PEET LIMITED — Interim / Quarterly Report 2017

Feb 22, 2017

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Peet Limited

ABN 56 008 665 834

Appendix 4D and Consolidated Financial Statements for the half-year ended 31 December 2016

Appendix 4D and Consolidated Financial Statements

For the half-year ended 31 December 2016

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Appendix 4D

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

PAGE 1

Appendix 4D and Consolidated Financial Statements For the half-year ended 31 December 2016

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Results for announcement to the market

Entity: Reporting Period: Previous Corresponding Period:

Peet Limited and its controlled entities 31 December 2016 31 December 2015

				$'million
Revenue	Up	15%	to	150.1
Statutory profit after tax attributable to owners of
Peet Limited	Up	7%	to	19.8
Basic and diluted earnings per share (cents)	Up	7%	to	4.03c

Dividends	Cents per security	% Franked per security
Current Year
Interim dividend 2017	1.75	Fully franked
Previous Year
Final dividend 2016	2.75	Fully franked
Interim dividend 2016	1.75	Fully franked

PAGE 2

Results Commentary

For the half-year ended 31 December 2016

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Results Commentary

Key results[1]

• Operating profit[2] and statutory profit[3] after tax of $19.8 million, up 7%

• Earnings per share of 4.03c, up 7%

• EBITDA[4] of $44.0 million, up 9%

• EBITDA[4] margin at 29%, in line with 1H16

• 1,408 lots settled, up 10%

• Record number of contracts[5] on hand as at 31 December 2016 of 2,450, with a value of $556.4 million

• Gearing[6 ] of 24.8%, down from 28.8% at 30 June 2016

• Fully franked interim dividend of 1.75 cents per share

Financial commentary

The Peet Group achieved an operating profit[2] and statutory profit[3] after tax of $19.8 million for the half-year ended 31 December 2016, which represents an increase of 7% compared with the previous corresponding period.

Earnings per share were 4.03 cents, representing an increase of 7% compared with the previous corresponding period.

The first half result was underpinned by the continuing strong conditions across the Group’s east coast markets, with price growth continuing to be achieved, particularly across the Victoria and ACT/NSW portfolios. The first half also saw the level of enquiries and sales improve across the Group’s Queensland portfolio, which bodes well for its Flagstone City and Redbank Plains projects, which has successfully launched.

The Group continues to deliver on its stated strategy, resulting in strong operating margins and further improvement in return on capital employed[7] , which increased from 12.9% in 1H16 to 13.7% in 1H17.

The Group derived EBITDA[4] of $44.0 million during 1H17, with a margin of 29%. The EBITDA was up 9%, and the margin was in line with, the corresponding previous period. Key contributors to the improved EBITDA included the price growth achieved across the Victoria portfolio (both Funds Management and Company-owned projects), the contribution of earnings from new projects launched during the period (across various markets) and a continuing focus on efficiencies across the business.

During 1H17, Peet announced the establishment of two new wholesale funds. These funds involve the coownership of residential land development projects with Supalai Public Company, a real estate developer listed on the Thailand Stock Exchange, and projects in the strong western growth corridor of Melbourne (Newhaven, Tarneit) and Redbank Plains less than 30 kms from Brisbane. These projects are expected to be strong contributors to the Group’s earnings over the next decade.

Peet also announced the sale of an undeveloped englobo parcel in Rockbank, west of Melbourne, Victoria for $30.5 million. The sale is subject to planning-related conditions, with settlement expected to occur in FY18.

1

Comparative period is 31 December 2015 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

EDITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.

5 Includes lot equivalents. Excludes englobo sales.

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.

7 Return on Capital Employed (ROCE) = Rolling 12 months EBITDA / (average net debt + average total equity)

PAGE 3

Results Commentary For the half-year ended 31 December 2016

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Operational commentary

The Group achieved 1,488 sales (down 10% on the corresponding period) and 1,408 settlements (up 10%) during 1H17. Sales were generally in line with expectations, with the strong east coast markets offsetting the continuing weak Western Australian and Northern Territory markets.

