PEET LIMITED — Annual Report 2003

Aug 1, 2004

Peet & Company Limited and its Controlled Entities

ABN: 56 008 665 834

Financial Report 30 June 2003

FINANCIAL REPORT 30 June 2003

CONTENTS	Page No
Directors' Report
the contract of the state of the contract ofStatements of Financial Performance
Statements of Financial Position
Statements of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Independent Audit Report

$\sim 10^{-1}$

DIRECTORS' REPORT

Your directors present their report on the consolidated entity consisting of Peet & Company Limited ("the Company") and the entities it controlled at the end of, or during, the financial year ended 30 June 2003.

$\mathbf{1}$ Directors

The following persons were directors of Peet & Company Limited during the whole of the financial year and up until the date of this report:

AW Lennon, AVLE

Mr Lennon is the Executive Chairman of Peet & Company Limited and has been the Chief Executive since 1985. Mr Lennon has 40 years experience in property agency and development. Of particular relevance, he has specialised in development and marketing of land estates.

Interest in shares of the company; 430,455 ordinary shares

WD Hemsley, B.Comm, CPA, Assoc.Dip.Val, FVLE (VAL & ECON.)

Mr Hemsley is the Managing Director of Peet & Company Limited and has been a Director of Peet & Company since 1985. He has a total of 25 years experience in property and agency work.

Interest in shares of the company; 132,229 ordinary shares

IMC Palmer, Dip.Val., AVLE, Dip. REM

Mr Palmer has been a Director of Peet & Company Limited since 1986. He has been a qualified valuer for 29 years with 33 years in real estate including 13 years as principal of Ian Palmer & $\hat{C}$ o.

Interest in shares of the company; 162,193 ordinary shares

AJ Lennon, BA, Grad.Dip.Bus.Admin.

Mr Lennon joined Peet & Company Limited in 1991 and became a director in 1994. Prior to that he worked in England for 3 years.

Interest in shares of the company; nil

A W Lennon, W D Hemsley and A J Lennon are executive directors. Details of interests in securities of the company are as at the date of this report.

$\mathbf{2}$ Principal activities

The principal activities of the consolidated entity during the course of the financial year were project management, land syndication, management of land sales and marketing, corporate management services, underwriting, land development and land and other real estate sales. There was no significant change in the nature of the activities during the year.

DIRECTORS' REPORT

$3.$ Review of operations and consolidated results

During the year the Company continued to gain good results from the management of various residential land developments and continued its land development and syndication activities.

Western Australia

The Western Australian market continued to provide strong sales for the Group, particularly from the Carramar, St Michel, Ocean Lagoon and Atwell Waters Estates. During the year, the Company also finalised a deal with the State Government seeing it take a joint venture interest in the development of a 3,000 lot subdivision in the suburb of Wellard. This was seen as a major milestone for the Company.

Victoria

During the year ended 30 June 2003, the Company further consolidated its position as one of the major players in the land development industry in Victoria. During the year the company acquired broadacres in Victoria which will yield more than 3,000 residential home-sites, plus various commercial and schooling sites. Included in this were some 1,800 lots in Tarneit. A capital raising allotting 14 Million partly paid $1.00 shares by Peet Tarneit Syndicate Limited will be used to finance the acquisition of 1,100 of those $\ln s$

Queensland

The Company arranged the syndication of its first land acquisition in Queensland - Shire of Pine Rivers. The Peet Warner Lakes Syndicate Limited allotted 21.6 Million partly paid $1.00 shares to fund the acquisition of 206 hectares of land only 19 Kilometres from the Brisbane CBD. The Company is continuing to investigate further acquisition opportunities in Queensland and to this end, has appointed an Operations Manager for the State.

Sales & settlements

Completed settlements of sales of land under the management of the Company in Western Australia and Victoria totalled approximately $179,000,000 for the year ended 30 June 2003 (2002: $115,000,000). Actual gross contracts written during the year ended 30 June 2003 for sales of land in projects under management totalled in excess of $247,000,000 (2002: $200,000,000).

The consolidated profit of the consolidated entity for the year ended 30 June 2003 after providing for income tax was $19,327,348 (2002: $8,205,378).

Changes in Accounting Policy

The accounting policies adopted are consistent with those of the previous year except for the following: As a result of the adoption of Urgent Issues Group Consensus View Abstract 53 'Pre-Completion Contracts for the Sale of Residential Development Properties' sales revenue is now recognised on the signing of an unconditional contract of sale for land held for resale and on the percentage of completion basis for precompletion sales contracts. Previously land sales revenue was recognised on a settlement basis. Current year's pre-tax profit and inventory have increased by $4,456,306 in the consolidated entity due to the change in accounting policy. Application of the new policy has not impacted the parent entity.

Comparative information for the prior reporting period has not been prepared. The requirement to determine revenue and profits for pre-completion sales contracts in accordance with note (e) above is considered onerous, as the data required is not readily available.

DIRECTORS' REPORT

$\overline{4}$ . Significant changes in the state of affairs

In the opinion of the directors there were no significant changes in the state of the consolidated entity that occurred during the financial year under review.

5. Dividends

Dividends paid or declared by the Company during the financial year ended 30 June 2003 (2002: $2,000,000) were as follows:

On 23 July 2002 the Company paid a fully franked dividend of approx. $2.70	$
per share, with Class C franking credits.	2,000,000
On 30 August 2002 the Company paid a fully franked dividend of approx.$2.70 per share, with Class C franking credits.	2,000,000
On 17 December 2002 the Company paid a fully franked dividend of approx.$4.06 per share, with Class C franking credits.	3,000,000
On 26 June 2003 the Company declared a fully franked dividend of approx.$2.70 per share, with Class C franking credits. The dividend was paid on 1
July 2003.	2,000,000
	9,000,000

6. Environmental regulation

The consolidated entity is subject to environmental regulation by way of the Environmental Protection Act 1986 (as amended) in respect of its Western Australian land subdivision activities, the Environmental Protection Act 1970 (as amended) in respect of its Victorian subdivision activities and the Environment Protection Act 1994 (including Regulations 1998) and the Integrated Planning Act in respect to its Queensland land subdivision activities.

To the best of the Directors' knowledge all activities have been undertaken in compliance with the requirements of subdivision and/or other approvals granted.

$\overline{7}$ . Directors' meetings

The number of directors' meetings and number of meetings attended by each of the directors of the company during the financial year are detailed below:

		Peet & Company Ltdin its own right		Peet & CompanyLimited as trustee
	Held	Attended	Held	Attended
AW Lennon	17	15		8
WD Hemsley	17	16		9
IM Palmer	17	13		7
AJ Lennon	17	16	9

DIRECTORS' REPORT

Likely developments and expected results of operations 8.

No information as to the likely developments in the operations of the consolidated entity and the expected results of those operations in subsequent financial years has been included in this report because in the opinion of the directors, it would prejudice the interests of the consolidated entity.

9. Matters subsequent to the end of the financial year

The Directors declared a fully franked dividend of approximately $2.70 per share ($2,000,000) on Thursday, 26 June 2003 and the dividend was paid on Tuesday, 1 July 2003. Additionally, the Directors declared a fully franked dividend of approximately $$5.40$ per share ($4,000,000) on Monday, 1 September 2003 and the dividend was paid on Friday, 19 September 2003.

Since year-end the Company has executed a joint venture agreement with Landstart for the development of a significant parcel of land at Wellard which is to be marketed as The Village at Wellard.

Additionally, the company arranged for the acquisition of land in Caboolture Queensland by Peet Caboolture Syndicate Ltd in which the company holds a 20% interest. The shares in Peet Caboolture Syndicate Ltd were allotted on $28^{th}$ August 2003 and the acquisition of the land settled on $29^{th}$ August 2003.

Except for the issues discussed above, no other matter or circumstance has arisen since 30 June 2003 that has significantly affected, or may significantly affect:

• (a) the consolidated entity's operations in future financial years, or
• (b) the results of those operations in future financial years, or
• (c) the consolidated entity's state of affairs in future financial years.

10. Insurance of Officers

During the financial year, Peet & Company Ltd paid a premium in respect of Directors' and Officers' liability that indemnifies officers of the Company. The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the Directors and Officers in their capacity as such. The Directors have not included more specific details of the nature of the liabilities covered or the amount of the premium paid in respect of Directors' and Officers' liability, as such disclosure is prohibited under the terms of the contract.

