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ANNUAL REPORT 2014
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Mirvac Group Annual Report
For the year ended 30 June 2014
Mirvac Group comprises Mirvac Limited (ABN 92 003 280 699) and its controlled entities
(including Mirvac Property Trust (ARSN 086 780 645) and its controlled entities).
Directors’ report
Remuneration report
01
10
32 Auditor’s independence declaration
33 Corporate governance statement
44 Financial statements
Directors’ declaration
111
112
Independent auditor’s report to the members of Mirvac Limited
114 Securityholder information
115 Glossary of acronyms
116 Directory
MIRVAC GROUP ANNUAL REPORT 2014
Directors’ report
The Directors of Mirvac Limited present their report, together with the consolidated report of Mirvac Group (“Mirvac” or “Group”)
for the year ended 30 June 2014. Mirvac comprises Mirvac Limited (“parent entity”) and its controlled entities, which includes
Mirvac Property Trust (“MPT” or “Trust”) and its controlled entities.
Directors
The following persons were Directors of Mirvac Limited during the whole of the year and up to the date of this report,
unless otherwise stated:
— John Mulcahy
— Susan Lloyd-Hurwitz
— Peter Hawkins
— James Millar AM
— John Peters
— Elana Rubin
— James MacKenzie (resigned as a Director on 30 January 2014)
— Marina Darling (resigned as a Director on 24 January 2014).
Principal activities
The principal continuing activities of Mirvac consist of real estate investment, development and investment management. Mirvac
has two core divisions: Investment (comprising MPT) and Development (comprising residential and commercial development).
There are also two business units, Mirvac Investment Management which comprises third party, listed and unlisted funds
management; and the property asset management business, Mirvac Asset Management (“MAM”).
Dividends/distributions
Dividends/distributions paid to stapled securityholders during the year were as follows:
June 2013 half yearly dividends/distributions paid on 26 July 2013: 4.50 cents per stapled security (“CPSS”)
June 2012 quarterly dividends/distributions paid on 27 July 2012: 2.40 CPSS
December 2013 half yearly dividends/distributions paid on 27 February 2014: 4.40 CPSS
December 2012 half yearly dividends/distributions paid on 25 January 2013: 4.20 CPSS
Total dividends/distributions paid
1) Included dividend/distribution reinvestment plan (“DRP”) activated for the 31 December 2013 half yearly distribution.
The June 2014 half yearly dividend/distribution of 4.60 CPSS totalling $169.8m is payable on 28 August 2014.
2014 1
$m
164.9
161.3
326.2
2013
$m
82.0
143.9
225.9
Dividends and distributions paid and payable by Mirvac for the year ended 30 June 2014 totalled $331.1m, being 9.00 CPSS (2013:
$308.8m – 8.70 CPSS). The payments for the year ended 30 June 2014 and the previous year were distributions made by the Trust.
Operating and financial review
The statutory profit after tax attributable to the stapled securityholders of Mirvac for the year ended 30 June 2014 was $447.3m
(2013: $139.9m). The operating profit (profit before specific non-cash and significant items) was $437.8m which is within the market
guidance provided previously. Operating profit is a financial measure which is not prescribed by Australian Accounting Standards
(“AAS”) and represents the profit under AAS adjusted for specific non-cash items and significant items. The Directors consider
operating profit to reflect the core earnings of the Group.
The following table summarises key reconciling items between statutory profit after tax attributable to the stapled securityholders
of Mirvac and operating profit. The operating profit information in the table has not been subject to any specific audit procedures by
the Group’s auditor but has been extracted from note 3 to the accompanying financial statements for the year ended 30 June 2014,
which have been subject to audit; refer to pages 112 and 113 for the auditor’s report on the financial statements.
01
MIRVAC GROUP ANNUAL REPORT 2014
Operating and financial review / continued
Profit attributable to the stapled securityholders of Mirvac
Specific non-cash items
Net gain on fair value of investment properties
Net loss on fair value of investment properties under construction (“IPUC”)
Net loss on fair value of derivative financial instruments and associated foreign exchange movements 1
Security based payment (“SBP”) expense 2
Depreciation of owner-occupied properties (“OOP”) 3
Straight-lining of lease revenue 4
Amortisation of lease fitout incentives 3
Net (gain)/loss on fair value of investment properties, derivatives and other specific
non-cash items included in share of net profit of joint ventures and associates (“JVA”) 5
Significant items
Impairment of loans, investments and inventories
Impairment of goodwill
Net loss on sale of non-aligned assets 6
Net gain on sale of Hotel Management business and related assets
Tax effect
Tax effect of non-cash and significant items adjustments 7
Operating profit (profit before specific non-cash and significant items)
2014
$m
447.3
(56.5)
7.7
15.8
6.5
5.9
(12.2)
10.3
(19.6)
(1.2)
24.5
6.0
—
3.3
437.8
2013
$m
139.9
(54.0)
3.6
12.4
4.1
7.5
(17.3)
10.9
4.4
273.2
—
3.7
(2.0)
(8.8)
377.6
Financial, capital management
and operational highlights
Key financial highlights for the year ended 30 June 2014:
— profit attributable to the stapled securityholders of Mirvac
increased significantly from $139.9m to $447.3m, the previous
year having been negatively impacted by impairments;
— operating profit after tax of $437.8m 8 (2013: $377.6m),
representing 11.9 CPSS;
— operating cash inflow of $399.3m, which is consistent with
the prior year;
— gearing at the financial year ending 30 June 2014 (“FY14”)
was 27.8 per cent 9, which remained within the Group’s
target range of 20.0 to 30.0 per cent. Refer to note 36
to the financial statements for further detail on gearing
following the settlement of 50.0 per cent of 275 Kent Street,
Sydney NSW on 1 July 2014;
— distributions of $331.1m, representing 9.0 CPSS; and
— net tangible assets (“NTA”) 10 per stapled security increased
to $1.66 from $1.62.
Key capital management highlights for the year ended
30 June 2014:
— Standard & Poor’s upgraded the Group’s credit rating from
BBB to BBB+ with stable outlook;
— issued over $750.0m of long-term capital markets debt,
further diversifying the Group’s sources of debt and
increasing the weighted average debt maturity:
> issued $506.8m (AUD equivalent) of US Private Placement
notes which will mature in December 2022, 2024 and 2025;
> issued $200.0m of medium term notes (“MTN”) which will
mature in September 2020; and
> issued $50.0m of MTN which will mature in December 2017;
— maintained strong liquidity with $510.8m of cash and undrawn
committed bank facilities held. Following assets sold to
an affiliate of Blackstone Real Estate Asia (“Blackstone”)
on 1 July 2014, liquidity increased to over $1.0 billion;
— increased the weighted average debt maturity to 4.3 years;
— reduced average borrowing costs slightly to 5.6 per cent per
annum as at 30 June 2014 (including margins and line fees),
despite significantly increasing the tenor and sources of the
Group’s debt; and
— continued to comfortably meet all debt covenants.
Key operational highlights for the year ended 30 June 2014:
— acquired $854.8m 11 of key strategic assets in core locations
across the office, retail, industrial and residential sectors;
— formed strategic relationships with high quality investment
organisations, with the sale of a 50.0 per cent interest in
275 Kent Street, Sydney to an affiliate of Blackstone 12, and
the sale of a 50.0 per cent interest in the 699 Bourke Street
office development in Melbourne to Australian Office Alliance
partner, TIAA-CREF;
— disposed of five non-core assets for $232.6m during the
year 11. Mirvac also disposed of seven assets which were sold
to Blackstone on 1 July 2014 for $391.4m 13, following the
exercise of call options granted to them during the year;
1) Total of Gain on financial instruments, Foreign exchange gain and Foreign exchange loss. Loss on financial instruments in the consolidated Statement
of Comprehensive Income (“SoCI”).
2) Included within Employee benefits expenses in the consolidated SoCI.
3) Included within Depreciation and amortisation expenses in the consolidated SoCI.
4) Included within Investment properties rental revenue in the consolidated SoCI.
5) Included within Share of net profit of JVA accounted for using the equity method in the consolidated SoCI.
6) Total of Net loss on sale of investment properties and Net loss on sale of investments in the consolidated SoCI.
7) Included in Income tax expense/(benefit) in the consolidated SoCI.
8) Excludes specific non-cash items, significant items and related taxation.
9) Net debt (at foreign exchange hedged rate) excluding leases/(total tangible assets – cash).
10) NTA per stapled security, based on ordinary securities including Employee Incentive Scheme (“EIS”) securities.
11) Pre-transaction costs.
12) Settlement of the asset occurred on 1 July 2014.
13) Includes capex contribution of $5.4m. Excluding capex contributions, total value of non-core assets is $386.0m.
02
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report
Financial, capital management
and operational highlights / continued
— maintained strong portfolio occupancy of 97.6 per cent
within the MPT portfolio 1;
— leased 140,982 square metres (9.8 per cent of net lettable
area) within the MPT portfolio 2;
— achieved strong levels of residential exchanged contracts
of $1,193.1m 3;
— settled 2,482 residential lots, ahead of the revised FY14
target of over 2,400 lots (previous target for FY14 was
over 2,200 lots); and
— achieved 4.9 Star NABERS energy rating average across
the office portfolio, ahead of the June 2014 target of
4.75 Star NABERS energy rating average.
Outlook 4
The global economy continues to improve at a moderate pace,
with Australia maintaining economic growth at around long-
term trend levels. The transition away from mining investment
is underway, supported by accommodative financial conditions.
A strong expansion in housing construction, a lift in consumer
demand to modest levels and signs of improvement in
investment intentions of other sectors are emerging. Despite
more modest occupancy fundamentals, an abundance of equity
capital and liquid market debt markets globally is placing
pressure on asset prices. Commercial sector capital values
are rising, predominantly for better quality assets in major
markets and with lease duration. The Group remains focused
on prudently managing its capital position by monitoring
and accessing diversified sources of capital, including equity,
domestic and international debt and wholesale capital. This focus
will ensure Mirvac can continue to meet its strategic objectives
without increasing its overall capital management risk profile.
Mirvac will continue to enhance its capabilities as a world-class
Australian property group, providing a stable income stream
from the Investment portfolio, and improving the Return on
Invested Capital (“ROIC”) achieved by the Development business.
Divisional highlights
Investment
At 30 June 2014, Investment (comprising MPT and one asset
held by the Company) had $7,537.5m 5 invested capital across
68 6 direct property assets, covering the office, retail and
industrial sectors, as well as investments in car parks, a hotel
and other funds managed by Mirvac. The split of invested capital
across each sector was:
— office: 61.5 per cent 6;
— retail: 25.3 per cent;
— industrial: 6.3 per cent; and
— other: 6.9 per cent 7.
For the 12 months to 30 June 2014, Investment’s statutory
profit before tax was $438.1m and operating profit before
tax was $415.0m, a decrease of 0.9 per cent on the previous
year. This was primarily driven by increased interest costs
associated with borrowings during the year as a result
of recapitalisation and acquisitions. The Trust’s earnings
continued to be secured by a strong weighted average lease
expiry (“WALE”) profile of 4.6 years 8, 96.2 per cent of FY14
rent reviews being fixed or linked to the Consumer Price Index
(“CPI”), and 68.5 per cent of revenue being derived from
multinational, ASX listed and government tenants.
Key operational highlights for MPT for the year ended
30 June 2014 included:
— achieved 3.1 per cent like-for-like net operating income growth;
— maintained high occupancy at 97.6 9 per cent;
— total investment property revaluations (including IPUC)
provided a net uplift of $37.9m 10 (or 0.6 per cent) over
the previous book value for the 12 months 30 June 2014.
On a like-for-like basis (excluding assets classified as
held for sale, IPUC, assets sold during the period and
acquisitions), the net uplift was $81.5m (or 1.5 per cent);
— entered into an agreement with Blackstone for the sale
of a 50.0 per cent interest in 275 Kent Street, Sydney NSW
for $435.0m 11, at a premium to book value 12;
— granted Blackstone call options over a portfolio of seven
non-core assets for $391.4m 13, at a premium to book value 12.
Mirvac provided Blackstone with $156.0m of vendor financing
in relation to the sale of the non-core assets, at an initial
coupon of 8.0 per cent per annum and for a maximum term
of 48 months;
— improved the quality of the portfolio by acquiring $606.8m 14
of assets on-strategy and with development potential, and
disposing $232.6m 14 of non-core assets;
— completed 425 leasing deals over 140,982 square metres
of net lettable area (9.8 per cent of net lettable area), with
major leasing commitments at:
> 10-20 Bond Street, Sydney NSW: renewal of lease to
Fitness First (4,445 square metres, which includes an
increase of 1,242 square metres on previous leased space)
for a new 10 year lease term, and renewal of lease to
Origin Energy (3,746 square metres) for a new five year
lease term;
> 5 Rider Boulevard, Rhodes NSW: new lease to Zoetis
Australia (1,678 square metres) for a five year term;
> 340 Adelaide Street, Brisbane QLD: renewal of lease
to Medibank Health Solutions (1,628 square metres)
for four years;
> 47-67 Westgate Drive, Altona North VIC: two year extension
of lease term to Pacific Brands (26,911 square metres);
> Broadway Shopping Centre, Broadway NSW: new lease to
Aldi (1,365 square metres) for a 10 year term;
> Kawana Shoppingworld, Buddina QLD: renewal of lease
to Woolworths (3,648 square metres) for a five year term; and
> City Centre Plaza, Rockhampton QLD: renewal of lease
to Coles (3,670 square metres) for a six year term.
1) By area, excludes IPUC, based on 100 per cent of building net lettable area.
2) Includes 8 Chifley, Sydney NSW.
3) Total exchanged pre-sales contracts as at 30 June 2014, adjusted for Mirvac’s share of joint ventures, associates and Mirvac managed funds.
4) These future looking statements should be read in conjunction with future releases to the Australian Stock Exchange (“ASX”).
5) Includes IPUC and indirect property investments.
6) Includes 8 Chifley Square, Sydney, NSW; although not a direct property asset, it is treated as an investment accounted for using the equity method.
7) Includes IPUC, indirect property investments, car park assets and hotel.
8) By income, includes 8 Chifley Square, Sydney NSW and excludes IPUC, based on MPT’s ownership.
9) By area, excludes IPUC, based on 100 per cent of building net lettable area.
10) After adjustment for OOP, the net uplift was $48.8m.
11) Settlement of the 50.0 per cent sale of 275 Kent Street, Sydney NSW occurred on 1 July 2014.
12) As at 31 December 2013.
13) Includes capex contributions of $5.4m. Excluding capex contribution, total value of non-core assets is $386.0m. Blackstone have exercised their call options
over the portfolio of seven non-core assets, with settlement of the sale of the non-core assets occurring on 1 July 2014.
14) Excludes transaction costs.
03
MIRVAC GROUP ANNUAL REPORT 2014 Divisional highlights / continued
— progressed with commercial developments as detailed in the
Commercial highlights section in this Report and achieved
the following leasing commitments at:
> 699 Bourke Street, Melbourne VIC: AGL increased its
commitment from 15,000 square metres to 19,300 square
metres, which accounts for 100.0 per cent of the building’s
net lettable area, for a 10 year term;
> Kawana Shoppingworld, Buddina QLD: construction
of Stage 4 is near complete, incorporating a new Aldi
supermarket and over 60 additional specialty stores,
expanding the centre by approximately 9,000 square
metres. As at 30 June 2014, the project was 95.6 per cent
committed by net lettable area;
> Stanhope Village, Stanhope Gardens NSW: commenced
trading of Stage 3 in August 2013, which is 100.0 per cent
leased. The project incorporated the extension of a Kmart
mall and a new Aldi supermarket. Construction on Stage 4
commenced in January 2014 with project completion due
in May 2015;
> Orion Springfield Town Centre, Springfield QLD (Pad
Sites): the project was completed fully leased and ahead
of schedule in December 2013, adding a total gross lettable
area of 5,108 square metres; and
> Orion Springfield Town Centre, Springfield QLD (Stage 2):
construction on the Stage 2 expansion of 31,545 square
metres commenced in March 2014 and will include Coles,
Target and Event Cinemas, a tavern, mini majors and an
additional 80 to 100 specialty tenants and commercial
suites, as well as an extra 1,200 car parks. Project
completion is expected by March 2016.
The Group’s focus on sustainability continued to deliver results
across its MPT portfolio, with key achievements including:
— a 4.9 Star NABERS energy rating average across the
office portfolio, ahead of the June 2014 target of 4.75 Star
NABERS energy rating average, and an increase of 2.4 Stars
since FY08, placing Mirvac in the top performing A-REIT
office portfolios;
— received the Facilities Management Association Contribution
to Energy Efficiency award for a second successive year for
energy reductions across the office portfolio;
— 65 Pirrama Road, Sydney NSW achieved a 5.5 Star NABERS
energy rating with energy consumption reduced by 16.0 per
cent and water usage reduced by 24.0 per cent, achieving
a utility cost saving of over $40,000 per annum;
Outlook 1
The global economy continues to improve, with signs of a
positive recovery in the US, UK and Eurozone leading to greater
stability. Domestically, the economy has shifted away from mining
investment to more interest rate sensitive sectors, with growth
driven by the rising housing market, increased retail turnover
and strong exports. Other lead indicators, such as stronger
financial markets, improved business confidence and improving
employment forecasts suggest a modest improvement in
office market conditions over the medium term. Mirvac’s
office portfolio, with low vacancy rates, high average fixed rent
increases, quality tenant profile, manageable expiry profile
and a long WALE, continues to be well positioned.
In retail, increasing household wealth, low interest rates and a
declining household savings ratio have seen turnover in this
area improve. Non-discretionary spending is expected to remain
resilient, although the low interest rate environment has allowed
for an improvement in discretionary spending in 2014. Landlords
are likely to benefit from a slowdown in online sales growth and
a rise in discretionary spending, yet this may be constrained in
the future by low income growth and a potential slowdown in the
residential property market. The Group’s retail assets, situated
in core locations, should continue to provide secure returns.
The industrial portfolio continues to provide steady returns due
to a low vacancy rate driven by quality, long term tenants who
are attracted to prime-grade facilities located within the key
logistics markets of Sydney and Melbourne.
Overall, the Trust remains focused on providing secure passive
income to the Group, with key areas of focus including:
— improving the quality of the portfolio via non-core asset sales
and creating new product to be held for the long term;
— creating and buying prime CBD office assets to be held for
the long term;
— focusing on prime sub-regional, neighbourhood and CBD
shopping centres located in growth markets, and leveraging
Mirvac’s integrated model to unlock value in existing retail
assets with development and expansion opportunity; and
— creating prime-grade industrial assets to be held over the
long term.
Investment Management
Mirvac Investment Management (“MIM”) comprises two business
activities for segment reporting purposes, including third
party, listed and unlisted funds management (Mirvac Capital
(“Capital”)); and property asset management (MAM).
— 3-5 Rider Boulevard, Rhodes NSW achieved a 5.5 Star NABERS
energy rating, reducing energy intensity by 10.3 per cent;
For the year ended 30 June 2014, MIM recorded a statutory profit
before tax of $5.8m and an operating profit before tax of $6.7m.
— 275 Kent Street, Sydney NSW achieved a 5.0 Star NABERS
energy rating and a 4.0 Star water rating. The property
has delivered a 1.0 Star improvement in energy and water
ratings since 2011 and has reduced carbon emissions by
37.0 per cent; and
— 10-20 Bond Street, Sydney NSW achieved a 5.0 Star
NABERS energy rating and won the ‘Best Sustainable
Development — Existing Buildings’ category at the Property
Council of Australia Innovation and Excellence Awards.
Following the $60.0m refurbishment, the property has
achieved a 56.0 per cent reduction in carbon emissions
and 47.0 per cent reduction in water usage.
As at 30 June 2014, highlights for Capital included:
— executed a Relationship Deed with North American based
institutional investor TIAA-CREF on 19 February 2014,
establishing the Australian Office Alliance (“AOA” or “Alliance”).
Under the Alliance, TIAA-CREF has exclusive first rights
to acquire 50.0 per cent of co-investment opportunities in
prime-grade Australian office assets sourced or developed
by Mirvac for the next three years; and
— entered into an agreement with TIAA’s General Account
under the AOA, for the sale of a 50.0 per cent interest
in Mirvac’s office development at 699 Bourke Street,
Melbourne VIC on a fund-through basis.
1) These future looking statements should be read in conjunction with future releases to the ASX.
04
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report Divisional highlights / continued
At 30 June 2014, Capital managed three wholesale funds:
Mirvac Wholesale Residential Development Partnership, Tucker
Box Hotel Group and JF Infrastructure Yield Fund; as well as
two retail funds: Mirvac Development Fund – Meadow Springs
and Mirvac Development Fund – Seascapes.
On 19 March 2014, Capital completed the sale of the Australian
Sustainable Forestry Investors (“ASFI”) rural land estate
comprising 68 properties in Victoria, South Australia and
Western Australia.
MIM manages the ASX listed Mirvac Industrial Trust (ASX: MIX),
while MAM provides asset management services primarily for the
MPT portfolio. As at 30 June 2014, MAM managed 73 properties.
Outlook 1
Capital will seek to expand its assets under management, with a
key focus on establishing and growing investment partnerships
with strategically aligned institutional investors seeking to
co-invest in Mirvac-managed real estate assets and development
projects. MAM will continue to expand its asset management
services in accordance with growth in the Investment and
Capital portfolios and in assets owned by third parties where
there are common interests.
Development
Mirvac’s Development business unit operates across national
product lines consisting of Residential (comprising Apartments
and Masterplanned Communities) and Commercial.
At 30 June 2014, Development had $1,631.9m of invested capital.
For the year ended 30 June 2014, Development’s statutory
profit before tax was $112.0m and operating profit before tax
was $112.0m.
Residential
In the Group’s core metropolitan markets, the business unit
continued to deliver quality residential product, with new
release projects targeted at the right price points and right
locations. Key highlights across Apartments and Masterplanned
Communities included:
Apartments:
— Rhodes Pinnacle, Rhodes NSW: completed construction
in September 2013 with 100.0 per cent now settled
(233 settled contracts);
— ERA, Chatswood NSW: completed construction in February
2014 with 100.0 per cent now settled (294 settled contracts);
— Harold Park, Glebe NSW: achieved strong sales with
100.0 per cent of Precinct 1, 100.0 per cent of Precinct 2 and
98.0 per cent of Precinct 3 sold (298, 184 and 338 exchanged
contracts respectively); and
— Yarra’s Edge, Docklands VIC: construction on track at Array,
with 82.4 per cent sold (169 exchanged contracts). Array is
expected to be completed in 2015.
— Googong NSW: continued strong sales with 91.5 per cent of
released lots sold (636 settled and exchanged contracts);
— Jane Brook WA: continued strong sales with 91.9 per cent of
released lots sold (192 settled and exchanged contracts);
— Enclave VIC: continued strong sales with 96.9 per cent of
released lots sold (185 settled and exchanged contracts); and
— Harcrest VIC: continued strong sales with 96.0 per cent of
released lots sold (582 settled and exchanged contracts).
In addition to this strong sales momentum, Mirvac completed
sales on two long-dated projects, Newbury Estate, Stanhope
Gardens NSW and Middleton Grange NSW. Mirvac also
completed the englobo sale of provisioned projects, Spring
Farm, NSW; Mariner’s Peninsula, QLD; Hope Island, Harbour
Village and Neighbourhood 7, QLD; Brookwater Stages 3-6, QLD;
and Foreshore Hamilton, QLD.
For the year ended 30 June 2014, Development’s residential
pipeline totalled 30,538 lots, which was supplemented by the
acquisition of a number of key on-strategy projects that will
contribute significantly to Development’s future pipeline, including:
— Bondi NSW: acquisition of an inner-ring apartment
development site in Sydney’s eastern suburbs. On completion,
this project is expected to comprise in excess of 200
apartment lots;
— Waterloo NSW: acquisition of an inner-ring apartment
development site in Sydney with the potential to deliver
approximately 250 apartment lots 2,3;
— South Brisbane QLD: acquisition of an inner-ring apartment
development site with approved planning for 329 lots across
two towers 2;
— Gledswood Hills NSW: acquisition of a masterplanned
community development site in Sydney’s South West Growth
Centre with the potential to deliver approximately 600 lots 2,3;
— Altona North VIC: acquisition of a masterplanned community
development site in Melbourne’s established inner-west. On
completion, the site is expected to comprise approximately
260 lots 2,3;
— Baldivis WA: acquisition of a masterplanned community site
of approximately 380 lots in the southern growth corridor
of Perth; and
— Everton Park QLD: acquisition of a masterplanned community
development site located approximately eight kilometres
north of Brisbane’s CBD. On completion, this project will
comprise of approximately 56 lots 3.
As at 30 June 2014, Development settled 2,482 residential lots
and had secured future income of $1,193.1m 4 through residential
exchange pre-sales contracts.
State based lot settlements by product for the year ended
30 June 2014 were as follows:
Masterplanned Communities:
— Elizabeth Hills NSW: continued strong sales with 97.8 per cent
of released lots sold (634 settled and exchanged contracts);
— Elizabeth Point NSW: continued strong sales with 100.0 per cent
of released lots sold (191 settled and exchanged contracts);
— Alex Avenue NSW: continued strong sales with 97.7 per cent
of released lots sold (213 settled and exchanged contracts);
State
NSW
QLD
VIC
WA
Total
Apartments
Masterplanned
Communities
527
89
29
9
654
1,100
242
193
293
Total
1,627
331
222
302
1,828
2,482
1) These future looking statements should be read in conjunction with future releases to the ASX.
2) Subject to planning approval.
3) Settlement to occur post FY14.
4) Total exchanged pre-sales contracts as at 30 June 2014, adjusted for Mirvac’s share of joint ventures, associates and Mirvac managed funds.
05
MIRVAC GROUP ANNUAL REPORT 2014
Divisional highlights / continued
Commercial
Mirvac’s commercial development activities include office, retail
and industrial projects. For the year ended 30 June 2014, Mirvac’s
office development pipeline had an end value of $3,414.2m on
a 100.0 per cent ownership basis.
Key operational highlights for Commercial for the year ended
30 June 2014 were outlined in the MPT highlights section of this
Report. Key development milestones were:
— 8 Chifley Square, Sydney NSW: practical completion was
achieved in July 2013. The project demonstrates the benefit
of Mirvac’s integrated model with the successful delivery of
this premium grade asset to the joint owners (MPT and Keppel
REIT) by Development. The premium office tower achieved
6.0 Star Green Star Design V2 rating and is expected to
achieve a 5.0 Star NABERS energy rating;
Outlook 1
The residential market continues to see volume and price
growth nationally, albeit at a subdued and more sustainable
rate than in the past 12 months. NSW continues to outperform
across all metrics, while Queensland continues to trail, although
is showing a marked improvement. The Victorian and West
Australian markets lie between these two extremes. Population
growth and low interest rates will continue to support activity
over the medium term. Mirvac’s overweight exposure to the
Sydney and Melbourne markets, as well as high-density living,
will ensure continued development activity in the medium to
long term.
The Development division remains focused on:
— continuing to improve key metrics including ROIC (10.0 plus
per cent target) and gross margin (18.0-22.0 per cent target);
— strategically restocking the development pipeline; and
— Treasury Building, Perth WA: construction progressing with
— improving the strong levels of pre-sales to mitigate future
earning risks.
Risks
As a property group involved in real estate investment, residential
and commercial development and investment management,
Mirvac faces a number of risks throughout the business cycle
which have the potential to affect the Group’s achievement
of its targeted financial outcomes. The Group’s objective is to
ensure those risks are identified and appropriate strategies
are implemented to control or otherwise manage the impact of
those risks. Mirvac’s risk management framework is integrated
with its day-to-day business processes and is supported by
a dedicated Group Risk function. Further information on
the Group’s risk management framework is detailed in the
Corporate Governance Statement in this Annual Report.
Group risks
For the year ended 30 June 2014, the Group continued to review
both internal and external risks which have the potential to
affect the Group’s targeted financial outcomes and to implement
strategies to minimise their impact. Further information on
the material risks identified for each of the Investment and
Development divisions is outlined below. The Group also
introduced a consolidated Group-wide robust capital allocation
process that encourages decision making with a focus on Group
outcomes rather than divisional outcomes. At a Group level,
Mirvac faces certain risks to achieving of its financial outcomes;
these risks are types of risks that are typical for a property
group. These may include debt refinancing and compliance with
debt covenants as well as compliance with health, safety and
environment regulations.
level 16 poured as at 30 June 2014. The A-grade office tower
is located on the landmark site of the Old Treasury in Perth.
The tower is scheduled for completion in mid-2015 and is
expected to achieve a 4.5 Star NABERS energy rating and
5.0 Star Green Star rating;
— 200 George Street, Sydney NSW: bulk excavation works are
now complete and construction of the basement car park
structure is underway. Project completion is expected for
mid-2016. The office tower is expected to achieve a 5.0 Star
NABERS energy rating and 5.0 Star Green Star rating;
— 699 Bourke Street, Melbourne VIC: commenced construction
in August 2013 with completion expected in mid-2015. The
A-grade office building with premium grade services is
designed to achieve a 5.0 Star NABERS and 5.0 Star Green
Star rating and is 100.0 per cent pre-committed to AGL;
— 2 Riverside Quay, Melbourne VIC; entered into Heads of
Agreement with PricewaterhouseCoopers for the lease of
17,200 square metres or 82.0 per cent of Mirvac’s proposed
new commercial tower. Mirvac intends to build an A-grade
12 level office building above the existing 8-storey car park;
— 60 Wallgrove Road, Eastern Creek, NSW: key acquisition of
a strategically located site in the existing industrial precinct
of Eastern Creek. Concept planning for future development
has commenced;
— Stanhope Village, Stanhope NSW: Stage 3 officially opened in
August 2013. Commenced construction works on the Stage 4
extension in January 2014, with major demolition works now
complete. Piling works and structural steel installation are
underway with construction due for completion in mid-2015;
— Kawana Shopping Centre, Buddina QLD: commenced
construction on Stage 4 which includes expanding the
centre by approximately 9,000 square metres. Completion
is expected in September 2014; and
— Orion Springfield Town Centre, Springfield QLD: commenced
construction on Stages 2 and 3 as well as the cinema
extension, providing an additional 31,545 square metres.
The project is due for completion in March 2016.
In addition to this, Mirvac completed the englobo sale of the
provisioned projects Warnervale Industrial Park, Belmont NSW
and Mackay Stage 2 and Stage 3, QLD.
1) These future looking statements should be read in conjunction with future releases to the ASX.
06
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report Divisional highlights / continued
Divisional risks
At a divisional level, the key risks faced by Investment and
Development which have the potential to affect the achievement
of the financial prospects for the Group include:
Environmental regulations
Mirvac and its business operations are subject to compliance
with both Federal and state environment protection legislation,
and the Board is satisfied that adequate systems are in place for
Mirvac’s compliance with the applicable legislation.
Within Mirvac’s health, safety and environment performance
reporting systems, including internal and external audits and
inspections, Mirvac has not experienced any incidents that have
resulted in any significant harm to the environment. There has
been no infringement notices issued for minor environmental
incidents during the year.
A key initiative to reduce greenhouse gas emissions was a
commitment to achieve an average 4.75 Star NABERS Energy
rating on applicable office buildings by July 2014. The Investment
division achieved this target in December 2013, six months ahead
of schedule and is now achieving 4.9 Stars. This has resulted in
reduced operating costs, improved environmental performance,
demonstrating excellent energy operational and management
practices, and high efficiency systems and equipment.
The new Mirvac sustainability strategy, ‘This Changes Everything’,
sets short term targets for the whole portfolio to reduce carbon
emissions by 20 per cent and increase energy generation to
1MW by 2018. This plan also includes a long term mission to be
Net Positive for energy and water by 2030, whilst achieving zero
waste to landfill in the same period.
Mirvac is required under the National Greenhouse and Energy
Reporting Act 2007 to report annually on greenhouse gas
emissions, reductions, removals and offsets, and energy
consumption and production figures.
The Federal Government has introduced into Parliament
legislation that terminates the Energy Efficiency Opportunities
Program and so removes the mandatory requirement for large
energy using businesses to assess opportunities to improve
energy efficiency and to report publicly on the outcomes of
those assessments. The Federal Government has recently
repealed the carbon tax, we will thereby approximately reduce
our energy bill by 10 per cent. The carbon tax will be replaced
by direct action details of which are still being finalised.
Mirvac is also subject to the commercial Building Energy
Efficiency Disclosure Act 2010. This involves the disclosure
of energy efficiency-related information at the point of sale
or lease of office space greater than 2,000 square metres.
Office: As detailed in the outlook section for Investment, the
demand for office space remains challenging across markets
in which the Group operates. This has the potential to impact
on the Group’s performance given that office assets represent
61.5 per cent 1 of the MPT portfolio. The risk is mitigated,
however, by MPT’s office portfolio metrics comprising a
long WALE of 4.6 years 2; high occupancy of 96.1 per cent 3;
and strong like-for-like rent growth of 3.4 per cent. This
demonstrates Mirvac’s ability to maintain a strong and robust
portfolio through the cycles of demand. The Group seeks
to manage uncertainty around commercial office demand
in a number of ways including the substantial pre-letting of
commercial development in advance of construction (for
example, AGL’s pre-commitment of 100.0 per cent of the
lettable area at 699 Bourke Street, Melbourne as announced
in November 2013) and by partially selling down commercial
developments before completion (for example, the sale of a
50.0 per cent interest in 699 Bourke Street, Melbourne VIC
to TIAA-CREF as announced in February 2014);
Retail: as detailed in the outlook section for Investment, while
recent improvements in retail sales is encouraging, leasing
conditions remain challenging. With 25.3 per cent of MPT’s
portfolio represented by retail assets, Mirvac is focused on
continually refreshing its retail assets (via refurbishment,
redevelopment or tenant remixing) to adapt to changing
market dynamics. Furthermore, Mirvac maintains a focus
on non-discretionary offerings, and a diversified tenancy
mix, where no single specialty retailer contributes greater
than 1.4 per cent of the total portfolio’s gross rent;
Industrial: as detailed in the outlook section for investment,
continuing investor demand for prime grade industrial assets
in key locations is resulting in compressed capitalisation rates.
As a result, Mirvac’s industrial portfolio has experienced a
contraction of its weighted average capitalisation rate of 35 basis
points to 7.58 per cent. Mirvac continues to focus on properties
with long lease terms and secure cash flow profiles, such as
Hoxton Distribution Park, which will benefit from the increase
in investor demand and continue to provide steady returns; and
Residential: as detailed in the outlook section for Development,
Australia’s residential market varies from state to state
(and within states) with some markets expected to continue
to strengthen over the next three years, while activity over
the medium term is expected to slow in states with a heavier
reliance on resources investment. The Development division
is focused on the right product in the right location with
diversification of risk across residential sub-markets, across
Australia and between Apartments and Masterplanned
Communities. Weighting to key growth markets such as
NSW further mitigates this risk, as do pre-sales.
1) Includes 8 Chifley Square, Sydney, NSW; although not a direct property asset, it is treated as an investment accounted for using the equity method for
statutory reporting.
2) By income, includes 8 Chifley Square, Sydney NSW and excludes IPUC, based on MPT’s ownership.
3) By area, excludes IPUC, based on 100 per cent of building net lettable area.
07
MIRVAC GROUP ANNUAL REPORT 2014 John Mulcahy
Susan Lloyd-Hurwitz
Peter Hawkins
James Millar AM
Information on Directors
Directors’ experience and areas of special responsibilities
The members of the Mirvac Board and their qualifications,
experience and responsibilities are set out below:
John Mulcahy
PhD (Civil Engineering), FIEAust, MAICD
Independent Non-Executive Chair
Member of the Audit, Risk and Compliance Committee
Member of the Human Resources Committee
Member of the Nomination Committee
John Mulcahy was appointed a Non-Executive Director of Mirvac
on 19 November 2009 and the Independent Non-Executive
Chair on 14 November 2013. John has more than 27 years
of leadership experience in financial services and property
investment. John is the former Managing Director and Chief
Executive Officer of Suncorp-Metway Limited. Prior to joining
Suncorp-Metway, John held a number of senior executive
roles at Commonwealth Bank, including Group Executive,
Investment and Insurance Services. He also held a number
of senior roles during his 14 years at Lend Lease Corporation,
including Chief Executive Officer, Lend Lease Property
Investment and Chief Executive Officer, Civil and Civic.
John is currently a Non-Executive Director of ALS Limited
(formerly Campbell Brothers Limited) (appointed February
2012), Coffey International Limited (appointed September
2009 and as Chair in November 2010) and GWA Group Limited
(appointed November 2010). John is also a Guardian of the
Future Fund Board of Guardians and a Director of The Shore
Foundation Limited and the Great Barrier Reef Foundation.
Susan Lloyd-Hurwitz
BA (Hons), MBA (Dist)
Chief Executive Officer & Managing Director (“CEO/MD”)
Executive
Susan Lloyd-Hurwitz was appointed CEO/MD on 15 August
2012 and a Director of Mirvac Board on 5 November 2012.
Prior to this appointment, Susan was Managing Director at
LaSalle Investment Management, where she was responsible
for the core investment accounts and funds business lines in
the European region, as well as the operation of the business.
Susan has also held senior executive positions at MGPA,
Macquarie Group and Lend Lease Corporation, working
in Australia, the US and Europe.
Susan has been involved in the real estate funds management
industry for over 24 years, with extensive experience in fund and
portfolio management in both the direct and indirect markets,
fund development, mergers and acquisitions, dispositions,
research and business strategy.
Susan is also a Director of the Green Building Council of
Australia and a member of the UWS Foundation Council
which supports the University of Western Sydney in its
development and contribution to Greater Western Sydney.
Peter Hawkins
BCA (Hons), FAICD, SFFin, FAIM, ACA (NZ)
Independent Non-Executive
Chair of the Human Resources Committee
Member of the Audit, Risk and Compliance Committee
Member of the Nomination Committee
Peter Hawkins was appointed a Non-Executive Director of
Mirvac on 19 January 2006, following his retirement from
ANZ after a career of 34 years. Prior to his retirement, Peter
was Group Managing Director, Group Strategic Development,
responsible for the expansion and shaping of ANZ’s businesses,
mergers, acquisitions and divestments and for overseeing its
strategic cost agenda.
Peter was a member of ANZ’s Group Leadership Team and sat
on the boards of Esanda Limited, ING Australia Limited and
ING (NZ) Limited, the funds management and life insurance
joint ventures between ANZ and ING Group. He was previously
Group Managing Director, Personal Financial Services, as well
as holding a number of other senior positions during his career
with ANZ. Peter was also a Director of BHP (NZ) Steel Limited
from 1990 to 1991 and Visa Inc. from 2008 to 2011.
Peter is currently a Non-Executive Director of Westpac Banking
Corporation (appointed December 2008), Murray Goulburn
Co-operative Co. Limited, Clayton Utz, Treasury Corporation
of Victoria and Liberty Financial Pty Ltd.
James Millar AM
BCom, FCA, FAICD
Independent Non-Executive
Chair of the Audit, Risk and Compliance Committee
Member of the Human Resources Committee
James Millar was appointed a Non-Executive Director of Mirvac
on 19 November 2009 and is the former Chief Executive Officer
and Oceania Area Managing Partner of Ernst & Young. He was
also a member of the global board of Ernst & Young.
James commenced his career in the reconstruction practice,
conducting some of the largest corporate workouts of the early
1990s. James has qualifications in business and accounting, and
is a Fellow of The Institute of Chartered Accountants in Australia.
James is a Non-Executive Director of Fairfax Media Limited
(appointed July 2012), Helloworld Limited (formerly known
as Jetset Travelworld Limited) (appointed September 2010)
and Chairman of the Forestry Corporation NSW (appointed
March 2013). James is a Member of the University of NSW
Australian School of Business Advisory Council and the Grant
Samuel Advisory Board. He is also a Director of a number of
charities including the Chairman of The Smith Family (appointed
March 2011) and a Trustee of the Australian Cancer Research
Foundation. James is a former Non-Executive Director and Chair
of Fantastic Holdings Limited (from May 2012 until June 2014).
08
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report John Peters
Elana Rubin
James MacKenzie
Marina Darling
Information on Directors / continued
John Peters
BArch, AdvDipBCM, ARAIA, GAICD
Independent Non-Executive
Member of the Audit, Risk and Compliance Committee
John Peters was appointed a Non-Executive Director of Mirvac
on 17 November 2011.
John brings to the Board over 35 years’ experience in
architectural design, project management, property
development and property management.
For the last 17 years, John has been the principal of a private
property development company focused on substantial
mixed use developments and redevelopments in South East
Queensland. During this period, he has also consulted to various
investors and other financial stakeholders in several Queensland
development projects.
Prior to this, John was with Lend Lease Corporation for 14 years,
where he was Queensland Manager Lend Lease Development,
and Director, Lend Lease Commercial.
John is a Non-Executive Director of Argyle Community Housing Ltd.
Elana Rubin
BA (Hons), MA, FFin, FAICD, FAIM
Independent Non-Executive
Member of the Audit, Risk and Compliance Committee
Member of the Nomination Committee
Elana Rubin was appointed a Non-Executive Director of Mirvac
on 11 November 2010 and has extensive experience in property
and financial services. In November 2013, Elana was also
appointed as a Director of Mirvac Funds Management Limited,
the responsible entity and trustee for Mirvac’s listed and unlisted
funds. Elana is a Director of several NAB life insurance and asset
management subsidiaries, a Director of PPB Advisory, and a
Member of the Federal Government’s Infrastructure Australia
Council, the Qualitas Properties Advisory Board and the Victorian
Council of the Australian Institute of Company Directors.
Elana is the former Chair of AustralianSuper (July 2007 to
April 2013), one of Australia’s leading superannuation funds,
having been on the board since 2006. She was a Director of
Victorian WorkCover Authority (December 2001 to February
2012) and Chair from 2006.
Elana was previously a Non-Executive Director of TAL Life
Limited (formerly Tower Australia Limited) (November 2007
to April 2013) and has been a Director on a number of listed
companies and other entities including Bravura Solutions Ltd.
James MacKenzie
BBus, FCA, FAICD
James MacKenzie was appointed to the Mirvac Board on
7 January 2005 and assumed the role of Chair in November
2005. He stepped down as Chair in November 2013 and resigned
as a Director on 30 January 2014.
James has served as a director of a number of public companies
listed on both Australian and international stock exchanges.
James was a Partner in both the Melbourne and Hong Kong
offices of an international accounting firm now part of Deloitte.
Subsequently, James led the transformation of the Victorian
Government’s Personal Injury Schemes initially as Chief
Executive Officer of the Transport Accident Commission (“TAC”)
and later as Chairman of TAC and the Victorian WorkCover
Authority (WorkSafe Victoria).
James was appointed as a member of the Australian B20
Group in February 2013 and was Co-Vice Chairman of ASX listed
Yancoal Australia Ltd until his resignation on 11 April 2014.
Marina Darling
BA (Hons), LLB, FAICD
Marina Darling was appointed to the Mirvac Board on
23 January 2012 and resigned on 24 January 2014.
Marina has previously been a Non-Executive Director of
a number of listed companies and other entities including
Southern Cross Broadcasting Limited, Southern Cross Media
Group Limited, National Australia Trustees Limited, GIO Holdings
Limited, Deacons (Lawyers), Argo Investments Limited and
Southern Hydro Limited.
Company Secretaries
Natalie Allen
BEc, LLB, GAICD
Natalie Allen was appointed Company Secretary on 21 January
2013. Natalie joined Mirvac as Group General Counsel in
August 2012, and has more than 15 years of legal experience
in real estate and equity capital markets. Prior to joining
Mirvac, Natalie was the Group General Counsel and Company
Secretary at Charter Hall Group, and before this was General
Counsel and Company Secretary for a number of listed and
unlisted entities within Macquarie’s Real Estate Funds division.
Natalie is a solicitor of the Supreme Court of NSW, a member
of the State Bar of California and a graduate of the Australian
Institute of Company Directors.
Sean Ward
BEc, BComm, FCSA, FFin
Sean Ward was appointed Company Secretary on 23 August
2013. Sean joined Mirvac as Group Company Secretary in
April 2013 and has more than 14 years’ corporate experience.
Prior to joining Mirvac, Sean was the Head of Subsidiaries
at Westpac Banking Corporation, providing company
secretarial support for all of Westpac’s listed and unlisted
entities and before this was a Senior Companies Advisor
at ASX Limited. Sean is also currently studying for a Master
of Business Administration with the Australian Graduate
School of Management.
09
MIRVAC GROUP ANNUAL REPORT 2014 Meetings of Directors
The number of meetings of the Board of Directors and of each standing Board committee, of which the relevant Director was a
member, held during the year ended 30 June 2014 and the number of meetings attended by each Director are detailed below:
Directors
John Mulcahy
Susan Lloyd-Hurwitz
Marina Darling 3
Peter Hawkins
James MacKenzie 4
James Millar AM
John Peters
Elana Rubin
Board
B
Board
Committee 1
B
A
Audit, Risk and
Compliance
Committee
(“ARCC”)
B
A
Human
Resources
Committee
(“HRC”)
B
A
15
15
9
15
10
15
15
15
2
4
—
1
1
2
1
—
2
4
—
1
1
2
1
—
6
—
—
6
1
6
6
6
6
—
—
6
3
6
6
6
5
—
0
5
1
5
—
—
5
—
3
5
3
5
—
—
A
15
15
0
14
7
14
15
15
Nomination
Committee 2
A
—
—
—
—
—
—
—
—
B
—
—
—
—
—
—
—
—
1) Committees of the Board established to deal with particular purposes during the year.
2) There were no Nomination Committee meetings held during FY14 as the Board chose to undertake the responsibilities of the Nomination Committee.
3) Marina Darling was granted a leave of absence from 9 August 2013 to 24 January 2014 being the date of her resignation as a Director. The leave of absence
covered all nine Board meetings and two HRC meetings.
4) James MacKenzie was granted a leave of absence from 1 July 2013 to 31 August 2013 and resigned as a Director on 30 January 2014. The leave of absence
covered two Board meetings, one ARCC meeting and one HRC meeting.
A) Indicates the number of meetings attended during the period the Director was a member of the Board or Committee.
B) Indicates the number of meetings held during the period the Director was a member of the Board or Committee.
Remuneration report
The remuneration report comprises the following sections:
1) Highlights for the year ended 30 June 2014
2) Alignment of remuneration strategy and business strategy
3) Mirvac’s approach to executive remuneration design
4) Remuneration components and outcomes for the Senior Executives
5) Five year snapshot of business and executive remuneration outcomes
6) Service agreements for the Senior Executives
7) Non-Executive Directors’ remuneration
8) Legacy remuneration arrangements
9) Additional required disclosures
This report covers the key management personnel (“KMP”) of Mirvac. KMP are those people with authority and responsibility
for planning, directing and controlling the activities of the entity, directly or indirectly. In essence, the KMP are responsible for
determining and executing Mirvac’s strategy.
Consistent with the approach used for the year ended 30 June 2013 (“FY13”), members of the Executive Leadership Team (“ELT”)
who head business functions are considered KMP. For Mirvac, the KMP during the year ended 30 June 2014 (“FY14”) were therefore:
— the CEO/MD, Chief Financial Officer (“CFO”) and members of the ELT who head a business (“Senior Executives”); and
— Non-Executive Directors.
10
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report
For the year ended 30 June 2014, the KMP were:
KMP
John Mulcahy
Peter Hawkins
James Millar AM
John Peters
Elana Rubin
Position
Chair
Director
Director
Director
Director
Former Non-Executive Directors
James MacKenzie
Marina Darling
Chair (resigned on 30 January 2014)
Director (resigned on 24 January 2014)
Senior Executives
Susan Lloyd-Hurwitz
Andrew Butler
Brett Draffen
Shane Gannon
Jonathan Hannam
CEO/MD
Chief Executive Officer, Investment
Chief Executive Officer, Development and Group Strategy
CFO (appointed 2 December 2013)
Group Executive, Capital
Term as KMP
Full Year
Full Year
Full Year
Full Year
Full Year
Part Year
Part Year
Full Year
Full Year
Full Year
Part Year
Full Year
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
1 Highlights for FY14
Fixed remuneration
1
In accordance with its market positioning strategy, Mirvac assesses the remuneration levels
and mix for Senior Executives to identify where adjustments are appropriate based on market
benchmarking. Following the review completed at the start of FY14, one Senior Executive
received an increase to their fixed remuneration, with the fixed remuneration for all the other
Senior Executives remaining unchanged.
Short-term incentives (“STI”)
2 To ensure that the STI pool was appropriately aligned to Mirvac’s strategic drivers, Mirvac
Introduction of STI deferral
continued with its balanced scorecard of measures for determining the STI pool for the year
ended 30 June 2014.
3 The FY14 STI pool was larger than the STI pool in the year ended 30 June 2013 (“FY13”).
This was largely due to improved performance on the ROIC measure in FY14 compared to FY13.
4 Consistent with the intention stated in the FY13 Remuneration Report, 25 per cent of FY14 STI
awards for ELT members will be deferred into rights over Mirvac securities, with the remainder
paid in cash.
5 Half of these deferred rights will vest after 12 months, with the balance vesting after 24
months. No dividends will be payable on these deferred rights. The deferred rights are subject
to service conditions.
Long-term incentives (“LTI”)
6 The three year performance period for the LTI grants made during the year ended 30 June
2012 finished on 30 June 2014. In total, 77 per cent of the performance rights from this grant
vested as both the relative total shareholder return (“TSR”) and return on equity (“ROE”)
performance hurdles were met.
7 Consistent with the intention stated in the FY13 Remuneration Report, two performance
measures will be applied to the LTI grants made during FY14: 50 per cent of the LTI allocation
will be tested against a relative TSR hurdle and 50 per cent against an ROIC hurdle.
