PEET LIMITED — Interim / Quarterly Report 2012

Feb 23, 2012

Peet Limited

ABN 56 008 665 834

Appendix 4D and Consolidated Financial Statements for the half-year ended 31 December 2011

Table of Contents	Page
Results for Announcement to the Market	2
Results Commentary	3
Directors' Report	7
Auditor's Independence Declaration	8
Consolidated Income Statement	9
Consolidated Statement of Comprehensive Income	10
Consolidated Statement of Financial Position	11
Consolidated Statement of Changes in Equity	12
Consolidated Statement of Cash Flows	13
Notes to the Consolidated Financial Statements	14
Directors' Declaration	26
Independent auditor'sreview report to the members	27

Results for Announcement to the Market

Entity:	Peet Limited and its controlled entities
Reporting Period:	31 December 2011
Previous Corresponding Period:	31 December 2010

			$'000
down	35 %	to	63,829
down	61 %	to	8,668
down	64 %	to	2.7 c
down	63 %	to	2.7 c

Dividends	Cents per security	% Franked per security
Current Period
Interim dividend 2012	0.00 cents	N/A

Previous Year
Final dividend 2011	4.50 cents	100%
Interim dividend 2011	4.00 cents	100%
	8.50 cents

Results commentary

Key results

• Statutory net profit of $8.7 million, down 61%
• Statutory earnings per share of 2.7 cents, down 64%
• NTA per share of $1.481,2
• 870 lots sold (down 26%) and 872 lots settled (down 22%)
• A total of 1,053 contracts on hand as at 31 December 2011
• Gearing3 at 38.8% as at 31 December 2011
• $57.1 million in cash and undrawn cash facilities

Peet Limited's net profit after tax for the half-year ended 31 December 2011 was $8.7 million, down 61% on the previous corresponding period, due to difficult property market and economic conditions. These difficult conditions have resulted in poor consumer confidence levels which have impacted on discretionary spending levels and customers' preparedness to make a purchasing commitment.

The Group's strategic response to first half market conditions has been to preserve capital, reduce costs across the organisation and position ourselves to respond effectively to improved conditions.

Peet has quality, low-cost product targeted at the affordable end of the market available in the key states of Western Australia, Queensland and Victoria. We have continued to offer a range of product including a greater proportion of smaller lots at attractive price points.

As indicated in Peet Limited's November 2011 announcement to the market, the Victorian residential market continues to prove very challenging. The previously strong population and migration growth in that State has stalled over the past 6-9 months and consistent price growth over recent years has put pressure on affordability, contributing to the continued softening of sales and price growth in 1H12 compared to the same period in 2011.

Despite the challenging conditions in recent years, the Group's future performance and growth will be underpinned by the strategies being implemented, and activities being undertaken, to fundamentally reposition Peet with quality, long-term projects and strong, quality capital partners. These investments in future growth include:

• the acquisition of a 50% share in a 13,000-lot project in Flagstone in South East Queensland (which settled during 1H12);
• the establishment of a partnership with the Future Fund which involves the acquisition and development of broadacre residential land in growth areas across Australia; and
• entering key project management agreements on larger-scale projects with the Western Australian State Government and Defence Housing Australia.

The Group will continue to identify opportunities to expand its land bank under its funds management model, while focussing on stringent capital management and debt reduction in the next phase of its growth strategy.

1 Net tangible assets (adjusted for market value of inventory as at 30 June 2011; subsequent development costs incurred; and settlements

achieved) 2 Does not account for value of Funds Management business / earnings 3 (Total interest bearing liabilities (including deferred payment obligations) less cash) / (Total assets adjusted for market value of inventory less cash, less intangible assets)

Operational commentary

There were 870 lot sales and 872 settlements for the first half, with sales down 26% and settlements down 22% on the previous corresponding period. Sales from Company-owned projects totalled 182 for the period (down 18%) and settlements were down 54% on the previous corresponding period at 140, due in part to inclement weather on the east coast and the Company's decision to defer capital expenditure on some of its major projects until conditions normalise and greater confidence emerges around sales and settlement activity. This had the impact of deferring settlement revenue to future periods.

