For personal use only · 2012. 2. 29. · A copy of the auditor's independence declaration as...

Becton Property Group Limited ABN 64 095 067 771

Interim report for the half-year ended 31 December 2011

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Becton Property Group LimitedDirectors' report

31 December 2011

Directors' report

The Directors of Becton Property Group Limited ("BPG" or the "Company") submit their report for the year half ended 31 December 2011.

The shares of BPG and units of Becton Property Trust (BPT) (collectively the BPG Group) are combined and issued as stapled units on the Australian Stock Exchange.

The shares and units cannot be traded separately and can only be traded as stapled securities. These financial statements reflect the aggregation of the consolidated financial statements of BPG and BPT.

For statutory reporting purposes, BPG has been identified as the head entity in the Consolidated Entity (BPG Group or the "Group") based on the size of its net assets and its operations and accordingly, it presents the consolidated financial report of Becton.

Directors The following persons were directors of Becton Property Group Limited during the whole of the half-year and up to the date of this report, unless otherwise stated:

William Conn (Chairman)

Peter Dempsey

Matthew Chun

Jack Crumlin (appointed 25 July 2011)

Robert Critchley (resigned 29 November 2011)

Review of operations A review of the operations of the consolidated entity during the half-year and the results of the operations are set out in the attached results announcement.

(a) Significant gains and losses The half-year results were affected by the following significant losses:

31 December 31 December 2011 2010 $'000 $'000 Loss on revaluation of discontinuing operation - (10,736) Loss on sale of business unit - (9,248) Less: Applicable income tax - - - (19,984)

Loss on revaluation of investment properties at fair value through the profit and loss - (6,802)

- (6,802)

Matters subsequent to the end of the financial half-year Other than as described elsewhere in the financial report, no matter or circumstance has arisen since 31 December 2011 that has significantly affected, or may significantly affect: (a) the BPG Group's operations in future financial years, or (b) the results of those operations in future financial half-year, or (c) the BPG Group's state of affairs in future financial years.

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 3.

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Becton Property Group LimitedDirectors' report

31 December 2011

(continued)

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

This report is made in accordance with a resolution of directors.

William Conn

CHAIRMAN

Melbourne 29 of February 2012

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Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

3

Deloitte Touche Tohmatsu ABN 74 490 121 060 550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia Tel: +61 3 9671 7000 Fax: +61 3 9671 7001 www.deloitte.com.au

The Board of Directors Becton Property Group Limited Level 2, 289 Wellington Parade South EAST MELBOURNE VIC 3002

29 February 2012 Dear Board Members

Becton Property Group Limited In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Becton Property Group Limited. As lead audit partner for the review of the financial statements of Becton Property Group Limited for the half year ended 31 December 2011, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

(ii) any applicable code of professional conduct in relation to the review. Yours faithfully DELOITTE TOUCHE TOHMATSU S PELUSI Partner Chartered Accountants F

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Becton Property Group LimitedCondensed consolidated statement of comprehensive income

For the half-year ended 31 December 2011

Half-year 31 December 31 December 2011 2010

Notes $'000 $'000

Revenue from continuing operations 44,258 48,276

Other income 3,664 4,734 Cost of inventory sold (36,997) (35,449) Employee benefits expense (6,073) (6,537) Depreciation and amortisation expense (92) (97) Impairment of other assets (200) (6,802) Other expenses (2,517) (3,134) Share of net (losses)/profits of joint venture entities accounted for using the equity method (663) 4,196 Finance costs (4,200) (8,184) Loss before income tax

(2,820) (2,997)

Income tax benefit/(expense) 11 (2,130) (Loss) from continuing operations

(2,809) (5,127)

(Loss) from discontinued operations 12 - (24,526) Loss for the half-year (2,809) (29,653)

Other comprehensive income

(Loss)/gain on cash flow hedges taken to equity (2,108) 2,043 Other comprehensive income (10) (365) Total comprehensive income for the half-year (4,927) (27,975)