8 To ensure that executives are only rewarded when performance hurdles have been achieved
at the end of the performance period, Mirvac continued with its policy of not paying dividends
on unvested LTI awards.
9 In order to facilitate the introduction of STI deferrals, effective FY14, the STI targets for
ELT members (other than the CEO/MD) increased by 10 per cent of fixed remuneration,
while the LTI targets reduced by 10 per cent of fixed remuneration. The STI and LTI targets
for the CEO/MD remained unchanged.
Changes to remuneration mix
Non-Executive Director fees
10 The maximum aggregate Non-Executive Director remuneration for FY14 remained unchanged
from the $1.95m limit approved by securityholders at the 2009 Mirvac Annual General
Meeting/General Meeting (“AGM”). A proposal to increase this maximum remuneration
amount to $2.25m will be presented for securityholder approval at the 2014 AGM.
11
MIRVAC GROUP ANNUAL REPORT 2014 2 Alignment of remuneration strategy with business strategy
Mirvac’s remuneration strategy is designed to support and reinforce its business strategy. Linking the at-risk components of
remuneration (that is, our STI and LTI schemes) to the drivers that support the business strategy ensures that remuneration
outcomes for executives are aligned with the creation of sustainable value for securityholders.
Mirvac’s remuneration arrangements support its strategic vision of setting the standard as a world-class Australian property group
that attracts the best. The Board has identified drivers that are critical to the achievement of this strategic vision, being:
1) financial performance and capital efficiency;
2) customer and investor satisfaction;
3) high performing people and culture; and
4) health, safety, environment and sustainability (“HSE&S”) leadership.
The at-risk components of executive reward (that is, Mirvac’s STI and LTI schemes) are directly tied to these four strategic drivers,
as shown in the following diagram. This is intended to motivate executives to focus on the areas the Board has identified as most
important for delivering the business strategy. Actual remuneration outcomes for executives are directly affected by, and aligned
with, Group performance in these areas.
Our strategic drivers...
Are reflected in STI
performance measures...
And LTI performance
measures...
So Mirvac’s actual
performance...
Directly affects what
executives are paid
Relative Total
Shareholder Return
(TSR)
Measures the
performance of Mirvac
securities over time,
relative to other entities
in a comparison group.
Return on Equity (ROE)
Measures Mirvac’s
profitability relative
to securityholders’
investment in the Group.
From FY12 – FY14
— Mirvac’s TSR was
ranked at the 73rd
percentile relative to
its comparison group.
— Mirvac’s average
annual ROE was 6%.
In FY14
— Operating earnings
were $437.8m, up
16% from $377.6m
in FY13.
— FY14 ROIC result
was up from FY13.
In FY14
— Mirvac achieved
stretch performance,
meeting six out of six
key measures on the
customer and investor
satisfaction scorecard.
In FY14
— Mirvac achieved
threshold performance,
meeting four out
of the six key
people measures.
In FY14
— Mirvac achieved
target performance,
meeting five out of
the six measures on
the HSE&S scorecard.
MD STI
outcome
in FY14
= 137%
of target
Average
STI in FY14
for other
eligible
Senior
Executives
= 111%
of target
LTI
vesting
outcome
in FY14
= 77%
of target
Capital efficiency and
financial performance
Deliver top three
AREIT returns.
Customer and
investor satisfaction
Provide customers and
investors an experience
that delivers excellence,
consistently exceeds
expectations and
engenders loyalty.
High performing
people and culture
Have an engaged and
motivated workforce
with superior skills
and capabilities.
Operating earnings
Reflects how much
revenue the business has
generated for the year,
less operating costs.
Return on Invested
Capital (ROIC)
Measures Mirvac’s
profitability relative to its
total assets. It is calculated
by dividing the company’s
annual earnings by its
total assets.
Customer/Investor
satisfaction
“scorecard”
The scorecard includes
improvement score and
rank in the CCI survey,
Retail customer and
Office tenant satisfaction
surveys as well as
Residential customer
satisfaction surveys.
People “scorecard”
The balanced scorecard
includes measures
such as talent turnover,
diversity targets and
employee engagement.
Performance is
assessed based on the
proportion of those
measures where targets
were met.
HSE&S leadership
Be recognised as a
leader in sustainability.
Provide workplaces
free from harm and
supported by a culture
where safety remains
an absolute priority.
HSE&S leadership
“scorecard”
The HSE&S scorecard
includes lead and
lag indicators such
as lost time injury
frequency rate and
timely incident reporting.
12
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report 2 Alignment of remuneration strategy and business strategy / continued
The following table sets out the actual value of the remuneration receivable by the Senior Executives during the year. The figures in
this table are different from those shown in the accounting table in section 4(h). The main difference between the two tables is that
the accounting table in section 4(h) includes an apportioned accounting value for all unvested LTI grants during the year (some of
which remain subject to satisfaction of performance and service conditions and may not ultimately vest). The table below, on the
other hand, shows the LTI value based on the awards that actually vested and delivered value to Senior Executives.
Senior
Executives
Fixed
remuneration
$
Year
STI 1
Cash
$
Deferred
STI
realised 2
$
Employee Termination
benefits
$
loans 4
$
LTI 3
$
Other
$
Total
$
Susan Lloyd-Hurwitz 5 2014 1,500,000
990,134
2013
1,160,156
724,035
Andrew Butler
Brett Draffen
2014 700,000
618,000
2013
415,800
401,929
2014 900,000
900,000
2013
647,460
549,423
Shane Gannon 10
2014
527,962
365,878
Jonathan Hannam 12
2014 540,000
258,619
2013
356,400
141,206
—
—
—
—
—
—
—
—
—
—
—
—
—
14,163
—
817,353
—
600,159
650,071
581,835
943,311
—
—
—
—
—
—
—
—
—
—
134,938 6 2,795,094
592,716 7 2,306,885
319,418 8 2,049,540
1,678,727
8,727
— 464,702 9 3,411,350
2,407,137
—
14,403
—
—
—
355,614 11 1,249,454
9,508 13 905,908
8,213 13 408,038
1) Cash STI values reflect the non-deferred portion of STI payments to be made in September 2014 in recognition of performance during FY14.
2) Represents the value of STI deferred from prior years that was realised in FY14.
3) LTI amounts represent the value to the participant during FY14 arising from performance rights whose performance period ended 30 June 2014.
4) Amount reported includes amounts forgiven during the year, imputed interest and related fringe benefits tax (“FBT”).
5) Commenced employment with Mirvac on 5 November 2012.
6) Includes relocation expenses and a payment of $87,500 as part compensation for the incentive entitlements forfeited on resigning from her previous employer.
7) Includes relocation expenses and a payment of $530,000 as part compensation for the incentive entitlements forfeited on resigning from her previous employer.
8) Cash retention payment as detailed in Section 4(c).
9) Cash retention payment as detailed in Section 4(c).
10) Commenced employment with Mirvac on 2 December 2013.
11) Includes a payment of $350,000 as part compensation for the incentive entitlements forfeited on resigning from the previous employer.
12) Commenced employment with Mirvac on 9 January 2013.
13) Includes relocation expenses.
3 Mirvac’s approach to executive remuneration design
The Board and HRC are responsible for designing remuneration arrangements that support the business strategy.
Remuneration arrangements are designed to enable Mirvac to derive maximum value from its remuneration spend, by attracting,
motivating and retaining the individuals who are best equipped to successfully execute the business strategy.
a) How remuneration decisions are made
Board and HRC oversight and accountability
The Board, with assistance from the HRC, is ultimately responsible for ensuring that the remuneration approach at Mirvac is
consistent with the business strategy and aligned with the creation of sustainable securityholder value.
The HRC, consisting of three independent Non-Executive Directors, has been delegated responsibility for reviewing the remuneration
strategy annually and advises the Board on remuneration policies and practices generally. The HRC also makes specific
recommendations to the Board on remuneration packages, incentives and other terms of employment for Non-Executive and
Executive Directors, including the CEO/MD, and approves the remuneration packages, incentives and other terms of employment
for other KMP. More detailed information on the role and responsibilities of the HRC can be found in section 9 of the Corporate
governance statement, while information on each of the HRC members can be found on page 08 and 09 of the Annual Report.
The HRC regularly reviews the at-risk components of executive remuneration (that is, the STI and LTI schemes) to ensure that the
executive remuneration approach continues to be appropriately aligned with securityholders’ interests, while also serving to attract,
motivate and retain suitably qualified people. The HRC also reviews and approves the performance targets set for the STI and LTI
schemes, as well as the assessment of Mirvac’s performance against those targets, which ultimately determines STI and LTI outcomes.
Clawback policy
Mirvac has in place an incentive clawback policy for ELT members and other executives capable of influencing the results of the
Group. The policy gives the HRC the ability to clawback incentives in the event of a material financial misstatement. The clawback
provisions apply to unvested STI and LTI awards received after the introduction of the policy.
Expert input from management and external advisors
The HRC has appointed Ernst & Young as its external remuneration adviser. Ernst & Young’s role in this regard is to provide both
information on current market practice and independent input into key remuneration decisions.
Ernst & Young’s terms of engagement include specific measures designed to protect its independence. The HRC recognises that,
to effectively perform its role, it is necessary for Ernst & Young to interact with members of Mirvac management, particularly
those in the Human Resources team. However, to ensure Ernst & Young remains independent, members of Mirvac’s management
are precluded from requesting services that would be considered to be a ‘remuneration recommendation’ as defined by the
Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011.
13
MIRVAC GROUP ANNUAL REPORT 2014
3
Mirvac’s approach to executive remuneration
design / continued
During the year ended 30 June 2014, Ernst & Young provided
the HRC with:
For business roles:
— the primary comparison group is the Australian Real Estate
Investment Trust (“A-REIT”) sector, plus Lend Lease, Aveo
Group and Australand Property Group; and
— guidance in the review and design of executive
— the secondary comparison group is a general industry
remuneration strategy;
— assistance in drafting of remuneration disclosures;
comparison group with a similar market capitalisation (50-200
per cent of Mirvac’s 12 month average market capitalisation).
— relative TSR performance calculations; and
For corporate roles:
— market remuneration information which was used
— the primary comparison group is a general industry
as an input to the annual review of KMP and selected
executives’ remuneration.
No remuneration recommendations were provided by
Ernst & Young or any other advisor during the year.
b) Remuneration principles
The Board and HRC have developed six remuneration principles
to ensure remuneration continues to support Mirvac’s business
strategy and create value for securityholders through all stages
of the business cycle. These principles underpin remuneration
decision making at Mirvac and provide a consistent framework to
ensure maximum value is derived from remuneration decisions.
Remuneration at Mirvac should:
comparison group with a similar market capitalisation
(50-200 per cent of Mirvac’s 12 month average market
capitalisation) to reflect the greater transferability of skills.
Where disclosed data is unavailable, Mirvac relies on published
remuneration surveys covering relevant industries and the
broader market.
Targeted market positioning
Fixed remuneration at Mirvac is positioned at the median (50th
percentile), with the ability to pay within a range around the
median based on criteria such as:
— the criticality of the role to successful execution of the
business strategy;
1) align and contribute to Mirvac’s key strategic business
objectives and desired business outcomes;
— assessment of employee performance/potential; and
— the employee’s experience level.
2) align the interests of employees with those of securityholders;
3) assist Mirvac in attracting and retaining the employees
required to execute the business strategy;
4) support Mirvac’s desired performance-based culture;
5) encompass the concept of pay parity and be fair and
equitable; and
6) be simple and easily understood.
c) Market positioning
Consistent with these principles, Mirvac has adopted a
market positioning strategy designed to attract and retain
talented employees, and to reward them for delivering strong
performance. The market positioning strategy also supports
fair and equitable outcomes between employees.
Definition of market
When determining the relevant market for each role, Mirvac
considers the companies from which it sources talent, and to
whom it could potentially lose talent. A distinction is made
between the market for business roles and the market for
corporate roles.
Target remuneration is comprised of fixed remuneration, STI
and LTI. Target total remuneration at Mirvac is positioned at
the median (50th percentile) with the opportunity to earn
total remuneration up to the upper quartile (75th percentile)
in the event that both the individual and the business achieve
stretch targets.
d) Remuneration mix
Mirvac’s remuneration structures strive to fairly and
responsibly reward employees, while complying with
all relevant regulatory requirements.
A significant portion of total remuneration for executives is
variable or at risk if applicable performance targets are not met
or exceeded each year. As described further in section 4(b),
commencing with the STI awards to be made in relation to FY14,
25 per cent of STI awards to ELT members will be deferred into
rights over Mirvac securities. This change was introduced to
support the introduction of the incentive clawback policy, and
to further align pay outcomes with Mirvac’s longer term security
price performance.
In order to facilitate the introduction of STI deferrals, effective
FY14, the STI targets for ELT members (other than the CEO/MD)
were increased by 10 per cent of fixed remuneration, while the
LTI targets were reduced by 10 per cent of fixed remuneration.
The STI and LTI targets for the CEO/MD were unchanged. The
following graphs compare the remuneration mix at target for
the CEO/MD and other Senior Executives during FY13 with the
mix after the introduction of STI deferral in FY14.
14
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report 3 Mirvac’s approach to executive remuneration design / continued
Changes in Senior Executive remuneration mix
CEO/MD
Other Senior Executives
46%
23%
31%
FY13
Fixed remuneration
Target short-term incentive
Target short-term incentive deferred
Long-term incentive
46%
6%
17%
31%
FY14
37%
26%
37%
FY13
33%
8%
22%
37%
FY14
The introduction of STI deferral in FY14 will also serve to ensure executives are rewarded for sustained performance over the
longer term.
FY14
FY15
FY16
Fixed Remuneration
Short Term Incentive – Cash
Short Term Incentive Deferred (12 months)
Short Term Incentive Deferred (24 months)
Long Term Incentive
The remuneration mix for Senior Executives has a significant weighting towards equity based remuneration to ensure strong
alignment with securityholder interests. The following graph illustrates the cash versus equity remuneration mix for the CEO/MD
and other Senior Executives:
Mix of cash vs equity
52%
48%
CEO/MD
Equity
Cash
41%
59%
Other Senior Executives
Minimum Securityholding Guidelines for ELT members were introduced in FY12 in order to further weight executives’ remuneration
mix towards equity. Under the Guidelines, ELT members are expected to establish and maintain a securityholding to the value of:
Level
CEO/MD
Other ELT members
Minimum securityholding
100% of fixed remuneration
50% of fixed remuneration
15
MIRVAC GROUP ANNUAL REPORT 2014 3 Mirvac’s approach to executive remuneration design / continued
Executives covered by the Minimum Securityholding Guidelines have five years to build up their securityholding to the suggested level.
As at 30 June 2014, progress towards the Minimum Securityholding Guidelines for each continuing Senior Executive was as follows:
Senior Executives
Susan Lloyd-Hurwitz
Andrew Butler
Brett Draffen
Shane Gannon
Jonathan Hannam
Date securityholding
to be attained
Value of securityholding
as at 30 June 2014
$
Minimum securityholding
guideline
$
November 2017
July 2017
July 2017
December 2018
January 2018
93,932
68,859
742,274
—
18,904
1,500,000
350,000
450,000
450,000
270,000
4 Remuneration components and outcomes for the Senior Executives
At Mirvac, the three components of executive remuneration – fixed remuneration, STI and LTI – are weighted so as to direct
executives’ focus towards building long-term value for the Group. To earn their at-risk components, executives must first create
sustainable value for securityholders.
a) Fixed remuneration
Fixed remuneration acts as a base-level reward for a competent level of performance in an executive’s particular role. It includes
cash, compulsory superannuation and any salary-sacrificed items (including FBT). The following factors are taken into account when
setting fixed remuneration levels at Mirvac:
— the size and complexity of the role;
— role accountabilities;
— skills and experience of the individual; and
— market pay levels for comparable roles.
The opportunity value for the at-risk components of remuneration is determined by reference to fixed remuneration, so Mirvac
is conscious that any adjustments to fixed remuneration have a flow-on impact on the executive’s potential STI and LTI awards.
Mirvac regularly considers market remuneration benchmarking information and, having regard to its market positioning strategy
and the desired remuneration mix, decides whether to adjust fixed remuneration for each executive. Following the review completed
at the start of FY14, one Senior Executive received an increase to their fixed remuneration, with the fixed remuneration for all the
other Senior Executives remaining unchanged.
b) The STI component – how does it work?
The purpose of STI is to motivate and reward employees for contributing to the delivery of annual business performance as assessed
against a balanced scorecard of measures. STI is an annual incentive based on Group and individual performance. Mirvac’s STI plan
has been structured as follows:
Eligibility
All permanent Mirvac employees are eligible to participate in the STI plan.
STI pool
formation
A gateway requirement of Group operating earnings being at least 90 per cent of target must be achieved before
any STI payments are made.
If the Group operating earnings gateway is satisfied, the size of the STI pool (from which all STI payments are made) is
determined based on Group performance against a balanced scorecard of measures linked to Mirvac’s strategic drivers.
For FY14, the ROA measure continued to be calculated in the same manner, but was relabelled as ROIC. This change
will ensure consistency between the terminology used in remuneration arrangements and that used when reporting
on Mirvac’s performance.
Effective FY14, the weighting on the balanced scorecard for the ROIC measure increased from 20 to 35 per cent,
while the weighting for the operating earnings measure will reduce from 50 to 35 per cent. This change reflects the
increased emphasis in Mirvac’s strategy on generating returns on the assets it manages. The gateway operating
earnings requirement will continue to apply.
STI
individual
allocation
An individual’s STI target opportunity is the amount earned for ‘on target’ Group and individual performance.
STI awards can range from zero to double the STI target opportunity.
In order to facilitate the introduction of STI deferrals, the FY14 STI targets for ELT members other than the CEO/MD
increased from 70 to 80 per cent of fixed remuneration. The FY14 STI target for the CEO/MD remained unchanged
at 75 per cent of fixed remuneration.
Once the Group operating earnings gateway has been met, actual STI awards are scaled up or down from the
individual’s STI target based on Group and individual performance.
16
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report
4 Remuneration components and outcomes for the Senior Executives / continued
STI deferral Commencing FY14, 25 per cent of any STI award will be deferred into rights over Mirvac securities, with the balance
paid as cash. Half of these rights will vest 12 months after award, with the balance vesting after 24 months.
No dividends will be payable on the deferred rights. This ensures that executives only receive value from their
deferred STI awards at the end of the deferral period. If the deferred rights vest, entitlements will be satisfied by the
purchase of existing securities on-market that are then transferred to the participant.
ELT members will be expected to retain the securities they receive as a result of the vesting of deferred STI awards
until they satisfy the Minimum Securityholding Guidelines.
Termination/
forfeiture
To be eligible for an STI award, the executive must be employed on the award date.
The deferred portion of an STI award will be forfeited in the event that an employee resigns or is dismissed for
performance reasons prior to the vesting date. Unvested deferred STI awards may be retained if an employee
leaves due to circumstances such as retirement, redundancy, agreed transfer to an investment partner, or total and
permanent disablement or death.
STI performance measures
Group and divisional STI performance measures are directly linked to Mirvac’s strategic drivers, as shown in the diagram in section 2.
A description of each measure, its weighting and the rationale behind its inclusion in the Group’s FY14 balanced scorecard is
presented in the following table:
Strategic driver
Aligned STI
measure(s)
Financial performance
and capital efficiency
Operating
earnings
ROIC
Customer and
investor satisfaction
Balanced
scorecard of
customer and
investor measures
High performing
people and culture
Balanced
scorecard of
people measures
HSE&S leadership
Balanced
scorecard of
HSE&S measures
Explanation of measure
% Rationale for using
Weighting
35
35
10
10
10
Operating earnings reflect how much
revenue the business has generated
for the year, less its operating costs.
ROIC is a measure of how profitable a
company is relative to its invested capital.
It is calculated by dividing the Group’s
annual earnings by its total assets.
The balanced scorecard includes
six measures relating to investment
community confidence, tenant
satisfaction, and residential customer
satisfaction. Performance is assessed
based on the proportion of those
measures where targets were met.
The balanced scorecard includes
six measures covering areas such as
talent turnover, diversity targets, and
employee engagement. Performance
is assessed based on the proportion of
those measures where targets were met.
The balanced scorecard includes six
measures covering areas such as safety
culture and compliance, lost time injury
frequency rate and proportion of waste
reused or recycled. Performance is
assessed based on the proportion of
those measures where targets were met.
Reflects the underlying
performance of Mirvac’s core
business operations and represents
a key driver of securityholder value.
Reflects how efficiently Mirvac is
using its assets to generate earnings.
Represents how well Mirvac is
meeting the expectations of key
external stakeholders.
There is a strong correlation
between high levels of
employee engagement and
total securityholder return.
Mirvac is committed to providing
a safe workplace for all of its
employees and to ensuring its
activities do not have an adverse
impact on the environment.
Group STI score
For each performance measure on the Group STI scorecard, a threshold, plan and stretch goal is set at the start of the financial year.
The Group STI score for each performance level is calculated according to the following schedule:
Performance level
< Threshold
Threshold
Plan
Stretch
> Stretch
A sliding scale operates between threshold and plan, and between plan and stretch.
Group STI score
% target
0
75
100
150
150
17
MIRVAC GROUP ANNUAL REPORT 2014
4 Remuneration components and outcomes for the Senior Executives / continued
The process for determining the FY14 Group STI score was as follows:
Operating earnings gateway
Requirement for operating earnings to be at least 90 per cent of target before STI is payable.
Calculation of STI scores for each balanced scorecard measure
Operating earnings
ROIC
Customer and Investor
Satisfaction
High performing
people and culture
HSE&S scorecard
Calculation of raw Group STI score
Raw Group STI score is calculated based on the weighted average of STI scores for each measure on the balanced scorecard.
The Group STI score can range between zero and 150 per cent.
HRC can exercise informed judgement to adjust the raw Group STI score up or down in order to ensure payments are consistent
with Mirvac’s renumeration strategy, and appropriately align with performance outcomes.
HRC determines final Group STI score
Individual STI score
Each participant is awarded an individual STI score between zero and 150 per cent of their STI target based on an assessment of their
personal performance for the year against objectives linked to Mirvac’s strategic drivers.
Calculation of STI awards
Once the Group and Individual STI scores are determined, an individual’s STI award is calculated as follows:
Fixed
remuneration
Individual
STI target
Group
STI score
(0-150%)
Individual
STI score
(0-150%)
Individual
STI award
(Capped at 200%
x target)
c) The STI component: how was reward linked to performance this year?
STI pool in FY14
The Group operating earnings gateway was achieved in FY14 which meant that an STI pool was formed. The following graph
summarises Mirvac’s performance against each of the measures on the balanced scorecard for the year ended 30 June 2014:
Stretch
Plan
Threshold
Weighting: 35%
% of Plan
awarded = 106%
Weighting: 35%
% of Plan
awarded = 115%
Weighting: 10%
% of Plan
awarded = 150%
Weighting: 10%
% of Plan
awarded = 75%
Weighting: 10%
% of Plan
awarded = 100%
Financial
(Operating earnings)
Capital efficiency
(ROIC%)
Customer & investor
satisfaction
(Customer/investor
scorecard)
High performance
people & culture
(People scorecard)
Health, Safety,
Environment
& Sustainability
(HSE&S scorecard)
1
4
Y
F
r
o
f
e
c
n
a
m
r
o
f
r
e
p
p
u
o
r
G
18
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report
4 Remuneration components and outcomes for the Senior Executives / continued
In light of Mirvac’s performance against these five measures for the year ended 30 June 2014, the HRC approved a Group STI score
equivalent to 110 per cent of target, compared to a maximum potential pool of 150 per cent of target. The resulting STI pool for FY14
was $21.1m which represented 4.8 per cent of Mirvac’s operating profit.
The STI pool in FY14 was larger than the STI pool in FY13. This was largely due to Mirvac exceeding the threshold performance level
on the ROIC measure in FY14. The size of the STI pool also increased as a result of the expansion of eligibility for the STI program in
FY14 to include all permanent employees.
FY14 STI awards for the Senior Executives
The following table shows the actual STI outcomes for each of the Senior Executives for FY14. Note that the STI maximum for an
individual represents double his or her STI target. As noted previously, each individual’s actual STI is based on the Group’s balanced
scorecard, adjusted, as appropriate, for divisional and individual performance.
Senior Executives
Susan Lloyd-Hurwitz
Andrew Butler
Brett Draffen
Shane Gannon
Jonathan Hannam
STI max
% of fixed
remuneration
Actual STI
% max
STI
forfeited
% max
Actual
STI (total)
$
150
160
160
160
160
69
50
60
58
55
31
50
40
42
45
1,546,875
554,400
863,280
487,837
475,200
d) The LTI component: how does it work?
The purpose of LTI at Mirvac is to:
— assist in attracting and retaining the required executive talent;
— focus executive attention on driving sustainable long term growth; and
— align the interests of executives with those of securityholders.
Mirvac’s LTI plans have changed over time to align with market practice. A summary of previous plans is in section 8.
Mirvac’s current LTI plan, the Long Term Performance (“LTP”) plan, was originally introduced in the year ended 30 June 2008
following approval by securityholders at the 2007 AGM.
Key details of the LTP plan are set out in the table below:
Eligibility
LTP grants are generally restricted to those executives who are most able to influence securityholder value.
Non-Executive Directors are not eligible to participate in the LTP plan.
Instrument
Awards under this plan are made in the form of performance rights. A performance right is a right to acquire one fully
paid Mirvac security provided a specified performance hurdle is met.
No dividends are paid on unvested LTI awards. This ensures that executives are only rewarded when performance
hurdles have been achieved at the end of the performance period.
No loans are made to participants under this plan.
Grant value
The maximum LTI opportunities during the year ended 30 June 2014 were equivalent to 150 per cent of fixed
remuneration for the CEO/MD, and 90 per cent of fixed remuneration for other Senior Executives.
In determining the value of the performance rights to grant to ELT members, the HRC takes into account the
annual retention value associated with participation in the Executive Retention Plan (“ERP”), a legacy LTI plan
described in section 8. The fair value of rights granted under the LTP equates to the ELT member’s maximum annual
LTI opportunity, less the annual value to the individual associated with their ERP participation.
As disclosed in the FY12 and FY13 Remuneration Reports, following a reviewing conducted in FY12, the CEO,
Development and Group Strategy’s fixed remuneration was reduced effective 1 July 2012. To recognise his acceptance
of reduced fixed remuneration, he received increased LTI awards in the FY13 and FY14 grants. The additional awards
are “at risk” to the executive and subject to applicable performance hurdles and performance conditions. A table
included later in this section sets out full details of the performance rights granted to Senior Executives under the
LTP during FY14.
Performance
hurdles
The HRC reviews the performance conditions annually to determine the appropriate hurdles based on Mirvac’s
strategy and prevailing market practice. Consistent with the intention stated in the FY13 Remuneration Report,
two performance measures apply to the LTI grants made during FY14: 50 per cent of the LTI allocation will be tested
against a relative TSR hurdle and 50 per cent against a ROIC hurdle.
Relative TSR is used because it is an objective measure of securityholder value creation and is widely understood
and accepted by the various key stakeholders. The entities against which Mirvac’s TSR performance is compared are
shown on the following page.
ROIC is used as the second performance condition because it is aligned to Mirvac’s strategic drivers, in particular
financial performance and capital efficiency. ROIC measures how efficiently Mirvac is using its assets to
generate earnings.
19
MIRVAC GROUP ANNUAL REPORT 2014
4 Remuneration components and outcomes for the Senior Executives / continued
Vesting/
delivery
The performance rights offered under the LTP plan can only be exercised if and when the performance conditions
are achieved over a three year period. If the performance rights vest, entitlements will be satisfied by, at the Board’s
discretion, either an allotment of new securities to participants or by the purchase of existing securities on-market
that are then transferred to the participant.
At the end of the three year performance period, all performance rights that vest are automatically converted to
Mirvac securities. However, if the performance rights do not vest at the end of the three year performance period,
they will lapse. There are no further tests of the performance conditions.
ELT members will be expected to retain the securities they receive as a result of the vesting of performance rights
until they satisfy the Minimum Securityholding Guidelines.
Termination/
forfeiture
If an employee resigns or is dismissed, all their unvested performance rights are forfeited. If an employee leaves due
to retirement, redundancy, agreed transfer to an investment partner, total and permanent disablement or death, the
HRC determines the number of rights which will lapse or are retained, subject to both the original performance period
and hurdles.
If a change of control event occurs, the HRC determines the number of performance rights that vest, if any, taking
into account the performance from the date of grant to the event.
Dilution
Dilution that may result from securities being issued under Mirvac’s LTP plan is capped at the limit set out in the
Australian Securities and Investments Commission’s (“ASIC”) Class Order 03/184, which provides that the number
of unissued securities under those plans must not exceed five per cent of the total number of securities of that class
as at the time of the relevant offer.
Hedging
Consistent with the Corporations Act 2001, participants are prohibited from hedging their unvested performance
rights or options.
Relative TSR performance hurdle
For the grant made during FY14, the vesting outcome for half of the award will depend on Mirvac’s TSR performance relative to
the constituents of the comparison group. To ensure that performance is measured objectively, the HRC receives the relative TSR
data from an independent external consultant. The HRC then determines the number of performance rights that will vest, if any,
by applying the TSR data to the following vesting schedule:
Performance level
< Threshold
Threshold
Threshold — maximum
Maximum
Relative TSR (percentile)
Percentage of TSR-tested rights to vest
<50th
50th
50th to 75th
75th and above
Nil
50
Pro-rata between 50 and 100
100
The comparison group for assessing relative TSR performance consists of Mirvac’s primary market competitors, including:
— the constituents of the S&P/ASX 200 A-REIT Index;
— Lend Lease Corporation Limited; and
— Aveo Group.
For the grant made during FY14, the entities comprising the TSR comparison group are:
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
1) FKP Property Group changed name to Aveo Group on 10 December 2014.
20
ASX code
Entity
ABP
ALZ
AOG
BWP
CFX
CHC
CQR
CPA
DXS
FDC
GMG
GPT
IOF
LLC
MGR
SCP
SGP
WDC
WRT
Abacus Property Group
Australand Property Group
Aveo Group 1
BWP Trust
CFS Retail Property Trust Group
Charter Hall Group
Charter Hall Retail REIT
Commonwealth Property Office
Dexus Property Group
Federation Centres
Goodman Group
GPT Group
Investa Office Fund
Lend Lease Group
Mirvac Group
Shopping Centres Australasia Property Group
Stockland
Westfield Group
Westfield Retail Trust
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report 4 Remuneration components and outcomes for the Senior Executives / continued
ROIC performance hurdle
The vesting outcome for the other half of the grant made during FY14 will depend on Mirvac’s average annual ROIC performance
over the three year performance period. The annual ROIC is defined as adjusted earnings of a financial year divided by average
monthly operating assets for the financial year, where adjusted earnings is defined as:
Statutory profit/(loss) after tax:
excluding: income tax expense and benefits;
excluding: interest expense;
excluding: bank and inter-company interest income;
excluding: fair value of derivatives and exchange differences (FX); and
including: changes in reserves (not including FX reserve).
Operating assets =
Closing total assets:
excluding: cash and cash equivalents;
excluding: tax assets;
excluding: derivative financial assets;
excluding: intercompany assets (that is, inter-company receivables and inter-company loans);
excluding: shares in subsidiaries; and
excluding: deferred land payable.
The adjustments to earnings and operating assets are made to ensure that rewards reflect management’s contribution to Mirvac’s
long term performance.
For the grant made during FY14, the vesting outcome at the end of the three year performance period for the half of the grant for
which ROIC is the performance measure will be based on the following schedule:
Performance level
< Threshold
Threshold
Threshold — maximum
Maximum
Average annual ROIC (%)
Percentage of ROIC-tested rights to vest
< 7.5
7.5
7.5 to 10
10 and above
Nil
50
Pro-rata between 50 and 100
100
LTIs granted in FY14
Details of the performance rights granted to Senior Executives under the LTP during FY14 are set out in the table below:
Senior Executives
Susan Lloyd-Hurwitz
Total
Andrew Butler
Total
Brett Draffen 2
Total
Shane Gannon
Total
Jonathan Hannam
Total
Performance
measure
Number of
performance
rights granted
TSR
ROIC
TSR
ROIC
TSR
ROIC
TSR
ROIC
TSR
ROIC
735,250
735,250
1,470,500
9,720
9,719
19,439
172,586
172,585
345,171
111,684
111,683
223,367
158,824
158,823
317,647
Vesting
date
1 July 2016
1 July 2016
1 July 2016
1 July 2016
1 July 2016
1 July 2016
1 July 2016
1 July 2016
1 July 2016
1 July 2016
Fair value per
performance
Minimum
Maximum
right value of grant value of grant
$ 1
$
$
0.80
0.71
0.80
0.71
0.80
0.71
0.80
0.71
0.80
0.71
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
588,200
518,351
1,106,551
7,776
6,852
14,628
138,069
121,672
259,741
89,347
78,737
168,084
127,059
111,970
239,029
1) The maximum value of the grant has been estimated based on the fair value as calculated at the time of the grant.
2) Brett Draffen’s FY14 LTP award includes a top-up award of 196,078 performance rights granted to reflect the reduction in his fixed remuneration effective
1 July 2012.
21
MIRVAC GROUP ANNUAL REPORT 2014
4 Remuneration components and outcomes for the Senior Executives / continued
e) The LTI component: how was reward linked to performance this year?
Key inputs used in valuing performance rights granted during FY14 were as follows:
Grant date
Performance hurdles
Performance period start
Performance testing date
Security price at grant date
Exercise price
Expected life
Volatility
Risk-free interest rate (per annum)
Dividend/distribution yield (per annum)
Performance rights
10 December 2013
Relative TSR and ROIC
1 July 2013
1 July 2016
$1.615
$nil
2.6 years
20%
2.92%
5.4%
LTI vested in FY14
In total, 77 per cent of the performance rights with a performance period ended 30 June 2014 vested as both the relative TSR and
ROE hurdles were met.
Senior Executives
Number
Value ($) 1
Number
% of
total grant
Value ($) 1
Number
% of
total grant
Value ($) 1
Rights granted in FY12
Rights vested in FY14
Rights forfeited in FY14
Andrew Butler
Brett Draffen
10,334
596,347
6,562
378,680
7,957
459,187
77
77
5,053
291,584
2,377
137,160
23
23
1,509
87,096
1) Value of the grant has been estimated based on the fair value as calculated at the time of the grant.
The actual LTI vested presented in the previous table is consistent with the fact that Mirvac’s relative TSR performance was at the
73rd percentile relative to the comparison group over the three year performance period, while Mirvac’s average annual ROE over
the performance period was 6.0 per cent.
f) CEO/MD transition arrangements
Consistent with the disclosures made in the FY13 Remuneration Report, as part compensation for the STI and LTI entitlements
the CEO/MD forfeited on resigning from her previous employer, a sign on payment of $530,000 was paid on commencement of
employment with Mirvac, with a further amount of $87,500 payable on 1 July 2014. Under the terms of her employment contract,
Mirvac also agreed to reimburse Susan Lloyd-Hurwitz for reasonable costs in connection with her relocation from London to Sydney.
g) Cash retention payments
Consistent with the disclosures made in the FY13 Remuneration Report, the following one-off cash retention payments were made to
Senior Executives during FY14:
Senior Executives
Andrew Butler
Brett Draffen
Amount
$309,000
$450,000
Payment date
1 December 2013
14 August 2013
These retention arrangements were put in place in order to ensure continuity during the CEO/MD transition.
h) Total remuneration for Senior Executives
The following table shows the total remuneration for Senior Executives for FY14, as well as comparative figures for FY13.
The information in the table below has been calculated in accordance with AAS and, accordingly, it differs from the information
in the table in section 2. The main difference between the two tables is that the table in section 2 includes an LTI value based
on the awards that actually vested and delivered value to Senior Executives, whereas, in accordance with AAS, the table below
includes an apportioned accounting value for all unvested LTI grants during the year (some of which remain subject to satisfaction
of performance and service conditions and may not ultimately vest).
22
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report
4 Remuneration components and outcomes for the Senior Executives / continued
Short term benefits
Post-
employ-
ment
Other
Total
long term Termination remuner-
ation
benefits
SBP
Cash salary
and fees 1
$
Year
Other
Cash Non-cash Employee short term
STI 2 benefits 3
$
$
loans 4 benefits 5 butions
$
$
$
Super
contri- Value of Value of Deferred
STI
$
options 6
$
rights 6
$
benefits
Long
service
leave
(“LSL”) 7
$
Executive Director
Susan Lloyd-Hurwitz
Other Senior Executives
Andrew Butler
Brett Draffen
Shane Gannon
Jonathan Hannam
Total
2014 1,443,918 1,160,156
724,035
2013 958,628
61,682
19,153
— 87,500
— 576,660
17,775
12,353
— 640,855 257,813 24,063
16,056
— 272,004
—
2014 619,967
2013 549,577
401,929
2014 872,446 647,460
818,263 549,423
2013
2014 514,631
365,878
2014 522,225 356,400
141,206
2013 250,384
415,800 62,258 600,159 309,000
51,953
—
650,071
9,779 581,835 450,000
65,267
—
943,311
— 347,038
—
806
—
—
3,851
—
—
17,775
16,470
17,775
16,470
13,331
17,775
8,235
7,063
—
—
21,067
— 329,951
— 339,840
— 56,028
127,129
—
47,452
—
92,400
—
143,880
—
81,306
79,200
—
10,418
8,727
14,702
14,403
8,576
8,703
4,362
2014 3,973,187 2,945,694
1,816,593
2013 2,576,852
133,719 1,181,994 1,194,344
580,511
136,373 1,593,382
84,431
53,528
— 1,161,026 654,599 66,462
43,548
— 680,363
—
$
$
— 3,693,762
— 2,578,889
— 2,134,840
— 1,699,794
— 3,067,828
— 2,746,977
— 1,386,788
— 1,112,238
— 455,490
— 11,395,456
— 7,481,150
1) Cash salary and fees includes accrued annual leave paid out as part of salary and salary-sacrifice amounts where applicable.
2) STI payments relate to cash portion of STI awards accrued for the relevant year.
3) Non-cash benefits include salary-sacrificed benefits and related FBT where applicable.
4) Employee loans are interest free and provided for personal use. Disclosed value includes amounts forgiven during the year, imputed interest and related FBT.
5) Includes relocation expenses for CEO/MD and Group Executive, Capital; payments to the CEO/MD and CFO as part compensation for the STI and LTI entitlements
they forfeited on resigning from their previous employers; and cash retention payments to the CEO, Investment and CEO, Development and Group Strategy.
6) Valuation of options and rights is conducted by an external accounting firm. Negative amounts (if any) relate to forfeiture of some or all participation in equity
plans due to terminations.
7) LSL relates to amounts accrued during the year.
i) Total remuneration for Senior Executives
The following table presents the FY13 remuneration details for Senior Executives not included in the preceding table, but who were
included in the FY13 Remuneration Report.
Short term benefits
Post-
employ-
ment
SBP
Total
Termination remuner-
ation
benefits
Cash salary
and fees 1
$
Year
Other
Non-cash Employee short term
loans 4 benefits
$
STI 2 benefits 3
$
$
$
Super
contri- Value of Value of
options 5
butions
$
$
Cash
settled
rights 5 payments 6
$
$
LSL 7
$
$
$
Former Senior Executives
Nicholas Collishaw
Gregory Dyer
Gary Flowers
Justin Mitchell
Bevan Towning
2013 494,510
2013 534,690
2013 546,396
173,359
2013
2013 572,478
—
—
319,410
—
163,800
1,280 895,508
—
32,071
290,723
22,134
650,071
995
—
—
Total
2013 2,321,433
483,210
56,480 1,836,302
—
—
—
—
—
—
8,235
16,470
16,470
4,340
16,470
61,985
—
—
—
—
—
—
(128,691) (234,000)
—
106,668
—
247,449
—
32,603
—
108,802
—
8,899
9,106
1,188,462 8 2,225,304
698,798
1,451,688
— 687,580 9 1,548,948
871,275
—
9,725
366,831 (234,000)
27,730 1,876,042 6,796,013
1) Cash salary and fees includes accrued annual leave paid out as part of salary and salary-sacrifice amounts where applicable.
2) STI payments relate to amounts accrued for the relevant year.
3) Non-cash benefits include salary-sacrificed benefits and related FBT where applicable.
4) Employee loans are interest free and provided for personal use (excludes EIS loans). Disclosed value includes amounts forgiven during the year, imputed
interest and related FBT.
5) Valuation of options and rights is conducted by an external accounting firm. Negative amounts (if any) relate to forfeiture of some or all participation in equity
plans due to terminations. Refer to note 34(f) to the financial statements for details.
6) Represents SBP expense during FY13 in relation to the potential future one-off cash payment linked to Mirvac’s TSR performance offered to the CEO/MD
following his acceptance of a reduction in fixed remuneration.
7) LSL relates to amounts accrued during the year.
8) Represents payment of six months severance, and 76 days payment in lieu of notice, consistent with contractual entitlements.
9) Represents payment of 12 months fixed remuneration, consistent with contractual entitlements.
The following table indicates the proportion of each Senior Executive’s FY14 total remuneration that was performance related:
Remuneration related to performance
Total
remuneration
$
Cash
STI
$
Value
of options
$
Value
of rights
$
Deferred
Performance
related
STI remuneration
% of total
$
2014
Executive Director
Susan Lloyd-Hurwitz
Other Senior Executives
Andrew Butler
Brett Draffen
Shane Gannon
Jonathan Hannam
3,693,762
1,160,156
2,134,840
3,067,828
1,386,788
1,112,238
415,800
647,460
365,878
356,400
Total
11,395,456 2,945,694
—
—
—
—
—
—
640,855
257,813
7,063
329,951
56,028
127,129
92,400
143,880
81,306
79,200
1,161,026
654,599
56
24
37
36
51
42
Value of
options
granted as
% of total
0
0
0
0
0
0
23
MIRVAC GROUP ANNUAL REPORT 2014
5 Five year snapshot of business and executive remuneration outcomes
Over the last five years, Mirvac has moved towards a model which more closely links executive remuneration outcomes with
Group performance.
The table below provides summary information on the Group’s earnings and securityholders’ wealth for the five years to 30 June 2014:
FY14
FY13
FY12
FY11
FY10
Profit attributable to the
stapled securityholders of Mirvac ($m)
Operating profit ($m)
Distributions paid ($m)
Security price at 30 June ($)
Operating earnings per
stapled security (“EPS”) — diluted (cents)
Statutory EPS — basic (cents)
447.3
437.8
326.2
1.79
11.9
12.2
139.9
377.6
225.9
1.61
10.9
4.1
416.1
366.3
280.2
1.28
10.7
12.2
182.3
358.5
270.2
1.25
10.5
5.4
234.7
275.3
179.4
1.32
9.3
8.0
a) How the Group’s performance has translated
b) How the Group’s performance has translated
into STI awards
into LTI awards
Mirvac only pays STI awards when financial performance is
strong. The two financial measures on the STI scorecard –
operating earnings and ROIC – together account for 70 per cent
of the overall Group STI score. The following graph shows how
the average STI outcome for all employees has been closely tied
to performance on these two measures since FY10. Financial
performance in each case is expressed as a percentage of
the business target set for the year, while the STI outcome
represents the average STI award to participants that year as
a percentage of target. Note that ROIC figures for FY10 are not
included in the graph as ROIC targets were not set prior to FY11.
In total, 77 per cent of the performance rights with performance
period ended 30 June 2014 vested. The vesting of half of
these performance rights was linked to Mirvac’s TSR and
ROE performance. Mirvac achieved a TSR of 69 per cent over
the three year performance period, which positioned it at the
73rd percentile relative to the entities in the comparison group.
As a result, 97 per cent of the performance rights linked to this
measure vested.
Average STI outcome vs financial performance
Mirvac TSR (1 July 2011 – 30 June 2014)
120% of target
100
80
60
40
20
0
80%
60%
40%
20%
0%
(20%)
FY10
FY11
FY12
FY13
FY14
30 Jun 11
30 Jun 12
30 Jun 13
30 Jun 14
Operating earnings
ROIC
Average STI
MGR
25th Percentile
50th Percentile
75th Percentile
As can be seen in the graph, there is a strong connection
between financial performance and STI outcomes. The
average STI outcome was significantly below target in FY11
and FY13. This is because, notwithstanding solid operating
earnings results, ROIC performance failed to meet the required
performance threshold in both these years. This was largely
due to the impairments announced in these two years. For the
FY11 performance year, the STI outcomes were also impacted
by Mirvac’s failure to meet the threshold performance level
for the customer and investor satisfaction measure.
24
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report
Five year snapshot of business and executive remuneration outcomes / continued
5
The vesting of the other half of performance rights was linked to Mirvac’s average annual ROE performance over the three year
period. As presented in the graph below, Mirvac’s average annual ROE over the three year period was 6.0 per cent. As a result,
57 per cent of the performance rights linked to this measure vested.
Mirvac ROE Performance
12 ROE
10
8
6
4
2
0
Stretch
Threshold
7.7
FY12
2.9
FY13
7.5
6.0
FY14
3 year average
A summary of vesting under Mirvac’s performance-hurdled equity grants made under the LTP for the last three years is shown in the
following table:
Grant year
FY10
FY11
FY12
Performance hurdle
Test date
Vested %
Lapsed %
TSR and ROE
TSR
30 June 2012
30 June 2013
TSR and ROE 30 June 2014
38
—
77
62
100
23
6 Service agreements for the Senior Executives
Mirvac’s engagement arrangements with its Senior Executives are set out in formal service agreements.
a) Service agreements
Each Senior Executive has a formal contract, known as a service agreement. These agreements are of a continuing nature and have
no set term of service (subject to the termination provisions). Each agreement covers:
— general duties;
— remuneration and other benefits; and
— termination of employment and termination benefits.
The termination entitlements for each Senior Executive are limited to 12 months 1 fixed remuneration, consistent with the maximum
amount permissible without requiring securityholder approval. In cases of serious and wilful misconduct, or in certain other
circumstances, Mirvac can terminate an executive’s employment without notice or payment in lieu of notice.
b) Summary of key terms
The key terms of the service agreements for the CEO/MD and other Senior Executives are summarised below:
Senior Executives
Susan Lloyd-Hurwitz
Andrew Butler
Brett Draffen
Shane Gannon
Jonathan Hannam
Notice period
Contract term
Employee
Group
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
6 months
3 months
3 months
3 months
3 months
6 months
3 months
3 months
3 months
3 months
Termination
payment 1
6 months
9 months
9 months
9 months
9 months
1) Payable if Mirvac terminates employee with notice, for reasons other than unsatisfactory performance.
25
MIRVAC GROUP ANNUAL REPORT 2014
7 Non-Executive Directors’ remuneration
In contrast to Senior Executives’ remuneration, the remuneration of Mirvac’s Non-Executive Directors is not linked with performance.
This is consistent with Non-Executive Directors being responsible for objective and independent oversight of the Group.
a) Remuneration strategy and components
Mirvac Limited’s Constitution provides that Non-Executive Directors may determine their own remuneration but the total amount
provided to all Directors (not including the CEO/MD and any other Executive Directors) must not exceed the sum agreed by
securityholders at a general meeting. The maximum aggregate remuneration of $1.95m per annum was approved by securityholders
at the 2009 AGM. A proposal to increase this maximum remuneration amount to $2.25m will be presented for securityholder
approval at the 2014 AGM.
Non-Executive Directors have not received any fees other than those described in this section, and do not receive bonuses or any
other incentive payments or retirement benefits.
The Non-Executive Directors are reimbursed for expenses properly incurred in performing their duties as a Director of Mirvac.
The schedule of fees for Non-Executive Directors during FY14 is set out in the table below and fees are annual fees, unless otherwise stated:
Board/Committee
Mirvac Limited and Mirvac Funds Limited Board Chair
Mirvac Limited and Mirvac Funds Limited Board member
ARCC Chair
ARCC member
HRC Chair
HRC member
Due Diligence Committee (per diem fee)
1) Chair fee covers all Board and committee responsibilities
b) Total remuneration for Non-Executive Directors
Short term benefits
Post-employment 1
Cash salary and fees Super contributions
$
$
Year
Non-Executive Directors
John Mulcahy 2
Peter Hawkins 3
James Millar AM
John Peters
Elana Rubin 4
Former Non-Executive Directors
James MacKenzie
Marina Darling
Total
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
393,213
228,530
261,892
216,530
213,225
214,530
171,259
178,532
233,397
186,530
217,215
476,530
59,497
178,899
1,549,698
1,680,081
17,775
16,470
17,775
16,470
17,775
16,470
31,741
24,468
17,628
16,470
10,392
16,470
5,503
16,101
118,589
122,919
$
480,000 1
185,000
36,000
18,000
30,000
10,000
4,000
Total
$
410,988
245,000
279,667
233,000
231,000
231,000
203,000
203,000
251,025
203,000
227,607
493,000
65,000
195,000
1,668,287
1,803,000
1) Relates to payments required under superannuation legislation.
2) John Mulcahy received an additional $29,524 in FY14 and $32,000 in FY13 for his service on the Mirvac Capital Partners Limited and Mirvac Funds
Management Limited boards. These fees ceased on his appointment to Chair on 14 November 2013.
3) Peter Hawkins received an additional $46,667 for the period he acted as Chair during July and August 2013.
4) Elana Rubin received an additional $48,025 in FY14 for her service on the Mirvac Capital Partners Limited and Mirvac Funds Management Limited boards.
c) Non-Executive Director Minimum Securityholding Guidelines
In order to further strengthen the alignment of interests between Non-Executive Directors and securityholders, FY12 saw the
introduction of Minimum Securityholding Guidelines. Under the Guidelines, each Non-Executive Director will be required to
hold a minimum securityholding of 25,000 Mirvac stapled securities. The securities can be acquired over a two year period.
