INVESTA PROPERTY GROUP – 30 JUNE 2007 ANNUAL RESULTS · 2007-08-08 · Investa is an Australian...

Investa Properties Limited ABN 54 084 407 241

Level 6 Deutsche Bank Place 126 Phillip Street Sydney NSW 2000 GPO Box 4180 Sydney NSW 2001 Australia

T 61 2 8226 9300 F 61 2 9844 9300 W www.investa.com.au

9 August 2007 The Manager Company Announcements Australian Securities Exchange Limited 20 Bridge Street Sydney NSW 2000

Dear Madam,

INVESTA PROPERTY GROUP – 30 JUNE 2007 ANNUAL RESULTS

Investa Property Group announces its results for the financial year ended 30 June 2007.

The Financial Statements for Investa Property Group are attached together with Appendix 4E, a summary Earnings Statement and a property by property net income analysis.

GROUP HIGHLIGHTS

Investa generated a net profit after tax of $663.5 million, up 99% on the previous corresponding period.

The profit increase reflects:

• The revaluation of 22 properties in the Investment Portfolio that resulted in $366.1 million of valuation increases compared with $254.7 million in the previous corresponding period, reflecting strong leasing activity, improving market conditions and the quality of the properties.

• The strength of the Investment Portfolio which demonstrated like-for-like earnings growth of 5.8%, assisted by the first full year impact of operating income at Deutsche Bank Place, Sydney.

• A $36.0 million earnings contribution from Investa Commercial Developments that more than off-set the impact of continued weak market conditions faced by Clarendon Residential. Overall the development activities contributed $70.0 million to Group earnings, up 21% on the prior corresponding period.

• Continued growth in the External Funds business that resulted in an EBITDA contribution of $11.7 million compared to $6.7 million previously, an increase of 75%.

• No impairment of goodwill in the current period compared with $184.6 million in the previous corresponding period relating primarily to the write-off of intangibles associated with the Principal Office Fund acquisition (following the completion and revaluation of Deutsche Bank Place) and impairment of the goodwill recognised on the acquisition of Clarendon Residential.

• A $54.5 million gain on the fair value of derivative financial instruments compared with $14.3 million in the prior corresponding period.

For

per

sona

l use

onl

y

2

Based on a net profit after tax of $663.5 million, earnings per security for the year rose to 43.71cps, compared to 22.12 cps previously whilst underlying earnings (which exclude revaluations, asset sales, goodwill charges and fair value of derivative instruments) for the year increased from 15.51 cps to 15.89 cps. If costs (after tax) of $1.8 million associated with addressing the Morgan Stanley proposal to acquire the Group are excluded, underlying earnings increased to 16.01 cps and represent a 3.2% increase over last year.

The distribution for the period was 15.60cps compared to 16.90cps in the prior period. The amount of the distribution reflects Investa’s policy, announced in August 2006, of aligning distributions with underlying earnings per security and not to treat profit on sale of investment properties as base earnings for distribution purposes.

Following the $366.1 million of property revaluations, the Net Tangible Assets per security increased to $2.10, up 16% on the prior corresponding period.

FINANCIAL SUMMARY

30 June 2007 30 June 2006 Change Revenue $1,729 million $1,329 million +30%Net Profit after tax $664 million $334 million +99%Earnings per Security 1 17.33 cents 17.09 cents +1.4% - Underlying 2 16.01 cents 15.51 cents +3.2% - Asset Sale Profits 1.44 cents 1.58 cents Distribution per Security 15.60 cents 16.90 cents -7.7% Net Assets per Security $2.19 $1.91 +15%Net Tangible Assets per Security $2.10 $1.81 +16%Gearing 27.3% 31.5% -420 bpAssets Under Management $7.3 billion $6.7 billion +10%

BUSINESS COMMENTARY

Internal Funds (Investment Portfolio)

The Investment Portfolio contributed $631.4 million to EBITDA, an increase of 24 per cent on the prior corresponding period. The result reflected an increase in property portfolio valuations demonstrating the quality of the Portfolio and strong leasing activity in key office markets.

Revaluations during the period totalled $366 million, including $49 million at 400 George Street in Sydney, $54 million at QV1 in Perth, $47 million at Grosvenor Place in Sydney, $28 million at St Martins Tower in Sydney, $25 million at 120 Collins Street in Melbourne and $24 million at Deutsche Bank Place in Sydney.

When revaluations are excluded, Internal Funds contributed 80% of the Group EBITDA.

1 Before amortisation (including impairment of goodwill), Investment Portfolio rental straight lining and fitout amortisation, net gains on the fair value of derivative instruments and properties, and associated tax with these adjustments.

2 Excludes costs associated with the Morgan Stanley proposal which are equivalent to 0.12 cps.

For

per

sona

l use

onl

y

3

Like for like income growth for the continuing Portfolio was 5.8 per cent for the year ending June 2007 and the Portfolio occupancy rate at 30 June 2007 was 97.9%, an improvement of 130 basis points on the prior year.

Leasing activity during the year resulted in 155,000 square metres of leases being executed and a further 34,000 square metres of space being subject to Heads of Agreement. As a result, the Portfolio’s weighted average lease expiry is now 5.3 years.3

Lease Expiry Profile by Area FY074 FY08 FY09 FY10 FY11 FY12 FY13+ June 2006 18.1% 8.6% 15.3% 7.6% 8.8% 4.5% 37.1% June 2007 2.1% 10.1% 12.3% 10.0% 9.8% 6.5% 49.2%

External Funds

External Funds increased it’s EBITDA by 75 per cent during the period to $11.7 million from $6.7 million in the previous corresponding period. This improvement was driven by increased funds under management, and realisation of deferred management and performance fees. The business increased its funds under management (FUM) to $2.0 billion, an increase of 23 per cent on June 2006. During the year External Funds committed to 11 acquisitions totalling $352.4 million and disposed of 4 properties collectively worth $154.5 million.

Clarendon Residential

Clarendon Residential business contributed $34.0 million to the Group EBITDA. The result was 36% lower than the previous corresponding period primarily due to a continuation of soft conditions in the NSW residential housing market. The result included $5.5 million of project write downs, and restructuring costs of $2.5 million which have been included in the business unit contribution.

Commercial Developments

Commercial Developments’ contribution to the Group EBITDA for the period was $36.0 million, up from $5.1 million in the previous corresponding period. The average return on funds employed in the business for the period was within its target range of between 10 and 15 per cent. Commercial Developments currently has 15 projects on its books with an end value of $1.7 billion.

Profits from the sale of investment properties

Profits from the sale of investment properties generated $26.7 million, principally from the sale of the Macarthur Central retail asset in Brisbane, 485 La Trobe Street in Melbourne and The Octagon in Parramatta, New South Wales.

3 Including Heads of Agreement

4 Includes vacancies and leases on holdover from previous years.

For

per

sona

l use

onl

y

4

CAPITAL MANAGEMENT

Investa’s gearing as at 30 June 2007 was 27.3% (31.5% at 30 June 2006), reflecting the impact of revaluations in the Investment Portfolio.

As at 30 June 2007, Investa’s debt was fully hedged with an average hedge maturity of 5.3 years and average fixed rate of approximately 6.4%.

Following the takeover proposal received from Morgan Stanley Real Estate, Investa decided to delay reinstating its Distribution Reinvestment Plan (DRP) pending the securityholder vote at the Scheme Meetings to be held on 22 August 2007.

OUTLOOK

As previously advised to securityholders, Morgan Stanley Real Estate has offered to buy all of Investa’s issued stapled securities at a price per security equal to $3.08 less the value of any distribution declared or paid by Investa after 31 May 2007 (the Proposal). On 15 June 2007 Investa announced a distribution of 8.0 cents per stapled security payable on 22 August 2007. Investa Managing Director John Arthur said; “The Directors carefully evaluated the Proposal and concluded that in the absence of a superior proposal, it represents a very attractive opportunity for Investa securityholders to lock in certain value for their holdings in the current environment.” “The Proposal has been unanimously recommended by the Investa board and the securityholders will have the opportunity to have their say and vote at Scheme Meetings to be held in Sydney on 22 August 2007,” he said.

For further information, please contact Mr John Hurst, Group Executive Corporate Communications, on (02) 8226 9473.

Yours faithfully

Geoffrey Stirton Company Secretary Tel: (02) 8226 9420 Fax: (02) 9844 9420 Email: [email protected]

About Investa

Investa is an Australian diversified property company within the ASX Top 100. As at 30 June 2007, Investa had assets under management of $7.3 billion. Investa’s businesses include Australia’s largest listed office portfolio, an external funds management business, a residential development business and a commercial development business. In the year ended 30 June 2007, the office portfolio contributed approximately 80% of the Group’s underlying earnings. Investa is a world leader in sustainability and is rated number one on the Dow Jones Sustainability World Index (DJSI) in both the real estate sector and the financial services super-sector and is included in the “Global 100” most sustainable companies in the world.

For

per

sona

l use

onl

y

5

Investa Summary Earnings Statement

$million 2007 2006

Internal Funds (Investment Portfolio) 631.4 508.5

External Funds 11.7 6.7

Property Development 70.0 58.0

Other Income 4.6 15.5

Profits from the sale of Investment Properties 26.7 23.8

Business Unit Contribution 744.4 612.5

Corporate Expenses (21.5) (18.8)

EBITDA 722.9 593.7

Finance Costs – Borrowings 5 (86.2) (72.9)

Finance Costs – Fair Value Derivatives 54.5 14.3

Depreciation (5.4) (3.7)

Amortisation (3.9) (188.7)

Tax (18.4) (8.7)

Net Profit after Tax (NPAT) 663.5 334.0

Earnings before Amortisation / Revaluations

Underlying Earnings 241.3 234.2

Portfolio Asset Sale Profits (net of tax) 21.8 23.8

Total 263.1 258.0

5 Net of interest income

For

per

sona

l use

onl

y

Disclaimer: This release may contain forward looking statements. Such forward looking statements are not guarantees of future market conditions, results or performance. The forward looking statements are subject to risks, uncertainties and other factors which may cause actual events to differ from the forward looking statements in this release. Those risks, uncertainties and other factors include, but are not limited to, general economic and business conditions; trends and business conditions in property markets in Australia; competition; changes in Investa’s strategies, plans and operations; governmental regulation; changes in interest rates and other risks and uncertainties. Investa disclaims any intention or obligation to update or revise any forward looking statements in this release, whether as a result of new information, future events or otherwise.

Property by Property Net Income

* Based on Investa’s interest in properties at 30 June 2007 ** Represents share of income earned in properties acquired, reduced or sold during the period

$Millions FY07 FY06 FY07 FY06ACT QLD62 Northbourne Ave., Canberra 2.8 2.9 Kings Row 3.6 3.3NSW 410 Ann Street, Brisbane 7.2 5.955 Market Street, Sydney 10.1 10.6 State Law Building 8.1 8.0310 Pitt Street, Sydney 5.5 5.4 VIC231 Elizabeth Street, Sydney 4.6 4.5 420 St Kilda Rd, Melbourne 2.5 2.260 Martin Place, Sydney 6.8 6.7 469 Latrobe Street, Melbourne 4.5 4.6255 Elizabeth Street, Sydney 12.5 10.8 242 Exhibition Street, Melbourne 17.5 17.3Centennial A, Sydney 3.9 3.8 441 St Kilda Rd, Melbourne 3.4 3.9Centennial B, Sydney 4.1 5.2 589 Collins Street, Melbourne 3.6 3.9Centennial C, Sydney 5.9 8.3 Customs House, Melbourne 4.2 4.2St Martins Tower, Sydney 9.4 10.7 120 Collins Street, Melbourne 21.4 23.81 Market Street, Sydney 7.7 7.2 209 Kingsway, South Melbourne 4.4 4.3400 George Street, Sydney 15.8 15.6Maritime Trade Towers, Sydney 5.1 5.9 Portfolio Like for Like * = 5.8% 249.8 236.2Grosvenor Place, Sydney 15.6 14.6 OtherDeutsche Bank Place, Sydney 26.4 12.1 Acquisition / Sale adjustment ** 17.4 20.9Kindersley House, Sydney 2.7 3.1 Operating costs (2.0) (3.3)80 Pacific Highway, North Sydney 3.4 3.5 Flat Lining 11.5 4.973 Miller Street, North Sydney 6.6 6.8 Fitout Amortisation (9.9) (5.4)50-60 Talavera Road, North Ryde 3.4 3.3 Revaluations 364.5 255.1WA 381.6 272.3109 St. Georges Terrace, Perth 2.7 1.1

QV 1, Perth 14.3 12.7 Net Property Income = 24.2% 631.4 508.5

For

per

sona

l use

onl

y

INVESTA PROPERTY GROUP ABN 54 084 407 241

Consisting of the consolidated reports of Investa Properties Limited ABN 54 084 407 241 and Investa Property Trust ARSN 088 705 882

Appendix 4E

ASX Full year information 30 June 2007

RESULTS FOR ANNOUNCEMENT TO THE MARKET FOR THE YEAR ENDED 30 JUNE 2007 (PREVIOUS CORRESPONDING PERIOD: YEAR ENDED 30 JUNE 2006) A$’000 Revenues from ordinary activities Up 30% to 1,728,859 Profit from ordinary activities after tax attributable to members

up 99% to 663,536

Net profit attributable to members up 99% to 663,536

Distributions Amount per security Franked amount per

security

Distributions paid and payable:

• Final distribution (June 2007) – payable 22 August 2007

• Interim distribution (December 2006 half year) - paid 28 February 2007

8.00¢

7.60¢

Nil

Nil

The final distribution will be paid solely out of income from the Investa Property Trust. Details of the tax advantaged component of the Trust’s 2006/07 distribution will be sent to security holders in August 2007. Record date for determining entitlements to the interim distribution: 5.00pm on 29 June 2007. Explanation of Revenue See attached full year consolidated financial report. Explanation of Profit from continuing operations See attached full year consolidated financial report. Explanation of Net profit See attached full year consolidated financial report. Explanation of Dividends See attached full year consolidated financial report.

For

per

sona

l use

onl

y

Investa Property Group

Annual Report

30 June 2007

The Investa Property Group (IPG) comprises Investa Properties Limited (IPL) ABN 54 084 407 241 and Investa Property Trust (IPT) ARSN 088 705882. Investa Properties Limited is the Responsible Entity of Investa Property Trust.

This report is not an offer or invitation for subscription or purchase or a recommendation of securities. It does not take into account the investmentobjectives, financial situation and particular needs of the investor. Before making an investment in IPG, the investor or prospective investor shouldconsider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult aninvestment advisor if necessary.

The IPG consolidated financial report has been prepared to enable IPL as Responsible Entity to comply with its obligations under the CorporationsAct 2001, to ensure compliance with the ASX Listing Rules and satisfy the requirements of the Australian Accounting Standards in relation tostapled structures. The responsibility for preparation of the consolidated financial report and any financial information contained in this financialreport rests solely with the directors of IPL. This financial report was authorised for issue by the directors on 9 August 2007. The directors have thepower to amend and reissue this financial report.

For

per

sona

l use

onl

y


Page 1

Annual Report – 30 June 2007

Contents Page

A BRIEF GUIDE TO THE INVESTA PROPERTY GROUP FINANCIAL REPORT ..................................................................................................... 3DIRECTORS’ REPORT.............................................................................................................................................................................................. 4AUDITOR’S INDEPENDENCE DECLARATION ...................................................................................................................................................... 24FINANCIAL REPORT OF INVESTA PROPERTIES LIMITED AND ITS CONTROLLED ENTITIES......................................................................... 26

Consolidated Income Statements ...................................................................................................................................................................... 27Consolidated Balance Sheets ............................................................................................................................................................................ 28Consolidated Statements of Changes in Equity ............................................................................................................................................... 29Consolidated Cash Flow Statements................................................................................................................................................................. 30Notes to the Consolidated Financial Statements.............................................................................................................................................. 31

Note 1. Summary of significant accounting policies.......................................................................................................................... 31Note 2. Critical accounting estimates and judgements...................................................................................................................... 39Note 3. Remuneration of auditor.......................................................................................................................................................... 39Note 4. Segment information ............................................................................................................................................................... 40Note 5. Income from operating activities ............................................................................................................................................ 41Note 6. Share of net profits of associates ........................................................................................................................................... 42Note 7. Net gain on fair value of investment properties ..................................................................................................................... 42Note 8. Expenses .................................................................................................................................................................................. 43Note 9. Income tax ................................................................................................................................................................................ 43Note 10. Dividends and distributions .................................................................................................................................................... 45Note 11. Earnings per stapled security ................................................................................................................................................. 45Note 12. Cash and cash equivalents ..................................................................................................................................................... 46Note 13. Assets – Receivables............................................................................................................................................................... 47Note 14. Assets – Inventories ................................................................................................................................................................ 47Note 15. Non-current assets classified as held for sale ....................................................................................................................... 47Note 16. Derivative financial instruments ............................................................................................................................................. 47Note 17. Current tax assets.................................................................................................................................................................... 48Note 18. Non-current assets – Intangibles ............................................................................................................................................ 48Note 19. Non-current assets – Property, plant and equipment............................................................................................................ 49Note 20. Non-current assets – Investments in associates and joint ventures.................................................................................... 51Note 21. Non-current assets – Investments in controlled entities....................................................................................................... 53Note 22. Non-current assets – Investment properties.......................................................................................................................... 55Note 23. Liabilities – Payables ............................................................................................................................................................... 57Note 24. Liabilities – Provisions ............................................................................................................................................................ 57Note 25. Interest bearing liabilities ........................................................................................................................................................ 58Note 26. Contributed equity ................................................................................................................................................................... 59Note 27. Treasury stock reserve ............................................................................................................................................................ 59Note 28. Security based payments ........................................................................................................................................................ 60Note 29. Minority interest ....................................................................................................................................................................... 63Note 30. Retained earnings .................................................................................................................................................................... 63Note 31. Reconciliation of net profit to net cash inflow from operating activities.............................................................................. 63Note 32. Non-cash financing and investing activities .......................................................................................................................... 64Note 33. Financial risk management ..................................................................................................................................................... 64Note 34. Financial instruments .............................................................................................................................................................. 65Note 35. Commitments ........................................................................................................................................................................... 66Note 36. Related party transactions ...................................................................................................................................................... 67Note 37. Key management personnel disclosures ............................................................................................................................... 68Note 38. Business combination ............................................................................................................................................................. 70Note 39. Contingent assets and liabilities............................................................................................................................................. 73Note 40. Events subsequent to balance date........................................................................................................................................ 74Note 41. Deed of cross guarantee ......................................................................................................................................................... 75

For

per

sona

l use

onl

y


Page 2

Annual Report – 30 June 2007

Contents Page

FINANCIAL REPORT OF INVESTA PROPERTY TRUST AND ITS CONTROLLED ENTITIES .............................................................................. 77Consolidated Income Statements ...................................................................................................................................................................... 78Consolidated Balance Sheets ............................................................................................................................................................................ 79Consolidated Statements of Changes in Equity ............................................................................................................................................... 80Consolidated Cash Flow Statements................................................................................................................................................................. 81Notes to the Consolidated Financial Statements.............................................................................................................................................. 82

Note 1. Summary of significant accounting policies.......................................................................................................................... 82Note 2. Critical accounting estimates and judgements...................................................................................................................... 88Note 3. Remuneration of auditor.......................................................................................................................................................... 88Note 4. Segment information ............................................................................................................................................................... 88Note 5. Income from operating activities ............................................................................................................................................ 88Note 6. Share of net profits of associates ........................................................................................................................................... 88Note 7. Net gain on asset revaluations................................................................................................................................................ 89Note 8. Expenses .................................................................................................................................................................................. 89Note 9. Income tax ................................................................................................................................................................................ 89Note 10. Distributions............................................................................................................................................................................. 90Note 11. Earnings per stapled security ................................................................................................................................................. 90Note 12. Cash and cash equivalents ..................................................................................................................................................... 91Note 13. Assets – Receivables............................................................................................................................................................... 91Note 14. Derivative financial instruments ............................................................................................................................................. 92Note 15. Non-current assets classified as held for sale ....................................................................................................................... 92Note 16. Non-current assets – Intangibles ............................................................................................................................................ 92Note 17. Non-current assets – Investments in associates ................................................................................................................... 93Note 18. Non-current assets – Investments in controlled entities....................................................................................................... 94Note 19. Non-current assets – Investment properties.......................................................................................................................... 95Note 20. Liabilities – Payables ............................................................................................................................................................... 96Note 21. Liabilities – Interest bearing liabilities .................................................................................................................................... 97Note 22. Liabilities – Provisions ............................................................................................................................................................ 98Note 23. Contributed equity ................................................................................................................................................................... 98Note 24. Treasury stock reserve ............................................................................................................................................................ 99Note 25. Minority interest ....................................................................................................................................................................... 99Note 26. Retained earnings .................................................................................................................................................................... 99Note 27. Reconciliation of net profit to net cash inflow from operating activities.............................................................................. 99Note 28. Non-cash financing and investing activities .......................................................................................................................... 99Note 29. Financial risk management ................................................................................................................................................... 100Note 30. Financial instruments ............................................................................................................................................................ 101Note 31. Commitments ......................................................................................................................................................................... 102Note 32. Related party transactions .................................................................................................................................................... 103Note 33. Key management personnel.................................................................................................................................................. 104Note 34. Contingent assets and liabilities........................................................................................................................................... 105Note 35. Events subsequent to balance date...................................................................................................................................... 105

DIRECTORS’ DECLARATION ............................................................................................................................................................................... 106INDEPENDENT AUDITOR’S REPORT TO THE STAPLED SECURITY HOLDERS OF INVESTA PROPERTY GROUP...................................... 107

For

per

sona

l use

onl

y


Page 3

A Brief Guide to the Investa Property Group Financial Report

Investa Property Group (IPG) (ASX Code: IPG) is a stapled security which comprises the stapling of: a share in Investa Properties Limited (IPL), and a unit in Investa Property Trust (IPT).

Investa Properties Limited is the Responsible Entity of Investa Property Trust.

The financial report of the Investa Property Group incorporates the financial reports for:

Investa Property Group (IPG Consolidated) Investa Properties Limited and its controlled entities (including Investa Property Trust and its controlled entities). Under

Australian equivalents to International Financial Reporting Standards (AIFRS), Investa Properties Limited is designated theParent Entity of Investa Property Group for accounting purposes. Therefore, the Investa Property Group consolidatedfinancial statements include Investa Properties Limited, as the Parent Entity, and its subsidiaries, and the results of InvestaProperty Trust and its subsidiaries.

Investa Property Trust Group (IPT Consolidated) Investa Property Trust and its controlled entities. As Investa Property Trust is also considered a disclosing entity, financial

information has been prepared for the Investa Property Trust consolidated group (IPT Consolidated) at 30 June 2007. TheGroup has applied Class Order 05/642 issued by the Australian Securities & Investments Commission which allows theInvesta Property Trust consolidated financial statements to be included in this financial report.

For

per

sona

l use

onl

y


Page 4

Directors’ Report

The directors of Investa Properties Limited (IPL), as Parent Entity of Investa Property Group (IPG or the Group) and ResponsibleEntity of Investa Property Trust (IPT), present their report together with the consolidated financial report of IPG and the consolidatedfinancial report of IPT for the year ended 30 June 2007.

DirectorsThe following persons were directors of IPL during the year and up to the date of this report, unless otherwise stated:

S Crane (Chairman – appointed 10 August 2006)J L Arthur (Managing Director)G B Monk (Finance Director)J I MessengerJ S MurrayD R Page AMHon R J Webster (appointed 10 August 2006)

Principal activitiesDuring the year ended 30 June 2007 the principal activities of the Group continued to consist of investment in commercial property,residential and commercial property development, and funds and property management. All business segments operate in onegeographical area, Australia.

Dividends and distributionsDividends and distributions paid and payable to stapled security holders for the year ended 30 June 2007 were $237,984,000(30 June 2006: $257,816,000) which is equivalent to 15.6 cents (30 June 2006: 16.9 cents) per stapled security and is whollycomprised of a distribution from the Trust. The amount of the distribution reflects the Group’s policy of aligning distributions withunderlying earnings per share and not to treat profit on sale of investment properties as base earnings for distribution purposes.

Review of operations and significant changes in the state of affairsA summary of the Group’s consolidated income and results is set out below:

2007$’000

2006$’000

Total income 1,728,859 1,328,560

Net profit after company tax attributable to stapled security holders of IPG 663,536 333,966Add back:

Amortisation of intangibles (including impairment) 3,860 188,731Fitout amortisation

1 9,875 5,404Less:

Rental straight-lining1 (11,475) (4,933)

Net gain on fair value of investment properties1 (333,374) (244,778)

Net gain on revaluation of investment in associates (31,149) (10,361)Net gain on fair value of derivative financial instruments

2 (38,184) (9,990)Earnings attributable to stapled security holders of IPG 263,089 258,039

Dividends and distributions paid and payable 237,984 257,816

Total value of Group assets 6,305,518 5,900,807

1 Excludes minority interest share.2 Net of tax.

The Group net profit after tax of $663,536,000 for the current year represents an increase of 99% on the previous correspondingperiod whilst the earnings attributable to stapled security holders increased by 2% to $263,089,000.

For

per

sona

l use

onl

y


Page 5

Directors’ Report (continued)

Review of operations and significant changes in the state of affairs (continued)The following summary, excluding minority interests, highlights the key contributors to the Group performance:

2007 2006$’000 $’000

Internal funds (Investment portfolio) 631,396 508,508External funds 11,658 6,687Property development 69,982 57,950Other income 4,563 15,498Profit from sale of investment properties 26,730 23,835Business unit contribution 744,329 612,478

Corporate expenses (21,438) (18,746)

Earnings before interest, tax, depreciation and amortisation (EBITDA) 722,891 593,732

Finance costs – borrowings (net of interest income) (86,233) (72,905)Finance costs – fair value derivatives 54,549 14,271Depreciation (5,431) (3,669)Amortisation (3,860) (188,731)Tax (18,380) (8,732)Net profit after company tax attributable to stapled security holders of IPG 663,536 333,966

The increase in net profit after tax over the previous financial year is attributable to divisional performance as follows: Investment portfolio revaluations (including shares in associates) of $366,123,000, an increase of $111,455,000 on the previous

corresponding period, reflecting strong leasing conditions and capital growth of the property portfolio. An earnings contribution from Investa Commercial Developments of $36,004,000 off-setting the impact of continued weak

market conditions faced by Clarendon Residential. Overall, development activities contributed $69,982,000 to Group earnings,up 21% on the prior comparable period.

An increase in earnings by the External Funds business of 74% to $11,658,000 following growth in funds under management,and realisation of deferred management and performance fees.

No impairment of goodwill in the current period compared with $184,558,000 in the previous corresponding period relatingprimarily to the write-off on intangibles associated with the Principal Office Fund acquisition (following the completion andrevaluation of Deutsche Bank Place) and impairment of residential goodwill.

A $54,549,000 gain on the fair value of interest rate and foreign currency swaps compared with $14,271,000 in the priorcorresponding period.

Based on the net profit after tax of $663,536,000, basic earnings per security for the year increased to 43.71 cents (30 June 2006:22.12 cents) per security whilst earnings attributable to security holders of $263,089,000 (which excludes revaluations, goodwillcharges and fair value of derivative instruments) increased 1.4% to 17.33 cents (30 June 2006: 17.09 cents) per security and canbe dissected as follows:

2007 2006Cents per security Cents per security

Underlying earnings 15.89 15.51Asset sale profits (net of tax) 1.44 1.58

17.33 17.09

The Group’s net assets increased by $513,268,000 to $4,209,062,000 primarily due to significant revaluations of investmentproperties held directly and through associates, and profits on sale of assets that have been retained and used to repay borrowings.As a result, net tangible assets increased by 16% from $1.81 per security to $2.10 per security.

The Group’s gearing as at 30 June 2007 was 27.3%, down from 31.5% at 30 June 2006, reflecting the impact of revaluations in theinvestment portfolio.

As at 30 June 2007, the Group’s debt was fully hedged with an average hedge maturity of 5.3 years. After taking into account theeffect of hedging, the average rate of debt is approximately 6.4%.

Likely developments and expected results of operationsComments on the results of the operations of the Group are included in this report under the review of operations and significantchanges in the state of affairs. Further information on likely developments in the operations of the Group and the expected results ofoperations has not been included in this report because the directors believe it would result in unreasonable prejudice to the Group.

For

per

sona

l use

onl

y


Page 6


Information on directors

S Crane BComm, Snr Fel FINSIA, MAICD, FAIM.CHAIRMAN

Experience and expertiseSteve Crane is a former Chief Executive Officer of ABN AMRO Australia and a current member of the ABN AMRO AustraliaAdvisory Council. He is a director of Adelaide Bank Limited and Chairman of Adelaide Managed Funds Limited and GlobalValve Technology Limited. Steve is also the Deputy Chairman of The Australian Chamber Orchestra and was previously adirector of Foodland Associated Limited.

Other current listed company directorshipsAdelaide Bank Limited – non-executive director (since April 2005)

Former listed company directorships in last three yearsFoodland Associated Limited (October 2003 to November 2005)

Special responsibilitiesChairmanChairman of Nominations Committee

Interests in securities75,000 stapled securities in Investa Property Group

J L Arthur LLB (Hons).MANAGING DIRECTOR

Experience and expertiseJohn Arthur has been a director of Investa Properties Limited since July 2001. He has extensive legal and commercialexpertise in property development and construction, managed property funds, information technology services and financialservices. Between 1981 and April 2006 he was a partner of major law firms in Sydney (except for between 1992 and 1995when he was General Counsel for the Lend Lease Group). John was also a director of the Manager of General Property Trustfrom 1989 to 1995.

Other current listed company directorshipsNil

Former listed company directorships in last three yearsRinker Group Limited – non-executive director (February 2003 to June 2007)

Special responsibilitiesManaging DirectorChairman of Clarendon Residential Holdings Pty LimitedDirector of Investa Funds Management LimitedDirector of Investa Asset Management Pty LimitedDirector of Investa Commercial Developments Pty LimitedDirector of IPG Finance Pty LimitedMember of Remuneration CommitteeMember of Sustainability, Safety, Health and Environment Committee

Interests in securities123,196 stapled securities in Investa Property Group. Mr Arthur has the potential to be issued with IPG securities under theMIP and EPP equity plans. His maximum aggregate entitlement under both plans is 262,000 IPG securities.

For

per

sona

l use

onl

y


Page 7


G B Monk BComm (Hons), FCPA, MAICD.FINANCE DIRECTOR

Experience and expertiseGraham Monk commenced with the Group as Chief Financial Officer in April 2002, responsible for treasury, risk management,accounting, taxation and information systems as well as providing significant input to the strategic direction of the Group. Hewas appointed as Finance Director effective 1 March 2006. Prior to working at Investa, Graham had 25 years experience in arange of ASX 100 companies including CSR Limited, Lion Nathan Limited and Lend Lease Corporation. He was also the ChiefFinancial Officer of Novus Petroleum Limited.


Former listed company directorships in last three yearsNil

Special responsibilitiesFinance DirectorDirector of Investa Funds Management LimitedChairman of Investa Commercial Developments Pty LimitedDirector of Clarendon Residential Holdings Pty LimitedDirector of IPG Finance Pty LimitedChairman of the Due Diligence Committee

Interests in securities872,475 stapled securities in Investa Property Group. Mr Monk has the potential to be issued with IPG securities under theMIP and EPP equity plans. His maximum aggregate entitlement under both plans is 126,000 IPG securities.

J I Messenger ANZIF (Snr. Assoc.), CIP.

Experience and expertiseJohn Messenger has extensive international insurance and risk management experience. John was previously the ManagingDirector of MLC Insurance Limited and the Chief Executive Officer, Corporate Risk Management for the Lend Lease Group. Heis a non-executive director of Territory Insurance Office, Darwin and Calliden Group Limited.

Other current listed company directorshipsCalliden Group Limited (appointed 24 May 2007)


Special responsibilitiesNon-executive directorChairman of Investa Funds Management LimitedChairman of Remuneration CommitteeMember of Audit and Risk Management CommitteeMember of Nominations CommitteeDirector of Investa Commercial Developments Pty LimitedLead Independent Director (from 1 April 2006 to 10 August 2006)


For

per

sona

l use

onl

y


Page 8


J S Murray BA, FCIT, FAICD.

Experience and expertiseJock Murray is a former Director General of the New South Wales Department of Transport, where he initiated a number ofmajor infrastructure and technology projects, and was Executive Director Transport for the Sydney 2000 Olympic Games, withresponsibility for infrastructure, strategic and operational planning. Jock has significant strategic, organisational andoperational experience in the areas of transport and major infrastructure. He is also a Non-executive Chairman of CentralRanges Pipelines Pty Limited and a director of Terminals Australia Pty Limited.


Former listed company directorships in last three yearsThe Hills Motorway Limited – Non-executive Chairman and non-executive director (November 2002 to June 2005)

Special responsibilitiesNon-executive directorDirector of Investa Commercial Developments Pty LimitedChairman of Sustainability, Safety, Health and Environment CommitteeMember of Audit and Risk Management CommitteeMember of Remuneration CommitteeMember of Nominations Committee


D R Page AM, B.Ec, FCA, MAICD.

Experience and expertiseDeborah Page is a chartered accountant and was a partner in Touche Ross/KPMG Peat Marwick until 1992. Subsequently sheheld senior executive positions with the Lend Lease Group, Allen Allen and Hemsley and the Commonwealth Bank. Deborahis currently Non-executive Chairman of Ascalon Capital Managers Limited, and a non-executive director of MacquarieGeneration, The Colonial Mutual Assurance Society Limited and Commonwealth Insurance Limited.



Special responsibilitiesNon-executive directorDirector of Investa Funds Management LimitedDirector of Clarendon Residential Holdings Pty LimitedChairman of Audit and Risk Management CommitteeMember of Sustainability, Safety, Health and Environment CommitteeMember of Nominations CommitteeMember of Remuneration Committee


For

per

sona

l use

onl

y


Page 9


Hon R J Webster MAICD, MAIM.

Experience and expertiseRobert Webster is a Senior Client Partner of Korn Ferry International and was previously the executive director of theInternational Banks and Securities Association of Australia. He spent over a decade in politics including serving as NSWMinister for Planning, Housing and Property Service. He is a director of Allianz Australia Limited, Brickworks Limited, ViridisInvestment Management Limited and The Shepherd Centre, and was previously a director of Mirvac Limited and MacquarieGeneration.

Other current listed company directorshipsBrickworks Limited (since August 2001)

Former listed company directorships in last three yearsMirvac Limited (February 1997 to December 2004)

Special responsibilitiesNon-executive directorDirector of Clarendon Residential Holdings Pty LimitedMember of Sustainability, Safety, Health and Environment CommitteeMember of Nominations Committee


Company SecretaryGeoffrey Stirton BComm, CA, MAICD, FCIS, is the Group Company Secretary. Geoffrey was appointed in October 2006 and isresponsible for company secretarial and compliance matters. He has over 20 years experience in finance and corporategovernance roles in financial services including as Company Secretary of the Wealth Management Division of National AustraliaBank (MLC) and Finance Director and Company Secretary with the Godfrey Pembroke Group.

Additional Company SecretaryLes Vance BComm, LLB (Hons), has recently been appointed to the role of Group Executive External Funds having joined Investain January 2006. He was a partner at Freehills until 2001. He joined TAB Limited as the General Counsel and was subsequentlyChief Executive – Gaming at TAB Limited.

