CVC LIMITED — Annual Report 2008

Aug 28, 2008

CVC Limited Appendix 4E – 30 June 2008

Appendix 4E

Preliminary Final Report Results for announcement to the market

CVC Limited

ABN 34 002 700 361	Financial Year ended (‘Reporting Period’) 30 June 2008	Previous Financial Year ended (‘Corresponding period’)
34 002 700 361	30 June 2008	30 June 2007

Results

Income	~~up~~ ~~/~~down	48%	to	$ 21,830,698
Net profit after tax	~~up~~ ~~/~~down	96%	to	$ 1,122,803
Profit after tax attributable to members	~~up~~ ~~/~~down	96%	to	$ 1,152,985
Net profit for the period attributable to members	~~up~~ ~~/~~down	96%	to	$ 1,152,985

Dividends (distributions)

Dividends (distributions)
	Amount per security		Franked amount per security
Final Dividend – 2007	6 ¢		6 ¢
Interim Dividend – 2008	3 ¢		3 ¢
Information on Dividends: On 17 July 2008 the Directors announced a final fully franked dividend in respect of the year ended 30 June 2008 of 3 cents per share payable on 26 September 2008. A fully franked interim dividend in respect of the current financial year totalling 3 cents per share was paid on 29 February 2008. A fully franked final dividend in respect of the year ended 30 June 2007 of 6 cents per share was paid on 9 November 2007. As previously advised the Dividend Reinvestment Plan has been suspended until such time as there is a better correlation between the share price and the underlying net asset value of CVC Limited. Ex-Dividend date for the purposes of receiving the dividend 22 July2008 Record date for determining entitlements to the final dividend 28 July2008 Last date for elections to participate in the Dividend Reinvestment Plan 28 July2008 Payment Date 26 September 2008
		22 July2008
		28 July2008
		28 July2008
		26 September 2008

CVC Limited Appendix 4E – 30 June 2008

Net tangible asset per security

Net tangible asset per security
	Year ended 30 June 2008	Year ended 30 June 2007
Net assets per share Net tangible assets (“NTA”) per share	$1.69 $1.64	$2.01 $1.96

The preliminary final report is based on accounts that are in the process of being audited.

Commentary

Brief explanation of any of the figures reported above:

Please refer to the attached commentary for a detailed review.

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Commentary on Results, Dividends, Developments and Future Expectations

Commentary on Results:

The Directors of CVC wish to announce a net profit after tax of $1.1 million for the year ended June 30, 2008, after recognising an impairment expense of $13.6 million on loans and investments. After considering changes in the value of investments held during the year this represents a loss on shareholders funds of 13.5% which included a $55.0 million after tax reduction in value of listed investments, nearly reversing the increase in 2007 of $55.8 million.

On 26 June 2008 the Directors of CVC announced that the forecast full year result after tax was expected to be approximately $7 million. The difference between the original forecast and the final audited net profit after tax represents additional impairment provisions raised against loans and investments totalling $6 million after tax following the release of new information to CVC during the course of the year end audit.

Summary of operating results include:

Financial Highlights:

• Profit before taxation of $1.1 million (2007: $35.8 million);

• Net profit after tax of $1.1 million (2007: $30.8 million);

• Earnings per share of 0.7 cents (2007: 23.9 cents);

• Fully franked final dividend of 9 cents per share, full year dividend of 3 cents per share declared on 17 July 2008 and payable on 26 September 2008;

• Dividends paid to shareholders of $14.5 million (2007: $14.6 million); and

• 9,778,617 shares bought back at a cost of $12.7 million ( $1.29 per share)

The profit for the year is directly attributed to the following:

Listed Investments:

During the year CVC sold a number of its listed investments resulting in a total contribution to operating profit of $9.8 million which included the timely sale of its investment in Trinity Group generating a profit of $5.9 million on the original investment.

During the year CVC continued to increase its core investment portfolio by acquiring shareholdings in Cellnet Group Limited, Mercury Mobility Limited and Pro-Pac Packaging Limited

The following represents CVC’s core portfolio of investments at market value.

	Holding		Dividends
	at 30 June	Value at	Received
Company	2007	30 June 2008	30 June 2008
Blue Energy Limited	19.6%	$31.9 million	-
Cellnet Group Limited	33.6%	$7.2 million	-
Cyclopharm Limited	12.1%	$3.0 million	-
Silver Bird Group Bhd	11.7%	$9.6 million	-
Mercury Mobility Limited	29.6%	$4.1 million	-
Pro-Pac Packaging Limited	22.3%	$11.2million	$0.3 million
Sunland Group Limited	9.7%	$70.8 million	$4.6 million
Tri Origin Minerals Limited	7.8%	$4.4 million	-

Private Equity:

Following the volatility in global capital markets a number of investments have been made generating returns in excess of 25% per annum. The positive result has however been overshadowed by the losses returned from equity accounted investments amounting to $6.7 million for the year.

CVC Limited ABN 34 002 700 361 AFSL 239665

Level 42, T 02 9087 8000 259 George Street F 02 9087 8088 Sydney NSW 2000 www.cvcltd.com.au

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Property:

CVC has continued to focus on providing mezzanine finance (principally as first or second mortgage security) to a number of different property projects during the year totalling of $15.7 million at above average interest rates. The positive outlook for investments has been overshadowed by the losses returned from the revaluation of the property portfolio in equity accounted investments and impairment on the finance provided to entities totalling $6.0 million.

Funds Management:

CVC continues to focus on the development and profitability of the funds management segment which includes the investment in Concise Asset Management, a new fund manager focused on mid-cap Australian listed companies and CVC Sustainable Investments, which continues to invest and raise capital in a sector that a gained a great deal more focus following the change in Federal Government and the subsequent signing of the Kyoto Protocol and the announcement of the carbon emissions trading scheme. CVC also continues to develop strategies to grow both CVC Trinity Property Fund and CVC Private Equity Limited. This has been made difficult during the current year with recent significant negative changes in market sentiment towards investment products and property financing which the company was seeking to grow significantly, which means the strategy of increasing funds under management required to meaningfully contribute to earnings is now a short to medium term strategy.

Corporate Finance

The newly created corporate finance segment contributed to profits during the year from CVC’s financial and technical support provided to a number of capital raisings including Blue Energy Limited, Cellnet Group Limited, Mercury Mobility Limited and a number of other portfolio companies.

Dividends:

On 17 July 2008 the Directors announced a fully franked final dividend for the year of 3 cents per share. The company paid a fully franked interim dividend of 3 cents per share bringing the total for the year to 6 cents, fully franked.

Developments and Future Expectations:

The growth in funds under management will continue to be a strategy of CVC over the long term. However, as announced on 27 June 2008 the volatility experienced in global capital markets has, and will impact on the current and future generation of profits. The volatility in capital markets has presented CVC with a significantly improved flow of investment opportunities and with cash holdings in excess of $50 million is well placed to capitalise on these opportunities. This means that the total level of profit for CVC in the future will continue to largely be determined by the timing of the realisation of capital profits.

Alexander Beard Chief Executive Officer 29 August 200

CVC Limited ABN 34 002 700 361 AFSL 239665

Level 42, T 02 9087 8000 259 George Street F 02 9087 8088 Sydney NSW 2000 www.cvcltd.com.au

+

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

CONDENSED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2008

	Consolidated	Consolidated
	2008	2007
	$	$
INCOME
Revenue from services	3,035,737	1,880,163
Net gain on sale of equity investments	9,881,817	14,733,314
Interest revenue	11,727,899	7,126,143
Dividend revenue	5,407,785	5,646,136
Recoveries of loans	134,987	1,224,701
Other income	861,932	680,733
	────────	────────
Total income	31,050,157	31,291,190
	────────	────────
Share of net (losses)/profits of associates accounted for using the equity method	(9,235,161)	10,982,860
Share of net (loss)/profits of joint ventures accounted for using the equity
method	15,702	(17,080)
EXPENSES
Amortisation of intangibles	117,000	117,000
Assets expensed as non-recoverable	1,112,746	432,706
Depreciation expense	36,996	37,366
Employee expenses	2,054,796	2,002,070
Finance costs	523,084	743,926
Impairment expense on assets	13,644,339	-
Management and consultancy fees	1,213,058	1,619,776
Net realised foreign exchange loss	230,854	-
Operating lease rental	361,242	377,604
Other expenses	1,474,011	1,115,682
	────────	────────
Profit before related income tax expense	1,062,572	35,810,840
Income tax (benefit)/expense	(60,231)	4,999,242
	────────	────────
Net profit	1,122,803	30,811,598
Net (loss)/profit attributable to minority interest	(30,182)	53,653
	────────	────────
Net profit attributable to members of the parent entity	1,152,985	30,757,945
	════════	════════
Basic earnings per share	0.0067	0.2387
	════════	════════
Diluted earnings per share	0.0067	0.2369
	════════	════════

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CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

CONDENSED BALANCE SHEET AS AT 30 JUNE 2008

	Consolidated	Consolidated
	2008	2007
	$	$
CURRENT ASSETS
Cash and cash equivalents	51,936,285	115,008,945
Loans and other receivables	42,340,390	24,794,211
Other assets	87,502	69,421
	────────	────────
Total current assets	94,364,177	139,872,577
	────────	────────
NON-CURRENT ASSETS
Loans and other receivables	1,170,374	4,069,502
Financial assets – available-for-sale	145,129,775	204,265,739
Investments accounted for using the equity method	55,966,019	41,512,461
Property, plant and equipment	34,484	45,621
Investment properties	2,783,873	2,799,197
Intangible assets	8,356,634	8,473,634
Deferred tax assets	8,301,965	3,218,075
	────────	────────
Total non-current assets	221,743,124	264,384,229
	────────	────────
TOTAL ASSETS	316,107,301	404,256,806
	────────	────────
CURRENT LIABILITIES
Trade and other payables	2,280,120	1,209,233
Interest bearing loans and borrowings	2,693,695	-
Provisions	199,199	187,623
Current tax liabilities	4,261,699	4,429,030
	────────	────────
Total current liabilities	9,434,713	5,825,886
	────────	────────
NON-CURRENT LIABILITIES
Trade and other payables	-	-
Provisions	23,948	-
Interest bearing loans and borrowings	8,431,997	8,325,924
Deferred tax liabilities	23,773,546	44,940,051
	────────	────────
Total non-current liabilities	32,229,491	53,265,975
	────────	────────
TOTAL LIABILITIES	41,664,204	59,091,861
	────────	────────
NET ASSETS	274,443,097	345,164,945
	════════	════════
EQUITY
Contributed equity	136,823,139	145,370,769
Retained profits	99,069,611	113,202,090
Other reserves	38,484,350	86,494,859
	────────	────────
Total parent entity interest	274,377,100	345,067,718
Minority interest	65,997	97,227
	────────	────────
TOTAL EQUITY	274,443,097	345,164,945
	════════	════════

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CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

CONDENSED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2008

	Consolidated
	2008	2007
	$	$
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts in the course of operations	2,668,747	2,098,763
Cash payments in the course of operations	(3,875,817)	(6,007,522)
Interest received	8,531,943	3,385,478
Dividends received	5,714,692	5,646,136
Interest paid	(163,131)	(158,848)
Income taxes paid	(4,581,990)	(4,314,405)
	───────	───────
Net cash provided by/(used in) operating activities	8,294,444	649,602
	───────	───────
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment	(10,535)	(44,123)
Payments for equity investments	(76,992,364)	(48,348,727)
Proceeds on disposal of equity investments	42,814,062	34,915,293
Proceeds for sale of controlled entities	-	200,000
Loans provided	(30,851,394)	(28,348,254)
Loans repaid	17,918,534	41,528,101
	───────	───────
Net cash (used in)/provided by investing activities	(47,121,697)	(97,710)
	───────	───────
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid to members of parent entity	(14,535,418)	(14,581,818)
Shares bought-back on market	(12,655,998)	(1,395,712)
Issue of shares	3,105,000	110,195,000
Cost of share issue	(3,481)	(3,955,214)
	───────	───────
Net cash (used in)/provided by financing activities	(24,089,897)	90,262,256
	───────	───────
Net increase in cash held	(62,917,150)	90,814,148
Foreign exchange loss on cash	(155,510)	-
Cash at the beginning of the financial year	115,008,945	24,194,797
	───────	───────
CASH AT THE END OF THE FINANCIAL YEAR	51,936,285	115,008,945
	════════	════════

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CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

CONTROLLED ENTITIES

The consolidated financial statements 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.

me as that of the parent entity. All companies are incorporated in Australia.
	Interest Held by Consolidated Entity
	2008	2007
	%	%
CVC Limited
Direct Controlled Entities:
Biomedical Systems Pty Limited	100	100
CVC Climate Innovations Pty Limited	100	-
CVC Fairfield Pty Limited	100	100
CVC Finance Company Pty Limited	100	100
CVC Investment Managers Pty Limited	100	100
CVC Funds Management Pty Limited (formerly CVC Leasing Pty Limited)	100	100
CVC Managers Pty Limited	100	100
CVC Mezzanine Finance Pty Limited	100	100
CVC Narabang Pty Limited	95	95
CVC (Newcastle) Pty Limited	100	100
CVC Trinity Property Managers Limited *	50	50
CVC Technologies Pty Limited	100	100
Energy Technology Holding Pty Limited	100	100
Laserex Pty Limited	100	100
Renewable Energy Managers Pty Limited	100	100
Stinoc Pty Limited	99	99
Skyline Investments Australia Pty Limited	100	100
The Eco Fund Managers Pty Limited	100	100
The Eco Fund Pty Limited	100	100
Controlled Entities owned 100% by Laserex Pty Limited
CVC Communication and Technology Pty Limited	100	100
Controlled Entities owned 100% by CVC Managers Pty Limited
CVC Capital Markets Pty Limited	100	100

• CVC Trinity Property Managers Limited is considered to be controlled by CVC Limited as 50% of the ordinary shares and the appointment of the Chairman of the company is controlled by CVC Limited.

	Consolidated
	2008	2007
	$	$
RETAINED PROFITS
Retained profits at the beginning of the year	113,202,090	98,077,668
Net profit attributable to members of the parent company	1,152,985	30,757,945
Dividends	(15,285,464)	(15,633,523)
	───────	───────
Retained profits at the end of the year	99,069,611	113,202,090
	═══════	═══════

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CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

	Consolidated
	2008	2007
	$	$
INCOME
Revenue from services	3,035,737	1,880,163
Net gain on sales of equity investments	9,881,817	14,733,314
Interest:
Controlled entities	-	-
Related parties	3,163,659	1,171,168
Other parties	8,564,240	5,954,975
Dividends
Related parties	88,925	14,550
Other parties	5,318,860	5,631,586
Impairment recoveries	134,987	1,224,701
Other revenue	861,932	680,733
	───────	───────
Total income	31,050,157	31,291,190
	════════	════════
PROFIT BEFORE INCOME TAX EXPENSE
Profit before income tax expense has been arrived at after charging the following items:
Borrowing costs:
Related parties	359,953	585,078
Other parties	163,131	158,848
	───────	───────
Total borrowing costs	523,084	743,926
	════════	════════
Other expenses:
Audit fees	109,348	90,000
Directors fees	74,000	74,000
Insurance	142,954	115,638
Legal costs	404,629	69,339
Travel and accommodation	102,191	144,516
All other expenses	640,840	622,189
	───────	───────
Total other expenses	1,473,962	1,115,682
	════════	════════
Impairment expense on assets:
Loans to other corporations	2,261,136	-
Loans to director related entities	1,276,465	-
“Available-for-sale” investments	5,627,594	-
Associated entities	4,479,144	-
	───────	───────
Total impairment expense on assets	13,644,339	-
	════════	════════

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CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

DIVIDENDS

Dividends proposed or paid and not provided for in previous years by the Company are: Declared during the financial period and included within the balance sheet:

		Cents	Total	Date of	Tax rate for	Percentage
		Per Share	$	Payment	Franking Credit	Franked
2007	Final on ordinary shares	6.00	10,302,823	9 November 2007	30%	100%
2008	Interim on ordinary shares	3.00	4,982,641	29 February 2008	30%	100%

Declared after the end of the financial period and not included in the balance sheet:

A final dividend in respect of the year ended 30 June 2008 of 3 cents per share was declared on 17 July 2008 payable on 26 September 2008 to those shareholders registered on 28 July 2008.

2008 to those shareholders registered on 28 July 2008.
	The Company
	2008	2007
	$	$
Dividend franking account
Franking credits available to shareholders for subsequent financial years	7,585,962	7,337,419
	════════	════════

The franking account is stated on a tax paid basis. The balance comprises the franking account at year-end adjusted for:

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

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

(c) 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.

INVESTMENTS IN ASSOCIATED ENTITIES

Details of material interests in associated entities are as follows:

	Ownership	Interest		Investment	Carrying
				Amount
	Type	Consolidated		Consolidated
		2008	2007	2008	2007
		%	%	$	$
Cellnet Group Limited	Ords	33.6	22.9	14,193,694	9,866,114
Concise Asset Management Pty	Ords	50.0	-	577,552	-
Limited
CVC Geelong Unit Trust	Ord Units	50.0	-	-	-
CVC Private Equity Limited	Ords	36.6	33.7	3,101,929	7,026,592
CVC Reef Investment Managers	Ords	50.0	50.0	67,627	-
Limited
CVC Shepparton Pty Limited	Ords	50.0	-	-	-
CVC Sustainable Investments	Ords	19.5	-	2,772,563	-
CVC Trinity Property Fund	Ord Units	37.8	37.4	3,015,497	5,744,191
CVC Wagga Wagga Unit Trust	Ord Units	50.0	-	-	-
GPG (No.7) Pty Limited	Ords	27.5	27.5	13,670,281	14,637,531
Mercury Mobility Limited	Ords	29.6	22.9	4,059,106	3,345,152
Pro-Pac Packaging Limited	Ords	22.3	-	12,491,977	-
Ron Finemore Transport Pty Limited	Ords	25.0	25.0	2,013,742	794,401
Winten (No.20) Pty Limited	Ords	50.0	50.0	-	-
				──────	──────
				55,963,968	41,413,981
				══════	══════

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CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

INVESTMENTS IN ASSOCIATED ENTITIES (CONTINUED)

Reconciliations:

Movements in the carrying amount of the investments in associated entities under the equity accounting method are as follows:

	CVC	CVC	Lauden	Pro-Pac	CVC	GPG	Cellnet	Mercury	Winten	Other	Total
	Private	Sustainable	CVC	Packaging	Trinity	(No. 7) Pty	Group	Mobility	(No. 20) Pty	Entities(a)
	Equity	Investments	Property	Limited	Property	Limited	Limited	Limited	Limited
			Trust		Fund
	$	$	$	$	$	$	$	$	$		$
Year ended 30 June 2008
Balance at the start of year	7,026,592	-	-	-	5,744,191	14,637,531	9,927,512	3,283,754	-	794,401	41,413,981
New interests acquired	306,613	118,013	-	1,607,617	32,548	1,430,000	8,459,450	2,905,180	-	851,665	15,711,086
Share of associates profits/(losses) before tax	(2,872,868)	(639,099)	-	(44,552)	(2,761,242)	(1,733,910)	(193,356)	(558,509)	(122,700)	270,419	(8,655,817)
Share of associates tax (expenses)/benefit	(207,661)	100,672	-	(314)	-	(663,340)	(551,137)	-	-	742,436	(579,344)
Share of associates reserves	(992,483)	562,688	-	(202)	-	-	(559,397)	18,447	-	-	(970,947)
Dividends received during the year	(158,264)	(66,288)	-	(230,616)	-	-	-	-	-	-	(455,168)
Reclassification of investments	-	2,696,577	-	11,160,044	-	-	-	-	122,700	-	13,979,321
Impairment	-	-	-	-	-	-	(2,889,378)	(1,589,766)	-	-	(4,479,144)
	───────	───────	───────	───────	───────	───────	───────	───────	───────	───────	───────
Balance at the end of the year	3,101,929	2,772,563	-	12,491,977	3,015,497	13,670,281	14,193,694	4,059,106	-	2,658,921	55,963,968
	═══════	═══════	═══════	═══════	═══════	═══════	═══════	═══════	═══════	═══════	═══════
Year ended 30 June 2007
Balance at the start of year	4,729,024		3,604,087	-	516,386	-	-	-	1,652,798	540,109	11,042,404
New interests acquired	1,144,414	-	-	-	5,805,431	12,455,055	1,961,495	3,595,581	-	300,000	25,261,976
Elimination of disposal profit from associated
company	-	-	-	-	(587,325)	-	-	-	-	-	(587,325)
Share of associates profits/(losses) before tax	155,074		22,636		9,699	2,051,260	(267,719)	(311,827)	9,047,571	(45,708)	10,660,986
Share of associates tax (expenses)/benefit	173,273	-	-	-	-	131,216	17,385	-	-	-	321,874
Share of associates reserves	995,951	-	-	-	-	-	-	-	-	-	995,951
Dividends received during the year	(171,144)	-	-	-	-	-	-	-	-	-	(171,144)
Interests disposed during the year	-	-	(3,626,723)	-	-	-	(3,595,581)	-	-	-	(7,222,304)
Reclassification of investments	-	-	-	-	-	-	11,811,932	-	(10,700,369)	-	1,111,563
	───────	───────	───────	───────	───────	───────	───────	───────	───────	───────	───────
Balance at the end of the year	7,026,592	-	-	-	5,744,191	14,637,531	9,927,512	3,283,754	-	794,401	41,413,981
	═══════	═══════	═══════	═══════	═══════	═══════	═══════	═══════	═══════	═══════	═══════

(a) Other entities include Ron Finemore Transport Pty Limited, Concise Asset Management Pty Limited and CVC Reef Investment Managers Limited.

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