Mirvac Group
Annual Report 2022
BUSINESS OVERVIEW
Mirvac is a leading creator
and curator of extraordinary
urban places and experiences.
Our mission is to build a
better future for millions
of Australians.
ACKNOWLEDGEMENT OF COUNTRY
Mirvac pays its respect to all Aboriginal and
Torres Strait Islander peoples as the traditional
custodians of the lands and waters of Australia
where we live, work and play.
Artwork created by Riki Salam (Mualgal, Kaurareg, Kuku Yalanji) of We are 27 Creative.
ABOUT THIS REPORT
The FY22 Annual Report is a consolidated
summary of Mirvac Group’s operations,
performance, and financial position for the
year ended 30 June 2022. In this report, unless
otherwise stated, references to ‘Mirvac’, ‘Group’,
‘company’, ‘parent entity’, ‘we’, ‘us’ and ‘our’ refer
to Mirvac Limited and its controlled entities as
a whole. Mirvac Limited also includes Mirvac
Property Trust and its controlled entities.
References in this report to a ‘year’ relate to the
financial year ended 30 June 2022. All dollar
figures are expressed in Australian dollars (AUD)
unless otherwise stated.
Mirvac’s Board acknowledges its responsibility
for our FY22 Annual Report and has had
oversight of its development. The Board reviewed,
considered, and provided feedback during the
production process and approved the Annual
Report on 11 August 2022. The consolidated
financial statements included in this report were
also authorised for issue by the Directors on
11 August 2022. The Directors have the power
to amend and reissue the financial statements.
Our full-year financial statements can be found
on pages 73 to 124.
Mirvac is evolving its Annual Report to align
with the International Integrated Reporting
Framework (2021) ( Framework). In FY22, we
used the Framework to identify, from an enterprise
perspective, the key pillars that enable us to
deliver sustained value for our stakeholders.
Mirvac has referenced, but not yet fully applied,
the fundamental principles, content elements and
guiding principles within this report.
All sustainability reporting within this report
has been prepared in accordance with the
Global Reporting Initiative (GRI) Standards: Core
option. PwC has provided limited assurance over
select environmental and social data within the
annual reporting suite, covering the 12 months
to 30 June 2022. Our assurance statement is
available online at www.mirvac.com/sustainability/
our-performance.
DIRECTORS’ REPORT AND OPERATING
AND FINANCIAL REVIEW (OFR)
The required elements of the Directors’
Report are featured on pages 48 to 50 of
this report. Our financial and operational
results for FY22 are covered specifically on
pages 36 to 40. All financial and non-financial
metrics included in this annual report have
been verified through our internal verification
process. The Remuneration Report on pages
51 to 71 and the Financial Statements have
been audited by PwC.
MATERIALITY
We have defined ‘relevant matters’ for inclusion
in our FY22 Annual Report, prepared with
reference to the Framework, as those
matters that are material to securityholders
and other providers of financial capital in
making their various decisions with respect to
their ongoing investment, funding, and support
for Mirvac. The FY22 process to determine
material ‘relevant matters’ has been:
IDENTIFYING RELEVANT MATTERS
We conduct an assessment of our key risks
each year to identify material operational and
strategic matters that could potentially impact
the achievement of our strategy over the short,
medium and long term. As part of this process
in FY22 we:
> scanned the external environment to
identify political, economic, societal,
technological, and environmental threats
and opportunities;
> consulted with senior management and our
Board to identify strengths, weaknesses,
opportunities and threats regarding risk
mitigation strategies;
> engaged with industry; and
> sought to understand our key stakeholders’
and investors’ needs and their
expectations of us.
EVALUATE AND PRIORITISE
To evaluate the relevant matters for the report,
our key risks and opportunities were discussed
with the Executive Leadership Team and the
Board in a structured workshop. Key risks and
risk mitigation strategies were evaluated and
prioritised based on likelihood of the material
matter occurring, and the anticipated impact
on value creation and protection.
DISCLOSE
Our material risks and risk mitigation strategies
are set out on pages 42 to 43. These were
reviewed and evaluated at least every quarter
by our Executive Leadership Team and the
Audit Risk & Compliance Committee (with the
full Board in attendance at these meetings).
Due to the complex nature of our risk profile,
some of these material matters may impact on
our ability to create and protect value over the
short, medium and long term.
As Mirvac moves to adopt Integrated
Reporting and prepare an Integrated Annual
Report in line with the Framework, we
will also seek to more formally refine our
stakeholder engagement and materiality
processes and the ‘relevant matters’ required
in an Integrated Report (that is, those that the
Board understand to be material to Mirvac’s
securityholders and other providers of financial
capital in making decisions relating to their
ongoing investment, funding and support
for the company).
Celebrating 50 years
Mirvac GroupLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS HOW WE CREATE VALUE
PERFORMANCE BY PILLAR
FINANCIAL AND OPERATIONAL RESULTS
RISK MANAGEMENT
GOVERNANCE
FINANCIAL REPORT
OTHER
CONTENTS
About this report and reporting suite
01
About Mirvac
02
FY22 highlights
06
Letters to securityholders
08
12
Our strategy
14 Megatrends
16
18
How we create value
Performance by pillar of value
> Performance: Financial
> Place: Asset creation and curation
> People: People, culture and safety
> Partners: Customers and stakeholders
> Planet: Sustainability
FY22 Financial and Operational Results
36
Risk and risk management
42
Governance
44
73
Financial report
125 Directors’ declaration
126
134 Securityholder information
136 Glossary
137 Directory & upcoming events
Independent auditor’s report
REPORTING SUITE
This reporting suite sets out the Group’s financial and
operational performance for the year ended 30 June 2022
across the following documents:
MGR FY22 RESULTS PRESENTATION
An overview of Mirvac’s financial, operational and
sustainability performance for the financial year.
MGR FY22 ADDITIONAL INFORMATION
Information supporting Mirvac’s FY22 Results Presentation.
MGR FY22 ANNUAL REPORT
An in-depth overview of Mirvac’s financial, operational
and sustainability performance for the 2022 financial year,
along with the Group’s Directors’ Report, its Remuneration
Report and its detailed financial statements.
MGR FY22 PROPERTY COMPENDIUM
A detailed summary of the Group’s investment portfolio,
other investments, and its commercial and residential
development pipeline as at 30 June 2022.
MPT FY22 ANNUAL REPORT
An overview of Mirvac Property Trust for the financial year.
BUILDING CLIMATE RESILIENCE
An overview of Mirvac’s approach to managing its
climate-related risks and opportunities, which aligns
with the recommendations set out by the Task Force
on Climate-related Financial Disclosures.
CORPORATE GOVERNANCE STATEMENT 2022
www.mirvac.com/about/corporate-governance.
TAX GOVERNANCE STATEMENT
www.mirvac.com/about/corporate-governance.
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).
Annual Report 2022 – 1
BUSINESS OVERVIEW
ABOUT MIRVAC
We are a purpose-driven organisation that strives to make a positive
impact on people’s lives by shaping the urban landscape.
This means we’re also able to see
the bigger picture and take a longer-
term view, with the ability to create
multifaceted spaces and adapt to our
customers’ diverse and changing needs.
The value that our integrated approach
delivers is further outlined on page 20.
And key to everything we do are our
people, who help us drive significant
outcomes for our customers,
communities, securityholders, and our
planet. By harnessing the unique skillset
of our people across each of the sectors
we operate in, we’re able to create and
curate outstanding urban environments
that people want to work, shop and live in.
Mirvac is an Australian Securities Exchange
(ASX) top 50 company with an integrated
asset creation and curation capability.
For 50 years, we’ve dedicated ourselves
to shaping Australia’s urban landscape,
with a strong focus on sustainability,
innovation, safety, and placemaking.
Our contribution to Australian cities is
reflected in the $26bn of assets we own
and manage across office, industrial, retail
and build to rent, along with our $12.4bn
commercial development pipeline and our
$17.3bn residential development pipeline.
Located in Australia’s key cities of Sydney,
Melbourne, Brisbane, Canberra and Perth,
we create award-winning urban precincts
that set new benchmarks in sustainability
and design excellence.
Underpinning the success of our urban
strategy is our integrated and diversified
business model, which ensures we maintain
an appropriate balance of passive and
active capital, enabling us to be agile and
respond to fluctuations in the property
cycle. Our integrated approach also gives
us a competitive advantage across the
lifecycle of a project. From site acquisition,
urban planning and design, through to
development and construction, leasing,
sales and marketing, property management
and long-term ownership, we exercise
control over the entire value chain.
2 – Celebrating 50 years
Mirvac GroupLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS OUR PURPOSE
Our purpose, Reimagine Urban Life, is
our passion and reason for being. When
we reimagine urban life, we’re inspired to
completely rethink how places are defined.
We don’t just build buildings and houses;
we create unique urban precincts and
thriving residential communities, and we
look to have a positive impact. This means
we apply our expertise to design and deliver
assets and projects that are at the forefront
of sustainability and innovation; to create
communities that connect the people within
them; and to leverage our capabilities so
that we leave a lasting legacy.
OUR VALUES
Our values are aligned with our purpose and guide us in what we do.
WE PUT
PEOPLE FIRST
HOW WE WORK
MATTERS
WE ARE CURIOUS
AND BOLD
WE
COLLABORATE
WE ARE PASSIONATE
ABOUT QUALITY
AND LEGACY
WE ARE GENUINE
AND DO THE
RIGHT THING
OUR BUSINESS
We have three core business segments that drive our financial performance and underpin our commitment
to Reimagine Urban Life.
INTEGRATED INVESTMENT PORTFOLIO
OFFICE
INDUSTRIAL
RETAIL
BUILD TO RENT
> 25 assets 1
> Portfolio value: $8.3bn 2
> NLA: 857,762 sqm
> 10 assets 1
> Portfolio value: $1.7bn 2
> NLA: 469,339 sqm
> 12 assets 1
> Portfolio value: $2.9bn 2
> GLA: 347,800 sqm
> 2,173 completed and
pipeline apartments
> Portfolio value: $0.7bn 2
FUNDS MANAGEMENT: $10.2BN THIRD-PARTY CAPITAL
COMMERCIAL & MIXED USE
RESIDENTIAL
> ~$2.2bn active developments 3
> ~$12.4bn total pipeline value 3
> 25,352 pipeline lots
> ~$14.5bn expected future revenue
> ~$1.6bn pre-sales 4
Includes assets held for sale, on market for sale and excludes IPUC and properties being held for development.
1.
2. Portfolio value includes IPUC, assets held for sale/on market for sale, and properties being held for development and represents fair value
(excludes gross up of lease liability under AASB 16).
3. Represents 100 per cent expected end value, subject to various factors outside Mirvac’s control such as planning outcomes, market demand and COVID-19 uncertainties.
4. Represents Mirvac’s share of total pre-sales and includes GST.
Annual Report 2022 – 3
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS BUSINESS OVERVIEW
CELEBRATING 50 YEARS
Mirvac was founded in 1972, when Robert Hamilton and Henry Pollack
identified a need for quality residential housing in Australia. Since
then, Mirvac has evolved into a leading ASX-listed property group with
activities across both commercial and residential, and our founders’
commitment to quality and care in every detail has endured.
The significant contribution we’ve made to
Australia’s urban landscape over the past 50
years can be seen in the large number of award-
winning workplaces, homes, communities, and
retail centres we’ve delivered - places that
continue to be experienced and enjoyed by
thousands of Australians.
To everyone involved in our story, we’d like
to say thank you for helping us reach this
exciting milestone. We are proud to celebrate
this achievement with our people, customers
and partners, and we look forward to creating
and curating extraordinary urban places and
experiences well into the future.
1970s
1972
> Business founded by
Henry Pollack, Robert
Hamilton and AGC
Corporation.
> First residential property
is built: Montrose, a block
of twelve apartments in
Rose Bay, NSW.
1976
1977
LATE ‘70s
Castle Vale, the first
large-scale, integrated
development of its kind,
is built in Willoughby
on Sydney’s lower
North Shore.
> Hotel management
and ownership begins
with The Sebel Hotel in
Elizabeth Bay.
Residential building on
subdivided land begins,
leading to the creation of
Mirvac Homes.
1990s
1990
1994
1995
1996
1999
Mirvac consolidates
its unlisted property
trusts into one
(Barclays-Mirvac
Property Trust).
First major project in
Melbourne: Beacon Cove.
First major project in
Queensland: The Quay
West Suites. It sells out in
three weeks.
> Henry Pollack retires.
> Mirvac buys back
BZW shares to create
Mirvac Property Trust.
Capital Property Trust
is acquired.
Mirvac Ltd and staple
trusts merge to form
Mirvac Group.
2010s
2010
2013
2014
2017
2018
A new urban strategy
is implemented,
setting the Group
up for the future.
Mirvac embarks on
the redevelopment
of 8 Chifley Square,
Sydney, signifying
the Group’s
evolution into an
urban asset creator.
Mirvac releases its
groundbreaking This
Changes Everything
sustainability strategy,
with ambitious targets
around carbon,
water and waste.
By 2017, Mirvac’s
innovation initiative
has its own team.
Hatch by Mirvac is
Mirvac’s award-winning
innovation program.
Mirvac launches build to
rent, pioneering the asset
class in Australia.
4 – Celebrating 50 years
Mirvac GroupLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS 1980s
EARLY ‘80s
1983
1987
Luxury high-rise
projects begin with
The York, Sydney.
The project sells out
in four hours.
Mirvac Premier
Property Trust is
formed to manage
commercial
properties.
Mirvac lists on the
ASX and is valued
at $120m. AGC
(since merged into
Westpac) sells
its share of the
business for $60m.
2001
2004
2005
2008
Expansion into WA
through Mirvac-Fini.
Mirvac acquires
James Fielding Group,
providing an investment
pipeline of $2.3bn.
Bob Hamilton retires as
MD, but keeps working.
Impact of GFC hits hard.
2020s
2021
2022
2022
Mirvac becomes the first
Australian property group
to be net positive carbon
for its scope 1 and 2
emissions.
Mirvac is named number
one in Equileap’s Global
Report on Gender Equality.
Mirvac is appointed
trustee of the AMP
Capital Wholesale Office
Fund, increasing the
Group’s funds under
management by $7.7bn.
2000s
Annual Report 2022 – 5
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS BUSINESS OVERVIEW
FY22 HIGHLIGHTS
Mirvac delivered a solid result in FY22, demonstrating our continued
resilience in another challenging operating environment.
STATUTORY PROFIT
$906m
up <1% on FY21
RESIDENTIAL GROSS
DEVELOPMENT MARGIN
25%
OPERATING EARNINGS
PER STAPLED SECURITY
15.1c
up 8% on FY21
OPERATING PROFIT OF
$596m
up 8% on FY21
OPERATING CASH FLOW
$896m
up 41% on FY21
GEARING1
21.3%
LEASED OVER
110,800sqm
of office, industrial and retail space
DISTRIBUTIONS PER
STAPLED SECURITY
up 3% on FY2110.2c
NTA2
$2.79
up 4% on FY21
5.3 star
average NABERS Energy rating
across the office portfolio
1. Net debt (at foreign exchange hedged rate) / total tangible assets – cash.
2. NTA per stapled security excludes intangibles, right of use assets and non-controlling interests, based on ordinary securities, including EIS securities.
3. Represents Mirvac’s share of total pre-sales and includes GST.
6 – Celebrating 50 years
Mirvac GroupLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS #1
EQUILEAP GLOBALLY
FOR GENDER EQUITY
SECURED
$1.6bn
of residential pre-sales 3
AFR BOSS
#1 Best Places
to Work
PROPERTY, CONSTRUCTION
AND TRANSPORT
First
AUSTRALIAN PROPERTY GROUP TO BE
NET POSITIVE CARBON FOR SCOPE 1
AND 2 EMISSIONS
Annual Report 2022 – 7
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS LETTERS TO SECURITYHOLDERS
LETTERS TO OUR SECURITYHOLDERS
LETTER FROM THE CHAIR
Dear securityholders,
In our 50th year, we celebrate
our significant history as we
look towards the future.
Despite the challenges we’ve faced over the
2022 financial year, Mirvac has remained
resilient. Having quickly stabilised the business
after COVID-19 first began to emerge over two
years ago, we set ourselves a goal to be stronger
than we were before. Thanks to the strength and
commitment of our people and the leadership
of Susan and the senior management team, we
have largely achieved this ambition.
Mirvac is a resolutely urban-focused company.
Our forward-looking development pipeline
- $30bn of secured projects across all asset
classes - is increasingly spread across sectors,
with Mirvac moving from a predominately
residential and office developer to a recognised
creator and curator of leading mixed use
precincts and places. Having made it through
lockdowns and border closures, we’re now
facing a confluence of headwinds, including
supply chain issues, labour shortages, cost
pressures, and rising inflation and interest rates.
However, while the macroenvironment has
shifted, our capability as a business has
continued to evolve. We’re fortunate to have
a team of many experienced, long-serving
employees, along with some highly-skilled
newer team members, and together, we’re
growing our mixed use capability and taking on
developments through which we can leverage
our deep expertise across design, development,
construction, and asset management.
This is also a time where the benefits of
our integrated model are clear. Having had
in-house construction capabilities for 50 years
means we have long-standing relationships
with tier one subcontractors and a proven
track record of well-run sites – all of which
help insulate us from the skill shortages and
supply chain pressures that currently surround
the construction sector. We have an exciting
pipeline of opportunities ahead of us, and we
can embrace them with confidence.
FINANCIAL PERFORMANCE
Our solid financial result in FY22 reflects the
continued execution of our urban strategy
and the strength of our diversified business.
Strong momentum in our residential business
in the first half, and the successful delivery of
our commercial and mixed use development
pipeline, helped to offset weaker market
conditions across office, retail and build to
rent as a result of COVID-19. And as markets
continue to fluctuate, our diversified model
will be key.
Our statutory profit of $906m was up $5m on
FY21. Included in this result were development
revaluation gains of $70m and asset revaluation
gains of $305m in our Integrated Investment
Portfolio, however, the overall result was
impacted by a $216m write-down of our
Toombul retail asset in Brisbane, following
extensive damage caused by flooding in
February this year.
Our operating profit of $596m was up
8 per cent on FY21, representing 15.1 cents per
stapled security. This was slightly ahead of
guidance provided earlier in the financial year
of at least 15.0 cents per stapled security.
Dr. John Mulcahy
CHAIRMAN
8 – Celebrating 50 years
As a result of this strong performance, the
annual distribution to securityholders increased
to 10.2 cents per stapled security, which was at
the upper end of guidance provided.
In addition to a strong earnings outcome,
our operating cash flow of $896m was
41 per cent higher than FY21, helping to fund
our distributions. Net tangible assets were up
4 per cent to $2.79, delivering a 6.9 per cent
Return on Invested Capital overall.
MANAGING OUR CAPITAL EFFECTIVELY
We continued our prudent approach to capital
management to ensure our capital position
and balance sheet remain strong. In FY22, this
enabled us to continue to navigate the ongoing
impacts of the global pandemic and remain agile
in the face of changing market conditions.
We continued to conservatively manage our
debt maturity profile, and as at 30 June 2022,
our weighted average debt maturity was
5.6 years, with only $220m of debt maturing
in FY23 and $250m in FY24. We increased
liquidity to $1.4bn and gearing at 21.3 per cent
is at the lower end of our target range of 20 to
30 per cent, ensuring Mirvac has the financial
flexibility to take advantage of opportunities as
they arise for the benefit of our securityholders.
We maintained our A3 Moody’s and A- Fitch
Ratings with stable outlooks.
Our cost of funds increased by 50 basis points
to 3.9 per cent as at 30 June 2022, and while
interest rates are expected to continue to
increase from historical lows, 55 per cent of
our debt is hedged, which means we are well
placed to withstand the increasing interest
rate environment.
Our capital position was further supported
by the execution of our asset sales program
during the financial year. Our Travelodge
portfolio sold for a 19 per cent premium to
book value, while strong capital demand for
high-quality retail assets facilitated the sale of
Cherrybrook Village and Tramsheds in Sydney
for a 43 per cent and 53 per cent premium to
book value respectively. Quay West Carpark
was also sold for a 35 per cent premium to
book value. As well as helping to enhance the
quality of our business, the proceeds, totalling
$820m, will be used to help fund our significant
$30bn development pipeline.
Susan Lloyd-Hurwitz
CEO & MANAGING DIRECTOR
Mirvac GroupBUSINESS OVERVIEWOUR STRATEGYMEGATRENDS And as we progress our substantial pipeline –
across all asset classes – we will continue
to focus on growing our capital partnership
mandates and increasing our funds under
management. This means leveraging our
end-to-end development, management, and
investment expertise to create high-quality
property investments that foster shared
success over the long term.
During the financial year, we established a
direct investment partnership with Australian
Retirement Trust (formerly Sunsuper ) to
manage their $800m direct property portfolio,
selling down a 49 per cent interest in the
Locomotive Workshop in Sydney as part of
this. We also strengthened our relationship
with M&G Real Estate, helping to secure a
49.9 per cent interest in EY Centre, 200 George
Street, Sydney, with Mirvac providing property
and investment management services to our
aligned capital partner.
More recently, in July 2022, we were honoured
to have secured management rights via a vote
of unitholders to the AMP Capital Wholesale
Office Fund (AWOF), featuring a high-quality
office portfolio valued at over $7.7bn. Mirvac is
expected to become trustee by mid-October of
this year and provide AWOF $500m in liquidity.
As a result of the transaction, our third-party
capital under management will grow to
approximately $17.9bn, which is an approximate
75 per cent increase on our third-party capital
under management as at 30 June 2022. It is
intended that this unlisted fund will be known
as Mirvac Wholesale Office Fund, and Mirvac
will derive base management fees and property
management fees that are earnings accretive
from FY23 onwards.
DIVERSITY & INCLUSION
At Mirvac, we are committed to fostering an
inclusive culture where everyone feels like they
belong. In FY22, we refreshed our Diversity
& Inclusion strategy, that builds on the excellent
work we have been doing over the past several
years around flexibility and gender diversity.
Within the strategy, we have broadened our
focus around Indigenous participation in the
workforce (including in our supply chains),
women in construction, and those with caring
responsibilities beyond young families – such as
caring for elderly parents. And to actively embed
our awareness of inclusion, we developed a new
Inclusive Leadership Program for our leaders,
which dives deeper into the themes of true
inclusion and the core characteristics of highly
inclusive cultures.
HEALTH, SAFETY, ENVIRONMENT AND
SUSTAINABILITY (HSE&S)
Providing a safe workplace for our employees,
suppliers, and communities is absolutely
paramount at Mirvac, and we work hard to
embed a culture that has health, safety, and
sustainability at top of mind.
Last year, to assist the Board in fulfilling
its oversight of our HSE&S governance
frameworks, culture, and compliance, we
established the HSE&S Board Committee. In
FY22, the Committee Members participated
in a number of site visits in order to increase
their understanding of HSE&S performance
across the Group, and to raise the profile of
risk management with employees and site
management. The site visits also provided
an opportunity for Mirvac to ensure that the
resources and systems that are in place to
manage HSE&S matters are effective.
CONTINUING OUR BOARD AND EXECUTIVE
LEADERSHIP TEAM (ELT) RENEWAL
Our Board and Nomination Committee
regularly reviews our Board’s composition
to ensure we have the right mix of skills,
experience, attributes, and diversity to support
and provide oversight of our business. At our
Annual General and General Meetings in
November last year, I announced that James
Millar and I, being the longest serving members
on the Board, anticipate stepping down from
the Board before the end of this term. In
preparation for this, and to ensure that we have
the right people to oversee Mirvac’s continued
success, we appointed Damien Frawley to
our Board in December last year. Damien has
wide-ranging experience in investment and
asset management across real estate and
infrastructure, both in Australia and overseas,
and has worked in the financial services industry
for over 30 years. He has a strong focus on
developing and executing strategy, and has
been a welcome addition to our team.
We also welcomed Amy Menere to the ELT
as our new Head of Stakeholder Relations.
Amy brings to Mirvac over 20 years of
experience in corporate affairs and stakeholder
relations in the property, professional and
financial services industries. I am confident
that in our current Board and ELT, we have the
right skills and experience to lead the company
through its next phase of growth, and ensure
we deliver value to all of our stakeholders.
REMUNERATION
As always, we remain committed to providing
open and transparent reporting of our
remuneration outcomes. In FY22, the strategic
objectives set by the Group were either met
or exceeded, resulting in a Group STI score
of 113 per cent. For the Executive KMP, the
FY20 LTP vested at 40 per cent reflecting the
mixed results across the performance metrics.
Mirvac’s absolute TSR performance was below
the median of the comparator group, and, as
a result, this portion of the award did not vest.
Two-thirds of the ROIC component vested,
taking into account the ROIC performance
exceeding WACC and the outcomes
delivered by management over the three-year
performance period. The full remuneration
report for FY22 is available on page 51.
OUTLOOK
While there is much uncertainty in
macroeconomic and geopolitical environments,
our business remains well placed. As
demonstrated throughout the pandemic, the
quality of our integrated investment portfolio,
our reputation as a market-leading residential
developer, and the value of our commercial
and mixed use development pipeline will enable
us to continue our long-term track record of
delivering strong returns to securityholders
through the cycle.
Our key strategic priorities over the next
financial year are to progress our secured
$12.4bn commercial and mixed use development
pipeline, secure strategically aligned capital
partnerships for our assets, increase our funds
under management further, and deliver our
residential project launches and settlements.
We will continue to have a disciplined approach
to capital management, while focusing on
maintaining a healthy balance sheet, protecting
our credit ratings, and holding sufficient liquidity
to capitalise on opportunities as they emerge.
Our significant program of non-core asset sales
will further support our activities, as we look to
create the next generation of assets that deliver
development profit, generate new recurring
income, and improve the quality of our portfolio.
Subject to no material change in the operating
environment, the Group is targeting operating
earnings in FY23 of at least 15.5 cents per
stapled security and distributions of at least
10.5 cents per stapled security.
As we celebrate Mirvac’s 50th year, I could not
be more proud to chair a company that has
achieved so much in that time. Not only have
we delivered exceptional places and projects
across Australia’s major cities, we have retained
a reputation for quality, for care, for being a
leader in sustainability and innovation, and for
being a trusted partner. In 50 years, Mirvac has
grown from delivering a block of 12 apartments
in Sydney’s eastern suburbs, to a leading asset
creator and curator that has over $26bn in
total assets under management and a $30bn
commercial and residential development
pipeline. I would like to thank and congratulate
all of the many, many people who have
contributed to Mirvac’s journey along the way.
DR JOHN MULCAHY
CHAIR
Annual Report 2022 – 9
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS LETTERS TO SECURITYHOLDERS
LETTERS TO OUR SECURITYHOLDERS CONTINUED
LETTER FROM THE CEO & MANAGING DIRECTOR
I am pleased to report to you on Mirvac’s performance in FY22, in a challenging
operating environment. Over the course of the financial year, we endured
extended COVID-19-related lockdowns, rising inflation and interest rates, supply
chain issues, labour shortages, international conflict, and extreme wet weather
along the east coast of Australia.
While we were certainly not immune to
the impacts of these events, we were able
to manage these risks effectively, and our
business has remained in good shape.
Key to this was our integrated and diversified
business model, which positioned us well
to respond and adapt to changing market
conditions. We were able to procure well
in advance of construction due to pipeline
visibility, and retain core skillsets – across all
asset classes – in-house. Our integrated model
is a proven competitive advantage for Mirvac
and has stood us in good stead for 50 years.
MAINTAINING A CULTURE OF WHICH WE CAN
ALL BE PROUD
This second year of the pandemic was testing
for our people, with some experiencing stress
and fatigue as a result of the government
mandated lockdowns, restrictions and other
ongoing COVID-19 impacts. We remained
steadfast in our commitment to provide our
people with a safe and healthy environment,
and in FY22, we broadened our focus around
psychological health and safety. This included
the launch of a new app called Sonder to
support people’s mental health and wellbeing.
The app connects users with medical experts
and psychology support and counselling
services 24 hours a day, seven days a week.
During the financial year, we also continued to
focus on creating a culture of which we can be
proud; a culture that helps to attract and retain
talent as we deliver on our urban strategy.
Our efforts to create a cohesive culture – one
that has flexibility, diversity and inclusion,
sustainability and innovation at its core –
continued to be recognised. Mirvac earned the
top spot in the 2022 AFR BOSS Best Places to
Work list for the Property, Construction and
Transport sector, and was ranked the number
one employer in the world for gender equality
by Equileap. Just as pleasing, we achieved
96 per cent talent retention in a challenging
year, and our employee engagement results
showed that 93 per cent of our people say they
are proud to work for Mirvac.
We also began to explore a broader definition
of diversity through our new Belonging
strategy, and we focused on growing our
innovation capability, introducing a new Board
of Innovators to proactively monitor inflection
points and provide a holistic view of our
innovation pipeline.
Our ambition to have a positive environmental
and social impact has helped us achieve
some big goals. We were absolutely thrilled
to have met our net positive carbon target
for our scope 1 and 2 emissions nine years
ahead of schedule, with very little reliance on
offsets. Since our sustainability strategy, This
Changes Everything, was launched in 2014, our
progress has continued to exceed expectations,
demonstrating that doing good really is good
for business. We’ve now set our sights on an
ambitious scope 3 emissions target, while
maintaining our leading water and waste goals,
and we are intensifying our focus on how we
measure our social impact. Reconciliation is also
another key focus for us: across the business,
our teams have been proactively focused on
building a deeper understanding of Indigenous
people, as we further embed recognition of
culture into our developments.
MAINTAINING POSITIVE MOMENTUM
Although FY22 presented a number of
challenges, our business continued to
perform well, underpinned by our integrated
and diversified model, and we achieved a
number of key milestones. These included
the completion of two major commercial
developments during the financial year –
The Locomotive Workshop in Sydney and
Heritage Lanes in Brisbane - which were
delivered ahead of our initial feasibilities.
Along with development profit, NTA uplift, and
management fees from our third party capital
co-owners, these two assets will provide
future recurring income within our Integrated
Investment Portfolio, with contributions from
the Locomotive Workshop commencing in the
second half of FY22 and contributions from
Heritage Lanes due to commence in FY23.
Overall, our active commercial and mixed
use pipeline has the potential to deliver an
estimated $250m of future annual recurring
income and $1.8bn of value created to
the Group as they complete, while further
enhancing the quality of our portfolio.
Positive momentum also continued in our
residential business, and despite wet-weather
and COVID-19-related project delays, we
achieved 2,523 residential settlements in
the financial year, in line with our 2,500-lot
target. Gross development margins were
maintained at 25 per cent, and we expect
that they will normalise, but remain above
our through-cycle target into FY23. We also
maintained solid sales activity, particularly
at our masterplanned communities projects
during the first half of the financial year, and
while conditions normalised in the second half,
the successful release of six major apartment
projects helped to elevate pre-sales to $1.6bn,
providing good visibility of future earnings.
We expect that the relative affordability of
apartments compared to established homes
and the forecast upcoming undersupply of
apartments along the east coast of Australia
will position us well to capture future demand,
even as interest rates rise. As buyers become
more discerning, our well-recognised brand,
the quality of the product we deliver, our
focus on owner-occupiers, and the benefits
of our integrated model will continue to
differentiate Mirvac.
Within Commercial and Mixed Use, we
progressed a number of key projects, including
the redevelopment of Harbourside in Sydney,
and demolition works at 55 Pitt Street in
Sydney and 200 Turbot Street in Brisbane.
Our confidence in the resilience of Melbourne’s
CBD was also reinforced, with a planning
permit lodged to transform 90 Collins Street by
refurbishing the existing 21-storey building and
adding 15 levels above the existing building.
This is expected to deliver an additional
15,000sqm of premium commercial space
and an end value of approximately $650m.
10 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWOUR STRATEGYMEGATRENDS PENDING
The high-quality office assets we create will
eventually form part of our office portfolio, which
has benefitted from strategic repositioning over
the past 10 years, setting the business up for
sustainable, long-term growth. Our well-located
portfolio has a 99 per cent weighting to Prime
assets, an average age of just 9.8 years, and
a 5.3 star average NABERS Energy rating,
ensuring our buildings remain attractive to
tenants and capital partners alike. This will
continue to be an important differentiator as the
flight to quality in the sector gathers pace, with
assets built after 2000 benefiting from lower
vacancy, higher rental growth, and stronger
asset valuations.
As well as maintaining an overweight exposure
to core CBD and fringe office and mixed use
assets, we have a focus on increasing our
industrial and build to rent allocation. Our $2.5bn
industrial development pipeline continued to
progress, with construction commencing at
Switchyards in Auburn, which is 58 per cent
pre-leased, and construction on track to
commence at Aspect in Kemps Creek in the first
half of FY23. At Aspect, we are pursuing our first
net positive embodied carbon development,
with 5 Star and 6 Star Green Star ratings being
targeted for the first two buildings, and we have
a commitment to deliver net positive carbon
assets across all of our industrial developments
going forward. Development approvals also
progressed at Elizabeth Enterprise in Badgerys
Creek, with good tenant enquiry received for
this asset to date.
In addition to this, we have approximately
$1bn of build to rent assets under construction
that will help grow our exposure to this
burgeoning asset class. Our build to rent
development pipeline of close to 2,200 lots
across the east coast is well-placed to benefit
from the anticipated upcoming undersupply
in apartments, as well as the expected
resumption of international migration. And
we continue to see the customer value
proposition of build to rent play out. While our
flagship development, LIV Indigo in Sydney,
faced challenges during the first half of FY22
(with resident amenities compromised due
to COVID-19-related lockdowns), we saw
leasing quickly rebound as restrictions eased,
increasing to 98 per cent by the end of the
financial year.
Customers have told us that they value the
new style of renting, and we have certainly
proven the need for build to rent in Australia
given the security of tenure and flexibility
it provides. As we apply what we’ve learnt
through LIV Indigo to subsequent projects,
starting with LIV Munro in Melbourne which
is on track to launch in the first half of FY23,
the offering will only get better.
Several years ago, in response to the growth
in online retail, we began to reposition our
retail centres as community hubs – places that
provide our customers with social connection,
entertainment, experiences and access to
essential services. This focus ensured that our
portfolio remained resilient throughout another
challenging financial year in the retail sector,
and we saw leasing enquiries and retail sales
return to pre-pandemic levels over the period.
We are also committed to bringing physical
and online retail together and giving people
genuine reasons to visit our centres. The
WeShow concept, for example, has removed
the barriers that have prevented online and
small businesses from establishing a physical
footprint, while adding diversity and local
relevance to our customer experience.
In February this year, the east coast of
Australia experienced extreme wet weather,
with widespread flooding in both Sydney
and Brisbane. Our retail centre in Brisbane,
Toombul Shopping Centre, sustained
catastrophic damage, with flood waters
inundating the centre – the first time in
its 55-year history. Given the extent of the
damage and the increased risk of a further
flood event, we made the difficult decision that
it was not practicable to reinstate the centre as
is. We have offered financial and other support
to our retailers to assist them through an
incredibly difficult time, and we are committed
to working with the local community as we
explore our options for this iconic site.
DELIVERING FOR OUR FUTURE CUSTOMERS
Given the crisis of affordability in major
cities, we are actively rethinking all types
of housing typologies, which, as well as build
to rent, includes disability housing and land
lease. Through land lease, customers have
the opportunity to buy their home within a
Mirvac community, while we retain ownership
of the land.
This is a sector through which we can apply
our asset creation and curation capability, and
although still in its early days, we are excited
by the potential this offering has for those
aged 55 and over, who will benefit from the
amenity, service, and sense of connection to
be delivered.
New, modular construction methodologies
are also changing the way we build homes.
We have now committed that every house
or apartment built by Mirvac will have a pod
bathroom, delivering savings in time and
reducing the number of trades on site.
REFLECTING ON OUR LEGACY
As we celebrate Mirvac’s 50th anniversary,
it’s important to reflect on how far we’ve come
and to take stock of all we’ve achieved.
It is an honour and a privilege to have led
this company over the past 10 years; to
have seen our asset creation and curation
capability come to life with the delivery of
many award-winning properties and projects
across each of our asset classes; to have seen
the culture evolve into what it is today – a
culture through which we are consistently
recognised for our commitment to gender
equality, diversity and inclusion, sustainability,
and innovation.
I would like to thank our people for helping to
make Mirvac what it is today and to everyone
involved in our story for their contribution over
the years.
I would also like to thank our Board for their
guidance and for setting the direction of the
company, and to our leaders for their role in
Mirvac’s success today.
I would especially like to thank our
securityholders for your continued support
and for your trust in what we do.
SUSAN LLOYD-HURWITZ
CEO & MANAGING DIRECTOR
Annual Report 2022 – 11
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS OUR STRATEGY
Mirvac has a resolutely urban strategy,
underpinned by a commitment to Reimagine
Urban Life. That means we focus on Australia’s
most attractive urban markets, with an
ambition to create places and precincts for
the long term, while delivering sustained
value to our securityholders.
OUR STRATEGY
Since 2013, our urban strategy has
delivered considerable benefits to our
stakeholders, including a continued strong
financial performance, over $5bn in new
assets across the key cities in which we
operate, numerous thriving residential
communities and apartments projects,
and leading sustainability outcomes.
Our strategy is supported by our vision
to be a leading creator and curator of
extraordinary urban places and experiences
to make life better for millions of Australians.
Under this vision, we have set out the
following key strategic priorities:
DELIVER FINANCIAL
OUTPERFORMANCE
measured by EPS and DPS
growth, ROIC, and strong total
securityholder returns.
ADVOCATE, RETAIN AND ATTRACT
OUR PARTNERS AND CUSTOMERS
by responding to their needs to drive
positive outcomes, while taking a broad
view of who they are to allow us to both
tailor and expand our offerings.
BE A TRUSTED PARTNER TO
GOVERNMENT AND COMMUNITIES
by striving to understand the
diverse and changing needs
of our stakeholders so that we
build strong communities with an
enduring legacy.
REMAIN A GLOBAL LEADER IN ESG
by striving to be planet positive in
carbon, water and waste and by
ensuring we leave a positive impact
in our communities.
BE FUTURE FIT
through the transformation of our
systems and processes and by
digitising everything.
BE A LEADER IN INNOVATION
by putting the customer at the heart of
the innovation process and generating
ideas to drive commercial success.
CREATE A COMPETITIVE ADVANTAGE
THROUGH PEOPLE AND CULTURE
ensuring that Mirvac is a company
where people join, stay, grow,
and belong.
12 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSMEGATRENDS Annual Report 2022 – 13
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS MEGATRENDS
MEGATRENDS SHAPING OUR WORLD
The environment we’re operating in is continuously evolving, with a number of
key global megatrends shaping our world and the cities we live in. We’re focused on
monitoring these trends and understanding their potential impact to our business,
our workforce, our customers, and partners, so that we can both manage the risks
and embrace the opportunities they present.
CHANGING DEMOGRAPHICS AND
CONSUMER BEHAVIOURS
CHANGES IN OUR POPULATION
DEMOGRAPHICS WILL IMPACT HOW
PEOPLE WORK, LIVE AND PLAY.
> Millennials and digital natives are
expected to represent 75 per cent
of the workforce by 2030, while
over 55-year-olds are a growing
cohort and projected to represent
28 per cent of the population.
> Changing consumer behaviours
accelerated by COVID-19.
> Online, real-time and convenience is
becoming the norm.
HOW WE’RE RESPONDING
We’re passionate about embedding a
customer-centric culture throughout
the organisation, and using our data
insights to reach new customer
segments, while delivering exceptional
experiences, services and products.
Within our retail business, we have
focused on expanding our reach across
a variety of channels, bringing the
online world to bricks and mortar and
ensuring a true omni-channel offering
for our partners and customers.
TECHNOLOGY DRIVING CHANGE
THE PACE OF DIGITISATION IS
INCREASING AND THE WORLD IN
WHICH WE OPERATE IS CHANGING
FAST.
> Increased use of technology to
enhance products and customer
experiences.
> Exponential growth in data-enabled
analytics and process automation.
> End-to-end digitisation supporting
the growth of prefabrication
methods in construction.
HOW WE’RE RESPONDING
We recognise the opportunity
technology-driven change can
bring, and our ongoing digital
initiatives focus on further developing
innovation in digital construction and
prefabrication, curating enhanced
customer experiences within and
across our asset classes, and driving
optimisation and efficiency across
our business.
URBANISATION, DENSIFICATION,
AND REGENERATION
THE URBANISATION OF AUSTRALIA’S
MAJOR CAPITAL CITIES CONTINUES,
WITH CHANGING TRENDS
IMPACTING PROPERTY IN URBAN
AREAS.
> Increased densification as land
becomes more scarce.
> Government policy facilitating
densification and regeneration.
> Strong demographic tailwinds
supporting continued urbanisation.
> Housing affordability challenges
exacerbated by recent rapid price
growth across our markets.
HOW WE’RE RESPONDING
We focus on creating and curating new
assets, precincts and communities
in key urban markets that contribute
to the vibrancy of our cities. We
believe that our Australian cities will
continue to be the drivers of economic
output, and we apply our placemaking
capabilities to deliver places people
want to work, shop and live in. In
addition to this, we are committed to
exploring new housing typologies,
such as land lease and build to rent,
to help address housing affordability
for our customers.
14 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGY FINANCIAL REPORT
OTHER
Annual Report 2022 – 15
CAPITAL SEARCHING FOR YIELD
SIGNIFICANT GROWTH IN DOMESTIC
AND INTERNATIONAL CAPITAL
POOLS WITH COMPETITIVE COST
OF CAPITAL.
> Domestic superannuation is now
more than $3 trillion and rising.
> Global capital remains attracted to
Australia.
> Yields generated from real estate
remain attractive on a relative basis.
HOW WE’RE RESPONDING
We continue to focus on being a
responsible custodian and delivering
strong returns for third-party capital
by utilising our development capability,
along with our expertise across
multiple asset classes.
ESG FRONT AND CENTRE
CAPITAL IS FLOWING INTO
INVESTMENTS THAT OFFER
ATTRACTIVE ESG FUNDAMENTALS
AS WELL AS SPECIFIC
DECARBONISATION ACTIVITIES.
> ESG and decarbonisation are now a
primary focus for our investors and
partners.
> Global capital and employees are
searching for socially responsible
impact.
> Trust, good governance, and
transparency continue to be
important factors across all
industries and sectors.
HOW WE’RE RESPONDING
Our sustainability strategy, This
Changes Everything, is integrated
into the way we do business. It sets
out our approach to environmental
and social responsibility, as well as
our commitment to transparency and
doing the right thing. Having reached
our goal to be net positive in scope
1 and 2 carbon emissions nine years
early, we have taken the opportunity to
refresh the strategy as it begins its third
iteration. This phase will focus on scope
3 emissions and our community goal to
create a strong sense of belonging.
GOVERNANCEHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS BUSINESS OVERVIEW
LETTERS TO SECURITYHOLDERS
OUR STRATEGY
MEGATRENDS
HOW WE CREATE VALUE
Creating value across our business helps to ensure our success both now
and in the future. We have defined five key pillars that enable us to execute
our strategy, deliver value for our stakeholders, and allow us to maintain a
healthy and resilient business. The table below sets out these pillars, and more
detail on our performance in effectively managing and leveraging these pillars
during the financial year can be found from pages 18 to 35.
PERFORMANCE
FINANCIAL
PLACE
ASSET CREATION AND CURATION
Having diversified and appropriately
balanced sources of capital, including
third-party capital, equity and debt,
helps us execute on our urban strategy
and deliver sustainable returns to our
securityholders and capital partners.
Our asset creation and curation
capability delivers places that contribute
to the vibrancy of our cities and improve
people’s lives.
By remaining agile through the property
cycle and maintaining a strong focus on
capital allocation. This is complemented
by our capital partnerships focus, which
helps us to fund our significant future
development pipeline.
By leveraging our integrated and
diversified business model to create
and curate high-quality assets,
precincts and communities that have
sustainability and technology embedded
throughout, and support our strategy
to Reimagine Urban Life.
Excess returns for securityholders,
above our cost of capital, in a
sustainable manner, with appropriate
levels of gearing maintained.
Modern, high-quality assets and
projects that deliver NTA uplift,
development profit, and stable, recurring
income and management fees to
the Group.
> Return on Invested Capital
> Total shareholder return
> Earnings per share
> Distributions per share
> IIP: Occupancy, WALE and WACR
> Commercial & Mixed Use:
Development EBIT and NTA uplift
> Residential: Sales and settlements
PILLAR OF VALUE
HOW WE DELIVER VALUE
VALUE CREATED
HOW WE MEASURE VALUE
16 – Celebrating 50 years
Mirvac Group HOW WE CREATE VALUE
PEOPLE
PEOPLE, CULTURE AND SAFETY
PARTNERS
CUSTOMERS AND STAKEHOLDERS
PLANET
SUSTAINABILITY
Our people and culture are a source
of competitive advantage in the delivery
of our strategy and purpose.
The relationships we build as a trusted
partner allow us to deliver on our
ambition to Reimagine Urban Life.
Our rigorous focus on our environmental
and social impact helps guide us to
deliver outcomes that are planet positive
and remain a global leader in ESG.
By prioritising diversity and inclusion,
flexibility, collaboration, learning,
innovation, wellbeing, leadership and a
pursuit of safety excellence. This fosters
the capabilities, culture and engagement
levels where people feel inspired to join,
perform, grow and belong.
A culture that provides a competitive
advantage and inspires our people
to deliver on our goals and our
urban strategy, while managing the risks
to our business.
By listening to and understanding our
customers, and by working closely with
community groups, capital partners,
suppliers, government and our industry
partners to deliver on our promises.
By developing and implementing
ambitious plans with clear timelines and
by encouraging our people to do the
right thing and be a force for good.
A trusted brand with a reputation for
delivering quality products and services
across each of our asset classes.
> Employee engagement / talent retention
> LTIFR, CIFR
> % of women in senior management roles
> Net promoter scores
> Repeat purchasers
A climate-resilient business that delivers
assets and homes for our customers
that are more sustainable and
affordable to run, along with a positive
community legacy.
> Water, waste and emissions performance
> MSCI and Sustainalytics ratings
> Social procurement spend
> Community investment delivered
Annual Report 2022 – 17
GOVERNANCEFINANCIAL REPORTOTHERPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS BUSINESS OVERVIEW
LETTERS TO SECURITYHOLDERS
OUR STRATEGY
MEGATRENDS
PERFORMANCE
FINANCIAL
Maintaining a strong financial position is critical to delivering our urban strategy.
It provides us with access to a diverse range of funds as well as the financial agility
to deploy capital to activate our development pipeline.
HOW WE LOOK AT FINANCIAL PERFORMANCE
Our financial performance and success
are guided by our Portfolio Management
Framework. The design of this framework
is intended to align our financial objectives
with our goal of creating long-term value
for our securityholders. It also achieves a
balance of seeking superior returns while
maintaining a prudent capital management
approach, to enable us to deliver sustainable
growth through the cycle. We will continue
to leverage our deep expertise across
multiple asset classes, our integrated asset
creation capabilities, and our ability to access
diversified pools of capital (including debt,
third-party capital and equity) so that we can
continue to create world-class urban assets,
while delivering superior risk-adjusted returns
to our securityholders and capital partners.