11. Auditor

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

Signed for and on behalf of the Board in accordance with a resolution of the Board of Directors.

Director

Perth, Western Australia $2,4$ September 2003

STATEMENTS OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2003

			Consolidated		Parent Entity
	Notes	2003$	2002$	2003S	2002S
Revenue from ordinary activities	2	48,844,018	16,971,159	29,832,314	16,949,368
Change in inventoriesPurchases & other inventory costsEmployee benefits expenseDepreciation expenseBorrowing costs expenseProject management, selling andother operating costsOffice costsOther expenses from ordinaryactivities		(46,075,285)58,805,6343,254,46252,795788,9293,202,174562,165683,521	(6,964,234)7,369,7172,851,97587,107(9,690)1,394,475478,012368,668	(5,349,179)5,349,1793,254,46249,5216,9972,387,217562,165297,561	246,092159,3912,851,97586,956(10, 875)1,394,475478,012326,967
Profit from ordinary activities beforerelated income tax expense	3	27,569,623	11,395,129	23,274,391	11,416,375
Income tax expense	$\overline{4}$	(8,242,275)	(3,189,751)	(6,936,602)	(3,213,370)
Net profit attributable to membersof Peet & Company LimitedTotal changes in equity other than		19,327,348	8,205,378	16,337,789	8,203,005
those resulting from transactionswith owners as owner	22	19,327,348	8,205,378	16,337,789	8,203,005

$\sim$

STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2003

			Consolidated		Parent Entity
	Notes	2003	2002	2003	2002
CURRENT ASSETS
Cash assets		9,842,315	5,321,212	8,076,861	5,320,994
Receivables	6	16,946,739	7,144,101	18,393,739	7,119,978
Other	7	170,650	120,018	78,130	75,951
Inventories	8	14,639,634	2,328,364
TOTAL CURRENT ASSETS		41,599,338	14,913,695	26,548,730	12,516,923
NON-CURRENT ASSETS
Receivables	9	6,919
Inventories	13		7,107	2,014,337	2,783,528
Investments	11	47,256,110	13,492,095	5,855,607	506,428
Property, plant and equipment		678,873	537,634	680,997	537,656
Deferred tax assets	12	414,462	215,881	363,836	210,463
Other	10		211,068
	15		83
TOTAL NON-CURRENT
ASSETS		48,356,364	14,463,868	8,914,777	4,038,075
TOTAL ASSETS		89,955,702	29,377,563	35,463,507	16,554,998
CURRENT LIABILITIES
Payables	15	2,063,751	497,631
Interest bearing liabilities	16	12,332,905	39,298	907,455	426,667
Current tax liabilities		3,222,860		4,800,000
Provisions	17	3,022,059	1,227,163208,416	1,944,9892,242,709	1,085,742208,416
TOTAL CURRENT
LIABILITIES		20,641,575	1,972,508	9,895,153	1,720,825
NON-CURRENT LIABILITIES
Payables	18	6,877,700
Interest bearing liabilities	16	33,865,000	12,500,000	28,466	2,002
Deferred tax liabilities	19	5,376,000	2,017,709
Provisions	20			5,239,238	1,850,043
			19,267		19,267
TOTAL NON-CURRENT
LIABILITIES		46,118,700	14,536,976	5,267,704	1,871,312
TOTAL LIABILITIES		66,760,275	16,509,484	15,162,857	3,592,137
NET ASSETS		23,195,427	12,868,079	20,300,650	12,962,861
EQUITY
Contributed equity
Retained profits	21	1,479,198	1,479,198	1,479,198	1,479,198
	22	21,716,229	11,388,881	18,821,452	11,483,663
TOTAL EQUITY	23	23, 195, 427	12,868,079	20,300,650	12,962,861

The above statements of financial position should be read in conjunction with the accompanying notes. $(8)$

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 June 2003

			Consolidated	Parent Entity
	Notes	2003$	2002$	2003	2002
Cash flows from operating				$	$
activities
Receipts from customers and
suppliers (inclusive of GST)		27,203,833	12,113,412	17,953,022	12,061,609
Payments to suppliers and
employees (inclusive of GST)		(45, 235, 296)	(12, 123, 514)	(11,276,524)	(5,338,222)
Dividend receivedInterest received		36,348	37,987	36,348	37,987
Trust Distributions Received		209,998	110,827	162,374	110,824
Interest and other borrowing costs		517,748	615,565	517,748	615,565
paid
Income tax paid		(1,830,060)(2,688,158)	(594,061)	(304, 180)	(160)
Net cash (outflow) inflow from			(959,096)	(2,688,158)	(959,096)
operating activities	28(c)	(21, 785, 587)	(798, 880)
				4,400,630	6,528,507
Cash Flows from investing
activities
Proceeds from sale of property, plant
and equipment		1,064		1,064
Payments for property, plant and
equipment		(261, 929)	(125, 587)	(213, 447)	(122,891)
Proceeds from sale of investments			1,101,788		1,101,788
Payments for investments		(214, 801)	(222, 920)	(214, 809)	(222, 936)
Proceeds from capital returns		71,469	203,600	71,469	203,600
Net cash (outflow) inflow frominvesting activities
		(404, 197)	956,881	(355, 723)	959,561
Cash Flows from financing
activities
Dividends paid		(7,000,000)	(2,000,000)	(7,000,000)
Loans to related entities					(2,000,000)
Loan repayments from related		52,280		910,960	(1,012,391)
entities
Transaction costs from capital
raisings			(9,156)
Repayments of borrowing		(50,000)	(101, 756)		(101, 756)
Proceeds from borrowing		33,715,000	6,220,000	4,800,000
Net cash inflow (outflow) fromfinancing activities
		26,717,280	4,109,088	(1,289,040)	(3, 114, 147)
Net increase in cash held		4,527,496
Cash at beginning of financial year		5,281,914	4,267,0891,014,825	2,755,867	4,373,921
Cash at the end of the financial				5,320,994	947,073
year	28(a)	9,809,410	5,281,914	8,076,861
					5,320,994
Financing arrangements	28(b)

$\bar{\gamma}$

$(9)$

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Summary of significant accounting policies 1.

The significant policies, which have been adopted in the preparation of this financial report, are:

$(a)$ Basis of preparation

This general-purpose financial report has been prepared in accordance with Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations Act 2001.

It is prepared in accordance with the historical cost convention, except for certain assets which, as noted, are at valuation. Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year.

Principles of consolidation $(b)$

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Peet $&$ Company Limited ("The Company") as at 30 June 2003 and the results of all controlled entities for the year then ended. The Company and its controlled entities together are referred to in this financial report as the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full.

Where control of an entity is obtained during a financial year, its results are included in the consolidated statement of financial performance from the date on which control commences. Where control of an entity ceases during a financial year its results are included for that part of the year during which control existed.

Depreciation of property, plant and equipment $\left( \text{c} \right)$

Depreciation is calculated to write off the net cost of each asset over its expected useful life to the consolidated entity using the straight-line method. Estimates of remaining useful lives are made on a regular basis for all assets

Expected useful life of furniture, plant $&$ equipment is between 1 and 5 years. The expected useful life of works of art is 100 years.

Employee entitlements $(d)$

Wages, salaries and annual leave

The provisions for employee entitlements to wages, salaries and annual leave represent the amounts which the consolidated entity has a present obligation to pay resulting from employees' services provided up to the balance date. The provision is measured as the amount expected to be paid when the liability is settled and includes related on-costs.

Long service leave

The liability for employee entitlements to long service leave represents the present value of the estimated future cash outflows to be made by the employer resulting from employees' services provided up to the balance date

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Summary of significant accounting policies (continued) 1.

$(d)$ Employee entitlements (continued)

Liabilities for employee entitlements which are not expected to be settled within 12 months are discounted using the rates attaching to national government securities at balance date, which most closely match the terms of maturity of the related liabilities.

In determining the liability for employee entitlements, consideration has been given to future increases in wage and salary rates and the consolidated entity's experience with staff departures. Related on-costs have also been included in the liability.

Superannuation fund

The Company contributes to various complying employee superannuation funds. Contributions are charged against income as they are made.

