PEET LIMITED — Interim / Quarterly Report 2016

Feb 24, 2016

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Peet Limited ABN 56 008 665 834

Appendix 4D and Consolidated Financial Statements for the half-year ended 31 December 2015

Appendix 4D and Consolidated Financial Statements

For the half-year ended 31 December 2015

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Appendix 4D
Results for announcement to the market	2
Results commentary	3
Half-year financial report
Directors’report	7
Auditor’s independence declaration	8
Consolidated statement of profit or loss and other comprehensive income	9
Consolidated balance sheet	10
Consolidated statement of changes in equity	11
Consolidated statement of cash flows	12
Notes to the consolidated financial statements	13
Directors' declaration	18
Independent auditor review report to the members	19

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Appendix 4D and Consolidated Financial Statements

For the half-year ended 31 December 2015

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Results for announcement to the market

Entity: Peet Limited and its controlled entities Reporting Period: 31 December 2015 Previous Corresponding Period: 31 December 2014

				$'million
Revenue	Down	29%	to	130.2
Statutory profit after tax attributable to owners
of Peet Limited	Up	8%	to	18.5
Basic and diluted earnings per share (cents)	Neutral			3.8c

Dividends	Cents per security	% Franked per security
Current Year
Interim dividend 2016	1.75	Fully franked
Previous Year
Final dividend 2015	3.0	Fully franked
Interim dividend 2015	1.5	Fully franked

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Results Commentary

For the half-year ended 31 December 2015

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Results Commentary

Key results[1]

• Operating profit[2] and statutory profit[3] after tax of $18.5 million, up 8% on 1H15

• EBITDA[4] of $40.3 million

• EBITDA[4] margin increased to 29%, compared to 25% in 1H15

• Earnings per share of 3.8c

• 1,275 lots settled

• Record number of contracts on hand as at 31 December 2015 of 2,318[5] , with a value of $523 million

• Gearing[6 ] of 30.6%

• Fully franked interim dividend of 1.75 cents per share, up 17% on 1H15

Financial commentary

The Peet Group achieved an operating profit[2] after tax of $18.5 million for the half-year ended 31 December 2015, which represents an increase of 8% compared with the previous corresponding period.

The Group’s statutory profit[3] after tax was $18.5 million, compared to $17.1 million in the previous corresponding period, also representing an increase of 8%. Earnings per share were 3.8 cents, in line with the previous corresponding period, but achieved on an expanded capital base.

The first half operating performance reflects the supportive conditions across the Group’s key east coast markets, in particular Victoria and ACT/New South Wales. The strong result was driven by price growth across the Victorian land portfolio as well as the Group’s continued focus on operational efficiencies.

The result further demonstrates that the Group’s focus on the implementation of its strategy continues to deliver improved operating performance. Improvement in the Group’s return on capital employed and operating margins continued through active asset management such as the divestment of the Arena, Greenvale project, project commencements and improved business operational effectiveness.

The Group delivered EBITDA[4] of $40.3 million during the period with a margin of 29%, compared with 25% in the previous corresponding period and 26% for the full year ended 30 June 2015.

1 Comparative period is 31 December 2014 unless stated otherwise. The non-IFRS measures have not been audited.

2 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 includes the effects of non-cash movements in investments in associates and joint ventures. Operating profit excludes unrealised fair value gains/(losses) arising from the effect of revaluing assets and liabilities and adjustments for realised transactions outside the core ongoing business activities.

3 Statutory profit after tax means net profit measured in accordance with Australian Accounting Standards, attributable to the owners of Peet Limited.

4 Pre write-downs of $ nil and includes effects of non-cash movements in investments in associates and joint ventures.

5 Includes lot equivalents. Excludes Arena englobo sale.

6 Calculated as (Total interest bearing liabilities (including land vendor liabilities) less cash) / (Total assets adjusted for market value of inventory less cash, less intangible assets). Excludes syndicates consolidated under AASB10.

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Results Commentary

For the half-year ended 31 December 2015

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Operational commentary

The Group achieved a total of 1,659 sales during the first half, representing an increase of 3% on the previous corresponding period.

Settlements for the half were 12% lower compared to the previous corresponding period, with the continued weakening of the Western Australian and Northern Territory markets being a key factor in the reduction in the number of sales and settlements in those markets for the period. However, this was largely offset by the strong performance of projects on the east coast.

