FINBAR GROUP LIMITED — Annual Report 2011

Aug 23, 2011

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FINBAR GROUP LIMITED ACN 009 113 473

Level 3 15 Labouchere Road SOUTH PERTH WA 6151

www.finbar.com.au ASX CODE: FRI

24 August 2011

FINBAR DELIVERS PROFIT GROWTH IN STRONG FINANCIAL YEAR PERFORMANCE

RESULTS

The board of directors is very pleased to advise that the company has achieved another record annual result, reporting an after tax profit of $24.03 million for the year ended 30 June 2011.

The majority of earnings this financial year resulted from the completion of two major apartment projects; Times Two, and The Edge, along with the successful conversion of presales in these projects.

The 2011 financial year continued to provide challenges for the industry with continued instability in the global economy and soft consumer sentiment locally. In spite of these prevailing conditions, the company has continued to secure a steady level of presales for new projects which has continued to underwrite project viability.

Whilst we cannot predict the timing of a return to confidence in the general property market, the company has continued to produce a product that meets the needs of the current market, offering value for money in a price sensitive environment whilst maintaining our robust margins and positioning the company to benefit from an inevitable recovery.

REVIEW OF OPERATIONS

COMPLETED PROJECTS

Delmar – 3 Palladio, Mandurah Ocean Marina: All lots are now sold, with settlement of the last unit occurring during the reporting period.

The Saint – 118 Adelaide Terrace East Perth: All lots are now sold. 6 units settled in the reporting period with the remaining unit contracted to settle in the financial year ending 30 June 2012.

Code – 69 Milligan Street East Perth: All units are now sold and settled.

Verve – 145 Newcastle Street Northbridge: All units are now sold. A total of 10 units settled in the reporting period, with 1 unit contracted to settle in the financial year ending 30 June 2013.

The Edge – 8 Horden Street Victoria Park: 70 units were settled in the reporting period, with 2 units sold since the end of the reporting period, and 3 lots remaining to be sold. It is anticipated that all remaining units will be sold and settled in the financial year ending 30 June 2012.

Gateway Office Building – 59 Albany Highway Victoria Park: The Gateway building is being held as an investment property and is 93% leased. Offers to lease on the remaining space are currently being negotiated and we anticipate that the property will be fully leased during the financial year ending 30 June 2012.

Times Two – 143 Adelaide Terrace East Perth: Times Two was the largest contributor to this year’s profit result with 172 units in the 202 unit project settling in the reporting period. A total of 10 lots have settled since the end of the reporting period, and an additional 18 recent sales have been achieved. There are only 2 unsold lots in the project and we anticipate that all remaining lots will be sold and settled in the financial year ending 30 June 2012.

The completion and virtual sell-out of this project gives the company confidence in the success of the imminent launch of Au208 and Au311 which is a similar product in close proximity to Times Two, and will be launched at a similar price point (refer below).

CURRENTLY UNDER CONSTRUCTION

Fairlanes – 181 Adelaide Terrace East Perth: Construction of the Fairlanes office and residential building has continued without interruption and is approximately two weeks from reaching the important milestone of “topping up”, being the completion of the 28 level structure.

To date, 115 unconditional sales have been achieved in the 128 unit residential building which will generate sufficient proceeds when settled to retire the project specific debt.

Finbar sold its corporate offices in South Perth during the financial year on a lease-back arrangement and the company intends to move its registered office into the Fairlanes building once complete. This move will position our office geographically closer to the majority of our core company projects, provide capacity for future growth, and provide an environment that will help ensure our company continues to attract and retain the industry's most talented people.

The residential component of this building has secured the financial success of the Fairlanes project which has enabled the company to offer the remaining 6,700 sqm of office space in the commercial component of the building for lease without offering lease incentives which will help maximise the future income potential and value of this retained investment.

18 on Plain – 18 Plain Street East Perth: Construction continues at 18 on Plain with the structure now complete. 26 units have been presold in this 31 lot project, and the project is scheduled for completion such that the results will be reflected in the current financial year to 30 June 2012.