Meetings of directorsThe numbers of meetings of IPL’s Board and of each Board committee held during the year to 30 June 2007, and the number ofmeetings attended by each director at the time the director held office, or was a member of the committee during the year were:

Meeting of CommitteesDirectors’meetings

Audit & RiskManagement Nominations Remuneration

Sustainability, Safety,Health & Environment

Held1 Attended Held

1 Attended Held1 Attended Held

1 Attended Held1 Attended

S Crane 2 15 315 - 5

4 - - - 34 - -

J L Arthur 17 17 - 64 1 1 5 5 4 4

G B Monk 17 17 - 64 - 1

4 - 34 - -

J I Messenger 173 17 6 6 1 1 5 5 - -

J S Murray 173 17 6 6 1 1 5 5 4 4

D R Page AM 173 17 6 6 1 1 5 5 4 4

Hon R J Webster 215

3 15 - - - - - - 4 3

1 “Held” reflects the number of meetings which the director was eligible to attend as a member of the Board or Committee.2 Mr S Crane and Hon R J Webster were appointed to the Board on 10 August 2006, and have attended all meetings since that date.3 Three additional meetings of the non-executive directors were held to consider matters associated with the Morgan Stanley Proposal.4 Reflects attendance at a meeting of which the director was not a Committee member, but eligible to attend.

The Audit and Risk Management Committee assists the Board in fulfilling its oversight responsibilities. The committee reviews andmakes recommendations to the Board in relation to the financial reporting process, the system of internal controls, the managementof financial and operational risks, external and internal audit processes and the processes for monitoring compliance with laws,regulations and the Group’s Code of Conduct. The Audit and Risk Management Committee is chaired by D R Page.

The Nominations Committee provides advice and recommendations to the Board regarding criteria for selection of directors,nominations for appointment as directors and criteria for reviewing the performance of the Board and of individual directors. TheNominations Committee is chaired by S Crane.

For

per

sona

l use

onl

y


Page 10


The Remuneration Committee provides advice and recommendations to the Board regarding remuneration policy, and the amountof remuneration for directors, committee members and senior executives. The committee also provides advice andrecommendations to the Board on remuneration policy for all other staff and oversees succession and development programs. TheRemuneration Committee is chaired by J I Messenger.

The Sustainability, Safety, Health and Environment Committee supervise and guide the implementation, operation andeffectiveness of the Group’s Sustainability, Safety, Health and Environment Policies. The committee reviews proposals to furtherthe Company’s performance in these matters, including the establishment and monitoring of performance targets and its own codeof business conduct, with the objective of enhancing shareholder value. The Sustainability, Safety, Health and EnvironmentCommittee is chaired by J S Murray.

Meetings of subsidiary boardsIn addition to the abovementioned meetings, Clarendon Residential Holdings Pty Limited, Investa Funds Management Limited andInvesta Commercial Developments Pty Limited convene separate board meetings to review and consider the operations, strategyand governance of these subsidiary businesses. The Clarendon Residential Holdings Pty Limited board met on six (6) occasions,the Investa Funds Management Limited Board met on five (5) occasions and the Investa Commercial Developments Pty Limitedboard met on 11 occasions during the year.

Audited Remuneration Report1. Introduction

For IPG, business success is driven by high quality people working effectively together towards the achievement of businessaligned objectives. The overarching aim is to continue to build a high performance culture. Hence, the Group is committed toattracting, retaining, developing and inspiring employees to contribute strongly at the individual, team, business unit and Grouplevel.

To achieve these aims, the Group applies a “total rewards” perspective, including both tangible benefits such as remuneration,professional development opportunities and leave policies; and less tangible benefits such as quality of leadership, teamworkenvironment, personal career development, community engagement and connection with the Group’s vision and values.

The Group invests across this full spectrum in a balanced and substantial way at all levels. The following initiatives are highlighted: supporting individual staff development is the Peter J. A. Carney memorial award for Leadership which gives employees the

opportunity to apply for a financial grant toward their further studies. The Remuneration Committee (Committee) assessesnominees against a series of criteria reflective of the key leadership attributes demonstrated by one of the Group’s foundingdirectors, the late Peter J. A. Carney. Successful candidates are presented with their award at the Annual General Meeting.

the “Investa – Active in the Community” program. This program was established in 2005 to support the Group’s employees intheir community activities in the following ways:- financial contributions to community organisations in which the Group’s employees are involved; and- providing each employee up to one full day each year to participate in community activities sponsored by a selected group

of charities.

Whilst the above applies generally to the Group’s employees, this Remuneration Report focuses on the remuneration policy andoutcomes for the Group’s directors and executives. It has been prepared in accordance with the Corporations Act 2001 andapplicable accounting standards.

In financial year 2006, the Remuneration Committee embarked on a comprehensive redesign of the Group’s reward strategies andprograms. Implementation of that redesign began in financial year 2007. Key features relevant to executives include: increasing the proportion of executive remuneration “at risk” and aligned to security holder interests; the cessation of further awards under the Employee Share Acquisition Plan (ESAP); the introduction of a new Management Incentive Plan (MIP) including both cash and equity components which replaces

previous short term incentive arrangements; the introduction of a new Executive Performance Plan (EPP) to provide a longer term incentive; attaching challenging performance hurdles to each of the Management Incentive Plan and Executive Performance Plan; and encouraging a minimum shareholding by executives.

2. Role of the Remuneration Committee

The Committee is responsible for: making recommendations to the Board on remuneration packages and other terms of employment for:

- the Managing Director & Chief Executive Officer (Chief Executive);- all executives, including executive directors, reporting directly to the Chief Executive (collectively, including the Chief

Executive, “the executives”); and- non-executive directors;

reviewing Group, business unit and individual performance against targets for executives and making recommendations to theBoard regarding the extent to which performance conditions have been achieved; and

approving overall remuneration policy and budgets for staff remuneration and incentive payments.

The Committee’s charter is published in the “Corporate Governance” section of the Group’s website, www.investa.com.au.

For

per

sona

l use

onl

y


Page 11


Remuneration Report (continued)

3. Morgan Stanley Proposal

On 31 May 2007, the Group announced on the Australian Securities Exchange (ASX) that it had entered into an agreement(Implementation Agreement) with funds managed by Morgan Stanley Real Estate under which, subject to the satisfaction of certainconditions including the obtaining of approval from IPG’s security holders, those funds would acquire all outstanding IPG securitiesfor a price of $3.08 per security (the “Morgan Stanley Proposal”). The offer is inclusive of the final distribution payment.

IPG security holders are scheduled to meet and vote on the Morgan Stanley Proposal on 22 August 2007. If security holders vote infavour, and assuming other relevant conditions are satisfied, all IPG securities will be acquired by the funds managed by MorganStanley Real Estate in early September 2007 (Implementation Date).

In recognition of the commercial benefit to the Group in maximising key talent retention in the period leading up to and after IPGsecurity holders vote on whether or not to approve the Morgan Stanley Proposal, the Board approved a number of initiatives toapply to executives’ employment arrangements consequent upon that Proposal.

These initiatives include the introduction of special retention payments (the Chief Executive, Mr Arthur, elected not to participate inthese), changes to vesting arrangements under ESAP, MIP and EPP, and changes in termination notice periods under executiveservice agreements.

Some initiatives will only apply if the Morgan Stanley Proposal is implemented, but others will take effect whether or not theProposal proceeds. Details of the initiatives appear in Section 6 of this Remuneration Report.

If the Morgan Stanley Proposal is implemented, the ongoing remuneration arrangements for executives will be as agreed betweenthem and Morgan Stanley Real Estate

1. If, on the other hand, the Morgan Stanley Proposal does not proceed, the Group will

continue the remuneration policies approved by the Board as outlined in this Remuneration Report, subject to such amendment asthe Board requires from time to time.

4. Executive remuneration policy

4.1 Principles

The key principles of the Group’s executive remuneration policy are to: ensure that remuneration arrangements attract, retain and motivate high quality executives committed to the interests of

security holders; deliver transparent, market competitive rewards appropriate for the results delivered; align executive remuneration with the achievement of strategic objectives and the creation of value for security holders; and encourage co-operation between executives and promote the focus and alignment of the efforts and resources of the various

business units to generate enhanced value at the Group level.

4.2 Individual elements of remuneration

The remuneration framework provides a mix of fixed and at risk remuneration, utilising both cash and equity. The individualcomponents of executive remuneration are: fixed remuneration comprising base pay plus superannuation; the MIP comprising two components: A cash based incentive opportunity paid after the end of the annual performance period,

and performance rights which are converted into deferred equity at the end of the annual performance period, which are thensubject to a further two year retention period. Both components are based on performance assessed against an annualscorecard of agreed performance objectives (KPIs); and

the EPP: an equity based long-term incentive opportunity based on two (2), three (3) and four (4) year measures of TotalSecurityholder Return (TSR) performance.

1 There will also be transitional arrangements, for example, in relation to bonus terms and conditions for the period beginning 1 July 2007 andending on the Implementation Date, when executives will be eligible to earn a pro rata amount determined by reference to their financial year2007 total incentive potential plus an uplift of 6%.

For

per

sona

l use

onl

y


Page 12



It is a requirement of the Group’s policy that, over time, executive remuneration packages should transition to a higher proportion oftotal remuneration being at risk and a higher proportion being delivered in the form of equity. That process began in financial year2007. The financial year 2007 proportion of fixed and at risk remuneration was as set out in the following table. Further progress isplanned for financial year 2008.

Financial year 2007 Fixed remuneration Potential cash-based incentives- at risk

Potential equity-based incentives- at risk

Chief Executive 50 % 25% 25%Finance Director 48.2% 28.2% 23.6%Other executives 46% - 50% 25% - 28% 23% - 26%

The target remuneration mix policy was determined having regard to: the impact (including cost to the Group) of significantly changing the balance of fixed and at risk remuneration for executives in

one step; market practice as advised by independent consultants; and the Group’s business strategy.

4.3 Fixed remuneration

The Committee considers it important to offer a competitive level of fixed remuneration in order to attract and retain the executivesneeded to ensure the success of the business. In each case, fixed remuneration is determined taking into consideration thepractices of competitors for talent relevant to the specific role.

Each year, executives’ fixed remuneration is reviewed by the Committee, with market remuneration data provided by independentexternal remuneration consultants. Following that review, the Committee makes a recommendation to the Board.

The Group has typically aimed fixed remuneration between the median and the 75th

percentile of the market, depending oncompetitive pressure and individual circumstances. The Committee has increased the emphasis on variable remuneration and ismoving fixed remuneration towards the median of the market. The Committee believes this approach best supports the Group’sobjectives of offering competitive remuneration opportunities which are directly linked to the achievement of superior performance.

4.4 Management Incentive Plan

All executives are eligible to participate in the MIP. The MIP has two components, cash based and equity based, as follows:

4.4.1 MIP – Cash based

The cash component of the MIP is based on annual performance measured against a balanced scorecard consisting of: sustainability, safety, health and environment (SSHE), financial and non-financial performance of the Group; SSHE, financial and non-financial performance of the executive’s business unit; performance of the executive measured against agreed KPIs; strategic objectives; and leadership behaviours, expectations and organisation development objectives.

This component of remuneration aims to: encourage and reward the desired behaviours and actions of each executive and to align reward with the success of the

executive’s business unit and the Group as a whole; focus executives on those performance areas which, although measured annually, are fundamental drivers of the Group’s

longer-term success; and ensure that the actual incentive payment increases for superior performance and decreases, or is eliminated, for less optimal

performance.

The annual scorecard of KPIs used to assess performance is designed to ensure rigour and consistency. It also incorporatesincreased ”stretch” into the target setting process, enabling higher potential reward outcomes if outstanding levels of performanceare achieved. This design is consistent with the intention to move towards greater proportions of remuneration at risk. It also aims tostimulate innovation by providing increased motivation to find fundamentally new ways to improve performance.

The annual scorecard encourages co-operative use of the Group’s resources by ensuring that the performance of each executive ismeasured in a balanced way across Group, business unit and personal measures. Indicatively, Group measures comprise at leastthirty percent (30%) of the incentive opportunity for executives. Additionally, five percent (5%) of the incentive opportunity relates tosafety, sustainability, health and environment (SSHE) outcomes. For an executive leading a business unit, forty percent (40%) ofthe incentive opportunity relates to that business unit. The balance of the incentive opportunity relates to strategic objectives andleadership behaviours.

For

per

sona

l use

onl

y


Page 13



The financial performance measures include earnings per share and return on funds employed. Higher performance in these areasis fundamental to driving superior security holder returns over the longer term.

Non-financial performance measures are included to ensure that focus and resources are applied to activities important to thedevelopment and growth of the business, in balance with the focus and resources applied to achieve financial performance.Specifically, SSHE performance measures are important because they support the desired values and culture of the Group andbecause effectiveness in these areas underpins sustainable business performance and growth.

A combination of Group, business unit and personal objectives is used to encourage excellence at each of those levels, as well asteamwork and co-operation across the Group’s businesses.

Executives have a cash MIP potential opportunity in the range of 24% – 50% of total remuneration. The Board reserves thediscretion to make awards in excess of the stated potential opportunity to reward extraordinary outcomes (for example, where keyGroup financial targets have been exceeded and a premium of quality earnings has been achieved over budget and marketconsensus earnings, having regard to market conditions).

At the beginning of each financial year, the Board, on the Committee’s recommendation, approves the Group, business unit andpersonal performance measures and stretch targets for each executive. Performance targets are not disclosed outside the Groupdue to their commercial sensitivity.

At the end of the financial year, the Board, on the Committee’s recommendation, assesses the extent to which performance targetshave been achieved and accordingly, the cash MIP awards payable to executives.

The target incentive opportunity can only be earned in its entirety if an executive achieves all performance KPIs and the executive’sbusiness unit and the Group meet their respective financial performance targets.

4.4.2 MIP – Equity based

The equity based component of the MIP is designed to: increase the equity based proportion of executives’ at risk reward to strengthen the alignment with security holder interests; facilitate executives’ security ownership; and encourage talent retention.

Rights to securities (Rights) are granted at the beginning of the financial year, subject to performance assessed at the end of thefinancial year against the same annual scorecard of KPIs used to assess the cash component of the MIP.

The number of securities available for each executive is based on a maximum potential dollar amount, which for executives infinancial year 2007 was up to but not greater than 50% of the MIP cash potential. The number of securities potentially available tothe executive is calculated by dividing the potential value by the volume weighted average security price based on the first five (5)trading days in July 2006 on the ASX. The potential number of securities available to each executive is communicated with his orher remuneration review.

Based on performance measured at the end of the 12 month period, the resultant number of Rights convert to Restricted Securities,which do not vest for two years (that is, the extent to which rights granted in respect of financial year 2007 convert into securities isassessed at the end of financial year 2007 but those securities do not vest until the end of financial year 2009). Securities requiredto satisfy MIP obligations are purchased on-market.

During the two year vesting period, the Restricted Securities are held under the MIP rules and the executive receives the benefit ofthe distributions on those securities.

If prior to the end of the vesting period an executive dies, or ceases employment as a result of retirement, ill health, retrenchment,change in control, or other circumstances as determined by the Board, the Restricted Securities will vest subject to Board approval.If an executive ceases employment for any other reason prior to vesting, the Restricted Securities are forfeited and any Rightswhich have not then converted into Restricted Securities will lapse.

In order to encourage executives to retain the Restricted Securities after the vesting period, the securities remain subject to the MIPrules for a period of up to seven years after vesting and continue to be subject to a sales restriction for as long as they remain withinthe MIP. An executive is required to place a request with the Board to withdraw the Restricted Securities from the MIP and lift thesales restriction.

For

per

sona

l use

onl

y


Page 14



4.5 Executive Performance Plan

4.5.1 Background to Executive Performance Plan

The primary aims of the EPP are: to encourage behaviours and judgments that consider long-term implications for the Group; to focus executives on the performance of the Group as a whole and encourage co-operation and knowledge sharing across

the Group; through equity ownership, to align executives with security holder interests; and to provide a retention effect through annual grants and phased vesting periods.

The EPP has been structured to make annual grants of Performance Rights which allow executives to acquire fully paid IPGsecurities, at no cost, provided performance conditions are satisfied.

The Committee believes the EPP is fundamental to the Group’s executive remuneration approach, as the plan: allows rewards to accrue to executives only when the Group’s TSR, over multi-year periods, exceeds hurdle rates set by

reference to the S&P/ASX 200 Listed Property Trust Index; and facilitates executives’ security ownership, thereby further aligning their interests with those of security holders.

4.5.2 Performance and vesting conditions

EPP Grants vest based on TSR performance (defined as the growth in security price plus reinvested dividends/distributions)measured over two (25% of grant), three (25% of grant) and four years (50% of grant) respectively. Any Performance Rights notvesting at each testing point are carried forward for quarterly retesting up to and including the 5th anniversary of grant. No retestingis available after the 5th anniversary of grant, at which point all Performance Rights that have not vested lapse. The retestingarrangements maintain the alignment between executive remuneration and the delivery of results for security holders, as reflectedby relative TSR performance assessed over the entire performance period.

To reduce the impact of market volatility and the potential impact of short term distortions, a smoothing practice has been adoptedfor performance hurdle measurement and retesting.

The Group’s TSR is measured relative to the S&P/ASX 200 Listed Property Trust Index (excluding IPG) with pro-rata vestingbetween the median and 75

thpercentile as follows:

IPG’s TSR ranking Percentage of rights vesting

Below median 0%

At median 50%

Between median and 75th

percentilePro-rata vesting (i.e. 50% plus 2% for eachpercentile above median)

75th

percentile or above 100%

TSR measured against the S&P/ASX 200 Listed Property Trust Index (excluding IPG) was selected as the performance measurefor the EPP as it reflects the returns received by security holders relative to the Group’s main competitors for business, talent andcapital.

At each performance testing date, an external firm will provide the Group with an independent analysis of its performance relative tothe S&P/ASX 200 Listed Property Trust Index.

If an executive dies or ceases employment prior to the end of the vesting period as a result of retirement, ill health, retrenchment,change in control, or other circumstances as determined by the Board, a portion of the Performance Rights may vest at the Board’sdiscretion. If an executive ceases employment for any other reason the awards will lapse.

The Group purchases on-market the securities required to satisfy the EPP Performance Rights. Upon vesting of PerformanceRights, the executive is allocated IPG securities and is then entitled to all future distributions paid on those securities.

To encourage executives to retain these securities, the securities remain subject to the EPP rules after vesting and continue to besubject to a sales restriction for as long as they remain within the EPP. An executive is required to place a request with the Board towithdraw the Restricted Securities from the EPP and lift the sales restriction.

For

per

sona

l use

onl

y


Page 15



4.6 Entitlements on termination under incentive plans

On termination, and in accordance with the relevant plan rules, an executive has the MIP, ESAP and EPP entitlements summarisedin the table below:

4.7 Equity incentives – Employee Equity Grant Plan

A new employee securities plan was introduced in 2007. This plan utilises the annual $1,000 tax exemption extended to stapledsecurity entities, and replaces the use of ESAP for Group employees generally. Following the end of the financial year, all eligibleemployees will be granted up to $1,000 of IPG securities subject to the achievement of a pre-determined Group performancehurdle. Executives also participate in this plan so that employees across the Group openly share a component of remunerationwhich is linked to their collective performance and aligned with the interests of security holders.

The plan operates as follows: Group underlying earnings per share over the financial year is used as the performance hurdle, with 100% being awarded for

“target" performance and 0% for below target performance; the number of securities have a value equivalent to $1,000 is calculated in accordance with the relevant provisions of the

income tax legislation (which are based on the one-week volume weighted average security price at the time of acquisition byemployees);

access to securities is restricted for three years from award; distributions flow to the individual participants from the time the restricted securities are awarded; and restricted securities may be accessed after the three years or earlier on the employee ceasing employment with the Group.

MIP EPP ESAP(grandfathered awards)Type of

termination Cash award Unvestedrights

Vestedsecurities

Unvestedsecurities

Vestedawards

Unvestedawards

Vested awards Unvested awards

Terminationwith notice

Determinedby Board

Determinedby Board

Released toparticipant



Determinedby Board

Securities soldand proceedsapplied to repaythe ESAP loan.Participantreceives anysurplusproceeds ofsale.

Securities soldand proceedsapplied to repaythe ESAP loan.Directorsdeterminewhether theparticipantreceives anysurplus proceedsof sale.

Terminationfor cause

No payment Rights lapse Released toparticipant

Securitiesforfeited


Awardslapse


Securities soldand proceedsapplied to repaythe ESAP loan.The Groupretains anysurplus proceedsof sale.

Termination forretirement, illhealth, death,retrenchment,change incontrol, or theBoarddeterminesthat thiscategory oftermination isto apply

Determinedby Board

Determinedby Board




Determinedby Board


Securities soldand proceedsapplied to repaythe ESAP loan.Participantreceives anysurplus proceedsof sale.

For

per

sona

l use

onl

y


Page 16



4.8 Security ownership policies

4.8.1 Salary sacrifice

The Group has designed a new equity based plan to enable executives (and non-executive directors) to salary sacrifice part of theirfixed remuneration to acquire IPG securities. The Committee believes that such a plan will further promote security ownership and,by doing so, further align the interests of executives with those of security holders. Securities for the purpose of the plan arepurchased on-market.

The launch of this plan was put on hold in light of the possibility of the Morgan Stanley Proposal being implemented. If the MorganStanley Proposal is not implemented then the Salary Sacrifice Plan will be put in place during FY08.

4.8.2 Minimum shareholding requirement

A minimum shareholding guideline exists for executives. Executives are encouraged to utilise the opportunity afforded by theseequity based remuneration arrangements to build and maintain a security holding with a market value not less than their annualfixed remuneration. Executives have five years to build this holding.

4.8.3 Equity hedging policy

The Group does not permit employees to enter into any hedging arrangements to protect the value of securities that remain subjectto any of the Group’s incentive plans, including securities that have vested but remain subject to disposal restrictions under theterms of an incentive plan.

5 Link between IPG’s performance and executive remuneration

Executive remuneration in the Group has been structured with the objective of linking rewards to company and individualperformance.

The overall level of executive reward in any given year takes into account the Group’s performance over a number of years, and, inparticular, the current and prior years. Over the past five (5) years, the Group’s profit from ordinary activities after income tax hasgrown at an average rate of 49.5% per annum, and total security holder return has averaged 14.4% per annum. This has beencalculated assuming an initial investment of $1,000, full participation in the dividend reinvestment plan when in operation, inclusionof the franking credit available on IPG portion of the distribution and no disposal of securities acquired. During the same period,average executive remuneration has grown by approximately 19.0% per annum.

The Board believes that the link between performance and remuneration has been strengthened through the adoption of theremuneration arrangements detailed in Section 4 of this Remuneration Report, including by: increasing the proportion of executives’ remuneration packages that is at risk; increasing the proportion of executives’ remuneration to be delivered in equity; incorporating challenging performance hurdles in the MIP which will increase the amount of the incentive payment awarded for

superior performance but decrease or eliminate awards where performance is less optimal; and incorporating, through the EPP, performance hurdles based on the Group’s TSR relative to the S&P/ASX 200 Listed Property

Trust Index (excluding IPG).

6 Executive employment arrangements

Executive employment arrangements are reflected in: Service agreements each executive has entered into with the Group, the principal terms of which are outlined below; and Other arrangements introduced as a consequence of the Morgan Stanley Proposal, details of which are outlined below.

6.1 Chief Executive’s service agreement

John Arthur was appointed as Managing Director & Chief Executive Officer effective 1 May 2006.

Mr Arthur has a five year service agreement beginning on 1 May 2006. At the end of that five year period, the service agreementcontinues until terminated by either party in accordance with its terms.

A full copy of Mr Arthur’s agreement was released by the Group to the ASX on 12 April 2006.

For

per

sona

l use

onl

y


Page 17



Mr Arthur’s service agreement provides for: an initial fixed remuneration (inclusive of superannuation) of $1,150,000 p.a.; from 1 July 2006 until next reviewed by the Board, the potential annual value of benefits under short and long-term incentive

plans to be at least equivalent to 100% of fixed remuneration; and fixed remuneration and the potential annual value of benefits under short and long-term incentive plans to be subject to review

by the Board in respect of each financial year.

Additionally, the service agreement includes a one-off “unlatching fee” of $450,000 to compensate Mr Arthur for agreeing to resignhis position as a senior partner and chairman of a leading Sydney law firm. This fee is to be paid in equal instalments of $150,000.The first instalment was paid within seven (7) days of 30 June 2006 and the two subsequent instalments are payable within seven(7) days of 30 June 2007 and 30 June 2008 (or at such earlier times as determined by the Board) provided that Mr Arthur remainsemployed by the Group on the date of the relevant instalment. If the Group terminates Mr Arthur’s employment without cause or dueto illness, all unpaid instalments of the unlatching fee are payable by the Group on the termination date.

The Group may terminate this agreement at any time, including during the initial five year term, for any reason by giving 12 months’notice but cannot require Mr Arthur to work out that notice period without his consent. The Group may elect to make a payment inlieu of some or all of the notice period.

The following table summarises Mr Arthur’s contractual entitlements to termination payments. As announced to the ASX on 31 May2007, Mr Arthur’s service agreement was amended by consent on 31 May 2007 as a consequence of the Morgan Stanley Proposal.The variation related to Mr Arthur’s rights consequent upon a termination without cause or a constructive dismissal, and issummarised in the following table:

Form of termination Entitlement on termination

If the Group terminates the agreementby giving notice on or before 30 June2008 (previously 30 April 2007).

1

A total payment equivalent to 1.3 times the Initial Potential Package (i.e. $2,300,000,being the sum of the initial fixed remuneration of $1,150,000 and the initial minimumpotential annual value of benefits under incentive plans of $1,150,000) inclusive ofpayments made in respect of notice worked by Mr Arthur, any payment in lieu ofnotice and any other remuneration or benefits payable on termination of employment(other than the unlatching fee and accrued leave entitlements).

If the Group terminates the agreementby giving notice after 30 June 2008 buton or before 30 June 2009 (previously 30April 2008).

1

A total payment equivalent to 0.87 times the Initial Potential Package inclusive ofpayments made in respect of notice worked by Mr Arthur, any payment in lieu ofnotice and any other remuneration or benefits payable on termination of employment(other than the unlatching fee and accrued leave entitlements).

If the Group terminates the agreementby giving notice after 30 June 2009(previously 30 April 2008).

1

A total payment of 12 months’ fixed remuneration inclusive of any period worked byMr Arthur but not including any unpaid unlatching fee or accrued leave entitlements.

For the purposes of these entitlements the Group will be taken to have terminated Mr Arthur’s executive service agreement if therehas been a material diminution of his status or responsibilities as Chief Executive of a publicly listed organisation.

Mr Arthur may terminate the service agreement at any time for any reason by giving six (6) months notice.

The service agreement contains a restraint of trade clause for the benefit of the Group which restricts Mr Arthur during the term ofhis employment and for up to six (6) months after the termination of employment from competing with the Group and solicitingGroup customers or employees.

The service agreement also contains other general provisions and provisions protecting the Group’s confidential information,intellectual property and moral rights.

Details of Mr Arthur’s remuneration for financial year 2007 are set out in Section 8 of this Remuneration Report.

1 Change announced to the ASX on 31 May 2007.

For

per

sona

l use

onl

y


Page 18



6.2 Finance Director’s service agreement

Graham Monk was appointed as Chief Financial Officer in 2002 and was appointed as Finance Director effective 1 March 2006.

Mr Monk signed a new service agreement in January 2007. This service agreement provides for: An initial fixed remuneration (inclusive of superannuation) of $563,971 p.a. From 1 July 2006 until next reviewed, the potential annual value of benefits under short and long term incentive plans to be at

least $605,000. Fixed remuneration and the potential value of benefits under short and long term incentive plans to be subject to annual review.

Mr Monk’s service agreement was varied by consent on 31 May 2007 in consequence of the Morgan Stanley Proposal. Thevariations are in the same terms as described in Sections 6.3, 6.4 and 6.5 below in relation to executives generally.

The Group may terminate Mr Monk’s employment at any time for any reason by giving six (6) months’ notice. The Group may electto make a payment in lieu of some or all of the notice period. Mr Monk may terminate his employment at any time for any reason bygiving three (3) months’ notice.

Mr Monk’s service agreement contains other general provisions and provisions protecting the Group’s confidential information,intellectual property and moral rights.

Details of Mr Monk’s remuneration for financial year 2007 are set out in Section 8.

6.3 Other executives’ service agreements

The Group has executive service agreements in generally consistent terms with all other executives.

None of these executives is appointed for a fixed term. All terms of employment currently enable the Group to terminate thatrelevant executive’s employment at any time for any reason.

As a consequence of the Morgan Stanley Proposal, agreement has been reached with nine (9) key executives entitling them to 18months’ notice of termination, if during the period from 1 July 2007 until 30 June 2008, either of the following circumstances: the executive is terminated without cause; or the executive resigns within six (6) months of his or her duties being materially adversely altered or varied substantially

resulting, in either case, in his or her status or responsibilities being materially diminished.

From 1 July 2008, the notice period in executive service agreements reverts to the period initially specified in those agreements,which is six (6) months.

The temporary operation of the eighteen (18) month notice period is not conditional upon the Morgan Stanley Proposal beingimplemented.

If the Group elects to terminate an executive service agreement it may elect to make payment in lieu of notice. The executives arealso able to terminate their employment by giving three (3) months notice at any time.

6.4 Special retention payments to executives

Special retention payments potentially totalling $2.65 million have been approved by the Board for nine executives (excluding MrArthur who has elected not to participate), each of whom is entitled to a payment (“Special Payment”) payable on 8 July 2008,subject to the executive: remaining employed by the Group and not having given notice of termination or receiving notice of termination as at 30 June

2008; observing the terms of their executive service agreement; and on receipt of the Special Payment, releasing the Group from liability to make a termination payment in respect of the

executive’s employment up to and including 30 June 2008.

This initiative is not dependent upon the Morgan Stanley Proposal being implemented.For

per

sona

l use

onl

y


Page 19



6.5 Morgan Stanley Proposal – other arrangements

The following section describes remuneration initiatives approved by the Board which are dependent on the implementation of theMorgan Stanley Proposal. Unless otherwise stated, entitlement to the arrangements described below is subject to the executiveremaining employed by the Group and not having given notice of termination or receiving notice of termination for cause as at onemonth after the Implementation Date.

Old Retention Scheme (ORS)If the Morgan Stanley Proposal is implemented before 1 October 2007, any amounts that would have been payable on 1October 2007 and 1 October 2008 under the old retention scheme

1will be grossed up and the aggregated amount paid to the

executive as a cash payment rather than being applied in reduction of any outstanding ESAP loan2. That amount will be paid

no later than one month after the Implementation Date.

If the Morgan Stanley Proposal is implemented after 1 October 2007, the executive’s 2007 ORS payments will be applied toESAP loan reduction and 2008 payments will be grossed up for tax and paid no later than one month after the ImplementationDate.

If the Morgan Stanley Proposal is not implemented, the 2007 and 2008 ORS payments will be applied to reduce the ESAP loanunder existing arrangements.

ESAPThe Board has exercised its discretion to permit early vesting of ESAP securities solely for the purpose of allowing thosesecurities to participate in the Morgan Stanley Proposal. Vesting is subject to the executive repaying any outstanding loanadvanced to the executive under the ESAP to acquire the relevant ESAP securities.

Deferred STIDeferred STI Cash Payments are short term incentive bonus amounts earned by executives in financial year 2006, due to bepaid in October 2009, subject to the executive remaining employed as at that date. These amounts will be paid no later thanone month after the Implementation Date.

EPP EquityThe Board has exercised its discretion to permit an early vesting of executives’ financial year 2007 EPP allocations solely forthe purpose of allowing those securities to participate in the Morgan Stanley Proposal. Payment will be made as soon aspossible after the Implementation Date. Accordingly, hurdles applicable to the financial year 2007 EPP allocations have beenwaived by directors but solely for the purpose of enabling the relevant securities to participate in the Morgan Stanley Proposal.

MIP Equity and CashThe Board has exercised its discretion in relation to any securities that executives may become entitled to as a result of theallocation of MIP equity for financial year 2007, to permit those securities to vest solely for the purpose of allowing thosesecurities to participate in the Morgan Stanley Proposal. The two-year deferred vesting that would have applied to thosesecurities has accordingly been waived by the directors but solely for the purpose of enabling those securities to participate inthe Morgan Stanley Proposal.

The cash element of the MIP incentives for the year commencing 1 July 2007 and ending on the Implementation Date will bepaid no later than one month after the Implementation Date.

1 ORS is a retention scheme introduced in 2005 to reward and retain key executives and employees. A pool of funds was made available on athree (3) year vesting basis to reduce each individual’s ESAP loan. Participants are only entitled to receive the allocation if they remain anemployee of the Group as at the vesting date (i.e. three (3) years after the grant). Two allocations were made on 1 October 2004 and on 1October 2005.

2 Until the conclusion of 2006, executives awarded securities through ESAP received a non-interest bearing loan for the amount required topurchase the relevant number of IPG securities. No awards were made under ESAP in financial year 2007. The scheme was replaced by theEPP and MIP described in Section 4 in this Remuneration Report with effect from 1 July 2006.

For

per

sona

l use

onl

y


Page 20



7 Non-executive director remuneration

7.1 Remuneration policy

The responsibilities of non-executive directors have expanded over recent years. The directors’ fee pool, and the fees paid to non-executive directors from that pool, reflects these increased responsibilities and the demands made on non-executive directors.

Non-executive directors’ fees are reviewed annually by the Board having regard to advice on market practice from independentremuneration consultants.

7.2 Non-executive directors’ fee pool

The maximum aggregate annual fees for non-executive directors were set at $1,000,000 by security holder resolution at the 2003Annual General Meeting. Within this aggregate limit, fees for individual directors are set by the Board.

7.3 Non-executive directors’ fee structure

The fee arrangements for various activities undertaken by Board members are as follows:

Role Fees per annum (unlessotherwise stated)

Base feesChairman

1

Non-executive director2

$250,000$100,000

Lead Independent Director Fee (from 1 April 2006 until S. Crane’s appointment as non-executive Chairman on 10 August 2006)

$5,000 per month

Committee Chairman feesChairman of Audit and Risk Management CommitteeChairman of Remuneration CommitteeChairman of SSHE Committee

$25,000$15,000$15,000

Committee member feesAudit and Risk Management CommitteeRemuneration CommitteeSSHE Committee

$12,500$7,500$7,500

Subsidiary board feesDirector of Investa Residential Holdings Pty LimitedDirector of Investa Commercial Developments Pty LimitedChairman of Investa Funds Management LimitedDirector of Investa Funds Management Limited (without other Group Board responsibilities)Director of Investa Funds Management Limited (with other Group Board responsibilities)

$12,500$10,000$20,000$50,000$10,000

1 The Chairman’s base fee is inclusive of all committee fees and subsidiary board fees.2 The base fee for non-executive directors includes service on the Nominations Committee.

For

per

sona

l use

onl

y


Page 21



8 Details of remuneration

8.1 Remuneration of key management personnel of the Parent Entity and the Group

Details of the remuneration of the directors and key management personnel (as defined in AASB 124 Related Party Disclosures) ofthe Parent Entity and the Group are set out in the following tables:

NameCash salary

and feesCash

bonusNon-monetary

benefits1 SuperannuationESAP

payments2

Value of EPPand MIP

PerformanceRights

3

Total

$ $ $ $ $ $ $

Non-executive directors

S Crane 222,826 - - 11,951 - - 234,777J I Messenger 166,250 - - 12,686 - - 178,936J S Murray 146,957 - - 12,686 - - 159,643D R Page AM 159,728 - - 12,686 - - 172,414Hon R J Webster 104,728 - - 9,426 - - 114,154

Executive directors

J L Arthur 1,287,1344

-5

32,204 12,686 - 102,583 1,434,607

G B Monk 528,968 205,0006

103,328 19,910 27,270 48,300 932,776

Key managementpersonnel

Cashsalary

CashBonus

6Non-monetary

benefits7 Superannuation

ESAPpayments

2

Value of EPPand MIP

PerformanceRights

3

Total

$ $ $ $ $ $W W Grounds

8413,961 134,882 18,958 15,682 - - 583,483

C J Hanan 391,448 234,400 37,515 17,589 24,015 42,167 747,134R M Johnston 323,819 154,333 20,836 15,365 13,975 38,633 566,961R L Lynch

9394,224 - 387,878 10,756 - 41,393 834,251

L W Vance 404,662 75,000 41,873 12,686 28,499 37,483 600,203

1 Non-monetary benefits include the value of providing car parking benefits and imputed interest on ESAP loans to employees. Any fringebenefits tax associated with these benefits is also included.

