CBD Energy Limited ACN

CBD Energy Limited ACN 010 966 793 Appendix 4E Preliminary Final Report 30 June Lodged with the ASX under Listing Rule 4.3A CBD ENERGY LIMITED REGISTERED OFFICE Suite 2, Level 2, 53 Cross Street, Double Bay NSW 2028 www.cbdenergy.com.au

Contents CBD Energy Limited (ACN 010 966 793) Results for Announcement to the Market 2 Dividends and Distributions 2 Net Tangible Assets per Security 2 Control gained or lost over entities during the period 3 Details of Associates and Joint Venture Entities 3 Other Significant Information 3 Commentary on significant features of operating performance 3 Commentary on Results 4-5 Consolidated Statement of Comprehensive Income 6 Consolidated Statement of Financial Position 7 Consolidated Statement of Changes in Equity 8 Consolidated Statement of Cash Flows 9 Notes to the consolidated financial statements 10 33 Audit/review of accounts upon which this report is based 34 CBD Energy Limited (ACN 010 966 793) Page 1

Name of Entity: CBD Energy Limited CBD Energy Limited (ACN 010 966 793) Details of the reporting period Current Period: 1 July 30 June Previous Corresponding Period: 1 July 2011 30 June Results for announcement to the market Up / down % movement Amount of change $A 000 $A 000 Revenues from ordinary activities Up 43% 21,205 71,089 Loss from ordinary activities after tax attributable to members Down 85% 33,962 (6,157) Net loss for the period attributable to members Down 85% 33,962 (6,157) Earnings before interest, tax, depreciation and amortisation Up 100% 34,110 28 Dividends (distributions) Current Period: No final or interim dividend has been declared or paid. Previous Corresponding Period: No final or interim dividend was declared or paid. Details of dividends/distributions No dividends have been paid during the period and the directors do not recommend that a dividend be declared for the period. Details of dividends/distribution reinvestment plan The Company does not have a dividend reinvestment plan. Net tangible assets per security Previous Current Period Corresponding Period Net asset backing per share 1.20 2.48 Net tangible asset backing per share* (2.41) (2.34) *Excludes goodwill on acquisition and other intangibles. CBD Energy Limited (ACN 010 966 793) Page 2

Control gained or lost over entities during the period CBD Energy Limited (ACN 010 966 793) In July, CBD Energy Limited acquired the remaining 50% of Eco-Kinetics UK Limited for $21,000. This entity operates in the Solar PV segment in the United Kingdom. There were no other changes in control over entities during the period. On 30 August the Company s 100% owned subsidiary Capacitor Technologies Pty Ltd (Captech) was sold for $1,840,000. The net proceeds realised from the sale have been used to reduce debt. Details of associates and joint venture entities The Consolidated entity has a 50% interest in RE Storage Pty Ltd and Integrated Energy Solutions Pty Ltd with Hydro Tasmania, acquired as part of the asset acquisition agreement with Lloyd Energy Systems on 7 th December 2006. As at 30 June, the joint venture entities did not trade with external parties nor hold any assets directly. The Consolidated entity has a 50% interest Bowen Co-Venture Deed a Joint venture between the Company and BD (Qld) Project G061 Pty Ltd (as trustee of the BD (Qld) Project G061 Unit Trust) (ACN 124 718 707). The investment in this joint venture was fully impaired at 30 June. The Consolidated entity has a 50% interest in Emerald Co-Venture Deed a Joint venture between the company and BD (Qld) Project G075 Pty Ltd (as trustee of the BD (Qld) Project G075 Unit Trust) (ACN 119 969 274). The investment in this joint venture was fully impaired at 30 June. On 8 October, the Company exited the AusChina Joint Venture. As at 30 June these joint venture entities are recognised using the equity method. Other significant information Refer to Commentary on Results below for details on other significant matters and information regarding the Consolidated Entity. Commentary on significant features of operating performance The net result for the Consolidated Entity attributable to shareholders for the year ended 30 June is a loss of $6,157,000 (: loss of $40,119,000). EBITDA of $28,000 compares favourably to the prior year EBITDA loss of $34,082,000, a positive turnaround of $34,110,000. Revenue Total revenue for the year was $71,089,000 (: $49,885,000). Refer to Commentary on results for further explanation of the increase. Finance Costs Finance costs for the year were $4,883,000 (: $2,327,000). The increase was due to a full year of interest and financing costs associated with the issue of secured convertible notes in May and interest charges on construction financing facilities in. This construction financing facility was repaid in full during the financial year and further reductions in the level of borrowings are anticipated in the coming months with a corresponding decrease in finance costs for the 2014 financial year expected. CBD Energy Limited (ACN 010 966 793) Page 3