At 31 December 2015, there were a record 2,318[7] contracts on hand, with a gross value of $523.0 million, compared with 2,061[7] contracts on hand as at 30 June 2015 (with a gross value of $440.9 million), providing momentum into 2H16.

Funds management projects

The Group’s Funds Management business performed solidly in 1H16, with the performance of projects in the Victorian market more than offsetting the performance of projects in the weaker WA market and the completion of highly successful syndicates in FY15 (Kingsford (Vic) and Warner Lakes (Qld)).

• 1,008 lots sold for a gross value of $230.6 million, compared with 906 lots ($230.6 million) in 1H15.

• 657 lots settled for a gross value of $172.1 million, compared with 786 lots ($179.1 million) in 1H15.

• 1,295[8] contracts on hand as at 31 December 2015 with a total value of $268.7 million, compared with 1,150[8] contracts on hand as at 30 June 2015 ($216.9 million).

• EBITDA[9] of $14.6 million compared with $14.2 million in the previous corresponding period.

• EBITDA[9] margin of 66%, compared with 65% in the previous corresponding period.

Expectations are for continued long-term growth of the Group’s Funds Management business, with preparations to release a further retail syndicate opportunity in Victoria and planning for the launch of sales at Flagstone in South East Queensland well progressed.

Development projects

The reduced contribution from the Group’s Development business is a result of the Quayside (ACT) apartment project and The Chimes (WA) residential land project completing in FY15. These factors were offset by the continued strong performance of the Group’s Aston project and the sale of the Arena, Greenvale project in Victoria.

• 256 lots sold for a gross value of $157.9 million (including the englobo sale of Arena, Greenvale), compared with 256 lots in 1H15 ($67.7 million).

• 181 lots settled for a gross value of $70.8 million, compared with 289 lots in 1H15 ($97.5 million).

• 416[7] 10 contracts on hand as at 31 December 2015, with a total value of $96.4 million, compared with 245[7] contracts on hand as at 30 June 2015 ($58.7 million).

• EBITDA[9] of $17.8 million compared with $19.6 million in the previous corresponding period.

• EBITDA[9] margin of 26%, compared with 21% in the previous corresponding period.

7 Includes lot equivalents. Excludes Arena englobo sale. 8 Includes lot equivalents.

9

Pre write-downs of $ nil and includes effects of non-cash movements in investments in associates and joint ventures, where appropriate.

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Results Commentary

For the half-year ended 31 December 2015

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Joint arrangements

The increased contribution from the Group’s Joint Venture business in 1H16 in comparison to 1H15 is predominantly due to the continued solid performances of the Googong (NSW) and Lightsview (SA) projects more than offsetting the reduced contributions from The Village at Wellard (WA) and The Heights (NT).

• 395 lots sold for a gross value of $91.1 million, compared with 448 lots in 1H15 ($115.7 million).

• 437 lots settled for a gross value of $96.2 million, compared with 381 lots in 1H15 ($96.3 million).

• 607[10] contracts on hand as at 31 December 2015 with a total value of $157.9 million, compared with 666 contracts on hand as at 30 June 2015 ($165.3 million).

• EBITDA[11] of $11.1 million compared with $10.2 million in the previous corresponding period.

• EBITDA[11 ] margin of 31% compared with 21% in the previous corresponding period.

Land portfolio metrics

	1H16 1H15 Change Up/(down)
Lot sales	1,659 1,610 3%
Lot settlements	1,275 1,456 (12%)
Contracts on hand12(comparison as at 30 June 2015) Number Value	2,318 2,061 $523.0m $440.9m

Capital management

The Peet Group maintains a disciplined focus on capital management.

The Group continued to identify growth opportunities and to manage its pipeline of projects with a focus on maximising its return on capital and continued its proactive and disciplined approach to investment in the development of a mix of product and infrastructure to meet market demand, particularly in the stronger performing east coast markets.

As at 31 December 2015, the Group’s gearing[13] was 30.6% following the acquisition of a 123 hectare developing residential estate in Tarneit (Vic) in December 2015, with settlement to occur over three years.

This acquisition followed the Group’s sale of its Arena residential estate in Greenvale, (Vic) for $93.1 million with settlement to also occur in instalments over three years. Part of the proceeds from this sale have been redeployed to fund the acquisition of Tarneit at a substantially lower cost base than the Greenvale land.