Non-Executive Director
Date securityholding
to be attained
Number of securities
held as at 30 June 2014
Minimum
Securityholding Guideline
John Mulcahy
Peter Hawkins
James Millar AM
John Peters
Elana Rubin
26
July 2014
July 2014
July 2014
July 2014
July 2014
25,000
596,117
40,714
30,000
25,917
25,000
25,000
25,000
25,000
25,000
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report
8 Legacy remuneration arrangements
a) Previous LTI plans closed for new grants
Mirvac’s LTI plans have changed over time to align with market practice, while continuing to support Mirvac’s business strategy.
The following table sets out Mirvac’s historic LTI plans that are no longer used for new LTI grants (that is, all LTI plans other than
the LTP). Further detail of each legacy plan is also provided below.
Plan
i) ERP
Purpose
Detail
Interest-free loan program designed to assist
in retaining employees critical to Mirvac’s
ongoing success.
ii) Employee Incentive Scheme (“EIS”) Designed to share the benefits of the Group’s
performance through the provision of loans
to purchase Mirvac stapled securities.
iii) Long Term Incentive Plan (“LTIP”) Loan which was applied to fund the acquisition
of Mirvac’s securities at market value.
No further awards will be made under this
program, consistent with Mirvac’s intention
to eliminate the use of loan plans as part
of employee reward. Final outstanding loan
balances for Senior Executive participants
were repaid during FY14.
Closed to new participants as no
longer considered to be consistent with
market practice.
Closed to new participants. Two performance
conditions for vesting: relative TSR and
absolute EPS growth.
Further detail of these plans follows.
i) ERP
A small number of executives were invited to participate in the ERP in FY09. The amounts of the loans range from $500,000
to $2,000,000 and must be secured against property or an unconditional bank guarantee. A progressively increasing forgiveness
schedule allowed for no more than 50 per cent of the total loan balance in total to be forgiven. The forgiveness schedule that applied
for the Senior Executives remaining in the scheme during FY14 is set out below:
Percentage of loan forgiven
1st
2nd
3rd
4th
5th
Maximum amount to be forgiven
The repayment date of the loan was the earlier of the following:
— 12 months after the participant ceases to be employed by Mirvac; or
— 12 months after the fifth anniversary of the loan.
5
7.5
10
12.5
15
50
The annual retention value to the individual includes amounts forgiven during the year, imputed interest and related FBT. This value
is offset against the value of the individual’s LTI grant in each year until the retention program is complete. As such, any retention
grant replaces a portion of the LTI award. On termination, no further amounts are forgiven.
The following table presents the amounts forgiven during FY14 for participating executives, together with the outstanding balance at
the end of the year. As can be seen, the ERP loans for the remaining Senior Executive participants have now been repaid in full.
Senior Executives
Andrew Butler
Brett Draffen
Loan balance Amount forgiven
during year
$
1 July 2013
$
Amount repaid
during year
$
Loan balance
30 June 2014
$
Annual
retention value
$
1,300,000
1,300,000
300,000
300,000
1,000,000
1,000,000
—
—
600,159
581,835
ii) EIS
Until 2006, Mirvac’s long term variable remuneration scheme for employees was the EIS. Open to all permanent employees,
allocations were made annually, were unrestricted and fully vested on allotment. Existing arrangements remain in place until
all current loans are repaid.
The loans were repayable via distributions received on the securities or upon their sale. If an employee resigns or is dismissed,
the outstanding loan balance must be paid when employment ceases. In the event of redundancy, retirement, total and permanent
disablement or death, the employee has 12 months after employment ceases in which to repay the loan. If the loan value is greater
than the value of the securities when the loan balance is due, the remaining balance is written off and the securities are forfeited.
The EIS is closed to new participants and will be run down until all loans under it are extinguished.
27
MIRVAC GROUP ANNUAL REPORT 2014
8 Legacy remuneration arrangements / continued
iii) LTIP
The LTIP was introduced in 2006 and approved by securityholders at the 2006 AGM. At this time, loan-funded incentive plans were
common for entities with stapled securities due to the prevailing tax rules. Participation in the plan was open to the CEO/MD, other
Executive Directors, other executives and eligible employees. Participants were offered an interest-free loan which was applied to
fund the acquisition of Mirvac’s stapled securities at market value.
The term of the loan is eight years. Any loan balance outstanding at the end of the eighth year must be repaid at that time. The loan
is reduced annually by applying the post-tax amounts of any distributions paid by Mirvac to the outstanding principal. The loans are
interest free and non-recourse over their term.
Two performance conditions had to be met before the securities vested in full: relative TSR and EPS growth. The satisfaction of each
condition was given an equal weighting in terms of the total number of securities that may vest (that is, 50 per cent of the total
securities held by a participant was subject to each performance condition).
On vesting, 53.5 per cent of the original loan to fund the purchase of the vested securities was waived. The remaining balance of the
loan will continue to be reduced by post-tax distributions until either the loan has been fully repaid or the eight year term expires,
whichever occurs first. If a participant terminates their employment, any outstanding loans must be repaid in full immediately or
the underlying securities will be forfeited.
The LTIP is closed to new participants and will be run down until all loans under it are extinguished. At 30 June 2014, 289,809
(2013: 307,831) securities remain on issue under the 2006 plan.
9 Additional required disclosures
a) Equity instruments held by Directors
Particulars of Directors’ interests in the stapled securities of Mirvac or a related body corporate, are as follows:
Director
John Mulcahy (indirect)
Susan Lloyd-Hurwitz (direct)
— performance rights
Peter Hawkins (direct and indirect)
James Millar AM (indirect)
John Peters (indirect)
Elana Rubin (direct)
Former Directors
James MacKenzie (direct)
— Mirvac Development Fund — Seascapes — units (indirect)
Marina Darling (direct)
Mirvac stapled securities
Interests in securities of related
entities or related body corporate
25,000
54,456
2,607,800
596,117
40,714
30,000
25,917
138,789
—
38,875
—
—
—
—
—
—
—
—
300,000
—
b) Other directorships
Details of all directorships of other listed companies held by each Director in the three years immediately before 30 June 2014 are
as follows:
Director
Company
Date appointed
Date ceased
John Mulcahy
Peter Hawkins
James Millar AM
John Peters
Elana Rubin
Former Directors
James MacKenzie
ALS Limited (formerly Campbell Brothers Limited)
Coffey International Limited
GWA Group Limited
Visa Inc.
Westpac Banking Corporation
Helloworld Limited (formerly Jetset Travelworld Limited)
Fairfax Media Limited
Fantastic Holdings Limited
Nil
February 2012
September 2009
November 2010
October 2008
December 2008
September 2010
July 2012
May 2012
Current
Current
Current
January 2011
Current
Current
Current
June 2014
TAL Life Limited (formerly Tower Australia Limited)
November 2007 Delisted May 2011
Gloucester Coal Limited (merged with Yancoal effective 27 June 2012)
Yancoal Australia Ltd
Pacific Brands Limited
June 2009
June 2012
May 2008
June 2012
April 2014
May 2013
Marina Darling
Argo Investments Limited
Southern Cross Media Group Limited
July 1999
September 2011
February 2012
January 2014
28
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report
9 Additional required disclosures / continued
c) Other benefits
Fees paid by Mirvac for Directors’ and Officers’ liability insurance are not itemised for each Director as their disclosure would breach
the terms of the policy.
Executives and Directors (including Non-Executive Directors) are entitled to participate in arrangements available to directly
purchase Mirvac developed residential property, on the same terms and conditions as for other employees within the Group.
d) Equity instrument disclosures relating to KMP
i) Security holdings
The number of ordinary securities in Mirvac held during the year by each Director and other KMP, including their personally-related
parties, is set out below.
Balance
1 July
STI paid
as equity 1
Other
changes
Balance
30 June
2014
Directors
John Mulcahy
Peter Hawkins
James Millar AM
John Peters
Elana Rubin
Former Directors
James MacKenzie
Marina Darling
Senior Executives
Susan Lloyd-Hurwitz
Andrew Butler
Brett Draffen
Shane Gannon
Jonathan Hannam
25,000
596,117
40,714
30,000
25,917
138,789
38,875
—
139,796
473,606
—
—
—
—
—
—
—
—
54,456
30,229
43,323
—
10,620
—
—
—
—
—
—
—
—
—
—
—
25,000
596,117
40,714
30,000
25,917
138,789 2
38,875 2
54,456
170,025
516,929
—
10,620
1) Represents the 25 per cent of FY13 STI awards to Senior Executives that was paid in the form of Mirvac securities.
2) Balance is as at 30 January 2014, being the date the Appendix 3Z was lodged with the ASX.
ii) Options
No options granted as remuneration were held by KMP during FY14.
iii) Performance rights
The number of performance rights in Mirvac held during the year by each Director and other KMP, including their personally-related
parties, is set out below:
Senior Executives
Susan Lloyd-Hurwitz
Andrew Butler
Brett Draffen
Shane Gannon
Jonathan Hannam
Balance Rights issued
under LTP
1 July
Other
changes 1
Balance
30 June
1,137,300
98,834
1,538,347
—
198,407
1,470,500
19,439
345,171
223,367
317,647
—
(88,500)
(452,200)
—
—
2,607,800
29,773
1,431,318
223,367
516,054
1) Other changes include additions/disposals resulting from first or final disclosure of a KMP and other changes to security holdings, options and performance rights.
29
MIRVAC GROUP ANNUAL REPORT 2014
9 Additional required disclosures / continued
Details of the movement in the number and value of performance rights held by Senior Executives during the year are set out below:
Senior Executives Grant date
Number
of rights
Value at
granted grant date ($) Vesting date
Number
of rights
vested
Value
of rights
vested ($) 1
Number
of rights
lapsed
Value
of rights
lapsed ($) 1
Susan Lloyd-Hurwitz
17 Dec 12
10 Dec 13
1,137,300
1,470,500
816,013
1,106,551
1 Jul 15
1 Jul 16
Total
2,607,800
1,922,564
Andrew Butler
Total
Brett Draffen
12 Dec 11
17 Dec 12
10 Dec 13
10,334
—
19,439
29,773
6,562
—
14,628
21,190
12 Dec 11
17 Dec 12
10 Dec 13
596,347
489,800
345,171
378,680
351,432
259,741
1 Jul 14
1 Jul 15
1 Jul 16
1 Jul 14
1 Jul 15
1 Jul 16
—
—
—
7,957
—
—
7,957
459,187
—
—
—
—
—
5,053
—
—
5,053
291,584
—
—
—
—
—
2,377
—
—
2,377
137,160
—
—
—
—
—
1,509
—
—
1,509
87,096
—
—
Total
1,431,318
989,853
459,187
291,584
137,160
87,096
Shane Gannon
10 Dec 13
223,367
168,084
1 Jul 16
Total
223,367
168,084
Jonathan Hannam
17 Dec 12
10 Dec 13
198,407
317,647
142,357
239,029
1 Jul 15
1 Jul 16
Total
516,054
381,386
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1) The calculation of the value of performance rights used the fair value as determined at the time of grant.
e) Loans to Directors and other KMP
Details of loans made to Directors and other KMP (including loans granted under the LTIP and EIS), including their personally-related
parties, are set out below:
i) Individuals with loans above $100,000 during the year:
2014
Andrew Butler
Brett Draffen
Balance
1 July
$
Interest
not charged 1
$
Highest
Balance
indebtedness
30 June during the year
$
$
323,597
1,300,000
291,002
1,300,000
3,214,599
—
21,082
—
21,082
42,164
317,342
—
286,243
—
323,597
1,300,000
291,002
1,300,000
603,585
3,214,599
1) Interest not charged excludes loans issued under the LTIP and EIS.
Other than loans forgiven to specified executives as disclosed in the remuneration report, no write-downs or provision for
impairment for receivables have been recognised in relation to any loans made to Directors or specified executives.
f) Other transactions with KMP
There are a number of transactions between KMP and the Group. The terms and conditions of these transactions are considered to
be no more favourable than in similar transactions on an arm’s length basis. On occasions, Directors and other KMP may purchase
goods and services from Mirvac. These purchases are on terms and conditions available to Mirvac employees generally. As set out
in the Directors’ report, a number of the Directors of Mirvac are also Directors of other companies. On occasions, the Group may
purchase goods and services from or supply goods and services to these entities. These transactions are undertaken on normal
commercial terms and conditions and the Director or other KMP does not directly influence these transactions.
30
MIRVAC GROUP ANNUAL REPORT 2014Directors’ report
Insurance of officers
During the year, Mirvac paid a premium for an insurance
policy insuring any past, present or future Director, secretary,
executive officer or employee of the Group against certain
liabilities. In accordance with commercial practice, the insurance
policy prohibits disclosure of the nature of the liabilities insured
against and the amount of the premium.
Auditor’s independence declaration
A copy of the auditor’s independence declaration required under
section 307C of the Corporations Act 2001 is set out on page 32.
Auditor
PricewaterhouseCoopers continues in office in accordance with
section 327 of the Corporations Act 2001.
Rounding of amounts
Mirvac is an entity of the kind referred to in Class Order 98/0100
issued by ASIC, relating to the rounding off of amounts in the
financial statements. Amounts in the financial statements have
been rounded off to the nearest tenth of a million (“m”) dollars
in accordance with that class order.
This statement is made in accordance with a resolution
of the Directors.
Susan Lloyd-Hurwitz
Director
Sydney
21 August 2014
9 Additional required disclosures / continued
Non-audit services
Mirvac may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s
expertise and experience with the Group are relevant. Details of
the amounts paid or payable to the auditor (PwC) for audit and
non-audit services provided during the year ended 30 June 2014
are set out in note 34 to the financial statements.
The Board has considered its position and, in accordance
with the advice received from the ARCC, is satisfied that
the provision of non-audit services is compatible with the
general standard of independence for auditors imposed by
the Corporations Act 2001. The Directors are satisfied that
the provision of non-audit services by the auditor, as set out
in note 34 to the financial statements, did not compromise
the auditor independence requirements of the Corporations
Act 2001 for the following reasons:
— all non-audit services have been reviewed by the ARCC to
ensure they do not affect the impartiality and objectivity
of the auditor; and
— none of the services undermines the general principles
relating to auditor independence as set out in Accounting
Professional & Ethical Standards (“APES”) 110 Code of
Ethics for Professional Accountants, including reviewing or
auditing the auditor’s own work, acting in a management or
a decision-making capacity for the Group, acting as advocate
for the Group or jointly sharing economic risk and rewards.
Significant changes in the state of affairs
Details of the state of affairs of the Group are disclosed within
the Operating and financial review section.
Matters subsequent to the end of the year
On 1 July 2014, Mirvac completed the sale of a 50.0 per cent
interest in 275 Kent Street, Sydney NSW to Blackstone. Blackstone
has also exercised its call options over a portfolio of seven
non-core assets, with settlement of the sale of the non-core
assets occurring on the same date. Total consideration for
the 50 per cent interest in 275 Kent Street, Sydney NSW and
the non-core assets is $821.0m. Mirvac has provided vendor
finance of $156.0m in relation to the sale of the non-core
assets, at an initial coupon of 8.0 per cent per annum and
for a maximum term of 48 months (under terms of the vendor
financing agreement, Blackstone has the option to repay the
loan after a minimum of 12 months) which will help to manage
the dilutionary impact to earnings from the sale of the non-core
assets. The sale provided a benefit to the headline gearing ratio
of approximately five per cent.
During the year ended 30 June 2014, Mirvac entered into a
put and call option agreement to purchase a parcel of land at
Lachlan Street Waterloo NSW (“Waterloo”) and Hope Street
Brisbane QLD (“Arthouse”). The purchase price for Waterloo
was $37.0m and for Arthouse was $23.5m (comprising two
stages). Board approvals were obtained prior to the year ended
30 June 2014, and all conditions precedent were met in relation
to the acquisitions. The owners of each parcel of land agreed
to grant Mirvac an option to purchase the property and Mirvac
agreed that the owners may execute their put option if Mirvac
does not exercise the call option. The option period to exercise
for both projects was after 30 June 2014. On 1 July 2014, Mirvac
exercised its call option in relation to the purchase of Waterloo
and on 4 July 2014 in relation to Stage 1 of Arthouse. As the
options were not exercisable at 30 June 2014, no liability was
recognised by Mirvac as at 30 June 2014.
No other circumstances have arisen since the end of the year
which have significantly affected or may significantly affect the
operations of Mirvac, the results of those operations, or the
state of affairs of Mirvac in future years.
31
MIRVAC GROUP ANNUAL REPORT 2014 As lead auditor for the audit of Mirvac Limited for the year ended 30 June 2014, 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 Mirvac Limited and the entities it controlled during the period.
Matthew Lunn
Partner
PricewaterhouseCoopers
Sydney
21 August 2014
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
32
MIRVAC GROUP ANNUAL REPORT 2014Auditor’s independence declaration Corporate governance statement
1 Introduction
This section of the Annual Report outlines Mirvac’s
governance framework.
Mirvac is committed to ensuring that its systems, procedures
and practices reflect a high standard of corporate governance.
The Directors believe that Mirvac’s corporate governance
framework is critical in maintaining high standards of corporate
governance and fostering a culture that values ethical behaviour,
integrity and respect to protect securityholders’ and other
stakeholders’ interests at all times.
During the year ended 30 June 2014, Mirvac’s corporate
governance framework was consistent with the 2nd edition of
the Corporate Governance Principles and Recommendations
released by the ASX Corporate Governance Council in
August 2007 (“Recommendations”) which were updated
in 2010. The table on pages 42 and 43 indicates where
specific Recommendations are dealt with in this Corporate
governance statement. In accordance with the Recommendations,
copies of the Group policies referred to in this Corporate
governance statement are posted to Mirvac’s website:
www.mirvac.com/about/corporate-governance.
Mirvac has also early-adopted the majority of the amendments
to the Recommendations contained in the 3rd edition published
by the ASX Corporate Governance Council and applicable in
the first financial year commencing after 1 July 2014 (“Revised
Recommendations”), and has included commentary in this
Corporate governance statement in relation to each of the
Revised Recommendations. In accordance with the Revised
Recommendations, Mirvac expects that its 2015 Corporate
governance statement will be published on its website rather
than contained in its Annual report.
This Corporate governance statement was approved by the
Board of Mirvac and is current as at 31 July 2014 in accordance
with ASX Listing Rule 4.10.3.
2
Principle 1: Lay solid foundations
for management and oversight
a) Responsibilities of the Board and management
i) Primary objective of the Board
The primary objective of the Board is to provide strategic
oversight and guidance to the Group and effective oversight
of management in order to build long term value for
securityholders. The Board does this by setting the Group’s
strategic direction and context, such as Mirvac’s mission, vision
and values, and focusing on issues critical for its successful
execution such as people, performance and the management
of risk. The Board is also responsible for overseeing Mirvac’s
corporate governance framework. In performing its role,
the Board has regard to other stakeholder interests and an
appropriate risk and return framework.
ii) Board Charter
In order to promote high standards of corporate governance
and to clarify the role and responsibilities of the Board, the
Board has formalised its roles and responsibilities into a Board
Charter. The Board Charter was updated in June 2014 to include
a revised description of the Board’s role and responsibilities, a
new requirement for Directors to attest to their independence
on an annual basis, and express provisions dealing with the
induction, education, development and performance evaluation
of Directors. Under the revised Board Charter, the key
responsibilities of the Board include:
— setting the strategic direction of the Group;
— approving operational and financial performance targets
and monitoring their achievement;
— appointing and reviewing the performance, remuneration
and succession planning of the CEO/MD;
— appointing the Chair of the Board;
— monitoring the performance of senior management;
— approving major capital expenditure, acquisitions
and divestitures;
— monitoring significant business risks;
— overseeing the integrity of the Group’s accounting and
corporate reporting systems, including appointing or
removing the Group’s external auditors;
— overseeing the Group’s relationship and communications
with securityholders;
— approving and monitoring the effectiveness of the Group’s
system of corporate governance; and
— determining the Group’s dividend and distribution policies
and the amount, nature and timing of such dividends
and distributions.
Non-Executive Directors spend approximately 25 to 30 days
each year on Board activities and business, including attendance
at Board meetings, Board committee meetings, strategy and
budget meetings with management, visits to sites (including
interstate) and meetings with Mirvac stakeholders. During the
year ended 30 June 2014, the Board visited Mirvac offices and
sites in Melbourne, Perth and Sydney.
The Non-Executive Directors by themselves and the Board as a
whole meet regularly without the presence of management to
discuss the operation of the Board and a range of other matters.
The CEO/MD provides open and detailed reports on Mirvac’s
performance and related matters to the Board at each Board
meeting. The CFO also provides open and comprehensive
reports on Mirvac’s financial performance and other relevant
matters such as Mirvac’s debt and gearing position and the
status of Mirvac’s financing facilities. The Board monitors the
decisions and actions of the CEO/MD, the CFO and other direct
reports of the CEO/MD, and the performance of the Group
as a whole, to gain assurance that progress is being made
towards the attainment of the approved strategies and plans.
The Board also monitors the performance of the Group through
its Board committees.
A copy of the Board Charter is available on the Group’s website:
www.mirvac.com/about/corporate-governance.
iii) Delegation to CEO/MD and other senior executives
The Board Charter delegates responsibility for the day-to-day
management and administration of the Group to the CEO/
MD, assisted by the ELT and other management committees
including the Investment Committee (“IC”). The CEO/MD and
senior executives of the Group operate in accordance with
Board-approved policies and the Board Delegations of Authority
to Management.
iv) ELT
The ELT was constituted to assist the CEO/MD in the day-to-day
management and administration of Mirvac. The ELT Charter sets
out the ELT’s responsibilities and delegated authority from the
Board via the CEO/MD. The terms of the ELT Charter specify
the membership of the ELT, which at 31 July 2014 comprised the
CEO/MD, CFO, Chief Investment Officer, General Counsel and
Company Secretary, Group Executive Office and Industrial, Group
Executive Corporate Affairs, Group Executive Capital, Group
Executive Operations, Group Executive Retail, Group Executive
Commercial Development and Group Executive Residential.
v) IC
The IC was constituted to assist the CEO/MD in the capital
allocation process of Mirvac. The IC Charter sets out the IC’s
responsibilities and delegated authority from the Board via the
CEO/MD. The terms of the IC Charter specify the membership of
the IC, which at 31 July 2014 comprised all members of the ELT.
The approved registers of resolutions made by the IC (as well as
the ELT) are provided to the Board.
33
MIRVAC GROUP ANNUAL REPORT 2014 Principle 1: Lay solid foundations for management and oversight / continued
2
vi) Written agreements with Directors and senior executives
In line with Recommendation 1.3 of the Revised Recommendations, Mirvac has written agreements in place with each current
Director which sets out the terms of their appointment and the majority of the matters contained in the commentary to
Recommendation 1.3.
All senior executives including the CEO/MD have their position descriptions, roles and responsibilities set out in writing, either
in their employment contract or as part of the performance management system.
Under the ASX Listing Rules, Mirvac is required to disclose (and has disclosed) the material terms of any employment, service
or consultancy agreement it enters into with any Director or the CEO/MD (or their related parties), or any material variation
to such agreement.
vii) Evaluation of performance of senior executives
The performance of senior executives is reviewed on an annual cycle, with an interim six monthly review. This is part of Mirvac’s
performance management system. The performance management system comprises a series of key performance indicators (“KPIs”)
which are aligned to Mirvac’s strategic objectives. Performance is measured against the agreed KPIs and against consistency of
senior executives’ behaviour against the Mirvac corporate values.
On an annual basis, the Chair and the Board review the performance of the CEO/MD, following a review by the HRC. The CEO/MD is
assessed against qualitative and quantitative criteria, including profit performance of Mirvac and achievement of other measures,
including safety performance and alignment of Group performance to strategic objectives. In turn, the CEO/MD reviews the
performance of their direct reports against their agreed KPIs, which are reviewed by the HRC.
Further information on performance evaluation and remuneration (including assessment criteria) is set out in the Remuneration
report starting on page 10.
3 Principle 2: Structure the board to add value
a) Structure of the Board
Together, the Board members have a broad range of financial and other skills, expertise and experience required to effectively
oversee Mirvac’s business. The Board currently comprises five Non-Executive Directors and one Executive Director (being the CEO/
MD). The Chair of the Board, John Mulcahy, is an independent Non-Executive Director. The skills, experience and expertise of each
Director are set out on pages 08 and 09 in the Directors’ report. The Board determines its size and composition subject to the limits
imposed by Mirvac’s Constitutions, which provide that there be a minimum of three and a maximum of 10 Directors (or a number less
than 10 determined by the Directors).
The Board Charter provides that the Board will comprise:
— a majority of independent Non-Executive Directors;
— Directors with an appropriate range of skills, experience and expertise from a diverse range of backgrounds;
— Directors who have a proper understanding of, and competence to deal with, current and emerging issues of the business; and
— Directors who can effectively review and challenge the performance of management and exercise independent judgement.
The tenure of the Directors is governed by Mirvac’s Constitutions and the ASX Listing Rules. In summary:
— one-third of the Directors (excluding the CEO/MD and any Director appointed to fill a casual vacancy or as an additional Director),
or if their number is not three or a multiple of three, then the number nearest one-third (but not more than one-third) must retire
from office and stand for election at each of the AGMs;
— a Director (other than the CEO/MD) must retire at the conclusion of the third AGM after the Director was last elected or re-elected
even if his or her retirement results in more than one-third of all Directors retiring; and
— a Director appointed to fill a casual vacancy or as an additional Director (other than the CEO/MD) only holds office until the next
AGM, where they must retire and seek election by securityholders at the AGM.
Directors required to retire at an AGM, or only hold office until the next AGM, are eligible for re-election or election (as appropriate)
at that AGM.
The period of office held by each current Director is as follows:
Director
Appointed
Last elected or re-elected at an AGM
John Mulcahy (Chair) 1
Susan Lloyd-Hurwitz (CEO/MD)
Peter Hawkins
James Millar AM
John Peters
Elana Rubin
Former Directors
James MacKenzie (former Chair) 2
Marina Darling 3
November 2009
November 2012
January 2006
November 2009
November 2011
November 2010
January 2005
January 2012
14 November 2013
N/A
Will stand for re-election at 2014 AGM
14 November 2013
15 November 2012
Will stand for re-election at 2014 AGM
15 November 2012
15 November 2012
1) John Mulcahy was appointed as Chair on 14 November 2013.
2) James MacKenzie was granted a leave of absence from 1 July 2013 to 31 August 2013 and resigned as a Director on 30 January 2014.
3) Marina Darling was granted a leave of absence from 9 August 2013 to 24 January 2014 being the date of her resignation as a Director.
34
MIRVAC GROUP ANNUAL REPORT 2014Corporate governance statement
3
Principle 2: Structure the board to add value /
continued
The notices of meeting and explanatory notes for the
2014 AGMs will contain all of the information contained in
Recommendation 1.2 of the Revised Recommendations in
relation to each Director standing for election or re-election,
including their biographical details, details of other material
directorships, the Director’s independence and a statement by
the Board as to whether it supports their election or re-election.
b) Chair’s responsibilities and independence
The Board Charter provides that the Chair of the Board:
— is appointed by the Directors; and
— must be an independent Non-Executive Director.
The Group’s Chair is John Mulcahy, an independent
Non-Executive Director. John was appointed as an
independent Non-Executive Director on 19 November 2009
and appointed Chair on 14 November 2013.
c) Board independence
The Board only considers Directors to be independent where
they are independent of management and free of any other
business relationship that could materially interfere with, or
could reasonably be perceived to interfere with, the exercise of
their unfettered judgement. The Board has adopted guidelines to
assist in considering the independence of Directors which have
been formulated by reference to the factors contained in the
Revised Recommendations. In general, the Board has determined
that a Director is considered to be independent if they are
Non-Executive (and have not been employed in an executive
capacity within the Group in the past three years) and they:
— are not a substantial securityholder (being a person holding
more than five per cent of the Group’s voting stock), or an officer
of or otherwise associated with a substantial securityholder;
— have not (and have not within the last three years) been a
partner, director or senior employee of a professional advisor
to the Group whose billings exceed five per cent of the
advisor’s total revenues;
— have not (and have not within the last three years) been in
a material business relationship (for example, as a supplier
or customer) with any entity in the Group (that is, amounts
received or payable to the supplier or customer exceed five
per cent of the supplier’s total revenues or the customer’s
total operating costs) or an officer of or otherwise associated
with someone with such a relationship;
— have no material contractual relationship with any entity in
the Group other than as a Director;
— have no close family ties with any person who falls within
any of the categories described above; or
— have not been a Director for such a period that their
independence may have been compromised.
However, a qualitative assessment of whether any particular
relationship could affect a Director’s independence will override
these quantitative considerations. The materiality of the interest,
position, association or relationship will also be assessed to
determine whether it might interfere, or might reasonably be seen
to interfere, with the Director’s capacity to bring an independent
judgement to bear on issues before the Board and to act in the
best interests of the Group and its securityholders generally.
The Board is responsible for assessing the independence
of Directors upon appointment and each year through an
attestation by each Director. Each Non-Executive Director also
has an ongoing obligation to disclose any personal interest
which could materially interfere with, or could reasonably be
perceived to materially interfere with, the independent exercise
of judgement or where they do not meet the Board’s guidelines
for assessing independence.
It is the Board’s view that the status of its Directors as at
31 July 2014 is as follows:
Independent Non-Executive Directors
John Mulcahy (Chair)
Peter Hawkins
James Millar AM
John Peters
Elana Rubin
Executive Director
Susan Lloyd-Hurwitz (CEO/MD)
It is therefore the Board’s view that all of its independent
Non-Executive Directors exercised judgement and discharged
their responsibilities in an unrestricted and independent manner
throughout the year.
d) Board committees
The Board has established the following standing board committees:
— ARCC
— HRC
— Nomination Committee
Each standing Board committee has a formal Charter
approved by the Board setting out the matters relevant to the
composition, terms of reference, process and administration of
that Board committee. Details of the role, responsibilities and
composition of the standing Board committees is contained
elsewhere in this Corporate governance statement.
The Board also established special purpose committees as
required during the year. Membership and terms of reference of
these committees are determined for each particular purpose by
the Board. Attendances at special purpose committee meetings
are included in the Director attendance table on page 10 in the
Directors’ report.
All Directors are entitled to attend meetings of the Board
committees. Proceedings of each Board committee meeting are
reported by the committee Chair at the subsequent Board meeting.
Each committee is entitled to the resources and information it
requires to discharge its responsibilities, including direct access
to senior executives, employees and advisors as needed. Minutes
of all Board committee meetings are provided to the Board.
e) Nomination Committee
The Nomination Committee was formed by resolution
of the Board in accordance with the Board Charter.
The Nomination Committee is governed by the Nomination
Committee Charter, which is available on Mirvac’s website:
www.mirvac.com/about/corporate-governance.
The objective of this Committee is to assist and make
recommendations to the Board in discharging its responsibilities
in respect of the appointment of all Board members including
the CEO/MD.
The Nomination Committee currently consists of three
members who are appointed by the Board. The current
members of the Nomination Committee are John Mulcahy
(Chair), Peter Hawkins and Elana Rubin, each of whom is an
independent Non-Executive Director.
The accountabilities and responsibilities of the Nomination
Committee are set out in the Nomination Committee
Charter. The responsibilities include reviewing and making
recommendations on Non-Executive Director remuneration,
assessing the skills, expertise and necessary industry, technical
or functional experience from a broad range of backgrounds
required on the Board, conducting searches for new Board
members, reviewing and making recommendations for the
appointment and re-election of Directors, ensuring succession
plans are in place for Board members and assisting the Board
to develop processes to evaluate the performance of the Board,
its committees and individual Directors.
However, the Board chose to undertake the responsibilities of
the Nominations Committee for FY14. Accordingly, there have
been no meetings of the Nomination Committee during FY14.
35
MIRVAC GROUP ANNUAL REPORT 2014 3
Principle 2: Structure the board to add value /
continued
f) Director selection process and Board renewal
The Nomination Committee usually manages the process of
recommending preferred Director candidates to the Board.
However, as noted above, the whole Board chose to undertake
this responsibility for FY14. The Board has reviewed the skills,
experience, expertise and personal qualities that will best
complement the Board’s effectiveness and then assessed the
extent to which these are represented on the existing Board.
Following this review, and in light of the resignation of two
Non-Executive Directors from the Board during the year, the
Board has identified the need to appoint additional Directors
to the Board and has commenced the search for potential
candidates with the assistance of an external search organisation.
The Board seeks to have a mix of skills, expertise and experience
across its members from a diverse range of backgrounds.
The mix of skills and diversity the Board is looking to achieve
in its membership includes:
— financial expertise;
— industry experience;
h) Induction
All new Directors participate in a formal induction program.
This includes meetings with the CEO/MD and other senior
executives (including Heads of Risk and Internal Audit), briefings
on Mirvac’s strategy, independent meetings with Mirvac’s
external and internal auditors, provision of all relevant corporate
governance material and policies, and discussions with the Chair
and other Directors.
i) Continuing education
In accordance with Recommendation 2.6 of the Revised
Recommendations, Directors are provided with continuing
education and professional development opportunities (at
the Group’s expense) to update and enhance their skills and
knowledge (in addition to the formal induction program), including:
— office and site visits to understand Mirvac’s operations
throughout Australia;
— briefings on any key changes to the industry and environment
in which Mirvac operates, including regular health, safety and
environment updates;
— ongoing briefings on developments in accounting standards
and corporate governance changes; and
— technical expertise related to Mirvac’s current and future
— attendance at external education and other professional
business;
— Directors who have a proper understanding of, and competence
to deal with, current and emerging issues of the business; and
— Director independence.
The Board also has a target of 50 per cent female membership by
2020 to reflect the communities and customers Mirvac serves.
The search for new Directors is focused on candidates
possessing the skills and experience which will best complement
the Board’s effectiveness and the current skills and experience
of the Board.
The skills, expertise and experience mix required will change
from time to time as Mirvac’s business and environment
changes. Mirvac will provide further details of the mix
of skills and diversity on the Board in its 2015 Corporate
governance statement in line with Recommendation 2.2
of the Revised Recommendations.
A key component of the Board renewal and selection process
is ensuring succession plans are in place for Directors. The
Board ensures that succession plans are in place to maintain
an appropriate mix of skills, experience, expertise and diversity
on the Board.
Appropriate checks are undertaken before a new candidate is
recommended to the Board for appointment as a Director. In
line with Recommendation 1.2 of the Revised Recommendations,
this includes checks as to the person’s character, experience,
education, criminal record and bankruptcy history.
g) Board and Director performance evaluation
The Board undertakes an annual assessment and review of
performance with every second annual review being conducted
with the assistance of an external consultant. The review
process includes an assessment of the performance of the
Board, the Board committees and each individual Director with
the results presented to the Board.
The Chair also seeks feedback on the performance of the Board
and Directors from the CEO/MD and other members of the ELT.
Feedback is also sought on the Chair’s performance.
The Chair provides open and transparent performance feedback
to the Board, the Board committees and each individual Director,
based on the discussions conducted.
The Board performance review process for the year ended
30 June 2014 is currently in progress.
development opportunities including Director-related courses
and industry conferences.
j)
Access to information, indemnification and
independent advice
The Company Secretary provides information and assistance to
the Board, and Directors also have access to senior executives
at any time to request any relevant information.
Under the relevant Constitutions and relevant Deeds with
Directors, Mirvac indemnifies Directors against claims and
liabilities incurred in their capacity as Directors of Mirvac
(to the extent permitted by law).
The Board Charter provides that Directors may obtain
independent professional advice, at the expense of Mirvac,
with the consent of the Chair.
k) Conflicts of interest
The Board Charter sets out the obligations of Directors in
dealing with any conflicts of interest. Pursuant to the Board
Charter, Directors are obliged to:
— disclose to the Board any interest which may give rise to a real
or substantial possibility of conflict (including any material
personal interest) as soon as they become aware of the issue;
— take any necessary and reasonable measures to manage
or resolve the conflict; and
— comply with the Corporations Act 2001 (Cth) provisions
on disclosing interests and restrictions on voting.
Unless the Board determines otherwise, a Director with any
actual or potential conflict of interest in relation to a matter
before the Board does not:
— receive any Board papers in relation to that matter; and
— participate in any discussion or decision making in relation
to that matter.
Related party transactions are governed by the Conflicts of
Interest and Related Party Transactions Policy, which was
updated in May 2014 to redefine the purpose and application
to the Group and clearly set out the Group’s position
as to how it identifies and manages conflicts of interest.
A copy of the updated Policy is available on Mirvac’s website:
www.mirvac.com/about/corporate-governance.
Mirvac’s Code of Conduct also sets down guidelines for dealing
with conflicts of interest that may arise particularly for senior
executives and other employees.
36
MIRVAC GROUP ANNUAL REPORT 2014Corporate governance statement 3
Principle 2: Structure the board to add value /
continued
l) Company Secretaries
The Board has appointed two Company Secretaries who are
accountable directly to the Board, through the Chair, on all
matters to do with the proper functioning of the Board. Each
Director communicates directly with the Company Secretaries
and vice versa. In line with Recommendation 1.4 of the Revised
Recommendations, the role of the Company Secretaries includes:
— advising the Board and its committees on governance matters;
— monitoring that Board and committee policy and procedures
are followed;
— coordinating the timely completion and despatch of Board
and committee papers;
— ensuring that the business at Board and committee meetings
is accurately captured in the minutes; and
— helping to organise and facilitate the induction and
professional development of Directors.
4
Principle 3: Promote ethical and
responsible decision making
a) Responsibilities of the Board and management
i) Conduct and ethics – code of conduct
Integrity is one of the Group’s core values. The Group
has built a reputation for integrity and in dealing fairly,
honestly and transparently with all stakeholders. Mirvac
has adopted a Code of Conduct which espouses its core
values and reflects the Recommendations in terms of the
matters addressed. The Code of Conduct applies to the
Board, executives, employees and contractors (known as
“Workplace Participants”). A copy of the Code is posted to
Mirvac’s website: www.mirvac.com/about/corporate-governance.
In addition, Mirvac is committed to maintaining a high standard
of ethical business behaviour at all times and requires Workplace
Participants to:
— treat other Workplace Participants with fairness, honesty
and respect;
— comply with all laws and regulations;
— comply with Mirvac policies and procedures in force from
time to time; and
— not engage in any improper conduct.
Mirvac has an established Open Line Policy which provides
a mechanism for employees to report concerns regarding
potentially unethical, unlawful or improper practices or
behaviours. The Open Line Policy provides protection
for individuals reporting in good faith. Access to Mirvac’s
Open Line is available to any third party including suppliers,
customers and securityholders who wish to report any concerns.
A copy of the Open Line Policy, together with the web form
and Open Line contact number, is available on Mirvac’s website:
www.mirvac.com/about/corporate-governance. In accordance
with the commentary to Recommendation 3.1 of the Revised
Recommendations, the website also includes Mirvac’s public
commitment to the non-tolerance of any unlawful, unethical
payments or inducements.
Mirvac also has a specific Fraud, Bribery & Corruption Policy
which outlines its commitment to prevent fraud, bribery
and corruption and which provides guidance to Workplace
Participants to manage these risks.
ii) Dealings in Mirvac securities
Mirvac has implemented a Security Trading Policy which covers
dealings in Mirvac securities by Directors, executives and other
designated employees, as well as their respective associates
(“Restricted Officers”). Restricted Officers may only deal in
Mirvac securities (with prior approval to do so), or in securities
of other publicly listed entities that are related to Mirvac, outside
certain periods as identified in the Policy. Notwithstanding this,
no Director, executive or other employee may deal in Mirvac
securities if they are in possession of price sensitive information
not available to the market. Margin loans and any form of
hedging or short term speculative dealing in Mirvac securities
(including options or derivatives) are prohibited under the Policy.
The Security Trading Policy was updated in April 2014 to require
a recommendation from the General Counsel to the person
approving any dealing in Mirvac securities by any Director
(including the CEO/MD). Any dealing in Mirvac securities by
Directors is notified to the ASX within five business days of
the transaction.
In 2012, the Board established minimum Mirvac Securityholding
Guidelines for Non-Executive Directors which recommend
Non-Executive Directors build up to a minimum securityholding
level of 25,000 Mirvac securities within two years of
appointment. Any purchases of Mirvac securities will be subject
to the Security Trading Policy. All current Directors have
achieved the minimum securityholding level of 25,000 Mirvac
securities as set out on page 26 in the Directors’ report.
As noted in the Remuneration report, performance rights or
options relating to Mirvac securities are granted to employees
in accordance with the Mirvac remuneration strategy. Consistent
with the prohibition under the Corporations Act 2001, the Policy
prohibits hedging the value of both unvested awards and vested
awards that remain subject to a holding lock.
A copy of the Security Trading Policy is available at Mirvac’s
website: www.mirvac.com/about/corporate-governance.
iii) Political donations
The Election Funding, Expenditure and Disclosures Act 1981 (Cth)
(amended in 2009) prohibits property developers from making
political donations. Mirvac has in place a Political Donations
Policy, which prohibits the Group and any Mirvac employee from
making any political donation on behalf of the Group. During the
year ended 30 June 2014, Mirvac (including its Directors and
employees) made no political donations.
b) Diversity
Mirvac has adopted, and is fully compliant with,
Recommendations 3.2 to 3.5 of the Recommendations.
Mirvac has reviewed Recommendation 1.5 of the Revised
Recommendations and will early adopt it to include the
definition of “Senior Executive” for the purpose of disclosing
the respective proportions of men and women on the board,
senior executive positions and across the whole organisation.
Mirvac’s Diversity Policy can be found on the website at:
www.mirvac.com/about/corporate-governance. Mirvac has
continued to demonstrate its ongoing commitment to diversity
by progressing a range of initiatives that support Mirvac’s
Diversity Policy. Mirvac understands and recognises that
diversity represents the key to engaging the full potential of
the talented individuals working with Mirvac. The steps taken
in the last 12 months have been important and have moved the
Group forward towards achieving its diversity objectives.
Mirvac’s commitment to diversity extends beyond the programs
and initiatives in place, and it strives to create a culture in which
both visible and tacit differences are recognised and valued.
Mirvac believes its competitive advantage lies in creating and
maintaining a culture where all employees are able to contribute
and fulfil their potential without artificial barriers. Mirvac’s goal
is to have a workforce representative of the communities in
which Mirvac operates.
The Board and management work hand-in-hand to create a
culture where individual differences are valued and respected.
Mirvac has, and will continue to develop, strategies and
programs to promote diversity and inclusion. During the year,
Mirvac focused on gender diversity and is reviewing the next
phase of the diversity and inclusion journey. The Board has
committed to measurable gender diversity targets and reports
on progress each year and is responsible for the regular review
of diversity-related activities.
37
MIRVAC GROUP ANNUAL REPORT 2014 Principle 3: Promote ethical and responsible decision making / continued
4
The Board has appointed the Chair, John Mulcahy, as the diversity program sponsor. The CEO/MD, Susan Lloyd-Hurwitz, chairs the
Mirvac Diversity Council. The Mirvac Diversity Council regularly meets to coordinate diversity activities and reports to the Board
regarding diversity initiatives and progress.
Mirvac aspires to ensure diversity outcomes are integrated at every level of its business. With a priority focus on gender, Mirvac’s
approach to diversity demonstrates its strong commitment in supporting women entering the workforce, equity in promotion and
initiatives to enhance female retention.
In 2013, Mirvac was one of 16 ASX 200 companies to have truly embedded the principles of gender diversity and was rated a green
light in the Women on Boards 2013 Traffic Light Index. In addition, Mirvac was one of six companies named by the BlackRock report
on gender diversity to receive an excellent scorecard.
Mirvac has now achieved all of the measurable objectives under the Diversity Policy as set out in the table below:
Initiative
Measurable objective
Status
Key achievements
Establish a women’s network Establish a leadership
Achieved — Sponsor and Chair appointed.
Establish an organisation-
wide graduate program to
provide a pipeline of gender
diverse talent for future
leadership roles
Update recruitment
guidelines to encourage,
where possible, a gender
balance of shortlisted
candidates
network and development
program for female leaders
Implement Mirvac graduate
program with 50 per cent
female graduates
— Network established.
— Development program requirements specified.
Achieved — Graduate recruitment policy/guidelines introduced.
— First graduate intake 50 per cent female.
Implement recruitment
policy that all executive
recruitment briefs include
a guideline for 50 per cent of
shortlisted candidates to be
female
Achieved — Mirvac recruitment policy updated.
— Recruitment process embedded in the organisation.
Flexible work arrangements/
job design policy
Implement flexible
work policy
Conduct a pay parity review
and implement measures to
achieve gender equity and
parity in pay
Complete annual pay
parity review and report
against internal and
external benchmarks
Implement a talent
management program
for female leaders
Implement a women
in Mirvac talent management
program
Achieved — Flexible work arrangements/job design policy developed
and implemented.
Achieved — Three annual pay parity reviews have been conducted.
Achieved — Talent management program designed and
implemented.
— High potential women identified at middle management.
— Development centres conducted to identify
development needs.
— Development plans developed and implemented.
These initiatives have formed part of the broader strategy focused on removing barriers to achieving diversity at all levels of the
Mirvac workforce.
As Mirvac has now achieved all of the measurable objectives under the Diversity Policy, Mirvac is currently refreshing its Diversity
strategy and Diversity Policy which will include new measurable objectives and targets. A workshop including the Diversity Council
members and 20 employees from across the organisation representing different business units, levels and locations was held in
July 2014. The details of the updated measurable objectives and targets will be disclosed in Mirvac’s FY15 Corporate governance
statement. Mirvac is focused on embedding a culture of inclusion across the organisation and in support of this the Mirvac senior
management team has participated in unconscious bias awareness training.
Proportion of female employees
In line with the Diversity Policy, the table below outlines Mirvac’s female representation targets, and progress against achievement
of these targets:
Measurable objectives
Actuals
Target by 2015 Target by 2020 30 June 2009 30 June 2014
%
Actuals
%
%
%
Women on Mirvac Board
Women in senior executive positions (full time equivalent (“FTE”))
Women in Mirvac (FTE)
35
35
50
50
50
50
14
—
43
33
34
39
Senior executive position is defined as a senior management position up to two reporting levels below the CEO/MD.
38
MIRVAC GROUP ANNUAL REPORT 2014Corporate governance statement
5
Principle 4: Safeguard integrity in
financial reporting
a) ARCC
i) ARCC Charter
The ARCC was formed by resolution of the Board in
accordance with the Board Charter. The ARCC is governed
by the ARCC Charter, which is available on Mirvac’s website:
www.mirvac.com/about/corporate-governance.
ii) Role of ARCC
The objective of the ARCC is to assist the Board in fulfilling its
corporate governance and oversight responsibilities in relation
to the Group’s financial reporting, systems of internal control
and management of risk, internal and external audit functions,
compliance obligations including the processes for monitoring
compliance with relevant laws and regulations and the Group
Code of Conduct. It is the ARCC’s role to ensure that the Group’s
financial statements and disclosures are complete and accurate
and are in accordance with generally accepted accounting
principles and applicable laws. The ARCC is also responsible for
making recommendations to the Board regarding the selection
and appointment of the external auditor and the rotation
of external audit engagement partners, as outlined in the
Committee Charter and section 5(b) below.
iii) ARCC composition
The ARCC currently consists of six members. Members are
appointed by the Board and all members are Non-Executive
and independent. The members of the ARCC as at 31 July 2014
were all five Non-Executive Directors from the Mirvac Board –
James Millar (Chair), Peter Hawkins, John Mulcahy, John Peters
and Elana Rubin. The Board has also appointed an additional
Non-Executive, independent member who is not a Director of
the Mirvac Board – namely Paul Barker.
Paul Barker is the Chair of Mirvac Funds Management Limited,
the responsible entity for Mirvac Industrial Trust (being Mirvac’s
ASX listed fund) and he has been appointed a member of ARCC
due to this role. Paul Barker is independent and is a Chartered
Accountant. He has extensive experience in accounting and
financial services, both in Australia and overseas.
Each member of the ARCC has the technical expertise to
enable the Committee to effectively discharge its mandate.
The Chair of the ARCC, James Millar, is the former Chief
Executive Officer of Ernst & Young. Further details of the Mirvac
Board members’ qualifications can be found at pages 08 and 09
in the Directors’ report.
The CEO/MD, CFO, General Counsel, Group General Manager
Risk & Compliance, Head of Internal Audit, Group Compliance
Manager as well as representatives of the external and internal
auditors are able to attend ARCC meetings. The ARCC regularly
meets with the external auditors without management present.
Details of meeting attendance of members of the ARCC for FY14
are contained in the following table:
Number of ARCC
Number of ARCC
meetings attended in FY14 meetings held in FY14
whilst a member
whilst a member
Director
James Millar AM (Chair)
Peter Hawkins
James MacKenzie (resigned) 1
John Mulcahy
John Peters
Elana Rubin
Non-Mirvac Director
Paul Barker
6
6
1
6
6
6
6
6
6
3
6
6
6
6
1) James MacKenzie was granted a leave of absence from 1 July 2013 to
31 August 2013 which covered one ARCC meeting. James MacKenzie
resigned as a Director on 30 January 2014 and therefore as a Committee
member on the same date.
iv) ARCC responsibilities
The ARCC Charter sets out the responsibilities of the ARCC
which include:
— reviewing the Group’s risk profile including approving the
Group’s Business Continuity Plan and insurance program
(other than D&O insurance);
— reviewing and approving the adoption and maintenance
of policies and procedures to ensure there is an adequate
system of internal control, management of business risks
and safeguarding of assets, and accountability at senior
management level for risk oversight and risk management;
— overseeing and approving the Group’s financial reporting and
disclosure processes, and reviewing and recommending to the
Board the Group’s financial statements, proposed distributions
and significant accounting policies and principles;
— overseeing the Group’s external auditor including approving
the external audit annual plan and monitoring compliance
with the non-audit services policy (see section 5(b) below);
— overseeing the Group’s Internal Audit function including
approving the Internal Audit annual plan and reviewing the
results of any significant internal audits and issues raised;
— reviewing and overseeing the Group’s compliance framework; and
— reviewing and making recommendations on the Group’s
Anti-Money Laundering and Counter-Terrorism Financing
Program and Policy.
v) Compliance
The ARCC has direct responsibility for monitoring and reviewing
the compliance plans of Mirvac’s registered managed investment
schemes and compliance with the Group’s Australian financial
services (“AFS”) licences.
b) External auditor relationship
i) Role of ARCC
Mirvac’s ARCC is responsible for overseeing the relationship with
the Group’s external auditor, PwC. In addition to the matters set out
in section 5(a) above, the ARCC is also responsible for monitoring
and evaluating the performance, independence and objectivity
of the external auditor and the provision of non-audit services.
ii) Auditor independence
It is the Group’s policy to rotate audit engagement partners on
listed companies at least every five years, and in accordance
with that policy a new audit engagement partner was introduced
for the year ended 30 June 2011.