2 The value of share based payments is calculated using a binomial option pricing model. Refer to Note 28 for details of how this value iscalculated.

3 The value of MIP Performance Rights is calculated by multiplying the volume weighted average security price (based on the first five (5) tradingdays in July 2006 on the ASX) by the employees’ allocation adjusted for the probability of meeting performance targets, to be assessed as partof their annual performance review (refer Section 4.4.2 of this Remuneration report). This amount is then amortised over the vesting period.The value of EPP Performance Rights is calculated by multiplying the volume weighted average security price (based on the first five (5) tradingdays in July 2006 on the ASX) by the employees’ allocation adjusted for the probability of the Group meeting TSR targets (refer Section 4.5.2 ofthis Remuneration Report). This amount is then amortised over the vesting period. Refer to Note 28 for details of how this value is calculated.

4 This includes an amount of $150,000 which represents the July 2006 instalment of the Unlatching Fee payable to Mr Arthur, referred to inSection 6.1.

5 Mr Arthur’s entitlement to receive a cash bonus payment in financial year 2007 related to the period he served as Chief Executive in May andJune 2006. Having regard to the relative brevity of this period, it was agreed that outcomes achieved would be factored into assessment of hiscash bonus payable in financial year 2008.

6 Cash Bonus includes one-off retention payment associated with the resignation of the previous Managing Director. The cash bonus paid infinancial year 2007 relates to financial year 2006 performance. Payment of 20% of cash bonus received under Bonus scheme is deferred forthree (3) years.

7 Non-monetary benefits include the value of providing car parking benefits and imputed interest on ESAP loans to employees and any otherbenefits such as loans. Any fringe benefits tax associated with these benefits are also included.

8 Mr Grounds’ remuneration details shown are up to the date of his resignation on 29 May 2007.9 Mr Lynch is entitled to an unlatching benefit in the form of a one off unsecured and interest free loan of $800,000 in accordance with a loan

agreement between Mr Lynch and IPL dated 28 August 2006. $200,000 of that amount was used by IPL to purchase stapled securities in theGroup on behalf of Mr Lynch. Those securities are registered in the name of Mr Lynch. This loan is to be forgiven at the rate of $200,000 perannum.

For

per

sona

l use

onl

y


Page 22



8.2 Short term incentives

For each short term incentive included in the above tables, the percentage of the STI potential paid is as follows:

Cash bonuses 20071

20061

% paid % forfeited % paid % forfeitedG B Monk 70 30 90 10R M Johnston

2 76 24 100 -W W Grounds 90 10 100 -C J Hanan 70 30 90 10L Vance 90 10 - -

1 Amounts paid in financial year 2007 and 2006 are attributable to executives’ performance in financial year 2006 and 2005 respectively.2 Mr Johnston received 100% of his bonus entitlement in his role up to 30 November 2005 when he changed his role and incentive arrangements.

Mr Johnston was subsequently allocated 67% of his new incentive for the period from December 2005 until June 2006.

8.3 Security based payments – ESAP

The terms of issue of all ESAP securities issued to key management personnel are as follows:

Issue date Vesting date Issue price Value per security at issue date

1 October 2004 1 October 2007 1.96 0.32619 April 2005 19 April 2008 2.05 0.5071 October 2005 1 October 2008 2.13 0.427

Security holdings of key management personnel vesting during the year are as follows:

Name 1 July 2005Issuedduring2006

No. of securitiesvested during

200630 June 2006

Issuedduring2007


200730 June 2007

G B Monk 770,000 100,000 50,000 870,000 - 100,000 870,000W W Grounds

3210,000 100,000 50,000 310,000 - 40,000 -

C J Hanan 90,000 100,000 - 190,000 - - 190,000R M Johnston 120,000 60,000 20,000 180,000 - 50,000 180,000L W Vance - 200,000 - 200,000 - - 200,000

3 W W Grounds resigned from the Group on 29 May 2007. All of his ESAP loans have been repaid and ESAP security holdings withdrawn fromthe Plan. Therefore, no ESAP security balance exists at 30 June 2007.

8.4 Non-ESAP security holdings of directors

4 J L Arthur’s numbers do not include the MIP Equity and EPP allocations. Mr Arthur has the potential to be issued with Investa securities underthese plans of a maximum aggregate entitlement of 262,000 IPG securities.

5 G Monk’s numbers do not include the MIP Equity and EPP allocations. Mr Monk has the potential to be issued with Investa securities underthese plans of a maximum aggregate entitlement of 126,000 IPG securities.

Directors’ Interest in IPG securities 1 July 20052006

Purchases/(sales)30 June 2006

2007Purchases/(sales)

30 June 2007

S Crane - - - 75,000 75,000J L Arthur

459,440 23,756 83,196 40,000 123,196

J I Messenger 35,486 750 36,236 - 36,236G B Monk

52,475 - 2,475 - 2,475

J S Murray 10,184 20,215 30,399 4,100 34,499D R Page AM 31,615 522 32,137 - 32,137Hon R J Webster - - - 10,000 10,000

For

per

sona

l use

onl

y


Page 23



8.5 Security-based payments

For details on conversion of MIP and EPP Performance Rights to securities, refer to section 4.4.2 and 4.5.2 of this Remunerationreport respectively.

1 No securities have been granted as the assessment against the employees’ balanced scorecard has not been completed.

Indemnification and insurance of officers and the auditorClause 9.2 of IPL’s constitution requires IPL to indemnify each officer and former officer of IPL and its related bodies corporate on afull indemnity basis and to the extent permitted by law against losses, liabilities, costs, charges and expenses incurred by them asan officer of IPL or its related bodies corporate. The indemnity is subject to the limitations applicable to such indemnities at law,including under the Corporations Act 2001, and the provisions of IPL’s constitution.

IPL’s constitution also permits IPL, to the extent permitted by law, to purchase and maintain insurance or pay or agree to pay apremium for insurance for officers and former officers of IPL or its related bodies corporate and to enter into contracts of insuranceto protect those officers and former officers against losses, liabilities, costs, charges and expenses incurred by them as an officer ofIPL or of a related body corporate.

IPL has executed Deeds of Indemnity, Insurance and Access in favour of each director of IPL which provides for those directors tobe indemnified against losses, liabilities, costs, charges and expenses incurred by them as an officer of IPL or its related bodiescorporate in terms similar to the IPL’s constitution. Those Deeds also, amongst other things, require IPL to maintain directors’ andofficers’ insurance coverage for the benefit of the directors.

Consistent with IPL’s constitution, during the year, IPL acquired and paid a premium for a contract insuring all directors and officersof IPL and each of its related bodies corporate and controlled entities. The insurance does not provide cover for the auditor of theGroup or its related bodies corporate or controlled entities. In accordance with usual commercial practice, the insurance contractprohibits disclosure of details of the liabilities covered by the insurance, the limit of indemnity and the amount of the premium paidunder the contract.

The auditor of the Group is PricewaterhouseCoopers. The auditor is in no way indemnified out of the assets of the IPL or IPT.

Events subsequent to balance dateOn 31 May 2007, IPG announced it had entered into an implementation agreement with funds advised by Morgan Stanley RealEstate, to acquire all stapled securities in IPG for cash consideration of $3.08 per security by way of a Court approved Scheme ofArrangement and Trust Scheme (together the “Scheme”). The offer is inclusive of the final distribution payment.

The directors have unanimously recommended the Offer in the absence of a superior proposal.

A Scheme Booklet containing full details of the Offer, including an Independent Expert’s Report, has been mailed to IPG securityholders. Security holders will be asked to vote on the Scheme at a security holders meeting to be held in Sydney on 22 August2007.

Since the end of the year, the directors of the Parent Entity have not become aware of any other matter or circumstance nototherwise dealt with in this report or the financial statements that has significantly or may significantly affect the operations of theGroup, the results of those operations, or the state of the Group’s affairs in future financial years.

Environmental regulationThe directors are satisfied that adequate systems are in place for the management of the Group’s environmental responsibility andcompliance with the various licence conditions and regulations. Further, the directors are not aware of any material breaches ofthese requirements and to the best of their knowledge all activities have been undertaken in compliance with environmentalrequirements.

Combined financial statementsThe Group has applied Class Order 05/642 (as amended) issued by the Australian Securities & Investments Commission (ASIC)which allows issuers of stapled securities to include their financial statements and the consolidated financial statements of thestapled Group in one financial report.

NameDate potential

Performance Rightsoffered

No. of potential MIPPerformance Rights

1No. of potential EPPPerformance Rights

1


2007

30 June 2007vested

securitiesJ L Arthur 10 November 2006 131,000 131,000 - -G B Monk 10 November 2006 76,000 50,000 - -C J Hanan 10 November 2006 57,000 50,000 - -R M Johnston 10 November 2006 52,000 46,000 - -L W Vance 10 November 2006 49,000 46,000 - -R L Lynch 10 November 2006 60,000 46,000 - -

For

per

sona

l use

onl

y


Page 24

PricewaterhouseCoopersABN 52 780 433 757

Darling Park Tower 2201 Sussex StreetGPO BOX 2650SYDNEY NSW 1171DX 77 SydneyAustraliawww.pwc.com/auTelephone +61 2 8266 0000Facsimile +61 2 8266 9999


Non-audit servicesThe Board has adopted a policy governing Auditor Independence which specifies that the auditing firm should not provide servicesthat are or could be perceived to be in conflict with the role of auditor. Each non-audit service is considered in the context of thispolicy.

The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertiseand experience with the Group are important.

Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year are set out below.

The Board has considered the position and, in accordance with the advice received from the Audit and Risk ManagementCommittee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for theauditor imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor didnot compromise the auditor independence requirements of the Corporations Act 2001, due to compliance with the Group policygoverning Auditor Independence.

During the year the following audit and non-audit fees were paid or payable for services provided by the auditor of the Group and itsrelated practices:

Assurance services2007

$2006

$Auditor of the Group – PricewaterhouseCoopers 968,767 891,436AIFRS technical advice - 42,419Audit of completion accounts and accounting advice in relation to acquisition of CPG - 279,168New accounting standards review 10,000 -Other audit assurance services - 12,000

978,767 1,225,023Non-audit servicesAuditor of the Group – PricewaterhouseCoopers:Due diligence review on establishment of new fund 88,000 -Due diligence review on Morgan Stanley Scheme of Arrangement and Trust Scheme 35,000 -Other services 960 7,568Total non-audit services 123,960 7,568Total auditor’s remuneration 1,102,727 1,232,591

Auditor’s Independence DeclarationA copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is below:

Auditor’s Independence Declaration

As lead auditor for the audit of Investa Property Group for the year ended 30 June 2007, I declare that to the best of my knowledgeand belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and(b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Investa Property Group and the entities it controlled during the year.

R D DeutschPartnerSydney9 August 2007

Liability limited by a scheme approved under Professional Standards Legislation

For

per

sona

l use

onl

y


Page 25


Rounding of amountsThe Group is of a kind referred to in Class Order 98/0100, issued by ASIC, relating to the “rounding off” of amounts in the directors’report and financial report. Amounts in the directors’ report and financial report have been rounded to the nearest thousand dollars,in accordance with that class order, unless otherwise indicated.

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

This report is made in accordance with a resolution of the directors.

S CraneChairmanSydney9 August 2007

For

per

sona

l use

onl

y


Page 26

Financial Report of Investa PropertiesLimited and its Controlled Entities

For

per

sona

l use

onl

y


Page 27

Consolidated Income StatementsFor the year ended 30 June 2007

ConsolidatedInvesta Property Group

Parent EntityInvesta Properties Limited

Notes 2007 2006 2007 2006$’000 $’000 $’000 $’000

IncomeIncome from operating activities 5 1,147,245 957,488 120,014 108,388Distributions from controlled entities - - 23,000 8,000Net gain/(loss) on disposal of assets 27,417 28,484 (67) 17,695Share of net profits of associates accounted for using theequity method 6 66,920 29,398 - -Share of net profits of joint ventures accounted for using theequity method - 75 - -Net gain on fair value of derivative financial instruments 54,549 14,271 - -Net gain on fair value of investment properties 7 432,728 298,844 - -Total income 1,728,859 1,328,560 142,947 134,083

ExpensesCost of sales 541,210 395,292 - -Employee benefits expense 89,827 74,496 32,590 23,139Property outgoings 90,011 81,964 - 4Repairs and maintenance 14,096 13,111 5 5Finance costs 8 99,520 78,888 99,669 87,048Depreciation of property, plant and equipment 19 5,431 3,669 1,871 1,582Amortisation of intangibles 18 3,860 4,173 - 313Impairment of goodwill 18 - 184,558 - 1,250Marketing 8,781 8,937 60 191Provision for diminution in respect of controlled entities - - 292 (1,300)Other expenses 39,912 41,063 13,476 13,337Total expenses 892,648 886,151 147,963 125,569

Net profit/(loss) before income tax expense 836,211 442,409 (5,016) 8,514

Company income tax (expense)/benefit 9 (18,750) (8,732) 3,147 (2,062)

Net profit/(loss) after income tax expense 817,461 433,677 (1,869) 6,452

Profit attributable to minority interest (153,925) (99,711) - -

Net profit/(loss) attributable to stapled security holders 663,536 333,966 (1,869) 6,452

Dividends and distributions paid and payable 10 237,984 257,816

Cents CentsDividends and distributions paid and payable

(cents per stapled security) 10 15.60 16.90Basic earnings (cents per security) 11 43.71 22.12Diluted earnings (cents per security) 11 43.50 21.96

The above Consolidated Income Statements should be read in conjunction with the accompanying notes.

For

per

sona

l use

onl

y


Page 28

Consolidated Balance SheetsAs at 30 June 2007



Notes 2007 2006 2007 2006$’000 $’000 $’000 $’000

Current assetsCash and cash equivalents 12 7,899 17,812 - 36Receivables 13 139,862 124,354 194,151 23,001Inventories 14 189,035 321,667 - -Non-current assets classified as held for sale 15 - 101,787 - -Derivative financial instruments 16 2,890 - - -Current tax assets 17 10,611 1,440 9,731 -Total current assets 350,297 567,060 203,882 23,037

Non-current assetsReceivables 13 83,654 87,534 649,603 957,980Deferred tax assets 9 7,724 18,832 3,322 6,833Inventories 14 476,518 361,924 - -Intangible assets 18 148,176 147,645 - -Property, plant and equipment 19 47,063 58,957 5,516 7,929Investments in associates and joint venture 20 270,751 246,553 - 7,003Investments in controlled entities 21 - - 107,615 120,466Investment properties 22 4,921,335 4,412,302 - -Total non-current assets 5,955,221 5,333,747 766,056 1,100,211

Total assets 6,305,518 5,900,807 969,938 1,123,248

Current liabilitiesBank overdraft 12 - - 5,670 -Payables 23 178,411 163,634 7,066 8,604Interest bearing liabilities 25 100,000 613,000 - -Derivative financial instruments 16 - 5,993 - -Provisions 24 147,678 160,323 8,049 7,602Total current liabilities 426,089 942,950 20,785 16,206

Non-current liabilitiesPayables 23 15,423 144 854,056 1,005,527Deferred tax liabilities 9 31,920 15,665 521 2,087Interest bearing liabilities 25 1,620,878 1,244,545 - -Provisions 24 2,146 1,709 306 304Total non-current liabilities 1,670,367 1,262,063 854,883 1,007,918

Total liabilities 2,096,456 2,205,013 875,668 1,024,124

Net assets 4,209,062 3,695,794 94,270 99,124

EquityContributed equity 26 2,824,802 2,824,802 87,680 87,680Treasury stock reserve 27 (10,395) (17,574) (2,985) -Minority interest 29 861,971 781,434 - -Retained earnings 30 532,684 107,132 9,575 11,444Total equity 4,209,062 3,695,794 94,270 99,124

The above Consolidated Balance Sheets should be read in conjunction with the accompanying notes.

For

per

sona

l use

onl

y


Page 29

Consolidated Statements of Changes in EquityFor the year ended 30 June 2007



Notes 2007 2006 2007 2006$’000 $’000 $’000 $’000

Total equity at the beginning of the financial year 3,695,794 3,220,147 99,124 88,132

Profit for the financial year 817,461 433,677 (1,869) 6,452

Transactions with equity holders in their capacity as equity holders:

Contributions of equity, net of transaction costs 26 - 48,747 - 3,548Distributions/dividends reinvested 26 - 13,967 - 992Distributions/dividends provided for or paid 10 (237,984) (257,816) - -Distributions/dividends provided for or paid to minority

interests in subsidiaries (60,641) (45,779) - -Treasury stock movement 27 7,179 (2,031) (2,985) -Acquisition by minority interests (12,747) 284,882 - -Total equity at the end of the financial year 4,209,062 3,695,794 94,270 99,124

Total recognised income and expense for the financial year isattributable to:Stapled security holders of Investa Property Group 663,536 333,966 (1,869) 6,452Minority interest 153,925 99,711 - -

817,461 433,677 (1,869) 6,452

The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.

For

per

sona

l use

onl

y


Page 30

Consolidated Cash Flow StatementsFor the year ended 30 June 2007



Notes 2007 2006 2007 2006$’000 $’000 $’000 $’000

Cash flows from operating activitiesCash receipts in the course of operations (inclusive of GST) 1,206,463 973,440 50,339 11,726Cash payments in the course of operations (inclusive of GST) (847,679) (688,808) (54,088) (38,068)Interest received 12,408 5,734 96,390 84,925Dividends and distributions received 31,769 23,207 23,070 8,000Finance costs paid (103,459) (113,323) (99,669) (87,048)Income taxes paid (2,398) (7,060) - (13)Net cash inflows/(outflows) from operating activities 31 297,104 193,190 16,042 (20,478)

Cash flows from investing activitiesPayment for purchase of controlled entity, net of cashacquired (673) (203,628) (2,296) (128,300)Capital expenditure and acquisition of investment properties (209,839) (82,859) - (8,170)Capital expenditure on property, plant and equipment (25,073) (68,858) - -Payments for investment in associates and joint venture (48,560) (43,546) - -Proceeds from sale of investments 344,211 227,663 19,494 55,969Proceeds from sale of property, plant and equipment 3,100 17,721 2,910 -Net cash inflows/(outflows) from investing activities 63,166 (153,507) 20,108 (80,501)

Cash flows from financing activitiesDistributions/dividends paid (244,848) (176,517) - (501)Proceeds from borrowings 3,317,305 2,452,600 - -Repayment of borrowings (3,408,305) (2,257,795) - -Proceeds from issues of securities - 50,000 - 3,550Payment of costs associated with issue of securities - (1,253) - (2)Proceeds from/(repayments of) loans to associates 3,071 (122,509) - -Proceeds from borrowing from related entity - - 1,780 97,697Payment of borrowing from related entity - - (42,798) -Payments (to)/from minority interests (43,523) 28,942 - -Purchase of securities under the employee security basedpayments plan 6,117 (2,686) (838) -Net cash (outflows)/inflows from financing activities (370,183) (29,218) (41,856) 100,744

Net (decrease)/increase in cash and cash equivalents (9,913) 10,465 (5,706) (235)Cash and cash equivalents at the beginning of the financialyear 17,812 7,347 36 271Cash and cash equivalents at the end of the financialyear 12 7,899 17,812 (5,670) 36

Financing arrangements 25Non-cash financing and investing activities 32

The above Consolidated Cash Flow Statements should be read in conjunction with the accompanying notes.

For

per

sona

l use

onl

y


Page 31

Notes to the Consolidated Financial StatementsFor the year ended 30 June 2007

Note 1. Summary of significant accounting policies

The financial report includes separate financial statements for Investa Properties Limited as an individual entity and theconsolidated entity consisting of Investa Properties Limited and its subsidiaries including Investa Property Trust and its subsidiaries.

The units in Investa Property Trust are “stapled” to the shares in Investa Properties Limited. All transactions in either security canonly be in the form of transactions in the Investa Property Group stapled securities.

(a) Basis of preparation of the financial reportThis general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritativepronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act2001.

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have beenconsistently applied to all the years presented, unless otherwise stated.

Compliance with IFRSAustralian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS).Compliance with AIFRS ensures that the consolidated financial statements and notes of Investa Property Group comply withInternational Financial Reporting Standards (IFRS) in accordance with AASB 101 Presentation of Financial Statements. The ParentEntity financial statements and notes also comply with IFRS except that it has elected to apply the relief provided to parent entitiesin respect of certain disclosure requirements contained in AASB 132 Financial Instruments: Presentation and Disclosure.

Historical cost conventionThese financial statements have been prepared under the historical cost convention, as modified by the revaluation of available forsale financial assets, financial assets and liabilities (including derivative instruments) at fair value through the income statement,certain classes of property, plant and equipment and investment property.

Critical accounting estimatesThe preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It alsorequires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving ahigher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements,are disclosed in Note 2.

(b) Principles of consolidationThe consolidated financial statements incorporate the assets and liabilities of all entities controlled by Investa Properties Limited asat 30 June 2007, including Investa Property Trust and its controlled entities, and their results for the year ended 30 June 2007.Investa Properties Limited (“Parent Entity”) and its controlled entities and Investa Property Trust (“Trust”) and its controlled entitiesare referred to in this financial report as the “Group”. Investa Properties Limited is designated the Parent Entity by the operation ofUIG 1013 Consolidated Financial Reports in relation to Pre-Date-of-Transition Stapling Arrangements.

The effects of all transactions between entities in the Group are eliminated in full. Minority interests in the results and equity ofcontrolled entities are shown separately in the consolidated income statements and balance sheets respectively.

Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies, generallyaccompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that arecurrently exercisable or convertible are considered when assessing whether the Group controls another entity.

Where control of an entity is obtained during a financial year, its results are included in the consolidated income statements from thedate on which control commences. Where control of an entity ceases during a financial year, its results are included for that part ofthe financial year during which control existed.

The purchase method of accounting is used to account for acquisition of subsidiaries within the Group (refer Note 1(l)).

For

per

sona

l use

onl

y


Page 32

Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2007

Note 1. Summary of significant accounting policies (continued)

(c) Revenue recognitionRevenue is recognised for the major business activities as follows:

(i) Rental incomeRental income from operating leases is recognised in income on a straight-line basis over the lease term. An asset is recognised torepresent the portion of the operating lease revenue in a reporting period relating to fixed increases in operating lease rentals infuture periods.

(ii) Property management feesProperty management fees are brought to account on an accrual basis and, if not received at balance date, are reflected in theconsolidated balance sheet as a receivable.

(iii) Fund management fees and establishment feesFund management and establishment fees are brought to account on an accrual basis and, if not received at balance date, arereflected in the consolidated balance sheet as a receivable.

(iv) Development projectsRevenue is recognised on settlement of an unconditional contract for sale.

(v) Residential propertiesRevenue is recognised on settlement of an unconditional contract for sale.

(vi) Disposal of assetsThe gain or loss on disposal is included in the consolidated income statements in the year when title to the benefits and risks haseffectively passed. The gain or loss on disposal of revalued assets is calculated as the difference between the carrying amount ofthe asset at the time of the disposal and the consideration is received.

(vii) Construction projectsRevenue is recognised based on the value of work performed using the percentage of completion method, which is measured byreference to the stage of construction where these can be reliably estimated.

(viii) Interest incomeInterest income is recognised on a time proportion basis using the effective interest method.

(ix) Dividends and distributionsDividend and distribution revenue is brought to account when the right to receive payment is established and, if not received at thebalance date, is reflected in the balance sheet as a receivable.

(d) Expenses(i) Property outgoingsProperty outgoings include rates, taxes and other property outgoings incurred in relation to investment properties where suchexpenses are the responsibility of the Group and are brought to account on an accrual basis.

(ii) Finance costsFinance costs include interest expense and the amortisation of other costs incurred in respect of obtaining finance except wherethey are included in the costs of qualifying assets in accordance with Note 1(h) or 1(m). Other costs incurred, including loanestablishment fees in respect of obtaining finance, are deferred and written off over the term of the respective agreement.

(e) Maintenance and repairsPlant of the Group is maintained on a regular basis. This is managed as part of an ongoing major cyclical maintenance program.The costs of this maintenance are charged as expenses as incurred, except where they relate to the replacement of a component ofan asset, in which case the costs are capitalised in accordance with Note 1(o). Other routine operating maintenance, repair costsand minor renewals are also charged as expenses as incurred.

(f) Cash and cash equivalentsCash and cash equivalents include cash on hand, deposits held at call with financial institutions and bank overdrafts. Bankoverdrafts are shown within borrowings in current liabilities on the balance sheet.

(g) ReceivablesReceivables to be settled within 30 days are carried at amounts due. The collectability of debts is reviewed on a regular basis and aspecific provision is made for any doubtful debts where objective evidence exists that the Group will not be able to collect allamounts due according to the original terms of receivables. The amount of the provision is recognised in the income statement.

For

per

sona

l use

onl

y


Page 33



(h) Inventory(i) ValuationLand held for development and resale is held at the lower of cost and net realisable value. Cost includes the cost of acquisition,development costs, holding costs, and interest on funds borrowed. A provision is raised when it is believed that the costs incurredwill not be recovered on the ultimate sale of the property. When a development is completed and ceases to be a qualifying asset,finance costs and other holding costs are expensed as incurred.

(ii) Construction contracts and work in progressConstruction work in progress is stated at the aggregate of contract costs incurred to date plus recognised profits less recognisedlosses and progress billings. If there are contracts where progress billings exceed the aggregate costs incurred plus profits lesslosses, the net amounts are presented under other liabilities.

Contract costs include all costs directly related to specific contracts, costs that are specifically chargeable to the customer under theterms of the contract and an allocation of overhead expenses incurred in connection with the Group’s construction activities ingeneral.

(iii) ClassificationAmounts are disclosed as current where it is anticipated that the assets will be disposed of within 12 months after balance date.

(iv) Capitalisation of finance costsFinance costs included in the carrying value of the property inventories are those costs that would have been avoided if theexpenditure on the acquisition and development of the land had not been made. Finance costs incurred while active developmentis interrupted for an extended period are recognised as expenses.

The capitalisation rate used to determine the amount of finance costs capitalised is the weighted average interest rate applicable tothe Group’s outstanding borrowings during the financial year.

(i) Non-current assets classified as held for saleNon-current assets classified as held for sale are stated at the lower of their carrying amount and fair value less costs to sell if theircarrying amount will be recovered principally through a sale transaction rather than through continuing use.

An impairment loss is recognised for any initial or subsequent write down of the asset to fair value less costs to sell. A gain isrecognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairmentloss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised atthe date of derecognition.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expensesattributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separatelyfrom the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separatelyfrom other liabilities in the balance sheet.

(j) TaxationUnder current legislation, the Trust is not liable for income tax, provided that the taxable income and taxable realised gains are fullydistributed to stapled security holders each financial year. Accordingly, the income tax expense, tax assets and tax liabilities areattributable to the corporate entities within the Group (including any corporate entities within the IPT Group).

The income tax expense or revenue for the period is the tax payable on the current year’s taxable income based on the Australiancompany tax rate, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the taxbases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax balances are recognised using the balance sheet method. Under this method, temporary differences arise when thecarrying amount of assets and liabilities in the financial statements is different to the tax base of the corresponding assets andliabilities. An exemption is made for certain of the 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 abusiness combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Similarly,deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases ofinvestments in controlled entities where the Parent Entity is able to control the timing of the reversal of the temporary differencesand it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are recognised fortemporary differences at the tax rates expected to apply when the assets are recovered or the liabilities are settled.

Deferred tax assets are recognised for temporary differences and unused tax losses only if it is probable that future taxableamounts will be available to utilise those temporary differences and losses.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

For

per

sona

l use

onl

y


Page 34



Tax consolidationInvesta Properties Limited and its wholly owned controlled entities have decided to implement the tax consolidation legislation as of1 July 2005. The Australian Taxation Office (ATO) will be notified of this decision in conjunction with the submission of the June2006 tax returns.

The head entity, Investa Properties Limited, and the controlled entities in the tax consolidated group account for their own currentand deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone taxpayer in its own right.

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

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivablefrom or payable to other entities in the Group. Details about the tax funding agreement are disclosed in Note 9.

Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognisedas a contribution to (or distribution from) wholly owned tax consolidated entities.

(k) Intangible assets

(i) GoodwillWhere an entity or operation is acquired, the identifiable net assets acquired are measured at fair value. The excess of the fairvalue of the cost of acquisition over the fair value of the identifiable net assets acquired is brought to account as goodwill.

Goodwill acquired in business combinations is not amortised. Instead, goodwill is tested annually for impairment or more frequentlyif events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses.

Goodwill is allocated to cash generating units for the purpose of impairment testing. Each of those cash generating units representsthe Group’s investment in each primary reporting segment.

(ii) Brand namesBrand names are accounted for as identifiable assets and recorded at the fair value of the asset acquired on acquisition. Brandnames have an indefinite useful life and are carried at cost less impaired losses. Accordingly, no amortisation has been providedagainst the carrying amount of brand names.

(iii) Management rightsThe directors have determined that management rights have a useful life of 10 years (2006: 10 years) and are carried at cost lessaccumulated amortisation and impairment losses. Amortisation is calculated using a straight-line basis to write off the cost ofmanagement rights over their expected useful life to the Group of 10 years.

(l) Acquisitions of assetsThe purchase method of accounting is used for all acquisitions of assets (including business combinations) regardless of whetherequity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, securities issued or liabilitiesundertaken at the date of acquisition plus incidental costs directly attributable to the acquisition. Where equity instruments areissued in an acquisition, the value of the instruments is their published market price as at the date of exchange. Transaction costsarising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at theirfair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over thefair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less thanthe fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but onlyafter a reassessment of the identification and measurement of the net assets acquired.

(m) Property, plant and equipmentLand and buildings (except for investment properties – refer to Note 1(o)) are shown at cost. Cost includes expenditure that isdirectly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it isprobable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measuredreliably. All other repairs and maintenance are charged to the income statement during the financial period in which they areincurred.

For

per

sona

l use

onl

y


Page 35



Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over itsexpected useful life to the Group. Estimates of remaining useful lives are made on a regular basis for all assets, with annualreassessments for major items. The expected useful life for property, plant and equipment is as follows:

Class of property, plant and equipment Depreciation rates Depreciation basisLeasehold improvements 13-20% Straight-linePlant and equipment 13-40% Straight-lineDisplay furniture 13-20% Straight-lineLeased plant and equipment 25-33.3% Straight-line

Properties under construction are carried at historical cost until completion. All costs of development are capitalised against thoseproperties and are not depreciated. Upon completion of construction, the assets are classified as investment property.

(n) Investments in associates and joint ventures

(i) Investments in associatesAssociates are entities over which the Group has significant influence but not control. Investments in associates are accounted forin the Group using the equity method of accounting, after initially being recognised at cost. The Group’s investment in associatesincludes goodwill (net of any accumulated impairment loss) identified on acquisition (refer Note 20).

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against thecarrying amount of the investment. Dividends or distributions receivable from associates are recognised in the Parent Entity’sincome statement, while in the consolidated financial statements they reduce the carrying amount of the investment.

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

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in theassociates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the assettransferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adoptedby the Group.

(ii) Joint venture operationsThe Group’s share of assets, liabilities, revenues and expenses of joint venture operations are included in the respective items ofthe consolidated balance sheets and income statements.

(iii) Joint venture entitiesThe Group’s interest in joint venture entities are accounted for in the consolidated financial statements using the equity method.Under the equity method, the share of the profits or losses of the joint venture entity is recognised in the income statement, and theshare of movements in reserves is recognised in reserves in the balance sheet. Details relating to joint ventures are set out in Note20.

Profits or losses on transactions establishing joint venture entities and transactions with the joint venture are eliminated to the extentof the Group’s ownership interest until such time as they are realised by the joint venture on consumption or sale, unless they relateto an unrealised loss that provides evidence of the impairment of an asset transferred.

(o) Investment propertiesInvestment properties are properties (land or a building) held to earn long-term rental income and for capital appreciation. TheTrust’s Constitution requires that all investment properties be valued at intervals of not more than three years and those valuationsare reflected in the financial report of the Trust. It is the policy of the Parent Entity to formally review the carrying value of eachproperty within the Group every six months, or earlier where the Parent Entity believes there may be a material change in thecarrying value of the property. External revaluations are made with sufficient regularity but at least every three years to ensure thatthe carrying amount of each investment property does not differ materially from its fair value.

The basis of valuation of investment properties is fair value, being the amount for which the assets could be exchanged betweenknowledgeable, willing parties in an arm’s length transaction.

Gains or losses arising from changes in fair value of an investment property are recognised in the consolidated income statements.

The gain or loss on disposal of revalued assets is calculated as the difference between the carrying amount of the asset at the dateof disposal and the net proceeds from disposal and is included in the consolidated income statements in the year of disposal.

For

per

sona

l use

onl

y


Page 36



Land and buildings are an investment and are regarded as a composite asset. Accounting standards do not require investmentproperties to be depreciated. Accordingly, the building and any component thereof (including plant and equipment) are notdepreciated. Expenses capitalised to properties may include the cost of acquisition, additions, refurbishment, redevelopment andfees incurred.

(p) Impairment of assetsAssets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. All other assets arereviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

(q) Lease incentivesIncentives such as cash, rent-free periods, lessee or lessor owned fitouts may be provided to lessees to enter into an operatinglease. These incentives are capitalised and are amortised on a straight-line basis over the term of the lease as a reduction of rentalincome or an increase in property outgoings. The carrying amount of the lease incentives is reflected in the fair value of investmentproperties.

(r) Trade and other payablesThese amounts represent liabilities for amounts owing by the Group at year end which are unpaid. The amounts are unsecured andare usually paid within 30 days of recognition and also include rent in advance.

(s) Interest bearing liabilitiesInterest bearing liabilities are initially recognised at fair value, net of transaction costs incurred, and subsequently measured atamortised cost using the effective interest rate method. Under this method, fees, costs, discounts and premiums directly related tothe financial liability are spread over its expected life.

(t) DerivativesThe Group enters into interest rate and foreign exchange rate hedging contracts in order to minimise exposure to fluctuations ininterest rates and exchange rates. Derivative financial instruments are not held for speculative purposes and the Group has electednot to hedge account all derivatives held. Consequently, hedge accounting does not apply and derivatives are carried on thebalance sheet at fair value, with changes in fair value recognised in the income statement.

Interest payments and receipts under interest rate swap contracts are recognised on an accrual basis in the income statement asan adjustment to interest expense when a derivative transaction occurs.

(u) Fair value estimationThe fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosurepurposes.

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets heldby the Group is the current bid price.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) isdetermined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on marketconditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debtinstruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remainingfinancial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. Thefair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due totheir short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractualcash flows at the current market interest rate that is available to the Group for similar financial instruments.

(v) Dividends and distributionsProvision is made for the amount of any dividend and distribution declared, determined or publicly recommended by the directors onor before the end of the financial year but not distributed at balance date.F

or p

erso

nal u

se o

nly


Page 37



(w) Employee entitlements(i) Wages and salaries and annual leaveLiabilities for wages and salaries and annual leave expected to be settled within 12 months of the reporting date are recognised inother creditors and accruals and are measured at amounts expected to be paid when liabilities are settled.

(ii) Long service leaveLong service leave is measured as the present value of expected future payments to be made in respect of services provided byemployees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employeedepartures and periods of service. Expected future payments are discounted using market yields that match as closely as possiblethe estimated timing of future cash outflows.

(iii) Retirement benefit obligationsThe amount charged to the consolidated income statements in respect of retirement benefit obligations are disclosed as employeebenefits and includes the contributions made by the Group to the Investa Staff Superannuation Plan. The Superannuation Plan isan accumulation fund, and therefore no other liability arises for the employer except payment of monthly contributions. There are nocontributions outstanding as at 30 June 2007.