Sales in the Funds Management business were down 37% to 576 for the period and settlements were down by 24% to 582.

The Group's net EBITDA margin for the first half was 29% compared with 42% for the previous corresponding period. This was significantly impacted by the lower settlement revenue from higher margin Company-owned projects including Craigieburn and Greenvale in Victoria in particular.

There were 1,053 contracts on hand as at 31 December 2011 with a gross sales value of $278.7 million. This represents only a 6% decrease in the number of contracts on hand and a 3% decrease in the value of those contracts when compared to 30 June 2011. Approximately 70% are due to settle before the end of the 2012 financial year.

Funds Management

• Revenue of $15.5 million a decrease of 28% over the previous corresponding period.
• EBITDA from Funds Management of $9.5 million, down 35% on the previous corresponding period.
• Net EBITDA margin of 61%, down 7% on 1H11.
• 576 lots sold (compared with 915 in 1H11, down 37%) for a gross sales value of $142.5 million.
• 582 lots settled (down 24% on 1H11) for a gross sales value of $133.4 million.
• 773 contracts on hand as at 31 December 2011, down 9% compared with 30 June 2011, with a gross sales value of $215.8 million, down 5% compared with those on hand at the conclusion of FY11.

Development

• Revenue of $36.0 million a decrease of 46% over the previous corresponding period.
• EBITDA from Company-owned projects of $5.1 million, down 76% on the previous corresponding period.
• Net EBITDA margin of 14%, compared to 33% for the previous corresponding period.
• 182 lots sold (compared with 222 in 1H11, down 18%) for a gross sales value of $42.0 million.
• A decrease of 54% in lots settled to 140 lots for a gross sales value of $38.4 million.
• 223 contracts on hand as at 31 December 2011, an increase of 25% over lots under contract at 30 June 2011, with a gross sales value of $50.4 million, an increase of 24% compared with those on hand at the conclusion of FY11.

Joint venture projects

• Revenue of $9.7 million an increase of 14% over the previous corresponding period.
• EBITDA from Joint Venture projects of $1.3 million, down 52% on the previous corresponding period.
• Net EBITDA margin of 13%, compared to 32% for the previous corresponding period.
• 167% increase in lots sold to 112 lots for a gross sales value of $23.2 million.
• An increase of 168% in lots settled to 150 lots with a gross sales value of $31.7 million, compared with 56 lots with a gross sales value of $11.1 million in the previous corresponding period.
• 57 contracts on hand as at 31 December 2011, a decrease of 40% compared with 30 June 2011, with a gross sales value of $12.5 million, down 41% compared with those on hand at the conclusion of FY11.

Capital Management

Peet has acted prudently in challenging conditions to protect its balance sheet and manage its quality asset base in line with its longer-term, strategic growth plan.

At 31 December 2011 Peet had:

• interest-bearing debt, net of cash, of $291.1 million;
• $57.1 million in cash and undrawn cash facilities;
• gearing4 (including convertible notes) of 38.8%; and
• an interest cover ratio (ICR) of 2.3 times against a bank covenant of 1.5 times.

The weighted average cost of debt for the half-year was 8.6% (including margins and interest on convertible notes) which represents an increase of just under 0.6% compared with the previous corresponding period. At 31 December 2011, 78% of the Group's interest bearing debt was hedged (compared with 91% as at 30 June 2011) resulting in an average hedge maturity profile of 3 years (compared with 3.5 as at 30 June 2011).

Cash flow in 1H12 was impacted by a range of factors including settlement on the 50% interest in the Flagstone City project in South East Queensland, upfront development expenditure on a number of new development projects, as well as delayed settlement revenue due to title delays associated with inclement weather on the east coast.

