PEET LIMITED — Annual Report 2021

Aug 25, 2021

PEET IS WELL POSITIONED TO BENEFIT FROM IMPROVING MARKET

UNIQUE FUNDS MANAGEMENT MODEL

SIGNIFICANT FUNDS MANAGEMENT PLATFORM VALUE NOT CAPTURED IN NTA

• 1. Gross Development Value
• 1. NTA before application of AASB 16 Leases.

DELIVERING AGAINST OUR STRATEGY PORTFOLIO WELL POSITIONED FOR POSITIVE GROWTH AND VALUE CREATION

RESULTS OVERVIEW

GROUP FY21 FINANCIAL RESULTS

IMPROVING RESULTS WITH MARKET RECOVERY

KEY PERFORMANCE STATISTICS	FY21	FY20	VAR (%)
Lot sales1	3,142	2,323	35%
Lot settlements1	2,980	1,794	66%
Revenue2	\$234.3m	\$196.3m	19%
EBITDA3, 4	\$58.1m	\$37.0m	57%
EBITDA3,4 margin	25%	19%	6%
5 Operating profit after tax	\$28.5m	\$15.1m	89%
Restructuring and divestment – related provisions	-	(\$45.2m)	100%
Statutory profit / (loss) after tax	\$28.5m	(\$30.1m)	195%
KEY METRICS	FY21	FY20	VAR (%)
EPS (operating)	5.9c	3.1c	90%
DPS6	3.5c	1.5c	133%
	JUN 21	JUN 20	VAR (%)
per share7 Book NTA	\$1.13	\$1.09	4%

Group sales volumes were up due to improving market conditions particularly across Qld and WA and government stimulus

Increased revenue was due to higher settlement volumes, FM fees and equity accounted earnings

Group EBITDA3 margin higher due to improved FM/JV performance and cost reduction initiatives during the year, despite completion of Aston (Vic) project during FY20

Final dividend for FY21 of 2.5 cents fully franked

Group NTA does not fully reflect:

• Value uplift on co-investment stakes in funds and joint ventures
• Value of Funds Management business

NOTES:

1. Fully franked

2. Includes equivalent lots

3. 1. Includes share of net profit from associates and JVs
4. 1. EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures
5. 1. Before divestment and related provisions in FY20
6. 1. Operating profit is a non-IFRS measure that is determined to present the ongoing activities of the Group in a way that reflects its operating performance. Operating profit excludes unrealised fair value gains/(losses) arising from the effect of revaluing assets and liabilities and adjustments for realised/unrealised transactions outside the core ongoing business activities

1. NTA before application of AASB 16 Leases.

GROUP BALANCE SHEET

CAPITAL MANAGEMENT METRICS	FY21	FY20
Cash at bank1	\$64.1m	\$46.8m
Bank debt2	\$70.3m	\$59.3m
Peet bonds3	\$200.0m	\$225.0m
Gearing4	24.8%	28.8%
Interest coverratio5	2.4x	1.6x
Weighted average debt maturity	3.2 years	2.1 years
Debt fixed/hedged	65%	91%
Weighted average cash cost of debt	6.2%	7.3%

• Cash and debt facility headroom of \$175m provides capacity to fund current portfolio and consider growth opportunities
• Senior bank facility increased by \$25m in connection with reducing the \$100m bond refinancing to \$75m
• Refinanced \$100 million of five-year fixed rate bonds via the issue of \$75 million unlisted five year variable rate bonds
• Gearing reduced to 24.8% within target range
• Gearing expected to be at upper end of target range during FY22 due to significant level of construction activity
• Cash cost of debt lower due to refinancing of bonds
• Cost of debt is expected to further reduce during FY22 as interest rate hedge expires in 1H22

Notes:

• 1 Includes cash at bank of syndicates consolidated under AASB10
• 2 Includes bank debt of syndicates consolidated under AASB10
• 3 Excluding transaction costs
• 4 Calculated as (Total interest-bearing liabilities (including land vendor liabilities) less cash) / (Total assets less cash, less intangible assets)
• 5 12 month rolling EBIT (excluding restructuring and divestment-related provisions) / Total interest cost (including capitalised interest).

