0113annual Report

People driven people
Annual Report 2012
CONTENTS 1 Year in Review 3 Chairmans and Managing Directors Report 6 Business Review Investment Property 8 Business Review Commercial & Industrial 10 Business Review Residential 12 Corporate Governance 21 Directors Report 29 Remuneration Report 43 Financial Report 101 Securityholders Information 104 Ten Year Financial Summary 105 Key 2013 Dates 109 Corporate Directory
Australand Property Group Australand Holdings Limited (ABN 12 008 443 696) Australand Property Limited (ABN 90 105 462 137 AFS Licence No. 231130) as the responsible entity of: Australand Property Trust (ARSN 106 680 424); and Australand ASSETS Trust (ARSN 115 338 513). Australand Investments Limited (ABN 12 086 673 092 AFS Licence No. 228837) as the responsible entity of: Australand Property Trust No.4 (ARSN 108 254 413); and Australand Property Trust No.5 (ARSN 108 254 771). Level 3, 1C Homebush Bay Drive Rhodes NSW 2138
Australand Annual Report 2012
Year in Review.
Operating Profit attributable to Stapled Securityholders
$142m
4.1 135 142
Total Assets
$4.0bn
4.0 4.0
175 120 128
3.5
3.7
08
09
10
11
12
08
09
10
11
12
Distributions per Stapled Security
21.5
Net Tangible Assets per Stapled Security
$3.49
21.5
21.5
3.46
3.49
11
12
11
12
Year in Review 1
Year in Review
Summary of profit and loss statement

Two Year Summary Investment Property Commercial & Industrial Residential Corporate/eliminations Earnings before interest and tax Net interest Profit before tax Tax Non-controlling interest Operating profit Investment property revaluation gains Impairment of inventories Unrealised losses on interest rate derivatives Statutory profit/(loss)
2012 $m 2011 $m
178 24 89 (30) 261 (95) 166 (24) 142 51 (13) 180
165 29 76 (28) 242 (81) 161 1 (27) 135 59 (30) (24) 141
2 Australand Annual Report 2012
Chairmans and Managing Directors Report.

We are pleased to report another strong result for 2012. In what has been a challenging environment, we have increased operating earnings by 5%, continued to strengthen our balance sheet and made solid progress in delivering on our strategy.
Significant achievements Significant achievements during the year included: operating profit after tax increased to $142.1 million, up 5% on 2011; the Groups statutory profit after tax increased to $180.0 million, up 28% on 2011; increased net tangible asset backing to $3.49 per security; distributions totalled 21.5 cents per security, representing a payout ratio of 87% of operating earnings; successfully executed agreements for the sale of two non-core assets in Sydney being the Crest Hotel, Kings Cross and 85 Alfred Street, Milsons Point with a combined value of $114 million; completed the construction of the $200 million 357 Collins Street, Melbourne office development; delivered solid sales from our Residential division and secured an increase in sales contracts on hand; and successfully integrated a new technology platform into the business reducing systems risk and providing efficiency benefits.
These achievements reflect the resilience of the Groups business model and the quality of our operating platform. Each of the Groups operating divisions made a significant contribution to the result. Investment Property Our Investment Property portfolio continued to deliver growth in line with strategy, driven by comparable rental growth of 3.2% and income from new developments completed during the course of 2011 and 2012. The division delivered earnings before interest and tax (EBIT) of $178.1 million, up 8% on 2011. Our portfolio metrics remain strong, with high occupancy (97.6%) and long leases (WALE of 5.5 years). Independent property revaluations were undertaken on 55% of the Investment Property portfolio (by value) during 2012, with the remaining one-third being subject to Directors valuations. The total portfolio valuation review resulted in revaluation gains of $51.3 million for the full year.
Commercial & Industrial Our Commercial & Industrial division delivered EBIT of $23.7 million for 2012. Whilst this is a lower result than 2011 it was in line with expectations, given the challenging market environment. During the year, the Commercial & Industrial division successfully completed 9 projects with a combined end value of approximately $380 million. The divisions forward workload includes 16 projects with an end value of approximately $440 million.
Chairmans and Managing Directors Report 3
Chairmans and Managing Directors Report
$142m 5.0%
Operating profit Growth in Group operating profit
21.5
Distributions per security
Residential In 2012, the Residential division delivered a 16% increase in EBIT to $88.5 million. The strong growth in earnings was underpinned by sales at a number of medium density projects including Burwood (VIC), Carlton (VIC) and Cockburn Central (WA) along with key land projects including Greenhills Beach (NSW) and Greenvale (VIC). The division held 1,169 contracts on hand at year end, up 24% on 2011. Approximately two-thirds of these contracts are expected to contribute to earnings in 2013. This was a creditable result, particularly given the negative bias toward the residential sector that prevailed through much of 2012. Our people and the community Underlying our success in 2012 has been the commitment and engagement of our people. In 2011 we rolled out a new brand for Australand and a set of values, being Authentic, Respectful, Dynamic and Passionate. In 2012 we continued our programme of building alignment of our culture around these values and are pleased with our progress to date and the extent to which our staff are embracing these values. While we still have work to do, we are well on our way to building a uniform and aligned culture. The safety of our employees and those we engage with in our business and through community activities continue to be our first priority. Unfortunately, for
the first time in four years our lost time injury frequency rate increased during the year but remains relatively low. Importantly, our injury severity rate declined significantly in 2012 and our safety culture remains strong. This will continue to be a focus in 2013. Since 2005, the Australand Foundation has coordinated our donations and volunteering activities to increase interaction with the communities in which we operate. Our employees desire to give back to the broader community is evidenced by them partaking in 340 paid volunteer days; partnering with 26 community, registered charity or not for profit organisations; and collectively donating over $240,000 (including the contribution from the Australand Foundation) to community and charity initiatives during 2012. Corporate update As we previously advised the market, on 10 December 2012, Australand received an unsolicited, indicative, non-binding proposal from The GPT Group to acquire its Investment Property portfolio and Commercial & Industrial business for a $140 million premium to the book value at 30 June 2012. The proposal involved Australand securityholders retaining their interest in the Residential business as a stand-alone listed entity. The proposal was highly conditional and subject to a number of factors including
undertaking due diligence, exclusivity and break fees which would apply in the event that the proposal did not proceed. Following detailed analysis, including advice from independent advisers, the Board rejected the proposal on the basis that it did not provide a compelling value proposition and was not considered to be in the best interests of Australand securityholders. In coming to this conclusion, the Board formed the view that the proposal did not provide a sufficient premium to compensate securityholders for the transaction costs, structural inefficiencies and risks involved including the uncertainty as to the trading value of the Residential business as a stand-alone listed company. Subsequent to this, Australands major securityholder, CapitaLand, announced its intention to conduct a strategic review of its investment in the Group. As a result of the proposal received from The GPT Group and CapitaLands strategic review, Australand has appointed financial and legal advisers to assist it in establishing whether any proposal can be developed that is in the interests of all Australand securityholders. Australands management and advisers are working collaboratively with CapitaLand in this process, and have made information available to a select number of parties that have expressed
Group Business Model

Recurrent Income
(60-70% of Group EBIT)
Growth
(30-40% of Group EBIT)
Investment Portfolio
Development Pipeline
Office & Industrial
Commercial & Industrial
Residential
1
$2.3bn
1 Estimated pipeline end values
$2.1bn
$8.0bn
an interest in the whole or parts of the Group. We emphasise however, that there is no guarantee that any proposal will be forthcoming from this process. The outlook While market conditions are expected to remain challenging for the near term, the Group expects to deliver further growth in operating earnings per security for 2013. This outlook is supported by: fixed increases in rental income from the Investment Property portfolio and the expectation of successfully leasing up unlet space at 357 Collins Street in Melbourne and Rhodes Building F in Sydney; a solid forward workload in the Commercial & Industrial division, coupled with improving enquiry and low vacancy levels in the industrial sector and the strength of demand from investors for quality product; and an increase in the level of contracts on hand in the Residential division, together with a low interest rate environment and diversity of product in our development pipeline.
The Group does, however, expect that first half earnings in 2013 will be less than first half earnings in 2012 due to the timing of settlements of Residential built form projects and the delivery of the Commercial & Industrial divisions forward workload being skewed to the second half of the year. Distributions for 2013 are expected to be maintained at 21.5 cents per security as the Group continues to take a prudent approach to capital management. This outlook is subject to market conditions not deteriorating and excludes the potential impact that might arise as a result of any corporate activity. Board changes Ms Beth Laughton was appointed as an independent non-executive director with effect from 7 May 2012. Beth is an experienced non-executive director who brings extensive financial, audit, risk and capital markets experience to the Board. The Board and its committees continue to ensure that the Group maintains a
high standard of governance and we would like to thank our fellow directors for their continued commitment. Thank you In closing we would like to thank our employees for their hard work and dedication to achieving the outcomes we have for the Group. Our employees continue to be committed to delivering results for securityholders despite the challenges of a tough operating environment. Finally, on behalf of the Board and management we would also like to thank you, our securityholders. We value and appreciate your support and will continue to work hard to enhance the value of your investment in the Group.
Olivier Lim Chairman
Bob Johnston Managing Director
Chairmans and Managing Directors Report
Business Review Investment Property
Well positioned to deliver growth. $2.3bn

Total portfolio value of the Investment Property division
$178m
EBIT
Isuzu, Richlands, QLD
Introduction As at 31 December 2012, the Investment Property division had a total portfolio value of $2.3 billion comprising 69 investment properties, including 3 properties under development. The portfolio is primarily diversified across the industrial (51%) and office (48%) sectors and comprises 1.1 million sqm of lettable space. The total portfolio occupancy was 97.6% (by income) excluding properties held for sale or under development. The portfolio metrics remain strong, with a weighted average lease expiry of 5.5 years (31 December 2011: 5.8 years) and 85% of the portfolio income coming from Government, ASX listed or multi-national corporations.
Operational highlights In the year to 31 December 2012, key leasing activities for the Investment Property division included: a 10 year lease to TNT at Mascot, NSW over a 7,650 sqm office tenancy; a 6 year lease to Nestl at Building B, Rhodes, NSW over a 3,525 sqm office tenancy; a 7 year lease to Vanguard at Freshwater Place, VIC over a 3,400 sqm office tenancy; and a 5 year lease to Smart Group at Richmond, VIC over a 2,700 sqm office tenancy. The Group has entered into unconditional contracts for the sale of the Crest Hotel, Kings Cross, NSW for $65 million, and 80 Alfred Street, Milsons Point, NSW for $49 million, with settlement scheduled to occur during 2013. These two assets were held for sale at year end.
Year in review The Investment Property division achieved an EBIT result of $178.1 million (FY11: $165.5m) before net property revaluation gains of $51.3 million (FY11: $59.4m) for the year. EBIT increased by 8%, which was supported by comparable rental growth of approximately 3.2%, income from internal developments completed and re-leasing activity. The Investment Property portfolio was revalued at 31 December 2012, resulting in a net gain of $51.3 million for the year (including a net gain of $0.4 million, representing the Groups share of property revaluations in its associates and joint ventures). The average capitalisation rate for the Investment Property portfolio, as at 31 December 2012, was 8.09%. During the course of 2012, independent valuations were undertaken on
Results
FY12
FY11
EBIT Revaluation gain1 Metrics

2
$178m $51m $2.3bn 97.6%
$165m $59m $2.2bn 99.3%
Portfolio value Occupancy (by income) Industrial occupancy Office occupancy Comparable rental growth WALE (by income) Average cap rate
100.0% 100.0% 94.9% 100.0% 3.2% 5.5 yrs 8.09% 3.3% 5.8 yrs 8.34%
1 Includes gains on internal developments of $16m (FY12) and $22m (FY11). 2 Metrics exclude properties under development and assets held for sale. Portfolio value includes properties under development.
357 Collins Street, Melbourne, VIC
approximately 55% of the Investment Property portfolio (by value). Further details of the Investment Property divisions 2012 results are summarised in the table above. Investment Property outlook The Investment Property division is well positioned to continue to deliver comparable rental growth, with average fixed rent increases of 3.4% over 94% of the portfolios income. The Group remains focused on leasing the residual space of 357 Collins Street, Melbourne (currently 70% leased) and Rhodes Building F (currently 56% leased) during the course of 2013.
Business Review 7
Business Review Commercial & Industrial
Competitive advantage. $214m

Revenue
$24m
EBIT
QLS and Ceva, Eastern Creek, NSW
Introduction The Commercial & Industrial division has a competitive advantage due to its national presence, well positioned landbank, broad customer base and integrated delivery platform. The division has a significant industrial land holding in the major markets of Melbourne, Sydney and Brisbane, which is 100% zoned. Operational highlights In the year to 31 December 2012, the key operational highlights for the Commercial & Industrial division included: Buildings with a total net lettable area of 241,200 sqm were delivered along with land sales of 210,500 sqm. Nine projects valued at $380 million were completed during the course of the year, including the completion of 357 Collins Street and the Coles Parkinson Expansion in Brisbane.
Secured major industrial tenants, including: Ceva, QLD (41,000 sqm) Catch of the Day, VIC (26,400 sqm) Border Express, VIC (19,000 sqm)
Eastern Creek in NSW, Catch Of The Day at Westpark in VIC and Toll and the Australian Ballet at Altona in VIC. During the course of 2012, the Australand Logistics Joint Venture with GIC committed to acquire $88.9 million of assets comprising the QLS and CEVA facility at Eastern Creek and the CEVA facility at Berrinba, which is currently under development. This brings the total commitment of the joint venture to $320.7 million out of a targeted investment of $450.0 million. The Rhodes Building F in Sydney was completed in early 2013 and is well positioned given the limited competing supply and amenity offered at Rhodes Corporate Park. Leasing enquiry has been positive with executed agreements for lease to Hewlett Packard for 6,500 sqm and Citibank for 3,500 sqm.
Year in review The Commercial & Industrial division achieved an EBIT result of $23.7 million for the full year (FY11: $29.1m). Aggregate sales revenue for the year was $213.7 million (FY11: $181.4m). The divisions return on average capital employed (ROACE) was 9.2% for the year which was less than expected due to delays and increased costs associated with the development of 357 Collins Street in Melbourne. Several major projects contributed to the result for the year, including the distribution facilities for Electrolux at Beverley in SA, QLS and CEVA at
Results1
FY12
FY11
Revenue EBIT NTA uplift Total contribution ROACE

2
$214m $24m $16m $40m 9.2%
$181m $29m $22m $51m 11.4%
Development activity Built form Third party (sqm) Built form Internal (sqm) Land sales (sqm) Metrics Capital employed3 Forward workload (sqm) $387m $469m 183,000 210,000 170,700 113,000 70,500 84,000 210,500 271,000
1 Includes ALZ share of joint ventures and PDAs. 2 EBIT/average capital employed. 3 Total assets less non interest bearing liabilities at period end, before FY11 impairments.
Electrolux, Beverley, SA
For further details of the Commercial & Industrial divisions 2012 results refer to the table above. Commercial & Industrial outlook As at 31 December 2012, the Commercial & Industrial division had a forward workload of 183,000 sqm, which is anticipated to be delivered during 2013 with completions skewed to the second half of the year. Occupier demand is expected to remain relatively subdued given the challenging economic and market conditions, however, continued demand is expected from the major retailers and third party logistics providers. Investor appetite for prime well leased assets remains strong which is expected to underpin asset values in 2013.
Business Review 9
Business Review Residential
Playing an integral role in urban development. $606m

Revenue
$89m
EBIT
Lume, Carlton, VIC
Introduction The Residential division develops residential land, medium density housing and apartments in Australias major population centres of Melbourne, Sydney, Perth and South East Queensland. The Groups Residential portfolio is diversified geographically and between land development activity and medium/high density developments where the Groups built form capabilities play an integral role in urban development process. Operational highlights For the year ending 31 December 2012, the key operational highlights for the Residential division included: 84% of earnings was generated from our top 10 projects with the most notable contributions from Greenhills Beach (NSW) and three Medium Density Projects Burwood and Carlton in (VIC) and Cockburn Central in (WA).
Improvement in sales activity levels in NSW and WA relative to prior years. Key projects in these markets include Wolli Creek and Clemton Park in NSW and Cockburn Central in WA and these projects have already secured significant pre-sales on stages forecast to settle in both 2013 and 2014. Wolli Creek has three buildings under development of which two are 100% sold and the third building was 73% sold with another building (Summit) to be released early in March 2013. Clemton Park has sold out two stages and stage 3 is now well advanced with sales which will settle over 2013 and 2014. Carlton and Parkville also secured significant pre-sales which will settle in 2013. First settlements were achieved at both Kangaroo Point and Hamilton, two key projects in Queensland.
An increase in contracts on hand for settlement in 2013 and 2014 of 24% compared to the prior comparable period. Year in review In 2012, the Residential division achieved an EBIT result of $88.5 million (FY11: $76.1m), up 16% on the previous year. Aggregate sales revenue for the year was $606.0 million (FY11: $586.8m). The divisions ROACE was 9.9% for the year which was less than expected due to the capital employed reducing at a slower rate than anticipated. Gross lots sold for the year were down on the prior corresponding year due to softer conditions in Victoria and the market remaining subdued in South East Queensland. Despite the soft market conditions, lot sale targets were largely achieved on the top ten projects. Revenue and EBIT were up reflecting settlements of a number of medium
Results1
FY12
FY11
Revenue EBIT ROACE2 Lots sold Contracts on hand (lots) Contracts on hand (value)
Activity3
$606m $89m 9.9% 1,242 690 $345m 2,018 1,788 1,169 $852m
3
$587m $76m 8.6% 1,654 623 $348m 2,420 2,536 939 $908m 21,800 $8.1bn
Sales activity4 Gross lots sold Gross contracts on hand (lots)

Metrics
Capital employed5 Lots under management Pipeline end value3

1 2 3 4
20,400 $8.0bn
Green Quarter, Hamilton, QLD
Includes ALZ share of joint ventures and PDAs. EBIT/average capital employed. Includes 100% of joint ventures and PDAs. Total new sales and contracts on hand for the 12 months to 31 December. 5 Total assets less non interest bearing liabilities at period end, before FY11 impairments.
density projects including Cockburn Central (WA), Burwood (VIC) and Carlton (VIC), along with contributions from key land projects including Greenhills Beach (NSW) and Greenvale (VIC). These projects also contributed to a higher average sales price for the year. The 2012 lot sales at Clyde North were adversely impacted by wet weather and planning delays, which resulted in 7 sales being recognised in 2012 and 61 sales being carried over into 2013. For further details of the Residential divisions 2012 results refer to the table above.
Residential outlook As at 31 December 2012, the Residential division held 1,169 sales contracts on hand (31 December 2011: 939 contracts on hand) with 64% of these expected to be recognised in 2013. The top twelve projects for 2013 are expected to contribute approximately 80% of targeted Residential earnings in 2013. These projects include; Greenhills Beach (NSW), Clemton Park (NSW), Lidcombe (NSW), Carlton (VIC), Clyde North (VIC), Greenvale (VIC), Cockburn Central (WA) and Hamilton (QLD). We expect trading conditions for 2013 to be similar to 2012 with a comparable level of sales activity targeted. Earnings are anticipated to be more heavily skewed to the second half of the year in line with the timing of medium density settlements.
Business Review 11
Corporate Governance
Comprehensive framework.
The Group has a comprehensive governance framework in place and the Board and management are committed to maintaining high standards of corporate governance for all stakeholders.
Company structure and approach to corporate governance Australand is a stapled group comprising Australand Holdings Limited, Australand Property Trust, Australand Property Trust No.4 and Australand Property Trust No.5. Australand Holdings Limited, Australand Property Limited (as the responsible entity of Australand Property Trust and Australand ASSETS Trust) and Australand Investments Limited (as the responsible entity of Australand Property Trust No.4 and Australand Property Trust No.5) have identical boards of directors. The term Board when used throughout this Corporate Governance Statement (Statement) refers to these boards. Australands Board and management are committed to meeting the expectations of securityholders in terms of achieving and demonstrating high standards of corporate governance. The Group has a comprehensive governance framework in place to ensure that Australand and all of its subsidiary companies are appropriately governed and directors and management at all levels are in a position to effectively discharge their responsibilities to securityholders and other stakeholders. Compliance with ASX Corporate Governance Principles and Recommendations This Statement reports the extent to which Australand has followed the ASX
Corporate Governance Principles and Recommendations (the ASX Recommendations) during the reporting period as required under the ASX Listing Rules. Australands Statement is structured in line with the ASX Recommendations. Areas not in full compliance are disclosed under the relevant principle, together with the reasons for departure. All of the corporate governance practices referred to in this Statement were in place for the entire year unless otherwise indicated. Documents that are italicised and underlined in this Statement can be accessed and downloaded from the Corporate Governance Section of Australands website at www.australand.com.au. A listing of the ASX Recommendations, indicating Australands compliance or otherwise, is included at the end of this Statement. Principle 1: Lay solid foundations for management and oversight The Board is responsible to the securityholders for the overall governance and performance of Australand. The Board has adopted a Board Governance Document which sets out those functions reserved for the Board and those delegated to the Managing Director. The Board Governance Document provides the basis for the Board to provide strategic guidance to the Group
and effective oversight of management, including the monitoring of performance against the Groups strategy and operational objectives (including financial performance), its risk management plan and compliance related responsibilities. Following the Boards approval of the Operating Plan each year, key performance indicators (KPIs) are established for the Executive Management Team and these are then cascaded down the organisation. On an annual basis, the Remuneration & Nomination Committee and, subsequently the Board, formally review the performance of the Managing Director and the Executive Management Team. The criteria assessed are both quantitative and qualitative and include financial performance and non-financial measures such as safety performance and progress against other key strategic goals. Further details on the assessment criteria for the Managing Director and senior executive remuneration are set out in the Remuneration Report. Principle 2: Structure the Board to add value The Board of Directors As at 26 February 2013, the Board comprised seven non-executive directors and one executive director, being the Managing Director. The names, skills and experience of each
of the directors who held office during the financial year and the terms of office of each director are set out on pages 21 to 24 of this report. Independence of Directors In defining the characteristics of an independent director, the Board has adopted the ASX Recommendations on the Independence of Directors, in conjunction with other factors that the Board considers to be specifically relevant for the Group and its businesses. In this regard, materiality thresholds have been established in respect of professional/consulting services and supplier/customer relationships such that, a director is not considered to be independent if he or she: has been a principal of a professional adviser or consultant to any company in the Australand Group where payments on an annual basis to or from the professional adviser or consultant exceeded 10% of the expenditure on an annual basis by Australand on professional or consulting services, or exceeded 10% of the revenue of the relevant professional adviser or consultant; is a material supplier or customer of Australand where payments exceeded 10% of the annual consolidated gross revenue of either Australand or of that supplier or customer.
Five of the seven non-executive directors (Messrs Isherwood, Newton and Prosser, Ms Laughton and Ms Milne) are independent in accordance with the ASX Recommendations for determining independence. The Chairman of Australand is Mr Olivier Lim. Mr Lim is the Deputy CEO of CapitaLand Limited (Australands majority securityholder) and, accordingly, he is not considered to be independent. In this regard, Australand does not comply with ASX Recommendation 2.2 which states that the Chairman of the Board should be independent. For this reason, the Board has appointed Mr Paul Isherwood, AO as Deputy Chairman and Lead Independent Director. Mr Lui Chong Chee is also not considered to be independent in that he is a former employee of CapitaLand Limited. A period of three years needs to lapse from the time Mr Lui ceased his employment with CapitaLand Limited before he will gain independent status (1 June 2013) in accordance with the ASX Recommendations. Committees The Board has established four committees to advise and support the Board in carrying out its duties. The Chairman of each committee reports on any matters of substance at the next full Board meeting and all committee minutes are provided to the Board at the following meeting. The four
permanent committees in existence at the date of this report are as follows: Audit Investment Remuneration & Nomination Risk & Compliance Each committee has its own Terms of Reference setting out the authority under which it operates and the responsibilities as delegated by the Board. The Terms of Reference are reviewed annually and membership for each committee is based on the skills and experience of the individual directors.
Corporate Governance 13
The Board and each committees membership as at 26 February 2013 is set out in the table below:
Board Membership Director Audit
Committee Membership Investment Remuneration & Nomination Risk & Compliance
Olivier Lim1 Paul Isherwood
Chairman Deputy Chairman and Lead Independent Director Managing Director Member Member Member Member Member Member Member Chair
Chair Member Chair
Bob Johnston2 Beth Laughton Lui Chee Nancy Milne Stephen Newton Bob Prosser
3
Member Member Member Member Chair Member Member
Notes: 1 Mr Olivier Lim stepped down as a member of the Audit Committee with effect from 30 September 2012. 2 Mr Bob Johnston is a member of the Investment Committee and attends all other Committee meetings by invitation. 3 Ms Beth Laughton was appointed as a Non-Executive Director of the Boards of Australand Holdings Limited, Australand Property Limited and Australand Investments Limited and as a member of the Audit Committee on 7 May 2012.
Meetings and Board work The Board schedules regular meetings throughout the year as well as a formal strategic planning session. If required, additional meetings are held to deal with specific non-scheduled matters. During the past year, five additional Board meetings were held. Each year the Board also visits the Groups operations in a specific location to meet with local management and undertake site/OH&S inspections. An agenda is prepared for each Board meeting by the Company Secretary in conjunction with the Managing Director and the Chairman. Items of a strategic, operational, financial and regulatory nature, together with any key risk areas, are given the appropriate focus on the agenda and management also present to the Board on specific matters on a regular basis.
To facilitate independent decision making by the Board, a Directors Only session is scheduled at each Board meeting. This allows directors to deal with a range of matters in the absence of management, including succession planning, remuneration and Board operation and effectiveness. Details of the number of meetings attended by each director are set out on page 25 of this report. Nomination of Directors and Board renewal The Boards Remuneration & Nomination Committee regularly reviews the composition of the Board to ensure that there is an appropriate mix of abilities, experience and diversity of backgrounds. The Committee reviews, at least annually, the collective skills of Non-Executive Directors to determine whether the Board, as a whole, has the
skills required to achieve the Groups strategic and operational objectives and reports the outcome of that assessment to the Board. A copy of Australands policy on the Selection, Appointment and Re-Election of Non-Executive Directors is available for viewing on Australands website. Board evaluation The Board undertakes ongoing self assessment and a formal review is undertaken at the end of each year whereby all directors complete a written Board Evaluation Questionnaire with the objective of identifying any areas for improvement. The results of the Questionnaire are collated by an independent consultant for review by the Chairman and discussion with the Board and individual directors. Recommendations for improvements in Board operations, processes and
practices resulting from the Board evaluation process are referred to the Board for consideration each year. The Board has delegated to the Deputy Chairman responsibility for reviewing the results of the annual performance review of the Chairman to the Deputy Chairman and, following this review, the Deputy Chairman reports back to the other directors. Continuing education Presentations are provided on a regular basis on different aspects of the Groups business. Directors are also encouraged to access external education including director-related courses and industry conferences. Access to information and advice In carrying out their duties and responsibilities, directors have access to the Groups management and they may seek independent professional advice at the companys expense, following consultation with the Chairman. Australand has a Deed of Access with each director that gives them a right of access to all documents provided during their term in office and for seven years after they cease to be a director. Principle 3: Promote ethical and responsible decision making The Board and management are committed to fostering an ethical and transparent culture within Australand. Conduct All directors and employees are expected to comply with the law and act with a high level of integrity. Australand has a Code of Conduct which guides everyday business practice and decision making. The aim of this Code is to promote a high standard of business behaviour and ensure that all directors, executives and other employees are aware of their obligation to treat others with fairness, honesty and respect.
Avoiding conflicts of interest All directors and employees of Australand are required to avoid conflicts of interest, being situations where personal interests conflict or appear to conflict with the interests of Australand. The Board has adopted a protocol for any director who may have a conflict of interest as a result of a material personal interest in a matter before the Board. Directors are required to declare their interests in any dealings between the Group and their related parties. Any director, who has a conflict, or potential conflict, does not receive papers from the Group pertaining to those matters, or participate in any meetings to consider, or vote on the matter giving rise to that conflict. Trading in Australands securities Under the Corporations Act 2001, no person can deal in the securities of a company if they are in possession of information that is not generally publicly available and which a reasonable person would expect to have a material effect on the price or the value of the companys securities. Directors, officers and employees are required to comply with the Securities Trading Policy which is designed to minimise the risk of actual or perceived insider trading. In accordance with this policy, directors, the executive management team, other designated persons and their respective associates may only deal in Australand securities during restricted trading windows. Political donations Australand does not make donations to any political party, or to any candidate seeking election to any Federal, State or Local Government body. Australands policy extends to the payment for attending any function where the proceeds of such function benefit any political party or candidate seeking election to any Federal, State or Local
Government body unless such payment is specifically approved by the Managing Director or relevant Executive General Manager. During the year ended 31 December 2012, Australand did not make any political donations or payments. Diversity In accordance with the ASX Recommendations, the Board established a Diversity Policy and set measurable objectives to achieve its goals with regard to diversity. The Group in 2010 established the following targets with regard to diversity which have been achieved: wherever possible to include two suitably qualified females in the final group of candidates for Non-Executive Director, Executive Management Team and Executive Management Team direct report roles. increase the number of women identified as successors to senior roles to our target level of 25% by 2012; undertake a review of gender remuneration parity across the Group; and undertake a cultural survey, and invest significantly in building our leadership skills and corporate culture. Australand has also established a Diversity Council (chaired by the Managing Director) to further its diversity objectives. The Diversity Policy is available for viewing on Australands website.
The proportion of women employees in the whole organisation, women in senior executive positions and women on the Board is shown below.
Level of role % Female 2012 % Female 2011 % Female 2010
Director Executive Team Senior Successors1 Company

1 Previously referred to as High Potential/High Performance talent (HIPO/HIPE).
25.0 14.3 25.0 29.0
12.5 14.3 19.6 28.1
12.5 14.3 16.0 27.7
Gender by age group of current permanent employees as at 31 December 2012.

