PEET LIMITED — AGM Information 2019

Nov 19, 2019

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ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 1

FY 2019 RESULTS HIGHLIGHTS

Financial

REVENUE EBITDA OPERATING margin of PROFIT AFTER TAX 13% 1% 3%

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DPS ROCE
FY19 fully franked
2% -% 11.8% 2.9%
5.0
cps
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EPS
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GEARING DEBT[1,2] 2% Up X% 5.6% 12.5%

NTA per security

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Operational

1,257 land lots under contract with a value of $336m 2,629

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Total lots settled

c.65% Of entire land bank under development

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NOTES:

1. Excludes debt of syndicates consolidated under AASB10 2. Excluding transaction costs

ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 2

WHO WE ARE

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• Property development company established in 1895

• Listed on the ASX in 2004

• Australia’s largest listed ‘pure play’ residential property developer

• Manages a broad property portfolio, encompassing about 48 projects encompassing more than 49,400 lots across the country

• Focused on acquisition, development and marketing of residential land, completed homes, townhouses and apartments

• Unique funding model: combination of company-owned developments and capital efficient Funds Management and JVs

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NATIONAL REACH EXPANDING PORTFOLIO ACROSS COUNTRY

49,413 LOTS

Peet manages a broad property portfolio, encompassing 49,400 lots across 48 projects

Diversified land bank

NO. OF PROJECTS NT 1

NO. OF NO. OF NO. OF WA PROJECTS VIC PROJECTS NSW PROJECTS 19 9 2 NO. OF NO. OF NO. OF QLD PROJECTS ACT PROJECTS SA PROJECTS 11 2 4

$14.5bn END-VALUE

48 PROJECTS NATIONALLY

strategically located in growth corridors of major cities in every mainland state and territory of Australia

Range of product type appealing to all buyer segments with a core focus on first home buyers

Majority of Peet’s estates offering land, starting at $180,000 / lot

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NET TANGIBLE ASSETS (NTA) SIGNIFICANT OPPORTUNITY TO CAPTURE FUNDS MANAGEMENT VALUE

NET ASSET VALUATION - $2.1bn in Assets Under Management

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PEET CAPITAL THIRD PARTY CAPITAL
NTA: $1.20 NTA
PEET INVENTORIES PEET CO-INVESTMENTS FUNDS MANAGEMENT AND JV
$388 million [1] $1,238 million [1]
$467 million [1]
59%
19% 22%
of AUM of AUM of AUM
DEVELOPMENT JV / FM FUNDS MANAGEMENT AND JV
• GDV [2] of $2.7bn CO-INVESTMENTS • GDV [2 ] of $11.8bn
• –
across 11,750 lots Represents Peet’s Significant pipeline of 37,663 lots providing long-term earnings visibility
• Held at lower of economic interest in – Represents more than 75% of land bank
historical cost and syndicates and JV – Lowly geared portfolio
net realisable value projects • Value of ‘capital lite’ fee streams not captured in NTA
• • Held at lower of –
Generating solid High margin profit source across multiple fee streams and projects
historical cost and net
margins – Scalable platform operating across seven states and territories
realisable value
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NOTES:

1. Based on book value of assets at 30 June 2019 2. Gross Development Value

ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 5

DELIVERING AGAINST OUR STRATEGY PORTFOLIO WELL POSITIONED FOR POSITIVE MEDIUM TO LONG TERM GROWTH AND VALUE CREATION

STRATEGY

KEY ACHIEVEMENTS (FY19)

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INVEST
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Invest in high quality land in strategic locations across country

• 49,400 lots with an end value of $14.5bn

• Four medium density and one broadacre projects acquired

• • Expanded into growth corridors of major cities in Australia

ENHANCE

Enhance, plan and create communities • Four new projects commenced development / sales and homes targeting the low to middle • c.65% of landbank under development market segment

EXPAND

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• Broadened product offering to Completed Homes, Medium

• Expand product offering and Density Townhouses and low rise Apartments

• geographic presence to appeal to - Pipeline of 1,600 townhouses/low rise apartments

• wider variety of customers • New Wholesale Fund established in 1H19

• Unique business model: Development, Funds Management, JVs

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MAINTAIN
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Maintain strong capital management

• Disciplined balance sheet utilisation, gearing of 24.6% within target range

• Completed $75m corporate bond raising

• Share buyback extended

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LONG-TERM GROWTH IN SHAREHOLDER RETURNS