Sales and settlements at these large-scale projects, including the high margin Company-owned Craigieburn and Greenvale projects in Victoria, have now commenced. Titles which had previously been delayed are now progressively being issued, resulting in a weighting of settlements to the second half of the 2012 financial year. The revenue from these settlements, along with revenue from non-core asset and super lot sales and ongoing cost reductions, will contribute to an improved operating cash flow position during 2H12.

The Group has a new gearing target of 20-30% and intends to achieve this debt reduction over the next 18 months through the activities described above. This strategy is well on track with a number of sales currently being negotiated or nearing completion.

4 (Total interest bearing liabilities (including deferred payment obligations) less cash) / (Total assets adjusted for market value of inventory less cash, less intangible assets)

Dividend payments

As indicated in Peet Limited's November 2011 announcement to the market, any dividend to be paid in respect of the 2012 financial year will be paid as a final dividend.

However the Board is cognisant of the challenging domestic and global economic conditions and their impact on capital markets and the Board will take these factors into account when determining any final dividend for the 2012 financial year.

Outlook

Peet expects conditions to remain challenging throughout 2H12 as a result of continued pressure on the broader Australian economy, tightening credit markets and difficult property markets. However Peet expects operating earnings for the 2012 financial year to be at the upper end of its guidance of $15 million to $20 million.

A significant improvement in consumer confidence is the key to improved trading conditions in the residential market and while sales volumes have improved since the interest rates cuts in late 2011, it is too early to determine whether the increases might be the start of a more positive trend.

Consumer confidence remains fragile and the residential property market remains cautious as a result of high-profile job losses, most notably in the manufacturing sector; the ongoing threat of higher mortgage interest rates; and general cost of living pressures.

Nonetheless, Peet remains confident in the medium to long-term fundamentals of the Australian property market. There is an increasingly significant structural imbalance between housing supply and demand across Australia – historically low construction activity and finance approvals with a tightening rental market across Australia, whose population is forecast to grow to more than 29 million by 2030.

The current high level of household savings; the widening gap between population growth and dwelling approvals and activity; and the higher rents arising from the gap in supply and demand are all positive leading indicators for the residential land market.

Peet will continue to address the critical affordability issue with the delivery of a range of lot sizes across its residential estates in a wide range of locations in Australia's key residential growth corridors. The Group's performance will reflect a sound growth strategy and expected steady improvements in the residential property market through the second half of FY12 and into the 2013 financial year. Importantly, Peet's current strategies position it well to capitalise on this recovery.

BRENDAN GORE MANAGING DIRECTOR

23 February 2012

Directors' Report

Your directors present their report on the consolidated entity consisting of Peet Limited and the entities it controlled at the end of, or during, the half-year ended 31 December 2011.

Directors

The following persons were directors of Peet Limited during the whole of the half-year and up to the date of this report:

AW Lennon BD Gore SF Higgs GW Sinclair AJ Lennon

Review of operations

The review of operations for the Peet Group for the half-year ended 31 December 2011 and the results of those operations are covered in the Results Commentary section on pages 3 to 6.

Auditor's independence declaration

A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 8.

Rounding of amounts

The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the directors' report and financial report. Amounts in the directors' report and financial report have been rounded off to the nearest thousand dollars in accordance with that Class Order.

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

BRENDAN GORE MANAGING DIRECTOR

23 February 2012

Auditor's Independence Declaration

As lead auditor for the review of Peet Limited for the half year ended 31 December 2011, I declare that to the best of my knowledge and belief, there have been:

• a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
• b) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Peet Limited and the entities it controlled during the period.

