2 0 1 3 A n n uAl R e P O R T
DEXUS
www.dexus.com
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AnnuAl RePORT 2013
letter from the Chair
fiVe Year fiNaNCial SummarY
Board of direCtorS
Corporate goVerNaNCe StatemeNt
fiNaNCial report
directors’ report
auditor’s independence declaration
Consolidated Statement of Comprehensive income
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
2013 annual reporting suite
2 0 1 3 A N N U A L R E P O R T
DEXUS
www.dexus.com
dexus property Group presents its 2013 annual Reporting suite
and supporting material for the year ended 30 June 2013:
1. the 2013 dexus annual Review – an integrated report
summarising our financial, operational and Corporate
Responsibility and sustainability (CR&s) performance.
2. this 2013 dexus annual Report – provides dxs’s Consolidated
Financial statements, Corporate Governance statement and
Board of directors information. this document should be read
in conjunction with the 2013 dexus annual Review.
3. the 2013 dexus Combined Financial statements – the
Financial statements of dexus Industrial trust, dexus office
trust and dexus operations trust. this document should be
read in conjunction with the 2013 dexus annual Report and
annual Review.
4. the 2013 dexus performance pack – provides the data and
detailed information supporting the results outlined in the 2013
dexus annual Review and will be available in our online annual
Reporting suite from early september 2013.
In these reports, dexus demonstrates how it manages its
financial and non‑financial performance in line with its strategy.
Further CR&s information can be found on our website at
www.dexus.com/crs.
the annual Reporting suite is available in hard copy by email
request to ir@dexus.com or by calling 1800 819 675. the online
annual Reporting suite is available at www.dexus.com and will be
online from early september 2013.
dexus property Group (dxs) (asx Code: dxs) consists of
dexus diversified trust (ddF) (aRsn 089 324 541), dexus
Industrial trust (dIt) (aRsn 090 879 137), dexus office trust
(dot) (aRsn 090 768 531) and dexus operations trust (dxo)
(aRsn 110 521 223), collectively known as dxs or the Group.
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 asx and media releases, Financial statements and other information
are available on our website: www.dexus.com
2013 dexus annual RepoRt
Inside:STRATEGIC PROGRESSDEXUS made significant progress on its strategic and operational objectives, delivering solid results for the yearSIGNIFICANT TRANSACTION ACTIVITYThe Group was involved in $2.9 billion of transactions including those that have re‑shaped the DXS portfolioGROWTH IN THIRD PARTY FUNDSDEXUS demonstrated its ability to attract new third party capital partners and invest alongside existing partnersDEXUS 2013 AnnuAl Reviewwww.dexus.comA YEAR OF FOCUSAND DELIVERYDEXUS 2013 COMbiNEd FiNANCiAl StAtEMENtSwww.dexus.comDEXUS 2013 PERFORMANCE PACKwww.dexus.com a year of successful delivery on our revised strategy
despite the uncertainty in global markets we had a successful and busy year delivering a solid operational result, meeting our earnings guidance
and achieving an improved distribution per security.
Following the announcement of our revised strategy in august 2012, we remained focused on delivering risk‑adjusted returns for our investors,
maintaining our agility to execute a number of strategic and operational initiatives.
the year involved the sale of properties in offshore markets and reinvestment into the australian office market, which was completed without
impacting earnings. our transactional activity strengthened the dexus platform and increased the composition of the listed dxs portfolio towards
australian office.
We engaged in a total of $2.9 billion of transactions across the Group, including jointly acquiring four properties with dexus Wholesale property Fund.
the most significant achievement was the sale of our entire us portfolio for us$617 million across three transactions achieving a 12% premium
to prior book value. equally successful was the reinvestment of $1.1 billion into australian office markets, which included acquiring:
a 50% interest in 12 Creek street, Brisbane
a 100% interest in 50 Carrington street, sydney
a 25% interest in Grosvenor place, sydney
a 50% interest in 39 Martin place, sydney
a 50% interest in 2‑4 dawn Fraser avenue, sydney olympic park
a 100% interest in 40 Market street, Melbourne
a 50% interest in fund‑through investments at 480 Queen street, Brisbane and Kings square, perth
the major benefit of these acquisitions has been the enhancement to investor returns through the improvement in the quality of our earnings.
our full exit from us and european markets has enabled us to fully dedicate our resources to our core australian CBd office markets and enhance
the performance of the total portfolio, progressing our objective of being the leading owner and manager of australian office.
on 25 July 2013, we announced that we had acquired a 14.9% economic interest in the asx listed Commonwealth property office Fund (Cpa).
We consider this to be a good investment at a discount to Cpa’s net tangible asset backing, and one which will benefit dexus security holders in
the long‑term.
on the capital management front, we actively managed our capital and risk, repaying the majority of us debt associated with the us portfolio and
securing us$300 million of long‑term us private placement notes. We utilised the on‑market securities buy‑back on an opportunistic basis when
it enhanced investor returns.
We continued to carefully manage operating cash flow with the objective of fully funding distributions from free cash flow. this was reflected in
the increase to the Group’s distribution payout ratio for the six months to 30 June 2013 from 75% to 80% of FFo, following a reduction in capital
expenditure over the period. this increase in the payout ratio resulted in an upgraded distribution of 6.0 cents per security and an average payout
of 77.4% for the year.
underlying fundamentals remain challenging
Continued volatility in global markets, together with economic uncertainty in europe and China, impacted business confidence during 2013.
With many of our tenants being global subsidiaries or having a global focus, the impact of this uncertainty further dampened tenant demand.
In a market affected by global and domestic factors, our team faced challenging leasing conditions. during FY13 we concentrated our efforts on
proactive leasing and have positioned the portfolio for solid growth in FY14, underpinned by strong like‑for‑like office income growth.
although the underlying fundamentals remain challenging, australia continues to be an attractive investment destination for pension and sovereign
wealth funds. our view is the weight of capital seeking quality australian office and industrial buildings will contribute to a further tightening of
capitalisation rates in buildings with strong fundamentals over the next 12 to 18 months. Recent transactional evidence supports this view.
Board commitment to strong corporate governance
the Board chooses to be at the forefront of best practice corporate governance and believes that a strong corporate governance platform underpins
the achievement of its strategic objectives.
over the past year we focused on our commitment to transparency and continuous disclosure, investigating ways to enhance transparency, improve
processes and work more actively to keep our investors fully informed.
In an effort to gain a better understanding of and respond to our institutional investor views on corporate governance, Ceo remuneration and other
areas of interest, the Board commenced an institutional investor engagement program during the year, which has proven to be an informative and
valuable initiative.
1
2013 dexus annual RepoRtletter from the chair to build on the effectiveness of the Board, we appointed an independent consultant to evaluate the performance of the Board, its Committees and
the contribution of each director. led by the independent consultant, the Board also assessed my effectiveness as the Chairman. details relating to
the evaluation are included in the corporate governance statement on pages 6 to 17.
our 2012 remuneration report and the revised executive remuneration framework were overwhelmingly supported by investors at the annual General
Meeting held in november 2012. the revised remuneration framework, which aligns to the Group’s revised strategy, enables and encourages dexus
Independent directors and dexus executives to hold dxs securities. the full 2013 remuneration report starts on page 19.
enhancement to the Board of directors
dexus’s Chief Financial officer, Craig Mitchell, was appointed to the Board on 12 February 2013. Craig has been with dexus for more than
five years and has over 20 years’ financial management and accounting experience, with more than 15 of those years specialising in property.
Craig’s knowledge and experience has further strengthened the expertise of the Board.
at the date of this report, the Board comprised ten directors, eight of whom are independent.
good corporate citizenship
embedded in our Corporate Responsibility and sustainability (CR&s) framework is our commitment to maintaining the highest standards of
governance and business ethics.
We deliver this through our service excellence approach to tenants and capital partners, the development of our people, our supplier partnerships
and engagement within our communities.
We take account of our obligations under the unpRI in our investment decision making, delivering good corporate citizenship.
this year we have continued to build on the significant successes that we have achieved in sustainability and have outlined these in an integrated
way throughout this report. they include improvements in our naBeRs energy ratings across our office portfolio to an average of 4.7 stars,
maintaining our focus on corporate responsibility and achieving a carbon neutral accreditation for our head office for the third consecutive year.
outlook
our strategic achievements and the Group’s performance in FY13 is testament to the strength of our people, and on behalf of the Board of directors
I thank them for their hard work and commitment during the year.
despite the near‑term uncertainty, we believe the medium to long‑term market outlook remains promising on the back of low interest rates, and
improvement in business sentiment. the prospect of an improved economy is expected to have a positive impact on tenant demand from late‑2014
and the Group is well‑positioned to capture the sustained recovery in australian property markets.
dexus enters FY14 with a clear vision and strategy. the combination of this clear strategy, the team’s focus on driving performance and the quality
of our properties provides a solid foundation for delivering superior returns for investors.
on behalf of the Board, I would like to thank you for your continued support and look forward to reporting on the Group’s progress over the next year.
Christopher T Beare
Chair
16 august 2013
2
2013 dexus annual RepoRtletter from the chair Consolidated Statement of Comprehensive Income
Profit and loss
property revenue
Management fees
proceeds from sale of inventory
property revaluations
Reversal of previous impairment
Contribution from equity accounted investments
other income
Total income
property expenses
Cost of sale of inventory
Finance costs
net gain/(loss) on sale of investment properties
property devaluations and impairments
other expenses
Total expenses
profit/(loss) before tax
Income and withholding tax benefit/(expense)
Profit/(loss) after tax from continuing operations
loss from discontinued operations
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)
Consolidated Statement of Financial Position
Cash and receivables
property assets2
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 ratio3 (%)
Consolidated Statement 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
Buy back of contributed equity, net of transaction costs
acquisition of non‑controlling interest
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
Consolidated Statement of Cash Flows
net cash inflow from operating activities
net cash inflow/(outflow) 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
2009
$m
708.5
63.7
–
–
–
–
5.7
777.9
(174.5)
–
(384.2)
(1.9)
(1,685.7)
(107.2)
(2,353.5)
(1,575.6)
120.2
(1,455.4)
–
(1,455.4)
(3.7)
(1,459.1)
514.5
10.43
7.30
120.7
7,735.9
494.5
8,351.1
289.6
2,509.0
406.3
3,204.9
5,146.2
206.8
4,939.4
1.01
31.2
5,835.1
(1,455.4)
(53.5)
1,129.9
–
–
(296.6)
–
(13.3)
5,146.2
359.6
(212.5)
(170.2)
(23.1)
99.2
8.7
84.8
2010
$m
2011
$m
2012
$m
2013
$m
663.1
51.6
–
–
13.3
(26.2)
10.1
711.9
(169.8)
–
(190.7)
(53.3)
(209.4)
(87.1)
(710.3)
1.6
30.0
31.6
–
31.6
(0.2)
31.4
461.3
7.30
5.10
89.4
7,306.6
475.0
7,871.0
281.2
2,240.1
343.3
2,864.6
5,006.4
205.2
4,801.2
0.95
29.8
5,146.2
31.6
(7.0)
90.3
–
–
(244.4)
–
(10.3)
629.1
50.6
3.3
148.4
–
34.1
5.5
871.0
(151.9)
(3.4)
(52.7)
7.1
–
(93.7)
(294.6)
576.4
(21.3)
555.1
–
555.1
(2.1)
553.0
437.2
7.40
5.18
109.9
7,487.1
390.7
7,987.7
274.3
2,215.1
191.4
2,680.8
5,306.9
204.0
5,102.9
1.01
28.4
5,006.4
555.1
(4.9)
14.6
–
–
(250.7)
–
(13.6)
5,006.4
5,306.9
340.2
90.6
(444.4)
(13.6)
84.8
(6.8)
64.4
239.3
(227.0)
4.9
17.2
64.4
(7.9)
73.7
535.7
50.3
49.8
43.0
–
13.8
1.7
694.3
(133.5)
(44.0)
(118.0)
–
(14.9)
(76.4)
(386.8)
307.5
18.9
326.4
(143.5)
182.9
(1.8)
181.1
467.9
7.65
5.35
90.0
6,922.7
351.4
7,364.1
277.0
1,940.8
139.0
2,356.8
5,007.3
–
5,007.3
1.00
27.2
5,306.9
182.9
41.8
–
(51.0)
(204.0)
(257.4)
0.1
(12.0)
5,007.3
348.4
659.6
(1,019.9)
(11.9)
73.7
(2.6)
59.2
546.6
48.5
24.4
185.9
20.5
37.9
1.2
865.0
(134.9)
(22.9)
(98.6)
(3.7)
(2.2)
(79.5)
(341.8)
523.2
(1.7)
521.5
(7.0)
514.5
–
514.5
443.3
7.75
6.001
44.7
7,258.4
449.5
7,752.6
275.8
2,167.1
118.0
2,560.9
5,191.7
–
5,191.7
1.05
29.0
5,007.3
514.5
29.7
–
(77.5)
–
(282.1)
(0.2)
–
5,191.7
193.5
(84.9)
(155.6)
(47.0)
59.2
2.7
14.9
1. 77.4% of FFo in FY13.
2. property assets include investment properties, non‑current assets held for sale, inventories and investment property accounted for using the equity method.
3. Includes cash.
3
2013 dexus annual RepoRtfive year financial summary 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. Chris is also a
member of the Board nomination, Remuneration & Governance 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.
Elizabeth A Alexander AM independent director
bcomm, fcA, fAicd, fcPA
elizabeth alexander is an Independent director of dexus Funds Management limited, Chair of dexus Wholesale
property limited and a member of the Board audit, Risk & sustainability Committee.
elizabeth brings to the Board extensive experience in accounting, finance, corporate governance and risk management
and was formerly a partner with pricewaterhouseCoopers. elizabeth is currently the Chair of Medibank and the
Chancellor of the university of Melbourne.
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 previously Chairman of Csl and a director of amcor and Boral.
Barry R Brownjohn independent director
bcomm
Barry Brownjohn is an Independent director of dexus Funds Management limited and is Chair of the Board audit,
Risk & sustainability Committee.
Barry has over 20 years’ experience in australia, asia and north america in international banking. Barry is an
Independent director of Citigroup australia pty limited and a director of Bakers delight Holdings pty limited. He also
serves as a member on the Board of Governors of the Heart Research Institute.
Barry 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. Barry has also held numerous industry positions including Chairing the
International Banks and securities association in australia and the asia pacific Managed Futures association.
John C Conde AO independent director
bsc, be (Hons), MbA
John Conde is an Independent director of dexus Funds Management limited, and is the Chair of the Board
nomination, Remuneration & Governance Committee.
John brings to the Board extensive experience across diverse sectors including commerce, industry and government.
John is the Chairman of Bupa australia Holdings pty limited, Cooper energy limited, sydney symphony limited,
destination nsW and deputy Chairman of Whitehaven Coal limited. John is president of the Commonwealth
Remuneration tribunal and a director of the McGrath Foundation limited. John is also Chairman of the australian
olympic Committee (nsW) Fundraising Committee and a director of the aFC asian Cup australia 2015.
John was previously Chairman of ausgrid (formerly energyaustralia), 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.
Tonianne Dwyer independent director
bJuris (Hons), llb (Hons)
tonianne dwyer is an Independent director of dexus Funds Management limited and dexus Wholesale property
limited, and a member of the Board Compliance Committee.
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 is currently a director
of Cardno limited and Queensland treasury Corporation.
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 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 & Bath
science park stakeholder Board.
4
2013 dexus annual RepoRt Stewart F Ewen OAM independent director
stewart ewen is an Independent director of dexus Funds Management limited and a member of the Board
nomination, Remuneration & Governance 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.
Craig D Mitchell chief financial Officer and executive director
bcomm, MbA (exec), fcPA, Advanced Management Program – Harvard business school 2011
Craig is the Chief Financial officer and an executive director of dexus Funds Management limited.
Craig is responsible for operational and strategic finance, accounting, tax, treasury and third party funds management
including management of the dexus retail property portfolio.
Craig has more than 20 years of financial management and accounting experience, with over 15 years specialising in
the property industry.
Craig was previously the General Manager, Finance of the Commercial, Industrial, Capital partners and third party
funds divisions at stockland Group. prior to this Craig worked in a number of senior finance roles at Westfield.
Craig has a Masters of Business administration (executive) from the australian Graduate school of Management,
a Bachelor of Commerce and is a Fellow of Cpa australia. He has also completed the advanced Management program
at Harvard Business school, Boston.
Richard Sheppard independent director
bec Hons
Richard sheppard is an Independent director of dexus Funds Management limited and a member of the Board
Finance and Board audit, Risk & sustainability Committees.
Richard brings to the dexus Board extensive experience in banking and finance and as a director and Chairman
of listed and unlisted property trusts. Richard is treasurer of the Bradman Foundation and a director of the sydney
Cricket Club. He is also the Chairman of Green state power pty ltd and the Macquarie Group Foundation, and a
director of echo entertainment Group.
He was Managing director and Chief executive officer of Macquarie Bank limited and deputy Managing director
of Macquarie Group limited from 2007 until late 2011. Following seven years at the Reserve Bank of australia,
Richard joined Macquarie Group’s predecessor, Hill samuel australia in 1975, initially working in Corporate Finance.
He became Head of the Corporate Banking Group in 1988 and headed a number of the Bank’s major operating
Groups, including the Financial services Group and the Corporate affairs Group. He was a member of the Group
executive Committee since 1986 and deputy Managing director since 1996. Richard was also Chairman of the
australian Government’s Financial sector advisory Council from 2009 to 2011.
Darren J Steinberg chief executive Officer and executive director
bec, fRics, fAPi
darren steinberg is the Ceo of dexus property Group and an executive director of dexus Funds Management limited.
darren has more than 25 years’ experience in the property and funds management industry. darren is the national
president of the property Council of australia, a Fellow of the Royal Institution of Chartered surveyors and the
australian property Institute and a member of the australian Institute of Company directors.
prior to joining dexus in March 2012, darren was Managing director property for Colonial First state Global asset
Management. He has also held senior property roles with stockland, Westfield, lend lease and Jones lang Wootton.
darren has a Bachelor of economics from the university of Western australia.
Peter St George independent director
cA(sA), MbA
peter is an Independent director of dexus Funds Management limited and the Chair of the Board Finance Committee.
peter has more than 20 years’ experience in senior corporate advisory and finance roles within natWest Markets
and Hill samuel & Co in london. peter is currently a director of First Quantum Minerals limited (listed on the toronto
stock exchange).
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, its related companies
and sFe Corporation limited.
peter is currently a director of First Quantum Minerals limited (listed on the toronto stock exchange) and Boart
longyear limited.
5
2013 dexus annual RepoRt ASX Corporate Governance Principles and Recommendations
principle 1 – lay solid foundations for management and oversight
1.1 Companies should establish and disclose the functions reserved for the board and those delegated to
senior executives
1.2 Companies should disclose the process for evaluating the performance of senior executives
principle 2 – structure of the board to add value
2.1 a majority of the board should be independent directors
2.2 the chair should be an independent director
page 7
pages 8–10
2.3 the roles of chair and chief executive officer should not be exercised by the same individual
2.4 the board should establish a nomination committee
2.5 Companies should disclose the process for evaluating the performance of the board, its committees and
individual directors
principle 3 – promote ethical and responsible decision making
pages 11–12
3.1 Companies should establish and disclose a code of conduct or a summary of the code
3.2 Companies should establish and disclose a policy concerning diversity or a summary of that policy. the policy
should include requirements for the board to establish measurable objectives for achieving gender diversity.
the board should assess annually both the objectives and progress in achieving them
3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity in
accordance with the diversity policy and progress towards achieving them
3.4 Companies should disclose in each annual report the proportion of women employees in the whole organisation,
women in senior executive positions and women on the board
principle 4 – safeguard integrity in financial reporting
4.1 the board should establish an audit committee
4.2 the audit committee should be structured so that it consists only of non‑executive directors, with a majority
of independent directors, is chaired by an independent chair who is not chair of the board and has at least
three members
4.3 the audit committee should have a formal charter
principle 5 – Make timely and balanced disclosure
5.1 Companies should establish written policies designed to ensure compliance with asx listing Rule disclosure
requirements and to ensure accountability at a senior executive level for compliance and disclosure of those
policies or a summary of those policies
principle 6 – Respect the rights of shareholders
pages 13–14
page 14
page 15
6.1 Companies should design a communications policy for promoting effective communication with shareholders and
encouraging their participation at general meetings and disclose their policy or a summary of that policy
principle 7 – Recognise and manage risk
pages 16–17
7.1 Companies should establish policies for the oversight and management of material business risks and disclose
a summary of those policies
7.2 the board should require management to design and implement the risk management and internal control systems
to manage the company’s material business risks and report on whether those risks are being managed effectively.
the board should disclose that management has reported as to the effectiveness of the company’s management
of its material business risks
7.3 the board should disclose whether it has received assurance from the chief executive officer (or equivalent) and
the chief financial officer (or equivalent) that the declaration provided in accordance with section 295a of the
Corporations act is founded on a sound system of risk management and internal control and that the system
is operating effectively in all material respects in relation to financial reporting risks
principle 8 – Remunerate fairly and responsibly
8.1 the board should establish a remuneration committee
page 17
8.2 the remuneration committee should be structured so that it consists of a majority of independent directors,
is chaired by an independent chair and has at least three members
8.3 Companies should clearly distinguish the structure of non‑executive directors’ remuneration from that of executive
directors and senior executives
6
2013 dexus annual RepoRtcorporate governance statement dexus Funds Management limited (dxFM) is the Responsible entity of each of the four trusts that comprise dexus property Group (dexus,
dxs). dxFM is also responsible for management of the Group’s third party funds and mandates.
the Board implements a corporate governance framework that applies to all dxFM funds, the dexus Wholesale property Fund and mandates.
the framework is designed to support the strategic objectives of the Group by defining accountability and creating control systems to mitigate the
risks inherent in day‑to‑day operations.
the framework meets the requirements of the asx Corporate Governance principles and Recommendations with 2010 amendments (2nd edition),
and addresses additional aspects of governance that the Board considers important.
Further information relating to dexus’s corporate governance framework, including committee structure, terms of Reference, key policies and
procedures and a reconciliation of the asx principles against its governance framework is available at www.dexus.com/corporategovernance
Principle 1 – lay solid foundations for management and oversight
roles and responsibilities
as dexus comprises four real estate investment trusts, its corporate governance practices satisfy the requirements relevant to unit trusts.
the Board determined that the governance framework will meet the highest standards of a publicly listed company. this includes the conduct
of the annual General Meeting, the appointment of Independent directors by dexus security holders and disclosure of its remuneration report.
Board responsibilities
the framework ensures accountability and a balance of authority by clearly defining the roles and responsibilities of the Board and executive
management. this enables the Board to provide strategic guidance while exercising effective oversight.
the Board is responsible for:
Reviewing and approving dexus’s business objectives and strategies to achieve them. these objectives form performance targets for the
Chief executive officer and the Group Management Committee members. performance against these objectives is reviewed semi‑annually
by the Board nomination, Remuneration & Governance Committee and is a primary input to the remuneration review of Group Management
Committee members
approving the annual business plan
approving acquisitions, divestments and major developments
ensuring that dexus’s fiduciary and statutory obligations to stakeholders are met
the Board is also directly responsible for appointing and removing the Chief executive officer and Company secretary, ratifying the appointment
of the Chief Financial officer and monitoring the performance of the Group Management Committee.
group management Committee responsibilities
the Board appoints a Group Management Committee responsible for achieving dexus’s goals and objectives, including ensuring the prudent
financial and risk management of the Group. throughout the year the Group Management Committee generally met weekly.
Members of the Group Management Committee for 2013 were:
Chief executive officer (and executive director)
Chief Financial officer (and executive director)
executive General Manager – Investor Relations, Marketing & Communications
executive General Manager – office & Industrial (appointed 10 december 2012)
executive General Manager – people & Culture (previously Human Resources)
executive General Manager – property services & Chief operating officer
executive General Manager – strategy, transactions & Research
General Counsel
7
2013 dexus annual RepoRt Principle 2 – structure the board to add value
Board composition
the composition of the Board reflects the duties and responsibilities it discharges and is determined by relevant experience and general
qualifications including:
the ability and competence to make appropriate business decisions
an entrepreneurial talent for contributing to the creation of investor value
Relevant experience in the property, investment and financial services sectors
High ethical standards
exposure to emerging issues
a commitment to the fiduciary and statutory obligations to further the interests of all investors and achieve the Group’s objectives
the incumbent directors bring a range of skills and experience to the Board in the areas of strategy, property investment, funds management,
capital markets, corporate governance and financial and risk management. their expertise enables them to relate to the strategies of dexus and
make a meaningful contribution to the Board’s deliberations.
Size
dexus has determined that the optimal size of the Board should be small enough to be able to act nimbly, but large enough to ensure a diverse
range of views is provided on any issue.
during the year Craig Mitchell, the Chief Financial officer, was appointed to the Board as an executive director. Craig has been with dexus for more
than five years and has more than 20 years of financial management and accounting experience, with more than 15 of those years specialising in
property.
at 30 June 2013, the Board comprised 10 members including eight Independent directors, the Chief executive officer and the Chief Financial
officer. the dxFM constitution allows for the appointment of up to 10 directors.
the tenure of Independent directors at 30 June, 2013 was:
name
Chris Beare (Chair)
elizabeth alexander aM
Barry Brownjohn
John Conde ao
tonianne dwyer
stewart ewen oaM
Richard sheppard
peter st George
Board independence
0 to 3 years
3 to 6 years
6 to 9 years
8 years 10 months
8 years 6 months
8 years 6 months
8 years 10 months
1 year 10 months
1 year 6 months
4 years 2 months
4 years 2 months
Independent directors are independent of management and must be 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:
Been retained as a professional adviser to dexus either directly or indirectly, or as determined by the Board
Been a significant customer of dexus or supplier to dexus (as determined by the Chair)
Held a significant financial interest in dexus either directly or indirectly (as determined by the Chair)
Held a senior executive position at dexus
the Board regularly assesses the independence of its directors, in light of interests disclosed to it.
While directors of the Responsible entity are not technically subject to the approval of security holders, the Board has determined that all directors,
other than the Chief executive officer and Chief Financial officer, will stand for election by dexus stapled security holders. If a nominated director
fails to receive a majority vote that director will not be appointed to the Board of dxFM.
8
2013 dexus annual RepoRtcorporate governance statement dxFM directors, other than the Chief executive officer and Chief Financial officer, 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).
Independent directors are not expected to hold office for more than 10 years or be nominated for more than three consecutive terms, whichever is
the longer. the Chair is an Independent director who is responsible for leadership, the efficient organisation and conduct of the Board’s functions
and briefing directors on issues arising relevant to the Board.
the Board defines the responsibilities and performance requirements of the Chief executive officer and performance is monitored by the Chair.
Biographies outlining the skills and experience of each director are set out on pages 4–5 of this annual Report.
the procedure for selecting and appointing new directors to the Board can be found at www.dexus.com/corporategovernance
meetings
the Board generally meets monthly between February and november, with additional meetings held throughout the year as required.
Board meetings are normally held at the registered office of dexus, although some meetings may be held “offsite” to allow directors to visit dexus
owned and managed properties. to enable participation, video conferencing facilities are utilised as required.
directors are expected to attend at least 75% of meetings a year. For the year to 30 June 2013, there was 100% attendance at all Board meetings.
agenda items for Board meetings are set by the Chair in conjunction with the Chief executive officer and Company secretary and include (but are
not limited to):
Chief executive officer’s report
Company secretary’s report
Minutes of Board Committee meetings
Reports on asset acquisitions, disposals and developments
Management presentations
other business where directors can raise any topical matters
each Board meeting includes time for Independent directors to meet without the Chief executive officer, Chief Financial officer and other executives
present. senior management is available to provide clarification or answer questions directors may have prior to the Board meeting, or to attend the
Board meeting if requested by the directors.
some of the key decisions made by the Board during the year include the:
sale of the remainder of dexus’s us assets
sale of the majority of dexus’s european assets
entering into fund‑through development agreements for two office developments in Brisbane and perth
acquisition of office properties in sydney and Melbourne
Issuance of a us private placement
settlement of a new capital partnership to acquire a 50% in select industrial properties
decision to relocate dexus’s head office to australia square
access to training and information
to ensure that each new director is able to meet his or her responsibilities effectively, newly appointed directors receive a briefing by dexus
management on business strategy and operations.
new directors receive an information pack which addresses the corporate governance framework, committee structures and their terms of
Reference, governing documents, and background reports.
In addition, directors receive regular presentations by management and external advisers regarding sector, fund, and industry specific trends.
directors also attend property tours and are encouraged to pursue professional development opportunities at the Group’s expense.
directors, as required, are encouraged to:
seek independent professional advice, at the Group’s expense
seek additional information from management
directly access senior dexus executives
9
2013 dexus annual RepoRt Principle 2 – structure the board to add value (continued)
performance
the Board nomination, Remuneration & Governance Committee oversees a two‑year Board performance evaluation program in which Board and
committee performance is evaluated in the first year and individual director performance in the next. every third year, an independent consultant is
engaged to facilitate the Board performance review applicable to that year.
during the year, an independent consultant was engaged to facilitate a review of the Board and Board committees addressing:
the role of the Board
Board interaction with management
Board composition and the contribution of each director
Board meeting effectiveness and interaction
effectiveness of sub committees
the review concluded that dexus has a “very strong and capable Board” and made several recommendations for incremental improvement that
included:
Investigating opportunities to optimise the Board’s contribution to dexus’s future growth
develop a more formal board renewal and transition process
Consider changes to business performance monitoring and reporting in relation to strategy execution
dexus’s performance evaluation policy is available at www.dexus.com/corporategovernance
Board support
the Board has a number of committees to assist it in the fulfilment of its responsibilities including:
Board audit, Risk & sustainability Committee
Board Compliance Committee
Board Finance Committee
Board nomination, Remuneration & Governance Committee
Board committee membership and responsibilities are revised regularly to ensure maximum effectiveness. Board committees are generally
supported by specific management committees.
the terms of Reference for the dexus Board and the Board committees are reviewed at least annually and are available
at www.dexus.com/corporategovernance
Independent directors have a standing invitation to attend any or all Board committee meetings. each Board Committee meeting has a standing
agenda item to identify improvements to reporting or processes that would benefit the Committee, as well as any items that require immediate
reference to the Board or a regulator (where applicable).