To maintain auditor independence, the Board has adopted a
policy and practice protocol related to non-audit services. A copy
of the Non-Audit Services Provided by the Independent External
Auditors Policy (“Non-Audit Services Policy”) is available at
Mirvac’s website: www.mirvac.com/about/corporate-governance.
Mirvac’s Non-Audit Services Policy specifies that Mirvac’s
external auditor cannot be engaged to undertake any non-audit
services for the Group that results in the external auditor:
— creating a mutual or conflicting interest with that of the Group;
— auditing their own work;
— acting in a management capacity or as an employee of the Group;
— providing appraisal or valuation and fairness opinions;
— performing internal audit services; or
— acting as an advocate for the Group.
No work will be awarded to the external auditor if the ARCC (or
the CEO/MD or CFO) believes such work would give rise to a
“self review threat” (as defined in APES 110 Code of Ethics for
Professional Accountants) or would create an actual or perceived
conflict of interest for the external auditor or any member of
the audit team, or would otherwise compromise the auditor’s
independence requirements under the Corporations Act 2001.
39
MIRVAC GROUP ANNUAL REPORT 2014
5
Principle 4: Safeguard integrity in
financial reporting / continued
In addition to the audit partner rotation and appointment
requirements set out in the Group’s policy and in the
Corporations Act 2001, under the Non-Audit Services Policy the
Chair of the ARCC must give prior approval for any non-audit
services engagement of the Group’s external auditor where the
fee for the particular engagement exceeds $100,000, or if the
annual cumulative fees for all non-audit services exceed, or are
likely to exceed, 50 per cent of the auditor’s annual audit fees.
The CEO/MD or the CFO can approve the appointment if the
engagement falls below these amounts.
An analysis of fees paid to the external auditors, including a
break-down of fees for non-audit services, is provided in note 34
to the financial statements.
iii) Certificate of independence
PwC has provided the ARCC with a half yearly and annual
certification of its continued independence, in accordance with
the requirements of the Corporations Act 2001, and in particular
confirmed that it did not carry out any services or assignments
during the year ended 30 June 2014 that were not compatible
with auditor independence.
Principle 5: Make timely and balanced disclosure
6
a) Commitment to disclosure
Mirvac is committed to ensuring:
— compliance with the ASX Listing Rules disclosure
requirements;
— accountability at a senior executive level for that compliance;
— facilitation of an efficient and informed market in Mirvac
securities by keeping the market appraised through ASX
announcements of all material information; and
— compliance with the requirements of the Corporations Act
2001, the ASX Listing Rules and the Recommendations
(including the Revised Recommendations).
b) Continuous Disclosure Policy
The Group’s Continuous Disclosure Policy is designed to support
its commitment to a fully informed market in Mirvac securities by:
— ensuring that Mirvac complies with its continuous disclosure
obligations under the ASX Listing Rules and the Corporations
Act and accountability at a senior executive level for that
compliance; and
— establishing a system for monitoring compliance with Mirvac’s
Group’s continuous disclosure obligations.
A copy of Mirvac’s Continuous Disclosure Policy is available at
Mirvac’s website: www.mirvac.com/about/corporate-governance.
7 Principle 6: Respect the rights of shareholders
a) Communications Policy
Mirvac has a Communications Policy, which was reviewed in
September 2013, which is available at Mirvac’s website:
www.mirvac.com/about/corporate-governance.
In accordance with the Policy, all Mirvac ASX announcements
are posted to Mirvac’s website including half year and annual
reports, results releases, market briefings, notices of meetings
and the Mirvac Property Compendium.
b) Mirvac website
The Mirvac website contains all of the information contained
in Recommendation 6.1 of the Revised Recommendations. The
corporate governance section of the Mirvac website contains:
— Mirvac’s Constitutions, Board Charter and Board Committee
Charters; and
— copies of the corporate governance policies referred to in this
Corporate governance statement.
The Investor Centre section of the Mirvac website also provides
access to relevant information about the Group including copies
of ASX and media releases, copies of annual reports and financial
statements, investor presentations, a key events calendar
including details of the next AGMs, distribution information,
historical security price information and registry contact
details (including email address and website which contains key
securityholder forms). Teleconferencing and webcasting facilities
for market briefings are also provided on the website to encourage
participation from all stakeholders, regardless of location.
The Mirvac website contains an overview of Mirvac and its
structure and history, and biographical information and photos
for each of the Mirvac Directors and members of the ELT.
c) Participation in AGMs
Mirvac encourages all securityholders to attend the AGMs in line
with Recommendation 6.3 of the Revised Recommendations.
Mirvac is committed to rotating the location of its AGMs to
allow securityholders in locations where Mirvac has operations
to participate in person. The previous four AGMs were held in
Melbourne, Sydney, Perth and Brisbane. The 2014 AGMs will be
held on 20 November 2014 in Sydney.
Notices of meeting for general meetings are accompanied by
explanatory notes to enable securityholders to assess and make
an informed decision on the resolutions being put forward at
the meetings. Full copies of notices of meetings and explanatory
notes are posted on Mirvac’s website. Securityholders may
also elect to receive all communications from the registry
electronically, including notices of meeting and annual reports, in
line with Recommendation 6.4 of the Revised Recommendations.
The AGMs are webcast in real time each year, with access details
posted to Mirvac’s website in advance of the date of the AGMs.
At the AGMs, securityholders are entitled to ask questions about
the management of Mirvac.
In line with Recommendation 4.3 of the Revised
Recommendations, the external auditor attends AGMs and
securityholders are provided with a reasonable opportunity to
ask questions of the external auditor. The external auditor also
has the opportunity to answer written questions submitted by
securityholders in advance of AGMs.
Securityholders who are unable to attend the AGMs may
vote by appointing a proxy using the form included with
the notice of meetings or via an online facility. In line with
Recommendation 6.3 of the Revised Recommendations, Mirvac
will also introduce a direct voting facility for the 2014 AGMs to
allow securityholders to vote before the meeting without having
to attend or appoint a proxy. Further, securityholders are also
invited to submit questions in advance of the AGMs so that
Mirvac can ensure those issues are addressed at the AGMs.
8 Principle 7: Recognise and manage risk
a) Risk management framework
i) Risks
Mirvac is a leading ASX listed, integrated real estate group
with activities involving real estate investment, residential and
commercial development and investment management. These
activities involve risks of varying types and to varying extents.
Risk can relate to both threats to existing activities, as well as
a failure to take advantage of opportunities that may arise.
Mirvac’s objective is to identify these risks and implement
appropriate measures to mitigate or otherwise manage the
impact those risks may have on the Group’s activities.
ii) Risk Management Policy
In recognition that risk management is a key element of an
organisation’s effective corporate governance processes, the
Board has adopted a Risk Management Policy and associated
procedures for identifying, assessing and managing Mirvac’s
strategic, operational, financial and reputational risks.
40
MIRVAC GROUP ANNUAL REPORT 2014Corporate governance statement 8
Principle 7: Recognise and manage risk /
continued
The objectives of the Policy are to:
— provide a systematic approach to risk management aligned
to the Group’s strategic objectives;
— define the mechanisms by which the Group determines its risk
appetite and considers and manages risks; and
— articulate the roles and accountabilities for the management,
oversight and governance of risk.
The approach defined within this Policy is consistent with the
Australian and New Zealand standard on risk management
(ISO 31000: 2009). The Policy applies to all legal entities within
the Group to enable an enterprise-wide approach to managing
risk to be applied.
Supporting this Policy is a framework which has been prepared
to guide the various business units in addressing their particular
risk exposures through a structured implementation of risk
management processes. Although structured, the framework
maintains a sufficient degree of flexibility to allow the respective
business units to adopt appropriate strategies to address their
risk exposures, as risks and their management by designated
controls are the responsibility of the business.
A copy of the Risk Management Policy is available at Mirvac’s
website: www.mirvac.com/about/corporate-governance.
iii) Risk management responsibility
The Board determines the overall risk appetite for the Group
and has approved strategies, policies and practices to ensure
that key risks are identified and managed within the context
of this risk appetite. The application of the Group’s policies
and procedures to manage risk is ultimately the responsibility
of the Board, which has in turn delegated specific authority
to the ARCC (as more fully detailed in the ARCC Charter and
section 5(a) above).
The ARCC advises the Board on risk management and is
responsible for reviewing policies for approval by the Board
and for reviewing the effectiveness of the Group’s approach
to risk management. Risk management is specifically reviewed
at least quarterly by the ARCC. The Group’s risk management
framework is reviewed annually at a Board Risk Management
Workshop to ensure it remains sound and relevant to the
changing business environment. The most recent Board Risk
Management Workshop was held during October 2013.
iv) Risk management function
The Board has charged management with the responsibility
for managing risk within the Group and the implementation
of mitigation measures, under the direction of the CEO/MD
supported by senior executives. A Group risk management
function, led by the Group General Manager Risk & Compliance,
has been established to facilitate the process by providing
a centralised role in advising the various business units on
executing risk management and mitigation strategies, as well
as consolidating risk reporting to senior executives, the ARCC
and ultimately the Board.
v) Role of Internal Audit
The Group’s risk management systems work alongside
its internal control systems to establish an effective
control environment to manage business risks. In line with
Recommendation 7.3 of the Revised Recommendations, Mirvac
has a formal Internal Audit function which is led by the Head
of Internal Audit who reports to the Chair of the ARCC and has
open access to the ARCC and its Chair at all times. The role of
Internal Audit is to evaluate, assess and support continuous
improvement of the Group’s internal control system and provide
independent, reasonable assurance to the ARCC and the Board
that material risks are effectively managed. Internal Audit’s
focus is on the Group’s key risks and business drivers which
may impact the achievement of its business objectives.
vi) Operational risks
The CEO/MD, supported by senior executives, is responsible for
implementing and maintaining effective risk management and
internal control systems for operational risks that arise from the
Group’s activities. To ensure consistent and effective practices
are employed, each business unit has developed risk registers,
detailing the key risks facing the particular business unit.
vii) Financial risks
The Board has approved principles and policies to manage
financial risks arising from the Group’s operations, including its
financing and treasury management activities. The ARCC reports
to the Board in relation to the integrity of the Group’s financial
reporting, internal control structure, risk management systems
as well as the internal and external audit functions. Mirvac
management also provides assurance to the Board and the ARCC
as to the effectiveness of the Group’s risk management and
internal control systems in relation to financial reporting risks.
The ARCC also oversees, and reports to various boards within
the Group on, the specific risks and compliance requirements
arising from the activities of the Group’s AFS licensed entities
and respective registered managed investment schemes.
viii) Economic, environmental and social sustainability risks
In accordance with Recommendation 7.4 of the Revised
Recommendations, the Group is very aware of its impact on
the economy, the environment and the community in which it
operates, and the risks associated with not dealing with these
aspects appropriately. Mirvac annually reports on these aspects
through its Sustainability Report which is available on Mirvac’s
website: www.mirvac.com/sustainability/sustainability-reports.
b) Assurances from the CEO/MD and CFO
The CEO/MD and the CFO have provided the following assurance
to the Board in connection with the Group’s financial statements
and reports for the year ended 30 June 2014, namely that in
their opinion:
— the financial records of the Group for the year ended
30 June 2014 have been properly maintained in accordance
with Section 286 of the Corporations Act 2001, such that those
records correctly record and explain the Group’s transactions
and its financial position and performance and enable true
and fair financial statements to be prepared and audited;
— the Group’s financial statements, and the notes to those
statements, for the year ended 30 June 2014 comply with
Accounting Standards (as defined in the Corporations Act 2001);
— the Group’s financial statements, and the notes to those
statements, for the year ended 30 June 2014 give a true and
fair view of the financial position and performance of the Group;
— there are reasonable grounds to believe that Mirvac will be able
to pay its debts as and when they become due and payable;
— each of the statements referred to above is founded on a
sound system of risk management and internal compliance
and control which implements the policies adopted by the
Board; and
— Mirvac’s system of risk management and internal compliance
and control is operating effectively in all material respects
in relation to financial reporting risks.
The effective control environment established by the Board
supports this assurance provided by the CEO/MD and the CFO.
However, it should be noted that JVA, which are not controlled
by Mirvac, are not covered for the purpose of this assurance or
the declaration given under Section 295A of the Corporations
Act 2001.
In line with Recommendation 4.3 of the Revised Recommendations,
Mirvac’s practice has been to provide similar assurances to the
Board for the Group’s half year financial statements and reports.
41
MIRVAC GROUP ANNUAL REPORT 2014 9 Principle 8: Remunerate fairly and responsibly
a) HRC
i) HRC Charter
The HRC was formed by resolution of the Board in accordance
with the Board Charter. The HRC is governed by the HRC Charter
which was updated in October 2013, and is available on Mirvac’s
website: www.mirvac.com/about/corporate-governance.
ii) Role of HRC
The objectives of this Committee are to assist the Board in
ensuring Mirvac:
— has coherent remuneration policies and practices which
are consistent with the Group’s strategic goals and human
resource objectives by attracting and retaining individuals
who will create value for securityholders;
iv) HRC responsibilities
The accountabilities and responsibilities of the HRC are set out
in the HRC Charter and include:
— reviewing remuneration programs and performance targets
for the CEO/MD and any other Executive Director and
approving these for the senior executives;
— reviewing and approving the Group’s recruitment, retention
and termination policies;
— approving the strategy and principles for people management
including remuneration programs, performance management
processes and career and skills development initiatives;
— reviewing and making recommendations on succession
planning for the CEO/MD and members of the ELT; and
— reviewing the Group’s Diversity Policy, objectives and
— fairly and responsibly remunerates Directors and executives,
having regard to the performance of the Group, the performance
of the individuals and the general remuneration environment;
strategies and progress towards achieving greater diversity,
including reviewing the proportion of women in the workforce
at all levels of the Group.
— has effective policies and procedures to attract, motivate and
retain appropriately skilled persons to meet the Group’s needs;
— has an effective Diversity Policy and regularly reviews
progress towards achieving measurable objectives and
strategies aimed at improving diversity; and
— integrates human capital and organisational issues to the
overall business strategy.
iii) HRC composition
The HRC currently consists of three members. Under the
HRC Charter, the Committee must comprise a minimum of three
independent Non-Executive Directors appointed by the Board,
one of whom is appointed as the Committee Chair. The members
of the HRC as at 31 July 2014 were Peter Hawkins (Chair),
James Millar and John Mulcahy.
Details of meeting attendance of the Non-Executive Director
members of the HRC for FY14 are contained in the following table:
Director
Number of HRC
Number of HRC
meetings attended in FY14 meetings held in FY14
whilst a member
whilst a member
Peter Hawkins (Chair)
James Millar AM
John Mulcahy
Marina Darling (resigned) 1
James MacKenzie (resigned) 2
5
5
5
0
1
5
5
5
3
3
1) Marina Darling was granted a leave of absence from 9 August 2013
to 24 January 2014 which covered two HRC meetings. Marina Darling
resigned as a Director on 24 January 2014 and therefore as a Committee
member on the same date.
2) James MacKenzie was granted a leave of absence from 1 July 2013 to
31 August 2013 which covered one HRC meeting. James MacKenzie
resigned as a Director on 30 January 2014 and therefore as a Committee
member on the same date.
Principles and recommendations (2nd edition)
v) Remuneration policies
Information on the Group’s remuneration policies and practices
is set out in the Remuneration report starting on page 10.
b) Distinguish Non-Executive Director remuneration
The remuneration of Non-Executive Directors is fixed and
is paid according to the role in which they serve on the
Board and Board committees. Non-Executive Directors do
not participate in other remuneration components such as
performance-related short term or long term incentives,
options or variable remuneration and do not receive retirement
benefits other than superannuation. Information relating to
the remuneration of Non-Executive Directors is disclosed
in the Remuneration report starting on page 10.
10 Conclusion
The Board is satisfied with its level of compliance with the
Recommendations. However, the Board recognises that
processes and procedures require continual monitoring and
improvement. Mirvac’s corporate governance framework is
continually reviewed and updated as changes occur in the
regulatory environment to ensure that it remains effective
and compliant. Mirvac has therefore early-adopted the majority
of the amendments to the Recommendations contained in
the Revised Recommendations and will report against each
of them in its 2015 Corporate governance statement.
ASX Corporate Governance Council’s Principles
and Recommendations
Mirvac’s Corporate governance statement 2014
All page references in the table below are to the
Corporate governance statement, unless noted otherwise.
Mirvac
compliance
Page
Revised
Recommendations
(3rd edition)
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1: Companies should establish the functions reserved to the board and those
delegated to senior executives and disclose those functions.
Recommendation 1.2: Companies should disclose the process for evaluating the performance of senior
executives.
Recommendation 1.3: Companies should provide the information indicated in the Guide to reporting on
Principle 1.
Principle 2: Structure the board to add value
Recommendation 2.1: A majority of the board should be independent directors.
Recommendation 2.2: The chair should be an independent director.
Recommendation 2.3: The roles of the chair and chief executive officer should not be exercised by the
same individual.
Recommendation 2.4: The board should establish a nomination committee.
Recommendation 2.5: Companies should disclose the process for evaluating the performance of the
board, its committees and individual directors.
33
34
33
35
35
34
35
36
√
√
√
√
√
√
√
√
1.1
1.7
No equivalent
2.4
2.5
2.5
2.1
1.6
42
MIRVAC GROUP ANNUAL REPORT 2014Corporate governance statement
10 Conclusion / continued
Principles and recommendations (2nd edition)
Recommendation 2.6: Companies should provide the information indicated in the Guide to reporting
on Principle 2.
Principle 3: Promote ethical and responsible decision making
Recommendation 3.1: Companies should establish a code of conduct and disclose the code
or a summary of the code as to:
— the practices necessary to maintain confidence in the company’s integrity;
— the practices necessary to take into account their legal obligations and the reasonable expectations
of their stakeholders; and
— the responsibility and accountability of individuals for reporting and investigating reports
of unethical practices.
Recommendation 3.2: Companies should establish a policy concerning diversity and disclose the
policy or a summary of that policy. The policy should include requirements for the board to establish
measurable objectives for achieving gender diversity and for the board to assess annually both the
objectives and progress in achieving them.
Recommendation 3.3: Companies should disclose in each annual report the measurable objectives
for achieving gender diversity set by the board in accordance with the diversity policy and progress
towards achieving them.
Recommendation 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.
Recommendation 3.5: Companies should provide the information indicated in the Guide to reporting
on Principle 3.
Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1: The board should establish an audit committee.
Recommendation 4.2: The audit committee should be structured so that it:
— consists only of non-executive directors;
— consists of a majority of independent directors;
— is chaired by an independent chair, who is not chair of the board; and
— has at least three members.
Recommendation 4.3: The audit committee should have a formal charter.
Recommendation 4.4: Companies should provide the information indicated in the Guide to reporting
on Principle 4.
Principle 5: Make timely and balanced disclosure
Recommendation 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
that compliance and disclose those policies or a summary of those policies.
Recommendation 5.2: Companies should provide the information indicated in the Guide to reporting
on Principle 5.
Principle 6: Respect the rights of shareholders
Recommendation 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.
Recommendation 6.2: Companies should provide the information indicated in the Guide to reporting
on Principle 6.
Principle 7: Recognise and manage risk
Recommendation 7.1: Companies should establish policies for the oversight and management
of material business risks and disclose a summary of those policies.
Recommendation 7.2: The board should require management to design and implement the risk
management and internal control system to manage the company’s material business risks and report
to it on whether those risks are being managed effectively. The board should disclose that management
has reported to it as to the effectiveness of the company’s management of the material business risks.
Recommendation 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.
Recommendation 7.4: Companies should provide the information indicated in the Guide to reporting
on Principle 7.
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1: The board should establish a remuneration committee.
Recommendation 8.2: The remuneration committee should be structured so that it:
— consists of a majority of independent directors;
— is chaired by an independent director; and
— has at least three members.
Recommendation 8.3: Companies should clearly distinguish the structure of non-executive directors’
remuneration from that of executive directors and senior executives.
Recommendation 8.4: Companies should provide the information indicated in the Guide to reporting
on Principle 8.
Mirvac
compliance
√
Page
34
Revised
Recommendations
(3rd edition)
No equivalent
37
37
38
38
37
39
39
39
39
40
40
40
40
40
41
41
41
42
42
42
42
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
3.1
1.5
1.5
1.5
No equivalent
4.1
4.1
4.1
No equivalent
5.1
No equivalent
6.1-6.4
No equivalent
7.1
7.2
4.2
No equivalent
8.1
8.1
8.2
No equivalent
43
MIRVAC GROUP ANNUAL REPORT 2014 These financial statements cover
the financial statements for the
consolidated entity consisting of
Mirvac Limited and its controlled
entities. The financial statements
are presented in Australian currency.
Mirvac Limited is a company
limited by shares, incorporated
and domiciled in Australia.
Its registered office and
principal place of business are:
Mirvac Limited
Level 26
60 Margaret Street
Sydney NSW 2000.
A description of the nature of the
consolidated entity’s operations and
its principal activities is included
in the Directors’ report on pages
01 to 31, both of which are not part
of these financial statements.
The financial statements were
authorised for issue by the Directors
on 21 August 2014. The Directors
have the power to amend and
reissue the financial statements.
Through the use of the internet,
Mirvac has ensured that its
corporate reporting is timely
and complete. All press releases,
financial reports and other
information are available in the
Investor Relations section on the
Group’s website: www.mirvac.com.
45 Consolidated statement of comprehensive income
46 Consolidated statement of financial position
47
Consolidated statement of changes in equity
48 Consolidated statement of cash flows
49 Notes to the consolidated financial statements
Summary of significant accounting policies
Critical accounting judgements and estimates
Segmental information
Revenue from continuing operations and other income
Expenses
Income tax
EPS
Receivables
Derivative financial instruments
Inventories
Other financial assets at fair value through profit or loss
Other assets
Assets classified as held for sale and discontinued operations
Investments in JVA entities
Other financial assets
Investment properties
PPE
Intangible assets
Payables
Borrowings
Provisions
Other liabilities
Contributed equity
Reserves
Retained earnings
Dividends/distributions
Controlled entities and deed of cross guarantee
Contingent liabilities
Commitments
Employee benefits
Related parties
Financial risk management
Fair value measurement of financial instruments
Remuneration of auditors
Notes to the consolidated statement of cash flows
Events occurring after the end of the year
Parent entity financial information
1
49
2
58
60
3
65 4
65
5
66 6
7
68
69 8
9
70
10
71
11
71
12
72
13
72
14
73
15
80
16
81
17
84
18
85
19
86
20
86
21
88
22
88
23
88
24
89
25
91
26
91
27
91
28
98
29
98
30
99
101
31
102 32
107 33
109 34
109 35
109 36
37
110
Directors’ declaration
Independent auditor’s report to the members of Mirvac Limited
111
112
44
MIRVAC GROUP ANNUAL REPORT 2014Financial statements
Consolidated statement of comprehensive income
For the year ended 30 June 2014
Revenue from continuing operations
Investment properties rental revenue
Investment management fee revenue
Development and construction revenue
Development management fee revenue
Interest revenue
Dividend and distribution revenue
Other revenue
Total revenue from continuing operations
Other income
Net gain on fair value of investment properties 1
Share of net profit of JVA accounted for using the equity method
Gain on financial instruments
Foreign exchange gain
Net gain on sale of property, plant and equipment (“PPE”)
Total other income
Total revenue from continuing operations and other income
Net loss on fair value of IPUC
Net loss on sale of investments
Net loss on sale of investment properties
Net loss on sale of PPE
Foreign exchange loss
Investment properties expenses
Cost of property development and construction
Employee benefits expenses
Depreciation and amortisation expenses
Impairment of goodwill
Impairment of loans, investments and inventories
Finance costs
Loss on financial instruments
Selling and marketing expenses
Other expenses
Profit from continuing operations before income tax
Income tax (expense)/benefit
Profit from continuing operations
Profit from discontinued operations (net of tax)
Profit for the year
Note
16
4
16
14
4
16
16
5
5
5
5
5
6
2014
$m
650.9
13.0
1,157.6
15.9
22.2
0.5
7.9
2013
$m
583.1
9.1
822.8
25.3
18.8
0.9
9.7
1,868.0
1,469.7
56.5
46.9
3.0
7.5
—
113.9
54.0
12.4
33.0
—
0.1
99.5
1,981.9
1,569.2
7.7
—
6.0
0.2
—
159.2
940.7
105.1
29.6
24.5
(1.2)
144.8
26.3
31.0
47.3
460.7
(13.4)
447.3
—
447.3
3.6
1.0
2.7
—
45.4
136.6
703.7
96.9
31.3
—
273.2
87.1
—
21.9
51.0
114.8
23.7
138.5
1.4
139.9
Other comprehensive income for the year
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations, net of tax
24(b)
3.5
7.2
Items that will not be reclassified to profit or loss
(Decrement)/Increment on revaluation of OOP
Deferred tax on SBP transactions
Other comprehensive income for the year
Total comprehensive income for the year
Profit for the year is attributable to the stapled securityholders of Mirvac
Total comprehensive income for the year is attributable to the stapled securityholders of Mirvac
EPS for profit from continuing operations attributable to the stapled securityholders of Mirvac
Basic EPS
Diluted EPS
EPS for profit attributable to the stapled securityholders of Mirvac
Basic EPS
Diluted EPS
The above consolidated SoCI should be read in conjunction with the accompanying notes.
1) FY13 included a revaluation decrement of $1.6m relating to investment properties classified as OOP.
24(b)
24(b)
7
7
7
7
(4.8)
0.4
(0.9)
446.4
447.3
446.4
Cents
12.19
12.17
Cents
12.19
12.17
14.8
0.6
22.6
162.5
139.9
162.5
Cents
4.02
4.01
Cents
4.06
4.05
45
MIRVAC GROUP ANNUAL REPORT 2014
Consolidated statement of financial position
As at 30 June 2014
Current assets
Cash and cash equivalents
Receivables
Derivative financial assets
Inventories
Other financial assets at fair value through profit or loss
Other financial assets
Other assets
Assets classified as held for sale
Total current assets
Non-current assets
Receivables
Inventories
Investments accounted for using the equity method
Derivative financial assets
Other financial assets
Investment properties
PPE
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Payables
Borrowings
Derivative financial liabilities
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Payables
Borrowings
Derivative financial liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Equity, reserves and retained earnings attributable to the stapled securityholders of Mirvac
Note
35
8
9
10
11
15
12
13
8
10
14
9
15
16
17
18
6
19
20
9
21
22
19
20
9
6
21
23
24
25
2014
$m
97.8
98.7
15.7
598.1
11.8
52.0
22.7
821.0
1,717.8
60.5
859.1
537.6
11.3
79.4
6,016.4
248.7
39.0
351.9
8,203.9
9,921.7
505.1
202.9
13.0
178.2
0.2
899.4
85.0
2,514.7
98.7
144.3
3.5
2,846.2
3,745.6
6,176.1
6,796.8
76.9
(697.6)
6,176.1
2013
$m
126.4
93.7
—
559.9
12.6
—
17.5
81.3
891.4
120.3
903.3
379.9
11.6
187.1
6,029.6
317.8
65.7
339.7
8,355.0
9,246.4
549.9
175.1
13.4
172.3
0.3
911.0
148.9
1,992.1
60.4
119.6
3.6
2,324.6
3,235.6
6,010.8
6,745.3
79.8
(814.3)
6,010.8
The above consolidated statement of financial position (“SoFP”) should be read in conjunction with the accompanying notes.
46
MIRVAC GROUP ANNUAL REPORT 2014
Attributable to stapled securityholders of Mirvac
Retained
earnings
$m
Contributed
equity
$m
Reserves
$m
Total
$m
Consolidated statement of changes in equity
For the year ended 30 June 2014
Note
Balance 30 June 2012
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
EEP securities issued
LTIP, LTI and EIS securities converted, sold, vested or forfeited
Contributions of equity, net of transaction costs
SBP transactions
Security based compensation
Dividends/distributions provided for or paid
Transfers (out)/in
23
23
23
24
25
25
25
Total transactions with owners in their capacity as owners
Balance 30 June 2013
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
EEP securities issued
LTIP, LTI and EIS securities converted, sold, vested or forfeited
DRP securities issued
Contributed equity raising costs
SBP transactions
Security based compensation
Dividends/distributions provided for or paid
Transfers due to deconsolidation of entity
Transfers (out)/in
23
23
23
23
24
25
25
25
25
Total transactions with owners in their capacity as owners
6,334.7
—
—
—
0.7
13.4
396.5
—
—
—
—
410.6
6,745.3
—
—
—
0.7
5.3
46.0
(0.5)
—
—
—
—
—
51.5
64.2
—
22.6
22.6
—
—
—
(6.9)
—
—
(0.1)
(7.0)
79.8
—
(0.9)
(0.9)
—
—
—
—
4.4
—
—
(3.2)
(3.2)
(2.0)
76.9
(644.2)
5,754.7
139.9
—
139.9
—
—
—
—
(1.3)
(308.8)
0.1
(310.0)
(814.3)
447.3
—
447.3
—
—
—
—
—
(1.5)
(331.1)
(1.2)
3.2
139.9
22.6
162.5
0.7
13.4
396.5
(6.9)
(1.3)
(308.8)
—
93.6
6,010.8
447.3
(0.9)
446.4
0.7
5.3
46.0
(0.5)
4.4
(1.5)
(331.1)
(4.4)
—
(330.6)
(697.6)
(281.1)
6,176.1
Balance 30 June 2014
6,796.8
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
47
MIRVAC GROUP ANNUAL REPORT 2014
Note
2014
$m
2013
$m
1,845.4
(1,325.5)
1,810.2
(1,326.5)
35(b)
23
23
519.9
18.1
17.6
0.5
(156.8)
399.3
(3.7)
0.1
(850.0)
226.5
—
(14.7)
8.0
(86.9)
12.9
—
—
(707.8)
2,717.2
(2,156.6)
—
(0.5)
(280.2)
279.9
(28.6)
126.4
—
97.8
483.7
14.0
23.6
0.9
(136.3)
385.9
(3.6)
0.1
(711.2)
139.7
0.1
(42.9)
8.8
(151.2)
15.7
6.5
15.0
(723.0)
2,932.1
(2,716.6)
403.7
(7.2)
(225.9)
386.1
49.0
77.3
0.1
126.4
Consolidated statement of cash flows
For the year ended 30 June 2014
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax (“GST”))
Payments to suppliers and employees (inclusive of GST)
Interest received
Dividends/distributions received from JVA
Dividends/distributions received
Borrowing costs paid
Net cash inflows from operating activities
Cash flows from investing activities
Payments for PPE
Proceeds from sale of PPE
Payments for investment properties
Proceeds from sale of investment properties and assets held for sale
Proceeds from loans to related entities
Payments for loans to unrelated entities
Proceeds from loans to unrelated entities
Contributions to JVA
Proceeds from JVA
Proceeds from sale of investments
Proceeds from sale of assets classified as held for sale
(sale of hotel management business and related assets)
Net cash outflows from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Proceeds from issue of stapled securities
Contributed equity raising costs
Dividends/distributions paid
Net cash inflows from financing activities
Net (decrease)/increase 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
35(a)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
48
MIRVAC GROUP ANNUAL REPORT 2014
Notes to the consolidated financial statements
1 Summary of significant accounting policies
This note provides a list of all significant accounting policies
adopted in the preparation of these consolidated financial
statements. These policies have been consistently applied to
all the years presented, unless otherwise stated. The financial
statements of Mirvac consist of the consolidated financial
statements of Mirvac Limited and its controlled entities
including MPT and its controlled entities.
a) Mirvac – stapled securities
A Mirvac stapled security comprises one Mirvac Limited share
“stapled” to one MPT unit to create a single listed security
traded on the ASX. The stapled securities cannot be traded
or dealt with separately. With the establishment of the Group
and its common investors, Mirvac Limited and Mirvac Funds
Limited (as responsible entity for MPT) have common directors
and operate as Mirvac with two core divisions: Investment and
Development. The entities forming the stapled group entered
into a Deed of Cooperation. This Deed of Cooperation allows
that members of the stapled group, where permitted by law, will
carry out activities with other members on a cost recovery basis,
thereby maintaining the best interests of Mirvac as a whole.
The two Mirvac entities comprising the stapled group, remain
separate legal entities in accordance with the Corporations Act
2001, and are each required to comply with the reporting and
disclosure requirements of AAS and the Corporations Act 2001.
In accordance with AAS, Mirvac Limited has been deemed the
parent entity of MPT. The stapled security structure will cease
to operate on the first to occur of:
— Mirvac Limited or MPT resolving by special resolution in
general meeting and in accordance with its Constitution
to terminate the stapling provisions; or
— the commencement of the winding up of Mirvac Limited or MPT.
The ASX reserves the right (but without limiting its absolute
discretion) to remove one or more entities with stapled
securities from the official list if any of their securities cease to
be stapled together, or any equity securities of the same class
are issued by one entity which are not stapled to equivalent
securities in the other entity or entities.
b) Basis of preparation
These general purpose financial statements have been prepared
in accordance with AAS, other authoritative pronouncements
of the Australian Accounting Standards Board (“AASB”), Urgent
Issues Group Interpretations and the Corporations Act 2001.
Mirvac is a for-profit entity for the purpose of preparing the
financial statements.
i) Compliance with International Financial Reporting
Standards (“IFRS”)
iii) Critical accounting estimates
The preparation of financial statements in conformity with AAS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process
of applying Mirvac’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements, are disclosed in note 2.
iv) Comparative information
Where necessary, comparative information has been reclassified
to achieve consistency in disclosure with current year amounts
and other disclosures.
v) Rounding of amounts
Mirvac is an entity of the kind referred to in Class Order 98/0100
issued by ASIC, relating to the “rounding off” of amounts in the
financial statements. Amounts in the financial statements have
been rounded off to the nearest tenth of a million dollars in
accordance with that class order.
vi) GST
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case, it is
recognised as part of the cost of acquisition of the asset or
as part of the expense. Receivables and payables are stated
inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the taxation
authority is included with other receivables or payables in the
consolidated SoFP. Cash flows are presented on a gross basis.
The GST components of cash flows arising from investing or
financing activities which are recoverable from or payable to
the taxation authority, are presented as operating cash flow.
vii) New and amended standards adopted by the Group
The Group has applied the following standards and amendments
for first time from 1 July 2013:
— AASB 10 Consolidated Financial Statements, AASB 11 Joint
Arrangements, AASB 12 Disclosure of Interests in Other
Entities, AASB 128 Investments in Associates and Joint
Ventures, AASB 127 Separate Financial Statements and AASB
2011-7 Amendments to Australian Accounting Standards arising
from the Consolidation and Joint Arrangements Standards;
— AASB 2012-10 Amendments to Australian Accounting Standards
— Transition Guidance and Other Amendments which provides
an exemption from the requirement to disclose the impact
of the change in accounting policy on the current period;
— AASB 13 Fair Value Measurement and AASB 2011-8
Amendments to Australian Accounting Standards arising
from AASB 13;
The consolidated financial statements of the Group also comply
with IFRS as issued by the International Accounting Standards
Board (“IASB”).
— AASB 119 Employee Benefits (September 2011) and AASB
2011-10 Amendments to Australian Accounting Standards
arising from AASB 119 (September 2011);
ii) Historical cost convention
The financial statements have been prepared on an historical
cost basis, except for the following:
— available-for-sale financial assets, financial assets and
liabilities (including derivative instruments) at fair value
through profit or loss, certain classes of PPE and investment
properties; and
— assets held for sale — measured at fair value less cost of disposal.
— AASB 2012-5 Amendments to Australian Accounting Standards
arising from Annual Improvements 2009-2011 Cycle;
— AASB 2012-2 Amendments to Australian Accounting
Standards — Disclosures — Offsetting Financial Assets and
Financial Liabilities; and
— AASB 2011-4 Amendments to Australian Accounting Standards
to Remove Individual Key Management Personnel Disclosure
Requirements from AASB 124 Related Party Disclosures.
The adoption of AASB 13 resulted in a change in accounting
policy and adjustment to the amounts recognised in the
financial statements. This is explained and summarised in note
1(dd)(iii) below. The other standards only affected the disclosures
in the notes to the financial statements.
49
MIRVAC GROUP ANNUAL REPORT 2014 1
Summary of significant accounting policies /
continued
c) Principles of consolidation
i) Controlled entities
Controlled entities are all entities (including structured entities)
over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the
activities of the entity. Controlled entities are fully consolidated
from the date on which control is transferred to Mirvac. They
are deconsolidated from the date that control ceases. The
acquisition method of accounting is used to account for the
business combinations undertaken by Mirvac (refer to note
1(i)). Inter-company transactions and balances between Mirvac
entities are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of controlled entities
have been changed where necessary to ensure consistency with
the policies adopted by the Group. Non-controlling interests
(“NCI”) in the results and equity of controlled entities are shown
separately in the consolidated SoCI, consolidated SoFP and
consolidated Statement of Changes in Equity.
ii) Associates
Associates are all entities over which Mirvac has significant
influence but not control or joint control, generally
accompanying a holding of between 20 per cent and 50 per cent
of the voting rights. Investments in associates are accounted
for in the consolidated financial statements using the equity
method of accounting (see (iv) below), after initially being
recognised at cost.
iii) Joint arrangements
Under AASB 11 Joint Arrangements, investments in joint
arrangements are classified as either joint operations or joint
ventures. The classification depends on the contractual rights
and obligations of each investor, rather than the legal structure
of the joint arrangement. Mirvac has assessed the nature of
its joint arrangements and determined that it only has joint
ventures. Interests in joint ventures are accounted for using the
equity method (see (iv) below), after initially being recognised at
cost in the consolidated SoFP.
iv) Equity method
Under the equity method of accounting, the investments
are initially recognised at cost and adjusted thereafter to
recognise the Group’s share of the post-acquisition profits or
losses of the investee in profit or loss, and the Group’s share of
movements in other comprehensive income of the investee in
other comprehensive income. Dividends received or receivable
from JVA are recognised as a reduction in the carrying amount
of the investment. When Mirvac’s share of losses in an equity
accounted investment equals or exceeds its interest in the
entity, including any other unsecured receivables, Mirvac does
not recognise further losses, unless it has incurred obligations
or made payments on behalf of the other entity.
Unrealised gains on transactions between Mirvac and its JVA
are eliminated to the extent of Mirvac’s interest in these entities.
Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred.
Accounting policies of equity accounted investees have been
changed where necessary to ensure consistency with the
policies adopted by Mirvac.
The Group treats transactions with NCI that do not result in a
loss of control as transactions with equity owners of the Group.
A change in ownership interest results in an adjustment between
the carrying amounts of the controlling and NCI to reflect their
relative interests in the controlled entity. Any difference between
the amount of the adjustment to NCI and any consideration paid
or received is recognised in a separate reserve within equity
attributable to the stapled securityholders of Mirvac.
50
v) Changes in ownership interests
When the Group ceases to have control, joint control or
significant influence, any retained interest in the entity is
remeasured to its fair value with the change in carrying amount
recognised in profit or loss. The fair value is the initial carrying
amount for the purpose of subsequently accounting for the
retained interest as an associate, joint venture or financial
asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted
for as if Mirvac had directly disposed of the related assets or
liabilities. This may mean that amounts previously recognised
in other comprehensive income are reclassified to profit or
loss. If the ownership interest in an associate or joint venture is
reduced but joint control or significant influence is retained, only
a proportionate share of the amounts previously recognised in
other comprehensive income are reclassified to profit or loss
where appropriate.
vi) Structured entities
A structured entity is an entity that has been designed so that
voting or similar rights are not the dominant factor in deciding
who controls the entity. Mirvac considers that all funds and
trusts in which it currently has an investment, or from which it
currently earns income, to be structured entities. Depending
on the Group’s power over the activities of the entity and its
exposure to and ability to influence its own returns, it may
consolidate the entity. In other cases, it may sponsor or have
exposure to such an entity but not consolidate it.
Certain wholly-owned companies incorporated in Australia are
permitted to be parties to a deed of cross guarantee. Refer to
note 27 for further details of which wholly owned companies
are subject to the deed of cross guarantee. For those entities
which are consolidated and which are not party to a deed of
cross guarantee, Mirvac Limited does not have a contractual
obligation to provide financial support.
Mirvac invests in a number of funds and trusts. These
investments are open-end and closed-end investment funds and
trusts which invest in industrial and infrastructure real estate for
the purpose of capital appreciation and/or to earn investment
income. The investees finance their operations through
borrowings and through equity issues. Material unconsolidated
structured entities include the following:
— Mirvac Industrial Trust;
— JF Infrastructure Yield Fund; and
— ASFI.
d) Segment reporting
Operating segments are reported in a manner consistent with
the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible
for allocating resources and assessing performance of the
operating segments, has been identified as the ELT.
e) Foreign currency translation
i) Functional and presentation currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (“functional
currency”). The consolidated financial statements are presented
in Australian currency, which is Mirvac Limited’s functional and
presentation currency.
ii) Transactions and balances
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 year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or
loss, except when deferred in equity as qualifying cash flow
hedges and qualifying net investment hedges or they are
attributable to part of the net investment in a foreign operation.
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements 1
Summary of significant accounting policies /
continued
Foreign exchange gains and losses that relate to borrowings
are presented in the consolidated SoCI, within finance costs.
All other foreign exchange gains and losses are presented in the
consolidated SoCI on a net basis within other income or other
expenses. Translation differences on non monetary financial assets
and liabilities held at fair value are reported as part of the fair
value gain or loss using the exchange rate applicable at the date
fair value is determined. Translation differences on non monetary
financial assets and liabilities such as equities held at fair value
through profit or loss are recognised in profit or loss as part of the
fair value gain or loss. Translation differences on non monetary
financial assets such as equities classified as available for sale
financial assets are included in a fair value reserve in equity.
iii) Group companies
The results and financial position of entities (none of which
has the currency of a hyperinflationary economy) that have a
functional currency different from the presentation currency
are translated into the presentation currency as follows:
— assets and liabilities at the end of the reporting period are
translated at the closing rate at the end of the reporting period;
— income and expenses for each consolidated SoCI are
translated at average exchange rates (unless this is not a
reasonable approximation of the cumulative effect of the rate
prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions); and
— all resulting exchange differences are recognised in other
comprehensive income.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges
of such investments, are recognised in other comprehensive
income. When a foreign controlled entity is sold or any borrowings
forming part of the net investment are repaid, a proportionate
share of such exchange differences is reclassified to profit or
loss, as part of the gain or loss on sale where applicable.
Goodwill and fair value adjustments arising on the acquisition of
a foreign entity are treated as assets and liabilities of the foreign
entities and translated at the closing rate.
f) Revenue recognition
Revenue is measured at the fair value of the consideration received
or receivable. Amounts disclosed as revenue are net of returns,
trade allowances and duties and taxes paid. Mirvac recognises
revenue when the amount of revenue can be reliably measured,
it is probable that future economic benefits will flow to the entity
and specific criteria have been met for each of the Group’s
activities as described below. The Group bases its estimates on
historical results, taking into consideration the type of customer,
the type of transaction and the specifics of each arrangement.
Revenue is recognised for the major business activities as follows:
i) Development projects and land sales
Revenue from the sale of development projects and land is
recognised upon settlement, which has been determined to
be when the significant risks and rewards of ownership are
transferred to the purchaser. Other revenue from development
projects such as project management fees is recognised as
services are performed.
ii) Construction contracts
Agreements to develop real estate are only defined as
construction contracts when the purchaser is able to specify the
main elements of the design of the project. Where this is not the
case, the project is treated as a development project. Revenue
and expenses are recognised in accordance with the percentage
of completion method unless the outcome of the contract cannot
be reliably estimated. The stage of completion is determined by
costs incurred to date as a percentage of total expected cost.
Where it is probable that a loss will arise from a construction
contract, the excess of total costs over revenue is recognised as
an expense immediately. When the outcome of a contract cannot
be reliably estimated, contract costs are recognised as an expense
as incurred, and where it is probable that the costs will be
recovered, revenue is recognised to the extent of costs incurred.
iii) Rental income
Rental revenue for operating leases is recognised on a straight
line basis over the term of the lease, except when an alternative
basis is more representative of the pattern of service rendered
through the provision of the leased premises. Lease incentives
offered under operating leases are amortised on a straight line
basis in profit or loss.
iv) Recoverable outgoings
Recovery of outgoings as specified in lease agreements is
accrued on an estimated basis and adjusted when the actual
amounts are invoiced to the respective tenants.
v) Fees
Revenues from the rendering of property funds management,
property advisory and facilities management services are recognised
upon the delivery of the service to the customers or where there is
a signed unconditional contract for the sale or purchase of assets.
vi) Interest
Interest revenue is brought to account when earned, taking into
account the effective yield on the financial asset.
vii) Dividends/distributions
Dividends/distributions are recognised as revenue when the
right to receive payment is established. This applies even if they
are paid out of pre-acquisition profits. However, the investment
may need to be tested for impairment as a consequence.
viii) Government grants
Grants from the government are recognised at their fair value
where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and
recognised in profit or loss over the period necessary to match
them with the costs that they are intended to compensate.
g) Income tax
The income tax expense or benefit for the year is the tax payable
on the current year’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in
deferred tax assets and liabilities attributable to temporary
differences between the tax bases of assets and liabilities and
their carrying amounts in the consolidated financial statements
and to unused tax losses. The current income tax charge is
calculated on the basis of the tax laws enacted or substantively
enacted at the end of the reporting period in the countries
where the controlled entities or JVA generate taxable incomes.
Deferred tax assets and 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. The relevant tax
rates are applied to the cumulative amounts of deductible and
taxable temporary differences to measure the deferred tax
asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or a
liability. No deferred tax asset or liability is recognised in relation
to these temporary differences if they arose in a transaction,
other than a business combination, that at the time of the
transaction did not affect either accounting profit or taxable
profit or 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.
51
MIRVAC GROUP ANNUAL REPORT 2014 1
Summary of significant accounting policies /
continued
Current tax assets and tax liabilities are offset where the entity
has a legally enforceable right to offset and intends either to
settle on a net basis, or to realise the asset and settle the liability
simultaneously. Mirvac and its wholly-owned Australian controlled
entities have implemented the tax consolidation legislation. As a
consequence, these entities are taxed as a single entity and the
deferred tax assets and liabilities of these entities are recorded
in the consolidated financial statements. 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.
i) Investment allowances
Companies within the Group may be entitled to claim special
tax deductions for investments in qualifying assets. The Group
accounts for such allowances as tax credits, which means that
the allowance reduces income tax payable and current tax
expense. A deferred tax asset is recognised for unclaimed tax
credits that are carried forward as deferred tax assets.
h) Leases
Leases of PPE where Mirvac has substantially all the risks and
rewards of ownership are classified as finance leases. Finance
leases are capitalised at the lease’s inception at the lower of the
fair value of the leased property and the present value of the
minimum lease payments. The corresponding rental obligations,
net of finance charges, are included in other short term or long
term payables. Each lease payment is allocated between the
liability and finance costs. The finance costs are charged to the
profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability
for each period. The PPE acquired under finance leases is
depreciated over the shorter of the asset’s useful life and the
lease term if there is no reasonable certainty that the Group
will obtain ownership at the end of the lease term. Leases in
which a significant portion of the risks and rewards of ownership
are retained by the lessor, are classified as operating leases.
Payments made under operating leases (net of any incentives
received from the lessor) are charged to profit or loss on a
straight line basis over the period of the lease. Lease income
from operating leases where the Group is a lessor is recognised
in income on a straight line basis over the lease term. Refer to
note 1(f)(iii).
i) Business combinations
The acquisition method of accounting is used to account
for all business combinations, regardless of whether equity
instruments or other assets are acquired. The consideration
transferred for the acquisition of a controlled entity comprises
the fair values of the assets transferred, the liabilities incurred
and the equity interests issued by the Group. The consideration
transferred also includes the fair value of any contingent
consideration arrangement and the fair value of any pre-existing
equity interest in the controlled entity. Acquisition-related
costs are expensed as incurred. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially at
their fair values at the acquisition date. On an acquisition-by-
acquisition basis, the Group recognises any NCI in the acquiree
either at fair value or at the NCI’s proportionate share of the
acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any
NCI in the acquiree and the acquisition-date fair value of any
previous equity interest in the acquiree over the fair value of the
Group’s share of the net identifiable assets acquired is recorded
as goodwill. If those amounts are less than the fair value of
the net identifiable assets of the controlled entity acquired
and the measurement of all amounts has been reviewed, the
difference is recognised directly in profit or loss as a discount
on business combination. Where settlement of any part of cash
52
consideration is deferred, the amounts payable in the future are
discounted to their present value at the date of exchange. The
discount rate used is the entity’s incremental borrowing rate,
being the rate at which a similar borrowing could be obtained
from an independent financier under comparable terms and
conditions. Contingent consideration is classified either as
equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value, with changes
in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition
date carrying value of the Group’s previously held equity
interest in the controlled entity is remeasured to fair value
at the acquisition date. Any gains or losses arising from such
remeasurement are recognised in profit or loss.