David J Smith Perth Partner 23 February 2012 PricewaterhouseCoopers

Consolidated Income Statement

For the half-year ended 31 December 2011

		Consolidated
	Notes	31 Dec2011$'000	31 Dec2010$'000
Revenue
Revenue from ordinary activities	3	60,653	95,525
Other revenue	3	3,176	3,201
		63,829	98,726
Expenses
Cost of inventories	4	(28,957)	(40,270)
Employee benefits expense		(8,260)	(9,104)
Depreciation and amortisation		(1,057)	(768)
Project management, selling and other operating costs		(6,363)	(6,830)
Office costs		(2,295)	(1,976)
Other expenses		(3,206)	(3,736)
Finance costs	4	(4,134)	(3,435)
Share of net profit/(loss) of associates accounted for using the equity method		206	(557)
Profit before income tax		9,763	32,050
Income tax expense	5	(1,119)	(9,855)
Profit for the half-year		8,644	22,195
Attributable to :
Owners of Peet Limited		8,668	22,195
Non-controlling interests		(24)	-
		8,644	22,195
Earnings per share for profit attributable to the ordinary equity holders ofthe Parent Entity:
Basic earnings per share (cents)	11	2.7	7.4
Diluted earnings per share (cents)	11	2.7	7.3

The above consolidated income statement should be read in conjunction with the accompanying notes.

Consolidated Statement of Comprehensive Income

For the half-year ended 31 December 2011

	Consolidated
	31 Dec2011$'000	31 Dec2010$'000
Profit for the half-year	8,644	22,195
Other comprehensive income
Changes in the fair value of cash flow hedges	(6,290)	4,157
Share of other comprehensive income of associates	(254)	-
Income tax relating to components of other comprehensive income	1,963	(1,247)
Other comprehensive income for the half-year, net of tax	(4,581)	2,910
Total comprehensive income for the half-year	4,063	25,105
Total comprehensive income for the half-year is attributable to:
Owners of Peet Limited	4,160	25,105
Non-controlling interests	(97)	-
Total comprehensive income	4,063	25,105

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

As at 31 December 2011

		Consolidated
		31 Dec	30 June
	Notes	2011$'000	2011$'000
Current assets
Cash and cash equivalents	7	26,154	57,201
Receivables		69,766	67,752
Inventories		78,046	120,444
Derivative financial instruments		4	263
Assets classified as held for sale	8	70,711	69,509
Total current assets		244,681	315,169
Non-current assets
Receivables		7,653	14,578
Inventories		358,026	300,979
Investments accounted for using the equity method	9	92,186	36,124
Available for sale financial assets		462	462
Derivative financial instruments		-	851
Property, plant and equipment		11,617	10,575
Intangible assets		2,087	876
Total non-current assets		472,031	364,445
Total assets		716,712	679,614
Current liabilities
Payables		30,463	30,371
Land vendor liabilities		25,782	20,573
Borrowings		949	1,080
Current tax liabilities		319	3,171
Provisions		2,321	1,969
Liabilities directly associated with assets classified as held for sale	8	19,516	29,439
Total current liabilities		79,350	86,603
Non-current liabilities
Land vendor liabilities		19,392	25,793
Borrowings		316,338	273,096
Derivative financial instruments		4,999	-
Deferred tax liabilities		27,265	22,132
Provisions		151	153
Total non-current liabilities		368,145	321,174
Total liabilities		447,495	407,777
Net assets		269,217	271,837
Equity
Contributed equity	10	203,713	201,291
Reserves		1,617	5,020
Retained profits		46,374	52,018
Capital and reserves attributable to owners of Peet Limited		251,704	258,329
Non-controlling interests		17,513	13,508
Total equity		269,217	271,837

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity

For the half-year ended 31 December 2011

Attributable to owners of Peet Limited
Consolidated		Contributedequity	Reserves	Retainedearnings	Total	Noncontrollinginterest	Totalequity
	Notes	$'000	$'000	$'000	$'000	$'000	$'000
Balance at 1 July 2010		176,025	1,367	55,520	232,912	-	232,912
Profit for the half-year		-	-	22,195	22,195	-	22,195
Other comprehensive income		-	2,910	-	2,910	-	2,910
Total comprehensive income for thehalf-year		-	2,910	22,195	25,105	-	25,105
Transactions with owners in theircapacity as owners:
Contributions of equity, net oftransaction costs and tax		4,150	-	-	4,150	-	4,150
Non-controlling interests on partdisposal of subsidiary		-	(205)	-	(205)	13,602	13,397
Dividends provided for or paid	6	-	-	(13,531)	(13,531)	-	(13,531)
Employee share benefit expense		-	375	-	375	-	375
		4,150	170	(13,531)	(9,211)	13,602	4,391
Balance at 31 December 2010		180,175	4,447	64,184	248,806	13,602	262,408

