Centuria Annual Report 2011 2[1]

7/31/2019 Centuria Annual Report 2011 2[1]

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Centuria Capital LimitedAnnual Report 2011

Committed


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Centuria Annual Report 2011

Contents

3 AboutCenturiaCapital

5 ChairmansReview7 ChiefExecutivesReport8 CenturiaPropertyFunds

10 CenturiaFinancialServices14 DirectorsReport19 RemunerationReport29 AuditorsIndependenceDeclaration30 CorporateGovernanceStatement36 FinancialStatements101 CorporateDirectory

Centuria Capital Limited and Controlled Entities ABN 22 095 454 336Annual Report for the year ended 30 June 2011

Annual Report 2011

Management Directory

Centuria Capital Limited

JohnMcBainMatthewCoy

JulianBlackleyYujitaChaudriTroyDafterPeterMcDonagh

ChiefExecutiveOfcerChiefFinancialOfcer

GroupHeadofFinanceGroupTaxManagerHeadofComplianceHeadofReverseMortgages

Centuria Property Funds Limited

JasonHuljichDavidGoveyRowanWallJohnTaylorAndreBaliSebastianUgarteJeremyRobothamJacquesDuvenageMarkJonesBenHarvie

DougHoskinsMicahSchulz

CEO-PropertyHeadofAssetsHeadofStrategicPropertyLimitedHeadofDistributionHeadofDevelopmentAcquisitionsManagerNationalLeasingManagerNationalPortfolioManager

FundManagerFundManager

FundManagerFundManager

Centuria Life Limited

TerryReidAnneHamiehRitaVarvakis

AshNakhlaSeanWebster

GeneralManagerHeadofDistribution

Operations&RiskManager

InvestorServicesTeamLeaderInvestmentManager


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1

TomorrowItsnotwhatyouexpecttoreadaboutwhenyouopenanannualreport.Butthisyear,wecouldnotaccuratelyshowcaseourachievementsbyonlylookingback.

Theconsolidationofourbrandsthisyearhasbeenfarmorethanasimplefacelift.Itisabout transformingourbusinesstotakeadvantageoftheopportunitiesthemarketconditionswillpresent.

Takingusfromacollectionofcompanies,toasinglediversiedfundsmanager.Fromasmallboutiqueplayer,toagrowinggroupsoughtafterbyinformedinvestors.

Ourambitioniscertain.TobeoneofAustraliasmostdynamicandsuccessfuldiversiedfundmanagers.Wevesetacoursetotakeusplacesdefyingtheconventionalthinkingoftheindustrytogiveourinvestorsfresherideaswithsolidandreliablereturns,whileretainingthesamelevelofpersonalservicewevealwayshad.

Thisyear,wehavechangedourbusinessforthebetter.WehavetransformedourselvesfromtheOverFiftyGroup,intoCenturiaCapital.

Andtransportedourselvesfromyesterday,intotomorrow.


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Highlights$Group total funds under management (FUM)at 30 June 2011

1.93 billion

Increase in Group FUM

from 30 June 2010 to 30 June 2011

2010

2011 16%

Total number of clientsat 30 June 2011

112,500

$Centuria Property Funds FUM

at 30 June 2011

1billion 40 %

Annual Report 2011


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3

About Us

Today,CenturiaCapitalisanASX-listeddiversiedfundsmanagerwithcloseto$2billioninfundsundermanagement.Asinglecompany,withasingledirection,andasinglesetofvaluesbutwiththeagility

affordedbyadiversiedofferingofpropertyfundsandnancialservices.

Ournewname,CenturiaCapital,markstheconsolidationofallourbrandsintothissingleentityandthebeginningofaninspiredfuture,aswesetourselvesambitiousgrowthtargetstobecomeAustraliasmostdynamicfundsmanagementgroup.

Where investors come rstWerechallengingtheconventionsofourindustryandsettingourselvesapartfromourcompetition,byalwaysputtingourinvestorsinterestsrst.Wecanalsoboastindustry-leadingexperience,andahands-onapproachtoourinvestorsneedsthatseesusconstantlystrivingto

comeupwithfresh,innovativeideas.Andnotonlydoweofferourinvestorsawiderangeofinvestmentoptionsacrossourtwocomplementarybusinesses,werealsoformingrelationshipswiththemthatcan

lastalifetime.Buildingtrust,asmuchaswebuildwealth.

Thevalueofourexperienceisevidentinthesuccessofourdiversication.OurtwocorebusinessesarewhattrulysetsCenturiaCapitalapart.Theyallowustocometothemarketfromtwodistinctanglesatthesametime.Thismeansmorewaystoattractnewinvestors,aswellas

greaterstability,andhigherrevenuesforthecompanyasawhole.

Bothsidesofthebusinessareperformingwellintoughconditions.AndaswemarktheendofourrstnancialyearasCenturia,wedosoonveryrmfootingwearesettotakegreatstridestowardsanuncompromisinglysuccessfulfuture.

$Underlying earnings before interestand taxto 30 June 2011

10.5million

$Underlying net prot after tax

to 30 June 2011

6.4million

Corporate gearing(excluding non-recoursedebt and convertible notes)to 30 June 2011

%8.9

$Value of reverse mortage book

at 30 June 2011

192million

Full-year dividendsat 30 June 2011

6.0 20%


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Transform

Annual Report 2011


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5

OtherhighlightsincludetherebrandingofthemajorityofbusinessunitsundertheCenturiabrandandtheunmarketableparcelsharebuy-back,whichculminatedinthebuy-backofover2.5millionsecurities.

IamparticularlyproudoftheinvestorrightsinitiativeswhichtheGrouphasputinplace.

TheBoardandmanagementareunanimousintheirbeliefthatinthepastsomefundsmanagementpracticeshavefavouredthemanagerattheexpenseoftheinvestor.

Thisyear,beginningwithournewpropertyfunds,ourinvestorshavebeenofferedarangeoftermsthatplacethemrmlybackinthecentreoftheinvestmentequation.Youcanreadmoreaboutthisonourwebsite:www.centuria.com.au.

The outlook and our future

Wewillcontinuetovigorouslypursueour

growthstrategyinthecurrentnancialyearandbeyond.WebelieveCenturiaCapitaliswellpositionedtobenetfromtheopportunitiesavolatilemarketwillpresent.

OnceagainIwouldliketothankmyfellowdirectors,theseniorexecutiveteamandallofourstaffforalloftheirhardworkduringthelastyear.

Toourshareholders,thankyouforyourcontinuingsupport.Welookforwardtoworkinghardonyourbehalf,expandingthegroupdespitetheprevailingconditions.

IlookforwardtoseeingyouatourAnnualGeneralMeetinginMelbourneonFriday28October2011.

Roger Dobson

Chairman

Roger Dobson

ChairmanLLB(Hons)LL.M

Dear Shareholders,

TheprimaryfocusforCenturiaCapitalinthe2011nancialyearhasbeentodeliverresultsinlinewithourcommitmenttostrongcompanygrowth.

Globalandlocaleconomicenvironments

remainchallengingandwebelievethatconditionswillremainvolatileinthemediumterm.Thegrowthstrategywedevelopedin2010isbasedonacquiringassets(forourpropertyfundinvestors)andmanagementrightsatdiscountedlevels,andwasbasedonafundamentalassumptionthatmarketconditionswouldbetoughforsometime.

Duringthe2011nancialyearCenturiahasinvestedinadditionalseniormanagementinkeyfunctionsdistribution,operationalpropertyandfundsmanagement,nanceandtaxtoenableustoservicethe

additionalbusinesswehavegeneratedandtofurtherexpandourambitionswithnewacquisitions.

Whilethishasbeenattheexpenseofsomeprotability,IampleasedthatCenturiawasabletodeclaredividendsof6centsperordinaryshareforthe2011nancialyear,anincreaseof20%overthe2010year.

2011 Business Achievements

Thenancialhealthofthebusinesscontinuestoimprovewithcorporategearingnowbelow10%atyearendforboththe2010and2011

nancialyears.Thislowgearingmeansourabilitytoraisedebtandequitytoimplementourstrategyforincreasedfundsundermanagementandacquisitionsisenhanced.MaintainingthisheadroomistheresultofadedicatedBoardstrategy.

Aclearexampleofimplementingandachievingourgrowthtargetsisthesuccessfulgrowthfromourpropertyfundsmanagementactivities.Duringtheyear,thepropertydivisionpurchasedtwocommercialinvestmentpropertiesfornewpropertyfundsandwasawardedthemanagementrightsfor

amajornationalportfolioofformerBectonpropertyfunds.

Jointly,thesetransactionsgeneratedinexcessof$300millionofgrowthinfundsundermanagementandforthersttimepropertyfundsundermanagementexceeded$1billion.

Chairmans Review


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Protect

Annual Report 2011


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Chief Executives Report

Dear Shareholders,

Ihavepleasureinupdatingyouontheperformanceandactivitiesfortheyearto30June2011andtheoutlookforCenturiaCapitalLimited.

Mandate for Growth

By2010,allrestructuringwasbehindus,includingtheeliminationof35%ofcorporateexpensesduringthe2008to2010period.Asstatedpreviously,theover-archingstrategyforthecompanyistoachievegrowthinwhatweforecasttobeongoingturbulentnancialmarkets.

WearegrowingCenturiaintoalargerdiversiednancialservicesbusinessandwhileourcommitmenttothisgoalisclear,theBoardhassethightargetsandthereismuchmoretodo.

Thisyearwesuccessfullyre-brandedtheOverFiftyGrouptoCenturiaCapitalincludingthe

consolidationofourmajordivisionsunderthisbrand.

Finally,wehavemadeimportantinvestmentsinsystemsandkeystaffduringtheyearwhilstthishasbeenattheexpenseofsomeprotabilitytheyareessentialcomponentsofourongoinggrowthplatform.

Centuria Property Fundsperformedstronglyduringtheperiod,establishingtwonewpropertyfundstotalling$68million.CenturiaisoneofahandfulofpropertyfundmanagerstohaveweatheredtheGFCandareabletoattract

debtandequitytotakeadvantageofhistoricallylowinvestmentpropertyvalues.

InDecember2010Centuriawasawardedthemanagementrightsfortwopropertyfundstotalling$240million,bringingtotalpropertyFUMto$1billionforthersttime,andmakingCenturiaoneofthetop3unlistedpropertyfundmanagersinAustralia.

Centuria Life continuestogenerateconsistent,strongreturnsfortheGroup,andyear-on-yearunderlyingnetprotfortheGrouprose2.4%to$9.14million,withFUMatyearendof$736million.Asyoucanseefromthechartopposite,

managedfundsunderthisdivisionhaveremainedrelativelystable.

WehaveappointedahighlyexperiencedHeadofDistributionandourgoalsforthisbusinessaretoachieveastableplatformofFUMandinparticular,tohighlighttheattractivenessofourcapitalguaranteedinvestmentsinthepresenthighlyvolatileinvestmentmarkets.

Investor Rights Initiative

Thepastfewyearshavebeentoughforinvestorsandthishardshiphasbroughtaboutadegreeofmistrusttowardsthefundmanagers

ingeneral.Webelievethatfundmanagersneedtorecognisethissituationandrebuildtrustwiththeinvestingcommunity.

Centuriatakesadifferentapproach:ournewpropertyfundshavealteredthebasisuponwhichfeesarecalculatedandvotingisconducted,heavilyinfavourofourinvestors.