Under 20 years Dec 12 M F 20-29 years M F 30-39 years M F 40-49 years M F 50-59 years M F 60 years + M F M Total F
Company total Age split by gender (%) Total age split (%)
5 1 1
0 0
63 11 19
49 8
131 22 35
76 13
126 21 25
22 4
70 12 16
23 4
23 4 4
1 0
418 71
171 29
100
Overall voluntary turnover for permanent employees.

2012 2011 2010
Total company voluntary turnover (%)
12
14
Principle 4: Safeguard integrity in financial reporting The Audit Committee oversees the structure and management systems that ensure the integrity of the Groups financial reporting. The Committee met six times during 2012. An agenda is prepared for each meeting and comprehensive papers are circulated to Committee members before each meeting. Australands external and internal auditors attend meetings on a regular basis and the Managing Director and senior management attend each meeting at the invitation of the Committee chairman. The Board has delegated oversight of the Companys system of internal controls to the Audit Committee. This includes the internal controls in place to deal with both the effectiveness and the efficiency of significant business processes, the
safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information. The Board receives regular and comprehensive reports relating to the financial condition, capital management and operational results of Australand throughout the year. In relation to the half year and annual financial reports, a detailed internal control questionnaire and review process is in place whereby all senior management are required to sign off on financial records, risk management systems and internal control and compliance systems within their areas of responsibility. This process supports the Managing Director and Chief Financial Officer in their declaration to the Board that the internal controls have operated effectively during the period and that the annual financial statements and
notes to the financial statements give a true and fair view of the financial position and performance of Australand. The Audit Committee Terms of Reference is available for viewing on Australands website. External auditor Australands external auditor is PricewaterhouseCoopers (PwC). PwC was appointed by securityholders at the 2004 Annual and General Meetings in accordance with the provisions of the Corporations Act 2001. The Board has a policy whereby the responsibilities of the lead audit engagement partner and the quality review partner cannot be performed by the same people for a period longer than five consecutive years. The Board requires a minimum two year period before an audit partner is allowed back onto the audit team.
The Audit Committee requires that the external auditor confirm every six months that they have maintained their independence and have complied with applicable independence standards promulgated by regulators and professional bodies. The Audit Committee annually reviews the independence of the external auditor and has provided the Board with written advice confirming this assessment. The Audit Committee also periodically meets with the external auditor without management present. A copy of the external auditors certification of independence is set out on page 42 of this report. The external auditor also attends the Annual and General Meetings and is available to answer securityholder questions about the conduct of the audit, the preparation and content of the audit report, the accounting policies adopted by Australand in relation to the preparation of the financial statements, and the independence of the auditor in relation to the conduct of this audit. Principle 5: Make timely and balanced disclosure Australand has policies and procedures in place to ensure compliance with its continuous disclosure obligations under the ASX Listing Rules. The Group has a Market Disclosure Committee comprising the Managing Director, the Chief Financial Officer, the General Counsel and the Company Secretary, with other management being invited to attend at the Managing Directors discretion. Specifically, the Market Disclosure Committee is responsible for ensuring that Australand complies with its disclosure obligations, reviewing information to determine whether it needs to be disclosed to the ASX, implementing and monitoring reporting processes and controls for the release of information.
Australand is committed to providing timely, full and accurate disclosure and to keeping the market fully informed by announcing all material matters to the ASX immediately as required under the ASX Listing Rules, and subsequently to the media. All material releases are posted on Australands website after they are released to the market. During 2012, Australand fully complied with its disclosure obligations under the ASX Listing Rules. The Company Secretary has the primary responsibility for communicating with the ASX in relation to compliance with the Listing Rules. The Communications and Market Disclosure Policy is available for viewing on Australands website. Principle 6: Respect the rights of securityholders Australand respects the rights of its securityholders and is committed to providing a high standard of communication to securityholders so that they have all available information reasonably required to make informed decisions in relation to Australands value and prospects. In accordance with the Communication and Market Disclosure Policy, Australand communicates with securityholders through the following means: Annual Report and Half Year Report; Annual and General Meetings; Securityholder Reviews which incorporate performance highlights, a review of operations and progress against key stated objectives; Releases to the market via the ASX; and The Investor Centre on Australands website www.australand.com.au. Australand encourages securityholders to attend and participate in Annual and General Meetings and respects
securityholders rights to ask questions about the management of the company. If securityholders are not able to attend meetings, they can view the meetings via webcast on Australands website and may vote by appointing a proxy using the form attached to the Notice of Meetings. Principle 7: Recognise and manage risk Risk management and oversight As part of Australands governance framework, the Group has a comprehensive risk management process in place, together with supporting procedures and processes. Australands risk management process seeks to ensure that all risks are properly identified, assessed and managed across the Group, that insurances are adequate and that appropriate policies are in place to guide ethical behaviour on the part of directors and employees. Risk management is an integral part of Australands decision making process and it is also used to assess potential opportunities and to manage potential adverse effects. The Board has ultimate responsibility for risk management across the Group and has delegated specific responsibility to the Risk & Compliance Committee to review the effectiveness of the overall risk management process in place (including the Risk Management Policy, the Risk Appetite and Tolerance Statement and the Risk Management Register) before recommending these to the Board for approval. The Board has delegated authority to the Audit Committee to monitor the processes concerning identification of the financial risk exposures material to the Group and the processes in place to mitigate those risks.
The Risk & Compliance Committee Terms of Reference is available for viewing on Australands website. Risk management process Australand has implemented and maintains a structured and documented process for risk management that is integrated with its business activities and aligned with its strategic and operational planning processes. This process complies in all material respects with the AS/NZS ISO 31000:2009 Risk Management Principles and Guidelines. The Managing Director is accountable to the Board for the development and management of Australands risk management framework and is supported by the General Counsel in terms of adopting appropriate risk management processes, including regular and transparent reporting to the Board, the Risk & Compliance Committee and the Audit Committee (in the case of financial risks). The Managing Director and the Chief Financial Officer provide assurance to the Board that the declaration provided in accordance with section 295A of the Corporations Act 2001 is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks (refer comments under Principle 4). Internal audit function Australands internal audit function focuses on areas of key risk to the organisation. Australands Internal Auditor is Ernst & Young and the work performed by Ernst & Young is supplemented by the Groups Internal Audit Team. Each year the Internal Audit Plan is reviewed and approved by the Audit Committee and internal audit reports are submitted to the Audit Committee on a quarterly basis, with
a copy being provided to the Risk & Compliance Committee. Regular presentations are made to the Audit Committee by the Internal Auditor. Principle 8: Remunerate fairly and responsibly Recommendation 8.1 recommends that an entitys remuneration committee should be structured so that it consists of a majority of independent directors, be chaired by an independent director and have at least three members. As at 26 February 2013, Australands Remuneration & Nomination Committee comprised three members, two of whom were independent directors under the ASX Recommendations. The Chairman of Australands Remuneration & Nomination Committee is Mr Paul Isherwood, AO. Mr Isherwood is independent in accordance with the guidelines for determining independence contained in the ASX Recommendations. The Managing Director attends Remuneration & Nomination Committee meetings at the invitation of the Committees Chairman. The Remuneration & Nomination Committee assists and supports the Board by ensuring that Australand has appropriate remuneration policies and practices in place to enable it to attract, motivate and retain executives and non-executive directors who will manage and direct Australand respectively with the goal of creating and increasing value for securityholders. The Remuneration & Nomination Committee has responsibility for ensuring that executives are fairly and responsibly rewarded having regard to the performance of Australand, the performance of the executive and the general environment for remuneration in Australia. The Remuneration & Nomination Committee also has responsibility for
recommending to the Board the remuneration structure and levels for non-executive directors. The Remuneration & Nomination Committee Terms of Reference is available for viewing on Australands website. Australands Remuneration Report is set out on pages 29 to 40 of the Annual Report. This report explains the structure of, and rationale behind, Australands remuneration principles and practices and outlines the link between the remuneration of employees and Australands performance.
Compliance with ASX Recommendations
Requirement/recommendations
Reference
Compliance
Lay solid foundations for management and oversight Board Governance Document; Policy on Selection, Appointment and Re-election of Non-Executive Directors; Delegations of Authority Remuneration & Nomination Committee Terms of Reference; Remuneration Policy Corporate Governance Statement; Australand website Board Governance Document; Corporate Governance Statement Board Governance Document; Corporate Governance Statement Board Governance Document Comply
1.1 Establish functions reserved to the Board and those delegated to senior executives and disclose those functions
1.2 Disclose the process for evaluating the performance of senior executives 1.3 Provide information indicated in the Guide to reporting on Principle 1 2 Structure the board to add value 2.1 A majority of the Board should be independent directors 2.2 Chair should be an independent director 2.3 Roles of chair and chief executive officer should not be exercised by the same individual 2.4 The Board should establish a nomination committee 2.5 Disclose the process for evaluating the performance of the Board, its committee and individual directors 2.6 Provide the information indicated in the Guide to reporting on Principle 2 3 Promote ethical and responsible decision making
Comply Comply
Comply Do not Comply Comply
Board Governance Document; Remuneration Comply & Nomination Committee Terms of Reference Board Governance Document; Remuneration Comply & Nomination Committee Terms of Reference; Corporate Governance Statement Comply Directors Report; Board Governance Document; Corporate Governance Statement; Australand website Code of Conduct Comply Comply
3.1 Establish a code of conduct and disclose the code or a summary of the code
3.2 Establish a policy concerning diversity and disclose the policy Diversity Policy or a summary of that policy. The policy should include requirements for the Board to establish measurable objectives for achieving gender diversity for the Board to assess annually both the objectives and the progress in achieving them 3.3 Disclose in each annual report the measurable objectives for Corporate Governance Statement achieving gender diversity set by the Board in accordance with the Diversity Policy and progress towards achieving them 3.4 Disclose in each annual report the proportion of women employees in the whole organisation, women in senior positions and women on the Board 3.5 Provide information indicated in the Guide to reporting on Principle 3 4 Safeguard integrity in financial reporting Board Governance Document; Audit Committee Terms of Reference 4.1 Board should establish an Audit Committee Corporate Governance Statement
Comply
Comply
Corporate Governance Statement; Australand Website
Comply
Comply
Requirement/recommendations
Reference
Compliance
4.2 Audit Committee should be structured so that it: Consists only of non-executive directors Consists of a majority of independent directors Is chaired by an independent chair, who is not a chair of the Board Has at least three members 4.3 Audit Committee should have a formal charter 4.4 Provide the information indicated in the Guide to reporting on Principle 4 5 Make timely and balanced disclosure 5.1 Establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or summary of those policies 5.2 Provide the information indicated in the Guide to Reporting on Principle 5 6 Respect the rights of shareholders
Audit Committee Terms of Reference
Comply
Audit Committee Terms of Reference Directors Report; Corporate Governance Statement; Australand website
Comply Comply
Policy on Communication and Market Comply Disclosure; Corporate Governance Statement
Comply Policy on Communication and Market Disclosure; Corporate Governance Statement; Australand Website Comply Policy on Communication and Market Disclosure; Corporate Governance Statement; Australand website Comply Policy on Communication and Market Disclosure; Corporate Governance Statement; Australand Website Risk Management Policy; Risk Appetite and Tolerance Statement; Corporate Governance Statement Risk Management Plan; Risk Appetite and Tolerance Statement; Risk Management Register; Risk & Compliance Committee Terms of Reference; Audit Committee Terms of Reference (financial risk); Corporate Governance Statement Corporate Governance Statement Comply
6.1 Design a communications policy for promoting effective communications with shareholders and encouraging their participation at general meetings and disclose that policy or a summary of that policy 6.2 Provide the information indicated in the Guide to Reporting on Principle 6 7 Recognise and manage risk
7.1 Establish policies for the oversight and management of material business risks and disclose summary of those policies 7.2 Board should require management to design and implement the risk management and internal control system to manage the companys material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the companys management of its material business risks 7.3 Board should disclose whether it has received assurances from the chief executive officer and chief financial officer that the declaration provided in accordance with s295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to the financial reporting risks 7.4 Provide the information indicated in the Guide to Reporting on Principle 7 8 Remunerate fairly and responsibly
Comply
Comply
Risk Management Policy; Risk Appetite and Tolerance Statement; Risk Management Register; Australand website
Comply
8.1 Board should establish a remuneration committee 8.2 The remuneration committee should be structured so that it: Consists of a majority of independent directors Is chaired by an independent chair Has at least three members 8.3 Clearly distinguish the structure of non-executive directors remuneration from that of executive directors and senior executives 8.4 Provide the information indicated in the Guide to Reporting on Principle 8
Board Governance Document; Remuneration Comply & Nomination Committee Terms of Reference Remuneration & Nomination Committee Terms of Reference; Corporate Governance Statement Remuneration Policy Comply
Comply
Directors Report; Remuneration Report; Australand Website
Comply
Directors Report.
Introduction
Australand is a stapled group that comprises Australand Holdings Limited (AHL) and its controlled entities, Australand Property Trust (APT) and its controlled entities, Australand Property Trust No.4 (APT4) and its controlled entities and Australand Property Trust No.5 (APT5) and its controlled entities. AHL, Australand Property Limited (APL) (as the responsible entity of APT and Australand ASSETS Trust (ASSETS) and Australand Investments Limited (AIL) (as the responsible entity of APT4 and APT5) have identical boards of directors. The term (Board) hereafter should be read as references to these boards. A Group stapled security consists of one share in AHL and one unit in each of APT, APT4 and APT5 and these securities trade as one security on the Australian Securities Exchange (ASX) under the code ALZ. Securities in ASSETS trade on the ASX under the code AAZPB.
GOVERNANCE Directors qualifications and experience The Board of Directors present their Report, together with the consolidated Financial Report of AHL and its controlled entities for the year ended 31 December 2012 and the Independent Auditors Report thereon. The Financial Report includes the consolidated entity, represented by AHL and its controlled entities including, APT and its controlled entities, APT4 and its controlled entities and APT5 and its controlled entities (collectively, the Trusts). The names, qualifications and experience of each person holding the position of director of Australand at the date of this Report are: Olivier Lim BEng (Civil) (Honours 1) Term of Office: Non-Executive Director since 18 December 2007 and Chairman from 14 April 2011. Mr Lim was last re-elected at the 2011 Annual and General Meetings and, in accordance with Australands Constitution, is retiring by rotation and standing for re-election in 2013. Independent: No Board Committee membership: Chairman of the Investment Committee Skills and experience: Appointed Group Deputy CEO of CapitaLand Limited on 3 January 2013. Held the position of Chief Investment Officer between February 2012 and January 2013 and was Head of Strategic Corporate Development from August 2011 up until his appointment as Chief Investment Officer. He was Group Chief Financial Officer of CapitaLand Limited between July 2005 and July 2011 and, prior to that, was Deputy Chief Financial Officer. He first joined CapitaLand as Senior Vice President, Corporate Finance in September 2003. Prior to joining the CapitaLand Group, he was Director and Head of Real Estate Unit, Corporate Banking in Citibank, Singapore. He joined Citibank in Singapore in August 1989. Directorships of listed entities within the last three years include: Director of Neptune Orient Lines Limited (appointed 12 April 2012) Director of Raffles Medical Group Limited (appointed 1 October 2009) Director of CapitaMalls Asia Limited (appointed 1 July 2005) Formerly a director CapitaMall Trust Management Limited (the manager of a listed REIT in Singapore) (appointed 1 July 2005, resigned 1 November 2012) Formerly a director of CapitaCommercial Trust Management Limited (the manager of a listed REIT in Singapore) (appointed 1 July 2005, resigned 1 January 2013) Other current Directorships/Offices: Member of the Board of Sentosa Development Corporation Chairman of Mount Faber Leisure Group Pte Ltd (a wholly owned subsidiary of Sentosa Development Corporation)
Directors Report 21
Directors Report (continued)
Paul Dean Isherwood, AO FCA Term of Office: Non-Executive Director since 15 December 2005. Appointed Deputy Chairman and Lead Independent Director on 1 January 2011. Mr Isherwood was re-elected at the 2012 Annual and General Meetings. Independent: Yes Board Committee membership: Chair of the Audit Committee and the Remuneration & Nomination Committee, Member of the Investment Committee Skills and experience: An experienced company director with a strong finance and accounting background. Proven leadership experience from a career with Coopers & Lybrand that spanned 38 years. Held the position of National Chairman and Managing Partner of Coopers & Lybrand (Australia) from 1985 to 1994. Served on the International Board and Executive Committee of the firm from 1985 to 1994. Has extensive corporate governance experience across different industry sectors, and mostly with listed companies. Directorships of listed entities within the last three years include: Chairman of Globe International Limited (appointed 30 March 2001) Other current Directorships/Offices: Nil
Robert William Johnston BEng (Electrical) (Honours 1) Term of Office: Managing Director since 1 August 2007. In accordance with the Companys Constitution, the Managing Director is exempt from retirement by rotation in accordance with clause 12.28. Independent: No Board Committee membership: Member of the Investment Committee. Attends all other Board Committee meetings by invitation. Skills and experience: Mr Johnston was appointed Managing Director of Australand in August 2007 and has extensive experience in the property sector. He has been involved in all facets of the sector including Funds Management, Property Development, Project Management and Construction. Prior to joining Australand, Mr Johnston spent 20 years with the Lend Lease Group in various roles in Australia, Asia, US and the UK. Directorships of listed entities within the last three years include: Nil Other current Directorships/Offices: Director of Property Industry Foundation Beth May Laughton BEc, FCA, FAICD Term of Office: Non-Executive Director since 7 May 2012. In accordance with Australands Constitution, Ms Laughton will stand for election in 2013.
Independent: Yes Board Committee membership: Member of the Audit Committee. Skills and experience: Ms Laughton is a chartered accountant with a strong background in corporate finance, having held senior roles at Wilson HTM, TMT Partners, KPMG, HSBC Securities and Ord Minnett, where she provided merger and acquisition advice and arranged equity funding across a range of industries. Directorships of listed entities within the last three years include: Director of JB Hi-Fi Limited (appointed May 2011) Other current Directorships/Offices: Director of CRC CARE Pty Ltd Member of the Defence SA Advisory Board Lui Chong Chee BSc, MBA Term of Office: Non-Executive Director since 11 December 2001 and Chairman between 1 June 2007 and 14 April 2011. Mr Lui was re-elected at the 2012 Annual and General Meetings. Independent: No Board Committee membership: Member of the Remuneration & Nomination Committee. Skills and experience: Currently Chief Financial Officer of Raffles Medical Group Limited. He previously held the position of CEO, CapitaLand Financial Limited up until his resignation on 31 May 2010. During his time with CapitaLand Limited, Mr Lui held a succession of senior financial and operational management positions
across the Group. Prior to joining the CapitaLand Group, he was Managing Director of Citicorp Investment Bank (Singapore) Limited. He joined Citibank, Singapore in July 1986. Directorships of listed entities within the last three years include: Formerly a director of: CapitaRetail China Trust Management Limited (appointed 1 June 2008, resigned 1 June 2010) CapitaCommercial Trust Management Limited (appointed 1 July 2008, resigned 1 June 2010) CapitaMall Trust Management Limited (appointed 24 November 2008, resigned 23 February 2010) All of the above are managers of listed REITs in Singapore Other current Directorships/Offices: Nil Nancy Jane Milne, OAM LLB Term of Office: Non-Executive Director since 1 October 2010. Ms Milne was elected at the 2011 Annual and General Meetings. Independent: Yes Board Committee membership: Chair of the Risk & Compliance Committee and Member of the Remuneration & Nomination Committee Skills and experience: An experienced company director with extensive business experience. Formerly a partner and consultant at Clayton Utz, specialising in the areas of insurance and risk. Was Chairperson of Australands Risk & Compliance Committee between 2003 and 2009.
Directorships of listed entities within the last three years include: Director of Commonwealth Property Office Fund (appointed 1 January 2009) Director of CFS Retail Property Trust Group (appointed 1 January 2009) Other current Directorships/Offices: Director of Colonial Mutual Life Assurance Society Limited Director of Commonwealth Insurance Limited Director of Commonwealth Managed Investments Limited Chair of Securities Exchanges Guarantee Corporation Limited Stephen Eric Newton BA (Econ & Actg), CA, MCom Term of Office: Non-Executive Director since 18 December 2007. Mr Newton was last re-elected at the 2011 Annual and General Meetings and, in accordance with Australands Constitution, is retiring by rotation and standing for re-election in 2013. Independent: Yes Board Committee membership: Member of the Investment Committee and the Risk & Compliance Committee Skills and experience: An experienced company director in the real estate and infrastructure sectors. Currently Joint Managing Director and co-founder of Arcadia Funds Management Limited. Prior to establishing the Arcadia Group in December 2002, he was a senior executive with the Lend Lease Group, a member of its global senior executive management group and a director of a number of Lend Lease entities and managed funds (November 1980 to
December 2002). Has over thirty years experience in the real estate sector both in Australia and internationally with extensive involvement in all aspects of asset management, development management, real estate investment management and mergers, acquisitions and dispositions of publicly listed and private (wholesale) real estate investment trusts and companies. Directorships of listed entities within the last three years include: Nil Other current Directorships/Offices: Director of Newcastle Airport Limited Advisory Board Member representing Alberta Investment Management Corporation (Canada) for Forestry Investment Trust Director of Broadcast Australia Group Director of Athllon Trustees Pty Limited Director of University of Notre Dame Australia Member of the Finance Committee and Property Committee for the Catholic Archdiocese of Sydney Robert Edward Prosser MA, FCA, MAICD, SA Fin Term of Office: Non-Executive Director since 9 February 2011. Mr Prosser was elected at the 2011 Annual and General Meetings. Independent: Yes Board Committee membership: Member of the Audit Committee and the Risk and Compliance Committee
Directors Report 23
Skills and experience: Mr Prosser has a strong finance and accounting background having retired in June 2008 as a Partner of PricewaterhouseCoopers (PwC) where he was responsible for due diligence in relation to mergers, acquisitions, equity raisings and divestments. At the time of his resignation, he was chair of PwCs public reports panel, with responsibility for the quality control of all public documents and liaison with regulators. Directorships of listed entities within the last three years include: Moly Mines Limited (appointed 20 October 2010, resigned 22 December 2011) Other current Directorships/Offices: Director of National Breast Cancer Foundation
COMPANY SECRETARIES Company secretaries of the Board in office at the date of this report, and each company secretarys experience and qualifications are as shown below. Beverley Ann Booker (Group Company Secretary) BBus, FCPA, FCIS, FAICD, Company Directors Advanced Diploma Ms Booker was appointed Company Secretary of AHL, APL and AIL on 25 October 2006. Ms Booker joined Australand as Group Company Secretary in October 2006. Her previous positions included Group Company Secretary/General Manager Risk & Compliance for the Australian Agricultural Company Limited and Group Company Secretary of AMP Limited. Ms Booker has over 25 years experience across a wide range of business areas including governance, compliance, risk management and strategic and operational planning.
Michael Bowden Newsom (General Counsel) BA, LLB, FCIS Mr Newsom was appointed a Company Secretary of AHL on 13 March 2001, APL on 29 January 2004 and AIL on 27 October 2005 and acts as Company Secretary in Ms Bookers absence. Mr Newsom joined Australand in August 2000 as General Counsel. He is also responsible for Corporate Risk Management. Prior to joining Australand, Mr Newsom held positions of Company Secretary and General Counsel for Pioneer International Limited and Ampol Limited. He has over 30 years experience in commercial and corporate law, dispute resolution, capital markets, mergers and acquisitions and corporate administration both in private legal practice and in large publicly listed companies across the property, building materials, petroleum and financial services sectors.
Meetings of Directors The number of meetings of directors (including committee meetings) held during the year and the number of meetings attended by each director or committee member is as follows:
Audit Committee Investment Committee Remuneration & Nomination Committee Risk & Compliance Committee
Director
Board
Olivier Lim (Chairman) Paul Dean Isherwood (Deputy Chairman and Lead Independent Director) Bob Johnston Beth Laughton Lui Chong Chee Nancy Milne Stephen Newton Bob Prosser
12
(13)
(5)
(1)
12 13 8 12 12 13 13
(13) (13) (10) (13) (13) (13) (13)
5 4
(6) (4)
1 1
(1) (1)
(4)
4 4 1 6 (6) (1)
(4) (4) 5 5 5 (5) (5) (5)
Notes: 1 Figures in brackets indicate the number of meetings held during the time the director held office or was a member of the Board or the Board Committee during the year. 2 There were 4 Board Sub-Committee meetings held during the year and 1 Remuneration & Nomination Sub-Committee meeting. 3 Mr Bob Johnston is a member of the Investment Committee and attends all other Committee meetings by invitation. 4 Mr Olivier Lim stepped down as a member of the Audit Committee with effect from 30 September 2012. 5 Ms Beth Laughton was appointed as a Non-Executive Director of the Boards of AHL, APL and AIL and as a member of the Audit Committee on 7 May 2012.
Directors interests in securities, contracts and other directorships Since 31 December 2011, no director or an associate of a director, has received or become entitled to receive a benefit (other than a benefit included in the total amount of emoluments received or due and receivable by directors or their associates shown in the consolidated financial statements) because of a contract that the director, or a firm of which the director is a member, or an entity in which the director has a substantial interest has made (during that, or any other, financial year) with Australand or an entity that Australand controlled, or a body corporate that was related to Australand when the contract was made or when the director or associate received or became entitled to receive the benefit.
OPERATIONS Principal activities During the year, the principal activities of Australand were: investment in income producing commercial and industrial properties; commercial and industrial property development; residential development (including land, housing and apartments); property trust management; and property management. There were no significant changes in the nature of Australands activities during the year. Review and results of operations Refer to the Business Review on pages 6 to 11 of this report.
Directors Report 25
Dividend/distributions Dividends paid or declared by AHL and distributions paid or declared by APT, APT4 and APT5 to securityholders since the end of the previous financial year were as shown in the table below:
Date Total distributions Distributions Dividends Total amount $000 Date of payment
Final 2011 Interim 2012 Final 2012
11.0 10.5 11.0
11.0 10.5 11.0
63,452 60,569 63,453
16 February 2012 7 August 2012 8 February 2013
Significant changes in state of affairs There were no significant changes in the state of affairs of Australand during the financial year. Future developments and results While market conditions are expected to remain challenging, the Group expects to deliver further growth in operating earnings per security for 2013. This outlook is supported by: fixed increases in rental income from the Investment Property portfolio and the expectation of successfully leasing up unlet space at 357 Collins Street and Rhodes F; a solid forward workload in the Commercial & Industrial division, coupled with improving enquiry and low vacancy levels in the industrial sector and the strength of demand from investors for quality product; and an increase in the level of contracts on hand in the Residential division, together with a low interest rate environment and diversity of product in our development pipeline. The Group does, however, expect that first half earnings in 2013 will be less than first half earnings in 2012 due to the timing of settlements of Residential built form projects and the delivery of the Commercial & Industrial forward workload being skewed to the second half of the year. Distributions for 2013 are expected to be maintained at 21.5 cents per
security as the Group continues to take a prudent approach to capital management. This outlook is subject to market conditions not deteriorating and excludes the potential impact that might arise as a result of any corporate activity. Events subsequent to balance date On 3 January 2013, Australands majority securityholder, CapitaLand Limited, announced its intention to conduct a strategic review of its investment in Australand. Australand has appointed financial and legal advisers to assist it in establishing whether any proposal arising from CapitaLands review can be developed that is in the interests of all Australand securityholders. Australands management and advisers are working with CapitaLand in this process, however, there is no guarantee that any proposal will be forthcoming. Other than the matter referred to above, there have been no significant events or transactions that have arisen since the end of the financial year, which in the opinion of the directors, would affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity. Environmental regulation Australand undertakes property development in New South Wales, Victoria, Queensland, Western Australia and South Australia. It is subject to the
respective state legislation regulating the development of land. Consents, approvals and licences are generally required for all developments and it is usual for such approvals and licences to be granted subject to conditions. Australand complies with these requirements by ensuring that all necessary consents, approvals and licences are obtained prior to any project being commenced, and the consents, approvals and licences are implemented in order to ensure compliance with these conditions. Other Indemnification and Insurance of Officers AHL Clause 20 of AHLs Constitution provides: Every person who is or has been: a) a director of the Company; b) a secretary of the Company; or c) an executive officer of the Company is entitled to be indemnified out of the property of the Company against: every liability incurred by the person in that capacity (except a liability for legal costs); and all legal costs incurred in defending or resisting (or otherwise in connection with) proceedings, whether civil or criminal or of an administrative or investigatory nature, in which the person becomes involved because of that capacity, unless:
the Company is forbidden by statute to indemnify the person against the liability or legal cost; or an indemnity by the Company of the person against the liability or legal costs would, if given, be made void by statute. The Company may pay or agree to pay, whether directly or through an interposed entity, a premium for a contract insuring a person who is or has been a director or secretary or executive officer of the Company against liability incurred by the person in that capacity, including a liability for legal costs unless: a) the Company is forbidden by statute to pay or agree to pay the premium; or b) the contract would, if the Company paid the premium, be made void by statute. The Company may enter into an agreement with a person referred to above with respect to matters covered by this Clause. An agreement entered into pursuant to this Clause may include provisions relating to rights of access to books of the Company conferred by the Corporations Act 2001 or otherwise by law. The Company has executed deeds of access, insurance and indemnity in terms of Clause 20 in favour of each director and secretary of the Company and executive officers of the Company who act as directors of a related body corporate of the Company. During the year, the Company, pursuant to Clause 20, paid a premium for a contract insuring all directors, secretaries, executive officers and officers of the Company and of each related body corporate of the Company. The insurance does not provide cover for the independent auditors of the Company or of a related body corporate of the Company.
In accordance with usual commercial practice, the insurance contract prohibits disclosure of details of the liabilities covered by the insurance, the limit of indemnity and the amount of the premium paid under the contract. No part of the premium has been included in directors or other key managements remuneration in the Remuneration Report. APT Clause 18 of APTs Constitution provides: The Manager is entitled to be indemnified out of the assets of the Trust for any liability incurred by it in properly performing or exercising any of its powers or duties in relation to the Trust. To the extent permitted by the Corporations Act 2001, this indemnity includes any liability incurred as a result of any act or omission of a delegate or agent appointed by the Manager. This indemnity is in addition to any indemnity allowed by law. It continues to apply after the Manager retires or is removed from the office it holds in relation to the Trust. APL in its capacity as the responsible entity of APT has executed deeds of access, insurance and indemnity in terms of Clause 18 in favour of each director of the Company. APT4 Clause 19 of APT4s Constitution provides: The Manager is entitled to be indemnified out of the assets of the Trust for any liability incurred by it in properly performing or exercising any of its powers or duties in relation to the Trust. To the extent permitted by the Corporations Act 2001, this indemnity includes any liability incurred as a result of any act or omission of a delegate or agent appointed by the Manager. This indemnity is in addition to any
indemnity allowed by law. It continues to apply after the Manager retires or is removed from the office it holds in relation to the Trust. AIL in its capacity as the responsible entity of APT4 has executed deeds of access, insurance and indemnity in terms of Clause 19 in favour of each director of the Company. APT5 Clause 20 of APT5s Constitution provides: The Manager is entitled to be indemnified out of the assets of the Trust for any liability incurred by it in properly performing or exercising any of its powers or duties in relation to the Trust. To the extent permitted by the Corporations Act 2001, this indemnity includes any liability incurred as a result of any act or omission of a delegate or agent appointed by the Manager. This indemnity is in addition to any indemnity allowed by law. It continues to apply after the Manager retires or is removed from the office it holds in relation to the Trust. AIL in its capacity as the responsible entity of APT5 has executed deeds of access, insurance and indemnity in terms of Clause 20 in favour of each director of the Company. Auditor PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001. Non Audit Services Details of the non audit services undertaken by the Groups external auditor, PricewaterhouseCoopers, including the amounts paid or payable to the external auditor for non audit services, are set out on page 28 of this report and in Note 5 to the financial statements.
Directors Report 27
In accordance with advice received from the Audit Committee, the directors are satisfied that the provision of non audit services during the year to 31 December 2012 by the external auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied because the Audit Committee has, having regard to auditor independence requirements of applicable laws, rules and regulations, concluded that in respect of each non audit service that the provision of such service would not impair the independence of the external auditor.
2012 $ 2011 $
Auditors remuneration: During the year, the following fees were paid or payable for services provided by the auditor of Australand Holdings Limited and its controlled entities: Assurance services 1. Audit services Fees paid or payable to PricewaterhouseCoopers Australian firm: Audit and review of financial reports and other audit work under the Corporations Act 2001 Subsidiary financial statement audits Total remuneration for audit services 2. Other assurance services Fees paid or payable to PricewaterhouseCoopers Australian firm: Audit related Accounting advice/assistance Audit of regulatory returns Compliance plan audit services IT Controls review Taxation services Taxation services Other services Agreed upon procedures Remuneration Advice Total remuneration for other assurance services Total auditors remuneration 18,000 20,400 358,670 1,183,470 25,000 11,500 278,340 1,082,040 51,000 41,390 130,920 49,350 89,000 12,000 126,000 47,450 15,000 790,000 34,800 824,800 765,000 38,700 803,700
Rounding amounts Australand is an entity of the kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the rounding off of amounts in the Directors Report and Consolidated Financial Report. Amounts in the Directors Report and Consolidated Financial Report have been rounded off to the nearest thousand dollars in accordance with that Class Order.
Remuneration Report
MESSAGE FROM THE BOARD The Board is committed to ensuring Australands remuneration framework: is aligned with our business objectives and performance; attracts and retains executives with the skills and experience required to deliver the Groups strategy; and delivers appropriate performance-based reward to executives. We review and consider enhancements to our remuneration framework on a regular basis to ensure it remains appropriate. While we continue to believe the remuneration structure is appropriate, we enhanced the structure during 2012 through the introduction of a clawback mechanism for unvested awards, adjusted our short-term incentive (STI) financial targets and re-weighted the financial and non-financial components of STI awards. These changes will be effective from 1 January 2013. At the 2012 Annual and General Meetings, the 2011 Remuneration Report received a 92% vote in favour of its adoption. While this was a strong endorsement of our remuneration practices we continue to engage with our larger investors on remuneration matters and shareholder advisory groups during 2012. Their feedback has been taken into account in our consideration of broader external advice. We have made some changes to this years Remuneration Report to improve its presentation and readability, and to better highlight how remuneration policies and outcomes at Australand are aligned with long term securityholder interest. 1. GLOSSARY OF KEY TERMS USED IN THIS REPORT
ACE EGM EPS EVA Gearing Ratio KPI LTI LTIFR NED NOPAT PRP ROACE ROE ROIC STI TFR TSR WACC Average Capital Employed Executive General Manager Earnings Per Security Economic Value Added is a measure of the amount by which earnings exceed (or fall short of) the required rate of return for securityholders or lenders at a similar level of risk Interest bearing debt/total tangible assets (cash adjusted), based on the drawn amount of debt excluding fair value adjustments and associated derivative financial instruments Key Performance Indicator Long-term Incentive Lost Time Injury Frequency Rate Non-Executive Director Net Operating Profit After Tax Performance Rights Plan Return on Average Capital Employed Return on Equity Return on Invested Capital Short-term Incentive Total Fixed Remuneration Total Securityholder Return Weighted Average Cost of Capital
Directors Report 29
2. WHO THIS REPORT COVERS This Report sets out the remuneration policies and outcomes for the Key Management Personnel (KMP) of the Group. KMP are defined as those who have the authority and responsibility for planning, directing and controlling the Groups activities, either directly or indirectly, including directors. For this Report, the KMP are:
Non-Executive Directors Olivier Lim Paul Isherwood, AO Nancy Milne, OAM Stephen Newton Lui Chong Chee Bob Prosser Beth Laughton
1
Chairman Deputy Chairman and Lead Independent Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director
Executive Director Bob Johnston Other KMP Kieran Pryke Rod Fehring Sean McMahon
1 Beth Laughton joined the Board on 7 May 2012.
Managing Director
Chief Financial Officer Executive General Manager Residential Executive General Manager Commercial & Industrial
3. REMUNERATION PRINCIPLES Remuneration is set at levels to ensure the Group has market competitive access to the skills and capabilities it needs to operate successfully. The following are the principles of the remuneration framework. Remuneration is: Competitive: Fixed remuneration is positioned at levels to attract and retain suitably qualified and experienced executives. Total potential remuneration (fixed and at risk) is targeted at the third quartile of market levels. Performance Linked: Short-term and long-term incentive plans are predominantly focussed on assessment of Group financial performance. A component of the short-term incentive plan relates to personal performance against defined criteria. Aligned with securityholder interests: At least 50% of STI measures are financial, reflecting Group performance. The entire LTI plan is based on economic return and relative securityholder return metrics. Transparent: Remuneration structure and principles are designed to be clearly understood by both employees and securityholders.
4. REMUNERATION SUMMARY FOR 2012 a) Changes to executive remuneration structure during 2012 (which will have effect from 1 January 2013) We have continued to review the remuneration structure to further align it with securityholder interests. Changes to the executive remuneration structure are summarised in the table below and will take effect from 1 January 2013. We believe these changes will further strengthen the alignment between executive reward, Group performance and securityholder interests by: increasing the weighting of reward aligned with financial performance; increasing the weighting on Return on Equity by removing ACE as an STI target; introducing a scaling factor for the STI driven by the Groups Gearing Ratio; and introducing a clawback provision for deferred STI or unvested LTI awards.
STI
Commentary
The weighting of financial and operational targets in the STI Plan has been changed from 60/40 to 70/30 for the 2013 year and beyond
The greater weighting to financial performance better aligns with securityholder interests by increasing the reward associated with annual financial performance, while still retaining an appropriate allocation towards operational targets. The targets for the Managing Director and Chief Financial Officer will be: Group EPS 40%; Group ROE 30%; and Operational Targets 30%. For the two EGMs the targets will be weighted 35% to Group EPS; 35% to the financial performance of their divisions; and 30% to operational targets. It is considered that ROE as a target for the STI plan is better aligned with securityholder interests than ACE because ROE includes the effect of gearing and interest rates in the return to securityholders. The Group Gearing Ratio will reduce STI awards for the Managing Director and other KMP if the Group Gearing exceeds Board established targets. If gearing is above the maximum defined by the Board the STI awards may be reduced to zero.
Commentary
The removal of ACE as a target with a corresponding increase in the allocation to ROE Introducing a Group Gearing Ratio scaling factor to STI awards
LTI & Deferred STI
A clawback provision will apply to the deferred component of any STI award and/or any unvested LTI grant
The Board may apply the clawback provision when there has been: i. serious fraud or misconduct by an executive; or ii. a material misstatement of financial results.
b) 2012 incentive award outcomes