Board
Board Committees
Responsibility
nomination, Remuneration & Governance Committee
audit, Risk & sustainability Committee
Oversight and Board support
Finance Committee
Compliance Committee
Management Committees
Group Management Committee
Capital Markets Committee
Compliance, Risk & ethics Committee
Continuous disclosure Committee
project steering Committee
Investment Committee
10
Review and support function
2013 dexus annual RepoRtcorporate governance statement Principle 3 – Promote ethical and responsible decision making
Codes of Conduct
to meet statutory and fiduciary obligations of each investor group and to maintain confidence in its integrity, the Board implements a series of clearly
articulated compliance policies and procedures to which all employees must adhere:
the Board considers it important that all employees meet the highest ethical and professional standards and has consequently established
an employee Code of Conduct and a directors’ Code of Conduct, both of which are approved by the Board Compliance Committee. dexus’s
anti‑Bribery policy addresses the acceptance and granting of appropriate gifts and benefits and reinforces the Group’s commitment not to
donate to political parties
the Group strongly supports the disclosure of corrupt conduct, illegality or substantial waste of company assets under its Good Faith Reporting
policy. employees who make such disclosures are protected from any detrimental action or reprisal and an independent external disclosure
management service provider has been appointed to ensure anonymity for those reporting incidents
all employees are required to confirm compliance with key dexus policies annually. In 2013, employees were asked to confirm ongoing compliance
with policies regarding Code of Conduct, Conflicts of Interest and securities trading and Inside Information.
other key ethical policies reviewed during 2013 include:
the Competition & Consumer act policy ensuring dexus’s operations acknowledge and promote competition and fair trading
dexus’s acquisition Rotation policy ensuring fair and equitable allocation of property acquisitions between dexus property Group and its
mandated clients
to further support dexus’s approach to ethical behaviour and responsible decision making, the Internal Compliance, Internal Risk and Internal
audit Committes were amalgamated in 2013 to form dexus’s Compliance, Risk & ethics Committee. the Committee’s focus has been extended
to address oversight of ethical policies and processes as well as a forum to discuss the promotion of ethical behaviour within the Group. all
dexus Board and Corporate policies are available at www.dexus.com/corporategovernance
insider trading and trading in deXuS securities
the Group’s securities trading policy applies to directors and employees who wish to invest in dexus securities for themselves or on behalf of
an associate.
the policy requires any director who wishes to trade in dexus securities, to obtain written approval from the Chair and Company secretary.
employees wishing to trade in dexus securities must obtain written approval from the Chief executive officer and General Manager, Compliance,
Risk & Governance before entering into a transaction. dexus directors and employees are only permitted to trade dexus securities in defined
trading windows, following the appropriate approvals.
In the event that the Chair or Chief executive officer considers that there is the potential that inside information may be held or that a significant
conflict of interest may arise, trading will not be permitted, even in defined trading windows.
the securities trading policy is available at www.dexus.com/corporategovernance
the Board determines that a minimum holding of 50,000 securities should be acquired by each Independent director by 30 June 2015.
newly appointed Independent directors will be required to purchase 50,000 securities within their first three year term.
at 30 June 2013, Independent directors’ holdings in dxs were:
Chris Beare
100,000
elizabeth alexander
100,000
Barry Brownjohn
50,000
John Conde
100,000
tonianne dwyer
100,000
stewart ewen
peter st George
100,000
104,000
Richard sheppard
100,000
under the dexus transitional plan, darren steinberg (executive director) was awarded 453,417 performance Rights under the dexus
transitional plan and Craig Mitchell (executive director) was awarded 539,782 performance Rights under the dexus transitional plan during the
2013 financial year.
11
2013 dexus annual RepoRt Principle 3 – Promote ethical and responsible decision making (continued)
Conflicts of interest and related party dealings
the Group’s Conflict of Interest and Related party policies address the management of conflicts of interest and related party transactions which may
arise:
When allocating property transactions, where a new property acquisition opportunity meets the mandate of more than one client
When negotiating leases, where a prospective tenant is interested in more than one property owned by different dexus clients
When executing transactions between dexus clients
Where a conflict of interest is identified, the Compliance, Risk & Governance team liaises with the parties concerned to ensure effective and timely
management of the conflict. Where information barriers are put in place, the team monitors compliance with the relevant policies.
on a monthly basis, the General Counsel reports to the Board on related party transactions and the General Manager, Compliance, Risk & Governance
reports conflicts of interest to the Board Compliance Committee each quarter.
during the 12 months ending 30 June 2013, dexus managed several related party transactions where dexus and dexus Wholesale property
Fund jointly acquired properties. the interests of each party were represented by dedicated teams and co‑owner agreements were executed.
dexus moved its head office to australia square in april 2013, a property jointly owned by dexus and the Gpt Group. teams were established to
represent the interests of dexus as joint owner and dexus as tenant. Information barriers remained in place throughout negotiations.
responsible investment
dexus’s environmental Management policy aims to minimise the overall environmental impact of its operations, both in the development of new
properties and the management of existing properties. as a signatory to the united nations principles of Responsible Investment (unpRI), dexus
incorporates these principles into its investment decisions.
diversity
dexus comprises a socially and culturally diverse workplace and has created a culture that is tolerant, flexible and adaptive to the changing
needs of its industry. dexus’s is committed to diversity and promotes a work 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 dexus’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. dexus acknowledges and fulfils its obligations under relevant employment legislation.
as at 30 June 2013, dexus’s workforce profile places women at 51% of total staff and 22% of senior managers. two of eight (25%) non‑executive
directors are women.
the dexus gender diversity target by 30 June 2015 is that 33% of non‑executive directors are to be female and 33% of senior management roles
are to be held by women.
dexus’s diversity principles and diversity target are available at www.dexus.com/corporategovernance
12
2013 dexus annual RepoRtcorporate governance statement Principle 4 – safeguard integrity in financial reporting
Board audit, risk & Sustainability Committee
to ensure the factual presentation of each trust’s financial position, dxFM has in place a structure of review and authorisation, where the Board
audit, Risk & sustainability Committee reviews (among other matters):
Financial statements of each entity
Independence and competence of the external auditor
semi‑annual management representations to the Committee, affirming the veracity of each entity’s Financial statements
the Committee’s terms of Reference require that all members are Independent directors with financial expertise and an understanding of the
industry in which the Group operates. the Committee:
Has access to management
Has unrestricted access to external auditors without management present
Has the opportunity to seek explanations and additional information as it sees fit
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, not less than four times a year, and the external auditor is invited
to attend all meetings.
For the 12 months ending 30 June 2013, the members of the Committee were:
Barry Brownjohn, Chair, Independent director
elizabeth alexander aM, Independent director
Richard sheppard, Independent director
the following reports are provided to the Committee:
the Chief executive officer and the Chief Financial officer make representations on a semi‑annual basis on the veracity of the Financial
statements and financial risk management systems
the Compliance, Risk & ethics Committee completes a Fraud Risk questionnaire semi‑annually to advise of any instances of actual or perceived
fraud during the period
pricewaterhouseCoopers continues its appointment as statutory auditor of dxFM and its related trusts and entities.
In order to ensure the independence of the statutory auditor, the Committee has responsibility for approving the engagement of the auditor for any
non‑audit service greater than $100,000. at 30 June 2013, fees paid to the external auditor for non‑audit services were 12.3% of audit fees (15.3% at
30 June 2012).
dexus’s policy on the selection and appointment of the external auditor is available at www.dexus.com/corporategovernance
Board Compliance Committee
the Corporations Act 2001 does not require dxFM to maintain a Board Compliance Committee as more than half its directors are external directors.
dexus has determined that a Board Compliance Committee provides additional control, oversight and independence of the compliance function.
the Board Compliance Committee reviews compliance matters and monitors dxFM compliance with the requirements of its australian Financial
services licence and of the Corporations Act 2001 as it relates to Managed Investment schemes. the scope of the Committee includes all trusts
and the Group’s investment mandates.
the Committee only includes members who are familiar with the requirements of Managed Investment schemes and have risk and compliance
experience. Committee members are encouraged to obtain independent professional advice in the satisfaction of their duties at the cost of the Group
and independent of management. during the 12 months ending 30 June 2013 no member of the Board Compliance Committee sought independent
professional advice.
at 30 June 2013, the Committee comprised three members, two external members (who satisfy the requirements of section 601JB(2) of the
Corporations Act 2001) and one executive of the Group.
the members of the Board Compliance Committee were:
andy esteban, Chair, external member
tonianne dwyer, external member (and Independent director)
John easy, executive member
the Compliance plan auditor is invited to each Board Compliance Committee meeting.
the skills, experience and qualifications of tonianne dwyer are detailed on page 4 and details for John easy are on page 18 in this annual Report.
13
2013 dexus annual RepoRt Principle 4 – safeguard integrity in financial reporting (continued)
Board Compliance Committee (continued)
andy esteban holds a Bachelor of Business majoring in accounting. andy 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, specialising in implementing and monitoring risk management and compliance frameworks in the financial
services industry. He has provided 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, a director of HFa Holdings ltd and Chair of its audit and Risk Committee and
a member of its Remuneration and nomination Committee; Chair of the Compliance Committees of aberdeen asset Management ltd, deutsche
asset Management australia ltd, Mosaic advisers and Grant samuel; and an Independent Member of the Compliance Committee of australian unity
Funds Management ltd, Celsius Investment Management limited, schroder Investment Management australia ltd, Fidelity International Investment
Management limited and alliance Bernstein.
the Committee reports breaches of the Corporations Act 2001 or of the provisions contained in any trust’s Constitution or Compliance plans to the
dxFM Board, and reports to asIC in accordance with legislative requirements.
In accordance with dexus’s Good Faith Reporting policy, employees have access to Board Compliance Committee members to raise any concerns
regarding unethical business practices. to enable the Board Compliance Committee to fulfil its obligations effectively, the Compliance, Risk & ethics
Committee was established to monitor the effectiveness of the Group’s internal compliance and control systems.
Furthermore, the Chief executive officer makes a quarterly representation to the General Manager, Compliance, Risk & Governance, regarding
compliance with policies and procedures. any significant exceptions are reported to the Board Compliance Committee.
the Chief Financial officer also provides quarterly certification to the Board Compliance Committee as to the continued adequacy of financial risk
management systems.
Principle 5 – Make timely and balanced disclosure
Continuous disclosure
dxFM’s Continuous disclosure Committee ensures timely and accurate continuous disclosure of all material matters that impact the Group.
Committee members comprise:
Chief executive officer
Chief Financial officer
eGM – Investor Relations, Marketing & Communications
eGM – strategy, transactions & Research
General Counsel & Company secretary
the Committee meets on a regular basis to consider whether any disclosure obligation is likely to arise as a result of the activities being undertaken by
the Group. the Continuous disclosure Committee ensures:
Investors continue to have equal and timely access to material information, including the financial status, performance, ownership and
governance of the trusts
announcements are factual and presented in a clear and balanced way
Management is required to provide a quarterly attestation to the Compliance, Risk & Governance team that there have been no issues within their
area of responsibility that would be subject to continuous disclosure requirements.
Compliance with the Continuous disclosure policy is subject to ongoing monitoring, the results of which are reported to the Board Compliance
Committee. the policy is available at www.dexus.com/corporategovernance
Following the release of asx Guidance note 8 – Continuous disclosure, the Board considered its current practice and approved various changes to
more closely reflect the revised Guidelines including:
enhancement to the Committee’s terms of Reference
enhancement of the Continuous disclosure policy including clarification of the type of event that would require disclosure
Confirmation of issues that would require reference to the Board (or delegate) to determine and approve disclosure
explanation of the process to be followed when assessing market rumours and the existence of false markets
14
2013 dexus annual RepoRtcorporate governance statement Principle 6 – Respect the rights of shareholders
annual general meeting
the Board conducts an annual General Meeting (aGM) increasing the number of opportunities it has to interact with dexus security holders.
each aGM is designed to:
supplement effective communication with security holders
provide them with ready access to balanced and understandable information
Increase the opportunities for participation
Facilitate security holders’ rights to appoint directors to the Board of dxFM
the Group’s policy is that all directors attend the aGM.
the external auditor of the trusts attends each aGM and is available to answer investor questions regarding the conduct of the audits of the trusts’
financial records and their Compliance plans, as well as the preparation and content of the auditor’s Report.
dexus engages an independent service provider, link Market services, to conduct any security holder vote required at the aGM. to facilitate
participation, the aGM can be accessed via webcast for those security holders unable to attend the meeting.
Stakeholder communication
In addition to conducting an aGM, the Group has an investor relations and communications strategy that promotes an informed market and
encourages participation with 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 available at www.dexus.com/dxs
the website also provides historical distribution and tax information and other trust related information. analyst briefings are undertaken
on a quarterly basis and enquiries received from investors are addressed in a timely manner in accordance with dexus’s policy on the handling of
enquiries and complaints.
In addition, institutional investors are invited to meet with Independent directors twice a year (outside of the aGM) to discuss corporate governance
or other areas of interest. Information provided at these meetings is subject to dexus’s Continuous disclosure policy.
In 2013, dexus launched an Investor Relations app to help in ensuring investors have instant access to corporate and stock information on iphone,
ipad and android mobile devices.
the Communications policy is available at www.dexus.com/corporategovernance
15
2013 dexus annual RepoRt Principle 7 – Recognise and manage risk
Board audit, risk & Sustainability Committee
the Board audit, Risk & sustainability Committee oversees risk management within dexus. the Committee oversees the Group’s enterprise risk
management practices, as well as environmental management, sustainability initiatives and internal audit practices. It also oversees the effectiveness
of the Group’s Risk Management Framework.
dexus’s Risk Management policy is available at www.dexus.com/corporategovernance
Members of the Board audit, Risk & sustainability Committee during the year to 30 June 2013 were:
Barry Brownjohn, Chair, Independent director
elizabeth alexander aM, Independent director
Richard sheppard, Independent director
While some risks are identified, managed and monitored internally, dexus has appointed independent experts to undertake monitoring of health
and safety, environmental risks and other risks where expert knowledge is essential to ensure dexus has in place best practice processes and
procedures. the Committee is empowered to engage consultants, advisers or other experts independent of management.
risk management
the management of risk is an important aspect of dexus’s activities, and the Group has a segregated risk function reporting to the General
Counsel on a day‑to‑day basis, as well as a Compliance, Risk & ethics Committee that has an independent reporting line to the Board audit, Risk &
sustainability Committee. the General Manager, Compliance, Risk & Governance has direct access to the Chief executive officer and Independent
directors.
Risks to dexus come from numerous sources, driven by both internal and external factors and include:
strategic risks
Market risks
Health and safety risks
operational risks
environmental risks
Financial risks
Regulatory risks
Fraud risks
the Compliance, Risk & Governance team promotes an effective risk and compliance culture by providing advice, drafting and updating relevant risk
and compliance policies and procedures, conducting training and monitoring and reporting adherence to key policies and procedures. Frameworks
have been developed and implemented in accordance with Iso 31000:2009 (Risk Management) and as 3806:2006 (Compliance programs).
the functions of the Compliance, Risk & Governance team include risk and compliance management, corporate governance and internal audit.
the ongoing effectiveness of the risk management and internal control systems is reported by the General Manager, Compliance, Risk & Governance
to the Board audit, Risk & sustainability Committee and Board Compliance Committee.
dexus’s internal control procedures are also subject to annual independent verification as part of the Gs007 (audit Implications of the use of
service organisations for Investment Management services) audit.
16
2013 dexus annual RepoRtcorporate governance statement internal audit
the internal audit program has a three year cycle, the results of which are reported quarterly to the Compliance, Risk & ethics Committee and to the
Board audit, Risk & sustainability Committee.
dexus adopts a co‑sourcing internal audit model. 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 the Committee
meeting to keep directors informed about these trends.
Board finance Committee
the Group is subject to significant financial risk, including interest rate and foreign exchange exposures. the Board Finance Committee is
responsible for the effective management of these exposures. the Committee reviews and recommends financial risk management policies, hedging
and funding strategies, forward looking financial management processes and periodic market guidance for consideration by the Board. to support
the Committee’s deliberations, a management committee, the Capital Markets Committee has been established.
Members of the Board Finance Committee during the year to 30 June 2013 were:
peter st George, Chair, Independent director
Chris Beare, Independent director
Richard sheppard, Independent director (appointed 1 July 2012)
Principle 8 – Remunerate fairly and responsibly
Board Nomination, remuneration & governance Committee
the Board nomination, Remuneration & Governance Committee oversees all aspects of:
director and executive remuneration
Board renewal
director, Chief executive officer, and management succession planning
Board and committee performance evaluation
director nominations
the Committee comprises three Independent directors:
John Conde ao, Chair, Independent director
Chris Beare, Independent director
stewart ewen oaM, Independent director
the Chief executive officer and executive General Manager, people & Culture attend the Board nomination, Remuneration & Governance
Committee meeting by invitation.
It is the practice of the Board nomination, Remuneration & Governance Committee to meet without executives, and non‑committee members are
not in attendance when their own performance or remuneration is discussed.
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 report commencing on page 19. there are no schemes for retirement benefits (other than
compulsory contributions to superannuation) for Independent directors.
17
2013 dexus annual RepoRt the directors of dexus Funds Management limited (dxFM) as Responsible entity of dexus diversified trust (ddF or the trust) present their
directors’ Report together with the consolidated Financial statements for the year ended 30 June 2013. the consolidated Financial statements
represent ddF and its consolidated entities, dexus property Group (dxs or the Group).
the trust together with dexus Industrial trust (dIt), dexus office trust (dot) and dexus operations trust (dxo) form the 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, unless otherwise stated:
Directors
Christopher t Beare
elizabeth a alexander, aM
Barry R Brownjohn
John C Conde, ao
tonianne dwyer
stewart F ewen, oaM
Craig d Mitchell
W Richard sheppard
darren J steinberg
peter B st George
Appointed
4 august 2004
1 January 2005
1 January 2005
29 april 2009
24 august 2011
4 august 2004
12 February 2013
1 January 2012
1 March 2012
29 april 2009
1.2 Company Secretaries
the names and details of the Company secretaries of dxFM as at 30 June 2013 are as follows:
Tanya L Cox MBa MaICd FCsa FCIs
appointed: 1 october 2004
tanya is the executive General Manager, property services and Chief operating officer of dexus property Group and is responsible for the tenant
and client service delivery model, sustainability practices, information technology solutions and company secretarial services across the Group.
tanya has over 25 years’ experience in the finance industry. prior to joining dexus in July 2003, tanya held various general management positions
over the previous 15 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 director of low Carbon australia limited, australian athletes With a disability
limited and a number of not‑for‑profit organisations.
tanya is a member of the australian Institute of Company directors and a fellow of the Institute of Chartered secretaries of australia.
tanya has an MBa from the australian Graduate school of Management, a diploma in applied Corporate Governance and was a finalist in the 2005
nsW telstra Business Woman of the year awards.
John C Easy B Comm llB FCsa FCIs
appointed: 1 July 2005
John is the General Counsel and Company secretary of all dexus Group companies and is responsible for the legal function and compliance, risk
and governance systems and practices across the Group.
during his time with the Group, John has been involved in the establishment and public listing of deutsche office trust, the acquisition of the
paladin and axa property portfolios, and subsequent stapling and creation of dexus property Group.
prior to joining dexus 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. John is a Fellow Member of the Institute of Chartered secretaries of australia.
John is a member of the Board Compliance Committee and Chair of the Continuous disclosure Committee.
18
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 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 nine times during the year. eight Board meetings were main meetings and one meeting was held to consider specific business.
Directors
Christopher t Beare
elizabeth a alexander, aM
Barry R Brownjohn
John C Conde, ao
tonianne dwyer
stewart F ewen, oaM
Craig d Mitchell1
W Richard sheppard
darren J steinberg
peter B st George
Main
meetings held
Main
meetings attended
Specific
meetings held
Specific
meetings attended
8
8
8
8
8
8
3
8
8
8
8
8
8
8
8
8
3
8
8
8
1
1
1
1
1
1
–
1
1
1
1
1
1
1
1
1
–
1
1
1
1. directorship commenced 12 February 2013.
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, Risk &
Sustainability Committee
Board Compliance
Committee
Board Nomination,
Remuneration &
Governance Committee
Board Finance
Committee
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Christopher t Beare
elizabeth a alexander, aM
Barry R Brownjohn
John C Conde, ao
tonianne dwyer
stewart F ewen, oaM
W Richard sheppard
peter B st George
–
4
4
–
–
–
4
–
–
4
4
–
–
–
4
–
–
–
–
–
4
–
–
–
–
–
–
–
4
–
–
–
6
–
–
6
–
6
–
–
6
–
–
6
–
6
–
–
4
–
–
–
–
–
4
4
4
–
–
–
–
–
4
4
3
Remuneration Report
3.1 overview
the Board has pleasure in presenting the Remuneration Report for the dexus property Group (Group). as with prior years, the Remuneration
Report has been prepared in accordance with the Corporations act and relevant accounting standards. Whilst the Group is not statutorily required
to prepare such a report, the Board continues to believe that the disclosure of the Group’s remuneration practices is in the best interests of all
security holders.
effective 1 July 2012, the Group implemented its new remuneration framework, which includes a new short‑term Incentive (stI) and long‑term
Incentive (ltI) plan. the operation of these plans received security holder approval at the Group’s annual General Meeting on 5 november 2012.
the Board believes that the Group’s remuneration framework encourages executives to perform in the best interests of security holders. short term
financial and operational objectives are approved annually by the Board for each executive, promoting alignment between investor returns and the
rewards an executive can receive under the stI plan. In addition, the Board has determined a set of financial performance hurdles within the ltI
plan which provide the executive with a performance and retention incentive which is strongly linked to security holder returns over the longer‑term.
19
2013 dexus annual RepoRt 3
Remuneration Report (continued)
3.1 overview (continued)
the main executive remuneration actions for the year ending 30 June 2013 were:
the implementation of the new remuneration framework effective 1 July 2012
no fixed remuneration increases for executives
the closure of the dexus performance payment (dpp) and dexus deferred performance payment (ddpp) plans
the Board exercised its discretion to not apply a performance multiplier to vesting legacy ddpp plan outcomes
performance pay outcomes for executives approved by the Board reflect the Group’s strong financial and operational results
non‑executive directors base fees remain unchanged since 1 July 2010
effective 1 July 2013, the Board has approved an average fixed remuneration increase of 2% for executives and 3% for other employees, noting that
that the fixed remuneration for the Chief executive officer will remain unchanged.
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 2013. the information provided in this Report has been audited in accordance with the provisions of section 308 (3C) of the
Corporations Act 2001.
3.2 Key management personnel
In this report, Key Management personnel (KMp) are those individuals having the authority and responsibility for planning, directing and controlling
the activities of the Group, either directly or indirectly. they comprise:
non‑executive directors
executive directors (Chief executive officer & Chief Financial officer)
Key executives considered KMp under the Corporations Act 2001 (executive KMp)
Below are the individuals determined to be KMp of the Group, classified between non‑executive directors, executive directors and executive KMp:
Non-Executive Directors
Non-Executive Director
Christopher t Beare
Title
Chair
elizabeth a alexander, aM
director
Barry R Brownjohn
John C Conde, ao
tonianne dwyer
stewart F ewen, oaM
W Richard sheppard
peter B st George
Executive Directors
director
director
director
director
director
director
Executive Director
Position
darren J steinberg
Chief executive officer
Craig d Mitchell
Chief Financial officer
Executive KMP
Executive KMP
Kevin l George
Position
executive General Manager, office & Industrial
Ross G du Vernet
executive General Manager, transactions, strategy & Research
Group Management Committee members – previously included as Executive KMP
Former Executive KMP
Position
executive General Manager, property services & Chief operating officer
General Counsel & Company secretary
tanya l Cox
John C easy
20
KMP 2012
KMP 2013
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
KMP 2012
part‑Year
P
KMP 2012
n/a
no
KMP 2013
P
P
KMP 2013
part‑Year
P
KMP 2012
KMP 2013
P
P
no
no
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 Ms Cox and Mr easy continue as Group Management Committee members. the current organisation structure and membership of internal
committees have led to a change in those considered by the Board to be executive KMp for the 2013 year. the Board has indicated that the
composition of executive KMp may change from year to year in line with the strategic and operational focus of the Group.
3.3
Board Nomination, remuneration & governance Committee
the objectives of the Committee are to assist the Board in fulfilling its responsibilities by overseeing all aspects of non‑executive director and
executive remuneration, as well as Board nomination and performance evaluation. primarily, the responsibilities of the Committee are to review and
recommend to the Board:
Board and Ceo succession plans
performance evaluation procedures for the Board, its committees and individual directors
the nomination, appointment, re‑election and removal of directors
the Group’s approach to remuneration, including design and operation of employee incentive plans
executive performance and remuneration outcomes
non‑executive directors’ fees
the Committee comprises three independent non‑executive directors. For the year ended 30 June 2013 Committee members were:
Non-Executive Director
Title
John C Conde, ao
Committee Chair
Christopher t Beare
Committee Member
stewart F ewen, oaM
Committee Member
2012
2013
P
P
P
P
P
P
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 Mr Beare
and Mr ewen, each of whom has significant management experience in the property and financial services sectors.
the Committee operates independently from management, and may at its discretion appoint external advisors or instruct management to compile
information for its consideration. the Ceo attends certain Committee meetings by invitation, where management input is required. the Ceo is not
present during any discussions related to his own remuneration arrangements.
during the year the Committee appointed egan associates to provide remuneration advisory services. egan associates was paid a total of $12,705
for remuneration recommendations made to the Committee and $39,097 for other advisory services. the Committee is satisfied the advice received
from egan associates is free from undue influence from the KMp to whom the remuneration recommendations relate. egan associates also
confirmed in writing that the remuneration recommendations were made free from undue influence by the relevant KMp.
the 2012 Remuneration Report received positive security holder support at the 2012 annual General Meeting with a vote of 98.3% in favour.
3.4 executive remuneration
Context
the Board believes that executives should be rewarded at levels consistent with the complexity and risks involved in their position. Incentive awards
should be scaled according to the relative performance of the Group, as well as business unit performance and individual effectiveness.
the Group’s remuneration principles and target remuneration structure is:
Fair and
competitive
Aligned
to investor
interests
Link
between
performance
and reward
Attract,
motivate
and retain
talent
FIXED
REMUNERATION
+
VARIABLE
‘AT-RISK’
REMUNERATION
21
2013 dexus annual RepoRt 3
Remuneration Report (continued)
3.4 executive remuneration (continued)
the Group requires, and needs to retain, an executive team with significant experience in:
the office, industrial and retail property sectors
property management, including securing new tenancies under contemporary lease arrangements, asset valuation and related financial
structuring and property development in its widest context
Capital markets, funds management, fund raising, joint venture negotiations and the provision of advice and support to independent
investment partners
treasury, tax and compliance
In this context the Committee reviews trends in employee reward structures and strategies embraced across these sectors, including:
Comparable international funds and asset managers which have an active presence in australia
asx listed entities
Boutique property asset managers and consultants
Where relevant, information from private equity and hedge funds will be considered.
at the executive level, the Committee reviews feedback from remuneration advisers, proxy advisers and institutional investors, and considers
stakeholder interests at each stage of the remuneration review process.
3.5 remuneration structure
Remuneration mix
the remuneration structure for executives comprises fixed remuneration, a short‑term incentive and a long‑term incentive. the mix between
these components varies according to the individual’s position and is determined based on the Group’s remuneration principles detailed above.
the remuneration mix for executives during 2013 was:
Executive
darren J steinberg
Craig d Mitchell
Kevin l George
Ross G du Vernet
Fixed
35%
40%
40%
50%
Target STI
Target Deferred STI
26%
30%
30%
26%
9%
10%
10%
9%
LTI
30%
20%
20%
15%
the chart below shows the remuneration structure for executives expressed as a percentage of fixed remuneration at both target and
outperformance (stretch) levels.
LTI
Deferred STI
STI
Fixed
85%
25%
75%
85%
31%
94%
50%
25%
75%
50%
31%
94%
30%
17%
53%
30%
22%
66%
100%
100%
100%
100%
100%
100%
Target
Outperformance
Target
Outperformance
Target
Outperformance
CEO
CFO/EGM, Office & Industrial
EGM, Transactions, Strategy & Research
K
S
I
R
T
A
D
E
X
I
F
22
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013
total remuneration
How does the Board determine
total remuneration?
the Committee reviews a considerable amount of information from a variety of sources to ensure an appropriate
outcome reflecting market practice (incorporating various benchmarks) is achieved. these sources include:
publicly available remuneration reports of a‑ReIt competitors
publicly available remuneration reports from asx listed companies with similar market capitalisation and
complexity
advice on remuneration levels of privately held property, funds management and private equity owned
companies
salary survey data from Hart Consulting, avdiev, aon Hewitt, FIRG and others as appropriate
advice from external advisors appointed by the Committee such as egan associates
the comparator group of companies and market data considered as part of the above process is significantly
larger than the comparator group of companies adopted for assessment of the Group’s relative tsR performance
under its ltI plan (refer below). executives are typically recruited from the former group, whereas the Group’s
performance will be assessed appropriately with respect to the latter.
fixed remuneration
What is Fixed Remuneration?
