0113annual Report

People driven

peopleAnnual Report 2012

Australand Annual Report 2012

Australand Property GroupAustraland Holdings Limited (ABN 12 008 443 696) Australand Property Limited (ABN 90 105 462 137 AFS Licence No. 231130) as the responsible entity of: – Australand Property Trust (ARSN 106 680 424); and – Australand ASSETS Trust (ARSN 115 338 513). Australand Investments Limited (ABN 12 086 673 092 AFS Licence No. 228837) as the responsible entity of: – Australand Property Trust No.4 (ARSN 108 254 413); – and – Australand Property Trust No.5 (ARSN 108 254 771).

Level 3, 1C Homebush Bay Drive Rhodes NSW 2138

CONTENTS

1Year in Review

3 Chairman’s and Managing Director’s Report

6Business Review Investment Property

8Business Review Commercial & Industrial

10Business Review Residential

12Corporate Governance

21Directors’ Report

29Remuneration Report

43Financial Report

101Securityholders’ Information

104Ten Year Financial Summary

105Key 2013 Dates

109Corporate Directory

Year in Review.

Operating Profit attributable to Stapled Securityholders

$142m Total Assets $4.0bn

Distributions per Stapled Security 21.5¢ Net Tangible Assets

per Stapled Security $3.49

08 09 10 11 12

175

120 128 135 142

11 12

21.5 21.5

11 12

3.46 3.49

08 09 10 11 12

4.13.7

4.03.5

4.0

Year in Review 1

Summary of profit and loss statement

Two Year Summary2012

$m2011

$m

Investment Property 178 165

Commercial & Industrial 24 29

Residential 89 76

Corporate/eliminations (30) (28)

Earnings before interest and tax 261 242

Net interest (95) (81)

Profit before tax 166 161

Tax – 1

Non-controlling interest (24) (27)

Operating profit 142 135

Investment property revaluation gains 51 59

Impairment of inventories – (30)

Unrealised losses on interest rate derivatives (13) (24)

Statutory profit/(loss) 180 141

2 Australand Annual Report 2012

People driven people

Year in Review

Chairman’s and Managing Director’s Report.

Significant achievementsSignificant achievements during the year included:

—operating profit after tax increased to $142.1 million, up 5% on 2011; —the Group’s statutory profit after tax increased to $180.0 million, up 28% on 2011; —increased net tangible asset backing to $3.49 per security; —distributions totalled 21.5 cents per security, representing a payout ratio of 87% of operating earnings; —successfully executed agreements for the sale of two non-core assets in Sydney being the Crest Hotel, Kings Cross and 85 Alfred Street, Milsons Point with a combined value of $114 million; —completed the construction of the $200 million 357 Collins Street, Melbourne office development; —delivered solid sales from our Residential division and secured an increase in sales contracts on hand; and —successfully integrated a new technology platform into the business reducing systems risk and providing efficiency benefits.

These achievements reflect the resilience of the Group’s business model and the quality of our operating platform. Each of the Group’s operating divisions made a significant contribution to the result.

Investment PropertyOur Investment Property portfolio continued to deliver growth in line with strategy, driven by comparable rental growth of 3.2% and income from new developments completed during the course of 2011 and 2012. The division delivered earnings before interest and tax (“EBIT”) of $178.1 million, up 8% on 2011.

Our portfolio metrics remain strong, with high occupancy (97.6%) and long leases (WALE of 5.5 years).

Independent property revaluations were undertaken on 55% of the Investment Property portfolio (by value) during 2012, with the remaining one-third being subject to Directors’ valuations. The total portfolio valuation review resulted in revaluation gains of $51.3 million for the full year.

Commercial & IndustrialOur Commercial & Industrial division delivered EBIT of $23.7 million for 2012. Whilst this is a lower result than 2011 it was in line with expectations, given the challenging market environment.

During the year, the Commercial & Industrial division successfully completed 9 projects with a combined end value of approximately $380 million. The division’s forward workload includes 16 projects with an end value of approximately $440 million.

We are pleased to report another strong result for 2012. In what has been a challenging environment, we have increased operating earnings by 5%, continued to strengthen our balance sheet and made solid progress in delivering on our strategy.

Chairman’s and Managing Director’s Report 3

ResidentialIn 2012, the Residential division delivered a 16% increase in EBIT to $88.5 million. The strong growth in earnings was underpinned by sales at a number of medium density projects including Burwood (VIC), Carlton (VIC) and Cockburn Central (WA) along with key land projects including Greenhills Beach (NSW) and Greenvale (VIC).

The division held 1,169 contracts on hand at year end, up 24% on 2011. Approximately two-thirds of these contracts are expected to contribute to earnings in 2013. This was a creditable result, particularly given the negative bias toward the residential sector that prevailed through much of 2012.

Our people and the communityUnderlying our success in 2012 has been the commitment and engagement of our people. In 2011 we rolled out a new brand for Australand and a set of values, being Authentic, Respectful, Dynamic and Passionate. In 2012 we continued our programme of building alignment of our culture around these values and are pleased with our progress to date and the extent to which our staff are embracing these values. While we still have work to do, we are well on our way to building a uniform and aligned culture.

The safety of our employees and those we engage with in our business and through community activities continue to be our fi rst priority. Unfortunately, for

the fi rst time in four years our lost time injury frequency rate increased during the year but remains relatively low. Importantly, our injury severity rate declined signifi cantly in 2012 and our safety culture remains strong. This will continue to be a focus in 2013.

Since 2005, the Australand Foundation has coordinated our donations and volunteering activities to increase interaction with the communities in which we operate. Our employees’ desire to give back to the broader community is evidenced by them partaking in 340 paid volunteer days; partnering with 26 community, registered charity or not for profi t organisations; and collectively donating over $240,000 (including the contribution from the Australand Foundation) to community and charity initiatives during 2012.

Corporate updateAs we previously advised the market, on 10 December 2012, Australand received an unsolicited, indicative, non-binding proposal from The GPT Group to acquire its Investment Property portfolio and Commercial & Industrial business for a $140 million premium to the book value at 30 June 2012. The proposal involved Australand securityholders retaining their interest in the Residential business as a stand-alone listed entity. The proposal was highly conditional and subject to a number of factors including

undertaking due diligence, exclusivity and break fees which would apply in the event that the proposal did not proceed.

Following detailed analysis, including advice from independent advisers, the Board rejected the proposal on the basis that it did not provide a compelling value proposition and was not considered to be in the best interests of Australand securityholders. In coming to this conclusion, the Board formed the view that the proposal did not provide a suffi cient premium to compensate securityholders for the transaction costs, structural ineffi ciencies and risks involved including the uncertainty as to the trading value of the Residential business as a stand-alone listed company.

Subsequent to this, Australand’s major securityholder, CapitaLand, announced its intention to conduct a strategic review of its investment in the Group. As a result of the proposal received from The GPT Group and CapitaLand’s strategic review, Australand has appointed fi nancial and legal advisers to assist it in establishing whether any proposal can be developed that is in the interests of all Australand securityholders.

Australand’s management and advisers are working collaboratively with CapitaLand in this process, and have made information available to a select number of parties that have expressed

5.0%$142m 21.5¢Growth in Group operating profi t

Operating profi t Distributions per security


Chairman’s and Managing Director’s Report


an interest in the whole or parts of the Group. We emphasise however, that there is no guarantee that any proposal will be forthcoming from this process.

The outlookWhile market conditions are expected to remain challenging for the near term, the Group expects to deliver further growth in operating earnings per security for 2013. This outlook is supported by:

—fi xed increases in rental income from the Investment Property portfolio and the expectation of successfully leasing up unlet space at 357 Collins Street in Melbourne and Rhodes Building F in Sydney; —a solid forward workload in the Commercial & Industrial division, coupled with improving enquiry and low vacancy levels in the industrial sector and the strength of demand from investors for quality product; and —an increase in the level of contracts on hand in the Residential division, together with a low interest rate environment and diversity of product in our development pipeline.

The Group does, however, expect that fi rst half earnings in 2013 will be less than fi rst half earnings in 2012 due to the timing of settlements of Residential built form projects and the delivery of the Commercial & Industrial division’s forward workload being skewed to the second half of the year.

Distributions for 2013 are expected to be maintained at 21.5 cents per security as the Group continues to take a prudent approach to capital management.

This outlook is subject to market conditions not deteriorating and excludes the potential impact that might arise as a result of any corporate activity.

Board changesMs Beth Laughton was appointed as an independent non-executive director with effect from 7 May 2012. Beth is an experienced non-executive director who brings extensive fi nancial, audit, risk and capital markets experience to the Board.

The Board and its committees continue to ensure that the Group maintains a

high standard of governance and we would like to thank our fellow directors for their continued commitment.

Thank youIn closing we would like to thank our employees for their hard work and dedication to achieving the outcomes we have for the Group. Our employees continue to be committed to delivering results for securityholders despite the challenges of a tough operating environment.

Finally, on behalf of the Board and management we would also like to thank you, our securityholders. We value and appreciate your support and will continue to work hard to enhance the value of your investment in the Group.

Group Business Model

Offi ce &Industrial

$2.3bn

Commercial & Industrial

$2.1bn1

Residential

$8.0bn1

1 Estimated pipeline end values

Recurrent Income (60-70% of Group EBIT)

Growth (30-40% of Group EBIT)

Investment Portfolio

Development Pipeline

Olivier Lim Bob Johnston Chairman Managing Director

Chairman’s and Managing Director’s Report 5

Well positioned to deliver growth.

Isuzu, Richlands, QLD

IntroductionAs at 31 December 2012, the Investment Property division had a total portfolio value of $2.3 billion comprising 69 investment properties, including 3 properties under development. The portfolio is primarily diversified across the industrial (51%) and office (48%) sectors and comprises 1.1 million sqm of lettable space. The total portfolio occupancy was 97.6% (by income) excluding properties held for sale or under development.

The portfolio metrics remain strong, with a weighted average lease expiry of 5.5 years (31 December 2011: 5.8 years) and 85% of the portfolio income coming from Government, ASX listed or multi-national corporations.

Operational highlightsIn the year to 31 December 2012, key leasing activities for the Investment Property division included:

—a 10 year lease to TNT at Mascot, NSW over a 7,650 sqm office tenancy; —a 6 year lease to Nestlé at Building B, Rhodes, NSW over a 3,525 sqm office tenancy; —a 7 year lease to Vanguard at Freshwater Place, VIC over a 3,400 sqm office tenancy; and —a 5 year lease to Smart Group at Richmond, VIC over a 2,700 sqm office tenancy.

The Group has entered into unconditional contracts for the sale of the Crest Hotel, Kings Cross, NSW for $65 million, and 80 Alfred Street, Milsons Point, NSW for $49 million, with settlement scheduled to occur during 2013. These two assets were held for sale at year end.

Year in reviewThe Investment Property division achieved an EBIT result of $178.1 million (FY11: $165.5m) before net property revaluation gains of $51.3 million (FY11: $59.4m) for the year. EBIT increased by 8%, which was supported by comparable rental growth of approximately 3.2%, income from internal developments completed and re-leasing activity.

The Investment Property portfolio was revalued at 31 December 2012, resulting in a net gain of $51.3 million for the year (including a net gain of $0.4 million, representing the Group’s share of property revaluations in its associates and joint ventures). The average capitalisation rate for the Investment Property portfolio, as at 31 December 2012, was 8.09%. During the course of 2012, independent valuations were undertaken on

$2.3bn

$178m

Total portfolio value of the Investment Property division

EBIT



Business Review Investment Property

357 Collins Street, Melbourne, VIC

approximately 55% of the Investment Property portfolio (by value).

Further details of the Investment Property division’s 2012 results are summarised in the table above.

Investment Property outlookThe Investment Property division is well positioned to continue to deliver comparable rental growth, with average fixed rent increases of 3.4% over 94% of the portfolio’s income.

The Group remains focused on leasing the residual space of 357 Collins Street, Melbourne (currently 70% leased) and Rhodes Building F (currently 56% leased) during the course of 2013.

Results FY12 FY11

EBIT $178m $165m

Revaluation gain1 $51m $59m

Metrics2

Portfolio value $2.3bn $2.2bn

Occupancy (by income) 97.6% 99.3%

Industrial occupancy 100.0% 100.0%

Office occupancy 94.9% 100.0%

Comparable rental growth 3.2% 3.3%

WALE (by income) 5.5 yrs 5.8 yrs

Average cap rate 8.09% 8.34%

1 Includes gains on internal developments of $16m (FY12) and $22m (FY11).

2 Metrics exclude properties under development and assets held for sale. Portfolio value includes properties under development.

Business Review 7

Competitive advantage.

QLS and CEVA, Eastern Creek, NSW

IntroductionThe Commercial & Industrial division has a competitive advantage due to its national presence, well positioned landbank, broad customer base and integrated delivery platform. The division has a significant industrial land holding in the major markets of Melbourne, Sydney and Brisbane, which is 100% zoned.

Operational highlightsIn the year to 31 December 2012, the key operational highlights for the Commercial & Industrial division included:

—Buildings with a total net lettable area of 241,200 sqm were delivered along with land sales of 210,500 sqm. —Nine projects valued at $380 million were completed during the course of the year, including the completion of 357 Collins Street and the Coles Parkinson Expansion in Brisbane.

—Secured major industrial tenants, including:

– Ceva, QLD (41,000 sqm)

– Catch of the Day, VIC (26,400 sqm)

– Border Express, VIC (19,000 sqm)

Year in reviewThe Commercial & Industrial division achieved an EBIT result of $23.7 million for the full year (FY11: $29.1m). Aggregate sales revenue for the year was $213.7 million (FY11: $181.4m).

The division’s return on average capital employed (“ROACE”) was 9.2% for the year which was less than expected due to delays and increased costs associated with the development of 357 Collins Street in Melbourne.

Several major projects contributed to the result for the year, including the distribution facilities for Electrolux at Beverley in SA, QLS and CEVA at

Eastern Creek in NSW, Catch Of The Day at Westpark in VIC and Toll and the Australian Ballet at Altona in VIC.

During the course of 2012, the Australand Logistics Joint Venture with GIC committed to acquire $88.9 million of assets comprising the QLS and CEVA facility at Eastern Creek and the CEVA facility at Berrinba, which is currently under development. This brings the total commitment of the joint venture to $320.7 million out of a targeted investment of $450.0 million.

The Rhodes Building F in Sydney was completed in early 2013 and is well positioned given the limited competing supply and amenity offered at Rhodes Corporate Park. Leasing enquiry has been positive with executed agreements for lease to Hewlett Packard for 6,500 sqm and Citibank for 3,500 sqm.

$214m

$24m

Revenue

EBIT



Business Review Commercial & Industrial

Electrolux, Beverley, SA

For further details of the Commercial & Industrial division’s 2012 results refer to the table above.

Commercial & Industrial outlook As at 31 December 2012, the Commercial & Industrial division had a forward workload of 183,000 sqm, which is anticipated to be delivered during 2013 with completions skewed to the second half of the year. Occupier demand is expected to remain relatively subdued given the challenging economic and market conditions, however, continued demand is expected from the major retailers and third party logistics providers. Investor appetite for prime well leased assets remains strong which is expected to underpin asset values in 2013.

Results1 FY12 FY11

Revenue $214m $181m

EBIT $24m $29m

NTA uplift $16m $22m

Total contribution $40m $51m

ROACE2 9.2% 11.4%

Development activity

Built form – Third party (sqm) 170,700 113,000

Built form – Internal (sqm) 70,500 84,000

Land sales (sqm) 210,500 271,000

Metrics

Capital employed3 $387m $469m

Forward workload (sqm) 183,000 210,000

1 Includes ALZ share of joint ventures and PDAs.2 EBIT/average capital employed.3 Total assets less non interest bearing liabilities at period end,

before FY11 impairments.

Business Review 9

Playing an integral role in urban development.

Lume, Carlton, VIC

IntroductionThe Residential division develops residential land, medium density housing and apartments in Australia’s major population centres of Melbourne, Sydney, Perth and South East Queensland. The Group’s Residential portfolio is diversified geographically and between land development activity and medium/high density developments where the Group’s built form capabilities play an integral role in urban development process.

Operational highlightsFor the year ending 31 December 2012, the key operational highlights for the Residential division included:

—84% of earnings was generated from our top 10 projects with the most notable contributions from Greenhills Beach (NSW) and three Medium Density Projects – Burwood and Carlton in (VIC) and Cockburn Central in (WA).

—Improvement in sales activity levels in NSW and WA relative to prior years. Key projects in these markets include Wolli Creek and Clemton Park in NSW and Cockburn Central in WA and these projects have already secured significant pre-sales on stages forecast to settle in both 2013 and 2014. Wolli Creek has three buildings under development of which two are 100% sold and the third building was 73% sold with another building (Summit) to be released early in March 2013. Clemton Park has sold out two stages and stage 3 is now well advanced with sales which will settle over 2013 and 2014. —Carlton and Parkville also secured significant pre-sales which will settle in 2013. —First settlements were achieved at both Kangaroo Point and Hamilton, two key projects in Queensland.

—An increase in contracts on hand for settlement in 2013 and 2014 of 24% compared to the prior comparable period.

Year in reviewIn 2012, the Residential division achieved an EBIT result of $88.5 million (FY11: $76.1m), up 16% on the previous year. Aggregate sales revenue for the year was $606.0 million (FY11: $586.8m). The division’s ROACE was 9.9% for the year which was less than expected due to the capital employed reducing at a slower rate than anticipated.

Gross lots sold for the year were down on the prior corresponding year due to softer conditions in Victoria and the market remaining subdued in South East Queensland. Despite the soft market conditions, lot sale targets were largely achieved on the top ten projects.

Revenue and EBIT were up reflecting settlements of a number of medium

$606m

$89m

Revenue

EBIT



Business Review Residential

Green Quarter, Hamilton, QLD

density projects including Cockburn Central (WA), Burwood (VIC) and Carlton (VIC), along with contributions from key land projects including Greenhills Beach (NSW) and Greenvale (VIC). These projects also contributed to a higher average sales price for the year. The 2012 lot sales at Clyde North were adversely impacted by wet weather and planning delays, which resulted in 7 sales being recognised in 2012 and 61 sales being carried over into 2013.

For further details of the Residential division’s 2012 results refer to the table above.

Residential outlook As at 31 December 2012, the Residential division held 1,169 sales contracts on hand (31 December 2011: 939 contracts on hand) with 64% of these expected to be recognised in 2013. The top twelve projects for 2013 are expected to contribute approximately 80% of targeted Residential earnings in 2013. These projects include; Greenhills Beach (NSW), Clemton Park (NSW), Lidcombe (NSW), Carlton (VIC), Clyde North (VIC), Greenvale (VIC), Cockburn Central (WA) and Hamilton (QLD).

We expect trading conditions for 2013 to be similar to 2012 with a comparable level of sales activity targeted. Earnings are anticipated to be more heavily skewed to the second half of the year in line with the timing of medium density settlements.

Results1 FY12 FY11

Revenue $606m $587m

EBIT $89m $76m

ROACE2 9.9% 8.6%

Lots sold 1,242 1,654

Contracts on hand (lots) 690 623

Contracts on hand (value) $345m $348m

Activity3

Sales activity4 2,018 2,420

Gross lots sold 1,788 2,536

Gross contracts on hand (lots) 1,169 939

Metrics

Capital employed5 $852m $908m

Lots under management3 20,400 21,800

Pipeline end value3 $8.0bn $8.1bn

1 Includes ALZ share of joint ventures and PDAs.2 EBIT/average capital employed.3 Includes 100% of joint ventures and PDAs.4 Total new sales and contracts on hand for the 12 months

to 31 December.5 Total assets less non interest bearing liabilities at period end,

before FY11 impairments.

Business Review 11

Comprehensive framework.

Company structure and approach to corporate governanceAustraland is a stapled group comprising Australand Holdings Limited, Australand Property Trust, Australand Property Trust No.4 and Australand Property Trust No.5. Australand Holdings Limited, Australand Property Limited (as the responsible entity of Australand Property Trust and Australand ASSETS Trust) and Australand Investments Limited (as the responsible entity of Australand Property Trust No.4 and Australand Property Trust No.5) have identical boards of directors. The term “Board” when used throughout this Corporate Governance Statement (“Statement”) refers to these boards.

Australand’s Board and management are committed to meeting the expectations of securityholders in terms of achieving and demonstrating high standards of corporate governance. The Group has a comprehensive governance framework in place to ensure that Australand and all of its subsidiary companies are appropriately governed and directors and management at all levels are in a position to effectively discharge their responsibilities to securityholders and other stakeholders.

Compliance with ASX Corporate Governance Principles and RecommendationsThis Statement reports the extent to which Australand has followed the ASX

Corporate Governance Principles and Recommendations (“the ASX Recommendations”) during the reporting period as required under the ASX Listing Rules.

Australand’s Statement is structured in line with the ASX Recommendations. Areas not in full compliance are disclosed under the relevant principle, together with the reasons for departure. All of the corporate governance practices referred to in this Statement were in place for the entire year unless otherwise indicated. Documents that are italicised and underlined in this Statement can be accessed and downloaded from the Corporate Governance Section of Australand’s website at www.australand.com.au.

A listing of the ASX Recommendations, indicating Australand’s compliance or otherwise, is included at the end of this Statement.

Principle 1: Lay solid foundations for management and oversightThe Board is responsible to the securityholders for the overall governance and performance of Australand.

The Board has adopted a Board Governance Document which sets out those functions reserved for the Board and those delegated to the Managing Director.

The Board Governance Document provides the basis for the Board to provide strategic guidance to the Group

and effective oversight of management, including the monitoring of performance against the Group’s strategy and operational objectives (including financial performance), its risk management plan and compliance related responsibilities.

Following the Board’s approval of the Operating Plan each year, key performance indicators (“KPIs”) are established for the Executive Management Team and these are then cascaded down the organisation.

On an annual basis, the Remuneration & Nomination Committee and, subsequently the Board, formally review the performance of the Managing Director and the Executive Management Team. The criteria assessed are both quantitative and qualitative and include financial performance and non-financial measures such as safety performance and progress against other key strategic goals. Further details on the assessment criteria for the Managing Director and senior executive remuneration are set out in the Remuneration Report.

Principle 2: Structure the Board to add value

The Board of Directors As at 26 February 2013, the Board comprised seven non-executive directors and one executive director, being the Managing Director. The names, skills and experience of each

The Group has a comprehensive governance framework in place and the Board and management are committed to maintaining high standards of corporate governance for all stakeholders.



Corporate Governance

of the directors who held office during the financial year and the terms of office of each director are set out on pages 21 to 24 of this report.

Independence of DirectorsIn defining the characteristics of an independent director, the Board has adopted the ASX Recommendations on the Independence of Directors, in conjunction with other factors that the Board considers to be specifically relevant for the Group and its businesses. In this regard, materiality thresholds have been established in respect of professional/consulting services and supplier/customer relationships such that, a director is not considered to be independent if he or she:

—has been a principal of a professional adviser or consultant to any company in the Australand Group where payments on an annual basis to or from the professional adviser or consultant exceeded 10% of the expenditure on an annual basis by Australand on professional or consulting services, or exceeded 10% of the revenue of the relevant professional adviser or consultant; —is a material supplier or customer of Australand where payments exceeded 10% of the annual consolidated gross revenue of either Australand or of that supplier or customer.

Five of the seven non-executive directors (Messrs Isherwood, Newton and Prosser, Ms Laughton and Ms Milne) are independent in accordance with the ASX Recommendations for determining independence.

The Chairman of Australand is Mr Olivier Lim. Mr Lim is the Deputy CEO of CapitaLand Limited (Australand’s majority securityholder) and, accordingly, he is not considered to be independent. In this regard, Australand does not comply with ASX Recommendation 2.2 which states that the Chairman of the Board should be independent. For this reason, the Board has appointed Mr Paul Isherwood, AO as Deputy Chairman and Lead Independent Director.

Mr Lui Chong Chee is also not considered to be independent in that he is a former employee of CapitaLand Limited. A period of three years needs to lapse from the time Mr Lui ceased his employment with CapitaLand Limited before he will gain independent status (1 June 2013) in accordance with the ASX Recommendations.

CommitteesThe Board has established four committees to advise and support the Board in carrying out its duties. The Chairman of each committee reports on any matters of substance at the next full Board meeting and all committee minutes are provided to the Board at the following meeting. The four

permanent committees in existence at the date of this report are as follows:

—Audit —Investment —Remuneration & Nomination —Risk & Compliance

Each committee has its own Terms of Reference setting out the authority under which it operates and the responsibilities as delegated by the Board. The Terms of Reference are reviewed annually and membership for each committee is based on the skills and experience of the individual directors.

Corporate Governance 13

Meetings and Board workThe Board schedules regular meetings throughout the year as well as a formal strategic planning session.

If required, additional meetings are held to deal with specific non-scheduled matters. During the past year, five additional Board meetings were held. Each year the Board also visits the Group’s operations in a specific location to meet with local management and undertake site/OH&S inspections.

An agenda is prepared for each Board meeting by the Company Secretary in conjunction with the Managing Director and the Chairman. Items of a strategic, operational, financial and regulatory nature, together with any key risk areas, are given the appropriate focus on the agenda and management also present to the Board on specific matters on a regular basis.

To facilitate independent decision making by the Board, a Directors’ Only session is scheduled at each Board meeting. This allows directors to deal with a range of matters in the absence of management, including succession planning, remuneration and Board operation and effectiveness.

Details of the number of meetings attended by each director are set out on page 25 of this report.

Nomination of Directors and Board renewalThe Board’s Remuneration & Nomination Committee regularly reviews the composition of the Board to ensure that there is an appropriate mix of abilities, experience and diversity of backgrounds. The Committee reviews, at least annually, the collective skills of Non-Executive Directors to determine whether the Board, as a whole, has the

skills required to achieve the Group’s strategic and operational objectives and reports the outcome of that assessment to the Board.

A copy of Australand’s policy on the Selection, Appointment and Re-Election of Non-Executive Directors is available for viewing on Australand’s website.

Board evaluationThe Board undertakes ongoing self assessment and a formal review is undertaken at the end of each year whereby all directors complete a written Board Evaluation Questionnaire with the objective of identifying any areas for improvement. The results of the Questionnaire are collated by an independent consultant for review by the Chairman and discussion with the Board and individual directors. Recommendations for improvements in Board operations, processes and

The Board and each committee’s membership as at 26 February 2013 is set out in the table below:

Board Membership Committee Membership

Director Audit InvestmentRemuneration & Nomination Risk & Compliance

Olivier Lim1 Chairman Chair

Paul Isherwood Deputy Chairman and Lead Independent Director

Chair Member Chair

Bob Johnston2 Managing Director Member

Beth Laughton3 Member Member

Lui Chee Member Member

Nancy Milne Member Member Chair

Stephen Newton Member Member Member

Bob Prosser Member Member Member

Notes: 1 Mr Olivier Lim stepped down as a member of the Audit Committee with effect from 30 September 2012. 2 Mr Bob Johnston is a member of the Investment Committee and attends all other Committee meetings by invitation.3 Ms Beth Laughton was appointed as a Non-Executive Director of the Boards of Australand Holdings Limited, Australand Property Limited and Australand

Investments Limited and as a member of the Audit Committee on 7 May 2012.




practices resulting from the Board evaluation process are referred to the Board for consideration each year.

The Board has delegated to the Deputy Chairman responsibility for reviewing the results of the annual performance review of the Chairman to the Deputy Chairman and, following this review, the Deputy Chairman reports back to the other directors.