Loss is attributable to: Owners of Becton Property Group Limited (2,809) (26,840) Minority interest - (2,813)

(2,809) (29,653)

Total comprehensive loss for the half-year is attributable to: Owners of Becton Property Group Limited (4,927) (25,162) Minority interest - (2,813)

(4,927) (27,975)

Cents Cents Earnings per share for (loss) from continuing operations attributable to the ordinary equity holders of the parent entity: Basic earnings per share 10 (38.10) (1.13) Diluted earnings per share 10 (38.10) (1.13)

Earnings per share for (loss) attributable to the ordinary equity holders of the parent entity: Basic earnings per share 10 (38.10) (13.10) Diluted earnings per share 10 (38.10) (13.10)

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

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Becton Property Group LimitedCondensed consolidated statement of financial position

As at 31 December 2011

31 December 30 June 2011 2011

Notes $'000 $'000

ASSETS Current assets Cash and cash equivalents 407 11,134 Trade and other receivables 1,335 32,227 Inventories 88,101 62,063 Total current assets 89,843 105,424

Non-current assets Receivables 534 1,777 Inventories 69,060 89,944 Investments accounted for using the equity method 58,722 59,460 Property, plant and equipment 1,310 1,373 Investment properties 37,864 33,475 Deferred tax assets 53,574 54,068 Total non-current assets 221,064 240,097

Total assets 310,907 345,521

LIABILITIES Current liabilities Trade and other payables 16,519 32,674 Borrowings 6 200,640 33,986 Provisions 1,029 1,237 Derivative financial instruments 5 1,101 803 Liability to retirement village residents 32,506 29,105 Total current liabilities 251,795 97,805

Non-current liabilities Trade and other payables 25 6,016 Borrowings 7 - 179,062 Deferred tax liabilities 53,574 54,074 Provisions 584 518 Derivative financial instruments 5 4,143 2,333 Total non-current liabilities 58,326 242,003

Total liabilities 310,121 339,808

Net assets 786 5,713

EQUITY Contributed equity 8 396,955 396,965 Reserves 19,238 21,346 Accumulated losses (415,407) (412,598) Equity attributable to the owners of Becton Property Group Limited 786 5,713

Total equity 786 5,713

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

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Becton Property Group LimitedCondensed consolidated statement of changes in equity


Attributable to members of Becton Property

Group Limited

Consolidated

Contributed equity Reserves

Accumulated deficit Total

Minorityinterest

Total equity

$'000 $'000 $'000 $'000 $'000 $'000

Balance at 1 July 2010 338,948 (700) (368,321) (30,073) 34,245 4,172 Total comprehensive income for the half-year

(365) 2,043 (26,840) (25,162) (2,813) (27,975)

Transactions with owners in their capacity as owners: Dividends provided for or paid - - - - (2,394) (2,394) Balance at 31 December 2010

338,583 1,343 (395,161) (55,235) 29,038 (26,197)

Attributable to members of Becton Property

Group Limited

Consolidated Contributed

equity ReservesAccumulated

deficit Total Minorityinterest

Totalequity

$'000 $'000 $'000 $'000 $'000 $'000

Balance at 1 July 2011 396,965 21,346 (412,598) 5,713 - 5,713 Total comprehensive income for the half-year

(10) (2,108) (2,809) (4,927) - (4,927)

Transactions with owners in their capacity as owners:

- - - - - -

Balance at 31 December 2011

396,955 19,238 (415,407) 786 - 786

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

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Becton Property Group LimitedCondensed consolidated cash flow statement



$'000 $'000

Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 52,915 86,029 Payments to suppliers and employees (inclusive of goods and services tax) (76,455) (63,488) (23,540) 22,541 Other revenue 300 2,643 Interest received 169 332 Interest paid (2,924) (7,318) Net cash (outflow)/inflow from operating activities (25,995) 18,198