The outlookfornancialmarketsinthe2011/12yearisoneofcontinuingmarketvolatility.Webelievethisvolatilitywillcontinuetomakethestable,low-riskreturnsgeneratedbyourpropertyfundsandinvestmentbondsattractive.Inaddition,thesemarketsfavourourcontinuedgrowthbyacquisitionstrategy,andwearelookingforwardtoreportingoursuccessestoyou.

Thankyouforyourinvestment.

John McBain

Chief Executive OfcerDip.UrbanValuation

John McBain

Chief Executive Ofcer

Key Business Highlights

Group Funds Under Management(FUM) increased 16%

Centuria Property Funds FUMincreased 40%

Full-year dividend up 20% to 6.0cents per share

Underlying EBIT of $10.5million and corporate gearingbelow 10%


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Centuria 8 Australia Avenue Fund

Wealsomadesomeimportantacquisitions.200Creek

Street,Brisbaneamodern10-levelcommercialpropertyintheCBDwaswaspurchasedfor$37.7million,andhasperformedwellsinceitslaunchinMarch,providingan8.75%(annualised)distributiontoinvestors.

Centuria Property Funds

Year in review

Our property funds managementgroup has performed impressivelythis year with both subsidiaries Centuria Property Funds andCenturia Strategic Property producing some excellent results.ConsistentwithCenturiasgrowthstrategy,propertyfundsundermanagementhasincreased40%from30June2010to30June2011.Therehavebeenanumberofhighlights,includingbeingappointedastheResponsibleEntityofBectonOfceFundNo.2andBectonDiversied

DirectPropertyFund.Electedbyanoverwhelmingmajorityofinvestors,wewereentrustedwiththetwofundsatacombinedvalueof$240million.

New funds successfully launched

Centuria 200 Creek Street Fund

FundlaunchedMarch2011

Purchaseprice$37.7million

FundlaunchedJune2011

Purchaseprice$30.15million

Outlook

Lookingahead,thecomingyearlookspromising.Wecontinuetobenetfromhavingfewercompetitorsintheunlistedpropertysector,andifwecantakeadvantageofthisposition,weshouldseeconsiderablegrowthbasedlargelyondirectacquisitionofassets,andthepurchaseandintegrationofotherfundmanagers.

Jason HuljichCEOBComm,CommercialLaw

David GoveyHead of AssetsDip.Technology(Valuation)andGrad.Dip.TownPlanning

InJuneweacquiredabrandnewfullyleasedA-gradecommercialbuildingat8AustraliaAvenue,SydneyOlympicPark.Thepropertywaspurchasedfor$30.15

millionadiscountonthelatestvaluationandisexpectedtodeliveraninitialincomeyieldof8.00%.

Annual Report 2011


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35 Spring Street, Melbourne

Strong investor returns

AcquiredinFebruary2003for$35.3million

MajorityleasedtotheGovernmentwhichprovidedstrongincomereturnstoinvestorsoverthelifeoftheFund

Aschemewascommissionedfora40-storeyhigh-endresidentialredevelopment

ThesaleagreementallowsanewCenturiaDevelopmentFundtoreinvestintotheproject

Propertysoldin2010for$45.5million

Wepurchased35SpringStreetfor$35.3millionin2003.ThepropertywaswellpositionedattheParisEndofMelbourne,withexcellentviewsoverTreasuryGardens.Consequently,Centuriaprepareddetailedconceptplansforaresidentialdevelopmentofthesite.Onceasuitableschemehadbeendrawnup,anationalmarketingcampaignwasundertakenandthepropertywassoldtoamajorsuperannuationfund.

Priortothesale,thesittingGovernmenttenantsleasewasextendedinordertoprovidethepurchaserwithastrongincomestreambeforethefuturedevelopmentcommenced,furtherimproving

thesalepriceforinvestors.

Reaching $1 billion inFUM marks a signicantmilestone for usand demonstrates ourongoing success ingrowing the size and scaleof our property business.Jason Huljich

Before After

48

Number of properties under management

8.95%Weighted Average Cap Rate

$1billionTotal FUM at 30 June 2011

40%Increase % FUM (year-on-year)

$13 millionOperating earnings

Asset type Assettype

Ofce

Industrial

RetailBulkyGoods

SpecialtyUse

MixedUse

Retail

Properties by State

Sector diversication

Geographic diversication

Location

NewSouthWales

Victoria

Queensland

SouthAustralia

AustralianCapitalTerritory

NorthernTerritory

Weighted Average Lease Expiry

3.63years


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92%

90%

88%

86%

84%

82%

80%

78%

Continued Strong Customer Retention Rate

Over Fifty Insuranc e Home Over Fifty Insurance Motor

2006 2007 2008 2009 2010 2011

The Centuria Life divisioncontinues to generate strongand stable cash earnings tothe Centuria Group.Thedivisionsfundsundermanagement(FUM)asat30June2011was$736million.ThisincludestheCenturiaLifeandGuardianFriendlySocietycapitalguaranteedandunitisedinvestmentbonds.

Terry Reid

General ManagerDip.Bus,CA

Rita Varvakis

Operation &Risk Manager

B.Bus.Accounting

Over Fifty Insurance

Centuria Financial Services

Year in review

Anne Hamieh

Centuria Life is focused on

a growth strategy to expandthe distribution of existingproducts and assessopportunities to developnew investment solutions.

AnotherareaofFinancialServicesisOverFiftyInsurance,withalmost27,500policiesacrossgeneral,travelormotorvehicleinsurance.ThisdivisionagainhadapositivecontributiontoCenturiaGroupearnings,andwearepositiveaboutthegrowthoutlookoverthenextyear.

Consistent returns

through volatile timesTheCapitalGuaranteedBondhasdeliveredpolicyholdersconsistentandhighernetreturnsinavolatileandchallengingenvironment.Policyholderscontinuedtohavetheircapitalandcreditedbonusespreservedthroughoutthisnancialyear.

Ourlargestbonds,theCapitalGuaranteedBondandIncomeAccumulationBondrepresentatotalFUMof$166millionand$234millionrespectively.

Redemptionshavefallenasimprovedreturnshavedemonstratedthevalueourguaranteedbondshaveaddedforpolicyholders.Wecontinuetofocusonstrategiestostrengthennetinows.

Anne Hamieh

Head of DistributionB.Eco,Grad.Dip.Appl.

Finance&InvestmentandGrad.Dip.Management

Source:OverFiftyInsurance,30June2011

Annual Report 2011


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200,000

150,000

100,000

50,000

-

Jun

-11

Jun

-13

Jun

-15

Jun

-17

Jun

-19

Jun

-21

Jun

-23

Jun

-25

Jun

-27

Jun

-29

Jun

-31

Jun

-33

Jun

-35

Jun

-37

Jun

-39

Jun

-41

Jun

-43

Jun

-45

Embedded Value at 30 June 2011- 8.2% p.a. redemption rate ($000)

ANZ Loan BookOFG Mortgage Book $234millionFUM of Income Accumulation Bond

Total FUM (excluding reverse mortgages)

$736million

$166millionFUM of Capital Guaranteed Bond

27,453Total number of insurance policies

$192millionValue of Reverse Mortgages

27,795Total number of Centuria Life policies

Reverse Mortgages future value to shareholders

Wecontinuetomanageourreversemortgagebookforexistinginvestors.ThisremainsaconsistentlysteadyandprotablebusinessunitforCenturiaCapital.

Further,thereversemortgagebookhassignicantembeddedshareholderequity,whichwillincreaseovertime.

Thechartaboveillustratesthevaluetoshareholders.Astheloanfacilityisrepaidovertime,thevalueofthemortgagebookincreasesandbecomescashowpositive.Whentheloanisrepaidfully,theassetbalancerepresentspositivecashowtothecompany.

Growth opportunities

WehaveastrongfocusondrivingrevenuegenerationopportunitiesfortheFinancialServicesdivision.ThestrategicappointmentofaHeadofDistributionhighlightsthisfocus.Ourgrowthstrategyaimstoexpandthedistributionofexistinginvestmentbonds.Giventhecontinuouschangessurroundingsuperannuationlegislation,weseearenewedopportunityforinvestmentbondsasacomplementarylong-termsavingssolution.

Weunderstandthatmarketdynamicsarechangingandinvestorshavevaryingneedsandnancialobjectives.Wewillrespondtothesedemandsbyassessingsuitableopportunitiestodevelopnewinvestmentsolutionsthatcansupportourstrategy.

TheFinancialServicesdivisionhasbeenprotablein2011,andwearecondentthatthecombinationofstrategiesweimplementwillprovideaplatformforgrowthintheyearsahead.

Source:RiceWarner,30June2011


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Annual Report 2011

Directors


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John McBain

Executive DirectorDip.UrbanValuation

Peter Done

Non-Executive DirectorB.Comm,FCA

Roger Dobson

Chairman LLB(Hons)LL.M

Jason Huljich

Executive DirectorB.Comm,CommercialLaw

Deepak Gupta

Non-Executive DirectorBCA,MBA,Cert.InvestmentAnalysis

Theabovenameddirectorsheldofceduringthewholeofthenancialyearandsincetheendofthenancialyear.

John McBainJohnhasbeenontheBoardsince2006andwasappointedCEOinApril2008.HewasthefounderofCenturiaPropertyFunds,whichwasacquiredbyOFG(nowCenturia)in2006.JohnisadirectorofsubsidiariesCenturiaStrategicPropertyLimited,CenturiaPropertyFundsLimitedandCenturiaLifeLimitedandadirectorofanassociatedcompanyMortgageportManagementPtyLimited.Johnserves

ontheInvestmentCommitteesofbothCenturiaLifeLimitedandOverFiftyGuardianFriendlySocietyLimited.Johnqualiedinpropertyvaluationandfrom1990to2006wasinvolvedinbothcommercialpropertyconsultingandthegrowthoftheunlistedpropertyfundmarketinAustralia.Priorto1990,JohnspentfouryearsasmanagingdirectorofaspecialistcommercialpropertyinvestmentcompanybasedintheUnitedKingdom.

Jason Huljich

JasonbecametheCEOofCenturiaPropertyFundsin2006andjoinedtheBoardin2007.Heisresponsibleforprovidingstrategicleadershipand

ensuringtheeffectiveoperationofCenturiaspropertyportfolio.HehasbeeninvolvedininvestmentpropertysyndicationinAustraliasince1996andhasdevelopedconsiderableexpertiseininvestmentpropertyselection,syndicatefeasibilityandsyndicatemanagement.JasoncurrentlysitsontheNationalExecutiveCommitteeofthePropertyFundsAssociation,thepeakindustrybodyrepresentingthe$32billiondirectpropertyinvestmentindustry.

Roger DobsonRogerwasappointedtotheBoardin2007.HeisChairmanoftheBoard,ChairmanoftheNominationandRemunerationCommitteeandisalsoamemberoftheAudit,RiskManagementandComplianceCommittee.RogerisaseniorpartnerofHenryDavisYorkandestablishedthermsbankingandnancepracticein1991.Rogerhasextensivelegalknowledgeofthepropertyfundsmanagementandnancialservicesindustries,aswellascorporate

governanceandregulatoryissues.

Peter DonePeterwasappointedtotheBoardin2007andistheChairmanoftheAudit,

RiskManagementandComplianceCommittee.HeisalsoamemberoftheNominationandRemunerationCommitteeandtheInvestmentCommittees.PeterwasapartnerofKPMGfor27yearsuntilhisretirementinJune2006.Hehasextensiveknowledgeinaccounting,auditandnancialmanagementinthepropertydevelopmentandnancialservicesindustries,corporategovernance,regulatoryissuesandBoardprocessesthroughhismanyseniorroles.