Fixed remuneration is the regular pay (base salary and statutory superannuation contributions) an executive
receives in relation to his/her role. It reflects the complexity of the role, as well as the skills and competencies
required to fulfil it, and is determined having regard to a variety of information sources to ensure the quantum
is fair and competitive.
How is Fixed Remuneration
determined?
the Board sets fixed remuneration around the median level of comparable companies after making adjustments
for the different risk profiles of those companies (refer to total remuneration above). Group and individual
performance is considered during the annual remuneration review process.
Short-term incentive (Sti) plan
What is the stI plan?
the stI plan provides the executive with an opportunity to achieve an annual remuneration outcome in addition
to fixed remuneration, subject to the achievement of pre‑agreed Group, divisional and individual performance
objectives which are set out in a personalised balanced scorecard.
How much can be earned
under the stI plan?
expressed as a percentage of fixed remuneration, executives can earn the following incentive payments under
the stI plan:
Ceo
CFo/eGM, office & Industrial
eGM, strategy, transactions & Research
Target
100%
100%
70%
Outperformance
125%
125%
88%
aggregate performance below pre‑determined thresholds would result in no award being made under the
stI plan.
the amount each executive can earn is dependent on how he/she performs against a balanced scorecard
of KpIs that is set at the beginning of each year. the balanced scorecard is arranged in categories and each
category is weighted differently depending on the specific accountabilities of each executive. If an executive
does not meet threshold performance in a category, the score for that category will be zero.
KpIs at the target level are set with an element of stretch against threshold performance, which ensures that it is
difficult for an executive to score 100% in any category. Following the same theme, KpIs at the outperformance
level have a significant amount of stretch, and would require exceptional outcomes to be achieved. KpIs at both
the target and outperformance levels incorporate year‑on‑year growth.
When is the stI paid?
august of the financial year immediately following the performance period, following the sign‑off of statutory
accounts and announcement of Group’s annual results.
How does the deferral
component operate?
25% of any award under the stI plan will be deferred and awarded in the form of performance rights to dxs
securities.
the rights will vest in two equal tranches, 12 and 24 months after being awarded. they are subject to
claw‑back and continued employment, and are based on a deferral period commencing 1 July after the
relevant performance period.
23
2013 dexus annual RepoRt 3
Remuneration Report (continued)
3.5 remuneration structure (continued)
Short-term incentive (Sti) plan (continued)
How is the allocation of deferred
stI determined?
the number of performance rights awarded is based on 25% of the stI value awarded to the executive divided
by the volume weighted average price (VWap) of securities 10 trading days either side of the first trading day of
the new financial year.
How are distributions treated
during the deferral period?
executives will be entitled to the benefit of distributions paid on the underlying dxs securities prior to vesting,
through the issue of additional performance rights.
Can deferred stI be forfeited?
Forfeiture will occur should the executive’s employment terminate within six months of the grant date for any
reason, or if the executive voluntarily resigns or is terminated for cause prior to the vesting date.
How is the stI plan aligned to
security holder interests?
notwithstanding the above, if an executive’s employment is terminated for reasons such as retirement,
redundancy, re‑organisation, change in control or other unforeseen circumstances, the Committee will
recommend whether the executive should remain in the plan as a good leaver, for decision by the Board.
the stI plan is aligned to security holder interests in the following ways:
as an immediate reward opportunity to attract, motivate and retain talented executives who can influence the
future performance of the Group
through a 25% mandatory stI deferral for executives, allowing for future clawback of stI awards in the event
of a material misstatement of the Group’s financial position
long-term incentive (lti) plan
What is the ltI plan?
the ltI is an incentive grant which rewards executives for sustained earnings and security holder returns and is
delivered in the form of performance rights to dxs securities.
How are grants under the ltI
plan determined?
executives receive a grant of performance rights to dxs securities (dependent on their role and responsibilities)
under the ltI plan equivalent to the following (expressed as a percentage of Fixed Remuneration):
Grant as a % of fixed remuneration
Ceo
CFo/eGM, office & Industrial
eGM, strategy, transactions & Research
85%
50%
30%
How does the ltI plan work?
performance rights are converted into dxs securities upon achievement of performance conditions set by
the Board. performance against the selected hurdles will be assessed in two equal tranches over two periods,
three and four years after the grant date. If the performance conditions are not met over either period, then
the respective performance rights will be forfeited. there is no re‑testing of forfeited rights.
Can an ltI grant be forfeited?
If pre‑determined performance hurdles are not met then the relevant part of the grant will not vest and those
rights will be forfeited.
additionally, forfeiture will occur should the executive’s employment terminate within 12 months of the grant
date for any reason, or if the executive voluntarily resigns or is terminated for cause prior to the vesting date.
notwithstanding the above, if an executive’s employment is terminated for reasons such as retirement,
redundancy, re‑organisation, change in control or other unforeseen circumstances, the Committee will
recommend whether the executive should remain in the plan as a good leaver, for decision by the Board.
What are the performance
hurdles?
the Board sets the performance hurdles for the ltI plan on an annual basis. For the 2013 ltI grant, a set of
external and internal hurdles has been selected.
notably, the Board has clarified the operation of the Relative tsR component of the ltI plan. the previously
communicated 50% weighting to Relative tsR will be split into two distinct groups, the first being a standard
Relative tsR measurement against listed peers, the second being a Relative Roe measurement against unlisted
peers. the Board feels this is a more accurate comparison given the way investors measure the performance of
listed and unlisted entities.
the four performance hurdles for the 2013 ltI plan are:
External performance hurdles (50%)
25% is based on the Group’s relative performance against a total security holder Return (Relative tsR)
performance hurdle measured against a peer group of listed entities within the a‑ReIt sector
– tsR represents an investor’s return, calculated as the percentage difference between the initial amount
invested and the final value of dxs securities at the end of the relevant period, assuming distributions
were reinvested
24
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 What are the performance
hurdles?
(continued)
25% is based on the Group’s relative performance against a Return on equity (Relative Roe) performance
hurdle measured against a peer group of unlisted entities within the a‑ReIt sector
– Roe represents the annualised composite rate of return to security holders, calculated as a percentage,
comprising the change in net tangible asset value per security together with the distributions paid to
security holders per security, divided by the net tangible asset value per security at the beginning of
the period
Internal performance hurdles (50%)
25% is based on the Group’s performance against a predetermined Funds From operations (FFo) per
security growth hurdle
– For the purpose of these performance hurdles, FFo is defined as per the definition adopted by the
property Council of australia
25% is based on the Group’s performance against a predetermined Return on equity performance hurdle
– Roe represents the annualised composite rate of return to security holders, calculated as a percentage,
comprising the change in net tangible asset value per security together with the distributions paid to security
holders per security, divided by the net tangible asset value per security at the beginning on the period
How are the performance
hurdles measured?
Relative TSR and Relative ROE
Vesting under both the Relative tsR & Relative Roe measures will be on a sliding scale reflecting relative
performance against a comparator group of entities.
nil vesting for performance below the median of the comparator group
50% vesting for performance at the median of the comparator group
straightline vesting for performance between the 50th and 75th percentile
100% vesting for performance at or above the 75th percentile
the listed and unlisted comparator groups have been reviewed and selected by the Board as being appropriate
entities within similar asset classes, investment risk/return profiles and market capitalisation/size. the 2013
ltI grant comparator groups are:
listed: Cpa, IoF, Gpt, CFx, WRt, sCp, CMW and FdC
unlisted: aWoF, GWoF, appFC, ICpF, Ispt, aCpp, QpF and appFR
the Board reserves the right to review the peer group annually, with relative performance monitored by an
independent external advisor at 30 June each year.
FFO growth and ROE
Vesting under both the FFo Growth & Roe measures will be on a sliding scale reflecting performance against
pre‑determined performance hurdles set by the Board.
nil vesting for below target performance
50% vesting for target performance
straightline vesting between target and outperformance
100% vesting for outperformance
What are the absolute ltI
hurdles for the 2013 grant?
Having determined the Group’s strategy, the Board has adopted the following FFo growth and Roe performance
hurdles for the 2013 ltI grant:
How is the ltI plan aligned to
security holder interests?
FFo Growth target of 3% – with outperformance at 5.5%
Roe target of 9% – with outperformance at 11%
these targets are measured as the per annum average over the three and four year grant periods.
aligned to long‑term security holder interests in the following ways:
as a reward to executives when the Group’s overall performance exceeds specific predetermined earnings
and security holder return benchmarks
as a reward mechanism which encourages executive retention and at the same time allows for future
clawback of ltI grants for financial underperformance, deliberate misrepresentation or fraud
aligning the financial interests of security holders with executives through exposure to dxs securities
and the Group’s performance
encouraging and incentivising executives to make sustainable business decisions within the Board‑approved
risk appetite and strategy of the Group
25
2013 dexus annual RepoRt 3
Remuneration Report (continued)
3.5 remuneration structure (continued)
long-term incentive (lti) plan (continued)
What policies and procedures
exist to support the integrity of
the ltI plan?
the administration of the ltI plan is supported by the ltI plan guidelines which provide executives with the
rules of the plan and guidance as to how it is to be administered.
executives are prevented from hedging their exposure to unvested dxs securities. trading in dxs securities or
related products is only permitted with the permission of the Ceo.
the Group also has Conflict of Interest and Insider trading policies in place to support the integrity of the ltI
plan, which extends to family members and associates of the executive.
the Board has appointed link Market services as trustee and administrators of the dexus performance Rights
plan trust, which is the vehicle into which unvested units are purchased on‑market and held in trust for the
executive pending performance assessment.
How is the allocation of
performance rights determined?
the number of performance rights granted is based on the grant value to the executive (% of fixed
remuneration) divided by the volume weighted average price (VWap) of securities 10 trading days either side
of the first trading day of the new financial year.
How are distributions treated
prior to vesting?
executives will not be entitled to distributions paid on the underlying dxs securities prior to the performance
rights vesting.
the operation of all incentive plans is at the discretion of the Board which retains the right to discontinue, suspend or amend the operation of such plans.
For both the stI and ltI plans, where incentive grants involve dxs securities, it is the Board’s current position that dxs securities be acquired
on‑market and not through the issue of new securities.
3.6 performance pay
Group performance
fY13 highlights
Group
12.1% increase in
distribution per security
Portfolio
Capital Management
Funds Management
Transactions
leased 629,209 square
metres of space across
the total portfolio
Raised $300 million of us
private placement notes
Increased funds under
management by 9.5%,
including over $820 million
of new equity for dWpF
achieved a 12% premium
on prior book value for
the sale of the remaining
us portfolio
achieved a 22.1% one‑year
total security holder return
achieved 1.6% growth in
like for like property net
operating income
actively managed the diversity
of debt achieving a duration
greater than five years
launched new $235 million
partnership with a leading
global pension fund
Involved in $2.9 billion
of transactions across
the Group
total return of dXS securities
the chart below illustrates dxs’s performance against the s&p/asx200 property accumulation Index since listing in 2004.
DEXUS Property Group
S&P/ASX 200 Property Accumulation Index
4
0
p
e
S
0
3
4
0
c
e
D
1
3
5
0
r
a
M
1
3
5
0
n
u
J
0
3
5
0
p
e
S
0
3
5
0
c
e
D
1
3
6
0
r
a
M
1
3
6
0
n
u
J
0
3
6
0
p
e
S
0
3
6
0
c
e
D
1
3
7
0
r
a
M
1
3
7
0
n
u
J
0
3
7
0
p
e
S
0
3
7
0
c
e
D
1
3
8
0
r
a
M
1
3
8
0
n
u
J
0
3
8
0
p
e
S
0
3
8
0
c
e
D
1
3
9
0
r
a
M
1
3
9
0
n
u
J
0
3
9
0
p
e
S
0
3
9
0
c
e
D
1
3
0
1
r
a
M
1
3
0
1
n
u
J
0
3
0
1
p
e
S
0
3
0
1
c
e
D
1
3
1
1
r
a
M
1
3
1
1
n
u
J
0
3
1
1
p
e
S
0
3
1
1
c
e
D
1
3
2
1
r
a
M
0
3
2
1
n
u
J
0
3
2
1
p
e
S
0
3
2
1
c
e
D
1
3
3
1
r
a
M
1
3
3
1
n
u
J
0
3
220
200
180
160
140
120
100
80
60
40
20
0
26
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013
total return analysis
the table below sets out dxs’s total security holder return over a one, two, three and five year time horizon, relative to the s&p/asx200 property
accumulation Index and the median of the Relative tsR comparator group under the new ltI plan:
Year ended 30 June 2013
dexus property Group
s&p/asx200 property accumulation Index
Median – Relative tsR Comparator Group
1 Year
2 Years
3 Years
5 years
(% per annum)
(% per annum)
(% per annum)
(% per annum)
22.1%
24.2%
18.8%1
17.0%
17.4%
15.2%2
18.4%
13.4%
16.2%3
2.6%
0.3%
n/a
1. Comparator group for 1 year comprises dxs, CFx, CMW, Cpa, FdC, Gpt, IoF and WRt.
2. Comparator group for 2 years comprises dxs, CFx, CMW, Cpa, Gpt, IoF and WRt.
3. Comparator group for 3 years comprises dxs, CFx, CMW, Cpa, Gpt and IoF.
three year performance relative to comparator group
the chart below illustrates dxs’s three year performance relative to the comparator group specified for ltI purposes. sCa property Group, Westfield
Retail trust and Federation Centres have been omitted as these entities were not formed for the comparison period.
the three year performance of the s&p/asx 200 property accumulation Index is also included for reference.
25%
20%
15%
10%
5%
0%
CMW
DXS
GPT
IOF
Property Index1
CPA
CFX
source: uBs securities australia ltd
1. s&p/asx 200 a‑ReIt Index.
three year performance relative to property index
the chart below illustrates dxs’s performance against the broader property sector over the past three financial years.
30%
25%
20%
15%
10%
5%
0%
CHC
CMW
ALZ
GMG
CQR
DXS
GPT
IOF
BWP
MGR
Property
Index1
CPA
WDC
ABP
CFX
SGP
source: uBs securities australia ltd
1. s&p/asx 200 a‑ReIt Index.
27
2013 dexus annual RepoRt 3
Remuneration Report (continued)
3.6 performance pay (continued)
Summary
dxs continues to outperform the s&p/asx200 property accumulation Index and has exceeded this benchmark on a rolling three year basis.
Whilst the directors recognise that improvement is always possible, they consider that the Group’s business model, which aims to deliver consistent
returns with relatively moderate risk, has been central to dxs’s consistent 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 the Group’s strategic plans.
individual performance assessment – Balanced Scorecard
prior to the commencement of each financial year, the Board approves the Group’s strategic and operational objectives which are then translated
into a series of weighted financial and non‑financial Key performance Indicators (KpIs) for management. KpIs are assembled to form each
executive’s Balanced scorecard.
the Balanced scorecard is divided into four components – Financial performance, Business Management and strategy, stakeholder engagement
and people and Culture. these components are weighted differently for each executive. For each of the components the executive has objectives
and specific initiatives set for that year. these scorecards are agreed with the executive at the beginning of the year, reviewed at half year and
assessed for performance awards at the end of the year.
Below is a table which summarises the principal elements within executive Balanced scorecards for the year ending 30 June 2013 (the numbers in
brackets represents what was actually achieved during the year, not the actual KpIs set):
Principal Elements of Executive Balanced Scorecards
Financial Performance
dxs total returns (22.1%)
Funds investment performance
Business Management and Strategy
delivery of divisional business plans
secure rent at risk
Funds from operations ($365.4 million)
property portfolio investment performance
Return on equity (11.2%)
trading profit ($1.5 million)
operating costs
Capital diversification
net operating income growth – like for like (1.6%)
transaction effectiveness
Stakeholder Engagement
Investor engagement and feedback
Media and community profile
tenant relationships and engagement
People and Culture
leadership effectiveness
Cultural survey results
succession planning
Internal and external service standards
talent retention and development
Balanced Scorecard Weighting
financial KPis
non-financial KPis
financial
Performance
business Management
and strategy
stakeholder
engagement
People and culture
40%
40%
30%
30%
30%
40%
40%
50%
20%
10%
15%
10%
10%
10%
15%
10%
Executive
darren J steinberg
Craig d Mitchell
Kevin l George
Ross G du Vernet
28
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 performance pay outcomes
Following an assessment of each executive’s Balanced scorecard, the Board has determined that the following remuneration outcomes are
appropriate with respect to each executive’s performance during the year ending 30 June 2013.
Executive
darren J steinberg
Craig d Mitchell
Kevin l George
Ross G du Vernet
sTi Award
1,750,000
750,000
330,000
385,000
% of Maximum
Possible sTi earned
% of Maximum sTi
forfeited
100%
80%
72%
100%
0%
20%
28%
0%
% of sTi
25%
25%
25%
25%
In addition to the stI award shown above, Mr steinberg was eligible for a once‑off payment of $500,000 as part of previously communicated sign‑
on conditions. this amount was subject to satisfactory performance as determined by the Board, and being payable in august 2013 is disclosed in
the statutory Reporting table under other short‑term Benefits.
25% of the value of the stI awarded to each executive will be deferred into dxs securities, subject to service and claw‑back conditions, and vesting
in two equal tranches after 12 and 24 months.
lti grants
the table below shows the number of performance rights to be granted to executives under the 2013 ltI plan (details of which are provided earlier
in this report).
Executive
darren J steinberg
Craig d Mitchell
Kevin l George
Ross G du Vernet
number of
Performance Rights
1st Vesting date
50%
2nd Vesting date
50%
1,128,176
355,518
326,128
237,012
1 July 2016
1 July 2016
1 July 2016
1 July 2016
1 July 2017
1 July 2017
1 July 2017
1 July 2017
the number of performance rights granted to each executive is based on the dollar value of ltI approved by the Board in its discretion and with
reference to the remuneration framework, divided by the Volume Weighted average price (VWap) of dxs securities 10 trading days either side of
30 June 2013, which was confirmed as $1.0548.
the ltI grants for Mr steinberg and Mr Mitchell as executive directors are subject to security holder approval at the 2013 annual General Meeting.
3.7 executive remuneration actual cash received
In line with best‑practice recommendations, the amounts shown in the table below provide a summary of actual remuneration received during the
year ended 30 June 2013. the dpp and ddpp cash payments were received for performance in the 2012 and 2009 financial years respectively.
Executive
darren J steinberg
Craig d Mitchell
Kevin l George
Ross G du Vernet
earned in Prior financial Year
Cash Salary
1,383,530
733,530
338,954
424,305
Pension & Super
Benefits1
Other Short-
Term Benefits2
Termination
Benefits
16,470
16,470
12,008
16,470
–
–
464,383
–
–
–
–
–
DPP Cash
Payment3
360,000
DDPP Cash
Payment4
Total
–
1,760,000
500,000
636,272
1,886,272
–
350,000
–
–
815,345
790,775
1. Includes employer contributions to superannuation under the superannuation guarantee legislation and salary sacrifice amounts.
2. Mr George received a sign‑on cash payment of $250,000 plus various relocation benefits totalling $214,383.
3. Cash payment made in august 2012 with respect to the 2012 dpp (i.e. annual performance payment for the prior financial year).
4. Cash payment made in august 2012 with respect to the 2009 ddpp award that vested on 1 July 2012 (i.e. realisation of three year deferred performance payment).
29
2013 dexus annual RepoRt 3
Remuneration Report (continued)
3.7 executive remuneration actual cash received (continued)
the amounts shown in this table are prepared in accordance with aasB 124 Related Party Disclosures and do not represent actual cash payments
received by executives for the year ended 30 June 2013. amounts shown under long term Benefits reflect the accounting expenses recorded
during the year with respect to prior year deferred remuneration and awards that have or are yet to vest. For performance payments and awards
made with respect to the year ended 30 June 2013, refer to the performance pay outcomes section of this report.
short-Term benefits
Post-employment
benefits
share based & long-Term benefits
Executive
Year
Cash Salary
STI Cash
Award1
Other Short-
Term
Benefits2
Pension
& Super
Benefits3
Termination
Benefits
darren J
steinberg
Craig d
Mitchell
Kevin l
George8
Ross G
du Vernet8
2013
1,383,530 1,312,500
500,000
16,470
2012
2013
2012
2013
2012
2013
2012
461,409
360,000 1,500,000
733,530
562,500
734,225
500,000
–
–
5,258
16,470
15,775
338,954
247,500
634,383
12,008
–
–
424,305
288,750
–
–
–
–
–
–
16,470
–
sub total
2013
2,880,319 2,411,250 1,134,383
61,418
2012
1,195,634
860,000 1,500,000
21,033
former KMP
tanya l Cox
2013
433,530
201,000
2012
434,225
200,000
John C easy
2013
426,530
281,250
2012
2013
427,225
200,000
–
–
–
–
–
–
–
16,470
15,775
23,470
22,775
–
other
former
KMps9
Total
Deferred
STI Plan
Accrual4
182,284
–
DDPP Plan
Accrual5
Transition
Plan
Accrual6
LTI Plan
Accrual7
Total
–
–
105,000
204,200
3,703,984
105,000
–
2,431,667
78,122
172,790
125,000
64,349
1,752,761
328,664
125,000
–
1,703,664
219,374
–
40,103
–
–
–
–
–
–
59,029
1,511,248
–
–
50,000
42,899
862,527
–
–
–
519,883
172,790
280,000
370,477
7,830,520
–
328,664
230,000
–
4,135,331
27,916
75,408
50,000
23,166
827,490
–
149,140
50,000
–
849,140
39,061
76,234
50,000
23,166
919,711
158,013
50,000
–
–
791,650
–
–
–
–
–
858,013
791,650
8,789,663
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2012
1,879,415 1,175,000
923,834
31,550 2,300,000
– 2,479,864
2013
3,740,379 2,893,500 1,134,383
101,358
–
586,860 1,116,082
380,000 416,809 10,369,371
2012 3,936,499 2,435,000 2,423,834
91,133 2,300,000
– 3,115,681
330,000
– 14,632,147
1. FY13 annual cash stI performance award, payable in august 2013.
2. Mr steinberg’s sign‑on conditions included access to an additional $500,000 subject to performance in FY13.
Mr George received a cash sign‑on payment of $250,000, a cash payment of $170,000 as compensation for foregone remuneration and various relocation benefits.
3. Includes employer contributions to superannuation under the superannuation guarantee legislation and salary sacrifice amounts.
4. Reflects the accounting expense accrued during the financial year for deferred stI awards made with respect to FY13 performance. Refer to note 36 of the dxs
Financial statements.
Mr George’s accrual also includes accounting for performance Rights detailed later in this report as special terms.
5. FY10 and FY11 ddpp legacy plan only applicable to Mr Mitchell and former KMp Ms Cox and Mr easy. Reflects the accounting expense accrued during the
financial year.
6. FY13 transition plan applicable to all KMp and former KMp, excluding Mr George. Reflects the accounting expense accrued during the financial year.
7. Reflects the accounting expense accrued during the financial year for ltI grants made with respect to FY13. Refer to note 36 of the dxs Financial statements.
8. Mr du Vernet joined the Group on 7 May 2012 and was appointed KMp with effect 1 July 2013. no prior year remuneration is disclosed on that basis.
Mr George joined the Group on 10 december 2012 and was appointed KMp with effect 10 december 2012. no prior year remuneration is disclosed on that basis.
9. other former KMps, Mr Hoog antink and Mr say are disclosed for completeness. Refer to the 2012 Remuneration Report for more detail.
30
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 3.8 Service agreements
executive service agreements detail the individual terms and conditions of employment applying to the Ceo and executives of the Group.
the quantum and structure of remuneration arrangements are detailed elsewhere in this report, with the termination scenarios and other key
employment terms detailed below:
Chief Executive Officer
Terms
employment agreement
an ongoing executive service agreement.
termination by the Ceo
termination by Mr steinberg requires a six month notice period. the Group may choose to place Mr steinberg
on “leave” or make a payment in lieu of notice at the Board’s discretion.
all unvested stI and ltI awards are forfeited under this scenario.
termination by the Group
without cause
If the Group terminates Mr steinberg without cause, Mr steinberg is entitled to a payment of 12 months Fixed
Remuneration. the Board may (in its absolute discretion) also approve a pro‑rata stI or ltI award based on
part‑year performance.
depending on the circumstances, the Board has the ability to treat Mr steinberg as a “good leaver” under this scenario,
which may result in Mr steinberg retaining some or all of his unvested stI and ltI.
termination by the Group
with cause
no notice or severance is payable under this scenario.
other contractual
provisions and restrictions
Mr steinberg’s executive service agreement includes standard clauses covering intellectual property, confidentiality,
moral rights and disclosure obligations.
Executives – Mitchell, George and Du Vernet
Terms
employment agreement
an ongoing executive service agreement.
termination by the
executive
termination by the executive requires a three month notice period. the Group may choose to place the executive on
“leave” or make a payment in lieu of notice at the Board’s discretion.
all unvested stI and ltI awards are forfeited under this scenario.
termination by the Group
without cause
If the Group terminates the executive without cause, the executive is entitled to a combined notice and severance
payment of 12 months Fixed Remuneration. the Board may (in its absolute discretion) also approve a pro‑rata stI
or ltI award based on part‑year performance.
depending on the circumstances, the Board has the ability to treat the executive as a “good leaver” under this
scenario, which may result in the executive retaining some or all of their unvested stI and ltI.
termination by the Group
with cause
no notice or severance is payable under this scenario.
other contractual
provisions and restrictions
the executive service agreement includes standard clauses covering intellectual property, confidentiality, moral rights
and disclosure obligations.
31
2013 dexus annual RepoRt 3
Remuneration Report (continued)
3.8 Service agreements (continued)
Legacy Plan – unvested and vesting DDPP awards
the table below shows the value of unvested and vesting dexus deferred performance payment (ddpp) awards for executives and Former
executive KMp as at 30 June 2013. the ddpp awards are part of a legacy plan closed to new participants from 1 July 2012.
Participant
Craig d Mitchell
former KMP
tanya l Cox
John C easy
Award Date
Allocation Value
Value as at
30 June 2013
Vesting DDPP as at
1 July 2013
1 Jul 2011
1 Jul 2010
1 Jul 2011
1 Jul 2010
1 Jul 2011
1 Jul 2010
450,000
400,000
190,000
180,000
185,000
188,000
577,305
598,440
243,751
269,298
237,337
281,267
–
598,440
–
269,298
–
281,267
Vesting Date
1 Jul 2014
1 Jul 2013
1 Jul 2014
1 Jul 2013
1 Jul 2014
1 Jul 2013
Mr Mitchell and former KMp Ms Cox and Mr easy are entitled to receive a cash payment relating to the vesting of their 2010 ddpp awards.
this payment will be made in august 2013.
the vesting ddpp value was determined by calculating the compound total return of both listed dxs (50%) and unlisted dWpF (50%) notional
securities over a three‑year vesting period. the dxs total return was 65.8% and the Group’s unlisted Funds and Mandates was 33.4%, resulting
in a composite 49.6% increase being applied to the original allocation value during the life of the 2010 ddpp plan. the Board chose to exercise its
discretion in not applying a performance multiplier (allowable under the ddpp plan rules) to the 2010 tranche, and has indicated it intends to follow
the same approach upon vesting of the 2011 tranche.
For more information on the ddpp legacy plan, refer to the 2012 annual Report.
legacy plan – unvested transitional performance rights
the table below shows the number of unvested performance rights held by executives under the transitional performance rights plan, which
received security holder approval at the annual General Meeting on 5 november 2012. the Board granted these once‑off performance rights to
executives, with respect to performance during the year ending 30 June 2012, as a transitional measure towards the adoption of the Group’s new
remuneration framework which came into effect 1 July 2012.
Participant
darren J steinberg
Craig d Mitchell
Ross G du Vernet
Former KMP
tanya l Cox
John C easy
Award Date
1 Jul 2012
1 Jul 2012
1 Jul 2012
1 Jul 2012
1 Jul 2012
Number of
Performance Rights
453,417
539,782
215,913
215,913
215,913
Vesting Date
1 Jul 2015
1 Jul 2015
1 Jul 2015
1 Jul 2015
1 Jul 2015
at the Board’s instruction, performance Rights are to be purchased on‑market and the plan is subject to both service and claw‑back conditions. For
more information on the transitional performance Rights plan, refer to the 2012 annual Report.
32
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 Special terms – performance rights and relocation package for Kevin l george
upon commencement, Mr George was offered a special grant of performance rights to dxs securities as compensation for foregone remuneration at
his previous employer and to immediately align his interests with those of his KMp peers and security holders.
Participant
Kevin l George
Award Date
10 dec 2012
Number of
Performance Rights
366,591
Vesting Date
1 aug 2014
the performance rights granted to Mr George are subject to both service and claw‑back conditions, and are to be purchased on‑market. the terms
and conditions of this offer mirror those of the deferred stI plan.