$(e)$ Income tax

The consolidated entity adopts the liability method of tax-effect accounting whereby the income tax expense shown in the statement of financial performance is based on the operating profit before tax, adjusted for any permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue and expense are included in the determination of operating profit and taxable income, are brought to account as either provision for deferred income tax or an asset described as future income tax benefit at the rate of income tax applicable to the period in which the benefit is expected to be received or the liability is expected to become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits relating to tax losses are only brought to account when their realisation is virtually certain.

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, the anticipation that the Company will derive sufficient future assessable income to enable the benefit to be realised and compliance with the conditions of deductibility imposed by the law.

$f$ Investments

Interests in listed and unlisted securities, other than controlled entities and associates in the consolidated financial statements, are brought to account at cost. Dividend income is recognised in the statement of financial performance when received and trust distribution income is recognised in the statement of financial performance when receivable.

Investments in controlled entities are accounted for in the consolidated financial statements as set out in note $1(b)$ .

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Summary of significant accounting policies (continued) $\mathbf{1}$

$\left( \mathbf{r} \right)$ Property, plant and equipment

Items of property, plant and equipment are recorded at cost and depreciated as per Note 1(c). All items of property, plant and equipment are carried at the lower of cost (less accumulated depreciation) and recoverable amount.

$(h)$ Recoverable Amount of Non Current Assets

The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising from its continued use and subsequent disposal.

When the carrying amount of a non-current asset is greater than its recoverable amount, the asset is written down to its recoverable amount. Where net cash inflows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group of assets. To the extent that a revaluation decrement reverses a revaluation increment previously credited to, and still included in the balance of, the asset revaluation reserve, the decrement is debited directly to that reserve. Otherwise the decrement is recognised as an expense in the statement of financial performance.

The expected net cash flows included in determining recoverable amounts of non-current assets are not discounted to their present values.

$(i)$ Land held for syndication or development

Land held for syndication or development or deposits on land are carried at the lower of cost and recoverable amount.

$(i)$ Inventories

Land held for development and resale is stated at the lower of cost (and recognised profits) and net realisable value. Cost includes the cost of acquisition, development and borrowing costs during development. When development is completed borrowing costs and other holding charges are expensed as incurred. Profit on pre-completion sales contracts is recognised in accordance with the percentage of completion method.

Borrowing costs included in the cost of land held for resale are those costs that would have been avoided if the expenditure on the acquisition and development of the land had not been made. Borrowing costs incurred while active development is interrupted for extended periods are recognised as expenses.

Trustee recognition of assets and liabilities $(k)$

In addition to its own operations, the company acts as trustee for a number of trusts.

Pursuant to the ASIC Accounting Commentary Update 163, which states that where a trust has sufficient assets to meet all its liabilities then it is unlikely that the trustee will have to meet these liabilities, it is not appropriate that the trustee recognise the liability and corresponding asset. Accordingly, the company has not recognised the trusts' liabilities at balance date.

$\Omega$ Receivables

Receivables are recognised on an accrual basis as the services to which they relate are performed. Collectibility of receivables is reviewed on an ongoing basis. Debts, which are known to be uncollectible, are written off.

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Summary of significant accounting policies (continued) 1.

Borrowing Costs $(m)$

Borrowing costs are recognised as expenses in the period in which they are incurred, except where they are included in the costs of qualifying assets.

The actual amount capitalised to the statement of financial position is determined on a pro-rata basis of cash paid. For example cash paid in respect to qualifying assets divided by the total cash outlay for the period is the percentage of borrowing costs allocated to qualifying assets. Such capitalised amounts are then written off to the statement of financial performance on the same basis as inventory.

Borrowing costs include interest on bank overdrafts and commercial bills and amortisation of ancilliary costs incurred in connection with the arrangement of borrowings.

$(n)$ Trade and Other Creditors

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year which are unpaid. These amounts are unsecured and usually paid within 30 days of recognition.

$\omega$ Cash

For the purposes of the statement of cash flows, cash includes deposits at call which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.

$(p)$ Interest bearing liabilities

Loans are carried at the principal amounts, which represent the present value of future cash flows associated with servicing the debt. Interest expense incurred in respect of commercial bills is expensed to the statement of financial performance as it is incurred, except where it is included in the costs of qualifying assets. Any interest attributable to the following financial year is treated as a prepayment.

$(a)$ Dividends

Provision is made for the amount of any dividend declared, determined or publicly recommended by the directors on or before the end of the financial year, but not distributed at balance date.

Change in accounting policy for providing for dividends

The above policy was adopted with effect from 1 July 2002 to comply with AASB 1044 Provisions, Contingent Liabilities and Contingent Assets released in October 2001. In previous years, in addition to providing for the amount of any dividends declared, determined or publicly recommended by the directors on or before the end of the financial year but not distributed at balance date, provision was made for dividends to be paid out of retained profits at the end of the financial year where the dividend was proposed, recommended or declared between the end of the financial year and the completion of the financial report.

This change in accounting policy has had no impact on the financial statements of the company

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Summary of significant accounting policies (continued) 1.

$(r)$ Web Site Costs

Costs in relation to web sites controlled by a controlled entity are charged as expenses in the period in which they are incurred, unless they relate to the acquisition of an asset, in which case they are capitalised and amortised over their period of expected benefit.

$(s)$ Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Sale of Land

Revenue and profits from the sale of blocks from completed stages of land subdivision are recognised on the signing of an unconditional contract.

Pre-completion Sales Contracts

Revenue and profits relating to pre-completion sales contracts are recognised on the basis of the percentage of completion when: -

• an unconditional sales contract exists;

• the stage outcome can be reliably measured; and

• the amounts receivable from sales are considered recoverable.

Percentage of completion is measured by reference to the costs incurred for each separate stage of the project as a proportion of the estimated total costs of the project stage. The stage outcome is not considered to be able to be reliably measured until 50% of costs are incurred.

$(t)$ Changes in Accounting Policy

The accounting policies adopted are consistent with those of the previous year except for the following:

As a result of the adoption of Urgent Issues Group Consensus View Abstract 53 'Pre-Completion Contracts for the Sale of Residential Development Properties' sales revenue is now recognised on the signing of an unconditional contract of sale for land held for resale and on the percentage of completion basis for precompletion sales contracts. Previously land sales revenue was recognised on a settlement basis. Current year's pre-tax profit and inventory have increased by $4,456,306 in the consolidated entity due to the change in accounting policy. Application of the new policy has not impacted the parent entity.

Comparative information for the prior reporting period has not been prepared. The requirement to determine revenue and profits for pre-completion sales contracts in accordance with note (e) above is considered onerous, as the data required is not readily available.

Acquisition of Assets - Deferred Settlement of Cash Consideration $(u)$

When settlement of all or any part of the cash consideration given in the acquisition of an asset is deferred, the fair value of the purchase consideration must be determined by discounting the amounts payable in the future to their present value as at the date of acquisition. The discount rate to be used in discounting the amounts payable in the future to their present value is the rate at which the acquirer could obtain a similar borrowing under comparable terms and conditions.

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

$2.$ Revenue

		Consolidated		Parent Entity
	2003$	2002$	2003$	2002$
Revenue from Operating Activities
Revenue from sale of landRevenue from other trading activities	23,614,32924,497,64048,111,969	16,090,93416,090,934	29,148,25929,148,259	16,090,93416,090.934
Revenue from Outside theOperating Activities
- Dividends- Trust distributions- Interest- Other	36,348485,310210,36823732,049	37,987707,835110,82723,576880,225	36,348485,310162,37423684,055	37,987707,835110,8241,788858,434
Revenue from ordinary activities	48,844,018	16,971,159	29,832,314	16,949,368

$\overline{3}$ . Profit from ordinary activities

Profit from ordinary activities before income tax includes the following specific expenses:

	Consolidated		Parent Entity
	2003	2002	2003	2002
	$	$	$	$
Expenses
Cost of sales
- Land and development costs	12,730,34912,730,349
Auditors' remuneration (parent entityauditors)
- Auditing services	40,954	22,165	26,250	12,915
- Other services	57,369	37,800	48,024	34,870
	98,323	59,965	74,274	47,785

The auditors received no other benefits.

