CVC LIMITED — Interim / Quarterly Report 2007

Apr 12, 2007

Incipacity Hitchcock

RIMANIAN SERIA

for the half-year ended 31 December 2006

chairman's report

for the half-year ended 31 December 2006

Commentary on Results, Dividend Announcement and Profit Outlook

Overview

The Directors of CVC Limited ("CVC") are pleased to:

• * report a profit before tax of \$10.0 million and after tax of \$7.9 million for the 6 months to 31 December 2006:
• report an increase of \$44.1 million after tax in the value of listed investments during the 6 months to 31 December 2006:
• announce an increase of 100% in the interim dividend to a record 6 cents fully franked per share:
• forecast a profit after tax of approximately \$30 million for the full year ended 30 June 2007; and
• * forecast a final dividend of 6 cents per share fully franked to give a full year dividend of 12 cents.

Half-year Result

The profit after tax of \$7.9 million for the 6 months to 31 December 2006 represents an increase of 159% over the comparative half-year and combined with the \$44.1 million after tax increase in the value of listed investments during the period, reflected directly in reserves, represents an after tax return on shareholders funds of over 31% for the half-year to December 2006.

The result reflects strong performances by CVC across. all business segments of the group and vindicates the continuing objective of developing substantial recurrent earnings streams for CVC that will be further pursued over the next 6 to 18 months.

Highlights

Investment highlights of the six months include:

. the Initial Public Offering of Probiotec:

CVC sold down approximately \$6.5 million of its holding into the IPO crystallising a \$2.2 million profit and has retained an approximate 4.0% holding in Probiotec.

. development of the CVC Trinity Property Fund: CVC signed a joint venture agreement with Trinity

Group to manage the CVC Trinity Property Fund: completed a \$7.5 million recapitalisation of the Fund and obtained approval for the acquisition of the Belrose property into the Fund.

• the announcement of a scheme of arrangement for the acquisition of Greens Foods:

CVC's long term holding in Green's will be sold to Nestle Australia Ltd, subject to Green's shareholder approval, in March 2007 and crystallise a profit for CVC of \$6.6 million. Concurrent with the sale, a joint venture between CVC and GPG PLC will purchase the non-petfood businesses of Greens.

• * preparation of Cyclopharm for an Initial Public Offering; After significant effort by the management team - our long term investment in Vita Life Sciences Limited has begun to show restoration in value with the ASX listing of Cyclopharm Limited in January 2007 and an initial market at a 30% premium to its issue price.
• expansion of the property portfolio.

CVC has expanded its property portfolio with a number of new property investments including a joint venture to develop two commercial properties in Shepparton and Geelong, Victoria and providing mezzanine finance to the Sakkara Group for its Synergy North project, a 49 unit residential project on Sydney's North Shore.

Commentary on Future Expectations and Profit Outlook

CVC is focusing on building its recurring income streams and capitalising upon opportunities across its core business segments of private equity, listed equity investments, direct property and funds management including undertaking the following:

• Acquire the non-petfood businesses of Green's Foods Limited.
• Pursue private equity opportunities.
• Pursue direct property opportunities.
• Development of the Ron Finemore Transport operations.
• Acquire/merge with existing equities manager to manage and grow the listed share portfolio.

The first step in achieving this was the placement of 55 million shares at \$2.00 per share subsequent to the end of the half-year. Additionally, a development agreement has been signed with the Aspen Group for the Fern Bay Seaside Village project which will return approximately \$21 million.

Based on the initiatives currently underway it is anticipated that CVC's profit after tax for the year ending 30 June 2007 will approach \$30 million and that there is good reason to believe that CVC is capable of at least a similar level of profitability for the year ending 30 June 2008.

Dividends

On the 22 February 2007 a fully franked interim dividend of 6 cents per share was paid, representing a 100% increase on the 2006 interim dividend. It is also expected that the final dividend will also be increased to 6 cents per share fully franked, totalling 12 cents for the 2007 financial year.