GROUP CASH FLOW SUMMARY

CASH FLOWS RELATED TO OPERATING ACTIVITIES	FY21 \$M	FY20 \$M
Receipts from customers	228.2	191.6
Payments for development and infrastructure	(102.9)	(113.4)
Payments to suppliers and employees	(46.7)	(53.7)
Borrowing costs	(22.6)	(21.8)
Interest Received	0.3	-
Distributions and dividends from associates and joint ventures	11.2	8.0
Net taxes paid	(5.7)	(7.3)
Operating cash flow before acquisitions	61.8	3.4
Payments for land acquisitions – Term payments	(6.9)	-
Payments for land acquisitions – Land & Medium Density Sites	(40.5)	(11.3)
Net operating cash flow	14.4	(7.9)

• Receipts higher due to increased settlement revenue from existing and new projects and funds management fee income
• Significant levels of construction activity being undertaken during FY21 and into FY22 due to strong sales volumes
• Substantial capital expected to be recycled from townhouse settlements during FY23
• Distributions from Funds and Joint Ventures increased due to higher settlements
• Distributions expected to further increase during FY22
• Acquired four new development sites which will contribute to earnings from FY23

OPERATING PERFORMANCE

GROUP OPERATING PERFORMANCE

IMPROVED RESULTS ACROSS NATIONAL PORTFOLIO

• Group EBITDA up 57% on significant increase in sales and settlement volumes
• Contribution from eastern states' projects represented 82% of EBITDA1,2 during FY21
• WA and QLD contribution continues to improve on the back of improving market conditions
• FM/JV business provided solid capital-lite earnings base representing c.69% of Group EBITDA1,2
• Continued focus on overhead management and other operational efficiencies

GROUP SALES AND SETTLEMENT ACTIVITY

MARKET IMPROVEMENT DRIVING SALES PERFORMANCE

• Group sales1 for FY21 of 3,142 lots up 35%
• WA and QLD sales volumes increased on the back of improving market conditions and government stimulus
• Vic sales activity remained resilient despite lengthy COVID-19 lockdown restrictions
• Sales momentum has continued during the first quarter of FY22.
• Credit availability and continuing low interest rates remain supportive
• Group settlements1 of 2,980 lots up 66%
• Higher settlements expected from NSW/ACT and Qld during FY22

ENQUIRY LEVELS REMAIN STRONG

• Enquiries remain strong despite the rolloff of Homebuilder stimulus
• QLD, WA and ACT/NSW enquiry levels continue to grow in 1Q22
• Vic enquiry level remain solid despite COVID-19 lockdown restrictions
• Strong customer demand for affordable product continues
• Indicates strong momentum for FY22

CONTRACTS ON HAND

CONTRACTS ON HAND1 (LOTS)

INCREASE IN CONTRACTS ON HAND REFLECTS STRONG MARKET CONDITIONS

Contracts on hand1 at year end have increased by 9% since 30 June 2020 to 1,948 lots

• Reflects strong market conditions across all of the Group's markets and government stimulus

Contracts value of \$547m – up 28% since 30 June 2020

Sales momentum continuing into 1Q22 resulting in further increased contracts on hand

• Lots under contract and value have increased by 16% and 19%, respectively since year end