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

$\overline{3}$ . Profit from ordinary activities (continued)

		Consolidated	Parent Entity
	2003	2002	2003	2002
	$	$	$	S
Depreciation	52,795	87,107
Borrowing costs:			49,521	86,956
- Interest & finance charges	2,594,158
- Amount capitalised	(1,805,229)	614,150	293,923	(10, 875)
Borrowing costs expense		(623, 840)	(286, 926)
	788,929	(9,690)	6,997	(10, 875)
Amounts set aside as provision for
employee entitlements
Lease rental expense - operating	23,375	7,939	23,375	7,939
expense	173,996	178,702	173,996	178,702
Write off of development expenditure	31,805	74,296	31,805	74,296
Net loss on disposal of non-current
assets	9,490	376	9,490	376
4.Income tax
Profit from ordinary activities beforeincome tax expense	27,569,623	11,395,129
			23,274,391	11,416,375
Income tax calculated at 30%	8,270,887	3,418,539	6,982,317	3,424,913
Tax effect of permanent differences:
- Non deductible entertainment	9,752
- Sundry items	21,645	14,118	8,883	14,096
		(50, 444)	926	(18, 358)
Income tax adjusted for permanent
differences
Transfer of tax losses from controlled	8,302,284	3,382,213	6,992,126	3,420,651
entity
			(182, 302)	(207, 281)
Benefit of tax losses of prior years
recouped	(186, 787)	(192, 462)
Input tax rebates	(10,904)		(10, 904)
Under (Over) provision in previous
year	137,682		137,682
Income tax expense	8,242,275	3,189,751	6,936,602	3,213,370

$\mathbb{R}^2$

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

$\boldsymbol{\Lambda}$ . Income tax (continued)

Tax consolidation legislation

Peet & Company Limited and its wholly owned Australian subsidiaries anticipate implementing the tax consolidation legislation as of 1 July 2003. The Australian Taxation Office has not yet been notifies of this. The entities also intend to enter into a tax sharing agreement, but details of this agreement are yet to be finalised.

As a consequence, Peet & Company Limited, as the head entity in the tax consolidated group, will recognise current and deferred tax amounts relating to transactions, events and balances of the wholly owned Australian controlled entities in this group in future financial statements as if those transactions, events and balances were its own, in addition to the current and deferred tax balances arising in relation to its own transactions, events and balances. Amounts receivable or payable under the tax sharing agreement will be recognised separately by Peet & Company Limited as tax related amounts receivable or payable. The impact on the income tax expense and results of Peet & Company Limited is unlikely to be material because of the tax sharing agreement. This is not expected to have a material impact on the consolidated assets and liabilities and results.

The financial effect of the implementation of the legislation has not been recognised in the financial statements for the year ended 30 June 2003.

5. Dividends

		Consolidated		Parent Entity
	2003$	2002$	2003S	2002S
Ordinary Shares
Fully franked dividends paid duringthe yearFully franked dividends provided for	7,000,000	2,000,000	7,000,000	2,000,000
but not paid during the year	2,000,000		2,000,000
	9,000,000	2,000,000	9,000,000	2,000,000
Franking credits available for thesubsequent financial year	3,971,353	7,311,609	2,693,481	6,981,627

A fully franked dividend of approximately $2.70 per share ($2,000,000) was declared on Thursday, 26 June 2003 and the dividend was paid on Tuesday, 1 July 2003. Additionally, a fully franked dividend of approximately $5.40 per share ($4,000,000) was declared on Monday, 1 September 2003 and the dividend was paid on Friday, 19 September 2003.

The above amounts represent the balances of the franking accounts as at 30 June of the relevant financial year, adjusted for:

franking credits that will arise from the payment of income tax payable as per the accounts for the $(a)$ year ended 30 June 2003.

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

$\overline{5}$ . Dividends (continued)

franking debits that will arise from the payment of dividends proposed (if any) as at 30 June. $(b)$

The amounts for the year ended 30 June 2003 are shown in tax dollars as compared to the amounts for the year ended 30 June 2002 which are shown in profits after tax dollars. For comparative purposes, consolidated franking credits available for 2002 would be $3,133,547 had the same policy been adopted as for this year. This change is as a result of a change in the tax laws during the year.

6. Current Assets - Receivables

	Consolidated			Parent Entity
	2003S	2002$	2003$	2002S
Trade debtorsAccrued incomeOwing by controlled entitiesOther debtors	534,21514,329,5442,082,980	174,9096,803,379165,813	529,17417,833,14331,422	174,9096,803,379115,30726,383
.	16,946,739	7,144,101	18,393,739	7,119,978

Accrued income

These amounts represent project management fees, marketing & selling fees, bookkeeping fees and trust distributions owing to the company from related entities.

Other debtors

These amounts generally arise from transactions other than fee earning activities of the consolidated entity. Interest may be charged at commercial rates where the terms of repayment exceed six months. Collateral is not normally obtained.

7. Current Assets - Other

Prepayments	170,650170,650	120,018120,018	78,13078,130	75,95175,951
8.Current Assets - Inventories
Land held for resale:Cost of acquisitionCapitalised development costs and	837,891	596,057
recognised profits	13,801,74314,639,634	1,732,3072,328,364
9.Non-Current Assets - Receivables

Owing by controlled entities	$\sim$	₩	2,007,418	2,776,421
Owing by other related parties	6,919	7,107.	6.919	$\cdot 107$
Further information on the above is set out in Note 26. $R_{\text{other}}$ in	6.919.	7.107	2,014,337	2,783,528

ove is set out in Note 26 – Related Parties.

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Non-Current Assets - Deferred Tax Assets 10.

		Consolidated		Parent Entity
	2003	2002$	2003	2002
Future income tax benefit	$\mathbf{m}\mathrm{t}$$\mathbf{m}\mathrm{t}$	211,068211,068______________________________________	Section	$\overline{\phantom{a}}$

Non-Current Assets - Investments 11.

Shares in unrelated companiesUnit trustsControlled entities	23,150219,750	27,000285,750	23,150219,750	27,000285,750
Syndicates (related companies)	435,973678,873	224,884537,634	2,124435,973680,997	224,906537,656

Investments in controlled entities comprise:

	Place ofIncorporation	Class of Share		Holding
			2003$%$	2002$\frac{0}{6}$
At Directors' valuation - 1996
Peet Prosper Pty Ltd	WA.	Ord $&$ Pref.	100	100
Hawkestone Conveyancing Pty Ltd	WA	Ordinary	100
At Cost				100
Hawkstone Unit Trust	N/A	Trust Unit
Peet Management Limited	WA	Ordinary	100	100
Peet Innisfail Syndicate Limited	WA	Ordinary	100	100
Peet & Co Western Estates Limited	WA	Ordinary	100	100
Peet Point Cook No 2 Syndicate Limited	WA		100	100
Peet Warner Lakes Syndicate Limited	WA	Ordinary	100	100
Peet Tarneit West Limited	WA	Ordinary	$\overline{\phantom{a}}$	100
Peet Craigieburn Limited	WA	Ordinary	100	100
Peet Greenvale No 2 Limited	WA	Ordinary	100	100
Peet Southern JV Limited		Ordinary	100	100
Peet No 63 Syndicate Limited	WA	Ordinary	100	100
Peet Sneydes Road Limited	WA	Ordinary	100	100
Peet Pakenham Syndicate Limited	WA	Ordinary	100
Peet No 67 Syndicate Limited	WA	Ordinary	100
Peet No 68 Syndicate Limited	WA	Ordinary	100
Peet No 69 Syndicate Limited	WΑ	Ordinary	100
	WA	Ordinary	100
Peet No 70 Syndicate Limited	WA.	Ordinary	100
Peet No 71 Syndicate Limited	WА	Ordinary	100
Peet No 72 Syndicate Limited	WΑ	Ordinary	100

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Non-Current Assets - Investments (continued) 11.

• The valuations were based on a review of the net asset values of the controlled entities, which $(a)$ resulted in a write down to recoverable amount.
• The net tangible assets of Hawkstone Unit Trust at acquisition date were nil. The trust was acquired $(b)$ on 9 September 1994 for nil consideration.
• In August 2003, additional shares were allotted in Peet No 71 Syndicate Ltd. After the allotment, $(c)$ Peet & Company Ltd's investment was reduced to 20% and accordingly, from this date, Peet No 71 Syndicate Ltd will no longer be part of the consolidated group.
• During December 2002, Peet Warner Lakes Syndicate Ltd issued 21,600,000 shares to the public to $(d)$ fund the acquisition of land in Queeensland. During March 2003, Peet Tarneit Gardens Syndicate Ltd issued $14,000,000$ shares to the public to fund the acquisition of land in Victoria. Peet & Company Limited was allotted 337,000 shares in Peet Warner Lakes and 200,000 shares in Peet Tarneit Gardens. Accordingly, these entities are no longer part of the consolidated group. Peet Tarneit Gardens Syndicate Ltd was established during the year and as such was not part of the wholly own group at the beginning of the year nor at the end.