Deepak GuptaDeepakwasappointedtotheBoardin2007andisamemberoftheNominationandRemunerationCommittee,theAudit,RiskManagementandComplianceCommitteeandtheInvestmentCommittees.Deepakhas25yearsexperienceinthenancialservicesandinvestmentmanagementindustry.AstheExecutiveDirectorofTrusteesExecutorsLimited,heisresponsibleforthecompanysstrategic,operationalandnancialmanagement.Trustees

ExecutorscurrentlyhasNZ$55billionoffundsundersupervision,administrationormanagement.


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Directors Report for the year ended 30 June 2011

Directorsholdordinaryinterests,withequalrightstoothershareholders.

Remuneration of directors and senior managementInformationabouttheremunerationofdirectorsandseniormanagementissetoutintheRemunerationReportofthisDirectorsReport.

Company secretaries

TerryReid,CharteredAccountant,hasbeentheCompanySecretarysinceDecember2007.HeisamemberoftheInstituteofCharteredAccountantsinAustralia.

MatthewCoy(B.Bus,CPA),ChiefFinancialOfcer,wasappointedinOctober2009asanadditionalCompanySecretarytobebasedinSydney.

R.W.Dobson

J.E.McBain

J.C.Huljich

P.J.Done

D.K.Gupta

-

600,000

400,000

-

-

655,390

4,363,861

2,189,116

303,812

109,735

Fully Paid Ordinary Shares

Number

Directors Share Options

ThedirectorsofCenturiasubmittheannualnancialreportoftheCompanyforthenancialyearended30June2011.InordertocomplywiththeprovisionsoftheCorporationsAct2001,thedirectorsreportasfollows:

Information about the directors and senior management

ThenamesandparticularsofthedirectorsofCenturiaduringorsincetheendofthenancialyearareoutlinedonthepreviouspage.


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Corporate structureCenturiaCapitalLimitedisacompanylimitedbysharesthatisincorporatedanddomiciledinAustralia.Thecompanyhaspreparedaconsolidatednancialreportincorporatingtheentitiesitcontrolledduringthenancialyear,whichareoutlinedinthefollowingillustrationoftheGroupscorporatestructure.Allentitiesare100%ownedunlessotherwisestated.

Centuria Capital Limited as at 1 July 2011

Principal activites

Theprincipalactivitiesoftheconsolidatedentity(beingCenturiaastheparententity,anditscontrolledentities,togethertheGroup)duringthecourseofthenancialyearwerethemarketingandmanagementofinvestmentproducts(includingfriendlysocietyinvestmentbondsandpropertyinvestmentfunds),generalinsurancethroughagencyarrangements,mortgagelendingandmanagement,propertyinvestmentandmanagementoftheOverFiftyGuardianFriendlySocietyLimited.

Centuria Capital LimitedABN: 22 095 454 336

Over Fifty InsurancePty Ltd

ABN: 58 007 165 200

NationalLeisure Trust

Centuria StrategicProperty Limited

ABN: 67 103 003 603

Centuria Life LimitedABN: 79 087 649 054

AFSL: 230867

Over Fifty FundsManagement Pty Ltd

ABN: 42 103 265 649

Over FiftyCapital Pty Ltd

ABN: 47 007 108 509

Centuria PropertyFunds Ltd

ABN: 11 086 553 639AFSL: 231149

Centuria BulkyGoods Fund 1

Over Fifty Investments

Pty LtdABN: 84 100 169 186

OFM Direct PropertyTrust No. 3 Chisholm

Centuria DirectProperty Fund

Benefit Funds

Over Fifty Seniors Equity

Release Pty LtdABN:12 095 362 388

Senex WarehouseTrust No.1

Mortgageport ManagementPty Limited

ABN: 42 082 753 679

21.80%

6% 38.72%

24.84%

50%

Note: represents partial ownership

represents 100% ownership


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Directors Report (continued)

Review of Operations

Theconsolidatednetlossfortheyearis$2.891million(2010:protof$6.318million)afterprovidingforanincometaxexpenserelatingtoshareholdersof$0.549million(2010:$3.941million).

Themainsourcesofrevenuewereprincipallyfromthe

operationsofCenturiaLifeLimited,ReverseMortgagesandCenturiaPropertyFundsLimited.

Operationalhighlightsforthenancialyearwereasfollows:

Centuria Life

Strategicstaffappointmentsweremadeduringtheyear includingtheHeadofDistributionacrossthe nancialservicesbusiness.

Centuria Property Funds

SubstantialincreaseinFUMof40%from1July2010.

AppointedasreplacementResponsibleEntityto BectonOfceFundNo.2andBectonDiversiedDirect PropertyFund(renamedtoCenturiaOfceFund2and CenturiaDiversiedDirectPropertyFund).

SuccessfullaunchofCenturia200CreekStreetFundand

Centuria8AustraliaAvenueFund.Newinvestorrightsinitiativelaunched.

Reverse Mortgages

Continuedtheactivefocusonportfoliomanagement.

AppointedanewHeadofReverseMortgageswithsignicant experienceinthemortgagesector.

Insurance

Continuedstrongcommissionincomefrombothexistingand newbusiness.

Re-focusedmarketingeffortsonareaswhicharepaying

dividends.Signicant expenses/adjustments incurred

Themostsignicantexpensesduringtheyearwhichareconsideredtobeofanon-recurringnatureinclude:

Investmentpropertieswererevalueddownwardsby$4.5 millionandarentalreceivableinconnectionwiththese propertiesof$1.158millionwaswrittenoff.

TheinvestmentinMortgageportwasimpairedby$3.5 mill ion.

Costsof$0.6millionrelatingtoeffortstoacquirethe managementrightsofOpuspropertyfunds.

Costsof$0.6millionrelatingtorebrandingtheGroupto Centuria.

Corporate governance practices

Thedirectorshave,instrivingtoachievethehighest standardsofcorporatebehaviourandaccountability, compliedwiththeprinciplesandpracticessetoutintheCorporateGovernanceStatementcontainedonpage30inthisannualreport.

Other mattersOn2February2011,Centuriacompleteditsbuy-backofan unmarketableparcelofsharesresultingin248,924shares beingboughtbackandcancelledandafurther2.3million sharesbeingboughtbackfortheCompanysPerformance RightsPlaninaccordancewiththeresolutionapprovedat the2009AnnualGeneralMeeting(AGM).

PursuanttotheAGMheldon26November2010,thename oftheCompanywaschangedfromOverFiftyGroupLimited toCenturiaCapitalLimited.Thechangewas effectiveon14March2011.

Changes in state of affairs

Therewerenosignicantchangesinthestateofaffairsoftheconsolidatedentityduringthenancialyear.

Subsequent events

On1July2011,EclipsePropertyGroupLimitedchangeditsnametoCenturiaStrategicPropertyLimited.

On18August2011,thetermofthenon-recoursenotesrelatingtothereversemortgagebusinesswasextendedto31March2013(refernote16).

Atthedateofsigningthisreport,theextensionoftheGroupsworkingcapitalfacilityhadbeenapprovedbythenancieranddocumentationfortheamendedfacilityagreementwasunderway.

On19August2011,theBoardofCenturiadeclaredanaldividendtobepaidtoshareholdersintheamountof3.5centspershare,partlyfrankedto30%.Thedividendpaymentdateisexpectedtobeonoraround30September2011.

Asat30June2011,Centuriaadministered$736million(2010:$753million)offriendlysocietybenetfundsandthishascontinuedtobeacoreactivityoftheGroupsince1980.Overthepast2yearstheCenturiaexecutiveandmanagementteamshavecontinuedtheirfocusonstrengtheningtheinvestmentandoperationalstaffstrategicallyaimedatimprovinginvestmentmanagementcapabilityandmembercommunicationandservices.


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Indemnication of ofcers and auditors

CenturiahasagreedtoindemnifyallcurrentandformerdirectorsandexecutiveofcersoftheCompanyanditscontrolledentitiesagainstallliabilitiestopersons(otherthantheCompanyorarelatedbodycorporate)whichariseoutoftheperformanceoftheirnormaldutiesasadirectororexecutiveofcerunlesstheliabilityrelatestoconductinvolvingalackof

goodfaith.

Centuriahasagreedtoindemnifythedirectorsandexecutiveofcersagainstallcostsandexpensesincurredindefendinganactionthatfallswithinthescopeoftheindemnityandanyresultingpayments.ThedirectorshavenotincludeddetailsofthenatureoftheliabilitiescoveredortheamountofpremiumpaidinrespectoftheDirectorsandOfcersLiabilityandlegalexpensesinsurancecontracts,assuchdisclosureisprohibitedunderthetermsofthosecontracts.TheCompanyhasnototherwise,duringorsincetheendofthenancialyear,excepttotheextentpermittedbylaw,indemniedoragreedtoindemnifyanofcerorauditoroftheCompanyoranyrelatedbodycorporateagainstaliabilityincurredassuchanofceror

auditor.

Directors meetings

Thefollowingtablesetsoutthenumberofdirectorsmeetings(includingmeetingsofcommitteesofdirectors)heldduringthenancialyearandthenumberofmeetingsattendedbyeachdirector(whiletheywereadirectororcommitteemember).

J.E.McBain

J.C.Huljich

R.W.Dobson

P.J.Done

D.K.Gupta

15

15

16

15

15

Board of DirectorsDirectors

Audit, RiskManagement

& ComplianceCommittee

InvestmentCommittee

16

16

16

16

16

-

-

6

6

4

-

-

6

6

6

10

-

-

11

6

12

-

-

12

12

-

-

4

4

3

-

-

4

4

4

Held Attended Held Attended Held Attended Held Attended

Note: J.EMcBainandJ.CHuljicharenotmembersoftheAudit,RiskManagement&ComplianceCommitee.

R.W.DobsonandJ.CHuljicharenotmembersoftheInvestmentCommittee.

J.EMcBainandJ.CHuljicharenotmembersoftheNomination&RemunerationCommitee.

Nomination &Remuneration

Committee

Future developments

TheGrouphasmadeconsiderableinvestmentsacrossitsdifferentbusinessestosupportthegrowthtargetswhichhavebeensetbytheBoard.TheBoardandmanagementteamarefocusedonfurtherstrengtheningthetwobusinesses,propertyfundsmanagementandnancialservices.

DividendsInrespectofthenancialyearended30June2011,aninterimdividendof2.5centspersharepartlyfrankedto30%waspaidtotheholdersoffullypaidordinaryshareson8April2011.

The2011naldividendof3.5centspersharewasdeclaredon19August2011.Refertothesubsequenteventssectiononpage16forfurtherdetail.

Inrespectofthenancialyearended30June2010,aninterimdividendof2.5centspersharepartlyfrankedto30%andanaldividendof2.5centspersharepartlyfrankedto30%werepaidtotheholdersoffullypaidordinaryshares.


20/101


Directors Report (continued)

Allnon-auditserviceshavebeenreviewedandapprovedtoensurethattheydonotimpacttheintegrityandobjectivityoftheauditor.

