66 commercial, industrial and office park properties located in key growth corridors across Australia, our commercial & industrial business has an asset base valued at over $4 billion.

• Retail: Our retail portfolio is valued at over $4 billion, with a development pipeline of approximately $1.8 billion. Accommodating more than 3,200 retailers, our centres currently generate more than $5 billion in retail sales annually.

• Development: Our residential communities portfolio has an end value of more than $17 billion, with over 67,000 future lots in 66 locations across Australia. Our range of high quality apartment projects has an end value of over $2 billion, whilst the retirement living portfolio has a medium-term development pipeline of over 3,000 units.

• Capital Partners: Provides capital solutions including unlisted property funds, joint ventures and co-investment opportunities to facilitate the continued growth of our business. Over $850 million of assets under management in Australia.

• Stockland Halladale: Established in 2007 through the acquisition of UK property group Halladale. Activities span on balance sheet projects, co-investment joint ventures and funds management in the UK and continental Europe, with a portfolio under management currently valued at over $2.2 billion, and a development pipeline with an end value of over $1.2 billion.

...multiple business lines and locations unified by one vision.”

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6 7
5 3
4
1
8 2
Global offices
Sydney, Australia 1
Melbourne, Australia 2
Brisbane, Australia 3
Perth, Australia 4
London, UK 5
Glasgow, UK 6
Edinburgh, UK 7
Paris, France 8
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Stockland Annual Report 30 June 2007

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Our performance

Operating profit* 10.3%

2007 $611.0m 2006 $553.7m 2005 $502.7m 2004^ $455.5m 2003^ $284.8m

Dividend and distribution per security 7.0%

2007		44.3c
2006		41.4c
2005		38.9c
2004 2003	32.1c	37.0c

“We have continued to deliver on our long-term strategies...

Earnings per security* 6.0%

2007	44.0c
2006	41.5c
2005	39.1c
2004^ 2003^	37.8c 33.5c

• Net profit before certain significant items. ^ Prepared under Australian Generally Accepted Accounting Principals (AGAAP) prior to transition to Australian equivalents to International Financial Reporting Standards (AIFRS).

Stockland Annual Report 30 June 2007

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2007 highlights

Gross revenue 43.5%

Total assets 42.7%

2007 $3.3bn 2006 $2.3bn 2005 $1.7bn 2004^ $1.4bn 2003^ $0.9bn 2007 $13.7bn 2006 $9.6bn 2005 $8.4bn 2004^ $7.2bn 2003^ $5.9bn

• Established UK and continental Europe platform through the $525 million acquisition of UK property investment and development group Halladale

• Delivery of retirement living strategy with the $328 million acquisition of Australian Retirement Communities (ARC)

• Development pipeline has now increased to an end value of over $20 billion across the residential, retail, commercial and industrial portfolios

• Successful capital recycling with profits from the sale of Saville Hotel Group used in the funding of the above growth initiatives

• Over $1 billion of investment property revaluations, an increase of 17 per cent on previous book value

• Net tangible assets per security increased by 17.4 per cent to $5.33

• Gearing ratio of 25.1 per cent, at the lower end of Stockland’s 25 per cent to 35 per cent target range

• Diverse, long-dated sources of debt with an average maturity of 7.6 years

...and we’re well positioned for sustainable future growth.”

Net tangible assets per security 17.4%

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2007 $5.33
2006 $4.54
2005 $4.00
2004^ $3.76
2003^ $3.41
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Chairman’s letter

“Our diversified properties and project pipeline continued to underpin

Dear investors,

It is a pleasure to report another strong result – our 25th consecutive year of profit growth. This quarter century milestone is an outstanding achievement. It can be matched by very few Australian companies. It is especially pleasing this year as we celebrate the 50th year of our listing as a public company in 1957.

Highlights

Our 2007 operating profit was $611 million, an increase of 10.3 per cent over 2006. Our earnings per security rose 6 per cent to 44 cents. Our dividend and distribution rose 7 per cent to 44.3 cents per security. Our consistent profit performance and investor returns are testament to the strength of our diversified business model and our strong capabilities in property development, management and investment.

Our results are particularly pleasing given the challenging environment we faced in some markets, notably parts of the New South Wales residential market. Our diversified properties and project pipeline across the country continued to underpin the performance of our business in 2007.

Strategic expansion

Reflecting on this year, it is evident that we have passed a significant milestone in our strategy for growth, with our considered expansion into new areas of business, by product type and geographic location. Our strategic acquisition of UK property investment and development group Halladale marks our first entry into European markets. Stockland Halladale is now our platform for growth in the UK and Europe. Further, our acquisition of Australian Retirement Communities positions us as a top five player in this sector in Australia. We believe we can build on this foundation to create a market-leading position in this sector to complement our existing residential communities business.

Corporate responsibility

Stockland has a long-standing culture of disciplined, ethical business practice and we recognise our corporate responsibility to reduce the environmental impact of our operations. I am therefore pleased to report that our continued focus has seen us meet some significant targets this year, as outlined in our second annual corporate responsibility and sustainability report.

I am proud of what we have achieved so far, including our commitment to designing more water and energy efficient residential communities, introducing our retail tenancy “green” design guidelines and setting energy and water efficiency targets for our commercial offices. In addition, our new Sydney head office highlights our ability to refurbish an existing office space to deliver an innovative, sustainable and engaging workplace for our people. One of the biggest opportunities for the property sector is to contribute to reducing carbon emissions by effectively recycling and refurbishing existing building stock. Our new Sydney office demonstrates our leadership in this field.

Leadership

One of the challenges we will continue to face is attracting and retaining high performing people. In an environment of high employment and skills shortages, our culture, values and workplaces are increasingly important as we strive to deepen our leadership and talent pool. We have made good progress in this critical area in 2007.

As a further stage of our Board renewal process, I am delighted to welcome Duncan Boyle. Duncan brings a wealth of experience in senior executive roles both in Australia and in the UK, adding to the Board’s collective experience. We have also announced the nomination of Barry Neil as a non-executive director. Barry brings many years of property industry expertise that will complement the existing skills and capabilities of the Board.

I would like to extend my thanks to all my Board colleagues for their continued support and commitment over the past year, and to our external directors of Stockland Funds Management Limited, Tony Sherlock and David Kent, who have made a valued contribution.

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the performance of our business in 2007.”

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Future outlook

Looking ahead, volatility in the debt and equity markets across the globe indicates that 2008 will be a challenging year for our industry. In the future, we believe that strong property skills will be more important to successful companies in our industry than financial engineering. Stockland is therefore well positioned for this future environment, given our strong property capability, our strong balance sheet and our strong platforms for future growth.

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In closing, I would like to acknowledge the leadership of Matthew Quinn, whose disciplined, practical and understated approach has again produced a year of noteworthy achievements in 2007.

I look forward to working with my Board colleagues and our leadership team to continue our track record of profit growth in 2008.

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Board (A-I): Graham Bradley, Nick Greiner, Duncan Boyle, Lyn Gearing, Hugh Thorburn, Terry Williamson, Peter Scott, Matthew Quinn, Bruce Corlett.

Graham Bradley Chairman

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Managing Director’s message

“ Our real competitive advantage is our integrated, diversified

A strategic approach

At the start of the financial year we took stock of our position in the marketplace, our capability and our competitive advantage. Our objective has always been to deliver outstanding returns for our investors, not just in absolute terms but relative to the multitude of other investment opportunities available.

The view we came to is that we have an outstanding platform, both in terms of our asset base and our people. However, the changing landscape and the world wide competitive nature of our business means that it is incumbent on us to look to new initiatives to deliver future performance, as well as continuing to deliver strong returns from our existing business. This decision wasn’t taken lightly and many organisations have failed at this point in their evolution by not taking a fully strategic approach.

At Stockland, strategy always comes first and opportunity second. Our strategy is driven by our competitive advantage, that is, what we bring to the table through our business model to deliver enhanced returns.

Our real competitive advantage is our integrated, diversified real estate platform coupled with our development expertise. This means we can capture synergies through access to wider market opportunities than sector specific business models, particularly as the rate of urbanisation and infrastructure consolidation gathers pace and we move towards more mixed-use developments.

We identified our next moves to really capture this advantage through:

• A move into the retirement living sector, which is a natural evolution of our residential communities business and enhances our integrated platform

• A measured expansion into international markets in locations where we can use our diversified platform to create value, focusing on fundamental property skills such as development, asset management and leasing – not just financial structuring

• An enhanced approach to capital partnering and sharing risks and returns with a wider set of investors.

Delivery on strategy

Having agreed these strategies, we then moved into execution mode. We’re delighted to say that we fully delivered on this, through the acquisition of ARC, which gave us a significant and potential market leading position in the Australian retirement sector; the acquisition of Halladale, one of the UK’s leading small cap property development and asset management groups and the creation of Stockland Capital Partners.

All of these initiatives are a means to an end and not an end in themselves. We invested a reasonable portion of our balance sheet ($328 million for ARC and $525 million for Halladale); however, we also realistically managed the risks inherent in these acquisitions. Both acquisitions give us a platform for future growth and enable us to achieve critical mass in what are rapidly emerging and growing markets.

These acquisitions have now been successfully integrated. Through the retention of key management personnel and the introduction of our own people, we now have an enviable platform from which to grow.

Our recent initiative to create Stockland Capital Partners recognises the fact that global capital markets are changing. We need to be in a position to be able to fund our growth targets not just through traditional sources of listed equity and debt, but through other solutions ranging from co-investment joint ventures, traditional funds management and structured financial solutions for a broader range of investors. Stockland Halladale has historically operated in this kind of environment and has already built up $2.2 billion of assets under management. In Australia we have grown this business to $850 million of funds under management and our goal is now to extend our platform onto the global stage and form a strong bridge between the two platforms.

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real estate platform.”

Positioned for future growth

These strategic initiatives are very exciting for us, but rest assured we’ve kept our eye on the ball in our existing operations. All parts of our business, retail, commercial, industrial and residential, delivered record operating results which enabled us to achieve a record group operating profit of $611 million. All of our operating businesses are poised for further growth and market conditions are generally very favourable for us.

I would like to thank our whole team for not only delivering these great results, but also the energy they have shown in broadening our businesses at the same time. This has been a team effort and everyone’s contribution has been vital to these achievements. We have a great team at Stockland, and I’m proud of every one of them.

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Executive team (A-K): Lisa Scenna (UK) , Hugh Thorburn, John Schroder, Matthew Quinn, Steven Mann, Rilla Moore, David Pitman, Johanna Keating, Denis Hickey, Kenneth Lindsay (UK), David Lockhart (UK).

Matthew Quinn Managing Director

Stockland Annual Report 30 June 2007

Review of the year – Proven track record

Optus Centre, Macquarie Park, NSW

Our $410 million Optus Centre is Australia’s largest single tenant campus and demonstrates our ability to combine expertise in large-scale commercial development with our focus on engaging, sustainable workplaces.

The 84,000m[2] development, completed in 2007, comprises six low-rise campus-style buildings and 6,500 Optus employees are now moving in.

All parts of our business delivered record operating results this year, which enabled us to achieve another outstanding group profit* of $611 million, a 10.3% increase on the previous corresponding period.

Commercial & Industrial Division: Operating profit increased 19.4% to $251.6 million

• Comparable net income growth of 3.1%

• High portfolio occupancy of 96% with over 294,000m[2] of space leased or renewed

• $747 million of acquisitions

• Revaluations of $468.6 million, an increase of 16.8% on previous book value

• Development pipeline increased to $1.3 billion

record erating results

• Net profit before certain significant items.

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Retail Division: Operating profit increased 6.5% to $252.1 million

• Comparable rental income growth of 5.5%

• Strong leasing activity, with 584 leasing transactions completed at an average increase of 23.9% on prior rents

• Revaluations of $543.5 million, a 16.6% increase on previous book value

• $103.9 million of developments completed

• $181.6 million of acquisitions with development potential

• Development pipeline increased to approximately $1.8 billion

Development Division: Operating profit increased 14% to $272.7 million

• Solid residential communities margin of 26%

• Four key apartments projects delivered and four significant approvals achieved for future major mixed-use projects

• Successfully acquired and integrated ARC, bringing forward our retirement living strategy

• Strong pipeline of projects across the country, with over 73,000 future lots with an end value of over $19 billion

Stockland Halladale

• Integration progressing very well, business is performing in line with expectations

• Earnings neutral in FY07 and FY08 due to fair value adjustments required by accounting standards

• Expected to be earnings accretive from FY09 with potential to outperform

Capital Partners

Australian funds under management platform

• Over $850 million of wholesale and retail assets under management

• Six funds operating, with all funds outperforming initial forecasts

UK/continental Europe funds under

management platform

• Established joint venture partnerships with major international institutions

• Over $2.2 billion of assets under management

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The Waterfront, ACT

Located in the Canberra suburb of Kingston, The Waterfront is the first waterside residential development situated on Lake Burley Griffin. The 104 apartments are almost 100 per cent sold, with prices ranging from $470,000 to $2.7 million. With a total project value of $120 million, The Waterfront has become Canberra’s most prestigious address, showcasing our premium apartment delivery capability.

Commercial lease expiry profile[*]

Industrial lease expiry profile[^]

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Vacant 1% Vacant 5%
FY08 8% FY08 10%
FY09 15% FY09 15%
FY10 22% FY10 14%
FY11 13% FY11 13%
FY12+ 41% FY12+ 43%
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Retail lease expiry profile[^]

this year.”

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Vacant 0% FY08 19% FY09 14% FY10 8% FY11 9% FY12+ 50%

• By Net Lettable Area at 30 June 2007

• ^ By Gross Lettable Area at 30 June 2007

Stockland Annual Report 30 June 2007

Review of the year – High performing people and culture

Our high performing people and positive culture, combined with our sound property skills, enable us to continually deliver on our strategic and financial objectives.

In a market in which it is increasingly difficult to attract and retain talented employees, a successful, growing and diversified business like ours which provides great career development opportunities is well positioned to attract and retain high quality people. This is reflected in our financial performance.

In 2007, we offered significant learning and development opportunities to our people, both on and off the job. We place strong emphasis on leadership and management training as well as technical skills. We also offer the Peter Daly International Fellowship, the Ervin Graf scholarships and various mentoring programs.

Our ongoing measurement of employee engagement via a globally recognised employee survey provides us with valuable feedback on how our employees feel about all aspects of working at Stockland.

Stockhome, Sydney head office

In April 2007, we relocated our 600 Sydney head office employees to Piccadilly Centre in the Sydney CBD, creating a world-class office environment.

Our employees were consulted at every stage, ensuring we have the surroundings to further enhance their wellbeing and improve business performance. The new refurbishment includes over 10,000m[2] across eight floors and is aimed at reducing our environmental footprint in line with our commitment to corporate responsibility and sustainability.

“There is a strong link between employee

Our vision to create one of Australia’s leading office environments demonstrates our commitment to delivering world-class projects across our portfolio.

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We have established indigenous and disability cadetship programs and our employees contribute to many local community initiatives that primarily focus on children and the environment.

In 2007, with a 91 per cent response rate, we achieved an overall employee engagement score of 85 per cent. This is significantly above the average for other Australian companies and is considered on par with global best practice. There is a strong link between employee engagement and financial performance.

Diversity, engagement, leadership and innovation are core to the ongoing success of our business. Our values come from the top down. Our achievements in building an organisation where people are engaged and can excel have been widely recognised, with the Government’s Equal Opportunity for Women in the Workplace Agency naming us an Employer of Choice for Women in 2007. We also received recognition as a Hewitt Best Employer for 2006/07.

Our strong commitment to corporate responsibility and sustainability (CR&S) involves high levels of employee consultation and involvement in new initiatives, such as our new Sydney and Melbourne head offices, and employee involvement in our CR&S and giving and volunteering committees. We place great emphasis on the health and safety of our employees and during the year increased our resourcing and focus on safety at all our sites.

We will continue to focus on understanding what motivates our employees and strive to maintain a work environment that rewards high performance and provides challenging career opportunities.

We are committed to giving to the community through our work with Australian Business Community Network. Employees from all levels of our business across the country are involved in mentoring and other support programs in schools that receive priority assistance from the Department of Education.

2007		85
GHPN	80

Employee engagement %

2007 International Survey Research (ISR)

Stockland

Global High Performing Companies Norm (GHPN)

financial performance.”

New Melbourne HQ – 452 Flinders Street

We relocated our 130 Melbourne employees to our Riverside Plaza office building in the heart of Melbourne’s CBD.

The new office incorporates an open plan layout and several environmental initiatives in line with our environmental commitments. This again showcases our ability to successfully recycle existing office buildings and deliver high quality, sustainable office space.

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Review of the year – Strategy for growth

Kawana, Qld

With a total end value of more than $1.1 billion, the Kawana precinct is a landmark mixed-use, masterplanned community showcasing our development and delivery capability. Spanning more than 231 hectares of land on Queensland’s growing Sunshine Coast, the Kawana precinct will ultimately be home to an anticipated 13,000 residents and provide employment opportunities for some 20,000 people. Combined, the precinct offers residential accommodation, schools, a retail town centre, a commercial precinct, open recreational spaces, and a new 650-bed Sunshine Coast regional public hospital announced by the Queensland Government in 2006.

One integrated real estate platform

Our growth strategy is driven by a focus on five key areas:

• Leveraging and extending our existing business

• Capital partnering opportunities

• New business initiatives

• International expansion

• High performing people and culture

The capabilities of our team, strength of our platform and ability to extend our business model into new markets are key ingredients that will maintain our competitive advantage.

A strategic, proactive approach to each of these key areas in the year ahead will see us establish a global platform for future growth.

“ We are build ing a global platform for future growth.”

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Leveraging and extending our existing business

While we continue to deliver on our strategy for extending our business model and capabilities into new markets, we remain focused on property fundamentals and operational excellence within our existing businesses.

We are uniquely positioned to:

• Work together to unlock the potential from existing assets in our portfolio

• Source the best mixed-use opportunities

• Showcase our market insight and design and delivery expertise

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In our retail business, we have enhanced relationships with major retailers and strengthened our portfolio by acquisitions with asset management and development upside. In the coming year we anticipate continued positive retail sales, boosted by a combination of the strong employment market, increasing wages and recent tax cuts.

Our retail development pipeline has increased to approximately $1.8 billion, with a substantial rise in active projects. In the year ahead, we will have a renewed focus on leveraging our customer insight and improving amenities and services, ensuring our centres remain at the heart of the communities they serve.

BankWest Tower, WA

Our acquisition of 50 per cent of BankWest Tower in the strongly performing Perth CBD positioned us well for future growth and returns in this market. BankWest Tower is a landmark, premium-grade office building comprising 52 levels of office accommodation, the Palace Hotel complex and two levels of basement parking. It is in a premier location in the Perth CBD, offering extensive views of the Swan River, parklands and the Supreme Court Gardens, and is fully leased until 2010. We will focus on unlocking rent reversions to drive further value.

Our commercial and industrial business achieved another solid performance this year. We will add value to our portfolio by capitalising on recent acquisitions, unlocking rent reversions and via the delivery of our burgeoning development pipeline, with nine projects forecast to commence across the country in the 2008 financial year.

This activity will be supported by the expected strong performance of the office market, with the resource-rich states continuing to outperform and Sydney set for rental growth due to limited supply.

Diversity by location[*]

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New South Wales 44% Queensland 22% Victoria 17% Western Australia 7% UK 5% New Zealand 3% South Australia 2%

• Gross assets as at 30 June 2007

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Stockland Green Hills, NSW

With a book value of $243 million and annual sales of circa $290 million for the 2007 financial year, Stockland Green Hills is one of the top performing centres in our retail portfolio. We will drive the continued performance of this centre with a significant upgrade and extension. A development application will be lodged in the coming year. The centre currently includes a Woolworths supermarket, Big W discount department store, Coles supermarket and 90 specialty stores.

Stockland Annual Report 30 June 2007

Review of the year – Strategy for growth (continued)

Stockland Halladale

The creation of Stockland Halladale marks our successful debut on the global property stage. Our UK/continental Europe platform is a co-investment, trading, asset management and development business.

Shaftesbury House (pictured) is a commercial office building located in the heart of Glasgow’s city centre. Stockland Halladale will shortly demolish the existing structure and develop 5,300m[2] of modern office space over eight levels. The site will be transformed into a mixed-use precinct including an extensive retail offering and underground parking.

16 //

The development division is in a strong position for 2008 with an extensive pipeline and diverse spread of projects. We will extract greater value from our projects as they mature. Core drivers for the residential market remain robust, with record population growth and high employment.

Changing demographics continue to fuel increased demand for retirement living facilities. We expect penetration rates to rise as product offerings increase, ensuring our business is poised for future growth.

We have a clear platform for future performance in our residential business, underpinned by a record value of contracts on hand and the quality and scale of our national portfolio.

Capital partnering opportunities

We are exploring opportunities to extend our capital partners business, which has already developed a solid unlisted funds platform. This approach will enhance our growth and provide a variety of products for a wider group of investors, including wholesale superannuation funds and retail investors.

New business initiatives

The strength of our balance sheet ensures we have a competitive advantage in a changing marketplace. We will build on our success by capitalising on opportunities to add value – where we can see synergies and a fit with our overall strategy.

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Artist’s impression.
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A successful organic extension of our business this year saw us move into home finance with our own mortgage brokers introduced into some of our residential communities. This service complements our existing land sales business, and ensures we improve our customers’ experience at the point of sale.

We are constantly repositioning our assets, pursuing additional uses for projects (for example, the addition of an industrial precinct adjacent to our Lakewood residential community in Sydney’s Greystanes) and development opportunities (for example, through our acquisition of commercial office space in Brisbane’s Toowong adjacent to our Woolworths property, consolidating the site for development potential).

Australian Retirement Communities (ARC) Our move into the retirement living sector complements our residential communities portfolio. ARC is a solidly performing, well-run business, with 20 established villages across Victoria and Queensland in complementary locations to our existing residential communities.

One of the newest villages in our retirement living portfolio is Cameron Close, located in the sought-after Victorian suburb of Burwood. The retirement village comprises independent living units and serviced apartments, which are 99 per cent occupied, with parts of the property enjoying CBD skyline views.

International expansion

We now have a strong foothold in the UK, and will extend our integrated real estate platform in the year ahead to develop a presence in continental Europe.

In addition to our existing retail and office development experience and expertise, we will focus on adding our residential capability to participate in the development of world-class mixed-use projects across the UK, establishing a recognised brand and reputation.

We will also capitalise on existing joint venture partnerships and a strong investment management platform to source further product and wholesale opportunities.

Artist’s impression.

Durack Centre, WA

Durack Centre in Perth was purchased in October 2006 for $49 million and our June 2007 revaluation showed 63 per cent growth to $80 million. We have capitalised on this acquisition in the burgeoning Perth market with plans to develop the back of the site facing the Swan River into additional commercial space. The development will incorporate environmentally sustainable design features to position it as Perth’s first commercial building designed to achieve a 5 star Green Star rating. The project is due to be completed in mid 2008.

Stockland Annual Report 30 June 2007

Review of the year – Leveraging development expertise

Competitive advantage

In an environment of increasing competition and tightening investment yields, groups with truly diversified platforms and recognised development experience will be best placed to drive maximum value.

Our development expertise and integrated, mixed-use capability give us a clear competitive advantage in this environment, as we focus on the delivery of a $20 billion plus development pipeline across our residential, retail, commercial and industrial portfolios.

Artist’s impression.

Delivery of our pipeline

We commenced a number of landmark projects this year, with active redevelopments underway in our retail portfolio including Stockland Forster, Merrylands and Rockhampton.

“Our give

integrated, mixed-use

Artist’s impression.

Stockland Annual Report 30 June 2007

Our expertise in urban rejuvenation was recognised at the 2007 Urban Development Institute of Australia (UDIA) awards for excellence in Western Australia, with our South Beach site remediation and residential community development receiving the award for best urban renewal project in the state.

In our commercial and industrial portfolio, we completed the flagship $410 million campus development of the new Optus Centre at Macquarie Park, and there are a number of key projects under construction, including Durack Centre in Perth and Triniti business campus in Sydney’s Macquarie Park as part of our $1.3 billion pipeline.

The recognised experience of the Stockland Halladale team in development and urban rejuvenation in the UK market is a crucial ingredient to the future success of our offshore business.

The residential business commenced a number of key development projects this year, including the Waterside residential community in New South Wales, South Beach in Western Australia and the Allisee apartments project on the Gold Coast.

We are involved in several town centre and urban rejuvenation projects across the UK, including a complete redevelopment of the Billingham town centre in north-east England and a new retail precinct in West Bromwich. We are targeting more mixed-use opportunities in this market as we look to grow our business.

Urban rejuvenation

Our multi-sector development expertise ensures we can deliver world-class mixed-use projects in key growth areas, particularly at sites like Balgowlah and Tooronga, which require unique capabilities above and beyond traditional development ability.

capabilities advantage.”

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Baldivis and Settlers Hills, WA

Located in Perth’s key southern growth corridor, the combination of the Stockland Baldivis retail centre and the Baldivis town centre adjacent to our Settlers Hills residential community is a key example of our ability to capitalise on our diversified business platform, providing a unique mix of lifestyle, retail and social amenity.

The $300 million Settlers Hills masterplanned // 19 residential community comprises some 2,500 residential lots, two schools and 18 landscaped parks and gardens. The $46 million Stockland Baldivis and adjoining town centre development provide essential retail and community services to this community, which has become one of Perth’s fastest growing residential areas.

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Stockland Annual Report 30 June 2007

Review of the year – Capital partnering focus

Waterfront Place, Qld

Waterfront Place is a 36-level premium grade office building offering panoramic river and Brisbane views. Completed in 1990, the building includes 494 car parking spaces and is currently 100 per cent leased. As the only property in Stockland Direct Office Trust No.1 (SDOT1), Waterfront Place is a primary example of our successful use of strong funds management and property capabilities to diversify our capital sources.

20 //

Our range of unlisted property funds continued to outperform forecasts this year, achieving solid capital growth and enhanced investor returns.

Global demand for quality real estate investment options today, both in Australia and internationally, provides the opportunity for us to diversify our sources of capital and develop a wider range of products.

New initiatives

We are focused on broadening our capital partnering initiatives to unlock the value of our development pipeline, manage risk and facilitate the continued growth of our existing and new business streams.

The provision of more diversified capital solutions including unlisted funds, joint ventures, co-investment and other product solutions across a wide stakeholder base will underpin our operations as we continue to grow.

“We will tap into the global demand for quality real estate investments.”

Stockland Annual Report 30 June 2007

UK/continental Europe platform

Rynda is Stockland Halladale’s investment management arm. Our ownership of Rynda provides us with wholesale product opportunities. Our Australian capital partners team will work closely with our Stockland Halladale and Rynda platforms in the UK and continental Europe to cross-sell our products and extend our already successful platform into new markets.

We will leverage our product and investor base internationally to extend our reach and simultaneously access multiple capital markets.

Future growth

Under new leadership and with a strong focus on supporting our business via diversified capital sources and earnings, our capital partners business is well placed to increase investor returns and strengthen funds under management both in Australia and globally.

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Rynda en Primeur fund, France

The Rynda en Primeur fund is managed by Rynda Property Investors, Stockland Halladale’s European investment management arm. The fund has secured assets of approximately € 300 million across France, with substantial investments from high profile entities including GIC Real Estate ( € 75 million) and Schroders Real Estate ( € 20 million).

541 St Kilda Road, Vic

541 St Kilda Road, Melbourne is one of the commercial assets in Stockland Direct Office Trust No. 3 (SDOT3), which closed in June 2007, successfully raising over $60 million from retail investors. The fund also includes an office building at 75 George Street, Parramatta, Sydney, a car park in the Melbourne CBD, as well as office buildings in Canberra and Perth.

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Stockland Annual Report 30 June 2007

Review of the year – Corporate responsibility and sustainability

Last year we published our inaugural corporate responsibility and sustainability (CR&S) report, outlining our commitment to doing the right thing by all of our stakeholders as a property manager, owner and developer.

Throughout 2007 we have continued to focus our CR&S strategy in four key areas:

• In the marketplace with our suppliers, customers, partners and government

• In the workplace with our people

• In the environment in which we operate, and beyond

• In the communities we create and service

Marketplace

This year, we focused on driving change in our supply chain through the development of a sustainable supply chain management policy. We are working with the NSW Department of Environment and Climate Change sustainability advantage program, which assists in the development strategies for supplier engagement on environmental sustainability.

Community consultation and ecologically sustainable design at Wallarah Peninsula, NSW

Our Murrays Beach residential community at Wallarah Peninsula, 125 kilometres north of Sydney, was launched to the market this year, with all dwellings meeting or exceeding NSW Building Sustainability Index (BASIX) requirements.

Our unique stakeholder management plan for Murrays Beach ensures the social, economic and environmental interests of the local community are considered at all stages of the project delivery. In recognition of our focus on community consultation and leading edge environmentally sensitive urban design, Murrays Beach received the Housing Industry Association award for GreenSmart design and the Urban Development Institute of Australia award for sustainability in late 2006. The Wallarah Peninsula masterplanned community will eventually comprise more than 1,700 homes.

We have also developed a supplier code of conduct that sets out our prerequisites for doing business, allowing us to work in partnership with suppliers to meet governance, environmental and social principles. We will continue to roll this out and enhance our supply chain engagement over the coming year.

Stockland Annual Report 30 June 2007

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Workplace

Our approach to CR&S is an embedded business imperative driven not only at Board level by our CR&S committee, but at all levels and locations across our business. Underpinning this approach are our formally recognised CR&S objectives outlined in every employee’s objectives.

This year we have focused on establishing an employee giving and volunteering platform and have made significant progress, with the establishment of our employee giving and volunteering committee.

We have also increased our commitment to health and safety in the workplace, striving towards world-class practices. To this end, we created the new role of general manager, health and safety at our Sydney head office.

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Environment

This year we participated for the second time in the Carbon Disclosure Project. We are committed to becoming a leader in awareness, innovation and accountability in relation to climate response and carbon management, with the development of our Climate Change Action Plan (CCAP). Our CCAP will establish clear goals, targets and actions to ensure we achieve measurable emissions reductions across all of our businesses.

We recently trialled the Green Building Council’s Green Star shopping centre tool and improved the performance of our commercial office portfolio by implementing initiatives using the National Australian Built Environment Rating System (NABERS) tools, including the Australian Building Greenhouse Rating scheme. We will continue to work with all levels of government to develop and improve industry tools and to enhance our performance.

Sustainable asset management at Stockland Wetherill Park, NSW

Our Wetherill Park shopping centre participated in two major pilot programs run by EcoSave and Energy Conservation Systems, supported by the NSW Government.

The programs aim to improve energy and water consumption by capturing rainwater, using storm water and carrying out educational and awareness programs with retailers and customers. To determine our savings, we’ve carried out monitoring and verification prior to and after the completion of work to record energy and water data. We are now working to implement these initiatives at 19 of our other retail sites across the country.

Community

We strengthened our community engagement across our projects this year, building a more consistent approach to stakeholder management. We have broadened our stakeholder engagement process via our project-based stakeholder management plans and have expanded our involvement in the Australian Business and Community Network (ABCN) to a national scale.

We have been recognised for our community involvement both at a corporate and project level, with our managing director, Matthew Quinn, elected deputy chairman of ABCN in 2007 and our awards for best practice stakeholder engagement at Wallarah Peninsula.

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Giving and volunteering with the ABCN ABCN is a group of national business leaders affecting positive social change through programs that engage students, educators and business people. Our participation in ABCN expanded to a national level this year, with our employees around the country involved in state-based operations taskforces. Our Sydney-based corporate services team participated in SPARK, a literacy program for year 1-2 students with 24 of our employees volunteering weekly to assist students at Tempe Public School. We also strengthened our involvement in the GOALS mentoring program with Year 9 school students in Sydney and Perth.

Stockland Annual Report 30 June 2007

Ten year performance history

“We have an enviable track record of delivering strong results and investor returns ...over many years.”

24 //

Year to 30 June

All figures are in Australian dollars

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2007 2006 2005 2004 2003 2002 2001 2000 1999 1998
Members’ equity $m 8,217.9 6,395.1 5,486.2 5,033.1 3,600.6 2,642.7 2,337.5 1,179.3 1,130.1 920.7
Total assets $m 13,700.4 9,598.5 8,399.1 7,204.6 5,948.6 3,327.1 3,386.2 1,683.1 1,278.4 1,124.9
Gross revenue $m 3,313.9 2,301.3 1,712.9 1,371.0 867.3 837.3 631.5 344.9 250.6 214.7
Net profit $m 611.0 553.7 502.7 455.5 284.8 249.8 198.2 115.1 100.8 92.2
Distribution and dividend paid $m 623.0 559.2 505.4 446.3 272.8 241.3 192.4 111.7 99.5 90.6
Distribution per security cents 44.3 41.4 38.9 37.0 32.1 29.7 28.3 26.1 25.1 24.7
Earnings per security cents 44.0 41.5 39.1 37.8 33.5 30.8 29.2 26.9 25.4 25.1
Net tangible assets per security $ 5.33 4.54 4.00 3.76 3.41 3.15 3.11 2.70 2.67 2.48
Closing market price $ 8.15 7.02 5.52 5.18 5.04 4.39 4.02 3.52 3.45 3.69
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• Net profit before certain significant items.

Note: FY98–FY04 is calculated under AGAAP, FY05-FY07 is calculated under AIFRS.

Stockland Annual Report 30 June 2007

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Stockland

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Registered office:

133 Castlereagh Street Sydney NSW 2000

Director’s Lead auditor’s report independence declaration page page 26 57 Annual Income Balance Statements Cash flow statements sheets of changes statements in equity page page page page Financial Report 58 59 60 62 30 June 2007 Notes to the consolidated financial statements page Directors’ Independent Security Security holder declaration auditors’ holders information report and directory 63

Directors’ Independent Security Security holder declaration auditors’ holders information report and directory page page page page 141 142 143 144

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report For the year ended 30 June 2007

26 //

The directors of Stockland Corporation Limited present their report together with the Financial Report of Stockland for the year ended 30 June 2007 and the Independent Auditor’s Report thereon. The Financial Report of Stockland comprises the Financial Report of Stockland Corporation Limited (“the Company”) and its controlled entities, including Stockland Trust and its controlled entities (“the Trust”) which together form the consolidated entity (“Stockland” or “consolidated entity”).

DIReCtoRS

The directors of the Company at any time during or since the end of the financial year (“the directors”) are:

Graham Bradley

BA, LLB (Hons 1), LLM, FAICD

Chairman

(Non-Executive)

Mr Bradley was appointed to the Board on 9 February 2004 and was appointed Chairman on 25 October 2005. He is Chairman of HSBC Bank Australia Limited, Film Finance Corporation Australia Limited, Anglo American Australia Limited, Proteome Systems Limited (appointed as a Director May 2004), Po Valley Energy Limited (appointed as a Director September 2004) and Boart Longyear Limited (appointed as a Director and Chairman February 2007). He has been a Director of Singapore Telecommunications Limited since March 2004 and a Director of MBF Australia Limited since November 2003. Mr Bradley was the Managing Director of Perpetual Trustees Australia Limited for eight years until September 2003 and was the National Managing Partner of Blake Dawson Waldron and a Principal of McKinsey & Company prior to that. Mr Bradley is Chair of the Corporate Responsibility and Sustainability Committee and a member of the Nomination and Remuneration Committee.

Former Directorships of listed entities in last three years None.

Nicholas Greiner

B.Ec (Hons), MBA

Deputy Chairman (Non-Executive)

Mr Greiner has been Deputy Chairman of the Board since his appointment in September 1992. He was a Member of the New South Wales Parliament

from 1980 to 1992 and Premier and Treasurer for the last five years of that period. Prior to entering Parliament and after a distinguished academic career, he held executive positions in the United States of America and in Australia. Mr Greiner is Chairman of Bilfinger Berger Australia Limited and Bradken Limited (appointed as a Director April 2004). He is also a Director of McGuigan Simeon Wines Limited (appointed September 1992) and Bluefreeway Limited (appointed November 2006). Mr Greiner is a Director and Chairman Designate of PMI Mortgage Insurance Ltd and PMI Mortgage Insurance Australia (Holdings) Limited (appointed February 2007) and is a Director of a number of private groups. Mr Greiner is Chair of the Nomination and Remuneration Committee.

Former Directorships of listed entities in last three years Mr Greiner was a Director of QBE Insurance Group from September 1992 until April 2007.

Matthew Quinn

B.Sc (Hons), CA, ARCS, FAPI

Managing Director

Mr Quinn has an extensive background in commercial, retail, industrial and residential property investment and development. He began his career in the United Kingdom as a Chartered Accountant and moved to Australia in 1987 with Price Waterhouse. In 1988 he joined the Rockingham Park Group, a substantial Western Australian private property group. Mr Quinn joined Stockland in 1999 and was appointed to his current role of Managing Director in October 2000. Mr Quinn held the position of National President of the Property Council of Australia from March 2003 until March 2005, and is a Fellow of the Australian Property Institute. He was appointed Director of Australian Business and Community Network Limited in October 2006.

Former Directorships of listed entities in last three years None.

Duncan Boyle

BA (Hons), FCII

(Non-Executive)

Mr Boyle was appointed to the Board on 7 August 2007. He has 34 years experience as a senior executive and director within the insurance industry in Australia, New Zealand and the United Kingdom, and is

a Director of QBE Insurance Group Limited (appointed September 2006).

Former Directorships of listed entities in last three years None.

Bruce Corlett

BA, LLB

(Non-Executive)

Mr Corlett was appointed to the Board in October 1996. He is Chairman of Servcorp Limited (appointed as a Director October 1999) and Trust Company Limited (appointed as a Director October 2000), and has been a Director of Tooth & Co. Limited since September 1999. Mr Corlett is a member of the Audit and Risk Committee and the Nomination and Remuneration Committee.

Former Directorships of listed entities in last three years

Mr Corlett was a Director of Adsteam Marine Limited from March 1997 until April 2007.

Lyn Gearing

B.Comm, Dip. Valuations, Cert. Bus.Studies (Real Estate), FAICD

(Non-Executive)

Ms Gearing was appointed to the Board on 1 November 2005. Ms Gearing is a Director of Hancock Natural Resources Group Australasia Pty Limited, IMB Limited and the Garvan Research Foundation. Ms Gearing was Chief Executive of NSW State Super from 1997 to 2002, and has extensive business experience in superannuation, funds management, corporate finance and management consulting. She was appointed as a member of the Audit and Risk Committee and a Director of Stockland Funds Management Limited, the Responsible Entity for Stockland Capital Partners, on 22 November 2005. Ms Gearing was appointed Chair of the Stockland Trust Management Limited and Stockland Funds Management Limited Compliance Committees from 1 July 2006.

Former Directorships of listed entities in last three years None.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 27

DIReCtoRS (CoNtINUeD)

Peter Scott

B.Eng (Hons), M.Eng Sc, FIE. Aust CPEng, MICE (Non-Executive)

Mr Scott was appointed to the Board on 9 August 2005. He is a Director of Sinclair Knight Merz Holdings Limited and was appointed a Director of Perpetual Limited on 31 July 2005. Mr Scott is also a Director of Pilotlight, a non-profit making organisation, is an employee of Korn Ferry International Pty Limited and is on the Advisory Board of Jones Lang LaSalle Australia. Mr Scott was the Chief Executive Officer of MLC and Executive General Manager, Wealth Management of National Australia Bank until January 2005. Prior to this, he held a number of senior positions with Lend Lease, following a successful career as a consulting engineer in Australia and overseas. Mr Scott was appointed as a Director and was elected Chairman of Stockland Funds Management Limited, the Responsible Entity for Stockland Capital Partners, on 22 November 2005 and is a member of the Corporate Responsibility and Sustainability Committee.

Former Directorships of listed entities in last three years None.

Hugh thorburn

B.Comm, FCA

Finance Director

Mr Thorburn was appointed to the Board as Finance Director on 1 July 2004, having been Chief Financial Officer since his commencement at Stockland on 16 February 2004. Mr Thorburn is a Chartered Accountant and has held a number of senior financial and general management roles in Australian companies.

Former Directorships of listed entities in last three years None.

terry Williamson

B.Ec, MBA, FCA, FCIS, MACS

(Non-Executive)

Mr Williamson was appointed to the Board in April 2003. He is a Director of Avant Insurance Limited, ING Australia Limited (appointed 21 June 2006) and a member of the University of Sydney Faculty of Economics and Business Studies Advisory Board. Mr Williamson was previously the Chief Financial Officer of Bankers Trust Australia Limited/BT Financial Group Pty Limited from 1997 to 2002 and prior to that was a partner of Price Waterhouse for 17 years. Mr Williamson is Chair of the Audit and Risk Committee and was appointed a member of the Stockland Trust Management Limited Compliance Committee from 1 July 2006. He is a Director of Stockland Funds Management Limited, the Responsible Entity for Stockland Capital Partners, and has been a member of the Stockland Funds Management Limited Compliance Committee since December 2004.

Former Directorships of listed entities in last three years

Mr Williamson was a Director of Excel Coal Limited from March 2004 until his retirement in October 2006.

David Fairfull

B.Comm, CPA, ACIS, ASIA, FAICD (Non-Executive) (Retired in October 2006)

Mr Fairfull was appointed to the Board in March 1990, where he served until his retirement in October 2006. He is Joint Managing Director of Pitt Capital Partners Limited, a Soul Pattinson controlled merchant bank, Chairman of Soul Communications Limited (appointed a Director April 2005), and a non-executive Director of Australian Pharmaceutical Industries Limited (appointed May 2000), SP Telemedia Limited (appointed May 2000), Washington H Soul Pattinson & Company Limited (appointed August 1997), Souls Private Equity Limited (appointed September 2004) and New Hope Corporation Limited (appointed August 1997). He was the Chair of the Stockland Trust Management Limited Compliance Committee until his resignation from that committee on 30 June 2006.

CoMPANy SeCRetARIeS

Phillip Hepburn

B.Ec, LLM, Grad Dip CSP, FCIS, MAICD

Company Secretary

Mr Hepburn joined Stockland as General Counsel and Group Secretary in 2001. He has over ten years experience as a company secretary. Prior to joining Stockland, he was General Counsel and Company Secretary of IAMA Limited, an Australian Securities Exchange (“ASX”) listed company.

Derwyn Williams

B.Comm, ASA, FCIS, MAICD

Company Secretary

Mr Williams has fifteen years experience as a company secretary, joining Stockland in December 2004 and appointed as Deputy Secretary in May 2005. Prior to joining Stockland he was General Manager Corporate Governance & Company Secretary at Credit Union Services Corporation (Australia) Limited and Deputy Company Secretary of St. George Bank Limited. He has held a number of senior management, accountancy and internal audit positions across the property, finance, heavy industry and public sectors.

Directors’ Report For the year ended 30 June 2007

Former Directorships of listed entities in last three years

Mr Fairfull was a Director of Gazal Corporation Limited from January 1987 until his retirement in November 2004.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report

For the year ended 30 June 2007

DIReCtoRS’ MeetINGS

The number of meetings of the Board of Directors (“Board”) and of the Board committees and the number of meetings attended by each of the directors during the financial year were:

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CORPORATE
NOMINATION AND RESPONSIBILITy
SCHEDULED AUDIT AND RISK REMUNERATION COMPLIANCE AND SUSTAINABILITy
DIRECTOR BOARD COMMITTEE COMMITTEE COMMITTEE COMMITTEE
A B A B A B A B A B
Graham Bradley 12 12 – – 5 5 – – 4 4
Nicholas Greiner 12 12 – – 5 5 – – – –
Matthew Quinn 12 12 – – – – – – 4 4
Bruce Corlett 10 12 7 7 5 5 – – – –
Lyn Gearing 12 12 7 7 – – 4 4 – –
Peter Scott 12 12 – – – – – – 4 4
Hugh Thorburn 12 12 – – – – – – – –
Terry Williamson 12 12 7 7 – – 4 4 – –
David Fairfull [1] 3 4 – – – – – – – –
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A – Meetings attended

B – Meetings eligible to attend

1 Retired 24 October 2006.

28 //

CoRPoRAte GoveRNANCe

Outlined below are the main corporate governance policies and practices in place throughout the year, unless otherwise stated. These are consistent with the ASX Corporate Governance Council’s principles and recommendations (“ASX Guidelines”).

The Board has a clear view of its governance responsibilities and believes it has the necessary mix of experience and skills to oversee the high standard of corporate integrity and accountability required of a professional and ethical organisation. The primary role of the Board is to ensure the long-term health and prosperity of Stockland and its security holders.

Role of the Board

The Board meets regularly and is responsible for the overall governance of Stockland, including:

• overseeing the development and implementation of corporate strategy, operational performance objectives and management policies with a view to maximising long-term security holder value;

• reviewing and approving the annual budget and monitoring ongoing financial and operating performance;

• reviewing and approving financial and other reporting to security holders;

• establishing appropriate structures for the management of Stockland, including the overall framework of internal control, risk management and compliance, the integrity of management information systems and the application of high ethical standards;

• setting executive remuneration policy;

• appointing and reviewing the performance and, where appropriate, the removal of the Managing Director;

• ratifying the appointment and, where appropriate, the removal of the Finance Director and/or the Company Secretary;

• appointing new non-executive directors to fill casual vacancies on the Board;

• determining the level of authority delegated to the Managing Director;

• approving major capital expenditure, acquisitions and divestitures; and

• appointing and removing the external auditor.

The Board has adopted a comprehensive charter detailing its functions and responsibilities, which may be viewed on the Stockland website.