STI Commentary
The average 2012 STI award for the Managing Director and other KMP was 59.5% of maximum
LTI
Please refer to the detail on 2012 STI awards in Section 6 of this Report.
Commentary
Performance against the 2010 PRP targets resulted in 58.98% of the maximum award vesting
Please refer to the detail on the 2010 PRP awards in Section 6 of this Report.
c) Actual remuneration received in 2012 Detailed statutory remuneration tables, prepared in accordance with the Groups obligations and with Accounting Standards, can be found in Section 10 of this Report. To provide securityholders with additional information the following table provides a summary of the actual remuneration received by the Managing Director and the other KMP relating to 2012. It includes TFR and the cash STI payments that relate to performance in 2012 (but are payable in 2013). It further shows the performance rights that vested on 31 December 2012 as a result of the 2010 PRP and the 2012 STI deferral into performance rights for the Managing Director and the other KMP. The 2011 STI deferred performance rights noted in last years Annual Report will vest to the other KMP in March 2013, and to the Managing Director in March 2014.
Total 2012 cash remuneration $000 2010 PRP: No. of vested performance rights2 2012 STI deferral: No. of performance rights3
TFR $000
STI $000
Other1 $000
Managing Director and other KMP Bob Johnston Kieran Pryke Rod Fehring Sean McMahon 1,350 735 760 760 834 329 312 310 10 3 7 2 2,194 1,067 1,079 1,072 231,320 80,980 80,980 83,870 66,382 26,184 24,804 24,669
1 Includes reimbursement of Death & TPD insurance premiums. 2 Allotted in March 2013. 3 Deferred for 2 years for Mr Johnston and 1 year for Messrs Pryke, Fehring and McMahon.
Directors Report 31
5. REMUNERATION GOVERNANCE The Remuneration & Nomination Committee is a Committee of the Board. Its objective is to ensure that the remuneration policies and structures are fair and competitive and aligned with the long term interests of the Group. During 2012 advice on market practice relating to remuneration structure for executives in ASX 100 and A-REIT companies was obtained from PricewaterhouseCoopers (PwC). This advice did not constitute a remuneration recommendation as defined by the Corporations Act 2001. The fees paid to PwC for this advice were $25,150 (excluding GST).
6. EXECUTIVE REMUNERATION FRAMEWORK Australands executive remuneration framework consists of total fixed remuneration, short-term incentives and long-term incentives. The mix between these three components for particular roles varies and is based on benchmarking to industry and business scale comparators. Executive Remuneration Mix To ensure that executive remuneration is aligned to Group performance a significant portion of executives target remuneration is at risk. Remuneration is linked to performance through the STI and LTI plans. The variable or at risk remuneration structure is designed to align executives remuneration with the success or otherwise of the Groups strategy by assessing specific performance against defined targets derived from the Groups strategic goals. In 2012, the variable component of remuneration for the Managing Director and other KMP comprised both short-term and long-term incentives. Performance is assessed over one year for the STI and over three years for the LTI against the measures as defined later in this Section 6. There have been no changes to the executive remuneration mix over the past twelve months. The remuneration mix for the year to 31 December 2012 was:
Managing Director Other KMP

0%
33% 41%
20% 40%
32% 31%
60%
8% 8%
27% 20%
100% 120%
TFR STI cash
STI deferred LTI
80%
Each component is discussed in more detail below. a) Total fixed remuneration TFR is the non-variable component of remuneration and encompasses base salary, superannuation contributions, insurance premiums and provision of vehicles. The reimbursement of insurance premiums by the Group has been discontinued effective 1 January 2013. The level of fixed remuneration reflects the role, responsibilities and experience of the executive. When necessary, it is benchmarked using commercially available industry salary surveys or by obtaining specific market data of various comparator groups (the REIT sector and companies with similar market capitalisation, similar revenue streams or similar asset backing), provided by external advisers. Where required, the reports from these external advisers are provided directly to the Chairman of the Committee. Remuneration of the Managing Director and the other KMP was last independently benchmarked to market at the end of 2010. Market conditions over the past two years have been subdued and no increases in TFR have been made for the Managing Director and other KMP in either 2012 or for 2013. b) Short-term incentive Executives participate in a formal STI plan which assesses performance against pre-determined KPIs over the financial year. The financial and non-financial measures against which the STI is assessed are set at the beginning of the year, with the 2012 measures described in the table below. In 2012 the STI was weighted 60% to financial metrics and 40% to operational measures. It has been decided that for future years this weighting will change to 70% financial and 30% operational for the Managing Director and other KMP. It is believed that this re-weighting better aligns executives with securityholders while still allowing sufficient weighting to make the operational metrics meaningful.
The STI is awarded in cash with 20% of the STI awards for the Managing Director and other KMP deferred and applied to performance rights over Australand stapled securities over the deferral period, being two years for the Managing Director and one year for the other KMP. These are forfeited if the participant voluntarily leaves the Group (i.e. in circumstances other than redundancy, retirement, death or permanent disability). Participants in the deferral scheme receive the half-yearly and annual distributions on an equivalent number of securities during the deferral period. The table below provides an overview of the achievement against the STI targets for the 2012 financial year. How STI was linked to performance in 2012 The following table provides a summary of the assessment of the Managing Directors award under the 2012 STI Plan. While the metrics for other KMP were broadly the same, some role specific targets may have been different to those below.
Measure Rationale/strategic driver Commentary on Managing Directors 2012 Achievement
Financial 60% of award Operating EPS ROE Operating EPS is the key market metric used to assess operating performance ROE captures asset valuation movement and earnings per share relative to Net Tangible Assets To align focus on the efficient use of capital Improved performance against severity rate and LTIFR targets; Personal visibility and leadership of safety and sustainability initiatives Evidence of progress against strategic initiatives Creation of a more values-aligned culture; Build leadership capabilities; Increased capability in those identified as successors Development divisions ROACE targets met; Assessment of opportunities to reposition the Group in the marketplace Managing Directors 2012 STI Operational award was 28% out of a possible 40% Managing Directors 2012 STI Financial award was 49% of a possible 60% award
ACE Operational 40% of award Safety & Sustainability
Strategy People
Performance
c) Long-term incentive Performance Rights Plan (PRP) The PRP aligns rewards for executives with securityholder returns. The PRP provides the Managing Director, the other KMP, the executive team and their direct reports with performance rights over Australand stapled securities, which may vest into securities at the end of a three year performance period, subject to achievement against two performance targets. i.2012 PRP: Details of performance rights issued in 2012 are included in Section 10 of this report. The 2012 PRP assesses Australands performance over a three year performance period commencing 1 January 2012 against: ROIC compared to the Groups WACC (60% of potential award); and TSR relative to the ASX A-REIT 200 Index (40% of potential award). Performance against each metric is assessed on a sliding scale as defined below.
Directors Report 33

Relative TSR: Australands TSR will be assessed against the A-REIT Index TSR on an un-weighted basis over the performance period. The un-weighted basis for assessment of performance removes the influence of the larger market capitalisation of other members of the A-REIT Index, providing an appropriate basis on which to gauge the Groups performance against competitors. The proportion of the PRP award (40%) that vests will be determined based on Australands TSR relative Index ranking. It will be determined as follows: if TSR is less than the 50th percentile: no award; if TSR equals the 50th percentile: 20% of the PRP award vests; if TSR performance is between 50th and 75th percentiles: straight line vesting from 20% to 40% of the PRP award; and if TSR is above the 75th percentile: the award is capped at 40%. This is shown graphically below:
ROIC: ROIC is defined as earnings before interest and tax (including asset revaluations) divided by total assets less cash. ROIC will have to equal or exceed the Groups WACC for any award to vest. The WACC at the commencement of the performance period will be determined by the Board. The proportion of the PRP award (60%) that vests as a result of ROIC performance during the performance period will be determined as follows: if ROIC is less than WACC: no award; if ROIC equals WACC: 30% of the PRP award vests; if ROIC is up to 10% greater than WACC: straight line vesting from 30% to 60% of the PRP award; and if ROIC is in excess of 10% greater than WACC: the award is capped at 60%. This is shown graphically below:
Portion of PRP that vests
Portion of PRP that vests
60%
40%
30%
20%
0% 0.90
(i.e. ROIC = WACC)
1.00
1.05
1.10
1.20
0%
50th percentile
75th percentile
ROIC/WACC
TSR relative to A-REIT Index ranking
ii. How LTI vesting in 2012 (2010 PRP) was linked to performance The 2010 PRP assessed TSR performance from 1 January 2010 to 31 December 2012, and EVA performance for each of the three years of the Plan. The Australand thirty day volume weighted average security price at the start of the Plan was $2.55, and at the end of the Plan was $3.14. The 2010 PRP was assessed against the following measures: Absolute TSR: maximum award if TSR was 18% per annum or above. Achieved 17.98% per annum. Relative TSR against the ASX 200 Accumulation Index: maximum award if Australand TSR was greater than 10% above the Index. Australand TSR was 53.95% compared to Index TSR of 0.4% over the three year period. The 2012 EVA target was based on a WACC of 9.1%. The EVA outcome in 2012 was below the target level and hence there was no award against the EVA measure. The 2010 PRP was the last PRP to include an EVA measure.
2010 PRP performance While the levels of participation in the PRP vary with seniority, the vested percentage of the PRP award applies to all participants equally.
Measure Target Achieved? Award Vested Award Forfeited
Absolute TSR 25% of total potential award Relative TSR 25% of total potential award EVA 50% of total potential award: 2010 16.67% 2011 16.67% 2012 16.67% Total 2010 PRP Award %
Partially Yes Partially No No
24.94% 25% 9.04% 0% 0% 58.98%
0.06% 0 7.62% 16.67% 16.67% 41.02%
The Managing Director was granted 392,2001 Performance Rights under the 2010 PRP following securityholder approval at the 2010 AGM. The 58.98% vested award delivers the Managing Director a 2010 PRP award of 231,320 stapled securities. Individual holding details in the PRP for the Managing Director and other KMP are provided in Note 24 of the financial statements.
7. HOW GROUP PERFORMANCE HAS INFLUENCED REMUNERATION OUTCOMES Remuneration is structured to provide an appropriate and market bench-marked total fixed remuneration component complemented by the opportunity to earn additional remuneration by way of both short-term and long-term incentive plans. Awards under these plans are driven by both Group and individual performance. The table below shows the relationship between NOPAT and the 3 year rolling TSR and the STI awards received by the Managing Director and other KMP over the past five years. The 3 year rolling TSR has been used as it is consistently used as a measure in the LTI Plan each year.
2008 2009 2010 2011 2012
NOPAT ($m) 3 year rolling TSR (%) STI (% of maximum) LTI (% vested)
175 (62.9) 59 0
120 (47.6) 49 17
128 (56.0) 87 9
135 161.3 59 59
142 54 59 59
While some commentators may desire a perfect alignment between at risk remuneration awards and Group financial metrics in each year, the longer term investment horizon in the industry makes this an unrealistic expectation. Within this context the Committee believes that rewarding performance in any one year, based on the STI targets established by the Committee at the start of that year, balanced with a longer term assessment conducted under the LTI, is the appropriate methodology.
1 Adjusted for the 2010 1 for 5 security consolidation.
Directors Report 35
8. EMPLOYMENT CONDITIONS Employment conditions are banded for executive levels, with more senior staff having higher levels of potential STI award and participation in the LTI. The employment conditions (including TFR) for the Managing Director and other KMP are summarised below.
2012 TFR STI Max (%TFR) LTI Opportunity (%TFR) Notice period/termination benefits
Bob Johnston Managing Director $1,350,000 120% 80% Voluntary termination Notice period 6 months with entitlements as follows: TFR during any unexpired period of notice. STI and LTI entitlements up to the date of termination. STI and LTI entitlements for any payment in lieu of notice period will be at the discretion of the Board. Involuntary termination Notice period 12 months with entitlements as follows: TFR for the period of notice. STI entitlements up to end of notice period. LTI entitlements up to date of termination. In addition to the above, in the case of redundancy, an additional one months TFR for each year of service up to a maximum of six months TFR. Three months notice or payment in lieu. In addition, in the case of redundancy: one month per year of service, up to a maximum of six months TFR1; and prorated entitlements under the STI and LTI schemes. Three months notice or payment in lieu. In addition, in the case of redundancy: one month per year of service, up to a maximum of six months TFR1; and prorated entitlements under the STI and LTI schemes. Three months notice or payment in lieu. In addition, in the case of redundancy: six months TFR1; and prorated entitlements under the STI and LTI schemes.
Kieran Pryke CFO $735,000 94.5% 50%
Rod Fehring EGM, Residential $760,000 94.5% 50%
Sean McMahon EGM, Commercial & Industrial and Investment Property $760,000 94.5% 50%
1 For retention purposes, entitlements in the case of redundancy have been increased to 12 months TFR for 2013 only.
9. NON-EXECUTIVE DIRECTORS NED fees are set at a level to attract and retain suitably qualified and experienced directors to oversee the functioning of the Group on behalf of securityholders. They are determined taking account of the size and complexity of the Australand business. The NED fee policy states that an external review of fees will be undertaken every second year with a CPI adjustment in the alternate years. NEDs do not participate in any incentive scheme nor receive any performance based remuneration or termination benefits. Securityholders, at the 2007 Annual and General Meetings, approved an aggregate fee pool for NED remuneration of $1.5m. During 2012 the total fees paid to the directors was $1.21m. In line with the fee policy, the NED fees were adjusted for CPI increases at the beginning of 2012. NED fees will be kept at the current levels for 2013. The fees effective from 1 January 2012 (with 2011 comparisons) were:
Audit Committee $ Risk & Remuneration Compliance & Nomination Committee Committee $ $ Investment1 Committee1 $
Base Fee Position Year $
Chairman Deputy Chairman Non-Executive Directors Committee Chairman Committee Members
2011 2012 2011 2012 2011 2012 2011 2012 2011 2012
258,750 266,800 161,000 166,000 115,000 118,600
36,000 37,100 18,000 18,600
36,000 37,100 18,000 18,600
36,000 37,100 18,000 18,600
1 Investment Committee fees of $3,100 are paid on a per meeting basis.
Directors Report 37
10. STATUTORY REMUNERATION DISCLOSURES
a) Remuneration tables Remuneration of KMP:
2012
Short-term employee benefits Fees/Cash Salary Superannuation $