In addition to the grant of performance rights, Mr George received a commencement and relocation package (disclosed in the statutory accounting
table as ‘other short‑term Benefits’) which included the following:
$250,000 as a cash sign‑on payment
$170,000 as a cash payment to be made in august 2013 as compensation for part‑year incentive forfeiture at Mr George’s previous employer
$186,916 as a once‑off relocation and family disturbance payment
$27,467 in expense reimbursements relating to Mr George and his family’s relocation from Melbourne to sydney – including flights, temporary
accommodation, removalists, transit insurance, connection of utilities and other service fees
Mr George is also entitled to future reimbursement of reasonable expenses (i.e. stamp duty, agent fees etc.) relating to the purchase of a family
home in sydney. this benefit has not yet been exercised by Mr George and expires on 10 december 2014.
all expense benefits relating to Mr George’s relocation are subject to a 100% claw‑back clause should Mr George voluntarily resign within two years
of his commencement date.
3.9 Non-executive directors
non‑executive directors’ fees are reviewed annually by the Committee to ensure they reflect the responsibilities of directors and are market
competitive. the Committee reviews information from a variety of sources to inform their recommendation regarding non‑executive directors’ fees to
the Board. Information considered includes:
publicly available remuneration reports from asx listed companies with similar market capitalisation and complexity
publicly available remuneration reports from a‑ReIt competitors
Information supplied by external remuneration advisors, including egan associates
total fees paid to non‑executive directors remain within the aggregate fee pool of $1,750,000 per annum approved by security holders at the aGM
in october 2008. the Board has reviewed base fees for non‑executive directors and has elected not to approve an increase at this time. this will be
the fourth consecutive year at the current rate.
In 2012, the Board (as noted in the directors’ Report) determined that it would be appropriate for non‑executive directors (existing and new) to hold
dxs securities. a minimum target of 50,000 securities is to be acquired in each director’s first three year term (effective from 1 July 2012). such
securities would be subject to the Group’s existing trading and insider information policies. no additional remuneration is provided to directors to
purchase these securities. all directors have subsequently used their own resources to purchase at least the minimum target in the first year of the
three year term. details of directors’ holdings are included in the directors’ Report.
other than the Chair who receives a single fee, non‑executive directors receive a base fee plus additional fees for membership of Board
Committees. the table below outlines the Board fee structure (inclusive of statutory superannuation contributions) for the year ended 30 June 2013:
Committee
director’s base fee (dxFM)
Board audit, Risk & sustainability
Board Compliance
Board Finance
Board nomination, Remuneration & Governance
dWpl Board
* the Chairman receives a single fee for his entire engagement, including service on Committees of the Board.
Chair
$350,000*
$30,000
$15,000
$15,000
$30,000
$30,000
Member
$150,000
$15,000
$7,500
$7,500
$15,000
$15,000
33
2013 dexus annual RepoRt 3
Remuneration Report (continued)
3.9 Non-executive directors (continued)
Non-Executive Directors’ Statutory Accounting Table
the amounts shown in this table are prepared in accordance with aasB 124 Related Party Disclosures. the table is a summary of the actual cash
and benefits received by each non‑executive director for the year ended 30 June 2013.
Executive
Year
Short-Term Benefits
Post-Employment Benefits
Other Long-Term Benefits
Christopher t Beare
elizabeth a alexander, aM
Barry R Brownjohn
John C Conde, ao
tonianne dwyer1
stewart F ewen, oaM
W Richard sheppard2
peter B st George
Total
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
1. Ms dwyer was appointed on 24 august 2011.
2. Mr sheppard was appointed 1 January 2012.
4
directors’ relevant interests
333,530
334,225
178,899
170,539
165,138
172,018
165,138
158,257
158,257
132,225
141,000
109,052
158,257
74,541
151,376
165,138
1,451,595
1,315,995
16,470
15,775
16,101
24,461
14,862
15,482
14,862
14,243
14,243
11,900
24,000
48,448
14,243
6,709
13,624
14,862
128,405
151,880
the relevant interests of each director in dxs stapled securities as at the date of this directors’ Report are shown below:
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Directors
Christopher t Beare
elizabeth a alexander, aM
Barry R Brownjohn
John C Conde, ao
tonianne dwyer
stewart F ewen, oaM
Craig d Mitchell
W Richard sheppard
darren J steinberg
peter B st George
1. performance Rights granted under the 2012 transitional performance Rights plan (refer note 36).
34
Total
350,000
350,000
195,000
195,000
180,000
187,500
180,000
172,500
172,500
144,125
165,000
157,500
172,500
81,250
165,000
180,000
1,580,000
1,467,875
No. of securities
100,000
100,000
50,000
100,000
100,000
100,000
539,7821
100,000
453,4171
104,000
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 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
Date appointed
Christopher t Beare
Mnemon Group limited
6 november 2009
elizabeth a alexander, aM
Csl limited
John C Conde, ao
Whitehaven Coal limited
Cooper energy limited
tonianne dwyer
Cardno limited
12 July 1991
3 May 2007
25 February 2013
25 June 2012
W Richard sheppard
echo entertainment Group
21 november 2012
Date resigned
27 May 2013
19 october 2011
peter B st George
Boart longyear limited
First Quantum Minerals limited1
21 February 2007
20 october 2003
21 May 2013
1. 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 2013 was $7,752.6 million (2012: $7,364.1 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.
8
Review of results and operations
the Group’s financial performance for the year ended 30 June 2013 is summarised below. to fully understand our results, please refer to the full
Financial statements included in this annual Report.
a strong focus on leasing and transactions during the year has driven a solid financial result with improved operational performance and strong
property revaluations. Capital management initiatives have underpinned our balance sheet and reduced cost of debt which, together with a focus
on cost management, has provided profit and Funds from operations1 (FFo) growth.
INCREASE IN NTA OF
5.2 cents
PER SECuRITY
DISTRIBuTION OF
6.0 cents
PER SECuRITY
TOTAL RETuRN OF
11.2%
In accordance with australian accounting standards, net profit includes a number of non‑cash adjustments including fair value movements in asset
and liability values. FFo is a global financial measure of real estate operating performance after finance costs and taxes, and is adjusted for certain
non‑cash items.
1. dexus’s FFo comprises net profit/loss after tax attributable to stapled security holders calculated in accordance with 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 certain assets,
straightline rent adjustments, deferred tax expense/benefit, rental guarantees and coupon income.
35
2013 dexus annual RepoRt 8
Review of results and operations (continued)
the directors consider FFo to be a measure that reflects the underlying performance of the Group. the following table reconciles between profit
attributable to stapled security holders, FFo and distributions paid to stapled security holders.
net profit for the year attributable to stapled security holders
net fair value gain of investment properties1
Impairment of inventories
net fair value loss of derivatives
net loss on sale of investment properties
Finance break costs attributable to sales transactions
Foreign currency translation reserve transfer on disposal of foreign operations
Incentive amortisation and rent straightline1,2
Rents capital distributions
deferred tax and other
Funds From Operations (FFO)
Retained earnings3
Distributions
FFo per security (cents)
distribution per security (cents)
net tangible asset backing per security ($)
30 June 2013
$m
30 June 2012
$m
514.5
(220.6)
2.2
17.7
3.6
18.8
21.5
30.5
–
(22.8)
365.4
(83.3)
282.1
7.75
6.00
1.05
181.1
(82.8)
14.9
97.1
32.6
44.3
41.5
31.7
(10.2)
17.6
367.8
(110.4)
257.4
7.65
5.35
1.00
1. Including dxs’s share of equity accounted investments.
2. Including cash and fit out incentives amortisation.
3. Based on payout ratio of 77.4%. dxs’s current policy is to distribute 70‑80% of FFo, in line with free cash flow.
net profit after tax was $514.5 million or 10.9 cents per security, an increase of $333.4 million from the prior year (2012: $181.1 million). the key
drivers of this increase included:
net revaluation gains from investment properties were $218.4 million, representing a 3.1% increase across the portfolio (2012: $67.9 million)
net fair value loss from derivatives of $17.7 million, which was significantly lower than the prior year (2012: losses of $97.1 million)
the reversal in FY13 of a prior year impairment of management rights of $20.5 million
operationally, FFo decreased 0.7% to $365.4 million (2012: 367.8 million) including the impact of the sale of non‑core offshore properties. FFo per
security increased 1.3% to 7.75 cents (2012: 7.65 cents).
Key drivers included:
office net operating income (noI) of $317.4 million, up 9.5% from $289.9 million in 2012, was underpinned by 1.8% growth in like‑for‑like noI
together with income from properties acquired during the year
Industrial noI of $117.1 million, a decrease of 2.4% (2012: $120.0 million) reflected the sale of a 50% interest in 18 properties to the australian
Industrial partnership (aIp). like‑for‑like noI growth was 1.1%
Finance costs (net of interest revenue) were $111.2 million, down $21.1 million1 from the prior year. average cost of debt reduced from 6.1% to 5.9%
operational expenses reduced $11.1 million following the sale of the us portfolio and an internal restructure
distributions per security for the year were 6.0 cents per security, presenting a 12.1% increase from the prior year (2012: 5.35 cents). the payout
ratio for the year to 30 June 2013 was 77.4% in accordance with dexus’s payout policy to distribute 70‑80% of FFo, in line with free cash flow.
1. 30 June 2012 includes Rents distributions of $12.0 million (30 June 2013: nil).
36
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 Strategy
dexus aims to achieve its vision to be globally recognised as australia’s leading real estate company by delivering on its clearly defined and
communicated strategy.
dexus identified four strategic objectives that would guide it towards achieving its strategy of delivering superior risk‑adjusted returns for its
investors from high quality australian real estate.
the objectives focus on leadership in office, core capabilities, capital partnerships and capital and risk management. these are areas in which
dexus considered it had established strength and capability, and on which it had the ability to develop.
dexus directly invests in australian office and industrial properties, and on behalf of its third party partners, invests in australian office, industrial
and retail properties. With a strong track record delivering high quality developments, dexus undertakes investments of scale and quality suitable
for long term ownership. dexus also invests in properties which offer value‑add potential through intensive asset management and are able to be
repositioned as trading opportunities.
DEXUS VISION
To be globally recognised as Australia’s leading real estate company
STRATEGY
To deliver superior
risk-adjusted returns for investors
from high quality Australian real estate
primarily comprising CBD office buildings
STRATEGIC
OBJECTIVES
OFFICE
CORE CAPABILITIES
CAPITAL PARTNERSHIPS
CAPITAL & RISK
MANAGEMENT
Being the leading
owner and manager
of Australian office
Having the best people,
strongest tenant
relationships and most
efficient systems
Being the wholesale
partner of choice
in Australian office,
industrial and retail
Actively managing
capital and risk in a
prudent and disciplined
manner
DEXUS’S PEOPLE WILL
BE RECOGNISED FOR
operations
Property expertise
Institutional rigour
Entrepreneurial spirit
Portfolio composition
Following the announcement of its revised strategy in august 2012, dexus immediately commenced a period of significant transformation. Focusing
on its objective to be a leading owner and manager in australian office, dexus exited its offshore, non‑core properties and redeployed capital into
the australian office market. In a series of transactions, eight office properties with a total value of $1.1 billion were acquired across the four key
markets of sydney, Melbourne, Brisbane and perth, increasing dexus’s office portfolio weighting to 78%. the total value of investment property at
30 June 2013 was $7.3 billion.
DXS property portfolio metrics
30 June 2013
portfolio value ($bn)
number of properties
occupancy (% by area)
occupancy (% by income)
tenant retention (%)
Wale (years)
like‑for‑like noI growth (%)
Weighted average cap rate %
Total return – 1 year (%)
Office
Industrial
5.7
36
94.4
94.6
72
5.0
1.8
7.17
10.6
1.6
48
95.9
96.1
70
4.1
1.1
8.55
8.8
Total
7.3
84
95.3
94.9
71
4.8
1.6
7.47
10.2
37
2013 dexus annual RepoRt 8
Review of results and operations (continued)
operations (continued)
30 June 2012
30 June 2013
$6.9bn
$7.3bn
Office
Industrial
US Industrial
Other
67%
24%
8%
1%
Office
Industrial
78%
22%
Office portfolio
portfolio value $5.7 billion (2012: $4.7 billion)
like‑for‑like noI growth 1.8% (2012: 5.4%)
occupancy by area 94.4% (2012: 97.1%)
Weighted average lease expiry by income 5.0 years (2012: 4.9 years)
a continued dedication and focus on retention and proactive negotiations with tenants delivered solid operational performance for dexus’s office
portfolio. noI of $317.4 million, up 9.5% from $289.9 million in 2012, was underpinned by 1.8% growth in like‑for‑like noI together with income
from properties acquired.
the office portfolio delivered a one year total return of 10.6% (2012: 9.5%) driven by underlying rental growth and improved property values.
occupancy decreased to 94.4% (2012: 97.1%) primarily as a result of inclusion of new office acquisitions and the impact of vacancy at 14 Moore
street, Canberra following the expiry of the Commonwealth Government’s lease in May 2013.
the weighted average lease duration improved marginally to 5.0 years and, as a result of dexus’s proactive tenant engagement and relationships,
tenant retention increased by 6% to 72%. tenant incentives averaged 12.2% (2012: 17.3%) across all deals.
dexus’s proactive leasing approach achieved a strong result, with the office team leasing 156,024 square metres, representing over 18% of the
portfolio during the year. this also significantly reduced FY14 expiries from 10.7% at 30 June 2012 to 5.6% at 30 June 2013. With many of these
expiries towards the latter half of the coming year, strong like‑for‑like growth is expected for FY14.
leasing successes, the weight of capital seeking quality australian office property and recent transactional evidence contributed to a
$190.7 million or 3.5% uplift in valuations on prior book values across the dxs office portfolio. the weighted average capitalisation rate of the
dxs office portfolio has tightened 13 basis points from 7.30% at 30 June 2012 to 7.17% at 30 June 2013.
In FY14, dexus will continue to drive the performance of the office portfolio while enhancing the value of newly acquired properties. dexus will
focus on reducing lease expiries and strengthening tenant relationships by launching initiatives to enhance the tenant experience and develop
tenant loyalty.
Industrial portfolio
portfolio value $1.6 billion (2012: $1.7 billion)
like‑for‑like noI growth 1.1% (2012: ‑1.6%)
occupancy by area 95.9% (2012: 91.7%)
Weighted average lease expiry by income 4.1 years (2012: 4.4 years)
the results achieved in the dxs industrial portfolio during the year reflect the importance of strong tenant relationships in driving increased retention
and significantly improving occupancy levels. through pursuing all operational targets, dexus secured strong investor returns achieving a portfolio
total return of 8.8% (2012: 8.0%).
38
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 noI for the year was $117.1 million, a decrease of 2.4% (2012: $120.0 million) reflecting the sale of a 50% interest in 18 properties to the aIp.
like‑for‑like noI growth was 1.1%.
strong leasing activity driven by tenant relationships and a proactive approach resulted in occupancy increasing by 4.2% to 95.9%. dexus secured
122 lease deals covering 327,432 square metres including 87,221 square metres of development leasing.
the impact of the formation of the aIp which involved the sale of 50% of the properties at Quarry at Greystanes, nsW, dexus Industrial estate at
laverton north and altona, Vic was partly offset by strong leasing results at Gillman, silverwater, Belrose, Rydalmere and Greystanes.
Increasing investor demand for prime quality industrial properties is being offset by the discounting of valuations for secondary properties and
those with leasing risk. this is evident in dxs’s industrial portfolio which achieved a moderate uplift in valuations of $5.8 million or 0.4% on prior
book values. properties with long lease tenures including at Greystanes, laverton north, Matraville and lara have benefitted most, with improving
occupancy and security of cash flows being the key drivers for valuation upside.
the weighted average capitalisation for the dxs industrial portfolio rates tightened four basis points from 8.59% at 30 June 2012 to 8.55%
at 30 June 2013.
In FY14, dexus will continue to focus on proactively managing the industrial portfolio and leveraging its industrial capabilities into developments
and new opportunities. dexus will continue to deliver on the investment objectives for its capital partners and progress projects in its industrial
development pipeline to deliver trading profits and enhance investor returns.
Third Party Funds Management
a key objective for dexus in FY13 was to grow its third party Funds Management business through partnering with wholesale investors on
investment opportunities and developing new capital partnerships.
over the year, dexus achieved this objective, growing funds under management by 9.5% from $5.6 billion at 30 June 2012 to $6.1 billion at
30 June 2013. dexus demonstrated its ability to further diversify its capital sources, through establishing and growing a new capital partnership,
the aIp, and partnering with dWpF to further invest in australian office markets.
Funds under management
Asset diversification
$7
$7
$6
$6
$5
$5
n
o
i
l
l
i
b
$
n
$4
o
i
l
l
i
b
$3
$
$4
$3
$2
$2
$1
$1
$0
$0
$0.2bn
$0.2bn
$1.6bn
$1.6bn
$1.8bn
$1.8bn
100%
100%
80%
80%
60%
60%
56%
56%
51%
51%
$3.8bn
$3.8bn
$4.3bn
$4.3bn
40%
40%
11%
11%
15%
15%
20121
20121
2013
2013
2012
2012
2013
2013
20%
20%
0%
0%
33%
33%
34%
34%
DWPF
DWPF
Mandates
Mandates
AIP
AIP
Office
Office
Industrial
Industrial
Retail
Retail
Transactions
since the announcement of its revised strategy in august 2012, dexus was actively involved in $2.9 billion of transactions that have re‑shaped
the composition of the dxs portfolio and supported the growth of existing and new capital partners in its third party Funds Management business.
dexus achieved its objective of fully exiting from the us industrial market and investing in quality office product through acquiring core and value‑
add opportunities as well as acquiring property on a development fund‑through basis.
dxs transactions included:
the sale of 27 remaining us properties in three separate transactions for total proceeds of us$617.2 million
the acquisition of six core office properties in sydney, Melbourne and Brisbane for a total price of $654.8 million
the acquisition of two office developments in Brisbane and perth on a fund‑through basis with an expected final cost of $489.4 million
the sale of a 50% interest in 18 industrial properties to the aIp
1. Mandates for 2012 include a $0.2bn us mandate.
39
2013 dexus annual RepoRt
8
Review of results and operations (continued)
Development
dexus continued to progress its $1.2 billion development pipeline during FY13, utilising its development capabilities to complete six prime industrial
properties across 81,024 square metres valued at $106.9 million. these included industrial developments at Quarry at Greystanes, 57‑65 templar
Road, erskine park and 163‑185 Viking drive, Wacol.
over the year, dexus leased 87,221 square metres of industrial development space, including achieving 100% occupancy on completed
developments at Quarry at Greystanes.
over $111 million of industrial developments have commenced across sydney, Melbourne and Brisbane that will deliver 90,139 square metres of
new product during FY14. dexus will also continue to drive the leasing and repositioning of value‑add properties at 50 Carrington street, sydney,
40 Market street, Melbourne and at 57‑101 Balham Road, archerfield.
Capital management
Cost of debt 5.9% (2012: 6.1%)
duration of debt 5.4 years (2012: 4.2 years)
Gearing 29.0% (2012: 27.2%)
Headroom $0.3bn (2012: $0.6bn)
s&p/Moody’s credit rating BBB+/Baa1 (2012: BBB+/Baa1)
In the past year, dexus focused on meeting its strategic objective of actively managing its capital and risk in a prudent and disciplined manner,
achieving its FY13 commitments of maintaining a strong credit rating, a strong diversity of debt and maintaining debt duration over four years.
Key achievements for FY13 included:
Completed over $1 billion of new funding with an average duration of seven years and a margin under 2%, including $235 million from the
australian Medium term note market and us$300 million in the us private placement market
Reduced average cost of debt by 0.2% to 5.9%
Increased debt duration to 5.4 years
Following an active period of transactional activity, dexus remains comfortably inside all its covenant limits and the Group’s strong credit ratings
of BBB+ rating with standards & poor’s and Baa1 rating with Moody’s. dexus’s balance sheet remains strong with gearing at 29.0% and limited
short‑term refinancing requirements.
On-market securities buy-back
Having launched an on‑market $200 million securities buy‑back program in april 2012, dexus used proceeds from the sale of the us central portfolio
in FY13 to acquire 137 million securities for $128.5 million at an average price of $0.9371.
Following the reinvestment of capital into australian markets on the back of improved share market performance, the dexus security price
performance stabilised and dexus chose not to extend the buy‑back, having completed 64% of the targeted $200 million.
post balance date on 2 July 2013, a buy‑back of up to 5% of securities was reinstated as a result of share market volatility, providing the flexibility for
dexus to acquire securities on‑market with a focus on enhancing value and returns to investors.
Distribution policy
the Group’s distribution policy is to distribute between 70% and 80% of FFo, in line with free cash flow, with the expectation that over time the
average payout ratio will be around 75% of FFo.
Following a reduction in capital expenditure over the six months to 30 June 2013, the payout ratio for this period was increased from 75% to 80%
of FFo. this resulted in an upgraded distribution of 6.0 cents per security and an average payout of 77.4% for the year ended 30 June 2013.
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.
40
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 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.
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 2013 were 6.00 cents per security (2012: 5.35 cents per security) as outlined
in note 26 of the notes to the Financial statements.
13
dXfM fees
details of fees paid or payable by the Group to dxFM for the year ended 30 June 2013 are outlined in note 31 of the notes to the Financial
statements and form part of this directors’ Report.
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 2013 are detailed in note 24
of the notes to the Financial statements and form part of this directors’ Report.
details of the number of interests in the Group held by dxFM or its associates as at the end of the financial year are outlined in note 31 of the notes to
the Financial statements and form part of this directors’ Report.
With the exception of performance rights which are discussed in detail in the Remuneration Report, the Group did not have any options on issue as
at 30 June 2013 (2012: nil).
15
environmental regulation
the Group’s senior management, through its Board audit, Risk & 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.
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.
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 its 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, Risk & sustainability 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.
41
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 17
Audit (continued)
17.2 Non-audit services (continued)
the reasons for the directors being satisfied are:
a Charter of audit Independence provides guidelines under which the auditor may be engaged to provide non‑audit services without impairing
the auditor’s objectivity or independence.
the Charter states that the auditor will not provide services where the auditor may be required to review or audit its own work, including:
– 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
– providing internal audit services
the Board audit, Risk & sustainability 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, Risk & sustainability 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, Risk & sustainability Committee.
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 on page 43 and forms part
of this directors’ Report.
18
corporate governance
dxFM’s Corporate Governance statement is set out in a separate section of this Financial 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 tenth of a million 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.
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 2013. the directors have the power to amend and reissue the Financial statements.
Christopher T Beare
Chair
16 august 2013
Darren J Steinberg
Chief executive officer
16 august 2013
42
2013 dexus annual RepoRtdirectors’ reportfor the year ended 30 june 2013 Auditor’s Independence Declaration
As lead auditor for the audit of DEXUS Diversified Trust for the year ended 30 June 2013, I declare
that to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of DEXUS Diversified Trust and the entities it controlled during the
period.
E A Barron
Partner
PricewaterhouseCoopers
Sydney
16 August 2013
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
43
2013 dexus annual RepoRtauditor’s independence declaration 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 of investment properties
share of net profit of investments accounted for using the equity method
Reversal of previous impairment
Total income
Expenses
property expenses
Cost of sale of inventory
Finance costs
Impairment of inventories
Impairment of goodwill
net fair value loss of derivatives
net loss on sale of investment properties
Fair value adjustment on acquisition of investments
Corporate and administration expenses
Total expenses
Profit before tax
Tax (expense)/benefit
Income tax (expense)/benefit
Total tax (expense)/benefit
Profit after tax from continuing operations
loss from discontinued operations
Net profit for the year
Other comprehensive income:
Items that may be reclassified to profit or loss:
exchange differences on translating foreign operations
Foreign currency translation reserve transfer on disposal of foreign operations
Total comprehensive income for the year
Profit for the year 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 for the year 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
basic and diluted earnings per unit attributable to unitholders of the parent entity
earnings per unit – profit from continuing operations
earnings per unit – profit/(loss) from discontinued operations
earnings per unit – total
basic and diluted earnings per stapled security attributable to stapled security holders
earnings per security – profit from continuing operations
earnings per unit – loss from discontinued operations
earnings per unit – total
Note
2
15
17
3
4
5(a)
12
25(a)
25(a)
35(a)
35(a)
35(a)
35(b)
35(b)
35(b)
2013
$m
546.6
24.4
1.2
48.5
620.7
185.9
37.9
20.5
865.0
(134.9)
(22.9)
(98.6)
(2.2)
(0.1)
(10.9)
(3.7)
(0.1)
(68.4)
(341.8)
523.2
(1.7)
(1.7)
521.5
(7.0)
514.5
2012
$m
535.7
49.8
1.7
50.3
637.5
43.0
13.8
–
694.3
(133.5)
(44.0)
(118.0)
(14.9)
(0.6)
–
–
–
(75.8)
(386.8)
307.5
18.9
18.9
326.4
(143.5)
182.9
8.2
21.5
0.3
41.5
544.2
224.7
102.8
411.7
514.5
–
514.5
148.9
395.3
544.2
–
544.2
81.5
99.6
181.1
1.8
182.9
139.1
83.8
222.9
1.8
224.7
Cents
Cents
2.02
0.16
2.18
11.06
(0.15)
10.91
2.63
(0.94)
1.69
6.71
(2.97)
3.75
the above Consolidated statement of Comprehensive Income should be read in conjunction with the accompanying notes.
44
2013 dexus annual RepoRtConsolidated statement of Comprehensive inCome for the year ended 30 june 2013 current assets
Cash and cash equivalents
Receivables
Inventories
derivative financial instruments
other
discontinued operations and assets classified as held for sale
Total current assets
non-current assets
Investment properties
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
provisions
derivative financial instruments
discontinued operations classified as held for sale
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 the parent entity
Contributed equity
Reserves
Retained profits
Parent entity unitholders’ interest
equity attributable to unitholders of other stapled entities
Contributed equity
Reserves
Retained profits
Other stapled unitholders’ interest
Total equity
Note
7
8
9
10
11
12
13
14
9
15
10
16
17
18
19
21
10
12
20
10
22
21
23
24
25
25
24
25
25
the above Consolidated statement of Financial position should be read in conjunction with the accompanying notes.
2013
$m
14.5
40.2
10.9
25.4
10.9
101.9
8.8
110.7
2012
$m
59.2
30.8
26.8
3.6
10.9
131.3
212.3
343.6
6,085.0
6,391.5
8.8
242.0
906.8
114.8
39.4
243.7
1.4
4.7
71.0
217.0
74.7
36.7
223.6
1.3
7,641.9
7,752.6
7,020.5
7,364.1
95.1
169.5
1.8
266.4
0.1
266.5
110.6
152.0
8.2
270.8
–
270.8
2,167.1
1,940.8
99.4
12.1
11.2
4.6
2,294.4
2,560.9
5,191.7
112.7
12.4
16.5
3.6
2,086.0
2,356.8
5,007.3
1,577.7
1,605.0
–
181.2
(46.1)
197.4
1,758.9
1,756.3
3,106.3
3,156.5
36.6
289.9
3,432.8
5,191.7
53.2
41.3
3,251.0
5,007.3
45
2013 dexus annual RepoRtConsolidated statement of finanCial Position As At 30 june 2013
Opening balance as at 1 July 2011
profit for the year attributable to:
unitholders of the parent entity
other stapled entities (non‑controlling interests)
other non‑controlling interest
profit for the year
other comprehensive income/(loss) for the year attributable to:
unitholders of the parent entity
other stapled entities (non‑controlling interests)
total other comprehensive income for the year
transactions with owners in their capacity as owners
Buy‑back of contributed equity, net of transaction costs
Capital payments and contributions, net of transaction costs
acquisition of non‑controlling interest
security‑based payments expense
distributions paid or provided for
total transactions with owners in their capacity as owners
transfer (from)/to retained profits
Closing balance as at 30 June 2012
Opening balance as at 1 July 2012
profit for the year attributable to:
unitholders of the parent entity
other stapled entities (non‑controlling interests)
profit for the year
other comprehensive income/(loss) for the year attributable to:
unitholders of the parent entity
other stapled entities (non‑controlling interests)
total other comprehensive income for the year
transactions with owners in their capacity as owners
Buy‑back of contributed equity, net of transaction costs
purchase of securities, net of transaction costs
security‑based payments expense
distributions paid or provided for
total transactions with owners in their capacity as owners
Closing balance as at 30 June 2013
Stapled security holders equity
Stapled security holders equity
Note
Contributed equity
$m
Retained profits
$m
Foreign currency
translation reserve
$m
4,812.8
325.2
(77.8)
Security-based payments
Treasury securities
Other non-controlling
Asset revaluation reserve
$m
42.7
reserve
$m
reserve
$m
Stapled security
holders’ equity
$m
5,102.9
–
–
–
–
–
–
–
(51.0)
(0.3)
–
–
–
(51.3)
–
4,761.5
81.5
99.6
–
181.1
–
–
–
–
–
–
–
(257.4)
(257.4)
(10.2)
238.7
4,761.5
238.7
–
–
–
–
–
–
(77.5)
–
–
–
(77.5)
4,684.0
102.8
411.7
514.5
–
–
–
–
–
–
(282.1)
(282.1)
471.1
24
24
25
26
24
25
25
26
–
–
–
–
57.6
(15.8)
41.8
–
–
–
–
–
–
–
(36.0)
(36.0)
–
–
–
46.1
(16.4)
29.7
–
–
–
–
–
(6.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.4
–
0.4
–
0.4
0.4
2.0
–
2.0
2.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2.2)
(2.2)
(2.2)
81.5
99.6
–
181.1
57.6
(15.8)
41.8
(51.0)
(0.3)
–
0.4
(257.4)
(308.3)
(10.2)
5,007.3
5,007.3
102.8
411.7
514.5
46.1
(16.4)
29.7
(77.5)
(2.2)
2.0
(282.1)
(359.8)
5,191.7
interest
$m
204.0
–
–
1.8
1.8
(204.0)
(12.0)
(216.0)
10.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total equity
$m
5,306.9
81.5
99.6
1.8
182.9
57.6
(15.8)
41.8
(51.0)
(0.3)
(204.0)
0.4
(269.4)
(524.3)
–
5,007.3
5,007.3
102.8
411.7
514.5
46.1
(16.4)
29.7
(77.5)
(2.2)
2.0
(282.1)
(359.8)
5,191.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
42.7
42.7
42.7
the above Consolidated statement of Changes in equity should be read in conjunction with the accompanying notes.