The Boards of Stockland Corporation Limited and Stockland Trust Management Limited have the same directors.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 29

CoRPoRAte GoveRNANCe (CoNtINUeD) Role of the Board (continued)

The Board has delegated responsibility to the Managing Director to manage the business of Stockland and to its various Board committees to deal with specific areas described later. These delegated responsibilities are regularly reviewed and the Managing Director regularly consults with the Board on performance and related matters. Matters which are not specifically delegated to the Managing Director require Board approval, including capital expenditure decisions above delegated levels, expenditure outside the ordinary course of business, major acquisitions and sales, changes to corporate strategy, the issue of securities by Stockland and key risk management and accounting policies.

Role of Stockland trust Management Limited as Responsible entity for Stockland trust

Stockland Trust Management Limited, as Responsible Entity for Stockland Trust, is responsible for the operation of the Trust. The Responsible Entity must exercise its powers and perform its obligations under the Stockland Trust Constitution and the Corporations Act 2001 in the best interests of security holders to ensure that the activities of the Trust are conducted in a proper and efficient manner. The major activities of the Responsible Entity include:

• ongoing selection and management of property investments;

• management of the Trust’s property portfolio;

• – maintenance of the accounting and statutory records of the Trust;

• management of equity and debt raisings; and

• – preparation of notices and reports issued to security holders.

Board processes

The Board currently holds ten scheduled meetings each year. Additional meetings are convened as required. The agenda for each meeting is prepared by the Company Secretary in conjunction with the Chairman and Managing Director and, along with supporting papers, is distributed to directors prior to the meeting. Standing items include the Managing Director’s report, the Finance Director’s report, reports of each Divisional and Functional Executive, together with reports addressing strategic matters, governance and compliance. Senior executives are directly involved in Board discussions and directors have a number

of further opportunities to contact a wider group of employees, including visits to business operations.

Board papers are designed to focus Board attention on current and future issues of importance to Stockland’s operations and performance, including monthly and year-to-date divisional performance against budget. Board papers include minutes of Board committees and subsidiaries which have met since the last Board meeting and papers on material issues requiring consideration. Significant matters are presented to the Board by senior executives. The Board may seek further information on any issue, from any executive.

Director education

Stockland has a formal process to inform new directors about the nature of its business, current issues, corporate strategies and its expectations concerning the performance of its directors. Directors also have the opportunity to visit Stockland facilities and to meet with management to gain a better understanding of business operations. Directors have the right of access to all Stockland information and executives.

Composition of the Board

At the date of this report, the Board comprised two executive directors and seven non-executive directors. Directors are listed on pages 26 and 27, with details of their other listed company directorships and prior experience.

Stockland recognises that having a majority of independent directors provides assurance to security holders that the Board is properly fulfilling its role and is diligent in holding management accountable for its performance. The Board has resolved that it should continue to have a majority of non-executive directors, that the Chairman and Managing Director must be separate persons, and that the Chairman should be an independent non-executive director. The Board is comprised of directors with a wide but complementary range of experience and expertise, including some with relevant accounting experience and qualifications, and a good understanding of financial reporting.

Stockland has developed criteria for determining the independence of its Board members. A director is considered to be independent if he or she:

• is not a substantial security holder of Stockland or of a company holding more than 5% of Stockland’s voting securities, or an officer of or directly or indirectly associated with a security holder holding more than 5% of Stockland’s voting securities;

• is not an employee of Stockland and has not within the last three years been employed by Stockland;

• is not a principal of a material professional advisor to Stockland. A director who is a principal or employee of a professional advisor will not participate in any consideration of the possible appointment of the professional advisor and will not participate in the provision of any service to Stockland by the professional advisor, unless otherwise resolved by the Board;

• is not a material supplier or customer of Stockland or an officer of or directly or indirectly associated with a significant supplier or customer;

–

has no material contractual relationship with Stockland or any of its associates other than as a director of Stockland;

• has no other interest or relationship that could interfere with the director’s ability to act in the best interests of Stockland and independently of management; and

–

• has not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of Stockland.

–

In this context, the Board considers that any directorrelated business relationship that is or is likely in the future to be more than 10% of the director-related business’s revenue to be material.

All directors are expected to act in the best interests of Stockland.

Stockland is committed to having a Board whose members have the capacity to act independently of management, and have the collective skills necessary to optimise the long-term financial performance of Stockland so as to sustain superior returns to security holders. Having considered carefully the above criteria, the Board has determined that all of Stockland’s nonexecutive directors are independent directors.

In making this determination, the Board considered the transactions between Stockland and entities with which Stockland directors are associated as directors or advisors set out in Note 48 to the Consolidated Financial Statements. The Board concluded that none of these transactions made those entities significant suppliers to, or customers of, Stockland when the relative size of the transactions was compared to the total revenues or business of those entities. Further, in none of those transactions did Stockland directors

Directors’ Report For the year ended 30 June 2007

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report

For the year ended 30 June 2007

30 //

CoRPoRAte GoveRNANCe (CoNtINUeD) Composition of the Board (continued)

receive direct financial benefits as principals, partners, or substantial shareholders of the entities concerned.

Also, two members of the Board, Mr Greiner and Mr Corlett, have been directors for more than 10 years. The Board considers that these directors add significant value to the Company since they thoroughly understand Stockland’s businesses and processes, and contribute insightfully to board discussions, strategy and policy. The Board does not believe that their tenure impairs their ability to bring an independent mind and judgement to bear in holding Stockland’s management accountable for its performance.

The only change to the composition of the Board during the year was the retirement of David Fairfull on 24 October 2006. In line with Stockland’s Board renewal programme, Mr Duncan Boyle was appointed as a director on 7 August 2007. Mr Boyle was Chief Executive Officer of Royal & Sun Alliance UK from 2002 to 2005, and prior to that held various CEO and Managing Director roles in the Royal & Sun Alliance group over twenty years. He brings a wealth of financial services and international business experience to complement the expertise of the Stockland Board.

The Board’s policy is that a majority of the members of each Board committee should be independent directors. The Audit and Risk Committee and the Nomination and Remuneration Committee comprise only non-executive directors. The Compliance Committee and the Corporate Responsibility and Sustainability Committee are chaired by an independent director and have a majority of independent directors as members.

The Board also has adopted the policy that nonexecutive directors will meet before each Board meeting in the absence of executive directors and management.

The Constitution of Stockland Corporation Limited (the “Constitution”) provides that:

• the maximum number of directors shall be ten;

• – no director may retain office for more than three years or until the third annual general meeting following the director’s appointment (whichever is the longer), but retiring directors are eligible for reappointment;

– directors appointed to fill casual vacancies must submit to election at the next general meeting; and – the number of directors necessary to constitute a quorum is not less than two.

The Constitution also enables the directors to appoint a Managing Director, who is not required to retire and be re-elected by members every three years while he or she continues to hold that office. Article 15.7 of the Constitution provides that if the Managing Director ceases to hold the office of director for any reason, he or she immediately ceases to be Managing Director, and if he or she ceases to be the Managing Director he or she immediately ceases to be a director.

terms of appointment and retirement of non-executive directors

The terms of appointment of a non-executive director are set out in a letter to the director from the Chairman which, among other things, sets out the expectations of the Board in relation to the performance of the director, procedures for dealing with a director’s potential conflicts of interest, and the disclosure obligations of the director, together with the details of director’s remuneration and relevant company policies.

The Constitution provides that a director may enter into an arrangement with Stockland. However, these arrangements are subject to the restrictions and disclosure requirements of the Corporations Act 2001, common law directors’ duties and Stockland’s policy on the independence of directors. The indemnity and insurance arrangements for directors are described under “Indemnities and insurance of officers and auditors” on page 56.

Directors are required to keep the Board advised of any interest that may be in conflict with those of Stockland, and restrictions are applied to directors’ rights to participate in discussion and/or to vote, as circumstances dictate. In particular, where a potential conflict of interest may exist, affected directors may be required to leave the Board meeting while the matter is considered in their absence.

Stockland has also entered into a deed of disclosure with each director, ensuring that Stockland can comply with its obligations under the ASX Listing Rules relating to disclosure of changes in directors’ stapled security holdings.

The Board has a policy of enabling directors to seek independent professional advice for Stockland related matters at Stockland’s expense, subject to the prior

agreement of the Chairman that the estimated costs are reasonable. Directors may also communicate directly with Stockland’s own advisors and share advice obtained with other directors. The Board has a policy that all non-executive directors acquire and hold at least 5,000 stapled securities in Stockland within a reasonable time of becoming a director. This policy is intended to align the personal financial interests of directors with those of security holders.

Board committees

Four permanent Board committees have been established to assist in the execution of the Board’s responsibilities as described below. These are the:

• Nomination and Remuneration Committee;

– Audit and Risk Committee; – Compliance Committee; and – Corporate Responsibility and Sustainability Committee.

These committees have written charters which are reviewed on a regular basis. All non-executive directors may attend any Board committee meeting. All committees have unfettered access to in-house professional advice and appropriate external advisors where the circumstances require. Committees may meet with external advisors in the absence of management. The minutes of all Board committee meetings are circulated to directors and are reviewed at the next scheduled Board meeting.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee meets as frequently as required and during this financial year held five meetings which were attended by all members of the committee. The committee also met informally on a number of occasions. The committee operates under the Board’s delegated authority and supports the Board by overseeing nomination and remuneration activities at Stockland.

The committee is responsible for reviewing and making recommendations to the Board on:

Nominations

• competencies necessary to fulfil the duties of a director at Stockland;

• the Board’s succession plan;

• the Board’s collective performance and the performance of individual directors;

• the appointment and removal of non-executive directors;

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Stockland Corporation Limited and its controlled entities (including Stockland Trust)

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CoRPoRAte GoveRNANCe (CoNtINUeD) Board committees (continued)

Nomination and Remuneration Committee (continued)

Nominations (continued)

• the appointment and removal of executive directors; and

• policies relating to the composition of the Board and directors’ independence.

Remuneration

• non-executive director remuneration;

• recruitment, retention and termination policies for non-executive directors and executives;

• succession management for senior executives;

• senior executive remuneration;

• executive incentive plan design; and

• – director, executive and employee share plans.

The committee ensures that there is a strong link between employee reward, Stockland’s performance and ultimately security holder returns. The committee also ensures that remuneration for non-executive directors is designed to attract and retain talented and experienced directors. Refer to the Remuneration Report for further information.

The following directors were members of the committee during or since the end of the financial year:

Mr N Greiner (Chair) – Non-Executive Director Mr G Bradley – Non-Executive Director

Mr B Corlett – Non-Executive Director

The committee has a charter, consistent with ASX Guidelines. Further details of the committee’s charter and policies may be viewed on the Stockland website.

When a vacancy exists or whenever it is considered that the Board would benefit from the services of a new director, the committee identifies candidates with the appropriate expertise and experience. The committee may use the services of a professional recruitment firm. Recommended candidates are then submitted to the Board for consideration.

Audit and Risk Committee

Audit and Risk Committee meetings are held at least quarterly and are attended, where appropriate, by the Managing Director, the Finance Director, Stockland’s external auditor and, as required, other Stockland executives (including Internal Audit) and external advisors. The committee meets privately with the

external auditor in the absence of management at least once a year. The committee has the power to conduct or authorise investigations into, or consult independent specialists on, any matters within the committee’s scope of responsibility. The committee has a written charter which incorporates the ASX Guidelines. Further details of the committee’s charter may be viewed on the Stockland website.

Under its charter, the committee must be comprised of at least three directors, all of whom must be non-executive directors, and a majority must be independent directors. The Chairman of the committee may not also be the Chairman of the Board.

At least one member of the committee has relevant accounting qualifications and experience and all members have a good understanding of financial reporting.

The members of the committee during or since the end of the financial year were:

Mr T Williamson (Chair) – Non-Executive Director

Mr B Corlett – Non-Executive Director

Ms L Gearing – Non-Executive Director

The Company Secretary acts as secretary to the committee and attends its meetings.

The committee assists the Board to fulfil its corporate governance and disclosure responsibilities in relation to financial reporting, internal controls, risk management systems and internal and external audits.

The committee’s role is to make recommendations to the Board and to determine any matter delegated to it by the Board, either specifically or under its charter. In addition, the committee will:

• oversee and appraise the quality of the audits conducted by both the internal and external auditors;

• provide, through regular meetings, a forum for communication between the Board, senior management and both internal and external auditors and risk management officers;

• review financial information prior to approval by the Board for presentation to security holders and/or release to both the ASX and regulatory bodies;

• – oversee and determine the adequacy of the operating and accounting controls; and

• oversee and determine the effectiveness of risk management strategies, policies, systems and procedures, including annual review of the corporate insurance programme.

The committee also has responsibility for recommending the appointment and removal of external auditors. The following principles and practices were adopted in April 2002:

• the external auditor must at all times remain independent of Stockland;

• the external auditor is to be appointed to all controlled entities of Stockland;

• the external auditor must not undertake staff recruitment, internal audit or management and IT consulting for Stockland;

• the external auditor must not provide non-audit services under which the auditor assumes the role of management, becomes an advocate for Stockland or audits its own professional expertise; and

• the external audit engagement partner and review partner will be rotated every five years.

The external auditor provides a declaration of independence each reporting period which is consistent with the requirements of the Corporations Act 2001.

Compliance Committee

The Compliance Committee is responsible for monitoring and reviewing the effectiveness of the Compliance Plan in respect of Stockland Trust, its controlled entities, associates, joint ventures and arrangements and in ensuring adherence to applicable laws and regulations.

The members of the committee during or since the end of the financial year were:

Ms L Gearing (Chair) – Non-Executive Director Mr A Sherlock – External Independent Member Mr T Williamson – Non-Executive Director

The role of the committee includes responsibility for evaluating the effectiveness of the Responsible Entity’s compliance systems designed to protect the interests of security holders.

The Compliance Plan for Stockland Trust and its controlled entities has been approved by the Australian Securities and Investments Commission (“ASIC”). The Compliance Committee meets regularly and must report breaches of the law and Constitution to the Board which is required to report any material breach of the Compliance Plan to ASIC.

Directors’ Report For the year ended 30 June 2007

Stockland Annual Report 30 June 2007

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Directors’ Report

For the year ended 30 June 2007

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CoRPoRAte GoveRNANCe (CoNtINUeD) Board committees (continued)

Corporate Responsibility and Sustainability Committee

The members of the committee during or since the end of the financial year were:

Mr G Bradley (Chair) – Non-Executive Director

Mr P Scott – Non-Executive Director

Mr M Quinn – Managing Director

Stockland recognises that a sustainable future for its business depends upon the sustainability of the communities, economy and society in which it operates. The purpose of the committee is to assist the Board in overseeing Stockland’s commitment to operate its businesses ethically, responsibly and in a sustainable way.

The committee’s role is to:

• review the social, environmental and ethical consequences of Stockland’s current and planned operations;

• oversee the development and implementation of policies and practices designed to ensure that Stockland’s operations meet the standard expected of an ethical and socially responsible organisation;

• consider initiatives proposed by management to adapt Stockland’s policies and practices to meet changing community expectations; and

• help the Board and management identify and address social, environmental and ethical issues likely to adversely affect Stockland’s business reputation or operations.

The Board has charged executive management with the responsibility for managing Stockland’s business operations to the highest standard of ethical business practice, corporate citizenship and environmental responsibility.

The responsibilities of the committee are to:

• review reports from management outlining the environmental, social and ethical impact of Stockland’s business activities and future plans, and to review the processes operating within the Company to address those issues;

• consider proposals from management and make recommendations to the Board on major initiatives related to Stockland’s corporate responsibility and sustainability policies, principles and practices;

Stockland Direct Retail Trust No. 1 which invests in a portfolio of neighbourhood shopping centres located in New South Wales, Western Australia and Queensland; and

• monitor compliance with Stockland’s published – policies and guidelines;

• review management’s progress in the implementation of policies, guidelines and agreed initiatives;

Stockland Direct Office Trust No. 3 which invests in a diverse portfolio of four commercial office properties and a car park located in the Australian Capital Territory, New South Wales, Victoria and Western Australia.

• approve external reporting on major corporate responsibility and sustainability policies, principles and initiatives; and

• act as a first point of reference for management to the Board for any major social, environmental or ethical issues likely to adversely affect Stockland’s brand, reputation or stakeholders.

On 17 April 2007, following the sale of Stockland’s hotel business, unit holders of the Saville Private Syndicate Trust (“SPST”) unanimously resolved to sell the sole trust property to Saville Brisbane Trust, a Stockland Controlled entity, and to wind up SPST in accordance with its Constitution.

The committee meets at least four times annually, or more frequently as circumstances dictate.

SFML Compliance Committee

The members of the SFML Board during or since the end of the financial year were:

A Compliance Committee has been set up to oversee the Compliance Plan approved by SFML for Stockland Direct Office Trust No.1, Stockland Direct Office Trust No. 2, Stockland Direct Office Trust No. 3, Stockland Direct Retail Trust No. 1 and the Saville Private Syndicate Trust, which was wound up on 15 June 2007.

Mr P Scott (Chair) – Non-Executive Director

Ms L Gearing – Non-Executive Director

Mr D Kent – Independent Non-Executive Director

Mr M Quinn – Managing Director

The members of the SFML Compliance Committee during or since the end of the financial year were: Ms L Gearing (Chair) – Non-Executive Director Mr A Sherlock – Independent Non-Executive Director

Mr A Sherlock – Independent Non-Executive Director

Mr T Williamson – Non-Executive Director

Since Stockland Capital Partners business has dealings with and may acquire assets from Stockland, the SFML Board has two independent non-executive directors who must approve each transaction SFML enters into with Stockland and must be satisfied that it is on arm’s length commercial terms. In order to protect the unit holders in the event there is a dispute or default by Stockland under the terms of any contract, the SFML Board has resolved that the unanimous consent of the two independent directors must be obtained as to any action SFML may take.

Mr T Williamson – Non-Executive Director

The role of the committee includes evaluation of the effectiveness of the Responsible Entity’s compliance systems designed to protect the interests of unit holders. The Compliance Plan has been approved by ASIC. The committee meets regularly and must report breaches of the law and Constitution to the Board which is required to report any material breach of the Compliance Plan to ASIC.

With a strong philosophy of co-investment, well defined fund investment strategies and transparent reporting, SFML’s governance is designed to ensure that the investors in its unlisted securities are not disadvantaged by the interests of Stockland.

Stockland Capital Partners

Stockland Capital Partners (previously known as the Unlisted Property Fund business) was established in 2005 to offer high quality property investment opportunities in both retail and wholesale investments, provide new sources of capital, facilitate asset growth and generate additional sustainable income. A wholly owned entity, Stockland Funds Management Limited (“SFML”) operates this business, with a separate board of directors (“SFML Board”). During the year Stockland Capital Partners launched the following trusts for which SFML acts as responsible entity:

Board and director performance

The Board has a formal annual performance assessment process, including assessment of the Board’s committees and individual directors.

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CoRPoRAte GoveRNANCe (CoNtINUeD)

Board and director performance (continued)

The assessment process requires each non-executive director to complete a questionnaire relating to the role, composition, procedures, practices and behaviour of the Board and its members. Assessments are confidential, other than to the Chairman and the Deputy Chairman who discuss the results with each director individually. A further discussion is held on the Board’s effectiveness and performance by the Board as a whole. As part of this process, each Board member has the opportunity to raise any matter, suggestion for improvement or criticism with the Chairman.

Directors who will be offering themselves for reelection at the 2007 Annual General Meeting have been reviewed by the Board which has resolved to support their re-election.

Non-executive directors receive a fee for their services and, following a resolution of security holders at the 2006 Annual General Meeting, have the opportunity to take part of their fees in the form of Stockland securities acquired on the ASX in the ordinary course of trading. Non-executive directors are also paid superannuation but receive no other retirement benefits. Refer to the Remuneration Report for further information.

Risk management

oversight of the risk management system

Managing risk is fundamental to the operations of Stockland. The Board and senior executives accept their responsibility to manage these risks through a framework of internal control that includes:

• establishing applicable ethical standards;

• comprehensive written policies and procedures;

• formal delegations of authority to and from the Managing Director;

• recruiting skilled, professional staff including a Chief Risk Officer with a direct reporting line to both the Finance Director and the Chairman of the Audit and Risk Committee;

• establishing suitable management reporting and audit systems to monitor compliance; and

• having in place a suitable disaster recovery plan for major systems.

The Board oversees the establishment, implementation and annual review of Stockland’s risk management systems, with assistance from the Audit and Risk Committee. Management has established

and implemented an enterprise-wide risk management framework for identifying, assessing, monitoring and managing financial, operational, strategic and compliance risk for Stockland.

At the core of this framework is the principle that each Division is accountable for implementing and managing the standards required under the risk management programme. Risks covered by the framework include changes to demand and supply in the property market, occupational health and safety issues, changes in government policy and environmental matters.

Management reports to the Audit and Risk Committee on the status of risk management initiatives and the findings of internal audit reviews. The Audit and Risk Committee regularly reports to the Board on these matters.

Risk profile

Whilst the identification, monitoring and reporting of risk occurs continuously throughout the year, an annual risk profile exercise is conducted to re-assess the materiality of individual risks and prioritise activities for the coming year. This exercise covers all Divisions and is performed in accordance with the Australia, New Zealand Risk Management Standard AS/NZS4360.

Assessment of risk management effectiveness

The effectiveness of risk management practices is assessed by the internal audit function and reported to both Executive Management and the Audit and Risk Committee. The annual work programme for the internal audit function is based upon the outcome of the annual risk review and internal control issues identified by both internal and external auditors. The work programme is considered and approved by the Audit and Risk Committee.

Stockland’s Risk Management Policy may be viewed on the Stockland website.

Integrity of financial reporting

In accordance with ASX Guidelines, the Managing Director and the Finance Director have declared in writing to the Board that:

• (a) in their opinion, Stockland’s financial records have been properly maintained and the financial reports for the year ended 30 June 2007 present a true and fair view, in all material respects, of Stockland’s financial position and performance and comply with relevant accounting standards, in all material respects; and

• (b) to the best of their knowledge and belief:

• (i) the statements made in (a) above regarding the integrity of the financial report is founded on a sound system of risk management and internal compliance and control systems which, in all material respects, implement the policies adopted by the Board;

• (ii) the risk management and internal compliance and control systems for the year ended 30 June 2007 were operating effectively, in all material respects, based on the risk management model adopted by Stockland; and

• (iii) nothing has come to their attention since 30 June 2007 that would indicate any material change to the statements made in (i) and (ii) above.

Associates and joint ventures, which Stockland does not control, are not covered for the purposes of this statement or declaration given under S295A of the Corporations Act 2001.

These statements provide a reasonable but not absolute level of assurance about risk management, internal compliance and control systems, and do not imply a guarantee against adverse events or more volatile outcomes occurring in the future.

environmental regulation

Stockland is committed to achieving a high standard of environmental performance. The Corporate Responsibility and Sustainability Committee regularly considers and reports to the Board on issues associated with the environmental impact of Stockland’s operations and, together with management, monitors Stockland’s compliance with relevant statutory requirements as well as published policies and guidelines.

Stockland’s operations are subject to various environmental regulations under both Commonwealth and State legislation, particularly in relation to its property development activities. Stockland undertakes an environmental due diligence and risk assessment of all properties it acquires. The Board, with the assistance of the Corporate Responsibility and Sustainability Committee, monitors environmental performance by setting objectives, monitoring progress against these objectives and identifying remedial action where required.

Directors’ Report For the year ended 30 June 2007

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Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report

For the year ended 30 June 2007

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CoRPoRAte GoveRNANCe (CoNtINUeD) ethical standards

Stockland’s directors, management and staff are required to maintain high ethical standards of conduct. Stockland’s Code of Conduct and Ethical Behaviour (the “code”) covers both dealings with external parties and internal operations. It is periodically reviewed and endorsed by the Board. A copy of the code is distributed to all staff and its standards communicated and reinforced at Stockland-wide employee induction programmes.

Stockland’s Code of Conduct and Ethical Behaviour may be viewed on the Stockland website.

Code of Conduct and ethical Behaviour

All staff including directors must comply with Stockland’s Code of Conduct and Ethical Behaviour. The Code covers a broad range of matters including:

• confidentiality and commercially sensitive information;

• employment practices such as occupational health and safety, anti-discrimination, performance and risk management;

• conflicts of interest and disclosure requirements;

• – prevention of directors and key executives from taking advantage of information or their position for personal gain in order to protect corporate opportunities;

• fair dealing, protection and proper use of Stockland’s assets;

• outside business interests, corporate entertainment and political contributions; and

• – Stockland’s “whistleblowing” policy.

Communication to security holders

The Board aims to ensure that its security holders are kept well-informed of all major developments and business events that are likely to materially affect Stockland’s operations and financial standing and the market price of its securities. Information is communicated to security holders through:

• Annual and Half year Financial Reports lodged with the ASX and distributed to all security holders;

• announcements of market-sensitive and other information, including annual and interim results announcements and analyst presentations released to the ASX;

• the Chairman’s and Managing Director’s addresses to, and the minutes of, the Annual General Meeting;

copies of announcements, presentations, past and current reports to security holders and a five year summary of key financial data made available on the Stockland website; and

– relevant announcements lodged with the Singapore Securities Exchange (“SGX”) following the issue of Notes in Singapore by Stockland Finance Pty Limited, a wholly owned subsidiary of Stockland Corporation Limited.

Stockland has a security holder disclosure policy which includes a formal procedure for dealing with potentially price-sensitive information. The policy sets out how Stockland meets its disclosure obligations under ASX Listing Rule 3.1 (continuous disclosure requirements). Stockland’s policy is to lodge with the ASX and place on its website all market-sensitive information, including annual and interim result announcements and analyst presentations, as soon as practically possible.

Stockland produces two sets of financial information each year: the Half year Financial Report for the six months ended 31 December and the Annual Financial Report for the year ended 30 June. Both are made available to security holders and other interested parties.

Security holders have the right to attend Stockland’s Annual General Meeting, usually held towards the end of October each year, and are provided with an explanatory memorandum on the resolutions proposed through the Notice of Meeting. A copy of the Notice of Meeting is also posted on the Stockland website and lodged with the ASX. Security holders are encouraged to vote on all resolutions. Unless specifically stated otherwise in the Notice of Meeting, all stapled security holders are eligible to vote on all resolutions. Security holders who cannot attend the Annual General Meeting may lodge a proxy in accordance with the Corporations Act 2001. Proxy forms may be lodged by facsimile or electronically. Stockland’s external auditor attends the Annual General Meeting to answer questions from security holders concerning the conduct of the audit, the preparation and content of the auditor’s report, accounting policies adopted by Stockland and the independence of the auditor in relation to the conduct of the audit.

While Stockland does not web cast its Annual General Meeting proceedings, transcripts of the Chairman’s and Managing Director’s Reports to security holders are released to the ASX upon the commencement of the Annual General Meeting. These transcripts, together with the minutes of the Annual General Meeting, are also posted on Stockland’s website.

Staff and director trading in Stockland securities

Stockland directors and executives may only trade in Stockland securities during nominated trading windows which are typically of four weeks duration following the announcements of Stockland’s halfyearly and full year results and after the Annual General Meeting. At other times, directors may trade only with the consent of two non-executive directors, one of which must be the Chairman or Deputy Chairman. Senior executives who wish to trade outside nominated trading windows may do so after first obtaining the consent of the Chairman and the Managing Director. Notwithstanding those designated windows and approval requirements, a person is prohibited from trading if they possess material, price-sensitive information about Stockland that is not generally available to the public.

Directors and employees may subscribe for securities in any offering in an unlisted property fund promoted by Stockland. Applications by directors and employees for such securities are on the same terms as applied to other investors. Directors and employees are prohibited from trading in unlisted property fund securities while they possess material, non-public, price-sensitive information.

Stockland’s Security Trading Policy may be viewed on the Stockland website.

PRINCIPAL ACtIvItIeS

The principal activities of Stockland during the financial year were:

• investment in income producing retail, commercial, industrial and office park properties;

• development of retail, commercial, industrial and office park properties;

• residential property development;

• retirement living, development and investment;

• property trust management;

• property management; and

• hotel management.

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PRINCIPAL ACtIvItIeS (CoNtINUeD)

Stockland operates primarily in mainland Australia, New Zealand and the United Kingdom.

On 31 January 2007 Stockland sold its hotel management business, which operated under the Saville Hotel Group brand. Refer Note 4 of the accompanying Financial Statements for further information.

On 28 February 2007 Stockland gained a strong market entry position into the retirement living sector with its strategic acquisition of the retirement living division of Australian Retirement Communities, a significant operator in the Australian retirement living market.

On 30 April 2007 Stockland commenced a strategic international growth plan with the acquisition of Halladale Group plc which operates primarily in the United Kingdom commercial and retail property

sectors in the areas of asset management, development and co-investment fund management.

Refer Note 4 of the accompanying Financial Statements for further information.

There were no other significant changes in the nature of the activities of Stockland during the year.

RevIeW AND ReSULtS oF oPeRAtIoNS

Stockland achieved a profit attributable to security holders calculated in accordance with Australian Accounting Standards (“AASBs”) of $1,716.3 million for the year ended 30 June 2007. This profit includes a number of significant items, such as investment property revaluations that, in the opinion of directors, need adjustment to enable security holders to obtain an understanding of Stockland’s result from operations (refer table below).

The profit from operations (before significant items), as assessed by the directors, for the year was $611.0 million, reflecting a 10.3% increase from the prior year.

To provide information to security holders that reflects the directors’ assessment of the profit attributable to security holders calculated in accordance with International Financial Reporting Standards (“IFRS”), certain significant items that are relevant to an understanding of Stockland’s IFRS result have been identified. The effect of these items is set out below.

Directors’ Report For the year ended 30 June 2007

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Consolidated
2007 2006
$’000 $’000
$M $M
Profit from operations as assessed by the directors 611.0 553.7
Certain significant items:
net gain from fair value adjustment of investment properties (including share of associates and joint ventures and excluding
revaluation upon completion of newly constructed retirement living communities and fair value movement of deferred
management fee contracts) [1] 1,031.2 640.3
Retirement living resident obligation fair value movement (19.1) –
net gain from sale of hotel business 87.8 –
tax on gain from sale of the hotel business (27.5) –
net gain/(loss) on sale of investment properties 0.9 (3.6)
net gain from financial instruments treated as fair value hedges 0.1 0.1
net realised gain on other financial instruments 6.1 –
net unrealised gain on other financial instruments 20.8 15.5
net realised foreign exchange gain 5.7 –
net unrealised foreign exchange loss (0.7) –
security holders’ finance costs [2] – (144.4)
Profit attributable to security holders 1,716.3 1,061.6
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1 Refer to notes 43, 44 and 45 of the accompanying Financial statements for further information regarding net gain from fair value adjustment of investment properties.

2 For the period 1 July 2005 to 25 october 2005, australian accounting standards (“aasBs”) required stockland trust unit holders’ issued capital to be treated as a liability and trust distributions payable to be treated as a finance cost in the income statement. at the annual General Meeting held on 25 october 2005, stockland trust unit holders agreed to amend the stockland trust Constitution, which meant the unit holders’ issued capital from that date would be treated as equity in accordance with accounting standard aasB 132 “Financial instruments: disclosure and Presentation”.

Basic earnings per stapled security was 123.5 cents. Basic earnings per security before certain significant items as listed below was 44.0 cents, an increase of 6% from 41.5 cents in the prior year.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report

For the year ended 30 June 2007

RevIeW AND ReSULtS oF oPeRAtIoNS (CoNtINUeD)

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CONSOLIDATED
2007 2006
CeNtS CENTS
Basic earnings per security before certain significant items 44.0 41.5
Diluted earnings per security before certain significant items 43.9 41.5
Basic earnings per security 123.5 79.6
Diluted earnings per security 123.0 79.6
Dividend and distribution per security
The dividend and distribution payment is 44.3 cents per stapled security, up 7% from 41.4 cents paid for the previous corresponding period.
The payment comprises:
Trust distribution, estimated 17.0% tax preferred (prior year 26.0% tax preferred) 35.5 32.8
Corporation dividend, fully franked 8.8 8.6
Total dividend and distribution 44.3 41.4
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Refer to Note 10 of the accompanying Financial Statements for further information regarding the earnings per security calculations.

Registers closed at 5.00pm on 29 June 2007 to determine entitlement to the year end dividend and distribution, which will be paid on 31 August 2007. The Dividend and Distribution Reinvestment Plan is in operation for this payout.

36 //

• Summary of other financial highlightS operational highlightS – Established UK and European platform through the retail Division $525 million acquisition of UK property investment – and development group Halladale; –

• Operating profit increased 6.5% to $252.1 million;

• – comparable rental income growth of 5.5%; – $543.5 million of property revaluations, an increase of 16.6% on previous book value;

• – $103.9 million of developments completed with a solid average yield of 8.4%;

• delivery of retirement living strategy with the $328 million acquisition of Australian Retirement Communities (“ARC”);

• development pipeline has now increased to almost $3 billion across the retail, commercial and industrial portfolios;

• $181.6 million of acquisitions with development potential, with an initial yield of 6.5%; and

• successful capital recycling with profits from the sale of Saville Hotel Group used in the funding of the above growth initiatives;

• strong leasing activity with 584 leasing transactions completed at an average increase of 23.9% on prior rents.

• over $1 billion of investment property revaluations, an increase of 17.0% on previous book value;

commercial & industrial Division

• Operating profit increased 19.4% to $251.6 million;

• Net Tangible Assets per security increased by 17.4% to $5.33;

• comparable net income growth of 3.1%;

• – high portfolio occupancy of 96% with over 294,000m² of space leased or renewed;

• Gearing ratio of 25.1%, at the lower end of Stockland’s 25% to 35% target range; and

• – diverse, long-dated sources of debt with an average maturity of 7.6 years.

• $747 million of commercial and industrial acquisitions at a yield of 6.7%;

• development pipeline increased to $1.3 billion; and

• – revaluations of $468.6 million, an increase of 16.8% on previous book value.

Development Division

• Operating profit increased by 14% to $272.7 million;

• solid Residential Communities margin of 26%, underpinned by geographic and product diversity;

• – four key apartments projects delivered and four significant DA approvals achieved for future major mixed use projects;

• successfully acquired and integrated ARC, bringing forward our retirement living strategy; and

• strong pipeline of projects across the country with over 73,000 future lots with an end value of over $18 billion.

Stockland halladale Division

• Integration going very well, business is performing in line with expectations;

• EPS neutral in FY07 and FY08 due to fair value adjustments required by accounting standards; and

• expected to be EPS accretive from FY09 with potential to outperform.

Stockland capital partners Division australian fum platform

• Over $850 million of wholesale and retail assets under management; and

• 6 Funds operating, with all funds outperforming initial forecasts.

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oPeRAtIoNAL HIGHLIGHtS (CoNtINUeD) Stockland Capital Partners Division (continued) UK/europe FUM platform

• Established JV partnerships with major international institutions; and

• over $2.2 billion of assets under management.

DIvIDeNDS AND DIStRIBUtIoNS

Dividends and distributions paid or declared by the Company and the Trust to security holders since the end of the previous financial year are set out in Note 38 of the accompanying Financial Statements.

StAte oF AFFAIRS

Changes in the state of affairs of Stockland during the financial year are set out in the various reports in the Stockland Annual Report. Refer to Note 36 of the accompanying Financial Statements for securities issued and Notes 25 and 31 for debt movements.

In the opinion of the directors there were no other significant changes in the state of affairs of Stockland that occurred during the financial year under review.

LIKeLy DeveLoPMeNtS

Stockland will continue to pursue strategies aimed at increasing the profitability and market share of its principal activities during the next financial year.

Other information about certain likely developments in the operations of Stockland and the expected results of those operations in future financial years is included in the various reports in the Stockland Annual Report. Further information about likely developments has not been included in this report because disclosure of such information would be likely to result in unreasonable prejudice to the consolidated entity.

ReMUNeRAtIoN RePoRt

Introduction

This report outlines Stockland’s director and executive remuneration arrangements and covers both Key Management Personnel (“KMP”) and the five highest paid executives. Under AASB 124 “Related Party Disclosures”, KMP are defined as those persons having authority and responsibility for planning, directing and controlling the activities of Stockland, directly or indirectly, including any director (whether executive or otherwise). In this report, KMP represents directors and those of the Managing Director’s direct reports who are members of the

Executive Committee, i.e. heads of businesses and functional areas. The term executive encompasses Directors’ the Managing Director, senior executives and general managers. This report is set out under the following main Report headings: For the year ended 30 June 2007

A Non-executive director remuneration;

• B Remuneration framework;

C Legacy security plans;

• D Details of remuneration; and

• E Additional information.

This report has been audited for compliance with AASB 124 “Related Party Disclosures”. The term “remuneration” has been used in this report as having the same meaning as the alternative term “compensation” as defined in AASB 124. The Additional Information contains disclosures required by the Corporations Act 2001 and the Corporations Regulations 2001.

The following table illustrates some of the performance measures that are typically used in rewarding Stockland executives. It summarises Stockland’s performance over the past five years highlighting the growth in security holder value:

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5 yEAR
COMPOUND
ANNUAL
2002 [3] 2003 [3] 2004 [3] 2005 2006 2007 GROWTH %
Profit before certain significant items ($M) [1] 249.8 284.8 455.5 502.7 553.7 611.0 19.6
Net Tangible Assets per security ($) 3.15 3.41 3.76 4.00 4.54 5.33 11.1
Security price at 30 June ($) 4.39 5.01 5.18 5.52 7.02 8.15 13.2
Dividends/distributions per security (cents) 29.7 32.1 37.0 38.9 41.4 44.3 8.3
Earnings Per Security (“EPS”) before certain significant items [1] (cents) 30.8 33.5 37.8 39.1/39.8 [3] 41.5 44.0 7.4
EPS target [2] (cents) – – – 39.5 [3] 41.5 43.2 n/a
EPS per cent of target [2] – – – 101% 100% 102% n/a
Growth in Stockland Total Security Holder Return (“TSR”) [4] 16.7% 21.6% 10.8% 13.9% 35.2% 22.5% 20.5%
Growth in TSR for ASX 200 Property Trust Accumulation Index [5] 14.9% 12.1% 17.2% 18.1% 18.0% 25.9% 18.2%
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1 Certain significant items represents net gain from fair value adjustment of investment properties (including share of associates and joint ventures and excluding revaluation on completion of newly constructed retirement living communities and fair value movement of deferred management fee contracts), retirement living resident obligation fair value movement, net gain from sale of the hotel business, tax on gain from sale of the hotel business, net gain/(loss) on sale of investment properties, net gain from financial instruments treated as fair value hedges, net realised gain on other financial instruments, net unrealised gain/(loss) on other financial instruments, net realised and unrealised foreign exchange gain/(loss) and security holders’ finance costs.

• 2 EPS targets quoted here are those set by the Board annually in relation to the Long Term Incentive programme.

• 3 These numbers were prepared under AGAAP prior to the transition to International Financial Reporting Standards.

4 Numbers shown here reflect growth from 1 July to the following 30 June.

• 5 Publicly quoted annual figures showing full Index including Stockland, whereas our employee plan hurdles are typically measured over a cumulative three year period and for the Performance Rights Plan excludes Stockland from the Index.

There have been no returns of issued capital during this period.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report For the year ended 30 June 2007

ReMUNeRAtIoN RePoRt (CoNtINUeD)

A Non-executive director remuneration

The Board is responsible for determining the fees for non-executive directors. Decisions are based on recommendations from the Nomination and Remuneration Committee (“the Committee”), taking into account advice from independent external remuneration advisors. The fees are set within an aggregate maximum pool approved by security holders at an Annual General Meeting. At the 2005 Annual General Meeting, security holders approved a pool of $1,900,000 per annum. For the 2007 financial year, $1,521,040 (80%) of the fee pool was utilised (2006: $1,493,951 (79%)).

Board fees and committee fees are reviewed annually taking into account:

• the responsibilities of non-executive directors and the Board committees;

• the size and complexity of Stockland; and

• the need to attract and retain well qualified non-executive directors.

The schedule of fees, excluding superannuation, for the Board and Board committees were as follows:

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BOARD POSITION FEES 2007 FEES 2006
Chairman [1] $341,250 $325,000
Deputy Chairman $204,750 $195,000
Non-executive director $136,500 $130,000
BOARD COMMITTEE CHAIR MEMBER CHAIR MEMBER
Audit and Risk $31,500 $15,750 $30,000 $15,000
Compliance $26,250 $15,750 $20,000 –
Nomination and Remuneration $12,600 $8,400 $12,000 $8,000
Corporate Responsibility and Sustainability – [1] $8,400 $12,000 $8,000
STOCKLAND FUNDS MANAGEMENT LIMITED BOARD FEES 2007 FEES 2006
Chairman $42,000 $40,000
Non-executive director $42,000 $40,000
Independent [2] Non-executive director $75,000 $40,000
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• 1 The Chairman does not receive any committee fees. However, Mr Bradley received fees of $15,762 as a director of Stockland Funds Management Limited until his retirement from the Board of that company on 22 November 2005. The Chairman is also Chairman of the Corporate Responsibility and Sustainability Committee.

2 Independent non-executive directors of Stockland Funds Management Limited are those who are not also on the Stockland Board.

Stockland does not operate a retirement scheme for non-executive directors. However superannuation contributions are paid by Stockland into a complying superannuation fund at the rate of 9% of the above fees.

Non-executive directors do not participate in any incentive plans. No bonuses, non-monetary benefits, long service leave or share-based payments were made to nonexecutive directors during either year, and no portion of the remuneration paid was performance related.

Non-executive Director Security Acquisition Plan

Stockland’s directors consider it good governance for directors to own Stockland securities. Approval was given at the Annual General Meeting on 24 October 2006 for a non-executive director Security Acquisition Plan (“SAP”) to facilitate and encourage non-executive directors to acquire Stockland securities through a fee sacrifice arrangement. The SAP operates under the following terms:

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eligibility All non-executive directors on a voluntary basis.
Disposal Restrictions The earlier of ten years from the date of acquisition and the retirement of the non-executive director from the Board.
Source of securities All securities will be acquired on-market.
Performance Conditions Not appropriate as securities are in lieu of fees sacrificed.
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

ReMUNeRAtIoN RePoRt (CoNtINUeD) B Remuneration framework Philosophy

Stockland’s remuneration philosophy is designed to reflect Stockland’s need to attract talent and retain employees whose contribution is critical to the achievement of the continued growth and success of Stockland.

The remuneration framework is based on the following core principles:

• remuneration is performance focused, with incentives based on financial and non-financial targets that link to the overall business plan and support the creation of long-term security holder value;

• reward outcomes are linked to the performance of the individual executive, the performance of the executive’s business unit and/or division and the performance of Stockland;

• the quantum of remuneration and its components should place Stockland in a strong position to secure the services of executives of the calibre required to provide good long-term returns to security holders; and

• to ensure executive performance and security holders’ interests are aligned by ensuring that a portion of executive reward is equity-based and dependent on Stockland’s returns to security holders.

The framework is applied consistently across Stockland and any decisions in relation to executive reward are based on it, including those relating to executive directors. The Stockland remuneration framework is regularly reviewed via a continuous improvement process and is designed to be appropriate and competitive in each business location, having regard to local practice. Stockland recognises the need to take account of differing costs of living especially in relation to expatriates when determining remuneration.

Performance management and measurement

The Board believes effective performance management is critical to the integrity of the remuneration philosophy. The Board considers Stockland has a rigorous performance management system that ensures executives understand what is expected of them, how they can achieve their objectives and the impact of their performance on their reward. Objective setting, performance

measurement and remuneration recommendations all follow a two tier approach, with the Committee and Board approving those of the Managing Director; the Committee and Managing Director approving those for the Managing Director’s direct reports, the Managing Director and his direct reports approving those for their direct reports and so forth. Common objectives reinforce cross divisional collaboration which the Directors believe is pivotal to sustained long-term growth and security holder returns.

A balanced scorecard approach is used, with objectives linked to four elements:

• Business/financial results – group, divisional and business unit performance, using measures such as profitability and return on funds employed.

• Stakeholder management – achieving and maintaining effective stakeholder relationships such as with investors and customers.

• People – the engagement and leadership of employees.

• Corporate responsibility and sustainability – contribution to Stockland’s Corporate Responsibility and Sustainability Strategy, including Health Safety and Environment.

The Managing Director has additional key performance indicators (“KPIs”) related to the development and execution of group strategy.

Performance is reviewed informally on a regular basis. At the completion of the financial year, each executive’s performance is formally reviewed by his or her manager. The outcomes of the performance review are then used as input to determining an executive’s remuneration.

The Long Term Incentive (“LTI”) programme includes performance hurdles relating to growth in Earnings Per Security (“EPS”) and Total Security Holder Return (“TSR”).

The EPS measure used for the LTI is basic EPS adjusted for certain significant items being net gain from fair value adjustment of investment properties (including share of associates and joint ventures and excluding revaluation upon completion of newly constructed retirement living communities and fair value movement of deferred management fee contracts), retirement living resident obligation fair value movement, net gain from sale of the hotel business, tax on gain from sale of the hotel business, net gain/(loss) on sale of investment properties, net gain from financial instruments treated as fair

value hedges, net realised gain on other financial instruments, net unrealised gain on other financial instruments, net realised and unrealised foreign exchange gain/(loss) and security holders’ costs. These significant items are set out on page 35 of this Report. The Board considers that this reflects the true operating performance of the group.

