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W. P. Carey2011
DEXUS Property Group
AnnuAl REPORT
DEXUS DIVERSIFIED TRUST
(ARSn 089 324 541)
lETTER FRom ThE ChaIR
oPERaTING aND FINaNCIal REVIEW
BoaRD oF DIRECToRS
CoRPoRaTE GoVERNaNCE STaTEmENT
FINaNCIal STaTEmENTS
DiREcTORS’ REPORT
AuDiTOR’S inDEPEnDEncE DEclARATiOn
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2
4
6
12
30
cOnSOliDATED STATEmEnT Of cOmPREhEnSivE incOmE 31
cOnSOliDATED STATEmEnT Of finAnciAl POSiTiOn
cOnSOliDATED STATEmEnT Of chAngES in EquiTy
cOnSOliDATED STATEmEnT Of cASh flOwS
nOTES TO ThE finAnciAl STATEmEnTS
DiREcTORS’ DEclARATiOn
inDEPEnDEnT AuDiTOR’S REPORT
aDDITIoNal INFoRmaTIoN
INVESToR INFoRmaTIoN
DIRECToRy
32
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2011 annual Reporting suite
DEXuS Property group (DXS) reports financial and non-financial performance across three reports:
1. The 2011 Annual Review, an integrated report summarising our financial, operational and corporate Responsibility and
Sustainability (cR&S) performance for the year ending 30 June 2011. further cR&S information can be found on our website
at www.dexus.com/crs
2. This report, the 2011 Annual Report containing the DXS’s consolidated financial Statements, corporate governance Statement
and information about our Board of Directors. This document should be read in conjunction with the 2011 Annual Review.
3. The 2011 combined financial Statements providing the financial Statements of DEXuS industrial Trust, DEXuS Office Trust and
DEXuS Operations Trust on an individual basis. This document should be read in conjunction with the DEXuS Property group
2011 Annual Report and Annual Review.
These reports are provided in print and online at www.dexus.com/dxs/reports along with our Annual general meeting notice of meeting
to security holders.
All amounts are A$ unless otherwise specified.
DEXuS Property group (DXS) (ASX code: DXS), consists of DEXuS Diversified Trust (DDf), DEXuS industrial Trust (DiT), DEXuS Office Trust
(DOT), and DEXuS Operations Trust (DXO), collectively known as DXS. DEXuS group includes DXS and the Third Party investment
management business as detailed in the 2011 Annual Review.
under Australian Accounting Standards, DDf has been deemed the parent entity for accounting purposes. Therefore the DDf consolidated
financial Statements include all entities forming part of DXS.
All press releases, financial Statements and other information are available on our website: www.dexus.com
cover: 123 Albert Street, Brisbane, qlD
i am pleased to present the 2011 Annual Report,
providing an overview of our financial performance
for the year ending 30 June 2011.
year in review
In 2010/11 we delivered a net profit to security holders of $553 million,
representing an increase of $521.6 million on the previous year. The
profit reflects the result of Funds From Operations (FFO) of $358 million
for the year and the revaluation of real estate, up $182 million.
In line with guidance provided to the market, FFO totalled $358 million
or 7.4 cents per security and distributions paid for the year were
5.2 cents per security.
In recovering market conditions we continued to concentrate on
achieving outperformance through leadership in office and industrial
property ownership, management and development. In particular,
our core office portfolio and active industrial business benefited from
a combination of improving market conditions and a business platform
well positioned to capitalise on those improvements.
While operating conditions in the united States continue to be mixed,
the value of our uS portfolio increased significantly. Our balance sheet
remained strong with gearing of 28.4%, access to multiple debt
markets and limited short term debt expiries. We remain well positioned
to respond to changing conditions and opportunities that may arise.
During the year we focused on further building our distinctive
capabilities to deliver strong performance and strengthening our
leadership positions in the office and industrial sectors. We achieved
this by focusing on the value drivers that we believe contribute to
outperformance mainly:
n Focusing investment in core markets with high barriers to entry
allowing us to create further scale and market power
n leveraging our concentrated scale to build and maintain
local relationships
n utilising our experienced in‑house research team in acquisition,
disposal and leasing transaction strategy
n Selectively engaging in value add developments
As a result of this focus DEXuS outperformed the S&P/ASX200
Property Accumulation Index in 2011 and has exceeded this
benchmark on a rolling three year basis each year since inception
in October 2004.
Stakeholder objectives
In 2011 we continued to drive performance for our stakeholders and
embed sustainability practices across our business in line with our
corporate commitments to deliver positive outcomes for our key
stakeholders by:
n Maximising returns for our investors
n Offering world class sustainable property solutions to our tenants
n Actively managing our purchasing and partnering decisions to ensure
a positive impact and create shared value
lETTER FRom
ThE ChaIR
n Being a preferred employer in the property industry to attract and
retain the most talented team
n Ensuring we have a positive impact through engagement with the
communities in which we operate
n Reducing resource consumption within our buildings including
working with our tenants to minimise their resource consumption
Board and governance
At the date of this report the Board comprises nine Directors, eight
of whom are independent. On 24 August 2011, Tonianne Dwyer
joined our Board and the appointment will be proposed at the
upcoming Annual General Meeting of security holders. Specific skills
and experience the Directors bring to the Board include strategy,
property investment, investment management, capital markets,
financial and risk management.
During the year we established a new Board membership policy,
outlining our approach to Directors servicing multiple boards, to guard
against Directors over committing their time. The policy also reflects our
commitment to review and refresh Board and Committee membership
to ensure appropriate experience and insight.
In 2010 we formalised our Diversity policy to reflect our belief that
diversity is a competitive advantage for our investors. In June 2011,
we agreed objectives and one of these was to achieve at least
33% female participation in senior management through to the
Board by June 2015. I am pleased to report that we currently sit
at 31% female participation. This represents the top 30% of our
workforce, including the Board, and is one of the highest in the
ASX 100. We continue to support and encourage diversity at all levels
– the Board of Directors, the Senior Management team and throughout
our organisation. The Board and Management oversee progress
towards the achievement of our diversity objectives, including regular
monitoring of key workforce demographics.
Outlook
Your Board and management team will remain focused on driving
performance from our property and the third party portfolios
we manage to maximise returns for investors.
On behalf of the Board, I would like to thank you for your support
during the past year. I look forward to leading the Board again in
2012 and reporting our activities to you next year.
christopher T Beare
Chair
26 September 2011
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
1
oPERaTING aND
FINaNCIal REVIEW
Financial summary
DEXuS Property Group’s financial performance for the year to 30 June
2011 is outlined below in detail. To fully understand our results, please
refer to the five year financial summary on page 3 and the full Financial
Statements in this Annual Report.
operational result
DEXuS Property Group’s FFO for the year to 30 June 2011 are
$358.0 million, an increase of 2.3% on the prior year. FFO per security
is 7.40 cents (2010: 7.30 cents per security). The key drivers impacting
FFO are:
Total revenue from ordinary activities for the year to 30 June 2011
decreased by $31.4 million to $684.7 million (2010 $716.1 million).
The key drivers include:
n The disposal of property assets totalling $177.8 million in 2011 and
$594.9 million in 2010, offset by the acquisition of property assets
totalling $78.1 million in 2011 and $307.2 million in 2010.
n An increase in like‑for‑like property income from the Australian
office and Australian industrial portfolios, offset by a reduction
in like‑for‑like property income for the uS industrial portfolio.
n unfavourable movements in the uS dollar currency rate.
net profit attributable to stapled security holders is $553.0 million or
11.4 cents per security, an increase of $521.6 million from the prior
year (2010: $31.4 million). The key drivers are:
n Fair value adjustments to property assets during the period
of $182.0 million1, compared to loss of $235.6 million in 2010.
This increase in the value of the Group’s property portfolio reflects
primarily a 30 basis point tightening in the weighted average
capitalisation rate, at which properties were valued, to 7.7%.
n unrealised net fair value gain on derivatives totalling $44.2 million
(2010: loss of $57.6 million) primarily as a result of higher market
interest rates.
n Gain on sale of investment properties of $7.1 million (2010: loss of
$53.3 million). The Group disposed of $177.8 million of properties
during the year resulting in the $7.1 million realised gain.
n Deferred tax expense of $18.6 million (2010: benefit of
$29.2 million) associated primarily with the positive revaluation
of our uS property assets.
n Operationally, FFO2 increased 2.3% to $358.0 million
(2010: $350.0 million).
n The Australian office portfolio income increased by $10.1 million (4.1%)
primarily driven by strong like ‑for‑like growth of 3.3%. This increase
was underpinned by strong leasing success particularly in the Sydney
market as our market scale and tougher stance on leasing delivered
benefits. Occupancy6 for the Australian office portfolio remains high
at 96.2% (2010: 95.7%) with a tenant retention rate of 53%.
n The Australian industrial portfolio’s income increased by $6.5 million
underpinned by stable like‑for‑like growth of 1.1%, the impact
of property transactions during 2010 and 2011, and the completion
of two developments at Greystanes during the year now valued at
$54.8 million. The industrial portfolio ended the year with occupancy6
at 96.2% (June 2010: 98.4%) and a tenant retention rate of 61%.
n The uS industrial portfolio’s income decreased by $19.5 million
through a combination of like‑for‑like income (down 4.5%), the impact
of a strengthening Australian dollar on uS earnings and property sales.
In a two‑tiered market, the core portfolio continues to perform well
with occupancy6 increasing from 95% to 99%. The central and east
coast portfolio remains weaker with occupancy at 74.0%. During
the year 11 properties totalling $143.6 million were sold including
$67.7 million in the central and east coast portfolio together with the
Group’s only Canadian asset, sold for C$78.7 million ($75.9 million).
n Financing costs for distributable earnings reduced by $33.1 million
primarily driven by the repayment of debt from asset sales
in 2010 and 2011 and favourable foreign currency movements.
n Management business EBIT decreased by $2.6 million primarily
due to costs associated with the establishment of our uS office
and local restructuring costs.
Based on our current distribution policy of 70% of FFO, the
distribution paid for the year to 30 June 2011 was 5.18 cents
per security (2010: 5.10 cents per security).
FFo
Retained earnings3
Distribution to security holders
Fair value adjustments of property
Other nTA changes in comprehensive income4
Other5
Net profit attributable to stapled security holders
June 2010
$m
June 2011
$m
Change
$m
350.0
(105.6)
244.4
(235.6)
1.5
21.1
31.4
358.0
(107.3)
250.7
182.0
110.8
9.5
553.0
8.0
(1.7)
6.3
417.6
109.3
(11.6)
521.6
1 Including DXS’s share of equity accounted investments.
2 FFO or distributable income is often used as a measure of real estate operating performance after finance costs and taxes. DXS’s FFO comprises profit/loss after tax attributable
to stapled security holders measured under Australian Accounting Standards and adjusted for: property revaluations, impairments, derivative and FX mark to market impacts,
amortisation of certain tenant incentives, gain/(loss) on sale of assets, straight line rent adjustments, deferred tax expense/benefit and DEXuS REnTS Trust capital distribution.
3 Based on the current distribution policy of 70% of FFO.
4 Includes fair value movement of derivatives, loss on sale of assets, deferred tax expense and amortisation of tenant incentives.
5 Includes REnTS capital distribution (classified as an equity related movement in the Financial Statements) and movements in intangibles.
6 Occupancy by area.
2
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Five year financial summary
2007
$’000
2008
$’000
2009
$’000
2010
$’000
2011
$’000
Statements of Comprehensive Income
Profit and loss
Property revenue
Management fees
Proceeds from sale of inventory
Property revaluations
Reversal of previous impairment
Interest revenue and net gain/(loss) on sale of investment properties
Contribution from equity accounted investments
Other income
Total income
Property expenses
Cost of sale of inventory
Finance costs
Employee benefit expense
Impairments and property devaluations
Other expenses
Total expenses
Profit/(loss) before tax
Income and withholding tax (expense)/benefit
Net profit/(loss)
Other non‑controlling interests (including REnTS)
Net profit/(loss) to stapled security holders
Operating EBiT
funds from Operations (cents per security)
Distributions (cents per security)
Statements of Financial Position
Cash and receivables
Property assets1
Other (including derivative financial instruments and intangibles)
Total assets
Payables and provisions
Interest bearing liabilities
Other (including financial instruments)
Total liabilities
net assets
Minority interest
Net assets (after non-controlling interest)
nTA per security ($)
gearing ratio (%)
Statements of Changes in Equity
Total equity at the beginning of the year
net profit/(loss)
Other comprehensive income/(loss)
Contributions of equity, net of transaction costs
Distributions provided for or paid
Other transactions with equity holders
Other non‑controlling interest movements during the year
Total equity at the end of the year
Statements of Cash Flows
net cash inflow from operating activities
net cash (outflow)/inflow from investing activities
net cash inflow/(outflow) from financing activities
net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
693,430
–
–
831,330
–
3,355
52,715
19,168
1,599,998
(170,120)
–
(133,055)
–
–
(53,559)
(356,734)
1,243,264
(32,473)
1,210,791
(41,972)
1,168,819
n/a
11.3
11.3
95,992
9,151,993
238,851
9,486,836
289,501
3,353,327
139,065
3,781,893
5,704,943
438,173
5,266,770
1.82
35.6
4,715,513
1,210,791
(27,136)
145,328
(324,638)
–
(14,915)
5,704,943
319,735
(537,912)
174,366
(43,811)
106,428
(3,014)
59,603
664,831
26,760
–
184,444
–
2,297
2,467
12,829
893,628
(159,565)
–
(213,233)
(23,340)
(61)
(44,266)
(440,465)
453,163
(7,902)
445,261
(6,984)
438,277
485.9
11.9
11.9
135,671
8,737,874
475,442
9,348,987
322,528
3,006,919
184,487
3,513,934
5,835,053
205,998
5,629,055
1.77
33.2
5,704,943
445,261
77,929
243,524
(355,380)
402
(281,626)
5,835,053
374,445
11,065
(342,514)
42,996
59,603
(3,385)
99,214
708,506
63,663
–
–
–
(1,880)
31
5,739
776,059
(174,485)
–
(384,241)
(59,282)
(1,685,733)
(47,970)
(2,351,711)
(1,575,652)
120,236
(1,455,416)
(3,695)
(1,459,111)
514.5
10.4
7.32
120,661
7,741,549
488,900
8,351,110
289,561
2,509,012
406,320
3,204,893
5,146,217
206,772
4,939,445
1.01
31.2
5,835,053
(1,455,416)
(53,478)
1,129,971
(296,648)
–
(13,265)
5,146,217
359,577
(212,459)
(170,190)
(23,072)
99,214
8,703
84,845
663,068
51,588
–
–
13,307
(53,342)
(26,243)
10,144
658,522
(169,753)
–
(190,685)
(58,978)
(209,367)
(28,132)
(656,915)
1,607
29,983
31,590
(170)
31,420
461.3
7.3
5.12
89,429
7,308,543
473,056
7,871,028
281,230
2,240,082
343,269
2,864,581
5,006,447
205,275
4,801,172
0.95
29.8
5,146,217
31,590
(7,034)
90,360
(244,411)
–
(10,275)
5,006,447
340,174
90,592
(444,382)
(13,616)
84,845
(6,810)
64,419
629,072
50,655
3,359
148,433
–
7,052
34,053
5,486
878,110
(151,865)
(3,353)
(52,744)
(67,417)
–
(26,298)
(301,677)
576,433
(21,313)
555,120
(2,108)
553,012
437.2
7.4
5.22
109,921
7,491,008
386,715
7,987,644
274,346
2,215,056
191,401
2,680,803
5,306,841
204,028
5,102,813
1.01
28.4
5,006,447
555,120
(4,973)
14,528
(250,662)
–
(13,619)
5,306,841
239,342
(227,039)
4,949
17,252
64,419
(7,925)
73,746
1 Property assets include investment properties, non‑current asset classified as held for sale, inventories, investments accounted for using the equity method,
and property, plant and equipment.
2 70% of FFO.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
3
BoaRD oF
DIRECToRS
Christopher T Beare Chair and Independent Director
BSc, BE (Hons), MBA, PhD, FAICD
Chris Beare is both the Chair and an Independent Director of DEXuS Funds Management limited
(appointed 4 August 2004). He is also a member of the Board nomination and Remuneration Committee
and the Board Finance Committee.
Chris has significant experience in international business, technology, strategy, finance and management.
Previously Chris was Executive Director of the Melbourne based Advent Management venture capital firm prior to
joining investment bank Hambros Australia in 1991. Chris became Head of Corporate Finance in 1994 and joint Chief
Executive in 1995, until Hambros was acquired by Société Générale in 1998. Chris remained a Director of SG Australia
until 2002. From 1998 onwards, Chris helped form Radiata, a technology start‑up in Sydney and Silicon Valley – and
as Chair and Chief Executive Officer, Chris steered it to a successful sale to Cisco Systems in 2001 and continued
part time for four years as Director Business Development for Cisco. Chris has previously been a director of a number
of companies in the finance, infrastructure and technology sectors. Chris is currently Chair of Mnet Group an
ASX listed company.
Elizabeth a alexander am Independent Director
BComm, FCA, FAICD, FCPA
Elizabeth Alexander is an Independent Director of DEXuS Funds Management limited (appointed 1 January 2005),
Chair of DEXuS Wholesale Property limited and a member of the Board Audit and Board Risk and Sustainability
Committees.
Elizabeth brings to the Board extensive experience in accounting, finance, corporate governance and risk
management and was formerly a partner with PricewaterhouseCoopers. Elizabeth’s previous appointments
include national Chair of the Australian Institute of Company Directors, national President of the Australian
Society of Certified Practising Accountants and Deputy Chairman of the Financial Reporting Council. Elizabeth
was also on the Boards of Boral limited and AMCOR limited.
Elizabeth is currently Chair of CSl limited from which she has indicated her intention to retire on 19 October 2011.
Elizabeth is also a director of Medibank Private and a Chancellor of the university of Melbourne.
Barry R Brownjohn Independent Director
BComm
Barry Brownjohn is an Independent Director of DEXuS Funds Management limited (appointed 1 January 2005) and is
Chair of the Board Audit and Board Risk and Sustainability Committees and a member of the Board Finance Committee.
Barry has over 20 years’ experience in Australia, Asia and north America in international banking and previously held
positions with the Bank of America including heading global risk management for the capital markets business, the
Asia capital markets business and was the Australasian CEO between 1991 and 1996. Following his career with Bank
of America, Barry has been active in advising companies in Australia and overseas on strategic expansion and capital
raising strategies. He has also held numerous industry positions including Chairing the International Banks and
Securities Association in Australia and the Asia Pacific Managed Futures Association.
Barry is an Independent Director of Citigroup Pty limited, an Advisory Board Member of the South Australian
Financing Authority and a Director of Bakers Delight Holdings Pty limited. He also serves as a Board Governor
of the Heart Research Institute.
John C Conde ao Independent Director
BSc, BE (Hons), MBA
John Conde is an Independent Director of DEXuS Funds Management limited (appointed 29 April 2009), is the
Chair of the Board nomination and Remuneration Committee and a member of the Board Compliance Committee.
John brings to the Board extensive experience across diverse sectors including commerce, industry and government.
John was previously a Director of BHP Billiton and Excel Coal limited, Managing Director of Broadcast Investment
Holdings Pty limited, Director of lumley Corporation and President of the national Heart Foundation of Australia.
John is Chairman of Ausgrid, the Bupa Australia Group and Whitehaven Coal limited. John is President of the
Commonwealth Remuneration Tribunal and Chairman of the Sydney Symphony. John is Chairman of the Australian
Olympic Committee (nSW) Fundraising Committee, Chairman of the Homebush Motor Racing Authority Advisory
Board and Chairman of Events nSW.
4
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Tonianne Dwyer Independent Director
BJuris (Hons), LLB (Hons)
Tonianne Dwyer is an Independent Director of DEXuS Funds Management limited (appointed 24 August 2011).
Tonianne brings to the Board significant experience as a company director and executive working in listed property,
funds management and corporate strategy across a variety of international markets. Tonianne was a Director from
2006 until 2010 of Quintain Estates and Development – a listed united Kingdom property company comprising funds
management, investment and urban regeneration – and was previously Head of Funds Management from 2003. Prior
to joining Quintain, Tonianne was a Director of Investment Banking at Hambros Bank, SG Cowen and Société Générale
based in london.
Tonianne also held directorships on a number of boards associated with Quintain’s funds management business
including the Quercus, Quantum and iQ Property Partnerships and the Bristol and Bath Science Park Stakeholder Board.
Stewart F Ewen oam Independent Director
Stewart Ewen is an Independent Director of DEXuS Funds Management limited (appointed 4 August 2004) and
a member of the Board nomination and Remuneration Committee.
Stewart has extensive property sector experience and started his property career with the Hooker Corporation
in 1966. In 1983, Stewart established Byvan limited which, by 2000, managed $8 billion in shopping centres in
Australia, Asia and north America. In 2000, Stewart sold his interest in Byvan to the Savills Group. In 1990 he started
navyB Pty ltd, which has completed in excess of $600 million of major residential and commercial property projects
in Australia and new Zealand. Stewart was previously Managing Director of Enacon ltd, a Director of the Abigroup and
Chairman of Tuscan Pty ltd, which developed and operated the Sydney university Village. Stewart was also a Director
of CapitaCommercial Trust Management limited in Singapore from 2004 to 2008.
Stewart was previously President of the Property Council of nSW, member of the nSW Heritage Council and Chair
of the Cure Cancer Australia Foundation.
Victor P hoog antink Executive Director and Chief Executive Officer
BComm, MBA, FAICD, FCA, FAPI, FRICS
Victor Hoog Antink is CEO and an Executive Director of DEXuS Funds Management limited (appointed 1 October 2004).
Victor has over 30 years’ experience in property and finance. Prior to joining DEXuS in november 2003, Victor held
Executive positions at Westfield Holdings where he was the Director of Funds Management, responsible for both the
Westfield Trust and the Westfield America Trust. Prior to joining Westfield in 1995, Victor held Executive management
positions in a number of financial services and property companies in Australia. Victor has a Commerce degree from
the university of Queensland and an MBA from the Harvard Business School. He is a fellow of the Australian Institute
of Company Directors, the Institute of Chartered Accountants in Australia, the Australian Property Institute and the
Royal Institute of Chartered Surveyors. Victor also holds a Real Estate Agent’s licence.
Victor is a former national President of the Property Council of Australia, Chair of the Property Industry Foundation
and Director for Greenprint Foundation.
Brian E Scullin Independent Director
BEc
Brian Scullin is an Independent Director of DEXuS Funds Management limited (appointed 1 January 2005),
DEXuS Wholesale Property limited and Chair of the Board Compliance Committee.
Brian brings to the Board extensive domestic and international funds management knowledge as well as finance,
corporate governance and risk management experience. Following a career in government and politics in Canberra,
Brian was appointed the inaugural Executive Director of the Association of Superannuation Funds of Australia (ASFA)
in 1987. He joined Bankers Trust in Australia in 1993 and held a number of senior positions, becoming President of
Japan Bankers Trust in 1997. In 1999 Brian was appointed Chief Executive Officer, Asia/Pacific for Deutsche Asset
Management and retired from this position in 2002.
Brian was appointed Chair of BT Investment Management limited in 2007 and Independent Director
of Spark Infrastructure in May 2011.
Peter B St George Independent Director
CA(SA), MBA
Peter St George is an Independent Director of DEXuS Funds Management limited (appointed 29 April 2009), is Chair
of the Board Finance Committee and is a member of the Board Audit and Board Risk and Sustainability Committees.
Peter has more than 20 years’ experience in senior corporate advisory and finance roles within natWest Markets
and Hill Samuel & Co in london. Peter acted as Chief Executive/Co‑Chief Executive Officer of Salomon Smith Barney
Australia/natWest Markets Australia from 1995 to 2001. Peter was previously a Director of Spark Infrastructure Group
and Chedha Holdings (Powercor and CitiPower, Victoria). Peter was also Chairman of Walter Turnbull Chartered
Accountants and a Director of SFE Corporation limited.
Peter is currently a Director of First Quantum Minerals limited (listed on the Toronto Stock Exchange)
and Boart longyear limited.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
5
CoRPoRaTE GoVERNaNCE
STaTEmENT
DEXuS Funds Management limited (DXFM) is the Responsible Entity
of each of the four Trusts that comprise DEXuS Property Group (DXS).
DXFM is also responsible for the management of a number of third
party funds and mandates.
This corporate governance framework applies to all DXFM funds
and mandates, and is designed to support the strategic objectives
of the Group by defining accountability and creating control systems
to mitigate the risks inherent in its day‑to‑day operations.
To achieve this objective, DXFM has implemented a corporate
governance framework that meets the requirements of ASX Corporate
Governance Principles and Recommendations (2nd edition) as amended
30 June 2010, and addresses additional aspects of governance that the
Board considers appropriate. The Board is also committed to the early
adoption of new and revised principles and recommendations.
A reconciliation of the ASX Principles against DXFM’s governance
framework is available at www.dexus.com/corporategovernance
The Board
Roles and responsibilities
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments); 1.1
As DEXuS comprises four real estate investment trusts, its corporate
governance practices satisfy the requirements relevant to unit trusts.
The Board has determined that its governance framework will also
satisfy the highest standards of a publicly listed company. These
additional governance aspects include the conduct of an annual
general meeting, the appointment of Directors by DEXuS security
holders and additional disclosure, such as the remuneration report.
The governance framework enables the Board to provide strategic
guidance, while exercising effective oversight of management. The
framework also defines the roles and responsibilities of the Board and
Executive Management in order to clearly communicate accountability
and ensure a balance of authority.
The Board is responsible for reviewing and approving DEXuS’s
business objectives and ensuring strategies for their achievements
are in place and monitored. Objectives are reviewed periodically
to ensure that they remain consistent with the Group’s priorities
and the changing nature of its business. These objectives become
the performance targets for the Chief Executive Officer and Group
Management Committee. Performance against these objectives is
reviewed annually by the Board nomination and Remuneration
Committee and is taken into consideration during the remuneration
review of Group Management Committee members.
The Board carries ultimate responsibility for the approval and
monitoring of annual business plans, the approval of acquisitions,
divestments and major developments. The Board also ensures that
the fiduciary and statutory obligations DEXuS owes to its security
holders, third party clients and investors are met.
The Board is directly responsible for appointing and removing the
Chief Executive Officer (CEO), and Company Secretary, ratifying the
appointment of the Chief Financial Officer (CFO) and monitoring the
performance of the Group Management Committee. The Board meets
regularly throughout the year and, when required, Directors also meet
to consider specific business. At each regular Board meeting the
Independent Directors meet without the CEO. Each year the Directors
also meet with senior management to specifically consider strategy.
In addition to these responsibilities, DXFM is committed to maintaining,
through both the Group Management Committee and the Board,
a balance of skills, experience and independence appropriate to
the nature and extent of its operations.
The Group Management Committee is responsible for the strategic
alignment and achievement of DEXuS’s goals and objectives. The
Group Management Committee is focused on ensuring prudent
financial and risk management of the Group.
composition
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments): 2.1, 2.2, 2.3
The composition of the Board reflects its role and the duties and
responsibilities it discharges. It reflects the need for the Board to
work together as a team with each Director making his or her own
contribution to the Board’s decision making process.
General qualifications for Board membership include the ability
and competence to make appropriate business recommendations and
decisions, an entrepreneurial talent for contributing to the creation of
investor value, relevant experience in the industry sector, high ethical
standards, exposure to emerging issues, sound practical sense and
a total commitment to the fiduciary and statutory obligations to further
the interests of all investors and achieve the Group’s objectives.
During the year, the Board implemented a Board Membership Policy
which addresses the potential impact of multiple board memberships
on Directors’ ability to devote adequate time to each board/position.
Should a Director seek to be appointed to additional boards, approval
must be sought from the Chair of DEXuS.
At 30 June 2011, the Board comprises eight members, seven of whom
are independent and the eighth member is the DEXuS CEO. All eight
Directors held office for the full financial year. The constitution allows
for the appointment of up to 10 Directors.
Specific skills the incumbent Directors bring to the Board include
strategy, property investment, funds management, capital markets,
financial and risk management. Independent Directors have expertise
in areas which enable them to relate to the strategies of DEXuS and
to make a meaningful contribution to the Board’s deliberations.
Independent Directors are independent of management and free of
any business or other relationship that could materially interfere with
the exercise of his or her unfettered and independent judgement. To
be independent, a Director must not have, in the previous three years:
1. been retained as a professional adviser to DEXuS either directly
or indirectly; or
2. been a significant customer of DEXuS or supplier to DEXuS
(as determined by the Chair); or
3. held a significant financial interest in DEXuS either directly
or indirectly (as determined by the Chair); or
4. held a senior executive position at DEXuS.
The Board regularly assesses the independence of its Directors, in light
of interests disclosed to it. Directors of the Responsible Entity are not
technically subject to the approval of security holders. However, the
Board has determined that all Directors other than the CEO, will stand
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DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
for election by DXS stapled security holders. If a nominated Director
fails to receive a majority vote that Director will not be appointed to the
Board of DXFM. DXFM Directors, other than the CEO, will hold office
for three years, following his or her first appointment (or, if appointed
by the Board between DXS Annual General Meetings, from the date
of the Annual General Meeting immediately succeeding the initial
appointment). It is not generally expected that an Independent Director
would hold office for more than ten years, or be nominated for more
than three consecutive terms, whichever is the longer.
The Chair is an Independent Director, and is responsible for the
leadership of the Board, for the efficient organisation and conduct
of the Board’s functions, and for the briefing of Directors in relation to
issues arising relevant to the Board. The Board has clearly defined the
responsibilities and performance of the CEO. The roles of the CEO and
the Chair are not exercised by the same individual. The performance
of the CEO is monitored by the Chair.
Biographies outlining the skills and experience of each Director are
set out on pages 4 to 5 of this Annual Report. The policy to select and
appoint new Directors to the Board, including specific criteria applied
to determine Director independence is available at www.dexus.com
meetings
The Board generally meets at least 10 times a year (being monthly
between February and november) as well as attending ad hoc meetings
that are called throughout the year. Board meetings are generally held
at the registered office of DEXuS, although a number of meetings will
be held “offsite” allowing the Directors to visit DEXuS owned or
managed properties. Directors are expected to attend at least 75%
of meetings a year. To assist participation, video conferencing facilities
have been established.
Agenda items for Board meetings include (but are not limited to):
n CEO report
n Company Secretary’s report
n Minutes of Board Committee meetings
n Reports on asset acquisitions, disposals and developments
n Management presentations
Board papers are provided to Directors no less than five business days
before the scheduled meeting. Management is available to provide
clarification or answer any questions Directors may have prior to
the Board meeting or attend the Board meeting if requested by the
Directors. DEXuS is currently trialling the provision of Board papers
via iPad.
Performance
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments); 1.2, 2.5
To ensure that each new Director is able to meet his or her responsibilities
effectively, newly appointed Directors receive an information pack and
induction briefing, which addresses the corporate governance framework,
Committee structures and their terms of reference, governing documents
and background reports. new Directors also attend briefings by DEXuS
management on business strategy and operations. There were no new
appointments during the 2011 financial year.
In addition, Directors undertake training, through regular presentations
by management and external advisers on sector, fund and industry
specific trends and conditions throughout the year. Directors are
also encouraged to:
n take independent professional advice, at the Group’s expense
and independent of management;
n seek additional information from management; and
n directly access the Company Secretary, General Counsel, Head
of Risk and Governance and other DEXuS Executives as required.
The Board nomination and Remuneration Committee oversees the
Board performance evaluation program which extends over a two year
period. Board and Committee performance is evaluated one year, and
individual Director performance is evaluated the following year.
The process is designed to identify opportunities for performance
improvement. In 2011 individual Director performance was evaluated.
Evaluations are undertaken using questionnaires and face‑to‑face
interviews on a broad range of issues.
The effectiveness of Board and Committees is reviewed on an annual
basis, the findings of which are reported to the Board. Committees’
Terms of Reference are reviewed on at least an annual basis. Each
Committee has a standing item to address at each meeting any
improvement to reporting or process that would benefit the Committee
as well as any items that require immediate reference to the Board,
or regulator (where applicable).
Governance
The Board has established a number of Committees to assist it in the
fulfilment of its responsibilities. The Board and Board Committee Terms
of Reference are reviewed at least annually, and copies can be found at
www.dexus.com/corporategovernance
Board nomination and Remuneration committee
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments); 2.4, 2.5, 8.1, 8.2
A Board nomination and Remuneration Committee oversees all
aspects of Director and Executive remuneration, Board renewal,
Director, CEO and management succession planning, Board and
Committee performance evaluation and Director nominations.
It comprises three Independent Directors:
n John C Conde AO, Chair, Independent Director
n Christopher T Beare, Independent Director
n Stewart F Ewen OAM, Independent Director
Reporting to the Board nomination and Remuneration Committee and the
Group Management Committee, the Compensation Committee oversees
the development and implementation of human resource management
systems and provides advice to the Board nomination and Remuneration
Committee. The Board nomination and Remuneration Committee also has
the power to engage external consultants independently of management.
Remuneration and incentive payments for employees are considered
by the Compensation Committee following guidance from the Board
nomination and Remuneration Committee.
Recommendations to the Board nomination and Remuneration
Committee are based on the achievement of approved
performance objectives and comparable market data.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
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Details of the Group’s remuneration framework for Executives,
Independent Directors and employees are set out in the Remuneration
Report that forms part of the Directors’ Report contained in this Annual
Report starting on page 14. In 2010/11 there were no base salary
increases for DEXuS senior management and no fee increases for
Independent Directors. There are no schemes for retirement benefits
(other than superannuation) for Independent Directors.
The CEO and Head of Human Resources attend the Board nomination
and Remuneration Committee meeting by invitation. It is the practice
of the Board nomination and Remuneration Committee to meet without
non‑committee members as required. non‑committee members are not
in attendance when their own performance or remuneration is discussed.
Board Audit committee
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments); 4.1, 4.2, 4.3, 7.3
To ensure the factual presentation of each Trust’s financial position,
DXFM has put in place a structure of review and authorisation. This
structure includes the establishment of a Board Audit Committee to:
n review the Financial Statements of each entity and review the
independence and competence of the external auditor; and
n review semi‑annual management representations to the Board Audit
Committee, affirming the veracity of each entity’s Financial Statements.
The Board Audit Committee’s Terms of Reference require that all three
Independent Director members have specific financial expertise and
have an understanding of the industry in which the Group operates.
The Board Audit Committee operates under formal Terms of Reference,
has access to management, and internal and external auditors without
management present, and has the right and opportunity to seek
explanations and additional information as it sees fit. Board Audit
Committee members have unrestricted access to external auditors.
The external auditor is invited to attend all Board Audit Committee
meetings. The Committee may also obtain independent professional advice
in the satisfaction of its duties at the cost of the Group and independent
of management. The Committee meets as frequently as required to
undertake its role effectively and meets not less than four times a year.
The members of the Board Audit Committee are:
n Barry R Brownjohn, Chair, Independent Director
n Elizabeth A Alexander AM, Independent Director
n Peter B St George, Independent Director
In order to ensure the independence of the external auditor, the Board
Audit Committee has responsibility for approving the engagement of
the auditor for any non‑audit service of greater than $100,000.