At 31 December 2016, there were a record 2,450 contracts on hand[8] , with a gross value of $556.4 million, compared with 2,426 contracts on hand[8] as at 30 June 2016 (with a gross value of $545.7 million). These contracts will provide strong momentum into 2H17.

Funds management projects

The Group’s Funds Management business performed solidly in 1H17, with the performance of projects in the Victorian and Queensland markets more than offsetting the performance of projects in the weaker Western Australia and Northern Territory markets and the substantial completion of sales in several syndicates in FY16 (Quarters (Vic) and Livingstone (Vic)). The period also saw the first sales from the Cornerstone (Vic) project.

• 826 lots sold for a gross value of $188.1 million, compared with 1,008 lots ($230.6 million) in 1H16.

• 829 lots settled for a gross value of $214.1 million, compared with 657 lots ($172.1 million) in 1H16.

• 1,496 contracts on hand[9] as at 31 December 2016 with a total value of $313.2 million, compared with 1,510 contracts on hand[9] as at 30 June 2016 ($314.7 million).

• EBITDA[10] of $15.1 million compared with $14.6 million in the previous corresponding period.

• EBITDA[10] margin of 68%, compared with 66% in the previous corresponding period.

Development projects

The increase in contribution from the Group’s Development business is underpinned by the strong Victorian market and the commencement of settlements from new projects. The Aston (Vic) project continued its significant contribution to earnings and settlement revenue commenced to be received from the Little Green (Vic) and Greenlea (WA) projects. The settlement of the sale of land to the Peet Werribee Land Syndicate (Vic) also contributed positively to 1H17 performance.

• 222 lots sold for a gross value of $105.4 million, compared with 256 lots in 1H16 ($157.9 million).

• 299 lots settled for a gross value of $108.6 million, compared with 181 lots in 1H16 ($70.8 million).

• 355 contracts on hand[8] as at 31 December 2016, with a total value of $90.4 million, compared with 488 contracts on hand[8] as at 30 June 2016 ($116.4 million).

• EBITDA of $27.8 million compared with $17.8 million in the previous corresponding period.

• EBITDA margin of 26%, in line with the previous corresponding period.

8 Includes lot equivalents. Excludes englobo sales.

9 Includes lot equivalents.

10 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.

PAGE 4

Results Commentary

For the half-year ended 31 December 2016

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Joint arrangements

The reduced contribution from the Group’s Joint Venture business in 1H17 is predominantly due to reduced contributions from The Village at Wellard (WA) and The Heights (NT) projects, and the weighting of settlements in the Googong (ACT/NSW) and Lightsview (SA) projects into 2H17.

• 440 lots sold for a gross value of $103.1 million, compared with 395 lots in 1H16 ($91.1 million).

• 280 lots settled for a gross value of $64.8 million, compared with 437 lots in 1H16 ($96.2 million).

• 599 contracts on hand[11] as at 31 December 2016 with a total value of $152.8 million, compared with 428 contracts on hand[11] as at 30 June 2016 ($114.6 million).

• EBITDA[12] of $6.6 million compared with $11.1 million in the previous corresponding period.

• EBITDA[12 ] margin of 32% compared with 31% in the previous corresponding period.

Land portfolio metrics

		1H17	1H16	Change
				Up/(down)
Lot sales		1,488	1,659	(10%)
Lot settlements		1,408	1,275	10%
Contracts on hand13	Number	2,450	2,426
(comparison as at 30 June 2016)
	Value	$556.4m	$545.7m

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 employed; 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.

The Peet Group maintains a disciplined focus on capital management, and at 31 December 2016, the Group’s gearing[14] reduced to 24.8%, from 28.8% at 30 June 2016.

At the end of the period, the Group had interest-bearing debt (including Peet Bonds) of $254.2 million, compared with $266.9 million at 30 June 2016. Approximately 88% of the Group’s interest-bearing debt was hedged as at 31 December 2016, compared with 84% at 30 June 2016.

Peet enters 2H17 with a strong balance sheet, including cash and debt facility headroom of $116.6 million as at 31 December 2016 and a weighted average debt maturity of over three years.

11 Includes lot equivalents.

12 EBITDA is a non-IFRS measure that includes effects of non-cash movements in investments in associates and joint ventures.