OUTLOOK

MARKET CONDITIONS: BY STATE

PEET'S SUMMARY

WA	QLD	VIC	SA	ACT/NSW
Strong 2H21 settlement performance driven by conversion of sales from government stimulus • Solid sales performance maintained through 2H21 leaving significant lots under contract • First home buyers remain the most active segment with approx. 65% of sales Net pricing continued to improve with • ongoing demand • Sales cancellation rate in line with medium term rates	Solid settlement volumes and net pricing improvement • 70% of all settlements were to Owner Occupiers in the First Home Buyer and Second and Subsequent Home Buyer categories • FY21 performance benefitted from significant interstate migration of >30,000 people in 2020, affordability and lifestyle benefits of SEQ over Southern States	Strong sales performance supported by state and federal government incentives • Low interest rate environment continuing to support moderate price growth • Market primarily driven by the first home buyer market	Strength in owner occupier market continues • New home and land sales have returned to traditional rates post HomeBuilder Strong settlements in first half with • low fallover rates • Building industry nearing capacity due to home builder volumes resulting in pressure on build costs • Rental vacancy remains tight	Large sales volumes experienced in a market with limited competition • Very strong price growth due to the lack of land supply in the market • Price points in the region are some of the highest in the country • Owner occupiers continue to make up the majority of the target market
MARKET OUTLOOK
WA	QLD	VIC	SA	ACT/NSW
Land sales moderated in 2H21 due to some bring forward of demand from stimulus, however remained solid • Relative affordability and strength of the local economy will continue to support this market • Established housing market has strengthened with positive growth. WA remains the most affordable state for home ownership • Strength of mining sector helping employment and overall confidence • Rental vacancy rates lowest since 2007	Moderation in sale volumes expected in FY22 due to land supply shortages, but likely to be offset by further price growth • SEQ is experiencing land supply shortages due to high demand from FY21, delays in statutory approvals, and increased delivery times due to supply chain delays • Carrying through a large amount of contracts on hand equivalent to 70% of full year result	Balanced supply in most corridors expected to keep sales rates at healthy levels • Recent price growth expected to moderate off high levels in FY21 • Investors are showing signs of returning to the market, which is expected to support solid sales in FY22	Expect a return to more traditional volumes in new home and land sales in FY22 • Market in "modest growth mode" and expected to continue throughout CY21 • Building activity to be at capacity throughout 2021	Limited competition to underpin demand, with sales volumes expected to moderate as more competition comes to market. • Recent price growth expected to moderate during FY22 • New projects in the pipeline will support market share in FY22 and beyond

15 FY2021 RESULTS | AUGUST 2021 |

NEW PROJECTS PROVIDE MEDIUM TERM EARNINGS VISIBILITY

PIPELINE OF APPROXIMATELY 44,900 LOTS PROVIDING VISIBILITY OF FUTURE EARNINGS

FY22 – FY24 NEW PROJECT RELEASE SCHEDULE

• Up to four new land community projects and seven townhouse/apartment sites to commence development within the next three years
• Planned project releases will be fully funded from internally generated cash flows, existing debt facilities and third party capital

PROJECT	STATE	SEGMENT	PROJECT START1	LOTS2 / UNITS	GDV	PROJECT LIFE (YEARS)
Communities
University of Canberra3	ACT	JV	FY24	3,300	\$1,985m	19
Fort Largs	SA	Owned	FY22	335	\$93m	4
Jumping Creek	NSW	Owned	FY22	218	\$93m	3
Ellery	VIC	Owned	FY22	278	\$92m	3
Townhouses
Nudgee	QLD	Owned	FY22	84	\$41m	3
Rochedale	QLD	Owned	FY22	36	\$25m	2
South Morang	VIC	Owned	FY23	71	\$37m	2
Keysborough	VIC	Owned	FY23	100	\$89m	3
Cranbourne East	VIC	Owned	FY23	57	\$29m	4
Glendalough	WA	Owned	FY22	100	\$73m	3
Apartments
Glyde Street	WA	Owned	FY22	44	\$35m	3
Total				4,623	\$2,592m

1 Commencement of sales / development 2 Refers to lots and/or dwellings

GROUP PRIORITIES AND STRATEGIC FOCUS

STRATEGIC FOCUS ON LEVERAGING EXISTING ASSETS SUPPLEMENTED BY SELECTIVE ACQUISITIONS

Continue to leverage large scale national portfolio to further improve returns

• Accelerate production to meet current demand and increase operating cash flows
• Sales momentum continuing into FY22
• Continue to focus on improving project returns and operating margins through efficient master planning, affordable product development, cost reduction initiatives and efficient allocation of capital
• Continue to balance the portfolio between land and built form projects and increase weighting to east coast markets
• Remain focussed on the right product in the right markets

Continue to assess capital recycling opportunities

• Assess further divestment opportunities to maximise market cycles to unlock value where appropriate
• Continue to develop FM/JV initiatives with existing and new capital partners
• Evaluate "super lot" opportunities within portfolio

Consider selective acquisitions to restock pipeline when appropriate

GROUP OUTLOOK

FOCUSED ON POSITIONING THE GROUP FOR FURTHER GROWTH THROUGH A CONSERVATIVE APPROACH TO PROJECT DELIVERY AND IDENTIFYING GROWTH OPPORTUNITIES