Segment results The group has identified its operating segments based on the internal reports that are reviewed and used by the executive management team (the chief operating decision makers) in assessing performance and in determining the allocation of resources. The consolidated entity s operating companies are organised and managed separately according to the nature of the products and services they provide, with each segment offering different products and serving different markets. The principal activities of the entities within the group are solar installations, mechanical services solutions and energy efficiency solutions, which includes renewable energy projects. For further information, please refer to Note 16 Segment Information. Commentary on Results Review and Results of Operations The financial year has been a challenging one for CBD with capital constraints restricting a number of opportunities which have been identified to improve operational performance. The full year loss of $6,157,000 marks a significant improvement from with all operating segments (with the exception of Parmac) posting improved results. EBITDA for the financial year was a profit of $28,000 (: $34,082,000 loss). Despite the constraints facing the company, a number of significant milestones have been achieved: Reaching equity close and financial close on the ~$280,000,000 Taralga wind farm. Our equity partner Banco Santander is one of the world s largest investor and developer of renewable assets construction of the 107MW wind farm has commenced and is scheduled for completion in the fourth quarter 2014. Construction and sale of a 5MW Italian solar PV project which was subsequently sold to a UK pension fund. Construction of a ~1.4MW solar PV project in New Jersey USA, which was our first project in the USA. Return to profitability of the Capacitor Technology (CapTech) business. Restructure of our operating businesses, leading to annualised cost savings in the region of $5 million. Development of a pipeline of solar PV projects across the US and the UK. A new group wide financial accounting and management system has been implemented and is now fully operational. The above achievements have proven CBD s delivery capability in a number of technologies and geographies globally while balancing a challenging financial position. The Company believes that these achievements point to a future of opportunities for CBD, however, this needs to be approached with a continued focus on improving the working capital position of the Group. Refer to Note 1 for further discussion on the financial position of the Group. Restructuring In July the Company announced that it was embarking on a program to restructure its balance sheet through negotiations with secured lenders and certain creditors. This program is ongoing and to date has resulted in the sale of the Captech business with proceeds used to reduce debt. Solar The Solar PV segment turnaround represents the biggest challenge for the company s management team. This division has been severely impacted by changing Federal and State Governments continual changes and uncertainty in policy settings. On a more positive note, the industry has stabilised with solar being competitive with traditional forms of power, largely as a result of significant reductions in cost of solar panels. Importantly, the market value of the STCs (Renewable Energy Certificates) generated from our solar installations, has stabilised and recovered from a low of approximately $16 to approximately $35. CBD Energy Limited (ACN 010 966 793) Page 4

During the year, the following strategic decisions have been implemented to focus activities on areas which can deliver ongoing profitable operations: The Australian residential solar business has been rebranded and relaunched under the Westinghouse Solar brand. Commercial sized installations are being targeted as a major area of growth opportunity in Australia. International solar resources are focussed on the United Kingdom and USA. Restructuring to improve operational performance and efficiency. Residential Rebranded Westinghouse Solar Adopted a Just In Time process for inventory management to maximise working capital efficiency Centralised marketing and sales functions Reduced headcount where required Implemented a variable cost base as far as possible to enable quick reaction to market changes Commercial and utility Focus is now the markets of Australia, UK and USA Delivered the Company s first solar project in USA A number of commercial scales (sub 500kW) solar systems have been installed by CBD s wholly owned UK subsidiary Wind Taralga Equity close achieved with Banco Santander Financial close achieved with a funding consortium including Clean Energy Finance Corporation, ANZ Bank and EKF (Eksport Kredit Fonden) Development fee earned on the project close Ongoing project management fees will be earned over the construction period of the project Focus is now on developing a number of follow-on projects Corporate The Company is actively pursuing the registration and listing of its shares in the USA but requisite approvals have not been received as of the date of this filing. New Enterprise Resource Planning (ERP) system implemented across the Group (NetSuite) Balance sheet restructuring underway. Cost savings identified and achieved Outlook The Company is continuing to focus on financing and capitalisation opportunities to secure the ongoing financial stability and viability of the Group. The financial and operational restructuring which is underway is starting to yield results. CBD Energy Limited (ACN 010 966 793) Page 5

Consolidated Statement of Comprehensive Income For The Year Ended 30 June Note Revenues from continuing operations 2 71,089 49,885 Other income 2 3,554 3,793 Cost of raw materials, consumables used, and contractors (44,060) (43,073) Employee benefit expenses 3 (15,907) (16,540) Compliance & consultants (4,728) (9,056) Advertising and marketing (1,032) (2,289) Travel costs (1,003) (1,587) Occupancy expenses 3 (1,447) (1,468) Provision for impairment of receivables and bad debts written off (843) (2,496) Other expenses 3 (4,576) (3,347) Share of net loss of associates - (108) Depreciation and amortisation expenses 3 (895) (939) Finance costs 3 (4,882) (2,327) Break fee from terminated acquisition - (2,475) Impairment loss on available-for-sale financial assets (560) (375) Impairment of financial assets and interest in joint ventures 3 (18) (4,239) Impairment of intangible assets 3 (402) (643) Profit/(Loss) from operations before income tax (5,710) (37,284) Income tax (expense)/benefit (447) (2,835) Net Profit/(Loss) for the period (6,157) (40,119) Attributable to: Non-controlling interests - - Members of the Parent (6,157) (40,119) Other comprehensive income Other items of comprehensive income - - Income tax on items of other comprehensive income - - Other comprehensive income for the period, net of tax - - Total comprehensive income for the period (6,157) (40,119) Earnings per share for profit attributable to the ordinary equity holders of the company: Cents Cents Basic earnings per share (1.29) (8.61) Diluted earnings per share (1.29) (8.61) This Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes CBD Energy Limited (ACN 010 966 793) Page 6