Continuing educationPresentations are provided on a regular basis on different aspects of the Group’s business. Directors are also encouraged to access external education including director-related courses and industry conferences.

Access to information and adviceIn carrying out their duties and responsibilities, directors have access to the Group’s management and they may seek independent professional advice at the company’s expense, following consultation with the Chairman. Australand has a Deed of Access with each director that gives them a right of access to all documents provided during their term in office and for seven years after they cease to be a director.

Principle 3: Promote ethical and responsible decision makingThe Board and management are committed to fostering an ethical and transparent culture within Australand.

ConductAll directors and employees are expected to comply with the law and act with a high level of integrity. Australand has a Code of Conduct which guides everyday business practice and decision making. The aim of this Code is to promote a high standard of business behaviour and ensure that all directors, executives and other employees are aware of their obligation to treat others with fairness, honesty and respect.

Avoiding conflicts of interestAll directors and employees of Australand are required to avoid conflicts of interest, being situations where personal interests conflict or appear to conflict with the interests of Australand. The Board has adopted a protocol for any director who may have a conflict of interest as a result of a material personal interest in a matter before the Board. Directors are required to declare their interests in any dealings between the Group and their related parties. Any director, who has a conflict, or potential conflict, does not receive papers from the Group pertaining to those matters, or participate in any meetings to consider, or vote on the matter giving rise to that conflict.

Trading in Australand’s securitiesUnder the Corporations Act 2001, no person can deal in the securities of a company if they are in possession of information that is not generally publicly available and which a reasonable person would expect to have a material effect on the price or the value of the company’s securities. Directors, officers and employees are required to comply with the Securities Trading Policy which is designed to minimise the risk of actual or perceived insider trading. In accordance with this policy, directors, the executive management team, other designated persons and their respective associates may only deal in Australand securities during restricted trading windows.

Political donationsAustraland does not make donations to any political party, or to any candidate seeking election to any Federal, State or Local Government body. Australand’s policy extends to the payment for attending any function where the proceeds of such function benefit any political party or candidate seeking election to any Federal, State or Local

Government body unless such payment is specifically approved by the Managing Director or relevant Executive General Manager. During the year ended 31 December 2012, Australand did not make any political donations or payments.

DiversityIn accordance with the ASX Recommendations, the Board established a Diversity Policy and set measurable objectives to achieve its goals with regard to diversity. The Group in 2010 established the following targets with regard to diversity which have been achieved:

—wherever possible to include two suitably qualified females in the final group of candidates for Non-Executive Director, Executive Management Team and Executive Management Team direct report roles. —increase the number of women identified as successors to senior roles to our target level of 25% by 2012; —undertake a review of gender remuneration parity across the Group; and —undertake a cultural survey, and invest significantly in building our leadership skills and corporate culture.

Australand has also established a Diversity Council (chaired by the Managing Director) to further its diversity objectives.

The Diversity Policy is available for viewing on Australand’s website.


Principle 4: Safeguard integrity in financial reportingThe Audit Committee oversees the structure and management systems that ensure the integrity of the Group’s financial reporting. The Committee met six times during 2012. An agenda is prepared for each meeting and comprehensive papers are circulated to Committee members before each meeting. Australand’s external and internal auditors attend meetings on a regular basis and the Managing Director and senior management attend each meeting at the invitation of the Committee chairman.

The Board has delegated oversight of the Company’s system of internal controls to the Audit Committee. This includes the internal controls in place to deal with both the effectiveness and the efficiency of significant business processes, the

safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information.

The Board receives regular and comprehensive reports relating to the financial condition, capital management and operational results of Australand throughout the year. In relation to the half year and annual financial reports, a detailed internal control questionnaire and review process is in place whereby all senior management are required to sign off on financial records, risk management systems and internal control and compliance systems within their areas of responsibility. This process supports the Managing Director and Chief Financial Officer in their declaration to the Board that the internal controls have operated effectively during the period and that the annual financial statements and

notes to the financial statements give a true and fair view of the financial position and performance of Australand.

The Audit Committee Terms of Reference is available for viewing on Australand’s website.

External auditorAustraland’s external auditor is PricewaterhouseCoopers (“PwC”). PwC was appointed by securityholders at the 2004 Annual and General Meetings in accordance with the provisions of the Corporations Act 2001. The Board has a policy whereby the responsibilities of the lead audit engagement partner and the quality review partner cannot be performed by the same people for a period longer than five consecutive years. The Board requires a minimum two year period before an audit partner is allowed back onto the audit team.

The proportion of women employees in the whole organisation, women in senior executive positions and women on the Board is shown below.

Level of role % Female 2012 % Female 2011 % Female 2010

Director 25.0 12.5 12.5

Executive Team 14.3 14.3 14.3

Senior Successors1 25.0 19.6 16.0

Company 29.0 28.1 27.7

1 Previously referred to as High Potential/High Performance talent (HIPO/HIPE).

Gender by age group of current permanent employees as at 31 December 2012.

Under 20 years

20-29 years

30-39 years

40-49 years

50-59 years 60 years + Total

Dec 12 M F M F M F M F M F M F M F

Company total 5 0 63 49 131 76 126 22 70 23 23 1 418 171

Age split by gender (%) 1 0 11 8 22 13 21 4 12 4 4 0 71 29

Total age split (%) 1 19 35 25 16 4 100

Overall voluntary turnover for permanent employees.

2012 2011 2010

Total company voluntary turnover (%) 9 12 14




The Audit Committee requires that the external auditor confirm every six months that they have maintained their independence and have complied with applicable independence standards promulgated by regulators and professional bodies. The Audit Committee annually reviews the independence of the external auditor and has provided the Board with written advice confirming this assessment. The Audit Committee also periodically meets with the external auditor without management present. A copy of the external auditor’s certification of independence is set out on page 42 of this report. The external auditor also attends the Annual and General Meetings and is available to answer securityholder questions about the conduct of the audit, the preparation and content of the audit report, the accounting policies adopted by Australand in relation to the preparation of the financial statements, and the independence of the auditor in relation to the conduct of this audit.

Principle 5: Make timely and balanced disclosureAustraland has policies and procedures in place to ensure compliance with its continuous disclosure obligations under the ASX Listing Rules. The Group has a Market Disclosure Committee comprising the Managing Director, the Chief Financial Officer, the General Counsel and the Company Secretary, with other management being invited to attend at the Managing Director’s discretion. Specifically, the Market Disclosure Committee is responsible for ensuring that Australand complies with its disclosure obligations, reviewing information to determine whether it needs to be disclosed to the ASX, implementing and monitoring reporting processes and controls for the release of information.

Australand is committed to providing timely, full and accurate disclosure and to keeping the market fully informed by announcing all material matters to the ASX immediately as required under the ASX Listing Rules, and subsequently to the media.

All material releases are posted on Australand’s website after they are released to the market. During 2012, Australand fully complied with its disclosure obligations under the ASX Listing Rules. The Company Secretary has the primary responsibility for communicating with the ASX in relation to compliance with the Listing Rules.

The Communications and Market Disclosure Policy is available for viewing on Australand’s website.

Principle 6: Respect the rights of securityholdersAustraland respects the rights of its securityholders and is committed to providing a high standard of communication to securityholders so that they have all available information reasonably required to make informed decisions in relation to Australand’s value and prospects.

In accordance with the Communication and Market Disclosure Policy, Australand communicates with securityholders through the following means:

—Annual Report and Half Year Report; —Annual and General Meetings; —Securityholder Reviews which incorporate performance highlights, a review of operations and progress against key stated objectives; —Releases to the market via the ASX; and —The Investor Centre on Australand’s website – www.australand.com.au.

Australand encourages securityholders to attend and participate in Annual and General Meetings and respects

securityholders’ rights to ask questions about the management of the company. If securityholders are not able to attend meetings, they can view the meetings via webcast on Australand’s website and may vote by appointing a proxy using the form attached to the Notice of Meetings.

Principle 7: Recognise and manage risk

Risk management and oversightAs part of Australand’s governance framework, the Group has a comprehensive risk management process in place, together with supporting procedures and processes. Australand’s risk management process seeks to ensure that all risks are properly identified, assessed and managed across the Group, that insurances are adequate and that appropriate policies are in place to guide ethical behaviour on the part of directors and employees. Risk management is an integral part of Australand’s decision making process and it is also used to assess potential opportunities and to manage potential adverse effects.

The Board has ultimate responsibility for risk management across the Group and has delegated specific responsibility to the Risk & Compliance Committee to review the effectiveness of the overall risk management process in place (including the Risk Management Policy, the Risk Appetite and Tolerance Statement and the Risk Management Register) before recommending these to the Board for approval. The Board has delegated authority to the Audit Committee to monitor the processes concerning identification of the financial risk exposures material to the Group and the processes in place to mitigate those risks.


The Risk & Compliance Committee Terms of Reference is available for viewing on Australand’s website.

Risk management processAustraland has implemented and maintains a structured and documented process for risk management that is integrated with its business activities and aligned with its strategic and operational planning processes. This process complies in all material respects with the AS/NZS ISO 31000:2009 Risk Management – Principles and Guidelines.

The Managing Director is accountable to the Board for the development and management of Australand’s risk management framework and is supported by the General Counsel in terms of adopting appropriate risk management processes, including regular and transparent reporting to the Board, the Risk & Compliance Committee and the Audit Committee (in the case of financial risks).

The Managing Director and the Chief Financial Officer provide assurance to the Board that the declaration provided in accordance with section 295A of the Corporations Act 2001 is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks (refer comments under Principle 4).

Internal audit functionAustraland’s internal audit function focuses on areas of key risk to the organisation. Australand’s Internal Auditor is Ernst & Young and the work performed by Ernst & Young is supplemented by the Group’s Internal Audit Team. Each year the Internal Audit Plan is reviewed and approved by the Audit Committee and internal audit reports are submitted to the Audit Committee on a quarterly basis, with

a copy being provided to the Risk & Compliance Committee. Regular presentations are made to the Audit Committee by the Internal Auditor.

Principle 8: Remunerate fairly and responsiblyRecommendation 8.1 recommends that an entity’s remuneration committee should be structured so that it consists of a majority of independent directors, be chaired by an independent director and have at least three members. As at 26 February 2013, Australand’s Remuneration & Nomination Committee comprised three members, two of whom were independent directors under the ASX Recommendations. The Chairman of Australand’s Remuneration & Nomination Committee is Mr Paul Isherwood, AO. Mr Isherwood is independent in accordance with the guidelines for determining independence contained in the ASX Recommendations.

The Managing Director attends Remuneration & Nomination Committee meetings at the invitation of the Committee’s Chairman.

The Remuneration & Nomination Committee assists and supports the Board by ensuring that Australand has appropriate remuneration policies and practices in place to enable it to attract, motivate and retain executives and non-executive directors who will manage and direct Australand respectively with the goal of creating and increasing value for securityholders. The Remuneration & Nomination Committee has responsibility for ensuring that executives are fairly and responsibly rewarded having regard to the performance of Australand, the performance of the executive and the general environment for remuneration in Australia.

The Remuneration & Nomination Committee also has responsibility for

recommending to the Board the remuneration structure and levels for non-executive directors.

The Remuneration & Nomination Committee Terms of Reference is available for viewing on Australand’s website.

Australand’s Remuneration Report is set out on pages 29 to 40 of the Annual Report. This report explains the structure of, and rationale behind, Australand’s remuneration principles and practices and outlines the link between the remuneration of employees and Australand’s performance.




Compliance with ASX Recommendations

Requirement/recommendations Reference Compliance

1 Lay solid foundations for management and oversight

1.1 Establish functions reserved to the Board and those delegated to senior executives and disclose those functions

Board Governance Document; Policy on Selection, Appointment and Re-election of Non-Executive Directors; Delegations of Authority

Comply

1.2 Disclose the process for evaluating the performance of senior executives

Remuneration & Nomination Committee Terms of Reference; Remuneration Policy

Comply

1.3 Provide information indicated in the Guide to reporting on Principle 1

Corporate Governance Statement; Australand website

Comply

2 Structure the board to add value

2.1 A majority of the Board should be independent directors Board Governance Document; Corporate Governance Statement

Comply

2.2 Chair should be an independent director Board Governance Document; Corporate Governance Statement

Do not Comply

2.3 Roles of chair and chief executive officer should not be exercised by the same individual

Board Governance Document Comply

2.4 The Board should establish a nomination committee Board Governance Document; Remuneration & Nomination Committee Terms of Reference

Comply

2.5 Disclose the process for evaluating the performance of the Board, its committee and individual directors

Board Governance Document; Remuneration & Nomination Committee Terms of Reference; Corporate Governance Statement

Comply

2.6 Provide the information indicated in the Guide to reporting on Principle 2

Directors’ Report; Board Governance Document; Corporate Governance Statement; Australand website

Comply

3 Promote ethical and responsible decision making

3.1 Establish a code of conduct and disclose the code or a summary of the code

Code of Conduct Comply

3.2 Establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the Board to establish measurable objectives for achieving gender diversity for the Board to assess annually both the objectives and the progress in achieving them

Diversity Policy Comply

3.3 Disclose in each annual report the measurable objectives for achieving gender diversity set by the Board in accordance with the Diversity Policy and progress towards achieving them

Corporate Governance Statement Comply

3.4 Disclose in each annual report the proportion of women employees in the whole organisation, women in senior positions and women on the Board


3.5 Provide information indicated in the Guide to reporting on Principle 3

Corporate Governance Statement; Australand Website

Comply

4 Safeguard integrity in financial reporting

4.1 Board should establish an Audit Committee Board Governance Document; Audit Committee Terms of Reference

Comply


Requirement/recommendations Reference Compliance

4.2 Audit Committee should be structured so that it: — Consists only of non-executive directors — Consists of a majority of independent directors — Is chaired by an independent chair, who is not a chair of the Board — Has at least three members

Audit Committee Terms of Reference Comply

4.3 Audit Committee should have a formal charter Audit Committee Terms of Reference Comply

4.4 Provide the information indicated in the Guide to reporting on Principle 4

Directors’ Report; Corporate Governance Statement; Australand website

Comply

5 Make timely and balanced disclosure

5.1 Establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or summary of those policies

Policy on Communication and Market Disclosure; Corporate Governance Statement

Comply

5.2 Provide the information indicated in the Guide to Reporting on Principle 5

Policy on Communication and Market Disclosure; Corporate Governance Statement; Australand Website

Comply

6 Respect the rights of shareholders

6.1 Design a communications policy for promoting effective communications with shareholders and encouraging their participation at general meetings and disclose that policy or a summary of that policy

Policy on Communication and Market Disclosure; Corporate Governance Statement; Australand website

Comply


Policy on Communication and Market Disclosure; Corporate Governance Statement; Australand Website

Comply

7 Recognise and manage risk

7.1 Establish policies for the oversight and management of material business risks and disclose summary of those policies

Risk Management Policy; Risk Appetite and Tolerance Statement; Corporate Governance Statement

Comply

7.2 Board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks

Risk Management Plan; Risk Appetite and Tolerance Statement; Risk Management Register; Risk & Compliance Committee Terms of Reference; Audit Committee Terms of Reference (financial risk); Corporate Governance Statement

Comply

7.3 Board should disclose whether it has received assurances from the chief executive officer and chief financial officer that the declaration provided in accordance with s295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to the financial reporting risks



Risk Management Policy; Risk Appetite and Tolerance Statement; Risk Management Register; Australand website

Comply

8 Remunerate fairly and responsibly

8.1 Board should establish a remuneration committee Board Governance Document; Remuneration & Nomination Committee Terms of Reference

Comply

8.2 The remuneration committee should be structured so that it: — Consists of a majority of independent directors — Is chaired by an independent chair — Has at least three members

Remuneration & Nomination Committee Terms of Reference; Corporate Governance Statement

Comply

8.3 Clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives

Remuneration Policy Comply


Directors’ Report; Remuneration Report; Australand Website

Comply




Directors’Report.

Introduction

Australand is a stapled group that comprises Australand Holdings Limited (“AHL”) and its controlled entities, Australand Property Trust (“APT”) and its controlled entities, Australand Property Trust No.4 (“APT4”) and its controlled entities and Australand Property Trust No.5 (“APT5”) and its controlled entities. AHL, Australand Property Limited (“APL”) (as the responsible entity of APT and Australand ASSETS Trust (“ASSETS”) and Australand Investments Limited (“AIL”) (as the responsible entity of APT4 and APT5) have identical boards of directors. The term (“Board”) hereafter should be read as references to these boards.

A Group stapled security consists of one share in AHL and one unit in each of APT, APT4 and APT5 and these securities trade as one security on the Australian Securities Exchange (“ASX”) under the code ALZ. Securities in ASSETS trade on the ASX under the code AAZPB.

GOVERNANCE

Directors’ qualifications and experienceThe Board of Directors present their Report, together with the consolidated Financial Report of AHL and its controlled entities for the year ended 31 December 2012 and the Independent Auditor’s Report thereon. The Financial Report includes the consolidated entity, represented by AHL and its controlled entities including, APT and its controlled entities, APT4 and its controlled entities and APT5 and its controlled entities (collectively, “the Trusts”).

The names, qualifications and experience of each person holding the position of director of Australand at the date of this Report are:

Olivier Lim

BEng (Civil) (Honours 1)

Term of Office:Non-Executive Director since 18 December 2007 and Chairman from 14 April 2011. Mr Lim was last re-elected at the 2011 Annual and

General Meetings and, in accordance with Australand’s Constitution, is retiring by rotation and standing for re-election in 2013.

Independent:No

Board Committee membership:Chairman of the Investment Committee

Skills and experience:Appointed Group Deputy CEO of CapitaLand Limited on 3 January 2013. Held the position of Chief Investment Officer between February 2012 and January 2013 and was Head of Strategic Corporate Development from August 2011 up until his appointment as Chief Investment Officer. He was Group Chief Financial Officer of CapitaLand Limited between July 2005 and July 2011 and, prior to that, was Deputy Chief Financial Officer. He first joined CapitaLand as Senior Vice President, Corporate Finance in September 2003. Prior to joining the CapitaLand Group, he was Director and Head of Real Estate Unit, Corporate Banking in Citibank, Singapore. He joined Citibank in Singapore in August 1989.

Directorships of listed entities within the last three years include:

—Director of Neptune Orient Lines Limited (appointed 12 April 2012) —Director of Raffles Medical Group Limited (appointed 1 October 2009) —Director of CapitaMalls Asia Limited (appointed 1 July 2005) —Formerly a director CapitaMall Trust Management Limited (the manager of a listed REIT in Singapore) (appointed 1 July 2005, resigned 1 November 2012) —Formerly a director of CapitaCommercial Trust Management Limited (the manager of a listed REIT in Singapore) (appointed 1 July 2005, resigned 1 January 2013)

Other current Directorships/Offices: —Member of the Board of Sentosa Development Corporation —Chairman of Mount Faber Leisure Group Pte Ltd (a wholly owned subsidiary of Sentosa Development Corporation)

Directors’ Report 21

Paul Dean Isherwood, AO

FCA

Term of Office:Non-Executive Director since 15 December 2005. Appointed Deputy Chairman and Lead Independent Director on 1 January 2011. Mr Isherwood was re-elected at the 2012 Annual and General Meetings.

Independent:Yes

Board Committee membership:Chair of the Audit Committee and the Remuneration & Nomination Committee, Member of the Investment Committee

Skills and experience:An experienced company director with a strong finance and accounting background. Proven leadership experience from a career with Coopers & Lybrand that spanned 38 years. Held the position of National Chairman and Managing Partner of Coopers & Lybrand (Australia) from 1985 to 1994. Served on the International Board and Executive Committee of the firm from 1985 to 1994. Has extensive corporate governance experience across different industry sectors, and mostly with listed companies.


—Chairman of Globe International Limited (appointed 30 March 2001)

Other current Directorships/Offices:Nil

Robert William Johnston

BEng (Electrical) (Honours 1)

Term of Office:Managing Director since 1 August 2007. In accordance with the Company’s Constitution, the Managing Director is exempt from retirement by rotation in accordance with clause 12.28.

Independent:No

Board Committee membership:Member of the Investment Committee. Attends all other Board Committee meetings by invitation.

Skills and experience:Mr Johnston was appointed Managing Director of Australand in August 2007 and has extensive experience in the property sector. He has been involved in all facets of the sector including Funds Management, Property Development, Project Management and Construction. Prior to joining Australand, Mr Johnston spent 20 years with the Lend Lease Group in various roles in Australia, Asia, US and the UK.

Directorships of listed entities within the last three years include:Nil

Other current Directorships/Offices: —Director of Property Industry Foundation

Beth May Laughton

BEc, FCA, FAICD

Term of Office:Non-Executive Director since 7 May 2012. In accordance with Australand’s Constitution, Ms Laughton will stand for election in 2013.

Independent:Yes

Board Committee membership:Member of the Audit Committee.

Skills and experience:Ms Laughton is a chartered accountant with a strong background in corporate finance, having held senior roles at Wilson HTM, TMT Partners, KPMG, HSBC Securities and Ord Minnett, where she provided merger and acquisition advice and arranged equity funding across a range of industries.


—Director of JB Hi-Fi Limited (appointed May 2011)

Other current Directorships/Offices: —Director of CRC CARE Pty Ltd —Member of the Defence SA Advisory Board

Lui Chong Chee

BSc, MBA

Term of Office:Non-Executive Director since 11 December 2001 and Chairman between 1 June 2007 and 14 April 2011. Mr Lui was re-elected at the 2012 Annual and General Meetings.

Independent:No

Board Committee membership:Member of the Remuneration & Nomination Committee.

Skills and experience:Currently Chief Financial Officer of Raffles Medical Group Limited. He previously held the position of CEO, CapitaLand Financial Limited up until his resignation on 31 May 2010. During his time with CapitaLand Limited, Mr Lui held a succession of senior financial and operational management positions



Directors’ Report (continued)

across the Group. Prior to joining the CapitaLand Group, he was Managing Director of Citicorp Investment Bank (Singapore) Limited. He joined Citibank, Singapore in July 1986.

Directorships of listed entities within the last three years include: Formerly a director of:

—CapitaRetail China Trust Management Limited (appointed 1 June 2008, resigned 1 June 2010) —CapitaCommercial Trust Management Limited (appointed 1 July 2008, resigned 1 June 2010) —CapitaMall Trust Management Limited (appointed 24 November 2008, resigned 23 February 2010)

All of the above are managers of listed REITs in Singapore

Other current Directorships/Offices:Nil

Nancy Jane Milne, OAM

LLB

Term of Office:Non-Executive Director since 1 October 2010. Ms Milne was elected at the 2011 Annual and General Meetings.

Independent:Yes

Board Committee membership:Chair of the Risk & Compliance Committee and Member of the Remuneration & Nomination Committee

Skills and experience:An experienced company director with extensive business experience. Formerly a partner and consultant at Clayton Utz, specialising in the areas of insurance and risk. Was Chairperson of Australand’s Risk & Compliance Committee between 2003 and 2009.


—Director of Commonwealth Property Office Fund (appointed 1 January 2009) —Director of CFS Retail Property Trust Group (appointed 1 January 2009)

Other current Directorships/Offices: —Director of Colonial Mutual Life Assurance Society Limited —Director of Commonwealth Insurance Limited —Director of Commonwealth Managed Investments Limited —Chair of Securities Exchanges Guarantee Corporation Limited

Stephen Eric Newton

BA (Econ & Actg), CA, MCom

Term of Office:Non-Executive Director since 18 December 2007. Mr Newton was last re-elected at the 2011 Annual and General Meetings and, in accordance with Australand’s Constitution, is retiring by rotation and standing for re-election in 2013.

Independent:Yes

Board Committee membership:Member of the Investment Committee and the Risk & Compliance Committee

Skills and experience:An experienced company director in the real estate and infrastructure sectors. Currently Joint Managing Director and co-founder of Arcadia Funds Management Limited. Prior to establishing the Arcadia Group in December 2002, he was a senior executive with the Lend Lease Group, a member of its global senior executive management group and a director of a number of Lend Lease entities and managed funds (November 1980 to

December 2002). Has over thirty years experience in the real estate sector both in Australia and internationally with extensive involvement in all aspects of asset management, development management, real estate investment management and mergers, acquisitions and dispositions of publicly listed and private (wholesale) real estate investment trusts and companies.

Directorships of listed entities within the last three years include:Nil

Other current Directorships/Offices: —Director of Newcastle Airport Limited —Advisory Board Member representing Alberta Investment Management Corporation (Canada) for Forestry Investment Trust —Director of Broadcast Australia Group —Director of Athllon Trustees Pty Limited —Director of University of Notre Dame Australia —Member of the Finance Committee and Property Committee for the Catholic Archdiocese of Sydney

Robert Edward Prosser

MA, FCA, MAICD, SA Fin

Term of Office:Non-Executive Director since 9 February 2011. Mr Prosser was elected at the 2011 Annual and General Meetings.

Independent:Yes

Board Committee membership:Member of the Audit Committee and the Risk and Compliance Committee


Skills and experience:Mr Prosser has a strong finance and accounting background having retired in June 2008 as a Partner of PricewaterhouseCoopers (“PwC”) where he was responsible for due diligence in relation to mergers, acquisitions, equity raisings and divestments. At the time of his resignation, he was chair of PwC’s public reports panel, with responsibility for the quality control of all public documents and liaison with regulators.


—Moly Mines Limited (appointed 20 October 2010, resigned 22 December 2011)

Other current Directorships/Offices: —Director of National Breast Cancer Foundation

COMPANY SECRETARIESCompany secretaries of the Board in office at the date of this report, and each company secretary’s experience and qualifications are as shown below.

Beverley Ann Booker (Group Company Secretary)

BBus, FCPA, FCIS, FAICD, Company Directors’ Advanced Diploma

Ms Booker was appointed Company Secretary of AHL, APL and AIL on 25 October 2006.

Ms Booker joined Australand as Group Company Secretary in October 2006. Her previous positions included Group Company Secretary/General Manager Risk & Compliance for the Australian Agricultural Company Limited and Group Company Secretary of AMP Limited. Ms Booker has over 25 years experience across a wide range of business areas including governance, compliance, risk management and strategic and operational planning.

Michael Bowden Newsom (General Counsel)

BA, LLB, FCIS

Mr Newsom was appointed a Company Secretary of AHL on 13 March 2001, APL on 29 January 2004 and AIL on 27 October 2005 and acts as Company Secretary in Ms Booker’s absence.

Mr Newsom joined Australand in August 2000 as General Counsel. He is also responsible for Corporate Risk Management. Prior to joining Australand, Mr Newsom held positions of Company Secretary and General Counsel for Pioneer International Limited and Ampol Limited. He has over 30 years experience in commercial and corporate law, dispute resolution, capital markets, mergers and acquisitions and corporate administration both in private legal practice and in large publicly listed companies across the property, building materials, petroleum and financial services sectors.




Meetings of Directors The number of meetings of directors (including committee meetings) held during the year and the number of meetings attended by each director or committee member is as follows:

Director BoardAudit

CommitteeInvestment Committee

Remuneration & Nomination

Committee

Risk & Compliance Committee

Olivier Lim (Chairman) 12 (13) 4 (5) 1 (1)

Paul Dean Isherwood (Deputy Chairman and Lead Independent Director) 12 (13) 5 (6) 1 (1) 4 (4)

Bob Johnston 13 (13) 1 (1)

Beth Laughton 8 (10) 4 (4)

Lui Chong Chee 12 (13) 4 (4)

Nancy Milne 12 (13) 4 (4) 5 (5)

Stephen Newton 13 (13) 1 (1) 5 (5)

Bob Prosser 13 (13) 6 (6) 5 (5)

Notes:1 Figures in brackets indicate the number of meetings held during the time the director held office or was a member of the Board or the Board Committee

during the year.2 There were 4 Board Sub-Committee meetings held during the year and 1 Remuneration & Nomination Sub-Committee meeting.3 Mr Bob Johnston is a member of the Investment Committee and attends all other Committee meetings by invitation. 4 Mr Olivier Lim stepped down as a member of the Audit Committee with effect from 30 September 2012.5 Ms Beth Laughton was appointed as a Non-Executive Director of the Boards of AHL, APL and AIL and as a member of the Audit Committee on 7 May 2012.