(iv) Security based paymentsFormerly, security based compensation benefits were provided to employees via the Employee Share Acquisition Plan (ESAP).Allocations under this plan have ceased and are now replaced by the MIP, EPP, and EGP. Existing ESAP holders continue in linewith their existing contractual arrangements. All purchases of securities on behalf of employees under the ESAP have beenincluded in Treasury Stock Reserve. Any repayments by employees under the ESAP, together with any distributions and dividends,reduce the amount in Treasury Stock Reserve.

Under the requirements of AASB 2 the ESAP is accounted for as if they were options. The fair value of the “options” under ESAP,and the fair value of rights issued under the MIP, EPP, and EGP are all measured at grant date and recognised in the incomestatement over the period during which the employees become unconditionally entitled to the securities.

The fair value at grant date for ESAP is independently determined using a binomial option pricing model that takes into account theexercise price, the term of the option, the vesting criteria, the non-tradeable nature of the option, the security price at grant date andexpected price volatility of the underlying security, the expected dividend yield and the risk-free interest rate for the term of thevesting period. At each balance sheet date, the Group reviews its estimate of the number of securities which are expected to vest.The employee benefit expense recognised in the period reflects that review.

(x) Contributed equityOrdinary stapled securities are classified as equity. Incremental costs directly attributable to the issue of new securities are shownin equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new securities for theacquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.

If the entity reacquires its own equity instruments, for example, as the result of a share buy-back, those instruments are deductedfrom equity and the associated securities are cancelled. No gain or loss is recognised in the profit or loss and the consideration paidincluding any directly attributable incremental costs (net of income taxes) is recognised directly in equity.

(y) Earnings per stapled security(i) Basic earnings per stapled securityBasic earnings per stapled security is determined by dividing the net profit attributable to stapled security holders of the Group bythe weighted average number of securities outstanding during the period.

(ii) Diluted earnings per stapled securityDiluted earnings per stapled security adjusts the figures used in the determination of basic earnings per stapled security by takinginto account amounts unpaid on securities and any reduction in earnings per security that will probably arise from the exercise ofsecurities outstanding during the period. Where there is no difference between basic earnings per stapled security and dilutedearnings per stapled security, the term basic and diluted earnings per stapled security is used.

(z) Segment reportingA business segment is a group of assets and operations engaged in providing products or services that are subject to risks andreturns that are different to those of other business segments.F

or p

erso

nal u

se o

nly


Page 38



(aa) Goods and services tax (GST)Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverablefrom 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 recoverablefrom, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities whichare recoverable from, or payable to the taxation authority, are presented as operating cash flows.

(bb) Combined financial statementsThe Group has applied the Class Order 05/642 (as amended) issued by the Australian Securities & Investments Commission (ASIC)which allows issuers of stapled securities to include their financial statements and the consolidated financial statements of the stapledGroup in adjacent columns in one financial report.

(cc) Rounding of amountsThe Group is of a kind referred to in Class Order 98/0100, issued by ASIC, relating to the “rounding off” of amounts in the directors’report and financial report. Amounts in the directors’ report and financial report have been rounded to the nearest thousand dollars,in accordance with that class order, unless otherwise indicated.

(dd) New accounting standards and UIG interpretationsCertain new accounting standards and UIG interpretations have been published that are not mandatory for 30 June 2007 reportingperiods. The Group’s assessment of the impact of these new standards and interpretations is set out below.

(i) AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendments to Australian Accounting Standards(AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038)

AASB 7 and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. The Group has notadopted the standards early. Application of the standards will not affect any of the amounts recognised in the financial statements,but will impact the type of information disclosed in relation to the Group’s financial instruments.

(ii) AASB – I 10 Interim Financial Reporting and ImpairmentAASB – I 10 is applicable to annual reporting periods commencing on or after 1 November 2006. The Group has not recognised animpairment loss in relation to goodwill, investments in equity instruments or financial assets carried at cost in an interim reportingperiod and subsequently reversed the impairment loss in the annual report. Application of the interpretation will therefore have noimpact on the Group’s financial statements.

(iii) AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8(AASB 5, AASB 6, AASB 102, AASB 107, AASB 119, AASB 127, AASB 134, AASB 136, AASB 1023 & AASB 1038)

AASB 8 and AASB 2007-3 are applicable to annual reporting periods beginning on or after 1 January 2009. The Group has notadopted these standards early. Application of these standards will not affect any of the amounts recognised in the financialstatements, but will affect the segment disclosures provided in Note 4.

(iv) AASB 101 Presentation of Financial Statements (Revised)AASB 101 (Revised) is applicable to annual reporting periods beginning on or after 1 January 2007. The Group has not adoptedthis standard early. Application of this standard will not affect any of the amounts recognised in the financial statements.

(v) AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments (AASB 1, 2, 3,4, 5, 6, 7, 102, 107, 108, 110, 112, 114, 116, 117, 118, 119, 120, 121, 127, 128, 129, 130, 131, 132, 133, 134, 136, 137,138, 139, 141, 1023 & 1038)

AASB 2007-4 is applicable to annual reporting periods beginning on or after 1 July 2007. The Group has not adopted this standardearly. The amendments introduce a number of options that existed under IFRS but had not been included in the original Australianequivalents to IFRS and remove many of the additional Australian disclosure requirements, other than those now consideredparticularly relevant in the Australian reporting environment. Application of this standard will not affect any of the amountsrecognised in the financial statements as none of the options introduced are relevant to the Group, but it may remove some of thedisclosures that are currently required.

(vi) AASB-I 11 AASB 2 Group and Treasury Share Transactions and AASB 2007-1 Amendments to Australian AccountingStandards arising from AASB Interpretation 11.

AASB-I 11 and AASB 2007-1 are effective for annual reporting periods commencing on or after 1 March 2007. AASB-I 11addresses whether certain types of share based payment transactions should be accounted for as equity settled or as cash settledtransactions and specifies the accounting in a subsidiary’s financial statements for share based payment arrangements involvingequity instruments of the parent. The Group will apply AASB-I 11 from 1 July 2007.

For

per

sona

l use

onl

y


Page 39



AASB-I 12 Service Concession Arrangements, AASB 2007-1 Amendments to Australian Accounting Standards arising from AASBInterpretation 12, revised UIG 4 Determining whether an Arrangement contains a Lease and revised UIG 129 Service ConcessionArrangements: Disclosures AASB-I 12, AASB 2007-2, UIG 4 and the revised UIG 129 are all effective for annual reporting periodscommencing on or after 1 January 2008. AASB-I 12 provides guidance on the accounting by operators for public-to-private serviceconcession arrangements under which private sector entities participate in the development, financing, operation and maintenanceof infrastructure for the provision of public services, such as transport, water and energy facilities. UIG 4 has been amended toexclude public-to-private service concession arrangements from its scope and UIG 129 was revised to require some additionaldisclosures. Application of this standard will not affect any of the amounts recognised in the financial statements.

(vii) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12]

The revised AASB 123 is applicable to annual reporting periods commencing on or after 1 January 2009. It has removed the optionto expense all borrowing costs and, when adopted, will require the capitalisation of all borrowing costs directly attributable to theacquisition, construction or production of a qualifying asset. The Group will apply the revised AASB 123 from 1 July 2009 andcapitalise its borrowing costs relating to all qualifying assets for which the commencement date for capitalisation is on or after thisdate. The impact on the financial statements will depend on the amount of qualifying assets and related borrowing costs in the firstyear of application.

Note 2. Critical accounting estimates and judgements

Estimates are continually evaluated and are based on historical experience and other factors, including expectations of futureevents that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptionsThe Group is required in certain circumstances to make estimates and assumptions concerning the future. The resulting accountingestimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk ofcausing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(i) Estimated impairment of goodwillThe Group tests whether there is any impairment of goodwill annually, in accordance with the accounting policy stated in Note 1(p).The recoverable amounts of cash generating units have been determined based on value in use calculations. These calculationsrequire the use of assumptions. Refer to Note 18 for details of these assumptions and the potential impact of changes to theassumptions.

(ii) Estimated value of investmentsCritical judgements are made by the Group in respect of the fair values of investments in associates and joint ventures (Note 1(n))and investment properties (Note 1(o)). These investments are reviewed regularly by reference to external independent propertyvaluations and market conditions, using generally accepted market practices.

(iii) Security based payment transactionsThe Group measures the cost of securities allocated to employees by reference to the fair value of the equity instruments at thedate at which they are granted. The fair value is determined using a binomial model, using the assumptions detailed in Note 28.

(iv) Construction contract revenue recognitionThe percentage of completion is determined by an assessment of the stage of construction completed. Management is confidentthat the percentage of completion calculated represents the percentage of completed contracts.

Note 3. Remuneration of auditor

Assurance services2007

$2006

$Remuneration for audit of the financial reports of the Group and its combined entities:Auditor of the Group – PricewaterhouseCoopers 968,767 891,436AIFRS technical advice - 42,419Audit of completion accounts and accounting advice in relation to acquisition of CPG - 279,168New accounting standards review 10,000 -Other audit assurance services - 12,000

978,767 1,225,023Non-audit servicesAuditor of the Group – PricewaterhouseCoopers:Due diligence review on establishment of new fund 88,000 -Due diligence review on Morgan Stanley Scheme of Arrangement and Trust Scheme 35,000 -Other services 960 7,568Total non-audit services 123,960 7,568Total auditor’s remuneration 1,102,727 1,232,591

For

per

sona

l use

onl

y


Page 40


Note 4. Segment information

The Group operates solely in Australia in the following business segments:

Investment portfolioThe Group invests directly in properties located throughout Australia and also has indirect property holdings through investments inunits in listed and unlisted property trusts.

External fundsInvesta Properties Limited was the Responsible Entity for eight (8) registered schemes from which annual management fees andestablishment fees were earned. During the year, Investa Properties Limited notified ASIC that Investa Funds Management Limited(IFML) has been appointed as their responsible entity.

Property developmentThe Group engages in contract housing, medium density and broad acre residential subdivision, as well as commercial andindustrial development.

ServicesInvesta Properties Limited is the Responsible Entity for Investa Property Trust and provides asset, property and facilitiesmanagement services to properties managed by Investa Property Group.

Investments and sale of investmentsThe Group holds other investments prior to syndication, disposal, or sell down to external investors.

30 June 2007

Investmentportfolio

$’000

Externalfunds$’000

Propertydevelopment

$’000

Services

$’000

Investments

$’000

Asset saleprofits

$’000

Unallocated1

$’000

Consolidated

$’000Income- Operating income 424,108 18,294 676,755 15,620 60 - 12,408 1,147,245- Distributions from associates 11,125 - 21,049 - 2,700 - - 34,874- Joint venture income - - - - - - - -- Net gains on the fair value of

derivative instruments,properties and associates 518,426 - 897 - - - - 519,323

- Net gain on disposal of assets - - 406 (67) 348 26,730 - 27,417- Inter-segment - - - 8,641 - - (8,641) -

953,659 18,294 699,107 24,194 3,108 26,730 3,767 1,728,859

EBITDA 2

- Consolidated 3 787,037 11,658 69,515 1,698 2,865 26,730 (21,438) 878,065- Less minority interest (155,641) - 467 - - - - (155,174)- Attributable to stapled

security holders of InvestaProperty Group 631,396 11,658 69,982 1,698 2,865 26,730 (21,438) 722,891

Net profit after tax 606,228 8,160 33,803 715 1,552 21,809 (8,731) 663,536

Segment assets 5,204,021 3,767 1,002,963 3,694 62,468 - 28,605 6,305,518

Segment liabilities 989,625 4,494 1,039,687 2,700 45,636 - 14,314 2,096,456

Depreciation and amortisation 4 3,860 - 3,385 175 - - 1,871 9,291

Acquisition of non-currentassets (including capitalexpenditure) 205,249 - 20,608 4,465 - - - 230,322

Investments in associates andjoint ventures 167,399 - 60,978 - 42,374 - - 270,7511 Relates to inter-segment revenue and Group operating costs.2 Earnings before interest income, finance costs, fair value of derivative instruments, tax, depreciation and amortisation.3 Includes revaluation of investment properties.4 Includes depreciation, amortisation and impairment of intangibles.

For

per

sona

l use

onl

y


Page 41


Note 4. Segment information (continued)

30 June 2006

Investmentportfolio

$’000

Externalfunds$’000

Propertydevelopment

$’000

Services

$’000

Investments

$’000

Asset saleprofits

$’000

Unallocated1

$’000

Consolidated

$’000Income- Operating income 384,767 9,361 529,256 18,824 10,562 - 4,718 957,488- Distributions from associates 16,720 - - - 3,112 - - 19,832- Joint venture income - - 75 - - - - 75- Net gains on the fair value of

derivative instruments,properties and associates 323,476 - (795) - - - - 322,681

- Net gain on disposal of assets - - 1,205 - 3,444 23,835 - 28,484- Inter-segment - - - 7,765 - - (7,765) -

724,963 9,361 529,741 26,589 17,118 23,835 (3,047) 1,328,560

EBITDA 2

- Consolidated 3 609,180 6,687 58,252 1,106 14,392 23,835 (18,746) 694,706- Less minority interest (100,672) - (302) - - - - (100,974)- Attributable to stapled

security holders of InvestaProperty Group 508,508 6,687 57,950 1,106 14,392 23,835 (18,746) 593,732

Net profit after tax 398,070 4,681 (84,473) (788) 5,068 23,835 (12,427) 333,966

Segment assets 4,697,356 10,921 1,008,274 6,284 141,225 - 36,747 5,900,807

Segment liabilities 1,023,961 12,512 1,016,391 9,222 131,925 - 11,002 2,205,013

Depreciation and amortisation 4 93,066 - 96,100 1,564 - - 1,670 192,400

Acquisition of non-currentassets (including capitalexpenditure) 124,120 - 252,169 8,352 14,250 - - 398,891

Investments in associates andjoint ventures 182,988 - 39,668 - 23,897 - - 246,5531 Relates to inter-segment revenue and Group operating costs.2 Earnings before interest income, finance costs, fair value of derivative instruments, tax, depreciation and amortisation.3 Includes revaluation of investment properties.4 Includes depreciation, amortisation and impairment of intangibles.

Note 5. Income from operating activitiesConsolidated



2007 2006 2007 2006$’000 $’000 $’000 $’000

Rental income5 425,804 398,015 - -

Sales income 662,438 517,702 - -Interest income 12,408 4,718 96,390 84,925Other income 46,595 37,053 23,624 23,463

1,147,245 957,488 120,014 108,388

5Rental income includes revenue from the straight-lining of rental income of $14,587,000 (30 June 2006: $5,949,000).

For

per

sona

l use

onl

y


Page 42




2007 2006 2007 2006$’000 $’000 $’000 $’000

Note 6. Share of net profits of associates

Share of net profits of associates excluding revaluations 34,874 19,832 - -

Add: Revaluations included in share of net profits of associates:80 Pacific Highway Trust 9 2,895 - -60 Martin Place Unit Trust 13,908 9,696 - -Penrhyn House Trust - (2,230) - -589 Collins Street Trust 17,232 - - -Aspley Joint Venture 523 - - -Newthorpe Pty Limited 374 - - -Clarendon Residential Housing Pty Limited

(formerly Investa Housing Pty Limited) - (795) - -32,046 9,566 - -

Share of net profits of associates 66,920 29,398 - -

Note 7. Net gain on fair value of investment properties

Revaluation of investment propertiesDeutsche Bank Place, 126 Phillip Street, Sydney 28,225 116,187 - -1 Market Street, Sydney 25,871 4,368 - -St Martins Tower, 31 Market Street, Sydney 27,385 7,737 - -55 Market Street, Sydney 1,180 6,039 - -231 Elizabeth Street, Sydney 27,701 9,144 - -255 Elizabeth Street, Sydney 617 7,635 - -Centennial Plaza A, 260 Elizabeth Street, Sydney 3,899 - - -Centennial Plaza B, 280 Elizabeth Street, Sydney 17,886 360 - -Centennial Plaza C, 300 Elizabeth Street, Sydney 15,333 625 - -310-322 Pitt Street, Sydney 23,135 8,498 - -Grosvenor Place, 225-235 George Street, Sydney 45,928 14,681 - -400 George Street, Sydney 86,587 13,688 - -Maritime Trade Towers, 210 Kent Street, Sydney 12,804 6,926 - -CBD Floor Space, Sydney 378 - - -Kindersley House, 33 Bligh Street, Sydney (425) 79 - -73 Miller Street, North Sydney 1,200 38 - -80 Pacific Highway, North Sydney (156) - - -110 George Street, Parramatta 10 11 - -50-60 Talavera Road, North Ryde 140 27 - -420 St Kilda Road, Melbourne (51) (3) - -Customs House, 414 Latrobe Street, Melbourne (270) (6,807) - -469 La Trobe Street, Melbourne 359 2,115 - -209 Kingsway, Melbourne 2,413 5,359 - -242 Exhibition Street, Melbourne 6,725 11,250 - -120 Collins Street, Melbourne 25,411 8,271 - -441 St Kilda Road, Melbourne 432 1,130 - -485 La Trobe Street, Melbourne (652) 937 - -State Law Building, 50 Ann Street, Brisbane 13,300 6 - -363 Adelaide Street, Brisbane (3,134) - - -410 Ann Street, Brisbane 10,818 23,278 - -Kings Row, Brisbane 5,447 10,636 - -109 St Georges Terrace, Perth (37) 8,554 - -QV1, 250 St Georges Terrace, Perth 54,278 38,025 - -62 Northbourne Avenue, Canberra (9) 50 - -

432,728 298,844 - -

For

per

sona

l use

onl

y


Page 43




2007 2006 2007 2006$’000 $’000 $’000 $’000

Note 8. Expenses

Net profit before income tax expense includes the following specific expenses:

Lease incentive amortisation 12,107 6,475 - -

Finance costs:Gross interest and finance charges paid/payable 124,632 118,136 99,669 87,048Less: Interest and finance charges capitalised (25,112) (39,248) -

99,520 78,888 99,669 87,048

Rental expense relating to operating leases 4,598 6,299 4,255 1,913

Note 9. Income tax

(a) Income tax expense/(benefit)Current tax (6,793) 9,425 (5,092) 1,538Deferred tax 27,363 (763) 1,945 524(Over)/under provided in prior years (1,820) 70 - -Aggregate income tax expense/(benefit) 18,750 8,732 (3,147) 2,062

Deferred income tax (benefit)/expense included in income taxexpense comprises:

Decrease/(increase) in deferred tax assets (refer (e) below) 5,791 2,841 3,511 (1,563)(Decrease)/increase in deferred tax liabilities (refer (f) below) 21,572 (3,604) (1,566) 2,087

27,363 (763) 1,945 524

(b) Numerical reconciliation of income tax expense to prima facie tax payableProfit before income tax expense 836,211 442,409 (5,016) 8,514

Tax at the Australian tax rate of 30% (2006: 30%) 250,863 132,723 (1,505) 2,554Tax effect of amounts which are not deductible (taxable) incalculating taxable income:

Goodwill amortisation and impairment - 28,700 - 469Non-taxable trust income (238,483) (153,946) - -Dividends from controlled entities - - (4,500) (2,400)Entertainment 100 111 62 64Sundry items 224 614 170 122

12,704 8,202 (5,773) 809Deferred tax assets not previously recognised or written off 7,865 1,288 2,626 1,253(Over)/under provided in prior years (1,819) 70 - -Prior year tax losses not recognised now recouped - (828) - -Income tax expense/(benefit) 18,750 8,732 (3,147) 2,062

(c) Amounts recognised directly into equityAggregate current and deferred tax arising and not recognised in netprofit but directly credited to equityNet deferred tax credited to equity - 6,078 - -

(d) Tax lossesUnused tax losses for which no deferred tax asset has beenrecognised 8,752 6,053 - -Potential tax benefit @ 30% (2006: 30%) 2,626 1,816 - -F

or p

erso

nal u

se o

nly


Page 44




2007 2006 2007 2006$’000 $’000 $’000 $’000

Note 9. Income tax (continued)

(e) Non-current assets – Deferred tax assetsThe balance comprises temporary differences attributable to:

Employee benefits 5,263 4,328 2,830 1,887Accrued expenses 2,161 4,673 492 1,750Provision for diminution - 320 - -Inventory - 3,975 - -Plant and equipment 300 972 - -Investments in associates - 61 - 490Net fair value of derivatives - 1,798 - -Tax losses

1 - 2,705 - 2,706Net deferred tax assets 7,724 18,832 3,322 6,833

Movements:Opening balance at 1 July 18,832 9,335 6,833 4,352Charged to the income statement (refer (a) above) (5,791) (2,841) (3,511) 1,563Credited to equity (refer (c) above) - 6,078 - -Transfer from subsidiary - - - 918Acquisition of subsidiary - 6,260 - -Transfer to deferred tax liabilities (5,317) - - -Closing balance at 30 June 7,724 18,832 3,322 6,833

1 The deferred tax asset attributable to tax losses does not exceed taxable amounts arising from the reversal of existing assessable temporarydifferences.

(f) Non-current liabilities – Deferred tax liabilitiesThe balance comprises temporary differences attributable to:

Prepayments - 111 - 109Inventories 15,477 12,392 - -Investments in associates 1,806 3,090 471 1,978Interest bearing liabilities

2 13,700 - - -Net fair value of derivatives 867 - - -Other 70 72 50 -

Net deferred tax liabilities 31,920 15,665 521 2,087

Movements:Opening balance at 1 July 15,665 14,347 2,087 -Charged/(credited) to the income statement (refer (a) above) 21,572 (3,604) (1,566) 2,087Acquisition of subsidiary - 4,922 - -Transfer from deferred tax assets (5,317) - -Closing balance at 30 June 31,920 15,665 521 2,087

2 This represents the foreign exchange translation difference relating to borrowings in US dollars shown in Note 25.

(g) Tax consolidation legislationInvesta Properties Limited and its wholly owned controlled entities have decided to implement the tax consolidation legislation as of1 July 2005. The accounting policy in relation to this legislation is set out in Note 1(j). On adoption of the tax consolidationlegislation, the entities in the tax consolidated group entered into a tax sharing agreement which limits the joint and several liabilityof the wholly owned entities in the case of a default by the head entity, Investa Properties Limited.

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

The amounts receivable or payable under the tax funding agreement are due upon receipt of the funding advice from the headentity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment ofinterim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as intercompanyreceivables or payables (refer Note 13 and Note 23).

For

per

sona

l use

onl

y


Page 45


2007$’000

2007Cents per

stapledsecurity

2006$’000

2006Cents per

stapledsecurity

Note 10. Dividends and distributions

31 December paid 115,941 7.60 128,908 8.4530 June (payable on 22 August 2007 in relation to 30 June 2007) 122,043 8.00 128,908 8.45

237,984 15.60 257,816 16.90

Dividends/distributions actually paid or satisfied by the issue of securities under the Group’s distribution reinvestment plan duringthe year ended 30 June 2007 were as follows:Paid in cash 244,848 176,516Satisfied by the issue of securities - 13,967

244,848 190,483

Franked dividendsFranking credits available for subsequent financial years based on atax rate of 30% 67,888 66,036

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:(a) franking credits that will arise from the payment of the current tax liability;(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and(d) franking credits that may be prevented from being distributed in subsequent financial years.

The consolidated amounts include franking credits that would be available to the Group if distributable profits of its controlledentities were paid as dividends.

Distributions paid for the financial years ending 2006 and 2007 were wholly comprised of distributions from the Trust.


2007 2006

Note 11. Earnings per stapled security

(a) Basic earnings per stapled security

Net profit attributable to stapled security holders ($’000) 663,536 333,966Weighted average number of stapled securities outstanding (’000) 1,518,029 1,509,498Basic earnings per security (cents per stapled security) 43.71 22.12

(b) Diluted earnings per stapled securityNet profit attributable to stapled security holders ($’000) 663,536 333,966Weighted average number of stapled securities outstanding (’000) 1,525,535 1,520,863Basic earnings per security (cents per stapled security) 43.50 21.96

$’000 $’000(c) Earnings before amortisation and net revaluations per stapled security

Net profit attributable to stapled security holders 663,536 333,966Amortisation of intangibles (including impairment) 3,860 188,731Fitout amortisation

1 9,875 5,404Rental straight-lining

1 (11,475) (4,933)Net loss on fair value of derivative financial instruments

2 (38,184) (9,990)Net gain on fair value of properties held by the Group

1 (364,523) (255,139)263,089 258,039

Weighted average number of stapled securities outstanding (’000) 1,518,029 1,509,498

Earnings (cents per stapled security) 17.33 17.09

1 Excludes minority interest.2 Net of tax.

For

per

sona

l use

onl

y


Page 46



2007 2006

Note 11. Earnings per stapled security (continued)

(d) Reconciliation of earnings used in calculating earnings per stapled securityBasic earnings per stapled security ($’000)Profit from continuing operations 817,461 433,677Profit from continuing operations attributable to minority interests (153,925) (99,711)Profit attributable to the ordinary equity holders of the Company used in calculating basic earningsper stapled security 663,536 333,966

Diluted earnings per stapled security ($’000)Profit from continuing operations attributable to the ordinary equity holders of the Group used incalculating basic earnings per stapled security 663,536 333,966Interest savings - -Profit attributable to the ordinary equity holders of the Company used in calculating dilutedearnings per stapled security 663,536 333,966

(e) Weighted average number of stapled securities used as the denominatorWeighted average number of ordinary securities used as the denominator in calculating dilutedearnings per stapled security (’000)

1,525,535 1,520,863

Adjustments for calculation of basic earnings per stapled security:Employee Share Acquisition Plans (ESAP) (’000) (7,506) (11,365)

Weighted average number of ordinary securities and potential ordinary securities used as thedenominator in calculating basic earnings per security (’000) 1,518,029 1,509,498

ESAP securities granted to employees are considered to be potential ordinary securities and have been included in thedetermination of diluted earnings per security to the extent to which they are dilutive. The ESAP securities have not been includedin the determination of basic earnings per security. Details relating to the options are set out in Note 28.



2007 2006 2007 2006$’000 $’000 $’000 $’000

Note 12. Cash and cash equivalents

Current assetsCash at bank and on hand 7,899 17,231 - 36Deposits at call - 581 - -

7,899 17,812 - 36

Current liabilitiesBank overdraft - - (5,670) -

Total cash and cash equivalents 7,899 17,812 (5,670) 36

(a) Cash at bank and on handThe weighted average interest rate earned on cash at bank was 5.85% during the 2007 financial year (2006: 5.14%).

(b) Deposits at callThe deposits earn floating interest rates of 6.20% (2006: 5.65%).

(c) Bank overdraftThe Parent Entity has a bank overdraft facility of $19 million with interest at Reference Lending Rate minus 0.4% where there is anet overdraft balance after set-off against nominated bank accounts of its controlled entities.F

or p

erso

nal u

se o

nly


Page 47




2007 2006 2007 2006$’000 $’000 $’000 $’000

Note 13. Assets – Receivables

CurrentTrade receivables 118,262 108,226 3,701 21,972Provision for doubtful receivables (290) (125) - -

117,972 108,101 3,701 21,972Distributions receivable from associates 4,176 1,422 - -Loans to controlled entities - - 189,035 -Other receivables 4,390 4,975 - -Prepayments 13,324 9,856 1,320 1,029Tax recoverable - - 95 -

139,862 124,354 194,151 23,001

Non-currentLoans to controlled entities - - 649,603 957,980Loans to associates 77,392 82,109 - -Other receivables 6,262 5,425 - -

83,654 87,534 649,603 957,980

Note 14. Assets – Inventories

CurrentDevelopment projects

At cost 186,870 320,094 - -

Construction work in progressContract costs incurred and recognised profits less recognisedlosses 2,165 1,573 - -

189,035 321,667 - -

Non-currentDevelopment projects

At cost 474,675 360,351 - -At net realisable value 1,843 1,573 - -

476,518 361,924 - -

Construction contractsAmounts totalling $9,373,000 (2006: $13,566,000) received as advances on construction contracts in progress are included inconsolidated trade creditors. Total retentions outstanding in relation to construction contracts in progress amount to $928,000(2006: $244,000).

Note 15. Non-current assets classified as held for sale

Macarthur Central Shopping Centre, Brisbane - 101,760 - -Penrhyn House Trust - 27 - -

- 101,787 - -

On 6 July 2006, the Group sold Macarthur Central Shopping Centre for $119,500,000.

Note 16. Derivative financial instruments

Current assetFair value of derivatives financial instruments 2,890 - - -

Current liabilityFair value of derivatives financial instruments - 5,993 - -

Instruments used by the GroupThe Group enters into derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations ininterest rates and foreign exchange rates in accordance with the Group’s financial risk management policies (refer to Note 33).

For

per

sona

l use

onl

y


Page 48




2007 2006 2007 2006$’000 $’000 $’000 $’000

Note 17. Current tax assets

Refunds due from the ATO 10,611 1,440 9,731 -

This amount represents tax instalments paid prior to lodgement of the consolidated tax group’s income tax returns for the financialyears ended 30 June 2006 and 30 June 2007.

Note 18. Non-current assets – Intangibles

Goodwill 234,730 230,339 - -Less accumulated amortisation and impairment (184,800) (184,800) - -

49,930 45,539 - -

Management rights 38,604 38,604 - -Less accumulated amortisation (16,558) (12,698) - -

22,046 25,906 - -

Corporate property services (CPS) - 3,500 - 3,500Less accumulated amortisation - (3,500) - (3,500)

- - - -

Brands 76,200 76,200 - -148,176 147,645 - -

(a) Movements in carrying amounts

ConsolidatedInvesta Property Group 2007 2006

Brands GoodwillManage-

ment rights CPS Total Brands GoodwillManage-

ment rights CPS Total$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Opening balance 76,200 45,539 25,906 - 147,645 - 90,573 29,766 1,563 121,902Acquisition ofsubsidiary - 4,391 - - 4,391 76,200 138,274 - - 214,474Amortisation - - (3,860) - (3,860) - - (3,860) (313) (4,173)Impairment - - - - - - (183,308) - (1,250) (184,558)Closing balance 76,200 49,930 22,046 - 148,176 76,200 45,539 25,906 - 147,645

(b) Impairment tests for goodwillGoodwill is allocated to the Group’s cash generating units (CGUs) identified according to business segment. A segment-levelsummary of the goodwill allocation is presented below.

2007 2006$’000 $’000

Developments – Residential 49,930 45,539

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projectionsbased on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period areextrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate forthe business in which the CGU operates.F

or p

erso

nal u

se o

nly


Page 49


Note 18. Non-current assets – Intangibles (continued)

(c) Key assumptions used for value-in-use calculationsGross margin

1Growth rate

2Discount rate

3

2007 2006 2007 2006 2007 2006% % % % % %

Development average – Residential 23.0 21.5 3.0 3.0 12.7 12.7

1Budgeted gross margin over the five (5) year period for contract housing.

2Weighted average nominal growth rate used to extrapolate cash flows beyond the budget period.

3Pre tax discount rate applied to the cash flow projections.

These assumptions have been used for the analysis of each CGU within the business segment. Management determined budgetedgross margin based on past performance and its expectations for the future. The weighted average nominal growth rates used areconsistent with forecasts included in industry reports. The discount rates used are pre tax and reflect specific risks relating to therelevant segments in which they operate.

(d) Impact of possible changes to key assumptionsThe value in use (VIU) model is a discounted cash flow model based on five (5) years of forecasted cash flows. The following tableindicates the sensitivity of the valuation to changes in either the discount rate or terminal value growth rate:

Discount rate

12.0% 12.7% 13.5%

2.5

% 1.7%increase

4.1%decrease

9.9%decrease

3.0

% 6.4%increase

-6.3%

decrease

No

min

alg

row

thra

te

3.5

% 11.5%increase

4.5%increase

2.5%decrease



2007 2006 2007 2006$’000 $’000 $’000 $’000

Note 19. Non-current assets – Property, plant and equipment

Land and buildingsAt cost 40,090 46,630 - -Less accumulated depreciation (1,887) (42) - -Total land and buildings 38,203 46,588 - -

Leasehold improvementsAt cost 13,817 14,582 5,421 7,599Less accumulated amortisation (7,354) (5,359) (1,348) (448)Total leasehold improvements 6,463 9,223 4,073 7,151

Plant and equipmentAt cost 10,416 9,692 4,324 2,760Less accumulated depreciation (8,019) (6,546) (2,881) (1,982)

2,397 3,146 1,443 778Total property, plant and equipment 47,063 58,957 5,516 7,929F

or p

erso

nal u

se o

nly


Page 50


Note 19. Non-current assets – Property, plant and equipment (continued)

Movements in carrying amountsMovements between the carrying amounts of property, plant and equipment between the beginning and end of the financial year:


Land andbuildings

Leaseholdimprovements

Property underconstruction

Plant andequipment Total

$’000 $’000 $’000 $’000 $’0002007Opening balance 46,588 9,223 - 3,146 58,957Additions 20,608 2,622 - 1,843 25,073Disposals (27,103) (287) - (1,046) (28,436)Contributions to fitout - (3,100) - - (3,100)Depreciation and amortisation (1,890) (1,995) - (1,546) (5,431)Closing balance 38,203 6,463 - 2,397 47,063

2006Opening balance - 142 394,483 1,181 395,806Acquisition of subsidiary 40,957 2,423 - 2,253 45,633Additions 22,281 8,562 83,695 1,514 116,052Disposals (16,650) (37) - (16,687)Transfer to investment property - - (478,178) - (478,178)Depreciation and amortisation - (1,867) - (1,802) (3,669)Closing balance 46,588 9,223 - 3,146 58,957


Leaseholdimprovements

Plant andequipment Total

$’000 $’000 $’0002007Opening balance 7,151 778 7,929Additions 732 1,636 2,368Lessor contribution to fitout (2,910) (2,910)Depreciation and amortisation (900) (971) (1,871)Closing balance 4,073 1,443 5,516

2006Opening balance 142 553 695Additions 7,457 1358 8,815Depreciation and amortisation (448) (1,133) (1,581)Closing balance 7,151 778 7,929

For

per

sona

l use

onl

y


Page 51


Note 20. Non-current assets – Investments in associates and joint ventures

Ownership interest ConsolidatedInvesta Property Group


2007 2006 2007 2006 2007 2006% % $’000 $’000 $’000 $’000

Associates60 Martin Place Unit Trust

1 50 50 119,127 105,220 - -589 Collins Street Trust

1 50 50 62,703 33,620 - -Schofields Pty Limited 50 50 2 2 - -Midson Road Pty Limited - 50 - - -Newthorpe Pty Limited - 50 - - - -Investa Diversified Office Fund

5 9 1 11,539 628 - -Investa Commercial Property Fund

5 4 4 5,835 9,019 - -Investa Development Trust

2 71 68 7,290 10,830 - 7,003Investa Enhanced Fund

5 17 17 25,000 14,250 - -80 Pacific Highway Trust

4 - 50 - 46,710 - -

Less: Share of associates’ liabilities (14,431) (2,562) - -217,065 217,717 - 7,003

Joint ventureMoorebank Joint Venture 50 50 53,686 28,836 - -Aspley Joint Venture

3 50 50 - - - -270,751 246,553 - 7,003

1 Details of the investment properties held by these trusts are disclosed below.2 The Group owns various classes of units in this entity which aggregate to an ownership of 71%. This entity is considered an associate due to

the ability of external investors in this associate to remove the Parent Entity as the Responsible Entity. Hence, the Group jointly controls theassociate with the external investors in the associate.

3 The Group has a 50% interest in this entity with a value below $1,000.4 The Group increased its holding in this entity to 100% on 25 August 2006. As a result, this entity has been consolidated from that date.5 These investments are held at cost.

(a) Investments in associates and joint venturesInvestments in associates and joint ventures are accounted for in the consolidated financial statements using the equity method ofaccounting and are carried at cost.

