MIRVAC gRoup AnnuAl RepoRt 2012 - Mirvac - Mirvac Group

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DIReCtoRs’ RepoRt MARKet AnD gRoup outlooK Market outlook whilst the resource sector continues to underpin domestic economic output, the easing of economic policy settings over the past nine months has started to provide support to the non-mining sectors of the economy. commercial outlook The european debt crisis has resulted in weaker levels of activity in finance related industries, as demonstrated by the softening in white collar employment resulting in an easing in office demand in Sydney and Melbourne. with the exception of Perth, vacancy rates have trended higher by varying degrees. however, the low level of office construction should limit the upside to vacancy rates. Conditions in the retail sector remain subdued. even though income growth is solid and saving appears to have stopped increasing, there has been a growing tendency for consumers to substitute goods for experiences. while vacancy rates are expected to remain stable, this is expected to be at the expense of incentives and rental growth. Industrial sector rents and demand remain subdued. Limited speculative construction, along with the majority of new supply being pre-committed, should see support for modest rental growth. Residential outlook The factors underpinning the residential property market have improved over the past year and vary by state. The combination of soft property prices and declining mortgage interest rates has resulted in an improvement in affordability, while population growth has started to pick up. The bias towards medium density accommodation continues, especially in the south eastern states. This trend is expected to continue given housing affordability, the preference of new migrants, transport infrastructure constraints, the cost of travel and the ageing population. housing approvals in NSw are now broadly in line with their pre global financial crisis levels. A low rental vacancy rate and rising rental growth are evident of strong underlying demand. A further strengthening in population growth, together with measures by the State Government to increase dwelling supply, suggests a further improvement in market conditions. with the appreciation of the Australian dollar continuing to exert pressure on the state’s manufacturing base and investment remaining biased towards the resource states, the victorian property market is likely to continue to underperform the other main states. The qLD property market has been adversely affected by the rising Australian dollar impacting on its tourism industry, weak economic conditions and a slowing in population growth. There are early signs the housing market is undergoing a modest recovery. Longer term prospects are underpinned by resource related activity, in conjunction with an improvement in population growth. The wA property market is showing signs of a recovery. Population growth has increased significantly, while property prices are starting to edge higher. Short-term prospects for the property market are expected to improve while, in the longer term, resource related activity is expected to lead both stronger dwelling demand and prices. 06 mirvac group annual report 2012 group outlook The Group remains focused on being an Australian real estate expert concentrating on its two core Divisions. The Investment Division remains focused on providing secure passive income to the Group, whilst improving the quality of the portfolio via non-aligned asset sales and new development product. The Division also maintains a focus on prime sub-regional shopping centres located in high growth markets. In spite of the subdued retail environment, Mirvac’s portfolio is comprised of shopping centres that are primarily driven by non-discretionary spend. The Development Division will continue to improve its return on invested capital and increase its earnings contribution to the Group by selectively restocking the development pipeline and maintaining strong levels of pre-sales to mitigate future earning risks. on 15 August 2012, the Group announced that by agreement, Nicholas Collishaw would be stepping down as Managing Director on 31 october 2012, and that Susan Lloyd-hurwitz has been appointed Chief executive officer and Managing Director. Susan will take up the role before the end of the 2012 calendar year. The Group also announced post 30 June 2012, the appointment of Bevan Towning as Chief executive officer, Platform, effective 9 July 2012, and the appointment of Greg Dyer as Finance Director, effective 4 September 2012. Greg will join the Mirvac Board as an executive Director on his commencement and will assume the responsibilities of the current Chief Financial officer, Justin Mitchell, who previously announced his intention to leave the Group on 1 october 2012. enviRonMentAl RegulAtions A key initiative to reduce greenhouse gas emissions was a commitment to achieve an average 4 Star NABeRS energy rating on applicable office buildings by December 2012. The Investment Division achieved this target during the 12 months ended 30 June 2012, six months ahead of schedule. This has resulted in improved environmental performance, demonstrating excellent energy or water performance due to design and management practices, and high efficiency systems and equipment. Mirvac and its business operations are subject to compliance with both Federal and state environment protection legislation. At the Federal level, Mirvac has triggered the energy efficiency opportunities Act 2006 (“eeo”) threshold and is required to participate. An eeo Assessment and Reporting Schedule (“ARS”) has been approved under section 16 of the eeo and Mirvac is progressing assessments in accordance with the ARS. Mirvac has also triggered the participation threshold of the National Greenhouse and energy Reporting Act 2007 (“NGeR”). The NGeR requires large energy-using companies to report annually on greenhouse gas emissions, reductions, removals and offsets, and energy consumption and production figures. Mirvac must report annually by 31 october. Mirvac is also subject to the commercial Building energy efficiency Disclosure Act 2010. This involves the disclosure of energy efficiency related information at the point of sale or lease of office space greater than 2,000 square metres. within Mirvac’s health, safety and environment performance reporting systems, including internal and external audits and inspections, no incidents of significant harm to the environment occurred during the year ended 30 June 2012. Mirvac’s development projects across Australia were issued a total of two environmental infringement notices throughout the year with a total value of $3,000. The notices related to minor incidents of potential environmental impact at development sites and were rectified immediately. The two instances related to the potential for uncontrolled sediment run off.
