CVC LIMITED — Annual Report 2003

Sep 14, 2003

(Formerly: Continental Venture Capital Limited) AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

For the year ended 30 June 2003

ACN 002 700 361

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

DIRECTORS' REPORT

Your Directors present the Financial Report of CVC Limited ("CVC") (formerly: Continental Venture Capital Limited) and the consolidated Financial Statements of the Consolidated Entity being the Company and its controlled entities, for the year ended 30 June 2003 together with the Auditors' Report thereon.

DIRECTORS

The names of Directors in office at the date of this report are Vanda Russell Gould (Chairman), John Scott Leaver, John Douglas Read Alexander Damien Harry Beard and John Riedl.

DIRECTORS' MEETINGS

The number of Directors' Meetings and number of meetings attended by each of the Directors of the Company during the financial year were:

	Directors' Meetings
	No of Meetings attended	No of Meetings held
Vanda Russell Gould
John Scott Leaver	٠'n	÷.
John Douglas Read	∽	式
Alexander Damien Harry Beard	式	∽
John Riedl

During the financial year the Company formed an audit committee. The number of meetings and the number of meetings attended by each of the Directors of the Company during the financial year were:

	Audit Committee Meetings
No of Meetings attended	No of Meetings held
	4
$\mathbf{r}$	$\overline{r}$

PRINCIPAL ACTIVITIES

The Company's principal activity is the provision of investment capital to companies with substantial profit growth prospects. The principal activities of the corporations in the Consolidated Entity and of the corporations to which investment capital has been provided during the year were financing, property related investments and packaging supplies.

REVIEW OF OPERATIONS

The Chairman's Report, Review of Operations and the annexure to the Financial Report contain details of the Consolidated Entity's operations during the year.

CONSOLIDATED RESULT

The consolidated profit for the year attributable to the members of CVC was:

	2003	2002
	S	\$
Net profit after income tax	5,234,703	10,097,353
Outside equity interests	(191, 643)	(18, 294)
Net profit and extraordinary items after income tax attributable to members	5.043.060	10.079.059

DIVIDENDS

An ordinary dividend of 2 cents per share was announced on 2 September 2003 to be paid on 4 December 2003. An ordinary dividend of 1.5 cents per share amounting to \$1,646,041 was paid on 5 December 2002.

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

DIRECTORS' REPORT (CONTINUED)

STATE OF AFFAIRS

Significant changes in the state of affairs of the consolidated entity during the financial year were as follows:

• As at 1 April 2003 the consolidated entity acquired a controlling interest in the share capital of Pro-Pac Packaging (Aust) ٠ Pty Ltd ("Pro-Pac"). Pro-Pac is a manufacturer of environmentally friendly packaging.
• As at 28 March 2003 the consolidated entity acquired a controlling interest in the share capital of Stinoc Limited, an investment company.

LIKELY DEVELOPMENTS

The likely developments in the operations of the Consolidated Entity will involve an increase in the range of investment activities undertaken with the emphasis on obtaining higher yields. The profitability or otherwise of those investments cannot be meaningfully predicted at the date of this report.

ENVIRONMENTAL REGULATION

The consolidated entity's operations are subject to various environmental regulations under both Commonwealth and State legislation. The Directors are not aware of any breaches of any particular and significant environmental regulation affecting the group's operations.

ENVIRONMENTAL MANAGEMENT

The consolidated entity is committed to achieving a high standard of environmental performance.

EVENTS SUBSEQUENT TO BALANCE DATE

The Company made certain investments and loans in support of its existing investee businesses, acquired various short term interests in listed equities and realised a portion of its short term investments as part of its ordinary course of business subsequent to balance date.

On 2 September 2003, the name of the company was changed to CVC Limited.

Since the end of the financial year, the company has bought back 406,872 of its own shares through an on-market buy-back.

There has not arisen in the interval between the end of the financial year and the date of this report any other matter or circumstance that has affected or may significantly affect the operations of the Consolidated Entity, the results of those operations, or the state of affairs of the Consolidated Entity, in future financial years.

INFORMATION ON DIRECTORS

Vanda Russell Gould (Chairman)

B.Comm (Uni, of NSW): M.Comm (Uni of NSW).

Fellow of the Institute of Chartered Accountants in Australia, Fellow of the Australian Institute of Certified Public Accountants, Licensed Securities Dealer.

Chairman of Vita Life Sciences Limited and CVC Investment Managers Pty Limited and a director of numerous private and public companies including educational establishments.

John Scott Leaver (Non-Executive Director) B.Ec. (Uni. of Sydney). Licensed Securities Dealer. Board member since 1984. Chairman of Sunland Group Limited and a director of CVC Investment Managers Pty Limited.

(AND ITS CONTROLLED ENTITIES)

DIRECTORS' REPORT (CONTINUED)

INFORMATION ON DIRECTORS (Continued)

John Douglas Read (Non-Executive Director)

B.Sc. (Hons.) (Cant.), M.B.A. (A.G.S.M.) Board Member since 1989. Chairman of the Environmental Group Limited. Director of Australian Institute for Commercialisation Limited.

Alexander Damien Beard (Director and Company Secretary)

B Com. (Uni. of NSW). Member of the Institute of Chartered Accountants in Australia. Director of Greens Foods Limited and numerous private and public companies.

John Thomas Riedl (Non-Executive Director) B.Sc, B.E. (Elect), (Hons.) (Sydney) Director of numerous public and private companies. Appointed as a director on 27 November 2002.

SHARE OPTIONS

There were no options in issue during the year or to the date of this report.

DIRECTORS' INTERESTS AND BENEFITS

The relevant interest of each Director in the share capital of the Company as at the date of this report is as follows:

Mr V.R. Gould	14,898,517
Mr LS. Leaver	15,013,307
Mr J.D. Read	493.956
Mr A D H Beard	14,663,443
Mr ID Riedl	$\blacksquare$

At the date of this report, through their directorship of The Eco Fund Limited, Messrs Gould, Leaver, and Read (1,000,000 shares) and Mr Beard (1,107,202 shares) hold indirect interests, in the share capital of Pro-Pac Group Limited.

Ordinary Shares

Directors benefits are set out in Notes 6 and 27.

INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS

al Indemnification

The Consolidated Entity has not, during or since the end of the financial year, in respect of any person who is or has been an officer or auditor of the Consolidated Entity or a related body corporate indemnified or made any relevant agreement for indemnifying such persons against a liability, including costs and expenses in successfully defending legal proceedings.

(AND ITS CONTROLLED ENTITIES)

DIRECTORS' REPORT (CONTINUED)

INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS (Continued)

b) Insurance Premiums

The Consolidated Entity has not, during the year or since the end of the financial year, in respect of any person who is or has been an auditor of the Company or a related body corporate paid or agreed to pay a premium in respect of a contract insuring against a liability for the costs or expenses of defending legal proceedings.

CVC Limited has paid insurance premiums in respect of directors and officers liability and legal expense insurance for directors and officers of the Company.

In accordance with subsection 300(9) of the Corporations Act 2001 further details have not been disclosed due to confidentiality provisions contained in the insurance contract.

Signed in accordance with a resolution of the Board of Directors.

Dated at Sydney this 15th day of September 2003.

VANDA RUSSELL GOULD Director

ALEXANDER DAMIEN BEARD Director

(AND ITS CONTROLLED ENTITIES)

STATEMENTS OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2003

	Notes		Consolidated	The Company
		2003	2002	2003	2002
		\$	s	\$	\$
Revenue
Revenue from rendering of services			4,167,782
Revenue from sale of goods		3,994,716
Proceeds from share sales		98,473	14,289,695	98,473	13,038,848
Interest income		2,594,689	2,792,656	1,698,692
Other revenue from ordinary activities		297,242 .	3,411,419 ---------	1,156,713 --------	5,220,940
Total revenue from ordinary activities	2	6,985,120 --------	24,661,552 ---------	2,953,878 --------	18,259,788 ---------
Share of net profits of associates accounted for using the
equity method	25	4,305,914	2,618,441
Share of net profits of joint ventures accounted for using
the equity method	30	4,543,120	3,611,892	4,543,120	4,772,139
Expenses
Borrowing costs	3	203,118	186,794	1,085,487	1,245,258
Cost of shares sold		192,829	10,009,712	192,829	7,529,146
Cost of goods sold		2,174,925
Employee expenses		702,479	1,406,093
Loans written-off		1,290,523		1,290,523
Management & consultancy fees		2,685,464	2,162,998	1,455,011	1,154,928
Provision against loan to joint venture for non-recovery			2,376,861		2,376,861
Other loan provisions for non-recovery Unrealised loss on investments		(1,615,693)	2,167,269	65,040	1,400,823
Other expenses from ordinary activities	3	3,742,843 1,045,492	137,752 2,245,046	2,340,056 427,001	137,752 398,647
		.	--------	--------	--------
Profit from ordinary activities before related income tax
expense	3	5,412,174	10,199,360	641,051	8,788,512
Income tax expense	4	177,471 --------	102,007 ---------	224,118 --------	594,951
Net profit		5.234.703	10,097,353	416,933	8,193,561
Net profit attributable to outside equity interests	23	191,643	18,294
Net profit attributable to members of the parent entity		5,043,060	10,079,059	416,933 $\begin{array}{cccccccccccccc} \cdots & \cdots & \cdots & \cdots & \cdots & \cdots \end{array}$	8,193,561
Other changes in equity attributable to members of the Parent entity other than those arising from transactions with owners as owners: Share of decrease in equity of associate accounted for using the equity method in relation to adoption of the principles of UIG 42 in relation to deferred expenditure Total changes in equity attributable to members of the parent entity other than those arising from transactions with owners as owners		(805,093) 4,237,967	10,079,059	416,933	8,193,561
			--------		- - - - - - - -
Basic & diluted earnings per share	8	0.0460	0.0918

The statements of financial performance are to be read in conjunction with the notes to the financial statements set out on pages 9 to 36.