KEY HIGHLIGHTS

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OPERATING PROFIT AFTER TAX ($M) OPERATING EPS (CENTS) DPS (CENTS)
49.1 10.0
5.0 5.0
47.5
9.8
4.8
44.8
42.6
9.1
4.5 4.5
8.7
38.5
8.3
FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19
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LONG-TERM GROWTH IN EARNINGS DRIVEN BY OUR FOCUSED STRATEGY AND NEW PROJECTS

• Business well established across seven states and territories

• Provides good geographic spread with well located projects across key growth corridors

• • Expanding market reach by broadening product offering to Completed Homes, Medium Density and low rise Apartment product

• • The Group has continued to transition to a solid delivery phase - Substantial portfolio of large master planned community projects providing long term earnings visibility

• • FY19 Operating EPS down 2% to 9.8 cps

• • FY19 DPS of 5 cps, fully franked

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ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 8ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 8

GROUP BALANCE SHEET CONTINUED EXECUTION OF CAPITAL MANAGEMENT STRATEGY

CAPITAL MANAGEMENT METRICS	FY19 FY18 FY17
Cash at bank1	$33.6m $76.7m $88.4m
Bank debt2	$23.2m $69.5m $151.7m
Peet bonds/convertible notes3	$225.0m $150.0m $100.0m
Gearing4	24.6% 19.0% 23.0%
Interest coverratio5	4.0x 4.8x 4.5x
Weighted average debt maturity	3.1 years 2.3 years 2.7 years
Debt fixed/hedged	91% 91% 89%
Weighted average cash cost of debt	8.0% 7.3% 6.8%
FLEXIBLE AND DIVERSE	BALANCE SHEET
	Balance sheet remains strong
The Group has a flexible and	• Total net debt6 of $212m,
diverse funding profile	including corporate bonds
	• Debt cost higher due to increase	d
Long term debt maturity	weighting to non-bank debt and
profile including Corporate	interest rate hedges
Bd	•Gi4 f 246% ihi

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NET DEBT [6] ($M) AND GEARING [4 ] (%)
31%
25%
23%
19%
212
194
161
141
FY16 FY17 FY18 FY19
SHARES
Commenced on-market share
buy-back for up to 5% of shares
on issue
• Total of 6.7m shares
purchased (27%)
• Share buy-back extended
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• Debt cost higher due to increased weighting to non-bank debt and interest rate hedges

Long term debt maturity profile including Corporate Bonds

• Gearing[4] of 24.6% - within target range

• 5 12 month rolling EBIT / Total interest cost (including capitalised interest). Excludes syndicates consolidated under AASB10

• 6 Net of transaction costs

Notes:

• 1 Includes cash at bank of syndicates consolidated under AASB10

• 2 Includes bank debt of syndicates consolidated under AASB10 3 Excluding transaction costs

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• 4 (Total interest bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets)

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ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 10ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 10

ENQUIRY LEVELS IMPROVING

TOTAL ENQUIRY BY STATE

VIC

• Enquiry levels improving following the Federal election, interest rate and income tax cuts and improved loan serviceability assessments by banks

QLD

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election, interest rate and income tax cuts and 1000 1500
improved loan serviceability assessments by 900
banks 800
700
• 1000
Prices stabilised across the portfolio with VIC 600
and QLD showing early signs of volume 500
increases 400
500
300
•
New projects with expected first settlements
200
in FY20 and FY21 include Palmview and
100
Strathpine in QLD, Brabham in WA and 0 0
Jumping Creek in ACT 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20
WA SA ACT
1000 1200 160
900
1000
800
120
700
800
600
500 600 80
400
400
300
40
200
200
100
0 0 0
1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20
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ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 11 ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 11

CONTRACTS ON HAND

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2500 CONTRACTS ON HAND [1 ] (LOTS)
2,257
2000 2,186
1500
1,445
1,257
1000
500
0
FY17 FY18 FY19 OCT
700 CONTRACTS ON HAND [1 ] (VALUE)
600
$616 m
500 $546 m
400
$378 m
300 $336 m
200
100
0
FY17 FY18 FY19 OCT
Notes:
1. Includes equivalent lots.
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CONTRACTS ON HAND REFLECTS IMPROVING MARKET CONDITIONS

• Contracts on hand[1] have increased by 15% since 30 June 2019 to 1,445 lots

• Reflects gradually improving market conditions across eastern states

• Sales activity momentum gradually improving however restrictive lending conditions still impacting conversion timeframes