Cash flows from investing activities Payments for plant and equipment (38) (11) Purchase of investments to be accounted for at fair value - (6,095) Proceeds from disposal of financial assets at fair value through profit or loss - 4,763 Proceeds from sale of other financial assets 27,389 - Dividends received 318 4,389 Proceeds from sale of business unit - (1,880) Dividends paid to minority interests in subsidiaries - (2,394) Net cash inflow/(outflow) from investing activities 27,669 (1,228)

Cash flows from financing activities Proceeds from borrowings 34,074 107,725 Repayment of borrowings (46,475) (124,538) Net cash (outflow) from financing activities (12,401) (16,813)

Net (decrease)/increase in cash and cash equivalents (10,727) 157 Cash and cash equivalents at the beginning of the half-year 11,134 9,183 Cash and cash equivalents at end of the half-year 407 9,340

The above cash flow statement should be read in conjunction with the accompanying notes.

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Becton Property Group LimitedNotes to the financial statements

31 December 2011

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1 Basis of preparation of half-year report

This general purpose financial report for the interim half year reporting period ended 31 December 2011 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2011 and any public announcements made by Becton Property Group 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, unless otherwise stated.

(a) Going Concern

During the half year ended 31 December 2011 the Consolidated Entity (or “Group”) incurred a net loss after tax from continuing operations of $2.8 million and negative cash outflows from operating activities of $26.0 million, positive cash inflows from investing activities of $27.7 million and negative cash outflows from financing activities of $12.4 million.

The Group is in a net current liability position as at 31 December 2011, primarily as a result of a breach of a financial covenant in relation to the Group’s working capital facility with BOS International (Australia) Limited (“BOSI”) prior to 31 December 2011. Under relevant Accounting Standards, the consequence of the breach is that project and working capital debt and other payables of $189.6 million, which would otherwise be classified as non-current, is required to be classified as current.

Notwithstanding the above, the Directors have prepared this financial report on a going concern basis for the period ended 31 December 2011, after due consideration of the cash flow forecasts (“forecasts”) of the Group for the 12 months from the date of this report which indicate that the Group will be able to pay its debts as and when they fall due.

In forming this view the Directors have considered and relied upon the following material factors in relation to the forecasts:

On 29 February 2012, the Group received notification of a formal waiver of the financial covenant breach in relation to the working capital facility held by BOSI, which has the effect of restoring $189.6 million of debt and other payables as non-current as the facility expires in March 2013. In addition, the waiver contained three new conditions relating to operational matters (refer Note 6) which have now been incorporated into the working capital facility and the Kensington and Waterloo project debt facilities.

In addition, an amendment to the facility agreement was executed on 29 February 2012 whereby the financial covenant will be tested at 30 June and 31 December each year in lieu of the previous requirement for the financial covenant to be met “at all times”. As a result, the financial covenant will not be tested again until 30 June 2012;

The forecasts of the Group indicate that the Group is not reliant on material cash flows from its investment in the Retirement Finance SPV Pty Ltd ( or “Retirement Alliance”) and there is no commitment or guarantee by the Group of the Retirement Alliance's debt facilities, and therefore no obligation to inject cash into the Retirement Alliance;

The forecasts indicate that the finance facilities in existence as at 31 December 2011, and over the forecast period, are sufficient for the Group to pay its debts as and when they fall due.

The assessment by the Directors’ included a sensitivity analysis on base case assumptions in the forecasts. Based on forecasts adopted the Directors do not anticipate the need for additional debt facilities or equity over this forecast period, outside of normal project funding as developments mature;

The forecasts assume that the core assets currently under construction will continue to be developed in the normal course of business. In particular, the Directors are not expecting material fluctuations in domestic residential property prices in either of our core markets in Melbourne and Sydney, and neither are the Directors expecting material fluctuations in domestic interest rates.