(AND ITS CONTROLLED ENTITIES)

STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2003

	Notes		Consolidated		The Company
		2003	2002	2003	2002
		\$	S	S	\$
CURRENT ASSETS
Cash assets	26	2,477,100	4,438,772	799,577	4,316,338
Receivables	9	13,165,058	9,628,897	4,968,518	9,628,897
Inventories	10	801,437
Other financial assets	11 4	4,669,488	9,686,269 311,208 1,899,217	4,669,488	6,526,873 952,027
Current tax assets Other assets	12	60,612	322,160	45,483	214,375
		--------	.	$\begin{array}{cccccccccccccc} \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \$	- - - - - - - -
Total current assets		.	21,484,903 25,975,315 10,483,066 . .		21,638,510 --------
NON-CURRENT ASSETS
Receivables	9.	17,218,269		21,542,212 17,352,220	18,855,548
Investments accounted for using the equity method	13	33,402,952		26,554,448 9,315,261	4,772,139
Other financial assets	11		10,328,167 6,776,706	13,980,626	7,718,386
Intangible assets	14	5,257,104
Property, plant and equipment	15 4	617,178
Deferred tax assets		4,015 ---------	3,000 - - - - - - - - -	4,015 --------
Total non-current assets		66,827,685 .	54,876,366 40,652,122 2222222	Liberation	31,346,073 .
TOTAL ASSETS		88,312,588 --------	80,851,681 51,135,188 $\begin{array}{cccccccccc} \bot & \bot & \bot & \bot & \bot & \bot & \bot & \bot \end{array}$		52,984,583 ---------
CURRENT LIABILITIES
Payables	16	3,044,732	1,425,936	15,264,426	3,263,878
Interest bearing liabilities	17	215,000			12,183,805
Provisions	18	1,935,389
Current tax liabilities	4	368,817	.	54,200 - - - - - - - -
Total current liabilities		5,563,938	. .	1,425,936 15,318,626	15,447,683
NON-CURRENT LIABILITIES
Interest bearing liabilities	17	$\blacksquare$	100,000
Provisions	18		Contract Service
Deferred tax liabilities	4		491,232		491,232
Total non-current liabilities			591,232	$\omega_{\alpha}=\omega_{\alpha}=\omega_{\alpha}=\omega_{\alpha}=\omega_{\alpha},$	491,232
TOTAL LIABILITIES		5,563,938	. .	$\begin{array}{cccccccccc} \bot & \bot & \bot & \bot & \bot & \bot & \bot & \bot \end{array}$ 2,017,168 15,318,626	15,938,915
NET ASSETS		82,748,650	--------	$- - - - - - - - - -$ 78,834,513 35,816,562 --------	- - - - - - - - 37,045,668
EQUITY
Contributed equity	19	26,633,636	26,633,636	26,633,636	26,633,636
Reserves	20
Retained profits	21	54,202,318 - - - - - - - -	51,589,177 .	9,182,926 --------	10,412,032 .
Total parent entity interest		80,835,954	78,222,813	35,816,562	37,045,668
Outside equity interest	23	1,912,696	611,700
		.	.	--------	--------
TOTAL EQUITY		82,748,650 .	--------	78,834,513 35,816,562 --------	37,045,668

The statements of financial position are to be read in conjunction with the notes to the financial statements set out on pages 9 to 36.

(AND ITS CONTROLLED ENTITIES)

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2003

	Notes		Consolidated		The Company
		2003	2002	2003	2002
		\$	s	s	\$
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts in the course of operations		4,274,088	4,329,969	56,249	500,994
Cash payments in the course of operations		(6,381,214)	(6,236,655)	(1,662,637)	(1,750,117)
Interest received		1,000,022	1,653,185	978,553	1,638,741
Dividends received		1,319,223	352,000	1,100,464	352,000
Interest paid		(88, 117)	(161,983)	(100, 179)	(1, 245, 258)
Income taxes paid		1,011,180 . . .	(717,331) .	286,862 . . . . . . .	(494, 634) .
Net cash provided by/ (used in) operating activities	26	1,135,182	(780, 815)	659,312	(998, 274)
		. . .	. . . .	. . . .	.
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment		(11,700)	(1,247,638)
Payments for equity investments		(2,231,587)	(8,158,177)	(2,226,587)	(7,485,277)
Payment for controlled entity		(3,282,931)	(6,480)	(4,667,165)	(6,480)
Proceeds on disposal of equity investments		58,691	3,427,593	58,691	2,724,635
Proceeds on disposal of controlled entity			6,722,409		6,933,328
Loans provided		(12, 448, 690)	(7,986,480)	(12,658,971)	(7,788,882)
Loans repaid		16,964,000	17,393,460	16,964,000	19,032,112
Other			(192, 943) a basa a basa		(192, 945) الداما ماما ما ما ما
Net cash (used in)/ provided by investing activities		(952.217)		9,951,744 (2,530,032)	13,216,491
		. . .	.	. . . . . . .	.
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of Borrowings			(9,652,554)		(9,458,815)
Dividends paid to members of parent entity		(1,646,041)	(1,371,700)	(1,646,041)	(1,371,700)
Dividends paid to outside equity interests		(1,713,000)
Issue of shares to outside equity interests		1,214,404 . . .	المام عاما ماماما		. . .
Cash (used in)/ provided by financing activities		(2,144,637)	(11,024,254)	. . . . (1,646,041)	(10,830,515)
		.		. . . .	.
Net (decrease)/increase in cash held		(1,961,672)	(1,853,325)	(3,516,761)	1,387,702
Cash at the beginning of the financial year		4,438,772	6,292,097	4,316,338	2,928,636
CASH AT THE END OF THE FINANCIAL YEAR	26	2,477,100	4,438,772	799,577	4,316,338

The statements of cashflows are to be read in conjunction with the notes to the financial statements set out on pages 9 to 36.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

Note	Contents
1.	Statement of Significant Accounting Policies
2. 3.	Revenue from Ordinary Activities Profit from Ordinary Activities Before Income Tax Expense
4.	Taxation
5.	Dividends
6.	Remuneration of Directors and Executives
7.	Auditors' Remuneration
8.	Earnings Per Share
9.	Receivables
10.	Inventories
11.	Other Financial Assets
12.	Other Assets
13.	Investments accounted for using the equity method
14.	Intangibles
15.	Property, Plant & Equipment
16.	Payables
17.	Interest - Bearing Liabilities
18.	Provisions
19.	Contributed Equity
20.	Reserves
21.	Retained Profits
22.	Financing Arrangements
23.	Controlled Entities
24. 25.	Operations by Segments Investments in Associated Companies
26.	Notes to the Statements of Cash Flows
27.	Related Party Information
28.	Commitments
29.	Contingent Liabilities
30.	Interest in Joint Venture Partnerships
31.	Additional Financial Instruments Disclosure
32.	Employee Entitlements
33.	Discontinuing Operations

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

NOTE₁: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The significant policies which have been adopted in the preparation of this Financial Report are:

$1,1$ Basis of Preparation

The Financial Report is a general purpose financial report, which has been prepared in accordance with applicable Accounting Standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. It has been prepared on the basis of historical costs and, except where stated, does not take into account changing money values or current valuations of non-current assets.

These accounting policies have been consistently applied by each entity in the Consolidated Entity and except where there is a change in accounting policy, are consistent with those of the previous year.

$1.2$ Principles of Consolidation

Controlled entities

The financial statements of controlled entities are included in results only from the date control commences until the date control ceases.

Outside interests in the equity and results of the entities that are controlled by the Company are shown as a separate item in the consolidated financial statements.

Associates

Associates are those entities, other than partnerships, over which the consolidated entity exercises significant influence but not control. In the consolidated financial statements investments in associates are accounted for using equity accounting principles. Investments in associates are carried at the lower of the equity accounted amount and recoverable amount. The consolidated entity's equity accounted share of the associates' net profit or loss is recognised in the consolidated statement of financial performance from the date significant influence commences until the date significant influence ceases. The consolidated entity's equity accounted share of movements in retained profits from changes in accounting policies by associates is recognised directly in consolidated retained profits (note 21). The consolidated entity's equity accounted share of other movements in reserves of associates is recognised directly in consolidated reserves.

Ioint venture operations

The consolidated entity's interests in unincorporated joint ventures are brought to account by including its proportionate share of the joint venture's assets, liabilities, expenses and revenue on a line-by-line basis, from the date joint control commences to the date joint control ceases.

The consolidated entity's interests in joint venture partnerships are accounted for using equity accounting principles. Investments in joint venture partnerships are carried at the lower of the equity accounted amount and recoverable amount. The consolidated entity's accounted share of the joint venture partnerships' net profit or loss is recognised in the consolidated statement of financial performance from the date joint control commences to the date joint control ceases. The consolidated entity's share of other movements in reserves is recognised directly in consolidated reserves.

Transactions eliminated on consolidation

Unrealised gains and losses and inter-entity balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.

Unrealised gains resulting from transactions with associates and joint ventures are eliminated to the extent of the consolidated entity's interest. Unrealised gains relating to associates and joint venture entities are eliminated against the carrying amount of the investment. Unrealised losses are eliminated in the same way as unrealised gains, unless they evidence a recoverable amount impairment.

Goodwill

Goodwill represents the excess of the purchase consideration over the fair value of identifiable net assets acquired at the time of acquisition of a business or shares in a controlled entity. Goodwill is amortised on a straight line basis over the period during which benefits are expected to be received. The period in use during the year is 13 years.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

Note 1: Statement of Significant Accounting Policies (Cont'd)

13 Invastments

Controlled Entities:

Investments in controlled entities are carried in the Company's financial statements at the lower of cost and recoverable amount.

Associated Companies.

In the Company's financial statements investments in shares of associates are carried at the lower of cost and recoverable amount.