Directors’ interests in securities, contracts and other directorshipsSince 31 December 2011, no director or an associate of a director, has received or become entitled to receive a benefit (other than a benefit included in the total amount of emoluments received or due and receivable by directors or their associates shown in the consolidated financial statements) because of a contract that the director, or a firm of which the director is a member, or an entity in which the director has a substantial interest has made (during that, or any other, financial year) with Australand or an entity that Australand controlled, or a body corporate that was related to Australand when the contract was made or when the director or associate received or became entitled to receive the benefit.

OPERATIONS

Principal activitiesDuring the year, the principal activities of Australand were:

—investment in income producing commercial and industrial properties; —commercial and industrial property development; —residential development (including land, housing and apartments); —property trust management; and —property management.

There were no significant changes in the nature of Australand’s activities during the year.

Review and results of operationsRefer to the Business Review on pages 6 to 11 of this report.


Dividend/distributionsDividends paid or declared by AHL and distributions paid or declared by APT, APT4 and APT5 to securityholders since the end of the previous financial year were as shown in the table below:

DateTotal

distributions Distributions DividendsTotal amount

$’000Date of

payment

Final 2011 11.0¢ 11.0¢ – 63,452 16 February 2012

Interim 2012 10.5¢ 10.5¢ – 60,569 7 August 2012

Final 2012 11.0¢ 11.0¢ – 63,453 8 February 2013

Significant changes in state of affairsThere were no significant changes in the state of affairs of Australand during the financial year.

Future developments and resultsWhile market conditions are expected to remain challenging, the Group expects to deliver further growth in operating earnings per security for 2013. This outlook is supported by:

—fixed increases in rental income from the Investment Property portfolio and the expectation of successfully leasing up unlet space at 357 Collins Street and Rhodes F; —a solid forward workload in the Commercial & Industrial division, coupled with improving enquiry and low vacancy levels in the industrial sector and the strength of demand from investors for quality product; and —an increase in the level of contracts on hand in the Residential division, together with a low interest rate environment and diversity of product in our development pipeline.

The Group does, however, expect that first half earnings in 2013 will be less than first half earnings in 2012 due to the timing of settlements of Residential built form projects and the delivery of the Commercial & Industrial forward workload being skewed to the second half of the year.

Distributions for 2013 are expected to be maintained at 21.5 cents per

security as the Group continues to take a prudent approach to capital management.

This outlook is subject to market conditions not deteriorating and excludes the potential impact that might arise as a result of any corporate activity.

Events subsequent to balance dateOn 3 January 2013, Australand’s majority securityholder, CapitaLand Limited, announced its intention to conduct a strategic review of its investment in Australand. Australand has appointed financial and legal advisers to assist it in establishing whether any proposal arising from CapitaLand’s review can be developed that is in the interests of all Australand securityholders. Australand’s management and advisers are working with CapitaLand in this process, however, there is no guarantee that any proposal will be forthcoming.

Other than the matter referred to above, there have been no significant events or transactions that have arisen since the end of the financial year, which in the opinion of the directors, would affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity.

Environmental regulationAustraland undertakes property development in New South Wales, Victoria, Queensland, Western Australia and South Australia. It is subject to the

respective state legislation regulating the development of land. Consents, approvals and licences are generally required for all developments and it is usual for such approvals and licences to be granted subject to conditions. Australand complies with these requirements by ensuring that all necessary consents, approvals and licences are obtained prior to any project being commenced, and the consents, approvals and licences are implemented in order to ensure compliance with these conditions.

Other

Indemnification and Insurance of Officers

AHLClause 20 of AHL’s Constitution provides:

“Every person who is or has been:

a) a director of the Company;b) a secretary of the Company; orc) an executive officer of the Company

is entitled to be indemnified out of the property of the Company against:

—every liability incurred by the person in that capacity (except a liability for legal costs); and —all legal costs incurred in defending or resisting (or otherwise in connection with) proceedings, whether civil or criminal or of an administrative or investigatory nature, in which the person becomes involved because of that capacity, unless:




—the Company is forbidden by statute to indemnify the person against the liability or legal cost; or —an indemnity by the Company of the person against the liability or legal costs would, if given, be made void by statute.”

The Company may pay or agree to pay, whether directly or through an interposed entity, a premium for a contract insuring a person who is or has been a director or secretary or executive officer of the Company against liability incurred by the person in that capacity, including a liability for legal costs unless:

a) the Company is forbidden by statute to pay or agree to pay the premium; or

b) the contract would, if the Company paid the premium, be made void by statute.

The Company may enter into an agreement with a person referred to above with respect to matters covered by this Clause. An agreement entered into pursuant to this Clause may include provisions relating to rights of access to books of the Company conferred by the Corporations Act 2001 or otherwise by law.

The Company has executed deeds of access, insurance and indemnity in terms of Clause 20 in favour of each director and secretary of the Company and executive officers of the Company who act as directors of a related body corporate of the Company.

During the year, the Company, pursuant to Clause 20, paid a premium for a contract insuring all directors, secretaries, executive officers and officers of the Company and of each related body corporate of the Company. The insurance does not provide cover for the independent auditors of the Company or of a related body corporate of the Company.

In accordance with usual commercial practice, the insurance contract prohibits disclosure of details of the liabilities covered by the insurance, the limit of indemnity and the amount of the premium paid under the contract. No part of the premium has been included in directors’ or other key management’s remuneration in the Remuneration Report.

APTClause 18 of APT’s Constitution provides:

“The Manager is entitled to be indemnified out of the assets of the Trust for any liability incurred by it in properly performing or exercising any of its powers or duties in relation to the Trust. To the extent permitted by the Corporations Act 2001, this indemnity includes any liability incurred as a result of any act or omission of a delegate or agent appointed by the Manager. This indemnity is in addition to any indemnity allowed by law. It continues to apply after the Manager retires or is removed from the office it holds in relation to the Trust.”

APL in its capacity as the responsible entity of APT has executed deeds of access, insurance and indemnity in terms of Clause 18 in favour of each director of the Company.

APT4Clause 19 of APT4’s Constitution provides:

“The Manager is entitled to be indemnified out of the assets of the Trust for any liability incurred by it in properly performing or exercising any of its powers or duties in relation to the Trust. To the extent permitted by the Corporations Act 2001, this indemnity includes any liability incurred as a result of any act or omission of a delegate or agent appointed by the Manager. This indemnity is in addition to any

indemnity allowed by law. It continues to apply after the Manager retires or is removed from the office it holds in relation to the Trust.”

AIL in its capacity as the responsible entity of APT4 has executed deeds of access, insurance and indemnity in terms of Clause 19 in favour of each director of the Company.

APT5Clause 20 of APT5’s Constitution provides:

“The Manager is entitled to be indemnified out of the assets of the Trust for any liability incurred by it in properly performing or exercising any of its powers or duties in relation to the Trust. To the extent permitted by the Corporations Act 2001, this indemnity includes any liability incurred as a result of any act or omission of a delegate or agent appointed by the Manager. This indemnity is in addition to any indemnity allowed by law. It continues to apply after the Manager retires or is removed from the office it holds in relation to the Trust.”

AIL in its capacity as the responsible entity of APT5 has executed deeds of access, insurance and indemnity in terms of Clause 20 in favour of each director of the Company.

AuditorPricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

Non Audit ServicesDetails of the non audit services undertaken by the Group’s external auditor, PricewaterhouseCoopers, including the amounts paid or payable to the external auditor for non audit services, are set out on page 28 of this report and in Note 5 to the financial statements.


In accordance with advice received from the Audit Committee, the directors are satisfied that the provision of non audit services during the year to 31 December 2012 by the external auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied because the Audit Committee has, having regard to auditor independence requirements of applicable laws, rules and regulations, concluded that in respect of each non audit service that the provision of such service would not impair the independence of the external auditor.

2012 $

2011 $

Auditor’s remuneration:

During the year, the following fees were paid or payable for services provided by the auditor of Australand Holdings Limited and its controlled entities:

Assurance services

1. Audit services

Fees paid or payable to PricewaterhouseCoopers Australian firm:

Audit and review of financial reports and other audit work under the Corporations Act 2001 790,000 765,000

Subsidiary financial statement audits 34,800 38,700

Total remuneration for audit services 824,800 803,700

2. Other assurance services


Audit related

Accounting advice/assistance – 12,000

Audit of regulatory returns 130,920 126,000

Compliance plan audit services 49,350 47,450

IT Controls review 89,000 15,000

Taxation services

Taxation services 51,000 41,390

Other services

Agreed upon procedures 18,000 25,000

Remuneration Advice 20,400 11,500

Total remuneration for other assurance services 358,670 278,340

Total auditor’s remuneration 1,183,470 1,082,040

Rounding amountsAustraland is an entity of the kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the Directors’ Report and Consolidated Financial Report. Amounts in the Directors’ Report and Consolidated Financial Report have been ‘rounded off’ to the nearest thousand dollars in accordance with that Class Order.




Remuneration Report

MESSAGE FROM THE BOARDThe Board is committed to ensuring Australand’s remuneration framework:

—is aligned with our business objectives and performance; —attracts and retains executives with the skills and experience required to deliver the Group’s strategy; and —delivers appropriate performance-based reward to executives.

We review and consider enhancements to our remuneration framework on a regular basis to ensure it remains appropriate. While we continue to believe the remuneration structure is appropriate, we enhanced the structure during 2012 through the introduction of a clawback mechanism for unvested awards, adjusted our short-term incentive (“STI”) financial targets and re-weighted the financial and non-financial components of STI awards. These changes will be effective from 1 January 2013.

At the 2012 Annual and General Meetings, the 2011 Remuneration Report received a 92% vote in favour of its adoption. While this was a strong endorsement of our remuneration practices we continue to engage with our larger investors on remuneration matters and shareholder advisory groups during 2012. Their feedback has been taken into account in our consideration of broader external advice.

We have made some changes to this year’s Remuneration Report to improve its presentation and readability, and to better highlight how remuneration policies and outcomes at Australand are aligned with long term securityholder interest.

1. GLOSSARY OF KEY TERMS USED IN THIS REPORT

ACE Average Capital Employed

EGM Executive General Manager

EPS Earnings Per Security

EVA Economic Value Added – is a measure of the amount by which earnings exceed (or fall short of) the required rate of return for securityholders or lenders at a similar level of risk

Gearing Ratio

Interest bearing debt/total tangible assets (cash adjusted), based on the drawn amount of debt excluding fair value adjustments and associated derivative financial instruments

KPI Key Performance Indicator

LTI Long-term Incentive

LTIFR Lost Time Injury Frequency Rate

NED Non-Executive Director

NOPAT Net Operating Profit After Tax

PRP Performance Rights Plan

ROACE Return on Average Capital Employed

ROE Return on Equity

ROIC Return on Invested Capital

STI Short-term Incentive

TFR Total Fixed Remuneration

TSR Total Securityholder Return

WACC Weighted Average Cost of Capital


2. WHO THIS REPORT COVERSThis Report sets out the remuneration policies and outcomes for the Key Management Personnel (“KMP”) of the Group. KMP are defined as those who have the authority and responsibility for planning, directing and controlling the Group’s activities, either directly or indirectly, including directors. For this Report, the KMP are:

Non-Executive Directors

Olivier Lim Chairman

Paul Isherwood, AO Deputy Chairman and Lead Independent Director

Nancy Milne, OAM Non-Executive Director

Stephen Newton Non-Executive Director

Lui Chong Chee Non-Executive Director

Bob Prosser Non-Executive Director

Beth Laughton1 Non-Executive Director

Executive Director

Bob Johnston Managing Director

Other KMP

Kieran Pryke Chief Financial Officer

Rod Fehring Executive General Manager – Residential

Sean McMahon Executive General Manager – Commercial & Industrial

1 Beth Laughton joined the Board on 7 May 2012.

3. REMUNERATION PRINCIPLESRemuneration is set at levels to ensure the Group has market competitive access to the skills and capabilities it needs to operate successfully. The following are the principles of the remuneration framework.

Remuneration is:

—Competitive: Fixed remuneration is positioned at levels to attract and retain suitably qualified and experienced executives. Total potential remuneration (fixed and at risk) is targeted at the third quartile of market levels. —Performance Linked: Short-term and long-term incentive plans are predominantly focussed on assessment of Group financial performance. A component of the short-term incentive plan relates to personal performance against defined criteria. —Aligned with securityholder interests: At least 50% of STI measures are financial, reflecting Group performance. The entire LTI plan is based on economic return and relative securityholder return metrics. —Transparent: Remuneration structure and principles are designed to be clearly understood by both employees and securityholders.

4. REMUNERATION SUMMARY FOR 2012

a) Changes to executive remuneration structure during 2012 (which will have effect from 1 January 2013)We have continued to review the remuneration structure to further align it with securityholder interests. Changes to the executive remuneration structure are summarised in the table below and will take effect from 1 January 2013.

We believe these changes will further strengthen the alignment between executive reward, Group performance and securityholder interests by:

—increasing the weighting of reward aligned with financial performance; —increasing the weighting on Return on Equity by removing ACE as an STI target; —introducing a scaling factor for the STI driven by the Group’s Gearing Ratio; and —introducing a clawback provision for deferred STI or unvested LTI awards.




STI Commentary

The weighting of financial and operational targets in the STI Plan has been changed from 60/40 to 70/30 for the 2013 year and beyond

The greater weighting to financial performance better aligns with securityholder interests by increasing the reward associated with annual financial performance, while still retaining an appropriate allocation towards operational targets. The targets for the Managing Director and Chief Financial Officer will be:

—Group EPS – 40%; —Group ROE – 30%; and —Operational Targets – 30%.

For the two EGMs the targets will be weighted 35% to Group EPS; 35% to the financial performance of their divisions; and 30% to operational targets.

The removal of ACE as a target with a corresponding increase in the allocation to ROE

It is considered that ROE as a target for the STI plan is better aligned with securityholder interests than ACE because ROE includes the effect of gearing and interest rates in the return to securityholders.

Introducing a Group Gearing Ratio scaling factor to STI awards

The Group Gearing Ratio will reduce STI awards for the Managing Director and other KMP if the Group Gearing exceeds Board established targets. If gearing is above the maximum defined by the Board the STI awards may be reduced to zero.

LTI & Deferred STI Commentary

A clawback provision will apply to the deferred component of any STI award and/or any unvested LTI grant

The Board may apply the clawback provision when there has been:i. serious fraud or misconduct by an executive; orii. a material misstatement of financial results.

b) 2012 incentive award outcomes

STI Commentary

The average 2012 STI award for the Managing Director and other KMP was 59.5% of maximum

Please refer to the detail on 2012 STI awards in Section 6 of this Report.

LTI Commentary

Performance against the 2010 PRP targets resulted in 58.98% of the maximum award vesting

Please refer to the detail on the 2010 PRP awards in Section 6 of this Report.

c) Actual remuneration received in 2012Detailed statutory remuneration tables, prepared in accordance with the Group’s obligations and with Accounting Standards, can be found in Section 10 of this Report.

To provide securityholders with additional information the following table provides a summary of the actual remuneration received by the Managing Director and the other KMP relating to 2012. It includes TFR and the cash STI payments that relate to performance in 2012 (but are payable in 2013). It further shows the performance rights that vested on 31 December 2012 as a result of the 2010 PRP and the 2012 STI deferral into performance rights for the Managing Director and the other KMP. The 2011 STI deferred performance rights noted in last year’s Annual Report will vest to the other KMP in March 2013, and to the Managing Director in March 2014.

TFR STI Other1

Total 2012 cash

remuneration

2010 PRP: No. of

vested performance

rights2

2012 STI deferral:

No. of performance

rights3$’000 $’000 $’000 $’000

Managing Director and other KMP

Bob Johnston 1,350 834 10 2,194 231,320 66,382

Kieran Pryke 735 329 3 1,067 80,980 26,184

Rod Fehring 760 312 7 1,079 80,980 24,804

Sean McMahon 760 310 2 1,072 83,870 24,669

1 Includes reimbursement of Death & TPD insurance premiums.2 Allotted in March 2013.3 Deferred for 2 years for Mr Johnston and 1 year for Messrs Pryke, Fehring and McMahon.


5. REMUNERATION GOVERNANCEThe Remuneration & Nomination Committee is a Committee of the Board. Its objective is to ensure that the remuneration policies and structures are fair and competitive and aligned with the long term interests of the Group.

During 2012 advice on market practice relating to remuneration structure for executives in ASX 100 and A-REIT companies was obtained from PricewaterhouseCoopers (“PwC”).

This advice did not constitute a remuneration recommendation as defined by the Corporations Act 2001. The fees paid to PwC for this advice were $25,150 (excluding GST).

6. EXECUTIVE REMUNERATION FRAMEWORKAustraland’s executive remuneration framework consists of total fixed remuneration, short-term incentives and long-term incentives. The mix between these three components for particular roles varies and is based on benchmarking to industry and business scale comparators.

Executive Remuneration MixTo ensure that executive remuneration is aligned to Group performance a significant portion of executives’ target remuneration is “at risk”.

Remuneration is linked to performance through the STI and LTI plans. The variable or at risk remuneration structure is designed to align executives’ remuneration with the success or otherwise of the Group’s strategy by assessing specific performance against defined targets derived from the Group’s strategic goals.

In 2012, the variable component of remuneration for the Managing Director and other KMP comprised both short-term and long-term incentives. Performance is assessed over one year for the STI and over three years for the LTI against the measures as defined later in this Section 6. There have been no changes to the executive remuneration mix over the past twelve months.

The remuneration mix for the year to 31 December 2012 was:

Each component is discussed in more detail below.

a) Total fixed remunerationTFR is the non-variable component of remuneration and encompasses base salary, superannuation contributions, insurance premiums and provision of vehicles. The reimbursement of insurance premiums by the Group has been discontinued effective 1 January 2013.

The level of fixed remuneration reflects the role, responsibilities and experience of the executive. When necessary, it is benchmarked using commercially available industry salary surveys or by obtaining specific market data of various comparator groups (the REIT sector and companies with similar market capitalisation, similar revenue streams or similar asset backing), provided by external advisers. Where required, the reports from these external advisers are provided directly to the Chairman of the Committee.

Remuneration of the Managing Director and the other KMP was last independently benchmarked to market at the end of 2010.

Market conditions over the past two years have been subdued and no increases in TFR have been made for the Managing Director and other KMP in either 2012 or for 2013.

b) Short-term incentive Executives participate in a formal STI plan which assesses performance against pre-determined KPIs over the financial year.

The financial and non-financial measures against which the STI is assessed are set at the beginning of the year, with the 2012 measures described in the table below.

In 2012 the STI was weighted 60% to financial metrics and 40% to operational measures. It has been decided that for future years this weighting will change to 70% financial and 30% operational for the Managing Director and other KMP. It is believed that this re-weighting better aligns executives with securityholders while still allowing sufficient weighting to make the operational metrics meaningful.

OtherKMP

ManagingDirector

33%

41% 31% 8% 20%

32% 8% 27% TFR STI cash STI deferred LTI

20%0% 40% 60% 80% 100% 120%




The STI is awarded in cash with 20% of the STI awards for the Managing Director and other KMP deferred and applied to performance rights over Australand stapled securities over the deferral period, being two years for the Managing Director and one year for the other KMP. These are forfeited if the participant voluntarily leaves the Group (i.e. in circumstances other than redundancy, retirement, death or permanent disability). Participants in the deferral scheme receive the half-yearly and annual distributions on an equivalent number of securities during the deferral period.

The table below provides an overview of the achievement against the STI targets for the 2012 financial year.

How STI was linked to performance in 2012 The following table provides a summary of the assessment of the Managing Director’s award under the 2012 STI Plan. While the metrics for other KMP were broadly the same, some role specific targets may have been different to those below.

Measure Rationale/strategic driverCommentary on Managing Director’s 2012 Achievement

Financial – 60% of award

Operating EPS Operating EPS is the key market metric used to assess operating performance

Managing Director’s 2012 STI Financial award was 49% of a possible 60% award

ROE ROE captures asset valuation movement and earnings per share relative to Net Tangible Assets

ACE To align focus on the efficient use of capital

Operational – 40% of award

Safety & Sustainability Improved performance against severity rate and LTIFR targets;

Managing Director’s 2012 STI Operational award was 28% out of a possible 40%

Personal visibility and leadership of safety and sustainability initiatives

Strategy Evidence of progress against strategic initiatives

People Creation of a more values-aligned culture;Build leadership capabilities;Increased capability in those identified as successors

Performance Development division’s ROACE targets met;Assessment of opportunities to reposition the Group in the marketplace

c) Long-term incentive – Performance Rights Plan (“PRP”)The PRP aligns rewards for executives with securityholder returns. The PRP provides the Managing Director, the other KMP, the executive team and their direct reports with performance rights over Australand stapled securities, which may vest into securities at the end of a three year performance period, subject to achievement against two performance targets.

i.2012 PRP:Details of performance rights issued in 2012 are included in Section 10 of this report.

The 2012 PRP assesses Australand’s performance over a three year performance period commencing 1 January 2012 against:

—ROIC compared to the Group’s WACC (60% of potential award); and —TSR relative to the ASX A-REIT 200 Index (40% of potential award).

Performance against each metric is assessed on a sliding scale as defined below.


ROIC:ROIC is defined as earnings before interest and tax (including asset revaluations) divided by total assets less cash. ROIC will have to equal or exceed the Group’s WACC for any award to vest. The WACC at the commencement of the performance period will be determined by the Board.

The proportion of the PRP award (60%) that vests as a result of ROIC performance during the performance period will be determined as follows:

— if ROIC is less than WACC: no award; — if ROIC equals WACC: 30% of the PRP award vests; — if ROIC is up to 10% greater than WACC: straight line vesting from 30% to 60% of the PRP award; and — if ROIC is in excess of 10% greater than WACC: the award is capped at 60%.

This is shown graphically below:

Relative TSR:Australand’s TSR will be assessed against the A-REIT Index TSR on an un-weighted basis over the performance period. The un-weighted basis for assessment of performance removes the influence of the larger market capitalisation of other members of the A-REIT Index, providing an appropriate basis on which to gauge the Group’s performance against competitors.

The proportion of the PRP award (40%) that vests will be determined based on Australand’s TSR relative Index ranking. It will be determined as follows:

— if TSR is less than the 50th percentile: no award; — if TSR equals the 50th percentile: 20% of the PRP award vests; — if TSR performance is between 50th and 75th percentiles: straight line vesting from 20% to 40% of the PRP award; and — if TSR is above the 75th percentile: the award is capped at 40%.

This is shown graphically below:

TSR relative to A-REIT Index ranking

Po

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75thpercentile

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ii. How LTI vesting in 2012 (2010 PRP) was linked to performanceThe 2010 PRP assessed TSR performance from 1 January 2010 to 31 December 2012, and EVA performance for each of the three years of the Plan. The Australand thirty day volume weighted average security price at the start of the Plan was $2.55, and at the end of the Plan was $3.14.

The 2010 PRP was assessed against the following measures:

—Absolute TSR: maximum award if TSR was 18% per annum or above. Achieved 17.98% per annum. —Relative TSR against the ASX 200 Accumulation Index: maximum award if Australand TSR was greater than 10% above the Index. Australand TSR was 53.95% compared to Index TSR of 0.4% over the three year period. —The 2012 EVA target was based on a WACC of 9.1%. The EVA outcome in 2012 was below the target level and hence there was no award against the EVA measure. The 2010 PRP was the last PRP to include an EVA measure.




2010 PRP performanceWhile the levels of participation in the PRP vary with seniority, the vested percentage of the PRP award applies to all participants equally.

Measure Target Achieved? Award Vested Award Forfeited

Absolute TSR – 25% of total potential award Partially 24.94% 0.06%

Relative TSR – 25% of total potential award Yes 25% 0

EVA – 50% of total potential award:

2010 – 16.67% Partially 9.04% 7.62%

2011 – 16.67% No 0% 16.67%

2012 – 16.67% No 0% 16.67%

Total 2010 PRP Award % 58.98% 41.02%

The Managing Director was granted 392,2001 Performance Rights under the 2010 PRP following securityholder approval at the 2010 AGM. The 58.98% vested award delivers the Managing Director a 2010 PRP award of 231,320 stapled securities. Individual holding details in the PRP for the Managing Director and other KMP are provided in Note 24 of the financial statements.

7. HOW GROUP PERFORMANCE HAS INFLUENCED REMUNERATION OUTCOMESRemuneration is structured to provide an appropriate and market bench-marked total fixed remuneration component complemented by the opportunity to earn additional remuneration by way of both short-term and long-term incentive plans. Awards under these plans are driven by both Group and individual performance.

The table below shows the relationship between NOPAT and the 3 year rolling TSR and the STI awards received by the Managing Director and other KMP over the past five years. The 3 year rolling TSR has been used as it is consistently used as a measure in the LTI Plan each year.

2008 2009 2010 2011 2012

NOPAT ($m) 175 120 128 135 142

3 year rolling TSR (%) (62.9) (47.6) (56.0) 161.3 54

STI (% of maximum) 59 49 87 59 59

LTI (% vested) 0 17 9 59 59

While some commentators may desire a perfect alignment between at risk remuneration awards and Group financial metrics in each year, the longer term investment horizon in the industry makes this an unrealistic expectation. Within this context the Committee believes that rewarding performance in any one year, based on the STI targets established by the Committee at the start of that year, balanced with a longer term assessment conducted under the LTI, is the appropriate methodology.

1 Adjusted for the 2010 1 for 5 security consolidation.


8. EMPLOYMENT CONDITIONS Employment conditions are banded for executive levels, with more senior staff having higher levels of potential STI award and participation in the LTI. The employment conditions (including TFR) for the Managing Director and other KMP are summarised below.

2012 TFRSTI Max (%TFR)

LTI Opportunity (%TFR) Notice period/termination benefits

Bob Johnston – Managing Director

$1,350,000 120% 80% Voluntary terminationNotice period 6 months with entitlements as follows:

—TFR during any unexpired period of notice. —STI and LTI entitlements up to the date of termination. —STI and LTI entitlements for any payment in lieu of notice period will be at the discretion of the Board.

Involuntary terminationNotice period 12 months with entitlements as follows:

—TFR for the period of notice. —STI entitlements up to end of notice period. —LTI entitlements up to date of termination.

In addition to the above, in the case of redundancy, an additional one month’s TFR for each year of service up to a maximum of six months TFR.

Kieran Pryke – CFO

$735,000 94.5% 50% Three months notice or payment in lieu. In addition, in the case of redundancy:

—one month per year of service, up to a maximum of six months TFR1; and —prorated entitlements under the STI and LTI schemes.

Rod Fehring – EGM, Residential


—one month per year of service, up to a maximum of six months TFR1; and —prorated entitlements under the STI and LTI schemes.

Sean McMahon – EGM, Commercial & Industrial and Investment Property


—six months TFR1; and —prorated entitlements under the STI and LTI schemes.