(b) Property details of associates

Property name Type Ownership

Acquisitiondate

(Sold date)

Cost includingall additions

$’000Independent

valuation date

Independentvaluation

amount$’000

Independentvaluer

Consolidatedbook value

30 Jun 2007$’000


30 Jun 2006$’000

60 Martin Place UnitTrust60 Martin Place,Sydney, NSW

Offices/Freehold

50% 01/11/99 81,271 30/06/07 119,000 Knight Frank 119,127 105,220

589 Collins StreetTrust595 Collins Street,Melbourne, VIC

Offices/Freehold

50% 28/02/03 42,082 30/06/07 62,500 CBRE 62,703 33,620

These properties are indirectly held through the ownership of a 50% interest in unlisted property trusts and the carrying valuerepresents 50% of the net tangible assets of the relevant trust.

(c) Movements in carrying amountsConsolidated



2007 2006 2007 2006$’000 $’000 $’000 $’000

Opening balance 246,553 265,391 7,003 -Share of profits before income tax 66,920 29,472 - -Distributions received/receivable (34,874) (19,832) - -Additions 44,218 106,087 - 7,003Disposals (1,806) (13,492) (7,003) -Repayment of contributions (3,540) -Transfer to non-current assets held for sale - (18,364) - -Associate now consolidated (46,720) (102,709) - -Closing balance 270,751 246,553 - 7,003

For

per

sona

l use

onl

y


Page 52


Note 20. Non-current assets – Investments in associates and joint ventures (continued)

(d) Share of associates’ and joint venture profits


2007 2006$’000 $’000

Profit before income tax 66,920 29,472Income tax expense - -Profit after income tax 66,920 29,472

(e) Summarised financial information of associates and joint ventures

Group’s share of:Assets Liabilities Revenues Profits Commitments

Capital Lease$’000 $’000 $’000 $’000 $’000 $’000

2007 458,634 (201,041) 118,317 66,920 925 -2006 392,711 (134,893) 33,182 29,472 1,410 -

(f) Contingent liabilities of associates and joint venturesThe Group has no share of contingent liabilities in associates.

For

per

sona

l use

onl

y


Page 53


Note 21. Non-current assets – Investments in controlled entitiesParent Entity

Investa Properties Limited

2007 2006$’000 $’000

Investment in controlled entities 107,615 120,466

Name of entityCountry of

incorporationClass of

shares/units2007 EquityHolding %

2006 EquityHolding %

Investa Property Trust Australia Ordinary * *120 Collins Street (Levels 5- 21) Pty Limited Australia Ordinary 100 100120 Collins Street Pty Limited Australia Ordinary 100 100120 Collins Street Trust Australia Ordinary 100 100231 Elizabeth Street Trust Australia Ordinary 52 52242 Exhibition Street Trust Australia Ordinary 81 81310 Pitt Street Trust Australia Ordinary 55 51400 George Street Pty Limited Australia Ordinary 55 55441 Trust Australia Ordinary 100 10080 Pacific Highway Trust ** Australia Ordinary 100 50Bellevale East Fairfield Pty Limited Australia Ordinary 100 100Bellevale Homes Pty Limited Australia Ordinary 100 100Beta Sub Trust Australia Ordinary 56 56Beta Trust Australia Ordinary 56 56Botanicca S7 Unit Trust Australia Ordinary 100 -Botanicca S8 Unit Trust Australia Ordinary 100 -Centennial Trust Australia Ordinary 82 80Central Trust Australia Ordinary 100 100Clarendon Corporate Services Pty Limited Australia Ordinary 100 100Clarendon Homes (NSW) Pty Limited Australia Ordinary 100 100Clarendon Homes (QLD) Pty Limited Australia Ordinary 100 100Clarendon Homes (VIC) Pty Limited

(formerly Domaine Homes Vic Pty Limited)Australia Ordinary 100 100

Clarendon Residential Communities Pty Limited Australia Ordinary 100 100Clarendon Residential Developments Pty Limited

(formerly Investa Residential Developments Pty Limited) Australia Ordinary 100 100Clarendon Residential Estates Pty Limited

(formerly Investa Residential Estates Pty Limited) Australia Ordinary 100 100Clarendon Residential Holdings Pty Limited

(formerly Investa Residential Holdings Pty Limited) Australia Ordinary 100 100Clarendon Residential Housing (VIC) Pty Limited

(formerly Investa Housing (VIC) Pty Limited) Australia Ordinary 100 100Clarendon Residential Housing Pty Limited

(formerly Investa Housing Pty Limited) Australia Ordinary 100 100Clarendon Residential Pty Limited

(formerly Investa Residential Pty Limited) Australia Ordinary 100 100Clarendon Resort Housing Pty Limited Australia Ordinary 100 70Connect Property Trust Australia Ordinary 100 100Coombabah Square Pty Limited Australia Ordinary 100 100Cornerstone Homes (VIC) Pty Limited Australia Ordinary 85 85Delta Office Fund Australia Ordinary 100 100Domaine Homes (NSW) Pty Limited Australia Ordinary 100 100East Street Pty Limited Australia Ordinary 100 100Even Drive Unit Trust Australia Ordinary 100 100Farwell Investments Pty Limited Australia Ordinary 100 100Fawkner Trust Australia Ordinary 100 100Floor Space Trust Australia Ordinary 100 100Greenway Homes Pty Limited Australia Ordinary 100 100

* Investa Property Trust is a controlled entity by virtue of the designation of Investa Properties Limited as the Parent Entity of the Group (refer toNote 1(b)). Investa Properties Limited does not own any units in Investa Property Trust. Each unit is stapled to a share in Investa PropertiesLimited. These securities trade on the Australian Stock Exchange (ASX) as one stapled security.

** The remaining 50% of units in 80 Pacific Highway Trust were acquired on 23 August 2006. The operating results of this controlled entity havebeen included in the consolidated income statement from the date of acquisition. Prior to the date of acquisition, the operating results of 80Pacific Highway Trust were equity accounted as an associate.

For

per

sona

l use

onl

y


Page 54


Note 21. Non-current assets – Investments in controlled entities (continued)

Name of entityCountry of


shares/units2007 EquityHolding %

2006 Equityholding %

Grosvenor Subsidiary Property Trust Australia Ordinary 100 100Helensvale Estate Pty Limited Australia Ordinary 100 100Help Street Pty Limited Australia Ordinary 100 100Help Street Trust Australia Ordinary 100 100Investa Asset Management (QLD) Pty Limited Australia Ordinary 100 100Investa Asset Management Pty Limited Australia Ordinary 100 100Investa Commercial Developments Pty Limited Australia Ordinary 100 100Investa Custodian Pty Limited Australia Ordinary 100 100Investa Custodian Two Pty Limited Australia Ordinary 100 100Investa Funds Management Limited Australia Ordinary 100 -Investa Gamma Trust Australia Ordinary 100 100Investa Industrial Core Fund Australia Ordinary 100 -Investa Industrial Development Holdings Fund Australia Ordinary 100 -Investa Moorebank Pty Limited Australia Ordinary 100 100Investa Nominees Pty Limited Australia Ordinary 100 100Investa Real Property Growth Trust Australia Ordinary 100 100Investa Securities Pty Limited Australia Ordinary 100 100Investa South Melbourne Trust Australia Ordinary 52 52Investa Sunlaw Trust Australia Ordinary 100 100Investa Third Industrial Trust Australia Ordinary 100 100IPG Finance Pty Limited Australia Ordinary 100 100Kellyville Ridge Pty Limited Australia Ordinary 100 100Little Bay Developments Pty Limited Australia Ordinary 100 100Lizabeth Trust Australia Ordinary 100 100Macarthur Central Trust Australia Ordinary 100 100Macquarie Street Sub Trust Australia Ordinary 76 76Macquarie Street Trust Australia Ordinary 76 76Mango Hill Unit Trust Australia Ordinary 100 -Maritime Nominees Pty Limited Australia Ordinary 100 100Maritime Trade Towers Trust Australia Ordinary 62 62Marketect Pty Limited Australia Ordinary 100 100Mount Street Unit Trust Australia Ordinary 100 -Murfield Pty Limited Australia Ordinary 100 100Northern Site Pty Limited Australia Ordinary 100 100O’Connell FH Pty Limited Australia Ordinary 100 100O’Connell LH Pty Limited Australia Ordinary 100 100O’Connell FH Trust Australia Ordinary 100 100O’Connell Holdings Pty Limited Australia Ordinary 100 100O’Connell Holdings Trust Australia Ordinary 100 100O’Connell LH Trust Australia Ordinary 100 100P.A. Shingles Pty Limited Australia Ordinary 100 100Phillip Street Sub Trust Australia Ordinary 76 76Phillip Street Trust Australia Ordinary 76 76Principal Sydney Development Pty Limited Australia Ordinary 100 100Project Ben Pty Limited Australia Ordinary 100 100Rushcutters Bay Pty Limited Australia Ordinary 100 100Rushcutters Bay Unit Trust Australia Ordinary 100 100Silverton Limited Australia Ordinary 100 100Somerset Estate Pty Limited Australia Ordinary 100 100Southern Site Pty Limited Australia Ordinary 100 100Sunpac Property Fund Australia Ordinary 52 52Syndicate Holding Trust Australia Ordinary 100 100The East Street Trust Australia Ordinary 100 100Townsville Trust Australia Ordinary 100 100Triptec Pty Limited Australia Ordinary 100 100Truganina Unit Trust Australia Ordinary 100 -Whitfords Beach Pty Limited Australia Ordinary 100 100Woodvale Park Pty Limited Australia Ordinary 100 100Your Home Centre Pty Limited Australia Ordinary 100 100Your Home Floor & Wall Tiling Pty Limited Australia Ordinary 100 100

For

per

sona

l use

onl

y


Page 55


Note 22. Non-current assets – Investment properties

Properties held directly or indirectly by the Group are classified in the balance sheet under the following categories:



2007 2006 2007 2006$’000 $’000 $’000 $’000

Investment properties 4,921,335 4,412,302 - -

(a) Details of investment properties – consolidated

Property name Type OwnershipAcquisition

date

Costincluding all

additions$’000


date


amount$’000

Independentvaluer


30 Jun 2007$’000


30 Jun 2006$’000

Deutsche Bank Place,126 Phillip Street,Sydney, NSW 2

Offices/Freehold

75% 31/12/96 478,600 31/12/06 635,000 Savills 638,645 599,369

400 George Street,Sydney, NSW 2

Offices/Freehold

55% 31/10/99 263,274 30/06/07 515,000 Knight Frank 515,000 425,439

Grosvenor Place,225-235 George Street,Sydney, NSW 3

Offices/Leasehold

30% 31/05/88 320,691 30/06/07 310,500 Savills 310,500 255,623

BT Tower,1 Market Street,Sydney, NSW 2

Offices/Freehold

50% 31/01/96 170,716 31/12/06 250,000 Knight Frank 250,052 224,147

St Martins Tower,31 Market Street,Sydney, NSW 1

Offices/Freehold

100% 30/09/00 121,219 30/06/07 180,000 Knight Frank 180,000 144,926

55 Market Street,Sydney, NSW 1

Offices/Freehold

100% 31/07/98 137,197 30/06/06 155,000 Knight Frank 158,820 155,000

231 Elizabeth Street,Sydney, NSW 2

Offices/Freehold

50% 19/08/02 118,981 30/06/07 160,000 Knight Frank 160,000 131,013

255 Elizabeth Street,Sydney, NSW 1 Offices/

Freehold100%

21/09/9411/12/9801/11/99

196,988 30/06/06 167,000 Knight Frank 184,950 167,000

Centennial Plaza Tower A260 Elizabeth Street,Sydney, NSW 2

Offices/Freehold

80% 30/09/00 57,270 30/06/07 67,000 Savills 67,000 63,051

Centennial Plaza Tower B280 Elizabeth Street,Sydney, NSW 1 & 2

Offices/Freehold

80% 30/09/00 80,570 30/06/07 99,500 Savills 99,500 81,617

Centennial Plaza Tower C300 Elizabeth Street,Sydney, NSW 1 & 2

Offices/Freehold

80% 30/09/00 97,265 30/06/07 122,250 Savills 122,250 105,465

310 Pitt Street,Sydney, NSW 1 & 2

Offices/Freehold

50% 30/11/02 133,077 30/06/07 169,000 Knight Frank 169,000 148,003

Maritime Trade Towers,201 Kent Street,Sydney, NSW 4

Offices/Leasehold

30% 31/12/00 106,805 30/06/07 145,000 Knight Frank 145,000 130,000

Kindersley House33 Bligh & 20-26O’Connell Streets,Sydney, NSW

Offices/Freehold

100% 31/12/01 80,776 31/12/06 64,000 Savills 64,466 63,623

CBD Floor Space,Sydney, NSW

HeritageFloor Space

100% 30/06/00 332 30/06/07 1,000 CBRE 1,000 622

73 Miller Street,North Sydney, NSW

Offices/Freehold

100% 12/06/97 76,633 31/12/06 88,500 Knight Frank 88,483 87,242

80 Pacific Highway,North Sydney, NSW 6

Offices/Freehold

100% 25/08/06 91,043 30/06/06 94,250 Savills 94,027 -

50-60 Talavera Road,North Ryde, NSW

Offices/Freehold

100% 01/11/99 33,478 31/03/06 32,400 Savills 32,902 32,902

The Octagon,110 George Street,Parramatta, NSW

Offices/Freehold

- - - - - - - 71,660

120 Collins Street,Melbourne, VIC 1

Offices/Freehold

100% 31/01/94 348,732 30/06/07 390,000 Knight Frank 390,000 342,415

242 Exhibition Street,Melbourne, VIC 2

Offices/Freehold

80% 19/08/02 281,993 31/12/06 305,000Jones Lang

LaSalle306,136 295,837

209 Kingsway,Melbourne, VIC 2

Offices/Freehold

50% 31/01/02 102,882 30/09/06 115,000 CBRE 115,081 110,000

469 La Trobe Street,Melbourne, VIC

Offices/Freehold

100% 01/07/88 88,905 30/06/06 58,250 Ernst & Young 58,908 58,250

485 La Trobe Street,Melbourne, VIC 1

Offices/Freehold

- - - - - - - 114,604

420 St Kilda Road,Melbourne, VIC

Offices/Freehold

100% 12/12/86 26,473 30/06/05 29,000Jones Lang

LaSalle29,856 29,571

441 St Kilda Road,Melbourne, VIC

Offices/Leasehold

100% 30/10/03 50,037 31/03/06 50,000 CBRE 50,883 50,212

For

per

sona

l use

onl

y


Page 56


Note 22. Non-current assets – Investment properties (continued)

Property name Type OwnershipAcquisition

date

Costincluding all

additions$’000


date


amount$’000

Independentvaluer


30 Jun 2007$’000


30 Jun 2006$’000

Customs House414 Latrobe Street,Melbourne, VIC

Offices/Freehold

100% 31/07/97 47,224 31/03/06 38,300 CBRE 39,041 38,300

State Law Building,50 Ann Street,Brisbane, QLD

Offices/Freehold

100% 31/12/02 89,980 31/12/06 101,500 CBRE 104,432 87,576

Cathedral Square,410 Ann Street,Brisbane, QLD

Offices/Freehold

120 yrleasehold

100% 23/11/87 63,557 31/12/06 99,000Colliers

International99,537 87,414

Kings Row,Brisbane, QLD 5

Offices/Freehold

50% 31/12/02 12,680 30/06/07 50,000 Knight Frank 50,000 43,750

363 Adelaide Street,Brisbane, QLD

Offices/Freehold

100% 31/05/07 73,702 30/06/07 70,500Jones Lang

LaSalle70,500 -

QV1,250 St Georges Terrace,Perth, WA 4

Offices/Freehold

50% 31/12/98 147,629 31/12/06 255,000 Knight Frank 256,560 200,554

109 St Georges Terrace,Perth, WA

Offices/Freehold

100% 01/11/99 40,036 30/06/06 40,900 Savills 41,624 40,900

62 Northbourne Avenue,Canberra, ACT

Offices 96 yrleasehold

100% 26/02/88 29,903 30/06/05 26,200 Knight Frank 27,182 26,217

Total non-currentinvestment property 4,921,335 4,412,302

1 Significant capital expenditure programs are in progress on these properties which are expected to translate into corresponding increases invaluation when complete.

2 These properties are indirectly held through the ownership of a controlling interest in unlisted property trusts and are carried at 100% of theirunderlying value due to the consolidation of these trusts.

3 30% interest as tenants-in-common.4 50% interest as tenants-in-common.5 Only 50% property interest shown as only 50% directly owned.6 This property was previously shown as an associate.

(b) Movements in carrying amountsReconciliations of the carrying amounts of investment property for the year are set out below:



2007 2006 2007 2006$’000 $’000 $’000 $’000

Opening balance 4,412,302 3,557,209 - -Additions including capital expenditure 205,249 40,968 - -Transfer from property, plant and equipment - 478,178 - -Lease incentives 54,840 37,630 - -Lease incentive amortisation (12,107) (6,475) - -Disposals (186,264) - - -Straight-line rental income 14,587 5,948 - -Revaluation increments 432,728 298,844 - -Closing balance 4,921,335 4,412,302 - -

The fair value of investment property includes the written down value of lease incentives, amortised initial direct leasing costs andthe impact of straightening lease income in accordance with AIFRS.

(c) Amounts recognised in the income statement for investment propertyRental income 425,804 398,015 - -Direct operating expenses from property that generate rental income 104,107 95,785 - -

(d) Valuation basisThe basis of the valuation of investment properties is fair value, being the amounts for which the properties could be exchangedbetween willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the samelocation and condition and subject to similar leases. The 2007 revaluations were based on independent assessments made bymembers of the Australian Property Institute.

For

per

sona

l use

onl

y


Page 57



(e) Contractual obligationsRefer to Note 35 for disclosure of any contractual obligations to purchase, construct or develop investment property or for repairs,maintenance or enhancements.

(f) Leasing arrangementsThe investment properties are leased to tenants under long term operating leases with rentals payable monthly. Minimum leasepayments receivable on leases of investment properties are as follows:



2007 2006 2007 2006$’000 $’000 $’000 $’000

Minimum lease payments under non-cancellable operating leases ofinvestment properties not recognised in the financial statements arereceivable as follows:Within one year 337,496 352,594 - -Later than one year but not later than five (5) years 1,096,784 1,171,652 - -Later than five (5) years 618,597 884,160 - -

2,052,877 2,408,406 - -

Note 23. Liabilities – Payables

CurrentTrade creditors 138,076 117,757 7,066 8,604Deferred income 15,406 17,610 - -Accrued borrowing costs 17,239 21,114 - -Other creditors 7,690 7,153 - -

178,411 163,634 7,066 8,604

Non-currentLoan from controlled entities - - 854,056 1,005,527Loan from associates 15,423 144 - -

15,423 144 854,056 1,005,527

Note 24. Liabilities – Provisions

CurrentProvision for dividends and distributions

1 133,680 132,552 - -Employee entitlements 11,913 12,721 8,049 5,986Income tax - 1,845 - 1,616Restructuring 2,085 13,205 - -

147,678 160,323 8,049 7,602

Non-currentEmployee entitlements 2,146 1,709 306 304

Movements in provisions Current Non-current

ConsolidatedDividends and

distributionsEmployee

entitlements 2

Otherprovisions Total

Employeeentitlements Total

$’000 $’000 $’000 $’000 $’000 $’000

Opening balance 132,552 12,721 15,050 160,323 1,709 1,709Movement in the period:

Paid during the period (244,848) (2,948) (12,165) (259,961) (188) (188)Paid to minority interests (55,374) - - (55,374) - -Additional provisions recognised 237,984 2,140 (800) 239,324 625 625Additional provisions recognisedfor minority interests 63,366 - - 63,366 - -

Closing balance 133,680 11,913 2,085 147,678 2,146 2,146

1 This provision includes $11,637,000 payable to minority interests at 30 June 2007 (30 June 2006: $3,644,000).2 This includes provision for performance bonus and the Managing Director’s unlatching fee.

The Group had 656 employees at 30 June 2007 (30 June 2006: 733).

For

per

sona

l use

onl

y


Page 58




2007 2006 2007 2006$’000 $’000 $’000 $’000

Note 25. Interest bearing liabilities

CurrentCommercial Mortgage Backed Securities (CMBS)

AAA rated 6.00% fixed rate notes - 195,000 - -AAA rated floating rate notes with a coupon of three month bank

bills plus 0.43% - 235,000 - -AA+ rated floating rate notes with a coupon of three month bank

bills plus 0.53% - 33,000 - -

Medium term notes6.75% notes maturing November 2006 - 150,000 - -

Bank facilities maturing August 20071 100,000 - - -

100,000 613,000 - -

Non-currentCommercial Paper

2 225,000 284,000 - -Bank facilities

1 341,000 210,000 - -Medium term notes

6.25% notes maturing September 2009 135,000 135,000 - -6.25% notes maturing September 2009 100,000 - - -6.75% notes maturing June 2011 125,000 - - -6.15% notes maturing August 2012 180,000 180,000 - -

Floating Rate Notes with a coupon of three month bank bills plus0.43% maturing September 2009 40,000 40,0000.48% maturing June 2011 125,000 - - -0.56% maturing August 2012 70,000 70,000 - -

US private placementUS$170 million 6.03% notes maturing July 2014 200,318 245,985 - -$80 million (floating rate) notes maturing July 2016 with a coupon

of three month bank bills 79,560 79,560 - -1,620,878 1,244,545 - -

Total interest bearing liabilities 1,720,878 1,857,545 - -

Financing arrangementsFacility as

at 2007$’000

Drawn asat 2007$’000

Facility asat 2006$’000

Drawn as at2006$’000

Unsecured bank facilities3 1,000,000 441,000 750,000 210,000

Commercial paper2 - 225,000 - 284,000

Total excluding bank guarantees 1,000,000 666,000 750,000 494,000

Bank guarantees - 39,480 - 25,627

Total 1,000,000 705,480 750,000 519,627

Available facilities 294,520 230,373

1 The bank facilities are fully revolving cash advance facilities, with a floating interest rate. $600 million of the facility is renewable every sixmonths and has a further termination period of 364 days. $300 million has a three (3) year term.

2 The commercial paper has varying fixed interest rates. Terms are less than 12 months. The commercial paper utilises part of the available non-current unsecured bank facility as standby support, therefore is classed as a non-current liability.

3 The unsecured bank facility includes a current and a non-current component as set out above.

For

per

sona

l use

onl

y


Page 59


No ofsecurities

’000

2007$’000

No ofsecurities

’000

2006$’000

Note 26. Contributed equity

Investa Property Trust 1,525,536 2,737,122 1,525,536 2,737,122Investa Properties Limited 1,525,536 87,680 1,525,536 87,680

2,824,802 2,824,802

The net tangible assets per security as at 30 June 2007 was $2.10 (30 June 2006: $1.83).

(a) Reconciliation of contributed equityInvesta Property

TrustInvesta Properties

Limited

DateNo. of units

’000 $’000No. of shares

’000 $’000Opening balance 1 Jul 2005 1,492,738 2,679,673 1,492,738 83,140Distributions reinvested 22 Aug 2005 7,157 12,975 7,157 992Placement of securities 22 Aug 2005 25,641 46,450 25,641 3,550Cost of issue of securities - - (1,251) - (2)Transfer to retained earnings - - (725) - -

Opening balance 30 June 2006 1,525,536 2,737,122 1,525,536 87,680

Closing balance 30 June 2007 1,525,536 2,737,122 1,525,536 87,680

(b) Distribution reinvestment plan issues (DRP)When in operation, the distribution reinvestment plan provides holders of stapled securities the opportunity to elect to have all orpart of their distribution entitlements satisfied by the issue of new stapled securities rather than by being paid in cash. Under thestapled security structure, the capital raised under the distribution reinvestment plan can be attributed to either the Trust or theParent Entity. In the year ended 30 June 2007, the Group did not issue any securities (2006: The Group issued 7,157,000 securitiesunder the DRP and allocated 7.1% to the Parent Entity and 92.9% to the Trust).

(c) Executive Performance Plan (EPP), Management Incentive Plan (MIP), Equity Grant Plan (EGP) and Employee ShareAcquisition Plan (ESAP)

Information relating to the MIP, EPP, EGP and ESAP, including details of securities issued under each plan is set out in Note 27and Note 28.

Note 27. Treasury stock reserve

Stapled securities held in trust by the Group for employees under the MIP, EPP, EGP and ESAP in Treasury Stock Reserve areshown below:

Consolidated No ofsecurities

’000

2007$’000

No ofsecurities

’000

2006$’000

Investa Property Trust 6,888 9,412 10,444 18,135Investa Properties Limited 6,888 983 10,444 (561)

10,395 17,574

Reconciliation of treasury stock reserveNo of

securities’000

2007$’000

No ofsecurities

’000

2006$’000

Opening balance 10,444 17,574 9,529 15,543Fair value of security based payments – ESAP - (224) - (655)Sale of securities and repayments (4,956) (9,389) (3,753) (7,327)Fair value of MIP, EPP and EGP securities - (1,363) - -Purchase of securities under MIP, EGP and EPP 1,400 3,797 - -Purchase of securities under ESAP on behalf of employees - - 4,668 10,013Closing balance 6,888 10,395 10,444 17,574

For

per

sona

l use

onl

y


Page 60


Note 27. Treasury stock reserve (continued)

Parent Entity No ofsecurities

’000

2007$’000

No ofsecurities

’000

2006$’000

Investa Properties Limited 1,400 2,985 - -

Reconciliation of treasury stock reserveFair value of MIP, EPP and EGP securities - (812)Purchase of securities under MIP, EGP and EPP 1,400 3,797 - -Closing balance 1,400 2,985 - -

Note 28. Security based payments

Executive Performance Plan (EPP)The EPP has been structured to make annual grants of Performance Rights which allow executives to acquire fully paid Investasecurities, at no cost, provided performance conditions are satisfied.

The EPP is fundamental to the Group’s executive remuneration approach, as the plan: allows rewards to accrue to executives only when the Group’s total return to security holders, over multi-year periods, exceeds

hurdle rates set by reference to the S&P/ASX 200 Listed Property Trust Index; and facilitates executives’ security ownership, thereby further aligning their interests with those of security holders.



2007$’000

2006$’000

2007$’000

2006$’000

Expenses arising from security based payment transactionsFair value of EPP securities granted included in employee benefitsexpense 339 - 296 -

The value of EPP Performance Rights is calculated by multiplying the volume weighted average security price (based on the firstfive (5) trading days in July 2006 on the ASX) by the employees allocation adjusted for the likelihood of the Group meeting TotalSecurityholder Return (TSR) targets. This amount is then amortised over the vesting period.

Management Incentive Plan (MIP)The MIP comprises two components: A cash based incentive opportunity paid after the end of the annual performance period, andperformance rights which are converted into deferred equity at the end of the annual performance period, and then are subject to afurther two year retention period. Both components are based on performance assessed against an annual scorecard of agreedperformance objectives (KPIs).

Expenses arising from security based payment transactionsFair value of MIP securities granted included in employee benefitsexpense 382 - 271 -

The value of MIP Performance Rights is calculated by multiplying the volume weighted average security price (based on the firstfive (5) trading days in July 2006 on the ASX) by the employees’ allocation adjusted for the probability of meeting performancetargets, to be assessed as part of their annual performance review. This amount is then amortised over the vesting period.

Equity Grant Plan (EGP)A new employee securities plan was introduced in FY07. This plan utilises the annual $1,000 tax exemption extended to stapledsecurity entities, and replaces the use of ESAP for Group employees generally. Following the end of the financial year, all eligibleemployees will be granted up to $1,000 of IPG securities subject to the achievement of a pre-determined Group performancehurdle. Executives also participate in this plan so that employees across the Group openly share a component of remunerationwhich is linked to their collective performance and aligned with the interests of security holders.

Expenses arising from security based payment transactionsFair value of EGP securities granted included in employee benefitsexpense 642 - 245 -

Plan Employee Share Acquisition Plan (ESAP)The Employee Share Acquisition Plan (ESAP) was designed to enable employees to share in the long term growth of the Group bybeing awarded securities under the Plan, potentially on an annual basis. The intention was to align employee wealth creationinterests with those of the Group’s security holders over the longer term, and also to encourage executives to remain with theGroup. As noted in the Remuneration Report incorporated in the Directors’ Report, because of changes being made in the Group’songoing remuneration arrangements it is not intended to make further issues of securities under ESAP.

For

per

sona

l use

onl

y


Page 61


Note 28. Security based payments (continued)

(a) ESAP grantedThe weighted average issue price of all outstanding ESAP securities as at 30 June 2007 was $2.04 (30 June 2006: $2.02). Theaverage value per security of outstanding ESAP loans to employees at 30 June 2007 was $1.78 (30 June 2006: $1.80). The closingsecurity price of IPG as at 30 June 2007 was $2.94 (30 June 2006: $2.18). The weighted average remaining contractual life ofsecurities under ESAP outstanding at the end of the period was 0.11 years (30 June 2006: 1.20 years).

Set out below is a summary of grants made under ESAP:

Consolidated

Granted Exercised Granted Exercised

Issue date

Issueprice

$

Balance1 July2005 Year ended 30 June 2006

Balance30 June

2006

Exercisableat 30 June

2006 Year ended 30 June 2007

Balance30 June

2007

Exercisableat 30 June

20071/03/2001 1.79 351,500 - (59,500) 292,000 292,000 - (249,000) 43,000 43,0001/12/2001 2.02 564,000 - (120,000) 444,000 444,000 - (331,000) 113,000 113,0004/10/2001 1.93 1,000,000 - (1,000,000) - - - - - -17/04/2002 1.93 20,000 - - 20,000 20,000 - (20,000) - -1/09/2002 1.90 1,362,500 - (439,000) 923,500 923,500 - (673,000) 250,500 250,50019/04/2002 2.02 500,000 - - 500,000 500,000 - - 500,000 500,00024/07/2002 2.02 10,000 - - 10,000 10,000 - - 10,000 10,00023/09/2002 2.01 25,000 - - 25,000 25,000 - (25,000) - -1/11/2002 2.08 20,000 - - 20,000 20,000 - - 20,000 20,0008/11/2002 2.08 20,000 - - 20,000 20,000 - (20,000) - -20/12/2002 2.10 100,000 - - 100,000 100,000 - (100,000) - -4/07/2003 1.97 10,000 - - 10,000 - - - 10,000 10,0005/08/2003 1.93 20,000 - - 20,000 - - - 20,000 20,00011/08/2003 1.92 50,000 - - 50,000 - - (50,000) - -26/09/2003 1.98 1,982,000 - (491,000) 1,491,000 - - (994,000) 497,000 497,00010/11/2003 1.94 2,500 - - 2,500 - - - 2,500 2,5005/12/2003 1.93 10,000 - - 10,000 - - (10,000) - -27/01/2004 1.92 20,000 - (20,000) - - - - - -4/06/2004 1.93 10,000 - - 10,000 - - (10,000) - -24/06/2004 1.94 20,000 - (20,000) - - - - - -9/07/2004 1.93 55,000 - (30,000) 25,000 - - - 25,000 -15/07/2004 1.93 20,000 - - 20,000 - - - 20,000 -27/07/2004 1.96 5,000 - - 5,000 - - (5,000) - -13/08/2004 1.98 20,000 - - 20,000 - - (20,000) - -16/08/2004 1.99 50,000 - - 50,000 - - (50,000) - -18/10/2004 2.07 30,000 - - 30,000 - - - 30,000 -19/10/2004 2.08 50,000 - - 50,000 - - - 50,000 -19/10/2004 2.08 10,000 - - 10,000 - - - 10,000 -22/10/2004 2.07 20,000 - (20,000) - - - - - -9/11/2004 2.13 10,000 - - 10,000 - - - 10,000 -8/11/2004 2.09 20,000 - - 20,000 - - - 20,000 -2/12/2004 2.15 10,000 - (10,000) - - - - - -13/12/2004 2.15 10,000 - (10,000) - - - - - -16/12/2004 2.09 20,000 - - 20,000 - - - 20,000 -19/01/2004 2.03 30,000 - - 30,000 - - (10,000) 20,000 -13/02/2004 1.94 10,000 - (10,000) - - - - - -19/02/2004 1.94 15,000 - (15,000) - - - - - -24/03/2004 2.04 20,000 - - 20,000 - - (20,000) - -1/10/2004 1.96 2,861,900 - (650,000) 2,211,900 - - (1,041,400) 1,170,500 -20/01/2005 2.27 20,000 - - 20,000 - - - 20,000 -4/03/2005 2.02 20,000 - - 20,000 - - - 20,000 -18/03/2005 2.11 10,000 - - 10,000 - - - 10,000 -19/04/2005 2.05 100,000 - - 100,000 - - - 100,000 -6/06/2005 1.95 15,000 - - 15,000 - - - 15,000 -11/07/2005 2.00 - 5,000 - 5,000 - - - 5,000 -26/08/2005 2.04 - 20,000 - 20,000 - - - 20,000 -7/09/2005 2.10 - 654,000 (157,500) 496,500 - - (190,500) 306,000 -1/10/2005 2.13 - 3,648,500 (701,000) 2,947,500 - - (1,067,500) 1,880,000 -25/10/2005 2.05 - 20,000 - 20,000 - - (20,000) - -6/12/2005 2.02 - 20,000 - 20,000 - - - 20,000 -27/01/2006 2.00 - 20,000 - 20,000 - - - 20,000 -2/02/2006 2.00 - 230,000 - 230,000 - - - 230,000 -23/05/2006 2.08 - 50,000 - 50,000 - - (50,000) - -

Total 9,529,400 4,667,500 (3,753,000) 10,443,900 2,354,500 - (4,956,400) 5,487,500 1,466,000

No securities under ESAP were forfeited during the periods covered by the above table.

For

per

sona

l use

onl

y


Page 62


Note 28. Security based payments (continued)

(b) Terms of ESAP grantedESAP functions through the Group making non-interest bearing limited recourse loans to employees to enable the acquisition onmarket of Investa Property Group securities under ESAP for the employees in question. Under the terms of ESAP any shortfallbetween the market value of an employee’s ESAP securities at the date he or she leaves the Group, and that employee’soutstanding loan balance at the same date, is borne by the Group. For the years to 30 June 2007 and 30 June 2006, no loss wassustained by the Group.

The securities are acquired on-market on behalf of the employee and granted with a three year vesting period with distributions anddividends paid on the securities representing assessable income to employees. A cash component of distributions and dividends ispaid to each employee to fund his or her tax liability arising from the distributions and dividends. The balance of the distributionsand dividends is directed towards repayment of the employees’ ESAP loans on an individual account basis.

Fair value of ESAP grantedUnder the requirements of AASB 2 ESAP is accounted for as “options” to employees because of the limited recourse loan feature.The fair value of the “options” was calculated as 42.7 cents per security (2006: 42.7 cents per security).

The binomial option pricing model used to calculate fair value takes into account the exercise price, the term of the ESAP grant, thevesting and performance criteria, the impact of dilution, the non-tradeable nature of the ESAP, the security price at grant date andexpected price volatility of the underlying security, the expected distribution yield and the risk free interest rate for the term of theESAP.

The model inputs for ESAP securities granted included the following. No ESAP has been granted in 2007:2006

(i) securities are granted for market value and have a three year vesting period(ii) grant date: 1 October 2005

(iii) vesting date: 1 October 2008

(iv) security price at grant date: $2.13

(v) expected price volatility of the securities: 16.81%

(vi) expected distribution yield: -

(vii) risk free interest rate: 5.35%

The expected price volatility is based on the historic volatility (based on the remaining life of the ESAP grant), adjusted for anyexpected changes to future volatility due to publicly available information.

The fair value of the options is amortised over the vesting period from grant date, being three (3) years.

(c) Expenses arising from security based payment transactions



2007$’000

2006$’000

2007$’000

2006$’000

Fair value of ESAP securities granted included in employee benefitsexpense 224 655 - -

The interest cost borne by the Group on employee ESAP loans of $1,401,000 (2006: $1,355,000) is included in the incomestatement under finance costs. The Remuneration Report incorporated in the Directors’ Report discloses the imputed interest onESAP loans to key management personnel.