Ioint pentures

The Company's interests in unincorporated joint ventures are brought to account by including its proportionate share of the joint venture's assets, liabilities, expenses and revenue on a line-by-line basis, from the date joint control commences to the date joint control ceases.

The Company's interests in joint venture partnerships are accounted for using equity accounting principles. Investments in joint venture partnerships are carried at the lower of the equity accounted amount and recoverable amount. The Company's equity accounted share of the joint venture partnerships' net profit or loss is recognised in the statement of financial performance from the date joint control commences to the date joint control ceases. The Company's share of other movements in reserves are recognised directly in reserves.

Other entities:

Investments in other listed companies are measured at the lower of cost and recoverable amount, being the current quoted market prices.

Investments in other unlisted entities are carried at the lower of cost and recoverable amount.

$1.4$ Income Tax

Tax effect accounting procedures are followed, whereby income tax expense is calculated on operating profit adjusted for any permanent differences between taxable and accounting income. The tax effect of timing differences, which arise from items being brought to account in different periods for income tax and accounting purposes, is carried forward in the statement of financial position as a future income tax benefit or a provision for deferred income tax.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits relating to tax losses are only brought to account when their realisation is virtually certain.

$1.5$ Cash

For the purposes of the statement of cash flows, cash includes cash on hand and in banks, and money market investments, readily convertible to cash within 2 working days, net of outstanding bank overdrafts,

$1.6$ Inventories

Inventories are carried at the lower of cost and net realisable value.

Net Realisable Value

Net realisable value is determined on the basis of each entity's normal selling pattern. Expenses of marketing, selling and distribution to customers are estimated and are deducted to establish net realisable value.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

Note 1: Statement of Significant Accounting Policies (Cont'd)

$1.7$ Payables

Liabilities are recognised for amounts to be paid in the future for goods or services provided to the Consolidated Entity prior to the year end. Trade accounts payable are normally settled within 30 days.

$1.8$ Accounts Receivable

Trade Debtors

Trade Debtors to be settled within 30 days are carried at amounts due.

Term Debtors

Term debtors are carried at amounts due and settled on completion of projects. A market rate of interest is charged on outstanding amounts and debtors are required to provide collateral.

Doubtful Debts

The collectability of debts is assessed regularly and specific provision is made for any doubtful accounts.

$1,9$ Property, Plant and Equipment

Acquisition

Items of property, plant and equipment are recorded at cost and depreciated as outlined below.

The cost of property, plant and equipment constructed by controlled entities includes the cost of materials and direct labour and an appropriate proportion of fixed and variable overheads.

Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed assets, from the time an asset is completed and held ready for use.

Leased Plant and Equipment

Leases of plant and equipment under which the Company or its controlled entities assume substantially all the risks and benefits of ownership are classified as finance leases. Other leases are classified as operating leases.

Finance leases are capitalised. A lease asset and a liability equal to the present value of the minimum lease payments are recorded at the inception of the lease. Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are charged to the statement of financial performance. Contingent rentals are expensed as incurred.

Payments made under operating leases are charged against profits in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property.

$1,10$ Employee Entitlements

Wages, Salaries and Annual Leave

The provision for employee entitlements in relation to wages and annual leave represent present obligations resulting from employee's services provided up to balance date.

Long Service Leave

The provision for employee entitlements to long service leave represents the present value of the estimated future cash outflows to be made resulting from employees' services provided up to the balance date.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

Statement of Significant Accounting Policies (Cont'd) Note 1:

$1.11$ Land Held for Sale

Valuation

Development properties are carried at the lower of cost and net realisable value. Cost includes the costs of acquisition, development, and holding costs such as interest, rates and taxes. Interest and other holding costs incurred after completion of development are expensed as incurred.

1.12 Revenue and Revenue Recognition

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST). Exchanges of goods or services of the same nature and value without any cash consideration are not recognised as revenues.

Sale of goods

Revenue from the sale of goods is recognised (net of returns, discounts and allowances) when control of the goods passes to the customer.

Interest Income

Interest income is recognised as it accrues unless collectability is in doubt, taking into account the effective vield on the financial asset.

Sale of non-current assets

The gross proceeds of non-current asset sales are included as revenue at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed.

The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.

Research and development grants

Where a grant is received relating to research and development costs that have been expensed, the grant is recognised as revenue. Where a grant is received relating to research and development costs that have been deferred, the grant is deducted from the carrying amount of the deferred research and development.

Dividends

Revenue from dividends and other distributions from controlled entities is recognised by the parent entity when they are declared by the controlled entities.

Revenue from dividends from associates is recognised by the parent entity when dividends are received.

Revenue from dividends from other investments is recognised when received.

Dividends received out of pre-acquisition reserves are eliminated against the carrying amount of the investment and not recognised in revenue.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

Note 1: Statement of Significant Accounting Policies (Cont'd)

1.13. Borrowing Costs

Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings.

Borrowing costs are expensed as incurred unless they relate to qualifying assets. Qualifying assets are assets which take more than 12 months to get ready for their intended use or sale. In these circumstances, borrowing costs are capitalised to the cost of the asset. Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs capitalised is those incurred in relation to that borrowing, net of any interest earned on that borrowing. Where funds are borrowed generally, borrowing costs are capitalised using a weighted average capitalisation rate.

1.14 Non-Current Assets

The carrying amounts of all non-current assets are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non-current asset exceeds the recoverable amount, the asset is written down to the lower amount. In assessing recoverable amounts the relevant cash flows have not been discounted to their present value.

1.15 Depreciation and Amortisation

Fixed assets are depreciated/amortised using the straight line method over the estimated useful lives, with the exception of finance lease assets. Finance lease assets are amortised over the term of the relevant lease, or where it is likely the consolidated entity will obtain ownership of the asset, the life of the asset. Depreciation and amortisation rates and methods are reviewed annually for appropriateness. When changes are made, adjustments are reflected prospectively in current and future periods only. Depreciation and amortisation are expensed, except to the extent that they are included in the carrying amount of another asset as an allocation of production overheads.

The current depreciation rates for each classes of assets are as follows: Plant and Equipment 5% to 50% Leased Assets 15% to 25%

Complex Assets

The components of major assets that have materially different useful lives, are effectively accounted for as separate assets, and are separately depreciated/amortised.

1.16 Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from or payable to the ATO are classified as operating cash flows.

Comparative Figures 1.17

Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

		Consolidated	The Company
	2003	2002	2003	2002
	\$	5	\$	\$
NOTE 2: REVENUE FROM ORDINARY ACTIVITIES
Revenue from operating activities:
Revenue from Sale of Goods	3,994,716
Rendering of services from operating activities		4,167,782
Proceeds from share sales	98,473	14,289,695	98.473	13,038,848
Effect of discontinuance of proportionate accounting in relation
to joint venture (note 30)		2,376,861		2,376,861
Interest:
Related parties	364,401	1,221,464	364,401	803,543
Other parties	2,230,288	1,571,192	1,334,291	1,149,052
Dividends
Related parties
Other parties	102,569	519,850	1,100,464	443,984
Other Revenue	194,673	514,708	56.249	447,500
Revenue From Ordinary and Operating Activities	6,985,120	24,661,552	2,953,878	18,259,788

PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE NOTE 3:

Profit from ordinary activities before income tax expense has been arrived at after charging/ (crediting) the following items:

Borrowing costs:
Related parties			985,308	1,079,855
Bank loans and overdraft		186,794		165,403
Other	203,118		100,179
Total borrowing costs	203,118	186,794	1,085,487	1,245,258
Other operating expenses:
Amortisation of goodwill	103,081
Audit Fees	75,000	88,350	60,000	71,350
Depreciation of plant and equipment	30,434	439,794
Directors fees	39,582	31,250	39,582	31,250
Freight costs	54,637
Insurance	34,628	42,889	13,940
Legal costs	131,418		120,988
Operating lease rental expense	62,010
Royalty costs	108,527
All other operating expenses	406,175	1,642,763	192,491	296,047
Total Other Operating Expenses	. 1,045,492	المراس سالم المراس 2,245,046	$\begin{array}{cccccccccccccc} \Delta & \Delta & \Delta & \Delta & \Delta & \Delta & \Delta & \Delta & \Delta & \Delta & \Delta & \Delta & \Delta & \$ 427,001	398,647
Other items:
Net loss/ (gain) on disposal of non-current assets:
Property, plant and equipment
Investments

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

		Consolidated			The Company
		2003	2002	2003	2002
NOTE 4:	TAXATION	\$	\$	\$	\$
4.1	Income Tax Expense:
	Prima facie income tax expense calculated at 30% (2002: 30%)
	on the profit from Ordinary activities	1,623,653	3,059,808	192,315	2,636,553
	Increase in income tax expense due to:
	Prima facie income tax on profit from ordinary activities of
	subsidiaries within tax consolidation group			196,253
	Provision to reflect recoverable amount of equity accounted
	component of investment carrying value	170,440
Sundry items			1,378	38,034	1,378
	Tax losses not recognised	28,274	80,434	28,241	196,346
	Decrease in income tax expense due to:
	Tax attributable to equity accounted profits	(926, 778)	(785, 562)		(348,103)
Sundry items	Dividend rebate	(22,996)
		(378, 738) (402, 673)	(22,760) (367,566)	(329, 236) (402, 673)
	Div 43 Building allowances Recovery of tax losses not previously recognised	(65, 765)	(1,158,980)	(75,580)	(339, 194) (1,639,996)
		المالون مالون موالي	.	الداما ماما ماما ما	.
		25,417	806,752	(352, 646)	506,984
	Prior year under/ (over) provision	152,054	(704, 745)	576,764	87,967
	Income tax expense attributable to profit from ordinary	المراجات المراجات	. .	a pracora pro
activities		177,471	102,007	224,118	594,951
		.	$\begin{array}{cccccccccccccc} \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \$	.	.
4.2	Current Tax Assets:
	Income tax instalments refundable
	Balance at end of year	311,208	1,899,217		952,027
		.	.	.	د د د د د د د
4.3	Current Tax Liabilities:
	Income tax payable: Balance at end of year		368,817	54,200
		المتعاطي والمتعاطي	$\label{eq:2.1} \begin{array}{l} \omega \cdot \omega \cdot \omega \cdot \omega \cdot \omega \cdot \omega \cdot \omega \cdot \omega \cdot \omega \cdot \omega \$	a plane and an
4.4	Deferred Tax Assets/Liabilities:
	Future income tax benefit:
	Balance at end of year		$4,015$ $3,000$		4,015
		.	a para a prairie	.
	Deferred income tax liability:
	Balance at end of year		491,233 March 1980		$-491,233$
			Service Service
	Future income tax benefits not taken to account:
	Tax revenue losses carried forward	4,254,097	455,838	2,267,888	196,345
	Tax capital losses carried forward	58,325,512	40,667,149	40,761,286	39,862,524
			.	.	. .