FINANCIAL STRATEGY
The Portfolio Management Framework forms
the foundation of the Group’s financial strategy
and is designed to:
> Maximise long term securityholder value
> Leverage competitive advantage of the
integrated model
> Maximise the performance of each
business line
> Ensure financial strength of the balance sheet
> Diversify availability of capital sources
GROWING OUR FUNDS UNDER MANAGEMENT
We have over $10bn in third-party capital
under management with domestic and
international partners, which is split between
separately managed accounts, co-investments
and joint ventures across all of our sectors
(office, retail, build to rent, and residential).
Key to our capital partnership strategy is the
continued engagement with aligned capital
partners to cater for future mutual growth
ambitions, including through the delivery of
our $30bn multi-sector development pipeline.
As the business shifts its focus towards
the next phase of growth, building on and
expanding relationships with pension funds,
sovereign wealth funds and other institutional
real estate investors will provide us with
access to deep pools of capital to execute
our large-scale commercial and mixed used
development pipeline. We are committed
to taking a considered and collaborative
approach to forming long-lasting relationships
with aligned investors and partners.
As we look to grow our funds under
management further, we will put in a robust
set of governance structures, including the
management of conflicts of interest, to ensure
we hold ourselves to the highest standards
in carrying out our fiduciary duties for our
direct and third-party capital partners alike.
Through this, we will not only seek to preserve
our position as a leading property manager,
developer and investor, but to be recognised
as a best-in-class fund manager, reinforcing
the strength of our brand and reputation in
the market.
18 – Celebrating 50 years
Mirvac Group HOW WE CREATE VALUE
PERFORMANCE BY PILLAR
FINANCIAL AND OPERATIONAL RESULTS
RISK MANAGEMENT
GOVERNANCE
FINANCIAL REPORT
OTHER
CAPITAL MANAGEMENT AND DISTRIBUTION POLICY
Prudent capital management is part of our
Framework and is critical to ensuring our balance
sheet can both withstand market volatilities
and capitalise on opportunities. To this end,
we strive to maintain A3/A- credit ratings from
Moody’s Investor Services and Fitch Ratings
respectively, and to stay within our target gearing
range of 20-30 per cent, giving us access to
capital markets on attractive terms. We believe
that maintaining a 60-80 per cent payout ratio
of operating earnings strikes the right balance
between delivering stable distributions to
investors and reserving capital for future growth.
CAPITAL ALLOCATION AND RETURNS
We regularly update and review our cost of capital
and adjust return hurdles to remain competitive in
the market, while aiming to deliver excess returns.
As part of managing the Group’s risk exposure, we
have adopted a through-cycle active capital allocation
of approximately 20 per cent. This achieves a balance
between passive investments that provide steady
income streams and active investments that add
value through developments.
Our detailed Financial and Operational Results
for FY22 are outlined on pages 36 to 40.
DIST R I B U T ION P
O
L
I
C
Y
60-80%
Payout Ratio
A
API T
C
L A LLOCA
T
I
O
N
Passive ~80%
Active ~20%
Mirvac’s
Portfolio
Management
Framework
E N T RETU
R
M
N
S
SE G
Active/Passive
L
A
M ANAGE
M
E
N
T
APIT
C
20-30% Gearing
A-/A3 Credit Rating
R OIC
Segment Hurdles
Annual Report 2022 – 19
PLACE
ASSET CREATION AND CURATION
As a leading Australian property group, we drive value for our securityholders through
the places, precincts, and communities we deliver. This means leveraging our integrated
and diversified capability to create new, high-quality assets, curating those assets
(and the assets we manage on behalf of our partners) through customer experience
and management, and progressing our substantial residential development pipeline.
We are also one of very few property companies in Australia with the ability to manage and deliver large, complex, integrated mixed use projects that
require high levels of stakeholder engagement, and even higher levels of expertise, across all facets of development.
Our activities are focused in Australia’s key cities of Sydney, Melbourne, Canberra, Brisbane and Perth, with an overweight to Sydney and Melbourne.
These two cities continue to be the economic powerhouses of Australia.
THE VALUE OF OUR INTEGRATED MODEL
As well as providing us with direct influence
over a project’s lifecycle, our integrated
model drives significant outcomes for our
securityholders. The assets we create
are owned and managed within our
Integrated Investment Portfolio, delivering
stable, recurring income to the Group. Our
development earnings, both commercial
and residential, are largely reinvested into
the development pipeline, with our growing
distribution funded by income from passive
investments and property management.
Our in-house asset creation capability:
> delivers NTA uplift, development profit,
management fees and new, high-quality
recurring income to the Group;
> reduces risk across supply chain,
construction costs; and
> allows us to incorporate customer
feedback into front-end design, while
driving sustainable outcomes from the
beginning of a project’s lifecycle.
Integrated Model Delivering
Outperformance
ASSET CREATION
Development
Development
EBIT
NTA
Uplift
Delivers new assets
Funds distributions from
recurring income and
future developments
ASSET CURATION
Integrated
investment
portfolio
New recurring high
quality rental income
Capital Partnerships
drives asset & funds
management fee income
VALUE CREATED OVER
THE PAST NINE YEARS
6.2% pa
NTA GROWTH
~$120m
NEW RECURRING
ANNUAL INCOME
~$1.3bn
CREATED VALUE
$5.4bn 1
NEW ASSETS
HOW THE INTEGRATED MODEL DELIVERS
VALUE IN CONSTRUCTION
Mirvac is one of a few tier-one builders in
Australia, and we have a rich corporate
memory across the team that has ensured
the continual refinement of our processes and
systems. As with many other aspects of our
business, our integrated model offers a number
of key benefits for our construction team.
For example:
> our integrated model provides us with
considerably more pipeline visibility than
other main contractors, allowing for critical
procurement decisions to be made early
in a project’s lifecycle;
> we have experienced teams across each
stage of delivery. Our cost planners,
design managers and commercial teams
are in constant dialogue, enabling us to
more accurately forecast budgets for
future projects;
> the bulk of our pricing on live projects is
market tested by competitive tendering.
We carefully screen our subcontractors for
their capability and financial capacity to
perform, and we typically use fixed price
subcontracts; and
> we are nimble by nature. This means
we can fast-track designs and align our
procurement programs across multiple
projects, which allows us to maximise
bundle-priced contracts and leverage
alliance deals that are in place.
1. Since 2013 and represents 100 per cent share.
20 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
PERFORMANCE BY PILLAR
OUR INTEGRATED MODEL IN ACTION
Heritage Lanes at 80 Ann Street in
Brisbane was completed in April this year.
This state-of-the-art 35-level asset offers
more than 60,000 square metres of
premium office space and was 98 per cent
leased on completion, with our major
tenant, Suncorp, committing to 66 per cent
of the building for a 10-year term.
A world-class workplace in every way,
Heritage Lanes used a lower carbon
concrete in its construction, has been
designed to be all-electric in its operations,
and is targeting the highest sustainability
credentials. This includes the highest rating
of the Green Building Council of Australia’s
newly released rating tool, 5.5 star NABERS
Energy and 4.5 star NABERS Water
ratings, and a Platinum Core and Shell
WELL Certification.
Heritage Lanes is also at the forefront
of smart building technology, with an
integrated building platform delivering
information from millions of data points
throughout the building.
This provides tenants of Heritage Lanes
with control over many aspects of their
office experience – such as lights, blinds,
air-conditioning and security – through
mobile apps and integrated AV systems.
But as well as being an outstanding asset,
the delivery of Heritage Lanes is a shining
example of our integrated model in action.
From the very beginning, we were able to
respond to Suncorp’s design requirements
easily because of our internal capability.
“During the bid phase, we essentially
redesigned a whole new building across
a larger site because that’s what Suncorp
wanted”, says Brett Draffen, Mirvac’s
Chief Investment Officer and Head of
Commercial and Mixed use. “And that was
made easier because we had people from
all across the business working on this and
collaborating as we progressed.”
Our integrated model also enabled greater
coordination and collaboration between
Suncorp, our co-owners, M&G Real Estate,
and key trades during the development,
which meant the project team was able to
respond to design changes in real-time – a
clear advantage over a traditional delivery
model. This was aided by key stakeholders,
including the architect, our co-owners, and
our development and construction teams,
having access to a 3D building information
modelling, which resulted in a higher rate of
clash detection and services co-ordination.
And by leveraging our integrated model,
we were able to deliver Heritage Lanes
ahead of initial feasibilities, despite the
numerous challenges presented by
COVID-19 and global supply chain shortages.
Now completed and forming a part of the
Integrated Investment Portfolio, Heritage
Lanes will deliver recurring income to the
Group, with over $130m of value created
for our securityholders.
Our smartest, most
sustainable building yet
6%
YIELD ON COST
98% $867m 6 Star
LEASED ON COMPLETION
END VALUE
GREEN STAR TARGET RATING
Heritage Lanes, 80 Ann Street, Brisbane
Annual Report 2022 – 21
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUERISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS PLACE CONTINUED
INTEGRATED INVESTMENT PORTFOLIO
IIP comprises four businesses that deliver
stable, recurring income to the Group: Office,
Retail, Industrial and Build to Rent. We have
approximately $13.5bn 1 of assets on our
balance sheet across the portfolio, and
$10.2bn of external assets and funds under
management. The integration of the four
sectors means we have a single view of our
customers and scale, delivering a number
of benefits and increased efficiencies to the
Group, such as streamlined procurement,
more diversified innovation, and resilience
in investment.
Through our decades of experience, we’re able
to expertly curate the daily experiences of those
who work in our office buildings and logistics
assets, shop in our retail centres, or live in our
build to rent apartments. Our unwavering focus
on sustainability excellence, innovation, and on
our occupants’ health and wellbeing also means
we provide our tenants with modern spaces
that serve to make the experience of urban
life better.
Our ability to leverage intelligent infrastructure
and convert data into insights also helps us
to continue to generate positive outcomes for
our tenants, customers and our business. It
allows us to run our buildings more seamlessly
and efficiently and respond to our customers’
needs, which is becoming increasingly
important as the way we live, work, shop
and socialise evolves. At Heritage Lanes, for
example, our major tenant, Suncorp, is tightly
integrated with the building system so that
data flows from the building to their own
Workplace Management Platform. This allows
them to manage and optimise their space while
meeting their ESG targets.
And as we continue to create physical assets
and curate the experiences within and around
those assets, we are increasingly blending in a
digital experience that enhances the physical
one. We’ve developed a Consumer Platform
for our build to rent portfolio, for example,
and through this, residents at LIV Indigo can
download an app and book communal spaces
(such as the media room), be notified of when
parcels are delivered and then access the
parcel room to collect them, and log issues
with building management. We will continue
to evolve the platform and roll it out across
the LIV portfolio as it completes, as well as
our other asset classes where appropriate.
OFFICE
Today’s workplace is designed to encourage
connection, creativity, collaboration, and
innovation. We are leading the work revolution
through the creation of flexible and adaptable
workplaces that have technology and
sustainability embedded throughout. Our office
portfolio, comprising 98 per cent Premium and
A-grade assets, is primarily located in Sydney
and Melbourne, which continue to be Australia’s
economic powerhouses. Our young, modern,
and high-quality portfolio that is future-fit has
also benefitted from the bifurcation of tenant
demand we have seen over the past two
years, with assets like those in our portfolio
continuing to attract higher occupancy,
rents and valuations, and requiring lower
capital expenditure.
97.3%
OCCUPANCY
5.6 years
WEIGHTED AVERAGE
LEASE EXPIRY
5.00
WEIGHTED AVERAGE
CAPITALISATION RATE
1.
Includes investment properties under construction and assets classified
as held for sale, and excludes AASB 16 lease liability gross up amounts.
Aspect, Kemps Creek, Sydney | Artist's impression
INDUSTRIAL
Our industrial portfolio is 100 per cent
weighted towards Sydney and located in the
Western Sydney growth corridor, close to key
transport infrastructure. As with our office
portfolio, we focus on high-quality assets
that provide our customers with flexibility,
and through our close relationships with
our tenants and our understanding of their
business, we are able to develop facilities that
allow them to fulfil their objectives and grow.
RETAIL
We own and manage a diverse portfolio
of retail assets across Australia’s eastern
seaboard, and each and every one offers a
bespoke environment that reflects the core
values and drivers of its community. While
COVID-19 impacted foot traffic in our CBD
centres and accelerated the trend towards
online shopping, our retail centres continue
to be a place for social connections and
experiences. As we move to a new world of
retail, we are focused on merging the physical
and digital for our customers and partners to
ensure a true omni-channel offering.
BUILD TO RENT
Mirvac has long championed build to rent in
Australia, which gives renters flexibility, choice,
and convenience. As both the builder and the
landlord, we’re able to deliver a completely
new property experience; one that’s designed
to remove the downsides that typically come
with renting. At our build to rent assets, our
customers don’t have to pay a bond, have
security of tenure, and are allowed to bring a
pet and hang pictures on their walls. They’re
also provided with high-quality amenity,
communal spaces, and resident programs to
help them connect with their neighbours. Our
consistently strong customer survey results
and leasing success at our operational asset,
LIV Indigo, demonstrate the appeal of this
growing asset class.
22 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS PERFORMANCE BY PILLAR
COMMERCIAL & MIXED USE DEVELOPMENT
One of our key competitive advantages is our
ability to bring urban assets and precincts to
life, and we focus on projects where we can
leverage our combined skillset across different
asset classes to deliver large-scale, city-shaping
urban renewal projects.
At Harbourside in Sydney, for example,
we are revitalising a 34-year-old retail asset
into a thriving mixed-use precinct that has
been designed to bring people together. The
proposed $1.8bn redevelopment is expected
to deliver approximately 24,000 square metres
of office space, 7,000 square metres of retail
and 350 luxury apartments. As part of the
project, we have also committed to delivering
10,000 square metres of public domain,
including a proposed 3,500 square metre new
neighbourhood park, as well as a widened
waterfront promenade.
At 55 Pitt Street, also in Sydney, we are
transforming a B-grade asset into a 63,000
square metre commercial and retail asset,
with sustainability and technology featured
throughout. As well as demonstrating
the strength our unique integrated and
diversified capability, our ambition is for these
projects to be enduring places recognised
by all stakeholders, including our investors,
government and the wider community.
Our active commercial development pipeline
has a total end value of $12.4bn and comprises
large-scale urban renewal projects designed
to support the growth and evolution of our
cities. The majority of these projects have
income in place or are held in capital efficient
structures, providing optionality and future
value. We focus on substantially de-risking
our development pipeline through pre-leasing
ahead of development completion. As at
30 June 2022, 42 per cent of our active
development pipeline was pre-leased, which
also provides us with visibility of future income.
$591
REALISED DEVELOPMENT
EBIT IN FY22
4.5%
NTA UPLIFT ON FY21
REPRESENTING 12CPSS
RESIDENTIAL
For 50 years, Mirvac has delivered places
of enduring value across Australia’s key cities
of Sydney, Melbourne, Brisbane and Perth
that our customers are proud to call home.
We have over 25,350 lots under control across
apartments and masterplanned communities,
and a reputation for care and quality in
everything we do.
Our integrated model is key to our success,
and enables us to deliver projects ranging from
greenfield sites through to complex urban
renewal projects and manage every aspect of
development – from site acquisition to design,
planning approvals, construction, marketing,
and sales. We leverage our integrated
capability to bring product to market when
market conditions are favourable, and we
have a track record of bringing releases
forward to capture high demand.
2,523
SETTLEMENTS IN FY22
~2,900
LOTS EXCHANGED
Another advantage of our integrated offering
is that we’re better placed to mitigate the
impacts of supply chain disruption and rising
costs, because we can strategically procure
across our product lines, with good visibility
of our forward pipeline. This will be important
in an environment where supply chains are
becoming disrupted and de-globalised, and
where rising inflation continues to put pressure
on the cost of materials.
Our proven ability to restock our pipeline
at the right time, in the right place, and for
the right price is another key driver of our
continued success. The active restocking of
our masterplanned communities in FY18 and
FY19, for instance, supported settlements in
FY21, and will continue to support settlements
over the next several years. Similarly, our focus
on restocking in our apartments business over
the past two years means we are well placed to
capture demand from the return of immigration
and the forecasted reduction in apartment
supply in FY23 and FY24. Our track record of
making the right decisions at the right time in
the cycle, have benefited, and will continue to
benefit, our earnings for many years to come.
HOW WE MEASURE VALUE
> IIP: Occupancy, WALE and WACR
> Commercial & Mixed Use:
Development EBIT and NTA uplift
> Residential: Sales and settlements
Olivine, Donnybrook, Victoria
Annual Report 2022 – 23
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUERISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS PEOPLE
PEOPLE, CULTURE AND SAFETY
People, culture and safety is one of the five pillars for creating value. By building
a culture that is aligned to our values, inclusive and collaborative, we can continue
to give Mirvac a competitive advantage, and inspire our people to deliver on our
goals and urban strategy.
Notwithstanding our engagement results,
there is no doubt that we are in a more
challenging labour market. There is fierce
competition for talent (exacerbated by limited
skilled migration), putting pressure on turnover
and wages. We are proud of our culture,
engagement, employment brand and employee
value proposition, and we will remain sharply
focused on maintaining and lifting these areas
into FY23.
PEOPLE AND CULTURE
Our goal is to be the number one employer in
the property sector, the place where people
want to join, grow and belong.
Flexibility continues to be a key part of
this, and in the past 12 months we saw a
rapid change in employee expectations
around where and how we work. Along with
employee surveys, we held 60 one-on-one
employee interviews to gauge preferences
around working in the office. The overarching
response was that the office still has a role, but
that employee expectations around flexibility
and where they work from have shifted.
In response to this shift, we formalised our
approach to hybrid working with a set of
flexible working principles. While our office-
based people are expected to work from a
Mirvac site or office each week, we haven’t
prescribed a minimum amount of time. Instead,
we believe in empowering our people and
teams to agree on an approach that works for
our customers, teams, and the individual.
Taking care of our people throughout
extended lockdowns was another key theme in
FY22, and every permanent full-time employee
received five ‘Thank You Days’ of paid leave in
recognition of their continued hard work and
perseverance during a challenging time.
DIVERSITY AND INCLUSION
Our long-standing focus on diversity and
inclusion contributed to achieving 44 per cent
of women in senior management, along with a
zero pay gap for like-for-like roles for the past six
years. While we maintained our well-recognised
focus on gender equity in FY22, we also began
to broaden our diversity focus at Mirvac.
During the financial year, we finalised a new
Belonging strategy that continues to build an
inclusive culture – one in which differences are
embraced and celebrated, and where everyone
feels that they belong. As part of this, we will
continue to expand on initiatives that focus
on LGBTQ+ people, women in construction,
First Nations Australians, those with caring
responsibilities (in addition to young families),
and non-nuclear families (such as SINKs,
DINKs, and empty nesters).
LEADERSHIP
We believe the quality of leadership at every
level is fundamental to fostering an engaging
and positive culture across Mirvac. Through
FY22, we continued to focus on creating
the best leaders, supported by training and
development on our ‘Big Five’ leadership
framework. As part of our Belonging strategy,
we are also growing our leaders’ capabilities
to build inclusive environments through a new
Inclusive Leadership Program. The program
trains leaders on nine themes of inclusion:
mental agility, personal awareness, conviction
and drive, cognitive humility, psychological
safety, transparency, diverse connections
and courage.
In a competitive recruitment market, we are
also investing in establishing a deeper, wider
pool of talent to create our next generation of
asset creators and asset curators.
At Mirvac, we know it’s not enough to say that
we value our people – we need to demonstrate
it too. During the financial year, many of
our employees continued to be impacted
by government-mandated lockdowns and
restrictions. While we’d already learnt to stay
connected and productive when working
remotely, the isolation and uncertainty of the
past financial year took its toll, particularly in
terms of mental health and pandemic fatigue.
Fortunately, our embedded flexibility and focus
on health and safety, diversity and inclusion,
innovation and gender equity ensured we
remained an employer of choice in our sector.
This year, we were thrilled to win the top spot
in the 2022 AFR BOSS Best Places to Work list
for the Property, Construction and Transport
sector, and to be ranked number one employer
in the world for gender equality by Equileap.
Having refreshed our Flexibility Charter last
year, FY22 saw us further refine our approach
to hybrid working, as those based in our head
offices gradually returned to the workplace.
Our purpose to Reimagine Urban Life was put
to the test, as we reconsidered the role of the
office and invested in activations to help our
people reconnect safely in a physical space.
Our focus on mental health increased, and we
strengthened and expanded our Employee
Assistance Program with the adoption of a new
support service called Sonder. We completed
a thorough review of our safety approach, with
a view to progressing towards an increased
emphasis on major hazards and psychological
health and safety. And while our Employee
Engagement Survey was held in the midst of
lockdowns last year, the results showed that
our people still felt that Mirvac was a great
place to work, with 93 per cent of employees
saying they were proud to work for Mirvac,
92 per cent happy to recommend Mirvac as a
great place to work, and 96 per cent confident
that Mirvac is committed to the safety
of employees.
24 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS PERFORMANCE BY PILLAR
OUR WORKFORCE AT A GLANCE
HEADCOUNT
1,550
GENDER SPLIT
45:55
RETENTION OF KEY TALENT
96%
BOARD REPRESENTATION
44%
WOMEN IN SENIOR MANAGEMENT
44%
WA
50
54:46
EMPLOYMENT BY
REGION & GENDER
QLD
161
39:61
ACT
7
57:43
NSW
1,053
46:54
VIC
279
42:58
PAID PARENTAL LEAVE POLICY
for the primary carer
20 weeks
4 weeks
for the non-primary carer
INDUSTRY LEADING
DOMESTIC VIOLENCE
& FAMILY LEAVE POLICY
Uncapped
paid leave for permanent employees
Annual Report 2022 – 25
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUERISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS PEOPLE CONTINUED
INNOVATION
Our innovation program, Hatch by Mirvac, was
launched in 2014 and has seen us experiment
with over 50 ideas aimed at adding value to
our business in an ever-changing world. These
have included award-winning initiatives such
as Cultivate, where we transformed a basement
carpark into an urban farm, as well as Build AI,
a digital platform that uses real-time data to
enhance safety, quality assurance, and other
project outcomes.
By identifying market trends and changing
customer needs, we strive to anticipate
and make the most of the challenges and
opportunities that lie over the horizon. This
year, our in-house innovation team, Hatch
by Mirvac, continued to partner across the
business to reimagine urban life in new ways.
BOARD OF INNOVATORS
During the financial year, Hatch by Mirvac
introduced a Board of Innovators: a diverse
group of 25 innovation ambassadors drawn
from all parts of the business. The Board of
Innovators is responsible for analysing key
trends and inflection points that could impact
our business, assessing their potential impact
through a robust disruption framework, and
identifying pathways to seize significant
opportunities. This forum also provides us with
a single view of our innovation pipeline and
a platform from which to proactively monitor
inflection points.
YOUNG HEARTS BY MIRVAC
In FY22, we partnered with our Residential
team to explore how we could reimagine the
living experience for young Australians with
a disability, so they can live comfortable,
autonomous, and enriching lives within
our communities.
Young Hearts by Mirvac is an initiative through
which we seek to leverage our integrated
model to deliver innovative and leading-edge
specialist disability accommodation, providing
a more diversified product offering within our
existing communities.
While still in a pilot phase, the initiative is aimed
at improving the lives of people with a disability
by providing independent living options that
meet their life goals.
In 2021, Mirvac came fourth in the property and
construction category of the AFR Boss Most Innovative
Companies list, making it the only company to be in
the top five in the Property, Construction, Transport
category for the past three years.
26 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS PERFORMANCE BY PILLAR
SAFETY AND WELLBEING
Health, Safety and Environment (HSE) is
central to our business, and through an
increased focus on major hazards and
psychological health and safety, we can
continue to take care of our people and
stakeholders, and deliver on our strategy and
commitments. In FY22, we maintained our
high standards of health and safety across the
business, stepped up our activities in several
key areas, and considered how to improve our
approach moving forward. We also launched a
comprehensive Wellbeing and Mental Health
strategy in FY22 in response to the growing
risks relating to mental health.
GREATER MENTAL HEALTH SUPPORT
As part of our Wellbeing and Mental Health
strategy, and as we faced a second year of
COVID-19 lockdowns and restrictions, we
recognised the rising mental health and social
risks posed by the pandemic, particularly for
younger employees. This led us to overhaul
our existing Employee Assistance Program
(EAP) and bring Sonder on board as our
new provider.
Through Sonder, our people can access
24-hour support from a network of trained
safety, health and wellbeing specialists, all year
round. Sonder also gives people the option to
engage via phone, video call, or text, catering
to all communication preferences. In addition,
Sonder provides access to a range of wellbeing
resources and self-help tools and offers
employees real-time information on safety,
security threats, or emerging scenarios, in their
immediate vicinity.
HSE STATISTICS IN FY22
INDICATOR
We also accredited 70 employees as Mental
Health First Aiders to establish a support
network of people equipped to provide
immediate assistance to someone in need
of help.
When it came to the physical impacts of
COVID-19, we continued to exercise caution
even when government restrictions lifted,
maintaining CO� monitoring in our offices, and
ensuring our Incident Management team met
weekly to stay abreast of events.
As well as 96 per cent of employees saying
that they believe Mirvac is committed to the
safety of its employees, 88 per cent agreed
that their manager genuinely cares about
their wellbeing (November 2021 Employee
Engagement Survey).
ADDRESSING SAFETY AT EVERY STAGE OF
OUR BUSINESS LIFECYCLE
Our approach to safety continues to be guided
by our Mirvac Minimum Requirements (MMRs):
a non-negotiable set of standards that either
adhere to or exceed legislative standards.
These requirements apply to all our employees,
contractors, and sub-contractors, and they are
carefully administered, governed, monitored
and updated.
As we continue to take on larger and more
complex projects, our approach to health and
safety will adapt accordingly. In light of this, we
engaged an independent consultant in FY22
to assess how the increasing complexity could
impact our ability to manage both our known
and unknown major hazards.
Looking ahead, we will work to evolve our
MMRs and embed them further within the
operating lifecycle of our business. This
whole-of-lifecycle approach will see HSE
being further embedded in every key stage
of a project, from investment, to design and
visioning, construction and operations, with
all of our people encouraged to actively
enquire and show curiosity when it comes
to safety at work.
Building on the work we began last financial
year, we will also place an even greater
emphasis on psychological health and
safety at work, and in particular, focus on
work-related psychosocial hazards. Left
unmanaged, these risks can significantly
impact a person’s overall wellbeing.
HOW WE MEASURE VALUE:
> Employee engagement /
talent retention
> LTIFR, CIFR
> % of women in senior
management
HSE LEADER
ACTIONS
HOURS
WORKED
LTIFR
TIMELY
REPORTING
WORKERS’
COMPENSATION
CLAIM COUNT
TRAINING
FATALITIES
CIFR
FY20
FY21
FY22
178%
222%
214%
TARGET
9,126,799
2.08
19hrs
6,782,607
3.24
22hrs
6,794,321
25hrs
13
10
6
97.0%
96.0%
97.2%
1.18
<2
100%
N/A
<24hrs
N/A
100%
0
0
0
0
0.63
1.50
0.74
<1.5
Our HSE management systems within construction continued to be certified to ISO 14001, OHSAS 18001, and AS/NZS 4801. Limited
assurance has been provided by PricewaterhouseCoopers. Data sets that have been assured are marked with a
visit mirvac.com/sustainability.
. For further information
Annual Report 2022 – 27
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUERISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS PARTNERS
CUSTOMERS AND STAKEHOLDERS
In order to properly Reimagine Urban Life, we need to ensure that we take our
stakeholders perspectives into account. This includes our customers, our communities,
and all levels of government.
Alongside this, we recognise that the
environment we’re operating in is becoming
more complex, and that the requirements
of those who lease our assets, rent in our
build to rent communities, or purchase one
of our homes are constantly changing. We’re
committed to continuously learning and
understanding what the changing wants
and needs are of all our stakeholders, and
how we can improve our products, services
and experiences across all asset classes.
Meanwhile, we will continue to focus on
being open and transparent with all of our
key stakeholders in order to build strong
relationships, as well as striving to be a
trusted partner.
ENGAGING WITH OUR CUSTOMERS
We have a wide and diverse range of
customers across our business, from our office,
retail and industrial tenants to our build to rent
and residential customers.
LEVERAGING TECHNOLOGY TO DRIVE INSIGHTS
The foundation of good customer experience
is knowing our customers – their needs,
motivations, and aspirations. It’s also important
to understand their pain points or what it is
that we can improve on, so we can deliver
solutions that make their experience with
us easier. By connecting a wide range of
data sources, we’re able to drive continuous
improvements throughout the customer
journey, deliver more personalised experiences
at scale, make better, data-driven decisions,
and create new products, services and revenue
streams that leverage our data. In our build to
rent business, our Consumer Platform allows
us to gather feedback from our customers to
get a better understanding of how they utilise
their space, and, as we begin to roll it out
across the rest of the organisation, will allow us
to share our insights across teams.
ADAPTING AND DISRUPTING
The landscape across all of our sectors is
changing, and to continue to deliver value to
our customers, we need to anticipate their
future needs and create changes to remain
relevant. In response to the trend towards
hybrid working, for example, which accelerated
as a result of COVID-19, our IIP team launched
the Adaptive Workspace during the financial
year. This year-long pilot is aimed at helping
us to reimagine the office for our customers
as we navigate a new era of work. Comprising
a mix of collaborative spaces and quiet zones
for focused work, the Adaptive Workspace is
hyper-flexible and can be changed depending
on the type of work being undertaken.
Within our residential business, our integrated
development, design and construction
capability has allowed us to nimbly adapt
to our customers’ increasing need for
home offices, multipurpose rooms and
larger kitchens, and where there has been
opportunity, we’ve also adapted our apartment
projects to introduce shared co-working
spaces and wellness facilities.
28 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS PERFORMANCE BY PILLAR
MERGING PHYSICAL AND DIGITAL
EXPERIENCES
Our customers move fluidly between the
physical and digital realms as they navigate life
and work, and they expect their experiences
to be frictionless and accessible across all
channels. The demand for digital connectivity,
omnichannel engagement, new services,
amenity, and the vibrant activation of our
places has already challenged us to embrace
new capabilities and operating models. Within
our retail business, for example, we have
introduced WeShow, an Australian-first rapid
delivery concept that provides online brands
with a physical retail space that enables them
to connect with their audience and attract new
customers. The customisable, modular store
design means that there is no expensive store
fit-out, long lease or fixed rent. Retailers are
also provided access to sales insights, and are
supported by a team of retail experts, including
store designers, visual merchandisers,
marketing specialists and legal. During FY22,
we hosted eight retailers in our WeShow space
across four of our centres, and the feedback
has been overwhelmingly positive to date.
We’ve also continued to adopt digital
technologies to allow our customers to
research and explore our apartment and
masterplanned communities projects online,
while increasingly sophisticated 3D imaging
has enhanced the customer experience in our
display galleries, enabling greater visualisation
of off-the-plan properties.
MEASURING OUR CUSTOMER IMPACT
Within our Integrated Investment Portfolio,
we use Net Promoter Score (NPS) to measure
customer experience at key moments of the
customer journey and periodically for ongoing
customer relationships. In the first half of FY22,
we saw NPS slightly decline in each asset
class as a result of the impacts of COVID-19,
most notably in Build to Rent. These improved,
however, as restrictions were lifted and the
experiences we were able to deliver to our
customers resumed.
Another outcome of our customer focus is
ongoing customer loyalty. We have a history
or attracting high levels of repeat purchasers
at our residential projects, a testament to the
care and quality we provide. And in IIP, we
have had significant tenures with a number of
our customers. At Riverside Quay, our tenant,
Nugents, has been with us for over 26 years,
while IAG has been with us at 189 Grey Street
for 17 years, and UGL has been with us at
40 Miller Street for nine years, and have just
signed their third lease term.
HOW WE MEASURE VALUE:
> Net promoter scores
> Customer satisfaction
+40
OFFICE NET PROMOTER
SCORE (NPS)
+56
RETAIL CONSUMER NPS
N/A1
INDUSTRIAL
+24
BUILD TO RENT
RESIDENT NPS
8.9/10
RESIDENTIAL CUSTOMER
SATISFACTION
1. Due to an insufficient sample size.
Annual Report 2022 – 29
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUERISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS PARTNERS CONTINUED
ENGAGING WITH OUR STAKEHOLDERS
Over the past 50 years, Mirvac has built a reputation as a trusted developer, owner and manager,
and partner of choice. We recognise the importance of maintaining strong, healthy relationships
with our stakeholders and the communities in which we operate, and we strive to understand their
diverse and changing needs in order to develop communities with an enduring legacy. This is
because we understand that mutually-beneficial relationships help us look at complex problems
from different angles and deliver maximum value where it matters most.
We focus on being open and transparent to generate positive outcomes and know that we are
most successful when our project teams take ownership to create genuine relationships; however,
we recognise our approach across the business is not always consistent and can be introduced
too late in the process. As we look to deliver the largest development pipeline in our history, in an
increasingly complex environment, ensuring we maintain and extend our licence to operate will
be more important than ever.
In light of this, we developed an integrated stakeholder engagement framework during the
financial year that sets out the vision, principles and tools to guide our interactions with our
stakeholders. Anchored by an overarching ambition to foster relationships built on respect, trust,
and doing what we say we will, its purpose is to:
> set a consistent, One Mirvac approach, with key principles for engagement across all our projects;
> encourage strong, healthy relationships with our stakeholders and the communities in which
we operate;
> allows us to actively monitor issues and maximise opportunities;
> facilitate shared learnings from our previous experiences; and
> help us to develop the capability of our people to create a stakeholder-centric culture.
OUR APPROACH TO STAKEHOLDER ENGAGEMENT REFLECTS OUR DIVERSE
BUSINESS AND ENCOURAGES REGULAR DIALOGUE WITH:
> governments, agencies, and regulators at all levels;
> our securityholders and the investment community;
> local and national media outlets;
> residents, tenants, and customers;
> community groups, community partners, and the local communities
in which we operate or have plans to do business with;
> capital and development partners;
> industry; and
> our employees.
GOVERNMENT
We take pride in having a high level of
engagement with all tiers of government. We
strive to be a trusted partner of governments
by coordinating this engagement across
the organisation. We do not make donations
to politicians or political parties at any level
of government.
Federal, state and local governments set the
regulatory environment in which we operate.
We maintain a bipartisan approach and actively
engage with all levels of government about
policy decisions in general and those that affect
our properties and projects.
During the financial year, we enhanced our
internal government relations and stakeholder
engagement structures. This included the
introduction of state-based government
engagement and advocacy plans to guide our
engagement with key stakeholders. These plans
ensure coordinated, cross-business policy and
project advocacy and ensure consistency in
our approach to government engagement.
INDUSTRY
We are a member of a number of industry
groups and participate in advocacy on issues
affecting our industry, as well as those that may
affect our properties. We have representatives
on a number of national and divisional
committees, join briefings and conferences,
and attend professional development courses.
In FY22, we focused on a more coordinated
approach to our industry engagement.
Recognising the importance of the multitude
of macro issues affecting the communities in
which we operate, this year we also expanded
our membership beyond the property industry
groups to business groups, ESG-focused
organisations, and think-tanks.
30 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS PERFORMANCE BY PILLAR
COMMUNITY ENGAGEMENT AT HENLEY BROOK, WA
One of the first things we do when planning a
future masterplanned communities project is
to identify the existing and future connections
the area has to its community through focused
community engagement. Creating a positive
community legacy is at the core of our purpose
to Reimagine Urban Life, and this early due
diligence makes a significant difference to the
finished product.
With a focus on respectful development, our
team at Henley Brook in Western Australia took
a thoughtful approach to engaging with the
Traditional Custodians, the Whadjuk-Noongar
people, on whose land the project is located.
Guiding the team were three key objectives:
to garner an understanding of the cultural
heritage of the site and surrounding areas; foster
a meaningful relationship with the Traditional
Custodians; and to actively listen to see how the
project team could achieve a culturally safe and
respectful development at Henley Brook.
The engagement process started with
a workshop, which gave our team the
opportunity to listen to the stories and
knowledge of the Traditional Custodians.
Their accounts of Elders past and present
allowed for a deeper understanding of the
local landscape and the abundance of natural
resources in the area.
In May this year, we launched the first open
space within the development – Wongin
Park – which features an Acknowledgement
of Country, along with an art display developed
in collaboration with a local primary school,
Moorditj Noongar Community College. This
was just one of the many ideas that stemmed
from the initial engagement workshop.
The community engagement at Henley Brook
is a leading example of how we build trusted
relationships with our important stakeholder
groups. It also embodies our Reconciliation
Action Plan principle of Respectful
Development, which ensures we work to find
ways to reflect the local history in our projects.
Annual Report 2022 – 31
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUERISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS PLANET
SUSTAINABILITY
Mirvac is one of Australia’s most sustainable companies, and the aim of our
This Changes Everything sustainability strategy is to be a force for good.
This Changes Everything sets out the way
we approach our ESG risks and opportunities
so that we can continue to deliver positive
outcomes for our people, the planet, our
partners and customers, and the communities
in which we operate.
> Social inclusion: the launch of our second
Reconciliation Action Plan, which focuses on
how we can contribute to reconciliation in
Australia, as well as our National Community
Day, which saw 750 employees volunteer on
44 community projects across Australia.
These outcomes are planet and people
positive, and they are also driving commercial
value for our business. We have conducted a
study into the value of our energy efficiency
efforts, which showed that having 75 per cent
of our office assets rated 5 star NABERS
Energy or above in our portfolio delivers 1
$2.4m in annual cost savings, and $43m in
valuation uplifts, from an average spend
maintenance capital expenditure below
0.5 per cent of asset value.
OUR PERFORMANCE IN FY22
ENVIRONMENT
We have one of Australia’s greenest office
portfolios, with 18 office assets that have a 5
Star NABERS Energy rating or higher, operating
assets that are on 100 per cent renewable
energy, and high waste diversion rates across
construction and operations.
We don’t just set ambitious targets in carbon
emissions, waste, and water, we also publish
transparent plans with clear timelines around
how we’ll reach these goals. This year, we
completed implementation on the first of
these plans, Planet Positive – Carbon, and
met our goal to be net positive in scope 1 and 2
carbon emissions nine years ahead of our 2030
target. This constituted our most significant
environmental achievement.
The framework for our waste strategy was
formed through our second plan, Planet
Positive – Waste and Materials, which
highlighted the importance of the circular
economy waste model.
We focus on what matters most to us and
our stakeholders, and we strive to embed the
practice of doing the right thing in our culture.
Our people are a big part of our success in
sustainability, and they feel the authenticity
of our sustainability approach is an important
factor in their engagement.
The second iteration of our strategy focused
on three areas – reimagining resources,
enriching communities, and transparent
governance. As a result of our choice to do
fewer things better, we have made significant
progress and achieved some of our key targets
well ahead of schedule.
OUR KEY ACHIEVEMENTS
In the past financial year, we have delivered:
> Carbon emissions: net positive in scope 1
and 2 emissions, nine years ahead of our
2030 target.
> Water: released Planet Positive – Water, our
plan to be net positive in water well ahead of
our 2030 target.
> Waste: our goal is to send zero waste to
landfill by 2030. Key to moving towards this
target is making improvements upstream
in our process to avoid the waste in the
first place. We are recycling 94 per cent
of construction waste. In operations, our
office and retail portfolios have increased
waste diversion from 34 per cent in FY13 to
68 per cent in FY22.
> Social procurement: $14m spent with
Indigenous businesses, social enterprises,
B-Corps, and charities, bringing our total
since FY18 to $42m. This means we have
met our goal of spending $30m by 2025,
three years early.
> Community investment: independently
verified contribution of $9.6m to deliver
initiatives that bring people together, such
as social infrastructure and events - not
just within our assets, but within the
broader community.
A standout circularity pilot was conducted
during the financial year at our development
site, 55 Pitt Street in Sydney, where we took
approximately 900 cubic metres of furniture
and fit-out materials, and diverted it from
landfill. This initiative extended the life of
more than 1,740 items from the site – worth
an estimated $174,000 – which were either
relocated, reused, or recycled by local charities,
businesses, and homes.
We are on track to procuring 25 per cent
recycled content (concrete and steel) and to
halving development waste. Since 2013, we’ve
been looking at how we can use methods of
Design for Manufacture and Assembly (DFMA)
across our projects, which as well as helping
us to reduce waste, delivers reduced program
schedules, less management of trades onsite,
and fewer safety risks. Most recently, 26 homes
were constructed using DFMA at Woodlea in
Rockbank, Victoria and in 2022, 45 homes at
Georges Cove, Moorebank in Sydney.
And in March this year, we released the third
in our series of environmental plans, Planet
Positive – Water, which sets out how we will
reduce and reuse water, as well as influence
consumption behaviour, to achieve net positive
water ahead of our 2030 target. The plan is
focused on three areas:
1. Efficiency – improving water efficiency at our
assets (where we have operational control),
using the recognised NABERS Water ratings.
2. Offsets – using captured and recycled
water at our masterplanned communities
projects where we can reduce drinking water
demand.
3. Influence – leveraging our materials
and electricity procurement volumes
and choices to help achieve even more
significant water savings.
1. Annual saving and valuation uplift based on office assets under operational management. Office assets with 5 star NABERS Energy or above and average spend maintenance capital expenditure,
based on Mirvac’s ownership. Further details can be found in “Our Methodology” section of our report, Building Climate Resilience.
32 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS PERFORMANCE BY PILLAR
ENERGY, GHG, WATER, WASTE
Emissions tC02e
Scope 1
Natural gas
Refrigerants
Diesel
Petrol
LPG
Total Scope 1
Scope 2 (market-based) 1
Electricity
Total scope 2
Total scope 1+2
Voluntary carbon offsets
Net scope 1 + 2 2
Renewable electricity %
Potable water usage
Retail
Office & Industrial
Build to rent
Total (kL)
Total waste
Construction
Investment
Total
Construction
Investment
FY13
FY20
FY21
FY22
2,697
1,383
2,333
646
7
7,066
4,422
1,827
1,017
112
79
7,457
4,430
1,083
701
97
31
6,342
5,028
1,311
677
87
21
7,125
FY22
Source data
97,573GJ
858kg
250,013L
37,700L
13,380L
44,532
44,532
51,989
—
51,989
12,660
12,660
19,002
—
19,002
0 86,289,241 kWh
0
7,125
7,225
-100
45%
84%
100%
492,216
349,597
468,170 406,320
295,338
436,614
337,166
291,049
22,609
701,658 650,824
841,813 904,784
35,565
12,833
48,398
14,387
23,939
38,326
8,780
20,230
29,010
7,667
17,647
25,314
94%
Recycled
68%
Recycled
6%
Landfill
32%
Landfill
1. We began reporting market-based electricity in FY19. Location-based scope 2 and scope 3 emissions are included in the ESG
Analyst Toolkit.
2. This means we now offset 100 more tonnes of scope 1 and scope 2 carbon emissions than we emit, meeting our Net Positive
Carbon by 2030 target.
MIRVAC’S CLIMATE-RELATED RISKS
AND OPPORTUNITIES
This year, we released our fourth
climate resilience report which details
the ways in which we are addressing our
climate-related risks and opportunities,
in line with the requirements set out
by the Taskforce for Climate-related
Financial Disclosures.
This report provides a clear and
transparent update on the progress
that we have achieved to date, our plans
moving forward, as well as an outline
of the physical and transition risks and
opportunities we face.
The full report can be downloaded here:
www.mirvac.com/sustainability
BUILDING
CLIMATE
RESILIENCE
MIRVAC’S APPROACH TO MANAGING ITS
CLIMATE-RELATED RISKS AND OPPORTUNITIES
Annual Report 2022 – 33
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUERISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS PLANET CONTINUED
SOCIAL
We have a longstanding commitment to
measuring our social impact. This includes our
voluntary spend on community engagement,
community investment, social procurement,
community partnerships, and advocacy.
We know that delivering upfront amenity
at our assets supports vibrant and thriving
communities, and we aim to give back through
our annual National Community Day – which
ran again in FY22 for the seventh time – and by
helping those who are more vulnerable in the
communities in which we operate.
We are proud to provide unlimited, fully-paid
volunteer leave for all employees, and with
recent natural disasters, such as bushfires and
floods, our people have stepped up to lend
a hand. Together with a corporate donation,
and a commitment to quadruple our employee
donations, we contributed $115,000 via GIVIT
to support people impacted by the 2022 floods.
Since 2018, we have spent $42m in social
procurement, exceeding our target to spend
$30m by 2025, and putting us well on our
way to achieving our goal of directing $100m
to the social sector by 2030. This year alone,
we spent $14m in social procurement, which
includes buying from social enterprises,
Indigenous businesses, B-Corps, and charities.
In doing so, we are helping to change lives,
and with $9.6m spent in verified community
investment in FY22, we have been recognised
as the number one best workplace to give back
by GoodCompany.
Our second Reconciliation Action Plan, which
was launched in July last year, provides a
framework through which we are working to
meaningfully embed reconciliation in the way
we do business. As land developers, we have a
special opportunity to listen to and recognise
First Nations Australians as part of how we build
upon the rich histories of the communities in
which we work.
FY22 ENRICHING COMMUNITIES
In FY22, in line with the Modern Slavery Act
2018, we released our second Modern Slavery
Statement that looks at our exposure to one
of the worst forms of human rights violations,
modern slavery, and where it may be present
in our operations and our supply chains. We
remain focused on establishing effective
governance structures and building our
capability to address this important issue.
We are proud of the progressive human rights
policies we have in place, including our gender
equality focus and our inclusion and diversity
policies, and in 2021 we published our first
Human Rights Commitment.
$9,620,691
OF COMMUNITY INVESTMENT
(including $397,260 of management costs)
$7,986,582
CASH DONATIONS
$1,038,139
VALUE OF HOURS OF SUPPORT
$198,710
IN-KIND CONTRIBUTIONS
$646,620
LEVERAGE CONTRIBUTIONS
34 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS PERFORMANCE BY PILLAR
Artist's impression | The Langlee, Sydney
GOVERNANCE
We recognise the important role we play in
making good investment choices, buying
better materials and being diligent about the
integrity of our supply chain. We’re forming
partnerships with values-aligned organisations
and leveraging our good track record to
attract both capital and debt. ESG choices are
embedded in our key investment decisions,
monitored regularly by several senior oversight
groups, and the whole company is held to
account on the basis that we’re delivering on
our ESG promises.
We have maintained excellent ESG disclosures
and performance, including an AAA rating from
MSCI, an Advanced rating from the United
Nations Global Compact, and a Negligible risk
rating from Sustainalytics.
We align our targets with the following
United Nations Sustainable Development
Goals (UNSDG):
WHAT’S NEXT?
Having reached our goal to be net positive
in scope 1 and 2 carbon emissions, as well as
our target to triple community investment,
both ahead of schedule, we’ve now taken the
opportunity to refresh our ESG strategy and
consider where the next set of targets will lead.
After undertaking extensive consultation,
both across our business and externally, we
identified several ways in which we think we
can continue to ‘change everything.’ This third
iteration of This Changes Everything brings
together our obsession with regenerative cities
with the needs of our stakeholders and the
capability of our people to focus on our planet,
our communities, and our shared values.
