MIRVAC gRoup AnnuAl RepoRt 2012 - Mirvac - Mirvac Group

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DIReCtoRs’ RepoRt opeRAtionAl highlights AnD DivisionAl stRAtegy / continueD outlook The Investment Division remains focused on providing secure passive income to the Group, with key areas of focus including: — improving the quality of the portfolio via non-aligned asset sales and new development product; — remaining strategically overweight in the office sector; and — focusing on prime sub-regional shopping centres located in growth markets. hotel Management The Group completed the sale of its hotel Management business to Accor on 22 May 2012. As at the settlement date, the hotel Management business comprised a portfolio of 45 hotels covering 5,648 rooms throughout Australia (42) and New Zealand (three) under a suite of four core brands comprising Sea Temple (five star resorts); quay west Suites (five star all-suite hotels); Sebel (four and a half star hotels and resorts); and Citigate (four star hotels). For the period up to settlement (22 May 2012), the business unit achieved a statutory profit before tax of $15.5m and an operating profit before tax of $17.2m. investment Management MIM comprises two business activities for segment reporting purposes: third party, listed and unlisted funds management; and property asset management. For the year ended 30 June 2012, MIM recorded a statutory loss before tax of $9.0m and an operating loss before tax of $6.7m. At 30 June 2012, MIM remained responsible for the management of four wholesale funds: Mirvac wholesale Residential Development Partnership; Travelodge Group; JF Infrastructure yield Fund; and, Australian Sustainable Forestry Investors. MIM also managed the ASX listed Mirvac Industrial Trust and two unlisted residential development funds. MIM continued to rationalise activities considered non-core to Mirvac’s strategy as demonstrated by the exit from the following: — 25.0 per cent interest in the Mirvac City Regeneration Partnership; — investment in the RedZed residential mortgage warehouse; and — roles as investment manager and responsible entity for: — New Zealand Sustainable Forestry Investors; and — Mirvac wholesale hotel Fund (as part of the Group’s exit from its hotel management business). MAM provides asset management services for the Investment Division’s portfolio. MAM currently manages 78 properties principally located in metropolitan locations on the east coast of Australia. outlook MIM will continue to seek to exit its responsible entity, trustee and investment manager responsibilities as the opportunities arise. MAM will seek to continue to expand its asset management services in accordance with growth in the Investment Division’s portfolio. 04 mirvac group annual report 2012 Development Division The Group announced a new organisational structure on 15 February 2012 with the formation of national product and service functions to further leverage the Group’s integrated model in the delivery of residential and commercial product. The Development Division now operates four national product lines consisting of Apartments, Masterplanned Communities and Commercial, as well as a new product line being Resource Partnerships, designed to meet the increasing accommodation needs of the resource sector. At 30 June 2012, the Development Division had invested capital of $1,807.3m 1 . For the year ended 30 June 2012, the Division’s statutory loss before tax was $10.0m and operating profit before tax was $15.2m. Residential In the Group’s core metropolitan markets, the Division continued to deliver quality residential product, with new release projects targeted at the right price points and right locations such as: Apartments: — harold Park, Glebe NSw: launched the first residential precinct (296 lots) and received Master Plan Development Consent post 30 June 2012 with site works to commence in August 2012, in line with the development program; — Rhodes waterside, Rhodes NSw: achieved 223 settlements for the 12 months ended 30 June 2012, with settlements at waters edge (114 lots), elyina (106 lots) and Amarco (three lots). The Division also commenced construction on the final stage of Rhodes waterside (Pinnacle, 231 lots); and — Array, yarra’s edge vIC: achieved planning approval for Mirvac’s seventh apartment tower at Docklands and successful vIP launch. Masterplanned Communities: — elizabeth hills, NSw: Stage 1 (96 lots) released with 86 contracts exchanged; — Middleton Grange, NSw: 180 settlements with 46 contracts exchanged; and — Rockbank, vIC: the 5,780 lot site located in Melbourne’s western growth corridor was identified by the State Government for an accelerated planning approval process. For the year ended 30 June 2012, the Division secured future income with $907.7m 2 of residential exchanged pre-sales contracts and settled 1,807 residential lots. 1) Development Division’s total inventories, investments and loans in associates and joint ventures as at 30 June 2012. 2) Total exchanged pre-sales contracts as at 30 June 2012, adjusted for Mirvac’s share of joint ventures, associates and Mirvac’s managed funds.