46
2013 dexus annual RepoRtConsolidated statement of Changes in equityfor the year ended 30 june 2013 Contributed equity
Retained profits
Note
$m
4,812.8
Foreign currency
translation reserve
$m
(77.8)
Opening balance as at 1 July 2011
profit for the year attributable to:
unitholders of the parent entity
other stapled entities (non‑controlling interests)
other non‑controlling interest
profit for the year
other comprehensive income/(loss) for the year attributable to:
unitholders of the parent entity
other stapled entities (non‑controlling interests)
total other comprehensive income for the year
transactions with owners in their capacity as owners
Buy‑back of contributed equity, net of transaction costs
Capital payments and contributions, net of transaction costs
total transactions with owners in their capacity as owners
acquisition of non‑controlling interest
security‑based payments expense
distributions paid or provided for
transfer (from)/to retained profits
Closing balance as at 30 June 2012
Opening balance as at 1 July 2012
profit for the year attributable to:
unitholders of the parent entity
other stapled entities (non‑controlling interests)
profit for the year
other comprehensive income/(loss) for the year attributable to:
unitholders of the parent entity
other stapled entities (non‑controlling interests)
total other comprehensive income for the year
transactions with owners in their capacity as owners
Buy‑back of contributed equity, net of transaction costs
purchase of securities, net of transaction costs
security‑based payments expense
distributions paid or provided for
total transactions with owners in their capacity as owners
Closing balance as at 30 June 2013
24
24
25
26
24
25
25
26
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(51.0)
(0.3)
(51.3)
4,761.5
(77.5)
(77.5)
4,684.0
$m
325.2
81.5
99.6
–
181.1
(257.4)
(257.4)
(10.2)
238.7
102.8
411.7
514.5
–
–
–
–
–
–
–
–
–
–
–
–
–
(282.1)
(282.1)
471.1
57.6
(15.8)
41.8
(36.0)
(36.0)
46.1
(16.4)
29.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,761.5
238.7
Stapled security holders equity
Stapled security holders equity
Asset revaluation reserve
$m
Security-based payments
reserve
$m
Treasury securities
reserve
$m
Stapled security
holders’ equity
$m
Other non-controlling
interest
$m
42.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
42.7
42.7
–
–
–
–
–
–
–
–
–
–
–
(6.3)
42.7
–
–
–
–
–
–
–
–
–
–
–
0.4
–
0.4
–
0.4
0.4
–
–
–
–
–
–
–
–
2.0
–
2.0
2.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2.2)
–
–
(2.2)
(2.2)
5,102.9
204.0
81.5
99.6
–
181.1
57.6
(15.8)
41.8
(51.0)
(0.3)
–
0.4
(257.4)
(308.3)
(10.2)
5,007.3
5,007.3
102.8
411.7
514.5
46.1
(16.4)
29.7
(77.5)
(2.2)
2.0
(282.1)
(359.8)
5,191.7
–
–
1.8
1.8
–
–
–
–
–
(204.0)
–
(12.0)
(216.0)
10.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total equity
$m
5,306.9
81.5
99.6
1.8
182.9
57.6
(15.8)
41.8
(51.0)
(0.3)
(204.0)
0.4
(269.4)
(524.3)
–
5,007.3
5,007.3
102.8
411.7
514.5
46.1
(16.4)
29.7
(77.5)
(2.2)
2.0
(282.1)
(359.8)
5,191.7
47
2013 dexus annual RepoRt 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 from investments accounted for using the equity method
Income and withholding taxes paid
proceeds from sale of property classified as inventory
payments for property classified as inventory
Net cash inflow from operating activities
cash flows from investing activities
proceeds from sale of investment properties
proceeds from sale of subsidiaries
payments for capital expenditure on investment properties
payments for acquisition of investment properties
payments for investments accounted for using the equity method
payments for plant and equipment
Net cash (outflow)/inflow from investing activities
cash flows from financing activities
proceeds from borrowings
Repayment of borrowings
payments for buy‑back of contributed equity
purchase of securities for security‑based payments plans
Capital contribution and capital payment transaction costs
acquisition of non‑controlling interest
distributions paid to security holders
distributions paid to other non‑controlling interests
Net cash outflow from financing activities
Net 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
Note
2013
$m
2012
$m
34(a)
760.0
(334.8)
1.3
(116.1)
19.7
(0.2)
24.4
(160.8)
193.5
303.4
435.9
(120.7)
(22.2)
(674.3)
(7.0)
(84.9)
3,516.3
(3,328.1)
(77.5)
(2.2)
–
–
(264.1)
–
854.5
(365.0)
1.9
(146.6)
7.5
(1.1)
53.2
(44.9)
359.5
883.6
–
(177.6)
(34.7)
(8.6)
(3.1)
659.6
2,628.2
(3,134.2)
(51.0)
–
(0.3)
(204.0)
(254.5)
(15.2)
(155.6)
(1,031.0)
(47.0)
59.2
2.7
14.9
(11.9)
73.7
(2.6)
59.2
7
the above Consolidated statement of Cash Flows should be read in conjunction with the accompanying notes.
48
2013 dexus annual RepoRtConsolidated statement of Cash flows for the year ended 30 june 2013 note 1 summary of significant accounting policies
(a)
Basis of preparation
In accordance with australian accounting standards, 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 results 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 and
represents the equity of dIt, dot and dxo. other non‑controlling
interests represent the equity attributable to parties external to the
Group. ddF is a for‑profit entity for the purpose of preparing Financial
statements.
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
ddF, dIt, dot and dxo may only un‑staple 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 2013 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(l), 1(n), 1(p), 1(u), 1(v), and 1(z)).
the Group has unutilised facilities of $305.9 million (refer note 20) and
sufficient working capital and cash flows in order to fund all requirements
arising from the net current asset deficiency of $155.8 million as at
30 June 2013.
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(l), 1(n), 1(p), 1(u), 1(v) and
1(z), 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.
Changes to presentation – classification of expenses
Following a review of internal reporting, the Consolidated statement of
Comprehensive Income and the operating segments note (refer note 33)
have been amended to disclose revenue and expenses on the basis of
their function. the revised disclosures, which include additional financial
metrics within the operating segments note, better reflects the financial
information regularly reviewed by the directors and dxs management in
order to assess the performance of the functions of the Group and the
allocation of resources.
(b)
principles of consolidation
Controlled entities
(i)
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 unit holdings 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.
Partnerships and joint ventures
(ii)
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(s)).
Employee share trust
(ii)
the Group has formed a trust to administer the Group’s securities‑based
employee benefits. the employee share trust is consolidated as the
substance of the relationship is that the trust is controlled by the Group.
(c)
revenue recognition
Rent
(i)
Rental revenue is brought to account on a straightline 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.
49
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 note 1 summary of significant accounting policies
(continued)
(c)
revenue recognition (continued)
Management fee revenue
(ii)
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.
Interest revenue
(iii)
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.
Dividends and distribution revenue
(iv)
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.
Property expenses
(i)
property expenses include rates, taxes and other property outgoings
incurred in relation to investment properties where such expenses are
the responsibility of the Group.
Borrowing costs
(ii)
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
Derivatives
(i)
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, the 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.
Debt and equity instruments issued by the Group
(ii)
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.
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.
Financial guarantee contracts
(iii)
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 and new Zealand 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.
50
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 dxo is liable for income tax and applies the following policy in
determining the tax expense, assets and liabilities:
the income tax expense for the year is the tax payable on the
current year’s taxable income based on the notional income tax
rate for each jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences and to unused
tax losses
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
based on the tax rates enacted for each jurisdiction. 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)
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
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
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.
deferred tax assets or liabilities are recognised for temporary
differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates which are
enacted or substantively enacted for each jurisdiction. the relevant tax
rates are applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or liability.
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,
where required.
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 28%. 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, where
required.
dxo and its wholly owned controlled australian entities have formed a
tax consolidated group. as a consequence, these entities are taxed as
a single entity.
(h)
distributions
In accordance with the trust’s Constitution, the Group distributes
its distributable income to unit holders 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(n). 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
(i)
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.
51
2013 dexus annual RepoRt note 1 summary of significant accounting policies
(continued)
(l)
inventories (continued)
Net realisable value
(ii)
net realisable value is determined using the estimated selling price
in the ordinary course of business. Costs to bring inventories to their
finished condition, including marketing and selling expenses, are
estimated and deducted to establish net realisable value.
(m)
Non-current assets held for sale and discontinued
operations
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.
a discontinued operation is a component of the entity that has been
disposed of or is classified as held for sale and that represents a
separate major line of business or geographical area of operations, is
part of a single coordinated plan to dispose of such a line of business or
area of operations, or is a subsidiary acquired exclusively with a view to
resale. the results of discontinued operations are presented separately
in the income statement.
non‑current assets classified as held for sale and the assets of a
discontinued operation are presented separately from the other assets
in the balance sheet. the liabilities of a discontinued operation are
presented separately from other liabilities in the balance sheet.
(n)
plant and equipment
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.
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(t)).
(o)
depreciation of plant and equipment
depreciation is calculated using the straightline method so as to allocate
their cost, net of their residual values, over their expected useful lives as
follows:
Furniture and fittings
It and office equipment
10‑20 years
3‑5 years
(p)
investment properties
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.
(q)
leasing fees
leasing fees incurred are capitalised and amortised over the lease
periods to which they relate.
(r)
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 straightline 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.
52
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 (s)
investments accounted for using the equity method
(v)
financial assets and liabilities
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.
Classification
(i)
the Group has classified its financial assets and liabilities as follows:
Financial asset/
liability
Receivables
Classification
Valuation basis
Reference
loans and
receivables
amortised cost Refer note 1(k)
other financial
assets
loans and
receivables
payables
Financial liability
at amortised cost
Interest bearing
liabilities
Financial liability
at amortised cost
derivatives
Fair value through
profit or loss
amortised cost Refer note 1(e)
amortised cost Refer note 1(w)
amortised cost Refer note 1(x)
Fair value
Refer note 1(e)
(t)
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.
(u)
intangible assets
Goodwill
(i)
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.
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.
Management rights
(ii)
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 straightline
method over their estimated remaining useful lives. Management rights
with indefinite useful lives are not subject to amortisation and are tested
for impairment annually.
Financial assets and liabilities are classified in accordance with the
purpose for which they were acquired.
Fair value estimation of financial assets and liabilities
(ii)
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.
(w)
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.
(x)
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.
53
2013 dexus annual RepoRt note 1 summary of significant accounting policies
(continued)
(y)
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.
Foreign currency transactions
(i)
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.
Foreign operations
(ii)
Foreign operations are located in new Zealand and Germany.
these operations have a functional currency of nZ dollars and euros
respectively, which are translated into the presentation currency.
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
or partial 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.
(z)
employee benefits
Wages, salaries and annual leave
(i)
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.
Long service leave
(ii)
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.
Security-based payments
(iii)
security‑based employee benefits will be provided to eligible
participants via the 2012 transitional performance Rights plan, the
deferred short term Incentive plan (dstI) and the long term Incentive
plan (ltI). Information relating to the plans is set out in note 36. under
the plans, participating employees will be granted a defined number
of performance rights which will vest into dxs stapled securities at no
cost, if certain vesting conditions are satisfied.
the fair value of performance rights granted is recognised as an
employee benefit expense with a corresponding increase in the
security‑based payments reserve in equity. the total amount to
be expensed is determined by reference to the fair value of the
performance rights granted. Fair value is determined independently
using Black‑scholes and Monte Carlo pricing models with reference
to the expected life of the rights, security price at grant date, expected
price volatility of the underlying security, expected distribution yield,
the risk free interest rate for the term of the rights and expected total
security‑holder returns (where applicable).
non‑market vesting conditions, including Funds from operations (FFo),
Return on equity (Roe) and employment status at vesting, are included
in assumptions about the number of performance rights that are expected
to vest. the total expense is recognised over the vesting period, which
is the period over which all of the specified vesting conditions are to be
satisfied. at the end of each period, the Group revises its estimates of
the number of performance rights that are expected to vest based on the
non‑market vesting conditions. the impact of the revised estimates,
if any, is recognised in profit or loss with a corresponding adjustment
to equity.
When performance rights vest, the Group will arrange for the allocation
and delivery of the appropriate number of securities to the participant.
(aa) earnings per unit
Basic earnings per unit are determined by dividing the net profit
attributable to unit holders 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.
(ab) 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.
(ac) 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 tenth of a million dollars, unless otherwise
indicated.
54
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 (ad) parent entity financial information
the financial information for the parent entity, dexus diversified trust,
disclosed in note 27, has been prepared on the same basis as the
consolidated Financial statements except as set out below:
(i)
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.
Interests held by the parent entity in controlled entities are measured
at fair value through profit and loss to reduce a measurement or
recognition inconsistency.
(ae) New accounting standards and interpretations
Certain new accounting standards and interpretations have been
published that are not mandatory for the 30 June 2013 reporting
period. our assessment of the impact of these new standards and
interpretations is set out below:
AASB 2012-3 Amendments to Australian Accounting Standard –
Offsetting Financial Assets and Financial Liabilities and AASB
2012-2 Amendments to Australian Accounting Standard –
Disclosures – Offsetting Financial Assets and Financial Liabilities
(effective 1 July 2014 and 1 July 2013 respectively)
In June 2012, the aasB approved amendments to the application
guidance in aasB 132 Financial Instruments: Presentation, to clarify
some of the requirements for offsetting financial assets and financial
liabilities in the Financial statements. these amendments are effective
from 1 July 2014. they are unlikely to affect the accounting for any
of the Group’s current offsetting arrangements. the aasB has also
introduced more extensive disclosure requirements into aasB 7 which
will apply from 1 July 2013. the Group intends to apply the new rules
from 1 July 2013 and does not expect any significant impacts.
AASB 2012-5 Amendments to Australian Accounting Standard
arising from Annual Improvements 2009-2011 cycle (effective
1 July 2013)
In June 2012, the aasB approved a number of amendments to
australian accounting standards as a result of the 2009‑2011 annual
improvements project. the Group will apply the amendments from
1 July 2013 and does not expect any significant impacts.
AASB 9 Financial Instruments, AASB 2009-11 Amendments to
Australian Accounting Standards arising from AASB 9, AASB
2010-7 Amendments to Australian Accounting Standards arising
from AASB 9 (December 2010) and AASB 2012-6 Amendments
to Australian Accounting Standards – Mandatory Effective Date
of AASB 9 and Transition Disclosures (effective 1 July 2015)
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 2015 and
does not expect any significant impacts.
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.
AASB 10 Consolidated financial statements (effective 1 July 2013)
aasB 10 replaces all of the guidance on control and consolidation in
aasB 127 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.
AASB 11 Joint Arrangements (effective 1 July 2013)
aasB 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.
AASB 12 Disclosure of interests in other entities (effective
1 July 2013)
aasB 12 sets out the required disclosures for entities reporting under the
two new standards, aasB 10 and aasB 11, and replaces the disclosure
requirements currently found in aasB 128. application of this standard
will not affect any of the amounts recognised in the Financial statements,
but will impact some of the Group’s current disclosures. the Group
intends to apply the standard from 1 July 2013 and does not expect
any significant impacts.
AASB 128 Investments in associates and joint ventures (effective
1 July 2013)
amendments to aasB 128 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.
AASB 13 Fair value measurement (effective 1 July 2013)
aasB 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 will impact some
of the Group’s current disclosures. the Group intends to apply the
standard from 1 July 2013 and does not expect any significant impacts.
55
2013 dexus 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 loss of interest rate swaps
Total finance costs
2013
$m
564.7
(53.0)
34.9
546.6
2013
$m
99.2
(10.7)
2.6
7.5
98.6
the average capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 7.00% (2012: 7.70%).
note 4 corporate and administration expenses
audit and taxation fees
Custodian fees
legal and other professional fees
Registry costs and listing fees
occupancy expenses
administration expenses
other staff expenses
depreciation and amortisation
employee benefits expense
other expenses
Total corporate and administration expenses
Note
6
2013
$m
1.3
0.5
0.7
0.5
2.7
3.3
1.7
3.2
50.9
3.6
68.4
2012
$m
558.2
(49.9)
27.4
535.7
2012
$m
76.2
(22.5)
2.1
62.2
118.0
2012
$m
1.2
0.4
1.6
0.7
2.7
3.0
1.8
2.5
57.5
4.4
75.8
56
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 note 5 income tax
(a)
income tax benefit
Current tax benefit
deferred tax benefit
Total income tax benefit
Total income tax benefit attributable to:
profit from continuing operations
loss from discontinued operations
Total income tax benefit
deferred income tax benefit included in income tax benefit comprises:
Increase in deferred tax assets
decrease in deferred tax liabilities
Total deferred tax benefit
(b) reconciliation of income tax benefit to net profit
profit from continuing operations before tax
loss from discontinued operations before tax
total profit before tax
less amounts not subject to income tax (note 1(g))
prima facie tax (expense)/benefit at the australian tax rate of 30% (2012: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
depreciation and amortisation
Reversal of previous impairment
Movements in the carrying value and tax cost base of properties
net loss/(gain) on sale of investment properties
tax losses brought to account
sundry items
Income tax benefit
Note
16
22
2013
$m
2.4
(1.6)
0.8
(1.7)
2.5
0.8
2.7
(4.3)
(1.6)
2013
$m
523.2
(13.9)
509.3
(461.7)
47.6
(14.3)
0.7
6.2
6.0
0.5
1.2
0.5
15.1
0.8
2012
$m
1.1
19.0
20.1
18.9
1.2
20.1
8.6
10.4
19.0
2012
$m
307.5
(108.1)
199.4
(261.5)
(62.1)
18.6
0.9
–
5.1
(4.6)
–
0.1
1.5
20.1
57
2013 dexus annual RepoRt 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 fees paid in relation to outgoings audits1
pwC australia – regulatory audit and compliance services
pwC australia – audit and review of us asset disposals
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 australia is respect of us asset disposals
taxation fees paid to pwC
Fees paid to non‑pwC audit firms
Total taxation fees2
Total audit and taxation fees3,4
Transaction services fees
Fees paid to pwC australia
Total transaction services fees2
2013
$’000
2012
$’000
1,025
1,221
125
182
226
1,558
52
1,610
164
26
24
214
821
1,035
2,645
–
–
103
177
115
1,616
52
1,668
70
17
45
132
498
630
2,298
110
110
Total audit, taxation and transaction services fees
2,645
2,408
1. Fees paid in relation to outgoing audits are included in property expenses in the statement of Comprehensive Income.
2. these services include general compliance work, one off project work and advice.
3. total audit and taxation fees include $1.2 million (2012: $1.0 million) in relation to the us and european portfolios for general compliance work, one‑off project work
and advice. these fees are included in loss from discontinued operations in the statement of Comprehensive Income.
4. after allowing for the impact of footnotes 1 and 3 above, total audit and taxation fees included in other expenses is $1.3 million (2012: $1.2 million).
58
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 note 7 current assets – cash and cash equivalents
Cash at bank
short‑term deposits
Cash held in escrow 1
Total current assets – cash and cash equivalents
2013
$m
11.2
0.4
2.9
14.5
2012
$m
20.8
13.7
24.7
59.2
1. as at 30 June 2013, the Group held us$2.7 million (a$2.9 million) in escrow in relation to the us asset disposal in april 2013. these funds were released from
escrow on 25 July 2013.
as at 30 June 2012, the Group held us$25.2 million (a$24.7 million) in escrow in relation to the us asset disposals in June 2012. these funds were released from
escrow during the year ended 30 June 2013.
reconciliation to cash at the end of the year
the above figures are reconciled to cash as shown in the statement of Cash Flows as follows:
Balances as above
discontinued operations
Balances per Statement of Cash Flows
Note
12
2013
$m
14.5
0.4
14.9
2012
$m
59.2
–
59.2
59
2013 dexus annual RepoRt
note 8 current assets – receivables
Rent receivable
less: provision for doubtful debts
Total rental receivables
Fees receivable
Interest receivable
distributions receivable
other receivables
Total other receivables
Total current assets – receivables
note 9 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
(b)
reconciliation
opening balance at the beginning of the year
transfer from/(to) investment properties1
disposals
Impairment
acquisitions, additions and other
Closing balance at the end of the year
2013
$m
10.8
(0.6)
10.2
8.7
–
2.6
18.7
30.0
40.2
2013
$m
10.9
10.9
242.0
242.0
252.9
2013
$m
97.8
14.5
(22.9)
(2.2)
165.7
252.9
2012
$m
7.4
(0.9)
6.5
9.9
0.1
–
14.3
24.3
30.8
2012
$m
26.8
26.8
71.0
71.0
97.8
2012
$m
112.2
(7.0)
(44.0)
(14.9)
51.5
97.8
Note
13
1. during the year ended 30 June 2013, $14.5 million of developable investment property was transferred to inventory with an intention to sell.
acquisitions
on 30 november 2012, 50 Carrington street, sydney, nsW was acquired for $58.5 million, excluding acquisition costs
on 17 January 2013, 40 Market street, Melbourne, VIC was acquired for $46.7 million, excluding acquisition costs
disposals
during the year ended 30 June 2013, six lots located at Boundary Road, laverton, VIC were disposed of for gross proceeds of $24.4 million
60
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 note 10 derivative financial instruments
current assets
Interest rate swap contracts
Cross currency swap contracts
Forward foreign exchange contracts
other
Total current assets – derivative financial instruments
non-current assets
Interest rate swap contracts
Cross currency swap contracts
Total non-current assets – derivative financial instruments
current liabilities
Interest rate swap contracts
Forward foreign exchange contracts
Total current liabilities – derivative financial instruments
non-current liabilities
Interest rate swap contracts
Cross currency swap contracts
Total non-current liabilities – derivative financial instruments
Net derivative financial instruments
Refer note 28 for further discussion regarding derivative financial instruments.
note 11 current assets – other
prepayments
other
Total current assets – other
2013
$m
0.8
21.9
–
2.7
25.4
47.4
67.4
114.8
1.8
–
1.8
73.0
26.4
99.4
39.0
2013
$m
10.9
–
10.9
2012
$m
1.3
–
2.3
–
3.6
74.7
–
74.7
8.1
0.1
8.2
112.6
0.1
112.7
(42.6)
2012
$m
10.7
0.2
10.9
61
2013 dexus annual RepoRt note 12 Assets classified as held for sale and discontinued operations
a strategic review was announced to the asx on 16 august 2012, which resulted in all offshore property being considered non‑core. the remaining
us industrial portfolio and the majority of the remaining european portfolio were sold in February 2013 and May 2013 respectively. therefore the
results of the us and european portfolios have been presented within loss from discontinued operations in the statement of Comprehensive Income
for the year ended 30 June 2013.
the loss from the us and european discontinued operations comprises:
Revenue
expenses1
Loss before tax
tax benefit/(expense)
Loss after tax
Gain on measurement to fair value less costs to sell before tax
Gain on sale of investment properties
Withholding tax benefit
Gain on measurement to fair value less costs to sell after tax
Loss from discontinued operations
2013
$m
39.3
(73.0)
(33.7)
2.4
(31.3)
18.7
1.1
4.5
24.3
(7.0)
2012
$m
152.8
(260.9)
(108.1)
(35.4)
(143.5)
–
–
–
–
(143.5)
1. Includes finance break costs attributable to sales transactions of $18.8 million (2012: $44.3 million) and foreign currency translation reserve transfer on disposal of
foreign operations of $21.5 million (2012: $41.5 million).
the table below sets out additional information detailing the financial performance for discontinued operations.
2013
$m
31.7
0.4
(7.7)
(3.4)
4.0
(18.3)
1.3
2.4
(0.3)
10.1
21.9
(2.3)
(18.8)
(21.5)
0.1
(1.3)
4.5
0.3
(7.0)
2012
$m
117.9
0.4
(34.3)
(7.1)
2.2
(66.0)
5.6
(0.6)
–
18.1
32.3
(35.1)
(44.3)
(41.5)
(32.6)
(5.6)
(34.8)
–
(143.5)
property revenue
Management fee revenue
property expenses
Corporate and administration expenses
Foreign exchange gains
Finance costs
Incentive amortisation and rent straightline
Income tax benefit/(expense)
other
Funds From operations (FFo)1
net fair value gain of investment properties
net fair value loss of derivatives
Finance costs attributable to sales transactions
Foreign currency translation reserve transfer on disposal of foreign operations
net gain/(loss) on sale of investment properties
Incentive amortisation and rent straightline
deferred tax benefit/(expense)
other
Loss from discontinued operations
1. Refer note 33(c)(i) for a definition of FFo.
62
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 the carrying amounts of assets and liabilities of discontinued operations as at the date of disposal were:
Cash and cash equivalents
Receivables
Investment properties
Total assets
payables
Interest bearing liabilities
loans to related parties
other liabilities
Total liabilities
Net assets
the table below sets out the cash flow information for discontinued operations.
net cash flows from operating activities
net cash flows from investing activities
net cash flows from financing activities
Net (decrease)/increase in cash generated by discontinued operations
2013
$m
0.2
0.1
524.3
524.6
5.5
74.6
172.7
1.6
254.4
270.2
2013
$m
4.3
465.6
(493.1)
(23.2)
2012
$m
–
–
–
–
–
–
–
–
–
2012
$m
23.0
819.0
(799.3)
42.7
the table below sets out the assets classified as held for sale and discontinued operations that continue to be owned by the Group as at balance
date. these assets and liabilities are presented as aggregate amounts in the statement of Financial position.