The next stage of our strategy will include a
sharp focus on scope 3 emissions with a view
to collaborating with suppliers and customers
to accelerate emissions reduction, as well as a
significant step up in our community activities.
We anticipate sharing more information about
these later in 2022.
We also continue to work on other climate-
related activities, such as further strengthening
our strategic resilience to the future impacts
of climate change through the implementation
of the TCFD Framework, and through our
in-house minimum design guidelines.
In addition, we are significantly stepping up
our social performance with a commitment
to create a strong sense of belonging in our
communities. We look forward to sharing our
progress and impact of this work with our
securityholders through a refreshed social
performance scorecard in FY23.
HOW WE MEASURE VALUE:
> Water, waste and emissions
performance
> MSCI and Sustainalytics ratings
> Social procurement spend
> Community investment delivered
This year, we were proud to join 22 of
Australia’s largest companies in signing up
to the new Corporate Emissions Reduction
Transparency (CERT) reporting pilot,
administered by the Clean Energy Regulator,
making it easier to compare carbon and
renewable energy targets.
Annual Report 2022 – 35
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUERISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS FY22 FINANCIAL AND OPERATIONAL RESULTS
The financial year 2022 (FY22) began under COVID-19-induced lockdowns (particularly
in Sydney and Melbourne), which caused significant disruptions to operations across our
business, largely concentrated to our CBD-based office and retail assets.
This was followed by extreme wet weather
along the eastern seaboard during the second
half of the financial year, which impacted
project delivery and led to the flooding of
Toombul Shopping Centre in Brisbane. In a
macro context, global geopolitical instability
had (and continues to have) a systemic impact
on supply chains and energy costs, leading to
accelerated inflation and central banks rapidly
tightening monetary policies.
Despite these headwinds, we delivered a strong
set of financial results in FY22. Our operating
profit increased by 8 per cent to $596m. This
translated into earnings of 15.1 cents per stabled
security (cpss), which is in line with our market
guidance of at least 15.0 cpss.
Key drivers of our operational result were:
> growth in the Integrated Investment
Portfolio NOI from newly completed office
developments, including Locomotive
Workshop, South Eveleigh, Sydney,
combined with a lower COVID-19 impact;
> lost NOI due to the disposal of non-core
assets, including 340 Adelaide Street,
Brisbane in FY21, and Cherrybrook Village,
Tramsheds and Quay West Carpark
(all in Sydney);
> development profit contribution from the
delivery of Locomotive Workshop, South
Eveleigh, Sydney and Heritage Lanes,
Brisbane; and
> residential settlements of 2,523 lots, which
was in line with market guidance.
Statutory profit for the financial year was
$906m, a $5m increase on FY21. This was
supported by asset revaluations within our
office, industrial and retail portfolios of $305m,
offset by a $216m write-down of Toombul
Shopping Centre.
Investment EBIT
Development EBIT
Segment EBIT
Unallocated overheads
Group operating EBIT
Operating profit after tax
Development revaluation gain
Investment property revaluation
Other non-operating items
Statutory profit attributable to stapled securityholder
KEY PERFORMANCE METRICS
EPS (cpss)
DPS (cpss)
Net tangible assets ($ per stapled security)
CASH FLOW
The Group’s operating cash flow in FY22
of $896m was up $261m (or 41 per cent)
on FY21, driven by an increase in cash
receipts from Commercial & Mixed Use for
Locomotive Workshop, South Eveleigh in
Sydney and 80 Ann Street, Brisbane, as well
as Residential development projects, including
receipts predominantly from Victorian MPC
and apartments.
Investing cash outflows decreased by $73m
to $436m, driven by proceeds from the sale of
Cherrybrook Shopping Village, Tramsheds, and
Quay West Carpark, all in Sydney, together with
the proceeds from the sale of the Tucker Box
hotel portfolio.
FY22
$m
570
285
855
(82)
773
596
70
305
(65)
906
15.1
10.2
2.79
FY21
$m
576
201
777
(73)
704
550
121
274
(44)
901
14.0
9.9
2.67
MOVEMENT
$m
(6)
84
78
(9)
69
46
(51)
31
(21)
5
1.1
0.3
0.12
This was offset by payments for investment
properties under construction, including
Aspect, Kemps Creek and 55 Pitt Street in
Sydney, Flinders West Office and LIV Aston
in Melbourne, and 80 Ann Street in Brisbane,
along with development contributions for
Switchyard Industrial Estate, Auburn in Sydney.
Financing cash outflows were $19m, resulting
in a $314m lower net cash outflow compared
to FY21, driven by a lower repayment of
borrowings. This was offset by higher
distributions paid to securityholders during
the period.
1. These statements are future looking and based on our reasonable assumptions at the time they were made. They include possible outlooks for our operating environments,
but are subject to external factors outside of Mirvac’s control.
36 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS CAPITAL MANAGEMENT
Our approach to capital management in FY22
ensured we maintained ample liquidity and
financial flexibility to manage the continuing
impacts of COVID-19. Our capital position
remains strong, despite the volatility in
markets, and we are continuing to deploy
capital to advance our record development
pipeline for the benefit of securityholders. Key
outcomes of our capital management focus in
FY22 included:
> a well-diversified maturity profile, which
has delivered a weighted average debt
maturity of 5.6 years, with only $220m of
debt facilities due for repayment in the next
12 months;
> A- and A3 credit ratings with stable outlooks
from Fitch Ratings and Moody’s Investor
Services maintained;
> $1.4bn of cash and undrawn debt facilities
at 30 June 2022; and
> gearing at the lower end of our target
range of 20-30 per cent.
THIRD-PARTY CAPITAL
During the financial year, third-party capital
was introduced to new co-investments in
stabilised assets, fund-through structures with
development delivery on completion, and full
shared development risk. The acquisition by
M&G Real Estate (M&G) of a 49.9 per cent
interest of 200 George Street, Sydney and
the finalisation of M&G’s acquisition of Investa
Commercial Property Fund’s 25 per cent
interest in 400 George Street, Sydney
facilitated the appointment of Mirvac as
trustee, investment and property manager
of significant investments. We also entered
into an investment management agreement
with leading domestic superannuation fund
Australian Retirement Trust, commencing
management of the $0.8bn direct
property portfolio.
Post 30 June 2022, Mirvac secured
management rights to the AMP Capital
Wholesale Office Fund. The portfolio comprises
11 Prime grade assets concentrated to Sydney
and Melbourne. It is expected that we will
become trustee by mid-October this year. As a
result of the transaction, our third-party capital
under management will grow by approximately
75 per cent to approximately $17.9bn.
FINANCIAL AND OPERATIONAL RESULTS
Gearing (%) 1
Liquidity ($m)
Weighted average debt maturity (years)
Net debt ($m)
Average borrowing rate (% per annum) 2
Credit rating Fitch Ratings and Moody’s Investor Services
DRAWN DEBT MATURITIES AS AT 30 JUNE 2022
FY22
21.3
1,368
5.6
3,532
3.9
A-/A3
FY21 MOVEMENT
22.8
867
6.6
3,582
3.4
A-/A3
(1.5)
501
(1.0)
(50)
0.5
—
800
600
400
200
0
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
FY33
FY34
FY35
FY36
FY37
FY38
FY39
FY40
FY41
FY42
Bank
MTN
USPP
EMTN
In the residential business, we entered into a
Joint Venture with Supalai Australia Holdings
Pty Ltd (Supalai) for the Smiths Lane Project
in Melbourne. The Smiths Lane Joint Venture
comprises over 2,100 lots and includes parks,
public open spaces, and community facilities.
Supalai is the Australian arm of Supalai
Public Company Limited, a leading Thai real
estate development company listed on the
Thai Stock Exchange.
Interest and support for our asset creation
activities remains positive. This includes
the next wave of the commercial and mixed
use development pipeline opportunities at
7 Spencer Street, Melbourne, 200 Turbot
Street, Brisbane, and 55 Pitt Street, Sydney,
allowing considerable opportunities for growth
in capital partnership activity.
GROUP OUTLOOK 1
As we learn to live with COVID-19, uncertainty
in macroeconomic and geopolitical
environments continue. As demonstrated
throughout the pandemic, the quality of our
integrated investment portfolio, our reputation
as a market-leading residential developer, and
the value of our commercial and mixed use
development pipeline will enable us to continue
our long-term track record of delivering strong
returns to securityholders through the cycle.
In FY23, our key strategic priorities are to
progress our $12.4bn commercial and mixed
use development pipeline, secure strategically
aligned capital partnerships, continue to
increase our funds under management,
and deliver our residential programs and
settlements. Of increasing importance in
volatile conditions, we will continue to focus
on maintaining a disciplined approach to
capital management, building a strong
balance sheet, protecting our credit rating,
and holding sufficient liquidity to capitalise
on opportunities as they emerge. We will also
target $1.3bn of non-core asset sales, with
proceeds supporting the next generation
of assets that deliver development profit,
generate new recurring income, and improve
the quality of our portfolio.
Subject to no material change in the operating
environment, the Group is targeting operating
earnings in FY23 of at least 15.5 cents per
stapled security (cpss) 3 and distributions
of at least 10.5cpss.
Annual Report 2022 – 37
1. Net debt (at foreign exchange hedged rate) / tangible assets – cash.
2. Reflects average borrowing cost at end of period. Weighted average cost of debt for FY22 was 3.4 per cent (FY21: 3.8 per cent).
3. Assumes a weighted average cost of debt of approximately 4.6 per cent over FY23.
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENT FY22 FINANCIAL AND OPERATIONAL RESULTS CONTINUED
COMMERCIAL & MIXED-USE DEVELOPMENT
We substantially progressed our Commercial
& Mixed Use Development pipeline in
FY22, completing two major projects – the
refurbishment of the Locomotive Workshop,
South Eveleigh, Sydney and Heritage Lanes,
Brisbane. Profit recognition from these two
projects contributed to a higher Commercial
and Mixed Use Development EBIT in FY22
compared to FY21, along with valuation gains
generated from our retained ownership
interest in each.
Our overall development revaluation gain of
$70m in FY22 recognises the value created
from our development activities, and in FY22
related to the fair value gain on investment
properties under construction (namely,
Switchyards in Auburn) and the initial fair value
uplift from independent valuations of Heritage
Lanes and the Locomotive Workshop.
In addition to the completion of Heritage Lanes
and the Locomotive Workshop, we advanced
a number of key office and mixed use projects.
Demolition commenced at 55 Pitt Street in
Sydney, with civil works due to commence in
1Q23, and at Harbourside, Sydney, we issued all
vacant possession notices, with demolition due
to commence in the second half of FY23.
Commercial & Mixed Use EBIT
Development revaluation gain
Total Commercial & Mixed Use return
KEY METRICS
Total development pipeline 3
Committed development pipeline
Invested capital 4
A number of our industrial developments
across Sydney progressed, with construction
commencing at Switchyard Industrial Estate in
1)
Auburn in FY22 (58 per cent pre-committed
and development approval received at Aspect
1).
in Kemps Creek (48 per cent pre-committed
At Aspect, we have committed to delivering
our first net positive embodied carbon
development, with 5 Star and 6 Star Green
Star ratings on the first two buildings being
targeted. Construction for this estate is
expected to commence in 1H23 2.
Further, we have approximately $1bn of build
to rent developments under construction,
including LIV Anura in Brisbane, LIV Aston and
LIV Munro in Melbourne. Construction at LIV
Munro (490 apartments) remained on track
through FY22, and is expected to complete in
2Q23, and pre-leasing expected to commence
in the first quarter of FY23. LIV Anura (396
apartments) and LIV Aston, Melbourne (474
apartments) also continued to progress, and
we received planning approval for LIV Albert
Fields, Brunswick (474 apartments). When the
current development pipeline completes, we
will have close to 2,200 apartments across our
build to rent platform.
FY22
$m
90
70
160
12,452
2,197
195
FY21
$m
MOVEMENT
$m
33
121
151
12,283
1,949
304
57
(51)
9
169
248
(109)
COMMERCIAL & MIXED USE OUTLOOK 1
Office
Despite ongoing uncertainty around the
impacts of the COVID-19 pandemic, tenant and
capital demand for modern, well-located office
buildings in CBD locations remains strong,
supporting our substantial office and mixed
use pipeline. While there is uncertainty around
the longer-term impacts of the pandemic
and the adoption of hybrid work practices,
there is positive tenant enquiry for new office
buildings that offer the latest in sustainability,
wellness and technology features and facilitate
collaboration, and our secured office and mixed
use development pipeline is well placed to
benefit from this trend.
Industrial
We continue to see strong customer demand
for our industrial developments, in a market
with ongoing elevated demand and very
low vacancy. This strong customer interest
continues to support the roll-out of our
Sydney-based industrial development pipeline,
secured on attractive terms, which includes
Switchyard Industrial Estate in Auburn, Aspect
Industrial Estate at Kemps Creek, and Elizabeth
Enterprise Precinct at Badgery’s Creek.
Build to Rent
Metropolitan rental markets continue to rapidly
improve, being well timed to match delivery of
our secured pipeline of build to rent projects
between FY23 and FY25. This is expected to
be supported by record low unemployment
rates, low rental vacancy, rising levels of
migration, and population growth in cities,
while broader apartment supply is expected
to moderate further.
Including non-binding heads of agreements.
1.
2. Subject to factors outside Mirvac’s control, such as planning outcomes and market demand.
3. Represents 100 per cent of expected end value/revenue, subject to various factors outside of Mirvac’s control, such as planning, market demand and COVID-19 uncertainties.
4. Excludes investment properties under construction.
38 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS FINANCIAL AND OPERATIONAL RESULTS
EBIT in FY22 also reflected a $12m COVID-
19-related impact (FY21: $20m), largely related
to Retail, as well as an increase in management
and administration expenses related to the
investment in our technology platform.
These losses were offset by income
contributions from 477 Collins Street, Melbourne
and The Foundry at South Eveleigh, Sydney,
increased EBIT at LIV Indigo, and increased
asset and funds management EBIT to $33m.
Despite macroeconomic and geopolitical
headwinds, strong capital demand supported
asset revaluation gains of $305m, and our
weighted average capitalisation rate tightened
by 17 basis points to 5.00 per cent, with valuation
gains of $224m in Office (up 2.9 per cent), $207m
in Industrial (up 14 per cent), and a revaluation
loss of ($126m) in Retail (down 4.3 per cent),
primarily driven by Toombul, Brisbane
($216m net revaluation decrease) following
flood impacts in February this year.
FY22
$m
581
369
55
153
4
33
(44)
570
305
875
FY22
13,492
5.00
97.3
97
5.6
FY21
$m
MOVEMENT
$m
581
366
56
157
2
30
(35)
576
274
850
FY21
12,379
5.17
97.4
98
5.6
0
3
(1)
(4)
2
3
(9)
(6)
31
25
MOVEMENT
1,113
(0.17)
(0.1)
(1)
—
INTEGRATED INVESTMENT PORTFOLIO
Our high-quality, modern portfolio of assets
that require low capital expenditure remained
resilient, despite the headwinds caused by
COVID-19. Extended lockdowns in the first half
of the year impacted our CBD retail assets in
particular, however, we saw an uptick in sales
and leasing activity as conditions normalised
over the second half of the year, supported by
the reopening of international and domestic
borders, along with strong employment growth.
As a result, solid occupancy and a long WALE
were maintained, while limited lease expiries
have positioned us well for the future. Cash
collections also improved in the second half of
FY22 to 97 per cent across the portfolio.
EBIT for IIP was down 1 per cent on FY21, as
a result of the loss of income at 55 Pitt Street,
Harbourside Shopping Centre, and 34 Waterloo
Road, Macquarie Park (all in Sydney) due to
redevelopment, as well as lower income due
to the sale of Tramsheds, Cherrybrook Village
and Quay West Car Park (all in Sydney), in
addition to the sale of 340 Adelaide Street,
Brisbane in FY21. The non-core assets sold
in FY22 achieved an average premium to book
value of 43 per cent, with the proceeds from
these sales to be redeployed into our active
development pipeline.
Net operating income
Office
Industrial
Retail
Build to Rent and other
Assets and funds under management EBIT
Management and administration expenses
Investment EBIT
Investment property revaluation 2
Total Integrated Investment Portfolio return
PORTFOLIO METRICS
Investment property portfolio value 3 ($m)
Weighted average capitalisation rate (%)
Occupancy (%) 4
Cash collection (%)
Weighted average lease expiry (years) 5
Leasing (sqm)
110,879
144,003
(33,124)
IIP OUTLOOK 1
Office
Momentum within Australia’s major markets
continues to improve as we learn to live with
COVID-19. Leasing volumes are increasing,
and in aggregate, businesses that made leasing
decisions through the pandemic have taken
more space than they have vacated, and this
space has generally been taken in higher quality
assets, supporting our view that the flight
to quality theme will continue. Our portfolio,
which is 99 per cent weighted to Prime assets
and has an average age of 9.8 years, is well
placed to benefit from this trend.
Industrial
Operating fundamentals remain positive in the
industrial sector, with strong occupier demand
and tight vacancy resulting in positive rental
growth. Capital demand remains firm, with
recent transactional evidence supporting a
tightening of capitalisation rates across our
Industrial portfolio over the past 12 months.
Our industrial portfolio, which is 100 per cent
occupied and located in Sydney, is expected to
benefit from market rent growth and continued
capital demand for high quality, well located
industrial assets.
Retail
Convenience-based and out-of-trade retail
assets continued to show an improvement over
the second half of the financial year, supported
by a more stable operating environment.
CBD-based retail remains a challenge and
has been slower to recover from the impact
of COVID-19 restrictions, with foot traffic
remaining well below pre-COVID-19 levels.
Our urban based retail assets are well placed
to benefit from the resumption of migration, as
well as the normalisation of trading conditions.
Build to Rent
Market conditions across the build to rent
sector are buoyant, with residential vacancy
nearing 16-year lows and renters expected to
be one of the fastest growing cohorts of the
residential market. As one of the pioneers of
build to rent in Australia, we have benefited
from ongoing feedback from our customers
at our completed asset, LIV Indigo in Sydney,
which reached a stabilised 98 per cent leased
in FY22. We expect that this will position us
well for the upcoming release of our second
build to rent asset, LIV Munro in Melbourne,
which is expected to complete in the second
quarter of FY23.
1. These statements are future looking and based on our reasonable assumptions at the time they were made. They include possible outlooks for our operating environments, but are subject to external
factors outside of Mirvac’s control.
Includes investment properties under construction, assets classified as held for sale, Mirvac’s share of JVA investment properties, and AASB 16 lease liability gross up amounts.
2. Excludes development revaluation gain and includes Mirvac’s share in the joint ventures and associates (JVA) revaluation of investment properties, which is included within share of net profit of JVAs.
3.
4. By area, excludes Build to Rent.
5. By income, excludes Build to Rent.
Annual Report 2022 – 39
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENT FY22 FINANCIAL AND OPERATIONAL RESULTS CONTINUED
RESIDENTIAL
Residential EBIT in FY22 was higher than
FY21, due to settlements of 2,523 residential
lots being weighted towards stronger EBIT
contributing projects across masterplanned
communities (MPC) and apartments. The
main contributors were our masterplanned
communities at Smiths Lane, Woodlea,
Tullamore, and Olivine in Melbourne, along
with our apartment project, Voyager, also in
Melbourne. In addition to this, Residential EBIT
benefitted from a joint venture with Supalai
to deliver the Smiths Lane project, which we
entered into during the financial year.
Positive sales momentum – particularly at
MPC projects in Melbourne in the first half
of the year – contributed to 2,898 exchanges
in FY22. This was down 17 per cent on
FY21, however, represents a normalisation
of market conditions following 18 months
of unprecedented demand.
Overall, 83 per cent of sales were in MPC, while
owner-occupiers continued to represent the
largest segment of purchasers at 74 per cent,
a testament to our focus on delivering well
designed, owner-occupier product.
We released 2,748 residential lots throughout
the financial year, with 70 per cent of all
released lots pre-sold. This included the launch
of six major apartment projects. As a result,
our pre-sales increased to $1.6bn 1, providing
good visibility of future earnings. Defaults at
Voyager in Melbourne resulted in a default rate
of 2.7 per cent. Excluding Voyager, defaults
remained low at 0.2 per cent.
Our development margin of 25 per cent was
above our through-cycle target.
The addition of 1,600 lots to our residential
development pipeline, including Cobbitty in
Sydney’s south-west, supports our future
near-term release profile.
RESIDENTIAL OUTLOOK 1
While market momentum has normalised as
a result of rising interest rates and inflation,
underlying fundamentals remain strong. This
includes low unemployment, above average
wage growth, rising overseas migration, tight
rental vacancy, low supply, compelling relative
affordability of new product, and strong
household balance sheets. We continue to
experience good demand from owner-occupiers
focused on high-quality, well-located, designed
product with good amenity.
KEY METRICS
Residential EBIT ($m)
Lots released
Lots exchanged
Lots settled
Pre-sales secured ($m)
Defaults (%)
Gross development margin (%)
Pipeline lots
Against this backdrop, we expect to launch
a further six major apartment projects over
FY23, including:
> 699 Park Street, Melbourne, a premium
offering of 168 apartments overlooking
Princes Park;
> the next stage at Yarra’s Edge in Melbourne,
comprising 191 apartments, and our most
premium offering in the precinct to date;
> our newly acquired site on 31 Queens
Road, Melbourne, a boutique offering of 110
apartments overlooking Albert Park;
> Isle, the next stage at our premium
Waterfront Newstead precinct in Brisbane,
comprising 133 apartments;
> O’Connell House, the fourth stage at Ascot
Green, comprising 128 apartments; and
> the last stages at NINE by Mirvac,
Willoughby, comprising 107 apartments.
This launch profile, complemented by a further
release of over 2,000 MPC lots, is expected
to elevate pre-sales in the coming years and
contribute to future residential earnings.
FY22
195
2,748
2,898
2,523
1,635
2.7
25
25,352
FY21
MOVEMENT
168
3,319
3,375
2,526
1,215
2.7
26
26,569
27
(517)
(477)
(3)
420
—
(1)
(1,217)
Olivine, Donnybrook, Victoria
1. Represents Mirvac’s share of total pre-sales and includes GST.
2. These statements are future looking and based on our reasonable assumptions at the time they were made. They include possible outlooks for our operating environments, but are subject to external
factors outside of Mirvac’s control.
40 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS HOW WE CREATE VALUE
PERFORMANCE BY PILLAR
FINANCIAL AND OPERATIONAL RESULTS
RISK MANAGEMENT
GOVERNANCE
FINANCIAL REPORT
OTHER
Artist’s impression | Isle waterfront, Brisbane
Annual Report 2022 – 41
RISK AND RISK MANAGEMENT
RISK GOVERNANCE
The Mirvac Board is responsible for ensuring
the effectiveness of Mirvac’s risk management
framework. This framework outlines our
governance, risk appetite, accountability for
risk management, and operational resilience,
and is consistent with the Australian and
New Zealand standard on risk management
(ISO 31000:2018).
The Board has charged our leadership team
with the responsibility for managing risk
across the Group and implementing mitigation
strategies under the direction of the CEO &
Managing Director, supported by other senior
executives. Each business unit is responsible
for identifying and managing their risks. An
enterprise-wide risk management system is
in place to drive consistency in risk recording
and reporting.
The Group Risk function is responsible for
embedding the risk management framework,
advising business units on risk management
plans, and consolidating risk reporting to
senior executives, the Audit, Risk & Compliance
Committee, and the Board. A strong risk
management culture is the key element
underpinning the risk management framework.
In FY22, we faced a challenging and uncertain
operating environment. Global supply chains
were disrupted, interest rates and inflation
increased, as did geopolitical tensions,
competition for talent intensified, climate risks
accelerated, and we began learning to live
with COVID-19. We will continue to work on
positioning the Group for long-term success
by managing the risks that have the potential
to impact the achievement of our targeted
financial outcomes.
KEY RISKS AND OPPORTUNITIES
HOW WE’RE ADDRESSING THEM
The Risk Management Policy is available on
our website: https://www.mirvac.com/about/
corporate-governance
RISK MANAGEMENT: OUR PRINCIPAL
RISKS AND OPPORTUNITIES
A number of the risks and opportunities we
face in delivering our strategic plan are set
out in the table below. They are largely related
to our portfolio of assets and are typical of a
property group. These are not the only risks
associated with Mirvac. The risks are grouped
by theme, rather than order of importance.
INVESTMENT PERFORMANCE
Our business is impacted by the value of our
property portfolio. This can be influenced
by many external aspects outside our direct
control, including the health of the economy
and the strength of the property market.
MACRO-ENVIRONMENT
We collaborate with aligned investors to leverage capability and develop recurring income streams.
Prudent capital decisions are based on due diligence and market research to ensure investor
confidence is retained. Buying and selling at the right time in the property cycle has enabled us to
deliver sustainable returns to our securityholders. We have a disciplined approach to acquisitions,
and are mindful of the fundamentals needed to maintain growth through our sustainable and
diversified urban-focused business model.
Mirvac is impacted by changing domestic and
international economic and macroprudential and
regulatory measures, which impact access to
capital, investor activity, and foreign investment.
We monitor a wide range of macro-economic, property market and capital market indicators and
use trend analysis to assess macro-economic changes, and we are attentive to these shifts. We
maintain a robust balance sheet and appropriate gearing to ensure we can respond to unforeseen
economic shocks.
SOCIAL RESPONSIBILITY
In an Australian context of low institutional
trust, we must maintain and enhance trust and
reputation to retain a social licence to operate.
SUPPLY CHAIN
With a broad range of suppliers providing an
equally diverse range of goods and services,
our stakeholders can be directly and indirectly
impacted by the practices of our suppliers, and
the materials they’re supplying.
PLANNING AND REGULATION
Our activities can be affected by government
policies in many ways, from local decisions
regarding zoning and developments, right
through to the national position on immigration.
We provide consistent, high-quality communication, and transparent and responsible reporting.
We have committed to proactively sharing our progress as a business to help us earn and retain
trust. We track trust and reputation through stakeholder research and are pleased to see strong
results. We provide good earnings visibility, guidance and full disclosure to our securityholders so
they can make informed choices.
We have well-established process and oversight bodies to manage key areas, such as modern
slavery, worker exploitation, material import risk, high-risk materials, and cyber security. We
are elevating our controls to identify and mitigate our exposure to these risks and ensure full
compliance to emerging legislation. Supply chain disruption, accelerated by COVID-19, geopolitical
tensions, and the impact of cost-escalation and labour shortages in the construction industry, are
actively managed through supply continuity plans and alternative supply arrangements.
We take the lead to have proactive and constructive engagements with all levels of government
to ready our business to respond to changing community expectations. Approval timeframes are
built into project delivery plans and are actively managed to minimise the impact on returns.
42 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS RISK MANAGEMENT
KEY RISKS AND OPPORTUNITIES
HOW WE’RE ADDRESSING THEM
IMPACTS OF CLIMATE CHANGE
Climate change can not only affect our assets,
it can affect our business operations. It is vital
that we respond to the implications of climate
change by implementing appropriate adaptation
and mitigation strategies for the portfolio, as well
as building resilience throughout the business.
We regularly assess our portfolio for climate risk and resilience and we report under the Task
Force on Climate-related Financial Disclosures (TCFD) recommendations. We strive to design
developments and major renovations to a high standard for green building and community
certifications, as well as energy and water performance ratings. In FY22, we met our ambition to be
net positive carbon for our scope 1 and 2 emissions nine years ahead of schedule, and we were the
first Australian property company to reach a net positive target.
CAPITAL MANAGEMENT
Maintaining a diversified capital structure to
support delivery of stable investor returns and
maintain access to equity and debt funding.
HEALTH AND SAFETY
Maintaining the health, safety and wellbeing of
our people is our most important duty of care
obligation, and critical to our ongoing success.
PEOPLE
We require a motivated, high-performing, and
capable workforce to deliver business strategy
and a desired culture.
We have a capital management framework that is approved and monitored by the Board. The
framework aims to address the market, credit and liquidity risks, while also meeting the Group’s
strategic objectives. We seek to maintain an investment-grade credit rating of A-/A3 to reduce
the cost of capital and diversify our sources of debt capital. Our target gearing ratio is between
20 and 30 per cent.
We continue to pursue safety excellence and to improve the overall wellbeing of our employees,
our suppliers, our community, and the environment. During FY22, we continued to strengthen
our health and safety practices and culture, while recognising that the ongoing management and
response to COVID-19 will continue for the foreseeable future (particularly with respect to mental
health).
We focus on having the right culture and capabilities, so that our people are engaged and enabled
to deliver on our strategy, particularly in an uncertain and changing operating environment,
in which labour markets are currently constrained. We have a range of programs aimed at
creating great leaders, growing and retaining key talent, and fostering a diverse and inclusive
workplace, and have been defining, measuring and curating our desired culture for some time. Our
remuneration strategy is designed to attract the best talent, and motivate and retain individuals,
while aligning to the interests of executives, securityholders and community expectations.
DIGITAL DISRUPTION
Technology is changing our world at a
rapid pace. It is important we embrace new
digitally-enabled ways of working and enhance
customer experiences to maintain relevance and
continue to innovate.
A core element of our strategy is understanding and preparing for disruption, and building a
resilient business. We are committed to ensuring that we have the right people, processes, and
systems to take advantage of disruption and to create a competitive advantage. Our innovation
program, Hatch, ensures that we continue to innovate in a meaningful way. We also continue to
invest in people and technology to ensure that digital experiences are continually evolving.
BUSINESS RESILIENCE
It is crucial we have the ability to manage a major
incident causing physical or information disruption
in a timely and efficient manner, and that we
adapt to changes in our operating markets.
We have an embedded operational resilience program that enables the business to effectively
manage and continue business-critical processes during an event that impacts the business. This
includes breaches to our information systems and/or damage to physical assets that could cause
significant damage to our business and reputation.
CYBER RISK
Cyber security and information privacy are
an increasing risk for our business given the
dynamic nature of these threats, and the
importance of safeguarding intellectual property,
Information and Operational Technology
systems, contractual agreements, and employee
and customer information.
KEY PARTNERS
Our partners play a vital role in our business and
our sustained success is driven by the strength
of these relationships. It is crucial that we build
long-term relationships that are driven by trust,
transparency and shared values.
We have a cyber security strategy and framework (which aligns to the National Institute of
Standards and Technology cyber security framework) to prevent and detect cyber threats and
respond and recover from cyber-related incidents.
Our partner relationships are based on delivering mutual benefits to all parties. Our value
creation model has a focus on trusted partnerships and enables the delivery of our strategy
through the partner lens. Fit-for-purpose governance frameworks are in place to manage our
capital partnerships.
Annual Report 2022 – 43
GOVERNANCEFINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARFINANCIAL AND OPERATIONAL RESULTS Mirvac Group
BUSINESS OVERVIEW
LETTERS TO SECURITYHOLDERS
OUR STRATEGY
MEGATRENDS
GOVERNANCE
46
Board of Directors
48
Directors’ report
51
Remuneration report
72
Auditor’s independence declaration
Financial report
73
125 Directors’ declaration
126
134 Securityholder information
136 Glossary
137 Directory & upcoming events
Independent auditor’s report
44 – Celebrating 50 years
44 – Celebrating 50 years
Mirvac Group HOW WE CREATE VALUE
PERFORMANCE BY PILLAR
FINANCIAL AND OPERATIONAL RESULTS
RISK MANAGEMENT
GOVERNANCE
FINANCIAL REPORT
OTHER
Annual Report 2022 – 45
Annual Report 2022 – 45
BOARD OF DIRECTORS
DIRECTORS’ EXPERIENCE AND AREAS OF SPECIAL RESPONSIBILITY
The members of the Mirvac Board and their qualifications, experience and responsibilities are set out below:
DR JOHN MULCAHY
PhD (Civil Engineering), FIEAUST, MAICD
SUSAN LLOYD-HURWITZ
BA (Hons), MBA (Dist)
CHRISTINE BARTLETT
BSc, MAICD
JANE HEWITT
BAS Land Economics, MAICD
JAMES M. MILLAR AM
BCom, FCA, FAICD
Independent Non-Executive
> Member of the Audit, Risk
and Compliance Committee
> Member of the Health, Safety,
Environment & Sustainability
Committee
Jane Hewitt was appointed
a Non-Executive Director of
Mirvac in December 2018. Jane
has over 27 years of experience
in real estate development
and asset management. She
founded UniLodge in 1996 and
pioneered the corporatisation
and professional development
and management of student
accommodation facilities on
and off University campuses
in Australia and New Zealand.
As an entrepreneur and
founder, Jane has extensive
operational experience
and a strong track record
in developing successful
partnerships in real estate
and business ventures. She
developed UniLodge into
an operation with assets of
approximately $1 billion.
Since 2012, Jane has worked on
a number of non-profit ventures
in housing, homelessness and
youth disadvantage. She is
Chair of the Beacon Foundation
and is a board member of the
National Housing Investment
Finance Corporation.
Independent Non-Executive
> Chair of the Audit, Risk and
Compliance Committee
> Member of the
Nomination Committee
James M. Millar was appointed
a Non-Executive Director of
Mirvac in November 2009. He
is the former Chief Executive
Officer of Ernst & Young (EY)
in the Oceania Region, and was
a Director on their global board.
James commenced his
career in the Insolvency &
Reconstruction practice at EY,
being involved in a number of
sizeable corporate workouts.
He has qualifications in both
business and accounting.
James is currently the Chair of
the Export Finance Australia
and Cambooya Pty Ltd, and
a Director of Credit Corp
Group Limited. James serves
a number of charities and is
Chair of the Vincent Fairfax
Family Foundation and Director
of Vincent Fairfax Ethics in
Leadership Foundation.
James is a former Director of
Forestry Corporation of NSW
(February 2013 to June 2022);
Macquarie Media Limited (April
2015 to October 2019), Fairfax
Media Limited (July 2012 to
December 2018), Slater &
Gordon Ltd (December 2015
to December 2017) and former
Chair of The Smith Family.
Independent
Non-Executive Chair
> Chair of the Nomination
Committee
> Member of the Audit, Risk
and Compliance Committee
> Member of the Human
Resources Committee
> Member of the Health,
Safety, Environment &
Sustainability Committee
John Mulcahy was appointed
a Non-Executive Director of
Mirvac in November 2009 and
the Independent Non-Executive
Chair in November 2013.
John has more than 30 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 Director
of ALS Limited (formerly
Campbell Brothers Limited)
(appointed February 2012),
Zurich Australian Insurance
subsidiaries, Deputy Chair
of GWA Group Limited
(appointed November 2010)
and Chair of ORIX Australia
Corporation Limited.
John is a former Director and
Chair of Coffey International
Limited (September 2009
to January 2016), a former
Director of The Shore
Foundation Limited and former
Guardian of the Future Fund
Board of Guardians.
Chief Executive Officer
& Managing Director
(CEO/MD) – Executive
Susan Lloyd-Hurwitz was
appointed Chief Executive
Officer & Managing Director
in August 2012 and a
Director of Mirvac Board in
November 2012.
Prior to this appointment,
Susan was Managing Director
at LaSalle Investment
Management. Susan has also
held senior executive positions
at MGPA, Macquarie Group
and Lend Lease Corporation,
working in Australia, the US
and Europe.
Susan is the Chair of the Green
Building Council of Australia,
a Director of the Business
Council of Australia, member
of the NSW Public Service
Commission Advisory Board, a
member of the INSEAD Global
Board and a Trustee of the
Australian Museum Foundation.
Susan holds a Bachelor of Arts
(Hons) from the University of
Sydney and an MBA (Distinction)
from INSEAD (France).
Independent Non-Executive
> Chair of the Human
Resources Committee
> Member of the Audit, Risk
and Compliance Committee
> Member of the
Nomination Committee
Christine Bartlett was appointed
a Non-Executive Director of
Mirvac in December 2014.
She is currently a Director of
Reliance Worldwide Corporation
Limited (appointed November
2019), Sigma Healthcare
Limited (appointed March
2016) and TAL Life Limited
(appointed January 2017).
Christine is currently a member
of the UNSW Australian School
of Business Advisory Council.
Christine is a former Director
of iCare (February 2018 to
February 2021), GBST Holdings
Ltd (June 2015 to November
2019) and Director (2007 to
2019) and Chair (2016 to 2019)
of The Smith Family.
Christine is an experienced
chief executive officer and
senior executive, with extensive
line management experience
gained through roles with
IBM, Jones Lang LaSalle and
National Australia Bank Limited.
Her executive career has
included Australian, regional
and global responsibilities
based in Australia, the USA
and Japan. Christine brings
a commercial perspective,
especially in the areas of
financial discipline, identifying
risk, complex project
management, execution of
strategy, fostering innovation
and taking advantage of new
emerging technologies.
Christine holds a Bachelor of
Science from the University
of Sydney and has completed
senior executive management
programs at INSEAD.
46 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS GOVERNANCE
SAMANTHA MOSTYN AO
BA, LLB
PETER NASH
BComm, FCA, F Fin
ROBERT SINDEL
BEng, MBA, GAICD, FIEAust
DAMIEN FRAWLEY
Independent Non-Executive
> Member of the Human
Resources Committee
> Member of the Nomination
Committee
> Member of the Health,
Safety, Environment &
Sustainability Committee
Samantha Mostyn was appointed
a Non-Executive Director of
Mirvac in March 2015. Samantha
is currently a corporate advisor
and Director of GO Foundation
and Alberts Group.
Samantha has significant
experience in the Australian
corporate sector both in
executive and non-executive
capacities, in particular in the
areas of human resources,
corporate and government
affairs, sustainability
management and diversity.
Samantha has held senior
executive positions including
Group Executive Culture and
Reputation, IAG and Global
Head HR and Culture, Cable
& Wireless in London. She
serves on the Australian faculty
of the Cambridge University
Business & Sustainability
Leadership Program.
Samantha is a former Director
of Virgin Australia Holdings
Limited (September 2010
to May 2019), Transurban
Holdings Limited (December
2010 to November 2021),
Cover-More Group Limited
(December 2013 to April 2017),
Sydney Theatre Company,
National Sustainability Council,
National Mental Health
Commission, Carriageworks,
Sydney Swans, Commissioner
with the Australian Football
League, Deputy Chair of the
Diversity Council of Australia
and Chair of an Australian
APRA regulated Citibank
subsidiary board.
Independent Non-Executive
> Member of the Audit, Risk
and Compliance Committee
> Member of the Health,
Safety, Environment &
Sustainability Committee
Peter Nash was appointed
a Non-Executive Director of
Mirvac in November 2018.
Peter is currently the Chair
of Johns Lyng Group Limited
(appointed October 2017),
Director of Westpac Banking
Corporation (appointed March
2018), ASX Limited (appointed
June 2019), Koorie Heritage
Trust and General Sir John
Monash Foundation.
Peter was a Senior Partner
with KPMG until September
2017, having been admitted
to the partnership of KPMG
Australia in 1993. He served
as the National Chair of KPMG
Australia from 2011 until August
2017, where he was responsible
for the overall governance
and strategic positioning of
KPMG in Australia. In this
role, Peter also served as a
member of KPMG’s global
and regional boards. Peter’s
previous positions with KPMG
included Regional Head of
Audit for Asia Pacific, National
Managing Partner for Audit in
Australia and Head of KPMG
Financial Services.
Peter has worked in
geographically diverse
and complex operating
environments providing
advice on a range of topics,
including business strategy,
risk management, business
processes and regulatory
change. Peter has also
provided financial and
commercial advice to many
government businesses at
both a federal and state level.
Peter is a former member
of the Business Council of
Australia and its Economic
and Regulatory Committee.
Independent Non-Executive
> Chair of the Health, Safety,
Independent Non-Executive
> Member of the Audit Risk and
Environment & Sustainability
Committee
> Member of the Human
Resources Committee
> Member of the Nomination
Committee
Robert Sindel was appointed
a Non-Executive Director of
Mirvac in September 2020. He
has 30 years of experience in
the construction industry both
in Australia and the United
Kingdom as well as experience
operating in high-risk industries.
Most recently, Rob has held
roles in senior executive
management and leadership,
in the building industry supply
chain, manufacturing, sales
and marketing in business-to-
business environments and
strategic management.
Robert is currently the Chair
of Orora Limited (appointed
February 2020), a Non-
Executive Director of Boral
Limited (appointed September
2020) and is a Member of
Australian Business Community
Network Foundation (appointed
April 2020) and the Yalari
NSW Advisory Committee
(appointed August 2017).
Rob is the former Managing
Director and Chief Executive
Officer of CSR Limited (January
2011 to September 2019),
a former Member of UNSW
Australian School of Business
Advisory Council and a former
Director of Green Building
Council of Australia.
Compliance Committee
> Member of the Human
Resources Committee
Damien Frawley was appointed
a Non-Executive Director of
Mirvac on 1 December 2021.
Damien has wide-ranging
experience in investment
management and asset
management in real estate
and infrastructure in Australia
and offshore as well as
public markets.
From 2012 to 2022, Damien
was the CEO of Queensland
Investment Corporation (QIC),
one of Australia’s leading
investment managers. He
has led the Queensland
Government-owned global
institutional investment
manager for the past 9 years,
retiring as CEO in 2022.
In June 2022, Damien was
appointed as Chair of Host-Plus
Pty Limited and Queensland
Treasury Corporation
Capital Markets.
Damien has over 35 years of
experience in the financial
services sector, with a strong
focus on developing and
executing strategy. Prior to
his QIC role, Damien was the
country head of BlackRock
Australia. Damien’s career has
also included roles at Merrill
Lynch Investment Management,
Barclays Global Investors
and Citibank.
MICHELLE FAVELLE
BBus, FGIA
Company Secretary
Michelle Favelle was appointed as Company Secretary in
December 2019, having joined Mirvac in February 2018 as
Deputy Group Company Secretary. She has over 20 years of
corporate experience and has held a range of governance and
company secretary roles in the property, financial services,
media and not-for-profit sectors. She holds a Bachelor of
Business and is a fellow of the Governance Institute of Australia.
Annual Report 2022 – 47
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS DIRECTORS’ REPORT
The Directors of Mirvac Limited present their report, together with the consolidated financial report of Mirvac Group (Mirvac or Group) for the year ended
30 June 2022. Mirvac comprises Mirvac Limited (parent entity) and its controlled entities, which include Mirvac Property Trust and its controlled entities.
PRINCIPAL ACTIVITIES
The principal continuing activities of Mirvac consist of real estate investment, development, third party capital management and property asset
management across three segments: Integrated Investment Portfolio, Commercial & Mixed Use and Residential.
DIRECTORS
The Directors of Mirvac in office at any time during the financial year and up to the date of this report together with information on their qualifications
and experience are set out on pages 46 to 47. The number of board and board committee meetings held and attended by Directors of which they
were members during the year ended 30 June 2022 is detailed below.
REMUNERATION REPORT
The Remuneration report as required under section 300A (1) of the Corporations Act 2001 is set out on pages 51 to 71 and forms part of the
Directors’ report.
MEETINGS OF DIRECTORS
The number of Directors’ meetings held and attended by each Director during the year ended 30 June 2022 is detailed below:
Board
Audit, Risk &
Compliance
Committee 1
Human Resources
Committee 1
Nomination
Committee 1
Health, Safety,
Environment &
Sustainability
Committee 1
Director
Held Attended
Held Attended
Held Attended
Held Attended
Held Attended
John Mulcahy (Chair)
Susan Lloyd- Hurwitz (CEO/MD)
Christine Bartlett
Jane Hewitt
James M. Millar AM
Samantha Mostyn AO
Peter Nash
Robert Sindel
Damien Frawley 2
13
13
13
13
13
13
13
13
6
13
13
13
13
13
12
13
13
6
6
—
6
6
6
—
6
—
4
6
—
6
6
6
—
6
—
4
1. Voluntary attendances at meetings by Directors who were not committee members are not included.
2. Damien Frawley was appointed as Director on 1 December 2021.
5
—
5
—
—
5
—
5
3
5
—
5
—
—
4
—
5
3
5
—
5
—
5
5
—
1
—
5
—
5
—
5
5
—
—
—
6
—
—
6
—
6
6
6
—
6
—
—
6
—
6
5
6
—
OTHER DIRECTORSHIPS
Details of all directorships of other listed companies held by each Director in the three years immediately before 30 June 2022 are as follows:
Director
John Mulcahy
Company
Date appointed
Date ceased
ALS Limited (formerly Campbell Brothers Limited)
GWA Group Limited
February 2012
November 2010
Current
Current
Susan Lloyd-Hurwitz
Nil
GBST Holdings Ltd
Reliance Worldwide Corporation Limited
Sigma Healthcare Limited
June 2015
November 2019
March 2016
November 2019
Current
Current
Christine Bartlett
Jane Hewitt
James M. Millar AM
Nil
Credit Corp Group Limited
Macquarie Media Limited
Samantha Mostyn AO
Transurban Holdings Limited
Peter Nash
Robert Sindel
ASX Limited
Johns Lyng Group Limited
Westpac Banking Corporation
Boral Limited
Orora Limited
Damien Frawley 1
Nil
1. Damien Frawley was appointed as Director on 1 December 2021.
48 – Celebrating 50 years
December 2021
March 2015
Current
October 2019
December 2010
October 2021
June 2019
October 2017
March 2018
September 2020
March 2019
Current
Current
Current
Current
Current
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
GOVERNANCE
Environment and Sustainability
During FY22, Mirvac continued to deliver on its commitment to have a
positive impact on the planet, its people, customers and the communities
in which it operates, most notably by achieving its ambitious plan to
become net positive in carbon nine years ahead of schedule. During the
year, the Board approved Mirvac’s Planet Positive Water commitment
which sets out how Mirvac will achieve a net positive water target well
ahead of its initial 2030 target.
The Board’s strong support of these commitments was supplemented
by the HSE&S Committee’s monitoring and oversight of Mirvac’s
sustainability strategy and performance reporting, as well as attending
site visits and briefings. For example, Mirvac’s successful pilot of a
waste reduction at its 55 Pitt Street development in Sydney, which
was the subject of an HSE&S Committee deep dive briefing, resulted
in approximately 900 cubic metres of furniture and fit-out materials
diverting from landfill.
Inclusion and Diversity
During FY22 the Human Resources Committee (HRC) maintained
oversight of diversity and inclusion initiatives and people metrics,
in support of Mirvac’s commitment to fostering an inclusive and
diverse workplace.
Gender equality remains a clear priority, and as at 30 June 2022, women
held 44 per cent of Board positions, exceeding the target of 40 per cent,
with 45 per cent of women representing Mirvac’s workforce.
Core to Mirvac’s overall people strategy is to foster a sense of belonging
by broadening the types of diversity we focus on through an inclusive
leadership and culture. Following the HRC’s review of a refreshed
belonging strategy during the year, the Board participated in a new,
externally facilitated inclusive leadership program focused on the true
themes of inclusion, which will be rolled out to all teams at Mirvac.
COMPLIANCE
Mirvac’s governance arrangements and practices met the requirements
of the fourth edition of the Australian Securities Exchange (ASX)
Corporate Governance Council Corporate Governance Principles
and Recommendations (the ASX Principles) during FY22. Further
information on our corporate governance policies and practices are
contained in our 2022 Corporate Governance Statement located at
www.mirvac.com/about/corporate-governance.