Consolidated Statement of Financial Position As At 30 June CBD Energy Limited (ACN 010 966 793) Note ASSETS Current Assets Cash and cash equivalents 932 2,522 Trade and other receivables 4 7,034 5,898 Inventories 5 1,965 18,687 Other current assets 6 463 1,259 Total Current Assets 10,394 28,366 Non-Current Assets Other receivables 4 2,500 - Available-for-sale and other financial assets 7 10,058 636 Plant and equipment 8 4,896 5,377 Goodwill and other intangible assets 9 18,898 22,800 Other non-current assets 6 96 192 Total Non-Current Assets 36,449 29,005 TOTAL ASSETS 46,843 57,371 LIABILITIES Current Liabilities Trade and other payables 10 22,346 16,728 Interest-bearing loans and borrowings 11 15,962 27,230 Current tax liabilities 447 - Provisions 12 1,307 985 Total Current Liabilities 40,062 44,943 Non-Current Liabilities Interest-bearing loans and borrowings 11 328 344 Deferred tax liabilities 65 65 Provisions 12 109 299 Total Non-Current Liabilities 502 708 TOTAL LIABILITIES 40,564 45,651 NET ASSETS 6,279 11,720 EQUITY Equity attributable to equity holders of the parent Contributed equity 13 109,680 109,083 Accumulated losses 14 (106,209) (100,052) Reserves 15 2,808 2,689 TOTAL EQUITY 6,279 11,720 This Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. CBD Energy Limited (ACN 010 966 793) Page 7

Consolidated Statement of Changes in Equity For The Year Ended 30 June CBD Energy Limited (ACN 010 966 793) Ordinary Shares Share options reserve Translation Reserve Accumulated losses Total At July 1, (restated) 109,083 2,689 - (100,052) 11,720 Profit/(loss) for period - - - (6,157) (6,157) Other comprehensive income - - - - - Total comprehensive income for the year - - - (6,157) (6,157) Transactions with owners in their capacity as owners Shares issued 686 - - - 686 Share-based payments for convertible notes (89) - - - (89) Share-based payments - 146 - - 146 Translation reserve - - (27) - (27) Balance at June 30, 109,680 2,835 (27) (106,209) 6,279 At July 1, 2011 (restated) 107,358 1,205 - (59,933) 48,630 Profit/(loss) for period - - - (40,119) (40,119) Other comprehensive income - - - - - Total comprehensive income for the year - - - (40,119) (40,119) Transactions with owners in their capacity as owners Shares issued 1,725 - - - 1,725 Share-based payments for convertible notes - 929 - - 929 Share-based payments - 555 - - 555 Balance at June 30, (restated) 109,083 2,689 - (100,052) 11,720 The above statement of changes in equity should be read in conjunction with the accompanying notes. CBD Energy Limited (ACN 010 966 793) Page 8

Consolidated Statement of Cash Flows For The Year Ended 30 June CBD Energy Limited (ACN 010 966 793) Cash flow from operating activities Note Receipts from customers (inclusive of GST) 70,815 86,808 Payments to suppliers and employees (inclusive of GST) (52,128) (90,992) Payments for development costs (5,644) (12,309) Finance costs (2,304) (2,585) Interest received 13 64 Net cash flows from in operating activities 10,752 (19,014) Cash flow from investing activities Proceeds from sale of property, plant and equipment 10 43 Proceeds from the sale of financial assets 250 - Purchase of property, plant and equipment (337) (591) Payment for investments - (1,270) Payment for the purchase of controlled entities, net of cash acquired (21) (351) Net cash flows used in investing activities (98) (2,169) Cash flow from financing activities Proceeds from share issues 207 - Proceeds from issue of convertible notes 103 7,362 Convertible note issue costs - (187) Proceeds from borrowings 680 16,252 Repayment of borrowings (13,117) (8,489) Payment of finance lease liabilities (117) (202) Net cash flows used financing activities (12,244) 14,736 Net (decrease) / increase in cash and cash equivalents (1,590) (6,447) Cash and cash equivalents at beginning of period 2,522 8,969 Cash and cash equivalents at end of period 932 2,522 This Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. CBD Energy Limited (ACN 010 966 793) Page 9

Notes to the consolidated financial statements CBD Energy Limited (ACN 010 966 793) Note 1 Basis of preparation and other information Basis Of Preparation This report has been prepared in accordance with Appendix 4E of the Australian Stock Exchange Listing Rules and is in accordance with Australian Accounting standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. This financial report relates to the consolidated entity consisting of CBD Energy Limited and the entities it controlled at the end of, or during, the year ended 30 June. The accounting policies adopted are consistent with those of the previous year. The Company is of a kind referred to in Class order 98/100, issued by the Australian Securities and Investment Commission, relating to the rounding off of amounts in the financial report. All financial information presented in Australian dollars has been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar. Going Concern The financial statements have been prepared on the basis of going concern which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. Key financial data for the Group for the financial year ended 30 June and is disclosed below: Consolidated Year ended 30 June Year ended 30 June Cash at bank and in hand 932 2,522 Loss for the Period (6,157) (40,119) Net cash inflow / (outflow) from operating activities 10,752 (19,014) Net current liabilities (29,668) (16,577) The company returned to a net operating cash inflow position for the year ended 30 June following net operating cash outflows for the year ended 30 June. The net current liability position noted at 30 June and 30 June is mainly explained by the convertibles notes and other loans balances and outstanding creditors which are overdue and payable and hence classified as current liability on these dates. Included in current liabilities, classified as Interest bearing loans and borrowings are the following obligations which as at 30 June continued to be in default of their respective loan conditions or are callable on demand: 30 June 30 June Secured convertible notes (i) US$6,350,000 US$6,250,000 Other Loan (ii) A$6,500,000 A$6,500,000 Unsecured convertible notes (iii) US$2,750,000 - (i) Secured convertible notes have a maturity date of 30 May 2015; however, the Group was required to achieve repayment of US$3,850,000 by 30 June to avoid a default. The Group did not meet this payment by 30 June. Since 30 June, the Group has undertaken a process to dispose of certain non-core or readily saleable assets in order to make part repayment of these notes. Further information is included below. CBD Energy Limited (ACN 010 966 793) Page 10