13 Includes lot equivalents. Excludes englobo sales.

14 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 AASB 10.

PAGE 5

Results Commentary For the half-year ended 31 December 2016

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Dividend payments

Subsequent to 31 December 2016, the Directors have declared an interim dividend of 1.75 cents per share, fully franked, in respect of the year ending 30 June 2017, which is in line with the interim dividend for the year ended 30 June 2016. The dividend is to be paid on 21 April 2017, with a record date of 23 March 2017.

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.

The key elements of Peet’s strategy 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 47,000 lots with a focus on maximising return on capital employed;

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

• Maintaining a focus on cost and debt reduction.

Outlook

The Australian residential property market conditions continued to differ across the States during 1H17, and the outlook is that 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 not expected to improve during the 2017 calendar year.

The Queensland residential market continues to improve, which bodes well for the Group’s Queensland portfolio, particularly the recently launched 12,000-lot Flagstone City and 1,100-lot Redbank Plains projects.

Peet has a diversified national portfolio of projects that remains well-positioned for sustainable long-term growth and value creation.

The Group has moved into the second half of FY17 well-positioned to target earnings growth, subject to market conditions and the timing of settlements.

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Brendan Gore Managing Director and Chief Executive Officer 23 February 2017

PAGE 6

Directors ’ Report

For the half-year ended 31 December 2016

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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 2016.

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 2016 attributable to owners of Peet Limited was $19.8 million (2015: $18.5 million). The review of operations for the Group for the half-year ended 31 December 2016 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 ASIC Corporations Instrument 2016/91, 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 legislative instrument.

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 23 February 2017

PAGE 7

Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843

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Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au

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 2016, 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

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G Lotter Partner

23 February 2017

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

PAGE 8

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the half-year ended 31 December 2016

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Notes	December 2016 $’000 December 2015 $’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 gains/(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	150,125 130,154 (121,125) (108,402) (3,474) (2,546) 2,953 6,585
	28,479 25,791 (9,016) (7,270)
	19,463 18,521
	19,751 18,510 (288) 11
	19,463 18,521
	858 1,137 3,033 (2,763) - 75 (1,167) 488
	2,724 (1,063)
	22,187 17,458
	22,475 17,447 (288) 11
	22,187 17,458

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

	Notes	Cents	Cents
Basic and diluted earnings per share	6	4.03	3.78

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

PAGE 9

Consolidated Balance Sheet

As at 31 December 2016

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Notes	December 2016 June 2016 $’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 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 8 Reserves Retained profits Capital and reserves attributable to owners of Peet Limited Non-controlling interests Total equity	68,945 73,373 81,406 66,514 92,824 147,549
	243,175 287,436
	69,262 48,024 415,412 451,395 202,249 198,115 9,670 8,577 6,047 5,147
	702,640 711,258
	945,815 998,694
	78,987 81,559 19,325 16,100 15,877 9,650 6,074 5,321 6,852 8,136
	127,115 120,766
	24,318 73,169 248,101 261,644 4,259 8,150 32,846 33,286 129 164
	309,653 376,413
	436,768 497,179
	509,047 501,515
	385,955 385,955 3,331 7,809 109,793 103,515
	499,079 497,279 9,968 4,236
	509,047 501,515

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

PAGE 10

Consolidated Statement of Changes in Equity

For the half-year ended 31 December 2016

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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 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 (26) - - (26) Dividends paid - - (14,507) (14,507) Share based payments - 1,140 - 1,140 Balance at 31 December 2015 385,936 10,705 86,267 482,908 Balance at 1 July 2016 385,955 7,809 103,515 497,279 Profit for the period - - 19,751 19,751 Other comprehensive income - 2,724 - 2,724 Total comprehensive income for the period - 2,724 19,751 22,475 Non-reciprocal contribution to a controlled entity - (6,020) - (6,020) Dividends paid 10 - - (13,473) (13,473) Share based payments - (1,182) - (1,182) Balance at 31 December 2016 385,955 3,331 109,793 499,079	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) - - (26) - - (14,507) (14,507) - 1,140 - 1,140	- (26) - (14,507) - 1,140
	385,936 10,705 86,267 482,908	5,051 487,959
	385,955 7,809 103,515 497,279	4,236 501,515
	- - 19,751 19,751 - 2,724 - 2,724	(288) 19,463 - 2,724
	- 2,724 19,751 22,475	(288) 22,187
		6,020 - - (13,473) - (1,182)
	385,955 3,331 109,793 499,079	9,968 509,047