• Contracts value of $378m – up 12.5% since 30 June 2019

• Lower contracts on hand to impact lot settlements in FY20

• The number of cancellations across the eastern states is moderating and is expected to improve over the balance of FY20 and to normalised levels during FY21

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ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 12

MARKET VOLUMES AND OUTLOOK MARKET VOLUMES EXPECTED TO STABILISE ACROSS MOST MARKETS PEET SUMMARY

VICTORIA FY19

• Strong economic growth, with significant Government investment in infrastructure

• Economic outlook and population growth to underpin dwelling demand

• Sales volumes impacted by restrictive lending conditions and moderating market

QUEENSLAND FY19

• Net migration strong and above 10-year average

• Sales impacted by reduced credit availability

• Modest price growth occurring in house & land

WESTERN AUSTRALIA FY19

• Ongoing challenges in WA market impacting volumes across a number of corridors

• Established market metrics remain soft, however sales and prices generally stable albeit at low levels

• Rental vacancy and rents gradually improving

AUSTRALIAN CAPITAL SOUTH AUSTRALIA TERRITORY FY19 FY19

• Growth in employment and • Sales volumes and prices wages supporting a steady steady market • Continued Government

• Continued Government investment in defence / shipbuilding will support an increase in population

• Volumes down primarily due to restrictive lending conditions

• Rental vacancy and rents improving

MARKET OUTLOOK

• VICTORIA QUEENSLAND WESTERN AUSTRALIA • Balanced market conditions • Volumes expected to show expected to continue in FY20 modest growth in 2H20 from a

• • SEQ to benefit most from an low base

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• Volumes expected to improve through the course of FY20 and into FY21 off low base

• SEQ to benefit most from an improvement in lending conditions due to affordability

• Prices showing early signs of increases

• Current price stability expected to continue

ACT

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• Tight supply to underpin demand in the short to medium term

• • Modest price growth forecast for FY21

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SOUTH AUSTRALIA
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• Outlook for SA economy is continued steady growth

• Volumes and price growth expected to be steady in FY20 but improve into FY21

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ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 13

Decelerating Maintained

Modest growth

Strong growth

GROWTH AND RESILIENCE, THROUGH CYCLES TRACK RECORD OF GROWING SHAREHOLDER VALUE OVER THE LONG-TERM

BROAD AND DIVERSE PORTFOLIO

• A diversified portfolio of property assets captures opportunities across key markets and provides strength through cycles

• • Counter cyclical acquisition strategy has allowed the Group to capitalise on strong market conditions in Victoria and secure holdings with favourable cost bases

• Strategically targeted opportunities across QLD, WA and SA over the past 3 years ensuring a strong market position in affordable markets with a low cost base

• Avoided acquiring broadacre land across Melbourne and Sydney during the past 3 years

• Solid embedded margins given pipeline age and location

LOW COST BASE PROVIDES FLEXIBILITY

• Average age of land bank is 9 years

• More than 90% of lot acquisitions since FY12 have been on capital-efficient terms

• Operating cash and financing facilities support funding of current portfolio

• Wide-range of price points offered provides good affordability

• Balance sheet strong with gearing of 24.6%, within target range of 20% to 30%

BUSINESS MODEL UNDERPINS STRENGTH

• A flexible and diverse funding profile

• 59% of capital employed is third party

• Funds Management / Joint Venture business provides solid capital-lite earnings base representing 39% of Group EBITDA

EXPERIENCED AT NAVIGATING MARKET CYCLES

• A high quality management team, with significant residential and commercial property market experience

• The Group has delivered an average annual earnings growth of 6% p.a in the last 4 years

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ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 14ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 14

NEW PROJECTS SUPPORTING GROWTH

PIPELINE OF APPROXIMATELY 49,400 LOTS PROVIDING VISIBILITY OF FUTURE EARNINGS

FY20 – FY22 NEW PROJECT RELEASE SCHEDULE

Up to seven new land projects and five medium density townhouse sites to commence development within the next two years

• Approximately 87% of the lots in these projects sit within the FM/JV business

• Average project duration of circa 7 years providing visibility of future earnings and cash flows