(ii) Loan balance of A$6,500,000 with an external party - under the terms of this agreement, the lender may serve notice on the Company at which point the loan becomes due and payable. In February the lender agreed not to request repayment of principal or interest accruing on the notes, prior to 30 July. No request for repayment has been received by the date of this report. Since 30 June, the Group has undertaken a process to dispose of certain non-core or readily saleable assets in order to make repayment of this loan balance. Further information is included below. (iii) Unsecured convertible notes with a face value of US$2,750,000 which were issued in December contain cross default provisions which will remain in default until the defaults on the secured convertible notes and loan balance are remedied. Consequently the ability of the Group to continue as a going concern and meet its debts and commitments as and when they fall due requires that it meets or exceeds operational budgets in the future, monetises longterm assets, receives continued forbearance and support from its lenders and creditors, and raises funds from new loans and securities issuances and from the sale of non-core assets. As a result of these matters, there is a material uncertainty related to events or conditions that may cast significant doubt on whether the Group will continue as a going concern and, therefore, whether it will realise its assets and settle its liabilities and commitments in the normal course of the business and at the amounts state in the financial report. In order to reduce or eliminate this doubt and continue operating, the Group is taking steps to: Achieve ongoing net operating profits: CBD is continually reviewing costs structures of the business and making the appropriate changes to maximize return on revenues generated. New business opportunities are assessed in order to identify opportunities for growth and increased profitability. The Group has restructured its operating businesses, and in doing so has reduced its annual operating overhead by approximately $5.1M. In delivering these savings, the firm has had to effect a reduction in its headcount across the group, and has made changes in other areas in a drive to improve operational efficiency. Monetise long-term assets: CBD is exploring opportunities to enable long-term assets to be monetised in the short term. Sell non-core assets: CBD has sold its non-core asset of Captech. The proceeds of this sale have been used to make part repayment of the secured convertible notes (in (i) above). Negotiate restructure of debt with lenders to remedy defaults: discussions are underway to cure defaults on all remaining convertible notes and extend any redemption requirements out further than a 12 month timeframe. Restructure and defer current payments to creditors: CBD has been successful in negotiating improved terms and reductions in amounts payable with some major creditors. To accommodate the Company s cash flow requirements, some creditors have agreed to establish payment plans in order to spread repayment. Raise new debt and/or equity capital: CBD continues to discuss opportunities for further investment with current and prospective equity and debt holders. The Directors note that there is a risk that some or all of the above activities may not be successful, however, at the date of this report, the Directors are of the opinion that there are reasonable grounds to expect that the economic entity s operational and financial performance will significantly improve and that the economic entity will be able to continue as a going concern as a result of the achievements outlined above. As such the financial report is prepared on a going concern basis. At this time, the Directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the financial report at 30 June. This financial report does not include any adjustments relating to the recoverability and classification of recorded assets amounts, or to the amounts and classification of liabilities, that might be necessary, should the economic entity not be able to continue as a going concern. CBD Energy Limited (ACN 010 966 793) Page 11

of prior period errors 1. The Group has corrected an error relating to the valuation methodology applied to STCs at 30 June 2010 which resulted in a downward valuation of $484,000 recognised through a reduction in inventory balances and revenue for that year. This adjustment also has the impact of increasing revenue in the 2011 financial year. The 2010 and 2011 entries both had an associated tax expense / benefit impact of 30% of this value ($145,000). 2. The Group has undertaken a detailed review of the basis under which it has carried capitalised expenditure on development projects. As a consequence, it was determined that $534,000 of costs in relation to the Singleton Green project which had previously been capitalised in 2010 should be impaired at 30 June 2010 as the conditions required to proceed with the project at that date were unlikely to be met. 3. The Group has corrected an error relating to the accounting treatment of a $239,000 increase in contingent consideration payable to the vendors of the eco-kinetics group of companies at 30 June 2010. This adjustment was previously recognised as an increase in goodwill in the 2011 financial year, however, the correct treatment was to record it as a loss on re-measurement in contingent consideration payable in the Statement of Comprehensive income for the year ended 30 June 2010. 4. It was determined that a $430,000 tax benefit recognised in the statement of comprehensive income in 2010 on costs relating to issue of share capital should be recognised in equity. 5. The Group has undertaken a detailed review of the terms of the convertible notes issued in 2010. As a consequence, it was determined that the convertible notes contained an equity component valued at $194,000 which has been adjusted to equity. An additional interest expense has been recognised of $119,000 in 2010 and $75,000 in 2011 on these convertible notes. The conversion terms of these notes was changed during the year ended 30 June 2011 which resulted in a further $380,000 interest expense being recognised during that year which had not been previously recognised. 6. A deferred tax asset relating to a capital gain loss for an investment amounting to $330,000 was incorrectly recognised at 30 June 2011. There is no impact on the financial statements for the year ended 30 June 2009 as a result of these errors. The effect on earnings per share related to the restatement in 2010 was a decrease in basic earnings per share by 0.58 cents to 1.03 cents per share and a decrease in diluted earnings per share by 0.49 cents to 1.00 cents per share. The effect on earnings per share related to the restatement in 2011 was an increase in basic earnings per share by 0.02 cents to 0.30 cents per share and an increase in diluted earnings per share by 0.02 cents to 0.30 cents per share. The effect on earnings per share related to the restatement in was an increase in basic earnings per share by 0.07 cents to (8.61) cents per share and an increase in diluted earnings per share by 0.07 cents to (8.61) cents per share. The impact of the correction of these errors is presented below through to the original adjustment period. CBD Energy Limited (ACN 010 966 793) Page 12