ACTIVE GOVERNANCE
BOARD GOVERNANCE
Mirvac is committed to ensuring that its operations, procedures and
practices reflect high standards of corporate governance, to foster a
culture that values ethical behaviour, integrity, and respect. This ensures
that Mirvac is well placed to protect the interests of its stakeholders.
In addition to the regular program of meetings, briefings and site tours,
the Board continued to strengthen and enhance its corporate governance
practices and oversight during FY22 in the following key areas:
Board Succession Planning
Ensuring that the Board maintains the right combination of skills and
experience is critical in driving the Group’s strategic objectives and to
maintaining appropriate oversight of the performance of the business.
Accordingly, a comprehensive succession planning program and
transitioning of Directors continued with the oversight of the Board and
the Nomination Committee during FY22, including:
> the appointment of Damien Frawley as a Non-Executive Director in
December 2021, complementing the Board’s skills and experience
in investment management, asset management, financial services
and strategy; and
> continuation of proactive Board succession planning, in particular
following the announcement at the 2021 AGM by the Chair of the
Board, Dr John Mulcahy that he, and the Chair of the Audit, Risk &
Compliance Committee (ARCC), James M. Millar AM, both being the
longest serving Directors anticipate retiring from the Board before
their next re-election in 2024.
Director Education
As part of ensuring that the Board maintains the right combination of
skills and experience, each year the Nomination Committee approves
and oversees the continuing professional development programs for
Directors. The FY22 education program was developed with reference to
the results of the 2021 Board self-evaluation, and focused on health and
safety, innovation, digital technology, and corporate culture.
A key component of the Board’s FY22 education program was a four-day
immersive, future-focused agenda aimed at educating and challenging
the Board’s thinking about advancements and technologies that might
influence how people will live, work and play, and ultimately, Mirvac’s
strategic ambitions. This program was delivered via a mix of interstate site
visits, externally facilitated presentations and interactive workshops, and
was attended by Directors and Executive Leadership Team members.
Health and Safety
Established in 2021, the Board’s Health, Safety, Environment &
Sustainability (HSE&S) Committee has continued to evolve its oversight
of the health and safety of Mirvac’s people and the key strategies,
systems, policies, and practices that are in place in this critically
important area. Quarterly site visits and deep dive presentations are
an integral part of this Committee’s role, which functions to drive
health, safety and sustainability outcomes and performance, as
well as to demonstrate the practical application of Mirvac’s HSE&S
policy and culture.
Annual Report 2022 – 49
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS NON-AUDIT SERVICES
From time to time, Mirvac may engage its external auditor,
PricewaterhouseCoopers, to perform services additional to their
statutory audit duties. Details of the amounts paid or payable to
PricewaterhouseCoopers for audit and non-audit services provided
during the year ended 30 June 2022 are set out in note H4 to the
consolidated financial statements.
In accordance with the advice received from the ARCC, the Board 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 and did not compromise the auditor independence
requirements of the Corporations Act 2001 for the following reasons:
> all non-audit services were reviewed by the ARCC to ensure they
did not affect the impartiality and objectivity of the auditor; and
> none of the services undermined the general principles relating to
auditor independence as set out in Accounting Professional & Ethical
Standards 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.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor’s independence declaration as required under
section 307C of the Corporations Act 2001 is set out on page 72 and
forms part of the Directors’ report.
ROUNDING OF AMOUNTS
The amounts in the consolidated financial statements have been
rounded off to the nearest million (m) dollars in accordance with ASIC
Corporations Instrument 2016/191.
This statement is made in accordance with a resolution of the Directors.
Susan Lloyd-Hurwitz Director
Sydney
11 August 2022
DIRECTORS’ REPORT
REVIEW OF OPERATIONS
A review of the operations of the Group during the financial year and
the results of those operations are detailed in the FY22 Financial and
Operational Results section on pages 36 to 40 of the report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Details of the state of affairs of the Group are disclosed on pages
36 to 40. Other than those matters disclosed, there were no significant
changes to the state of affairs during the financial year under review that
are not otherwise disclosed in this annual report.
EVENTS OCCURRING AFTER THE END OF THE YEAR
On 18 July 2022, the unitholders of AMP Capital Wholesale Office Fund
(AWOF) approved a resolution for Mirvac Funds Management Australia
Limited to become the trustee of the fund. Effective around mid-October
2022, Mirvac will become the investment manager of AWOF and
property manager in respect of AWOF’s wholly owned assets. As a result
of this appointment, Mirvac’s third-party capital under management
will grow by $7.7bn. In addition, Mirvac will offer a total of $500m of
liquidity with an expectation that this will be utilised within six months
of the transition date.
No other events have occurred since the end of the year which have
significantly affected or may significantly affect Mirvac’s operations,
the results of those operations, or Mirvac’s state of affairs in future years.
DISTRIBUTIONS
Distributions paid or payable by the Group for the year ended 30 June
2022 were 10.2 cents per stapled security (2021: 9.9 cents per stapled
security). Refer to note E1 in the consolidated financial statements.
ENVIRONMENTAL REGULATIONS
Mirvac and its business operations are subject to compliance with
both commonwealth and state environment protection legislation.
The Board is satisfied that adequate policies and procedures are
in place to ensure Mirvac’s compliance with the applicable legislation.
In addition, Mirvac is also subject to the reporting requirements
of the National Greenhouse and Energy Reporting Act 2007 and
Building Energy Efficiency Disclosure Act 2010. Mirvac is not aware
of any incidents that have resulted in material non-compliance
with environmental regulations during the financial year.
TAX GOVERNANCE STATEMENT
Mirvac has adopted the Board of Taxation’s Tax Transparency Code
(TTC). As part of the TTC, Mirvac has published a Tax governance
Statement (TGS) which details Mirvac’s corporate structure and
tax corporate governance systems. Mirvac’s TGS for the year
ended 30 June 2022 can be found on Mirvac’s website at:
www.mirvac.com/about/corporate-governance.
FRAUD, BRIBERY AND CORRUPTION
Mirvac has zero tolerance regarding fraud, bribery and corruption and
requires all employees and service providers to adhere to the highest
standards of honesty and integrity in the conduct of all its activities.
Mirvac will uphold all laws relevant to countering bribery, fraud and
corruption in the jurisdictions in which it operates.
Any allegation of a person from within or associated with Mirvac
(notwithstanding the capacity in which they are acting), acting in
a manner inconsistent with this statement will be treated seriously,
regardless of the seniority of those involved. Disciplinary action
including dismissal may result. Where it is believed that a criminal
offence may have been committed, the police and other relevant
bodies may be informed.
50 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS GOVERNANCE
REMUNERATION REPORT
51
52
53
55
58
58
62
64
65
66
66
67
68
69
69
70
71
1 Message from the Human Resources Committee
2 Who is covered by this report
3 Key questions
4 Our remuneration strategy and the link to business strategy and performance
5 Executive KMP remuneration at Mirvac
6 How remuneration is structured
7 Business and executive remuneration outcomes
8 Summary of FY22 remuneration
9 Actual remuneration received in FY22
10 Total remuneration in FY22
11 LTP grants in FY22
12 Equity instrument disclosures relating to Executive KMP
13 Other transactions with KMP
14 Service agreements for Executive KMP
15 Governance and how remuneration decisions are made
16 Non-Executive Directors’ remuneration
17 Additional required disclosures
1 MESSAGE FROM THE HUMAN RESOURCES COMMITTEE (HRC)
The HRC is pleased to present securityholders with the FY22 Remuneration Report. This report sets out Mirvac’s approach to remuneration for
its executives and in particular the link between Mirvac’s strategy and its remuneration framework, the link between performance and reward, and
remuneration outcomes for senior executives. The HRC has oversight of Mirvac’s People Strategy, Culture and key Human Resources practices.
Mirvac’s remuneration framework is an integral component of our People Strategy.
PEOPLE AND CULTURE KEY HIGHLIGHTS
The HRC has for many years recognised Mirvac’s culture as a key source of competitive advantage, a differentiator for attracting and retaining the best
talent in our sector, and a driver of employee, team and organisational performance. Throughout the COVID-19 pandemic, our purpose, culture, and
values have guided our decision making and actions, including our values to ‘do the right thing’ and to ‘put people first’.
Key highlights for the year include:
> Mirvac ranked number one globally in Equileap’s Global Report on Gender Equality;
> awarded AFR Boss Best Place to Work for the property sector;
> supported our people through the COVID-19 pandemic, with increased communications and initiatives to support physical and mental wellbeing.
This included providing employees with ‘Thank You Days’, which provided a week of paid leave in recognition of our people’s continued hard work
and perseverance during a challenging time;
> maintained employee engagement in the top-quartile of companies globally;
> maintained a like-for-like zero gender pay gap for the sixth year in a row;
> maintained female representation above targets, including 44 per cent of senior leadership roles held by women;
> retained 96 per cent of key talent, notwithstanding a highly competitive labour market, and secured preferred candidates for a number of senior
General Manager appointments, reflecting the strength of our employer brand in securing top talent;
> supported employees facing cost of living pressures, providing employees earning <$100k with an average remuneration review increase of
5.3 per cent, effective 1 July 2022; and
> refreshed our People Strategy, including updating our talent approach and approving a new Belonging Strategy that aims to maintain our leadership
in gender diversity while expanding our focus and initiatives to ensure Mirvac remains a place where everyone belongs.
More on our People Strategy and how this supports Mirvac’s performance can be found in the People section, page 24.
Supporting our people through ongoing uncertainty
Our people have shown remarkable strength, resilience and dedication throughout FY22. We are committed to supporting our people, focusing on their
wellbeing, resilience and engagement, and continuing – even in lock-down or in a hybrid working environment – to be the #1 employer in our sector
and a place where people want to join, grow and belong.
Annual Report 2022 – 51
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS REMUNERATION REPORT
1 MESSAGE FROM THE HUMAN RESOURCES COMMITTEE (HRC) CONTINUED
REMUNERATION OUTCOMES FOR FY22
The remuneration outcomes for FY22 reflect the intended operation of the remuneration framework. At the heart of Mirvac’s remuneration framework
is our commitment to deliver competitive remuneration for excellent performance in order to attract the best, and motivate and retain talented
individuals, while aligning the interests of executives and securityholders. It does this through:
> incentives based on the achievement of financial measures and strategic objectives that reflect key goals critical to sustained organisational success;
> consideration of business and operational risk through the design of performance objectives, clawbacks and the exercise of Board discretion;
> incentives, and a minimum securityholding requirement, that align the interests of executives to those of securityholders;
> vesting periods for deferred incentives that reflect the time horizons over which Mirvac invests, while providing appropriate stretch and
incentive for executives;
> best-practice governance and ensuring remuneration outcomes are reasonable taking into account community and stakeholder expectations; and
> target remuneration levels and remuneration outcomes that appropriately reflect the challenge and complexity of being an active developer and of
being an integrated and diverse property company.
As in previous years, we have maintained a financial gateway of 90 per cent of budget for the Group STI Pool to open, which the HRC believes is important
in aligning financial performance with individual STI outcomes. Pleasingly, the gateway opened for FY22, reflecting the performance of the Group.
STI outcomes (detailed pages 55 to 57) reflect financial performance and performance against the non-financial strategic priorities on the Group Scorecard.
The Long-term Performance Plan (LTP) vested at 40 per cent for Executive KMP:
> The relative Total Shareholder Return (TSR) metric did not vest as a result of Mirvac’s securityprice performance. While the Board are disappointed
with this relative result, the outcome for executives is aligned to securityholders and demonstrates the alignment between performance and reward
that our remuneration framework is designed to deliver; and
> The ROIC component vested at 66.67 per cent based on the communicated/approved methodology. The Board determined this vesting outcome
for the ROIC component, taking into account the ROIC performance, which exceeded WACC over the three-year performance period (the primary
driver of the vesting calculation) and taking into account the outcomes delivered by management over the performance period, including steering
Mirvac through the pandemic; protecting the balance sheet; de-risking future earnings; rapid growth of the Build to Rent business and pipeline;
and delivering on critical non-financial outcomes over the three-year period, including Mirvac becoming net positive carbon for its scope 1 and 2
emissions nine years early and Mirvac being ranked the Best Place to Work in the property sector.
There were no significant changes made to our remuneration approach in FY22. As always, Mirvac conducts a detailed review of our executive
remuneration framework each year. While the Board prefers stability in the framework and avoids one-off retention awards to supplement the approach,
we believe a full review ensures the approach remains fit for purpose. Notwithstanding the more challenging trading conditions for FY23, the Board and
Management believe that the current STI and LTP design remains fit for purpose, including a financial gateway for the STI plan, use of TSR and ROIC as
the LTP measures, and maintaining ROIC exceeding WACC as a key component of our LTP design.
2 WHO IS COVERED BY THIS REPORT
This report covers the key management personnel (KMP) of Mirvac, who are the people responsible for determining and executing Mirvac’s strategy.
This includes both the Executive KMP (the CEO/MD, CFO and heads of business units who are part of the ELT) as well as Non-Executive Directors.
For FY22, the KMP were:
Non-Executive Directors
John Mulcahy
Christine Bartlett
Damien Frawley
Jane Hewitt
James M. Millar AM
Samantha Mostyn AO
Peter Nash
Robert Sindel
Executive KMP
Susan Lloyd-Hurwitz
Brett Draffen
Campbell Hanan
Stuart Penklis
Courtenay Smith
Chair
Non-Executive Director
Non-Executive Director since 1 December 2021
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
CEO/MD
Chief Investment Officer
Head of Integrated Investment Portfolio
Head of Residential
CFO
The information provided in this remuneration report has been audited as required by section 308 (3C) of the Corporations Act 2001.
52 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS REMUNERATION REPORT
GOVERNANCE
3 KEY QUESTIONS
Key questions
REMUNERATION IN FY22
How is Mirvac’s performance
reflected in this year’s
remuneration outcomes?
What changes have been
made to the remuneration
structure in FY22?
Are any changes planned
for FY23?
Mirvac approach
Further information
Mirvac’s reward framework aims to align the interests of our employees with those of our
securityholders and stakeholders. The remuneration outcomes reflect a pay-for-performance
approach that considers a number of factors, including Group, team and individual performance, as
well as behaviours that help build and protect Mirvac’s culture and reputation.
Short-term: Mirvac has delivered strong performance with both operating profit and ROIC
outperforming targets, and the strategic objectives were either met or exceeded, see pages 55 to 57.
A Group operating profit gateway is applied, such that no STI pool is funded unless operating profit
is at least 90 per cent of plan. Subject to the gateway being met, the STI pool is funded up to a
maximum of 6 per cent of operating profit.
The FY22 operating profit was above both the gateway and plan, and the HRC approved a Group
STI score of 113 per cent, down from 123 per cent in FY22.
Long-term: The three-year performance period for the FY20 Long-term Performance Plan (LTP)
completed on 30 June 2022. The FY20 LTP was divided into two components, with 40 per cent
tested against relative TSR and 60 per cent tested against ROIC, both over a three-year period.
Mirvac’s absolute TSR performance was below the median of the comparator group and as a
result this portion of the award did not vest. The Board determined that the ROIC component
of the award has vested at 66.67 per cent taking into account the ROIC performance exceeding
WACC over the three-year performance period (the primary driver of the vesting calculation) and
the outcomes delivered by management over the performance period, including: steering Mirvac
through the pandemic; protecting the balance sheet; de-risking future earnings; rapid growth of
the Build to Rent business and pipeline; and delivering on critical non-financial outcomes over the
three-year period including Mirvac becoming net positive carbon nine years early and Mirvac being
ranked the ‘Best Place to Work’ in our sector.
Total vesting of the FY20 LTP for Executive KMP is 40 per cent.
Fixed remuneration: There were no increases to the fixed remuneration or total target
remuneration for any Executive KMP during FY22.
Short-term incentives: There were no changes to STI methodology. Consistent with prior years,
the STI pool has a gateway requirement of Group operating profit being at least 90 per cent of
target, and the pool funding is moderated by the Board based on the achievement of a scorecard
of strategic objectives.
Long-term incentives: Following the suspension of the ROIC hurdle for the FY21 LTP award, the
Board determined the performance measures for the FY22 LTP award to KMP would revert to
relative TSR and ROIC: 40 per cent weighting for relative TSR; and 60 per cent weighting for ROIC.
The performance period of the FY22 LTP began on 1 July 2021 and will end on 30 June 2024.
Minimum securityholding requirement: The minimum securityholding requirement for Non-Executive
Directors has increased from 50,000 securities to 100 per cent of base fees. Non-Executive Directors
will have three years from their date of appointment to the Board, or for current Non-Executive
Directors three years from September 2021, to acquire securities up to the minimum.
Fixed remuneration: Stuart Penklis, Head of Residential, has received a fixed pay increase from
$800,000 to $950,000 per annum, effective 1 July 2022. While Mirvac generally does not provide
year-on-year increases to senior executives’ fixed remuneration, the adjustment was made after
benchmarking this role relative to both external market and internal peers, and the broader
scope of his role.
Variable remuneration: There are no significant changes planned for FY23. However, in line
with previous years, the Board will review and adjust (if necessary) the threshold and stretch
performance levels for the performance objectives applicable to the STI and LTP awards.
Section 4
Page 55
Section 6
Page 58
Section 6
Page 58
Annual Report 2022 – 53
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS REMUNERATION REPORT
3 KEY QUESTIONS CONTINUED
Key questions
Mirvac approach
REMUNERATION FRAMEWORK
Further information
Where does Mirvac’s remuneration
sit relative to the market?
Fixed and variable pay are both aimed at the market median, with remuneration opportunities for
outstanding performance extending up to the 75th percentile of the market.
What proportion of
remuneration is ‘at risk’?
The majority of Executive KMP’s remuneration is based on performance and is therefore at risk.
The remuneration package for the CEO/MD is 70 per cent performance-related pay, and for other
Executives the remuneration package is, on average, 58 per cent performance-related pay.
Are there any clawback
provisions for incentives?
Yes, the Board has the ability to claw back incentives in the event of a material financial
misstatement, any misconduct that is, or may be, harmful to the Group, and/or gross negligence.
What is Mirvac’s minimum
securityholding requirement?
The minimum securityholding requirement is:
> 150 per cent of fixed remuneration for the CEO/MD;
> 100 per cent of fixed remuneration for other Executives; and
> 100 per cent of base fees for Non-Executive Directors.
Executives have five years from the commencement of their role on the ELT, or for current
Executives five years from 1 July 2018, to establish their Mirvac security ownership to the minimum.
Non-Executive Directors have three years from their date of appointment to the Board to acquire
securities up to the minimum.
SHORT-TERM INCENTIVES
Are any STI payments
deferred?
Yes, 25 per cent of STI for Executives are awarded as rights over Mirvac securities, half of which
vest in one year and half in two years. If the Executive resigns before the vesting period ends, the
rights do not vest and are forfeited.
Are STI payments capped?
Yes, an Executive’s STI is capped at double their STI target, achievable only in circumstances
of both exceptional individual and Group performance.
LONG-TERM INCENTIVES
What are the performance
measures for the LTP plan?
For the FY20 and FY22 LTP awards, performance is measured over a three-year period with
40 per cent of the award subject to relative TSR, and 60 per cent of the award subject to ROIC,
with the Board having overarching discretion to ensure vesting outcomes are appropriately aligned
to performance.
For the FY21 LTP award, performance is measured over the period 1 October 2020 to 30 June 2023
with 100 per cent of the award subject to relative TSR, with the Board having overarching
discretion to ensure vesting outcomes are appropriately aligned to performance.
Does the LTP have re-testing?
No, there is no re-testing.
Are dividends/distributions
paid on unvested LTP awards?
No, dividends/distributions are not paid on unvested LTP awards. This ensures that Executives
are only rewarded when performance hurdles have been achieved at the end of the
performance period.
Is the size of LTP grants
increased in light of
performance conditions?
No, there is no adjustment to reflect the performance conditions. The grant price for allocation
purposes is not reduced based on performance conditions. Mirvac uses a ‘face value methodology’
for allocating performance rights to each Executive KMP, being the average security price for the
month leading up to grant, discounted for the assumed value of dividends and distributions not
paid during the three-year performance period.
Section 6
Page 58
Section 5
Page 58
Section 6
Page 58
Section 12
Page 67
Section 16
Page 71
Section 5
Page 58
Section 6
Page 60
Section 6
Page 59
Section 6
Page 60
Section 6
Page 60
Section 6
Page 60
Section 6
Page 60
Can LTP participants hedge
their unvested LTP?
Consistent with the Corporations Act 2001, participants are prohibited from hedging their
unvested performance rights.
Section 6
Page 61
For deferred STI awards, securities are purchased on-market. For LTP awards, the Board has
discretion to issue new securities or buy existing securities on-market.
Section 6
Pages 60 and 61
No, Mirvac uses performance rights for the deferred STI and LTP awards.
EXECUTIVE KMP SERVICE AGREEMENTS
What is the maximum an executive
can receive on termination?
Executive KMP termination entitlements are limited to 12 months’ fixed remuneration.
54 – Celebrating 50 years
Section 6
Pages 60 and 61
Section 14
Page 69
Does Mirvac buy securities
or issue new securities for
security-based awards?
Does Mirvac issue
share options?
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
REMUNERATION REPORT
GOVERNANCE
4 OUR REMUNERATION STRATEGY AND THE LINK TO BUSINESS STRATEGY AND PERFORMANCE
Mirvac’s remuneration strategy is designed to support and reinforce its business strategy. The at-risk components of remuneration are tied to
measures that reflect the successful execution of our business strategy in both the short and long term.
Our strategic drivers are reflected in STI performance measures and LTP performance measures, so Mirvac’s actual performance directly affects
what executives are paid.
Our pillars for
creating value …
… are reflected in incentive
performance measures
Commentary on actual performance
Achievement
PERFORMANCE
FINANCIAL
LTP PERFORMANCE MEASURES
RELATIVE TOTAL SHAREHOLDER
RETURN (TSR)
Measures the performance of Mirvac
securities over time, relative to other
entities in a comparison group.
RETURN ON INVESTED CAPITAL (ROIC)
Reflects how efficiently Mirvac is
using its assets to generate earnings.
It is calculated by dividing Total
Return by average Invested Capital
over the three-year period.
STI PERFORMANCE MEASURES
OPERATING PROFIT
Reflects how much revenue the
business has generated for the year,
less operating costs and represents a
key driver of securityholder value.
RETURN ON INVESTED CAPITAL (ROIC)
Reflects how efficiently Mirvac is using
its capital to generate earnings. It is
calculated by dividing Total Return
by average Invested Capital.
OTHER PERFORMANCE MEASURES
Mirvac’s absolute TSR performance was below the median relative
to its comparator group.
Below target
Mirvac’s average annual ROIC
was 6.4 per cent over the three-year period.
Within
target range
Within
target range
Within
target range
Within
target range
In FY22, operating profit was $596m up from $550m in FY21.
In FY22, ROIC was 6.9 per cent up from 6.8 per cent in FY21.
EPS
In FY22 EPS (cpss) was 15.1.
DPS
In FY22 DPS (cpss) was 10.2.
Capital Management
> As at 30 June 2022, weighted average debt maturity of 5.6 years,
with only $220m of debt maturing in FY23 and $250m in FY24;
> A- and A3 credit ratings with stable outlooks from Fitch Ratings
and Moody’s Investor Services maintained;
> $1.4bn of cash and undrawn debt facilities at 30 June 2022; and
> gearing at the lower end of our preferred range of 20-30 per cent.
More recently, in July 2022, we were delighted to secure management
rights to the AMP Capital Wholesale Office Fund (AWOF), featuring
a high-quality office portfolio valued at over $7.7bn. As a result of the
transaction, our third-party capital under management will grow to
approximately $17.9bn, which is an approximate 75 per cent increase
on our funds under management as at 30 June 2022.
Annual Report 2022 – 55
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS REMUNERATION REPORT
4 OUR REMUNERATION STRATEGY AND THE LINK TO BUSINESS STRATEGY CONTINUED
Our pillars for
creating value …
… are reflected in incentive
performance measures
Commentary on actual performance
PLACE
ASSET CREATION
AND CURATION
STRATEGY EXECUTION
Ensures management delivers on
core initiatives relating to Group
strategy and operating model.
Measures include performance
against Group-or divisional-specific
initiatives and/or integrated projects.
Commercial & Mixed Use
> Completed two major projects – the refurbishment of the Locomotive
Workshop, South Eveleigh, Sydney and Heritage Lane, Brisbane; and
> Advanced key office and mixed use projects at 55 Pitt Street
in Sydney and at Harbourside, Sydney.
Integrated Investment Portfolio
> Approximately $13.8bn of assets on our balance sheet across the IIP portfolio;
> $10.2bn of external assets and funds under management; and
> 5.6 years WALE, 97.3 per cent occupancy and 5.0 WACR.
Residential
> Settlements of 2,523 lots;
> Positive sales momentum was demonstrated by 2,898 exchanges; and
> Released 2,748 residential lots, with 70 per cent of all released lots
pre-sold. As a result, our pre-sales increased to $1.6bn, providing good
visibility of future earnings.
Achievement
Within
target range
PEOPLE
PEOPLE, CULTURE
AND SAFETY
PEOPLE & LEADERSHIP
Have an engaged and motivated
workforce with superior skills and
capabilities.
There is a strong correlation
between high levels of employee
engagement and a positive culture
with securityholder returns.
Measures include engagement, key
talent retention, gender diversity and
flexibility targets.
INNOVATION LEADERSHIP
A culture of innovation will
drive and safeguard long-term
securityholder returns.
Measures include performance
against agreed innovation missions.
HSE
Mirvac is committed to providing a
safe workplace for its employees,
suppliers and communities.
Measures include Lost Time
Injury Frequency Rate, Critical
Injury Frequency Rate, and timely
incident reporting.
People & Leadership targets set were either met or exceeded:
> ranked number one employer in the world for gender equality by Equileap;
> 2022 AFR BOSS Best Places to Work for the Property, Construction and
Above target
Transport sector;
> maintained employee engagement in the top quartile of companies globally;
> strong scores on leadership and culture in employee surveys, including
93 per cent favourable score on the statement ‘I am proud to work at
Mirvac’ and 92 per cent of employees happy to recommend Mirvac as
a great place to work;
> achieved 44 per cent women in senior management;
> maintained a zero like-for-like gender pay gap for the sixth year; and
> retention of 96 per cent of employees identified as key talent.
> Young Hearts by Mirvac is an initiative aimed at improving the lives of
people with a disability by providing independent living options that
meet their life goals. While still in a pilot phase, we seek to leverage
our integrated model to deliver innovative and leading-edge specialist
disability accommodation, providing a more diversified product offering
within our existing communities; and
> Introduced a Board of Innovators: a diverse group of innovation
ambassadors from across the business who are responsible for
analysing key trends and inflection points that could impact our
business, and identify pathways to seize significant opportunities.
Within
target range
> Performance against key metrics:
> CIFR of 0.74 against a target of less than 1.5;
> LTIFR of 1.18 against a target of less than 2;
Above target
> In our most recent engagement survey, 96 per cent of employees said
they believe Mirvac is committed to the safety of employees, and 88 per
cent agreed that their manager genuinely cares about their wellbeing;
> We launched our new ‘Work Well, Stay Well’ strategy, which includes:
> Mental Health First Aid Training with over 70 certified trainers across
the business;
> the overhaul of our Employee Assistance Program, which included
partnering with a new provider, Sonder, provides a range of wellbeing
resources and support from a network of trained safety, health and
wellbeing specialists 24 hours a day, 365 days a year; and
> Ongoing COVID-19 response management to safeguard the safety
of our people and our stakeholders, and the continuity of our
business operations.
56 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS GOVERNANCE
REMUNERATION REPORT
4 OUR REMUNERATION STRATEGY AND THE LINK TO BUSINESS STRATEGY CONTINUED
Our pillars for
creating value …
… are reflected in incentive
performance measures
Commentary on actual performance
PARTNERS
CUSTOMERS AND
STAKEHOLDERS
PLANET
SUSTAINABILITY
CUSTOMER & INVESTOR
SATISFACTION
Provide customers and investors
with an experience that delivers
excellence, consistently exceeds
expectations and engenders loyalty.
Represents how well Mirvac is
meeting the expectations of key
external stakeholders.
Measures include retail customer,
office tenant and residential
customer satisfaction surveys, as
well as qualitative feedback from key
institutional investors and third-party
capital investors.
SUSTAINABILITY
Mirvac’s sustainability strategy,
This Changes Everything, sets
out the way we approach our
environmental, social and governance
(ESG) risks and opportunities so that
we can continue to deliver positive
outcomes for our people, the planet,
our partners and customers, and the
communities in which we operate. We
focus on six material issues:
> Climate change, target: net positive
carbon by 2030;
> Natural resources, targets: net
positive water and zero waste to
landfill by 2030;
> Our communities, target: net
positive legacy;
> Social inclusion, target: $100m
investment in social sector by 2030;
> Our people, target: highly engaged,
capable, and diverse workforce; and
> Trusted partner, target: most
trusted owner and developer.
Mirvac uses Net Promoter Score (NPS) to measure customer experience
at key moments of the customer journey and periodically for ongoing
customer relationships. In the first half of FY22, we saw NPS slightly
decline in each asset class as a result of the impacts of COVID-19, most
notably in Build to Rent. These improved, however, as restrictions were
lifted and the experiences we were able to deliver to our customers
resumed. Overall, NPS across the business in FY22 was:
> +56% Retail consumer;
> +40% Office; and
> +24% Build to Rent.
Within our Residential business, 30 per cent of apartment purchasers
in FY22 had bought with Mirvac before, a testament to the care and
quality we provide.
Read more about Customers and Stakeholders on pages 28 to 31.
Achieved a sustainability score of 96 per cent against a hurdle
of 80 per cent.
Highlights include:
> Carbon emissions: net positive in scope 1 and 2 emissions,
nine years ahead of our 2030 target;
> Water: released Planet Positive – Water, our plan to be net positive
in water well ahead of our 2030 target;
> Waste: on track to halving development waste and buying 25 per cent
recycled content in major materials;
> Social procurement: $14m spent with Indigenous businesses, social
enterprises, B-Corps, and charities, bringing our total since FY18
to $42m. This means we have met our $30m by 2025 goal,
three years early;
> Community investment: $9.6m in independently verified investment
delivered, which includes initiatives such as social infrastructure and
events and activities that bring people together – not just within
our assets but within our broader community;
> Released our second Modern Slavery Statement; and
> Embedded our second Reconciliation Action Plan across Mirvac.
Read more about Sustainability at Mirvac on pages 32 to 35.
Achievement
Within
target range
Above target
HOW PERFORMANCE DIRECTLY AFFECTS
WHAT EXECUTIVES ARE PAID
Incentive outcomes
LTP OUTCOMES
LTP vesting outcome for Executive KMP in FY22 = 40 per cent
STI OUTCOMES
CEO/MD STI outcome in FY22 = 130 per cent of target
Average STI in FY22 for other eligible Executives = 130 per cent of target
Annual Report 2022 – 57
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS REMUNERATION REPORT
5 EXECUTIVE KMP REMUNERATION AT MIRVAC
Mirvac’s executive remuneration approach is strongly performance focused. A significant proportion of executive remuneration is based on sustained
performance, aligned with the business strategy.
Executive remuneration at Mirvac is:
> performance based:
> the remuneration package for the CEO/MD is 70 per cent performance related pay;
> the remuneration package for other Executive KMP is, on average, 58 per cent performance related pay is therefore at risk;
> equity focused:
> 52 per cent of the CEO/MD’s total remuneration is paid in equity;
> about one-third of other Executive KMP members’ total remuneration is paid in equity;
> encouraging an ownership mindset through equity-based incentives (above) and minimum securityholding requirements:
> the CEO/MD is required to hold 150 per cent of fixed remuneration as Mirvac securities;
> other Executive KMP are required to hold 100 per cent of their fixed remuneration as Mirvac securities;
> multi-year focused:
> 50 per cent of STI deferral is subject to a one-year holding lock and the remaining 50 per cent to a two-year holding lock; and
> LTP performance is measured over a three-year period.
REMUNERATION MIX
The graphs below set out the remuneration structure and mix for the CEO/MD and other Executive KMP members at Mirvac for FY22:
6 HOW REMUNERATION IS STRUCTURED
CEO/MD
PERFORMANCE DEPENDENT
Fixed remuneration 30%
Target STI 24%
Maximum LTP 2 46%
Cash 18%
Deferred 1 6%
Maximum LTP 46%
Other Executive KMP
PERFORMANCE DEPENDENT
Fixed remuneration 43%
Target STI 31%
Maximum LTP 2 26%
1. Deferred STI: 50% deferred for 12 months and 50% deferred for 24 months. Subject to clawback.
2. LTP granted as performance rights with performance measured over a three-year period. Subject to clawback.
Cash 23%
Deferred 1 8%
Maximum LTP 26%
Mirvac’s executive remuneration framework adopts 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 among employees.
FIXED REMUNERATION
Fixed remuneration acts as a base-level reward for a competent level of performance. It includes cash salary, compulsory superannuation and any
salary-sacrificed items (including fringe benefits tax).
The Board engages its independent remuneration advisor, as needed, to provide external remuneration benchmarking data as input into setting
remuneration for Executive KMP, ensuring that remuneration remains competitive. 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:
For business roles
> primary comparison group: the A-REIT, plus Lendlease; and
> secondary comparison group: general industry with a similar market capitalisation (50 per cent to 200 per cent of Mirvac’s 12-month average market
capitalisation).
For corporate roles
> primary comparison group: general industry with a similar market capitalisation (50 per cent to 200 per cent of Mirvac’s 12-month average market
capitalisation). The use of general industry reflects the greater transferability of skills for these roles; and
> secondary comparison group: specific peers in the A-REIT, plus Lendlease.
58 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS GOVERNANCE
REMUNERATION REPORT
6 HOW REMUNERATION IS STRUCTURED CONTINUED
STI: HOW DOES IT WORK?
Purpose
Value
Group STI
scorecard/
pool funding
Motivate and reward employees for contributing to the delivery of annual business performance.
Target
Maximum
CEO/MD
80 per cent of fixed remuneration
160 per cent of fixed remuneration
Other Executive KMP
70-80 per cent of fixed remuneration
140-160 per cent of fixed remuneration
Gateway: Group operating profit must be at least 90 per cent of plan before any STI payments are made.
STI pool funding: Subject to the gateway being met, the STI pool is funded up to a maximum of 6 per cent of operating profit.
Pool moderation: The Board has discretion to moderate the above calculated outcome based on achievement of strategic objectives
(see below). The objectives are quantitative in nature and are set in line with the short- and medium-term strategic objectives.
SCORECARD
At the start of the year, a scorecard of objectives is agreed with management. At the end of the year, the Board makes a rigorous
assessment, taking into account quantitative and qualitative factors. The Board has discretion to increase or decrease the pool
funding taking into account performance against these strategic objectives and the Group’s risk framework and tolerance.
Our performance against targets will be disclosed retrospectively as we have done this year on pages 55 and 57, noting that some
of the targets for individual strategic objectives are not disclosed as they are commercially sensitive.
Measure
Rationale for using
Financial performance
Capital efficiency
Strategy execution and
operational excellence
Reflects how much revenue the business
has generated for the year, less operating
costs, and represents a key driver of
securityholder value.
Reflects how efficiently Mirvac is using
its capital to generate earnings, and the
alignment of business strategy to create
sustainable value for securityholders.
Ensures management delivers on core
initiatives relating to Group strategy and
operating model.
Customer and investor
satisfaction
Represents how well Mirvac is meeting the
expectations of key external stakeholders.
People & Leadership
There is a strong correlation between high
levels of employee engagement and a positive
culture with securityholder returns.
Measurement
Operating profit
AFFO
ROIC
Progress on strategic capital allocation initiatives,
and third-party funds under management growth.
Measures include performance against Group
or divisional specific initiatives and/or integrated
projects.
Measures include retail customer, office tenant
and residential customer satisfaction surveys, as
well as qualitative feedback from key institutional
investors and third-party capital investors.
Measures include engagement, key talent
retention, gender diversity and flexibility targets.
Innovation leadership
A culture of innovation will drive and
safeguard long-term securityholder returns.
Measures include performance against agreed
innovation missions.
HSE&S leadership
Risk
Mirvac is committed to providing a safe
workplace for its employees, suppliers and
communities and to ensuring its activities do not
have an adverse impact on the environment.
Alignment of remuneration/reward and
prudent risk-taking. The scorecard includes
specific risk objectives and the HRC makes
an overall assessment of how each individual
ELT member has managed risk before
approving individual STI outcomes.
Measures include Lost Time Injury Frequency
Rate, Critical Incident Frequency Rate, timely
incident reporting and sustainability targets.
Measures include an assessment of risk culture
and compliance (including training and open audit
items), with a broad view of risk, including financial
and non-financial risks and reputation matters.
Individual
performance
objectives
Performance
assessment
Each Executive KMP agrees an individual scorecard of performance objectives at the start of the year against which their
performance will be assessed. Individual performance objectives are set based on the specific responsibilities for each role and
include specific risk objectives, and an assessment by the HRC at year-end on risk leadership and risk outcomes.
When determining executive remuneration outcomes, the Board use their judgement and oversight to consider a range
of quantitative and qualitative factors to ensure outcomes align to business performance, investor outcomes, and
stakeholder expectations.
Individual awards are proposed by the CEO/MD, endorsed by the HRC and approved by the Board. For the CEO/MD, the HRC
proposes the STI award for Board approval.
Annual Report 2022 – 59
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS REMUNERATION REPORT
6 HOW REMUNERATION IS STRUCTURED CONTINUED
STI: HOW DOES IT WORK?
Delivery/deferral
For Executive KMP:
> 75 per cent is paid as cash; and
> 25 per cent of any STI award is deferred into performance rights over Mirvac securities (granted on the same date as the cash
payment is made). The rights vest in two tranches: 50 per cent after one year and 50 per cent after two years. If the deferred
rights vest, entitlements are satisfied by the purchase of existing securities on-market. Executives are expected to retain the
resulting securities they receive until they satisfy the minimum securityholding guidelines.
Termination/
forfeiture
The deferred portion of a STI award is forfeited if 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, total and permanent disablement or death.
Clawback policy
The policy gives the Board the ability to claw back incentives in the event of a material financial misstatement, any misconduct
that is, or may be, harmful to the Group, and/or gross negligence.
Hedging
Consistent with the Corporations Act 2001, participants are prohibited from hedging their unvested performance rights.
LTP: HOW DOES IT WORK?
Purpose
Value
Instrument
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.
The maximum LTP opportunity during FY22 was equivalent to:
CEO/MD
Other Executive KMP
150 per cent of fixed remuneration
50-90 per cent of fixed remuneration
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/distributions are paid on unvested LTP awards. This ensures that Executives are only rewarded when performance
hurdles have been achieved at the end of the performance period.
Grant value/price Mirvac uses a ‘face value methodology’ for allocating performance rights to each Executive KMP, being the average security price
for the month leading up to grant, discounted for the assumed value of dividends and distributions not paid during the three-year
performance period.
The grant price for allocation purposes is not reduced based on performance conditions.
Performance
period
Performance
hurdle for
FY22 grant
Performance is measured over a three-year period. The FY22 grant has a performance period commencing 1 July 2021 and ending
30 June 2024.
The HRC reviews the performance conditions annually to determine the appropriate hurdles based on Mirvac’s strategy and
prevailing market practice. Two performance measures apply to the LTP grants made during FY22:
Relative TSR: (40 per cent of the LTP allocation)
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.
Mirvac’s TSR performance is measured relative to a comparison group consisting of Mirvac’s primary market competitors (the
A-REIT) as this is aligned to the peer group in which we compete for capital.
ROIC: (60 per cent of the LTP allocation)
ROIC is used because it is aligned to Mirvac’s strategic drivers, in particular financial performance and capital efficiency. ROIC is
calculated as Total Return divided by average Invested Capital.
The vesting schedule set out below reflects the Board’s view that vesting of the ROIC component ought to commence on the
achievement of Mirvac’s WACC, the point at which management create value for securityholders, with full vesting on achieving a
premium above WACC. The premium to WACC for the ROIC component of the FY22 award was one per cent, which at the time
represented both significant stretch and value creation for securityholders. After calculating the outcome based on the vesting
schedule detailed below, the Board shall have +/-20 per cent discretion to adjust the vesting outcomes for the ROIC performance
hurdle to ensure vesting outcomes reflect management’s performance over the performance period.
60 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS GOVERNANCE
REMUNERATION REPORT
6 HOW REMUNERATION IS STRUCTURED CONTINUED
LTP: HOW DOES IT WORK?
Vesting schedule
for FY22 grant
Relative TSR
ROIC
Relative TSR (percentile)
Percentage of ROIC-tested
rights to vest
Average annual ROIC (%)
Percentage of ROIC tested
rights to vest
< 50th
50th
> 50th to 75th
Nil
50%
Pro-rata between
50% and 100%
75th and above
100%
< WACC
Nil
Between WACC and
WACC + 0.2%
Between WACC +
0.2% and WACC + 0.4%
Between WACC +
0.4% and WACC + 1.0%
Pro-rata between 0% and 50%
Pro-rata between 50% and 75%
Pro-rata between 75% and
100%
> WACC + 1.0%
100%
Vesting/delivery
Vesting of LTP grants is dependent on achieving relative TSR performance and ROIC targets over the period 1 July 2021 to
30 June 2024, with the Board having overarching discretion to ensure vesting outcomes are appropriately aligned to performance.
The performance rights will automatically exercise if and when the Board determines the performance conditions are achieved.
If the performance rights vest, entitlements are satisfied by either an allotment of new securities to participants or by the
purchase of existing securities on-market. Any performance rights that do not vest at the end of the performance period will lapse.
There is no re-testing.
Executive KMP members will be expected to retain the resulting securities until they satisfy the minimum securityholding guidelines.
Termination/
forfeiture
Resignation or dismissal: all unvested performance rights are forfeited.
Retirement, redundancy, agreed transfer to an investment partner, total and permanent disablement or death: the HRC
determines the number of rights that will lapse or are retained, subject to both the original performance period and hurdles.
Change of control event: the Board, in its absolute discretion, determines the number of performance rights that vest, if any, taking
into account the performance from the date of grant to the event.
Clawback policy
The policy gives the Board the ability to claw back incentives in the event of a material financial misstatement, any misconduct
that is, or may be, harmful to the Group, and/or gross negligence.
Dilution
Dilution that may result from securities being issued under Mirvac’s LTP plan is capped at the limit set out in ASIC Class Order
14/1000, which provides that the number of unissued securities under those plans must not exceed 5 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.
REMUNERATION DELIVERY
The graphs below set out the remuneration structure so that a substantial portion of remuneration is delivered as equity through STI and LTP,
encouraging an ownership mindset and aligning the interests of the executives with those of our securityholders:
FIXED
Base salary, superannuation
& any salary-sacrificed items
STI
LTP
Based on individual and
business performance
(financial & strategic objectives)
Cash
12.5% deferred for 12 months
12.5% deferred for 24 months
Performance rights subject to three-year performance period & continued service
Year 0
Year 1
Year 2
Year 3
Annual Report 2022 – 61
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS REMUNERATION REPORT
7 BUSINESS AND EXECUTIVE REMUNERATION OUTCOMES
HOW THE GROUP’S PERFORMANCE HAS TRANSLATED INTO STI AWARDS
Mirvac’s financial performance directly affects the STI awards in two ways:
> Gateway: Group operating profit must be at least 90 per cent of plan
before any STI payments are made; and
> STI pool funding: Subject to the gateway being met, the STI pool is funded
up to a maximum of 6 per cent of operating profit.
The Board then has discretion to moderate the calculated outcome based on
achievement of strategic objectives.
Performance was strong across the Group in FY22, with operating profit
outperforming the target set by the Board. The Group’s STI scorecard of
113 per cent (of a potential 150 per cent) reflects the strong financial results.
This graph shows how the average STI outcome for all employees has been
closely tied to financial performance on operating profit and ROIC.
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.
The diagram below sets out Mirvac’s performance and the resulting STI outcomes:
Financial performance vs average STI outcome
160
Per cent of target
120
80
40
0
FY18
FY19
FY20
FY21
FY22
Operating profit
STI score
ROIC
Operating earnings per stapled security
18.0
15.0
12.0
9.0
6.0
3.0
0
GATEWAY ACHIEVED (AT LEAST 90% OF TARGET OPERATING PROFIT ACHIEVED)
OPERATING PROFIT +
STRATEGIC OBJECTIVES
STI pool funding: Subject
to the gateway being met,
the STI pool is funded up
to a maximum of 6 per cent
of operating profit.
Pool moderation: The HRC can moderate the
score, up or down, based on achievement of
strategic objectives to ensure STI awards are
consistent with Mirvac’s remuneration strategy, and
is appropriately aligned to business performance,
investor outcomes, and stakeholder expectations.
FY22 STI outcome: The HRC approved
a Group STI score of 113 per cent of
target (from a maximum potential pool
of 150 per cent of target). FY22 cash
STI pool – $35.8m (6 per cent of Mirvac’s
operating profit).
Fixed
remuneration
+
Individual
STI target
+
Group STI
score (0-150%)
+
Individual
STI score (0-150%)
=
Individual STI award
(capped at 200% of target)
Each Executive KMP is awarded an individual STI score between zero and 150 per cent of their target.
Scores are based on an assessment of their performance for the year against their individual objectives.
When determining executive remuneration outcomes, the Board use their judgement and oversight to consider a range of quantitative and qualitative
factors to ensure outcomes align to business performance, investor outcomes, and stakeholder expectations.
STEP 1
STEP 2
STEP 3
STEP 4
Calculated
STI pool outcomes
Assessment of Group
scorecard outcomes
Consider other factors
affecting performance that are
not reflected in the scorecard
Apply judgement ensuring
outcomes align to investor outcomes,
stakeholder expectations, Mirvac Values
62 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS REMUNERATION REPORT
GOVERNANCE
7 BUSINESS AND EXECUTIVE REMUNERATION OUTCOMES CONTINUED
HOW THE GROUP’S PERFORMANCE HAS TRANSLATED INTO LTP AWARDS
Mirvac’s financial and security price performance directly affects the vesting of the LTP awards. For the FY20 award:
> 40 per cent of the LTP is subject to a relative TSR performance measure; and
> 60 per cent is subject to a ROIC performance measure.
Vesting of LTP grants is dependent on achieving relative TSR performance and ROIC targets over a three-year period, with the Board having
over-arching discretion to ensure vesting outcomes are appropriately aligned to performance.
In the three years to 30 June 2022:
> Mirvac’s absolute TSR performance was below the median of the comparator group and as a result the relative TSR component did not vest;
> the Group’s three-year average ROIC performance was 6.4 per cent, exceeding WACC over the same period, with the Board determining that
66.67 per cent of the ROIC component vested; and
> as a result, total vesting of the FY20 LTP for Executive KMP is 40 per cent.
