BLACKWALL LIMITED - Annual Report 2009

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AND CONTROLLED ENTITIES

ANNUAL REPORT

Financial Year Ended 30 June 2009

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Pelorus Property Group Limited

ABN 45 091 209 639

Level 3, 50 Yeo Street, Neutral Bay NSW 2089 PO Box 612, Neutral Bay NSW 2089 Phone : (02) 9033 8611 Fax : (02) 9033 8600 Web : www.pelorus.com.au

CONTENTS Directors’ Report Corporate Governance Shareholders Pelorus Details Auditor’s Independence Declaration Independent Audit Report Directors’ Declaration Financial Statements	CONTENTS Directors’ Report Corporate Governance Shareholders Pelorus Details Auditor’s Independence Declaration Independent Audit Report Directors’ Declaration Financial Statements					3 11 14 15 16 17 19 20

Annual Report Financial Year Ended 30 June 2009

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2009

Your directors present their report for the company and controlled entities for the financial year ended 30 June 2009.

PRINCIPAL ACTIVITIES

The year ended 30 June 2009 has been one of significant change for Pelorus. With the completion of the group’s restructure in December 2008 (the “Merger”), Pelorus now has a much larger balance sheet, a solid real estate portfolio and a property funds management and services business with significant capacity and prospects.

Pelorus aims to generate recurring revenue and capital growth from income producing properties. Our strategy is to hold real estate for the long term and grow income streams through active management and, where possible, ongoing development.

Our activities can be broken into three vertically integrated groups.

Current value of $220 million - equating to NTA of 26 cents per share following over $30 million of write downs over the past 18 months.

Property Portfolio

  - 6 assets (5 in Australia and 1 in New Zealand).

Net lettable area of 70,000 sqm with a further 60,000 sqm of development potential.
Weighted average look through gearing of 50% with a weighted average term to maturity of 2.7 years.
Seven funds with over A$200 million in assets under management.
A rent roll of over $75 million pa from over 40 properties.
Funds Management • Development management, leasing and general property consultancy.
& Property Services
Asset management and advisory work specialising in special situations, distressed assets and property structures.
WT Serviced Offices - A serviced office business controlling over 4,300 sqm of short-term office space.
Pelathon Management Group Pty Ltd (40% joint venture) – Pub operations with 4 existing pubs, a portfolio of three pubs under negotiation and a new
Property Operating outlet due to open in December 2009. Businesses • WT Retail Services (India) Private Ltd (50% India joint venture) – Retail property management and consultancy with 5 ongoing mandates in Bangalore, Hyderabad and Mangalore.
Capital Storage Services Pty Ltd (51% joint venture) – A self-storage management business with over 30,000 sqm of storage space under management.

FUTURE DEVELOPMENTS AND RESULTS

The deterioration of economic conditions over the past 18 months has led to highly geared property structures experiencing significant and in some cases fatal funding difficulties. We feel that, particularly in the unlisted

Annual Report Financial Year Ended 30 June 2009

property sector, these issues will continue for some time. Such circumstances will lead to increasing mergers and acquisition activity among property funds management businesses. Pelorus has already participated in this space with the acquisition of RFML Limited (formerly called Reed Funds Management Limited) and Tankstream Funds Management Limited. These two transactions have effectively replaced the funds under management lost with the merger of Pelorus with its largest fund, The Bakehouse Quarter Fund, in December 2008.

With the integration of Tankstream and RFML now complete, we have a solid platform from which to grow assets under management. In this regard we expect assets under management to grow to over $1 billion over the coming three years.

The trusts we now manage are not without issues; however, we feel our structure along with our approach to property and property finance should, over time, rectify problems and generate reasonable returns to investors and stable fees to Pelorus. A number of specific initiatives are under way and will be announced in the coming weeks.

Over the coming 12 months, Pelorus will aim to grow its portfolio of controlled assets by:

merger and acquisitions of property funds management businesses;
using its balance sheet along with the balance sheets of its managed funds to acquire income producing properties with a particular focus on distressed assets and property structures; and
engaging its Property Services activities and that of its Property Operating Business in mandates with equity participation components.

RESULTS AND REVIEW OF OPERATIONS

Pelorus made a Pre-Tax Profit for the full year to 30 June 2009 of $9.5 million.

The revenue and earnings contributions of Pelorus’ three operating platforms are summarised below; however, the Merger had a significant effect on the quantum and make up of this result. Specifically:

the Property Investment result includes only the six months trading from December 2008; and
Funds Management and Property Services revenue in relation to the funds and properties brought on to the Pelorus balance sheet as a result of the Merger are eliminated on consolidation for the six months from December 2008. Had the merger not occurred, the annualised result for this segment would have been approximately $2.2 million.

Segment Report 2009

Segment Report 2009
	June 2009	June 2008	June 2007
Fund/Asset Management Revenue	$1,685,079	$3,793,292	$2,804,466
Property Services Revenue	$3,711,992	$4,339,604	$4,453,387
Property Investment Revenue	$6,768,875	$0	$0
Other Investment Revenue	$1,636,546	$2,365,240	$6,054,212
TOTAL	$13,802,492	$10,498,136	$13,312,065

Annual Report Financial Year Ended 30 June 2009

Consolidated Earnings 2009
		Pre-Tax
Fund/Asset Management	$865,123
PropertyServices	$847,912
PropertyInvestment	$1,546,178
Other Investment Revenue	$1,088,462
		$4,347,675
Merger & Acquisition Gains	$13,174,849
Asset Impairments	($8,068,781)
		$5,106,068
Pre-Tax Proft		$9,453,743

SUBSEQUENT EVENTS

As discussed earlier, on 12 August 2009 Pelorus announced that it was merging its funds management business with Tankstream Funds Management Limited (“Tankstream”). Tankstream has been in business since 2004 and is the manager of two property securities funds and a pub fund. Tankstream directors David Mackey and Craig Williams have joined Pelorus, growing the funds management group as part of this transaction.

DIVIDENDS PAID

The Pelorus directors have resolved not to declare a dividend for the full year ended 30 June 2009.

Annual Report Financial Year Ended 30 June 2009

INFORMATION ON DIRECTORS

The names of the directors in office at any time during or since the end of the year are set out below. Unless otherwise stated, directors have been in office since the start of the financial year to the date of this financial report.

Name	Special Experience	Position
Seph Glew	Seph has over 30 years experience in the commercial property industry in	Executive
	NZ, the USA and Australia. While working for the Housing Corporation	Chairman
	and then the AMP in New Zealand Seph qualifed as registered valuer
	and obtained a Bachelor Of Commerce with a major in economics. In the
	1980’s he served as an executive director with NZ based property group
	Chase Corporation and as a non executive director with a number of
	other listed companies in New Zealand and Australia. In the early 1990’s
	Seph started the property development, investment and advisory business
	that hasgrown to be the Pelorus PropertyGroup.
Stuart Brown	Stuart joined Pelorus in 2000. He is closely involved with all facets	Managing
	of the business and in particular the group’s corporate transactions,	Director
	funds management and structured fnance operations. In 2006 he was
	appointed Chief Operating Offcer and Chief Financial Offcer and
	Managing Director in 2007. Prior to joining the group Stuart practiced
	as a solicitor in the areas of property and infrastructure acquisitions,
	sale and leasing, mergers and acquisitions and ASX listings with Mallesons
	and Gilbert & Tobin.
Guy Wynn	Guy has over 25 years in the property industry specialising in retail	Executive
	management, leasing, development and strategic planning. Guy	Director
	heads the group’s retail consultancy and management business. He
	spent eight years with Lend Lease including a position as Division Manager
	responsible with Paul Tresidder for General Property Trust’s retail portfolio.
	In 1987 Guy formed a property management company with Paul that was
	purchased by Baillieu Knight Frank and then formed Wynn Tresidder with
	Paul and Seph in 1993. In late 2008 Guy returned from India where he
	directed the establishment of Pelorus’ shopping centre management and
	consultancybusinessjoint venture,WT Retail India.
Paul Tresidder	Paul advises the group closely in all facets of development and leasing. He	Non-Executive
	has over 25 years experience in retail management, leasing, development	Director
	and strategic planning. Before joining with Seph and Guy to form Wynn
	Tresidder in 1993 he held a number of positions at Lend Lease including
	National Leasing Manager and Division Manager responsible with Guy
	for General Property Trust’s retail portfolio. In 1987 Paul formed a property
	management company with Guy Wynn that was purchased by Baillieu
	Knight Frank.
Robin Tedder	Robin has over 30 years experience in investment and fnancial	Independent
	markets and now manages private equity interests and is the	Non-Executive
	Chairman of Vintage Capital Pty Ltd. He is a former member of the	Director
	ASX and has served on the boards of several merchant banks in
	Australia and overseas, including Rand Merchant Bank Ltd, Kleinwort
	Benson Australia Ltd, and Australian Gilt Securities Ltd (as CEO 1988-
	95). He is a director of Italtile Australia Pty Ltd (a national retailer
	under the CTM brand, and developer of bulky goods stores) and is
	also a Fellow of the Financial Services Institute of Australasia.

Annual Report Financial Year Ended 30 June 2009

Richard Hill

Richard Hill has extensive investment banking and management Independent experience. He was the founding partner of Hill Young & Non-Executive Associates and formerly held a number of senior executive Director positions in Hong Kong and New York with Wardley Holdings Limited, a wholly owned subsidiary of Hong Kong & Shanghai Banking Corporation (HSBC). He was admitted as an attorney in New York State (United States of America) and was registered by the US Securities & Exchange Commission and the Ontario Securities Commission. He is the Chairman of Sirtex Medical Limited, Insearch Limited and the Chairman of Calliden Group Limited.

Simon Hayes was the Company Secretary during the financial year. However, David Sellin was appointed as the Company Secretary in July 2009. Both Simon and David are qualified solicitors.

ESV Chartered Accountants audit the company. Amounts paid to the auditor during the year are detailed at Note 24 of the financials statements.

MEETING ATTENDANCES

Attendance at the company’s board and sub-committees’ meetings held during the financial year are detailed below:

below:
	Board	Audit	Related Party	Investment
Director	Meetings	Committee	Transactions Committee	Committee
Meetings Held	10	6	4	5
Seph Glew	10	-	4	5
Stuart Brown	10	-	4	-
GuyWynn	10	-	-	-
Paul Tresidder	10	-	-	-
Robin Tedder	9	6	-	5
Richard Hill	10	6	4	-

DIRECTORS’ RELEVANT INTERESTS

As at the date of this report the directors’ relevant interests in shares or options in the company are:

Director	Shares	Shares (%)
Seph Glew	73,305,703	20.11%
Stuart Brown	5,138,431	1.41%
GuyWynn	8,638,651	2.37%
Paul Tresidder	70,763,396	19.41%
Robin Tedder	17,550,689	4.81%
Richard Hill	16,266,857	4.46%

Annual Report Financial Year Ended 30 June 2009

Options

Director-related entities have relevant interests in options over shares in the company as set out below.

The issued options at 30 June 2008 have a five year term commencing on 20 July 2006 and are exercisable at any time prior to their expiry at a price of 67.5 cents per share. The additional options granted during the year ended 30 June 2009 (approved by shareholders on 28 November 2008) are valued at $0.0007 per option under the Black Scholes and binomial valuation methods, and have the following terms:

Each option entitles the option holder to convert the Option into 1 fully paid Ordinary Share in the capital of the company.
Options may be exercised at any time after the third anniversary of the date of issue of the Options, which was 28 November 2008.
The Options expire 5 years from the date of issue.
The exercise price will be at $0.60 on the date which is the third anniversary from the date of issue of the Options. The exercise price will increase by 0.75 of a cent each 3 monthly period thereafter until the Options expire or are exercised.
The share price on the date of issue was $0.17.

Entity/Individual	Options (‘000)
Seph Glew	7,660
Stuart Brown	5,600
GuyWynn	3,900
Paul Tresidder	4,720
Robin Tedder	2,500
Richard Hill	500
Interests associated with Southern Cross Equities Limited*	920

* The underwriter of the initial public offer of shares in the company.

The company has adopted an Employee Share Option Plan and an Employee Share Bonus Plan.

REMUNERATION REPORT

The Board is responsible for determining the Managing Director and senior executives’ remuneration. The Executive Chairman, Managing Director and Executive Directors determine employee remuneration.

When determining the remuneration of the Managing Director, senior executives and employees the following is taken into consideration:

Remuneration is aligned with the delivery of returns to shareholders;
Responsibilities, results, innovation and entrepreneurial behaviour are recognised and rewarded; and
• The company’s financial position and market conditions.

The Board members have service agreements with the company. The remuneration payable under each service agreement is subject to review each year by the Board. There are no performance conditions within the service agreements for board members or contracts for senior executives. Any performance payments are at the discretion of the Board.