EPS is used as it is a key indicator of Stockland’s financial performance and long-term security holder wealth creation. The target is the sum of annual growth targets, each set to reflect the Board’s performance expectations for the coming year, taking into account prevailing market conditions and outlook. The Board believes this approach is better aligned to security holders’ interests than setting a three year target which may become unreasonably high or low as market conditions change over the three year period. Due to their commercial sensitivity, the annual EPS targets and the extent to which the targets have been achieved are disclosed retrospectively.

TSR is a market accepted relative measure and the Board considers this to be a fair reflection of the overall wealth created for investors. The LTI plan measures TSR relative to the ASX 200 Property Trust Accumulation Index (excluding Stockland in the case of the Performance Rights Plan). Both Stockland’s and the Index’s TSRs are calculated by an independent third-party. The Board has final accountability for the determination of performance relative to targets, independently from management.

Directors’ Report For the year ended 30 June 2007

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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report

For the year ended 30 June 2007

40 //

ReMUNeRAtIoN RePoRt (CoNtINUeD)

B Remuneration framework (continued)

the Stockland remuneration framework

The Stockland remuneration framework consists of three main elements: fixed remuneration (“Fixed Pay”), Short Term Incentives (“STI”) and Long Term Incentives (“LTI”).

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BAND FIXED PAy TARGET STI TARGET LTI
Executive Committee (KMP) Performance Rights Plan
Percentage of Fixed Pay
Percentage of Fixed Pay Percentage increases with responsibility and
General Manager
Based on skills, Percentage increases with responsibility accountability, depends on the role (ability to
qualifications, and accountability, depends on the role impact results) and reflects market practice
Senior Manager/ Functional Expert experience, relativity and reflects market practice Three year measures (no re-testing):
to market and overall Balanced Scorecard elements: EPS and TSR
performance and 50% vest at target, sliding scale to maximum
Financial, Stakeholder Management,
includes all salary 100% vesting
People, and Corporate Responsibility and
sacrificed benefits
Sustainability (including Health Safety
Other employees and the Environment) Tax Exempt Employee Security Plan (“$1,000 plan”)
} Reflects market practice
Independent external advisors provide guidance on market practice and market levels of remuneration. Fixed pay increases, STI and LTI awards for the Managing Director
and his direct reports are approved by the Nomination and Remuneration Committee. The Board considers the two tier review and approval process described previously
ensures due process for other executives. In addition, all appointments and promotions with a Fixed Pay in excess of $300,000 require approval from the Managing
Director.
executive remuneration mix
The mix of remuneration for on-target performance is:
REMUNERATION MIX – AT TARGET [1]
TOTAL FIXED
TARGET STI TARGET LTI + STI + LTI FIXED STI AS LTI AS A “AT RISK”
AS A % OF AS A % OF AS A % OF PAy AS A A % % OF PAy [2]
ROLE FIXED PAy FIXED PAy FIXED PAy % OF TOTAL OF TOTAL TOTAL (STI + LTI)
Managing Director 67% 75% 242% 41% 27% 32% 59%
Finance Director 50% 60% 210% 48% 24% 28% 52%
CEO – Development Division 67% 60% 227% 44% 30% 26% 56%
Other Division CEOs 60% 60% 220% 45% 27% 28% 55%
Executive GMs 40% 60% 200% 50% 20% 30% 50%
General Managers 30% 40% 170% 58% 18% 24% 42%
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1 This chart illustrates the mix for on-target performance. There is extensive opportunity for reward for high performance and this is discussed further in the sections below covering Short and Long Term Incentives.

2 Percentage assumes on target performance is achieved for Short and Long Term Incentives. The percentages of performance related pay outlined later (in the section entitled “Details of Remuneration” reflects actual performance achieved as a percentage of total actual remuneration, including movements in leave balances, non-monetary benefits, and share-based payment amounts calculated in accordance with AASB 2.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

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ReMUNeRAtIoN RePoRt (CoNtINUeD) B Remuneration framework (continued) Fixed pay

Fixed Pay is aligned to the market and is based on remuneration information sourced from independent external remuneration advisors.

An executive’s Fixed Pay is comprised of a base salary and superannuation contributions in line with Stockland’s obligations under the Superannuation Guarantee Charge (“SGC”) legislation. All employees are able to select a fund of their choice, including an employer fund administered via an external master trust. Stockland has no defined benefit superannuation plans.

Executives may choose to salary package various items, such as motor vehicles, car parking, additional superannuation contributions or other benefits provided by Stockland from time to time such as the Childcare facility being developed for our new Head Office location. To ensure there is no additional impost on Stockland, the cost of any benefit and applicable Fringe Benefits Tax (“FBT”) is deducted from an executive’s base salary.

There are no guaranteed increases in fixed remuneration in executive service contracts.

Short term Incentives

All employees have the opportunity to earn a Short Term Incentive, which is paid in cash after the close of the financial year. The quantum of incentives is dependent on the employee’s role and level within the organisation, with higher levels of “at risk” remuneration the more senior the executive.

The actual STI earned is based on performance against the four elements of a balanced scorecard: Financial, Stakeholder, People Management and Corporate Responsibility and Sustainability, as described in “Performance Management and Measurement”. These four scorecard elements are chosen to reflect key business drivers. Metrics used for an individual are created with specific reference to the level and role of that individual. KPIs are not disclosed as they are commercially sensitive.

Performance is assessed by an individual’s manager, within the two tier approval process described earlier. In the case of financial hurdles, it is formula driven (110% of target results in payment of 110% of that portion of STI, capped at 200%). For other elements of the Scorecard there is management discretion to increase or decrease STI payments after considering matters such as demonstration of Stockland values and behaviours. The Board believes stretch targets and Stockland’s high performance culture generated results in the range 50% to 150% of target in the last two financial years, but the structure enables a range from 0% to 200% in exceptional circumstances. A minimum performance threshold of 50% of target must be achieved before any STI is payable. Generally executives must be employed for at least three months of the financial year and remain employed at the end of the financial year to receive an STI payment.

Long term Incentives

Executives (and others at the Board’s discretion) are invited to participate in the Performance Rights Plan (“PRP”). Other employees are eligible, after a qualifying period, to participate in a $1,000 tax exempt employee security plan (discussed below). These plans are designed to align the interests of employees with those of security holders in creating sustainable long-term growth in security holder value. In addition, the PRP acts as a retention mechanism for executives, with award deferred until three years from grant date. Executives must not deal in an option over Stockland securities whether held in equity plans or otherwise acquired.

Performance Rights Plan

The PRP was approved by shareholders in October 2006. The first allocation was made to the Managing Director, the Finance Director, and the CEO of Retail (who joined Stockland in October 2006) in April 2007, with a grant date of October 2006, following changes to the tax legislation which were contemplated but not yet enacted at the time of approval by security holders. The plan will be extended to other participants in August 2007. Eligibility is by invitation of the Board and is reviewed annually. Participants of the PRP are prohibited from receiving grants under any other Stockland employee security plan in the same financial year. As with the STI, the target PRP quantum is set as a percentage of an executive’s fixed remuneration, with specific reference to the role and in accordance with the remuneration framework. The PRP provides for equity grants under the following terms:

Directors’ Report For the year ended 30 June 2007

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Structure of grant Performance rights – right to acquire Stockland securities at nil cost to participants when certain performance conditions are met. Each
grant will comprise two equal tranches, each of which vest based on separate performance hurdles (being EPS and TSR).
Measurement Period Three financial years – from 1 July in the financial year of grant to 30 June three years later.
Re-testing No re-testing of performance: to the extent targets are not achieved, rights lapse except at the discretion of the Board.
Service Condition If a participant resigns from Stockland prior to the end of the vesting period, the rights lapse, unless the Board exercises its discretion to
allow vesting in certain circumstances.
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report

For the year ended 30 June 2007

42 //

ReMUNeRAtIoN RePoRt (CoNtINUeD) B Remuneration framework (continued) Long term Incentives (continued)

Performance Rights Plan (continued)

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ePS vesting ePS growth Proportion of ePS related performance rights vesting
Target being the sum of Less than target 0%
three annual EPS targets Equal to target 50%
Up to 5 percentage points greater than target Straight line between 50% and 100%
5 percentage points or more greater than target 100%
tSR vesting tSR growth Proportion of tSR related performance rights vesting
Target being the ASX Less than or equal to target 0%
S&P 200 Property Trust Greater than target 50%
Accumulation Index Up to 10 percentage points greater than target Straight line between 50% and 100%
exclusive of Stockland
10 percentage points or more greater than target 100%
over the three year
measurement period
Disposal restrictions Following vesting, the appropriate proportion of performance rights is exercised at nil cost to Plan participants to acquire securities. The
and expiry date securities are subject to disposal conditions until the expiry date, up to seven years after vesting (ten years from the date the performance
rights were originally granted).
Source of securities Stockland reserves the right to review the most appropriate source of securities at the time of vesting. This may be via purchase on
for satisfaction of market or via newly issued securities.
performance rights
exercised
Issue price The volume weighted average price (“VWAP”) of securities at 30 June prior to allocation determines the number of securities to be
allocated.
Accounting expense The fair value is expensed on a straight line basis over the vesting period, being the period during which the securities are subject to
performance and service conditions. The fair value is determined as at the grant date.
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The following assumptions were used in determining the fair value for grants during the year:

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GRANTED ON 26 OCTOBER 2006
Fair value per right $3.36
Spot price of the stapled securities at grant date $7.73
Exercise price Nil
Volatility of security price [1] 14.4%
Distribution yield 6.6%
Risk free rate at grant date 6.1%
Expected life 2.7 years
Volatility of the Index price [1] 9.8%
Correlation (Stockland and the Index) [2] 57.7%
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1 The volatility is based on the historic volatility of the security adjusted for any expected changes to future volatility due to publicly available information.

2 Represents the estimated correlation of Stockland’s TSR and the TSR of the ASX 200 Property Trust Accumulation Index.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

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ReMUNeRAtIoN RePoRt (CoNtINUeD)

B Remuneration framework (continued) Long term Incentives (continued)

Tax Exempt Employee Security Plan

The new $1,000 tax exempt plan (“$1,000 plan”) was approved by shareholders in October 2006. Under the $1,000 plan eligible employees may be granted, at nil cost to the employee, Stockland securities to a maximum value of $1,000. Offers are approved by the Board dependent upon the performance of Stockland over the previous twelve months. Offers will be made in August each year, concurrent with the PRP. Such offers recognise the contribution of employees to Stockland’s performance and provide a link to growth in long-term security holder value.

Directors’ Report For the year ended 30 June 2007

The revised plan meets the requirements of the tax legislation in that it includes a holding lock of three years if the employee remains with Stockland and no forfeiture provisions (participants keep the securities and the holding lock lifts when they leave). The prior plan, approved in 2002, had a lock of only one year, and Stockland was required to pay FBT on the securities issued to employees.

Following finalisation of the changes in the tax legislation, the first offer under the $1,000 plan was made in April 2007, along with a cash top-up to reflect the reward participants would have achieved if the grant had been made in August 2006.

C Legacy security plans

The following provides an overview of the operation of the prior plans because they form part of ongoing remuneration with the fair value of grants expensed over vesting periods until August 2009. The Incentive Security Plan (“ISP”) and the Executive Securities Scheme (“ESS”) both operated on the basis of limited recourse loans to participants for a maximum term of five years, provided by Stockland. Final grants under ISP and ESS were made in August 2006, and no new grants are contemplated under either plan in future.

Under AASB 2 “Share-based payment”, these securities are treated as options for accounting purposes. The fair value is expensed on a straight line basis over the vesting period, being the period during which the securities are subject to performance and service conditions. The exercise period spans from the vesting date to the end of the five year loan period.

The following assumptions are used in determining the fair values for securities granted under these plans:

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ISP ESS
2006
2007 2006 TRANSITIONAL [3] 2007 2006
Grant date for executive directors – 26/10/05 26/10/05 – –
Spot price of the stapled securities at grant date – $6.04 $6.04 – –
Fair value per security granted to executive directors – $3.56 $3.48 – –
Grant date for other participants 17/8/06 18/8/05 18/8/05 31/8/06 18/8/05
Spot price of the stapled securities at grant date $7.17 $5.99 $5.99 $7.21 $5.90
Fair value per security granted to other participants $3.09 $3.43 $3.46 65c 32c
Exercise price (reduced by dividends and performance related loan
forgiveness) $5.69 $5.66 $5.71 $6.86 $5.90
Risk free rate at grant date 6.0% 5.2% 5.7% 5.6% 4.9%
Asset income rate (distribution yield) 6.7% 7.2% 7.2% 6.7% 6.7%
Volatility of asset at grant date [1] 13.9% 13.1% 13.9% 14.5% 12.8%
Correlation factor [2] 0.6 0.6 0.6 – –
– –
Performance measurement period 3 years 3 years 2 years
Service period 3 years 3 years 2.5 years 2 years 2 years
Annualised time to expiry 5 years 5 years 5 years 3.5 years 3.5 years
Valuation methodology Monte Carlo Simulation Black Scholes
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• 1 The volatility is based on the historic volatility of the security adjusted for any expected changes to future volatility due to publicly available information.

2 Represents the estimated correlation of Stockland’s TSR and the TSR of the ASX 200 Property Trust Accumulation Index.

• 3 Participants transitioned from a two year vesting arrangement under the ESS to a three year vesting under ISP. A transitional ISP grant was made to participants to provide continuity of vesting during the transition period. This additional grant is referred to as the “transitional grant” in this report.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report

For the year ended 30 June 2007

44 //

ReMUNeRAtIoN RePoRt (CoNtINUeD)

C Legacy security plans (continued) Incentive Share Plan

Under the ISP the loan is interest free. After tax dividends and distributions paid on securities subject to the ISP are applied against the loan balance. The ISP operates under the following terms:

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Structure of grant Limited recourse interest free loan.
A portion of the loan may be waived if certain performance conditions are met. The two measurements (EPS and TSR) have equal
weighting for the loan waiver, having regard to the vesting scales below, retaining Board discretion.
Service period Three financial years.
Required for vesting 18 August 2005 and 26 October 2005 transitional tranche: Two and a half years (to 31 December 2007).
(The maximum period for the loan is five years.)
If a participant resigns from Stockland prior to the end of the vesting period, the securities are forfeited, unless the Board exercises its
discretion to allow vesting in certain circumstances.
Measurement period Three financial years – from 1 July in the financial year of issue to 30 June three years later.
18 August 2005 and 26 October 2005 transitional tranche: Two financial years
23 November 2004: One fnancial year.
Re-testing No re-testing of performance – to the extent targets are not achieved, portion of loan is not waived unless the Board exercises its
discretion to do so.
ePS vesting ePS growth ePS related proportion vesting
Target being the sum of Less than target 0%
annual EPS targets over Equal to target 50%
the measurement period Up to 5 percentage points greater than target Straight line between 50% and 100%
5 percentage points or more greater than target 100%
tSR vesting tSR growth tSR related proportion vesting
Target being ASX S&P Less than or equal to target 0%
200 Property Trust Greater than target 50%
Accumulation Index over Up to 10 percentage points greater than target Straight line between 50% and 100%
the measurement period 10 percentage points or more greater than target 100%
outperformance For the 18 August 2005 and 26 October 2005 grants, the loan waivers are capped at 200% for executives and the original loan balance
for executive directors. If the loan waiver from the two hurdles combined exceeds the loan balance, the excess is applied to any other
ISP loan, except for Executive Directors where the loan waivers were capped at the original loan balance. If there is no other ISP loan the
excess is forfeited.
Source of securities Securities are met via newly issued securities. These securities are not recognised in share capital until the loan is extinguished.
for ISP
Issue price The issue price was based on the volume weighted average price (“VWAP”) at which stapled securities are traded on the ASX during the
five trading days up to and including the last trading day before the date of issue.
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

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ReMUNeRAtIoN RePoRt (CoNtINUeD) C Legacy security plans (continued) Incentive Share Plan (continued)

Transitional tranche (granted 2005)

The transitional ISP tranche will vest on 31 December 2007, with performance measured over the period 1 July 2005 to 30 June 2007. The aggregate EPS growth of 12.2% compared to the aggregate target EPS growth of 10.2%. Stockland’s TSR of 65.6% compared to the Index TSR of 48.6%. In line with the vesting schedule in the above table, the Board approved waiver of the maximum 200% of the original loan balance (from which FBT is deducted). For executive directors, this award is subject to a cap limiting the net of tax waiver to the amount of the original loan balance. For other participants, any loan waiver in excess of the original loan value may be applied to other ISP loans.

October 2004 ISP

For the first ISP grant, the service vesting occurred on 30 June 2007. The performance was measured over the period 1 July 2004 to 30 June 2005. For that period the EPS target of 39.5 cents was achieved, actual EPS was 39.8 cents. For the same period, Stockland’s TSR of 13.9% compared to the Index TSR of 18.1%. However, this reflected extraneous market movements around the measurement date, much of which corrected in the month following measurement. If either the EPS or TSR hurdles are achieved, a further loan waiver may be granted, reflecting the VWAP movement from 30 June to date of issue. The Board exercised its discretion to grant the TSR Award in part, granting a total award of 87.5% of the 2004 awards, along with the 65c per security issue price adjustment. The cost of FBT is deducted from these awards. The combinations of awards, FBT offset and dividends/ distributions over the lifetime of the award, has so far resulted in a net loan waiver of $3.67 per security being 61% of the $5.97 issue price for executive directors, and 63% of the $5.79 issue price for other participants. Future dividends/distributions to 30 June 2009 will further reduce the loan balance.

executive Securities Scheme

Under the Executive Securities Scheme (“ESS”), participants were invited to acquire securities at a discount to the market price equivalent to the discount that applies to the Stockland Dividend Reinvestment Plan (“DRP”). Interest charged is equivalent to the dividends and distributions received annually on the securities. After a two years service period, from the date of issue, these securities vest fully with the participants. If a participant leaves prior to vesting, the securities are forfeited. This plan has not applied to KMP since the ISP was introduced in 2004.

D Details of remuneration

The following were KMP of both the consolidated entity and the Company at any time during the reporting period and unless otherwise indicated were KMP for the entire period. This disclosure also includes the five executives who received the highest remuneration whether or not they were KMP by any other definition, designated below as “other executives”.

Non-executive directors

Mr Graham Bradley Chairman Mr Nicholas Greiner Deputy Chairman Mr Bruce Corlett Ms Lyn Gearing (appointed November 2005) Mr Peter Scott (appointed August 2005) Mr Terry Williamson

Former non-executive directors

Mr Peter Daly (retired October 2005) Mr David Fairfull (retired October 2006)

executive directors

Mr Matthew Quinn Managing Director Mr Hugh Thorburn Finance Director

Senior executives

CEO Development Division Executive General Manager – Corporate Affairs (appointed to the Executive Committee January 2006)

Mr Denis Hickey CEO Development Division Ms Johanna Executive General Manager – Keating Corporate Affairs (appointed to the Executive Committee January 2006) Mr Robb Former CEO Unlisted Property Macnicol Funds (now Stockland Capital Partners Division) (ceased employment March 2007) Mr Steve Mann CEO Commercial & Industrial Division Ms Rilla Moore Executive General Manager – Human Resources Mr David Pitman Executive General Manager – Strategy and Corporate Development (commenced employment March 2007) Ms Lisa Scenna Joint Managing Director Stockland Halladale Mr John Schroder CEO Retail Division (commenced employment October 2006) Mr Darren Former CEO Retail Division Steinberg (ceased employment November 2006) other executives Mr Nick Perrignon General Manager – Residential Communities, Development Division, Queensland

All executives are employed by Stockland Development Pty Limited, a subsidiary of Stockland Corporation Limited.

Directors’ Report For the year ended 30 June 2007

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report

For the year ended 30 June 2007

46 //

ReMUNeRAtIoN RePoRt (CoNtINUeD)

D Details of remuneration (continued)

Non-executive directors’ remuneration

The nature and amount of each element of remuneration for each non-executive director of Stockland, all of whom are KMP, are detailed below:

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SHORT-TERM POST-EMPLOyMENT
NON-MONETARy TOTAL SHORT- SUPERANNUATION
FEES TOTAL
BENEFITS TERM PAyMENTS BENEFITS
$ $ $ $ $
Non-executive directors
Mr Graham Bradley – Chairman 2007 341,250 – 341,250 30,712 371,962
2006 283,429 – 283,429 25,509 308,938
Mr Nicholas Greiner – Deputy Chairman 2007 217,350 217,350 19,562 236,912
2006 207,000 – 207,000 18,630 225,630
Mr Bruce Corlett 2007 160,650 – 160,650 14,459 175,109
2006 153,000 – 153,000 13,770 166,770
Ms Lyn Gearing 2007 220,500 220,500 19,845 240,345
2006 120,145 – 120,145 10,813 130,958
Mr Peter Scott 2007 186,900 186,900 16,821 203,721
2006 148,690 – 148,690 13,382 162,072
Mr Terry Williamson 2007 225,750 225,750 20,318 246,068
2006 200,000 – 200,000 18,000 218,000
Former non-executive directors
Mr David Fairfull 2007 43,050 9,346 [1] 52,396 3,875 56,271
2006 150,000 – 150,000 13,500 163,500
Mr Peter Daly – Retired Chairman 2007 – – – – –
2006 108,333 12,285 [1] 120,618 9,750 130,368
Total remuneration 2007 1,395,450 9,346 1,404,796 125,592 1,530,388
(consolidated and company) 2006 1,370,597 12,285 1,382,882 123,354 1,506,236
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1 Represent gifts provided as acknowledgement of Mr Daly’s and Mr Fairfull’s service to Stockland upon their retirement.

No bonuses, long service leave or share-based payments were made to non-executive directors during either year, and no portion of the remuneration paid was performance related.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 47

ReMUNeRAtIoN RePoRt (CoNtINUeD)

D Details of remuneration (continued)

executive directors and senior executives’ remuneration

The nature and amount of each major element of remuneration for KMP and other executives, are detailed below:

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OTHER SHARE-
POST- LONG BASED PERFORMANCE VALUE OF
SHORT-TERM PAyMENTS EMPLOyMENT TERM PAyMENT RELATED SECURITIES
SHORT-TERM
NON- INCENTIVE TOTAL LONG LONG-TERM (STI + LTI) LTI
MONETARy SIGN ON (STI) & SHORT-TERM SUPERANNUATION SERVICE INCENTIVE PERCENT OF PERCENT
SALARy BENEFITS [1] PAyMENTS BONUSES [2] PAyMENTS BENEFITS LEAVE (LTI) [4] TOTAL TOTAL OF TOTAL
$ $ $ $ $ $ $ $ $ % %
executive directors
Mr Matthew Quinn 2007 1,763,479 45,716 – 1,625,000 3,434,195 12,686 75,560 1,059,608 4,582,049 58.6 23.1
Managing Director 2006 1,256,786 65,147 – 1,000,000 2,321,933 12,139 37,235 465,475 2,836,782 51.7 16.4
Mr Hugh Thorburn 2007 930,645 9,629 – 800,000 1,740,274 12,686 – 528,364 2,281,324 58.2 23.2
Finance Director 2006 894,525 7,279 – 510,000 1,411,804 12,139 – 257,092 1,681,035 45.3 15.3
Senior executives
Mr Denis Hickey 2007 904,758 73,166 – 850,000 1,827,924 12,686 35,406 370,110 2,246,126 54.3 16.5
CEO Development 2006 751,978 85,199 – 690,000 1,527,177 12,139 74,896 247,251 1,861,463 50.4 13.3
Division
Mr John Schroder 2007 747,118 12,408 525,000 [3] 580,000 1,864,526 9,271 – 153,783 2,027,580 36.2 7.6
(joined Oct 06) 2006 – – – – – – – – – – –
CEO Retail
Division
Mr Darren 2007 274,165 25,248 – – 299,413 4,782 – 103,935 408,130 25.5 25.5
Steinberg 2006 639,528 58,785 – 470,000 1,168,313 12,139 – 217,876 1,398,328 49.1 15.6
(left Nov 06)
Former CEO
Retail Division
Mr Steve Mann 2007 615,880 36,976 – 480,000 1,132,856 12,686 17,619 260,840 1,424,001 52.0 18.3
CEO Commercial 2006 510,953 55,744 – 400,000 966,697 12,139 49,430 181,012 1,209,278 47.9 15.0
& Industrial
Division
Mr Robb Macnicol 2007 347,202 5,993 – – 353,195 9,027 – 127,196 489,418 26.0 26.0
(left Mar 07) 2006 402,283 6,295 – 300,000 708,578 12,139 – 123,958 844,675 49.8 14.7
Former CEO
Unlisted Property
Funds
Ms Lisa Scenna 2007 535,877 5,489 – 550,000 1,091,366 12,686 – 190,236 1,294,288 57.2 14.7
Joint MD 2006 367,299 8,647 – 225,000 600,946 12,139 – 127,595 740,680 47.5 17.2
Stockland
Halladale
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Directors’ Report For the year ended 30 June 2007

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report

For the year ended 30 June 2007

48 //

ReMUNeRAtIoN RePoRt (CoNtINUeD)

D Details of remuneration (continued)

executive directors and senior executives’ remuneration (continued)

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POST- OTHER SHARE-BASED PERFORMANCE VALUE OF
SHORT-TERM PAyMENTS EMPLOyMENT LONG-TERM PAyMENT RELATED SECURITIES
SHORT-TERM
NON- INCENTIVE TOTAL SUPER- LONG LONG TERM (STI + LTI)
MONETARy SIGN ON (STI) & SHORT TERM AN NUATION SERVICE INCENTIVE PERCENT OF LTI PERCENT
SALARy BENEFITS [1] PAyMENTS BONUSES [2] PAyMENTS BENEFITS LEAVE (LTI) [4] TOTAL TOTAL OF TOTAL
$ $ $ $ $ $ $ $ $ % %
Senior executives (continued)
Mr David Pitman
(joined Mar 07) 2007 123,542 3,020 – 200,000 326,562 3,416 – – 329,978 60.6 –
EGM – Strategy 2006 – – – – – – – – – – –
and Corporate
Development
Ms Rilla Moore 2007 426,751 – – 280,000 706,751 12,686 – 149,611 869,048 49.4 17.2
EGM – Human 2006 341,846 – – 200,000 541,846 12,139 – 96,444 650,429 45.6 14.8
Resources
Ms Johanna
Keating 2007 298,106 22,304 – 210,000 530,410 11,711 15,439 85,647 643,207 46.0 13.3
EGM – Corporate 2006 182,477 27,447 – 100,000 309,924 11,170 14,698 47,243 383,035 38.4 12.3
Affairs [5]
Total remuneration 2007 6,967,523 239,949 525,000 5,575,000 13,307,472 114,323 144,024 3,029,330 16,595,149 51.8 18.2
(consolidated and 2006 5,347,675 314,543 – 3,895,000 9,557,218 108,282 176,259 1,763,946 11,605,705 48.7 15.2
company)
other executives
Mr Nick Perrignon [6]
General Manager 2007 543,295 39,227 – 300,000 882,522 12,686 – 132,801 1,028,009 42.1 12.9
– Residential
Communities,
Development
Division,
Queensland
----- End of picture text -----

1 Comprises motor vehicle costs, car parking, measured at “cost to company” for interest-free housing loans and FBT payable.

2 Short Term Incentives are earned in the financial year to which they relate and are paid in August of the following financial year.

3 The amount shown for Mr Schroder includes a sign on bonus of $425,000 (repayable on a sliding scale reducing by 25% every six months should he leave Stockland within two years) and a deferred sign on bonus of $100,000 payable in January 2008, as compensation for STI and LTI foregone from his previous employment.

4 Value of Long Term Incentive accounted for as options.

5 Appointed to the Executive Committee on 3 January 2006, however remuneration disclosed represents total remuneration paid during each year. Ms Keating was on maternity leave for the period 8 March to 28 July 2006 and now works nine days per fortnight.

• 6 Mr Perrignon was not part of KMP; this disclosure is required under the Corporations Act.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

ReMUNeRAtIoN RePoRt (CoNtINUeD)

D Details of remuneration (continued) vesting profile of Short term Incentives

Details of the vesting profile of the STI are detailed below:

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STI STI NOT
INCLUDED IN STI ACHIEVED STI ACHIEVED ACHIEVED
STI AT TARGET % MAXIMUM STI % REMUNERATION % OF % OF POTENTIAL % OF POTENTIAL
OF FIXED PAy OF FIXED PAy $ TARGET MAXIMUM MAXIMUM
executive directors
Mr Matthew Quinn – Managing Director 2007 67 100 1,625,000 139 94 6
2006 67 100 1,000,000 111 74 26
Mr Hugh Thorburn – Finance Director 2007 50 100 800,000 168 84 16
2006 50 100 510,000 142 71 29
Senior executives
Mr Denis Hickey – CEO Development Division 2007 67 100 850,000 127 85 15
2006 75 120 690,000 115 72 28
Mr John Schroder – CEO Retail Division 2007 60 100 580,000 137 82 18
2006 – – – – – –
Mr Darren Steinberg – Former CEO Retail Division 2007 – – – – – –
2006 60 100 470,000 116 70 30
Mr Steve Mann – CEO Commercial & Industrial Division 2007 60 100 480,000 125 75 25
2006 60 100 400,000 119 71 29
Mr Robb Macnicol – Former CEO Unlisted Property Funds 2007 – – – – – –
2006 60 100 300,000 125 63 37
Ms Lisa Scenna – Joint MD Stockland Halladale 2007 60 100 550,000 167 100 –
2006 40 80 225,000 141 70 30
Mr David Pitman – EGM – Strategy and
Corporate Development 2007 40 45 200,000 110 100 –
2006 – – – – – –
Ms Rilla Moore – EGM – Human Resources 2007 40 80 280,000 163 81 19
2006 40 80 200,000 143 71 29
Ms Johanna Keating – EGM – Corporate Affairs 2007 40 80 210,000 146 73 27
2006 40 80 100,000 145 73 27
other executives
Nick Perrignon
GM – Residential Communities, Development Division,
Queensland 2007 30 60 300,000 172 86 14
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Directors’ Report For the year ended 30 June 2007

// 49

The STI amounts awarded and included in remuneration for the year have been based on achievement of specified performance criteria. No amounts vest in future financial years in respect of STI schemes for the 2007 financial year. The amounts not achieved are due to performance criteria not being attained in relation to the current financial year.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report For the year ended 30 June 2007

50 //

ReMUNeRAtIoN RePoRt (CoNtINUeD) D Details of remuneration (continued) vesting profile of Long term Incentives, rights/securities held under PRP/ISP/eSS

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MAXIMUM VALUE
RIGHTS/ TO BE RECOGNISED IN
SECURITIES HELD FUTURE yEARS
LTI PLAN AT 30 JUNE 2007 GRANT DATE % VESTED IN yEAR [1] VESTING DATE [2] $
executive directors
Mr Matthew Quinn ISP 160,000 23/11/04 100 30/06/07 –
Managing Director ISP 168,000 26/10/05 – 31/12/07 135,143
ISP 168,000 26/10/05 – 30/06/08 223,821
PRP 470,000 24/10/06 – 30/06/09 1,178,831
Mr Hugh Thorburn ISP 90,000 23/11/04 100 30/06/07 –
Finance Director ISP 89,000 26/10/05 – 31/12/07 71,594
ISP 89,000 26/10/05 – 30/06/08 118,572
PRP 204,000 24/10/06 – 30/06/09 511,663
Senior executives
Mr Denis Hickey ESS 300,000 31/12/01 – 30/06/04 –
CEO Development Division ISP 70,000 23/11/04 100 30/06/07 –
ISP 80,000 18/08/05 – 31/12/07 58,880
ISP 80,000 18/08/05 – 30/06/08 95,922
ISP 86,000 17/08/06 – 30/06/09 185,359
Mr John Schroder PRP 180,000 26/10/06 – 30/06/09 451,467
CEO Retail Division
Mr Steve Mann ESS 200,000 31/08/03 – 30/06/06 –
CEO Commercial & Industrial Division ISP 55,000 23/11/04 100 30/06/07 –
ISP 56,000 18/08/05 – 31/12/07 41,216
ISP 56,000 18/08/05 – 30/06/08 67,145
ISP 55,000 17/08/06 – 30/06/09 118,543
Mr Robb Macnicol ISP 32,000 23/11/04 100 [3] 16/03/07 –
Former CEO Unlisted Property Funds
Ms Lisa Scenna ESS 50,000 31/08/03 – 30/06/06 –
Joint MD Stockland Halladale ISP 38,000 23/11/04 100 30/06/07 –
ISP 40,000 18/08/05 – 31/12/07 29,440
ISP 40,000 18/08/05 – 30/06/08 49,961
ISP 45,000 17/08/06 – 30/06/09 96,990
Ms Rilla Moore ISP 20,000 23/11/04 100 30/06/07 –
EGM – Human Resources ISP 35,000 18/08/05 – 31/12/07 25,760
ISP 35,000 18/08/05 – 30/06/08 41,966
ISP 37,000 17/08/06 – 30/06/09 79,747
Ms Johanna Keating ESS 30,000 31/08/03 – 30/06/06 –
EGM – Corporate Affairs ISP 12,000 23/11/04 100 30/06/07 –
ISP 16,000 18/08/05 – 31/12/07 11,776
ISP 16,000 18/08/05 – 30/06/08 19,184
ISP 32,000 17/08/06 – 30/06/09 68,971
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 51

ReMUNeRAtIoN RePoRt (CoNtINUeD)

D Details of remuneration (continued)

vesting profile of Long term Incentives, rights/securities held under PRP/ISP/eSS (continued)

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RIGHTS/ MAXIMUM VALUE
SECURITIES HELD TO BE RECOGNISED IN
LTI PLAN AT 30 JUNE 2007 GRANT DATE % VESTED IN yEAR [1] VESTING DATE [2] FUTURE yEARS
Mr Nick Perrignon GM – Residential ESS 75,000 28/02/03 – 30/06/05 –
Communities, Development Division, ESS 100,000 31/08/03 – 30/06/06 –
Queensland ISP 25,000 23/11/04 100 30/06/07 –
ISP 28,000 18/08/05 – 31/12/07 20,608
ISP 28,000 18/08/05 – 30/06/08 33,573
ISP 33,000 17/08/06 – 30/06/09 71,126
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Directors’ Report For the year ended 30 June 2007

Mr Pitman does not hold any securities under Stockland share plans.

1 Proportion vesting reflects the meeting of service conditions. As at 30 June 2007 62% of the original loan on the 23 November 2004 grant had been waived.

• 2 Vesting date refers to the date at which the performance and service conditions are met. The securities may remain in the plan until the 5th anniversary of the grant date with trading restrictions until the loan is repaid.

3 Mr Macnicol left Stockland in March 2007. In recognition of his achievements at Stockland, the Board exercised its discretion to allow vesting of Mr Macnicol’s 2004 ISP award on 30 June 2007, to the extent of achievement of performance conditions in line with vesting for all other participants on 30 June 2007.

No awards were forfeited due to failure to meet performance conditions. The minimum future value of these ISP/ESS securities is nil as future performance and service criteria may not be met.

Loans in respect of Long term Incentives repaid during the year

During the year, the following KMP sold LTI securities and/or repaid loans in respect of LTI securities granted as remuneration in previous years. The associated LTI securities are now issued capital and not considered as in substance options for accounting purposes under AASB 2 “Share-based payment”. There are no loan amounts remaining unpaid in respect of these securities.

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NUMBER OF SECURITIES LOAN VALUE REPAID PER
ASSOCIATED WITH LOAN LOAN VALUE REPAID SECURITy
REPAyMENT $ $
executive directors
Mr Matthew Quinn 2007 1,350,000 5,616,000 4.16
Managing Director 2006 1,000,000 4,080,000 4.08
Mr Hugh Thorburn 2007 200,000 1,034,000 5.17
Finance Director 2006 – – –
Senior executives
Mr Denis Hickey 2007 – – –
CEO Development Division 2006 700,000 2,891,000 4.13
Mr Darren Steinberg 2007 225,000 1,082,250 4.81
Former CEO Retail Division 2006 250,000 1,050,000 4.20
Mr Steve Mann 2007 – – –
CEO Commercial & Industrial Division 2006 245,000 1,006,950 4.11
Mr Robb Macnicol 2007 150,000 775,500 5.17
Former CEO Unlisted Property Funds 2006 – – –
Ms Lisa Scenna 2007 – – –
Joint MD Stockland Halladale 2006 125,000 601,250 4.81
Ms Johanna Keating 2007 30,000 125,100 4.17
EGM – Corporate Affairs 2006 50,000 205,000 4.10
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report

For the year ended 30 June 2007

52 //

ReMUNeRAtIoN RePoRt (CoNtINUeD)

D Details of remuneration (continued)

Movements in value of Long term Incentives securities during the year

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FAIR VALUE AT GRANT DATE
OF SECURITIES GRANTED IN
THE yEAR EXERCISED IN THE yEAR [1] FORFEITED IN THE yEAR [2] TOTAL VALUE IN THE yEAR
$ $ $ $
executive directors
Mr Matthew Quinn 2007 1,580,375 4,644,000 – 6,224,375
Managing Director 2006 1,182,720 1,956,100 – 3,138,820
Mr Hugh Thorburn 2007 685,950 602,000 – 1,287,950
Finance Director 2006 626,560 – – 626,560
Senior executives
Mr Denis Hickey 2007 265,740 – – 265,740
CEO Development Division 2006 551,200 1,679,000 – 2,230,200
Mr John Schroder 2007 605,250 – – 605,250
CEO Retail Division 2006 – – – –
Mr Darren Steinberg 2007 – 598,500 (233,070) 365,430
Former CEO Retail Division 2006 468,520 482,250 – 950,770
Mr Steve Mann 2007 169,950 – – 169,950
CEO Commercial & Industrial Division 2006 385,840 649,382 – 1,035,222
Mr Robb Macnicol 2007 132,870 308,550 (256,770) 184,650
Former CEO Unlisted Property Funds 2006 275,600 – – 275,600
Ms Lisa Scenna 2007 139,050 – – 139,050
Joint MD Stockland Halladale 2006 275,600 162,500 – 438,100
Ms Rilla Moore 2007 114,330 – – 114,330
EGM – Human Resources 2006 241,150 – – 241,150
Ms Johanna Keating 2007 98,880 86,700 – 185,580
EGM – Corporate Affairs 2006 110,240 121,300 – 231,540
other executives –
Mr Nick Perrignon 2007 101,970 – – 101,970
GM – Residential Communities,
Development Division, Queensland
----- End of picture text -----

1 Exercising of the security occurs when the loan associated with the ISP/ESS securities is repaid, either through the sale of securities or in cash by the individual, or when repayment of the loan is waived under the terms of the ISP. The value shown in the table represents the difference between the value of the loan repaid and the market value of the securities on the date of repayment.

2 The only forfeitures relate to failure to meet service conditions by those leaving Stockland, and comprise all non-vested ISP securities except in relation to Mr Macnicol. Mr Macnicol left Stockland in March 2007. In recognition of his achievements at Stockland, the Board exercised its discretion to allow vesting of Mr Macnicol’s 2004 ISP award, to the extent of achievement of performance conditions in line with vesting for all other participants on 30 June 2007.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 53

ReMUNeRAtIoN RePoRt (CoNtINUeD)

D Details of remuneration (continued) equity holdings and transactions

The movement during the period in the number of stapled securities held directly, indirectly or beneficially, by executive KMP, including parties related to them, is as follows:

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GRANteD
At StARt oF yeAR vIA LtI veSteD PURCHASeD SoLD FoRFeIteD At yeAR eND
UNVESTED UNVESTED
LTI OTHER TOTAL LTI OTHER TOTAL
executive directors
Mr M Quinn 2007 496,000 1,351,000 1,847,000 – 160,000 – – – 336,000 1,511,000 1,847,000
Managing Director 2006 2,510,000 1,000 2,511,000 336,000 2,350,000 – (1,000,000) – 496,000 1,351,000 1,847,000
Mr H Thorburn 2007 268,000 200,000 468,000 – 90,000 – – – 178,000 290,000 468,000
Finance Director 2006 290,000 – 290,000 178,000 200,000 – – – 268,000 200,000 468,000
Senior executives
Mr D Hickey 2007 230,000 300,000 530,000 86,000 70,000 – – – 246,000 370,000 616,000
CEO Development 2006 1,070,000 – 1,070,000 160,000 1,000,000 – (700,000) – 230,000 300,000 530,000
Division
Mr J Schroder 2007 – – – – – – – – – – –
CEO Retail Division 2006 – – – – – – – – – – –
Mr D Steinberg 2007 201,000 225,000 426,000 – – – (225,000) (201,000) – – [1] – [1]
Former CEO Retail 2006 540,000 – 540,000 136,000 475,000 – (250,000) – 201,000 225,000 426,000
Division
Mr S Mann 2007 167,000 200,000 367,000 55,000 55,000 – – – 167,000 255,000 422,000
CEO Commercial & 2006 500,000 – 500,000 112,000 445,000 – (245,000) – 167,000 200,000 367,000
Industrial Division
Mr R Macnicol 2007 112,000 150,000 262,000 43,000 32,000 – (150,000) – – – [1] – [1]
Former CEO 2006 182,000 – 182,000 80,000 150,000 – – (123,000) 112,000 150,000 262,000
Unlisted Property
Funds
Ms L Scenna 2007 118,000 50,000 168,000 45,000 38,000 – – – 125,000 88,000 213,000
Joint MD Stockland 2006 213,000 – 213,000 80,000 175,000 – (125,000) – 118,000 50,000 168,000
Halladale
Ms R Moore 2007 90,000 – 90,000 37,000 20,000 – – – 107,000 20,000 127,000
EGM – Human 2006 20,000 – 20,000 70,000 – – – – 90,000 – 90,000
Resources
Ms J Keating 2007 44,000 60,000 104,000 32,000 12,000 – (30,000) – 64,000 42,000 106,000
EGM – Corporate 2006 42,000 80,000 122,000 32,000 30,000 5,141 [2] (55,141) – 44,000 60,000 104,000
Affairs
----- End of picture text -----

Directors’ Report For the year ended 30 June 2007

Mr D Pitman and Mr J Schroder do not hold any securities in Stockland.

1 year end information is not available following termination of employment, however Mr Macnicol has 32,000 vested securities under the ISP.

2 Represents securities allotted under the Dividend Reinvestment Plan during the year.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report

For the year ended 30 June 2007

54 //

ReMUNeRAtIoN RePoRt (CoNtINUeD) e Additional information Additional benefits

Under the remuneration framework, Fixed Pay comprises monetary and non-monetary amounts. Non-monetary comprises salary sacrificed amounts, e.g. in relation to motor vehicle, car parking, superannuation, other specified benefits and applicable FBT. As required by AASB 124, superannuation is identified separately. The monetary amount of Fixed Pay is denoted “Salary” in “Executive Directors’ and Senior Executives’ Remuneration”.

Non-monetary amounts also include interest-free housing loans where relocation for work at Stockland has been required. The loans were advanced by a wholly owned subsidiary of Stockland and are secured by unregistered mortgage over residential property. Commercial interest rates apply should the executive no longer be an employee of Stockland, and the loan matures within 180 days of ceasing employment with Stockland. The value of these loans as remuneration represents the fair value of interest that would otherwise be payable (together with any related FBT). Mr M Quinn has an interest-free loan of $159,000 maturing on 20 August 2009. Mr D Hickey has an interest-free loan of $300,000 repayable on 8 November 2012.

Mr D Steinberg had an interest-free loan of $300,000 which was repaid in November 2006 on his ceasing employment with Stockland.

All employees, including executives, are entitled to discounts of up to 4% on the purchase of Stockland properties held for sale. These discounts approximately represent the savings in agent’s commissions and sales and marketing costs. Such discounts are not included in remuneration as there is no net cost to Stockland.

Prior to the disposal of the Saville Group on 31 January 2007, discounts were offered to all Stockland staff on accommodation at Saville hotels. The availability of discounts was dependent on occupancy levels. Such discounts are not included in remuneration as there was no net cost to Stockland. The liability for long service leave expected to be settled within 12 months of the balance date is measured at the amounts expected to be paid when the liabilities are settled. The liability for long service leave expected to be settled more than 12 months from the balance date is measured as the present	Total severance payments (including payment in lieu of notice), are the following percentage of the annual rate of Fixed Pay plus STI:
	NOTICE PERIOD TOTAL SEVERANCE PAy
	Managing Director (KMP) 6 months 150%
	Finance Director & Executive Committee (KMP) 3 months 100%
	General Managers 3 months 75%

The liability for long service leave expected to be settled within 12 months of the balance date is measured at the amounts expected to be paid when the liabilities are settled. The liability for long service leave expected to be settled more than 12 months from the balance date is measured as the present value of expected payments to be made in respect of services provided by employees up to the balance 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 market yields at the reporting date on national government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows.