Residential markets are expected to remain positive over the medium term supported by low interest rates, accommodative credit conditions and an improving employment outlook

Continuing residential sales momentum, a significant development pipeline and a strengthening balance sheet, positions the Group well for future growth

The Group continues to monitor, assess and manage the ongoing impacts of COVID-19 including various government imposed lockdowns and restrictions. These impacts may contribute to:

• Development program timeframes being extended
• Disruption to supply chains
• Increased development and labour costs due to border restrictions

FY22 is expected to be a year focused on the delivery of a significant number of land lots and townhouses sold during FY21 along with the commencement of up to six new projects

The Group is well-positioned to target growth on FY21 earnings, subject to market conditions and the timing of settlements

APPENDICES

SCALE PIPELINE WITH LOW COST BASE BROAD CUSTOMER AND PRODUCT REACH

FM OPERATING PERFORMANCE

KEY PERFORMANCE STATISTICS	FY21	FY20	VAR (%)
Lot sales1	1,613	1,412	14%
Lot settlements1	1,732	924	87%
Revenue	\$37.2m	\$22.8m	63%
Share of net profit of equity accounted investments	\$5.4m	\$1.9m	184%
EBITDA2	\$29.2m	\$13.0m	125%
EBITDA2 margin	69%	53%	16%
	JUN 21	JUN 20	VAR (%)
Contracts on hand1	1,054	1,173	(10%)
10% FM SALES1 COMPOSITION BY 43% GEOGRAPHY (LOTS) 28% VIC QLD WA SA 19%	29%	1% FM EBITDA2 COMPOSITION BY GEOGRAPHY (%) VIC QLD SA WA	25% 45%

FM sales were up due to improving market conditions and government stimulus

Reflects the contracts on hand at 30 June 2020 and increased sales activity

Revenue higher due to higher sales and settlement volumes and performance fees

Equity accounted profit impacted by higher settlement volumes

Improved earnings due to higher settlement volumes and performance fees

Notes:

JV OPERATING PERFORMANCE

2 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in JVs

KEY PERFORMANCE STATISTICS	FY21	FY20	VAR (%)
Lot sales1	998	479	108%
Lot settlements1	764	436	75%
Revenue	\$44.7m	\$34.6m	29%
Share of net profit of equity accounted investments	\$7.9m	\$4.8m	65%
EBITDA2,3	\$18.3m	\$8.8m	108%
EBITDA2,3 margin	35%	22%	13%
	JUN 21	JUN 20	VAR (%)
Contracts on hand1	638	404	58%
19% JV SALES1 GEOGRAPHY (LOTS)		1% JV EBITDA2,3 COMPOSITION BY	16%	12%

Reflects contracts on hand at 30 June 2020 and increased sales activity

Equity accounted profits impacted by higher settlements at Googong NSW

Earnings up due to increased sales and settlement volumes

3 Before divestment and related provisions in FY20

DEVELOPMENT OPERATING PERFORMANCE

KEY PERFORMANCE STATISTICS	FY21	FY20	VAR (%)
Lot sales1	531	432	23%
Lot settlements1	484	434	12%
Land only	456	426	7%
Medium Density product	28	8	250%
Revenue	\$134.7m	\$128.5m	5%
EBITDA2	\$21.8m	\$23.5m	(7%)
EBITDA2 margin	16%	18%	(2%)
	JUN 21	JUN 20	VAR (%)
Contracts on hand1	256	209	22%

Higher sales due to government stimulus

Earnings and EBITDA margin impacted by completion of Aston (Vic) project

SUMMARY INCOME STATEMENT

	FY21	FY20	Var
	\$M	\$M	(%)
Funds Management	37.2	22.8	63%
Development	134.7	128.5	5%
Joint Venture	44.7	34.6	29%
Share of net profit of equity accounted investments	13.3	6.7	99%
Other1	4.4	3.7	19%
Revenue	234.3	196.3	19%
EBITDA	58.1	37.0	57%
Finance costs2	(14.8)	(11.5)	(29%)
Depreciation and amortisation	(3.0)	(3.4)	12%
NPBT (pre restructuring and divestment – related provisions)	40.3	22.1	82%
Income tax expense	(12.2)	(7.6)	(60%)
Non-controlling interest	0.4	0.6	33%
Operating NPAT	28.5	15.1	89%
Restructuring and divestment – related provisions (net of tax)	-	(45.2)	100%
Statutory NPAT3	28.5	(30.1)	195%