1 For retention purposes, entitlements in the case of redundancy have been increased to 12 months TFR for 2013 only.




9. NON-EXECUTIVE DIRECTORSNED fees are set at a level to attract and retain suitably qualified and experienced directors to oversee the functioning of the Group on behalf of securityholders. They are determined taking account of the size and complexity of the Australand business. The NED fee policy states that an external review of fees will be undertaken every second year with a CPI adjustment in the alternate years. NEDs do not participate in any incentive scheme nor receive any performance based remuneration or termination benefits.

Securityholders, at the 2007 Annual and General Meetings, approved an aggregate fee pool for NED remuneration of $1.5m. During 2012 the total fees paid to the directors was $1.21m.

In line with the fee policy, the NED fees were adjusted for CPI increases at the beginning of 2012. NED fees will be kept at the current levels for 2013.

The fees effective from 1 January 2012 (with 2011 comparisons) were:

Position Year

Base FeeAudit

Committee

Risk & Compliance Committee

Remuneration & Nomination

CommitteeInvestment1 Committee1

$ $ $ $ $

Chairman 2011 258,750 – – – –

2012 266,800 – – – –

Deputy Chairman 2011 161,000 – – – –

2012 166,000 – – – –

Non-Executive Directors 2011 115,000

2012 118,600

Committee Chairman 2011 – 36,000 36,000 36,000 –

2012 – 37,100 37,100 37,100 –

Committee Members 2011 – 18,000 18,000 18,000 –

2012 – 18,600 18,600 18,600 –

1 Investment Committee fees of $3,100 are paid on a per meeting basis.


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2012 Managing Director and other KMP remuneration (% fixed and at risk)The following relates to the table of KMP remuneration in this report. The relative percentages of remuneration received in 2012 that were linked to performance and those that were fixed are as follows:

NameTFR

%STI

%

LTI (accounting value)

%Total

%

Bob Johnston 50 30 20 100

Kieran Pryke 60 25 15 100

Rod Fehring 60 24 16 100

Sean McMahon 60 24 16 100

b) Performance rights issued as remuneration Details of performance rights provided as remuneration to the Managing Director and other KMP are set out below. This includes the 2011 and 2012 PRPs which are still live and the 2010 PRP which completed 31 December 2012. Further information on the performance rights are set out in Note 24 to the financial statements.

PRP – Managing Director and other KMP

Name

No. of 2010 PRP performance rights vested as a result of performance

to 31/12/12

No. of performance rights granted during 2011 (2011

PRP – to be assessed 31/12/13)

No. of performance rights granted during 2012

(2012 PRP – to be assessed 31/12/14)

Bob Johnston 231,320 371,000 408,000

Kieran Pryke 80,980 126,300 138,900

Rod Fehring 80,980 130,600 143,700

Sean McMahon 83,870 130,600 143,700

c) Vesting and forfeiture: cash bonus and performance rightsFor each cash bonus and grant of performance rights included in this Section 10, the percentage of the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited is set out below. As noted earlier in the report, 20% of the STIs awarded to the Managing Director and other KMP are to be deferred and applied to performance rights over Australand securities for either two years or one year respectively. These rights are included in the figures in the tables.

No performance rights will vest if the conditions are not satisfied, hence the minimum value of the performance rights yet to vest is nil. The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the performance rights.

Maximum 2012 STI Performance Rights vested or forfeited in 2012

Name

Paid Deferred ForfeitedYear

granted

Vested Forfeited

Financial years in

which rights

vested or may vest

Minimum total value

of grant yet to vest

Maximum total value

of grant yet to vest

% % % % % $ $

Bob Johnston 20101 59 17 2012 Nil –

2011 – – 2013 Nil 289,083

51 13 36 2012 – – 2014 Nil 503,395

Kieran Pryke 20101 59 17 2012 Nil –

2011 – – 2013 Nil 116,230

47 12 41 2012 – – 2014 Nil 196,933

Rod Fehring 20101 59 17 2012 Nil –

2011 – – 2013 Nil 101,764

43 11 46 2012 – – 2014 Nil 181,921

Sean McMahon 20101 59 17 2012 Nil –

2011 – – 2013 Nil 101,764

44 11 45 2012 – – 2014 Nil 180,865

1 Other amounts were forfeited in prior years.




DIRECTORS’ RESOLUTIONDated at Sydney this day of 26 February 2013. Signed in accordance with a resolution of the directors.

Olivier Lim Bob Johnston

Chairman Managing Director

Olivier Lim Bob Johnston

Chairman Managing Director


Auditor’s Independence Declaration


ContentsConsolidated income statement 44

Consolidated statement of comprehensive income 45

Consolidated balance sheet 46

Consolidated cash flow statement 47

Consolidated statement of changes in equity 48

Notes to the consolidated financial statements 49

1. Summary of significant accounting policies 49

2. Segment information 56

3. Financial risk management 59

4. Revenue 62

5. Expenses 62

6. Earnings per stapled security 64

7. Income tax expense 65

8. Receivables 66

9. Inventories 67

10. Other assets 67

11. Investments accounted for using the equity method 67

12. Investment properties 70

13. Plant and equipment 73

14. Derivative financial instruments 74

15. Payables 75

16. Borrowings 76

17. Provisions 77

18. Land vendor liabilities 77

19. Equity 78

20. Dividends/distributions 81

21. ASSETS hybrid equity 82

22. Contingencies 82

23. Investments in controlled entities 83

24. Key management personnel disclosures 88

25. Commitments 91

26. Non-director related party transactions 91

27. Financial instruments 92

28. Cash flow information 94

29. Security based payments 95

30. Parent entity financial information 96

31. Events occurring after the balance sheet date 97

Directors’ declaration 98

Independent auditor’s report 99

Financial Report.

Financial Report 43

2012 2011

Notes $’000 $’000

Revenue from continuing operations 4 918,794 692,810

Cost of properties sold 5 (540,815) (343,690)

Write down of inventories – (30,000)

Development profit recognised through valuation of properties transferred to Australand Property Trusts – 1,842

Share of net profits of joint ventures and associates accounted for using the equity method 11(d) 18,703 30,162

Investment property expenses (38,864) (37,968)

Management and administration expenses 5 (75,633) (72,273)

Depreciation 5 (4,565) (3,348)

Other expenses (53,310) (48,532)

Finance costs 5 (71,446) (81,940)

Amortisation of lease incentives 5 (3,562) (2,177)

Net gains from fair value adjustments on investment property 12 54,520 61,525

Profit before income tax 203,822 166,411

Income tax benefit 7 – 851

Net profit 203,822 167,262

Net profit attributable to ASSETS hybrid equity holders (non-controlling interest) (23,856) (26,642)

Net profit attributable to stapled securityholders of Australand 179,966 140,620

Attributable to:

Equity holders of AHL and APT 115,951 106,105

Equity holders of other stapled entities (non-controlling interest):

– Australand Property Trust No.4 (APT4) 51,857 20,404


Net profit attributable to stapled securityholders of Australand 179,966 140,620

Earnings per stapled security for profit attributable to ordinary equity holders of AHL and APT:

Basic and diluted earnings per stapled security (parent entity) 6 20.1 cents 18.4 cents

The above consolidated income statement should be read in conjunction with the accompanying notes, including Note 6 which presents the following earnings per stapled security for profit attributable to the stapled securityholders:

Basic and diluted earnings per stapled security 6 31.2 cents 24.4 cents

The above consolidated income statement should be read in conjunction with the accompanying notes.


Consolidated income statementFor the year ended 31 December 2012Australand Holdings Limited and its controlled entities

2012 2011

$’000 $’000

Net profit 203,822 167,262

Other comprehensive income:

Changes in the fair value of cash flow hedges (35,810) (51,957)

Share of associate and joint venture changes in the fair value of cash flow hedges 627 (609)

Other comprehensive income for the financial year (35,183) (52,566)

Total comprehensive income for the financial year 168,639 114,696

Total comprehensive income for the financial year is attributable to:

Equity holders of AHL and APT 80,768 53,539

Equity holders of other stapled entities (non-controlling interest):



Other non-controlling interests 23,856 26,642

168,639 114,696

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Consolidated statement of comprehensive incomeFor the year ended 31 December 2012Australand Holdings Limited and its controlled entities

Financial Report 45

2012 2011

Notes $’000 $’000

Current assets

Cash and cash equivalents 76,059 93,286

Receivables 8 143,282 142,456

Inventories 9 308,893 372,802

Other assets 10 7,049 9,787

535,283 618,331

Investment properties held for sale 12(e) 114,000 72,065

Total current assets 649,283 690,396

Non-current assets

Receivables 8 56,495 48,001

Inventories 9 628,381 724,268

Investments accounted for using the equity method 11 271,992 234,067

Investment properties 12 2,286,043 2,165,143

Derivative financial instruments 14 21,715 24,263

Plant and equipment 13 34,363 28,811

Deferred tax assets 7(c) 30,212 30,212

Other assets 10 5,069 8,177

Total non-current assets 3,334,270 3,262,942

Total assets 3,983,553 3,953,338

Current liabilities

Payables 15 80,339 72,038

Borrowings 16 100,000 –


Provisions 17 93,083 91,951

Land vendor liabilities 18 33,451 32,723

Total current liabilities 340,637 220,723

Non-current liabilities

Borrowings 16 1,252,889 1,381,810


Provisions 17 5,942 4,870

Land vendor liabilities 18 11,564 27,088

Total non-current liabilities 1,359,090 1,466,611

Total liabilities 1,699,727 1,687,334

Net assets 2,283,826 2,266,004

Equity

Equity holders of AHL and APT:

– Contributed equity 19(a) 1,741,986 1,742,001

– Reserves 19(b) (80,405) (42,306)

– Accumulated losses 19(c) (86,809) (107,748)

1,574,772 1,591,947

Equity holders of APT4 and APT5 (non-controlling interest) 440,396 405,399

Stapled securityholders interest in the Group 19 2,015,168 1,997,346

ASSETS hybrid equity 21 268,658 268,658

Total equity 2,283,826 2,266,004

The above consolidated balance sheet should be read in conjunction with the accompanying notes.


Consolidated balance sheetAs at 31 December 2012Australand Holdings Limited and its controlled entities

2012 2011

Notes $’000 $’000

Cash flows from operating activities

Receipts from customers 890,240 741,723

Payments to suppliers and employees (444,669) (512,724)

Interest received 2,348 4,214

Interest paid (100,721) (84,371)

347,198 148,842

Distributions received from joint venture entities 12,569 32,480

Distributions received from associate entities 5,558 3,358

Payment for land acquisitions (31,276) (127,052)

Net cash inflow from operating activities 28(b) 334,049 57,628

Cash flows from investing activities

Net investment in joint venture entities (12,085) (36,678)

Net investment in associate entities (28,387) (27,902)

Proceeds from sale of investment properties 72,395 133,250

Payments for development and acquisition of investment properties (169,710) (145,529)

Payments for plant and equipment (10,118) (20,610)

Net cash outflow from investing activities (147,905) (97,469)

Cash flows from financing activities

Proceeds from borrowings 858,008 1,362,059

Repayment of borrowings (908,561) (1,131,992)

Distributions paid (124,022) (121,115)

Distributions to non-controlling interest (ASSETS) (24,868) (26,747)

Payment to satisfy vested PRP entitlements (3,905) (109)

Proceeds from issue of units/shares (net of transaction costs) (23) 99

Net cash (outflow)/inflow from financing activities (203,371) 82,195

Net (decrease)/increase in cash held (17,227) 42,354

Cash at the beginning of the financial year 93,286 50,932

Cash at the end of the financial year 28(a) 76,059 93,286

The above consolidated cash flow statement should be read in conjunction with the accompanying notes.

Consolidated cash flow statementFor the year ended 31 December 2012Australand Holdings Limited and its controlled entities

Financial Report 47

Attributable to owners of Australand Holdings LimitedNon-

controlling interest*

Total equity

Contributed equity Reserves

Accumulated losses Total

$000’s $000’s $000’s $000’s $000’s $000’s

Balance at 1 January 2012 1,742,001 (42,306) (107,748) 1,591,947 674,057 2,266,004

Total comprehensive income for the year attributable to:

AHL and APT (parent) – (35,183) 115,951 80,768 – 80,768

APT4 and APT5 (non-controlling interest) – – – – 64,015 64,015

Other non-controlling interest – – – – 23,856 23,856

Total comprehensive income for the year – (35,183) 115,951 80,768 87,871 168,639

Represented by:

Profit for the year – – 115,951 115,951 87,871 203,822

Other comprehensive income – (35,183) – (35,183) – (35,183)


Transactions with equity holders:

Contributions of equity, net of transaction costs (15) – – (15) (8) (23)

Security based payments – (2,916) – (2,916) – (2,916)

Dividends and distributions provided for or paid (Note 20) – – (95,012) (95,012) (29,010) (124,022)

Distributions provided for or paid to ASSETS hybrid equity holders (non-controlling interest) – – – – (23,856) (23,856)

(15) (2,916) (95,012) (97,943) (52,874) (150,817)

Balance at 31 December 2012 1,741,986 (80,405) (86,809) 1,574,772 709,054 2,283,826

Balance at 1 January 2011 1,741,922 8,094 (123,342) 1,626,674 673,011 2,299,685

Total comprehensive income for the year attributable to:

AHL and APT (parent) – (52,566) 106,105 53,539 – 53,539

APT4 and APT5 (non-controlling interest) – – – – 34,515 34,515

Other non-controlling interest – – – – 26,642 26,642


Represented by:

Profit for the year – – 106,105 106,105 61,157 167,262

Other comprehensive income – (52,566) – (52,566) – (52,566)


Transactions with equity holders:

Contributions of equity, net of transaction costs 79 – – 79 20 99

Security based payments – 2,166 – 2,166 – 2,166

Dividends and distributions provided for or paid (Note 20) – – (90,511) (90,511) (33,489) (124,000)

Distributions provided for or paid to ASSETS hybrid equity holders (non-controlling interest) – – – – (26,642) (26,642)

79 2,166 (90,511) (88,266) (60,111) (148,377)

Balance at 31 December 2011 1,742,001 (42,306) (107,748) 1,591,947 674,057 2,266,004

* Non-controlling interest includes Australand Property Trust No.4, Australand Property Trust No.5 and ASSETS.

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.


Consolidated statement of changes in equityFor the year ended 31 December 2012Australand Holdings Limited and its controlled entities

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe significant accounting policies adopted in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes financial statements for the consolidated entity (‘Australand’) consisting of Australand Holdings Limited (‘AHL’) and its subsidiaries and controlled entities as defined in Note 1(b).

(a) Basis of preparationThis general purpose financial report has been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’), and the Corporations Act 2001.

AHL is a for profit entity for the purpose of preparing financial statements.

Except where noted below, the accounting policies adopted are consistent with those of the previous and interim reporting period and corresponding financial year.

Compliance with International Financial Reporting Standards (‘IFRS’)The financial report of the consolidated entity complies with IFRS as issued by the International Accounting Standards Board (‘IASB’).

Historical cost conventionThese financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment property, financial assets and liabilities (including derivative instruments) at fair value through profit or loss.

Prior year and current year reclassificationsReclassifications of a number of immaterial balances have been made to the income statement and balance sheet in the current period to better reflect the underlying nature of these balances. Prior year reclassifications have been made where it improves comparability of amounts from period to period.

Critical accounting estimatesThe preparation of these financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying Australand’s accounting policies. The resulting estimates will, by definition, seldom equal the related actual results. It is reasonably possible that outcomes in subsequent reporting periods could require material adjustment to the carrying amount of the asset/liability. The material estimates and assumptions in these financial statements include:

(i) Investment Properties: All investment properties are valued at least every 2 years by external independent valuers. Values are based on active market prices, adjusted if necessary, for specific asset conditions. If this information is not available, the Group uses alternative valuation methods such as the capitalisation approach and discounted cash flow projections.

(ii) Recognition of Profit: Profit recognised on property development projects is determined based on the forecasted outcomes of projects. Forecasts are updated at each reporting date to determine the appropriateness

of profit recognised on projects. Net realisable values of projects are assessed to ensure that inventory is carried at the lower of cost and net realisable value.

(iii) Inventories: The net realisable value of inventories is the estimated selling price in the ordinary course of business less estimated costs of completion and costs to sell. Such estimations take into consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the reporting period. Key assumptions make use of most recent reliable evidence available and management judgement.

(iv) Financial Instruments: A variety of methods are used to calculate the value of financial instruments and make assumptions that are based on market conditions existing at each balance date. Valuation of derivative financial instruments involves assumptions based on quoted market rates adjusted for specific features of the instrument. The valuations of any financial instrument may change in the event of market volatility.

(v) Impairment: Assets are tested annually or more frequently if events or circumstances indicate impairment. An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model.

(vi) Deferred Taxes: Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

(b) Principles of consolidation

(i) Subsidiaries and controlled entitiesThe consolidated financial statements incorporate the assets and liabilities of all subsidiaries and controlled entities of AHL, including Australand Property Trust (‘APT’), Australand Property Trust No.4 (‘APT4’), and Australand Property Trust No.5 (‘APT5’) as at 31 December 2012 and the results of all subsidiaries and controlled entities for the year then ended. AHL and its subsidiaries and controlled entities are referred to in this financial report as the Group or the consolidated entity.

Subsidiaries and controlled entities are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Notes to the consolidated financial statementsAustraland Holdings Limited and its controlled entities

Financial Report 49

Subsidiaries and controlled entities are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Inter-entity transactions, balances and unrealised gains on transactions between Group entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. The accounting policies adopted by the subsidiaries, joint ventures and associates are consistent with those of the Group.

(ii) Associates and joint venture entitiesAssociates are entities where the Group has significant influence but not control of those entities, generally accompanying a shareholding of between 20% and 50%.

Joint venture entities (including unincorporated or incorporated companies, partnerships and trusts) involve a contractual arrangement whereby the two parties undertake economic activities that are subject to joint control.

Investments in these associates and joint ventures entities are accounted for using the equity method of accounting, after being initially recognised at cost.

Under this method, Australand’s share of the entities profits or losses are recognised in the consolidated income statement, and its share of the entities movements in reserves is recognised in the consolidated reserves of the Group. The cumulative movements are adjusted against the carrying amount of the investment. Dividends/distributions receivable from associates and joint venture entities reduce the carrying amount of the investment.

When the Group’s share of losses equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise any further losses, unless it has incurred obligations or made payments on behalf of the entity.

Unrealised gains on transactions establishing joint ventures and transactions between the Group and its associates or joint venture entities are eliminated to the extent of the Group’s interest until such time as they are realised by the entity through consumption or sale. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

(iii) Stapling arrangementsAHL has been identified as the parent entity in relation to the pre-date of transition stapling with APT and the post-date of transition stapling with APT4 and APT5. Consequently, the results and equity of AHL and APT have been combined in the financial statements and the results and equity, not directly owned by AHL or APT, of APT4 and APT5 have been treated and disclosed as non-controlling interest. Whilst the results and equity of APT4 and APT5 are disclosed as non-controlling interest, the stapled securityholders of AHL and APT are the same as the stapled securityholders of APT4 and APT5.

(c) Revenue recognitionRevenue is measured at the fair value of the consideration received or receivable. Revenue is recognised for the major business activities as follows:

Real estate asset salesRevenue is recognised on real estate asset sales when the significant risks and rewards have passed to the buyer and it is probable the economic benefits will flow to the Group and can be reliably measured. Revenue on land sales is recognised where there is a signed unconditional contract for sale. All other sales are recognised on settlement.

Construction contractingContract revenue and expenses are recognised in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. Where it is probable that a loss will arise from a construction contract, the excess of total costs over revenue is recognised as an expense immediately. Where the outcome of a contract cannot be reliably estimated, contract costs are recognised as an expense as incurred, and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred.

Rental incomeRental income from operating leases is recognised in income on a straight line basis over the lease term. An asset is recognised to represent the portion of operating lease income in a reporting period relating to fixed increases in operating lease rentals in future periods. Such assets are recognised as a component of the carrying amount of investment properties in the balance sheet.

Interest incomeInterest income is recognised under the effective interest rate method.

Dividends/distributionsDividends/distributions are recognised as revenue when the right to receive payment is established.

Development profit recognised through valuation of properties transferred to Australand Property TrustsRevenue and profit from the development of Commercial and Industrial projects are based on arms length contractual agreements with customers, either external or the Australand Property Trusts. The agreed value included in these contracts is either based on a fixed price contract or an agreed on-completion value. The on-completion value is arrived at by obtaining an independent valuation of the expected market value of the property at practical completion. The profit on internal developments is disclosed separately in the consolidated income statement as development profit recognised through valuation of properties transferred to Australand Property Trusts.

(d) Investment propertiesInvestment properties comprise investment interests in land and buildings held for long term rental yields and not occupied by the Group. Investment properties are carried at fair value which is based on active market prices, adjusted if necessary, for any difference in the nature, location or

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) Principles of consolidation (continued)

(i) Subsidiaries and controlled entities (continued)


Notes to the consolidated financial statements (continued) Australand Holdings Limited and its controlled entities

condition of the specific asset. If this information is not available, the Group uses alternative valuation methods such as the capitalisation approach and discounted cash flow projections. Each property is valued at least every 2 years by external independent valuers. Any resultant changes in fair value are shown separately in the consolidated income statement as net gains/(losses) from fair value adjustments on investment property.

The carrying amount of investment properties recorded in the balance sheet includes components relating to lease incentives and assets relating to fixed increases in operating lease rentals in future periods.

Investment properties under constructionInvestment properties under construction are carried at fair value after allowing for the remaining expected costs of completion plus an appropriate risk adjusted development margin.

(e) Plant and equipmentPlant and equipment is carried at cost less accumulated depreciation. Plant and equipment is depreciated over their estimated useful lives using the straight line method. Net gains and losses on disposal of plant and equipment are brought to account in determining the results for the year. The expected useful lives of plant and equipment are as follows:

Furniture and fittings: two to ten years (2011: two to ten years)

Computer hardware: three to four years (2011: three to four years)

Computer software: five to ten years (2011: five to ten years)

(f) Valuation of inventoriesInventories comprising land, land and housing, integrated land and housing, medium density, high-rise developments and commercial and industrial developments are carried at the lower of cost and net realisable value. Cost includes the cost of acquisition and development and borrowing costs incurred during development. When development is completed, borrowing costs are expensed as incurred. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Estimates of net realisable value are based on the most recent reliable evidence available at the time the estimates are made, of the amount the inventories are expected to realise and the estimate of costs to complete. Inventories that are anticipated to be realised within twelve months are classified as current.

(g) Cash and cash equivalentsFor cash flow statement purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

(h) Trade receivablesTrade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

Collectability of trade receivables is reviewed on an ongoing basis. Receivables which are known to be uncollectible are written off by reducing the carrying amount directly. A provision for any impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

(i) Business combinationsThe acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in the income statement as a bargain purchase.

(j) Impairment of assetsAssets that have an indefinite useful life are not subject to amortisation or depreciation and are tested annually for impairment or more frequently if events or circumstances indicate that they might be impaired. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).


(d) Investment properties (continued)

Financial Report 51

(k) Non-current assets held for saleNon-current assets are classified as held for sale if their carrying value will be recovered principally through a sales transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying value and the fair value less costs to sell, except for assets such as investment property that are carried at fair value.

(l) Trade and other payablesTrade and other payables represent liabilities for goods and services provided prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(m) Land vendor liabilitiesWhere the consolidated entity enters into unconditional contracts with land vendors to purchase properties for future development that contain deferred payment terms, these liabilities are disclosed at their present value.

(n) ProvisionsProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of time value of money and the risks specific to the liability. The increase in the provision due to passage of time is recognised as interest expense.

(o) Lease incentivesProspective lessees may be offered incentives as an inducement to enter into non-cancellable operating leases. These incentives may take various forms including, upfront cash payments, rent free periods, or a contribution to certain lessee costs such as fit-out or relocation costs. As these incentives are repaid out of future lease payments, they are recognised as an asset in the consolidated balance sheet as a component of the carrying amount of investment properties and amortised over the lease period.

(p) Employee benefits

(i) Wages, salaries and annual leaveLiabilities for employee entitlements to wages and salaries, annual leave and other current employee entitlements are accrued at non-discounted amounts calculated on the basis of future wage and salary rates including on-costs.

(ii) Long service leaveLiabilities for other employee entitlements which are not expected to be paid or settled within 12 months of balance date are accrued in respect of all employees at present values of future amounts expected to be paid, based on a projected weighted average increase in wage and salary rates. Expected future payments are discounted using interest rates on national government securities with terms to maturity that match, as closely as possible, the estimated future cash outflows.

(iii) SuperannuationSuperannuation contributions are charged as an expense as the contributions are paid or become payable.

(iv) Security-based payments Security-based compensation benefits are provided to employees via the Australand Performance Rights Plan and Australand Tax Exempt Employee Security Plan. The fair value of options or rights granted is determined at grant date and recognised as an expense with a corresponding increase in equity over their vesting period.

(q) Borrowing and borrowing costsBorrowings are initially recognised at fair value including transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between proceeds (net of transaction costs) and redemption is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the income statement as other income or finance costs.

Borrowing costs incurred for construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed. In extended periods where development of a qualifying asset is suspended borrowing costs are expensed as incurred.

The amount of borrowing costs eligible to be capitalised is calculated using the weighted average interest rate applicable to the entity’s outstanding borrowings during the year.

(r) Derivatives and hedging activitiesDerivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging




instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either:

—hedges of highly probable forecast transactions (cash flow hedges) —hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges).

The Group documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in cash flows of hedged items.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity using a recalculated effective interest rate.

Fair value hedgesChanges in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The gain or loss relating to the effective portion of interest rate derivatives hedging fixed rate borrowings is recognised in profit or loss within finance costs, together with changes in the fair value of the hedged fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective portion is recognised in profit or loss within finance costs.

Cash flow hedgesThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.

Amounts accumulated in equity are recycled in the income statement and disclosed as finance costs in the periods when the hedged item will affect profit or loss (for instance when the interest is payable on hedged variable rates borrowings). However, when the forecast transaction that is hedged results in the recognition of a non financial asset (for example, inventory) or a non financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the cost of the asset or liability. The deferred amounts are ultimately recognised in the profit or loss as costs of goods sold in the case of inventory.

When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the

forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

(s) Foreign currency translation

(i) Functional and presentational currencyItems included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Australian dollars, which is the functional and presentational currency of AHL and its controlled entities.

(ii) Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

(t) Income taxThe income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred income tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that, at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Current and deferred tax balances attributable to amounts recognised in other comprehensive income or directly in equity are also recognised in other comprehensive income or directly in equity, respectively.


(r) Derivatives and hedging activities (continued)

Financial Report 53

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Tax consolidation legislationAHL and its wholly owned entities implemented the tax consolidation legislation from 1 January 2003. AHL and the wholly owned entities in the tax consolidation group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidation group continues to be a stand-alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, AHL also recognises the current tax liabilities (or assets) and the deferred tax assets arising from the unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement is recognised as a contribution to (or distribution from) wholly owned tax consolidated entities.

Australand Property TrustsUnder current income tax legislation, APT, APT4 and APT5 are not liable for income tax, provided that the taxable income is fully distributed each year including any taxable capital gain derived from the sale of an asset.

(u) Earnings per stapled security

(i) Basic earnings per stapled securityBasic earnings per stapled security is determined by dividing the net profit after income tax attributable to Australand stapled securityholders by the weighted average number of stapled securities outstanding during the year, adjusted for bonus elements in stapled securities, if any, issued during the year.