Peet expects that its gearing[13] will return to within its 20-30% target range by 30 June 2016.

At the end of the period, the Group had interest-bearing debt (including its convertible notes) of $235.1 million, compared with $234.9 million at 30 June 2015. Approximately 53% of the Group’s interest-bearing debt was hedged as at 31 December 2015, compared with 51% at 30 June 2015.

10 Includes lot equivalents.

11 Pre write-downs of $ nil and includes effects of non-cash movements in investments in associates and joint ventures.

12 Includes lot equivalents. Excludes Arena englobo sale.

13 Calculated as (Total interest bearing liabilities (including land vendor liabilities) less cash) / (Total assets adjusted for market value of inventory less cash, less intangible assets). Excludes syndicates consolidated under AASB10.

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Results Commentary For the half-year ended 31 December 2015

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Entering 2H16 with a solid balance sheet, including cash and facility headroom of $99 million as at 31 December 2015, the Group is currently in advanced discussions in relation to new finance facilities. The Group’s current intention is to redeem the convertible notes maturing in June 2016 from operating cash flows and existing debt facilities.

Dividend payments

Subsequent to 31 December 2015, the Directors have declared an interim dividend of 1.75 cents per share, fully franked, in respect to the half-year ended 31 December 2015. This represents a 17% increase on the dividend for 1H15. The dividend is to be paid on 15 April 2016, with a record date of 24 March 2016.

The Dividend Reinvestment Plan remains deactivated.

Group strategy

The Group’s strategy continues to be based around leveraging the diversity of its national land bank; working in partnership with wholesale, institutional and retail investors; and continuing to meet market demand for a mix of product in the growth corridors of major Australian cities.

Key elements of Peet’s strategy for the remainder of FY16 and beyond include:

• Continuing to deliver high-quality, masterplanned communities, adding value and facilitating additional investment in amenity and services wherever possible;

• Managing the Group’s land bank of approximately 48,000 lots to achieve optimal shareholder returns;

• Continuing to assess opportunities to selectively acquire strategic residential land holdings in a disciplined manner under our funds management platform;

• An ongoing focus on maximising return on capital employed in all our key markets;

• Extending opportunities, where appropriate, for wholesale, institutional and retail investors including the anticipated launch of a new retail syndicate opportunity in Victoria in 2H16;

• Maintaining a focus on cost and debt reduction; and

• Continuing to identify and assess growth opportunities in line with our strategic objectives and as appropriate in market conditions, optimising the flexibility afforded by our strong capital position and capital partner relationships.

Outlook

The Australian residential property market was mixed in 1H16 as a result of some uncertainty about the economic outlook. However, conditions should remain generally supportive with sustained low interest rates and modest economic growth.

Conditions across Victoria, New South Wales/ ACT and South Australia are expected to remain supportive, while Western Australia and Northern Territory are expected to remain subdued through the 2016 calendar year.

Activity in the Queensland residential market continues to improve due to its relative affordability, which has seen a recovery in interstate migration. This market recovery is expected to support the launch of the Group’s 12,000lot Flagstone project in 2H16.

Peet has a diversified national portfolio of projects, has demonstrated its ability to manage through variable cycles and is well-positioned for sustainable long-term growth and value creation.

The Group has moved into the second half of FY16 well-positioned to achieve earnings growth, subject to market conditions and the timing of settlements.

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Brendan Gore Managing Director and Chief Executive Officer

25 February 2016

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Directors ’ Report

For the half-year ended 31 December 2015

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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 2015.

Directors

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

Tony Lennon (Chairman) Brendan Gore Anthony Lennon Trevor Allen Vicki Krause Robert McKinnon

Review of operations

Net profit after tax for the half-year ended 31 December 2015 attributable to owners of Peet Limited was $18.5 million (2014: $17.1 million). The review of operations for the Group for the half-year ended 31 December 2015 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.

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Brendan Gore Managing Director and Chief Executive Officer

25 February 2016

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Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

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Auditor’s Independence Declaration to the Directors of Peet Limited

As lead auditor for the review of Peet Limited for the half-year ended 31 December 2015, I declare 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 financial period.