Non-Current Assets - Property, plant and equipment 12.

	Consolidated		Parent Entity
	2003S	2002S	2003S	2002$
Fixtures and fittings- at costLess: accumulated depreciation	964,530(550,068)	884,436(668, 555)	910,450(546, 614)	878,838(668, 375)
	414,462	215,881	363,836	210,463

Reconciliations

Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current financial year are set out below.

	Consolidated		Parent Entity
	Plant $&$Equipment	Total	Plant $&$Equipment	Total
	S	S.	$	$
Carrying amount at 1 July 2002	215,881	215,881	210,463	210,463
Additions	261,929	261,929	213,447	213,447
Disposals	(10, 553)	(10, 553)	(10, 553)	(10, 553)
Depreciation	(52, 795)	(52, 795)	(49, 521)	(49, 521)
Carrying amount at 30 June 2003	414,462	414,462	363,836	363,836

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

13. Non-Current Assets - Inventories

		Consolidated		Parent Entity
	2003$	2002$	2003$	2002$
Land held for resale:Cost of acquisitionCapitalised development costsCapitalised borrowing costs	41,494,2803,449,8882,311,94247,256,110	11,585,966586,1401,319,98913,492,095	5,337,335231,346286,9265,855,607	506,428506,428
14.Non-Current Assets - Other
Transaction costs from capital raisings		8383
15.Current Liabilities - Payables
Trade creditorsOther creditorsAccrualsOuring to estated excel.	1,087,062667,534259,155	328,889168,742	222,620442,402241,893	266,688159,393

540

907,455

586

426,667

Further information on amounts owing to controlled entities is set out in note 26 - Related Parties.

50,000

2,063,751

Liabilities - Interest bearing liabilities 16.

Owing to related entities

Current - SecuredBank OverdraftBank BillsNon-current - Secured	32,90512,300,00012,332,905	39,29839,298	4,800,0004,800,000
Bank Bills	33,865,00033,865,000	12,500,00012,500,000

÷,

497,631

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Current Liabilities - Interest bearing liabilities (continued) 16.

The interest bearing liabilities are secured by a variety of registered mortgage debentures over the consolidated entity's assets and undertakings and first registered mortgages over the land assets of the consolidated entity. The terms of the consolidated entity's borrowing facilities are as follows:

Terms of facilities

Peet & Company Limited
Facility:	Fixed and/or Floating Accommodation Bills
Limit:	$4,800,000 expiry date 31 October 2003.
Facility:	Overdraft & Multi-Option Facility
Limit:	$500,000 expiry date 31 October 2003.
Peet Innisfail Limited
Facility:	Commercial Bills and/or Overdraft
Limit:	$16,000,000 until 30 September 2003, then $13,000,000 until 31December 2003, then $8,000,000 until 30 April 2004, then$4,000,000 until 31 May 2006.
Facility:	Bank Guarantee
Limit:	$5,000,000 in favour of Peet & Company Limited until 30September 2003.
Peet Management Limited
Facility:	Overdraft & Multi Option Facility
Limit:	$2,458,000 term expiry date 30 September 2003.
Peet Point Cook No 2 Syndicate Limited
Facility:	Overdraft & Multi Option Facility
Limit:	$2,458,000 term expiry date 30 September 2003.

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Current Liabilities - Interest bearing liabilities (continued) 16.

Peet Sneydes Road Limited
Facility:	Overdraft & Multi Option Facility
Limit:	$8,500,000 term expiry date 31 October 2003.
Peet Pakenham Syndicate Limited
Facility:	Overdraft & Multi Option Facility
Limit:	$500,000 term expiry date 31 October 2003. Subsequent to yearend this has been increased to $17,500,000.
Peet Greenvale No 2 Limited
Facility:	Overdraft & Multi Option Facility
Limit:	$19,000,000 term expiry date 31 October 2005.
Peet Southern JV Limited
Facility:	Overdraft & Multi Option Facility
Limit:	$1,000,000 term expiry date 31 October 2003. Subsequent toyear end this has increased to $2,000,000.

The above-mentioned multi option facilities that expire on 30 September 2003 and 31 October 2003 will be rolled forward on a regular basis until the respective entities commence selling land and thus generating profits. Accordingly, these debts have been shown as non current liabilities. The multi option facility for Peet Innisfail Syndicate Ltd has been allocated as per the loan terms that were negotiated with the bank.

The directors do not envisage any difficulties in obtaining extensions to the above facilities.

Current Liabilities - Provisions 17.

		Consolidated		Parent Entity
	2003S	2002$	2003S	2002$
DividendsEmployee EntitlementsRebates	2,000,000214,809807,250	172,16636,250	2,000,000214,80927,900	172,16636,250
	3,022,059	208,416	2,242,7092000 Block of Contract Contract on the	208,416

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Current Liabilities - Provisions (continued) 17.

Reconciliation

Reconciliations of the carrying amounts of each class of provisions at the beginning and end of the current financial year are set out below.

	Consolidated		Parent Entity
$\mathcal{L}^{(N)}$	Dividends	Total	Dividends	Total
	S	$	3	$
Carrying amount at 1 July 2002
Dividends declared during the year	9,000,000	9,000,000	9,000,000	9,000,000
Dividends paid during the year	(7,000,000)	(7,000,000)	(7,000,000)	(7,000,000)
Carrying amount at 30 June 2003	2,000,000	2,000,000	2,000,000	2,000,000
$\mathbf{T}^{\mathbf{u}}$ . The compact of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract

The carrying amount of the provision for dividends at 30 June 2003 was paid to shareholders on 1 July 2003.

	Consolidated			Parent Entity
	Rebates	Total	Rebates	Total
	$	$	$	S.
Carrying amount at 1 July 2002	36,250	36,250	36,250	36,250
Increase in provision	804,068	804,068	4,455	4,455
Payments to suppliers	(33,068)	(33,068)	(12, 805)	(12, 805)
Carrying amount at 30 June 2003	807,250	807,250	27,900	27,900

Once the consolidated entity sells lots, the purchasers become entitled to a rebate for fencing and landscaping. In general, the company expects that rebates will be claimed within 12 months of the purchased lots settling.

Non-Current Liabilities - Payables 18.

	Consolidated		Parent Entity
Unsecured	2003S	2002S	2003$	2002S
Balance of development property
purchase priceFuture interest component of deferred	8,868,729
payments	(1,991,029)
Owing to controlled entities			28,466	2,002
Fortharm Commodiation	6,877,700		28,466	2,002

Further information on amounts owing to controlled entities is set out in note $26$ – Related Parties.

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Non-Current Liabilities - Deferred Tax Liabilities 19.

	Consolidated			Parent Entity
	2003$	2002$	2003S	2002$
Provision for deferred income tax	5,376,000	2,017,709	5,239,238	1,850,043
	5,376,000	2,017,709	5,239,238	1,850,043
20.Non-Current Liabilities - Provisions
Employee Entitlements		19,267		19,267
		19,267		19,267
21.Contributed Equity - Peet & Company Limited
Paid up capital
739,599 Ordinary shares - fully paid	1,479,198	1,479,198	1,479,198	1,479,198
	1,479,198	1,479,198	1,479,198	1,479,198

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or in proxy, is entitled to one vote, and upon a poll each share held is entitled to one vote.

$22.$ Retained Profits

$\overline{\phantom{a}}$

	Consolidated		Parent Entity
	2003S	2002S	2003$	2002$
Retained profits at the beginning of
the financial yearNet profit from ordinary activities	11,388,881	5,183,503	11,483,663	5,280,658
after related income taxDividends provided for or paidRetained profits at the end of the	19,327,348(9,000,000)	8,205,378(2,000,000)	16,337,789(9,000,000)	8,203,005(2,000,000)
financial year	21,716,229	11,388,881	18,821,452	11,483,663

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Equity 23.