Impairment of assets
j)
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. In assessing value
in use, the estimated future cash flows are discounted to their
present value using the post-tax discount rate that reflects
current market assessments of both the time value of money
and the risk specific to the asset for which the estimates of
future cash flows have not been adjusted. An impairment
loss is recognised for the amount by which the asset’s (or
cash generating unit (“CGU”)) carrying amount exceeds its
recoverable amount. For the purpose of assessing impairment,
assets are grouped at the lowest levels for which there are
separately identifiable cash flows which are largely independent
of the cash inflows from other assets or groups of assets (CGU).
The lowest level at which Mirvac allocates and monitors goodwill
is at the primary reporting segments level (refer to note 3).
k) Cash and cash equivalents
For the purpose of presentation in the consolidated statement
of cash flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, 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, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the consolidated SoFP.
l) Trade receivables
Trade receivables are amounts due from customers for goods
sold or services performed in the ordinary course of business.
If collection of the amounts is expected in one year or less,
they are classified as current assets. If not, they are presented
as non-current assets. Trade receivables are generally due
for settlement within 30 days and therefore are all classified
as current. Trade receivables are recognised initially at fair
value and subsequently measured at amortised cost using
the effective interest method, less provision for impairment.
Collectability of trade receivables is reviewed on an ongoing
basis. Receivables which are known to be uncollectible are
written off by reducing the carrying amount directly. A separate
provision for impairment of trade receivables is established
when there is objective evidence that Mirvac will not be able
to collect all amounts due according to the original terms of
receivables. The Group considers that there is evidence of
impairment if any of the following indicators are present:
— significant financial difficulties of the debtor;
— probability that the debtor will enter bankruptcy or financial
reorganisation; and
— default or delinquency in payments (more than 30 days overdue).
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements 1
Summary of significant accounting policies /
continued
The amount of the provision is the difference between the
asset’s carrying amount, and the present value of estimated
future cash flows discounted at the effective interest rate.
Cash flows relating to short term receivables are not discounted
if the effect of discounting is immaterial. The amount of the
provision is recognised in profit or loss within other expenses.
When a trade receivable for which an impairment provision had
been recognised becomes uncollectible in a subsequent period,
it is written off against the provision account. Subsequent
recoveries of amounts previously written off are credited
against other expenses in profit or loss. See note 1(p) for
information about how impairment losses are calculated.
m) Mezzanine loans
Mezzanine loans are loans to unrelated parties for predominately
real estate property development. These loans are secured
by a second ranking mortgage, behind that of the senior
lender. Mezzanine loans are recognised initially at fair value.
Collectability of loans is reviewed on an ongoing basis and those
which are considered uncollectible are written off to profit or loss.
n) Inventories
Inventories comprise development projects and construction contracts.
i) Development projects
Development projects are valued at the lower of cost and NRV.
Cost includes the costs of acquisition, development, borrowings
and all other costs directly related to specific projects, including
an allocation of direct overhead expenses. Upon completion of
the contract of sale, borrowing costs and other holding charges
are expensed as incurred. Profits on development projects are
not brought to account until settlement of the contract of sale.
Borrowing costs included in the cost of land are those costs that
would have been avoided if the expenditure on the acquisition
and development of the land had not been made. Borrowing
costs incurred while active development is interrupted for
extended periods are recognised as expenses.
ii) Construction contracts
Construction work in progress is stated at the aggregate of
contract costs incurred to date plus recognised profits less
recognised losses and progress billings. If there are contracts
where progress billings exceed the aggregate costs incurred
plus profits less losses, the net amounts are presented under
payables. Contract costs include all costs directly related to
specific contracts and costs that are specifically chargeable to the
customer under the terms of the contract. The stage of completion
is measured using the percentage of completion method unless
the outcome of the contract cannot be reliably measured.
o) Non-current assets (or disposal groups) classified
as held for sale
Non-current assets (or disposal groups) 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, financial
assets and investment properties that are carried at fair value.
An impairment loss is recognised for any initial or subsequent
write-down of the asset (or disposal group) to fair value less
costs to sell. A gain is recognised for any subsequent increases
in fair value less costs to sell of an asset (or disposal group),
but not in excess of any cumulative impairment loss previously
recognised. A gain or loss not previously recognised by the
date of the sale of the non-current asset (or disposal group) is
recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal
group) are not depreciated or amortised while they are classified
as held for sale. Interest and other expenses attributable to the
liabilities of a disposal group classified as held for sale continue
to be recognised. Non-current assets classified as held for sale
and the assets of a disposal group classified as held for sale
are presented separately from other assets in the consolidated
SoFP. The liabilities of a disposal group classified as held for
sale are presented separately from other liabilities in the
consolidated SoFP.
A disposal group 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 a
disposal group are shown as discontinued operations and are
presented separately in the consolidated SoCI. The comparatives
in the consolidated SoCI are restated to include the profit or loss
of the disposal group in discontinued operations.
p) Investments and other financial assets
i) Classification
Mirvac classifies its financial assets in the following categories:
financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments and available-for-sale
financial assets. The classification depends on the purpose for
which the investments were acquired. Management determines
the classification of its investments at initial recognition and, in
the case of assets classified as held-to-maturity, re-evaluates
this designation at the end of each reporting period.
— Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included
in the category “financial assets at fair value through profit
or loss”. Financial assets are classified as held for trading if
they are acquired for the purpose of selling in the near term.
Derivatives are also categorised as held for trading unless they
are designated as hedges. Assets in this category are classified
as current assets if they are expected to be settled within
12 months; otherwise, they are classified as non-current.
— Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an
active market. They arise when Mirvac provides money, goods
or services directly to a debtor with no intention of selling
the receivable. They are included in current assets, except for
those with maturities greater than 12 months after the end
of the reporting period which are classified as non-current
assets. Loans and receivables are included in receivables in
the consolidated SoFP, except where the amount relates to the
funding of investment structures, which are disclosed separately.
— Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets
with fixed or determinable payments and fixed maturities that
Mirvac’s management has the positive intention and ability
to hold to maturity. If the Group were to sell other than an
insignificant amount of held-to-maturity financial assets, the
whole category would be tainted and reclassified as available
for sale. Held-to-maturity financial assets are included in non-
current assets, except for those maturities less than 12 months
from the end of the reporting period, which are classified as
current assets.
— Available-for-sale financial assets
Available-for-sale financial assets, comprising principally
marketable equity securities, are non-derivatives that are either
designated in this category or not classified in any of the other
categories. They are included in non-current assets unless the
investment matures or management intends to dispose of the
investment within 12 months of the end of the reporting period.
Investments are designated as available for sale if they do not
have fixed maturities and fixed or determinable payments and
management intends to hold them for the medium to long term.
53
MIRVAC GROUP ANNUAL REPORT 2014 1
Summary of significant accounting policies /
continued
ii) Reclassification
The Group may choose to reclassify a non-derivative trading
financial asset out of the held-for-trading category if the
financial asset is no longer held for the purpose of selling it in
the near term. Financial assets other than loans and receivables
are permitted to be reclassified out of the held-for-trading
category only in rare circumstances arising from a single
event that is unusual and highly unlikely to recur in the near
term. In addition, the Group may choose to reclassify financial
assets that would meet the definition of loans and receivables
out of the held-for-trading or available-for-sale categories if
the Group has the intention and ability to hold these financial
assets for the foreseeable future or until maturity at the date
of reclassification. Reclassifications are made at fair value as
of the reclassification date. Fair value becomes the new cost
or amortised cost as applicable, and no reversals of fair value
gains or losses recorded before the reclassification date are
subsequently made. Effective interest rates for financial assets
reclassified to loans and receivables and held-to-maturity
categories are determined at the reclassification date. Further
increases in estimates of cash flows adjust effective interest
rates prospectively.
iii) Recognition and derecognition
Regular way purchases and sales of investments are recognised
on trade date, being the date on which Mirvac commits to
purchase or sell the asset. Financial assets are derecognised
when the rights to receive cash flows from the financial
assets have expired or have been transferred and Mirvac has
transferred substantially all the risks and rewards of ownership.
When securities classified as available for sale are sold, the
accumulated fair value adjustments recognised in other
comprehensive income are reclassified to profit or loss as gains
and losses from investment securities.
iv) Measurement
At initial recognition, the Group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at fair value through profit
or loss are expensed in profit or loss. Loans and receivables
and held-to-maturity investments are subsequently carried at
amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at fair
value through profit or loss are subsequently carried at fair
value. Gains or losses arising from changes in the fair value
of the “financial assets at fair value through profit or loss”
category are presented in profit or loss within other income
or other expenses in the period in which they arise. Dividend
income from financial assets at fair value through profit or
loss is recognised in profit or loss as part of revenue from
continuing operations when the Group’s right to receive
payments is established. Interest income from these financial
assets is included in the net gain/(loss). Changes in the fair
value of monetary securities denominated in a foreign currency
and classified as available for sale are analysed between
translation differences resulting from changes in amortised
cost of the security and other changes in the carrying amount
of the security. The translation differences related to changes
in the amortised cost are recognised in profit or loss, and
other changes in carrying amount are recognised in other
comprehensive income. Changes in the fair value of other
monetary and non-monetary securities classified as available
for sale are recognised in other comprehensive income. Details
on how the fair value of financial instruments is determined are
disclosed in note 2(b)(viii).
54
v) Impairment
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or group of financial
assets is impaired and impairment losses are incurred only if
there is objective evidence of impairment as a result of one or
more events that occurred after the initial recognition of the
asset (“loss event”) and that loss event (or events) has an impact
on the estimated future cash flows of the financial asset or group
of financial assets that can be reliably estimated. In the case of
equity investments classified as available for sale, a significant
or prolonged decline in the fair value of the security below its
cost is considered an indicator that the assets are impaired.
— Assets carried at amortised cost
For loans and receivables, the amount of the loss is measured
as the difference between the asset’s carrying amount, and
the present value of estimated future cash flows (excluding
future credit losses that have not been incurred) discounted
at the financial asset’s original effective interest rate. The
carrying amount of the asset is reduced and the amount of the
loss is recognised in profit or loss. If a loan or held-to-maturity
investment has a variable interest rate, the discount rate for
measuring any impairment loss is the current effective interest
rate determined under the contract. As a practical expedient, the
Group may measure impairment on the basis of an instrument’s
fair value using an observable market price. If, in a subsequent
period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after
the impairment was recognised (such as an improvement in the
debtor’s credit rating), the reversal of the previously recognised
impairment loss is recognised in profit or loss. Impairment
testing of trade receivables is described in note 1(l).
— Assets classified as available-for-sale
If there is objective evidence of impairment for available-
for-sale financial assets, the cumulative loss – measured as
the difference between the acquisition cost and the current
fair value, less any impairment loss on that financial asset
previously recognised in profit or loss – is removed from
equity and recognised in profit or loss. Impairment losses on
equity instruments that were recognised in profit or loss are
not reversed through profit or loss in a subsequent period. If
the fair value of a debt instrument classified as available for
sale increases in a subsequent period and the increase can be
objectively related to an event occurring after the impairment
loss was recognised in profit or loss, the impairment loss is
reversed through profit or loss.
q) Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting
period. The method of recognising the resulting gain or loss
depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged.
Mirvac designates certain derivatives as either (1) hedges of the
fair value of recognised assets, liabilities or firm commitments
(“fair value hedges”); or (2) hedges of highly probable forecast
transactions (“cash flow hedges”). Mirvac documents at
the inception of the transaction the relationship between
hedging instruments and hedged items, as well as its risk
management objective and strategy for undertaking various
hedge transactions. Mirvac also documents its assessment, both
at hedge inception and on an ongoing basis, of whether the
derivatives that are used in hedging transactions have been and
will continue to be highly effective in offsetting changes in fair
values or cash flows of hedged items. The fair values of various
derivative financial instruments used for hedging purposes are
disclosed in note 33. The full fair value of a hedging derivative is
classified as a non-current asset or liability when the remaining
maturity of the hedged item is more than 12 months; it is
classified as a current asset or liability when the remaining
maturity of the hedged item is less than 12 months.
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements 1
Summary of significant accounting policies /
continued
i) Fair value hedges
Changes in the fair value of derivatives that are designated
and qualify as fair value hedges are recorded in profit or loss,
together with any changes in the fair value of the hedged asset
or liability that are attributable to the hedged risk. The gain
or loss relating to the effective portion of interest rate swaps
hedging fixed rate borrowings is recognised in profit or loss
within finance costs, together with changes in the fair value
of the hedged fixed rate borrowings attributable to interest
rate risk. The gain or loss relating to the ineffective portion
is recognised in profit or loss within other income or other
expenses. If the hedge no longer meets the criteria for hedge
accounting, the adjustment to the carrying amount of a hedged
item for which the effective interest method is used is amortised
to profit or loss over the period to maturity using a recalculated
effective interest rate.
ii) Cash flow hedges
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges is
recognised in other comprehensive income and accumulated
in reserves in equity. The gain or loss relating to the ineffective
portion is recognised immediately in profit or loss. Amounts
accumulated in equity are reclassified to profit or loss in the
periods when the hedged item will affect profit or loss (for
instance, when the forecast sale that is hedged takes place).
However, when the forecast transaction that is hedged results
in the recognition of a non-financial asset (for example,
inventories) or a non-financial liability, the gains and losses
previously deferred in equity are transferred from equity and
included in the measurement of the initial cost or carrying
amount of the asset or liability. When a hedging instrument
expires or is sold or terminated, or when a hedge no longer
meets the criteria for hedge accounting, any cumulative gain
or loss existing in equity at that time remains in equity and
is recognised when the forecast transaction is ultimately
recognised in profit or loss. When a forecast transaction is no
longer expected to occur, the cumulative gain or loss that was
reported in equity is immediately transferred to profit or loss.
iii) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge
accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting are
recognised immediately in profit or loss.
r) PPE
PPE comprises land and buildings, plant and equipment
and OOP. Increases in the carrying amounts arising on the
revaluation of certain classes of PPE are credited, net of tax,
in other comprehensive income and accumulated in reserves
in equity. To the extent that the increase reverses a decrease
previously recognised in profit or loss, the increase is first
recognised in profit or loss. Decreases that reverse previous
increases of the same asset are first recognised in other
comprehensive income to the extent of the remaining surplus
attributable to the asset; all other decreases are charged to
profit or loss. Each year, the difference between depreciation
based on the revalued carrying amount of the asset charged to
profit or loss and depreciation based on the asset’s original cost,
net of tax, is reclassified from the PPE revaluation surplus to
retained earnings.
i) Plant and equipment
Plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
ii) OOP
Properties are classified as owner-occupied where Mirvac
occupies more than 10 per cent of the total lettable area of the
individual property. OOP are shown at fair value, less subsequent
depreciation for buildings. Fair values are determined by
external valuers on a rotation basis with one-half of the portfolio
being valued annually. Those assets which are not subject
to an external valuation at the end of the reporting period
are fair valued internally by management. Any accumulated
depreciation at the date of revaluation is eliminated against
the gross carrying amount of the asset and the net amount
is revalued to fair value.
Land is not depreciated. Depreciation on other assets is
calculated using the straight line method to allocate their cost
or revalued amounts, net of their residual values, over their
estimated useful lives, as follows:
— buildings
— plant and equipment
— office leasehold improvements
40 years
3-15 years
1-10 years.
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount (refer to note 1(j)). Gains
and losses on disposals are determined by comparing proceeds
with carrying amount. These are included in profit or loss on a
net basis when the risks and rewards pass to the purchaser.
s) Investment properties
i) Investment properties
Investment properties are properties held for long term rental
yields and for capital appreciation. Investment properties are
carried at fair value with any gain or loss arising from a change
in fair value recognised in the consolidated SoCI. The carrying
amount of the investment properties recorded in the consolidated
SoFP includes components relating to lease incentives.
Investment properties also include properties that are under
construction for future use as investment properties. These
are carried at fair value unless the fair value cannot yet be
reliably determined. Where that is the case, the property will
be accounted for at cost until either the fair value becomes
reliably determinable or construction is complete. The fair value
of IPUC is determined by using estimation models including
residual valuations. The estimated value of future assets is
based on the expected future income from the project, using
current yields of similar completed properties. The remaining
expected costs of completion plus risk adjusted development
margin are deducted from the estimated future asset value.
ii) Investment properties under redevelopment
Existing investment properties being redeveloped for continued
future use are carried at fair value.
iii) Lease incentives
Lease incentives provided under an operating lease by
the Group as lessor are recognised on a straight line basis
against rental income. As these incentives are repaid out of
future lease payments, they are recognised as an asset in the
consolidated SoFP as a component of the carrying amount of
investment properties and amortised over the lease period.
Where the investment property is supported by a valuation
that incorporates the value of lease incentives, the investment
property is revalued back to the valuation amount after the
lease incentive amortisation has been charged as an expense.
55
MIRVAC GROUP ANNUAL REPORT 2014 1
Summary of significant accounting policies /
continued
t) Intangible assets
i) Goodwill
Goodwill represents the excess of the cost of an acquisition over
the fair value of Mirvac’s share of the net identifiable assets of
the acquired controlled entity or JVA at the date of acquisition.
Goodwill on acquisition of controlled entities is included in
intangible assets. Goodwill on acquisition of JVA is included in
investments in JVA respectively. Goodwill acquired in business
combinations is not amortised. Instead, goodwill is tested for
impairment annually or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried
at cost less accumulated impairment losses. Gains and losses on
the disposal of an entity include the carrying amount of goodwill
relating to the entity sold. Goodwill is allocated to CGU for the
purpose of impairment testing. The allocation is made to those
CGUs or groups of CGU that are expected to benefit from the
business combination in which the goodwill arose, identified
according to operating segments (refer to note 3).
ii) Management rights
Management rights which have an indefinite useful life are not
amortised but tested annually for impairment.
u) Trade and other payables
These amounts represent liabilities for goods and services
provided to Mirvac prior to the end of the year which are unpaid.
The amounts are unsecured and are usually paid within 30
days of recognition. Trade and other payables are presented as
current liabilities unless payment is not due within 12 months
from the reporting date. They are recognised initially at fair
value and subsequently measured at amortised cost using the
effective interest method.
v) Borrowings and borrowing costs
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the
borrowings using the effective interest method. Fees paid on the
establishment of loan facilities, which are not an incremental cost
relating to the actual drawdown of the facility, are recognised
as prepayments and amortised on a straight line basis over
the term of the facility. Borrowings are removed from the
consolidated SoFP when the obligation specified in the contract
is discharged, cancelled or expired. Borrowings are classified
as current liabilities unless Mirvac has an unconditional right to
defer settlement of the liability for at least 12 months after the
end of the reporting period. Borrowing costs incurred for the
construction of any qualifying asset are capitalised during the
period of time that is required to complete and prepare the asset
for its intended use or sale. Other borrowing costs are expensed.
w) Employee benefits
i) Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary
benefits, and annual leave expected to be settled within
12 months of the end of the reporting period in which the
employees render the related service, are recognised in other
creditors and accruals in respect of employees’ services up
to the end of the reporting period and are measured at the
amounts expected to be paid when the liabilities are settled.
Liabilities for accumulating sick leave are recognised when the
leave is taken and measured at the rates paid or payable.
ii) LSL
The liability for LSL vesting within 12 months of the end of the
reporting period is recognised and is measured in accordance
with (i) above and included in provisions. The liability for LSL
vesting more than 12 months from the end of the reporting
period is recognised and measured as the present value of
expected future payments to be made in respect of services
56
provided by employees up to the end of each reporting period
using the projected unit credit method. Consideration is given to
expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments
are discounted using interest rates attaching, at the end of the
reporting period, to national government guaranteed securities
with terms to maturity that match, as closely as possible, the
estimated future cash flows.
iii) SBP
SBP are recognised for the following plans:
— Current LTI
The fair value at grant date is independently determined using
a Monte-Carlo simulation that takes into account the exercise
price, the vesting and performance criteria, the impact of
dilution, the security price at grant date and expected price
volatility of the underlying security, the expected dividend
yield and the risk-free interest rate for the term of the equity
instrument. The fair value is then expensed on a straight line
basis over the vesting period of equity instruments.
— EEP
Security based charges relating to the securities issued under
the EEP are included in profit or loss in the year in which the
securities are granted with a corresponding increase to Mirvac’s
contributed equity.
— Superseded plans
The fair value of equity instruments granted under the
superseded LTI plan and EIS is recognised in employee benefits
expenses with a corresponding increase in equity. The fair value
is measured at grant date and recognised over the vesting period.
iv) STI
STI awards for most employees are made in the form of cash,
while 25 per cent of STI awards for ELT members are paid in
the form of unhurdled rights over Mirvac securities. The vesting
period for 50 per cent of these unhurdled rights is 12 months,
with the balance vesting after 24 months. For the cash position
of STI awards, a liability for STI payable is recognised in accruals
where there is a present obligation to settle the liability and at
least one of the following conditions is met:
— there are formal terms for determining the amount of the benefit;
— the amounts to be paid are determined before the time of
completion of the consolidated financial statements; or
— past practice gives clear evidence of the amount of the obligation.
Liabilities for cash STI awards are expected to be settled within
12 months and are measured at the amounts expected to be
paid when they are settled. The liabilities for the portion of
STI awards paid as deferred rights over Mirvac securities are
measured at the fair value and amortised to security based
expenses over the relevant vesting period.
v) Termination benefits
Termination benefits are payable when employment is
terminated by Mirvac before the normal retirement date, or when
an employee accepts voluntary redundancy in exchange for these
benefits. Mirvac recognises termination benefits at the earlier of
the following dates: (a) when Mirvac can no longer withdraw the
offer of those benefits; and (b) when Mirvac recognises costs for
a restructuring that is within the scope of AASB 137 Provisions,
Contingent Liabilities and Contingent Assets and involves the
payment of terminations benefits. In the case of an offer made
to encourage voluntary redundancy, the termination benefits
are measured based on the number of employees expected to
accept the offer. Benefits falling due more than 12 months after
the end of the reporting period are discounted to present value.
vi) Retirement benefit obligations
Contributions to the defined contribution fund are recognised
as an expense as they become payable. Prepaid contributions
are recognised as an asset to the extent that a cash refund or
a reduction in the future payments is available.
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements 1
Summary of significant accounting policies /
continued
x) Provisions
Provisions for legal claims, contracts and make good
obligations are recognised when the Group has a present
legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle
the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined
by considering the class of obligations as a whole. A provision
is recognised even if the likelihood of an outflow with respect
to any one item included in the same class of obligations may
be small. Provisions are measured at the present value of
management’s best estimate of the expenditure required to
settle the present obligation at the end of the reporting period.
The discount rate used to determine the present value reflects
current market assessments of the time value of money and the
risks specific to the liability. The increase in the provision due to
the passage of time is recognised as interest expense.
y) Contributed equity
Ordinary securities are classified as equity. Incremental costs
directly attributable to the issue of new securities or options are
shown in equity as a deduction, net of tax, from the proceeds.
Incremental costs directly attributable to the issue of new
securities or options, or for the acquisition of a business, are not
included in the cost of the acquisition as part of the purchase
consideration. In accordance with AASB 2 Share-based Payment,
securities issued as part of the LTI plan and EIS are not classified
as ordinary securities, until such time as the employee loans are
fully repaid or the employee leaves Mirvac. If Mirvac reacquires
its own equity instruments (for example, as the result of a
security buy-back), those instruments are deducted from equity
and the associated securities are cancelled. No gain or loss is
recognised in profit or loss and the consideration paid including
any directly attributable incremental costs (net of income taxes)
is recognised directly in equity.
z) Distributions
Provision is made for the amount of any distribution declared
at or before the end of the year but not distributed at the
end of the year.
aa) EPS
i) Basic EPS
Basic EPS is calculated by dividing the profit attributable to
securityholders of the Group by the weighted average number
of ordinary securities outstanding during the year. In calculating
basic EPS, securities issued under the EIS have been excluded
from the weighted average number of securities.
ii) Diluted EPS
Diluted EPS adjusts the figures used in the determination of
basic EPS to take into account the after income tax effect of
interest and other financing costs associated with dilutive
potential ordinary securities (including those securities issued
under the EIS) and the weighted average number of securities
assumed to have been issued for no consideration in relation
to dilutive potential ordinary securities.
bb) Parent entity financial information
The financial information for the parent entity, Mirvac Limited,
disclosed in note 37 has been prepared on the same basis as the
consolidated financial statements, except as set out below:
i) Investments in controlled entities and JVA
Investments in controlled entities and JVA are accounted for
at cost in the financial statements of Mirvac Limited. Dividends/
distributions received from JVA are recognised in the parent
entity’s profit or loss, rather than being deducted from the
carrying amount of these investments.
ii) Tax consolidation legislation
Mirvac Limited and its wholly-owned Australian controlled
entities have implemented the tax consolidation legislation.
The head entity, Mirvac Limited, and the controlled entities in the
tax consolidated group continue to account for their own current
and deferred tax amounts. These tax amounts are measured
as if each entity in the tax consolidated group continues to
be a stand-alone taxpayer in its own right. In addition to its
own current and deferred tax amounts, Mirvac Limited also
recognises the current tax liabilities (or assets) and the deferred
tax assets arising from unused tax losses and unused tax credits
assumed from controlled entities in the tax consolidated group.
Assets or liabilities arising under tax funding agreements
within the tax consolidated group are recognised as amounts
receivable from or payable to other entities in the Group. Details
about the tax funding agreement are disclosed in note 6(d).
Any difference between the amounts assumed and amounts
receivable or payable under the tax funding agreement is
recognised as a contribution to (or distribution from) wholly-
owned tax consolidated entities. Under the current income tax
legislation, MPT is not liable for income tax, provided its taxable
income is fully distributed to unitholders each year.
iii) Financial guarantees
Where the parent entity has provided financial guarantees in
relation to loans and payables of controlled entities or JVA
for no compensation, the fair values of these guarantees are
accounted for as contributions and recognised as part of the
cost of the investment.
cc) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for 30 June 2014 reporting
periods and have not been early adopted by the Group. The
Group’s assessment of the impact of these new standards and
interpretations is set out below:
i) AASB 9 Financial Instruments
This standard addresses the classification, measurement and
derecognition of financial assets and financial liabilities. Since
December 2013, it also sets out new rules for hedge accounting.
The standard only permits the recognition of fair value gains
and losses in other comprehensive income if they relate to
equity investments that are not held for trading. Fair value gains
and losses on available-for-sale debt investments, for example,
will therefore have to be recognised directly in profit or loss. In
the current reporting period, the Group did not recognise any
such gains in other comprehensive income and did not hold any
available-for-sale debt investments.
There will be no impact on the Group’s accounting for financial
liabilities, as the new requirements only affect the accounting
for financial liabilities that are designated at fair value through
profit or loss and the Group does not have any such liabilities.
The Group has not yet decided when to adopt AASB 9. There
will be no impact on the Group’s accounting for financial assets
as they are all currently recognised in the consolidated SoCI.
This standard must be applied for financial years commencing
on or after 1 January 2017.
There are no other standards and interpretations that are not
yet effective and that are expected to have a material impact
on the entity in the current or future reporting periods and on
foreseeable future transactions.
dd) Changes in accounting policies
As explained in note 1(b)(vii) above, the Group has adopted a
number of new or revised accounting standards this year that
have resulted in changes in accounting policies and adjustments
to the amounts recognised in the financial statements.
57
MIRVAC GROUP ANNUAL REPORT 2014 1
Summary of significant accounting policies /
continued
i) Consolidated financial statements and joint arrangements
AASB 10 Consolidated Financial Statements was issued
in August 2011 and replaces the guidance on control and
consolidation in AASB 127 Consolidated and Separate Financial
Statements and in Interpretation 112 Consolidation – Special
Purpose Entities. The Group has reviewed its investments in
other entities to assess whether the conclusion to consolidate
is different under AASB 10 than under AASB 127. No differences
were found and therefore no adjustments to any of the carrying
amounts in the financial statements are required as a result of
the adoption of AASB 10.
Under AASB 11 Joint Arrangements, investments in joint
arrangements are classified as either joint operations or joint
ventures depending on the contractual rights and obligations
of each investor. Mirvac has assessed the nature of its joint
arrangements and determined to have only joint ventures. As
a result of this assessment, a few of the Group’s interest in
associates have been reclassified as interests in joint ventures;
however, there is no material impact to the Group’s consolidated
SoFP during the reporting period.
The Group’s accounting for its interests in joint ventures was not
affected by the adoption of the new standard since the Group
had already applied the equity method in accounting for these
interests. As required under AASB 11, the change in policy has
been applied retrospectively; however, there is no impact to the
Group’s consolidated SoFP as at 30 June 2013.
ii) Employee benefits
The revised standard has changed the accounting for the
Group’s annual leave obligations. As the Group expects all
annual leave to be taken within 12 months of the respective
service being provided, annual leave obligations are classified as
current employee benefits in their entirety. This did not change
the measurement of these obligations and has no material
impact to the consolidated SoFP.
iii) Fair value measurement
AASB 13 Fair Value Measurement aims to improve consistency
and reduce complexity by providing a precise definition of
fair value and a single source of fair value measurement and
disclosure requirements for use across AAS. The standard
does not extend the use of fair value accounting but provides
guidance on how it should be applied where its use is already
required or permitted by other AAS.
Previously, the fair value of financial liabilities (including
derivatives) was measured on the basis that the financial
liability would be settled or extinguished with the counterparty.
The adoption of AASB 13 has clarified that fair value is an exit
price notion, and as such, the fair value of financial liabilities
should be determined based on a transfer value to a third party
market participant. As a result of this change, the fair value of
derivative liabilities changed on transition to AASB 13, due to
incorporating credit risk into the valuation. As required under
AASB 13, the change to fair value measurements on adoption
of the standard is applied prospectively, in the same way as a
change in an accounting estimate. As a consequence, the fair
value of net derivative liabilities relating to interest rate swap
contracts increased from $26.3m to $27.0m and to forward
exchange contracts increased from $66.5m to $68.5m as at
30 June 2014. The difference has been recorded as a fair value
movement through profit or loss. Comparative amounts have
not been restated.
2 Critical accounting judgements and estimates
Judgements and estimates are continually evaluated, based on
historical experience and other factors, including expectations of
future events that may have a financial impact and are believed
to be reasonable under the circumstances.
58
a) Critical judgements in applying Mirvac’s accounting policies
The following are the critical judgements that management has
made in the process of applying the Group’s accounting policies
and that have the most significant effect on the amounts
recognised in the consolidated financial statements:
i) Revenue recognition
The measurement of development revenue, which is recognised
when the significant risks and rewards of ownership are
transferred to the purchaser, requires management to exercise
its judgement in setting selling prices, given due consideration
to cost inputs and market conditions. The measurement of
construction revenue, which is recognised upon construction
contracts on a percentage of completion basis, requires an
estimate of expenses incurred to date as a percentage of total
estimated costs.
ii) Cost of goods sold
Inventories are expensed as cost of goods sold upon
sale. Management uses its judgement in determining the
apportionment of cost of goods sold, through either unit
entitlement or percentage of revenue, the quantum of cost
of goods sold, which includes both costs incurred to date and
forecast final costs, and the nature of cost of goods sold, which
may include acquisition costs, development costs, borrowing
costs and those costs incurred in bringing the inventories to a
saleable state.
iii) Provision for loss on inventories
Mirvac is required to carry inventories at the lower of cost and
NRV. Through the use of project feasibility assessments, which
are based on the most reliable evidence available at the time,
and incorporate both quantitative and qualitative factors, such
as estimated selling rates and costs to complete, judgement is
made concerning estimated NRV, which, in some cases, have
resulted in the establishment of a provision.
iv) Investment properties and OOP
Mirvac is required to make a judgement to determine whether a
property qualifies as an investment property or PPE in the cases
where part of the building is occupied by the Group. Each property
is considered individually. Where more than 10 per cent of the
lettable space is occupied by the Group, the property is normally
treated as owner-occupied and accounted for as part of PPE.
v) Fair value estimation
Where financial assets and liabilities are carried at fair value, the
fair value is based on assumptions of future events and involves
significant estimates. The basis of valuation is set out in note 33.
vi) SBP transactions
The Group measures the cost of equity settled securities
allocated to employees by reference to the fair value of the
equity instruments at the date at which they are granted. As
explained in note 30, the fair value is determined by an external
valuer using the bionomial simulation pricing method; this
method includes a number of judgements and assumptions.
These judgements and assumptions relating to SBP would have
no impact on the carrying amounts of assets and liabilities in the
consolidated SoFP but may impact the SBP expense taken to
profit or loss and equity.
vii) Recognition of deferred tax assets
The recognition of deferred tax assets is based upon whether
it is probable that sufficient and suitable taxable profits will be
available in the future against which the reversal of temporary
differences can be deducted. To determine the future taxable
profits, reference is made to the latest available profit forecasts.
Judgement is also required in assessing whether deferred tax
assets and certain deferred tax liabilities are recognised on the
consolidated SoFP. Deferred tax assets, including those arising
from tax losses, capital losses and temporary differences, are
recognised only when it is considered probable that they will
be recovered. Recoverability is dependent on the generation
of sufficient future taxable profits.
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements 2
Critical accounting judgements and estimates /
continued
viii) Classification of investments in structured entities
as an associate/joint venture
Mirvac holds 14 per cent of the overall investment within the Mirvac
Industrial Trust. Mirvac equity accounts for this investment as an
associate even though it owns less than 20 per cent of the voting
or potential voting power due to the fact that it has significant
influence over this entity. As a controlled entity of the Group, Mirvac
Funds Management Limited, is the responsible entity for the fund.
Mirvac holds 60 per cent of the overall investment within ASFI.
Mirvac equity accounts for this investment as a joint venture even
though it owns 60 per cent of the voting or potential voting power,
due to the fact that major decisions affecting the joint venture
require unanimous approval from each investor in the joint venture.
b) Key sources of estimation uncertainty
In preparing the consolidated financial statements, management is
required to make estimations and assumptions. The following are
the key assumptions concerning the future, and other key sources
of estimation uncertainty at the end of the reporting period,
that have a significant risk of causing material adjustment to the
carrying amounts of assets and liabilities within the next year:
i) Inventories
The NRV of inventories is the estimated selling price in the
ordinary course of business less estimated costs of completion
and costs to sell. Such estimates take into consideration
fluctuations of price or cost directly relating to events occurring
after the end of the period to the extent that such events
confirm conditions existing at the end of the reporting period.
The key assumptions require the use of management judgement
and are reviewed quarterly. During the year, Mirvac did not
expense any amount (2013: $242.9m) in relation to inventories
that were carried in excess of the NRV.
ii) Impairment of goodwill
Mirvac annually tests whether goodwill has suffered any
impairment. Determining whether goodwill is impaired requires
an estimation of the value in use of the CGUs to which goodwill
has been allocated. The value in use calculation requires the
entity to estimate the future cash flows expected to arise from
each CGU and a suitable discount rate in order to calculate the
net present value (“NPV”). The carrying amount of goodwill
at the end of the reporting period was $36.4m (2013: $63.1m).
During the year, the Group entered an unconditional contract
to sell 50 per cent of 275 Kent Street, Sydney NSW. This
investment property was the largest asset of WOT. The
recoverable amount of goodwill for the CGU was tested using
the value in use methodology, using the present value of future
cash flows expected to be derived from the Office CGU using
a pre-tax discount rate. The major assumptions included the
future cash flows of the property and the discount rate used.
Due to the 50 per cent sale of the investment property, a
significant reduction in the future cash flows in the Office CGU
has resulted in an impairment loss of $24.5m (2013: $nil) in the
Office CGU goodwill. A further $2.2m relating to the acquisition
of the North Ryde Office Trust (“NROT”) was derecognised
during the year as a result of the sale of NROT in February 2014
and is considered a selling cost. Details on the assumptions used
are provided in note 18.
iii) Estimated impairment of investments accounted for using
the equity method
The investments are tested for impairment, by comparing
recoverable amounts (higher of value in use, and fair value less
costs to sell) with the carrying amounts, whenever there is an
indication that the investment may be impaired. In determining
the value in use of the investment, Mirvac estimates the present
value of the estimated future cash flows expected to arise from
distributions to be received from the investment and from its
ultimate disposal. Details of the assumptions used by management
in assessing the impairment are provided in note 14.
iv) Fair value of investments not traded in active markets
The fair value of investments not traded in an active market is
determined by the unit price as advised by the fund manager.
The unit price is determined by NPV calculations using future cash
flows and an appropriate post-tax discount rate (refer to note 33).
The carrying value of investments not traded in an active market
determined using the above techniques and assumptions is
$11.8m (2013: $12.6m) and is disclosed as other financial assets
at fair value through profit or loss (refer to note 11).
v) Valuation of investment properties and OOP
Mirvac uses judgement in respect of the fair values of
investment properties and OOP. Investment properties and
OOP are revalued by external valuers on a rotation basis
with approximately one-half of the portfolio being valued
annually. Investment properties which are not subject to an
external valuation at the end of the reporting period are fair
valued internally by management. The assumptions used in
the estimations of fair values include expected future market
rentals, discount rates, market prices and economic conditions.
The reported fair values of investment properties and OOP
reflect the market conditions at the end of the reporting
period. While this represents the best estimation of fair value
at the reporting date, actual sale prices achieved (should the
investment properties and OOP be sold) may be higher or lower
than the most recent valuation. This is particularly relevant in
periods of market illiquidity or uncertainty. Major assumptions
used in valuation of investment properties are disclosed in note
16. The carrying value at the end of the reporting period for
investment properties was $6,016.4m (2013: $6,029.6m) and
OOP $238.6m (2013: $306.7m). Details on investment properties
are provided in note 16 and OOP in note 17.
vi) Valuation of IPUC
IPUC are valued at fair value. There are generally no active
markets for IPUC and fair value is considered to be the
estimated market price that would be paid for the partially
completed property, reflecting the expectations of market
participants of the value of the property when complete
less deductions for the estimated costs to complete, with
appropriate adjustments for risk and profit. The fair value is
determined on the basis of either DCF or residual methods.
Both methods require consideration of the project risks which
are relevant to the development process, including but not
limited to construction and letting risks. The estimated value
of future assets is based on the expected future income from
the project, using current yields of similar completed properties.
The net loss on fair value of IPUC was $7.7m (2013: $3.6m).
The carrying value of $126.0m (2013: $74.9m) at the end of the
year was included in investment properties (refer to note 16).
vii) Valuation of SBP transactions
Valuation of SBP transactions is performed using judgements
around the fair value of the equity instruments on the date
at which they are granted. The fair value is determined using
a Monte-Carlo simulation. Mirvac recognises a SBP over the
vesting period which is based on the estimation of the number of
equity instruments likely to vest. At the end of the vesting period,
Mirvac will assess the total expense recognised in comparison
to the number of equity instruments that ultimately vested.
viii) Valuation of derivatives and other financial instruments
Mirvac uses judgement in selecting the appropriate valuation
technique for financial instruments not quoted in an active
market. Valuation of derivative financial instruments involves
assumptions based on quoted market rates adjusted for specific
features of the instrument. The valuations of any financial
instrument may change in the event of market volatility. The
valuation techniques are discussed in detail at note 33 and have
been developed in compliance with requirements of AASB 139
Financial Instruments: Recognition and Measurement.
59
MIRVAC GROUP ANNUAL REPORT 2014 2
Critical accounting judgements and estimates /
continued
ix) Estimated future taxable profits
Mirvac prepares financial budgets and forecasts on a regular
basis which are reviewed, covering a five year period. Budgets
and forecasts are prepared on a base case and identified new
projects. These forecasts and budgets form the basis of future
profitability to support the carrying of the deferred tax asset.
Mirvac’s operating and financial performance is influenced
by a variety of general economic and business conditions,
which are outside the control of Mirvac, including the level
of inflation, interest rates, exchange rates, commodity prices,
ability to access funding, oversupply and demand conditions
and government fiscal, monetary and regulatory policies.
A change in any of the assumptions used in the budgeting and
forecasting would have an impact on the future profitability
of the Group. For example, adverse fluctuations in interest
rates, to the extent that they are not hedged or forecast, may
impact Mirvac’s earnings and asset values due to any impact
on property markets in which Mirvac operates.
3 Segmental information
a) Description of business segments
Management has determined the segments based on the
reports reviewed by the ELT that are used to make strategic
decisions. The ELT considers the business from both a product,
and within Australia, a geographic perspective. Each division
prepares an executive finance report on a monthly basis; this
is a detailed report that summarises the following:
— historic results of the division, using both statutory profit and
operating profit;
— future forecast of the division for the remainder of the year; and
— key risks and opportunities facing the division.
The ELT assesses the performance of the segments based
on a number of measures, both financial and non-financial,
which include a measure of operating profit; the use of capital;
and success in delivering against KPIs. The ELT has identified
two core divisions, Investment and Development. Applying
the requirements of AASB 8 Operating Segments, Mirvac has
two reportable segments, and in addition one business unit,
Investment Management (including MAM), which does not
meet the requirements for aggregation and therefore has
been shown separately:
i) Investment
The division is made up of MPT and a small number of assets
held by the company which holds investments in properties
covering the retail, office, industrial and hotel sectors
throughout Australia, held for the purpose of producing rental
income, predominately through the Trust, its controlled trusts
and corporate entities holding investment properties. Income
is also derived from investments in associates including Mirvac
Industrial Trust.
ii) Investment Management
MIM comprises two business activities for segment reporting
purposes, being funds management for listed and unlisted
property funds on behalf of retail and institutional investors,
and property asset management (MAM) on behalf of MPT,
joint venture partners and external property owners.
iii) Development
The division’s primary operations are property development
and construction of residential, office, industrial and retail
development projects throughout Australia. In addition,
project management fees are received from the management
of development and construction projects on behalf of JVA
and residential development funds.
b) Inter-segment transfers
Segment revenues, expenses and results include transfers
between segments. Such transfers are on an arm’s length basis
and eliminated on consolidation.
c) Elimination
The elimination segment includes adjustment to eliminate
trading between segments and to transfer balances to reflect
correct disclosure of items on a consolidated basis.
d) Comparative information
When necessary, comparative information has been reclassified
to achieve consistency in disclosure in current year amounts and
other disclosures.
e) Operating profit
Operating profit is a financial measure which is not prescribed
by AAS and represents the profit under AAS adjusted for
specific non-cash items and significant items which management
considers to reflect the core earnings of the Group.
f) Segment assets and liabilities
The amounts provided to the ELT with respect to total assets
and total liabilities are measured in a manner consistent with
that of the consolidated financial statements. These assets and
liabilities are allocated based on the operations of the segment
and physical location of the asset. The Group’s borrowings and
derivative financial instruments are not considered to be segment
liabilities but rather are managed by the Mirvac Group Treasury.
g) Geographical and customer analysis
Mirvac operates predominately in Australia with investments
in the United States of America. Materially, all revenue is
derived in Australia and all assets are in Australia. No single
customer in the current or prior year provided more than
10 per cent of the Group’s revenue.
60
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements 3 Segmental information / continued
2014
Investment
Investment Management Development
$m
$m
$m
Unallocated
$m
Elimination
$m
Consolidated
SoCI
$m
Revenue from continuing operations
Investment properties rental revenue
Investment management fee revenue
Development and construction revenue
Development management fee revenue
Interest revenue
Dividend and distribution revenue
Other revenue
Inter-segment revenue
645.1
—
—
—
15.6
0.5
1.9
14.5
5.8
13.0
—
—
0.3
—
3.2
18.0
—
—
1,168.4
15.2
5.1
—
3.5
99.4
—
—
—
—
1.5
—
1.1
35.7
—
—
(10.8)
0.7
(0.3)
—
(1.8)
(167.6)
650.9
13.0
1,157.6
15.9
22.2
0.5
7.9
—
Total revenue from continuing operations 677.6
40.3
1,291.6
38.3
(179.8)
1,868.0
Net gain on fair value of
investment properties
Share of net profit of JVA accounted
for using the equity method
Gain on financial instruments
Foreign exchange gain
Total other income
Total revenue from continuing
operations and other income
Net loss on fair value on IPUC
Net loss on sale of investment properties
Net loss on sale of PPE
Investment properties expenses
Cost of property development
and construction
Employee benefits expenses
Depreciation and amortisation expenses
Impairment of goodwill
Impairment of loans, investments
and inventories
Finance costs
Loss on financial instruments
Selling and marketing expenses
Other expenses
Profit/(loss) from continuing
operations before income tax
Income tax expense
Profit attributable to the stapled
securityholders of Mirvac
47.4
37.5
(4.3)
0.2
80.8
—
0.1
—
—
0.1
—
8.7
—
—
8.7
—
0.6
7.3
7.3
15.2
9.1
—
—
—
9.1
56.5
46.9
3.0
7.5
113.9
758.4
40.4
1,300.3
53.5
(170.7)
1,981.9
9.5
6.0
—
169.2
—
—
21.3
24.5
—
77.0
0.2
—
12.6
438.1
—
—
—
2.2
—
23.8
0.5
—
—
0.4
—
0.2
7.5
5.8
—
—
0.2
—
1,037.8
17.3
2.3
—
—
77.9
—
30.4
22.4
—
—
—
—
—
64.0
1.7
—
(1.2)
35.6
25.5
0.4
17.3
(1.8)
—
—
(12.2)
(97.1)
—
3.8
—
—
(46.1)
0.6
—
(12.5)
112.0
(89.8)
(5.4)
7.7
6.0
0.2
159.2
940.7
105.1
29.6
24.5
(1.2)
144.8
26.3
31.0
47.3
460.7
(13.4)
447.3
61
MIRVAC GROUP ANNUAL REPORT 2014
3 Segmental information / continued
Investment
2014
Investment Management Development Unallocated Elimination
$m
$m
$m
$m
$m
Tax Consolidated
$m
$m
438.1
(47.4)
9.5
Profit/(loss) attributable to the
stapled securityholders of Mirvac
Specific non-cash items
Net gain on fair value of
investment properties
Net loss on fair value of IPUC
Net loss on fair value of derivative
financial instruments and associated
foreign exchange movements 1
SBP expense 2
Depreciation of OOP 3
Straight-lining of lease revenue 4
Amortisation of lease fitout incentives 3
Net (gain)/loss on fair value of
investment properties, derivatives
and other specific non-cash items
included in share of net profit of JVA 5
Significant items
Impairment of loans,
—
investments and inventories
Impairment of goodwill
24.5
Net loss from sale of non-aligned assets 6 6.0
Tax effect
Tax effect of non-cash and
significant items adjustments 7
4.3
—
—
(12.2)
12.4
(20.2)
—
5.8
112.0
(89.8)
(5.4)
(13.4)
447.3
—
—
—
—
—
—
—
0.9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
10.9
6.5
—
—
—
(0.3)
(1.2)
—
—
—
(9.1)
(1.8)
0.6
—
5.9
—
(2.1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(56.5)
7.7
15.8
6.5
5.9
(12.2)
10.3
(19.6)
(1.2)
24.5
6.0
3.3
3.3
Operating profit/(loss)
(profit before specific non-cash
and significant items)
415.0
6.7
112.0
(73.9)
(11.9)
(10.1)
437.8
1) Total of Gain and Loss on financial instruments and Foreign exchange gain in the consolidated SoCI.
2) Included within Employee benefits expenses in the consolidated SoCI.
3) Included within Depreciation and amortisation expenses in the consolidated SoCI.
4) Included within Investment properties rental revenue in the consolidated SoCI.
5) Included within Share of net profit of JVA accounted for using the equity method in the consolidated SoCI.
6) Net loss on sale of investment properties in the consolidated SoCI.
7) Included in Income tax expense in the consolidated SoCI.