The Group currently has three residential development projects and one retirement development project in progress and based on the support provided by financiers to date, and the success of these developments to date, the Directors’ have a reasonable expectation that these core assets will continue to be developed in the normal course of business and will provide profit and cash inflows on the sale of the developments.

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31 December 2011(continued)

1 Basis of preparation of half-year report (continued)

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The Directors have also considered the impact of borrowings in relation to the cash flow forecast. As at 31 December, the Group had total borrowings of $200.6 million, of which:

$112.7 million relates to project debt

$87.9 million relates to corporate debt

All debt is classified as current. The consequence of a breach in a financial covenant is that project and working capital debt of $183.6 million, which would otherwise be classified as non-current, is required to be classified as current.

Project Debt

Kensington: $12.8 million expiring 31 March 2012. This facility will be fully repaid with settlements expected to occur in March 2012.

Waterloo: $95.8 million expiring 31 March 2013. This is an on-going construction facility that is expected to be repaid out of future settlements as the project matures.

Wahroonga/Hervey Bay: $4.1 million expiring 31 May 2012. This facility is expected to be partly repaid with settlements from Wahroonga, and a refinance of the remaining debt using the Group’s existing working capital facility.

Corporate Debt

$87.9 million relates to a working capital facility of $126.0 million which expires in March 2013. The working capital facility is classified as current as at 31 December 2011 due to a breach of a financial covenant. On 29 February 2012, the Group received notification of a formal waiver of the financial covenant breach, which had the effect of restoring the classification of this facility as non-current.

The forecasts indicate that the Group expects to continue to need to draw down on the unused portion of the facility during the forecast period. The ability of the Group to access the unused portion of the facility is subject to various terms and conditions, which includes the obligation to meet financial covenants.

An amendment to the facility agreement was executed on 29 February 2012 whereby the financial covenant will be tested at 30 June and 31 December each year in lieu of the previous requirement for the financial covenant to be met “at all times”. The current assessment by the Directors is that the Group will be able to comply with the terms and conditions in the amended facility agreement. In forming this view, a key assumption adopted by the Directors is that the carrying value of the Retirement Alliance will not be materially different to that currently disclosed in the financial statements over the forecast period. However, in the event that the carrying value of the Retirement Alliance is materially different to that currently disclosed, due to the factors outlined in Note 1(b), the Directors are currently of the opinion, based on discussions held to date, that the group will continue to have the support of BOSI in relation to these facilities.

The Directors acknowledge that while they are of the view that the assumptions adopted in the cash flow forecasts are reasonable, and their best estimate based on circumstances existing today, forecasts are by their nature subject to inherent uncertainty.

To that end, the Directors are reliant on the continued support of their primary financier, BOSI, in the event that the circumstances and assumptions as contained in the forecasts adopted do not eventuate. Based on discussions held with BOSI to date, the Directors are of the view that this support will be forthcoming, if required, over the forecast period.

Based on the matters outlined above, the Directors are of the view that it is appropriate that the financial statements of the Group are prepared on a going concern basis.

No adjustments have been made to the financial report related to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary if the entity does not continue as a going concern. F

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(b) Interest in joint venture

The Group has a 50% interest in a joint venture entity, Retirement Alliance, with a carrying value of $55.3 million at 31 December 2011, which is accounted for using the equity method. The Retirement Alliance has finance facilities totalling $81.8 million, drawn to $80.7 million as at 31 December 2011.

DMF Facility: $73.6 million, which is due for expiry on 15 March 2012. The current financiers have indicated a desire to reduce their exposure to the Retirement Alliance in the next 12 months, however they are considering a proposal by the Retirement Alliance to provide a mid-term extension to allow the Retirement Alliance to continue negotiations with other financiers to refinance the facility.

Bendigo and Adelaide Bank Loan Facility of $7.1million expiring 23 December 2012. This facility is expected to be fully repaid from the settlement proceeds of dwellings at the Waverley retirement site.