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

PAGE 11

Consolidated Statement of Cash Flows

For the half-year ended 31 December 2016

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December 2016 $’000 December 2015 $’000 182,842 141,738 (115,182) (108,050) (25,226) (9,500) (10,037) (8,725) 1,858 1,534 (3,080) (2,804) 31,175 14,193 (3,737) (1,288) (2,250) (1,750) 357 1,181 (6,605) (6,023) 4,092 - 481 321 (7,662) (7,559) (13,473) (14,507) (62,490) (18,505) 48,022 18,000 - (38) (27,941) (15,050) (4,428) (8,416) 73,373 57,723 68,945 49,307

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 Repayment of loans by related parties Interest received Net cash outflow from investing activities Cash flows from financing activities Dividends paid Repayment of borrowings Proceeds from borrowings Transaction costs share issue Net cash outflow from financing activities Net decrease 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

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

PAGE 12

Notes to the Consolidated Financial Statements

For the half-year ended 31 December 2016

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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 2016 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 23 February 2017. The 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 financial statements for the year ended 30 June 2016 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 derives 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.

PAGE 13

Notes to the Consolidated Financial Statements

For the half-year ended 31 December 2016

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2. Segment reporting

2. Segment reporting
	Funds management December 2016 December 2015 $’000 $’000	Company owned projects December 2016 December 2015 $’000 $’000	Joint arrangements December 2016 December 2015 $’000 $’000	Inter-segment eliminations and other unallocated December 2016 December 2015 $’000 $’000	Consolidated December 2016 December 2015 $’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 EBITDA Depreciation and amortisation EBIT	21,875 21,045 10 515 205 580	107,239 67,023 920 420 - -	16,649 28,539 1,067 1,117 2,778 6,315	2,272 11,299 93 196 (30) (310)	148,035 127,906 2,090 2,248 2,953 6,585
	22,090 22,140	108,159 67,443	20,494 35,971	2,335 11,185	153,078 136,739
	15,122 14,602	27,785 17,817	6,644 11,067	(5,509) (5,233) (5,507) (3,206)	(5,509) (5,233) 44,044 40,280
	15,122 14,602 (25) (40)	27,785 17,817 (910) (976)	6,644 11,067 (64) (152)	(5,507) (3,206) (678) (515)	44,044 40,280 (1,677) (1,683)
	15,097 14,562	26,875 16,841	6,580 10,915	(6,185) (3,721)	42,367 38,597
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

PAGE 14

Notes to the Consolidated Financial Statements

For the half-year ended 31 December 2016

3. Revenue

	December 2016 $’000 December 2015 $’000
Revenue from sales of land Project management and performance fees Other revenue	122,374 102,053 25,661 25,853 2,090 2,248
	150,125 130,154

4. Profit before income tax

4. Profit before income tax
	December 2016 $’000 December 2015 $’000
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 of bonds Interest on convertible notes Amount capitalised Total finance costs	72,907 60,103 10,415 10,260
	83,322 70,363 1,284 1,516 393 167
	1,677 1,683 16,923 17,458 11,093 10,937 8,110 7,961
	36,126 36,356
	121,125 108,402
	6,630 6,998 3,917 - - 2,997 (7,073) (7,449)
	3,474 2,546

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5. Income tax

5. Income tax
	December	December
	2016	2015
	$’000	$’000
Major components of tax	expense
Current tax	9,147	7,133
Deferred tax	(131)	137
	9,016	7,270
Numerical reconciliation of income tax
expense to prima facie tax payable
Profit before income tax expense	28,479	25,791
Tax at Australian tax rate of 30% (2015: 30%)	8,544	7,737
Tax effect of amounts which are not deductible
Share of net profit of associates	532	(726)
Employee benefits	306	342
Franking rebate	(531)	(400)
Other	165	317
	9,016	7,270