The nature and the amount of each element of remuneration for key management personnel follows:

Annual Report Financial Year Ended 30 June 2009

Short Term Post Employment Long Term Share Based Payments Consulting Fees Directors Fees Salary and Other Superan- nuation Retirement Benefts Incentive Plans Long Term Service Options Total $ $ $ $ $ $ $ $ $	Guy Wynn *253,333 - - - - - - 1,750 255,083	Stuart Brown 23,500 - 237,156 21,344 - - - 3,500 285,500	Robin Tedder - 55,000 - - - - - 1,050 56,050	Richard Hill - 55,000 - - - - - 350 55,350	Paul Tresidder 185,000 55,000 - - - - - 1,750 241,750	Seph Glew 285,000 75,000 - - - - - 3,500 363,500	TOTAL 746,833 240,000 237,156 21,344 - - - 11,900 1,257,233	$90,000 of this Fee was paid by WT Retail Services (India) Private Limited Remuneration for year ended 30 June 2008 Short Term Post Employment Long Term Share Based Payments Consulting Fees Directors Fees Salary and Other Superan- nuation Retirement Benefts Incentive Plans Long Term Service Options Total $ $ $ $ $ $ $ $ $*	Guy Wynn *177,286 - - - - - - - 177,286	Stuart Brown 281,998 - - - - - - - 281,998	Robin Tedder - 55,000 - - - - - - 55,000	Richard Hill - 55,000 - - - - - - 55,000	Paul Tresidder - 55,000 - - - - - - 55,000	Seph Glew - 75,000 - - - - - - 75,000	TOTAL 459,284 240,000 - - - - - - 699,284	*$113,286 of this Fee was paid by WT Retail Services (India) Private Limited

NON-AUDIT SERVICES

Amounts paid to the auditor for non-audit services during the year are detailed at Note 24 of the financial statements. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is set out in the financial report.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The consolidated entities’ operations are not regulated by any environmental regulation under a law of the Commonwealth or of a State or a Territory.

INDEMNITIES OF OFFICERS

During the financial period the company has paid premiums to insure each of the directors named in this report along with officers of that company against all liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of the company, other than conduct involving a wilful breach of duty in relation to the Responsible Entity.

No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for any person who is or has been an auditor to the company.

Signed in accordance with a resolution of Directors.

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______ Stuart Brown Managing Director

Dated at Sydney on the 29th day of September 2009.

Annual Report Financial Year Ended 30 June 2009

CORPORATE GOVERNANCE

ASX Corporate Governance Principles and Recommendations

The Board of Directors of Pelorus Property Group is responsible for the corporate governance of the Company. Outlined below are the company’s corporate governance practices for the financial year addressing the ASX Corporate Governance Council’s Principles and Recommendations.

Principle 1: Lay solid foundations for management and oversight

Pelorus operates with a flat management structure. Executive directors are involved in the day-to-day operations of the business. Decisions at the Board level and the assessment of executive performance are based on reports received from executive directors and the consideration of issues by executive, non-executive and independent directors at meetings. Executive directors implement these decisions.

Principle 2: Structure the board to add value

The Directors monitor the business affairs of the company on behalf of shareholders with a specific focus on the profitability of the business activities and the efficiency of its managers. In keeping with this consideration, board positions are held by a majority of members who are significant shareholders and its Chairman is not independent. The board is structured to ensure the efficient interaction between the board and management. Specifically, the board structure is as follows:

Executive Board Members	Seph Glew (Chairman)
	Stuart Brown
	GuyWynn
Non-Executive Board Member	Paul Tresidder
Independent and Non-Executive	Robin Tedder
Board Members	Richard Hill

The board’s primary focus is on driving returns to shareholders by growing Net Tangible Assets and earnings per share over the long term. The board considers risk management and the ethical conduct of business. In this regard the board has established the following sub-committees:

Audit Committee	Robin Tedder (Chairman)
	Richard Hill
Related Party Transactions Committee	Richard Hill (Chairman)
	Seph Glew
	Stuart Brown
Investment Committee	Seph Glew
	Robin Tedder
Remuneration Committee	The board notes that the remuneration and
	recruitment of key senior executives are issues that are
	fundamental to the performance of the company. As
	a consequence the board has resolved that this issue
	will, when required, form part of the board meeting
	agenda for consideration by all board members.

Annual Report Financial Year Ended 30 June 2009

The Board is structured with a combination of skills and experiences outlined in the “Information on Directors” section. The Board members’ skills and experience are consistent with the business operations that Pelorus undertakes, including:

Structured finance and fund management;
Property management and leasing; and
Property development.

The Board’s current composition has operated since the company’s listing date on 20 July 2006. Pelorus does not foresee the composition changing in the near future and therefore has not established a nomination committee. The board considers that the independence of a director is not compromised simply by the fact that the director is a significant shareholder in the company or a significant investor in the company’s projects. As a consequence the board regards Robin Tedder and Richard Hill as independent directors notwithstanding that each is significantly invested in the company’s projects, its shares or both.

Principle 3: Promote ethical and responsible decision making

Pelorus has a number of work groups that meet either weekly, fortnightly or monthly. Director and employee conduct and decision making is discussed at these meetings. In addition, Pelorus imposes restrictions on its directors and employees trading Pelorus securities when they are in possession of price-sensitive information that has not been published or made available to the general public. Directors and employees are encouraged to report any suspected unethical or irresponsible behaviour to the Compliance Officer.

Principle 4: Safeguard integrity in financial reporting

Financial reports are prepared through the collaboration of senior management, executive directors and the Chairman.

The Audit Committee consists of two independent non-executive directors. The committee reviews the auditing process for half-yearly and annual reports and meets prior to, during and post the audit to discuss. The committee minutes its roles and responsibilities at each meeting in relation to the audit process, removing the need for a formal charter. The committee has direct access to the auditor during the auditing period and the auditor attends the committee meetings. The committee may make recommendations to the Board.

Principle 5: Make timely and balanced disclosures

Pelorus undertakes timely market disclosures. The Executive Chairman and Managing Director manage investor relations and the release of market sensitive information. Information is not published without at least two directors reviewing the disclosure or announcement. All relevant information is published on the ASX and the company’s website and any financial results released include commentary from directors. The company maintains a timetable for its compliance and periodic disclosure requirements.

Annual Report Financial Year Ended 30 June 2009

Principle 6: Respect the rights of shareholders

Pelorus undertakes a number of measures to ensure its shareholders are informed of its operations, including:

The Executive Directors are available to meet or speak to shareholders;
The Executive Chairman and Managing Director make themselves available to independent research houses, brokers and other participants in the financial markets;
Maintaining an “Investor Key Dates” section on its website and updating the website continually;
Making available Pelorus’ annual and half-yearly reports electronically via email and website;
Enabling access to Pelorus’ external auditor at the Annual General Meeting;
Placing on its website all releases to the ASX and the media, and full notices of all meetings and company information on its website including access to archived information; and
Publishing director interviews and market announcements on commercial market information services.

Principle 7: Recognise and managing risk

Pelorus identifies and manages risk through a framework managed by the executive directors. Risks are reported to the Board by management executives at each Board meeting and the Chairman may call an extraordinary meeting when circumstances require. The Board has received confirmation from the Managing Director that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control.

In its capacity as a responsible entity of managed investment schemes, the company has convened a compliance committee to report to the Board on compliance systems with respect to its registered schemes. The committee has a majority of independent members and an independent chair. The company’s compliance practices and procedures with respect to its registered schemes are subject to external audit. The compliance committee is constituted as an audit committee for the purposes of the audit of the registered schemes.

Principle 8: Remunerate fairly and responsibly

The Board actively encourages and promotes efficiency, innovation and entrepreneurialism. Senior management meetings are held weekly to discuss issues and opportunities. The Managing Director and senior executives are remunerated on the basis of the Board’s consideration of the employee’s responsibilities and performance, the company’s financial position and market conditions. The Executive Chairman, Managing Director and Executive Directors determine employee remuneration. Further details of the Board’s approach to remuneration are detailed in the Remuneration Report.

Annual Report Financial Year Ended 30 June 2009

SHAREHOLDERS

As at 29 September 2009 the company’s top 20 shareholdings were:

Investor	Investor	Ordinary Shares (‘000)	Share %
1	VINTAGE CAPITAL PTY LTD	46,604	13.33%
2	JAGAR HOLDINGS PTY LTD	43,075	11.82%
3	HOLLIA PTY LIMITED	43,075	11.82%
4	RBC DEXIA INVESTOR SERVICES AUSTRALIA	16,724	4.59%
	NOMINEES PTY LIMITED
5	KIRELA UNITHOLDERS A/C	15,182	4.17%
6	KOONTA PTY LTD	11,585	3.18%
7	SENO MANAGEMENT PTY LTD	11,385	3.12%
8	LYMKEESH PTY LTD	11,286	3.10%
9	MR RICHARD HILL	8,736	2.40%
10	JAGAR PROPERTY CONSULTANTS PTY LTD	8,427	2.31%
11	PINNATUS PTY LTD	8,072	2.21%
12	GLENAHILTY PTY LIMITED	7,721	2.12%
13	TAMPOPO PTY LTD	7,531	2.07%
14	CASTLEBAY PTY LTD	7,237	1.99%
15	I P R NOMINEES PTY LTD	5,949	1.63%
16	SAO INVESTMENTS PTY LTD	5,655	1.55%
17	KOONTA PTY LIMITED	4,916	1.35%
18	METHUSELAH CAPITAL MANAGEMENT PTY LTD	4,656	1.28%
19	FROGSTORM PTY LTD	4,349	1.19%
20	TRUST COMPANY SUPERANNUATION	4,100	1.13%
	SERVICES LIMITED

As at 29 September 2009 the substantial shareholders, as disclosed in substantial holding notices to the company, were:

Investor	Ordinary Shares	Advised Share %
SEPH GLEW	71,816,531	19.86%
PAUL TRESIDDER	69,303,396	19.16%
VINTAGE CAPITAL PTY LTD	47,359,904	13.09%
JAGAR HOLDINGS PTY LTD	43,074,998	11.91%
HOLLIA PTY LIMITED	43,074,998	11.91%
GLENAHILTY PTY LTD*	6,720,873	7.07%

* The company’s records indicate that Glenahilty Pty Ltd is no longer a substantial shareholder, but has not received such notice from the shareholder.

Annual Report Financial Year Ended 30 June 2009

As at 29 September 2009 the distribution of shareholders by size of holding was:

Category	No. of Holders
1-1,000	12
1,001-5,000	86
5,001-10,000	94
10,001-100,000	389
100,001 and over	189
Total number of shareholders	770

Pelorus has 38 holders of less than a marketable parcel.

The company has 364,593,893 ordinary shares on issue as at 29 September 2009. All shares carry one vote per share without restrictions. All shares are quoted on the Australian Securities Exchange (ASX Code: PPI).

PELORUS DETAILS

The company’s details are as follows:

Registered Offce	Level 4, 222 Clarence Street
	Sydney NSW 2000
Principal Place of Business	Level 3, 50 Yeo Street
	Neutral Bay NSW 2089
Telephone	02 9033 8611
Fax	02 9033 8600
Website	www.pelorus.com.au
Registry	Registries Limited
	Level 7, 207 Kent Street
	Sydney NSW 2000
	GPO Box 3993
	Sydney NSW 2001
	www.registries.com.au

Annual Report Financial Year Ended 30 June 2009

16 Annual Report Financial Year Ended 30 June 2009

Annual Report Financial Year Ended 30 June 2009

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18 Annual Report Financial Year Ended 30 June 2009

PELORUS PROPERTY GROUP LTD ABN 45 091 209 639

DIRECTORS’ DECLARATION

In accordance with a resolution of directors of Pelorus Property Group Ltd, I state that:

In the opinion of the directors:

the financial statements and notes of the company and of the consolidated entities are in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the company’s and the consolidated entities’ financial position as at 30 June 2009 and of their performance for the year ended on that date;
(b) complying with Accounting Standards and Corporations Regulations 2001; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

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Stuart Brown Managing Director Pelorus Property Group Ltd

Dated at Sydney on the 29th day of September 2009.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Income Statement

For the Year Ended 30 June 2009

Note Fund / Asset Management Income Property Services Income Direct Property Investment Income Investment Income 3(a) Gain / (loss) on exchange differences Gain / (loss) on disposal of assets Gain on acquisition 13 Total revenue Business operating expenses 4(a) Property Outgoings Merger & acquisition expenses Finance costs 5 Other expenses Unrealised (loss) / gains on revaluation of assets 3(b) Profit before income tax Income tax benefit / (expense) 6(a) Profit for the period Minority interest Profit attributable to members of the parent Earnings Per Share: Continuing operations: Basic earnings per share Diluted earnings per share	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 1,685,079 3,793,292 1,661,927 3,793,292 3,255,403 4,339,604 - - 6,768,875 - - - 1,636,548 1,223,048 1,602,365 1,142,374 11,390 (40,704) - - 1,118,515 262,165 (133,488) 287,341 12,555,372 - - -
	27,031,182 9,577,405 3,130,804 5,223,007 (5,132,999) (4,752,184) (1,281,164) (1,091,519) (1,501,789) - - - - (200,097) - (200,097) (2,635,757) (16,491) (8,031) (8,428) (238,113) (660,025) (353,234) (71,032) (8,068,781) 880,027 (5,180,124) 880,027
	9,453,743 4,828,635 (3,691,749) 4,731,958 1,357,089 (1,343,143) 1,360,874 (1,293,157)
	10,810,832 3,485,492 (2,330,875) 3,438,801 (17,361) (12,014) - -
	10,793,471 3,473,478 (2,330,875) 3,438,801
	$ 0.04 $ 0.03 $ - $ - $ 0.04 $ 0.03 $ - $ -