Noneoftheservicesunderminethegeneralprinciples

relatingtoauditorindependenceassetoutinCodeofConductAPES110CodeofEthicsforProfessional AccountantsissuedbytheAccountingProfessional&EthicalStandardsBoard,includingreviewingorauditingtheauditorsownwork,actinginamanagementordecision-makingcapacityfortheCompany,actingasadvocateforthe Companyorjointlysharingeconomicrisksandrewards.

Non-audit services

Detailsofamountspaidorpayabletotheauditorfornon-auditservicesprovidedduringtheyearbytheauditorareoutlinedinnote24tothenancialstatements.

Thedirectorsaresatisedthattheprovisionofnon-auditservices,duringtheyear,bytheauditor(orbyanotherperson

orrmontheauditorsbehalf)iscompatiblewiththegeneralstandardofindependenceforauditorsimposedbytheCorporationsAct2001.

Thedirectorsareoftheopinionthattheservicesasdisclosedinnote24tothenancialstatementsdonotcompromisetheexternalauditorsindependence,basedonadvicereceivedfromtheAudit,RiskManagement&ComplianceCommittee,forthefollowingreasons:

Auditors independence declaration

Theauditorsindependencedeclarationisincludedonpage29oftheannualreportandformspartoftheDirectorsReportfortheyearended30June2011.

Rounding off of amounts

ThecompanyisacompanyofthekindreferredtoinASICClassOrder98/0100,dated10July1998,andinaccordancewiththatClassOrderamountsintheDirectorsReportandthenancialstatementsareroundedofftothenearestthousanddollars,unlessotherwiseindicated.


21/101

19

Remuneration Report for the year ended 30 June 2011

ThisRemunerationReport,whichformspartoftheDirectorsReport,setsoutinformationabouttheremunerationofCenturiasdirectorsanditsseniormanagementforthenancialyearended30June2011.Theprescribeddetailsforeachpersoncoveredbythisreportaredetailedbelowunderthefollowingheadings:

1Directorandseniormanagementdetails

2 Remunerationpolicy

3Relationshipbetweentheremunerationpolicyandcompany performance

4Non-executivedirectorremuneration

5Remunerationofexecutivedirectorsandseniormanagement

6Allotheremployeesremuneration

7Keytermsofemploymentcontracts.

1. Director and senior management details

ThefollowingpersonsactedasdirectorsoftheCompanyduring

orsincetheendofthenancialyear:

R.W.Dobson(IndependentChairman)

P.J.Done(IndependentDirector)

D.K.Gupta(IndependentDirector)

J.E.McBain(ChiefExecutiveOfcerandExecutiveDirector)

J.C.Huljich(ExecutiveDirector)

ThetermseniormanagementisusedinthisRemunerationReporttorefertothefollowingpersons.Exceptasnoted,thenamedpersonsheldtheircurrentpositionforthewholeofthenancialyearandsincetheendofthenancialyear:

M.J.Coy(ChiefFinancialOfcerandadditionalCompanySecretarybasedinSydney)

T.D.Reid(CompanySecretaryandGeneralManager-CenturiaLifeLimited)

D.B.Govey(HeadofAssets)

2. Remuneration policy

Centuriarecognisestheimportantrolepeopleplayintheachievementofitslong-termobjectivesandasakeysourceofcompetitiveadvantage.Togrowandbesuccessful,Centuriamustbeabletoattract,motivateandretaincapableindividuals.Centuriasremunerationpolicyfocusesonthefollowing:

Ensuringcompetitiverewardsareprovidedtoattractand retainexecutivetalent

Linkingremunerationtoperformancesothathigherlevelsof performanceattracthigherrewards

Aligningrewardsofallstaff,butparticularlyexecutives,tothe creationofvaluetoshareholders

Makingsurethecriteriausedtoassessandrewardstaff includenancialandnon-nancialmeasuresofperformance

Linkingtheoverallcostofremunerationtotheabilityofthe Companytopay

EnsuringseverancepaymentsduetotheChief ExecutiveOfceronterminationarelimitedtopre-established contractualarrangementsthatdonotcommittheGroupto makinganyunjustiedpaymentsintheeventofnon-performance.

3. Relationship between the remuneration policyand company performance

ThemainobjectiveinrewardingtheCompanyexecutivesfortheirperformancesistoensurethatshareholderswealthismaximisedthroughtheCompanyscontinuedgrowthmovingforward.Itisnecessarytostructureandstrengthenthisfocusto

drivethisstrategysothattheyarealignedwiththeCompanysobjectivesandsuccesses.

Undertheremunerationpolicy,seniormanagementsremunerationincludesaxedremunerationcomponent,short-termandlong-termincentivearrangements.Thelong-termincentivesarebasedonCenturiasperformancefortheyearinreferencetospecicEarningsPerShare(EPS)hurdlesbeingmet.Theshort-termincentivesarebasedontheindividualsperformanceinthepreceding12monthscomparedtopre-agreedgoals.

Whereseniormanagementisremuneratedwithsecurities,theRemunerationPolicyplacesnolimitationsontheirexposuretoriskinrelationtothesecurities.Targetincentiveremuneration

referstotheincentivepayprovidedformeetingperformancerequirements.Actualincentiveremunerationcanvaryforexecutivedirectorsandseniormanagementdependingontheextenttowhichtheymeetperformancerequirements.

InaccordancewiththeCompanyscorporategovernance,thestructureofnon-executivedirectorandexecutiveremunerationisseparateanddistinct.

4. Non-executive director remuneration

Objective

TheBoardseekstosetaggregateremunerationatalevelthatprovidestheCompanywiththeabilitytoattractandretain

directorsofthehighestcalibre,whilstincurringacostthatisacceptabletoshareholders.

Structure

TheConstitutionandtheASXListingRulesspecifythattheaggregateremunerationofnon-executivedirectorsshallbedeterminedfromtimetotimebyageneralmeeting.Anamountnotexceedingtheamountdeterminedisthendividedbetweenthedirectorsasagreed.Clause63.2oftheConstitutionprovidesanaggregatemaximumamountofnotmorethan$750,000peryear.

Directors Fees

EachdirectorreceivesafeeforbeingadirectorofGroupcompaniesandanadditionalfeeispaidtotheChairmanandtotheChairmanofeachBoardCommittee.ThepaymentoftheadditionalfeestoeachChairmanrecognisestheadditionaltimecommitmentandresponsibilityassociatedwiththeposition.

Non-Executive Director Share Plan

Followingapprovalatthe2009AGM,aNon-ExecutiveDirectorSharePlan(NEDSharePlan)wasimplemented.Theconceptofthenon-executivedirectorstakingacomponentoftheirremunerationasCenturiasharesisseenasfurtheraligningtheirinterestswithshareholders.


22/101


Duringthe2010year,eachofthenon-executivedirectors(MessrsDobson,Done&Gupta)wereissuedwith75,000CenturiasharesundertheNEDSharePlanfornilconsideration.ThesesharesweresubjecttotradingrestrictionsanddirectorswerenotabletosellorotherwisedealwiththeirsharesissuedunderthePlanwithin12monthsofthedateofissueunlessaChangeofControlEventoccurredasdenedsection5(b)(ii)of

thisreport.

5. Remuneration of executive directors andsenior management

Objective

TheCompanyaimstorewardexecutiveswithalevelandmixofremunerationcommensuratewiththeirpositionandresponsibilitieswithintheCompanysoasto:

Rewardexecutivesforcompany,businessunitandindividual performanceagainsttargetssetbyreferencetoappropriate benchmarks

Aligntheinterestsofexecutiveswiththoseofstakeholders

Linkrewardswiththestrategicgoalsandperformanceofthe Company

Ensuretotalremunerationiscompetitivebymarket standards.

Structure

Indeterminingthelevelandmake-upofexecutiveremuneration,theCEOseeksindependentadviceregardingmarketlevelsofremunerationforcomparableexecutiveroles.

Remunerationpackagesincludeamixofxedandvariableremunerationandshortandlong-termperformance-basedincentives.TheproportionofxedandvariableremunerationisestablishedforeachexecutivebytheCEOafterconsultationwiththeNomination&RemunerationCommittee.Whiletheallocationmayvaryfromperiodtoperiod,thetablebelowdetailstheapproximatexedandvariablecomponentsfortheexecutives.

(a) Fixed Remuneration

Objective

Fixedremunerationconsistsofbaseremuneration(whichiscalculatedonatotalcostbasisandincludesanyFBTchargesrelatedtoemployeebenetsincludingmotorvehicles),aswellasemployercontributionstosuperannuationfunds.Thisis

reviewedannuallybytheCEOandtheprocessconsistsofareviewofCompany,businessunitandindividualperformanceaswellasrelevantcomparativeremunerationinthemarket.ThesameprocessisusedbytheNomination&RemunerationCommitteewhenreviewingthexedremunerationoftheCEO.

TheCEOandseniorexecutivesaregiventheopportunitytoreceivetheirxed(primary)remunerationinavarietyofformsincludingcashandsalarysacriceitemssuchasmotorvehicles,motorvehicleallowancesand/oradditionalsuperannuationcontributions.ItisintendedthatthemannerofpaymentchosenwillbeoptimalwithoutcreatingunduecostfortheGroupbutalwayscontainedintheirrespectivexedtotalremuneration.

(b) Variable Remuneration

UnderCenturiasSeniorManagementRemunerationPolicy,longandshort-termperformanceincentivesmaybemadeundertheCompanysincentiveplans.Thesearediscussedfurtherbelow.

(b) (i) Short-term Incentives (STI)

TheobjectiveoftheSTIprogramistolinktheachievementoftheGroupsoperationalandnancialtargetswiththeremunerationreceivedbytheexecutiveschargedwithmeetingthosetargets.ThetotalpotentialSTIavailableissetatalevelsoastoprovidesufcientincentivetotheexecutivetoachieve

operationaltargetsandsuchthatthecosttotheGroupisreasonableinthecircumstances.

Executive Directors

J.C.Huljich

J.E.McBain

Senior Management

M.J.Coy

T.D.Reid

D.B.Govey

26%

26%

26%

23%

23%

74%

74%

74%

77%

77%

FixedRemuneration

%

DirectorsVariable

Remuneration

%

% of Total Target Annual Remuneration

Remuneration Report (continued)


23/101

21

Details of the grants of Performance Rights are set out below:

Performance Rights Plan (PRP)

Atthe2003AGM,CenturiashareholdersapprovedaPerformanceRightsPlan(PRP)whichprovidestheBoard(ortheNomination&RemunerationCommitteeactingastheBoardsdelegate)discretiontograntPerformanceRightstoemployeesforaspeciednumberofordinarysharesfornoconsideration.Atthe2009AGM,shareholdersreapprovedthePRPand

approvedtheissueofupto3millionPerformanceRightsfornilconsideration.ThePRPappliestoexecutivedirectors,seniormanagementandotheremployeeswithintheGroup.

APerformanceRightrepresentstherighttosubscribefororacquireoneCenturiashareintheCompanyfornilconsideration(unlessotherwisedeterminedbytheBoardatthetimeofgrant).PerformanceRightsmaynotbetransferred,orencumberedwithouttheapprovaloftheBoardandwillnotbelistedforquotationonanystockexchange.

TheBoardmaydeterminefromtimetotimetheperformanceconditions(ifany)thatwillapplytoPerformanceRights.OnlyPerformanceRightswhichsatisfytheseconditionsorwhich

vestfollowingaChangeofControlEventwillvestandbecomeexercisable.