enviRonMentAl RegulAtions / continueD The Federal Government has introduced a price on carbon pollution, which came in to affect on 1 July 2012. Mirvac is not a liable entity under the legislation and is marginally affected. The legislation bill provides for increases in the total carbon cap and therefore does not preclude expansion of the number of directly liable entities before the scheme transitions to a cap and trade system in 2015. infoRMAtion on DiRectoRs Directors’ experience and areas of special responsibilities The members of the Board, their qualifications, experience and responsibilities are set out below: James MacKenzie, BBus, FCA, FAICD — Chairman — Independent Non-executive Chair of the nomination committee Member of the audit, risk and compliance committee Member of the human resources committee James MacKenzie was appointed to the Mirvac Board in January 2005 and assumed the role of Chairman in November 2005. James led the transformation of the victorian Government’s Personal Injury Schemes as Chairman of the Transport Accident Commission (“TAC”) and victorian workCover Authority from 2000 to 2007. he has previously held senior executive positions with Australia and New Zealand Banking Group Limited (“ANZ”), Norwich union and Standard Chartered Bank, and was Chief executive officer of the TAC. A Chartered Accountant by profession, James was a partner in both the Melbourne and hong Kong offices of an international accounting firm, now part of Deloitte. nicholas collishaw, SAFin, AAPI, FRICS — Managing Director — Dependent Nicholas Collishaw was appointed Managing Director on 26 August 2008. Prior to this appointment, he was the executive Director — Investment responsible for Mirvac’s Investment operations including MPT, Investment Management and hotel Management, having been appointed to the Mirvac Board on 19 January 2006. Nicholas has been involved in property and property investment management for over 25 years and has extensive experience in development and investment management of real estate in all major sectors and geographies throughout Australia. Prior to joining Mirvac in 2005 following its merger with James Fielding Group, Nicholas was an executive Director and head of Property at James Fielding Group. he has also held senior positions with Deutsche Asset Management, Paladin Australia Limited and Schroders Australia. Marina Darling, BA (hons), LLB, FAICD — Independent Non-executive Member of the human resources committee Marina Darling was appointed to the Mirvac Board on 23 January 2012. Marina is currently the Managing Director of Caponero Group, a diversified property development and investment organisation. Alongside her executive role, she is currently a Non-executive Director of Southern Cross Media Group Limited and until recently a Non-executive Director of Argo Investments Limited. Marina has previously been a Non-executive Director of a number of listed companies and other entities including Southern Cross Broadcasting Limited, National Australia Trustees Limited, GIo holdings Limited, Deacons (Lawyers) and Southern hydro Limited. mirvac group annual report 2012 peter hawkins, BCA (hons), FAICD, SFFin, FAIM, ACA (NZ) — Independent Non-executive Chair of the human resources committee Member of the audit, risk and compliance committee Member of the nomination committee Peter hawkins was appointed a Non-executive Director of Mirvac on 19 January 2006, following his retirement from the ANZ Bank after a career of 34 years. Prior to his retirement, Peter was Group Managing Director, Group Strategic Development, responsible for the expansion and shaping of ANZ’s businesses, mergers, acquisitions and divestments and for overseeing its strategic cost agenda. Peter was a member of ANZ’s Group Leadership Team and sat on the Boards of esanda Limited, ING Australia Limited and ING (NZ) Limited, the funds management and life insurance joint ventures between ANZ and ING Group. he was previously Group Managing Director, Personal Financial Services, as well as holding a number of other senior positions during his career with ANZ. James Millar AM, BCom, FCA, FAICD — Independent Non-executive Chair of the audit, risk and compliance committee Member of the human resources committee James Millar AM was appointed a Non-executive Director of Mirvac on 19 November 2009 and is the former Chief executive officer and oceania Area Managing Partner of ernst & young, one of the world’s leading professional services firms. he was a member of the global Board of ernst & young. James commenced his career in the reconstruction practice, conducting some of the largest corporate workouts of the early 1990s. James has qualifications in business and accounting, and is a Fellow of The Institute of Chartered Accountants of Australia. John Mulcahy, PhD (Civil engineering), FIeAust — Independent Non-executive Member of the audit, risk and compliance committee Member of the human resources committee Member of the nomination committee John Mulcahy was appointed a Non-executive Director of Mirvac on 19 November 2009 and is the former Managing Director and Chief executive officer of Suncorp-Metway Limited (“Suncorp”). Prior to Suncorp, 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 has more than 27 years of management experience in financial services and property investment. elana Rubin, BA (hons), MA, FFin, FAICD, FAIM, FAIST — Independent Non-executive Member of the audit, risk and compliance committee Member of the nomination committee elana Rubin was appointed a Non-executive Director of Mirvac on 11 November 2010 and has extensive experience in property and financial services. elana is the former executive Director — Investments of the Australian Retirement Fund, one of Australia’s leading superannuation funds. elana has been a Director on a number of listed companies and other entities including Tower Australia Ltd and Bravura Solutions Ltd. 07
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MIRVAC gRoup AnnuAl RepoRt 2012 - Mirvac - Mirvac Group

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