The accompanying notes form part of the financial statements

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Balance Sheet As At 30 June 2009 Note ASSETS Current assets Cash and cash equivalents 7 Trade and other receivables 9 Other financial assets 10(a) Current tax receivable 21 Other assets 17 Total current assets Non-current assets Equity accounted investments 11 Other financial assets 10(b) Property, plant and equipment 14 Investment properties 15 Deferred tax assets 21 Intangible assets 16 Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Trade and other payables 18 Current tax payable 21 Provisions 20 Total current liabilities Non-current liabilities Property debt 15 Other financial liabilities 19 Deferred tax liabilities 21 Provisions 20 Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Share capital 22 Reserves Retained earnings Parent interest Minority interest TOTAL EQUITY	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 3,180,771 4,561,003 2,630,799 4,005,001 1,064,824 1,213,725 666,950 929,471 2,106,122 29,628,581 5,220,830 29,697,994 214,695 - 270,134 - 339,176 20,873 - -
	6,905,588 35,424,182 8,788,713 34,632,466
	53,580 51,895 44,960 43,301 763,636 4,194,000 77,411,803 5,827,706 260,982 304,760 - - 189,235,000 - - - 1,819,413 - 223,381 - 3,322,512 1,582,728 - 29,404
	195,455,123 6,133,383 77,680,144 5,900,411
	202,360,711 41,557,565 86,468,857 40,532,877
	2,515,937 1,187,835 921,384 776,649 - 302,013 - 215,067 197,491 138,505 - -
	2,713,428 1,628,353 921,384 991,716
	97,415,000 - - - 2,950,000 - - - - 1,404,323 - 1,435,686 4,500 31,793 - -
	100,369,500 1,436,116 - 1,435,686
	103,082,928 3,064,469 921,384 2,427,402
	99,277,783 38,493,096 85,547,473 38,105,475
	84,734,575 34,961,702 84,734,575 34,961,702 (41,008) (58,526) - - 14,356,226 3,562,755 812,898 3,143,773
	99,049,793 38,465,931 85,547,473 38,105,475 227,990 27,165 - -
	99,277,783 38,493,096 85,547,473 38,105,475

The accompanying notes form part of the financial statements

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Statement of Changes in Equity

30 June 2009

30 June 2009 Balance at 1 July 2008 Profit attributable to members Issue of options under employee share based payment Issue of shares Cost of issuing equity Balance at 30 June 2009 30 June 2008 Balance at 1 July 2007 Profit attributable to members Issue of shares Dividends paid or provided for 23 Balance at 30 June 2008	Parent Ordinary Shares $ Retained Earnings $ Total $
	34,961,702 3,143,773 38,105,475 - (2,330,875) (2,330,875) 5,717 - 5,717 49,788,400 - 49,788,400 (21,244) - (21,244)
	84,734,575 812,898 85,547,473
	Parent Ordinary Shares $ Retained Earnings $ Total $
	31,742,192 4,058,930 35,801,122 - 3,438,801 3,438,801 3,219,510 - 3,219,510 - (4,353,958) (4,353,958)
	34,961,702 3,143,773 38,105,475

The accompanying notes form part of the financial statements

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Statement of Changes in Equity

30 June 2009

30 June 2009 Balance at 1 July 2008 Profit attributable to members Revaluation increment (decrement) Issue of options under employee share based payment Issue of shares Cost of issuing equity Difference in opening balance due to foreign exchange difference on foreign entity Balance at 30 June 2009 30 June 2008 Note Balance at 1 July 2007 Profit attributable to members Issue of shares Dividends paid or provided for 23 Balance at 30 June 2008	Consolidated Ordinary Shares $ Retained Earnings $ Asset Revaluation Reserve $ Foreign Currency Translation Reserve $ Total $
	34,961,702 3,562,755 - (58,526) 38,465,931 - 10,793,471 - - 10,793,471 - - 1,498 - 1,498 5,717 - - - 5,717 49,788,400 - - - 49,788,400 (21,244) - - - (21,244) - - - 16,020 16,020
	84,734,575 14,356,226 1,498 (42,506) 99,049,793
	Consolidated Ordinary Shares $ Retained Earnings $ Foreign Currency Translation Reserve $ Total $ 31,742,192 4,443,236 (58,526) 36,126,902 - 3,473,478 - 3,473,478 3,219,510 - - 3,219,510 - (4,353,959) - (4,353,959) 34,961,702 3,562,755 (58,526) 38,465,931

The accompanying notes form part of the financial statements

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Statement of Cash Flows 30 June 2009 Note Cash from operating activities: Receipts from customers Payments to suppliers and employees Dividends and distributions received Interest received Interest paid Income tax paid Net cash provided by (used in) operating activities 8(a) Cash flows from investing activities: Proceeds from disposal of investments Acquisition of property, plant and equipment Acquisition of other investments Acquisition of subsidiaries, net of cash acquired Loans to employees Repayment from employees Payment for development of investment properties Payment for research and development Loans to related parties Loans acquired and repaid Repayments from related parties Net cash provided by (used in) investing activities Cash flows from financing activities: Proceeds from the issue of share capital Merger transaction costs Proceeds from borrowings Dividends paid by parent entity Net cash provided by (used in) financing activities Net increase (decreases) in cash held Cash on 1 July 2008 Effect of exchange rates on cash holdings Cash on 30 June 2009 7(b)	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 11,694,933 7,969,891 1,724,880 3,536,327 (6,913,195) (5,112,521) (1,624,196) (850,541) 1,006,918 20,069 1,123,623 20,069 614,309 1,202,979 146,757 1,122,305 (2,635,757) (16,491) (8,031) (8,428) (662,175) (1,201,776) (711,224) (1,177,172)
	3,105,033 2,862,151 651,809 2,642,560
	9,329,538 2,591,501 727,534 2,591,501 (24,710) (67,900) - - (2,278,876) (322,849) (387,724) (322,849) (96,989) - (1,155,100) (18,904) (35,542) - - 38,678 157,349 - 157,349 (3,243,124) - - (37,999) - (29,404) (2,196,712) (3,865,887) 14,347,597 (3,836,380) (8,742,983) - - (375,818) 548,752 2,539,041 (15,778,123) 2,539,041
	(6,685,330) 957,714 (2,245,816) 723,440
	686,243 3,219,510 686,243 3,219,510 (346,091) - (346,091) 2,000,000 - (120,347) (4,353,959) (120,347) (4,353,959)
	2,219,805 (1,134,449) 219,805 (1,134,449)
	(1,360,492) 2,685,416 (1,374,202) 2,231,551 4,561,003 1,875,587 4,005,001 1,773,450 (19,740)
	3,180,771 4,561,003 2,630,799 4,005,001

The accompanying notes form part of the financial statements

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies

General information

Introduction

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The financial report covers the economic entity of Pelorus Property Group Ltd and Controlled Entities, and Pelorus Property Group Ltd as an individual parent entity. Pelorus Property Group Ltd is a listed public company, incorporated and domiciled in Australia.

The financial report for Pelorus Property Group Ltd and controlled entities for the year ended 30 June 2009 was authorised for issue in accordance with the resolution of the directors in August 2009.

The financial report of Pelorus Property Group Ltd and Controlled Entities, and Pelorus Property Group Ltd as an individual parent entity comply with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

Basis of Preparation

Reporting Basis and Conventions

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Presentation of financial statements

Presentation currency

Both the functional and presentation currency of Pelorus Property Group Limited and its Australian subsidiaries is Australian dollars. The New Zealand subsidiary's functional currency is New Zealand Dollars, which is translated to presentation currency (refer to Foreign Currency Translation note below).

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Any change of presentation has been made in order to make the financial statements more relevant and useful to the user.

Principles of Consolidation

Controlled entities

The consolidated financial statements comprise the financial statements of Pelorus Property Group Limited and its subsidiaries as at 30 June 2009. A list of controlled entities is contained in Note 28 to the financial statements. All controlled entities have a June financial year-end and use consistent accounting policies.

A controlled entity is an entity Pelorus Property Group Ltd and Controlled Entities has the power to control the financial and operating policies of so as to obtain benefits from its activities.

Investments in subsidiaries held by Pelorus Property Group Limited are accounted for at cost in the separate financial statements of the parent entity less any impairment charges.

The acquisition of subsidiaries is accounted for using the purchase method of accounting. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition (refer to Business Combination note below).

Inter-company balances

All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Where controlled entities have entered or left the economic entity during the year, its operating results have been included from the date control was obtained or until the date control ceased.

Minority interests

Minority interests not held by the Group are allocated their share of net profit after tax in the income statement and are presented within equity in the consolidated balance sheet, separately from parent shareholders' equity.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Business combinations

The purchase method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the combination. Where equity instruments are issued in a business combination, the fair value of the instruments is their published market price as at the date of exchange. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Except for non-current assets or disposal groups classified as held for sale (which are measured at fair value less costs to sell), all identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of the business combination over the net fair value of the Group's share of the identifiable net assets acquired is recognised as goodwill. If the cost of acquisition is less than the Group's share of the net fair value of the identifiable net assets of the subsidiary, the difference is recognised as a gain in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

Critical accounting estimates and judgments

General

The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Key estimates - Impairment

The Group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. The directors believed it is appropriate to raise impairment provisions against investment property assets as well as against loans and receivables in the year ended 30 June 2009. The provisions have been raised in reference to the economic conditions.

Foreign currency translation

Group companies

The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows:

assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Foreign currency translation continued

Group companies continued

retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the Group's foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.

Property, Plant and Equipment

General Information

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.

Plant and equipment

Plant and equipment are measured on the cost basis less accumulated depreciation and impairment losses.

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of an item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit and loss as incurred.

Depreciation

The depreciable amount of all fixed assets is depreciated on a diminishing value basis over their useful lives to the Group commencing from the time the asset is held ready for use.

Useful life

The estimated useful lives used for each	class of depreciable assets are:
Furniture, Fixtures and Fittings	over 2 to 5 years
Office Equipment	over 2 to 5 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Property, Plant and Equipment continued

Disposal

An item of property, plant and equipment is derecognised upon disposal or when no further economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included within "other income" in profit and loss in the year the asset is derecognised.

Investment Properties

Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met, and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which is based on active market prices, adjusted if necessary, for any difference in the nature, location or condition of the specific asset at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the year in which they arise.

Impairment of Assets

At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired.

If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. In assessing value in use, either the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the income of the asset is capitalised at its relevant capitalisation rate.

An impairment loss is recognised if the carrying value of an asset exceeds its recoverable amount. Impairment losses are expensed to the income statement.

Impairment losses recognised in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised.

Research and development

Research costs are expensed when incurred. Development costs are capitalised to the extent that recovery of these costs is assured, and are amortised over the life of the property services agreement.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Financial Instruments

Borrowing Costs

Borrowing costs directly attributable to the to the acquisition and construction of a qualifying asset are capitalised as part of the cost of the asset.

Derivative instruments

The Group uses derivative financial instruments (interest rate swaps) to hedge its risks associated with interest rate fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value.

Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value

is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss for the year.

Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below.

Recognition

A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flow from the financial assets expire or if the Group transfers the financial assets to another party without retaining control or substantially all risks and rewards of the asset. Purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.

Held-for trading financial assets

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management and within the requirements of AASB 139: Financial Instruments: Recognition and Measurement. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Financial Instruments continued

Loans and receivables

Loans and receivables including loans to related entities and to key management personnel are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method. Gains and losses are recognised in profit and loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Available-for-sale financial assets

The Group's investments in equity securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity until the financial assets are derecognised or determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit and loss.

Non-current assets held-for-sale

Non-current assets held-for-sale comprise of assets that are to be disposed of within 12 months of balance date. Upon initial classification as held-for-sale, non-current assets are recognised at lower of carrying amount and fair value less cost to sell.

Revaluations on initial classification as held-for-sale are included in the Income Statement.

Net gains from disposal of non-current assets sales are recognised in the Income Statement at the date the control of the asset passes to the buyer.

Financial liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Derivative financial liabilities are measured at fair value. Revaluations are included in the income statement where hedge accounting is not applied.

Fair value

The fair values of investments that are actively traded in organised financial markets are determined by reference to quoted market bid prices at the close of business on the balance date. For investments in related party unlisted unit trusts, fair values are determined by reference to independent valuations of the underlying properties offered as security.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Financial Instruments continued

Impairment

At each reporting date, the Group assess whether there is objective evidence that a financial instrument has been impaired. A financial instrument is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen.

An impairment loss in respect of a financial instrument measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value.

Individually significant financial instruments are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

Impairment losses are recognised in the income statement.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial instruments measured at amortised cost, the reversal is recognised in profit and loss. For available-for-sale financial instruments that are equity securities, the reversal is recognised directly in equity.

Intangibles

Goodwill

Goodwill on consolidation is initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units. Each unit to which the goodwill is so allocated:

represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and
is not larger than a segment based on either the Group's primary or secondary reporting format determined in accordance with AASB 114 Segment Reporting .

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Intangibles continued

Goodwill continued

Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. When the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised. When goodwill forms part of a cash-generating unit and that unit is disposed of, the goodwill associated with the unit disposed of is included in the carrying amount of the unit when determining the gain or loss on disposal of the unit. Impairment losses recognised for goodwill are not subsequently reversed.

As at 30 June 2009, there is no indication that impairment exists.

Investments in Associates

Investments in associate companies are recognised in the financial statements by applying the equity method of accounting where significant influence is exercised over an investee. Significant influence exists where the investor has the power to participate in the financial and operating policy decisions of the investee but does not have control or joint control over those policies. The Group generally deems they have significant influence if they have between 20% to 50% of the voting rights.