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

NOTE 4: TAXATION (Continued)

Deferred Tax Assets/ Liabilities (Continued): $4.4$

The potential future income tax benefit will only be obtained if:

• the relevant company derives future assessable income of a nature and an amount sufficient to enable the benefit to be $\hat{a}$ realised, or the benefit can be utilised by another company in the Consolidated Entity
• (ii) the relevant company continues to comply with the conditions for deductibility imposed by the law:
• no changes in tax legislation adversely affect the relevant company in realising the benefit. $(iii)$

$4.5$ Tax Consolidation

It is expected that CVC and its applicable wholly owned subsidiaries will adopt the provisions of the tax consolidation regime for the full accounting period ending 30 June 2003. Formal notification of the adoption to the Australian Taxation Office has not yet been made but is due to be made prior to the lodgement of the income tax returns for the 2003 year. Tax balances within this financial report reflect the expected effects of the adoption of the tax consolidation regime with the absence of a formal tax sharing arrangement between subsidiaries.

NOTE 5: DIVIDENDS

Dividends proposed or paid and not provided for in previous years by the Company are:

	Cents per share	Total \$	Date of Payment	Tax rate for franking credit	Percentage franked
Declared during the financial period and included within the statement of financial position:
2002 Final - ordinary	1.50	1.646.041	5 December 2002	30%	100%
Declared after the end of the financial period and not included in the statement of financial position:
2003 Final - ordinary	2.00	$\left( i\right)$	4 December 2003	30%	100%

(i) The final amount to be paid will be based on the number of shares in issue at the record date, 20 November 2003.

		The Company
	2003	2002
	Я.	S
Dividend Franking account
Franking credits available to shareholders for subsequent financial years	2.696.421	1,891,000

From 1 July 2002, the new imputation system requires a company's franking credits to be expressed on a tax-paid basis. The franking account surplus existing at 30 June 2002 has been reinstated to a tax paid amount by multiplying the franking credits by 30/70.

The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:

franking credits that will arise from the payment of the amount of the provision for income tax $(a)$

$(b)$ franking debits that will arise from the payment of dividends recognised as a liability at year-end

$(c)$ franking credits that will arise from the receipt of dividends recognised as receivables at year end

$(d)$ franking credits that the entity may be prevented from distributing in subsequent years.

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

NOTE 6: REMUNERATION OF DIRECTORS AND EXECUTIVES

$6.1$ Directors' Remuneration

The number of Directors of the Company whose income from the Company or any related party falls within the following bands:

				The Company
			Number	Number
\$0\$		$-$ \$9,999
\$10,000		$-$ \$19,999		$\mathbf{r}$
\$20,000	$\sim$	\$29,999

Income paid or payable, or otherwise made available to all Directors of the Company from the Company or any related party.

Fees – John Douglas Read	25,000	25,000
Fees – John Thomas Riedl	14,582	$\mathbf{r}$
	. . .
	39.582	25,000

Executive Officers' Remuneration $6.2$

No amounts were paid or payable, directly or indirectly to executive officers of the Company.

NOTE 7: AUDITORS' REMUNERATION

Amounts received or due and receivable for audit services by:

		Consolidated	The Company
	2003	2002	2003	2002
	S	\$	\$	\$
Auditors of the company	75,000	60,000	60,000	50,000
Former Auditors of the company		28,350		21.350
	75,000	88,350	60,000	71,350
Amounts received or due and receivable for other services
by the auditors of the company		6.200		6,200

The Auditors received no other benefits.

NOTE 8: EARNINGS PER SHARE

Basic & Diluted Earnings per Share (dollars per share)	0.0460	0.0918
Reconciliation of earnings used in the calculation of earnings per share:
Operating profit after income tax	5.234.703	10,097,353
Outside equity interests Less:	(191.643)	(18, 294)
Earnings	5,043,060	10,079,059
	Number of Shares

Weighted average number of ordinary shares 109,736,032 . . . . . . .

109,736,032

$\begin{smallmatrix}&&&&&&&&&&&\&\ddots&\ddots&\ddots&\ddots&\ddots&\ddots&\ddots&\ddots&\ddots&\ddots$

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

	Consolidated		The Company
	2003	2002	2003	2002
	£	Ŝ.	\$	\$
NOTE 9: RECEIVABLES
Current
Trade debtors	2,630,330
Other debtors		79,460 614,251		13,250 614,251
Loans to other corporations (a)		10,908,949 5,284,440		5,089,682 5,284,440
Provision for non-recovery of loans to other corporations			$(1,913,681)$ $(1,244,894)$ $(1,594,414)$	(1,244,894)
Loans to related entities	1,460,000		1,460,000
Loans to joint ventures (b)		4,975,100		4,975,100
Total Current Receivables			13,165,058 9,628,897 4,968,518 9,628,897
Non-Current
Loans to other corporations (a)	5,735,388	7,999,700	5,735,388	3,313,036
Provision for non-recovery of loans to other corporations	(29, 143)	(2,000,000)	(29, 143)
Loans to controlled entities				1,256,342 1,122,391
Provision for non-recovery of loans to controlled entities			(1, 122, 391)	(1, 122, 391)
Loans to director related entities $(c)$		3,162,256 981,979	3,162,256	981,979
Loans to other related entities		10,892,994		10,892,994
Provision for non-recovery of loans to other related entities		$-$ (2,953,480)		(2,953,480)
Loans to joint ventures (b)			8,349,768 6,621,019 8,349,768	6,621,019 .
Total Non-Current Receivables			17,218,269 21,542,212 17,352,220	18,855,548
		550 (100 - 111111)		.

Further details of loans from related entities are set out in Note 27.

NOTE 10: INVENTORIES

Current
Finished goods – at cost	801,437	$\mathbf{r}$	$\overline{\phantom{0}}$	$\sim$
	-------	.	.	.
Total Current Inventories	801.437	$\mathbf{r}$	$\overline{\phantom{a}}$	$\sim$
			-------

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

	Consolidated		The Company
	2003	2002	2003 — 100	2002
	S	\$	\$	\$
OTHER FINANCIAL ASSETS NOTE 11:
Current
Shares in listed corporations at cost			3,609,776 6,370,055 3,609,776 3,210,659
Shares in listed corporations at market value	.	product and products of the	1,059,712 $3,316,214$ 1,059,712 $3,316,214$ .	.
Total Current Other Financial Assets			4,669,488 9,686,269 4,669,488 6,526,873
Market value of shares in listed corporations	. . .	product and a series of $\begin{array}{cccccccccccccc} \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \$	Sandardon 7,519,533 18,130,382 7,519,533 6,570,932 $\frac{1}{2}$	. .
Non-Current
Unlisted Controlled entities - at cost			$4,770,619$ $102,554$
Shares in listed corporations - at cost or realisable value			5,578,817 3,424,322 1,970,241 499,481
Other investments at cost			4,749,350 3,352,384 2,279,696 2,156,281
Shares in listed associated companies at cost (Note 25)		$\begin{array}{cccccccccccccc} \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \dots & \$	4,960,070 $4,960,070$ . . .	. . . .
Total Non-Current Other Financial Assets			10.328.167 6.776.706 13.980.626	7.718.386
Market value of shares in listed corporations:
Associated companies			$-25.546.108$ 22,752,002
Other investments			12,049,741 4,754,005 1,970,241 729,583
			$\frac{1}{2}$ 12,049,741 4,754,005 27,516,349 23,481,585	. .
	.	and and and and complete	$\frac{1}{2}$	a dia dia dia k

The directors have valued shares in listed corporations at the lower of cost and market value as at 30 June 2003.