Both the CFO and the CEO, on a semi‑annual basis, make representations
to the Board Audit Committee regarding the veracity of the Financial
Statements and the financial risk management systems. On a semi‑annual
basis, the Internal Risk Committee completes a Fraud Risk questionnaire
identifying any instances of actual or perceived fraud during the period.
The CEO makes a representation at least quarterly to the Head of Risk
and Governance, regarding conformance with compliance policies
and procedures. Any significant exceptions are reported by Risk
and Governance to the Board Compliance Committee. Furthermore,
on a quarterly basis, the CFO provides certification to the Board
Compliance Committee as to the continued adequacy of financial
risk management systems.
As at June 2009, fees paid to the external auditor for non‑audit services
were 123% of audit fees. In 2010, non‑audit service fees reduced to
44% of audit fees and in 2011 non‑audit fees reduced to 28%.
Board compliance committee
The Corporations Act 2001 does not require DXFM to maintain a
Compliance Committee while more than half its Directors are external
Directors. However, the Board of DXFM has determined that the Board
Compliance Committee provides additional control, oversight and
independence of the compliance function and therefore will be continued.
The Board Compliance Committee reviews compliance matters and
monitors DXFM conformance with the requirements of its Australian
Financial Services licence and of the Corporations Act 2001 as it
relates to Managed Investment Schemes.
The Committee includes only members who are familiar with the
requirements of Managed Investments Schemes and have extensive
risk and compliance experience. The Committee is also encouraged to
obtain independent professional advice in the satisfaction of its duties
at the cost of the Group and independent of management. During the
2011 financial year, the Board Compliance Committee has not needed
to seek independent professional advice.
As at 30 June 2011, the Committee comprised five members,
three of whom are external members (i.e. members who satisfy the
requirements of Section 601JB(2) of the Corporations Act 2001), and
two of whom are Executives of the Group. The Compliance Plan Auditor
is invited to each Board Compliance Committee meeting.
The scope of the Committee includes all Trusts, including the Group’s
investment mandates. The Committee reports to the Board of the
Responsible Entity, breaches of the Corporations Act 2001 or breaches of
the provisions contained in any Trust’s Constitution or Compliance Plan,
and further reports to ASIC in accordance with legislative requirements.
DEXuS employees also have access to Board Compliance Committee
members to raise any concerns regarding unethical business practices.
The members of the Board Compliance Committee are:
n Brian E Scullin, Chair, external member
n John C Conde AO, external member
n Andy Esteban, external member
n Tanya l Cox, executive member
n John C Easy, executive member
The skills, experience and qualifications of Mr Scullin and Mr Conde AO
are on pages 4 and 5, Ms Cox and Mr Easy are on page 12 in this
Annual Report.
Andy Esteban holds a Bachelor of Business majoring in Accounting.
He is a CPA and a member of the Australian Institute of Company
Directors. Andy has over 30 years’ experience in the financial services
industry, 21 years of which were with Perpetual Trustees. In December
1999 he established FP Esteban and Associates, which specialises
in implementing and monitoring risk management and compliance
frameworks in the financial services industry. Andy has provided
compliance consulting services to organisations including uBS Global
Asset Management in Australia, Hong Kong, Singapore, Taiwan and
China. Andy is Chair of Certitude Global Investments ltd (formerly
HFA Asset Management ltd) and a Director of HFA Holdings ltd and
Chair of their Audit and Risk Committee; Director of Equitable Asset
Management (Australia) limited; Chair of the Compliance Committees
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DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
of Aberdeen Asset Management ltd, Deutsche Asset Management
Australia ltd, Grant Samuel and SPARK Infrastructure RE ltd; and
an Independent Member of the of Australian unity Funds Management
ltd, Celsius Investment Management limited, Schroder Investment
Management Australia ltd and Alliance Bernstein Compliance.
While some risks are identified, managed and monitored internally,
DEXuS has appointed independent experts to undertake monitoring
of health and safety and environmental risks, and other risks where
expert knowledge is essential to ensure DEXuS has in place best
practice processes and procedures.
To enable the Board Compliance Committee to effectively fulfil its
obligations, an Internal Compliance Committee has been established
to monitor the effectiveness of the Group’s internal compliance and
control systems.
Board Risk and Sustainability committee
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments); 7.1, 7.2
To oversee risk management at DEXuS, the Board has established
a Board Risk and Sustainability Committee responsible for reviewing
the Group’s operational risk management, environmental management,
sustainability initiatives, internal audit practices and any incidents of
fraud. The Committee also approves and oversees the effectiveness
of the Group’s Risk Management Framework.
The Board Risk and Sustainability Committee and Board Audit
Committee share common membership to ensure that a comprehensive
understanding of control systems is maintained by both Committees.
The Group has in place a range of policies supporting the risk and
compliance framework including (but not limited to):
n Good Faith Reporting – encouraging employees to raise concerns
regarding corruption, illegality or substantial waste of company
assets with appropriate management or members of the Board
Compliance Committee
n Occupational Health, Safety and liability – covering DEXuS’s
duty of care to investors, tenants, employees, agents and the wider
community, to ensure all Occupational Health, Safety and liability
(OHS&l) risks in our property portfolio and corporate offices are
appropriately managed
n Environmental Management – covering DEXuS’s duty of care to its
investors, tenants, employees, agents and the wider community to
sustain and protect the environment during the management of its
property portfolio, and to ensure that environmental obligations receive
equal importance to its commercial and other competitive obligations
n Fraud Control and Awareness – covering the detection, recognition
The members of the Board Risk and Sustainability Committee are:
and prevention of fraud
n Barry R Brownjohn, Chair, Independent Director
n Elizabeth A Alexander AM, Independent Director
n Peter B St George, Independent Director
The management of risk is an important aspect of the Group’s activities.
Consequently the Group has created a segregated risk function reporting
to the Chief Operating Officer on a day‑to‑day basis, as well as an
Internal Compliance Committee, an Internal Audit Committee and an
Internal Risk Committee, all of whom have independent reporting lines
to corresponding Board Committees.
The Risk and Governance team’s responsibility is to promote an
effective risk and compliance culture including the provision of advice,
the drafting and updating of relevant risk and compliance policies and
procedures, conducting training, monitoring and reporting adherence
to key policies and procedures. Frameworks have been developed and
implemented in accordance with Australian Standards AS 31000:2009
(Risk Management) and AS 3806:2006 (Compliance Programs).
The ongoing effectiveness of the risk management and internal control
systems is reported by the Head of Risk and Governance to the Board
Risk and Sustainability Committee and Board Compliance Committee
on a quarterly basis. Furthermore, on an annual basis, DEXuS’s
internal control procedures are subject to independent verification
as part of the GS007 (Audit Implications of the use of Service
Organisations for Investment Management Services) audit.
DEXuS recognises that risks come from numerous sources,
driven by both internal and external factors. The main sources
of risk faced by DEXuS include (and in no particular order):
n Strategic risks
n Market risks
n Environmental risks
n Financial risks
n Health and safety risks
n Regulatory risks
n Operational risks
n Fraud risks
n Anti‑Bribery – covering DEXuS’s policy on political donations,
charitable donations, lobbying, the receipt and provision of gifts
and benefits
While Internal Audit is resourced internally, DEXuS has adopted
a co‑sourcing arrangement. The appointment of an external firm
as co‑source service provider has the advantage of ensuring DXFM
is informed of broader industry trends and experience. A partner from
the internal audit co‑source service provider is invited to each Board
Risk and Sustainability Committee meeting.
The internal audit program has a three year cycle. The results of all
audits are reported to the Internal Audit Committee and the Board
Risk and Sustainability Committee on a quarterly basis, and the internal
audit function has a dual reporting line to the Internal Audit Committee
and the Board Risk and Sustainability Committee.
The Board Risk and Sustainability Committee is empowered to engage
consultants, advisers or other experts independently of management.
During the 2011 financial year, the Board Risk and Sustainability
appointed PricewaterhouseCoopers to undertake AS1000 assurance
of its Corporate Responsibility and Sustainability Report.
Board finance committee
The Group experiences significant financial risk, including interest
rate and foreign exchange exposures. To assist in the effective
management of these exposures, the Board has established a
Committee to specifically manage these financial risks. The Board
Finance Committee’s role is to review and recommend for approval
to the Board, financial risk management policies, hedging and funding
strategies, to review forward looking financial management
processes and recommend periodic market guidance.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
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STaTEmENT
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Supporting this Committee, management has established a Capital
Markets Committee. Members of the Board Finance Committee are:
n Peter B St George, Chair, Independent Director
n Barry R Brownjohn, Independent Director
n Christopher T Beare, Independent Director
management
The day‑to‑day management of each of the Trusts rests in the
hands of the management team. To assist this team in the
direction, implementation and monitoring of its plans and strategies,
a number of management Committees have been established and
responsibilities delegated.
Ethical behaviour
code of conduct
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments); 3.1
To ensure the satisfaction of statutory and fiduciary obligations to
each of its investor groups and to maintain confidence in its integrity,
the Board has implemented a series of clearly articulated compliance
policies and procedures to which it requires that all employees adhere.
In addition, the Board considers it important that its employees
meet the highest ethical and professional standards and consequently
has established both an Employee Code of Conduct, for all employees,
and a Directors’ Code of Conduct. Codes of Conduct are approved
by the Board Compliance Committee.
During the year, an Anti‑Bribery policy has been developed
and implemented. The policy covers the acceptance and provision
of appropriate gifts and benefits and reiterates DEXuS’s policy
of not making donations to any political party. The policy has been
approved by the Board Compliance Committee.
The Group is committed to and strongly supports disclosure being
made of corrupt conduct, illegality or substantial waste of company
assets under its Good Faith Reporting policy. The Group provides
protection to employees who make such disclosures from any
detrimental action or reprisal.
On an annual basis, all employees are required to confirm compliance
with key policies such as Code of Conduct, Employee Trading and
Good Faith Reporting.
Diversity
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments); 3.2, 3.3, 3.4
DEXuS comprises a socially and culturally diverse workplace
which helps create a culture that is tolerant, flexible and adaptive to
the changing needs of our environment. DEXuS believes that Boards
should be small enough to be able to act decisively, but large enough
that a diverse range of views is heard on any issue. DEXuS also
believes that Boards need to have continuity and experience with
DEXuS, as well as bringing fresh perspectives, and the DEXuS
Board continually reviews these two factors.
DEXuS is committed to diversity and promotes an environment
conducive to the merit‑based appointment of qualified employees,
senior management and Directors. Where professional intermediaries
are used to identify or assess candidates, they are made aware of the
Group’s commitment to diversity.
DEXuS currently publishes annual statistics on the diversity profile of
its Board and senior management, including a breakdown of the type
and seniority of roles undertaken by women in its 2011 Annual Review.
insider trading and trading in DEXuS securities
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments); 3.1
The Board has determined that Directors will not trade in any security
managed by the Group, and the Senior Executive team has similarly
determined that they will not trade in any security managed by the
Group. This decision has been made because the Board of DXFM has
responsibility for the performance of DEXuS as well as the third party
business. Directors are obliged to act in the best interests of each
group of investors independently of each other. Therefore, to minimise
the appearance of conflict that may arise, the Board has determined
that it will not invest in any fund managed by the Group, including
DEXuS. This position is periodically reviewed by the Board.
The Group has implemented a trading policy that applies to employees
who wish to invest in any of the Group’s financial products for his or her
personal account or on behalf of an associate. The policy requires any
employee who wishes to trade in any security issued or managed by
DXFM to obtain written approval from the CEO or member of the Group
Management Committee and the Head of Risk and Governance before
entering into a trade.
Generally, approval will not be granted during defined blackout periods.
These periods commence at the end of the financial half‑year and
full‑year reporting periods and end on the day DEXuS Group results
are released. In addition, if Risk and Governance or the Chief Executive
Officer considers that there is the potential that inside information may
be held or that a significant conflict of interest may arise, additional
blackout periods will be imposed.
With regard to aligning Senior Executives’ interests with the interests of
DEXuS’s investors, the Board has put in place a deferred performance
scheme that it considers ensures an alignment of Senior Executives’
interests with all investors. A description of the Senior Executives’
payment scheme is contained in the Remuneration Report starting
on page 14 of this Annual Report.
All employees are required to provide an annual declaration confirming
his or her understanding and compliance with the Employee Trading
Policy. Risk and Governance undertakes regular monitoring of the
security registers.
All policies and procedures are available on our website
at www.dexus.com/corporategovernance
conflicts of interest and related party dealings
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments); 3.1
The Group has implemented policies covering the management
of conflicts of interest which include:
10
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Personal conflicts
These may arise where the interests of clients or DEXuS are in conflict
with the interests of employees. The policies which deal with Personal
conflicts are the:
n Director Code of Conduct;
n Employee Code of Conduct;
n Key Management Personnel Trading;
n Employee Trading; and
n Gifts and Entertainment.
Business conflicts
These may arise in the following ways:
n conflicts arising from allocating property transactions, where there
may be conflicts between the interests of different DEXuS clients;
n when allocating a limited investment opportunity between a number
of clients;
n tenant conflicts, where a prospective tenant has two similar
properties to choose from both owned or managed by DEXuS;
n conflicts arising from related party dealings involving more than one
of DEXuS’s clients, where those clients are on opposite sides of the
transaction; and
n conflicts arising from transfer of assets involving the interests
of DEXuS clients when transferring real estate between schemes
and/or accounts which a DEXuS entity manages.
Where a conflict of interest has been identified, Risk and Governance
liaises with the parties concerned to ensure the effective and timely
management of the conflict. Where information barriers are put in
place, the Risk and Governance team monitors compliance with the
relevant policies.
On a monthly basis, the General Counsel reports to the Board on
related party transactions. On a quarterly basis, the Head of Risk
and Governance reports related party transactions to the Board
Compliance Committee.
During the 2010/11 financial year, DEXuS managed a related party
transaction where DEXuS Property Services Pty limited was appointed
to provide property management services for the newly acquired
industrial properties within the DEXuS Wholesale Property Fund
portfolio. Independent verification was sought to ensure the fee
structure reflected market rates.
continuous disclosure
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments); 5.1
DXFM has established a Committee to ensure timely and accurate
continuous disclosure for all material matters that impact the Group.
The Committee meets regularly to consider the activities of the Group
and whether any disclosure obligation is likely to arise as a result of
those activities. This Committee has been established to ensure that:
n investors continue to have equal and timely access to material
information, including the financial status, performance, ownership
and governance of the Trusts; and
n announcements are factual and presented in a clear and
balanced way.
Please refer to www.dexus.com/corporategovernance for a copy
of the Continuous Disclosure and Analyst Briefings Policy.
Compliance with our Continuous Disclosure and Analyst Briefing policy
is subject to ongoing monitoring, the results of which are reported to
the Board Compliance Committee.
Training
newly appointed members of the Senior Executive team undertake
induction training soon after commencing employment. Induction
training in relation to the operations of DEXuS takes the form of
a half day, interactive training session presented by the heads of
various business units. The Head of Risk and Governance conducts
a one‑to‑one Compliance Induction session with each newly appointed
Senior Executive outlining DEXuS’s approach to risk management and
compliance. In addition, all new employees attend face‑to‑face
Compliance Induction training facilitated by Risk and Governance,
which covers key compliance issues. Induction training for uS
employees is facilitated by video conferencing.
Training is also identified throughout the year based on changes to
legislation, compliance and risk issues highlighted during the period,
or changes to business operations. Training is facilitated by employee,
external service providers or the completion of online exams after
reference to policies and procedures.
annual General meeting
ASX Corporate Governance Principles and Recommendations
(with 2010 Amendments); 6.1
DEXuS respects the rights of security holders and to facilitate the
effective exercise of those rights, the Board has committed to the
conduct of an Annual General Meeting (AGM) for DXS security holders.
Each AGM is designed to:
n supplement effective communication with security holders;
n provide security holders ready access to balanced and
understandable information;
n increase the opportunities for security holder participation; and
n facilitate security holders’ rights to appoint Directors to the Board
of DXFM.
The Group has adopted a policy which requires Directors to attend its
AGM. In October 2010 all Directors attended the AGM. The external
auditor of the Trusts also attends each AGM and is available to answer
investor questions about the conduct of the audits of both the Trusts’
financial records and their Compliance Plans, and the preparation and
content of the Auditor’s Report. In addition to conducting an AGM, the
Group has a communications and investor relations strategy that promotes
an informed market and encourages participation with its investors.
This strategy includes use of the Group’s website to enable access to
DEXuS announcements, annual and half‑year reports, presentations
and analyst support material. The website also contains significant
historical information on announcements, distributions and other
related information at www.dexus.com/dxs DEXuS Property Group
engages link Market Services to independently conduct any vote
undertaken at the AGM of security holders.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 11
FINaNCIal STaTEmENTS
Directors’ Report
for the year ended 30 June 2011
The Directors of DEXuS Funds Management limited (DXFM) as
Responsible Entity of DEXuS Diversified Trust (DDF or the Trust) and
its consolidated entities, DEXuS Property Group (DXS or the Group)
present their Directors’ Report together with the consolidated Financial
Statements for the year ended 30 June 2011.
The Trust together with DEXuS Industrial Trust (DIT), DEXuS Office
Trust (DOT) and DEXuS Operations Trust (DXO) form DEXuS Property
Group stapled security.
1. Directors and Secretaries
1.1 Directors
The following persons were Directors of DXFM at all times during the
year and to the date of this Directors’ Report:
Directors
Christopher T Beare
Elizabeth A Alexander, AM
Barry R Brownjohn
John C Conde, AO
Stewart F Ewen, OAM
Victor P Hoog Antink
Brian E Scullin
Peter B St George
appointed
4 August 2004
1 January 2005
1 January 2005
29 April 2009
4 August 2004
1 October 2004
1 January 2005
29 April 2009
Particulars of the qualifications, experience and special responsibilities
of the Directors at the date of this Directors’ Report are set out in the
Board of Directors section of the Annual Report and form part of this
Directors’ Report.
1.2 company Secretaries
The names and details of the Company Secretaries of DXFM
as at 30 June 2011 are as follows:
Tanya l Cox mBa maICD FCIS
appointed: 1 october 2004
Tanya is the Chief Operating Officer and Company Secretary of DXFM
and is responsible for the delivery of company secretarial, operational,
information technology, communications and administration services,
as well as operational risk management systems and practices across
the Group. Prior to joining DXS in July 2003, Tanya held various general
management positions over the past 16 years, including Director and
Chief Operating Officer of nM Rothschild & Sons (Australia) ltd and
General Manager – Finance, Operations and IT for Bank of
new Zealand (Australia).
Tanya is a non‑executive director of a number of not‑for‑profit
organisations, a member of the Australian Institute of Company Directors
and a fellow of the Institute of Chartered Secretaries and Administrators
(ICSA) and Chartered Secretaries Australia (CSA). Tanya has an MBA
from the Australian Graduate School of Management and a Graduate
Diploma in Applied Corporate Governance.
Tanya is Chief Operating Officer and Company Secretary of DXFM,
DEXuS Holdings Pty limited (DXH) and DEXuS Wholesale Property
limited (DWPl) and is a member of the Board Compliance Committee.
John C Easy B Comm llB aCIS
appointed: 1 July 2005
John is the General Counsel and Company Secretary of DXFM. During
his time with the Group he has been involved in the establishment and
public listing of the Deutsche Office Trust, the acquisition of the Paladin
and AXA property portfolios, and subsequent stapling and creation
of DXS. Prior to joining DXS in november 1997, John was employed
as a senior associate in the commercial property/funds management
practices of law firms Allens Arthur Robinson and Gilbert & Tobin.
John graduated from the university of new South Wales with Bachelor
of laws and Bachelor of Commerce (Major in Economics) degrees.
He is a member of Chartered Secretaries Australia (CSA) and holds
a Graduate Diploma in Applied Corporate Governance.
John is General Counsel and Company Secretary for DXFM, DXH
and DWPl and is a member of the Board Compliance Committee.
12
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
2. attendance of Directors at Board meetings and Board Committee meetings
The number of Directors’ meetings held during the year and each Director’s attendance at those meetings is set out in the table below.
The Directors met 13 times during the year. Ten Board meetings were main meetings, three meetings were held to consider specific business.
While the Board continually considers strategy, in March 2011 they met with the Executive and Senior Management team over three days
to consider the Group’s strategic plans.
main meetings
held
main meetings
attended
Specific meetings
held
Specific meetings
attended
Christopher T Beare
Elizabeth A Alexander, AM
Barry R Brownjohn
John C Conde, AO
Stewart F Ewen, OAM
Victor P Hoog Antink
Brian E Scullin
Peter B St George
10
10
10
10
10
10
10
10
10
10
10
10
10
10
9
10
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
Special meetings are held at a time to enable the maximum number of Directors to attend and are generally held to consider specific items that
cannot be held over to the next scheduled main meeting.
The table below sets out the number of Board Committee meetings held during the year for the Committees in place at the end of the year and
each Director’s attendance at those meetings.
Board audit
Committee
Board Risk and
Sustainability
Committee
Board Compliance
Committee
Board Nomination
and Remuneration
Committee
Board Finance
Committee
held
attended
held
attended
held
attended
held
attended
held
attended
Christopher T Beare
Elizabeth A Alexander, AM
Barry R Brownjohn
John C Conde, AO
Stewart F Ewen, OAM
Brian E Scullin
Peter B St George
–
6
6
–
–
–
6
–
6
6
–
–
–
6
–
4
4
–
–
–
4
–
4
4
–
–
–
4
–
–
–
4
–
4
–
–
–
–
4
–
4
–
7
–
–
7
7
–
–
7
–
–
7
7
–
–
4
–
4
–
–
–
4
4
–
4
–
–
–
4
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 13
FINaNCIal STaTEmENTS
Directors’ Report
for the year ended 30 June 2011
CoNTINUED
3. Remuneration Report
3.1 introduction
This Remuneration Report has been prepared in accordance with AASB 124 Related Party Disclosures and section 300A of the Corporations Act
2001 for the year ended 30 June 2011. The information provided in this Report has been audited in accordance with the provisions of section
308 (3C) of the Corporations Act 2001.
Key management Personnel
In this report, Key Management Personnel (KMP) are those people having the authority and responsibility for planning, directing and controlling
the activities of the Group, either directly or indirectly. They comprise:
n non‑Executive Directors;
n the Chief Executive Officer; and
n Executives who are members of the Group Management Committee (GMC).
Below are the individuals determined to be KMP of the Group, classified between non‑Executive Director and Executive personnel.
Non-Executive Directors
There were no changes to the composition of non‑Executive Directors from the previous year.
Name
Title
Christopher T Beare
non‑Executive Chair
Elizabeth A Alexander, AM
non‑Executive Director
Barry R Brownjohn
non‑Executive Director
John C Conde, AO
non‑Executive Director
Stewart F Ewen, OAM
non‑Executive Director
Brian E Scullin
non‑Executive Director
Peter B St George
non‑Executive Director
Executives
KmP 2011
KmP 2010
3
3
3
3
3
3
3
3
3
3
3
3
3
3
The following changes occurred within the Executive group during the year ended 30 June 2011:
n the GMC was formed on 1 July 2010, replacing the former Executive Committee;
n all property sector Executives now report through to the Chief Investment Officer;
n Mr Turner, former Head of Funds Management and a KMP, ceased employment on 31 December 2010; and
n Ms Martin, former Head of Office and a KMP, ceased employment on 31 December 2010.
Name
Title
Victor P Hoog Antink
Chief Executive Officer
Tanya l Cox
John C Easy
Craig D Mitchell
Paul G Say
Chief Operating Officer
General Counsel
Chief Financial Officer
Chief Investments Officer
Andrew P Whiteside1
Head of Industrial
R Jane lloyd1
Head of uS Investments
Patricia A Daniels1
Head of Human Resources
Status
GMC Member
GMC Member
GMC Member
GMC Member
GMC Member
Executive
Executive
Executive
Mark F Turner2
louise J Martin2
Head of Funds Management
Executive/left Employment
Head of Office and Retail
Executive/left Employment
KmP 2011
KmP 2010
3
3
3
3
3
–
–
–
–
–
3
3
3
3
3
3
3
3
3
3
1 Following the establishment of the GMC on 1 July 2010, Mr Whiteside, Ms lloyd and Ms Daniels were no longer considered to be KMP for the purpose of this report.
However, the total of their remuneration received in 2010 has been disclosed in sections 3.5 and 3.8 of this report to provide consistency with figures reported in the prior year.
2 Ms Martin is included in the remuneration disclosure in sections 3.5 and 3.8 of this report due to her termination payments placing her within the five most highly paid Directors
or Executives as defined under the Corporations Act. Mr Turner’s remuneration is disclosed for 2010 within the former KMP group in sections 3.5 and 3.8.
14
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
3.2 Board oversight of remuneration
The objectives of the Board nomination and Remuneration Committee (Committee) are to assist the Board in fulfilling its responsibilities
by overseeing all aspects of Director and Executive remuneration, as well as Board nomination and performance evaluation. Specifically,
the Committee carries out the following activities:
Nomination
To review and recommend to the Board:
n the nomination, appointment, re‑election and removal of Directors;
n performance evaluation procedures for the Board, its committees and individual Directors;
n Board and CEO succession plans;
n identification of those employees who fall within the definition of Key Management Personnel as defined in AASB124 Related Party Disclosures;
n the DEXuS Diversity Policy;
n measurable objectives for the achievement of gender diversity and monitoring of those objectives;
n ongoing training and development requirements for Directors;
n the effectiveness of the induction process for Directors; and
n determination of the time required by independent Directors to discharge their responsibilities effectively, and whether Directors are meeting
this commitment.
Remuneration
To review and recommend to the Board:
n remuneration approach, including design and operation of the performance payment employee incentive schemes;
n CEO and Executive performance and remuneration;
n aggregate annual performance payment pool; and
n Directors’ fees.
To review and approve:
n aggregate base salary increases and annual performance payment pool, for all employees other than the CEO and
Key Management Personnel; and
n recruitment, retention and termination policies and procedures.
Regarding remuneration, the Committee assesses the appropriateness of the structure and the quantum of both Director and Executive
remuneration on an annual basis, with reference to relevant regulatory and market conditions, and individual and company performance.
At its discretion, the Committee engages external consultants to provide independent advice when required (see section 3.4 for a description
of the remuneration review process).
Further information about the role and responsibilities of the Committee is set out in the Board nomination and Remuneration Committee
Terms of Reference, which may be found online at www.dexus.com in the Corporate Governance section.
The composition of the Committee remained unchanged throughout the year ended 30 June 2011. Mr Conde continued in his role as Committee
Chair, drawing upon his extensive experience from a diverse range of appointments, including his role as President of the Commonwealth
Remuneration Tribunal. The Committee’s experience is further enhanced through the membership of Messrs Beare and Ewen, each of whom
has significant management experience in the property and financial services sectors.
During the year ended 30 June 2011, Committee members were:
Name
Title
John C Conde, AO1
Committee Chair
Christopher T Beare2
Committee Member
Stewart F Ewen, OAM
Committee Member
Brian E Scullin3
Committee Member
2011
2010
3
3
3
–
3
3
3
–
1 Mr Conde was formerly a member of the Committee and became Chair effective 1 September 2009.
2 Mr Beare was formerly Chair of the Committee and became a Member effective 1 September 2009.
3 Mr Scullin ceased being a Member of the Committee on 31 August 2009 (there were no FY10 meetings of the Committee prior to this).
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 15
FINaNCIal STaTEmENTS
Directors’ Report
for the year ended 30 June 2011
CoNTINUED
3. Remuneration Report (continued)
3.3 non-Executive Directors’ remuneration framework
The objectives of the non‑Executive Directors’ remuneration framework are to ensure non‑Executive Directors’ fees reflect the responsibilities
of non‑Executive Directors and are market competitive. non‑Executive Directors’ fees are reviewed annually with reference to:
n comparably sized companies in the S&P/ASX 100 index;
n publicly available remuneration reports from competitors; and
n information supplied by independent external advisors, such as the Australian Institute of Company Directors, Ernst & Young and the Godfrey
Remuneration Group.
non‑Executive Directors, other than the Chair, receive a base fee plus additional fees for membership of Board Committees. The table below
outlines the fee structure for the year ended 30 June 2011.
Committee
Director’s Base Fee
Board Audit and Risk
DWPl Board
Board Finance
Board Compliance
Board nomination and Remuneration
Chair
$
350,000
30,000
30,000
15,000
15,000
15,000
member
$
150,000
15,000
15,000
7,500
7,500
7,500
In addition to the Directors’ fee structure outlined above, Mr Ewen’s company is paid a fixed fee of $30,000 per annum for his attendance
at property inspections, for reviewing property investment proposals and participating in informal management meetings.
Recognising the greater responsibility and time commitment required, the Board Chair receives a higher fee than other non‑Executive Directors,
which is benchmarked to the market median of comparably sized ASX listed entities. The Chair does not receive Board Committee fees,
nor is the Chair present during any discussion relating to the determination of the Chair’s fees.
non‑Executive Directors are not eligible to receive performance based remuneration or accrue separate retirement benefits beyond statutory
superannuation entitlements.
Base fees for both the Chair and non‑Executive Directors were increased effective 1 July 2010. This increase was reported in the remuneration
report for the year ended 30 June 2010. Total fees paid to Directors remain within the aggregate fee pool of $1,750,000 per annum approved
by DXS security holders at its Annual General Meeting in October 2008.
16
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
3.4 Approach to Executive remuneration
3.4.1 Executive remuneration principles
DXS Executives are charged with providing a full range of integrated
property services, focused on office and industrial property
management, delivering consistent total returns to investors, while
assuming relatively moderate risk. Earnings growth is also driven by
increasing activity in each of our operating business and growing new
revenue streams. The Directors consider that an appropriately skilled
and qualified Executive team is essential to achieve this objective. The
Group’s approach to the principles, structure and quantum of Executive
remuneration is therefore designed to attract, motivate and retain such
an Executive team.
In establishing the Group’s remuneration principles, the Directors
are cognisant that DXS’s business is based on long term property
investments and similarly long term tenant relationships. Furthermore,
property market investment returns tend to be cyclical. Taking these
factors into account, the Executive remuneration structure is based
on the following criteria:
1. market competitiveness and reasonableness;
2. alignment of Executive performance payments with achievement
of the Group’s financial and operational objectives, within its risk
framework and cognisant of its values‑based culture; and
3. an appropriate mix of remuneration components, including
performance payments linked to security holder returns over
the longer term.
(a) market competitiveness and reasonableness
For the purposes of determining market competitive remuneration, the
Group takes a research based approach, obtaining external executive
remuneration benchmarks from a range of sources, including:
n publicly available data from the annual reports of constituents of the
S&P/ASX 100 index;
n independent remuneration consultants, including Hart Consulting
Group, Financial Institutions Remuneration Group, Aon Hewitt and
the Avdiev Group, regarding property organisations of a similar
market capitalisation; and
n various recruitment and consulting agencies who are informed
sources of market remuneration trends.
(b) Alignment of Executive performance payments
with achievement of the group’s objectives
The Group assesses individual Executive performance within a
Balanced Scorecard framework. The Balanced Scorecard prescribes
the financial and non‑financial performance indicators that will be
used to measure an Executive’s performance for the year. Financial
performance indicators include objectives that promote the achievement
of superior security holder returns over time, whilst non‑financial
indicators are designed to encourage operational effectiveness and
sustainable business and people practices. By setting objectives which
promote a balanced performance outcome, the Group is able to monitor
the execution of its strategy in a holistic manner. The Balanced Scorecard
focuses on performance in four areas, which reflect each Executive’s
role, responsibility, accountability and strategy delivery.
DEXUS Balanced Scorecard – typical objectives
financial performance
Business development
and business management
n earnings per security
n execution of strategy on time
n distributions per security
n third party funds performance
n total security holder return,
relative to peers
and within budget
n corporate responsibility
and sustainability initiatives
n achievement of international
operations strategies
Stakeholder satisfaction
leadership
n investor relations
n tenant satisfaction
n executive succession
n talent management
n employee engagement
n role modelling DEXuS
cultural values
n executive development
Individual objectives are selected based on the key strategic drivers
for each area of responsibility and as a result are tailored and weighted
differently for each Executive. The typical objectives listed above are
therefore not common to all Executive roles.
The Committee reviews and approves Balanced Scorecard objectives
at the commencement of each financial year and reviews achievement
against these KPIs at the end of each financial year. The Committee’s
review of Executive performance, in conjunction with data provided
from external benchmarks and the target remuneration mix, guide
the Committee in its determination of the appropriate quantum of
Performance Payments to be awarded to Executives.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 17
FINaNCIal STaTEmENTS
Directors’ Report
for the year ended 30 June 2011
CoNTINUED
3. Remuneration Report (continued)
3.4 Approach to Executive remuneration (continued)
3.4.1 Executive remuneration principles (continued)
(c) Executive remuneration structure
i. Executive remuneration components
The DXS Executive remuneration structure comprises the following remuneration components:
ToTal REmUNERaTIoN
n delivered through fixed and variable components
n variable remuneration is delivered as immediate and
n fixed remuneration is targeted at the market median awarded on a
variable scale, which may result in a total remuneration range from
lower quartile to upper quartile, reflecting differing levels of
experience, role structure and contribution
deferred performance payments and is determined on a range
of factors including achievement of KPIs and relative market
remuneration mix
FIXED
REmUNERaTIoN
Salary
n Consists of cash salary and salary
sacrificed fringe benefits, such as
motor vehicles
n Targeted at Australian market median using
external benchmark data and varies according
to Executives’ skills and depth of experience
Superannuation
n Prescribed and salary sacrifice
n Reviewed annually by the Board, effective
superannuation contributions, including
insurance premiums (if applicable)
1 July, including internal and external
relativities
VaRIaBlE
REmUNERaTIoN
Performance
Payments
DEXuS Performance
Payments (DPP)
DEXuS Deferred
Performance
Payments (DDPP)
n The aim of Performance Payments is to
attract, motivate and retain appropriately
skilled and qualified Executives to achieve
the strategic objectives of the business,
measured through the achievement
of KPIs
n Strategic objectives incorporate financial
and non‑financial measures of performance
at Group, business unit and individual level
and represent key drivers for the success
of the business and for delivering long term
value to security holders
n The achievement of KPIs is assessed
through a Balanced Scorecard approach
n Individual awards are determined on a
range of factors, including achievement of
KPIs and relative market remuneration mix
n Performance Payments are delivered
as immediate and deferred elements in
accordance with the targeted remuneration
mix set out in the table below
n The annual award of any Performance
Payment to an Executive is dependent
upon the Board being satisfied that
minimum threshold performance targets
have been achieved
n Only in exceptional circumstances would
the Board consider awarding a performance
payment which exceeds the target
remuneration mix
n Delivery of DPP is immediate
n Awarded annually as a cash payment
in September
n Delivery of DDPP is deferred for three
n Granted annually
years, as described below
n Grants vest after three years
(i.e. no accelerated vesting)
n Delivered as a cash payment in accordance
with the plan design described below
n unvested grants are forfeited upon Executive
initiated termination (i.e. resignation)
n The nomination and Remuneration
Committee may use its discretion in
operating the Plan
18
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Performance payment pool
A single pool of funds is accrued to meet all Performance Payments. The pool of funds accrued is sufficient to ensure that the Group is able
to meet its objectives under its remuneration framework. The Board may exercise its discretion to vary the size of the pool by reference to
such factors as:
n three year absolute total security holder return;
n management costs, risk factors and revenue of DEXuS Holdings Pty limited; and
n performance against budgeted earnings and distributions per security.
ii. Target mix of remuneration components
The target remuneration mix for KMP, expressed as a percentage of total remuneration, is outlined in the table below.