Under the equity method of accounting, investments in the associates are carried in the consolidated balance sheet at cost plus post-acquisition changes in the Group's share of net assets of the associates. The Group's share of its associates' post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group's share of losses exceeds its interest in an equity accounted investee, the carrying amount of the interest is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

Interests in joint ventures

The Group has an interest in a joint venture that is a jointly controlled operation. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. A jointly controlled operation involves use of assets and other resources of the venturers rather than establishment of a separate entity. The Group recognises its interest in the jointly controlled operation by recognising its interest in the assets and the liabilities of the joint venture. The Group also recognises the expenses that it incurs and its share of the income that it earns from the sale of services by the jointly controlled operation.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Trade and other receivables

Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful debts is made when there is objective evidence that the Group will not be able to collect the receivable. Financial difficulties of the debtor and default payments are considered objective evidence of impairment. Bad debts are written off when identified as uncollectible.

The cost of mining stocks includes direct materials, direct labour, transportation costs and variable and fixed overhead costs relating to mining activities.

Trade and other payables

Liabilities for trade creditors are carried at cost which is the fair value of the consideration to be paid in the future for goods or services received, whether or not billed to the company at balance date. The amounts are unsecured and are usually paid within 30 days of recognition.

Interest-bearing borrowings

Interest-bearing borrowings are initially recognised at fair value less any related transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost.

Employee Benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions to a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contribution to defined contribution plans are recognised as a personnel expense in profit and loss when they are due.

Other long-term employee benefits

The Group's net obligation in respect of long-term employee benefits other than defined benefit plans is the amount of future benefit that employees have earned in return for their service in the current and prior periods plus related on-costs. These employee benefits have not been discounted to the present value of the estimated future cash outflows to be made for those benefits.

Short-term benefits

Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present obligations resulting from employee's services provided to the reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay as at reporting date including related on-costs.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

Revenue

Income from management fees in relation to managed investment schemes is recognised when it becomes legally due and payable to the Company.

Revenue from property services contracts is recognised monthly in arrears.

Finance income

Finance income comprises interest on funds invested, dividend income, gains on the disposal of available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit and loss.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Dividend revenue is recognised when the right to receive a dividend has been established, which in the case of quoted securities is the ex-dividend date.

Foreign currency gains or losses are reported on a net basis.

All revenue is stated net of the amount of goods and services tax (GST).

Property income

Property income comprises rental and recovery of outgoings from property tenants. It is recognised when it becomes legally due and payable to the Property Owner.

Trust distribution income

Trust distributions are recognised when they are declared by the Trustee or responsible entity.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Income Tax

Current Income Tax expense

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.

Accounting for deferred tax

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax calculation

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

Deferred income tax assets

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Benefit brought to account

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Tax consolidations

Pelorus Property Group Limited has elected to form a tax consolidated group with its wholly owned entities for income tax purposes under the tax consolidation regime with effect from 1 July 2005. As a consequence, all members of the tax-consolidated group are taxed as a single entity from that date. The head entity within the tax-consolidated group is Pelorus Property Group Limited.

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

The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the tax-consolidated group will be available against which the asset can be utilised.

Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recoverability is recognised by the head entity only.

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 Group.

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

New standards and interpretations not yet adopted

The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2009, but have not been applied in preparing this financial report.

Revised AASB 3 Business Combinations changes the application of acquisition accounting for business combinations and the accounting for non-controlling (minority) interest. Key changes include: the immediate expensing of all transactions costs; measurement of contingent consideration at acquisition date with subsequent changes through the income statement; measurement of non-controlling (minority) interests at full fair value or the proportionate share of the fair value of the underlying net assets; guidance on issues such as reacquired rights and vendor indemnities; and the inclusion of combinations by contract alone and those involving mutuals. The revised standard becomes mandatory for the Group's 30 June 2010 financial statements.
AASB 8 Operating Segments introduces the "management approach" to segment reporting. AASB 8, which becomes mandatory for the Group's 30 June 2010 financial statements, will require the disclosure of segment information based on the internal reports regularly reviewed by the Group's Chief Executive Officer in order to assess each segment's performance and to allocate resources to them. Currently the Group presents segment information in respect of its business segments. Application of this standard will not affect any of the amounts in the financial statements, but may impact the type of information disclosed in relation to the Group's segment reporting.
Revised AASB 101 Presentation of Financial Statements introduces as a financial statement (formerly "primary" statement) the "statement of comprehensive income". The revised standard does not change the recognition, measurement or disclosure of transactions and events that are required by other AASBs. The revised AASB 101 will become mandatory for the Group's 30 June 2010 financial statements. Application of this standard will not affect any of the amounts in the financial statements, but may result in changes in terminology used in the financial statements.
Revised AASB 127 Consolidated and Separate Financial Statements changes the accounting for investments in subsidiaries. Key changes include: the remeasurement to fair value of any previous/ retained investment when control is obtained/ lost, with any resulting gain or loss being recognised in profit or loss; and the treatment of increases in ownership interest after control is obtained as transactions with equity holders in their capacity as equity holders. The revised standard will become mandatory for the Group's 30 June 2010 financial statements. The Group has not yet determined the potential effect of the revised standard on the Group's financial report.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

2 Segment Reporting

A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments. Segment information is presented in respect of the Group's business and geographical segments. The Group's primary format for segment reporting is based on business segments. The business segments are determined based on the Group management and internal reporting structure. There is only one geographical segment being Australasia.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly of income tax assets and liabilities.

The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

The Fund / Asset management segment engages in property structured finance and funds management.

The Property Services segment engages in integrated property services including property management, leasing and general property consultancy. It contains a serviced office business branded as WTSO.

The Direct Property Investment segment owns direct interests in property assets. It receives rental income and incurs property outgoings and property owning finance costs.

The Other Investment segment includes all other investments such as listed security investments, property securities, loans and cash. It generates income from dividends, distributions, and interest.

Transfer prices between business segments are set at an arms length basis in a manner similar to transactions with third parties.

The Direct Property Investment segment has been created as a result of the merger transaction that occurred during the year ended 30 June 2009. There are therefore no comparative numbers for this segment. For further details on the merger see note 3 (b).

Annual Report Financial Year Ended 30 June 2009

						Consolidated total	$			13,345,903	456,589	13,802,492	(456,589)	13,685,279	27,031,182		9,453,743
				Unallocated income and expenses		Merger and Acquisition Gains Asset Impairments	$ $							13,685,279	13,685,279 -		13,174,849 (8,068,781)
						Total	$			13,345,903	456,589	13,802,492	(456,589)		13,345,903		4,347,675		202,360,711	202,360,711		103,082,928	103,082,928
ABN 45 091 209 639	Notes to the Financial Statements	30 June 2009	2 Segment Reporting continued		Fund / Asset Direct Property	Management Property Services Investments Other Investments	$ $ $ $	Year ended 30 June 2009	Revenue	Sales to external customers 1,685,079 3,255,403 6,768,875 1,636,546	Inter-segment sales - 456,589 - -	Total segment revenue 1,685,079 3,711,992 6,768,875 1,636,546	Inter-segment eliminations	Unallocated revenue	Total consolidated revenue	Results	Profit before income tax 865,123 847,912 1,546,178 1,088,462	Assets	Segment assets 3,393,566 3,358,014 193,345,974 2,263,157	Total Assets	Liabilities	Segment liabilities 1,106,872 211,108 101,764,948 -	Total liabilities

Annual Report Financial Year Ended 30 June 2009

					Consolidated total	$			10,498,136	-	10,498,136	10,498,136		4,828,635		41,558,267	31,363	41,589,630		1,238,487	1,858,046	3,096,533
ABN 45 091 209 639	Notes to the Financial Statements	30 June 2009	2 Segment Reporting continued	Fund / Asset Direct Property	Management Property Services Investments Other Investments	$ $ $ $	Year ended 30 June 2008	Revenue	Sales to external customers 3,793,292 4,339,604 - 2,365,240	Inter-segment sales - - - -	Total segment revenue 3,793,292 4,339,604 - 2,365,240	Total consolidated revenue	Results	Profit before income tax 2,456,851 2,334,943 - 36,841	Assets	Segment assets 1,265,067 2,406,891 - 37,886,309	Unallocated assets	Total Assets	Liabilities	Segment liabilities 607,566 630,921 - -	Unallocated liabilities	Total liabilities

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

3 Revenue

(a) Investment income

	Consolidated	Consolidated	Parent
	2009	2008	2009	2008
	$	$	$	$
Dividends and distributions	1,006,918	20,069	1,123,623	20,069
Finance income	629,630	1,202,979	478,742	1,122,305
Total investment income	1,636,548	1,223,048	1,602,365	1,142,374
(b) Unrealised (loss)/ gains on revaluation of assets
	Consolidated		Parent
	2009	2008	2009	2008
	$	$	$	$
Revaluation of interest rate hedges	1,400,000	-	-	-
Provision for loans impairment	(46,185)	-	-	-
Unrealised gain / (loss) on revaluation of
listed securities	(24,860)	-	(24,860)	-
Unrealised loss on revaluation of Mulgoa Rd,
Penrith	(3,036,550)	-	-	-
Unrealised loss on revaluation of The
Bakehouse Quarter	(6,361,186)	880,027	(5,155,264)	880,027
Unrealised (loss)/ gains on revaluation of
assets	(8,068,781)	880,027	(5,180,124)	880,027

(b) Unrealised (loss)/ gains on revaluation of assets

On 28 November 2008 the shareholders approved a transaction to merge the group with a number of its funds and related bodies corporate.

At the full year ended 30 June 2008 the units in the Bakehouse Quarter Fund held by the Group (approximately 25% of the Fund) were classified as a Held-For-Sale asset to reflect management's intention to establish a new property investment fund to be seeded by this investment.

As part of the merger, Pelorus acquired all of the units in the Bakehouse Quarter Fund giving the Group control of the Bakehouse Quarter property. As a consequence, this asset is carried as an Investment Property in the consolidated balance sheet. Accordingly the interests held in the Fund prior to the merger have been reclassified from Held-For-Sale to Investment Property.

In recognising the interests acquired in properties as part of the merger, the directors resolved to write down the value of the portfolio by $29.67 million to reflect the deteriorating economic conditions and sentiment with respect to commercial properties. As a consequence, the carrying value of the units in the Fund held prior to the merger have been impaired by $6.3m as shown above. See notes 13 and 15 for the treatment of the investment properties acquired in merger.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

4 Included in income statement under expenses by function

(a) Business operating expenses Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ Employee & Consultants costs 4(b) 3,937,539 3,426,932 923,459 586,284 Occupancy costs 207,360 199,472 - - Depreciation expenses 75,488 76,626 - - Administration expenses 912,612 1,049,154 357,705 505,235 Total business operating expenses 5,132,999 4,752,184 1,281,164 1,091,519 (b) Employee costs Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ Salaries & wages 2,471,990 2,391,039 - - Directors' Fees 240,000 240,000 240,000 240,000 (Decrease) / increase in liability for annual leave (17,105) 19,800 - - (Decrease) / increase in liability for long service leave (27,293) (2,814) - - Contributions to defined contribution superannuation funds 177,012 186,023 - - Consultancy fees 931,134 346,284 677,742 346,284 Employee share option scheme 5,717 - 5,717 - Other associated personnel expenses 156,084 246,600 - - Total employee costs 3,937,539 3,426,932 923,459 586,284	(a) Business operating expenses Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ Employee & Consultants costs 4(b) 3,937,539 3,426,932 923,459 586,284 Occupancy costs 207,360 199,472 - - Depreciation expenses 75,488 76,626 - - Administration expenses 912,612 1,049,154 357,705 505,235 Total business operating expenses 5,132,999 4,752,184 1,281,164 1,091,519 (b) Employee costs Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ Salaries & wages 2,471,990 2,391,039 - - Directors' Fees 240,000 240,000 240,000 240,000 (Decrease) / increase in liability for annual leave (17,105) 19,800 - - (Decrease) / increase in liability for long service leave (27,293) (2,814) - - Contributions to defined contribution superannuation funds 177,012 186,023 - - Consultancy fees 931,134 346,284 677,742 346,284 Employee share option scheme 5,717 - 5,717 - Other associated personnel expenses 156,084 246,600 - - Total employee costs 3,937,539 3,426,932 923,459 586,284	(a) Business operating expenses Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ Employee & Consultants costs 4(b) 3,937,539 3,426,932 923,459 586,284 Occupancy costs 207,360 199,472 - - Depreciation expenses 75,488 76,626 - - Administration expenses 912,612 1,049,154 357,705 505,235 Total business operating expenses 5,132,999 4,752,184 1,281,164 1,091,519 (b) Employee costs Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ Salaries & wages 2,471,990 2,391,039 - - Directors' Fees 240,000 240,000 240,000 240,000 (Decrease) / increase in liability for annual leave (17,105) 19,800 - - (Decrease) / increase in liability for long service leave (27,293) (2,814) - - Contributions to defined contribution superannuation funds 177,012 186,023 - - Consultancy fees 931,134 346,284 677,742 346,284 Employee share option scheme 5,717 - 5,717 - Other associated personnel expenses 156,084 246,600 - - Total employee costs 3,937,539 3,426,932 923,459 586,284
		5,132,999 4,752,184 1,281,164 1,091,519
		Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 2,471,990 2,391,039 - - 240,000 240,000 240,000 240,000 (17,105) 19,800 - - (27,293) (2,814) - - 177,012 186,023 - - 931,134 346,284 677,742 346,284 5,717 - 5,717 - 156,084 246,600 - -
		3,937,539 3,426,932 923,459 586,284

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

5 Finance income and expense

Finance income Interest income on bank deposits Interest income on loans and receivables Total finance income Finance expense: Interest expense on financial liabilities measured at amortised cost Total finance expense Net finance income and expense	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 208,326 287,631 151,912 206,957 421,304 915,348 326,750 915,348
	629,630 1,202,979 478,662 1,122,305
	(2,635,757) (16,491) (8,031) (8,428)
	(2,635,757) (16,491) (8,031) (8,428)
	(2,006,127) 1,186,488 470,631 1,113,877