of prior period errors (continued) As a result of the errors noted above, the following adjustments were made to the financial statements: Statement of Financial Position (extract): June 30, As issued of error 3 Consolidated Entity of error 4 of error 5 of error 5 Goodwill and other intangible assets 23,039 (239) - - - 22,800 Net assets 11,959 (239) - - - 11,720 Contributed equity 108,079-430 194 380 109,083 Reserves 2,689 - - - - 2,689 Accumulated losses (98,809) (239) (430) (194) (380) (100,052) Total equity 11,959 (239) - - - 11,720 3 Adjustment to contingent consideration paid on acquisition of eco-kinetics 4 Tax recognised on share issue costs incorrectly recorded in the income statement 5 Debt / equity split adjustment on convertible note / additional interest expense 5 Additional interest expenses relating to the change of redemption terms to convertible note Income statement (extract): Year ended June 30, As issued Consolidated Entity of error 6 Profit before income tax expense (37,284) - (37,284) Income tax (expense) / benefit (3,165) 330 (2,835) Net profit / (loss) attributable members of CBD Energy Limited (40,449) 330 (40,119) 6 of incorrect deferred tax asset recognised in 30 June 2011 relating to the impairment of Planet Power investment / Reversal of the tax expense relating to the write off this deferred tax asset recorded in 30 June CBD Energy Limited (ACN 010 966 793) Page 13

of prior period errors (continued) As a result of the errors noted above, the following adjustments were made to the financial statements: Statement of Financial Position (extract): June 30, 2011 As issued of error 3 of error 4 Consolidated Entity of error 5 of error 5 of error 6 Deferred tax assets 3,551 - - - - (330) 3,221 Goodwill and other intangible assets 23,536 (239) - - - - 23,297 Net assets 49,199 (239) - - - (330) 48,630 Contributed equity 106,354-430 194 380-107,358 Reserves 1,205 - - - - - 1,205 Accumulated losses (58,360) (239) (430) (194) (380) (330) (59,933) Total equity 49,199 (239) - - - (330) 48,630 3 Adjustment to contingent consideration paid on acquisition of eco-kinetics 4 Tax recognised on share issue costs incorrectly recorded in the income statement 5 Debt / equity split adjustment on convertible note / additional interest expense 5 Additional interest expenses relating to the change of redemption terms to convertible note 6 of incorrect deferred tax asset recognised in 30 June 2011 relating to the impairment of Planet Power investment Income statement (extract): Year ended June 30, 2011 As issued of error 1 of error 2 Consolidated Entity of error 5 of error 5 of error 6 Revenue and other income 162,806 484 - - - - 163,290 Cost of raw materials, - - - - consumables used, and contractors (129,258) (129,258) Impairment of financial assets - - - - (1,690) 534 and interest in joint ventures (1,156) Finance costs (1,468) - - (75) (380) - (1,923) Other expenses and revenue (29,153) - - - (29,153) Profit before income tax expense 1,237 484 534 (75) (380) - 1,800 Income tax (expense) / benefit (119) (145) - - - (330) (594) Net profit attributable members of CBD Energy Limited 1,118 339 534 (75) (380) (330) 1,206 1 Reversal of the 30 June 2010 adjustment relating to the decrease to the previously reported value of STCs arising from incorrect application of the accounting policy 2 Impairment of the investment in Singleton Green in 2010 rather than 2011 5 Interest adjustment on convertible note 5 Additional interest expenses relating to the change of redemption terms to convertible note Tax adjustment relating to impairment of Planet Power investment CBD Energy Limited (ACN 010 966 793) Page 14

of prior period errors (continued) As a result of the errors noted above, the following adjustments were made to the financial statements: Statement of Financial Position (extract): June 30, 2010 As issued of error 1 of error 2 Consolidated Entity of error 3 of error 4 of error 5 Inventories 13,635 (484) - - - - 13,151 Available-for-sale & other financial assets 7,960 - (534) - - - 7,426 Deferred tax assets 3,180 145 - - - - 3,325 Total liabilities 28,611 - - 239 - (75) 28,775 Net assets 38,757 (339) (534) (239) - 75 37,720 Contributed equity 97,975 - - - 430 194 98,599 Reserves 290 - - - - - 290 Accumulated losses (59,508) (339) (534) (239) (430) (119) (61,169) Total equity 38,757 (339) (534) (239) - 75 37,720 1 Decrease to the previously reported value of STCs arising from incorrect application of the accounting policy 2 Impairment of the investment in Singleton Green in 2010 rather than 2011 3 Adjustment to contingent consideration paid on acquisition of eco-kinetics 4 Tax recognised on share issue costs incorrectly recorded in the income statement 5 Debt / equity split adjustment on convertible note / additional interest expense Income statement (extract): Year ended June 30, 2010 As issued of error 1 of error 2 Consolidated Entity of error 3 of error 4 of error 5 Revenue and other income 45,598 (484) - (239) - - 44,875 Cost of raw materials, consumables used, and (29,317) - - - - - (29,317) contractors Impairment of financial assets and interest in joint ventures (2,703) - (534) - - - (3,237) Finance costs (874) - - - - (119) (993) Other expenses and revenue (11,177) - - - - - (11,177) Profit before income tax expense 1,527 (484) (534) (239) - (119) 151 Income tax (expense) / benefit 3,054 145 - - (430) - 2,769 Net profit attributable members of CBD Energy Limited 4,581 (339) (534) (239) (430) (119) 2,920 1 Decrease to the previously reported value of STCs arising from incorrect application of the accounting policy 2 Impairment of the investment in Singleton Green in 2010 rather than 2011 3 Adjustment to contingent consideration paid on acquisition of eco-kinetics 4 Tax recognised on share issue costs incorrectly recorded in the income statement 5 Interest adjustment on convertible note CBD Energy Limited (ACN 010 966 793) Page 15