Remuneration component
Total fixed
DEXuS Performance Payment (DPP)
DEXuS Deferred Performance Payment (DDPP)
2011
2010
CEo
CFo & CIo
other
Executives
CEo
CFo & CIo
other
Executives
35%
30%
35%
40%
30%
30%
50%
25%
25%
35%
30%
35%
40%
30%
30%
50%
25%
25%
The Directors consider that the target mix of remuneration is appropriate and reflects alignment with long term returns to security holders.
The Group’s performance payment philosophy is based on appropriate reward for performance. In the event of exceptional performance the
nomination and Remuneration Committee may choose to award a performance payment in excess of the target remuneration mix. Although
the Committee has chosen to not adopt a maximum performance payment cap, historically it has not exercised its right to award performance
payments in excess of the target remuneration mix.
iii. DEXUS Deferred Performance Payment (DDPP) plan
The DDPP plan operates as follows:
n Following allocation, Deferred Performance Payments are subject to a three year vesting period from allocation date;
n The DDPP allocation value is notionally invested during the vesting period in DXS securities (50% of DDPP value) and its unlisted funds
and mandates (50% of DDPP value);
n During the vesting period, DDPP allocation values fluctuate in line with changes in the “Composite Total Return” (simulating notional
investment exposure), comprising 50% of the total return of DXS securities and 50% of the combined asset weighted total return
of its unlisted funds and mandates; and
n At the conclusion of the three year vesting period, if the Composite Total Return meets or exceeds the Composite Performance Benchmark,
the Board may approve the application of a performance factor to the final DDPP allocation value:
– The “Composite Performance Benchmark” is 50% of the S&P/ASX200 Property Accumulation Index and 50% of the Mercer unlisted
Property Fund Index over the three year vesting period;
– For performance up to 100% of the Composite Performance Benchmark, Executives receive a DDPP allocation reflecting the Composite
Total Return of the preceding three year vesting period; and
– For performance between 100% and 130% of the Composite Performance Benchmark a performance factor may be applied,
ranging from 1.1 to a maximum of 1.5 times.
Provisions regarding the vesting of DDPP in the event of termination of service are outlined in section 3.7.
Equity options scheme
The Group does not operate an equity option scheme as part of its Executive remuneration structure. The Committee has considered the
introduction of such a scheme, but has determined that it would not be an appropriate component of the Group’s remuneration structure.
Equity and loan schemes
The Group does not operate a security participation plan or a loan plan for Executives or Directors.
The deferred element of DXS’s Performance Payment is designed to simulate, or at least replicate, some of the features of an equity plan,
but it does not provide Executives with direct equity exposure.
Hedging policy
The Group does not permit Executives to hedge their DDPP allocation.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 19
FINaNCIal STaTEmENTS
Directors’ Report
for the year ended 30 June 2011
CoNTINUED
3. Remuneration Report (continued)
3.5 Remuneration arrangements for the year ended 30 June 2011
This section outlines how the approach to remuneration described above has been implemented in the year ended 30 June 2011.
Non-Executive Director’s remuneration for the year ended 30 June 2011
n At its meeting of 20 May 2010, the nomination and Remuneration Committee endorsed an increase to the base fee payable to both
the Chair and non‑Executive Directors to bring DXS fees into line with the fee structure of comparably sized ASX listed entities.
n This increase in base fees came into effect on 1 July 2010 (as set out in section 3.8 of this report).
n There were no changes to committee fees.
Executive remuneration for the year ended 30 June 2011
n At its meeting of 21 July 2010, the nomination and Remuneration Committee determined that the fixed remuneration of a number
of Executives had fallen below the market median of comparably sized ASX listed entities.
n Two substantial increases to KMP remuneration were required to correct this position and to reflect increased responsibilities as a result
of the Executive restructure on 1 July 2010 (as set out in section 3.8 of this report).
n These increases in fixed remuneration came into effect 1 July 2010.
n DPP and DDPP awarded to Executives reflected a combination of individual and group performance, external market comparisons and
benchmarking, and reference to the remuneration mix guidelines established for each category of Executive (as set out in section 3.4
of this report).
n DPP is payable in September 2011, with DDPP following the vesting schedule applicable under the DDPP Plan.
actual remuneration earned/granted
The following table provides details of actual remuneration earned/granted by Executives in the years ended 30 June 2010 and 30 June 2011.
This table includes details of the five highest paid Directors or Executives. The amounts detailed in the remuneration earned/granted table vary
from the amounts detailed in the statutory accounting table in section 3.8, because performance payments (in the remuneration earned/granted
table) are attributed to Executives in the year performance payments are earned.
Name
Victor P hoog antink
Craig D mitchell
Paul G Say
John C Easy
Tanya l Cox
andrew P Whiteside1
louise J martin1,2
Total
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
Cash salary
including
superannuation
DEXUS
performance
payments
$
$
DEXUS
deferred
performance
payments
$
1,550,000
1,100,000
1,300,000
1,300,000
1,100,000
1,200,000
700,000
550,000
700,000
500,000
425,000
375,000
425,000
400,000
525,000
475,000
262,500
500,000
450,000
400,000
400,000
250,000
190,000
187,000
195,000
180,000
235,000
225,000
–
450,000
400,000
400,000
250,000
185,000
188,000
190,000
180,000
240,000
225,000
other
short term
benefits
Termination
benefits
$
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
3,950,000
3,600,000
1,600,000
1,350,000
1,500,000
1,000,000
800,000
750,000
810,000
760,000
1,000,000
925,000
861,889
900,000
200,000
200,000
–
–
–
74,389
525,000
4,587,500
2,570,000
2,765,000
74,389
525,000
10,521,889
4,100,000
2,542,000
2,643,000
–
–
9,285,000
1 Mr Whiteside and Ms Martin are former KMP. Mr Whiteside’s remuneration is disclosed due to being counted among the five highest paid Directors or Executives.
Ms Martin ceased employment on 31 December 2010 and due to termination benefits received, also forms part of the five highest paid Directors or Executives.
Ms Martin will not form part of subsequent remuneration disclosures.
2 Ms Martin received payment for statutory leave entitlements upon termination.
20
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
For the purpose of consistency, the following table includes the total remuneration of former KMP as disclosed for the year ended 30 June 2010.
As referred to in section 3.1 of this report, the former KMP group comprises Mr Turner (ceased employment on 31 December 2010), Ms lloyd
and Ms Daniels. This group will not form part of subsequent remuneration disclosures.
Cash salary
including
superannuation
DEXUS
performance
payments
$
$
DEXUS
deferred
performance
payments
$
Former KMP Total
Combined Totals
2010
2010
1,081,249
5,181,249
383,391
383,391
2,925,391
3,026,391
other
short term
benefits
Termination
benefits
Total
$
123,107
123,107
$
–
–
$
1,971,138
11,256,138
Other employee remuneration for the year ended 30 June 2011
n A moderate increase in base salaries was applied to the wider employee group to ensure market competitive remuneration was maintained.
n A limited number of adjustments was made as a result of promotion, key talent retention and market comparison.
n DPP was awarded based on individual and company performance, with reference to the remuneration mix guidelines in place for each category
of employee.
n DDPP continues to be limited to a small number of key employees outside the Executive group.
n DPP is payable in August 2011, with DDPP (if applicable) following the vesting schedule applicable under the DDPP Plan.
Decisions taken relating to remuneration arrangements for the year ending 30 June 2012
n no change to non‑Executive Directors’ base or committee fees;
n no increase to the CEO’s base salary;
n Conservative increases to Executive base salaries in line with market comparisons and cognisant of prior year adjustments;
n Industry standard increases to base salaries for the wider employee group, with a small number of adjustments made to ensure retention
of key talent and to recognise increased contribution to the group in some roles; and
n no change to the target remuneration mix guidelines which are used to determine the split between fixed remuneration, DPP and DDPP.
3.6 group performance and the link to remuneration
Total return analysis
The table below sets out DXS’s total security holder return since inception, relative to the S&P/ASX200 Property Accumulation Index. It also
sets out DXS’s Composite Total Return since inception, relative to the Composite Performance Benchmark. The DEXuS Composite Total Return
is 50% of the total return of DXS securities, plus 50% of the combined asset weighted total return of its unlisted funds and mandates and the
Composite Performance Benchmark is 50% of the S&P/ASX200 Property Accumulation Index and 50% of Mercers’ unlisted Property
Fund Index.
year ended 30 June 2011
DEXuS Property Group1
S&P/ASX200 Property Accumulation Index
DEXuS Composite Total Return
Composite Performance Benchmark
note: DEXuS inception date was 1 October 2004.
1 Compound annual return, source DEXuS/IRESS.
1 year
% per annum
2 years
% per annum
3 years
% per annum
Since 1 october 2004
% per annum
21.6
5.8
16.4
8.3
15.4
12.9
12.2
9.9
(5.8)
(9.7)
(1.9)
(4.6)
2.5
(4.0)
6.1
3.5
In determining the construction of the Composite Total Return and in particular the relative weighting between the returns of DEXuS Property
Group and its unlisted funds and mandates, the Board considered the following factors:
n the desire of DEXuS Property Group to attract and retain third party funds and mandates based on the assurance that incentives are in place
to ensure their equitable treatment;
n the economic contribution to DEXuS Property Group of management fees arising from third party funds under management;
n the increased investment in its management team and infrastructure, enabled by third party funds management fees, including in‑house
research, valuations and sustainability teams, the cost of which is defrayed by those fees; and
n the greater market presence and relevance the third party business brings to DEXuS Property Group.
The Board also considered whether the construction of the Composite Total Return should reflect the actual value of the unlisted funds and
mandates ($6.2 billion as at 30 June 2011), and DEXuS Property Group’s own funds under management ($7.5 billion as at 30 June 2011).
Cognisant of all the above factors, the Board determined that a 50/50 allocation, rather than an allocation varying according to asset weighting,
most fairly reflects the value contribution of third party funds to DEXuS Property Group and provides the greatest assurance that all investors are
treated equitably.
During the year the Group did not buy‑back or cancel any of its securities.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 21
FINaNCIal STaTEmENTS
Directors’ Report
for the year ended 30 June 2011
CoNTINUED
3. Remuneration Report (continued)
3.6 group performance and the link to remuneration (continued)
Total return of DXS securities
The graph below illustrates DXS’s total security holder return relative to the S&P/ASX200 Property Accumulation Index.
S&P/ASX200 Property Accumulation Index
DXS
220
200
180
160
140
120
100
80
60
40
20
0
Oct 04*
Dec 04
Mar 05
Jun 05
Sep 05
Dec 05
Mar 06
Jun 06
Sep 06
Dec 06
Mar 07
Jun 07
Sep 07
Dec 07
Mar 08
Jun 08
Sep 08
Dec 08
Mar 09
Jun 09
Sep 09
Dec 09
Mar 10
Jun 10
Sep 10
Dec 10
Mar 11
Jun 11
* 6 October 2004 to 30 June 2011. Source: IRESS/DEXuS.
The chart below illustrates DXS’s performance relative to A‑REITs above $2 billion market capitalisation.
25%
20%
15%
10%
5%
0%
-5%
DXS
GPT
GMG
CPA
XPJAI
MGR
SGP
WDC
Source: uBS Securities Australia ltd.
The chart below illustrates DXS’s performance against the broader property sector.
45%
40%
30%
25%
20%
15%
10%
5%
0%
-5%
-70%
-75%
CQO
ALZ CQR
ABP
DXS GPT
IOF GMG CDI CMW CPA FKP APZ XPJAI BWP CFX MGR SGP WDC CHC VPG CNP
Source: uBS Securities Australia ltd.
22
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
DXS continues to outperform the S&P/ASX200 Property Accumulation index and has exceeded this benchmark on a rolling three year basis
each period since inception in October 2004. In addition, the DXS Composite Total Return has also outperformed the Composite Performance
Benchmark on a rolling three year basis since inception.
Whilst the Directors recognise that improvement is always possible, they consider that DXS’s business model, which aims to deliver consistent
returns with relatively moderate risk, has been central to DXS’s relative outperformance, and that its approach to Executive remuneration,
with a focus on consistent outperformance of objectives, is aligned with and supports the superior execution of DXS’s strategic plans.
3.7 Service agreements
The employment arrangements for Executives are set out below.
CEo – Victor P hoog antink
The current employment contract commenced on 1 October 2004. The principal terms of the employment arrangement are as follows:
n the CEO is employed under a rolling contract;
n the CEO may resign from his position and thus terminate this contract by giving six months written notice. On resignation any unvested
DDPP will be forfeited subject to the discretion of the Board;
n the Group may terminate the CEO’s employment agreement by providing six months written notice or payment in lieu of the notice period
(based on the fixed component of CEO’s remuneration). Additionally, the Group may provide a performance payment for the period of the
last review date (being 1 July) until the last day of the notice period;
n in the event that the Group initiates termination for reasons outside the control of the CEO, a severance payment equal to 100% of fixed
remuneration is payable;
n on termination by the Group, any DDPP awards will vest in accordance with the vesting schedule of the DDPP Plan, subject to the discretion
of the Board; and
n the Group may terminate the contract of the CEO at any time without notice if serious misconduct has occurred. In the event of termination
for cause, the CEO is only entitled to that portion of remuneration that is fixed, and only up to the date of termination. On termination for
cause any unvested DDPP awards will immediately be forfeited.
KmP Executives (other than the CEo)
The principal terms of Executive employment arrangements are as follows:
n all Executives have rolling contracts;
n an Executive may resign from their position and thus terminate their contract by giving three months written notice. On resignation
any unvested DDPP will be forfeited subject to the discretion of the Board;
n the Group may terminate an Executive’s employment agreement by providing three months written notice or providing payment in lieu
of the notice period (based on the fixed component of the Executive’s remuneration). In the event that the Group initiates the termination
for reasons outside the control of the Executive, a severance payment equal to a maximum of 75% of fixed remuneration will be made;
n on termination by the Group, any DDPP awards will vest in accordance with the vesting schedule of the DDPP Plan, subject to the discretion
of the Board; and
n the Group may terminate the contract at any time without notice if serious misconduct has occurred. Where termination for cause occurs
the Executive is only entitled to that portion of remuneration that is fixed, and only up to the date of termination. On termination for cause
any unvested DDPP awards will immediately be forfeited.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 23
FINaNCIal STaTEmENTS
Directors’ Report
for the year ended 30 June 2011
CoNTINUED
3. Remuneration Report (continued)
3.8 Statutory accounting method
In accordance with Australian Accounting Standard AASB 124, details of the structure and quantum of each component of remuneration
for Executives for the years ended 30 June 2010 and 30 June 2011 are set out in the following table.
Short term benefits
Post-employment benefits
long term benefits
Total
Cash salary
DEXUS
performance
payments
other
short term
benefits
Pension
and super
benefits
Termination
benefits
DEXUS
deferred
performance
payment
allocations
movement
in prior year
deferred
performance
payment
allocation
values
$
other
long term
benefits
$
$
$
$
$
$
$
1,502,801
1,100,000
1,252,539
1,100,000
684,801
450,000
535,539
400,000
649,801
400,000
485,539
250,000
401,801
190,000
360,539
187,000
375,001
195,000
385,539
180,000
509,801
235,000
460,539
225,000
$
–
–
–
–
–
–
–
–
–
–
–
–
47,199
47,461
15,199
14,461
50,199
14,461
23,199
14,461
49,999
14,461
15,199
14,461
– 1,300,000
900,583
– 4,850,583
–
1,200,000
363,957
–
3,963,957
–
–
–
–
–
–
–
–
–
–
450,000
273,781
– 1,873,781
400,000
40,528
–
1,390,528
400,000
226,785
– 1,726,785
250,000
30,565
–
1,030,565
185,000
131,830
188,000
47,437
190,000
161,359
180,000
62,533
–
–
–
–
931,830
797,437
971,359
822,533
240,000
121,087
– 1,121,087
225,000
16,610
–
941,610
213,800
–
74,389
48,700
525,000
–
214,101
– 1,075,990
485,539
200,000
–
14,461
–
200,000
74,415
–
974,415
4,337,806
2,570,000
74,389
249,694
525,000
2,765,000
2,029,526
– 12,551,415
3,965,773
2,542,000
–
134,227
–
2,643,000
636,045
–
9,921,045
1 Mr Whiteside and Ms Martin are former KMP. Mr Whiteside’s remuneration is disclosed due to being counted among the five highest paid Directors or Executives.
Ms Martin ceased employment on 31 December 2010 and due to termination benefits received, also forms part of the five highest paid Directors or Executives.
Ms Martin will not form part of subsequent remuneration disclosures.
2 Ms Martin received payment for statutory leave entitlements upon termination.
For the purpose of consistency, the following table includes the total remuneration of former KMP as disclosed for the year ended 30 June 2010.
As referred to in section 3.1 of this report, the former KMP group comprises Mr Turner (ceased employment on 31 December 2010), Ms lloyd
and Ms Daniels. This group will not form part of subsequent remuneration disclosures.
Former KmP total
2010
1,003,666
406,000
123,107
77,583
Combined totals
2010
4,969,439
2,948,000
123,107
211,810
–
–
407,000
111,508
–
2,128,864
3,050,000
747,553
– 12,049,909
24
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Name
Victor P hoog antink
2011
2010
Craig D mitchell
2011
2010
Paul G Say
2011
2010
John C Easy
2011
2010
Tanya l Cox
2011
2010
andrew P Whiteside1
2011
2010
louise J martin1,2
2011
2010
Total
2011
2010
Deferred Performance Payments
The table below sets out details of DDPP allocations made to KMP and their current valuations.
Grant
year
DDPP
allocation
value
movement
in DDPP
allocation
value
since grant
date
Closing DDPP
allocation
value as at
vesting date
(30 June 2011)
Name
Victor P hoog antink
2011
1,300,000
$
Craig D mitchell
Paul G Say
John C Easy
Tanya l Cox
andrew P Whiteside1
louise J martin1
2010
2009
2008
2011
2010
2009
2008
2011
2010
2009
2008
2011
2010
2009
2008
2011
2010
2009
2008
2011
2010
2009
2008
2011
2010
2009
2008
1,200,000
915,000
900,000
450,000
400,000
325,000
250,000
400,000
250,000
200,000
250,000
185,000
188,000
162,000
120,000
190,000
180,000
150,000
175,000
240,000
225,000
135,000
100,000
–
200,000
175,000
250,000
$
–
197,160
236,528
(50,580)
–
65,720
84,013
(14,050)
–
41,075
51,700
(14,050)
–
30,888
41,877
(6,744)
–
29,574
38,775
(9,835)
$
1,300,000
1,397,160
1,151,528
849,420
450,000
465,720
409,013
235,950
400,000
291,075
251,700
235,950
185,000
218,888
203,877
113,256
190,000
209,574
188,775
165,165
–
240,000
36,968
34,898
(5,620)
–
32,860
45,238
(14,050)
261,968
169,898
94,380
–
232,860
220,238
235,950
movement
in DDPP
allocation
value at
vesting date
(30 June 2011)
due to
performance
multiplier
$
–
–
–
Vested DDPP
as at
30 June 2011
Vest year
$
–
–
–
424,800
1,274,220
–
–
–
–
–
–
118,000
353,950
–
–
–
–
–
–
118,000
353,950
–
–
–
–
–
–
56,640
169,896
–
–
–
–
–
–
82,600
247,765
–
–
–
–
–
–
47,200
141,580
–
–
–
–
–
–
118,000
353,950
2014
2013
2012
2011
2014
2013
2012
2011
2014
2013
2012
2011
2014
2013
2012
2011
2014
2013
2012
2011
2014
2013
2012
2011
2014
2013
2012
2011
1 Mr Whiteside and Ms Martin are former KMP. Mr Whiteside’s remuneration is disclosed due to being counted among the five highest paid Directors or Executives.
Ms Martin ceased employment on 31 December 2010 and due to termination benefits received, also forms part of the five highest paid Directors or Executives.
Ms Martin will not form part of subsequent remuneration disclosures, however, her prior grants will continue vest in accordance with the plan’s rules.
Figures are subject to rounding.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 25
FINaNCIal STaTEmENTS
Directors’ Report
for the year ended 30 June 2011
CoNTINUED
3. Remuneration Report (continued)
3.8 Statutory accounting method (continued)
Non-Executive Director Board and Committee fees
Board and Committee fees paid to non‑Executive Directors for the years ended 30 June 2010 and 30 June 2011 are set out in the table below.
There were no changes to the Committee appointments of non‑Executive Directors during the year ended 30 June 2011.
Directors fees
Committee fees
Board
Compliance
Board Nom
and Rem
Board
Finance
Name
Christopher T Beare
Elizabeth a alexander, am
Barry R Brownjohn
John C Conde, ao
Stewart F Ewen, oam
Brian E Scullin
Peter B St George
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
Board
DWPl
$
350,000
300,000
$
–
–
Board
audit and
risk
$
–
–
150,000
30,000
15,000
130,000
17,500
–
–
–
–
–
–
15,000
25,000
17,500
30,000
27,500
–
–
–
–
–
–
150,000
130,000
150,000
130,000
150,000
130,000
150,000
130,000
150,000
130,000
$
–
–
–
–
–
–
7,500
7,500
–
–
15,000
15,000
–
–
Total
$
350,000
300,000
195,000
165,000
187,500
166,250
172,500
151,250
157,500
137,500
180,000
171,250
$
–
–
–
–
–
–
15,000
13,750
7,500
7,500
–
1,250
$
–
–
–
–
7,500
8,750
–
–
–
–
–
–
–
–
15,000
15,000
–
–
15,000
180,000
13,750
158,750
Total
2011 1,250,000
45,000
60,000
22,500
22,500
22,500 1,422,500
2010
1,080,000
42,500
60,000
22,500
22,500
22,500
1,250,000
The comparatively higher total for the year ended 30 June 2011 is reflective of the increase in base fees for both the Chair and
non‑Executive Directors endorsed by the nomination and Remuneration Committee on 20 May 2010. This increase was reported in the
year ended 30 June 2010 remuneration report and remains within the aggregate pool of $1,750,000 per annum approved by DXS security
holders at its Annual General Meeting in October 2008.
non‑Executive Directors also receive reimbursement for reasonable travel, accommodation and other expenses incurred whilst undertaking
DEXuS business.
The Chief Executive Officer, Victor P Hoog Antink, does not receive fees in respect of his role as a Director, but does receive remuneration
as a Senior Executive of DEXuS Property Group.
In addition to his Director’s fee, Mr Ewen’s company is paid $30,000 for the added responsibilities he assumes in attending property inspections,
reviewing property investment proposals and participating in informal management meetings.
26
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Non-Executive Director remuneration
Details of the structure and quantum of each component of remuneration for each non‑Executive Director for the years ended 30 June 2010
and 30 June 2011 are set out in the following table.
Name
Christopher T Beare
Elizabeth a alexander, am
Barry R Brownjohn
John C Conde, ao
Stewart F Ewen, oam
Brian E Scullin
Peter B St George
Total
Short term
employment
benefits
$
Post-
employment
benefits1
$
other
long term
benefits
$
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
334,801
285,539
179,801
151,376
172,301
152,523
158,257
138,761
109,052
102,700
165,138
157,211
165,138
145,642
15,199
14,461
15,199
13,624
15,199
13,727
14,243
12,489
48,448
34,800
14,862
14,039
14,862
13,108
1,284,488
1,133,752
138,012
116,248
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
350,000
300,000
195,000
165,000
187,500
166,250
172,500
151,250
157,500
137,500
180,000
171,250
180,000
158,750
1,422,500
1,250,000
1 Post‑employment benefits represent compulsory and salary sacrificed superannuation benefits.
4. Directors’ interests
The Board’s policy on insider trading and trading in DXS securities, or securities in any of the funds managed by the Group, by any Director
or employee is outlined in the Corporate Governance Statement.
While the trading policy described in the Corporate Governance Statement applies to Directors and Senior Executives, the Board has determined
that Directors will not trade in any security managed by the Group.
Directors have made this decision because the Board of DXFM has responsibility for the Group itself as well as the third party business. Directors
are obliged to act in the best interests of each group of investors independently of each other. Therefore, to minimise a conflict that may arise
by being a Director of multiple funds, the Directors have determined that they will not invest in any fund managed by the Group, including DXS.
This position is periodically reviewed by the Board.
As a direct result of the Group’s policy regarding Directors holding DXS securities, or securities in any of the funds managed by the Group,
as at the date of this Directors’ Report no Director directly or indirectly held:
n DXS securities; or
n options over, or any other contractual interest in, DXS securities; or
n an interest in any other fund managed by DXFM or any other entity that forms part of the Group.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 27
FINaNCIal STaTEmENTS
Directors’ Report
for the year ended 30 June 2011
CoNTINUED
5. Directors’ directorships in other listed entities
The following table sets out directorships of other listed entities, not including DXFM, held by the Directors at any time in the three years
immediately prior to the end of the year, and the period for which each directorship was held:
Director
Company
Christopher T Beare
Mnet Group limited
Elizabeth A Alexander, AM
CSl limited
Date appointed
6 november 2009
12 July 1991
Date resigned or ceased being
a Director of a listed entity
Boral limited
15 December 1999
24 October 2008
John C Conde, AO
Whitehaven Coal limited
Brian E Scullin
SPARK Infrastructure RE limited1
3 May 2007
31 May 2011
BT Investment Management limited
17 September 2007
Peter B St George
Boart longyear limited
SPARK Infrastructure RE limited1
First Quantum Minerals limited2
21 February 2007
8 november 2005
20 October 2003
31 December 2008
1 SPARK Infrastructure RE limited has issued ASX listed stapled securities trading as SPARK Infrastructure Group (ASX: SKI).
2 listed for trading on the Toronto Stock Exchange in Canada and the london Stock Exchange in the united Kingdom.
6. Principal activities
During the year the principal activity of the Group was to own, manage
and develop high quality real estate assets and manage real estate
funds on behalf of third party investors. There were no significant
changes in the nature of the Group’s activities during the year.
7. Total value of Trust assets
The total value of the assets of the Group as at 30 June 2011 was
$7,987.6 million (2010: $7,871.0 million). Details of the basis of this
valuation are outlined in note 1 of the notes to the Financial Statements
and form part of this Directors’ Report.
11. matters subsequent to the end of the financial year
Since the end of the financial year the Directors are not aware of
any matter or circumstance not otherwise dealt with in this Directors’
Report or the Financial Statements that has significantly or may
significantly affect the operations of the Group, the results of those
operations, or the state of the Group’s affairs in future financial years.
12. Distributions
Distributions paid or payable by the Group for the year ended 30 June
2011 were 5.18 cents per security (2010: 5.1 cents per security)
as outlined in note 28 of the notes to the Financial Statements.
8. Review of results and operations
A review of the results, financial position and operations of the Group
is set out on page 2 of this Annual Report and forms part of this
Directors’ Report. Refer to the Chief Executive Officer’s Report of the
DEXuS Property Group 2011 Annual Review for further information.
9. likely developments and expected results
of operations
In the opinion of the Directors, disclosure of any further information
regarding business strategies and future developments or results of
the Group, other than the information already outlined in this Directors’
Report or the Financial Statements accompanying this Directors’ Report
would be unreasonably prejudicial to the Group.
10. Significant changes in the state of affairs
The Directors are not aware of any matter or circumstance not otherwise
dealt with in this Directors’ Report or the Financial Statements that has
significantly or may significantly affect the operations of the Group, the
results of those operations, or the state of the Group’s affairs in future
financial years.
13. DXFm’s fees and associate interests
Details of fees paid or payable by the Group to DXFM for the year
ended 30 June 2011 are outlined in note 33 of the notes to the
Financial Statements and form part of this Directors’ Report.
The number of interests in the Group held by DXFM or its associates
as at the end of the financial year were nil (2010: nil).
14. Interests in DXS securities
The movement in securities on issue in the Group during the year and
the number of securities on issue as at 30 June 2011 are detailed in
note 25 of the notes to the Financial Statements and form part of this
Directors’ Report.
The Group did not have any options on issue as at 30 June 2011
(2010: nil).
15. Environmental regulation
The Group’s senior management, through its Board Risk and
Sustainability Committee, oversee the policies, procedures and
systems that have been implemented to ensure the adequacy of its
environmental risk management practices. It is the opinion of this
Committee that adequate systems are in place for the management
of its environmental responsibilities and compliance with its various
licence requirements and regulations. Further, the Committee is not
aware of any material breaches of these requirements.
28
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
16. Indemnification and insurance
The insurance premium for a policy of insurance indemnifying Directors,
officers and others (as defined in the relevant policy of insurance)
is paid by DXH.
17.3 Auditor’s independence Declaration
A copy of the Auditor’s Independence Declaration as required under
section 307C of the Corporations Act 2001 is set out in the Financial
Statements and forms part of this Directors’ Report.
PricewaterhouseCoopers (PwC or the Auditor), is indemnified out of the
assets of the Group pursuant to the DEXuS Specific Terms of Business
agreed for all engagements with PwC, to the extent that the Group
inappropriately uses or discloses a report prepared by PwC. The Auditor,
PwC, is not indemnified for the provision of services where such an
indemnification is prohibited by the Corporations Act 2001.
17. audit
17.1 Auditor
PricewaterhouseCoopers continues in office in accordance with
section 327 of the Corporations Act 2001.
17.2 non-audit services
The Group may decide to employ the Auditor on assignments, in
addition to their statutory audit duties, where the Auditor’s expertise
and experience with the Group are important.
Details of the amounts paid or payable to the Auditor, for audit and
non‑audit services provided during the year, are set out in note 6
of the notes to the Financial Statements.
The Board Audit Committee is satisfied that the provision of non‑audit
services provided during the year by the Auditor (or by another person
or firm on the Auditor’s behalf) is compatible with the standard of
independence for auditors imposed by the Corporations Act 2001.
The reasons for the Directors being satisfied are:
18. Corporate governance
DXFM’s Corporate Governance Statement is set out in a separate
section of the DEXuS Property Group Annual Report and forms part
of this Directors’ Report.
19. Rounding of amounts and currency
The Group is a registered scheme of the kind referred to in Class Order
98/0100, issued by the Australian Securities & Investments Commission,
relating to the rounding off of amounts in this Directors’ Report and the
Financial Statements. Amounts in this Directors’ Report and the Financial
Statements have been rounded off in accordance with that Class Order
to the nearest thousand dollars, unless otherwise indicated. All figures
in this Directors’ Report and the Financial Statements, except where
otherwise stated, are expressed in Australian dollars.
20. management representation
The Chief Executive Officer and Chief Financial Officer have reviewed
the Group’s financial reporting processes, policies and procedures
together with its risk management, internal control and compliance
policies and procedures. Following that review, it is their opinion that
the Group’s financial records for the financial year have been properly
maintained in accordance with the Corporations Act 2001 and the
Financial Statements and their notes comply with the accounting
standards and give a true and fair view.
n a Charter of Audit Independence was adopted in 2010 that provides
guidelines under which the Auditor may be engaged to provide non‑audit
services without impairing the Auditor’s objectivity or independence.
n the Charter states that the Auditor will not provide services where the
Auditor may be required to review or audit its own work, including:
21. Directors’ authorisation
The Directors’ Report is made in accordance with a resolution of the
Directors. The Financial Statements were authorised for issue by the
Directors on 16 August 2011. The Directors have the power to amend
and reissue the Financial Statements.
– the preparation of tax provisions, accounting records and financial
statements;
– the design, implementation and operation of information
technology systems;
– the design and implementation of internal accounting and
risk management controls;
– conducting valuation, actuarial or legal services;
– consultancy services that include direct involvement
in management decision making functions;
– investment banking, borrowing, dealing or advisory services;
– acting as trustee, executor or administrator of trust or estate;
– prospectus independent expert reports and being a member
of the Due Diligence Committee; and
– providing internal audit services.
n the Board Audit Committee regularly reviews the performance
and independence of the Auditor and whether the independence
of this function has been maintained having regard to the provision
of non‑audit services. The Auditor has provided a written declaration
to the Board regarding its independence at each reporting period
and Board Audit Committee approval is required before the
engagement of the Auditor to perform any non‑audit service
for a fee in excess of $100,000.
