Mirvac Group - An Australian leading publicly listed company on ASX

Assessment Task

Table of Contents
Overview of the borrower............................................................................................................3
Financial analysis.........................................................................................................................3
Security........................................................................................................................................7
Loan Policy..................................................................................................................................7
Pricing Model...............................................................................................................................8
Recommendations........................................................................................................................8
REFERENCES..............................................................................................................................10
APPENDIX....................................................................................................................................12
Appendix: 1 Security analysis....................................................................................................12
Appendix: 2: Financial analysis.................................................................................................12
Appendix: 3: Projected statements.............................................................................................13

Overview of the borrower
Mirvac Group is Australian leading publicly listed company on ASX headquartered in
Sydney NSW, Australia. It was established in the year 1972 and operates in real estate industry.
It is an integrated property group which owns and manages number of assets across industrial,
retail and office sectors. Its key mission is to invest in vibrant cities considering well-connected
places for work, live and play. Along with the property development operations, it also invest in
hi-quality commercial assets and residential projects for their consumers so as to maximize long-
term value for security holders. Such integrated business approach of Mirvac provide it’s a
competitive benefit in creating and developing world class assets across project lifecycle from
planning to construction, leasing, development and property management (Mirvac Group Annual
report, 2017). Its integrated business model assures growth in its income through having a
balance of active & passive capital. with having an experience of 45 years, Mirvac is redefining
its presence in Australia through developing highly sustainable, well-connected and vibrant
urban environment for the society whether they can play, live, shop and work. It is extremely
committed towards innovation, sustainability, technological advancements and safety. In the year
2016, its urban strategy and well managed capital delivered successful results with $482m
operating profit (+6%, $455m in 2015) which got increased to $750m EBIT in FY 2017. Its
statutory profit increased from 1.03 bn to $1.16 bn and operating cash flow from $509m to
$513m. Currently, it employed more than 1,470 employees spreaded all around the world at a
sex ratio of 59:41. As per FY 2017, it has effectively managed its capital through lowering its
gearing (Pan, Wang and Weisbac, 2014). With the reduction in debt composition which will be
due in one year, its weight average debt maturity increased by 6.2 years, whilst, average
borrowing cost came down to 4.8% from 5%. Its 2017 year annual report presented revenue of
$2,275m at a total long-term borrowing of $2,765m. Currently, it is looking for expansion for
which it requires loan borrowing of AUD 250m.
Financial analysis
Profitability analysis

2013 2014 2015 2016 2017
9.49%
24.37%
32.59% 35.53%
49.87%
22.46%
13.00%
27.66%
8.49% 4.03%4.45% 5.85% 4.58% 4.55% 4.51%
Net profit ratio
Mirvac Group Finbar Group LendLease Group
2013 2014 2015 2016 2017
14.33%
37.95% 41.35%
49.33%
44.34%
30.43%
20.94%
31.91%
9.43% 8.06%8.06% 5.08% 7.41% 6.41% 6.26%
Operating profit ratio
Mirvac Group Finbar Group LendLease Group
According to the results, it is clear that Mirvac Group has generated increased operating
return till the end of 2016, while in latest year, it dropped down to $1035m at a operating margin
of 44.34%, still, it is significantly higher than that of competitors operating return @ 8.06%
(Finbar Group ) and 6.10% (LendLease Group) (LendLease Group Ltd, 2017). Good increase in
the revenue from $1465m to $2907m by 2016 is the result behind higher operating return
whereas in FY 2017, it came down to $2,334m due to decline in revenue from development
operations from $1,654m to $1605m, still, it accounted major contribution.