Assets classified as held for sale
Cash and cash equivalents
Receivables
other
Investment properties
Total assets classified as held for sale
liabilities classified as held for sale
payables
Total liabilities classified as held for sale
20131
$m
20122
$m
0.4
0.4
0.3
7.7
8.8
0.1
0.1
–
–
–
212.3
212.3
–
–
1. Includes the remaining european property.
2. Includes certain investment properties whose value will be recovered through sale rather than through continuing use.
disposals
on 13 July 2012, 114‑120 old pittwater Road, Brookvale, nsW was disposed of for gross proceeds of $40.5 million
on 2 october 2012, 50% of an industrial portfolio consisting of assets at dexus Industrial estate laverton north VIC, altona north VIC
and Quarry Greystanes nsW was disposed of for gross proceeds of $110.8 million
on 1 February 2013, 50% of Quarry Greystanes, nsW – Camerons transport was disposed of for gross proceeds of $14.9 million
on 20 February 2013, Quarry Greystanes, nsW – promak was disposed of for gross proceeds of $16.4 million
on 15 May 2013, five properties located in France were disposed of for gross proceeds of €16.5 million (a$21.3 million)
on 21 June 2013, 50% of Quarry Greystanes, nsW – Warehouse 9 was disposed of for gross proceeds of $12.5 million
63
2013 dexus annual RepoRt note 13 non-current assets – investment properties
(a)
properties
Kings park Industrial estate, Bowmans Road, Marayong, nsW
target distribution Centre, lot 1, tara avenue, altona north, VIC
axxess Corporate park, Mount Waverley, VIC
Knoxfield Industrial estate, 20 Henderson Road, Knoxfield, VIC
12 Frederick street, st leonards, nsW
2 alspec place, eastern Creek, nsW
108‑120 silverwater Road, silverwater, nsW
40 talavera Road, north Ryde, 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 space1
34‑60 little Collins street, Melbourne, VIC**
32‑44 Flinders street, Melbourne, VIC
Flinders Gate Carpark, 172‑189 Flinders street, Melbourne, VIC
383‑395 Kent street Car park, sydney, nsW
123 albert st, Brisbane, Qld
2‑4 Military Rd, 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
145‑151 arthur street, Flemington, nsW
436‑484 Victoria Road, Gladesville, nsW
1 Foundation place, Greystanes, nsW
5‑15 Roseberry avenue & 25‑55 Rothschild avenue, Rosebery, nsW
10‑16 south street, Rydalmere, nsW
pound Road West, dandenong, VIC
dexus Industrial estate, Boundary Road, laverton north, VIC – Visy
dexus Industrial estate, Boundary Road, laverton north, VIC – Wrightson
dexus Industrial estate, Boundary Road, laverton north, VIC – Fosters
dexus Industrial estate, Boundary Road, laverton north, VIC – BestBar
12‑18 distribution drive, laverton north, VIC
250 Forest Road, south lara, VIC
15‑23 Whicker Road, Gillman, sa
25 donkin street, 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, north Ryde, nsW
131 Mica Road, Carole park, nsW
dexus Industrial estate, egerton street, silverwater, nsW
64
Ownership
Acquisition date
Independent
valuation date
Independent
valuation amount
$m
Independent valuer
Book value
30 Jun 2013
Book value
30 Jun 2012
400.0
401.4
375.5
%
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
50
50
50
50
50
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
oct 1984
dec 2009
sep 1997
dec 2002
dec 1998
dec 1998
sep 1997
sep 1997
Feb 2003
apr 1998
sep 1997
Jan 2004
Jul 2002
Jul 2002
Jul 2002
Jul 2002
Jul 2002
dec 2002
dec 2002
dec 1998
Jul 1998
May 1997
Jul 1998
Jun 1997
Jun 2002
Jan 2013
May 1997
dec 2012
Jun 2013
dec 2012
Jun 2011
Jun 2011
dec 2011
Jun 2013
dec 2011
Jun 2013
Jun 2012
dec 2010
Jun 2011
dec 2011
Jun 2013
dec 2011
Jun 2011
Jun 2011
Jun 2011
dec 2011
Mar 2013
Jun 2012
dec 2011
Jun 2012
Jun 2012
Jun 2012
Jun 2011
dec 2011
dec 2012
dec 2012
Jun 2011
dec 2012
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2012
sep 2012
dec 2010
Jun 2012
Jun 2011
sep 2012
Mar 2013
n/a
n/a
Jun 2012
90.5
16.3
187.2
37.6
33.5
24.9
23.4
31.5
241.0
93.5
77.0
28.5
133.0
24.0
0.1
39.2
29.5
54.0
64.0
52.9
37.5
42.0
16.3
24.0
28.0
41.5
44.8
90.5
39.3
71.4
9.6
3.6
18.7
6.0
51.0
52.3
28.8
27.0
12.5
16.3
8.8
n/a
145.0
n/a
35.0
(d)
(c)
(b)
(g)
(a)
(d)
(a)
(g)
(d)
(a)
(f)
(e)
(a)
(e)
(a)
(c)
(e)
(e)
(a)
(e)
(c)
(g)
(f)
(a)
(a)
(f)
(e)
(c)
(a)
(g)
(f)
(c)
(c)
(c)
(c)
(c)
(e)
(c)
(f)
(f)
(e)
(d)
n/a
(a)
n/a
(g)
$m
91.9
16.3
187.6
37.6
34.6
24.9
23.4
29.5
241.0
99.0
77.2
30.6
136.9
24.0
0.1
36.1
29.9
54.3
64.0
55.7
35.4
42.9
16.3
22.5
27.6
40.8
44.8
93.0
41.5
70.7
9.6
3.6
18.7
6.0
51.0
54.5
29.1
28.5
12.5
15.7
8.9
–
146.6
22.3
36.6
$m
89.0
16.3
182.8
37.7
33.9
24.9
24.3
29.0
217.7
93.5
77.2
28.1
134.0
27.6
0.1
39.3
29.9
54.0
64.0
52.9
37.5
42.0
16.3
24.0
28.5
41.7
43.3
90.8
40.7
74.5
9.5
3.5
18.0
5.9
50.4
52.3
27.3
29.4
12.5
15.6
8.0
14.3
147.9
–
35.0
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 Flinders Gate Complex, 172 Flinders street & 189 Flinders lane, Melbourne, VIC
note 13 non-current assets – investment properties
(a)
properties
Kings park Industrial estate, Bowmans Road, Marayong, nsW
target distribution Centre, lot 1, tara avenue, altona north, VIC
axxess Corporate park, Mount Waverley, VIC
Knoxfield Industrial estate, 20 Henderson Road, Knoxfield, VIC
12 Frederick street, st leonards, nsW
2 alspec place, eastern Creek, nsW
108‑120 silverwater Road, silverwater, nsW
40 talavera Road, north Ryde, nsW
44 Market street, sydney, nsW
8 nicholson street, Melbourne, VIC
130 George street, parramatta, nsW
383‑395 Kent street, sydney, nsW
14 Moore street, Canberra, aCt**
sydney CBd Floor space1
34‑60 little Collins street, Melbourne, VIC**
32‑44 Flinders street, Melbourne, VIC
123 albert st, Brisbane, Qld
2‑4 Military Rd, 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
145‑151 arthur street, Flemington, nsW
436‑484 Victoria Road, Gladesville, nsW
1 Foundation place, Greystanes, nsW
10‑16 south street, Rydalmere, nsW
pound Road West, dandenong, VIC
Flinders Gate Carpark, 172‑189 Flinders street, Melbourne, VIC
383‑395 Kent street Car park, sydney, nsW
5‑15 Roseberry avenue & 25‑55 Rothschild avenue, Rosebery, nsW
dexus Industrial estate, Boundary Road, laverton north, VIC – Visy
dexus Industrial estate, Boundary Road, laverton north, VIC – Wrightson
dexus Industrial estate, Boundary Road, laverton north, VIC – Fosters
dexus Industrial estate, Boundary Road, laverton north, VIC – BestBar
12‑18 distribution drive, laverton north, VIC
250 Forest Road, south lara, VIC
15‑23 Whicker Road, Gillman, sa
25 donkin street, 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, north Ryde, nsW
131 Mica Road, Carole park, nsW
dexus Industrial estate, egerton street, silverwater, nsW
Ownership
%
Acquisition date
Independent
valuation date
Independent
valuation amount
$m
Independent valuer
Book value
30 Jun 2013
$m
Book value
30 Jun 2012
$m
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
50
50
50
50
50
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
oct 1984
dec 2009
sep 1997
dec 2002
dec 1998
dec 1998
sep 1997
sep 1997
Feb 2003
apr 1998
sep 1997
Jan 2004
Jul 2002
Jul 2002
Jul 2002
Jul 2002
Jul 2002
dec 2002
dec 2002
dec 1998
Jul 1998
May 1997
Jul 1998
Jun 1997
Jun 2002
Jan 2013
May 1997
dec 2012
Jun 2013
dec 2012
Jun 2011
Jun 2011
dec 2011
Jun 2013
dec 2011
Jun 2013
Jun 2012
dec 2010
Jun 2011
dec 2011
Jun 2013
dec 2011
Jun 2011
Jun 2011
Jun 2011
dec 2011
Mar 2013
Jun 2012
dec 2011
Jun 2012
Jun 2012
Jun 2012
Jun 2011
dec 2011
dec 2012
dec 2012
Jun 2011
dec 2012
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2012
sep 2012
dec 2010
Jun 2012
Jun 2011
sep 2012
n/a
Mar 2013
n/a
Jun 2012
90.5
16.3
187.2
37.6
33.5
24.9
23.4
31.5
241.0
93.5
77.0
28.5
133.0
24.0
0.1
39.2
29.5
54.0
64.0
400.0
52.9
37.5
42.0
16.3
24.0
28.0
41.5
44.8
90.5
39.3
71.4
9.6
3.6
18.7
6.0
51.0
52.3
28.8
27.0
12.5
16.3
8.8
n/a
145.0
n/a
35.0
(d)
(c)
(b)
(g)
(a)
(d)
(a)
(g)
(d)
(a)
(f)
(e)
(a)
(e)
(a)
(c)
(e)
(e)
(a)
(e)
(c)
(g)
(f)
(a)
(a)
(f)
(e)
(c)
(a)
(g)
(f)
(c)
(c)
(c)
(c)
(c)
(e)
(c)
(f)
(f)
(e)
(d)
n/a
(a)
n/a
(g)
91.9
16.3
187.6
37.6
34.6
24.9
23.4
29.5
241.0
99.0
77.2
30.6
136.9
24.0
0.1
36.1
29.9
54.3
64.0
401.4
55.7
35.4
42.9
16.3
22.5
27.6
40.8
44.8
93.0
41.5
70.7
9.6
3.6
18.7
6.0
51.0
54.5
29.1
28.5
12.5
15.7
8.9
–
146.6
22.3
36.6
89.0
16.3
182.8
37.7
33.9
24.9
24.3
29.0
217.7
93.5
77.2
28.1
134.0
27.6
0.1
39.3
29.9
54.0
64.0
375.5
52.9
37.5
42.0
16.3
24.0
28.5
41.7
43.3
90.8
40.7
74.5
9.5
3.5
18.0
5.9
50.4
52.3
27.3
29.4
12.5
15.6
8.0
14.3
147.9
–
35.0
65
2013 dexus annual RepoRt Ownership
Acquisition date
Independent
valuation date
Independent
valuation amount
Book value
30 Jun 2013
Book value
30 Jun 2012
Independent valuer
%
100
100
100
50
50
50
50
50
50
50
50
50
100
100
50
50
100
100
50
100
100
100
50
100
50
n/a
May 1997
Jul 1997
Jun 1997
dec 2007
dec 2007
dec 2007
dec 2007
dec 2007
dec 2007
dec 2007
Jun 2010
Jun 2010
Jun 2010
dec 1998
dec 1998
dec 1998
dec 1998
dec 1998
dec 1998
Jan 2001
May 2002
aug 2000
aug 2000
aug 2000
aug 2000
n/a
Jun 2012
Mar 2013
sep 2012
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
n/a
Jun 2011
dec 2012
Jun 2012
sep 2012
sep 2012
Mar 2013
Jun 2012
Jun 2013
Jun 2012
Jun 2011
dec 2011
Jun 2013
n/a
$m
4.0
15.4
20.6
13.4
17.0
21.0
15.9
4.4
13.7
11.1
8.0
6.4
n/a
247.5
670.0
191.0
186.0
146.0
120.0
460.0
179.0
418.4
144.0
29.5
305.0
n/a
n/a
(g)
(b)
(a)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(f)
(a)
(d)
(d)
(c)
(e)
(f)
(c)
(c)
(d)
(a)
(e)
n/a
$m
–
15.4
20.9
13.4
17.0
21.0
15.9
4.4
13.7
11.1
8.0
6.4
6.5
256.7
671.8
194.0
192.8
147.8
120.3
480.2
179.0
425.2
144.0
55.1
305.0
107.4
$m
4.0
15.2
20.3
12.6
16.1
20.0
14.9
–
–
–
7.0
5.4
5.9
250.3
651.1
191.0
175.3
141.1
117.3
460.0
146.5
418.4
148.1
48.8
271.5
656.1
6,008.1
76.9
6,085.0
6,297.5
94.0
6,391.5
note 13 non-current assets – investment properties (continued)
(a)
properties (continued)
89 egerton street, silverwater, nsW
114 Fairbank Road, Clayton, VIC
30 Bellrick street, acacia Ridge, Qld
Quarry Greystanes, nsW – solaris
Quarry Greystanes, nsW – symbion
Quarry Greystanes, nsW – Fujitsu
Quarry Greystanes, nsW – Camerons transport
Quarry Greystanes, nsW – ups2
Quarry Greystanes, nsW – WH92
Quarry Greystanes, nsW – Brady2
Boundary Road, laverton, VIC – Fastline
Boundary Road, laverton, VIC – toll
Boundary Road, laverton, VIC – aCFs3
45 Clarence street, sydney, nsW
Governor phillip tower & Governor Macquarie tower, 1 Farrer place, sydney, nsW
309‑321 Kent street, sydney, nsW
1 Margaret street, sydney, nsW
Victoria Cross 60 Miller street, north sydney, nsW
the Zenith, 821‑843 pacific Highway, Chatswood, nsW
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, nsW
Garema Court, 140‑180 City Walk, Civic, aCt**
australia square Complex, 264‑278 George street, sydney, nsW
non‑core international properties
Total investment properties excluding development properties
Total development properties held as investment property
Total investment properties
1. Heritage floor space retained following the disposal of 1 Chifley square, sydney.
2. Classified as development property held as investment property at 30 June 2012.
3. 50% classified as inventory at 30 June 2013.
the title to all properties is freehold, with the exception of the properties marked ** which are leasehold.
(a) Colliers International
(b) urbis
(c) CB Richard ellis
(d) Jones lang lasalle
(e) Knight Frank
(f) Fpd savills
(g) m3property
66
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 89 egerton street, silverwater, nsW
114 Fairbank Road, Clayton, VIC
30 Bellrick street, acacia Ridge, Qld
Quarry Greystanes, nsW – solaris
Quarry Greystanes, nsW – symbion
Quarry Greystanes, nsW – Fujitsu
Quarry Greystanes, nsW – Camerons transport
Quarry Greystanes, nsW – ups2
Quarry Greystanes, nsW – WH92
Quarry Greystanes, nsW – Brady2
Boundary Road, laverton, VIC – Fastline
Boundary Road, laverton, VIC – toll
Boundary Road, laverton, VIC – aCFs3
45 Clarence street, sydney, nsW
Governor phillip tower & Governor Macquarie tower, 1 Farrer place, sydney, nsW
309‑321 Kent street, sydney, nsW
1 Margaret street, sydney, nsW
Victoria Cross 60 Miller street, north sydney, nsW
the Zenith, 821‑843 pacific Highway, Chatswood, nsW
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, nsW
Garema Court, 140‑180 City Walk, Civic, aCt**
australia square Complex, 264‑278 George street, sydney, nsW
non‑core international properties
Total investment properties excluding development properties
Total development properties held as investment property
Total investment properties
1. Heritage floor space retained following the disposal of 1 Chifley square, sydney.
2. Classified as development property held as investment property at 30 June 2012.
3. 50% classified as inventory at 30 June 2013.
the title to all properties is freehold, with the exception of the properties marked ** which are leasehold.
(a) Colliers International
(b) urbis
(c) CB Richard ellis
(d) Jones lang lasalle
(e) Knight Frank
(f) Fpd savills
(g) m3property
Ownership
%
Acquisition date
Independent
valuation date
Independent
valuation amount
$m
Independent valuer
Book value
30 Jun 2013
$m
Book value
30 Jun 2012
$m
100
100
100
50
50
50
50
50
50
50
50
50
100
100
50
50
100
100
50
100
100
100
50
100
50
n/a
May 1997
Jul 1997
Jun 1997
dec 2007
dec 2007
dec 2007
dec 2007
dec 2007
dec 2007
dec 2007
Jun 2010
Jun 2010
Jun 2010
dec 1998
dec 1998
dec 1998
dec 1998
dec 1998
dec 1998
Jan 2001
May 2002
aug 2000
aug 2000
aug 2000
aug 2000
n/a
Jun 2012
Mar 2013
sep 2012
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
Jun 2013
n/a
Jun 2011
dec 2012
Jun 2012
sep 2012
sep 2012
Mar 2013
Jun 2012
Jun 2013
Jun 2012
Jun 2011
dec 2011
Jun 2013
n/a
4.0
15.4
20.6
13.4
17.0
21.0
15.9
4.4
13.7
11.1
8.0
6.4
n/a
247.5
670.0
191.0
186.0
146.0
120.0
460.0
179.0
418.4
144.0
29.5
305.0
n/a
(g)
(b)
(a)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
n/a
(f)
(a)
(d)
(d)
(c)
(e)
(f)
(c)
(c)
(d)
(a)
(e)
n/a
–
15.4
20.9
13.4
17.0
21.0
15.9
4.4
13.7
11.1
8.0
6.4
6.5
256.7
671.8
194.0
192.8
147.8
120.3
480.2
179.0
425.2
144.0
55.1
305.0
107.4
4.0
15.2
20.3
12.6
16.1
20.0
14.9
–
–
–
7.0
5.4
5.9
250.3
651.1
191.0
175.3
141.1
117.3
460.0
146.5
418.4
148.1
48.8
271.5
656.1
6,008.1
76.9
6,085.0
6,297.5
94.0
6,391.5
67
2013 dexus annual RepoRt note 13 non-current assets – investment properties (continued)
(a)
properties (continued)
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 or the new Zealand Institute of Valuers.
Key valuation assumptions
the below table illustrates the key valuation assumptions used in the determination of the investment properties fair value.
2013
Weighted average capitalisation rate (%)
Weighted average lease expiry by income (years)
occupancy by income (%)
2012
Weighted average capitalisation rate (%)
Weighted average lease expiry by income (years)
occupancy by income (%)
Australian
office
Australian
industrial
7.17
5.0
94.6
7.30
4.9
96.8
8.55
4.1
96.1
8.59
4.4
92.8
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
on 18 January 2013, 131 Mica street, Carole park, Qld was acquired for s21.0 million, excluding acquisition costs
disposals
on 12 november 2012, 89 egerton street, silverwater, nsW was disposed of for gross proceeds of $4.0 million
on 21 november 2012, 1777 s Vintage avenue, ontario was disposed of for gross proceeds of us$18.2 million (a$17.6 million)
on 14 February 2013, a portfolio of 25 us industrial properties were disposed of as part of an entity sale for gross proceeds of us$542.8 million
(a$526.0 million)
on 1 March 2013, 144 Wicks Road, Macquarie park, nsW was disposed of for gross proceeds of $13.9 million
on 27 March 2013, 50% of Quarry Greystanes, nsW – Blackwoods was disposed of for gross proceeds of $4.8 million
on 27 March 2013, 50% of Quarry Greystanes, nsW – Roche was disposed of for gross proceeds of $2.4 million
on 18 april 2013, 3550 tyburn street & 3332‑3424 north san Fernando Road, los angeles was disposed of for gross proceeds of
us$56.2 million (a$54.1 million)
68
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 (b)
reconciliation
opening balance at the beginning of the year
additions
acquisitions
lease incentives
amortisation of lease incentives
Rent straightlining
disposals
transfer to non‑current assets classified as held for sale
transfer to discontinued operations
transfer (to)/from inventories1
net fair value gain of investment properties
Foreign exchange differences on foreign currency translation
Closing balance at the end of the year
Note
2013
$m
2012
$m
6,391.5
7,105.9
82.1
22.2
52.0
(52.1)
(0.6)
(24.9)
(7.2)
(559.6)
(14.5)
188.8
7.3
160.7
35.2
62.8
(62.7)
4.4
(881.1)
(187.4)
–
7.0
73.7
73.0
6,085.0
6,391.5
9
1. during the year ended 30 June 2013, $14.5 million of developable investment property was transferred to inventory with an intention to sell.
(c)
investment properties pledged as security
Refer to note 20 for information on investment properties pledged as security.
note 14 non-current assets – plant and equipment
opening balance at the beginning of the year
additions
depreciation charge
Closing balance at the end of the year
Cost
accumulated depreciation
Net book value as at the end of the year
2013
$m
4.7
7.0
(2.9)
8.8
22.6
(13.8)
8.8
2012
$m
3.9
3.1
(2.3)
4.7
15.6
(10.9)
4.7
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(s)). Information relating to these
entities is set out below:
Name of entity
Bent street trust
dexus Creek street trust
dexus Martin place trust
Grosvenor place Holding trust
site 6 Homebush Bay trust
site 7 Homebush Bay trust
dexus 480 Q Holding trust
dexus Kings square trust
Ownership interest
2013
%
33.3
50.0
50.0
50.0
50.0
50.0
50.0
50.0
2012
%
33.3
–
–
–
–
–
–
–
2013
$m
248.3
127.6
79.8
289.1
37.1
50.3
44.5
30.1
2012
$m
217.0
–
–
–
–
–
–
–
Total non-current assets – investments accounted for using the equity method
906.8
217.0
the above entities were formed in australia and their principal activity is office property investment.
69
2013 dexus annual RepoRt note 15 non-current assets – investments accounted for using the equity method (continued)
movements in carrying amounts of investments accounted for using the equity method
opening balance at the beginning of the year
additions
share of net profit after tax1
Fair value adjustment on acquisition of investments
distributions received/receivable
Closing balance at the end of the year
2013
$m
217.0
674.3
37.9
(0.1)
(22.3)
906.8
2012
$m
200.4
9.7
13.8
–
(6.9)
217.0
1. share of net profit after tax includes a fair value gain of investment properties of $12.9 million (2012: $7.5 million).
Summary of the performance and financial position of investments accounted for using the equity method
the Group’s share of aggregate revenue, profit, assets, liabilities and capital commitments of investments accounted for using the equity method are:
2013
$m
32.2
37.9
922.5
15.7
302.3
2013
$m
0.6
27.5
10.7
0.6
39.4
36.7
5.2
(2.5)
2.7
–
–
–
39.4
2012
$m
8.6
13.8
221.2
4.1
12.4
2012
$m
1.0
22.3
12.2
1.2
36.7
55.6
8.4
0.2
8.6
(28.6)
1.1
(27.5)
36.7
Revenue
net profit after tax
assets
liabilities
Capital commitments
note 16 non-current assets – deferred tax assets
The balance comprises temporary differences attributable to:
derivative financial instruments
tax losses
employee provisions
other
Total non-current assets – deferred tax assets
Movements
opening balance at the beginning of the year
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 to the statement of Comprehensive Income
Closing balance at the end of the year
70
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 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
Goodwill
opening balance at the beginning of the year
Impairment
Closing balance at the end of the year
Cost
accumulated impairment
Total goodwill
2013
$m
221.9
(0.3)
20.5
242.1
252.4
(3.0)
(7.3)
242.1
1.7
(0.1)
1.6
3.0
(1.4)
1.6
2012
$m
222.3
(0.4)
–
221.9
252.4
(2.7)
(27.8)
221.9
2.3
(0.6)
1.7
3.0
(1.3)
1.7
Total non-current assets – intangible assets
243.7
223.6
Management rights represent the asset management rights owned by dexus Holdings pty limited, a wholly owned subsidiary of dxo, which entitle
it to management fee revenue from both finite life trusts and indefinite life trusts. those rights that are deemed to have a finite useful life (held at a
value of $5.4 million (2012: $5.7 million)) are measured at cost and amortised using the straightline method over their estimated remaining useful
lives of 19 years. Management rights that are deemed to have an indefinite life are held at a value of $236.7 million (2012: $216.2 million).
impairment of management rights
during the current year, management carried out a review of the recoverable amount of its management rights. as part of this process, the estimated
fair‑value of assets under management, which are used to derive the future expected management fee income, have been adjusted to better reflect
current market conditions and committed developments. this has resulted in the recognition of a reversal of previous impairments of $20.5 million
(2012: nil) in the Consolidated statement of Comprehensive Income.
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:
a terminal capitalisation rate of 12.5% (2012: 12.5%) was used incorporating an appropriate risk premium for a management business
the cash flows have been discounted at 9.5% (2012: 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% (2012: 0.25%) decrease in the discount rate would increase the valuation by
$2.7 million (2012: $2.4 million)
note 18 non-current assets – other
tenant bonds
other
Total non-current assets – other
2013
$m
1.2
0.2
1.4
2012
$m
0.9
0.4
1.3
71
2013 dexus annual RepoRt note 19 current liabilities – payables
trade creditors
accruals
accrued capital expenditure
prepaid income
Gst payable
accrued interest
Current tax liabilities
other
Total current liabilities – payables
note 20 interest bearing liabilities
non-current
secured
Bank loans
Total secured
unsecured
us senior notes
Bank loans
Medium term notes
Total unsecured
deferred borrowing costs
Total non-current liabilities – interest bearing liabilities
Total interest bearing liabilities
Note
(a)
(b), (c)
(d)
(e)
financing arrangements
Type of Facility
us senior notes (144a)
us senior notes (uspp)
Medium term notes
Multi‑option revolving credit facilities
Total
Bank guarantee utilised
unused at balance date
Note
Currency
Security
Maturity Date
(b)
(c)
(e)
(d)
us$
us$
a$
unsecured
Mar 21
unsecured
dec 14 to Mar 17
unsecured
Jul 14 to sep 18
Multi Currency unsecured
Jan 15 to Feb 18
2013
$m
34.8
13.7
9.9
15.9
1.5
17.5
1.1
0.7
95.1
2012
$m
39.0
17.5
20.5
16.2
0.9
14.4
2.1
–
110.6
2013
$m
2012
$m
–
–
75.5
75.5
409.0
1,189.6
580.0
493.7
1,046.6
340.0
2,178.6
1,880.3
(11.5)
2,167.1
2,167.1
(15.0)
1,940.8
1,940.8
2013
$m
Facility Limit
268.8
140.2
580.0
1,527.4
2,516.4
2013
$m
utilised
268.8
140.2
580.0
1,189.6
2,178.6
31.9
305.9
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.
(a)
Bank loans – secured
Facilities secured by mortgages over investment properties sold as part of the remaining us industrial portfolio were repaid and associated
mortgages discharged during the year.
(b)
uS senior notes (144a)
this includes a total of us$250.0 million (a$268.8 million) of us senior notes with a maturity of March 2021.
(c)
uS senior notes (uSpp)
this includes a total of us$130.0 million (a$140.2 million) of us senior notes with a weighted average maturity of september 2015.
72
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 (d) multi-option revolving credit facilities
this includes 16 facilities maturing between January 2015 and February 2018 with a weighted average maturity of october 2016. the total facility
limit comprises a$1,473.5 million and us$50.0 million (a$53.9 million). a$31.9 million is utilised as bank guarantees for developments, aFsl
requirements and in relation to the sale of the us industrial portfolio.
(e) medium term notes
this includes a total of $580.0 million of medium term notes with a weighted average maturity of January 2016.
additional information
the Group has a commitment with a delayed start for us$300.0 million (a$323.5 million) of us senior notes with a weighted average maturity of
september 2026.
Following the end of the year, the Group extended the maturity date of an existing $150.0 million bank facility from March 2017 to January 2019.
the Group has entered into new revolving credit facilities totalling $120.0 million and a $100.0 million same day funding facility, each maturing in
august 2015.
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
payment of distributions
Closing balance at the end of the year
2013
$m
146.2
23.3
169.5
2012
$m
128.2
23.8
152.0
128.2
282.1
(264.1)
146.2
125.3
257.4
(254.5)
128.2
a provision for distribution has been raised for the period ended 30 June 2013. this distribution is to be paid on 30 august 2013.
non-current
provision for employee benefits
Total non-current liabilities – provisions
note 22 non-current liabilities – deferred tax liabilities
The balance comprises temporary differences attributable to:
derivative financial instruments
Goodwill
Investment properties and inventories
other
Total non-current liabilities – deferred tax liabilities
Movements
opening balance at the beginning of the year
temporary differences
Credited to the statement of Comprehensive Income
Movements in deferred withholding tax arising from:
temporary differences
Foreign currency translation
Charged to the statement of Comprehensive Income
Closing balance at the end of the year
11.2
11.2
16.5
16.5
2013
$m
3.3
2.1
6.5
0.2
2012
$m
3.8
2.2
5.9
0.5
12.1
12.4
12.4
4.3
4.3
(4.5)
(0.1)
(4.6)
12.1
18.2
(10.4)
(10.4)
5.5
(0.9)
4.6
12.4
73
2013 dexus annual RepoRt note 23 non-current liabilities – other
tenant bonds and other
Total non-current liabilities – other
note 24 contributed equity
(a)
Contributed equity of unitholders of the parent entity
opening balance at the beginning of the year
Capital payments
Buy‑back of contributed equity
transaction costs
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
Capital contributions
Buy‑back of contributed equity
transaction costs
Closing balance at the end of the year
(c) Number of securities on issue
opening balance at the beginning of the year
Buy‑back of contributed equity
Closing balance at the end of the year
terms and conditions
2013
$m
4.6
4.6
2012
$m
3.6
3.6
2013
$m
1,605.0
–
(27.3)
–
2012
$m
1,798.1
(175.0)
(18.0)
(0.1)
1,577.7
1,605.0
3,156.5
3,014.7
–
(50.2)
–
175.0
(33.0)
(0.2)
3,106.3
3,156.5
2013
No. of securities
2012
No. of securities
4,783,817,657 4,839,024,176
(81,860,267)
(55,206,519)
4,701,957,390 4,783,817,657
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.
74
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 note 25 Reserves and retained profits
(a)
reserves
Foreign currency translation reserve
asset revaluation reserve
security‑based payments reserve
treasury securities reserve
Total reserves
Movements:
Foreign currency translation reserve
opening balance at the beginning of the year
exchange differences on translating foreign operations
Foreign currency translation reserve transfer on disposal 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
security-based payments reserve
opening balance at the beginning of the year
security‑based payments expense
Closing balance at the end of the year
Treasury securities reserve
opening balance at the beginning of the year
purchase of securities
Closing balance at the end of the year
(b)
Nature and purpose of reserves
2013
$m
(6.3)
42.7
2.4
(2.2)
36.6
(36.0)
8.2
21.5
(6.3)
42.7
42.7
0.4
2.0
2.4
–
(2.2)
(2.2)
2012
$m
(36.0)
42.7
0.4
–
7.1
(77.8)
0.3
41.5
(36.0)
42.7
42.7
–
0.4
0.4
–
–
–
Foreign currency translation reserve
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.
Security-based payments reserve
the security‑based payments reserve is used to recognise the fair value of performance rights to be issued under the 2012 transitional performance
Rights plan, the deferred short‑term Incentive plan (dstI) and the long‑term Incentive plan (ltI). Refer to note 36 for further details.
Treasury securities reserve
the treasury securities reserve is used to record the acquisition of securities purchased to fulfill the obligations of the 2012 transitional performance
Rights plan, the deferred short‑term Incentive plan (dstI) and the long‑term Incentive plan (ltI). as at 30 June 2013, dxs held 2,108,728
stapled securities (2012: nil).