For

per

sona

l use

onl

y


Page 63




2007 2006 2007 2006$’000 $’000 $’000 $’000

Note 29. Minority interest

Interest in:Contributed equity 619,846 632,563 - -Retained profits 242,125 148,871 - -

861,971 781,434 - -

The outside equity interest represents external investors’ interest in: 310 Pitt Street Trust – 45% held by Investa Diversified Office Fund Beta Trust – 44% held by Prudential Properties Trust Pty Limited and Investa Commercial Property Fund Centennial Trust – 18% held by Investa Diversified Office Fund Maritime Trade Towers Trust – 38% held by Investa Commercial Property Fund Sunpac Property Fund – 48% held by Investa Commercial Property Fund Investa South Melbourne Trust – 48% held by Investa Commercial Property Fund 231 Elizabeth Street Trust – 48% held by Investa Commercial Property Fund Phillip St Trust – 24% held by Investa Commercial Property Fund Macquarie St Trust – 24% held by Investa Commercial Property Fund 242 Exhibition St Trust – 19% held by Investa Commercial Property Fund

Note 30. Retained earnings

Opening balance 107,132 39,962 11,444 4,992Profit/(loss) attributable to stapled security holders 663,536 333,966 (1,869) 6,452Dividends/distributions paid and payable (237,984) (257,816) - -Adjustment on adoption of AASB 132 and AASB 139, net of tax - (9,705) - -Transfer from contributed equity - 725 - -Closing balance 532,684 107,132 9,575 11,444

Components of retained earnings

Retained earnings – amounts available for distribution 32,645 7,852 11,765 13,634Retained earnings – capital 66,479 50,618 - -Unrealised retained earnings 433,560 48,662 (2,190) (2,190)

532,684 107,132 9,575 11,444

Note 31. Reconciliation of net profit to net cash inflow from operating activities

Net profit/(loss) after tax before outside equity interest 817,461 433,677 (1,869) 6,452Amortisation of intangibles 3,860 4,173 - 313Impairment of intangibles - 184,558 - 1,250Depreciation and amortisation of property, plant and equipment 5,431 3,669 1,871 1,582Share of net profits of associates (66,920) (29,398) - -Distributions from associates 34,874 19,832 - -Net (gain)/loss on sale of investment property (27,416) (28,484) 67 (17,695)Share of joint venture profit - (75) - -Net gain on fair value of investment properties (432,728) (298,844) - -Net gain on fair value of derivative financial instruments (54,549) (14,271) - -Provision for diminution – investments in controlled entities - - 292 (1,300)Straight line of rental (14,587) (5,949) - -Employee benefits expense due to AIFRS 224 655 - -(Increase)/decrease in receivables (18,523) (22,638) 17,907 (10,866)(Increase)/decrease in inventories 19,066 (64,913) - -Decrease/(increase) in investment properties 549 (19,965) - -Increase in payables 14,009 33,192 1,790 (2,263)Increase/(decrease) in tax amounts payable 16,353 (2,029) (4,016) 2,049Net cash inflow/(outflows) from operating activities 297,104 193,190 16,042 (20,478)

For

per

sona

l use

onl

y


Page 64




2007$’000

2006$’000

2007$’000

2006$’000

Note 32. Non-cash financing and investing activities

Issuance of securities under Distribution Reinvestment Plan:Distributions reinvested – 22 Aug 2005 - 13,967 - 992

Note 33. Financial risk management

The Group’s activities expose it to a variety of financial risks, market risk (including currency risk, fair value interest rate risk andprice risk), credit risk, liquidity risk and cash flow interest rate risk. The Group’s overall risk management program focuses on theunpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. TheGroup uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge certain riskexposures.

Financial risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board.Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Boardapproves written principles for overall risk management, as well as written policies covering specific areas, such as mitigatingforeign exchange, interest rate and credit risks, use of derivative financial instruments and investing excess liquidity.

(a) Market risk(i) Foreign exchange riskThe Group does not invest in activities offshore and only incurs foreign exchange risk where it borrows in currencies other thanAustralian dollars. The Board approved policy is that all foreign exchange risk associated with its financing activities should beeliminated with the use of currency derivatives.

(ii) Price riskThe Group is exposed to equity securities price risk. This arises from investments held by the Group and classified on the balancesheet either as available for sale or at fair value through profit or loss. The Group is not exposed to commodity price risk.

(iii) Fair value interest rate riskRefer to (d) below.

(b) Credit riskThe Group has no significant concentrations of credit risk. The Group has policies in place to ensure that investments and derivativetransactions are undertaken with financial institutions with an appropriate credit rating. The Group has policies that limit the amountof credit exposure to any one financial institution.

(c) Liquidity riskPrudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount ofcommitted credit facilities and the ability to close out market positions. The Group maintains flexibility in funding by keepingcommitted credit lines available.

(d) Cash flow and fair value interest rate riskAs the Group has no significant interest bearing assets, the Group’s income and operating cash flows are not directly affected bychanges in market interest rates and are substantially independent of changes in these rates.

The Group’s interest rate risk arises from borrowings. Borrowings undertaken at variable rates expose the Group to cash flowinterest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group has a comprehensivepolicy for the management of financial risk, which involves minimum and maximum hedge ratios, duration limits, and limits onmaximum Earnings at Risk. These measures are monitored and managed by Group Treasury within Board approved limits and arereviewed regularly under the supervision of the Audit and Risk Management Committee.

For

per

sona

l use

onl

y


Page 65


Note 34. Financial instruments

The Group’s exposure to interest rate risk and the Group’s interest rate profile by maturity periods is set out in (a) and (b) below.

(a) Interest rate risk exposuresFixed interest maturing in:

2007 Floatinginterest

rate

1 year orless

Over 1 to2 years

Over 2 to3 years

Over 3 to4 years

Over 4 to5 years

Over 5years

Non-interestbearing

Total

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000Financial assetsCash 7,899 - - - - - - - 7,899Trade receivables - - - - - - - 118,262 118,262Related party receivables 77,392 - - - - - - 4,176 81,568Other financial assets - - - - - - - 23,976 23,976

85,291 - - - - - - 146,414 231,705Weighted average interest rate 10.1%

Financial liabilitiesPayables - - - - - - - 178,411 178,411Interest bearing liabilities 980,560 - - 235,000 125,000 - 380,318 - 1,720,878Related party liabilities - - - - - - - 15,423 15,423

980,560 - - 235,000 125,000 - 380,318 193,834 1,914,712

2006

Financial assetsCash 17,812 - - - - - - - 17,812Trade receivables - - - - - - - 108,139 108,139Related party receivables 82,109 - - - - - - 1,422 83,531Other financial assets - - - - - - - 21,696 21,696

99,921 - - - - - - 131,257 231,178Weighted average interest rate 8.7%

Financial liabilitiesPayables - - - - - - - 163,634 163,634Interest bearing liabilities 951,560 345,000 - - 135,000 - 425,985 - 1,857,545Related party liabilities - - - - - - - 144 144

951,560 345,000 - - 135,000 - 425,985 163,778 2,021,323

Interest rate exposures arise predominantly from liabilities bearing variable interest rates as the Group intends to hold fixed rateliabilities to maturity. The above tables should be read in conjunction with the tables shown in (b) below.

(b) Interest rate derivativesThe Group uses a combination of fixed rate debt and interest rate derivatives to ensure that the rate of interest on debt ispredominantly fixed. The Group’s portfolio of fixed rate bonds and derivatives can be summarised as follows:

2007 June2008

June2009

June2010

June2011

June2012

June2013

June2014

June2015

June2016

June2017

$’m $’m $’m $’m $’m $’m $’m $’m $’m $’mSwaps 761 762 898 845 875 662 336 369 106 44Bonds 740 740 561 500 380 227 200 13 - -Total Fixed 1,501 1,502 1,459 1,345 1,255 889 536 382 106 44

Average FixedRate 6.10% 6.17% 6.11% 6.11% 6.12% 6.01% 5.90% 5.90% 6.01% 6.09%

2006 June2007

June2008

June2009

June2010

June2011

June2012

June2013

June2014

June2015

June2016

$’m $’m $’m $’m $’m $’m $’m $’m $’m $’mSwaps 773 750 663 696 611 506 378 177 253 28Bonds 697 561 561 458 426 426 273 246 16 -Total Fixed 1,470 1,311 1,224 1,154 1,037 932 651 423 269 28


For

per

sona

l use

onl

y


Page 66


Note 34. Financial instruments (continued)

The table above depicts the notional principal of interest rate swaps, the average outstanding principal of fixed rate bonds, and theweighted average interest rate of those contracts in each financial year.

The net fair value of these interest rate derivatives that could be made on cancellation of these instruments (net of transactioncosts) at balance date, calculated as the net present value of future interest cash flows is included in Note 16.

(c) Foreign exchange derivativesThe Group has entered into a foreign exchange hedging contract, in respect of the USD170,000,000 denominated bonds(AUD200,318,000), to hedge its exposure to fluctuations in exchange rates.

(d) Net fair value of financial assets and liabilitiesThe net fair value of financial assets and liabilities included in the balance sheet approximates their carrying value.

(e) Finance guaranteesThe obligation of IPG Finance Pty Limited (IPGF) under its loan arrangements have been guaranteed by Investa Properties Limitedin its own capacity, and in its capacity as responsible entity of the Investa Property Trust and as responsible entity of Delta OfficeFund (DOF). Lenders to IPGF have the benefit of those guarantees, and the benefit of a Master Negative Pledge that contains thefinancial covenants and other commercial terms of the loans.

Note 35. Commitments

(a) Capital commitmentsCapital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:



2007$’000

2006$’000

2007$’000

2006$’000

Property, plant and equipmentPayable:

Within one year 200 459 200 459Later than one year but not later than five years - 206 - 206

200 665 200 665Investment propertyPayable:

Within one year 43,879 95,718 - -44,079 96,383 200 665

(b) Lease commitments – Group entity as lesseeCommitments in relation to leases contracted for at the reportingdate but not recognised as liabilities, payable:

Within one year 6,291 7,522 8,628 10,283Later than one year but not later than five years 15,111 16,519 25,285 28,609Later than five years 7,085 8,783 7,085 8,783

28,487 32,824 40,998 47,675

These lease commitments are all in respect of non-cancellable operating leases.

The Group leases various plant and equipment under non-cancellable operating leases expiring within one (1) to six (6) years. Theleases have varying terms. On renewal, the terms of the leases are renegotiated.

At year end there are no sub-leases in respect of any of the above operating leases.

(c) Remuneration commitmentsCommitments for the payment of salaries and other remunerationunder long-term employment contracts in existence at the reportingdate but not recognised as liabilities, payable:

Within one year470 1,795 470 1,795

Later than one year but not later than five years 4,910 5,838 4,910 5,8385,380 7,633 5,380 7,633

For

per

sona

l use

onl

y


Page 67


Note 36. Related party transactions

(a) Parent entitiesThe ultimate Parent Entity within the Group is Investa Properties Limited.

(b) SubsidiariesInterests in subsidiaries are set out in Note 21.

(c) Key management personnelDisclosures relating to key management personnel are set out in Note 37.

(d) Transactions with related partiesThe following transactions occurred during the year between IPG and the following related parties: On 23 August 2006, Investa Property Trust acquired the remaining 50% interest in 80 Pacific Highway, North Sydney, NSW

from Investa North Sydney Property Trust for $46,600,000. Consideration for this purchase was based on independent externalvaluations and on normal arm’s length commercial terms and conditions.

On 14 December 2006, Investa Commercial Developments Pty Limited sold 6&7 Eden Park Drive, North Ryde, NSW to InvestaCommercial Property Fund (ICPF). The land was sold for $15,000,000 and under a Development Management Agreement,construction revenue of $25,828,000 has been billed on a percentage of completion basis. Consideration for the land sale wasbased on independent external valuations and on normal arm’s length commercial terms and conditions.

On 16 April 2007, Investa Property Trust sold 485 La Trobe Street, Melbourne for $126,500,000. The property was sold toInvesta Commercial Property Fund which acquired a 50% interest and Investa Enhanced Fund which acquired a 50% interest.Consideration for this sale was based on independent external valuations and on normal arm’s length commercial terms andconditions. The sale of these assets generated an accounting profit of $7,276,000 for the Group.

On 31 May 2007, Investa Property Trust acquired 363 Adelaide Street, Brisbane from Investa Brisbane Commercial Trust for$70,500,000. Consideration for this purchase was based on independent external valuations and on normal arm’s lengthcommercial terms and conditions.

On 29 June 2007, Clarendon Residential Group Pty Limited sold a 50% interest in Lot 5, Bellflower Rd, Sippy Downs, QLD for$2,300,000. Consideration for this sale was based on independent external valuations and on normal arm’s length commercialterms and conditions.



2007$’000

2006$’000

2007$’000

2006$’000

Responsible entity, performance and property management feesfrom related entities

1 & 2

Collins Property Trust - 393 - 219Investa Brisbane Commercial Trust 4,000 592 459 421Martin Place Trust 477 390 186 269Investa North Sydney Property Trust 456 311 450 311Investa First Industrial Trust 888 601 319 370Investa Second Industrial Trust 766 718 290 368Investa Commercial Property Fund 4,050 2,934 1,303 2,483Investa Fourth Commercial Trust 478 683 264 683Investa Fifth Commercial Trust 1,368 1,466 715 1,144Investa Sixth Commercial Trust 4,156 945 612 422Investa Diversified Office Fund 912 646 392 592Investa Enhanced Fund 1,512 10 545 -

Loans to subsidiaries at the end of the year - - 835,638 958,651

Loans from commonly controlled entities at the end of the year - - 854,056 1,005,527

Interest revenue - Subsidiaries - - 96,088 83,762- Associates 7,804 - - -

Interest expense - Subsidiaries - - 99,669 87,048Distribution revenue - Subsidiaries - - 23,000 8,000

- Associates 34,874 19,832 - -

Superannuation contributionsContributions to superannuation funds on behalf of employees 5,939 5,754 2,062 1,172

Guarantees provided to joint venture entityRefer to Note 39 for details of a guarantee given in respect of loans of a joint venture entity.

1 During the year, IPL notified ASIC that Investa Funds Management Limited had been appointed as responsible entity of these schemes.2 The Responsible Entity fees are as specified in the PDS of each of the related entities. The performance and property management fees are on

normal commercial terms and conditions and at market rates.

For

per

sona

l use

onl

y


Page 68


Note 36. Related party transactions (continued)

(e) Transactions with directorsThe Managing Director, J L Arthur, was a partner in the law firm Gilbert + Tobin (G+T) until 30 April 2006. Mr Arthur’s spouseremains a partner of G+T. G+T is a major Sydney based law firm with in excess of forty (40) partners. Mr Arthur resigned hispartnership in G+T before he became Managing Director of the Group. Staff of G+T (not including J L Arthur, or his spouse)provided legal services to Investa Properties Limited, Investa Property Trust and certain of their controlled entities during the year,on normal commercial terms and conditions. The aggregate amount of legal fees for services provided by G+T during the year was$1,508,493, of which $1,500,000 relates to services provided in relation to the Morgan Stanley Scheme of Arrangement and TrustScheme (2006: $31,254).

(f) Terms and conditionsTransactions relating to dividends, calls on partly paid ordinary securities and subscriptions for new ordinary securities were on thesame terms and conditions that applied to other security holders.

All other transactions between the Group and related parties were made on normal commercial terms and conditions and at marketrates, except that there are no fixed terms for the repayment of loans between the parties.

Outstanding balances are unsecured and are repayable in cash.

Note 37. Key management personnel disclosures

(a) DirectorsThe following persons were directors of Investa Properties Limited during the year and up to the date of this report, unlessotherwise stated:


(b) Other key management personnelThe following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directlyor indirectly, during the year:

Name Position EmployerR L Lynch Group Executive – Clarendon Residential Investa Properties LimitedC J Hanan Group Executive – Internal Funds Investa Properties LimitedR M Johnston Group Executive – Commercial Investa Properties LimitedL W Vance

1Group Executive – External Funds Investa Properties Limited

W W Grounds (resigned 29 May 2007) Group Executive – External Funds Investa Properties LimitedD F Bromell (resigned 9 August 2006) Group Executive – Residential Investa Properties LimitedA S Junor (resigned 14 July 2006) Group Executive – Property Services Investa Properties Limited

1 L W Vance was appointed to the position of Group Executive of External Funds on 14 May 2007. Previously Mr Vance was Group GeneralCounsel and Company Secretary.

(c) Key management personnel compensationConsolidated



2007$

2006$

2007$

2006$

Short-term employee benefits 5,990,912 5,597,282 5,990,912 5,597,282Post-employment benefits 164,109 361,295 164,109 361,295Security based payments 404,318 180,874 404,318 180,784

6,559,339 6,139,362 6,559,339 6,139,362For

per

sona

l use

onl

y


Page 69


Note 37. Key management personnel disclosures (continued)

(d) Equity instrument disclosures relating to key management personnelStapled security holdings of key managementpersonnel

Balance1 July 2005

Purchases/(sales)

Balance30 June 2006

Purchases/(sales)

Balance30 June 2007

DirectorsS Crane - - - 75,000 75,000J I Messenger 35,486 750 36,236 - 36,236J L Arthur 59,440 23,756 83,196 40,000 123,196G B Monk

4772,475 100,000 872,475 - 872,475

J S Murray 10,184 20,215 30,399 4,100 34,499D R Page 31,615 522 32,137 - 32,137Hon R J Webster - - - 10,000 10,000Other key management personnelD F Bromell

2270,000 100,000 370,000 (370,000) -

A S Junor2

525,500 100,000 625,500 (625,500) -W W Grounds

2210,000 100,000 310,000 (310,000) -

C J Hanan1

90,000 100,000 190,000 - 190,000R M Johnston

1120,000 60,000 180,000 - 180,000

L W Vance1

- 200,000 200,000 - 200,000R L Lynch

3- - - 87,337 87,337

1 Purchased pursuant to the Employee Share Acquisition Plan (ESAP). Refer to Note 28 for details of terms of issue.2 These executives resigned during the year, so their holdings as at 30 June 2007 are shown as nil.3 Purchased using part of the proceeds of one-off unsecured and interest free loan of $800,000 in accordance with a loan agreement between Mr

Lynch and IPL dated 28 August 2006. $200,000 of that amount was used by IPL to purchase stapled securities in the Group on behalf of RLynch.

4 Mr Monk purchased 870,000 stapled securities pursuant to ESAP and holds an additional 2,475 stapled securities.

(e) Loans to key management personnelBalance

1 July 2005Imputed valueof interest not

charged in2006

Highestindebtedness

during the2006 year

Balance30 June 2006

Imputed valueof interest not

charged in2007

Highestindebtedness

during the2007 year

Balance30 June 2007

$ $ $ $ $ $ $G B Monk 1,305,562 92,301 1,518,862 1,470,269 75,364 1,470,269 1,381,850C J O’Donnell 2,809,589 194,522 3,342,839 - - - -D F Bromell 494,703 41,217 708,003 687,337 - 687,337 -A S Junor 847,966 63,473 1,061,265 1,026,329 - 1,026,329 -W W Grounds 370,303 33,380 583,603 566,288 18,195 566,288 -C J Hanan 168,984 20,379 382,281 371,669 22,728 371,669 352,359R M Johnston 218,327 19,363 346,307 336,307 20,408 336,307 317,960R L Lynch - - - - 47,890 800,000 650,000L W Vance - 10,229 400,440 400,440 24,847 400,440 380,114Total 6,215,434 474,864 4,858,639 209,432 3,082,283

All of these loans are pursuant to the Employee Share Acquisition Plan (ESAP) except Loan to R Lynch. Refer to Note 28 for detailsof terms re ESAP Loans.

(f) Other transactions with key management personnelThere have been no transactions with key management personnel other than the transactions with directors and their interestsoutlined in Note 36.

For

per

sona

l use

onl

y


Page 70


Note 38. Business combination

Transactions in 2007

Clarendon Resort Housing Pty Limited

(i) Summary of acquisitionOn 19 May 2007, Clarendon Residential Developments Pty Limited completed the acquisition of 30% interest in Clarendon ResortHousing Pty Limited, the entity which owns the Kooindah Waters Residential and Golf Course Development at Wyong, NSW, takingits total interest to 100%. The total consideration for the 30% additional interest was $2,790,000 paid to third party vendors,unrelated to the vendors of Investa Housing Pty Limited (formerly CPG Australia Pty Limited) vendors in 2006 (as shown in the priorcomparative period information below).

Details of the fair value of the assets and liabilities acquired are as follows. There was no goodwill acquired in this transaction.$’000

Purchase consideration (refer (ii) below):Debt forgiven 2,000Cash paid 790Total purchase consideration 2,790Fair value of net identifiable assets acquired (refer (iii) below) 1,601Goodwill 4,391

(ii) Purchase considerationOutflow of cash to acquire subsidiary, net of cash acquiredTotal purchase consideration 2,790Cash consideration 790Less: balances acquiredCash and cash equivalents (117)Outflow of cash 673

(iii) Assets and liabilities acquiredThe assets and liabilities arising from the acquisition are as follows:

Carrying amount Fair value$'000 $'000

Cash 117 117Deferred tax liabilities (1,577) (1,577)Inventories 78,876 78,876Payables (79,017) (79,017)Net identifiable assets/(liabilities) acquired (1,601) (1,601)

The fair value of assets and liabilities acquired are based on discounted cash flow models.

Clarendon Resort Housing Pty Limited has contributed $948,000 to net profit after tax and minorities since the acquisition of theremaining 30% interest in May 2007.

Transactions in 2006

(a) Investa Residential Pty Limited (formerly CPG Australia Pty Limited)

(i) Summary of acquisitionOn 1 September 2005, Investa Residential Pty Limited (formerly Investa Residential Developments Pty Limited) acquired the final60% interest in Investa Housing Pty Limited (formerly CPG Australia Pty Limited) (CPG) for $141,411,000, plus costs, taking its totalinterest to 100%. The total consideration for the 100% interest was $265,467,000 plus the assumption of $376,865,000 of debt,which translates to a total acquisition value of $642,332,000.

Details of the fair value of the assets and liabilities acquired and goodwill are as follows:$’000

Purchase consideration (Refer (ii) above):Cash paid 238,546Direct costs relating to the acquisition 26,921Total purchase consideration 265,467

Fair value of net identifiable assets acquired (Refer (iii) below) 127,285Goodwill 138,182

The goodwill is attributable to the profitability of the acquired business and synergies expected after the Group’s acquisition.

For

per

sona

l use

onl

y


Page 71


Note 38. Business combination (continued)

(ii) Purchase consideration$’000

Outflow of cash to acquire subsidiary, net of cash acquiredTotal purchase consideration 265,467Less: Issue of securities (60,000)Cash consideration 205,467Less: Cash balances acquired (2,602)Outflow of cash 202,865

The purchase agreement includes a potential performance based payment up to a maximum of $60,000,000 which is subject tocontractually defined financial performance targets for CPG over the three (3) years ending 30 September 2007. If it becomesprobable that additional consideration will be payable it will be brought to account as a component of the goodwill arising on theacquisition when the amount can be reliably measured. As at 30 June 2007, no potential performance payment is anticipated.

(iii) Assets and liabilities acquired

The assets and liabilities arising from the acquisition are as follows:CPG’s carrying

amount1

Fair value$'000 $'000

Cash 2,602 2,602Receivables 75,784 78,194Income tax receivable 1,586 1,586Inventories 386,686 369,215Interests in joint venture entities and associates 13,912 7,770Plant and equipment 46,512 45,632Deferred tax asset 3,406 6,260Intangible assets: brand names - 76,200Other assets 2,400 2,400Payables (59,075) (76,497)Interest bearing liabilities (376,865) (376,865)Provisions (186) (186)Deferred tax liability (7,191) (4,922)Other liabilities

2(4,104) (4,104)

Net assets 85,467 127,285Minority interests 173 -Net identifiable assets acquired 85,640 127,285


1 As at 31 August 2005.2 Included in the net identifiable assets acquired is a contingent liability for potential warranty claims under construction contracts.

(iv) Entities acquiredDetails of other entities over which control has been gained effective 31 August 2005 are:

Name of entity % Equity holding acquiredClarendon Residential Communities Pty Limited 100Rushcutters Bay Pty Limited 100Rushcutters Bay Unit Trust 100Murfield Pty Limited 100

For

per

sona

l use

onl

y


Page 72



Details of other entities over which control has been gained effective 1 September 2005 are:

Name of entity % Equity holding acquiredClarendon Homes (NSW) Pty Limited 100Clarendon Homes (QLD) Pty Limited 100Investa Residential Developments Pty Limited (formerly CPG Developments Pty Limited) 100Bellevale Homes Pty Limited 100Greenway Homes Pty Limited 100Domaine Homes (NSW) Pty Limited 100Investa Residential Estates Pty Limited (formerly CPG Estates Pty Limited) 100Cornerstone Homes (VIC) Pty Limited 85Investa Housing Pty Limited (formerly CPG Australia Pty Limited) 100Investa Housing (VIC) Pty Limited (formerly Clarendon Homes (VIC) Pty Limited) 100Your Home Centre Pty Limited 100Your Home Floor & Wall Tiling Pty Limited 100Clarendon Corporate Services Pty Limited 100Marketect Pty Limited 100East Street Pty Limited 100The East Street Trust 100Woodvale Park Pty Limited 100Clarendon Homes (VIC) Pty Limited (formerly Domaine Homes (VIC) Pty Limited) 100Somerset Estate Pty Limited 100Bellevale East Fairfield Pty Limited 100Kellyville Ridge Pty Limited 100Little Bay Developments Pty Limited 100Investa Moorebank Pty Limited (formerly CPG Moorebank Pty Limited) 100Clarendon Resort Housing Pty Limited 70

The CPG entities acquired contributed $8,806,000 to Group profit after tax for the year ended 30 June 2006.

(b) Little Bay Joint Venture

(i) Summary of acquisitionOn 20 June 2006, Little Bay Developments Pty Ltd acquired a further 50% interest in Little Bay Joint Venture for a totalconsideration of $4,300,000, taking its total interest in the Joint Venture to 100%.

Details of the fair value of the assets and liabilities acquired are as under:$’000

Purchase consideration (Refer (ii) below):Cash paid 4,300Total purchase consideration 4,300

Fair value of net identifiable assets acquired (Refer (iii) below) 4,207Goodwill 93

The goodwill is attributable to the profitability of the Little Bay project.

(ii) Purchase consideration$’000

Outflow of cash to acquire subsidiary, net of cash acquiredTotal purchase consideration 4,300Less: Cash balances acquired (1,375)Outflow of cash 2,925F

or p

erso

nal u

se o

nly


Page 73



(iii) Assets and liabilities acquired

The assets and liabilities arising from the acquisition are as follows:

Carryingamount and

fair value$'000

Cash 1,375Receivables 22Inventories 35,016Plant and equipment 1Other assets 94Payables (135)Interest bearing liabilities (27,959)Net assets 8,414Fair value of 50% interest 4,207


Note 39. Contingent assets and liabilities

(a) Contingent assets

Management and performance feesThe Group is entitled to management fees in respect of the five (5) syndicates and three (3) wholesale schemes which it manages.In accordance with the terms of each scheme’s product disclosure statement (PDS), a portion of the base management fees maybe postponed for a period of time. The Group may be separately entitled to additional performance based fees if the performance ofthe scheme exceeds PDS forecasts or if profits are generated in the scheme on the sale of properties. The Group has the right torecover the full amount of any fees postponed in previous periods, provided in any period where a recovery of fees is made, it shallnot reduce that managed scheme’s distribution for the period below the PDS forecast. The total postponed fees as at 30 June 2007were $3,975,000 (30 June 2006: $5,719,000).

(b) Contingent liabilitiesOn 31 May 2007, IPG announced it had entered into an implementation agreement with funds advised by Morgan Stanley RealEstate, to acquire all stapled securities in IPG for cash consideration of $3.08 per security by way of a Court approved Scheme ofArrangement and Trust Scheme (together the “Scheme”). The offer is inclusive of any final distribution payment.

As disclosed in the Implementation Agreement, IPG has agreed to pay Morgan Stanley a break fee of $20 million if any of thefollowing occur:- Within nine (9) months of the date of the implementation agreement (31 May 2007), a Superior Competing Takeover

Proposal is announced and the bidder acquires more than 50% of all Securities, and the proposal becomes free from anydefeating conditions;

within nine (9) months of the date of the implementation agreement (31 May 2007), a Superior Competing TakeoverProposal is implemented; or

Morgan Stanley terminates the implementation agreement or the Schemes do not become effective prior to the SunsetDate, being 31 October 2007, as a result of a breach of the agreement by IPG.

As a result of the offer, the Company has also entered into retention agreements with key executives. These retention agreementsdo not exceed $5 million in aggregate and are payable only if the executive remains employed with IPG on 30 June 2008.

In the event of a breach of the implementation agreement by Morgan Stanley Real Estate, Morgan Stanley Real Estate has agreedto reimburse IPG the retention payments that IPG has agreed to pay executives up to a maximum amount of $5 million. IPG is notentitled to claim or be paid damages in excess of $8 million for any breach of the implementation agreement by Morgan Stanley.

Another $23 million of costs are payable to consultants contingent on the Scheme proceeding.For

per

sona

l use

onl

y


Page 74


Note 39. Contingent assets and liabilities (continued)

Bank guaranteesThe Group had contingent liabilities of $39,480,000 at 30 June 2007 (30 June 2006: $25,627,000). These are in the form of bankguarantees supporting rental obligations and development activities. The bank guarantees may give rise to liabilities if the Groupdoes not meet its obligations under the terms of the guarantees, although none are anticipated.

Acquisition of Clarendon Residential Housing Pty Limited (CPG)On 1 September 2005, Clarendon Residential Group Pty Limited (formerly Investa Residential Pty Limited) acquired the final 60%interest in CPG for $144,479,000, plus costs, taking its total interest to 100%. The purchase agreement includes a potentialperformance based payment up to a maximum of $60,000,000 which is subject to contractually defined financial performancetargets for CPG over the three (3) years ending 30 September 2007. As at 30 June 2007, no potential performance payment isanticipated.

CPG is in discussion with the ATO in respect of unresolved tax issues relating to CPG and its controlled entities, the quantum ofwhich is currently not reliably ascertainable. The sale agreement whereby the Group acquired CPG, contains warranties the effectof which is that the Group will not ultimately bear the economic cost of any liability that may arise from such unresolved tax issues tothe extent they relate to pre-acquisition liabilities.

The Group has notified the vendors of CPG of its rights under the warranties in the sale agreement in respect of the unresolved taxissues and certain other matters. Given the current status of the discussions with the ATO and the vendors, the amount of thewarranty claims cannot currently be quantified, however, it is highly unlikely that there will be any residual exposure to the Group.

Moorebank Joint VentureIPL and its joint venture partner, BMD Holdings Pty Limited, have each severally guaranteed 50% of a bank loan in CPGMoorebank Pty Limited and Moorebank (Urbex) Investments Pty Limited, of which each joint venture partner has a 50% interest. Atthe 30 June 2007, the amount guaranteed by IPL was $5,672,000 (30 June 2006: $9,745,000).

Investa Commercial Property Fund (ICPF)In 2005, ICPF acquired a 17% interest in Martin Place Trust (MPT) from the Group. ICPF has the right to put its interest in MPTunits back to the Group if the objectives of MPT no longer correspond to the strategic plan of ICPF. If the put is exercised, the pricewill be the prevailing net tangible asset per unit at the time. In December 2006, ICPF acquired 6 & 7 Eden Park Drive, North Rydefrom the Group. At that time, ICPF also entered into a development agreement with the Group to construct an 18,500m

2office

complex on the site. ICPF has the right to put the property back to the Group at the aggregate development cost expended, if thebuilding is not completed by the contractual due date for completion (as extended in accordance with the contract) or if certain leaseagreements are terminated. The building is programmed for completion in April 2008.

Investa Diversified Office Fund (IDOF)IPL has entered into an agreement to provide Investa Diversified Office Fund (IDOF) investors with a capped liquidity facility while aGroup entity is the Responsible Entity of IDOF. If so requested, the Group must purchase units from investors wishing to withdrawfrom IDOF, until either of the following limits is reached: the Group hold 30% of units of the Fund; the Group hold units with a value of $50 million.Refer to Note 20 for more details of the Group’s investment in IDOF as at 30 June 2007.

Other than disclosed as above, no other contingent assets or liabilities existed as at 30 June 2007.

Note 40. Events subsequent to balance date

On 31 May 2007, IPG announced it had entered into an implementation agreement with funds advised by Morgan Stanley RealEstate, to acquire all stapled securities in IPG for cash consideration of $3.08 per security by way of a Court approved Scheme ofArrangement and Trust Scheme (together the “Scheme”). The offer is inclusive of the final distribution payment.

The directors have unanimously recommended the Offer in the absence of a superior proposal. A Scheme Booklet containing fulldetails of the Offer, including an Independent Expert’s Report, has been mailed to IPG security holders. Security holders will beasked to vote on the Scheme at a security holders meeting to be held in Sydney on 22 August 2007.F

or p

erso

nal u

se o

nly


Page 75


Note 41. Deed of cross guarantee

Investa Properties Limited and the following companies are parties to a deed of cross guarantee under which each entityguarantees the debts of the others:

At 30 June 2007 At 30 June 2006

Investa Nominees Pty Limited Investa Nominees Pty LimitedInvesta Commercial Developments Pty Limited Investa Commercial Developments Pty LimitedInvesta Asset Management Pty Limited Investa Asset Management Pty LimitedInvesta Asset Management (Qld) Pty Limited Investa Asset Management (Qld) Pty LimitedClarendon Residential Communities Pty Limited Clarendon Residential Communities Pty LimitedMurfield Pty Limited Murfield Pty LimitedBellevale Homes Pty LimitedClarendon Homes (NSW) Pty LimitedClarendon Homes (QLD) Pty LimitedClarendon Homes (VIC) Pty LimitedClarendon Residential Developments Pty LimitedClarendon Residential Group Pty LimitedClarendon Residential Holdings Pty LimitedClarendon Residential Housing Pty LimitedDomaine Homes (NSW) Pty LimitedInvesta Funds Management LimitedSilverton LimitedSomerset Estates Pty Limited

By entering into the deed, the wholly owned companies have been relieved from the requirement to prepare a financial report anddirectors’ report under Class Order 98/1418 (as amended) issued by ASIC.

(a) Consolidated income statement and a summary of movements in consolidated retained profits

The above companies represent a “Closed Group” for the purpose of the Class Order, and as there are no other parties to the Deedof Cross Guarantee that are controlled by Investa Properties Limited, they also represent the “Extended Closed Group”.

Set out below is a consolidated income statement and a summary of movements in consolidated retained profits for the year ended30 June 2007 of the Closed Group.

2007$’000

2006$’000

IncomeIncome from operating activities 640,500 48,555Net gain from disposal of investments 339 2,537Share of net profits of associates 22,870 2,834

663,709 53,926Expenses

Cost of sales 419,915 28,689Employee benefits expense 85,697 11,114Finance costs 70,610 12,365Other expenses 47,057 4,017

623,279 56,185

Profit/(loss) before income tax 40,430 (2,259)Income (tax expense)/tax benefit (17,908) 1,153Profit/(loss) after income tax expense 22,522 (1,106)(Accumulated loss)/retained profit at the beginning of the year (88,557) 1,568(Accumulated loss)/retained profit at the end of the year (66,035) 462F

or p

erso

nal u

se o

nly


Page 76


Note 41. Deed of cross guarantee (continued)

(b) Balance sheetSet out below is a consolidated balance sheet as at 30 June 2007 of the Closed Group.