OnlypersonsemployedontherelevantPerformanceRightsGrantDatebytheCompanyoroneofitssubsidiarieswillbeeligibletoreceiveagrantofPerformanceRights.ThePerformanceRightsofaneligibleemployeewillbeforfeiteduponterminationoftheeligibleemployeeceasingtobeanemployeeordirectoroftheCompany(otherthanasaresultofcertaincircumstancessuchasdeath,totalandpermanentdisabilityorredundancyorthesaleofaCenturiacompanyorbusinesswhichemploystheCenturiaemployeeorasotherwisedeterminedbytheBoard).

ThePRPhastwoparts:

Compensation Performance Rights

Theseweredesignedtocompensateeligibleemployeesforsalaryreductionsmadeasof1May2009,withthenumberofPerformanceRightsissueddeterminedbyreferencetothesalaryreductionsfrom1May2009to30June2010.ThenumberofCompensationPerformanceRightsissuedinrespectofthe2011nancialyearwas685,308atapriceof$0.52.

Incentive Performance Rights

Theseprovideeligibleemployeeswithashort-termincentive,andtheBoardmayelecttoawardanemployeewitheitherPerformanceRightsoracashbonusoracombinationofboth,bearinginmindthetotalremunerationtheemployeeisawardedinaparticularyear.

ThePerformanceRightswillveston,andareexercisableafter,datesspeciedatthetimeofgrantsubject(otherthanforCompensationPerformanceRights)totheachievementofcertainperformancehurdlesbytheCompany.IfthecapitaloftheCompanyisreconstructedthenthehurdleswillbeadjustedasnecessaryfortheplan.

(i)

(ii)-

Basedonunderlyingnetprotaftertax.ThefairvalueofeachPerformanceRightissuedwas$0.57basedonthevolumeweightedaveragesharepriceofCenturiainthe10tradingdayspriorto30June2011.

EPShurdlewillbesetpriortothetimeofgrant.1.3millionperformancerightsavailableforpotentialfutureissuancebytheNominationandRemunerationCommittee.

(i)

(ii)

CompensationPerformanceRights

IncentivePerformanceRights



01July2010

30September2010

30June2011

30June2012

10February2010

30June2010

30June2011

30June2012

Performance Rights

Grant Date

0.7million

0.3million

0.7million

1.3million

Number of

Performance Rights

NoEPShurdle

8.96cents

7.50cents

EPS

Hurdle

Vesting

Date


24/101


(b) (ii) Long-term Incentives (LTI)

AnExecutiveOptionPlan(EOP)wasapprovedatthe2009AGM.TheEOPrepresentsthelong-termincentiveforseniorexecutives.TheawardofExecutiveOptionsunderthisplanaresubjecttoEPShurdlesandnoExecutiveOptionwillbecapableofbeingexerciseduntilthethirdyearafterthedateofgranting(thatis,2012).

TheExecutiveOptionsdonotvest:

UntilthelodgementorpublicationbytheCompanyofits annualnancialstatementsforthenancialyearending30 June2012(AnnouncementDate)

Achangeofcontrolevent(asdenedbelow)occursor

Iftherelevantexecutiveisnotanemployeeordirectorat30June2012unlesstheyhaveonlyceasedtobeanemployeeordirectorduetoaQualifyingReason(death,totaland permanentdisability,redundancy;thesaleofaCenturia companyorbusinesswhichemploystheCenturiaemployee orasotherwisedeterminedbytheBoard).

Achangeofcontroloccursifapersonacquires:

Arelevantinterest(withinthemeaningofsection608ofthe CorporationsAct2001)inmorethan50%oftheordinary sharesintheCompanyor

ControloftheCompanyor

OranyothereventoccurswhichtheBoarddetermines,initsabsolutediscretion,tobeaChangeofControlEvent.

IfaneventoccursaffectingthenumberortypeofsecuritiesonissueinthecapitaloftheCompany(includingasubdivision,consolidationorreduction),theExecutiveOptionswillberestructuredinamannerwhichisfairandequitabletothe

executiveswhichisconsistentwiththerelevantprovisionsoftheASXListingRulesatthattime.

TheBoardhasdeterminedthatthecombinationoftheEPSperformancehurdleandsettingtheexerciseprice(showntopright)abovetheanticipatedfairmarketvalueoftheunderlyingCenturiashareatthetimeofgrantisappropriatebecausesatisfactionofthehurdles(andthereforevesting)shouldcorrespondtoanincreaseinshareholdervalue.

TheExecutiveOptionsmaybeexercisedfromtheAnnouncementDateforaperiodofthreemonthslessoneday.

ThemaximumnumberofExecutiveOptionsissuedundertheEOP,andofCenturiasharesissueduponexerciseof

theExecutiveOptions,willbe2.1million.OftheseExecutiveOptions,1.6millionhavebeenissuedasat30June2011.OneExecutiveOptiononitsvalidexerciseentitlestheholdertobeissuedwithoneCenturiaordinaryshare.TheExecutiveOptionswillbeissuedtoexecutivesfornilconsideration.

(i)OfthetotalnumberofExecutiveOptionsofanexecutivedirectorthatbecomeexercisable,onethirdhaveanexercisepriceof$0.66,onethirdanexercisepriceof$0.73andonethirdanexercisepriceof$0.80perExecutiveOption.

AlloftheExecutiveOptionsbecomeexercisableif:

TheCompanymeetsorexceedsallofthefollowingEPS targetsfornancialyearsshown:

Or:

ThesimpleaverageoftheCompanysEPSforthe3nancialyearsis10.07cents.

PartonlyoftheExecutiveOptionswillbecomeexercisableif:

AChangeofControlEventoccurs(thenumberofExecutiveOptionsvestingwillbepro-ratatotheproportionofthe vestingperiodthathaselapsedatthetimeoftheChangeofControlEvent),or

BasedontheEPSachievedandonthefollowingsliding scale,assumingthattheEPSforthepurposesofthegrowth chartwas8centsforthenancialyearending30June2009:

J.E.McBain

J.C.Huljich

M.J.Coy

T.D.Reid

D.B.Govey

600,000

400,000

325,000

100,000

100,000

Executive OptionsGranted on 29October 2009

Name of Executive Director /Senior Management

2010

2011

2012

8.96cents

10.04cents

11.23cents

EPS HurdleFinancial Year (FY)

Lessthan8%

8-8.99%

9-9.99%

10-10.99%

11-11.99%

12-12.99%

0%

20%

40%

60%

80%

100%

% ExecutiveOptions Vesting

Average EPS Growth Rate from2010 to 2012

Details of grants of Executive Options to ExecutiveDirectors and Senior Management are set out below:



25/101

23

6. All other employees remuneration

Objective

TheCompanyaimstorewardallotheremployeeswithalevelofremunerationcommensuratewiththeirpositionandresponsibilitieswithintheCompanyandensuringthatitiscompetitivebymarketstandards.

Structure

Indeterminingthelevelofallotheremployeesremuneration,theCEOmayseekindependentadviceregardingmarketlevelsofremunerationforcomparableroles.Remunerationpackagesarexedandinclusiveofstatutorysuperannuationcontributions.Aftercompletionofaqualifyingperiod,employeesmaybeeligibletoparticipateintheCompanysincentiveprogramswhichwillvaryfromtimetotimedependingoncompanypoliciesandthechangingneedsofthebusiness.BonuspaymentsaredeterminedattheabsolutediscretionoftheCompany.Eligibleemployeeswillbeadvisedannuallyoftheirparticipationinanybonusprogram.

CenturiasoverallobjectiveistorewardseniormanagementbasedontheCompanysperformanceandbuildonshareholderswealthbutthisissubjecttomarketconditionsfortheyear.ThetablebelowsetsoutsummaryinformationabouttheGroupsearningsfortheveyearstoJune2011:

Totalincome

Netprot/(loss)beforetaxNetprot/(loss)aftertax

73,447

(19,527)(12,413)

114,019

11,3786,514

30 June 2007$000

30 June 2008$000

30 June 2009$000

30 June 2010$000

30 June 2011$000

Summaryof Earnings

55,344

(1,065)(2,707)

51,583

12,8806,318

51,804

1,347(2,981)

Sharepriceatstartofyear

Sharepriceatendofyear

Interimdividend(i)

Finaldividend(i)

BasicearningspershareDilutedearningspershare

$0.91

$0.42

0.0cps

0.0cps

(21.4)cps(21.4)cps

$2.26

$2.22

5.0cps

6.0cps

11.0cps11.0cps

30 June 200730 June 200830 June 200930 June 201030 June 2011

$2.22

$0.91

5.0cps

3.0cps

(4.6)cps(4.6)cps

$0.42

$0.52

2.5cps

2.5cps

9.3cps8.4cps

$0.52

$0.57

2.5cps

3.5cps

(3.7)cps(3.7)cps

(i)30June2011:partlyfrankedto30%.


26/101


Valuation of performance rights for directors and senior management

ThevalueofthePerformanceRightsgrantedatthegrantdatein2011was$136,064.

Valuation of options for directors and senior management

Thevalueofoptionsgrantedatthegrantdatein2010inrespectofthe2011yearwas$67,623.Non-executive directors remuneration

Theaggregatenon-executivedirectorsremunerationpaidin2011was$332,450.

Remuneration of directors and senior management

Remuneration for the year ended 30 June 2011:

R.W.Dobson

J.E.McBain

J.C.Huljich

P.J.Done

D.K.Gupta

Sub-total

Senior Management

M.J.Coy

T.D.Reid

D.B.Govey

Sub-total

Grand Total

Directors

Salaries $

-

354,243

253,008

-

-

607,251

256,881

200,279

219,450

676,610

1,283,861

Fees $

130,000

-

-

100,000

75,000

305,000

-

-

-

-

305,000

Bonus $

-

100,000

71,000

-

-

171,000

-

-

-

-

171,000

Car Allowance $

-

20,000

20,000

-

-

40,000

-

-

-

-

40,000

11,700

33,682

24,571

9,000

6,750

85,703

23,119

17,070

19,750

59,939

145,642

Superannuation $

Short-term Employee Benets Post Employment Benets


Nodirectorsorseniormanagementpersonappointedduringtheperiodreceivedapaymentaspartofhisorherconsiderationforagreeingtoholdtheposition.


27/101

25

Performance Rights $

-

-

-

-

-

-

69,609

6,986

59,469

136,064

136,064

Options $

-

26,606

17,737

-

-

44,343

14,412

4,434

4,434

23,280

67,623

Participating Rights $

-

-

-

-

-

-

-

-

-

-

-

141,700

534,531

386,316

109,000

81,750

1,253,297

364,021

228,769

303,103

895,893

2,149,190

Total $

-

-

-

-

-

-

-

-

-

-

-

Termination Payments $

Share-based Payment Termination Benets


28/101


R.W.Dobson

J.E.McBain

J.C.Huljich

P.J.Done

D.K.Gupta

Sub-total

Senior Management

M.J.Coy

T.D.Reid

D.B.Govey

Sub-total

Grand Total

Directors

Salaries $

-

316,819

225,711

-

-

542,530

231,192

180,233179,546

590,971

1,133,501

Fees $

95,000

-

-

67,125

49,000

211,125

-

--

-

211,125

Bonus $

-

-

-

-

-

-

-

--

-

-

Car Allowance $

-

20,000

20,000

-

-

40,000

-

--

-

40,000

8,550

30,314

22,114

3,690

-

64,668

20,807

15,38316,159

52,349

117,017

Superannuation $

Short-term Employee Benets Post Employment Benets

Nodirectorsorseniormanagementpersonappointedduringtheperiodreceivedapaymentaspartofhisorherconsiderationforagreeingtoholdtheposition.