The diagram below sets out the Group’s performance and the resulting LTP outcomes for the Executive KMP:
FY20 LTP GRANTS TO ELIGIBLE PARTICIPANTS AND RELATIVE TSR AND ROIC PERFORMANCE HURDLES SET
30 June 2022: three-year performance period ends for the FY20 grants and performance is measured for relative TSR and ROIC
>
RELATIVE TSR
Mirvac’s security price & distributions over the past five years
$500m
$3.50
Mirvac’s Total Shareholder Return (1 July 2019 – 30 June 2022)
30%
400
300
200
100
0
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
0
25%
20%
15%
10%
5%
0
FY18
FY19
FY20
FY21
FY22
Jun 19
Jun 20
Jun 21
Distributions paid ($m)
Security price ($)
25th percentile
50th percentile
75th percentile
Jun 22
MGR
Mirvac’s absolute TSR performance was below the median relative to the comparator group.
None of the performance rights linked to the relative TSR measure vested.
+
ROIC
ROIC performance
Mirvac’s ROIC performance over the three years
9%
Performance over the three-year period:
> FY20 performance was significantly impacted by COVID-19
resulting in the threshold performance hurdle not being met;
> FY21 and FY22 performance exceeded the threshold;
> Mirvac’s average annual ROIC over the three-year performance period
was 6.4 per cent, resulting in the threshold target being exceeded; and
> the WACC methodology used for determining vesting has been
independently validated by an independent advisor.
Stretch
6%
Threshold
5.2%
3%
0
7.2%
6.9%
6.4%
66.67 per cent of the performance rights linked to the ROIC measure vested.
FY20
FY21
FY22
3-year average
40 PER CENT OF THE TOTAL FY20 LTP AWARD VESTED FOR EXECUTIVE KMP
=
Annual Report 2022 – 63
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
43.4
76.0
40.0
FY18
1,089
608
408
2.17
29.4
15.6
REMUNERATION REPORT
7 BUSINESS AND EXECUTIVE REMUNERATION OUTCOMES CONTINUED
EXECUTIVE KMP VESTING OUTCOMES FOR THE PAST THREE YEARS
A summary of vesting under Mirvac’s performance-based equity grants that have vested in the last three years is shown in the following table:
Grant year
FY18
FY19
FY20
Performance hurdle
Performance period
Performance period ended
Vested %
Relative TSR and ROIC
Relative TSR and ROIC
Relative TSR and ROIC
3 years
3 years
3 years
30 June 2020
30 June 2021
30 June 2022
PAST FINANCIAL PERFORMANCE
The table below provides summary information on the Group’s earnings and securityholders’ wealth for the five years to 30 June 2022:
Profit attributable to the stapled securityholders of Mirvac ($m)
Operating profit ($m) 1
Distributions paid ($m)
Security price at 30 June ($)
Statutory EPS – basic (cents)
Operating earnings per stapled security (EPS) – diluted (cents)
FY22
906
596
404
1.98
23.0
15.1
FY21
827
550
390
2.92
21.0
14.0
FY20
558
602
357
2.17
14.2
15.3
FY19
1,019
631
440
3.13
27.6
17.1
1. Consistent with the financial statements disclosures, the FY18 operating profit has been updated to $608m as a result of the 1 July 2018 operating profit definition change.
8 SUMMARY OF FY22 REMUNERATION
CEO/MD remuneration
The CEO/MD’s remuneration was not changed during FY22.
Remuneration for the CEO/MD in the table in section 9 decreased to $3.5m from $5.9m in FY21 due to:
> STI at 130 per cent of target for FY22 v 166 per cent of target for FY21;
> 40 per cent vesting of the FY20 LTP award v 76 per cent vesting of the FY19 LTP award; and
> the decrease in security price ($1.98 at 30 June 2022 v $2.92 at 30 June 2021).
The CEO/MD has not had an increase to her fixed remuneration since she commenced in 2012.
Fixed and total
target remuneration
STI
LTP
There were no increases to the fixed remuneration or total target remuneration for any Executive KMP during FY22.
Strong results across all operating metrics resulted in an above target STI pool of 113 per cent, down from 123 per cent
in FY22.
The STI pool in FY22 was driven by:
> operating profit of $596m outperforming the target set by the Board, up from $550m in FY22; and
> strong performance against the scorecard of the strategic objectives (see pages 55 to 57).
Vesting of LTP grants is dependent on achieving relative TSR performance and ROIC targets over a three-year period,
with the Board having over-arching discretion to ensure vesting outcomes are appropriately aligned to performance.
The three-year performance period for the FY20 LTP completed on 30 June 2022. Mirvac’s absolute TSR performance
was below the median of the comparator group and as a result none of the relative TSR component of the award vested.
The Board determined that the ROIC component of the award has vested at 66.67 per cent taking into account the ROIC
performance exceeding WACC over the three-year performance period (the primary driver of the vesting calculation) and
the outcomes delivered by management over the performance period, including: steering Mirvac through the pandemic;
protecting the balance sheet; de-risking future earnings; rapid growth of the Build to Rent business and pipeline; and
delivering on critical non-financial outcomes over the three-year period, including Mirvac becoming net positive carbon
nine years early and Mirvac being ranked the ‘Best Place to Work’ in our sector.
Total vesting of the FY20 LTP for Executive KMP is 40 per cent.
Non-Executive
Director fees
No changes.
64 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
REMUNERATION REPORT
GOVERNANCE
9 ACTUAL REMUNERATION RECEIVED IN FY22
The following table sets out the actual value of the remuneration received by Executive KMP members during the year.
The figures in this table are different from those shown in the accounting table in section 10, which includes an apportioned accounting value for
all unvested STI and LTP 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:
> cash STI: the cash portion of any STI payments to be made in September 2022 in recognition of performance during FY22;
> deferred STI vested: the value of the deferred STI from prior years that vested in FY22 (being the number of rights that vested multiplied by the
security price on the vesting date); and
> LTP vested: the value of performance rights having a performance period that ended 30 June 2022 (being the number of performance rights that
vested multiplied by the security price on 30 June 2022, being the last business day of the performance period).
ACTUAL REMUNERATION RECEIVED IN FY22
Executive KMP
Susan Lloyd-Hurwitz
Brett Draffen
Campbell Hanan 2
Stuart Penklis
Courtenay Smith 3
Fixed
remuneration 1
$
Cash
STI
$
Deferred
STI vested
$
LTP
vested
$
Other 1
$
Total
$
1,500,000
1,500,000
1,169,315
1,494,450
950,000
950,000
950,000
899,167
800,000
800,000
800,000
252,174
676,305
946,485
704,485
828,175
593,250
697,410
498,330
162,842
193,457
330,308
124,254
212,148
92,797
158,439
92,797
147,106
112,821
—
610,274
2,573,813
231,904
978,048
108,492
457,566
108,492
457,566
—
—
24,617
24,648
15,768
21,459
15,446
15,478
17,383
12,977
12,627
4,689
3,497,663
5,923,219
1,998,231
3,108,140
1,871,220
2,358,825
1,611,922
2,115,059
1,423,778
419,705
Year
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
Includes long service leave accrued during the year.
1.
2. Campbell Hanan received a fixed remuneration increase from $800,000 to $950,000 per annum effective 1 October 2020.
3. Courtenay Smith commenced employment with Mirvac as CFO on 8 March 2021.
EXECUTIVE KMP STI AWARDS IN FY22
The following table shows the actual STI outcomes (including any deferred component) for each of the Executive KMP for FY22:
STI target % of
fixed remuneration
STI max % of
fixed remuneration
Actual
STI % max
STI forfeited
% max
Actual STI
(total) $
Executive KMP
Susan Lloyd-Hurwitz
Brett Draffen
Campbell Hanan
Stuart Penklis
Courtenay Smith
80
80
70
70
70
160
160
140
140
140
65
59
71
71
59
35
41
29
29
41
1,559,087
901,740
939,313
791,000
664,440
Annual Report 2022 – 65
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
REMUNERATION REPORT
10 TOTAL REMUNERATION IN FY22
The following statutory table shows the total remuneration for the Executive KMP for FY21 and FY22. These disclosures are calculated in accordance
with the accounting standards and accordingly differ from the information presented in the actual remuneration received in FY22 table in section 9.
Short-term
benefits
Cash salary
and fees 1
$
Cash STI 2
$
Non-cash
benefits 3
$
Post-
employment
Super-
annuation
contributions
$
Security-based
payments
Value of
LTP rights 4
$
Value of
Deferred
STI rights 4
$
Other
long-term
benefits
Long
service
leave 5
$
Termination
benefits
$
Total
remuneration
$
%
o
f
t
o
t
a
l
r
e
m
u
n
e
r
a
t
i
o
n
P
e
r
f
o
r
m
a
n
c
e
r
e
a
t
e
d
l
r
e
m
u
n
e
r
a
t
i
o
n
1,476,432
1,478,306
1,169,315
1,494,450
917,410
919,284
926,432
877,473
766,696
778,306
765,109
242,224
676,305
946,485
704,485
828,175
593,250
697,410
498,330
162,842
—
—
9,494
15,154
—
—
14,453
—
11,323
—
23,568
21,694
23,568
21,694
23,568
21,694
23,568
21,694
23,568
9,950
1,533,475
1,625,342
718,938
617,630
309,000
303,942
272,617
288,949
142,074
18,216
431,313
188,498
314,172
120,174
239,017
100,055
201,278
89,117
209,719
72,176
24,617
24,648
15,296
15,327
15,446
15,478
12,666
12,977
12,627
4,689
— 4,658,720
4,832,938
—
—
—
—
—
2,675,183
2,655,748
2,217,948
2,146,817
— 1,884,528
1,888,453
—
— 1,662,750
510,097
—
67%
68%
64%
63%
56%
57%
57%
57%
51%
50%
Executive KMP
Susan
Lloyd-Hurwitz
Brett
Draffen
Campbell
Hanan
Stuart
Penklis
Courtenay
Smith 6
Year
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
1. Cash salary and fees includes accrued annual leave paid out as part of salary.
2. Cash STI relates to cash portion of STI awards accrued for the relevant year and payable in September following the end of the relevant financial year.
3. Non-cash benefits include salary-sacrificed benefits and related fringe benefits tax where applicable.
4. Valuation of rights is conducted by an independent advisor. Lower STI values in FY21 is a result of no STI in FY20, therefore no deferral vesting in future periods.
5. Long service leave relates to amounts accrued during the year.
6. Courtenay Smith commenced employment with Mirvac as CFO on 8 March 2021.
11 LTP GRANTS IN FY22
The table below shows LTP grants made during FY22, subject to performance conditions over the performance period 1 July 2021 to 30 June 2024.
Accounting standards require the estimated valuation of the grants be recognised over the performance period. The minimum value of the grant is
nil if the vesting conditions are not met. The maximum value is based on the estimated fair value calculated at the time of the grant and amortised in
accordance with the accounting standard requirements.
Executive KMP
Susan Lloyd-Hurwitz
Total
Brett Draffen
Total
Campbell Hanan
Total
Stuart Penklis
Total
Courtenay Smith
Total
LTP max as a % of
fixed remuneration
Performance measure
Relative TSR
ROIC
Relative TSR
ROIC
Relative TSR
ROIC
Relative TSR
ROIC
Relative TSR
ROIC
150
90
50
50
50
Number of
Fair value per
performance performance right
$
rights granted
342,889
514,335
857,224
130,298
195,447
325,745
72,387
108,582
180,969
60,958
91,437
152,395
60,958
91,437
152,395
1.36
1.96
1.36
1.96
1.36
1.96
1.36
1.96
1.36
1.96
Maximum total
value of grant 1
$
467,015
1,008,281
1,475,296
177,466
383,146
560,612
98,591
212,860
311,451
83,025
179,249
262,274
83,025
179,249
262,274
1. The value of performance rights reflects the fair value at the time of grant. For the LTP grants subject to ROIC, 75 per cent vesting is assumed in the above valuation.
66 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
GOVERNANCE
REMUNERATION REPORT
11 LTP GRANTS IN FY22 CONTINUED
Key inputs used in valuing performance rights granted during FY22 were as follows:
Grant date
Performance hurdles
Performance period start
Performance period end
Security price at grant date
30 November 2021
Relative TSR and ROIC
Exercise price
Expected life
1 July 2021
Volatility
30 June 2024
Risk-free interest rate (per annum)
$2.86
Dividend/distribution yield (per annum)
$nil
2.6 years
36.80%
1.05%
3.46%
The valuation of rights is conducted by an independent advisor. The fair value is determined using a Monte-Carlo simulation for the relative TSR
component and a Binomial tree methodology for the ROIC component.
12 EQUITY INSTRUMENT DISCLOSURES RELATING TO EXECUTIVE KMP
SECURITYHOLDINGS
Executives are expected to establish and maintain a minimum securityholding (excluding performance rights) to the value of 150 per cent of
fixed remuneration for the CEO/MD and 100 per cent of fixed remuneration for all other Executives. Executives have five years from the date they
commenced their role on the ELT to build up their securityholding to the expected level.
As at 30 June 2022, the number of ordinary securities in Mirvac held by Executive KMP, including their personally related parties, is set out below:
Executive KMP
Susan Lloyd-Hurwitz
Brett Draffen
Campbell Hanan
Stuart Penklis 2
Courtenay Smith 3
Balance
1 July 2021
5,020,678
845,000
420,344
215,727
—
Changes
44,613
195,077
70,000
126,548
45,218
Balance
30 June 2022
5,065,291
1,040,077
490,344
342,275
45,218
Value
30 June 2022
$
Minimum
securityholding
guideline
$
Date
securityholding
to be attained 1
10,029,276
2,059,352
970,881
677,705
89,532
2,250,000
950,000
950,000
800,000
800,000
June 2021
June 2021
June 2021
May 2022
March 2026
1. Attainment date is based on the minimum securityholding requirement effective from FY19.
2. Stuart Penklis had met the minimum securityholding guideline based on security price during the year, and is expected to meet the guideline with future vesting and security price growth.
3. Courtenay Smith has five years from the date she commenced in March 2021 to build up her securityholding to the expected level.
OPTIONS
No options (i.e. a right to acquire a security upon payment of an exercise price) were granted as remuneration during FY22 and no unvested or
unexercised options are held by Executive KMP as at 30 June 2022.
PERFORMANCE RIGHTS HELD DURING THE YEAR
The number of performance rights in Mirvac held during the year by each Executive KMP, including their personally related parties, is set out below:
Executive KMP
Susan Lloyd-Hurwitz
Brett Draffen
Campbell Hanan
Stuart Penklis
Courtenay Smith
Balance
1 July 2021
1,850,357
719,501
381,704
347,790
180,872
Rights issued
857,224
325,745
180,969
152,395
152,395
LTP
Rights vested/
forfeited relating to
performance period
ended 30 June 2022
Deferred STI
Rights issued
Rights vested/
forfeited
Balance
30 June 2022
(770,547)
(292,808)
(136,986)
(136,986)
—
181,145
114,725
100,384
84,534
19,738
(62,398)
(40,077)
(29,931)
(29,931)
(45,218)
2,055,781
827,086
496,140
417,802
307,787
Annual Report 2022 – 67
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
REMUNERATION REPORT
12 EQUITY INSTRUMENT DISCLOSURES RELATING TO EXECUTIVE KMP CONTINUED
Details of the movement in the number and value of performance rights held by Executive KMP during the year are set out below:
Number
of rights
granted
Value at
grant date 1
$
Vesting
date
Number
of rights
% of
total
grant
Value of
rights
$
Number
of rights
% of
total
grant
Value of
rights
$
Vested
Lapsed
Executive KMP
Susan Lloyd-Hurwitz
Total
Brett Draffen
Total
Campbell Hanan
Total
Stuart Penklis
Total
Courtenay Smith
Grant
date
30 Sep 19
2 Dec 19
3 Dec 20
31 Aug 21
31 Aug 21
30 Nov 21
30 Sep 19
2 Dec 19
3 Dec 20
31 Aug 21
31 Aug 21
30 Nov 21
30 Sep 19
2 Dec 19
3 Dec 20
31 Aug 21
31 Aug 21
30 Nov 21
30 Sep 19
2 Dec 19
3 Dec 20
31 Aug 21
31 Aug 21
30 Nov 21
26 Mar 21
26 Mar 21
26 Mar 21
31 Aug 21
31 Aug 21
30 Nov 21
Plan
STI
LTP
LTP
STI
STI
LTP
STI
LTP
LTP
STI
STI
LTP
STI
LTP
LTP
STI
STI
LTP
STI
LTP
LTP
STI
STI
LTP
STI
STI
LTP
STI
STI
LTP
62,398
770,547
1,017,412
90,573
90,572
857,224
176,996
1,684,444
1,649,225
273,735
265,156
1,475,296
2,888,726
5,524,852
40,077
292,808
386,616
57,363
57,362
325,745
113,681
640,089
626,705
173,366
167,931
560,612
1,159,971
2,282,384
29,931
136,986
214,787
50,192
50,192
180,969
84,901
299,457
348,170
151,693
146,941
311,451
663,057
1,342,613
29,931
136,986
180,873
42,267
42,267
152,395
84,901
299,457
293,195
127,742
123,740
262,274
584,719
1,191,309
45,218
45,218
90,436
9,869
9,869
152,395
106,579
103,233
127,515
29,827
28,892
262,274
30 Sep 21
30 Jun 22
30 Jun 23
31 Aug 22
31 Aug 22
30 Jun 24
30 Sep 21
30 Jun 22
30 Jun 23
31 Aug 22
31 Aug 22
30 Jun 24
30 Sep 21
30 Jun 22
30 Jun 23
31 Aug 22
31 Aug 22
30 Jun 24
30 Sep 21
30 Jun 22
30 Jun 23
31 Aug 22
31 Aug 22
30 Jun 24
8 Mar 22
8 Mar 23
30 Jun 23
31 Aug 22
31 Aug 22
30 Jun 24
Total
353,005
658,320
62,398
308,219
—
—
—
—
370,617
40,077
117,123
—
—
—
—
157,200
29,931
54,794
—
—
—
—
84,725
29,931
54,794
—
—
—
—
84,725
45,218
—
—
—
—
—
45,218
100%
40%
176,996
716,936
—
—
—
—
—
462,328
—
—
—
—
0%
—
60% 967,508
—
—
—
—
893,932 462,328
967,508
100%
113,681
40% 272,435
—
—
—
—
—
175,685
—
—
—
—
0%
—
60% 367,654
—
—
—
—
100%
40%
100%
40%
386,116
175,685
367,654
84,901
127,454
—
—
—
—
—
82,192
—
—
—
—
0%
—
60% 172,003
—
—
—
—
212,355
82,192
172,003
84,901
127,454
—
—
—
—
—
82,192
—
—
—
—
0%
—
60% 172,003
—
—
—
—
212,355
82,192
172,003
100% 106,579
—
—
—
—
—
106,579
—
—
—
—
—
—
—
0%
—
—
—
—
—
—
—
1. The calculation of the value of performance rights used the fair value as determined at the time of grant. For the LTP grants subject to ROIC performance, the initial accounting treatment assumes
75 per cent vesting, which is reflected in the above valuation.
13 OTHER TRANSACTIONS WITH KMP
There are a number of transactions between KMP and the Group. On occasions, Directors and other KMP participate in arrangements available
to directly purchase Mirvac developed residential property. These transactions are made on terms equivalent to those that prevail in arm’s length
transactions and are at market rates.
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 companies. These transactions are undertaken on normal commercial terms and
conditions and the Director or other KMP does not directly influence these transactions.
68 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS REMUNERATION REPORT
GOVERNANCE
14 SERVICE AGREEMENTS FOR EXECUTIVE KMP
Each Executive KMP member, including the CEO/MD, has a formal contract, known as a service agreement. These agreements are of a continuing
nature and have no fixed term of service.
There were no changes to the service agreements for Executive KMP in FY22.
The key terms of the service agreements for the CEO/MD and other Executive KMP members are summarised below:
Susan Lloyd-Hurwitz
Other Executive KMP
Notice period
Contract term
Employee
Group
Termination payment 1
No fixed term
No fixed term
6 months
3 months
6 months
3 months
6 months
9 months
1. Payable if Mirvac terminates employee with notice, for reasons other than unsatisfactory performance.
15 GOVERNANCE AND HOW REMUNERATION DECISIONS ARE MADE
The Board, the HRC, advisors and management work closely to apply our remuneration principles and ensure our strategy supports sustainable
securityholder value.
Board
Oversees
remuneration
WITH ADVICE FROM
HRC
Four independent
Non-Executive Directors
Advises Board on
remuneration strategy
Specific recommendations on
Director remuneration
Approves KMP terms of employment
BASED ON
REMUNERATION PRINCIPLES
Align and contribute to Mirvac’s key strategic
business objectives and desired business outcomes
Align the interests of employees with those of securityholders
Assist Mirvac in attracting and retaining the employees
required to execute the business strategy
Support Mirvac’s desired performance-based culture
Encompass the concept of pay parity and be fair and equitable
Be simple and easily understood
The HRC has appointed EY as its external remuneration advisor. EY provides both information on current market practice and independent input into
key remuneration decisions.
EY’s terms of engagement include specific measures designed to protect its independence. To effectively perform its role, EY needs to interact with
members of Mirvac management, particularly those in the Human Resources team. However, to ensure independence, members of Mirvac’s management
are precluded from requesting services that would be considered to be a ‘remuneration recommendation’ as defined by the Corporations Act 2001.
During FY22, the HRC were provided with:
> market remuneration benchmarking and information, used as an input to the annual review of Executive KMP remuneration; and
> regulatory updates and market trend analysis.
No remuneration recommendations were provided by EY or any other advisor during the year.
Annual Report 2022 – 69
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
REMUNERATION REPORT
16 NON-EXECUTIVE DIRECTORS’ REMUNERATION
APPROACH TO NON-EXECUTIVE DIRECTOR FEES
In contrast to Executive KMP remuneration, the remuneration of Mirvac’s Non-Executive Directors is not linked to performance. This is consistent with
Non-Executive Directors being responsible for objective and independent oversight of the Group.
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 $2.25m per annum was approved by securityholders 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 FY22 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, HRC and HSE&E Chair
Committee member
Due Diligence Committee (per diem fee)
1. Chair fee covers all Board and committee responsibilities.
2. The ARCC, HRC and HSE&E Chair fee is in addition to the committee member fee.
3. The single committee fee is paid once for all committee memberships.
ACTUAL REMUNERATION FOR NON-EXECUTIVE DIRECTORS
Non-Executive Directors
John Mulcahy
Christine Bartlett 2
Damien Frawley 3
Jane Hewitt
James M. Millar AM
Samantha Mostyn AO
Peter Nash
Robert Sindel 4
Total
Short-term benefits
Post-employment 1
Cash salary
and fees
$
Superannuation
contributions
$
456,432
458,306
211,818
202,240
107,652
—
184,545
185,388
211,818
212,785
184,546
188,911
199,540
189,791
229,028
160,302
1,785,379
1,597,723
23,568
21,694
21,182
19,213
10,765
—
18,455
17,612
21,182
20,215
18,454
14,089
3,460
13,209
3,972
15,229
121,038
121,261
Year
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
1. Relates to payments required under superannuation legislation.
2. Christine Bartlett was appointed Chair of the HRC on 19 November 2020.
3. Damien Frawley joined the Board as a Non-Executive Director on 1 December 2021.
4. Robert Sindel joined the Board as a Non-Executive Director on 1 September 2020, and was appointed Chair of the HSE&E Committee on 15 April 2021.
$
480,000 1
185,000
30,000 2
18,000 3
4,000
Total
$
480,000
480,000
233,000
221,453
118,417
—
203,000
203,000
233,000
233,000
203,000
203,000
203,000
203,000
233,000
175,531
1,906,417
1,718,984
70 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
REMUNERATION REPORT
GOVERNANCE
16 NON-EXECUTIVE DIRECTORS’ REMUNERATION CONTINUED
MINIMUM SECURITYHOLDING FOR NON-EXECUTIVE DIRECTORS AND ACTUAL SECURITYHOLDING
In order to further strengthen the alignment of interests between Non-Executive Directors and securityholders, the Board established minimum
Mirvac Securityholding Guidelines, which recommend Non-Executive Directors build up to a minimum securityholding level. In December 2017, this
minimum securityholding level was increased from 25,000 Mirvac securities to 50,000 Mirvac securities, and in September 2021 this was further
increased to 100 per cent of base fees. Non-Executive Directors appointed to the Mirvac Board will have three years to establish their securityholding
to the minimum level from their date of appointment, or for Non-Executive Directors who were appointed to the Board prior to FY22 three years from
September 2021, to acquire securities up to the minimum.
In addition to this minimum securityholding requirement, in FY18, a voluntary Non-Executive Director Fee Sacrifice Rights Plan was introduced to
further encourage Directors to build an ownership stake in Mirvac.
Non-Executive Directors
John Mulcahy
Christine Bartlett
Damien Frawley 1
Jane Hewitt
James M. Millar AM
Samantha Mostyn AO
Peter Nash
Robert Sindel
Balance
1 July 2021
Changes
Balance
30 June 2022
Minimum
securityholding
requirement
$
Date
securityholding
to be attained
105,172
65,172
—
50,000
55,172
74,045
65,123
70,000
—
15,000
—
20,000
—
—
17,597
20,198
105,172
80,172
—
70,000
55,172
74,045
82,720
90,198
480,000
185,000
185,000
185,000
185,000
185,000
185,000
185,000
September 2024
September 2024
December 2024
September 2024
September 2024
September 2024
September 2024
September 2024
1. Damien Frawley joined the Board as a Non-Executive Director on 1 December 2021.
17 ADDITIONAL REQUIRED DISCLOSURES
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. These transactions are made on terms equivalent to those that prevail in arm’s length transactions and are at market rates.
TERMS USED IN THIS REMUNERATION REPORT
Term
Meaning
A-REIT
Clawback
S&P/ASX 200 Australian Real Estate Investment Trust Index.
Mirvac’s clawback policy gives the HRC the ability to claw back incentives in the event of a material financial misstatement, for
misconduct that is, or may be, harmful to the Group, and/or gross negligence. The clawback provisions apply to unvested STI and
LTP awards received after the introduction of the policy in February 2013.
Executive KMP
Includes the CEO/MD, CFO, Chief Investment Officer, Head of Integrated Investment Portfolio and the Head of Residential.
Executives
Members of Mirvac’s Executive Leadership Team (including the Executive KMP).
Invested Capital
Invested Capital equals investment properties, inventories and indirect investments, less fund-through adjustments
(deferred revenue) and deferred payment for land. Average Invested Capital is the average of the current period and the prior
two reporting periods.
KMP
Key management personnel are those people with authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly.
Performance right A right to a Mirvac security at the end of a performance period, subject to the satisfaction of performance measures.
ROIC
Total Return
TSR
ROIC is calculated as Total Return divided by average Invested Capital.
Total Return is the profit for the year attributable to securityholders adjusted for development interest costs and other interest
costs; net gain or loss on financial instruments; and income tax expense.
Total Shareholder Return measures the percentage growth in a company’s security price together with the value of dividends/
distributions received during the period, assuming that all of those dividends/distributions are reinvested into new securities.
Annual Report 2022 – 71
FINANCIAL REPORTOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration
As lead auditor for the audit of Mirvac Limited for the year ended 30 June 2022, 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.
Voula Papageorgiou
Partner
PricewaterhouseCoopers
Sydney
11 August 2022
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation.
72 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
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).
FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A BASIS OF PREPARATION
B RESULTS FOR THE YEAR
B1 Segment information
B2 Revenue
B3 Expenses
B4 Events occurring after the end of the year
B5
Income tax
C PROPERTY AND DEVELOPMENT ASSETS
C1 Property portfolio
C2
C3
C4
Investment properties
Investments in joint ventures and associates
Inventories
D CAPITAL STRUCTURE AND RISKS
D1 Capital management
D2 Borrowings and liquidity
D3 Cash flow information
D4 Derivative financial instruments
D5 Financial risk management
D6 Fair value measurement of financial instruments
E EQUITY
E1 Distributions
E2 Contributed equity
E3 Reserves
E4 Security-based payments
F OPERATING ASSETS AND LIABILITIES
F1 Receivables
F2 Other financial assets
F3
Intangible assets
F4 Payables
F5 Provisions
F6 Leases
G GROUP STRUCTURE
G1 Group structure and Deed of Cross Guarantee
G2 Parent entity
G3 Non-controlling interests
G4 Business combinations
H OTHER DISCLOSURES
H1 Contingent liabilities
H2 Earnings per stapled security
H3 Related parties
H4 Auditor’s remuneration
I APPENDICES
Property portfolio listing
I1
I2 Controlled entities
I3
Interests in joint ventures and associates
74
75
76
77
78
79
82
85
87
87
89
91
93
95
97
97
98
99
100
103
104
104
105
105
107
108
109
110
111
111
112
114
114
116
117
117
117
118
119
122
124
Annual Report 2022 – 73
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Revenue
Other income
Revaluation of investment properties
Share of net profit of joint ventures and associates
Gain on sale of assets
Gain on financial instruments
Total revenue and other income
Development expenses
Cost of goods sold interest
Inventory write-downs and losses
Selling and marketing expenses
Investment property expenses and outgoings
Depreciation and amortisation expenses
Impairment loss on receivables
Employee and other expenses
Finance costs
Loss on financial instruments
Loss on disposal of assets
Profit before income tax
Income tax expense
Profit from continuing operations
Profit for the year is attributable to:
Stapled securityholders
Non-controlling interests
Other comprehensive income/(loss) that may be reclassified to profit or loss
Changes in the fair value of cash flow hedges
Other comprehensive income/(loss) for the year
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Stapled securityholders
Non-controlling interests
Earnings per stapled security (EPS) attributable to stapled securityholders
Basic EPS
Diluted EPS
Note
B2
C2
C3
B2
B3
B3
B3
B3
B3
B3
B3
B5
B1
E3
G3
H2
H2
2022
$m
2,306
347
109
16
64
2,842
1,152
24
15
46
212
83
24
204
96
—
1
985
78
907
906
1
17
17
924
923
1
924
Cents
23.0
23.0
2021
$m
1,808
392
109
2
68
2,379
779
17
12
34
200
71
20
177
112
23
—
934
35
899
901
(2)
(16)
(16)
883
885
(2)
883
Cents
22.9
22.9
The above consolidated statement of comprehensive income (SoCI) should be read in conjunction with the accompanying notes.
74 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
FINANCIAL REPORT
Current assets
Cash and cash equivalents
Receivables
Inventories
Derivative financial assets
Other assets
Assets classified as held for sale
Total current assets
Non-current assets
Receivables
Inventories
Investment properties
Investments in joint ventures and associates
Derivative financial assets
Other financial assets
Other assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Payables
Deferred revenue
Borrowings
Derivative financial liabilities
Lease liabilities
Provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Payables
Deferred revenue
Borrowings
Lease liabilities
Derivative financial liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity attributable to the stapled securityholders
Non-controlling interests
Total equity
Note
F1
C4
D4
C2
F1
C4
C2
C3
D4
F2
F6
F3
B5
F4
B2
D2
D4
D2
F5
B5
F4
B2
D2
D2
D4
F5
E2
E3
G3
2022
$m
558
144
622
63
42
—
1,429
30
1,639
12,189
1,481
178
73
49
13
28
79
17
15,776
17,205
730
17
281
—
8
232
42
1,310
571
3
3,930
72
116
11
4,703
6,013
11,192
7,527
23
3,576
11,126
66
11,192
2021
$m
117
117
632
—
43
133
1,042
97
1,461
11,821
783
248
78
222
11
17
78
55
14,871
15,913
503
54
—
5
4
223
—
789
367
1
3,922
64
99
12
4,465
5,254
10,659
7,510
13
3,070
10,593
66
10,659
The above consolidated statement of financial position (SoFP) should be read in conjunction with the accompanying notes.
Annual Report 2022 – 75
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Attributable to stapled securityholders
Note
Contributed
equity
$m
7,503
Reserves
$m
Retained
earnings
$m
Non-controlling
interests
$m
Total
$m
Balance 30 June 2020
Profit for the year
Other comprehensive loss for the year
Total comprehensive income for the year
Transactions with owners of the Group
Security-based payments
Expense recognised – EEP
Expense recognised – LTI and STI
LTI vested
STI vested
Distributions
Non-controlling interests of subsidiary
Total transactions with owners of the Group
Balance 30 June 2021
Balance 1 July 2021
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
E2
E4
E2/E4
E4
E1
G3
Transactions with owners of the Group
Security-based payments
E2
Expense recognised – EEP
E4
Expense recognised – LTI and STI
E2/E4
LTI vested
E4
STI vested
E2
Legacy schemes vested
Transfer from SBP reserve for unvested awards E4
E1
Distributions
G3
Non-controlling interests of subsidiary
Total transactions with owners of the Group
Balance 30 June 2022
—
—
—
1
—
6
—
—
—
7
7,510
7,510
—
—
—
1
—
15
—
1
—
—
—
17
7,527
2,559
10,090
901
—
901
—
—
—
—
(390)
—
(390)
3,070
3,070
906
—
906
—
—
—
—
—
4
(404)
—
(400)
901
(16)
885
1
9
(1)
(1)
(390)
—
(382)
10,593
10,593
906
17
923
1
13
—
(1)
1
—
(404)
—
(390)
51
(2)
—
(2)
—
—
—
—
—
17
17
66
66
1
—
1
—
—
—
—
—
—
—
(1)
(1)
Total
equity
$m
10,141
899
(16)
883
1
9
(1)
(1)
(390)
17
(365)
10,659
10,659
907
17
924
1
13
—
(1)
1
—
(404)
(1)
(391)
3,576
11,126
66
11,192
28
—
(16)
(16)
—
9
(7)
(1)
—
—
1
13
13
—
17
17
—
13
(15)
(1)
—
(4)
—
—
(7)
23
The above consolidated statement of changes in equity (SoCE) should be read in conjunction with the accompanying notes.
76 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Distributions received from joint ventures and associates
Distributions received
Interest paid
Income tax paid
Net cash inflows from operating activities
Cash flows from investing activities
Payments for investment properties
Proceeds from sale of investment properties
Repayments of loans from unrelated parties
Payments for property, plant and equipment
Contributions to joint ventures
Proceeds from joint ventures and associates
Payments for software under development
Proceeds from/(payments for) investments
Proceeds from acquisitions of subsidiary, net of cash acquired
Deconsolidation of cash and cash equivalents upon disposal of controlled entities
Net cash outflows from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Distributions paid
Proceeds from stapled securities issued
Proceeds from non-controlling interests
Distributions paid to non-controlling interests
Principal element of lease payments
Net cash outflows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Note
D3
G4
G4
FINANCIAL REPORT
2022
$m
2,461
(1,531)
930
6
95
1
(130)
(6)
896
(792)
231
22
(7)
(70)
163
(1)
9
11
(2)
(436)
1,711
(1,320)
(402)
—
—
(1)
(7)
(19)
441
117
558
2021
$m
2,221
(1,533)
688
6
84
1
(144)
—
635
(631)
85
51
(3)
(12)
5
(2)
(2)
—
—
(509)
2,224
(2,264)
(307)
1
17
—
(4)
(333)
(207)
324
117
The above consolidated statement of cash flows (SoCF) should be read in conjunction with the accompanying notes.
Annual Report 2022 – 77
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
Mirvac Group
A BASIS OF PREPARATION
MIRVAC GROUP – STAPLED SECURITIES
A Mirvac Group stapled security comprises one Mirvac Limited share
‘stapled’ to one unit in Mirvac Property Trust (MPT) to create a single
listed security traded on the ASX. The stapled securities cannot be traded
or dealt with separately. Mirvac Limited (the deemed parent entity) and
Mirvac Funds Limited (as responsible entity for MPT) have common
directors and operate as Mirvac Group. Mirvac Limited and MPT have
a Deed of Cooperation to recharge each other on a cost recovery basis,
where permitted by law, to maintain the best interests of Mirvac as a whole.
The stapled security structure will cease to operate on the first of:
> Mirvac Limited or MPT resolving by special resolution in a general
meeting, and in accordance with its Constitution, to terminate the
stapled security structure; or
> Mirvac Limited or MPT commencing winding up.
The ASX reserves the right (but without limiting its absolute discretion) to
remove entities with stapled securities from the official list if their securities
cease to be stapled together, or either one or more stapled entities issues
any equity securities of the same class that are not stapled.
Mirvac Limited and MPT remain separate legal entities in accordance
with the Corporations Act 2001. For accounting purposes, Mirvac Limited
has been deemed the parent entity of MPT.
STATEMENT OF COMPLIANCE
These consolidated financial statements are general purpose financial
statements. They have been prepared in accordance with Australian
Accounting Standards and other authoritative pronouncements of the
Australian Accounting Standards Board, the Corporations Act 2001 and
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
BASIS OF PREPARATION
Mirvac Group is a for-profit entity for the purposes of preparing the
financial statements.
These financial statements have been prepared on a going concern
basis, using historical cost conventions except for investment properties,
investment properties under construction (IPUC), derivative financial
instruments and other financial assets and financial liabilities which have
been measured at fair value.
All figures in the financial statements are presented in Australian dollars
and have been rounded to the nearest million (m) dollars in accordance
with ASIC Corporations Instrument 2016/191, unless otherwise indicated.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires estimation and
judgement. The areas involving a higher degree of estimation or
judgement are discussed in the following notes:
Revenue
Income tax
Investment properties
Investments in joint ventures and associates
Inventories
Fair value measurement of financial instruments
Security-based payments
Intangible assets
Note
B2
B5
C2
C3
C4
D6
E4
F3
COMPARATIVE INFORMATION
Where necessary, comparative information has been restated to conform
to the current year’s disclosures.
NEW AND AMENDED STANDARDS ADOPTED BY THE GROUP
Amended standards and interpretations adopted by the Group for the
year ended 30 June 2022 have not had a significant impact on the
current period or any prior period and are not likely to have a significant
impact in future periods. These are listed below:
> AASB 2020-8 Amendments to Australian Accounting Standards –
Interest Rate Benchmark Reform – Phase 2 [AASB 4, AASB 7,
AASB 9, AASB 16 & AASB 139].
> AASB 2021-3 Amendments to Australian Accounting Standards –
Covid-19-Related Rent Concessions beyond 30 June 2021 [AASB 16].
MACRO ENVIRONMENT IMPACTS
As a property group involved in property investment, investment management, and residential and commercial development, Mirvac is
subject to macroeconomic factors throughout the business cycle that have the potential to impact a number of financial and non-financial
metrics of the Group.
IMPACT OF GLOBAL CONFLICT ON THE GROUP
The magnitude and complexity of the consequences of the Russia-Ukraine conflict remain highly uncertain, driving geopolitical
fragmentation, ongoing sanctions and diversified supply chains. Key areas of exposure relate to economic sanctions, oil and gas supply and
impacts on global indices. While Mirvac does not have direct exposure to the conflict or region, market data continues to be highly volatile
and uncertain, with any escalation likely to have an impact on global markets and place additional pressures on supply chains.
SUPPLY CHAIN PRESSURE
Disruptions linked to COVID-19 lockdowns in China, the Russia-Ukraine conflict, severe weather events, lack of migration and new variants of
COVID-19 continue to exacerbate supply shortages, labour/skills shortages and construction materials price increases. The Group’s long standing
experience and capabilities are well placed to see through the supply challenges, with a number of initiatives in place to analyse, assess and flex
across suppliers, timing and lead times for supplies with a number of development project trade costs locked in for the medium term.
INFLATION RISING AND INTEREST RATES INCREASING
Higher cost price inflation has led to negative real wage growth in 2022. This combined with heightened geopolitical tensions and increasing
interest rates has lowered consumer sentiment. A faster than expected economic recovery from COVID-19, and stronger inflationary pressures
have brought forward interest rate hikes, with the Reserve Bank of Australia raising the cash rate by 125 bps from May to July 2022.
The Group’s capital management is well placed to steer through the tide of rising interest rates, with gearing maintained at the lower end of
the target range of between 20-30 per cent, a large portion of the debt at fixed or hedged rates and maintenance of the Group’s credit rating.
Consumer sentiment around inflation and rising interest rates are likely to impact residential purchases as consumers are weary of mortgage
stress, particularly as wages growth has lagged behind inflation and rising living costs. Retail spending is expected to curb away from discretionary
spend as the uncertainty around increasing interest rates and rising living costs (fuel, food and so on) tighten household spending.
The above factors have been considered in the preparation of the financial statements though they have not had a material impact to date.
78 – Celebrating 50 years
78 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
B RESULTS FOR THE YEAR
FINANCIAL REPORT
This section explains the results and performance of the Group, including segmental analysis and detailed breakdowns.
THREE-YEAR PERFORMANCE REVIEW
$901m
$906m
$558m
$602m
$550m
$596m
$796m
$773m
$704m
FY21
FY20
Statutory profit after tax
FY22
B1 SEGMENT INFORMATION
FY20
FY21
Earnings before interest and tax
FY22
FY20
FY21
Operating profit after tax
FY22
The Group identifies its operating segments based on the internal reporting provided to the ELT, who are the Group’s chief operating decision makers.
The Group’s operating segments are as follows:
INTEGRATED INVESTMENT PORTFOLIO
Manages the office, industrial, retail and build to
rent property portfolio to produce rental income
and capital appreciation.
This segment also manages joint ventures and
associates, properties and funds for capital partners.
COMMERCIAL & MIXED USE
Designs, develops and constructs office
buildings, industrial warehouses, retail
precincts, build to rent apartments and
mixed use offerings which leverages
Mirvac’s multi-asset expertise.
RESIDENTIAL
Designs, develops, markets and sells
residential properties to external customers.
These include masterplanned communities
and apartments in core metropolitan markets
at times in conjunction with capital partners.
Geographically, the Group operates in major urban areas across Australia.
During the year, the Group recognised revenue of $528 million from two external customers. This represents 23 per cent of total revenue and was attributed
to the Commercial & Mixed Use segment. No other single customer in the current or prior period provided more than 10 per cent of the Group’s revenue.
Presented below are the key profit metrics, a breakdown of revenue by function and other required information for each segment:
KEY PROFIT METRICS
Investment
Integrated Investment Portfolio NOI
Asset and funds management EBIT
Management and administration expenses
Investment EBIT
Development
Commercial & Mixed Use
Residential
Development EBIT
Segment EBIT 1
Unallocated overheads
Group EBIT
Net financing costs 2
Operating income tax expense
Operating profit after tax
Development revaluation gain 3
Investment property revaluation
Other non-operating items
Statutory profit attributable to stapled securityholders
1. EBIT includes share of net operating profit of joint ventures and associates.
2.
3. Relates to the fair value movement on IPUC.
Includes cost of goods sold interest of $7m for Commercial & Mixed Use (2021: $1m) and $17m for Residential (2021: $16m) and interest revenue of $5m (2021: $5m).
2022
$m
581
33
(44)
570
90
195
285
855
(82)
773
(115)
(62)
596
70
305
(65)
906
2021
$m
581
30
(35)
576
33
168
201
777
(73)
704
(124)
(30)
550
121
274
(44)
901
Annual Report 2022 – 79
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
B RESULTS FOR THE YEAR
B1 SEGMENT INFORMATION CONTINUED
SEGMENT EBIT: FY21 TO FY22
$777m
($6m)
$57m
$27m
$885m
EBIT BY SEGMENT
$195m
$90m
$168m
$33m
$576m
$570m
FY21
Integrated
Investment Portfolio
Commercial &
Mixed Use
REVENUE BY FUNCTION
Residential
FY22
FY21
FY22
Residential
Commercial & Mixed Use
Integrated Investment Portfolio
Investment
Integrated
Investment Portfolio
2022
$m
786
—
39
11
836
50
—
50
886
336
2021
$m
781
—
43
10
834
27
—
27
861
379
1,222
1,240
Property rental revenue
Development revenue 1
Asset and funds
management revenue 2
Other revenue
Total operating revenue
Share of net profit/(loss) of
joint ventures and associates 3
Gain on sale of assets
Other income
Total operating revenue
and other income
Non-operating items 4
Total statutory revenue
and other income
Segments
Development
Commercial &
Mixed Use
2022
$m
2021
$m
—
535
—
3
538
—
—
—
538
—
538
—
183
—
2
185
—
—
—
185
—
185
Residential
Unallocated
Total
2022
$m
—
950
—
16
966
36
16
52
1,018
—
2021
$m
—
821
—
13
834
55
—
55
889
—
1,018
889
2022
$m
2021
$m
—
—
—
5
5
(1)
—
(1)
4
60
64
—
—
—
6
6
(1)
—
(1)
5
60
65
2022
$m
786
1,485
39
35
2021
$m
781
1,004
43
31
2,345
1,859
85
16
101
81
—
81
2,446
1,940
396
439
2,842
2,379
Includes development management fees.
1.
2. Property management revenue incurred on the Group’s investment properties of $19m (2021: $20m) has been eliminated on consolidation.
3. Revenue excludes non-operating items.
4. Relates mainly to fair value of investment properties and IPUC.
80 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
B RESULTS FOR THE YEAR
B1 SEGMENT INFORMATION CONTINUED
ADDITIONAL SEGMENT INFORMATION
Investment
Integrated
Investment Portfolio
2022
$m
2021
$m
Segments
Development
Commercial &
Mixed Use
2022
$m
2021
$m
Residential
Unallocated
Total
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
Segment assets and liabilities
Assets
Investment properties
Inventories
Assets held for sale
Indirect investments 1
Other assets
Total assets
Total liabilities
Net assets
Other segment information
Share of net profit/(loss) of joint
ventures and associates
Depreciation and
amortisation expenses
Additions for investment
properties and PPE
Additions of investments in
joint ventures and associates
12,189
—
—
1,487
74
11,821
—
133
949
117
13,750
13,020
372
375
13,378
12,645
74
72
55
62
1,702
657
61
1
—
136
—
62
8
206
197
9
—
—
—
7
—
326
—
23
31
380
150
230
—
—
—
11
—
2,125
—
130
38
2,293
746
1,547
36
1
—
—
—
1,767
—
164
46
1,977
399
1,578
55
1
—
—
—
—
—
15
941
956
—
—
—
14
522
536
4,698
4,330
(3,742)
(3,794)
12,189
2,261
—
1,694
1,061
17,205
6,013
11,192
11,821
2,093
133
1,150
716
15,913
5,254
10,659
(1)
(1)
109
109
10
6
—
8
1
—
83
71
1,708
658
68
12
1.
Includes carrying value of investments in joint ventures and associates and other indirect investments.
Annual Report 2022 – 81
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
B RESULTS FOR THE YEAR
B1 SEGMENT INFORMATION CONTINUED
RECONCILIATION OF STATUTORY PROFIT TO OPERATING PROFIT AFTER TAX
The following table shows how profit for the year attributable to stapled securityholders reconciles to operating profit after tax:
Segments
Investment
Development
Investment Portfolio
$m
Integrated Commercial &
Mixed Use
$m
Profit for the year attributable stapled securityholders
836
Exclude specific non-cash items
Revaluation of investment properties 1
Net gain on financial instruments
Depreciation of right-of-use assets
Straight-lining of lease revenue 2
Amortisation of lease incentives and leasing costs
Share of net profit of joint ventures and associates
relating to movement of non-cash items 3
AASB 16 Leases – net movement
Exclude other non-operating items
Net gain from sale of assets
Net loss from fair value of investment properties
included in non-controlling interests
Tax effect
Tax effect of non-operating adjustments 4
Operating profit after tax
SaaS implementation costs 5
FFO
(347)
(4)
—
(5)
114
(24)
—
—
—
—
570
5
575
83
—
—
—
—
—
—
—
—
—
—
83
2
85
Residential
$m
Unallocated
$m
164
(177)
—
—
—
—
—
—
—
—
—
—
164
6
170
—
(60)
7
—
—
—
(7)
—
—
16
(221)
5
(216)
2022
Total
$m
906
(347)
(64)
7
(5)
114
(24)
(7)
—
—
16
596
18
614
2021
Total
$m
901
(392)
(45)
4
(12)
125
(28)
(4)
(2)
(2)
5
550
15
565
Includes development revaluation gain and excludes Mirvac’s share in the JVA revaluation of investment properties which is included within Share of net profit of joint ventures and associates.