6. Earnings per share

6. Earnings per share
	December	December
	2016	2015
Profit attributable to the	19,751	18,510
ordinary equity holders of the
Company ($’000)
Weighted average number of	489,980,559	489,236,844
ordinary shares used as the
denominator in calculating
basic earnings per share
Basic and diluted earnings	4.03	3.78
per share (cents)

There are 1,200,000 options 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 2016

7. Borrowings

	December 2016 June 2016 Facility Amount Utilised Amount Facility Amount Utilised Amount $’000 $’000 $’000 $’000
Bank loans1 Peet bonds3	233,000 156,2432 223,000 169,1912 100,000 97,932 100,000 97,774
	333,000 254,175 323,000 266,965

1 Secured

2 Excludes bank guarantees. Refer note 9 for bank guarantees information.

3 $100 million utilised, net of transaction costs.

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9. Contingencies

. Contingencies
	December 2016 $’000 June 2016 $’000
Bank guarantees outstanding Insurance bonds outstanding	19,260 19,280 13,342 10,735
	32,602 30,015

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 2016 $’000 June 2016 $’000
Borrowings – Current Borrowings – Non-current Total borrowings Cash and cash equivalents Net debt	6,074 5,321 248,101 261,644
	254,175 266,965 (68,945) (73,373)
	185,230 193,592

8. Contributed equity

Movements in ordinary share capital

Date Details	Number of Shares $’000
30 June 2015 Opening balance 17 August 2015 Vested Performance rights less transaction costs net of deferred tax credit recognised in equity 30 June 2016 Closing balance 31 December 2016 Closing balance	486,989,173 385,962
	2,991,386 (7)
	489,980,559 385,955
	489,980,559 385,955

PAGE 16

Notes to the Consolidated Financial Statements

For the half-year ended 31 December 2016

10. Dividends

(a) Dividends paid

The Directors declared a final fully franked dividend of 2.75 cents per share in respect of the year ended 30 June 2016. The dividend of $13.5 million was paid on 14 October 2016.

(b) Dividends not recognised at period end

Subsequent to 31 December 2016, the Directors have declared an interim dividend of 1.75 cents per share fully franked in respect of the year ending 30 June 2017. The dividend is to be paid on Friday, 21 April 2017, with a record date of Thursday, 23 March 2017.

11. Fair value measurements

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12. Significant events during the period

During the period, the Group announced the sale of an undeveloped englobo parcel in Rockbank, west of Melbourne, Victoria for $30.5 million. The sale is subject to planningrelated conditions, with settlement expected to occur in November 2017.

The Group announced a new wholesale fund with Supalai Public Company, a real estate developer listed on the Thailand Stock Exchange. The Group holds a 50.1% interest in, and will act as the development manager for the fund. The wholesale fund will develop the New Haven estate in Tarneit. This fund represents the second established by Peet and Supalai following the establishment of a fund earlier in the year for the development of a 1,100 – lot operating residential estate in Redbank Plains, Queensland for $37.5 million.

Measurement

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 2016 is $4.3 million (30 June 2016: $8.2 million).

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.

There have been no transfers between levels during the period.

Disclosure

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

The quoted market value (on ASX) of a Peet bond as at 31 December 2016 is $100.55. At 31 December 2016, the carrying value of Peet bonds is $98 million.

PAGE 17

Directors ’ Declaration

For the half-year ended 31 December 2016

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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 2016 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 23 February 2017

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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 2016, 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, other information as set out in Appendix 4D to the Australian Stock Exchange (ASX) Listing Rules and the Directors’ declaration of the consolidated entity. The consolidated entity comprises 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 complies with the ASX Listing Rules as they relate to Appendix 4D. The Directors are also responsible for such internal controls that 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 half-year 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 2016 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting , the Corporations Regulations 2001 and the ASX Listing Rules as they relate to Appendix 4D. 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.

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.

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:

• a) the Corporations Act 2001 , including:

• i giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and of its performance for the half-year ended on that date; and

• ii complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 ; and

• b) the ASX Listing Rules as they relate to Appendix 4D.

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Ernst & Young

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G Lotter Partner Perth 23 February 2017

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

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