Bonus

Nocashbonusesweregrantedduringthe30June2010nancialyeartotheaboveseniormanagementoranyotherstaffofCenturia.

Performance rights

AsaresultofallCenturiastaffreceivingeithera7.5%or10%reductiontotheirremunerationduringthecurrentperiod,inaccordancewiththeresolutionsattheOctober2009AGM,staffweregrantedPerformanceRightsascompensationforthedecreasedremuneration(98%weregranted),theconditionbeingemploymentfrom1May2009to1July2010.

AlsoinaccordancewiththeOctober2009AGM,performancerightswerealsograntedtostaffinsteadofcashbonuses.

Valuation of options and performance rights for directors and senior management

Thevalueofoptionsgrantedatthegrantdatein2010inrespectofthe2010yearwas$67,623.

ThevalueofthePerformanceRightsgrantedatthegrantdatein2010was$360,843.

Theaggregatenon-executivedirectorsremunerationpaidin2010was$388,200.

Remuneration of directors and senior management (continued)

Remuneration for the year ended 30 June 2010:


29/101

27

Performance Rights $

54,945

57,347

42,156

54,945

54,945

264,338

40,843

23,83631,826

96,505

360,843

Options $

-

26,606

17,737

-

-

44,343

14,412

4,4344,434

23,280

67,623

Participating rights $

-

-

-

-

-

-

-

--

-

-

158,495

451,086

327,718

125,760

103,945

1,167,004

307,254

223,886231,965

763,105

1,930,109

Total $

-

-

-

-

-

-

-

--

-

-

Termination Payments $

Share-based Payment Termination Benets


30/101


7. Key terms of employment contracts

Current CEO

MrJohnMcBain,wasappointedasCEOofCenturiainApril2008.HeisalsoanexecutivedirectorofCenturia.MrMcBainisemployedundercontract.ThesummaryofthemajortermsandconditionsofMrMcBainsemploymentcontractareasfollows:


Redundancyorretrenchment

Special

Circumstances(Deathordisablity)

Dismissalforseriousmisconduct(e.g.Fraud)

Terminationinanyotherinstance

(e.g.Resignation)

VestedRights

Type ofTermination

Lapseafter12monthsfrom

dateofterminationofemployment.

Lapse.

Lapse.

Lapse.

Lapseafter60days

fromthedateoftermination.

Lapseafter180

daysfromthedateoftermination.

Lapsefromthedateoftermination.

Lapsefromthedateoftermination.

UnvestedRights

OnbehalfoftheBoard

J.E. McBain

Executive Director & Chief Executive Ofcer

P.J. Done

Director

Chairman - Audit, Risk Management & ComplianceCommittee

Other executives (standard contracts)

Allexecutivesareemployedundercontract.TheCompanymayterminatetheexecutivesemploymentagreementbyproviding1-6monthswrittennoticeorprovidingpaymentinlieuofthenoticeperiod(basedontheTotalFixedCompensationPackage).

UponaparticipantsterminationofemploymentwithCenturia,the

unvestedandvestedperformancerightsoftheparticipantwillbedealtwithasspeciedinthetablebelow.MrMcBainreceivesFixedCompensationplus superannuation.

MrMcBainisentitledtoamotorvehicleallowanceandcanelecttoapplyaportionofhissalaryasamotorvehicleallowance.Fortheyearended30June2011,MrMcBainelectedtoallocatefromhistotalsalaryamount$20,000(2010:$20,000)tohismotorvehicleallowance.

MrMcBainisentitledtocarparkingwithincloseproximitytoCenturiasofce.

MrMcBainiseligibletoparticipateinthebonusprogramwhichwillbedeterminedatthediscretionoftheBoard.

Centuriamayterminatethisemploymentcontractbyproviding6monthswrittennoticeorprovidepaymentinlieuofthenoticeperiod.AnypaymentinlieuofnoticewillbebasedontheTotalFixedCompensationPackage.

Centuriamayterminatetheemploymentcontractatanytimewithoutnoticeifseriousmisconducthasoccurred.WhenterminationwithcauseoccurstheCEOisonlyentitledtoremunerationuptothedateoftermination.


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29

Auditors Independence Declaration

Lead Auditors Independence Declaration under Section 307C of the Corporations Act 2001

To: the directors of Centuria Capital Limited

I declare that, to the best of my knowledge and belief, in relation to the audit for the nancial year

ended 30 June 2011 there have been:

(i) no contraventions of the auditor independence requirements as set out in the

Corporations Act 2001 in relation to the audit; and

(ii) no contraventions of any applicable code of professional conduct in relation to theaudit.

KPMG

Steven Gatt

Partner

Sydney

19 August 2011

KPMG, an Australian partnership and a member rm of the KPMG network

of independent member rms afliated with KPMG International Cooperative(KPMG International), a swiss entity.


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ThisstatementsetsouttheeightcoreprinciplesidentiedbytheASXCorporateGovernanceCouncil(theCouncil)asunderlyinggoodcorporategovernanceandoutlinestheapproachofCenturiaCapitalLimited(Centuria)toeachoftheprinciples.

AsrecognisedbytheCouncil,corporategovernanceisthesystembywhichcompaniesaredirectedandmanaged.Itinuenceshowtheobjectivesofthecompanyaresetand

achieved,howriskismonitoredandassessedandhowperformanceisoptimised.Thereisnosinglemodelofgoodcorporategovernance.AtCenturia,corporategovernancewillevolvewithourchangingcircumstancesandwillbetailoredtomeetthosecircumstances.

DetailsofthemaincorporategovernancerelatedpoliciesadoptedbytheCompanyareavailableintheCorporateGovernancesectionofCenturiaswebsitewww.centuria.com.au.

Principle 1: Lay solid foundations for managementand oversight

The role of the Board

TheBoardofDirectorsisresponsibleforsettingthestrategicdirectionandestablishingthepoliciesofCenturia.Itisresponsibleforoverseeingthenancialposition,andformonitoringthebusinessandaffairsofCenturiaonbehalfoftheshareholders,bywhomthedirectorsareelectedandtowhomtheyareaccountable.Italsoaddressesissuesrelatingtointernalcontrolsandapproachestoriskmanagement.Itensuresthatthereareprocessesinplacetoconformtolegalrequirementsandcorporategovernancestandardsandthatriskexposuresareadequatelymanaged.

ForfulldetailsoftheroleoftheBoardpleaserefertoourBoardCharter,alinktowhichiscontainedundertheCorporateGovernancepageofourwebsite.

Delegation to Senior Executives

TheroleoftheChiefExecutiveOfcer(CEO)andSeniorExecutivesistomanageCenturiainaccordancewiththedirectiongivenbytheBoard.

TheCEOsresponsibilitiesinclude:

Performance Review of Senior Executives

TheperformanceoftheCEOisreviewedperiodicallybytheNominationandRemunerationCommitteeandtheBoard.Thisassessmentismadeagainstpre-determinedcriteriaincludingKeyPerformanceIndicatorsrelatingtoCenturiasperformanceasdeterminedinCenturiasStrategicPlan.

PerformancereviewsofSeniorExecutivesarecarriedoutbytheCEOwhoreportsthendingstotheNominationandRemunerationCommittee.TheCEOconductsthereviewseach

yearbycomparingperformanceagainstagreedmeasures,evaluatinganyefcienciesorimprovementsduringthecourseoftheyearanddecidingupontargetsfornextyear.

2011 Corporate Governance Statement

Principle 2: Structure the Board to add value

Directors

TheDirectorsReportintheAnnualReportcontainsdetailsofthedirectorsskills,experienceandqualications.Italsostatesthedatetheindividualdirectorwasappointedtotheboard,theirstatusasnon-executiveorexecutivedirectorsandthe

committeesonwhichtheysit.ThedirectorsseektoensuretheBoardconsistsofdirectorswithanappropriaterangeofexperience,skills,knowledgeandvisiontoenableittooperateCenturiasbusinesswithexcellence.ThenumberofdirectorsislimitedbyCenturiasconstitutiontoaminimumof5andamaximumof13.TheBoardconsidersthattheidealsizeis5to8directors.TherehavebeennonewappointmentstotheBoardsince2007.AnyfuturenewappointmentsshallcontinuetoadheretoCenturiasdesiretomaintaintheappropriateskills,experienceandqualicationmix,keepinginmindacommitmenttodiversityofgenderandbackground.

CurrentlytheBoardconsistsof5directors.Threeofthevedirectors,namelyRogerDobson,PeterDoneandDeepak

GuptaareconsideredtobeindependentasperindependencecriteriasetoutintheBoardCharter.ThethreeindependentdirectorsdonothaverelationshipswithCenturiawhichaffecttheirindependentstatus,suchassubstantialshareholdingsordirectemployment.Theydonotprovidematerialprofessionalconsultancyservices,theyarenotamaterialsupplierorcustomerandtheydonothaveamaterialcontractualrelationshipwithCenturiaorothergroupmemberexceptasadirector.OurCEOs,JohnMcBainandJasonHuljicharealsoexecutivedirectors.DirectorsarerequiredtodiscloseateachBoardmeetinganyintereststhatmayaffecttheirindependence.IndependentdirectorsreconrmtheirindependentstatustotheBoardbywayofawrittenconrmationonanannualbasis.

Directorsareselectedandappointedinaccordancewithdocumentedprocedures.Forfulldetailsontheproceduresfortheselectionandappointmentofdirectorspleaseseeourpolicy,alinktowhichiscontainedundertheCorporateGovernancepageofourwebsite.

Chairman

Centuriaschairman,RogerDobsonisconsideredtobeanindependentdirectorforthereasonsgivenabove.ThereisacleardivisionofresponsibilityattheheadofthecompanyastherolesofchairmanandtheCEOarenotperformedbythesameperson.TheBoardCharteralsoprovidesthatthechairmanshallbeanindependentnon-executivedirector.AStatementofPositionAuthorityisinplacefortheCEOwhichdetailsthe

responsibilitiesandauthoritiesforthatposition.

Nomination and Remuneration Committee

TheNominationandRemunerationCommitteeformulatescriteriaforappointmentofdirectorstotheBoard,identiespotentialcandidatesandrecommendsremunerationofdirectorsandseniormanagement.AppointmentstotheBoardaremadeontheunderstandingthataminimumofonetermofthreeyearsandamaximumofthreeterms(9years)willbeserved.AlinktothecharteroftheNominationandRemunerationCommitteecanbefoundontheCorporateGovernancepageofourwebsite.

Formulatingandreviewing,withtheBoard,thevisionandstrategyforCenturia

DevelopingactionsandplanstoachievethevisionandimplementthestrategyandtoreporttotheBoardontheprogressagainstthoseplans

Appointingamanagementteamandnegotiatingtermsandconditionsoftheiremployment

Approvingtheremunerationlevelsofallstaff.


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31

Specic activities include:

Assessmentoftheef fectivenessandcompositionofBoardcommittees

RegularevaluationoftheperformanceoftheCEORecommendingremunerationfornon-executivedirectors

RecommendingacompetitiveremunerationandrewardprogramfortheCEOandotherseniormanagement

Ensuringthatotherhumanresourcemanagementprograms,includingperformanceassessmentprograms,arein place.