62
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
3 Segmental information / continued
Investment
2013
Investment Management Development Unallocated Elimination
$m
$m
$m
$m
$m
Total inc.
discontinued Discontinued Consolidated
SoCI
$m
operations
$m
operations
$m
Revenue from continuing operations
Investment properties rental revenue 578.1
—
Investment management fee revenue
—
Development and construction revenue
—
Development management fee revenue
9.1
Interest revenue
0.9
Dividend and distribution revenue
2.0
Other revenue
37.8
Inter-segment revenue
5.0
9.1
—
—
0.9
—
2.8
15.1
—
—
820.8
25.8
5.5
—
2.5
8.2
Total revenue from
continuing operations
Net gain on fair value of
investment properties
Share of net profit of JVA accounted
for using the equity method
Gain on financial instruments
Net gain on sale of investments
Net gain on sale of PPE
Total other income
Total revenue from continuing
operations and other income
627.9
32.9
862.8
56.0
10.8
(1.2)
—
—
65.6
—
2.1
—
—
—
2.1
—
(0.7)
—
—
0.1
(0.6)
—
—
—
—
3.9
—
4.2
—
8.1
—
0.2
34.2
2.0
—
36.4
—
—
2.0
(0.5)
(0.6)
—
(1.8)
(61.1)
583.1
9.1
822.8
25.3
18.8
0.9
9.7
—
(62.0)
1,469.7
(2.0)
54.0
—
—
—
—
(2.0)
12.4
33.0
2.0
0.1
101.5
—
—
—
—
—
—
—
—
—
—
—
—
(2.0)
—
(2.0)
583.1
9.1
822.8
25.3
18.8
0.9
9.7
—
1,469.7
54.0
12.4
33.0
—
0.1
99.5
693.5
35.0
862.2
44.5
(64.0)
1,571.2
(2.0)
1,569.2
5.6
Net loss on fair value on IPUC
—
Net loss on sale of investments
Net loss on sale of investment properties 2.7
1.3
Foreign exchange loss
Investment properties expenses
145.6
Cost of property development
—
and construction
Employee benefits expenses
—
Depreciation and amortisation expenses 21.8
Impairment of loans, investments
and inventories
Finance costs
Selling and marketing expenses
Other expenses
—
42.8
—
9.4
—
1.0
—
—
1.9
—
18.9
0.4
—
16.3
0.6
9.6
—
—
—
—
—
703.7
20.9
2.5
273.2
58.6
20.6
18.8
—
—
—
44.1
—
—
57.1
1.6
—
0.3
0.7
25.5
(2.0)
—
—
—
(10.9)
—
—
5.0
—
(30.9)
—
(12.3)
464.3
(13.7)
(236.1)
(84.8)
(12.9)
Profit/(loss) from continuing
operations before income tax
Income tax benefit
Profit from continuing operations
Profit from discontinued operations
(net of tax)
Profit attributable to the
stapled securityholders of Mirvac
3.6
1.0
2.7
45.4
136.6
703.7
96.9
31.3
273.2
87.1
21.9
51.0
116.8
23.1
139.9
—
139.9
—
—
—
—
—
—
—
—
—
—
—
—
(2.0)
0.6
(1.4)
1.4
—
3.6
1.0
2.7
45.4
136.6
703.7
96.9
31.3
273.2
87.1
21.9
51.0
114.8
23.7
138.5
1.4
139.9
63
MIRVAC GROUP ANNUAL REPORT 2014
3 Segmental information / continued
Investment
2013
Investment Management Development Unallocated Elimination
$m
$m
$m
$m
$m
Tax Consolidated
$m
$m
464.3
(56.0)
5.6
2.5
—
—
(17.3)
13.4
Profit/(loss) attributable to the
stapled securityholders of Mirvac
Specific non-cash items
Net gain on fair value
of investment properties
Net loss on fair value of IPUC
Net loss on fair value of derivative
financial instruments and associated
foreign exchange movements 1
SBP expense 2
Depreciation of OOP 3
Straight-lining of lease revenue 4
Amortisation of lease fitout incentives 5
Net loss on fair value of investment
properties, derivatives and other
specific non-cash items included
in share of net profit of JVA 6
Significant items
Impairment of loans, investments
—
and inventories
Net loss from sale of non-aligned assets 7 2.7
Net gain on sale of Hotel Management
business and related assets (net of tax) 8
Tax effect
Tax effect of non-cash and
significant adjustments 9
3.6
—
—
(13.7)
(236.1)
(84.8)
(12.9)
23.1
139.9
—
—
—
—
—
—
—
0.8
—
1.0
—
—
—
—
—
—
—
—
—
—
273.2
—
—
—
—
—
9.9
4.1
—
—
—
—
—
—
(2.0)
—
2.0
(2.0)
—
—
7.5
—
(2.5)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(54.0)
3.6
12.4
4.1
7.5
(17.3)
10.9
4.4
273.2
3.7
0.6
(1.4)
(9.4)
(9.4)
Operating profit/(loss) (profit before
specific non-cash and significant items) 418.8
(11.9)
37.1
(72.8)
(7.9)
14.3
377.6
1) Total of Gain on financial instruments and Foreign exchange loss in the consolidated SoCI.
2) Included within Employee benefits expenses in the consolidated SoCI.
3) Included within Depreciation and amortisation expenses in the consolidated SoCI.
4) Included within Investment properties rental revenue in the consolidated SoCI.
5) Included within Depreciation and amortisation expenses in the consolidated SoCI.
6) Included within Share of net profit of JVA accounted for using the equity method in the consolidated SoCI.
7) Total of Net loss on sale of investments and Net loss on sale of investment properties in the consolidated SoCI.
8) Included within Profit from discontinued operations (net of tax) in the consolidated SoCI.
9) Included in Income tax benefit in the consolidated SoCI.
30 June 2014
Investment
Investment Management Development
$m
$m
$m
Unallocated
$m
Elimination
$m
Consolidated
SoFP/SoCI
$m
Total assets
Total liabilities
Investments in JVA
Acquisitions of investments and PPE
Depreciation and amortisation expenses
7,638.6
1,912.0
370.1
1,028.7
21.3
30 June 2013
Total assets
Total liabilities
Investments in JVA
Acquisitions of investments and PPE
Depreciation and amortisation expenses
7,263.0
1,358.6
201.2
802.3
21.8
54.6
8.1
2.3
0.3
0.5
49.1
8.1
6.6
0.7
0.4
2,069.3
572.5
217.4
4.0
2.3
2,123.3
665.0
212.6
1.8
2.5
1,685.1
2,711.5
2.8
2.4
1.7
296.3
1,629.1
2.4
1.5
1.6
(1,525.9)
(1,458.5)
(55.0)
—
3.8
(485.3)
(425.2)
(42.9)
(6.9)
5.0
9,921.7
3,745.6
537.6
1,035.4
29.6
9,246.4
3,235.6
379.9
799.4
31.3
64
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
4 Revenue from continuing operations and other income
Interest revenue
Cash and cash equivalents
JVA and related party loans
Mezzanine loans
Total interest revenue
Gain on financial instruments
Gain on interest rate derivatives
Gain on cross currency derivatives
Total gain on financial instruments
5 Expenses
Profit before income tax includes the following specific expenses:
Note
Interest and finance charges paid/payable net of provision release
Amount capitalised 1
Interest capitalised in current and prior years expensed this year net of provision release
Borrowing costs amortised
Total finance costs
Depreciation
Plant and equipment
OOP
Total depreciation expenses
Amortisation
Lease fitout incentives
Lease incentives
Total amortisation expenses
Total depreciation and amortisation expenses
Loss on financial instruments
Loss on cross currency derivatives
Loss on revaluation of other financial assets at fair value through profit or loss
Total loss on financial instruments
Other charges against assets
Impairment of trade receivables
Impairment of goodwill
Impairment of loans, investments and inventories
Rental expense relating to operating leases
17
8
18
2014
$m
1.7
20.4
0.1
22.2
2.9
0.1
3.0
2014
$m
135.7
(35.9)
38.4
6.6
144.8
4.5
5.9
10.4
10.3
8.9
19.2
29.6
25.5
0.8
26.3
(0.1)
24.5
(1.2)
3.9
1) The amount capitalised relates to qualifying assets only, and is impacted by the amount borrowed and the interest rate charged on the borrowing.
2013
$m
1.6
14.3
2.9
18.8
4.4
28.6
33.0
2013
$m
113.7
(62.0)
32.2
3.2
87.1
4.5
7.5
12.0
10.9
8.4
19.3
31.3
—
—
—
(0.2)
—
273.2
3.9
65
MIRVAC GROUP ANNUAL REPORT 2014
6 Income tax
a) Income tax expense/(benefit)
Current tax
Deferred tax
Income tax expense/(benefit)
Income tax expense/(benefit) is attributable to:
Profit/(loss) from continuing operations
Profit from discontinued operations
Aggregate income tax expense/(benefit)
Deferred income tax expense/(benefit) included in income tax expense/(benefit) comprises:
Increase in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Deferred income tax expense/(benefit)
b) Numerical reconciliation of income tax expense/(benefit) to prima facie tax payable
Profit from continuing operations before income tax
Profit from discontinued operations before income tax
Profit before income tax
Income tax calculated at 30 per cent
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income
Non-deductible impairment of investments including JVA
Non-deductible impairment of loans
Other non-deductible/non-assessable items
Utilisation of prior year tax and capital gains tax losses not previously recognised
Derecognition of net deferred tax asset 1
Trust net income not subject to tax
Over provided in prior years
Income tax expense/(benefit)
c) Tax losses
Unused tax and capital gains tax losses incurred by Australian entities
for which no deferred tax asset has been recognised
Potential tax benefit at 30 per cent
2014
$m
0.4
13.0
13.4
13.4
—
13.4
(3.9)
16.9
13.0
460.7
—
460.7
138.2
—
4.7
1.4
—
—
(129.1)
15.2
(1.8)
13.4
2013
$m
1.3
(24.4)
(23.1)
(23.7)
0.6
(23.1)
(9.0)
(15.4)
(24.4)
114.8
2.0
116.8
35.0
4.0
6.0
(0.8)
(0.9)
66.4
(132.6)
(22.9)
(0.2)
(23.1)
566.1
169.8
550.8
165.2
1) In FY13, Mirvac assessed the carrying value of its net deferred asset position and determined that it was prudent to derecognise part of its net deferred tax
asset position on the basis that it may not be considered recoverable with a sufficient degree of certainty. Refer to note 2(a)(vii).
d) Tax consolidation legislation
Mirvac Limited and its wholly owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July 2003
(refer to note 1(bb)). On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax
sharing agreement which, in the opinion of the Directors, limits the joint and several liability of the wholly owned entities in the case
of a default by the head entity, Mirvac Limited. The entities within the tax consolidated group have also entered into a tax funding
agreement under which the wholly owned entities fully compensate Mirvac Limited for any current tax payable assumed and are
compensated by Mirvac Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused
tax credits that are transferred to Mirvac Limited under the tax consolidation legislation. The funding amounts are determined by
reference to the amounts recognised in the wholly owned entities’ financial statements. The amounts receivable/payable under the
tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after
the end of each year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax
instalments. The funding amounts are recognised as current inter-company receivables/payables.
66
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
6 Income tax / continued
e) Current tax (liabilities)/assets
Tax (payable)/receivable
f) Net deferred tax assets
Non-current assets — deferred tax assets
The balance comprises temporary differences attributable to:
Unearned profits with associates
Accrued expenses
Employee provisions
Unearned progress billings
Derivative financial instruments
Impairment of loans
PPE
Equity raising costs
Tax losses
Deferred tax assets
Non-current liabilities — deferred tax liabilities
The balance comprises temporary differences attributable to:
Equity accounted investments
Inventories
Foreign exchange translation gains
Derivative financial instruments
Other
Deferred tax liabilities
Net deferred tax assets
Deferred tax assets expected to be recovered within 12 months
Deferred tax assets expected to be recovered after more than 12 months
g) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not recognised
in profit or loss or other comprehensive income but directly debited or credited to equity:
Net deferred tax — credited directly to equity
h) Tax (benefit)/expense relating to items of other comprehensive income
Exchange differences on translation of foreign operations
Movements in deferred tax
Equity
accounted
investments
$m
Foreign
exchange
Unearned
translation profits with
associates
$m
gains
$m
Unearned
progress
billings
$m
Derivative
financial
instruments
$m
Impairment
of loans
$m
Balance 1 July 2012
Credited/(charged) to profit or loss
Credited/(charged) to other
comprehensive income
Credited to equity
Closing balance 30 June 2013
Credited/(charged) to profit or loss
Credited/(charged) to other
comprehensive income
Credited to equity
(9.1)
(1.4)
—
—
(10.5)
(6.6)
—
—
(39.1)
12.8
(2.3)
—
(28.6)
(2.0)
0.1
—
15.1
3.0
—
—
18.1
4.0
—
—
—
97.0
—
—
97.0
(41.7)
—
—
47.0
(24.9)
—
—
22.1
2.8
—
—
Closing balance 30 June 2014
(17.1)
(30.5)
22.1
55.3
24.9
4.4
1.0
—
—
5.4
2.0
—
—
7.4
2014
$m
2013
$m
—
—
22.1
33.5
6.7
55.3
33.5
7.4
1.4
0.1
191.9
351.9
17.1
86.2
30.5
8.6
1.9
144.3
207.6
12.0
339.9
351.9
0.4
0.4
(0.1)
18.1
23.9
6.0
97.0
22.1
5.4
1.3
0.2
165.7
339.7
10.5
79.0
28.6
—
1.5
119.6
220.1
—
339.7
339.7
0.6
0.6
2.3
PPE
$m
5.0
(3.7)
—
—
1.3
0.1
—
—
1.4
67
MIRVAC GROUP ANNUAL REPORT 2014
6 Income tax / continued
Equity
raising costs
$m
Inventories
$m
Accrued
expenses
$m
Employee
provisions
$m
Tax losses
$m
Other
$m
Balance 1 July 2012
Credited/(charged) to profit or loss
Credited/(charged) to other
comprehensive income
Credited to equity
Closing balance 30 June 2013
Credited/(charged) to profit or loss
Credited/(charged) to other
comprehensive income
Credited to equity
Closing balance 30 June 2014
0.6
(0.5)
—
0.1
0.2
(0.1)
—
—
0.1
7 EPS
(82.7)
3.7
—
—
(79.0)
(7.2)
—
—
23.0
0.9
—
—
23.9
9.6
—
—
(86.2)
33.5
6.3
(0.3)
228.7
(63.5)
—
—
6.0
0.7
—
—
6.7
—
0.5
165.7
25.8
—
0.4
191.9
Basic EPS
From continuing operations
From discontinued operations
Total basic EPS attributable to the stapled securityholders of Mirvac
Diluted EPS 1
From continuing operations
From discontinued operations
Total diluted EPS attributable to the stapled securityholders of Mirvac
Basic and diluted earnings 1
From continuing operations
From discontinued operations
Profit attributable to the stapled securityholders of Mirvac used in calculating EPS
Weighted average number of securities used as denominator
Weighted average number of securities used in calculating basic EPS
Adjustment for calculation of diluted EPS
Securities issued under EIS
Weighted average number of securities used in calculating diluted EPS 1
Total
$m
197.4
24.4
(2.3)
0.6
220.1
(13.0)
0.1
0.4
(1.8)
0.3
—
—
(1.5)
(0.4)
—
—
(1.9)
207.6
2014
Cents
2013
Cents
12.19
—
12.19
12.17
—
12.17
$m
447.3
—
447.3
Number
m
3,669.5
4.02
0.04
4.06
4.01
0.04
4.05
$m
138.5
1.4
139.9
Number
m
3,448.7
4.7
5.7
3,674.2
3,454.4
1) Diluted securities include securities issued under the EIS, but does not include the options and rights issued under the current LTI plans as the exercise of these
equity instruments is contingent on conditions during the vesting period.
68
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
8 Receivables
30 June 2014
Current receivables
Trade receivables
Loans to directors and employees
Amounts due from related parties
Amounts due from unrelated parties
Mezzanine loans
Accrued income
Other receivables
Non-current receivables
Loans to directors and employees
Amounts due from related parties
Other receivables
30 June 2013
Current receivables
Trade receivables
Loans to directors and employees
Amounts due from related parties
Amounts due from unrelated parties
Mezzanine loans
Accrued income
Other receivables
Non-current receivables
Loans to directors and employees
Amounts due from related parties
Other receivables
Gross
$m
Provision for
impairment
$m
Net
$m
22.3
2.0
13.6
47.4
12.2
17.3
14.3
129.1
0.3
56.7
60.7
117.7
25.5
3.6
25.5
28.6
12.4
22.1
12.6
130.3
6.4
99.8
73.6
179.8
(0.1)
—
(0.3)
(16.6)
(12.2)
—
(1.2)
(30.4)
—
(24.2)
(33.0)
(57.2)
(0.2)
—
(0.3)
(22.5)
(12.4)
—
(1.2)
(36.6)
—
(41.5)
(18.0)
(59.5)
22.2
2.0
13.3
30.8
—
17.3
13.1
98.7
0.3
32.5
27.7
60.5
25.3
3.6
25.2
6.1
—
22.1
11.4
93.7
6.4
58.3
55.6
120.3
Further information in relation to loans to KMP is set out in Remuneration report and amounts due from related parties is set out in
note 31.
a) Trade receivables
The average credit period on sales of goods is 30 days. No interest is charged on any outstanding trade receivables. Refer to note
8(d) for details regarding the credit risk of receivables.
b) Other receivables
These amounts generally arise from transactions outside of the classification of trade receivables such as GST receivables and other
sundry debtors.
c) Provision for impairment of trade receivables
Movements in the provision for impairment of trade receivables are detailed below:
Balance 1 July
Provision for impairment released
Balance 30 June
2014
$m
(0.2)
0.1
(0.1)
2013
$m
(0.4)
0.2
(0.2)
Mirvac has released $0.1m (2013: $0.2m) of impairment against trade receivables during the current year. There was no loss applied
against the provision for impairment of receivables. The creation and release of the provision for impaired receivables have been
included in impairment of loans in profit or loss where these relate to the mezzanine loans, and have been included in other expenses
in profit or loss where these relate to the impairment of trade receivables.
69
MIRVAC GROUP ANNUAL REPORT 2014
8 Receivables / continued
d) Credit risk
Receivables consist of a large number of customers. Mirvac does not have any significant credit risk exposure to a single customer or
groups of customers. Ongoing credit evaluation is performed on the financial condition of customers and, where appropriate, a provision
for impairment of receivables is raised. Mirvac holds collateral in certain circumstances which takes the form of bank guarantees,
security deposits, personal guarantee or a mortgage over property until completion. The ageing of receivables is detailed below:
Not past due
Renegotiated
Past due 1—30 days
Past due 31—60 days
Past due 61—90 days
Past due 91—120 days
Past 120 days
Total
2014
2013
Total Provision for
impairment
$m
receivables
$m
Total
receivables
$m
Provision for
impairment
$m
191.9
—
2.5
0.6
0.2
0.2
51.4
246.8
(36.6)
—
—
—
—
—
(51.0)
(87.6)
239.6
—
11.4
1.6
0.1
0.1
57.3
310.1
(39.0)
—
—
—
(0.1)
(0.1)
(56.9)
(96.1)
Under certain circumstances, Mirvac has not provided for all balances past due as it has been determined that there has not been a
significant change in credit quality at the end of the reporting period based upon the customer’s payment history and analysis of the
customer’s financial accounts. The Group holds collateral over all lease arrangements of $288.3m (2013: $109.0m). The fair value of
the collateral held equals the fair value of the receivables for which the collateral is held. The terms of the collateral are if payment
due is not received per the agreed terms, Mirvac is able to claim the collateral held.
e) Impairment and risk exposures
Refer to note 1(l) for information about the impairment of trade receivables and their credit quality and note 1(p) for impairment of
other receivables. Refer to note 32 for Mirvac’s exposure to foreign currency risk, interest rate risk and credit risk.
f) Fair values of trade and other receivables
Due to the short term nature of the current receivables, their carrying amount (less impairment provision) is assumed to be the same as
their fair value. For the majority of the non-current receivables, the carrying amount is also not significantly different to their fair value.
9 Derivative financial instruments
2014
$m
2013
$m
Current assets
Interest rate swap contracts — fair value
Cross currency swaps — fair value
Total current derivative assets
Non-current assets
Interest rate swap contracts — fair value
Cross currency swaps — fair value
Total non-current derivative assets
Current liabilities
Interest rate swap contracts — fair value
Total current derivative liabilities
Non-current liabilities
Interest rate swap contracts — fair value
Cross currency derivatives — fair value
Total non-current derivative liabilties
6.6
9.1
15.7
6.9
4.4
11.3
13.0
13.0
17.1
81.6
98.7
—
—
—
11.6
—
11.6
13.4
13.4
17.8
42.6
60.4
Mirvac’s derivatives are exclusively used for hedging purposes and not held for trading or speculative purposes.
a) Instruments used by Mirvac
Refer to note 32 for information on instruments used by Mirvac.
b) Risk exposures
Refer to note 32 for Mirvac’s exposure to foreign exchange, interest rate and credit risk on interest rate and cross currency swaps.
70
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
9 Derivative financial instruments / continued
c) Change in accounting policy
The Group has applied the new standards on fair value measurement from 1 July 2013. As explained in note 1(dd), the adoption
of the standard has affected the measurement of the fair value of certain net derivative liabilities. The Group has recognised the
adjustment as a fair value movement in profit or loss in the current period of $2.7m.
d) Fair value measurement
For information about the methods and assumptions used in determining the fair value of derivatives, please refer to note 33.
10 Inventories
Current 1
Development projects
Cost of acquisition
Development costs
Borrowing costs capitalised during development
Provision for loss
Construction work in progress (amount due from customers for contract work)
Contract costs incurred and recognised profits less recognised losses
Progress billings
Total current inventories
Non-current 1
Development projects
Cost of acquisition
Development costs
Borrowing costs capitalised during development
Provision for loss
Total non-current inventories
Aggregate carrying amount of inventories
Current
Non-current
Total inventories
1) Lower of cost and NRV.
2014
$m
2013
$m
202.1
362.6
62.8
(29.4)
598.1
126.0
(126.0)
—
598.1
609.4
283.0
120.4
(153.7)
859.1
598.1
859.1
1,457.2
167.1
448.6
69.7
(125.5)
559.9
68.5
(68.5)
—
559.9
674.5
277.6
154.9
(203.7)
903.3
559.9
903.3
1,463.2
a) Inventories expense
Inventories expensed as cost of property development and construction during the year ended 30 June 2014 amounted to $940.7m
(2013: $703.7m). During the year, there was no amount (2013: $242.9m) expensed as provision for loss on inventories.
b) Current and non-current inventories
The disclosure of inventories as either current or non-current is determined by the period within which they are expected to be
realised. Inventories disclosed as current are expected to be realised within 12 months; all other inventories are expected to be
realised beyond 12 months from the reporting date.
11 Other financial assets at fair value through profit or loss
Units in unlisted fund
Balance 1 July
Loss on revaluation
Capital distribution
Balance 30 June
2014
$m
12.6
(0.8)
—
11.8
2013
$m
12.7
—
(0.1)
12.6
Changes in fair values of other financial assets at fair value through profit or loss are reflected in the consolidated SoCI as a gain or
loss on financial instruments.
71
MIRVAC GROUP ANNUAL REPORT 2014
11 Other financial assets at fair value through profit or loss / continued
a) Unlisted securities
Unlisted securities are traded in inactive markets. The fair value of investments that are not traded in an active market is determined
by the unit price as advised by the trustee of the fund. Unlisted securities held in the Group are units in JF Infrastructure Yield
Fund. James Fielding Trust, a wholly-owned Group entity, owns 12.9m units (22 per cent) of this entity. The fair value of the security
is determined based on the value of the underlying assets held by the fund. The assets of the fund are subject to regular external
valuations. These valuations are based on discounted net cash inflows from expected future income and/or comparable sales of similar
assets. Appropriate discount rates determined by the external valuer are used to determine the present value of the net cash inflows
based on a market interest rate adjusted for the risk premium specific to each asset. The fair value is determined using valuation
techniques that are not supported by prices from an observable market; the fair value recognised in the consolidated financial
statements could change significantly if the underlying assumptions made in estimating the fair values were significantly changed.
b) Price risk exposure
Refer to note 32 for Mirvac’s exposure to price risk on other financial assets at fair value through profit or loss.
12 Other assets
Prepayments
Monies held in trust
2014
$m
22.5
0.2
22.7
2013
$m
17.2
0.3
17.5
Monies held in trust relate to deposits received in respect of future sales of inventories.
13 Assets classified as held for sale and discontinued operations
a) Discontinued operations
There were no discontinued operations in relation to the sale of a disposal group as at 30 June 2014 and 30 June 2013. During the
year ended 30 June 2013, Mirvac recognised a gain of $2.0m (net of costs) relating to the purchase price adjustments following the
satisfaction of a trigger event in the contract for sale which relates to the sale of the Hotel Management business.
b) Assets classified as held for sale
Non-current assets held for sale
1 Castlereagh Street, Sydney NSW 1
10 Julius Avenue, North Ryde NSW 1
12 Julius Avenue, North Ryde NSW 1
275 Kent Street, Sydney NSW (50%) 1
33 Corporate Drive, Cannon Hill QLD 1
38 Sydney Avenue, Forrest ACT 1
339 Coronation Drive, Milton QLD 1
Waverley Gardens Shopping Centre, Mulgrave VIC 1
Logan Megacentre, Logan QLD 2
Manning Mall, Taree NSW 3
1) Settlement occurred on 1 July 2014.
2) Settlement occurred on 9 August 2013.
3) Settlement occurred on 11 July 2013.
2014
$m
69.4
51.4
21.3
435.0
15.2
35.5
53.7
139.5
—
—
821.0
2013
$m
—
—
—
—
—
—
—
—
49.5
31.8
81.3
As part of the Group’s strategy, investment properties that no longer meet the investment criteria and are subject to a contract for
sale, are classified as held for sale.
i) Non-recurring fair value measurements
Investment properties classified as held for sale during the reporting period was measured at the lower of its carrying amount and
fair value at the time of the reclassification. The fair value of the investment properties was determined using the sales comparison
approach as described in note 16. This is a level three measurement as per the fair value hierarchy set out in note 33.
72
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
13 Assets classified as held for sale and discontinued operations / continued
c) Financial performance and cash flow information
The financial performance and cash flow information for the discontinued operations for the year ended 30 June 2014 and
30 June 2013 were as follows:
Gain on sale before income tax
Income tax expense
Gain on sale after income tax
Profit from discontinued operations
d) Details of the sale
Consideration received or receivable:
Cash
Total consideration
Carrying amount of net assets sold (including selling costs)
Gain on sale before income tax
Income tax expense
Gain on sale after income tax
14 Investments in JVA entities
Consolidated SoFP
Investments accounted for using the equity method
Investments in associates
Investments in joint ventures
Consolidated SoCI
Share of net profit of JVA accounted for using the equity method
Investments in associates
Investments in joint ventures
2014
$m
—
—
—
—
—
—
—
—
—
—
2014
$m
0.5
537.1
537.6
1.2
45.7
46.9
2013
$m
2.0
(0.6)
1.4
1.4
2.2
2.2
(0.2)
2.0
(0.6)
1.4
2013
$m
0.5
379.4
379.9
0.1
12.3
12.4
Note
14(a)(i)
14(a)(iii)
14(d)(i)
14(d)(ii)
a) Details of Mirvac’s JVA
Investments in JVA are accounted for using the equity method of accounting. All JVA were established or incorporated in Australia.
Information relating to JVA are as follows:
i) Associates
Name of entity
Principal activities
Mindarie Keys Joint Venture 1
Mirvac Industrial Trust 2
Residential development
Listed property investment trust
2014
%
15
14
Interest
2013
%
15
14
Carrying value
2013
$m
2014
$m
—
0.5
0.5
0.5
—
0.5
1) Mirvac equity accounts for this investment as an associate even though it owns less than 20 per cent of the voting or potential voting power due to the fact
that it has significant influence over this entity, as a controlled entity of the Group is the project manager of this investment.
2) Mirvac equity accounts for this investment as an associate even though it owns less than 20 per cent of the voting or potential voting power due to the fact
that it has significant influence over this entity, as a controlled entity of the Group is the responsible entity for the trust.
ii) Fair value of listed investments in associates
Mirvac Industrial Trust
2014
$m
8.4
2013
$m
8.1
73
MIRVAC GROUP ANNUAL REPORT 2014
14 Investments in JVA entities / continued
a) Details of Mirvac’s JVA (continued)
iii) Joint ventures
Name
Principal activities
Residential development
Non-residential development
Non-residential development
Residential development
Non-residential development
Non-residential development
Non-residential development
Non-residential development
Non-residential development
Non-residential development
Non-residential development
Residential development
Ascot Chase Nominee Stages 3-5 Pty Ltd
Australian Centre for Life Long Learning 1
Australian Sustainable Forestry Investors 1 & 2 2 Forestry and environmental asset manager
BAC Devco Pty Limited 2,3
BL Developments Pty Limited
City West Property Investments (No.1) Trust
City West Property Investments (No.2) Trust
City West Property Investments (No.3) Trust
City West Property Investments (No.4) Trust
City West Property Investments (No.5) Trust
City West Property Investments (No.6) Trust
Domaine Investment Trust
Ephraim Island Joint Venture
Fast Track Bromelton Pty Limited
and Nakheel SPV Pty Limited
FreeSpirit Resorts Pty Limited 2
Googong Township Unit Trust
Green Square Consortium Pty Limited
HPAL Freehold Pty Limited 4
Infocus Infrastructure Management Pty Limited
Leakes Road Rockbank Unit Trust
Mirvac 8 Chifley Trust
Mirvac Lend Lease Village Consortium
Mirvac (Old Treasury) Trust
Mirvac Wholesale Residential
Development Partnership Trust
MVIC Finance 2 Pty Limited
Tucker Box Hotel Group
Walsh Bay Partnership
Non-residential development
Investment property
Residential development
Residential development
Non-residential development
Investment property
Residential development
Investment property
Residential development
Investment property
Residential development
Residential development
Hotel investment
Residential development
2014
%
Interest
2013
%
Carrying value
2013
$m
2014
$m
50
—
60
33
50
50
50
50
50
50
50
50
50
50
25
50
50
—
50
50
50
50
50
20
50
50
50
50
50
60
33
50
50
50
50
50
50
50
50
50
50
25
50
50
50
50
50
50
50
50
20
50
50
50
—
—
2.3
—
30.9
9.7
9.7
9.7
9.7
9.7
9.7
—
—
27.4
—
27.8
1.5
—
1.0
14.3
157.3
0.9
53.6
21.8
—
138.5
1.6
—
—
10.4
—
30.8
9.6
9.6
9.6
9.6
9.6
9.6
—
2.7
27.2
—
24.8
—
—
0.6
14.2
38.4
0.8
30.2
20.2
—
121.5
—
537.1
379.4
1) This investment was sold during the year ended 30 June 2014.
2) Due to AASB 11 assessment, these investments have been reclassified from associates to joint ventures.
3) This entity entered into voluntary administration as of 4 May 2010.
4) This entity was deregistered on 5 September 2013.
b) Share of JVA commitments and contingent liabilities
Mirvac’s share of its JVA commitments which have been approved but not yet provided for at year ended 30 June 2014 are set out below:
Capital commitments
Total JVA commitments
2014
$m
—
—
2013
$m
—
—
74
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
14 Investments in JVA entities / continued
c) Summarised financial information for JVA
The tables below provide summarised financial information for those JVA of the Group. The information disclosed reflects the
amounts presented in the financial statements of the relevant JVA and not the Mirvac’s share of those amounts.
i) Associates
Summarised consolidated SoFP
2014
Mindarie Keys Joint Venture
Mirvac Industrial Trust 1
2013
Mindarie Keys Joint Venture
Mirvac Industrial Trust
Current
financial
Total
liabilities
Other
non- (excluding
trade
current
assets payables) liabilities
$m
$m
$m
current
Total
current
assets
$m
Non-
current
financial
liabilities
Total (excluding
trade
Other
non-
current
liabilities payables) liabilities
$m
current
$m
$m
Cash and
Other
cash current
assets
$m
equivalents
$m
0.4
16.5
16.9
1.2
13.3
14.5
—
1.1
1.1
0.4
17.6
—
219.2
—
2.9
0.3
12.7
0.3
15.6
—
142.3
18.0 219.2
2.9
13.0
15.9
142.3
2.4
1.9
4.3
3.6
15.2
3.2
229.1
18.8
232.3
—
3.0
3.0
0.9
14.4
15.3
0.9
17.4
—
150.9
18.3
150.9
—
—
—
—
—
—
Total
non-
current
liabilities
$m
Net
assets
$m
—
142.3
0.1
78.9
142.3
79.0
—
150.9
150.9
5.9
76.0
81.9
1) SoFP based on the latest publicly available financial statements as at 31 December 2013.
Reconciliation to carrying amounts
2014
Mindarie Keys Joint Venture
Mirvac Industrial Trust 1
2013
Mindarie Keys Joint Venture
Mirvac Industrial Trust 1
Opening
net assets
1 July
$m
Other
Profit compre-
for the hensive
income
$m
year
$m
Issue of
Distri- Closing
net
butions
paid/
equity payable 30 June
$m
$m
$m
assets Group’s Group’s Carrying
share amount
$m
share
%
$m
5.9
76.0
81.9
6.1
67.7
73.8
3.5
(0.3)
3.2
0.5
3.0
3.5
—
3.2
3.2
—
7.0
7.0
—
—
—
—
—
—
(9.3)
—
0.1
78.9
(9.3) 79.0
(0.7)
(1.7)
5.9
76.0
(2.4)
81.9
15
14
15
14
—
11.0
11.0
0.9
10.6
11.5
—
0.5
0.5
0.5
—
0.5
1) The investment was written down to $nil in 2009. The impairment on the loan to this investment was released during the year ended 30 June 2012. The Group
did not recognised the full share of profit or loss in the investment since it has been fully impaired to $nil.
Summarised consolidated SoCI
2014
Mindarie Keys Joint Venture
Mirvac Industrial Trust
2013
Mindarie Keys Joint Venture
Mirvac Industrial Trust
Revenue
$m
Other
Total
Profit for comprehensive comprehensive
income
income
the year
$m
$m
$m
Distributions
received from
associates
$m
10.5
17.3
27.8
1.9
28.9
30.8
3.5
(0.3)
3.2
0.5
3.0
3.5
—
3.2
3.2
—
7.0
7.0
3.5
2.9
6.4
0.5
10.0
10.5
1.4
0.3
1.7
0.1
—
0.1
75
MIRVAC GROUP ANNUAL REPORT 2014
14 Investments in JVA entities / continued
ii) Joint ventures
Summarised consolidated SoFP
2014
Cash
Other
and cash current
assets
$m
equivalents
$m
Ascot Chase Nominee Stages 3-5 Pty Ltd
Australian Centre for Life Long Learning
Australian Sustainable Forestry
Investors 1 & 2
BAC Devco Pty Limited
BL Developments Pty Limited
City West Property Investments
(No. 1 to 6) Trusts
Domaine Investment Trust
Ephraim Island Joint Venture
Fast Track Bromelton Pty Limited
and Nakheel SPV Pty Limited
FreeSpirit Resorts Pty Limited
Googong Township Unit Trust
Green Square Consortium Pty Limited
HPAL Freehold Pty Limited
Infocus Infrastructure Management
Pty Limited
Leakes Road Rockbank Unit Trust
Mirvac 8 Chifley Trust
Mirvac Lend Lease Village Consortium
Mirvac (Old Treasury) Trust
Mirvac Wholesale Residential
Development Partnership Trust
MVIC Finance 2 Pty Limited
Tucker Box Hotel Group
Walsh Bay Partnership
26.7
0.7
5.5
—
35.1
0.3
—
0.4
2.7
0.2
—
1.5
—
2.1
1.0
0.2
4.3
151.5
35.0
0.1
4.8
—
8.3
89.7
—
—
5.1
4.4
—
—
—
4.1
32.0
1.5
—
0.1
—
0.4
—
0.2
69.0
—
7.2
0.6
Total
current
assets
$m
35.0
90.4
5.5
—
40.2
4.7
—
0.4
2.7
4.3
32.0
3.0
—
2.2
1.0
0.6
4.3
151.7
104.0
0.1
12.0
0.6
Current
financial
Total
liabilities
Other
non- (excluding
current
trade
assets payables) liabilities
$m
$m
$m
current
Non-
current
financial
liabilities
Total (excluding
trade
Other
non-
current
liabilities payables) liabilities
$m
current
$m
$m
Total
non-
current
liabilities
$m
Net
assets
$m
15.3
0.1
—
—
35.4
112.4
—
—
62.3
1.0
103.4
16.7
—
—
32.0
347.6
—
124.2
108.1
—
423.6
—
11.7
—
4.5
40.1
16.2
40.1
36.9
35.2
(0.1)
—
36.8
35.2
(2.7)
15.2
—
—
—
—
—
—
—
0.3
14.9
4.8
—
—
—
—
—
—
—
—
2.8
—
—
—
0.7
0.1
—
0.2
0.1
7.2
11.7
11.4
—
0.2
1.1
0.5
2.1
(0.2)
9.7
—
7.5
2.6
—
—
0.7
0.1
—
0.2
0.1
7.5
26.6
16.2
—
0.2
1.1
0.5
2.1
(0.2)
9.7
—
10.3
2.6
—
—
—
—
—
—
—
3.5
6.7
—
—
—
—
—
—
158.9
76.7
—
146.2
—
—
—
(0.5)
—
—
(0.5)
—
—
—
—
—
39.0
0.4
—
—
3.3
—
—
—
—
—
1.1
—
—
—
—
—
3.5
45.7
0.4
—
—
3.3
—
—
158.9
76.7
—
147.3
—
5.5
—
75.4
117.0
—
0.2
64.9
(5.7)
63.1
3.1
—
2.0
28.6
347.7
2.2
117.2
125.7
0.1
278.0
(2.0)
272.1 222.6 494.7 1,382.1
34.5
99.5
134.0 464.1
43.2 507.3 1,235.5
2013
Ascot Chase Nominee Stages 3-5 Pty Ltd
Australian Centre for Life Long Learning
Australian Sustainable Forestry
Investors 1 & 2
BAC Devco Pty Limited
BL Developments Pty Limited
City West Property Investments
(No. 1 to 6) Trusts
Domaine Investment Trust
Ephraim Island Joint Venture
Fast Track Bromelton Pty Limited
and Nakheel SPV Pty Limited
FreeSpirit Resorts Pty Limited
Googong Township Unit Trust
Green Square Consortium Pty Limited
HPAL Freehold Pty Limited
Infocus Infrastructure Management
Pty Limited
Leakes Road Rockbank Unit Trust
Mirvac 8 Chifley Trust
Mirvac Lend Lease Village Consortium
Mirvac (Old Treasury) Trust
Mirvac Wholesale Residential
Development Partnership Trust
MVIC Finance 2 Pty Limited
Tucker Box Hotel Group
Walsh Bay Partnership
1.3
1.0
2.2
—
25.1
0.4
—
0.1
4.0
0.3
—
3.0
—
1.7
1.1
1.0
4.3
100.8
17.3
42.9
0.2
—
15.1
3.5
—
9.8
0.1
3.8
28.2
0.2
15.0
0.1
—
1.6
—
0.3
18.6
43.9
2.4
—
40.2
3.9
—
9.9
4.1
4.1
28.2
3.2
15.0
1.8
1.1
2.6
4.3
101.1
12.2
0.1
5.1
—
152.5
—
6.5
—
164.7
0.1
11.6
—
21.6
48.8
13.7
—
0.3
42.6
14.0
42.6
53.9
—
39.9
111.3
—
—
61.6
1.3
84.8
3.3
—
—
30.5
277.1
—
64.7
181.1
—
397.1
—
—
—
—
—
5.2
2.7
—
0.3
20.3
4.7
—
—
—
—
—
—
132.5
—
3.8
—
1.7
—
2.3
—
—
0.1
0.9
7.4
11.1
1.7
—
0.6
1.8
1.0
2.0
(0.2)
12.7
—
7.4
0.1
1.7
—
2.3
—
5.2
2.8
0.9
7.7
31.4
6.4
—
0.6
1.8
1.0
2.0
(0.2)
145.2
—
11.2
0.1
27.0
35.2
22.9
—
—
—
—
—
—
2.3
—
—
—
—
—
194.5
—
95.7
80.6
—
143.7
—
—
—
—
—
3.3
—
—
—
—
—
29.6
0.1
—
—
1.5
—
—
—
—
—
9.7
—
27.0
35.2
22.9
—
3.3
—
—
—
—
2.3
29.6
0.1
—
—
1.5
194.5
—
95.7
80.6
—
153.4
—
(0.8)
14.9
31.7
—
74.5
115.2
(5.2)
7.1
64.8
(4.6)
52.0
—
15.0
1.2
28.3
84.2
2.3
70.3
120.0
0.1
244.1
(0.1)
163.7
297.1 460.8
1,377.0
183.2
93.5
276.7
601.9
44.2
646.1
915.0
76
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
14 Investments in JVA entities / continued
Reconciliation to carrying amounts
2014
Opening
net assets
1 July
$m
Ascot Chase Nominee Stages 3-5 Pty Ltd 1
(0.8)
Australian Centre for Life Long Learning 2
14.9
Australian Sustainable Forestry Investors 1 & 2 3
31.7
—
BAC Devco Pty Limited
BL Developments Pty Limited 4
74.5
115.2
City West Property Investments (No. 1 to 6) Trusts
(5.2)
Domaine Investment Trust
Ephraim Island Joint Venture
7.1
Fast Track Bromelton Pty Limited and Nakheel SPV Pty Limited 4 64.8
(4.6)
FreeSpirit Resorts Pty Limited
Googong Township Unit Trust 5
52.0
—
Green Square Consortium Pty Limited
HPAL Freehold Pty Limited 6
15.0
1.2
Infocus Infrastructure Management Pty Limited
28.3
Leakes Road Rockbank Unit Trust
Mirvac 8 Chifley Trust 4
84.2
2.3
Mirvac Lend Lease Village Consortium
Mirvac (Old Treasury) Trust 4
70.3
Mirvac Wholesale Residential Development Partnership Trust 4 120.0
0.1
MVIC Finance 2 Pty Limited
244.1
Tucker Box Hotel Group
(0.1)
Walsh Bay Partnership
year
$m
(1.9)
0.3
(13.7)
—
0.9
1.8
5.2
(2.0)
0.1
(1.1)
11.1
0.1
(14.7)
1.2
0.3
12.9
(0.1)
3.5
25.0
—
58.7
—
Profit/
Other
(loss) compre-
for the hensive
Issue/
(return)
Distri- Closing
net
butions
paid/
income of equity payable 30 June
$m
$m
$m
$m
assets Group’s Group’s Carrying
share amount
$m
share
%
$m
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(12.5)
—
—
—
—
—
—
—
—
3.0
(0.3)
—
—
250.6
—
45.7
(19.3)
—
—
(1.9)
—
—
—
—
—
—
—
(4.9)
—
—
—
—
—
(0.4)
—
—
—
(2.3)
—
—
(2.7)
15.2
5.5
—
75.4
117.0
—
0.2
64.9
(5.7)
63.1
3.1
—
2.0
28.6
347.7
2.2
117.2
125.7
0.1
(24.8) 278.0
(2.0)
—
50
—
60
33
50
50
50
50
50
25
50
50
—
50
50
50
50
50
20
50
50
50
(1.4)
—
3.3
—
37.7
58.5
—
0.1
32.5
(1.4)
31.6
1.6
—
1.0
14.3
173.9
1.1
58.6
25.1
0.1
139.0
(1.0)
—
—
2.3
—
30.9
58.2
—
—
27.4
—
27.8
1.5
—
1.0
14.3
157.3
0.9
53.6
21.8
—
138.5
1.6
915.0
87.6
— 265.3
(32.4) 1,235.5
574.6
537.1
1) The investment is in an asset deficiency position and the Group has taken the amount to its liability on the consolidated SoFP.
2) The Group disposed of this investment during the year.
3) The investment has disposed of its assets and made a part repayment of capital to its investors. The remaining of the capital will be repaid in FY15. The Group
is still holding part of the provision previously made against this investment. As a result, the carrying amount is less than Group’s entitlement to the net asset
of the investment.
4) The difference between the carrying amount and the Group’s share in the net assets of its investment is a result of elimination due to the Group’s transactions
with its investment.
5) The difference between the carrying amount and the Group’s share in the net assets of its investment is due to a different methodology on allocation of cost
of goods sold upon settlements of project lots in the JV.
6) This investment was deregistered on 5 September 2013.
77
MIRVAC GROUP ANNUAL REPORT 2014
14 Investments in JVA entities / continued
Reconciliation to carrying amounts
2013
Opening
net assets
1 July
$m
Ascot Chase Nominee Stages 3-5 Pty Ltd 1
—
Australian Centre for Life Long Learning 2
14.3
Australian Sustainable Forestry Investors 1 & 2 3
31.7
—
BAC Devco Pty Limited
BL Developments Pty Limited 4
100.5
113.4
City West Property Investments (No. 1 to 6) Trusts
Domaine Investment Trust 5
(5.2)
Ephraim Island Joint Venture 6
19.9
Fast Track Bromelton Pty Limited and Nakheel SPV Pty Limited 4 64.7
(4.4)
FreeSpirit Resorts Pty Limited
51.3
Googong Township Unit Trust
—
Green Square Consortium Pty Limited
HPAL Freehold Pty Limited 7
15.1
2.7
Infocus Infrastructure Management Pty Limited
28.5
Leakes Road Rockbank Unit Trust
Mirvac 8 Chifley Trust 4
44.2
2.2
Mirvac Lend Lease Village Consortium
Mirvac (Old Treasury) Trust 4
—
Mirvac Wholesale Residential Development Partnership Trust 4 143.8
0.1
MVIC Finance 2 Pty Limited
Quadrant Real Estate Advisors LLC 7
0.3
Swanbourne Joint Venture 8
7.7
246.4
Tucker Box Hotel Group
(0.9)
Walsh Bay Partnership
year
$m
(0.8)
0.6
—
—
(19.0)
1.8
—
(12.8)
0.1
(0.2)
—
—
(0.1)
1.3
(0.2)
0.7
0.1
1.4
(23.8)
—
6.8
3.1
19.9
(0.3)
Profit/
Other
(loss) compre-
for the hensive
Issue/
(return)
Distri- Closing
net
butions
paid/
income of equity payable 30 June
$m
$m
$m
$m
assets Group’s Group’s Carrying
share amount
$m
share
%
$m
—
—
—
—
—
—
—
—
—
—
0.7
—
—
—
—
—
—
—
—
—
(3.5)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
39.3
—
69.3
—
—
(1.4)
—
—
1.1
—
—
—
—
(7.0)
—
—
—
—
—
—
—
—
(2.8)
—
—
—
(0.4)
—
—
(2.2)
(10.8)
(22.2)
—
(0.8)
14.9
31.7
—
74.5
115.2
(5.2)
7.1
64.8
(4.6)
52.0
—
15.0
1.2
28.3
84.2
2.3
70.3
120.0
0.1
—
—
244.1
(0.1)
50
50
60
33
50
50
50
50
50
25
50
50
50
50
50
50
50
50
20
50
—
—
50
50
(0.4)
7.5
19.0
—
37.3
57.6
(2.6)
3.6
32.4
(1.2)
26.0
—
7.5
0.6
14.2
42.1
1.2
35.2
24.0
0.1
—
—
122.1
(0.1)
—
—
10.4
—
30.8
57.6
—
2.7
27.2
—
24.8
—
—
0.6
14.2
38.4
0.8
30.2
20.2
—
—
—
121.5
—
876.3
(21.4)
(2.8)
108.3
(45.4) 915.0
426.1
379.4
1) The investment is in an asset deficiency position and the Group has taken the amount to its liability on the consolidated SoFP.
2) The Group has previously impaired this investment to nil and has not taken up any movements in share of profit or loss since.
3) The difference between the carrying amount and the Group’s share in the investment’s net assets is due to an impairment made to the investment in the prior years.
4) The difference between the carrying amount and the Group’s share in the net assets of its investment is a result of elimination due to the Group’s transactions
with its investment.
5) The Group has previously impaired this investment to $nil.
6) The losses incurred in the investment during the year have already been reflected in the provision made to the investment in the prior years. No further losses
were booked in this year.
7) The only asset in the investment is receivables from the investment partners where this has been previously booked as repayment of capital in the Group.
8) The partnership has been concluded during the year.