In the absence of an approval from the existing financier to extend the DMF facility into the mid-term, or an agreement with a debt provider to refinance this facility before the expiry date, there is significant uncertainty in relation to the Retirement Alliance being able to continue as a going concern without the continued support of the current debt provider.

The Directors are also of the opinion that there is a significant risk that any future refinancing of this facility will be at less commercially attractive terms with regards to both pricing and term. This is turn creates significant uncertainty over the carrying value of the Group’s investment in the Retirement Alliance, as finance costs increase and values of assets decrease where debt amortisation becomes a priority.

Based on the above, there is significant uncertainty over the carrying value of the Group’s investment in the Retirement Alliance.

(c) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of GST paid.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group's activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised for the major business activities as follows:

(i) Projects in progress and completed buildings The Group constructs residential developments for sale to the public as well as office, retail and industrial developments, revenue is recognised on these projects upon settlement of the relevant unit, apartment or property.

Any loss on projects is recognised as soon as it is foreseen.

Adjustment made to prior period

An adjustment has been made to the prior period statement of comprehensive income relating to internal sales and construction activity between the Development and Construction segment, and the Retirement management segment. This adjustment does not impact upon the net profit realised in the income statement in the current or prior periods.

The adjustment amounted to a $16.9 million reduction in Revenue from continuing operations and Raw materials and consumables used in the half year ending 31 December 2011.

2010 2010

(restated)

$'000 $'000

Revenue from continuing operations 48,276 65,216 Raw materials and consumables used (35,449) (52,389)

Net profit impact - -

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(ii) Construction contracts Where the Group constructs buildings under construction contracts with external parties, revenue is recognised on these projects on a percentage of completion basis.

(iii) Deferred management fee income Deferred Management Fees (DMF) revenue from the investment in retirement village facilities is accrued during the period a resident occupies a leased unit or apartment. The fees are only received upon the re lease of the unit or apartment to an incoming resident. The DMF receivable is calculated according to the terms of each lease, the elapsed time of the resident occupancy and where relevant the current market value of the lease. Any difference between the receivable and the cash received when a unit or apartment is re-leased is recognised in profit or loss in the period in which the re-lease occurs.

(iv) Interest income Interest income is recognised using the effective interest method. When a receivable is impaired, the Company reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

(v) Dividends and distributions Dividends are recognised as revenue when the right to receive payment is established.

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2 Segment information

Half-year 2011

Development and

constructionRetirement

management

Total consolidated continuing operations

$'000 $'000 $'000

Sales to external customers 43,221 - 43,221 Other revenue 28 3,440 3,468 Total segment revenue 43,249 3,440 46,689

Unallocated revenue 570 Consolidated revenue

47,259

Segment result 4,302 276 4,578 Unallocated revenue less unallocated expenses (7,398) Loss before income tax (2,820) Income tax benefit 11 Loss for the half-year

(2,809)

Half-year 2010

Development and

constructionRetirement

management

Total continuing operations

$'000 $'000 $'000

Sales to external customers 46,543 - 46,543 Other revenue 1,688 9,717 11,405 Total segment revenue 48,231 9,717 57,948

Intersegment elimination (3,474) Unallocated revenue 3,263 Consolidated revenue

57,737

Segment result 4,542 5,269 9,811 Intersegment elimination (12,808) Unallocated revenue less unallocated expenses - Loss before income tax (2,997) Income tax expense (2,130) Loss for the half-year

(5,127)

3 Dividends and distributions

No dividends were declared in the current half year. During the prior period an amount of $2,394,000 was paid to minority interests by 360 Capital Diversified Property Fund, a controlled entity at the time.

4 Equity securities issued

No securities were issued in the current or prior half years.