(ii) Diluted earnings per stapled securityDiluted earnings per stapled security adjusts the figures used in the determination of basic earnings per stapled security by taking into account the after income tax effect of interest and other financing costs associated with dilutive potential stapled securities and the weighted average number of securities assumed to have been issued for no consideration in relation to the dilutive potential ordinary securities.

(iii) Basic earnings per stapled security – parent entityBasic earnings per stapled security is determined by dividing the net profit after income tax attributable to Australand Holdings Limited and APT (excluding the non-controlling interest of APT4 and APT5) by the weighted average number

of stapled securities outstanding during the year, adjusted for bonus elements in stapled securities, if any, issued during the year.

(iv) Diluted earnings per stapled security – parent entityDiluted earnings per stapled security adjusts the figures used in the determination of basic earnings per stapled security by taking into account the after income tax effect of interest and other financing costs associated with dilutive potential stapled securities, and the weighted average number of securities assumed to have been issued for no consideration in relation to the dilutive potential ordinary securities.

(v) Financial guarantee contracts Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with AASB 137: Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation, where appropriate. The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.

(w) Leases Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

(x) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included within other receivables or payables in the balance sheet.

(y) Dividends and trust distributionsProvision is made for the amount of any dividend or trust distributions declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at balance date.

(z) Contributed equityAustraland is a stapled group in which the securityholders hold direct interests and an equal number of shares in Australand Holdings Limited (‘AHL’), and units in each of Australand Property Trust (‘APT’), Australand Property Trust No.4 (‘APT4’) and Australand Property Trust No.5 (‘APT5’).


(t) Income tax (continued)



AHL has been identified as the parent entity in relation to the pre-date of transition stapling with APT and the post-date of transition stapling with APT4 and APT5. Consequently, the results and equity of AHL and APT have been combined in the financial statements and the results and equity, not directly owned by AHL or APT, of APT4 and APT5 have been treated and disclosed as non-controlling interest. Whilst the results and equity of APT4 and APT5 are disclosed as non-controlling interest, the stapled securityholders of AHL and APT are the same as the stapled securityholders of APT4 and APT5.

Incremental costs directly attributable to the issue of new stapled securities are shown in equity as a deduction, net of tax, from the proceeds.

(aa) Segment reportingAASB 8: Operating Segments (‘AASB 8’) requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. The segments are reported in a manner that is consistent with the internal reporting provided to the Executive Management Team.

The following operating segments have been determined as separately reportable in accordance with AASB 8:

—Residential – development of land, housing & apartments. —Commercial & Industrial – development of commercial, industrial and retail properties. —Investment Property – investment in income producing commercial & industrial properties, property trust management and property management.

(ab) Rounding of amountsAustraland is an entity of the kind referred to in Class Order 98/100 issued by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

(ac) New accounting standards and interpretationsCertain new accounting standards and interpretations have been published that are not mandatory for 31 December 2012 reporting periods. The Group has made an assessment of such standards and intrepretations and have concluded that Australian Accounting Standard (AASB) 11: Joint Arrangements is likely to have an impact on the financial statements in future reporting periods.

This standard was issued in August 2011 and is applicable to financial years commencing on or after 1 January 2013. AASB 11 requires that joint arrangements are to be accounted for as joint operations (parties have joint control and have rights to assets and obligations for liabilities of the arrangement) or joint ventures (parties have joint control and have rights to net assets of the arrangement).

The Group will have arrangements that will be accounted for as joint operations (recognising its share of assets, liabilities, revenue and expenses) which have been previously equity accounted as net investments. Based on a high level

preliminary assessment of the Group’s joint arrangements, the impact on the Group’s balance sheet is expected to be immaterial. Had the Group adopted the new rules in the current reporting period, total assets would have been approximately $78 million higher and total liabilities would have been approximately $78 million higher.

In addition, AASB 10: Consolidated Financial Statements (AASB 10) was issued in August 2011 and is applicable to financial years commencing on or after 1 January 2013. AASB 10 replaces all of the guidance on control and consolidation in AASB 127: Consolidated and Separate Financial Statements, and Interpretation 112: Consolidation – Special Purpose Entities. The Group does not expect there to be any impact upon adoption of AASB 10.

Under AASB 10, the core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However the standard introduces a single definition of control that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns before control is present. Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. There is also new guidance on participating and protective rights and on agent/principal relationships.

The Group’s assessment of the impact of other new standards and interpretations is that there is not expected to be any material effect on the Group in future reporting periods.

(ad) Parent entity financial informationThe financial information for the parent entity, Australand Holdings Limited, disclosed in Note 30 has been prepared on the same basis as the consolidated financial statements, except for investments in subsidiaries and joint venture entities, which are accounted for at cost.


(z) Contributed equity (continued)

Financial Report 55

2. SEGMENT INFORMATIONThe consolidated entity operates wholly within Australia and is organised into Residential, Commercial & Industrial and Investment Property divisions. Segment revenues, expenses and results include transfers between segments. Such transfers are on an arm’s length basis and eliminated on consolidation.

(a) Segment result

December 2012

Operating Segment Summary

ResidentialCommercial & Industrial

Total Developer

Investment Property Corporate Consolidated$’000

Revenue 606,033 213,675 819,708 225,569 7,988 1,053,265

Less: Property development sales revenue from joint venture entities (106,656) (27,815) (134,471) – – (134,471)

Segment Revenue 499,377 185,860 685,237 225,569 7,988 918,794

Segment result before interest, equity accounted results 82,261 18,328 100,589 171,409 – 271,998

Share of net profits of associates and joint ventures accounted for using the equity method 6,284 5,361 11,645 6,696 – 18,341

Unallocated corporate costs – – – – (29,665) (29,665)

Operating Earnings Before Interest and Tax 88,545 23,689 112,234 178,105 (29,665) 260,674

Capitalised interest in cost of goods sold & other interest (98,872)

Interest income 4,121

Operating profit before tax 165,923

Income tax credit on operating activities –

Net profit attributable to ASSETS hybrid equity holders (non-controlling interest) (23,856)

Net Operating Profit After Tax 142,067

Revaluation gains on investment property held1 38,902

Revaluation gains on investment properties under construction2 15,980

Amortisation of lease incentives (3,562)

Unrealised losses on interest rate derivatives (13,421)

Net profit attributable to stapled securityholders of Australand 179,966

1 Includes $362,000 relating to share of joint venture and associate’s revaluation gains.2 The revaluation gains on investment properties under construction are included in the return on average capital employed calculation for the Commercial

& Industrial division.



December 2011



Total Developer

Investment Property Corporate Elim1$’000 Consolidated

Revenue 586,776 181,390 768,167 209,516 14,154 (38,493) 953,344

Less: Property development sales revenue from joint venture entities (248,334) (26,474) (274,809) – – 14,275 (260,534)

Segment Revenue 338,442 154,916 493,358 209,516 14,154 (24,218) 692,810

Segment result before interest, equity accounted results 51,776 26,725 78,501 161,212 – (1,253) 238,460

Development profit through valuation of properties transferred to Australand Property Trusts – – – – – 1,9922 1,992

Share of net profits of associates and joint ventures accounted for using the equity method 24,360 2,349 26,709 4,265 – (889) 30,085

Unallocated corporate costs – – – – (28,068) – (28,068)

Operating Earnings Before Interest and Tax 76,136 29,074 105,210 165,477 (28,068) (150) 242,469

Capitalised interest in cost of goods sold & other interest (85,504)

Interest income 4,214

Operating profit before tax 161,179

Income tax credit on operating activities 851

Net profit attributable to ASSETS hybrid equity holders (non-controlling interest) (26,642)

Net Operating Profit After Tax 135,388

Revaluation gains on investment property held3 39,725

Revaluation gains on investment properties under construction4 21,877

Amortisation of lease incentives (2,177)

Write down of inventories5 (30,000)

Unrealised losses on interest rate derivatives (24,193)

Net profit attributable to stapled securityholders of Australand 140,620

1 All revenue eliminated relates to the Commercial & Industrial division. The profit on internal developments is disclosed separately in the eliminations column.2 Interest relating to Development profit is included in “Capitalised interest in cost of goods sold and other interest”.3 Includes $77,000 relating to share of joint venture and associate’s revaluation gains.4 The revaluation gains on investment properties under construction are included in the return on average capital employed calculation for the Commercial

and Industrial division.5 A write down of inventories was recorded in the Commercial & Industrial and Residential divisions of $23,000,000 and $7,000,000 respectively.

2. SEGMENT INFORMATION (CONTINUED)

(a) Segment result (continued)

Financial Report 57

(b) Segment balance sheet

December 2012



Total Developer


Total segment assets1 927,565 378,655 1,306,220 2,546,370 130,963 3,983,553

Total segment borrowings 643,056 262,512 905,568 447,321 – 1,352,889

Total other liabilities 82,487 14,623 97,110 229,516 20,212 346,838

Investments in associates and joint venture entities 132,129 36,955 169,084 102,908 – 271,992

December 2011



Total Developer


Total segment assets1 981,634 458,577 1,440,211 2,364,218 148,909 3,953,338

Total segment borrowings 681,089 409,943 1,091,032 290,968 – 1,382,000

Total other liabilities 80,773 12,106 92,879 187,222 25,233 305,334

Investments in associates and joint venture entities 127,872 33,700 161,572 72,495 – 234,067

1 Total segment assets includes investments in associates and joint venture entities.

(c) Other segment information

2012 2011

$’000 $’000

(i) Depreciation expense (Corporate) (4,565) (3,348)

(ii) Share of net profits of joint ventures and associate

Share of operating profits (segment note) 18,341 30,085

Share of property revaluations gains 362 77

Share of net profits of associate and joint ventures accounted for using the equity method (income statement) 18,703 30,162

(iii) Finance costs

Capitalised interest in cost of goods sold & other interest (segment note) 98,872 85,504

Less: Capitalised finance costs recovered in cost of properties sold (40,847) (27,757)

Unrealised losses on interest rate derivatives 13,421 24,193

Finance costs (income statement) 71,446 81,940

2. SEGMENT INFORMATION (CONTINUED)



3. FINANCIAL RISK MANAGEMENTThe Group’s activities expose it to a variety of financial risks including liquidity risk, market risk, credit risk and interest rate risk. It is the responsibility of the Board and Management to ensure that adequate risk identification, assessment and mitigation practices are in place for the effective oversight and management of these risks. The Group’s overall management program as it relates to these risks is managed centrally to ensure alignment of financial risk management with corporate objectives and seeks to minimise potential adverse effects on the financial performance of the Group.

The Group uses derivative financial instruments such as interest rate swaps and cross currency interest rate swaps to hedge certain financial risk exposures. Interest rate swaps are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and foreign exchange risk and aging analysis for credit risk.

The Group also uses other derivative instruments such as callable swaps to manage the cost of funding. These instruments provide Australand with a fixed interest rate for a period but are callable by the swap counterparty.

The Treasury function identifies, evaluates and mitigates the above financial risks under policies approved by the Board of Directors.

(a) Credit riskCredit risk is the risk that a counterparty will default on their financial obligations resulting in a financial loss to the Group.

The Group’s maximum exposure to credit risk at 31 December 2012 is limited to the carrying amount of the financial assets disclosed in Note 27.

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to receivables from customers, tenants and joint venture entities.

Derivative counterparties and cash transactions are limited to high credit quality financial institutions. The Group has policies that limit the amount of credit exposure to any one financial institution.

The Group has policies in place to ensure that the leasing of investment properties and the sales of products and services are made to customers with an appropriate credit history. Ongoing checks are performed by management to ensure that settlement terms detailed in individual contracts are adhered to.

There is no concentration of credit risk with respect to the trade receivables of the Group as they consist of a large number of customers that are geographically dispersed. The Group does not have any significant credit risk exposure to a single customer or group of customers. The Group generally holds collateral in the form of bank deposits, bank guarantees or mortgages over assets until completion.

The credit risk associated with receivables from joint venture entities is monitored through management’s review of project feasibilities and the Group’s ongoing involvement in the operations of these entities.

(b) Market risk

(i) Foreign exchange riskForeign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency.

During 2011, the Group issued US$170m of guaranteed senior notes through the US Private Placement debt market (USPP). It is the Group’s policy to fully protect debt sourced overseas from exposure to volatility in exchange rates. To remove any foreign exchange and US interest rate exposure, the Group entered into cross currency interest rate swaps (notional principal of US$170m). As a result, the proceeds under the note issue were swapped into Australian dollars at the time of issue and therefore 100% of anticipated US dollar cash flows are hedged for the term of the notes.

The Group’s exposure to foreign currency risk at the reporting date was as follows:

2012 2011

USD USD

$’000 $’000

Borrowings 170,000 170,000

Cross currency interest rate swaps (notional principal) (170,000) (170,000)

– –

(ii) Interest rate riskThe Group’s interest rate risk arises from long term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Group policy is to maintain fixed interest rate hedging above a minimum of 60% for 1 year maturities, reducing to 0% for maturities 7 years and beyond.

The Group hedges its interest rate risk by entering into floating to fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Under the interest rate swaps, the Group agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.

Furthermore, as a result of the issue of USPP notes, the Group hedges its US dollar cash flow interest rate risk by entering into cross currency interest rate swaps. The US dollar components of the cross currency swaps are structured to provide US dollars necessary to pay the semi annual coupons on the US dollar Senior Notes to maturity. The settlement dates coincide with the dates on which interest is payable on the underlying debt. The Australian dollar components of the cross currency swaps are paid on a floating rate basis every 90 days.

Australand’s fixed interest rate hedge maturity was 4.1 years at 31 December 2012 (31 December 2011: 4.0 years). This profile is longer than the debt maturity of the Group as the Group maintains a portfolio of hedges, some of which are forward start swaps, to protect future debt balances which will arise on the renewal of existing facilities. At year end, 81% (2011: 72%) of the Group’s borrowings were at fixed interest rates (including the effect of interest rate swaps).

Financial Report 59

The potential impact of a change in interest rates by +/-1% on profit and equity has been disclosed in a table in Note 27(e).

(c) Liquidity riskPrudent liquidity risk management implies that at all times the Group has access to sufficient cash resources to meet its financial obligations as they fall due. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching maturity profiles of financial assets and liabilities.

Due to the dynamic nature of the underlying businesses, Group Treasury aims to maintain flexibility in funding by keeping committed credit lines available with a variety of counterparties.

At 31 December 2012 the Group had undrawn committed facilities of $360 million (2011: $455 million) and cash of $76 million (2011: $93 million).

At 31 December 2012 the debt maturity profile on the Group’s interest bearing debt was 2.9 years (2011: 3.3 years). Further information on the debt maturity profile of the Group’s financial liabilities is disclosed in Note 16.

Maturities of financial liabilitiesThe tables below analyse the Group’s financial liabilities and derivative financial instruments into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows (including estimated interest payments). For interest rate swaps the cash flows have been estimated using forward interest rates applicable (including foreign exchange rates for cross currency interest rate swaps) at the reporting date.

3. FINANCIAL RISK MANAGEMENT (CONTINUED)

(b) Market risk (continued)

(ii) Interest rate risk (continued)

31 December 2012

Within 1 year

Between 1 & 2 years

Over 2 years

Total contractual cash flows

Carrying amount assets/

(liabilities)

$’000 $’000 $’000 $’000 $’000

Non-derivatives

Non-interest bearing (113,790) (1,476) (10,088) (125,354) (125,354)

Variable rate (168,041) (403,020) (1,007,399) (1,578,460) (1,352,889)

Total non-derivatives (281,831) (404,496) (1,017,487) (1,703,814) (1,478,243)

Derivatives

Net settled (interest rate derivatives) (10,320) (2,611) (5,046) (17,977) (122,459)

Gross settled (cross currency interest rate swaps):

– Outflow (10,103) (9,697) (232,822) (252,622) –

– Inflow 9,237 9,237 226,509 244,983 –

(866) (460) (6,313) (7,639) 21,715

31 December 2011

Within 1 year

Between 1 & 2 years

Over 2 years

Total contractual cash flows

Carrying amount assets/

(liabilities)

$’000 $’000 $’000 $’000 $’000

Non-derivatives

Non-Interest bearing (115,225) – (16,624) (131,849) (131,849)

Variable rate (90,159) (593,085) (1,029,565) (1,712,809) (1,381,810)

Total non-derivatives (205,384) (593,085) (1,046,189) (1,844,658) (1,513,659)

Derivatives

Net settled (interest rate derivatives) (5,472) (4,790) (2,181) (12,443) (76,854)

Gross settled (cross currency interest rate swaps):

– Outflow (11,444) (11,252) (263,243) (285,939) –

– Inflow 9,181 9,181 239,416 257,778 –

(2,263) (2,071) (23,827) (28,161) 24,263

For additional disclosure on the maturity of the Group’s borrowing facilities refer to Note 16.



(d) Fair value estimationThe fair value of financial assets and financial liabilities must be estimated for recognition and measurement purposes. The Group uses a variety of methods to calculate the value of financial instruments and makes assumptions that are based on market conditions existing at each balance date. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The carrying value of trade and other receivables (less impairment provisions), payables and financial liabilities is a reasonable approximation of their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

AASB 7: Financial Instruments: Disclosures (AASB 7) requires disclosure of fair values, for each of the following measurement categories:

I. where the fair value is measured using quoted prices (unadjusted in active markets for identical assets or liabilities (level 1));

II. where the fair value is measured using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and

III. where the fair value is measured using inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

The fair value of the Group’s derivatives (interest rate derivatives and cross currency swaps) as at 31 December 2012 is a net liability of $100.7 million (2011: $52.6 million). These are classified as level 2 financial liabilities.

(e) Capital risk managementThe Group’s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns for securityholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends/distributions paid to securityholders, return capital to securityholders or issue new stapled securities.

At 31 December 2012, the Group had available liquidity (including cash) of $436 million (2011: $548 million).

Gearing ratioGearing is a measure used to monitor the levels of debt capital used by the business to fund its operations. Gearing is defined as interest bearing debt to total tangible assets, cash adjusted, based on the drawn amount of debt excluding fair value adjustments and associated derivative financial instruments.

3. FINANCIAL RISK MANAGEMENT (CONTINUED)

The gearing ratios at 31 December 2012 and 31 December 2011 were as follows:

2012 2011

$’000 $’000

Total interest bearing debt (borrowings) 1,352,889 1,381,810

Less: Fair value adjustment associated with USPP (25,232) (24,263)

Less: Cash and cash equivalents (76,059) (93,286)

Net debt 1,251,598 1,264,261

Total assets 3,983,553 3,953,338

Less: Derivative financial instruments (asset) (21,715) (24,263)

Less: Cash and cash equivalents (76,059) (93,286)

Tangible assets net of cash and cash equivalents 3,885,779 3,835,789

Gearing ratio 32.2% 33.0%

The gearing ratio was within the Group’s target range of 25% to 35%.

The Group continued to comply with all of its debt covenants during the year.

Financial Report 61

4. REVENUE

2012 2011

$’000 $’000

Sales revenue

Property development sales 648,055 426,681

Rent from investment properties 213,613 204,641

861,668 631,322

Other revenue

Interest received or receivable 4,121 4,214

Management fees from joint venture entities 14,344 15,946

Other income from joint venture entities 14,861 16,029

Sundry income 23,800 25,299

57,126 61,488

Revenue from continuing operations 918,794 692,810

5. EXPENSES

2012 2011

$’000 $’000

Profit before income tax includes the following:

Cost of properties sold:

Cost of properties sold excluding write down of inventories and recovery of capitalised finance costs 499,968 315,933

Capitalised finance costs recovered in cost of properties sold 40,847 27,757

Total cost of properties sold 540,815 343,690

Finance costs:

Interest paid or payable 100,937 86,373

Finance charges relating to loan establishment and financing fees 20,626 29,908


Total gross finance costs 134,984 140,474

Less: amounts capitalised to projects (63,538) (58,534)

Finance costs per income statement 71,446 81,940

Rental expense relating to operating leases:

Premises 4,392 4,148

Motor vehicles 1,262 1,359

Office equipment 6 16

Computer equipment 181 402

Total operating lease rentals 5,841 5,925

Other expenses:

Management and administration expenses* 75,633 72,273

Depreciation of plant and equipment 4,565 3,348

Amortisation of lease incentives 3,562 2,177

Impairment of receivable – 5,997

* These expenses are net of employee costs associated with the development of projects. Gross employee costs for 2012 are $114,663,000 (FY11: $110,401,000).



2012 2011

$ $

Auditor’s remuneration:

During the year, the following fees were paid or payable for services provided by the auditor of Australand Holdings Limited and its controlled entities:

Assurance services

1. Audit services


Audit and review of financial reports and other audit work under the Corporations Act 2001 790,000 765,000

Subsidiary financial statement audits 34,800 38,700

Total remuneration for audit services 824,800 803,700

2. Other assurance services


Audit related

Accounting advice/assistance – 12,000

Audit of regulatory returns 130,920 126,000

Compliance plan audit services 49,350 47,450

IT controls review 89,000 15,000

Taxation services

Taxation services 51,000 41,390

Other services

Agreed upon procedures 18,000 25,000

Remuneration advice 20,400 11,500

Total remuneration for other assurance services 358,670 278,340

Total auditor’s remuneration 1,183,470 1,082,040

The Group’s policies do not restrict PricewaterhouseCoopers from performing assignments additional to their statutory audit duties where PricewaterhouseCoopers’ expertise and experience with the Group are important. Any such engagement is subject to Audit Committee approval. These assignments are principally tax and other advice, or where PricewaterhouseCoopers is awarded assignments on a competitive basis. It is the Group’s policy to seek competitive tenders for all major consulting projects.

5. EXPENSES (CONTINUED)

Financial Report 63

6. EARNINGS PER STAPLED SECURITY

2012 2011

i. Basic and diluted earnings per stapled security 31.2 cents 24.4 cents

ii. Basic and diluted earnings per stapled security (parent entity) 20.1 cents 18.4 cents

(a) Reconciliation of earnings used in calculating earnings per stapled security

Consolidated $’000 $’000

Basic and diluted earnings per stapled security

Net profit after tax 179,966 140,620

Earnings used in calculating basic earnings per stapled security 179,966 140,620

Parent entity*

Basic and diluted earnings per stapled security

Net profit after tax 115,951 106,105

Earnings used in calculating basic earnings per stapled security 115,951 106,105

* For the purposes of earnings per stapled security, the parent entity is defined as AHL and APT.

(b) Weighted average number of stapled securities used

No. of stapled securities

No. of stapled securities

Weighted average number of ordinary securities used as the denominator in calculating basic and diluted earnings per stapled security 576,846,597 576,844,794

The weighted average number of stapled securities used for the basic and diluted earnings per stapled security calculation is the same for both the consolidated and parent calculations.



7. INCOME TAX EXPENSE

2012 2011

$’000 $’000

(a) Income tax benefit

Current tax – (531)

Deferred tax – (851)

Under/(over) provided in prior years – 531

Income tax benefit – (851)

(i) Deferred income tax expense/(credit) included in income tax credit comprises:

Increase in deferred tax assets (9,367) (8,870)

Increase in deferred tax liabilities 9,367 8,019

– (851)

(b) Numerical reconciliation of income tax credit to prima facie tax payable

Profit before income tax 203,822 166,411

Tax at the Australian tax rate of 30% (2011: 30%) 61,146 49,923

Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:

Security-based payments expense 297 650

Property trust earnings (73,435) (61,324)

Non-deductible eliminations 873 1,505

Under provision in prior years – 531

Provision against recoverability of deferred tax assets 11,707 9,000

Sundry items (588) (1,136)

Income tax benefit – (851)

(c) Non-current assets – deferred tax assets

The balance of deferred tax assets comprises temporary differences attributable to:

Provisions 16,106 28,767

Depreciable assets – 884

Deferred income 17,280 18,752

Consolidated tax losses1 42,665 36,372

Other deferred tax assets 85 728

Deferred tax assets 76,136 85,503

The balance of deferred tax liabilities comprises temporary differences attributable to:

Inventories (10,058) (22,704)

Joint ventures (27,420) (26,859)

Trust distributions (4,160) (3,232)

Other deferred tax liabilities (4,286) (2,496)

Deferred tax liabilities (45,924) (55,291)

Net deferred tax assets2 30,212 30,212

Movements in deferred tax

Opening balance at 1 January 30,212 29,361

(Under)/over provision in prior years – (531)

Credited to the income statement – 1,382

Closing balance at 31 December 30,212 30,212

1 As at 31 December 2012, the total tax losses for the AHL tax consolidated group were $164,888,975.2 Set-off of deferred tax liabilities against deferred tax assets pursuant to set-off provisions.

Financial Report 65

(d) Tax consolidation legislationAustraland Holdings Limited (‘AHL’) and its wholly-owned entities have implemented the tax consolidation legislation as of 1 January 2003. The accounting policy in relation to this legislation is set out in Note 1(t).

On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement, which in the opinion of the directors, limits the joint and several liability of the wholly-owned entities in the case of a default by the head entity, AHL.

The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate AHL for any current tax payable assumed and are compensated by AHL for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to AHL under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.

The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments.

(e) Amendments to prior year tax returnsIn November 2012, the Group received amended assessments in respect of matters relating to the 2003 – 2008 tax periods. The net amount payable is $4.3m and reflects a penalty imposed by the ATO as a result of AHL claiming deductions in an income year later than that in which they were first available. The amount payable has been provided for. The Group has objected to the amended assessment.

8. RECEIVABLES

2012 2011

$’000 $’000

Current

Trade receivables 72,954 48,965

Receivables from joint venture entities 46,181 76,614

Other receivables 24,147 16,877

Total current receivables 143,282 142,456

Non-current

Receivables from joint venture entities 50,327 40,498

Other receivables 6,168 7,503

Total non-current receivables 56,495 48,001

Total receivables 199,777 190,457

The expected timing of cash flows associated with receivables from joint venture entities has been assessed in conjunction with the detailed reviews of project feasibilities undertaken in the period. This has resulted in the forecast cash flows on a number of these balances being deferred to greater than 12 months from the balance sheet date.

(a) Impaired and past due receivablesThere were no material receivables at 31 December 2012 that were past due and impaired (2011: $Nil). No provision for these receivables was therefore required for the Group (2011: $Nil).

(b) Fair value and credit riskDue to the nature of the current and non-current receivables, their carrying amount is assumed to approximate their fair value. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. Refer to Note 3 for more information on the financial risk management policies of the Group.

7. INCOME TAX EXPENSE (CONTINUED)



9. INVENTORIES

2012 2011

$’000 $’000

Current

Cost of acquisition 164,195 245,733

Development costs 104,204 68,100

Borrowing costs 40,494 58,969

Total current inventories 308,893 372,802

Non-current

Cost of acquisition 297,889 428,302

Development costs 266,403 232,891

Borrowing costs 64,089 63,075

Total non-current inventories 628,381 724,268

Carrying amounts of inventories 937,274 1,097,070

Inventories comprise:

Land held for development and resale 437,950 516,505

Work in progress/land under development 490,667 541,530

Finished goods 8,657 39,035

Carrying amounts of inventories 937,274 1,097,070

Write down of inventories to net realisable value recognised as an expense during the year ended 31 December 2012 was $Nil (2011: $30,000,000).

10. OTHER ASSETS

2012 2011

$’000 $’000

Current

Prepayments 7,049 9,787

Non-current

Prepayments 5,069 8,177

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

2012 2011

$’000 $’000

Non-current

Interests in joint venture entities and associates 271,992 234,067

Financial Report 67

Investments in joint venture entities and associatesSet out below are the beneficial interests of the consolidated entity in joint venture entities and associates. Principal activities of the below entities were property development and management of investment properties.