Insurance premiums

Insurance contracts in respect of Directors’ and Officers Liability, Fidelity and Professional Indemnity prohibit the disclosure of the amount of the premium paid in respect of the contract. No part of the premium has been included in the details of remuneration for directors and executives.

employment arrangements

There are no fixed terms in the contracts of Stockland’s KMP. The notice periods are shown below, with potential payment in lieu of notice by Stockland. Where the termination occurs as a result of misconduct or serious or persistent breach of agreement, no notice is required. In the event that Stockland initiates the termination for reasons which are outside the control of the individual, severance payments are payable.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 55

ReMUNeRAtIoN RePoRt (CoNtINUeD)

e Additional information (continued) Directors’ security holdings

The relevant interest of each director in the securities issued by Stockland and other related bodies corporate, as notified by the directors to the ASX in accordance with S205G(1) of the Corporations Act 2001, at the date of this report are as follows:

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NUMBER OF SECURITIES/UNITS HELD By DIRECTORS
SECURITIES UNITS IN
IN STOCKLAND UNVESTED UNITS IN UNITS IN UNITS IN SAVILLE UNITS IN
(EXCLUDING SECURITIES STOCKLAND STOCKLAND STOCKLAND PRIVATE STOCKLAND
UNVESTED IN STOCKLAND DIRECT OFFICE DIRECT OFFICE DIRECT OFFICE SyNDICATE DIRECT RETAIL
DIRECTOR UNDER LTI) UNDER LTI TRUST NO. 1 TRUST NO. 2 TRUST NO. 3 TRUST [1] TRUST NO. 1
Mr Graham Bradley 2007 68,124 – 225,000 750,000 – – –
2006 56,400 – 225,000 750,000 – 1,600,000 –
Mr Nicholas Greiner 2007 47,070 – 10,000 25,000 – – –
2006 44,589 – 10,000 25,000 – – –
Mr Bruce Corlett 2007 205,918 – 15,000 200,000 – – –
2006 174,605 – 15,000 200,000 – – –
Mr David Fairfull 2007 14,279 – – – – – –
2006 13,539 – – – – – –
Ms Lyn Gearing 2007 5,099 – – – – – –
2006 4,974 – – – – – –
Mr Peter Scott 2007 5,917 – – 25,000 20,000 – 20,000
2006 5,064 – – 25,000 – – –
Mr Terry Williamson 2007 21,414 – 37,500 100,000 – – –
2006 20,285 – 37,500 100,000 – – –
Mr Matthew Quinn 2007 1,511,000 336,000 15,000 25,000 10,000 – 10,000
2006 1,351,000 496,000 15,000 25,000 – – –
Mr Hugh Thorburn 2007 290,000 178,000 – – – – –
2006 200,000 268,000 – – – – –
Total 2007 2,168,821 514,000 302,500 1,125,000 30,000 – 30,000
2006 1,870,456 764,000 302,500 1,125,000 – 1,600,000 –
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Directors’ Report For the year ended 30 June 2007

1 Saville Private Syndicate Trust was wound up on 15 June 2007.

There were no units held by any of the directors in Stockland Residential Estates Equity Fund No.1.

Duncan Boyle was appointed as a director on 7 August 2007 and did not hold any interest in securities issued by Stockland and other related bodies corporate at the date of this report.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Directors’ Report For the year ended 30 June 2007

INDeMNItIeS AND INSURANCe oF oFFICeRS AND AUDItoRS

Since the end of the previous financial year Stockland has not indemnified or agreed to indemnify any person who is or has been an officer or an auditor of Stockland against any liability.

Since the end of the previous financial year, Stockland has paid insurance premiums in respect of Directors’ and Officers’ liability insurance contracts, for directors, executive directors, company secretaries and officers. Such insurance contracts insure against certain liabilities (subject to specified exclusions) for persons who are or have been directors and officers of Stockland.

Premiums are also paid for Fidelity insurance and Professional Indemnity insurance policies to cover certain risks for a broad range of employees, including directors and executives.

Details of the amounts paid to the auditor of Stockland, KPMG, and its related practices and to other auditors for audit and non-audit services provided during the year are set out in Note 8 of the accompanying Financial Statements.

LeAD AUDItoR’S INDePeNDeNCe DeCLARAtIoN UNDeR SeCtIoN 307C oF tHe CoRPoRAtIoNS ACt 2001

The external auditor’s independence declaration is set out on page 57 and forms part of the Directors’ Report for the year ended 30 June 2007.

RoUNDING oFF

Stockland is an entity of the kind referred to in ASIC Class Order 98/100 (as amended) and in accordance with that Class Order, amounts in the Financial Report and Directors’ Report have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

NoN-AUDIt SeRvICeS

56 //

During the year Stockland’s auditor, KPMG, provided certain other services to Stockland in addition to its statutory duties as auditor.

The Board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of those services is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• the non-audit services were for taxation, regulatory and assurance related work closely linked to the Group’s audit, and none of this work created any conflicts with the auditor’s statutory responsibilities;

• the Audit and Risk Committee resolved that the provision of non-audit services during the year by KPMG as auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001;

• – the Board’s own review conducted in conjunction with the Audit and Risk Committee, having regard to the Board policy set out in this report, concluded that it is satisfied the non-audit services did not impact the integrity and objectivity of the auditor; and

Signed in accordance with a resolution of the directors:

Graham Bradley Chairman

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Matthew Quinn Managing Director Dated at Sydney, 8 August 2007

• the declaration of independence provided by KPMG, as auditor of Stockland.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 57

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To: The directors of Stockland Corporation Limited and the directors of Stockland Trust Management Limited, the Responsible Entity of Stockland Trust: I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2007 there have been:

(a) no contraventions of the auditor independence requirements as set out in 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.

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Lead Auditor’s Independence Declaration For the year ended 30 June 2007

KPMG

Michael J Coleman Partner Sydney 8 August 2007

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Income Statements

For the year ended 30 June 2007

58 //

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ConSoLIdaTed Company
2007 2006 2007 2006
noTeS $M $m $M $m
Revenue and other income
property development sales 1,414.7 955.8 – –
Rent from investment properties 5 594.5 556.1 – –
Hotel operation revenue 54.5 75.7 – –
dividend and distribution income 2.3 2.0 109.7 120.0
other revenue 27.8 7.1 – –
Total revenue 2,093.8 1,596.7 109.7 120.0
Interest income 5.5 2.9 187.5 141.5
Share of profits of investments accounted for using the equity method 44,45 256.3 114.5 – –
net gain from disposal of non-current assets 0.5 – – –
net gain from sale of hotel business 4 87.8 – 87.8 –
net gain from financial instruments treated as fair value hedges 0.1 0.1 – –
net realised gain on other financial instruments 6.1 – – –
net unrealised gain on other financial instruments 20.8 15.5
net realised foreign exchange gain 5.7 – – –
net gain from fair value adjustment of investment properties [1] 18,43 837.3 571.6 – –
Total revenue and other income 3,313.9 2,301.3 385.0 261.5
Cost of property developments sold (971.3) (589.1) – –
Investment property expenses (160.1) (155.5) – –
Hotel operation expenses (43.8) (67.5) – –
Retirement living resident obligation fair value movement 43 (19.1) – – –
management, administration, marketing and selling expenses [2] (241.8) (190.2) (0.3) –
Finance costs to external parties [2] 6 (60.3) (28.1) (1.4) (3.0)
Finance costs to controlled entities – – (187.5) (141.5)
net loss from disposal of non-current assets – (3.7) – –
net unrealised foreign exchange loss (0.7) – – –
profit before income tax expense and security holders’ finance costs 1,816.8 1,267.2 195.8 117.0
Income tax beneft/(expense) 9 (100.5) (61.2) (28.4) –
profit for the year before security holders’ finance costs 1,716.3 1,206.0 167.4 117.0
Security holders’ fnance costs [3,4] – (144.4) – –
Proft for the year attributable to security holders of Stockland 37(b) 1,716.3 1,061.6 167.4 117.0
Basic earnings per security 10 123.5 79.6
Diluted earnings per security 10 123.0 79.6
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• 1 net gain from fair value adjustment of investment properties includes fair value adjustment of $5.7 million (2006: nil) on non-current assets held for sale.

• 2 also includes indirect property management, leasing, project and development management expenses.

• 3 Total finance costs for the consolidated entity are $60.3 million (2006: $172.5 million), being the sum of finance costs to external parties and finance costs to security holders. Security holders’ finance costs represents trust distributions payable for the period 1 July 2005 to 25 october 2005, being the date of the annual General meeting. For the period, 1 July 2005 to 25 october 2005, aaSBs required Stockland Trust unit holders’ issued capital to be treated as a liability and trust distributions payable to be treated as a finance cost in the Income Statement. at the annual General meeting, Stockland Trust unit holders agreed to amend the Stockland Trust Constitution, which meant the unit holders’ issued capital from that date would be treated as equity in accordance with accounting standard aaSB 132 “Financial Instruments: disclosure and presentation”.

4 There is no effect on the income tax expense associated with security holders’ finance costs as this amount represents Trust undistributed income available for distribution recognised during the period when Trust unit holders’ issued capital was classified as a liability under aaSB 132.

The above Income Statements should be read in conjunction with the accompanying notes.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 59

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ConSoLIdaTed Company
2007 2006 2007 2006
Balance
noTeS $M $m $M $m
Current assets
Sheets
Cash and cash equivalents 11 96.6 37.1 – –
Trade and other receivables 12 135.6 66.0 2,633.3 2,292.0 as at 30 June 2007
Inventories 13 929.6 712.3 – –
other assets 14 105.9 65.5 – –
1,267.7 880.9 2,633.3 2,292.0
non-current assets held for sale 15 16.2 92.6 – –
Total current assets 1,283.9 973.5 2,633.3 2,292.0
Non-current assets
Trade and other receivables 16 63.4 21.4 – –
Inventories 17 1,999.4 1,907.5 – –
Investment properties 18 8,232.8 5,597.0 – –
other financial assets 19 36.4 21.1 182.2 184.7
property, plant and equipment 20 241.0 29.9 – –
Investments accounted for using the equity method 21 1,181.6 735.7 – –
Intangible assets 22 557.5 248.6 – –
other assets 23 104.4 63.8 – –
Total non-current assets 12,416.5 8,625.0 182.2 184.7
Total assets 13,700.4 9,598.5 2,815.5 2,476.7
Current liabilities
Trade and other payables 24 550.5 250.2 – –
Interest-bearing loans and borrowings 25 446.2 200.0 2,222.9 2,029.3
Retirement living resident obligations 26 312.8 – – –
Income tax payable 27 51.6 2.3 51.5 2.3
provisions 28 43.2 30.8 0.1 –
other liabilities 29 352.5 302.7 66.6 55.5
Total current liabilities 1,756.8 786.0 2,341.1 2,087.1
Non-current liabilities
other payables 30 158.1 88.6 – –
Interest-bearing loans and borrowings 31 2,683.7 2,110.0 – –
Retirement living resident obligations 26 412.9 – – –
deferred tax liabilities 32 83.6 54.6 – –
provisions 33 19.3 28.8 17.7 27.0
other liabilities 35 368.1 135.4 – –
Total non-current liabilities 3,725.7 2,417.4 17.7 27.0
Total liabilities 5,482.5 3,203.4 2,358.8 2,114.1
Net assets 8,217.9 6,395.1 456.7 362.6
Security holders’ funds
Issued capital 36 5,570.9 4,885.3 403.1 355.1
Reserves 37(a) 83.4 30.8 4.2 4.1
Retained earnings 37(b) 2,563.6 1,479.0 49.4 3.4
Total equity attributable to security holders’ 8,217.9 6,395.1 456.7 362.6
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The above Balance Sheets should be read in conjunction with the accompanying notes.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Statements of Changes in equity

For the year ended 30 June 2007

60 //

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ATTRiBuTABle To SeCuRiTy holDeRS of SToCklAND
ReTaIned ToTaL SeCuRITy
ISSued CapITaL ReSeRveS eaRnInGS HoLdeRS’ FundS
ConSoLIdaTed noTeS $m $m $m $m
Balance at 1 July 2006 4,885.3 30.8 1,479.0 6,395.1
Currency translation differences 37 – 10.4 – 10.4
effective portion of changes in fair value of cash flow hedges 37 – 60.4 – 60.4
valuation gain recognised on fnancial assets 37 – 3.3 – 3.3
Total income and expense recognised directly in equity – 74.1 – 74.1
net change in fair value of cash flow hedges transferred to profit – (40.5) – (40.5)
proft for the year – – 1,716.3 1,716.3
Total recognised income and expenses for the year 4,885.3 64.4 3,195.3 8,145.0
net transfers to reserves from retained earnings – 21.4 (21.4) –
equity issued for the year 36 685.6 – – 685.6
dividends and distributions to security holders [1] 38 – (6.9) (610.3) (617.2)
expense relating to securities and rights issued under share plans 37 – 4.5 – 4.5
Balance at 30 June 2007 5,570.9 83.4 2,563.6 8,217.9
Balance at 1 July 2005 4,611.3 42.5 832.4 5,486.2
application of aaSB 132 and 139 effective 1 July 2005 (4,276.8) 5.0 (3.7) (4,275.5)
Reclassification of Stockland Trust units from liabilities to equity on
25 october 2005 36 4,395.6 – – 4,395.6
Currency translation differences 37 – (21.0) – (21.0)
effective portion of changes in fair value of cash fow hedges 37 – (2.8) – (2.8)
Total income and expense recognised directly in equity 118.8 (18.8) (3.7) 96.3
proft for the year – – 1,061.6 1,061.6
Total recognised income and expenses for the year 118.8 (18.8) 1,057.9 1,157.9
net transfers to reserves from retained earnings – 12.5 (12.5) –
equity issued for the year 36 155.2 – – 155.2
dividends and distributions to security holders [1] 38 – (9.7) (398.8) (408.5)
expense relating to securities and rights issued under share plans 37 – 4.3 – 4.3
Balance at 30 June 2006 4,885.3 30.8 1,479.0 6,395.1
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The amounts recognised directly in equity are disclosed net of tax.

1 Stockland has guaranteed the repayment of certain Stockland employee loans with an external financier used for the purpose of acquiring securities granted under the Incentive Share plan and executive Securities Scheme. aaSB 2 “Share-based payments” requires such guarantees to be recognised as a financial liability. The effect of this is to treat dividends and distributions paid on these securities as interest payments.

The above Statement of Changes in equity should be read in conjunction with the accompanying notes.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 61

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ATTRiBuTABle To SeCuRiTy holDeRS of SToCklAND
ReTaIned ToTaL SeCuRITy
ISSued CapITaL ReSeRveS eaRnInGS HoLdeRS’ FundS Statements
Company noTeS $m $m $m $m
Balance at 1 July 2006 355.1 4.1 3.4 362.6 of Changes
profit for the year – – 167.4 167.4
equity issued for the year 36 48.0 – – 48.0
dividends and distributions to security holders [1] 38 – – (121.4) (121.4) in equity
expense relating to securities and rights issued under share plans 37 – 0.1 – 0.1 For the year ended 30 June 2007
Balance at 30 June 2007 403.1 4.2 49.4 456.7
Balance at 1 July 2005 334.6 3.8 1.2 339.6
profit for the year – – 117.0 117.0
equity issued for the year 36 20.5 – – 20.5
dividends and distributions to security holders [1] 38 – – (114.8) (114.8)
expense relating to securities and rights issued under share plans 37 – 0.3 – 0.3
Balance at 30 June 2006 355.1 4.1 3.4 362.6
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The amounts recognised directly in equity are disclosed net of tax.

1 Stockland has guaranteed the repayment of certain Stockland employee loans with an external financier used for the purpose of acquiring securities granted under the Incentive Share plan and executive Securities Scheme. aaSB 2 “Share-based payments” requires such guarantees to be recognised as a financial liability. The effect of this is to treat dividends and distributions paid on these securities as interest payments.

The above Statement of Changes in equity should be read in conjunction with the accompanying notes.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Cash Flow Statements

For the year ended 30 June 2007

62 //

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ConSoLIdaTed Company
2007 2006 2007 2006
noTeS $M $m $M $m
Cash flows from operating activities
Cash receipts in the course of operations 2,338.5 1,885.0 – –
Cash payments in the course of operations (1,580.9) (1,478.3) (0.3) –
distributions received from associates and joint venture entities 52.2 40.7 – –
dividends received from controlled entities – – 109.7 120.0
distributions received from other entities 2.3 1.9 – –
Receipts from retirement living residents 34.3 – – –
payments to retirement living residents net of deferred management fees (10.9) – – –
Receipts from joint venture entities – 8.0 – –
payments to joint venture entities – (1.7) – –
Interest received 5.5 2.9 187.5 141.5
Interest paid (199.3) (141.5) (187.5) (141.5)
Security holders’ finance costs – (144.4) – –
Income taxes paid (27.7) (47.2) – –
Net cash from operating activities 46 614.0 125.4 109.4 120.0
Cash flows from investing activities
disposal of hotel business, net of cash disposed 4 100.0 – 100.1 –
acquisition of businesses, net of cash acquired 4 (508.0) – – –
proceeds from sale of investment properties 162.0 57.8 – –
payments for investment properties (1,135.4) (219.7) – –
proceeds from sale of plant and equipment 4.1 – – –
payments for plant and equipment (50.6) (6.5) – –
proceeds from sale of investments 48.2 – –
payments for investments (180.2) (16.4) – –
Repayment of loans (to)/from other entities (30.1) 0.2 – –
Loans to controlled entities – – (451.4) (289.6)
Net cash from investing activities (1,590.0) (184.6) (351.3) (289.6)
Cash flows from financing activities
proceeds from issue of securities [1] 645.2 248.6 45.1 18.6
proceeds from vesting of equity instruments under employee share plans 7.3 18.1 7.3 18.1
proceeds from sale of equity instruments forfeited under Stockland share plans 23.3 8.3 23.3 8.3
proceeds from borrowings 9,936.4 7,372.2 1,078.7 602.3
Repayment of borrowings (8,999.3) (7,203.4) (800.8) (364.2)
dividends and distributions paid [1] (577.4) (384.9) (111.7) (113.5)
Net cash from fnancing activities 1,035.5 58.9 241.9 169.6
Net increase/(decrease) in cash and cash equivalents 59.5 (0.3) – –
Cash and cash equivalents at the beginning of the fnancial year 37.1 37.4 – –
Cash and cash equivalents at the end of the fnancial year 11 96.6 37.1 – –
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1 These cash flows include the effect of additional securities issued under the dividend Reinvestment plan.

The above Cash Flow Statements should be read in conjunction with the accompanying notes.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

1 SuMMARy of SigNifiCANT ACCouNTiNg PoliCieS

Stockland was established for the purpose of facilitating a joint quotation of Stockland Corporation Limited and its controlled entities (“the Corporation”) and Stockland Trust and its controlled entities (“the Trust”) on the australian Securities exchange (“aSX”). Both the Corporation and the Trust were formed/ incorporated and are domiciled in australia. The Constitutions of Stockland Corporation Limited and Stockland Trust ensure that, for so long as the two entities remain jointly quoted, the number of shares in the Corporation and the number of units in the Trust shall be equal and that the shareholders and unit holders be identical. Both the Corporation and the Responsible entity of the Trust must at all times act in the best interest of Stockland. The stapling arrangement will cease upon the earliest of either the winding up of the Corporation or the Trust or either entity terminating the stapling arrangements.

The Financial Report of Stockland as at and for the year ended 30 June 2007 comprises the consolidated Financial Report of Stockland Corporation Limited (“the Company”) and its controlled entities including the Trust, which form the consolidated entity (“Stockland” or “consolidated entity”).

This Financial Report has been prepared based upon a business combination of the parent entity, the Company, and Stockland Trust and their controlled entities, in accordance with australian Interpretation (“aI”) 1013 “Consolidated Financial Reports in relation to pre-date-of-Transition Stapling arrangements”.

The Financial Report was authorised for issue by the directors on 8 august 2007.

(a) Statement of compliance

The Financial Report is a general purpose financial report which has been prepared in accordance with australian accounting Standards (“aaSBs”) (including australian Interpretations) adopted by the australian accounting Standards Board (“aaSB”) and the Corporations act 2001. The Financial Report also complies with the International Financial Reporting Standards (“IFRSs”).

(b) New accounting standards

Certain new accounting standards have been published that are not mandatory for this reporting period. Stockland’s assessment of the impact of these new standards is set out below.

aaSB 7 “Financial Instruments: disclosures” replaces the presentation requirements of financial instruments in aaSB 132 “Financial Instruments: disclosure and presentation”. aaSB 2005-10 “amendments to australian accounting Standards” makes consequential amendments to aaSB 132, aaSB 101 “presentation of Financial Statements”, aaSB 114 “Segment Reporting”, aaSB 117 “Leases”, aaSB 133 “earnings per Share”, aaSB 139 “Financial Instruments: Recognition and measurement”, aaSB 1 “First-time adoption of australian equivalents to International Financial Reporting Standards”, aaSB 4 “Insurance Contracts”, aaSB 1023 “General Insurance Contracts” and aaSB 1038 “Life Insurance Contracts”.

aaSB 7 and aaSB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. Stockland has not adopted these standards early. application of these standards will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to Stockland’s financial instruments.

aaSB 8 “operating Segments” and aaSB 2007-3 “amendments to australian accounting Standards arising from aaSB 8” make amendments to aaSB 5 “non-current assets Held for Sale and discontinued operations”, aaSB 6 “exploration for and evaluation of mineral Resources”, aaSB 102 “Inventories”, aaSB 107 “Cash Flow Statements”, aaSB 119 “employee Benefits”, aaSB 127 “Consolidated and Separate Financial Statements”, aaSB 134 “Interim Financial Reporting”, aaSB 136 “Impairment assets”, aaSB 1023 and aaSB 1038.

aaSB 8 and aaSB 2007-3 are applicable to annual reporting periods beginning on or after 1 January 2009. Stockland has not adopted these standards early. application of these standards will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to Stockland’s segment reporting.

aaSB 2007-4 “amendments to australian accounting Standards arising from ed 151 and other amendments” is applicable to annual reporting periods beginning on or after 1 July 2007. Stockland has not adopted this standard early. application of this standard will not affect any of the amounts recognised in the financial statements, but may impact the level of disclosure.

(c) Basis of preparation

The Financial Report is presented in australian dollars, which is the Company’s functional currency and the functional currency of the majority of the consolidated entity.

The Financial Report has been prepared on the basis of the going concern and historical cost conventions except for:

• investment properties (including retirement living assets), derivative financial instruments, certain financial assets and liabilities which are stated at their fair value; and

• non-current assets classified as held for sale which are stated at the lower of carrying amount and fair value less costs to sell.

Stockland is an entity of the kind referred to in aSIC Class order 98/100 (as amended) and in accordance with that Class order, amounts in the Financial Report have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. actual results may differ from these estimates. estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Refer to note 2 for significant areas of estimation.

The accounting policies have been applied consistently throughout the consolidated entity for the purposes of this consolidated Financial Report.

In the prior financial year the consolidated entity adopted aaSB 132 and aaSB 139 in accordance with the transitional rules of aaSB 1. This change has been accounted for by adjusting the opening balance of retained earnings and reserves at 1 July 2005, as disclosed in the Consolidated Statement of Changes in equity.

The significant policies which have been adopted in the preparation of this Financial Report are:

notes to the Consolidated Financial Statements For the year ended 30 June 2007

// 63

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

64 //

1 SuMMARy of SigNifiCANT ACCouNTiNg PoliCieS (CoNTiNueD)

(d) Basis of consolidation

This Financial Report has been prepared based upon a business combination of the parent entity, the Company, and Stockland Trust and their controlled entities, in accordance with aI 1013 “Consolidated Financial Reports in relation to pre-date-of-Transition Stapling arrangements”.

Controlled entities are entities controlled by either Stockland Corporation Limited or Stockland Trust. Control exists when the entity has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account.

The Financial Statements of controlled entities are included in the consolidated Financial Report from the date that control commences until the date that control ceases.

any balances, unrealised gains and losses or income and expenses resulting from transactions with or between controlled entities are eliminated in full within Stockland.

(e) investments

Controlled entities

Investments in controlled entities are carried at their cost of acquisition in the Company’s Financial Statements.

Associates

associates are those entities over which Stockland has significant influence, but not control, over the financial and operating policies. The consolidated Financial Report includes Stockland’s share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. If Stockland’s share of losses exceeds its interest in an associate, Stockland’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that Stockland has incurred legal or constructive obligations or made payments on behalf of the associate.

Joint venture entities

a joint venture is either an entity or operation over whose activities Stockland has joint control, established by contractual agreement. Investments in joint venture entities are accounted for using equity accounting principles. Investments in joint venture entities are carried at the lower of the equity accounted amount and the recoverable amount.

Stockland’s share of the joint venture entity’s net profit or loss is recognised in the consolidated Income Statement from the date joint control commences until the date joint control ceases. other movements in reserves are recognised directly in reserves.

Joint venture operations

Stockland’s interests in unincorporated joint ventures are brought to account by recognising its proportionate share of joint venture operations’ assets, liabilities and expenses and Stockland’s revenue from the sale of its share of goods or services on a line-by-line basis, from the date joint control commences to the date joint control ceases.

other investments

Investments in other entities which do not qualify as associates, joint ventures or joint venture entities are classified as financial assets available for sale and are stated at fair value, with any resultant gain or loss recognised in the financial asset revaluation reserve.

Transactions eliminated on consolidation

any balances, unrealised gains and losses or income and expenses arising from transactions with joint ventures and associates are eliminated to the extent of Stockland’s interest.

unrealised gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of Stockland’s interest in the entity with adjustments made to the “Investment accounted for using the equity method” and “Share of profits of investments accounted for using the equity method” accounts.

unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Gains and losses are recognised as the contributed assets are consumed by the associates or jointly controlled entities or, if not, consumed or sold by the associate or jointly controlled entity, when Stockland’s interest in such entities is disposed of.

(f) Revenue recognition

Revenue is recognised at the fair value of the consideration received or receivable net of the amount of goods and services tax (“GST”) levied.

Revenue is recognised for the major business activities as follows:

Property development sales

Revenue from residential land sales and property development sales is recognised in the Income Statement upon settlement and after contractual duties are completed.

Revenue from property development services rendered is recognised in proportion to the stage of completion of the transaction at balance date. The stage of completion is assessed by reference to surveys of work performed.

no revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, the costs incurred or to be incurred cannot be measured reliably, there is a risk of return or there is continuing management involvement to the degree usually associated with ownership.

Rent from investment properties

Rent from investment properties is recognised in the Income Statement on a straight-line basis over the lease term. Rent not received at balance date is reflected in the Balance Sheet as a receivable or if paid in advance, as rents in advance. Lease incentives granted are recognised over the lease term, on a straight-line basis, as a reduction of rent.

hotel operations

Revenue from hotel operations is recognised in the Income Statement in proportion to the stage of services provided at balance date. The stage of services provided is assessed by reference to the work performed.

Dividends and distributions

Revenue from dividends and distributions from controlled entities and other investments are recognised in the Income Statement on the date the entity’s right to receive payment is established, being the date when they are declared by those entities.

dividends and distributions received out of preacquisition reserves are eliminated against the carrying amount of the investment and not recognised in revenue.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

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1 SuMMARy of SigNifiCANT ACCouNTiNg PoliCieS (CoNTiNueD)

(f) Revenue recognition (continued) interest income

Interest income is recognised in the Income Statement as it accrues using the effective interest method and if not received at balance date, is reflected in the Balance Sheet as a receivable.

(g) operating leases

payments made under operating leases are expensed on a straight-line basis over the term of the lease.

(h) Segment reporting

a segment is a distinguishable component of Stockland that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

Stockland’s primary format for segment reporting is based on business segments.

(i) goods and services tax

Revenues, expenses and assets are recognised net of the amount of GST or overseas equivalent, except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as a current asset or liability in the Balance Sheet.

Cash flows are included in the Cash Flow Statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the taxation authority are classified as operating cash flows.

(j) income tax

Stockland Corporation limited

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax expense/benefit is recognised in the Income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

or substantially enacted at the balance date, and any adjustment to tax payable in respect of previous years.

deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. deferred tax is not recognised for the following temporary differences: initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. deferred tax provided is based upon the expected manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantially enacted at balance date.

a deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

additional income taxes that may arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.

The united Kingdom operations of controlled entities of Stockland Corporation Limited are subject to united Kingdom tax on their taxable earnings.

Tax consolidation

The Company entered into tax consolidation from 1 July 2003. Stockland Corporation Limited, as the head entity, recognises all current tax balances relating to wholly-owned entities included in the Tax Consolidated Group (“TCG”).

The current and deferred tax amounts for the TCG are allocated among the entities in the TCG using a form of the group allocation approach whereby each entity is allocated current and deferred taxes in a systematic manner that is consistent with the broad principles of aaSB 112 “Income Taxes”, based on the underlying effect of transactions with those subsidiaries.

deferred tax assets and liabilities relating to temporary differences are measured by reference to the carrying notes to the amounts of the assets and liabilities in the TCG member’s balance sheet and their tax values applying under tax consolidation. any fair value adjustments on Consolidated accounting consolidation are included in the TCG’s tax calculation. Financial The Company recognises deferred tax assets arising from unused tax losses and tax credits and other tax attributes assumed from subsidiaries of the TCG to the Statements

The Company recognises deferred tax assets arising from unused tax losses and tax credits and other tax attributes assumed from subsidiaries of the TCG to the extent that is probable that future taxable profits of the TCG will be available against which the asset can be utilised.

For the year ended 30 June 2007

Nature of tax funding and sharing arrangements

Stockland, in conjunction with other members of the TCG, has entered into a tax funding arrangement which sets out the funding obligations of members of the TCG in respect of tax amounts. The tax funding arrangement requires that payments to or from the Company shall equal any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses or tax credits or other tax attributes assumed by the Company at the then recognised amount, and generally will not require any further payments to or from the Company should the recognised amount subsequently change, except for changes by way of correction.

any subsequent period adjustments to deferred tax assets arising from unused tax losses or tax credits or other tax attributes assumed from subsidiaries are recognised by the Company only and do not result in further amounts being payable or receivable under the tax funding arrangement.

Where there is an amendment of a prior year tax return of the Company and/or recalculation of the stand alone tax calculation of a TCG member and/ or adjustment to the disclosed tax losses or other tax attributes not requiring an amendment to the tax return, the change in tax liabilities or assets should be allocated on a systematic and rational basis between the TCG members, based on the principles that each member should be allocated current and deferred taxes in a systematic manner based on the underlying tax effect of transactions within those subsidiaries.

The tax liabilities of the entities included in the TCG will be governed by the tax sharing agreement should the Company default on its tax obligations.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

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(j) income tax (continued) Stockland Trust

under current australian income tax legislation, the Trust is not liable for income tax, provided that the taxable income (including any assessable component of any capital gains from the sale of investment assets) is fully distributed to unit holders each year. Tax allowances for building and plant and equipment depreciation are distributed to unit holders in the form of tax deferred components of distributions.

The new Zealand operations of Stockland Trust are subject to new Zealand tax on their taxable earnings.

(k) foreign currency Transactions

Foreign currency transactions are translated into the entity’s functional currency at the rates of exchange ruling at the dates of the transactions. monetary assets and liabilities denominated in foreign currencies at reporting dates are translated into the functional currency at the rates of exchange ruling at that date. Foreign exchange differences arising on translation are recognised in the Income Statement.

non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to australian dollars at foreign exchange rates ruling at the date the fair value was determined.

Translation of financial reports of foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to australian dollars at foreign exchange rates ruling at the reporting date. The revenue and expenses of foreign operations are translated to australian dollars at rates approximating the foreign exchange rate ruling at the date of transactions. equity items are translated at historical rates.

Foreign currency differences arising on translation are recognised directly in the foreign currency translation reserve, a separate component of equity.

exchange differences arising from the translation of the net investment in foreign entities, and of related hedges, are taken directly to the foreign currency translation reserve. They are released into the Income Statement upon disposal.

(l) Derivative financial instruments

Stockland holds derivative financial instruments to hedge foreign currency and interest rate risk exposures arising from operational, financing and investment activities. In accordance with its treasury policy, Stockland does not hold or issue derivative financial instruments for trading purposes.

derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on re-measurement to fair value is recognised in the Income Statement. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged. Refer note 1(m).

The fair value of interest rate derivatives is the estimated amount that Stockland would receive or pay to terminate the swap or swaption at balance date, taking into account current interest rates and the current creditworthiness of the swap or swaption counterparties.

The fair value of cross currency interest rate swaps is the estimated amount that Stockland would receive or pay to terminate the swap at balance date, taking into account current interest and exchange rates and the current creditworthiness of the swap counterparties.

The fair value of forward exchange contracts is their quoted market price at balance date, being the present value of the quoted forward price.

(m) hedging

Stockland formally designates and documents the relationship between hedging instruments and hedged items at the inception of the transaction, as well as its risk management objective and strategy for undertaking various hedge transactions. Stockland also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.

fair value hedge

a fair value hedge is a hedge of the exposure to changes in fair value of an asset or liability that is attributable to a particular risk and could affect the Income Statement.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Income Statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

Cash flow hedge

a cash flow hedge is a hedge of the exposure to variability in cash flows attributable to a particular risk associated with an asset, liability or highly probable forecast transaction that could affect the Income Statement.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement.

amounts in the hedging reserve are recognised in the Income Statement in the periods when the hedged item is recognised in the Income Statement.

When the forecast transaction that is hedged results in the recognition of a non-financial asset or a nonfinancial liability, the gains and losses previously in the hedging reserve are transferred from equity and included in the initial measurement of the cost of the asset or liability.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. any cumulative gain or loss recognised in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Income Statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was recognised in equity is recognised immediately in the Income Statement.

hedge of net investment in foreign operation

The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is determined to be an effective hedge is recognised directly in the foreign currency translation reserve. The ineffective portion is recognised immediately in the Income Statement.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

1 SuMMARy of SigNifiCANT ACCouNTiNg PoliCieS (CoNTiNueD)

(n) financing income and expenses

net financing costs include interest payable on bank overdrafts and short-term and long-term borrowings calculated using the effective interest method, interest receivable on funds invested, dividend income net of interest receipts, payments on derivatives and gains and losses on hedging instruments that are recognised in the Income Statement and amortisation of ancillary costs incurred in connection with arrangement of borrowings.

Financing costs are expensed as incurred except to the extent that they are directly attributable to the acquisition, construction or production of a qualifying asset. Qualifying assets are assets that necessarily take a substantial period of time to reach the stage of their intended use or sale.

In these circumstances, borrowing costs are capitalised to the cost of the assets until the assets are ready for their intended use or sale. Total interest capitalised within Stockland must not exceed the net interest expense of Stockland in any period, and project carrying values, including all capitalised interest attributable to projects, must continue to be recoverable based on the latest project feasibilities. In the event that development is suspended for an extended period of time, the capitalisation of borrowing costs is also suspended. Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs capitalised is the actual borrowing cost incurred on that borrowing, net of any interest earned on those borrowings. Where funds are borrowed generally, borrowing costs are capitalised using a weighted average capitalisation rate applied to the expenditures on the asset excluding specific borrowings.

(o) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and at call deposits. Bank overdrafts that are repayable on demand and form an integral part of Stockland’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

(p) Trade receivables

Trade debtors are carried at cost less impairment losses. Collectability of trade debtors is reviewed on an ongoing basis and at balance date specific impairment losses are recorded for any doubtful accounts.

(q) Non-current assets held for sale

Immediately before classification as held for sale, the measurement of the assets is brought up-to-date in accordance with applicable accounting standards. upon initial classification as held for sale, non-current assets are recognised at the lower of carrying amount and fair value less costs to sell (except for investment properties which are held at fair value).

Impairment losses on initial classification as held for sale are included in the Income Statement, even when there is a revaluation. The same applies to gains and losses on subsequent re-measurement.

net gains from disposal of non-current asset sales are recognised in the Income Statement at the date control of the asset passes to the buyer.

(r) inventories

development properties are stated at the lower of cost and net realisable value.

Net realisable value

net realisable value is determined on the basis of sales for each class of inventory in the ordinary course of business. expenses of marketing, selling and distribution to customers are estimated and deducted to establish net realisable value.

Development work in progress

Cost includes variable and fixed costs directly related to specific contracts and those costs related to contract activity in general which can be allocated to specific contracts on a reasonable basis and other costs specifically chargeable under the contract. Costs expected to be incurred under penalty clauses and rectification provisions as well as financing costs on qualifying assets are also included.

land and property held for resale

land and property held for resale development properties are stated at the lower notes to the of cost and net realisable value. Cost includes the costs of acquisition, development and holding costs such as borrowing costs, rates and taxes. Holding Consolidated costs incurred after completion of development are expensed. Financial (s) impairment of assets The carrying amounts of Stockland’s assets, other than Statements investment properties (refer note 1(u)), inventories (refer note 1(r)) and deferred tax assets (refer note For the year ended 30 June 2007

The carrying amounts of Stockland’s assets, other than investment properties (refer note 1(u)), inventories (refer note 1(r)) and deferred tax assets (refer note 1(j)) are reviewed at each balance date, to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

an impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the Income Statement, unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any losses that exceed the previous revaluation recognised through the Income Statement.

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Calculation of recoverable amount

Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. Significant receivables are individually assessed for impairment. non-significant receivables are not individually assessed. Instead, impairment testing is performed by placing non-significant receivables in portfolios of similar risk profiles, based on objective evidence from historical experience adjusted for any effects of conditions existing at each balance date.

The recoverable amount of other assets is the greater of their fair value less cost to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cashgenerating unit to which the asset belongs.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

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1 Summary of Significant accounting policieS (continued)

(s) impairment of assets (continued)

reversals of impairment

Impairment losses, other than in respect of goodwill, are reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimate used to determine the recoverable amount.

An impairment loss in respect of goodwill is not reversed.

An impairment loss in respect of a held-to-maturity security or receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

An impairment loss in respect of an investment in an equity instrument classified as available for sale is not reversed through the Income Statement.

(t) depreciation and amortisation

All assets having limited useful lives, are depreciated/ amortised using the diminishing value or the straightline method over their estimated useful lives. Land is not depreciated. Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed assets, from the time an asset is completed and held ready for use.

Depreciation and amortisation rates and methods are reviewed annually for appropriateness. Depreciation and amortisation are expensed, except to the extent that they are included in the carrying amount of another asset as an allocation of production overheads. The depreciation/amortisation rates of useful lives used for each class of assets are detailed below:

• Leasehold improvements 10-20%

• Plant and equipment 2-50%

• – Hotel management rights 10%

These rates are consistent with the prior year.

The residual value, the useful life and the depreciation method applied to an asset are reviewed at least annually.

(u) investment properties

Investment properties comprise investment interests in land and buildings (including integral plant and equipment) held for the purpose of producing rental income, capital appreciation, or both. Retirement living community assets are classified as investment properties as they are held to earn revenues and capital appreciation over the long term. These assets comprise independent living units, serviced apartments, common facilities and integral plant and equipment.

Investment properties are initially recognised at cost including any acquisition costs. Investment properties are subsequently stated at fair value at each balance date with any gain or loss arising from a change in fair value recognised in the Income Statement in the period. The value of retirement living community assets within investment properties includes the value of land and buildings as well as the value of future resident fees to be derived. The value should be considered in conjunction with the retirement living resident obligations as described in Note 1(z).

Where a property is undergoing redevelopment, it is carried at fair value. Where property does not qualify as investment property but is to be redeveloped into investment property it is treated as property, plant and equipment and carried at cost until completion and then transferred to investment property at fair value. Finance costs incurred on investment properties undergoing redevelopment are included in the cost of the development as set out in Note 1(n).

Lease incentives provided by Stockland to lessees, and rental guarantees which may be received by Stockland from third parties (arising from the acquisition of investment properties) are included in the measurement of fair value of investment property and are treated as separate assets. Such assets are amortised over the respective periods to which the lease incentives and rental guarantees apply, either using a straight-line basis, or a basis which is more representative of the pattern of benefits.

When an item of property, plant and equipment is transferred to investment property following a change in its use, any differences arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity if it is a gain. Upon disposal of the item, the gain is transferred to retained earnings. Any loss arising in this manner is recognised immediately in the Income Statement.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment and its fair value at the date of reclassification becomes its cost for accounting purposes for subsequent recording. When the consolidated entity begins to redevelop an existing investment property for continued future use as investment property, the property remains an investment property, which is measured based on a fair value model, and is not reclassified as property, plant and equipment during the redevelopment.

A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the consolidated entity holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value.

fair value

When assessing fair value, the directors will consider the discounted cash flow of the investment property, the highest and best use of the investment property and sales of similar properties.

In addition, Stockland is required to ensure that independent valuations are performed at regular intervals appropriate to the nature of the investment property. These valuations are considered by the directors when determining fair value.

Subsequent costs

Stockland recognises in the carrying amount of an investment property the cost of replacing part of that investment property when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the consolidated entity and the cost can be measured reliably. All other costs are recognised in the Income Statement as an expense as incurred.

disposal of revalued assets

The gain or loss on disposal of revalued assets is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal and is included in the Income Statement in the year of disposal.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

1 SuMMARy of SigNifiCANT ACCouNTiNg PoliCieS (CoNTiNueD)

(v) Property, plant and equipment

Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing items and restoring the site on which they are located, and an appropriate proportion of production overheads.

property under construction or development for future use as investment property (but which does not yet qualify as investment property as it is not complete) is classified as property, plant and equipment and stated at cost until construction or development is complete and the property is able to be leased, at which time it is reclassified as investment property. property under construction or development for future sale is classified as inventory and stated at the lower of cost and net realisable value. The construction or development of a self-constructed investment property is classified as property, plant and equipment and stated at cost until construction or development is complete, at which time it is reclassified as investment property.

(w) goodwill

Business combinations prior to 1 July 2004

Goodwill is included on the basis of its deemed cost, which represents the amount recorded under previous australian Gaap. The classification and accounting treatment of business combinations that occurred prior to 1 July 2004 was not reconsidered in preparing Stockland’s opening IFRS Balance Sheet at 1 July 2004.

Business combinations since 1 July 2004

all business combinations are accounted for by applying the purchase method. Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cashgenerating units and is not amortised but is tested annually for impairment (refer note 1(s)). In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment in the associate.

negative goodwill arising on acquisition is recognised directly in the Income Statement.

(x) Trade and other payables

Trade and other payables are stated at cost.

Dividends and distributions

dividends and distributions payable are recognised in the reporting period in which the dividends and distributions are declared, determined, or publicly recommended by the directors on or before the end of the financial year, but not distributed at balance date.

(y) interest-bearing loans and borrowings

Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the Income Statement over the period of the borrowings on an effective interest basis unless there is an effective fair value hedge of the borrowings, in which case the borrowings are carried at fair value.

(z) Retirement living resident obligations

Retirement living resident obligations are treated as financial liabilities at fair value and resulting fair value adjustments are recognised in the Income Statement.

The fair value of retirement living resident obligations is determined by the contract between the resident and Stockland.

under an exit fee contract, the value of the obligation is measured as the principal amount plus the resident’s share of capital growth at the reporting date. These obligations are classified as current liabilities because Stockland does not have an unconditional right to defer settlement greater than 12 months after the resident turnover date. The underlying investment property is classified as a non-current asset.

under a deferred repayment contract the nominal value of the obligation is measured as the principal amount plus the resident’s share of capital gains based on the expected market value of the underlying property at turnover and is then discounted to its fair value at balance sheet date. The terms of the contract type allow Stockland to defer settlement of the obligation for a maximum of eight years after the resident turnover date based upon the resident’s tenure period. In the event the loan is settled early, the nominal value of the obligation is discounted at a

rate in accordance with the contract for a maximum of eight years. Given Stockland has an unconditional right notes to the to defer settlement greater than 12 months, the value of the obligation is classified as a non-current liability. Consolidated (aa) Provisions a provision is recognised when a present legal or constructive obligation exists as a result of a past constructive obligation exists as a result of a past Financial event and it is probable that a future sacrifice of economic benefits will be required to settle the Statements

a provision is recognised when a present legal or constructive obligation exists as a result of a past constructive obligation exists as a result of a past event and it is probable that a future sacrifice of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain.

For the year ended 30 June 2007

provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

(bb) employee benefits

(i) Wages, salaries and annual leave

Liabilities for wages and salaries, including nonmonetary benefits and annual leave expected to be settled within 12 months of the balance date are recognised as current liabilities in respect of employees’ services up to the balance date and are measured at the amounts expected to be paid when the liabilities are settled.

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(ii) long service leave

The liability for long service leave expected to be settled within 12 months of the balance date is recognised in the provision for employee benefits and is measured in accordance with (i) above. The liability for long service leave expected to be settled more than 12 months from the balance date is recognised in the provision for employee benefits and measured as the present value of expected payments to be made in respect of services provided by employees up to the balance 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 market yields at the reporting date on national government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

70 //

1 SuMMARy of SigNifiCANT ACCouNTiNg PoliCieS (CoNTiNueD)

(bb) employee benefits (continued)

(iii) Bonus entitlements

a liability is recognised in other creditors for employee benefits in the form of employee bonus entitlements where there is a contractual obligation or where there is a past practice that has created a constructive obligation. Liabilities for employee bonus entitlements are expected to be settled within 12 months and are measured at the amounts expected to be paid when they are settled.

(iv) Superannuation plan

Stockland Corporation Limited contributes to several defined contribution superannuation plans. Contributions are recognised as an expense as they are incurred.

(v) 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.

(vi) Share-based payments

Employee share plans

Stockland securities/rights granted to executive directors and senior executives together with the associated loan, where applicable, under executive share plans are required to be accounted for as options. The fair value of options granted is recognised as an employee expense with a corresponding increase in the executive remuneration reserve. The fair value is measured at grant date using the BlackScholes or monte Carlo Simulation option pricing models taking into account the terms and conditions upon which the options were granted. The fair value is expensed on a straight-line basis over the vesting period, which is the period over which the securities are subject to performance and service conditions. Securities are allotted to the individuals, though ultimate beneficial ownership is dependent on meeting both performance hurdles and a service period.

Stockland securities issued to eligible employees under the Tax exempt employee Security plan are recognised as an expense with a corresponding increase in issued capital. The value recognised is the market price of the securities granted at grant date.

(cc) issued capital

Issued capital represents the amount of consideration received for stapled securities issued by Stockland. Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax benefit.

2 ACCouNTiNg eSTiMATeS AND ASSuMPTioNS

estimates and judgements are continually evaluated and are based on historical experience as adjusted for current market conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Stockland makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.