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5 Liabilities - Derivative financial instruments


$'000 $'000

Current liabilities Interest rate swaps - fair value hedges 1,101 803 Total current derivative financial instrument liabilities 1,101 803

Non-current liabilities Interest rate swaps - fair value hedges 4,143 2,333 Total non-current derivative financial instrument liabilities 4,143 2,333

Total derivative financial instrument (liabilities) (5,244) (3,136)

6 Current liabilities - Borrowings


$'000 $'000

Secured Bank loans 200,635 33,974 Lease liabilities 5 12 Total secured current borrowings 200,640 33,986

As at 31 December 2011, the Group was in breach of a financial covenant in relation to the Group’s working capital facility with BOSI. Under relevant Accounting Standards, the consequence of the breach is that project and working capital debt of $183.6 million, which would otherwise be classified as non-current, is required to be classified as current.

On 29 February 2012, the Group received notification of a formal waiver of the financial covenant breach in relation to the working capital facility held by BOSI, which has the effect of restoring $189.6 million of debt and other payables as non-current as it expires in March 2013. The waiver contained three new conditions which have now been incorporated into the corporate working capital facility and the Kensington & Waterloo project debt facilities:

Changes to the Group’s Board composition will trigger a default of the facilities;

Amendments to the current operation of the change of control default provisions; and

All officers under the Australian Financial Services Licence, held by a 100% owned subsidiary of the Group, must remain within the employment of the Group.

Refer to Note 7 for further details on borrowings.

7 Non-current liabilities - Borrowings


$'000 $'000

Secured Bank loans - 179,062 Total secured non-current borrowings - 179,062

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7 Non-current liabilities - Borrowings (continued)

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(a) Bank loans

The bank loans are provided under a number of Australian dollar facilities. They have variable interest rates of between 6.0% and 10.0% (including bank funding margins) and are repayable in instalments over the next 1 - 3 years.

(b) Assets pledged as security

The bank loans of the parent entity and subsidiaries are secured by first mortgages over the Group’s freehold land and buildings included in inventories and investment properties as well as a floating charge over the Group and all of its remaining assets and liabilities.

(c) Financial instruments used by the Group

The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in interest rates in accordance with the company's financial risk management policies.

Interest rate swap contracts - cash flow hedges

Bank loans of the Group currently bear an average variable interest rate ranging between 6% and 10% (including bank funding margins). It is policy to protect part of the loans from exposure to increasing interest rates. Accordingly, the Group has entered into interest rate swap contracts under which it is obliged to receive interest at variable rates and to pay interest at fixed rates.

Swaps currently in place cover approximately 20% of the loan principal outstanding. The variable rates are between 3.00% and 4.50% above the 30 day bank bill rate which at balance date was 4.54%.

At balance date these contracts were liabilities with a fair value of ($5,244,000) (2010 $2,661,000).

(d) Financing arrangements

The Group had access to a number of current and non-current facilities at reporting date. The following are the undrawn borrowing facilities at reporting date:


$'000 $'000

Bank loan facilities

Corporate Debt Total facilities 126,000 126,000 Drawn facilities (87,864) (102,030) Bank guarantees (14,947) (14,829)

Unused corporate debt at balance date 23,189 9,141

Project Debt Total facilities 141,515 196,534 Drawn facilities (112,770) (111,005) Bank guarantees (3,429) (2,921)

Unused project debt at balance date 25,316 82,608

In relation to the facilities available at 31 December 2011, all are classified as current. Refer to Note 6 for further details.

8 Contributed equity

At the Annual General Meeting on 25 November 2011, securityholders of the Group approved a resolution to consolidate securities on a 200:1 basis. This took the total number of securities from 1,474,905,353 (pre-consolidation) to 7,374,116 (post consolidation).

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9 Contingencies

The company had contingent liabilities at 31 December 2011 in respect of:

Specific performance guarantees The group has contingent liabilities at 31 December 2011 of $18,374,957 (2010: $15,887,058). These relate to specific performance guarantees for development and construction activity.