	Attributable to owners of Peet Limited
Consolidated		Contributedequity	Reserves	Retainedearnings	Total	Noncontrollinginterest	Totalequity
	Notes	$'000	$'000	$'000	$'000	$'000	$'000
Balance at 1 July 2011		201,291	5,020	52,018	258,329	13,508	271,837
Profit for the half-year		-	-	8,668	8,668	(24)	8,644
Other comprehensive income		-	(4,508)	-	(4,508)	(73)	(4,581)
Total comprehensive income for thehalf-year		-	(4,508)	8,668	4,160	(97)	4,063
Transactions with owners in theircapacity as owners:
Contributions of equity, net oftransaction costs and tax	10	2,422	-	-	2,422	-	2,422
Transactions with non-controllinginterests		-	518	-	518	4,102	4,620
Dividends provided for or paid	6	-	-	(14,312)	(14,312)	-	(14,312)
Employee share benefit expense		-	587	-	587	-	587
		2,422	1,105	(14,312)	(10,785)	4,102	(6,683)
Balance at 31 December 2011		203,713	1,617	46,374	251,704	17,513	269,217

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows

For the half-year ended 31 December 2011

		Consolidated
		31 Dec2011$'000	31 Dec2010$'000
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)		74,750	113,278
Payments to suppliers and employees (inclusive of goods and services tax)		(55,417)	(60,204)
Payments for purchase of land		(5,544)	(16,531)
Interest and other finance costs paid		(15,223)	(9,197)
Income tax received/(paid)		3,070	(8,102)
Net cash inflow from operating activities		1,636	19,244
Cash flows from investing activities
Payments for property, plant and equipment		(2,053)	(1,584)
Payments for intangibles		(1,269)	-
Payments for investments in associates and jointly controlled entities		(56,033)	(31)
Loans to related entities		(8,143)	(7,300)
Repayment of loans by related entities		2,493	1,600
Dividends received		27	207
Interest received		2,439	1,226
Net cash outflow from investing activities		(62,539)	(5,882)
Cash flows from financing activities
Dividends paid to the Company's shareholders		(11,881)	(9,374)
Repayment of borrowings		(14,961)	(4,109)
Proceeds from borrowings		47,521	15,425
Proceeds from capital returns		-	1
Proceeds from issue of equity securities		4,192	-
Transaction costs of share issue		(13)	(590)
Issue of convertible notes (net of debt raising costs)		(264)	-
Transactions with non-controlling interests	8	4,620	13,803
Net cash inflow from financing activities		29,214	15,156
Net (decrease)/increase in cash and cash equivalents		(31,689)	28,518
Cash and cash equivalents at the beginning of the half-year		57,906	41,074
Cash and cash equivalents at end of the half-year	7	26,217	69,592

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Notes to the Consolidated Financial Statements

1 Summary of significant accounting policies

(a) Basis of preparation of half-year financial statements

These general purpose financial statements for the interim half-year reporting period ended 31 December 2011 have been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

These interim financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these statements are to be read in conjunction with the annual statements for the year ended 30 June 2011 and any public announcements made by Peet Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Comparatives in the consolidated statement of cash flows and segment reporting note are reclassified where appropriate to enhance comparability and understanding of the financial statements.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

2 Segment reporting

Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the executive management group.

The executive management group assesses the performance of the operating segments based on multiple measures including EBITDA, EBIT and profit after tax.

The executive management group considers the business to have the following three reportable business segments:

Funds management/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.