	Consolidated		Parent Entity
	2003S	2002S	2003S	2002S
Total equity at the beginning of the
financial yearTotal changes in equity recognised in	12,868,079	6,662,701	12,962,861	6,759,856
the statement of financial performance- Dividends provided for or paidTotal equity at the end of the financial	19,327,348(9,000,000)	8,205,378(2,000,000)	16,337,789(9,000,000)	8,203,005(2,000,000)
year	23, 195, 427	12,868,079	20,300,650	12,962,861

24. Directors' remuneration

The numbers of parent entity directors whose total income from the parent entity or related parties was within the specified bands are as follows:

	Number	Number
$$10,000 - $19,999$
$$50,000 - $59,999$
$140,000 - $149,999
$200,000 - $209,999
$240,000 - $249,999
$270,000 - $279,999
	2003	2002
Income paid or payable, or otherwise made available, to directors byentities in the consolidated entity and related parties in connection with themanagement of affairs of the parent entity or its controlled entities,	S	S
inclusive of GST:	728,488	713,941

Aggregate number of shares of Peet & Company Limited held directly, indirectly or beneficially by directors or their director-related entities at balance date.

	2003	2002
Ordinary shares	724,877and the contract with the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the cont	724,877_______________________________________

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

25. Remuneration of Executives

The numbers of Australian based executive officers including directors whose remuneration from entities in the consolidated entity and related parties was within the specified bands are as follows:

	Number	Number
$$110,000 - $119,999$$$120,000 - $129,999$$130,000 - $139,999$$140,000 - $149,999$$200,000 - $209,999$240,000 - $249,999		$\mathcal{L}^{\mathcal{S}}$
$$270,000 - $279,999$	2003	2002
Remuneration received, or due and receivable from entities in theconsolidated entity and related parties by Australian based executiveofficers (including directors) whose remuneration was at least $100,000.	S	S
Executive officers of the parent and consolidated entity	844,528	899.027

26. Related parties

Directors

The names of persons who were directors of the company at any time during the financial year are as follows: AW Lennon, WD Hemsley, IMC Palmer and AJ Lennon. All of these persons were also directors during the year ended 30 June 2003.

Remuneration Benefits

Information on remuneration benefits of directors is disclosed in notes 24.

$\bar{z}$

Transactions of Directors and Director-related Entities Concerning Shares

There were no transactions with directors and director-related entities concerning shares during the financial year ended 30 June 2003. The aggregate number of shares held directly, indirectly or beneficially by directors or their director-related entities at balance date is disclosed in note 24, with individual details disclosed in the Directors' Report.

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Related parties (continued) 26.

Other Transactions with Directors and Director-related Entities

During the year ended 30 June 2003, the Company derived the following fees from entities over which the directors and their related entities have significant influence:

	Consolidated			Parent Entity
	2003	2002S	2003	2002S
Project management, marketing and selling feesManager's performance feesBrokerage, underwriting & finder's feesBookkeeping and secretarial feesOther consultancy fees	12,639,094	11,121,813	15,495,558	11,121,813
	8,601,116	1,600,613	10,371,469	1,600,613
	2,422,970	549,000	2,422,970	549,000
	410,238	395,343	468,841	395,343
	.91,731	74,965	105,223	74,965
	24, 165, 149	13,741,734	28,864,061	13,741,734

During the year a consultancy fee of $272,250 (2002: $272,250) was paid to Tony Lennon & Associates, a related entity of A W Lennon

As at 30 June 2003 the following amounts were receivable from / (payable) to directors and their director related entities:

	Parent Entity
	2003Ж	2002
Aggregate amounts receivable from directors and their director -related entitiesAggregate amounts payable to directors and their director-related	16,516,016	6,878,959
entities	(72,038)	(33,600)

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

26. Related parties (continued)

Other related parties

Aggregate amounts of advances receivable from and payable to controlled entities at balance date are as follows:

	Parent Entity
	2003	2002
Payable to Controlled Entities	S	S
Current:		$\Delta \mathcal{A}$
Peet No 67 Syndicate Ltd	90
Peet No 68 Syndicate Ltd	90
Peet No 69 Syndicate Ltd
Peet No 70 Syndicate Ltd	90
Peet No 71 Syndicate Ltd	90
Peet No 72 Syndicate Ltd	90
Peet Windsor Park Syndicate Limited	90
		586
Non-current:	540	586
Peet Pakenham Syndicate Ltd
Peet Innisfail Syndicate Ltd	662
Hawkestone Conveyancing Pty Ltd	25,802
	2,002	2,002
	28,466	2,002
Total	29,006	2,588

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

26. Related parties (continued)

J.

	2003	Consolidated & Parent Entity2002
Receivable from Controlled Entities	$	$
Current:
Peet Warner Lakes Syndicate Limited
		115,307
Non-current:		115,307
Hawkstone Unit Trust
Peet Innisfail Syndicate Limited (formerly Dunnings Road Limited)	243,951	241,045
Peet & Co Western Estates Syndicate Limited		1,942,891
Peet & Company Limited Management Limited	10,914	13,306
Peet Tarneit West Limited	445,326	278,047
Peet Craigieburn Limited	10,419	1,814
Peet Greenvale No 2 Limited	341,097	1,814
Peet No Southern JV Limited	247,385	1,814
Peet No 63 Syndicate Limited		1,814
Peet Sneydes Road Limited	2,801	1,814
Peet No 67 Syndicate Limited	74,842	1,814
Peet No 68 Syndicate Limited	2,662
Peet No 69 Syndicate Limited	13,253
Peet No 70 Syndicate Limited	2,867
Peet No 71 Syndicate Limited	2,640
Peet No 72 Syndicate Limited	18,271
Peet Point Cook No 2 Syndicate Limited	2,640
	588,350	292,062
	2,007,418	2,776,421
	2,007,418	2,892,944
Receivable from other related partiesNon current:
Thompson's Lake Unit Trust	6,919
	6,919	7,107
		7,107

The amounts owing are unsecured, interest free and repayable on demand. The purpose of the advances to the various entities is to allow the purchase and potential development of broad acre land and is considered a part of the project management services performed by the Company.

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

26. Related parties (continued)

Wholly Owned Group

The wholly owned group as at 30 June 2003 consists of Peet & Company Limited (incorporated in Australia), being the ultimate parent entity, and its wholly owned controlled entities:

• Peet Prosper Pty Limited: ↘

• Peet Management Limited $\blacktriangle$

• $\triangleright$ Hawkestone Conveyancing Pty Ltd

• $\triangleright$ Hawkstone Unit Trust

• Peet & Co Western Estates Syndicate Limited

• Peet Point Cook No 2 Syndicate Limited

• $\triangleright$ Peet Innisfail Syndicate Limited

• $\triangleright$ Peet Tarneit West Limited

• $\triangleright$ Peet Craigieburn Limited

• $\prec$ Peet Greenvale No 2 Limited

• $\triangleright$ Peet Southern JV Limited

• $\triangleright$ Peet No 63 Syndicate Limited

• $\triangleright$ Peet Sneydes Road Limited

• $\triangleright$ Peet Pakenham Syndicate Limited

• $\triangleright$ Peet No. 67 Syndicate Limited

• $\triangleright$ Peet No 68 Syndicate Limited

• $\triangleright$ Peet No 69 Syndicate Limited

• $\triangleright$ Peet No 70 Syndicate Limited

• $\triangleright$ Peet No 71 Syndicate Limited

• $\triangleright$ Peet No 72 Syndicate Limited

Ownership interest in these controlled entities is set out in note 11.

Transactions between Peet & Company Limited and other entities in the wholly owned group during the years ended 30 June 2003 and 2002 consisted of loans advanced and project management, marketing & selling fees charged by Peet & Company Limited. There are no interest charges or fixed terms for the repayment of loans advanced by Peet & Company Limited.

Peet & Company Limited derived total fees of $4,688,620 from Peet Innisfail Syndicate Limited during the year ended 30 June 2003 (2002; Nil).

27. Trusts

The company is trustee for the following trusts:

	2003Right of	2003Total	2003	2002Right of	2002Total	2002
	Indemnity	LiabilitiesS		DeficiencyS	IndemnityS	LiabilitiesS	Deficiency
Australind Unit Trust	13,956	13,956
Burns Beach Property Trust	4,911,238			8,018	8.018
Eaton Unit Trust		4,911,238		7,761,985	7,761.985
Glenfield Oceanside Unit Trust	326,247	326.247		556,327	556,327
				73,823	73,823
Hawkstone Unit Trust	220,138	244,152	24,014	220,135	241,794
Jandakot Unit Trust	704,140	704,140		146,779		21,659
Thompson's Lake Unit Trust	920,198	920,198			146.779
Warnbro Oceanside Unit Trust	1,426,578	1,426,578		333,135	333,135
Yanchep Ocean Front Unit Trust	3,352,772		$\overline{\phantom{a}}$	2,118,716	2,118,716
Yatala Unit Trust		3,352,772	$\overline{\phantom{a}}$	2,538,722	2,538,722
	15,905,915	15,905,915		7,384,505	7,384,505
	27,781,182	27,805,196	24,014	21,142,145	21,163,804	21,659

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Notes to Statements of Cash Flows 28.