NOTE 12: OTHER ASSETS

Current
Prepayments and deposits	18,098	90.409	10.810	$\overline{a}$
Goods and Services Tax	42.514	231.751	34.673	214.375
	60.612	322.160	45.483	214,375

NOTE 13: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Non-Current
Equity accounted shares of joint ventures (Note 30)	9.315.261	4.772.139	9.315.261	4.772.139
Equity accounted shares in listed associated companies
(Note 25)	24,087,691	21,782,309	-
	33,402,952	26,554,448	9,315,261	4,772,139
Market value of shares in listed associated companies	31,146,341	27.739.710

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

		Consolidated		The Company
	2003	2002.	2003	2002
	\$	\$	\$	\$
NOTE 14: INTANGIBLE ASSETS
Goodwill	5,360,185
Accumulated Amortisation	(103, 081)
	. .	.
	5,257,104
NOTE 15: PROPERTY, PLANT AND EQUIPMENT
Plant and Equipment
At cost	1,449,904
Accumulated depreciation	(832,726) . .		.
	617,178
	$\frac{1}{2}$
Leased Plant and Equipment
At cost
Accumulated depreciation
Capital Works in Progress
At cost
Total property, plant and equipment	617,178
Reconciliations
Plant and Equipment
Carrying amount at beginning of year		2,260,886
Assets acquired in business acquisition	635,912
Additions	11,700	1,796,509
Assets disposed of with business sale	$\overline{\phantom{a}}$	(3,639,910)	-
Depreciation	(30, 434)	(417, 485)
Carrying amount at end of year	617,178
		المناسب المناسب
Leased Plant and Equipment
Carrying amount at beginning of year		314,679
Additions Assets disposed of with business sale		974,041 (1,266,411)
Amortisation		(22,309)
		.
Carrying amount at end of year
		$\omega$ , $\omega$ , $\omega$		.
Capital Works in Progress
Carrying amount at beginning of year Additions		579,367 14,207
Disposals		(593, 574)
Carrying amount at end of year
		.
Total Property, Plant & Equipment	617,178
	. .	.	--------	and and and a

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

	Consolidated			The Company
	2003	2002	2003	2002
	\$	\$	\$	\$
NOTE 16: PAYABLES
Current
Trade creditors	1,632,839	355,074	41,127	350,000
Loans from controlled entities		۰	14,328,506	2,038,130
Loans from joint venture entities	756,875	687,078	756.875	687,078
Loans from other persons		85,751	-	85,751
Sundry creditors and accruals	472,808	298,034	137.918	102.919
GST Payable	182,211	×
Total Current Accounts Payable	3.044.733	1,425,936	15,264,426	3,263,878

Included within loans from controlled entities are amounts on which interest was previously payable but on which, following a change to 100% ownership and the adoption of tax consolidation, interest is not expected to be charged in future.

NOTE 17: INTEREST BEARING LIABILITES

Current
Loans from controlled entities		$\blacksquare$	$\overline{\phantom{a}}$	12,183,805
Loans from other persons	215,000	$\blacksquare$	-
Total Current Interest Bearing Liabilities	215,000	$\blacksquare$	$\overline{\phantom{a}}$	12,183,805
Non-Current
Loans from other persons		100,000	$\overline{\phantom{0}}$
Total Non-Current Interest Bearing Liabilities	-	100,000	$\overline{\phantom{0}}$

NOTE 18: PROVISIONS

Current Employee entitlements	303,374	$\mathbf{r}$	-
Deferred consideration and costs for acquisition of
controlled entity	1,577,644	$\blacksquare$	$\overline{\phantom{0}}$
Other	54.371	$\mathbf{r}$	-
Total Current Provisions	1,935,389	$\mathbf{r}$	-

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

			Consolidated		The Company
		2003	2002	2003	2002
		\$	\$	\$	\$
NOTE 19:	CONTRIBUTED EOUITY
	Issued and Paid-Up Share Capital
	109,736,032 (2002: 109,736,032) ordinary shares	26,633,636	26,633,636	26,633,636	26,633,636

On 21 December 1999 the Company commenced an on-market share buy-back scheme for an unlimited duration but limited to 7,000,000 shares. No shares were bought back during the years ended 30 June 2003 or 30 June 2002. Subsequent to the end of the financial year and to the date of this report, the company has bought back 406,872 shares under the scheme for \$345,841. At the date of this report there is provision for 5,334,704 further shares that could be bought back under the scheme.

NOTE 20: RESERVES

Capital Profits Reserve
Balance at beginning of the year	-	74.222	$\overline{a}$	74.222
Equity accounted share of reserve movement in
associated entity	21,215	۰
Transfer to Retained Profits	(21.215)	(74.222)	$\overline{\phantom{0}}$	(74.222)
Balance at end of the year

NOTE 21: RETAINED PROFITS

Retained Profits at the beginning of the year	51,589,177	42,807,596	10.412.032	3,515,949
Net Profit Attributable to members of the parent	5,043,060	10.079.059	416.933	8,193,561
company
Dividends	(1,646,041)	(1,371,700)	(1,646,041)	(1,371,700)
Equity accounted share of decrease in associate of initial
adoption of principles of UIG42	(805,093)
Transfer from Capital Profits Reserve	21,215	74.222	-	74.222
Retained Profits at the end of the year	54,202,318	51,589,177	9,182,926	10,412,032

NOTE 22: FINANCING ARRANGEMENTS

The Consolidated Entity has had access to the following specific lines of credit.

Total facilities available:
Joint venture - Finance loans	48,500,000	$\mathbf{r}$	48,500,000	$\tilde{z}$
Bank facility	5,000,000	$\overline{ }$	5,000,000	$\sim$
	53,500,000	. $\overline{r}$	53,500,000	$\sim$
		.

Joint venture facilities are shown gross and not the 50% share attributable to the consolidated entity. Joint venture facilities are fully drawn and are secured on property within the joint ventures. The bank facility has not been drawn

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

NOTE 23: CONTROLLED ENTITIES

$23.1$ Particulars in Relation to Controlled Entities

The consolidated financial statements at 30 June 2003 include the following controlled entities. The financial years of all controlled entities are the same as that of the parent entity.

All companies are incorporated in Australia,

Interest Held
2003	2002
⊸	%

Continental Venture Capital Limited

Controlled Entities:
Biomedical Systems Pty Limited	100	100
Head to Heart Pty Limited	100	100
Kingarrow Pty Limited	100	100
Campburn Pty Limited	100	100
Laserex Limited	100	98.
CVC Communication and Technology Pty Ltd	100	98
CVC Technologies Pty Limited	100	100
CVC (Newcastle) Pty Limited	100	100
Pro-Pac Group Limited	77
Pro-Pac Packaging (Aust) Pty Ltd	62
Pro-Pac Packaging Manufacturing (Syd) Pty Ltd	62
Pro-Pac Packaging Manufacturing (Melb) Pty Ltd	-62
Pro-Pac Packaging Manufacturing (Bris) Pty Ltd	-62
Stinoc Limited	80

$23.2$ Outside Equity Interests in Controlled Entities comprise:

Reconciliation of outside equity interests in controlled entities:

	Consolidated
	2003	2002
	\$	\$
Interest in:
Share Capital	6,378,626	11.341.977
Retained Profits/ Accumulated Losses	(4,465,930)	(10,730,277)
Balance at end of the year	1,912,696	611,700
	.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

	Consolidated		The Company
	2003	2002	2003	2002
NOTE 23: CONTROLLED ENTITIES (Cont'd)

23.3 Acquisition of controlled entities

a) Pro-Pac Packaging (Aust) Pty Ltd

Pro-Pac Group Limited, a controlled entity, acquired an 80% private equity interest in Pro-Pac Packaging (Aust) Pty Limited and if's subsidiaries with effect from 1 April 2003.

Consideration and costs paid to 30 June 2003	(5,382,541)
Cash acquired	2,708,384
Outflow of cash to 30 June 2003	(2,674,157)
Fair value of net assets acquired:
- Cash assets	2,708,384
- Inventory	836,347
- Trade debtors	2,444,456
- Other current assets	33,533
- Property, plant and equipment	635,912
- Trade creditors	(1,591,239)
- Employee entitlements	(283,952)
- Tax liabilities	(277,251)
- Related party loans	(2,212,924)
- Other current liabilities	(293, 266)
	2,000,000
Net assets at fair value at 80% ownership	1,600,000
Goodwill arising	5,360,185
Estimated total consideration and costs (a)	6,960,185

a) A further instalment of consideration is payable, to be calculated based on an adjusted audited earnings figure for the year ended 30 June 2003. As at the date of this report the final consideration to be paid for the acquisition had not been finalised.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

	Consolidated		The Company
	2003	2002	2003	2002
NOTE 23: CONTROLLED ENTITIES (Continued)

23.3 Acquisition of controlled entities (continued)

$\mathcal{O}$ Stinoc Limited

On 28 March 2003, as a result of the effects of a rights issue by Stinoc Limited, Stinoc Limited became an 80.19% controlled entity of CVC.

Consideration paid	(488, 317)	$\tilde{\phantom{a}}$	(488, 317)
Cash acquired	714,769
Inflow/ (Outflow) of cash	226,452	$\tilde{\phantom{a}}$	(488, 317)
Fair value of net assets acquired:
- Cash assets	714,769
- Current receivables	2,216
- Accounts payable	(38, 222)	$\overline{r}$
	678,763
Net assets at fair value at 80.19% ownership	544,288
Discount on acquisition	(55, 971)
Consideration	488,317

The discount on acquisition has been included as other income.

Laserex Limited đ)

On 5 March 2003, as a result of the effects of a capital reduction by Laserex Limited, Laserex Limited, previously a 97.7% controlled entity, became a 100% controlled entity of CVC. The effect of the capital reduction was that outside equity interests in the controlled entity were removed at a cash cost to the consolidated entity of \$835,226.

There were no acquisitions of controlled entities in the year ended 30 June 2002.

23.4 Disposal of Controlled Entities

During the year ended 30 June 2003 there were no disposals of controlled entities.

During the year ended 30 June 2002 the consolidated entity sold 100% of the voting shares of Clinical Waste Australia Pty Limited. Details of the disposal of Clinical Waste Australia Pty Limited are as follows:

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

			Consolidated		The Company
		2003	2002	2003	2002
		\$	\$	\$	\$
NOTE 23:	Controlled Entities (Cont'd)
23.4	Disposal of Controlled Entities (Continued)
	Details of the disposal of Clinical Waste Australia Pty Limited:
Gross Consideration			9,412,849		9,412,849
Costs of disposal			(362, 632)		(362, 632)
Net consideration			a dia ara-d 9,050,217		9,050,217
	Non-cash consideration		(2,270,812)		(2,270,812)
	Cash transferred on disposal		(210,919)		.
Inflow of cash			6,568,486		6,779,405
			$\omega = \omega - \omega - \omega$
	Carrying value of net assets sold:
- Cost of Investments					5,049,386
	- Property plant and equipment		4,906,321
	- Other non-current assets		1,500,000
- Cash Assets			210,919
- Inventory			50,742
- Receivables			1,198,009
- Payables			(932,077)
	- Interest bearing liabilities		(1, 129, 196)
- Provisions		$\tilde{\phantom{a}}$	(436, 661)
			. 5,368,057		5,049,386
Profit on disposal			3,682,160 .		4,000,831 .
Net Consideration			9,050,217		9,050,217
			.	.	.