Comparative Figures As a result of the correction of an error noted above, comparative figures have been restated. When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Audit Status The Preliminary Financial Report of CBD Energy Limited for the year ended 30 June has not yet been subject to audit and is currently in the process of being audited. As a result of the matters reported in note 1 the auditors have indicated their audit opinion will most likely contain an emphasis of matter relating to the ability of the Group to continue as a going concern. The Board of CBD Energy Limited is also continuing to review information which may impact negatively the carrying value of goodwill carried at a value of $18,898,000 at 30 June. The carrying value of these assets may differ in the Final Financial Report of CBD Energy Limited for the year ended 30 June on completion of this review. The Board of CBD Energy Limited is also continuing to review the accounting treatment of the convertible notes disclosed in note 11 following the restructuring of some of these notes during the year which may impact the carrying value of these balances at 30 June which in turn may have an impact on the income statement of CBD Energy Limited. CBD Energy Limited (ACN 010 966 793) Page 16

Note 2 Revenue Consolidated Revenue from operating activities Revenue from sales and services 71,089 49,885 Total revenue from operating activities 71,089 49,885 Other income Gain / (loss) on re-measurement of contingent consideration - 3,529 Gain on financial liabilities measured at fair value 1,571 - Interest revenue 40 64 Other income 1,943 200 Total other income 3,554 3,793 Note 3 Expenses and losses Consolidated (a) Employee benefits expense Wages and salaries 13,426 13,158 Defined contribution superannuation expense 728 1,159 Share-based payments expense 56 180 Other employee benefits expense 1,697 2,043 15,907 16,540 (b) Lease payments and other occupancy expenses Minimum lease payments - operating lease 1,282 1,417 Other 165 51 1,447 1,468 (c) Depreciation, and amortisation of non-current assets Depreciation property, plant & equipment 698 758 Amortisation Leasehold improvements 60 99 Amortisation Patents 137 82 895 939 CBD Energy Limited (ACN 010 966 793) Page 17

Note 3 Expenses and losses (continued) Consolidated (d) Impairment loss on intangibles Impairment loss on goodwill - 225 Impairment loss on license costs - 163 Impairment loss on development costs 402 255 402 643 (e) Impairment loss on financial assets and joint venture assets Investments in Solar projects 18 44 Investment in eco-kinetics UK JV - 129 Investment in eco-kinetics Germany JV - 179 Investment in Bowen - 1,898 Investment in Emerald - 1,989 18 4,239 (f) Other Expenses Communications costs 438 517 Bank charges 182 478 Printing, postage & delivery 49 50 Insurance 615 361 Office supplies 115 512 Training 24 59 Unrealised losses on foreign exchange 1,483 395 Losses on sale of assets Refer 9(b) 813 25 Other expenses 857 950 4,576 3,347 (g) Finance costs Interest expense 4,882 1,980 Share option expenses 527 Foreign exchange difference (180) 4,882 2,327 (h) Cost of sales 52,114 52,107 CBD Energy Limited (ACN 010 966 793) Page 18

Note 4 Trade and other receivables Current Consolidated Trade receivables 6,854 5,504 Other receivables 425 1,251 Provision for impairment (245) (803) 7,034 5,898 Non-Current Other receivables refer 9(b) 2,500-2,500 - Note 5 Inventories Consolidated Raw materials and stores 1,569 3,219 Work in progress # 201 13,389 STCs* - lower of cost and net realisable value 195 2,079 1,965 18,687 # Work in progress at June 30, includes $10,498,000 in relation to costs incurred in constructing the 5MW solar project in Italy. This project was sold in December. Also included in that balance is development expenditure on the Taralga Wind Farm project. All development expenditure in relation to the Taralga project was reimbursed following the closure of equity funding for the project in October. * STCs are initially recognised at fair value of the consideration received (the deemed cost) following the installation of a solar panel and the assignment of the STCs to the Group. STCs are subsequently measured at lower of cost or net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. When STCs are ultimately sold by the Group incremental revenue might arise being the difference between the initial value at which the STCs was recorded at and the final price at which STCs have been traded for by the Group. This incremental revenue is reported as other income. Similarly, when STCs are sold at less than the value at which they were recorded at initially, the loss is reported within the cost of raw materials in the income statement, as it represents in effect, a write down of the STCs inventory balance to its net realisable value. CBD Energy Limited (ACN 010 966 793) Page 19