The above Directors’ statements are in accordance with the advice
received from the Board Audit Committee.
christopher T Beare
Chair
16 August 2011
victor P hoog Antink
Chief Executive Officer
16 August 2011
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 29
FINaNCIal STaTEmENTS
auditor’s Independence Declaration
for the year ended 30 June 2011
30
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
FINaNCIal STaTEmENTS
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2011
Revenue from ordinary activities
Property revenue
Proceeds from sale of inventory
Interest revenue
Management fee revenue
Total revenue from ordinary activities
net fair value gain/(loss) of investment properties
net gain/(loss) on sale of investment properties
Share of net profit/(loss) of associates accounted for using the equity method
net fair value gain of derivatives
net foreign exchange gain
Reversal of previous impairment
Other income
Total income
Expenses
Property expenses
Cost of sale of inventory
Finance costs
net loss on sale of investment
Depreciation and amortisation
Impairment
Employee benefits expense
Other expenses
Total expenses
Profit before tax
Tax benefit/(expense)
Income tax benefit
Withholding tax (expense)/benefit
Total tax (expense)/benefit
Profit after tax
other comprehensive income/(loss):
Exchange differences on translating foreign operations
Total comprehensive income for the year
Profit attributable to:
unitholders of the parent entity
unitholders of other stapled entities (non‑controlling interests)
Stapled security holders
Other non‑controlling interest
Total profit for the year
Total comprehensive income attributable to:
unitholders of the parent entity
unitholders of other stapled entities (non‑controlling interests)
Stapled security holders
Other non‑controlling interest
Total comprehensive income for the year
Earnings per unit
Basic earnings per unit on profit attributable to unitholders of the parent entity
Diluted earnings per unit on profit attributable to unitholders of the parent entity
Earnings per stapled security
Basic earnings per unit on profit attributable to stapled security holders
Diluted earnings per unit on profit attributable to stapled security holders
Note
2
15
17
3
5
4(a)
4(c)
39
39
39
39
2011
$’000
2010
$’000
629,072
3,359
1,565
50,655
684,651
148,433
7,052
34,053
2,605
574
–
742
878,110
(151,865)
(3,353)
(52,744)
–
(3,811)
(194)
(67,417)
(22,293)
(301,677)
576,433
4,851
(26,164)
(21,313)
555,120
(4,973)
550,147
182,368
370,644
553,012
2,108
555,120
153,280
394,856
548,136
2,011
550,147
Cents
3.77
3.77
11.44
11.44
663,068
–
1,484
51,588
716,140
(209,367)
(53,342)
(26,243)
5,401
3,103
13,307
156
449,155
(169,753)
–
(190,685)
(15)
(3,498)
(242)
(58,978)
(24,377)
(447,548)
1,607
3,426
26,557
29,983
31,590
(7,034)
24,556
16,121
15,299
31,420
170
31,590
791
23,833
24,624
(68)
24,556
Cents
0.34
0.34
0.66
0.66
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 31
FINaNCIal STaTEmENTS
Consolidated Statement of Financial Position
As at 30 June 2011
Current assets
Cash and cash equivalents
Receivables
non‑current assets classified as held for sale
Inventories
Derivative financial instruments
Current tax assets
Other
Total current assets
Non-current assets
Investment properties
Property, plant and equipment
Inventories
Investments accounted for using the equity method
Derivative financial instruments
Deferred tax assets
Intangible assets
Other
Total non-current assets
Total assets
Current liabilities
Payables
Interest bearing liabilities
Current tax liabilities
Provisions
Derivative financial instruments
Other
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Derivative financial instruments
Deferred tax liabilities
Provisions
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Equity attributable to unitholders of parent entity
Contributed equity
Reserves
Retained profits
Parent entity unitholders’ interest
Equity attributable to unitholders of other stapled entities (non-controlling interests)
Contributed equity
Reserves
Retained profits/(accumulated losses)
other stapled unitholders’ interest
Stapled security holders’ interest
Other non‑controlling interest
Total equity
Note
7
8
9
14
10
11
12
13
14
15
10
16
17
18
19
20
21
10
22
20
10
23
21
24
25
26
26
25
26
26
27
2011
$’000
73,746
36,175
59,260
7,991
23,112
1,247
11,396
2010
$’000
64,419
25,010
18,068
–
33,903
3,621
13,555
212,927
158,576
7,105,914
3,926
104,247
200,356
77,108
55,577
224,684
2,905
7,146,397
5,264
45,470
93,344
112,421
79,927
225,525
4,104
7,774,717
7,712,452
7,987,644
7,871,028
108,916
315,777
7,014
147,806
5,000
–
130,207
198,996
2,271
134,499
17,264
132
584,513
483,369
1,899,279
155,085
18,151
17,624
6,151
2,041,086
304,897
11,296
16,524
7,409
2,096,290
2,381,212
2,680,803
2,864,581
5,306,841
5,006,447
1,798,077
(103,670)
222,638
1,789,973
(74,582)
151,439
1,917,045
1,866,830
3,014,665
68,566
102,537
3,008,241
44,354
(118,253)
3,185,768
2,934,342
5,102,813
204,028
4,801,172
205,275
5,306,841
5,006,447
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
32
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
FINaNCIal STaTEmENTS
Consolidated Statement of Changes in Equity
for the year ended 30 June 2011
Stapled security holders equity
other non-
controlling
interest
$’000
Total equity
$’000
Note
Contributed
equity
Retained
profits
$’000
$’000
Foreign
currency
translation
reserve
$’000
asset
revaluation
reserve
$’000
Stapled
security
holders’
equity
$’000
opening balance as at 1 July 2009
4,707,854
255,023
(66,171)
42,739
4,939,445
206,772
5,146,217
Comprehensive income/(loss)
for the year attributable to:
unitholders of the parent entity
Other stapled entities
(non‑controlling interests)
Other non‑controlling interest
Total comprehensive income/(loss)
Transactions with owners in their
capacity as owners
Contributions of equity,
net of transaction costs
Comprehensive income/(loss)
for the year attributable to:
unitholders of the parent entity
Other stapled entities
(non‑controlling interests)
Other non‑controlling interest
Total comprehensive income/(loss)
Transactions with owners in their
capacity as owners
Contributions of equity,
net of transaction costs
90,360
–
Distributions paid or provided for
28
–
(244,411)
Total transactions with owners
in their capacity as owners
Transfer (from)/to retained profits
90,360
(244,411)
–
(8,846)
Closing balance as at 30 June 2010
4,798,214
33,186
(72,967)
42,739
4,801,172
205,275
5,006,447
opening balance as at 1 July 2010
4,798,214
33,186
(72,967)
42,739
4,801,172
205,275
5,006,447
–
–
–
–
16,121
(15,330)
15,299
8,534
–
–
31,420
(6,796)
–
–
–
–
182,368
(29,088)
370,644
24,212
–
–
553,012
(4,876)
–
–
–
–
–
–
–
–
791
23,833
–
24,624
–
–
(68)
(68)
791
23,833
(68)
24,556
90,360
27
90,387
(244,411)
(10,302)
(254,713)
(154,051)
(10,275)
(164,326)
(8,846)
8,846
–
–
–
–
–
–
–
–
–
153,280
394,856
–
–
153,280
394,856
–
2,011
2,011
548,136
2,011
550,147
14,528
(991)
13,537
(250,662)
(12,628)
(263,290)
(236,134)
(13,619)
(249,753)
(10,361)
10,361
–
–
–
–
–
–
–
–
–
14,528
–
Distributions paid or provided for
28
–
(250,662)
Total transactions with owners
in their capacity as owners
Transfer (from)/to retained profits
14,528
(250,662)
–
(10,361)
Closing balance as at 30 June 2011
4,812,742
325,175
(77,843)
42,739
5,102,813
204,028
5,306,841
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 33
FINaNCIal STaTEmENTS
Consolidated Statement of Cash Flows
for the year ended 30 June 2011
Cash flows from operating activities
Receipts in the course of operations (inclusive of GST)
Payments in the course of operations (inclusive of GST)
Interest received
Finance costs paid to financial institutions
Distributions received
Income and withholding taxes received
Payments for property developments classified as inventory
Payments for capex on property developments classified as inventory
Net cash inflow from operating activities
Cash flows from investing activities
Proceeds from sale of investment properties
Proceeds from sale of investments
Note
2011
$’000
2010
$’000
797,297
857,134
(332,682)
(330,270)
1,539
1,481
(169,484)
(188,714)
–
118
(37,614)
(19,832)
16
527
–
–
37(a)
239,342
340,174
170,547
585,924
–
3,288
Payments for capital expenditure on investment properties
37(b)
(291,917)
(185,844)
Payments for acquisition of investment properties
Payments for acquisition of investments net of cash
Payments for investments accounted for using the equity method
Payments for property, plant and equipment
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
Equity issued to other non‑controlling entities
Proceeds from borrowings
Repayment of borrowings
Distributions paid to security holders
Distributions paid to other non‑controlling interests
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
(41,083)
(279,385)
(872)
–
(61,726)
(31,995)
(1,988)
(1,396)
(227,039)
90,592
–
27
2,245,856
2,311,576
(1,999,591)
(2,545,886)
(228,913)
(200,470)
(12,403)
(9,629)
4,949
(444,382)
17,252
(13,616)
64,419
84,845
(7,925)
(6,810)
Cash and cash equivalents at the end of the year
7
73,746
64,419
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
34
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
Note 1. Summary of significant accounting policies
(a) Basis of preparation
In accordance with AASB Interpretation 1002 Post-Date-of-Transition
Stapling Arrangements, the entities within the Group must be consolidated.
The parent entity and deemed acquirer of DIT, DOT and DXO is DDF.
These Financial Statements represent the consolidated result of DDF,
which comprises DDF and its controlled entities, DIT and its controlled
entities, DOT and its controlled entities, and DXO and its controlled
entities. Equity attributable to other trusts stapled to DDF is a form of
non‑controlling interest in accordance with AASB 1002 and represents
the equity of DIT, DOT and DXO. Other non‑controlling interests
represent the equity attributable to parties external to the Group.
DEXuS Property Group stapled securities are quoted on the Australian
Securities Exchange under the “DXS” code and comprise one unit
in each of DDF, DIT, DOT and DXO. Each entity forming part of the
Group continues as a separate legal entity in its own right under the
Corporations Act 2001 and is therefore required to comply with the
reporting and disclosure requirements under the Corporations Act 2001
and Australian Accounting Standards.
DEXuS Funds Management limited (DXFM) as Responsible Entity
for each entity within DXS may only unstaple the Group if approval
is obtained by a special resolution of the stapled security holders.
These general purpose Financial Statements for the year ended
30 June 2011 have been prepared in accordance with the
requirements of the Constitution of the entities within the Group, the
Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australia Accounting Standards
Board and interpretations. Compliance with Australian Accounting
Standards ensures that the Financial Statements and notes also comply
with International Financial Reporting Standards (IFRS).
These Financial Statements are prepared on a going concern basis
and in accordance with historical cost conventions and have not been
adjusted to take account of either changes in the general purchasing
power of the dollar or changes in the values of specific assets, except
for the valuation of certain non‑current assets and financial instruments
(refer notes 1(e), 1(o), 1(q), 1(w) and 1(x)).
As at 30 June 2011, the Group had a net current asset deficiency of
$371.6 million (2010: $324.8 million). These Financial Statements are
prepared on a going concern basis as the Group has sufficient working
capital and cash flow due to the existence of unutilised facilities of
$546.3 million and the extension of $200 million of maturing facilities
and $145 million of new facilities as set out in note 20.
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting period,
unless otherwise stated.
Critical accounting estimates
The preparation of Financial Statements requires the use of certain
critical accounting estimates and management to exercise its
judgement in the process of applying the Group’s accounting policies.
Other than the estimations described in notes 1(e), 1(o), 1(q), 1(w) and
1(x), no key assumptions concerning the future or other estimation of
uncertainty at the end of each reporting period have a significant risk
of causing material adjustments to the Financial Statements in the next
annual reporting period.
Uncertainty around property valuations
The fair value of our investment properties in the united States and
Europe have been adjusted to reflect market conditions at the end of
the reporting period. While this represents the best estimates of fair
value as at the end of the reporting period, the current uncertainty in
these markets means that if investment property is sold in the future,
the price achieved may be higher or lower than the most recent
valuation, or higher or lower than the fair value recorded in the
Financial Statements.
(b) Principles of consolidation
(i) Controlled entities
The Financial Statements have been prepared on a consolidated basis
in recognition of the fact that while the securities issued by the Group
are stapled into one trading security and cannot be traded separately,
the Financial Statements must be presented on a consolidated basis.
The parent entity and deemed acquirer of the Group is DDF. The
accounting policies of the subsidiaries are consistent with those
of the parent.
Subsidiaries are all entities (including special purpose entities) over
which the Group has the power to govern the financial and operating
policies, generally accompanying a shareholding of more than one‑half
of the voting rights. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity.
The Financial Statements incorporate an elimination of inter‑entity
transactions and balances to present the Financial Statements on a
consolidated basis. net profit and equity in controlled entities, which
is attributable to the unitholdings of non‑controlling interests, are shown
separately in the Statement of Comprehensive Income and Statement
of Financial Position respectively. Where control of an entity is obtained
during a financial year, its results are included in the Statement of
Comprehensive Income from the date on which control is gained.
They are deconsolidated from the date that control ceases. The
Financial Statements incorporate all the assets, liabilities and results
of the parent and its controlled entities.
(ii) Partnerships and joint ventures
Where assets are held in a partnership or joint venture with another
entity directly, the Group’s share of the results and assets of this
partnership or joint venture are consolidated into the Statement of
Comprehensive Income and Statement of Financial Position of the
Group. Where assets are jointly controlled via ownership of units in
single purpose unlisted unit trusts or shares in companies, the Group
applies equity accounting to record the operations of these investments
(refer note 1(t)).
(c) Revenue recognition
(i) Rent
Rental revenue is brought to account on a straight‑line basis over
the lease term for leases with fixed rent review clauses. In all other
circumstances rental revenue is brought to account on an accruals
basis. If not received at the end of the reporting period, rental revenue
is reflected in the Statement of Financial Position as a receivable.
Recoverability of receivables is reviewed on an ongoing basis.
Debts which are known to be not collectable are written off.
(ii) management fee revenue
Management fees are brought to account on an accruals basis,
and if not received at the end of the reporting period, are reflected
in the Statement of Financial Position as a receivable.
(iii) Interest revenue
Interest revenue is brought to account on an accruals basis using the
effective interest rate method and, if not received at the end of the
reporting period, is reflected in the Statement of Financial Position
as a receivable.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 35
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 1. Summary of significant accounting policies
(continued)
(c) Revenue recognition (continued)
(iv) Dividends and distribution revenue
Revenue from dividends and distributions are recognised when
declared. Amounts not received at the end of the reporting period
are included as a receivable in the Statement of Financial Position.
(d) Expenses
Expenses are brought to account on an accruals basis and, if not paid
at the end of the reporting period, are reflected in the Statement of
Financial Position as a payable.
(i) Property expenses
Property expenses include rates, taxes and other property outgoings
incurred in relation to investment properties and property, plant and
equipment where such expenses are the responsibility of the Group.
(ii) Borrowing costs
Borrowing costs include interest, amortisation of discounts or premiums
relating to borrowings, amortisation or ancillary costs incurred in
connection with arrangement of borrowings and foreign exchange
losses net of hedged amounts on borrowings, including trade creditors
and lease finance charges. Borrowing costs are expensed as incurred
unless they relate to qualifying assets.
Qualifying assets are assets which take more than 12 months to get
ready for their intended use or sale. In these circumstances, borrowing
costs are capitalised to the cost of the asset during the period of time
that is required to complete and prepare the asset for its intended use
or sale. Where funds are borrowed generally, borrowing costs are
capitalised using a weighted average capitalisation rate.
(e) Derivatives and other financial instruments
(i) Derivatives
The Group’s activities expose it to a variety of financial risks including
foreign exchange risk and interest rate risk. Accordingly, the Group
enters into various derivative financial instruments such as interest
rate swaps, cross currency swaps and foreign exchange contracts
to manage its exposure to certain risks. Written policies and limits
are approved by the Board of Directors of the Responsible Entity, in
relation to the use of financial instruments to manage financial risks.
The Responsible Entity continually reviews the Group’s exposures
and updates its treasury policies and procedures. The Group does not
trade in derivative instruments for speculative purposes. Even though
derivative financial instruments are entered into for the purpose of
providing the Group with an economic hedge, the Group has elected
not to apply hedge accounting under AASB 139 Financial Instruments:
Recognition and Measurement for interest rate swaps and foreign
exchange contracts. Accordingly, derivatives including interest rate
swaps, interest rate component of cross currency swaps and foreign
exchange contracts, are measured at fair value with any changes in
fair value recognised in the Statement of Comprehensive Income.
(ii) Debt and equity instruments issued by the Group
Financial instruments issued by the Group are classified as either
liabilities or as equity in accordance with the substance of the
contractual arrangements. Accordingly, ordinary units issued
by DDF, DIT, DOT and DXO are classified as equity.
Interest and distributions are classified as expenses or as
distributions of profit consistent with the Statement of Financial
Position classification of the related debt or equity instruments.
36
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Transaction costs arising on the issue of equity instruments are
recognised directly in equity (net of tax) as a reduction of the proceeds
of the equity instruments to which the costs relate. Transaction costs
are the costs that are incurred directly in connection with the issue of
those equity instruments and which would not have been incurred had
those instruments not been issued.
(iii) Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability
at the time the guarantee is issued. The liability is initially measured
at fair value and subsequently at the higher of the amount determined
in accordance with AASB 137 Provisions, Contingent Liabilities and
Contingent Assets and the amount initially recognised less cumulative
amortisation, where appropriate.
The fair value of financial guarantees is determined as the present
value of the difference in the net cash flows between the contractual
payments under the debt instrument and the payments that would be
required without the guarantee, or the estimated amount that would be
payable to a third party for assuming the obligations. Where guarantees
in relation to loans or other payables of subsidiaries or associates are
provided for no compensation, the fair values are accounted for as
contributions and recognised as part of the cost of the investment.
(iv) other financial assets
loans and other receivables are measured at amortised cost using
the effective interest rate method less impairment.
(f) goods and services tax/value added tax
Revenues, expenses and capital assets are recognised net of any
amount of Australian/new Zealand/Canadian Goods and Services Tax
(GST) or French and German Value Added Tax (VAT), except where the
amount of GST/VAT incurred is not recoverable. In these circumstances
the GST/VAT is recognised as part of the cost of acquisition of the asset
or as part of the expense.
Cash flows are included in the Statement of Cash Flows on a gross
basis. The GST component of cash flows arising from investing and
financing activities that is recoverable from or payable to the Australian
Taxation Office is classified as cash flows from operating activities.
(g) Taxation
under current Australian income tax legislation, DDF, DIT and DOT
are not liable for income tax provided they satisfy certain legislative
requirements. The Group may be liable for income tax in jurisdictions
where foreign property is held (i.e. united States, France, Germany,
Canada and new Zealand).
DXO is subject to Australian income tax as follows:
n the income tax expense for the year is the tax payable on the
current year’s taxable income based on a tax rate of 30% adjusted
by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses;
n deferred tax assets and liabilities are recognised for temporary
differences arising from differences between the carrying amount of
assets and liabilities and the corresponding tax base of those items.
The relevant tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure the
deferred tax assets or liabilities. An exception is made for certain
temporary differences arising from the initial recognition of an
asset or a liability (where they do not arise as a result of a business
combination and did not affect either accounting profit/loss or
taxable profit/loss);
n deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary
differences and losses;
The entities in the DXO tax consolidated group have entered into a Tax
Sharing Deed. In the opinion of the Directors, this limits the joint and
several liability of the wholly owned entities in the case of a default by
the head entity, DXO.
n deferred tax assets and liabilities are not recognised for temporary
differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able
to control the timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the foreseeable
future; and
n current and deferred tax is recognised in profit or loss, except to
the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised
in other comprehensive income or directly in equity, respectively.
Withholding tax payable on distributions received by the Group from
DEXuS Industrial Properties Inc. (uS REIT) and DEXuS uS Properties
Inc. (uS W REIT) are recognised as an expense when tax is withheld.
In addition, a deferred tax liability or asset and related deferred tax
expense/benefit is recognised on differences between the tax cost
base of uS assets and liabilities in the Group (held by uS REIT and
uS W REIT) and their accounting carrying values at end of the
reporting period. Any deferred tax liability or asset is calculated
using a blend of the current withholding tax rate applicable to
income distributions and the applicable uS federal and state taxes.
under current Australian income tax legislation, the security
holders will generally be entitled to receive a foreign tax credit for
uS withholding tax deducted from distributions paid by the uS REIT
and uS W REIT.
DIT France logistique SAS (DIT France), a wholly owned sub‑trust of
DIT, is liable for French corporation tax on its taxable income at the rate
of 33.33%. In addition, a deferred tax liability or asset and its related
deferred tax expense/benefit is recognised on differences between the
tax cost base of the French real estate assets and their accounting
carrying value at end of the reporting period, where required.
DEXuS GlOG Trust, a wholly owned Australian sub‑trust of DIT, is
liable for German corporate income tax on its German taxable income
at the rate of 15.82%. In addition, a deferred tax liability or asset and
its related deferred tax expense/benefit is recognised on differences
between the tax cost base of the German real estate assets and their
accounting carrying value at end of the reporting period.
DOT nZ Sub‑Trust no. 1, a wholly owned Australian sub‑trust of
DOT, is liable for new Zealand corporate tax on its new Zealand
taxable income at the rate of 30%. In addition, a deferred tax liability
or asset and its related deferred tax expense/benefit is recognised on
differences between the tax cost base of the new Zealand real estate
asset and the accounting carrying value at end of the reporting period.
DEXuS Canada Trust, a wholly owned Australian sub‑trust of DIT, is
liable for Canadian income tax on its Canadian taxable income at the
rate of 42.92%.
Tax consolidation
In December 2009, DXO became the head entity of a tax consolidated
group. This group currently comprises 20 Barrack Street Trust, DEXuS
Holdings Pty limited, DEXuS Funds Management limited, DEXuS
Property Services Pty limited, DEXuS Financial Services Pty limited,
DEXuS Projects Pty limited, DEXuS Wholesale Property limited,
DEXuS CMBS Issuer Pty limited, Otho Pty limited and DWPl
nominees Pty limited. The implementation date for the DXO tax
consolidation group was 1 July 2008.
(h) Distributions
In accordance with the Trust’s Constitution, the Group distributes
its distributable income to unitholders by cash or reinvestment.
Distributions are provided for when they are approved by the
Board of Directors and declared.
(i) Repairs and maintenance
Plant is required to be overhauled on a regular basis and is managed
as part of an ongoing major cyclical maintenance program. The costs
of this maintenance are charged as expenses as incurred, except where
they relate to the replacement of a component of an asset, in which
case the replaced component will be derecognised and the
replacement costs capitalised in accordance with note 1(o). Other
routine operating maintenance, repair costs and minor renewals are
also charged as expenses as incurred.
(j) cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call
with financial institutions and other short term, highly liquid investments
with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
(k) Receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest rate method,
which is based on the invoiced amount less provision for doubtful
debts. Trade receivables are required to be settled within 30 days and
are assessed on an ongoing basis for impairment. Receivables which
are known to be uncollectable are written off by reducing the carrying
amount directly. A provision for doubtful debts is established when
there is objective evidence that the Group will not be able to collect
all amounts due according to the original terms of the receivables.
The provision for doubtful debts is the difference between the asset’s
carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate. Cash flows relating to
short term receivables are not discounted as the effect of discounting
is immaterial.
(l) inventories
land and properties held for resale
land and properties held for resale are stated at the lower of cost and
the net realisable value. Cost is assigned by specific identification and
includes the cost of acquisition, and development and holding costs
such as borrowing costs, rates and taxes. Holding costs incurred after
completion of development are expensed.
Net realisable value
net realisable value is the estimated selling price in the ordinary
course of business. Marketing and selling expenses are estimated
and deducted to establish net realisable value.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 37
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 1. Summary of significant accounting policies
(continued)
(m) non-current assets held for sale
non‑current assets are classified as held for sale if their carrying
amount will be recovered principally through a sale transaction rather
than through continuing use, and a sale is considered highly probable.
They are measured at the lower of their carrying amount and fair value
less costs to sell, except for assets such as deferred tax assets, assets
arising from employee benefits, financial assets and investment
property that are carried at fair value and contractual rights
under insurance contracts, which are specifically exempt from
this requirement.
(n) Other financial assets at fair value through profit and loss
Interests held by the Group in controlled entities and associates are
measured at fair value through profit and loss to reduce a measurement
or recognition inconsistency.
(o) Property, plant and equipment
Property, plant and equipment is stated at historical cost less
depreciation and accumulated impairment. Historical cost includes
expenditure that is directly attributable to its acquisition. Subsequent
costs are included in the asset’s carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and
the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the Statement of Comprehensive Income
during the reporting period in which they are incurred.
Property, plant and equipment is tested for impairment whenever
events or changes in circumstances indicate that the carrying amounts
exceed their recoverable amounts (refer note 1(v)).
(p) Depreciation of property, plant and equipment
land is not depreciated. Depreciation on buildings (including fit‑out)
is calculated on a straight‑line basis so as to write off the net cost of
each non‑current asset over its expected useful life. Estimates for
remaining useful lives are reviewed on a regular basis for all assets
and are as follows:
Buildings (including fit‑out)
IT equipment
5–50 years
3–5 years
(q) investment properties
During the year ended 30 June 2010, the Group adopted the
amendments to AASB 140 Investment Property as set out in AASB
2008‑5 Amendments to Australian Accounting Standards arising
from the Annual Improvements Project effective for reporting periods
beginning on or after 1 January 2009. under this amendment, property
that is under construction or development for future use as investment
property falls within the scope of AASB 140. As such, development
property of this nature is no longer recognised and measured as
property, plant and equipment but is included as investment property
measured at fair value. Where fair value of investment property under
construction is not reliably measurable, the property is measured at
cost until the earlier of the date construction is completed and the date
at which fair value becomes reliably measurable. As required by the
standard, the amendments to AASB 140 were applied prospectively
from 1 July 2009.
The Group’s investment properties consist of properties held for
long term rental yields and/or capital appreciation and property
that is being constructed or developed for future use as investment
property. Investment properties are initially recognised at cost including
transaction costs. Investment properties are subsequently recognised
at fair value in the Financial Statements. Each valuation firm and its
signatory valuer are appointed on the basis that they are engaged for
no more than three consecutive valuations.
The basis of valuations of investment properties is fair value being
the amounts for which the assets could be exchanged between
knowledgeable willing parties in an arm’s length transaction, based
on current prices in an active market for similar properties in the
same location and condition and subject to similar leases. In addition,
an appropriate valuation method is used, which may include the
discounted cash flow and the capitalisation method. Discount rates
and capitalisation rates are determined based on industry expertise and
knowledge and, where possible, a direct comparison to third party rates
for similar assets in a comparable location. Rental revenue from current
leases and assumptions about future leases, as well as any expected
operational cash outflows in relation to the property, are also reflected
in fair value. In relation to development properties under construction
for future use as investment property, where reliably measurable, fair
value is determined based on the market value of the property on the
assumption it had already been completed at the valuation date less
costs still required to complete the project, including an appropriate
adjustment for profit and risk.
External valuations of the individual investment properties are carried
out in accordance with the Constitutions for each trust forming the
Group or may be earlier where the Responsible Entity believes there
is a potential for a material change in the fair value of the property.
Changes in fair values are recorded in the Statement of
Comprehensive Income. The gain or loss on disposal of an investment
property is calculated as the difference between the carrying amount
of the asset at the date of disposal and the net proceeds from disposal
and is included in the Statement of Comprehensive Income in the year
of disposal.
Subsequent redevelopment and refurbishment costs (other than
repairs and maintenance) are capitalised to the investment property
where they result in an enhancement in the future economic benefits
of the property.
(r) leasing fees
leasing fees incurred are capitalised and amortised over the lease
periods to which they relate.
38
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
(v) impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not
subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they
might be impaired. Other assets are tested for impairment whenever
events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair
value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash inflows, which are largely independent of
the cash inflows from other assets or groups of assets (cash‑generating
units). non‑financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment
at each reporting date.
(w) intangible assets
(i) Goodwill
Goodwill is recognised as at the acquisition date and is measured
as the excess of the aggregate of the fair value of consideration
transferred and the non‑controlling interest’s proportionate share
of the acquiree’s identifiable net assets over the fair value of the
identifiable net assets acquired.
In a business combination achieved in stages, the acquirer shall
remeasure its previously held equity interest in the acquiree at its
acquisition‑date fair value and recognise the resulting gain or loss,
if any, in profit or loss.
The carrying value of the goodwill is tested for impairment at the
end of each reporting period with any decrement in value taken
to the Statement of Comprehensive Income as an expense.
(ii) management rights
Management rights represent the asset management rights owned by
the Group which entitle it to management fee revenue from both finite
and indefinite life trusts. Those rights that are deemed to have a finite
useful life are measured at cost and amortised using the straight‑line
method over their estimated useful lives which vary from five to
21 years.
During the year, the Group changed the accounting policy for the
testing of impairment of management rights associated with indefinite
life trusts. These management rights are tested for impairment annually
in accordance with AASB 136 Impairment of Assets. Previously testing
was performed every six months at the end of each reporting period.
There is no adjustment required to current or prior periods as a result
of the change in policy. As at the date of this report, there were no
events or circumstances identified that would indicate an impairment
during the year ended 30 June 2011.
(s) lease incentives
Prospective lessees may be offered incentives as an inducement to
enter into operating leases. These incentives may take various forms
including cash payments, rent free periods, or a contribution to certain
lessee costs such as fit‑out costs or relocation costs.
The costs of incentives are recognised as a reduction of rental revenue
on a straight‑line basis from the earlier of the date which the tenant has
effective use of the premises or the lease commencement date to the
end of the lease term. The carrying amount of the lease incentives is
reflected in the fair value of investment properties.
(t) investments accounted for using the equity method
Some property investments are held through the ownership of units
in single purpose unlisted trusts or shares in unlisted companies where
the Group exerts significant influence but does not have a controlling
interest. These investments are considered to be associates and the
equity method of accounting is applied in the Financial Statements.
under this method, the entity’s share of the post‑acquisition profits of
associates is recognised in the Statement of Comprehensive Income.
The cumulative post‑acquisition movements are adjusted against the
carrying amount of the investment. Dividends or distributions receivable
from associates are recognised as a reduction in the carrying amount
of the investment.
When the Group’s share of losses in an associate equal or exceed its
interest in the associate (including any unsecured receivables) the
Group does not recognise any further losses unless it has incurred
obligations or made payments on behalf of the associate.
(u) Business combinations
The acquisition method of accounting is used to account for
all business combinations. The consideration transferred for the
acquisition of a subsidiary comprises the fair values of the assets
transferred, the liabilities incurred and the equity interests issued by
the Group. The consideration transferred also includes the fair value
of any contingent consideration arrangement and the fair value of any
pre‑existing equity interest in the subsidiary. Acquisition‑related costs
are expensed as incurred. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are,
with limited exceptions, measured initially at their fair values at the
acquisition date. The Group recognises any non‑controlling interest
in the acquiree at its proportionate share of the acquiree’s net
identifiable assets.
The excess of the consideration transferred, the amount of any
non‑controlling interest in the acquiree and the acquisition‑date fair
value of any previous equity interest in the acquiree over the fair value
of the Group’s share of the net identifiable assets acquired is recorded
as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the subsidiary acquired and the measurement
of all amounts has been reviewed, the difference is recognised directly
in the Statement of Comprehensive Income as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the
amounts payable in the future are discounted to their present value
as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing
could be obtained from an independent financier under comparable
terms and conditions.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 39
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 1. Summary of significant accounting policies (continued)
(x) financial assets and liabilities
(i) Classification
The Group has classified its financial assets and liabilities as follows:
Financial asset/liability
Classification
Valuation basis
Reference
Cash and cash equivalents
Fair value through profit or loss
Fair value
Refer note 1(j)
Receivables
Other financial assets
Payables
loans and receivables
loans and receivables
Amortised cost
Refer note 1(k)
Amortised cost
Refer note 1(e)
Financial liability at amortised cost
Amortised cost
Refer note 1(y)
Interest bearing liabilities
Financial liability at amortised cost
Amortised cost
Refer note 1(z)
Derivatives
Fair value through profit or loss
Fair value
Refer note 1(e)
Financial assets and liabilities are classified in accordance with the purpose for which they were acquired.
(ii) Fair value estimation of financial assets and liabilities
(aa) Employee benefits
The fair value of financial assets and financial liabilities must
be estimated for recognition and measurement and for
disclosure purposes.
The fair value of financial instruments traded in active markets (such
as publicly traded derivatives) is based on quoted market prices at the
end of the reporting period. The quoted market price used for financial
assets held by the Group is the current bid price. The appropriate
quoted market price for financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in an active
market (for example, over‑the‑counter derivatives) is determined using
valuation techniques including dealer quotes for similar instruments
and discounted cash flows. In particular, the fair value of interest rate
swaps and cross currency swaps are calculated as the present value
of the estimated future cash flows, the fair value of forward exchange
rate contracts is determined using forward exchange market rates
at the end of the reporting period, and the fair value of interest rate
option contracts is calculated as the present value of the estimated
future cash flows taking into account the time value and implied
volatility of the underlying instrument.
(y) Payables
These amounts represent liabilities for amounts owing at end of the
reporting period. The amounts are unsecured and are usually paid
within 30 days of recognition.
(z) interest bearing liabilities
Subsequent to initial recognition at fair value, net of transaction costs
incurred, interest bearing liabilities are measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and
the redemption amount is recognised in the Statement of
Comprehensive Income over the period of the borrowings using the
effective interest method. Interest bearing liabilities are classified as
current liabilities unless the Group has an unconditional right to defer
the liability for at least 12 months after the reporting date.
(i) Wages, salaries and annual leave
liabilities for employee benefits for wages, salaries and annual leave
represent present obligations resulting from employees’ services
provided to the end of the reporting period, calculated at undiscounted
amounts based on remuneration wage and salary rates that the Group
expects to pay at the end of the reporting period including related
on‑costs, such as workers compensation, insurance and payroll tax.
(ii) long service leave
The provision for employee benefits for long service leave represents
the present value of the estimated future cash outflows, to be made
resulting from employees’ services provided to the end of the
reporting period.
The provision is calculated using expected future increases in wage
and salary rates including related on‑costs and expected settlement
dates based on turnover history and is discounted using the rates
attaching to national government bonds at the end of the reporting
period that most closely matches the term of the maturity of the
related liabilities. The unwinding of the discount is treated as long
service leave expense.
(ab) Earnings per unit
Basic earnings per unit are determined by dividing the net profit
attributable to unitholders of the parent entity by the weighted
average number of ordinary units outstanding during the year.
Diluted earnings per unit are adjusted from the basic earnings per unit
by taking into account the impact of dilutive potential units. The Group
did not have such dilutive potential units during the year.
(ac) foreign currency
Items included in the Financial Statements of the Group are measured
using the currency of the primary economic environment in which the
entity operates (the functional currency). The Financial Statements are
presented in Australian dollars, which is the functional and presentation
currency of the Group.
40
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
(i) Foreign currency transactions
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period end
exchange rates of financial assets and liabilities denominated in foreign
currencies are recognised in the Statement of Comprehensive Income.
(ii) Foreign operations
(ag) new accounting standards and interpretations
Certain new accounting standards and interpretations have been
published that are not mandatory for the 30 June 2011 reporting
period. Our assessment of the impact of these new standards and
interpretations is set out below:
AASB 2010-4 Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Project
(effective 1 January 2011)
Foreign operations are located in the united States, new Zealand,
France, Germany and Canada. These operations have a functional
currency of uS dollars, nZ dollars, Euros and Canadian dollars
respectively, which are translated into the presentation currency.
In June 2010, the AASB made a number of amendments to Australian
Accounting Standards as a result of the IASB’s annual improvements
project. The Group intends to apply the standard from 1 July 2011
and does not expect any significant impacts.
The assets and liabilities of the foreign operations are translated
at exchange rates prevailing at the end of each reporting period.
Income and expense items are translated at the average exchange
rates for the period. Exchange differences arising are recognised in
the foreign currency translation reserve and recognised in profit or
loss on disposal of the foreign operation.
Goodwill and fair value adjustments arising on the acquisition of a
foreign operation are treated as assets and liabilities of the foreign
operation and translated at exchange rates prevailing at the end of
each reporting period.
(ad) Operating segments
Operating segments are reported in a manner that is consistent with
the internal reporting provided to the Chief Operating Decision Maker
(CODM). The CODM has been identified as the Board of Directors as
they are responsible for the strategic decision making within the Group.
(ae) Rounding of amounts
The Group is the kind referred to in Class Order 98/0100, issued by
the Australian Securities & Investments Commission, relating to the
rounding off of amounts in the Financial Statements. Amounts in the
Financial Statements have been rounded off in accordance with that
Class Order to the nearest thousand dollars, or in certain cases, the
nearest dollar.
(af) Parent entity financial information
On 28 June 2010 the Corporations Amendment (Corporate
Reporting Reform) Act 2010 received Royal Assent. As a result of
the amendments, Financial Statements for financial years ending
on or after 30 June 2010 no longer need to include separate columns
and associated note disclosures for the parent entity. Instead, the
Corporations Regulations now prescribe limited disclosures that
will need to be made in the notes to the Financial Statements which
include disclosure of key financial information for the parent entity and
details of any guarantees, contingent liabilities and commitments.
The financial information for the parent entity of DEXuS Property Group
is disclosed in note 29 and has been prepared on the same basis as
the consolidated Financial Statements except as set out below:
Investment in subsidiaries, associates and joint venture entities
Distributions received from associates are recognised in the parent
entity’s Statement of Comprehensive Income, rather than being
deducted from the carrying amount of these investments.
