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1 Appendix 4E Preliminary final report Lodged with The Australian Stock Exchange under Listing Rule 4.3A. PHILEO AUSTRALIA LIMITED ABN ASX code: PHI and Controlled Entities Financial year ended ( the year ) RESULTS FOR ANNOUNCEMENT TO THE MARKET Comparison is to previous corresponding year ended 30 June 2010 ( the previous year ). Unless stated otherwise, all amounts are shown to the nearest $ 000. Revenue from ordinary activities Up 1% to $13,952,000 (2010: $13,857,000) Profit from ordinary activities after tax attributable to members Net profit attributable to members Earning per share after tax *Down 70% to $671,000 profit (2010: $2,226,000 profit) *Down 70% to $671,000 profit (2010: $2,226,000 profit) $0.02 profit (2010: $0.09 profit) Net tangible asset per share $2.54 (30 June 2010: $2.56) Dividend distribution The directors have declared a fully franked $0.05 per ordinary share final dividend for the financial year. (2010: $0.05 final dividend fully franked.) Ex-dividend date Monday, 5 September 2011 Record date for determining entitlement to the dividend Friday, 9 September 2011 Approximate date of payment of dividend Monday, 31 October 2011 *The decline in profitability was due mainly to asset impairment totalling $1,193,000 booked in the year. 1

2 PRINCIPAL ACTIVITIES The principal activities of the entity during the year were property development, the earning of rental income, farming and hotel operations. There were no significant changes in the nature of these activities during the year other than as noted below. REVIEW OF OPERATION Certain comparative figures have been reclassified or adjusted in the previous year so as to be comparable, to the extent possible, with the figures presented for the year. Total revenue for the economic entity for the year was $13,952,000 (2010: $13,857,000) and profit after tax of $670,000 (2010: $2,533,000 profit). Total revenue was maintained at just under $14,000,000 with revenue from rental properties decreasing by $593,000 offset by increase of $250,000 in hotel revenue from the Ramada Encore Dandenong. The decline in profitability was due mainly to asset impairment of $1,193,000 (2010: $692,000) relating to the hotel property at McCrae Street, Dandenong ($992,000, booked in the half year ended 31 December 2010). Bank borrowings of $45 million which was used to partially fund the acquisition of 303 Collins Street, and are secured over that property and the Rocklea Homemaker Centre in Bendigo remain unchanged from the previous year. The entities other properties were unencumbered. Most of the Rocklea Homemaker Centre - Stage 1 has been leased out. Another 5,832 m2 for Stage 2 is expected to commence development when pre-leases are in place. On, Sequoia Management Pty Ltd (ABN ) ( Sequoia ), became a wholly owned subsidiary company of after the parent entity acquired the 20% interest held by the minority shareholder. Sequoia continues to operate the 108-room 4-star Ramada Encore Dandenong business class hotel. The hotel operation contributed revenue of $2,390,000 (2010: $2,140,000) and trading profit of $327,000 (2010: $424,000 profit), to the consolidated results for the year. Phileo Australia s acquisition of the additional 20% interest in Sequoia has resulted in additional $65,000 profit after tax to members of the parent entity. The acquisition also resulted in $11,000 arising from Sequoia s prior period loss transferred to members of the parent entity. As reported above, the economic entity wrote down $1,193,000 (2010: $692,000) in the carrying value of its property portfolio to the net realisable value (inclusive of estimated selling costs). Of this write down, $992,000 was booked in the half year ended 31 December 2010 (31 December 2009: $28,000 write down). During the year the wheat was harvested on the rural property owned by Daleston Pty Ltd (ABN ), a wholly-owned subsidiary company of. This entity recorded a $594,000 loss (2010: $809,000 loss) for the year, arising mainly from farming activity and holding costs. During the year, the entity continued to hold the vacant industrial land at Northcorp Industrial Park, Broadmeadows in Victoria. The property is owned by Shuttlecrest Pty Ltd (ABN ), a 75% owned subsidiary company of Phileo Australia. Other than holding this property, the entity did not trade during the year. 2