Other contingent liabilities The Company has been assessed in the amount of $7.0 million in respect of land rich duty on properties arising from transactions that took place in 2004/5. The Company has lodged an objection against the assessment and the State Revenue Office of Victoria has agreed that payment of the assessment will only be required if it is confirmed on objection or on appeal that a liability exists. The Directors believe, based on legal advice, that the action can be successfully defended and therefore no losses (including costs) will be incurred. Consequently, the Directors have not accrued for a liability for stamp duty in this financial report. The information usually required by AASB 137 Provisions, Contingent Liabilities and Contingent Assets is not disclosed on the grounds that it may prejudice the outcome of the matter.

The Company has been assessed in the amount of $10.0 million in respect of land rich duty on properties arising from the acquisition of Becton Properties Limited by the Group on 1 July 2005, in conjunction with the listing of the Company. The Company has lodged an objection against the assessment and the State Revenue Office of Victoria has agreed that payment of the assessment will only be required if it is confirmed on objection or on appeal that a liability exists. The Directors believe, based on legal advice, that the action can be successfully defended and therefore no losses (including costs) will be incurred. Consequently, the Directors have not accrued for a liability for stamp duty in this financial report. The information usually required by AASB 137 Provisions, Contingent Liabilities and Contingent Assets is not disclosed on the grounds that it may prejudice the outcome of the matter.

10 Earnings per share


Cents Cents

(a) Basic and diluted earnings per share

(Loss) from continuing operations attributable to the ordinary equity holders of the company (38.1) (1.1) (Loss) from discontinued operation - (12.0) Total basic and diluted earnings per share attributable to the ordinary equity holders of the company (38.1) (13.1)

(b) Reconciliations of earnings used in calculating earnings per share


$'000 $'000

Basic and diluted earnings per share (Loss) attributable to the ordinary equity holders of the company used in calculating basic earnings per share

(Loss) from continuing operations (2,809) (5,127) (Loss) from continuing operations attributable to minority interests - 2,813 (Loss) from discontinued operation - (24,526)

(2,809) (26,840)

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10 Earnings per share (continued)

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(c) Number of shares used as the denominator

Number of shares

31 December

2011

Number of ordinary shares used as the denominator in calculating basic and diluted earnings per share 31 December 2010 204,820,547 Movements during year

New ordinary equity issued under capital restructure (d) 1,270,084,806 Securities consolidated on a 200:1 basis note (d) (1,467,531,237)

Number of ordinary shares used as the denominator in calculating basic and diluted earnings per share 31 December 2011 7,374,116

(d) Movement in securities and prior year comparatives

At the Annual General Meeting on 25 November 2011, securityholders of the Group approved a resolution to consolidate securities on a 200:1 basis. This took the total number of securities from 1,474,905,353 (pre-consolidation) to 7,374,116 (post consolidation).

11 Events occurring after the reporting period

Since the end of the financial period, the Directors are not aware of any matter or circumstance not otherwise dealt with in the report, that has significantly or may significantly affect the operations of the Group, the results of those operations or state of affairs of the Group in subsequent financial years.

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12 Discontinued operation

Discontinued Operation - Funds management and property investment

(a) Description

On 16 December 2010, Becton Property Group sold its shares in Becton Investment Management Limited, being its funds management business. The interest in the funds management business is reported in this financial report as a discontinued operation.

In addition to the sale of the funds management business, the Group entered into a conditional Call Option Deed (the Option) for the divestment of its investment in 360 Capital Diversified Fund (previously known as Becton Diversified Property Fund) and 360 Capital Developments Income Fund (previously known as Becton Developments Income Fund), being its property funds business, to the same purchaser of the funds management business. The Option was exercised and the investment divested on 30 June 2011, hence being reported as a discontinued operation.

Financial information relating to these discontinued operations for the period to the date of disposal is set out below.