2
Post employment benefits Long-term benefits Long service leave PRP $ $ Security-based payments
Cash bonus $
1

Non-monetary benefits $ Total $ $
Name
Non-Executive Directors 266,790 223,239 137,518 140,274 159,884 119,077 81,884 1,128,666 78,540 7,370 36,683 14,396 20,091 266,790 243,330 137,518 140,274 174,280 155,760 89,254 1,207,206
Olivier Lim (Chairman)
Paul Isherwood (Deputy Chairman)
Lui Chong Chee
Stephen Newton
Nancy Milne
Bob Prosser
Beth Laughton3
Sub-total Non-Executive Directors
Executive Director 1,317,480 833,760 24,893 32,520 21,913 573,629 2,804,195
Bob Johnston (Managing Director)
Other KMP 712,860 726,770 724,200 4,609,976 1,784,004 309,837 15,829 105,747 311,539 21,011 328,868 44,014 22,140 33,230 35,800 202,230 11,860 12,156 12,156 58,085 192,241 206,355 206,560 1,178,785 1,311,983 1,311,061 1,304,382 7,938,827
Kieran Pryke
Rod Fehring
Sean McMahon
KMP compensation
1 Includes annual leave accrual and payment of insurance premiums. 2 Includes deferred component of STI. 3 Beth Laughton was appointed to the Board on 7 May 2012.
2011
Short-term employee benefits Fees/Cash Salary Cash bonus $

1 2
Post employment benefits Long-term benefits Long service leave PRP $ $ Total $ Security-based payments Superannuation $
Non-monetary benefits $
Name
Non-Executive Directors 217,222 226,609 169,328 139,000 154,861 125,275 38,074 1,070,369 61,553 15,948 11,275 13,939 20,391 217,222 247,000 169,328 139,000 168,800 136,550 54,022 1,131,922
Olivier Lim (Chairman)4
Paul Isherwood (Deputy Chairman)
Lui Chong Chee
Stephen Newton
Nancy Milne
Bob Prosser
Ian Hutchinson
Sub-total Non-Executive Directors
Executive Director 1,308,760 795,960 8,696 41,240 21,315 551,558 2,727,529
Bob Johnston (Managing Director)
Other KMP 712,160 721,283 749,541 4,562,113 1,710,687 17,699 302,602 1,465 302,602 4,888 309,523 2,650 22,840 38,717 10,459 174,809 11,860 11,883 11,858 56,916 179,764 180,288 200,743 1,112,353 1,238,797 1,259,661 1,276,668 7,634,577
Kieran Pryke
Rod Fehring
Sean McMahon
KMP compensation
1 Includes annual leave accrual and payment of insurance premiums. 2 Includes deferred component of STI. 3 Ian Hutchinson retired 14 April 2011. 4 Olivier Lim was appointed Chairman on 14 April 2011 and Lui Chong Chee stepped down as Chairman on 14 April 2011. 5 Bob Prosser was appointed to the Board on 9 February 2011.
Directors Report 39
2012 Managing Director and other KMP remuneration (% fixed and at risk) The following relates to the table of KMP remuneration in this report. The relative percentages of remuneration received in 2012 that were linked to performance and those that were fixed are as follows:
TFR % STI % LTI (accounting value) % Total %
Name
Bob Johnston Kieran Pryke Rod Fehring Sean McMahon
50 60 60 60
30 25 24 24
20 15 16 16
100 100 100 100
b) Performance rights issued as remuneration Details of performance rights provided as remuneration to the Managing Director and other KMP are set out below. This includes the 2011 and 2012 PRPs which are still live and the 2010 PRP which completed 31 December 2012. Further information on the performance rights are set out in Note 24 to the financial statements. PRP Managing Director and other KMP
No. of 2010 PRP performance rights vested as a result of performance to 31/12/12 No. of performance rights granted during 2011 (2011 PRP to be assessed 31/12/13) No. of performance rights granted during 2012 (2012 PRP to be assessed 31/12/14)
Name
231,320 80,980 80,980 83,870
371,000 126,300 130,600 130,600
408,000 138,900 143,700 143,700
c) Vesting and forfeiture: cash bonus and performance rights For each cash bonus and grant of performance rights included in this Section 10, the percentage of the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited is set out below. As noted earlier in the report, 20% of the STIs awarded to the Managing Director and other KMP are to be deferred and applied to performance rights over Australand securities for either two years or one year respectively. These rights are included in the figures in the tables. No performance rights will vest if the conditions are not satisfied, hence the minimum value of the performance rights yet to vest is nil. The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the performance rights.
Maximum 2012 STI Performance Rights vested or forfeited in 2012 Financial Minimum Maximum years in total value total value which of grant of grant rights yet to vest yet to vest vested or may vest $ $
Paid Name %
Deferred %
Forfeited %
Year granted
Vested %
Forfeited %
Bob Johnston 51 Kieran Pryke 47 Rod Fehring 43 Sean McMahon 44

1 Other amounts were forfeited in prior years.
20101 2011 13 36 2012 20101 2011 12 41 2012 20101 2011 11 46 2012 20101 2011 11 45 2012
59 59 59 59
17 17 17 17
2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014
Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
289,083 503,395 116,230 196,933 101,764 181,921 101,764 180,865
DIRECTORS RESOLUTION Dated at Sydney this day of 26 February 2013. Signed in accordance with a resolution of the directors.
Olivier Lim Chairman
Directors Report
41
Auditors Independence Declaration
42
Financial Report.
Contents
Consolidated income statement Consolidated statement of comprehensive income Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity Notes to the consolidated financial statements 1. 2. 3. 4. 5. 6. 7. 8. 9. Summary of significant accounting policies Segment information Financial risk management Revenue Expenses Earnings per stapled security Income tax expense Receivables Inventories 44 45 46 47 48 49 49 56 59 62 62 64 65 66 67 67 67 70 73 74 75 76 77 77 78 81 82 82 83 88 91 91 92 94 95 96 97 98 99
10. Other assets 11. Investments accounted for using the equity method 12. Investment properties 13. Plant and equipment 14. Derivative financial instruments 15. Payables 16. Borrowings 17. Provisions 18. Land vendor liabilities 19. Equity 20. Dividends/distributions 21. Assets hybrid equity 22. Contingencies 23. Investments in controlled entities 24. Key management personnel disclosures 25. Commitments 26. Non-director related party transactions 27. Financial instruments 28. Cash flow information 29. Security based payments 30. Parent entity financial information 31. Events occurring after the balance sheet date Directors declaration Independent auditors report
Financial Report 43
Consolidated income statement

For the year ended 31 December 2012 Australand Holdings Limited and its controlled entities
2012 Notes $000 2011 $000
Revenue from continuing operations Cost of properties sold Write down of inventories Development profit recognised through valuation of properties transferred to Australand Property Trusts Share of net profits of joint ventures and associates accounted for using the equity method Investment property expenses Management and administration expenses Depreciation Other expenses Finance costs Amortisation of lease incentives Net gains from fair value adjustments on investment property Profit before income tax Income tax benefit Net profit Net profit attributable to ASSETS hybrid equity holders (non-controlling interest) Net profit attributable to stapled securityholders of Australand Attributable to: Equity holders of AHL and APT Equity holders of other stapled entities (non-controlling interest): Australand Property Trust No.4 (APT4) Australand Property Trust No.5 (APT5) Net profit attributable to stapled securityholders of Australand
4 5
918,794 (540,815)
692,810 (343,690) (30,000) 1,842 30,162 (37,968) (72,273) (3,348) (48,532) (81,940) (2,177) 61,525 166,411 851 167,262 (26,642) 140,620
11(d) 5 5 5 5 12 7
18,703 (38,864) (75,633) (4,565) (53,310) (71,446) (3,562) 54,520 203,822 203,822 (23,856) 179,966
115,951 51,857 12,158 179,966
106,105 20,404 14,111 140,620
Earnings per stapled security for profit attributable to ordinary equity holders of AHL and APT: Basic and diluted earnings per stapled security (parent entity) The above consolidated income statement should be read in conjunction with the accompanying notes, including Note 6 which presents the following earnings per stapled security for profit attributable to the stapled securityholders: Basic and diluted earnings per stapled security 6 31.2 cents 24.4 cents 6 20.1 cents 18.4 cents
The above consolidated income statement should be read in conjunction with the accompanying notes.
Consolidated statement of comprehensive income

2012 $000 2011 $000
Net profit Other comprehensive income: Changes in the fair value of cash flow hedges Share of associate and joint venture changes in the fair value of cash flow hedges Other comprehensive income for the financial year Total comprehensive income for the financial year Total comprehensive income for the financial year is attributable to: Equity holders of AHL and APT Equity holders of other stapled entities (non-controlling interest): Australand Property Trust No.4 (APT4) Australand Property Trust No.5 (APT5) Other non-controlling interests
203,822
167,262
(35,810) 627 (35,183) 168,639
(51,957) (609) (52,566) 114,696
80,768 51,857 12,158 23,856 168,639
53,539 20,404 14,111 26,642 114,696
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Financial Report 45
Consolidated balance sheet

As at 31 December 2012 Australand Holdings Limited and its controlled entities
2012 Notes $000 2011 $000
Current assets Cash and cash equivalents Receivables Inventories Other assets Investment properties held for sale Total current assets Non-current assets Receivables Inventories Investments accounted for using the equity method Investment properties Derivative financial instruments Plant and equipment Deferred tax assets Other assets Total non-current assets Total assets Current liabilities Payables Borrowings Derivative financial instruments Provisions Land vendor liabilities Total current liabilities Non-current liabilities Borrowings Derivative financial instruments Provisions Land vendor liabilities Total non-current liabilities Total liabilities Net assets Equity Equity holders of AHL and APT: Contributed equity Reserves Accumulated losses Equity holders of APT4 and APT5 (non-controlling interest) Stapled securityholders interest in the Group ASSETS hybrid equity Total equity 19 21 19(a) 19(b) 19(c) 1,741,986 (80,405) (86,809) 1,574,772 440,396 2,015,168 268,658 2,283,826 1,742,001 (42,306) (107,748) 1,591,947 405,399 1,997,346 268,658 2,266,004 16 14 17 18 1,252,889 88,695 5,942 11,564 1,359,090 1,699,727 2,283,826 1,381,810 52,843 4,870 27,088 1,466,611 1,687,334 2,266,004 15 16 14 17 18 80,339 100,000 33,764 93,083 33,451 340,637 72,038 24,011 91,951 32,723 220,723 8 9 11 12 14 13 7(c) 10 56,495 628,381 271,992 2,286,043 21,715 34,363 30,212 5,069 3,334,270 3,983,553 48,001 724,268 234,067 2,165,143 24,263 28,811 30,212 8,177 3,262,942 3,953,338 8 9 10 12(e) 76,059 143,282 308,893 7,049 535,283 114,000 649,283 93,286 142,456 372,802 9,787 618,331 72,065 690,396
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Consolidated cash flow statement

2012 Notes $000 2011 $000
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid Distributions received from joint venture entities Distributions received from associate entities Payment for land acquisitions Net cash inflow from operating activities Cash flows from investing activities Net investment in joint venture entities Net investment in associate entities Proceeds from sale of investment properties Payments for development and acquisition of investment properties Payments for plant and equipment Net cash outflow from investing activities Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Distributions paid Distributions to non-controlling interest (ASSETS) Payment to satisfy vested PRP entitlements Proceeds from issue of units/shares (net of transaction costs) Net cash (outflow)/inflow from financing activities Net (decrease)/increase in cash held Cash at the beginning of the financial year Cash at the end of the financial year 28(a) 858,008 (908,561) (124,022) (24,868) (3,905) (23) (203,371) (17,227) 93,286 76,059 1,362,059 (1,131,992) (121,115) (26,747) (109) 99 82,195 42,354 50,932 93,286 (12,085) (28,387) 72,395 (169,710) (10,118) (147,905) (36,678) (27,902) 133,250 (145,529) (20,610) (97,469) 28(b) 890,240 (444,669) 2,348 (100,721) 347,198 12,569 5,558 (31,276) 334,049 741,723 (512,724) 4,214 (84,371) 148,842 32,480 3,358 (127,052) 57,628
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
Financial Report 47
Consolidated statement of changes in equity

Attributable to owners of Australand Holdings Limited Contributed equity $000s Accumulated Reserves losses $000s $000s Total $000s Noncontrolling interest* $000s
Total equity $000s
Balance at 1 January 2012 Total comprehensive income for the year attributable to: AHL and APT (parent) APT4 and APT5 (non-controlling interest) Other non-controlling interest Total comprehensive income for the year Represented by: Profit for the year Other comprehensive income Total comprehensive income for the year Transactions with equity holders: Contributions of equity, net of transaction costs Security based payments Dividends and distributions provided for or paid (Note 20) Distributions provided for or paid to ASSETS hybrid equity holders (non-controlling interest) Balance at 31 December 2012 Balance at 1 January 2011 Total comprehensive income for the year attributable to: AHL and APT (parent) APT4 and APT5 (non-controlling interest) Other non-controlling interest Total comprehensive income for the year Represented by: Profit for the year Other comprehensive income Total comprehensive income for the year Transactions with equity holders: Contributions of equity, net of transaction costs Security based payments Dividends and distributions provided for or paid (Note 20) Distributions provided for or paid to ASSETS hybrid equity holders (non-controlling interest) Balance at 31 December 2011
1,742,001
(42,306)
(107,748)
1,591,947
674,057
2,266,004
(35,183) (35,183) (35,183) (35,183)
115,951 115,951 115,951 115,951
80,768 80,768 115,951 (35,183) 80,768
64,015 23,856 87,871 87,871 87,871
80,768 64,015 23,856 168,639 203,822 (35,183) 168,639
(15) (15) 1,741,986 1,741,922
(2,916) (2,916) (80,405) 8,094
(95,012) (95,012) (86,809) (123,342)
(15) (2,916) (95,012) (97,943) 1,574,772 1,626,674
(8) (29,010) (23,856) (52,874) 709,054 673,011
(23) (2,916) (124,022) (23,856) (150,817) 2,283,826 2,299,685
(52,566) (52,566) (52,566) (52,566)
106,105 106,105 106,105 106,105
53,539 53,539 106,105 (52,566) 53,539
34,515 26,642 61,157 61,157 61,157
53,539 34,515 26,642 114,696 167,262 (52,566) 114,696
79 79 1,742,001
2,166 2,166 (42,306)
(90,511) (90,511) (107,748)
79 2,166 (90,511) (88,266) 1,591,947
20 (33,489) (26,642) (60,111) 674,057
99 2,166 (124,000) (26,642) (148,377) 2,266,004
* Non-controlling interest includes Australand Property Trust No.4, Australand Property Trust No.5 and ASSETS.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Notes to the consolidated financial statements

Australand Holdings Limited and its controlled entities 1. Summary of significant accounting policies The significant accounting policies adopted in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes financial statements for the consolidated entity (Australand) consisting of Australand Holdings Limited (AHL) and its subsidiaries and controlled entities as defined in Note 1(b). (a) Basis of preparation This general purpose financial report has been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB), and the Corporations Act 2001. AHL is a for profit entity for the purpose of preparing financial statements. Except where noted below, the accounting policies adopted are consistent with those of the previous and interim reporting period and corresponding financial year. Compliance with International Financial Reporting Standards (IFRS) The financial report of the consolidated entity complies with IFRS as issued by the International Accounting Standards Board (IASB). Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment property, financial assets and liabilities (including derivative instruments) at fair value through profit or loss. Prior year and current year reclassifications Reclassifications of a number of immaterial balances have been made to the income statement and balance sheet in the current period to better reflect the underlying nature of these balances. Prior year reclassifications have been made where it improves comparability of amounts from period to period. Critical accounting estimates The preparation of these financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying Australands accounting policies. The resulting estimates will, by definition, seldom equal the related actual results. It is reasonably possible that outcomes in subsequent reporting periods could require material adjustment to the carrying amount of the asset/liability. The material estimates and assumptions in these financial statements include: (i) I nvestment Properties: All investment properties are valued at least every 2 years by external independent valuers. Values are based on active market prices, adjusted if necessary, for specific asset conditions. If this information is not available, the Group uses alternative valuation methods such as the capitalisation approach and discounted cash flow projections. (ii) Recognition of Profit: Profit recognised on property development projects is determined based on the forecasted outcomes of projects. Forecasts are updated at each reporting date to determine the appropriateness of profit recognised on projects. Net realisable values of projects are assessed to ensure that inventory is carried at the lower of cost and net realisable value. (iii) Inventories: The net realisable value of inventories is the estimated selling price in the ordinary course of business less estimated costs of completion and costs to sell. Such estimations take into consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the reporting period. Key assumptions make use of most recent reliable evidence available and management judgement. (iv) Financial Instruments: A variety of methods are used to calculate the value of financial instruments and make assumptions that are based on market conditions existing at each balance date. Valuation of derivative financial instruments involves assumptions based on quoted market rates adjusted for specific features of the instrument. The valuations of any financial instrument may change in the event of market volatility. (v) Impairment: Assets are tested annually or more frequently if events or circumstances indicate impairment. An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arms length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. (vi) Deferred Taxes: Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. (b) Principles of consolidation (i) Subsidiaries and controlled entities The consolidated financial statements incorporate the assets and liabilities of all subsidiaries and controlled entities of AHL, including Australand Property Trust (APT), Australand Property Trust No.4 (APT4), and Australand Property Trust No.5 (APT5) as at 31 December 2012 and the results of all subsidiaries and controlled entities for the year then ended. AHL and its subsidiaries and controlled entities are referred to in this financial report as the Group or the consolidated entity. Subsidiaries and controlled entities are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Financial Report 49
Notes to the consolidated financial statements (continued)

Australand Holdings Limited and its controlled entities
1. Summary of significant accounting policies (continued) (b) Principles of consolidation (continued) (i) Subsidiaries and controlled entities (continued) Subsidiaries and controlled entities are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Inter-entity transactions, balances and unrealised gains on transactions between Group entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. The accounting policies adopted by the subsidiaries, joint ventures and associates are consistent with those of the Group. (ii) Associates and joint venture entities Associates are entities where the Group has significant influence but not control of those entities, generally accompanying a shareholding of between 20% and 50%. Joint venture entities (including unincorporated or incorporated companies, partnerships and trusts) involve a contractual arrangement whereby the two parties undertake economic activities that are subject to joint control. Investments in these associates and joint ventures entities are accounted for using the equity method of accounting, after being initially recognised at cost. Under this method, Australands share of the entities profits or losses are recognised in the consolidated income statement, and its share of the entities movements in reserves is recognised in the consolidated reserves of the Group. The cumulative movements are adjusted against the carrying amount of the investment. Dividends/distributions receivable from associates and joint venture entities reduce the carrying amount of the investment. When the Groups share of losses equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise any further losses, unless it has incurred obligations or made payments on behalf of the entity. Unrealised gains on transactions establishing joint ventures and transactions between the Group and its associates or joint venture entities are eliminated to the extent of the Groups interest until such time as they are realised by the entity through consumption or sale. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. (iii) Stapling arrangements AHL has been identified as the parent entity in relation to the pre-date of transition stapling with APT and the post-date of transition stapling with APT4 and APT5. Consequently, the results and equity of AHL and APT have been combined in the financial statements and the results and equity, not directly owned by AHL or APT, of APT4 and APT5 have been treated and disclosed as non-controlling interest. Whilst the results and equity of APT4 and APT5 are disclosed as non-controlling interest, the stapled securityholders of AHL and APT are the same as the stapled securityholders of APT4 and APT5.
(c) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Revenue is recognised for the major business activities as follows: Real estate asset sales Revenue is recognised on real estate asset sales when the significant risks and rewards have passed to the buyer and it is probable the economic benefits will flow to the Group and can be reliably measured. Revenue on land sales is recognised where there is a signed unconditional contract for sale. All other sales are recognised on settlement. Construction contracting Contract revenue and expenses are recognised in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. Where it is probable that a loss will arise from a construction contract, the excess of total costs over revenue is recognised as an expense immediately. Where the outcome of a contract cannot be reliably estimated, contract costs are recognised as an expense as incurred, and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred. Rental income Rental income from operating leases is recognised in income on a straight line basis over the lease term. An asset is recognised to represent the portion of operating lease income in a reporting period relating to fixed increases in operating lease rentals in future periods. Such assets are recognised as a component of the carrying amount of investment properties in the balance sheet. Interest income Interest income is recognised under the effective interest rate method. Dividends/distributions Dividends/distributions are recognised as revenue when the right to receive payment is established. Development profit recognised through valuation of properties transferred to Australand Property Trusts Revenue and profit from the development of Commercial and Industrial projects are based on arms length contractual agreements with customers, either external or the Australand Property Trusts. The agreed value included in these contracts is either based on a fixed price contract or an agreed on-completion value. The on-completion value is arrived at by obtaining an independent valuation of the expected market value of the property at practical completion. The profit on internal developments is disclosed separately in the consolidated income statement as development profit recognised through valuation of properties transferred to Australand Property Trusts. (d) Investment properties Investment properties comprise investment interests in land and buildings held for long term rental yields and not occupied by the Group. Investment properties are carried at fair value which is based on active market prices, adjusted if necessary, for any difference in the nature, location or
1. Summary of significant accounting policies (continued) (d) Investment properties (continued) condition of the specific asset. If this information is not available, the Group uses alternative valuation methods such as the capitalisation approach and discounted cash flow projections. Each property is valued at least every 2 years by external independent valuers. Any resultant changes in fair value are shown separately in the consolidated income statement as net gains/(losses) from fair value adjustments on investment property. The carrying amount of investment properties recorded in the balance sheet includes components relating to lease incentives and assets relating to fixed increases in operating lease rentals in future periods. Investment properties under construction Investment properties under construction are carried at fair value after allowing for the remaining expected costs of completion plus an appropriate risk adjusted development margin. (e) Plant and equipment Plant and equipment is carried at cost less accumulated depreciation. Plant and equipment is depreciated over their estimated useful lives using the straight line method. Net gains and losses on disposal of plant and equipment are brought to account in determining the results for the year. The expected useful lives of plant and equipment are as follows: Furniture and fittings: two to ten years (2011: two to ten years) Computer hardware: three to four years (2011: three to four years) Computer software: five to ten years (2011: five to ten years) (f) Valuation of inventories Inventories comprising land, land and housing, integrated land and housing, medium density, high-rise developments and commercial and industrial developments are carried at the lower of cost and net realisable value. Cost includes the cost of acquisition and development and borrowing costs incurred during development. When development is completed, borrowing costs are expensed as incurred. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Estimates of net realisable value are based on the most recent reliable evidence available at the time the estimates are made, of the amount the inventories are expected to realise and the estimate of costs to complete. Inventories that are anticipated to be realised within twelve months are classified as current. (g) Cash and cash equivalents For cash flow statement purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
(h) Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Collectability of trade receivables is reviewed on an ongoing basis. Receivables which are known to be uncollectible are written off by reducing the carrying amount directly. A provision for any impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. (i) Business combinations The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisitionrelated costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interests proportionate share of the acquirees net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Groups share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in the income statement as a bargain purchase. (j) Impairment of assets Assets that have an indefinite useful life are not subject to amortisation or depreciation and are tested annually for impairment or more frequently if events or circumstances indicate that they might be impaired. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds recoverable amount. Recoverable amount is the higher of an assets fair value less costs to sell and value in use. For purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
Financial Report 51