$(a)$ Reconciliation of cash

Cash as at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the statement of financial position as follows:

	Consolidated		Parent Entity
	2003$	2002	2003S	2002
Cash at bank and on handInterest bearing overdraft	9,842,315(32,905)	5,321,212(39, 298)	8,076,861$\overline{\phantom{a}}$	5,320,994
	9,809,410	5,281,914	8,076,861	5.320.994

$(b)$ Financing arrangements

Unrestricted access was available at balance date to the following lines of credit:

		Consolidated	Parent Entity
	2003$	2002S	2003	2002
Total facilities			S	S
Bank overdraftsBank loan facilitiesCredit cardsBank Guarantees/ Letters of Credit	$\Omega$54,827,49875,0005,388,502	$\left( i\right)$17,925,26824,0005,090,732	$\left( i\right)$5,209,26875,00090,732	$\left( 1\right)$259,26824,00090,732
Used at balance dateBank overdraftBank loan facilities	32,905	39,298
Credit cards	46,165,000	12,500,000	4,800,000
Bank Guarantees/ Letters of Credit	5,321,762	5,023,992	23,992	23,992
Unused at balance date
Bank overdraftBank loan facilitiesCredit cardsBank Guarantees/ Letters of Credit	$\rm\scriptstyle{(i)}$8,629,59375,00066,740	$\rm _{(i)}$5,385,97024,00066,740	$\mathfrak{u}$409,26875,00066,740	$\rm _{(1)}$259,26824,00066.740

(i) the bank loan facilities, the bank overdraft and the Bank Guarantees of the parent entity cannot together exceed $5,300,000 (2002: $350,000) at any one time. The bank loan facilities, the bank overdrafts and the Bank Guarantees of the consolidated entity as at 30 June 2003 could not together exceed $60,216,000 (2002: $23,016,000) at any one time. These are multi option facilities. Refer to note 16 Liabilities – Interest bearing liabilities for details about terms and securities on the above facilities.

$\mathcal{A}$

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Notes to Statements of Cash Flows (continued) 28.

Reconciliation of operating profit after income tax to net cash provided by operating activities. $\left( \mathrm{e}\right)$

		Consolidated	Parent Entity
	20032002		2003	2002
	$	$	$	$
Operating profit after income tax	19,327,348	8,205,378	16,337,789
Profit on sale of investments		(892, 634)		8,203,005
Subvention charge		141,421		(892, 634)
Consolidation adjustments to
Statement of financial performance		31,603
Add/(deduct) non cash items:
Depreciation	52,795	87,107
Bad debts		1,156	49,521	86,956
Loss on sale of non-current	9,490	376		1,156
assets			9,490	376
Amortisation of interest		4,335
Other non-cash		2,042		4,335
Net eash provided by operating
activities before changes in assets
and liabilities	19,389,633	7,580,784	16,396,800
Change in operating assets and				7,403,194
liabilities during the financial year:
Decrease/(increase) in trade
debtors	(359,306)	(3,953,257)	(11, 384, 029)
Decrease/(increase) in				(3,953,257)
prepayments & other debtors	(9, 493, 964)	(263,702)
(Increase)/decrease in inventory	(46,075,285)	7,027,800	(7,218)(5,349,179)	353,985
Decrease/(increase) in future				246,092
income tax benefit	211,068	(186,069)
(Decrease)/increase in income
taxes payable	1,995,697	944,176
Increase/(decrease) in trade			859,247	1,035,841
creditors	758,173	185,852
Increase/(decrease) in other			(44, 114)	198,656
creditors	7,635,647	(13,512,038)
(Decrease)/increase in provisions	794,376	(3,311)	524,902	28,874
Increase/(decrease) in deferred			15,026	(3,311)
taxes payable	3,358,291
Decrease/(increase) in other		1,380,885	3,389,195	1,218,433
assets	83
Net cash provided by operating
activities	(21, 785, 587)
		(798, 880)	4,400,630	6,528,507

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

29. Financial instruments

Credit risk exposures $(a)$

The credit risk on financial assets of the consolidated entity which have been recognised on the statement of financial position, other than investments in shares, is generally the carrying amount, net of any provisions for doubtful debts.

The cash component of financial assets is considered to have low credit risk as it is maintained within accounts operated by a reputable financial institution subject to Australian Prudential Regulatory Authority supervision.

$(b)$ Interest rate risk exposures

The consolidated entity's exposure to interest rate risk and the interest rate for each class of financial asset and liability is set out below.

Exposures to this type of risk arise predominantly from assets and liabilities bearing variable interest rates as any fixed rate assets or liabilities that the consolidated entity may hold is likely to be held to maturity.

2003Financial assets	Notes	FloatinginterestrateS	Fixed interestmaturing inless than 1year	Fixed interestmaturing in1-5 yearsS	Non-interestbearings	Total$
Cash assets	28(a)	9,842,315
ReceivablesInvestments	6,910				16,953,658678,873	9,842,31516,953,658678,873
		9,842,315			17,632,531	27,474,846
Weighted average interest rate		3.60%			NA
Financial liabilitiesPayablesInterest bearing habilities	1415	32,905	12,300,000	33,865,000	8,941,451	8,941,45146,197,905
		32,905	12,300,000	33,865,000	8,941,451	55,139,356
Weighted average interest rate		9.60%	6.10%	6.10%	N/A
Net financial assets/(liabilities)		9,809,410	(12,300,000)	(33,865,000)	8,691,080	(27,664,510)

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Financial instruments (continued) 29.

2002	Notes	Floatinginterestrate$	Fixedinterestmaturing inI year or lessS	Non-interestbearing	Total
Financial assets				$	$
Cash assets	28(a)	5,321,098		114	5,321,212
Receivables	6			7,271,226	7,271,226
Investments	10			537,634	537,634
		5,321,098		7,808,974	13,130,072
Weighted average interest rate		3.70 %		N/A
Financial liabilitiesPayables	15
Interest bearing liabilities	16			497,631	497,631
		39,298	12,500,000		12,539,298
		39,298	12,500,000	497,631	13,036,929
Weighted average interest rate		9.60%	5.80%	N/A
Net financialassets/(liabilities)		5,281,800	(12,500,000)	7,311,343	93,143

Net fair value of financial assets and financial liabilities $(c)$

The net fair value of the consolidated entity's financial assets and financial liabilities approximates their carrying value.

30. Commitments

The Company commitments relate to the lease of its premises at Level 7, 200 St George's Terrace, Perth and Level 2, 470 St Kilda Road, Melbourne.

	Consolidated		Parent Entity
Future operating lease rentals notprovided for in the financialstatements and payable:	2003$	2002$	2003S	2002$
Not later than one yearLater than one year but not later	185,091	163,978	185,091	163,978
than five yearsLater than five years	290,318	69,422	290,318	69,422
	475,409	233,400	475,409	233,400

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

30. Commitments (continued)

The consolidated entity's purchase commitments relate to land development project contracts. $C = 1.31324$

	сонзоналыса		Parent Entity
	2003	2002	2003	2002
Future capital expenditure notprovided for in the financialstatements and payable:	S	$	S	$
Not later than one yearLater than one year but not later	2,918,953	$\mathcal{L}^{\mathcal{L}}$1,690,191
than five years	1,343,878	1,485,200
Later than five years	2,332,000	2,332,000
	6,594,831	5,507,391

31. Contingent liabilities

The details and estimated amount of contingent liabilities are set out below. The directors are not aware of any circumstances or information, which would lead them to believe that these liabilities will crystallise and consequently no provisions are included in the accounts in respect of these matters.