3 REVIEW OF OPERATION (CONTINUED) The vacant land that has been rezoned for the 79-unit Mont Albert Rise proposed residential townhouse development at Box Hill continues to be held for future development. Various development options are being considered for this property. Other than reported above, there were no other operations discontinued or any changes to controlled entities, joint ventures or associates not otherwise reported for the year. During the year the entity s earning per share after tax was $0.02 profit (2010: $0.09 profit). DIVIDENDS PAID OR RECOMMENDED The directors have declared a fully franked $0.05 per ordinary share final dividend for this financial year (2010: final dividend $0.05 fully franked). FINANCIAL OVERVIEW During the year, the carrying value of properties increased to $114,672,000 (2010: $114,342,000). The increase was mainly due to additional development and holding costs capitalised on the Box Hill property, and some leasehold improvements to 303 Collins Street. The carrying values of these properties were consistent with directors valuation based on the latest available independent market valuations and other available financial data. Recently an independent valuation assessed 303 Collins Street at $73,500,000, compared to the asset s carrying value of $60,019,000. In assessing any asset impairment, where appropriate, the carrying value is written down to the estimated net realisable value (inclusive of estimated selling costs) for the property concerned. As for liabilities, the major items comprise bank borrowings of $45,000,000 used to fund the purchase of 303 Collins Street. As at balance date, the entity had approximately $3,262,000 (2010: $4,382,000) in cash, cash management accounts and term deposits at bank, and $33,954,000 (2010: $34,398,000) in carrying value of unencumbered properties that are available to secure new borrowings if required. Other than dividends as disclosed in this report, there were no returns to shareholders including distributions and buy backs during the year (2010: $Nil). As at, the economic entity s net tangible asset backing per share was $2.54 (2010: $2.56). AFTER BALANCE DATE EVENTS As at the date of signing this report, there have not been any events of a significant nature after the balance date. 3

4 FUTURE DEVELOPMENTS AND TRENDS The main income stream will continue to be from rental of 303 Collins Street, Melbourne and the Rocklea Homemaker Centre, Kangaroo Flat. New tenants continue to be sought to lease the remaining Stage 1 vacancies in the Rocklea Homemaker Centre. The development of Stage 2 is expected to commence when new tenants are secured for the additional space. On going restructuring is continuing in order to improve the occupancy and resultant profitability of the Ramada Encore Dandenong hotel business in the current competitive environment. The vacant residential land at Kangaroo Flats and industrial land at Broadmeadows have been put on the market for sale. The rural property at Wyndham Vale is within Victoria s urban growth corridor with significant upside potential in a future development. Phileo Australia is working closely with the relevant authorities to prepare the precinct structure plan for this property. COMPLIANCE STATEMENT The financial statements are in the process of being audited. Signed for and on behalf of the Board of Directors of Rudy Koh Managing Director 31 August

5 Annual General Meeting Place s registered office at Level14, 303 Collins Street, Melbourne Date Friday, 25 November 2011 Time noon Approximate date the Annual Report will be available Friday, 28 October

6 and Controlled Entities Consolidated Statement of Comprehensive Income for the Year Ended Revenue from sales or services Consolidated Group 12 months 12 months ended ended 30/06/ /06/2010 Sale of properties - - Rental income from properties 10,737 11,330 Hotel operation 2,390 2,140 Farming activity 90 - Interest revenue Other Total revenue 13,952 13,857 Less: Expenses Borrowing expenses -3,787-3,535 Administrative expenses -1,334-1,308 Impairment of property, plant and equipment -1, Other Expenses from Ordinary Activities. Direct rental costs -3,446-2,871. Hotel -2,063-1,812. Farming Other ,685-5,880 Profit before income tax 952 2,441 Income tax expense Profit from continuing operations 670 2,533 (Loss)/profit from discontinued operations - - Profit for the period 670 2,533 Other comprehensive income - - Total comprehensive income for the period 670 2,533. Profit attributable to: Members of the parent entity 671 2,227 Non-controlling interest ,533 Total comprehensive income attributable to: Members of the parent entity 671 2,227 Non-controlling interest ,533 6