(a) Carrying amounts

Direct or indirect interest in ordinary equity

2012 2011

2012 Investment

carrying amount

2011 Investment

carrying amount

% % $’000 $’000

Alberti Co-Venture 50 50 10,238 4,837

Australand Apartments No.6 Pty Ltd 50 50 (3,728) (3,172)

Australand Logistics JV 19.9 19.9 56,929 27,483

Australand Residential Trust 50 50 25,682 41,898

Australand Retail Trust 50 50 7,868 8,114

Australand Wholesale Property Fund No.6 (associate) 28 28 38,111 36,900

Baldivis Co-Venture 50 50 (2,451) (2,451)

Bluewater Co-Venture 50 – 2,201 –

Carlton Co-Venture* – 50 – 4,741

Clemton Park Co-Venture 50 50 18,857 18,950

CIP ALZ (Wellington Road) Unit Trust 50 50 4,463 4,118

CIP ALZ (BBP) Trust 50 50 1,226 1,119

CIP ALZ (Gillman) Pty Limited 50 50 1,451 1,401

CIP ALZ (MA) Trust 50 50 1,611 1,026

Commercial & Industrial Property (Pinkenba) Trust 50 50 1,133 929

Croydon Development Trust 50 50 (2,484) (1,977)

Discovery Point Co-Venture 50 50 44,025 26,955

Giffnock North Ryde Co-Venture 50 50 2,550 2,298

Lidcombe Co-Venture 50 50 13,351 12,152

Parkinson Development Co-Venture 50 50 3,378 2,688

Port Coogee Co-Venture 50 50 8,422 8,029

Port Coogee (Stage 5) Co-Venture 50 50 (4,195) (4,195)

Seaspray Co-Venture 50 50 116 (1,045)

Stage 3 Eastern Creek Co-Venture 50 50 10,667 12,925

Sunshine Co-Venture 50 50 7,241 7,125

Torquay Co-Venture 50 50 309 5

Trust Project No.9 Unit Trust 50 50 (9,732) (10,582)

Village Park Consortium 50 50 3,804 3,199

Wallan Co-Venture 50 50 4,628 8,745

Woolloomooloo Unit Trust 50 50 1,932 675

Yanchep Co-Venture 50 50 13,872 14,154

Yatala Co-Venture 50 50 10,959 7,977

Other Co-Ventures 50 50 (442) (954)

271,992 234,067

* Acquired an additional interest during the period. The results of the entity are now fully consolidated from the date of acquisition.

The investment carrying amounts are disclosed net of unrealised (profits)/losses from the establishment of joint ventures, where applicable.

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)



(b) Movement in the carrying amount of investments in joint venture entities and associates

2012 2011

$’000 $’000

Carrying amount at the beginning of the financial year 234,067 178,741

New capital invested 60,672 79,298

Reclassification to inventories and receivables from joint ventures (8,778) (6,759)

Share of profit after tax 18,703 30,162

Distributions and return of capital (38,208) (45,513)

Share of movement in hedging derivatives 627 (622)

Movements in unrealised profits from joint ventures 4,909 (2,131)

Development profit recognised through valuation of properties transferred to Australand Property Trusts – 891

Carrying amount at the end of the financial year 271,992 234,067

(c) Share of assets and liabilities in joint venture entities and associates

2012 2011

$’000 $’000

Current inventory 62,429 60,646

Non current inventory 257,007 254,223

Other current assets 59,573 61,355

Non-current assets 127,265 98,199

Total assets 506,274 474,423

Current borrowings (64,845) (27,980)

Other current liabilities (71,430) (23,312)

Non-current borrowings (53,902) (109,392)

Other non-current liabilities (237) (30,895)

Total liabilities (190,414) (191,579)

Net assets 315,860 282,844

Less: Unrealised profits from joint ventures (43,868) (48,777)

Carrying amount at the end of the financial year 271,992 234,067

(d) Share of revenues, expenses and results of joint venture entities and associates

2012 2011

$’000 $’000

Revenues 148,371 270,521

Expenses (129,668) (240,359)

Profit after tax accounted for using the equity method 18,703 30,162

Refer to Note 22 for details of contingent liabilities in relation to joint venture entities. There are no material commitments in relation to the joint ventures or associates as at 31 December 2012 (December 2011: Nil).

For all joint ventures and associates, the country of residence is Australia.

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)

Financial Report 69

12. INVESTMENT PROPERTIES

(a) Details of the individual properties comprising investment propertiesInvestment properties are 100% owned, unless otherwise stated.

Description

AcquisitionIndependent

ValuationIndependent

Valuation31 Dec 12

Book Value31 Dec 11

Book Value

Date Date $’000 $’000 $’000

658 Church Street, Richmond, VIC Oct 03 Dec 12 34,400 34,400 31,000

690 Springvale Rd and 350 Wellington Rd, Mulgrave, VIC Oct 03 Jun 11 72,500 76,600 74,329

5 Henry Deane Place, Railway Square, Sydney, NSW Oct 03 Jun 11 43,500 46,700 45,000

57-71 Platinum Street, Crestmead, QLD Oct 03 Jun 12 26,000 26,100 25,900

5-7 Trade Street, Lytton, QLD Oct 03 Jun 11 19,000 19,600 19,250

Lot 102 Coghlan Rd, Outer Harbour, SA Oct 03 Jun 11 7,700 7,800 7,700

99 Shettleston Street, Rocklea, QLD Oct 03 Dec 11 18,000 19,100 18,000

51 Stradbroke Street, Heathwood, QLD Oct 03 Dec 11 19,500 20,100 19,500

227 Walters Road, Arndell Park, NSW Oct 03 Jun 11 22,400 23,300 22,450

8 Stanton Road, Seven Hills, NSW Oct 03 Jun 11 14,500 15,000 14,750

26-30 Lee Street, Gateway Building, Sydney, NSW Oct 03 Jun 12 73,000 74,000 69,000

10 Butu Wargun Drive, Greystanes, NSW May 04 Jun 12 32,000 32,300 32,000

1B Homebush Bay Drive, Rhodes Corporate Park, Rhodes, NSW May 04 Dec 11 58,250 58,800 58,250

1D Homebush Bay Drive, Rhodes Corporate Park, Rhodes, NSW May 04 Jun 11 77,000 92,000 82,000

Tower A, 197-201 Coward Street, Mascot, NSW May 04 Dec 12 54,500 54,500 52,300

Lot 101,10 Stanton Rd, Seven Hills, NSW May 04 Jun 12 10,700 10,800 10,700

20 Thackray Road, Port Melbourne, VIC Dec 04 Dec 12 15,500 15,500 15,000

21-33 South Park Drive, Dandenong South, VIC May 05 Dec 12 17,250 17,250 17,200

50 Southbank Blvd. Southbank, VIC May 05 Jun 11 14,500 15,200 15,000

23 Scanlon Drive, Epping, VIC Jun 05 Dec 12 11,500 11,500 11,500

6 Butu Wargun Drive, Greystanes, NSW Jul 05 Dec 12 25,300 25,300 25,300

64 West Park Drive, West Park, Derrimut, VIC Aug 05 Dec 11 16,100 18,700 16,100

81-103 South Park Drive, Dandenong South, VIC Sep 05 Jun 12 9,100 9,200 9,300

35 Huntingwood Drive, Huntingwood, NSW Oct 05 Dec 11 29,500 33,600 29,500

80 Hartley Road, Smeaton Grange, NSW Oct 05 Dec 11 52,500 53,000 52,500

Tower B, 197-201 Coward St, Mascot, NSW Oct 05 Dec 11 40,000 39,900 40,000

Freshwater Place Office Tower, 2 Southbank Boulevard, Southbank, VIC (50% interest) Oct 05 Jun 12 196,500 202,600 184,000

63 South Park Drive, Dandenong, VIC Oct 05 Jun 12 11,700 11,800 11,700

47-59 Boundary Road, Carole Park, QLD Oct 05 Dec 11 10,900 11,400 10,900

22-28 Bam Wine Court, Dandenong South, VIC Oct 05 Dec 11 17,700 18,200 17,700

2 Wonderland Drive, Eastern Creek, NSW Oct 05 Dec 12 43,500 43,500 44,000

286 Queensport Road, Murarrie, QLD Oct 05 Jun 11 23,800 25,200 24,200

8 Butu Wargun Drive, Greystanes, NSW Nov 05 Jun 12 30,200 30,200 29,000

Civic Tower, 66-68 Goulburn Street, Sydney, NSW (50% interest) Dec 05 Dec 10 65,500 63,000 66,250

80 Alfred Street Milsons Point, NSW1 Dec 05 Jun 12 48,000 – 53,300

2 Douglas Street, Port Melbourne, VIC Dec 05 Jun 12 23,000 23,000 23,000

468 Boundary Road, West Park, Derrimut, VIC Jun 06 Jun 11 21,250 21,400 21,500

98-126 South Park Drive, Dandenong, VIC Oct 06 Dec 12 17,750 17,750 18,000



Description

AcquisitionIndependent

ValuationIndependent

Valuation31 Dec 12

Book Value31 Dec 11

Book Value

Date Date $’000 $’000 $’000

97 School Street, Spring Hill, QLD Feb 07 Dec 11 9,400 9,000 9,400

111 Darlinghurst Road, Kings Cross, NSW2 Apr 07 Dec 11 70,000 – 70,000

44 Cambridge Street, Rocklea, QLD Oct 07 Dec 12 16,000 16,000 18,000

25-29 Jets Court, Melbourne Airport Business Park, Tullamarine, VIC Dec 07 Jun 12 11,250 11,265 11,250

Vanessa Road, Cambellfield, VIC Dec 07 Dec 10 6,850 6,950 7,300

18-20 Butler Boulevard, Burbridge Business Park, Adelaide Airport, SA Jan 08 Jun 12 8,900 8,900 8,900

Spring Valley Business Park, 610 Heatherton Road, Clayton South, VIC Apr 08 Jun 12 25,200 25,300 25,200

115-121 South Centre Rd, Melb Airport, Tullamarine, VIC May 08 Jun 12 6,000 6,000 6,000

8 Distribution Place, Seven Hills, NSW May 08 Jun 12 18,500 18,600 18,250

Rhodes Corporate Park (Childcare)

1 Homebush Bay Drive, Rhodes, NSW Jun 08 Jun 11 3,100 3,500 3,300

Rhodes Corporate Park (Café & Car Wash)

1 Homebush Bay Drive, Rhodes, NSW Jun 08 Jun 11 2,500 2,300 2,300

Boundary Rd cnr. West Park Dr, Derrimut, VIC Aug 08 Dec 12 8,250 8,250 12,500

28-32 Sky Road East, Melb Airport Bus Park, Melb Airport, Tullamarine, VIC Aug 08 Dec 12 8,000 8,000 8,000

BBP2, 5 Butler Blvd, Adelaide Airport, SA Sep 08 Dec 12 7,900 7,900 7,750

94 South Centre Rd, Melbourne Airport Business Park, East Tullamarine, VIC Sep 08 Jun 12 22,250 22,250 22,250

28 Southbank Boulevard, Southbank, VIC – FW28 (50% interest) Dec 08 Dec 11 109,000 116,000 109,000

63 & 99 Sandstone Place, Parkinson, QLD Dec 08 Dec 12 165,500 165,500 124,755

Hudswell Road, Perth Airport, WA Feb 09 Dec 11 24,250 24,000 24,250

17-23 Jets Court, Melb Airport Bus Park, Tullamarine, VIC Apr 09 Dec 11 7,200 7,200 7,200

Greens Rd & South Park Dr, Dandenong, VIC Apr 09 Jun 11 11,200 12,000 11,500

96-106 Link Road, Melbourne Airport Business Park, Tullamarine, VIC Jun 09 Dec 11 26,400 26,395 26,400

BBP4, 20-24 Butler Blvd, Adelaide Airport, SA Aug 09 Jun 12 9,800 9,800 9,800

Lot 2, Inner Circle, Port Kembla, NSW Sep 09 Jun 12 21,800 21,800 21,800

260 Earnshaw Rd., Northgate, QLD Dec 09 Dec 12 46,500 46,500 45,200

Part Lot 192 and 193 Cnr Robinsons Road, Sunline and Saintly Drives, West Park Industrial Estate, Derrimut, VIC Apr 11 Jun 11 23,500 24,400 23,700

99 Station Road, Seven Hills, NSW Mar 11 Jun 11 14,400 15,000 14,500

144-166 Atlantic Drive, Keysborough, VIC Sep 11 Dec 11 26,700 27,500 26,700

49-71 Pacific Drive, Keysborough, VIC Dec 11 Dec 11 22,000 22,700 22,000

357 Collins Street, Melbourne, VIC^^ Dec 12 Dec 12 180,868 180,868 –

Other properties Various Various 1,316 1,224 1,667

Subtotal 2,173,402 2,015,951

1 Property held for sale at book value of $49,000,000 at 31 December 2012. 2 Property held for sale at book value of $65,000,000 at 31 December 2012.^^ Under development in 2011.

12. INVESTMENT PROPERTIES (CONTINUED)

(a) Details of the individual properties comprising investment properties (continued)

Financial Report 71

Properties under Development

Description

31 Dec 12 Book Value

31 Dec 11 Book Value

$’000 $’000

357 Collins Street, Melbourne, VIC – 112,771

Rhodes F, Homebush Bay Drive, Rhodes Corporate Park, Rhodes, NSW 72,722 26,420

Pacific Drive, Keysborough, VIC 26,457 9,992

Lot 1, 14-28 Flint St & 374 Boundary Rd, Inala, Qld 13,462 9

Subtotal 112,641 149,192

Total investment properties 2,286,043 2,165,143

Valuation BasisThe value of investment properties is measured on a fair value basis being the amounts for which the properties could be exchanged between knowledgable, willing parties in an arm’s length transaction. A ‘willing seller’ is not a forced seller prepared to sell at any price. The best evidence of fair value is given by current prices in an active market for similar property in the same location and condition and subject to similar leases.

The fair value of investment property has been updated to reflect market conditions at the end of the reporting period. While this represents best estimates as at the balance sheet date if investment property is sold in the future the price achieved may be higher or lower than the most recent valuation.

At 31 December 2012, the Group had a portfolio of 69 properties including 3 properties under development. Independent valuations were undertaken on approximately 55% of income producing assets (by value) in the twelve months to 31 December 2012. In assessing the value of the investment properties, the independent valuers considered valuations using both the capitalisation approach and discounted cash flows. Properties that are not independently valued at 31 December 2012 are carried at fair value determined by directors’ valuations.

The average market capitalisation rate of the investment property portfolio at 31 December 2012 was 8.09% (Industrial properties: 8.59%; Office properties: 7.58%) and at 31 December 2011 was 8.34% (Industrial properties: 8.72%; Office properties: 7.92%). These metrics exclude assets classified as held for sale or under development.

A reconciliation of the carrying amounts of investment properties at beginning and end of the current financial year is set out below:

Reconciliation of investment properties:

2012 2011

$’000 $’000

Opening balance at 1 January 2,165,143 2,115,755

Acquisition and development costs 169,065 191,864

Net gains from fair value adjustments 54,520 61,525

Disposals (330) (133,250)

Transfer (to)/from investment properties held for sale (114,000) (72,065)

Net movement in lease incentives 11,645 1,314

Closing balance at 31 December 2,286,043 2,165,143


(a) Details of the individual properties comprising investment properties (continued)



(b) Leasing arrangementsThe investment properties are leased to tenants under long term operating leases. Rentals are receivable from the tenants monthly.

Minimum lease payments under non-cancellable operating leases of investment properties not recognised in the financial statements are receivable as follows:

2012 2011

$’000 $’000

Within one year 167,562 193,254

Later than one year but not later than 5 years 597,145 764,562

Later than 5 years 449,354 377,845

Total 1,214,061 1,335,661

(c) Assets pledged as securityThere are no assets that have been pledged as security as at 31 December 2012 (December 2011: Nil).

(d) Amounts recognised in profit and loss for investment property

2012 2011

$’000 $’000

Rental income (including recoverable outgoings) 213,613 204,641

Investment property expenses (38,864) (37,968)

Net amount recognised in profit and loss for investment property 174,749 166,673

(e) Investment properties held for sale

Description

2012 Book Value

2011 Book Value

$’000 $’000

Crest Hotel, Kings Cross, NSW1 65,000 –

80 Alfred Street, Milsons Point, NSW1 49,000 –

Lot 122 Wonderland Drive, Eastern Ck, NSW2 – 72,065

Total investment properties held for sale 114,000 72,065

1 There are unconditional contracts for the sale of these properties, with settlement to occur during 2013.2 This property was sold to the Australand Logistics Joint Venture with Government Investment Corporation of Singapore on 7 February 2012.

13. PLANT AND EQUIPMENT

2012 2011

$’000 $’000

Furniture and fittings at cost 10,581 9,823

Less: accumulated depreciation (5,425) (4,369)

Total carrying value 5,156 5,454

Computer hardware at cost 2,839 2,622

Less: accumulated depreciation (1,783) (786)


Computer software at cost 44,800 35,559

Less: accumulated depreciation (16,649) (14,038)


Net book value 34,363 28,811


Financial Report 73

Reconciliation of the carrying amount of plant and equipment and computer equipment at the beginning and end of the current and previous financial year are set out below:

Furniture & Fittings

Computer hardware

Computer software Total

2012 $’000 $’000 $’000 $’000

Carrying amount at 1 January 2012 5,454 1,836 21,521 28,811

Additions 758 217 9,142 10,117

Depreciation charge (1,056) (997) (2,512) (4,565)

Carrying amount at 31 December 2012 5,156 1,056 28,151 34,363

Furniture & Fittings

Computer hardware

Computer software Total

2011 $’000 $’000 $’000 $’000

Carrying amount at 1 January 2011 2,744 874 7,931 11,549

Additions 3,562 1,476 15,572 20,610

Depreciation charge (852) (514) (1,982) (3,348)

Carrying amount at 31 December 2011 5,454 1,836 21,521 28,811

14. DERIVATIVE FINANCIAL INSTRUMENTS

2012 2011

$’000 $’000

Non-current assets

Cross currency interest rate swaps – fair value hedges 21,715 24,263

Current liabilities

Interest rate swap contracts – cash flow hedges – (781)

Interest rate derivatives – fair value through profit or loss (33,764) (23,230)

Total current derivative financial instruments (33,764) (24,011)

Non-current liabilities

Interest rate swap contracts – cash flow hedges (86,632) (50,921)

Interest rate derivatives – fair value through profit or loss (2,063) (1,922)

Total non-current derivative financial instruments (88,695) (52,843)

Total derivative financial instruments (100,744) (52,591)

Derivative financial instruments are used by the Group to hedge exposure to interest rate risk associated with movements in interest rates, and to foreign exchange risk associated with movements in the US dollar, which impact on the borrowings of the Group. Other interest rate derivatives such as callable swaps are used to manage the cost of funding.

Cross currency interest rate swapsDuring 2011, the Group issued US$170m of guaranteed senior notes through the US Private Placement debt market (USPP). It is the Group’s policy to fully protect debt sourced overseas from exposure to volatility in exchange rates. Accordingly, the Group has entered into cross currency interest rate swap contracts under which it is obliged to pay interest at variable rates in Australian dollars (AUD) and to pay interest at fixed rates in United States dollars (USD). This debt is hedged by a combination of fair value and cash flow hedges.

The USD components of the cross currency interest rate swaps are structured to provide USD necessary to pay the semi annual coupons on the USPP to maturity. The settlement dates coincide with the dates on which interest is payable on the underlying debt. The AUD components of the cross currency interest rate swaps are paid on a floating rate basis every 90 days.

The fair value of the cross currency interest rate swaps at 31 December 2012 was a non-current asset of $21,715,000 (2011: $24,263,000), which offsets the fair value adjustments included in the carrying value of the US Private Placement borrowings (refer to Note 16).

13. PLANT AND EQUIPMENT (CONTINUED)



Interest rate swap contractsIt is the Group’s policy to protect an appropriate portion of interest bearing debt from exposure to volatility in interest rates. Accordingly, the Group has entered into interest rate swap contracts under which it is obliged to receive interest at variable rates and to pay interest at fixed rates.

The contracts are settled on a net basis and the net amount receivable or payable at the reporting date is included in other receivables or other payables. The contracts require settlement of net interest receivable or payable each 90 days. The settlement dates coincide with the dates on which interest is payable on the underlying debt.

At 31 December 2012, including the impact of interest rate swaps, 81% (2011: 72%) of the gross debt outstanding was at fixed interest rates. The fixed interest rates on swaps range between 4.0% and 6.7% (2011: 4.1% and 6.7%).

At 31 December 2012, the notional principal amounts and periods of expiry of interest rate swap contracts (including forward swap contracts) and callable swaps are as follows:

2012 2011

$’000 $’000

Less than 1 year 450,000 550,000

1 – 2 years 100,000 –

2 – 3 years 400,000 –

3 – 4 years 250,000 500,000

4 – 5 years 130,000 250,000

More than 5 years 480,000 330,000

1,810,000 1,630,000

The gain or loss from remeasuring the cash flow hedging instruments at fair value is recognised in other comprehensive income and deferred in equity in the hedging reserve, to the extent that the hedge is effective, and reclassified into profit and loss when the hedged interest expense is recognised.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

The movement in the fair value of interest rate derivatives such as callable swaps which do not qualify as a hedge for accounting purposes are recognised directly in the income statement. In addition, the ineffective portion of cash flow hedges is also recognised in the income statement. The total fair value amount recognised in the income statement is $13,421,000 (2011: $24,193,000).

No previously hedged instruments have become ineffective during the period and there is no ineffectiveness on currently hedged instruments.

15. PAYABLES

2012 2011

$’000 $’000

Current

Trade and other payables 80,339 72,038

14. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

Financial Report 75

16. BORROWINGS

2012 2011

$’000 $’000

Current

Bank facilities – unsecured 100,000 -

Total current borrowings 100,000 -

Non-current

Bank facilities – unsecured 1,065,000 1,195,000

US Private Placement 187,889 186,810

Total non-current borrowings 1,252,889 1,381,810

Total borrowings 1,352,889 1,381,810

Drawn amount Facility limit

2012 2011 2012 2011

Security Maturity Date $’000 $’000 $’000 $’000

Syndicated Facility Unsecured Sept 2013 100,000 – 100,000 –

Syndicated Facility Unsecured July 2014 350,000 – 350,000 –

Syndicated Facility Unsecured Sept 2015 40,000 – 200,000 –

Syndicated Facility Unsecured May 2017 – – 200,000 –

Syndicated Facility Unsecured Jun 2013 – 520,000 – 650,000

Syndicated Facility Unsecured Jun 2014 – – – 325,000

Syndicated Facility Unsecured Jan 2015 303,750 303,750 303,750 303,750

Syndicated Facility Unsecured Sept 2016 371,250 371,250 371,250 371,250

US Private Placement2 Unsecured May 2021 154,692 153,804 154,692 153,804

US Private Placement2 Unsecured May 2023 33,197 33,006 33,197 33,006

1,352,889 1,381,810 1,712,889 1,836,810

The Group also had access to additional unsecured facilities totalling $167,880,000 (2011: $181,146,000), for financial bank guarantees, performance bank guarantees and insurance bonds of $18,500,000 (2011: $10,000,000), $78,500,0001 (2011: $100,000,000), and $70,880,000 (2011: $71,146,000) respectively.

1. The Group has access to a $50,000,000 facility (included as a performance bank guarantee above) that can be utilised wholly for performance bank guarantees or up to $25,000,000 for financial bank guarantees.

2. The drawn and facility limits associated with the US private placement include fair value adjustments of $25,232,000 (2011: $24,263,000).

Details of the amounts utilised in relation to guarantees and bonds are included in Note 22.

There are no assets that have been pledged as security (December 2011: Nil).

Risk ExposuresDetails of the Group’s exposure to risks arising from borrowings are set out in Note 3.

Fair value disclosuresDetails of the fair value of borrowings for the Group are set out in Note 27.



17. PROVISIONS

2012 2011

$’000 $’000

Current

Dividends/distributions 69,046 70,058

Employee benefits 4,872 4,771

Other 19,165 17,122

Total current provisions 93,083 91,951

Non-current

Employee benefits 5,942 4,870

Total non-current provisions 5,942 4,870

ReconciliationsReconciliations of the carrying amounts of each class of provision, except for employee entitlements provision, are set out below:

(i) Dividends/distributions

2012 2011

$’000 $’000

Carrying amount at beginning of financial year 70,058 67,278

Interim and final dividends/distributions provided for during the year 147,878 150,642

Payments made during the year (148,890) (147,862)

Carrying amount at end of financial year 69,046 70,058

(ii) Other provisions The provisions below relate to amounts recognised in relation to legal, property, lease and other expenditure where there is uncertainty regarding the timing or amount required to settle the obligation.

Property provisions

Provision for legals 2012

$’000 $’000 $’000

Carrying amount at beginning of financial year 13,620 3,502 17,122

Charged to the income statement 13,905 1,500 15,405

Utilised (11,900) (1,462) (13,362)

Carrying amount at end of financial year 15,625 3,540 19,165

18. LAND VENDOR LIABILITIES

2012 2011

$’000 $’000

Current

Land vendor liabilities 33,451 32,723

Non-current

Land vendor liabilities 11,564 27,088

The deferred payment terms for land vendor liabilities are disclosed in accordance with Note 1(m). The amount owing to some land vendors is secured over the properties being purchased until the balance of the purchase monies has been paid or settlement of the acquisition has occurred.

Financial Report 77

19. EQUITYAustraland is a stapled entity in which the securityholders hold direct interests and an equal number of securities in each of AHL, APT, APT4 and APT5 (collectively Australand Property Group).

AHL is identified as the acquirer of APT and the parent and the results and net assets of AHL and APT are combined when presenting the consolidated financial statements.

However, as the stapling of APT4 and APT5 occurred after the introduction of IFRS, APT has been identified as the acquirer and the results and equity of APT4 and APT5 are presented as non-controlling interest in the consolidated financial statements on the basis that neither APT nor AHL has obtained an ownership interest as a result of the stapling.

All benefits and risks of ownership and operations of APT, APT4 and APT5 flow through to the consolidated result of AHL and its controlled entities and form part of the profit attributable to stapled securityholders. Accordingly, whilst the results and equity of APT4 and APT5 are disclosed as non-controlling interest, the stapled securityholders of AHL and APT are the same as the stapled securityholders of APT4 and APT5.