Clinical Waste Australia Pty Limited was sold on 21 March 2002. The disposal of Clinical Waste has been classified as a discontinuing operation of the consolidated entity (refer note 33).

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

NOTE 24: OPERATIONS BY SEGMENTS

$24.1$ Primary Segments - Business Segments

Information, in round thousands, as permitted under class order 98/100, for each business segment is as follows:

30 June 2003:	Private Equity & Venture Capital	Listed Investments	Property	Eliminations	Consolidated
	\$'000's	\$'000's	\$'000's	\$'000's	\$'000's
Revenues:
Revenue from customers
outside the group	5,605	296	1,084		6,985
Inter-segment revenue	834 .	$\bar{\phantom{a}}$ .	$\tilde{\phantom{a}}$ $\omega = \omega \cdot \omega \cdot \omega \cdot \omega$	(834) .	لدام كالدام كالدام
Operating Revenue	6,439	296	1,084	(834)	6,985
Equity Accounted Net Profits	3,479 .	4,306 .	1,064 .	$\sim 100$ .	8,849 .
Total Segment Revenue	9,918	4,602	2,148	(834)	15,834
	.	.	.	$\begin{array}{cccccccccccccc} \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \$	.
Results:
Segment Result	3,012	3,019	2,136		8,167
Unallocated Corporate Expenses					(2,755)
Income Tax Expense					(177) .
Profit After Taxation					5,235
					a a a a a a a
Assets:
Segment Assets	44,184	34,336	15,135	(5,657)	87,998
Unallocated Assets					315 .
Total Assets					88,313
					.
Liabilities:
Segment Liabilities	4,048		6,646	(5,657)	5,037
Unallocated Liabilities					527 .
Total Liabilities					5,564
Other Disclosures:					.
Equity Accounted Investments
included in Segment Assets	4,537	24,088	8,153	(3,375)	33,403
Depreciation	30	$\tilde{\phantom{a}}$	$\tilde{\phantom{a}}$		30
Amortisation	103				103
Other Non-Cash Expenses	3,315	1,390	(937)		3,767
Costs of Acquisition of
Non-Current Assets	5,360				5,360

Inter-segment pricing is determined on an arm's length basis.

Private Equity and Venture Capital involves equity and debt investments in non-listed entities. It includes shares, debt, convertible notes and other investments. Property comprises joint venture interests in the Chevron Renaissance shopping centre, the Bel-Air shops and property held by CVC (Newcastle) Pty Ltd. Listed investments comprises investments listed on the Australian Stock Exchange Limited.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

OPERATIONS BY SEGMENTS (continued) NOTE 24:

$24.1$ Primary Segments - Business Segments (continued)

30 June 2002:	Private Equity & Venture Capital \$'000's	Listed Investments \$000s	Property \$'000's	Eliminations \$'000's	Consolidated \$'000's
Revenues: Revenue from customers
outside the group	15,192 765	5,106	4,364	$\tilde{\phantom{a}}$	24,662
Inter-segment revenue	.	.	.	(765) .	.
Operating Revenue Equity Accounted Net Profits	15,957 2,160 .	5,106 2,619 a dia dia dia dia .	4,364 1,451 .	(765) $\sim 100$ $\begin{array}{cccccccccccccc} \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \$	24,662 6,230 .
Total Segment Revenue	18,117 $\begin{array}{cccccccccccccc} \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \$	7,725 .	5,815 Carlo and and an	(765) $\begin{array}{cccccccccccccc} \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \$	30,892 .
Results: Segment Result Unallocated corporate expenses Income Tax Expense	7,551	3,598	1,731	$\tilde{\phantom{a}}$	12,880 (2,681) (102)
Profit After Taxation					. 10,097 .
Assets: Segment Assets Unallocated Assets Total Assets	28,926	34,893	19,344	(4,624)	78,539 2,313 . 80,852
Liabilities: Segment Liabilities Unallocated Liabilities Total Liabilities	250		5,411	(4,624)	. 1,037 980 . 2,017
Other Disclosures: Equity Accounted Investments included in					.
Segment Assets	2,729	21,782	8,661	(6,618)	26,554
Depreciation Other Non-Cash Expenses	440 $824\,$	138	3,720		440 4,682
Costs of Acquisition of Non-Current Assets	7,336		4,248		11,584

$24.2$ Secondary Segments - Geographical Segments

The Consolidated Entity operates predominantly in Australia.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

NOTE $25$ INVESTMENTS IN ASSOCIATED ENTITIES

Details of material interests in associated entities are as follows:

					Ownership Interest
				Consolidated		The Company
	Principal	Class of	2003	2002	2003	2002
Name	Activities	Share	$\%$	%	$\%$	%
Sunland Group Limited	Property development	Ord	28.58	29.35	23.44	24.07

The balance date of the associated companies is 30 June 2003 and all were incorporated in Australia.

		Investment Carrying Amount				Dividends Received/Receivable
		Consolidated		The Company	Consolidated			The Company
Name	2003	2002	2003	2002	2003	2002	2003	2002
*Sunland Group Limited	24.087.691	21,782,309	4.960.070	4.960.070	1.216.654	$\mathbf{r}$	1,003,982

Investments in associated companies are accounted for on a cost basis in the company accounts and under the equity accounting method in the consolidated accounts. Movements in the carrying amount of the investments under the equity accounting method are as follows:

		Consolidated
	2003	2002
	\$	S
Balance at the start of year	21,782,309	20.765.615
Share of associates profits before tax for the year	5,880,853	3,402,365
Share of associates tax expense attributable to income tax for the year	(1.574, 939)	(783, 924)
Share of associates adjustment on initial adoption of UIG 42	(805.093)
Share of associates capital reserve movement	21,215
New interests acquired		47,149
Interests disposal during the year		(1,648,896)
Dividends received during the year	(1,216,654)
Balance at the end of the year	24,087,691	21,782,309

*Due to the June 2003 full financial information for Sunland Group Limited not being publicly available at the time of the preparation of this report, the investment has only been accounted for up to and including 31 December 2002. This is consistent with prior years.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

Consolidated		The Company
2003	2002	2003	2002
S	S

NOTE 26: NOTES TO THE STATEMENT OF CASH FLOWS

Reconciliation of Cash $26.1$

For the purposes of the statements of cash flows, cash includes cash on hand and at bank and short term deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the statements of financial position as follows:

Cash Assets		2,477,100 4,438,772	199,577 +	4,316,338
	-------	-------	--------	--------

$26.2$ Reconciliation of profit from ordinary activities after income tax to the net cash provided by operating activities

Profit from ordinary activities after income tax	5,234,703	10,097,353	416.933	8,193,561
Add/(less) non-cash items:
Share of equity accounted profits	(8,849,034)	(6,230,333)	(4,543,120)	(4,772,139)
Dividends received from equity accounted associates	1,216,654
Depreciation and amortisation of property plant
And equipment	30,434	439,794
Amortisation of goodwill	103,081
Discount on acquisition	(55, 971)
Writeback on ceasing to equity account joint venture		(2,376,861)		(2,376,861)
Unrealised loss on investments	3,742,843	137,352	2,340,056	137,752
Dividends not received in cash		(167, 850)		(91, 984)
Profit on disposal of investments		(4,638,983)		(5,814,636)
Loss on disposal of short term investments	91,050	407,144	91,050	401,750
Movements in loan provisions	(561, 265)	4,544,130	1,121,968	3,777,684
Borrowing costs in operating profit	92,500	24,811
Interest income not received	(1.604, 487)	(1,128,827)	(720, 139)	(303, 209)
Interest expense not paid			985,308
Movement in income tax provision	1,679,574	(1,474,306)	1,006,227	(695, 912)
Movement in deferred tax assets & liabilities	(492, 247)	858,982	(495, 247)	796.229
Changes in assets and liabilities:
Receivables	570,940	(1,012,370)	830,914	(315, 119)
Inventories	34,910	(779)
Payables	(301.057)	(399, 540)	(363, 828)	64,611
Provisions	19,422	229,877
Prepayments	183,132	(90, 409)	(10, 810)
Net cash provided by/(used in) operating activities	1,135,182	(780, 815)	659,312	(998.274)

$26,3$ Financing Facilities

Refer Note 22.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

NOTE 27: RELATED PARTY INFORMATION

Niroctore

The names of each person holding the position of Director of CVC during the financial year are:

Vanda Russell Gould John Scott Leaver John Douglas Read Alexander Damien Harry Beard John Thomas Riedl

Details of directors' remuneration, superannuation and retirement payments are set out in Note 6.

Apart from the details disclosed in this note, no director has entered into a contract with the Company or the Consolidated Entity since the end of the previous financial year and there were no contracts involving directors' interests existing at year-end.

Other Transactions

CVC Investment Managers Pty Limited, of which Messrs Gould, Read and Leaver were Directors during the relevant period, is entitled to a management fee of 4% of the funds under management of CVC for providing fund raising, accounting, secretarial and management services. CVC Investment Managers Pty Limited is also entitled to a further payment (Incentive Fee) assessed at 20%of the increment in the net asset value of the Company during each year (refer note 29). No Incentive Fee has been paid or provided for the year to 30 June 2003. CVC Investment Managers Pty Limited is responsible for the remuneration of several Directors and Executive Officers of CVC together with the provision of administration and management services.

Management fees of \$1,387,380 (2002: \$1,136,508) were paid to CVC Investment Managers Pty Limited and its controlled entities by CVC during the year. CVC Investment Managers Pty Limited and its controlled entities received management fees from the controlled entities and associated companies of CVC for the provision of services directly to those companies totalling \$1,084,476 (2002: \$1,008,070).