1. Summary of significant accounting policies (continued) (k) Non-current assets held for sale Non-current assets are classified as held for sale if their carrying value will be recovered principally through a sales transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying value and the fair value less costs to sell, except for assets such as investment property that are carried at fair value. (l) Trade and other payables Trade and other payables represent liabilities for goods and services provided prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. (m) Land vendor liabilities Where the consolidated entity enters into unconditional contracts with land vendors to purchase properties for future development that contain deferred payment terms, these liabilities are disclosed at their present value. (n) Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of managements best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of time value of money and the risks specific to the liability. The increase in the provision due to passage of time is recognised as interest expense. (o) Lease incentives Prospective lessees may be offered incentives as an inducement to enter into non-cancellable operating leases. These incentives may take various forms including, upfront cash payments, rent free periods, or a contribution to certain lessee costs such as fit-out or relocation costs. As these incentives are repaid out of future lease payments, they are recognised as an asset in the consolidated balance sheet as a component of the carrying amount of investment properties and amortised over the lease period. (p) Employee benefits (i) Wages, salaries and annual leave Liabilities for employee entitlements to wages and salaries, annual leave and other current employee entitlements are accrued at non-discounted amounts calculated on the basis of future wage and salary rates including on-costs.
(ii) Long service leave Liabilities for other employee entitlements which are not expected to be paid or settled within 12 months of balance date are accrued in respect of all employees at present values of future amounts expected to be paid, based on a projected weighted average increase in wage and salary rates. Expected future payments are discounted using interest rates on national government securities with terms to maturity that match, as closely as possible, the estimated future cash outflows. (iii) Superannuation Superannuation contributions are charged as an expense as the contributions are paid or become payable. (iv) Security-based payments Security-based compensation benefits are provided to employees via the Australand Performance Rights Plan and Australand Tax Exempt Employee Security Plan. The fair value of options or rights granted is determined at grant date and recognised as an expense with a corresponding increase in equity over their vesting period. (q) Borrowing and borrowing costs Borrowings are initially recognised at fair value including transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between proceeds (net of transaction costs) and redemption is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the income statement as other income or finance costs. Borrowing costs incurred for construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed. In extended periods where development of a qualifying asset is suspended borrowing costs are expensed as incurred. The amount of borrowing costs eligible to be capitalised is calculated using the weighted average interest rate applicable to the entitys outstanding borrowings during the year. (r) Derivatives and hedging activities Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging
1. Summary of significant accounting policies (continued) (r) Derivatives and hedging activities (continued) instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either: hedges of highly probable forecast transactions (cash flow hedges) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges). The Group documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in cash flows of hedged items. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity using a recalculated effective interest rate. Fair value hedges Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The gain or loss relating to the effective portion of interest rate derivatives hedging fixed rate borrowings is recognised in profit or loss within finance costs, together with changes in the fair value of the hedged fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective portion is recognised in profit or loss within finance costs. Cash flow hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement. Amounts accumulated in equity are recycled in the income statement and disclosed as finance costs in the periods when the hedged item will affect profit or loss (for instance when the interest is payable on hedged variable rates borrowings). However, when the forecast transaction that is hedged results in the recognition of a non financial asset (for example, inventory) or a non financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the cost of the asset or liability. The deferred amounts are ultimately recognised in the profit or loss as costs of goods sold in the case of inventory. When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement. (s) Foreign currency translation (i) Functional and presentational currency Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Australian dollars, which is the functional and presentational currency of AHL and its controlled entities. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. (t) Income tax The income tax expense or revenue for the period is the tax payable on the current periods taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred income tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that, at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Current and deferred tax balances attributable to amounts recognised in other comprehensive income or directly in equity are also recognised in other comprehensive income or directly in equity, respectively.
Financial Report 53

1. Summary of significant accounting policies (continued) (t) Income tax (continued) Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Tax consolidation legislation AHL and its wholly owned entities implemented the tax consolidation legislation from 1 January 2003. AHL and the wholly owned entities in the tax consolidation group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidation group continues to be a stand-alone taxpayer in its own right. In addition to its own current and deferred tax amounts, AHL also recognises the current tax liabilities (or assets) and the deferred tax assets arising from the unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement is recognised as a contribution to (or distribution from) wholly owned tax consolidated entities. Australand Property Trusts Under current income tax legislation, APT, APT4 and APT5 are not liable for income tax, provided that the taxable income is fully distributed each year including any taxable capital gain derived from the sale of an asset. (u) Earnings per stapled security (i) Basic earnings per stapled security Basic earnings per stapled security is determined by dividing the net profit after income tax attributable to Australand stapled securityholders by the weighted average number of stapled securities outstanding during the year, adjusted for bonus elements in stapled securities, if any, issued during the year. (ii) Diluted earnings per stapled security Diluted earnings per stapled security adjusts the figures used in the determination of basic earnings per stapled security by taking into account the after income tax effect of interest and other financing costs associated with dilutive potential stapled securities and the weighted average number of securities assumed to have been issued for no consideration in relation to the dilutive potential ordinary securities. (iii) Basic earnings per stapled security parent entity Basic earnings per stapled security is determined by dividing the net profit after income tax attributable to Australand Holdings Limited and APT (excluding the non-controlling interest of APT4 and APT5) by the weighted average number
of stapled securities outstanding during the year, adjusted for bonus elements in stapled securities, if any, issued during the year. (iv) Diluted earnings per stapled security parent entity Diluted earnings per stapled security adjusts the figures used in the determination of basic earnings per stapled security by taking into account the after income tax effect of interest and other financing costs associated with dilutive potential stapled securities, and the weighted average number of securities assumed to have been issued for no consideration in relation to the dilutive potential ordinary securities. (v) Financial guarantee contracts Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with AASB 137: Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation, where appropriate. The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment. (w) Leases Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straightline basis over the period of the lease. (x) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included within other receivables or payables in the balance sheet. (y) Dividends and trust distributions Provision is made for the amount of any dividend or trust distributions declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at balance date. (z) Contributed equity Australand is a stapled group in which the securityholders hold direct interests and an equal number of shares in Australand Holdings Limited (AHL), and units in each of Australand Property Trust (APT), Australand Property Trust No.4 (APT4) and Australand Property Trust No.5 (APT5).
1. Summary of significant accounting policies (continued) (z) Contributed equity (continued) AHL has been identified as the parent entity in relation to the pre-date of transition stapling with APT and the post-date of transition stapling with APT4 and APT5. Consequently, the results and equity of AHL and APT have been combined in the financial statements and the results and equity, not directly owned by AHL or APT, of APT4 and APT5 have been treated and disclosed as non-controlling interest. Whilst the results and equity of APT4 and APT5 are disclosed as non-controlling interest, the stapled securityholders of AHL and APT are the same as the stapled securityholders of APT4 and APT5. Incremental costs directly attributable to the issue of new stapled securities are shown in equity as a deduction, net of tax, from the proceeds. (aa) Segment reporting AASB 8: Operating Segments (AASB 8) requires a management approach, under which segment information is presented on the same basis as that used for internal reporting purposes. The segments are reported in a manner that is consistent with the internal reporting provided to the Executive Management Team. The following operating segments have been determined as separately reportable in accordance with AASB 8: Residential development of land, housing & apartments. Commercial & Industrial development of commercial, industrial and retail properties. Investment Property investment in income producing commercial & industrial properties, property trust management and property management. (ab) Rounding of amounts Australand is an entity of the kind referred to in Class Order 98/100 issued by the Australian Securities and Investments Commission, relating to the rounding off of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar. (ac) New accounting standards and interpretations Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2012 reporting periods. The Group has made an assessment of such standards and intrepretations and have concluded that Australian Accounting Standard (AASB) 11: Joint Arrangements is likely to have an impact on the financial statements in future reporting periods. This standard was issued in August 2011 and is applicable to financial years commencing on or after 1 January 2013. AASB 11 requires that joint arrangements are to be accounted for as joint operations (parties have joint control and have rights to assets and obligations for liabilities of the arrangement) or joint ventures (parties have joint control and have rights to net assets of the arrangement). The Group will have arrangements that will be accounted for as joint operations (recognising its share of assets, liabilities, revenue and expenses) which have been previously equity accounted as net investments. Based on a high level
preliminary assessment of the Groups joint arrangements, the impact on the Groups balance sheet is expected to be immaterial. Had the Group adopted the new rules in the current reporting period, total assets would have been approximately $78 million higher and total liabilities would have been approximately $78 million higher. In addition, AASB 10: Consolidated Financial Statements (AASB 10) was issued in August 2011 and is applicable to financial years commencing on or after 1 January 2013. AASB 10 replaces all of the guidance on control and consolidation in AASB 127: Consolidated and Separate Financial Statements, and Interpretation 112: Consolidation Special Purpose Entities. The Group does not expect there to be any impact upon adoption of AASB 10. Under AASB 10, the core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However the standard introduces a single definition of control that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns before control is present. Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. There is also new guidance on participating and protective rights and on agent/principal relationships. The Groups assessment of the impact of other new standards and interpretations is that there is not expected to be any material effect on the Group in future reporting periods. (ad) Parent entity financial information The financial information for the parent entity, Australand Holdings Limited, disclosed in Note 30 has been prepared on the same basis as the consolidated financial statements, except for investments in subsidiaries and joint venture entities, which are accounted for at cost.
Financial Report 55

2. Segment information The consolidated entity operates wholly within Australia and is organised into Residential, Commercial & Industrial and Investment Property divisions. Segment revenues, expenses and results include transfers between segments. Such transfers are on an arms length basis and eliminated on consolidation. (a) Segment result December 2012
Operating Segment Summary $000 Residential Commercial & Industrial Total Developer Investment Property Corporate Consolidated
Revenue Less: Property development sales revenue from joint venture entities Segment Revenue Segment result before interest, equity accounted results Share of net profits of associates and joint ventures accounted for using the equity method Unallocated corporate costs Operating Earnings Before Interest and Tax Capitalised interest in cost of goods sold & other interest Interest income Operating profit before tax Income tax credit on operating activities Net profit attributable to ASSETS hybrid equity holders (non-controlling interest) Net Operating Profit After Tax Revaluation gains on investment property held1 Revaluation gains on investment properties under construction2 Amortisation of lease incentives Unrealised losses on interest rate derivatives Net profit attributable to stapled securityholders of Australand
606,033 (106,656) 499,377 82,261
213,675 (27,815) 185,860 18,328
819,708 (134,471) 685,237 100,589
225,569 225,569 171,409
7,988 7,988
1,053,265 (134,471) 918,794 271,998
6,284 88,545
5,361 23,689
11,645 112,234
6,696 178,105
(29,665) (29,665)
18,341 (29,665) 260,674 (98,872) 4,121 165,923 (23,856) 142,067 38,902 15,980 (3,562) (13,421) 179,966
1 Includes $362,000 relating to share of joint venture and associates revaluation gains. 2 The revaluation gains on investment properties under construction are included in the return on average capital employed calculation for the Commercial & Industrial division.
2. Segment information (continued) (a) Segment result (continued) December 2011

Operating Segment Summary $000 Residential Commercial & Industrial Total Developer Investment Property Corporate Elim1 Consolidated
Revenue Less: Property development sales revenue from joint venture entities Segment Revenue Segment result before interest, equity accounted results Development profit through valuation of properties transferred to Australand Property Trusts Share of net profits of associates and joint ventures accounted for using the equity method Unallocated corporate costs Operating Earnings Before Interest and Tax Capitalised interest in cost of goods sold & other interest Interest income Operating profit before tax Income tax credit on operating activities Net profit attributable to ASSETS hybrid equity holders (non-controlling interest) Net Operating Profit After Tax Revaluation gains on investment property held3 Revaluation gains on investment properties under construction4 Amortisation of lease incentives Write down of inventories5 Unrealised losses on interest rate derivatives Net profit attributable to stapled securityholders of Australand
1 2 3 4
586,776
181,390
768,167
209,516
14,154
(38,493)
953,344
(248,334) 338,442 51,776
(26,474) 154,916 26,725
(274,809) 493,358 78,501
209,516 161,212
14,154
14,275 (24,218) (1,253)
(260,534) 692,810 238,460
1,9922
1,992
24,360 76,136
2,349 29,074
26,709 105,210
4,265 165,477
(28,068) (28,068)
(889) (150)
30,085 (28,068) 242,469 (85,504) 4,214 161,179 851
(26,642) 135,388 39,725
21,877 (2,177) (30,000) (24,193)
140,620
All revenue eliminated relates to the Commercial & Industrial division. The profit on internal developments is disclosed separately in the eliminations column. Interest relating to Development profit is included in Capitalised interest in cost of goods sold and other interest. Includes $77,000 relating to share of joint venture and associates revaluation gains. The revaluation gains on investment properties under construction are included in the return on average capital employed calculation for the Commercial and Industrial division. 5 A write down of inventories was recorded in the Commercial & Industrial and Residential divisions of $23,000,000 and $7,000,000 respectively.
Financial Report 57

2. Segment information (continued) (b) Segment balance sheet December 2012

Operating Segment Summary $000 Residential
1
Total Developer
Investment Property
Corporate Consolidated
Total segment assets Total other liabilities
927,565 643,056 82,487 132,129
378,655 262,512 14,623 36,955
1,306,220 905,568 97,110 169,084
2,546,370 447,321 229,516 102,908
130,963 20,212
3,983,553 1,352,889 346,838 271,992
Total segment borrowings Investments in associates and joint venture entities
December 2011
Operating Segment Summary $000 Residential
1
Total Developer
Investment Property
Corporate Consolidated
Total segment assets Total other liabilities
981,634 681,089 80,773 127,872
458,577 409,943 12,106 33,700
1,440,211 1,091,032 92,879 161,572
2,364,218 290,968 187,222 72,495
148,909 25,233
3,953,338 1,382,000 305,334 234,067
Total segment borrowings Investments in associates and joint venture entities
1 Total segment assets includes investments in associates and joint venture entities.
(c) Other segment information

2012 $000 2011 $000
(i) Depreciation expense (Corporate) (ii) Share of net profits of joint ventures and associate Share of operating profits (segment note) Share of property revaluations gains Share of net profits of associate and joint ventures accounted for using the equity method (income statement) (iii) Finance costs Capitalised interest in cost of goods sold & other interest (segment note) Less: Capitalised finance costs recovered in cost of properties sold Unrealised losses on interest rate derivatives Finance costs (income statement)
(4,565)
(3,348)
18,341 362 18,703
30,085 77 30,162
98,872 (40,847) 13,421 71,446
85,504 (27,757) 24,193 81,940
3. Financial risk management The Groups activities expose it to a variety of financial risks including liquidity risk, market risk, credit risk and interest rate risk. It is the responsibility of the Board and Management to ensure that adequate risk identification, assessment and mitigation practices are in place for the effective oversight and management of these risks. The Groups overall management program as it relates to these risks is managed centrally to ensure alignment of financial risk management with corporate objectives and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as interest rate swaps and cross currency interest rate swaps to hedge certain financial risk exposures. Interest rate swaps are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and foreign exchange risk and aging analysis for credit risk. The Group also uses other derivative instruments such as callable swaps to manage the cost of funding. These instruments provide Australand with a fixed interest rate for a period but are callable by the swap counterparty. The Treasury function identifies, evaluates and mitigates the above financial risks under policies approved by the Board of Directors. (a) Credit risk Credit risk is the risk that a counterparty will default on their financial obligations resulting in a financial loss to the Group. The Groups maximum exposure to credit risk at 31 December 2012 is limited to the carrying amount of the financial assets disclosed in Note 27. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to receivables from customers, tenants and joint venture entities. Derivative counterparties and cash transactions are limited to high credit quality financial institutions. The Group has policies that limit the amount of credit exposure to any one financial institution. The Group has policies in place to ensure that the leasing of investment properties and the sales of products and services are made to customers with an appropriate credit history. Ongoing checks are performed by management to ensure that settlement terms detailed in individual contracts are adhered to. There is no concentration of credit risk with respect to the trade receivables of the Group as they consist of a large number of customers that are geographically dispersed. The Group does not have any significant credit risk exposure to a single customer or group of customers. The Group generally holds collateral in the form of bank deposits, bank guarantees or mortgages over assets until completion. The credit risk associated with receivables from joint venture entities is monitored through managements review of project feasibilities and the Groups ongoing involvement in the operations of these entities.
(b) Market risk (i) Foreign exchange risk Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entitys functional currency. During 2011, the Group issued US$170m of guaranteed senior notes through the US Private Placement debt market (USPP). It is the Groups policy to fully protect debt sourced overseas from exposure to volatility in exchange rates. To remove any foreign exchange and US interest rate exposure, the Group entered into cross currency interest rate swaps (notional principal of US$170m). As a result, the proceeds under the note issue were swapped into Australian dollars at the time of issue and therefore 100% of anticipated US dollar cash flows are hedged for the term of the notes. The Groups exposure to foreign currency risk at the reporting date was as follows:
2012 USD $000 2011 USD $000
Borrowings Cross currency interest rate swaps (notional principal)
170,000 (170,000)
170,000 (170,000)
(ii) Interest rate risk The Groups interest rate risk arises from long term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Group policy is to maintain fixed interest rate hedging above a minimum of 60% for 1 year maturities, reducing to 0% for maturities 7 years and beyond. The Group hedges its interest rate risk by entering into floating to fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Under the interest rate swaps, the Group agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts. Furthermore, as a result of the issue of USPP notes, the Group hedges its US dollar cash flow interest rate risk by entering into cross currency interest rate swaps. The US dollar components of the cross currency swaps are structured to provide US dollars necessary to pay the semi annual coupons on the US dollar Senior Notes to maturity. The settlement dates coincide with the dates on which interest is payable on the underlying debt. The Australian dollar components of the cross currency swaps are paid on a floating rate basis every 90 days. Australands fixed interest rate hedge maturity was 4.1 years at 31 December 2012 (31 December 2011: 4.0 years). This profile is longer than the debt maturity of the Group as the Group maintains a portfolio of hedges, some of which are forward start swaps, to protect future debt balances which will arise on the renewal of existing facilities. At year end, 81% (2011: 72%) of the Groups borrowings were at fixed interest rates (including the effect of interest rate swaps).
Financial Report 59

3. Financial risk management (continued) (b) Market risk (continued) (ii) Interest rate risk (continued) The potential impact of a change in interest rates by +/-1% on profit and equity has been disclosed in a table in Note 27(e). (c) Liquidity risk Prudent liquidity risk management implies that at all times the Group has access to sufficient cash resources to meet its financial obligations as they fall due. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching maturity profiles of financial assets and liabilities. Due to the dynamic nature of the underlying businesses, Group Treasury aims to maintain flexibility in funding by keeping committed credit lines available with a variety of counterparties.
At 31 December 2012 the Group had undrawn committed facilities of $360 million (2011: $455 million) and cash of $76 million (2011: $93 million). At 31 December 2012 the debt maturity profile on the Groups interest bearing debt was 2.9 years (2011: 3.3 years). Further information on the debt maturity profile of the Groups financial liabilities is disclosed in Note 16. Maturities of financial liabilities The tables below analyse the Groups financial liabilities and derivative financial instruments into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows (including estimated interest payments). For interest rate swaps the cash flows have been estimated using forward interest rates applicable (including foreign exchange rates for cross currency interest rate swaps) at the reporting date.
Carrying amount assets/ (liabilities) $000
Within 1 year 31 December 2012 $000
Between 1 & 2 years $000
Over 2 years $000
Total contractual cash flows $000
Non-derivatives Non-interest bearing Variable rate Total non-derivatives Derivatives Net settled (interest rate derivatives) Gross settled (cross currency interest rate swaps): Outflow Inflow (10,103) 9,237 (866) (9,697) 9,237 (460) (232,822) 226,509 (6,313) (252,622) 244,983 (7,639) 21,715 (10,320) (2,611) (5,046) (17,977) (122,459) (113,790) (168,041) (281,831) (1,476) (403,020) (404,496) (10,088) (1,007,399) (1,017,487) (125,354) (1,578,460) (1,703,814) (125,354) (1,352,889) (1,478,243)
Within 1 year 31 December 2011 $000
Between 1 & 2 years $000
Over 2 years $000
Total contractual cash flows $000
Carrying amount assets/ (liabilities) $000
Non-derivatives Non-Interest bearing Variable rate Total non-derivatives Derivatives Net settled (interest rate derivatives) Gross settled (cross currency interest rate swaps): Outflow Inflow (11,444) 9,181 (2,263) (11,252) 9,181 (2,071) (263,243) 239,416 (23,827) (285,939) 257,778 (28,161) 24,263 (5,472) (4,790) (2,181) (12,443) (76,854) (115,225) (90,159) (205,384) (593,085) (593,085) (16,624) (1,029,565) (1,046,189) (131,849) (1,712,809) (1,844,658) (131,849) (1,381,810) (1,513,659)
For additional disclosure on the maturity of the Groups borrowing facilities refer to Note 16.
3. Financial risk management (continued) (d) Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement purposes. The Group uses a variety of methods to calculate the value of financial instruments and makes assumptions that are based on market conditions existing at each balance date. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The carrying value of trade and other receivables (less impairment provisions), payables and financial liabilities is a reasonable approximation of their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. AASB 7: Financial Instruments: Disclosures (AASB 7) requires disclosure of fair values, for each of the following measurement categories: I. where the fair value is measured using quoted prices (unadjusted in active markets for identical assets or liabilities (level 1)); II. where the fair value is measured using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and
III. where the fair value is measured using inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3). The fair value of the Groups derivatives (interest rate derivatives and cross currency swaps) as at 31 December 2012 is a net liability of $100.7 million (2011: $52.6 million). These are classified as level 2 financial liabilities. (e) Capital risk management The Groups objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns for securityholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends/distributions paid to securityholders, return capital to securityholders or issue new stapled securities. At 31 December 2012, the Group had available liquidity (including cash) of $436 million (2011: $548 million). Gearing ratio Gearing is a measure used to monitor the levels of debt capital used by the business to fund its operations. Gearing is defined as interest bearing debt to total tangible assets, cash adjusted, based on the drawn amount of debt excluding fair value adjustments and associated derivative financial instruments.
The gearing ratios at 31 December 2012 and 31 December 2011 were as follows:
2012 $000 2011 $000
Total interest bearing debt (borrowings) Less: Fair value adjustment associated with USPP Less: Cash and cash equivalents Net debt Total assets Less: Derivative financial instruments (asset) Less: Cash and cash equivalents Tangible assets net of cash and cash equivalents Gearing ratio
1,352,889 (25,232) (76,059) 1,251,598 3,983,553 (21,715) (76,059) 3,885,779 32.2%
1,381,810 (24,263) (93,286) 1,264,261 3,953,338 (24,263) (93,286) 3,835,789 33.0%
The gearing ratio was within the Groups target range of 25% to 35%. The Group continued to comply with all of its debt covenants during the year.
Financial Report 61

4. Revenue
2012 $000 2011 $000
Sales revenue Property development sales Rent from investment properties Other revenue Interest received or receivable Management fees from joint venture entities Other income from joint venture entities Sundry income Revenue from continuing operations 4,121 14,344 14,861 23,800 57,126 918,794 4,214 15,946 16,029 25,299 61,488 692,810 648,055 213,613 861,668 426,681 204,641 631,322
5. Expenses
2012 $000 2011 $000
Profit before income tax includes the following:
Cost of properties sold:

Cost of properties sold excluding write down of inventories and recovery of capitalised finance costs Capitalised finance costs recovered in cost of properties sold Total cost of properties sold 499,968 40,847 540,815 315,933 27,757 343,690
Finance costs:
Interest paid or payable Finance charges relating to loan establishment and financing fees Unrealised losses on interest rate derivatives Total gross finance costs Less: amounts capitalised to projects Finance costs per income statement 100,937 20,626 13,421 134,984 (63,538) 71,446 86,373 29,908 24,193 140,474 (58,534) 81,940
Rental expense relating to operating leases:

Premises Motor vehicles Office equipment Computer equipment Total operating lease rentals 4,392 1,262 6 181 5,841 4,148 1,359 16 402 5,925
Other expenses:
Management and administration expenses* Depreciation of plant and equipment Amortisation of lease incentives Impairment of receivable 75,633 4,565 3,562 72,273 3,348 2,177 5,997
* These expenses are net of employee costs associated with the development of projects. Gross employee costs for 2012 are $114,663,000 (FY11: $110,401,000).
5. Expenses (continued)
2012 $ 2011 $
Auditors remuneration: During the year, the following fees were paid or payable for services provided by the auditor of Australand Holdings Limited and its controlled entities:
Assurance services 1. Audit services

Fees paid or payable to PricewaterhouseCoopers Australian firm: Audit and review of financial reports and other audit work under the Corporations Act 2001 Subsidiary financial statement audits Total remuneration for audit services 790,000 34,800 824,800 765,000 38,700 803,700
2. Other assurance services

Fees paid or payable to PricewaterhouseCoopers Australian firm: Audit related Accounting advice/assistance Audit of regulatory returns Compliance plan audit services IT controls review Taxation services Taxation services Other services Agreed upon procedures Remuneration advice Total remuneration for other assurance services Total auditors remuneration 18,000 20,400 358,670 1,183,470 25,000 11,500 278,340 1,082,040 51,000 41,390 130,920 49,350 89,000 12,000 126,000 47,450 15,000
The Groups policies do not restrict PricewaterhouseCoopers from performing assignments additional to their statutory audit duties where PricewaterhouseCoopers expertise and experience with the Group are important. Any such engagement is subject to Audit Committee approval. These assignments are principally tax and other advice, or where PricewaterhouseCoopers is awarded assignments on a competitive basis. It is the Groups policy to seek competitive tenders for all major consulting projects.
Financial Report 63

6. Earnings per stapled security

2012 2011
i. Basic and diluted earnings per stapled security ii. Basic and diluted earnings per stapled security (parent entity)
31.2 cents 20.1 cents
24.4 cents 18.4 cents
(a) Reconciliation of earnings used in calculating earnings per stapled security

Consolidated $000 $000
Basic and diluted earnings per stapled security Net profit after tax Earnings used in calculating basic earnings per stapled security Parent entity* Basic and diluted earnings per stapled security Net profit after tax Earnings used in calculating basic earnings per stapled security
* For the purposes of earnings per stapled security, the parent entity is defined as AHL and APT.
179,966 179,966
140,620 140,620
115,951 115,951
106,105 106,105
(b) Weighted average number of stapled securities used

No. of stapled securities No. of stapled securities
Weighted average number of ordinary securities used as the denominator in calculating basic and diluted earnings per stapled security
576,846,597
576,844,794
The weighted average number of stapled securities used for the basic and diluted earnings per stapled security calculation is the same for both the consolidated and parent calculations.
7. Income tax expense

2012 $000 2011 $000
(a) Income tax benefit

Current tax Deferred tax Under/(over) provided in prior years Income tax benefit (i) Deferred income tax expense/(credit) included in income tax credit comprises: Increase in deferred tax assets Increase in deferred tax liabilities (9,367) 9,367 (8,870) 8,019 (851) (531) (851) 531 (851)
(b) Numerical reconciliation of income tax credit to prima facie tax payable
Profit before income tax Tax at the Australian tax rate of 30% (2011: 30%) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: Security-based payments expense Property trust earnings Non-deductible eliminations Under provision in prior years Provision against recoverability of deferred tax assets Sundry items Income tax benefit 297 (73,435) 873 11,707 (588) 650 (61,324) 1,505 531 9,000 (1,136) (851) 203,822 61,146 166,411 49,923
(c) Non-current assets deferred tax assets

The balance of deferred tax assets comprises temporary differences attributable to: Provisions Depreciable assets Deferred income Consolidated tax losses Deferred tax assets The balance of deferred tax liabilities comprises temporary differences attributable to: Inventories Joint ventures Trust distributions Other deferred tax liabilities Deferred tax liabilities Net deferred tax assets
2 1
16,106 17,280 42,665 85 76,136 (10,058) (27,420) (4,160) (4,286) (45,924) 30,212 30,212 30,212
28,767 884 18,752 36,372 728 85,503 (22,704) (26,859) (3,232) (2,496) (55,291) 30,212 29,361 (531) 1,382 30,212
Other deferred tax assets
Movements in deferred tax Opening balance at 1 January (Under)/over provision in prior years Credited to the income statement Closing balance at 31 December
1 As at 31 December 2012, the total tax losses for the AHL tax consolidated group were $164,888,975. 2 Set-off of deferred tax liabilities against deferred tax assets pursuant to set-off provisions.
Financial Report 65