Included within Revenue.
Included within Share of net profit of joint ventures and associates.
Included within Income tax expense.
1.
2.
3.
4.
5. Adjustment for the configuration and customisation costs incurred in implementing SaaS arrangements in accordance with the Property Council of Australia’s Interim Guidance Note 2021-1 – An interim
guide to Software as a Service implementation costs issued in June 2021.
B2 REVENUE
The Group has two main revenue streams: property rental revenue and development revenue. Property rental revenue comes from holding
properties as investment properties and earning rental yields over time. Development revenue is derived from constructing and selling properties
as well as management developments for third parties and capital partners.
Revenue is measured at the fair value of the consideration received or receivable, net of returns, trade allowances and duties and taxes paid. The Group
recognises revenue from the transfer of goods or services over time and at a point in time in the following revenue streams.
82 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
B RESULTS FOR THE YEAR
B2 REVENUE CONTINUED
FINANCIAL REPORT
PROPERTY RENTAL REVENUE
Lease revenue
The Group invests in properties for rental yields and capital appreciation. Rental revenue from investment properties is recognised on a
straight-line basis over the lease term, net of any incentives. Modifications to the leases are accounted for as a new lease from the effective
date of the modification, considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for
the new lease.
Service revenue
The Group also provides services to the lessees, which primarily consist of general building management and operations in accordance with
their lease agreements. Service income, representing the recovery of associated costs from the lessees, is recognised over time when the
services are provided.
Asset and funds management revenue
The Group provides property management and leasing, investment funds management, and facilities management services. These services
are provided on an ongoing basis and over the term of the agreements. The management fees are generally calculated based upon the
value of the managed assets, which is a variable consideration and recognised upon delivery of services.
DEVELOPMENT REVENUE
Settlement revenue
The Group develops and sells properties comprising apartments, land lots, masterplanned communities and commercial and mixed-use
properties held as inventory. The sales contracts typically contain one performance obligation satisfied when control of the property is
transferred to the customer. This generally occurs on settlement, at which point revenue is recognised. The revenue is measured at the
transaction price agreed under the contract.
Development management service revenue
Development management fees are received to remunerate the Group for management services, time and the risk of developing a
commercial, mixed-use or residential project. Contracts can include one or multiple performance obligations depending on the terms of the
contract. Revenue is recognised as the performance obligations are satisfied. Hourly rate fees are recognised when service is provided, and
fixed rate fees are recognised on a percentage of completion basis.
Construction service revenue
The Group provides services to construct office, industrial, retail and residential buildings or a combination thereof as mixed-use on
customer-owned land.
There is ordinarily one performance obligation, being the ‘macro-promise’ to deliver a completed building to the customer, including the
design, construction and leasing (if applicable) of the building. The performance obligation is satisfied, and revenue including costs and
margin is recognised, over time with progress determined in line with the building’s percentage of completion. The percentage of completion
is determined by costs incurred to date as a percentage of total expected costs. This method best represents the passing of control of the
building to the customer as it is being built. Estimates of costs and project completion and associated revenue are revised if circumstances
change, with any resulting increases or decreases reflected in the consolidated SoCI.
Certain development contracts may include variable revenue, which is dependent on predetermined metrics, for example, capitalised net rental
income. Variable revenue is recognised when highly probable based on historical experience, forecasts and current economic conditions.
Deferred revenue
Some development contracts are funded by a capital partner throughout the life of the project or construction phase, generally known
as fund through projects. Payments received for these projects are recognised as deferred revenue which is classified as a liability in
the consolidated SoFP. Associated revenue is recognised in the consolidated SoCI when the performance obligations are satisfied.
The recognition of deferred revenue is contractually-based. Judgement is required in determining whether performance obligations
have been satisfied for the recognition of the associated revenue.
At 30 June 2022, the Group held $20m of deferred revenue (2021: $55m).
During the year, the Group recognised $45m in revenue from contracts for which deferred revenue was held at the beginning of the
financial year (2021: $49m).
Annual Report 2022 – 83
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS B RESULTS FOR THE YEAR
B2 REVENUE CONTINUED
FY22 REVENUE BY FUNCTION
REVENUE: FY20 TO FY22
$2,306m
$2,116m
$1,808m
FY20
FY21
FY22
2022
$m
620
104
8
732
39
1,014
471
1,485
5
45
2,306
2021
$m
618
113
—
731
43
623
381
1,004
5
25
1,808
Development: 64%
Property rental: 32%
Asset and funds management: 2%
Interest and other: 2%
Revenue
Lease revenue 1
Service revenue
Other property rental revenue
Total property rental revenue
Asset and funds management revenue
Settlement revenue
Development and construction management services revenue
Total development revenue
Interest revenue
Other revenue
Total revenue
1.
Includes straight-lining of lease revenue of $5m (2021: $12m).
COSTS TO OBTAIN A CONTRACT
Sales commissions, incurred to obtain a contract, are capitalised and included within other assets on the consolidated SoFP and expensed when the
associated settlement revenue is recognised.
2022
$m
22
3
6
9
2021
$m
17
7
4
11
Expensed during the period 1
Incremental costs to obtain a contract
Current
Non-current
Total incremental costs to obtain a contract
1. No impairment loss was recognised during the year (2021: $nil).
84 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
B RESULTS FOR THE YEAR
B2 REVENUE CONTINUED
TRANSACTION PRICE ALLOCATED TO REMAINING PERFORMANCE OBLIGATIONS
The transaction price allocated to partially unsatisfied performance obligations at 30 June 2022 is as set out below.
Within one year
More than one year
Total
GAIN ON FINANCIAL INSTRUMENTS
Gain on interest rate derivatives
Gain on assets at fair value through profit or loss
Gain on cross currency derivatives
Total gain on financial instruments
B3 EXPENSES
FINANCIAL REPORT
2022
$m
985
650
1,635
2022
$m
49
4
11
64
2021
$m
1,239
259
1,498
2021
$m
57
8
3
68
DEVELOPMENT EXPENSES
Development expenses are initially capitalised as inventory on the consolidated SoFP until the associated revenue is recognised.
These expenses include the costs of acquisition and development and all other costs directly related to the specific projects, including
an allocation of direct overhead expenses.
COST OF GOODS SOLD INTEREST
Interest previously capitalised to incomplete inventory is expensed when the associated revenue is recognised. Upon completion of the
project, borrowing costs and other holding charges are no longer capitalised and are expensed as incurred.
SELLING AND MARKETING EXPENSES
Costs to promote and market projects are expensed as incurred. Direct costs incurred in obtaining a contract, such as sales commissions
are capitalised as a contract asset and included within other assets on the consolidated SoFP. These costs are expensed when the
associated revenue is recognised.
INVESTMENT PROPERTY EXPENSES AND OUTGOINGS
Investment property expenses relate to those costs which are required to be incurred to allow for the occupation and maintenance of
investment properties in order to continue to earn rental revenue. Expenses include statutory levies, insurance and other property outgoings
and are recognised on an accruals basis.
Government grants
Government grants are accounted for under AASB 120 Accounting for Government Grants and Disclosure of Government Assistance.
The standard provides the option to present these amounts as income or as a reduction in expenses.
During the year, the Group received land tax rebates from various state revenue agencies totalling $13m (2021: $nil). These rebates were
provided to landlords who provided rental relief to tenants. These amounts have been recognised as a reduction to Investment property
expenses and outgoings in the consolidated SoCI.
DEPRECIATION AND AMORTISATION
Depreciation on property, plant and equipment is calculated on a straight-line basis over the estimated useful life of the asset, usually
between 3-15 years. Amortisation on lease incentives, software and management rights is calculated on a straight-line basis over the
estimated useful life of the asset.
Annual Report 2022 – 85
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
B RESULTS FOR THE YEAR
B3 EXPENSES CONTINUED
Profit before income tax includes the following specific expenses:
Total inventory write-downs and losses
Provision for impairment of inventories
Inventory costs written off
Total inventory write-downs and losses
Total investment property expenses and outgoings
Statutory levies
Insurance
Power and gas
Property maintenance
Other
Total investment property expenses and outgoings
Total impairment loss on receivables
Loss allowance on trade debtors
Loss allowance on loans receivable
Total impairment loss on receivables
Total employee and other expenses
Employee benefits expenses
Security-based payments expense
Total employee expenses
Compliance, consulting and professional fees
Office and administration expenses
IT infrastructure 1
Insurance and other expenses
Total other expenses
Total employee and other expenses
Interest and borrowing costs
Interest paid/payable
Interest on lease liabilities
Interest capitalised 2
Borrowing costs amortised
Total finance costs
Add: cost of goods sold interest 3
Total interest and borrowing costs
Loss on financial instruments
Loss on interest rate derivatives
Total loss on financial instruments
2022
$m
2021
$m
5
10
15
46
6
26
55
79
212
25
(1)
24
107
15
122
19
11
35
17
82
204
127
3
(36)
2
96
24
120
—
—
5
7
12
48
9
26
52
65
200
20
—
20
99
10
109
16
10
32
10
68
177
136
3
(32)
5
112
17
129
23
23
Includes employee benefits expenses $7m (2021: $10m) relating to the implementation of SaaS arrangements.
1.
2. Relates to Integrated Investment Portfolio $11m (2021: $13m), Commercial and & Mixed Use $12m (2021: $7m) and Residential $13m (2021: $12m).
3. This interest was previously capitalised and has been expensed in the current period. Relates to Commercial & Mixed Use $7m (2021: $1m) and Residential $17m (2021: $16m).
86 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
B RESULTS FOR THE YEAR
B4 EVENTS OCCURRING AFTER THE END OF THE YEAR
On 18 July 2022, the unitholders of AMP Capital Wholesale Office Fund (AWOF) approved a resolution for Mirvac Funds Management Australia Limited
to become the trustee of the fund. Effective around mid-October 2022, Mirvac will become the investment manager of AWOF and property manager in
respect of AWOF’s wholly owned assets. As a result of this appointment, Mirvac’s third-party capital under management will grow by $7.7bn. In addition,
Mirvac will offer a total of $500m of liquidity with an expectation that this will be utilised within six months of the transition date.
No other events have occurred since the end of the year which have significantly affected or may significantly affect Mirvac’s operations, the results of
those operations, or Mirvac’s state of affairs in future years.
B5 INCOME TAX
This section includes the Group’s tax accounting policies and details of the income tax expense and deferred tax balances.
ACCOUNTING FOR INCOME TAX
Most of the Group’s profit is earned by Mirvac Property Trust and its sub-trusts which are not subject to taxation, provided that the stapled
securityholders of the Group are attributed the taxable income of the Mirvac Property Trust. Stapled securityholders are liable to pay tax at their
effective tax rate on the amounts attributed.
Income tax expense for Mirvac Limited and its wholly-owned controlled entities is calculated at the applicable tax rate (currently 30 per cent in
Australia). This is recognised in the profit for the year, unless it relates to other comprehensive income or transactions recognised directly in equity.
The tax expense comprises both current and deferred tax. Broadly, current tax represents the tax expense paid or payable for the current year.
Accounting income is not always the same as taxable income, creating temporary differences. These differences usually reverse over time. Until
they reverse, a deferred asset or liability is recognised on the consolidated SoFP. Deferred tax is not recognised on the initial recognition of goodwill.
Deferred tax assets, including those arising from tax losses, are only recognised to the extent it is probable that sufficient taxable profits will be
available to utilise the losses in the foreseeable future.
The Group estimates future taxable profits based on approved budgets and forecasts extending five years. Future taxable profits are influenced by a
variety of general economic and business conditions, which are outside the control of the Group. A change in any of these assumptions could have an
impact on the future profitability of the Group and may affect the recovery of deferred tax assets.
MIRVAC LIMITED TAX CONSOLIDATED GROUP
Mirvac Limited and its wholly-owned controlled entities are in a tax consolidated group. The entities in the tax consolidated group have 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. Accordingly, the deferred tax assets and deferred tax liabilities are permitted to be offset in the consolidated SoFP.
The entities in the tax consolidated group have also entered into a tax funding agreement to fully compensate/be compensated by Mirvac Limited for
current tax balances and the deferred tax assets for unused tax losses and credits transferred.
INCOME TAX ANALYSIS
Reconciliation to effective tax rate
Profit before income tax
Less: Group elimination entries not subject to corporate taxation
Less: MPT profit not subject to taxation
Add: Mirvac Ltd trust profits not subject to taxation 1
Profit which is subject to taxation
Income tax expense calculated at 30%
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income
Non-deductible/assessable equity accounted profit/(loss)
Other non-deductible/(non-assessable) items
Income tax expense
Effective tax rate 2
2022
$m
985
(6)
(712)
1
268
80
1
(3)
78
29%
2021
$m
934
—
(798)
2
138
41
(8)
2
35
31%
1. Trust income that is not subject to corporate taxation as not wholly owned by the Mirvac Ltd tax consolidated group.
2. Effective tax rate is calculated as the income tax expense divided by the profit which is subject to taxation. The effective tax rate has been normalised by excluding equity accounted profit/(loss) on joint
ventures and associates.
Annual Report 2022 – 87
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
B RESULTS FOR THE YEAR
B5 INCOME TAX CONTINUED
Reconciliation of income tax expense to tax paid and payable
Income tax expense
Temporary differences
Deferred revenue
Inventories
Unrealised gain on financial instruments
Changes in the value of cash flow hedges
Receivables
Right-of-use assets
Lease liabilities
Other temporary differences
Transfer from tax losses
Current tax expense
Less: current tax paid during the year
Current tax liability
Unrecognised tax and capital losses
Unused capital losses which have not been recognised as deferred tax assets due to uncertainty of utilisation 1
Potential tax benefit at 30 per cent
1. Unused capital losses can only be utilised against capital gains.
2022
$m
78
(32)
84
(10)
(5)
(18)
—
(1)
(4)
(44)
48
(6)
42
2022
$m
62
19
Movement in deferred tax
Recognised
in other
Recognised in comprehensive
income
$m
profit or loss
$m
1 July 2020
$m
Recognised
in other
Balance Recognised in comprehensive
income
$m
profit or loss
$m
30 June 2021
$m
Unrealised gain/(loss) from JVAs
Accruals
Employee provisions and accruals
Deferred revenue
Derivative financial instruments
Impairment of loans and doubtful debts
PPE
Tax losses
Lease liabilities
Foreign exchange translation losses
Other
Deferred tax assets
Investments in JVAs
Inventories 1
Derivative financial instruments
Land and buildings
Prepayments
Receivables
Right-of-use assets
Other
Deferred tax liabilities
Net deferred tax assets
8
22
10
50
53
1
2
114
26
172
6
464
(7)
(127)
(182)
—
(5)
(45)
(12)
(4)
(382)
82
(1)
8
1
(3)
(3)
6
(1)
(70)
(2)
(8)
3
(70)
1
(6)
—
(3)
1
38
2
2
35
(35)
—
—
—
—
(6)
—
—
—
—
(94)
—
(100)
—
—
108
—
—
—
—
—
108
8
7
30
11
47
44
7
1
44
24
70
9
294
(6)
(133)
(74)
(3)
(4)
(7)
(10)
(2)
(239)
55
1.
Includes investment properties that are considered trading stock for tax purposes.
Deferred tax assets expected to be recovered after more than 12 months are $189m (2021: $263m).
88 – Celebrating 50 years
—
(1)
3
(32)
(3)
(5)
1
(44)
(1)
(5)
(1)
(88)
(2)
84
(7)
(2)
1
(18)
—
2
58
(30)
—
—
—
—
13
—
—
—
—
(30)
—
(17)
—
—
9
—
—
—
—
—
9
(8)
2021
$m
35
(3)
(6)
(3)
(8)
38
2
(2)
17
(70)
—
—
—
2021
$m
214
64
Balance
30 June 2022
$m
7
29
14
15
54
2
2
—
23
35
8
189
(8)
(49)
(72)
(5)
(3)
(25)
(10)
—
(172)
17
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
C PROPERTY AND DEVELOPMENT ASSETS
FINANCIAL REPORT
This section includes investment properties, investments in joint ventures and associates and inventories. They represent the core assets of the
business and drive the value of the Group.
C1 PROPERTY PORTFOLIO
Mirvac holds a property portfolio for long-term rental yields. Depending on the specific arrangements for each property, they are classified as
investment properties or properties held through joint ventures. Refer to note I1 for a detailed listing of Mirvac’s property portfolio.
INVESTMENT PROPERTIES
Investment properties are properties owned by Mirvac and not occupied by the Group. Investment properties include investment properties
under construction (IPUC), which will become investment properties once construction is completed.
Mirvac accounts for its investment properties at fair value and revaluation gains are recognised as Other income. For the year ended
30 June 2022, $347m of revaluation gains had been recognised in Other income (2021: $392m).
INVESTMENTS IN JOINT ARRANGEMENTS
Mirvac enters into arrangements with third parties to jointly own investment properties. If Mirvac has joint control over the activities
and joint rights to the net assets of an arrangement held in a separate entity, then it is classified as a joint venture or associate (JVA).
The JVA holds investment property at fair value and Mirvac recognises its share of the JVA’s profit or loss as Other income.
Mirvac also holds joint operations with third parties whereby the parties have rights to the assets, and obligations for the liabilities,
relating to the arrangement.
For further details on accounting for JVAs, refer to note C3.
JUDGEMENTS IN FAIR VALUE ESTIMATION
Fair value is the price that would be received to sell an asset in an orderly transaction between market participants.
For all investment property that is measured at fair value, the existing use of the property is considered the highest and best use.
The Group assesses its property portfolio for climate related risks and resilience, where appropriate, in determining the fair value
of investment properties.
The fair values of properties are calculated using a combination of market sales comparisons, discounted cash flows and capitalisation rates.
To assist with calculating reliable estimates, Mirvac uses independent valuers on a rotational basis. Approximately 25 per cent of the
portfolio is independently valued every six months, with management internally estimating the fair value of the remaining properties
using estimation techniques by suitably qualified personnel. As at 30 June 2022, the Group undertook independent valuations covering
35 per cent of its investment property portfolio, by value, excluding IPUC.
The fair values are a best estimate but may differ to the actual sales price if the properties were to be sold. The key judgements for each
valuation method are explained below:
Discounted cash flow (DCF): Projects a series of cash flows over the property’s life and a terminal value, discounted using a discount rate
to give the present value.
The projected cash flows incorporate expected rental income (based on contracts or market rates), operating costs, lease incentives, lease
fees, capital expenditure, and a terminal value from selling the property. The terminal value is calculated by applying the terminal yield to
the net market income. The discount rate is a market rate reflecting the risk associated with the cash flows, the nature, location and tenancy
profile of the property relative to comparable investment properties and other asset classes.
Capitalisation rate: The rate or yield at which the annual net income from an investment is capitalised to ascertain its capital value at
a given date. The annual net income is based on contracted rents, market rents, operating costs and future income on vacant space.
The capitalisation rate reflects the nature, location and tenancy profile of the property together with current market evidence and sales
of comparable properties.
Direct comparison approach: Utilises recent sales of comparable properties, adjusted for any differences including the nature, location,
town planning/zoning, flooding and environmental impediments.
Investment properties under construction: There generally is not an active market for investment properties under construction, so fair
value is measured using DCF or residual valuations. DCF valuations for investment properties under construction are as described above
but also consider the costs and risks of completing construction and letting the property.
Residual: Estimates the value of the completed project, less the remaining development costs which include construction, finance costs
and an allowance for the developer’s risk and profit. This valuation is then discounted back to the present value.
Note C2 explains the key inputs and sensitivity to changes in the measurement of fair value of investment properties.
LEASE INCENTIVES
The carrying amount of investment properties includes lease incentives provided to tenants. Lease incentives are capitalised and
recognised on a straight-line basis over the lease term.
Annual Report 2022 – 89
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS C PROPERTY AND DEVELOPMENT ASSETS
C1 PROPERTY PORTFOLIO CONTINUED
GROUND LEASES
A lease liability reflecting the leasehold arrangements of investment properties is separately disclosed in the consolidated SoFP and
the carrying value of the investment properties adjusted (i.e. increased) so that the net of these two amounts equals the fair value of
the investment properties. The lease liabilities are calculated as the net present value of the future lease payments discounted at the
incremental borrowing rate.
At 30 June 2022, $48m of lease liabilities for ground leases has been recognised in the consolidated SoFP (2021: $47m).
Lease liabilities are subsequently measured by:
> increasing the carrying amount to reflect interest on the lease liability;
> reducing the carrying amount to reflect the lease payments made; and
> remeasuring the carrying amount to reflect any reassessment or lease modifications.
Some ground leases contain variable payment terms that are linked to sales generated. Variable lease payments that depend on sales are
recognised in the consolidated SoCI in the period in which the condition that triggers those payments occurs.
Interest on the lease liabilities and any variable lease payments not included in the measurement of the lease liabilities are recognised in the
consolidated SoCI to the period in which they relate.
DERECOGNITION OF INVESTMENT PROPERTIES
Investment properties are reclassified from non-current to current assets held for sale when they satisfy the conditions under AASB 5
Non-current Assets Held for Sale and Discontinued Operations.
For reclassification to occur, the disposal of the investment property must be highly probable with an exchanged contract and settlement
pending. Once control of an investment property transfers to a purchaser, usually upon settlement, the Group will derecognise the book
value of the Investment property with any resultant gain or loss recognised in the consolidated SoFP. As at 30 June 2022, there were no
investment properties held for sale (2021: $133m).
Occasionally, the Group will reassess the status of an investment property and determine that its highest and best use may be different from
its current use, for example an office building may better suited to redevelopment and sale as apartments. In these cases, once development
commences with a view to resale, and the investment property ceases to be classified as an investment property, all or part is reclassified
from Investment properties to Inventory. During the year, a net of $37m of investment properties was transferred to inventory (2021: $56m).
COMMITMENTS
Capital expenditure commitments
At 30 June 2022, capital commitments on Mirvac’s investment property portfolio were $645m (2021: $527m). There were no investment
properties pledged as security by the Group (2021: nil).
Lease commitments
Lease revenue from investment properties is accounted for as operating leases. The revenue from leases is recognised in the consolidated
SoCI on a straight-line basis over the lease term.
The future receipts are shown as undiscounted contractual cash flows.
Future operating lease receipts as a lessor
2022
2021
$521m
$1,666m
$1,481m
$558m
$1,675m
$1,447m
Within one year
Between one and five years
Later than five years
PROPERTY PORTFOLIO AS AT 30 JUNE 2022
Note
Investment properties
Investment properties under construction
Total investment properties
C2
Investments in JVA 1
Assets classified as held for sale
Total property portfolio
Integrated Investment Portfolio
Total
Office
$m
6,653
401
7,054
1,283
—
8,337
Industrial
$m
Retail
$m
Build to Rent
$m
1,242
341
1,583
67
—
2,576
342
2,918
—
—
1,650
2,918
221
413
634
—
—
634
2022
$m
10,692
1,497
12,189
1,350
—
13,539
2021
$m
10,978
843
11,821
472
133
12,426
1. Represents Mirvac’s share of the JVA’s investment properties which is included within the carrying value of investments in JVA.
90 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
C PROPERTY AND DEVELOPMENT ASSETS
C1 PROPERTY PORTFOLIO CONTINUED
BY ASSET CLASS
BY GEOGRAPHY
Office: 62%
Retail: 21%
Industrial: 12%
Build to Rent: 5%
FINANCIAL REPORT
NSW: 63%
VIC: 21%
QLD: 10%
ACT: 3%
WA: 3%
REVALUATION OF INVESTMENT PROPERTIES
FY22 net revaluation gain $347m
$0
C
U
P
I
/
P
I
FY21 net revaluation gain $392m
$0
C
U
P
I
/
P
I
($126m)
$265m
$208m
$275m
$137m
($7m)
($13m)
Build to Rent
Retail
Office
Industrial
C2 INVESTMENT PROPERTIES
Investment properties, including investment properties under construction, are held at fair value and any gains or losses are recognised in revenue
and Other income. The fair value movements are non-cash and do not affect the Group’s distributable income.
Office
$m
Industrial
$m
Retail
$m
Build to Rent
$m
Movements in investment properties
Balance 1 July
Expenditure capitalised
Acquisitions
Disposals
Net revaluation gain/(loss) from fair value adjustments
Transfer from/(to) inventories
Transfer to assets classified as held for sale
Transfer to joint ventures and associates
Amortisation expense
7,191
380
755
(661)
265
18
—
(819)
(75)
1,186
62
188
—
208
(55)
—
—
(6)
Balance 30 June
7,054
1,583
3,074
52
—
(50)
(126)
—
—
—
(32)
2,918
370
172
93
—
—
—
—
—
(1)
634
2022
Total
$m
11,821
666
1,036
(711)
347
(37)
—
(819)
(114)
12,189
2021
Total
$m
11,167
473
185
(82)
392
(56)
(133)
—
(125)
11,821
Annual Report 2022 – 91
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
C PROPERTY AND DEVELOPMENT ASSETS
C2 INVESTMENT PROPERTIES CONTINUED
FAIR VALUE MEASUREMENT AND VALUATION BASIS
The basis of valuation of investment properties is fair value. Fair values are based on market values, being the price that would be received to sell an
asset in an orderly transaction between market participants at the reporting date.
Investment properties are measured as Level 3 financial instruments. Refer to note D6 for explanation of the levels of fair value measurement. The
following are the unobservable inputs used in determining the fair value measurement of investment properties. Movement in any of the unobservable
inputs is likely to have an impact on the fair value of investment property. The higher the net market income or 10-year compound annual growth rate,
the higher the fair value. The higher the capitalisation rate, terminal yield or discount rate, the lower the fair value.
Unobservable inputs
Details
Capitalisation
rate
Discount rate
The rate at which net market income is capitalised to determine the value of a property.
The rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
This should reflect the opportunity cost of capital, that is, the required rate of return the capital can earn if put to other
uses having regard to a similar risk profile.
Terminal yield
The capitalisation rate used to convert income into an indication of the anticipated value of the property at the end of
the holding period when carrying out a discounted cash flow calculation.
Market rent
and growth rate
The rent at which a tenancy could be leased in the market including rental growth in future years at the date of valuation.
Market rent includes gross rent and net rent. Gross rent is where outgoings are incorporated in the rent being paid. Net
market rent is where the owner recovers outgoings from the tenant on a pro-rata basis.
Market rate
The market rate per square metre uses recent transactional evidence of comparable properties to determine the fair
value of the investment property under the direct comparison method.
The discounted cash flow, capitalisation rate, residual valuation and direct comparison methods all use unobservable inputs in determining fair value;
ranges of the inputs are included below per asset class:
Inputs used to measure fair value
Level 3
fair value
$m
Net market
income
$/sqm
10-year compound Capitalisation
rate
annual growth rate
%
%
Market rate
$/sqm
Terminal
yield
%
Discount
rate
%
2021
Office
Industrial
Retail
Build to Rent
Total investment properties
2022
Office
Industrial
Retail
Build to Rent
Total investment properties
7,191
1,186
3,074
370
11,821
7,054
1,583
2,918
634
12,189
312 – 1,519
104 – 407
311 – 1,121
539 1
—
365 – 1,199
110 – 410
314 – 1,127
547 1
—
1. Average net market income per apartment per week.
2.50 – 3.80
2.82 – 3.02
2.30 – 3.84
3.00
4.38 – 7.50
4.00 – 5.75
4.75 – 8.75
4.00
—
—
—
—
—
—
—
4.50 – 7.50
4.50 – 6.00
5.00 – 9.00
4.00
5.85 – 8.25
5.25 – 6.75
6.25 – 9.50
6.25
—
—
2.60 – 4.20
3.27 – 3.32
1.87 – 4.13
3.30
4.50 – 6.75
3.50 – 5.00
4.75 – 8.75
4.00
—
—
—
—
865-1,612
—
—
4.75 – 7.00
3.75 – 5.25
5.00 – 9.00
4.00
6.00 – 7.75
4.88 – 6.25
6.00 – 9.50
6.25
—
—
92 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
C PROPERTY AND DEVELOPMENT ASSETS
C2 INVESTMENT PROPERTIES CONTINUED
SENSITIVITY ANALYSIS
Due to the rapidly changing economic climate and the judgement required to assess the fair value of the Group’s investment properties, a sensitivity
analysis has been undertaken to further stress test the Group’s assessment of fair value as at 30 June 2022.
The following sensitivity analysis is based on upward and downward movement scenarios of 25 bps and 50 bps on the movement of capitalisation rates,
discount rates and terminal yields per asset class compared to the capitalisation rates, discount rates and terminal yields adopted by the Group as at
30 June 2022. These are considered to be the key unobservable inputs that would be expected to have the most material impact on the fair values
adopted if they moved. Valuations use a blended capitalisation rate and DCF approach whereby the current market income and the cash flow of the
investment property are considered to determine the final fair value. Varying the capitalisation rates alone will only impact the valuations derived through
capitalisation method and has no impact on the DCF analysis. A change in discount rate and terminal capitalisation rate will only impact the DCF valuation.
Accordingly, all three metrics need to be moved proportionately to ensure a consistent methodology when performing the sensitivity analysis.
Presented below is the outcome of the sensitivity analysis as the decrement or increment to the fair value of each asset class of the Group’s investment
property portfolio (including office JV but excluding IPUC and development assets) should the unobservable inputs increase or decrease by 25 bps or
50 bps. For example, an increase of 25 bps of the capitalisation rate, discount rate and terminal yield in the Group’s office portfolio would have resulted
in a decrement of $414m in addition to the fair value presented as at 30 June 2022.
Investment properties at fair value assessed using DCF,
market capitalisation and capitalisation rate
Office
Industrial
Retail
Build to Rent
Total
Capitalisation rate, discount rate and terminal yield movement by
25 bps
$m
(414)
(73)
(119)
(13)
(619)
50 bps
$m
(813)
(138)
(229)
(25)
(1,205)
25 bps
$m
50 bps
$m
407
82
115
15
619
805
175
258
32
1,270
For investment properties at fair value assessed using the direct comparison approach, a sensitivity analysis was performed. Using an increase of
10 per cent in the rate per square metre and a decrease of 10 per cent in the rate per square metre, the impact to the fair value presented as at
30 June 2022 was not material.
C3 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
A joint venture or an associate (JVA) is an arrangement where Mirvac has joint control or significant influence over the activities and joint rights to
the net assets. Refer to note G1 for details on how Mirvac decides if it controls an entity. Refer to note I3 for the Group’s joint venture and associate
entities and ownership percentages.
Mirvac initially records its investment in JVAs at cost and subsequently accounts for them using the equity method. Under the equity method, the
Group’s share of the JVA’s profit or loss is added to/deducted from the carrying amount each year. Distributions received or receivable are recognised
by reducing the carrying amount of the JVA.
When transactions between Mirvac and its JVAs create an unrealised gain, the Group eliminates the unrealised gain relating to Mirvac’s proportional
interest in the JVA. Unrealised losses are eliminated in the same way unless there is evidence of impairment, in which case the loss is realised.
JUDGEMENT IN TESTING FOR IMPAIRMENT OF INVESTMENTS IN JVA
At each reporting period, the Group assesses whether there is any indication that its investments in JVAs may be impaired. If any such
indication exists, the Group estimates the recoverable amount of the asset. The recoverable amount is calculated as the estimated present
value of future distributions to be received from the JVA and from its ultimate disposal. There were no impairments of JVAs in 2022 (2021: nil).
All JVAs are established or incorporated in Australia. The movements in the carrying amount of the JVAs are as follows:
Movements in the carrying amount of JVA
Balance 1 July
Share of profit 1
Equity acquired
Other movements
Transfer from investment properties
Return of capital
Distributions received/receivable
Balance 30 June
1. Share of net profit of JVAs reconciles to the consolidated SoCI net of expenses associated with the Tucker Box Hotel Group transaction.
2022
$m
783
111
73
(33)
819
(174)
(98)
1,481
2021
$m
744
114
12
2
—
(5)
(84)
783
Annual Report 2022 – 93
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
C PROPERTY AND DEVELOPMENT ASSETS
C3 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES CONTINUED
The table below provides summarised financial information for those JVAs that are significant to the Group.
The information presented reflects the total amounts presented in the financial statements of the relevant JVAs and not the Group’s share, unless
otherwise stated. The information has been amended to reflect any unrealised gains or losses on transactions between Mirvac and its JVAs.
The
George Street
Trust 1
Mirvac
(Old Treasury)
Trust 2
Mirvac
Locomotive
Trust 1,2
Mirvac
8 Chifley
Trust 2
Tucker Box
Hotel Group
Other
JVAs
Total
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
Property
investment
Property
investment
Property
investment
Property
investment
Hotel
investment
Various
4
12
16
1,159
1,175
—
18
18
—
—
—
18
1,157
50
579
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6
—
6
497
503
—
7
7
—
—
—
7
6
1
7
4
3
7
487
494
471
478
—
7
7
—
—
—
7
—
7
7
—
—
—
7
496
487
471
50
248
50
244
51
240
579
—
242
237
223
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7
1
8
462
470
—
6
6
—
—
—
6
2
—
2
458
460
—
7
7
—
—
—
7
464
453
50
232
50
227
31
38
69
—
69
—
25
25
—
—
—
25
44
50
22
1
621
622
—
622
197
43
240
—
—
—
240
382
50
191
67
67
134
492
626
—
17
17
64
160
224
241
385
—
195
76
102
178
119
121
240
85
724
809
340
3,081
1,285
518
3,321
2,094
24
23
47
33
160
193
240
278
—
139
—
80
80
64
160
224
304
221
80
301
33
160
193
494
3,017
1,600
—
1,516
—
801
216
210
22
191
199
145
1,481
783
Principal activities
Summarised SoFP
Cash and cash equivalents
Other current assets
Total current assets
Total non-current assets
Total assets
Borrowings
Other current liabilities
Total current liabilities
Borrowings
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Group’s ownership of the JVA in %
Group’s share of net assets in $m
Carrying amount in Group’s
consolidated SoFP
1. This entity was previously consolidated into the Group; however control was lost during the year and is now accounted for as a JVA. Refer to note G4.
2. The difference between the carrying amount and the Group’s share in the net assets of its investment is a result of eliminations due to the Group’s transactions with its investee.
The
George Street
Trust 1
Mirvac
(Old Treasury)
Trust
Mirvac
Locomotive
Trust 1
Mirvac
8 Chifley
Trust
Tucker Box
Hotel Group
Other
JVAs
Total
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
Property
investment
Property
investment
Property
investment
Property
investment
Hotel
investment
Various
50
—
6
56
—
14
—
42
19
—
—
—
—
—
—
—
—
—
42
—
5
47
—
9
—
38
15
42
—
25
67
—
8
—
59
14
28
—
—
28
—
8
—
20
10
—
—
—
—
—
—
—
—
—
23
—
2
25
—
5
—
20
10
32
—
—
32
—
25
—
7
14
10
—
2
12
5
7
—
—
—
8
—
62
70
5
3
1
61
—
254
—
15
269
1
184
—
84
246
—
1
247
1
140
—
106
407
—
30
437
6
227
—
204
328
—
88
416
6
176
1
233
44
56
98
84
Principal activities
Summarised SoCI
Revenue
Interest income
Other income
Total revenue and other income
Interest expense
Other expenses
Income tax expense
Profit from continuing operations
Distributions received/receivable
by the Group from JVAs
1. This entity was previously consolidated into the Group; however control was lost during the year and is now accounted for as a JVA. Refer to note G4.
CAPITAL EXPENDITURE COMMITMENTS
At 30 June 2022, the Group’s share of its JVA’s capital commitments which have been approved but not yet provided for was $56m (2021: $42m).
94 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
C PROPERTY AND DEVELOPMENT ASSETS
C4 INVENTORIES
The Group develops residential, commercial and mixed use properties for sale in the ordinary course of business.
Inventories are classified as current if they are expected to be settled within 12 months or otherwise they are classified as non-current.
DEVELOPMENT PROJECTS
Development projects are valued at the lower of cost and net realisable value (NRV). Following a review and assessment of the project
forecasts and new development opportunities, there were Inventory write-downs and losses recognised during the year of $15m (2021:
$12m); refer to note B3.
Cost includes the costs of acquisition, development, interest capitalised and all other costs directly related to specific projects. An allocation
of direct overhead expenses is also included.
JUDGEMENT IN CALCULATING NRV OF INVENTORIES
NRV is the estimated selling price in the ordinary course of business less the estimated costs to complete and sell the development. NRV
is estimated using the most reliable evidence available at the time, including expected fluctuations in selling price and estimated costs to
complete and sell.
The key assumptions used in the project forecasts for the Group’s NRV assessments include:
Key assumption
Details of key assumption
Sales rates/volumes
The rate at which lots are sold over a given period.
Sales price
The price which a given lot is sold to the general public.
Sales incentives
Recognised as a percentage of the purchase price, which is allocated to either direct or indirect expenditure to
induce the sale of a lot.
Settlement volumes
The number of lot settlements achievable over a given period.
Cost to complete
All remaining costs to complete the program of works and sell unsold stock, measured at reporting date.
Program duration
The duration of a project from commencement to completion of all stages, a project program generally extends
from the approval to purchase through to the final settlement of lots and may extend over many years.
Annual Report 2022 – 95
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS C PROPERTY AND DEVELOPMENT ASSETS
C4 INVENTORIES CONTINUED
Movements in inventories
Balance 1 July
Costs incurred
Settlements
Provision for impairment of inventories
Inventory costs written off
Transfer from investment properties
Transfer to other assets
Balance 30 June
Inventory represented by
Current inventory
Provision for impairment
Total current inventory
Non-current inventory
Provision for impairment
Total non-current inventory
Total inventories
Residential
Apartments
$m
924
319
(316)
—
(4)
—
—
923
MPC
$m
843
776
(412)
—
(1)
—
(4)
1,202
Residential
MPC
$m
Apartments
$m
228
(3)
225
983
(6)
977
1,202
332
(2)
330
644
(51)
593
923
Commercial &
Mixed Use
Total
$m
326
235
(433)
(5)
(5)
37
(19)
136
Commercial &
Mixed Use
Total
$m
67
—
67
76
(7)
69
136
Total
$m
1,767
1,095
(728)
—
(5)
—
(4)
2,125
Total
$m
560
(5)
555
1,627
(57)
1,570
2,125
INVENTORIES AS AT 30 JUNE 2022
By product line
By geography
Apartments: 41%
Masterplanned communities: 53%
Commercial & Mixed Use: 6%
2022
Total
$m
2,093
1,330
(1,161)
(5)
(10)
37
(23)
2,261
2022
Total
$m
627
(5)
622
1,703
(64)
1,639
2,261
NSW: 63%
VIC: 24%
QLD: 8%
WA: 5%
2021
Total
$m
1,684
1,137
(772)
(5)
(7)
56
—
2,093
2021
Total
$m
651
(19)
632
1,516
(55)
1,461
2,093
96 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
D CAPITAL STRUCTURE AND RISKS
FINANCIAL REPORT
This section outlines the market, credit and liquidity risks that the Group is exposed to and how it manages these risks. Capital comprises stapled
securityholders’ equity and net debt.
D1 CAPITAL MANAGEMENT
Mirvac has a capital management framework, approved and monitored by the
Board. The framework aims to address the market, credit and liquidity risks while
also meeting the Group’s strategic objectives.
These objectives include:
> The Group’s target allocation of capital is 80 per cent investment and 20 per cent
development with the current allocation being 88 per cent/12 per cent;
> The Group’s distribution policy is a minimum of trust taxable earnings and up
to 80 per cent of operating earnings. The payout ratio for FY22 was 67.5 per cent;
> The Group’s target credit rating is Fitch A- and Moody’s A3 which was
maintained as at 30 June 2022; and
> The Group’s target gearing ratio is between 20 and 30 per cent and was
21.3 per cent as at 30 June 2022.
GEARING RATIO
21.3%
30 June 2022
22.8%
30 June 2021
If the Group is required to change its gearing ratio, it could adjust its payout ratio, issue new equity, buy back securities, or realise capital through
disposals of investment properties to repay borrowings.
The Group was in compliance with all debt covenants in 2022 and in the prior year.
The Group uses derivatives to hedge its underlying exposures to changes in interest rates on its borrowings and to changes in foreign exchange rates
on its foreign currency transactions.
D2 BORROWINGS AND LIQUIDITY
The Group enters into borrowings at both fixed and floating interest rates and also uses interest rate derivatives to reduce interest rate risks.
During the year, the Group has undertaken $450m of new financing transactions with maturities ranging from 2 – 10 years. At 30 June 2022,
the Group had $1,368m of cash and committed undrawn facilities available.
DRAWN DEBT SOURCES AS AT 30 JUNE 2022
$800m
$600m
$400m
$200m
0
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
FY33
FY34
FY35
FY36
FY37
FY38
FY39
FY40
BORROWINGS
Borrowings are initially recognised at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest
rate method. Under the amortised cost method, any difference between the initial amount recognised and the redemption amount is recognised in the
consolidated SoCI over the period of the borrowings using the effective interest rate method.
MTN
USPP
EMTN
Bank
Unsecured facilities
Bank loans
Bonds
Total unsecured borrowings
Prepaid borrowing costs
Total borrowings
Undrawn facilities
Other
Lease liabilities
2022
2021
Current Non-current
$m
$m
Total carrying
amount
$m
—
281
281
—
281
818
3,123
3,941
(11)
3,930
818
3,404
4,222
(11)
4,211
810
Total
fair value
$m
818
3,397
4,215
(11)
4,204
Current Non-current
$m
$m
Total carrying
amount
$m
—
—
—
—
—
578
3,356
3,934
(12)
3,922
578
3,356
3,934
(12)
3,922
750
Total
fair value
$m
578
3,464
4,042
(12)
4,030
8
72
80
80
4
64
68
68
Annual Report 2022 – 97
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
D CAPITAL STRUCTURE AND RISKS
D2 BORROWINGS AND LIQUIDITY CONTINUED
The fair value of bank loans is considered to approximate their carrying amount. The fair value of bonds is calculated as the expected future cash flows
discounted by the relevant current market rates.
The following table sets out Mirvac’s net exposure to interest rate risk by maturity periods. Exposures arise predominantly from liabilities bearing
variable interest rates as the Group intends to hold fixed rate liabilities to maturity.
2022
Fixed interest maturing in:
2021
Fixed interest maturing in:
Floating
interest
rate
$m
818
2,515
(900)
2,433
Less
than
1 year
$m
—
50
400
450
Bank loans
Bonds
Interest rate derivatives
Total
1 to 2
years
$m
2 to 5
Over
years 5 years
$m
$m
Total
$m
818
3,272
—
—
250
300
550
—
75
400
475
—
382
(200)
182
4,090
Floating
interest
rate
$m
Less
than
1 year
$m
320
2,065
(1,200)
1,185
—
—
300
300
1 to 2
years
$m
2 to 5
Over
years 5 years
$m
$m
—
50
400
450
258
325
600
1,183
—
681
(100)
Total
$m
578
3,121
—
D3 CASH FLOW INFORMATION
For the purpose of presentation in the consolidated SoCF, cash and cash equivalents include cash at bank and short-term deposits at call.
RECONCILIATION OF PROFIT TO OPERATING CASH FLOW
Profit from continuing operations
Revaluation of investment properties
Share of net profit of assets
JVA distributions received
Net gain on sale of assets
Net loss on sale of PPE
Net gain on financial instruments
Inventory write-downs and losses
Depreciation and amortisation expenses
Impairment loss on receivables
Security-based payments expense
Change in operating assets and liabilities
Net cash inflows from operating activities
NET DEBT RECONCILIATION
2022
$m
907
(347)
(109)
95
(16)
1
(64)
15
77
24
15
298
896
Liabilities from financing activities
Current
lease liabilities
$m
Non-current
lease liabilities
$m
Current
borrowings
$m
Non-current
liabilities
$m
Total Cash and cash
equivalents
$m
liabilities
$m
Balance 1 July 2020
Net cash flow movements
Other non-cash movements
Balance 30 June 2021
Net cash flow movements
Other non-cash movements
Balance 30 June 2022
(4)
4
(4)
(4)
(12)
8
(8)
(68)
—
4
(64)
—
(8)
(72)
(200)
200
—
—
(219)
(62)
(281)
(4,100)
(162)
340
(3,922)
(173)
165
(3,930)
(4,372)
42
340
(3,990)
(404)
103
(4,291)
324
(207)
—
117
441
—
558
98 – Celebrating 50 years
581
3,699
2021
$m
899
(392)
(109)
84
(2)
—
(45)
12
71
20
10
87
635
Total
$m
(4,048)
(165)
340
(3,873)
37
103
(3,733)
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
D CAPITAL STRUCTURE AND RISKS
D4 DERIVATIVE FINANCIAL INSTRUMENTS
Mirvac uses derivative financial instruments to hedge its exposure to movements in interest and foreign exchange rates and not for trading
or speculative purposes. Refer to note D5 for further details of how Mirvac manages financial risk.
HEDGING PROFILE AT 30 JUNE 2022
Derivatives are classified as held for trading and accounted for at fair value through profit or loss unless they are designated as hedges. All derivative
financial instruments used for hedge accounting are recognised initially at fair value and reported subsequently at fair value in the consolidated SoFP.
The chart below shows the net amount of debt subject to fixed interest rates and the maximum average fixed interest rate payable each year:
$2.0bn
$1.5bn
$1.0bn
$0.5bn
0
2.42%
2.46%
2.44%
2.47%
2.73%
2.67%
4.0%
3.5%
3.0%
2.5%
2.0%
FY22
FY23
FY24
FY25
FY26
FY27
Fixed
Collar
Swap
Average Rate
DERIVATIVES THAT QUALIFY FOR HEDGE ACCOUNTING
Mirvac’s treasury policy sets out the hedging strategy and objectives to manage exposures arising from fluctuations in interest rates and foreign
currency exchange rates.
At implementation, Mirvac formally designates and documents the relationship between hedging instruments (cross currency interest rate swaps only)
and the hedged items (foreign currency bonds) as well as the proposed effectiveness of the risk management objective that the hedge relationship
addresses. On an ongoing basis, Mirvac documents its assessment of retrospective and prospective hedge effectiveness of all hedge relationships for
changes in fair values or cash flows.
FAIR VALUE HEDGE
A fair value hedge is a hedge of the exposure to changes in fair value of an asset or liability (such as a bond) that is attributable to a particular risk
(such as movements in interest rates).
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the consolidated SoCI, together with any
changes in the fair value of the hedged asset/liability that are attributable to the hedged risk.
CASH FLOW HEDGE
A cash flow hedge is a hedge of the exposure to variability in cash flows attributable to a particular risk associated with an asset, liability or highly
probable forecast transaction that could affect profit or loss.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity via the cash
flow hedge reserve. Any gain or loss relating to the ineffective portion is recognised in the consolidated SoCI.