Company-owned projects

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

Joint ventures

Joint ventures are formed with government, statutory authorities and private landowners. The joint venture partner will normally contribute the land and the Consolidated Entity funds the development costs. The Company is typically entitled to ongoing fees for management of the development project and also a share of the profits.

For internal reporting purposes management consider both 'The Village at Wellard' and 'Quattro – The New Queens Park' projects to be joint ventures. Quattro, however, is not considered a joint venture for statutory reporting purposes.

The Consolidated Entity operates primarily in Australia.

Inter-segment transfers

Segment revenue, expenses and results include transfers between segments. Such transfers are based on an arm's length basis and are eliminated on consolidation

2 Segment reporting (continued)

		Funds Management / LandSyndicationCompany-owned Projects		Joint Ventures			Inter-Segment Eliminationsand Unallocated		Consolidated
Primary Reporting	31 Dec2011$'000	31 Dec2010$'000	31 Dec2011$'000	31 Dec2010$'000	31 Dec2011$'000	31 Dec2010$'000	31 Dec2011$'000	31 Dec2010$'000	31 Dec2011$'000	31 Dec2010$'000
Revenue
Sales to external customers	15,516	21,374	35,414	65,604	9,723	8,547	-	-	60,653	95,525
Total Sales Revenue	15,516	21,374	35,414	65,604	9,723	8,547	-	-	60,653	95,525
Other income	27	207	558	515	-	-	-	-	585	722
Interest	-	-	-	-	-	-	2,591	2,479	2,591	2,479
Total segment revenue	15,543	21,581	35,972	66,119	9,723	8,547	2,591	2,479	63,829	98,726
EBITDA (i)	9,461	14,555	5,105	21,588	1,304	2,686	2,591	2,479	18,461	41,308
Depreciation and amortisation	(238)	(149)	(684)	(479)	(135)	(140)	-	-	(1,057)	(768)
EBIT (ii)	9,223	14,406	4,421	21,109	1,169	2,546	2,591	2,479	17,404	40,540
Financing costs (includes interest and financecosts expensed through cost of sales)									(7,641)	(8,490)
Profit before income tax expense									9,763	32,050
Income tax expense									(1,119)	(9,855)
Profit for the half-year									8,644	22,195

(i) EBITDA: Earnings before interest (including interest and finance costs expensed through cost of sales) tax, depreciation and amortisation.

(ii) EBIT: Earnings before interest (including interest and finance costs expensed through cost of sales) and tax.

3 Revenue

	Consolidated
	31 Dec2011$'000	31 Dec2010$'000
Revenue from ordinary activities
Revenue from sales of Land	35,414	65,604
Project management and performance fees	15,317	20,469
Revenue from Joint Venture operations	8,944	8,537
Revenue from other trading activities
Syndicate administration fees	828	567
Syndicate underwriting and capital raising fees	150	348
	60,653	95,525
Other revenue
Dividends	27	207
Interest	2,591	2,479
Other	558	515
	3,176	3,201

4 Profit before income tax

	Consolidated
	31 Dec2011$'000	31 Dec2010$'000
Profit before income tax for the half-year includes the following specific expense items:
Expenses
Cost of inventories
Cost of inventories	25,450	35,215
Capitalised interest and finance charges	3,507	5,055
Total cost of inventories expensed	28,957	40,270
Finance costs
Interest and finance charges paid/payable	12,056	9,908
Cash flow hedges – transfer from equity	131	1,283
Interest on convertible notes	2,757	-
Amount capitalised to inventory	(10,810)	(7,756)
Total finance costs expensed	4,134	3,435
Discount on land vendor payments
Change in present value of land vendor payments	1,207	2,500
Capitalisation of change in present value of land vendor payments	(1,207)	(2,500)
Total discount on land vendor payments	-	-