6 Income Tax Expense

(a) The components of tax expense comprise:

Current tax Relating to origination and reversal of temporary differences Over/ (under) provision in prior year Total income tax expense / (benefit)	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 187,048 1,069,533 302,017 1,034,353 (1,544,035) 266,206 (1,526,247) 264,009 (102) 7,404 (136,644) (5,205)
	(1,357,089) 1,343,143 (1,360,874) 1,293,157

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

6 Income Tax Expense continued

(b) The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax as follows:

Prima facie tax payable on profit from
ordinary activities before income tax at
30% (2008: 30%)
- Consolidated entity
Add:
Tax effect of:
- Entertainment
- Options expenditure
- Gross up imputation credits
- Penalties
- Under provision in prior year
- Tax rate differential of foreign
subsidiary
Less:
Tax effect of:
- Costs of issuing equity
- Investment allowance
- Imputation credits offset
- Discount on acquisition
(consolidation adj)
- Losses recouped
- Over provision in prior year
- Correction of prior year Deferred Tax
Assets
Income tax attributable to entity

Consolidated
Parent
2009
$
2008
$
2009
$
2008
$

2,836,123
1,448,591
(1,107,619)
1,419,588
4,345
3,380
-
-
1,715
-
1,715
-
1,364
2,580
1,364
2,580
198
429
67
99

-
7,404
-
-
19,596
4,664
-

-
115,304
115,304
115,304
115,304
919

-
4,546
8,601
4,546
8,601
3,903,353
-
-
-
59,663
-
-
-
3,825
-
3,731
5,205

132,820
-
132,820
-

(1,357,089)
1,343,143
(1,360,874)
1,293,157

7 Cash and Cash Equivalents

and Cash Equivalents
	Consolidated		Parent
	2009	2008	2009	2008
	$	$	$	$
Cash on hand	500	500	-	-
Cash at bank	3,180,271	4,560,503	2,630,799	4,005,001
Total cash and cash equivalents	3,180,771	4,561,003	2,630,799	4,005,001

(a) Effective Interest Rate

Cash at bank earns interest at floating rates based on daily bank deposit rates.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

7 Cash and Cash Equivalents continued

(b) Reconciliation of Cash

	Consolidated	Consolidated	Parent
	2009	2008	2009	2008
	$	$	$	$
Cash at the end of the financial year as shown in the cash		flow statement is reconciled to		items in the
balance sheet as follows:
Cash and cash equivalents	3,180,771	4,561,003	2,630,799	4,005,001
Bank overdraft	-	-	-	-
Net cash	3,180,771	4,561,003	2,630,799	4,005,001

8 Cash Flow Information

(a) Reconciliation of Cash Flow from Operations with Profit after Income Tax

Net income for the period
Non-cash flows in profit
Depreciation
Net (gain)/loss on disposal of
investments
Unrealised (gains)/losses on
investments
Impairment of assets
Unrealised (gains)/losses in foreign
exchange
Bad debts expenses
Cost associated with share issuance
recognised in equity
Amortisation of borrowing costs
Changes in assets and liabilities, net
of the effects of purchase and
disposal of subsidiaries
(Increase)/decrease in trade and term
receivables
(Increase)/decrease in other
receivables
(Increase)/decrease in loan
receivables
(Increase)/decrease in prepayments
(Increase)/decrease in unearned
revenue
Increase/(decrease) in trade payables
and accruals
Increase/(decrease) in income taxes
payable
Increase/(decrease) in deferred tax
balances
Increase/(decrease) in provisions
Cashflow from operations

Consolidated
Parent
2009
$
2008
$
2009
$
2008
$
10,810,832
3,485,492 (2,330,875)
3,438,801

75,488
76,626
-
-
(1,118,515)
(262,165) 133,488
(287,341)
(12,555,372)
(880,027)
-
(880,027)
8,068,781
-
5,180,124
(11,392)
-
117,605
-
(15,527)
-
330,563
(21,405)
-

(551,820)
101,100
(73,721)
(243,228)
(11,226)
(264,105)
54,476
(13,707)
(51,211)
-
(358,582)
(252,414)
(12,728)
-

-
31,693
-

573,222
426,358
(211,566)
548,677
(516,708)
(114,311)
(413,031)
(195,026)
(1,502,556)
289,247
(1,659,067)
274,411
35,558
16,664
-
-

3,105,033
2,862,151
651,809
2,642,560

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

9 Trade and Other Receivables CURRENT Trade receivables Cash held on trust Deposits Distributions receivable Equity subscriptions receivable Sundry receivables Total trade and other receivables	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 634,953 472,159 241,500 243,228 350,000 - 350,000 - 4,421 1,480 - - 75,450 - 75,450 - - 686,243 - 686,243 - 53,843 - -
	1,064,824 1,213,725 666,950 929,471

On 4 June 2009 Pelorus acquired all of the issued shares in RFML Limited, a small funds management company. The Cash held on trust is a conditional retention sum and forms part of the consideration for the acquisition of RFML. A liability for the same amount is disclosed in note 18.

10 Financial Assets

(a) Current financial assets

(a)	Current financial assets
			Consolidated		Parent
			2009	2008	2009	2008
		Note	$	$	$	$
	Listed shares	10(c)	296,800	401,251	292,800	401,252
	Non-current asset held-for-sale
	financial assets	10(d)	-	23,566,920	-	23,566,920
	Loans and receivables	10(e)	1,809,322	5,660,410	4,928,030	5,729,822
	Total current financial assets		2,106,122	29,628,581	5,220,830	29,697,994
(b)	Non-current financial assets
	Other financial assets	10(f)	763,636	4,194,000	763,636	4,194,000
	Investment in controlled entities		-	-	76,648,167	1,633,706
	Total non-current financial assets		763,636	4,194,000	77,411,803	5,827,706
	Investment in controlled entities	is recorded	at cost.
(c)	Held-for-trading Financial Assets Comprise:
	Listed securities		296,800	401,252	292,800	401,252
	Total held-for-trading financial assets		296,800	401,252	292,800	401,252

Held-for-trading financial assets are comprised of investments in listed securities. The fair value of the listed financial assets are based on closing bid prices on 30 June 2009 for quoted investments.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

10 Financial Assets continued

(d) Non-Current Assets Held-For-Sale Comprise:

Units in unlisted unit trusts Total non-current assets held-for-sale	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ - 23,566,920 - 23,566,920
	- 23,566,920 - 23,566,920

At the year ended 30 June 2008 the units in the Bakehouse Quarter Fund were classified as Non Current Assets Held-For-Sale. As part of the merger, Pelorus acquired all of the units in the Bakehouse Quarter Fund giving the Group control of the Bakehouse Quarter property. As a consequence, this asset is carried as an Investment Property in the consolidated balance sheet and the interests held prior to the merger have been reclassified from Held-For-Sale to Investment Property (see note 15).

(e) Loans and Receivables Comprise:

Loans and receivables to related parties Loans and receivables to non-related party Loans and receivables to controlled entities Security deposit against contingent interest payable Total loans and receivables	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 1,080,809 4,957,306 475,476 4,947,421 728,513 473,844 - 406,583 - - 4,452,554 375,818 - 229,259 - -
	1,809,322 5,660,409 4,928,030 5,729,822

(f) Other financial assets

Units in related party unlisted unit trusts Other financial assets Total other financial assets	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 660,000 4,094,000 660,000 4,094,000 103,636 100,000 103,636 100,000
	763,636 4,194,000 763,636 4,194,000

The units held at 30 June 2009 on the consolidated balance sheet are in the Pelorus Storage Fund.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

11 Investments Accounted for Using the Equity Method

Consolidated Note 2009 $ 2008 $ Interest in joint venture entity 12 34,960 33,301 Associated companies 12 18,620 18,594 Total investments 53,580 51,895 Associated Companies Interests are held in the following associated companies: Name Principal Activities Country of Incorporation Ownership Interest 2009 % 2008 % Unlisted: Pelorus Storage Advantage Pty Limited Financial services and management company Australia 33 33 WT Retail Services (India) Private Limited Property management company India 50 50 Trentham City Investments Limited Shopping centre New Zealand 40 40	Consolidated 2009 $ 2008 $ 34,960 33,301 18,620 18,594	Parent 2009 $ 2008 $ 34,960 33,301 10,000 10,000
	53,580 51,895	44,960 43,301
		Carrying Amount of Investment 2009 $ 2008 $ 10,000 10,000 34,960 33,301 8,620 8,594 53,580 51,895

12 Associated Companies

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

13 Acquisition of subsidiaries

(a) Bakehouse Quarter Fund / Planloc Pty Ltd / RASP Investments Pty Ltd and RASP Investments No. 2 Pty Ltd

The Merger acquisition completed in November / December 2008 had the following effect on the Group's assets and liabilities on acquisition date:

Cash and cash equivalents
Trade and other receivables
Other financial assets
Loans and receivables
Investment properties
Intangible assets
Deferred tax assets
Trade and other payables
Income in advance
Property debt
Other financial liabilities
Net identifiable assets and
liabilities.
Planloc Pty Ltd
64,075,758
PPI shares
at $0.20
RASP Investments Pty Ltd
RASP Investments No.2 Pty Ltd
Bakehouse Quarter Fund
168,016,242
PPI shares
at $0.20
Total consideration
Less transaction expenses
Gain on acquisition
Net cash inflow:
Cash acquired
Less: payment for share capital
Net cash acquired

Recognised values on
acquisition
$
115,161
22,751
758,375
(2,377,066)
156,910,482
620
1,728,029
(357,322)
(121,440)
(87,415,000)
(9,986,000)
59,278,590
Consideration
$
12,815,152
2,500
2,500
33,603,248
46,423,400
(299,818)
12,555,372
Cash inflow / outflow
115,161
(5,000)
110,161

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

13 Acquisition of subsidiaries continued

As part of the merger, Pelorus Property Group Ltd acquired all of the interests it did not already own in the Bakehouse Quarter Fund, all of the issued shares of Planloc Pty Limited and a 50% interest in RASP Investments Pty Ltd and RASP Investments No. 2 Pty Ltd. This gave the consolidated entity control of the Bakehouse Quarter property, a bulky goods retail centre known as 120 Mulgoa Road Penrith and two residential properties providing furnished short-term accommodation to working tourists. These assets are classified as Investment Properties in the consolidated balance sheet.

At 31 December 2008 the gain on acquisition was included in the parent entity accounts. At 30 June 2009 it is shown only in the consolidated accounts.

In recognising the interests acquired in these properties, the directors resolved to write down the value of the portfolio by $29.7 million to reflect the deteriorating economic conditions and sentiment with respect to commercial real estate. The fair value of all properties is shown in Note 15.

(b) Acquisition of Reed Funds Management Limited

On 4 June 2009 Pelorus acquired all of the share capital in a funds management business – Reed Funds Management Limited (now known as RFML Limited). Prior to completion RFML paid Pelorus a commitment fee of $200,000 as part of the share sale arrangement. The acquisition had the following effect on the Group’s assets and liabilities on acquisition date;

Cash and cash equivalents Trade and other receivables Property Plant and Equipment Trade and other payables Net identifiable assets and liabilities.	Recognised values on acquisition $ 939,502 120,250 7,000 (273,629)
	793,123

Consideration Goodwill Net cash outflow: Cash acquired Less: payment for share capital Net cash outflow	1,150,000
	356,877
	Cash inflow / (outflow) 939,502 (1,150,000)
	(210,498)

RFML is the manager of the RP Trust. Prior to the acquisition, contractual arrangements between RFML and a unit holder in the RP Trust were disclosed to Pelorus. These arrangements could give rise to significant contingent liabilities within RFML. Pelorus did not agree to undertakings in relation to any of RFML’s prior obligations and does not regard them as a risk to the group.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

13 Acquisition of subsidiaries continued

(c) Acquisition of WRV Unit Trust

On 30 June 2009 Pelorus PIPES Trust No.5 acquired 68% of the units of WRV Unit Trust which has as its major asset a mixed use entertainment precinct property on Woodville Rd, Villawood known as The Woods at Villawood. The acquisition had the following effect on the Group’s assets and liabilities on acquisition date.