Pelago West – Corner Sharpe Avenue & Warambie Road Karratha: Construction at Pelago West commenced in the second half of the reporting period and the structure has already reached level 6 of 9 levels. To date 60 lots have been sold with a further 12 leased on a five year contract to a service contractor. These leased lots (originally 18 in total) are currently being sold to investors with a secured lease, and we expect to continue to progressively convert these leased lots to sales.

These 72 total contracts have successfully secured the viability of the company’s first Pilbara project.

Lime –185 Swansea Street East Victoria Park: 26 pre-sales have been achieved at the 111 lot Lime project. Construction work has now commenced.

Adagio at Symphony City – 90 Terrace Road East Perth: Construction work has commenced at the first stage of the Symphony City project. 46 pre-sales have been secured in the 115 unit project.

FUTURE PROJECTS

St Marks Apartments – 369 Stirling Street Highgate: During the reporting period the company received development approval for a 130 unit project to be constructed on the former investment property site. The company is currently preparing for a marketing launch which is scheduled to commence in October.

Au208 & Au311 – 208 Adelaide Terrace & 311 Hay Street East Perth: During the reporting period the company secured the joint venture development site and obtained approval for a new 192 unit project to be launched in October.

Knightsgate – 17 Sunlander Drive Currambine: All approvals have been received and the marketing campaign continues on the Knightsgate project. To date 8 lots in the 43 unit project have been pre-sold.

262 Lord Street Perth: A joint venture, secured during the reporting period, the proposed Lord Street development has now received development approval and a marketing campaign to launch the 98 unit project will commence in the spring.

36 Chester Avenue Dianella: Another project secured during the reporting period. The company is currently in the planning application process. It is anticipated that the project will be brought to the market early in the 2012.

Pelago East – Corner Sharpe Avenue & Warambie Road Karratha: Approvals have been secured for Pelago East comprising 178 apartments plus commercial. With similar product, location, and price point to Pelago West, Pelago East will be launched to the market when more sales in Pelago West have occurred.

Toccata at Symphony City – 88 Terrace Road East Perth: The company currently holds a development approval for this project. Marketing will commence once Adagio, located immediately to the West, has reached a more substantial level of sales.

Concerto & Harmony at Symphony City – 193 Adelaide Terrace East Perth: The third stage of the Symphony City project is currently in early stages of planning and design brief.

CAPITAL MANAGEMENT

The company conducted a capital raising and a shareholder purchase plan during the reporting period which raised $45.7m.

Funds from this raising along with reserves and completed lot cashflow have placed the company in very strong cash position of $61.3m at the end of the reporting period.

The company is sufficiently capitalised to fund the normal development equity required to conduct all current projects in the pipeline, and our cashflows provide the company with sufficient capability to continue to secure new development growth opportunities.

The company has no debt on completed stock, and draws down only on those facilities utilised for project construction finance on a progressive basis. These facilities are limited recourse, project specific, and are repaid from the initial settlements that occur when these projects are completed.

The parent company has no fixed and floating charge held by any institution.

DIVIDEND

On 4 July 2011 the company announced a fully franked final dividend of $0.055 (five and one half cents) per share.

The record date occurred on 20 July 2011, and the payment date for this dividend is 5 September 2011.

OUTLOOK

The company has no scheduled project completions in the first half of the current financial year, therefore revenue for the first half will be limited to settlements of remaining stock and investment income only. As such we do not anticipate the company will report a profit for the half year to 31 December 2011.

The second half of the financial year will generate the vast majority of earnings with the scheduled completion of the wholly owned Fairlanes Apartment and Office project, and the 18 on Plain joint venture.

In spite of the subdued property market and renewed concerns for the global economy, the company board and management are confident that the completion of these projects will see the company reporting a growth in profit for FY2012, along with continued growth into FY2013 as the company realises its first returns from the strategic expansion into the Pilbara.

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DARREN PATEMAN Managing Director

24 August 2011

ENC.: Appendix 4E & Audited Financial Report