1 Includes AASB10 Syndicates, unallocated and elimination entries

2 Finance costs includes interest and finance costs expensed through cost of sales

3 Attributable to the owners of Peet Limited

Notes:

SUMMARY BALANCE SHEET

	FY21	FY20
	\$M	\$M
Assets
Cash and cash equivalents	64.1	46.8
Receivables	94.0	119.4
Inventories	489.9	478.5
Investments accounted for using the equity method	232.6	232.1
Other	9.1	11.9
Total assets	889.7	888.7
Liabilities
Payables	34.5	33.4
Land vendor liabilities	-	6.4
Borrowings	268.0	282.2
Other	54.7	53.7
Total liabilities	357.2	375.7
Net assets	532.5	513.0
Book NTA per share1	\$1.13	\$1.09

LAND BANK FUNDS MANAGEMENT KEY PROJECTS

PROJECT LIFECYCLE PROJECT NAME STATE GDV1 LOTS REMAINING2 2022 2023 2024 2025 2026 Alkimos WA \$1,023m 2,218 Brabham WA \$676m 3,105 Burns Beach WA \$155m 256 Eglinton WA \$219m 998 Golden Bay WA \$109m 529 Lakelands WA \$156m 870 Yanchep Golf Estate WA \$392m 1,518 Oakford WA \$135m 899 Forrestdale WA \$200m 968 Movida WA \$71m 339 Mundijong WA \$228m 933 Yanchep (Wholesale) WA \$171m 888 Spring Mountain QLD \$46m 137 Caboolture QLD \$94m 399 Palmview DMA QLD \$120m 561 Flagstone City QLD \$3,394m 10,739 Cornerstone VIC \$106m 387 Newhaven VIC \$473m 1,537 Mt Barker SA \$55m 265 Total Funds Management \$7,823m 27,546

LEGEND Planning Selling

PROJECT LIFECYCLE LAND BANK DEVELOPMENT KEY PROJECTS

PROJECT NAME	STATE	GDV1	LOTS REMAINING2	2022	2023	2024	2025	2026
Brigadoon	WA	\$32m	81
Greenlea	WA	\$45m	238
Mundijong	WA	\$187m	781
Glyde Street	WA	\$35m	44
Glendalough	WA	\$73m	100
Other	WA	\$652m	4,033
Gladstone	QLD	\$85m	327
Flagstone North	QLD	\$470m	1,862
Palmview	QLD	\$92m	317
Strathpine	QLD	\$40m	90
Nudgee	QLD	\$41m	84
Rochedale	QLD	\$25m	36
Other	QLD	\$94m	601
Aston West	VIC	\$300m	1,121
Ellery	VIC	\$92m	278
Cranbourne East	VIC	\$29m	57
Hummingbird	VIC	\$39m	80
Lightwood	VIC	\$38m	81
Lumeah	VIC	\$17m	35
South Morang	VIC	\$37m	71
Keysborough	VIC	\$89m	100
Lightsview	SA	\$18m	39
Tonsley	SA	\$141m	529
Fort Largs	SA	\$93m	335
Other	SA	\$1m	2
Jumping Creek	NSW	\$93m	218
Total Company-Owned		\$2,858m	11,540
					LEGEND	Planning	Selling

LAND BANK JOINT VENTURE KEY PROJECTS

PROJECT LIFECYCLE

PROJECT NAME	STATE	GDV1	LOTS REMAINING2	2022	2023	2024	2025	2026
Wellard	WA	\$68m	308
Pier Street	WA	\$98m	178
Edens Crossing	QLD	\$157m	656
Googong3	NSW	\$567m	1,383
University of Canberra4	ACT	\$1,985m	3,300
Lightsview	SA	\$12m	46
Total Joint Venture		\$2,887m	5,871
TOTAL PIPELINE		\$13,568m	44,957
						Planning LEGEND	Selling

Gross Development Value Equivalent lots as at 30 June 2021 Googong represents 50% share of project Conditional agreement

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.