(a) key sources of estimation uncertainty

estimates of fair value of investment properties

The best evidence of fair value is current prices in an active market for similar investment properties. Where such information is not available, Stockland determines a property’s value within a range of reasonable fair value estimates. In making its judgement, Stockland considers information from a variety of sources including:

• (i) current prices in an active market for properties of different nature, condition or location (or subject to different leases or other contracts), adjusted to reflect those differences;

• (ii) recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices;

(iii) discounted cash flow projections based on reliable estimates of future cash flows, derived from the term of any existing lease and other contracts, and (where possible) from external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of cash flows; and

(iv) capitalised income projections based upon a

property’s estimated net market income, which is assumed to be a level annuity in perpetuity, and a capitalisation rate derived from analysis of market evidence. Reversions associated with short-term leasing risks/costs, incentives and capital expenditure may be deducted from the capitalised net income figure.

Assumptions underlying management’s estimates of fair value

i) Investment property excluding retirement living assets

The discounted cash flow approach applied for investment properties includes assumptions in relation to current and recent investment property prices. If such prices are not available, then the fair value of investment properties is determined using assumptions that are mainly based on market conditions existing at each balance date.

The principal assumptions underlying management’s estimation of fair value are those related to the receipt of contractual rentals, expected future market rentals, void periods, maintenance requirements, and appropriate discount rates. These valuations are regularly compared to actual market yield data, and actual transactions by Stockland and those reported by the market.

The expected future market rentals are determined on the basis of current market rentals for similar properties in the same location and condition.

ii) Retirement living assets and liabilities

• The discounted cash flow approach applied for retirement living assets and liabilities include assumptions in relation to:

• discount rates;

• compound annual growth rates of the value of the underlying property;

• forecast period of occupancy of residents;

• estimates of future capital expenditure; and

• contract terms between Stockland and the residents of the retirement living asset.

Where possible, these valuations are regularly compared to transactions reported in the market and underlying data.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

2 ACCouNTiNg eSTiMATeS AND ASSuMPTioNS (CoNTiNueD)

(b) Critical judgements in applying Stockland’s accounting policies

Distinction between investment properties and owner-occupied properties

In applying its accounting policies Stockland determines whether or not a property qualifies as an investment property. In making its judgement, Stockland considers whether the property generates cash flows largely independently of the other assets held by an entity. owner-occupied properties generate cash flows that are attributable not only to property but also to other assets used in the production or supply process.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods and services or for administrative purposes. If these portions can be sold separately (or leased out separately under a finance lease), Stockland accounts for the portions separately. If the portions cannot be sold separately, the property is accounted for as investment property only if an insignificant portion is held for use in the production or supply of goods and services or for administrative purposes. Judgement is applied in determining whether ancillary services are so significant that a property does not qualify as investment property. Stockland considers each property separately in making its judgement.

3 SegMeNT RePoRTiNg

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. unallocated items mainly comprise corporate assets, liabilities and expenses.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.

Business segments

Stockland comprises the following main business segments, based on its management reporting system:

• development (including retirement living);

• Retail (previously referred to as “Shopping Centres”);

• Commercial and Industrial;

• Stockland Halladale; and

• – other.

other comprises the Stockland Capital partners and Hotel divisions and Responsible entity fees relating to the Trust management.

The Stockland Halladale segment was created on 30 april 2007 following the acquisition of Halladale Group plc.

geographical segments

In presenting information on the basis of geographical segments, segment revenue and segment assets are based on the geographical location of the underlying assets.

notes to the Consolidated Financial Statements For the year ended 30 June 2007

// 71

all segments operate solely within australia with the exception of Stockland Halladale, which operates within the united Kingdom, and Retail which also operates in new Zealand.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements For the year ended 30 June 2007

72 //

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CommeRCIaL SToCKLand
deveLopmenT ReTaIL and InduSTRIaL HaLLadaLe oTHeR eLImInaTIonS ConSoLIdaTed
2007 $m $m $m $m $m $m $m
3 SegMeNT RePoRTiNg (CoNTiNueD)
Primary reporting – business segments
external segment revenue 1,166.1 369.2 458.9 21.8 63.6 – 2,079.6
Inter-segment revenue 467.6 39.2 119.9 – 11.6 (638.3) –
unallocated revenue 14.2
Total revenue 1,633.7 408.4 578.8 21.8 75.2 (638.3) 2,093.8
Segment result before interest, share of profits of
investments accounted for using the equity method,
fair value adjustment of investment properties [2] and
net gain on sale of investment properties 312.8 241.2 232.5 4.0 15.5 – 806.0
Interest expense included in cost of sales (40.1) (0.3) (20.9) (1.8) – – (63.1)
Share of profits of investments accounted for using
the equity method (before fair value adjustments of
investment properties) [1] – 11.2 40.0 – – – 51.2
Segment result before fair value adjustments and
net gain on sale of investment properties 272.7 252.1 251.6 2.2 15.5 – 794.1
Fair value adjustment of investment properties [3] – 509.9 297.1 – – – 807.0
Share of fair value adjustments of investment
properties in associates and joint ventures [1] 33.6 171.5 – – – 205.1
net gain/(loss) on sale of investment properties – 1.1 (0.2) – – – 0.9
Segment result 272.7 796.7 720.0 2.2 15.5 – 1,807.1
unallocated corporate other income and expenses [4] (23.3)
Gain on sale of hotel business 87.8
Interest income 5.5
Finance costs (60.3)
profit before income tax expense 1,816.8
Income tax expense (100.5)
Proft attributable to security holders of Stockland 1,716.3
1 Total share of profits on investments accounted for
using the equity method – 44.8 211.5 – – – 256.3
----- End of picture text -----

• 2 other than fair value movement of deferred management fee contracts and revaluation upon completion of newly constructed retirement living communities.

• 3 Includes capital growth of operational retirement living communities offset by existing retirement living resident obligations fair value movement (refer note 43) and excludes items in footnote 2 above.

4 unallocated corporate income and expenses includes $20.8 million net unrealised gain on financial instruments, $6.1 million net realised gain on financial instruments, $5.7 million net realised foreign exchange gain, $0.7 million net unrealised foreign exchange loss and $0.1 million net gain from fair value of financial instruments.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 73

	deveLopmenT ReTaIL CommeRCIaL and InduSTRIaL SToCKLand HaLLadaLe oTHeR ConSoLIdaTed 2007 (CoNTiNueD) $m $m $m $m $m $m 3 SegMeNT RePoRTiNg (CoNTiNueD) Primary reporting – business segments (continued) Assets Segment assets before investments in associates and joint venture entities 3,871.7 4,360.6 3,422.2 483.3 244.4 12,382.2 Investments in associates and joint venture entities – 217.6 871.2 92.8 – 1,181.6 unallocated assets 136.6	notes to the Consolidated Financial Statements For the year ended 30 June 2007
	Total assets 13,700.4
	liabilities Segment liabilities 3,418.3 67.2 73.7 576.8 14.7 4,150.7 unallocated liabilities 1,331.8
	Total liabilities 5,482.5
	acquisition of property, plant and equipment, intangibles and other non-current segment assets 174.8 119.2 892.9 – 15.3 1,202.2 depreciation and amortisation expense (1.4) (0.8) (0.7) – (5.8) (8.7) individually signifcant items – sale of investment properties proceeds on sale of investment properties – 59.7 199.7 – – 259.4 Book value of investment properties sold – (58.3) (200.5) – – (258.8)	//
	– 1.4 (0.8) – – 0.6

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

74 //

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CommeRCIaL and
deveLopmenT ReTaIL InduSTRIaL oTHeR eLImInaTIonS ConSoLIdaTed
2006 $m $m $m $m $m $m
3 SegMeNT RePoRTiNg (CoNTiNueD)
Primary reporting – business segments (continued)
external segment revenue 927.3 359.0 230.9 79.5 – 1,596.7
Inter-segment revenue 108.6 30.1 18.0 9.9 (166.6) –
Total revenue 1,035.9 389.1 248.9 89.4 (166.6) 1,596.7
Segment result before interest, share of profits of
investments accounted for using the equity method, fair
value adjustment of investment properties and net loss
on sale of investment properties 257.8 232.0 174.7 8.1 – 672.6
Interest expense included in cost of sales (20.1) (3.8) – – – (23.9)
Share of profits of investments accounted for using
the equity method (before fair value adjustments of
investment properties) [1] 1.3 8.5 36.0 – – 45.8
Segment result before fair value adjustments and net
loss on sale of investment properties 239.0 236.7 210.7 8.1 – 694.5
Fair value adjustment of investment properties – 401.1 170.5 – – 571.6
Share of fair value adjustments of investment properties
in associates and joint ventures [1] – 15.9 52.8 – – 68.7
net loss on sale of investment properties – (0.1) (3.5) – – (3.6)
Segment result 239.0 653.6 430.5 8.1 – 1,331.2
unallocated corporate other income and expenses [2] (38.8)
Interest revenue 2.9
Interest expense [3] (172.5)
profit before income tax expense 1,122.8
Income tax expense (61.2)
Proft attributable to security holders of Stockland 1,061.6
1 Total share of profits on investments accounted for
using the equity method 1.3 24.4 88.8 – – 114.5
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2 unallocated corporate other income expenses includes $15.5 million net unrealised gain on financial instruments and $0.1 million net gain from fair value of financial instruments.

3 Interest expense includes $144.4 million security holders’ finance costs.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 75

deveLopmenT ReTaIL CommeRCIaL and InduSTRIaL SToCKLand HaLLadaLe oTHeR ConSoLIdaTed 2006 (ConTInued) $m $m $m $m $m $m 3 SegMeNT RePoRTiNg (CoNTiNueD) Primary reporting – business segments (continued) Assets Segment assets before investments in associates and joint venture entities 2,424.2 3,568.9 2,704.3 – 52.0 8,749.4 Investments in associates and joint venture entities – 145.8 589.9 – – 735.7 unallocated assets 113.4	notes to the Consolidated Financial Statements For the year ended 30 June 2007
Total assets 9,598.5
liabilities Segment liabilities 2,206.8 34.8 71.5 – 5.4 2,318.5 unallocated liabilities 884.9
Total liabilities 3,203.4
acquisition of property, plant and equipment, intangibles and other non-current segment assets 130.8 2.4 99.9 – 5.3 238.4 depreciation and amortisation expense (1.1) (0.4) (0.2) – (5.1) (6.8) other non-cash expenses – 2.4 – – 0.5 2.9 individually signifcant items – sale of investment properties proceeds on sale of investment properties – – 119.3 – – 119.3 Book value of investment properties sold – (0.1) (122.8) – – (122.9)	//
– (0.1) (3.5) – – (3.6)

Secondary reporting – geographical segments

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aCQuISITIonS oF pRopeRTy, pLanT and eQuIpmenT,
eXTeRnaL SeGmenT RevenueS SeGmenT aSSeTS InTanGIBLeS and oTHeR non-CuRRenT SeGmenT aSSeTS
2007 2006 2007 2006 2007 2006
$M $m $M $m $M $m
new South Wales 585.9 484.0 5,694.8 4,417.8 175.8 11.4
Queensland 818.3 637.0 2,945.3 2,312.6 274.5 126.6
victoria 233.6 224.1 2,377.9 957.5 308.2 40.5
Western australia 277.3 162.2 1,024.5 307.2 373.9 59.6
aCT 84.7 30.4 254.4 212.0 66.1 0.2
South australia 27.4 24.7 250.7 223.4 – –
northern Territory 6.0 9.3 – 1.9 – 0.1
new Zealand 24.6 25.0 430.3 317.0 3.7 –
united Kingdom 21.8 – 585.9 – – –
2,079.6 1,596.7 13,563.8 8,749.4 1,202.2 238.4
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

4 BuSiNeSS CoMBiNATioNS AND DiSPoSAlS 2007

Disposal of hotel business

on 31 January 2007 the consolidated entity sold its hotel management business which operated under the Saville Hotel Group brand. The Saville Hotel Group managed 11 apartment style hotels under lease agreements and management contracts with third party owners. The group was included in “other” within the segment note. The net gain on sale of this disposal group before tax was $87.8 million. proceeds from the sale amounted to $100.0 million.

Acquisition of businesses

Australian Retirement Communities

on 28 February 2007 Stockland acquired the Retirement Living division of australian Retirement Communities (“aRC”), a privately owned retirement living operator, for $338.7 million in cash. The purchase involved both the acquisition of assets and shares/units in entities held by aRC. during the four months to 30 June 2007 aRC contributed profit before tax of $4.4 million to Stockland’s results for the year. management believe that it would be impractical to estimate the revenue and profit effect of this acquisition if it had occurred on 1 July 2006 given that it was a privately owned business not required to prepare a general purpose financial report.

The acquisition had the following effect on the consolidated entity’s assets and liabilities on acquisition date:

76 //

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pRe-aCQuISITIon ReCoGnISed
CaRRyInG FaIR vaLue vaLue on
amounTS adJuSTmenTS aCQuISITIon
$m $m $m
Trade and other receivables 6.3 – 6.3
non-current assets classified as held for sale – 1.1 1.1
property, plant and equipment 117.0 (1.1) 115.9
Investment properties 809.4 – 809.4
Retirement living resident obligations (688.0) – (688.0)
provisions (1.0) – (1.0)
deferred tax liabilities (3.3) – (3.3)
net identifiable assets and liabilities 240.4 – 240.4
Goodwill on acquisition 98.3
Total cost of acquisition [1] 338.7
deferred consideration/payables (102.1)
net cash outfow 236.6
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1 Included within the total cost of acquisition are transaction costs of $10.3 million.

pre-acquisition carrying amounts were determined based on applicable aaSBs immediately before the acquisition. The values of assets, liabilities and contingent liabilities recognised on acquisition are their estimated fair values.

The goodwill recognised on acquisition is attributable to premiums paid to gain a strong market entry position into the retirement living sector. aRC was an industry leader with a strong reputation and a highly desirable retirement living asset profile in locations complementary to other Stockland land holdings.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

4 BuSiNeSS CoMBiNATioNS AND DiSPoSAlS (CoNTiNueD) 2007 (continued)

Acquisition of businesses (continued) Stockland halladale

on 30 april 2007 Stockland acquired 100% of the ordinary shares of Halladale Group plc, which was listed on the London aIm exchange, for $305.5 million via a Scheme of arrangement. Halladale Group plc operated primarily in the united Kingdom commercial and retail property sector within the areas of asset management, development and co-investment funds management. management believes it is impractical to estimate the revenue and profit effect of the acquisition if it had occurred on 1 July 2006 as Halladale was not required to report under IFRS to the London aIm exchange for their financial year ended 30 april 2007.

The acquisition had the following effect on the consolidated entity’s assets and liabilities on acquisition date:

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pRe-aCQuISITIon ReCoGnISed
CaRRyInG FaIR vaLue vaLue on
amounTS adJuSTmenTS aCQuISITIon
$m $m $m
Cash and cash equivalents 9.8 – 9.8
Trade and other receivables 14.1 – 14.1
Inventories 236.3 12.3 248.6
property, plant and equipment 1.5 – 1.5
deferred tax assets 2.4 (2.4) –
other assets 2.0 – 2.0
Investments accounted for using the equity method 104.2 (9.5) 94.7
Trade and other payables (160.6) – (160.6)
Interest-bearing loans and borrowings (127.9) (1.5) (129.4)
provisions (0.3) – (0.3)
deferred tax liabilities – (0.9) (0.9)
other liabilities (0.9) – (0.9)
net identifiable assets and liabilities 80.6 (2.0) 78.6
Goodwill on acquisition 226.9
Total cost of acquisition [1] 305.5
deferred consideration (24.3)
Cash acquired (9.8)
net cash outfow 271.4
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notes to the Consolidated Financial Statements

For the year ended 30 June 2007

// 77

1 Included within the total cost of acquisition are transaction costs of $11.9 million.

pre-acquisition carrying amounts were determined based on applicable aaSBs immediately before the acquisition. The values of assets, liabilities and contingent liabilities recognised on acquisition are their estimated fair values.

The goodwill recognised on acquisition is attributable to the strength of knowledge of the acquired business’ workforce primarily within the united Kingdom property market, particularly in the areas of development and co-investment fund management, as well as the synergies expected to be achieved by integrating the business into Stockland.

Basis for determining fair values of assets and liabilities acquired

The fixed rate debt was valued by an independent valuer using a discounted cash flow analysis. no fair value adjustment arose on floating rate debt as the interest rate inherent in the instruments is market related.

The fair value of inventories were determined based upon passing rent (where applicable) or estimated rental value and an applicable yield as determined by the respective asset manager and confirmed by the property director. The fair value of inventories held by joint ventures and associates were valued by independent valuers and adjusted for development and settlement risk.

The fair value adjustments recognised against investments accounted for using the equity method relate to the underlying fair value of inventory and debt.

2006

There were no acquisitions or disposals during the year ended 30 June 2006.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

78 //

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ConSoLIdaTed Company
2007 2006 2007 2006
$M $m $M $m
5 ReNT fRoM iNveSTMeNT PRoPeRTieS
Included within rent from investment properties:
Contingent rent billed to tenants and recognised in gross lease income 9.6 9.4 – –
6 fiNANCe CoSTS To exTeRNAl PARTieS
Interest expense relating to interest-bearing financial liabilities carried at:
– amortised cost 100.9 90.7 – –
– Fair value 103.5 62.4 – –
Interest paid or payable to other parties 14.6 3.5 1.4 3.0
Less interest capitalised to property developments in inventory (134.6) (112.7) – –
Less interest capitalised to investment properties (24.1) (15.8) – –
Total finance costs to external parties expensed 60.3 28.1 1.4 3.0
Capitalised fnance costs to external parties included in cost of property developments sold 63.1 23.9 – –
Total effect of fnance costs to external parties included in the Income Statement 123.4 52.0 1.4 3.0
7 PeRSoNNel exPeNSeS
Wages and salaries including on costs 166.2 136.0 – –
Contributions to defined contribution plans 9.7 8.2 – –
equity-settled pRp/ISp/eSS share-based payment transactions 4.5 4.3 – –
Increase in liability for long service leave and annual leave 1.6 2.1 – –
$1000 plan including associated costs 0.1 0.7 – –
Interest expense related to share-based payments 1.4 3.0 – –
183.5 154.3 – –
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

	ConSoLIdaTed Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000	notes to the
	8 AuDiToRS’ ReMuNeRATioN Audit services Auditors of the Company audit and review of the fnancial reports (KpmG australia) 1,632 1,202 944 700 audit and review of the fnancial reports (overseas KpmG frms) 40 36 25 22 Regulatory audit and assurance services (KpmG australia) 642 634 155 278	Consolidated Financial Statements
	2,314 1,872 1,124 1,000 Other auditors audit and review of the fnancial reports (overseas deloitte frms) 246 – – – 2,560 1,872 1,124 1,000	For the year ended 30 June 2007
	other services other audit related services IFRS accounting services (KpmG australia) – 502 – 277 IFRS accounting services (overseas deloitte frms) 94 – – – accounting interpretation services (KpmG australia) 370 200 216 112
	464 702 216 389
	other non-audit related services Taxation compliance services (KpmG australia) 395 473 134 172 Taxation compliance services (overseas deloitte frms) 215 – – – 610 473 134 172	//
	3,634 3,047 1,474 1,561

// 79

auditors’ fees are paid by Stockland development pty Limited on behalf of the Company and its controlled entities.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

80 //

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ConSoLIdaTed Company
2007 2006 2007 2006
noTe $M $m $M $m
9 iNCoMe TAx exPeNSe/(BeNefiT) ReCogNiSeD iN The iNCoMe STATeMeNT
Current tax expense
Current year 75.9 40.6 27.5 –
adjustments for prior years 0.9 2.1 0.9 0.1
76.8 42.7 28.4 0.1
Deferred tax expense
origination and reversal of temporary differences 32 23.7 18.5 – (0.1)
Total income tax expense in Income Statement 100.5 61.2 28.4 –
Numerical reconciliation between tax expense and pre-tax net profit
proft before income tax expense and security holders’ fnance costs 1,816.8 1,267.2 195.8 117.0
prima facie income tax calculated at 30% 545.1 380.2 58.7 35.1
Less prima facie income tax on proft from Trust (454.6) (324.4) – –
90.5 55.8 58.7 35.1
Increase in income tax expense due to:
other non-deductible expenses 5.9 3.0 0.5 0.8
assessable income not recognised in profit before income tax expense 3.2 0.7 1.2 –
decrease in income tax expense due to:
non-taxable dividends – – (32.9) (35.9)
other deductible expenses – (0.4) – –
99.6 59.1 27.5 –
under provided in prior years 0.9 2.1 – –
Income tax expense on pre-tax net proft 100.5 61.2 27.5 –
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 81

	noTeS 2007 CeNTS 2006 CenTS	notes to the
	10 eARNiNgS PeR SeCuRiTy Basic earnings per security (a) 123.5 79.6 diluted earnings per security (a) 123.0 79.6 Basic earnings per security before certain signifcant items (b) 44.0 41.5 diluted earnings per security before certain signifcant items (b) 43.9 41.5	Consolidated Financial Statements

(a) earnings per security Basic earnings per security is calculated by dividing profit attributable to security holders of Stockland by the weighted average number of ordinary securities outstanding during the year. diluted earnings per security is calculated by dividing the profit attributable to security holders (after adding back the after-tax effect of interest on sharebased payments) by the weighted average number of ordinary securities outstanding during the year after adjusting for the effect of dilutive securities granted under share plans accounted for as options and rights granted under the performance Rights plan (“pRp”).

For the year ended 30 June 2007

The following reflects the earnings and securities data used in the basic and diluted earnings per security computations.

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2007 2006
noTe $M $m
Basic earnings
proft attributable to security holders 1,716.3 1,061.6
Diluted earnings reconciliation
profit attributable to security holders 1,716.3 1,061.6
after-tax effect of interest expense related to share-based payments 7 1.4 3.0
diluted proft attributable to security holders 1,717.7 1,064.6
2007 2006
No. no.
Weighted average number of securities (basic)
Weighted average number of securities as at 30 June 1,389,968,312 1,334,426,419
Weighted average number of securities (diluted)
Weighted average number of securities (basic) as at 30 June 1,389,968,312 1,334,426,419
effect of rights and securities granted under share plans accounted for as options 6,031,079 2,248,130
Weighted average number of securities (diluted) as at 30 June 1,395,999,391 1,336,674,549
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854,000 (2006: nil) pRp rights, 639,000 (2006: 2,204,000) ISp securities and nil (2006: 277,000) eSS securities could potentially dilute basic earnings per security in the future but were not included in the 2007 and 2006 calculations of diluted earnings per security because they were antidilutive in those periods.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

82 //

10 eARNiNgS PeR SeCuRiTy (CoNTiNueD)

(b) earnings per security calculated on the profit from operations as assessed by the directors

To provide information to security holders that reflects the directors’ assessment of the profit attributable to security holders, certain significant items that are relevant to an understanding of Stockland’s results have been identified. The effect of these items are set out below.

The following reflects the income and securities data used in calculating the basic and diluted earnings per security as assessed by the directors:

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2007 2006
noTeS $M $m
profit from operations as assessed by the directors 611.0 553.7
Certain significant items:
net gain from fair value adjustment of investment properties (including share of associates and joint ventures
and excluding revaluation upon completion of newly constructed retirement living communities and fair value
movement of deferred management fee contracts) 43,44,45 1,031.2 640.3
Retirement living resident obligation fair value movement (19.1) –
net gain from sale of hotel business 87.8 –
Tax on gain from sale of hotel business (27.5) –
net gain/(loss) on sale of investment properties 0.9 (3.6)
net gain from financial instruments treated as fair value hedges 0.1 0.1
net realised gain on other financial instruments 6.1 –
net unrealised gain on other financial instruments 20.8 15.5
net realised foreign exchange gain 5.7 –
net unrealised foreign exchange loss (0.7) –
Security holders’ fnance costs [1] – (144.4)
proft attributable to security holders 1,716.3 1,061.6
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1 For the period 1 July 2005 to 25 october 2005, aaSBs required Stockland Trust unit holders’ issued capital to be treated as a liability and trust distributions payable to be treated as a finance cost in the Income Statement. at the annual General meeting held on 25 october 2005, Stockland Trust unit holders agreed to amend the Stockland Trust Constitution, which meant the unit holders’ issued capital from that date would be treated as equity in accordance with accounting standard aaSB 132 “Financial Instruments: disclosure and presentation”.

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2007 2006
noTe $M $m
Basic earnings from operations before certain significant items
proft from operations as assessed by the directors 611.0 553.7
Diluted earnings from operations before certain significant items
profit from operations as assessed by the directors 611.0 553.7
after tax effect of interest expense related to share-based payments 7 1.4 3.0
diluted proft from operations as assessed by the directors 612.4 556.7
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 83

	2007 No. 2006 no.	notes to the
	10 eARNiNgS PeR SeCuRiTy (CoNTiNueD) (b) earnings per security calculated on the proft from operations as assessed by the directors (continued) Weighted average number of securities(basic)	Consolidated Financial
	Weighted average number of securities as at 30 June 1,389,968,312 1,334,426,419 Weighted average number of securities (diluted) Weighted average number of securities (basic) as at 30 June 1,389,968,312 1,334,426,419 effect of rights and securities granted under share plans accounted for as options 6,031,079 2,248,130	Statements For the year ended 30 June 2007
	Weighted average number of securities (diluted) as at 30 June 1,395,999,391 1,336,674,549

854,000 pRp rights, 639,000 (2006: 2,204,000) ISp securities and nil (2006: 277,000) eSS securities could potentially dilute basic earnings per security before significant items in the future but were not included in the 2007 and 2006 calculations of diluted earnings per security before significant items because they were antidilutive in those periods.

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ConSoLIdaTed Company
2007 2006 2007 2006
noTe $M $m $M $m
11 CuRReNT ASSeTS – CASh AND CASh equivAleNTS
Cash and cash equivalents 96.6 37.1 – –
12 CuRReNT ASSeTS – TRADe AND oTheR ReCeivABleS
Trade debtors 83.9 53.6 – –
Less: impairment loss (0.2) (0.4) – –
83.7 53.2 – –
Interest receivable – 2.8 – –
Receivables from wholly owned entities 49 – – 2,633.3 2,292.0
other debtors 51.9 10.0 – –
135.6 66.0 2,633.3 2,292.0
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

84 //

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ConSoLIdaTed Company
2007 2006 2007 2006
$M $m $M $m
13 CuRReNT ASSeTS – iNveNToRieS
land and property held for resale – at cost:
– cost of acquisition 173.8 105.3 – –
– development costs 252.8 137.5 – –
– other costs [1] 42.1 16.3 – –
468.7 259.1 – –
Development work in progress – at cost:
Residential communities under development [2]
– cost of acquisition 146.4 131.6 – –
– development costs 81.2 104.7 – –
– other costs [1] 39.6 38.5 – –
267.2 274.8 – –
apartments
– cost of acquisition 94.3 55.4 – –
– development costs 20.7 87.1 – –
– other costs [1] 12.0 12.1 – –
127.0 154.6 – –
Retail projects
– cost of acquisition 15.6 7.7 – –
– development costs – 12.2 – –
– other costs [1] – 1.0 – –
15.6 20.9 – –
Industrial projects
– cost of acquisition 45.4 2.9 – –
– development costs 3.9 – – –
– other costs [1] 1.8 – – –
51.1 2.9 – –
929.6 712.3 – –
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• 1 other costs include finance costs, rates and taxes. Finance costs were capitalised at a weighted average interest rate of 6.2% (30 June 2006: 6.2%).

• 2 Residential communities under development includes land which is legally owned by Stockland, however Stockland Residential estates equity Fund no. 1 has a 50% interest in the development rights in stages 2-5 of the vertu private estate project. as a result only a 50% interest with a value of $13.2 million has been recognised by Stockland in this Financial Report.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 85

	ConSoLIdaTed Company 2007 2006 2007 2006 $M $m $M $m	notes to the
	14 CuRReNT ASSeTS – oTheR ASSeTS prepayments 6.0 8.6 – – deposits 26.9 34.5 – – Lease incentives (net of amortisation) 8.6 8.0 – – Financial instruments asset 36.9 – – – other 27.5 14.4 – –	Consolidated Financial Statements
	105.9 65.5 – – 15 NoN-CuRReNT ASSeTS helD foR SAle Sydney orbital park, Sydney nSW1 – 20.5 – – 50 pitt Street Sydney, Sydney nSW2 – 45.3 – – 75 George Street, parramatta nSW2 – 26.8 – – Cnr overton Lea Boulevard and Trickey avenue, Sydenham vIC3 1.1 – – – units in unlisted fund4 15.1 – – –	For the year ended 30 June 2007
	16.2 92.6 – –

• 1 Consisted of vacant land and was presented as held for sale following the decision of Stockland’s management to sell this property in two tranches during the financial year ended 30 June 2007. This asset was presented in the Commercial and Industrial segment.

• 2 These commercial properties were presented as held for sale following the decision of Stockland’s management to sell these properties to Stockland direct office Trust no.3 during the financial year ended 30 June 2007. These assets were presented in the Commercial and Industrial segment.

• 3 Consists of vacant land and is presented as held for sale following the decision of Stockland’s management to sell this property during the financial year ended 30 June 2008.

• 4 Consists of a 25% investment in the units of an unlisted property fund. This investment is not equity accounted as it is held for sale. It is management’s intention to sell its 25% investment within the next 12 months to external investors. The revenue and net loss of the fund for the period ended 30 June 2007 are $0.1 million and $2.4 million respectively and total assets and total liabilities are $140.0 million and $87.3 million respectively. In addition to these units, Stockland expects to retain a 10% cornerstone investment in the fund. Refer to note 19.

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ConSoLIdaTed Company
2007 2006 2007 2006
noTe $M $m $M $m
16 NoN-CuRReNT ASSeTS – TRADe AND oTheR ReCeivABleS
Trade debtors – straight-lining of rental income 20.0 16.2 – –
Loans to executive directors and senior executives 48 0.5 1.8 – –
other 42.9 3.4 – –
63.4 21.4 – –
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

86 //

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ConSoLIdaTed Company
2007 2006 2007 2006
$M $m $M $m
17 NoN-CuRReNT ASSeTS – iNveNToRieS
Development work in progress – at cost:
Residential communities under development [2]
– cost of acquisition 1,209.6 1,091.4 – –
– development costs 196.6 171.7 – –
– other costs [1] 214.1 145.4 – –
1,620.3 1,408.5 – –
apartments
– cost of acquisition 225.9 175.4 – –
– development costs 62.4 37.7 – –
– other costs [1] 37.8 22.0 – –
326.1 235.1 – –
Retail projects
– cost of acquisition – 8.3 – –
– development costs – 0.2 – –
– other costs [1] – – – –
– 8.5 – –
Industrial projects
– cost of acquisition 52.2 50.5 – –
– development costs 0.7 204.4 – –
– other costs [1] 0.1 0.5 – –
53.0 255.4 – –
1,999.4 1,907.5 – –
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• 1 other costs include finance costs, rates and taxes. Finance costs were capitalised at a weighted average interest rate of 6.2% (30 June 2006: 6.2%).

• 2 Residential communities under development include land which is legally owned by Stockland, however Stockland Residential estates equity Fund no. 1 has a 50% interest in the development rights in stages 2-5 of the vertu private estate project. as a result only a 50% interest with a value of $2.1 million has been recognised by Stockland in this Financial Report.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 87

TITLe aCQuISITIon daTe oRIGInaL puRCHaSe pRICe CoST InCLudInG addITIonS IndependenT vaLuaTIon IndependenT vaLuaTIon Book vAlue 30 JuNe 2007 BooK vaLue 30 June 2006 deSCRIpTIon $m $m daTe $m $M $m 18 NoN-CuRReNT ASSeTS – iNveSTMeNT PRoPeRTieS Retail Stockland Wetherill park, Wetherill park nSW1,3 F/hold aug 1983 12.0 107.6 dec 2006 307.5 309.2 278.0 Stockland Shellharbour, Shellharbour nSW F/hold June 2003 140.2 147.7 dec 2006 252.0 253.1 227.4 Stockland Green Hills, maitland nSW1 F/hold dec 2000 51.7 113.9 June 2007 243.0 243.0 168.1 Stockland Townsville, Townsville QLd1,3 F/hold June 1987 27.7 99.5 dec 2006 230.0 231.2 198.5 Stockland Glendale, Glendale nSW1 F/hold mar 1996 50.6 81.9 June 2007 220.0 220.0 184.0 Stockland Bay village, Bateau Bay nSW F/hold oct 2000 63.9 107.9 June 2007 197.0 197.0 176.0 Stockland Cairns, Cairns QLd1,3 F/hold June 1992 47.8 145.7 dec 2006 181.0 182.7 157.3 Stockland Rockhampton, Rockhampton QLd3 F/hold June 2003 132.6 134.5 June 2006 174.0 174.3 174.0 Botany Town Centre, auckland nZ (50%) F/hold June 2003 86.3 98.5 June 2007 173.7 173.7 109.6 Stockland Burleigh Heads, Burleigh Heads QLd1 F/hold aug 2003 82.4 111.5 dec 2006 158.0 158.0 134.1 Stockland merrylands, merrylands nSW1,3 F/hold Sept 1982 18.0 37.4 dec 2006 151.0 151.2 129.6 Stockland The pines, doncaster east vIC1 F/hold nov 2004 122.5 123.3 June 2007 150.6 150.6 134.6 Karrinyup Shopping Centre, Karrinyup Wa (25%)4 F/hold June 2003 69.9 70.8 June 2007 130.0 130.0 106.2 Stockland Jesmond, Jesmond nSW1 F/hold Feb 1984 9.2 39.2 June 2007 122.0 122.0 108.0 Stockland Forster, Forster nSW1 F/hold July 2003 39.0 97.6 June 2007 112.0 112.0 48.4 Stockland Baulkham Hills, Baulkham Hills nSW1,3,6 F/hold Sept 1982 15.5 66.6 dec 2004 69.5 110.8 70.2 Stockland Gladstone, Gladstone QLd3 F/hold oct 2000 52.2 54.5 dec 2006 97.5 98.1 87.1 Stockland nowra, nowra nSW F/hold June 2003 49.7 50.5 June 2007 88.0 88.0 79.0 Stockland Bullcreek, Bullcreek Wa F/hold June 2003 53.0 53.4 June 2007 88.0 88.0 72.5 Lynnmall Shopping Centre, auckland nZ (50%) F/hold June 2003 56.3 57.3 June 2007 87.5 87.5 62.1 Stockland parabanks, Salisbury Sa F/hold June 2003 55.7 56.7 June 2007 87.2 87.2 78.0 Stockland Cleveland, Cleveland QLd1 F/hold oct 2002 63.3 66.9 dec 2006 84.5 84.5 71.3 Stockland Bathurst, Bathurst nSW3 F/hold June 2003 40.4 53.6 dec 2006 83.0 83.5 77.1 Stockland Caloundra, Caloundra QLd F/hold June 2003 46.5 49.2 dec 2006 82.0 82.0 68.1 Stockland Batemans Bay, Batemans Bay nSW1 F/hold June 2002 6.3 64.2 June 2007 73.0 73.0 69.0 Stockland Traralgon, Traralgon vIC F/hold June 2003 44.0 45.0 dec 2006 71.2 70.8 60.5 Stockland Wendouree, Ballarat vIC3 F/hold June 2003 42.0 44.7 dec 2005 69.5 70.4 69.7 Stockland Corrimal, Corrimal nSW F/hold June 2003 36.5 37.0 dec 2006 58.4 58.4 48.6 Shellharbour Supa Centre, Shellharbour nSW F/hold June 2003 33.5 34.0 June 2007 51.0 51.0 46.7 Stockland Baldivis, Baldivis Wa1 F/hold aug 2006 5.6 33.7 June 2007 46.4 46.4 – manukau Supa Centre, auckland nZ (50%) F/hold June 2003 22.1 27.7 June 2007 40.8 40.8 26.3 Stockland Glenrose, Glenrose nSW1,2,3 F/hold Jan 2003 39.6 39.9 dec 2002 36.7 39.9 39.8 Stockland Riverton, Riverton Wa (50%)4 F/hold aug 2006 35.0 35.0 June 2007 38.8 38.8 – Jimboomba Shopping Centre (50%)3,6 F/hold Jan 2007 19.6 19.6 July 2006 12.9 19.6 – Bridge plaza, Batemans Bay nSW1,3 F/hold Sept 2003 13.3 19.2 dec 2005 17.1 17.9 17.7 Burleigh Central, Burleigh Heads QLd1 F/hold aug 2003 14.8 14.9 dec 2006 17.0 17.0 15.5 merrylands Court, merrylands nSW1,3 F/hold dec 2002 15.8 15.9 June 2004 16.0 16.1 16.1 vincentia Shopping Centre, vincentia nSW1,3,6 F/hold Jan 2007 13.7 14.6 nov 2006 13.7 14.6 – Woolworths, Toowong QLd F/hold oct 2000 4.8 4.9 June 2007 10.0 10.0 8.0 Jimboomba Country Tavern (50%)3,6 F/hold Jan 2007 5.2 5.2 July 2006 4.4 5.2 – auckland Creek, Gladstone QLd F/hold oct 2000 6.7 7.8 dec 2006 3.6 3.6 3.4 Stockland vincentia, vincentia nSW1 F/hold June 2003 6.8 1.1 June 2007 1.1 1.1 7.4 Benowa Gardens, Burleigh Heads QLd1 F/hold aug 2003 21.3 22.2 June 2004 22.0 – 22.3

// notes to the Consolidated Financial Statements For the year ended 30 June 2007

Retail total 4,212.2 3,450.2

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

88 //

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oRIGInaL CoST
aCQuISITIon puRCHaSe InCLudInG IndependenT IndependenT Book vAlue BooK vaLue
TITLe daTe pRICe addITIonS vaLuaTIon vaLuaTIon 30 JuNe 2007 30 June 2006
deSCRIpTIon $m $m daTe $m $M $m
18 NoN-CuRReNT ASSeTS – iNveSTMeNT PRoPeRTieS (CoNTiNueD)
Commercial
piccadilly, 133-145 Castlereagh Street, Sydney nSW [3,5] L/hold oct 2000 210.1 240.7 June 2007 354.5 354.5 296.0
Waterfront place, eagle Street, Brisbane QLd (50%) [3,4] F/hold Feb 2004 151.6 154.5 dec 2006 237.5 241.4 177.9
northpoint, north Sydney nSW [3] F/hold June 2003 173.3 178.8 dec 2006 220.0 220.7 195.9
Colonial Centre, Sydney nSW (50%) [4] L/hold June 2003 173.8 175.5 June 2007 209.2 209.2 182.5
Riverside, 452 Flinders Street, melbourne vIC F/hold oct 2000 124.5 129.1 June 2007 188.0 188.0 140.0
Bankwest Tower, 108 St Georges Terrace, perth Wa [3] F/hold apr 2007 139.0 146.8 dec 2006 139.0 146.8 –
exchange plaza, perth Wa (50%) [4] L/hold June 2003 67.8 69.0 June 2007 142.8 142.8 93.5
135 King Street, Sydney nSW (50%) [4,5] F/hold June 2003 96.5 103.7 dec 2006 138.5 139.4 120.6
edmund Barton Building, Barton aCT [3] L/hold oct 2000 76.9 81.2 dec 2004 87.5 88.8 87.6
durack Centre, 236 adelaide Terrace, perth Wa [1] L/hold Sept 2006 49.1 52.8 June 2007 80.0 80.0 –
72 Christie Street, St Leonards nSW F/hold June 2003 46.0 63.6 dec 2006 69.0 68.8 60.5
601 pacific Highway, St Leonards nSW [3] F/hold June 2003 61.1 63.2 June 2006 67.5 68.2 67.5
175-181 Castlereagh Street, Sydney nSW [1] F/hold Sept 1982 18.0 34.5 June 2007 65.0 65.0 46.4
7 macquarie place, Sydney nSW (50%) [4] F/hold June 2003 48.1 48.6 June 2007 61.5 61.5 52.5
45 Street, Georges Terrace, perth Wa [3] F/hold mar 2007 57.2 60.4 mar 2007 57.3 60.4 –
Garden Street office park, 17 Wadley Street,
mac Gregor, mount Gravatt QLd [3] F/hold Feb 2007 57.0 59.6 Feb 2007 57.0 59.7 –
77 pacific Highway, north Sydney nSW F/hold Jan 2000 25.9 54.0 dec 2006 59.0 59.0 48.2
150 Charlotte Street, Brisbane QLd F/hold Jan 2006 45.0 46.9 dec 2006 57.0 57.0 46.9
234 Sussex Street, Sydney nSW [7] F/hold oct 2000 42.0 43.0 June 2007 55.0 55.0 50.0
333 Kent Street, Sydney nSW F/hold Jan 2000 32.8 35.7 dec 2006 50.9 50.9 40.6
81-95 Waymouth Street, adelaide Sa F/hold June 2003 41.0 41.0 dec 2006 50.0 50.0 46.6
300 ann Street, Brisbane QLd [1,2] F/hold dec 2006 40.4 42.4 nov 2006 40.4 42.4 –
Chesser House, adelaide Sa [3] F/hold June 2003 22.6 23.5 dec 2006 33.0 34.6 31.6
40 Cameron avenue, Belconnen aCT (50%) [2] L/hold Feb 2007 28.5 33.0 dec 2006 30.1 33.0 –
68 northbourne avenue, Canberra aCT [1,3] L/hold aug 2003 21.5 22.0 June 2007 31.6 31.6 29.0
1 Havelock Street, West perth Wa [2] F/hold apr 2007 28.8 30.7 mar 2007 29.0 30.7 –
110 Walker Street, north Sydney nSW [3] F/hold oct 2000 22.7 23.6 dec 2006 29.4 29.5 25.2
amory Gardens, 2-6 Cavill avenue, ashfield nSW F/hold July 2000 33.2 37.6 dec 2006 29.1 29.1 26.3
80-88 Jephson Street, Towong QLd F/hold June 2006 23.9 24.0 June 2007 24.6 24.6 23.9
118-120 pacific Highway, St Leonards nSW [3] F/hold oct 2000 19.1 20.8 June 2006 23.6 24.4 23.6
Trace/Todd Buildings Cooyong & mort Streets,
Canberra aCT L/hold oct 2000 10.6 15.3 dec 2006 21.3 21.3 17.3
Cox & drakeford Buildings, northbourne avenue &
mort Street, Canberra aCT L/hold oct 2000 11.0 13.2 dec 2006 21.1 21.1 18.0
27-29 High Street, Toowong QLd [2] F/hold July 2006 4.5 4.8 June 2006 4.5 4.8 –
541 St Kilda Road, melbourne vIC F/hold Jan 2000 17.1 20.5 dec 2006 26.0 – 22.8
Commercial total 2,794.2 1,970.9
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 89

TITLe aCQuISITIon daTe oRIGInaL puRCHaSe pRICe CoST InCLudInG addITIonS IndependenT vaLuaTIon IndependenT vaLuaTIon Book vAlue 30 JuNe 2007 BooK vaLue 30 June 2006 deSCRIpTIon $m $m daTe $m $M $m 18 NoN-CuRReNT ASSeTS – iNveSTMeNT PRoPeRTieS (CoNTiNueD) industrial yennora distribution Centre, yennora nSW3 F/hold July 2000 141.9 223.5 dec 2006 296.0 305.6 256.2 Hendra distribution Centre, Hendra QLd F/hold July 2000 41.7 47.0 June 2007 83.0 83.0 68.5 Brooklyn estate, Brooklyn vIC3 F/hold June 2003 52.4 58.6 June 2006 82.5 82.7 82.5 port adelaide distribution Centre, Gillman Sa F/hold July 2000 42.9 45.9 June 2007 74.0 74.0 60.5 m4 Greystanes Industrial park, Greystanes nSW F/hold June 2006 15.2 54.5 June 2007 55.0 55.0 54.5 20-50 Fillo drive & 10 Stubb Street, Somerton vIC2 F/hold Sept 2006 43.1 45.7 aug 2006 43.1 45.7 – 9-11 Ferndell Street, Granville nSW3 F/hold June 2003 32.9 37.3 June 2006 39.5 41.4 39.5 1090-1124 Centre Road, oakleigh vIC F/hold Feb 2007 42.6 45.8 June 2007 38.0 38.0 – altona distribution Centre, altona vIC3 F/hold July 2000 24.3 25.1 dec 2006 27.5 27.8 26.1 3676 Ipswich Road, Wacol QLd1,2 F/hold aug 2006 23.1 25.8 July 2006 22.6 25.8 – 55-63 Bourke Road, alexandria nSW F/hold June 2003 20.1 20.5 dec 2005 24.3 24.1 24.2 11-25 Toll drive, altona north vIC3 F/hold Sept 2006 21.4 22.6 Sept 2006 21.4 22.7 – preston Industrial estate, prestons nSW F/hold may 2005 21.6 21.7 June 2006 21.8 21.8 21.8 elderslie Road, yatala QLd1,2 F/hold nov 2006 20.0 21.2 Sept 2006 20.0 21.2 – 56-60 Toll drive, altona north vIC3 F/hold Sept 2006 18.8 19.9 Sept 2006 18.5 20.0 – 514 Boundary Road, Richlands QLd1 F/hold oct 2005 17.2 17.9 dec 2006 19.5 19.5 17.9 2 davis Road, Wetherill park nSW1 F/hold april 2003 15.6 15.7 dec 2006 19.3 19.3 17.6 32-54 Toll drive, altona vIC3 F/hold Sept 2006 18.1 19.1 Sept 2006 18.5 19.2 – 11a Ferndell Street, Granville nSW1 F/hold april 2003 14.4 14.9 dec 2006 18.0 18.0 16.5 76-82 Fillo drive, Somerton vIC3 F/hold July 2006 15.8 16.8 aug 2006 15.8 16.8 – 1-5 morphett place, erskine park nSW F/hold Feb 2007 15.3 16.2 Sept 2006 15.3 16.2 – 42 Birnie avenue, Sydney nSW1 F/hold June 2005 15.0 15.3 June 2006 15.3 15.3 15.3 11 amour Street, Revesby nSW1 F/hold June 2003 11.0 13.3 dec 2006 15.0 15.0 14.0 735 Boundary Road, Richlands QLd1 F/hold oct 2005 11.8 12.3 dec 2006 14.7 14.7 12.3 159-163 newton Road, Wetherill park nSW1 F/hold oct 2003 11.1 11.3 dec 2006 13.3 13.3 12.0 Formation Street, Wacol QLd1 F/hold June 2007 12.2 12.7 June 2007 12.7 12.7 – 17 mcnaughton Road, Clayton vIC3 F/hold July 2006 11.4 12.2 aug 2006 11.4 12.2 – 509 Boundary Road, Richlands QLd3 F/hold June 2003 8.1 8.6 dec 2006 11.5 12.0 9.1 9 orielton park, Smeaton Grange nSW1 F/hold Sept 2003 11.9 11.6 dec 2005 11.6 11.6 11.6 60 Fulcrum Street, Richlands QLd F/hold June 2003 5.7 5.9 dec 2006 9.6 9.6 7.5 9-11 Somerton park drive, Somerton vIC3 F/hold July 2006 7.1 7.6 aug 2006 7.1 7.9 – Lot 42 Scanlon drive, northpoint enterprise estate park, epping vIC F/hold June 2007 2.1 2.3 – 2.9 2.3 –

// notes to the Consolidated Financial Statements For the year ended 30 June 2007

Industrial total 1,124.4 767.6

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

90 //

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oRIGInaL CoST
aCQuISITIon puRCHaSe InCLudInG IndependenT IndependenT Book vAlue BooK vaLue
TITLe daTe pRICe addITIonS vaLuaTIon vaLuaTIon 30 JuNe 2007 30 June 2006
deSCRIpTIon $m $m daTe $m $M $m
18 NoN-CuRReNT ASSeTS – iNveSTMeNT PRoPeRTieS (CoNTiNueD)
office Parks
optus HQ, macquarie park, north Ryde nSW F/hold July 2000 68.7 105.1 June 2007 127.1 127.1 –
60-66 Waterloo Road, north Ryde nSW [6] F/hold oct 2000 20.8 52.2 June 2007 79.4 79.4 34.7
macquarie Technology Centre 11-17 Khartoum
Road, north Ryde nSW (31%) F/hold oct 2000 36.5 38.8 dec 2005 40.5 40.3 40.5
16 Giffnock avenue, north Ryde nSW [6] F/hold July 2000 25.7 27.5 June 2006 38.5 38.7 38.5
Lot 21 Riverside Corporate park, north Ryde nSW [3] F/hold June 2001 16.0 22.6 June 2004 16.5 22.6 19.3
3 Byfeld Street, north Ryde nSW F/hold Jan 2000 9.0 9.4 dec 2005 9.1 9.1 9.1
offce parks total 317.2 142.1
Retirement living community assets total [7] 854.3 –
halladale assets total [4] 60.5 –
other
Capital works in progress 163.1 53.0
Saville South Bank, 161 Grey Street, Brisbane QLd F/hold apr 2007 38.6 38.7 June 2007 39.0 39.0 –
210-222 Russell Street, melbourne vIC F/hold June 2004 16.8 16.8 dec 2004 17.2 – 17.2
2 Bond Street, Sydney nSW F/hold – 1.7 2.5 – – – 2.5
88 The esplanade, darwin nT F/hold June 2004 1.9 1.9 – – – 1.9
other total 202.1 74.6
Total investment properties (including amounts classifed in other assets, receivables and property, plant and equipment) 9,564.9 6,405.4
Less amounts classified as:
– property, plant and equipment 86.6 3.2
– other assets (including lease incentives) 74.6 55.8
– other assets attributable to investments accounted for using the equity method 21.6 20.6
– other receivables (straight-lining of operating lease rental income) 20.0 16.2
– other receivables (straight-lining of operating lease rental income) attributable to investments accounted for using the equity method 4.3 1.8
Total investment properties (including share of investment property held by associates and joint ventures) 9,357.7 6,307.8
----- End of picture text -----

1 property held by Stockland Trust.