7. Income tax expense (continued) (d) Tax consolidation legislation Australand Holdings Limited (AHL) and its wholly-owned entities have implemented the tax consolidation legislation as of 1 January 2003. The accounting policy in relation to this legislation is set out in Note 1(t). On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement, which in the opinion of the directors, limits the joint and several liability of the wholly-owned entities in the case of a default by the head entity, AHL. The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate AHL for any current tax payable assumed and are compensated by AHL for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to AHL under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities financial statements. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. (e) Amendments to prior year tax returns In November 2012, the Group received amended assessments in respect of matters relating to the 2003 2008 tax periods. The net amount payable is $4.3m and reflects a penalty imposed by the ATO as a result of AHL claiming deductions in an income year later than that in which they were first available. The amount payable has been provided for. The Group has objected to the amended assessment. 8. Receivables
2012 $000 2011 $000
Current Trade receivables Receivables from joint venture entities Other receivables Total current receivables Non-current Receivables from joint venture entities Other receivables Total non-current receivables Total receivables 50,327 6,168 56,495 199,777 40,498 7,503 48,001 190,457 72,954 46,181 24,147 143,282 48,965 76,614 16,877 142,456
The expected timing of cash flows associated with receivables from joint venture entities has been assessed in conjunction with the detailed reviews of project feasibilities undertaken in the period. This has resulted in the forecast cash flows on a number of these balances being deferred to greater than 12 months from the balance sheet date. (a) Impaired and past due receivables There were no material receivables at 31 December 2012 that were past due and impaired (2011: $Nil). No provision for these receivables was therefore required for the Group (2011: $Nil). (b) Fair value and credit risk Due to the nature of the current and non-current receivables, their carrying amount is assumed to approximate their fair value. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. Refer to Note 3 for more information on the financial risk management policies of the Group.
9. Inventories
2012 $000 2011 $000
Current Cost of acquisition Development costs Borrowing costs Total current inventories Non-current Cost of acquisition Development costs Borrowing costs Total non-current inventories Carrying amounts of inventories Inventories comprise: Land held for development and resale Work in progress/land under development Finished goods Carrying amounts of inventories 437,950 490,667 8,657 937,274 516,505 541,530 39,035 1,097,070 297,889 266,403 64,089 628,381 937,274 428,302 232,891 63,075 724,268 1,097,070 164,195 104,204 40,494 308,893 245,733 68,100 58,969 372,802
Write down of inventories to net realisable value recognised as an expense during the year ended 31 December 2012 was $Nil (2011: $30,000,000).
10. Other assets

2012 $000 2011 $000
Current Prepayments Non-current Prepayments 5,069 8,177 7,049 9,787
11. Investments accounted for using the equity method

2012 $000 2011 $000
Non-current Interests in joint venture entities and associates 271,992 234,067
Financial Report 67

11. Investments accounted for using the equity method (continued) Investments in joint venture entities and associates Set out below are the beneficial interests of the consolidated entity in joint venture entities and associates. Principal activities of the below entities were property development and management of investment properties. (a) Carrying amounts
2012 2011 Investment Investment 2011 carrying amount carrying amount % $000 $000
2012 Direct or indirect interest in ordinary equity %
Alberti Co-Venture Australand Apartments No.6 Pty Ltd Australand Logistics JV Australand Residential Trust Australand Retail Trust Australand Wholesale Property Fund No.6 (associate) Baldivis Co-Venture Bluewater Co-Venture Carlton Co-Venture* Clemton Park Co-Venture CIP ALZ (Wellington Road) Unit Trust CIP ALZ (BBP) Trust CIP ALZ (Gillman) Pty Limited CIP ALZ (MA) Trust Commercial & Industrial Property (Pinkenba) Trust Croydon Development Trust Discovery Point Co-Venture Giffnock North Ryde Co-Venture Lidcombe Co-Venture Parkinson Development Co-Venture Port Coogee Co-Venture Port Coogee (Stage 5) Co-Venture Seaspray Co-Venture Stage 3 Eastern Creek Co-Venture Sunshine Co-Venture Torquay Co-Venture Trust Project No.9 Unit Trust Village Park Consortium Wallan Co-Venture Woolloomooloo Unit Trust Yanchep Co-Venture Yatala Co-Venture Other Co-Ventures
50 50 19.9 50 50 28 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50
50 50 19.9 50 50 28 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50
10,238 (3,728) 56,929 25,682 7,868 38,111 (2,451) 2,201 18,857 4,463 1,226 1,451 1,611 1,133 (2,484) 44,025 2,550 13,351 3,378 8,422 (4,195) 116 10,667 7,241 309 (9,732) 3,804 4,628 1,932 13,872 10,959 (442) 271,992
4,837 (3,172) 27,483 41,898 8,114 36,900 (2,451) 4,741 18,950 4,118 1,119 1,401 1,026 929 (1,977) 26,955 2,298 12,152 2,688 8,029 (4,195) (1,045) 12,925 7,125 5 (10,582) 3,199 8,745 675 14,154 7,977 (954) 234,067
* Acquired an additional interest during the period. The results of the entity are now fully consolidated from the date of acquisition.
The investment carrying amounts are disclosed net of unrealised (profits)/losses from the establishment of joint ventures, where applicable.
11. Investments accounted for using the equity method (continued) (b) Movement in the carrying amount of investments in joint venture entities and associates
2012 $000 2011 $000
Carrying amount at the beginning of the financial year New capital invested Reclassification to inventories and receivables from joint ventures Share of profit after tax Distributions and return of capital Share of movement in hedging derivatives Movements in unrealised profits from joint ventures Development profit recognised through valuation of properties transferred to Australand Property Trusts Carrying amount at the end of the financial year
234,067 60,672 (8,778) 18,703 (38,208) 627 4,909 271,992
178,741 79,298 (6,759) 30,162 (45,513) (622) (2,131) 891 234,067
(c) Share of assets and liabilities in joint venture entities and associates
2012 $000 2011 $000
Current inventory Non current inventory Other current assets Non-current assets Total assets Current borrowings Other current liabilities Non-current borrowings Other non-current liabilities Total liabilities Net assets Less: Unrealised profits from joint ventures Carrying amount at the end of the financial year
62,429 257,007 59,573 127,265 506,274 (64,845) (71,430) (53,902) (237) (190,414) 315,860 (43,868) 271,992
60,646 254,223 61,355 98,199 474,423 (27,980) (23,312) (109,392) (30,895) (191,579) 282,844 (48,777) 234,067
(d) Share of revenues, expenses and results of joint venture entities and associates
2012 $000 2011 $000
Revenues Expenses Profit after tax accounted for using the equity method
148,371 (129,668) 18,703
270,521 (240,359) 30,162
Refer to Note 22 for details of contingent liabilities in relation to joint venture entities. There are no material commitments in relation to the joint ventures or associates as at 31 December 2012 (December 2011: Nil). For all joint ventures and associates, the country of residence is Australia.
Financial Report 69

12. Investment properties (a) Details of the individual properties comprising investment properties Investment properties are 100% owned, unless otherwise stated.
Acquisition Description Date Independent Independent 31 Dec 12 31 Dec 11 Valuation Valuation Book Value Book Value Date $000 $000 $000
658 Church Street, Richmond, VIC 690 Springvale Rd and 350 Wellington Rd, Mulgrave, VIC 5 Henry Deane Place, Railway Square, Sydney, NSW 57-71 Platinum Street, Crestmead, QLD 5-7 Trade Street, Lytton, QLD Lot 102 Coghlan Rd, Outer Harbour, SA 99 Shettleston Street, Rocklea, QLD 51 Stradbroke Street, Heathwood, QLD 227 Walters Road, Arndell Park, NSW 8 Stanton Road, Seven Hills, NSW 26-30 Lee Street, Gateway Building, Sydney, NSW 10 Butu Wargun Drive, Greystanes, NSW 1B Homebush Bay Drive, Rhodes Corporate Park, Rhodes, NSW 1D Homebush Bay Drive, Rhodes Corporate Park, Rhodes, NSW Tower A, 197-201 Coward Street, Mascot, NSW Lot 101,10 Stanton Rd, Seven Hills, NSW 20 Thackray Road, Port Melbourne, VIC 21-33 South Park Drive, Dandenong South, VIC 50 Southbank Blvd. Southbank, VIC 23 Scanlon Drive, Epping, VIC 6 Butu Wargun Drive, Greystanes, NSW 64 West Park Drive, West Park, Derrimut, VIC 81-103 South Park Drive, Dandenong South, VIC 35 Huntingwood Drive, Huntingwood, NSW 80 Hartley Road, Smeaton Grange, NSW Tower B, 197-201 Coward St, Mascot, NSW Freshwater Place Office Tower, 2 Southbank Boulevard, Southbank, VIC (50% interest) 63 South Park Drive, Dandenong, VIC 47-59 Boundary Road, Carole Park, QLD 22-28 Bam Wine Court, Dandenong South, VIC 2 Wonderland Drive, Eastern Creek, NSW 286 Queensport Road, Murarrie, QLD 8 Butu Wargun Drive, Greystanes, NSW Civic Tower, 66-68 Goulburn Street, Sydney, NSW (50% interest) 80 Alfred Street Milsons Point, NSW1 2 Douglas Street, Port Melbourne, VIC 468 Boundary Road, West Park, Derrimut, VIC 98-126 South Park Drive, Dandenong, VIC
Oct 03 Oct 03 Oct 03 Oct 03 Oct 03 Oct 03 Oct 03 Oct 03 Oct 03 Oct 03 Oct 03 May 04 May 04 May 04 May 04 May 04 Dec 04 May 05 May 05 Jun 05 Jul 05 Aug 05 Sep 05 Oct 05 Oct 05 Oct 05 Oct 05 Oct 05 Oct 05 Oct 05 Oct 05 Oct 05 Nov 05 Dec 05 Dec 05 Dec 05 Jun 06 Oct 06
Dec 12 Jun 11 Jun 11 Jun 12 Jun 11 Jun 11 Dec 11 Dec 11 Jun 11 Jun 11 Jun 12 Jun 12 Dec 11 Jun 11 Dec 12 Jun 12 Dec 12 Dec 12 Jun 11 Dec 12 Dec 12 Dec 11 Jun 12 Dec 11 Dec 11 Dec 11 Jun 12 Jun 12 Dec 11 Dec 11 Dec 12 Jun 11 Jun 12 Dec 10 Jun 12 Jun 12 Jun 11 Dec 12
34,400 72,500 43,500 26,000 19,000 7,700 18,000 19,500 22,400 14,500 73,000 32,000 58,250 77,000 54,500 10,700 15,500 17,250 14,500 11,500 25,300 16,100 9,100 29,500 52,500 40,000 196,500 11,700 10,900 17,700 43,500 23,800 30,200 65,500 48,000 23,000 21,250 17,750
34,400 76,600 46,700 26,100 19,600 7,800 19,100 20,100 23,300 15,000 74,000 32,300 58,800 92,000 54,500 10,800 15,500 17,250 15,200 11,500 25,300 18,700 9,200 33,600 53,000 39,900 202,600 11,800 11,400 18,200 43,500 25,200 30,200 63,000 23,000 21,400 17,750
31,000 74,329 45,000 25,900 19,250 7,700 18,000 19,500 22,450 14,750 69,000 32,000 58,250 82,000 52,300 10,700 15,000 17,200 15,000 11,500 25,300 16,100 9,300 29,500 52,500 40,000 184,000 11,700 10,900 17,700 44,000 24,200 29,000 66,250 53,300 23,000 21,500 18,000
12. Investment properties (continued) (a) Details of the individual properties comprising investment properties (continued)
Acquisition Description Date Independent Independent 31 Dec 12 31 Dec 11 Valuation Valuation Book Value Book Value Date $000 $000 $000
97 School Street, Spring Hill, QLD 111 Darlinghurst Road, Kings Cross, NSW2 44 Cambridge Street, Rocklea, QLD 25-29 Jets Court, Melbourne Airport Business Park, Tullamarine, VIC Vanessa Road, Cambellfield, VIC 18-20 Butler Boulevard, Burbridge Business Park, Adelaide Airport, SA Spring Valley Business Park, 610 Heatherton Road, Clayton South, VIC 115-121 South Centre Rd, Melb Airport, Tullamarine, VIC 8 Distribution Place, Seven Hills, NSW Rhodes Corporate Park (Childcare) 1 Homebush Bay Drive, Rhodes, NSW Rhodes Corporate Park (Caf & Car Wash) 1 Homebush Bay Drive, Rhodes, NSW Boundary Rd cnr. West Park Dr, Derrimut, VIC 28-32 Sky Road East, Melb Airport Bus Park, Melb Airport, Tullamarine, VIC BBP2, 5 Butler Blvd, Adelaide Airport, SA 94 South Centre Rd, Melbourne Airport Business Park, East Tullamarine, VIC 28 Southbank Boulevard, Southbank, VIC FW28 (50% interest) 63 & 99 Sandstone Place, Parkinson, QLD Hudswell Road, Perth Airport, WA 17-23 Jets Court, Melb Airport Bus Park, Tullamarine, VIC Greens Rd & South Park Dr, Dandenong, VIC 96-106 Link Road, Melbourne Airport Business Park, Tullamarine, VIC BBP4, 20-24 Butler Blvd, Adelaide Airport, SA Lot 2, Inner Circle, Port Kembla, NSW 260 Earnshaw Rd., Northgate, QLD Part Lot 192 and 193 Cnr Robinsons Road, Sunline and Saintly Drives, West Park Industrial Estate, Derrimut, VIC 99 Station Road, Seven Hills, NSW 144-166 Atlantic Drive, Keysborough, VIC 49-71 Pacific Drive, Keysborough, VIC 357 Collins Street, Melbourne, VIC Other properties Subtotal
1 Property held for sale at book value of $49,000,000 at 31 December 2012. 2 Property held for sale at book value of $65,000,000 at 31 December 2012. ^^ Under development in 2011.
^^
Feb 07 Apr 07 Oct 07 Dec 07 Dec 07 Jan 08 Apr 08 May 08 May 08 Jun 08 Jun 08 Aug 08 Aug 08 Sep 08 Sep 08 Dec 08 Dec 08 Feb 09 Apr 09 Apr 09 Jun 09 Aug 09 Sep 09 Dec 09 Apr 11 Mar 11 Sep 11 Dec 11 Dec 12 Various
Dec 11 Dec 11 Dec 12 Jun 12 Dec 10 Jun 12 Jun 12 Jun 12 Jun 12 Jun 11 Jun 11 Dec 12 Dec 12 Dec 12 Jun 12 Dec 11 Dec 12 Dec 11 Dec 11 Jun 11 Dec 11 Jun 12 Jun 12 Dec 12 Jun 11 Jun 11 Dec 11 Dec 11 Dec 12 Various
9,400 70,000 16,000 11,250 6,850 8,900 25,200 6,000 18,500 3,100 2,500 8,250 8,000 7,900 22,250 109,000 165,500 24,250 7,200 11,200 26,400 9,800 21,800 46,500 23,500 14,400 26,700 22,000 180,868 1,316
9,000 16,000 11,265 6,950 8,900 25,300 6,000 18,600 3,500 2,300 8,250 8,000 7,900 22,250 116,000 165,500 24,000 7,200 12,000 26,395 9,800 21,800 46,500 24,400 15,000 27,500 22,700 180,868 1,224 2,173,402
9,400 70,000 18,000 11,250 7,300 8,900 25,200 6,000 18,250 3,300 2,300 12,500 8,000 7,750 22,250 109,000 124,755 24,250 7,200 11,500 26,400 9,800 21,800 45,200 23,700 14,500 26,700 22,000 1,667 2,015,951
Financial Report 71

12. Investment properties (continued) (a) Details of the individual properties comprising investment properties (continued) Properties under Development
31 Dec 12 Book Value Description $000 31 Dec 11 Book Value $000
357 Collins Street, Melbourne, VIC Rhodes F, Homebush Bay Drive, Rhodes Corporate Park, Rhodes, NSW Pacific Drive, Keysborough, VIC Lot 1, 14-28 Flint St & 374 Boundary Rd, Inala, Qld Subtotal Total investment properties
72,722 26,457 13,462 112,641 2,286,043
112,771 26,420 9,992 9 149,192 2,165,143
Valuation Basis The value of investment properties is measured on a fair value basis being the amounts for which the properties could be exchanged between knowledgable, willing parties in an arms length transaction. A willing seller is not a forced seller prepared to sell at any price. The best evidence of fair value is given by current prices in an active market for similar property in the same location and condition and subject to similar leases. The fair value of investment property has been updated to reflect market conditions at the end of the reporting period. While this represents best estimates as at the balance sheet date if investment property is sold in the future the price achieved may be higher or lower than the most recent valuation. At 31 December 2012, the Group had a portfolio of 69 properties including 3 properties under development. Independent valuations were undertaken on approximately 55% of income producing assets (by value) in the twelve months to 31 December 2012. In assessing the value of the investment properties, the independent valuers considered valuations using both the capitalisation approach and discounted cash flows. Properties that are not independently valued at 31 December 2012 are carried at fair value determined by directors valuations. The average market capitalisation rate of the investment property portfolio at 31 December 2012 was 8.09% (Industrial properties: 8.59%; Office properties: 7.58%) and at 31 December 2011 was 8.34% (Industrial properties: 8.72%; Office properties: 7.92%). These metrics exclude assets classified as held for sale or under development. A reconciliation of the carrying amounts of investment properties at beginning and end of the current financial year is set out below: Reconciliation of investment properties:
2012 $000 2011 $000
Opening balance at 1 January Acquisition and development costs Net gains from fair value adjustments Disposals Transfer (to)/from investment properties held for sale Net movement in lease incentives Closing balance at 31 December
2,165,143 169,065 54,520 (330) (114,000) 11,645 2,286,043
2,115,755 191,864 61,525 (133,250) (72,065) 1,314 2,165,143
12. Investment properties (continued) (b) Leasing arrangements The investment properties are leased to tenants under long term operating leases. Rentals are receivable from the tenants monthly. Minimum lease payments under non-cancellable operating leases of investment properties not recognised in the financial statements are receivable as follows:
2012 $000 2011 $000
Within one year Later than one year but not later than 5 years Later than 5 years Total
167,562 597,145 449,354 1,214,061
193,254 764,562 377,845 1,335,661
(c) Assets pledged as security There are no assets that have been pledged as security as at 31 December 2012 (December 2011: Nil). (d) Amounts recognised in profit and loss for investment property
2012 $000 2011 $000
Rental income (including recoverable outgoings) Investment property expenses Net amount recognised in profit and loss for investment property
213,613 (38,864) 174,749
204,641 (37,968) 166,673
(e) Investment properties held for sale

2012 Book Value Description $000
1 1
2011 Book Value $000
Crest Hotel, Kings Cross, NSW
65,000 49,000 114,000
72,065 72,065
80 Alfred Street, Milsons Point, NSW
Lot 122 Wonderland Drive, Eastern Ck, NSW2 Total investment properties held for sale
1 There are unconditional contracts for the sale of these properties, with settlement to occur during 2013. 2 This property was sold to the Australand Logistics Joint Venture with Government Investment Corporation of Singapore on 7 February 2012.
13. Plant and equipment

2012 $000 2011 $000
Furniture and fittings at cost Less: accumulated depreciation Total carrying value Computer hardware at cost Less: accumulated depreciation Total carrying value Computer software at cost Less: accumulated depreciation Total carrying value Net book value
10,581 (5,425) 5,156 2,839 (1,783) 1,056 44,800 (16,649) 28,151 34,363
9,823 (4,369) 5,454 2,622 (786) 1,836 35,559 (14,038) 21,521 28,811
Financial Report 73

13. Plant and equipment (continued) Reconciliation of the carrying amount of plant and equipment and computer equipment at the beginning and end of the current and previous financial year are set out below:
Furniture & Fittings 2012 $000 Computer hardware $000 Computer software $000 Total $000
Carrying amount at 1 January 2012 Additions Depreciation charge Carrying amount at 31 December 2012
5,454 758 (1,056) 5,156

Furniture & Fittings
1,836 217 (997) 1,056

Computer hardware $000
21,521 9,142 (2,512) 28,151

Computer software $000
28,811 10,117 (4,565) 34,363

Total $000
2011
$000
Carrying amount at 1 January 2011 Additions Depreciation charge Carrying amount at 31 December 2011
2,744 3,562 (852) 5,454
874 1,476 (514) 1,836
7,931 15,572 (1,982) 21,521
11,549 20,610 (3,348) 28,811
14. Derivative financial instruments

2012 $000 2011 $000
Non-current assets Cross currency interest rate swaps fair value hedges Current liabilities Interest rate swap contracts cash flow hedges Interest rate derivatives fair value through profit or loss Total current derivative financial instruments Non-current liabilities Interest rate swap contracts cash flow hedges Interest rate derivatives fair value through profit or loss Total non-current derivative financial instruments Total derivative financial instruments (86,632) (2,063) (88,695) (100,744) (50,921) (1,922) (52,843) (52,591) (33,764) (33,764) (781) (23,230) (24,011) 21,715 24,263
Derivative financial instruments are used by the Group to hedge exposure to interest rate risk associated with movements in interest rates, and to foreign exchange risk associated with movements in the US dollar, which impact on the borrowings of the Group. Other interest rate derivatives such as callable swaps are used to manage the cost of funding. Cross currency interest rate swaps During 2011, the Group issued US$170m of guaranteed senior notes through the US Private Placement debt market (USPP). It is the Groups policy to fully protect debt sourced overseas from exposure to volatility in exchange rates. Accordingly, the Group has entered into cross currency interest rate swap contracts under which it is obliged to pay interest at variable rates in Australian dollars (AUD) and to pay interest at fixed rates in United States dollars (USD). This debt is hedged by a combination of fair value and cash flow hedges. The USD components of the cross currency interest rate swaps are structured to provide USD necessary to pay the semi annual coupons on the USPP to maturity. The settlement dates coincide with the dates on which interest is payable on the underlying debt. The AUD components of the cross currency interest rate swaps are paid on a floating rate basis every 90 days. The fair value of the cross currency interest rate swaps at 31 December 2012 was a non-current asset of $21,715,000 (2011: $24,263,000), which offsets the fair value adjustments included in the carrying value of the US Private Placement borrowings (refer to Note 16).
14. Derivative financial instruments (continued) Interest rate swap contracts It is the Groups policy to protect an appropriate portion of interest bearing debt from exposure to volatility in interest rates. Accordingly, the Group has entered into interest rate swap contracts under which it is obliged to receive interest at variable rates and to pay interest at fixed rates. The contracts are settled on a net basis and the net amount receivable or payable at the reporting date is included in other receivables or other payables. The contracts require settlement of net interest receivable or payable each 90 days. The settlement dates coincide with the dates on which interest is payable on the underlying debt. At 31 December 2012, including the impact of interest rate swaps, 81% (2011: 72%) of the gross debt outstanding was at fixed interest rates. The fixed interest rates on swaps range between 4.0% and 6.7% (2011: 4.1% and 6.7%). At 31 December 2012, the notional principal amounts and periods of expiry of interest rate swap contracts (including forward swap contracts) and callable swaps are as follows:
2012 $000 2011 $000
Less than 1 year 1 2 years 2 3 years 3 4 years 4 5 years More than 5 years
450,000 100,000 400,000 250,000 130,000 480,000 1,810,000
550,000 500,000 250,000 330,000 1,630,000
The gain or loss from remeasuring the cash flow hedging instruments at fair value is recognised in other comprehensive income and deferred in equity in the hedging reserve, to the extent that the hedge is effective, and reclassified into profit and loss when the hedged interest expense is recognised. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The movement in the fair value of interest rate derivatives such as callable swaps which do not qualify as a hedge for accounting purposes are recognised directly in the income statement. In addition, the ineffective portion of cash flow hedges is also recognised in the income statement. The total fair value amount recognised in the income statement is $13,421,000 (2011: $24,193,000). No previously hedged instruments have become ineffective during the period and there is no ineffectiveness on currently hedged instruments.
15. Payables
2012 $000 2011 $000
Current Trade and other payables 80,339 72,038
Financial Report 75

16. Borrowings
2012 $000 2011 $000
Current Bank facilities unsecured Total current borrowings Non-current Bank facilities unsecured US Private Placement Total non-current borrowings Total borrowings 1,065,000 187,889 1,252,889 1,352,889 1,195,000 186,810 1,381,810 1,381,810 100,000 100,000 -
Drawn amount 2012 Security Maturity Date $000 2011 $000
Facility limit 2012 $000 2011 $000
Syndicated Facility Syndicated Facility Syndicated Facility Syndicated Facility Syndicated Facility Syndicated Facility Syndicated Facility Syndicated Facility US Private Placement US Private Placement
2 2
Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured
Sept 2013 July 2014 Sept 2015 May 2017 Jun 2013 Jun 2014 Jan 2015 Sept 2016 May 2021 May 2023
100,000 350,000 40,000 303,750 371,250 154,692 33,197 1,352,889
520,000 303,750 371,250 153,804 33,006 1,381,810
100,000 350,000 200,000 200,000 303,750 371,250 154,692 33,197 1,712,889
650,000 325,000 303,750 371,250 153,804 33,006 1,836,810
The Group also had access to additional unsecured facilities totalling $167,880,000 (2011: $181,146,000), for financial bank guarantees, performance bank guarantees and insurance bonds of $18,500,000 (2011: $10,000,000), $78,500,0001 (2011: $100,000,000), and $70,880,000 (2011: $71,146,000) respectively.
1. The Group has access to a $50,000,000 facility (included as a performance bank guarantee above) that can be utilised wholly for performance bank guarantees or up to $25,000,000 for financial bank guarantees. 2. The drawn and facility limits associated with the US private placement include fair value adjustments of $25,232,000 (2011: $24,263,000).
Details of the amounts utilised in relation to guarantees and bonds are included in Note 22. There are no assets that have been pledged as security (December 2011: Nil). Risk Exposures Details of the Groups exposure to risks arising from borrowings are set out in Note 3. Fair value disclosures Details of the fair value of borrowings for the Group are set out in Note 27.
17. Provisions
2012 $000 2011 $000
Current Dividends/distributions Employee benefits Other Total current provisions Non-current Employee benefits Total non-current provisions 5,942 5,942 4,870 4,870 69,046 4,872 19,165 93,083 70,058 4,771 17,122 91,951
Reconciliations Reconciliations of the carrying amounts of each class of provision, except for employee entitlements provision, are set out below: (i) Dividends/distributions
2012 $000 2011 $000
Carrying amount at beginning of financial year Interim and final dividends/distributions provided for during the year Payments made during the year Carrying amount at end of financial year
70,058 147,878 (148,890) 69,046
67,278 150,642 (147,862) 70,058
(ii) Other provisions The provisions below relate to amounts recognised in relation to legal, property, lease and other expenditure where there is uncertainty regarding the timing or amount required to settle the obligation.
Property provisions $000 Provision for legals $000 2012 $000
Carrying amount at beginning of financial year Charged to the income statement Utilised Carrying amount at end of financial year
13,620 13,905 (11,900) 15,625
3,502 1,500 (1,462) 3,540
17,122 15,405 (13,362) 19,165
18. Land vendor liabilities