Cash and cash equivalents Investment Property Capitalised Borrowing Costs Trade and other payables Property debt Intercompany Payables Interest Rate Hedge Liability Net identifiable assets and liabilities. Value of % acquired Consideration Goodwill Net cash inflow: Cash acquired Less: Cash payment for issued units Net cash inflow	Recognised values on acquisition $ 3,347 15,000,000 37,441 (97,765) (8,000,000) (6,175,000) (215,000)
	553,023
	376,056 1,700,000
	1,323,944
	Cash inflow / (outflow) 3,347 -
	3,347

(d) Acquisition of Pelorus Pipes Trust No. 5

On 4 June 2009 Pelorus acquired 100% of the units of Pelorus PIPES Trust No. 5 (formerly known as Reed Metro Trust No.2). At acquisition it had net assets of $100 and $100 was paid as consideration.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

14 Property Plant and Equipment PLANT AND EQUIPMENT Furniture, fixtures and fittings At cost Less accumulated depreciation Total furniture, fixtures and fittings Office equipment At cost Less accumulated depreciation Total office equipment Total property, plant and equipment (a) Movements in Carrying Amounts Current Period Balance at the beginning of year Additions Disposals Depreciation expense Carrying amount as at 30 June 2009 30 June 2008 Balance at the beginning of year Additions Disposals Depreciation expense Carrying amount as at 30 June 2008	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 263,030 280,911 - - (104,118) (81,538) - -	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 263,030 280,911 - - (104,118) (81,538) - -
	158,912 199,373 - -
	232,145 278,236 - - (130,075) (172,849) - -
	102,070 105,387 - -
	260,982 304,760 - -
		Consolidated Furniture, Fixtures and Fittings $ Office Equipment $ Total $ 199,373 105,387 304,760 1,600 32,141 33,741 (6,187) (7,347) (13,534) (35,874) (28,111) (63,985)
		158,912 102,070 260,982
		187,327 126,159 313,486 56,007 40,311 96,318 (5,455) (22,961) (28,416) (38,506) (38,122) (76,628)
		199,373 105,387 304,760

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

15 Investment Properties and Property Debt

Value at 30 June 2008 Capital Improvements Market deterioration impairments Investment property fair value Property debt Net property equity Loan to value ratio	Bakehouse Quarter $ '000 Penrith $ '000 The Woods at Villawood $ '000 Bondi $ '000 Surry Hills $ '000 Total $ '000 177,250 20,670 16,900 975 1,245 217,040 1,865 1,865 (23,600) (4,170) (1,900) - - (29,670)
	155,515 16,500 15,000 975 1,245 189,235
	(77,500) (10,500) (8,000) (610) (805) (97,415) 78,015 6,000 7,000 365 440 91,820 50% 64% 53% 63% 65% 52%

As part of the merger, Pelorus acquired all of the units in the Bakehouse Quarter Fund giving the Group control of the Bakehouse Quarter property. It also acquired all of the shares in a company known as Planloc Pty Ltd, which along with some other financial assets, owns the Penrith property.

As a consequence of the merger the Bakehouse Quarter is carried as an Investment Property in the consolidated balance sheet. The Bakehouse Quarter is a significant development site located in North Strathfield Sydney. The project involves the conversion of the old Arnott’s biscuit factory into an urban business precinct with over 35,000 sqm of commercial, retail, restaurant and entertainment space completed and trading. The site is expected to grow roughly 100,000 sqm over the next five to ten years. A $37.5m debt facility secured against the property was refinanced in June 2009 and now has an expiry date of August 2011, the remaining debt expires in September 2012. The current fair value is a combination of development land value, cost of building under construction and a yield of 8% on completed elements.

The Penrith property is a bulky goods retail centre known as 120 Mulgoa Road, Penrith. Pelorus is working up a proposal to expand the properties largest tenant by up to 500 sqm. An independent valuation of the property was undertaken in May 2009 in connection with the refinancing of the debt facility for a further 2 years. The debt now expires in May 2011 reflects a current yield of 9.14%.

The Woods at Villawood is a partially completed conversion of a 9,000 sqm failed bulky goods retail site into a mixed-use entertainment precinct situated on Woodville Road, Villawood. To date the property has 5,000 sqm converted and occupied with negotiations on another 4,000 sqm (including some extensions) expected to be finalised in the coming weeks. The debt secured against the property is due to expire in September 2012. The current fair value reflects a capitalisation rate of 9.25%.

Bondi and Surry Hills are two residential properties providing furnished short-term accommodation to working tourists. The debt facilities secured against the properties are due to expire in July and August 2012 respectively.

The debt secured against Investment Properties is held in six separate facilities with Australian financial institutions. The weighted average term to maturity of the debt is 2.7 years.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

16 Intangible Assets

Goodwill Goodwill on consolidation Net carrying value Development costs At cost Net carrying value Capitalised borrowing costs Cost Net carrying value Total Intangibles Goodwill as at 30 June 2008 Adjustment to 2008 goodwill Opening goodwill July 2008 Goodwill recognised on acquisition of RFML Limited Goodwill recognised on acquisition of WRV Unit Trust Goodwill as at 30 June 2009	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 3,254,451 1,544,729 - -
	3,254,451 1,544,729 - -
	620 37,999 - 29,404
	620 37,999 - 29,404
	67,441 - - -
	67,441 - - -
	3,322,512 1,582,728 - 29,404
	1,544,729 28,901 1,573,630 356,877 1,323,944 3,254,451

Goodwill was acquired through the acquisition of 100% of the issued capital of Wynn Tresidder Management Pty Ltd and DDT Projects Pty Ltd on 1 July 2005, 100% of RFML Limited on 4 June 2009, and 68% of WRV Unit Trust on 30 June 2009. Details of the acquisitions that occurred in the current financial year are contained in Note 13. The goodwill has been allocated to the property services and fund asset management segments respectively. The calculation of value in use has been based on known continuing contracted property management and fund asset management services. The goodwill is fully recoverable within 12 months on an undiscounted basis.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

17 Other Assets CURRENT Prepayments Other assets Total other assets 18 Trade and Other Payables CURRENT Unsecured liabilities Trade payables Consideration payable re RFML Intercompany tax payable Deposits Payable GST payable/ (receivable) Sundry payables and accrued expenses Rental income in advance Dividends payable Total trade and other payables			Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 23,606 20,873 - - 315,570 - - -
			339,176 20,873 - -
			Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 1,823,321 1,008,920 401,276 612,843 350,000 350,000 - - 114,970 42,800 89,893 - - - 152,719 (701) 55,137 659 64,446 59,269 - - 35,558 - - - - 120,347 - 120,347
			2,515,937 1,187,835 921,384 776,649

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

19 Financial Liabilities

Other liabilities

NON-CURRENT Unsecured liabilities Interest rate hedge Outside minority interest in Pelorus Penrith Fund No.2 Total other liabilities	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 2,715,000 - - - 235,000 - - -
	2,950,000 - - -

The interest rate hedge liabilities represent the mark to market valuations of hedges in place at 30 June 2009 with respect to property debt held over the Penrith, Bakehouse Quarter and The Woods properties.

20 Provisions

Opening balance at 1 July 20081 July 2008 Additional provisions Amounts used Balance at 30 June 2009	Legal proceedings $ Employee entitlements $ Total $ - 170,298 170,298 50,000 151,870 201,870 - (170,177) (170,177)
	50,000 151,991 201,991

(a) Analysis of Total Provisions

(a) Analysis of Total Provisions
Current Non current Total provisions	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 197,491 138,505 - - 4,500 31,793 - -
	201,991 170,298 - -

The number of employees for the Group as at 30 June 2009 is 22 (30 June 2008: 28).

The provision for legal proceedings has been raised in relation to a claim against Wynn Tresidder Management Pty Ltd (WTM) in its capacity as manager of Neeta City shopping centre. A slip and fall case has resulted in a judgement against WTM. WTM is indemnified by its client under the relevant property agreement; however, the directors resolved to provide for less than a full recovery and any recoverable costs.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

21 Tax CURRENT Income tax receivable / (payable) Total current tax liabilities NON-CURRENT Deferred tax balance comprises: Fair value adjustments Employee entitlements Interest rate swaps Asset impairment Prepayments Total deferred tax assets / (liabilities) 22 Issued Capital (a) Summary Table 364,593,893 (30 June 2008: 113,649,724) Ordinary Total issued capital	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 214,695 (302,013) 270,134 (215,067)
	214,695 (302,013) 270,134 (215,067)
	223,381 (1,435,686) 223,381 (1,435,686) 55,028 31,363 - - 750,000 - - - 872,991 - - - (81,987) - - -
	1,819,413 (1,404,323) 223,381 (1,435,686)
	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 84,734,575 34,961,702 84,734,575 34,961,702
	84,734,575 34,961,702 84,734,575 34,961,702

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

22 Issued Capital continued

(b) Movement in shares on issue

At the beginning of reporting period Shares issued during the year: Employee Share Scheme Dividend Reinvestment Plan Issued for acquisition of Bakehouse Quarter Fund units Issued for acquisition of Planloc Pty Ltd shares Issued for acquisition of Pelorus Storage Fund units Issued for acquisition of Pelorus Penrith Fund No. 2 units Pro-rata issue for Directors and Shareholders shortfall shares At reporting date	Consolidated Parent 2009 No. 2008 No. 2009 No. 2008 No. 113,649,724 107,650,320 113,649,724 107,650,320 195,729 - 195,729 - - 1,668,143 - 1,668,143 168,016,256 364,590 168,016,256 364,590 64,075,758 - 64,075,758 - 11,550,000 - 11,550,000 - 5,300,000 - 5,300,000 - 1,806,426 3,966,671 1,806,426 3,966,671
	364,593,893113,649,724 364,593,893113,649,724

At the beginning of reporting period
Shares issued during the year:
Employee Share Scheme
Dividend Reinvestment Plan
Issued for acquisition of Bakehouse
Quarter Fund units
Issued for acquisition of Planloc Pty
Ltd shares
Issued for acquisition of Pelorus
Storage Fund units
Issued for acquisition of Pelorus
Penrith Fund No. 2 units
Pro-rata issue for Directors and
Shareholders shortfall shares
At reporting date

Consolidated
Parent
2009
No.
2008
No.
2009
No.
2008
No.
113,649,724 107,650,320 113,649,724 107,650,320

195,729
-

195,729
-

-
1,668,143
-
1,668,143
168,016,256
364,590 168,016,256
364,590

64,075,758
-

64,075,758
-

11,550,000
-

11,550,000
-

5,300,000
-

5,300,000
-

1,806,426
3,966,671
1,806,426
3,966,671

364,593,893113,649,724 364,593,893113,649,724

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.

At the shareholders meetings, each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

23 Dividends

(a) Dividends and distributions paid table

Distributions paid

Payment of final fully franked ordinary dividend of 2 cents per share Payment of interim fully franked ordinary dividend of 2 cents per share Total distributions	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ - 2,160,297 - 2,160,297 - 2,193,661 - 2,193,661
	- 4,353,958 - 4,353,958

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

23 Dividends continued

(b) Balance of franking account

The amount of franking credits available for the subsequent financial year are: - franking account balance as at the end of the period at 30% (2008: 30%) - franking credits that will arise from the payment of income tax Total franking account balance ors' Remuneration Remuneration of the auditor of the parent entity for: - Auditing or reviewing the financial report - Auditing or reviewing the financial report of the Managed Investment Schemes for whom Pelorus acts as Responsible Entity - Taxation services - Other services Total auditors' remuneration	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 175,435 (544,426) 117,692 (544,426) - 242,857 - 242,857
	175,435 (301,569) 117,692 (301,569)
	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 103,549 75,000 103,549 75,000 23,400 21,590 23,400 21,590 14,820 13,450 14,820 13,450 6,600 6,685 6,600 6,685
	148,369 116,725 148,369 116,725

24 Auditors' Remuneration

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

25 Capital and Leasing Commitments

Operating Lease Commitments

Non-cancellable operating leases contracted for but not capitalised in the financial statements

Non-cancellable operating leases contracted	for but not capitalised in the financial statements
Payable - minimum lease payments - not later than 12 months Total operating lease commitments	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 186,960 186,960 - -
	186,960 186,960 - -

Capital Commitments

There are no capital commitments as at 30 June 2009 (30 June 2008: Nil).

26 Contingent Liabilities and Contingent Assets

The cash deposit in relation to the Trentham City, Wellington New Zealand shopping centre for which Pelorus Management (NZ) Limited has an equity interest has now been repaid and as such is no longer a contingent asset.

There are no other contingent assets or liabilities as at 30 June 2009

27 Events After the Balance Sheet Date

Please refer to the Directors' Report for detailed information on events subsequent to balance date.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

28 Controlled Entities

olled Entities
			Percentage
	Country of	Percentage	Owned
	incorporation	Owned	30 June
Name		30 June 2009	2008
Parent Entity:
Pelorus Property Group Ltd	Australia
Subsidiaries of parent entity:
Wynn Tresidder Management Pty Limited	Australia	100	100
DDT Projects Pty Limited	Australia	100	100
Capital Storage Services Pty Ltd	Australia	51	51
Pelorus Management (NZ) Limited	New Zealand	100	100
WRV Pty Limited *	Australia	100	100
Planloc Pty Ltd	Australia	100	-
RASP Investments Pty Ltd	Australia	50	-
RASP Investments No. 2 Pty Ltd	Australia	50	-
Bakehouse Quarter Fund	Australia	100	25
RFML Limited	Australia	100	-
Bakehouse Cellars Pty Ltd*	Australia	100	-
Pelorus PIPES Trust No. 5	Australia	100	-
WRV Unit Trust	Australia	68	-
RFM Nominees Pty Ltd*	Australia	100	-

The results and net assets of these entities have not been consolidated on the basis they have not traded during the period and their net assets are immaterial to the Group.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

29 Related party transactions

Note Fees received Kirela Pty Ltd (Bakehouse Quarter Fund) JPS Properties Pty Ltd Mosman Branch Pty Ltd Alerik Pty Ltd Claremont Street Pty Ltd Planloc Pty Ltd (Pelorus Penrith Fund No 2) Trentham City Investments Limited Pelorus Storage Advantage Pty Ltd WRV Pty Limited (WRV Unit Trust) Seph Glew Paul Tresidder Robin Tedder Total Rent paid JPS Properties Pty Ltd 29(e) Total Consultancy fees paid Frogstorm Pty Ltd Castle Bay Pty Ltd Seno Management Pty Ltd Lymkeesh Pty Ltd Kokoda Pty Ltd Total Directors fees paid Seno Management Pty Ltd Lymkeesh Pty Ltd Hillandip Pty Ltd Koonta Pty Ltd Total**	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 1,177,316 2,558,768 436,010 927,437 58,809 27,642 - - 16,127 15,443 - - 235,661 211,221 71,500 74,500 - 258,238 - - 59,999 478,859 44,749 403,400 521,889 364,558 - - 3,253 4,698 - - 107,387 2,313,469 48,750 2,078,380 7,332 - - - 1,731 - - - 538 - - -
	2,190,042 6,232,896 601,009 3,483,717
	463,909 199,472 - -
	463,909 199,472 - -
	23,500 281,998 23,500 281,998 184,242 64,286 184,242 64,286 285,000 - 285,000 - 185,000 - 185,000 - 90,000 - - -
	767,742 346,284 677,742 346,284
	75,000 - 75,000 - 55,000 - 55,000 - 55,000 - 55,000 - 55,000 - 55,000 -
	240,000 - 240,000 -