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Ernst & Young G Lotter Partner 25 February 2016

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

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Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the half-year ended 31 December 2015

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Notes	December 2015 $’000 December 2014 $’000
Revenue 3 Expenses 4 Finance costs 4 Share of net profit of associates and joint ventures Profit before income tax Income tax expense 5 Profit for the period Attributable to: Owners of Peet Limited Non-controlling interests Other comprehensive income Items that may subsequently be reclassified to profit or loss: Realised losses on cash flow hedges transferred to profit or loss Unrealised losses on cash flow hedges Share of other comprehensive income of associates Income tax relating to components of other comprehensive income Other comprehensive (loss) for the period, net of tax Total comprehensive income for the period Attributable to: Owners of Peet Limited Non-controlling interests	130,154 182,801 (108,402) (150,323) (2,546) (3,827) 6,585 1,373
	25,791 30,024 (7,270) (9,131)
	18,521 20,893
	18,510 17,128 11 3,765
	18,521 20,893
	1,137 954 (2,763) (2,411) 75 (23) 488 437
	(1,063) (1,043)
	17,458 19,850
	17,447 16,061 11 3,789
	17,458 19,850

Earnings per share for profit attributable to the ordinary equity holders of the Company

	Notes	Cents	Cents
Basic earnings per share	6	3.8	3.8
Diluted earnings per share	6	3.8	3.8

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

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Consolidated Balance Sheet

As at 31 December 2015

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Notes	December 2015 June 2015 $’000 $’000
Current assets Cash and cash equivalents Receivables Inventories Total current assets Non-current assets Receivables Inventories Investments accounted for using the equity method Property, plant and equipment Intangible assets Total non-current assets Total assets Current liabilities Payables Land vendor liabilities Derivative financial instruments Current tax liabilities Borrowings 7 Provisions Total current liabilities Non-current liabilities Land vendor liabilities Borrowings 7 Derivative financial instruments Deferred tax liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Contributed equity 9 Reserves Retained profits Capital and reserves attributable to owners of Peet Limited Non-controlling interests Total equity	49,307 57,723 64,923 53,512 87,199 100,676
	201,429 211,911
	48,547 47,965 511,698 419,858 188,080 181,826 10,656 10,932 2,301 2,589
	761,282 663,170
	962,711 875,081
	66,388 63,346 43,000 5,000 746 1,917 6,965 3,324 57,500 65,825 10,658 11,099
	185,257 150,511
	80,228 43,181 177,560 169,100 4,270 1,473 27,086 26,436 351 486
	289,495 240,676
	474,752 391,187
	487,959 483,894
	385,936 385,962 10,705 10,628 86,267 82,264
	482,908 478,854 5,051 5,040
	487,959 483,894

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

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Consolidated Statement of Changes in Equity

For the half-year ended 31 December 2015

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Contributed equity Reserves Retained profits Total Notes $’000 $’000 $’000 $’000	Contributed equity Reserves Retained profits Total Notes $’000 $’000 $’000 $’000	Non- controlling interests Total equity $’000 $’000
Balance at 1 July 2014 328,609 8,791 66,291 403,691 Profit for the period - - 17,128 17,128 Other comprehensive income - (1,067) - (1,067) Total comprehensive income for the period - (1,067) 17,128 16,061 Contributions of equity, net of transaction costs and tax 9 54,971 - - 54,971 Dividends paid 10 - - (15,214) (15,214) Share based payments - 1,003 - 1,003 Balance at 31 December 2014 383,580 8,727 68,205 460,512 Balance at 1 July 2015 385,962 10,628 82,264 478,854 Profit for the period - - 18,510 18,510 Other comprehensive income - (1,063) - (1,063) Total comprehensive income for the period - (1,063) 18,510 17,447 Contributions of equity, net of transaction costs and tax 9 (26) - - (26) Dividends paid 10 - - (14,507) (14,507) Share based payments - 1,140 - 1,140 Balance at 31 December 2015 385,936 10,705 86,267 482,908	328,609 8,791 66,291 403,691 - - 17,128 17,128 - (1,067) - (1,067)	16,355 420,046 3,765 20,893 24 (1,043)
	- (1,067) 17,128 16,061	3,789 19,850
		- 54,971 - (15,214) - 1,003
	383,580 8,727 68,205 460,512	20,144 480,656
	385,962 10,628 82,264 478,854	5,040 483,894
	- - 18,510 18,510 - (1,063) - (1,063)	11 18,521 - (1,063)
	- (1,063) 18,510 17,447	11 17,458
		- (26) - (14,507) - 1,140
	385,936 10,705 86,267 482,908	5,051 487,959