2 date of latest valuation preceding acquisition by the Trust.

3 Book value includes capital expenditure incurred since latest independent valuation.

4 property held by associates and joint venture entities.

5 Includes Retail.

6 Capital works are in progress. Fair value at 30 June 2007 has been assessed by the directors after consideration of the latest valuation and capital works incurred to 30 June 2007. an independent valuation of the property will be undertaken upon completion of the works.

7 Refer to note 43 for details.

directors’ valuations have been undertaken as at 30 June 2007 for all properties when determining fair value. directors’ valuations are on the basis of open market values for the highest and best use of the respective properties.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 91

	ConSoLIdaTed 2007 2006 $M $m 18 NoN-CuRReNT ASSeTS – iNveSTMeNT PRoPeRTieS (CoNTiNueD) Reconciliation of ownership Consolidated investment properties 8,232.8 5,597.0 Stockland’s share of investment properties held by associates and joint venture entities 1,124.9 710.8 Total interest in investment properties 9,357.7 6,307.8 Reconciliation – investment properties Direct investments and controlled entities Carrying amount at the beginning of the fnancial year 5,597.0 5,019.2 acquisitions 860.7 102.0 acquisitions through business combination 809.4 – expenditure capitalised 333.5 127.4 Transfers to assets classifed as held for sale (150.2) (149.7) Transfers to inventory – (51.9) Transfers to property, plant and equipment (69.6) – net gain on fair value adjustments of investment properties1 831.6 571.6 effect of movements in foreign exchange 20.4 (21.6)	notes to the Consolidated Financial Statements For the year ended 30 June 2007
	Carrying amount at the end of the fnancial year 8,232.8 5,597.0	//

1 Includes fair value adjustments on retirement living assets. Refer to note 43.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

92 //

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ConSoLIdaTed Company
2007 2006 2007 2006
$M $m $M $m
19 NoN-CuRReNT ASSeTS – oTheR fiNANCiAl ASSeTS
investments in other entities
Shares in controlled entities 0.1 – 182.2 184.7
units in unlisted entities 36.3 21.1 – –
36.4 21.1 182.2 184.7
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ConSoLIdaTed
ReTIRemenT
LeaSeHoLd pLanT and
LIvInG STRaTa unITS ToTaL
ImpRovemenTS eQuIpmenT
CommunITIeS [1]
$m $m $m $m $m
20 NoN-CuRReNT ASSeTS – PRoPeRTy, PlANT AND equiPMeNT
Cost
Balance at 1 July 2005 – 4.8 1.8 36.7 43.3
additions – – 0.8 6.5 7.3
disposals – – – (0.3) (0.3)
Transfer to investment properties – (0.8) – – (0.8)
Balance at 30 June 2006 – 4.0 2.6 42.9 49.5
Balance at 1 July 2006 – 4.0 2.6 42.9 49.5
acquisitions through business combinations 115.5 – – 1.9 117.4
additions 20.2 2.4 2.3 28.3 53.2
disposals – (6.4) – (15.6) (22.0)
Transfer (to)/from investment properties (13.8) – – 83.4 69.6
Transfer to inventory – – – (7.9) (7.9)
Balance at 30 June 2007 121.9 – 4.9 133.0 259.8
Depreciation and impairment losses
Balance at 1 July 2005 – 0.5 0.7 12.3 13.5
depreciation charge for the year – 0.1 0.3 5.9 6.3
disposals – – – (0.2) (0.2)
Balance at 30 June 2006 – 0.6 1.0 18.0 19.6
Balance at 1 July 2006 – 0.6 1.0 18.0 19.6
depreciation charge for the year – 0.6 0.5 6.6 7.7
disposals – (1.2) – (7.3) (8.5)
Balance at 30 June 2007 – – 1.5 17.3 18.8
Carrying amounts
at 1 July 2005 – 4.3 1.1 24.4 29.8
at 30 June 2006 – 3.4 1.6 24.9 29.9
at 1 July 2006 – 3.4 1.6 24.9 29.9
at 30 June 2007 121.9 – 3.4 115.7 241.0
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There are no restrictions on the title to these assets nor have they been pledged as security for liabilities during either financial year.

1 These assets are not subject to depreciation as they are under development and not yet available for use.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

	ConSoLIdaTed Company 2007 2006 2007 2006 noTeS $M $m $M $m 21 NoN-CuRReNT ASSeTS – iNveSTMeNTS ACCouNTeD foR uSiNg The equiTy MeThoD associates 44 308.8 106.5 – – Joint venture entities 45 872.8 629.2 – – 1,181.6 735.7 – – ConSoLIdaTed GoodWILL oTHeR1 ToTaL $m $m $m	notes to the Consolidated Financial Statements For the year ended 30 June 2007
	22 NoN-CuRReNT ASSeTS – iNTANgiBle ASSeTS Cost Balance at 1 July 2005 252.7 5.9 258.6 Write-off on disposal of investment properties2 (3.3) – (3.3)
	Balance as at 30 June 2006 249.4 5.9 255.3
	Balance at 1 July 2006 249.4 5.9 255.3 acquisition through business combinations 325.2 – 325.2 Sale of hotel business – (4.7) (4.7) Write-off on disposal of investment properties2 (10.1) – (10.1) effects of movements in exchange rates (4.5) – (4.5)	//
	Balance as at 30 June 2007 560.0 1.2 561.2
	Amortisation and impairment losses Balance at 1 July 2005 3.7 2.5 6.2 amortisation for the year – 0.5 0.5
	Balance as at 30 June 2006 3.7 3.0 6.7
	Balance at 1 July 2006 3.7 3.0 6.7 Sale of hotel business – (3.0) (3.0)
	Balance as at 30 June 2007 3.7 – 3.7
	Carrying amounts at 1 July 2005 249.0 3.4 252.4
	at 30 June 2006 245.7 2.9 248.6
	at 1 July 2006 245.7 2.9 248.6
	at 30 June 2007 556.3 1.2 557.5

// 93

1 other intangibles consisted of Hotel management rights $nil (2006: $4.7 million) and Heritage Floor space $1.2 million (2006: $1.2 million).

2 a portion of goodwill is required to be written off when a fair value asset previously acquired in a business combination is sold.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

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ConSoLIdaTed
2007 2006
$M $m
22 NoN-CuRReNT ASSeTS – iNTANgiBle ASSeTS (CoNTiNueD)
The aggregate carrying amounts of goodwill allocated to each unit are as follows:
Stockland Halladale 222.4 –
Stockland aRC 98.3 –
diversified property assets (adp) 226.8 236.9
other 8.8 8.8
556.3 245.7
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Goodwill is tested annually for impairment, or more frequently if there are indicators of impairment. no impairment losses have been recognised in the current or prior years.

The Stockland Halladale goodwill arose on the acquisition of Halladale Group plc on 30 april 2007. The goodwill impairment test was based on the fair value less costs to sell method. This involves identifying other recent transactions in the market place of entities that appear to have similar cash flow characteristics to Stockland Halladale. a comparison is then made between the premium percentage paid by other parties in the marketplace for similar entities and the premium percentage paid for the underlying assets in Stockland Halladale.

94 //

The Stockland aRC goodwill arose on the acquisition of the retirement living division of australian Retirement Communities on 28 February 2007. The goodwill impairment test was based upon the value in use method. This involves using cash flow projections for current and future Stockland retirement living communities based on formal budgets approved by management covering a five year period at a discount rate of 15%. Cash flows beyond the five year period have been determined by applying a steady 3% p.a. capital growth rate assumption for future Stockland retirement living communities once complete and projecting the costs and selling price for retirement living communities in the construction pipeline. This growth rate does not exceed the long term average rate for the australian retirement living property market. management believe that due to the long-term nature of retirement living communities and the ability to manage assets over that extended period, it is reasonable to use a cash flow period of greater than five years.

The diversified property assets (adp) goodwill arose on the acquisition of the amp diversified property Trust in 2003. The goodwill impairment test was based on the fair value less costs to sell method. This involves identifying other competitors in the marketplace that appear to have similar cash flows. a comparison is then made between the premium percentage being paid by competitors compared to the premium percentage paid for the underlying assets to which the diversified property assets (adp) goodwill relate.

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ConSoLIdaTed Company
2007 2006 2007 2006
$M $m $M $m
23 NoN-CuRReNT ASSeTS – oTheR ASSeTS
Lease incentives (net of amortisation) 57.8 42.2 – –
Lease fees 9.2 7.0 – –
Financial instruments asset 37.4 14.6 – –
104.4 63.8 – –
24 CuRReNT liABiliTieS – TRADe AND oTheR PAyABleS
Trade payables and accruals 367.4 195.5 – –
Trade payables – land purchases 62.5 34.2 – –
Goods and services tax (“GST”) payable 30.2 20.5 – –
deferred consideration on business combinations 90.4 – – –
550.5 250.2 – –
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 95

	ConSoLIdaTed Company 2007 2006 2007 2006 $M $m $M $m	notes to the
	25 CuRReNT liABiliTieS – iNTeReST-BeARiNg loANS AND BoRRoWiNgS unsecured domestic medium term notes 340.0 – – – Commercial paper 73.0 200.0 – – Bank bill facility 33.2 – – – Loan from controlled entity – – 2,222.9 2,029.3	Consolidated Financial Statements
	446.2 200.0 2,222.9 2,029.3	For the year ended 30 June 2007

details of the terms and conditions on the medium term notes, commercial paper and bank bill facility are set out in note 31.

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ConSoLIdaTed Company
2007 2006 2007 2006
$M $m $M $m
26 ReTiReMeNT liviNg ReSiDeNT oBligATioNS
Current
existing resident obligations 307.0 – – –
ex-resident obligations 5.8 – – –
312.8 – – –
Non-current
existing resident obligations 378.5 – – –
ex-resident obligations 34.4 – – –
412.9 – – –
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existing retirement living resident obligations represent the ingoing payment made by the resident together with their entitlement to a portion of the increase in the value of the property on turnover in accordance with their residency contract. The value of the obligation is calculated using the market value of the underlying property at each reporting date.

Retirement living ex-resident obligations represent resident obligations under deferred repayment contracts, where the right to defer settlement for a maximum of eight years after the resident turnover date has been enacted. Refer notes 1(z) and 43 for further details.

27 CuRReNT liABiliTieS – iNCoMe TAx PAyABle

The current tax liability for the consolidated entity of $51.6 million (2006: $2.3 million) and for the Company of $51.5 million (2006: $2.3 million) represent the amount of income tax payable in respect of current and prior periods.

In accordance with the tax consolidation legislation, the Company as the head entity of the australian Tax Consolidated Group has assumed the current Tax liability/(asset) initially recognised by the members in the Tax Consolidated Group.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

96 //

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ConSoLIdaTed Company
2007 2006 2007 2006
noTe $M $m $M $m
28 CuRReNT liABiliTieS – PRoviSioNS
employee benefits 34 8.2 8.0 – –
development costs 32.0 18.3 – –
other 3.0 4.5 0.1 –
43.2 30.8 0.1 –
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Movement in provisions

movements in each class of provision during the financial year, other than employee benefits, are set out below:

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deveLopmenT
CoSTS oTHeR
$m $m
Consolidated
Carrying amount at the beginning of the financial year 18.3 4.5
additional provisions recognised 22.2 0.2
payments (8.5) (1.7)
Carrying amount at the end of the fnancial year 32.0 3.0
ConSoLIdaTed Company
2007 2006 2007 2006
noTe $M $m $M $m
29 CuRReNT liABiliTieS – oTheR liABiliTieS
dividends and distributions payable [1] 38 323.7 281.3 66.6 55.5
Tenant security deposits 3.0 2.3 – –
Rents in advance 16.0 16.0 – –
other 9.8 3.1 – –
352.5 302.7 66.6 55.5
1 dividends and distributions disclosed in note 38 include $2.3 million (2006: $3.2 million) in relation to dividends and
distributions payable on eSS and ISp securities not vested or refinanced (Company: $0.6 million (2006: $0.6 million)).
30 NoN-CuRReNT liABiliTieS – oTheR PAyABleS
other payables – land purchases 143.9 88.6 – –
deferred consideration on business combinations 13.5 – – –
other 0.7 – – –
158.1 88.6 – –
31 NoN-CuRReNT liABiliTieS – iNTeReST-BeARiNg loANS AND BoRRoWiNgS
unsecured
domestic medium term notes 672.9 1,014.3 – –
Foreign medium term notes 1,918.4 974.1 – –
Bank bill facility 92.4 91.2 – –
Loan from related entities – 30.4 – –
2,683.7 2,110.0 – –
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 97

31 NoN-CuRReNT liABiliTieS – iNTeReST-BeARiNg loANS AND BoRRoWiNgS (CoNTiNueD) financing arrangements (current and non-current interest-bearing loans and borrowings)

(a) Commercial paper

Commercial paper is a short-term funding instrument. Commercial paper is always of less than one year to maturity and is typically issued at a margin above bank bill rates. at 30 June 2007 $73.0 million (2006: $200.0 million) of commercial paper was on issue and the weighted average effective interest rate was 6.5% (2006: 5.8%).

(b) Bank bill facilities

The bank bill facilities are multi-use facilities which may be used partially for bank guarantees and commercial paper support.

as at 30 June 2007 the weighted average interest rate on the unsecured facilities was 6.3% (2006: 6.2%) and 7.1% on secured facilities. There were no secured facilities at 30 June 2006.

details of maturity dates and security for facilities are set out below:

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fACiliTy FaCILITy uTiliSeD AT uTILISed aT
30 JuNe 2007 30 June 2006 SeCuRITy maTuRITy daTe 30 JuNe 2007 30 June 2006
$M $m $M $m
– 150.0 unsecured July 2006 – –
– 100.0 unsecured august 2006 – –
– 100.0 unsecured September 2006 – –
14.4 – Secured July 2007 14.2 –
150.0 – unsecured august 2007 – –
17.5 [1] – Secured January 2008 14.0 –
6.6 – Secured February 2008 5.0 –
– 250.0 unsecured June 2008 – 78.0
450.0 200.0 unsecured august 2008 – 13.2
21.7 – Secured october 2008 21.5 –
350.0 – unsecured June 2009 – –
15.2 [1] – Secured december 2009 15.1 –
70.8 [1] – Secured February 2010 – –
8.3 [1] – Secured april 2010 8.2 –
8.9 [1] – Secured July 2010 8.8 –
28.8 [1] – Secured September 2011 28.7 –
10.9 – Secured September 2013 10.1 –
1,153.1 800.0 125.6 91.2
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notes to the Consolidated Financial Statements

For the year ended 30 June 2007

1 These secured facilities have been replaced by a £100 million revolving credit facility.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

98 //

31 NoN-CuRReNT liABiliTieS – iNTeReST-BeARiNg loANS AND BoRRoWiNgS (CoNTiNueD)

financing arrangements (current and non-current interest-bearing loans and borrowings) (continued)

(c) Medium term notes

Domestic

during previous financial years Stockland issued notes with a face value of $1,015.0 million in the domestic placement market.

medium term notes have been issued at either face value, or at a discount or premium to face value. The discount or premium is amortised to finance costs over the term of the notes. The medium term notes are issued at a combination of fixed and floating interest rate terms.

The weighted average effective interest rate of the domestic medium term notes at 30 June 2007 is 6.0% (2006: 5.9%) and the nominal interest rate is 6.2% (2006: 6.0%). details of unsecured medium term notes on issue are set out below:

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ConSoLIdaTed
2007 2006
maTuRITy daTe $M $m
Fair value of notes
october 2007 348.6 361.8
august 2008 265.9 282.2
June 2011 343.9 346.2
may 2013 205.8 180.8
Total fair value 1,164.2 1,171.0
Total Balance Sheet carrying amount at amortised cost 1,012.9 1,014.3
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Foreign

UK private placement

during the current financial year Stockland issued medium term notes with a face value of $619.3 million (GBp 250.0 million) into the uK private placement market. all notes were issued at a fixed coupon payable in GBp and converted back to aud floating coupons through cross currency principal and interest rate swaps. The fair value of the notes recorded at 30 June 2007 is $547.4 million and the weighted average effective interest rate is 7.0%. The notes mature in october 2013.

details of the foreign medium term notes on issue in the uK private placement market are set out below:

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ConSoLIdaTed
2007 2006
maTuRITy daTe $M $m
october 2013 547.4 –
Less: attributable transaction costs (1.0) –
Total Balance Sheet carrying amount at fair value 546.4 –
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US private placement

during the 2004 financial year Stockland issued notes with a face value of $534.5 million (uS$350.0 million) in the uS private placement market. In July 2005, additional notes were issued in the uS private placement market with a face value of $417.7 million (uS$325.0 million). In June 2007, additional notes were issued in the uS private placement market with a face value of $533.5 million (uS$450.0 million).

all notes were issued at a fixed coupon in uSd and converted back to aud and GBp floating coupons through cross currency interest rate swaps. The fair value of the notes recorded at 30 June 2007 is $1,253.1 million (2006: $833.5 million) and the weighted average effective interest rate is 6.9% (2006: 6.4%).

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 99

31 NoN-CuRReNT liABiliTieS – iNTeReST-BeARiNg loANS AND BoRRoWiNgS (CoNTiNueD)

31 NoN-CuRReNT liABiliTieS – iNTeReST-BeARiNg loANS AND BoRRoWiNgS (CoNTiNueD) financing arrangements (current and non-current interest-bearing loans and borrowings) (continued) (c) Medium term notes (continued) Foreign (continued) US private placement (continued) details of the foreign medium term notes on issue in the uS private placement market are set out below: maTuRITy daTe ConSoLIdaTed 2007 $M 2006 $m Fair value of notes october 2011 24.0 26.6 July 2012 43.8 49.0 october 2012 34.3 38.2 July 2013 43.8 48.6 July 2014 23.9 26.6 June 2015 70.7 – July 2015 53.8 59.9 october 2015 73.8 82.4 July 2016 51.2 57.0 october 2016 20.6 22.9 June 2017 199.5 – october 2017 45.5 51.1 June 2018 187.3 – october 2018 199.7 224.9 July 2019 56.3 64.5 July 2020 71.3 81.8 June 2022 30.8 – June 2027 22.8 –	31 NoN-CuRReNT liABiliTieS – iNTeReST-BeARiNg loANS AND BoRRoWiNgS (CoNTiNueD) financing arrangements (current and non-current interest-bearing loans and borrowings) (continued) (c) Medium term notes (continued) Foreign (continued) US private placement (continued) details of the foreign medium term notes on issue in the uS private placement market are set out below: maTuRITy daTe ConSoLIdaTed 2007 $M 2006 $m Fair value of notes october 2011 24.0 26.6 July 2012 43.8 49.0 october 2012 34.3 38.2 July 2013 43.8 48.6 July 2014 23.9 26.6 June 2015 70.7 – July 2015 53.8 59.9 october 2015 73.8 82.4 July 2016 51.2 57.0 october 2016 20.6 22.9 June 2017 199.5 – october 2017 45.5 51.1 June 2018 187.3 – october 2018 199.7 224.9 July 2019 56.3 64.5 July 2020 71.3 81.8 June 2022 30.8 – June 2027 22.8 –	// notes to the Consolidated Financial Statements For the year ended 30 June 2007
	Total fair value 1,253.1 833.5 Less: attributable transaction costs (6.4) (5.0)
	Total Balance Sheet carrying amount at fair value 1,246.7 828.5

Asian private placement

during the 2006 financial year Stockland issued medium term notes with a face value of $151.3 million (Jpy 13,000 million) into the asian private placement market. all notes were issued at a fixed coupon payable in uSd and converted back to aud floating coupons through cross currency principal and interest rate swaps. The fair value of the notes recorded at 30 June 2007 is $125.8 million (2006: $145.8 million) and the weighted average effective interest rate is 7.2% (2006: 6.7%). The notes mature in august 2035.

details of the foreign medium term notes on issue in the asian private placement market are set out below:

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ConSoLIdaTed
2007 2006
maTuRITy daTe $M $m
august 2035 125.8 145.8
Less: attributable transaction costs (0.5) (0.2)
Total Balance Sheet carrying amount at fair value 125.3 145.6
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Derivatives

Stockland has entered into principal and cross currency interest rate swaps over its foreign currency loans and borrowings. Refer to note 47 for details.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

32 DefeRReD TAx ASSeTS AND liABiliTieS

Recognised deferred tax assets and liabilities

deferred tax assets and liabilities are attributable to the following:

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aSSeTS LIaBILITIeS neT
2007 2006 2007 2006 2007 2006
$M $m $M $m $M $m
Consolidated
Trade and other receivables 4.0 – (1.9) – 2.1 –
Inventories – – (99.1) (75.9) (99.1) (75.9)
Investment properties – – (11.4) (0.1) (11.4) (0.1)
property, plant and equipment – – (0.8) – (0.8) –
Trade and other payables 17.2 15.1 – – 17.2 15.1
Retirement living resident obligations 5.7 – – – 5.7 –
provisions 3.2 6.3 – – 3.2 6.3
other liabilities (0.5) – – – (0.5) –
Tax assets/(liabilities) 29.6 21.4 (113.2) (76.0) (83.6) (54.6)
Set-off of tax balances (29.6) (21.4) 29.6 21.4 – –
net tax assets/(liabilities) – – (83.6) (54.6) (83.6) (54.6)
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The Company does not have any deferred tax assets or liabilities. There are no unrecognised deferred tax assets (2006: $nil).

100 //

Movement in temporary differences during the year 2007

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aCQuIRed
BaLanCe ReCoGnISed In In BuSIneSS InCLuded In BAlANCe
1 JuLy 06 InCome ComBInaTIonS dISpoSaL GRoup 30 JuNe 07
$m $m $m $m $M
Consolidated
Trade and other receivables – 2.1 – – 2.1
Inventories (75.9) (23.2) – – (99.1)
Investment properties (0.1) (6.1) (4.2) (1.0) (11.4)
property, plant and equipment – (0.8) – – (0.8)
Trade and other payables 15.1 2.1 – – 17.2
Retirement living resident obligations – 5.7 – – 5.7
provisions 6.3 (3.1) – – 3.2
other liabilities – (0.5) – – (0.5)
(54.6) (23.8) (4.2) (1.0) (83.6)
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 101

32 DefeRReD TAx ASSeTS AND liABiliTieS (CoNTiNueD) Movement in temporary differences during the year (continued)

	32 DefeRReD TAx ASSeTS AND liABiliTieS (CoNTiNueD) Movement in temporary differences during the year (continued) 2006 BaLanCe 1 JuLy 05 ReCoGnISed In InCome BaLanCe 30 June 06 $m $m $m Consolidated Trade and other receivables 0.2 (0.2) – Inventories (40.5) (35.4) (75.9) other assets (0.1) 0.1 – Investment properties – (0.1) (0.1) property, plant and equipment 0.6 (0.6) – Trade and other payables 3.2 11.9 15.1 provisions 2.4 3.9 6.3 other items (1.9) 1.9 –	notes to the Consolidated Financial Statements For the year ended 30 June 2007
	(36.1) (18.5) (54.6)
	Company Trade and other receivables 0.1 (0.1) –
	0.1 (0.1) –
	ConSoLIdaTed Company 2007 2006 2007 2006 noTe $M $m $M $m	// 1
	33 NoN-CuRReNT liABiliTieS – PRoviSioNS Contingent settlement provision under share-based payments 17.7 27.0 17.7 27.0 employee benefts 34 1.3 1.8 – – other 0.3 – – –
	19.3 28.8 17.7 27.0

Stockland Corporation Limited has guaranteed loans provided by the Commonwealth Bank of australia (“CBa”) to Key management personnel (“Kmp”) and other executives for a period of up to three years and 90 days from the date of the loan. The guarantee is for the shortfall, if any, between the value of the loan and the market value of the securities that the loan supports. The guarantee ends 90 days after the borrower ceases to be an employee of Stockland or a related entity. The value of the guarantee, being the value of the underlying loans, has been recorded as a contingent settlement provision.

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ConSoLIdaTed Company
2007 2006 2007 2006
noTeS $M $m $M $m
34 eMPloyee BeNefiTS
aggregate liability for employee benefits, including on-costs
Liability for employee benefits – current 28 8.2 8.0 – –
Liability for employee benefts – non-current 33 1.3 1.8 – –
9.5 9.8 – –
number of full time equivalent employees at year end 1,241 1,467 – –
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

102 //

34 eMPloyee BeNefiTS (CoNTiNueD)

Superannuation contributions

Stockland contributes to several defined contribution funds in accordance with the superannuation guarantee legislation and choice of fund legislation. Stockland and the employees make contributions based on various percentages of gross salaries. employees are entitled to benefits on retirement.

long Term incentive Plans

Tax exempt employee Security Plan

The new $1,000 tax exempt plan (“$1,000 plan”) was approved by security holders in october 2006. under the $1,000 plan eligible employees may be granted, at nil cost to the employee, Stockland securities to a maximum value of $1,000. The number of securities issued is based on the five day volume weighted average price (“vWap”) of securities prior to grant date. offers are approved by the Board dependent upon the performance of Stockland over the previous twelve months. offers will be made in august each year, concurrent with the pRp (discussed below). Such offers recognise the contribution of employees to Stockland’s performance and provide a link to growth in long-term security holder value.

The revised plan meets the requirements of the tax legislation in that it includes a holding lock of three years if the employee remains with Stockland and no forfeiture provisions (participants keep the securities and the holding lock lifts when they leave). The prior plan, approved in 2002, had a lock of only one year, and Stockland was required to pay FBT on the securities issued to employees.

Following finalisation of the changes in the tax legislation, the first offer under the $1,000 plan was made in april 2007, along with a cash top-up to reflect the reward participants would have achieved if the grant had been made in august 2006.

Performance Rights Plan

The performance Rights plan (“pRp”) was approved by security holders in october 2006. The first allocation was made in april 2007, with a grant date of october 2006, following changes to the tax legislation which were contemplated but not yet enacted at the time of approval by security holders. under the pRp, executives have the right to acquire Stockland securities at nil consideration when certain performance conditions are met as part of their remuneration package. each grant will comprise two equal tranches, each of which vest based on separate

performance hurdles (being earnings per Share (“epS”) and Total Security Holder Return (“TSR”)). The plan will be extended to other participants in august 2007. eligibility is by invitation of the Board and is reviewed annually. participants of the pRp are prohibited from receiving grants under any other Stockland employee security plan in the same financial year.

The number of rights granted to executives pursuant to the plan for the year ended 30 June 2007 was 854,000.

incentive Share Plan

The Incentive Share plan (“ISp”) was approved by security holders at the Stockland annual General meeting held on 26 october 2004. The ISp is administered by the Board in accordance with the plan Rules and the terms and conditions of the grants to participants. as a consequence of the creation of the pRp following tax legislation changes in april 2007, no further grants will be made under this plan following the august 2006 grant.

due to the FBT legislation previously in place, it was cost effective for Stockland to operate the ISp via a loan plan, such that executives acquire securities funded via a limited recourse loan provided by Stockland. The issue price of all securities was based on the vWap at which stapled securities are traded on the aSX during the five trading days up to and including the last trading day before the grant date. all grants under the ISp have been funded by interest-free loans provided by Stockland for a maximum of five years. dividends and distributions paid (net of FBT) on ISp securities are applied against the loan balance. The outstanding value of the loan is limited to the market value of the securities.

under the ISp rules, a proportion of the loan for the securities may be waived if certain performance conditions are met over a two to three year period and if continuous service is rendered over either two and one half or three years. The amount of loan forgiven is an award.

The number of securities acquired by employees pursuant to the plan for the year ended 30 June 2007 was 795,000 (2006: 2,260,000). outstanding loans to participants at 30 June 2007 amounted to $15,699,956 (2006: $13,218,398).

executive Securities Scheme

prior to the approval of the ISp in 2004, executives participated in the executive Securities Scheme (“eSS”). under the rules of the eSS, senior employees

below executive level are invited to acquire a specific number of securities at a discount to the market price that is equivalent to the discount that applies to the Stockland dividend Reinvestment plan (“dRp”).

as a consequence of the creation of the pRp following tax legislation changes in april 2007, no further grants will be made under this plan following the august 2006 grant. as with the ISp, it was cost effective for Stockland to operate the eSS via a loan plan, such that participating senior employees acquired securities funded via a limited recourse loan provided by Stockland. all grants under the eSS have been funded by loans provided by Stockland for a maximum term of five years. Interest charged on the loans is equivalent to the dividends and distributions received annually on the securities. The outstanding value of the loan is limited to the market value of the securities.

The number of securities offered to each participating senior employee is dependent on their role, individual responsibilities, past performance and other components of remuneration detailed above. participating senior employees only receive a benefit after two years continuous service from the date of issue, being the vesting date, with the exercisable period expiring at a maximum of five years from grant date when repayment of the loan is required.

no grants were made under the eSS to any executives (being executive directors, senior executives and general managers) during the current or prior financial years.

The number of securities acquired by employees pursuant to the plan for the year ended 30 June 2007 was 4,113,000 (2006: 3,801,000). outstanding loans to participants at 30 June 2007 amounted to $28,215,180 (2006: $32,938,930).

The pRp, ISp and eSS operated in the same manner for senior executives as they did for executive directors, with the exception that any allotments were approved by the nomination and Remuneration Committee and did not require the passing of a resolution at a general meeting.

under aaSB 2, the pRp rights are options with performance conditions. ISp and eSS securities are options for accounting purposes. The fair value of the options is recognised as an employee expense with a corresponding increase in reserves. The fair value is expensed on a straight-line basis over the vesting period, being the period during which the rights/securities are subject to performance and/or service conditions.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 103

34 eMPloyee BeNefiTS (CoNTiNueD)

long Term incentive Plans (continued)

Calculation of fair value of rights/securities granted under share plans

The fair values of the rights granted under the pRp during the year have been measured using a monte Carlo Simulation (TSR hurdle) and the Black-Scholes options pricing model (epS hurdle).

The fair values of the securities granted under the ISp and eSS during the current and prior years have been measured using, for the ISp grant monte Carlo Simulation, and for the eSS grant Black-Scholes options pricing model.

assumptions made in determining the fair value of rights/securities granted under the share plans are detailed in the tables below:

a) Performance Rights Plan

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2007
Fair value of rights granted under plan $3.36
Spot price of the stapled securities at grant date $7.73
exercise price Nil
volatility of security price [1] 14.4%
distribution yield 6.6%
Risk free rate at grant date 6.1%
expected life 2.7 years
volatility of Index price [1] 9.8%
Correlation (Stockland and the Index) [2] 57.7%
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notes to the Consolidated Financial Statements

For the year ended 30 June 2007

1 The volatility is based on the historic volatility of the security adjusted for any expected changes to future volatility due to publicly available information.

2 Represents the estimated correlation of Stockland’s TSR and the TSR of the aSX 200 property Trust accumulation Index.

b) Incentive Share Plan

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Key manaGemenT
eXeCuTIve dIReCToRS peRSonneL (eXCLudInG
(InCLuded WITHIn eXeCuTIve dIReCToRS)
Key manaGemenT and oTHeR SenIoR
peRSonneL) empLoyeeS
2007 2006 2007 2006
Fair value of securities granted under plan Nil $3.48/$3.56 $3.09 $3.43/$3.46
Spot price of the stapled securities at grant date – $6.04 $7.17 $5.99
exercise price (reduced by dividends and performance awards) – $5.66-$5.71 [1] $5.69 $5.66-$5.71 [1]
Risk free rate at grant date – 5.2-5.7% 6.0% 5.2-5.7%
asset income rate (distribution yield) – 7.2% 6.7% 7.2%
–
performance and service measurement period 2-3 years 3 years 2-3 years
volatility of asset at grant date [2] – 13.1-13.9% 13.9% 13.1-13.9%
Correlation factor [3] – 60% 60% 60%
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1 Calculated using a log-normal probability distribution with standard deviation of $0.74 ($0.79 for the transitional 2006 tranche).

2 The volatility is based on the historic volatility of the security adjusted for any expected changes to future volatility due to publicly available information.

3 Represents the estimated correlation of Stockland’s TSR and the TSR of the aSX 200 property Trust accumulation Index.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

34 eMPloyee BeNefiTS (CoNTiNueD)

long Term incentive Plans (continued)

Calculation of fair value of rights/securities granted under share plans (continued) c) Executive Securities Scheme

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Key manaGemenT
peRSonneL (eXCLudInG
eXeCuTIve dIReCToRS)
and oTHeR SenIoR
empLoyeeS
2007 2006
Fair value of securities granted under plan $0.65 $0.32
Spot price of the Stapled Securities at grant date $7.21 $5.90
exercise price (reduced by dividends) [1] $6.86 $5.90
Risk free rate at grant date 5.6% 4.9%
asset income rate (distribution yield) 6.7% 6.7%
Service period 2 years 2 years
volatility of asset at grant date [2] 14.5% 12.8%
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1 The securities granted are funded by limited recourse loans. any excess from the sale of securities over the loan balance is to the benefit of Stockland if sold within two years of grant date and to the benefit of the security holder if sold in the unconditional period. any shortfall from the sale of securities is forgiven by Stockland, except in respect of any dividends and distributions attaching to the securities.

2 The volatility is based on the historic volatility of the security adjusted for any expected changes to future volatility due to publicly available information.

Movement in rights/securities under PRP, iSP and eSS during the year

104 //

The number and weighted average fair value of rights/securities under share plans is as follows:

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WeIGHTed WeIGHTed
aveRaGe eXeRCISe aveRaGe eXeRCISe numBeR numBeR
pRICe peR RIGHT/ pRICe peR RIGHT/ oF RIGHTS/ oF RIGHTS/
SeCuRITy SeCuRITy SeCuRITIeS SeCuRITIeS
2007 2006 2007 2006
$ $
Securities outstanding at the beginning of the year 5.28 4.74 14,901,053 14,148,053
Rights/securities granted during the year 6.36 5.96 5,762,000 6,061,000
Securities forfeited during the year 6.23 5.53 (2,212,000) (1,408,000)
Securities exercised during the year 4.68 4.34 (4,705,553) (3,900,000)
Rights/securities outstanding at the end of the year 5.79 5.28 13,745,500 14,901,053
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The pRp rights outstanding at 30 June 2007 have a fair value of $3.36 per right and a weighted average restricted period remaining of 2.0 years. The ISp and eSS securities outstanding at 30 June 2007 have fair values ranging from $2.79 to $3.56 (2006: $2.79 to $3.56) and $0.26 to $0.65 (2006: $0.26 to $0.39) respectively and a weighted average restricted period remaining of 0.8 years (2006: 0.6 years).

The weighted average fair value of the securities which were exercised during the year was $0.38 per security (2006: $0.25).

during the financial year, 2,242,500 securities vested (2006: 4,195,000 securities). The weighted average fair value of the securities which vested during the year was $0.39 per security (2006: $0.26).

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ConSoLIdaTed Company
2007 2006 2007 2006
$M $m $M $m
35 NoN-CuRReNT liABiliTieS – oTheR liABiliTieS
Financial instruments liability 368.1 135.4 – –
Refer to note 47 for details.
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

numBeR oF SeCuRITIeS numBeR oF SeCuRITIeS ConSoLIdaTed Company 2007 2006 2007 2006 2007 2006 $M $m $M $m 36 iSSueD CAPiTAl ordinary securities–Issued and fully paid 1,437,595,986 1,352,641,458 5,570.9 4,885.3 403.1 355.1 Consolidated The following table provides details of movements in the consolidated entity’s issued units. daTe deTaILS numBeR oF SeCuRITIeS ISSue pRICe $m	notes to the Consolidated Financial Statements For the year ended 30 June 2007
Movement of securities issued 1 July 2005 Balance 1,306,900,669 4,611.3 1 July 2005 Reclassifcation of Stockland Trust units to liabilities on adoption of aaSB 1321 – (4,276.8) 31 august 2005 employee share plan2 58,100 $0.47 – 31 august 2005 dividend reinvestment plan2 21,823,708 $0.47 10.3 25 october 2005 Reclassifcation of Stockland Trust units on 1 July 2005 from liabilities to equity following amendment to Trust constitution1 – 4,276.8 25 october 2005 Reclassifcation of Stockland Trust units issued on 31 august 2005 under the dividend reinvestment plan from liabilities to equity following amendment to Trust constitution2 – 118.5 25 october 2005 Reclassifcation of Stockland Trust units issued on 31 august 2005 under the employee share plan from liabilities to equity following amendment to Trust constitution2 – 0.3 31 december 2005 Issued securities which have either matured, been sold or forfeited and sold under share plans 3,418,000 16.4 28 February 2006 dividend reinvestment plan 18,550,981 $6.44 119.5 30 June 2006 Issued securities which have either matured, been sold or forfeited and sold under share plans 1,890,000 9.0	// 1
30 June 2006 Balance 1,352,641,458 4,885.3 31 august 2006 dividend reinvestment plan 15,741,383 $6.86 108.0 31 december 2006 Issued securities which have either matured, been sold or forfeited and sold under share plans 4,197,553 22.3 16 February 2007 placement 46,000,000 $8.75 402.5 Less: transaction costs (5.0) 28 February 2007 dividend reinvestment plan 15,136,469 $8.62 130.4 27 march 2007 Stapled securities purchase plan 1,071,968 $8.75 9.4 25 may 2007 employee share plan 57,155 $8.63 0.5 30 June 2007 Issued securities which have either matured, been sold or forfeited and sold under share plans 2,750,000 17.5
30 June 2007 Balance 1,437,595,986 5,570.9

// 105

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

36 iSSueD CAPiTAl (CoNTiNueD) Consolidated (continued) notes to the Consolidated daTe 1 July 2005 Financial 18 august 2005 31 august 2005 31 october 2005 Statements

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daTe deTaILS numBeR oF SeCuRITIeS
equity instruments granted pursuant to Stockland share plans accounted for as options [3]
1 July 2005 Balance 14,148,053
18 august 2005 Incentive share plan 1,746,000
31 august 2005 executive securities scheme 3,501,000
31 october 2005 Incentive share plan 514,000
31 december 2005 Issued securities which have either matured, been sold or forfeited and sold under share plans (3,418,000)
28 February 2006 executive securities scheme 300,000
30 June 2006 Issued securities which have either matured, been sold or forfeited and sold under share plans (1,890,000)
30 June 2006 Balance 14,901,053
17 august 2006 Incentive share plan 795,000
31 august 2006 executive securities scheme 4,113,000
31 december 2006 Issued securities which have either matured, been sold or forfeited and sold under share plans (4,197,553)
30 June 2007 Issued securities which have either matured, been sold or forfeited and sold under share plans (2,750,000)
30 June 2007 Balance 12,861,500
30 June 2007 Issued capital 1,437,595,986
Issued capital issued on aSX [4] 1,450,457,486
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For the year ended 30 June 2007

• 1 For the period 1 July 2005 to 25 october 2005, aaSBs required Stockland Trust unit holders’ issued capital to be classified as a liability. at the annual General meeting held on 25 october 2005, the Stockland Trust unit holders agreed to amend the Stockland Trust Constitution, which meant the unit holders’ issued capital from that date would be treated as equity in accordance with accounting standard aaSB 132. Therefore, the value of units on issue at 1 July 2005, being $4,276.8 million, was reclassified as a liability for the period 1 July 2005 to 25 october 2005.

106 //

2 These securities were issued during the period 1 July 2005 to 25 october 2005 when aaSBs required Stockland Trust unit holders’ issued capital to be classified as a liability under aaSB 132. This means that the value shown on 31 august 2005 of $0.47 represents the value of Stockland Corporation Limited shares issued, and the value shown on 25 october 2005 represents the reclassification of the value of Stockland Trust units at $5.43 per unit from liabilities to issued capital following amendment to the Stockland Trust Constitution at the annual General meeting which allowed the unit holders’ issued capital to be treated as equity from that date.