2007 2006$’000 $’000

Current assetsCash and cash equivalents 4,535 7Receivables 91,033 12,585Inventories 133,493 34,662Total current assets 229,061 47,254

Non-current assetsReceivables 466,587 40,752Deferred tax assets 6,890 1,091Inventories 244,881 162,481Intangible assets 121,646 -Property, plant and equipment 46,598 462Investments in associates and joint ventures 28,741 25,275Investments in controlled entities 27,234 12,558Total non-current assets 942,577 242,619

Total assets 1,171,638 289,873

Current liabilitiesPayables 98,215 7,438Provisions 18,198 2,429Total current liabilities 116,413 9,867

Non-current liabilitiesPayables 1,009,197 179,385Deferred tax liabilities 18,117 7,579Interest bearing liabilities - 55,847Total non-current liabilities 1,027,314 242,811

Total liabilities 1,143,727 252,678

Net assets 27,911 37,195

EquityContributed equity 87,680 36,172Treasury stock reserve (2,345) 561Other reserves 8,611 -(Accumulated loss)/retained earnings (66,035) 462Total equity 27,911 37,195

For

per

sona

l use

onl

y


Page 77

Financial Report of Investa Property Trustand its Controlled Entities

For

per

sona

l use

onl

y


Page 78

Investa Property Trust and its Controlled EntitiesConsolidated Income StatementsFor the year ended 30 June 2007

IPT Consolidated IPTNotes 2007 2006 2007 2006

$’000 $’000 $’000 $’000

IncomeIncome from operating activities 5 494,492 437,178 180,459 186,239Distributions from controlled entities - - 203,954 190,266Net gain on disposal of investments 10,640 24,980 7,276 -Share of net profits of associates accounted for using theequity method 6 88,979 52,002 49,162 33,111Net gain on fair value of derivative financial instruments 54,549 14,271 - -Net gain on asset revaluations 7 376,811 279,902 10,438 44,726Total income 1,025,471 808,333 451,289 454,342

ExpensesProperty outgoings 86,083 74,603 16,171 15,404Repairs and maintenance 11,837 10,706 2,246 2,187Finance costs 8 124,619 101,359 120,357 105,088Amortisation of intangibles 16 3,860 3,860 3,860 3,860Impairment of goodwill 16 - 89,206 - -Other expenses 4,143 5,523 2,621 3,302Total expenses 230,542 285,257 145,255 129,841

Net profit before income tax expense 794,929 523,076 306,034 324,501

Company income tax expense 9 (16,560) (4,663) - -

Net profit after income tax expense 778,369 518,413 306,034 324,501

Profit attributable to minority interest (110,268) (74,587) - -

Net profit attributable to stapled security holders 668,101 443,826 306,034 324,501

Distributions paid and payable 10 237,984 257,816

Cents CentsDistributions paid and payable (cents per stapled security) 10 15.60 16.90Basic and diluted earnings (cents per stapled security) 11 44.01 29.40Diluted earnings (cents per security) 11 43.79 29.20

The above Consolidated Income Statements should be read in conjunction with the accompanying notes.

For

per

sona

l use

onl

y


Page 79

Investa Property Trust and its Controlled EntitiesConsolidated Balance SheetsAs at 30 June 2007


$’000 $’000 $’000 $’000

Current assetsCash and cash equivalents 12 391 27,616 33 1,054Receivables 13 35,728 26,219 7,153 6,716Derivative financial instruments 14 2,890 - - -Non-current assets classified as held for sale 15 - 27 - 27Total current assets 39,009 53,862 7,186 7,797

Non-current assetsReceivables 13 1,016,078 1,123,864 1,757,282 1,667,882Deferred tax asset 9 1 1,809 - -Intangible assets 16 22,046 25,906 22,046 25,906Investments in associates 17 472,834 431,226 239,355 240,575Investments in controlled entities 18 - - 2,354,224 2,260,794Investment properties 19 4,396,202 3,947,142 607,812 632,100Total non-current assets 5,907,161 5,529,947 4,980,719 4,827,257

Total assets 5,946,170 5,583,809 4,987,905 4,835,054

Current liabilitiesPayables 20 70,448 81,529 10,935 8,984Interest bearing liabilities 21 100,000 613,000 - 463,000Derivative financial instruments 14 - 5,993 - -Provisions 22 130,696 130,667 122,043 128,908Total current liabilities 301,144 831,189 132,978 600,892

Non-current liabilitiesPayables 20 664 144 1,949,388 1,405,396Interest bearing liabilities 21 1,620,878 1,244,545 - -Deferred tax liabilities 9 14,609 26 - -Provisions 22 89 - - -Total non-current liabilities 1,636,240 1,244,715 1,949,388 1,405,396

Total liabilities 1,937,384 2,075,904 2,082,366 2,006,288

Net assets 4,008,786 3,507,905 2,905,539 2,828,766

EquityContributed equity 23 2,737,122 2,737,122 2,737,122 2,737,122Treasury stock reserve 24 (9,412) (18,135) (9,412) (18,135)Minority interest 25 626,774 564,733 - -Retained earnings 26 654,302 224,185 177,829 109,779Total equity 4,008,786 3,507,905 2,905,539 2,828,766

The above Consolidated Balance Sheets should be read in conjunction with the accompanying notes.

For

per

sona

l use

onl

y


Page 80

Investa Property Trust and its Controlled EntitiesConsolidated Statements of Changes in EquityFor the year ended 30 June 2007


$’000 $’000 $’000 $’000

Total equity at the beginning of the financial year 3,507,905 3,023,881 2,828,766 2,706,401

Profit for the financial year 778,369 518,413 306,034 324,501

Transactions with equity holders in their capacity as equity holders:

Contributions of equity, net of transaction costs 23 - 45,200 - 45,200Distributions reinvested 23 - 12,975 - 12,975Distributions provided for or paid 10 (237,984) (257,816) (237,984) (257,816)Distributions provided for or paid to minority interests in

subsidiaries (41,040) (46,207) - -Treasury stock movement 8,723 (2,495) 8,723 (2,495)Acquisition by minority interests (7,187) 213,954 - -Total equity at the end of the financial year 4,008,786 3,507,905 2,905,539 2,828,766

Total recognised income and expense for the financial year isattributable to:Stapled security holders of Investa Property Trust 668,101 443,826 306,034 324,501Minority interest 110,268 74,587 - -

778,369 518,413 306,034 324,501

The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.

For

per

sona

l use

onl

y


Page 81

Investa Property Trust and its Controlled EntitiesConsolidated Cash Flow StatementsFor the year ended 30 June 2007


$’000 $’000 $’000 $’000Cash flows from operating activitiesCash receipts in the course of operations (inclusive of GST) 385,488 354,303 72,631 68,961Cash payments in the course of operations (inclusive of GST) (128,291) (94,205) (13,196) (26,448)Interest received 115,217 93,168 113,987 121,358Distributions received 27,684 35,067 219,482 212,813Finance costs paid (128,559) (110,359) (122,957) (102,847)Income taxes paid (230) (138) - -Net cash inflows from operating activities 27 271,309 277,836 269,947 273,837

Cash flows from investing activitiesAdditional investments in controlled entities (46,593) - (46,719) (3,328)Capital expenditure and acquisition of investment propertiesand property, plant and equipment (163,850) (115,470) (93,457) (13,843)Payments for investment in associates (28,473) (21,201) (11,850) (3,942)Proceeds from sale of investments 200,470 163,023 125,592 18,337Net cash (outflows)/inflows from investing activities (38,446) 26,352 (26,434) (2,776)

Cash flows from financing activitiesDistributions paid (244,848) (176,016) (244,848) (176,016)Proceeds from borrowings 3,764,300 2,452,600 - -Repayment of borrowings (3,855,300) (2,039,600) (463,000) -Proceeds from issues of securities - 46,450 - 46,450Issue costs paid - (1,251) - (1,251)Loans to associates (14,509) (59,626) (15,028) -Loans (to)/from related entities 131,536 (544,766) 478,342 (140,091)Payments (to)/from minority interests (41,267) 41,941 - -Loans to employees (ESAP) - (2,495) - -Net cash outflows from financing activities (260,088) (282,763) (244,534) (270,908)

Net (decrease)/increase in cash and cash equivalents (27,225) 21,425 (1,021) 153Cash and cash equivalents at the beginning of the financialyear 27,616 6,191 1,054 901Cash and cash equivalents at the end of the financialyear 12 391 27,616 33 1,054

Financing arrangements 21Non-cash financing and investing activities 28

The above Consolidated Cash Flow Statements should be read in conjunction with the accompanying notes.

For

per

sona

l use

onl

y


Page 82

Investa Property Trust and its Controlled EntitiesNotes to the Consolidated Financial StatementsFor the year ended 30 June 2007

Note 1. Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have beenconsistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statementsfor Investa Property Trust as an individual entity and the consolidated entity consisting of Investa Property Trust and its subsidiaries.

The units in Investa Property Trust are “stapled” to the shares in Investa Properties Limited. All transactions in either security canonly be in the form of transactions in the Investa Property Group stapled securities.

(a) Basis of preparation of the financial reportThis general purpose financial report has been prepared in accordance with Investa Property Trust’s Constitution, AustralianAccounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues GroupInterpretations and the Corporations Act 2001.

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have beenconsistently applied to all the years presented, unless otherwise stated.

Compliance with IFRSAustralian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS).Compliance with AIFRS ensures that the consolidated financial statements and notes of IPT Consolidated comply with InternationalFinancial Reporting Standards (IFRS) in accordance with AASB 101 Presentation of Financial Statements. The Trust financialstatements and notes also comply with IFRS except that it has elected to apply the relief provided to parent entities in respect ofcertain disclosure requirements contained in AASB 132 Financial Instruments: Presentation and Disclosure.

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

Critical accounting estimatesThe preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It alsorequires management to exercise its judgement in the process of applying the IPT Group’s accounting policies. The areas involvinga higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statementsare disclosed in Note 2.

(b) Principles of consolidationThe consolidated financial statements incorporate the assets and liabilities of all entities controlled by Investa Property Trust as at30 June 2007 and their results for the year ended 30 June 2007. Investa Property Trust and its controlled entities are referred to inthis financial report as the “IPT Group”.

The effects of all transactions between entities in the IPT Group are eliminated in full. Minority interests in the results and equity ofcontrolled entities are shown separately in the consolidated income statements and balance sheets respectively.

Subsidiaries are all those entities over which the IPT Group has the power to govern the financial and operating policies, generallyaccompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that arecurrently exercisable or convertible are considered when assessing whether the IPT Group controls another entity.

Where control of an entity is obtained during a financial year, its results are included in the consolidated income statements from thedate on which control commences. Where control of an entity ceases during a financial year, its results are included for that part ofthe financial year during which control existed.

The purchase method of accounting is used to account for acquisition of subsidiaries within the IPT Group (refer Note 1(j)).

For

per

sona

l use

onl

y


Page 83

Investa Property Trust and its Controlled EntitiesNotes to the Consolidated Financial Statements (continued)For the year ended 30 June 2007


(c) Revenue recognitionRevenue is recognised for the major business activities as follows:

(i) Rental incomeRental income from operating leases is recognised in income on a straight-line basis over the lease term. An asset is recognised torepresent the portion of the operating lease revenue in a reporting period relating to fixed increases in operating lease rentals infuture periods.

(ii) Property management feesProperty management fees are brought to account on an accrual basis and, if not received at balance date, are reflected in theconsolidated balance sheets as a receivable.

(iii) Disposal of assetsThe gain or loss on disposal is included in the consolidated income statements in the year when title to the benefits and risks haseffectively passed. The gain or loss on disposal of revalued assets is calculated as the difference between the carrying amount ofthe asset at the time of the disposal and the consideration is received.

(iv) Interest incomeInterest income is recognised on a time proportion basis using the effective interest method.

(v) Dividends and distributionsDividend and distribution revenue is brought to account when the right to receive payment is established and, if not received at thebalance date, is reflected in the balance sheet as a receivable.

(d) Expenses(i) Property outgoingsProperty outgoings include rates, taxes and other property outgoings incurred in relation to investment properties where suchexpenses are the responsibility of the IPT Group and are brought to account on an accrual basis.

(ii) Finance costsFinance costs include interest expense and the amortisation of other costs incurred in respect of obtaining finance except wherethey are included in the costs of qualifying assets in accordance with Note 1(l). Other costs incurred, including loan establishmentfees in respect of obtaining finance, are deferred and written off over the term of the respective agreement.

(e) Maintenance and repairsPlant of the IPT Group is maintained on a regular basis. This is managed as part of an ongoing major cyclical maintenanceprogram. The costs of this maintenance are charged as expenses as incurred, except where they relate to the replacement of acomponent of an asset, in which case the costs are capitalised in accordance with Note 1(n). Other routine operating maintenance,repair costs and minor renewals are also charged as expenses as incurred.

(f) Cash and cash equivalentsCash and cash equivalents include cash on hand, deposits held at call with financial institutions and bank overdrafts. Bankoverdrafts are shown within borrowings in current liabilities on the balance sheet.

(g) ReceivablesReceivables to be settled within 30 days are carried at amounts due. The collectability of debts is reviewed on a regular basis anda specific provision is made for any doubtful debts where objective evidence that the IPT Group will not be able to collect allamounts due according to the original terms of receivables. The amount of the provision is recognised in the income statement.

For

per

sona

l use

onl

y


Page 84



(h) Non-current assets classified as held for saleNon-current assets classified as held for sale are stated at the lower of their carrying amount and fair value less costs to sell if theircarrying amount will be recovered principally through a sale transaction rather than through continuing use.

An impairment loss is recognised for any initial or subsequent write down of the asset to fair value less costs to sell. A gain isrecognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairmentloss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognisedat the date of derecognition.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expensesattributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separatelyfrom the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separatelyfrom other liabilities in the balance sheet.

(i) Intangible assets

(i) GoodwillWhere an entity or operation is acquired, the identifiable net assets acquired are measured at fair value. The excess of the fairvalue of the cost of acquisition over the fair value of the identifiable net assets acquired is brought to account as goodwill.

Goodwill acquired in business combinations is not amortised. Instead, goodwill is tested annually for impairment or more frequentlyif events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses.

Goodwill is allocated to cash generating units for the purpose of impairment testing. Each of those cash generating units representsthe IPT Group’s investment in each primary reporting segment.

(ii) Management rightsThe directors have determined that management rights have a useful life of 10 years (2006: 10 years) and are carried at cost lessaccumulated amortisation and impairment losses. Amortisation is calculated using a straight-line basis to write off the cost ofmanagement rights over their expected useful life to the IPT Group of 10 years.

(j) Acquisitions of assetsThe purchase method of accounting is used for all acquisitions of assets (including business combinations) regardless of whetherequity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, securities issued or liabilitiesundertaken at the date of acquisition plus incidental costs directly attributable to the acquisition. Where equity instruments areissued in an acquisition, the value of the instruments is their published market price as at the date of exchange. Transaction costsarising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at theirfair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over thefair value of the IPT Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is lessthan the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, butonly after a reassessment of the identification and measurement of the net assets acquired.

(k) Impairment of assetsAssets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. All other assets arereviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

(l) Property, plant and equipmentProperties under construction are carried at historical cost until completion. All costs of development are capitalised against thoseproperties and are not depreciated. Upon completion of construction, the assets are classified as investment property.F

or p

erso

nal u

se o

nly


Page 85



(m) Investments in associatesAssociates are entities over which the IPT Group has significant influence but not control. Investments in associates are accountedfor in the IPT Group using the equity method of accounting, after initially being recognised at cost. The IPT Group’s investment inassociates includes goodwill (net of any accumulated impairment loss) identified on acquisition (refer Note 17).

The IPT Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share ofpost-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted againstthe carrying amount of the investment. Dividends or distributions receivable from associates are recognised in the Parent Entity’sincome statement, while in the consolidated financial statements they reduce the carrying amount of the investment.

When the IPT Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecuredlong-term receivables, the IPT Group does not recognise further losses, unless it has incurred obligations or made payments onbehalf of the associate.

Unrealised gains on transactions between the IPT Group and its associates are eliminated to the extent of the IPT Group’s interestin the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the assettransferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adoptedby the IPT Group.

(n) Investment propertiesInvestment properties are properties (land or a building) held to earn long-term rental income and for capital appreciation. TheTrust’s Constitution requires that all investment properties be valued at intervals of not more than three years and those valuationsare reflected in the financial report of the Trust. It is the policy of the Parent Entity to formally review the carrying value of eachproperty within the IPT Group every six months, or earlier where the Parent Entity believes there may be a material change in thecarrying value of the property. External revaluations are made with sufficient regularity but at least every three years to ensure thatthe carrying amount of each investment property does not differ materially from its fair value.

The basis of valuation of investment properties is fair value, being the amount for which the assets could be exchanged betweenknowledgeable, willing parties in an arm’s length transaction.

Gains or losses arising from changes in fair value of an investment property are recognised in the consolidated income statements.

The gain or loss on disposal of revalued assets is calculated as the difference between the carrying amount of the asset at the dateof disposal and the net proceeds from disposal and is included in the consolidated income statements in the year of disposal.

Land and buildings are an investment and are regarded as a composite asset. Accounting standards do not require investmentproperties to be depreciated. Accordingly, the building and any component thereof (including plant and equipment) are notdepreciated. Expenses capitalised to properties may include the cost of acquisition, additions, refurbishment, redevelopment andfees incurred.

(o) Lease incentivesIncentives such as cash, rent-free periods, lessee or lessor owned fitouts may be provided to lessees to enter into an operatinglease. These incentives are capitalised and are amortised on a straight-line basis over the term of the lease as a reduction of rentalincome or an increase in property outgoings. The carrying amount of the lease incentives is reflected in the fair value of investmentproperties.

(p) PayablesThese amounts represent liabilities for amounts owing by the IPT Group at year end which are unpaid. The amounts are unsecuredand are usually paid within 30 days of recognition and also include rent in advance.

(q) Dividends and distributionsProvision is made for the amount of any distribution declared, determined or publicly recommended by the directors on or before theend of the financial year but not distributed at balance date.

(r) Interest bearing liabilitiesInterest bearing liabilities are initially recognised at fair value, net of transaction costs incurred, and subsequently measured atamortised cost using the effective interest rate method. Under this method, fees, costs, discounts and premiums directly related tothe financial liability are spread over its expected life.

For

per

sona

l use

onl

y


Page 86



(s) DerivativesThe IPT Group enters into interest rate and foreign exchange rate hedging contracts in order to minimise exposure to fluctuations ininterest rates and exchange rates. Derivative financial instruments are not held for speculative purposes and the IPT Group haselected not to hedge account all derivatives held. Consequently, hedge accounting does not apply and derivatives are carried onthe balance sheet at fair value, with changes in fair value recognised in the income statement.

Interest payments and receipts under interest rate swap contracts are recognised on an accruals basis in the income statement asan adjustment to interest expense when a hedge transaction occurs.

(t) Segment reportingA business segment is a group of assets and operations engaged in providing products or services that are subject to risks andreturns that are different to those of other business segments.

(u) TaxationUnder current legislation, the Trust is not liable for income tax, provided that the taxable income and taxable realised gains are fullydistributed to stapled security holders each financial year. Accordingly, the income tax expense, assets and liabilities areattributable to the corporate entities within the IPT Group.

The income tax expense or revenue for the period is the tax payable on the current year’s taxable income based on the Australiancompany tax rate, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the taxbases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax balances are recognised using the balance sheet method. Under this method, temporary differences arise when thecarrying amount of assets and liabilities in the financial statements is different to the tax base of the corresponding assets andliabilities. An exemption is made for certain of the 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 abusiness combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Similarly,deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases ofinvestments in controlled entities where the Parent Entity is able to control the timing of the reversal of the temporary differencesand it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are recognised fortemporary differences at the tax rates expected to apply when the assets are recovered or the liabilities are settled.

Deferred tax assets are recognised for temporary differences and unused tax losses only if it is probable that future taxableamounts will be available to utilise those temporary differences and losses.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

(v) Goods and services tax (GST)Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverablefrom 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 recoverablefrom, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities whichare recoverable from, or payable to the taxation authority, are presented as operating cash flows.

(w) Earnings per stapled security(i) Basic earnings per stapled securityBasic earnings per stapled security is determined by dividing the net profit attributable to stapled security holders of the IPT Groupby the weighted average number of securities outstanding during the period.

(ii) Diluted earnings per stapled securityDiluted earnings per stapled security adjusts the figures used in the determination of basic earnings per stapled security by takinginto account amounts unpaid on securities and any reduction in earnings per security that will probably arise from the exercise ofsecurities outstanding during the period. Where there is no difference between basic earnings per stapled security and dilutedearnings per stapled security, the term basic and diluted earnings per stapled security is used.

(x) Rounding of amountsThe IPT Group is of a kind referred to in Class Order 98/0100, issued by the Australian Securities & Investments Commission(ASIC), relating to the “rounding off” of amounts in the directors’ report and financial report. Amounts in the directors’ report andfinancial report have been rounded to the nearest thousand dollars, in accordance with that class order, unless otherwise indicated.

For

per

sona

l use

onl

y


Page 87



(y) New accounting standards and UIG interpretationsCertain new accounting standards and UIG interpretations have been published that are not mandatory for 30 June 2007 reportingperiods. The IPT Group’s assessment of the impact of these new standards and interpretations is set out below.

(i) AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendments to Australian Accounting Standards (AASB 132,AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038)

AASB 7 and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. The IPT Group hasnot adopted the standards early. Application of the standards will not affect any of the amounts recognised in the financialstatements, but will impact the type of information disclosed in relation to the IPT Group’s financial instruments.

(ii) AASB – I 10 Interim Financial Reporting and ImpairmentAASB – I 10 is applicable to annual reporting periods commencing on or after 1 November 2006. The Group has not recognised animpairment loss in relation to goodwill, investments in equity instruments or financial assets carried at cost in an interim reportingperiod but subsequently reversed the impairment loss in the annual report. Application of the interpretation will therefore have noimpact on the IPT Group’s financial statements.

(iii) AASB 8 Operating Segments and AASB 2007 3 Amendments to Australian Accounting Standards arising from AASB 8 (AASB5, AASB 6, AASB 102, AASB 107, AASB 119, AASB 127, AASB 134, AASB 136, AASB 1023 & AASB 1038)

AASB 8 and AASB 2007 3 are applicable to annual reporting periods beginning on or after 1 January 2009. The Fund has notadopted these standards early. Application of these standards will not affect any of the amounts recognised in the financialstatements, but will affect the segment disclosures provided in Note 4.

(iv) AASB 101 Presentation of Financial Statements (Revised).AASB 101 (Revised) is applicable to annual reporting periods beginning on or after 1 January 2007. The Fund has not adopted thisstandard early. Application of this standard will not affect any of the amounts recognised in the financial statements.

(v) AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments (AASB 1, 2, 3, 4,5, 6, 7, 102, 107, 108, 110, 112, 114, 116, 117, 118, 119, 120, 121, 127, 128, 129, 130, 131, 132, 133, 134, 136, 137, 138,139, 141, 1023 & 1038)

AASB 2007-4 is applicable to annual reporting periods beginning on or after 1 July 2007. The Fund has not adopted this standardearly. The amendments introduce a number of options that existed under IFRS but had not been included in the original Australianequivalents to IFRS and remove many of the additional Australian disclosure requirements, other than those now consideredparticularly relevant in the Australian reporting environment. Application of this standard will not affect any of the amountsrecognised in the financial statements as none of the options introduced are relevant to the Fund, but it may remove some of thedisclosures that are currently required.

(viii) AASB-I 11 AASB 2 - Group and Treasury Share Transactions and AASB 2007-1 Amendments to Australian AccountingStandards arising from AASB Interpretation 11.

AASB-I 11 and AASB 2007-1 are effective for annual reporting periods commencing on or after 1 March 2007. AASB-I 11addresses whether certain types of share based payment transactions should be accounted for as equity-settled or as cash settledtransactions and specifies the accounting in a subsidiary’s financial statements for share based payment arrangements involvingequity instruments of the parent. The Group will apply AASB-I 11 from 1 July 2007.

AASB-I 12 Service Concession Arrangements, AASB 2007-1 Amendments to Australian Accounting Standards arising from AASBInterpretation 12, revised UIG 4 Determining whether an Arrangement contains a Lease and revised UIG 129 Service ConcessionArrangements: Disclosures AASB-I 12, AASB 2007-2, UIG 4 and the revised UIG 129 are all effective for annual reporting periodscommencing on or after 1 January 2008. AASB-I 12 provides guidance on the accounting by operators for public-to-private serviceconcession arrangements under which private sector entities participate in the development, financing, operation and maintenanceof infrastructure for the provision of public services, such as transport, water and energy facilities. UIG 4 has been amended toexclude public-to-private service concession arrangements from its scope and UIG 129 was revised to require some additionaldisclosures. Application of this standard will not affect any of the amounts recognised in the financial statements.

(ix) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12]

The revised AASB 123 is applicable to annual reporting periods commencing on or after 1 January 2009. It has removed the optionto expense all borrowing costs and, when adopted, will require the capitalisation of all borrowing costs directly attributable to theacquisition, construction or production of a qualifying asset. The Group will apply the revised AASB 123 from 1 July 2009 andcapitalise its borrowing costs relating to all qualifying assets for which the commencement date for capitalisation is on or after thisdate. The impact on the financial statements will depend on the amount of qualifying assets and related borrowing costs in the firstyear of application.

For

per

sona

l use

onl

y


Page 88


Note 2. Critical accounting estimates and judgements

Estimates are continually evaluated and are based on historical experience and other factors, including expectations of futureevents that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptionsThe IPT Group is required in certain circumstances to make estimates and assumptions concerning the future. The resultingaccounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have asignificant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year arediscussed below.

Estimated value of investmentsEstimates are made by the IPT Group in respect of the fair values of investments in associates (Note 1(m)) and investmentproperties (Note 1(n)). These investments are reviewed regularly for impairment by reference to external independent propertyvaluations and market conditions, using generally accepted market practices.

Note 3. Remuneration of auditor2007

$2006

$Assurance servicesAuditor of the IPT Group – PricewaterhouseCoopers:Remuneration for audit of the financial reports of the IPT Group and its controlled entities 329,643 343,450Other assurance services - 12,000

329,643 355,450Non-audit servicesOther services - 7,568Total auditor’s remuneration 329,643 363,018

Note 4. Segment information

The Trust operates solely in the business of investment in commercial property in Australia and also has indirect property holdingsthrough investments in units in listed and unlisted property trusts.

Note 5. Income from operating activitiesIPT Consolidated IPT

2007 2006 2007 2006$’000 $’000 $’000 $’000

Rental income 377,855 343,553 66,472 64,725Interest income 115,217 93,168 113,987 121,358Other income 1,420 457 - 156

494,492 437,178 180,459 186,239

Note 6. Share of net profits of associates

Share of net profits of associates excluding revaluations 29,125 32,753 15,522 20,250

Add: Revaluations included in share of net profits of associates:80 Pacific Highway Trust 9 2,895 - 2,89560 Martin Place Unit Trust 13,908 9,696 13,908 9,696Penrhyn House Trust - (2,230) - (2,230)Investa South Melbourne Trust 2,500 2,500 2,500 2,500231 Elizabeth Street Trust 13,887 4,660 - -589 Collins Street Trust 17,232 - 17,232 -Sunpac Property Fund 12,318 1,728 - -

59,854 19,249 33,640 12,861

Share of net profits of associates 88,979 52,002 49,162 33,111

For

per

sona

l use

onl

y


Page 89


IPT Consolidated IPT2007 2006 2007 2006

$’000 $’000 $’000 $’000

Note 7. Net gain on asset revaluations

Net gain on fair value of investment properties 376,811 279,902 10,438 42,349Net gain on fair value of controlled entities - - - 2,377

376,811 279,902 10,438 44,726

Note 8. Expenses

Net profit before income tax expense includes the following specific expenses:

Lease incentive amortisation 10,866 4,886 1,690 1,117

Finance costs:Gross interest and finance charges paid/payable 124,619 116,171 120,357 105,088Less: Interest and finance charges capitalised - (14,812) - -

124,619 101,359 120,357 105,088

Note 9. Income tax

Income tax expense, assets and liabilities disclosed below are attributable to the corporate subsidiaries within the IPT Group.

(a) Income tax expenseCurrent tax 89 545 - -Deferred tax 16,391 4,118 - -Under/(over) provision in prior years 80 -Aggregate income tax expense 16,560 4,663 - -

Deferred income tax (benefit)/expense included in income taxexpense comprises:

Decrease in deferred tax assets (refer (c) below) 1,808 4,270 - -Increase in deferred tax liabilities (refer (d) below) 14,583 26 - -

16,391 4,296 - -

(b) Numerical reconciliation of income tax expense to prima facie tax payableProfit from continuing operations before income tax expense 794,929 523,077 306,034 324,501

Tax at the Australian tax rate of 30% (2006: 30%) 238,479 156,923 91,810 97,350Tax effect of amounts which are not deductible (taxable) incalculating taxable income:

Non-taxable trust income (221,999) (152,082) (91,810) (97,350)16,480 4,841 - -

Under provision in prior years 80 - - -Deferred tax liability not previously recognised - (178) - -Income tax expense 16,560 4,663 - -

(c) Non-current assets – Deferred tax assetsThe balance comprises temporary differences attributable to:

Net fair value of derivatives - 1,798 - -Investments in associates - 11 - -Accrued expenses 1 - - -

Net deferred tax assets 1 1,809 - -

Movements:Opening balance at 1 July 1,809 - - -(Charged) to the income statement (refer (a) above) (1,808) (4,270) - -Credited to equity (refer (e) below) - 6,079 - -Closing balance at 30 June 1 1,809 - -

For

per

sona

l use

onl

y


Page 90



$’000 $’000 $’000 $’000

Note 9. Income tax (continued)

(d) Non-current liabilities – Deferred tax liabilitiesThe balance comprises temporary differences attributable to:

Accrued income - 26 - -Interest bearing liabilities

1 13,700 - - -Net fair value of derivatives 867 - - -Investments in associate 42 - - -Net deferred tax liabilities 14,609 26 - -

Movements:Opening balance at 1 July 26 - - -Charged to the income statement (refer (a) above) 14,583 26 - -Closing balance at 30 June 14,609 26 - -1 This represents the foreign exchange translation difference relating to borrowings in US dollars shown in Note 25.

(e) Amounts recognised directly into equityAggregate current and deferred tax arising and not recognised in netprofit but directly credited to equityNet deferred tax credited to equity - 6,079 - -

Note 10. Distributions

2007$’000

2007Cents per

stapledsecurity

2006$’000

2006Cents per

stapledsecurity

31 December paid 115,941 7.60 128,908 8.4530 June (payable on 22 August 2007 in relation to 30 June 2007) 122,043 8.00 128,908 8.45

237,984 15.60 257,816 16.90

Distributions paid or satisfied by the issue of securities under IPG’s distribution reinvestment plan during the year ended 30 June2007 were as follows:Paid in cash 244,848 176,016Satisfied by the issue of securities - 12,975

244,848 188,991

Note 11. Earnings per stapled securityIPT Consolidated

2007 2006(a) Basic earnings per stapled securityNet profit attributable to stapled security holders ($’000) 668,101 443,826Weighted average number of stapled securities outstanding (’000) 1,518,029 1,509,498Basic earnings per security (cents per stapled security) 44.01 29.40

(b) Diluted earnings per stapled securityNet profit attributable to stapled security holders ($’000) 668,101 443,826Weighted average number of stapled securities outstanding (’000) 1,525,535 1,520,863Basic earnings per security (cents per stapled security) 43.79 29.20

For

per

sona

l use

onl

y


Page 91


Note 11. Earnings per stapled security (continued)

(c) Reconciliation of earnings used in calculating earnings per stapled securityIPT Consolidated

2007 2006Basic earnings per stapled security ($’000)Profit from continuing operations 778,369 518,413Profit from continuing operations attributable to minority interests (110,268) (74,587)Profit attributable to the ordinary equity holders of the Group used in calculating basic earningsper stapled security 668,101 443,826

Diluted earnings per stapled security ($’000)Profit from continuing operations attributable to the ordinary equity holders of the Group used incalculating basic earnings per stapled security 668,101 443,826Interest savings - -Profit attributable to the ordinary equity holders of the Group used in calculating diluted earningsper stapled security 668,101 443,826

(d) Weighted average number of stapled securities used as the denominatorWeighted average number of ordinary securities used as the denominator in calculating basicearnings per stapled security (‘000)

1,525,535 1,520,863

Adjustments for calculation of diluted earnings per stapled security:Employee Share Acquisition Plans (ESAP) (‘000) (7,506) (11,365)

Weighted average number of ordinary securities and potential ordinary securities used as thedenominator in calculating diluted earnings per share (‘000) 1,518,029 1,509,498


$’000 $’000 $’000 $’000

Note 12. Cash and cash equivalents

Cash at bank and on hand 391 27,035 33 678Deposits at call - 581 - 376

391 27,616 33 1,054

(a) Cash at bank and on handThe weighted average interest rate earned on cash at bank was 5.85% during the 2007 financial year (2006: 5.14%).

(b) Deposits at callThe deposits earn floating interest rates of 6.20% (2006: 5.65%).

Note 13. Assets – Receivables

CurrentTrade receivables 20,986 15,881 3,749 2,903Provision for doubtful receivables (15) (38) (15) (15)

20,971 15,843 3,734 2,888Distributions receivable from associates 4,352 3,262 1,387 1,393Prepayments 10,405 7,114 2,032 2,435

35,728 26,219 7,153 6,716

Non-currentLoans to related entities 941,280 1,064,094 1,682,484 1,608,112Loans to associates 74,798 59,770 74,798 59,770

1,016,078 1,123,864 1,757,282 1,667,882For

per

sona

l use

onl

y


Page 92



$’000 $’000 $’000 $’000

Note 14. Derivative financial instruments

Current assetFair value of derivatives financial instruments 2,890 - - -

Current liabilityFair value of derivatives financial instruments - 5,993 - -

Instruments used by the IPT GroupThe IPT Group enters into derivative financial instruments in the normal course of business in order to hedge exposure tofluctuations in interest rates in accordance with the IPT Group’s financial risk management policies (refer to Note 29).

Note 15. Non-current assets classified as held for sale

Penrhyn House Trust - 27 - 27

Note 16. Non-current assets – Intangibles

Goodwill - 89,206 - -Less impairment - (89,206) - -

- - - -

Management rights 38,604 38,604 38,604 38,604Less accumulated amortisation (16,558) (12,698) (16,558) (12,698)

22,046 25,906 22,046 25,906

22,046 25,906 22,046 25,906


IPT Consolidated 2007 2006

GoodwillManagement

rights Total GoodwillManagement

rights Total$’000 $’000 $’000 $’000 $’000 $’000

Opening balance - 25,906 25,906 89,206 29,766 118,972Amortisation - (3,860) (3,860) - (3,860) (3,860)Impairment - - - (89,206) - (89,206)Closing balance - 22,046 22,046 - 25,906 25,906

The movement shown in respect of the management rights is the movement in the Parent Entity’s (IPT) intangibles.

(b) Impairment chargeThe impairment charge of $89,206,000 appearing in the prior year income statement is in respect of goodwill associated with thepurchase of the wholly owned entity, Delta Office Fund (formerly Principal Office Fund). In that year, the investment properties inthe Delta Office Fund (including Deutsche Bank Place, Sydney) were revalued to fair value in accordance with the accounting policystated in Note 1(p). The increased fair value represented by the revalued amount includes the amount originally attributable togoodwill, which would be double counted if still recorded in the balance sheet. Accordingly, the goodwill has been written off. Therevaluation increment in respect of the investment properties in the Delta Office Fund more than offsets the impairment charge.

For

per

sona

l use

onl

y


Page 93


Note 17. Non-current assets – Investments in associates

Ownership interest IPT Consolidated IPT2007 2006 2007 2006 2007 2006

% % $’000 $’000 $’000 $’000

60 Martin Place Unit Trust 50 50 119,127 105,220 119,127 105,22080 Pacific Highway Trust

1 - 50 - 46,710 - 46,710589 Collins Street Trust 50 50 62,703 33,620 62,703 33,620Investa South Melbourne Trust 50 50 57,525 55,025 57,525 55,025Sunpac Property Fund 50 50 123,535 111,217 - -231 Elizabeth Street Trust 50 50 78,862 64,974 - -Investa Diversified Office Fund 9 1 11,540 628 - -Investa Enhanced Fund 17 17 25,000 14,250 - -

478,292 431,644 239,355 240,575Less: Share of associates’ liabilities (5,458) (418) - -Total investment in associates 472,834 431,226 239,355 240,575

1 The Group increased its holding in this entity to 100% on 25 August 2006. As a result, this entity has been consolidated from that date.