(b) Financial performance information

The financial performance information presented is for the period 1 July 2011 to 31 December 2011

Half-year 31 December 31 December 2011 2010 $'000 $'000

Revenue - 4,611 Expenses - (10,422) (Loss) before income tax - (5,811)

(Loss) on measurement to fair value less costs to sell included in expenses - (9,248) (Loss) on sale of the division before income tax - (10,736) Income tax expense - - (Loss) on sale of the division after income tax - (19,984)

(Loss) from discontinued operation - (25,795)

(c) Loss on disposal/re-measurement to fair value less costs to sell of the discontinued and discontinuing operations

Consideration received or receivable: Cash - 1,880 Fair value of future exit fees - 1,777 Fair value of contingent consideration - 26,396 Total disposal consideration - 30,053

Carrying amount of net assets disposed / remeasured to fair value less costs to sell - (50,037) (Loss) on sale before income tax - (19,984)

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12 Discontinued operation (continued)

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Discontinued Operation - Mackay retirement village

(a) Description

The Breezes Mackay retirement village was sold by the Group to RSL Care Limited and settled on 1st June 2011. The operations of this village is reported in this financial report as a discontinued operation.

(b) Financial performance information

The financial performance presented is for the period 31 December 2011.


$'000 $'000

Revenue - 1,328 Expenses - (59) Profit from discontinued operation - 1,269

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Becton Property Group LimitedDirectors' declaration

31 December 2011

In the directors’ opinion:

(a) the financial statements and notes set out on pages 4 to 18 are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

(ii) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and its performance, as represented by the results of its operations, changes in equity and its cash flows, for the half-year ended on that date; and

(b) there are reasonable grounds to believe that Becton Property Group Limited will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors made pursuant to s. 303(5) of the Corporations Act 2001.

On behalf of the Directors

William Conn

CHAIRMAN

Melbourne 29 of February 2012

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Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

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Deloitte Touche Tohmatsu ABN 74 490 121 060 550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia Tel: +61 3 9671 7000 Fax: +61 9671 7001 www.deloitte.com.au

Independent Auditor’s Review Report to the Members of Becton Property Group Limited We have reviewed the accompanying half-year financial report of Becton Property Group Limited, which comprises the condensed consolidated statement of financial position as at 31 December 2011, and the condensed consolidated statement of comprehensive income, the condensed consolidated statement of cash flows and the condensed consolidated statement of changes in equity for the half-year ended on that date, selected explanatory notes and, the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year “the Group” as set out on pages 4 to 19. Directors’ Responsibility for the Half-Year Financial Report The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of 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 Becton Property Group Limited’s financial position as at 31 December 2011 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Becton Property Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Auditor’s Independence Declaration In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Becton Property Group Limited, would be in the same terms if given to the directors as at the time of this auditor’s review report.

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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 Becton Property Group Limited is not in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2011 and of its

performance for the half-year ended on that date; and (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations

Regulations 2001. Significant uncertainty regarding the carrying value of an investment in a joint venture entity accounted for using the equity method of accounting Without qualifying our conclusion, we draw attention to Note 1(b) in the half-year financial report which indicates that a significant uncertainty exists in relation to the carrying value of Becton Property Group Limited’s equity accounted investment in the Retirement Finance SPV Pty Ltd (or “Retirement Alliance”) of $55.3 million as at 31 December 2011. The Retirement Alliance has a finance facility, drawn to $73.6 million as at 31 December 2011, which is due to expire in March 2012. At the date of this report no agreement has been reached with a debt provider for the refinance of this facility. In the absence of an agreement with a debt provider to refinance this facility there is significant uncertainty in relation to the Retirement Alliance being able to continue as a going concern, without the continued support of the current debt provider. Accordingly, there is significant uncertainty over the carrying value of the Group’s investment in the Retirement Alliance. DELOITTE TOUCHE TOHMATSU S PELUSI Partner Chartered Accountants Melbourne, 29 February 2012

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