5 Income tax

	Consolidated
	31 Dec2011$'000	31 Dec2010$'000
(a)Income tax expense
Current tax	3,245	8,462
Deferred tax	(199)	1,398
Adjustments for income tax of prior periods	(1,927)	(5)
	1,119	9,855
(b)Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense	9,763	32,050
Tax at the Australian tax rate of 30% (2011 - 30%)	2,929	9,615
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Entertainment	5	20
Share of net profit/(loss) of associates	(62)	167
Employee benefits	176	115
Dividend franking	1	25
Franking rebate	(3)	(87)
Sundry	-	5
Over provision in prior periods	(1,927)	(5)
	1,119	9,855

6 Dividends

		Consolidated
	31 Dec2011$'000	31 Dec2010$'000
(a)Ordinary sharesDividends provided for or paid during the half-year	14,312	13,531

	Cents pershare	Total amount$'000	Date ofpayment	Franked /Unfranked
Dividends declared and paid in the current half-year by the Company are:
2011
Final 2011 ordinary	4.50	14,312	18 October 2011	Franked
2010
Final 2010 ordinary	4.50	13,531	15 October 2010	Franked

Franked dividends declared or paid during the period were fully franked at the tax rate of 30%.

7 Current assets - Cash and cash equivalents

		Consolidated
	31 Dec	30 June
	2011	2011
	$'000	$'000
Cash at bank and on hand	25,518	57,201
Term deposits	636	-
	26,154	57,201

a) Reconciliation of cash and cash equivalents

Cash and cash equivalents as at the end of the half-year, as shown in the statement of cashflows, is reconciled to the related items in the statement of financial position as follows:

Balances as above	26,154
Asset classified as held for sale – cash at bank (Note 8)	63
Balance per statement of cash flows	26,217

8 Current assets and liabilities - Classified as held for sale

	Consolidated
	31 Dec2011$'000	30 June2011$'000
(a)Assets classified as held for sale
Cash at bank and on hand	63	705
Fixed assets	13	1
GST recoverable	29	28
Inventories	70,342	68,493
Net deferred tax assets	264	282
	70,711	69,509
(b)Liabilities directly associated with assets classified as held for sale
Payables	231	259
Bank borrowings	18,709	28,916
Interest rate swap contract – cash flow hedge	576	264
	19,516	29,439

In December 2010, Peet No 113 Pty Ltd (a wholly owned subsidiary of Peet Limited) sold down by syndication 33.5% of its investment in Peet Yanchep Land Syndicate for $13,803,000 (being $0.75 per unit). In February 2011, Peet No 113 Pty Ltd sold down a further 0.1% of its investment in Peet Yanchep Land Syndicate for $57,000 (being $0.75 per unit). The difference between the book value of the assets disposed and the proceeds received have been recognised in the non-controlling interest reserve.

In September 2011, as per the Product Disclosure Statement of Yanchep Land Syndicate ("Syndicate"), the directors of the Syndicate made a further call of $0.25 per unit on the holders of all $1.00 ordinary class units previously partly paid to $0.75. As such the Peet Group received $4,620,000 from non-controlling interest.

The assets and liabilities of Peet Yanchep Land Syndicate have been classified as held for sale as the directors of Peet Limited are currently in discussions with interested parties with regard to further reducing the number of units held by Peet No 113 Pty Ltd. It is the directors' intention to sell down to a non-controlling interest.

9 Non-current assets - Investments accounted for using the equity method

		Consolidated
	31 Dec2011$'000	30 June2011$'000
Peet Yanchep Pty Ltd	10,494	700
Peet Caboolture Syndicate Ltd	3,194	1,244
Peet Tri-State Syndicate Ltd	3,943	3,910
Peet Flagstone City Pty Ltd	47,204	4,606
Peet Alkimos Pty Ltd	25,943	24,348
Other	1,408	1,316
	92,186	36,124