TheNominationandRemunerationCommitteeconsistsofthreedirectors,allofwhomareindependentandischairedbyanindependentdirector.DetailofmembershipoftheNominationandRemunerationCommitteeincludingmeetingattendanceissetoutinattheendoftheCorporateGovernanceStatement.

Eachdirectorsskills,experienceandexpertiseiscontainedintheDirectorsReport.

Board Performance

TheBoardreviewedandassesseditsperformanceforthe2010/11nancialyear.Detailedconsiderationwasgiventothefollowingareas:

TheBoardscomposition

TheoperationsandeffectivenessoftheBoardandits Committees

Decisionmakingprocesses,includingagendas,frequencyofmeetingsandcontentofpapers

CommunicationsbetweentheBoardandexecutives

Determinationofcompanystrategy

TheBoardspoliciesforBoardrenewal.

Continuingeducationtoupdateandenhancedirectorknowledgeisseenasanimportantfactorinensuringoptimumperformancebyeachdirector.

Clause5oftheBoardChartergivesdirectorstheauthoritytoseekprofessionaladviceasconsiderednecessaryintheperformanceofitsdutiesatCenturiasexpense.Thedirectorsalsohavefullaccesstothecompanysecretarytoassistthemtocarryouttheirrole.

Re-election of Directors

TheCompanysconstitutionstipulatesthatanumberofdirectorsnotexceedingone-thirdoftheirnumbershouldretirebyrotationateachannualgeneralmeeting(AGM).Adirectormustofferthemselfforre-electionatthethirdAGMsincetheirelectionorre-election,unlesstheyhaveservedthreetermsatwhichtimethedirectormustretirefromtheBoard.TheCEO,ifalsoadirector,isnotsubjecttotheretirementbyrotationprocess,andisnotincludedwhencalculatingthenumberofdirectorsrequiredtoretirebyrotation.

PRINCIPLE 3: Promote ethical and responsibledecision-making

Code of Conduct

TheBoardhasestablishedaDirectorsandEmployeeCodeofConductthatsetsthestandardbywhichallofcersand

employeesofthecompanyaretoconductthemselvesinthecourseoftheirduties.PotentialbreachesoftheCodeofConductcanbereportedtomanagement,theAudit,RiskManagement&ComplianceCommitteeoranexternalauditorusingtheguideoutlinedinCenturiasWhistleblowerPolicy.AlinktotheCodeofConductcanbefoundundertheCorporateGovernancepageofourwebsite.

Trading in Centurias Securities

TheBoardhasestablishedapolicyconcerningtradinginCenturiassecuritiesbydirectors,ofcersandemployees.ThepolicyprohibitsDirectorsandemployeestradinginCenturiassecuritiesiftheyareawareofanypricesensitiveinformationandalso,atnominatedtimeswhenablack-outperiodisimposed.AlinktoCenturiasDirectors&EmployeesSecuritiesTradingPolicycanbefoundundertheCorporateGovernancepageofourwebsite.

Diversity at Centuria

RecentamendmentstotheASXCorporateGovernancePrinciplesandRecommendationshavefocussedtheBoards

attentiononformalisingintopolicytheCompanysbeliefthatadiverseworkforcewithequalityofopportunitywillachievestrongbusinessresults.MeasurabletargetstoachieveCenturiasdiversityobjectivesarecurrentlyunderconsiderationbytheBoard.Onceadopted,progresstowardrealisingthetargetswillbereportedonanannualbasis.Whilstultimatelyallnewappointments,whetherofadirectororanemployeewillbemadeonthebasisofmerit,meetingthetargetswillprovideevidenceoftheeffectivenessofthepolicy.

Principle 4: Safeguard integrity in nancial reporting

Audit, Risk Management and Compliance Committee

OurAudit,RiskManagement&ComplianceCommitteeconsists

ofthreenon-executivedirectors,hasamajorityofindependentdirectorsandischairedbyanindependentchairwhoisnotthechairofCenturiasBoard.Allmembersarenanciallyliterateeitherholdingnancialoraccountingqualicationsand/orhavingprofessionalexperienceinanancialoraccountingrelatedeld.TheCommitteechairman,PeterDoneisacharteredaccountantwithover40yearsofexperience.DeepakGuptahas20yearsexperienceinthenancialservicesandinvestmentmanagementindustry.Thethirdmemberofthecommittee,RogerDobsonisaseniorpartnerinthebankingandnancepracticeatthelegalrminwhichheisapartner.TheCommitteemeetsatleastsixtimesperyear.TheexternalandinternalauditorsoftheGroupattendonaregularbasis.DetailoftheAudit,RiskManagement

&ComplianceCommitteemembersnames,appointmentdate,status,qualicationsandmeetingattendanceissetoutatheendofthisCorporateGovernanceStatement.

Charter

TheBoardhasformulatedanAudit,RiskManagement&ComplianceCommitteeCharter,alinktowhichiscontainedundertheCorporateGovernancepageofourwebsite.

External Auditor

Procedureshavebeenestablishedinrelationtotheexternalauditorselection,appointmentandleadpartnerrotation.Alinktotheproceduresrelatingtotheexternalauditorselection,appointmentandleadpartnerrotationcanbefoundunderthe

CorporateGovernancepageofourwebsite.

AnnualreviewofBoardcompositiontoensurethatthenecessaryskillsarerepresented,togetherwiththeappropriatecontinuityandbalance


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Principle 5: Make timely and balanced disclosure

TheBoardhasestablishedwrittenpoliciesandproceduresoninformationdisclosure.ThefocusofthesepoliciesandproceduresistoeffectCenturiascommitmentto:

Complywiththegeneralandcontinuousdisclosure principlescontainedintheASXListingRulesandthe

CorporationsActPreventtheselectiveorinadvertentdisclosureofprice sensitiveinformation

Ensurethatshareholdersandthemarketareprovided withfullandtimelyinformationaboutitsactivities

Ensurethatallmarketparticipantshaveequalopportunity toreceiveexternallyavailableinformationissuedby Centuria.

AsummaryofourContinuousDisclosurePolicycanbefoundundertheCorporateGovernancepageofourwebsite.

ResponsibilityforcompliancewithCenturiascontinuous

disclosureobligationsrestswiththeCompanySecretary.PricesensitiveinformationispubliclyreleasedthroughtheASXbeforedisclosingittoanalystsorothersoutsidethecompany.InformationispostedonCenturiaswebsiteassoonasreasonablypracticableafterthestockexchangeconrmsanannouncementhasbeenmade,withtheaimofmakingtheinformationaccessibletothewidestaudience.withtheaimofmakingtheinformationaccessibletothewidestaudience.

Principle 6: Respect the rights of shareholders

Centuriaaimstoprovideprompt,accurateandaccessibleinformationtoitsshareholders.IthasestablishedaCommunicationsPolicydetailingstepstobetakentoachievethisobjective,acopyofwhichcanbeviewedundertheCorporateGovernancepageofourwebsite.ThemainmechanismsthroughwhichCenturiacommunicateswithitsshareholdersare:

TheAnnualReportandHalf-yearFinancialReports

AnnouncementsmadetotheAustralianSecuritiesExchange

Noticesandexplanatorymemorandaofannualgeneral meetings

TheAnnualGeneralMeeting

Centuriaswebsitewww.centuria.com.au

Centuriaswebsiteformsanimportantpartofthestrategyfor

communicatingwithshareholders.Centuriaswebsitehasashareholderspagewhichincludessharedetails,companyreports,companyannouncementsandpressreleases(includingcopiesofanysignicantpresentationsmadetoanalysts),anditemsrelatingtoAGMs.

Indesigningnoticesandexplanatorystatements/memorandaofAGMs,CenturiagivesconsiderationtotheguidelinesgivenbytheASXCorporateGovernanceCouncilinitsCorporateGovernancePrinciplesandRecommendations.

AtthetimeofprovidinganoticeofmeetingandexplanatorymemorandafortheAGMaformisprovidedforshareholderstomailbacktoCenturiaiftheywishtoraiseanyissues.AttheAGM,theCompanywill,whereappropriate,endeavourtoaddressissuesraisedbyshareholdersintheseforms.DuringthecourseoftheAGMtheoorisopenedforquestions.

Principle 7: Recognise and manage risk

TheCenturiaBoardhasestablishedaRiskManagementFrameworkfortheGroup,asummaryofwhichcanbeviewedundertheCorporateGovernancepageofourwebsite.RiskmanagementisanintegralpartofthegovernanceofCenturiaandisoneofthemainresponsibilitiesoftheBoardandSeniorManagement.TheBoardisultimatelyresponsibleforapproving

andreviewingCenturiasRiskManagementFramework.ThemonitoringandmanagementofriskonanongoingbasisistheresponsibilityofmanagementasrepresentedbytheheadsoftherespectivebusinessunitsofCenturia.

AtCenturia,managingriskisacontinuousprocessforbothManagementandtheBoard.Centuriascomprehensiveriskmanagementframeworkrequiresadetailedannualbusinessriskreview,whichseekstodeneallthemajorrisksthatcouldpreventorimpacttheCompanyfromachievingitsobjectives.ThisreviewhasbeencompletedforthisnancialyearandtheBoardhasacceptedmanagementsreportthatmaterialbusinessriskshavebeenmanagedeffectively.

Themanagementofriskisthencontinuallyaddressedduringtheyearatthebusinessunitlevel.Periodically,anexternalauditrmisengagedtoreviewtheeffectivenessofCenturiasriskmanagementframework.Combinedwiththis,isanembeddedcomplianceculturetoensureCenturiameetstherequirementsoftheAustralianSecuritiesandInvestmentsCommissionforconductinganancialservicesbusinessandoperatingmanagedinvestmentschemes.Arobustcomplianceframeworkhasbeenimplementedwhichrequiresthebusinesstomonitoritsactivitiesandthoseofitsoutsourcedserviceproviders.ThecompliancefunctionatCenturiareportsdirectlytotheAudit,RiskManagement&ComplianceCommitteeandtheBoard.

AninternalauditfunctionhasalsobeenestablishedwithafocusonCenturiascontrolenvironment.Theannualinternalauditplanisdeterminedhavingregardtotheriskproleofthebusinessarisingfromtheannualbusinessriskreview.

TheAudit,RiskManagement&ComplianceCommitteehasthebelowriskmanagementresponsibilities:

AssessingrisksarisingfromtheGroupsoperationsand ensuringtheadequacyofmeasurestakentomoderate thoserisks

ReviewingandassessingtheeffectivenessoftheGroups RiskManagementFrameworkandinternalcontrol practicesandensurethereisacontinuousprocessfor

themanagementofsignicantrisksthroughouttheGroupMonitoringcompliancewiththeCompanysRisk ManagementFramework.

QuarterlyriskmanagementreportingisprovidedtotheAudit,RiskManagementandComplianceCommitteebymanagement.

TheCEOandCFOhavedeclaredinwritingtotheBoardforboththehalf-yearandfull-yearnancialstatementsthatthedeclarationprovidedinaccordancewithsection295AoftheCorporationsActisfoundedonasoundsystemofriskmanagementandinternalcontrolandthatthesystemisoperatingeffectivelyinallmaterialrespectsinrelationtonancial

reportingrisks.