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

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Consolidated Statement of Cash Flows

For the half-year ended 31 December 2015

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	December 2015 $’000 December 2014 $’000
Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Payments for purchase of land Interest and other finance costs paid Distributions and dividends received from associates and joint ventures Income tax paid Net cash inflow from operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for investment in associates Proceeds from capital returns from associates Loans to related parties Interest received Net cash outflow from investing activities Cash flows from financing activities Dividends paid Repayment of borrowings Proceeds from borrowings Proceeds from issue of equity securities (net of equity raising costs) Net cash outflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at end of the period	141,738 208,867 (108,050) (127,485) (9,500) (8,775) (8,725) (11,284) 1,534 8,302 (2,804) (4,256)
	14,193 65,369
	(1,288) (1,545) (1,750) (32,195) 1,181 303 (6,023) (1,898) 321 313
	(7,559) (35,022)
	(14,507) (10,606) (18,505) (93,517) 18,000 39,732 (38) 49,937
	(15,050) (14,454)
	(8,416) 15,893 57,723 38,783
	49,307 54,676

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

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Notes to the Consolidated Financial Statements

For the half-year ended 31 December 2015

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1. Basis of preparation of consolidated financial statements

This general purpose condensed financial report for the half-year ended 31 December 2015 is for the Consolidated Entity consisting of Peet Limited and its subsidiaries ("Group"). Peet Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is; Level 7, 200 St Georges Terrace, Perth WA 6000. The financial report was authorised for issue by the Directors on 25 February 2016. The condensed financial report has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

These half-year 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 2015 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 .

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[1] , EBIT[2] and profit after tax.

The share of profits from associates and joint ventures is included as segment revenue as it is treated as revenue for internal reporting purposes.

The Group operates only in Australia.

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

Funds management

Peet enters into asset and funds management agreements with external capital providers. Peet and/or the external capital provider commit equity funds towards the acquisition of land and this is generally supplemented with debt funds either at the time of acquisition or during the development phase of a project.

The Group derive fees from underwriting, capital raising and asset identification services. Ongoing project related fees (mainly project management and selling fees as well as performance fees) are then derived by the Group for the duration of a particular project.

Company owned projects

The Group acquires parcels of land in Australia, primarily for residential development purposes. Certain land holdings will also produce non-residential blocks of land.

Joint arrangements

Joint arrangements are entered into with government, statutory authorities and private landowners. The form of these arrangements can vary from project to project but generally involves Peet undertaking the development of land on behalf of the landowner or in conjunction with the co-owner. The Group is typically entitled to ongoing fees for management of the development project and also a share of the profits.

Inter-segment eliminations and other unallocated

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

The adoption of AASB 10 Consolidated Financial Statements from 1 July 2013, resulted in certain property syndicates being consolidated. These entities however, continue to be managed and reported to the executive management group as part of the funds management business segment. Adjustments are included in "Inter‑Segment Eliminations and Other Unallocated" to reconcile reportable business segment information to the Group's consolidated statement of profit or loss.

1. EBITDA: Earnings Before Interest (including interest and finance charges amortised through cost of sales) Tax, Depreciation and Amortisation.

2. EBIT: Earnings Before Interest (including interest and finance charges amortised through cost of sales) and Tax.

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Notes to the Consolidated Financial Statements