3 under aaSB 2, the executive Securities Scheme and the Incentive Share plan equity instruments are required to be accounted for as options. Refer accounting policy in note 1(bb)(vi). The value of the securities granted under these share plans represents the fair value of those shares at grant date calculated using either the Black-Scholes or monte Carlo Simulation option pricing models which takes into account the terms and conditions upon which the share were granted. The fair value is expensed in the Income Statement when granted over the vesting period, with a corresponding increase in the executive remuneration reserve. Refer to note 37. 4 Represents the aggregate of “issued capital” and securities accounted for as options.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

36 iSSueD CAPiTAl (CoNTiNueD) Company

36 iSSueD CAPiTAl (CoNTiNueD) Company daTe deTaILS numBeR oF SeCuRITIeS ISSue pRICe $m Movement of securities issued 1 July 2005 Balance 1,306,900,669 334.6 31 august 2005 employee share plan 58,100 $0.47 – 31 august 2005 dividend reinvestment plan 21,823,708 $0.47 10.3 31 december 2005 Issued securities which have either matured, been sold or forfeited and sold under share plans 3,418,000 1.3 28 February 2006 dividend reinvestment plan 18,550,981 $0.45 8.3 30 June 2006 Issued securities which have either matured, been sold or forfeited and sold under share plans 1,890,000 0.6	36 iSSueD CAPiTAl (CoNTiNueD) Company daTe deTaILS numBeR oF SeCuRITIeS ISSue pRICe $m Movement of securities issued 1 July 2005 Balance 1,306,900,669 334.6 31 august 2005 employee share plan 58,100 $0.47 – 31 august 2005 dividend reinvestment plan 21,823,708 $0.47 10.3 31 december 2005 Issued securities which have either matured, been sold or forfeited and sold under share plans 3,418,000 1.3 28 February 2006 dividend reinvestment plan 18,550,981 $0.45 8.3 30 June 2006 Issued securities which have either matured, been sold or forfeited and sold under share plans 1,890,000 0.6	notes to the Consolidated Financial Statements For the year ended 30 June 2007
	30 June 2006 Balance 1,352,641,458 355.1 31 august 2006 dividend reinvestment plan 15,741,383 $0.48 7.6 31 december 2006 Issued securities which have either matured, been sold or forfeited and sold under share plans 4,197,553 1.6 16 February 2007 placement 46,000,000 $0.61 28.1 Less: transaction costs (0.3) 28 February 2007 dividend reinvestment plan 15,136,469 $0.60 9.1 27 march 2007 Stapled securities purchase plan 1,071,968 $0.61 0.6 25 may 2007 employee share plan 57,155 $0.60 – 30 June 2007 Issued securities which have either matured, been sold or forfeited and sold under share plans 2,750,000 1.3	// 1
	30 June 2007 Balance 1,437,595,986 403.1

// 107

Terms and conditions of securities

Holders of stapled securities are entitled to receive dividends and distributions as declared from time to time and are entitled to one vote per stapled security at security holder meetings. The liability of a member is limited to the amount if any remaining unpaid in relation to a member’s subscription for securities. a member is entitled to receive a distribution following termination of the stapling arrangement (for whatever reason). The net proceeds of realisation must be distributed to members, after making an allowance for payment of all liabilities (actual and anticipated) and meeting any actual or anticipated expenses of termination.

effect of stapling arrangement

under aI 1013, this Financial Report has been prepared based upon a business combination of the Company and Stockland Trust and its controlled entities. Therefore, there is a difference between the consolidated and company issued capital as a result of this stapling arrangement.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

108 //

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ConSoLIdaTed Company
2007 2006 2007 2006
noTe $M $m $M $m
37 ReSeRveS AND ReTAiNeD eARNiNgS
(a) Reserves
Realised capital profits reserve 27.7 32.5 3.6 3.6
executive remuneration reserve 9.8 6.8 0.6 0.5
Cash flow hedge reserve 22.1 2.2 – –
unrealised financial instruments reserve 21.8 1.0 – –
Foreign currency translation reserve (1.3) (11.7) – –
Financial assets revaluation reserve 3.3 – – –
83.4 30.8 4.2 4.1
Movements in reserves
Realised capital profits reserve
Balance at the beginning of the financial year 32.5 45.3 3.6 3.6
profit/(loss) on sale of investment properties transferred from/(to) retained
earnings 2.1 (3.1) – –
distributions paid from capital 37(b) (6.9) (9.7) – –
Balance at the end of the fnancial year 27.7 32.5 3.6 3.6
executive remuneration reserve
Balance at the beginning of the financial year 6.8 2.5 0.5 0.2
expense relating to securities granted under share plans 4.5 4.3 0.1 0.3
Securities exercised under share plans transferred to retained earnings (1.5) – – –
Balance at the end of the fnancial year 9.8 6.8 0.6 0.5
Cash flow hedge reserve
Balance at the beginning of the financial year 2.2 – – –
application of aaSB 132 and 139 effective 1 July 2005 – 5.0 – –
effective portion of changes in fair value of cash flow hedges during the year 60.4 (2.8) – –
net change in fair value of cash fow hedges transferred to proft (40.5) – – –
Balance at the end of the fnancial year 22.1 2.2 – –
unrealised financial instruments reserve
Balance at the beginning of the financial year 1.0 (14.6) – –
unrealised gain on fnancial instruments transferred from retained earnings 20.8 15.6 – –
Balance at the end of the fnancial year 21.8 1.0 – –
foreign currency translation reserve
Balance at the beginning of the financial year (11.7) 9.3 – –
net exchange differences on translation of foreign controlled entities 10.4 (21.0) – –
Balance at the end of the fnancial year (1.3) (11.7) – –
financial assets revaluation reserve
– – – –
Balance at the beginning of the financial year
valuation gain recognised on fnancial assets 3.3 – – –
Balance at the end of the fnancial year 3.3 – – –
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 109

	ConSoLIdaTed Company 2007 2006 2007 2006 noTeS $M $m $M $m 37 ReSeRveS AND ReTAiNeD eARNiNgS (CoNTiNueD) (b) Retained earnings Retained earnings at the beginning of the fnancial year 1,479.0 832.4 3.4 1.2 application of aaSB 132 and 139 effective 1 July 2005 – (3.7) – – proft attributable to security holders 1,716.3 1,061.6 167.4 117.0 aggregate of amounts transferred from/(to) reserves (21.4) (12.5) – – dividends and distributions provided for or paid (610.3) (398.8) (121.4) (114.8) Retained earnings at the end of the fnancial year 2,563.6 1,479.0 49.4 3.4 Reconciliation of dividends and distributions paid and payable to dividends and distributions to security holders as per Statement of Changes in equity distributions paid from capital 37(a) (6.9) (9.7) – – dividends and distributions provided for or paid (610.3) (398.8) 121.4 (114.8)	notes to the Consolidated Financial Statements For the year ended 30 June 2007
	Total dividends and distributions recognised through security holders’funds 38 (617.2) (408.5) 121.4 (114.8)

(c) Nature and purpose of reserves

(i) Realised capital profits reserve

The realised capital profits reserve is used to transfer realised gains on the sale of investment properties which have been recorded in the Income Statement to reserves, as management policy is generally to reinvest these profits into future acquisitions of investment properties.

(ii) executive remuneration reserve

The executive remuneration reserve has arisen under aaSBs due to the pRp, ISp and eSS equity instruments being required to be accounted for as options. The fair value of the options is recognised as an employee expense with a corresponding increase in reserves. The fair value is expensed on a straight-line basis over the vesting period, being the period over which the securities are subject to performance and/or service conditions. Refer accounting policy at note 1(bb)(vi).

(iii) Cash flow hedge reserve

The cash flow hedge reserve is used to record the effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges. Refer accounting policy at note 1(m).

(iv) unrealised financial instruments reserve

The unrealised financial instruments reserve is used to transfer gains and losses on financial instruments which have been recorded in the Income Statement to reserves until such time as they are realised.

(v) foreign currency translation reserve

The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

(vi) financial assets revaluation reserve

The financial assets revaluation reserve comprises the cumulative net change in the fair value of financial assets until the investment is derecognised.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

110 //

38 DiviDeNDS AND DiSTRiBuTioNS

dividends and distributions recognised in the current year by the Company and the Trust are detailed below. The 2006 interim distribution amount shown below in the Trust includes finance costs to unit holders of $144.4 million.

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TaX RaTe FoR peRCenTaGe
CenTS peR SHaRe ToTaL amounT daTe oF paymenT FRanKInG CRedIT FRanKed
2007 $m % %
The Company
Interim dividend 4.1 56.6 28 February 2007 30 100
Final dividend 4.7 67.2 31 august 2007 30 100
Total dividend 8.8 123.8
ToTaL amounT TaX pReFeRRed
CenTS peR unIT $m daTe oF paymenT %
The Trust
Interim distribution 17.4 240.4 28 February 2007 17.0 [1]
Final distribution 18.1 258.8 31 august 2007 17.0 [1]
Total distribution 35.5 499.2
Total 44.3 623.0
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dividends and distributions recognised in the prior year by the Company and the Trust are detailed below:

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TaX RaTe FoR peRCenTaGe
CenTS peR SHaRe ToTaL amounT daTe oF paymenT FRanKInG CRedIT FRanKed
2006 $m % %
The Company
Interim dividend 4.5 60.3 28 February 2006 30 100
Final dividend 4.1 55.8 31 august 2006 30 100
Total dividend 8.6 116.1
ToTaL amounT TaX pReFeRRed
CenTS peR unIT $m daTe oF paymenT %
The Trust
Interim distribution 16.0 214.4 28 February 2006 26.0 [1]
Final distribution 16.8 228.7 31 august 2006 26.0 [1]
Total distribution 32.8 443.1
Total 41.4 559.2
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distributions do not include the 50% CGT concession component of net capital gains because these amounts are not distributable.

1 Includes tax free component of 3.7% (2006: 3.5%).

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 111

38 DiviDeNDS AND DiSTRiBuTioNS (CoNTiNueD)

The following table reconciles the total dividends and distributions paid and payable to the Statement of Changes in equity:

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ConSoLIdaTed Company
2007 2006 2007 2006
noTe $M $m $M $m
Total dividends and distributions paid and payable 623.0 559.2 123.8 116.1
adjustments:
Finance costs to security holders as reported in the Income Statement – (144.4) – –
dividends and distributions relating to share-based payment loans (5.8) (6.3) (2.4) (1.3)
dividends and distributions paid and payable to security holders as per
Statement of Changes in equity 37(b) 617.2 408.5 121.4 114.8
Company
2007 2006
$M $m
Dividend franking account
30% franking credits available to shareholders of the Company for subsequent fnancial years 28.9 1.7
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notes to the Consolidated Financial Statements For the year ended 30 June 2007

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

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

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

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

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

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. The positive balance of the franking account at 30 June 2007 was due to timing of dividend and tax payment cash flows.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

notes to the Consolidated Financial Statements

For the year ended 30 June 2007

112 //

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ConSoLIdaTed Company
2007 2006 2007 2006
$M $m $M $m
39 CoMMiTMeNTS
inventory commitments
Commitments for the acquisition of development land not recognised at balance date:
Within one year 46.8 14.0 – –
Later than one year but not later than five years 41.9 45.6 – –
Later than fve years 5.2 – – –
Commitments not recognised in the fnancial statements 93.9 59.6 – –
Capital expenditure commitments
Commitments for capital expenditure not recognised at balance date:
Within one year [1] 335.9 250.9 – –
Later than one year but not later than fve years 120.3 30.9 – –
Commitments not recognised in the fnancial statements 456.2 281.8 – –
lease commitments
exchange Plaza, Perth WA
There is a contractual commitment for ground rent on exchange plaza of 10% p.a. (the Trust’s
share 5% p.a.) of the net income of the leased premises for each lease year, or $0.75 million
(the Trust’s share: $0.38 million), whichever is greater. This commitment expires in 2122.
Non-cancellable operating lease receivable from investment property tenants
non-cancellable operating lease commitments receivable:
Within one year 490.7 466.9 – –
Later than one year but not later than five years 1,253.7 1,122.4 – –
Later than fve years 727.7 617.2 – –
2,472.1 2,206.5 – –
annual rent receivable by Stockland under current leases from tenants is from commercial,
industrial and retail property held.
hotel lease commitments
Commitments for minimum lease payments in relation to non-cancellable
operating leases are payable as follows:
Within one year – 24.1 – –
Later than one year but not later than five years – 56.1 – –
Later than fve years – 27.2 – –
Commitments not recognised in the fnancial statements – 107.4 – –
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Stockland entered into non-cancellable operating leases in respect of several all-suite hotel developments, to be operated by Stockland, for terms of up to 15 years. Following the sale of the Saville business during the year, Stockland has no further hotel lease commitments.

during the year ended 30 June 2007, $14.6 million was recognised as an expense in the Income Statement in respect of operating leases (2006: $23.1 million).

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

	CoNSoLidaTed CompaNy 2007 2006 2007 2006 $M $m $M $m 40 Contingent liAbilitieS And Contingent ASSetS Contingent liabilities guarantees Bank guarantees issued to semi and local government and other authorities against performance contracts, maximum facility $720 million included within bank multi-use facilities (2006: $450.0 million) 244.5 160.3 – –	Notes to the Consolidated Financial Statements

Joint and several liability

For the year ended 30 June 2007

Stockland, as a 33.33% partner in a joint venture partnership (Subiaco Joint Venture), is jointly and severally liable for 100% of all liabilities incurred by that partnership. The assets of the partnership as at 30 June 2007 are sufficient to meet such liabilities (refer Note 45).

No deficiencies of assets exist in relation to any of the companies to which bank guarantees apply.

Revised notices on income tax

The australian Tax office has issued revised notices of assessment ($37.5 million including interest and penalties) reflecting various tax liabilities due in respect of companies acquired by Stockland that relate to taxation periods preceding the acquisition. These liabilities are covered by indemnities from the vendor in the sale agreement.

41 deed of CRoSS guARAntee

Stockland Corporation Limited and certain wholly-owned companies (the “Closed Group”), identified in Note 42, are parties to a deed of Cross Guarantee (the “deed”). The effect of the deed is that the members of the Closed Group guarantee to each creditor, payment in full of any debt, in the event of winding up of any of the members under certain provisions of the Corporations act 2001.

// 113

aSiC Class order 98/1418 (as amended) dated 13 august 1998, provides relief to parties to the deed from the Corporations act 2001 requirements for preparation, audit and lodgement of financial reports and directors’ reports, subject to certain conditions as set out therein. This Class order does not apply to trusts.

pursuant to the requirements of this Class order, a summarised consolidated income Statement for the year ended 30 June 2007 and a Balance Sheet as at 30 June 2007, comprising the members of the Closed Group after eliminating all transactions between members are set out on the following page.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

114 //

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CLoSed Group
2007 2006
NoTe $M $m
41 deed of CRoSS guARAntee
Summarised income Statement
profit before income tax expense 272.4 184.6
income tax expense (91.4) (61.1)
Proft for the year 181.0 123.5
balance Sheet
Current assets
Cash and cash equivalents 61.4 28.6
Trade and other receivables 98.3 55.9
Capital works in progress for Stockland Trust 133.7 256.6
inventories 799.7 667.4
other assets 36.7 49.7
Non-current assets held for sale 15.1 –
total current assets 1,144.9 1,058.2
non-current assets
Trade and other receivables 381.0 1,117.9
inventories 1,893.1 1,652.1
investment properties 54.9 76.1
other financial assets 417.1 0.4
property, plant and equipment 41.0 19.3
intangible assets 50.2 51.9
other assets 0.2 10.2
total non-current assets 2,837.5 2,927.9
total assets 3,982.4 3,986.1
Current liabilities
Trade and other payables 37.5 188.1
interest-bearing loans and borrowings 49 2,222.9 2,029.3
income tax payable 50.7 2.3
provisions 132.6 26.9
other liabilities – 55.2
total current liabilities 2,443.7 2,301.8
non-current liabilities
other payables 154.0 179.8
interest-bearing loans and borrowings 707.2 974.1
deferred tax liabilities 77.9 54.6
provisions 19.0 28.7
total non-current liabilities 958.1 1,237.2
total liabilities 3,401.8 3,539.0
net assets 580.6 447.1
equity
issued capital 403.1 355.1
reserves 33.7 8.1
retained earnings 143.8 83.9
total equity 580.6 447.1
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 115

42 ContRolled entitieS

The following entities were 100% controlled during the current and previous financial years:

Stockland trust Controlled entities of Stockland trust

adp Trust advance property Fund australian Commercial property Trust Flinders industrial property Trust Stockland Finance pty Limited Stocks & Holdings property Trust underwood Street (No 1) unit Trust underwood Street (No 2) unit Trust advance property Fund No. 3 (Growth)[1] advance property Fund No. 5 (Capital Growth)[2] property Trust of australasia[3] Stockland Commercial office Trust[3] Stockland Brisbane office Trust adp NZ Finance Company Limited[1] adp (NZ) Trust adp property Trust No.1 adp property Trust No.2 Capricornia property Trust industrial property Trust North Sydney property Trust[4] Schroders Building Fund Shellharbour property Trust

Notes to the Consolidated Financial Statements For the year ended 30 June 2007

Stockland Corporation limited Controlled entities of Stockland Corporation limited albert & Co. pty Limited[2] Stockland (alamein) pty Limited[2] Stockland development pty Limited Stockland Funds management Limited[2] Stockland management Limited[2] Stockland management Services pty Limited[2] Stockland (mapledown) pty Limited[2] Stockland (park) pty Limited[2] Stockland property management pty Limited Stockland property Services pty Limited[2] Stockland Holding Trust No 1[1] Stockland Holding Trust No 3[1] Stockland Holding Trust No 4[1] Stockland Holding Trust No 5[1] Stockland Holding Trust No 6[1] Stockland (Queensland) pty Limited[2] Stockland (russell Street) pty Limited[2] Stockland (Sales) pty Limited[2] Stockland Singapore pte Limited[1] Stockland Trust management Limited[2]

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

42 ContRolled entitieS (Continued) The following entities were 100% controlled during the current and previous financial years:

Notes to the Consolidated Financial Statements

Notes to the	42 ContRolled entitieS (Continued) The following entities were 100% controlled during the current and pr
Consolidated	Stockland Corporation limited (continued) Controlled entities of Stockland Corporation limited (continued)
Financial	Stockland (Victoria) pty Limited2 Stockland Wa Holdings pty Limited Stocks and realty (Security Finance) pty Limited2
Statements	Thermotech Building maintenance Services pty Limited2 Heritage Construction pty Limited2 North Whitfords estates pty Limited2
For the year ended 30 June 2007	Stockland Wa Corser pty Limited2
	Stockland Wa development pty Limited
	Stockland Wa (estates) pty Limited
	Stockland Wa property Company of australia pty Limited2
	Stockland South Beach Holdings pty Limited
	Stockland Wa enterprises pty Limited2
	Stockland Wa (rockingham) pty Limited2
	endeavour (No.2) unit Trust1
	Stockland development (Holdings) pty Limited2
	Stockland development (pHH) pty Limited2
	Stockland developments (Napa QLd) pty Limited
116 //	Stockland developments (Napa NSW) pty Limited Stockland development (Napa ViC) pty Limited
	Stockland Services pty Limited2
	Stockland development (QLd Holdings) pty Limited2
	Stockland development (Wa No.1) pty Limited2
	Stockland development (Wa No.2) pty Limited2
	Stockland development (Holdings No.1) pty Limited2
	Stockland Bells Creek pty Limited2
	Stockland Buddina pty Limited
	Stockland Caboolture Waters pty Limited
	Stockland Caloundra downs pty Limited
	Stockland Kawana Waters pty Limited
	Stockland Lake doonella pty Limited2
	Stockland North Lakes development pty Limited2
	Stockland North Lakes pty Limited
	Stockland realty pty Limited2
	Stockland Highlands pty Limited
	Lensworth Glenmore park Limited
	Stockland Wallarah peninsula pty Limited2
	Stockland (General) pty Limited2
	Stockland South Beach pty Limited
	Stockland South Beach Syndicate pty Limited
	Stockland Wa development (VerTu Sub 1) pty Limited1
	Stockland Wallarah peninsula management pty Limited2
	aCN 116788713 pty Limited
	Jimboomba Trust

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

42 ContRolled entitieS (Continued)

The following entities were formed/incorporated or acquired during the current financial year and are 100% controlled unless stated otherwise:

Stockland trust

Controlled entities of Stockland trust

Stockland industrial No. 1 property 1 Trust Stockland industrial No. 1 property 2 Trust Stockland industrial No. 1 property 3 Trust Stockland industrial No. 1 property 4 Trust Stockland industrial No. 1 property 5 Trust Stockland industrial No. 1 property 6 Trust Stockland industrial No. 1 property 7 Trust Stockland industrial No. 1 property 8 Trust Stockland industrial No. 1 property 9 Trust Stockland industrial No. 1 property 10 Trust Stockland industrial No. 1 property 11 Trust Jimboomba Village Shopping Centre and Tavern Trust Saville Brisbane Trust Stockland direct diversified Fund Stockland direct office Trust No. 4 SdoT 4 property # 1 Trust SdoT 4 property # 2 Trust SdoT 4 property # 3 Trust Stockland direct retail Trust No. 3 SdrT 3 property # 1 Trust SdrT 3 property # 2 Trust SdrT 3 property # 3 Trust Stockland retail Holding Trust No. 1 Stockland retail Holding Sub-Trust No. 1 Stockland retail Holding Sub-Trust No. 2

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

// 117

Stockland Corporation

Controlled entities of Stockland Corporation limited Nowra property unit Trust Stockland direct retail Trust No. 2 SdrT 2 property 1 Trust SdrT 2 property 2 Trust SdrT 2 property 3 Trust SdrT 2 property 4 Trust arC Joint Ventures pty Limited oak Grange pty Limited[2] rosebud Village pty Limited[2] Vermont retirement Village pty Limited[2] Knox Village pty Limited[2] patterson Village pty Limited[2] Templestowe retirement Village pty Limited[2] Long island Village pty Limited

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

42 ContRolled entitieS (Continued)

Notes to the Consolidated Financial Statements

The following entities were formed/incorporated or acquired during the current financial year and are 100% controlled unless stated otherwise:

Stockland Corporation (continued) Consolidated Controlled entities of Stockland Corporation limited (continued) midlands Terrace adult Community pty Limited Financial Wantirna Village pty Limited retirement Living Holding Trust No. 1 retirement Living Holding Trust No. 2 retirement Living Holding Trust No. 3 Statements retirement Living Holding Trust No. 4 For the year ended 30 June 2007 retirement Living Holding Trust No. 5 retirement Living Holding Trust No. 6 retirement Living acquisition Trust Knowles property management unit Trust Knox unit Trust patterson Lakes unit Trust Bayview road property Trust Vermont unit Trust Templestowe unit Trust retirement Living unit Trust No. 1 retirement Living unit Trust No. 2 Stockland Halladale Services Limited (registered in the uK)[1] 118 // Stockland Halladale (uK) Limited (registered in the uK)[1] Stockland Halladale Limited (registered in the uK)[1] Halladale developments Limited (registered in the uK)[1] Halladale asset management Limited (registered in the uK)[1] Finford management Limited (registered in the uK)[1] Geranium properties Limited (registered in the uK)[1] Halladale investments Limited (registered in the uK)[1] Halladale (Queen Street) Limited (registered in the uK)[1] Halladale (Stafford) Limited (registered in the uK)[1] Halladale (Newport) Limited (registered in the uK)[1] Halladale (Shaftesbury) Limited (registered in the uK)[1] Halladale properties (London) Limited (registered in the uK)[1] Halladale office (one) Limited (registered in the uK)[1] Halladale Land Limited (registered in the uK)[1] Halladale properties Limited (registered in the uK)[1] Halladale investments (London) Limited (registered in the uK)[1] Halladale (Cream) Limited (registered in the uK)[1] Halladale Lp Limited (registered in the uK)[1] Halladale Gp Limited (registered in the uK)[1] Halladale (isle of Wight) Limited (registered in the uK)[1] Halladale General partner Limited (registered in the uK)[1] Halladale General partner 2 Limited (registered in the uK)[1] Halladale General partner (Nelson) Limited (registered in the uK)[1]

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

42 ContRolled entitieS (Continued)

The following entities were formed/incorporated or acquired during the current financial year and are 100% controlled unless stated otherwise:

Stockland Corporation (continued)

Controlled entities of Stockland Corporation limited (continued) Halladale Nelson Nominee Limited (registered in the uK)[1] Halladale (dalgety Bay) Limited (registered in the uK)[1] Halladale (Billingham) Limited (registered in the uK)[1] Halladale (derby) Limited (registered in the uK)[1] Halladale properties (Fountain) Limited (75%) (registered in the uK)[1] Halladale developments (Fountain) Limited (75%) (registered in the uK)[1] osprey residential (rutherglen) Limited (registered in the uK)[1] Halladale (Glasgow) Limited (registered in the uK)[1] Halladale (europe) Limited (registered in the uK)[1] Halladale (Nailsea) Limited (registered in the uK)[1] Halladale (Gracechurch) Limited (registered in the uK)[1] Cream (Gp) Limited (75.10%) (registered in the uK)[1] Cream (GpNo.1) Limited (75.10%) (registered in the uK)[1] Cream Nominees (No.1) Limited (75.10%) (registered in the uK)[1] Cream (GpNo.2) Limited (75.10%) (registered in the uK)[1] Cream Nominees (No.2) Limited (75.10%) (registered in the uK)[1] Cream (GpNo.3) Limited (75.10%) (registered in the uK)[1] Cream Nominees (No.3) Limited (75.10%) (registered in the uK)[1] Cream (GpNo.4) Limited (75.10%) (registered in the uK)[1] Cream Nominees (No.4) Limited (75.10%) (registered in the uK)[1] Cream (GpNo.5) Limited (75.10%) (registered in the uK)[1] Cream Nominees (No.5) Limited (75.10%) (registered in the uK)[1] Halladale (William Hunter) Limited (registered in the uK)[1] Halladale Lp (Nezsky) Limited (registered in the uK)[1] Halladale (Capital Lp) Limited (registered in the uK)[1] Halladale General partner (Brook) Limited (registered in the uK)[1] Brook properties General partner Limited (registered in the uK)[1] Halladale Gp (Hammersmith) Limited (registered in the uK)[1] Halladale Lp (Hammersmith) Limited (registered in the uK)[1] Halladale (Warminster) Limited (registered in the uK)[1] Halladale (Cumbernauld) Limited (registered in the uK)[1] Halladale (uK) Limited[1] rynda property investors LLp[1] Stockland (Boardwalk Sub2) pty Limited[1] Stockland Financial Services Limited Stockland Wa development (realty) pty Limited[2] The following entities were deregistered during the current financial year having been 100% controlled in the previous financial year: West end apartments management unit Trust Centenary park developments No.1 pty Limited

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

// 119

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

42 ContRolled entitieS (Continued)

The following entities were sold during the current financial year having been 100% controlled in the previous financial year:

Stockland Hotel Group pty Limited directors management pty Limited[2] The park at melbourne (australia) pty Limited[2] West end apartments management pty Limited[2]

The following entities were 100% controlled by Stockland Corporation Limited during the previous financial year but were transferred to Stockland Trust in the current financial year: Stockland Holding Trust No 2 endeavour (No.1) unit Trust

Stockland Wholesale office Trust No. 1 (formerly Stockland residential property Trust)

The following entities were formed during the financial year and were 100% controlled by Stockland Trust during part of the financial year but are no longer wholly owned: Stockland direct office Trust No. 3

SdoT 3 property #1 Trust SdoT 3 property #2 Trust SdoT 3 property #3 Trust SdoT 3 property #4 Trust SdoT 3 property #5 Trust

120 //

The following entities were formed during the financial year and were 100% controlled by Stockland Corporation Limited during part of the financial year but are no longer wholly owned: Stockland direct retail Trust No. 1 SdrT 1 property 1 Trust SdrT 1 property 2 Trust SdrT 1 property 3 Trust SdrT 1 property 4 Trust

The following entity was 100% controlled by Stockland Trust during the previous financial year and part of this financial year but is no longer wholly owned: macquarie park Trust[5]

all Stockland entities were formed/incorporated in australia with the exception of adp (NZ) Trust and adp NZ Finance Company Limited which are incorporated in New Zealand, Stockland Singapore pte Limited which is incorporated in Singapore and Stockland Halladale Services Limited, Stockland Halladale (uK) Limited, Stockland Halladale Limited and all uK subsidiaries identified as being incorporated in the uK.

Stockland owns all the issued units/shares of the respective controlled entities (unless otherwise stated) and such units/shares carry the voting, dividend and distribution and equitable rights.

• 1 except for these companies, all other companies listed above, excluding Trusts, were parties to the deed and members of the Closed Group referred to in Note 41, as at 30 June 2007.

• 2 These companies are parties to the deed but are currently ineligible for relief under the Class order.

• 3 These trusts are wholly owned by advance property Fund, which is 100% owned by Stockland Trust.

• 4 This trust is wholly owned by the Flinders industrial property Trust, which is 100% owned by Stockland Trust.

• 5 This trust was 100% controlled during the prior year, 69% was sold on 15 June 2007.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 121

43 RetiReMent living

Stockland arC owns 20 operational retirement living communities. The contracts entered into between Stockland and the resident, entitle Stockland to earn a resident fee which is linked to the resale value of the resident’s unit or apartment and their period of occupancy. under the contracts the residents are entitled to receive their ingoing payment plus any increase in the value of the property on turnover. The timing for settlement of this obligation upon turnover depends on the contract. under an exit fee contract, Stockland does not have an unconditional right to defer settlement greater than 12 months after the resident turnover date.

under a deferred repayment contract, the terms of the contract allow Stockland to defer settlement for a maximum of eight years after the resident turnover date based upon the resident’s tenure period. in the event the loan is settled early the nominal value of the obligation is discounted at a rate in accordance with the contract for a maximum of eight years.

No interest is payable to the residents on these obligations.

Given the resident contracts are either loan/lease or loan and repurchase agreements, the accounting standards require the amount payable to residents to be recorded as a liability and the capital value of the retirement living communities to be recorded on the balance sheet as part of the fair value of the investment property.

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

The following table represents the net investment by Stockland in operational retirement living communities:

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CoNSoLidaTed CompaNy
2007 2006 2007 2006
NoTeS $M $m $M $m
Fair value of deferred management fee contracts 168.5 – – –
Capital value of operational retirement living communities 685.8 – – –
Total book value 18 854.3 – – –
existing retirement living resident obligations 26 (685.5) – – –
Net investment in operational retirement living communities 168.8 – – –
The retirement living communities have not been independently valued, the total
book value has been determined based upon directors’ valuations undertaken as
at 30 June 2007 using open market values.
The overall contribution of retirement living to the income Statement comprises the following:
Net gain from fair value adjustment of retirement living communities
– Capital growth of operational retirement living communities 19.1 – – –
– Fair value movement of deferred management fee contracts 7.3 – – –
– revaluation upon completion of newly constructed retirement living communities 3.9 – – –
30.3 – – –
existing retirement living resident obligations fair value movement (19.1) – – –
Net fair value movement from operational retirement living communities 11.2 – – –
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Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

122 //

44 inveStMentS in ASSoCiAteS

investments in associates are accounted for in the Financial Statements using the equity method of accounting. information relating to the associates is set out below:

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LoCaTioN priNCipaL aCTiViTy oWNerSHip iNTereST CarryiNG amouNT
2007 2006 2007 2006
aSSoCiaTe % % $M $m
KSC Trust australia property investment 25 25 130.2 106.5
macquarie park Trust [1] australia property investment 31 – 120.1 –
The anglo Halladale Limited partnership uK property trading and development 25 – 0.1 –
The anglo Halladale No.2 Limited partnership uK property trading and development 30 – 8.3 –
The anglo Halladale No.3 Limited partnership uK property trading and development 30 – 5.9 –
Halladale Nelson Limited partnership uK property investment 9 – 2.2 –
Cumbernauld retail park Limited partnership uK property trading and development 50 – 1.9 –
Cpi retail active management programme
Limited partnership and subsidiary partnerships uK property investment 10 – 16.9 –
Hammersmith Grove Limited partnership uK property trading and development 30 – 6.1 –
Capita portfolio Jersey property trading and development 30 – 12.4 –
Gracechurch Street unit Trust Jersey property trading and development 25 – 2.9 –
Nailsea unit Trust Jersey property trading and development 8 – 1.8 –
Bowen Square properties Limited uK in liquidation 30 – – –
Cockhedge retail Limited partnership uK property trading and development 6 – – –
portfolio real estate Limited uK in liquidation 29 – – –
308.8 106.5
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1 Controlled entity in the prior year.

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

2007 2006
$M $m
Movements in carrying amount of investment in associates
Carrying amount at the beginning of the financial year 106.5 100.3
acquisitions through business combinations 58.5 –
Controlled entity transferred to associates 102.0 –
Share of net profit (excluding fair value adjustment of investment properties) 7.1 6.5
Share of fair value adjustment of investment properties 41.6 6.1
dividends received/receivable (6.9) (6.4)
Carrying amount at the end of the fnancial year 308.8 106.5
----- End of picture text -----

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

	reVeNueS (100%) proFiT (100%) SHare oF aSSoCiaTeS’ NeT proFiT reCoGNiSed ToTaL aSSeTS (100%) ToTaL LiaBiLiTieS (100%) NeT aSSeTS aS reporTed By aSSoCiaTeS (100%) SHare oF aSSoCiaTeS’ NeT aSSeTS eQuiTy aCCouNTed $m $m $m $m $m $m $m	Notes to the Consolidated
	44 inveStMentS in ASSoCiAteS (Continued) 2007 KSC Trust 133.0 122.5 30.6 523.0 (2.2) 520.8 130.2 macquarie park Trust 58.5 58.3 18.1 411.9 (1.6) 410.3 120.11 The anglo Halladale Limited partnership – – – 0.4 – 0.4 0.1 The anglo Halladale No.2 Limited partnership – – – 158.0 (130.5) 27.5 8.3 The anglo Halladale No.3 Limited partnership – – – 60.8 (41.2) 19.6 5.9 Halladale Nelson Limited partnership – – – 71.4 (47.4) 24.0 2.2 Cumbernauld retail park Limited partnership – – – 101.2 (97.4) 3.8 1.9 Cpi retail active management programme Limited partnership and subsidiary partnerships – – – 704.2 (535.0) 169.2 16.9 Hammersmith Grove Limited partnership – – – 182.3 (161.9) 20.4 6.1 Capita portfolio – – – 188.4 (147.2) 41.2 12.4 Gracechurch Street unit Trust – – – 33.3 (21.7) 11.6 2.9 Nailsea unit Trust – – – 66.5 (43.6) 22.9 1.8 Bowen Square properties Limited – – – 0.1 – 0.1 – Cockhedge retail Limited partnership – – – 0.1 – 0.1 – portfolio real estate Limited – – – – – – –	// 1 Financial Statements For the year ended 30 June 2007
	191.5 180.8 48.7 2,501.6 (1,229.7) 1,271.9 308.8
	2006 KSC Trust 60.2 50.4 12.6 428.8 (2.8) 426.0 106.5

// 123

1 after elimination of $7.1 million in unrealised profits within the Group.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

124 //

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LoCaTioN priNCipaL aCTiViTy HoLdiNGS CarryiNG amouNT
2007 2006 2007 2006
JoiNT VeNTure % % $M $m
45 inveStMentS in Joint ventuReS
Compam property management pty Limited NSW dormant 50 50 – –
esplanade property Trust Wa property investment 50 50 143.0 94.0
martin place management Limited NSW dormant 50 50 – –
martin place property Trust NSW property investment 50 50 212.0 185.1
m property Trust NSW property investment 50 50 62.5 53.6
SdoT Sub Trust No.1 QLd property investment 50 50 239.7 177.7
Subiaco Joint Venture Wa dormant 33.3 33.3 – –
The King Trust NSW property investment 50 50 141.7 118.8
Willeri drive Trust Wa property investment 50 – 39.5 –
Halladale Ventures Limited uK property trading and development 50 – 14.1 –
Halladale opportunity Fund Limited partnership uK property trading and development 50 – 0.6 –
Halladale opportunity Fund Limited No.2 partnership uK property trading and development 50 – 2.3 –
Halladale anglo Ventures Limited uK property trading and development 50 – 13.3 –
Halladale muir Limited uK property trading and development 50 – 3.4 –
Nevsky property investors Lp uK property trading and development 25 – 0.7 –
Farworth Basingstoke Limited uK in liquidation 50 – – –
872.8 629.2
CoNSoLidaTed
2007 2006
$M $m
Movements in carrying amount of investment in joint venture entities
Carrying amount at the beginning of the financial year 629.2 553.1
acquisitions through business combinations 34.4 –
Contributions to the joint venture entities 2.3 7.6
Share of net profit (excluding fair value adjustment of investment properties) 44.1 39.3
Share of fair value adjustment of investment properties 163.5 62.6
distributions received/receivable (45.0) (47.3)
Joint venture entities purchased 44.3 13.9
Carrying amount at the end of the fnancial year 872.8 629.2
Share of joint venture entities’ assets and liabilities
Current assets 266.5 10.6
Non-current assets 838.4 624.8
Total assets 1,104.9 635.4
Current liabilities (15.1) (5.9)
Non-current liabilities (217.0) (0.3)
Total liabilities (232.1) (6.2)
Net assets 872.8 629.2
Share of joint venture entities’ revenues, expenses and results
revenues 223.1 129.5
expenses (15.5) (27.6)
Net proft accounted for using the equity method 207.6 101.9
----- End of picture text -----

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

45 inveStMentS in Joint ventuReS (Continued)

	45 inveStMentS in Joint ventuReS (Continued) CurreNT aSSeTS (100%) NoN-CurreNT aSSeTS (100%) CurreNT LiaBiLiTieS (100%) NoN-CurreNT LiaBiLiTieS (100%) NeT aSSeTS (100%) reVeNueS (100%) expeNSeS (100%) $m $m $m $m $m $m $m 2007 Compam property management pty Limited – – – – – – – esplanade property Trust 1.8 284.7 (0.4) – 286.1 116.0 (7.0) martin place management Limited – – – – – – – martin place property Trust 6.4 418.2 (0.7) – 423.9 84.2 (5.8) m property Trust 2.0 123.0 – – 125.0 22.0 (1.9) SdoT Sub Trust No.1 5.8 481.2 (5.3) (2.4) 479.3 152.6 (7.8) Subiaco Joint Venture – – – – – – – The King Trust 7.2 278.3 (2.0) – 283.5 57.7 (6.3) Willeri drive Trust 2.4 81.3 (4.7) – 79.0 13.7 (2.1) Halladale Ventures Limited 302.4 9.9 (11.1) (273.1) 28.1 – – Halladale opportunity Fund Limited partnership 8.7 – (0.8) (6.8) 1.1 – – Halladale opportunity Fund Limited No.2 partnership 72.4 – (1.3) (66.5) 4.6 – – Halladale anglo Ventures Limited 106.7 – (3.8) (76.3) 26.6 – – Halladale muir Limited 15.8 – (0.1) (8.9) 6.8 – – Nevsky property investors Lp 2.9 – – – 2.9 – – Farworth Basingstoke Limited – – – – – – – 534.5 1,676.6 (30.2) (434.0) 1,746.9 446.2 (30.9)	// 1 Notes to the Consolidated Financial Statements For the year ended 30 June 2007
	2006 Compam property management pty Limited – – – – – – – esplanade property Trust 2.6 186.2 (0.8) – 188.0 54.7 (7.5) martin place management Limited – – – – – – – martin place property Trust 6.2 364.6 (0.6) – 370.2 47.1 (7.0) m property Trust 2.4 105.0 (0.2) – 107.2 12.1 (1.8) SdoT Sub Trust No.1 6.8 353.2 (4.0) (0.6) 355.4 81.9 (7.6) Subiaco Joint Venture 0.3 – (0.3) – – 22.5 (18.6) The King Trust 3.0 240.6 (6.0) – 237.6 36.7 (7.5)
	21.3 1,249.6 (11.9) (0.6) 1,258.4 255.0 (50.0)

// 125

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

126 // Notes to the Consolidated Financial Statements For the year ended 30 June 2007	CoNSoLidaTed CompaNy 2007 2006 2007 2006 $M $m $M $m
	46 noteS to the CASh flow StAteMentS
	reconciliation of proft attributed to security holders of Stockland to net cash from operating activities:
	proft attributable to security holders of Stockland 1,716.3 1,061.6 167.4 117.0
	add/(less) items classifed as investing/fnancing activities:
	Fair value adjustment for investment properties (1,042.5) (640.3) – –
	increase in dividends and distributions receivable from joint venture entities – 4.0 – –
	Fair value adjustment for fnancial instruments treated as fair value hedge (0.1) (0.1) – –
	(proft)/loss on sale of non-current assets (0.5) 3.7 – –
	interest capitalised directly to investment properties (7.1) (6.3) – –
	medium term note capitalised (3.9)
	add/(less) non-cash items:
	Net unrealised (gain) on fnancial instruments (20.9) (15.5) – –
	Net unrealised loss on foreign exchange 0.7 – – –
	amortisation/depreciation 8.8 6.8 – –
	Straight-line rent adjustment (2.8) (3.2) – –
	equity-settled share-based payments 55.7 3.0 1.4 3.0
	Gain on sale of hotel business (87.8) – (87.8) –
	other items – 0.3 – –
	Net cash infow from operating activities before change in assets and liabilities 615.9 414.0 81.0 120.0
	(increase)/decrease in receivables (57.8) (17.0) – 4.7
	decrease/(increase) in other assets 131.4 (48.9) – –
	decrease in prepayments 2.4 3.0 – –
	increase in inventories (358.1) (350.1) – –
	increase in payables and other liabilities 207.8 109.5 – –
	increase/(decrease) in income tax payable 48.2 (4.7) 28.4 (4.7)
	increase in deferred taxes payable 24.8 18.5 – –
	(decrease)/increase in employee benefts (0.2) 2.2 – –
	(decrease) in other provisions (0.4) (1.1) – –
	Net cash infow from operating activities 614.0 125.4 109.4 120.0

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

47 finAnCiAl inStRuMentS

(a) financial risk management

Stockland’s activities expose it to a variety of financial risks: credit risk, liquidity risk, foreign exchange risk, cash flow and fair value interest rate risk. Stockland’s overall financial risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on Stockland’s financial performance. Stockland uses derivative financial instruments to hedge exposure to fluctuations in foreign exchange rates and interest rates.

Financial risk management is carried out by a central treasury department under policies approved by the Board. The Board provides written principles of overall risk management, as well as written policies covering specific areas such as mitigating interest rate and credit risks, use of derivative financial instruments and investing excess liquidity.

Credit risk

Stockland has no significant concentrations of credit risk and has policies to review the aggregate exposure of tenancies across its portfolio. Stockland also has policies to ensure that sales of products and services are made to customers with an appropriate credit history. derivative counterparties and cash transactions are limited to high credit quality financial institutions. Stockland has policies that limit the amount of credit risk exposure to any one financial institution.

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

The carrying amount of financial assets included in the consolidated balance sheet represents Stockland’s maximum exposure to credit risk in relation to these assets.

liquidity risk

prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. due to the dynamic nature of the underlying businesses, Stockland aims at maintaining flexibility in funding by keeping committed credit lines available.

foreign exchange risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not Stockland’s functional currency, being australian dollars.

Stockland is exposed to foreign exchange risk arising from currency exposures to the New Zealand dollars, uS dollars, Japanese yen and pounds Sterling.

// 127

Stockland manages its foreign exchange exposure by using cross currency interest rate swap contracts and forward exchange contracts.

Cash flow and fair value interest rate risk

The income and the associated operating cash flows of Stockland’s assets are substantially independent of changes in market interest rates. Stockland’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose Stockland to cash flow interest rate risk. Borrowings issued at fixed rates expose Stockland to fair value interest rate risk.

Stockland manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally, Stockland raises long-term borrowings at floating rates and swaps them into fixed rates that are lower than those available if Stockland borrowed at fixed rates directly. under the interest rate swaps, Stockland agrees with other parties to exchange, at specified intervals (generally quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.

(b) derivative financial instruments used by Stockland

Stockland is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in interest and foreign exchange rates in accordance with Stockland’s financial risk management policies as mentioned above. From time to time Stockland uses other derivative financial instruments to diversify and/or enhance the yield on its investments.

Allocated interest rate swap contracts

The weighted average effective interest rate on the domestic medium term notes at 30 June 2007 is 5.97% (2006: 5.93%) and the nominal interest rate is 6.18% (2006: 5.99%). in accordance with Stockland’s policy to protect borrowings from exposure to increasing interest rates, interest rate swap contracts are entered into to achieve an appropriate mix of fixed and floating interest rate exposures.

Swaps currently in place cover approximately 49.4% (2006: 49.3%) of the note principal outstanding and are timed to expire as each note repayment falls due. The fixed interest rates range between 5.13% and 5.29% (2006: 5.13% and 5.29%) and the variable rates are the 90 day bank bill rate which at 30 June 2007 was 6.44% (2006: 5.98%).

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Notes to the Consolidated Financial Statements For the year ended 30 June 2007

47 finAnCiAl inStRuMentS (Continued)

(b) derivative financial instruments used by Stockland (continued) Allocated interest rate swap contracts (continued)

at 30 June 2007, the notional principal amounts and periods of expiry of the allocated interest rate swap contracts for domestic medium term notes are as follows:

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

2007 2006
$M $m
1-2 years 400.0 –
2-3 years – 400.0
3-4 years 101.0 –
4-5 years – 101.0
over 5 years 285.0 285.0
----- End of picture text -----

These contracts require settlement of net interest receivable or payable each 90 days. The settlement dates coincide with the dates on which interest is payable on the underlying debt.

interest rate swap contracts have been recorded on the Balance Sheet at their fair value in accordance with aaSB 139. These instruments have not been designated as hedges for accounting purposes, nevertheless management believe the hedges are effective economically. as a result movements in the fair value of these instruments are recognised in the income Statement. refer accounting policy at Note 1(m).

at balance date, these contracts had a fair value of $11.5 million (2006: $6.3 million) included in non-current other assets and $12.6 million (2006: $12.8 million) in non-current other liabilities.

unallocated and future dated interest rate swap contracts

128 //

Stockland enters into unallocated and future dated interest rate swaps to manage the risk profile of its debt portfolio.

at 30 June 2007, the notional principal amounts and periods of expiry of the unallocated and future dated interest rate swap contracts are as follows:

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

2007 2006
$M $m
Less than one year – 400.0
1-2 years 150.0 –
2-5 years 300.0 –
over 5 years 2,104.3 1,200.0
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The contracts require settlement of net interest receivable or payable each 90 days.

interest rate swap contracts have been recorded on the Balance Sheet at their fair value in accordance with aaSB 139 “Financial instruments: recognition and measurement”. These instruments have not been designated as hedges for accounting purposes, nevertheless management believe the hedges are effective economically. as a result movements in the fair value of these instruments are recognised in the income Statement. refer accounting policy at Note 1(m).

at balance date, these contracts had a fair value of $18.7 million (2006: $6.7 million) included in non-current other assets and $38.6 million (2006: $0.9 million) included in non-current other liabilities.