Note 6 - Other assets Consolidated Current Prepayments 463 94 Deferred borrowing costs - 1,165 463 1,259 Non-Current Deposits 96 192 96 192 Note 7 Available-for-sale and Other Financial assets Consolidated Available-for-sale financial assets Taralga Wind Farm 1 10,000 - Investment in Westinghouse Solar 43 603 Shares in other corporations 15 15 10,058 618 Other financial assets Investments in solar projects - 18-18 10,058 636 (1) CBD holds an equity investment of 10% of the Taralga Wind Farm project by way of investment in two entities, Taralga Holding Nominees 1 Pty Ltd and Taralga Holding Nominees 2 Pty Ltd. This investment was funded by CBD from the re-investment of part of its development fee generated on equity close of the project. This investment is classified as an Available-for-sale financial asset. The investment in Taralga was initially recognised at fair value at the date of the equity transaction on 9 October. Fair value was determined by reference to the present value of net cash inflows projected to be received by CBD from exiting this investment based on the financial model of the project and the contractually defined distributions from any sales profits due to CBD on exit. Due to the requirement for judgement over variables within the financial model to determine future returns and profit achievable on exit, the fair value calculations were based on a net present value of a risk adjusted, probability weighted average return from different sales Internal Rate of Return (IRR) expectations. The range of IRR assumptions used in these calculations was from 9.0% to 13.0% which are considered the high and low points between which arm s length sales transactions of wind farm projects may occur in Australia. A discount rate of 17.0% was applied to the calculated amount to reflect the risk to deliver the project as per the model associated with construction risk and the time value of money based on return premiums specific to the project. The range of outcomes of the fair value calculations was from $9,500,000 to $10,900,000 and the adopted value was $10,000,000. Variances between actual results and the estimated results from the valuation methodology may result in higher or lower profits being achieved on exit of this project. CBD Energy Limited (ACN 010 966 793) Page 20

Note 8 Property, plant and equipment Computer hardware & software Consolidated At cost 961 638 Accumulated depreciation (609) (484) Total computer hardware & software 352 154 Motor vehicles At cost 530 661 Accumulated depreciation (418) (322) Total motor vehicles 112 339 Plant and equipment At cost 4,768 4,945 Accumulated depreciation (1,095) (934) Total plant and equipment 3,673 4,011 Furniture, fittings & office equipment At cost 435 581 Accumulated depreciation (218) (206) Total furniture, fittings & office equipment 217 375 Leased motor vehicles At cost 635 616 Accumulated amortisation (256) (330) Total leased motor vehicles 379 286 Leasehold improvements At cost 443 512 Accumulated amortisation (280) (300) Total leasehold improvements 163 212 Total property, plant and equipment At cost 7,772 7,953 Accumulated amortisation/depreciation (2,876) (2,576) Total property, plant and equipment 4,896 5,377 CBD Energy Limited (ACN 010 966 793) Page 21

Note 9 Non-current assets intangible assets and goodwill (a) Reconciliation of carrying amounts at the beginning and end of the period CBD Energy Limited (ACN 010 966 793) Patent Costs Development Costs License Costs Goodwill Total Year ended June 30, At July 1, net of impairment 3,500 402-18,898 22,800 Disposals (3,500) - - - (3,500) Impairment - (402) - - (402) At June 30, net of accumulated amortisation and impairment - - - 18,898 18,898 At June 30, Cost (gross carrying amount) - 402-18,898 19,300 Accumulated impairment - (402) - - (402) Net carrying amount - - - 18,898 18,898 Year ended June 30, (restated) At July 1, 2011 net of impairment 3,582 654 163 18,898 23,297 Additions - 3-225 228 Impairment - (255) (163) (225) (643) Amortisation (82) - - - (82) At June 30, net of accumulated amortisation and impairment (restated) 3,500 402-18,898 22,800 At June 30, (restated) Cost (gross carrying amount) 3,582 657 163 19,123 23,525 Accumulated impairment - (255) (163) (225) (643) Accumulated amortisation (82) - - - (82) Net carrying amount (restated) 3,500 402-18,898 22,800 Intangibles are allocated to cash-generating units based on the group s reporting segments. CBD Energy Limited (ACN 010 966 793) Page 22

Note 9 Non-current assets intangible assets and goodwill (continued) (b) Patents The storage technology patents were held by Larkden Pty Ltd. On 16 April, the Group s interests in Larkden Pty Ltd were sold including the energy storage patents held by Larkden. The sale price was $2,750,000 of which $250,000 was received in cash at the time of sale. The balance of the payments of $2,500,000 is to be received in three tranches on the anniversaries of the sale from 2015 to 2017. If certain targets of installed capacity of the storage technology are not met within 3 years of the date of sale then the purchase price shall be reduced by $1,000,000. A loss on disposal of this asset of $613,000 was recognised in the financial year. (c) License costs and development costs All capitalised license costs were fully impaired during the financial year. During the year ended June 30,, the Group determined that the carrying value of development costs required impairment and accordingly an impairment loss of $402,000 was been recognised in the statement of comprehensive income in the financial year. (d) Goodwill (i) Description of the cash-generating units and other relevant information Goodwill is allocated to the Group s cash-generating units (CGUs) identified to the operating segment. A segment-level summary of the goodwill allocation is presented below: Consolidated Eco-Kinetics 17,391 17,391 Parmac 1,166 1,166 Captech 341 341 18,898 18,898 CBD Energy Limited (ACN 010 966 793) Page 23