2012 $000 2011 $000
Current Land vendor liabilities Non-current Land vendor liabilities 11,564 27,088 33,451 32,723
The deferred payment terms for land vendor liabilities are disclosed in accordance with Note 1(m). The amount owing to some land vendors is secured over the properties being purchased until the balance of the purchase monies has been paid or settlement of the acquisition has occurred.
Financial Report 77

19. Equity Australand is a stapled entity in which the securityholders hold direct interests and an equal number of securities in each of AHL, APT, APT4 and APT5 (collectively Australand Property Group). AHL is identified as the acquirer of APT and the parent and the results and net assets of AHL and APT are combined when presenting the consolidated financial statements. However, as the stapling of APT4 and APT5 occurred after the introduction of IFRS, APT has been identified as the acquirer and the results and equity of APT4 and APT5 are presented as non-controlling interest in the consolidated financial statements on the basis that neither APT nor AHL has obtained an ownership interest as a result of the stapling. All benefits and risks of ownership and operations of APT, APT4 and APT5 flow through to the consolidated result of AHL and its controlled entities and form part of the profit attributable to stapled securityholders. Accordingly, whilst the results and equity of APT4 and APT5 are disclosed as non-controlling interest, the stapled securityholders of AHL and APT are the same as the stapled securityholders of APT4 and APT5. (a) Capital, reserves and retained profits
2012 $000 2011 $000
Capital and reserves attributable to stapled security holders as: Stapled security holders interest in the Group Equity holders of AHL and APT Contributed equity Reserves Accumulated losses Parent interest Equity holders of other stapled entities APT4 and APT5 (non-controlling interest) Contributed equity Reserves Retained profits Equity holders of other stapled entities APT4 and APT5 (non-controlling interest) (e) (b) (c) 379,855 (10,601) 71,142 440,396 379,863 (10,601) 36,137 405,399 (e) (b) (c) 1,741,986 (80,405) (86,809) 1,574,772 1,742,001 (42,306) (107,748) 1,591,947 2,015,168 1,997,346
(b) Reserves (i) Hedging reserve

Hedging reserve (cash flow hedges) AHL and APT (87,895) (52,712)
(ii) Share based payments reserve

Share based payments reserve AHL and APT 7,490 (80,405) 10,406 (42,306)
(iii) Capital redemption reserve

Capital redemption reserve APT4 and APT5 Total reserves stapled security holders Movements in above stapled security holders reserves comprise: (10,601) (91,006) (10,601) (52,907)
(i) Hedging reserve cash flow hedges

Balance 1 January Share of changes in the fair value of hedges of joint ventures and associates Changes in fair value of cash flow hedges Balance 31 December (52,712) 627 (35,810) (87,895) (146) (609) (51,957) (52,712)
19. Equity (continued) (b) Reserves (continued)

2012 $000 2011 $000
(ii) Share-based payments reserve

Balance 1 January Payment to satisfy vested PRP entitlement Expense relating to share based payments Balance 31 December 10,406 (3,905) 989 7,490 8,240 (109) 2,275 10,406
(iii) Capital redemption reserve

Balance 1 January and 31 December (10,601) (10,601)
(c) (Accumulated losses)/retained profits

Equity holders of AHL and APT Other stapled entities Australand Property Trust No.4 Australand Property Trust No.5 Stapled security holders interest in accumulated losses Movements in above total stapled security holders interests in (accumulated losses): Balance 1 January Net profit attributable to the stapled security holders of Australand Dividends/distributions (Note 20) Balance 31 December (71,611) 179,966 (124,022) (15,667) (88,231) 140,620 (124,000) (71,611) 60,915 10,226 71,142 (15,667) 30,581 5,556 36,137 (71,611) (86,809) (107,748)
(d) Nature and purpose of reserves (i) Hedging reserve cashflow hedges The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised in other comprehensive income, as described in Note 1(r). Amounts are reclassified to profit and loss when the associated hedged transaction affects profit and loss. (ii) Share-based payments reserve The share-based payments reserve is used to recognise the fair value of options or performance rights granted. (iii) Capital redemption reserve The capital redemption reserve arises in APT4 and APT5 as a result of the redemption of unit holders stapling with AHL and APT.
Financial Report 79

19. Equity (continued) (e) Movements in contributed equity 2012

Date Details Number of securities Issue price $ $000
1 Jan 12 31 Dec 12
Balance at beginning of financial year ESOP (Employee Securities Option Plan) Balance at end of financial year
1
576,629,615 576,629,615
2,121,864 (23) 2,121,841
Balance at end of financial year is attributable to: Equity holders of AHL and APT Equity holders of other stapled entities (APT4 and APT5) Total contributed equity 1,741,986 379,855 2,121,841
1 The total number of securities at 31 December 2012 is 576,846,597. The difference relates to securities held in trust to satisfy future performance rights plans.
Movements in contributed equity 2011

Date Details Number of securities Issue price $ $000
1 Jan 11
Balance at beginning of financial year Exercise of options ESOP (Employee Securities Option Plan)
576,480,847 9,400 139,368 576,629,615 1.10
2,121,765 10 89 2,121,864
31 Dec 11
Balance at end of financial year
Balance at end of financial year is attributable to: Equity holders of AHL and APT Equity holders of other stapled entities (APT4 and APT5) Total contributed equity 1,742,001 379,863 2,121,864
1 The total number of securities at 31 December 2011 is 576,846,597. The difference relates to securities held in trust to satisfy future performance rights plans.
(f) Stapled securities Stapled securities entitle the holder to receive dividends/distributions and the proceeds on any winding up of the consolidated entity in proportion to the number of and amounts paid on the stapled securities held. On a show of hands, every holder of stapled securities present at a meeting of stapled security holders in person or by proxy, is entitled to one vote, and upon a poll each stapled security is entitled to one vote.
20. Dividends/distributions Distributions recognised in the current year by APT, APT4 and APT5 are:
Payment per stapled security Total Amount $000 Date of Payment Tax Rate for Franking Credit Percentage Franked
2012
Units Interim distribution Final distribution Total distribution 10.5 cents 11.0 cents 21.5 cents 60,569 63,453 124,022 7 August 2012 8 February 2013
No dividends were paid in relation to the ordinary shares in the year ended 31 December 2012. The Australand Dividend/Distribution Reinvestment Plan (DRP) is currently suspended.
2011
Payment per stapled security
Total Amount $000
Date of Payment
Tax Rate for Franking Credit
Percentage Franked
Units Interim distribution Final distribution Total distribution 10.5 cents 11.0 cents 21.5 cents 60,569 63,452 124,021 4 August 2011 16 February 2012
No dividends were paid in relation to the ordinary shares in the year ended 31 December 2011. Total distributions shown above are $124,021,000. The total amount of distributions for the year as shown in Note 19 is $124,000,000. The difference between these amounts relates to the Employee Securities Ownership Plan dividends and distributions, which are applied against outstanding ESOP loan balances. Franking credits
2012 $000 2011 $000
Franking credits available for subsequent financial years based on a tax rate of 30% (2011: 30%)
59,009
60,060
Franking credits are available at the 30% corporate tax rate after allowing for tax payable in respect of the current periods profit and payment of proposed dividends. The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. The above amounts represent the balances of the franking accounts as at the end of the financial period, adjusted for: a) franking credits that will arise from the payment of any tax liability; b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and c) franking credits that may be prevented from being distributed in subsequent financial years.
Financial Report 81

21. ASSETS hybrid equity

2012 $000 2011 $000
Share capital
268,658
268,658
ASSETS hybrid equity relates to the contributed equity in the Australand ASSETS Trust. ASSETS are perpetual instruments that can be redeemed by the Group at any time. These instruments attract a distribution rate of 4.80% above the three month bank bill swap reference rate on the first business day of the March, June, September and December quarters. 22. Contingencies Details and estimated maximum amounts of contingent liabilities (for which no amounts are recognised in the financial statements) are as follows: (a) The Group has given indemnities for land development contract performance in the form of bank guarantees and insurance bonds.
2012 $000 2011 $000
Performance bank guarantees outstanding Financial bank guarantees Insurance bonds outstanding
36,158 1,553 54,809 92,520
45,283 2,749 51,220 99,252
The Group has also provided commercial guarantees and indemnities to some of its joint venture entities. At 31 December 2012 the Groups share of financial and performance guarantees were $17,580,000 (2011: $18,255,000) and $Nil (2011: $Nil), respectively. (b) In the ordinary course of business, the Group provides rental guarantees to tenants and owners of various commercial, industrial and residential buildings, which the Group is developing or has completed. These arrangements require the Group to guarantee the rental income of these properties for certain periods of time. Based on the current lease commitments, together with the allowances made within the development budgets for these property developments adequate allowance has been made in the financial statements for these potential obligations. (c) In the ordinary course of business, the Group becomes involved in litigation, some of which falls within the Groups insurance arrangements. Whilst the outcomes are uncertain, these contingent liabilities are not considered to be material to the Group. (d) Due to the nature of the Groups operations, which can involve complex financing structures and joint venture arrangements, the Australian Tax Office (ATO) periodically reviews and queries the taxation treatment of various transactions, which could result in additional tax being levied.
23. Investments in controlled entities Set out below are the AHL, APT, APT4 and APT5 material controlled entities to which these consolidated financial statements relate. The beneficial interest in all controlled entities is 100% (2011: 100%) except Australand Kellyville Pty Limited which is 99%. AHL, APT, APT4 and APT5 and all their respective controlled entities were incorporated in Australia with the exception of Australand HK Company Limited which was incorporated in Hong Kong. Particulars in relation to material controlled entities
Equity holding 2012 Controlled entities excluding those incorporated or formed during current financial year Notes % 2011 %
111 Darlinghurst Road Pty Ltd * ACN 085 799 695 Pty Limited * AHL (Perth) Pty Limited * AHL Real Estate (Vic) Pty Limited * AHL Real Estate Pty Limited * Apartment Project (Non-MOF) No. 4 Unit Trust * APT Altona Toll Trust * APT (Beverely No.1) Trust * APT (Collins St No.1) Trust * APT Clayton South No. 1 Unit Trust * APT (Derrimut No.2) Trust * APT Eastern Creek No. 1 Unit Trust * APT (Eastern Creek No. 2) Trust * APT (Keysborough No.1) Trust * APT (Keysborough No.2) Trust * APT Keysborough Subsidiary Trust * APT Logistics Trust * APT (Northgate No. 1) Trust * APT NSW Commercial Units Trust * APT (Parkinson No.2) Trust * APT (Port Kembla No. 1) Trust * APT Rhodes No. 1 Unit Trust * APT Rhodes F Unit Trust * APT Seven Hills No. 2 Unit Trust * APT Seven Hills No. 5 Unit Trust * APT Spring Hill No. 1 Unit Trust * APT Tullamarine No. 1 Unit Trust * Australand APT Holdings (Campbellfield No. 1) Trust * Australand Baldivis West Pty Limited (formerly Australand Port Melbourne Pty Limited) * Australand C&I (Baulkham Hills No. 1) Trust * Australand C&I Land Holdings (Altona No.1) Trust* Australand C & I Land Holdings (Campbellfield No. 1) Trust * Australand C & I Land Holdings (Dandenong No. 1) Trust * Australand C&I Land Holdings (Eastern Creek Stage 4 No.1) Trust* Australand C & I Land Holdings (Keysborough) Trust * Australand C&I Land Holdings (Larapinta No.1) Trust* Australand Cambridge Street Unit Trust * Australand Carlton Pty Limited* (a)
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Financial Report 83

23. Investments in controlled entities (continued)

Australand Car Park Trust * Australand Car Park Operations Pty Limited* Australand CE Pty Limited * Australand Consolidated Investments Pty Limited * Australand Constructions Pty Limited * Australand Corporation (NSW) Pty Limited * Australand Corporation (Qld) Pty Ltd * Australand Developments (NSW) Pty Limited * Australand Duntroon Pty Limited * Australand Finance Limited Australand Funds Management Limited Australand HK Company Limited Australand Industrial No. 101 Trust * Australand Industrial No.16 Pty Limited * Australand Industrial No.18 Pty Limited * Australand Industrial No. 46 Pty Limited * Australand Industrial No.63 Pty Limited * Australand Industrial No. 69 Pty Limited * Australand Industrial No. 76 Pty Limited * Australand Industrial No. 101 Trust (No. 2) * Australand Industrial No. 101 Trust (No. 3) * Australand Industrial No. 122 Pty Limited * Australand Industrial No. 129 Pty Limited * Australand Industrial No.139 Pty Limited * Australand Industrial Constructions Pty Limited * Australand Investments Limited Australand Jets Court Unit Trust (No. 1) (formerly Australand Jets Court Spec Unit Trust) * Australand Jets Court Unit Trust (No. 2) * Australand Kellyville Pty Limited * Australand Northshore Pty Limited * Australand Management Services Pty Limited * Australand Omeo Finance Pty Limited * Australand Parkinson Trust * Australand Property Group Pty Limited Australand Property Holdings (Collins St No. 1) Pty Limited * Australand Property Management (Vic) Pty Limited * Australand Queensland Constructions Pty Limited (formerly Australand Industrial and Logistics International Pty Limited) * Australand Retail JV Trust * Australand (SYJC) No. 2 Pty Limited * Australand Port Melbourne Unit Trust * Australand Property Limited Australand Property Management (NSW) Pty Limited (formerly Australand Industrial No. 114 Pty Limited) *
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 99 100 100 100 100 100 100 100 100 100 100 100 100 100
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 99 100 100 100 100 100 100 100 100 100 100 100 100 100

Australand Property Trust Australand Property Trust No. 4 Australand Property Trust No. 5 Australand Residential Ashlar Unit Trust * Australand Residential Burwood Unit Trust * Australand Residential Cranbourne Unit Trust * Australand Residential No. 126 Pty Limited * Australand Residential No. 130 Pty Limited * Australand Residential No. 143 Pty Limited * Australand Residential No. 166 Pty Limited * Australand Sovereign Hotel Unit Trust * Australand Stage 3B Partner Trust * Australand Stage 3C Partner Trust * Australand Torquay No. 2 Pty Limited (formerly Australand Port Coogee Pty Limited) * Australand Valley Park Pty Limited * Australand W9 & 10 Stage 4B Pty Limited * Australand West Park No. 1 Pty Limited * Australand West Park No. 1 Trust * Australand West Park No. 2 Pty Limited * Australand West Park Truganina Trust * Australand Wholesale Holdings Pty Limited * Australand Wholesale Investments (Custodian) Pty Limited * Australand Wholesale Investments No.5 Pty Limited * Australand Wholesale Property Trust No. 6 * AWPT3 Greystanes Holding Trust No. 1 * AWPT3 Greystanes Holding Trust No. 2 * AWPT 4 No. 4 Holding Trust * AWPT 4 NSW Holding Trust No.1 * AWPT 4 NSW Holding Trust No.2 * AWPT 5 Holding Trust No. 3 * AWPT 5 Holding Trust No. 5 * AWPT 5 Holding Trust No. 6 * AWPT 5 Intermediate Trust * Bayslore Pty Limited * Berwick Retail Trust * Blacktown Residential Unit Trust * Burbridge Investment Trust * Burbridge Park Industrial Trust B * Burbridge Park Industrial Trust C * Burbridge Park Industrial Trust D * Chatswood Unit Trust * Civic Tower Trust * Discovery Point Pty Limited *
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Financial Report 85


Duntroon Street Unit Trust * Eastern Creek Investment Trust No. 2 * Eastern Creek No. 1 Unit Trust * Elizabeth Street Melbourne Pty Limited * Freshwater Holding Trust No. 2 * Freshwater Holding Trust No. 5 * Freshwater Office Trust No. 2 * Freshwater Residential Pty Limited * Freshwater Stage 4 No. 2 Unit Trust * Freshwater Stage 4 Unit Trust * Greystanes Investment Trust No. 4 * Greystanes Investment Trust No. 5 * Greystanes No. 1 Unit Trust * Greystanes No. 2 Unit Trust * Healesville Investment Trust * Healesville Retail Trust * Henry Deane Building Trust * Horrie Miller Drive Unit Trust * Huntingwood Trust * Industrial Project No. 2 Unit Trust * Industrial Project No. 3 Unit Trust * Industrial Project No. 4 Unit Trust * Industrial Project No. 5 Unit Trust * Jacday Pty Limited * Jeraspell Pty Limited * Kilsyth Investment Trust * Macleay Apartment Holdings Limited * Mascot No. 1 Unit Trust * Mt Derrimut Unit Trust * No. 9 Stradbroke Street Unit Trust * Outer Harbour Unit Trust * PDI (Qld) Pty Limited * PDI Pty Limited * Platinum Street Trust * Port Catherine Developments Pty Ltd * Queensport Road Unit Trust * Rhodes Investment Trust * Rhodes No. 8 Unit Trust * Rhodes No. 9 Unit Trust * Smeaton Grange Trust * South Park Industrial Trust A * South Park Industrial Trust B *
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

South Park Investment Trust * South Park Unit Trust * South Park No. 2 Unit Trust * South Park No. 116 Trust (No. 1) * South Park No. 125 Trust * Stanton Road No. 1 Unit Trust * Stanton Road No. 2 Unit Trust * The Gateway Building Trust * Trade Street Unit Trust * Trust Project No. 11 Unit Trust * Tullamarine Investment Trust * Tullamarine No. 1 Unit Trust * Twenty8 Freshwater Place Unit Trust * Walters Road Unit Trust * West Park Investment Trust * West Park Investment Trust No. 2 * West Park No. 116 Trust (No. 1) * West Park No. 118 Trust * West Park Industrial Trust A * 394 Collins Street Unit Trust *
* Controlled entity not separately audited as it is a small proprietary company or trust not required to prepare financial statements. (a) Entities wound up during the year.
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Interest held Entities formed during the year and wholly owned at balance date Date formed %
Australand Industrial No. 68 Pty Limited Nexus Apartments Pty Limited APT (Inala/Richlands No. 1) Trust
13 Jan 2012 31 July 2012 22 Dec 2012
100 100 100
Financial Report 87

24. Key management personnel disclosures (a) Key management personnel compensation
2012 $ 2011 $
Short term employee benefits Post employment benefits Other long term employee benefits Security based payments Total
6,499,727 202,230 58,085 1,178,785 7,938,827
6,290,499 174,809 56,916 1,112,353 7,634,577
Detailed remuneration disclosures are provided in section 10 of the Remuneration Report on pages 38 to 40. (b) Equity instrument disclosures relating to key management personnel (i) Australand, CapitaLand Options* and Performance Rights Details of options and performance rights provided as remuneration, together with the terms and conditions, can be found in the Remuneration Report on pages 29 to 41.
* CapitaLand Limited is the ultimate parent entity (Note 26).
(ii) Australand options The number of options over ordinary securities in Australand held during the financial year by each director and other key management personnel of AHL, including their personally related parties, are set out below: Directors of Australand Holdings Limited 2012 No directors held options over Australand securities in 2012. 2011 No directors held options over Australand securities in 2011. Other key management personnel 2012 No key management personnel held options over Australand securities in 2012. 2011
Balance at start of year Granted during the year Other Changes Balance at Vested and end of year exercisable
Name
Exercised
Lapsed
Unvested
Sean McMahon
1,800
(1,800)
No other key management personnel held options over Australand securities. (iii) Australand stapled securities The number of Australand stapled securities held during the financial year by each director and other key management personnel of Australand Holdings Limited, including their personally related parties, are set out below: Directors of Australand Holdings Limited
2012
Name Balance at start of year Received during the year on exercise of options Other changes during year Balance at end of year
Paul Isherwood Bob Johnston Nancy Milne 2011

Name
120,000 76,000 12,014
120,000 76,000 12,014
Balance at start of year
Received during the year on exercise of options
Other changes during year
Balance at end of year
Ian Hutchinson* Paul Isherwood Bob Johnston Nancy Milne

* Iain Hutchinson retired 14 April 2011.
47,271 120,000 12,014
(12,434) 76,000
34,837 120,000 76,000 12,014
24. Key management personnel disclosures (continued) (b) Equity instrument disclosures relating to key management personnel (continued) (iii) Australand stapled securities (continued) Other key management personnel 2012
Sean McMahon
120,217
(88,000)
32,217
2011
Sean McMahon
120,217
120,217
No other directors or key management personnel held any Australand securities. (iv) CapitaLand Limited shares The number of CapitaLand Limited shares held during the financial year by each director and other key management personnel, including their personally related parties, are set out below: Directors of Australand Holdings Limited 2012 Olivier Lim and Lui Chong Chee held 342,489 and 472,000 shares respectively in CapitaLand Limited as at 31 December 2012. No other directors of Australand Holdings Limited held CapitaLand Limited shares in 2012. 2011 Olivier Lim and Lui Chong Chee held 246,521 and 472,000 shares respectively in CapitaLand Limited as at 31 December 2011. No other directors of Australand Holdings Limited held CapitaLand Limited shares in 2011. Other key management personnel No CapitaLand Limited shares were held by any other key management personnel of Australand Holdings Limited in 2012 or 2011. (v) Units held in ASSETS The number of units held in ASSETS during the financial year by each director and other key management personnel, including their personally related parties, are set out below: 2012 Directors of Australand Holdings Limited
Name Balance at start of year Other changes during year Balance at end of year
Paul Isherwood
4,200
4,200
2011
Paul Isherwood
4,200
4,200
No other directors or other key management personnel held units in ASSETS in 2012 or 2011.
Financial Report 89

24. Key management personnel disclosures (continued) (b) Equity instrument disclosures relating to key management personnel (continued) (vi) Units held in Australand Wholesale Property Fund No.6 (AWPF6) The number of units held in AWPF6 during the financial year by each director and other key management personnel, including their personally related parties, are set out below: 2012 Directors of Australand Holdings Limited
Paul Isherwood
200,000
200,000
2011
Paul Isherwood
200,000
200,000
No other directors or other key management personnel held units in AWPF6 in 2012 or 2011. (vii) Performance Rights Plan The number of performance rights held during the financial year by each director and other key management personnel, including their personally related parties, are set out below: 2012 Key management personnel and executives of the Group
Balance at start of the year Granted during the year Other changes Balance at end of Vested and the year exercisable
Name
Exercised
Lapsed
Unvested
1,118,974 230,243 234,543 395,949
408,000 138,900 143,700 143,700
(65,367) (22,863) (22,863) (23,700)
1,461,607 346,260 355,360 515,949
682,607 81,060 81,060 231,549
779,000 265,200 274,300 284,400
No other directors or other key management personnel held performance rights. 2011 Key management personnel and executives of the Group
Balance at start of the year Granted during the year Other changes Balance at end of Vested and the year exercisable
Name
Exercised
Lapsed
Unvested
932,374 126,826 126,826 330,716
371,000 126,300 130,600 130,600
(184,400) (22,883) (22,883) (65,367)
1,118,974 230,243 234,543 395,949
451,059 157,696
667,915 230,243 234,534 238,253
No other directors or other key management personnel held performance rights. (c) Other transactions with directors and other key management personnel Apart from the details disclosed within this report, no director has entered into a material contract with the consolidated entity (or a related party of the consolidated entity) since the end of the previous financial year and there are no material contracts involving directors interests existing at year end. All transactions with directors are conducted in the normal course of business under commercial terms and conditions. (d) Security based payments Details of the security-based payments for the Group are set out in section 10 of the Remuneration Report and in Note 29.
25. Commitments Operating leases Operating lease expenditure contracted for at balance date but not provided for in the financial statements:
2012 $000 2011 $000
Payable: Not later than one year Later than one year but not later than five years Later than five years 5,988 10,511 1,384 17,883 6,905 12,479 658 20,042
The consolidated entity leases premises, motor vehicles and office equipment under non-cancellable operating leases expiring from one to seven years. Leases generally provide the consolidated entity with a right of renewal at which time all terms are renegotiated. Conditional contracts Conditional contracts for the purchase of land, or relevant agreements, which have not been recognised in the financial statements:
2012 $000 2011 $000
Payable: Not later than one year Later than one year but not later than five years 405 37,714 38,119 8,390 17,057 25,447
26. Non-director related party transactions (a) Controlling entities The immediate and ultimate parent entity of AHL, APT, APT4 and APT5 is CapitaLand Limited, a company incorporated in Singapore, which at 31 December 2012 through various subsidiaries owned 59.3% (2011: 59.3%) of the issued stapled securities of Australand. (b) Controlled entities Interests in controlled entities are set out in Note 23. (c) Key management personnel Disclosures relating to key management personnel are set out in Note 24. (d) Transactions with other related parties Transactions with related parties are conducted in the normal course of business under normal terms and conditions.
2012 $000 2011 $000
Management fees from joint venture entities Management fees from associates Interest income from joint ventures Other income from joint venture entities Construction billings to joint ventures entities Sale of investment property to associate
14,344 1,710 3,314 11,814 11,835 72,065
15,946 1,107 6,591 9,789 37,630 133,250
(e) Ownership interests in entities in the wholly owned group and other related parties Interests in controlled entities are set out in Note 23. Interests held in joint venture operations, joint venture entities and associates are set out in Note 11.
Financial Report 91