2011 Corporate Governance Statement (continued)


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33

Principle 8: Remunerate fairly and responsibly


TheNominationandRemunerationCommitteeconsistsofthreedirectors,allofwhomareindependentandischairedbyanindependentdirector.DetailofmembershipoftheNominationandRemunerationCommitteeincludingmeetingattendanceis

setoutattheendofthisCorporateGovernanceStatement.RemunerationrelatedresponsibilitiesoftheNominationandRemunerationCommitteeinclude:

Recommendingfeesfordirectors

Recommendingacompetitiveremunerationandreward programfortheCEOandotherseniormanagement

Ensuringthatotherhumanresourcemanagement programs,includingperformanceassessmentprograms andincentiveschemes,areinplace.

Centuriarecognisestheimportantrolepeopleplayintheachievementofitslong-termobjectivesandasakey

determinantofcompetitiveadvantage.Togrowandbesuccessful,Centuriamustbeabletoattract,motivateandretaincapableindividuals.

Senior executive remuneration structure

ThekeyprinciplesthatunderpinCenturiasSeniorExecutiveRemunerationPolicyare:

Competitiverewardsareprovidedtoattractandretain executivetalent

Remunerationislinkedtoperformancesothathigher levelsofperformanceattracthigherrewards

Rewardstoallstaffbutparticularlyexecutivesarelinked

tothecreationofvaluetoshareholders

Thecriteriausedtoassessandrewardstaffinclude nancialandnon-nancialmeasuresofperformance

Theoverallcostofremunerationismanagedandlinked totheabilityofthecompanytopay

severancepaymentsduetotheCEOonterminationare limitedtopre-establishedcontractualarrangements

whichdonotcommittheGrouptomakinganyunjustied paymentsintheeventofnon-performance.

TheremunerationpolicyassistsCenturiatoachieveitsbusinessstrategyandobjectives.Centuriarecognisesthat,whileremunerationisakeyfactorinrecruitingtherightpeople,itisnottheonlyfactor.Centuriasvaluesanditsabilitytoprovideinterestingandchallengingcareeropportunities,alsoplayanimportantrole.

Non-executive director remuneration structure

TheBoardhasestablishedapolicyrelatingtotheremunerationofnon-executivedirectors.Centuriapaysnon-executivedirectorsfeesatalevelwhichissufcienttoattractindividuals

withtheappropriateskills,andtofairlyreimbursethosedirectorsforservicesprovided.

Non-executivedirectorsremunerationdoesnotincludeincentiveschemesorperformancerelatedpayments.

Executivedirectorsarepaidasalarycommensuratewiththeirpositionandresponsibilitiesandatalevelwhichattractshighcalibreexecutiveswithappropriateskillsandexperience.ExecutivedirectorsalsoparticipateinCenturiaslong-termandshort-termincentiveplans.

FurtherinformationregardingdirectorandseniorexecutiveremunerationcanbefoundintheRemunerationReport.

LLB(Hons)LLM

B.Comm

(Accounting)FCA

BCA,MBA

4

4

3

MeetingsAttended

MeetingsHeld

QualicationsStatusAppointmentDate

MemberNomination

4

4

4

IndependentChair

Independent

Independent

RogerDobson

PeterDone

DeepakGupta

22Jan2008

22Jan2008

25Nov2008

B.Comm

(Accounting)FCA

LLB(Hons)LLM

BCA,MBA

6

6

4

MeetingsAttended

MeetingsHeld

QualicationsStatusAppointmentDate

MemberNomination

6

6

6

IndependentChair

Independent

Independent

PeterDone

RogerDobson

DeepakGupta

17Dec2007

17Dec2007

17Dec2007

Addendum: Board Committee detail


Audit, Risk Management & Compliance Committee

July2010-June2011

July2010-June2011


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Inthedirectorsopinion,therearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable

Inthedirectorsopinion,theattachednancialstatementsandnotestheretoareinaccordancewiththeCorporations

Act2001,includingcompliancewithaccountingstandardsandgivingatrueandfairviewofthenancialpositionandperformanceoftheconsolidatedentity

Inthedirectorsopinion,thenancialstatementsandnotestheretoareinaccordancewithInternationalFinancialReportingStandardsissuedbytheInternationalAccountingStandardsBoardasstatedinNote2tothenancialstatements

Thedirectorshavebeengiventhedeclarationsrequiredbys.295AoftheCorporationsAct2001.

Directors Declaration for the year ended 30 June 2011

(a)

(b)

(c)

(d)

Signedinaccordancewitharesolutionofthedirectorsmadepursuanttos.295(5)oftheCorporationsAct2001.

On behalf of the Directors

J.E. McBain

Executive Director & Chief Executive Ofcer

Sydney

19 August 2011

P.J. Done

Director

Chairman - Audit, Risk Management & Compliance

The directors declare that:


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35

Financial Commentary for the year ended 30 June 2011

Forthenancialyearended30June2011,theGroupmadeanunderlyingnetprotbeforetaxof$10.5million.Whilstthisresultrepresentsaslightdeclineonthepreviousnancialyear($11.2million),theGrouphasinvestedinbusinesssystemsandemployedkeypersonneltofacilitatetheGroupsstrategyofgrowingfundsundermanagementinthesecurrentmarketconditions.

Inthe2011nancialyearourcorporatenanceteamhascontinueditsfocus

onmaintainingminimalcorporategearing(below10%excludingconvertiblenotesandnon-recoursedebt),obtainingsubstantialdebtrenancingperiodsforcorporateborrowingsandreversemortgagefacilities(February2013andMarch2013respectively)andimprovingthequalityofitsnancialreportingallowingshareholderstomoreeasilyunderstandthestandaloneCenturiaCapitalcorporateperformance.

30%

25%

20%

15%

10%

5%

0%

2008 2009 2010 2011

Debt / Equity at 30 June 2008 - 2011

Corporate Debt / Equity Ratio

ObtaininglengthoftenureofCenturiastwomaindebtfacilities,inthiscurrentmarket,isfundamentaltoprovidingstabilityfortheGroupsnancialplatform,whilstallowingnecessaryheadroomtofacilitatetheGroupsgrowthplans.Centuriahasbeenabletoachievethisbyalwaysremainingcompliantwithitsnancialcovenantsrequirements,aswellasdevelopingacloserelationshipoverthepastfouryearswithitsmajornanciers.

Centuriahasmadesubstantialheadwayinreducingthecomplexityofitsnancialreporting.WhilstAccountingStandardsrequiretheBenetsFundstobeincludedintheconsolidatedresults,theonelinedisclosuresmadeinthecurrentyearsnancialreportshouldgiveshareholdersclearertransparencyoftheGroupsresults.

Matthew Coy

Chief Financial Ofcer

Julian Blackley

Group Head of FinanceB.Bus.FCA,Grad.Dip.Accounting

Matthew Coy

Chief Financial OfcerB.Bus.Accounting,CPA

*Continuedlowlevelofcorporategearing(excludingnon-recoursedebtandconvertiblenotes).

*


38/101


Statement of Comprehensive Income for the nancial year ended 30 June 2011

Revenue

CenturiaLifeRevenue

NetrevenuefromBenetFunds

Otherincome

Total income

Financecosts

Employeebenetsexpense

Administrativeandotherexpenses

CenturiaLifeexpenses

Shareoflossofassociates

Impairmentofinvestmentsinassociates

Revaluationofinvestmentpropertyassets

Prot before tax

Incometaxexpenserelatingtoshareholders

Incometaxexpenserelatingtobenetfunds

Totalincometaxexpense

(Loss)/prot for the year

Other comprehensive income:

Gainoncashowhedgestakentoequity

Shareofothercomprehensiveincomeofassociates

Incometaxrelatingtocomponentsofothercomprehensiveincome

Othercomprehensiveincomefortheyear(netoftax)

Total comprehensive (loss)/income for the year

Earnings per share

Basic(centspershare)

Diluted(centspershare)

3(i)3(iii)

3(iii)

3(ii)

4

5(a)

5(b)

3(iii)

12

12

5(b)

6

6

7

7

32,25114,030

2,621

2,681

51,583

(17,180)

(6,394)

(8,781)

(5,106)

(1,921)

691

(13)

12,880

(3,941)

(2,621)

(6,562)

6,318

1,223

323

(464)

1,082

7,400

9.3

8.4

2010$000

2011$000

Note

32,69613,453

3,689

1,966

51,804

(16,768)

(7,187)

(12,904)

(4,316)

(840)

(3,933)

(4,510)

1,347

(549)

(3,689)

(4,238)

(2,891)

1,033

1,204

(671)

1,565

(1,326)

(3.7)

(3.7)

TheConsolidatedresultaggregatesthenancialresultsoftheCenturiaCapitalLimitedcorporateentitiesandthebenetfunds(refertoNote2(a)).

Consolidated


39/101

37

Statement of Financial Position as at 30 June 2011

Assets

Cashandcashequivalents

Tradeandotherreceivables

Financialassetsatfairvaluethroughprotandloss

Othernancialassets

Otherassets

Investmentproperty

Investmentinassociates

Plantandequipment

AssetsinrespectofBenetFunds

Deferredtaxassets

Intangibleassets

Total assets

Liabilities

Tradeandotherpayables

Borrowings

Incometaxpayable

Otherliabilities

Derivativenancialliabilities

LiabilitiesinrespectofBenetFunds

Deferredtaxliabilities

Provisions

Total liabilities

Net assets

Equity

Contributedequity

Reserves

Accumulatedlosses

Total equity

26

8

9

9

10

11

12

13

20

6(d)

14

15

16

6(c)

18

19

20

6(d)

17

21

21

21

13,966

13,052

152

208,947

2,115

27,000

11,886

1,198

548,259

13,063

52,812

892,449

5,279

204,451

(1,688)

14,054

15,951

548,259

3,413

711

796,806

95,643

100,018

(2,172)

(2,203)

95,643

11,625

10,854

2,331

198,194

1,816

22,500

7,453

1,349

508,964

11,751

53,809

830,646

5,492

196,889

5,663

6,654

13,531

508,964

2,256

705

740,165

90,481

100,235

(868)

(8,886)

90,481

TheConsolidatedresultaggregatesthenancialresultsoftheCenturiaCapitalLimitedcorporateentitiesandthebenetfunds(refertoNote2(a)).

2010$000

2011$000

Note

Consolidated


40/101


41/101

39

$000

8

-

-

-

213

517

-

-

-

-

738

738

-

-

-

(229)

(32)

-

-

-

-

-

-

477

Share-basedIncentive Reserve

$000

78,438

6,318

1,082

7,400

213

517

10,349

459

165

(1,898)

95,643

95,643

(2,891)

1,565

(1,326)

(229)

526

1,030

359

(3,792)

(169)

-

(1,561)

90,481

Attributable to EquityHolders of the Parent

$000

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Non-ControllingInterests

$000

78,348

6,318

1,082

7,400

213

517

10,349

459

165

(1,898)

95,643

95,643

(2,891)

1,565

1,326

(229)

526

1,030

359

(3,792)

(169)

-

(1,561)

90,481

Total


42/101


Interestreceived

Dividendsreceived

ManagementfeesreceivedRent,trustdistributionsandotherincomereceived

Benetfunds

Paymentstosuppliersandemployees

Incometaxreceived

Net cash used in operating activities

Cash ows from investing activities

Interestreceived/(paid)onmortgageloansnetofmortgagereceipt/drawdown

Benetfunds

Receipts/(payments)forinvestmentproperty

Paymentsforplantandequipment

Proceedsfromdisposalofplantandequipment

Proceedsfromsaleofinvestments

Acquisitionofsubsidiariesnetofcashacquired

Proceedsfrominvestmentinothernancialassets

Paymen

Documents

Centuria Annual Report 2011 2[1]