Note 9 Non-current assets intangible assets and goodwill (continued) (ii) Key assumptions used in value in use calculations for the cash-generating units for June 30, and June 30, The recoverable amount of a CGU is determined based on value-in-use calculations. The recoverable amount of the CGUs has been determined based on a value in use calculation using cash flow projections as at June 30, based on financial budgets approved by senior management covering a five-year period. Eco- Kinetics CGU is represented by the Solar PV segment. Terminal growth rates of 0.0% to 2.0% are used beyond the fifth year ( growth rates: 0.0% - 2.0%), which is consistent of the long-term average growth rate for the industries in which the CGU operates. The pre-tax, risk adjusted discount rate applied to cash flow projections is 27.5% (: 31.4%) The calculation of value in use is most sensitive to the following assumptions: earnings before interest, tax, depreciation & amortisation (EBITDA); discount rates; and growth rate used to extrapolate cash flows beyond the budget period. Earnings before interest, tax, depreciation & amortisation EBITDA forecasts are based on projections for the forthcoming five financial years. In respect of the Eco-Kinetics CGU, the most significant contribution to the projected results is from delivery of the UK and Australian solar projections. These projections are based on a pipeline developed by the technical and management teams within eco-kinetics since CBD Energy acquired the business in January 2010 and based on the application of skills and expertise in the solar installation area developed from the eco-kinetics core business. Projections are based on the Group s reasonable expectations of delivery of this pipeline and ongoing conversion of sales opportunities. The delivery of the UK pipeline is based on the presumption of access to adequate funding by way of the issue of secured corporate bonds in the UK market. Discount rates - discount rates reflect the Group s estimate of the time value of money and the risks specific to each unit that are not already reflected in the cash flows. This is the benchmark used by the Group to assess operating performance and to evaluate future investment proposals. In determining appropriate discount rates, regard has been given to the weighted average cost of capital of the entity as a whole and adjusted for business risk specific to the unit. Growth rate estimates - these are based on published industry research such as IbisWorld for Electricity Generation in the case of Eco-Kinetics CGU, Electrical Equipment Manufacturing for Captech CGU or Industrial Building Construction for Parmac. CBD Energy Limited (ACN 010 966 793) Page 24

Note 9 Non-current assets intangible assets and goodwill (continued) (iii) Sensitivity to changes in assumptions The implications of the key assumptions on the recoverable amount are discussed below. Earnings before interest, tax, depreciation & amortisation ( EBITDA ) the Group recognises that market competition, new entrants, government regulation and incentive schemes, and general economic climate amongst other factors can have a significant impact on EBITDA forecasts and associated cash flow assumptions. As indicated above in respect of the Eco-Kinetics CGU the most significant contribution to the projected results is from delivery of the UK and Australian solar projects pipeline. If this pipeline is not achieved as budgeted by the Group and if only 80% of forecast revenues of the CGU is achieved whilst all other key assumptions remain unchanged, the Group estimates that the carrying value of the Eco-Kinetics CGU would not materially exceed its recoverable amount. If the forecast gross margin percentage of the CGU declines by over 22% (averaged over 5 years), this may cause the carrying value of the CGU to exceed its recoverable amount. Growth rate assumptions - the Group recognises that the speed of technological change and the possibility of new entrants can have a significant impact on growth rate assumptions. The effect of new entrants is not expected to impact adversely on forecasts included in the budget, but could yield a reasonably possible alternative to the estimated long term growth rate of 0.0%. The Group believes that in isolation to changes in other key assumptions no reasonably possible change in this assumption would cause the carrying value of the units to materially exceed their recoverable amounts. Discount rate assumptions - the Group recognises that actual time value of money may vary to what they have estimated. Management believes that in isolation to changes in other key assumptions no reasonably possible change in this assumption would cause the carrying value of any of the units to materially exceed their recoverable amount. The Solar CGU has been the subject of considerable restructuring and rationalisation since 30 June, the impacts of which have been included in the projections discussed above. Further restructuring continues to take place. The impact of these changes on the Solar CGU projections and goodwill assessment assumptions is monitored on a regular basis by management and may have an impact on goodwill carrying values in the short term. In the event that changes to the CGU s operations indicate that the carrying value of goodwill may be impaired then adjustments to goodwill carrying value will be reflected in the Group s audited financial statements. Note 10 Trade and other payables Consolidated Current Trade payables 14,185 10,889 Accruals and other payables 7,558 5,236 Contingent consideration* 603 603 22,346 16,728 * Contingent consideration represents the amount payable in relation to the purchase of eco-kinetics. CBD Energy Limited (ACN 010 966 793) Page 25

Note 11 Interest-bearing loans and borrowings Consolidated Current secured Bank overdraft 1 463 - Trade finance 2-2,500 Other Loans 3 6,500 17,263 Convertible Notes 4 4,592 4,965 Finance leases 197 157 Current un-secured Other Loans 3 984 - Convertible Notes 4 3,226 2,345 Non-current secured 15,962 27,230 Finance leases 328 344 328 344 (1) Bank overdraft was secured by 1st ranking fixed and floating charges over the eco-kinetics Group of companies. (2) Trade finance facility was secured by purchased stock and by the assets of eco-kinetics Pty Ltd. (3) Other Loans Secured other loans of $6,500,000 ($6,500,000 at 30 June ) are secured by 2nd ranking fixed and floating charge over all otherwise unencumbered assets of the Group. Interest is payable on this loan at 15%. Under the terms of the agreement with the loan provider it may serve notice on the Company at which point the loan becomes due and payable. No notice of default or demand for repayment has been issued to the Company by loan provider. The Group expects to be able to defer repayment of the loan until it has sufficient resources to do so and is in continuing discussions with the loan provider on this matter. The loan provider may require that some or all of the loan be converted into ordinary shares of the Company, up to a maximum of 40,000,000 ordinary shares, should the Company fail to repay the loan in full. Unsecured other loans balance at 30 June represent loans for working capital. CBD Energy Limited (ACN 010 966 793) Page 26