75
2013 dexus annual RepoRt note 25 Reserves and retained profits (continued)
(c)
retained profits
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 26 distributions paid and payable
(a)
distribution to security holders
31 december (paid 28 February 2013)
30 June (payable 30 august 2013)
(b) distribution to other non-controlling interests
dexus Rents trust (paid 18 october 2011)
dexus Rents trust (paid 17 January 2012)
dexus Rents trust (paid 18 april 2012)
dexus Rents trust (paid 29 June 2012)
Total distributions
(c) distribution rate
31 december (paid 28 February 2013)
30 June (payable 30 august 2013)
Total distributions
(d)
franked dividends
2013
$m
238.7
514.5
–
(282.1)
471.1
2013
$m
135.9
146.2
282.1
–
–
–
–
–
282.1
2013
Cents per
security
2.89
3.11
6.00
2012
$m
325.2
181.1
(10.2)
(257.4)
238.7
2012
$m
129.2
128.2
257.4
3.2
3.1
2.9
2.8
12.0
269.4
2012
Cents per
security
2.67
2.68
5.35
the franked portions of the final dividends recommended after 30 June 2013 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 2013.
Franking credits
opening balance at the beginning of the year
Franking debits arising during the year on receipt of tax refund at 30%
Closing balance at the end of the year
2013
$m
16.2
–
16.2
2012
$m
17.2
(1.0)
16.2
76
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 note 27 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 for the year from continuing operations
net profit/(loss) for the year from discontinued operations
net profit for the year
Total comprehensive income for the year
(b)
guarantees entered into by the parent entity
Refer to note 29 for details of guarantees entered into by the parent entity.
(c) Contingent liabilities
the parent entity had no contingent liabilities as at 30 June 2013 (2012: nil).
(d) Capital commitments
2013
$m
74.2
2,182.5
119.5
423.4
2012
$m
220.7
2,255.8
116.1
499.0
1,577.7
181.4
1,605.0
151.8
1,759.1
1,756.8
141.5
7.5
149.0
149.0
184.6
(45.5)
139.1
139.1
the following amounts represent capital expenditure of the parent entity on investment properties contracted at the end of the reporting period but
not recognised as liabilities payable:
Investment properties
Total capital commitments
2013
$m
3.2
3.2
2012
$m
3.4
3.4
77
2013 dexus annual RepoRt note 28 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 policies 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. the capital
structure is monitored and managed in consideration of a range of factors including:
the cost of capital and the financial risks associated with each class of capital
Gearing levels and other covenants
potential impacts on net tangible assets and security holders’ equity
potential impacts on the Group’s credit rating
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 30% to 40%. the gearing ratio calculated in accordance with our covenant requirements at
30 June 2013 was 29.1% (as detailed below).
Gearing ratio
total interest bearing liabilities1
total tangible assets2
Gearing ratio3
2013
$m
2,134.7
7,329.3
29.1%
2012
$m
1,956.0
7,025.5
27.8%
1. total interest bearing liabilities excludes deferred borrowing costs and includes the currency impact of cross currency swaps as reported internally to
management.
2. total tangible assets comprise total assets less intangible assets, derivatives and deferred tax balances as reported internally to management.
3. the cash adjusted gearing ratio at 30 June 2013 was 29.0% (2012: 27.2%).
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.
the Group is required to comply with certain financial covenants in respect of its interest bearing liabilities. during the 2013 and 2012 reporting
periods, the Group was in compliance with all of its financial covenants.
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 license (aFsl). the license is subject to certain capital requirements including the requirement to hold minimum net tangible
assets and to maintain minimum liquidity. dxFM must also prepare rolling cash projections over at least the next 12 months and demonstrate it will
have access to sufficient financial resources to meet its liabilities that are expected to be payable over that period. Cash projections and assumptions
are approved, at least quarterly, by the Board of the Responsible entity.
dWpl, a wholly owned entity, has also been issued with an aFsl as it is the Responsible entity for dexus Wholesale property Fund (dWpF).
dexus Wholesale Management limited (dWMl), a wholly owned entity, has been issued with an aFsl as it is the trustee of Golden diamond (Gd)
trust. these entities are subject to the same capital requirements.
78
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 (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:
short‑term liquidity management includes continuously monitoring forecast and actual cash flows
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
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 facilities or replacing the facilities 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.
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.
2013
2012
Expiring within
one year
$m
Expiring
between one
and two years
$m
Expiring
between two
and five years
$m
Expiring after
five years
$m
Expiring
within one
year
$m
Expiring
between one
and two years
$m
Expiring
between two
and five years
$m
Expiring after
five years
$m
40.6
95.2
(54.6)
–
–
–
–
–
–
–
–
–
30.8
110.6
(79.8)
–
–
–
–
–
–
–
–
–
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
55.2
148.4
430.8
518.5
45.2
45.2
525.2
295.4
69.0
257.9
1,179.8
–
71.2
163.8
1,142.4
151.9
124.2
406.3
1,610.6
518.5
116.4
209.0
1,667.6
447.3
53.3
61.1
138.6
134.4
106.5
121.6
681.3
632.8
35.2
37.3
22.5
29.1
18.6
49.7
–
14.0
(7.8)
4.2
(15.1)
48.5
(2.1)
(6.6)
(31.1)
(14.0)
1. Refer to note 20 (interest bearing liabilities). excludes deferred borrowing costs 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 financial assets and liabilities that have floating rate interest cash flows, future cash flows have been calculated using static interest and exchange rates prevailing at the
end of each reporting period. Refer to note 10 (derivative financial instruments) for fair value of derivatives. Refer note 29 (contingent liabilities) for financial guarantees.
79
2013 dexus annual RepoRt note 28 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 2013, 62% (2012: 67%) of the financial assets and liabilities 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.
June 2014
$m
June 2015
$m
June 2016
$m
June 2017
$m
June 2018
$m
> June 2019
$m
465.0
465.0
465.0
408.3
205.0
11.4
fixed rate debt1
a$ fixed rate debt
interest rate swaps
a$ hedged1
Combined fixed debt and swaps (A$ equivalent)
1,364.2
1,392.9
1,337.5
Hedge rate (%)
3.94%
3.99%
4.12%
1. amounts do not include fixed rate debt that has been swapped to floating rate debt through cross currency swaps.
899.2
927.9
872.5
565.0
973.3
4.21%
327.5
532.5
4.32%
70.0
81.4
5.68%
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)
Total A$ equivalent
the increase or decrease in interest expense is proportional to the increase or decrease in interest rates.
a$
us$
€
2013
(+/-) $m
2012
(+/-) $m
4.8
–
–
4.8
2.6
0.8
0.2
3.6
80
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013
Sensitivity on fair value of interest rate swaps
the table below shows the impact on the statement of Comprehensive Income for changes in the fair value of interest rate swaps for a 50 basis
points increase and decrease in short‑term and long‑term market interest rates. the sensitivity on the fair value arises from the impact that changes
in market rates will have on the mark‑to‑market valuation of the interest rate swaps. the fair value of interest rate swaps is calculated as the present
value of estimated future cash flows on the instruments. Cash flows are discounted using the forward price curve of interest rates at the end of the
reporting period. although interest rate swaps are transacted for the purpose of providing the Group with an economic hedge, the Group has elected
not to apply hedge accounting to its interest rate derivatives. accordingly, gains or losses arising from changes in the fair value are reflected in the
statement of Comprehensive Income.
+/– 0.50% (50 basis points)
+/– 0.50% (50 basis points)
Total A$ equivalent
a$
us$
2013
(+/–) $m
2012
(+/–) $m
14.6
(1.3)
13.1
14.0
0.6
14.6
(ii) equity price risk
equity price risk is the risk that the fair value of financial investments fluctuates due to changes in the underlying unit price. the Group’s equity price
risk arises from a derivative financial instrument, with any resultant fair value movements recognised in profit and loss.
Sensitivity analysis on equity price risk
the following sensitivity analysis shows the effect on the statement of Comprehensive Income if the market price of the underlying equity securities/
units at balance date had been 10% higher/lower with all other variables held constant.
+/– 0.10%
2013
(+/–) $m
7.9
2012
(+/–) $m
–
a$
(iii) 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 new Zealand and Germany. as a result of these activities, the Group has foreign exchange
risk, arising primarily from:
translation of investments in foreign operations
Borrowings and cross currency swaps denominated in foreign currencies
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.
81
2013 dexus annual RepoRt note 28 financial risk management (continued)
(2)
financial risk management (continued)
(b) Market risk (continued)
(iii) foreign exchange risk (continued)
Where foreign currency borrowings are used to fund australian investments, the Group transacts cross currency swaps for the purpose of ensuring
the Group has access to funding in multiple jurisdictions whilst reducing the risk that movements in foreign exchange rates will have an adverse
impact on security holder’s equity and net tangible assets. the Group’s net foreign currency exposures for net investments in foreign operations and
hedging instruments are as follows:
us$ assets1
us$ net borrowings and cross currency swaps2
uS$ denominated net investment
% hedged
€ assets1
€ net borrowings and cross currency swaps2
€ denominated net investment
% hedged
nZ$ assets1
NZ$ denominated net investment
% hedged
total foreign net investment (a$ equivalent)
Total % hedged
2013
$m
–
–
–
0%
6.0
(4.2)
1.8
71%
127.5
127.5
0%
109.9
5%
2012
$m
549.6
(523.7)
25.9
95%
36.6
(32.6)
4.0
89%
123.3
123.3
0%
126.9
81%
1. assets exclude working capital and cash as reported internally to management.
2. net borrowings equals interest bearing liabilities less cash. Where there is no interest bearing liabilities, cash is excluded. Cross currency swap amounts comprise the
foreign currency denominated leg of the cross currency swaps.
Sensitivity on equity (foreign currency translation reserve)
the table below shows the impact on the foreign currency translation reserve for changes in the translated value of foreign currency assets and
liabilities for an increase and decrease in foreign exchange rates per currency. the increase and decrease in cents per currency has been based
on the historical movements of the australian dollar relative to each currency1. the cents per currency has been applied to the spot rates prevailing
at the end of each reporting period2. the impact on the foreign currency translation reserve arises as prior to the disposal of the operations, the
translation of the Group’s foreign currency assets and liabilities are recorded (in australian dollars) directly in the foreign currency translation reserve.
+ 11.8 cents (12.8%) (2012: 13.2 cents)
– 11.8 cents (12.8%) (2012: 13.2 cents)
+ 8.9 cents (12.5%) (2012: 10.3 cents)
– 8.9 cents (12.5%) (2012: 10.3 cents)
+ 9.5 cents (8.0%) (2012: 10.6 cents)
– 9.5 cents (8.0%) (2012: 10.6 cents)
us$ (a$ equivalent)
us$ (a$ equivalent)
€ (a$ equivalent)
€ (a$ equivalent)
nZ$ (a$ equivalent)
nZ$ (a$ equivalent)
2013
$m
–
–
0.3
(0.4)
8.0
(9.4)
2012
$m
2.9
(3.8)
0.6
(0.7)
7.4
(8.7)
1. the sensitivity on market rates has been based on the standard deviation of the annual change in the australian dollar exchange rate per currency since 1984 or
commencement.
2. exchange rates at 30 June 2013: a$/us$ 0.9275 (2012: 1.0191), a$/€ 0.7095 (2012: 0.8092), a$/nZ$ 1.1871 (2012: 1.2771).
82
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 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. 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)
Total A$ equivalent
1. the above analysis does not include sensitivity to movements in BIlls lIBoR.
us$ (a$ equivalent)
2013
(+/–) $m
2012
(+/–) $m
8.5
8.5
–
–
Net foreign currency denominated cash flows
Foreign exchange risk exists in relation to net cash flows and transactions with foreign operations that are denominated in foreign currencies. this
risk is managed through the use of forward foreign exchange contracts (after taking into account the natural hedging through foreign denominated
interest expense).
Forward foreign exchange contracts outstanding at 30 June 2013 and 30 June 2012 are as follows:
1 year or less
2013
To pay uS$
uS$m
–
2013
To receive
A$m
–
2013
Weighted
average
exchange rate
–
2012
To pay
uS$m
–
2012
To receive
A$m
2.3
2012
Weighted
average
exchange rate
–
(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:
adopting a process for determining an approved counterparty, with consideration of qualitative factors as well as the counterparty’s rating
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
entering into Isda Master agreements once a financial institution counterparty is approved
ensuring tenants, together with approved credit limits, are approved and ensuring that leases are undertaken with a large number of tenants
For some trade receivables, obtaining collateral where necessary in the form of bank guarantees and tenant bonds
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 2013, the
lowest rating of counterparties the Group is exposed to was a– (Fitch) (2012: 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 2013 and 30 June 2012 was the carrying amount of financial assets recognised on the statement
of Financial position.
as at 30 June 2013 and 30 June 2012, 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 2013 is ($m): 34.6 (0‑30 days), 2.3 (31‑60 days), 1.7 (61‑90 days),
2.0 (91+ days). the ageing analysis of loans and receivables net of provisions at 30 June 2012 is ($m): 29.2 (0‑30 days), 0.7 (31‑60 days),
0.2 (61‑90 days), 0.7 (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.
83
2013 dexus annual RepoRt note 28 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 2013 and 30 June 2012, 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
Total financial liabilities
2013
Carrying amount1
$m
2013
Fair value2
$m
14.9
40.6
140.2
195.7
95.2
101.2
14.9
40.6
140.2
195.7
95.2
101.2
2012
Carrying
amount1
$m
59.2
30.8
78.3
2012
Fair value2
$m
59.2
30.8
78.3
168.3
168.3
110.6
120.9
108.5
120.9
878.9
1,299.6
2,374.9
934.7
1,299.6
2,430.7
673.7
1,282.1
2,187.3
743.2
1,282.1
2,254.7
1. Carrying value is equal to the value of the financial instruments on the statement of Financial position.
2. Fair value is the amount for which the financial instrument could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length
transaction. Where there is a difference between the carrying amount and fair value, the difference is not recognised in the statement of Financial position.
the fair value of interest bearing liabilities and derivative financial instruments has been determined by discounting the expected future cash flows
by the relevant market interest rates. the discount rates applied range from 0.19% to 4.56% for us$ and 2.66% to 5.29% for a$. Refer note 1(v)
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.
the following tables present the assets and liabilities measured and recognised as at fair value at 30 June 2013 and 30 June 2012.
30 June 2013
financial assets
derivative assets
Interest rate derivatives
Cross currency swaps
other
financial liabilities
interest bearing liabilities
Fixed interest bearing liabilities
Floating interest bearing liabilities
derivative liabilities
Interest rate derivatives
Cross currency swaps
84
Level 1
$m
Level 2
$m
Level 3
$m
2013
$m
–
–
2.7
2.7
–
–
–
–
–
–
48.2
89.3
–
137.5
934.7
1,299.6
2,234.3
74.8
26.4
101.2
–
–
–
–
–
–
–
–
–
–
48.2
89.3
2.7
140.2
934.7
1,299.6
2,234.3
74.8
26.4
101.2
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 30 June 2012
financial assets
derivative assets
Interest rate derivatives
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
$m
Level 2
$m
Level 3
$m
2012
$m
–
–
–
–
–
–
–
–
–
–
75.9
2.3
78.2
743.2
1,282.1
2,025.3
120.7
0.1
0.1
120.9
–
–
–
–
–
–
–
–
–
–
2013
$m
–
0.5
0.1
0.4
1.0
75.9
2.3
78.2
743.2
1,282.1
2,025.3
120.7
0.1
0.1
120.9
2012
$m
0.2
0.4
0.5
–
1.1
during the year, there were no transfers between level 1, level 2 and level 3 fair value measurements.
note 29 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
Boundary Road, laverton, VIC
123 albert street, Brisbane, Qld
1 Foundation place, Greystanes, nsW
Contingent liabilities in respect of developments
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$1,473.5 million and us$50 million (a$53.9 million) of bank bilateral
facilities, a total of a$575.0 million of medium term notes, a total of us$130.0 million (a$140.2 million) of privately placed notes, and a total of
us$250.0 million (a$268.8 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.
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.
on settlement of the us sales transaction (refer note 12), a letter of credit was issued in relation to the sale of 25 properties located in the united
states. the letter of credit was issued for us$15.2 million (a$16.4 million) and is expected to remain on issue until september 2014.
the Group has bank guarantees of $12.0 million held on behalf of dexus Funds Management limited and dexus Wholesale property limited to
comply with the terms of their australian Financial services licences (aFsl). the bank guarantees are issued in respect of the Group and do not
constitute an additional liability to those already existing on the statements 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.
85
2013 dexus annual RepoRt note 30 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:
Investment properties
Inventories
Total capital commitments
(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
2013
$m
53.6
4.9
58.5
2013
$m
3.0
11.6
–
14.6
2012
$m
52.8
10.1
62.9
2012
$m
3.5
5.8
6.1
15.4
payments made under operating leases are expensed on a straightline 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 a commitment for its
Head office premise at 264‑278 George street, sydney and for 343 George street, sydney.
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 31 Related parties
responsible entity
dxFM is the Responsible entity of ddF, dIt, dot and dxo.
dxH is the parent entity of dWpl, the Responsible entity for dWpF.
responsible entity fees
2013
$m
410.1
1,001.0
383.5
2012
$m
512.2
1,491.5
740.5
1,794.6
2,744.2
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.
86
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 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)
Investments accounted for using the equity method
property management fee income
Recovery of administration expenses
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)
2013
$’000
2012
$’000
21,018
19,004
7,629
3,377
1,827
1,015
49
284
180
–
48
7,435
3,141
1,667
710
143
704
265
43
3
directors
the following persons were directors of dxFM at all times during the year and to the date of this report, unless otherwise stated:
C t Beare, Bsc, Be (Hons), MBa, phd, FaICd1,4,5
e a alexander, aM, BComm, FCa, FaICd, FCpa1,2
B R Brownjohn, BComm1,2,7
J C Conde, ao, Bsc, Be (Hons), MBa1,4,6
t dwyer, BJuris (Hons), llB (Hons)1,3
s F ewen, oaM1,4
Craig d Mitchell, BComm, eMBa, FCpa10
W R sheppard, Bec (Hons)1,2,8
d J steinberg, Bec, FRICs, FapI
p B st George, Ca(sa), MBa1,5,9
1. Independent director.
2. Board audit, Risk & sustainability Committee Member.
3. Board Compliance Committee Member.
4. Board nomination, Remuneration & Governance Committee Member.
5. Board Finance Committee Member.
6. Resigned as Board Compliance Committee Member on 1 July 2012.
7. Resigned as Board Finance Committee Member on 1 July 2012.
8. appointed as Board Finance Committee Member on 1 July 2012.
9. Resigned as Board audit, Risk & sustainability Committee Member on 1 July 2012.
10. appointed as director on 12 February 2013.
other key management personnel
In addition to the directors listed above, the following persons were deemed by the Board nomination, Remuneration & Governance Committee to
be key management personnel during all or part of the financial year:
Name
tanya l Cox1
Ross du Vernet2
John C easy1
Kevin George3
Title
executive General Manager, property services and Chief operating officer
executive General Manager, strategy, transactions & Research
General Counsel
executive General Manager, office & Industrial
1. Ceased to be key management personnel on 1 July 2012.
2. appointed as key management personnel on 1 July 2012.
3. appointed as key management personnel on 10 december 2012.
87
2013 dexus annual RepoRt note 31 Related parties (continued)
Key management personnel compensation
compensation
short‑term employee benefits
post employment benefits
other long‑term benefits
termination benefits
security‑based payments
2013
$’000
2012
$’000
9,220
229
1,116
–
1,384
11,949
10,166
248
3,116
2,300
330
16,160
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.
equity instrument disclosures relating to key management personnel
the relevant interest in dxs stapled securities held during the financial year by each key management personnel, including their personally related
parties, are set out below:
Opening balance
1 July 2012
Purchases
Other1
Closing balance
30 June 2013
directors
Christopher t Beare
elizabeth a alexander, aM
Barry R Brownjohn
John C Conde, ao
tonianne dwyer
stewart F ewen, oaM
Craig d Mitchell
W Richard sheppard
darren J steinberg
peter B st George
Other key management personnel
Ross du Vernet2
Kevin George3
–
–
–
–
–
–
–
–
–
–
–
–
100,000
100,000
50,000
100,000
100,000
100,000
–
–
–
–
–
–
–
539,782
100,000
–
–
453,417
104,000
–
100,000
100,000
50,000
100,000
100,000
100,000
539,782
100,000
453,417
104,000
–
–
215,913
215,913
–
–
1. performance Rights granted under the 2012 transitional performance Rights plan (refer note 36).
2. appointed as key management personnel on 1 July 2012.
3. appointed as key management personnel on 10 december 2012.
the dxFM Board has approved a grant of performance rights to dxs stapled securities to eligible participants (refer note 36). details of the number
of performance rights issued to each of the key management personnel are set out in section 3 of the directors’ Report.
there were no loans or other transactions with key management personnel or their related parties during the years ended 30 June 2013 and
30 June 2012.
88
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 note 32 events occurring after reporting date
on 25 July 2013, dexus Funds Management limited (dxFM) as Responsible entity of dexus property Group entered into a forward contract with
deutsche Bank aG (dBa) in relation to units in the Commonwealth property office Fund (Cpa) which, in accordance with its terms, gives dxFM the
ability to acquire and dBa the obligation to deliver, 350,000,000 Cpa units (a 14.9% relevant interest in Cpa) at a price of $1.1334 per unit.
on 25 July 2013, at the same time as the forward contract was entered into, dxFM also entered into a zero‑cost cash‑settled collar with dBa over
350,000,000 Cpa units.
the zero‑cost cash‑settled collar is a derivative product under which:
If the prevailing price of relevant securities falls below a “floor” price ($1.02), dBa will pay dxFM the difference between the prevailing security
price and the “floor” price on the settlement date
If the prevailing price of relevant securities rises above a “ceiling” price ($1.20), dxFM will pay dBa the difference between the prevailing
security price and the “ceiling" price on the settlement date
no party pays a fee to the other for entry into the collar
since the end of the year, other than the matter disclosed 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 33 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.
Following a review of internal reporting, the operating segments note has been amended to disclose revenue and expenses on the basis of their
function and to provide additional financial metrics. the revised disclosures better reflect the financial information regularly reviewed by the directors
and dxs management in order to assess the performance of the functions of the Group and the allocation of resources.
Office
Industrial
this comprises office space with any associated retail space; as well as car parks and office developments in
australia and new Zealand.
this comprises domestic industrial properties, industrial estates and industrial developments.
Property management
this comprises property management services for third part clients and owned assets.
Development and trading
this comprises revenue earned and costs incurred by the Group on developments and inventory.
Funds management
this comprises funds management of third party client assets.
DXS asset management
this comprises asset management of assets owned by the Group.
All other segments
this comprises corporate expenses associated with maintaining and operating the Group. this segment also
includes the treasury function of the Group which is managed through a centralised treasury department.
Discontinued operations
this comprises industrial properties, industrial estates and industrial developments in the united states, as well
as the european industrial portfolio.
89
2013 dexus annual RepoRt note 33 Operating segments (continued)
(b)
Segment information provided to the Codm
30 June 2013
segment performance measures
Office
$m
Industrial
$m
Property
management
$m
Development and
trading
$m
Funds
management
$m
DXS asset
management
$m
All other
segments
$m
Eliminations
$m
Continuing
operations
$m
Discontinued
operations
$m
property revenue and property management fees
424 .1
142.6
–
–
424.1
(106.7)
–
–
–
–
–
–
142.6
(25.5)
–
–
–
–
317.4
117.1
–
–
30.4
–
0.8
348.6
190.7
–
–
–
–
(0.6)
(30.4)
–
–
(0.8)
507.5
–
–
(1.2)
–
–
115.9
8.0
–
–
–
–
(3.1)
1.2
–
–
–
12.3
–
19.7
32.0
–
(9.8)
(15.5)
–
–
6.7
–
–
–
–
–
6.7
–
–
–
–
–
–
–
–
–
–
4,657.9
1,427.1
–
–
912.8
5,570.7
–
–
–
1,427.1
–
–
–
–
–
24.4
1.1
25.5
(1.4)
(22.9)
1.2
(2.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
252.9
252.9
27.7
27.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(13.6)
(13.0)
(25.2)
0.3
1.2
14.1
(13.0)
14.1
(13.0)
(118.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(25.2)
1.2
(94.1)
(0.1)
(15.4)
20.5
(1.6)
(0.1)
(0.3)
(0.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
578.7
24.4
48.5
651.6
(132.2)
(9.8)
(68.4)
(22.9)
–
418.3
1.2
(94.1)
29.2
(0.1)
0.8
355.3
198.7
(2.2)
(15.4)
–
–
(3.7)
(29.2)
20.5
(1.6)
(0.9)
521.5
6,085.0
–
252.9
912.8
7,250.7
Total
$m
610.4
24.4
48.9
683.7
(139.9)
(9.8)
(71.8)
(22.9)
4.0
443.3
1.2
(112.4)
30.5
2.3
0.5
365.4
220.6
(2.2)
(17.7)
(18.8)
(21.5)
(3.6)
(30.5)
20.5
2.9
(0.6)
514.5
6,085.0
7.7
252.9
912.8
7,258.4
31.7
–
0.4
32.1
(7.7)
(3.4)
4.0
25.0
–
–
–
(18.3)
1.3
2.4
(0.3)
10.1
21.9
–
(2.3)
(18.8)
(21.5)
0.1
(1.3)
–
4.5
0.3
(7.0)
7.7
–
–
–
7.7
122.0
6.7
(1.0)
14.1
(13.0)
(114.8)
proceeds from sale of inventory
Management fee revenue
Total operating segment revenue
property expenses
property management salaries
Corporate and administration expenses
Cost of sale of inventory
Foreign exchange gains
Net operating EBIT
Interest revenue
Finance costs
Incentive amortisation and rent straightline
tax (expense)/benefit
other
Funds from Operations (FFO)
net fair value gain of investment properties
Impairment of inventories
net fair value loss of derivatives
Finance costs attributable to sales transactions
Foreign currency translation reserve transfer on disposal of foreign operations
net loss on sale of investment properties
Incentive amortisation and rent straightline
Reversal of impairment of management rights
deferred tax (expense)/benefit
other
Net profit/(loss) attributable to stapled security holders
segment asset measures
Investment properties
non‑current assets held for sale
Inventories
equity accounted investment properties
Direct property portfolio
90
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 property revenue and property management fees
424 .1
142.6
Incentive amortisation and rent straightline
30.4
(1.2)
note 33 Operating segments (continued)
(b)
Segment information provided to the Codm
30 June 2013
segment performance measures
proceeds from sale of inventory
Management fee revenue
Total operating segment revenue
property expenses
property management salaries
Corporate and administration expenses
Cost of sale of inventory
Foreign exchange gains
Net operating EBIT
Interest revenue
Finance costs
tax (expense)/benefit
other
Funds from Operations (FFO)
net fair value gain of investment properties
Impairment of inventories
net fair value loss of derivatives
Finance costs attributable to sales transactions
net loss on sale of investment properties
Incentive amortisation and rent straightline
Reversal of impairment of management rights
deferred tax (expense)/benefit
other
segment asset measures
Investment properties
non‑current assets held for sale
Inventories
equity accounted investment properties
Direct property portfolio
Foreign currency translation reserve transfer on disposal of foreign operations
424.1
(106.7)
142.6
(25.5)
317.4
117.1
6.7
115.9
8.0
6.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.8
348.6
190.7
(0.6)
(30.4)
(0.8)
507.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(3.1)
1.2
12.3
19.7
32.0
(9.8)
(15.5)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Office
$m
Industrial
$m
Property
management
$m
Development and
trading
$m
Funds
management
$m
DXS asset
management
$m
All other
segments
$m
Eliminations
$m
Continuing
operations
$m
Discontinued
operations
$m
–
24.4
1.1
25.5
–
–
(1.4)
(22.9)
–
1.2
–
–
–
–
–
1.2
–
(2.2)
–
–
–
–
–
–
–
–
–
–
27.7
27.7
–
–
(13.6)
–
–
14.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(13.0)
(25.2)
–
–
(13.0)
–
–
–
–
–
–
–
(25.2)
1.2
(94.1)
–
(0.1)
–
14.1
(13.0)
(118.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(15.4)
–
–
–
–
20.5
(1.6)
(0.1)
Net profit/(loss) attributable to stapled security holders
122.0
6.7
(1.0)
14.1
(13.0)
(114.8)
4,657.9
1,427.1
912.8
5,570.7
1,427.1
–
–
252.9
–
252.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.3)
–
–
(0.3)
–
–
0.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
578.7
24.4
48.5
651.6
(132.2)
(9.8)
(68.4)
(22.9)
–
418.3
1.2
(94.1)
29.2
(0.1)
0.8
355.3
198.7
(2.2)
(15.4)
–
–
(3.7)
(29.2)
20.5
(1.6)
(0.9)
521.5
6,085.0
–
252.9
912.8
7,250.7
31.7
–
0.4
32.1
(7.7)
–
(3.4)
–
4.0
25.0
–
(18.3)
1.3
2.4
(0.3)
10.1
21.9
–
(2.3)
(18.8)
(21.5)
0.1
(1.3)
–
4.5
0.3
(7.0)
–
7.7
–
–
7.7
Total
$m
610.4
24.4
48.9
683.7
(139.9)
(9.8)
(71.8)
(22.9)
4.0
443.3
1.2
(112.4)
30.5
2.3
0.5
365.4
220.6
(2.2)
(17.7)
(18.8)
(21.5)
(3.6)
(30.5)
20.5
2.9
(0.6)
514.5
6,085.0
7.7
252.9
912.8
7,258.4
91
2013 dexus annual RepoRt note 33 Operating segments (continued)
(b)
Segment information provided to the Codm (continued)
30 June 2012
segment performance measures
Office
$m
Industrial
$m
Property
management
$m
Development
and trading
$m
Funds
management
$m
DXS asset
management
$m
All other
segments
$m
Continuing
operations
$m
Discontinued
operations
$m
property revenue and property management fees
385.7
147.1
proceeds from sale of inventory
Management fee revenue
Total operating segment revenue
property expenses
property management salaries
Corporate and administration expenses
Cost of sale of inventory
Foreign exchange gains
Net operating EBIT
Interest revenue
Finance costs
Incentive amortisation and rent straightline
Rents cash distributions
tax expense and other
Funds from Operations (FFO)
net fair value gain/(loss) of investment properties
Impairment of inventories
net fair value loss of derivatives
net loss on sale of investment properties
Finance costs attributable to us sales transaction
Foreign currency translation reserve transfer on disposal of foreign operations
Incentive amortisation and rent straightline
Rents capital distributions
deferred tax benefit/(expense)
other
Net profit/(loss) attributable to stapled security holders
segment asset measures
Investment properties
non‑current assets held for sale
Inventories
equity accounted investment properties
Direct property portfolio
–
–
385.7
(95.8)
–
–
–
–
–
–
147.1
(27.1)
–
–
–
–
289.9
120.0
–
–
26.5
–
–
316.4
93.5
–
–
–
–
–
(26.5)
–
–
–
383.4
4,458.4
–
–
221.1
4,679.5
–
–
(0.4)
–
–
119.6
(43.0)
–
–
–
–
–
0.4
–
–
–
77.0
1,373.5
187.4
–
–
1,560.9
11.5
–
19.5
31.0
–
(12.9)
(15.5)
–
–
2.6
–
–
–
–
–
2.6
–
–
–
–
–
–
–
–
–
–
2.6
–
–
–
–
–
92
–
49.8
2.5
52.3
(44.0)
8.3
8.3
(14.9)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
97.8
97.8
(13.0)
(11.8)
(35.5)
15.3
(11.8)
15.3
(11.8)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(35.5)
1.7
(56.0)
(12.0)
1.1
(100.7)
(62.0)
10.2
18.9
(1.7)
544.3
49.8
50.3
644.4
(122.9)
(12.9)
(75.8)
(44.0)
–
388.8
1.7
(56.0)
26.1
(12.0)
1.1
349.7
50.5
(14.9)
(62.0)
–
–
–
(26.1)
10.2
18.9
(1.7)
324.6
5,831.9
187.4
97.8
221.1
6,338.2
117.9
–
0.4
118.3
(34.3)
(7.1)
2.2
79.1
–
–
–
(66.0)
5.6
–
(0.6)
18.1
32.3
–
(35.1)
(32.6)
(44.3)
(41.5)
(5.6)
(34.8)
–
–
–
–
(143.5)
559.6
24.9
584.5
28.3
28.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(6.6)
15.3
(11.8)
(135.3)
Total
$m
662.2
49.8
50.7
762.7
(157.2)
(12.9)
(82.9)
(44.0)
2.2
467.9
1.7
(122.0)
31.7
(12.0)
0.5
367.8
82.8
(14.9)
(97.1)
(32.6)
(44.3)
(41.5)
(31.7)
10.2
(15.9)
(1.7)
181.1
6,391.5
212.3
97.8
221.1
6,922.7
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013
note 33 Operating segments (continued)
(b)
Segment information provided to the Codm (continued)
property revenue and property management fees
385.7
147.1
30 June 2012
segment performance measures
proceeds from sale of inventory
Management fee revenue
Total operating segment revenue
property expenses
property management salaries
Corporate and administration expenses
Cost of sale of inventory
Foreign exchange gains
Net operating EBIT
Interest revenue
Finance costs
Rents cash distributions
tax expense and other
Funds from Operations (FFO)
Impairment of inventories
net fair value loss of derivatives
net fair value gain/(loss) of investment properties
net loss on sale of investment properties
Finance costs attributable to us sales transaction
Rents capital distributions
deferred tax benefit/(expense)
other
segment asset measures
Investment properties
non‑current assets held for sale
Inventories
equity accounted investment properties
Direct property portfolio
Incentive amortisation and rent straightline
26.5
(0.4)
Foreign currency translation reserve transfer on disposal of foreign operations
Incentive amortisation and rent straightline
(26.5)
0.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
385.7
(95.8)
147.1
(27.1)
289.9
120.0
2.6
316.4
93.5
119.6
(43.0)
2.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11.5
19.5
31.0
(12.9)
(15.5)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Office
$m
Industrial
$m
Property
management
$m
Development
and trading
$m
Funds
management
$m
DXS asset
management
$m
All other
segments
$m
Continuing
operations
$m
Discontinued
operations
$m
–
49.8
2.5
52.3
–
–
–
(44.0)
–
8.3
–
–
–
–
–
8.3
–
(14.9)
–
–
–
–
–
–
–
–
–
–
28.3
28.3
–
–
(13.0)
–
–
15.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(11.8)
(35.5)
–
–
(11.8)
–
–
–
–
–
–
–
(35.5)
1.7
(56.0)
–
(12.0)
1.1
15.3
(11.8)
(100.7)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(62.0)
–
–
–
–
10.2
18.9
(1.7)
Net profit/(loss) attributable to stapled security holders
383.4
77.0
2.6
(6.6)
15.3
(11.8)
(135.3)
544.3
49.8
50.3
644.4
(122.9)
(12.9)
(75.8)
(44.0)
–
388.8
1.7
(56.0)
26.1
(12.0)
1.1
349.7
50.5
(14.9)
(62.0)
–
–
–
(26.1)
10.2
18.9
(1.7)
324.6
4,458.4
221.1
4,679.5
1,373.5
187.4
1,560.9
–
–
97.8
–
97.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,831.9
187.4
97.8
221.1
6,338.2
117.9
–
0.4
118.3
(34.3)
–
(7.1)
–
2.2
79.1
–
(66.0)
5.6
–
(0.6)
18.1
32.3
–
(35.1)
(32.6)
(44.3)
(41.5)
(5.6)
–
(34.8)
–
(143.5)
559.6
24.9
–
–
584.5
Total
$m
662.2
49.8
50.7
762.7
(157.2)
(12.9)
(82.9)
(44.0)
2.2
467.9
1.7
(122.0)
31.7
(12.0)
0.5
367.8
82.8
(14.9)
(97.1)
(32.6)
(44.3)
(41.5)
(31.7)
10.2
(15.9)
(1.7)
181.1
6,391.5
212.3
97.8
221.1
6,922.7
93
2013 dexus annual RepoRt
note 33 Operating segments (continued)
(c)
other segment information
funds from operations (ffo)
(i)
the Board assesses the performance of each operating sector based on FFo. FFo is a global financial measure of real estate operating performance
after finance costs and taxes, and is adjusted for certain non‑cash items. the directors consider FFo to be a measure that reflects the underlying
performance of the Group. dexus’s FFo comprises net profit/loss after tax attributable to stapled security holders calculated in accordance with
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 certain assets, straightline rent adjustments, deferred tax expense/benefit, rental guarantees and
coupon income.