Opening balance 431,226 398,438 240,575 242,136Share of profits before income tax 88,979 52,002 49,162 33,111Distributions received/receivable (29,125) (32,753) (15,522) (20,250)Return of capital - (18,337) - (18,337)Additions 28,464 31,903 11,850 3,942Transfer to non-current assets held for sale - (27) - (27)Transfer to investments in controlled entities (46,710) - (46,710) -Closing balance 472,834 431,226 239,355 240,575

(b) Share of associates’ profitsProfit before income tax 88,979 52,002Income tax expense - -Profit after income tax 88,979 52,002

(c) Summarised financial information of associatesIPT Group’s share of:

Assets Liabilities Revenues Profits CommitmentsCapital Lease

$’000 $’000 $’000 $’000 $’000 $’000

2007 541,063 35,894 109,670 88,979 1,885 -2006 437,953 6,727 61,201 52,002 2,068 -

(d) Contingent liabilities of associatesThe IPT Group has no share of contingent liabilities in associates.

For

per

sona

l use

onl

y


Page 94


Note 18. Non-current assets – Investments in controlled entitiesIPT

2007 2006$’000 $’000

Investments in controlled entities1 2,354,224 2,260,794

Name of controlled entityCountry of


shares/unitsEquity

holdingEquityholding

% %

Lizabeth Trust Australia Ordinary 100 100Investa Real Property Growth Trust Australia Ordinary 100 100Investa Custodian Pty Limited Australia Ordinary 100 100Helensvale Estate Pty Limited Australia Ordinary 100 100Centennial Trust Australia Ordinary 82 80Connect Property Trust Australia Ordinary 100 100Investa Sunlaw Trust Australia Ordinary 100 100Delta Office Fund Australia Ordinary 100 100Macquarie Street Trust Australia Ordinary 75 75Macquarie Street Sub Trust Australia Ordinary 75 75Phillip Street Trust Australia Ordinary 75 75Phillip Street Sub Trust Australia Ordinary 75 7580 Pacific Highway Trust

1Australia Ordinary 100 50

Floor Space Trust Australia Ordinary 100 100Central Trust Australia Ordinary 100 100Maritime Trade Towers Trust Australia Ordinary 60 60Beta Trust Australia Ordinary 55 55Beta Sub Trust Australia Ordinary 55 55Grosvenor Subsidiary Property Trust Australia Ordinary 100 100O’Connell Holdings Trust Australia Ordinary 100 100O’Connell FH Trust Australia Ordinary 100 100O’Connell LH Trust Australia Ordinary 100 100Fawkner Trust Australia Ordinary 100 100Investa Custodian Two Pty Limited Australia Ordinary 100 100IPG Finance Pty Limited Australia Ordinary 100 100310 Pitt Street Trust Australia Ordinary 55 51441 Trust Australia Ordinary 100 100Investa Gamma Trust Australia Ordinary 100 100242 Exhibition Street Trust Australia Ordinary 80 80120 Collins Street Trust Australia Ordinary 100 100120 Collins Street (L5- 21)Pty Limited Australia Ordinary 100 100120 Collins Street Pty Limited Australia Ordinary 100 100Principal Sydney Development Pty Limited Australia Ordinary 100 100O’Connell Holdings Pty Limited Australia Ordinary 100 100Project Ben Pty Limited Australia Ordinary 100 100Northern Site Pty Limited Australia Ordinary 100 100Southern Site Pty Limited Australia Ordinary 100 100Maritime Nominees Pty Limited Australia Ordinary 100 100O’Connell FH Pty Limited Australia Ordinary 100 100O’Connell LH Pty Limited Australia Ordinary 100 100Syndicate Holding Trust Australia Ordinary 100 100

1 The remaining 50% of units in 80 Pacific Highway Trust were acquired on 23 August 2006. The operating results of this controlled entity havebeen included in the consolidated income statement from the date of acquisition. Prior to the date of acquisition, the operating results of 80Pacific Highway Trust are equity accounted as an associate.F

or p

erso

nal u

se o

nly


Page 95



$’000 $’000 $’000 $’000

Note 19. Non-current assets – Investment properties

Investment propertiesDeutsche Bank Place, 126 Phillip Street, Sydney, NSW

1 638,645 599,369 - -400 George Street, Sydney, NSW

1 515,000 425,439 - -Grosvenor Place, 225-235 George Street, Sydney, NSW

2 310,500 255,623 - -St Martins Tower, 31 Market Street, Sydney, NSW 180,000 144,926 - -55 Market Street, Sydney, NSW 158,820 155,000 158,820 155,000255 Elizabeth Street, Sydney, NSW 184,950 167,000 - -Centennial Plaza Tower A, 260 Elizabeth Street, Sydney, NSW

1 67,000 63,051 - -Centennial Plaza Tower B, 280 Elizabeth Street, Sydney, NSW

1 99,500 81,617 - -Centennial Plaza Tower C, 300 Elizabeth Street, Sydney, NSW

1 122,250 105,465 - -310 Pitt Street, Sydney, NSW

1 169,000 148,003 - -Maritime Trade Towers, 201 Kent Street, Sydney, NSW

1 & 3 145,000 130,000 - -Kindersley House, 33 Bligh & 20-26 O’Connell Streets, Sydney, NSW 64,466 63,623 - -CBD Floor Space, Sydney, NSW 1,000 622 - -73 Miller Street, North Sydney, NSW 88,483 87,242 88,483 87,24280 Pacific Highway, North Sydney, NSW 94,027 - -50-60 Talavera Road, North Ryde, NSW 32,902 32,902 32,902 32,902The Octagon, 110 George Street, Parramatta, NSW - 71,660 - -120 Collins Street, Melbourne, VIC 390,000 342,415 - -242 Exhibition Street, Melbourne, VIC

1 306,136 295,837 - -469 La Trobe Street, Melbourne, VIC 58,908 58,250 58,908 58,250485 La Trobe Street, Melbourne, VIC - 114,604 - 114,604420 St Kilda Road, Melbourne, VIC 29,856 29,571 29,856 29,571441 St Kilda Road, Melbourne, VIC 50,883 50,212 - -Customs House, 414 Latrobe Street, Melbourne, VIC 39,041 38,300 - -State Law Building, 50 Ann Street, Brisbane, QLD 104,432 87,576 - -Cathedral Square, 410 Ann Street, Brisbane, QLD 99,537 87,414 99,537 87,414363 Adelaide Street, Brisbane, QLD 70,500 - 70,500Kings Row, Brisbane, QLD 50,000 43,750 - -QV1, 250 St Georges Terrace, Perth, WA

3 256,560 200,554 - -109 St Georges Terrace, Perth, WA 41,624 40,900 41,624 40,90062 Northbourne Avenue, Canberra, ACT 27,182 26,217 27,182 26,217Total non-current investment property 4,396,202 3,947,142 607,812 632,100

1 These properties are indirectly held through the ownership of a controlling interest in unlisted property trusts and are carried at 100% of theirunderlying value due to the consolidation of these trusts.

2 30% interest as tenants-in-common.3 50% interest as tenants-in-common.

(a) Movements in carrying amountsReconciliations of the carrying amounts of investment property for the year are set out below:

Opening balance 3,947,142 3,114,963 632,100 575,754Additions including capital expenditure 204,795 40,565 75,694 7,058Transfer from property, plant and equipment - 478,178 - -Lease incentives 52,723 32,896 5,876 8,056Lease incentive amortisation (10,865) (4,886) (1,691) (353)Disposals (186,265) - (114,605) -Straight-line rental income 11,861 5,524 - 551Revaluation increments 376,811 279,902 10,438 41,034Closing balance 4,396,202 3,947,142 607,812 632,100

The fair value of investment property includes the written down value of lease incentives, amortised initial direct leasing costs andthe impact of straightening lease income in accordance with AIFRS.

For

per

sona

l use

onl

y


Page 96



$’000 $’000 $’000 $’000


(b) Amounts recognised in profit and loss for investment property

Rental income 377,855 343,553 66,472 64,725Direct operating expenses from property that generate rental income 97,920 85,309 18,417 17,591

(c) Valuation basisThe basis of the valuation of investment properties is fair value being the amounts for which the properties could be exchangedbetween willing parties in an arm’s length transaction, based on current prices in an active market for similar properties in the samelocation and condition and subject to similar leases. The 2007 revaluations were based on independent assessments made by amember of the Australian Property Institute.

(d) Contractual obligationsRefer to Note 31 for disclosure of any contractual obligations to purchase, construct or develop investment property or for repairs,maintenance or enhancements.

(e) Leasing arrangementsThe investment properties are leased to tenants under long term operating leases with rentals payable monthly. Minimum leasepayments receivable on leases of investment properties are as follows:

Minimum lease payments under non-cancellable operating leases ofinvestment properties not recognised in the financial statements arereceivable as follows:Within one year 296,851 309,894 49,670 58,450Later than one year but not later than five (5) years 958,768 1,015,046 144,743 144,078Later than five (5) years 557,801 792,462 62,733 66,208

1,813,420 2,117,402 257,146 268,736

Note 20. Liabilities – Payables

CurrentAccrued borrowing costs 17,239 21,114 500 3,262Other creditors 53,209 60,415 10,435 5,722

70,448 81,529 10,935 8,984

Non-currentLoans from related entities - - 1,949,388 1,405,396Loans from associates 664 144 - -

664 144 1,949,388 1,405,396

For

per

sona

l use

onl

y


Page 97



$’000 $’000 $’000 $’000

Note 21. Liabilities – Interest bearing liabilities

CurrentCommercial Mortgage Backed Securities (CMBS)

AAA rated 6.00% fixed rate notes - 195,000 - 195,000AAA rated floating rate notes with a coupon of three month bank

bills plus 0.43% - 235,000 - 235,000AA+ rated floating rate notes with a coupon of three month bank

bills plus 0.53% - 33,000 - 33,000

Medium term notes6.75% notes maturing on November 2006 - 150,000 - -

Bank facilities maturing on August 20071 100,000 - - -

100,000 613,000 - 463,000

Non-currentCommercial Paper

2 225,000 284,000 - -Bank facilities

1 341,000 210,000 - -Medium term notes

6.25% notes maturing September 2009 135,000 135,000 - -6.25% notes maturing September 2009 100,000 -6.75% notes maturing June 2011 125,000 - - -6.15% notes maturing August 2012 180,000 180,000 - -

Floating Rate Notes with a coupon of three month bank bills plus0.43% maturing September 2009 40,000 40,000 - -0.48% maturing June 2011 125,000 - - -0.56% maturing August 2012 70,000 70,000 - -

US private placementUS$170 million 6.03% notes maturing July 2014 200,318 245,985 - -$80 million (floating rate) notes maturing July 2016 with a coupon

of three month bank bills 79,560 79,560 - -1,620,878 1,244,545 - -

Total interest bearing liabilities 1,720,878 1,857,545 - 463,000

Financing arrangementsFacility as

at 2007$’000

Drawn asat 2007$’000

Facility asat 2006$’000

Drawn as at2006$’000

Unsecured bank facilities3 1,000,000 441,000 750,000 210,000

Commercial paper2 - 225,000 - 284,000

Total excluding bank guarantees 1,000,000 666,000 750,000 494,000

Bank guarantees - 39,480 - 25,627

Total 1,000,000 705,480 750,000 519,627

Available facilities 294,520 230,373

1 The bank facilities are fully revolving cash advance facilities, with a floating interest rate. $600 million of the facility is renewable every sixmonths and has a further termination period of 364 days. $300 million has a three (3) year term.

2 The commercial paper has varying fixed interest rates. Terms are less than 12 months. The commercial paper utilises part of the available non-current unsecured bank facility as standby support, therefore is classed as a non-current liability.

3 The unsecured bank facility includes a current and a non-current component as set out above.

For

per

sona

l use

onl

y


Page 98



$’000 $’000 $’000 $’000

Note 22. Liabilities – Provisions

CurrentProvision for distribution

1 130,527 130,438 122,043 128,908Provision for company income tax 169 229 - -

130,696 130,667 122,043 128,908

Non-currentEmployee entitlements 89 - - -

1 This provision includes $8,484,000 payable to minority interests at 30 June 2007 (30 June 2006: $1,530,000).

Movements in provisionsMovements in each class of provision during the reporting period are set out below:

Provision for distributionOpening balance 130,438 61,972 128,908 60,083Movement in the year:

Paid during the year (244,848) (188,991) (297,292) (188,991)Paid to minority interests (41,741) (30,105) - -Additional provisions recognised 237,984 257,816 290,427 257,816Additional provisions recognised for minority interests 48,694 29,746 - -

Closing balance 130,527 130,438 122,043 128,908

Provision for taxOpening balance 229 - - -Movement in the year:

Paid during the year (229) (138) - -Additional provisions recognised 168 367 - -

Closing balance 168 229 - -

Note 23. Contributed equity

(a) Reconciliation of contributed equityNo of

securities’000 $’000

Opening balance 1 Jul 2005 1,492,738 2,679,673Distributions reinvested 22 Aug 2005 7,157 12,975Placement of securities 22 Aug 2005 25,641 46,450Cost for issue of securities - (1,251)Transfer to retained earnings - (725)

Opening balance 30 June 2006 1,525,536 2,737,122

Closing balance 30 June 2007 1,525,536 2,737,122

(b) Distribution reinvestment plan issues (DRP)When in operation, the distribution reinvestment plan provides holders of stapled securities the opportunity to elect to have all orpart of their distribution entitlements satisfied by the issue of new stapled securities rather than by being paid in cash. Under thestapled security structure, the capital raised under the distribution reinvestment plan can be attributed to either the Trust or theParent Entity. In the year ended 30 June 2007, the Group did not issue any securities (2006: The Group issued 7,157,000 securitiesunder the DRP and allocated 7.1% to the Parent Entity and 92.9% to the Trust).

(c) Executive Performance Plan (EPP), Management Incentive Plan (MIP), Equity Grant Plan (EGP) and Employee ShareAcquisition Plan (ESAP)

Information relating to the MIP, EPP, EGP and ESAP, including details of securities issued under each plan is set out in Note 24.

For

per

sona

l use

onl

y


Page 99


Note 24. Treasury stock reserve

Stapled securities held in trust by the Group for employees of the Parent Entity (IPL) under the MIP, EPP, EGP and ESAP inTreasury Stock Reserve are shown below:

No ofsecurities

’000

2007$’000

No ofsecurities

’000

2006$’000

Opening balance 10,444 18,135 9,529 15,640(Sale)/purchase of securities under MIP, EGP, EPP and ESAP on

behalf of employees of the Parent Entity (IPL) (4,956) (8,723) 915 2,495

Closing balance 5,488 9,412 10,444 18,135

Note 25. Minority interestIPT Consolidated IPT

2007 2006 2007 2006$’000 $’000 $’000 $’000

Interest in:Contributed equity 440,693 447,880 - -Retained profits 186,081 116,853 - -

626,774 564,733 - -

Note 26. Retained earnings

Opening balance 224,185 47,155 109,779 42,369Profit attributable to stapled security holders 668,101 443,826 306,034 324,501Distributions paid and payable (237,984) (257,816) (237,984) (257,816)Adjustment on adoption of AASB 132 and AASB 139 - (9,705) - -Transfer (to)/from contributed equity - 725 - 725Closing balance 654,302 224,185 177,829 109,779

Note 27. Reconciliation of net profit to net cash inflow from operating activities

Net profit after tax before outside equity interest 778,369 518,413 306,034 324,501Amortisation of intangibles 3,860 3,860 3,860 3,860Impairment of intangibles - 89,206 - -Share of net profits of associates (88,979) (52,002) (49,162) (33,111)Distributions from associates 29,125 32,753 15,522 20,250Net gain on sale of investment property (10,640) (24,980) (7,276) -Net gain on fair value of investment properties (376,811) (279,902) (10,437) (44,726)Net gain on fair value of derivative financial instruments (54,549) (14,271) - -Straight-line of rental (11,861) (5,524) - -Decrease/(increase) in receivables (9,455) (1,608) (437) 2,393(Increase) in investment properties (750) (20,888) 1,385 (154)Increase/(decrease) in payables (3,330) 28,253 10,458 824Increase in tax amounts payable 16,330 4,526 - -Net cash inflow from operating activities 271,309 277,836 269,947 273,837

Note 28. Non-cash financing and investing activities

Distributions reinvested – 22 Aug 2005 - 12,975 - 12,975For

per

sona

l use

onl

y


Page 100


Note 29. Financial risk management

The IPT Group's activities expose it to a variety of financial risks; market risk (including currency risk, fair value interest rate risk andprice risk), credit risk, liquidity risk and cash flow interest rate risk. The IPT Group's overall risk management program focuses onthe unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the IPTGroup. The IPT Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedgecertain risk exposures.

Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board ofDirectors of the Responsible Entity. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with theIPT Group’s operating units. The Responsible Entity provides written principles for overall risk management, as well as writtenpolicies covering specific areas, such as mitigating foreign exchange, interest rate and credit risks, use of derivative financialinstruments and investing excess liquidity.

(a) Market risk(i) Foreign exchange riskThe IPT Group does not invest in activities offshore, and only incurs foreign exchange risk where it borrows in currencies other thanAustralian dollars. The Responsible Entity’s approved policy is that all foreign exchange risk associated with its financing activitiesshould be eliminated with the use of currency derivatives.

(ii) Price riskThe IPT Group is exposed to equity securities price risk. This arises from investments held by the IPT Group and classified on thebalance sheet either as available for sale or at fair value through profit or loss. The IPT Group is not exposed to commodity pricerisk.

(b) Credit riskThe IPT Group has no significant concentrations of credit risk. The IPT Group has policies in place to ensure that investments andderivative transactions are undertaken with financial institutions with an appropriate credit rating. The IPT Group has policies thatlimit the amount of credit exposure to any one financial institution.

(c) Liquidity riskPrudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount ofcommitted credit facilities and the ability to close out market positions. The IPT Group maintains flexibility in funding by keepingcommitted credit lines available.

(d) Cash flow and fair value interest rate riskAs the IPT Group has no significant interest bearing assets, the IPT Group’s income and operating cash flows are not directlyaffected by changes in market interest rates and are substantially independent of changes in these rates.

The IPT Group’s interest rate risk arises from borrowings. Borrowings undertaken at variable rates expose the IPT Group to cashflow interest rate risk. Borrowings issued at fixed rates expose the IPT Group to fair value interest rate risk. The IPT Group has acomprehensive policy for the management of financial risk, which involves minimum and maximum hedge ratios, duration limits,and limits on maximum Earnings at Risk. These measures are monitored and managed by Group Treasury within the ResponsibleEntity’s approved limits and are audited regularly under the supervision of the Compliance team.

For

per

sona

l use

onl

y


Page 101


Note 30. Financial instruments

(a) Interest rate risk exposuresThe IPT Group’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods is set out in thefollowing tables.

Fixed interest maturing in:2007 Floating

interestrate

1 year orless

Over 1to 2

years

Over 2to 3

years

Over 3to 4

years

Over 4to 5

years

Over 5years

Non-interestbearing

Total

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000Financial assetsCash 391 - - - - - - - 391Trade receivables - - - - - - - 20,986 20,986Related party receivables 1,016,078 - - - - - - 4,352 1,020,430Other financial assets - - - - - - - 10,404 10,404

1,016,469 - - - - - - 35,742 1,052,211Weighted average interest rate 10.5%

Financial liabilitiesPayables - - - - - - - 70,448 70,448Interest bearing liabilities 980,560 - - 235,000 125,000 - 380,318 - 1,720,878Other financial liabilities - - - - - - - 664 664

980,560 - - 235,000 125,000 - 380,318 71,112 1,791,990

2006Financial assetsCash 27,616 - - - - - - - 27,616Trade receivables - - - - - - - 15,881 15,881Related party receivables 1,123,864 - - - - - - 3,262 1,127,126Other financial assets - - - - - - - 7,114 7,114

1,151,480 - - - - - - 26,257 1,177,737Weighted average interest rate 9.3%

Financial liabilitiesPayables - - - - - - - 81,529 81,529Interest bearing liabilities 951,560 345,000 - - 135,000 - 425,985 - 1,857,545Other financial liabilities - - - - - - - 144 144

951,560 345,000 - - 135,000 - 425,985 81,673 1,939,218

Exposures arise predominantly from liabilities bearing variable interest rates as the IPT Group intends to hold fixed rate liabilities tomaturity.

For

per

sona

l use

onl

y


Page 102


Note 30. Financial instruments (continued)

(b) Interest rate derivativesThe IPT Group uses a combination of fixed rate debt and interest rate derivatives to ensure that the rate of interest on debt ispredominantly fixed. The IPT Group’s portfolio of fixed rate bonds and derivatives can be summarised as follows:

2007 June2008

June2009

June2010

June2011

June2012

June2013

June2014

June2015

June2016

June2017

$’m $’m $’m $’m $’m $’m $’m $’m $’m $’m

Swaps 761 762 898 845 875 662 336 369 106 44Bonds 740 740 561 500 380 227 200 13 - -Total Fixed 1,501 1,502 1,459 1,345 1,255 889 536 382 106 44


2006 June2007

June2008

June2009

June2010

June2011

June2012

June2013

June2014

June2015

June2016

$’m $’m $’m $’m $’m $’m $’m $’m $’m $’m

Swaps 773 750 663 696 611 506 378 177 253 28Bonds 697 561 561 458 426 426 273 246 16 -Total Fixed 1,470 1,311 1,224 1,154 1,037 932 651 423 269 28


The table above depicts the notional principal of interest rate swaps, the average outstanding principal of fixed rate bonds, and theweighted average interest rate of those contracts in each financial year.

The net fair value of these interest rate derivatives that could be made on cancellation of these instruments (net of transactioncosts) at balance date, calculated as the net present value of future interest cash flows is included in Note 14.

(c) Foreign exchange derivativesThe IPT Group has entered into a foreign exchange hedging contract, in respect of the USD170,000,000 denominated bonds, tohedge its exposure to fluctuations in exchange rates.

(d) Net fair value of financial assets and liabilitiesThe net fair value of financial assets and liabilities included in the balance sheet approximates their carrying value.

Note 31. Commitments

(a) Capital commitmentsCapital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:

IPT Consolidated IPT2007

$’0002006$’000

2007$’000

2006$’000

Investment propertyPayable:

Within one year 43,629 93,623 13,380 4,490

(b) Remuneration commitmentsThe IPT Group had no employees during the year. Accordingly, there are no commitments for the payment of salaries and otherremuneration.F

or p

erso

nal u

se o

nly


Page 103


Note 32. Related party transactions

(a) Parent entitiesThe Parent Entity within the IPT Group is Investa Property Trust. The ultimate parent entity is Investa Properties Limited.

(b) SubsidiariesInterests in subsidiaries are set out in Note 18.

(c) Key management personnelDisclosures relating to key management personnel are set out in Note 33.

(d) Transactions with related parties

The following transactions occurred during the year between IPT and the following related parties: On 16 April 2007, Investa Property Trust sold 485 La Trobe Street, Melbourne for $126,500,000. The property was sold to

Investa Commercial Property Fund which acquired a 50% interest and Investa Enhanced Fund which acquired a 50% interest.Consideration for this sale was based on independent external valuations and on normal arm’s length commercial terms andconditions. The sale of these assets generated an accounting profit of $7,276,000 for the Group.

On 31 May 2007, Investa Property Trust acquired 363 Adelaide Street, Brisbane from Investa Brisbane Commercial Trust for$70,500,000. Consideration for this purchase was based on independent external valuations and on normal arm’s lengthcommercial terms and conditions.

On 23 August 2006, Investa Property Trust acquired the remaining 50% interest in 80 Pacific Highway, North Sydney, NSWfrom Investa North Sydney Property Trust for $46,600,000. Consideration for this purchase was based on independent externalvaluations and on normal arm’s length commercial terms and conditions.

IPT Consolidated IPT2007

$’0002006$’000

2007$’000

2006$’000

Loans from subsidiaries at the end of the year - - 1,949,388 861,377

Loans to commonly controlled entities at the end of the year 941,280 1,064,094 1,681,919 1,064,094

Loans to associates at the end of the year 74,798 59,770 74,798 59,770

Interest revenue - Subsidiaries - - - 29,959- Commonly controlled entities 106,733 90,874 106,733 90,874- Associates 6,994 - 6,994 1

Interest expense - Commonly controlled entities - - 107,744 75,858

Distribution revenue - Subsidiaries - - 203,954 190,266- Associates 29,125 32,753 15,522 20,250

Management fees paid and payable to the Responsible Entity 2,428 1,844 2,428 1,844

Property management fees paid to commonly controlled entities 4,568 3,413 932 899

(e) Terms and conditions of related party transactionsTransactions relating to dividends, calls on partly paid ordinary securities and subscriptions for new ordinary securities were on thesame terms and conditions that applied to other security holders.

All other related party transactions were made on normal commercial terms and conditions and at market rates, except that thereare no fixed terms for the repayment of loans between the parties.

Outstanding balances are unsecured and are repayable in cash.For

per

sona

l use

onl

y


Page 104


Note 33. Key management personnel

(a) Responsible EntityThe Responsible Entity of Investa Property Trust is Investa Properties Limited.

(b) Key management personnel(i) Directors

The following persons were directors of Investa Properties Limited during the year and up to the date of this report, unlessotherwise stated:


(ii) Other key management personnelThere were no other persons with responsibility for planning, directing and controlling the activities of the IPT Group, directly orindirectly during the year.

(c) Key management personnel remunerationKey management personnel are paid by Investa Properties Limited. Payments made from the IPT Group to Investa PropertiesLimited do not include any amounts attributable to the compensation of key management personnel.

(d) Key management personnel loan disclosuresThe IPT Group has not made, guaranteed or secured, directly or indirectly, any loans to the key management personnel or theirpersonally related entities at any time during the year.

(e) Equity instrument disclosures relating to key management personnel1

Stapled security holdings of key managementpersonnel

Balance1 July 2005

Purchases/(sales)

Balance30 June 2006

Purchases/(sales)

Balance30 June 2007

S Crane - - - 75,000 75,000J I Messenger 35,486 750 36,236 - 36,236J L Arthur 59,440 23,756 83,196 40,000 123,196G B Monk

2 & 4772,475 100,000 872,475 - 872,475

J S Murray 10,184 20,215 30,399 4,100 34,499D R Page 31,615 522 32,137 - 32,137Hon R J Webster - - - 10,000 10,000C J O’Donnell

2 & 32,066,347 (1,750,000) -

3- -

1 Key management personnel of the IPT Group include the directors (and non-executive directors) of the Responsible Entity but excludeexecutive management.

2 Purchased pursuant to the Employee Share Acquisition Plan (ESAP).3 This director resigned in 2006, hence, his holdings as at 30 June 2006 are not shown.4 Mr Monk has personally acquired 2,475 stapled securities.

For

per

sona

l use

onl

y


Page 105


Note 34. Contingent assets and liabilities

Contingent liabilitiesOn 31 May 2007, IPG announced it had entered into an implementation agreement with funds advised by Morgan Stanley RealEstate, to acquire all stapled securities in IPG for cash consideration of $3.08 per security by way of a Court approved Scheme ofArrangement and Trust Scheme (together the “Scheme”). The offer is inclusive of any final distribution payment.

As disclosed in the Implementation Agreement, IPG has agreed to pay Morgan Stanley a break fee of $20 million if any of thefollowing occur:- within nine (9) months of the date of the implementation agreement (31 May 2007), a Superior Competing Takeover

Proposal is announced and the bidder acquires more than 50% of all Securities, and the proposal becomes free from anydefeating conditions;

within nine (9) months of the date of the implementation agreement (31 May 2007), a Superior Competing TakeoverProposal is implemented; or

Morgan Stanley terminates the implementation agreement or the Schemes do not become effective prior to the SunsetDate, being 31 October 2007, as a result of a breach of the agreement by Investa Property Group.

As a result of the offer, the Company has also entered into retention agreements with key executives. These retention agreementsdo not exceed $5 million in aggregate and are payable only if the executive remains employed with Investa Property Group on 30June 2008.

In the event of a breach of the implementation agreement by Morgan Stanley Real Estate, Morgan Stanley Real Estate has agreedreimburse IPG the retention payments that IPG has agreed to pay executives up to a maximum amount of $5 million. IPG is notentitled to claim or be paid damages in excess of $8 million for any breach of the implementation agreement by Morgan Stanley.

Another $23 million of costs are payable to consultants contingent on the Scheme proceeding.

Bank guaranteesThe Group had contingent liabilities of $39,480,000 at 30 June 2007 (30 June 2006: $25,627,000). These are in the form of bankguarantees supporting rental obligations and development activities. The bank guarantees may give rise to liabilities if the Groupdoes not meet its obligations under the terms of the guarantees, although none are anticipated.

Other than disclosed as above, no other contingent asset or liability existed as at 30 June 2007.

Note 35. Events subsequent to balance date

On 31 May 2007, IPG announced it had entered into an implementation agreement with funds advised by Morgan Stanley RealEstate, to acquire all stapled securities in IPG for cash consideration of $3.08 per security by way of a Court approved Scheme ofArrangement and Trust Scheme (together the “Scheme”). The offer is inclusive of the final distribution payment.

The directors have unanimously recommended the Offer in the absence of a superior proposal. A Scheme Booklet containing fulldetails of the Offer, including an Independent Expert’s Report, has been mailed to IPG security holders. Security holders will beasked to vote on the Scheme at a security holders meeting to be held in Sydney on 22 August 2007.

For

per

sona

l use

onl

y


Page 106

Directors’ Declaration

In the directors’ opinion:

(a) the financial statements and notes set out on pages 27 to 105 are in accordance with the Corporations Act 2001,including:(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional

reporting requirements;(ii) giving a true and fair view of the Parent Entity and Investa Property Group’s financial position as at 30 June 2007

and of their performance, for the year ended on that date; and(iii) giving a true and fair view of the Investa Property Trust and Investa Property Trust’s consolidated financial

position as at 30 June 2007 and of their performance, for the year ended on that date; and(b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and

payable;(c) the audited remuneration disclosures set out on pages 10 to 23 of the directors’ report comply with Accounting

Standards AASB 124 Related Party Disclosures and the Corporations Regulations 2001; and(d) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group

identified in Note 41 will be able to meet any obligations or liabilities which they are, or may become, subject by virtue ofthe deed of cross guarantee described in Note 41.

The directors have been given the declarations by the Managing Director and Finance Director required by section 295A of theCorporations Act 2001.

This declaration is made in accordance with a resolution of the directors of Investa Properties Limited and in their capacity asdirectors of the Responsible Entity of Investa Property Trust.

S CraneChairmanSydney9 August 2007

For

per

sona

l use

onl

y

Independent auditor’s report to the stapled security holders ofInvesta Property Group

Report on the financial reports and the AASB 124Remuneration disclosures contained in the directors’ reportWe have audited the accompanying financial report of InvestaProperties Limited (the company), which comprises the balancesheet as at 30 June 2007, and the income statement, statementof changes in equity and cash flow statement for the year endedon that date, a summary of significant accounting policies, otherexplanatory notes and the directors’ declarations for both InvestaProperties Limited and Investa Property Group (the consolidatedentity). The consolidated entity comprises the company and theentities it controlled at the year end or from time to time during thefinancial year.

Additionally, we have audited the accompanying financial reportof Investa Property Trust (the Trust), which comprises thebalance sheet as at 30 June 2007, and the income statement,statement of changes in equity and cash flow statement for theyear ended on that date, a summary of significant accountingpolicies, other explanatory notes and the directors’ declarationsfor both Investa Property Trust and Investa Property Trust Group(the Trust Group). The Trust Group comprises the Trust and theentities it controlled at the year end or from time to time during thefinancial year.

We have also audited the remuneration disclosures contained inthe directors’ report. As permitted by the CorporationsRegulations 2001, the company has disclosed information aboutthe remuneration of directors and executives (“remunerationdisclosures”), required by Accounting Standard AASB 124Related Party Disclosures, under the heading “RemunerationReport” on pages 10 to 23 of the directors’ report and not in thefinancial report.

Directors’ responsibility for the financial reports and theAASB 124 Remuneration disclosures contained in thedirectors' reportThe directors of the company are responsible for the preparationand fair presentation of the financial reports in accordance withAustralian Accounting Standards (including the AustralianAccounting Interpretations) and the Corporations Act 2001. Thisresponsibility includes establishing and maintaining internalcontrol relevant to the preparation and fair presentation of thefinancial reports that are free from material misstatement,whether due to fraud or error; selecting and applying appropriateaccounting policies; and making accounting estimates that arereasonable in the circumstances.

The directors of the company are also responsible for theremuneration disclosures contained in the directors’ report.

Auditor’s responsibilityOur responsibility is to express an opinion on the financial reportsbased on our audit. We conducted our audit in accordance withAustralian Auditing Standards. These Auditing Standards requirethat we comply with relevant ethical requirements relating to auditengagements and plan and perform the audit to obtainreasonable assurance whether the financial report is free frommaterial misstatement. Our responsibility is to also express anopinion on the remuneration disclosures contained in thedirectors’ report based on our audit.

An audit involves performing procedures to obtain audit evidenceabout the amounts and disclosures in the financial reports andthe remuneration disclosures contained in the directors’ report.The procedures selected depend on the auditor’s judgement,including the assessment of the risks of material misstatement of

the financial reports and the remuneration disclosures containedin the directors’ report, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal controlrelevant to the entity’s preparation and fair presentation of thefinancial reports and the remuneration disclosures contained inthe directors’ report in order to design audit procedures that areappropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accountingestimates made by the directors, as well as evaluating the overallpresentation of the financial reports and the remunerationdisclosures contained in the directors’ report.

Our procedures include reading the other information in theAnnual Report to determine whether it contains any materialinconsistencies with the financial reports.

For further explanation of an audit, visit our websitehttp://www.pwc.com/au/financialstatementaudit.

Our audit did not involve an analysis of the prudence of businessdecisions made by directors or management.

We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinions.

IndependenceIn conducting our audit, we have complied with the independencerequirements of the Corporations Act 2001.

Auditor’s opinion on the financial reportIn our opinion, the financial reports of Investa Properties Limitedand Investa Property Trust are in accordance with theCorporations Act 2001, including:

(i) giving a true and fair view of the financial position of InvestaProperties Limited, Investa Property Group, Investa PropertyTrust and Investa Property Trust Group as at 30 June 2007and of their performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (includingthe Australian Accounting Interpretations) and theCorporations Regulations 2001.

Auditor’s opinion on the AASB 124 Remunerationdisclosures contained in the directors’ reportIn our opinion, the remuneration disclosures that are contained onpages 10 to 23 of the directors’ report comply with AccountingStandard AASB 124.

PricewaterhouseCoopers

R D DeutschPartnerSydney9 August 2007

PricewaterhouseCoopers

E A BarronPartnerSydney9 August 2007

Liability limited by a scheme approved under Professional Standards Legislation

PricewaterhouseCoopersABN 52 780 433 757

Darling Park Tower 2201 Sussex StreetGPO BOX 2650SYDNEY NSW 1171DX 77 SydneyAustraliawww.pwc.com/auTelephone +61 2 8266 0000Facsimile +61 2 8266 9999

For

per

sona

l use

onl

y

INVESTA PROPERTY GROUP – 30 JUNE 2007 ANNUAL RESULTS · 2007-08-08 · Investa is an Australian...

Documents

Transcript of INVESTA PROPERTY GROUP – 30 JUNE 2007 ANNUAL RESULTS · 2007-08-08 · Investa is an Australian...