Annual Report 2022 – 99
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS D CAPITAL STRUCTURE AND RISKS
D4 DERIVATIVE FINANCIAL INSTRUMENTS CONTINUED
COST OF HEDGING
Currency basis spread is a liquidity premium that is charged for exchanging different currencies, and the changes over time impacting the fair value of
cross currency swaps. Mirvac defers the change in fair value to currency basis spreads in the cost of hedging reserve.
All derivatives require settlement on a monthly or quarterly basis. Translation gains or losses on the net investment in foreign operations are recorded
through the foreign currency translation reserve.
Current
Interest rate derivatives – through profit or loss
Cross currency interest rate swaps – cash flow hedge
Total current derivative financial instruments
Non-current
Interest rate derivatives – through profit or loss
Cross currency interest rate swaps – cash flow hedges
Total non-current derivative financial instruments
Total derivative financial assets/liabilities
2022
2021
Asset
$m
Liability
$m
Asset
$m
Liability
$m
1
62
63
17
161
178
241
—
—
—
47
69
116
116
—
—
—
3
245
248
248
5
—
5
75
24
99
104
MASTER NETTING ARRANGEMENTS – NOT CURRENTLY ENFORCEABLE
Agreements with derivative counterparties are based on an ISDA Master Agreement. Under the terms of these arrangements, only where certain credit
events occur (such as default), may the net position owing/receivable to a single counterparty in the same currency be taken as owing and all the
relevant derivative arrangements terminated. As the Group does not presently have a legally enforceable right of set-off, these amounts have not been
offset in the consolidated SoFP. If a credit event had occurred, the ISDA Master Agreement would have the effect of netting, allowing a reduction to
derivative assets and derivative liabilities of the same amount of $107 million (2021: $128 million).
D5 FINANCIAL RISK MANAGEMENT
Mirvac’s activities expose it to a variety of financial risks including market risk, credit risk and liquidity risk. Mirvac seeks to minimise the potential
impact of these financial risks on financial performance, for example, by using derivative financial instruments to protect against interest rate
and foreign exchange risk.
Financial risk management is carried out by a central treasury department (Mirvac Group Treasury) under policies approved by the Board. The Board
provides overall risk management principles and policies covering specific areas. 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 table below summarises key financial risks and how they are managed:
Risk
Definition
Exposures arising from
Management of exposures
Market risk –
interest rate
The risk that the fair value
or cash flows of financial
instruments will fluctuate
due to changes in market
interest rates
> Borrowings issued
at fixed rates and
variable rates
> Derivatives
> Interest rate derivatives manage cash flow interest rate risk by
converting floating rate borrowings to fixed or capped rates with
target of 55 per cent
> Mirvac does not manage the fair value risk for debt instruments from
interest rates, as it does not have an impact on the cash flows paid
by the business
> Refer to note D2 for details on the interest rate exposure for borrowings
Market risk –
foreign
exchange
The risk that the fair value
of a financial commitment,
asset or liability will
fluctuate due to changes
in foreign exchange rates
> Bonds denominated in
other currencies
> Receipts and payments
which are denominated
in other currencies
> Cross currency interest rate swaps to convert non-Australian dollar
borrowings to Australian dollar exposures. These cross currency
interest rate swaps have been designated as cash flow hedges with
the movements in fair value recognised while they are still in an
effective hedge relationship
100 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
D CAPITAL STRUCTURE AND RISKS
D5 FINANCIAL RISK MANAGEMENT CONTINUED
Market risk –
price
Credit risk
The risk that the fair value
of other financial assets at
fair value through profit or
loss will fluctuate due to
changes in the underlying
share/unit price
The risk that a
counterparty will not make
payments to Mirvac as
they fall due
> Other financial assets
at fair value through
profit or loss, with any
resultant gain or loss
recognised in other
comprehensive income
> Cash and cash
equivalents
> Receivables
> Derivative financial
assets
> The Group is exposed to minimal price risk and so does not
manage the exposures
> Setting credit limits and obtaining collateral as security (where
appropriate)
> Diversified trading spread across large financial institutions with
investment grade credit ratings
> Regularly monitoring the exposure to each counterparty and their
> Other financial assets
credit ratings
> Refer to note F1 for details on credit risk exposure on receivables.
The Group deems the exposure to credit risk as not significant for all
other classes of financial assets and liabilities
Liquidity risk
The risk that Mirvac will
not be able to meet its
obligations as they fall due
> Payables
> Borrowings
> Derivative financial
liabilities
> Regular forecasts of the Group’s liquidity requirements. Surplus funds
are only invested in highly liquid instruments
> Availability of cash, marketable securities and committed credit facilities
> Ability to raise funds through issue of new securities through
MARKET RISK
Foreign exchange risk
The cross currency interest rate swaps (CCIRS) that are in place cover
100 per cent of the foreign denominated bonds (interest payments and
redemption value) with the same maturity profiles as the bonds. This
removes exposure to foreign exchange movements between the foreign
currencies and Australian dollar.
Foreign currency transactions are translated into the entity’s functional
currency using the exchange rate at the transaction date. Foreign
exchange gains and losses resulting from settling foreign currency
transactions and from translating foreign currency monetary assets and
liabilities at year end are recognised in the consolidated SoCI.
Sensitivity analysis – interest rate risk and foreign exchange risk
This sensitivity analysis shows the impact on profit after tax and equity if
Australian interest rates changed by 100 basis points (bps).
placements or DRP
> Refer to note D2 for details of liquidity risk of the Group’s
financing arrangements
NOTIONAL AMOUNT AND EXPIRY OF CCIRS
$2,473m
$2,322m
$1,637m
$1,286m
$1,017m
$515m
$170m $170m
1 to 2 years
2 to 5 years
Over 5 years
Total
30 June 2021
30 June 2022
Given the recent significant upward shift in the interest rate environment that the Group is operating in and with official interest rates at the beginning
of a tightening cycle, a 100 bps movement is deemed an appropriate sensitivity to consider for 30 June 2022. The Group has borrowings and CCIRS
which reference foreign interest rates and foreign exchange rates however these are hedge accounted in effective hedge relationships, therefore the
net profit impact is nil.
Total impact on profit after tax and equity
Interest rate risk 1
Changes in:
Australian interest rates
Foreign exchange risk 2
Foreign interest rates
Foreign exchange risk 2
Foreign exchange rates
2022
2021
100 bps
$m
100 bps
$m
25 bps
$m
25 bps
$m
$15.5m decrease
$14.2m increase
$1.1m increase
$3.3m decrease
—
—
—
—
—
—
—
—
1. This calculation shows the impact on borrowings, cash and derivative financial instruments held as an economic hedge. It assumes that no interest is capitalised into qualifying assets as discussed in note
B3. If fair value movements were excluded, operating profit would reduce if interest rates were to rise.
2. The Group has borrowings and CCIRS which reference foreign interest rates and foreign exchange rates; however, these are hedge accounted in effective hedge relationships, therefore the net profit impact is nil.
Annual Report 2022 – 101
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
D CAPITAL STRUCTURE AND RISKS
D5 FINANCIAL RISK MANAGEMENT CONTINUED
EFFECTS OF HEDGE ACCOUNTING
The effects of the foreign currency-related hedging instruments on the Group’s financial position and performance are as follows:
Carrying amount
Original debt amount
Original hedged amount
Maturity date
Hedge ratio
Change in discounted spot value of outstanding hedging instruments since inception of the hedge
Change in value of hedged item used to determine hedge ineffectiveness
Weighted average hedged rate for outstanding hedging instruments against AU$1
2022
$2,605m
$2,473m
$2,473m
2021
$2,557m
$2,322m
$2,322m
Dec 2022 – Mar 2034
Dec 2022 – Mar 2034
1:1
$136m
($151m)
US$0.79
YEN79.82
HK$5.74
1:1
$206m
($246m)
US$0.79
YEN79.82
HK$6.04
LIQUIDITY RISK
Maturities of financial liabilities and derivative financial assets
Mirvac’s maturity of financial liabilities and derivative financial assets is provided in the following table. The amounts disclosed in the table are the
contractual undiscounted cash flows:
2022
Maturing in:
2021
Maturing in:
Less than
1 year
$m
747
22
414
8
1 to 2
years
$m
242
21
368
7
2 to 5
years
$m
332
794
1,307
16
Over
5 years
$m
—
—
2,167
49
Less than
1 year
$m
Total
$m
1,321
837
4,256
80
557
5
126
4
1 to 2
years
$m
43
6
383
4
2 to 5
years
$m
Over
5 years
$m
325
568
938
11
—
—
2,672
49
Total
$m
925
579
4,119
68
1
1
16
15
33
24
15
14
6
59
289
(328)
1,153
131
(88)
682
1,360
(1,379)
2,446
1,545
(1,532)
2,244
3,325
(3,327)
6,525
50
(85)
681
225
(294)
382
715
(766)
1,805
1,855
(1,840)
2,742
2,845
(2,985)
5,610
Payables 1
Unsecured bank loans
Bonds
Lease liabilities
Net settled derivatives
Interest rate derivatives –
floating to fixed
Gross settled derivatives
(cross currency swaps)
> Outflow
> (Inflow)
1.
Includes deferred revenue.
102 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
D CAPITAL STRUCTURE AND RISKS
D6 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
Mirvac measures various financial assets and liabilities at fair value which, in some cases, may be subjective and depend on the inputs used
in the calculations. The different levels of measurement are described below:
> Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
> Level 2: not traded in an active market but calculated with significant inputs coming from observable market data; and
> Level 3: significant inputs to the calculation that are not based on observable market data (unobservable inputs).
Mirvac holds no Level 1 financial instruments.
The methods and assumptions used to estimate the fair value of Mirvac’s financial instruments are as follows:
DERIVATIVE FINANCIAL INSTRUMENTS
Mirvac’s derivative financial instruments are classified as Level 2, as the fair values are calculated based on observable market interest rates and
foreign exchange rates. The fair values of interest rate derivatives are calculated as the present value of the estimated future cash flows based on
observable yield curves.
OTHER FINANCIAL ASSETS
Other financial assets include units in unlisted entities; refer to note F2 for further details. The carrying value of other financial assets is equal to the fair value.
Investments in unlisted entities are traded in inactive markets and the fair value is determined by the unit or share price as advised by the trustee
of the unlisted entity, based on the value of the underlying assets. The unlisted entity’s assets are subject to regular external valuations using the
valuation methods explained in note C1.
The following table summarises the financial instruments measured and recognised at fair value on a recurring a basis:
2022
2021
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
Financial assets carried at fair value
Investments in unlisted entities
Derivative financial instruments
Total financial assets carried at fair value
Financial liabilities carried at fair value
Derivative financial instruments
Total financial liabilities carried at fair value
—
—
—
—
—
—
241
241
116
116
73
—
73
—
—
73
241
314
116
116
—
—
—
—
—
—
248
248
104
104
78
—
78
—
—
78
248
326
104
104
There were no transfers between the fair value hierarchy levels during the year. The following table presents a reconciliation of the carrying value of
Level 3 instruments held by the Group (excluding investment properties):
Investments in unlisted funds
Balance 1 July
Acquisitions
Net gain recognised in gain on financial instruments
Return of capital
Balance 30 June
Refer to note C2 for a reconciliation of the carrying value of investment properties, also classified as Level 3.
2022
$m
78
8
4
(17)
73
2021
$m
68
2
8
—
78
Annual Report 2022 – 103
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
E EQUITY
This section includes details of distributions, stapled securityholders’ equity and reserves. It represents how the Group raised equity from its stapled
securityholders in order to finance the Group’s activities both now and in the future.
E1 DISTRIBUTIONS
Half yearly ordinary distributions paid/payable and distribution per security:
9.9cpss
10.2cpss
4.8cpss
5.1cpss
5.1cpss
5.1cpss
$390m
paid
$404m
paid/payable
$189m
paid on
1 Mar 2021
$202m
paid on
28 Feb 2022
$201m
paid on
31 Aug 2021
$202m
payable on
31 Aug 2022
FY21
FY22
31 December
FY21
FY22
30 June
FY21
FY22
Annual
All distributions in the current and prior periods were unfranked. Franking credits available for future years, based on a tax rate of 30 per cent,
total $30m (2021: $24m).
E2 CONTRIBUTED EQUITY
Mirvac’s contributed equity includes ordinary shares in Mirvac Limited and ordinary units in MPT which are stapled to create stapled securities.
Each ordinary security entitles the holder to receive distributions when declared, to one vote at securityholders’ meetings and on polls and to a
proportional share of proceeds on winding up of Mirvac.
When new securities or options are issued, the directly attributable incremental costs are deducted from equity, net of tax.
CONTRIBUTED EQUITY
Mirvac Limited – ordinary shares issued
MPT – ordinary units issued
Total contributed equity
2022
2021
No. securities
m
Securities
$m
No. securities
m
Securities
$m
3,942
3,942
2,165
5,362
7,527
3,936
3,936
2,162
5,348
7,510
The total number of stapled securities issued as listed on the ASX at 30 June 2022 was 3,943m (2021: 3,938m) which included 1m of stapled securities
issued under the LTI plan and EIS (2021: 1m). Securities issued to employees under the Mirvac employee LTI plan and EIS are accounted for as options
and are recognised in the security-based payments reserve, not in contributed equity.
MOVEMENTS IN PAID UP EQUITY
Balance 1 July
Securities issued under EEP 1
LTI vested 2
Legacy schemes vested
Balance 30 June
1. Mirvac issues securities to employees as security-based payments; refer to note E3 for details.
2. Stapled securities issued for LTIs during the year, relate to LTIs granted in prior years.
2022
2021
No. securities
3,936,111,448
401,059
5,111,753
97,782
3,941,722,042
Securities
$m
7,510
1
15
1
7,527
No. securities
3,932,737,261
525,021
2,746,083
103,083
3,936,111,448
Securities
$m
7,503
1
6
—
7,510
104 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
E EQUITY
E3 RESERVES
COST OF HEDGING RESERVE
The cost of hedging reserve is used to record gains or losses on derivatives that relate to the currency basis spread. Currency basis spread is the
liquidity premium that is charged for exchanging different currencies, and changes over time impacting the fair value of a cross currency swap.
CASH FLOW HEDGE RESERVE
The cash flow hedge reserve is used to record gains or losses on derivatives that qualify as cash flow hedges and that are recognised in other
comprehensive income.
SECURITY-BASED PAYMENTS (SBP) RESERVE
The SBP reserve recognises the SBP expense. Further details on SBP are explained in note E4.
NON-CONTROLLING INTERESTS (NCI) RESERVE
The NCI reserve was used to record the discount received on acquiring the non-controlling interest in Mirvac Real Estate Investment Trust in
December 2009.
Note
E4
E4
Balance 1 July 2020
Hedging reserve movements
Cash flow hedge movements
SBP movements
Balance 30 June 2021
Hedging reserve movements
Cash flow hedge movements
SBP movements
Balance 30 June 2022
E4 SECURITY-BASED PAYMENT
Cost of
Cash flow
hedging reserve hedge reserve
$m
$m
SBP
reserve
$m
NCI
reserve
$m
Capital
reserve
$m
Total
reserves
$m
—
9
—
—
9
(7)
—
—
2
(9)
—
(25)
—
(34)
—
24
—
(10)
30
—
—
1
31
—
—
(7)
24
8
—
—
—
8
—
—
—
8
(1)
—
—
—
(1)
—
—
—
(1)
28
9
(25)
1
13
(7)
24
(7)
23
Mirvac currently operates the following SBP schemes:
> Employee Exemption Plan (EEP);
> Long-term Incentives Plan (LTI); and
> Short-term incentive (STI) awards.
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.
EEP
The EEP provides eligible employees with up to $1,000 worth of Mirvac securities at no cost. Employees cannot sell the securities for three years or
until they cease employment with the Group, in which case they keep any securities already granted. Other than the restriction on selling, holders have
the same rights and benefits as other securityholders.
LTI
The LTI provides senior executives with performance rights to both reward and retain executives and strengthen the alignment between the
performance of the Group and the executives. The performance rights vest based on Mirvac’s TSR and ROIC performance over a three-year period.
STI
The STI is to motivate and reward employees for contributing to the delivery of annual business performance. For Executive KMP, 75 per cent of any
STI award is paid as cash and 25 per cent is deferred into rights. The rights vest in two equal tranches: 50 per cent of the rights vest after one year and
50 per cent after two years.
Accounting for the SBP schemes
The EEP securities issued each year are recognised as an expense and a movement in contributed equity. The securities issued in FY22 were issued
on 3 March 2022 at a stapled security price of $2.57. At 30 June 2022, a total of 9.3m (2021: 8.9m) stapled securities have been issued to employees
under the EEP.
The LTI, STI and legacy EIS are accounted for as equity-settled SBP. The fair value is estimated at grant date and recognised over the vesting period as an
expense and in the SBP reserve. When the SBP vest, ordinary securities are issued and recognised as a transfer from the SBP reserve to contributed equity.
Annual Report 2022 – 105
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
E EQUITY
E4 SECURITY-BASED PAYMENT CONTINUED
RECONCILIATION OF RIGHTS OUTSTANDING UNDER SBP SCHEMES
LTI
STI
Total rights FY21
LTI
STI
Total rights FY22
Balance
1 July
12,879,742
945,421
13,825,163
10,629,320
394,801
11,024,121
Issued
Vested
Forfeited
6,759,759
144,321
6,904,080
5,883,107
601,007
6,484,114
(5,111,753)
(674,776)
(5,786,529)
(2,789,136)
(349,583)
(3,138,719)
(3,898,428)
(20,165)
(3,918,593)
(2,058,072)
—
(2,058,072)
Balance
30 June
10,629,320
394,801
11,024,121
11,665,219
646,225
12,311,444
The weighted average remaining contractual life of SBP schemes as at 30 June 2022 was 1.45 years (2021: 1.53 years). SBP expense recognised within
employee benefits expenses is as follows:
LTI
STI
Total SBP expense taken to SBP reserve
EEP recognised directly in contributed equity
Total SBP expense
The movements in the SBP reserve are as follows:
Balance 1 July
Total SBP expense taken to SBP reserve
LTI vested and taken to contributed equity
STI vested
Transfer of unvested awards to retained earnings
Balance 30 June
2022
$000
9,925
3,515
13,440
1,322
14,762
2022
$000
31,362
13,440
(15,284)
(1,037)
(4,149)
24,332
2021
$000
8,580
1,245
9,825
—
9,825
2021
$000
29,856
9,825
(7,314)
(1,005)
—
31,362
JUDGEMENT IN CALCULATING FAIR VALUE OF SBP
To calculate the expense for equity-settled SBP, the fair value of the equity instruments at grant date has to be estimated. The fair value
is determined using the Monte-Carlo simulation for the relative TSR component (key judgements and assumptions include exercise price,
vesting and performance criteria, security price at grant date, volatility, distribution yield and risk-free interest rate) and a Binomial tree
method for the ROIC component. These judgements and assumptions relating to fair value measurement may impact the SBP expense
taken to profit or loss and reserves.
Assumptions used for the fair value of performance rights awarded during the current year are as follows:
Grant date
Performance hurdles
Performance period start
Performance period end
Security price at grant date
30 November 2021
Relative TSR and ROIC
Exercise price
Expected life
1 July 2021
Volatility
30 June 2024
Risk-free interest rate (per annum)
$2.86
Dividend/distribution yield (per annum)
$nil
2.6 years
36.80%
1.05%
3.46%
The valuation of rights is conducted by an independent advisor. The fair value is determined using a Monte-Carlo simulation for the relative TSR
component and a Binomial tree methodology for the ROIC component.
106 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
F OPERATING ASSETS AND LIABILITIES
F1 RECEIVABLES
Receivables are initially recognised at their fair value. Receivables are subsequently measured at amortised cost using the effective interest rate
method, less loss allowance if required. Due to the short-term nature of current receivables, their carrying amount (less loss allowance) 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. The expected credit loss (ECL)
of receivables is reviewed on an ongoing basis. The Group applies the simplified approach to measuring ECL as appropriate based on the different
characteristics of each financial asset class. To measure the ECL, management has grouped together its receivables based on shared credit risk
characteristics and the days past due. The Group uses judgement in making assumptions about risk of default and ECL rates and the inputs to the
impairment calculation, based on the Group’s past history, existing market conditions and future looking estimates at the end of each reporting period.
Receivables which are determined to be uncollectable are written off.
For loans receivable, at inception of a loan, an ECL provision is recognised which considers the following:
> The historical bad debt write offs incurred for similar loan arrangements; and
> The collateral held over the loan; and
> The creditworthiness of the borrower.
Over the life of the loan, the risk profile is reassessed in accordance with the three-stage approach.
> Stage 1 – Performing includes loans that have not had a significant increase in credit risk since initial recognition or that have low credit risk
at the reporting date. For these loans, 12-month expected credit losses are recognised and interest revenue is calculated on the gross carrying
amount of the loan.
> Stage 2 – Underperforming includes loans that have had a significant increase in credit risk since initial recognition but are not credit-impaired.
For these loans a lifetime ECL over the life of the loan is recognised, and interest revenue is still calculated on the gross carrying amount of the asset.
> Stage 3 – Non-performing consists of loans that are credit-impaired, which is when one or more events that have a detrimental impact on the
estimated future cash flows of the loan has occurred. For these assets, a lifetime ECL is also recognised, but interest revenue is calculated on the
net carrying amount (net of the ECL provision).
The consideration of the stage of the loan requires significant judgement, in particular when assessing whether there has been a significant
increase in credit risk and in estimating ECL provision.
As at 30 June 2022, the Group did not have any stage 2 or stage 3 loans receivable.
Note
Gross
$m
2022
Loss
allowance
$m
H3
40
70
53
163
—
16
14
30
193
(19)
—
—
(19)
—
—
—
—
(19)
Net
$m
21
70
53
144
—
16
14
30
174
Gross
$m
98
65
28
191
5
89
3
97
288
Current receivables
Trade receivables
Loans to unrelated parties
Other receivables
Total current receivables
Non-current receivables
Loans to related parties
Loans to unrelated parties
Other receivables
Total non-current receivables
Total receivables
Movements in loss allowance
Balance 1 July
Loss allowance recognised
Amounts utilised for write-off of receivables
Balance 30 June
2021
Loss
allowance
$m
(35)
(39)
—
(74)
—
—
—
—
(74)
2022
$m
(74)
(24)
79
(19)
Net
$m
63
26
28
117
5
89
3
97
214
2021
$m
(80)
(20)
26
(74)
Annual Report 2022 – 107
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
F OPERATING ASSETS AND LIABILITIES
F1 RECEIVABLES CONTINUED
AGEING
Trade receivables 1
Loans
Other receivables
Loss allowance
Balance 30 June 2021
Trade receivables 1
Loans
Other receivables
Loss allowance
Balance 30 June 2022
Not past due
$m
1 – 30
$m
31 – 60
$m
61 – 90
$m
91 – 120
$m
Over 120
$m
Total
$m
Days past due
59
115
31
(1)
204
13
86
67
—
166
8
—
—
(5)
3
6
—
—
—
6
8
—
—
(7)
1
2
—
—
(1)
1
3
—
—
(3)
—
3
—
—
(2)
1
3
—
—
(3)
—
2
—
—
(2)
—
17
44
—
(55)
6
14
—
—
(14)
—
98
159
31
(74)
214
40
86
67
(19)
174
1. The Group has recognised a provision for impairment for all investment property tenant trade receivables that are greater than 30 days overdue.
The Group does not have any significant credit risk exposure to a single customer. The Group holds collateral of $166m (2021: $164m). The quantum,
terms and conditions of collateral are outlined in the lease agreements, however generally as lessor, the Group has the right to call upon the collateral if
a lessee breaches their lease. Refer to note D5 for further details on the Group’s exposure to, and management of, credit risk.
LOANS RECEIVABLE
2022
2021
Stage 1
$m
Stage 2
$m
Stage 3
$m
Total
$m
Stage 1
$m
Stage 2
$m
Stage 3
$m
Total
$m
Opening loss allowance
Loss allowance utilised during the year
Closing loss allowance
—
—
—
—
—
—
39
(39)
—
39
(39)
—
—
—
—
—
—
—
39
—
39
The gross carrying amount of loans receivables representing the maximum exposure to loss, is as follows:
Stage 1 – Performing
Stage 2 – Underperforming
Stage 3 – Non-performing 1
Total gross loans receivable
Less: Loan allowance
Total net loans receivable
2022
$m
86
—
—
86
—
86
39
—
39
2021
$m
110
5
44
159
(39)
120
1. During the year, the Group became mortgagee in possession of land held as security for this loan. As the Group had control of the land, it reclassified the net loan receivable to Inventory, which was
subsequently disposed of during the year.
F2 OTHER FINANCIAL ASSETS
INVESTMENTS IN UNLISTED ENTITIES
The Group holds units in unlisted entities which do not give Mirvac control, as explained in note G1, or significant influence, as explained in note C3.
Distributions received are recognised in revenue and any changes in fair value are recognised in the gain or loss on financial instruments in the
consolidated SoCI.
FAIR VALUE MEASUREMENT
Other financial assets are carried at fair value. Fair value is estimated as explained in note D6.
Non-current
Investments in unlisted entities
Total other financial assets
108 – Celebrating 50 years
2022
$m
73
73
2021
$m
78
78
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
F OPERATING ASSETS AND LIABILITIES
F3 INTANGIBLE ASSETS
Mirvac’s intangible assets consists of goodwill, management rights and software.
GOODWILL
The goodwill acquired in a business combination is attributable to the profitability of the acquired business, as well as benefits derived from the
acquired workforce and other intangible assets that cannot be separately recognised. The goodwill is not expected to be deductible for income tax.
MANAGEMENT RIGHTS
Management rights are the rights to manage properties and funds and have been initially recognised at fair value as part of business combinations.
Management rights relating to office are estimated to have a useful life of 10 years and are carried at cost less accumulated amortisation and
impairment losses. Management rights relating to retail are considered to be open-ended and therefore have no expiry. Management considers the
useful life as indefinite and the management rights are tested annually for impairment.
SOFTWARE
Software consists of purchased and internally generated capitalised development costs where it is evident that these costs will generate probable
future economic benefits. Software is held at cost less accumulated amortisation. Once ready for use, the Group amortises software using a straightline
method over the estimated useful life.
Costs incurred to configure or customise cloud computing software, and the ongoing fees to obtain access to the cloud provider’s application
software, are recognised as an expense when the services are received. In a contract where the cloud provider provides both the SaaS configuration
and customisation, and the SaaS access over the contract term, the services are assessed to determine if they are distinct. Where the services are
not distinct, the configuration and customisation costs incurred are capitalised on the consolidated SoFP as a prepayment and expensed over the
SaaS contract term.
The breakdown of intangible assets by type and operating segment is set out below.
Carrying amounts
Goodwill
Integrated Investment Portfolio
Total goodwill
Management rights
Integrated Investment Portfolio
Office
Retail
Total management rights
Software under development
Unallocated
Total software under development
Software
Unallocated
Total software
Total intangible assets
Balance
1 July 2020
$m
67
67
8
3
11
—
—
—
—
78
Balance
Additions Amortisation 30 June 2021
$m
$m
$m
—
—
—
—
—
2
2
—
—
2
—
—
(2)
—
(2)
—
—
—
—
(2)
67
67
6
3
9
2
2
—
—
78
Additions
$m
Balance
Transfers 30 June 2022
$m
$m
—
—
—
—
—
1
1
—
—
1
—
—
—
—
—
(2)
(2)
2
2
—
67
67
6
3
9
1
1
2
2
79
MANAGEMENT RIGHTS
Management rights include property management rights for office and retail properties managed by the Group. Management rights with a
finite life are amortised using the straight-line method over their useful life. For indefinite management rights, the Group tests for impairment at
the reporting date. Assets are impaired if the carrying value exceeds their recoverable amount. The recoverable amount is determined using a
discounted cash flow. A 13.50 per cent pre-tax discount rate and 2 per cent growth rate have been applied to the cash flow projections.
GOODWILL
Goodwill acquired in a business combination is tested annually for impairment. Goodwill is impaired if the recoverable amount, calculated as
the higher of the value in use and the fair value less costs to sell, is less than its carrying amount. For the purpose of assessing impairment,
assets are grouped at the lowest levels for which goodwill is monitored for internal management purposes and allocated to cash generating
units (CGU). The estimation of the recoverable amount of goodwill depends on the nature of the CGU. For the IIP CGU, the value in use is the
discounted present value of estimated cash flows that the CGU will generate, which primarily comprise of the Group’s investment properties.
Annual Report 2022 – 109
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
F OPERATING ASSETS AND LIABILITIES
F3 INTANGIBLE ASSETS CONTINUED
The key assumptions used to determine the forecast cash flows in the goodwill model include:
Key assumption
Details of key assumption
Inputs used
Net market rent
The rent at which a tenancy could be leased in the market including outgoings recovery Lease specific assumptions including
Other cash flows
These cashflows are minimal in comparison to the rental cashflows but form part
of the IIP CGU
Capital expenditure
The amount of additional investment required to upgrade or maintain the
Group’s investment properties
Growth rate
Cash flow period
The rate at which cashflows will grow over time. The growth rate has been adjusted
to reflect current market conditions and does not exceed the long-term average
growth rate for IIP. The cash flow projections are based on management approved
forecasts covering an initial period of five years and the subsequent five years are
based on a growth rate of 3.0-3.5 per cent p.a (2021: 3.0 per cent p.a)
AASB 136 Impairment of Assets recommends that cash flow projections should
cover a maximum period of five years, unless a longer period can be justified.
As the cash flow projections used for budgeting and forecasting are based on
long-term, predictable and quantifiable leases, with renewal assumptions based
on asset class and industry experience, management is comfortable that a ten year
cash flow projection is appropriate
let up periods and incentives
Cash flows from the Asset & Funds
Management and Management &
Administration parts of IIP
Investment property assumptions
based on the age and condition of
the property
3.0-3.5% (2021: 3.0%)
10 years (2021: 10 years)
Terminal growth rate
The constant rate that cash flows are expected to grow at into perpetuity
2.5% (2021: 3.0%)
Pre-tax discount rate The rate of return used to convert cashflows into present value, these are specific
5.8-11.5% (2021: 5.9%-10.4%)
to the risks of each of the cash flows within the IIP segment. This includes using
the weighted investment property portfolio discount rate, which was 6.1 per cent as at
30 June 2022 (2021: 6.4 per cent), and then applying a premium adjustment to this
rate on the basis that a prospective purchaser would expect there to be multiple
benefits to acquiring a portfolio of assets
Sensitivity
If the cash flow projections used in the value in use calculations increased or decreased the pre-tax discount rate by 50 bps and the terminal growth
rate or growth rate were increased or decreased by 50 bps, and 100 bps respectively, the Group would have sufficient headroom and this would not
result in an impairment.
Based on information available and market conditions as at 30 June 2022 and up to the date of this report, management have considered that a
reasonably foreseeable change in the other assumptions used in the goodwill assessment would not result in an impairment to the value of goodwill as
at 30 June 2022.
F4 PAYABLES
Payables are measured at amortised costs. Due to the short-term nature of current payables, their carrying amount is assumed to be the same as their
fair value. For the majority of non-current payables, the carrying amount is also not significantly different to their fair value.
Trade payables due more than 12 months after year end are classified as non-current.
Current
Trade payables
Accrued expenses
Deferred land payable
Annual leave accrued
Other payables
Total current payables
Non-current
Deferred land payable
Other payables
Total non-current payables
Total payables
110 – Celebrating 50 years
2022
$m
47
510
91
26
56
730
569
2
571
1,301
2021
$m
50
400
7
18
28
503
332
35
367
870
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
F OPERATING ASSETS AND LIABILITIES
F5 PROVISIONS
LONG SERVICE LEAVE (LSL)
Where the LSL provision is expected to be settled more than 12 months after year end, the expected future payments are discounted to present value.
The corporate bond rates used to discount the expected future payments have maturities aligned to the estimated timing of future cash flows.
In calculating the LSL provision, judgement is required to estimate future wages and salaries, on-cost rates and employee service periods.
DISTRIBUTION PAYABLE
A provision is made for the amount of distribution declared at or before year end but not yet paid; refer to note E1.
WARRANTIES
The Group is obliged to rectify any defective work during the warranty period of its developments. Warranties are also known as post-completion
maintenance costs.
Movements in each class of provision during the year are set out below:
Balance 1 July 2021
Additional provisions
Payments made/amounts utilised
Balance 30 June 2022
Current
Non-current
F6 LEASES
RIGHT-OF-USE ASSETS
The right-of-use assets recognised in the consolidated SoFP include:
Property leases
Total right-of-use assets
Long service
leave
$m
Distribution
payable
$m
Warranties
$m
18
4
(1)
21
15
6
201
404
(403)
202
202
—
16
10
(6)
20
15
5
2022
$m
28
28
Total
$m
235
418
(410)
243
232
11
2021
$m
17
17
Due to the deconsolidation of The George Street Trust as outlined in note G4, an additional right-of-use asset of $18m was recognised during the year.
RIGHT-OF-USE ASSETS AMOUNTS RECOGNISED IN THE CONSOLIDATED SOCI
The consolidated SoCI shows the following amounts relating to leases:
Depreciation on property leases
Total depreciation
Interest expense on property leases
Total interest expense (included in finance costs)
2022
$m
7
7
3
3
2021
$m
4
4
3
3
THE GROUP’S LEASING ACTIVITIES AND HOW THESE ARE ACCOUNTED FOR
The Group leases include ground leases and property leases. Lease terms are negotiated on an individual basis and contain a wide range of different
terms and conditions.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease
components based on their relative stand-alone prices. However, for leases of property for which the Group is a lessee, it has elected not to separate
lease and non-lease components and instead accounts for these as a single lease component.
Lease payments are allocated between principal and finance cost. The finance cost is charged to the consolidated SoCI over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Group is
reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. Right-of-use assets
which meet the definition of an investment property form part of the investment property balance and are measured at fair value in accordance with
AASB 140 Investment Property, refer to note C1.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an
expense in the consolidated SoCI. Short-term leases are leases with a lease term of 12 months or less.
Annual Report 2022 – 111
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
G GROUP STRUCTURE
This section explains how the Group is structured, the Deed of Cross Guarantee between Group companies and disclosures for the parent entity.
G1 GROUP STRUCTURE AND DEED OF CROSS GUARANTEE
CONTROLLED ENTITIES
The consolidated financial statements of Mirvac incorporate the assets, liabilities and results of all controlled entities. Controlled entities are all entities
over which the Group has power to direct the activities of the entity and an exposure to and ability to influence its variable returns from its involvement
with the entity.
Controlled entities are fully consolidated from the date control is obtained until the date that control ceases. Intra-group transactions and balances are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the assets transferred.
Refer to note I2 for Mirvac’s controlled entities.
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 to direct 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 some form of exposure to a structured entity but not consolidate it.
If Mirvac does not control a structured entity but has significant influence it is treated as an associate.
FUNDS AND TRUSTS
Mirvac invests in a number of funds and trusts which invest in real estate as investment properties. The funds and trusts finance their operations
through borrowings and through equity issues. The Group determines whether it controls or has significant influence over these funds and trusts as
discussed above.
CLOSED GROUP
Mirvac Limited and certain wholly-owned entities (collectively the Closed Group) are parties to a Deed of Cross Guarantee. The members of the Closed
Group guarantee to pay any deficiency in the event that another member winds up.
Refer to note I2 for the members of the Closed Group.
2022
$m
2,128
38
23
60
2,249
1,589
25
58
39
1
14
—
161
143
—
219
77
142
2021
$m
1,467
—
48
60
1,575
967
—
11
29
1
12
1
159
216
23
156
86
70
Closed Group SoCI
Revenue
Other income
Revaluation of investment properties
Share of net profit of joint ventures
Gain on financial instruments
Total revenue and other income
Development expenses
Cost of goods sold interest
Inventory write-downs and losses
Selling and marketing expenses
Investment properties expenses and outgoings
Depreciation and amortisation expenses
Impairment loss on receivables
Employee and other expenses
Finance costs
Loss on financial instruments
Profit before income tax
Income tax expense
Profit for the year
112 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
G GROUP STRUCTURE
G1 GROUP STRUCTURE AND DEED OF CROSS GUARANTEE CONTINUED
FINANCIAL REPORT
Closed Group SoFP
Current assets
Cash and cash equivalents
Receivables
Inventories
Derivative financial assets
Other assets
Total current assets
Non-current assets
Receivables
Inventories
Investment properties
Investments in joint ventures
Derivative financial assets
Other financial assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other assets
Total non-current assets
Total assets
Current liabilities
Payables
Deferred revenue
Borrowings
Lease liabilities
Derivative financial liabilities
Provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Payables
Deferred revenue
Borrowings
Derivative financial liabilities
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
2022
$m
457
3,781
657
63
19
4,977
1,914
1,783
70
41
178
1,181
10
45
40
—
27
5,289
10,266
3,069
51
281
12
—
29
128
3,570
570
3
3,957
116
11
41
4,698
8,268
1,998
2,340
8
(350)
1,998
2021
$m
72
2,996
574
—
19
3,661
1,966
1,730
4
56
248
1,270
7
32
40
11
3
5,367
9,028
2,507
148
—
8
5
21
—
2,689
332
7
3,922
99
12
32
4,404
7,093
1,935
2,436
(2)
(499)
1,935
Annual Report 2022 – 113
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
G GROUP STRUCTURE
G2 PARENT ENTITY
The financial information for the parent entity, Mirvac Limited, is prepared on the same basis as the consolidated financial statements, except as set
out below:
Tax consolidation legislation – Mirvac Limited is the head entity of a tax consolidated group as discussed in note B5. As the head entity, Mirvac
Limited recognises the current tax balances and the deferred tax assets for unused tax losses and credits assumed from other members as well
as its own current and deferred tax amounts. Amounts receivable from or payable to the other members are recognised by Mirvac Limited as
intercompany receivables or payables.
Parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Equity
Contributed equity
SBP reserve
Retained earnings
Total equity
Loss/(profit) for the year
Total comprehensive loss/(profit) for the year
2022
$m
5,852
6,319
4,031
4,031
2,164
24
100
2,288
(1)
(1)
2021
$m
5,398
5,888
3,598
3,598
2,162
31
97
2,290
1
1
The parent entity is party to the Deed of Cross Guarantee discussed in note G1 and therefore guarantees the debts of the other Closed Group members.
At 30 June 2022, the parent entity did not provide any other guarantees (2021: $nil), have any contingent liabilities (2021: $nil), or any capital
commitments (2021: $nil).
G3 NON-CONTROLLING INTERESTS
NON-CONTROLLING INTERESTS
The Group holds a 69.9 per cent interest in the Australian Build to Rent Club (ABTRC or the club). Non-controlling interest in the results and equity
of the club are shown separately in the consolidated SoCI, SoCE and SoFP separately. The club was established in Australia.
The financial information of ABTRC is provided below and is before intercompany eliminations.
Accumulated balances of the NCI
Profit/(loss) allocated to the NCI for the year
Summarised Consolidated Statement of Comprehensive Income
Revenue
Total revenue and other income
Expenses
Revaluation loss on investment property
Profit/(loss) before tax
Income tax expense/(benefit)
Profit/(loss) for the year
Total comprehensive income/(loss)
Attributable to:
Stapled securityholders
Non-controlling interest
114 – Celebrating 50 years
2022
$m
66
1
2022
$m
9
9
4
—
5
1
4
4
3
1
2021
$m
66
(2)
2021
$m
4
4
3
7
(6)
(2)
(4)
(4)
(2)
(2)
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
G GROUP STRUCTURE
G3 NON-CONTROLLING INTERESTS CONTINUED
Summarised Consolidated Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Retained earnings
Total equity
Attributable to:
Stapled securityholders
Non-controlling interest
Summarised Consolidated Cash Flow Information
Net operating cash inflows
Net investing cash outflows
Net financing cash (outflows)/inflows
Net increase in cash
FINANCIAL REPORT
2022
$m
4
221
225
3
3
6
219
209
10
219
153
66
2022
$m
6
—
(4)
2
2021
$m
1
220
221
1
—
1
220
208
12
220
154
66
2021
$m
1
(46)
46
1
Annual Report 2022 – 115
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
G GROUP STRUCTURE
G4 BUSINESS COMBINATIONS
ACQUISITIONS OF SUBSIDIARIES
During the year, the Group purchased the remaining interests in the following entities which were previously accounted for as investments in joint
ventures. Control of these entities was gained from their acquisition date and they have been consolidated from then.
At the acquisition date, the carrying amount of the Group’s previously held interest in these entities approximated its fair value and accordingly, no gain
or loss as a result of the remeasurement of the equity interest in these entities to fair value was recognised in the consolidated SoCI.
The cash consideration paid to acquire the remaining interest of these entities approximated the fair value of assets acquired and liabilities assumed
and accordingly no goodwill arose from the acquisitions.
Entity
Mirvac Ping An Waterloo Development Trust
Mirvac SLS Development Trust
Mirvac Lucas Real Estate Unit Trust
1. Values not shown due to rounding.
Pre-consolidation
ownership
%
Cash
consideration
paid
$m
Net assets
acquired
$m
Inflow/(outflow)
of cash, net of
cash acquired
$m
51
51
50
— 1
4
2
6
— 1
4
2
6
3
10
(2)
11
The Mirvac Ping An Waterloo Development Trust acquired, developed and sold residential inventory in Waterloo, NSW with the project nearing
completion. On 4 August 2021, the Group consolidated the assets and liabilities held by the Mirvac Ping An Waterloo Development Trust which
included cash of $2m.
The Mirvac SLS Development Trust acquired, developed and sold residential inventory in St Leonards, NSW with the project nearing completion.
On 4 August 2021, the Group consolidated the assets and liabilities held by the Mirvac SLS Development Trust which included cash of $14m
and inventory of $1m.
The Mirvac Lucas Real Estate Unit Trust performs residential property management in Victoria. On 31 July 2021, when completion of the acquisition
occurred, the Group consolidated the assets and liabilities held by the Mirvac Lucas Real Estate Unit Trust which included an intangible asset of $3m.
There were no acquisitions of subsidiaries for the year ended 30 June 2021.
DISPOSAL OF SUBSIDIARIES
During the year, the Group disposed of partial interests in two previously controlled and consolidated entities.
1. On 5 August 2021, the Group disposed of 49 per cent of the units in the Mirvac Locomotive Trust, which holds a 100 per cent interest in the recently
completed Locomotive Workshop, South Eveleigh NSW. Following the sale, the Group lost control of the Mirvac Locomotive Trust and reclassified its
remaining 51 per cent interest to an Investment in a joint venture.
The consideration from the sale of the 49 per cent interest in the Mirvac Locomotive Trust was recognised as revenue of $231m, and is reflected as sale of
inventory in the ordinary course of business. The net cash inflow representing total proceeds less cash disposed of following deconsolidation was $231m.
2. On 26 August 2021, the Group exercised its pre-emptive right as existing co-owner to acquire the remaining 50 per cent of the investment property
at 200 George Street, Sydney, NSW. On the same day following this purchase, the Group disposed of 49.9 per cent of the units in The George Street
Trust, the controlled entity owning the investment property. Following the sale, the Group lost control of The George Street Trust and reclassified its
remaining 50.1 per cent interest to an Investment in a joint venture.
The consideration received from the sale of the 49.9 per cent interest in The George Street Trust was $609m. The Group did not outlay cash for
the 50 per cent purchase of the property, with the proceeds from the sale of the controlled entity being directed to satisfy payment to the vendor of
50 per cent interest of the property. The net cash outflow, being the cash disposed of following deconsolidation was $2m. The carrying value of the net
assets at the time of disposal approximated the consideration received, resulting in no gain or loss on the sale recognised in the consolidated SoCI.
There were no disposal of subsidiaries for the year ended 30 June 2021.
116 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
H OTHER DISCLOSURES
FINANCIAL REPORT
This section provides additional required disclosures that are not covered in the previous sections.
H1 CONTINGENT LIABILITIES
A contingent liability is a possible obligation that may become payable depending on a future event or a present obligation that is not probable to
require payment/cannot be reliably measured. A provision is not recognised for contingent liabilities.
Bank guarantees and performance bonds granted in the normal course of business
Health and safety claims
Payments for investment properties, inventory and other assets contingent on approvals
Total contingent liabilities
As at 30 June 2022, the Group had no contingent liabilities relating to joint ventures and associates (2021: $nil).
H2 EARNINGS PER STAPLED SECURITY
Basic earnings per stapled security (EPS) is calculated by dividing:
> the profit attributable to stapled securityholders; by
> the weighted average number of ordinary securities (WANOS) outstanding during the year.
Diluted EPS adjusts the WANOS to take into account dilutive potential ordinary securities from security-based payments.
2022
$m
226
4
29
259
2021
$m
179
2
33
214
Profit attributable to stapled securityholders used to calculate basic and diluted EPS ($m)
WANOS used in calculating basic EPS (m)
WANOS used in calculating diluted EPS (m)
H3 RELATED PARTIES
2022
906
3,941
3,942
2021
901
3,936
3,938
Basic and diluted EPS
(cents)
23.0
22.9
FY21
FY22
A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a
price is charged.
KEY MANAGEMENT PERSONNEL COMPENSATION
The Remuneration report on pages 51 to 71 provides detailed disclosures of key management personnel compensation. The total expense is
summarised below:
Short-term employment benefits
Security-based payments
Post-employment benefits
Other long-term benefits
Termination benefits
Total key management personnel compensation
There are no outstanding loans to directors or employees (2021: nil).
2022
$000
10,313
4,370
239
81
—
15,003
2021
$000
11,170
3,313
253
73
1,639
16,448
Annual Report 2022 – 117
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
H OTHER DISCLOSURES
H3 RELATED PARTIES CONTINUED
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
From time to time key management personnel participate in arrangements available to directly purchase Mirvac developed residential property.
These transactions are made on terms equivalent to those that prevail in arm’s length transactions and are at market rates. The deposits received
and the amounts committed by key management personnel for Mirvac developed residential property exchanged are summarised below:
Mirvac developed property purchased by key management personnel
Exchanges
Deposits received
Outstanding commitments
Transactions with JVAs
Interest income
Project development fees
Management and service fees
Trustee fees
Total transactions with JVAs
Loans due from JVAs and other related parties
Balance 1 July
Interest capitalised
Loan repayments received
Balance 30 June
2022
$000
5,027
251
4,776
2022
$000
175
88,976
7,943
10,398
107,492
2022
$000
5,104
175
(5,279)
—
2021
$000
1,403
70
1,333
2021
$000
139
123,100
8,142
7,377
138,758
2021
$000
5,000
104
—
5,104
Transactions between Mirvac and its related parties were made on commercial terms and conditions. Distributions received from JVAs were on the
same terms and conditions that applied to other securityholders. Equity interests in JVAs are set out in note I3.
H4 AUDITOR’S REMUNERATION
During the year the following fees were paid or payable for services provided by PricewaterhouseCoopers Australia (PwC) as the auditor of the Group,
and by PwC’s related network firms.
2021 1
$000
2,570
645
3,215
50
50
3,265
Audit services
Audit and review of financial reports
Other assurance services
Total audit services
Other services
Advisory services
Total other services
Total auditor’s remuneration
1. 2021 fees have been revised to reflect additional billings relating to FY21 not agreed as at the date of signing.