AASB 2010-6 Amendments to Australian Accounting Standards –
Disclosures on Transfers of Financial Assets (effective 1 July 2011)
Amendments made to AASB 7 Financial Instruments: Disclosures
in november 2010 introduce additional disclosures in respect of risk
exposures arising from transferred financial assets. The amendments
will particularly affect entities that sell, factor, securitise, lend or
otherwise transfer financial assets to other parties. The Group
intends to apply the standard from 1 July 2011 and does not expect
any significant impacts.
AASB 9 Financial Instruments and AASB 2009-11 Amendments
to Australian Accounting Standards arising from AASB 9 and
AASB 2010-7 Amendments to Australian Accounting Standards
arising from AASB 9 (December 2010) (effective 1 January 2013)
AASB 9 Financial Instruments addresses the classification,
measurement and derecognition of financial assets and financial
liabilities. The standard simplifies the classifications of financial assets
into those to be carried at amortised cost and those to be carried at fair
value. The Group intends to apply the standards from 1 July 2013 and
does not expect any significant impacts.
AASB 2010-8 Amendments to Australian Accounting
Standards – Deferred Tax: Recovery of Underlying Assets
(effective 1 January 2012)
In December 2010, the AASB amended AASB 112 Income Taxes
to provide an amended approach for measuring deferred tax liabilities
and deferred tax assets when investment property is measured using
the fair value model. AASB 112 requires the measurement of deferred
tax assets or liabilities to reflect the tax consequences that would follow
from the way management expects to recover or settle the carrying
amount of the relevant assets or liabilities, that is through use or through
sale. The Group intends to apply the standard from 1 July 2012 and
does not expect any significant impacts.
AASB 1054 Australian Additional Disclosures,
AASB 2011-1 Amendments to Australian Accounting Standards
arising from the Trans-Tasman Convergence Project and
AASB 2011-2 Amendments to Australian Accounting Standards
arising from the Trans-Tasman Convergence Project – Reduced
Disclosure Requirements (effective 1 July 2011)
The AASB and nZ FRSB have issued accounting standards that
eliminate most of the existing differences between their local standards
and IFRS. Where additional disclosures were considered necessary,
they were moved to new standard AASB 1054. Adoption of the new
rules will not affect any of the amounts recognised in the Financial
Statements, but may simplify some of the Group’s current disclosures.
The Group intends to apply the standards from 1 July 2011.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 41
iAS 28 Investments in associates (effective 1 January 2013)
Amendments to IAS 28 provide clarification that an entity continues
to apply the equity method and does not remeasure its retained
interest as part of ownership changes where a joint venture becomes
an associate, and vice versa. The Group intends to apply the standard
from 1 July 2013 and does not expect any significant impacts.
ifRS 13 Fair value measurement (effective 1 January 2013)
IFRS 13 explains how to measure fair value and aims to enhance fair
value disclosures. Application of this standard will not affect any of the
amounts recognised in the Financial Statements, but may impact some
of the Group’s current disclosures. The Group intends to apply the
standard from 1 July 2013.
Revised iAS 1 Presentation of Financial Statements
(effective 1 July 2012)
In June 2011, the IASB made an amendment to IAS 1 Presentation
of Financial Statements. The AASB is expected to make equivalent
changes to AASB 101 shortly. The amendment requires entities to
separate items presented in other comprehensive income into two
groups, based on whether they may be recycled to profit or loss in the
future. It will not affect the measurement of any of the items recognised
in the balance sheet or the profit or loss in the current period. The Group
intends to adopt the new standard from 1 July 2012.
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 1. Summary of significant accounting policies
(continued)
(ag) new accounting standards and interpretations (continued)
AASB 2011-4 Amendments to Australian Accounting Standards
to Remove Individual Key Management Personnel Disclosure
Requirements (effective 1 July 2013)
In July 2011 the AASB decided to remove the individual KMP
disclosure requirements from AASB 124 Related Party Disclosures,
to achieve consistency with the international equivalent standard and
remove a duplication of the requirements with the Corporations Act
2001. While this will reduce the disclosures that are currently required
in the notes to the Financial Statements, it will not affect any of the
amounts recognised in the Financial Statements. The amendments
apply from 1 July 2013 and cannot be adopted early. The Corporations
Act requirements in relation to remuneration reports will remain
unchanged for now, but these requirements are currently subject
to review and may also be revised in the near future.
The IASB has issued new and amended standards as discussed below.
The AASB is expected to issue equivalent Australian standards shortly.
ifRS 10 Consolidated financial statements
(effective 1 January 2013)
IFRS 10 replaces all of the guidance on control and consolidation in
IAS 27 Consolidated and separate financial statements, and SIC‑12
Consolidation – special purpose entities. The standard introduces
a single definition of control that applies to all entities. It focuses on
the need to have both power and rights or exposure to variable returns
before control is present. The Group intends to apply the standard
from 1 July 2013 and does not expect any significant impacts.
ifRS 11 Joint Arrangements (effective 1 January 2013)
IFRS 11 introduces a principles based approach to accounting for
joint arrangements. The focus is no longer on the legal structure of joint
arrangements, but rather on how rights and obligations are shared by
the parties to the joint arrangement. Based on the assessment of rights
and obligations, a joint arrangement will be classified as either a joint
operation or joint venture. Joint ventures are accounted for using the
equity method, and the choice to proportionately consolidate will no
longer be permitted. The Group intends to apply the standard from
1 July 2013 and does not expect any significant impacts.
ifRS 12 Disclosure of interests in other entities
(effective 1 January 2013)
IFRS 12 sets out the required disclosures for entities reporting
under the two new standards, IFRS 10 and IFRS 11, and replaces the
disclosure requirements currently found in IAS 28. Application of this
standard will not affect any of the amounts recognised in the Financial
Statements, but may impact some of the Group’s current disclosures.
The Group intends to apply the standard from 1 July 2013.
42
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Note 2. Property revenue
Rent and recoverable outgoings
Incentive amortisation
Other revenue
Total property revenue
Note 3. Finance costs
Interest paid/payable
Amount capitalised
Other finance costs
net fair value (gain)/loss of interest rate swaps
Finance cost attributable to asset disposal program1
Total finance costs
2011
$’000
2010
$’000
648,421
690,010
(58,732)
(49,033)
39,383
22,091
629,072
663,068
2011
$’000
2010
$’000
124,427
119,490
(60,955)
(41,377)
4,444
(15,172)
5,240
97,662
52,744
181,015
–
9,670
52,744
190,685
1 As a result of the uS phase 1 asset sale program in the year ended 30 June 2010, debt was repaid and associated finance costs were recognised in the Statement
of Comprehensive Income.
The average capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 7.74% (2010: 7.09%).
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 43
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 4. Income tax
(a) income tax (benefit)/expense
Current tax expense/(benefit)
Deferred tax (benefit)/expense
Total income tax benefit
Deferred income tax (benefit)/expense included in income tax (benefit)/expense comprises:
Increase in deferred tax assets
Increase in deferred tax liabilities
Total deferred tax (benefit)/expense
(b) Reconciliation of income tax expense to net profit
Profit before tax
less amounts not subject to income tax (note 1(g))
Prima facie tax benefit at the Australian tax rate of 30% (2010: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Depreciation and amortisation
Reversal of previous impairment
net fair value loss of investment properties
net gain on sale of investment properties
Previous unrecognised tax losses utilised
unused tax losses
Sundry items
Income tax benefit
Note
16
23
2011
$’000
2010
$’000
97
(3,650)
(4,948)
(4,851)
224
(3,426)
(11,803)
6,855
(4,948)
2011
$’000
576,433
(1,097)
1,321
224
2010
$’000
1,607
(614,379)
(16,210)
(37,946)
(14,603)
(11,384)
(4,381)
(1,342)
–
7,886
(26)
–
–
15
6,533
(1,370)
(3,992)
6,988
242
(693)
(225)
5
955
(4,851)
(3,426)
(c) withholding tax expense
Withholding tax expense of $26,164,000 (2010: $26,557,000 benefit) comprises deferred tax expense of $23,592,000 (2010: $29,396,000
benefit) and current tax expense of $2,572,000 (2010: $2,839,000). The deferred tax benefit is recognised on differences between the tax cost
base of the uS assets and liabilities and their accounting carrying value at the end of the reporting period. The majority of the deferred tax expense
arises due to the tax depreciation and revaluation of uS investment properties as well as mark‑to‑market of derivatives.
44
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Note 5. other expenses
Audit and taxation fees
Custodian fees
legal and other professional fees
Registry costs and listing fees
Occupancy expenses
Administration expenses
Other staff expenses
External management fees
Other expenses
Total other expenses
Note
6
Note 6. audit, taxation and transaction services fees
During the year, the Auditor and its related practices, and non‑related audit firms earned the following remuneration:
audit fees
PwC Australia – audit and review of Financial Statements
PwC uS – audit and review of Financial Statements
PwC fees paid in relation to outgoings audit1
PwC Australia – regulatory audit and compliance services
audit fees paid to PwC
Fees paid to non‑PwC audit firms
Total audit fees
Taxation fees
Fees paid to PwC Australia
Fees paid to PwC nZ
Fees paid to PwC uS
Taxation fees paid to PwC
Fees paid to non‑PwC audit firms
Total taxation fees2
Total audit and taxation fees1
Transaction services fees
PwC assurance services in respect of debt raisings
PwC taxation services
Transaction services fees paid to PwC
Fees paid to non‑PwC audit firms
Total transaction services fees
Total audit, taxation and transaction services fees
2011
$’000
2,264
474
1,542
651
2,881
4,101
2,528
2,799
5,053
2010
$’000
2,417
402
2,495
895
2,194
4,319
2,118
4,172
5,365
22,293
24,377
2011
$
2010
$
1,068,066
1,114,706
278,057
234,140
107,361
95,711
170,816
147,000
1,624,300
1,591,557
57,874
266,011
1,682,174
1,857,568
188,539
164,172
12,670
6,639
3,103
213,188
204,312
383,999
484,384
270,831
688,696
654,830
2,370,870
2,512,398
243,557
245,544
–
76,300
243,557
321,844
52,432
–
295,989
321,844
2,666,859
2,834,242
1 Fees paid in relation to outgoing audits are included in property expenses. Therefore, total audit and taxation fees included in other expenses
is $2,263,509 (2010: $2,416,687).
2 These services include general compliance work, one off project work and advice with respect to the management of day‑to‑day tax affairs of the Group.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 45
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 7. Current assets – cash and cash equivalents
Cash at bank
Short term deposits1
Total current assets – cash and cash equivalents
2011
$’000
28,039
45,707
2010
$’000
54,365
10,054
73,746
64,419
1 As at 30 June 2011, the Group held cash of C$34.7 million (A$33.4 million) in escrow in relation to the sale of its Toronto warehouse facility in June 2011.
The funds in escrow relate to an amount withheld by the purchaser under Canadian tax law as part of the finalisation of the capital gains tax on disposal.
The majority of the remaining funds will be used to repay debt once released by the Canadian tax authority.
Note 8. Current assets – receivables
Rent receivable
less: provision for doubtful debts
Total rental receivables
Fees receivable
Interest receivable
Other receivables
Total other receivables
Total current assets – receivables
Note 9. Non-current assets classified as held for sale
(a) non-current assets held for sale
Investment properties held for sale
Total non-current assets classified as held for sale
(b) Reconciliation
Opening balance at the beginning of the year
Disposals
Transfer from investment properties
Foreign exchange differences on foreign currency translation
Additions, amortisation and other
Closing balance at the end of the year
2011
$’000
9,203
(3,112)
6,091
9,354
282
20,448
2010
$’000
16,403
(8,628)
7,775
7,220
586
9,429
30,084
17,235
36,175
25,010
2011
$’000
2010
$’000
59,260
18,068
59,260
18,068
2011
$’000
2010
$’000
18,068
98,054
(15,674)
(98,035)
59,260
18,068
(2,445)
51
–
(19)
59,260
18,068
As part of the asset sale program, certain assets were classified as non‑current assets held for sale and carried at fair value.
Disposal
On 19 november 2010, Atlantic Corporate Park, Sterling, northern Virginia was disposed of for uS$22.6 million (A$22.9 million).
46
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Note 10. Derivative financial instruments
Current assets
Interest rate swap contracts
Cross currency swap contracts
Forward foreign exchange contracts
Total current assets – derivative financial instruments
Non-current assets
Interest rate swap contracts
Cross currency swap contracts
Forward foreign exchange contracts
Total non-current assets – derivative financial instruments
Current liabilities
Interest rate swap contracts
Cross currency swap contracts
Forward foreign exchange contracts
Total current liabilities – derivative financial instruments
Non-current liabilities
Interest rate swap contracts
Cross currency swap contracts
Forward foreign exchange contracts
Total non-current liabilities – derivative financial instruments
Net derivative financial instruments
Refer note 30 for further discussion regarding derivative financial instruments.
Note 11. Current assets – other
Prepayments
Total current assets – other
2011
$’000
2010
$’000
3,336
17,583
2,193
24,727
7,812
1,364
23,112
33,903
71,765
3,198
2,145
97,492
13,440
1,489
77,108
112,421
4,675
–
325
5,765
11,313
186
5,000
17,264
154,677
303,181
408
–
1,585
131
155,085
304,897
(59,865)
(175,837)
2011
$’000
2010
$’000
11,396
13,555
11,396
13,555
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 47
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 12. Non-current assets – investment properties
(a) Properties
Kings Park Industrial Estate, Vardys Road, Marayong, nSW
Target Distribution Centre, Tarras Road, Altona north, VIC
Axxess Corporate Park, Corner Ferntree Gully & Gilby Roads, Mount Waverley, VIC
Knoxfield Industrial Estate, Henderson Road, Knoxfield, VIC
12 Frederick Street, St leonards, nSW
2 Alspec Place, Eastern Creek, nSW
Centrewest Industrial Estate, 108‑120 Silverwater Road, Silverwater, nSW
40‑50 Talavera Road, Macquarie Park, nSW
44 Market Street, Sydney, nSW
8 nicholson Street, Melbourne, VIC
130 George Street, Parramatta, nSW
Flinders Gate Complex, 172 Flinders Street & 189 Flinders lane, Melbourne, VIC
383‑395 Kent Street, Sydney, nSW
14 Moore Street, Canberra, ACT**
Sydney CBD Floor Space (1 Chifley Square, Sydney), nSW1
34‑60 little Collins Street, Melbourne, VIC**
32‑44 Flinders Street, Melbourne, VIC
Flinders Gate Complex, 172 Flinders Street, Melbourne, VIC
383‑395 Kent Street Car Park, Sydney, nSW
2‑4 Military Road, Matraville, nSW
79‑99 St Hilliers Road, Auburn, nSW
3 Brookhollow Avenue, Baulkham Hills, nSW
1 Garigal Road, Belrose, nSW
2 Minna Close, Belrose, nSW
114‑120 Old Pittwater Road, Brookvale, nSW
145‑151 Arthur Street, Flemington, nSW
436‑484 Victoria Road, Gladesville, nSW
1 Foundation Place, Greystanes, nSW
5‑15 Rosebery Avenue & 25‑55 Rothschild Avenue, Rosebery, nSW
10‑16 South Street, Rydalmere, nSW
19 Chifley Street, Smithfield, nSW
Pound Road West, Dandenong, VIC
DEXuS Industrial Estate, Boundary Road (including 440 Doherty’s Road), laverton north, VIC
250 Forest Road South, lara, VIC
15‑23 Whicker Road, Gillman, SA
1 This relates to heritage floor space retained following the disposal of 1 Chifley Square, Sydney.
The title to all properties is freehold, with the exception of the properties marked ** which are leasehold.
48
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
ownership
acquisition date
Independent
valuation date
Independent
Independent valuer
Consolidated book
Consolidated book
valuation amount
value 30 June 2011
value 30 June 2010
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
May 1990
Oct 1995
Oct 1996
Aug 1996
Jul 2000
Mar 2004
May 2010
Oct 2002
Sep 1987
nov 1993
May 1997
Mar 1999
Sep 1987
May 2002
Jul 2000
nov 1984
Jun 1998
Mar 1999
Sep 1987
Dec 2009
Sep 1997
Dec 2002
Dec 1998
Dec 1998
Sep 1997
Sep 1997
Sep 1997
Feb 2003
Apr 1998
Sep 1997
Dec 1998
Jan 2004
Jul 2002
Dec 2002
Dec 2002
Dec 2009
Jun 2011
Jun 2010
Jun 2011
Jun 2011
Dec 2008
n/a
Jun 2009
Jun 2010
Jun 2009
Dec 2010
Jun 2011
Jun 2010
Jun 2010
n/a
Jun 2011
Jun 2011
Jun 2011
Jun 2010
n/a
Jun 2009
Jun 2010
Jun 2009
Jun 2009
Dec 2008
Jun 2011
Jun 2009
Jun 2010
Dec 2010
Jun 2011
Jun 2008
Jun 2010
Jun 2011
Dec 2010
Dec 2010
$’000
88,000
32,500
179,400
37,600
33,500
24,800
n/a
29,200
192,700
85,000
77,000
28,500
122,000
37,000
n/a
39,200
29,500
54,000
60,000
n/a
40,000
40,000
24,000
27,600
48,000
28,000
46,000
41,500
89,000
39,250
18,350
77,300
123,200
50,000
25,500
n/a
n/a
n/a
(i)
(i)
(g)
(g)
(a)
(f)
(f)
(d)
(i)
(f)
(e)
(i)
(i)
(i)
(e)
(e)
(i)
(e)
(e)
(f)
(f)
(f)
(f)
(a)
(f)
(f)
(g)
(i)
(i)
(g)
(i)
(a)
$’000
88,660
32,500
181,249
37,600
33,500
24,328
25,931
27,981
207,000
80,162
79,460
28,500
127,225
33,000
129
39,200
29,500
54,000
60,000
48,902
37,400
40,112
20,500
27,312
44,128
28,000
43,500
43,000
89,756
39,250
–
75,300
123,393
50,000
28,800
$’000
88,030
28,964
179,400
33,164
33,463
23,300
25,798
26,603
192,700
80,000
74,320
24,747
122,000
37,000
129
34,077
27,010
49,043
60,000
48,751
40,168
40,000
22,000
27,213
41,800
31,078
46,804
41,500
89,795
39,636
15,000
77,300
115,400
50,700
25,712
Note 12. Non-current assets – investment properties
(a) Properties
Kings Park Industrial Estate, Vardys Road, Marayong, nSW
Target Distribution Centre, Tarras Road, Altona north, VIC
Axxess Corporate Park, Corner Ferntree Gully & Gilby Roads, Mount Waverley, VIC
Knoxfield Industrial Estate, Henderson Road, Knoxfield, VIC
Centrewest Industrial Estate, 108‑120 Silverwater Road, Silverwater, nSW
12 Frederick Street, St leonards, nSW
2 Alspec Place, Eastern Creek, nSW
40‑50 Talavera Road, Macquarie Park, nSW
44 Market Street, Sydney, nSW
8 nicholson Street, Melbourne, VIC
130 George Street, Parramatta, nSW
Flinders Gate Complex, 172 Flinders Street & 189 Flinders lane, Melbourne, VIC
383‑395 Kent Street, Sydney, nSW
14 Moore Street, Canberra, ACT**
Sydney CBD Floor Space (1 Chifley Square, Sydney), nSW1
34‑60 little Collins Street, Melbourne, VIC**
32‑44 Flinders Street, Melbourne, VIC
Flinders Gate Complex, 172 Flinders Street, Melbourne, VIC
383‑395 Kent Street Car Park, Sydney, nSW
2‑4 Military Road, Matraville, nSW
79‑99 St Hilliers Road, Auburn, nSW
3 Brookhollow Avenue, Baulkham Hills, nSW
1 Garigal Road, Belrose, nSW
2 Minna Close, Belrose, nSW
114‑120 Old Pittwater Road, Brookvale, nSW
145‑151 Arthur Street, Flemington, nSW
436‑484 Victoria Road, Gladesville, nSW
1 Foundation Place, Greystanes, nSW
10‑16 South Street, Rydalmere, nSW
19 Chifley Street, Smithfield, nSW
Pound Road West, Dandenong, VIC
250 Forest Road South, lara, VIC
15‑23 Whicker Road, Gillman, SA
5‑15 Rosebery Avenue & 25‑55 Rothschild Avenue, Rosebery, nSW
DEXuS Industrial Estate, Boundary Road (including 440 Doherty’s Road), laverton north, VIC
1 This relates to heritage floor space retained following the disposal of 1 Chifley Square, Sydney.
The title to all properties is freehold, with the exception of the properties marked ** which are leasehold.
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
ownership
acquisition date
Independent
valuation date
Independent
valuation amount
$’000
Independent valuer
Consolidated book
value 30 June 2011
$’000
Consolidated book
value 30 June 2010
$’000
May 1990
Oct 1995
Oct 1996
Aug 1996
Jul 2000
Mar 2004
May 2010
Oct 2002
Sep 1987
nov 1993
May 1997
Mar 1999
Sep 1987
May 2002
Jul 2000
nov 1984
Jun 1998
Mar 1999
Sep 1987
Dec 2009
Sep 1997
Dec 2002
Dec 1998
Dec 1998
Sep 1997
Sep 1997
Sep 1997
Feb 2003
Apr 1998
Sep 1997
Dec 1998
Jan 2004
Jul 2002
Dec 2002
Dec 2002
Dec 2009
Jun 2011
Jun 2010
Jun 2011
Jun 2011
Dec 2008
n/a
Jun 2009
Jun 2010
Jun 2009
Dec 2010
Jun 2011
Jun 2010
Jun 2010
n/a
Jun 2011
Jun 2011
Jun 2011
Jun 2010
n/a
Jun 2009
Jun 2010
Jun 2009
Jun 2009
Dec 2008
Jun 2011
Jun 2009
Jun 2010
Dec 2010
Jun 2011
Jun 2008
Jun 2010
Jun 2011
Dec 2010
Dec 2010
88,000
32,500
179,400
37,600
33,500
24,800
n/a
29,200
192,700
85,000
77,000
28,500
122,000
37,000
n/a
39,200
29,500
54,000
60,000
n/a
40,000
40,000
24,000
27,600
48,000
28,000
46,000
41,500
89,000
39,250
18,350
77,300
123,200
50,000
25,500
(i)
(i)
(g)
(g)
(a)
(f)
n/a
(f)
(d)
(i)
(f)
(e)
(i)
(i)
n/a
(i)
(e)
(e)
(i)
n/a
(e)
(e)
(f)
(f)
(f)
(f)
(a)
(f)
(f)
(g)
(i)
(i)
(g)
(i)
(a)
88,660
32,500
181,249
37,600
33,500
24,328
25,931
27,981
207,000
80,162
79,460
28,500
127,225
33,000
129
39,200
29,500
54,000
60,000
48,902
37,400
40,112
20,500
27,312
44,128
28,000
43,500
43,000
89,756
39,250
–
75,300
123,393
50,000
28,800
88,030
28,964
179,400
33,164
33,463
23,300
25,798
26,603
192,700
80,000
74,320
24,747
122,000
37,000
129
34,077
27,010
49,043
60,000
48,751
40,168
40,000
22,000
27,213
41,800
31,078
46,804
41,500
89,795
39,636
15,000
77,300
115,400
50,700
25,712
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 49
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 12. Non-current assets – investment properties (continued)
(a) Properties (continued)
25 Donkin Street, West End Brisbane, QlD
52 Holbeche Road, Arndell Park, nSW
30‑32 Bessemer Street, Blacktown, nSW
27‑29 liberty Road, Huntingwood, nSW
154 O’Riordan Street, Mascot, nSW
11 Talavera Road, Macquarie Park, nSW
DEXuS Industrial Estate, Egerton Street, Silverwater, nSW
114 Fairbank Road, Clayton, VIC
30 Bellrick Street, Acacia Ridge, QlD
Zone Industrial Epône II, 7860 Epône, Paris, France
19 rue de Bretagne, 38070 Saint‑Quentin Fallavier, lyon, France
21 rue du Chemin Blanc, 91160 Champlan, Paris, France
Im Gewerbegebiet 18, Friedewald, Hessen, Germany
Im Steinbruch 4, 6, Knetzgau, Bayern, Germany
Carl‑leverkus‑Straße 3, 5, Winkelsweg 182‑184, langenfeld, nordrhein Westfalen, Germany
Schneiderstraße 82, langenfeld, nordrhein Westfalen, Germany
Former Straße 6, unna, nordrhein Westfalen, Germany
liverpooler Straße, Kopenhagener Straße, Osloer Straße, Friemersheim, Duisburg, nordrhein Westfalen, Germany
Bremer Ring & Hansestraße, Wustermark, Berlin, Brandenburg, Germany
Theodorstraße, Düsseldorf, nordrhein Westfalen, Germany
32 Avenue de l’Océanie, 91140 Villejust, Paris, France
Servon 1, Route nationale 19 l’Orme Rond, 77170 Servon, Paris
Servon 2, Route nationale 19 l’Orme Rond, 77170 Servon, Paris
Im Holderbusch 3, Sulmstraße, Ellhofen, Baden‑Württemberg, Germany
Schillerstraße 51, Ellhofen, Baden‑Württemberg, Germany
Schillerstraße 42, 42a, Bahnhofstraße 44, 50, Ellhofen, Baden‑Württemberg, Germany
Über der Dingelstelle, langenweddingen, neidersachsen, Germany
niedesheimer Straße 24, Worms, Hessen, Germany
13201 South Orange Avenue, Orlando, Florida, uS
8574 Boston Church Road, Milton, Ontario, Canada
Governor Phillip & Macquarie Tower Complex, 1 Farrer Place, Sydney, nSW1
45 Clarence Street, Sydney, nSW
309‑321 Kent Street, Sydney, nSW1
One Margaret Street, Sydney, nSW
Victoria Cross, 60 Miller Street, north Sydney, nSW
The Zenith, 821 Pacific Highway, Chatswood, nSW1
1 The valuation reflects 50% of the independent valuation amount.
50
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
ownership
acquisition date
Independent
valuation date
Independent
Independent valuer
Consolidated book
Consolidated book
valuation amount
value 30 June 2011
value 30 June 2010
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
50
100
100
50
Dec 1998
Jul 1998
May 1997
Jul 1998
Jun 1997
Jun 2002
May 1997
Jul 1997
Jun 1997
Jul 2006
Jul 2006
Jul 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Jun 2007
Jul 2006
Jul 2006
Jul 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Jun 2007
Dec 2007
Dec 1998
Dec 1998
Dec 1998
Dec 1998
Dec 1998
Dec 1998
Dec 2010
Dec 2009
Jun 2011
Dec 2010
Jun 2011
Jun 2010
Dec 2009
Dec 2010
Jun 2010
Jun 2011
Jun 2011
Jun 2010
Jun 2011
Jun 2011
Jun 2011
Jun 2011
Jun 2011
Dec 2010
Jun 2011
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2011
Dec 2010
Dec 2009
Jun 2011
Jun 2010
$’000
27,000
11,500
16,250
8,000
13,750
127,000
39,500
14,900
19,600
7,252
7,711
7,924
4,389
9,251
9,386
5,773
14,922
24,240
10,466
15,598
9,467
10,709
5,105
16,002
11,142
6,516
5,942
4,322
25,583
68,211
643,000
247,500
182,500
162,500
135,000
107,500
(f)
(a)
(e)
(i)
(e)
(g)
(e)
(f)
(d)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(a)
(a)
(d)
(f)
(i)
(f)
(a)
(e)
$’000
26,200
12,500
16,250
8,000
13,750
141,000
40,200
15,090
20,300
7,252
7,711
–
4,389
9,251
9,386
5,773
14,922
26,334
10,466
19,176
–
–
–
–
–
–
–
–
–
29,435
645,443
247,500
184,308
170,863
135,000
112,953
$’000
32,234
12,000
15,400
8,154
13,592
127,000
41,900
14,600
19,600
6,462
9,056
7,924
4,442
9,636
10,532
6,233
16,191
23,642
11,212
16,621
10,173
11,907
5,488
17,194
12,036
7,093
6,305
4,657
28,593
61,999
624,744
254,834
178,645
162,719
128,881
107,500
Carl‑leverkus‑Straße 3, 5, Winkelsweg 182‑184, langenfeld, nordrhein Westfalen, Germany
Schneiderstraße 82, langenfeld, nordrhein Westfalen, Germany
Former Straße 6, unna, nordrhein Westfalen, Germany
liverpooler Straße, Kopenhagener Straße, Osloer Straße, Friemersheim, Duisburg, nordrhein Westfalen, Germany
Note 12. Non-current assets – investment properties (continued)
(a) Properties (continued)
25 Donkin Street, West End Brisbane, QlD
52 Holbeche Road, Arndell Park, nSW
30‑32 Bessemer Street, Blacktown, nSW
27‑29 liberty Road, Huntingwood, nSW
154 O’Riordan Street, Mascot, nSW
11 Talavera Road, Macquarie Park, nSW
DEXuS Industrial Estate, Egerton Street, Silverwater, nSW
114 Fairbank Road, Clayton, VIC
30 Bellrick Street, Acacia Ridge, QlD
Zone Industrial Epône II, 7860 Epône, Paris, France
19 rue de Bretagne, 38070 Saint‑Quentin Fallavier, lyon, France
21 rue du Chemin Blanc, 91160 Champlan, Paris, France
Im Gewerbegebiet 18, Friedewald, Hessen, Germany
Im Steinbruch 4, 6, Knetzgau, Bayern, Germany
Bremer Ring & Hansestraße, Wustermark, Berlin, Brandenburg, Germany
Theodorstraße, Düsseldorf, nordrhein Westfalen, Germany
32 Avenue de l’Océanie, 91140 Villejust, Paris, France
Servon 1, Route nationale 19 l’Orme Rond, 77170 Servon, Paris
Servon 2, Route nationale 19 l’Orme Rond, 77170 Servon, Paris
Im Holderbusch 3, Sulmstraße, Ellhofen, Baden‑Württemberg, Germany
Schillerstraße 51, Ellhofen, Baden‑Württemberg, Germany
Schillerstraße 42, 42a, Bahnhofstraße 44, 50, Ellhofen, Baden‑Württemberg, Germany
Über der Dingelstelle, langenweddingen, neidersachsen, Germany
Governor Phillip & Macquarie Tower Complex, 1 Farrer Place, Sydney, nSW1
niedesheimer Straße 24, Worms, Hessen, Germany
13201 South Orange Avenue, Orlando, Florida, uS
8574 Boston Church Road, Milton, Ontario, Canada
45 Clarence Street, Sydney, nSW
309‑321 Kent Street, Sydney, nSW1
One Margaret Street, Sydney, nSW
Victoria Cross, 60 Miller Street, north Sydney, nSW
The Zenith, 821 Pacific Highway, Chatswood, nSW1
1 The valuation reflects 50% of the independent valuation amount.
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
50
100
100
50
ownership
acquisition date
Independent
valuation date
Independent
valuation amount
$’000
Independent valuer
Consolidated book
value 30 June 2011
$’000
Consolidated book
value 30 June 2010
$’000
Dec 1998
Jul 1998
May 1997
Jul 1998
Jun 1997
Jun 2002
May 1997
Jul 1997
Jun 1997
Jul 2006
Jul 2006
Jul 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Jun 2007
Jul 2006
Jul 2006
Jul 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Jun 2007
Dec 2007
Dec 1998
Dec 1998
Dec 1998
Dec 1998
Dec 1998
Dec 1998
Dec 2010
Dec 2009
Jun 2011
Dec 2010
Jun 2011
Jun 2010
Dec 2009
Dec 2010
Jun 2010
Jun 2011
Jun 2011
Jun 2010
Jun 2011
Jun 2011
Jun 2011
Jun 2011
Jun 2011
Dec 2010
Jun 2011
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2011
Dec 2010
Dec 2009
Jun 2011
Jun 2010
27,000
11,500
16,250
8,000
13,750
127,000
39,500
14,900
19,600
7,252
7,711
7,924
4,389
9,251
9,386
5,773
14,922
24,240
10,466
15,598
9,467
10,709
5,105
16,002
11,142
6,516
5,942
4,322
25,583
68,211
643,000
247,500
182,500
162,500
135,000
107,500
(f)
(a)
(e)
(i)
(e)
(g)
(e)
(f)
(d)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(a)
(a)
(d)
(f)
(i)
(f)
(a)
(e)
26,200
12,500
16,250
8,000
13,750
141,000
40,200
15,090
20,300
7,252
7,711
–
4,389
9,251
9,386
5,773
14,922
26,334
10,466
19,176
–
–
–
–
–
–
–
–
29,435
–
645,443
247,500
184,308
170,863
135,000
112,953
32,234
12,000
15,400
8,154
13,592
127,000
41,900
14,600
19,600
6,462
9,056
7,924
4,442
9,636
10,532
6,233
16,191
23,642
11,212
16,621
10,173
11,907
5,488
17,194
12,036
7,093
6,305
4,657
28,593
61,999
624,744
254,834
178,645
162,719
128,881
107,500
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 51
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 12. Non-current assets – investment properties (continued)
(a) Properties (continued)
Woodside Plaza, 240 St Georges Terrace, Perth, WA
30 The Bond, 30‑34 Hickson Road, Sydney, nSW
Southgate Complex, 3 Southgate Avenue, Southbank, VIC
201‑217 Elizabeth Street, Sydney, nSW1
Garema Court, 140‑180 City Walk, Canberra, ACT**
Australia Square Complex, 264‑278 George Street, Sydney, nSW1
lumley Centre, 88 Shortland Street, Auckland, new Zealand
300 Townpark Drive, Kennesaw, Georgia, uS
1000‑1200 Williams Street nW, Atlanta, Georgia, uS
MD Wholesale Food Market, 7951 Ocean Avenue & 7970 Tarbay Drive, Jessup, Maryland, uS
1015 & 1025 West nursery Road, linthicum Heights, Maryland, uS
Cabot Techs, 989‑991 Corporate Boulevard, linthicum Heights, Maryland, uS
9112 Guilford Road, Columbia, Maryland, uS
8155 Stayton Drive, Jessup, Maryland, uS
8306 Patuxent Range Road & 8332 Bristol Court, Jessup, Maryland, uS
8350 & 8351 Bristol Court, Jessup, Maryland, uS
nE Baltimore, 21 & 23 Fontana lane, Rosedale, Maryland, uS
Fort Holabird Industrial, 1811 & 1831 Portal Street & 6615 Tributary Street, Baltimore, Maryland, uS
9900 Brookford Street, Charlotte, north Carolina, uS
3520‑3600 Westinghouse Boulevard, Charlotte, north Carolina, uS
1825 Airport Exchange Boulevard, Erlanger, Kentucky, uS
7453 Empire Drive, Florence, Kentucky, uS
1910 International Way, Hebron, Kentucky, uS
7930 & 7940 Kentucky Drive, Florence, Kentucky, uS
5‑11 Spiral Drive, Florence, Kentucky, uS
3368‑3372 Turfway Road, Erlanger, Kentucky, uS
124 Commerce Boulevard, loveland, Ohio, uS
10013‑11093 Kenwood Road, Cincinnati, Ohio, uS
World Park, 9756 & 9842 International Boulevard, Cincinnati, Ohio, uS
4343 & 4401 Equity Drive, 1614‑1634 Westbelt Drive & 1901‑1919 Dividend Drive, Columbus, Ohio, uS
2700 International Street, Columbus, Ohio, uS
SE Columbus, 2626 Port Road, Columbus, Ohio, uS
912 113th Street & 2300 East Randoll Mill Road, Arlington, Texas, uS
1900 Diplomat Drive, Dallas, Texas, uS
2055 Diplomat Drive, Dallas, Texas, uS
850 north lake Drive, Weatherford, Texas, uS
555 Airline Drive, Coppell, Texas, uS
1 The valuation reflects 50% of the independent valuation amount.
The title to all properties is freehold, with the exception of the properties marked ** which are leasehold.