Summarised consolidated SoCI
2014
Revenue
$m
25.5
Ascot Chase Nominee Stages 3-5 Pty Ltd
0.3
Australian Centre for Life Long Learning
2.1
Australian Sustainable Forestry Investors 1 & 2
—
BAC Devco Pty Limited
13.5
BL Developments Pty Limited
1.6
City West Property Investments (No. 1 to 6) Trusts
—
Domaine Investment Trust
8.4
Ephraim Island Joint Venture
0.1
Fast Track Bromelton Pty Limited and Nakheel SPV Pty Limited
10.2
FreeSpirit Resorts Pty Limited
72.8
Googong Township Unit Trust
(1.4)
Green Square Consortium Pty Limited
—
HPAL Freehold Pty Limited
1.7
Infocus Infrastructure Management Pty Limited
—
Leakes Road Rockbank Unit Trust
32.7
Mirvac 8 Chifley Trust
0.1
Mirvac Lend Lease Village Consortium
3.5
Mirvac (Old Treasury) Trust
Mirvac Wholesale Residential Development Partnership Trust 251.4
—
MVIC Finance 2 Pty Limited
68.5
Tucker Box Hotel Group
—
Walsh Bay Partnership
Deprec-
iation and
amorti-
Income
Interest
tax
sation expense expense
$m
$m
$m
Interest
income
$m
Other
Profit/
Distri-
butions
(loss) compre- compre- received
for the hensive hensive from joint
income ventures
$m
income
$m
year
$m
Total
$m
3.5
—
0.1
—
0.6
—
—
—
0.1
—
0.2
0.1
—
—
—
—
—
3.0
0.5
—
0.1
—
—
—
—
—
—
—
—
—
—
—
0.1
—
—
—
—
—
—
—
—
—
—
—
7.1
—
1.2
—
0.2
—
—
(0.6)
—
—
0.6
—
—
—
0.3
16.7
—
—
21.0
—
10.0
—
(0.8)
—
—
—
—
—
—
—
—
—
—
—
—
0.5
—
—
—
—
—
—
0.1
—
(1.9)
0.2
0.2
—
(0.5)
1.4
—
(2.0)
0.1
(0.7)
11.1
—
—
1.2
0.4
12.8
0.1
3.5
25.0
—
58.6
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1.9)
0.2
0.2
—
(0.5)
1.4
—
(2.0)
0.1
(0.7)
11.1
—
—
1.2
0.4
12.8
0.1
3.5
25.0
—
58.6
—
—
—
—
—
—
—
—
2.4
—
—
—
—
—
0.2
—
—
—
1.2
—
—
12.4
—
78
491.0
8.2
0.1
56.5
(0.2)
109.5
—
109.5
16.2
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
14 Investments in JVA entities / continued
Summarised consolidated SoCI
2013
Revenue
$m
1.0
Ascot Chase Nominee Stages 3-5 Pty Ltd
1.4
Australian Centre for Life Long Learning
3.7
Australian Sustainable Forestry Investors 1 & 2
—
BAC Devco Pty Limited
22.8
BL Developments Pty Limited
1.8
City West Property Investments (No. 1 to 6) Trusts
—
Domaine Investment Trust
19.7
Ephraim Island Joint Venture
0.1
Fast Track Bromelton Pty Limited and Nakheel SPV Pty Limited
15.7
FreeSpirit Resorts Pty Limited
0.1
Googong Township Unit Trust
0.9
Green Square Consortium Pty Limited
—
HPAL Freehold Pty Limited
1.7
Infocus Infrastructure Management Pty Limited
—
Leakes Road Rockbank Unit Trust
0.7
Mirvac 8 Chifley Trust
0.2
Mirvac Lend Lease Village Consortium
Mirvac (Old Treasury) Trust
2.1
Mirvac Wholesale Residential Development Partnership Trust 71.2
—
MVIC Finance 2 Pty Limited
15.4
Quadrant Real Estate Advisors LLC
10.7
Swanbourne Joint Venture
33.2
Tucker Box Hotel Group
—
Walsh Bay Partnership
202.4
d) Reconciliation of the carrying amount of investments in JVA
i) Associates
Movements in carrying amounts
Balance 1 July
Distributions received/receivable
Share of profit from ordinary operating activities
Other
Balance 30 June
ii) Joint ventures
Movements in carrying amounts
Balance 1 July
Equity acquired
Equity sold
Repayment of capital
Investment impaired
Distributions received/receivable
Deferred revenue eliminated
Share of profit from ordinary operating activities
Transfers from investment in controlled entities
Other
Balance 30 June
Deprec-
iation and
amorti-
Income
tax
Interest
sation expense expense
$m
$m
$m
Interest
income
$m
Other
Profit/
Distri-
butions
(loss) compre- compre- received
for the hensive hensive from joint
income ventures
$m
income
$m
year
$m
Total
$m
1.0
—
0.1
—
0.4
—
—
—
0.1
—
0.1
—
—
0.1
—
—
—
0.6
0.2
—
—
—
0.2
—
2.8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0.2
—
—
—
0.2
1.4
—
1.8
—
0.7
—
—
1.9
—
—
—
—
—
—
—
—
—
—
7.5
—
0.6
—
11.3
—
(0.3)
—
—
—
—
—
—
—
—
—
(0.1)
—
—
0.5
—
—
—
—
—
—
—
—
—
—
(0.8)
0.6
1.1
—
(19.0)
1.8
—
(12.8)
0.1
(0.5)
—
—
—
1.2
(0.2)
0.7
0.2
2.1
(28.7)
—
3.0
3.1
20.0
—
25.2
0.1
(28.1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(0.8)
0.6
1.1
—
(19.0)
1.8
—
(12.8)
0.1
(0.5)
—
—
—
1.2
(0.2)
0.7
0.2
2.1
(28.7)
—
3.0
3.1
20.0
—
—
—
—
—
3.5
—
—
—
—
—
—
—
—
1.4
—
—
—
0.2
—
—
1.2
5.4
11.1
—
(28.1)
22.8
2014
$m
0.5
(1.7)
1.2
0.5
0.5
2014
$m
379.4
151.3
—
(11.4)
—
(16.2)
(12.3)
45.7
—
0.6
537.1
2013
$m
0.5
(0.1)
0.1
—
0.5
2013
$m
356.9
47.8
(2.3)
—
(12.3)
(22.8)
(8.1)
12.3
6.9
1.0
379.4
79
MIRVAC GROUP ANNUAL REPORT 2014
14 Investments in JVA / continued
e) Investment in associates accounted for at fair value
Name of entity
Principal activities
JF Infrastructure Yield Fund
Infrastructure
2014
%
22
Interest
2013
%
22
2014
$m
11.8
2013
$m
12.6
For information about the methods and assumptions used in determining the fair value of other financial assets at fair value through
profit or loss, refer to note 33.
f) Impairment of investments
In the year ended 30 June 2014, there was no impairment provision taken against the carrying value of the investments in JVA
(2013: $12.3m). Investments in JVA are reviewed at the end of each reporting period for any impairment and written off to the
extent that the future benefits are no longer probable and do not support the carrying value of the investment.
g) Investments in unconsolidated structured entities
Mirvac is not contractually obliged to provide financial support to its unconsolidated structured entities.
Mirvac invests in a number of funds and trusts. These investments are open-end and closed-end investment funds and trusts
which invest in industrial and infrastructure real estate for the purpose of capital appreciation and/or to earn investment income.
The investees finance their operations through borrowings and through equity issues. Material unconsolidated structured entities
include the following:
— Mirvac Industrial Trust;
— JF Infrastructure Yield Fund; and
— ASFI.
As Mirvac does not provide financial support the exposure of Mirvac is equal to the carrying value being $14.6m (2013: $23.0m).
15 Other financial assets
Current
Heritage Maintenance Annuity — Treasury Building Hotel
Total other financial assets
Non-current
Convertible notes issued by Mirvac 8 Chifley Trust
Convertible notes issued by Mirvac (Old Treasury) Trust
Heritage Maintenance Annuity — Treasury Building Hotel
Total other financial assets
2014
$m
52.0
52.0
—
79.4
—
79.4
2013
$m
—
—
97.2
47.9
42.0
187.1
At 30 June 2014, the Group held $79.4m of convertible notes (2013: $145.1m), of which associated with funding Mirvac (Old Treasury)
Trust joint venture was $79.4m (2013: $47.9m). The Group has an investment accounted for using the equity method in the issuing
joint venture. Convertible notes have been issued to fund the development costs of investment property currently under construction
held by the Group. Upon the agreed conversion date of each property, the convertible notes may be converted into equity held
by the Group and the investment accounted for using the equity method will increase by the value of the convertible notes held.
At 30 June 2014, $97.2m of convertible notes issued by Mirvac 8 Chifley Trust were converted into equity.
a) Fair value measurement
For information about the methods and assumptions used in determining the fair value of other financial assets refer to note 33.
80
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
16 Investment properties
Book value Capitalisation rate
Discount rate
Date of acquisition
30 June 30 June 30 June 30 June 30 June 30 June
2013
%
2014
$m
2014
%
2014
%
2013
$m
2013
%
Date
Last
of last external
external valuation
$m
valuation
—
7.00
7.75
8.00
—
6.63
6.50-
6.75
—
7.63
7.25
9.75
7.75
8.00
8.25
6.00
8.00
—
8.75
7.00
8.00
—
7.25
9.50
7.50
7.75
8.00
9.75
—
9.50
9.00
8.75
6.50-
9.50
6.75
8.00
7.75
7.50
7.63
7.00
7.75
8.25
8.50
6.88
6.75-
7.00
8.50
7.63
7.50
8.00
8.00
8.00
8.25
6.75
8.00
9.00
—
—
8.25
8.50
7.25
9.75
—
8.00
8.25
9.75
7.50
8.50
8.25
8.75
—
7.25
8.25
7.75
7.65
—
8.75
8.88
9.50
—
9.25
June 2012
9.00 December 2012
8.88
June 2013
9.75 December 2013
June 2013
9.50
8.50
8.50- 9.00-
9.00 December 2013
8.75
—
9.00
9.25 December 2012
9.50
June 2013
9.25 December 2013
8.50
10.00
8.75
8.75
9.25
8.50
8.75
—
9.25
8.75
8.75
—
8.75
9.75
8.75
8.75
8.75
10.50
—
10.00
9.00
9.50
9.00-
10.50
8.75
9.25 December 2013
June 2014
9.25
June 2014
9.50
June 2014
9.50
June 2014
9.50
June 2012
9.00
June 2013
9.25
June 2013
10.00
— December 2012
—
—
9.50
June 2014
9.50 December 2012
June 2014
9.25
10.00 December 2013
—
9.25 December 2012
June 2014
9.50
10.50 December 2012
9.25 December 2012
June 2014
9.50
June 2014
9.50
June 2013
9.50
—
—
8.75
June 2014
June 2014
9.25
9.00
8.75
9.50
June 2014
9.50 December 2013
9.25 December 2013
72.0
175.0
248.0
31.0
51.2
188.0
267.5
23.5
79.0
36.0
77.5
26.0
57.0
31.4
792.0
84.3
15.2
60.0
—
68.0
35.5
106.4
19.1
—
124.0
26.0
14.7
47.0
70.0
9.5
48.5
55.1
175.5
237.0
69.0
110.0
6.00
6.00
8.75
9.00
June 2014
280.0
32.5
—
—
82.2
192.8
181.4
—
188.9
December 2009
December 1998
April 2004
December 2009
April 2004
November 2002
December 2009
June 1994 289.3 272.0
23.5
78.6
71.0
178.2
August 2010 250.0 248.0
30.5
51.2
MPT and its controlled entities
1 Castlereagh Street, Sydney NSW 1
1 Darling Island, Pyrmont NSW
1 Woolworths Way, Bella Vista NSW 2
1-47 Percival Road, Smithfield NSW
10 Julius Avenue, North Ryde NSW 1,2
10-20 Bond Street, Sydney NSW
(50% interest) 2
101-103 Miller Street & Greenwood Plaza,
North Sydney NSW (50% interest)
12 Julius Avenue, North Ryde NSW 1,2
189 Grey Street, Southbank QLD
1900-2060 Pratt Boulevard,
Chicago Illinois USA
191-197 Salmon Street, Port Melbourne VIC
210 George Street, Sydney NSW
220 George Street, Sydney NSW
271 Lane Cove Road, North Ryde NSW
275 Kent Street, Sydney NSW 2,3
3 Rider Boulevard, Rhodes NSW 2
33 Corporate Drive, Cannon Hill QLD 1,2
340 Adelaide Street, Brisbane QLD 2,4
367 Collins Street, Melbourne VIC 5
May 2013
37 Pitt Street, Sydney NSW
38 Sydney Avenue, Forrest ACT 1
June 1996
40 Miller Street, North Sydney NSW
March 1998
47-67 Westgate Drive, Altona North VIC 2 December 2009
477 Collins Street, Melbourne VIC 5
November 2013
January 2007
5 Rider Boulevard, Rhodes NSW
May 2013
51 Pitt Street, Sydney NSW
October 1987
54 Marcus Clarke Street, Canberra ACT
54-60 Talavera Road, North Ryde NSW 1,2
August 2010
55 Coonara Avenue, West Pennant Hills NSW 2 August 2010
May 2013
6-8 Underwood Street, Sydney NSW
September 1989
60 Marcus Clarke Street, Canberra ACT
35.0
101.6
26.0
57.0
31.3
August 2010 435.0 830.0
84.3
15.2
—
—
67.0
35.5
105.5
19.1
—
126.9
24.0
14.7
47.0
100.5
9.0
48.5
89.1
December 2009
—
August 2010
December 2009
55.3
November 2013 228.0
68.0
—
106.4
19.1
72.0
130.4
26.0
14.1
—
70.0
9.5
48.5
December 2007
July 2003
May 2013
May 2013
April 2000
36.0
77.5
26.0
57.0
31.4
January 2007 280.0 255.0
—
170.0
231.0
68.6
109.2
55.1
175.5
January 2014
May 2013
December 2009
December 2009
May 2013 237.0
69.0
July 2007
115.0
June 2001
60 Wallgrove Road, Eastern Creek NSW 5
90 Collins Street, Melbourne VIC
Allendale Square, 77 St Georges Terrace,
Perth WA
Aviation House, 16 Furzer Street, Phillip ACT
Bay Centre, Pirrama Road, Pyrmont NSW
Broadway Shopping Centre, Broadway NSW
(50% interest)
Cherrybrook Village Shopping Centre,
Cherrybrook NSW 2
City Centre Plaza, Rockhampton QLD 2
Como Centre, Cnr Toorak Road &
168.3
Chapel Street, South Yarra VIC
Cooleman Court, Weston ACT 2
52.0
Gippsland Centre, Sale VIC 1
—
Harbourside Shopping Centre, Sydney, NSW 5 January 2014 252.0
93.2
Hinkler Central, Bundaberg QLD
John Oxley Centre, 339 Coronation Drive,
Milton QLD 1
Kawana Shoppingworld,
Buddina QLD
Moonee Ponds Central,
Moonee Ponds VIC 6
Nexus Industry Park (Building 1),
Lyn Parade, Prestons NSW
Nexus Industry Park (Building 2),
Lyn Parade, Prestons NSW
August 1998
December 2009
January 1994
May 2003
& February 2008
December 1993 (50%)
August 2004
August 2004
August 2003
86.7
44.0
May 2002
20.5
67.0
13.1
—
84.6
49.0
159.9
47.6
48.5
—
92.0
7.25
7.25
8.00
8.00
8.00- 8.00-
8.50
8.36
7.75
7.50
8.50
—
—
6.75
7.75
7.75
June 2013
June 2013
9.25
9.25
9.25
9.50
9.00- 9.00-
June 2013
11.00
11.00
9.50 December 2013
9.00
9.50 December 2011
—
8.75
—
9.50 December 2012
9.50
—
84.6
49.0
159.9
53.0
49.1
—
92.0
56.1
—
9.00
—
10.00 December 2012
56.0
& June 1998 (50%) 299.8 230.7
6.50
66.8
7.75
6.75
7.75-
8.50
9.00
9.25 December 2013
255.0
9.50-
9.75
9.00
June 2014
67.0
19.2
7.75
8.00
9.25
9.25
June 2013
19.2
14.6
7.75
8.00
9.25
9.50 December 2012
14.4
81
MIRVAC GROUP ANNUAL REPORT 2014
16 Investment properties / continued
Book value Capitalisation rate
Discount rate
Date of acquisition
30 June 30 June 30 June 30 June 30 June 30 June
2013
%
2014
$m
2014
%
2014
%
2013
%
2013
$m
Date
Last
of last external
external valuation
$m
valuation
August 2004
26.1
25.3
8.00
8.00
9.25
9.25
June 2013
25.3
August 2004
38.2
35.0
7.50
8.00
9.25
9.50 December 2013
35.8
August 2004
April 1993
19.5
—
17.1
48.0
7.50
—
8.00
8.50
9.25
—
9.50 December 2012
9.75 December 2011
16.4
49.0
August 2002
138.8
129.0
6.75
6.75
9.25
9.25 December 2012
128.0
November 1989
29.3
30.5
8.25
8.50
10.00
10.00
June 2013
30.5
Nexus Industry Park (Building 3),
Lyn Parade, Prestons NSW
Nexus Industry Park (Building 4),
Lyn Parade, Prestons NSW
Nexus Industry Park (Building 5),
Lyn Parade, Prestons NSW
Orange City Centre, Orange NSW 1
Orion Springfield Town Centre,
Springfield QLD
Quay West Car Park,
109-111 Harrington Street, Sydney NSW
Rhodes Shopping Centre, Rhodes NSW
(50% interest)
January 2007
April 2002
130.4
125.0
& July 2003 208.5
October 1995 (50%)
& April 2001 (50%)
Riverside Quay, Southbank VIC
Royal Domain Centre,
380 St Kilda Road, Melbourne VIC
Sirius Building, 23 Furzer Street,
February 2010 247.0 246.0
Phillip ACT
44.0
St Marys Village Centre, St Marys NSW
January 2003
87.0
Stanhope Village, Stanhope Gardens NSW November 2003
Waverley Gardens Shopping Centre,
Mulgrave VIC 1
November 2002
46.0
101.6
194.7
127.7
135.7
118.0
—
7.00
7.50-
7.75
7.00
7.75-
8.00
9.25
9.00-
10.25
June 2013
9.25
9.25-
10.00 December 2013
125.0
199.3
8.00
8.00
9.00
9.00
June 2013
118.0
7.35
7.75
7.25
7.50
7.75
7.50
8.75
9.00
9.00
9.50 December 2013
9.00 December 2012
9.25 December 2013
246.5
44.0
97.0
—
7.75
—
9.50 December 2013
131.5
Mirvac Limited and its controlled entities
Hoxton Distribution Park,
Hoxton Park NSW (50% interest)
July 2010
114.1
104.1
6.50
7.25
9.25
9.25 December 2013
108.0
Total investment properties
5,890.4 5,954.7
IPUC
200 George Street, Sydney NSW
(50% interest)
699 Bourke Street, Melbourne VIC
(50% interest) 7
December 2012
68.6
44.1
6.50
6.50
8.75
8.75 December 2012
37.6
November 2007 (50%)
& May 2011 (50%) 20.4
—
6.50
—
6.50- 6.50-
9.50
9.50
9.00
—
9.25- 9.25-
10.25
10.25 December 2012
—
—
Orion Springfield land, Springfield QLD
August 2002
37.0
30.8
Total IPUC
Total investment properties and IPUC
126.0
74.9
6,016.4 6,029.6
1) Investment property disposed of or reclassified to held for sale during the year.
2) Date of acquisition represents business combination acquisition date.
3) 50 per cent of the investment property reclassified to held for sale during the year.
4) Previously classified as OOP.
5) Investment property acquired during the year.
6) Moonee Ponds Central (Stage ll) and Moonee Ponds Central, Moonee Ponds VIC amalgamated during the year.
7) Transferred from inventories during the year.
a) Reconciliation of carrying amounts of investment properties
At fair value
Balance 1 July
Additions
Acquisitions
Disposals
Net gain on fair value of investment properties 1
Net loss on fair value of IPUC
Net (loss)/gain from foreign currency translation
Assets classified as held for sale
Transfers from inventories
Transfers from OOP
Amortisation of fitout incentives, leasing costs and rent incentive
Balance 30 June
Note
35
35
13
17
2014
$m
6,029.6
215.5
643.1
(149.1)
56.5
(7.7)
(0.9)
(821.0)
20.1
60.0
(29.7)
6,016.4
1) FY13 is different to consolidated SoCI by $1.6m due to revaluation decrement to investment properties classified as OOP.
82
33.0
2013
$m
5,488.5
118.4
619.0
(142.4)
55.6
(3.6)
3.0
(81.3)
—
—
(27.6)
6,029.6
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
16 Investment properties / continued
b) Amounts recognised in the consolidated SoCI for investment properties
At fair value
Investment properties rental revenue
Investment property expenses
2014
$m
650.9
(159.2)
491.7
2013
$m
583.1
(136.6)
446.5
c) Fair value measurement and valuation basis
i) Investment properties
Investment properties are carried at fair value. Valuation methods used to determine the fair value include market sales comparison,
DCF and capitalisation rate (“CR”). The fair value for a property may be determined by using a combination of these and other
valuation methods.
Market sales comparison: The sales comparison approach utilises recent sales of comparable properties, adjusted for any differences
including the nature, location and lease profile, to indicate the fair value of a property. Where there is a lack of recent sales activity,
adjustments are made from previous comparable sales to reflect changes in economic conditions.
DCF: DCF projections derived from contracted rents, market rents, operating costs, lease incentives, lease fees, capital expenditure
and future income on vacant space are discounted at a rate to arrive at a value. The discount rate is a market assessment of the
risk associated with the cash flows, and the nature, location and tenancy profile of the property relative to returns from alternative
investments, CPI rates and liquidity risk. It is assumed that the property is sold at the end of the investment period at a terminal
value. The terminal value is determined by using an appropriate terminal CR. Mirvac’s terminal CR is in the range of an additional nil
to 75 basis points above the respective property’s CR.
CR: An assessment is made of fully leased net income based on contracted rents, market rents, operating costs and future income
on vacant space. The adopted fully leased net income is capitalised in perpetuity from the valuation date at an appropriate CR. The
CR reflects the nature, location and tenancy profile of the property together with current market investment criteria, as evidenced
by current sales evidence. Various adjustments, including incentives, capital expenditure, and reversions to market rent, are made to
arrive at the property value.
ii) IPUC
There are generally no active markets for IPUC; therefore, a lack of comparable transactions for IPUC usually requires the use
of estimation models. The two main estimation models used to value IPUC are residual and DCF valuations. The residual method
of determining the value of a property uses the estimated total cost of the development, including construction and associated
expenditures, finance costs, and an allowance for developer’s risk and profit is deducted from the end value of the completed project.
The resultant figure is then adjusted back to the date of valuation to give the residual value.
AASB 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
— quoted prices (unadjusted) in active markets for identical assets or liabilities (level one);
— inputs other than quoted prices included within level one that are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices) (level two); and
— inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level three).
DCF and CR both use unobservable inputs in determining fair value; ranges of the inputs are included below:
Fair value
hierarchy
Fair value
$m
Gross
market rent 1
$/sqm
Inputs used to measure fair value
Gross Capitalisation
rate
%
passing rent 2
$/sqm
Terminal
yield Discount rate
%
%
Level three
Level three
Level three
Level three
3,701.4
405.6
1,806.6
102.8
280-1,275
50-260
211-10,357
270-425 4
195-1,275
50-290
211-10,357
220-425 4
6.00-9.75
7.25-9.50
6.00-8.00
7.75-8.25
6.25-10.50
7.75—9.75
6.25-8.25
8.00-8.50
8.50-10.50
8.50-9.75
8.75-9.50
10.00-11.00
Sector
Office 3
Industrial
Retail 3
Other 5
1) Estimated rent between arm’s length parties if negotiated today, per square metre, per annum.
2) Current contracted rent, per square metre, per annum.
3) Includes IPUC.
4) Other represents the rate per a car space per month.
5) Includes a hotel which has been excluded from the passing and market rental calculation.
d) Sensitivity on changes in fair value of investment property
Movement in any of the unobservable inputs is likely to have an impact on the fair value of investment property. The higher the CR,
terminal yield and discount rate, the lower the fair value.
e) Highest and best use
For all investment properties, the current use equates to the highest and best use.
f) Non current assets pledged as security
There are no non-current assets pledged as security by the Group.
83
MIRVAC GROUP ANNUAL REPORT 2014
16 Investment properties / continued
g) Property portfolio
Mirvac’s property portfolio is made up as follows:
Investment properties per consolidated SoFP
Properties classified as assets held for sale
OOP classified as PPE
17 PPE
2014
Balance 1 July
Revaluation decrement
Additions
Transfers to other assets 1
Disposals
Depreciation expenses
Balance 30 June
2014
Cost or fair value
Accumulated depreciation
Net book amount
2013
Balance 1 July
Revaluation increment
Additions
Transfers to other assets
Depreciation expenses
Balance 30 June
2013
Cost or fair value
Accumulated depreciation
Net book amount
Note
13
17
2014
$m
6,016.4
821.0
238.6
7,076.0
2013
$m
6,029.6
81.3
306.7
6,417.6
Plant and
equipment
$m
Leased plant
OOP and equipment
$m
$m
11.1
—
3.2
—
(0.2)
(4.5)
9.6
32.5
(22.9)
9.6
12.7
—
3.6
(0.7)
(4.5)
11.1
40.1
(29.0)
11.1
306.7
(2.2)
—
(60.0)
—
(5.9)
238.6
276.6
(38.0)
238.6
294.7
19.5
—
—
(7.5)
306.7
341.4
(34.7)
306.7
—
—
0.5
—
—
—
0.5
0.5
—
0.5
—
—
—
—
—
—
—
—
—
Total
$m
317.8
(2.2)
3.7
(60.0)
(0.2)
(10.4)
248.7
309.6
(60.9)
248.7
307.4
19.5
3.6
(0.7)
(12.0)
317.8
381.5
(63.7)
317.8
1) Transfers out relates to 340 Adelaide Street, Brisbane QLD being reclassified as investment property as it no longer satisfies the criteria for OOP.
A reconciliation of the revaluation (decrement)/increment and the asset revaluation reserve (“ARR”) is shown in note 24(d).
a) Fair value measurement and valuation basis of OOP
OOP is revalued by external valuers on a rotation basis with approximately one-half of the portfolio (including OOP) being valued
annually. The basis of valuation of OOP is fair value; for information about the methods and assumptions used in determining the
fair value of OOP, refer to note 16. The valuation basis is consistent with the approach taken for investment properties (refer to
note 16(c)). Discount rates range from 8.50 to 10.50 per cent (2013: 8.75 to 10.25 per cent) and CR range from 6.00 to 9.50 per cent
(2013: 6.00 to 9.75 per cent). The revaluation decrement net of applicable deferred income taxes was debited to the ARR in equity
(refer to note 24(b)).
b) Historical cost of items carried at fair value
OOP
Balance 30 June
2014
$m
210.6
2013
$m
249.3
84
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
18 Intangible assets
2014
Balance 1 July
Impairment of goodwill
Derecognition of goodwill
Balance 30 June
2013
Balance 1 July
Balance 30 June
a) Allocation of intangible assets by operating segment
A segment level summary of the intangible asset allocations is presented below:
2014
Management rights — indefinite life 1
Goodwill
Balance 30 June
2013
Management rights — indefinite life 1
Goodwill
Balance 30 June
Management
rights
$m
Goodwill
$m
2.6
—
—
2.6
2.6
2.6
63.1
(24.5)
(2.2)
36.4
63.1
63.1
Investment
Investment Management
$m
$m
—
36.4
36.4
—
63.1
63.1
2.6
—
2.6
2.6
—
2.6
Total
$m
65.7
(24.5)
(2.2)
39.0
65.7
65.7
Total
$m
2.6
36.4
39.0
2.6
63.1
65.7
1) Management rights are primarily held in relation to funds established or rights established by entities acquired by Mirvac. These funds are considered to be
open-ended and therefore have no expiry. The Group also holds strategic stakes in these funds in order to protect its interests.
b) Key assumptions used for value in use calculations for goodwill and other intangible assets
The recoverable amount of CGU is determined using the higher of fair value less costs to sell, and their value in use. The value in use
calculation is based on financial budgets and forecasts approved by management covering a five year period. For the Investment
Management CGU, cash flows beyond the five year period are extrapolated using the estimated growth rates stated below. For the
Investment CGU, no forecast growth rate is assumed as the value in use calculations are based on forecast cash flows from existing
projects and investment properties. The growth rate has been adjusted to reflect current market conditions and does not exceed the
long term average growth rate for the business in which the CGU operates. The discount rates used are pre-tax and reflect specific
risks relating to the relevant segments and the countries in which they operate. A terminal growth rate of three per cent has also
been applied.
CGU
Investment
Investment Management
Growth rate 1 Discount rate
2014
% pa
2014
% pa
Growth rate 1 Discount rate
2013
% pa
2013
% pa
— 2
1.0
8.9
13.0
— 2
1.0
9.5
13.0
1) Weighted average growth rate used to extrapolate cash flows beyond the budget period.
2) The value in use calculation is based on financial budgets and forecasts approved by management covering a five year period. No forecast growth rate is
assumed as the value in use calculations are based on forecast cash flows from existing projects and investment properties.
The recoverable amount of intangible assets exceeds the carrying value at 30 June 2014. Management considers that for the
carrying value to exceed the recoverable amount, there would have to be unreasonable changes to key assumptions. Management
considers the chances of these changes occurring as unlikely.
c) Impairment of goodwill
Goodwill of $24.5m was recognised following the acquisition of the WOT on 4 August 2010. This goodwill was tested for impairment
within the Investment CGU, in line with the policy detailed in note 1(j). During the year, the Group entered an unconditional contract
to sell 50 per cent of 275 Kent Street, Sydney NSW. This investment property was the largest asset of WOT. The recoverable amount
of goodwill for the CGU was tested using the value in use methodology, using the present value of future cash flows expected to
be derived from the Investment CGU using a pre-tax discount rate. The major assumptions included the future cash flows of the
property and the discount rate used. Due to the 50 per cent sale of the investment property, a significant reduction in the future
cash flows in the Investment CGU has resulted in an impairment loss of $24.5m (2013: $nil) in the Investment CGU goodwill.
d) Impairment of intangible assets
There was no impairment of management rights (2013: $nil). Management rights are primarily held in relation to funds established
or rights established by entities acquired by Mirvac. These funds are considered to be open-ended and therefore have no expiry.
85
MIRVAC GROUP ANNUAL REPORT 2014
19 Payables
Current
Trade payables
Employee benefits
Deferred revenue 1
Accruals
Deferred payment for land
Other creditors
Amounts due to related entities
Non-current
Deferred revenue 1
Deferred payment for land
Other creditors
2014
$m
79.0
9.8
128.0
185.1
55.2
45.8
2.2
505.1
24.5
35.5
25.0
85.0
2013
$m
51.3
9.4
282.3
142.1
27.1
35.9
1.8
549.9
52.4
85.0
11.5
148.9
1) Deferred revenue includes payments received in respect of development contracts that do not meet the requirements to be accounted for as construction contracts.
Trade payables are unsecured and are usually paid within 30 days of recognition.
a) Fair values of payables
The carrying amounts of trade and other payables are assumed to be the same as their fair values due to their short term nature.
20 Borrowings
a) Borrowings
Current
Unsecured
Bank loans
Domestic MTN
Secured
Lease liabilities
Non-current
Unsecured
Bank loans
Domestic MTN
Foreign MTN
Secured
Lease liabilities
Note
2014
$m
2013
$m
20(a)(i)
20(a)(ii)
20(a)(iii)
20(a)(i)
20(a)(ii)
20(a)(iv)
20(a)(iii)
—
200.0
2.9
202.9
975.2
625.0
914.3
0.2
2,514.7
172.1
—
3.0
175.1
1,000.0
575.0
414.3
2.8
1,992.1
i) Bank loans
Mirvac has unsecured bank facilities totalling $1,388.2m (2013: $1,560.0m). The facility contains three tranches: a $448.2m tranche
maturing in September 2015, a $470.0m tranche maturing in September 2017 and a $470.0m tranche maturing in September 2018.
The bilateral bank facility was repaid during the period (2013: $150.0m). Subject to compliance with the terms, each of these bank
loan facilities may be drawn at any time.
ii) Domestic MTN
Mirvac has a total of $825.0m (2013: $575.0m) of domestic MTN outstanding: $200.0m maturing in March 2015, $225.0m maturing in
September 2016, $200.0m maturing in December 2017 and $200.0m maturing in September 2020. Mirvac issued a total of $250.0m
during the year. Interest is payable either quarterly or semi-annually in arrears in accordance with the terms of the notes.
iii) Lease liabilities
Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.
86
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
20 Borrowings / continued
iv) Foreign MTN
Mirvac has a total of $1,019.8m (US$735.0m and $135.0m) (2013: $512.9m) US Private Placement notes outstanding. The notes
mature as follows:
— US$275.0m and $10.0m maturing in November 2016;
— US$100.0m maturing in November 2018;
— US$160.0m and $50.0m maturing in December 2022;
— US$105.0m and $25.0m maturing in December 2024; and
— US$95.0m and $50.0m maturing in December 2025.
Mirvac issued a total of $506.8m in notes during the year. Interest is payable semi-annually in arrears for all notes. Some of the notes
were issued with fixed and floating rate coupons payable in US dollars and swapped back to Australian dollar floating rate coupons
through cross currency swaps and interest rate swaps.
b) Financing arrangements
Total facilities
Bank loans
Domestic MTN
Foreign MTN
Used at end of the reporting period
Bank loans
Domestic MTN
Foreign MTN
Unused at end of the reporting period
Bank loans
Domestic MTN
Foreign MTN
c) Fair value
Included in consolidated SoFP
Non-traded financial liabilities
Bank loans
Domestic MTN
Foreign MTN
Lease liabilities
2014
$m
2013
$m
1,388.2
825.0
914.3
3,127.5
975.2
825.0
914.3
2,714.5
413.0
—
—
413.0
1,560.0
575.0
414.3
2,549.3
1,172.1
575.0
414.3
2,161.4
387.9
—
—
387.9
Carrying amount
2014
$m
2013
$m
2014
$m
Fair value
2013
$m
975.2
825.0
914.3
3.1
1,172.1
575.0
414.3
5.8
975.2
868.8
914.3
3.1
2,717.6
2,167.2
2,761.4
1,172.1
575.0
414.3
5.8
2,167.2
None of the classes above is readily traded on organised markets in standardised form.
The carrying value of all borrowings except domestic MTN is considered to approximate their fair value and the impact to the fair
value from the difference in the interest rates is considered immaterial. All borrowings are disclosed as level three in the fair value
measurement hierarchy. For details on fair value hierarchy, refer to note 33.
i) Included in consolidated SoFP
The fair value for borrowings less than 12 months to maturity is deemed to equal the carrying amounts. All other borrowings are
discounted if the effect of discounting is material. The fair value of borrowings is based upon market prices where a market exists
or by discounting the expected future cash flows by the current interest rates for liabilities with similar risk profiles.
87
MIRVAC GROUP ANNUAL REPORT 2014
21 Provisions
Current
Employee benefits — LSL
Dividends/distributions payable
Non-current
Asset retirement obligation
Employee benefits — LSL
Movements in each class of provision during the year, other than employee benefits, are set out below:
Dividends/distributions payable 1
Balance 1 July
Interim and final dividends/distributions
Payments made
Balance 30 June
Asset retirement obligation 2
Balance 1 July
Recognition
Provision release
Balance 30 June
2014
$m
8.4
169.8
178.2
0.3
3.2
3.5
2014
$m
164.9
331.1
(326.2)
169.8
0.4
0.3
(0.4)
0.3
2013
$m
7.4
164.9
172.3
0.4
3.2
3.6
2013
$m
82.0
308.8
(225.9)
164.9
0.6
—
(0.2)
0.4
1) The amounts reported in the provision include dividends/distributions paid/payable to securityholders of the Group.
2) The asset retirement obligation relates to obligations under lease agreements for space on expiry of the lease, to return it to its condition at the
commencement of the lease.
22 Other liabilities
Monies held in trust
23 Contributed equity
a) Paid up equity
Mirvac Limited — ordinary shares issued
MPT — ordinary units issued
Total contributed equity
2014
$m
0.2
2013
$m
0.3
2014
Securities
m
3,688.5
3,688.5
2013
Securities
m
3,659.9
3,659.9
2014
$m
2,070.8
4,726.0
6,796.8
2013
$m
1,765.2
4,980.1
6,745.3
b) Movements in paid up equity
Movements in paid up equity of Mirvac for the year ended 30 June 2014 and June 2013 were as follows:
Issue date
Issue price
Note
m
Balance 1 July 2013
DRP securities issued
EEP securities issued
LTP, LTIP and EIS securities converted, sold, vested or forfeited
Less: Transaction costs arising on issues of securities
27 February 2014
20 March 2014
$1.71
$1.72
23(d)
3,659.9
26.9
0.4
1.3
—
Securities
$m
6,745.3
46.0
0.7
5.3
(0.5)
Balance 30 June 2014
Balance 1 July 2012
Acquisition of GE portfolio
EEP securities issued
LTP, LTIP and EIS securities converted, sold,
vested or forfeited
Less: Transaction costs arising on issues of securities
Balance 30 June 2013
88
14 March 2013
$1.69
$1.64
23(c)
23(d)
3,688.5
6,796.8
3,412.0
238.9
0.4
8.6
—
6,334.7
403.7
0.7
13.4
(7.2)
3,659.9
6,745.3
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
23 Contributed equity / continued
Ordinary securities
All ordinary securities were fully paid at 30 June 2014. Ordinary securities entitle the holder to participate in dividends/distributions
and the proceeds on winding up of Mirvac in proportion to the number of and amount paid on the securities held. On a show of
hands, every holder of ordinary securities present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each
security is entitled to one vote.
c) Acquisition of GE portfolio
On 23 May 2013, Mirvac acquired a portfolio of office assets from GE, which was largely funded by a fully underwritten $400.0m
(before costs) institutional placement of 236.7m securities at $1.69 per stapled security issued on 17 May 2013 and $3.7m Security
Purchase Plan of 2.2m securities at $1.69 per stapled security issued on 24 June 2013.
d) LTP, LTIP, EIS and EEP issues
i) Current LTP
At 30 June 2014, 23.4m (2013: 23.3m) performance rights and nil (2013: nil) options were issued to participants under the plan.
The number of issued rights and options is net of adjustments due to forfeiture of rights and options as a result of termination
of employment. During the year, no performance rights (2013: 3.4m) and no options (2013: nil) vested.
ii) EEP
At 30 June 2014, 5.8m (2013: 5.4m) stapled securities have been issued to employees under the EEP.
iii) Superseded LTI and EIS plans
During the year, no securities were issued to employees of Mirvac Limited and its controlled entities under the superseded LTI plan
and EIS (2013: nil). The total number of stapled securities issued to employees under the superseded LTI and EIS at 30 June 2014
was 3.8m (2013: 5.1m). The market price per ordinary stapled security at 30 June 2014 was $1.79 (2013: $1.61). Securities issued
as part of the superseded LTI plan and EIS are not classified as ordinary securities, until such time as the vesting conditions are
satisfied, employee loans are fully repaid or the employee leaves Mirvac.
e) Reconciliation of securities issued on the ASX
Under AAS, securities issued under the Mirvac employee LTI plans and EIS are required to be accounted for as an option and are
excluded from total issued equity, until such time as the relevant employee loans are fully repaid or the employee leaves the Group.
Total ordinary securities issued as detailed above is reconciled to securities issued on the ASX as follows:
Total ordinary securities disclosed
Securities issued under LTI plan and EIS
Total securities issued on the ASX
2014
Securities
m
2013
Securities
m
3,688.5
3.8
3,692.3
3,659.9
5.1
3,665.0
f) Employee share scheme
Information relating to the employee share scheme, including details of shares issued under the scheme, is set out in note 30.
g) DRP
Under the DRP, holders of stapled securities may elect to have all or part of their distribution entitlements satisfied by the issue of
new stapled securities rather than being paid in cash. Stapled securities issued under the plan were issued at a price calculated on
a volume weighted average market price (“VWAP”) basis over the 15 business days commencing on the second business day post
record date.
h) Capital risk management
Refer to note 32 for details of Mirvac’s capital risk management.
24 Reserves
a) Reserves
ARR
Capital reserve
Foreign currency translation reserve
SBP reserve
NCI reserve
2014
$m
59.0
(1.5)
(3.5)
15.3
7.6
76.9
2013
$m
65.8
(0.3)
(3.8)
10.5
7.6
79.8
89
MIRVAC GROUP ANNUAL REPORT 2014
24 Reserves / continued
b) Movement in reserves
ARR
Balance 1 July
(Decrement)/increment on revaluation of OOP
Transfers out to retained earnings
Balance 30 June
Capital reserve
Balance 1 July
Transfers out to retained earnings
Balance 30 June
Foreign currency translation reserve
Balance 1 July
Increase in reserve due to translation of foreign operations
Deferred tax
Transfers due to deconsolidation of entity
Balance 30 June
SBP reserve
Balance 1 July
Expense relating to SBP
Deferred tax
Balance 30 June
NCI reserve
Balance 1 July
Balance 30 June
Note
24(d)
25
25
6(h)
6(g)
2014
$m
65.8
(4.8)
(2.0)
59.0
(0.3)
(1.2)
(1.5)
(3.8)
3.4
0.1
(3.2)
(3.5)
10.5
4.4
0.4
15.3
7.6
7.6
2013
$m
51.0
14.8
—
65.8
(0.2)
(0.1)
(0.3)
(11.0)
9.5
(2.3)
—
(3.8)
16.8
(6.9)
0.6
10.5
7.6
7.6
c) Nature and purpose of reserves
i) ARR
The ARR is used to record increments and decrements on the revaluation of OOP. However, any decrement in excess of previous
increments is expensed to the consolidated SoCI.
ii) Capital reserve
The capital reserve was prior to the introduction of IFRS, and used to record the net revaluation increment or decrement on disposal
of investment properties. The balance of the reserve may be transferred to retained earnings and used to satisfy distributions
to securityholders.
iii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled operations of the Group are taken to the foreign currency
translation reserve, as described in note 1(e).
iv) SBP reserve
The SBP reserve is used to recognise the fair value of securities issued under LTI plans, securities issued under the EEP and any
deficit resulting from the sale of securities under LTI plans.
v) NCI reserve
Transactions with NCI that do not result in a loss of control are accounted through equity. The NCI reserve is used to record the
difference between the fair value of the NCI acquired or disposed and any consideration paid/received.
d) Reconciliation of movements between PPE to ARR
Revaluation decrement/(increment) within PPE
Items adjusted to consolidated SoCI
Items relating to OOP including fitout and lease amortisation
Revaluation shortfall booked to PPE but not to ARR
Balance transferred to ARR
Items adjusted directly to reserves
Transfers out to retained earnings
Movement in ARR
90
Note
17
25
2014
$m
2.2
2.6
—
4.8
2.0
6.8
2013
$m
(19.5)
6.3
(1.6)
(14.8)
—
(14.8)
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
25 Retained earnings
Balance 1 July
Profit for the year attributable to the stapled securityholders of Mirvac
Items in other comprehensive income recognised in directly in retained earnings
— Movement in security based compensation
— Transfers due to deconsolidation of entity
— Transfers in from capital reserve
— Transfers in from ARR due to retiring of OOP
Dividends/distributions provided for or paid
Balance 30 June
26 Dividends/distributions
Ordinary stapled securities
Half yearly ordinary distributions paid/payable as follows:
4.40 CPSS paid on 27 February 2014 (unfranked distribution)
4.20 CPSS paid on 25 January 2013 (unfranked distribution)
4.60 CPSS payable on 28 August 2014 (unfranked distribution)
4.50 CPSS paid on 26 July 2013 (unfranked distribution)
Total dividend/distribution 9.00 (2013: 8.70) CPSS
Note
24(b)
24(d)
26
2014
$m
(814.3)
447.3
(1.5)
(1.2)
1.2
2.0
(331.1)
(697.6)
2014
$m
161.3
—
169.8
—
331.1
2013
$m
(644.2)
139.9
(1.3)
—
0.1
—
(308.8)
(814.3)
2013
$m
—
143.9
—
164.9
308.8
DRP was activated for the 31 December 2013 half yearly distribution but was deactivated for the 30 June 2014 half yearly distribution.
Distributions paid and payable in cash or satisfied by the issue of stapled securities under the Group’s DRP are as follows:
Paid/payable in cash
Satisfied by the issue of stapled securities
2014
$m
285.1
46.0
331.1
2013
$m
308.8
—
308.8
Franking credits available for subsequent years based on a tax rate of 30 per cent total $15.8m (2013: $15.7m on a tax rate of 30 per cent).
27 Controlled entities and deed of cross guarantee
The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities in accordance
with the accounting policy described in note 1(c):
a) Interests in controlled entities of Mirvac
Country of
establishment/
incorporation
Class of
units/
shares
2014
%
Equity holding
2013
%
Name of entity
107 Mount Street Head Trust
107 Mount Street Sub Trust
197 Salmon Street Pty Limited 1
A.C.N. 087 773 859 Pty Limited 1
A.C.N. 110 698 603 Pty Limited 1
A.C.N. 150 521 583 Pty Limited 1
A.C.N. 151 466 241 Pty Limited 1
A.C.N. 165 515 515 Pty Limited 1,2
Banksia Unit Trust
CN Collins Pty Limited 1
Domaine Investments Management Pty Limited
Fast Track Bromelton Pty Limited 1
Ford Mirvac Unit Trust
Fyfe Road Pty Limited 1
Gainsborough Greens Pty Limited 1
Hexham Project Pty Limited 1
HIR Boardwalk Tavern Pty Limited 1
HIR Golf Club Pty Limited 1
HIR Golf Course Pty Limited 1
HIR Property Management Holdings Pty Limited 1
HIR Tavern Freehold Pty Limited 1
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Units
Units
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Units
Ordinary
Ordinary
Ordinary
Units
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
—
100
100
50
100
100
100
100
100
100
100
100
100
100
91
MIRVAC GROUP ANNUAL REPORT 2014
27 Controlled entities and deed of cross guarantee / continued
a) Interests in controlled entities of Mirvac / continued
Country of
establishment/
incorporation
Hoxton Park Airport Limited 1
HPAL Holdings Pty Limited 1
Industrial Commercial Property Solutions (Constructions) Pty Limited 1
Industrial Commercial Property Solutions (Finance) Pty Limited 1
Industrial Commercial Property Solutions (Holdings) Pty Limited 1
Industrial Commercial Property Solutions (Queensland) Pty Limited 1
Industrial Commercial Property Solutions Pty Limited 1
JF ASIF Pty Limited 1
Magenta Shores Finance Pty Limited 1
Magenta Shores Unit Trust
Magenta Unit Trust
MFM US Real Estate Inc
MGR US Real Estate Inc
Mirvac (Beacon Cove) Pty Limited 1
Mirvac (Docklands) Pty Limited 1
Mirvac (Old Treasury Development Manager) Pty Limited 1
Mirvac (Old Treasury Hotel) Pty Limited 1
Mirvac (WA) Pty Limited 1
Mirvac (Walsh Bay) Pty Limited 1
Mirvac 8 Chifley Pty Limited
Mirvac Advisory Pty Limited 1
Mirvac Aero Company Pty Limited 1
Mirvac AOP SPV Pty Limited2
Mirvac Blue Trust
Mirvac Capital Investments Pty Limited 1
Mirvac Capital Office Pty Limited 2
Mirvac Capital Partners Limited 3
Mirvac Capital Partners Investment Management Pty Limited 1,4
Mirvac Capital Pty Limited 1
Mirvac Chifley Holdings Pty Limited
Mirvac Commercial Funding Pty Limited 1
Mirvac Commercial Sub SPV Pty Limited 1
Mirvac Constructions (Homes) Pty Limited 1
Mirvac Constructions (QLD) Pty Limited 1
Mirvac Constructions (SA) Pty Limited 1
Mirvac Constructions (VIC) Pty Limited 1
Mirvac Constructions (WA) Pty Limited 1
Mirvac Constructions Pty Limited 1
Mirvac Design Pty Limited 1
Mirvac Developments Pty Limited 1
Mirvac Doncaster Pty Ltd 1
Mirvac Elderslie Pty Limited 1
Mirvac ESAT Pty Limited 1
Mirvac Finance Limited 1
Mirvac Funds Limited 3
Mirvac Funds Management Limited 3
Mirvac George Street Holdings Pty Limited 1
Mirvac George Street Pty Limited 1
Mirvac Green Trust
Mirvac Group Finance Limited 1
Mirvac Group Funding Limited 1
Mirvac Harbourtown Pty Limited 1
Mirvac Harold Park Pty Ltd 1
Mirvac Harold Park Trust
Mirvac Holdings (WA) Pty Limited 1
Mirvac Holdings Limited 1
Mirvac Home Builders (VIC) Pty Limited 1
Mirvac Homes (NSW) Pty Limited 1
Mirvac Homes (QLD) Pty Limited 1
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
92
Class of
units/
shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Units
Units
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Units
Ordinary
Ordinary
Ordinary
Ordinary
Units
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2014
%
Equity holding
2013
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
—
100
100
—
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
27 Controlled entities and deed of cross guarantee / continued
a) Interests in controlled entities of Mirvac / continued
Mirvac Homes (SA) Pty Limited 1
Mirvac Homes (VIC) Pty Limited 1
Mirvac Homes (WA) Pty Limited 1
Mirvac Hotel Services Pty Limited 1
Mirvac ID (Bromelton) Pty Limited 1
Mirvac ID (Bromelton) Sponsor Pty Limited 1
Mirvac Industrial Developments Pty Limited 1
Mirvac International (Middle East) No. 2 Pty Limited 1
Mirvac International (Middle East) No. 3 Pty Limited 1
Mirvac International No. 3 Pty Limited 1
Mirvac JV’s Pty Limited 1
Mirvac Kent Street Holdings Pty Limited 1
Mirvac Mandurah Pty Limited 1
Mirvac National Developments Pty Limited 1
Mirvac Newcastle Pty Limited 1
Mirvac Old Treasury Holdings Pty Limited 1
Mirvac Pacific Pty Limited 1
Mirvac Parking Pty Limited 1
Mirvac Parklea Pty Limited 1
Mirvac Precinct 2 Pty Limited 1
Mirvac Procurement Pty Limited 1,5
Mirvac Projects Dalley Street Pty Limited 1
Mirvac Projects George Street Pty Limited 1
Mirvac Projects Dalley Street Trust
Mirvac Projects George Street Trust
Mirvac Projects No. 2 Pty Limited 1
Mirvac Projects Pty Limited 1
Mirvac Properties Pty Limited 1
Mirvac Property Advisory Services Pty Limited 1
Mirvac Property Services Pty Limited 1
Mirvac Queensland Pty Limited 1
Mirvac Real Estate Debt Funds Pty Limited 1
Mirvac Real Estate Pty Limited 1
Mirvac REIT Management Limited 3
Mirvac Retail Head SPV Pty Limited 1
Mirvac Retail Sub SPV Pty Limited 1
Mirvac Rockbank Pty Limited 1
Mirvac Services Pty Limited 1
Mirvac South Australia Pty Limited 1
Mirvac Spare Pty Limited 1
Mirvac Spring Farm Limited 1
Mirvac SPV 1 Pty limited 1,6
Mirvac Trademarks Pty Limited 2
Mirvac Treasury Limited 1
Mirvac Treasury No. 3 Limited 1
Mirvac UK Limited 7
Mirvac UK Services Limited 7
Mirvac Victoria Pty Limited 1
Mirvac Waterloo Pty Limited2
Mirvac Wholesale Funds Management Limited 1
Mirvac Wholesale Industrial Developments Limited 1
Mirvac Woolloomooloo Pty Limited 1
MRV Hillsdale Pty Limited 1
MWID (Brendale) Pty Limited 1
MWID (Brendale) Unit Trust
MWID (Mackay) Pty Limited 1
Newington Homes Pty Limited 1
Oakstand No. 15 Hercules Street Pty Limited 1
Pigface Unit Trust
Country of
establishment/
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
United Kingdom
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Class of
units/
shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Units
Units
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Units
Ordinary
Ordinary
Ordinary
Units
2014
%
Equity holding
2013
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
—
—
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
—
100
100
100
100
100
—
100
100
100
100
100
100
100
100
100
100
93
MIRVAC GROUP ANNUAL REPORT 2014
27 Controlled entities and deed of cross guarantee / continued
a) Interests in controlled entities of Mirvac / continued
Country of
establishment/
incorporation
Planned Retirement Living Pty Limited 1
Rovno Pty Limited 2
Spring Farm Finance Pty Limited 1
Springfield Development Company Pty Limited 1
SPV Magenta Pty Limited 1
Suntrack Holdings Pty Limited 2
Suntrack Property Trust 2
Taree Shopping Centre Pty Limited
TMT Finance Pty Limited 1
Tucker Box Management Pty Limited 1,8
b) Interests in controlled entities of MPT
10-20 Bond Street Trust
1900-2000 Pratt Inc.