2022
$000
2,442
789
3,231
262
262
3,493
118 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
I APPENDICES
This section provides detailed listings of Mirvac’s properties and controlled entities.
I1 PROPERTY PORTFOLIO LISTING
This table shows details of Mirvac’s properties portfolio. Refer to notes C1 to C3 for further details.
Fair
value
2022
$m
Lease
liability
gross up
2022
$m
Book value
Capitalisation
rate
Discount rate
2022
$m
2021
$m
2022
%
2021
%
2022
%
2021
%
Office
1 Darling Island, Pyrmont NSW
101-103 Miller Street, North Sydney NSW (50% interest)
10-20 Bond Street, Sydney NSW (50% interest)
189 Grey Street, Southbank QLD
2 Riverside Quay, Southbank VIC (50% interest)
23 Furzer Street, Phillip ACT
275 Kent Street, Sydney NSW (50% interest)
367 Collins Street, Melbourne VIC
380 St Kilda Road, Melbourne VIC
383 La Trobe Street, Melbourne VIC
80 Ann Street, Brisbane QLD (50% interest) 1
40 Miller Street, North Sydney NSW
477 Collins Street, Melbourne VIC (50% interest)
60 Margaret Street, Sydney NSW (50% interest)
65 Pirrama Road, Pyrmont NSW
664 Collins Street, Melbourne VIC (50% interest)
699 Bourke Street, Melbourne, VIC (50% interest)
75 George St, Paramatta NSW
90 Collins Street, Melbourne VIC
Quay West Car Park, 109-111 Harrington
Street, Sydney NSW 2
Allendale Square, 77 St Georges Terrace, Perth WA
Locomotive Carpark, South Eveleigh NSW
Riverside Quay, Southbank VIC
South Eveleigh Precinct, Eveleigh NSW (33.3% interest)
Various lots, 53 Walker Street &
97 Pacific Highway, North Sydney NSW
Total investment properties
55 Pitt Street, Sydney NSW 3
7-23 Spencer Street, Melbourne VIC 4
377 Botany Road, Zetland NSW 5
Total investment properties under construction
Total investment properties and investment
properties under construction
200 George Street, Sydney NSW (50.1% interest) 6
Locomotive Workshop, South Eveleigh NSW (51% interest) 6
8 Chifley Square, Sydney NSW (50% interest)
David Malcolm Justice Centre, 28 Barrack Street,
Perth WA (50% interest)
Total investments in joint ventures
Total office property portfolio
319
326
349
93
155
380
922
427
196
121
400
180
462
377
220
166
106
87
263
—
207
21
380
465
31
6,653
252
128
21
401
7,054
581
223
231
248
1,283
8,337
1.
2.
3.
4.
5.
6.
IPUC was completed during the year and was reclassified to investment property.
Investment property was disposed of during the year.
Investment property was transferred to IPUC during the year.
IPUC was acquired during the year.
IPUC was transferred from Inventories during the year.
Investment property was transferred to a JVA during the year.
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
319
326
349
93
155
380
922
427
196
121
400
180
462
377
220
166
106
87
263
—
207
21
380
465
31
304
315
345
90
150
324
890
426
183
122
204
180
441
362
211
155
109
88
263
38
232
13
355
453
31
6,653
6,284
252
128
21
401
178
—
—
178
7,054
6,462
581
223
231
248
1,283
8,337
579
150
229
243
1,201
7,663
5.38
5.00
5.00
6.63
5.00
5.25
4.50
5.25
5.75
5.13
4.88
5.38
4.75
5.13
5.50
4.88
5.00
5.38
5.25
—
6.75
6.00
5.25
4.88
—
—
—
—
5.38
5.25
5.00
6.63
5.00
5.75
4.63
5.25
5.75
5.38
—
5.38
4.75
5.13
5.50
5.00
5.13
5.75
5.25
7.25
6.75
7.50
5.38
4.88
—
—
—
—
6.13
6.00
6.13
7.00
6.25
6.00
6.00
6.25
6.25
6.25
6.00
6.13
6.00
6.13
6.13
6.00
6.00
6.25
6.25
—
7.25
7.75
6.25
6.00
—
—
—
—
4.38
4.88
4.88
4.38
—
4.88
5.88
6.13
6.00
5.25
5.25
6.50
6.50
6.25
6.25
7.00
6.25
7.00
6.38
6.25
6.25
6.50
—
6.38
6.25
6.13
6.25
6.50
6.50
7.00
6.25
7.25
7.25
8.25
6.75
6.26
—
—
—
—
5.85
—
6.00
6.75
Annual Report 2022 – 119
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
I APPENDICES
I1 PROPERTY PORTFOLIO LISTING CONTINUED
Industrial
1-47 Percival Road, Smithfield NSW
274 Victoria Rd, Rydalmere NSW
34-38 Anzac Avenue, Smeaton Grange NSW
36 Gow Street, Padstow NSW
39 Britton Street, Smithfield NSW
39 Herbert Street, St Leonards NSW
8 Brabham Drive, Huntingwood NSW
Calibre, 60 Wallgrove Road,
Eastern Creek NSW (50% interest)
Hoxton Distribution Park,
Hoxton Park NSW (50% interest)
Nexus Industry Park, Lyn Parade, Prestons NSW
Total investment properties
1669A Elizabeth Drive, Badgerys Creek NSW 1
864-882 Mamre Road, Kemps Creek NSW 2
Total investment properties under construction
Total investment properties and
investment properties under construction
Switchyard, 300 Manchester Road,
Auburn NSW (51% Interest) 1
Total investments in joint ventures
Total industrial property portfolio
Retail
1-3 Smail Street, Ultimo NSW (50% interest)
80 Bay St, Glebe NSW (50% interest)
Birkenhead Point Brand Outlet, Drummoyne NSW 3
Broadway Sydney, Broadway NSW (50% interest)
Cooleman Court, Weston ACT
East Village, Zetland NSW
Greenwood Plaza, North Sydney NSW (50% interest)
Kawana Shoppingworld, Buddina QLD (50% interest)
Metcentre, Sydney NSW (50% interest)
Moonee Ponds Central, Moonee Ponds VIC
Orion Springfield Central, Springfield QLD
Rhodes Waterside, Rhodes NSW (50% interest)
South Village, Kirrawee NSW
Stanhope Village, Stanhope Gardens NSW
Tramsheds Sydney, Glebe NSW 4
Fair
value
2022
$m
Lease
liability
gross up
2022
$m
Book value
Capitalisation
rate
Discount rate
2022
$m
2021
$m
2022
%
2021
%
2022
%
2021
%
70
77
57
54
40
254
35
184
246
225
1,242
221
120
341
1,583
67
67
1,650
40
16
402
368
76
327
89
186
57
105
467
179
103
154
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6
1
—
—
—
—
—
—
—
—
—
—
—
7
70
77
57
54
40
254
35
184
246
225
50
64
36
46
29
223
26
5.00
4.50
5.75
5.00
4.75
4.25
4.00
4.00
4.50
4.00
6.25
6.00
6.50
6.25
6.00
4.75-5.00 5.00-5.50 6.00-6.25 6.50-6.75
6.50
5.50
5.38
5.38
5.75
5.50
5.50
4.25
5.50
147
3.50-4.13
4.51-4.76 5.25-5.38
5.88
218
186
3.63-3.88 4.00-4.25 5.00-5.25 5.25-5.50
3.88-4.50 4.50-5.25 4.88-5.50 5.50-6.00
1,242
1,025
221
120
341
134
27
161
1,583
1,186
67
67
—
—
1,650
1,186
—
—
—
—
—
—
—
—
—
—
—
—
40
16
408
369
76
327
89
186
57
105
467
179
103
154
—
39
14
400
369
69
302
89
186
60
100
450
175
102
142
34
5.00
5.25
5.50-8.75
4.75
5.50
5.00
5.75
5.75
5.75
5.75
5.25
5.50
5.50
5.50
—
2,576
2,531
5.25
5.50
6.25
6.00
6.50
6.00
5.50-8.75 6.50-9.50 6.50-9.50
6.25
6.00
7.00
6.00
7.00
6.25
6.50
6.50
6.75
6.75
6.50
6.50
6.75
6.50
6.75
6.50
6.25
6.25
6.25
6.25
7.00
6.75
7.00
—
4.75
6.25
5.25
5.75
5.75
5.75
6.00
5.25
5.50
5.50
5.75
5.50
Total investment properties
2,569
IPUC was acquired during the year.
1.
2. A portion of IPUC was transferred to inventories during the year.
3. Book value includes Birkenhead Point Marina, Drummoyne NSW and 64 Roseby Street, Drummoyne NSW.
4.
Investment property was disposed of during the year.
120 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
I APPENDICES
I1 PROPERTY PORTFOLIO LISTING CONTINUED
Retail continued
Toombul, Nundah QLD 1
Harbourside, Sydney NSW 1
Total investment properties under construction
Total investment properties and
investment properties under construction
Cherrybrook Village, Cherrybrook NSW
Total assets classified as held for sale
Total retail property portfolio
Build to Rent
LIV Indigo, 2 Figtree Drive, Sydney Olympic Park NSW
Total investment properties
LIV Munro, Melbourne VIC
LIV Aston, Melbourne VIC 2
LIV Anura, Newstead QLD
LIV Albert Fields, Brunswick VIC
Total investment properties under construction
Total investment properties and
investment properties under construction
Total Build to Rent property portfolio
1.
2.
Investment property was transferred to IPUC during the year.
IPUC was acquired during the year.
Fair
value
2022
$m
90
211
301
2,870
—
—
2,870
221
221
213
86
44
70
413
634
634
FINANCIAL REPORT
Lease
liability
gross up
2022
$m
Book value
Capitalisation
rate
Discount rate
2022
$m
2021
$m
2022
%
2021
%
2022
%
2021
%
—
—
5.75
—
—
—
7.00
—
4.00
4.00
6.25
6.25
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
41
41
48
—
—
48
—
—
—
—
—
—
—
—
—
90
252
342
303
240
543
2,918
3,074
—
—
133
133
2,918
3,207
221
221
213
86
44
70
413
634
634
220
220
103
—
22
25
150
370
370
Property portfolio
Total investment properties and investment properties under construction
Total assets classified as held for sale
Total investments in joint ventures
Total property portfolio
Fair value
2022
$m
12,141
—
1,350
13,491
Lease
liability
gross up
2022
$m
Book value
2022
$m
2021
$m
48
—
—
48
12,189
—
1,350
13,539
11,821
133
472
12,426
Annual Report 2022 – 121
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
I APPENDICES
I2 CONTROLLED ENTITIES
All entities controlled by the Group are shown below. Unless otherwise noted, they are wholly owned and were incorporated or established in Australia
during the current year and prior years.
During the year, the Group established MGR Insurance International Pte Ltd, a company incorporated in Singapore. This entity complies with IFRS.
Members of the Closed Group
CN Collins Pty Ltd
Hoxton Park Airport Pty Ltd
Mirvac (Docklands) Pty Limited
Mirvac (WA) Pty Limited
Mirvac Capital Investments Pty Limited
Mirvac Constructions (QLD) Pty Limited
Mirvac Constructions (VIC) Pty Limited
Mirvac Constructions (WA) Pty Limited
Mirvac Constructions Pty Ltd
Mirvac Design Pty Limited
Mirvac Doncaster Pty Ltd
Mirvac Finance Pty Ltd 1, 2
Mirvac Group Finance Limited
Mirvac Group Funding Pty Ltd 1, 3
Mirvac Holdings Limited
Mirvac Home Builders (VIC) Pty Limited
Mirvac Homes (NSW) Pty Limited
Mirvac Industrial Developments Pty Limited
Mirvac International Investments Pty Ltd
Mirvac Limited
Mirvac National Developments Pty Limited
Mirvac Office Developments Pty Ltd
Mirvac Pacific Pty Ltd
Mirvac Projects Pty Ltd
Mirvac Queensland Pty Limited
Mirvac Real Estate Pty Ltd
Mirvac Residential (NSW) Developments Pty Ltd
Mirvac Retail Developments Pty Ltd
Mirvac Rockbank Pty Ltd
Mirvac Spring Farm Pty Ltd 1, 4
Mirvac Treasury Ltd
Mirvac Treasury No. 3 Limited
Mirvac Victoria Pty Limited
Mirvac Wholesale Funds Management Pty Ltd 1, 5
Mirvac Wholesale Industrial Developments Pty Ltd 1, 6
Mirvac Woolloomooloo Pty Limited
1. This company was converted from a public company to a proprietary limited company on 7 July 2022.
2. Previously registered as Mirvac Finance Limited.
3. Previously registered as Mirvac Group Funding Limited.
4. Previously registered as Mirvac Spring Farm Limited.
5. Previously registered as Mirvac Wholesale Funds Management Limited.
6. Previously registered as Mirvac Wholesale Industrial Developments Limited.
Interests in controlled entities of Mirvac not included in the Closed Group
197 Salmon Street Pty Limited
477 Collins Street No. 2 Trust
699 Bourke Street Services Pty Limited
A.C.N. 087 773 859 Pty Limited
A.C.N. 110 698 603 Pty Ltd
A.C.N. 150 521 583 Pty Ltd
A.C.N. 165 515 515 Pty Ltd
ABTRC Head Trust A
ABTRC Head Trust B
Ascot Chase Nominee Stages 3-5 Pty Ltd
Banksia Unit Trust
BL Developments Pty Ltd
Bligh Street Office Trust
BTR Brunswick Trust A
BTR Brunswick Trust B
BTR Foreshore Trust
BTR Head Company Pty Limited
BTR Indigo Trust A
BTR Indigo Trust B
BTR QLD Pty Limited
BTR QVM Trust A
BTR QVM Trust B
BTR Vic Head Trust A
BTR Vic Head Trust B
Eveleigh Commercial Holdings Pty Limited
Eveleigh Commercial Pty Limited
Eveleigh Precinct Pty Limited
EZ Power Pty Ltd
Fast Track Bromelton Pty Limited
Gainsborough Greens Pty Ltd
HIR Boardwalk Tavern Pty Limited
HIR Golf Club Pty Limited
HIR Golf Course Pty Limited
HIR Property Management Holdings Pty Limited
HIR Tavern Freehold Pty Limited
Home Loans by Mirvac Pty Ltd 1
HPAL Holdings Pty Limited
ICDPL Pty Limited 2
ICPL Pty Limited 3
IN3PL Pty Limited 4
Industrial Commercial Property
Solutions (Constructions) Pty Limited
Industrial Commercial Property
Solutions (Finance) Pty Limited
Industrial Commercial Property
Solutions (Holdings) Pty Limited
Industrial Commercial Property
Solutions (Queensland) Pty Limited
Industrial Commercial Property
Solutions Pty Limited
IPGH Pty Limited 5
IPPL Pty Limited 2
JF ASIF Pty Limited
JFM Hotel Trust
Joynton North Pty Ltd
Kirrawee South Centre Pty Ltd
Kirrawee South Centre Trust
La Trobe Office Trust
Magenta Shores Finance Pty Ltd
Magenta Shores Unit Trust
Magenta Unit Trust
Marrickville Projects Pty Limited
MGR Insurance International Pte. Ltd 6
Mirvac (Beacon Cove) Pty Limited
Mirvac (Old Treasury Development Manager)
Pty Limited
Mirvac (Old Treasury Hotel) Pty Limited
Mirvac (Retail and Commercial) Holdings
Pty Limited
Mirvac (Walsh Bay) Pty Limited
Mirvac 275 Kent Street Services Pty Ltd
Mirvac 699 Bourke Street Trust
Mirvac 90CS No.2 Trust 7
Mirvac Advisory Pty Limited
Mirvac Aero Company Pty Ltd
Mirvac Altona North Pty Ltd
Mirvac AOP SPV Pty Limited
Mirvac Auburn Industrial Trust
Mirvac Badgerys Creek Industrial Trust
Mirvac Birkenhead Point Marina Pty Limited
Mirvac Blue Trust
Mirvac Bourke Street No. 3 Sub-Trust
Mirvac BST Pty Limited
Mirvac BTR Developments Pty Ltd
Mirvac BTR Head Company A Pty Ltd
Mirvac BTR Head Company B Pty Ltd
Mirvac BTR Head SPV Pty Ltd
Mirvac BTR Head Trust
Mirvac BTR Sub Company A Pty Ltd
Mirvac BTR Sub Company B Pty Ltd
Mirvac BTR Sub SPV Pty Ltd
Mirvac BTR Sub-Trust 1
Mirvac BTR Trust
Mirvac Capital Assurance Pty Ltd
Mirvac Capital Partners Pty Ltd
Mirvac Capital Pty Limited
Mirvac Chifley Holdings Pty Limited
Mirvac Commercial Finance Pty Limited
Mirvac Commercial Sub SPV Pty Limited
Mirvac Constructions (Homes) Pty. Limited
Mirvac Constructions (SA) Pty Limited
Mirvac Developments Pty Limited
Mirvac Duck River Pty Ltd
Mirvac Elizabeth Trust
Mirvac Energy Pty Limited
1. Previously registered as TMT Finance Pty Limited.
2. This entity commenced a Creditor’s Voluntary Liquidation on 9 July 2021.
3. This entity commenced a Member’s Voluntary Liquidation on 8 December 2021.
4. This entity commenced a Member’s Voluntary Liquidation on 3 November 2021.
5. This entity commenced a Member’s Voluntary Liquidation on 8 December 2021.
6. This entity was established during the year in Singapore.
7. This entity was established during the year.
122 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS I2 CONTROLLED ENTITIES CONTINUED
Interests in controlled entities of Mirvac not included in the Closed Group CONTINUED
Mirvac ESAT Pty Limited
Mirvac Funds Limited
Mirvac Funds Management Australia Limited 1
Mirvac Funds Management Limited
Mirvac George Street Holdings Pty Limited
Mirvac George Street Pty Limited
Mirvac Green Square Pty Limited
Mirvac Green Trust
Mirvac Harbourside Sub-Trust
Mirvac Harbourtown Pty Limited
Mirvac Harold Park Pty Limited
Mirvac Harold Park Trust
Mirvac Hatch Pty Ltd
Mirvac Hoist Pty Ltd
Mirvac Holdings (WA) Pty Limited
Mirvac Homes (QLD) Pty Limited
Mirvac Homes (SA) Pty Limited
Mirvac Homes (VIC) Pty Limited
Mirvac Homes (WA) Pty Limited
Mirvac Hotel Services Pty Limited
Mirvac ID (Bromelton) Pty Limited
Mirvac ID (Bromelton) Sponsor Pty Limited
Mirvac Industrial No. 2 Sub-Trust
Mirvac Industrial Sub SPV Pty Limited
Mirvac International (Middle East) No. 2 Pty Limited
Mirvac Investment Manager Pty Ltd
Mirvac JV’s Pty Limited
Mirvac Kemps Creek Trust
Mirvac Kensington Pty Ltd
Mirvac Kent Street Holdings Pty Limited
Mirvac King Street Pty Ltd
Mirvac Leader Pty Limited
Mirvac Living Investment Company Pty Ltd
Mirvac Living Investment Manager Pty. Ltd.
Mirvac Living Real Estate Services Pty. Ltd.
Mirvac Lucas Real Estate Unit Trust 2
Mirvac Maker Space Pty Limited
Mirvac Mandurah Pty Limited
Mirvac McCormacks Road Pty Limited
Mirvac Newcastle Pty Limited
Mirvac NIC Trust
Mirvac Nike Holding Pty Limited
Mirvac North Sydney Office Holdings Pty Limited
Mirvac North Sydney Office Holdings Trust
Mirvac Old Treasury Holdings Pty Limited
Mirvac Parking Pty. Limited
Mirvac Parramatta Sub-Trust No. 2
Mirvac Pennant Hills Residential Trust
Mirvac Ping An Residential Developments
Pty Limited 2
Mirvac Ping An Waterloo Development Trust 2
Mirvac Pitt Street Trust No. 2
Mirvac Precinct 2 Pty Limited 1
Mirvac Precinct Trust
Mirvac Procurement Pty Ltd
Mirvac Project Trust
Mirvac Projects (Retail and Commercial) Pty Ltd
Mirvac Projects Dalley Street Pty Limited
Mirvac Projects Dalley Street Trust
Mirvac Projects George Street Pty Limited
Mirvac Projects George Street Trust
Mirvac Projects No. 2 Pty. Limited
Mirvac Projects Norwest No. 2 Trust
Mirvac Projects Norwest Trust
Mirvac Properties Pty Ltd
Mirvac Property Advisory Services Pty. Limited
Mirvac Property Services Pty Limited
Mirvac Property Trust
Mirvac Real Estate Debt Funds Pty Limited
Mirvac REIT Management Pty Ltd
Mirvac Retail Head SPV Pty Limited
Mirvac Retail Sub SPV Pty Limited
Mirvac Services Pty Limited
Mirvac Showground Pty Ltd
Mirvac Showground Trust
Mirvac SLS Development Pty Limited 2
1. This entity was established during the year.
2. This entity became wholly owned during the year.
3. Previously registered as Mirvac International No.3 Pty Limited.
4. This entity commenced a Member’s Voluntary Liquidation on 8 December 2021.
Interests in controlled entities of MPT
10-20 Bond Street Trust
367 Collins Street No. 2 Trust
367 Collins Street Trust
380 St Kilda Road Trust
477 Collins Street No. 1 Trust
Australian Office Partnership Trust
Eveleigh Trust
James Fielding Trust
Joynton North Property Trust
Joynton Properties 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 90 Collins Street Trust
Mirvac Allendale Square Trust
Mirvac Ann Street Trust
Mirvac Bay St Trust
Mirvac Bourke Street No. 1 Sub-Trust
Mirvac Broadway Sub-Trust
Mirvac Capital Partners 1 Trust
Mirvac Collins Street No. 1 Sub-Trust
Mirvac Commercial No. 3 Sub-Trust
Mirvac Commercial Trust
Mirvac Group Funding No.2 Pty Limited
Mirvac Group Funding No.3 Pty Limited
Mirvac Hoxton Park Trust
Mirvac Industrial No. 1 Sub-Trust
Mirvac Kensington Trust
Mirvac Kirrawee Trust No. 1
Mirvac Kirrawee Trust No. 2
Mirvac La Trobe Office Trust
Mirvac Living Trust
Mirvac Padstow Trust No. 1
Mirvac Parramatta Sub-Trust No. 1
Mirvac Pitt Street Trust
FINANCIAL REPORT
Mirvac SLS Development Trust 2
Mirvac South Australia Pty Limited
Mirvac Spare No.2 Pty Limited 1
Mirvac Spare Pty Limited
Mirvac SPV 1 Pty Limited
Mirvac St Leonards Pty Limited
Mirvac St Leonards Trust
Mirvac T6 Pty Ltd
Mirvac T6 Trust
Mirvac Trademarks Pty Limited
Mirvac TS Pty Limited
Mirvac Ventures Pty Limited
Mirvac Wholesale Sub Pty Limited 3
MirvacX Retail Solutions Pty Limited
MLJV Pty Ltd 2
MRV Hillsdale Pty Limited
MWID (Brendale) Pty Limited
MWID (Brendale) Unit Trust
MWID (Mackay) Pty Limited
Newington Homes Pty Limited
Oakstand No.15 Hercules Street Pty Ltd
Picket & Co Development Pty Limited
Picket & Co NSW Head Trust
Picket & Co Operations Pty Limited
Picket & Co Property Pty Limited
Picket & Co Pty Ltd
Pigface Unit Trust
Planned Retirement Living Pty Ltd
Post Bidco Pty Limited 4
Rovno Pty. Limited
Spring Farm Finance Pty Limited
Springfield Development Company Pty Limited
SPV Magenta Pty Limited
Suntrack Holdings Pty Limited
Suntrack Property Trust
Treasury Square Trust
TS Triangle Pty Limited
TS Triangle Trust
Tucker Box Management Pty Limited
Mirvac Property Trust No. 3
Mirvac Property Trust No. 4
Mirvac Property Trust No. 5
Mirvac Property Trust No. 6
Mirvac Property Trust No. 7
Mirvac Real Estate Investment Trust
Mirvac Retail Head Trust
Mirvac Retail Sub-Trust No. 1
Mirvac Retail Sub-Trust No. 2
Mirvac Retail Sub-Trust No. 3
Mirvac Retail Sub-Trust No. 4
Mirvac Rhodes Sub-Trust
Mirvac Rydalmere Trust No. 1
Mirvac Rydalmere Trust No. 2
Mirvac Smail St Trust
Mirvac Toombul Trust No. 1
Mirvac Toombul Trust No. 2
Old Treasury Holding Trust
Springfield Regional Shopping Centre Trust
Annual Report 2022 – 123
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS I APPENDICES
INTERESTS IN JOINT VENTURES AND ASSOCIATES
I3
This table shows details of Mirvac’s interests in joint ventures and associates.
Barangaroo EDH Pty Ltd
BuildAI Pty Ltd
Domaine Investments Management Pty Ltd
Duck River Auburn Trust
Googong Township Pty Ltd
Googong Township Unit Trust
Harold Park Real Estate Trust
HPRE Pty Ltd
Leakes Road Rockbank Pty Ltd
Leakes Road Rockbank Unit Trust
Mirvac (Old Treasury) Pty Limited
Mirvac (Old Treasury) Trust
Mirvac 8 Chifley Pty Ltd
Mirvac 8 Chifley Trust
Mirvac Locomotive Trust 1
Mirvac Lucas Real Estate Unit Trust 2
Mirvac Ping An Residential Developments Pty Limited 3
Mirvac Ping An Waterloo Development Trust 3
Mirvac SLS Development Pty Limited 3
Mirvac SLS Development Trust 3
MLJV Pty Ltd 2
MVIC Finance 2 Pty Ltd
TM Management Services Pty Ltd 5
The George Street Trust 4
Tucker Box Hotel Group
Walsh Bay Finance Pty Ltd 5
Walsh Bay Properties Pty Ltd 5
Walsh Bay SPV Pty Ltd 5
WL Developer Pty Ltd
WL Developer Trust
1. This entity was previously consolidated into Mirvac Group, however control was lost on 5 August 2021 and the entity is now accounted for as a JVA.
2. This entity was previously accounted for as a JVA, however control was gained on 31 July 2021 and the entity was consolidated into the Mirvac Group from that date.
3. This entity was previously accounted for as a JVA, however control was gained on 4 August 2021 and the entity was consolidated into the Mirvac Group from that date.
4. This entity was previously consolidated into Mirvac Group, however control was lost on 26 August 2021 and the entity is now accounted for as a JVA.
5. This entity entered into administration on 10 May 2022.
Ownership %
2022
2021
33
37
50
51
50
50
50
50
50
50
50
50
50
50
51
—
—
—
—
—
—
50
50
50
50
50
50
50
50
50
33
37
50
51
50
50
50
50
50
50
50
50
50
50
—
50
51
51
51
51
50
50
50
—
50
50
50
50
50
50
124 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
FINANCIAL REPORT
DIRECTORS’ DECLARATION
In the Directors’ opinion:
a) the financial statements and the notes set out on pages 73 to 124 are in accordance with the Corporations Act 2001, including:
i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
ii) giving a true and fair view of the consolidated entity’s financial position at 30 June 2022 and of its performance for the financial year
ended on that date;
b) 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
c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended Closed Group identified in note I2 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 G1.
The basis of preparation note confirms that the financial statements also comply with IFRS as issued by the IASB.
The Directors have been given the declarations by the CEO & Managing Director and Chief Financial Officer required by section 295A
of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Susan Lloyd-Hurwitz Director
Sydney
11 August 2022
Annual Report 2022 – 125
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MIRVAC LIMITED
Independent auditor’s report
To the stapled securityholders of Mirvac Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Mirvac Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2022 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group’s financial report comprises:
●
●
●
●
●
●
the consolidated statement of financial position as at 30 June 2022
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation.
126 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MIRVAC LIMITED
FINANCIAL REPORT
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Key audit matters
For the purpose of our audit we
used overall Group materiality of
$30.73 million, which represents
approximately 5% of the Funds
from Operations of the Group.
We applied this threshold,
together with qualitative
considerations, to determine the
scope of our audit and the nature,
timing and extent of our audit
procedures and to evaluate the
effect of misstatements on the
financial report as a whole.
We chose Funds from Operations
of the Group because, in our view,
it is the benchmark against which
the performance of the Group is
most commonly measured.
We utilised a 5% threshold based
on our professional judgement,
noting it is within the range of
commonly acceptable thresholds.
Our audit focused on where the
Group made subjective
judgements; for example,
significant accounting estimates
involving assumptions and
inherently uncertain future events.
The Group owns and manages
investment property assets across
Sydney, Melbourne, Brisbane,
Canberra, and Perth. The Group's
development activities also create
and deliver commercial assets and
residential projects across these
locations. The accounting
processes are structured around a
Group finance function at its head
office in Sydney.
Amongst other relevant topics, we
communicated the following key
audit matters to the Audit and Risk
Committee:
•
•
•
Carrying value of
residential inventories
Fair value of investment
properties
Recognition of
development &
construction
management services
revenue
These are further described in the
Key audit matters section of our
report.
Annual Report 2022 – 127
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MIRVAC LIMITED
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Carrying value of residential inventories
(Refer to note C4) $2,125m
Residential inventories are recognised at the lower of
cost and net realisable value for each residential
development project.
The Group’s estimate of net realisable value includes
assumptions about future market and economic
conditions which are inherently subject to the risk of
change. The faster than expected economic recovery
from COVID-19, supply chain issues and global
conflicts have led to stronger inflationary pressures
and a rapidly changing economic environment in
which interest rate hikes have been brought forward.
This has increased the level of judgement and
uncertainty in the assumptions used in determining
the net realisable value of residential inventories as
described in note C4.
This was a key audit matter given:
●
●
The relative size of the residential
inventories balance in the Consolidated
Statement of Financial Position; and
The significant judgement and uncertainty
involved in estimating net realisable value.
We evaluated the design of the Group’s relevant
controls over the carrying value of residential
inventories process and assessed whether a sample
of these controls operated effectively throughout the
year including:
●
●
The Group’s review of capitalised costs
relating to new residential development
projects; and
The Group’s process for review of key
assumptions used in the estimation of net
realisable value across the residential
development project portfolio.
We performed a risk assessment over the Group’s
residential development project portfolio to determine
those residential inventories at greater risk of being
carried at an amount in excess of their recoverable
amount. Our risk assessment was informed by our
understanding obtained of the significant assumptions
relevant to the net realisable value of each project,
consideration of the results of the Group’s process for
estimation of net realisable value, the stage of
development progress of each project, our
observations made through site visits during the year
and our understanding of current economic conditions
relevant to individual project locations.
For those projects which were assessed as being at
greater risk, we performed procedures to assess the
appropriateness of key assumptions used in the
Group’s estimate of net realisable value. In our audit
procedures we:
● Obtained the project feasibility model that
the Group uses to assess net realisable
value and held discussions with
management to develop an understanding of
the basis for assumptions used in the model.
128 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MIRVAC LIMITED
FINANCIAL REPORT
●
Assessed the appropriateness of key
assumptions by:
○ Comparing forecast sales rates
against actual sales rates for a
month before and a month after
balance date.
○ Comparing estimated sales prices
to recent market sales data for the
project location or internal data for
recently executed sales at the
project.
○ Considering the basis for other key
assumptions including whether
costs to complete are consistent
with the expected project
completion programmes, the
planned sales incentives and any
allocation of costs across stages on
multistage projects.
●
Assessed whether the carrying value was
the lower of cost and net realisable value.
We also assessed the reasonableness of the Group’s
disclosures against the requirements of Australian
Accounting Standards.
Key audit matter
How our audit addressed the key audit matter
Fair value of investment properties
(Refer to note C1) $12,189m
Investment properties are recognised at fair value.
The Group’s estimate of fair value of investment
properties includes assumptions about unobservable
inputs including future market and economic
conditions which are inherently subject to the risk of
change. The faster than expected economic recovery
from COVID-19, supply chain issues and global
conflicts have led to stronger inflationary pressures
and a rapidly changing economic environment in
which interest rate hikes have been brought forward.
This has increased the level of judgement and
uncertainty in the assumptions used in determining
the fair value of investment properties as described in
note C1.
We evaluated the design of the Group’s relevant
controls over the investment property valuation
process and assessed whether a sample of these
controls operated effectively throughout the year
including:
●
The Group’s compliance with its policy to
externally value all properties at least once
in the last two years and to rotate valuation
firms.
●
The approval of the adopted fair values for
all individual properties by the Directors of
the Group.
We evaluated the appropriateness of the valuation
methodologies used against the requirements of
Australian Accounting Standards.
We agreed the fair values of all properties to the
external valuation or internal valuation model
Annual Report 2022 – 129
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MIRVAC LIMITED
At each reporting period, the Directors determine the
fair value of the Group’s investment property portfolio
having regard to the Group’s valuation policy which
requires all properties to be externally valued by
valuation experts at least once every two years. In the
period between external valuations the Directors’
valuation is supported by internal Mirvac valuation
models.
Fair value of investment properties was a key audit
matter because:
●
Investment property balances are financially
significant in the Consolidated Statement of
Financial Position.
● The impact of changes in the fair value of
investment properties can have a significant
effect on the Group’s total comprehensive
income.
●
Investment property valuations are
inherently subjective due to the use of
unobservable inputs in the valuation
methodology.
● Fair values are highly sensitive to changes in
key assumptions.
(together, the ‘valuations’) and assessed the
competency, capability and objectivity of the relevant
external or internal valuer.
We read recent independent property market reports
to develop our understanding of the prevailing market
conditions in which the Group invests.
We engaged PwC valuation experts to join our
discussions with several valuation firms to obtain an
understanding and assess the appropriateness of the
methodology used.
We met with management to discuss the specifics of
the property portfolio including, amongst other things,
any significant leasing activity, capital expenditure
and vacancies impacting the portfolio.
We evaluated the completeness and accuracy of
tenancy schedules used in the valuations on a
sample basis to evaluate whether the relevant leasing
information had been correctly input.
We performed a risk assessment over the Group’s
investment property portfolio to determine those
properties at greater risk of fair value being materially
misstated. Our risk assessment was informed by our
understanding of each property, consideration of the
results of the Group’s estimate of fair value and our
understanding of current market conditions.
For those properties which were assessed as being at
greater risk, we performed procedures to assess the
appropriateness of key assumptions used in the
Group’s assessment of fair value. In our audit
procedures over the valuations we:
● Obtained the valuation and held discussions
with management to develop an
understanding of the basis for assumptions
used.
● Assessed the appropriateness of the
methodology adopted and the mathematical
accuracy of the valuations.
● Assessed the appropriateness of the
capitalisation rate, discount rate and market
rents used in the valuation by comparing
them against market data for comparable
properties.
130 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MIRVAC LIMITED
FINANCIAL REPORT
●
Assessed the appropriateness of rental
income data used in the valuation against
rental income recorded in the general ledger
in FY22 for each property.
We also assessed the reasonableness of the Group’s
disclosures against the requirements of Australian
Accounting Standards.
Key audit matter
How our audit addressed the key audit matter
Recognition of development & construction
management services revenue
(Refer to note B2) $471m
Construction and development management services
revenue is recognised based on the satisfaction of
performance obligations.
There is judgement required by the Group to
determine when performance obligations are met. In
particular, where revenue is recognised on a
percentage of completion basis, it involves the use of
forward-looking assumptions including forecast costs
of completion and the date of project completion.
Revenue recognition on construction projects was a
key audit matter because:
●
●
There is significant judgement in determining
the amount of revenue to be recognised in
the year;
These revenue streams are significant to the
Group’s comprehensive income; and
● Changes in the assumptions used to
estimate the percentage of completion on
construction projects can have a significant
effect on the Group’s comprehensive
income.
We evaluated the design of the Group’s relevant
controls over the recognition of development &
construction management services revenue and
assessed whether a sample of these controls
operated effectively throughout the year including:
●
The Group’s process for review of key
assumptions used in the estimation of
forward-looking assumptions including
forecast costs of completion and the date of
project completion.
For a sample of projects we:
● Obtained the relevant development
agreements executed between the Group
and the external customer(s) and evaluated
the terms of the agreement to obtain an
understanding of the performance
obligations and transaction price.
●
Performed site visits to obtain an
understanding of the overall project scope
and stage of progress.
We performed audit procedures over a sample of
projects for which revenue was recognised in the
year. In our audit procedures we:
● Obtained and discussed the project
feasibility model with management to
develop an understanding of project status
and risks and the basis of the assumptions
used by the Group in their assessment of
revenue and costs for the year.
● Obtained and assessed the appropriateness
of evidence used by the Group to support
forecast project revenue.
Annual Report 2022 – 131
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MIRVAC LIMITED
● Performed look-back procedures, comparing
current year revenue recognised to prior
year revenue forecasts for FY22.
● Obtained and assessed the appropriateness
of evidence used by the Group to support
forecast costs of completion and date of
project completion.
● Performed look-back procedures, comparing
current year costs recognised to prior year
costs forecasts for FY22.
● Assessed the appropriateness of
capitalisation of costs incurred to date and
agreed forecast costs to completion to the
project feasibility model.
We also assessed the reasonableness of the Group’s
disclosures against the requirements of Australian
Accounting Standards.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2022, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors 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 gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
132 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MIRVAC LIMITED
FINANCIAL REPORT
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 51 to 71 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the remuneration report of Mirvac Limited for the year ended 30 June 2022 complies
with section 300A of the Corporations Act 2001.
Responsibilities
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.
PricewaterhouseCoopers
Voula Papageorgiou
Partner
Joe Sheeran
Partner
Sydney
11 August 2022
Annual Report 2022 – 133
GOVERNANCEOTHERHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
SECURITYHOLDER INFORMATION
MANAGING YOUR SECURITYHOLDING
Securityholders with queries concerning their holding, distribution payments or other related matters should contact Mirvac’s registry, Link Market
Services Limited, as follows:
> Mirvac information line (toll free within Australia): +61 1800 356 444; or
> Website: www.linkmarketservices.com.au
When contacting the registry, please quote your current address details together with your Securityholder Reference Number (SRN) or Holder
Identification Number (HIN) as shown on your Issuer Sponsored or CHESS statements. The most efficient way to access your securityholding details is
online at www.linkmarketservices.com.au. You will need your SRN or your HIN (this reference number is recorded in statements that you receive about
your holding in Mirvac) when you log-in online.
You can do the following online at www.linkmarketservices.com.au:
> elect to receive important communications by email;
> choose to have your distribution payments paid directly into your bank account;
> provide your tax file number (TFN) or Australian Business Number (ABN);
> lodge your votes for securityholder meetings; and
> Complete Tax Residency Certification (CRS/FATCA).
Managing your securityholding online is speedier, cost-effective and environmentally friendly. If it is easier for you to update your securityholding
information by post, you can download the forms from www.linkmarketservices.com.au or by contacting the Mirvac information line (toll free within
Australia) on +61 1800 356 444 to request the appropriate forms to be sent out to you.
The information set out below was prepared at 29 July 2022 and applies to Mirvac’s stapled securities (ASX code: MGR). As at 29 July 2022 there were
3,943,069,322 stapled securities on issue.
SUBSTANTIAL SECURITYHOLDERS
As disclosed in substantial holding notices lodged with the ASX at 29 July 2022:
Date
of change
Number of
stapled securities
Percentage of
issued equity 1
%
15/11/2021
29/11/2021
14/07/2020
01/12/2021
375,102,424
410,682,477
202,695,923
289,943,287
9.51
10.41
5.15
7.35
Number of
holders
Number of
stapled securities
Percentage of
issued equity 1
%
7,351
9,407
4,374
5,441
251
3,286,849
25,762,083
32,412,678
129,932,377
3,751,675,335
0.08
0.65
0.82
3.30
95.15
26,824
3,943,069,322
100.00
Name
The Vanguard Group, Inc
BlackRock Group (BlackRock Inc. and subsidiaries)
APG Asset Management N.V.
State Street Corporation and subsidiaries
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
1. Percentage of issued equity held as at the date notice provided.
134 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS
SECURITYHOLDER INFORMATION
20 LARGEST SECURITYHOLDERS
Name
1. HSBC Custody Nominees (Australia) Limited
2. J P Morgan Nominees Australia Pty Limited
3. Citicorp Nominees Pty Limited
4. National Nominees Limited
5. BNP Paribas noms Pty Ltd
6. BNP Paribas Nominees Pty Ltd
7. Citicorp Nominees Pty Limited
8. Australian Foundation Investment Company Limited
9. HSBC Custody Nominees (Australia) Limited
10. BNP Paribas Nominees Pty Ltd
11. BNP Paribas Noms(Nz) Ltd
12. Solium Nominees (Australia) Pty Ltd
13. Djerriwarrh investments Limited
14. BNP Paribas Nominees Pty Ltd ACF CLEARSTREAM
15. one managed investment funds Ltd
16. Medich Capital Pty Ltd
17. Argo Investments Limited
18. HSBC Custody Nominees (Australia) Limited - A/C 2
19. HSBC Custody Nominees (Australia) Limited
20. Sobeda Pty Ltd
Total for 20 largest securityholders
Total other securityholders
Total stapled securities on issue
OTHER
Number of stapled
securities
Percentage of
issued equity
%
1,756,149,118
868,708,848
474,005,844
173,351,680
160,921,809
52,614,153
40,782,129
29,350,000
21,592,077
18,690,000
14,185,500
11,009,142
8,900,000
8,374,652
6,850,000
6,033,980
6,000,551
5,919,297
5,620,636
5,065,291
3,674,124,707
268,944,615
3,943,069,322
44.54
22.03
12.02
4.40
4.08
1.33
1.03
0.74
0.55
0.47
0.36
0.28
0.23
0.21
0.17
0.15
0.15
0.15
0.14
0.13
93.18
6.82
100.00
Number of securityholders holding less than a marketable parcel (being 233 securities at the closing market price of $2.15 on 29 July 2022): 2,258.
VOTING RIGHTS
Subject to the Constitutions of Mirvac Limited and of MPT and to any rights or restrictions for the time being attached to any class or classes of
shares, units or stapled securities:
> on a show of hands, each Member present in person or by proxy, attorney, or representative has one vote; and
> on a poll, each Member has:
> in the case of a resolution of Mirvac Limited, one vote for each share in Mirvac Limited held; and
> in the case of a resolution of MPT, one vote for each whole $1.00 of unit value in MPT held.
Annual Report 2022 – 135
GOVERNANCEFINANCIAL REPORTHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
NABERS
NED
NOI
NRV
PPE
PwC
RAP
ROIC
SBP
SaaS
SoCI
SoFP
SRN
STI
TFN
TGS
TSR
TTC
USPP
WACC
WALE
National Australian Built Environment Rating System
Non-Executive Directors
Net operating income
Net realisable value
Property, plant and equipment
PricewaterhouseCoopers
Reconciliation action plan
Return on invested capital
Security-based payments
Software-as-a-Service
Statement of comprehensive income
Statement of financial position
Securityholder Reference Number
Short-term incentives
Tax file number
Tax governance statement
Total shareholder return
Tax Transparency Code
US Private Placement
Weighted average cost of capital
Weighted average lease expiry
GLOSSARY
AASB
ABN
AGM
ARCC
SoCE
ARSN
ASIC
ASX
AUD
BTR
CCIRS
CEO
CEO/MD
CFO
CGU
CHESS
CPSS
DCF
DRP
EBIT
EBITDA
ECL
EEP
EIS
ELT
EPS
FFO
FY20
FY21
FY22
GLA
HIN
HRC
HSE
HSE&S
IASB
IFRS
IIP
IP
IPUC
JVA
KMP
LSL
LTI
LTIFR
MPC
MPT
MTN
Australian Accounting Standards Board
Australian business number
Annual General and General Meeting
Audit, Risk & Compliance Committee
Statement of changes in equity
Australian Registered Scheme Number
Australian Securities and Investments Commission
Australian Securities Exchange
Australian dollar
Build to Rent
Cross currency interest rate swap
Chief Executive Officer
Chief Executive Officer/Managing Director
Chief Financial Officer
Cash generating unit
Clearing House Electronic Subregister System
Cents per stapled security
Discounted cash flow
Dividend/distribution reinvestment plan
Earnings before interest and taxes
Earnings before interest, taxes, depreciation and amortisation
Expected credit loss
Employee Exemption Plan
Employee Incentive Scheme
Executive Leadership Team
Earnings per stapled security
Funds From Operations
Year ending 30 June 2020
Year ending 30 June 2021
Year ending 30 June 2022
Gross leasable area
Holder Identification Number
Human Resources Committee
Health, safety and environment
Health, safety, environment and sustainability
International Accounting Standards Board
International Financial Reporting Standards
Integrated Investment Portfolio
Investment properties
Investment properties under construction
Joint ventures and associates
Key management personnel
Long service leave
Long-term incentives
Lost time injury frequency rates
Masterplanned communities
Mirvac Property Trust
Medium-term notes
136 – Celebrating 50 years
Mirvac GroupBUSINESS OVERVIEWLETTERS TO SECURITYHOLDERSOUR STRATEGYMEGATRENDS OTHER
DIRECTORY & UPCOMING EVENTS
REGISTERED OFFICE/PRINCIPAL OFFICE
Mirvac Group (comprising Mirvac Limited ABN 92 003 280 699
and Mirvac Funds Limited ABN 70 002 561 640, AFSL 233121
as responsible entity of MPT ARSN 086 780 645)
Level 28
200 George Street
Sydney NSW 2000
Telephone +61 2 9080 8000
Facsimile +61 2 9080 8111
www.mirvac.com
SECURITIES EXCHANGE LISTING
Mirvac is listed on the Australian Securities Exchange (ASX code: MGR).
DIRECTORS
John Mulcahy (Chair)
Susan Lloyd-Hurwitz (CEO/MD)
Christine Bartlett
Damien Frawley
Jane Hewitt
James M. Millar AM
Samantha Mostyn AO
Peter Nash
Robert Sindel
COMPANY SECRETARY
Michelle Favelle
STAPLED SECURITY REGISTRY
Link Market Services Limited
Parramatta Square, Level 22, Tower 6
10 Darcey Street, Parramatta NSW 2150
Telephone +61 1800 356 444
Securityholder enquiries
Telephone +61 1800 356 444
Correspondence should be sent to:
Mirvac Group
C/- Link Market Services Limited
Locked Bag 14
Sydney South NSW 1235.
Further investor information can be located in the
Investor Centre tab on Mirvac’s website at www.mirvac.com.
AUDITOR
PricewaterhouseCoopers
One International Towers Sydney,
Watermans Quay Barangaroo NSW 2000
ANNUAL GENERAL AND GENERAL MEETING
Mirvac Group’s 2022 AGM will be held at 11.00am (AEDT)
Friday, 18 November 2022
UPCOMING EVENTS
26 October 2022
18 November 2022 Annual General and General Meetings
First Quarter Operational Update
y
e
v
a
d
n
g
i
s
e
d
Annual Report 2022 – 137
GOVERNANCEFINANCIAL REPORTHOW WE CREATE VALUEPERFORMANCE BY PILLARRISK MANAGEMENTFINANCIAL AND OPERATIONAL RESULTS
Continue reading text version or see original annual report in PDF
format above