During prior years CVC lent \$9,842,505 to The Keriland Joint Venture in which it had an effective 25% interest. During the year the joint venture was dissolved and the balance of the loan written down to \$7,300,000 to be repaid by instalments. At 30 June 2003 two instalments totalling \$1,460,000 were outstanding and were paid shortly thereafter. The balance of the interests in The Keriland Hotel Joint Venture are held by Sunland Group Limited ("Sunland"). Mr Leaver is a director of CVC and Sunland.

As at 30 June 2002, CVC Communications & Technology Pty Limited had loaned \$12,183,805 including capitalised interest to CVC at 9% interest. During the year 30 June 2003, CVC repaid a net \$879,538 and a further amount of interest of \$985,308 was capitalised on the same terms. There were a number of smaller other loans between wholly owned controlled entities during the period.

CVC loaned \$1.500.000 to Vita Life Sciences Limited and converted this and a further \$80.695 into convertible notes issued by Vita during the year. Mr Gould is a director of Vita Life Sciences Limited.

During the year ended 30 June 2001, the Consolidated Entity committed to advance \$3,461,829 to CVC Reef Limited, a director related entity, in the form of convertible notes. At 30 June 2003, \$1,418,387 had been advanced and accrued interest of \$148,923 had been capitalised.

The ownership interests in related parties are set out in Note 23 (controlled entities), Note 25 (associated entities) and Note 30 (joint ventures).

Dividends of \$1,216,654 (2002: Nil) were received by the consolidated entity from Sunland, an associated company of CVC. Dividends of \$93,473 were received from Greens Foods Limited. Mr Beard is a director of Greens Foods Limited.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

	Consolidated			The Company
	2003	2002	2003	2002
	Ŝ	\$	\$	S
COMMITMENTS NOTE 28:
Capital Expenditure Commitments
Contracted but not provided for and payable:
not later than one year
Non-cancellable operating lease expense commitments
Future operating lease commitments not provided for in
the financial statements and payables:
within one year	304,150
later than one year but not later than five years	209,331
	513.481

NOTE 29: CONTINGENT LIABILITIES

The Company is a defendant in an action brought in the Supreme Court of New South Wales by the liquidator of Amann Aviation Pty Limited (in liquidation) ('Amann'). The liquidator alleges, that certain group companies were involved in an alleged failure to pay tax on damages awarded to Amann as a result of proceedings brought by CVC against the Commonwealth in 1987. The liquidator alleges in the statement of claim that CVC be required to repay to him amounts paid to CVC as a result of the 1987 proceedings, together with damages, interest and the costs of these proceedings. The directors deny any liability and further CVC holds a secured charge over Amann so that in the event that monies were found to be repayable to Amann, they must be paid back to CVC because of the security held by CVC, which has not been challenged. Resolution of this matter may be subject to determination by the Court and accordingly cannot be quantified. However, the directors believe that there will be no material loss to the Company from this matter.

As described in note 27, CVC Investment Managers Pty Limited ('CVCIM'), is entitled to an incentive fee calculated at 20% of the increase in net asset value of CVC during each financial year. This fee has never been paid or provided for in the financial report of CVC. CVCIM has indicated that there is no present intention to exercise the right to the incentive fee retrospectively. Should the fee be exercised retrospectively, the accumulated liability to 30 June 2003 not recognised in this financial report is estimated to be \$3.424.602 (2002: 3.316.000).

The Company has a 50% interest in the Chevron Developments joint venture (note 30) which has bank loans from Suncorp Metway of \$46,500,000 secured on the real property of the joint venture. The Company, along with the external joint venture partner, has guaranteed those loans. As at 30 June 2003, the revenues and net assets of the joint venture are considered to be sufficient to meet all its external liabilities including these loans.

The Company has a number of tax matters in dispute relating to assessments issued by the ATO for the financial years 1988 to 1994 inclusive. At 30 June 2003 the total amount claimed by the ATO and disputed by the company is \$2,418,061. Even though the full amount is being disputed, the Company has paid \$1,474,633 to the ATO pending determination. The Company has, based on a detailed analysis of the issues, estimated the net likely total liability as being \$1,477,583 which has been fully provided for in the accounts.

NOTE 30: INTEREST IN IOINT VENTURES

a) Joint Venture Operations

The consolidated entity held an effective interest of 25% (2002: 25%) in the "Keriland Joint Venture" whose principal activity was the ownership and operation of a hotel on the Gold Coast, Queensland. In the year ended 30 June 2002, due to a change in the underlying ownership of the other 75% interest in the joint venture, the consolidated entity ceased to have any effective control over the joint venture and the consolidated entity changed its the accounting treatment such that the investment in the joint venture was carried at its original cost of \$nil. As a result of the change, the net assets of the consolidated entity increased by \$2,376,861 but this was matched by an equivalent provision against joint venture loans of \$2,376,861 to give a nil effect on the result for the year. In the year ended 30 June 2003, the joint venture was dissolved (see note 27).

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

	Consolidated		The Company
	2003	2002	2003	2002
	\$	\$	\$	\$
NOTE 30: INTEREST IN JOINT VENTURES (Continued)
b) Ioint Ventures Partnerships
Interests in joint ventures partnerships comprise:
Chevron Developments	6.079.564	3,823,378	6,079,564	3,823,378
Bel Air Real Estate	479.856	417.451	479.856	417.451
Skyline Investments Australia	2,755,841	531,310	2,755,841	531,310
	9.315.261	4,772,139	9,315,261	4,772,139
				. .

Chevron Developments

The Company and consolidated entity hold an interest of 50% (2002: 50%) in the Chevron Developments joint venture partnership. The principal activities of Chevron Developments are the ownership and operation of the Chevron Renaissance shopping centre on the Gold Coast, Queensland and the provision of finance for property development. Included in the assets of the Company and the Consolidated Entity are the following amounts representing the share of net assets at the beginning and end of the financial period and profits for the period for the joint venture partnership:

Non-Current Assets - Investments accounted for using the equity method:

At beginning of the year	3.823.378	1.006.611	3,823,378	$\mathbf{r}$
Amount not recognised in relation to prior year		$\overline{ }$	$\overline{\phantom{0}}$	1.006.611
Share of Profit for the year	2,256,186	2.816.767	2,256,186	2,816,767
At end of the year	6.079.564	3.823.378	6.079.564	3,823,378

Bel Air Real Estate

The Company and consolidated entity hold an interest of 50% (2002: 50%) in the Bel Air Real Estate joint venture partnership whose principal activity is the ownership and operation of a shopping strip on the Gold Coast, Queensland. Included in the assets of the Company and the Consolidated Entity are the following amounts representing the share of net assets at the beginning and end of the financial period and profits for the period for the joint venture partnership:

Non-Current Assets – Investments accounted for using the equity method:
At beginning of the year	417.451	151.577	417.451	$\mathbf{r}$
Amount not recognised in relation to prior year	$\tilde{\phantom{a}}$	$\mathbf{r}$	$\overline{\phantom{a}}$	151.577
Share of Profit for the year	62.405	265.874	62.405	265.874
At end of the year	479.856	417.451	479.856	417.451

Skyline Investments Australia

The Company and consolidated entity hold an interest of 50% (2002; 50%) in the Skyline Investments Australia joint venture partnership whose principal activity is the provision of finance to property developments on the Gold Coast, Queensland. Included in the assets of the Company and the Consolidated Entity are the following amounts representing the share of net assets at the beginning and end of the financial period and profits for the period for the joint venture partnership:

Non-Current Assets - Investments accounted for using the equity method:

At beginning of the year	531.310	2.158	531,310
Amount not recognised in relation to prior year	$\tilde{\phantom{a}}$	$\sim$	-	2.158
Share of Profit for the year	2.224.531	529.152	2.224.531	529.152
At end of the year	2.755.841	531.310	2.755.841	531,310

Refer also notes 28 and 29 for details of commitments and contingent liabilities.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

NOTE 31: ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE

Interest rate risk a)

The consolidated entity exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

				Fixed Interest Rate Maturing in:
		Floating	1 year	Between	Non-	TOTAL
		Interest	OF	1 & 5	interest
		Rate	less	vears	bearing
	Note	\$	\$	\$	\$	\$
2003.
Financial Assets
Cash Assets	26	1,098,966	1,378,134		$-2,477,100$
Receivables	9			3,495,268 14,368,501 12,519,588 30,383,357
		.	.	.	Carlo and and	.
Weighted Average Interest Rate		3.5%	$9.7\%$	21.1%
Financial Liabilities
Accounts Payable	16				3,044,732 $\sigma$ . The set of $\sigma$	3,044,732
Interest Bearing Liabilities	17	215,000				215,000
		. . .		La La La L	.	.
Weighted Average Interest Rate		29.0%
2002:
Financial Assets
Cash Assets	26	4,438,772				4,438,772
Receivables	9	.	.	5,278,378 16,561,637 9,331,094 31,171,109 $\begin{array}{cccccccccccccc} \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} & \textcolor{red}{\bullet} &$	.	.
Weighted Average Interest Rate		4.7%	12.1%	16.1%
Financial Liabilities
Accounts Payable	16				$-1,425,936$	1,425,936
Weighted Average Interest Rate

Credit Risk Exposure (b)

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

The credit risk on financial assets, excluding investments, of the consolidated entity which have been recognised on the statement of financial position, is the carrying amount, net of any provision for doubtful debts.

Collateral is obtained. Refer Note 9.

Net Fair Value of Financial Assets and Liabilities $\left( c \right)$

Monetary financial assets and financial liabilities not readily traded in an organised financial market are determined by valuing them at the present value of contractual future cash flows on amounts due from customers (reduced for expected credit losses) or due to suppliers. The carrying amounts of bank term deposits, accounts receivable, loans receivable accounts payable, dividends payable and employee entitlements approximate net fair value.