52
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
ownership
acquisition date
Independent
valuation date
Independent
Independent valuer
Consolidated book
Consolidated book
valuation amount
value 30 June 2011
value 30 June 2010
%
100
100
100
50
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Jan 2001
May 2002
Aug 2000
Aug 2000
Aug 2000
Aug 2000
Sep 2005
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Jun 2005
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Jun 2010
Dec 2010
Jun 2009
Jun 2011
Mar 2009
Dec 2009
Jun 2010
Jun 2011
Jun 2010
Dec 2010
Jun 2011
Dec 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2011
Jun 2010
Jun 2011
Dec 2010
Dec 2010
Jun 2010
Dec 2010
Dec 2010
Jun 2010
Dec 2010
Jun 2011
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2011
Jun 2010
Jun 2011
Jun 2010
Jun 2010
$’000
425,000
145,000
340,000
144,000
50,600
264,250
99,205
4,190
6,593
15,271
4,842
13,791
6,053
5,774
8,194
7,729
5,811
9,344
2,886
14,340
1,639
3,733
8,567
9,805
3,149
4,060
2,066
13,037
6,519
16,679
2,421
2,372
6,146
2,980
1,816
9,209
4,377
(e)
(a)
(i)
(d)
(i)
(d)
(d)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
$’000
441,000
145,455
385,000
144,000
31,000
271,463
94,974
4,190
–
17,134
4,842
14,703
7,147
5,773
9,079
9,219
6,220
9,344
2,084
14,340
1,656
3,896
8,732
10,811
–
–
–
13,037
6,379
16,840
1,932
1,886
6,146
2,943
1,816
10,532
4,900
$’000
425,000
150,000
340,372
140,989
38,083
265,340
104,404
6,042
7,861
19,975
6,771
19,975
7,626
7,274
10,325
9,738
7,321
11,985
3,637
18,538
2,351
5,437
10,794
13,018
5,262
4,060
2,692
16,438
8,336
32,160
3,054
8,113
8,592
3,755
3,520
11,604
5,514
Note 12. Non-current assets – investment properties (continued)
(a) Properties (continued)
Woodside Plaza, 240 St Georges Terrace, Perth, WA
30 The Bond, 30‑34 Hickson Road, Sydney, nSW
Southgate Complex, 3 Southgate Avenue, Southbank, VIC
201‑217 Elizabeth Street, Sydney, nSW1
Garema Court, 140‑180 City Walk, Canberra, ACT**
Australia Square Complex, 264‑278 George Street, Sydney, nSW1
lumley Centre, 88 Shortland Street, Auckland, new Zealand
300 Townpark Drive, Kennesaw, Georgia, uS
1000‑1200 Williams Street nW, Atlanta, Georgia, uS
MD Wholesale Food Market, 7951 Ocean Avenue & 7970 Tarbay Drive, Jessup, Maryland, uS
1015 & 1025 West nursery Road, linthicum Heights, Maryland, uS
Cabot Techs, 989‑991 Corporate Boulevard, linthicum Heights, Maryland, uS
9112 Guilford Road, Columbia, Maryland, uS
8155 Stayton Drive, Jessup, Maryland, uS
8306 Patuxent Range Road & 8332 Bristol Court, Jessup, Maryland, uS
8350 & 8351 Bristol Court, Jessup, Maryland, uS
nE Baltimore, 21 & 23 Fontana lane, Rosedale, Maryland, uS
Fort Holabird Industrial, 1811 & 1831 Portal Street & 6615 Tributary Street, Baltimore, Maryland, uS
9900 Brookford Street, Charlotte, north Carolina, uS
3520‑3600 Westinghouse Boulevard, Charlotte, north Carolina, uS
1825 Airport Exchange Boulevard, Erlanger, Kentucky, uS
7453 Empire Drive, Florence, Kentucky, uS
1910 International Way, Hebron, Kentucky, uS
7930 & 7940 Kentucky Drive, Florence, Kentucky, uS
5‑11 Spiral Drive, Florence, Kentucky, uS
3368‑3372 Turfway Road, Erlanger, Kentucky, uS
124 Commerce Boulevard, loveland, Ohio, uS
10013‑11093 Kenwood Road, Cincinnati, Ohio, uS
2700 International Street, Columbus, Ohio, uS
SE Columbus, 2626 Port Road, Columbus, Ohio, uS
912 113th Street & 2300 East Randoll Mill Road, Arlington, Texas, uS
1900 Diplomat Drive, Dallas, Texas, uS
2055 Diplomat Drive, Dallas, Texas, uS
850 north lake Drive, Weatherford, Texas, uS
555 Airline Drive, Coppell, Texas, uS
World Park, 9756 & 9842 International Boulevard, Cincinnati, Ohio, uS
4343 & 4401 Equity Drive, 1614‑1634 Westbelt Drive & 1901‑1919 Dividend Drive, Columbus, Ohio, uS
1 The valuation reflects 50% of the independent valuation amount.
The title to all properties is freehold, with the exception of the properties marked ** which are leasehold.
%
100
100
100
50
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
ownership
acquisition date
Independent
valuation date
Independent
valuation amount
$’000
Independent valuer
Consolidated book
value 30 June 2011
$’000
Consolidated book
value 30 June 2010
$’000
Jan 2001
May 2002
Aug 2000
Aug 2000
Aug 2000
Aug 2000
Sep 2005
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Jun 2005
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Jun 2010
Dec 2010
Jun 2009
Jun 2011
Mar 2009
Dec 2009
Jun 2010
Jun 2011
Jun 2010
Dec 2010
Jun 2011
Dec 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2011
Jun 2010
Jun 2011
Dec 2010
Dec 2010
Jun 2010
Dec 2010
Dec 2010
Jun 2010
Dec 2010
Jun 2011
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2011
Jun 2010
Jun 2011
Jun 2010
Jun 2010
425,000
145,000
340,000
144,000
50,600
264,250
99,205
4,190
6,593
15,271
4,842
13,791
6,053
5,774
8,194
7,729
5,811
9,344
2,886
14,340
1,639
3,733
8,567
9,805
3,149
4,060
2,066
13,037
6,519
16,679
2,421
2,372
6,146
2,980
1,816
9,209
4,377
(e)
(a)
(i)
(d)
(i)
(d)
(d)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
441,000
145,455
385,000
144,000
31,000
271,463
94,974
4,190
–
17,134
4,842
14,703
7,147
5,773
9,079
9,219
6,220
9,344
2,084
14,340
1,656
3,896
8,732
10,811
–
–
–
13,037
6,379
16,840
1,932
1,886
6,146
2,943
1,816
10,532
4,900
425,000
150,000
340,372
140,989
38,083
265,340
104,404
6,042
7,861
19,975
6,771
19,975
7,626
7,274
10,325
9,738
7,321
11,985
3,637
18,538
2,351
5,437
10,794
13,018
5,262
4,060
2,692
16,438
8,336
32,160
3,054
8,113
8,592
3,755
3,520
11,604
5,514
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 53
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 12. Non-current assets – investment properties (continued)
(a) Properties (continued)
11411, 11460‑11480 & 11550‑11560 Hillguard Road, Dallas, Texas, uS
11011 Regency Crest Drive, Garland, Texas, uS
885 East Collins Boulevard, Richardson, Texas, uS
3601 East Plano Parkway & 1000 Shiloh Road, Plano, Texas, uS
2701, 2801, 2805 East Plano Parkway & 2700 Summit Avenue, Plano, Texas, uS
820‑860 F Avenue, Plano, Texas, uS
1800‑1808 10th Street, Plano, Texas, uS
1600‑1700 Capital Avenue, Plano, Texas, uS
CTC at Valwood, 13755 Hutton Drive, Dallas, Texas, uS
6350 & 6360 Brackbill Boulevard, Mechanicsburg, Pennsylvania, uS
3550 Tyburn Street & 3332–3424 n San Fernando Road, los Angeles, California, uS
14489 Industry Circle, la Mirada, California, uS
14555 Alondra Boulevard, la Mirada, California, uS
6530 Altura Boulevard, Buena Park, California, uS
9210 San Fernando Road, Sun Valley, California, uS
2950 lexington Avenue South, St Paul, Minnesota, uS
2222‑2298 Wooddale Drive, Mounds View, Minneapolis, uS
6105 Trenton lane north, Minneapolis, Minnesota, uS
8575 Monticello lane, Osseo, Minnesota, uS
CTC at Dulles, 13555 EDS Drive, Herndon, Virginia, uS
300 & 405‑444 Swann Avenue, 2402‑2520 Oakville Street & 2412‑2610 Jefferson Davis Highway, Alexandria, Virginia, uS
44633‑44645 Guilford Road & 21641 Beaumeade Circle, Ashburn, Virginia, uS
Orlando Central Park, 7600 Kingspointe Parkway, 8259 Exchange Drive, 7451‑7488 Brokerage Drive
& 2900‑2901 Titan Row, Orlando, Florida, uS
7500 Exchange Drive, Orlando, Florida, uS
105‑107 South 41st Avenue, Phoenix, Arizona, uS
1429‑1439 South 40th Avenue, Phoenix, uS
10397 West Van Buren Street, Tolleson, Arizona, uS
844 44th Avenue, Phoenix, Arizona, uS
220 South 9th Street, Phoenix, Arizona, uS
431 north 47th Avenue, Phoenix, Arizona, uS
601 South 55th Avenue, Phoenix, Arizona, uS
1000 South Priest Drive, Phoenix, Arizona, uS
1120‑1150 West Alameda Drive, Tempe, Arizona, uS
13602 12th Street, Chino, California, uS
3590 De Forest Circle, Mira loma, California, uS
1450 E Francis Street, 1951 S Parco Street, 1401 E Cedar Street, Ontorio, California, uS
4200 Santa Ana, Riverside, California, uS
54
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
ownership
acquisition date
Independent
valuation date
Independent
Independent valuer
Consolidated book
Consolidated book
valuation amount
value 30 June 2011
value 30 June 2010
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Jun 2010
Jun 2010
Jun 2010
Dec 2010
Dec 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2011
Jun 2010
Dec 2010
Jun 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2010
Jun 2010
Dec 2010
Jun 2011
Dec 2010
Dec 2010
Jun 2011
Jun 2011
$’000
6,629
5,867
2,980
12,757
20,393
4,656
10,048
5,440
3,538
13,962
53,850
6,938
12,084
3,290
19,127
6,984
11,429
6,202
1,525
21,324
38,365
13,688
51,308
3,538
9,502
8,007
8,008
5,680
5,559
5,028
3,958
2,421
4,311
5,830
11,267
10,960
2,682
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
$’000
7,668
6,024
3,072
12,240
21,548
4,851
8,800
5,885
3,315
–
54,192
6,957
13,052
4,013
20,832
7,589
12,118
6,272
–
23,280
38,365
16,272
54,847
3,962
9,889
8,449
7,984
5,671
5,595
5,350
3,850
1,867
4,311
6,790
12,308
10,960
2,682
$’000
8,353
7,392
3,755
14,326
24,933
5,866
12,660
6,854
4,459
13,962
62,009
9,105
15,562
4,237
23,302
7,403
15,323
7,814
1,819
26,868
48,540
17,247
59,897
4,459
12,947
9,040
8,782
6,494
6,840
6,336
4,987
2,149
7,063
7,333
13,927
12,463
3,256
Note 12. Non-current assets – investment properties (continued)
(a) Properties (continued)
11411, 11460‑11480 & 11550‑11560 Hillguard Road, Dallas, Texas, uS
11011 Regency Crest Drive, Garland, Texas, uS
885 East Collins Boulevard, Richardson, Texas, uS
3601 East Plano Parkway & 1000 Shiloh Road, Plano, Texas, uS
2701, 2801, 2805 East Plano Parkway & 2700 Summit Avenue, Plano, Texas, uS
820‑860 F Avenue, Plano, Texas, uS
1800‑1808 10th Street, Plano, Texas, uS
1600‑1700 Capital Avenue, Plano, Texas, uS
CTC at Valwood, 13755 Hutton Drive, Dallas, Texas, uS
6350 & 6360 Brackbill Boulevard, Mechanicsburg, Pennsylvania, uS
3550 Tyburn Street & 3332–3424 n San Fernando Road, los Angeles, California, uS
14489 Industry Circle, la Mirada, California, uS
14555 Alondra Boulevard, la Mirada, California, uS
6530 Altura Boulevard, Buena Park, California, uS
9210 San Fernando Road, Sun Valley, California, uS
2950 lexington Avenue South, St Paul, Minnesota, uS
2222‑2298 Wooddale Drive, Mounds View, Minneapolis, uS
6105 Trenton lane north, Minneapolis, Minnesota, uS
8575 Monticello lane, Osseo, Minnesota, uS
CTC at Dulles, 13555 EDS Drive, Herndon, Virginia, uS
& 2900‑2901 Titan Row, Orlando, Florida, uS
7500 Exchange Drive, Orlando, Florida, uS
105‑107 South 41st Avenue, Phoenix, Arizona, uS
1429‑1439 South 40th Avenue, Phoenix, uS
10397 West Van Buren Street, Tolleson, Arizona, uS
844 44th Avenue, Phoenix, Arizona, uS
220 South 9th Street, Phoenix, Arizona, uS
431 north 47th Avenue, Phoenix, Arizona, uS
601 South 55th Avenue, Phoenix, Arizona, uS
1000 South Priest Drive, Phoenix, Arizona, uS
1120‑1150 West Alameda Drive, Tempe, Arizona, uS
13602 12th Street, Chino, California, uS
3590 De Forest Circle, Mira loma, California, uS
1450 E Francis Street, 1951 S Parco Street, 1401 E Cedar Street, Ontorio, California, uS
4200 Santa Ana, Riverside, California, uS
300 & 405‑444 Swann Avenue, 2402‑2520 Oakville Street & 2412‑2610 Jefferson Davis Highway, Alexandria, Virginia, uS
44633‑44645 Guilford Road & 21641 Beaumeade Circle, Ashburn, Virginia, uS
Orlando Central Park, 7600 Kingspointe Parkway, 8259 Exchange Drive, 7451‑7488 Brokerage Drive
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
ownership
acquisition date
Independent
valuation date
Independent
valuation amount
$’000
Independent valuer
Consolidated book
value 30 June 2011
$’000
Consolidated book
value 30 June 2010
$’000
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Jun 2010
Jun 2010
Jun 2010
Dec 2010
Dec 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2011
Jun 2010
Dec 2010
Jun 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2010
Jun 2010
Dec 2010
Jun 2011
Dec 2010
Dec 2010
Jun 2011
Jun 2011
6,629
5,867
2,980
12,757
20,393
4,656
10,048
5,440
3,538
13,962
53,850
6,938
12,084
3,290
19,127
6,984
11,429
6,202
1,525
21,324
38,365
13,688
51,308
3,538
9,502
8,007
8,008
5,680
5,559
5,028
3,958
2,421
4,311
5,830
11,267
10,960
2,682
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
7,668
6,024
3,072
12,240
21,548
4,851
8,800
5,885
3,315
–
54,192
6,957
13,052
4,013
20,832
7,589
12,118
6,272
–
23,280
38,365
16,272
54,847
3,962
9,889
8,449
7,984
5,671
5,595
5,350
3,850
1,867
4,311
6,790
12,308
10,960
2,682
8,353
7,392
3,755
14,326
24,933
5,866
12,660
6,854
4,459
13,962
62,009
9,105
15,562
4,237
23,302
7,403
15,323
7,814
1,819
26,868
48,540
17,247
59,897
4,459
12,947
9,040
8,782
6,494
6,840
6,336
4,987
2,149
7,063
7,333
13,927
12,463
3,256
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 55
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 12. Non-current assets – investment properties (continued)
(a) Properties (continued)
1777 S Vintage Avenue, Ontario, California, uS
4190 Santa Ana Street, Ontario, California, uS
11653 6th Street, 9357 Richmond Place & 9371 Buffalo Avenue, Rancho Cucamonga, California, uS
9545 Santa Anita Avenue, Rancho Cucamonga, California, uS
12000 Jersey Court, Rancho Cucamonga, California, uS
7510‑7520 Airway Road, San Diego, California, uS
Kent West Corporate Park, 21902 64th Avenue S, Kent, Washington, uS
Riverbend Commerce Park, 8005 South 266th Street & 26507 79th Avenue South, Kent, Washington, uS
326‑446 Calvert Avenue & 401‑403 Murry’s Avenue, Alexandria, Virginia, uS
Brooklyn Park Interstate Center, 7700 68th Avenue, Brooklyn Park, Minnesota, uS
Braemar Ridge, 7500 West 78th Street, Bloomington, Minnesota, uS
Eagandale Business Campus, 1285 & 1301 Corporate Centre Drive,
1230 & 1270 Eagan Industrial Road, Eagan, Minnesota, uS
3691 north Perris Boulevard, Perris, California, uS
8151‑8161 Interchange Parkway, San Antonio, Texas, uS
Cornerstone Building, 5411 I‑10 East & 1228 Cornerway Boulevard, San Antonio, Texas, uS
302‑402 n Tayman Street, San Antonio, Texas, uS
1803 Grandstand Drive, San Antonio, Texas, uS
195 King Mill Road, McDonough, Georgia, uS
19700 38th Avenue East, Spanaway, Washington, uS
6241 Shook Road, lockbourne, Columbus, Ohio, uS
Summit Oaks, 28515 Westinghouse Place, Santa Clarita, California, uS
Tri‑County 5, Tri‑County Parkway, Schertz, Texas, uS1
Tri‑County 6, Tri‑County Parkway, Schertz, Texas, uS1
202 S Tayman Street, San Antonio, Texas, uS1
1100 Hatcher Avenue & 17521 & 17531 Railroad Street, Industry, California, uS
14501 Artesia Boulevard, la Mirada, California, uS
Total investment properties excluding development properties
Total development properties held as investment property
Total investment properties
1 Classified as development properties held as investment property at 30 June 2010.
56
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
ownership
acquisition date
Independent
valuation date
Independent
Independent valuer
Consolidated book
Consolidated book
valuation amount
value 30 June 2011
value 30 June 2010
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
nov 2005
nov 2005
nov 2005
Jan 2008
Jul 2007
Aug 2007
Oct 2007
Aug 2007
nov 2009
Oct 2009
Jul 2009
Dec 2006
July 2007
July 2007
nov 2007
Oct 2010
Jan 2011
Jun 2011
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2011
Jun 2010
Jun 2011
Jun 2010
Jun 2010
Jun 2011
Dec 2010
Jun 2010
Jun 2010
Jun 2011
Jun 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2011
n/a
n/a
$’000
11,211
4,050
10,662
7,273
3,575
7,543
25,142
9,312
4,563
2,551
3,837
11,519
99,637
9,564
11,617
14,992
5,480
57,454
52,612
56,803
29,333
1,079
1,780
8,101
n/a
n/a
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
n/a
n/a
$’000
11,211
4,616
13,092
7,216
3,975
7,540
25,142
8,877
4,563
2,441
3,213
11,519
113,337
12,734
12,860
14,992
8,637
61,401
52,612
55,067
33,552
1,183
2,188
8,101
13,809
26,077
$’000
12,352
5,338
15,504
10,553
5,614
9,668
28,746
11,733
5,280
3,215
4,834
15,452
107,767
12,051
14,637
20,785
6,905
70,398
64,649
68,256
36,959
–
–
–
–
–
6,512,018
593,896
7,105,914
6,706,218
440,179
7,146,397
Note 12. Non-current assets – investment properties (continued)
(a) Properties (continued)
1777 S Vintage Avenue, Ontario, California, uS
4190 Santa Ana Street, Ontario, California, uS
11653 6th Street, 9357 Richmond Place & 9371 Buffalo Avenue, Rancho Cucamonga, California, uS
9545 Santa Anita Avenue, Rancho Cucamonga, California, uS
12000 Jersey Court, Rancho Cucamonga, California, uS
7510‑7520 Airway Road, San Diego, California, uS
Kent West Corporate Park, 21902 64th Avenue S, Kent, Washington, uS
Riverbend Commerce Park, 8005 South 266th Street & 26507 79th Avenue South, Kent, Washington, uS
326‑446 Calvert Avenue & 401‑403 Murry’s Avenue, Alexandria, Virginia, uS
Brooklyn Park Interstate Center, 7700 68th Avenue, Brooklyn Park, Minnesota, uS
Braemar Ridge, 7500 West 78th Street, Bloomington, Minnesota, uS
Eagandale Business Campus, 1285 & 1301 Corporate Centre Drive,
1230 & 1270 Eagan Industrial Road, Eagan, Minnesota, uS
3691 north Perris Boulevard, Perris, California, uS
8151‑8161 Interchange Parkway, San Antonio, Texas, uS
Cornerstone Building, 5411 I‑10 East & 1228 Cornerway Boulevard, San Antonio, Texas, uS
302‑402 n Tayman Street, San Antonio, Texas, uS
1803 Grandstand Drive, San Antonio, Texas, uS
195 King Mill Road, McDonough, Georgia, uS
19700 38th Avenue East, Spanaway, Washington, uS
6241 Shook Road, lockbourne, Columbus, Ohio, uS
Summit Oaks, 28515 Westinghouse Place, Santa Clarita, California, uS
Tri‑County 5, Tri‑County Parkway, Schertz, Texas, uS1
Tri‑County 6, Tri‑County Parkway, Schertz, Texas, uS1
202 S Tayman Street, San Antonio, Texas, uS1
1100 Hatcher Avenue & 17521 & 17531 Railroad Street, Industry, California, uS
14501 Artesia Boulevard, la Mirada, California, uS
Total investment properties excluding development properties
Total development properties held as investment property
Total investment properties
1 Classified as development properties held as investment property at 30 June 2010.
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
ownership
acquisition date
Independent
valuation date
Independent
valuation amount
$’000
Independent valuer
Consolidated book
value 30 June 2011
$’000
Consolidated book
value 30 June 2010
$’000
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
nov 2005
nov 2005
nov 2005
Jan 2008
Jul 2007
Aug 2007
Oct 2007
Aug 2007
nov 2009
Oct 2009
Jul 2009
Dec 2006
July 2007
July 2007
nov 2007
Oct 2010
Jan 2011
Jun 2011
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2011
Jun 2010
Jun 2011
Jun 2010
Jun 2010
Jun 2011
Dec 2010
Jun 2010
Jun 2010
Jun 2011
Jun 2010
Dec 2010
Dec 2010
Dec 2010
Jun 2010
Jun 2010
Jun 2010
Jun 2011
n/a
n/a
11,211
4,050
10,662
7,273
3,575
7,543
25,142
9,312
4,563
2,551
3,837
11,519
99,637
9,564
11,617
14,992
5,480
57,454
52,612
56,803
29,333
1,079
1,780
8,101
n/a
n/a
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
n/a
n/a
11,211
4,616
13,092
7,216
3,975
7,540
25,142
8,877
4,563
2,441
3,213
11,519
113,337
12,734
12,860
14,992
8,637
61,401
52,612
55,067
33,552
1,183
2,188
8,101
13,809
26,077
12,352
5,338
15,504
10,553
5,614
9,668
28,746
11,733
5,280
3,215
4,834
15,452
107,767
12,051
14,637
20,785
6,905
70,398
64,649
68,256
36,959
–
–
–
–
–
6,512,018
593,896
7,105,914
6,706,218
440,179
7,146,397
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 57
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 12. Non-current assets – investment properties (continued)
(a) Properties (continued)
(a) Colliers International
(b) landmark White
(c) Cushman & Wakefield
(d) Jones lang laSalle
(e) Knight Frank
(f) FPD Savills
(g) m3property
(h) Weiser Realty Advisors (uSA)
(i) CB Richard Ellis
Valuation basis
The basis of valuation of investment properties is fair value, being the amounts for which the assets could be exchanged between knowledgeable
willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the same location and condition
and subject to similar leases. In relation to development properties under construction for future use as investment property, fair value is
determined based on the market value of the property on the assumption it had already been completed at the valuation date less costs still
required to complete the project, including an appropriate adjustment for profit and risk. Properties independently valued in the last 12 months
were based on independent assessments by a member of the Australian Property Institute, the new Zealand Institute of Valuers, the Appraisal
Institute in the united States of America, the French Real Estate Valuation Institution or the Society of Property Researchers, Germany or the
Appraisal Institute in Canada.
Key valuation assumptions
The below table illustrates the key valuation assumptions used in the determination of the investment properties fair value.
2011
Weighted average capitalisation rate (%)
Weighted average lease expiry by income (years)
Vacancy by income (%)
2010
Weighted average capitalisation rate (%)
Weighted average lease expiry by income (years)
Vacancy by income (%)
australian
office
australian
industrial
North american
industrial
European
industrial
7.4
5.3
4.7
7.6
5.3
3.8
8.6
4.7
4.9
8.8
4.9
2.1
7.6
3.9
12.1
8.4
4.9
15.7
n/a
3.0
15.1
8.0
3.2
17.2
Ten year discounted cash flows and capitalisation valuation methods are used together with active market evidence. In addition to the key
assumptions set out in the table above, assumed portfolio downtime ranges from six to 12 months and tenant retention ranges from 50% to 75%.
acquisitions
n On 8 October 2010, 1100 Hatcher Avenue and 17521 & 17531 Railroad Street, California was acquired for uS$14.4 million (A$14.7 million).
n On 14 January 2011, living Spaces Building, 14501 Artesia Boulevard, la Mirada, California was acquired for uS$26.3 million (A$25.8 million).
58
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Disposals
n On 21 December 2010, 21 rue du Chemin Blanc, Champlan was disposed of for €5.7 million (A$7.6 million).
n On 23 December 2010, 3368‑3372 Turfway Road, Cincinnati was disposed of for uS$3.5 million (A$3.5 million).
n On 29 December 2010, 6350 & 6360 Brackbill Boulevard, Harrisburg was disposed of for uS$12.0 million (A$12.0 million).
n On 3 January 2011, 1999 Westbelt drive, Columbus, Ohio was disposed of for uS$5.2 million (A$5.2 million).
n On 14 January 2011, 3003 nE 1‑410 loop, San Antonio, Texas was disposed of for uS$4.0 million (A$4.0 million).
n On 1 March 2011, 1000‑1200 Williams Drive, Atlanta, Georgia was disposed of for uS$9.0 million (A$8.9 million).
n On 24 March 2011, 2550 John Glenn Avenue, Columbus, Ohio was disposed of for uS$4.5 million (A$4.4 million).
n On 31 March 2011, 8575 Monticello lane, Osseo, Minneapolis, Minnesota was disposed of for uS$1.7 million (A$1.6 million).
n On 2 May 2011, 5 & 11 Spiral Drive, Florence, Kentucky was disposed of for uS$3.5 million (A$3.2 million).
n On 2 May 2011, 124 Commerce Drive, loveland, Ohio was disposed of for uS$1.8 million (A$1.6 million).
n On 4 May 2011, 19 Chifley Street, Smithfield was sold for $15.4 million.
n On 24 June 2011, 8574 Boston Church Road, Milton, Ontario, Canada was disposed of for C$78.7 million (A$76.3 million).
n On 28 June 2011, 5A 64 Pound Road West, Dandenong South, VIC was sold for $7.8 million.
(b) Reconciliation
Opening balance at the beginning of the year
Additions
Acquisitions
Note
2011
$’000
2010
$’000
7,146,397
7,120,710
267,455
200,365
41,205
331,565
Transfer from property, plant and equipment1
13
–
431,891
lease incentives
Amortisation of lease incentives
Rent straightlining
Disposals
Transfer to non‑current assets classified as held for sale
Transfer to inventories2
net fair value gain/(loss) of investment properties
Foreign exchange differences on foreign currency translation
Closing balance at the end of the year
9
14
85,439
55,885
(58,732)
(48,469)
(2,119)
2,858
(141,674)
(541,541)
(59,260)
(18,068)
(6,448)
(45,135)
148,433
(209,367)
(314,782)
(134,297)
7,105,914
7,146,397
1 During the year ended 30 June 2010, the Group adopted the amendments to AASB 140 Investment Property. Transfers from property, plant and equipment
therefore included $431.9 million of development property under construction for future use as investment property.
2 During the current year, $6.4 million of developable investment property was transferred to inventory with an intention to sell. During the year ended 30 June 2010,
DEXuS Projects Pty limited (DXP), a wholly owned subsidiary of DXO, purchased the undeveloped land at laverton VIC from DIT. DXP initiated the development
of part of the land with an intention to sell and therefore classified this portion of the asset as inventory.
(c) investment properties pledged as security
Refer to note 20 for information on investment properties pledged as security.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 59
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 13. Non-current assets – property, plant and equipment
(a) Property, plant and equipment
30 June 2011
Opening balance as at 1 July 2010
Additions
Depreciation charge
Disposals – cost
Disposals – accumulated depreciation
Closing balance as at 30 June 2011
Cost
Accumulated depreciation
Net book value as at 30 June 2011
30 June 2010
Opening balance as at 1 July 2009
Additions
Depreciation charge
Transfer to investment properties
Closing balance as at 30 June 2010
Cost
Accumulated depreciation
Net book value as at 30 June 2010
Note 14. Inventories
(a) land and properties held for resale
Current assets
land and properties held for resale
Total current assets – inventories
Non-current assets
land and properties held for resale
Total non-current assets – inventories
Total assets – inventories
60
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Construction
in progress
$’000
land and
freehold
buildings
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
IT and
office
$’000
5,264
1,988
(3,326)
(1,400)
1,400
3,926
Total
$’000
5,264
1,988
(3,326)
(1,400)
1,400
3,926
10,839
10,839
(6,913)
3,926
(6,913)
3,926
Construction
in progress
$’000
land and
freehold
buildings
$’000
248,824
183,067
–
–
–
–
IT and
office
$’000
6,729
1,136
(2,601)
Total
$’000
438,620
1,136
(2,601)
(248,824)
(183,067)
–
(431,891)
–
–
–
–
–
–
–
–
5,264
10,251
(4,987)
5,264
5,264
10,251
(4,987)
5,264
2011
$’000
2010
$’000
7,991
7,991
–
–
104,247
45,470
104,247
45,470
112,238
45,470
(b) Reconciliation
Opening balance at the beginning of the year
Transfer from investment properties1
Acquisitions
Disposal
Additions and other
2011
$’000
45,470
6,448
37,614
(3,353)
26,059
2010
$’000
–
45,135
–
–
335
Closing balance at the end of the year
112,238
45,470
1 During the current year, $6.4 million of developable investment property was transferred to inventory with an intention to sell. During the year ended 30 June 2010,
DEXuS Projects Pty limited (DXP), a wholly owned subsidiary of DXO, purchased the undeveloped land at laverton VIC from DIT. DXP initiated the development of
part of the land with an intention to sell and therefore classified this portion of the asset as inventory.
acquisitions
n On 16 August 2010, DXP acquired undeveloped land at 94‑106 lenore Drive, Erskine Park, nSW, for $15.9 million.
n On 1 november 2010, DXP acquired, with an intention to develop and sell, land and property at 57‑101 Balham Road, Archerfield, QlD,
for $21.7 million.
Disposals
n On 30 June 2011, a parcel of DEXuS Industrial Estate, laverton north, VIC, was compulsorily acquired by Melbourne Water Corporation
for $3.4 million.
Note 15. Non-current assets – investments accounted for using the equity method
Investments are accounted for in the Financial Statements using the equity method of accounting (refer note 1).
Information relating to these entities is set out below:
Name of entity
Principal activity
ownership interest
2011
%
2010
%
2011
$’000
2010
$’000
Office property
investment
33.3
33.3
200,356
93,344
Bent Street Trust
Total non-current assets – investments accounted for
using the equity method
The Bent Street Trust was formed in Australia.
movements in carrying amounts of investments accounted for using the equity method
Opening balance at the beginning of the year
units issued during the year
Share of net profit/(loss) after tax1
Distributions receivable
Interest sold during the year
Closing balance at the end of the year
Results attributable to investments accounted for using the equity method
Operating profit/(loss) before income tax
operating profit/(loss) after income tax
less: Distributions receivable
Accumulated losses at the beginning of the year
Retained profits/(accumulated losses) at the end of the year
200,356
93,344
2011
$’000
93,344
73,558
2010
$’000
84,165
38,739
34,053
(26,243)
(599)
(15)
–
(3,302)
200,356
93,344
34,053
(26,243)
34,053
(26,243)
(599)
(15)
33,454
(26,258)
(32,610)
(6,352)
844
(32,610)
1 Share of net profit/(loss) after tax includes a fair value gain of $33.6 million (2010: loss of $26.2 million) in relation to the Group’s share of the Bligh Street development.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 61
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 15. Non-current assets – investments accounted for using the equity method (continued)
Summary of the performance and financial position of investments accounted for using the equity method
The Group’s share of aggregate profit/(loss), assets and liabilities of investments accounted for using the equity method are:
2011
$’000
2010
$’000
34,053
(26,243)
212,252
11,896
97,670
4,326
646
67,308
2011
$’000
2010
$’000
23,753
55,205
4,719
13,865
12,229
1,011
9,027
4,446
10,366
883
55,577
79,927
79,927
(3,033)
13,865
971
11,803
49,136
(3,081)
3,033
1,145
1,097
(23,592)
29,396
(12,561)
298
(36,153)
29,694
55,577
79,927
Profit/(loss) from ordinary activities after income tax expense
Assets
liabilities
Share of expenditure commitments
Capital commitments
Note 16. Non-current assets – deferred tax assets
The balance comprises temporary differences attributable to:
Investment properties
Derivative financial instruments
Tax losses
Employee provisions
Other
Total non-current assets – deferred tax assets
movements
Opening balance at the beginning of the year
Reversal of previous tax losses
Recognition of tax losses
Temporary differences
Credited to the Statement of Comprehensive Income
movements in deferred withholding tax arising from:
Temporary differences
Foreign currency translation
(Charged)/credited to the Statement of Comprehensive Income
Closing balance at the end of the year
62
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Note 17. Non-current assets – intangible assets
management rights
Opening balance at the beginning of the year
Amortisation charge
Reversal of previous impairment
Closing balance at the end of the year
Cost
Accumulated amortisation
Accumulated impairment
Total management rights
2011
$’000
2010
$’000
223,000
210,500
(647)
(807)
–
13,307
222,353
223,000
252,382
252,382
(2,226)
(1,579)
(27,803)
(27,803)
222,353
223,000
Management rights represent the asset management rights owned by DXH, which entitle it to management fee revenue from both finite life trusts
($7,769,204) and indefinite life trusts ($214,584,150). Those rights that are deemed to have a finite useful life are measured at cost and amortised
using the straight‑line method over their estimated useful lives, which vary from five to 21 years.
impairment of management rights
During the current year, management carried out a review of the recoverable amount of its management rights. The review did not identify
any events or circumstances that would indicate an impairment of management rights associated with indefinite life trusts.