(ii)
reconciliation of segment revenue to the Statement of Comprehensive income
Gross operating segment revenue
Revenue from discontinued operations
share of property revenue from associates
Interest revenue
Total revenue from ordinary activities
2013
$m
683.7
(32.1)
(32.1)
1.2
620.7
2012
$m
762.7
(118.3)
(8.6)
1.7
637.5
reconciliation of segment assets to the Statement of financial position
(iii)
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 operations of the segment and physical location of the asset and are measured in a manner consistent with the statement of
Financial position. the reconciliation below reconciles the total direct property portfolio balance to total assets in the statement of Financial position.
Investment properties
Investment properties classified as held for sale
Inventories
Investment properties accounted for using the equity method1
Direct property portfolio
Cash and cash equivalents
Receivables
Intangible assets
derivative financial instruments
deferred tax assets
plant and equipment
prepayments and other assets2
other assets classified as discontinued operations
Total assets
2013
$m
2012
$m
6,085.0
6,391.5
7.7
252.9
912.8
212.3
97.8
221.1
7,258.4
6,922.7
14.5
40.2
243.7
140.2
39.4
8.8
6.3
1.1
59.2
30.8
223.6
78.3
36.7
4.7
8.1
–
7,752.6
7,364.1
1. this represents the Group’s portion of investment properties accounted for using the equity method.
2. other assets include the Group’s share of total net assets of its investments accounted for using the equity method less the Group’s share of the investment property
value which is included in the direct property portfolio.
94
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 note 34 Reconciliation of net profit to net cash inflow from operating activities
(a)
reconciliation
net profit for the year
Capitalised interest
depreciation and amortisation
Impairment of inventories
Impairment of goodwill
net fair value gain of investment properties
share of net profit of investments accounted for using the equity method
net fair value loss of derivatives
net fair value loss of interest rate swaps
net loss on sale of investment properties
net foreign exchange gain
Foreign currency translation reserve transfer on disposal of foreign operations
Reversal of previous impairment
Fair value adjustment on acquisition of investments
provision for doubtful debts
Change in operating assets and liabilities
(Increase)/decrease in receivables
(Increase)/decrease in prepaid expenses
decrease in other non‑current assets
(Increase)/decrease in inventories
Increase in other current assets
decrease in other non‑current assets
decrease in payables
decrease in current liabilities
Increase in other non‑current liabilities
(Increase)/decrease in deferred tax assets
Net cash inflow from operating activities
2013
$m
514.5
(10.7)
2.9
2.2
0.1
(207.8)
(37.9)
10.9
5.7
3.6
(4.0)
21.5
(20.5)
0.1
(0.3)
(9.1)
(0.2)
28.9
(137.9)
–
22.7
(4.9)
(0.5)
17.2
(3.0)
2012
$m
182.9
(22.5)
2.8
14.8
0.6
(75.2)
(13.8)
1.6
100.5
32.6
(2.2)
41.5
–
–
(2.2)
7.5
0.8
35.0
14.4
(4.3)
12.7
(7.7)
(6.5)
33.1
13.1
193.5
359.5
(b)
Capital expenditure on investment properties
payments for capital expenditure on investment properties include $67.6 million (2012: $99.8 million) of maintenance and incentive capital
expenditure.
note 35 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.
(a)
Net profit/(loss) attributable to unitholders of the parent entity used in calculating basic and diluted earnings per unit
profit from continuing operations
profit/(loss) from discontinued operations
profit attributable to unitholders of the parent entity
2013
$m
95.3
7.5
102.8
2012
$m
127.0
(45.5)
81.5
95
2013 dexus annual RepoRt note 35 earnings per unit (continued)
(b)
Net profit/(loss) attributable to stapled security holders used in calculating basic and diluted earnings
per stapled security
profit from continuing operations
profit/(loss) from discontinued operations
profit attributable to stapled security holders
(c) Weighted average number of units used as a denominator
2013
$m
521.5
(7.0)
514.5
2012
$m
324.6
(143.5)
181.1
2013
securities
2012
securities
Weighted average number of units outstanding used in calculation of basic and diluted earnings per unit
4,714,292,865 4,834,864,561
note 36 security-based payments
the dxFM Board has approved a grant of performance rights to
dxs stapled securities to eligible participants. awards, via the 2012
transitional performance Rights plan, deferred short term Incentive
plan (dstI) and long term Incentive plan (ltI), will be in the form of
performance rights awarded to eligible participants who convert to dxs
stapled securities for nil consideration subject to satisfying specific
service and performance conditions.
For each plan, the dxFM Board approves the eligible participants
nominated by the Board nomination, Remuneration & Governance
Committee. each participant will be granted performance rights, based
on performance against agreed key performance indicators, as a
percentage of their remuneration mix. the dollar value is converted into
performance rights to dxs stapled securities using the average closing
price of dxs securities for the period of ten days either side of the
financial year end to which the award relates. participants must remain
in employment for the vesting period in order for the performance rights
to vest.
the fair value of the performance rights is amortised over the vesting
period. In accordance with aasB2 Share-based Payments, fair value is
independently determined using Black‑scholes and Monte Carlo models
with the following inputs:
Grant date
expected vesting date
security price at grant date
expected price volatility (based on historic dxs security price
movements)
expected life
dividend yield
Risk free interest rate
expected total security holder return (for the ltI only)
(a)
2012 transitional performance rights plan
subject to satisfying employment service conditions, the award will
vest three years after grant on 1 July 2015. In accordance with aasB 2
Share-based payments, the year of employment in which participants
became eligible for the 2012 transitional performance Rights plan, the
year preceding the grant, is included in the vesting period over which
the fair value of the performance rights is expensed. Consequently
the fair value of these performance rights is expensed over a four year
period ending 30 June 2015. no performance rights were granted in
respect of the year ended 30 June 2013 (2012: 1,840,656). the fair
value of the 2012 performance rights is $0.995 per performance right
and the total security‑based payment expense recognised during the
year ended 30 June 2013 was $489,477 (2012: $426,250).
(b)
deferred Short-term incentive plan
25% of any award under the short term Incentive plan (stI) for certain
participants will be deferred and awarded in the form of performance
rights to dxs securities.
50% of those performance rights awards will vest one year after grant
and 50% of the awards will vest two years after grant, subject to
participants satisfying employment service conditions. In accordance
with aasB 2 Share-based Payments, the year of employment in which
participants become eligible for the dstI, the year preceding the grant,
is included in the vesting period over which the fair value of those
performance rights is expensed. Consequently, 50% of the fair value
of those performance rights is expensed over two years and 50% of
the award is expensed over three years.
the number of performance rights granted in respect of the year ended
30 June 2013 was 2,073,400 and the fair value of these performance
rights is $1.07 per performance right. the total security‑based payment
expense recognised during the year ended 30 June 2013 was $924,390
(2012: nil).
(c)
long-term incentive plan
50% of the awards will vest three years after grant and 50% of
the awards will vest four years after grant, subject to participants
satisfying employment service conditions and performance hurdles.
In accordance with aasB 2 Share-based Payments, the year of
employment in which participants become eligible for the ltI, the year
preceding the grant, is included in the vesting period over which the
fair value of the performance rights is expensed. Consequently, 50% of
these fair value of the performance rights is expensed over four years
and 50% of the award is expensed over five years.
the number of performance rights granted in respect of the year ended
30 June 2013 was 3,317,014. the fair value of these performance
rights is $0.80 per performance right. the total security‑based
payment expense recognised during the year ended 30 June 2013
was $600,379 (2012: nil).
96
2013 dexus annual RepoRtNotes to the FiNaNcial statemeNtsfor the year ended 30 june 2013 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 44 to 96:
(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 2013 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
(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 2013
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 2013
97
2013 dexus annual RepoRtDIRECTORS’ DECLARATIONfor the year ended 30 june 2013 Independent auditor’s report to the stapled security holders of
DEXUS Diversified Trust
Report on the financial report
We have audited the accompanying financial report of DEXUS Diversified Trust (the Trust or DDF),
which comprises the statement of financial position as at 30 June 2013, the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the year ended
on that date, a summary of significant accounting policies, other explanatory notes and the directors’
declaration for DEXUS Property Group (the Group or the consolidated stapled entity). The
consolidated stapled entity, as described in Note 1 to the financial report, comprises the Trust and the
entities it controlled at the year-end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of DEXUS Funds Management Limited (the Responsible Entity) are responsible for the
preparation of the financial report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001 and for such internal control as the directors
determine is necessary to enable the preparation of the financial report that is free from material
misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements
comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the
audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
Our procedures include reading the other information in the Annual Report to determine whether it
contains any material inconsistencies with the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171
DX 77 Sydney, Australia
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
98
2013 dexus annual RepoRtIndependent AudItor’s report Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of DEXUS Diversified Trust is in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the consolidated stapled entity’s financial position as at
30 June 2013 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001; and
(b)
the financial report and notes also comply with International Financial Reporting Standards
as disclosed in Note 1.
Report on the Remuneration Report
We have audited the remuneration report included in pages 19 to 34 of the directors’ report for the year
ended 30 June 2013. The directors of the Responsible Entity are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the remuneration report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of DEXUS Diversified Trust for the year ended 30 June 2013,
complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
E A Barron
Partner
Sydney
16 August 2013
99
2013 dexus annual RepoRt Top 20 security holders as at 16 August 2013
Rank Name
No. of units
% of issued capital
1 HsBC Custody nominees (australia) limited
2 J p Morgan nominees australia limited
3 national nominees limited
4 Citicorp nominees pty limited
5 Bnp paribas nominees pty ltd
6 Jp Morgan nominees australia limited
7 Citicorp nominees pty limited
8 aMp life limited
9 equity trustees limited
10 RBC Investor services australia nominees pty limited
11 Questor Financial services limited
12 Bnp paribas nominees pty ltd
13 Bond street Custodians limited
14 Cs third nominees pty ltd
15 share direct nominees pty ltd <10026 a/C>
16 HsBC Custody nominees (australia) limited
17 suncorp Custodian services pty limited
18 uBs Wealth Management australia nominees pty ltd
19 Bond street Custodians limited
20 HsBC Custody nominees (australia) limited
Subtotal
Balance of register
Total
1,663,830,662
867,767,388
675,382,834
357,209,186
192,854,959
134,359,014
97,264,579
86,217,365
32,291,225
28,465,361
21,727,316
21,582,042
15,491,825
14,181,358
13,523,626
8,064,529
7,406,085
6,642,608
6,187,464
5,681,219
4,256,130,645
445,826,745
4,701,957,390
substantial holders at 16 August 2013
the names of substantial holders, who at 16 august 2013 have notified the Responsible entity in accordance with section 671B of the
Corporations Act 2001, are:
Date
30 aug 2012
28 Jan 2011
11 nov 2010
17 dec 2009
10 Jul 2013
Name
CBRe Clarion securities llC
InG Group
Vanguard Group
Blackrock Investment Management (inc. BGI)
aMp limited
Number of
stapled securities
440,873,263
388,416,434
291,637,480
275,099,167
237,591,500
35.39%
18.46%
14.36%
7.60%
4.10%
2.86%
2.07%
1.83%
0.69%
0.61%
0.46%
0.46%
0.33%
0.30%
0.29%
0.17%
0.16%
0.14%
0.13%
0.12%
90.52%
9.48%
100.00%
% voting
9.4%
8.3%
6.2%
5.9%
5.1%
100
2013 dexus annual RepoRtAdditionAl informAtion class of securities
dexus property Group has one class of stapled security trading on the asx with security holders holding stapled securities at 16 august 2013.
Spread of securities at 16 august 2013
Range
1100,001 and over
50,001 to 100,000
10,001 to 50,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Securities
4,417,347,838
58,413,036
183,983,472
31,104,963
10,543,357
564,724
%
93.95
1.24
3.91
0.66
0.22
0.01
No. of Holders
361
855
8,531
4,070
3,303
1,641
4,701,957,390
100.00
18,761
at 16 august 2013, the number of security holders holding less than a marketable parcel of 488 securities ($500) was 1,059 and they hold in total
117,324 securities.
Voting rights
at meetings of the security holders of dexus diversified trust, dexus Industrial trust, dexus office trust and dexus operations trust, being the
trusts that comprise dexus property Group, on a show of hands, each security holder of each trust has one vote. on a poll, each security holder of
each trust has one vote for each dollar of the value of the total interests they have in the trust.
securities restricted or subject to voluntary escrow
there are no stapled securities that are restricted or subject to voluntary escrow.
On-market buy-back
dexus property Group commenced a $200 million on‑market securities buy‑back program on 16 april 2012. throughout the year, dexus
acquired 137 million securities for $128.5 million at an average price of $0.9371 under the buy‑back program.
Following the reinvestment of capital into the australian markets on the back of improved share market performance, the dexus security price
performance stabilised and dexus chose not to extend the buy‑back on 16 april 2013, having completed 64% of the targeted $200 million.
post balance date on 2 July 2013, a buy‑back program of up to 5% of securities was reinstated as a result of share market volatility, providing the
flexibility for dexus to acquire securities on‑market, with a focus of enhancing value and returns to investors.
cost base apportionment
For capital gains tax purposes, the cost base apportionment details for dxs securities for the 12 months ended 30 June 2013 are:
Date
DEXuS Diversified Trust
DEXuS Industrial Trust
DEXuS Office Trust
DEXuS Operating Trust
1 Jul 2012 to 31 dec 2012
1 Jan 2013 to 30 Jun 2013
35.17%
34.67%
13.32%
13.67%
49.01%
49.15%
2.50%
2.51%
Historical cost base details are available in the downloads area at www.dexus.com/dxs/tax
101
2013 dexus annual RepoRt deXuS is one of the largest real estate groups listed on the australian Securities exchange (aSX) and is
listed under the aSX code dXS. over 18,000 investors located in 15 countries around the globe invest in
dXS, highlighting the demand both domestically and abroad for exposure to its quality property portfolio.
distribution payments
dexus’s payout policy is to distribute between 70%–80% of Funds
From operations (FFo), in line with free cash flow, with the expectation
that the average payout ratio will be 75% of FFo. distributions are
paid for the six month period to 31 december and 30 June each year.
distribution statements are available in print and electronic formats and
distributions are paid via direct credit into nominated bank accounts or
by cheque. to change the method of receiving distributions, please use
the investor login facility at www.dexus.com/dxs
unclaimed distribution income
If you believe you have unpresented cheques or unclaimed distribution
income, please contact the dxs Infoline on 1800 819 675. For
monies outstanding greater than seven years, please contact the nsW
office of state Revenue on 1300 366 016, use their search facility at
osr.nsw.gov.au or email unclaimedmoney@osr.nsw.gov.au.
Annual taxation statements
an annual taxation statement is sent to investors in august each
year. the statement summarises distributions provided during the
financial year and includes information required to complete your
tax return. annual taxation statements are also available online at
www.dexus.com/dxs via the investor login facility.
Making contact
If you have any questions regarding your security holding or wish to
update your personal or distribution payment details, please contact the
Registry by calling the dxs Infoline on 1800 819 675. this service is
available from 8.30am to 5.30pm (sydney time) on all business days.
all correspondence should be addressed to:
dexus property Group
C/‑ link Market services limited
locked Bag a14
sydney south nsW 1234
dexus is committed to delivering a high level of service to all investors.
should there be some way you feel that dexus could improve its
service or you want to make a suggestion or complaint, your feedback
is appreciated. dexus’s contact details are:
Investor Relations
dexus property Group
po Box R1822
Royal exchange nsW 1225
ir@dexus.com
dexus Funds Management limited is a member of Financial
ombudsman service (Fos), an independent dispute resolution scheme.
If you are not satisfied with the resolution of your complaint by dexus,
you may refer your complaint to Fos.
dexus’s Investor Relations team drives and facilitates communication
with existing and potential institutional investors, sell‑side analysts
and retail investors. the team, alongside dexus senior management,
maintains a strong rapport with the investment community through
proactive and regular investor engagement initiatives.
dexus strives to ensure high levels of transparency and disclosure by:
Releasing accurate and relevant information to investors to ensure
they can make informed investment decisions
providing regular access to senior management through one‑on‑one
presentations, meetings, site tours, conferences, dedicated investor
road shows, conference calls and webcasts
during FY13, dexus hosted a number of investor conferences,
property tours and participated in investor roadshows in singapore,
Hong Kong, london and the united states.
dexus is committed to ensuring all investors have equal access to
information about its investment activities. In line with the Group’s
commitment to long‑term integration of sustainable business practices,
investor communications are provided via various electronic methods.
a wide range of information including asx announcements, the
annual reporting suite, presentations, corporate governance policies,
Board of directors and executive team information is available at
www.dexus.com.
In addition, dexus has various communication tools available on
its website, including:
ONLINE ENQuIRY
www.dexus.com/contact
including an online enquiry form
INVESTOR LOGIN
www.dexus.com/dxs
allowing investors to update their details and choose delivery methods
for their communications
SuBSCRIBE TO ALERTS
www.dexus.com/media enables investors to receive asx and media
releases as they are released
CREATE YOuR PROPERTY REPORT www.dexus.com/properties
enables investors to download individual or Group property information
dexus commissions an independent investor perception study
twice a year to gather feedback from the institutional investment
community. the study involves an independent consultant conducting
interviews with institutional investors and sell‑side analysts to gauge
investor thoughts on a number of attributes and report on the findings.
the results help dexus’s Board and executive team understand
the investment community’s perceptions and concerns and assists
in the development of dexus’s communications and enhancing the
effectiveness of the Group’s Investor Relations efforts.
Annual General Meeting
on tuesday, 29 october 2013, dexus’s annual General Meeting
(aGM) will be held at the dexus Head office, level 25, australia
square, 264 George street, sydney commencing at 2.00pm. Investors
are encouraged to attend the aGM in person and to meet the Board
of directors and the executive team. the aGM will be webcast at
www.dexus.com for investors who are unable to attend in person.
102
2013 dexus annual RepoRtinvestor information Key aSX announcements
20 Aug 13
19 Aug 13
technical filing – Commonwealth property office Fund
appendix 4e and financial report as at 30 June 2013
2013 annual results release
2013 annual results presentation
2013 portfolio and debt summary
discontinuation of CMIl (Cpa) court proceedings
Response to asx announcement made by CMIl
acquisition of investment in Cpa
notice of initial substantial holder in Cpa
strong leasing activity across industrial portfolio
Independent valuations as at 30 June 2013
appendix 3C on‑market securities buy‑back
dxs upgraded distribution for the six months to 30 June 2013
sale of five european industrial properties
dxs and dWpF acquire strategic investment in perth
March 2013 quarterly update release
March 2013 quarterly update and sydney office tour
successful pricing of long‑dated us private placement
Change of registered address
dxs and dWpF acquire strategic investment in Brisbane
settlement on sale of remaining us industrial property
appendix 3Y – darren steinberg
sale of remaining us industrial property
8 Aug 13
1 Aug 13
25 Jul 13
17 Jul 13
2 Jul 13
2 Jul 13
17 Jun 13
15 May 13
6 May 13
2 May 13
1 May 13
29 Apr 13
26 Apr 13
18 Apr 13
15 Apr 13
2 Apr 13
20 Mar 13
appendix 3Y – elizabeth alexander
28 Feb 13
28 Feb 13
27 Feb 13
15 Feb 13
14 Feb 13
12 Feb 13
17 Jan 13
21 Dec 12
20 Dec 12
20 Dec 12
18 Dec 12
30 Nov 12
29 Nov 12
27 Nov 12
23 Nov 12
21 Nov 12
5 Nov 12
1 Nov 12
24 Oct 12
3 Oct 12
2013 half year report
settlement of the acquisition of interests in three sydney office properties
appendix 3Y – tonianne dwyer
appendix 3x – Craig Mitchell
settlement of us industrial portfolio sale
appendix 4d and interim reports as at 31 december 2012
2013 half year results release
2013 half year results presentation
Craig Mitchell appointed as executive director
dxs settles on 40 Market street, Melbourne
acquisition of three sydney office properties
significant premium achieved on the sale of united states industrial portfolio
Market briefing – us industrial portfolio sale
december 2012 distribution details
dxs settles on 50 Carrington street, sydney
updated on us industrial portfolio
dxs acquires a Melbourne CBd office property
appendix 3Y – elizabeth alexander
executive appointment – Kevin George
2012 annual General Meeting results
2012 annual General Meeting address and presentation
settlement of 12 Creek street Brisbane
september 2012 quarterly update and sydney CBd office tour
settlement of JV with the australian Industrial partnership
27 Sep 12
2012 notice of annual General Meeting
2012 dexus annual Review
2012 dexus Combined Financial statements
26 Sep 12
2012 annual Reporting suite
2012 notice of annual General Meeting
12 Sep 12
31 Aug 12
appendix 3Y (B Brownjohn) Change of director’s Interest notice
appendix 3Y (R sheppard) Change of director’s Interest notice
103
2013 dexus annual RepoRt auditors
Pricewaterhousecoopers
Chartered accountants
201 sussex street
sydney nsW 2000
investor enquiries
Registry Infoline: 1800 819 675
Investor Relations: +61 2 9017 1330
email: ir@dexus.com
www.dexus.com
Security registry
link Market services limited
level 12, 680 George street
sydney nsW 2000
locked Bag a14
sydney south nsW 1235
Registry Infoline: 1800 819 675
Fax: +61 2 9287 0303
email: registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
open Monday to Friday between 8.30am and 5.30pm (sydney time).
For enquiries regarding your holding you can contact the security
registry, or access your holding details at www.dexus.com using the
Investor login link.
australian Securities exchange
asx Code: dxs
ir app
download the dexus IR app to your preferred mobile device to gain
instant access to the latest dxs stock price, asx announcements,
presentations, reports, webcasts and more.
deXus diversified Trust
aRsn 089 324 541
deXus industrial Trust
aRsn 090 879 137
deXus Office Trust
aRsn 090 768 531
deXus Operations Trust
aRsn 110 521 223
responsible entity
deXus funds Management limited
aBn 24 060 920 783
aFsl 238 163
directors of the responsible entity
Christopher t Beare, Chair
elizabeth a alexander, am
Barry r Brownjohn
John C Conde, ao
tonianne dwyer
Stewart f ewen, oam
Craig d mitchell, CFo
W richard Sheppard
darren J Steinberg, Ceo
peter B St george
Secretaries of the responsible entity
tanya l Cox
John C easy
registered office of the responsible entity
level 25, australia square
264 George street
sydney nsW 2000
po Box R1822
Royal exchange
sydney nsW 1225
phone: +61 2 9017 1100
Fax: +61 2 9017 1101
email: ir@dexus.com
www.dexus.com
104
2013 dexus annual RepoRtdirectory
2013 dexus annual RepoRt
property expertise.
Institutional rigour.
entrepreneurial spirit.
www.dexus.com