The net fair value of investments in unlisted shares in other corporations is determined by reference to the underlying net assets and an assessment of future maintainable earnings and cash flows of the respective corporations.

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 (Continued)

	Consolidated		The Company
	2003	2002		2002
	\$	\$	\$	\$
NOTE 32: EMPLOYEE ENTITLEMENTS
Aggregate liability for employee entitlements including on-costs
Current	303.374	$\mathbf{r}$	۰
Number of employees at year-end	52		$\overline{r}$

NOTE 33: DISCONTINUING OPERATIONS

The consolidated entity disposed of its interest in the clinical processing segment of the business during the previous year ended 30 June 2002 (refer also note 23.4). Included within the corresponding year figures within the financial statements of the consolidated entity are the following amounts in respect of the clinical processing operation:

Statement of Financial Performance (Year ended 30 June)

Revenues from ordinary activities		4.207.674
Expenses from ordinary activities		(3,672,035)
Profit (loss) before income tax		535.639
Income tax	$\sim$	(132.319)
Net profit (loss)		403,320

Statement of Financial Position (as at 30 June)

Assets	$\overline{\phantom{a}}$
Liabilities	$\overline{\phantom{0}}$	$\mathbf{r}$
Net assets	-	$\mathbf{r}$

Statement of Cash Flows information (Year ended 30 June)

Cash inflow (outflow) from operating activities	$\sim$	1.174.390
Cash inflow (outflow) from investing activities		(1.247.638)
Cash inflow (outflow) from financing activities	$\sim$	(193,739)
Total cash inflow (outflow)	$\overline{\phantom{a}}$	(266.987)

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

DIRECTORS' DECLARATION

For the Year-Ended 30 June 2003

In the opinion of the Directors of CVC Limited:

the financial statements and notes, set out in pages 6 to 36, are in accordance with the Corporations Act 2001, $(a)$

including:

• giving a true and fair view of the financial position of the Company and consolidated entity as at 30 June 2003 and of $(i)$ their performance, as represented by the results of their operations and their cash flows, for the year ended on that date; and
• complying with Accounting Standards and the Corporations Regulations; and $(ii)$
• $(b)$ there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Dated at Sydney this 15th day of September 2003.

Signed in accordance with a resolution of the Board of Directors.

VR Gould Director

ADH Beard Director

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CVC LIMITED

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position as at 30 June 2003, and the statement of financial performance. statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for the year ended 30 June 2003 for both CVC Limited ("the company") and the CVC Limited group ("the consolidated entity") as set out on pages 6 to 37. The consolidated entity comprises both the company and the entities it controlled during that year.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit approach

We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether or not the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows.

We formed our audit opinion on the basis of these procedures, which included:

• examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and - assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Audit opinion

In our opinion, the financial report of CVC Limited is in accordance with:

(a) the Corporations Act 2001, including:

• $(i)$ giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2003 and of their performance for the year ended on that date; and
• $(ii)$ complying with Accounting Standards in Australia and the Corporations Regulations 2001; and

(b) other mandatory financial reporting requirements in Australia.

Dated at Sydney this 15th day of September 2003.

P Meade Partner

HLB MANN JUDD (NSW Partnership) Chartered Accountants

(AND ITS CONTROLLED ENTITIES)

CORPORATE GOVERNANCE STATEMENT

This statement outlines the main Corporate Governance practices that were in place throughout the financial year, unless hetse saiwhed a

BOARD OF DIRECTORS AND ITS COMMITTEES

The Board is responsible for the overall Corporate Governance of the Consolidated Entity including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

Composition of the Board

The names of the directors of the Company in office at the date of this statement are set out in the Directors Report of this financial report.

The Company has no employees. The Company is managed by CVC Investment Managers Pty Limited, pursuant to a Management Agreement dated 30 December 1986. Three directors of the Company are also directors of CVC Investment Managers Pty Limited.

The Board is comprised using the following principles:

• × the Board should comprise of not less than three nor more than ten directors.
• the Board should comprise directors with a broad range of expertise both nationally and internationally.
• ×. the Board should comprise of at least two employees/directors of the management company.
• ×. the Board should comprise of at least one other non-executive director. This number may be increased where it is felt that additional expertise is required in specific areas, or when an outstanding candidate is identified.
• at least one third of the directors shall retire from office and be eligible for re-election at every annual general meeting. No director shall retain office for more than three years without submitting to re-election unless they are the managing director who can be appointed for a fixed term not exceeding five years or a period without limitation.

The composition of the Board is reviewed annually. When a vacancy exists, through whatever cause, the directors review the appropriateness of appointing a new director. If a new director is to be appointed, via a vacancy or where it is considered that the Board would benefit from the service of a new director with particular skills, the Board identifies, reviews and appoints the most suitable candidate who must then stand for election at the next general meeting of shareholders.

Role of the Board

The Board of Directors is responsible for setting the strategic direction and establishing the policies of the Company. It is responsible for overseeing the financial position, and for monitoring the business and affairs of the Company on behalf of the shareholders, by whom the directors are elected and to whom they are accountable. It also addresses issues relating to internal controls and approaches to risk management.

At all directors meetings held throughout the financial year directors discuss any major risks affecting the Consolidated Entity. If a risk is identified one or more directors are nominated to develop strategies to mitigate these risks and take corrective action. The Board is informed of actions taken.

Independent Professional Advice

Each director has the right to seek independent professional advice at the Consolidated Entity's expense. However, prior approval of the chairman is required, which is not to be unreasonably withheld.

(AND ITS CONTROLLED ENTITIES)

CORPORATE GOVERNANCE STATEMENT (Continued)

Remuneration

The employees/directors of CVC Investment Managers Pty Limited who are appointed to the Board are not directly remunerated by the Company.

Non-executive directors that are not related to the management company are remunerated by the Company. The current remuneration for non-executive directors in aggregate must not exceed \$50,000 per annum to be divided amongst the nonexecutive directors as they see fit. This level of remuneration was approved at the 1995 Annual General Meeting.

Further details of director's remuneration are set out in Note 6 of the financial statements.

Audit Committee

The directors have formed an audit committee to review the performance of the external auditor on an annual basis and to meet with the auditor during the year in connection with the following;

• review of audit plan, fees, scope and effectiveness; $\bullet$
• review of accounting policies adopted or proposed changes thereto;
• review of financial information and financial statements.

ETHICAL STANDARDS

All directors are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Consolidated Entity.

THE ROLE OF SHAREHOLDERS

The Board of Directors aims to ensure that shareholders are informed of all major developments affecting the Consolidated Entity's state of affairs. Information is communicated to shareholders as follows:

• the annual report; $\overline{a}$
• $\overline{a}$ the half-yearly report;
• proposed major changes in the Consolidated Entity which may impact on share ownership rights are submitted to a vote of shareholders; and
• announcements to the Australian Stock Exchange Limited.

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Consolidated Entity's strategy and goals. Important issues are presented to the shareholders as single resolutions.

Dated at Sydney the 15th day of September 2003.

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

ADDITIONAL INFORMATION

Distribution of Shareholders as at 11th day of September 2003: $\mathbf{1}$

Category (Size of Holding)		Number of Ordinary Shareholders
1	1,000 ٠	19
1,001	5,000 $\tilde{\phantom{a}}$	110
5,001	10,000 ۰	82
10,001	100,000 $\tilde{\phantom{a}}$	152
100,001	and over	74
		437

As at 11th day of September 2003, 11 shareholders held less than a marketable parcel.

$2.$ The names of the substantial shareholders at 11th day of September, 2003 as advised to the Australian Stock Exchange Limited.

	Number of Ordinary Shares
Shareholder	in Which Interest Held
Penalton Limited	15,575,978
John Scott Leaver	15,013,307
Vanda Russell Gould	14,898,517
John Douglas Read	14,313,307
CVC Investment Managers Pty Limited	14,313,307
Joseph David Ross	11,439,044
Derin Brothers Properties Limited	10,523,200
Abasus Investments Limited	6.256.000
Southgate Investment Funds Limited	5,000,000

20 Largest Shareholders - Ordinary Capital: at 11th day of September, 2003 $3.$

	Number of Ordinary	% of Issued
Shareholder	Shares Held	Capital Held
Penalton Pty Limited	15,575,978	14.19
CVC Investment Managers Pty Limited	14,313,307	13.04
Derin Brothers Properties Limited	10,523,200	9.59
Abasus Investments Limited	6,256,000	5.70
LJK Nominees Pty Limited	6,104,681	5.56
Southgate Investment Funds Limited	5,500,000	5.01
Bank of Commerce (Micronesia) Limited	4,731,704	4.31
Southsea (Aust.) Pty Limited	4,600,000	4.19
Huang Xiao Sheung Limited	4,000,000	3.65
Chemical Trustee Limited	3,183,123	2.90
Hua Wang Bank Berhard	3,090,000	2,82
Dr Joseph David Ross	2,741,173	2,50
Kirman Traders Pty Ltd	1,500,000	1.37
Tifu Pty Limited	1,435,544	1.31
Indo-Suez Investments Ltd	1,365,862	1.24
Pacific Securities Inc.	1,200,000	1.09
Mr Brian Sherman	1,073,860	0.98
LJK Investments Pty Limited	1,034,363	0.94
Mr Nigel Stokes	1,006,363	0.92
Wenola Pty Limited Pension Fund	700,000	0.64
	89,935,158	81.95%
	.	.

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

ADDITIONAL INFORMATION (Continued)

$\ddot{\mathbf{4}}$ Voting Rights

CVC Limited's Articles of Association detail the voting rights of members. Article 71 states that every member, present in person or by proxy, shall have one vote for every ordinary share registered in his or her name.

Registered Office $5.$

The Company is registered and domiciled in Australia. Its registered office and principal place of business are at Level 42, AAP Centre, 259 George Street, Sydney, NSW 2000.