10 Contributed equity

	Consolidated		Consolidated
	31 Dec2011Shares	30 June2011Shares	31 Dec2011$'000	30 June2011$'000
Ordinary shares
Opening Balance	318,038,544	300,681,486	201,291	176,025
Institutional Share Purchase Plan – Note (a)	-	11,210,992	-	15,808
Retail Share Purchase Plan – Note (a)	-	2,973,308	-	4,192
Dividend reinvestment plan (DRP)	2,132,060	3,172,758	2,431	5,738
Less: Transaction costs arising on share issue	-	-	(13)	(674)
Deferred tax credit recognised directly in equity	-	-	4	202
	320,170,604	318,038,544	203,713	201,291

(a) On 1 June 2011, the Company announced a $20 million fully underwritten share purchase plan (SPP). The SPP allowed existing eligible Peet Limited shareholders to acquire up to a maximum of $15,000 worth of fully paid ordinary shares in Peet Limited.

11 Earnings per share

	Consolidated
	31 Dec	31 Dec
	2011Cents	2010Cents
Basic earnings per share	2.7	7.4
Diluted earnings per share	2.7	7.3
(a)Reconciliation of earnings used in calculating earnings per share	$'000	$'000
Basic and diluted earnings per share
Profit attributable to the ordinary equity holder of the company used in calculating basic anddiluted earnings per share	8,668	22,195
	Number	Number
Weighted average number of ordinary shares used as the denominator in calculating basicearnings per share	318,907,590	301,476,031
Adjustments for calculation of diluted earnings per share:
Options	3,830,000	4,000,000
Weighted average number of ordinary shares and potential ordinary shares used as thedenominator in calculating diluted earnings per share	322,737,590	305,476,031

12Details of entities over which control has been gained or lost during the period

The Company did not gain or lose control over any entities during the half-year ended 31 December 2011.

13 Interests in jointly controlled operations

(a) Details of aggregate share of assets and liabilities of jointly controlled operations

		Consolidated
	31 Dec2011$'000	30 June2011$'000
The Village at Wellard
Total assets	33,246	31,794
Total liabilities	(22,500)	(22,063)
Net assets	10,746	9,731

(b) Details of aggregate share of revenue, expenses and results of jointly controlled operations

	Consolidated
	31 Dec2011$'000	31 Dec2010$'000
The Village at Wellard
Revenues	8,618	8,293
Expenses	(7,167)	(5,088)
Profit before income tax	1,451	3,205

14 Contingencies

Contingent liabilities

Details of the estimated maximum amounts of contingent liabilities (for which no amounts are recognised in the financial statements) are as follows:

		Consolidated
	31 Dec2011	31 Dec2010
	$'000	$'000
Underwriting obligations outstanding	197	13,947
Bank guarantees outstanding	22,277	12,297
	22,474	26,244

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

Contingent assets

The directors are not aware of any circumstances or information pertaining to the existence or possible existence of any contingent assets.

15Events occurring after the reporting period

No matter or circumstance has occurred subsequent to the half-year end that has significantly affected, or may significantly affect, the operations of the company or economic entity, the results of those operations or the state of affairs of the Company or economic entity in subsequent financial half-years.

Directors' Declaration

In the directors' opinion:

• (a) the financial statements and notes set out on pages 9 to 25 are in accordance with the Corporations Act 2001, including:
  • (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and
  • (ii) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and
• (b) there are reasonable grounds to believe that Peet Limited will be able to pay its debts as and when they become due and payable.

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

Brendan Gore Managing Director

23 February 2012

Independent auditor's review report to the members of Peet Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Peet Limited, which comprises the statement of financial position as at 31 December 2011, and the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors' declaration for the Peet Limited Group (the consolidated entity). The consolidated entity comprises both Peet Limited (the company) and the entities it controlled during that half-year.

Directors' responsibility for the half-year financial report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Peet Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

PricewaterhouseCoopers, ABN 52 780 433 757 QV1, 250 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840 T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation

Independent auditor's review report to the members of Peet Limited (cont'd)

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Peet Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

PricewaterhouseCoopers

David J Smith Perth Partner 23 February 2012