(a) Capital, reserves and retained profits

2012 2011

$’000 $’000

Capital and reserves attributable to stapled security holders as:

Stapled security holders interest in the Group 2,015,168 1,997,346

Equity holders of AHL and APT

Contributed equity (e) 1,741,986 1,742,001

Reserves (b) (80,405) (42,306)

Accumulated losses (c) (86,809) (107,748)

Parent interest 1,574,772 1,591,947

Equity holders of other stapled entities – APT4 and APT5 (non-controlling interest)

Contributed equity (e) 379,855 379,863

Reserves (b) (10,601) (10,601)

Retained profits (c) 71,142 36,137

Equity holders of other stapled entities – APT4 and APT5 (non-controlling interest) 440,396 405,399

(b) Reserves

(i) Hedging reserve

Hedging reserve (cash flow hedges) – AHL and APT (87,895) (52,712)

(ii) Share based payments reserve

Share based payments reserve – AHL and APT 7,490 10,406

(80,405) (42,306)

(iii) Capital redemption reserve

Capital redemption reserve – APT4 and APT5 (10,601) (10,601)

Total reserves – stapled security holders (91,006) (52,907)

Movements in above stapled security holders reserves comprise:

(i) Hedging reserve – cash flow hedges

Balance 1 January (52,712) (146)

Share of changes in the fair value of hedges of joint ventures and associates 627 (609)

Changes in fair value of cash flow hedges (35,810) (51,957)

Balance 31 December (87,895) (52,712)



2012 2011

$’000 $’000

(ii) Share-based payments reserve

Balance 1 January 10,406 8,240

Payment to satisfy vested PRP entitlement (3,905) (109)

Expense relating to share based payments 989 2,275

Balance 31 December 7,490 10,406

(iii) Capital redemption reserve

Balance 1 January and 31 December (10,601) (10,601)

(c) (Accumulated losses)/retained profits

Equity holders of AHL and APT (86,809) (107,748)

Other stapled entities

– Australand Property Trust No.4 60,915 30,581

– Australand Property Trust No.5 10,226 5,556

71,142 36,137

Stapled security holders interest in accumulated losses (15,667) (71,611)

Movements in above total stapled security holders interests in (accumulated losses):

Balance 1 January (71,611) (88,231)

Net profit attributable to the stapled security holders of Australand 179,966 140,620

Dividends/distributions (Note 20) (124,022) (124,000)

Balance 31 December (15,667) (71,611)

(d) Nature and purpose of reserves

(i) Hedging reserve – cashflow hedgesThe hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised in other comprehensive income, as described in Note 1(r). Amounts are reclassified to profit and loss when the associated hedged transaction affects profit and loss.

(ii) Share-based payments reserveThe share-based payments reserve is used to recognise the fair value of options or performance rights granted.

(iii) Capital redemption reserveThe capital redemption reserve arises in APT4 and APT5 as a result of the redemption of unit holders stapling with AHL and APT.

19. EQUITY (CONTINUED)

(b) Reserves (continued)

Financial Report 79

(e) Movements in contributed equity – 2012

Date DetailsNumber of securities

Issue price

$ $’000

1 Jan 12 Balance at beginning of financial year 576,629,615 2,121,864

ESOP (Employee Securities Option Plan) – – (23)

31 Dec 12 Balance at end of financial year1 576,629,615 2,121,841

Balance at end of financial year is attributable to:

Equity holders of AHL and APT 1,741,986

Equity holders of other stapled entities (APT4 and APT5) 379,855

Total contributed equity 2,121,841

1 The total number of securities at 31 December 2012 is 576,846,597. The difference relates to securities held in trust to satisfy future performance rights plans.

Movements in contributed equity – 2011

Date DetailsNumber of securities

Issue price

$ $’000

1 Jan 11 Balance at beginning of financial year 576,480,847 2,121,765

Exercise of options 9,400 1.10 10

ESOP (Employee Securities Option Plan) 139,368 – 89

31 Dec 11 Balance at end of financial year1 576,629,615 2,121,864

Balance at end of financial year is attributable to:

Equity holders of AHL and APT 1,742,001

Equity holders of other stapled entities (APT4 and APT5) 379,863

Total contributed equity 2,121,864

1 The total number of securities at 31 December 2011 is 576,846,597. The difference relates to securities held in trust to satisfy future performance rights plans.

(f) Stapled securitiesStapled securities entitle the holder to receive dividends/distributions and the proceeds on any winding up of the consolidated entity in proportion to the number of and amounts paid on the stapled securities held. On a show of hands, every holder of stapled securities present at a meeting of stapled security holders in person or by proxy, is entitled to one vote, and upon a poll each stapled security is entitled to one vote.

19. EQUITY (CONTINUED)



20. DIVIDENDS/DISTRIBUTIONSDistributions recognised in the current year by APT, APT4 and APT5 are:

2012Payment per

stapled security

Total AmountDate of

PaymentTax Rate for

Franking CreditPercentage

Franked$’000

Units

Interim distribution 10.5 cents 60,569 7 August 2012 – –

Final distribution 11.0 cents 63,453 8 February 2013 – –

Total distribution 21.5 cents 124,022

No dividends were paid in relation to the ordinary shares in the year ended 31 December 2012.The Australand Dividend/Distribution Reinvestment Plan (DRP) is currently suspended.

2011Payment per

stapled security

Total AmountDate of

PaymentTax Rate for

Franking CreditPercentage

Franked$’000

Units

Interim distribution 10.5 cents 60,569 4 August 2011 – –

Final distribution 11.0 cents 63,452 16 February 2012 – –

Total distribution 21.5 cents 124,021

No dividends were paid in relation to the ordinary shares in the year ended 31 December 2011.Total distributions shown above are $124,021,000. The total amount of distributions for the year as shown in Note 19 is $124,000,000. The difference between these amounts relates to the Employee Securities Ownership Plan dividends and distributions, which are applied against outstanding ESOP loan balances.

Franking credits

2012 2011

$’000 $’000

Franking credits available for subsequent financial years based on a tax rate of 30% (2011: 30%) 59,009 60,060

Franking credits are available at the 30% corporate tax rate after allowing for tax payable in respect of the current period’s profit and payment of proposed dividends. The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.

The above amounts represent the balances of the franking accounts as at the end of the financial period, adjusted for:

a) franking credits that will arise from the payment of any tax liability;

b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and

c) franking credits that may be prevented from being distributed in subsequent financial years.

Financial Report 81

21. ASSETS HYBRID EQUITY

2012 2011

$’000 $’000

Share capital 268,658 268,658

ASSETS hybrid equity relates to the contributed equity in the ‘Australand ASSETS Trust’. ASSETS are perpetual instruments that can be redeemed by the Group at any time. These instruments attract a distribution rate of 4.80% above the three month bank bill swap reference rate on the first business day of the March, June, September and December quarters.

22. CONTINGENCIESDetails and estimated maximum amounts of contingent liabilities (for which no amounts are recognised in the financial statements) are as follows:

(a) The Group has given indemnities for land development contract performance in the form of bank guarantees and insurance bonds.

2012 2011

$’000 $’000

Performance bank guarantees outstanding 36,158 45,283

Financial bank guarantees 1,553 2,749

Insurance bonds outstanding 54,809 51,220

92,520 99,252

The Group has also provided commercial guarantees and indemnities to some of its joint venture entities. At 31 December 2012 the Group’s share of financial and performance guarantees were $17,580,000 (2011: $18,255,000) and $Nil (2011: $Nil), respectively.

(b) In the ordinary course of business, the Group provides rental guarantees to tenants and owners of various commercial, industrial and residential buildings, which the Group is developing or has completed. These arrangements require the Group to guarantee the rental income of these properties for certain periods of time. Based on the current lease commitments, together with the allowances made within the development budgets for these property developments adequate allowance has been made in the financial statements for these potential obligations.

(c) In the ordinary course of business, the Group becomes involved in litigation, some of which falls within the Group’s insurance arrangements. Whilst the outcomes are uncertain, these contingent liabilities are not considered to be material to the Group.

(d) Due to the nature of the Group’s operations, which can involve complex financing structures and joint venture arrangements, the Australian Tax Office (ATO) periodically reviews and queries the taxation treatment of various transactions, which could result in additional tax being levied.



23. INVESTMENTS IN CONTROLLED ENTITIESSet out below are the AHL, APT, APT4 and APT5 material controlled entities to which these consolidated financial statements relate. The beneficial interest in all controlled entities is 100% (2011: 100%) except Australand Kellyville Pty Limited which is 99%. AHL, APT, APT4 and APT5 and all their respective controlled entities were incorporated in Australia with the exception of Australand HK Company Limited which was incorporated in Hong Kong.

Particulars in relation to material controlled entities

Controlled entities excluding those incorporated or formed during current financial year

Equity holding

Notes

2012 2011

% %

111 Darlinghurst Road Pty Ltd * 100 100

ACN 085 799 695 Pty Limited * 100 100

AHL (Perth) Pty Limited * 100 100

AHL Real Estate (Vic) Pty Limited * 100 100

AHL Real Estate Pty Limited * 100 100

Apartment Project (Non-MOF) No. 4 Unit Trust * 100 100

APT Altona Toll Trust * 100 100

APT (Beverely No.1) Trust * 100 100

APT (Collins St No.1) Trust * 100 100

APT Clayton South No. 1 Unit Trust * 100 100

APT (Derrimut No.2) Trust * 100 100

APT Eastern Creek No. 1 Unit Trust * 100 100

APT (Eastern Creek No. 2) Trust * 100 100

APT (Keysborough No.1) Trust * 100 100

APT (Keysborough No.2) Trust * 100 100

APT Keysborough Subsidiary Trust * (a) – 100

APT Logistics Trust * 100 100

APT (Northgate No. 1) Trust * 100 100

APT NSW Commercial Units Trust * 100 100

APT (Parkinson No.2) Trust * 100 100

APT (Port Kembla No. 1) Trust * 100 100

APT Rhodes No. 1 Unit Trust * 100 100

APT Rhodes F Unit Trust * 100 100

APT Seven Hills No. 2 Unit Trust * 100 100

APT Seven Hills No. 5 Unit Trust * 100 100

APT Spring Hill No. 1 Unit Trust * 100 100

APT Tullamarine No. 1 Unit Trust * 100 100

Australand APT Holdings (Campbellfield No. 1) Trust * 100 100

Australand Baldivis West Pty Limited (formerly Australand Port Melbourne Pty Limited) * 100 100

Australand C&I (Baulkham Hills No. 1) Trust * 100 100

Australand C&I Land Holdings (Altona No.1) Trust* 100 100

Australand C & I Land Holdings (Campbellfield No. 1) Trust * 100 100

Australand C & I Land Holdings (Dandenong No. 1) Trust * 100 100

Australand C&I Land Holdings (Eastern Creek Stage 4 No.1) Trust* 100 100

Australand C & I Land Holdings (Keysborough) Trust * 100 100

Australand C&I Land Holdings (Larapinta No.1) Trust* 100 100

Australand Cambridge Street Unit Trust * 100 100

Australand Carlton Pty Limited* 100 100

Financial Report 83


Equity holding

Notes

2012 2011

% %

Australand Car Park Trust * 100 100

Australand Car Park Operations Pty Limited* 100 100

Australand CE Pty Limited * 100 100

Australand Consolidated Investments Pty Limited * 100 100

Australand Constructions Pty Limited * 100 100

Australand Corporation (NSW) Pty Limited * 100 100

Australand Corporation (Qld) Pty Ltd * 100 100

Australand Developments (NSW) Pty Limited * 100 100

Australand Duntroon Pty Limited * 100 100

Australand Finance Limited 100 100

Australand Funds Management Limited 100 100

Australand HK Company Limited 100 100

Australand Industrial No. 101 Trust * 100 100

Australand Industrial No.16 Pty Limited * 100 100


Australand Industrial No. 46 Pty Limited * 100 100




Australand Industrial No. 101 Trust (No. 2) * 100 100

Australand Industrial No. 101 Trust (No. 3) * 100 100




Australand Industrial Constructions Pty Limited * 100 100

Australand Investments Limited 100 100

Australand Jets Court Unit Trust (No. 1) (formerly Australand Jets Court Spec Unit Trust) * 100 100

Australand Jets Court Unit Trust (No. 2) * 100 100

Australand Kellyville Pty Limited * 99 99

Australand Northshore Pty Limited * 100 100

Australand Management Services Pty Limited * 100 100

Australand Omeo Finance Pty Limited * 100 100

Australand Parkinson Trust * 100 100

Australand Property Group Pty Limited 100 100

Australand Property Holdings (Collins St No. 1) Pty Limited * 100 100

Australand Property Management (Vic) Pty Limited * 100 100

Australand Queensland Constructions Pty Limited (formerly Australand Industrial and Logistics International Pty Limited) * 100 100

Australand Retail JV Trust * 100 100

Australand (SYJC) No. 2 Pty Limited * 100 100

Australand Port Melbourne Unit Trust * 100 100

Australand Property Limited 100 100

Australand Property Management (NSW) Pty Limited (formerly Australand Industrial No. 114 Pty Limited) * 100 100

23. INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)




Equity holding

Notes

2012 2011

% %

Australand Property Trust 100 100

Australand Property Trust No. 4 100 100

Australand Property Trust No. 5 100 100

Australand Residential Ashlar Unit Trust * 100 100

Australand Residential Burwood Unit Trust * 100 100

Australand Residential Cranbourne Unit Trust * 100 100

Australand Residential No. 126 Pty Limited * 100 100




Australand Sovereign Hotel Unit Trust * 100 100

Australand Stage 3B Partner Trust * 100 100

Australand Stage 3C Partner Trust * 100 100

Australand Torquay No. 2 Pty Limited (formerly Australand Port Coogee Pty Limited) * 100 100

Australand Valley Park Pty Limited * 100 100

Australand W9 & 10 Stage 4B Pty Limited * 100 100

Australand West Park No. 1 Pty Limited * 100 100

Australand West Park No. 1 Trust * 100 100

Australand West Park No. 2 Pty Limited * 100 100

Australand West Park Truganina Trust * 100 100

Australand Wholesale Holdings Pty Limited * 100 100

Australand Wholesale Investments (Custodian) Pty Limited * 100 100

Australand Wholesale Investments No.5 Pty Limited * 100 100

Australand Wholesale Property Trust No. 6 * 100 100

AWPT3 Greystanes Holding Trust No. 1 * 100 100

AWPT3 Greystanes Holding Trust No. 2 * 100 100

AWPT 4 No. 4 Holding Trust * 100 100

AWPT 4 NSW Holding Trust No.1 * 100 100

AWPT 4 NSW Holding Trust No.2 * 100 100

AWPT 5 Holding Trust No. 3 * 100 100



AWPT 5 Intermediate Trust * 100 100

Bayslore Pty Limited * 100 100

Berwick Retail Trust * 100 100

Blacktown Residential Unit Trust * 100 100

Burbridge Investment Trust * 100 100

Burbridge Park Industrial Trust B * 100 100

Burbridge Park Industrial Trust C * 100 100

Burbridge Park Industrial Trust D * 100 100

Chatswood Unit Trust * 100 100

Civic Tower Trust * 100 100

Discovery Point Pty Limited * 100 100


Financial Report 85


Equity holding

Notes

2012 2011

% %

Duntroon Street Unit Trust * 100 100

Eastern Creek Investment Trust No. 2 * 100 100

Eastern Creek No. 1 Unit Trust * 100 100

Elizabeth Street Melbourne Pty Limited * 100 100

Freshwater Holding Trust No. 2 * 100 100

Freshwater Holding Trust No. 5 * 100 100

Freshwater Office Trust No. 2 * 100 100

Freshwater Residential Pty Limited * 100 100

Freshwater Stage 4 No. 2 Unit Trust * 100 100

Freshwater Stage 4 Unit Trust * 100 100

Greystanes Investment Trust No. 4 * 100 100

Greystanes Investment Trust No. 5 * 100 100

Greystanes No. 1 Unit Trust * 100 100

Greystanes No. 2 Unit Trust * 100 100

Healesville Investment Trust * 100 100

Healesville Retail Trust * 100 100

Henry Deane Building Trust * 100 100

Horrie Miller Drive Unit Trust * 100 100

Huntingwood Trust * 100 100

Industrial Project No. 2 Unit Trust * 100 100




Jacday Pty Limited * 100 100

Jeraspell Pty Limited * 100 100

Kilsyth Investment Trust * 100 100

Macleay Apartment Holdings Limited * 100 100

Mascot No. 1 Unit Trust * 100 100

Mt Derrimut Unit Trust * 100 100

No. 9 Stradbroke Street Unit Trust * 100 100

Outer Harbour Unit Trust * 100 100

PDI (Qld) Pty Limited * 100 100

PDI Pty Limited * 100 100

Platinum Street Trust * 100 100

Port Catherine Developments Pty Ltd * 100 100

Queensport Road Unit Trust * 100 100

Rhodes Investment Trust * 100 100

Rhodes No. 8 Unit Trust * 100 100

Rhodes No. 9 Unit Trust * 100 100

Smeaton Grange Trust * 100 100

South Park Industrial Trust A * 100 100

South Park Industrial Trust B * 100 100





Equity holding

Notes

2012 2011

% %

South Park Investment Trust * 100 100

South Park Unit Trust * 100 100

South Park No. 2 Unit Trust * 100 100

South Park No. 116 Trust (No. 1) * 100 100

South Park No. 125 Trust * 100 100

Stanton Road No. 1 Unit Trust * 100 100

Stanton Road No. 2 Unit Trust * 100 100

The Gateway Building Trust * 100 100

Trade Street Unit Trust * 100 100

Trust Project No. 11 Unit Trust * 100 100

Tullamarine Investment Trust * 100 100

Tullamarine No. 1 Unit Trust * 100 100

Twenty8 Freshwater Place Unit Trust * 100 100

Walters Road Unit Trust * 100 100

West Park Investment Trust * 100 100

West Park Investment Trust No. 2 * 100 100

West Park No. 116 Trust (No. 1) * 100 100

West Park No. 118 Trust * 100 100

West Park Industrial Trust A * 100 100

394 Collins Street Unit Trust * 100 100

* Controlled entity not separately audited as it is a small proprietary company or trust not required to prepare financial statements.

(a) Entities wound up during the year.

Entities formed during the year and wholly owned at balance date Date formed

Interest held

%

Australand Industrial No. 68 Pty Limited 13 Jan 2012 100

Nexus Apartments Pty Limited 31 July 2012 100

APT (Inala/Richlands No. 1) Trust 22 Dec 2012 100


Financial Report 87

24. KEY MANAGEMENT PERSONNEL DISCLOSURES

(a) Key management personnel compensation

2012 2011

$ $

Short term employee benefits 6,499,727 6,290,499

Post employment benefits 202,230 174,809

Other long term employee benefits 58,085 56,916

Security based payments 1,178,785 1,112,353

Total 7,938,827 7,634,577

Detailed remuneration disclosures are provided in section 10 of the Remuneration Report on pages 38 to 40.

(b) Equity instrument disclosures relating to key management personnel

(i) Australand, CapitaLand Options* and Performance RightsDetails of options and performance rights provided as remuneration, together with the terms and conditions, can be found in the Remuneration Report on pages 29 to 41.* CapitaLand Limited is the ultimate parent entity (Note 26).

(ii) Australand optionsThe number of options over ordinary securities in Australand held during the financial year by each director and other key management personnel of AHL, including their personally related parties, are set out below:

Directors of Australand Holdings Limited2012

No directors held options over Australand securities in 2012.

2011

No directors held options over Australand securities in 2011.

Other key management personnel2012

No key management personnel held options over Australand securities in 2012.

2011

NameBalance at

start of year

Granted during the

year Exercised LapsedOther

ChangesBalance at end of year

Vested and exercisable Unvested

Sean McMahon 1,800 – – (1,800) – – – –

No other key management personnel held options over Australand securities.

(iii) Australand stapled securitiesThe number of Australand stapled securities held during the financial year by each director and other key management personnel of Australand Holdings Limited, including their personally related parties, are set out below:

Directors of Australand Holdings Limited

2012

NameBalance at

start of yearReceived during the year

on exercise of optionsOther changes

during yearBalance at end of year

Paul Isherwood 120,000 – – 120,000

Bob Johnston 76,000 – – 76,000

Nancy Milne 12,014 – – 12,014

2011

NameBalance at




Ian Hutchinson* 47,271 – (12,434) 34,837

Paul Isherwood 120,000 – – 120,000

Bob Johnston – – 76,000 76,000

Nancy Milne 12,014 – – 12,014

* Iain Hutchinson retired 14 April 2011.



Other key management personnel

2012

NameBalance at




Sean McMahon 120,217 – (88,000) 32,217

2011

NameBalance at




Sean McMahon 120,217 – – 120,217

No other directors or key management personnel held any Australand securities.

(iv) CapitaLand Limited sharesThe number of CapitaLand Limited shares held during the financial year by each director and other key management personnel, including their personally related parties, are set out below:


2012

Olivier Lim and Lui Chong Chee held 342,489 and 472,000 shares respectively in CapitaLand Limited as at 31 December 2012. No other directors of Australand Holdings Limited held CapitaLand Limited shares in 2012.

2011

Olivier Lim and Lui Chong Chee held 246,521 and 472,000 shares respectively in CapitaLand Limited as at 31 December 2011. No other directors of Australand Holdings Limited held CapitaLand Limited shares in 2011.

Other key management personnelNo CapitaLand Limited shares were held by any other key management personnel of Australand Holdings Limited in 2012 or 2011.

(v) Units held in ASSETSThe number of units held in ASSETS during the financial year by each director and other key management personnel, including their personally related parties, are set out below:

2012


NameBalance at

start of yearOther changes


Paul Isherwood 4,200 – 4,200

2011

NameBalance at




No other directors or other key management personnel held units in ASSETS in 2012 or 2011.

24. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)

(b) Equity instrument disclosures relating to key management personnel (continued)

(iii) Australand stapled securities (continued)

Financial Report 89

(vi) Units held in Australand Wholesale Property Fund No.6 (AWPF6)The number of units held in AWPF6 during the financial year by each director and other key management personnel, including their personally related parties, are set out below:

2012Directors of Australand Holdings Limited

NameBalance at




2011

NameBalance at




No other directors or other key management personnel held units in AWPF6 in 2012 or 2011.

(vii) Performance Rights PlanThe number of performance rights held during the financial year by each director and other key management personnel, including their personally related parties, are set out below:

2012

Key management personnel and executives of the Group

Name

Balance at start of

the year

Granted during the


changes

Balance at end of the year


Bob Johnston 1,118,974 408,000 – (65,367) – 1,461,607 682,607 779,000

Kieran Pryke 230,243 138,900 – (22,863) – 346,260 81,060 265,200

Rod Fehring 234,543 143,700 – (22,863) – 355,360 81,060 274,300

Sean McMahon 395,949 143,700 – (23,700) – 515,949 231,549 284,400

No other directors or other key management personnel held performance rights.

2011Key management personnel and executives of the Group

Name

Balance at start of

the year

Granted during the


changes

Balance at end of the year


Bob Johnston 932,374 371,000 – (184,400) – 1,118,974 451,059 667,915

Kieran Pryke 126,826 126,300 – (22,883) – 230,243 – 230,243

Rod Fehring 126,826 130,600 – (22,883) – 234,543 – 234,534

Sean McMahon 330,716 130,600 – (65,367) – 395,949 157,696 238,253

No other directors or other key management personnel held performance rights.

(c) Other transactions with directors and other key management personnelApart from the details disclosed within this report, no director has entered into a material contract with the consolidated entity (or a related party of the consolidated entity) since the end of the previous financial year and there are no material contracts involving directors’ interests existing at year end.

All transactions with directors are conducted in the normal course of business under commercial terms and conditions.

(d) Security based paymentsDetails of the security-based payments for the Group are set out in section 10 of the Remuneration Report and in Note 29.

24. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)

(b) Equity instrument disclosures relating to key management personnel (continued)



25. COMMITMENTS

Operating leasesOperating lease expenditure contracted for at balance date but not provided for in the financial statements:

2012 2011

$’000 $’000

Payable:

– Not later than one year 5,988 6,905

– Later than one year but not later than five years 10,511 12,479

– Later than five years 1,384 658

17,883 20,042

The consolidated entity leases premises, motor vehicles and office equipment under non-cancellable operating leases expiring from one to seven years. Leases generally provide the consolidated entity with a right of renewal at which time all terms are renegotiated.

Conditional contractsConditional contracts for the purchase of land, or relevant agreements, which have not been recognised in the financial statements:

2012 2011

$’000 $’000

Payable:

– Not later than one year 405 8,390

– Later than one year but not later than five years 37,714 17,057

38,119 25,447

26. NON-DIRECTOR RELATED PARTY TRANSACTIONS

(a) Controlling entitiesThe immediate and ultimate parent entity of AHL, APT, APT4 and APT5 is CapitaLand Limited, a company incorporated in Singapore, which at 31 December 2012 through various subsidiaries owned 59.3% (2011: 59.3%) of the issued stapled securities of Australand.

(b) Controlled entitiesInterests in controlled entities are set out in Note 23.

(c) Key management personnelDisclosures relating to key management personnel are set out in Note 24.

(d) Transactions with other related partiesTransactions with related parties are conducted in the normal course of business under normal terms and conditions.

2012 2011

$’000 $’000

Management fees from joint venture entities 14,344 15,946

Management fees from associates 1,710 1,107

Interest income from joint ventures 3,314 6,591

Other income from joint venture entities 11,814 9,789

Construction billings to joint ventures entities 11,835 37,630

Sale of investment property to associate 72,065 133,250

(e) Ownership interests in entities in the wholly owned group and other related partiesInterests in controlled entities are set out in Note 23. Interests held in joint venture operations, joint venture entities and associates are set out in Note 11.

Financial Report 91

27. FINANCIAL INSTRUMENTS(a) Interest rate hedging agreementsRefer to Note 14 for details of the interest rate hedging agreements.

(b) Interest rate riskThe consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate by maturity period are:

31 December 2012

Floating interest rate

Fixed interest

maturing in 1 year

or less

Fixed interest

maturing in 1 to 5 years

Fixed interest

maturing in more than

5 yearsNon interest

bearing Total

$’000 $’000 $’000 $’000 $’000 $’000

Financial assets

Cash 76,059 – – – – 76,059

Trade and other receivables – – – – 199,777 199,777

Total financial assets 76,059 – – – 199,777 275,836

Weighted average interest rate (p.a.) 3.62%

Financial liabilities

Payables – – – – (80,339) (80,339)

Land vendor liabilities – – – – (45,015) (45,015)

Syndicated facility 2011 (675,000) – – – – (675,000)


USD Senior Notes (187,889) – – – – (187,889)

Interest rate derivatives (notional principal amounts excluding forward swap contracts)** 1,717,889 (450,000) (880,000) (387,889) – –

Total financial liabilities 365,000^ (450,000) (880,000) (387,889) (125,354) (1,478,243)

Weighted average interest rate on interest bearing liabilities (p.a.)* 7.43%

Net financial assets/(liabilities) 441,059 (450,000) (880,000) (387,889) 74,423 (1,202,407)

31 December 2011

Floating interest rate

Fixed interest

maturing in 1 year

or less

Fixed interest

maturing in 1 to 5 years

Fixed interest

maturing in more than

5 yearsNon interest

bearing Total

$’000 $’000 $’000 $’000 $’000 $’000

Financial assets

Cash 93,286 – – – – 93,286

Trade and other receivables 9,324 – – – 181,133 190,457

Total financial assets 102,610 – – – 181,133 283,743

Weighted average interest rate (p.a.) 4.54%


Payables – – – – (72,038) (72,038)

Land vendor liabilities – – – – (59,811) (59,811)



USD Senior Notes (186,810) – – – – (186,810)

Interest rate derivatives (notional principal amounts excluding forward swap contracts)** 1,616,810 (550,000) (650,000) (416,810) – –

Total financial liabilities 235,000^ (550,000) (650,000) (416,810) (131,849) (1,513,659)

Weighted average interest rate on interest bearing liabilities (p.a.)* 7.87%

Net financial assets/(liabilities) 337,610 (550,000) (650,000) (416,810) 49,284 (1,229,916)

* Weighted average interest rates include the effect of interest rate derivatives.** Based on the maturity of current swaps (excludes the impact of forward start interest rate swaps).^ Includes derivatives against ASSETS hybrid equity (recognised as equity in the balance sheet) and callable swaps.

An analysis of maturities of financial liabilities on an undiscounted cash flow basis is shown in Note 3(c).



(c) Net fair valuesThe consolidated entity’s financial assets and liabilities are stated at cost and these assets are not traded in an organised financial market.

Carrying amounts of trade and other receivables, other financial assets, payables, bank loans and unsecured notes are stated at cost as the carrying values approximate net fair values.