** Consultancy fees were paid by WT Retail Services (India) Private Ltd.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

29 Related party transactions continued

Interest received Frogstorm Pty Ltd Alerik Pty Limited Planloc Pty Ltd Old Bear Pty Ltd Kirela Pty Ltd Pelorus Storage Fund WRV Unit Trust Pelorus Penrith Fund No.2 JPS Properties Pty Ltd Trentham City Investments Limited Total Loans to related parties: Trentham City Investments Limited Old Bear Pty Ltd Frogstorm Pty Ltd WRV Unit Trust WT Retail Services (India) Private Ltd Bin 24 Restaurants Pty Ltd Pelorus Management (NZ) Limited Total Distributions received Bakehouse Quarter Fund Pelorus Storage Fund Pelorus Penrith Fund No.2 Total Interest paid Pelorus Penrith Fund No.2 Total	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	21,325 19,750 - 19,750 - 565 - 565 38,665 24,480 21,705 24,480 18,294 15,418 - 15,418 - 40,472 - 40,472 - 97,590 - 97,590 298,739 334,023 298,739 334,023 - 376,761 - 376,761 - 6,289 - 6,289 434 - - -
	377,457 915,348 320,444 915,348
	86,614 - - - 232,753 - - - 271,325 - - - - 4,650,000 - 4,650,000 475,476 307,306 475,476 297,421 14,641 - - - - - - -
	1,080,809 4,957,306 475,476 4,947,421
	735,000 - 608,455 - 183,940 - 176,718 - 317,800 - 317,800 -
	1,236,740 - 1,102,973 -
	20,147 - - -
	20,147 - - -

Annual Report Financial Year Ended 30 June 2009

Legal/ Beneficial Interest as at 30 June 2009	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder, Robin Tedder, Richard Hill	Pelorus Property Group Limited	Pelorus Property Group Limited	Seph Glew, Robin Tedder, Paul Tresidder	Pelorus Property Group Limited	Guy Wynn	Seph Glew, Paul Tresidder	Stuart Brown
Legal/ Beneficial Interest Before Merger	Seph Glew, Paul Tresidder,	Seph Glew, Paul Tresidder, Robin Tedder, Richard Hill	Seph Glew, Paul Tresidder, Robin Tedder	Seph Glew, Paul Tresidder, Robin Tedder, Richard Hill, Stuart Brown	Seph Glew, Robin Tedder, Paul Tresidder	Pelorus Property Group Limited	Guy Wynn	Seph Glew, Paul Tresidder	Stuart Brown
Directors	Seph Glew, Paul Tresidder	-	Seph Glew, Paul Tresidder, Robin Tedder, Stuart Brown, Guy Wynn	-	Seph Glew, Robin Tedder, Paul Tresidder	Stuart Brown	Guy Wynn	Seph Glew, Paul Tresidder	Stuart Brown
Entity Type	Company	Trust	Company	Trust	Company	Company	Company	Company	Company
Name	Alerik Pty Ltd	Alerik Unit Trust	Bakehouse Cellars Pty Ltd	Bakehouse Quarter Fund	Bin24 Restaurants Pty Ltd	Capital Storage Services Pty Ltd	Castle Bay Pty Ltd	Claremont Street Pty Ltd	Frogstorm Pty Ltd

Annual Report Financial Year Ended 30 June 2009

Legal/ Beneficial Interest as at 30 June 2009	Richard Hill	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder	Guy Wynn	Robin Tedder
Legal/ Beneficial Interest Before Merger	Richard Hill	Paul Tresidder, Seph Glew	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder, Robin Tedder, Richard Hill, Guy Wynn, Stuart Brown	Seph Glew, Paul Tresidder	Guy Wynn	Robin Tedder
Directors	Richard Hill	Paul Tresidder, Seph Glew	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder	-	Seph Glew, Paul Tresidder	Guy Wynn	Robin Tedder
Entity Type	Company	Company	Company	Company	Company	Trust	Company	Company	Company
Name	Hillandip Pty Ltd	Hollia Pty Ltd	Jagar Holdings Pty Ltd	Jagar Property Consultants Pty Ltd	JPS Properties Pty Ltd	Kirela Development Unit Trust	Kirela Pty Ltd	Kokoda Pty Ld	Koonta Pty Ltd

Annual Report Financial Year Ended 30 June 2009

Legal/ Beneficial Interest as at 30 June 2009	Paul Tresidder	Seph Glew, Paul Tresidder	David Tresidder	-	Pelorus Property Group Limited	Seph Glew, Stuart Brown, Guy Wynn, Paul Tresidder	Seph Glew, Paul Tresidder	Pelorus Property Group Limited	Seph Glew, Paul Tresidder
Legal/ Beneficial Interest Before Merger	Paul Tresidder	Seph Glew, Paul Tresidder	David Tresidder	Seph Glew, Stuart Brown	Pelorus Property Group Limited	Seph Glew, Stuart Brown, Guy Wynn, Paul Tresidder	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder
Directors	Paul Tresidder	Seph Glew, Paul Tresidder	David Tresidder	-	Stuart Brown	-	-	Seph Glew, Paul Tresidder, Stuart Brown, Guy Wynn	Seph Glew, Paul Tresidder
Entity Type	Company	Company	Company	Trust	Company	Trust	Trust	Company	Company
Name	Lymkeesh Pty Ltd	Mosman Branch Pty Ltd	Old Bear Pty Ltd	Pelorus Penrith Fund No. 2	Pelorus Storage Advantage Pty Ltd	Pelorus Storage Fund	Penrith Unit Trust	Planloc Pty Ltd	PRSC Pty Ltd

Annual Report Financial Year Ended 30 June 2009

Legal/ Beneficial Interest as at 30 June 2009	Pelorus Property Group Limited	Pelorus Property Group Limited	Seph Glew	Pelorus Management (NZ) Limited	Pelorus Property Group Limited	Seph Glew, Paul Tresidder, Stuart Brown, Robin Tedder	Pelorus Property Group Limited
Legal/ Beneficial Interest Before Merger	Seph Glew, Paul Tresidder	Seph Glew, Paul Tresidder	Seph Glew	Pelorus Management (NZ) Limited	Pelorus Property Group Limited	Seph Glew, Paul Tresidder, Stuart Brown, Robin Tedder	Pelorus Property Group Limited
Directors	Seph Glew, Paul Tresidder, Stuart Brown	Seph Glew, Paul Tresidder, Stuart Brown	Seph Glew	Seph Glew, Stuart Brown	Seph Glew, Paul Tresidder, Guy Wynn, Stuart Brown	-	Guy Wynn, Paul Tresidder
Entity Type	Company	Company	Company	NZ Company	Company	Trust	Indian Company
Name	RASP Investments No2 Pty Ltd	RASP Investments Pty Ltd	Seno Management Pty Ltd	Trentham City Investments Limited	WRV Pty Ltd	WRV Unit Trust	WT Retail Services (India) Private Ltd

Annual Report Financial Year Ended 30 June 2009

Related Directors	Seph Glew	Seph Glew
Type	Individual	Individual
Name	Ms JA Glew	Ms SM Glew

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

29 Related party transactions continued

(b) Beneficial Holdings

The direct, indirect and beneficial holding of directors and their director-related entities in the share and share options of the Company as at 30 June 2009 is:

Shares: 191,663,727 (30 June 2008: 52,472,991) Ordinary shares

Options: 24,880,000 (30 June 2008: 7,880,000)

Refer Note 32(a) for further details.

(c) Property management and leasing fees received

The consolidated entity receives property management and leasing fees from various related parties. These fees are paid under a property management agreement and the fees charged are determined with reference to arm's length commercial rates.

(d) Funds management fees

Funds management fees are provided for in the fund constituent documents and fees charged are determined with reference to arm's length commercial rates.

(e) Rental expenses

Rent is paid to JPS Properties Pty Ltd for use of the Group's Neutral Bay head office premises. The rent paid is subject to a lease, which is determined with reference to arm's length commercial rates.

Wynn Tresidder Serviced Offices paid rental expenses of $256,549 to JPS Properties Pty Ltd during the period. This rental expense is fully recovered from unrelated tenants and as such does not form part of occupancy costs.

(f) Consultancy fees

The Group has entered into consultancy arrangements with entities associated with Stuart Brown, Seph Glew, Paul Tresidder, Richard Hill, Robin Tedder and Guy Wynn. The fees charged are subject to consultancy agreements and rates charged are determined with reference to arm's length commercial rates.

(g) Loans to / from related parties

WRV Pty Ltd ATF WRV Unit Trust

$6,125,000 is loaned to WRV Pty Ltd ATF WRV Unit Trust by Pelorus PIPES Trust No.5. The loan is secured by a registered caveat over real property and the Company has an irrevocable right to increase the senior debt in order to recover the loan. Interest is charged at the rate of the Bank Bill Swap Rate plus a margin of 0.63% per annum.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

29 Related party transactions continued

Old Bear Pty Ltd and Frogstorm Pty Ltd

These loans are secured by shares in Pelorus Property Group Ltd and interest is currently charged at 9% per annum.

Planloc Pty Ltd

Pelorus Penrith Fund No 2 holds a PIPES mortgage secured over 120 Mulgoa Rd, Penrith. 235,000 of the units are held by investors other than Pelorus Property Group Limited. They are disclosed as minority interests in PPF2 on the balance sheet of the Group. Interest is payable under the mortgage at a rate of 8.75% per annum.

(h) Other related party transactions

Mosman Branch Pty Ltd purchased PRSC Pty Ltd from Planloc Pty Ltd for consideration of $2,581,059.20.
Kirela Pty Ltd purchased Jagar Property Consultants Pty Ltd from Planloc Pty Ltd for consideration of $6,020,945.20.
Pelorus Property Group Ltd purchased Planloc Pty Ltd from Hollia Pty Ltd and Jagar Holdings Pty Ltd for the issue of 64,075,758 Pelorus Property Group Pty Ltd shares.
Pelorus Property Group Ltd purchased 50% of RASP Investments Pty Ltd & RASP Investments No 2 Pty Ltd for $2,500 each from PRSC Pty Ltd.
Pelorus Property Group Ltd purchased 11,587,327 units in the Bakehouse Quarter Fund for the issue of 168,016,256 Pelorus Property Group Ltd shares.
Pelorus Property Group Ltd purchased 1,060,000 units in the Pelorus Penrith Fund No. 2 for the issue of 5,300,000 Pelorus Property Group Ltd shares.
Pelorus Property Group Ltd purchased 2,310,000 units in the Pelorus Storage Fund for the issue of 11,550,000 Pelorus Property Group Ltd shares.
Pelorus Property Group Ltd purchased 321,000 units in the Pelorus Storage Fund from Planloc Pty Ltd for $321,000.
The Bakehouse Quarter Fund purchased Bakehouse Cellars Pty Ltd for $15,000.
Pelorus Property Group Ltd purchased 100 shares in RFML Limited for $1,150,000.
Seno Management Pty Ltd sold 200,000 units in Pelorus Penrith Fund No.2 to Pelorus PIPES Trust No.5 for $200,000.
Seno Management Pty Ltd purchased 200,000 units in Pelorus Storage Fund from Pelorus Property Group Ltd for $200,000.
Frogstorm Pty Ltd sold 5,000 units in Pelorus Penrith Fund No.2 to Pelorus PIPES Trust No.5 for $5,000.
Frogstorm Pty Ltd purchased 5,000 units in Pelorus Storage Fund from Pelorus Property Group Ltd for $5,000.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

29 Related party transactions continued

Kirela Development Unit Trust exchanged 1,360,000 units in WRV Unit Trust for 1,360,000 shares in Pelorus Property Group Ltd and 1,088,000 units in Pelorus Storage Fund.
Koonta Pty Ltd exchanged 300,000 units in WRV Unit Trust for 300,000 shares in Pelorus Property Group Ltd and 240,000 units in Pelorus Storage Fund.
Frogstorm Pty Ltd exchanged 40,000 units in WRV Unit Trust for 40,000 shares in Pelorus Property Group Limited and 32,000 units in Pelorus Storage Fund.
Pelorus Property Group Ltd assigned its loan of $45,000 to Old Bear Pty Ltd to Kirela Development Unit Trust.
Jagar Property Consultants Pty Ltd sold 1,420,000 shares in Pelorus Property Group to Planloc Pty Ltd for $284,000.

30 Directors' options

Directors related entities have relevant interests in options over shares in the Company as set out below. The options that existed at 30 June 2008 have a five year term commencing on 20 July 2006 and are exercisable at any time prior to their expiry at a price of 67.5 cents per share. The additional options granted during the year ended 30 June 2009 have the following terms:

Each option entitles the option holder to convert the Option into 1 fully paid Ordinary Share in the capital of the Company.
Options may be exercised at any time after the third anniversary of the date of issue of the Options which was 28 November 2008.
The Options expire 5 years from the date of issue.
The exercise price will be at $0.60 on the date which is the third anniversary from the date of issue of the Options. The exercise price will increase by 0.75 of a cent each 3 monthly period thereafter until the Options expire or are exercised.
The share price on the date of issue was $0.17.