Land portfolio well balanced across key growth corridors

Operating cash and financing facilities support funding of current portfolio

	Project	State	Segment	Commencement of	Lots1/Units	Project Life
				Sales/Development		(Years)
	Palmview	QLD	Owned	FY20	441	4
	University of Canberra	ACT	JV	FY21	3,300	18
	Brabham	WA	JV	FY21	3,333	14
	Medium Density – Townhouses Pier Street Apartments	VIC/QLD WA	Owned JV	FY20 – FY22 FY21	336 184	3 3
	Strathpine	QLD	Owned	FY20	187	4
	Eglinton Jumping Creek	WA NSW	Funds Owned	FY21 FY21	1,041 219	8 3
	Total				9,041	Av 7

Notes:

1 Refers to lots and/or dwellings

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ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 15ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 15

NEW PROJECTS SUPPORTING GROWTH

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PROJECTS / LOTS DEVELOPING & SELLING
60,000
50,000 49,413 lots
Projects: 8
Lots: 9,468
39,945 lots
40,000
Projects: 12
Lots: 9,041
30,904 lots
30,000
20,000
Projects: 28
Lots: 30,904
10,000
30 JUNE 2019 FY20 - FY22 FY23 & BEYOND
YEAR
ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 16
NO. OF LOT/UNITS
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OUTLOOK
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MARKET OUTLOOK

FOCUSED ON POSITIONING FOR AN IMPROVING MARKET THROUGH A CONSERVATIVE APPROACH TO PROJECT DELIVERY AND IDENTIFYING GROWTH OPPORTUNITIES

• Market conditions remain mixed, however sentiment is gradually improving

• Steady employment growth, record low interest rates, recent income tax cuts and high Government infrastructure investment are expected to support underlying demand

• Despite markets being at or close to bottoming and an improvement in residential enquiry, we expect the market to take some time to normalise as our buyers continue to experience challenges achieving loan approvals

• Given current market conditions, the Group will continue to have a strong focus on capital management

• Selective deployment of development capital to reflect market conditions and outlook

• Recycling of capital from medium density and completed home pipeline

• Continued focus on overhead management and other operational efficiencies

• The Group’s lower contracts on hand as at 30 June 2019 will impact lot settlements in FY20 and result in earnings being significantly weighted towards the second half of the year

• We remain cautious about the timing of a sustainable recovery in the residential market and expect a challenging FY20. However, our strong pipeline of projects and the underlying fundamentals of the residential property sector means that Peet is well positioned to deliver supply to the market as demand improves and lending conditions normalise.

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STRATEGIC OUTLOOK

PORTFOLIO WELL POSITIONED FOR POSITIVE MEDIUM TO LONG TERM GROWTH AND VALUE CREATION

STRATEGY

OUTLOOK

• Selective acquisition of projects as cycles, markets and

• Invest in high quality land in strategic opportunities allow to restock pipeline

• INVEST locations across country • Focus on securing low cost projects, predominantly through funds platform

• • Delivery of affordable product targeted at the low and

• Enhance, plan, and create communities middle market segments

• ENHANCE and homes targeting the low to middle • Accelerating production where possible and appropriate,

• market segment and active management of product mix

• • Up to seven new land projects and five Medium Density

• Expand product offering and Townhouse sites to commence development within the next

• EXPAND geographic presence to appeal to two years •

• wider variety of customers Well-placed to deliver supply to the market as demand improves

MAINTAIN

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Maintain strong capital management

• Maintain strong balance sheet through - Recycling of capital from medium density pipeline

• • Selective deployment of development capital to reflect market conditions and outlook

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DISCLAIMER

• While every effort is made to provide accurate and complete information, Peet does not warrant or represent that the information in this presentation is free from errors or omissions or is suitable for your intended use. This presentation contains forward-looking statements, including statements regarding future earnings and distributions that are based on information and assumptions available to Peet as at the date of this presentation. Actual results performance or achievements could be significantly different from those expressed in, or implied by these forward-looking statements. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond Peet’s control, and which may cause actual results to differ materially from those expressed in the statements contained in the release.

• The information provided in this presentation may not be suitable for your specific needs and should not be relied upon by you in substitution of you obtaining independent advice. Subject to any terms implied by law and which cannot be excluded, Peet accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in this presentation. All information in this presentation is subject to change without notice.

• This presentation is not an offer or an invitation to acquire Peet securities or any other financial products in any jurisdictions, and is not a prospectus, product disclosure statement or other offering document under Australian law or any other law. It is for information purposes only.

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ANNUAL GENERAL MEETING ǀ 20 NOVEMBER 2019 ǀ PAGE 20