Cross currency interest rate swap contracts

Swaps currently in place cover 100% of the uK private placement principal outstanding and are timed to expire when each uK private placement loan matures. The fixed interest rate is 5.625% and the variable rates are between 0.630% and 0.635% above the 90 day bank bill rate which at 29 June 2007 was 6.44%. The foreign currency exchange rate has been fixed at aud/GBp 0.4037 for the notes on issue in the uK private placement market.

Stockland’s foreign medium term notes create both an interest rate and a foreign currency risk exposure. Stockland’s policy is to minimise its exposure to both interest rate and exchange rate movements. accordingly, Stockland has entered into a series of principal and cross currency interest rate swaps.

Certain of the cross currency swaps have been designated as a hedge of Stockland’s investment in Halladale. The carrying amount of these cross currency swaps recognised in the foreign currency translation reserve at 30 June 2007 was a $8.3 million loss.

Swaps currently in place cover 100% (2006: 100%) of the foreign currency loan principal outstanding and are timed to expire as each loan repayment falls due. in addition to these swaps, additional interest rate swaps totalling $63.1 million (2006: $63.0 million) have been entered into to further manage the risk profile of the foreign medium term notes.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

47 finAnCiAl inStRuMentS (Continued)

47 finAnCiAl inStRuMentS (Continued) (b) derivative fnancial instruments used by Stockland (continued) Cross currency interest rate swap contracts (continued) The interest rates and exchange rates relating to the swaps are set out below: 2007 2006 foreign currency loan interest rates Fixed interest rate range uSd placement – october 2003 5.10% – 6.01% 5.10% – 6.01% uSd placement – July 2005 4.68% – 5.24% 4.68% – 5.24% asian bond – august 2005 3.99% 3.99% Sterling bond – april 2007 5.63% – uSd placement – June 2007 5.81% – 6.28% – Variable interest rates (above 90 day bank bill rate) uSd placement – october 2003 0.46% – 0.79% 0.46% – 0.79% uSd placement – July 2005 0.55% – 0.87% 0.55% – 0.87% asian bond – august 2005 0.80% 0.80% Sterling bond – april 2007 0.63% – 0.64% – uSd placement – June 2007 – above 90 day bank bill rate 0.39% – 0.48% – – above 90 day Libor rate 0.41% – 0.61% – 90 day bank bill rate 6.44% 5.98% 90 day Libor rate 6.00% – foreign currency exchange rates uS private placement market aud/uSd placement – october 2003 0.66 0.66 aud/uSd placement – July 2005 0.78 0.78 asian private placement market aud/uSd placement – august 2005 0.77 0.77 uK private placement market aud/GBp placement – april 2007 0.40 0.40 uS private placement market aud/uSd placement – June 2007 0.84 – GBp/uSd 1.99 –

// 1 Notes to the Consolidated Financial Statements For the year ended 30 June 2007

// 129

at 30 June 2007, the notional principal amounts (stated in aud) and periods of expiry of the cross currency interest rate swap contracts for foreign medium term notes are as follows:

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

2007 2006
$M $m
over 5 years – uSd placements 1,636.8 1,103.3
over 5 years – GBp placement 619.3 –
----- End of picture text -----

The contracts require settlement of net interest every 90 days. The settlement dates coincide with the dates on which interest is payable on the underlying debt.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

47 finAnCiAl inStRuMentS (Continued)

(b) derivative financial instruments used by Stockland (continued)

Cross currency interest rate swap contracts (continued)

These derivatives are recognised on the Balance Sheet at their fair value. The movements in fair value are recognised in accordance with the accounting policy at Note 1(m) depending upon whether they are designated as a fair value hedge or cash flow hedge relationship.

at balance date, these contracts had a fair value of $315.8 million (2006: $121.8 million) included in non-current other liabilities and $3.5 million (2006: $1.7 million) in non-current other assets.

forward exchange contracts

Stockland receives foreign currency denominated revenues from its New Zealand operations which creates a foreign currency risk exposure. as management desires to have certainty over the australian dollars received once the New Zealand dollars are generated, Stockland has entered into the forward contracts for the revenues it will receive from its New Zealand operations.

Contracts are entered into based on forecast revenue from the New Zealand operations for the ensuing financial years. The contracts are timed to settle quarterly.

The cash flows are expected to occur at various dates from the balance date to the period outlined below. at 30 June 2007, the details of outstanding contracts are:

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

SeLL NZd ForWard exCHaNGe raTe
2007 2006 2007 2006
$M $m Aud/nZd aud/NZd
Less than 1 year 16.0 16.0 1.18 1.18
1-2 years 12.0 16.0 1.18 1.18
2-3 years – 12.0 – 1.18
----- End of picture text -----

130 //

amounts disclosed above represent currency sold measured at the contracted rate.

at balance date, these contracts had a fair value of $1.1 million included in non-current other liabilities. For the year ended 30 June 2007, there was an unrealised loss in the income Statement from the decrease in fair value of the net assets of $1.1 million during the year.

in the prior year, these contracts had a fair value of $0.6 million included in current other assets and a corresponding unrealised gain of $0.6 million was also recognised in the income Statement.

other derivative financial instruments

From time to time Stockland uses other derivative financial instruments to diversify and/or enhance the yield on its investments. These derivatives are recognised on the balance sheet at fair value. The movements in fair value are recognised in accordance with the accounting policy at Note 1(m) depending upon whether they are designated as a fair value or cash flow hedge relationship.

at 30 June 2007 the notional principal amount and periods of expiry of other derivative financial instruments are as follows:

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

2007 2006
$M $m
Less than one year 132.6 –
1–2 years 10.9 –
----- End of picture text -----

at 30 June 2007, these instruments had a fair value of $3.7 million (2006: Nil) included in non-current other assets and $36.9 million included in current other assets (2006: Nil).

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

47 finAnCiAl inStRuMentS (Continued)

47 finAnCiAl inStRuMentS (Continued) (c) interest rate risk exposures in respect of income-earning fnancial assets and interest-bearing liabilities, the following table indicates their effective interest rate at the balance date and the periods in which they reprice at reporting date. 2007 2006 eFFeCTiVe iNTereST raTe FLoaTiNG iNTereST raTe 1 year or LeSS 1-2 yearS 2-3 yearS 3-4 yearS 4-5 yearS more THaN 5 yearS NoN- iNTereST- BeariNG ToTaL eFFeCTiVe iNTereST raTe FLoaTiNG iNTereST raTe 1 year or LeSS 1-2 yearS 2-3 yearS 3-4 yearS more THaN 5 yearS NoN- iNTereST- BeariNG ToTaL CoNSoLidaTed $m $m $m $m $m $m $m $m $m $m $m $m $m $m $m $m $m financial assets2 Cash and cash equivalents 5.86% 96.6 – – – – – – – 96.6 5.46% 37.1 – – – – – – 37.1 financial liabilities2 unsecured commercial paper 6.45% (73.0) – – – – – – – (73.0) 5.87% (200.0) – – – – – – (200.0) Secured bank facility 7.1% (113.8) (0.6) (2.2) (0.6) (0.6) (0.5) (7.3) – (125.6) 6.23% (91.2) – – – – – – (91.2) unsecured domestic medium term notes 6.18% (316.0) (239.0)(150.0) – (175.0) – (135.0) – (1,015.0) 5.99% (316.0) – (239.0) (150.0) (175.0) (135.0) – (1,015.0) effect of interest rate swaps1 (0.21%) 216.0 (101.0)(100.0) – – – (15.0) – – (0.06%) 216.0 – (101.0) (100.0) – (15.0) – – unsecured foreign medium term notes 5.53% – – – – – (32.1) (2,224.0) – (2,256.1) 5.27% – – – – – (1,103.3) – (1,103.3) effect of interest rate swaps1 1.44% (2,256.1) – – – – 32.1 2,224.0 – – 1.05% (1,103.3) – – – – 1,103.3 – – effect of unallocated interest rate swaps1 (0.80%) 2,554.3 – (150.0) – – (300.0) (2,104.3) – – (0.42%) 700.0 (400.0) – – – (300.0) – –

// 1 Notes to the Consolidated Financial Statements For the year ended 30 June 2007

// 131

1 Notional principal amounts.

2 other financial assets and payables are non-interest-bearing financial assets and liabilities.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

47 finAnCiAl inStRuMentS (Continued)

(c) interest rate risk exposures (continued)

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

2007 2006
eFFeCTiVe NoN-iNTereST- eFFeCTiVe NoN-iNTereST-
iNTereST raTe 1 year or LeSS BeariNG ToTaL iNTereST raTe 1 year or LeSS BeariNG ToTaL
CompaNy $m $m $m $m $m $m
financial liabilities
Loan from Trust 7.5% (2,222.9) – (2,222.9) 6.90% (2,029.3) – (2,029.3)
Loans to controlled
entities – – 2,633.3 2,633.3 – – 2,292.0 2,292.0
(2,222.9) 2,633.3 410.4 (2,029.3) 2,292.0 262.7
----- End of picture text -----

(d) fair values of financial assets and liabilities

Set out below is a comparison by category of carrying amounts and fair values of all Stockland’s financial assets and liabilities recognised in the Financial Statements. The fair values of other financial assets have been determined by reference to the net assets of the underlying investments.

The fair values of medium term notes (domestic and foreign) and derivative financial instruments have been calculated by discounting the expected future cash flows at prevailing market interest rates and exchange rates.

The fair value of the contingent settlement provision has been determined by comparing the value of the loans guaranteed by Stockland to the 30 June 2007 value of the securities to which they relate.

132 //

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CarryiNG CarryiNG
amouNT Fair VaLue amouNT Fair VaLue
2007 2007 2006 2006
CoNSoLidaTed $M $M $m $m
Cash and cash equivalents 96.6 96.6 37.1 37.1
Trade and other receivables 199.0 199.0 87.4 87.4
other financial assets 36.4 36.4 21.1 22.0
Trade and other payables (708.6) (708.6) (338.8) (338.8)
dividends and distributions payable (323.7) (323.7) (281.3) (281.3)
Commercial paper (73.0) (73.0) (200.0) (200.0)
Bank bill facility (125.6) (125.6) (91.2) (91.2)
domestic medium term notes (1,012.9) (1,164.2) (1,014.3) (1,171.0)
Foreign medium term notes (1,918.4) (1,918.4) (974.1) (974.1)
Contingent settlement provision (17.7) – (27.0) –
Financial instruments asset 74.3 74.3 14.6 14.6
Financial instruments liability (368.1) (368.1) (135.4) (135.4)
(4,141.7) (4,275.3) (2,901.9) (3,030.7)
unrealised losses (133.6) (128.8)
----- End of picture text -----

The difference of $151.3 million (2006: $156.7 million) between the carrying amount and fair value of the domestic medium term notes is due to the notes being carried at amortised cost under aaSB 139, whilst the fair value represents the amount required to replicate at balance date the principal and duration of these notes based on current market interest rates and conditions.

The difference of $17.7 million (2006: $27 million) between the carrying amount and the fair value of the contingent settlement provision is due to the market value of the Stockland securities which support the loans guaranteed by Stockland being higher than the loan values at balance date.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 133

47 finAnCiAl inStRuMentS (Continued)

(d) fair values of financial assets and liabilities (continued)

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

CarryiNG CarryiNG
amouNT Fair VaLue amouNT Fair VaLue
2007 2007 2006 2006
CompaNy $M $M $m $m
Trade and other receivables 2,633.3 2,633.3 2,292.0 2,292.0
other financial assets 182.2 339.3 [1] 184.7 211.8
other financial liabilities (66.6) (66.6) (55.5) (55.5)
Contingent settlement provision (17.7) – (27.0) –
2,731.2 2,906.0 2,394.2 2,448.3
unrealised gains 174.8 54.1
----- End of picture text -----

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

1 This excludes the next asset value of the units in the Trust of $7,695.0 million due to the nature of the stapling arrangement.

48 Key MAnAgeMent PeRSonnel diSCloSuReS

The following were key management personnel (“Kmp”) of both the consolidated entity and the Company at any time during the reporting period and unless otherwise indicated were Kmp for the entire period.

non-executive directors

mr Graham Bradley mr Nicholas Greiner mr Bruce Corlett ms Lyn Gearing (appointed November 2005) mr peter Scott (appointed august 2005) mr Terry Williamson

Chairman deputy Chairman

former non-executive directors

mr peter daly (retired october 2005) mr david Fairfull (retired october 2006)

executive directors

mr matthew Quinn managing director mr Hugh Thorburn Finance director

Senior executives

mr denis Hickey Ceo development division ms Johanna Keating executive General manager – Corporate affairs (appointed to the executive Committee January 2006) mr robb macnicol Former Ceo unlisted property Funds (now Stockland Capital partners division) (ceased employment march 2007) mr Steve mann Ceo Commercial and industrial division ms rilla moore executive General manager – Human resources mr david pitman executive General manager – Strategy and Corporate development (commenced employment march 2007) ms Lisa Scenna Joint managing director Stockland Halladale mr John Schroder Ceo retail division (commenced employment october 2006) mr darren Steinberg Former Ceo retail division (ceased employment November 2006)

other executives

mr Nick perrignon General manager – residential Communities, development division, Queensland

all executives are employed by Stockland development pty Limited, a subsidiary of Stockland Corporation Limited.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

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

poST- oTHer SHare-BaSed
SHorT-Term paymeNTS empLoymeNT LoNG Term paymeNTS
SHorT-Term
NoN- iNCeNTiVe ToTaL Super-
moNeTary SiGN oN (STi) & SHorT-Term aNNuaTioN LoNG SerViCe VaLue oF
SaLary BeNeFiTS [1] paymeNTS BoNuSeS [2] paymeNTS BeNeFiTS LeaVe SHareS [3] ToTaL
$ $ $ $ $ $ $ $ $
48 Key MAnAgeMent PeRSonnel diSCloSuReS (Continued)
Remuneration of key management personnel by the consolidated entity
total remuneration
Key management personnel 2007 8,362,973 249,295 525,000 5,575,000 14,712,268 239,915 144,024 3,029,330 18,125,537
(Consolidated and Company) 2006 6,718,272 326,828 – 3,895,000 10,940,100 231,636 176,259 1,763,946 13,111,941
----- End of picture text -----

1 Comprises motor vehicle costs, car parking, measured “cost to company” for interest-free housing loans and FBT payable.

2 Short term incentives are earned in the financial year to which they relate and are paid in august of the following financial year.

3 The methods and assumptions used to calculate the fair value of share-based payments are disclosed within this note.

information regarding individual directors’ and executives’ remuneration is provided in the remuneration report section of the directors’ report.

basis of disclosures included as remuneration

The equity remuneration provided by Stockland under the prp, iSp and the eSS involves a benefit to the recipients of the grants, which is disclosed as remuneration and calculated in accordance with australian accounting Standards.

Measurement

134 //

refer Note 34 for details regarding the calculation of fair values for the prp, iSp and eSS.

The remuneration to the individual under each plan is this fair value multiplied by the number of equity instruments granted to the individual to determine the total value of the remuneration benefit for each issue.

refer Note 1(bb)(vi) for further details regarding the accounting policy for rights/securities granted under these plans.

Allocation of accounting expense

Where the benefit from equity remuneration is expected to be earned over several reporting periods, the total benefit determined at the grant date of the equity remuneration is apportioned on a straight-line basis over the periods in which it is expected to be earned, being the vesting period.

For the equity remuneration granted by Stockland, where the individual forfeits the rights/securities due to failure to meet a service or performance condition, no remuneration in respect of that grant is reflected in the remuneration disclosures in that period, unless forfeiture relates to a market condition. The cumulative expense on forfeited rights/securities is reversed through the income Statement.

Where amendments are made to the terms and conditions of the grant subsequent to the grant date, the values of the grant immediately prior to and following the modification is determined. This occurs upon resignation or termination where the amendment relates to securities becoming vested in terms of beneficial ownership, which would otherwise have been forfeited due to the failure to meet future service or performance conditions. in this situation, the value that would have been recognised in future periods in respect of the securities not forfeited is brought to account in the period that the securities vest, along with the incremental value change of the grant resulting from the modification.

Loans granted under the ISP and ESS

Loans made to individuals by Stockland to fund the purchase of securities granted under the iSp and eSS are not disclosed in the Balance Sheet under aaSBs because they are considered options for accounting purposes.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 135

48 Key MAnAgeMent PeRSonnel diSCloSuReS (Continued) basis of disclosures included as remuneration (continued) equity holdings and transactions

The movement during the period in the number of stapled securities held, directly, indirectly or beneficially, by Kmp, including parties related to them, is as follows:

Stockland securities held under ISP/ESS plans

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

ToTaL SeCuriTieS ToTaL SeCuriTieS veSted SeCuRitieS
HeLd aT GraNTed aS HeLd aT held At
1 JuLy 2006 remuNeraTioN iN THe 30 JuNe 2007 30 June 2007
uNder iSp/eSS period Via iSp exerCiSed ForFeiTed uNder iSp/eSS undeR iSP/eSS
executive directors
mr m Quinn 1,846,000 – – – 1,846,000 1,511,000
mr H Thorburn 468,000 – – – 468,000 290,000
Senior executives
mr d Hickey 530,000 86,000 – – 616,000 370,000
mr J Schroder – – – – – –
mr d Steinberg 426,000 – (225,000) (201,000) – –
mr S mann 367,000 55,000 – – 422,000 255,000
mr r macnicol 262,000 43,000 (150,000) (123,000) 32,000 32,000
ms L Scenna 168,000 45,000 – – 213,000 88,000
ms r moore 90,000 37,000 – – 127,000 20,000
ms J Keating 104,000 32,000 (30,000) – 106,000 42,000
ToTaL SeCuriTieS ToTaL SeCuriTieS VeSTed SeCuriTieS
HeLd aT GraNTed aS HeLd aT HeLd aT
1 JuLy 2005 remuNeraTioN iN THe 30 JuNe 2006 30 JuNe 2006
uNder iSp/eSS period Via iSp exerCiSed ForFeiTed uNder iSp/eSS uNder eSS [1]
executive directors
mr m Quinn 2,510,000 336,000 (1,000,000) – 1,846,000 1,350,000
mr H Thorburn 290,000 178,000 – – 468,000 200,000
Senior executives
mr d Hickey 1,070,000 160,000 (700,000) – 530,000 300,000
mr d Steinberg 540,000 136,000 (250,000) – 426,000 225,000
mr S mann 500,000 112,000 (245,000) – 367,000 200,000
mr r macnicol 182,000 80,000 – – 262,000 150,000
ms L Scenna 213,000 80,000 (125,000) – 168,000 50,000
ms r moore 20,000 70,000 – – 90,000 –
ms J Keating 122,000 32,000 (50,000) – 104,000 60,000
----- End of picture text -----

Notes to the Consolidated Financial Statements For the year ended 30 June 2007

1 only eSS securities had vested and were exercisable by the individual Kmps in the prior year.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

136 //

48 Key MAnAgeMent PeRSonnel diSCloSuReS (Continued) basis of disclosures included as remuneration (continued)

equity holdings and transactions (continued)

Stockland securities held excluding unvested securities held under ISP/ESS plans

==> picture [602 x 412] intentionally omitted <==

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

ToTaL SeCuriTieS totAl SeCuRitieS
HeLd aT held At
1 JuLy 2006 (exCLudiNG 30 June 2007 (exCluding
uNVeSTed SeCuriTieS HeLd VeSTed aNd exerCiSaBLe unveSted SeCuRitieS held
uNder iSp/eSS) purCHaSed uNder iSp/eSS SoLd undeR iSP/eSS)
non-executive directors
mr G Bradley 56,400 11,724 – – 68,124
mr N Greiner 44,589 2,481 – – 47,070
mr B Corlett 174,605 31,313 – – 205,918
mr d Fairfull 13,539 740 – – 14,279
ms L Gearing 4,974 125 – – 5,099
mr p Scott 5,064 853 – – 5,917
mr T Williamson 20,285 1,129 – – 21,414
executive directors
mr m Quinn 1,351,000 – 160,000 – 1,511,000
mr H Thorburn 200,000 – 90,000 – 290,000
Senior executives
mr d Hickey 300,000 – 70,000 – 370,000
mr d Steinberg 225,000 – – (225,000) –
mr S mann 200,000 – 55,000 – 255,000
mr r macnicol 150,000 – 32,000 (150,000) 32,000
ms L Scenna 50,000 – 38,000 – 88,000
ms r moore – – 20,000 – 20,000
ms J Keating 60,000 – 12,000 (30,000) 42,000
ToTaL SeCuriTieS ToTaL SeCuriTieS
HeLd aT HeLd aT
1 JuLy 2005 (exCLudiNG 30 JuNe 2006 (exCLudiNG
uNVeSTed SeCuriTieS HeLd VeSTed aNd exerCiSaBLe uNVeSTed SeCuriTieS HeLd
uNder iSp/eSS) purCHaSed uNder iSp/eSS SoLd uNder iSp/eSS)
non-executive directors
mr G Bradley 44,780 11,620 – – 56,400
mr N Greiner 41,850 2,739 – – 44,589
mr B Corlett 123,171 51,434 – – 174,605
mr d Fairfull 12,720 819 – – 13,539
ms L Gearing – 4,974 – – 4,974
mr p Scott – 5,064 – – 5,064
mr T Williamson 19,039 1,246 – – 20,285
executive directors
mr m Quinn 1,000 – 2,350,000 (1,000,000) 1,351,000
mr H Thorburn – – 200,000 – 200,000
----- End of picture text -----

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

48 Key MAnAgeMent PeRSonnel diSCloSuReS (Continued) basis of disclosures included as remuneration (continued) equity holdings and transactions (continued)

Stockland securities held excluding unvested securities held under ISP/ESS plans (continued)

==> picture [602 x 115] intentionally omitted <==

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

ToTaL SeCuriTieS ToTaL SeCuriTieS
HeLd aT HeLd aT
1 JuLy 2005 (exCLudiNG 30 JuNe 2006 (exCLudiNG
uNVeSTed SeCuriTieS HeLd VeSTed aNd exerCiSaBLe uNVeSTed SeCuriTieS HeLd
uNder iSp/eSS) purCHaSed uNder iSp/eSS SoLd uNder iSp/eSS)
Senior executives
mr d Hickey – – 1,000,000 (700,000) 300,000
mr d Steinberg – – 475,000 (250,000) 225,000
mr S mann – – 445,000 (245,000) 200,000
mr r macnicol – – 150,000 – 150,000
ms L Scenna – – 175,000 (125,000) 50,000
ms J Keating – 5,141 [1] 110,000 (55,141) 60,000
----- End of picture text -----

Notes to the Consolidated Financial Statements For the year ended 30 June 2007

1 This represents shares allotted under the dividend reinvestment plan during the year.

mr Schroder and mr pitman do not hold any securities under Stockland share plans.

No securities (excluding securities under iSp/eSS) were granted as remuneration to Kmp during the reporting period.

loans with KMP

details regarding loans outstanding at the reporting date to Kmp and all loans where the individual’s aggregate loan balance exceeded $100,000 at any time in the reporting period, are as follows:

// 137

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

BaLaNCe BaLaNCe bAlAnCe iNTereST paid aNd payaBLe
1 JuLy 2005 30 JuNe 2006 30 June 2007 To SToCKLaNd iN THe
(iNCLudiNG iNTereST payaBLe) (iNCLudiNG iNTereST payaBLe) (inCluding inteReSt PAyAble) reporTiNG period
$ $ $ $
executive directors
mr m Quinn 159,000 159,000 159,000 –
Senior executives
mr d Hickey 300,000 300,000 300,000 –
mr d Steinberg 300,000 300,000 – –
Total for other executive key
management personnel 600,000 600,000 300,000 –
----- End of picture text -----

These loans represent housing loans advanced to Kmp as follows:

in consideration for moving interstate to join Stockland, mr m Quinn has an interest-free loan of $159,000 maturing on 20 august 2009 or within 180 days of him ceasing to be an employee of Stockland, whichever is the earlier. Commercial interest rates apply should mr m Quinn no longer be an employee of Stockland. The loan was advanced by a wholly owned subsidiary of Stockland. in the event of death or disability rendering mr m Quinn unable to work for Stockland, the loan may be repaid from the proceeds of life insurance policies.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

48 Key MAnAgeMent PeRSonnel diSCloSuReS (Continued)

loans with KMP (continued)

in consideration for moving interstate to join Stockland, mr d Hickey has an interest-free loan of $300,000 secured by unregistered mortgage over residential property with Stockland. This 10 year loan is repayable on 8 November 2012, or within 180 days of ceasing employment with Stockland, whichever is the earlier. Commercial interest rates apply should the executive no longer be an employee of Stockland. in the event of death or disability rendering the executive unable to work for Stockland, the loans may be repaid from the proceeds of life insurance policies.

in consideration for moving interstate to join Stockland, mr d Steinberg had an interest-free loan of $300,000 secured by unregistered mortgage over residential property with Stockland. This was repaid on 1 November 2006 and the mortgage was released.

No amounts have been written down or recorded as an allowance, as the balances are considered fully collectible.

The difference between fair value and face value of the loans being the value of the interest-free element (together with the related fringe benefits tax) has also been disclosed as a “Short-term Non-monetary” benefit in the remuneration report.

Share-based payment loans to KMP

Limited recourse interest-free loans have been made by a wholly owned entity of Stockland to Kmp to finance the purchase of Stockland securities, pursuant to the iSp and the eSS as described in Note 34. The annual General meetings of Stockland have approved the grant of securities to executive directors and the grant of securities under the iSp. These loans have a maximum term of five years from the date the loan is advanced. early repayment is required upon resignation, retirement, or dismissal (within 91 days) and within 182 days after death of the individual. The stapled securities are security for the loan until all outstanding amounts are fully repaid under the eSS or waived under the iSp if certain performance and service conditions are met.

Loans made to individuals by Stockland to fund the purchase of securities granted under the iSp and eSS are not disclosed in the Balance Sheet under aaSBs because they are considered options for accounting purposes.

Some eSS loans advanced to Kmp have been refinanced through loans provided by the CBa.

138 //

Stockland has guaranteed these loans provided by CBa to Kmp and other executives for a period of up to three years and ninety days from the date of the loan. The guarantee is for the shortfall, if any, between the value of the loan and the market value of the stapled securities that the loan supports. The guarantee ends 90 days after the borrower ceases to be an employee of Stockland or a related entity. The value of the guarantee, being $17.7 million (2006: $27.0 million) has been recorded as a contingent settlement provision in the Balance Sheet. refer Note 33.

Where the underlying iSp and eSS securities are sold prior to vesting, any excess of sales proceeds over loan balances outstanding is to the benefit of Stockland (other than for any capital gains tax liability imposed on the individual) and otherwise, that is after vesting, to the benefit of the individual. any shortfall of sales proceeds over the loan balance is forgiven, except in respect of any dividends and distributions attaching to the securities.

other transactions with KMP

detailed below are transactions between Stockland and entities with which directors have an association. These transactions do not meet the definition of related parties since the directors as individuals are not considered to have control or significant influence over the financial or operating activities of the respective non-Stockland entities. Furthermore, the terms and conditions of those transactions were no more favourable than those available, or might reasonably be available, on similar transactions on an arm’s length basis.

The aggregate amounts recognised during the year to directors, executives and their personally related entities were total revenues of Nil (2006: $35,000), and total expenses of $145,122,755 (2006: $187,957,050). There were no liabilities which arose from these transactions. details of the transactions are as follows:

mr N Greiner was Chairman of Bilfinger Berger australia pty Limited, the holding company of abigroup Limited and Baulderstone Hornibrook pty Limited. Baulderstone Hornibrook pty Limited provided construction services to Stockland during the year. in december 2004, Stockland entered into a fixed time and term arrangement with Baulderstone Hornibrook pty Limited to undertake the construction of a $350 million development of the optus HQ campus in macquarie park, NSW, which completed in June 2007. The terms and conditions of the transactions with Baulderstone Hornibrook pty Limited were no more favourable than those available, or which might reasonably be expected to be available on similar transactions to non-director related entities on an arm’s length basis. amounts paid/payable to Baulderstone Hornibrook pty Limited during the financial year were $141,514,398 (2006: $184,337,515).

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 139

48 Key MAnAgeMent PeRSonnel diSCloSuReS (Continued)

other transactions with KMP (continued)

mr Bradley is a director of Singapore Telecommunications Limited, the holding company of the optus group. in September 2004, optus entered into an agreement to lease purpose built campus style accommodation at macquarie park, NSW, which is owned by macquarie park Trust, an associate of Stockland. Stockland completed development of the site in June 2007. Stockland is now managing the property following optus’ relocation in June 2007. Stockland has also entered into various agreements with optus for the provision of telephony/telecommunications services. The terms and conditions of the transactions with optus were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions with non-director related entities on an arm’s length basis. amounts paid/payable to optus during the financial year for telephony/telecommunication services were $2,231,715 (2006: $2,678,629).

mr Corlett is the Chairman of Trust Company Limited, which provided custodial services to Stockland and its controlled entities during the financial year. The terms and conditions of this transaction, including the payment terms, were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions with non-director related entities on an arm’s length basis. Custodian fees paid and payable to Trust Company Limited for the financial year were $487,621 (2006: $407,667).

Notes to the Consolidated Financial Statements For the year ended 30 June 2007

mr Scott is a director of Sinclair Knight merz Holdings Limited, an unlisted public company which provided consulting services to Stockland and its controlled entities during the financial year. The terms and conditions of this transaction, including the payment terms, were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions with non-director related entities on an arm’s length basis. Fees paid and payable to Sinclair Knight merz for the financial year were $739,712 (2006: $533,239).

mr Scott is an employee of Korn Ferry international pty Limited, which provided consulting services to Stockland and its controlled entities during the financial year. The terms and conditions of this transaction, including the payment terms, were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions with non-director related entities on an arm’s length basis. Fees paid and payable to Korn Ferry international for the financial year were $149,309 (2006: Nil).

during the prior financial year, mr Bradley was a director until his retirement on 31 october 2005 of Queensland investment Corporation, which holds half of the issued units in the martin place property Trust, a registered investment scheme for which Stockland Trust management Limited is the responsible entity. during the financial year, Stockland Trust management Limited provided administrative and accounting services to Queensland investment Corporation in connection with the martin place property Trust. The terms and conditions of the transactions with Queensland investment Corporation were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions with non-director related entities on an arm’s length basis. The amount received from Queensland investment Corporation during the prior financial year was $35,000.

From time to time, Kmp of Stockland or parties related to them, may purchase goods and services from Stockland. except as otherwise detailed above, these purchases are on terms and conditions no more favourable than those entered into by unrelated customers and are trivial or domestic in nature.

49 otheR RelAted PARty diSCloSuReS

details of dealings within Stockland are set out below:

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2007 2006
$M $m
transactions with subsidiaries
dividends received or due and receivable by the Company from subsidiaries 109.7 120.0
interest paid by the Company to Stockland Trust 187.5 141.5
rent paid by the Company to subsidiaries 12.3 6.2
rent paid is in the normal course of business and on normal terms and conditions
intercompany loans with subsidiaries
aggregate amount receivable by the Company from subsidiaries 410.4 262.7
----- End of picture text -----

Loans from the Company to entities in the wholly-owned group are interest-free and repayable at call except for the loan between the Company and Stockland Trust of $2,222.9 million (2006: $2,029.3 million). interest on that loan was payable monthly in arrears at an interest rate of 7.5% (2006: 6.80% for July 2005, 6.85% for august 2005, 6.90% from 1 September 2005 to 31 october 2005 and 6.95% from 1 November 2005 to 30 June 2006).

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

Notes to the Consolidated Financial Statements

For the year ended 30 June 2007

49 otheR RelAted PARty diSCloSuReS (Continued)

transactions with associates

during the year Stockland development pty Limited paid rent totalling $1.1 million to macquarie park Trust (“mpT”), a 31% owned associate of Stockland. in addition, an access fee of $2.3 million was paid by Stockland development pty Limited to mpT to access the property to develop the optus commercial office campus.

other related parties

The major transactions between Stockland and the unlisted property funds managed by Stockland during the year, which have been received or are due and receivable, are outlined below.

==> picture [601 x 83] intentionally omitted <==

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2007 2006
$M $m
Fund establishment fees 10.1 8.7
responsible entity fees 1.4 0.9
management and service fees 1.2 –
performance fees 6.8 –
property management and leasing fees 1.3 0.5
Limited debt guarantee fee 0.1 0.1
----- End of picture text -----

during the year Stockland direct office Trust No.3 (“SdoT No.3”), an unlisted property fund managed by Stockland, acquired four properties from Stockland for $100.1 million, being the fair value of the properties. a 50% interest as a tenant in common for a property was acquired from Stockland for $32.8 million.

during the year Stockland direct retail Trust No.1 (“SdrT No.1”), an unlisted property fund managed by Stockland, acquired three properties from Stockland for $62.7 million, being the fair value of the properties.

140 //

Stockland received a swap premium of $0.2 million for the provision of an interest rate swap to SdrT No.1. The interest rate swap will incur a floating rate of BBSy plus 0.7% set quarterly. interest is payable quarterly in arrears and will terminate on the earlier of 7 years or when the underlying debt becomes due and payable. Stockland has provided an interest rate swap to SdoT No. 3. The interest rate swap will incur a floating rate of BBSy plus 0.6% set quarterly. interest is payable quarterly in arrears and will terminate on the earlier of 7 years or when the underlying debt becomes due and payable.

in addition, during the year Stockland sold 50% of the development rights in Vertu private estate, Forrestdale, Western australia to Stockland residential estates equity Fund No.1, an unlisted property fund managed by Stockland, for $22.5 million, being fair value.

as noted in Note 42, during the year 69% of macquarie park Trust was sold of which 49% was sold to Stockland direct office Trust No. 2 (“SdoT No.2”). in the prior year macquarie park Trust had a loan of $30.4 million payable to SdoT No.2. This loan matured upon commencement of the optus lease being 15 June 2007. interest was payable on the loan at 8.2303% p.a. The loan has been fully repaid.

during the year Saville Brisbane Trust, a subsidiary of the consolidated entity acquired 161 Grey Street, Southbank from Saville private Syndicate Trust (“SpST”), an unlisted property syndicate managed by Stockland. The property was acquired for $38.6 million, being the fair value of the property.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 141

• 1 in the opinion of the directors of Stockland Corporation Limited (“the Company”), and the directors of the responsible entity of Stockland Trust, Stockland Trust management Limited (collectively referred to as “the directors”):

• (a) the remuneration disclosures that are contained in sections a to e of the remuneration report in the directors’ report and the financial statements and notes, set out on pages 58 to 140, are in accordance with the Corporations act 2001, including:

  • (i) giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2007 and of their performance for the financial year ended on that date; and

directors’ declaration For the year ended 30 June 2007

  - (ii)  complying with australian accounting Standards (including the australian accounting interpretations) and the Corporations regulations 2001;

• (b) the Financial report also complies with international Financial reporting Standards as disclosed in Note 1(a);

• (c) the remuneration disclosures that are contained in sections a to e of the remuneration report in the directors’ report comply with australian accounting Standard aaSB 124 “related party disclosures”; and

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

• 2 There are reasonable grounds to believe that the Company and the group entities identified in Note 42 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the deed of Cross Guarantee between the Company and those group entities pursuant to aSiC Class order 98/1418.

• 3 The directors have been given the declarations required by Section 295a of the Corporations act 2001 from the managing director and Finance director for the financial year ended 30 June 2007.

Signed in accordance with a resolution of the directors:

==> picture [157 x 35] intentionally omitted <==

Graham Bradley Chairman dated at Sydney, 8 august 2007

matthew Quinn managing director

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

==> picture [83 x 36] intentionally omitted <==

independent auditors’ report to the Security holders of Stockland

142 //

RePoRt on the finAnCiAl RePoRt And AASb

124 ReMuneRAtion diSCloSuReS ContAined in the diReCtoRS’ RePoRt

Stockland comprises the consolidation of Stockland Corporation Limited (“the Company”) and its controlled entities, including Stockland Trust and its controlled entities, which form the consolidated entity (“Stockland” or “the consolidated entity”).

We have audited the accompanying financial report of Stockland, which comprises the balance sheets as at 30 June 2007, and the income statements, statements of changes in equity and cash flow statements for the year ended on that date, a summary of significant accounting policies and other explanatory notes 1 to 49 and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

as permitted by the Corporations Regulations 2001 , the Company has disclosed information about the remuneration of directors and executives (“remuneration disclosures”), required by australian accounting Standard aaSB 124 Related Party Disclosures , under the heading “remuneration report” in the directors’ report and not in the financial report. We have audited these remuneration disclosures.

directors’ responsibility for the financial report and the AASb 124 remuneration disclosures contained in the directors’ report

The directors of Stockland Corporation Limited and the directors of Stockland Trust management Limited, the responsible entity of Stockland Trust (collectively referred to as “the directors”) are responsible for the preparation and fair presentation of the financial report in accordance with australian accounting Standards (including the australian accounting interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. in note 1, the directors also state, in accordance with australian accounting Standard that the financial report, comprising the financial aaSB 101 Presentation of Financial Statements ,

statements and notes, complies with international Financial reporting Standards.

The directors are also responsible for the remuneration disclosures contained in the directors’ report.

Auditor’s responsibility

our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with australian auditing Standards. These auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. our responsibility is also to express an opinion on the remuneration disclosures contained in the directors’ report based on our audit.

an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report and the remuneration disclosures contained in the directors’ report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report and the remuneration disclosures contained in the directors’ report, whether due to fraud or error. in making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report and the remuneration disclosures contained in the directors’ report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. an audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the remuneration disclosures contained in the directors’ report.

We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and australian accounting Standards (including the australia accounting interpretations), a view which is consistent with our understanding of the Company’s and the consolidated entity’s financial position and of their performance and whether the remuneration

disclosures are in accordance with australian accounting Standard aaSB 124.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Auditor’s opinion on the financial report

in our opinion:

• (a) the financial report of Stockland is in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the Company’s and the consolidated entity’s financial position as at 30 June 2007 and of their performance for the year ended on that date; and

• (ii) complying with australian accounting Standards (including the australian accounting interpretations) and the Corporations regulations 2001.

• (b) the financial report also complies with international Financial reporting Standards as disclosed in note 1(a).

Auditor’s opinion on AASb 124 remuneration disclosures contained in the directors’ report

in our opinion the remuneration disclosures that are contained in the directors’ report comply with australian accounting Standard aaSB 124 Related Party Disclosures .

KpmG

m J Coleman Partner Sydney 8 august 2007

KpmG, an australian partnership and a member firm of the KpmG network of independent member firms affiliated with KpmG international, a Swiss cooperative.

Stockland Annual Report 30 June 2007

Stockland Corporation Limited and its controlled entities (including Stockland Trust)

// 143

The information set out below was prepared as at 31 august 2007 and applies equally to Stockland Trust and Stockland Corporation Limited, as members are required to hold equal numbers of units in the Trust and shares in the Corporation under the terms of the joint quotation of the australian Securities exchange. There are on issue 1,465,526,823 ordinary units in the Trust and ordinary shares in the Corporation.

largest twenty ordinary unit holders/Security holders

Security holders

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

NumBer oF perCeNTaGe oF
SeCuriTieS iSSued SeCuriTieS
HSBC Custody Nominees (australia) Limited 285,727,279 19.50
Jp morgan Nominees australia Ltd 191,265,569 13.05
National Nominees Limited 157,217,201 10.73
Citicorp Nominees pty Limited 145,455,044 9.93
aNZ Nominees Ltd (Cash income a/C) 122,338,654 8.35
Citicorp Nominees pty Ltd (CFS WSLe property Sec) 49,495,871 3.38
Cogent Nominees pty Ltd 28,843,222 1.97
amp Life Limited 16,757,748 1.14
rBC dexia investor Services aust Nominees pty Ltd (apN a/C) 15,359,394 1.05
Cogent Nominees pty Ltd (Smp accounts) 14,661,651 1.00
aNZ Nominees Limited (income reinvest plan a/C) 13,116,605 0.90
Bond Street Custodians Limited (property Securities a/C) 11,644,086 0.76
Bond Street Custodians Limited (eNH property Securities a/C) 11,095,094 0.76
Queensland investment Corporation 10,209,222 0.70
Citicorp Nominees pty Ltd (CFSiL CWLTH property 1 a/C) 8,909,907 0.61
perpetual Trustee Company Limited 8,858,560 0.60
Citicorp Nominees pty Ltd (CFSiL CFS WS iNdx prop a/C) 6,682,916 0.46
rBC dexia investor Services aust Nominees pty Ltd (pipooLed a/C) 6,535,437 0.45
uBS Wealth management australia Nominees pty Ltd 6,515,839 0.44
e G Holdings pty Limited 6,411,632 0.44
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The largest twenty members held 76.23% of the ordinary units/securities on issue.

distribution of security holders

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NumBer oF NumBer oF
CaTeGory SeCuriTieS SeCuriTy HoLderS
1 – 1,000 4,130,103 9,461
1,001 – 5,000 66,292,033 24,142
5,001 – 10,000 62,201,809 8,759
10,001 – 100,000 108,754,112 5,386
100,001 and over 1,224,148,766 229
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The number of unitholder/shareholders holding less than a marketable parcel was 1,778.

Substantial security holders

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NumBer oF
uNiTS/SeCuriTieS
iNG australia Holdings Limited 87,061,221
Commonwealth Bank of australia Limited 86,638,230
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Stockland Annual Report 30 June 2007

Security holder information and directory

144 //

Security holder information

end of financial year tax statement

after 30 June each year you will receive a comprehensive tax statement. This statement summarises the distributions and dividends paid to you during the year, and includes information required to complete your tax return.

Annual report

members have a choice as to whether they receive:

• no annual report or Financial Statements;

• an annual report in this form;

• detailed Financial Statements only;

• the annual report plus detailed Financial Statements; or

• electronic versions of the annual report and Financial Statements.

Members’ enquiries

To assist in providing quality service to its investors, Stockland has established the following sources for those wishing to obtain information in relation to the Group:

Stockland website

www.stockland.com.au

The Stockland site contains a variety of investor information, including market presentations, financial results, property news, announcements to the australian Securities exchange (aSx), and the latest annual and interim reports.

Registry

Computershare investor Services pty Limited operates a freecall number on behalf of Stockland. if you have any questions with regard to any of the following matters:

• change of address details as a member;

• request to have payments made directly to a bank account;

Reinvestment plan

Stockland operates a distribution/dividend reinvestment plan which allows members to have their dividend/distribution payments used to buy more Stapled Securities in Stockland at a discount of up to 5% as determined by the Board. These securities are acquired by members at no brokerage or other associated costs. The discount applicable to the august 2007 drp was 1.5%. any future changes to the drp will be disclosed to the aSx and notified on the Stockland website. drp application forms can be sent to you by Computershare or are available on the Stockland website.

distribution periods

• 1 July – 31 december 2006 1 January – 30 June 2007

ex-distribution dates

21 december 2006 25 June 2007

distribution banking or mailing dates

28 February 2007 31 august 2007

Annual general Meeting

Will be held at City recital Hall, angel place at 2.30pm on Tuesday 23 october 2007.

directory

Corporation/Responsible entity

Stockland Corporation Limited aCN 000 181 733

Stockland Trust management Limited aCN 001 900 741 aFSL 241190 Level 25 133 Castlereagh Street Sydney NSW 2000 Toll free 1800 251 813 Telephone 02 9035 2000

Custodian

Trust Company Limited aCN 004 027 749 35 Clarence Street Sydney NSW 2000

directors

Non-Executive Graham Bradley – Chairman Nicholas Greiner – deputy Chairman duncan Boyle Bruce Corlett Lyn Gearing peter Scott Terry Williamson

Executive

matthew Quinn – managing director Hugh Thorburn – Finance director

Company Secretaries phillip Hepburn derwyn Williams

unit/Share Registry

Computershare investor Services pty Limited Level 3

60 Carrington Street Sydney NSW 2000 Toll free (within australia) 1800 804 985 Telephone (outside australia) 61 3 9415 4000 email stockland@computershare.com.au

bankers

Commonwealth Bank of australia Westpac Banking Corporation Limited

Auditor KpmG

Quoted Securities

SGp ordinary units/shares

• request not to receive annual or half yearly report;

• provision of tax file numbers; or

– general queries about your securityholding, then please call the freecall hotline number: 1800 804 985.

Stockland Annual Report 30 June 2007

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Stockland Corporation Ltd ACN 000 181 733

Head Office Level 25, 133 Castlereagh Street Sydney NSW 2000

Sydney Telephone +61 (0)2 9035 2000

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This annual report has been produced on a stock that has 55 per cent recycled paper content, comprising 25 per cent post-consumer and 30 per cent pre-consumer waste, and 45 per cent fibre from sustainable well managed forests, and has an ISO14001 Environmental Accreditation.

Melbourne Telephone +61 (0)3 9095 5000 Brisbane Telephone +61 (0)7 3305 8600

Perth Telephone +61 (0)8 9368 9222

United Kingdom 37 Maddox Street London WIS 2PP Telephone +44 (0)207 659 9970

Disclaimer of Liability

While every effort is made to provide accurate and complete information, Stockland does not warrant or represent that the information in this brochure is free from errors or omissions or is suitable for your intended use. Subject to any terms implied by law and which cannot be excluded, Stockland accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in information. Note: All figures are in Australian dollars unless otherwise indicated.

www.stockland.com.au