opeRAtionAl highlights AnD DivisionAl stRAtegy / continueD State based settlements for the year ended 30 June 2012 were as follows: State Lots NSw 1,060 wA 318 vIC 216 qLD 213 total 1,807 State based settlements by product for the year ended 30 June 2012 were as follows: State Masterplanned Communities Apartments Total NSw 812 248 1,060 wA 318 — 318 vIC 179 37 216 qLD 145 68 213 total 1,807 For the year ended 30 June 2012, the Development Division’s residential pipeline totalled 29,787 lots, which was supplemented by the acquisition of a number of key projects that will contribute significantly to the Division’s Fy15 and beyond development pipeline, including: — Googong, NSw: acquired in December 2011. Stage 1 was released with 174 exchanged contracts. Googong is a joint venture with CIC Australia to develop a masterplanned community comprising approximately 5,800 lots; — Clyde North, vIC: secured site in November 2011 on capital efficient terms. The 200 hectare site located in Melbourne’s south east growth corridor will comprise approximately 2,100 lots on completion; — Alex Avenue, NSw: in February 2012 Mirvac secured 259 lots on capital efficient terms. Alex Avenue is located in Sydney’s north west growth centre; and — Green Square, NSw: in March 2012 Mirvac executed the project agreement with Landcom and joint venture partner, Leighton Properties, to deliver the Green Square Town Centre core sites. on completion, the core sites will comprise approximately 1,600 lots, 48,000 square metres of office space and 12,000 square metres of retail space as well as substantial public domain and open space. During the period, the Division completed the disposals of its non-core inventory at Magenta Shores, The entrance NSw and The Royal, Newcastle NSw (Stages 1c and 2), thereby finalising the major provisioned englobo sales for the year ended 30 June 2012. commercial Mirvac’s commercial development activities include office, retail and industrial projects, and the Group’s strategy is to sell a part share to aligned third parties and retain the remaining share within the Investment Division’s property portfolio. For the year ended 30 June 2012, Mirvac’s commercial pipeline totalled $1,361.9m. 1) Construction at Kawana Shopping Centre commenced in late July 2012. mirvac group annual report 2012 Key highlights for the year ended 30 June 2012 included: — completed the sale of 50.0 per cent of 8 Chifley Square, Sydney NSw to K-ReIT Asia and secured the first lease to Corrs Chambers westgarth for 42.0 per cent of the building’s net lettable area; — completed the sale of 50.0 per cent of hoxton Distribution Park, hoxton Park NSw to AvIvA Investors and achieved practical completion on the Dick Smith and Big w warehouses, five months ahead of schedule; — progressed the Stage 2 Development Application at 190-200 George Street, Sydney NSw with architectural firm, Francis-Jones Morehen Thorp, being selected as preferred architect following a design excellence competition; — approval received for the development of the old Treasury Building, Perth wA, which incorporates 30,000 square metres of prime office space that is 100.0 per cent pre-leased to the wA Government for 25 years; — commenced construction at orion Springfield, Springfield qLD and Kawana Shopping Centre, Buddina qLD 1 after building approvals for expansions at both centres were approved; — completed the final building at Nexus Industry Park, Prestons NSw in october 2011, which is now 100.0 per cent leased to hPM Legrand Australia; — named as the preferred proponent by the wA Government to deliver a major residential and hotel development at Port hedland in partnership with the wA Government and LandCorp; and — shortlisted in July 2012 as the preferred proponent by the wA Government to develop the mixed-use Perth City Link project, in conjunction with Leighton Properties. outlook The Division remains on track towards achieving its 2014 recovery, with key areas of focus including: — improving earnings to represent a 20.0 per cent contribution to the overall Group result; — continue to improve key metrics including return on invested capital (10.0 plus per cent target) and gross margin (18.0-22.0 per cent target); — selectively restocking the development pipeline; and — strong levels of pre-sales to mitigate future earning risks. 05
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MIRVAC gRoup AnnuAl RepoRt 2012 - Mirvac - Mirvac Group

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