In September 2000, the company arranged a bank guarantee of $13,992 in favour of 470 St Kilda Road Pty Ltd (A.C.N. 006 075 381) for the sub lease of premises at Level 2, 470 St Kilda Road Melbourne, Victoria. The lease term commenced 8 August 2000 and ends 8 September 2003. The lease agreement also contains two, 2-year options to extend the term at the discretion of the Company. The first 2-year option was exercised in September 2003.

As from 1 July 2000, the Company is subject to the Managed Investments Provisions of the Corporations Act 2001, in respect to several associated entities for which it acts as the Responsible Entity ("RE") and Custodian. The entities are:

• (a) Burns Beach Property Trust
• (b) Yatala Unit Trust
• (c) Jandakot Unit Trust
• (d) Thompson's Lake Unit Trust
• (e) Australind Unit Trust

To assist the Company in meeting the requirements to act as an RE and Custodian, it had one of its wholly owned subsidiaries arrange a Bank Guarantee of $2,400,000 in favour of the Company. In June 2002 this Bank Guarantee was increased to $5,000,000.

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

31. Contingent liabilities (continued)

As trustee of the Hawkstone Unit Trust an agreement was entered into during the 1998 financial year with Peet Adios Syndicate Limited, Peet Forrestdale Syndicate Limited and Peet Oakford Land Syndicate Limited relating to a cost sharing arrangement for joint use of a water pipeline. The total costs relating to the pipeline agreement amount to $329,750. The trust's share is calculated at 2% of the total cost, being $6,595. The company as trustee for the Hawkstone Unit Trust has a bank guarantee of $10,000 in favour of the City of Armadale, in respect to this issue.

The Company was the underwriter to a $21,600,000 capital raising by Peet Warner Lakes Syndicate Limited ("Warner Lakes"). As at the date of this report, the Company's potential liability had reduced to $9,324,600.

The Company was the underwriter to a $14,000,000 capital raising by Peet Tarneit Gardens Syndicate Limited ("Tarneit Gardens"). As at the date of this report, the Company's potential liability had reduced to $4,394,000.

Peet & Company Limited has provided a total of $52,216,000 in guarantees and indemnities which are secured by registered mortgage debenture over the whole of its assets and undertakings including uncalled capital, if any, to secure the borrowings to fund the acquisition of the consolidated entity's land assets.

Peet & Company Limited has guaranteed the performance of a purchase contract for Peet Tarneit Gardens Syndicate Limited. The amount of the guarantee is $11,902,324. Peet & Company Limited has also guaranteed the performance of a purchase contract for Peet Tarneit West Limited. The amount of the guarantee is $7,151,029.

32. Employee Entitlements

	Consolidated		Parent Entity
Employee Entitlement LiabilitiesProvision for employee entitlements	2003$	2002$	2003$	2002$
Current (note 17)Non – current (note 20)	214,808	172,16619,267	214,808	172,16619,267
	214,808	191,433	214,808	191,433
Employee numbersNumber of employees at the end ofthe financial year (not including	Number		Number
Directors)	40	34	39	34

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Events subsequent to reporting date 33.

The Directors declared a fully franked dividend of approximately $2.70 per share ($2,000,000) on Thursday, 26 June 2003 and the dividend was paid on Tuesday, 1 July 2003. Additionally, the Directors declared a fully franked dividend of approximately $5.40 per share ($4,000,000) on Monday, 1 September 2003 and the dividend was paid on Friday, 19 September 2003

34. Segment information

Business segments

The consolidated entity is an Australian based company having the following two business segments:

Land Syndication

External equity capital raisings are undertaken to fund the acquisition of land across Australia. The consolidated entity derives fees from underwriting and capital raising coordination services, as well as asset identification fees from this activity. Ongoing project related fees are then derived by the consolidated entity for the duration of a particular project.

Land development and resale

Purchase and development of various parcels of land in Australia, primarily for residential purchases. However, certain land holdings will also produce non-residential blocks of land.

Geographical segments

The consolidated entity operates primarily in one geographical segment being Australia. Accordingly, no further geographical information is provided.

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

34. Segment information (continued)

Primary reporting - business segments

2003	LandSyndication$	Landdevelopment $&$resale$	Inter-segmenteliminationsS	Consolidated$
Sales to external customersInter-segment sales	29,148,259	23,706,902	(4,743,192)	48,111,969
Total sales revenue	29,148,259	23,706,902	(4,743,192)	48,111,969
Other revenue	23			23
Total segment revenue	29,148,282	23,706,902	(4,743,192)	48,111,992
Segment resultUnallocatedrevenueless	23,506,603	6,252,589	(834, 185)	28,925,007
unallocated expenseProfit from ordinaryactivities before income tax				(1,355,384)
expense				27,569,623
Income tax expense				(8, 242, 275)
Profit from ordinaryactivities after income tax
expense				19,327,348
Segment assets	29,588,105	65,912,200	(5, 544, 603)	89,955,702
Unallocated assets
Total assets				89,955,702
Segment liabilities	6,969,888	9,701,914	(4,708,292)	11,963,510
Unallocated liabilities				54,796,765
Total liabilities				66,760,275
Acquisitions ofproperty,plant & equipment and other
non-current segment assets	428,256	48,474		476,730
Depreciation expense	49,521	3,274		52,795
Other non-cash expenses	9,490			9.490

NOTES TO THE FINANCIAL STATEMENTS 30 June 2003

Segment information (continued) 34.

Primary reporting -- business segments

2002	LandSyndication$	Landdevelopment &resaleS	Inter-segmenteliminationsS	ConsolidatedS
Sales to external customersInter-segment sales	16,090,934			16,090,934
Total sales revenue	16,090,934			16,090,934
Other revenue	1,788	19,686	2102	23,576
Total segment revenue	16,092,722	19,686	2,102	16,114,510
Segment resultUnallocatedrevenueless	11,846,272	19,686	2,102	11,462,577
unallocated expenseProfit from ordinaryactivities before income tax				(67, 448)
expense
Income tax expense				11,395,129
Profit from ordinary				(3,189,751)
activities after income tax
expense				8,205,378
Segment assets	16,047,922	16,012,243	(2,893,753)	29,166,412
Unallocated assets				211,151
Total assets				29,377,563
Segment liabilities	654,350	186,272	(115,308)
Unallocated liabilities				725,314
Total liabilities				15,784,170
				16,509,484
Acquisitionsofproperty,plant & equipment and other
non-current segment assets	345,827	2,696	(16)	348,507
Depreciation expense	86,956	3,274		87,107
Other non-cash expenses	5,867	2,042		7,909

DIRECTORS' DECLARATION

The directors declare that the financial statements and notes set out on pages 10 to 40:

• comply with Accounting Standards, the Corporations Regulations 2001 and other $(a)$ mandatory professional reporting requirements; and
• give a true and fair view of the company's and consolidated entity's financial position as at $(b)$ 30 June 2003 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date.

In the directors' opinion:

• the financial statements and notes are in accordance with the Corporations Act 2001; and $(a)$
• there are reasonable grounds to believe that the company will be able to pay its debts as $(b)$ and when they become due and payable.

This declaration is made in accordance with a resolution of the directors.

Director

Perth, Western Australia $\mathcal{K}$ . September 2003

Independent audit report to the members of Peet & Company Limited

PricewaterhouseCooners ABN 52 780 433 757

ovi 250 St Georges Terrace PERTH WA 6000 GPO Box 11198 PERTH WA 6840 DX 77 Perth Australia www.pwc.com/air Telephone +61 8 9238 3000 Facsimile +61 8 9238 3999

Audit opinion

In our opinion, the financial report of Peet & Company Limited:

• gives a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial position of Peet & Company Limited and the Peet & Company Group (defined below) as at 30 June 2003, and of their performance for the year ended on that date, and
• is presented in accordance with the Corporations Act 2001, Accounting Standards and other mandatory financial reporting requirements in Australia, and the Corporations Regulations 2001.

This opinion must be read in conjunction with the rest of our audit report.

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for both Peet & Company Limited (the company) and the Peet & Company Group (the consolidated entity), for the year ended 30 June 2003. The consolidated entity comprises both the company and the entities it controlled during that year.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit approach

We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows.

PRICEWATERHOUSE COPERS @

We formed our audit opinion on the basis of these procedures, which included:

• examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
• assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

When this audit report is included in a document containing the director's report, our procedures include reading the director's report to determine whether it contains any material inconsistencies with the financial report.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Pruvoteckundopers

PricewaterhouseCoopers

Ò

John O'Connor Partner

Perth September 2003