7 and Controlled Entities Consolidated Statement of Financial Position as at Consolidated Group 30/06/ /06/2010 CURRENT ASSETS Cash and cash equivalents 3,262 4,382 Trade and other receivables Inventories 8,178 9,169 Other assets 1,734 1,882 13,567 15,967 NON-CURRENT ASSETS Inventories 106, ,173 Plant and equipment 1, Deferred tax assets 2,846 2,220 Other assets 1,724 2, , ,845 TOTAL ASSETS 125, ,813 CURRENT LIABILITIES Financial liabilities 45,000 - Trade and other creditors 1,489 1,555 Dividends payable - 1,446 Income tax payable Provisions 1, ,239 3,078 NON-CURRENT LIABILITIES Financial liabilities - 45,000 Trade and other creditors Deferred tax liabilities 3,484 2,687 Loan from minority shareholder Provisions ,224 48,571 TOTAL LIABILITIES 52,463 51,649 NET ASSETS 73,387 74,164 EQUITY Issued capital 19,911 19,911 Reserves Retained earnings: - Parent entity interest 53,474 54,261 - Minority interest ,463 54,239 TOTAL EQUITY 73,387 74,164 7

8 and Controlled Entities Consolidated Statement of Changes in Equity for the Year Ended Issued Non- Capital Other Retained controlling Ordinary Reserves Earnings Interests Total Balance at 1 July 2009 Profit attributable to members of the parent entity 19, , ,077 Profit for the period - - 2, ,533 Total other comprehensive income for the period Subtotal 19, , ,610 Dividends paid or provided for , ,446 Balance at 30 June , , ,164 Balance at 1 July 2010 Profit attributable to members of the parent entity 19, , ,164 Adjustment for minority interest Profit for the period Total other comprehensive income for the period Subtotal 19, , ,834 Dividends paid or provided for , ,446 Balance at 19, , ,387 8

9 and Controlled Entities Consolidated Statement of Cash Flows for the Year Ended Consolidated Group 12 months 12 months ended ended 30/06/ /06/2010 CASHFLOW FROM OPERATING ACTIVITIES Proceeds from sale of property - - Receipts from ordinary activities 13,857 13,577 Payment for purchase of properties - -5,386 Payment to suppliers & employees -6,928-7,774 Payment for property development -1,496-1,348 Dividend paid -1,446-1,446 Income tax paid - - Interest received Interest paid -4,384-3,975 Net Cash produced (used) in Ordinary Activities ,842 CASHFLOW FROM INVESTING ACTIVITIES Payment for purchase of plant & equipment Cashflow from Investing Activities CASHFLOW FROM FINANCING ACTIVITIES Proceeds from borrowing - - Repayment of borrowings Cashflow from Financing Activities 0-47 Net increase (decrease) in cash -1,119-5,889 Cash at beginning of period 4,382 10,271 Cash at end of period 3,262 4,382 9

10 and Controlled Entities Operating Segments Year Ended (i) Segment performance 12 months ended Revenue Develop Rental Hotel -ment Farming Other Total External sales 10,737 2, ,715 Inter-segment sales Interest revenue Total segment revenue 10,737 2, ,952 Reconciliation of segment revenue to group revenue Inter-segment elimination Total group revenue 10,737 2, ,952 Segment net profit before tax Reconciliation of segment result to group net profit/(loss) before tax Segment net profit before tax 3, , Net profit before tax from continuing operations months ended 30 June 2010 Revenue External sales 11,330 2, ,566 Inter-segment sales Interest revenue Total segment revenue 11,330 2, ,857 Reconciliation of segment revenue to group revenue Inter-segment elimination Total group revenue 11,330 2, ,857 Segment net profit before tax Reconciliation of segment result to group net profit/(loss) before tax Segment net profit before tax 5, ,212 2,441 Net profit before tax from continuing operations 2,441 10

11 and Controlled Entities Operating Segments Year Ended (ii) Segment assets Develop- Rental Hotel ment Farming Other Total As at Segment assets 80,690 7,350 9,740 16,020 12, ,851 Total group assets from continuing operations 125,851 As at 30 June 2010 Segment assets 79,944 8,342 10,234 15,806 11, ,813 Total group assets from continuing operations 125,813 (iii) Segment liabilities Develop- Rental Hotel ment Farming Other Total As at Segment liabilities ,217 52,463 Total group liabilities from continuing operations 52,463 As at 30 June 2010 Segment liabilities 45, ,980 51,649 Total group liabilities from continuing operations 51,649 11