27. Financial instruments (a) Interest rate hedging agreements Refer to Note 14 for details of the interest rate hedging agreements. (b) Interest rate risk The consolidated entitys exposure to interest rate risk and the effective weighted average interest rate by maturity period are:
Fixed Fixed interest Fixed interest maturing interest maturing in in 1 year maturing in more than Non interest or less 1 to 5 years 5 years bearing $000 $000 $000 $000
Floating interest rate 31 December 2012 $000
Total $000
Financial assets Cash Trade and other receivables Total financial assets Weighted average interest rate (p.a.) Financial liabilities Payables Land vendor liabilities Syndicated facility 2011 Syndicated facility 2012 USD Senior Notes Interest rate derivatives (notional principal amounts excluding forward swap contracts)** Total financial liabilities Weighted average interest rate on interest bearing liabilities (p.a.)* Net financial assets/(liabilities) (675,000) (490,000) (187,889) 1,717,889 365,000^ 7.43% 441,059 (450,000) (880,000) (387,889) 74,423 (1,202,407) (450,000) (450,000) (880,000) (880,000) (387,889) (387,889) (80,339) (45,015) (80,339) (45,015) (675,000) (490,000) (187,889) 76,059 76,059 3.62% 199,777 199,777 76,059 199,777 275,836
(125,354) (1,478,243)
Floating interest rate 31 December 2011 $000
Fixed Fixed interest Fixed interest maturing interest maturing in 1 year maturing in in more than Non interest or less 1 to 5 years 5 years bearing $000 $000 $000 $000
Total $000
Financial assets Cash Trade and other receivables Total financial assets Weighted average interest rate (p.a.) Financial liabilities Payables Land vendor liabilities Syndicated facility 2010 Syndicated facility 2011 USD Senior Notes Interest rate derivatives (notional principal amounts excluding forward swap contracts)** Total financial liabilities Weighted average interest rate on interest bearing liabilities (p.a.)* Net financial assets/(liabilities) (520,000) (675,000) (186,810) 1,616,810 235,000^ 7.87% 337,610 (550,000) (650,000) (416,810) 49,284 (1,229,916) (550,000) (550,000) (650,000) (650,000) (416,810) (416,810) (72,038) (59,811) (72,038) (59,811) (520,000) (675,000) (186,810) 93,286 9,324 102,610 4.54% 181,133 181,133 93,286 190,457 283,743
(131,849) (1,513,659)
* Weighted average interest rates include the effect of interest rate derivatives. ** Based on the maturity of current swaps (excludes the impact of forward start interest rate swaps). ^ Includes derivatives against ASSETS hybrid equity (recognised as equity in the balance sheet) and callable swaps.
An analysis of maturities of financial liabilities on an undiscounted cash flow basis is shown in Note 3(c).
27. Financial instruments (continued) (c) Net fair values The consolidated entitys financial assets and liabilities are stated at cost and these assets are not traded in an organised financial market. Carrying amounts of trade and other receivables, other financial assets, payables, bank loans and unsecured notes are stated at cost as the carrying values approximate net fair values. The valuation of financial instruments recognised on the consolidated balance sheet reflects the estimated amounts, which the consolidated entity expects to pay or receive to terminate the contracts, or replace the contracts at their current market rates as at the reporting date. The net fair value recognised on the consolidated balance sheet in relation to interest rate derivatives and cross currency interest rate swaps held at 31 December 2012 was a liability of $122,459,000 (2011: $76,854,000) and an asset of $21,715,000 (2011: $24,263,000). (d) Credit risk The carrying amounts of financial assets included in the consolidated balance sheet represent the consolidated entitys exposure to credit risk in relation to these assets. (e) Summarised interest rate sensitivity analysis The table below illustrates the potential impact a change in interest rates by +/-1% would have had on the Groups profit and equity.
-1% Carrying amount 31 December 2012 $000 Profit $000 Equity $000 Profit $000 +1% Equity $000
Financial assets Cash and cash equivalents Other financial assets (non-interest bearing) Financial liabilities Borrowings Derivative financial instruments Other financial liabilities (non-interest bearing) Total increase/(decrease) (1,352,889) (122,459) (125,354) 13,276 (38,001) (25,257)
-1% Carrying amount 31 December 2011 $000 Profit $000 Equity $000 Profit $000
76,059 199,777
(532)
(532)
532
532
13,276 (69,534) (56,790)
(13,276) 26,450 13,706

+1%
(13,276) 57,285 44,541
Equity $000
Financial assets Cash and cash equivalents Other financial assets (non-interest bearing) Financial liabilities Borrowings Derivative financial instruments Other financial liabilities (non-interest bearing) Total increase/(decrease) (1,381,810) (76,854) (131,849) 13,576 (28,829) (15,906) 13,576 (64,012) (51,089) (13,576) 22,657 9,734 (13,576) 52,912 39,989 93,286 190,457 (653) (653) 653 653
Based upon a 100 (2011: 100) basis point increase or decrease in Australian interest rates, the impact on profit after tax has been calculated taking into account all underlying exposures and related derivatives. This sensitivity has been selected as this is considered reasonable given the current level of both short term and long term interest rates.
Financial Report 93

28. Cash flow information (a) Reconciliation of cash Cash as at the end of the financial year as shown in the cash flow statement is equal to cash shown in the balance sheet. (b) Reconciliation of profit after income tax to net cash inflow from operating activities
2012 $000 2011 $000
Net profit for the year Non-cash items: Depreciation and amortisation Non-cash employee benefits expense (share-based payments) Net gains from fair value adjustments on investment property Share of profits from joint venture entities not received as dividends or distributions Movements in unrealised losses from the establishment of joint ventures Write-down of inventories Development profit recognised through valuation of properties to Australand Property Trusts Unrealised losses on interest rate derivatives Change in operating assets and liabilities: (Increase)/decrease in trade and other receivables (Increase)/decrease in other assets Decrease/(increase) in inventories Decrease in advances to joint ventures Decrease in investments accounted for using the equity method (distributions received) Increase in deferred tax assets Increase in payables Increase/(decrease) in provisions Net cash flows provided by operating activities
203,822
167,262
8,172 989 (54,520) (18,703) 4,909 13,421
5,525 2,275 (61,525) (30,162) (2,130) 30,000 (1,842) 24,193
(29,924) (3,150) 159,796 20,605 18,127 8,301 2,204 334,049
44,893 2,633 (246,390) 77,137 35,838 (851) 13,306 (2,534) 57,628
(c) Cash flows from investment in associates

2012 $000 2011 $000
Distributions received Net receipts from investment in associates
5,558 5,558
3,358 3,358
29. Security based payments (a) Australand Performance Rights Plan (PRP) The establishment of the Australand Performance Rights Plan was approved by securityholders at the 2007 Annual and General Meetings. Details of the PRP for key management personnel are disclosed in the remuneration report. Set out below are summaries of Performance Rights granted under the plan:
Balance at start of year Granted during year Exercised during the year Lapsed/ Forfeited during year Balance at end of year Vested and exercisable at end of year
Grant date
Vesting & Expiry date
Exercise Price
31 December 2012 Jun 2007 Oct 2008 Jun 2009 Aug 2010 Jun 2011 Jun 2011 Feb 2012 Feb 2012 July 2012 July 2012 Feb 2013 Feb 2013 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2012 Dec 2013 Dec 2012 Dec 2013 Dec 2014 Dec 2013 Dec 2013 Dec 2014 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 111,620 35,673 1,564,492 1,442,256 168,600 1,510,400 86,055 74,882 1,734,700 184,300 75,657 66,382 (23,866) (5,420) (228,611) (394,211) (13,300) (26,600) (30,200) (8,900) 87,754 30,253 1,335,881 1,048,045 155,300 1,483,800 86,055 74,882 1,704,500 175,400 75,657 66,382 87,754 30,253 1,335,881 1,048,045 155,300 86,055
31 December 2011 Jun 2007 Oct 2008 Jun 2009 Aug 2010 Jun 2011 Jun 2011 Feb 2012 Feb 2012 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2012 Dec 2013 Dec 2012 Dec 2013 Nil Nil Nil Nil Nil Nil Nil Nil 111,620 35,673 2,006,152 1,759,773 168,600 1,510,400 86,055 74,882 (441,660) (317,517) 111,620 35,673 1,564,492 1,442,256 168,600 1,510,400 86,055 74,882 111,620 35,673 1,564,492
Fair value of Performance rights granted The assessed fair value at grant date of Performance Rights granted since 1 March 2012 is $1.62, $2.22 and $3.14 respectively (2011: $1.97, $2.55 and $2.40). The fair value at grant date is independently determined using the Monte Carlo Simulation technique. This technique involves stock prices being randomly simulated under risk neutral conditions and parameters in order to calculate the value of the Performance Rights at expiry. The simulation is repeated numerous times to produce distribution payoff amounts. The Performance Rights value is taken as the average of the payoff amounts calculated and discounted back to the valuation date. The following assumptions were used in valuing the Performance Rights: (a) share price at grant date: Feb 13 $3.44, Jul 12 $2.49 (2011: Feb 12 $2.66, Jun 11 $2.87) (b) expected price volatility of the companys stapled securities: 32% (2011: 35%) (c) expected dividend yield: 8% (2011: 8%) (d) risk-free discount rate (p.a effective): 2.5% (2011: 4.7%) (e) expected franking rate: Nil% (2011: Nil%) (f) Australand and index correlation: 50% (2011: 50%)
Financial Report 95

29. Security based payments (continued) (b) Australand tax exempt employee security plan (TEP) A plan under which tax exempt stapled securities may be issued by the company to employees for no cash consideration was approved by shareholders at the 2007 Annual and General Meetings. All Australian resident permanent (full-time and part-time) employees (excluding directors and participants in the Australand Performance Rights Plan) who have been continuously employed by the Group for a period of at least nine months as at the invitation date and are still employees as at the acquisition date (the date Australand acquires the securities) are eligible to participate in the plan. Employees may elect not to participate in the plan. The plan provides for up to $1,000 worth of Australand Stapled Securities (tax-free) to eligible employees annually for no cash consideration. A three-year restriction period on selling, transferring or otherwise dealing with the securities applies, unless the employee leaves Australand. Under the plan, employees will receive the same benefits as all other security holders. The number of securities issued to participants in the plan is the offer amount divided by the weighted average price at which the companys stapled securities are traded on the Australian Stock Exchange during the week up to and including the acquisition date (rounded down to the nearest whole number of securities).
Weighted average market price Date stapled securities were issued under the plan to participating employees $ No. of securities issued Consolidated 2012 2011
20 June 2011 Total securities issued
2.90
108,016 108,016
There were no securities issued under the plan during the year as a result of it being discontinued. (c) Expenses arising from security-based payment transactions Total expenses for the Group arising from security-based payment transactions during the period were as follows:
2012 $000 2011 $000
Performance Rights issued under Australand Performance Rights Plan
989 989
2,275 2,275
30. Parent entity financial information (a) Summary financial information The individual financial statements for the parent entity show the following aggregate amounts. Balance sheet
2012 $000 2011 $000
Current assets Total assets Current liabilities Total liabilities Equity Contributed Equity Reserves (security-based payments and other) Retained earnings Profit or loss for the year Total comprehensive income for the year
293,241 1,253,354 12,795 651,695 576,433 7,338 17,888 601,659 6,575 6,575
354,665 1,488,376 29,293 890,124 576,433 10,506 11,313 598,252 65,493 65,493
30. Parent entity financial information (continued) (b) Guarantees entered into by the Parent entity The parent entity has provided commercial guarantees and indemnities to its joint venture entities. At 31 December 2012 the parent entitys share of financial and performance guarantees were $17,580,000 (2011: $18,255,000) and $Nil (2011: $nil), respectively. (c) Contingent liabilities of the parent entity The parent entity had contingent liabilities of $54,809,000 as at 31 December 2012 (2011: $51,220,000), in relation to insurance bonds outstanding. For information about guarantees given by the parent entity, please see Note (b) above. (d) Contractual commitments for operating leases As at 31 December 2012, the parent entity had contractual commitments for non-cancellable operating leases totalling $16,955,000 (31 December 2011: $18,782,000).
31. Events occurring after the balance sheet date On 3 January 2013, Australands major securityholder, CapitaLand Limited, announced its intention to conduct a strategic review of its investment in Australand. Australand has appointed financial and legal advisers to assist it in establishing whether any proposal arising from CapitaLands review can be developed that is in the interests of all Australands securityholders. Australands management and advisers are working with CapitaLand in this process, however there is no guarantee that any proposal will be forthcoming. Other than the matter referred to above, there have been no significant events or transactions that have arisen since the end of the financial year, which in the opinion of the directors, would affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity.
Financial Report 97
Directors declaration
In the directors opinion:
(a) the financial statements and notes set out on pages 44 to 97 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of the consolidated entitys financial position as at 31 December 2012 and of its performance for the financial year ended on that date; and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the directors.
Olivier Lim Chairman Sydney 26 February 2013
98
Independent audit report
Financial Report
99
Independent audit report (continued)
100
Securityholders Information.
Top 20 holdings as at 21 February 2013
Rank Name No. of stapled Securities %
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Ausprop Holdings Limited Austvale Holdings Ltd HSBC Custody Nominees (Australia) Limited J P Morgan Nominees Australia Limited National Nominees Limited Citicorp Nominees Pty Limited JP Morgan Nominees Australia Limited BNP Paribas Noms Pty Ltd Equity Trustees Limited Citicorp Nominees Pty Limited AMP Life Limited Woodcross Nominees Pty Ltd HSBC Custody Nominees (Australia) Limited Pacific Custodians Pty Limited HSBC Custody Nominees (Australia) Limited A/C 3 Bond Street Custodians Limited Brazil Farming Pty Ltd QIC Limited Milton Corporation Limited Diversified United Investment Limited
269,674,539 72,210,836 57,055,144 44,185,362 28,487,083 12,612,263 7,142,081 4,409,456 3,522,277 3,242,580 2,099,623 1,975,662 1,834,387 1,818,042 1,279,020 1,170,810 1,050,000 962,571 832,732 790,000 516,354,468 60,492,129 576,846,597
46.75 12.52 9.89 7.66 4.94 2.19 1.24 0.76 0.61 0.56 0.36 0.34 0.32 0.32 0.22 0.20 0.18 0.17 0.14 0.14 89.51 10.49 100.00
Total securities held by top 20 All other securityholders Total Australand stapled securities on issue
Range of securityholders
Range No. of securityholders % of securityholders No. of stapled securities % of issued capital
1 1,000 1,001 5,000 5,001 10,000 10,001 100,000 100,001 and above Total
2,664 3,512 1,160 1,065 81 8,482
31.41 41.41 13.68 12.56 0.95 100.00
1,181,503 9,233,505 8,536,508 25,961,068 531,934,013 576,846,597
0.20 1.60 1.48 4.50 92.21 100.00
The number of investors holding less than a marketable parcel of 146 securities ($3.440 on 21/02/2013) is 454 and they held 18,633 securities.
Securityholders Information 101
Securityholders Information (continued)
Substantial securityholders Australands substantial securityholders and the number of stapled securities in which each securityholder has an interest as disclosed to Australand as at 21 February 2013 are:
Registered holder No. of stapled securities % of issued capital
Temasek Holdings (Private) Limited1
Ausprop Holdings Limited Austvale Holdings Ltd
269,674,539 72,210,836
46.75 12.52
1 Temasek Holdings (Private) Limited has an interest in 40.37% of the issued capital of CapitaLand Limited and is deemed to hold an interest in Australand stapled securities held by Ausprop Holdings Limited and Austvale Holdings Ltd. CapitaLand Limited has also lodged a substantial securityholder notice by virtue of its interest in Ausprop Holdings Limited and Austvale Holdings Ltd.
ADDITIONAL SECURITYHOLDERS INFORMATION Securities Exchange listing Australands stapled securities are listed on the Australian Securities Exchange and trades under the code ALZ. Issued capital As at 31 December 2012, the issued capital of Australand was 576,846,597 (no change from the prior year). Dividend/distribution payments It remains the directors intention to pay dividends/ distributions on Australands stapled securities on a half yearly basis. Direct dividend/distribution deposit into bank accounts If you are an Australian resident securityholder, your dividend/distribution will be paid directly into your nominated bank, building society or credit union account in Australia on the dividend/distribution payment date. Details of the dividend/distribution payment will be confirmed by an advice mailed to you on that date. If you have not provided your bank account details you will not receive your dividend/distribution payment until you do so. You can provide your bank account details by contacting our share registry, Link Market Services (Link). If you subsequently change your bank account details, please promptly notify the registry in writing. Tax file numbers For Australian resident securityholders, Tax File Numbers or Exemption details are recorded from securityholders who have advised this information. Dividend/distribution advice statements indicate if a securityholders Tax File Number has not been recorded. While it is not compulsory to provide a Tax File Number or Exemption details, in the event of Australand paying an unfranked distribution, Australand is obliged to deduct tax at the highest marginal rate plus Medicare Levy from those Australian resident securityholders who have not supplied such information.
Securityholder enquiries Securityholders with queries concerning their holding, dividend/distribution payments or related matters should contact our share registry as detailed in the Corporate Directory of the 2012 Annual Report. Change of address Securityholders who have changed their address should advise our share registry in writing or by visiting our share registry website at www.linkmarketservices.com.au Removal from Annual Report mailing list Securityholders who do not wish to receive an Annual Report should advise our share registry in writing or by visiting our share registry website at www.linkmarketservices.com.au to update your communication options. Privacy legislation The Privacy Act 1988 (as amended) is designed to protect an individuals personal information, including information stored or transmitted electronically. The substance of the legislation is the Ten National Privacy Principles regulating the collection, use, disclosure and management of personal information. Link collects and maintains personal information of securityholders on behalf of Australand as part of its operation of Australands stapled security registers, and its facilitation of communication from Australand to its securityholders. Link has implemented various policies and procedures to ensure compliance with the Privacy legislation. A Collection and Disclosure Statement outlining certain particulars in relation to the collection, maintenance and disclosure of personal information has been sent to all securityholders and is available from Link on request. Australand has also implemented appropriate policies and procedures to ensure its compliance and that of its employees with the Privacy legislation.
Voting rights stapled securities entitlement to vote The following is an extract from the Constitution of Australand Holdings Limited: 9.16 Subject to any rights or restrictions for the time being attached to any class or classes of shares and to this Constitution: a) on a show of hands, each Member present in person and each other person present as a proxy, attorney or Representative of a Member has one vote; and b) on a poll, each Member present in person has one vote for each fully paid share held by the Member and each person present as proxy, attorney or Representative of a Member has one vote for each fully paid share held by the Member that the person represents. A Member is not entitled to vote at a General Meeting in respect of shares which are the subject of a current Restriction Agreement for so long as any breach of that agreement subsists. The following is an extract from the Constitution of Australand Property Trust: 16.24 Subject to any rights or restrictions for the time being attached to any class or classes of units and to this Constitution: a) on a show of hands, each Member present in person and each other person present as a proxy, attorney or Representative of a Member has one vote; and b) on a poll, each Member present in person has one vote for each one dollar of the value of the units held by the Member and each person present as proxy, attorney or Representative of a Member has one vote for each one dollar of the value of the units held by the Member that the person represents. A Member is not entitled to vote at a General Meeting in respect of units which are the subject of a current Restriction Agreement for so long as any breach of that agreement subsists. The following is an extract from the Constitution of Australand Property Trust No.4: 17.15 The provisions of the Corporations Act governing proxies and voting for meetings of members of registered schemes apply to the Trust. The following is an extract from the Constitution of Australand Property Trust No.5: 18.15 The provisions of the Corporations Act governing proxies and voting for meetings of members of registered schemes apply to the Trust.
Securityholders Information 103
Ten year financial summary1

2011 2010 2009 2008 2007 2006 2005 20042 2003
Year ended 31 December
2012
Financial performance ($m) 692.8 140.6 165.8 (298.2) 40.2 269.2 243.1 201.0 113.1 95.2 749.3 686.8 831.6 1,159.1 1,058.4 1,533.1 1,124.4 1,405.4
Revenue
918.8
Profit attributable to stapled securityholders
180.0
Financial position ($m) 3,953.3 2,266.0 2,299.7 2,242.9 2,105.3 1,848.7 1,712.1 1,496.5 1,142.1 3,683.7 3,483.2 4,099.1 3,789.1 3,502.6 3,081.3 2,568.2 2,008.1 994.8

23.5 21.5 11.0 2.3 36.2 1.08 432.6 0.266 1.916 0.226 1.98 2.65 2.32 2.00 2.22 1.73 2,152.0 1,854.2 1.70 1.56 40.4 39.8 18.0 18.2 16.9 39.7 1.41 1,807.2 2.07 2.13 1.36 17.0 16.5 16.5 6.9 33.0 3.46
8
Total assets
3,983.6
Total equity
2,283.8
Securityholder value 22.1 20.5 8.3 29.5 3.52 1,678.6 2.91 3.09 0.457 0.19 0.58 0.52 1,485.3 3.40 25.4 (15.3) 25.08 27.15 11.85 14.55 17.3 17.1 14.6 16.5 10.7 46.6 1.35 1,527.9 1.81 1.94 1.56 17.1 13.4 10.9 29.9 1.36 1,110.7 1.61 1.85 1.36
Basic earnings per stapled security on operating profit after tax4()
24.6
Dividends/distributions per stapled security ()
21.5
Return on securityholders funds (%)
8.7
Gearing ratio (%)3 1,384.4 2.40 3.20 2.17
32.2
NTA per stapled security ($)
3.49
Market capitalisation ($m)
1,961.3
Stapled security prices ($):
Close, 31 December
3.40
High
3.52
Low
2.19
Other information 576,846,597 576,837,197 2,884,031,620 1,696,490,449 927,598,937 927,114,437 873,052,172 844,143,646 689,875,776
Ten Year Financial Summary.
Number of securities
576,846,597
1 Ten year financial summary is based on AIFRS for years ended 31 December 2012, 2011, 2010, 2009, 2008, 2007, 2006, 2005 and 2004 and based on AGAAP for year ended 31 December 2003. 2 Restated on adoption of AIFRS. 3 Gearing ratio is defined as interest bearing debt to total tangible assets (cash adjusted), based on the drawn amount of debt excluding fair value adjustments and associated derivative financial instruments. 4 Excluding unrealised gains/(losses) from property valuations and significant one-off items. 5 Adjusted in accordance with AASB 133 Earnings per share for the effect of the Entitlement Offers completed in September 2008 and September 2009. 2009 has been restated for the May 2010 security consolidation. 6 The stated stapled security price for 2008 includes the adjustment factor in the relation to the Entitlement Offer announced on 28 July 2008. The actual high and low stapled security price, before the impact of the Entitlement Offer, was $2.36 and $0.22, respectively. 7 The stapled security price for 2010 and the number of securities includes the adjustment factor in relation to the security consolidation (1 for 5) completed in May 2010. The actual low stapled security price prior to the consolidation was $0.09. 8 Restated for the effect of the security consolidation (1 for 5) completed in May 2010.
Key 2013 Dates.

Feb 07 Feb 08
Release of 2012 full year results
Jun 28 Jun 30
Half year end
2013 interim dividend/ distribution record date
DEC 23 DEC 31 DEC 31

Year end
Stapled securities trade ex-dividend/distribution for 2013 final distribution
Payment of 2012 final dividend/distribution
Apr 22 Jun 19 Jun 24
Jul 24*
2013 final dividend/ distribution record date
Annual and General Meetings
Release of half year results
Aug 07* DEC 18
2013 interim dividend/distribution announcement
Payment of 2013 interim dividend/distribution
Stapled securities trade ex-dividend/ distribution for 2013 interim distribution
2013 final dividend/ distribution announcement
* These dates are indicative only and may be subject to change without notice.
Key 2013 Dates 105
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107
Corporate Directory.
AUstRalanD Australand Holdings Limited (ABN 12 008 443 696) Australand Property Limited (ABN 90 105 462 137, AFSL 231130) As the responsible entity of Australand Property Trust (ARSN 106 680 424) Australand ASSETS Trust (ARSN 115 338 513) Australand Investments Limited (ABN 12 086 673 092, AFSL 228837) As the responsible entity of Australand Property Trust No.4 (ARSN 108 254 413) Australand Property Trust No.5 (ARSN 108 254 771) Registered Office Level 3, Building C Rhodes Corporate Park 1 Homebush Bay Drive Rhodes NSW 2138 Telephone: + 61 2 9767 2000 Facsimile: + 61 2 9767 2900 www.australand.com.au Company Secretary Bev Booker Telephone: + 61 2 9767 2000 Facsimile: + 61 2 9767 2900 Email: bbooker@australand.com.au How to contact us At www.australand.com.au click on Contact Us and you can email your enquiry and let us know the most convenient way for us to respond to you. AUstRalanD State OFFices Head Office Sydney Level 3, Building C Rhodes Corporate Park 1 Homebush Bay Drive Rhodes NSW 2138 Telephone: + 61 2 9767 2000 Facsimile: + 61 2 9767 2900 PO Box 3307 Rhodes NSW 2138 DX 8419 Ryde Melbourne Commercial & Industrial Freshwater Place Level 14, 2 Southbank Boulevard Southbank VIC 3006 Telephone: + 61 3 9426 1000 Facsimile: + 61 3 9426 1051 Residential Level 9, 484 St Kilda Road Melbourne Vic 3004 Telephone: +61 3 9258 1200 Facsimile: +61 3 9258 1212 Brisbane Level 3, 154 Melbourne Street South Brisbane QLD 4101 Telephone: + 61 7 3249 7400 Facsimile: + 61 7 3249 7456 PO Box 3439 South Brisbane Business Centre QLD 4101 Adelaide Suite 206, 147 Pirie Street Adelaide SA 5000 Telephone: +61 8 8203 5500 Facsimile: +61 8 8232 6065 Perth Level 2, 115 Cambridge Street West Leederville WA 6007 Telephone: +61 8 9214 7900 Facsimile: +61 8 9214 7910 PO Box 1216 West Leederville WA 6901 ShaRe RegistRY Link Market Services Limited 1A Homebush Bay Drive Rhodes NSW 2138 Locked Bag A14 Sydney South NSW 1235 Telephone: +61 1300 554 474 Facsimile: +61 2 9287 0309 www.linkmarketservices.com.au AUstRalian SecURities EXchange Exchange Centre 20 Bridge Street Sydney NSW 2000 AnnUal RepoRt To request a copy of the Annual Report please call +61 2 9767 2000 A copy of Australands Complaints Handling and Dispute Resolution Policy can be accessed from the website on www.australand.com.au under Corporate Governance.
Corporate Directory 109
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People driven people

Annual Report 2012

175 120 128

Distributions per Stapled Security

Net Tangible Assets per Stapled Security

People driven people

Summary of profit and loss statement

178 24 89 (30) 261 (95) 166 (24) 142 51 (13) 180

2 Australand Annual Report 2012

Chairmans and Managing Directors Report.

Chairmans and Managing Directors Report 3

People driven people

Chairmans and Managing Directors Report

Australand Annual Report 2012

Group Business Model

Office & Industrial

Commercial & Industrial

Olivier Lim Chairman

Bob Johnston Managing Director

Chairmans and Managing Directors Report

People driven people

Business Review Investment Property

Well positioned to deliver growth. $2.3bn

6 Australand Annual Report 2012

EBIT Revaluation gain1 Metrics

$178m $51m $2.3bn 97.6%

$165m $59m $2.2bn 99.3%

357 Collins Street, Melbourne, VIC

People driven people

Business Review Commercial & Industrial

Competitive advantage. $214m

8 Australand Annual Report 2012

Revenue EBIT NTA uplift Total contribution ROACE

$214m $24m $16m $40m 9.2%

$181m $29m $22m $51m 11.4%

People driven people

Business Review Residential

Playing an integral role in urban development. $606m

10 Australand Annual Report 2012

Sales activity4 Gross lots sold Gross contracts on hand (lots)

Capital employed5 Lots under management Pipeline end value3

Green Quarter, Hamilton, QLD

People driven people

12 Australand Annual Report 2012

People driven people

Board Membership Director Audit

Committee Membership Investment Remuneration & Nomination Risk & Compliance

Olivier Lim1 Paul Isherwood

Chair Member Chair

Member Member Member Member Chair Member Member

14 Australand Annual Report 2012

People driven people

Director Executive Team Senior Successors1 Company

25.0 14.3 25.0 29.0

12.5 14.3 19.6 28.1

12.5 14.3 16.0 27.7

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

Overall voluntary turnover for permanent employees.

Total company voluntary turnover (%)

16 Australand Annual Report 2012

People driven people

18 Australand Annual Report 2012

Compliance with ASX Recommendations

Comply Do not Comply Comply