The valuation of financial instruments recognised on the consolidated balance sheet reflects the estimated amounts, which the consolidated entity expects to pay or receive to terminate the contracts, or replace the contracts at their current market rates as at the reporting date. The net fair value recognised on the consolidated balance sheet in relation to interest rate derivatives and cross currency interest rate swaps held at 31 December 2012 was a liability of $122,459,000 (2011: $76,854,000) and an asset of $21,715,000 (2011: $24,263,000).

(d) Credit riskThe carrying amounts of financial assets included in the consolidated balance sheet represent the consolidated entity’s exposure to credit risk in relation to these assets.

(e) Summarised interest rate sensitivity analysisThe table below illustrates the potential impact a change in interest rates by +/-1% would have had on the Group’s profit and equity.

-1% +1%

Carrying amount Profit Equity Profit Equity

31 December 2012 $’000 $’000 $’000 $’000 $’000

Financial assets

Cash and cash equivalents 76,059 (532) (532) 532 532

Other financial assets (non-interest bearing) 199,777 – – – –


Borrowings (1,352,889) 13,276 13,276 (13,276) (13,276)

Derivative financial instruments (122,459) (38,001) (69,534) 26,450 57,285

Other financial liabilities (non-interest bearing) (125,354) – – – –

Total increase/(decrease) (25,257) (56,790) 13,706 44,541

-1% +1%

Carrying amount Profit Equity Profit Equity

31 December 2011 $’000 $’000 $’000 $’000 $’000

Financial assets

Cash and cash equivalents 93,286 (653) (653) 653 653

Other financial assets (non-interest bearing) 190,457 – – – –


Borrowings (1,381,810) 13,576 13,576 (13,576) (13,576)

Derivative financial instruments (76,854) (28,829) (64,012) 22,657 52,912

Other financial liabilities (non-interest bearing) (131,849) – – – –

Total increase/(decrease) (15,906) (51,089) 9,734 39,989

Based upon a 100 (2011: 100) basis point increase or decrease in Australian interest rates, the impact on profit after tax has been calculated taking into account all underlying exposures and related derivatives. This sensitivity has been selected as this is considered reasonable given the current level of both short term and long term interest rates.

27. FINANCIAL INSTRUMENTS (CONTINUED)

Financial Report 93

28. CASH FLOW INFORMATION

(a) Reconciliation of cashCash as at the end of the financial year as shown in the cash flow statement is equal to cash shown in the balance sheet.

(b) Reconciliation of profit after income tax to net cash inflow from operating activities

2012 2011

$’000 $’000

Net profit for the year 203,822 167,262

Non-cash items:

Depreciation and amortisation 8,172 5,525

Non-cash employee benefits expense (share-based payments) 989 2,275

Net gains from fair value adjustments on investment property (54,520) (61,525)

Share of profits from joint venture entities not received as dividends or distributions (18,703) (30,162)

Movements in unrealised losses from the establishment of joint ventures 4,909 (2,130)

Write-down of inventories – 30,000

Development profit recognised through valuation of properties to Australand Property Trusts – (1,842)


Change in operating assets and liabilities:

(Increase)/decrease in trade and other receivables (29,924) 44,893

(Increase)/decrease in other assets (3,150) 2,633

Decrease/(increase) in inventories 159,796 (246,390)

Decrease in advances to joint ventures 20,605 77,137

Decrease in investments accounted for using the equity method (distributions received) 18,127 35,838

Increase in deferred tax assets – (851)

Increase in payables 8,301 13,306

Increase/(decrease) in provisions 2,204 (2,534)

Net cash flows provided by operating activities 334,049 57,628

(c) Cash flows from investment in associates

2012 2011

$’000 $’000

Distributions received 5,558 3,358

Net receipts from investment in associates 5,558 3,358



29. SECURITY BASED PAYMENTS

(a) Australand Performance Rights Plan (PRP)The establishment of the Australand Performance Rights Plan was approved by securityholders at the 2007 Annual and General Meetings. Details of the PRP for key management personnel are disclosed in the remuneration report.

Set out below are summaries of Performance Rights granted under the plan:

Grant date

Vesting & Expiry date

Exercise Price

Balance at start of year

Granted during

year

Exercised during

the year

Lapsed/Forfeited

during year

Balance at end

of year

Vested and exercisable

at end of year

31 December 2012

Jun 2007 Dec 2009 Nil 111,620 – (23,866) – 87,754 87,754

Oct 2008 Dec 2010 Nil 35,673 – (5,420) – 30,253 30,253

Jun 2009 Dec 2011 Nil 1,564,492 – (228,611) – 1,335,881 1,335,881

Aug 2010 Dec 2012 Nil 1,442,256 – – (394,211) 1,048,045 1,048,045

Jun 2011 Dec 2012 Nil 168,600 – – (13,300) 155,300 155,300

Jun 2011 Dec 2013 Nil 1,510,400 – – (26,600) 1,483,800 –

Feb 2012 Dec 2012 Nil 86,055 – – – 86,055 86,055

Feb 2012 Dec 2013 Nil 74,882 – – – 74,882 –

July 2012 Dec 2014 Nil – 1,734,700 – (30,200) 1,704,500 –

July 2012 Dec 2013 Nil – 184,300 – (8,900) 175,400 –

Feb 2013 Dec 2013 Nil – 75,657 – – 75,657 –

Feb 2013 Dec 2014 Nil – 66,382 – – 66,382 –

31 December 2011

Jun 2007 Dec 2009 Nil 111,620 – – – 111,620 111,620

Oct 2008 Dec 2010 Nil 35,673 – – – 35,673 35,673

Jun 2009 Dec 2011 Nil 2,006,152 – – (441,660) 1,564,492 1,564,492

Aug 2010 Dec 2012 Nil 1,759,773 – – (317,517) 1,442,256 –

Jun 2011 Dec 2012 Nil – 168,600 – – 168,600 –

Jun 2011 Dec 2013 Nil – 1,510,400 – – 1,510,400 –

Feb 2012 Dec 2012 Nil – 86,055 – – 86,055 –

Feb 2012 Dec 2013 Nil – 74,882 – – 74,882 –

Fair value of Performance rights grantedThe assessed fair value at grant date of Performance Rights granted since 1 March 2012 is $1.62, $2.22 and $3.14 respectively (2011: $1.97, $2.55 and $2.40).

The fair value at grant date is independently determined using the Monte Carlo Simulation technique. This technique involves stock prices being randomly simulated under risk neutral conditions and parameters in order to calculate the value of the Performance Rights at expiry. The simulation is repeated numerous times to produce distribution payoff amounts. The Performance Rights value is taken as the average of the payoff amounts calculated and discounted back to the valuation date.

The following assumptions were used in valuing the Performance Rights:

(a) share price at grant date: Feb 13 – $3.44, Jul 12 – $2.49 (2011: Feb 12 – $2.66, Jun 11 – $2.87) (b) expected price volatility of the company’s stapled securities: 32% (2011: 35%)(c) expected dividend yield: 8% (2011: 8%)(d) risk-free discount rate (p.a effective): 2.5% (2011: 4.7%)(e) expected franking rate: Nil% (2011: Nil%)(f) Australand and index correlation: 50% (2011: 50%)

Financial Report 95

(b) Australand tax exempt employee security plan (TEP)A plan under which tax exempt stapled securities may be issued by the company to employees for no cash consideration was approved by shareholders at the 2007 Annual and General Meetings. All Australian resident permanent (full-time and part-time) employees (excluding directors and participants in the Australand Performance Rights Plan) who have been continuously employed by the Group for a period of at least nine months as at the invitation date and are still employees as at the acquisition date (the date Australand acquires the securities) are eligible to participate in the plan. Employees may elect not to participate in the plan.

The plan provides for up to $1,000 worth of Australand Stapled Securities (tax-free) to eligible employees annually for no cash consideration.

A three-year restriction period on selling, transferring or otherwise dealing with the securities applies, unless the employee leaves Australand. Under the plan, employees will receive the same benefits as all other security holders.

The number of securities issued to participants in the plan is the offer amount divided by the weighted average price at which the company’s stapled securities are traded on the Australian Stock Exchange during the week up to and including the acquisition date (rounded down to the nearest whole number of securities).

Weighted average

market price

No. of securities issued

Date stapled securities were issued under the plan to participating employees

Consolidated

$ 2012 2011

20 June 2011 2.90 – 108,016

Total securities issued – 108,016

There were no securities issued under the plan during the year as a result of it being discontinued.

(c) Expenses arising from security-based payment transactions Total expenses for the Group arising from security-based payment transactions during the period were as follows:

2012 2011

$’000 $’000

Performance Rights issued under Australand Performance Rights Plan 989 2,275

989 2,275

30. PARENT ENTITY FINANCIAL INFORMATION

(a) Summary financial informationThe individual financial statements for the parent entity show the following aggregate amounts.

Balance sheet

2012 2011

$’000 $’000

Current assets 293,241 354,665

Total assets 1,253,354 1,488,376

Current liabilities 12,795 29,293

Total liabilities 651,695 890,124

Equity

Contributed Equity 576,433 576,433

Reserves (security-based payments and other) 7,338 10,506

Retained earnings 17,888 11,313

601,659 598,252

Profit or loss for the year 6,575 65,493

Total comprehensive income for the year 6,575 65,493

29. SECURITY BASED PAYMENTS (CONTINUED)



(b) Guarantees entered into by the Parent entityThe parent entity has provided commercial guarantees and indemnities to its joint venture entities. At 31 December 2012 the parent entity’s share of financial and performance guarantees were $17,580,000 (2011: $18,255,000) and $Nil (2011: $nil), respectively.

(c) Contingent liabilities of the parent entityThe parent entity had contingent liabilities of $54,809,000 as at 31 December 2012 (2011: $51,220,000), in relation to insurance bonds outstanding. For information about guarantees given by the parent entity, please see Note (b) above.

(d) Contractual commitments for operating leasesAs at 31 December 2012, the parent entity had contractual commitments for non-cancellable operating leases totalling $16,955,000 (31 December 2011: $18,782,000).

31. EVENTS OCCURRING AFTER THE BALANCE SHEET DATEOn 3 January 2013, Australand’s major securityholder, CapitaLand Limited, announced its intention to conduct a strategic review of its investment in Australand. Australand has appointed financial and legal advisers to assist it in establishing whether any proposal arising from CapitaLand’s review can be developed that is in the interests of all Australand’s securityholders. Australand’s management and advisers are working with CapitaLand in this process, however there is no guarantee that any proposal will be forthcoming.

Other than the matter referred to above, there have been no significant events or transactions that have arisen since the end of the financial year, which in the opinion of the directors, would affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity.

30. PARENT ENTITY FINANCIAL INFORMATION (CONTINUED)

Financial Report 97

Directors’ declarationAustraland Holdings Limited and its controlled entities

In the directors’ opinion:

(a) the fi nancial statements and notes set out on pages 44 to 97 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 fi nancial position as at 31 December 2012 and of its performance for the fi nancial year ended on that date; and

(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.

Note 1(a) confi rms that the fi nancial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The directors have been given the declarations by the Chief Executive Offi cer and Chief Financial Offi cer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the directors.

Olivier Lim Bob JohnstonChairman Managing Director

Sydney26 February 2013

Olivier Lim Bob JohnstonChairman Managing Director


Independent audit report

Financial Report 99


Independent audit report (continued)

Top 20 holdings as at 21 February 2013

Rank NameNo. of stapled

Securities %

1 Ausprop Holdings Limited 269,674,539 46.75

2 Austvale Holdings Ltd 72,210,836 12.52

3 HSBC Custody Nominees (Australia) Limited 57,055,144 9.89

4 J P Morgan Nominees Australia Limited 44,185,362 7.66

5 National Nominees Limited 28,487,083 4.94

6 Citicorp Nominees Pty Limited 12,612,263 2.19

7 JP Morgan Nominees Australia Limited 7,142,081 1.24

8 BNP Paribas Noms Pty Ltd 4,409,456 0.76

9 Equity Trustees Limited 3,522,277 0.61

10 Citicorp Nominees Pty Limited 3,242,580 0.56

11 AMP Life Limited 2,099,623 0.36

12 Woodcross Nominees Pty Ltd 1,975,662 0.34

13 HSBC Custody Nominees (Australia) Limited 1,834,387 0.32

14 Pacific Custodians Pty Limited 1,818,042 0.32

15 HSBC Custody Nominees (Australia) Limited – A/C 3 1,279,020 0.22

16 Bond Street Custodians Limited 1,170,810 0.20

17 Brazil Farming Pty Ltd 1,050,000 0.18

18 QIC Limited 962,571 0.17

19 Milton Corporation Limited 832,732 0.14

20 Diversified United Investment Limited 790,000 0.14

Total securities held by top 20 516,354,468 89.51

All other securityholders 60,492,129 10.49

Total Australand stapled securities on issue 576,846,597 100.00

Range of securityholders

RangeNo. of

securityholders% of

securityholdersNo. of stapled

securities% of

issued capital

1 – 1,000 2,664 31.41 1,181,503 0.20

1,001 – 5,000 3,512 41.41 9,233,505 1.60

5,001 – 10,000 1,160 13.68 8,536,508 1.48

10,001 – 100,000 1,065 12.56 25,961,068 4.50

100,001 and above 81 0.95 531,934,013 92.21

Total 8,482 100.00 576,846,597 100.00

The number of investors holding less than a marketable parcel of 146 securities ($3.440 on 21/02/2013) is 454 and they held 18,633 securities.

Securityholders’ Information.

Securityholders’ Information 101

Substantial securityholdersAustraland’s substantial securityholders and the number of stapled securities in which each securityholder has an interest as disclosed to Australand as at 21 February 2013 are:

Registered holderNo. of stapled

securities% of

issued capital

Temasek Holdings (Private) Limited1 Ausprop Holdings Limited 269,674,539 46.75

Austvale Holdings Ltd 72,210,836 12.52

1 Temasek Holdings (Private) Limited has an interest in 40.37% of the issued capital of CapitaLand Limited and is deemed to hold an interest in Australand stapled securities held by Ausprop Holdings Limited and Austvale Holdings Ltd. CapitaLand Limited has also lodged a substantial securityholder notice by virtue of its interest in Ausprop Holdings Limited and Austvale Holdings Ltd.

ADDITIONAL SECURITYHOLDERS’ INFORMATION

Securities Exchange listingAustraland’s stapled securities are listed on the Australian Securities Exchange and trades under the code ALZ.

Issued capitalAs at 31 December 2012, the issued capital of Australand was 576,846,597 (no change from the prior year).

Dividend/distribution paymentsIt remains the directors’ intention to pay dividends/distributions on Australand’s stapled securities on a half yearly basis.

Direct dividend/distribution deposit into bank accountsIf you are an Australian resident securityholder, your dividend/distribution will be paid directly into your nominated bank, building society or credit union account in Australia on the dividend/distribution payment date. Details of the dividend/distribution payment will be confirmed by an advice mailed to you on that date.

If you have not provided your bank account details you will not receive your dividend/distribution payment until you do so. You can provide your bank account details by contacting our share registry, Link Market Services (“Link”). If you subsequently change your bank account details, please promptly notify the registry in writing.

Tax file numbersFor Australian resident securityholders, Tax File Numbers or Exemption details are recorded from securityholders who have advised this information. Dividend/distribution advice statements indicate if a securityholder’s Tax File Number has not been recorded.

While it is not compulsory to provide a Tax File Number or Exemption details, in the event of Australand paying an unfranked distribution, Australand is obliged to deduct tax at the highest marginal rate plus Medicare Levy from those Australian resident securityholders who have not supplied such information.

Securityholder enquiriesSecurityholders with queries concerning their holding, dividend/distribution payments or related matters should contact our share registry as detailed in the Corporate Directory of the 2012 Annual Report.

Change of addressSecurityholders who have changed their address should advise our share registry in writing or by visiting our share registry website at www.linkmarketservices.com.au

Removal from Annual Report mailing listSecurityholders who do not wish to receive an Annual Report should advise our share registry in writing or by visiting our share registry website at www.linkmarketservices.com.au to update your communication options.

Privacy legislationThe Privacy Act 1988 (as amended) is designed to protect an individual’s personal information, including information stored or transmitted electronically. The substance of the legislation is the Ten National Privacy Principles regulating the collection, use, disclosure and management of personal information.

Link collects and maintains personal information of securityholders on behalf of Australand as part of its operation of Australand’s stapled security registers, and its facilitation of communication from Australand to its securityholders. Link has implemented various policies and procedures to ensure compliance with the Privacy legislation.

A Collection and Disclosure Statement outlining certain particulars in relation to the collection, maintenance and disclosure of personal information has been sent to all securityholders and is available from Link on request.

Australand has also implemented appropriate policies and procedures to ensure its compliance and that of its employees with the Privacy legislation.


Securityholders’ Information (continued)

Voting rights – stapled securities entitlement to voteThe following is an extract from the Constitution of Australand Holdings Limited:

“9.16 Subject to any rights or restrictions for the time being attached to any class or classes of shares and to this Constitution:

a) on a show of hands, each Member present in person and each other person present as a proxy, attorney or Representative of a Member has one vote; and

b) on a poll, each Member present in person has one vote for each fully paid share held by the Member and each person present as proxy, attorney or Representative of a Member has one vote for each fully paid share held by the Member that the person represents.

A Member is not entitled to vote at a General Meeting in respect of shares which are the subject of a current Restriction Agreement for so long as any breach of that agreement subsists.”

The following is an extract from the Constitution of Australand Property Trust:

“16.24 Subject to any rights or restrictions for the time being attached to any class or classes of units and to this Constitution:

a) on a show of hands, each Member present in person and each other person present as a proxy, attorney or Representative of a Member has one vote; and

b) on a poll, each Member present in person has one vote for each one dollar of the value of the units held by the Member and each person present as proxy, attorney or Representative of a Member has one vote for each one dollar of the value of the units held by the Member that the person represents.

A Member is not entitled to vote at a General Meeting in respect of units which are the subject of a current Restriction Agreement for so long as any breach of that agreement subsists.”

The following is an extract from the Constitution of Australand Property Trust No.4:

“17.15 The provisions of the Corporations Act governing proxies and voting for meetings of members of registered schemes apply to the Trust.”

The following is an extract from the Constitution of Australand Property Trust No.5:

“18.15 The provisions of the Corporations Act governing proxies and voting for meetings of members of registered schemes apply to the Trust.”

Securityholders’ Information 103

Ten Year Financial Summary.

Ten

year

fin

anci

al s

um

mar

y1

Yea

r en

ded

31

Dec

emb

er20

1220

1120

1020

0920

0820

0720

0620

0520

042

2003

Fin

anci

al p

erfo

rman

ce ($

m)

Rev

enue

918.

869

2.8

749.

368

6.8

831.

61,

159.

11,

058.

41,

533.

11,

124.

41,

405.

4

Pro

fit a

ttrib

utab

le to

sta

ple

d

secu

rityh

old

ers

180.

014

0.6

165.

8(2

98.2

)40

.226

9.2

243.

120

1.0

113.

195

.2

Fin

anci

al p

osi

tio

n ($

m)

Tota

l ass

ets

3,98

3.6

3,95

3.3

3,68

3.7

3,48

3.2

4,09

9.1

3,78

9.1

3,50

2.6

3,08

1.3

2,56

8.2

2,00

8.1

Tota

l eq

uity

2,28

3.8

2,26

6.0

2,29

9.7

2,24

2.9

2,10

5.3

1,84

8.7

1,71

2.1

1,49

6.5

1,14

2.1

994.

8

Sec

uri

tyh

old

er v

alu

e

Bas

ic e

arni

ngs

per

sta

ple

d se

curit

y on

op

erat

ing

pro

fit a

fter

tax

4 (¢)

24.6

23.5

22.1

27.1

511

.85

14.5

517

.317

.114

.617

.1

Div

iden

ds/

dis

trib

utio

ns p

er

stap

led

secu

rity

(¢)

21.5

21.5

20.5

25.0

811

.017

.016

.516

.516

.513

.4

Ret

urn

on s

ecur

ityho

lder

s fu

nds

(%)

8.7

6.9

8.3

(15.

3)2.

318

.018

.216

.910

.710

.9

Gea

ring

ratio

(%)3

32.2

33.0

29.5

25.4

36.2

40.4

39.8

39.7

46.6

29.9

NTA

per

sta

ple

d se

curit

y ($

)3.

493.

463.

523.

408

1.08

1.70

1.56

1.41

1.35

1.36

Mar

ket c

apita

lisat

ion

($m

)1,

961.

31,

384.

41,

678.

61,

485.

343

2.6

2,15

2.0

1,85

4.2

1,80

7.2

1,52

7.9

1,11

0.7

Sta

ple

d se

curit

y p

rices

($):

Clo

se, 3

1 D

ecem

ber

3.40

2.40

2.91

0.52

0.26

62.

322.

002.

071.

811.

61

Hig

h3.

523.

203.

090.

581.

916

2.65

2.22

2.13

1.94

1.85

Low

2.19

2.17

0.45

70.

190.

226

1.98

1.73

1.36

1.56

1.36

Oth

er in

form

atio

n

Num

ber

of s

ecur

ities

576,84

6,597

576,846,597

576,837,197

2,884,031,6201,696,490,449

927,598,937

927,114,437

873,052,172

844,143,646

689,875,776

1 Te

n ye

ar fi

nanc

ial s

umm

ary

is b

ased

on

AIF

RS

for

year

s en

ded

31

Dec

emb

er 2

012,

201

1, 2

010,

200

9, 2

008,

200

7, 2

006,

200

5 an

d 20

04 a

nd b

ased

on

AG

AA

P fo

r ye

ar e

nded

31

Dec

emb

er 2

003.

2 R

esta

ted

on a

dop

tion

of A

IFR

S.

3 G

earin

g ra

tio is

def

ined

as

inte

rest

bea

ring

deb

t to

tota

l tan

gib

le a

sset

s (c

ash

adju

sted

), b

ased

on

the

dra

wn

amou

nt o

f deb

t exc

lud

ing

fair

valu

e ad

just

men

ts a

nd a

sso

ciat

ed d

eriv

ativ

e fin

anci

al

inst

rum

ents

.4

Exc

lud

ing

unre

alis

ed g

ains

/(los

ses)

from

pro

per

ty v

alua

tions

and

sig

nific

ant o

ne-o

ff it

ems.

5 A

dju

sted

in a

cco

rdan

ce w

ith A

AS

B 1

33 E

arni

ngs

per

sha

re fo

r th

e ef

fect

of t

he E

ntitl

emen

t Off

ers

com

ple

ted

in S

epte

mb

er 2

008

and

Sep

tem

ber

200

9. 2

009

has

bee

n re

stat

ed fo

r th

e M

ay 2

010

secu

rity

cons

olid

atio

n.6

The

sta

ted

stap

led

secu

rity

pric

e fo

r 20

08 in

clud

es t

he a

dju

stm

ent f

acto

r in

the

rel

atio

n to

the

Ent

itlem

ent O

ffer

ann

ounc

ed o

n 28

Jul

y 20

08. T

he a

ctua

l hig

h an

d lo

w s

tap

led

secu

rity

pric

e, b

efo

re t

he

imp

act o

f the

Ent

itlem

ent O

ffer

, was

$2.

36 a

nd $

0.22

, res

pec

tivel

y.7

The

sta

ple

d se

curit

y p

rice

for

2010

and

the

num

ber

of s

ecur

ities

incl

udes

the

ad

just

men

t fac

tor

in r

elat

ion

to t

he s

ecur

ity c

onso

lidat

ion

(1 fo

r 5)

com

ple

ted

in M

ay 2

010.

The

act

ual l

ow s

tap

led

secu

rity

pric

e p

rior

to t

he c

onso

lidat

ion

was

$0.

09.

8 R

esta

ted

for

the

effe

ct o

f the

sec

urity

con

solid

atio

n (1

for

5) c

omp

lete

d in

May

201

0.


Key 2013 Dates.

FEB 07Release of 2012 full year results

FEB 08Payment of 2012 final dividend/distribution

APR 22 Annual and General Meetings

JUN 192013 interim dividend/distribution announcement

JUN 24Stapled securities trade ex-dividend/distribution for 2013 interim distribution

JUN 282013 interim dividend/distribution record date

JUN 30Half year end

JUL 24*Release of half year results

AUG 07*Payment of 2013 interim dividend/distribution

DEC 182013 final dividend/distribution announcement

DEC 23Stapled securities trade ex-dividend/distribution for 2013 final distribution

DEC 312013 final dividend/distribution record date

DEC 31Year end

* These dates are indicative only and may be subject to change without notice.

Key 2013 Dates 105

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107

AuSTrALANd

Australand Holdings Limited(ABN 12 008 443 696)

Australand Property Limited(ABN 90 105 462 137, AFSL 231130) As the responsible entity of Australand Property Trust (ARSN 106 680 424) Australand ASSETS Trust (ARSN 115 338 513)

Australand Investments Limited(ABN 12 086 673 092, AFSL 228837) As the responsible entity of Australand Property Trust No.4 (ARSN 108 254 413) Australand Property Trust No.5 (ARSN 108 254 771)

registered OfficeLevel 3, Building CRhodes Corporate Park1 Homebush Bay Drive Rhodes NSW 2138Telephone: + 61 2 9767 2000Facsimile: + 61 2 9767 2900www.australand.com.au

Company SecretaryBev BookerTelephone: + 61 2 9767 2000Facsimile: + 61 2 9767 2900Email: [email protected]

How to contact usAt www.australand.com.au click on ‘Contact Us’ and you can email your enquiry and let us know the most convenient way for us to respond to you.

AuSTrALANd STATE OffICES

Head Office SydneyLevel 3, Building CRhodes Corporate Park1 Homebush Bay DriveRhodes NSW 2138Telephone: + 61 2 9767 2000Facsimile: + 61 2 9767 2900PO Box 3307Rhodes NSW 2138DX 8419 Ryde

Melbourne Commercial & IndustrialFreshwater PlaceLevel 14, 2 Southbank BoulevardSouthbank VIC 3006Telephone: + 61 3 9426 1000Facsimile: + 61 3 9426 1051

residentialLevel 9, 484 St Kilda RoadMelbourne VIC 3004Telephone: +61 3 9258 1200Facsimile: +61 3 9258 1212

BrisbaneLevel 3, 154 Melbourne StreetSouth Brisbane QLD 4101Telephone: + 61 7 3249 7400Facsimile: + 61 7 3249 7456PO Box 3439South Brisbane Business Centre QLD 4101

AdelaideSuite 206, 147 Pirie StreetAdelaide SA 5000Telephone: +61 8 8203 5500 Facsimile: +61 8 8232 6065

PerthLevel 2, 115 Cambridge StreetWest Leederville WA 6007Telephone: +61 8 9214 7900Facsimile: +61 8 9214 7910PO Box 1216West Leederville WA 6901

SHArE rEGISTry

Link Market Services Limited1A Homebush Bay DriveRhodes NSW 2138Locked Bag A14Sydney South NSW 1235Telephone: +61 1300 554 474 Facsimile: +61 2 9287 0309www.linkmarketservices.com.au

AuSTrALIAN SECurITIES ExCHANGE

Exchange Centre20 Bridge StreetSydney NSW 2000

ANNuAL rEPOrT

To request a copy of the Annual Report please call +61 2 9767 2000

A copy of Australand’s Complaints Handling and Dispute Resolution Policy can be accessed from the website on www.australand.com.au under ‘Corporate Governance’.

Corporate directory.

Corporate Directory 109

australand.com.au

0113annual Report

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