Seph Glew Guy Wynn Stuart Brown Paul Tresidder Robin Tedder Richard Hill Total	Balance 1/07/2008 No. Net change No. Balance 30/06/2009 No. 2,660,000 5,000,000 7,660,000 1,400,000 2,500,000 3,900,000 600,000 5,000,000 5,600,000 2,220,000 2,500,000 4,720,000 1,000,000 1,500,000 2,500,000 - 500,000 500,000
	7,880,000 17,000,000 24,880,000

** Additional options were issued to the directors in accordance with approval of shareholders at the Annual General Meeting on 28 November 2008.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

31 Issue of shortfall shares

The Group issued shortfall shares under 4 June 2008 pro rata offer to the following related parties:

Frogstorm Pty Ltd Ms J A Glew Ms S M Glew Jagar Property Consultants Pty Ltd Koonta Pty Ltd Seno Management Pty Ltd Total	No. of shares 8,929 8,929 8,929 210,817 369,656 438,139
	1,045,399

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

32 Directors and Key Management Personnel

(a) Directors' relevant interests

The directors have relevant interests in shares of the Company as set out in the following table.

Seph Glew Guy Wynn Stuart Brown Paul Tresidder Robin Tedder Richard Hill Total shareholding	Balance 1/07/2008 Options Exercised Net Change Other Balance 30/06/2009* 16,997,009 - 56,308,694 73,305,703 8,566,201 - 72,450 8,638,651 3,915,286 - 1,223,145 5,138,431 16,637,804 - 54,125,592 70,763,396 6,356,691 - 11,193,998 17,550,689 - - 16,266,857 16,266,857
	52,472,991 - 139,190,736 191,663,727

Net Change Other refers to changes in relevant interests in shares during the financial year including changes as a result of the merger.

(b) Key Management Personnel Compensation

30 June
2009
Guy Wynn
Stuart
Brown
Robin
Tedder
Richard Hil
Paul
Tresidder
Seph Glew

Short-term benefits
Post
employment
benefits
Total
Consultancy
fees
$
Directors
Fees
$
Salary and
Other
$
Superannuation
$
Options
$
$

253,333
-
-
-
1,750
255,083
23,500
-
237,156
21,344
3,500
285,500
-

55,000
-
-

1,050
56,050
l
-

55,000
-
-

350
55,350
185,000
55,000
-
-

1,750
241,750

285,000
75,000
-
-

3,500
363,500
746,833
240,000
237,156
21,344
11,900
1,257,233

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

32 Directors and Key Management Personnel continued

$90,000 of Guy Wynn's fees paid in India by WT Services (India) Private Limited.

Options valued at $0.0007 per option under the Black Scholes and binomial valuation methods.

Material terms of the options:

Each option entitles the option holder to convert the Option into 1 fully paid Ordinary Share in the capital of the company.
Options may be exercised at any time after the third anniversary of the date of issue of the Options which was 28 November 2008.
The Options expire 5 years from the date of issue.
The exercise price will be at $0.60 on the date which is the third anniversary from the date of issue of the Options. The exercise price will increase by 0.75 of a cent each 3 monthly period thereafter until the Options expire or are exercised.
The share price on the date of issue was $0.17.

30 June 2008 Guy Wynn Stuart Brown Robin Tedder Richard Hill Paul Tresidder Seph Glew	Short-term benefits Post employment benefits Total Consultancy fees $ Directors Fees $ Salary and Other $ Superannuation $ Options $ $ 177,286 - - - - 177,286 281,998 - - - - 281,998 - 55,000 - - - 55,000 - 55,000 - - - 55,000 - 55,000 - - - 55,000 - 75,000 - - - 75,000 459,284 240,000 - - - 699,284

$113,286 of Guy Wynn's fees paid in India By WT Services (India) Private Limited.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

33 Financial Instruments

(a) Financial Risk Management

The main risks the Group is exposed to through its financial instruments are interest rate risk, price risk and credit risk.

The Group's principal financial instruments are cash, loan receivables, investments in listed securities and investments in related and unrelated property structures. Additionally, the Group has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations.

This note presents information about the Company's and Group's exposure to each of the above risks, their objectives, policies, and processes for measuring and managing risk, and the management of capital.

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Board of Directors and senior management set appropriate risk limits and controls, and monitor risks and adherence to limits. Changes in market conditions and the Company's and Group's activities are monitored with respect to the Group's risk profile. The Company and Group, through their training and management standards and procedures, aim to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

(b) Interest rate risk

The Group has exposure to market risk for changes in interest rates on long-term borrowings. Borrowings at variable rate expose the Group to cash flow interest rate risk.

The Group undertakes hedging strategies to mitigate the risk on its Property Debt. The Group manages its cash flow interest rate risk by using floating-to-fixed interest rate derivatives. Such interest rate derivatives have the economic effect of converting borrowings from floating rates to fixed or capped rates. Generally, the Group raises long term borrowings at floating rates and hedges them into fixed rates that are lower than those available if the group borrowed at fixed rates directly. Under the interest rate derivatives, the Group agrees with other parties to exchange, at specified intervals, the difference between fixed contract rates and floating rates interest amounts calculated by reference to the agreed notional principal amounts.

Refer to note 33(g) for financial instruments subject to interest rate risk.

(c) Price Risk

The Group is exposed to price risk through the fluctuation of share prices for listed securities held by the Group and fluctuations in the underlying value of properties used as security for investments in related and unrelated property structures.

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

33 Financial Instruments

(d) Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements.

Credit risk for financial instruments arises from the potential failure by counter-parties to the contract to meet their obligations.

The Group has credit risk exposure to related parties loan receivables and investments in related and unrelated property structures under financial instruments and contractual arrangements entered into by the Group.

The Group limits its exposure to credit risk by obtaining equitable mortgage over real property for related unrelated party loan receivables and investment in related and unrelated property structures.

(e) Exposure to credit risk

The carrying amount of the Group's financial assets represents the maximum credit exposure. The Group's maximum exposure to credit risk at the reporting date was:

	Consolidated	Consolidated	Parent
	2009	2008	2009	2008
	$	$	$	$
Other financial assets	763,636	4,194,000	76,947,852	4,194,000
Loans and receivables	1,809,322	5,660,409	4,928,030	5,729,822
Held-for-trading financial assets	296,800	401,252	292,800	401,252
Non-current assets held-for-sale	-	23,566,920	-	-
Cash and cash equivalents	3,180,771	4,561,003	2,630,799	4,005,001
Trade receivables	634,953	472,159	241,500	243,228
Cash held on trust	350,000	-	350,000	-
	7,035,482	38,855,743	85,390,981	14,573,303

Annual Report Financial Year Ended 30 June 2009

	2008	Carrying	amount Fair value	$ $		4,005,001 4,005,001	243,228 243,228	5,729,822 5,729,822	401,252 401,252	23,566,920 23,566,920	4,194,000 4,194,000	- -		612,843 612,843					38,753,066 38,753,066
Consolidated Parent	2009 2008 2009	Carrying Carrying Carrying	amount Fair value amount Fair value amount Fair value	$ $ $ $ $ $	Financial assets	Cash 3,180,771 3,180,771 4,561,003 4,561,003 2,630,799 2,630,799	Trade receivables 634,953 634,953 472,159 472,159 241,500 241,500	Loans receivables 1,809,322 1,809,322 5,660,409 5,660,409 4,928,030 4,928,030	Held for trading financial assets 296,800 296,800 401,252 401,252 292,800 292,800	Non-current assets held-for-sale - - 23,566,920 23,566,920 - -	Other financial assets 763,636 763,636 4,194,000 4,194,000 76,947,852 76,947,852	Cash held on trust 350,000 350,000 - - 350,000 350,000	Financial liabilities	Trade payables 1,823,321 1,823,321 1,008,920 1,008,920 401,276 401,276		Consideration payable re RFML 350,000 350,000 350,000 350,000		Secured bank loans	Total 9,208,803 9,208,803 39,864,663 39,864,663 86,142,237 86,142,237

Annual Report Financial Year Ended 30 June 2009

The Group's exposure to interest rate risk, which is the risk that a financial instruments value will fluctuate as a result of changes in	market interest rates and theeffective weighted average interest rates on classes of financial assets and financial liabilities, is as follows:	Weighted Average	Effective Interest	Rate Floating Interest Rate Hedged Interest Rate Non-interest Bearing Total	2009 2008 2009 2008 2009 2008 2009 2008 2009 2008	% % $ $ $ $ $ $ $ $	Financial Assets:	Cash and cash	equivalents 2.25 5.50 3,180,771 4,561,003 - - - - 3,180,771 4,561,003	Trade & other	receivables - - - - - - 1,064,824 1,213,725 1,064,825 1,213,725	Loan and receivables 8.00 8.10 1,809,322 5,431,150 - - - - 1,809,322 5,431,150	Total Financial	Assets 4,990,093 9,992,153 - - 1,064,824 1,213,725 6,054,918 11,205,878	Financial Liabilities:	Property debt 7.00 - 9,915,000 - 87,500,000 - - - 97,415,000 -	Trade & other	payables - - - - - - 2,515,937 1,187,835 2,515,937 1,187,835	Hedge Liabilities - - - - - - 2,715,000 - 2,715,000 -	Outside interest in	Penrith fund No.2 8.75 - - - 235,000 - - - 235,000 -	Total Financial	Liabilities - 9,915,000 - 87,735,000 - 5,230,937 1,187,835 102,880,937 1,187,835

Annual Report Financial Year Ended 30 June 2009

ABN 45 091 209 639	Notes to the Financial Statements	30 June 2009	33 Financial Instruments continued	(g) Interest Rate Risk Continued

11,205,878	- 1,187,835 - -	1,187,835
6,054,917	97,415,000 2,515,937 2,715,000 235,000	102,880,937
-	- - - -	-
-	97,415,000 - 2,605,000 235,000	100,255,000
11,205,878	- 1,187,835 - -	1,187,835

Annual Report Financial Year Ended 30 June 2009

(g) Interest Rate Risk Continued	The following sensitivity analysis is based on the interest rate ri	At 30 June 2009, if interest rates had moved, as illustrated in th	been affected as follows:	Pre tax profit	higher/(lower)	2009 2008	$ $	Consolidated	+1.0% (100 basis points) (49,249) 99,922	-0.5% (50 basis points) 24,625 (49,961)	Parent	+1.0% (100 basis points) 75,588 97,348	-0.5% (50 basis points) (37,794) (48,674)

Annual Report Financial Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

34 Company Details

Principal place of business

The principal place of business of the company is:

Pelorus Property Group Ltd and Controlled Entities Level 3, 50 Yeo Street Neutral Bay NSW 2089

Annual Report Financial Year Ended 30 June 2009

==> picture [131 x 34] intentionally omitted <==

Pelorus Property Group Limited

ABN 45 091 209 639

Level 3, 50 Yeo Street, Neutral Bay NSW 2089 Post: PO Box 612, Neutral Bay NSW 2089 Phone: (02) 9033 8611 Fax: (02) 9033 8600

www.pelorus.com.au

AI assistant

BLACKWALL LIMITED — Annual Report 2009

64590_rns_2011-10-17_3ea80607-e7b2-4f4b-8191-2e947100a510.pdf

AND CONTROLLED ENTITIES

ANNUAL REPORT

Pelorus Property Group Limited

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2009

PRINCIPAL ACTIVITIES

Property Portfolio

FUTURE DEVELOPMENTS AND RESULTS

RESULTS AND REVIEW OF OPERATIONS

Segment Report 2009

SUBSEQUENT EVENTS

DIVIDENDS PAID

INFORMATION ON DIRECTORS

MEETING ATTENDANCES

DIRECTORS’ RELEVANT INTERESTS

Options

REMUNERATION REPORT

NON-AUDIT SERVICES

AUDITOR’S INDEPENDENCE DECLARATION

ENVIRONMENTAL REGULATION AND PERFORMANCE

INDEMNITIES OF OFFICERS

CORPORATE GOVERNANCE

ASX Corporate Governance Principles and Recommendations

Principle 1: Lay solid foundations for management and oversight

Principle 2: Structure the board to add value

Principle 3: Promote ethical and responsible decision making

Principle 4: Safeguard integrity in financial reporting

Principle 5: Make timely and balanced disclosures

Principle 6: Respect the rights of shareholders

Principle 7: Recognise and managing risk

Principle 8: Remunerate fairly and responsibly

SHAREHOLDERS

PELORUS DETAILS

PELORUS PROPERTY GROUP LTD ABN 45 091 209 639

DIRECTORS’ DECLARATION

Stuart Brown Managing Director Pelorus Property Group Ltd

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Income Statement

For the Year Ended 30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Statement of Changes in Equity

30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Statement of Changes in Equity

30 June 2009

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Pelorus Property Group Ltd and Controlled Entities

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies

General information

Introduction

Basis of Preparation

Reporting Basis and Conventions

Presentation of financial statements

Presentation currency

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Comparative Figures

Principles of Consolidation

Controlled entities

Inter-company balances

Minority interests

ABN 45 091 209 639

Notes to the Financial Statements

30 June 2009

1 Statement of Significant Accounting Policies continued

Business combinations

Critical accounting estimates and judgments

BLACKWALL LIMITED Annual Report 2009