During the year ended 30 June 2010, as part of the process to review the recoverable amount of management rights, the estimated fair value
of assets under management, which are used to derive the future expected management fee income, were adjusted to better reflect market
conditions. This resulted in the recognition of a reversal of a previous impairment of $13.3 million in that year.
The value in use has been determined using Board approved long term forecasts in a five year discounted cash flow model. Forecasts were
based on projected returns of the business in light of current market conditions. The performance in year five has been used as a terminal value.
Key assumptions:
n A terminal capitalisation rate of 12.5% was used incorporating an appropriate risk premium for a management business.
n The cash flows have been discounted at 9.3% based on externally published weighted average cost of capital for an appropriate peer group
plus an appropriate premium for risk. A 0.25% decrease in the discount rate would increase the valuation by $2.3 million.
Goodwill
Opening balance at the beginning of the year
Impairment
Closing balance at the end of the year
Cost
Accumulated impairment
Total goodwill
2011
$’000
2010
$’000
2,525
(194)
2,331
2,998
(667)
2,331
2,767
(242)
2,525
2,998
(473)
2,525
Total non-current assets – intangible assets
224,684
225,525
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 63
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 18. Non-current assets – other
Tenant and other bonds
Other
Total non-current assets – other
Note 19. Current liabilities – payables
Trade creditors
Accruals
Amount payable to other non‑controlling interests
Accrued capital expenditure
Prepaid income
GST payable
Accrued interest
Total current liabilities – payables
Note 20. Interest bearing liabilities
Current
Secured
Bank loans
Total secured
Unsecured
uS senior notes
Medium term notes
Total unsecured
Deferred borrowing costs
Total current liabilities – interest bearing liabilities
Non-current
Secured
Bank loans
Total secured
Unsecured
uS senior notes
Bank loans
Medium term notes
Preference shares
Total unsecured
Deferred borrowing costs
Total non-current liabilities – interest bearing liabilities
Total interest bearing liabilities
64
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
2011
$’000
1,097
1,808
2,905
2011
$’000
41,806
13,168
3,142
13,194
15,487
181
2010
$’000
1,204
2,900
4,104
2010
$’000
45,819
11,007
2,917
30,715
14,974
1,673
21,938
23,102
108,916
130,207
Note
2011
$’000
2010
$’000
(b), (d)
250,983
49,831
250,983
49,831
65,183
122,023
–
27,227
65,183
149,250
(389)
(85)
315,777
198,996
(b), (c)
153,218
568,182
153,218
568,182
(a)
(e)
720,967
697,980
701,573
447,582
340,000
340,000
86
109
1,762,626
1,485,671
(16,565)
(12,767)
1,899,279
2,041,086
2,215,056
2,240,082
Financing arrangements
Type of facility
uS senior notes (144a)
uS senior notes (uSPP)
Medium term notes
Multi‑option revolving credit facilities
Bank debt – secured
Bank debt – secured
Bank debt – secured
Total
Bank guarantee utilised
Unused at balance date
2011
$’000
2011
$’000
Note
Currency
Security
maturity date
Utilised
Facility limit
uS$
uS$
A$
unsecured
Oct 14 to Mar 21
510,519
510,519
unsecured
Dec 11 to Mar 17
275,631
275,631
unsecured
Jul 14 to Apr 17
340,000
340,000
Multi Currency unsecured
Sep 11 to Jun 16
701,573
1,259,242
uS$
uS$
A$
Secured
Secured
Secured
Feb 14
Jun 17 to Dec 17
82,593
71,608
82,593
71,608
Oct 11
250,000
250,000
(a)
(b)
(c)
(d)
2,231,924
2,789,593
11,362
546,307
Each of the Group’s unsecured borrowing facilities are supported by guarantee arrangements, and have negative pledge provisions which limit
the amount and type of encumbrances that the Group can have over their assets and ensures that all senior unsecured debt ranks pari passu.
The current debt facilities will be refinanced as at/or prior to their maturity.
(a) multi-option revolving credit facilities
This includes 15 facilities maturing between September 2011 and June 2016 with a weighted average maturity of August 2013. The total facility
limit comprises uS$120.0 million (A$111.7 million) and A$1,147.5 million. Of the total facility limit, A$145.0 million is maturing in September 2011,
none of which is drawn and A$11.3 million is utilised as bank guarantees for developments.
(b) Bank loans – secured
This includes a uS$88.7 million (A$82.6 million) secured bank debt facility that amortises over the life of the loan through monthly principal
payments ($1.0 million payable within 12 months) with a final maturity date of February 2014. The facility is secured by mortgages over investment
properties totalling uS$137.2 million (A$127.7 million) as at 30 June 2011.
(c) Bank loans – secured
This includes a total of uS$76.9 million (A$71.6 million) of secured bank facilities with a weighted average maturity of October 2017. The facilities
are secured by mortgages over investment properties totalling uS$178.2 million (A$165.9 million) as at 30 June 2011. During the period, a total
of uS$223.2 million (A$207.8 million) was repaid.
(d) Bank loans – secured
Comprises a A$250.0 million secured bank loan maturing in October 2011. This loan is secured by mortgages over one DDF investment property
and two DOT investment properties totalling A$792.6 million as at 30 June 2011.
(e) Preferred shares
uS REIT has issued uS$92,550 (A$86,181) of preferred shares as part of the requirement to be classified as a Real Estate Investment Trust
(REIT) under uS tax legislation. These preferred shares will remain on issue until such time that the Board decides that it is no longer in the
Group’s interest to qualify as a REIT.
Additional information
The Group has a forward start commitment of A$200 million to extend an existing facility from its current maturity date within the next 12 months
to a weighted average maturity of June 2016.
The Group has credit approved commitments for A$145 million to refinance facilities maturing within the next six months to a date that is five years
from the signing of the new commitments. Signing is expected to be completed by the end of the third quarter of calendar 2011.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 65
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 21. Provisions
Current
Provision for distribution
Provision for employee benefits
Total current liabilities – provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Provision for distribution
Opening balance at the beginning of the year
Additional provisions
Payments and reinvestment of distributions
Closing balance at the end of the year
2011
$’000
2010
$’000
125,331
118,110
22,475
16,389
147,806
134,499
2011
$’000
2010
$’000
118,110
164,529
250,662
244,411
(243,441)
(290,830)
125,331
118,110
A provision for distribution has been raised for the period ended 30 June 2011. This distribution is to be paid on 31 August 2011.
Non-current
Provision for employee benefits
Total non-current liabilities – provisions
Note 22. Current liabilities – other
Other borrowing costs
Total current liabilities – other
Note 23. Non-current liabilities – deferred tax liabilities
The balance comprises temporary differences attributable to:
Derivative financial instruments
Goodwill
Investment properties
Other
2011
$’000
17,624
17,624
2011
$’000
–
–
2011
$’000
1,137
2,331
13,862
821
2010
$’000
16,524
16,524
2010
$’000
132
132
2010
$’000
1,668
2,525
6,559
544
Total non-current liabilities – deferred tax liabilities
18,151
11,296
movements
Opening balance at the beginning of the year
Temporary differences
Charged to Statement of Comprehensive Income
Closing balance at the end of the year
11,296
6,855
6,855
9,975
1,321
1,321
18,151
11,296
66
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Note 24. Non-current liabilities – other
Tenant bonds
Other
Total non-current liabilities – other
Note 25. Contributed equity
(a) contributed equity of unitholders of the parent entity
Opening balance at the beginning of the year
Distributions reinvested
Closing balance at the end of the year
(b) contributed equity of unitholders of other stapled entities
Opening balance at the beginning of the year
Distributions reinvested
Closing balance at the end of the year
(c) number of securities on issue
Opening balance at the beginning of the year
Distributions reinvested
Closing balance at the end of the year
Terms and conditions
2011
$’000
6,151
–
2010
$’000
7,403
6
6,151
7,409
2011
$’000
2010
$’000
1,789,973
1,741,211
8,104
48,762
1,798,077
1,789,973
2011
$’000
2010
$’000
3,008,241
2,966,643
6,424
41,598
3,014,665
3,008,241
2011
No. of securities
2010
No. of securities
4,820,821,799
4,700,841,666
18,202,377
119,980,133
4,839,024,176
4,820,821,799
Each stapled security ranks equally with all other stapled securities for the purposes of distributions and on termination of the Group.
Each stapled security entitles the holder to vote in accordance with the provisions of the Constitutions and the Corporations Act 2001.
(d) Distribution reinvestment plan
under the distribution reinvestment plan (DRP), stapled security holders may elect to have all or part of their distribution entitlements satisfied
by the issue of new stapled securities, rather than being paid in cash.
On 27 August 2010, 18,202,377 units were issued at a unit price of 79.8 cents in relation to the June 2010 distribution period.
On 13 December 2010, the Group announced the suspension of the DRP until further notice.
approval of issues of Stapled Securities to an underwriter in connection with issues under a distribution reinvestment plan
At the Extraordinary General Meeting held on 6 February 2009 by DXFM, as Responsible Entity for DDF, DIT, DOT and DXO, stapled security
holders resolved to authorise DXFM, as Responsible Entity, to issue stapled securities, each comprising a unit in each of the above mentioned
trusts (Stapled Securities), to an underwriter or persons procured by an underwriter within a period of 24 months from the date of the meeting
in connection with any issue of Stapled Securities under the DXS distribution reinvestment plan.
Such an issue will not be counted for the purposes of the calculation of the 15% limit under ASX listing Rule 7.1.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 67
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 26. Reserves and retained profits
(a) Reserves
Foreign currency translation reserve
Asset revaluation reserve
Total reserves
movements:
Foreign currency translation reserve
Opening balance at the beginning of the year
Exchange difference arising from the translation of the financial statements of foreign operations
Closing balance at the end of the year
asset revaluation reserve
Opening balance at the beginning of the year
Closing balance at the end of the year
(b) nature and purpose of reserves
Foreign currency translation reserve
2011
$’000
2010
$’000
(77,843)
(72,967)
42,739
42,739
(35,104)
(30,228)
(72,967)
(66,171)
(4,876)
(6,796)
(77,843)
(72,967)
42,739
42,739
42,739
42,739
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements
of foreign operations.
asset revaluation reserve
The asset revaluation reserve is used to record the fair value adjustment arising on a business combination.
(c) Retained profits
2011
$’000
2010
$’000
33,186
255,023
553,012
(10,361)
31,420
(8,846)
(250,662)
(244,411)
325,175
33,186
2011
$’000
2010
$’000
200,126
200,530
70,568
60,304
(66,666)
(55,559)
204,028
205,275
Opening balance at the beginning of the year
net profit attributable to security holders
Transfer of capital reserve of other non‑controlling interests
Distributions provided for or paid
Closing balance at the end of the year
Note 27. other non-controlling interests
Interest in
Contributed equity
Reserves
Accumulated losses
Total other non-controlling interests
68
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Note 28. Distributions paid and payable
(a) Distribution to security holders
31 December (paid 25 February 2011)
30 June (payable 31 August 2011)
(b) Distribution to other non-controlling interests
DEXuS REnTS Trust (paid 18 October 2010)
DEXuS REnTS Trust (paid 18 January 2011)
DEXuS REnTS Trust (paid 15 April 2011)
DEXuS REnTS Trust (payable 15 July 2011)
Total distributions
(c) Distribution rate
31 December (paid 25 February 2011)
30 June (payable 31 August 2011)
Total distributions
2011
$’000
2010
$’000
125,331
126,301
125,331
118,110
250,662
244,411
2011
$’000
3,162
3,182
3,142
3,142
2010
$’000
2,285
2,387
2,713
2,917
12,628
10,302
263,290
254,713
2011
Cents per
security
2010
Cents per
security
2.59
2.59
5.18
2.65
2.45
5.10
(d) franked dividends
The franked portions of the final dividends recommended after 30 June 2011 will be franked out of existing franking credits or out of franking
credits arising from the payment of income tax in the year ended 30 June 2011.
Opening balance at the beginning of the year
Franking credits arising during the year on payment of tax at 30%
Franking debits arising during the year on refund of tax at 30%
Closing balance at the end of the year
2011
$’000
2010
$’000
19,730
21,380
1,528
(4,062)
4,996
(6,646)
17,196
19,730
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 69
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 29. Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Retained profits
Total equity
net profit/(loss) for the year
Total comprehensive income/(loss) for the year
(b) guarantees entered into by the parent entity
Refer to note 31 for details of guarantees entered into by the parent entity.
(c) contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2011 (2010: $nil).
2011
$’000
2010
$’000
162,887
86,663
2,567,774
2,421,574
114,676
143,985
650,730
560,439
1,798,077
1,789,973
118,967
71,162
1,917,044
1,861,135
155,671
155,671
(1,599)
(1,599)
(d) contractual capital commitments
The following amounts represent capital commitments of the parent entity for investment properties contracted at the end of the reporting period
but not recognised as liabilities payable.
not longer than one year
later than one year but no later than five years
2011
$’000
2010
$’000
11,409
127,188
408
–
11,817
127,188
70
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Note 30. Financial risk management
To ensure the effective and prudent management of the Group’s capital and financial risks, the Group has a well established framework consisting
of a Board Finance Committee and a Capital Markets Committee. The Board Finance Committee is accountable to and primarily acts as an
advisory body to the DXFM Board and includes three Directors of the DXFM Board. Its responsibilities include reviewing and recommending
financial risk management polices and funding strategies for approval.
The Capital Markets Committee is a management committee that is accountable to both the Board Finance Committee and the Group Management
Committee. It convenes at least quarterly and conducts a review of financial risk management exposures including liquidity, funding strategies and
hedging. It is also responsible for the development of financial risk management policies and funding strategies for recommendation to the Board
Finance Committee, and the approval of treasury transactions within delegated limits and powers.
Further information on the Group’s governance structure, including terms of reference, is available at www.dexus.com
(1) capital risk management
The Group manages its capital to ensure that entities within the Group will be able to continue as a going concern while maximising
the return to owners through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt (see note 20), cash and cash equivalents, and equity attributable to security holders
(including hybrid securities). The capital structure is monitored and managed in consideration of a range of factors including:
n the cost of capital and the financial risks associated with each class of capital;
n gearing levels and other covenants;
n potential impacts on net tangible assets and security holders’ equity;
n potential impacts on the Group’s credit rating; and
n other market factors and circumstances.
To minimise the potential impacts of foreign exchange risk on the Group’s capital structure, the Group’s policy is to hedge the majority of its foreign
asset and liability exposures. Consequently the magnitude of the assets and liabilities on the Statement of Financial Position (translated into
Australian dollars) and gearing ratios will rise and fall as exchange rates fluctuate. This policy ensures that net tangible assets are not materially
affected by currency movements (refer foreign exchange risk below).
The Group has a stated target gearing level of below 40%. The gearing ratio calculated in accordance with our covenant requirements
at 30 June 2011 was 29.1% (as detailed below).
Gearing ratio
Total interest bearing liabilities1
Total tangible assets2
Gearing ratio
2011
$’000
2010
$’000
2,211,637
2,244,580
7,607,163
7,419,252
29.1%
30.3%
1 Total interest bearing liabilities excludes deferred borrowing costs and includes the fair value of cross currency swaps as reported internally to management. The interest
bearing liabilities disclosed in the Financial Statements for the reporting period ended 30 June 2010 did not include the fair value of cross currency swaps and the resultant
gearing ratio was 30.4%.
2 Total tangible assets comprise total assets less intangible assets, derivatives and deferred tax balances as reported internally to management.
The Group is rated BBB+ by Standard and Poor’s (S&P) and Baa1 by Moody’s. The Group considers potential impacts upon the rating when
assessing the strategy and activities of the Group and regards those impacts as an important consideration in its management of the Group’s
capital structure.
DXFM is the Responsible Entity for the managed investment schemes that are stapled to form the Group. DXFM has been issued with an Australian
Financial Services licence (AFSl). The licence is subject to certain capital requirements including the requirement to hold minimum net tangible
assets (of $5 million), and to maintain a minimum level of surplus liquid funds. Furthermore, the Responsible Entity maintains trigger points in
accordance with the requirements of the licence. These trigger points maintain a headroom value above the AFSl requirements and the entity
has in place a number of processes and procedures should a trigger point be reached.
DWPl, a wholly owned entity, has also been issued with an AFSl as it is the Responsible Entity for DEXuS Wholesale Property Fund. It is subject
to the same requirements.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 71
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 30. Financial risk management (continued)
(2) financial risk management
The Group’s activities expose it to a variety of financial risks: credit risk, market risk (including currency risk, interest rate risk and price risk), and
liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Group.
Accordingly, the Group enters into various derivative financial instruments such as interest rate swaps, cross currency interest rate swaps, and
foreign exchange contracts to manage its exposure to certain risks. The Group does not trade in derivative instruments for speculative purposes.
The Group uses different methods to measure the different types of risks to which it is exposed, including monitoring the current and forecast
levels of exposure, and conducting sensitivity analysis.
Risk management is implemented by a centralised treasury department (Group Treasury) whose members act under written policies that are
endorsed by the Board Finance Committee and approved by the Board of Directors of the Responsible Entity. Group Treasury identifies, evaluates
and hedges financial risks in close cooperation with the Group’s business units. The treasury policies approved by the Board of Directors cover
overall treasury risk management, as well as policies and limits covering specific areas such as liquidity risk, interest rate risk, foreign exchange
risk, credit risk and the use of derivatives and other financial instruments. In conjunction with its advisers, the Responsible Entity continually
reviews the Group’s exposures and (at least annually) updates its treasury policies and procedures.
(a) liquidity risk
liquidity risk is the risk that the Group will not have sufficient available funds to meet financial obligations in an orderly manner when they
fall due or at an acceptable cost.
The Group identifies and manages liquidity risk across short term, medium term, and long term categories:
n short term liquidity management includes continuously monitoring forecast and actual cash flows;
n medium term liquidity management includes maintaining a level of committed borrowing facilities above the forecast committed debt
requirements (liquidity headroom buffer). Committed debt includes future expenditure that has been approved by the Board or Investment
Committee (as required within delegated limits), and may also include projects that have a very high probability of proceeding, taking into
consideration risk factors such as the level of regulatory approval, tenant pre‑commitments and portfolio considerations; and
n long term liquidity risk is managed through ensuring an adequate spread of maturities of borrowing facilities so that refinancing risk
is not concentrated, and ensuring an adequate diversification of funding sources where possible, subject to market conditions.
Refinancing risk
A key liquidity risk is the Group’s ability to refinance its current debt facilities. As the Group’s debt facilities mature, they are usually required
to be refinanced by extending the facility or replacing the facility with an alternative form of capital.
The refinancing of existing facilities may also result in margin price risk, whereby market conditions may result in an unfavourable change
in credit margins on the refinanced facilities. The Group’s key risk management strategy for margin price risk on refinancing is to spread the
maturities of debt facilities over different time periods to reduce the volume of facilities to be refinanced and the exposure to market conditions
in any one period.
72
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
An analysis of the contractual maturities of the Group’s interest bearing liabilities and derivative financial instruments is shown in the table below.
The amounts in the table represent undiscounted cash flows.
2011
2010
Expiring
between
one and
two years
$’000
Expiring
between
two and
five years
$’000
Expiring
after
five years
Expiring
within
one year
$’000
$’000
Expiring
between
one and
two years
$’000
Expiring
between
two and
five years
$’000
Expiring
after
five years
$’000
–
–
–
–
–
–
–
–
–
25,010
130,207
(105,197)
–
–
–
–
–
–
–
–
–
Expiring
within
one year
$’000
36,175
108,916
(72,741)
Receivables
Payables
Interest bearing liabilities and interest
Fixed interest rate liabilities
and interest
Floating interest rate liabilities
and interest
Total interest bearing liabilities
and interest1
Derivative financial instruments
Derivative assets
Derivative liabilities
Total net derivative
financial instruments2
117,506
104,327
603,438
525,524
219,893
128,077
726,644
325,227
326,254
105,971
899,860
73,380
102,226
519,549
686,138
434
443,760
210,298 1,503,298
598,904
322,119
647,626
1,412,782
325,661
65,100
38,431
48,564
8,450
77,823
58,316
33,558
1,907
57,768
54,702
129,639
61,515
113,390
80,984
115,878
29,256
7,332
(16,271)
(81,075)
(53,065)
(35,567)
(22,668)
(82,320)
(27,349)
1 Refer to note 20 (interest bearing liabilities). Excludes deferred borrowing costs and preference shares, but includes estimated fees and interest.
2 The notional maturities on derivatives is only shown for cross currency interest rate swaps (refer foreign exchange rate risk) and forward foreign exchange contracts as they are
the only instruments where a principal amount is exchanged. For interest rate swaps, only the net interest cash flows (not the notional principal) are included. For derivative
assets and liabilities that have floating rate interest cash flows, future cash flows have been calculated using static interest rates prevailing at the end of each reporting period.
Refer to note 10 (derivative financial instruments) for fair value of derivatives. Refer note 31 (contingent liabilities) for financial guarantees.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 73
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 30. Financial risk management (continued)
(2) financial risk management (continued)
(b) market risk
Market risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices.
The market risks that the Group is exposed to are detailed further below.
(i) interest rate risk
Interest rate risk is the risk that fluctuating interest rates will cause an adverse impact on interest payable (or receivable), or an adverse change
on the capital value (present market value) of long term fixed rate instruments.
Interest rate risk for the Group arises from interest bearing financial assets and liabilities that the Group holds. Borrowings issued at variable rates
expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.
The primary objective of the Group’s risk management policy for interest rate risk is to minimise the effects of interest rate movements on the
Group’s portfolio of financial assets and liabilities and financial performance. The policy sets out the minimum and maximum hedging amounts
for the Group, which is managed on a portfolio basis.
Cash flow interest rate risk on borrowings is managed through the use of interest rate swaps, whereby a floating interest rate exposure is converted
to a fixed interest rate exposure. Fair value interest rate risk on borrowings is also managed through the use of interest rate swaps, whereby a fixed
interest exposure is converted to a floating interest rate exposure. The mix of fixed and floating rate exposures is monitored regularly to ensure that
the interest rate exposure on the Group’s cash flows is managed within the parameters defined by the Group Treasury Policy.
As at 30 June 2011, 84% (2010: 94%) of the financial assets and liabilities (including DEXuS REnTS Trust) of the Group had an effective fixed
interest rate.
The Group holds borrowings in multiple currencies with both fixed and floating rate exposures and is exposed to interest rate risk related to each
particular currency.
The net notional amount of fixed rate debt and interest rate swaps in place in each year and the weighted average effective hedge rate per currency
is set out below.
Fixed rate debt
A$ fixed rate debt1
uS$ fixed rate debt1
Interest rate swaps
A$ hedged1
A$ hedge rate (%)2
uS$ hedged1
uS$ hedge rate (%)2
€ hedged1
€ hedge rate (%)2
June 2012
$’000
June 2013
$’000
June 2014
$’000
June 2015
$’000
June 2016
$’000
> June 2017
$’000
180,000
180,000
180,000
180,000
180,000
27,000
864,855
821,383
769,568
458,942
322,009
237,867
660,033
571,667
550,000
480,000
328,333
104,250
4.97%
5.40%
5.68%
5.96%
6.24%
5.99%
124,417
178,750
241,500
447,000
399,417
174,983
3.72%
3.89%
3.91%
4.11%
4.01%
127,500
105,000
70,000
68,333
50,000
4.43%
4.55%
4.86%
4.21%
4.06%
4.12%
4,000
4.10%
Combined fixed debt and swaps
(a$ equivalent)
1,983,322
1,920,363
1,897,761
1,723,424
1,348,546
575,173
hedge rate (%)
4.32%
4.54%
4.65%
4.82%
4.85%
4.55%
1 Average amounts for the period. Hedged amounts above do not include potential hedges that are cancellable at the counterparty’s option.
2 The above hedge rates do not include margins payable on borrowings.
74
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Sensitivity on interest expense
The table below shows the impact on unhedged net interest expense (excluding non‑cash items) of a 50 basis points increase or decrease in
short term and long term market interest rates. The sensitivity on cash flow arises due to the impact that a change in interest rates will have on the
Group’s floating rate debt and derivative cash flows. net interest expense is only sensitive to movements in market rates to the extent that floating
rate debt is not hedged.
+/– 0.50% (50 basis points)
+/– 0.50% (50 basis points)
+/– 0.50% (50 basis points)
+/– 0.50% (50 basis points)
Total a$ equivalent
A$
uS$
€
C$
2011
(+/–) $’000
2010
(+/–) $’000
888
932
(25)
150
1,866
575
145
11
–
760
The increase or decrease in interest expense is proportional to the increase or decrease in interest rates.
Sensitivity on fair value of interest rate swaps
The table below shows the impact on the Statement of Comprehensive Income for changes in the fair value of interest rate swaps for a 50 basis
points increase and decrease in short term and long term market interest rates. The sensitivity on the fair value arises from the impact that
changes in market rates will have on the mark‑to‑market valuation of the interest rate swaps. The fair value of interest rate swaps is calculated
as the present value of estimated future cash flows on the instruments. Cash flows are discounted using the forward price curve of interest rates
at the end of the reporting period. Although interest rate swaps are transacted for the purpose of providing the Group with an economic hedge,
the Group has elected not to apply hedge accounting to its interest rate derivatives. Accordingly, gains or losses arising from changes in the fair
value are reflected in the Statement of Comprehensive Income.
+/– 0.50% (50 basis points)
+/– 0.50% (50 basis points)
+/– 0.50% (50 basis points)
+/– 0.50% (50 basis points)
Total a$ equivalent
A$
uS$
€
C$
2011
(+/–) $’000
2010
(+/–) $’000
13,060
12,348
8,934
2,714
–
17,427
2,777
1,784
25,044
38,762
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 75
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 30. Financial risk management (continued)
(2) financial risk management (continued)
(b) market risk (continued)
(ii) foreign exchange risk
Foreign exchange risk is the risk that movements in exchange rates used to convert foreign currency revenues, expenses, assets, or liabilities to the
Group’s functional currency will have an adverse effect on the Group.
The Group operates internationally with investments in north America, new Zealand, France and Germany. As a result of these activities, the Group
has foreign exchange risk, arising primarily from:
n translation of investments in foreign operations;
n borrowings and cross currency swaps denominated in foreign currencies; and
n earnings distributions and other transactions denominated in foreign currencies.
The objective of the Group’s foreign exchange risk management policy is to ensure that movements in exchange rates have minimal adverse impact
on the Group’s foreign currency assets and liabilities, and net foreign currency cash flows as outlined below.
Foreign currency assets and liabilities
Exposure to foreign exchange risk is minimised by predominantly matching the currency of the Group’s debt with the currency of its investment
to form a natural hedge against movements in exchange rates. This policy reduces the risk that movements in foreign exchange rates will have
an adverse impact on security holder’s equity and net tangible assets.
Where Australian dollar borrowings are used to fund the foreign currency investment, the Group may transact cross currency swaps for the purpose
of providing an alternate source of foreign currency funding whilst maintaining the natural hedge. In these instances the Group has committed
foreign currency borrowing capacity in place that can replace the foreign currency amounts that are due under the cross currency swaps.
The Group’s net foreign currency exposures for net investments in foreign operations and hedging instruments are as follows:
uS$ assets1
uS$ net borrowings2
uS$ cross currency swaps3
US$ denominated net investment
% hedged
¤ assets1
¤ net borrowings2
¤ cross currency swaps3
¤ denominated net investment
% hedged
C$ assets4
C$ net borrowings2
C$ cross currency swaps3
C$ denominated net investment
% hedged
nZ$ assets1
nZ$ net borrowings2
NZ$ denominated net investment
% hedged
Total foreign net investment (a$ equivalent)
Total % hedged
2011
$’000
2010
$’000
1,259,179
1,187,770
(1,246,552)
(1,184,295)
–
12,627
99%
–
3,475
100%
128,788
137,350
(49,803)
(54,952)
(80,000)
(80,000)
(1,015)
2,398
101%
98%
35,573
55,650
–
–
(30,000)
(50,000)
5,573
5,650
84%
90%
123,001
128,484
–
–
123,001
128,484
0%
0%
110,711
116,066
92%
93%
1 Assets exclude working capital and cash as reported internally to management.
2 net borrowings equals interest bearing liabilities less cash. Where there are no interest bearing liabilities, cash is excluded.
3 Cross currency swap amounts comprise the foreign currency denominated leg of the cross currency swaps.
4 C$ assets include cash of C$34.7 million (A$33.4 million) held in escrow in relation to the sale of its Toronto warehouse facility in June 2011.
76
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Sensitivity on equity (foreign currency translation reserve)
The table below shows the impact on the foreign currency translation reserve for changes in the translated value of foreign currency assets and
liabilities for an increase and decrease in foreign exchange rates per currency. The increase and decrease in cents per currency has been based
on the historical movements of the Australian dollar relative to each currency.1 The cents per currency has been applied to the spot rates prevailing
at the end of each reporting period.2 The impact on the foreign currency translation reserve arises as the translation of the Group’s foreign currency
assets and liabilities are recorded (in Australian dollars) directly in the foreign currency translation reserve.
+ 14.2 cents (13%) (2010: 11.3 cents)
– 14.2 cents (13%) (2010: 11.3 cents)
+ 9.6 cents (13%) (2010: 6.4 cents)
– 9.6 cents (13%) (2010: 6.4 cents)
+ 10.9 cents (8%) (2010: 10.4 cents)
– 10.9 cents (8%) (2010: 10.4 cents)
+ 8.7 cents (8%) (2010: 7.5 cents)
– 8.7 cents (8%) (2010: 7.5 cents)
uS$ (A$ equivalent)
uS$ (A$ equivalent)
€ (A$ equivalent)
€ (A$ equivalent)
nZ$ (A$ equivalent)
NZ$ (A$ equivalent)
C$ (A$ equivalent)
C$ (A$ equivalent)
2011
$’000
1,373
(1,792)
(158)
205
7,375
(8,731)
413
(488)
2010
$’000
478
(624)
388
(500)
8,156
(9,666)
486
(575)
1 The sensitivity on market rates has been based on the standard deviation of the annual change in the Australian dollar exchange rate per currency since 1984
or commencement.
2 Exchange rates at 30 June 2011: A$/uS$ 1.0739 (2010: 0.8523), A$/€ 0.7405 (2010: 0.6979), A$/nZ$ 1.2953 (2010: 1.2308), A$/C$ 1.0389 (2010: 0.8976).
Sensitivity on fair value of cross currency swaps
The table below shows the impact on the Statement of Comprehensive Income for changes in the fair value of cross currency swaps for a
50 basis points increase and decrease in market rates. The sensitivity on the fair value arises from the impact that changes in short term and
long term market rates will have on the interest rate mark‑to‑market valuation of the cross currency swaps.1 The Group has elected not to apply
hedge accounting to its cross currency swaps. Accordingly, gains or losses arising from changes in the fair value are reflected in the Statement
of Comprehensive Income.
+/– 0.50% (50 basis points)
+/– 0.50% (50 basis points)
+/– 0.50% (50 basis points)
Total a$ equivalent
uS$ (A$ equivalent)
€ (A$ equivalent)
C$ (A$ equivalent)
2011
(+/–) $’000
2010
(+/–) $’000
2
10
3
15
7
16
3
26
1 note the above sensitivity is reflective of how changes in interest rates will affect the valuation of the cross currency swaps. The effect of movements in foreign exchange rates
on the valuation of cross currency swaps is reflected in the foreign currency translation reserve sensitivity.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 77
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 30. Financial risk management (continued)
(2) financial risk management (continued)
(b) market risk (continued)
(ii) foreign exchange risk (continued)
Net foreign currency denominated cash flows
Foreign exchange risk exists in relation to net cash flows and transactions with foreign operations that are denominated in foreign currencies.
This risk is managed through the use of forward foreign exchange contracts (after taking into account the natural hedging through foreign
denominated interest expense).
Forward foreign exchange contracts outstanding at 30 June 2011 and 30 June 2010 are as follows:
1 year or less
Over 1 and less than 2 years
More than 2 years
1 year or less
Over 1 and less than 2 years
More than 2 years
2011
2011
2011
2010
2010
2010
To pay
US$’000
To receive
a$’000
Weighted
average
exchange rate
To pay
US$’000
To receive
a$’000
Weighted
average
exchange rate
4,400
2,650
2,500
6,199
3,981
3,678
0.7098
0.6657
0.6798
–
4,400
5,150
–
6,199
7,658
–
0.7098
0.6725
2011
2011
2011
2010
2010
2010
To pay
NZ$’000
To receive
a$’000
Weighted
average
exchange rate
To pay
NZ$’000
To receive
a$’000
Weighted
average
exchange rate
–
–
–
–
–
–
–
–
–
2,000
1,688
1.1848
–
–
–
–
–
–
Sensitivity on fair value of foreign exchange contracts
The table below shows the impact on the Statement of Comprehensive Income for changes in the fair value of forward foreign exchange contracts
for an increase and decrease in market rates. The increase and decrease in cents per currency has been based on the historical movements of
the Australian dollar relative to each currency1. The cents per currency has been applied to the spot rates prevailing at the end of each reporting
period2. The sensitivity on the fair value arises from the impact that changes in market rates will have on the mark‑to‑market valuation of the
forward foreign exchange contracts.
Although forward foreign exchange contracts are transacted for the purpose of providing the Group with an economic hedge, the Group has elected
not to apply hedge accounting to its forward foreign exchange contracts. Accordingly, gains or losses arising from changes in the fair value are
reflected in the Statement of Comprehensive Income.
+ 14.2 cents (13%) (2010: 11.3 cents)
– 14.2 cents (13%) (2010: 11.3 cents)
+ 10.9 cents (8%) (2010: 10.4 cents)
– 10.9 cents (8%) (2010: 10.4 cents)
uS$ (A$ equivalent)
uS$ (A$ equivalent)
NZ$ (A$ equivalent)
nZ$ (A$ equivalent)
2011
(+/–) $’000
2010
(+/–) $’000
1,339
(1,026)
–
–
1,659
(1,271)
124
(146)
1 The sensitivity on market rates has been based on the standard deviation of the annual change in the Australian dollar exchange rate per currency since 1984
or commencement.
2 Exchange rates at 30 June 2011: A$/uS$ 1.0739 (2010: 0.8523), A$/€ 0.7405 (2010: 0.6979), A$/nZ$ 1.2953 (2010: 1.2308), A$/C$ 1.0389 (2010: 0.8976).
78
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
(c) Credit risk
Credit risk is the risk of loss to the Group in the event of non‑performance by the Group’s financial instrument counterparties. Credit risk arises from
cash and cash equivalents, loans and receivables, and derivative financial instruments. The Group has exposure to credit risk on all financial assets.
The Group manages this risk by:
n adopting a process for determining an approved counterparty, with consideration of qualitative factors as well as the counterparty’s rating;
n regularly monitoring counterparty exposure within approved credit limits that are based on the lower of a S&P, Moody’s and Fitch credit rating.