For the half-year ended 31 December 2015

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2. Segment reporting

2. Segment reporting
	Funds management December 2015 December 2014 $’000 $’000	Asset management Company owned projects December 2015 December 2014 $’000 $’000	Asset management Joint arrangements December 2015 December 2014 $’000 $’000	Inter-segment eliminations and other unallocated December 2015 December 2014 $’000 $’000	Consolidated December 2015 December 2014 $’000 $’000
Sales to external customers Other revenue Share of net profit of associates and JVs Total Corporate overheads EBITDA excluding write-down in inventories Write-down of inventories EBITDA Depreciation and amortisation EBIT	21,045 19,785 515 1,410 580 891	67,023 94,128 420 718 - -	28,539 47,449 1,117 277 6,315 1,588	11,299 18,479 196 555 (310) (1,106)	127,906 179,841 2,248 2,960 6,585 1,373
	22,140 22,086	67,443 94,846	35,971 49,314	11,185 17,928	136,739 184,174
	14,602 14,249 - -	17,817 19,597 - -	11,067 10,160 - -	(5,233) (5,723) (3,206) 1,877 - -	(5,233) (5,723) 40,280 45,883 - -
	14,602 14,249 (40) (50)	17,817 19,597 (976) (767)	11,067 10,160 (152) (255)	(3,206) 1,877 (515) (492)	40,280 45,883 (1,683) (1,564)
	14,562 14,199	16,841 18,830	10,915 9,905	(3,721) 1,385	38,597 44,319
Financing costs (includes interest and finance costs expensed through cost of sales) Profit before income tax Income tax expense Profit for the period Profit attributable to non-controlling interests Profit attributable to owners of Peet Limited					(12,806) (14,295)
					25,791 30,024 (7,270) (9,131)
					18,521 20,893
					(11) (3,765)
					18,510 17,128

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Notes to the Consolidated Financial Statements

For the half-year ended 31 December 2015

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3. Revenue

5. Income tax

3. Revenue
	December 2015 $’000 December 2014 $’000
Revenue from sales of land Project management and performance fees Other revenue	102,053 153,227 25,853 26,614 2,248 2,960
	130,154 182,801

5. Income tax
	December	December
	2015	2014
	$’000	$’000
Major components of tax expense
Current tax	7,133	5,602
Deferred tax	137	3,529
	7,270	9,131
Numerical reconciliation of income tax expense to
prima facie tax payable
Profit before income tax
expense	25,791	30,024
Tax at Australian tax rate of
30% (2014: 30%)	7,737	9,007
Tax effect of amounts which are not deductible
Share of net profit of associates	(726)	(412)
Employee benefits	342	301
Franking rebate	(400)	(33)
Other	317	268
	7,270	9,131

4. Profit before income tax

		5. Income tax	5. Income tax
		December 2015 $’000 December 2014 $’000
		Major components of tax expense Current tax 7,133 5,602 Deferred tax 137 3,529 7,270 9,131 Numerical reconciliation of income tax expense to prima facie tax payable Profit before income tax expense 25,791 30,024
	December 2015 $’000 December 2014 $’000 60,103 101,890 10,260 10,468 70,363 112,358 1,516 1,315 167 249 1,683 1,564 17,458 17,112 10,937 11,208 7,961 8,081 36,356 36,401 108,402 150,323 6,998 9,862 2,997 2,926 (7,449) (8,961) 2,546 3,827 Tax at Australian tax rate of 30% (2014: 30%) 7,737 9,007 Tax effect of amounts which are not deductible Share of net profit of associates (726) (412) Employee benefits 342 301 Franking rebate (400) (33) Other 317 268 7,270 9,131 6. Earnings per share December December 2015 2014 Profit attributable to the ordinary equity holders of the Company ($’000) 18,510 17,128 Weighted average number of ordinary shares used as the denominator in calculating basic earningsper share 489,236,844 445,605,519 Basic and diluted earnings per share (cents) 3.8 3.8 There are 1,200,000 options and 500,000 convertible note excluded from the calculation of diluted earnings per share a they are anti-dilutive. They could potentially dilute basic earning per share in the future.	Tax at Australian tax rate of 30% (2014: 30%) Tax effect of amounts which ar Share of net profit of associates Employee benefits Franking rebate Other	7,737 9,007 e not deductible (726) (412) 342 301 (400) (33) 317 268
Profit before income tax includes the following specific expenses: Expenses Land and development cost Capitalised interest and finance expense Total land and development cost Depreciation Amortisation Total depreciation and amortisation Employee benefits expense Project management, selling and other operating costs Other expenses Total other expenses Total expenses Finance costs Interest and finance charges paid/payable Interest on convertible notes Amount capitalised Total finance costs
			7,270 9,131
			December December 2015 2014
		Profit attributable to the ordinary equity holders of the Company ($’000)	18,510 17,128
		Weighted average number of ordinary shares used as the denominator in calculating basic earningsper share 489,236,844 445,605,519

There are 1,200,000 options and 500,000 convertible notes excluded from the calculation of diluted earnings per share as they are anti-dilutive. They could potentially dilute basic earnings per share in the future.