197 Salmon Street Trust
275 Kent Street Holding Trust
367 Collins Street Trust 2
367 Collins Street No. 2 Trust 2
380 St Kilda Road Trust 9
477 Collins Street No. 1 Trust 2
477 Collins Street No. 2 Trust 2
Australian Office Partnership Trust 2
Cannon Hill Office Trust
Chifley Holding Trust
George Street Holding Trust
James Fielding Trust
JF Infrastruture — Sustainable Equity Fund
JF Property Trust 7
JFIF Victorian Trust
JFM Hotel Trust
Meridian Investment Trust No. 1
Meridian Investment Trust No. 2
Meridian Investment Trust No. 3
Meridian Investment Trust No. 4
Meridian Investment Trust No. 5
Meridian Investment Trust No. 6
Mirvac 210 George Street Trust
Mirvac 220 George Street Trust
Mirvac 90 Collins Street Trust
Mirvac Allendale Square Trust
Mirvac Bourke Street No.1 Sub-Trust 2
Mirvac Bourke Street No.2 Sub-Trust 2
Mirvac Broadway Sub-Trust
Mirvac Capital Partners 1 Trust 10
Mirvac Collins Street Trust No.1 Sub-Trust 2
Mirvac Collins Street Trust No.2 Sub-Trust 2
Mirvac Commercial Trust 9
Mirvac Commercial No.1 Sub Trust 11
Mirvac Commercial No.3 Sub Trust
Mirvac Funds Finance Pty Limited
Mirvac Funds Loan Note Pty Limited
Mirvac Glasshouse Sub-Trust
Mirvac Group Funding No.2 Limited
Mirvac Group Funding No.3 Pty Limited
Mirvac Harbourside Sub Trust 2
Mirvac Industrial Fund
Mirvac Industrial No. 1 Sub Trust 2
94
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Class of
units/
shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Units
Ordinary
Ordinary
Ordinary
Units
Ordinary
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Ordinary
Ordinary
Units
Ordinary
Ordinary
Units
Units
Units
2014
%
Equity holding
2013
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
—
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
—
100
100
100
—
—
100
100
100
100
100
100
100
—
—
100
—
—
—
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
—
—
100
100
—
—
100
100
100
100
100
100
100
100
—
100
—
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
27 Controlled entities and deed of cross guarantee / continued
b) Interests in controlled entities of MPT / continued
Mirvac Industrial No. 2 Sub Trust 2
Mirvac Office Trust
Mirvac Pitt Street Trust
Mirvac Property Trust No. 2 7
Mirvac Real Estate Investment Trust
Mirvac Retail Head Trust
Mirvac Retail Sub-Trust No. 1
Mirvac Retail Sub-Trust No. 2 2
Mirvac Rhodes Sub-Trust
North Ryde Office Trust 12
Old Wallgrove Road Trust 7
Old Treasury Holding Trust
Pennant Hills Office Trust
Property Performance Fund No. 3 7
Property Performance Fund No. 4 7
Property Performance Fund No. 5 7
Springfield Regional Shopping Centre Trust
The George Street Trust
The Mulgrave Trust
WOT CMBS Pty Ltd
WOT Holding Trust
WOT Loan Note Pty Ltd
WOW Office Trust
Country of
establishment/
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Class of
units/
shares
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Units
Ordinary
Units
Ordinary
Units
2014
%
Equity holding
2013
%
100
100
100
—
100
100
100
100
100
—
—
100
100
—
—
—
100
100
100
100
100
100
100
—
100
100
100
100
100
100
—
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1) These subsidiaries have been granted relief as at 30 June 2014 from the necessity to prepare financial reports in accordance with Class Order 98/1418 issued
by ASIC.
2) These entities were established/registered during the year ended 30 June 2014.
3) These entities are included in the deed of cross guarantee; however, they are still required to lodge separate financial statements.
4) Previously registered as Mirvac Platform Investment Management Pty Limited.
5) Previously registered as Mirvac International Pty Limited.
6) Previously registered as Mirvac International (Middle East) Pty Limited.
7) These entities were de-registered/wound up during the year ended 30 June 2014.
8) Previously registered as Mirvac Reserve Pty Limited.
9) One unit on issue held by Mirvac Limited as custodian for MPT.
10) Previously established as Mirvac Wholesale Office Platform Trust.
11) On 30 April 2014, 100 per cent of the units in this trust were exchanged for sale. Settlement occurred on 1 July 2014.
12) On 28 February 2014, 100 per cent of the units in this trust were sold.
c) Entities subject to class order
Certain wholly-owned companies incorporated in Australia are permitted to be parties to a deed of cross guarantee under which
each company guarantees the debts of the others. By entering into the deed, the wholly-owned companies can be relieved from the
requirements among other things to prepare a financial report and directors’ report under class order 98/1418 (as amended) issued by
ASIC. The entities included at 30 June 2014 are listed in note 27(a). Companies identified in note 27(a) as being included in the class
order, are a “closed group” for the purpose of the class order, and as there are no other parties to the deed of cross guarantee that
are controlled by the parent entity, they also represent the “extended closed group”. As a condition of the class order, the companies
have entered into a deed of cross guarantee. The effect of the deed is that Mirvac Limited has guaranteed to pay any deficiency in
the event of winding up of a company in the closed group. The companies in the closed group also have given a similar guarantee in
the event that Mirvac Limited is wound up. The consolidated SoCI, a summary of movement in consolidated retained earnings and
the consolidated SoFP for the year ended 30 June 2014 of the entities which are members of the closed group are as follows:
95
MIRVAC GROUP ANNUAL REPORT 2014
27 Controlled entities and deed of cross guarantee / continued
Consolidated SoCI
Revenue from continuing operations
Investment properties rental revenue
Investment management fee revenue
Development and construction revenue
Development management fee revenue
Interest revenue
Other revenue
Total revenue from continuing operations
Other income
Net gain on fair value of investment properties
Share of net profit of JVA accounted for using the equity method
Gain on financial instruments
Foreign exchange gain
Net gain on sale of investment properties
Net gain on sale of PPE
Total other income
Total revenue from continuing operations and other income
Net loss on sale of PPE
Foreign exchange loss
Investment properties expenses
Cost of property development and construction
Employee benefits expenses
Depreciation and amortisation expenses
Impairment of loans, investments and inventories
Finance costs
Loss on financial instruments
Selling and marketing expenses
Other expenses
Profit/(loss) from continuing operations before income tax
Income tax (expense)/benefit
Profit/(loss) from continuing operations
Profit from discontinued operations (net of tax)
Profit/(loss) for the year
Summary of movement in consolidated retained earnings
Movement in retained earnings
Balance 1 July
Profit/(loss) for the year
SBP
Transfer in from reserves
Balance 30 June
2014
$m
2013
$m
16.4
33.1
1,269.6
15.9
42.9
7.2
1,385.1
7.5
9.4
7.3
7.2
0.3
—
31.7
1,416.8
0.2
—
4.9
1,038.0
104.5
4.5
(1.2)
112.4
25.5
24.4
53.9
49.7
(22.7)
27.0
—
27.0
2014
$m
(1,402.8)
27.0
(1.5)
4.6
15.6
26.1
820.5
32.5
10.3
9.6
914.6
9.6
0.1
34.1
—
—
0.1
43.9
958.5
—
44.1
4.3
701.4
95.9
4.5
432.4
81.0
—
16.3
53.9
(475.3)
11.0
(464.3)
1.4
(462.9)
2013
$m
(938.7)
(462.9)
(1.2)
—
(1,372.7)
(1,402.8)
96
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
27 Controlled entities and deed of cross guarantee / continued
Consolidated SoFP
Current assets
Cash and cash equivalents
Receivables
Derivative financial assets
Inventories
Other assets
Other financial assets
Total current assets
Non-current assets
Receivables
Inventories
Investments accounted for using the equity method
Derivative financial assets
Other financial assets
Investment properties
PPE
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Payables
Borrowings
Derivative financial liabilities
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Payables
Borrowings
Derivative financial liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
Note
23(a)
2014
$m
86.2
388.6
9.2
437.8
14.9
52.0
988.7
1,440.3
620.8
189.7
11.3
317.2
114.1
10.0
2.6
343.7
3,049.7
4,038.4
450.0
2.9
13.0
8.3
0.2
474.4
109.1
2,500.6
98.7
144.3
3.5
2,856.2
3,330.6
707.8
2,070.8
9.7
(1,372.7)
707.8
2013
$m
119.0
466.8
—
530.6
6.6
—
1,123.0
149.3
628.0
188.1
0.7
108.9
104.1
11.1
2.6
329.6
1,522.4
2,645.4
463.1
60.4
13.4
7.4
0.3
544.6
495.3
1,057.1
60.4
112.2
3.6
1,728.6
2,273.2
372.2
1,765.2
9.8
(1,402.8)
372.2
97
MIRVAC GROUP ANNUAL REPORT 2014
28 Contingent liabilities
a) Contingent liabilities
The Group had contingent liabilities at 30 June 2014 in respect of the following:
Bank guarantees and performance bonds issued by external parties in respect of certain
performance obligations granted in the normal course of business.
Performance guarantees. The Group has provided guarantees to third parties in respect
of the performance of entities within the Group. No material losses are anticipated
in respect of these contractual obligations.
Claims for damages in respect of injury sustained due to health and safety issues have been
made during the year. The potential effect of these claims indicated by legal advice is that
if the claims were to be successful against the Group, they would result in a liability.
2014
$m
2013
$m
155.1
129.4
1.2
1.0
2.4
1.6
As part of the ordinary course of business of the Group, disputes can arise with suppliers, customers and other third parties. Where
there is a present obligation, a liability is recognised. Where there is a possible obligation, which will only be determined by a future
event and it is not considered probable that a liability will arise, they are disclosed as a contingent liability. Where the possible
obligation is remote, no disclosure is given. The Group does not provide details of these as to do so may prejudice the Group’s position.
b) Guarantees
For information about guarantees given by entities within the Group, including the parent entity, refer to notes 27 and 37.
c) JVA
There are no contingent liabilities relating to JVA.
29 Commitments
a) Capital commitments
Investment properties
Not later than one year
Later than one year but not later than five years
Later than five years
PPE
Not later than one year
Later than one year but not later than five years
Later than five years
b) Lease commitments
Operating lease receivable 1
Future minimum rental revenues under non-cancellable operating property leases, are as follows:
Not later than one year
Later than one year but not later than five years
Later than five years
Operating lease payable
Commitments in relation to non-cancellable operating leases contracted for
at the reporting date but not recognised as liabilities, are payable as follows:
Not later than one year
Later than one year but not later than five years
Later than five years
1) Excludes storeroom licences, telecommunications and car parking income.
98
2014
$m
66.5
—
—
66.5
—
—
—
—
2013
$m
70.7
28.1
—
98.8
—
—
—
—
2014
$m
2013
$m
451.6
1,500.6
913.3
2,865.5
430.9
1,498.6
1,130.3
3,059.8
9.9
9.8
1.8
21.5
9.5
18.6
2.2
30.3
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
29 Commitments / continued
Finance leases
Commitments in relation to finance leases are payable as follows:
Not later than one year
Later than one year but not later than five years
Later than five years
Residual
Minimum lease payments
Less: Future finance charges
Lease liabilities
2014
$m
2013
$m
3.0
0.2
—
—
3.2
(0.1)
3.1
3.3
2.9
—
—
6.2
(0.4)
5.8
Mirvac leases various plant and equipment with a carrying value of $0.3m (2013: $nil) under finance leases expiring in less than five years.
30 Employee benefits
a) Employee benefits and related on-cost liabilities
Provision for employee benefits
Annual leave accrual
Current LSL
Non-current LSL
Aggregate employee benefit and related on-cost liabilities
2014
$m
9.8
8.4
3.2
21.4
2013
$m
9.4
7.4
3.2
20.0
The aggregate employee benefits and related on-cost liabilities include amounts for annual leave and LSL. The amount for LSL that
is expected to be settled more than 12 months from the end of the year is measured at its present value.
b) Superannuation commitments
Mirvac offers employees based in Australia as part of their remuneration, the ability to participate in a staff superannuation plan
managed by AustralianSuper. Employees are able to choose whether to participate in this plan or a qualifying plan of their choice.
The plan provides lump sum benefits on retirement, disability or death for employees who are invited by their employer to join the
plan. The plan is a defined contribution plan, which complies with relevant superannuation requirements.
c) Employee security issues
The total of all securities issued under all employee security schemes is limited to five per cent of the issued securities of the stapled
group in any five year period.
d) LTI plans
i) EEP
The EEP is designed to encourage security ownership across the broader employee population. It provides eligible employees with
$1,000 worth of Mirvac securities at nil cost. The plan is open to Australian based employees with more than 12 months of continuous
service, who do not participate in other Mirvac equity plans.
Securities acquired under this plan are subject to a restriction on disposal until the earlier of three years after acquisition, or
cessation of employment with the Group. Otherwise, holders enjoy the same rights and benefits as other holders of Mirvac’s
stapled securities. On termination, employees retain any securities granted to them. At 30 June 2014, 5,844,194 stapled securities
(2013: 5,418,170) had been issued to employees under the EEP.
ii) Current plan – LTP
The LTP was originally introduced in the year ended 30 June 2008 following approval by securityholders at the 2007 AGM.
Securityholders approved an update to the LTP at the 2010 AGM. The purpose of the LTP is to drive performance, retain executives
and facilitate executive security ownership.
LTP grants are generally restricted to the executives who are most able to influence securityholder value. Executives are eligible,
at the discretion of the HRC, to participate in the LTP. Non-Executive Directors are not eligible to participate in the LTP. Awards
under this plan are made in the form of performance rights. Awards of options have also been made under this plan in previous
years. A performance right is a right to acquire one fully paid stapled security in Mirvac provided a specified performance hurdle
is met. No loans are made to participants under this plan.
The Board reviews the performance conditions annually to determine the appropriate hurdles based on Mirvac’s strategy and
prevailing market practice.
This year, the Board determined, on the recommendation of the HRC, the vesting outcome for half of the LTP awards made in the
year ended 30 June 2014 will depend on Mirvac’s TSR performance relative to the constituents of the comparison group, with
the other half linked to Mirvac’s ROE performance. TSR was chosen given that it is an objective measure of securityholder value
creation, and given its wide level of understanding and acceptance by the various key stakeholders. ROE was chosen as the second
performance condition because it is aligned to Mirvac’s strategic drivers, in particular financial performance and capital efficiency.
At 30 June 2014, 23,366,336 (2013: 23,338,483) performance rights and nil (2013: nil) options had been issued to participants
under the LTP. The number of issued rights and options is net of adjustments due to forfeiture of rights and options as a result of
termination of employment. A total of nil performance rights (2013: 3,435,582) and nil options (2013: nil) vested during the year
ended 30 June 2014.
99
MIRVAC GROUP ANNUAL REPORT 2014
30 Employee benefits / continued
iii) Superseded plans
There are four old plans now closed for new grants with the introduction of the LTP:
ERP
A small number of senior executives were invited to participate in the ERP. While the loans under this program were offered during
the year ended 30 June 2009, some of the loan amounts were drawn down in the year ended 30 June 2010. The amounts of the
loans range from $500,000 to $2,000,000 and must be secured against property or unconditional bank guarantee. A progressively
increasing forgiveness schedule allows for no more than 50 per cent of the total loan balance in total to be forgiven.
EIS
Until 2006, Mirvac’s long-term variable remuneration scheme for employees was the EIS. Open to all permanent employees,
allocations were made annually, were unrestricted and fully vested on allotment. Existing arrangements remain in place until all
current loans are repaid.
The loans were repayable via distributions received on the securities or upon their sale. If an employee resigns or is dismissed, the
outstanding loan balance must be paid when employment ceases. In the event of redundancy, retirement, total and permanent
disablement or death, the employee has 12 months after employment ceases in which to repay the loan. If the loan value is greater
than the value of the securities when the loan balance is due, the remaining balance is written off and the securities are forfeited.
LTIP
The LTIP was introduced in 2006 and approved by securityholders at the Group’s 2006 AGM. At this time, loan-funded incentive
plans were common for entities with stapled securities due to the prevailing tax rules. Participation in the plan was open to the CEO/
MD, other Executive Directors, other executives and eligible employees. Participants were offered an interest-free loan which was
applied to fund the acquisition of Mirvac’s stapled securities at market value. The term of the loan is eight years. Any loan balance
outstanding at the end of the eighth year must be repaid at that time. The loan is reduced annually by applying the post-tax amounts
of any distributions paid by Mirvac to the outstanding principal. The loans are interest free and non-recourse over their term.
Two performance conditions had to be met before the securities vested in full: relative TSR and EPS growth. The satisfaction of each
condition was given an equal weighting in terms of the total number of securities that may vest (that is, 50 per cent of the total
securities held by a participant was subject to each performance condition). On vesting, 53.5 per cent of the original loan to fund the
purchase of the vested securities was waived. The remaining balance of the loan will continue to be reduced by post-tax distributions
until either the loan has been fully repaid or the eight year term expires, whichever occurs first. If a participant terminates their
employment, any outstanding loans must be repaid in full immediately or the underlying securities will be forfeited.
EIP
The final loans under the EIP were offered during the year ended 30 June 2006. The amounts of the loans ranged from $50,000
to $800,000 with Mirvac holding security over the assets purchased with the loan proceeds. A progressively increasing forgiveness
schedule applied which allowed the total loan balance to be forgiven if the employee remained employed on the final forgiveness
date. The total outstanding loan balance under the EIP was $200,000 as at 1 July 2012. This amount was forgiven in accordance with
the loan agreement during the year ended 30 June 2013. There are no outstanding loan amounts under the EIP as at 30 June 2014
and no further loans will be made under the EIP.
e) SBP expense
Total expenses arising from SBP transactions recognised during the year as part of employee benefits expenses were as follows:
EEP
Current plan — LTP
Current plan — STI
2014
$m
0.7
5.4
0.4
6.5
2013
$m
0.7
3.4
—
4.1
f) Fair value of SBP expense
i) EEP
The nature of the securities allotted under this plan is in substance similar to an option. The assessed fair value is taken to profit or
loss as the securities vest immediately.
SBP inputs for the EEP issued during the year
Grant date
Security price at grant date
EEP
20 March 2014
$1.72
ii) LTP
Fair value at grant date has been independently determined using an option pricing model that takes into account the exercise price,
the term of the securities, the current price of the underlying securities, the expected volatility of the security price, the expected
dividend/distribution yield and the risk-free interest rate for the term of the security. The fair value of the SBP expense is calculated
using a Monte-Carlo simulation. Assumptions used for the fair value of SBP expense are as follows:
100
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
30 Employee benefits / continued
SBP inputs for the current LTP
In valuing rights linked to the relative TSR measure, the key inputs for the 2014 grant were as follows:
Grant date
Performance hurdle
Performance period start
Performance testing date
Security price at grant date
Exercise price
Expected life
Volatility
Risk-free interest rate (per annum)
Dividend/distribution yield (per annum)
31 Related parties
a) Controlled entities
Interests in controlled entities are set out in note 27.
b) KMP compensation
Short term employment benefits
Post-employment benefits
SBP
Termination benefits
Other long term benefits
Detailed remuneration disclosures are provided on pages 10 to 30 in the Remuneration report.
c) Transactions with other related parties
The following transactions occurred with related parties:
Transactions with JVA
Interest income
Project development fees
Management and service fees
Construction billings
Responsible entity fees
d) Outstanding balances in relation to transactions with related parties
The following balances are outstanding at the end of the year in relation to transactions with related parties:
Current receivables
JVA
Non-current receivables
JVA
Performance rights
10 December 2013
Relative TSR and ROIC
1 July 2013
1 July 2016
$1.62
$nil
2.6 years
20%
2.92%
5.40%
2014
$m
11.0
0.2
1.8
—
0.1
13.1
2013
$m
13.1
0.2
0.8
1.9
0.1
16.1
2014
$’000
2013
$’000
17,764
807
23,500
45,475
7,609
9,244
1,306
12,358
166,325
7,928
2014
$’000
2013
$’000
13,344
25,159
32,489
58,348
During the year, impairment of receivables due from related parties was recognised $2.0m (2013: $0.3m impairment released) and
the expense in respect of impaired receivables due from related parties was recognised within impairment of loans, investments and
inventories in the consolidated SoCI.
101
MIRVAC GROUP ANNUAL REPORT 2014
31 Related parties / continued
e) Loans to/from related parties
Loans to directors and employees
Balance 1 July
Loans advanced
Loan repayments received
Loan forgiveness
Balance 30 June
Amounts due from related parties
Balance 1 July
Loans advanced
Loan repayments received
Impairment (recognised)/released
Transfers out
Interest charged
Balance 30 June
2014
$m
10.0
—
(6.3)
(1.4)
2.3
83.5
1.3
(16.8)
(2.0)
(23.2)
3.0
45.8
2013
$m
13.6
—
(1.3)
(2.3)
10.0
81.6
11.3
(10.6)
0.3
—
0.9
83.5
f) Terms and conditions of outstanding balances
Transactions relating to dividends/distributions are on the same terms and conditions that applied to other securityholders.
The terms of the tax funding agreement are set out as per note 6(d).
Other transactions were made on normal commercial terms and conditions with variable terms for the repayment and interest
payable at market rates on the loans between the parties.
32 Financial risk management
Mirvac’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk),
credit risk and liquidity risk. Mirvac’s overall risk management program seeks to minimise potential adverse effects on the financial
performance of Mirvac. The Group uses various derivative financial instruments to manage certain risk exposures, specifically in
relation to interest rate and foreign exchange risks on borrowings. Derivatives are exclusively used for hedging purposes and are
not held for trading or speculative purposes. Financial risk management is carried out by a central treasury department (Mirvac
Group Treasury) under policies approved by the Board. The Board provides written principles for overall risk management, as well as
written policies covering specific areas, such as mitigating foreign exchange, interest rate and credit risks, use of derivative financial
instruments and investing excess liquidity. Mirvac Group Treasury identifies, evaluates, reports and manages financial risks in close
cooperation with the Group’s operating units in accordance with Board policy.
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Receivables
Derivative financial assets
Other financial assets at fair value through profit or loss
Other financial assets
Financial liabilities
Payables
Borrowings
Derivative financial liabilities
Note
35
8
9
11
15
19
20
9
2014
$m
97.8
159.2
27.0
11.8
131.4
427.2
2013
$m
126.4
214.0
11.6
12.6
187.1
551.7
590.1
2,717.6
111.7
3,419.4
698.8
2,167.2
73.8
2,939.8
The carrying values of trade receivables (less impairment provision) and payables are assumed to approximate their fair values due
to their short term nature. Derivative financial assets and liabilities are valued based upon valuation techniques (refer to note 33).
102
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
32 Financial risk management / continued
a) Market risk
Market risk is the risk that the fair value or future cash flows of a financial asset or financial liability will fluctuate because of changes
in market prices. Market risk comprises currency risk, interest rate risk and price risk.
i) Currency risk
Foreign exchange risk refers to the change in value between foreign currencies and the Australian dollar. This change affects the
assets and liabilities of Mirvac which are denominated in currencies other than Australian dollars. Mirvac foreign exchange risks arise
mainly from:
— borrowings denominated in currencies other than Australian dollars which are predominately US dollars;
— investments in offshore operations which are located in the United States and New Zealand;
— receipts and payments which are denominated in other currencies; and
— foreign exchange risk on derivatives.
Mirvac manages its foreign exchange risk for its assets and liabilities denominated in other currencies by borrowing in the same
currency as that in which the offshore business operates to form a natural hedge against the movement in exchange rates. Mirvac
manages its foreign currency note borrowings with cross currency swaps which swap the obligations to pay fixed or floating US
dollar principal and interest payments to floating Australian dollar interest payments. Cross currency swaps in place cover 100 per
cent of the US dollar denominated note principal outstanding. These swaps have the same maturity profiles as the underlying note
obligations. This removes exposure to interest rates in the US market while creating floating exposures in the domestic market that
have been managed to meet Mirvac’s target interest rate profile. The foreign currency exchange rate has been fixed for US$375.0m
swaps to A$/US$ 0.7456 and US$360.0m swaps to A$/US$ 0.9429.
At 30 June 2014, the notional amounts and periods of expiry of the cross currency swap contracts for the Group were:
Between two to three years
Between three to four years
Between four to five years
Greater than five years
2014
$m
368.9
—
134.1
381.9
884.9
2013
$m
—
368.9
—
134.1
503.0
All swaps require settlement on a quarterly basis. Translation gains or losses on the net investment in foreign operations are
recorded through the foreign currency translation reserve.
Sensitivity analysis
Cross currency swaps are in place to manage the foreign exchange exposure on the US dollar debt. These swaps have the same
notional principal and maturity profiles as those of the underlying note obligations. Based upon current exposures, there is no
material foreign exchange sensitivity in Mirvac.
ii) Interest rate risk
Mirvac’s interest rate risk arises from long term borrowings, cash and cash equivalents (refer to note 35(a)), receivables and
derivatives.
Borrowings
Borrowings issued at variable rates expose Mirvac to cash flow interest rate risk. Borrowings issued at fixed rates expose Mirvac to
fair value interest rate risk. The Group’s policy is to have a minimum of 40 per cent and a maximum of 80 per cent of borrowings
subject to fixed or capped interest rates. This policy was complied with at the end of the year. Mirvac manages its cash flow interest
rate risk by using interest rate derivatives, thereby maintaining fixed rate exposures within the policy range. Such interest rate
derivatives have the economic effect of converting borrowings from floating rates to fixed or capped rates or vice versa.
103
MIRVAC GROUP ANNUAL REPORT 2014
32 Financial risk management / continued
The following table sets out Mirvac’s net exposure to interest rate risk by maturity periods. Exposures arise predominately from
liabilities bearing variable interest rates as the Group intends to hold fixed rate liabilities to maturity.
Fixed interest maturing in
Floating
interest
rate
$m
975.2
—
779.3
(650.0)
—
1,104.5
1,172.1
—
404.3
(500.0)
—
1,076.4
2014
Unsecured bank loans
Domestic MTN
Foreign MTN
Interest rate swaps
Lease liabilities
Total
2013
Unsecured bank loans
Domestic MTN
Foreign MTN
Interest rate swaps
Lease liabilities
Total
1 year
or less
$m
Over 1 to
2 year(s)
$m
Over 2 to
3 years
$m
Over 3 to
4 years
$m
Over 4 to
5 years
$m
Over
5 years
$m
—
200.0
—
(150.0)
2.9
52.9
—
—
—
—
3.0
3.0
—
—
—
100.0
0.1
100.1
—
200.0
—
(150.0)
2.8
52.8
—
225.0
10.0
100.0
0.1
335.1
—
—
—
300.0
—
300.0
—
200.0
—
200.0
—
—
200.0
—
200.0
—
—
—
125.0
200.0
—
400.0
400.0
325.0
2,717.6
—
225.0
10.0
100.0
—
335.0
—
150.0
—
150.0
—
300.0
—
—
—
100.0
—
100.0
1,172.1
575.0
414.3
—
5.8
2,167.2
Total
$m
975.2
825.0
914.3
—
3.1
Derivative instruments used by Mirvac
Mirvac enters into a variety of derivative instruments, although most commonly it uses interest rate swap agreements. Under the
swap agreements, Mirvac agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between
fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.
Aside from swap agreements, bought and/or sold option agreements are used which allow rates to float between certain ranges and
bank cancellable agreements are used which allow the relevant bank to cancel the agreement if certain conditions arise, the benefit
of which is lower fixed rates. These derivatives are recorded in the consolidated SoFP at fair value in accordance with AASB 139.
The fair value movements are recorded through the consolidated SoCI (refer to notes 4 and 5). Derivatives currently in place cover
approximately 57.1 per cent (2013: 50.1 per cent) of the loan principal outstanding. The fixed interest rates range between 2.50 and
6.40 per cent (2013: 3.00 and 6.40 per cent) per annum. At 30 June 2014, the notional principal amounts, interest rates and periods
of expiry of the interest rate swap contracts held by the Group were as follows:
Interest
rates
% pa
1 year or less
—
Over 1 to 2 year(s) 4.75 — 5.50
Over 2 to 3 years
4.70
Over 3 to 4 years 2.50 — 6.40
Over 4 to 5 years 2.50 — 4.00
3.49 — 4.00
Over 5 years
Floating to fixed
2014
$m
Interest
rates
% pa
—
—
100.0
—
100.0 3.00 — 5.50
400.0
4.70
200.0 3.35 — 6.40
3.35
200.0
1,000.0
Fixed to floating
2013
$m
—
—
300.0
100.0
300.0
100.0
800.0
Interest
rates
% pa
8.25
—
—
5.50
—
—
2014
$m
150.0
—
—
200.0
—
—
350.0
Interest
rates
% pa
—
8.25
—
—
5.50
—
2013
$m
—
150.0
—
—
150.0
—
300.0
The contracts require settlement of net interest receivable or payable each reset date (generally 90 days). The settlement dates
generally coincide with the dates on which interest is payable on the underlying debt. The contracts are settled on a net basis.
Cash and cash equivalents
Cash held exposes Mirvac to cash flow interest rate risk.
104
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
32 Financial risk management / continued
Receivables
The Group’s exposure to interest rate risk for current and non-current receivables is set out in the following table:
Fixed interest maturing in
Floating
interest
rate
$m
1 year
or less
$m
Note
Over 1 to Over 2 to Over 3 to Over 4 to
5 years
2 year(s)
$m
$m
4 years
$m
3 years
$m
2014
8
Trade receivables
Related party receivables 8
Loans to directors
and employees
Other receivables
8
8
2013
8
Trade receivables
Related party receivables 8
Loans to directors
and employees
Other receivables
8
8
—
—
—
16.2
16.2
—
—
—
30.0
30.0
—
5.8
—
3.1
8.9
—
4.3
—
3.5
7.8
—
11.2
—
4.9
16.1
—
8.7
—
0.1
8.8
—
15.1
—
—
15.1
—
6.7
—
0.1
6.8
—
—
—
—
—
—
16.1
—
0.2
16.3
—
—
—
—
—
—
—
—
—
—
Non-
interest
bearing
$m
22.2
13.7
2.3
64.7
102.9
25.3
47.7
10.0
61.3
144.3
Total
$m
22.2
45.8
2.3
88.9
159.2
25.3
83.5
10.0
95.2
214.0
Sensitivity analysis
Mirvac’s interest rate risk exposure arises from long term borrowings, cash held with financial institutions and receivables. Based
upon a 50 (2013: 50) basis point increase or decrease in Australian interest rates, the impact on profit after tax has been calculated
taking into account all underlying exposures and related derivatives. This sensitivity has been selected as this is considered
reasonable given the current level of both short term and long term interest rates.
The impact on the Group’s result of a 50 (2013: 50) basis point increase in interest rates assuming no interest is capitalised would
be a decrease in profit of $2.3m (2013: increase of $3.8m). The impact on Mirvac’s result of a 50 (2013: 50) basis point decrease in
interest rates would be an increase in profit of $1.5m (2013: decrease of $3.7m). The impact on the Group of a movement in US dollar
interest rates would not be material to the profit of the Group.
The interest rate sensitivities of the Group vary on an increase/decrease of 50 basis point movement in interest rates due to the
interest rate optionality of a small number of derivatives.
iii) Price risk
The Group is exposed to equity price risk arising from an equity investment (refer to note 11). The equity investment is held for the
purpose of selling in the near term. As this investment is not listed, the fund manager provides a unit price each six months. At the
end of the year, if the unit price had been five per cent higher or lower, the effect on profit and on equity for the year would have
been $0.6m (2013: $0.6m) higher or lower. This investment represents less than one per cent of Mirvac’s net assets and therefore
represents minimal risk to the Group. The amount recognised in profit or loss in relation to the equity investment held by the Group
is disclosed in note 11.
Convertible notes do not convert at a fixed rate to equity, the conversion being based on NTA and as a result are not subject to
material price risk.
b) Credit risk
Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument and will cause a financial
loss. Mirvac has exposures to credit risk on cash and cash equivalents, receivables and derivative financial assets; the maximum
exposure to credit risk is based on the total value of the Group’s financial assets, net of any provision for impairment, as shown in
note 8. To help manage this risk, the Group has a policy for establishing credit limits for the entities dealt with which is based on the
size, previous trading experience of the entity or where available at reasonable cost, external credit ratings and/or reports. Based
upon the information available, Mirvac may require collateral, such as bank guarantees or security deposits in relation to investment
properties, leases or deposits taken on residential sales. Tenant receivables are reviewed throughout the year and if collection is
deemed uncertain a provision is made.
Mirvac may also be subject to credit risk for transactions which are not included in the consolidated SoFP, such as when Mirvac
provides a guarantee for another party. Details of the Group’s contingent liabilities are disclosed in note 28. The credit risk arising
from derivatives transactions and cash held with financial institutions exposes the Group if the contracting entity is unable to
complete its obligations under the contracts. Mirvac’s policy is to spread the amount of net credit exposure among major financial
institutions which are rated the equivalent of A or above from the major rating agencies. Mirvac’s net exposure and the credit ratings
of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread among approved
counterparties. With regard to mezzanine loans, Mirvac monitors all loans advanced on a continuous basis. Formal procedures are in
place, which include the regular review of each loan’s status, monitoring of compliance with loan terms and conditions, consideration
of historical performance and future outlook of borrowers for realisation. These procedures include the process for the realisation of
loans, review and determination of the appropriate carrying value of investments and regular dialogue with the borrowers to ensure
material issues are identified as they arise. Refer to note 8 for the management of credit risk relating to receivables.
105
MIRVAC GROUP ANNUAL REPORT 2014
32 Financial risk management / continued
c) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Prudent
liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an
adequate amount of committed credit facilities, the ability to close out market positions and the ability to raise funds through the
issue of new securities through various means including placements and/or Mirvac’s DRP. Mirvac prepares and updates regular
forecasts of the Group’s liquidity requirements to ensure that committed credit lines are kept available in order to take advantage
of growth opportunities. Surplus funds are generally only invested in highly liquid instruments.
i) Financing arrangements
At 30 June 2014, Mirvac has a strong liquidity position with available undrawn facilities and cash of $510.8m. During the year, the Group
completed the extension and increase of its unsecured syndicated bank facility and issued additional long-term capital markets debt.
ii) Maturities of financial liabilities
Mirvac’s maturity of net and gross settled derivative and non-derivative financial instruments is provided in the following table.
The amounts disclosed in the table are the contractual undiscounted cash flows:
1 year
or less
$m
Over 1 to
2 year(s)
$m
Over 2 to
3 years
$m
Over 3 to
4 years
$m
Over 4 to
5 years
$m
Over
5 years
$m
Total
$m
Note
Maturing in
2014
Non-interest bearing
Payables
Interest bearing
Unsecured bank loans
Domestic MTN
Foreign MTN
Derivatives
Net settled
(interest rate swaps)
Fixed to floating swaps
Gross settled
(cross currency swaps)
— Outflow
— (Inflow)
2013
Non-interest bearing
Payables
Interest bearing
Unsecured bank loans
Domestic MTN
Foreign MTN
Derivatives
Net settled
(interest rate swaps)
Fixed to floating swaps
Gross settled
(cross currency swaps)
— Outflow
— (Inflow)
19
505.1
42.1
7.4
—
—
35.5
590.1
24.7
257.0
47.8
290.6
40.5
48.1
22.4
256.5
342.9
339.1
217.0
32.9
392.3
11.5
135.9
—
217.3
639.7
1,069.1
999.8
1,247.3
13.7
(13.9)
8.6
(5.2)
7.1
(4.5)
3.7
(1.9)
(0.5)
—
(0.8)
—
31.8
(25.5)
13.3
(38.3)
809.4
14.1
(38.6)
400.2
378.8
(323.7)
686.9
4.7
(24.0)
571.5
136.7
(127.1)
—
(469.3)
547.6
(1,021.0)
548.8
422.4
3,439.2
19
549.9
113.4
—
—
—
35.5
698.8
198.5
40.3
21.1
426.5
242.8
21.2
615.9
26.3
21.6
—
242.3
310.7
13.0
(10.2)
11.1
(11.8)
4.9
(2.8)
2.2
(2.1)
13.4
(21.1)
804.9
14.7
(21.2)
796.7
17.9
(21.6)
662.2
381.5
(310.7)
623.9
—
154.1
6.5
(0.1)
(0.8)
5.9
(6.5)
159.1
—
—
111.1
(1.1)
—
1,240.9
705.8
492.2
30.0
(27.7)
137.4
(111.1)
171.8
570.8
(492.2)
3,218.6
d) Capital risk
Mirvac’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so that it can provide
returns to securityholders and meet its strategic objectives without increasing its overall risk profile.
In assessing the optimal capital structure, the Group seeks to maintain an investment grade credit rating of BBB+ to reduce the cost
of capital and diversify its sources of debt capital.
At 30 June 2014, the gearing ratio (net debt including cross currency swaps to total tangible assets less cash) was 27.8 per cent
(2013: 23.6 per cent). The Group’s target gearing ratio is 20 to 30 per cent. This may be exceeded in order to take advantage of
appropriate opportunities, such as acquisitions as they arise. To manage the Group’s gearing ratio, a number of mechanisms are
available. These may include adjusting the amount of dividends/distributions paid to securityholders, adjusting the number of
securities on issue (via buy-backs), or the disposal of assets.
106
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
32 Financial risk management / continued
Mirvac prepares quarterly consolidated SoFP, SoCI and cash flow updates for the current year and five year forecasts. These forecasts
are used to monitor the Group’s capital structure and future capital requirements, taking into account future market conditions.
AFSL ratios and Queensland Building licences ratios were complied with at 30 June 2014. Mirvac also complied with all its borrowing
covenant ratios at 30 June 2014. The gearing ratios were as follows:
Net interest bearing debt less cash 1
Total tangible assets less cash
Gearing ratio (%)
2014
$m
2,722.2
9,784.9
27.8
2013
$m
2,133.6
9,054.3
23.6
1) US dollar denominated borrowings translated at cross currency instrument rate and excluding leases.
33 Fair value measurement of financial instruments
i) Fair value hierarchy
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes. AASB 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
— quoted prices (unadjusted) in active markets for identical assets or liabilities (level one);
— inputs other than quoted prices included within level one that are observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices) (level two); and
— inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level three).
The following table presents the Group’s assets and liabilities measured and recognised at fair value at 30 June 2014 and 30 June 2013
on a recurring basis:
Note
Level one
$m
Level two
$m
Level three
$m
Total
$m
2014
Assets
Other financial assets at fair value through profit or loss
— unlisted securities
Other financial assets 1
Derivatives used for hedging
Liabilities
Derivatives used for hedging
2013
Assets
Other financial assets at fair value through profit or loss
— unlisted securities
Other financial assets
Derivatives used for hedging
Liabilities
Derivatives used for hedging
11
15
9
9
11
15
9
9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
27.0
27.0
111.7
111.7
—
—
11.6
11.6
73.8
73.8
11.8
131.4
—
143.2
—
—
12.6
187.1
—
199.7
—
—
11.8
131.4
27.0
170.2
111.7
111.7
12.6
187.1
11.6
211.3
73.8
73.8
1) Primarily relates to convertible notes associated with funding Mirvac (Old Treasury) Trust joint venture $79.4m (2013: $47.9m). Convertible notes have been
issued to fund the development costs of IPUC held by the Group and they will be converted into equity held by the Group at the end of the development.
During the year, $97.2m of convertible notes issued by Mirvac 8 Chifley Trust was converted into equity.
There were no transfers between levels one, two and three for recurring fair value measurements during the year. The Group’s policy
is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
ii) Valuation techniques used to derive level one, level two and level three fair values
Level one: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
available-for-sale securities) 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. Mirvac holds no level one financial instruments.
107
MIRVAC GROUP ANNUAL REPORT 2014
33 Fair value measurement of financial instruments / continued
Level two: 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. Mirvac uses a variety of methods and makes assumptions that are based on market
conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used to
estimate fair value for long term debt for disclosure purposes. Other techniques, such as estimated DCF, are used to determine fair
value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated
future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the end of the
reporting period. These instruments are included in level two and comprise debt investments and derivative financial instruments,
where the fair values have been determined based on present values and discount rates used were adjusted for counterparty or own
credit or debit adjustments.
Credit value adjustments: these are applied to mark-to-market assets based on the counterparty’s credit risk using the observable
credit default swaps curve as a benchmark for credit risk.
Debit value adjustments: these are applied to mark-to-market liabilities based on Mirvac’s credit risk using Mirvac’s credit default
swaps curve as a benchmark for credit risk.
Level three: If one or more of the valuation techniques for financial instruments is based on significant unobservable inputs,
such instruments are included in level three. This is the case for unlisted securities and other financial assets.
iii) Fair value measurements using significant unobservable inputs (level three)
The following table presents the changes in level three instruments for the year ended 30 June 2014 held by the Group:
Unlisted Other financial
assets
$m
securities
$m
Balance 1 July 2012
Acquisitions
Capital distribution received
Balance 30 June 2013
Acquisitions
Equity conversion
Loss recognised in other income 1
Balance 30 June 2014
12.7
—
(0.1)
12.6
—
—
(0.8)
11.8
1) Unrealised loss for the year included in gain on financial instruments that relate to assets held at the end of the year.
2014
2013
(0.8)
—
51.5
135.6
—
187.1
41.5
(97.2)
—
131.4
—
—
Total
$m
64.2
135.6
(0.1)
199.7
41.5
(97.2)
(0.8)
143.2
(0.8)
—
There were no transfers between the levels of the fair value hierarchy during the year. There were also no changes made to any
of the valuation techniques applied as of 30 June 2013.
The main level three inputs used by the Group in measuring the fair value of financial instruments are derived and evaluated as follows:
— unlisted securities – fair values of the security unit prices: these are determined based on the valuation of the underlying assets
held by the fund. These valuations are based on discounted net cash inflows from expected future income and/or comparable sales
of similar assets; and
— other financial assets – expected cash inflows: these are determined based on the development management agreement with fixed
repayment terms based on fixed interest rate and agreed project costs.
iv) Sensitivity on changes in fair value of level three financial instruments
For sensitivity analysis on level three unlisted securities, refer to note 32(a)(iii).
v) Fair value of other financial instruments
The carrying value of the other short term financial assets and financial liabilities being receivables and payables (set out in note
32(a)) is considered to approximate their fair value.
108
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
34 Remuneration of auditors
During the year, the following fees were paid or payable for services provided by the auditor of the Group, its related practices and
non-related audit firms:
a) Assurance services
Audit services
Audit and review of financial reports
Compliance services and regulatory returns
Total remuneration for assurance services
b) Taxation services
Tax advice and compliance services
Total remuneration for taxation services
c) Advisory services
Advisory services
35 Notes to the consolidated statement of cash flows
a) Reconciliation of cash
Cash at the end of the year as shown in the consolidated statement of
cash flows is the same as the consolidated SoFP, the detail of which follows:
Cash at bank
Deposits at call
Cash and cash equivalents
25
16
16
5
5
b) Reconciliation of profit attributable to the stapled securityholders
of Mirvac to net cash inflows from operating activities
Profit attributable to the stapled securityholders of Mirvac
Share of net profit of JVA not received as dividends/distributions
Net loss on sale of investments
Net gain on fair value of investment properties
Net loss on fair value of IPUC
Net loss on sale of investment properties
Net loss/(gain) on sale of PPE
Depreciation and amortisation expenses
Impairment of loans, investments, inventories and goodwill
SBP expense
Net loss/(gain) on financial instruments
Net (gain)/loss on foreign exchange
JVA dividends/distributions received
Change in operating assets and liabilities, net of effects from purchase of controlled entities:
— Increase in income taxes payable
— Decrease/(increase) in tax effected balances
— Decrease/(increase) in receivables
— Increase in inventories
— Increase in other assets/liabilities
— (Decrease)/increase in payables
— Increase/(decrease) in provisions for employee benefits
Net cash inflows from operating activities
2014
$000
2013
$000
1,813.1
308.2
2,121.3
123.9
123.9
1,827.9
272.9
2,100.8
139.7
139.7
15.9
7.8
Note
2014
$m
2013
$m
67.6
30.2
97.8
447.3
(46.9)
—
(56.5)
7.7
6.0
0.2
29.6
23.3
6.5
23.3
(7.5)
17.6
0.4
12.4
53.7
(33.1)
(12.3)
(73.3)
0.9
399.3
115.1
11.3
126.4
139.9
(12.4)
(1.0)
(54.0)
3.6
2.7
(0.1)
31.3
273.2
4.1
(33.0)
45.4
23.6
0.4
(22.7)
(67.9)
(252.6)
(16.4)
322.2
(0.4)
385.9
36 Events occurring after the end of the year
On 1 July 2014, Mirvac completed the sale of a 50 per cent interest in 275 Kent Street, Sydney NSW to Blackstone. Blackstone
has also exercised its call options over a portfolio of seven non-core assets, with settlement of the sale of the non-core assets
occurring on the same date. Total consideration for the 50 per cent interest in 275 Kent Street, Sydney NSW and the non-core
assets is $821.0m. Mirvac has provided vendor finance of $156.0m in relation to the sale of the non-core assets, at an initial coupon
of 8.0 per cent per annum and for a maximum term of 48 months (under terms of the vendor financing agreement, Blackstone
has the option to repay the loan after a minimum of 12 months) which will help to manage the dilutionary impact to earnings
from the sale of the non-core assets. The sale provided a benefit to the headline gearing ratio of approximately five per cent.
109
MIRVAC GROUP ANNUAL REPORT 2014
36 Events occurring after the end of the year / continued
During the year ended 30 June 2014, Mirvac entered into a put and call option agreement to purchase a parcel of land at Lachlan
Street Waterloo NSW (“Waterloo”) and Hope Street Brisbane QLD (“Arthouse”). The purchase price for Waterloo was $37.0m and
for Arthouse was $23.5m (comprising two stages). Board approvals were obtained prior to the year ended 30 June 2014, and all
conditions precedent were met in relation to the acquisitions. The owners of each parcel of land agreed to grant Mirvac an option
to purchase the property and Mirvac agreed that the owners may execute their put option if Mirvac does not exercise the call option.
The option period to exercise for both projects was after 30 June 2014. On 1 July 2014, Mirvac exercised its call option in relation to
the purchase of Waterloo and on 4 July 2014 in relation to Stage 1 of Arthouse. As the options were not exercisable at 30 June 2014,
no liability was recognised by Mirvac as at 30 June 2014.
No other circumstances have arisen since the end of the year which have significantly affected or may significantly affect the
operations of Mirvac, the results of those operations, or the state of affairs of Mirvac in future years.
37 Parent entity financial information
a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
SoFP
Current assets
Total assets
Current liabilities
Total liabilities
Equity
Contributed equity
Reserves
— SBP reserve
— Capital reserve
Retained earnings
Loss for the year
Total comprehensive income
Note
2014
$m
3,651.5
4,012.5
1,925.5
1,925.9
2013
$m
3,638.1
3,975.9
1,847.5
2,197.7
23
2,070.8
1,765.2
15.3
(0.2)
0.7
10.6
(0.2)
2.6
2,086.6
1,778.2
(0.5)
(0.5)
(331.1)
(331.1)
b) Guarantees entered into by the parent entity
The parent entity is party to a deed of cross guarantee, with members of the closed group. Further details are disclosed in note 27(c).
c) Contingent liabilities of the parent entity
The parent entity did not have any other contingent liabilities other than the item referred to in note 37(b) at 30 June 2014 or
30 June 2013.
d) Contractual commitments for the acquisition of PPE
The parent entity did not have any contractual commitments for the acquisition of PPE at 30 June 2014 or 30 June 2013.
110
MIRVAC GROUP ANNUAL REPORT 2014Notes to the consolidated financial statements
Directors’ declaration
In the Directors’ opinion:
a)
the financial statements and the notes set out on pages 44 to 110 are in accordance with the Corporations Act 2001, including:
i)
ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
giving a true and fair view of the consolidated entity’s financial position at 30 June 2014 and of its performance for the
financial year ended on that date;
b)
c)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group
identified in note 27 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the
deed of cross guarantee described in note 27.
Note 1(b) confirms that the financial statements also comply with IFRS as issued by the IASB.
The Directors have been given the declarations by the CEO/MD and CFO required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Susan Lloyd-Hurwitz
Director
Sydney
21 August 2014
111
MIRVAC GROUP ANNUAL REPORT 2014
Independent auditor’s report
to the members of Mirvac Limited
Independent auditor’s report to the members of Mirvac Limited
Report on the financial report
We have audited the accompanying financial report of Mirvac Limited (the company), which comprises the statement of
financial position as at 30 June 2014, 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 the Mirvac Limited Group (the consolidated entity). The consolidated entity comprises the company and the entities
it controlled at year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company 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. Those 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 consolidated 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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
112
MIRVAC GROUP ANNUAL REPORT 2014 Independent auditor’s report
to the members of Mirvac Limited
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 Mirvac Limited is in accordance with the Corporations Act 2001, including:
i)
ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 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.
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 10 to 31 of the directors’ report for the year ended 30 June 2014.
The directors of the company 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 Mirvac Limited for the year ended 30 June 2014, complies with section 300A of the
Corporations Act 2001.
PricewaterhouseCoopers
Matthew Lunn
Partner
Sydney
21 August 2014
113
MIRVAC GROUP ANNUAL REPORT 2014
Securityholder information
The information set out below was prepared at 31 July 2014 and applies to Mirvac’s stapled securities (ASX code: MGR).
As at 31 July 2014, there were 3,692,279,772 stapled securities on issue.
Substantial securityholders
As disclosed in substantial holding notices lodged with the ASX at 31 July 2014:
Name
CBRE Clarion Securities LLC
AMP Limited and its related bodies corporate
BlackRock Group
Commonwealth Bank of Australia Group
The Vanguard Group, Inc
Date of change
30/06/2014
19/12/2013
13/09/2013
04/09/2013
01/03/2010
1) Percentage of issued equity held as at the date notice provided.
Range of securityholders
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total number of securityholders
20 largest securityholders
Name
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
National Nominees Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
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