The exposure includes the current market value of in‑the‑money contracts as well as potential exposure, which is measured with reference to
credit conversion factors as per APRA guidelines;
n entering into ISDA Master Agreements once a financial institution counterparty is approved;
n ensuring tenants, together with approved credit limits, are approved and ensuring that leases are undertaken with a large number
of tenants;
n for some trade receivables, obtaining collateral where necessary in the form of bank guarantees and tenant bonds; and
n regularly monitoring loans and receivables on an ongoing basis.
A minimum S&P rating of A– (or Moody’s or Fitch equivalent) is required to become or remain an approved counterparty. As at 30 June 2011,
the lowest rating of counterparties the Group is exposed to was A+ (S&P) (2010: A (S&P)).
Financial instrument transactions are spread among a number of approved financial institutions within specified credit limits to minimise the
Group’s exposure to any one counterparty. As a result, there is no significant concentration of credit risk for financial instruments.
The maximum exposure to credit risk at 30 June 2011 and 30 June 2010 was the carrying amount of financial assets recognised on the Statement
of Financial Position.
As at 30 June 2011 and 30 June 2010, there were no significant concentrations of credit risk for trade receivables. Trade receivable balances
and the credit quality of trade debtors are consistently monitored on an ongoing basis.
The ageing analysis of loans and receivables net of provisions at 30 June 2011 is ($’000): 34,335.3 (0‑30 days), 637.0 (31‑60 days), 530.0
(61‑90 days), 672.3 (91+ days). The ageing analysis of loans and receivables net of provisions at 30 June 2010 is ($’000): 23,356.6 (0‑30 days),
1,045.0 (31‑60 days), 184.4 (61‑90 days), 424.0 (91+ days)). Amounts over 31 days are past due, however, no receivables are impaired.
The credit quality of financial assets that are neither past due nor impaired is consistently monitored to ensure that there are no adverse changes
in credit quality.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 79
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 30. Financial risk management (continued)
(2) financial risk management (continued)
(d) Fair value of financial instruments
Fair value interest rate risk is the risk of an adverse change in the net fair (or market) value of an asset or liability due to movements
in interest rates.
As at 30 June 2011 and 30 June 2010, the carrying amounts and fair value of financial assets and liabilities are shown as follows:
Financial assets
Cash and cash equivalents
loans and receivables (current)
Derivative assets
Total financial assets
Financial liabilities
Trade payables
Derivative liabilities
Interest bearing liabilities
Fixed interest bearing liabilities
Floating interest bearing liabilities
Preference shares
Total financial liabilities
2011
Carrying amount1
$’000
2011
Fair value2
$’000
2010
Carrying amount1
$’000
2010
Fair value2
$’000
73,746
36,175
100,220
210,141
108,916
160,085
73,746
36,175
100,220
210,141
108,916
160,085
64,419
25,010
146,324
235,753
130,207
322,161
64,419
25,010
146,324
235,753
130,207
322,161
1,011,864
1,180,374
1,086,571
1,263,432
1,220,060
1,220,060
1,166,254
1,166,254
86
86
109
109
2,501,011
2,669,521
2,705,302
2,882,163
1 Carrying value is equal to the value of the financial instruments on the Statement of Financial Position.
2 Fair value is the amount for which the financial instrument could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction,
however, not recognised on the Statement of Financial Position.
The fair value of interest bearing liabilities and derivative financial instruments has been determined by discounting the expected future cash flows
by the relevant market interest rates. The discount rates applied range from 0.25% to 5.02% for uS$ and 4.81% to 6.42% for A$. Refer note 1(x)
for fair value methodology for financial assets and liabilities.
The Group uses methods in the determination and disclosure of the fair value of financial instruments. These methods comprise:
level 1: the fair value is calculated using quoted prices in active markets.
level 2: the fair value is determined using inputs other than quoted prices included in level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
level 3: the fair value is estimated using inputs for the asset or liability that are not based on observable data.
80
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
The following tables present the assets and liabilities measured and recognised as at fair value at 30 June 2011 and 30 June 2010.
Financial assets
Derivative assets
Interest rate derivatives
Cross currency swaps
Forward exchange contracts
Financial liabilities
Interest bearing liabilities
Fixed interest bearing liabilities
Floating interest bearing liabilities
Derivative liabilities
Interest rate derivatives
Cross currency swaps
Forward exchange contracts
Financial assets
Derivative assets
Interest rate derivatives
Cross currency swaps
Forward exchange contracts
Financial liabilities
Interest bearing liabilities
Fixed interest bearing liabilities
Floating interest bearing liabilities
Derivative liabilities
Interest rate derivatives
Cross currency swaps
Forward exchange contracts
level 1
$’000
level 2
$’000
level 3
$’000
2011
$’000
–
–
–
–
–
–
–
–
–
–
–
75,101
20,781
4,338
100,220
1,180,374
1,220,060
2,400,434
159,352
408
325
160,085
–
–
–
–
–
–
–
–
–
–
–
75,101
20,781
4,338
100,220
1,180,374
1,220,060
2,400,434
159,352
408
325
160,085
level 1
$’000
level 2
$’000
level 3
$’000
2010
$’000
–
–
–
–
–
–
–
–
–
–
–
122,219
21,252
2,853
146,324
1,263,432
1,166,254
2,429,686
308,946
12,898
317
322,161
–
–
–
–
–
–
–
–
–
–
–
122,219
21,252
2,853
146,324
1,263,432
1,166,254
2,429,686
308,946
12,898
317
322,161
During the year, there were no transfers between level 1, level 2 and level 3 fair value measurements.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 81
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 31. Contingent liabilities
Details and estimates of maximum amounts of contingent liabilities are as follows:
Bank guarantees by the Group in respect of variations and other financial risks
associated with the development of:
1 Bligh Street, Sydney, nSW1
123 Albert Street, Brisbane, QlD
34‑60 little Collins Street, Melbourne, VIC
Beaumeade, Ashburn, northern Virginia, uSA
Total contingent liabilities
2011
$’000
2010
$’000
5,650
5,682
30
–
2,650
3,601
–
789
11,362
7,040
1 Bank guarantee held in relation to an equity accounted investment (refer note 15).
DDF together with DIT, DOT and DXO is also a guarantor of a total of A$1,147.5 million and uS$120.0 million (A$111.7 million) of bank bilateral
facilities, a total of A$340.0 million of medium term notes, a total of uS$296.0 million (A$275.6 million) of privately placed notes, and a total of
uS$550.0 million (A$512.2 million) public 144a senior notes, which have all been negotiated to finance the Group and other entities within DXS.
The guarantees have been given in support of debt outstanding and drawn against these facilities, and may be called upon in the event that a
borrowing entity has not complied with certain requirements such as failure to pay interest or repay a borrowing, whichever is earlier. During the
period no guarantees were called.
DDF together with DIT, DOT and DXO is also a guarantor, on a subordinated basis, of REnTS (Real‑estate perpetual Exchangeable sTep‑up
Securities). The guarantee has been given in support of payments that become due and payable to the REnTS holders and ranks ahead of
the Group’s distribution payments, but subordinated to the claims of the senior creditors.
The guarantees are issued in respect of the Group and do not constitute an additional liability to those already existing in interest bearing liabilities
on the Statement of Financial Position.
The Directors of the Responsible Entity are not aware of any other contingent liabilities in relation to the Group, other than those disclosed in the
Financial Statements, which should be brought to the attention of security holders as at the date of completion of this report.
82
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Note 32. Commitments
(a) capital commitments
The following amounts represent capital expenditure on investment properties and inventories contracted at the end of each reporting period
but not recognised as liabilities payable:
Not longer than one year
3 Brookhollow Avenue, Baulkham Hills, nSW
Governor Phillip & Macquarie Tower Complex, 1 Farrer Place, Sydney, nSW
Southgate Complex, 3 Southgate Avenue, Southbank, VIC
201‑217 Elizabeth Street, Sydney, nSW
Garema Court, 140‑180 City Walk, Canberra, ACT
40‑50 Talavera Road, Macquarie Park, nSW
Flinders Gate Complex, 172‑189 Flinders Street, Melbourne, VIC
79‑99 St Hilliers Road, Auburn, nSW
DEXuS Industrial Estate, Egerton Street, Silverwater, nSW
114‑120 Old Pittwater Road, Brookvale, nSW
94‑106 lenore Drive, Erskine Park, nSW
7930 & 7940 Kentucky Drive, Florence, Kentucky, uS
10013‑11093 Kenwood Road, Cincinnati, Ohio, uS
1600‑1700 Capital Avenue, Plano, Texas, uS
2701, 2801, 2805 East Plano Parkway & 2700 Summit Avenue, Plano, Texas, uS
2950 lexington Avenue S, St Paul, Minneapolis, uS
2222‑2298 Wooddale Drive, St Paul, Minneapolis, uS
Eagandale Business Campus, 1285 & 1301 Corporate Centre Drive, 1230 & 1270 Eagan Industrial Road,
Eagan, Minnesota, uS
105‑107 South 41st Avenue, Phoenix, Arizona, uS
1429‑1439 South 40th Avenue, Phoenix, Arizona, uS
601 South 55th Avenue, Phoenix, Arizona, uS
7510‑7520 Airway Road, San Diego, California, uS
1000‑1200 Williams Street nW, Atlanta, Georgia, uS
MD Wholesale Food Market, 7951 Ocean Avenue & 7970 Tarbay Drive, Jessup, Maryland, uS
1015 & 1025 West nursery Road, linthicum Heights, Maryland, uS
Fort Holabird Industrial, 1811 & 1831 Portal Street & 6615 Tributary Street, Baltimore, Maryland, uS
9900 Brookford Street, Charlotte, north Carolina, uS
3520‑3600 Westinghouse Boulevard, Charlotte, north Carolina, uS
912 113th Street & 2300 East Randoll Mill Road, Arlington, Texas, uS
4343 & 4401 Equity Drive, 1614‑1634 Westbelt Drive & 1901‑1919 Dividend Drive, Columbus, Ohio, uS
11411, 11460‑11480 & 11550‑11560 Hillguard Road, Dallas, Texas, uS
11011 Regency Crest Drive, Dallas, Texas, uS
3601 East Plano Parkway & 1000 Shiloh Road, Plano, Texas, uS
6350 & 6360 Brackbill Boulevard, Mechanicsburg, Pennsylvania, uS
3550 Tyburn Street & 3332–3424 n San Fernando Road, los Angeles, California, uS
Braemar Ridge, 7500 West 78th Street, Bloomington, Minnesota, uS
326‑446 Calvert Avenue & 401‑403 Murry’s Avenue, Alexandria, Virginia, uS
2011
$’000
461
982
7,505
2,411
777
1,300
400
68
1,344
2,872
8,133
24
78
53
47
9
703
306
–
–
–
–
–
422
118
5
203
56
124
91
–
–
62
–
–
82
261
2010
$’000
93
1,986
756
–
–
–
–
–
–
–
718
–
21
360
621
254
187
282
170
66
211
159
235
–
84
–
82
–
–
57
59
299
863
108
174
–
Orlando Central Park, 7600 Kingspointe Parkway, 8259 Exchange Drive, 7451‑7488 Brokerage Drive
& 2900‑2901 Titan Row, Orlando, Florida, uS
–
3,831
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 83
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 32. Commitments (continued)
(a) capital commitments (continued)
Not longer than one year (continued)
13201 South Orange Avenue, Orlando, uS
1450 E Francis Street, 4200 Santa Ana Street, 1951 S Parco Street, 1401 E Cedar Street
& 1777 S Vintage Avenue, Ontario, Riverside, California, uS
Cornerstone Building, 5411 I‑10 East & 1228 Cornerway Boulevard, San Antonio, Texas, uS
Interchange north 1, 3005 nE I‑410 loop, San Antonio, Texas, uS
Tri‑County 6, Tri‑County Parkway, Schertz, Texas, uS
202 S Tayman Road, San Antonio, Texas, uS
Cabot Techs, 989‑991 Corporate Boulevard, linthicum Heights, Maryland, uS
7453 Empire Drive, Florence, Kentucky, uS
Quarry Industrial Estate, Reconciliation Road, Greystanes, nSW
Australia Square Complex, 264‑278 George Street, Sydney, nSW
The Zenith, 821‑843 Pacific Highway, Chatswood, nSW
Victoria Cross, 60 Miller Street, north Sydney, nSW
14 Moore Street, Canberra, ACT
44 Market Street, Sydney, nSW
123 Albert Street, Brisbane QlD
One Margaret Street, Sydney, nSW
45 Clarence Street, Sydney, nSW
309‑321 Kent Street, Sydney, nSW
383‑395 Kent Street, Sydney, nSW
Axxess Corporate Park, 164‑180 Forster Road, 11 & 21‑45 Gilby Road,
307‑355 Ferntree Gully Road, Mount Waverley, VIC
5‑15 Rosebery Avenue & 25‑55 Rothschild Avenue, Rosebery, nSW
Servon 2, Route nationale 19 l’Orme Rond, 77170 Servon, Paris, France
DEXuS Industrial Estate, Boundary Road (including 440 Doherty’s Road), laverton north, VIC
later than one year but no later than five years
1 Reconciliation Road, Greystanes Estate, Greystanes, nSW
309‑321 Kent Street, Sydney, nSW
Kings Park Industrial Estate, Vardys Road, Marayong, nSW
Total capital commitments
84
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
2011
$’000
2010
$’000
–
–
32
–
41
103
304
90
76
173
65
293
165
313
–
–
3,024
20,106
98
660
–
246
4,011
5,428
–
578
1,236
24
–
–
–
5,120
–
1,811
765
–
403
123,008
369
1,200
1,121
3,647
129
172
1,614
–
49,892
167,106
–
378
408
786
2,000
–
–
2,000
50,678
169,106
(b) lease payable commitments
The future minimum lease payments payable by the Group are:
Within one year
later than one year but not later than five years
later than five years
Total lease payable commitments
2011
$’000
3,200
7,726
6,098
2010
$’000
2,375
10,372
6,388
17,024
19,135
Payments made under operating leases are expensed on a straight‑line basis over the term of the lease, except where an alternative basis is more
representative of the pattern of benefits to be derived from the leased property.
The Group has a commitment for ground rent payable in respect of a leasehold property included in investment properties, and commitments for
its head office premise at 343 George Street, Sydney and its uS Office premise at newport, California.
no provisions have been recognised in respect of non‑cancellable operating leases.
(c) lease receivable commitments
The future minimum lease payments receivable by the Group are:
Within one year
later than one year but not later than five years
later than five years
Total lease receivable commitments
Note 33. Related parties
Responsible Entity
DXFM is the Responsible Entity of the Group.
2011
$’000
2010
$’000
505,234
500,921
1,436,299
1,533,216
712,081
790,633
2,653,614
2,824,770
DXFM was also the Responsible Entity of Gordon Property Trust, Gordon Property Investment Trust, northgate Property Trust and northgate
Investment Trust (collectively known as “the Syndicates”). On 30 April 2011, Gordon Property Trust and Gordon Property Investment Trust
were wound up. On 31 May 2010, northgate Property Trust and northgate Investment Trust were wound up.
DXH is the parent entity of DWPl, the Responsible Entity for DWPF.
Responsible Entity fees
under the terms of the Constitutions of the entities within the Group, the Responsible Entity is entitled to receive fees in relation to the management
of the Group. DXFM’s parent entity, DXH, is entitled to be reimbursed for administration expenses incurred on behalf of the Group. DEXuS Property
Services Pty limited (DXPS), a wholly owned subsidiary of DXH, is entitled to property management fees from the Group.
Related party transactions
Responsible Entity fees in relation to Group assets are on a cost recovery basis. All agreements with third party funds are conducted on normal
commercial terms and conditions.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 85
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 33. Related parties (continued)
DEXuS wholesale Property fund
Responsible Entity fee income
Property management fee income
Recovery of administration expenses
Aggregate amount receivable at the end of each reporting period (included above)
Property management fees receivable at the end of each reporting period (included above)
Administration expenses receivable at the end of each reporting period (included above)
The Syndicates
Responsible Entity fee income
Property management fee income
Performance fee – Gordon Syndicate
Performance fee – northgate Syndicate
Recovery of administration expenses
Aggregate amount receivable at the end of each reporting period (included above)
Property management fees receivable at the end of each reporting period (included above)
Administration expenses receivable at the end of each reporting period (included above)
Bent Street Trust
Property management fee income
Recovery of administration expenses
Transactions with master Development corporation (mDc)
The Group entered into a two year lease agreement with the two
MDC principals for the newport office which commenced on 1 June
2010 for which annual rental payable is uS$180,000 (A$167,613).
As part of the two year lease agreement, MDC completed an office
fit‑out for uS$205,739 (A$191,581). In addition, on 1 February 2011
the Group entered into a one year assignment of a sublease agreement
from MDC for adjacent office space for which annual rental payable is
uS$45,648 (A$42,507).
The Group has earned management agreement revenue for managing
the existing MDC property portfolio that the two MDC principals hold
interests in. The management fees of uS$973,884 (A$959,787)
(2010: uS$25,000 (A$29,312)) are consolidated in the Group.
86
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
2011
$’000
2010
$’000
16,483,106
15,065,851
6,185,789
5,878,083
2,122,590
1,404,968
1,432,482
1,277,966
1,076,948
353,501
30,298
267,239
2011
$’000
2010
$’000
439,709
958,425
499,173
962,107
1,669,625
–
–
1,752,500
102,585
388,551
–
–
–
63,471
21,283
21,398
2011
$’000
2010
$’000
1,403,196
1,403,196
67,692
5,885
Directors
The following persons were Directors of DXFM at all times during
the year and to the date of this report:
C T Beare, BSc, BE (Hons), MBA, PhD, FAICD1,4,5
E A Alexander, AM, BComm, FCA, FAICD, FCPA1,2,6
B R Brownjohn, BComm1,2,5,6
J C Conde, AO, BSc, BE (Hons), MBA1,3,4
S F Ewen, OAM1,4
V P Hoog Antink, BComm, MBA, FAICD, FCA, FAPI, FRICS
B E Scullin, BEc1,3
P B St George, CA(SA), MBA1,2,5,6
1 Independent Director
2 Board Audit Committee Member
3 Board Compliance Committee Member
4 Board nomination and Remuneration Committee Member
5 Board Finance Committee Member
6 Board Risk and Sustainability Committee Member
no Directors held an interest in the Group for the years ended
30 June 2011 and 30 June 2010.
Other Key management Personnel
In addition to the Directors listed above, the following persons were
deemed by the Board nomination and Remuneration Committee to
be Key Management Personnel during all or part of the financial year:
Name
Position
There were no loans or other transactions with Key Management
Personnel or their related parties during the years ended 30 June 2011
and 30 June 2010.
2011
$’000
2010
$’000
Victor P Hoog Antink
Chief Executive Officer
Compensation
Tanya l Cox
John C Easy
Craig D Mitchell
Paul G Say
Chief Operating Officer
Short term employee benefits
8,266,683
9,174,298
General Counsel
Post employment benefits
912,706
328,058
Chief Financial Officer
Other long term benefits
4,794,526
3,797,553
Chief Investment Officer
13,973,915
13,299,909
no Key Management Personnel or their related parties held an interest
in the Group for the years ended 30 June 2011 and 30 June 2010.
The Group has shown the detailed remuneration disclosures in the
Directors’ Report. The relevant information can be found in section 3
of the Directors’ Report.
Note 34. Business combinations
On 1 June 2010 the Group entered into an arrangement with MDC for no purchase consideration. The acquisition was accounted for as a business
combination with the resultant goodwill being zero.
Note 35. Events occurring after reporting date
On 6 July 2011, DEXuS Valley View, 5911 Fresca Drive, la Palma was acquired for uS$18.3 million (A$17.1 million).
On 21 July 2011, DXP disposed of two lots located at lenore Drive, Erskine Park, nSW for $10.1 million.
Since the end of the year, other than the matter discussed above, the Directors are not aware of any matter or circumstance not otherwise dealt
with in their Directors’ Report or the Financial Statements that has significantly or may significantly affect the operations of the Group, the results
of those operations, or state of the Group’s affairs in future financial periods.
Note 36. operating segments
(a) Description of segments
The Chief Operating Decision Maker (CODM) has been identified as the Board of Directors as they are responsible for the strategic decision making
within the Group. DXS management has identified the Group’s operating segments based on the sectors analysed within the management reports
reviewed by the CODM in order to monitor performance across the Group and to appropriately allocate resources. Refer to the table below for
a brief description of the Group’s operating segments.
Office – Australia and new Zealand
This comprises office space with any associated retail space; as well as car parks and office
developments in Australia and new Zealand.
Industrial – Australia
This comprises domestic industrial properties, industrial estates and industrial developments.
Industrial – north America
This comprises industrial properties, industrial estates and industrial developments in the united States
as well as one industrial asset in Canada1.
Management Business
Financial Services
All other segments
The domestic and uS based management businesses are responsible for asset, property and
development management of Office, Industrial and Retail properties for the Group and the third
party funds management business.
The treasury function of the Group is managed through a centralised treasury department. As a result, all
treasury related financial information relating to borrowings, finance costs as well as fair value movements
in derivatives, are prepared and monitored separately.
This comprises the European industrial and retail2 portfolios. These operating segments do not meet
the quantitative thresholds set out in AASB 8 Operating Segments due to their relatively small scale.
As a result these non‑core operating segments have been included in “all other segments” in the
operating segment information shown below.
1 The Canadian asset was sold on 24 June 2011 (refer note 12).
2 The retail asset was sold on 31 March 2010. The Group does not own any other retail assets.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 87
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 36. operating segments (continued)
(b) Segment information provided to the cODm
The segment information provided to the CODM for the reportable segments for the year ended 30 June 2011 and 30 June 2010 includes
the following:
30 June 2011
office
australia &
New Zealand
$’000
Industrial
australia
$’000
Industrial
North
america
$’000
management
Business
Financial
Services
all other
segments
Eliminations
Total
$’000
$’000
$’000
$’000
$’000
Segment performance measures
Property revenue
348,007
144,554
115,723
Proceeds from sale of inventory
Management fee revenue
Interest revenue
Inter‑segment revenue
–
–
–
–
–
–
–
–
–
–
–
–
231
3,359
50,655
–
–
–
–
1,565
37,119
–
20,557
–
–
–
–
–
–
–
–
629,072
3,359
50,655
1,565
(37,119)
–
Total operating segment revenue
348,007
144,554
115,723
91,364
1,565
20,557
(37,119)
684,651
Net operating income (NoI)
255,204
116,355
79,591
management business EBIT
Finance costs
Compensation related expenses
net fair value gain/(loss)
of investment property1
net gain/(loss) on sale
of investment property
net fair value gain on derivatives
Segment asset measures
–
–
–
–
–
–
–
–
–
122,686
(13,448)
81,130
–
–
(349)
7,313
–
–
–
3,453
–
–
–
(52,744)
(67,417)
–
218
–
–
–
–
2,605
–
–
–
16,037
–
–
–
(8,337)
(130)
–
173,920
4,963
–
–
–
–
–
–
–
–
–
–
–
–
467,187
3,453
(52,744)
(67,417)
182,031
7,052
2,605
7,487,082
440,410
78,819
–
2,215,056
Direct property portfolio
4,510,798
1,518,963
1,171,163
112,238
Additions to
direct property portfolio
Acquisition of
direct property portfolio
Segment liability measures
Interest bearing liabilities
300,813
63,948
44,627
26,059
41,205
37,614
–
–
–
–
–
–
2,215,056
1 Includes net fair value gain of investment property of $148.4 million and the Group’s share of the net fair value gain of its investments accounted for using the equity
accounted method of $33.6 million.
88
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
30 June 2010
office
australia &
New Zealand
$’000
Industrial
australia
$’000
Industrial
North
america
$’000
management
Business
Financial
Services
all other
segments
Eliminations
Total
$’000
$’000
$’000
$’000
$’000
Segment performance measures
Property revenue
335,336
137,213
146,843
Management fee revenue
Interest revenue
Inter‑segment revenue
–
–
199
–
–
–
–
–
–
–
51,588
–
–
–
1,484
28,987
–
43,676
–
–
–
–
–
–
663,068
51,588
1,484
(29,186)
–
Total operating segment revenue
335,535
137,213
146,843
80,575
1,484
43,676
(29,186)
716,140
–
6,121
–
–
–
(190,685)
Net operating income (NoI)
245,106
109,939
99,135
management business EBIT
Finance costs
Compensation related expenses
net fair value loss
of investment property1
–
–
–
–
–
–
–
–
–
(57,530)
(47,878)
(113,104)
Reversal of previous impairment
–
–
–
net loss on sale
of investment property
(508)
(3,514)
(49,320)
net fair value gain on derivatives
–
–
–
Segment asset measures
(58,978)
–
–
–
–
Direct property portfolio
4,109,029
1,502,468
1,452,809
45,470
Additions to
direct property portfolio
Acquisition of
direct property portfolio
Segment liability measures
Interest bearing liabilities
199,971
54,959
30,759
335
–
–
94,852
236,713
–
–
–
–
–
–
–
–
5,401
–
–
–
2,240,082
30,227
–
–
–
(17,098)
13,307
–
–
196,809
2,947
–
–
–
–
–
–
–
–
–
–
–
–
–
484,407
6,121
(190,685)
(58,978)
(235,610)
13,307
(53,342)
5,401
7,306,585
288,971
331,565
– 2,240,082
1 Includes net fair value loss of investment property of $209.4 million and the Group’s share of the net fair value loss of its investments accounted for using the equity
accounted method of $26.2 million.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 89
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 36. operating segments (continued)
(c) Other segment information
(i) Segment revenue
The revenue from external parties reported to the Board is measured in a manner consistent with that in the Statement of Comprehensive Income.
Revenue from external customers is derived predominantly through property revenue and management fee revenue. A breakdown of revenue
by operating segment is provided in the tables above. The Group internally manages many of its investment properties for which inter‑segment
management fees are received (refer to note 33 for information relating to inter‑company management fee income). Furthermore, inter‑segment
rental income is received from the funds management company. These amounts are eliminated on consolidation (refer to reconciliation below).
Gross operating segment revenue
less: inter‑segment revenue eliminated on consolidation
Property rental revenue
Responsible Entity fee revenue
Other management fee revenue
Other eliminations
Total inter‑segment revenue
Total revenue from ordinary activities
2011
$’000
2010
$’000
721,770
745,326
(150)
(26,150)
(10,969)
150
(874)
(19,048)
(9,939)
675
(37,119)
(29,186)
684,651
716,140
The Group is domiciled in Australia. The result of its revenue from external customers in Australia is $548.4 million (2010: $544.7 million),
and the total revenue from external customers in other countries is $136.3 million (2010: $171.4 million). Revenue from external customers
includes $115.7 million (2010: $146.8 million) attributable to the united States portfolio. Segment revenues are allocated based on the country
in which the investment property is located.
There is no single external tenant responsible for greater than 10% of external revenue.
90
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
(ii) Net operating income (NoI) and operating earnings before interest and tax (operating EBIT)
The Board assesses the performance of each operating sector based on a measure of nOI, which is determined as property revenue less
attributable property expenses. The performance indicator predominantly used as a measure of the management business performance is the
Management Business EBIT, which comprises management fee revenue less compensation related expenses and other management operating
expenses. Both the property nOI and the management business’ EBIT exclude the effects of finance costs, taxation and non‑cash items, such
as unrealised fair value adjustments, which are monitored by management separately. The reconciliation below reconciles these profit measures
to the profit attributable to stapled security holders.
Reconciliation of net operating income and management business EBIT to Group net profit attributable to stapled security holders:
Property revenue per Statements of Comprehensive Income
Property expenses per Statements of Comprehensive Income
Intercompany property revenue and expenses1
Share of net operating income from associates
Net operating income (NoI)
add: management company EBIT
less: Internal management fees2
less: Inter‑segment eliminations
Other income and expense3
operating EBIT
Interest revenue
Finance costs
Share of net profit/(loss) of associates accounted for using the equity method
net fair value gain/(loss) of investment properties
net gain/(loss) on sale of investment properties
net loss on sale of investment
net fair value gain of derivatives
Impairment and other4
Reversal of previous impairment
Tax (expense)/benefit
Other non‑controlling interests
2011
$’000
2010
$’000
629,072
663,068
(151,865)
(169,753)
(10,413)
(8,908)
393
–
467,187
484,407
3,453
6,121
(26,150)
(19,048)
(633)
(6,648)
(1,031)
(9,140)
437,209
461,309
1,565
1,484
(52,744)
(190,685)
33,598
(26,243)
148,433
(209,367)
7,052
(53,342)
–
2,605
(1,285)
–
(21,313)
(2,108)
(15)
5,401
(242)
13,307
29,983
(170)
Net profit attributable to stapled security holders
553,012
31,420
1 Includes internal property expenses of $10.2 million included in nOI for management reporting purposes but eliminated for statutory accounting purposes.
The internal property management expenses comprise of property management fees included in the management business EBIT.
2 Elimination of internally generated Responsible Entity fees of $19.5 million and $6.7 million other internal management fees.
3 Other income and expenses comprise foreign exchange gains; depreciation, other income and expenses excluding amounts included in the management business EBIT.
4 Includes $1.1 million of non‑recurring depreciation.
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 91
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 36. operating segments (continued)
(c) Other segment information (continued)
(iii) Segment assets
The amounts provided to the CODM as a measure of segment assets is the direct property portfolio. The direct property portfolio values are
allocated based on the physical location of the asset and are measured in a manner consistent with the Statement of Financial Position. The direct
property portfolio comprises investment properties, all development properties and the Group’s share of properties held through equity accounted
investments. The reconciliation below reconciles the total direct property portfolio balance to total assets in the Statement of Financial Position.
The Group is domiciled in Australia. Total non‑current assets other than financial instruments and deferred tax assets located in Australia is
$6,354.8 million (2010: $5,868.1 million), and the amount located in other countries is $1,287.2 million (2010: $1,652.1 million). This includes
$1,172.5 million (2010: $1,455.2 million) attributable to the united States portfolio.
Reconciliation of direct property portfolio to Group total assets in the Statement of Financial Position:
Investment properties
non‑current assets held for sale
Inventories
Investment property (accounted for using the equity method)1
Direct property portfolio
Cash
Receivables
Intangible assets
Derivative financial instruments
Deferred tax asset
Current tax receivable
Property, plant and equipment (IT and office equipment)
Prepayments and other assets2
Total assets
2011
$’000
2010
$’000
7,105,914
7,146,397
59,260
112,238
209,670
18,068
45,470
96,650
7,487,082
7,306,585
73,746
36,175
224,684
100,220
55,577
1,247
3,926
4,987
64,419
25,010
225,525
146,324
79,927
3,621
5,264
14,353
7,987,644
7,871,028
1 This represents the Group’s portion of the investment property accounted for using the equity accounted method.
2 Other assets include the Group’s share of total net assets of its investments accounted for using the equity accounted method less the Group’s share of the investment
property value which is included in the direct property portfolio.
92
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
Note 37. Reconciliation of net profit to net cash inflow from operating activities
(a) Reconciliation
net profit for the year
Capitalised interest
Depreciation and amortisation
Impairment
Reversal of previous impairment
net fair value (gain)/loss of investment properties
Share of net (profit)/loss of associates accounted for using the equity method
net fair value gain of derivatives
net fair value (gain)/loss of interest rate swaps
net (gain)/loss on sale of investment properties
net fair value loss of investment
net foreign exchange gain
Provision for doubtful debts
Change in operating assets and liabilities
(Increase)/decrease in receivables
Decrease in prepaid expenses
Decrease in other non‑current assets – investments
Increase in inventories
Decrease/(increase) in other current assets
Decrease in other non‑current assets
(Decrease)/increase in payables
(Decrease)/increase in current liabilities
(Decrease)/increase in other non‑current liabilities
(Decrease)/increase in deferred tax assets
Net cash inflow from operating activities
2011
$’000
555,120
2010
$’000
31,590
(60,955)
(41,377)
3,811
194
–
3,498
242
(13,307)
(148,433)
209,367
(34,053)
(2,605)
(41,599)
(7,052)
–
(574)
(5,516)
(5,649)
2,159
24,222
(66,768)
4,741
1,199
(3,770)
(6,177)
(158)
26,243
(5,401)
53,623
53,342
15
(3,103)
4,141
6,665
63
31,016
–
(3,445)
1,861
9,848
3,151
1,612
31,205
(29,470)
239,342
340,174
(b) capital expenditure on investment properties
Payments for capital expenditure on investment properties include $101.8 million (2010: $78.5 million) of maintenance and incentive
capital expenditure.
Note 38. Non-cash financing and investing activities
Distributions reinvested
Note
28
2011
$’000
14,528
2010
$’000
90,360
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 93
FINaNCIal STaTEmENTS
Notes to the Financial Statements
for the year ended 30 June 2011
CoNTINUED
Note 39. Earnings per unit
Earnings per unit are determined by dividing the net profit attributable to unitholders by the weighted average number of ordinary units outstanding
during the year. The weighted average number of units has been adjusted for the bonus elements in units issued during the year and comparatives
have been appropriately restated.
Basic earnings per unit on profit attributable to unitholders of the parent entity
Diluted earnings per unit on profit attributable to unitholders of the parent entity
Basic earnings per unit on profit attributable to stapled security holders
Diluted earnings per unit on profit attributable to stapled security holders
(a) Reconciliation of earnings used in calculating earnings per unit
net profit for the year
net profit attributable to unitholders of other stapled entities (non‑controlling interests)
net profit attributable to other non‑controlling interests
Net profit attributable to the unitholders of the Trust
used in calculating basic and diluted earnings per unit
(b) weighted average number of units used as a denominator
2011
cents
3.77
3.77
11.44
11.44
2010
cents
0.34
0.34
0.66
0.66
2011
$’000
2010
$’000
555,120
31,590
(370,644)
(15,299)
(2,108)
(170)
182,368
16,121
2011
securities
2010
securities
Weighted average number of units outstanding used in calculation of basic and diluted earnings per unit
4,836,131,743
4,774,467,167
94
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
FINaNCIal STaTEmENTS
Directors’ Declaration
for the year ended 30 June 2011
The Directors of DEXuS Funds Management limited as Responsible Entity of DEXuS Diversified Trust declare that the Financial Statements
and notes set out on pages 31 to 94:
(i) comply with Australian Accounting Standards, the Corporations Act 2001 and other mandatory professional reporting requirements; and
(ii) give a true and fair view of the Group’s financial position as at 30 June 2011 and of their performance, as represented by the results of
their operations and their cash flows, for the year ended on that date.
In the Directors’ opinion:
(a) the Financial Statements and notes are in accordance with the Corporations Act 2001;
(b) there are reasonable grounds to believe that the Group and its consolidated entities will be able to pay their debts as and when they become
due and payable; and
(c) the Group has operated in accordance with the provisions of the Constitution dated 15 August 1984 (as amended) during the year ended
30 June 2011.
note 1(a) confirms that the Financial Statements also comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
christopher T Beare
Chair
16 August 2011
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 95
FINaNCIal STaTEmENTS
Independent auditor’s Report
for the year ended 30 June 2011
96
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT
DEXUS PRoPERTy GRoUP 2011 AnnuAl REPORT 97
aDDITIoNal
INFoRmaTIoN
Top 20 security holders as at 25 august 2011
Rank Name
1
2
3
4
5
6
7
8
9
HSBC Custody nominees (Australia) limited
JP Morgan nominees Australia limited
national nominees limited
Citicorp nominees Pty limited
JP Morgan nominees Australia limited
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