Page | 15

Notes to the Consolidated Financial Statements

For the half-year ended 31 December 2015

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7. Borrowings

	December 2015 June 2015 Facility Amount Utilised Amount Facility Amount Utilised Amount $’000 $’000 $’000 $’000
Bank loans1 Convertible notes2 Fixed rate loan2 1Secured 2Unsecured	245,000 185,515 265,000 185,784 50,000 49,384 50,000 48,744 161 161 397 397
	295,161 235,060 315,397 234,925

8. Contingencies and commitments

	December 2015 $’000 June 2015 $’000
Bank guarantees outstanding Insurance bonds outstanding	18,889 26,235 9,717 10,422
	28,606 36,657

All contingent liabilities are expected to mature within 1 year. 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.

The borrowings are disclosed as follows in the balance sheet:

	December 2015 $’000 June 2015 $’000
Borrowings – Current Borrowings – Non-current Total borrowings Cash and cash equivalents Net debt	57,500 65,825 177,560 169,100
	235,060 234,925 (49,307) (57,723)
	185,753 177,202

9. Contributed equity

Movements in ordinary share capital

Date Details	Number of Shares $’000
30 June 2014 Opening balance 22 September 2014 Vested Performance rights less transaction costs 31 October 2014 Dividend reinvestment plan 14 November 2014 Institutional placement less transaction costs 12 December 2014 Share purchase plan 22 December 2014 Capital raising 30 April 2015 Dividend reinvestment plan Deferred tax credit recognised in equity 30 June 2015 Closing balance 17 August 2015 Vested Performance rights less transaction costs Deferred tax credit recognised in equity 31 December 2015 Closing balance	433,389,348 328,609 1,292,657 (6) 3,905,709 4,608 36,036,036 38,539 3,923,628 4,306 6,306,306 6,946 2,135,489 2,489 - 471
	486,989,173 385,962
	2,991,386 (38) - 12
	489,980,559 385,936

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For the half-year ended 31 December 2015

Notes to the Consolidated Financial Statements

10. Dividends

(a) Dividends paid

The Directors declared a final fully franked dividend of 3.0 cents per share in respect of the year ended 30 June 2015. The dividend of $14.5 million was paid on 30 September 2015.

(b) Dividends not recognised at period end

Subsequent to 31 December 2015, the Directors have declared an interim dividend of 1.75 cents per share fully franked in respect to the year ending 30 June 2016. The dividend is to be paid on Friday, 15 April 2016, with a record date of Thursday, 24 March 2016.

11. Fair value measurements

Measurement

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12. Significant events during the period

During the period, the Group announced the sale of Arena residential estate in Greenvale, north of Melbourne, Victoria for $93.1 million. The sale is unconditional, with settlement to occur in instalments over three years. The first instalment of $28 million was received in December 2015.

The Group acquired a developing residential estate in Tarneit, Victoria during the half-year ended 31 December 2015, for $90 million. The acquisition is unconditional, with settlement to occur in instalments over three years.

13. Events after the end of the reporting period

No other matters or circumstances have arisen since the end of the half year, which have significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years.

The Group measures its derivative financial liabilities at fair value at each reporting date. These derivatives are measured using significant observable inputs (level 2 of the fair value hierarchy). The fair value at 31 December is $5 million (30 June 2015: $3.4 million).

There have been no transfers between levels during the period.

Disclosure

Except for the convertible notes, the carrying value of financial assets and liabilities is considered to approximate fair values.

The quoted market value (on ASX) of a convertible note as at 31 December 2015 is $100. At 31 December 2015, the carrying value of the convertible note debt is $49.4 million.

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Directors ’ Declaration

For the half-year ended 31 December 2015

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Directors ’ declaration

In the Directors' opinion:

• (a) the financial statements and notes set out on pages 9 to 17 are in accordance with the Corporations Act 2001, including:

• (i) complying with AASB 134 Interim Financial Reporting , 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 2015 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.

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Brendan Gore Managing Director and Chief Executive Officer

25 February 2016

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Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

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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 consolidated balance sheet as at 31 December 2015, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a statement of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the 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 and the Corporations Act 2001 and for such internal controls as the directors determine are 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 a 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 2015 and its performance for the halfyear 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 and the entities it controlled during the half-year, 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 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report.

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A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

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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 2015 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 .

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Ernst & Young

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G Lotter Partner Perth

25 February 2016

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A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation