CVC LIMITED — Annual Report 2020

Aug 30, 2020

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RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 30 JUNE 2020

GROUP SUMMARY

The financial year has resulted in CVC Limited recording an underlying loss after tax to shareholders of $2.1 million (2019: $2.1 million).

	Underlying Results
	FY2020	FY2019	Change (%)
Total income	$22.6 m	$32.3 m	(30.1%)
Underlying NPAT	$0.1 m	$1.0 m	(90.5%)
NPAT to shareholders	($2.1 m)	($2.1 m)	(0.7%)
Ordinary dividends	Nil	15.0 cps	(100.0%)
Net assets to shareholders	$167.7 m	$180.0 m	(6.9%)
Net cash position	$22.6 m	$57.2 m	(60.4%)

Despite this disappointing financial result, significant progress has been achieved advancing the repositioning of the business by concentrating on specific investment strategies. A focus on rebalancing the investment portfolio toward fewer investment strategies has resulted in a reduction in the number of listed and unlisted equity positions, which has assisted in protecting shareholder value during the current environment of extreme market volatility and uncertainty. In particular, it was fortuitous that a significant portion of the listed equity portfolio was divested during the first half of the year.

Property financing is a segment that has performed well for CVC over the longer term and remains a key part of the business strategy. Again, it provided a significant contribution to income during the year and is forecast to continue to grow, especially as the major lending institutions appear to be reducing their exposure to property at this time.

The major property projects have achieved significant progress during the year. Each of the Caboolture, Marsden Park, Donnybrook, East Bentleigh and Liverpool projects have made further progress in achieving either planning outcomes or development, which once achieved, are forecast to deliver substantial value to shareholders, with realisations forecast to commence during FY21.

During the year, two new direct property acquisitions were completed to further expand the existing pipeline of development activity within the group. The two properties are both well located, part of master-planned residential developments and involve the construction of

CVC Limited Level 40, T 02 9087 8000 ABN 34 002 700 361 1 Farrer Place F 02 9087 8088 Sydney NSW 2000 www.cvc.com.au

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neighbourhood shopping centres. CVC is positive about these projects given the way this segment of the property market has performed in recent times. It is anticipated that this area of the business will continue to be a core investment strategy in the future.

The CVC Emerging Companies Fund has performed well during the year, with key investments increasing in value. This investment is anticipated to continue to perform well during FY21 and beyond.

The streamlining of investment strategies has resulted in a more efficient business, with a material reduction in the level of overhead expenses. The level of staff required to undertake investment activities will be reviewed continually to ensure that there are appropriate resources to deliver the investment strategy of CVC and to generate strong financial outcomes for shareholders.

Management continue to carry a level of caution in respect to existing and new investments, considering the full effect of the global pandemic is yet to play out. Rigour and diligence in investments remain a key focus and will be the foundation to making informed and calculated investment decisions.

SEGMENT REVIEW

A summary of the operating results for the financial year is provided below:

	2020	2019
	$	$
Direct property investment	(1,107,511)	16,428,583
Property backed lending	10,897,171	5,790,648
Funds management	531,637	1,503,677
Equity investments	(3,266,230)	(7,426,912)
Commercial debt and alternative assets	66,144	335,398
Convertible note interest	(3,639,841)	(4,252,724)
Unallocated	(5,729,618)	(11,323,707)
Tax effect	2,343,726	(46,804)
Total Comprehensive Income	95,478	1,008,159

Level 40, 1 Farrer Place Sydney NSW 2000

CVC Limited ABN 34 002 700 361

T 02 9087 8000 F 02 9087 8088 www.cvc.com.au

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Property Backed Lending

Total pre-tax contribution was $10.9 million (2019: $5.8 million) after incurring $1.0 million (2019: $1.0 million) of impairments associated with investments exposures which no longer form part of the investment strategy of the business. During the financial year the property loan portfolio has increased considerably and CVC will continue to deploy funds into lending opportunities where high quality security is available and investment terms are generally between 12-18 months. The business remains of the view that the risk / return metrics in this area are strong relative to other investment opportunities.

Direct Property

Total pre-tax contribution was a loss of $1.1 million (2019: profit of $16.4 million) net of project specific borrowing costs of $2.0 million. The result is largely due to the requirement to expense project expenditure associated with holding and progressing properties through planning processes. These costs are small relative to the value uplift that is forecast to be achieved once planning approval have been obtained or by completing developments.

The significant pipeline of direct property investments, which has been developed over the past 6 years, is anticipated to start contributing to shareholder value in the near term.

The East Bentleigh project, which CVC is a 50% JV partner with MAKE Property Group, is expected to achieve rezoning from industrial to mixed use (including residential) during FY21, paving the way for development or sale of the site.

The Caboolture project is progressing through the process of commercialisation. The project has already seen the development of the Caltex Travel Centre and has now secured an agreement for lease with Bunnings on the site. Subject to obtaining a development approval, it is anticipated that the development of the Bunnings building will commence during Q3 FY21. In addition, it is forecast that construction of the neighbourhood shopping centre, anchored by a major supermarket retailer, will commence at the same time.

The Marsden Park rezoning process is now approaching finalisation. The project has been nominated under a state lead rezoning process and it is anticipated a rezoning will be achieved during FY21.

The Donnybrook property, part of the Shenstone Park Precinct Structure Plan (PSP) is now on exhibition and a panel hearing is set for November 2020. In August 2020, the property (and surrounds) was nominated by the Victorian Planning Authority as one of 19 ‘fast track’ projects which will benefit from an accelerated planning process. It is forecast that a rezoning of this precinct could be achieved during FY21.

CVC Limited Level 40, T 02 9087 8000 ABN 34 002 700 361 1 Farrer Place F 02 9087 8088 Sydney NSW 2000 www.cvc.com.au

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Two new development projects were acquired throughout the period:

• Elara Village Neighbourhood Centre, Marsden Park, New South Wales

• The project is a 2.53 hectare site within the Stockland Elara Estate that will be developed into an 8,200 sqm neighbourhood shopping centre that is anchored by Coles as well as a Goodstart Early Learning childcare centre, medical centre and speciality retail tenants. The project is expected to be completed during CY21 with an end value of approximately $60 million.

• Harpley Town Centre, Werribee, Victoria

• A 4.39 hectare site within the master planned Harpley Estate being developed by Lend Lease. The project is to be developed into an 8,000 sqm neighbourhood shopping centre anchored by a major supermarket retailer as well as a medical centre, service station, fast food and ancillary commercial space. The project has a four-year time horizon with an end value in excess of $90 million.

Funds Management

The pre-tax contribution from funds management was a profit of $0.5 million (2019: $1.5 million).

• Property Funds Management:

CVC has been focused on growing funds management in the Eildon Debt Fund, a contributory mortgage trust that is focused on providing senior loans to property developers and investors secured by registered first mortgages. During the year, a new strategic JV was formed with Strategic Property Partners Investments Pty Limited, with the objective of growing passive property investment funds, initially focused on retail assets. This strategy will commence by utilising the existing pipeline of developments being delivered by CVC. Property specific funds management activities delivered an underlying profit of $2.0 million.

In addition, extraordinary adjustments during the year included the impact of consolidating Eildon Capital Group, which generated a profit of $1.8 million as well as the impairment of goodwill of $1.4 million associated with the acquisition and internalisation of Eildon Funds Management Limited, arising from the accounting treatment of an internal management agreement. This amounted to total one-off extraordinary accounting adjustments of $0.4 million profit during the year.

o Other Funds Management Activities:

The CVC Emerging Companies Fund, which CVC has committed $10 million in capital, has delivered impressive results during the year. Key investments

CVC Limited Level 40, T 02 9087 8000 ABN 34 002 700 361 1 Farrer Place F 02 9087 8088 Sydney NSW 2000 www.cvc.com.au

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held by the fund, specifically AI Media and Cleanspace, have significantly increased in value, and these movements have contributed $3.2 million to CVC’s results. The outlook for further upside is positive as these key investments progress through an initial public offering.

The balance of the overall performance of the segment was offset by a loss of $4.9 million which was significantly impacted by impairments totalling $4.1 million, principally in relation to the commercial loan portfolio managed by Bigstone Capital Pty Limited as well as its operations, which has been directly affected by the impact of COVID-19.

Equity Investments and Commercial Debt

The Equity Investment and Commercial Debt segments have reduced in both number of investments and value over the year. In combination, they generated a total pre-tax loss of $3.2 million (2019: $7.1 million). Predominantly, the loss has been generated as a result of CVC’s review of the carrying value of its investments, having regard to the impact of the COVID-19 pandemic.

o Listed Equities:

The listed equities portfolio has reduced substantially during the financial year to $27.5 million (2019: $59.8 million). This represented a reduction of the number of investments to a total of 13 (2019: 43). The sale of approximately $32 million of listed equities in H1 FY20 was a positive result in light of market movements since that time. The remaining core holdings in the portfolio include Mitchell Services Limited (ASX: MSV), Cyclopharm Limited (ASX: CYC) and Tasfoods Limited (ASX: TFL). This excludes CVC’s substantial holding in Eildon Capital Group (ASX: EDC), which is classified as a Funds Management investment.

Overall listed equities contributed a loss of $0.1 million (2019: loss of $5.7 million) during the year.

• Unlisted Equity:

The Unlisted Equity segment was significantly affected by the COVID-19 pandemic, resulting in a number of impairments across various investments. The value of unlisted equities has reduced to $6.6 million (2019: $11.1 million). Any future investment exposure in this area is only likely to come via CVC’s investment in the CVC Emerging Companies Fund.

o Commercial Debt:

This segment has been impacted as a result of COVID-19 with impairments of $1.2 million raised against a number of loans. The commercial debt portfolio

CVC Limited Level 40, T 02 9087 8000 ABN 34 002 700 361 1 Farrer Place F 02 9087 8088 Sydney NSW 2000 www.cvc.com.au

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has reduced to a total value of $6.4 million (2019: $9.9 million) across 3 loans (2019: 13). This segment will continue to reduce as loans mature.

BUSINESS OUTLOOK

CVC is focused on completing the rationalisation and repositioning of the business which commenced during the year. A key focus over the next 12 months is unlocking and delivering value from the existing portfolio of direct property assets, which is forecast to commence contributing to results from FY21 and will continue over the longer term.

The business will also continue to be active in property lending, a segment both the Board and Management believe is a core competency.

It is forecast that the CVC Emerging Companies Fund will continue to deliver strong results during the short to medium term.

Although the non-core investment portfolio continues to be reduced, these will require ongoing management to optimise value for shareholders.

It is anticipated that FY21 will continue to be a period of continued consolidation and it is expected that the general economic environment will remain uncertain due to the COVID19 pandemic. It is for these reasons, coupled with the nature of the investments held by CVC, that the Board is not in a position to provide detailed guidance around financial performance for the upcoming period.

CAPITAL MANAGEMENT AND DIVIDEND POLICY

The Board remains committed to paying dividends in line with the performance of the company and its underlying profitability.

The Directors have considered the operating performance of the company during FY20, as well as the uncertainty in relation to COVID-19, and have decided that the payment of a final dividend is not appropriate. The Directors are unable to provide guidance on the payment of dividends to shareholders in future periods, but will continually evaluate this in line with the performance of the business.

CVC has periodically purchased shares and convertible notes under its buy-back schemes, depending on price. Buy-back schemes will continue to be utilised from time to time with a view that this will allow CVC to optimise the capital structure of the business and deliver long term shareholder value.

Mark Avery Managing Director 31 August 2020

CVC Limited Level 40, T 02 9087 8000 ABN 34 002 700 361 1 Farrer Place F 02 9087 8088 Sydney NSW 2000 www.cvc.com.au

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Appendix 4E

Preliminary Final Report Results for announcement to the market

CVC Limited

ABN 34 002 700 361 esults	Financial Year ended (‘Reporting Period’) 30 June 2020	Previous Financial Year ended (‘Corresponding period’) 30 June 2019
Income from ordinary activities ~~up~~/down Profit after tax attributable to members ~~up~~/down Net profit for the period attributable to members ~~up~~/down		30% to $22,552,906 1% to ($2,074,480) 1% to ($2,074,480)

Results

Dividends (distributions)

ividends (distributions)
	Amount per security	Franked amount per security
Final Dividend – 2020	Nil	Nil
Interim Dividend - 2020	Nil	Nil
Final Dividend – 2019 (Paid 20 August 2019)	8 ¢	8 ¢
Information on Dividends: The Directors have considered that in light of the current year is operating performance and the uncertainty in relation to COVID-19 the Directors have resolved to conserve capital and not pay dividends until further notice.

Net tangible asset per security

et tangible asset per security
	Year ended 30 June 2020	Year ended 30 June 2020
Net assets per share Net tangible assets (“NTA”) per share	$1.43 $1.41	$1.53 $1.53

The preliminary final report is based on accounts that have not been audited. The annual financial report is being audited.

Commentary

Brief explanation of any of the figures reported above:

Please refer to the attached commentary for a detailed review.

CVC Limited Level 40, T 02 9087 8000 ABN 34 002 700 361 1 Farrer Place F 02 9087 8088 Sydney NSW 2000 www.cvc.com.au

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CVC LIMITED

AND ITS CONTROLLED ENTITIES

FINANCIAL REPORT

For the year ended 30 June 2020

The company has the power to amend and reissue the financial report.

ACN 002 700 361

1

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2020

	Notes	2020	2019
		$	$
INCOME FROM CONTINUING OPERATIONS
Interest and fee income	4	14,379,839	11,474,450
Net profit from property development activities	4	423,975	8,775,936
Management fee income		1,431,427	1,508,249
Other income	4	333,689	1,020,500
		─────────	─────────
Total income		16,568,930	22,779,135
		─────────	─────────
Share of net profits of associates accounted for using the equity
method	15	5,983,976	9,499,968
EXPENSES
Employee costs		1,674,673	7,255,178
Finance costs	5	6,332,242	5,651,004
Impairment of financial assets at amortised cost	5	5,288,804	2,963,528
Impairment of goodwill	17	1,376,006	-
Management and consultancy fees		1,078,178	2,884,375
Net loss from share investments	5	5,002,495	8,714,278
Overhead expenses	5	4,048,756	3,755,777
		─────────	─────────
Total expenses		24,801,154	31,224,140
		─────────	─────────
(Loss)/profit before related income tax expense		(2,248,248)	1,054,963
Income tax (benefit)/expense	6	(2,343,726)	46,804
		─────────	─────────
Net profit		95,478	1,008,159
Net profit attributable to non-controlling interest		2,169,958	3,068,161
		─────────	─────────
Net loss attributable to members of the parent entity		(2,074,480)	(2,060,002)
		═════════	═════════
Basic and diluted earnings per share for loss attributable to the
members of the parent entity	7	(0.0177)	(0.0173)
		═════════	═════════

The above statement of financial performance is to be read in conjunction with the notes to the financial statements.

2

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020

	2020	2019
	$	$
Profit for the year	95,478	1,008,159
	───────	───────
Total comprehensive income for the year	95,478	1,008,159
	═════════	═══════
Attributable to
Shareholders	(2,074,480)	(2,060,002)
Non-controlling interest	2,169,958	3,068,161
	───────	───────
	95,478	1,008,159
	═══════	═══════

The above statement of comprehensive income is to be read in conjunction with the notes to the financial statements.

3

CVC LIMITED

(AND ITS CONTROLLED ENTITIES) CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2020

	Notes
		2020	2019
		$	$
CURRENT ASSETS
Cash and cash equivalents	24	22,625,871	57,157,737
Financial assets at amortised cost	9	84,993,405	35,081,213
Financial assets at fair value through profit or loss	12	27,423,831	43,124,036
Inventories	13	1,425,803	3,323,321
Other assets	14	1,987,556	1,412,728
Current tax assets		133,307	1,145,424
		──────	─────────
Total current assets		138,589,773	141,244,459
		──────	─────────
NON-CURRENT ASSETS
Financial assets at amortised cost	9	65,494,103	18,568,770
Financial assets at fair value through profit or loss	12	6,581,920	40,156,134
Inventories	13	34,121,095	19,528,957
Investments accounted for using the equity method	15	37,379,060	48,409,113
Property, plant and equipment		168,404	304,544
Intangible assets	17	1,570,000	-
Right-of-use assets	11	401,080	-
Investment properties	16	26,300,000	2,400,000
Other assets	14	15,860,883	15,243,157
Deferred tax assets	6	5,782,676	2,712,604
		──────	─────────
Total non-current assets		193,659,221	147,323,279
		──────	─────────
TOTAL ASSETS		332,248,994	288,567,738
		──────	─────────
CURRENT LIABILITIES
Trade and other payables	18	10,415,969	14,164,786
Contract liabilities	10	916,175	2,133,503
Interest bearing loans and borrowings	20	4,729,164	-
Lease liabilities	11	107,217	-
Provisions	19	587,695	854,699
Current tax liabilities		31,667	-
		──────	─────────
Total current liabilities		16,787,887	17,152,988
		──────	─────────
NON-CURRENT LIABILITIES
Trade and other payables	18	-	5,000,000
Interest bearing loans and borrowings	20	92,440,760	80,335,742
Lease liabilities	11	293,800	-
Provisions	19	-	104,136
Deferred tax liabilities	6	6,686,049	6,186,110
		──────	─────────
Total non-current liabilities		99,420,609	91,625,988
		──────	─────────
TOTAL LIABILITIES		116,208,496	108,778,976
		──────	─────────
NET ASSETS		216,040,498	179,788,762
		══════	═════════
EQUITY
Contributed equity	21	98,096,404	98,768,308
Other equity	22	1,881,405	1,881,405
Retained earnings		68,137,884	79,626,124
Other reserves	23	(433,655)	(266,808)
		──────	─────────
Total parent entity interest		167,682,038	180,009,029
Non-controlling interest		48,358,460	(220,267)
		──────	─────────
TOTAL EQUITY		216,040,498	179,788,762
		═════════	═════════

The above statement of financial position is to be read in conjunction with the notes to the financial statements.

4

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2020

	Contributed	Retained	Asset		Owners of the	Non-controlling
	equity	earnings	revaluation	Other equity	parent	interest	Total
	$	$	$	$	$	$	$
At 1 July 2019	98,768,308	79,626,124	(266,808)	1,881,405	180,009,029	(220,267)	179,788,762
	═════════	═════════	═════════	═════════	═════════	═════════	═════════
(Loss)/profit for the year	-	(2,074,480)	-	-	(2,074,480)	2,169,958	95,478
Other comprehensive income	-	-	-	-	-	-	-
	─────────	─────────	─────────	─────────	─────────	─────────	─────────
Total comprehensive income/(loss) for the year	-	(2,074,480)	-	-	(2,074,480)	2,169,958	95,478
	─────────	─────────	─────────	─────────	─────────	─────────	─────────
Transactions with shareholders:
Share bought back	(670,688)	-	-	-	(670,688)	-	(670,688)
Share buyback transaction cost	(1,737)	-	-	-	(1,737)	-	(1,737)
Income tax on buyback transaction cost	521	-	-	-	521	-	521
Acquisition of interest in controlled entities	-	-	(180,447)	-	(180,447)	49,959,773	49,779,326
Disposal of interest in controlled entities	-	-	13,600	-	13,600	3,370	16,970
Return of capital	-	-	-	-	-	(520,000)	(520,000)
Dividends paid	-	(9,413,760)	-	-	(9,413,760)	(3,034,374)	(12,448,134)
	─────────	─────────	─────────	─────────	─────────	─────────	─────────
At 30 June 2020	98,096,404	68,137,884	(433,655)	1,881,405	167,682,038	48,358,460	216,040,498
	═════════	═════════	═════════	═════════	═════════	═════════	═════════
At 1 July 2018	103,646,848	99,606,254	(318,237)	1,881,405	204,816,270	1,353,079	206,169,349
	═════════	═════════	═════════	═════════	═════════	═════════	═════════
(Loss)/profit for the year	-	(2,060,002)	-	-	(2,060,002)	3,068,161	1,008,159
Other comprehensive income	-	-	-	-	-	-	-
	─────────	─────────	─────────	─────────	─────────	─────────	─────────
Total comprehensive income/(loss) for the year	-	(2,060,002)	-	-	(2,060,002)	3,068,161	1,008,159
	─────────	─────────	─────────	─────────	─────────	─────────	─────────
Share of associate reserve	-	-	51,429	-	51,429	-	51,429
Transactions with shareholders:
Share bought back	(4,870,858)	-	-	-	(4,870,858)	-	(4,870,858)
Share buyback transaction cost	(10,975)	-	-	-	(10,975)	-	(10,975)
Income tax on buyback transaction cost	3,293	-	-	-	3,293	-	3,293
Acquisition of interest in controlled entities	-	-	-	-	-	322,430	322,430
Disposal of interest in controlled entities	-	-	-	-	-	2,358	2,358
Return of capital	-	-	-	-	-	(180,000)	(180,000)
Dividends paid	-	(17,920,128)		-	(17,920,128)	(4,786,295)	(22,706,423)
	─────────	─────────	─────────	─────────	─────────	─────────	─────────
At 30 June 2019	98,768,308	79,626,124	(266,808)	1,881,405	180,009,029	(220,267)	179,788,762
	═════════	═════════	═════════	═════════	═════════	═════════	═════════

The above statement of changes in equity is to be read in conjunction with the notes to the financial statements.

5

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020

	Notes
		2020	2019
		$	$
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts in the course of operations		3,548,769	3,057,330
Cash payments in the course of operations		(15,466,145)	(11,076,462)
Net cash (payment)/receipts for land held for resale		(12,231,671)	10,645,433
Proceeds from disposal of financial assets at fair value through profit or loss		38,344,427	106,891,716
Payments for acquisition of financial assets at fair value through profit or loss		(20,679,366)	(93,030,011)
Net (payment)/proceeds on construction contract		(1,133,895)	10,443,039
Loans provided		(104,533,437)	(69,688,277)
Loans repaid		68,477,165	62,694,503
Dividends received		2,712,553	3,410,071
Interest received		9,240,463	5,866,208
Interest paid		(2,926,747)	(5,335,411)
Income taxes paid		282,873	(2,666,423)
		─────────	─────────
Net cash (used in)/provided by operating activities	24	(34,365,011)	21,211,716
		─────────	─────────
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisition and development of investment properties		(20,010)	(837,256)
Payments for property, plant and equipment		(89,850)	(53,472)
Acquisition of subsidiaries, net of cash acquired		7,502,415	(3,102,637)
		─────────	─────────
Net cash provided by/(used in) investing activities		7,392,555	(3,993,365)
		─────────	─────────
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings		(4,030,655)	(81,487,901)
Proceeds from borrowings		7,960,644	78,205,695
Principal elements of lease payments		(684,501)	-
Convertible loan note purchased		(1,954,881)	-
Dividends paid		(13,054,946)	(22,809,860)
Payments for share buy-back		(672,425)	(4,881,833)
Transactions with non-controlling interests		5,397,354	-
Payments for return of capital		(520,000)	(180,000)
		─────────	─────────
Net cash used in financing activities		(7,559,410)	(31,153,899)
		─────────	─────────
Net decrease in cash and cash equivalents		(34,531,866)	(13,935,548)
Cash and cash equivalents at the beginning of the financial year		57,157,737	71,093,285
		─────────	─────────
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL
YEAR	24	22,625,871	57,157,737
		═════════	═════════

The above statement of cash flows is to be read in conjunction with the notes to the financial statements.

6

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

Note 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33.

Contents

Statement of Accounting Policies Controlled Entities Parent Company Information Income Profit Before Income Tax Expense Income Tax Earnings Per Share Dividends Financial Assets At Amortised Cost Contract Liabilities Lease Financial assets at Fair Value through Profit or Loss Inventories Other Assets Investments Accounted for Using the Equity Method Investment Properties Intangible Assets Trade and Other Payables Provisions Interest Bearing Loans and Borrowings Contributed Equity Other Equity Other Reserves Notes to Statement of Cash Flows Auditors’ Remuneration Commitments and Contingencies Segment Information Related Party Information Additional Financial Instruments Disclosure Fair Value Measurements Events Subsequent to Year End Critical Accounting Estimates and Judgements Changes in Accounting Policies

7

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 1: STATEMENT OF 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 the requirements of the Corporations Act 2001 and Australian Accounting Standards. The financial report has been prepared on a historical cost basis, except for financial assets at fair value through profit or loss and investment properties which have been measured at fair value.

These accounting policies have been consistently applied by each entity in CVC and, are consistent with those of the previous year, except for the adoption of AASB 16 Leases as set out in note 33. Management is required to make judgements, estimates and assumptions in relation to the carrying value of assets and liabilities, that have significant risk of material adjustments in the next year and these have been disclosed in the relevant notes to the financial statements.

CVC presents assets and liabilities in the Statement of Financial Position as current or non-current.

• Current assets include assets held primarily for trading purposes, cash and cash equivalents, and assets expected to be realised in, or intended for sale or use in, the course of CVC’s operating cycle and within one year from the reporting date. All other assets are classified as non-current.

• Current liabilities include liabilities held primarily for trading purposes, liabilities expected to be settled in the course of CVC’s operating cycle and those liabilities due within one year from the reporting date. All other liabilities are classified as non-current liabilities.

Critical accounting estimates and judgements

The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying CVC’s accounting policies.

The key estimates and judgements that have a significant risk of causing a material adjustment to the carrying amount of certain assets and liabilities are:

• Valuation of investments accounted for using the equity method (refer note 32.1 and note 32.2);

• Fair value of financial assets at amortised cost (refer note 9);

• Valuation of inventories (refer note 13);

• Valuation of investment properties (refer note 16);

• Fair value of financial assets at fair value through profit or loss (refer note 12);

• Valuation of intangible assets (refer note 17);

• Determination of the acquisition of a business under a business combination (refer note 2);

• Recoverable value of other assets (refer note 14); and

• Recoverability of current and deferred tax assets and measurement of current and deferred tax liabilities, and the likelihood of generating sufficient future taxable profits to recover such tax balances (refer note 6).

1.2 Statement of Compliance

The financial report complies with Australian Accounting Standards, which include the Australian Accounting Interpretations. The financial report also complies with International Financial Reporting Standards (IFRS).

CVC has adopted AASB 16 Leases for the first time for the annual reporting period commencing 1 July 2019. The impact of the adoption of the standard and the new accounting policy are disclosed in note 33.

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2020 reporting periods and have not been early adopted by CVC. These standards are not expected to have a material impact on CVC in the current or future reporting periods and on foreseeable future transactions.

1.3 Coronavirus (COVID-19) Impact

The World Health Organisation declared a global pandemic in March 2020 as a result of COVID-19. The impact of the crisis has had a significant economic impact. The critical accounting estimates and judgements of CVC have required additional consideration and analysis due to the impact of COVID-19. Given the uncertainty of the extent of the impact of the pandemic, changes to the estimates and outcomes that have been applied in the measurement of CVC’s assets and liabilities may arise in the future. Other than adjusting events that provide evidence of conditions that existed at the end of the financial year, the impact of events that arise after the reporting period will be accounted for in future reporting periods.

8

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 1: STATEMENT OF ACCOUNTING POLICIES (CONTINUED)

1.3 Coronavirus (COVID-19) Impact (Continued)

The effect on the operations of CVC will be dependent on the severity and duration of the pandemic, as well as the economic support provided by the government. The processes applied in the preparation of this Financial Report included a review of:

• all financial assets at amortised cost and associated underlying security to determine if there has been a significant increase in credit risk and determined the expected credit loss on each financial asset. Refer note 9;

• unlisted financial assets at fair value through profit or loss to determine if the investments’ carrying value included a consideration of the impact of COVID-19. Refer note 12;

• the carrying value of inventories to take into consideration of either recent selling prices or independent valuations undertaken compared to the current carrying value of the properties. Refer note 13;

• the appropriateness of the carrying value of call options over property assets. Refer note 14;

• the carrying amount of each associate and joint venture, by comparing the investment’s recoverable amount with its carrying value. Refer note 15; and

• the carrying value of investment properties has been considered in relation to the potential for vacancy risk and the impact on cashflows of the tenant. Refer note 16.

1.4 Principles of Consolidation

Controlled entities

The consolidated financial statements comprise the financial statements of CVC Limited (the “Company”) and its subsidiaries during the year ended 30 June 2020 (“CVC”). The financial statements of controlled entities are included in the results only from the date control commences until the date control ceases and include those entities over which CVC is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profits and losses resulting from intra-group transactions have been eliminated in full and the reporting period and accounting policies of subsidiaries are consistent with those of the parent entity.

The acquisition of subsidiaries is accounted for using the purchase method of accounting which allocates the cost of the business combination to the fair value of the assets acquired and the liabilities assumed at the date of acquisition.

Non-controlling interests not held by CVC are allocated their share of net profit after tax in the statement of comprehensive income and are presented within equity in the consolidated statement of financial position, separately from parent shareholders’ equity. Increases in investments in existing controlled entities are recognised by CVC in equity with no impact on goodwill and the statement of financial performance. The difference between the consideration paid by CVC and the carrying amount of non-controlling interest has been included in asset revaluation reserve.

Associates

Associates are those entities, other than partnerships, over which CVC exercises significant influence but not control. In the consolidated financial statements investments in associates are accounted for using equity accounting principles. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post acquisition changes in the consolidated entity's share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment. Investments in associates are carried at the lower of the equity accounted amount and recoverable amount. CVC’s equity accounted share of the associates' net profit or loss is recognised in the consolidated statement of comprehensive income from the date significant influence commences until the date significant influence ceases.

Parent entity information

The financial information of the Company is disclosed in note 3 and has been prepared on the same basis as the consolidated financial statements with the exception of investments in associates and controlled entities which are accounted for as “fair value through profit or loss” investments.

9

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 1: STATEMENT OF ACCOUNTING POLICIES (CONTINUED)

1.4 Principles of Consolidation (Continued)

Joint ventures

CVC’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. CVC's equity accounted share of the joint venture partnerships’ net profit or loss is recognised in the consolidated statement of comprehensive income from the date joint control commences to the date joint control ceases. CVC’s share of other movements in reserves is recognised directly in other comprehensive income.

Goodwill

Goodwill is considered to have an indefinite life and 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. Following initial recognition goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but is tested annually for impairment. Impairment losses on goodwill are taken to the statement of financial performance and are not subsequently reversed.

1.5 Impairment

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. Non-financial assets other than goodwill that suffered impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed.

1.6 Income Tax and Other Taxes

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities on the current period’s taxable income at the tax rates enacted by the reporting date. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profits will be available against which deductible temporary differences and the carry-forward of unused tax credits can be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit.

Tax consolidation legislation

The controlled entities of the Company implemented the tax consolidation legislation as at 30 June 2003. The entities in the consolidated group continue to account for their own current and deferred tax amounts. CVC has applied the “stand-alone taxpayer” approach in determining the appropriate amount of current taxes and deferred taxes to be allocated to members of the tax consolidated group. The Company recognises the current tax liabilities (or assets) from controlled entities in the tax consolidated group. To the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised the Company recognises the deferred tax assets from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

10

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 1: STATEMENT OF ACCOUNTING POLICIES (CONTINUED)

1.6 Income Tax and Other Taxes (Continued)

Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except:

• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense item as applicable; and

• receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

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

1.7 Business Combination

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

• fair values of the assets transferred

• liabilities incurred to the former owners of the acquired business

• equity interests issued by CVC

• fair value of any asset or liability resulting from a contingent consideration arrangement, and

• fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. CVC recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred.

The excess of the:

• consideration transferred,

• amount of any non-controlling interest in the acquired entity, and

• acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable due in more than a year are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

1.8 Cash and Cash Equivalents

Cash includes cash on hand and short-term deposits with an original maturity of three months or less.

1.9 Trade and Other Payables

Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to CVC prior to the end of the financial year that are unpaid and arise when CVC becomes obliged to make future payments in respect of the purchase of these goods and services. Trade payables are non-interest bearing and are normally settled on average between 30 - 45 day terms.

1.10 Trade and Other Receivables

Trade and other receivables, which generally have 30 - 120 day terms, are stated at their amortised cost less any allowance for expected credit losses. Individual debts that are known to be uncollectible are written off when identified. CVC applies the AASB 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade and other receivables. The measurement of expected loss is based on CVC’s historical credit losses experienced and then adjusted for current and forward-looking information affecting CVC’s customers.

11

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 1: STATEMENT OF ACCOUNTING POLICIES (CONTINUED)

1.11 Contract Assets and Contract Labilities

A contract asset is the entity’s right to consideration in exchange for goods or services that the entity has transferred to the customer. A contract asset becomes a receivable when the entity’s right to consideration is unconditional, which is the case when only the passage of time is required before payment of the consideration is due. A contract liability is an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or an amount of consideration is due) from the customer. Individual contract asset that are known to be uncollectible are written off when identified. CVC applies the AASB 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for contract assets. The measurement of expected loss is based on CVC’s historical credit losses experienced and then adjusted for current and forward-looking information affecting CVC’s customers.

1.12 Inventories

CVC develops some residential and commercial properties for sale which are classified as inventories. Development projects are valued at the lower of cost and net realisable value (NRV). Cost includes costs of acquisition, development and all other costs directly related to specific projects. NRV is the estimated selling price in the ordinary course of business less estimated costs to complete and sell the development.

1.13 Property, Plant and Equipment

Acquisition

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

Investment properties

Investment properties are initially measured at cost, including transaction costs. Investment properties are subsequently measured at fair value, which reflect market conditions at the reporting date. Gains or losses arising from changes in the fair value of investment properties are recognised in the statement of financial performance in the year in which they arise.

Leased property, plant and equipment

CVC has adopted AASB 16 Leases from 1 July 2019, but has not restated comparatives for the 2019 reporting period, as permitted under the specific transition provisions in the standard. The impact of the adoption of the accounting policy for the year ending 30 June 2020 is disclosed in note 33. The accounting policies for the year ending 30 June 2019 are disclosed below.

Lease 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 profit or loss. 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.

Depreciation and amortisation

Property, plant and equipment are depreciated/amortised using the straight line and diminishing value methods 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 CVC 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.

The current depreciation rates for each class of assets are as follows:

Plant and equipment 5% to 50% Leased assets 15% to 25% Leasehold improvements 2.5% to 30%

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amounts being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

12

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 1: STATEMENT OF ACCOUNTING POLICIES (CONTINUED)

1.14 Financial Assets

(a) Classification

Financial assets in the scope of AASB 9 Financial Instruments are classified in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income (OCI), or through profit or loss); and

• those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in financial performance or OCI.

Debt investments are reclassified when and only when its business model for managing those assets changes.

(b) Measurement

At initial recognition, a financial asset is measured at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.

Financial assets at amortised cost

Financial assets at amortised cost are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in statement of financial performance and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of financial performance.

Financial assets at fair value through profit or loss (FVPL)

Equity investments that do not meet the criteria for amortised cost or have not been elected to present as financial assets at fair value through other comprehensive income are measured at FVPL. Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of financial performance as applicable.

(c) Impairment

The expected credit losses associated with its debt instruments carried at amortised cost is assessed on a forward looking basis. The expected credit loss is determined based on changes in the financial asset’s underlying credit risk and includes forward-looking information. Where there has been a significant increase in credit risk since initial recognition, the expected credit loss is determined with reference to the probability of default. CVC applies its judgement in determining whether there has been a significant increase in credit risk since initial recognition based on qualitative, quantitative, and reasonable and supportable information that includes forward-looking information.

Expected credit loss is generally determined based on the contractual maturity of the financial asset and an assessment of the underlying security provided by the counterparty. The expected credit loss is measured as the product of probability of default, loss given default and exposure at default, with increases and decreases in the measured expected credit loss from the date of origination being recognised in the statement of financial performance as either an impairment loss or gain.

Outcomes within the next financial period that are different from assumptions and estimates could result in changes to the timing and amount of expected credit losses to be recognised.

The loss allowances for expected credit loss are presented in the statement of financial position as a deduction to the gross carrying amount.

(d) Set-off of financial assets and liabilities

For investments with direct associated debt, the financial assets and liabilities are reflected on a net basis where this reflects a right, and an intention, to set-off the expected future cash flows from settling those assets and liabilities.

13

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 1: STATEMENT OF ACCOUNTING POLICIES (CONTINUED)

1.15 Intangible Assets

Goodwill

Goodwill on acquisition of businesses is included in intangible assets. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

1.16 Interest-Bearing Loans and Borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Borrowing costs consists of interest and other costs relating to the financing of the acquisition of investment properties, and are expensed in the period they occur.

The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non-convertible bond. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the conversion option. This is recognised and included in shareholders’ equity, net of income tax effects.

1.17 Revenue and Revenue Recognition

Contract Revenue

CVC develops commercial properties. There is ordinarily one performance obligation, being the delivery of a completed building to a customer, including design, construction and leasing (if applicable) of the building. The performance obligation is satisfied, and revenue including costs and margin is recognised, over time with progress determined by reference to a progress certificate issued by the project manager. The progress certificate issued by the project manager represents the current state of completion and is a reliable estimate of the works that have been done. This involves reporting revenue, expenses and profit attributable to the proportion of work completed. Where revenues are associated with uncertain project expenditure, including rental guarantees and lease incentive payments, the revenue is not recognised in the profit or loss until it is highly probable that there will be no reversal or adjustment in the future.

A receivable is also recognised by reference to the progress certificate issued by the project manager as this is the point in time that consideration is unconditional.

Where the contract term is for periods of one year or less, as permitted under AASB 15, the transaction price allocated to these unsatisfied contracts is not disclosed.

Sale of land

CVC develops and sells residential properties and commercial land. Revenue is recognised when control of the property has transferred to the customer. The revenue is measured at the transaction price agreed under the contract. The properties have generally no alternative use for CVC due to contractual restrictions. However, an enforceable right to payment does not arise until legal title has passed to the customer. Therefore, revenue is recognised at a point in time when the legal title has passed to the customer. The consideration is due when legal title has been transferred.

Interest income

Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Fee income

CVC provides services to parties which is measured at the amount in accordance with the agreement. Revenue is recognised in the accounting period which the services provided are matched with the use of the benefits by the client. A receivable is recognised at the same time as this is the point in time that consideration is unconditional because only the passage of time is required before the payment is due.

14

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 1: STATEMENT OF ACCOUNTING POLICIES (CONTINUED)

1.18 Revenue and Revenue Recognition (Continued)

Financing components

CVC does not expect to have any contracts where the period between the transfer of promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, CVC does not adjust any of the transaction prices for the time value of money.

Dividends

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

Revenue from dividends from associates is recognised by the Company when dividends are received. Revenue from dividends from other investments is recognised when received. Dividends received out of pre-acquisition reserves are recognised in revenue and the investment is also assessed for impairment.

Rental income

Rental revenue from operating leases is recognised on a straight line basis over the term of the lease.

Outgoings recovered

Outgoings recovered in relation to operating leases are recognised over the term of the lease when the right of recovery has been determined.

1.19 Employee Entitlements

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be wholly settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled including “on-costs”.

Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date.

1.20 Contributed Equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

1.21 Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

1.22 Earnings Per Share

Basic earnings per share is calculated as net profit/(loss) attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

1.23 Comparative Figures

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

1.24 Segment Reporting

A business segment is a distinguishable component of the entity that is engaged in providing differentiated products or services.

15

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 2: CONTROLLED ENTITIES

2.1 Composition of Consolidated Group

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.

Companies incorporated in Australia:

ompanies incorporated in Australia:
	Interest Held by		Interest held by	non-
	Consolidated Entity		controlling interests
	2020	2019	2020	2019
	%	%	%	%
CVC Limited
Direct Controlled Entities:
Albemarle Alternate Finance Pty Limited	-	100	-	-
Albemarle Altfi Investments Unit Trust	100	100	-	-
Albemarle Capital Pty Limited	-	100	-	-
Biomedical Systems Pty Limited	100	100	-	-
CVC Alternate Funding Pty Limited	100	100	-	-
CVC Bentleigh (Developer) Pty Limited	100	100	-	-
CVC Bentleigh (Loan) Pty Limited	100	100	-	-
CVC Caboolture Unit Trust	60	60	40	40
CVC Elara Developments Pty Ltd	100	-	-	-
CVC Elara Pty Ltd	100	-	-	-
CVC Elara Town Centre Property Fund	100	-	-	-
CVC Funds Management Pty Limited	100	100	-	-
CVC Investment Managers Pty Limited	100	100	-	-
CVC Litigation Funding Pty Limited	100	100	-	-
CVC Managers Pty Limited	100	100	-	-
CVC Masters Unit Trust	50	50	50	50
CVC Mezzanine Finance Pty Limited	100	100	-	-
CVC (Newcastle) Pty Limited	100	100	-	-
CVC Property Investments Pty Limited	100	100	-	-
CVC Reef Investment Managers Pty Limited	-	100	-	-
CVC Renewables Pty Limited	94	94	6	6
CVC Rockhampton Unit Trust	82	82	18	18
CWH No 1 Pty Ltd	-	100	-	-
EAM Berwick Motor Trust	100	-	-	-
EFM Harpley Property Trust	100	-	-	-
EFM Harpley Town Centre Property Trust	100	-	-	-
EFM Nominee Services Pty Limited	100	-	-	-
Eildon Asset Management Pty Limited	100	-	-	-
Eildon Capital Group	45.5	-	54.5	-
Eildon Debt Fund	42	-	58	-
Eildon Funds Management Limited	100	-	-	-
Eildon Investments Services Pty Limited	100	-	-	-
Eildon Property Investment (E) Fund	95	-	5	-
Elara Development Trust	67	-	33	-
Harpley Developments Pty Limited	100	-	-	-
iLiv CVC Rockhampton Trust	55	55	45	45
JAK Mickleham Road Pty Limited	100	-	-	-
LAC JV Pty Limited	66.7	66.7	33.3	33.3
LAC JV Unit Trust	66.7	66.7	33.3	33.3
MAC 1 MP Pty Ltd	66	66	34	34
Marsden Park Development Trust	66	66	34	34
Safari Capital Pty Limited	100	100	-	-
Stinoc Pty Limited	99	99	1	1
Controlled Entities jointly owned by CVC Renewables	Pty Limited and CVC Reef Investment Managers:
Wind Corporation Australia Pty Limited	100	100	-	-
Hampton Wind Park Company Pty Limited	100	100	-	-
Controlled Entities jointly owned by CVC Property Investments Pty Limited and Eildon Capital Group:
79 Logan Road Pty Ltd	70	-	30	-
79 Logan Road Trust	70	-	30	-
LAC JV No. 2 Pty Limited	67	50	33	50
LAC JV No. 2 Unit Trust	67	50	33	50
	16

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 2: CONTROLLED ENTITIES (CONTINUED)

2.2 Acquisition of Operations

a) Eildon Funds Management Limited

On 8 August 2019, CVC acquired 60% of Eildon Funds Management Limited (“EFM”) for a consideration of $3,623,500 at which time it became a 100% subsidiary of CVC. Immediately prior to that date, CVC had an existing holding of 40% of the equity on issue with a carrying amount of $471,622.

A summary of the acquisition is as follows:

mmary of the acquisition is as follows:
	$
Purchase consideration:
Cash paid	3,623,500
	────────
Total purchase consideration	3,623,500
	════════
Fair value of Assets and Liabilities of EFM at Acquisition:
Cash assets	985,868
Trade and other receivables (a)	543,777
Plant and equipment	7,342
Financial assets	130
Deferred tax asset	17,794
Trade and other payables	(77,011)
Current tax liability	(328,784)
	────────
Total identifiable net assets at fair value	1,149,116
Less: carrying amount prior to acquisition	(471,622)
Add: goodwill (b)	2,946,006
	────────
Consideration for acquisition	3,623,500
	════════
Cash outflow
Cash consideration	3,623,500
Less: balances acquired
Cash	(985,868)
	────────
Net outflow of cash – investing activities	2,637,632
	════════

(a) The fair value of acquired trade and other receivables is the gross contractual amount.

(b) The goodwill is attributable to the value of EFM’s funds management business. It will not be deductible for tax purpose. Refer to note 17.

For the period from acquisition to the end of the period, EFM recorded revenues of $1,366,033 and profit after tax of $778,999. If the acquisition had occurred on 1 July 2019, consolidated pro-forma revenue would have been $1,556,649 and profit after tax would have been $806,685.

17

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 2: CONTROLLED ENTITIES (CONTINUED)

2.2 Acquisition of Operations (Continued)

b) Eildon Debt Fund

CVC is deemed to acquire specified assets in Eildon Debt Fund (“EDF”) on 8 August 2019 along with the EFM transaction. The directors have concluded that CVC controls specified assets in EDF, even though it holds less than half of the voting rights of this subsidiary. The significant judgement is per below:

• Eildon Investments Services Pty Limited (“EIS”), a 100% own subsidiary of EFM, is the fund manager for EDF.

• EIS has the decision-making authority to direct the relevant activities of EDF and make decisions in the best interests of all investors.

• The investors’ rights to remove the fund manager are protective as they are excisable only when EIS is in default.

• CVC holds more than 20% investments in specified assets in EDF. This creates sufficient exposure for EIS to be a principal for the relevant specified assets.

No consideration was paid on 8 August 2019 at which time EDF became a subsidiary of CVC. Immediately prior to that date, CVC had an existing holding equivalent to 41.4% of specified assets with a carrying amount of $11,928,085.

A summary of the acquisition is as follows:

	$
Purchase consideration:
Cash paid	-
	────────
Total purchase consideration	-
	════════
Fair value of Assets and Liabilities of EDF at Acquisition:
Cash assets	1,588,130
Trade and other receivables (a)	18,036
Financial assets	30,210,574
Trade and other payables	(3,027,098)
	────────
Total identifiable net assets at fair value	28,789,642
Less: non-controlling interest (b)	(16,861,557)
Less: carrying amount prior to acquisition	(11,928,085)
	────────
Consideration for acquisition	-
	════════
Cash inflow
Cash consideration	-
Add: balances acquired
Cash	1,588,130
	────────
Net inflow of cash – investing activities	1,588,130
	════════

(a) The fair value of acquired trade and other receivables is the gross contractual amount.

(b) CVC has recognised the non-controlling interest at the non-controlling interest’s proportionate share of the net identifiable assets.

For the period from acquisition to the end of the period, EDF recorded revenues of $5,393,329 and profit after tax of $5,017,918. If the acquisition had occurred on 1 July 2019, consolidated pro-forma revenue would have been $5,767,007 and profit after tax would have been $5,370,880.

18

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 2: CONTROLLED ENTITIES (CONTINUED)

2.2 Acquisition of Operations (Continued)

c) Eildon Capital Group

During the year, Eildon Capital Group (“EDC”) completed a restructure on 25 May 2020 which resulted in CVC’s holdings in EDC increasing to 45.5%. Although EDC operates as an autonomous investment vehicle that has appointed a majority of independent directors, as CVC had increased its ownership in EDC to a point where it has the ability to determine the outcome of any securityholder resolutions EDC is considered to be a controlled entity for accounting purposes, even though it holds less than half of the voting rights of this subsidiary.

No consideration was paid at the time when EDC became a subsidiary of CVC. Immediately prior to that date, CVC had an existing holding 45.5% of the equity on issue with a carrying amount of $18,545,778.

A summary of the acquisition is as follows:

mmary of the acquisition is as follows:
	$
Purchase consideration:
Cash paid	-
	────────
Total purchase consideration	-
	════════
Fair value of Assets and Liabilities of EDC at Acquisition:
Cash assets	8,486,029
Trade and other receivables (a)	51,307
Financial assets	33,009,877
Investments accounted for using the equity method	4,338,592
Trade and other payables	(1,066,817)
Current tax liability	(31,667)
Deferred tax liabilities	(192,367)
	────────
Total identifiable net assets at fair value	44,594,954
Less: non-controlling interest (b)	(24,289,542)
Less: carrying amount prior to acquisition	(18,545,778)
Less: discount on acquisition	(1,759,634)
	────────
Consideration for acquisition	-
	════════
Cash outflow
Cash consideration	-
Plus: balances acquired
Cash	8,486,029
	────────
Net inflow of cash – investing activities	8,486,029
	════════

(a) The fair value of acquired trade and other receivables is the gross contractual amount.

(b) CVC has recognised the non-controlling interest at the non-controlling interest’s proportionate share of the net identifiable assets.

If the acquisition had occurred on 1 July 2019, consolidated pro-forma revenue would have been $7,793,075 and profit after tax would have been $4,730,453.

19

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 2: CONTROLLED ENTITIES (CONTINUED)

2.2 Acquisition of Operations (Continued)

d) 79 Logan Road Trust

Following the completion of the restructure of EDC on 25 May 2020, refer note 2.2(c), the deemed ownership of CVC’s holding in 79 Logan Road Trust increased from 35% to 70%. No consideration was paid at the time when 79 Logan Road Trust became a subsidiary of CVC. At the time of the completion of the EDC restructure the carrying value of CVC’s 35% interest in 79 Logan Road Trust was $4,338,557 and the carrying value of EDC’s 35% interest was $4,338,557.

A summary of the acquisition is as follows:

mmary of the acquisition is as follows:
	$
Purchase consideration:
Cash paid	-
	────────
Total purchase consideration	-
	════════
Fair value of Assets and Liabilities of 79 Logan Road Trust at Acquisition:
Cash assets	65,760
Trade and other receivables (a)	57,596
Investment properties	23,900,000
Trade and other payables	(137,481)
Interest bearing liabilities	(11,490,000)
	────────
Total identifiable net assets at fair value	12,395,875
Less: non-controlling interest (b)	(3,718,761)
Less: carrying amount prior to acquisition	(8,677,114)
	────────
Consideration for acquisition	-
	════════
Cash outflow
Cash consideration	-
Plus: balances acquired
Cash	65,760
	────────
Net inflow of cash – investing activities	65,760
	════════

(a) The fair value of acquired trade and other receivables is the gross contractual amount.

(b) CVC has recognised the non-controlling interest at the non-controlling interest’s proportionate share of the net identifiable assets.

If the acquisition had occurred on 1 July 2019, consolidated pro-forma revenue would have been $5,676,177 and profit after tax would have been $4,723,021.

20

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 2: CONTROLLED ENTITIES (CONTINUED)

2.2 Acquisition of Operations (Continued)

e) LAC JV Unit Trust

On 26 June 2019, CVC acquired 33.4% of the units in LAC JV Unit Trust for consideration of $9,333,739. Immediately prior to that date the Company had an existing holding of 33.3% of the equity on issue with a carrying amount of $807,179. This transaction does not fit within the scope of AASB 3 Business Combinations as the LAC JV Unit Trust was not deemed to be carrying on a business.

A summary of the acquisition is as follows:

mmary of the acquisition is as follows:
	$
Purchase consideration:
Cash paid	2,332,446
Payables (a)	7,001,293
	────────
Total purchase consideration	9,333,739
	════════
Fair value of Assets and Liabilities of LAC JV Unit Trust at Acquisition:
Cash assets	27,102
Trade and other receivables (b)	13,946
Other assets (c)	10,248,075
Trade and other payables	(149,100)
	────────
Total identifiable net assets at fair value	10,140,023
Plus: non-controlling interest (d)	895
Less: carrying amount prior to acquisition	(807,179)
	────────
Consideration for acquisition	9,333,739
	════════
Cash outflow
Cash consideration	2,332,446
Less: balances acquired
Cash	(27,102)
	────────
Net outflow of cash – investing activities	2,305,344
	════════

(a) The payables include a payment of $4,405,051 which was paid on 26 June 2020 and $2,596,242 which is due to be paid on 24 December 2020.

(b) The fair value of acquired trade and other receivables is the gross contractual amount.

(c) Other assets include a call option at fair value to purchase a property, non-refundable call option fees paid and associated due diligence costs paid in relation to land subject to rezoning and further development.

(d) CVC has recognised the non-controlling interest at the non-controlling interest’s proportionate share of the net identifiable assets.

The acquired business did not contribute any revenue or net profit to CVC for the period from acquisition to the end of the 2019 financial year. If the acquisition had occurred on 1 July 2018, consolidated pro-forma revenue would have been nil and loss after tax for the year would have been $655.

21

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 2: CONTROLLED ENTITIES (CONTINUED)

2.2 Acquisition of Operations (Continued)

f) LAC JV No. 2 Unit Trust

On 26 June 2019, CVC acquired 33.3% of the units in LAC JV No. 2 Unit Trust for consideration of $842,174. Immediately prior to that date the Company had an existing holding of 16.7% of the equity on issue with a carrying amount of $323,543. This transaction does not fit within the scope of AASB 3 Business Combinations as the LAC JV Unit Trust was not deemed to be carrying on a business.

A summary of the acquisition is as follows:

mmary of the acquisition is as follows:
	$
Purchase consideration:
Cash paid	842,174
	────────
Total purchase consideration	842,174
	════════
Fair value of Assets and Liabilities of LAC JV No. 2 Unit Trust at
Acquisition:
Cash assets	44,881
Trade and other receivables (a)	1,908
Other assets (b)	1,443,208
Trade and other payables	(955)
	────────
Total identifiable net assets at fair value	1,489,042
Less: non-controlling interest (c)	(323,325)
Less: carrying amount prior to acquisition	(323,543)
	────────
Consideration for acquisition	842,174
	════════
Cash outflow
Cash consideration	842,174
Less: balances acquired
Cash	(44,881)
	────────
Net outflow of cash – investing activities	797,293
	════════

• (a) The fair value of acquired trade and other receivables is the gross contractual amount.

(b) Other assets include non-refundable call option fees paid and associated due diligence costs paid in relation to land subject to rezoning and further development.

(c) CVC has recognised the non-controlling interests at the non-controlling interest’s proportionate share of the net identifiable assets.

The acquired business did not contribute any revenue or net profit to CVC for the period from acquisition to the end of the 2019 financial year. If the acquisition had occurred on 1 July 2018, consolidated pro-forma revenue would have been $10 and loss after tax for the year would have been $275.

Following the completion of the restructure of EDC on 25 May 2020, refer note 2.2(c), the deemed ownership of CVC’s holding in LAC JV No.2 Trust increased from 50% to 67%. The deemed consideration was $474,291, being the carrying amount of EDC’s holding in LAC JV No. 2 Trust immediately prior to the transaction. Immediately prior to the transaction, the carrying amount of the existing 50% non-controlling interests In LAC JV No. 2 Unit Trust was $473,655. CVC recognised a decrease in non-controlling interest of $474,012 and a decrease in equity attributable to owners of the parent of $279.

22

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 2: CONTROLLED ENTITIES (CONTINUED)

2.2 Acquisition of Operations (Continued)

g) Other immaterial business combinations

A summary of the acquisition is as follows:

mmary of the acquisition is as follows:
	2020 (b)	2019 (c)
	$	$
Purchase consideration:
Cash paid	-	2
	────────	────────
Total purchase consideration	-	2
	════════	════════
Assets and Liabilities of acquired business at Acquisition:
Cash	130	-
Financial assets	1,371,487	-
Trade and other receivables (a)	-	2
Trade and other payables	(16,075)	-
Interest bearing loans and borrowings	(1,355,412)	-
	────────	────────
Total identifiable net assets at fair value	130	2
Less: carrying amount prior to acquisition	(130)	-
	────────	────────
Consideration for acquisition	-	2
	════════	════════
Cash inflow/(outflow)
Cash consideration	-	(2)
Add: balances acquired
Cash	130	-
	────────	────────
Net inflow/(outflow) of cash – investing activities	130	(2)
	════════	════════

(a) The fair value of acquired trade and other receivables is the gross contractual amount.

(b) For the period from acquisition to the end of the financial year, the acquired business recorded revenues of $333,370 and profit after tax of $192,605. If the acquisition had occurred on 1 July 2019, consolidated pro-forma revenue would have been $346,060 and profit after tax would have been $192,605.

(c) The acquired business did not contribute any revenue or net profit to CVC for the period from acquisition to the end of the 2019 financial year. If the acquisition had occurred on 1 July 2018, there would be no contribution to consolidated pro-forma revenue and profit after tax for the year.

2.3 Interest in material subsidiaries

(a) Significant restrictions

CVC also has constitutional restrictions on its ability to access or use the assets of 79 Logan Road Trust, CVC Caboolture Unit Trust, CVC Masters Unit Trust, Eildon Debt Fund, Eildon Property Investment (E) Fund, Elara Development Trust, iLiv CVC Rockhampton Trust, LAC JV Unit Trust, LAC JV No. 2 Unit Trust and Marsden Park Development Trust, which arise from the operation of the various Trust Deeds of the entities. CVC has an interest in the equity of the entities, but does not provide it a right to their assets or liabilities.

The carrying amount of the non-controlling interests of the various entities included within the consolidated financial statements to which these restrictions apply is a net asset of $48,358,460 (2019: net liability of $220,267).

(b) Information on subsidiaries:

Set out below are those entities that have non-controlling interests that are material to CVC.

CVC Caboolture Unit Trust:

a commercial property development in Caboolture, Queensland.

CVC Masters Unit Trust: a commercial property development in Port Macquarie, New South Wales.

Eildon Debt Fund: a contributory trust which provides investors with strong risk-adjusted returns through investing in select Australian property finance transactions

iLiv CVC Rockhampton Trust: a residential property development in Rockhampton, Queensland.

LAC JV No. 2 Unit Trust: a residential property development in Turrella, New South Wales.

Marsden Park Development Trust:

a residential property development in Riverstone, New South Wales.

23

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 2: CONTROLLED ENTITIES (CONTINUED)

2.3 Interest in material subsidiaries (Continued)

(b) Information on subsidiaries (continued):

Eildon Capital Group: an active property investment entity which participates in retail, industrial, residential and commercial opportunities.

79 Logan Road Trust a commercial property in Woolloongabba, Queensland with a long term lease to an ASX listed entity, with residential development approval.

Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to CVC. The amounts disclosed for each subsidiary are before inter-company eliminations.

	Marsden	Park	CVC Caboolture Unit	CVC Caboolture Unit	iLiv CVC Rockhampton	iLiv CVC Rockhampton	LAC JV No. 2 Unit Trust	LAC JV No. 2 Unit Trust
	Development Trust		Trust		Trust
	2020	2019	2020	2019	2020	2019	2020	2019
	$	$	$	$	$	$	$	$
Summarised statement of financial position
Current assets	12,327	2,902	369,213	517,147	1,857,480	3,371,314	16,187	46,789
Current liabilities	22,000	12,292	244,628	645,065	1,856,957	2,330,790	35,907	955
	───────	───────	───────	───────	───────	───────	───────	───────
Current net assets	(9,673)	(9,390)	124,585	(127,918)	523	1,040,524	(19,720)	45,834
	───────	───────	───────	───────	───────	───────	───────	───────
Non-current assets	12,396,003	12,066,100	11,659,842	9,862,857	-	-	1,915,413	1,247,699
Non-current liabilities	15,853,567	14,712,101	13,411,786	9,946,443	-	-	-	-
	───────	───────	───────	───────	───────	───────	───────	───────
Non-current net assets	(3,457,564)	(2,646,001)	(1,751,944)	(83,586)	-	-	1,915,413	1,247,699
	───────	───────	───────	───────	───────	───────	───────	───────
Net assets	(3,467,237)	(2,655,391)	(1,627,359)	(211,504)	523	1,040,524	1,895,693	1,293,533
Accumulated NCI	(1,623,701)	(1,342,850)	(650,943)	(84,601)	(258)	519,742	473,655	323,325
Summarised statement of comprehensive income
Revenue	10,909	410,909	242,757	2,013,461	2,789,117	1,071,524	2	19
(Loss)/profit for the
period	(811,846)	(347,621)	(1,415,855)	635,634	290,098	10,161	(840)	(550)
Other comprehensive
income	-	-	-	-	-	-	-	-
	───────	───────	───────	───────	───────	───────	───────	───────
Total comprehensive
income	(811,846)	(347,621)	(1,415,855)	635,634	290,098	10,161	(840)	(550)
(Loss)/profit allocated to
NCI	(284,065)	(121,632)	(566,342)	254,254	159,554	5,589	(420)	-
	───────	───────	───────	───────	───────	───────	───────	───────
Dividends paid to NCI	-	-	-	67,045	165,142	5,589	-	-
Summarised statement of cash flows
Cash flows (used
in)/from operating
activities	(323,492)	127,413	(2,000,308)	871,031	2,211,433	302,781	(644,275)	(296,274)
Cash flows from/(used
in) financing activities	321,413	(126,729)	1,850,066	(872,045)	(1,840,000)	(360,000)	603,000	297,760
	───────	──────	──────	──────	──────	──────	───────	──────
Net (decrease)/increase
cash and cash
equivalents	(2,079)	684	(150,242)	(1,014)	371,433	(57,219)	(41,275)	1,486
	───────	──────	──────	──────	──────	──────	───────	──────

24

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 2: CONTROLLED ENTITIES (CONTINUED)

2.3 Interest in material subsidiaries (Continued)

(b) Information on subsidiaries (continued):

	CVC Masters Unit Trust	CVC Masters Unit Trust	Eildon Debt	Fund	Eildon Capital	Group (a)	79 Logan Road	Trust (a)
	2020	2019	2020	2019	2020	2019	2020	2019
	$	$	$	$	$	$	$	$
Summarised statement of financial position
Current assets	768,132	4,558,870	22,601,044	-	28,453,135	-	123,356	-
Current liabilities	768,032	4,560,706	1,565,879	-	1,098,484	-	137,481	-
	───────	───────	───────	───────	───────	───────	───────	───────
Current net assets	100	(1,836)	21,035,165	-	27,354,651	-	(14,125)	-
	───────	───────	───────	───────	───────	───────	───────	───────
Non-current assets	-	-	17,132,964	-	17,716,952	-	23,900,000	-
Non-current liabilities	-	-	-	-	476,649	-	11,490,000	-
	───────	───────	───────	───────	───────	───────	───────	───────
Non-current net assets	-	-	17,132,964	-	17,240,303	-	12,410,000	-
	───────	───────	───────	───────	───────	───────	───────	───────
Net assets	100	(1,836)	38,168,129	-	44,594,954	-	12,395,875	-
Accumulated NCI	(29,524)	(30,492)	22,166,581	-	24,289,542	-	3,718,761	-
Summarised statement of comprehensive income
Revenue	113,956	43,691,850	5,767,007	-	-	-	-	-
(Loss)/profit for the				-	-	-	-	-
period	108,323	6,186,308	5,370,880
Other comprehensive
income	-	-	-	-	-	-	-	-
	───────	───────	───────	───────	───────	───────	───────	───────
Total comprehensive
income	108,323	6,186,308	5,370,880	-	-	-	-	-
(Loss)/profit allocated to
NCI	54,162	2,927,102	2,811,909	-	-	-	-	-
	───────	───────	───────	───────	───────	───────	───────	───────
Dividends paid to NCI	53,194	4,708,170	2,811,909	-	-	-	-	-
Summarised statement of cash flows
Cash flows (used
in)/from operating
activities	(1,949,243)	19,933,661	(5,824,408)	-	-	-	-	-
Cash flows from/(used
in) financing activities	(1,629,143)	(15,988,093)	4,406,100	-	-	-	-	-
	───────	───────	───────	───────	───────	───────	───────	───────
Net (decrease)/increase
cash and cash
equivalents	(3,578,386)	3,945,568	(1,418,308)	-	-	-	-	-
	───────	───────	───────	───────	───────	───────	───────	───────

(a) During the financial year Eildon Capital Group and 79 Logan Road Trust became controlled entities of CVC. The amounts disclosed relate to the period from when Eildon Capital Group and 79 Logan Road Trust became controlled entities of CVC to the end of the period. Refer note 2.2.

25

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 3: PARENT COMPANY INFORMATION

3.1 Summary financial information

The individual financial statements for the parent company, CVC Limited, show the following aggregate amounts:

	2020	2019
	$	$
Current assets	42,383,013	69,565,453
	─────────	─────────
TOTAL ASSETS	236,732,471	254,761,593
	═════════	═════════
Current liabilities	1,001,913	5,808,023
	─────────	─────────
TOTAL LIABILITIES	131,453,623	141,935,094
	═════════	═════════
EQUITY
Contributed equity	98,096,404	98,768,308
Retained earnings	5,301,039	12,176,786
Other equity	1,881,405	1,881,405
	─────────	─────────
TOTAL EQUITY	105,278,848	112,826,499
	═════════	═════════
Net profit/(loss)	2,538,012	(8,369,349)
	─────────	─────────
Total comprehensive income/(loss) for the year	2,538,012	(8,369,349)
	═════════	═════════

The financial information for the Company has been prepared on the same basis as the consolidated financial statements with the exception of investments in associates and controlled entities which are accounted for as “fair value through profit or loss” investments.

3.2 Commitments and Contingent liabilities of the parent entity

The Company did not have any contingent liabilities and capital commitments as at 30 June 2020 and 30 June 2019. Refer note 26.3 for information about guarantees given by the Company.

26

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

	2020	2019
	$	$
NOTE 4: INCOME
Interest and fee income:
Interest income	13,673,717	11,269,367
Fee income	706,122	205,083
	───────	───────
Total interest and fee income	14,379,839	11,474,450
	════════	════════
Net profit from property development activities:
Contract revenue	106,544	32,630,943
Contract costs	-	(25,083,512)
Change in fair value of investment property	12,981	1,041,016
Sale of land	2,789,117	12,471,524
Cost of land sold	(2,484,667)	(12,284,035)
	───────	───────
Total net profit from property development activities	423,975	8,775,936
	════════	════════
Other income:
Rental income	212,127	595,869
All other income	121,562	424,631
	───────	───────
Total other income	333,689	1,020,500
	════════	════════

27

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

	2020	2019
	$	$
NOTE 5: PROFIT BEFORE INCOME TAX EXPENSE
Profit before income tax expense has been arrived at after charging the following items:
Finance costs:
Interest and finance charges paid/payable for financial liabilities at
amortised cost	5,072,117	5,637,250
Amortisation of prepaid finance cost (a)	1,258,457	13,754
Lease liabilities	1,668	-
	───────	───────
Total finance costs expensed	6,332,242	5,651,004
	════════	════════
(a) The finance cost is in relation to the guarantee provided by a third party to the vendor of the property in Moorebank,
New South Wales, being purchased by LAC JV Unit Trust. The guarantee is being	amortised over the term that the
facility is being provided.
Net loss from share investments:
Net loss from equity investments
Net loss on financial assets at fair value through profit or loss	3,689,152	9,473,297
Dividends	(759,079)	(1,782,444)
Fee income	(243,116)	(203,912)
Discount on acquisition	(1,759,634)	-
Impairment of investments	4,075,172	1,227,337
	───────	───────
Total net loss from share investments	5,002,495	8,714,278
	════════	════════
Impairment of financial assets at amortised cost
Impairment of loans	5,404,158	2,963,528
Impairment recovery of loans	(115,354)	-
	───────	───────
Total impairment of financial assets at amortised cost	5,288,804	2,963,528
	═══════	═══════
Overhead expenses:
Audit fees	167,250	162,864
Depreciation and amortisation	771,975	91,789
Directors fee	784,511	714,288
Impairment of property, plant and equipment	145,795	-
Operating lease rental	-	594,855
All other overhead expenses	2,179,225	2,191,981
	───────	───────
Total overhead expenses	4,048,756	3,755,777
	════════	════════

28

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

	2020	2019
	$	$
NOTE 6: INCOME TAX
6.1 Income Tax Expense
Accounting (loss)/profit before income tax	(2,248,248)	1,054,963
	────────	────────
Income tax (benefit)/expense at the statutory income tax rate of 30%	(674,474)	316,489
Increase in income tax expense due to:
Sundry items	32,909	29,836
Trust losses not deductible	678,345	-
Net deferred tax not recognised	454,656	2,499,696
Decrease in income tax expense due to:
Dividends received	(1,738,756)	(1,607,234)
Trust profit not assessable	(852,110)	(383,666)
Tax losses previously not recognised utilised	(158,223)	(777,094)
	────────	────────
	(2,257,653)	78,027
Adjustments in respect of current income tax of previous years	(86,073)	(31,223)
	────────	────────
Income tax (benefit)/expense	(2,343,726)	46,804
	════════	════════
The major components of income tax expense are:
Current income tax charge	364,642	-
Deferred income tax	(2,622,295)	78,027
Adjustments in respect of current income tax of previous years	(86,073)	(31,223)
	────────	────────
Income tax (benefit)/expense reported in the statement of financial performance	(2,343,726)	46,804
	════════	════════

6.2 Deferred Tax Assets

Deferred income tax at 30 June related to the following deferred tax assets:

	Included in Income	Included in Equity	Total
	$	$	$
Year ended 30 June 2020
Provisions and accrued expenses	412,729	-	412,729
Financial assets	4,396,282	-	4,396,282
Property, plant and equipment	218,354	-	218,354
Intangible assets	412,802	-	412,802
Equity accounted income	693,705	-	693,705
Other	69,291	96,840	166,131
Tax losses	1,042,520	-	1,042,520
Deferred tax assets not recognised	(1,559,847)	-	(1,559,847)
	────────	────────	────────
	5,685,836	96,840	5,782,676
	═════════	═════════	═════════

29

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 6: INCOME TAX (CONTINUED)

6.2 Deferred Tax Assets (Continued)

	Included in Income	Included in Equity	Total
	$	$	$
Year ended 30 June 2019
Provisions and accrued expenses	947,956	-	947,956
Financial assets	892,095	-	892,095
Property, plant and equipment	243,444	-	243,444
Equity accounted income	546,244	-	546,244
Other	110,820	-	110,820
Tax losses	1,248,824	-	1,248,824
Deferred tax assets not recognised	(1,276,779)	-	(1,276,779)
	────────	────────	────────
	2,712,604	-	2,712,604
	═════════	═════════	═════════
.3 Deferred Tax Liabilities
eferred income tax at 30 June related to the following deferred tax liabilities:
Year ended 30 June 2020
Financial assets	-	806,316	806,316
Equity accounted income	12,036,588	-	12,036,588
Intangible assets	21,000	-	21,000
Gain on acquisition	817,008	-	817,008
Other	21,508	-	21,508
Deferred tax assets not recognised	(7,016,371)	-	(7,016,371)
	────────	────────	────────
	5,879,733	806,316	6,686,049
	═════════	═════════	═════════
Year ended 30 June 2019
Financial assets	2,977,281	806,316	3,783,597
Equity accounted income	9,091,708	-	9,091,708
Intangible assets	21,000	-	21,000
Gain on acquisition	405,247	-	405,247
Deferred tax assets not recognised	(7,115,442)	-	(7,115,442)
	────────	────────	────────
	5,379,794	806,316	6,186,110
	═════════	═════════	═════════

6.3 Deferred Tax Liabilities

Deferred income tax at 30 June related to the following deferred tax liabilities:

Deferred income tax assets are offset against deferred income tax liabilities to the extent that it is probable that the timing of the utilisation of the temporary differences will occur in the same accounting period, a legally enforceable right exists to set off tax assets and liabilities and that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

CVC estimates future taxable profits based on forecasts. Future taxable profits are influenced by a variety of general economic and business conditions, which are outside the control of CVC. A change in any of these assumptions could have an impact on the future profitability of CVC and may affect the recovery of deferred tax assets. The potential business impacts of COVID-19 have been reflected in the current forecasts. The recoverability of deferred tax assets including those arising from tax losses has been determined with reference to these forecasts.

30

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 6: INCOME TAX (CONTINUED)

6.4 Tax Consolidation

The controlled entities of the Company implemented the tax consolidation legislation as at 30 June 2003. Members of the group have entered into a tax sharing agreement that provides for the allocation of income tax liabilities to subsidiaries in the event the tax liability is not paid.

The entities in the consolidated group continue to account for their own current and deferred tax amounts. The members of the tax consolidated group has applied the “stand-alone taxpayer” approach in determining the appropriate amount of current taxes and deferred taxes to be allocated to members of the tax consolidated group.

In addition to its own current and deferred tax amounts, the Company recognises the current tax liabilities (or assets) from controlled entities in the tax consolidated group. To the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised the Company recognises the deferred tax assets from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Members of the tax consolidated group have entered into a tax funding agreement. Under the funding agreement the allocation of tax within the group is calculated as if each entity was an individual entity for tax purposes. Unless agreed between the members the tax funding agreement requires payment as a result of the transfer of tax amounts.

NOTE 7: EARNINGS PER SHARE

	2020	2019
	$	$
Basic and diluted earnings per share	(0.0177)	(0.0173)
	════════	════════
Net loss attributable to members of the parent entity	2,074,480	2,060,002
	════════	════════
	Number of Shares
Weighted average number of ordinary shares – Basic and Diluted	117,490,423	119,393,856
Number of shares on issue at the end of the year	117,357,320	117,690,259
	════════	════════

31

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 8: DIVIDENDS

Dividends proposed or paid and not provided for in previous years by the Company are: Declared during the financial year and included within the statement of changes in equity:

		Cents	Total	Date of	Tax rate for	Percentage
	Per Share		$	Payment	Franking Credit	Franked
2019	Final dividend on ordinary shares	8.00	9,413,760	20 August 2019	30%	100%
2019	Interim dividend on ordinary shares	7.00	8,357,505	8 March 2019	30%	100%
2018	Final dividend on ordinary shares	8.00	9,562,623	5 September 2018	30%	100%

Declared after the end of the financial period and not included in the statement of financial position:

No dividend has been declared or paid after the end of the financial period.

clared after the end of the financial period and not included in the statement of dividend has been declared or paid after the end of the financial period.	financial position:
	The	Company
	2020	2019
	$	$
vidend franking account
Franking credits available to shareholders for subsequent financial years	2,472,842	3,641,826
	════════	════════

Dividend franking account

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 refund of overpaid tax instalments paid

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

(d) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date (e) 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.

NOTE 9: FINANCIAL ASSETS AT AMORTISED COST

Current
Trade receivables	409,563	1,158,249
Other receivables and prepayments	2,216,973	802,035
Loans to associated entities	4,225,871	10,503,536
Expected credit loss for loans to associated entities	(470,199)	-
Loans to entities associated with key management personnel	7,550,425	-
Loans to other related entities	-	4,020,994
Loans to other corporations	71,695,322	18,596,399
Expected credit loss for loans to other corporations	(634,550)	-
	────────	────────
	84,993,405	35,081,213
	════════	════════
Non-current
Loans to associated entities	26,778,319	6,604,132
Expected credit loss for loans to associated entities	(680,072)	-
Loans to other corporations	43,190,975	11,964,638
Expected credit loss for loans to other corporations	(3,795,119)	-
	────────	────────
	65,494,103	18,568,770
	═════════	════════

9.1 Trade receivables

Trade receivables are non-interest bearing and are generally on 30 - 120 day terms. CVC applies the AASB 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade and other receivables. The measurement of expected loss is based on CVC’s historical credit losses experienced and then adjusted for current and forward-looking information affecting CVC’s customers.

32

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 9: FINANCIAL ASSETS AT AMORTISED COST (CONTINUED)

9.1 Trade receivables (Continued)

				2020		2019
				$		$
Movements in the allowance for expected credit losses were as
follows:
Carrying amount	at the beginning of the	year		-		-
Receivables written off during the year as uncollectible				(138,625)		(308,389)
Provision for impairment recognised during the year				138,625		308,389
				────────	────────
Carrying amount	at the end of the year			-		-
				═════════	═════════
he ageing analysis of the trade receivables is as follows:
	Total	Not past due	0 – 30	31 – 60	61 – 90	+91
			days (PDNI)	days (PDNI)	days (PDNI)	days (PDNI)
	$	$	$	$	$	$
Closing balance - 2020	409,563	409,563	-	-	-	-
Closing balance - 2019	1,158,249	504,349	-	4,400	106,600	542,900
	═══════	═══════	═══════	═══════	═══════	═══════

The ageing analysis of the trade receivables is as follows:

PDNI – Past due not impaired

The gross carrying amounts of trade receivables of $409,563 (2019: $1,158,249) are not considered to have an exposure to credit risk over their lifetime.

9.2 Loans

Following the economic consequences of COVID-19 at the reporting date the timing of contractual recovery is subject to evolving regulatory and industry support for counterparties requesting such support.

In the event that a counterparty default on a loan, CVC may take possession of security provided. CVC has not repossessed any assets that have been provided as security.

Expected credit loss on loans are disclosed as a deduction against the gross carrying amount. CVC regularly reviews loans to determine if there is a significant increase in credit risk, which may be evidenced by either qualitative or quantitative factors. These factors include if a counterparty does not pay a scheduled payment of principal and interest, requests a variation to the repayment terms, or management consider that there has been an adverse change in the underlying value of assets securing the loan. The significant increase in credit risk methodology is based on an actual credit risk review approach which considers changes in a counterparty’s credit risk since origination. The outcome of the review identifies the probability of default and the loss given default of the loan, which are used to determine the impairment required to be made in relation to a loan.

A loss allowance is identified at the time that there is a significant increase in credit risk of the borrower, and the loan is impaired once it is determined that an amount is not recoverable.

The table below represents the reconciliation of the expected credit loss allowance on loan assets to which the impairment requirements under AASB 9 are applied.

	2020	2019
	$	$
Movements in the provision for impairment loss were as follows:
Carrying amount at the beginning of the year	-	-
Expected credit loss allowance recognised during the year	5,579,940	-
	────────	────────
Carrying amount at the end of the year	5,579,940	-
	════════	════════

Further details of loans are set out in notes 29.

In response to COVID-19 CVC has reviewed its loans for a significant increase in credit risk and expected credit loss. The review considered the counterparty credit quality, the security held, exposure at default and the effect of repayment terms as at reporting date.

9.3 Fair value

Due to the short-term nature of the current financial assets at amortised cost, their carrying amount is considered to be the same as their fair value. For the majority of the non-current financial assets at amortised cost, the fair values are also not significantly different from their carrying amounts.

33

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 10: CONTRACT LIABILITIES

Current Contract liabilities – construction contract 916,175 2,133,503 ═════════ ═════════

Revenue recognised that was included in the contract liability balance at the beginning of the financial year is $106,544 (2019: nil).

CVC develops commercial properties. There is ordinarily one performance obligation, being the delivery of a completed building to a customer, including design, construction and leasing (if applicable) of the building. The performance obligation is satisfied, and revenue including costs and margin is recognised, over time with progress determined by reference to a progress certificate issued by the project manager. The progress certificate issued by the project manager represents the current state of completion and is a reliable estimate of the works that have been done. This involves reporting revenue, expenses and profit attributable to the proportion of work completed. Where revenues are associated with uncertain project expenditure, including rental guarantees and lease incentive payments, the revenue is not recognised in the profit or loss until it is highly probable that there will be no reversal or adjustment in the future.

Construction contract assets are recognised for all contracts in which costs incurred plus recognised profits exceed progress billings. If progress billings and recognised losses exceed costs incurred plus recognised profits, then the difference is a contract liability.

Where the contract term is for periods of one year or less, as permitted under AASB 15, the transaction price allocated to these unsatisfied contracts is not disclosed.

NOTE 11: LEASE

	30 June 2020	1 Jul 2019
	$	$
Right-of-use assets
Buildings	365,028	2,789,872
Equipment	36,052	60,964
	────────	────────
	401,080	2,850,836
	═════════	═════════
Lease liabilities
Current	107,217	624,152
Non-current	293,800	2,226,684
	────────	────────
	401,017	2,850,836
	═════════	═════════

Additions to the right-of-use assets during the year ended 30 June 2020 were $415,855 and the total cash outflow for leases was $686,169. The office lease associated with the buildings was assigned to an external party during the year. The relevant lease liabilities have been derecognised. Refer note 24.4.

levant lease liabilities have been derecognised. Refer note 24.4.
	2020	2019
	$	$
Depreciation charge of right-of-use assets
Buildings	659,526	-
Equipment	24,911	-
	────────	────────
	684,437	-
	═════════	═════════

34

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 12: FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	2020	2019
	$	$
Current
Shares in listed corporations	27,423,831	31,348,641
Shares in unlisted corporations	-	11,775,395
	───────	───────
	27,423,831	43,124,036
	════════	════════
Non-current
Shares in listed corporations	-	27,745,323
Shares in unlisted corporations	6,581,920	12,410,811
	───────	───────
	6,581,920	40,156,134
	════════	════════

12.1 Shares in listed corporations

The carrying value of investments classified as “Shares in listed corporations” has been determined by using the fair value approach. Refer note 30. The price within the bid-ask spread was determined to be an appropriate indication for the fair value of the investments. The closing “last-price” has been used for the current financial year and “bid-price” has been used for the 2019 financial year. If the last price was used in the prior year to determine the fair value of shares, this would have resulted in an immaterial variance to what is presented above.

Significant share holdings are held in Cyclopharm Limited, Heritage Brands Ltd, Longtable Group Ltd, Mitchell Services Limited, Tasfoods Limited and Universal Biosensors Inc. The number of shares held is greater than what would reasonably be considered to be liquid as each company does not trade on a daily basis; each trade that is executed, excluding those by CVC, is small in size; and the market capitalisation is small. CVC has determined that although an active market may not exist, the active market in small amounts of trading does provide a guide for valuation in that it indicates whether or not the market values the intangible assets of an entity. Additionally, CVC has been able to exit larger shareholdings over a period of time without impacting the prevailing share price, particularly when larger investors are seeking to acquire holdings. This factor has been used in determining the valuation of each company.

12.2 Shares in unlisted corporations

The carrying value of investments classified as “Shares in unlisted corporations” has been determined by using valuation techniques. Such techniques include using recent arm’s length market transactions; net asset backing; reference to the current market value of another instrument that is substantially the same and discounted cash flow analysis. Refer note 30.

The impact of the COVID-19 pandemic on unlisted investments is as follows:

• (a) Externally managed investments - the impact of COVID-19 would be considered by the investment manager when determining the underlying value of investments and reporting at financial year end.

• (b) Investments on business operations – businesses have provided updates regarding the impact of COVID-19 on their operations and CVC is of the opinion that there has been no impact on the basis of determining the carrying value of investments.

35

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

		2020	2019
		$	$
NOTE 13:	INVENTORIES
Current
Land development sites held for resale		1,425,803	3,323,321
		═════════	═════════
Non-current
Land development sites held for resale		34,121,095	19,528,957
		═════════	═════════

CVC develops residential and commercial properties for the purpose of sale rather than being held as an investment property. Development projects are valued at the lower of cost and net realisable value (NRV). Cost includes costs of acquisition, development and all other costs directly related to specific projects. NRV is the estimated selling price in the ordinary course of business less estimated costs to complete and sell the development. The carrying value has been determined as follows:

Current land development sites

The land development project in Rockhampton, Queensland is currently being actively marketed and sold. The sale prices achieved exceed the current carrying value, and as such the development project is valued at cost. COVID-19 has not materially impacted on the sale prices being achieved by the project.

Non-current land development sites

The projects represent developments at Marsden Park, New South Wales and Caboolture, Queensland. The current NRV of the projects exceed the carrying values which has been based on the following:

• (a) Elara Village Neighbourhood Centre, Marsden Park, New South Wales

The acquisition of the property was completed on 15 June 2020. CVC is of the opinion that the purchase price is a reasonable estimate of the carrying value of the property.

• (b) Residential development, Marsden Park, New South Wales

An Independent valuation was completed by Landsburys Valuation & Advisory Pty Ltd on 11 July 2017 valuing the site at $65.0 million on a direct comparison basis compared to a current carrying value of $12.4 million. CVC is of the opinion that the current value would be significantly higher as further progress has been made in rezoning the site.

• (c) Retail precinct development, Caboolture, Queensland

An Independent valuation was completed by Jones Lang LaSalle Advisory Services on 29 September 2017 valuing the site at $13.875 million on a direct comparison basis compared to a current carrying value of $9.2 million. CVC is of the opinion that the current value would be significantly higher as further progress has been made in developing the site.

Although COVID-19 may have had an impact on underlying property values, CVC is of the opinion that the NRV of the above land development sites exceeds the current carrying value.

Inventories recognised as an expense for the year ended 30 June 2020 totalled $2,484,667 (2019: $12,284,035). This expense has been included in the Statement of Financial Performance.

36

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

		2020	2019
		$	$
NOTE 14:	OTHER ASSETS
Current
Prepayments (a)		1,495,448	1,412,728
Other current assets		492,108	-
		────────	────────
		1,987,556	1,412,728
		═════════	═════════
Non-current
Prepayments (a)		2,296,856	3,551,874
Other non-current assets (b)		13,564,027	11,691,283
		────────	────────
		15,860,883	15,243,157
		═════════	═════════

• (a) The prepayments include an amount of $3,551,874 (2019: $4,810,331) which represents the finance cost in relation to the guarantee provided by a third party to the vendor of the property in Moorebank, New South Wales, being purchased by LAC JV Unit Trust. The guarantee is being amortised over the term that the facility is being provided.

• (b) Other non-current assets include call options at deemed cost to purchase property, non-refundable call option fees paid and associated due diligence costs paid in relation to land subject to rezoning and further development.

An Independent valuation was completed by Landsburys Valuation & Advisory Pty Ltd on 27 June 2019 valuing the option at $26.0 million on a direct comparison basis. CVC is of the opinion that the current value would be significantly higher as further progress has been made in rezoning the underlying site.

Although COVID-19 may have had an impact on underlying property values, CVC is of the opinion that the value of the option exceeds the carrying value.

NOTE 15: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Non-current
Equity accounted interests in joint ventures	6,426,413	7,821,157
Equity accounted shares in listed associated companies	-	18,779,948
Equity accounted shares in other associated companies	30,952,647	21,808,008
	────────	────────
	37,379,060	48,409,113
	═════════	═════════

Management have reviewed the recoverable amount of investments to determine whether an impairment is required taking into account any impacts of COVID-19. The amount of any impairment has been determined after consideration of the recoverable amount of the investments, being a recent share price where an active market exists, or alternative valuation methodologies from a review of the operations and assets of the company where an active market does not exist. Management assesses the results to determine the most appropriate valuation. Refer to note 32.1 and 32.2.

Reconciliation
Balance at the beginning of the year	48,409,113	32,436,702
New interests acquired	27,242,771	9,515,056
Share of profits	5,983,976	9,499,968
Share of associate reserve	-	73,470
Return of capital	(14,700,432)	(2,261,213)
Dividend paid	(5,441,966)	(1,458,477)
Revaluation of investment	(4,075,172)	(1,027,337)
Discount on acquisition	-	432,651
Reclassification of investments	(20,039,230)	1,198,293
	────────	────────
Balance at the end of the year	37,379,060	48,409,113
	═════════	═════════

37

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 15: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)

15.1 Details of material interests in investments accounted for using the equity method are as follows:

	Ownership	Interest	Investment Information
	Consolidated
	2020	2019
	%	%
Associated entities in Australia
79 Logan Road Pty Ltd (e)	n/a	35.0	Trustee of 79 Logan Road Trust
79 Logan Road Trust (e)	n/a	35.0	A commercial property in Woolloongabba, Queensland with a long term lease to an ASX listed entity, with residential
			development approval
Australian Invoice Finance Limited (d)	44.1	47.6	An investment company that provides finance to small business
Bigstone Capital Pty Limited (b)	34.0	34.0	An investment company that provides finance to small business using a peer-to-peer marketplace to fund loans
BioPower Systems Pty Limited	25.1	25.1	Non-operating company
Burnley Maltings Pty Ltd (b)	32.2	n/a	A residential property development in Yarra, Victoria
Causeway Income Partners Limited (a), (c)	50.0	50.0	A fund manager providing investors with steady income by investing in a diverse portfolio of quality SME and middle market
			corporate loan
Cedar and Stone Pty Ltd (d)	43.3	43.3	A 100% plant based skin care company
Cravenda Pty Ltd (a), (b)	50.0	50.0	Trustee of Cravenda Unit Trust
Cravenda Unit Trust (a), (b)	50.0	50.0	A residential property development in Mernda, Victoria
CVC Emerging Companies Fund (b)	22.3	22.3	A wholesale unit trust that invest in listed and unlisted growth or expansion stage companies
CVC Emerging Companies IM Pty Ltd (a), (c)	50.0	50.0	Manager of CVC Emerging Companies Fund
Donnybrook JV Pty Ltd (b)	49.0	49.0	A residential property development in Donnybrook, Victoria
Eildon Capital Group (e)	n/a	40.3	An active property investment entity which participates in retail, industrial, residential and commercial opportunities
Eildon Funds Management Limited	n/a	40.0	An investment manager and the holder of a financial services licence
JAK Contributory Mortgage Fund Loan Trust No 3 (b)	20.8	20.8	An investment entity that provides Senior Debt Funding to residential property developer
JAK Investment Group Pty Ltd (c)	40.0	40.0	A boutique real estate finance and investment house specialising in the provision of real estate capital solutions
Kingsgrove Property LMC Pty Ltd (a)	-	50.0	Trustee of The Kingsgrove (Vanessa Road) Unit Trust
LC Menangle Unit Trust (a), (b)	50.0	-	A residential property development in Menangle, New South Wales

• (a) Causeway Income Partners Limited, Cravenda Pty Ltd, Cravenda Unit Trust, CVC Emerging Companies IM Pty Ltd, Kingsgrove Property LMC Pty Ltd and LC Menangle Unit Trust are not considered to be controlled entities of CVC as CVC does not have the power to direct the relevant activities of the investee, in order to affect its returns from each entity.

• (b) The underlying investments are asset based and management have undertaken a review of the investments taking into account the impact of the COVID-19 pandemic to determine the recoverable amount of the investment.

• (c) The investment is in a fund and asset management operation where the impact of COVID-19 has had minimal impact on the recoverable value.

• (d) The recoverable value has been assessed based on transactions that have been completed since the commencement of COVID-19.

• (e) During the financial year 79 Logan Road Pty Ltd, 79 Logan Road Trust and Eildon Capital Group became controlled entities of CVC. Refer note 2.

38

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 15: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)

15.1 Details of material interests in investments accounted for using the equity method are as follows (Continued):

	Ownership	Interest	Investment Information
	Consolidated
	2020	2019
Lewcorp Properties Pty Ltd (b)	20.0	20.0	A residential property development in Elsternwick, Victoria
Mooloolaba Wharf Holding Company Pty Limited (a), (c)	50.0	50.0	The landowner of “The Wharf” Mooloolaba, Parkland Parade and River Esplanade in Mooloolaba, Queensland
The Kingsgrove (Vanessa Road) Unit Trust	-	25.0	A residential property development in Kingsgrove, New South Wales
The Maroochydore Medical Centre Facility Unit Trust (a), (c)	50.0	50.0	A residential property development in Maroochydore, Queensland
Turrella Property Pty Ltd (c)	32.5	32.5	A residential property development in Turrella, New South Wales
Turrella Property Unit Trust (c)	32.5	32.5	Trustee of Turrella Property Unit Trust
Urban Properties Cairns Pty Limited (c)	20.0	20.0	A dormant company
Urban Properties Centenary Pty Limited (c)	20.0	20.0	A dormant company
Urban Properties Pty Limited (c)	-	33.3	A residential property development in Manoora, Queensland
US Residential Fund (b)	22.2	22.2	An ex-ASX listed entity in the process of winding up
Joint Ventures in Australia
JAK Mickleham Road Pty Ltd and North Victorian	50.0	-	A residential property development in Craigieburn West, Victoria
Buddhist Association Inc Joint Venture (a), (c)
MAKE 246 EBRB Pty Ltd (a), (c)	50.0	50.0	The landowner of a commercial site at 240-246 East Boundary Rd, East Bentleigh, Victoria. The property is
			progressing through a re-zoning process for a range of commercial, retail and residential uses
MAKE EBRB Dev Nominee Pty Ltd (a), (c)	50.0	50.0	The developer of 240-246 East Boundary Rd, East Bentleigh, Victoria

(a) Mooloolaba Wharf Holding Company Pty Limited, The Maroochydore Medical Centre Facility Unit Trust, JAK Mickleham Road Pty Ltd and North Victorian Buddhist Association Inc Joint Venture, MAKE EBRB Dev Nominee Pty Ltd and MAKE 246 EBRB Pty Ltd are not considered to be controlled entities of CVC as CVC does not have the power to direct the relevant activities of the investee, in order to affect its returns from each entity.

(b) The reporting date of all the associated entities and joint ventures except US Residential Fund is 30 June. US Residential Fund has a reporting date of 31 December.

(c) The underlying investments are asset based and management have undertaken a review of the investments taking into account the impact of the COVID-19 pandemic to determine the recoverable amount of the investment.

39

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 15: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)

15.2 Summarised financial information for investments accounted for using the equity method

The table below provides summarised financial information for those investments accounted for using the equity method that are material to CVC. The information disclosed reflects the amounts presented in the financial statements of the relevant investments accounted for using the equity method and not CVC’s share of those amounts. They have been amended to reflect adjustments made by the entity when using the equity method, including fair value adjustments and modifications for differences in accounting policy.

Joint Venture	MAKE EBRB Dev Nominee Pty Limited	MAKE EBRB Dev Nominee Pty Limited
	2020	2019
	$	$
Summarised statement of financial position
Cash and cash equivalents	65,319	63,754
Other assets	1,222,319	616,285
	──────	──────
Current assets	1,287,638	680,039
Non-current assets	40,025,415	40,076,509
	──────	──────
Other current liabilities	659,088	391,439
	──────	──────
Current liabilities	659,088	391,439
	──────	──────
Financial liabilities (excluding trade payables)	28,031,241	24,722,637
	──────	──────
Non-current liabilities	28,031,241	24,722,637
	──────	──────
Net assets	12,622,724	15,642,472
	──────	──────
Reconciliation to carrying amounts:
Opening net assets 1 July	15,642,472	5,704,653
Shares issued	-	160
(Loss)/profit for the period	(3,019,748)	9,937,659
	──────	──────
Closing net assets	12,622,724	15,642,472
	──────	──────
Group's share - percentage	50%	50%
Group's share - dollars	6,311,362	7,821,236
Adjusted to market value	(79)	(79)
	──────	──────
Carrying amount	6,311,283	7,821,157
	──────	──────
Summarised statement of comprehensive income
Revenue	1,700,249	15,168,955
Interest income	93	258
Depreciation and amortisation	(30,176)	(25,509)
Interest expense	(2,832,023)	(2,309,637)
(Loss)/profit for the period	(3,019,748)	9,937,659
	──────	──────
Total comprehensive income	(3,019,748)	9,937,659
	──────	──────
Dividends received	-	-
	──────	──────

40

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 15: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)

15.2 Summarised financial information for investments accounted for using the equity method (Continued)

	Australian Invoice	Australian Invoice	Donnybrook JV Pty	Donnybrook JV Pty
Associates	Finance Limited		Limited		Eildon Capital	Group (a)	79 Logan Road	Trust (a)
	2020	2019	2020	2019	2020	2019	2020	2019
	$	$	$	$	$	$	$	$
Summarised statement of	financial position
Current assets	16,327,698	9,884,286	32,143,025	437,848	-	33,092,239	-	122,417
Non-current assets	12,625	3,486	1,958,251	30,469,949	-	16,536,647	-	19,674,518
	──────	──────	────	──────	──────	──────	──────	──────
Current liabilities	444,426	5,355,497	22,128,533	23,961,953	-	1,443,316	-	41,081
Non-current liabilities	11,076,917	-	-	-	-	-	-	11,490,000
	──────	──────	──────	──────	──────	──────	──────	──────
Net assets	4,818,980	4,532,275	11,972,743	6,945,844	-	48,185,570	-	8,265,854
	──────	──────	──────	──────	──────	──────	──────	──────
Reconciliation to carrying	amounts:
Opening net assets 1 July	4,532,275	4,794,882	6,945,844	6,486,690	-	47,872,354	-	8,649,206
Shares issued	1,000,000	-	5,232,711	630,000	-	62,201	-	-
Shares bought back	-	-	-	-	-	(609,993)	-	-
Profit/(loss) for the period	(713,295)	(262,607)	(205,812)	(170,846)	-	4,386,507	-	200,648
Dividend paid	-	-	-	-	-	(3,525,499)	-	(200,648)
Return of capital	-	-	-	-	-	-	-	(383,352)
	──────	──────	──────	──────	──────	──────	──────	──────
Closing net assets	4,818,980	4,532,275	11,972,743	6,945,844	-	48,185,570	-	8,265,854
	──────	──────	──────	──────	──────	──────	──────	──────
Group's share - percentage	44.1%	47.6%	49%	49%	n/a	40.3%	n/a	35%
Group's share - dollars	2,125,170	2,157,363	5,866,644	3,403,464	-	19,418,785	-	2,893,049
Impairment	(1,282,309)	-	-	-	-	(709,738)	-	-
Goodwill	-	1,286	1,355,789	-	-	-	-	-
	──────	──────	──────	──────	──────	──────	──────	──────
Carrying amount	842,861	2,158,649	7,222,433	3,403,464	-	18,709,047	-	2,893,049
	──────	──────	──────	──────	──────	──────	──────	──────
Summarised statement of	comprehensive income
Revenue	374,645	2,331,160	30,390	53,717	7,793,075	7,636,774	5,676,177	1,205,229
Profit/(loss) for the period	(713,295)	(262,607)	(205,812)	(170,846)	4,730,453	4,386,507	4,723,021	200,648
	──────	──────	──────	──────	──────	──────	──────	──────
Total comprehensive
income	(713,295)	(262,607)	(205,812)	(170,846)	4,730,453	4,386,507	4,723,021	200,648
	──────	──────	──────	──────	──────	──────	──────	──────
Dividends received	-	-	-	-	4,252,098	1,059,262	64,229	70,227
	──────	──────	──────	──────	──────	──────	──────	──────

(a) During the financial year Eildon Capital Group and 79 Logan Road Trust became controlled entities of CVC. The amounts disclosed relate to the period from the beginning of the period until when Eildon Capital Group and 79 Logan Road Trust became controlled entities of CVC. Refer note 2.

Impairment

The carrying value of investment in associates and joint ventures has been reviewed for impairment, including considering the impact of COVID-19. The carrying value of the investments in associates and joint ventures has not been impacted other than as follows:

Australian Invoice Finance Limited

The associate is an investment company that provides finance to small business. The carrying value of the investment represents the recoverable value of CVC’s share as determined on the basis of its value in use. The value in use has been calculated with reference to negotiations currently being undertaken to sell the investment, less costs of disposal.

Eildon Capital Group

The associate is an active property investment entity which participates in retail, industrial, residential and commercial opportunities which is listed on the Australian Securities Exchange. The underlying investments of the associate represents a portfolio of loans and equity investments in property projects that is managed by a subsidiary of CVC.

The carrying value of the investment in the associate represents the recoverable value of CVC’s share as determined on the basis of value in use, with reference to the closing share price at 30 June. The value in use is calculated in accordance with accounting standards and does not represents CVC’s assessment of the investment’s underlying value, which is based on Net Tangible Assets.

41

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 15: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED) 15.2 Summarised financial information for investments accounted for using the equity method (Continued)

	Mooloolaba Wharf	Mooloolaba Wharf					JAK Contributory	JAK Contributory
	Holding Company Pty		CVC Emerging		Bigstone	Capital Pty	Mortgage Fund Loan
Associates	Limited		Companies Fund		Limited		Trust No 3
	2020	2019	2020	2019	2020	2019	2020	2019
	$	$	$	$	$	$	$	$
Summarised statement of
financial position
Current assets	1,230,001	611,182	4,853,596	5,910,303	12,242,864	15,017,423	27,917,285	5,143,203
Non-current assets	20,110,828	20,504,495	42,429,470	9,119,938	15,375,015	7,441,732	1,510,814	8,965,881
	────	──────	──────	──────	──────	──────	──────	──────
Current liabilities	328,511	371,607	84,436	94,007	11,005,894	13,328,629	3,917,285	809,093
Non-current liabilities	14,067,634	13,674,865	3,043,942	-	14,957,917	6,496,986	-	-
	────	──────	──────	──────	──────	──────	──────	──────
Net assets	6,944,684	7,069,205	44,154,688	14,936,234	1,654,068	2,633,540	25,510,814	13,299,991
	────	──────	──────	──────	──────	──────	──────	──────
Reconciliation to carrying
amounts:
Opening net assets 1 July	7,069,205	(35,713)	14,936,234	-	2,633,540	(81,044)	13,299,991	-
Shares issued	-	-	14,936,234	14,936,234	-	5,434,582	12,210,823	13,300,000
Other comprehensive income	-	-	-	-	(130,736)	-	-	-
Profit/(loss) for the period	(124,521)	7,104,918	14,282,220	-	(848,736)	(2,719,998)	3,108,201	941,584
Dividend paid	-	-	-	-	-	-	(3,108,201)	(941,593)
	────	──────	──────	──────	──────	──────	──────	──────
Closing net assets	6,944,684	7,069,205	44,154,688	14,936,234	1,654,068	2,633,540	25,510,814	13,299,991
	────	──────	──────	──────	──────	──────	──────	──────
Group's share - percentage	50%	50%	22.3%	22.3%	34%	34%	20.8%	20.8%
Group's share - dollars	3,472,342	3,534,603	9,846,495	3,330,780	562,383	895,404	5,306,249	2,766,398
Impairment	(25)	(25)	-	-	(562,383)	-	(306,249)	-
Goodwill	-	-	5,107	2,554	-	948,102	-	4,435
	────	──────	──────	──────	──────	──────	──────	──────
Carrying amount	3,472,317	3,534,578	9,851,602	3,333,334	-	1,843,506	5,000,000	2,770,833
	────	──────	──────	──────	──────	──────	──────	──────
Summarised statement of
comprehensive income
Revenue	3,557,269	13,726,080	18,520,743	27,186	2,660,203	1,660,670	3,108,321	941,635
Profit/(loss) for the period	(124,521)	7,104,918	14,282,220	-	(848,736)	(2,719,998)	3,108,201	941,584
	────	──────	──────	──────	──────	──────	──────	──────
Total comprehensive income	(124,521)	7,104,918	14,282,220	-	(848,736)	(2,719,998)	3,108,201	941,584
	────	──────	──────	──────	──────	──────	──────	──────
Dividends received	-	-	-	-	-	-	-	-
	────	──────	──────	──────	──────	──────	──────	──────

Impairment

The carrying value of investment in associates and joint ventures has been reviewed for impairment, including considering the impact of COVID-19. The carrying value of the investments in associates and joint ventures has not been impacted other than as follows:

Bigstone Capital Pty Limited

The associate is an asset manager that provides finance to small business using a peer-to-peer marketplace to fund loans. The carrying value of the investment represents the recoverable value of CVC’s share as determined on the basis of value in use. The value in use was determined after considering the current scale of the business relative to its ongoing operating costs and its current reduced lending activity.

JAK Contributory Mortgage Fund Loan Trust No 3

The underlying investment in the associate represents a loan provided to a property developer which is managed by JAK Investment Group Pty Limited (the Manager). The carrying value of the investment represents CVC’s share in the fair value of the loan, which has been determined on the basis of the net asset backing methodology. The Manager considers that the carrying value reflects the recoverable value after assessing the impact of COVID-19.

42

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 15: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)

15.3 Individually immaterial investments accounted for using the equity method

In addition to the interests in investments accounted for using the equity method disclosed above, CVC also has interests in a number of individually immaterial investments that are accounted for using the equity method.

	2020	2019
	$	$
Aggregate carrying amount of individually immaterial
investments accounted for using the equity method	4,678,564	1,941,496
Aggregate amounts of CVC’s share of:
Profit for the period	192,131	108,151
	────────	────────
Total comprehensive income	192,131	108,151
	═════════	═════════
NOTE 16: INVESTMENT PROPERTIES
Non-current
Leased properties	26,300,000	2,400,000
	═════════	═════════
Reconciliation:
Investment properties at the beginning of the year	2,400,000	1,350,000
Additions – capital expenditure	20,010	8,984
Reclassification to inventory	(32,991)	-
Additions – acquisition of subsidiary	23,900,000	-
Fair value adjustment	12,981	1,041,016
	────────	────────
Carrying amount at the end of the year	26,300,000	2,400,000
	═════════	═════════
Amounts recognised in comprehensive income
Rental income	212,127	204,901
Outgoing recovery	23,925	27,131
Direct operating expenses from property that generated rental
income	31,735	35,870
Leased properties
423 – 479 Pumicestone Road, Caboolture	2,400,000	2,400,000
	═════════	═════════

The fair value has been determined based on an independent valuation prepared by Jones Lang LaSalle Advisory Services Pty Ltd on 15 January 2019 based on a yield of 8.95%. The directors have undertaken a review of the risk of vacancy from the existing tenant, or if the event arises locating a replacement tenant and estimated rental income that would be negotiated and the impact on the capitalisation rates and yield of the property.

The directors are of the opinion the valuation has not changed when considering the following inputs:

	2020	2019
Implied capitalisation rate	9.63%	9.17%
Lease expiry	3.33 years	4.34 years
Occupancy	100%	100%

43

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 16: INVESTMENT PROPERTIES (CONTINUED)

Leased properties (cont.)

		2020	2019
		$	$
79	Logan Road, Woollongabba, Queensland	23,900,000	-
		═════════	═════════

The fair value has been determined based on an independent valuation prepared by Herron Todd White (Brisbane) Pty Ltd on 3 October 2019 based on a capitalisation rate of 5.26%. The directors have undertaken a review of the risk of vacancy from the existing tenant, or if the event arises locating a replacement tenant and estimated rental income that would be negotiated and the impact on the capitalisation rates and yield of the property.

The directors are of the opinion the valuation has not changed when considering the following inputs:

	2020
Implied capitalisation rate	5.26%
Lease expiry	4.42 years
Occupancy	100%
NOTE 17: INTANGIBLE ASSETS
	2020	2019
	$	$
Goodwill	1,570,000	-
	═════════	═════════
Reconciliations:
Carrying amount at the beginning of the period	-	-
Acquisition of business	2,946,006	-
Impairment of goodwill	(1,376,006)	-
	────────	────────
Carrying amount at the end of the year	1,570,000	-
	═════════	═════════

The goodwill is attributable to the acquisition of the funds management business in Eildon Funds Management Limited on 8 August 2019. The acquisition price was based on an independent valuation prepared by Lonergan Edwards and Associates Limited on 2 August 2019. The beneficiaries of the sale included associates of Messrs Mark Avery, John Hunter and Alexander Beard.

Goodwill has been impaired as the internal management fees of CVC have been excluded from the assessment of the carrying value. All other valuation metrics and principles applied by Lonergan Edwards in determining the value on 2 August 2019 have been used to calculate the carrying value of goodwill as at 30 June 2020, as these were considered to remain appropriate. This includes the following:

• Earnings before interest and taxes multiple: 4.0 – 4.5x; and

• Funds Under Management: 1.4% – 1.8%.

Goodwill is not deductible for tax purpose. Refer to note 2.2.

NOTE 18: TRADE AND OTHER PAYABLES

OTE 18: TRADE AND OTHER PAYABLES
Current
Trade payables (a)	5,358,134	6,205,947
Sundry creditors and accruals	5,057,835	7,958,839
	────────	────────
	10,415,969	14,164,786
	═════════	═════════
Non-current
Trade payables (a)	-	5,000,000
	═════════	═════════

(a) Trade payables includes a $2,596,242 (2019: $7,001,293) payable for the purchase of units in the LAC JV Unit Trust and $2,403,758 (2019: $2,998,707) in relation to the finance cost remaining to be paid for a guarantee provided by a third party to the vendor of the property in Moorebank, New South Wales, being purchased by LAC JV Unit Trust.

44

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 19: PROVISIONS

Current
Employee entitlements	587,695	854,699
	═════════	═════════
Non-current
Employee entitlements	-	104,136
	═════════	═════════
OTE 20: INTEREST BEARING LOANS AND BORROWINGS
	2020	2019
	$	$
Current
Secured loan	4,729,164	-
	═════════	═════════
Non-current
Secured loans	28,041,076	14,669,132
Unsecured loan from associated entity	9,581,805	9,613,092
Convertible notes	54,817,879	56,053,518
	────────	────────
	92,440,760	80,335,742
	═════════	═════════

NOTE 20: INTEREST BEARING LOANS AND BORROWINGS

20.1 Secured Loans

The secured loans are generally for periods up to 10 years. The loans attract interest rates ranging from 2.6% to 10% (2019: 5% to 5.3%) per annum. The secured loans are secured by a first ranking charge over the applicable assets.

Facility Amount
Lot 11 Richards Road, Riverstone, New South Wales	15,444,975	14,669,132
Lot 1, 423 – 479 Pumicestone Road, Caboolture, Queensland	1,106,101	-
Lots 1101 and 1102 in DP1191303, Corner of Northbourne Drive
and Harvest Street, Marsden Park, New South Wales	3,381,759	-
22 Whiteside Street, Beveridge, Victoria	1,347,405	-
79 Logan Road, Woolloongabba, Queensland	11,490,000	-
	────────	────────
	32,770,240	14,669,132
	═════════	═════════
Security
Lot 11 Richards Road, Riverstone, New South Wales (note 13)	12,396,003	12,066,100
Lot 1, 423 – 479 Pumicestone Road, Caboolture Queensland (note
16)	2,400,000	-
Lots 1101 and 1102 in DP1191303, Corner of Northbourne Drive
and Harvest Street, Marsden Park, New South Wales (note 13)	10,494,355	-
22 Whiteside Street, Beveridge, Victoria	16,830,000	-
79 Logan Road, Woolloongabba, Queensland (note 16)	23,900,000	-
ASX listed shares
Financial assets – “at fair value through profit or loss”
Current (note 12)	27,423,831	31,348,641
Non-current (note 12)	-	27,745,323
Investments accounted for using the equity method (note 15)	-	18,779,948
Eildon Capital Group (note 2)	18,545,778	-
	────────	────────
	45,969,609	77,873,912
	═════════	═════════

20.2 Unsecured loan from associated entity This loan is an unsecured loan from Winten (No. 20) Pty Limited at an interest rate of 5.25% per annum repayable by 10 July 2021.

45

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 20: INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)

20.3 Convertible notes

The Company issued 600,000 convertible notes for $60 million on 22 June 2018. The coupon rate for the note is 3.75% plus the 90 day Bank Bill Swap Rate. The notes are convertible into ordinary shares of the Company, at the option of the holder, or repayable on 22 June 2023. The conversion price is $3.40 per ordinary share but subject to adjustments for reconstructions of equity. A total of 22,336 notes were bought back during the year. The convertible notes are presented in the Statement of Financial Position as follows:

	2020	2019
	$	$
Face value of notes issued at the end of the year	57,766,400	60,000,000
Other equity securities – value of conversion rights (note 22)	(2,784,907)	(2,784,907)
Transaction cost – liability component	(1,996,652)	(1,996,652)
	────────	────────
	52,984,841	55,218,441
Cumulative interest expense (a)	7,997,933	4,358,092
Cumulative interest paid	(6,277,160)	(3,523,015)
Gain on notes bought back	328,859	-
Debt settlement expenses (b)	(216,594)	-
	────────	────────
Non-current liability	54,817,879	56,053,518
	═════════	═════════
Accrued interest expense (c)	6,097	24,415
	═════════	═════════

(a) Interest expense is calculated by applying the effective interest rate of 7.16% to the liability component adjusted for actual interest paid/payable.

(b) Debt settlement expenses is the difference between the carrying value and the fair value of the notes at the time they were bought back.

(c) Interest accrued as at 30 June 2020 and 30 June 2019 were included in other payables. Refer to note 18.

The initial fair value of the liability portion of the bond was determined using a market interest rate for an equivalent non-convertible bond at the issue date. The liability is subsequently recognised on an amortised cost basis until extinguished on conversion or maturity of the bonds. The remainder of the proceeds is regarded as the value of the conversion rights and is recognised in shareholders’ equity, net of transaction costs. The carrying amount of the conversion option is not remeasured in subsequent periods. Interest on convertible notes is expensed in profit or loss.

20.4 Fair value

For the majority of the borrowings, the fair values are not materially different from their carrying amounts, since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short-term nature.

20.5 COVID-19 Response

As part of the COVID-19 response CVC has been buying back and cancelling convertible notes which has the impact of improving the loan to value ratio and reduces the risk of a breach of a lending covenant in the event that the values of assets were to fall. CVC continues to hold sufficient cash reserves and manage its cashflows in the event that it is required to repay borrowings when facilities fall due.

46

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 21: CONTRIBUTED EQUITY

TE 21: CONTRIBUTED EQUITY
		The Company
	2020		2019
	Number	$	Number	$
Issued and paid-up ordinary share capital
Balance at the beginning of the year	117,690,259	98,768,308	119,532,788	103,646,848
Shares bought back	(332,939)	(670,688)	(1,842,529)	(4,870,858)
Share buyback transaction costs	-	(1,737)	-	(10,975)
Income tax on buyback transaction costs	-	521	-	3,293
	───────	───────	───────	───────
Balance at the end of the year	117,357,320	98,096,404	117,690,259	98,768,308
	════════	════════	════════	════════

On 25 November 2019 CVC received approval from shareholders to undertake an on-market share buy-back scheme for a duration of 12 months and limited to 20,000,000 ordinary shares. At the date of this report 174,951 shares had been bought back under this scheme with 19,825,049 available to be bought back.

NOTE 22: OTHER EQUITY

NOTE 22: OTHER EQUITY
	2020	2019
	$	$
Value of conversion rights – convertible notes	2,784,907	2,784,907
Transaction cost – equity component	(97,186)	(97,186)
Deferred tax liability component	(806,316)	(806,316)
	───────	───────
	1,881,405	1,881,405
	════════	════════
The value of the conversion rights relates to the convertible notes. See note 20.3
NOTE 23: OTHER RESERVES
Asset Revaluation Reserve
Balance at the beginning of the year	266,808	318,237
Share of associate reserve	-	(73,470)
Tax on share of associate reserve	-	22,041
Acquisition of interest in controlled entities	180,447	-
Disposal of interest in controlled entities	(13,600)	-
	───────	───────
Balance at the end of the year	433,655	266,808
	════════	════════

The asset revaluation reserve includes CVC’s share of the unrealised change in value arising from the acquisition and disposal of a noncontrolling interest in a controlled entity by CVC.

47

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 24: NOTES TO STATEMENT OF CASH FLOWS

24.1 Reconciliation of Cash and Cash Equivalents

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

	2020	2019
	$	$
Cash on deposit	22,625,871	56,399,645
Funds held by bank	-	758,092
	───────	───────
Cash and cash equivalents	22,625,871	57,157,737
	════════	════════
24.2 Reconciliation of profit after Income Tax to Cash provided by Operating Activities
Net profit	95,478	1,008,159
Adjustments for:
Share of equity accounted profit	(5,983,976)	(9,499,968)
Depreciation of property, plant and equipment	771,975	91,789
Discount on acquisition	(1,759,634)	-
Bad debts	138,625	308,389
Facility fee	(472,763)	-
Change in fair value of investment properties	(12,981)	(1,041,016)
Impairment of intangible assets	1,376,006	-
Impairment expenses on financial instruments	9,479,330	4,190,865
Impairment recoveries on financial instruments	(115,354)	-
Impairment of plant and equipment	145,795	-
Net loss on equity investments	3,689,152	9,473,297
Net foreign currency differences	79,189	(137,006)
Non-cash finance cost	1,258,457	728,208
Interest income not received	(4,433,254)	(5,373,898)
Interest expense not paid	511,826	634,592
Dividend income	1,432,480	1,627,627
Movement in current tax liabilities	683,334	(2,446,899)
Movement in deferred tax assets and liabilities	(2,744,187)	(172,720)
Changes in operating assets and liabilities:
Inventories	(12,852,433)	10,690,619
Equity investments	22,686,370	13,858,892
Trade and other receivables	(35,811,979)	(5,662,374)
Trade and other payables	(9,782,457)	2,630,772
Provisions	(371,140)	70,032
Other assets	(2,372,870)	232,356
	───────	───────
Net cash (used in)/provided by operating activities	(34,365,011)	21,211,716
	════════	════════
24.3 Financing Facilities
At 30 June 2020, CVC had access to the following specific lines of credit.
Total facilities available:
Secured non-bank loan	20,174,139	14,669,132
Secured bank loan	32,596,101	20,000,000
	───────	───────
Total facilities	52,770,240	34,669,132
	════════	════════
Total facilities used (note 20.1):
Secured non-bank loan	20,174,139	14,669,132
Secured bank loan	12,596,101	-
	───────	───────
	32,770,240	14,669,132
	════════	════════

48

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 24: NOTES TO STATEMENT OF CASH FLOWS (CONTIUED)

24.4 Interest Bearing Loans and Borrowings

Reconciliation:	Liabilities from financing activities	Liabilities from financing activities
	Borrowings	Leases (a)	Total
	$	$	$
Year ended 30 June 2020
Liabilities at the beginning of the year	80,335,742	-	80,335,742
Recognised on adoption of AASB 16 (note 33)	-	2,850,836	2,850,836
Acquisition - leases	-	415,855	415,855
Cash flows	1,975,108	(684,501)	1,290,607
Acquisition of subsidiary	11,490,000	-	11,490,000
Other changes	3,369,074	(2,181,173)	1,187,901
	───────	───────	───────
Liabilities at the end of the year	97,169,924	401,017	97,570,941
	════════	════════	════════
(a) The office lease associated with the buildings was assigned to an external party during the year. The
relevant lease liabilities have been derecognised and included in other changes.
Year ended 30 June 2019
Liabilities at the beginning of the year	81,428,322	-	81,428,322
Cash flows	(6,780,806)	-	(6,780,806)
Other changes	5,688,226	-	5,688,226
	───────	───────	───────
Liabilities at the end of the year	80,335,742	-	80,335,742
	════════	════════	════════

NOTE 25: AUDITORS' REMUNERATION

The auditor of the Company is HLB Mann Judd (NSW Partnership).

Amounts received or due and receivable to Auditors of the Company:

	2020	2019
	$	$
Audit or review of the financial report	167,250	162,864
	════════	════════

No fees were paid to HLB Mann Judd (NSW Partnership) in respect of non-audit services during the year. The Auditors received no other benefits.

49

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 26: COMMITMENTS AND CONTINGENCIES

26.1 Operating Lease Commitments

Non-cancellable operating lease expense

CVC leases various offices and equipment. From 1 July 2019, CVC has recognised right-of-use assets for the leases, see note 33 for further information.

further information.
	2020	2019
	$	$
Future operating lease commitments not provided for in the
financial statements and payable:
- within one year	-	613,855
- later than one year but not later than five years	-	2,443,070
	───────	───────
	-	3,056,925
	════════	════════

26.2 Operating leases - leases as lessor

An investment property is leased to a tenant under an operating lease with rentals payable monthly. The remaining lease terms are on average 4.32 years (2019: 4.34 years), excluding options for lease extensions upon completion of the lease term.

The future minimum lease payments under non-cancellable leases are as follows:

Less than one year	1,525,467	224,400
Between one and five years	5,293,485	796,943
	───────	───────
	6,818,952	1,021,343
	════════	════════

Refer to note 16 for more information.

50

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 26: COMMITMENTS AND CONTINGENCIES (CONTINUED)

26.3 Financial Guarantees

Guarantees

The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.

	2020	2019
	$	$
Parent
Guarantee (a)	11,752,650	11,752,650
Guarantee (b)	18,500,000	-
Subsidiaries
Bank guarantees (c)	845,415	758,092
Guarantee (d)	-	2,500,000
Guarantee (e)	6,250,000	6,250,000
Guarantee (f)	1,738,800	869,400
	═══════	═══════

• (a) The guarantee provided by CVC to National Australia Bank Limited is used as security for a loan facility in relation to 960-1000 Donnybrook Victoria.

• (b) The guarantee was provided by CVC to the vendor and developer of the property in Lots 911, 912, 913 and 921, 'Harpley', 270 Bulban Road, Werribee, Victoria for settlement and delivery of the project.

• (c) The bank guarantees provided by CVC are secured by a term deposit.

• (d) The guarantee provided by CVC to National Australia Bank Limited is used as security for a loan facility and is secured by an interest in the Marsden Park Development Trust and other additional security. The guarantee was released during the year.

• (e) The guarantee provided by CVC to Australia and New Zealand Banking Group Limited is used as security for a loan facility in relation to 246 East Boundary Road, East Bentleigh, Victoria.

• (f) The guarantee provided by CVC to Australia and New Zealand Banking Group Limited is used as security for a loan facility in relation to 33-45 Gibdon Street, Burnley, Victoria.

26.4 Capital Commitments

Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:

Construction contract

Construction contract
Less than one year	48,563	-
	═══════	═══════
26.5 Loans and other investments
Amounts available to be drawn by borrowers under existing loan facility agreements
Associated entities	620,386	2,343,307
Key management personnel	1,465,485	-
Unrelated entities	9,055,847	15,150,069
	─────	─────
	11,141,718	17,493,376
	═══════	═══════
Amounts available to be called by investees for partially paid shares and units
Unrelated entities	7,174,171	5,492,830
	═══════	═══════

51

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 27: SEGMENT INFORMATION

27.1 Primary Segments - Business Segments

Information for each business segment is shown in the following tables, in round thousands, as permitted under ASIC class order “ASIC Corporations (Rounding in Financial/Directors Reports) Instrument 2016/191”.

Composition of each business segment is as follows:

• Direct Property Investment involves direct exposure, including in ordinary equity, preference equity, joint ventures and options to acquire and interest in direct property subject to planning outcomes.

• Property backed lending comprises loans backed by underlying property assets.

• Funds Management comprises investments in listed equities mangers, property investment managers, debt managers and litigation funding managers.

• Equity Investments comprises investments in listed and unlisted investments.

• Commercial Debt and Alternative comprises secured lending to corporates, projects and individuals against various securities and assets, including receivables, contracted income, resources, listed equities, litigation claims and others.

27.2 Secondary Segments - Geographical Segments

CVC operates predominantly in Australia.

52

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 27: SEGMENT INFORMATION (CONTINUED)

	Direct Property	Property Backed	Funds	Equity	Commercial	Eliminations	Consolidated
	Investments	Lending	Management	Investments	Debt and
					Alternative
					Assets
	$'000's	$'000's	$'000's	$'000's	$'000's	$'000's	$'000's
Year Ended 30 June 2020
Revenue:
Total revenue for reportable segments	660	11,793	2,354	-	1,336	-	16,143
Inter-segment revenue	1,850	-	10,415	-	-	(12,265)	-
	────────────	────────────	────────────	────────────	────────────	────────────	────────────
Unallocated amounts:
Interest income							331
Corporate income							95
							────────────
Consolidated revenue							16,569
							────────────
Equity accounted income	313	605	5,162	(96)	-	-	5,984
	────────────	────────────	────────────	────────────	────────────	────────────	────────────
Results:
Total profit for reportable segments	(1,421)	10,293	(4,631)	(3,170)	66	-	1,137
Unallocated amounts: corporate expenses							(7,026)
Share of profit of equity accounted associates							5,984
							────────────
Consolidated profit after tax							95
							────────────

All revenue during the financial year is recognised at a point in time when the performance obligation is satisfied.

53

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 27: SEGMENT INFORMATION (CONTINUED)

	Direct Property	Property Backed	Funds	Equity	Commercial	Eliminations	Consolidated
	Investments	Lending	Management	Investments	Debt and
					Alternative
					Assets
	$'000's	$'000's	$'000's	$'000's	$'000's	$'000's	$'000's
Year Ended 30 June 2019
Revenue:
Total revenue for reportable segments	9,449	7,238	2,909	323	2,096	-	22,015
Inter-segment revenue	2,205	-	13,331	-	-	(15,536)	-
	────────────	────────────	────────────	────────────	────────────	────────────	────────────
Unallocated amounts:
Interest income							764
							────────────
Consolidated revenue							22,779
							────────────
Equity accounted income	8,398	189	1,107	(194)	-	-	9,500
	────────────	────────────	────────────	────────────	────────────	────────────	────────────
Results:
Total profit for reportable segments	8,031	5,602	396	(7,233)	335	-	7,131
Unallocated amounts: corporate expenses							(15,623)
Share of profit of equity accounted associates							9,500
							────────────
Consolidated profit after tax							1,008
							────────────
Disaggregation of revenue from contracts with
customers
Timing of revenue recognition
At a point in time	14,186	7,238	2,909	323	2,096	-	26,752
Over time	32,631	-	-	-	-	-	32,631
	────────────	────────────	────────────	────────────	────────────	────────────	────────────
	46,817	7,238	2,909	323	2,096	-	59,383
	────────────	────────────	────────────	────────────	────────────	────────────	────────────

54

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 27: SEGMENT INFORMATION (CONTINUED)

	Direct Property	Property Backed	Funds	Equity	Commercial Debt	Eliminations	Consolidated
	Investments	Lending	Management	Investments	and Alternative
					Assets
	$'000's	$'000's	$'000's	$'000's	$'000's	$'000's	$'000's
Year Ended 30 June 2020
Assets:
Segment assets	100,477	135,945	23,971	34,108	6,436	-	300,937
	────────────	────────────	────────────	────────────	────────────	────────────	───────────
Unallocated amounts:
Cash and cash equivalents							22,626
Other assets							8,686
							───────────
Total assets							332,249
							───────────
Liabilities:
Segment liabilities	38,348	11,920	-	-	-	-	50,268
	────────────	────────────	────────────	────────────	────────────	────────────	───────────
Unallocated amounts:
Other liabilities							65,940
							───────────
Total liabilities							116,208
							═══════
Year Ended 30 June 2019
Assets:
Segment assets	61,945	50,948	32,395	70,814	10,222	-	226,324
	────────────	────────────	────────────	────────────	────────────	────────────	───────────
Unallocated amounts:
Cash and cash equivalents							57,158
Other assets							5,086
							───────────
Total assets							288,568
							───────────
Liabilities:
Segment liabilities	28,879	9,613	-	-	350	-	38,842
	────────────	────────────	────────────	────────────	────────────	────────────	───────────
Unallocated amounts:
Other liabilities							69,937
							───────────
Total liabilities							108,779
							═══════

55

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 28: RELATED PARTY INFORMATION

Parent entity

CVC Limited is the parent entity.

Subsidiaries

Interest in subsidiaries are set out in note 2.

Associates

Interest in associates are set out in note 15.

28.1 Key management personnel compensation

	2020	2019
	$	$
Short-term employee benefits	1,314,867	1,116,754
Post-employment benefits	103,641	89,657
Termination benefits	-	1,815,000
	────────	────────
Total	1,418,508	3,021,411
	════════	════════

Details of key management personnel remuneration, superannuation and termination benefits are set out in the Remuneration Report section of the Directors’ Report.

28.2 Shares held by key management personnel

• (a) On 8 August 2019, CVC acquired 60% of Eildon Funds Management Limited from Messrs Avery, Beard and Hunter for a consideration of $3,623,500. The price was based on an independent valuation prepared by Lonergan Edwards and Associates Limited. Refer to note 2.2.

• (b) Mr Rapajic-Leaver and his related entity hold interest in the following CVC subsidiaries at the beginning and end of the year:

	Interest Held
LAC JV Pty Limited	33.3%
LAC JV Unit Trust	33.3%
LAC JV No. 2 Pty Limited	33.3%
LAC JV No. 2 Unit Trust	33.3%
Marsden Park Development Trust	34.0%
28.3 Loans with Related Parties
	2020	2019
	$	$
Loans from associates
Beginning of the year	9,613,092	9,677,586
Loan repayments made	(543,113)	(699,086)
Interest charged	511,826	634,592
	────────	────────
End of the year	9,581,805	9,613,092
	════════	════════

56

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 28: RELATED PARTY INFORMATION (CONTINUED)

28.3 Loans with Related Parties (Continued)

28.3 Loans with Related Parties (Continued)
	2020	2019
	$	$
Loans to associates
Beginning of the year	17,107,668	17,159,828
Loans advanced	5,298,055	13,222,901
Loan repayments received	(1,397,655)	(13,524,476)
Interest charged	1,810,104	1,974,657
Interest received	(81,031)	(545,170)
Impairment	(1,221,656)	(1,180,072)
Impairment recovery	80,000	-
	────────	────────
End of the year	21,595,485	17,107,668
	════════	════════

The loans to associates are generally for periods up to 10 years. The loans attract interest rates ranging from 0% to 17% (2019: 0% to 20%) per annum. The security held in relation to the various loans, differs for each loan and ranges from:

• registered mortgage;

• general security agreements;

• appointment to Project Control Group: and

• equity ownership

Loans to key management personnel (a)
Beginning of the year	-	-
Transfer from loans to other related entities (b)	4,020,994	-
Loans advanced	3,020,275	-
Interest charged	509,156	-
	────────	────────
End of the year	7,550,425	-
	════════	════════
Loans to other related entities
Beginning of the year	4,020,994	-
Transfer from loans to unrelated entities (b)	-	4,020,994
Transfer to loans to entities associated with key
management personnel (b)	(4,020,994)	-
	────────	────────
End of the year	-	4,020,994
	════════	════════

(a) This relates to loans to entities related to Mr Rapajic-Leaver.

(b) Mr Rapajic-Leaver was appointed as director from 1 July 2019.

Loans to key management personnel are for periods that match the timing of delivery of the underlying projects that are being delivered. The loans attract an interest rate of 10% (2019: 10% to 20%) per annum and are secured by the projects listed in note 28.2.

57

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 28: RELATED PARTY INFORMATION (CONTINUED)

28.4 Other Transactions

The following represent income and expenditure generated from transactions with related parties with CVC and its controlled entities during the financial year.

(a) Amounts recognised as assets and liabilities

Key management personnel have made co-investments in the projects of CVC and have contractual rights to receive distributions and capital returns received by CVC from the following projects.

Marsden Park Development Trust

• the landowner of the property project in Marsden Park North, New South Wales

Donnybrook JV Pty Limited

• the landowner of the property project in Donnybrook, Victoria

The following table shows the entitlement movement during the year.

			Other changes
	Opening	Sales	during the year	Closing
Marsden Park Development Trust
Mr M.A. Avery	0.5%	-	-	0.5%
Mr J.A. Hunter	0.5%	-	-	0.5%
Mr A.D.H. Beard (b)	0.5%	(0.5%)	-	-
Donnybrook JV Pty Limited
Mr M.A. Avery	1.3%	-	-	1.3%
Mr A.J. Rapajic-Leaver(a)	-	-	0.4%	0.4%
Mr J.A. Hunter	0.8%	-	-	0.8%
Mr A.D.H. Beard (b)	1.0%	(1.0%)	-	-
Mr J.S. Leaver	2.0%	-	-	2.0%

(a) Mr Rapajic-Leaver was appointed as director on 1 July 2019.

(b) During the financial year, CVC acquired Mr Beard’s investment in Marsden Park Development Trust and Donnybrook JV Pty Limited for a total consideration of $640,000 following his resignation on 1 August 2019.

At the end of the reporting period the following aggregate amounts were recognised in relation to the co-investment in Marsden Park and Donnybrook Projects.

	2020	2019
	$	$
Trade and other payables	240,827	331,711
	════════	════════

Apart from the details disclosed in this financial report, no other Director or key management personnel has entered into a contract with the Company or CVC since the end of the previous financial year and there were no contracts involving Directors' interests existing at year-end.

58

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 28: RELATED PARTY INFORMATION (CONTINUED)

28.4 Other Transactions (Continued)

(b) Amounts recognised as revenue or expense

	2020		2019
	Paid	Received	Paid	Received
	$	$	$	$
Amounts recognised as revenue or expense
Management and consulting fees
Associated entities	93,141	1,352,388	1,686,219	1,353,795
Key management personnel	620,000	-	-	-
Other related entities	-	5,825	-	52,624
Interest income
Associated entities	-	1,810,104	-	1,974,657
Key management personnel	-	509,156	-	-
Other related entities	-	-	-	685,410
Dividend and distribution
Other related entities	-	-	-	561,046
Marsden Park distribution (refer to note 28.4(a))
Key management personnel	156	-	4,259	-
Borrowing costs
Associated entities	511,826	-	634,592	-
Administrative cost
Key management personnel	-	68,546	-	-
	2020		2019
	Impairment	Impairment	Impairment	Impairment
		Recovery		Recovery
	$	$	$	$
Investment in associated entities	4,075,172	-	1,227,337	-
Loan to associated entities	1,221,656	80,000	1,180,072	-

59

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 29: ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE

CVC’s activities expose it to a variety of financial risks: market risk (including market price risk, interest rate risk and currency risk), credit risk and liquidity risk. CVC’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the group.

CVC uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and price risk.

The responsibility for operational risk management resides with the Board of Directors who seeks to manage the exposure of CVC. There have been no significant changes in the types of financial risks, or CVC’s risk management program (including methods used to measure the risks) since the prior year.

29.1 Interest Rate Risk

CVC’s exposure to interest rate risks of financial assets and liabilities at the reporting date are as follows:

				Fixed Interest	Fixed Interest
	Note	Weighted Average	Floating			Non Interest	Total
		Interest Rate	Interest Rate	1 Year or Less	1 to 5 Years	Bearing
			$	$	$	$	$
2020:
Financial assets
Cash and cash equivalents	24	0.2%	22,625,369	-	-	502	22,625,871
Financial assets at amortised cost	9	11.9%	-	82,183,870	64,176,692	4,126,946	150,487,508
			════════	════════	════════	════════	═════════
Financial liabilities
Trade and other payables	18	-	-	-	-	10,415,969	10,415,969
Interest bearing liabilities	20	4.5%	55,923,980	4,729,164	36,516,780	-	97,169,924
			════════	════════	════════	════════	═════════
2019:
Cash and cash equivalents	24	1.1%	56,399,143	758,092	-	502	57,157,737
Financial assets at amortised cost	9	13.0%	-	33,120,928	18,568,770	1,960,285	53,649,983
			════════	════════	════════	════════	═════════
Financial liabilities
Trade and other payables	18	-	-	-	-	19,164,786	19,164,786
Interest bearing liabilities	20	5.1%	56,053,518	-	24,282,224	-	80,335,742
			════════	════════	════════	════════	═════════

60

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 29: ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (CONTINUED)

29.1 Interest Rate Risk (Continued)

CVC holds a significant amount of cash balances which are exposed to movements in interest rates. Further, the majority of borrowings of CVC are at variable interest rates.

CVC has made a commercial decision to not hedge against movements in interest rates. CVC business operations includes borrowing funds at low interest rates and lending at higher rates. Although hedging provides a level of certainty from moving interest rates, it reduces the flexibility of being able to repay loans with excess, undeployed funds if the need arises.

To reduce the risk CVC typically deposits uncommitted cash in high interest rate accounts with financial institutions. Interest bearing loans and receivables are made at fixed rates. CVC is not charged interest on outstanding trade and other payable balances. CVC enters into loans and borrowings with fixed rates of interest when it is considered commercial and necessary to manage cash flows.

Sensitivity

As CVC expects interest rates to stay the same during the 2021 financial year (2020: 50 basis points lower), at reporting date there would be no impact on CVC, with all other varieties held constant. The impact for the 2019 financial year would be:

	Decrease of 50 bp
	$
2019
Net profit	104,655
Equity increase	104,655

29.2 Price Risk

Equity Securities Price Risk

CVC has investments in listed securities which could be adversely affected if general equity market values were to decline. CVC also has investments in unlisted securities however these are less susceptible to movements in value as a result of market sentiment as they are valued based on operational fundamentals. CVC does not hedge its exposure to the risk of a general decline in equity market values, believing that such strategies are not cost-effective.

Sensitivity

At reporting date, if equity prices had been 10% higher/(lower) while all other variables were held constant the impact would be:

	Increase of 10%	Decrease of 10%
	$	$
2020
Net profit/(loss)	3,217,873	(3,217,873)
Equity increase/(decrease)	3,217,873	(3,217,873)
2019
Net profit/(loss)	5,451,174	(5,451,174)
Equity increase/(decrease)	5,451,174	(5,451,174)

61

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 29: ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (CONTINUED)

29.3 Credit Risk Exposure

Credit risk refers to the loss that CVC would incur if a debtor or counterparty fails to perform under its obligations. CVC is exposed to credit risk from financial assets including cash and cash equivalents held at banks, trade and other receivables and loans to various entities. The carrying amounts of financial assets recognised in the statement of financial position best represent CVC’s maximum exposure to credit risk at reporting date.

CVC’s significant concentration of credit risk relates to deposits held with financial institutions, which is mitigated by the requirement that deposits are only held with institutions with an “investment grade” credit rating, and loans made to various entities, which are mitigated by collateral held with a value in excess of the counterparty’s obligations to CVC, providing a “margin of safety” against loss.

CVC minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a number of counterparties, and is managed through normal payment terms of 30 – 120 days.

29.4 Liquidity Risk

Liquidity risk is the risk that CVC might be unable to meet its obligations. CVC manages liquidity risk by maintaining sufficient cash balances and holding liquid investments that could be realised to meet commitments. CVC continuously monitors forecast and actual cash flows and matches the maturity profiles of financial assets and liabilities.

The following table details maturity profiles of CVC’s contractual liabilities.

	Less than 6	6 months to	1 to 5 Years	Total
	months	1 Year
	$	$	$	$
2020
Trade and other payables	10,415,969	-	-	10,415,969
Interest bearing liabilities	3,381,759	1,347,405	92,440,760	97,169,924
Lease liabilities	53,324	53,893	293,800	401,017
2019
Trade and other payables	14,164,786	-	5,000,000	19,164,786
Interest bearing liabilities	-	-	80,335,742	80,335,742

29.5 Currency Risk

Currency risk is measured using sensitivity analysis. A portion of CVC investments are in companies listed on foreign exchanges and sales and purchases are made in foreign currencies. CVC is exposed to a decline in the values of those currencies relative to the Australian dollar.

Considering the quantum of the investments in absolute terms as well as relative terms compared to CVC’s total investment portfolio it is not cost-effective to hedge against foreign exchange fluctuations.

62

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 29: ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (CONTINUED)

29.5 Currency Risk (Continued)

At balance date CVC had the following exposure to the United States dollar, New Zealand dollar and British pound that is not designated as cashflow hedges:

	2020	2019
	$	$
Financial assets
Financial assets at amortised cost	3,265,136	3,339,171
Financial assets at fair value through profit or loss	1,566,009	4,632,763
	───────	───────
	4,831,145	7,971,934
	════════	════════

Foreign currency sensitivity

CVC is exposed to the US dollar (USD), New Zealand dollar (NZD) and British pound (GBP). The following table details CVC’s sensitivity to a 10% change in the Australian dollar against the respective currencies with all other variables held constant as at reporting date for unhedged foreign exchange exposure. A positive number indicates an increase in net profit/equity.

A sensitivity of 10% has been selected as this is considered reasonable given the current level of exchange rates and the volatility observed on a historic basis and market expectations for future movement.

		Net profit/(loss)	Equity increase/(decrease)	Equity increase/(decrease)
	2020	2019	2020	2019
	$	$	$	$
USD
Increase in AUD of 10%	(81,123)	(151,412)	(81,123)	(151,412)
Decrease in AUD of 10%	99,150	185,059	99,150	185,059
NZD
Increase in AUD of 10%	(207,781)	(212,493)	(207,781)	(212,493)
Decrease in AUD of 10%	253,955	259,713	253,955	259,713
GBP
Increase in AUD of 10%	-	(63,079)	-	(63,079)
Decrease in AUD of 10%	-	77,097	-	77,097

63

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 30: FAIR VALUE MEASUREMENTS

Fair value reflects the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Quoted prices or rates are used to determine fair value where an active market exists. If the market for an asset is not active, fair values are estimated using valuation techniques, based on market conditions prevailing at the measurement date. Such techniques include using recent arm’s length market transactions; net asset backing; reference to current market value of another instrument that is substantially the same and discounted cash flow analysis.

The fair value of liquid assets maturing within three months are approximate to their carrying amounts. This assumption is applied to liquid assets and the short-term portion of all other financial assets and financial liabilities. Judgements and estimates were made in determining the fair values of certain financial instruments and non-financial assets that are recognised and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, CVC has classified its financial instruments and non-financial assets into three levels prescribed under the accounting standards.

Level 1 – the fair value is calculated using quoted prices in active markets.

Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset, either directly (as prices) or indirectly (derived from prices).

Level 3 – the fair value is estimated using inputs for the asset that are not based on observable market data.

The fair value of the assets and liabilities as well as the methods used to estimate the fair value are summarised in the table below.

	Quoted market	Valuation	Valuation	Total
	price	technique –	technique – non
	(Level 1)	market	market
		observable	observable
		inputs (Level 2)	inputs (Level 3)
	$	$	$	$
Year ended 30 June 2020
Financial assets
“Fair value through profit or loss” investments
Shares in listed corporations	1,387,110	26,036,721	-	27,423,831
Shares in unlisted corporations	-	-	6,581,920	6,581,920
Non-financial assets
Investment properties	-	-	26,300,000	26,300,000
	─────────	─────────	─────────	─────────
	1,387,110	26,036,721	32,881,920	60,305,751
	═════════	═════════	═════════	═════════
Year ended 30 June 2019
Financial assets
“Fair value through profit or loss” investments
Shares in listed corporations	17,186,400	41,907,564	-	59,093,964
Shares in unlisted corporations	-	-	24,186,206	24,186,206
Non-financial assets
Investment properties	-	-	2,400,000	2,400,000
	─────────	─────────	─────────	─────────
	17,186,400	41,907,564	26,586,206	85,680,170
	═════════	═════════	═════════	═════════

64

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 30: FAIR VALUE MEASUREMENTS (CONTINUED)

Reconciliation of Level 3 fair value movements:

conciliation of Level 3 fair value movements:
	2020	2019
	$	$
Balance at the beginning of the year	26,586,206	19,602,318
Purchases	2,003,966	20,472,959
Purchases – acquisition of subsidiary	23,900,000	-
Sales	(2,090,619)	(11,874,190)
Capital return	(406,036)	-
Loss recognised in other income (a)	(3,415,855)	(805,281)
Transfer out of Level 3 to Level 1	(250,000)	(809,600)
Transfer out of Level 3 to equity accounting investment	(1,670,347)	-
Transfer out of Level 3 (b)	(11,775,395)	-
	────────	────────
Balance at the end of the year	32,881,920	26,586,206
	════════	════════
(a) Unrealised loss recognised in profit or loss attributable to assets held at the
end of the reporting period.	(3,645,276)	(1,510,063)
	════════	════════

(b) The equity investments held by CVC in Eildon Debt Fund were reclassified to loans at the time that it became a controlled entity of CVC on 8 August 2019. Refer note 2.2.

The fair value of Level 2 financial assets at fair value through profit or loss has been determined using available prices where trading does not occur in an active market.

The fair value of Level 3 assets has been determined as follows:

• (a) Financial assets at fair value through profit or loss – with reference to valuation techniques, including:

• recent arm’s length market transactions; and

• net asset backing.

Refer note 12

• (b) Investment properties – independent valuation. Refer note 16.

Sensitivity analysis

The table below shows the pre-tax sensitivity to reasonable possible alternative assumptions for Level 3 assets whose fair values are determined in whole or in part using unobservable inputs.

		Net profit/(loss)	Equity increase/(decrease)	Equity increase/(decrease)
	2020	2019	2020	2019
	$	$	$	$
Shares in unlisted corporations
Favourable changes	825,227	2,418,621	825,227	2,418,621
Unfavourable changes	(825,227)	(2,418,621)	(825,227)	(2,418,621)
Investment properties
Favourable changes	1,635,584	283,825	1,635,584	283,825
Unfavourable changes	(4,376,134)	(14,378)	(4,376,134)	(14,378)

65

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 30: FAIR VALUE MEASUREMENTS (CONTINUED)

Significant unobservable inputs

The following table contains information about the significant unobservable inputs used in Level 3 valuations, and the valuation techniques used to measure fair value. The range of values represent the highest and lowest input used in the valuation techniques. Therefore, the range does not reflect the level of uncertainty regarding a particular input, but rather the different underlying characteristics of the relevant assets.

	Valuation	Significant		Range of Inputs	Range of Inputs
	Techniques	Unobservable Inputs	Year	Minimum	Maximum
Shares in unlisted corporations	Net asset backing	Value per security	2020	Down 10%	Up 10%
			2019	Down 10%	Up 10%
Investment properties	Capitalisation of	Capitalisation Rate	2020	5.3%	6.80%
	income		2019	8.0%	9.0%

NOTE 31: EVENTS SUBSEQUENT TO YEAR END

There are no matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of CVC, the results of those operations or the state of affairs of CVC in future financial years.

NOTE 32: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

CVC makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

32.1 Investments accounted for using the equity method – unlisted investments

The carrying value of the following investments have been valued based on the net asset backing methodology, using the most recent reports provided by the entity:

• 79 Logan Road Trust as $2,893,049 as at 30 June 2019. The entity became a controlled entity of CVC during the year;

• CVC Emerging Companies Fund as $9,851,602 (2019: $3,333,334);

• JAK Contributory Mortgage Fund Loan Trust No 3 as $5,000,000 (2019: $2,770,833);

• JAK Investment Group Pty Limited as $126,391 (2019: $227,037);

• Lewcorp Properties Pty Limited as $632,832 (2019: $818,853);

• MAKE EBRB Dev Nominee Pty Ltd as $6,311,283 (2019: $7,821,157);

• Mooloolaba Wharf Holding Company Pty Limited as $3,472,317 (2019: $3,534,578); and

• Turrella Property Unit Trust as $245,957 (2019: $267,727).

The carrying value of Australian Invoice Finance Limited has been impaired to $842,861 as at 30 June 2020. The carrying value as at 30 June 2019 was $2,158,649 based on the net asset backing methodology, using the most recent reports provided by the entity.

The carrying value of Bigstone Capital Pty Limited has been impaired to nil as at 30 June 2020. The carrying value as at 30 June 2019 was $1,843,506 based on the net asset backing methodology, using the most recent reports provided by the entity.

The carrying value of Donnybrook JV Pty Limited has been calculated as $7,222,433 (2019: $3,403,464) based on the net asset backing methodology, using the most recent reports provided by the entity. A valuation of the property of $79.95 million indicates that CVC’s investment would have a value of approximately $31.6 million.

During the financial year, Eildon Funds Management Limited became a controlled entity of CVC. The carrying value of the investment for the year ended 30 June 2019 has been calculated as $460,548 based on the net asset backing methodology, using the most recent reports provided by the entity.

Net asset backing methodology

The net asset backing methodology considers that the net assets of an entity reflects the future value of the business. This is because:

• the underlying value of the business operations may be focused specifically on increasing the value of its assets base; or

• there is insufficient repetitive income or profits to justify the use of different valuation techniques such as discounted cashflows or multiple of earnings.

66

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 32: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

32.2 Investments accounted for using the equity method – listed investments

During the financial year, Eildon Capital Group (“EDC”) became a controlled entity of CVC. The carrying value of EDC for the year ended 30 June 2019 has been calculated at $18,709,047. The carrying value has been determined using the fair value approach. The closing “bid-price” of EDC on 30 June 2019 was $1.01 per share which was determined to be an appropriate indication for the fair value of the investment, despite the lack of an active market. The reported net tangible assets of EDC as at 30 June 2019 was reported as $1.06 which indicates the value of CVC’s investment is approximately $19.4 million.

The carrying value of US Residential Fund (“USR”) has been calculated at $nil (2019: $70,901). The entity is in the process of winding up.

32.3 Subsidiary entities

During the year, Eildon Capital Group (“EDC”) completed a restructure on 25 May 2020 which resulted in CVC’s holdings in EDC increasing to 45.5%. The impact of the restructure has been that both EDC and 79 Logan Road Trust are treated as subsidiaries of CVC notwithstanding:

• EDC has a board that comprises a majority of independent directors which operate the entity without direction for CVC; and

• The minority investor in 79 Logan Road Trust is responsible for the ongoing management of the investment property owned by the trust.

Although both entities operate autonomously to CVC, as CVC had increased its ownership in EDC to a point where it has the ability to determine the outcome of any resolutions EDC is considered to be a controlled entity for accounting purposes.

67

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 33: CHANGES IN ACCOUNTING POLICIES

CVC has adopted AASB 16 Leases from 1 July 2019, but has not restated comparatives for the 2019 reporting period, as permitted under the specific transition provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 July 2019.

(a) CVC’s leasing activities and how these are accounted for CVC leases various offices and equipment. Rental contracts are typically made for fixed periods of 4 years to 7 years, without any extension options.

Contracts may contain both lease and non-lease components. CVC allocates the consideration in the contract to the lease and nonlease components based on their relative stand-alone prices.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

Until the 2019 financial year, leases of property, plant and equipment were classified as either finance leases or operating leases. From 1 July 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by CVC.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable;

• variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date;

• amounts expected to be payable by CVC under residual value guarantees; and

• payments of penalties for terminating the lease, if the lease term reflects CVC exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in CVC, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

Lease payments are allocated between principal and finance cost. The finance cost is charged to the statement of financial performance over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability;

• any lease payments made at or before the commencement date less any lease incentives received;

• any initial direct costs; and

• restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

(b) Impact of adoption

On adoption of AASB 16, CVC recognised lease liabilities and associated right-of-use assets in relation to leases which had previously been classified as ‘operating leases’ under the principles of AASB 117 Leases . These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 July 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 July 2019 was 4%.

Amounts recognised in the consolidated statement of financial position and consolidated statement of financial performance are disclosed in note 11.

(c) Practical expedients applied

• In applying AASB 16 for the first time, CVC has used the following practical expedients permitted by the standard:

• applying a single discount rate to a portfolio of leases with reasonably similar characteristics;

• • relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review. There were no onerous contracts as at 1 July 2019;
• • accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-term leases; and
• • using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

68

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 (CONTINUED)

NOTE 33: CHANGES IN ACCOUNTING POLICIES (CONTINUED)

(d) Measurement of lease liabilities

Below is a reconciliation between the operating lease commitments reported as at 30 June 2019 and lease liabilities recognised under AASB16 Leases on 1 July 2019.

nder AASB16_Leases_on 1 July 2019.
	2019
	$
Operating lease commitments disclosed as at 30 June 2019	3,056,925
	─────────
Discounted using the lessee’s incremental borrowing rate of at the date of initial application	2,694,775
Add:
Contracts reassessed as lease contracts	48,196
Adjustments relating to changes in the CVC’s incremental borrowing rate	107,865
	─────────
Lease liability recognised as at 1 July 2019	2,850,836
	═════════
Of which are:
Current lease liabilities	624,152
Non-current lease liabilities	2,226,684
	─────────
	2,850,836
	═════════

(e) Adjustments recognised in the condensed consolidated statement of financial position on 1 July 2019

The change in accounting policy affected the following items in the consolidated statement of financial position on 1 July 2019:

• • right-of-use assets – increase by $2,850,836
• • lease liabilities – increase by $2,850,836

There was no impact on retained earnings on 1 July 2019 as CVC has elected to measure right of use assets at amounts equal to the corresponding lease liabilities, as permitted by the transitional provisions of AASB 16.

(f) Lessor accounting

CVC did not need to make any adjustments to the accounting for assets held as lessor under operating leases as a result of the adoption of AASB 16.

69

CVC LIMITED

(AND ITS CONTROLLED ENTITIES)

ADDITIONAL INFORMATION

The following information was current as at 28 August 2020.

Distribution schedule

The distribution of shareholders and their shareholdings was as follows:-

Category	Number of ordinary shareholders	Number of ordinary shareholders
(size of holding)
1 - 1,000		197
1,001 - 5,000		244
5,001 - 10,000		138
10,001 - 100,000		211
100,001 - over		68
		────────
Total		858
		════════
Category	Number of convertible noteholders
(size of holding)
1 - 1,000		1,292
1,001 - 5,000		56
5,001 - 10,000		2
10,001 - 100,000		2
		────────
Total		1,352
		════════
Unmarketable parcels
	Minimum	Number of
	parcel size	shareholders
Ordinary shares
Minimum $500.00 parcel at $1.50 per share	334	102
Convertible notes
Minimum $500.00 parcel at $83 per note	6	-

On market share buy-back

The Company has a current on market share buy-back which commenced on 25 November 2019.

Substantial holders

The names of the Company’s substantial holders and the number of ordinary shares in which each has a relevant interest as disclosed in substantial holder notices given to the Company are as follows:

	Number of ordinary shares in
Shareholder	which interest held
Mr John Scott Leaver (a)	50,476,985
Southsea (Aust) Pty Limited	17,610,506
Mr Joseph David Ross	12,200,000
Anglo Australian Christian & Charitable Fund	9,712,816

(a) Mr Leaver’s holding includes 20,704,611 shares held by Leagou Pty Limited and 3,233,469 shares held by Wenola Pty Limited.

70

CVC LIMITED (AND ITS CONTROLLED ENTITIES)

ADDITIONAL INFORMATION (CONTINUED)

20 largest shareholders - ordinary shares

As at 28 August 2020, the top 20 shareholders and their shareholdings were as follows:

Shareholder	Shares held	% of issued
		capital held
Ordinary Shares
Mr John Scott Leaver	26,355,973	22.48
Leagou Pty Limited	20,704,611	17.66
Southsea (Aust) Pty Limited	17,610,506	15.02
Anglo Australian Christian & Charitable Fund	9,712,816	8.28
J K M Securities Pty Limited	6,700,000	5.71
JKM Securities Pty Limited	5,500,000	4.69
Chemical Overseas Limited	4,861,741	4.15
Wenola Pty Limited	2,488,757	2.12
Mr Nigel Cameron Stokes	1,000,000	0.85
Dr Raymond Joseph Healey	817,517	0.70
Melbourne Corporation of Australia Pty Limited	576,893	0.49
Heasman Superannuation Pty Ltd	505,100	0.43
Mr Julian Tertini	480,000	0.41
Cannington Corporation Pty Ltd	466,094	0.40
Syvest Pty Ltd	450,000	0.38
John Angela Pty Limited	445,000	0.38
Wenola Pty Limited	422,052	0.36
JA Investments Limited	420,000	0.36
Jasperson Pty Limited	381,817	0.33
Mr Geoffrey Leaver	350,000	0.30
	────────	──────
	100,248,877	85.50
	════════	══════
Convertible Notes
J P Morgan Nominees Australia Pty Limited	28,960	5.15
HSBC Custody Nominees (Australia) Limited	10,756	1.91
Investment Management Co Pty Ltd	6,750	1.20
Mutual Trust Pty Ltd	5,547	0.99
National Nominees Limited	4,753	0.85
Radder Investments Pty Ltd	4,030	0.72
Vision Australia Foundation	3,934	0.70
R S Management Pty Limited	3,734	0.66
Netwealth Investments Limited	3,258	0.58
Pstar Pty Ltd	2,800	0.50
Ciano Investments Pty Ltd	2,550	0.45
Erwin Small Pty Ltd	2,500	0.44
Dr Andrew Robert Small	2,500	0.44
Waterloo Medical Centre Pty Ltd	2,500	0.44
Mr Damien Joseph Kenneally & Mrs Candace Lynn Kenneally	2,358	0.42
Joly Pty Ltd	2,200	0.39
Selbourne Investments Pty Ltd	2,010	0.36
Sutclife Family Administration Pty Ltd	2,006	0.36
Morben Nominees Pty Ltd	2,005	0.36
Abtourk (SYD No 415) Pty Ltd	2,000	0.36
	────────	──────
	97,151	17.28
	════════	══════

Voting Rights

The Company’s constitution details the voting rights of members and 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

The Company is registered and domiciled in Australia. Its registered office and principal place of business are at Level 40 Governor Philip Tower, 1 Farrer Place, SYDNEY NSW 2000.

71