ADH Beard

Director

income statement

$\ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ld$ for the half-year ended 31 December 2006

	Consolidated
	31 Dec 2006	WA NGC 2005
INCOME Dividends received
Interest income	2,757,418 2,570,021	2,619,012 2,470,883
Net gain on sale of equity
investments	4,719,106	135,427
Recoveries of loans		682,438
Recoveries on equity investments	67,000
Sale of services	1,014,544	493,537
Other income	315,943	420,661
Total income	11,444,032	6,821,958
Equity accounted profits/(losses)
Share of net profits/(losses)
of associates	1,136,329	(540, 329)
Share of net profits of joint ventures	3,385	36,019
Net equity accounted profits/(losses) 1,139,714		(504,310)
EXPENSES
Audit fees	30,000	16,000
Amortisation of intangible assets	58,500	58,500
Finance costs	95,971	70,766
Depreciation expense	17,694	23,358
Directors fees	37,000	25,000
Employee costs	787,862	612,959
Impairment expenses on loans Legal and associated costs	1.691	1,051,613 20,894
Management and consultancy fees	820,300	592,849
Operating lease expense	185,382	175,146
Other expenses	538,337	424,073
Total expenses	2,572,737	3,071,158
Profit before related income
tax expense	10,011,009	3,246,490
Income tax expense	2.144.786	208,586
Profit Net profit attributable to	7,866,223	3,037,904
minority interests	16	2
Profit attributable to members
of the parent entity	7,866,207	3,037,902
Basic & diluted earnings per share (cents)	6.75	2.39
Dividends paid during period per share (cents)	3.00	3.00
. .

balance sheet . . . . . . . . . . . . . . . . . . . .

as at 31 December 2006

		Consolicated 31 Dec 2006 30 Jul 2006
CURRENT ASSETS Cash and cash equivalents Trade and other receivables Current tax assets Assets held for resale	8,172,796 23,964,929 17,560,409	24,194,797 15,799,635 304,864
Other assets	104,332	89,531
Total current assets	49,802,466	40,388,827
NON-CURRENT ASSETS Trade and other receivables "Available-for-sale" financial assets Investments accounted for using the equity method Investment properties Property, plant and equipment Intangible assets Deferred tax assets	6,067,098 182,792,001 8,749,263 2,808,837 37,037 8,627,854 936,051	5,422,656 126,588,621 11,157,964 2,818,637 19,424 8,686,354 1,039,109
Total non-current assets	210,018,141	155,732,765
TOTAL ASSETS	259,820,607	196,121,592
CURRENT LIABILITIES Trade and other payables Provisions Current tax liabilities Total current liabilities	1,058,361 165,169 1,752,151 2,975,681	2,145,874 323,985 4,641,279 7,111,138
NON-CURRENT LIABILITIES Other financial liabilities Deferred tax liabilities .	3,177,269 38,720,825	2,113,032 19,491,298
Total non-current liabilities	41,898,094	21,604,330
. TOTAL LIABILITIES	44,873,775	28,715,468
NET ASSETS	214,946,832	167,406,124
EQUITY Contributed equity Retained profits Other reserves	37,652,039 102,452,055 74.842,547	38,633,426 98,077,668 30,694,856
Total parent entity interest Minority interest	214,946,641 191	167,405,950 174
TOTAL EQUITY	214,946,832	167,406,124

statement of changes in equity . . . . . . . . . . . . . . . . . . . .

for the half-year ended 31 December 2006

Income and expenses recognised directly in equity

"Available-for-sale" investments:

statement on sale - Income tax on fair value	(3,568,955)	187,323
movements taken to or from other reserves	(18,896,395)	(3,498,476)
- Value of equity based remuneration recognised in other reserves - Value of associates equity based	59,441	55,223
remuneration recognised in other reserves	(3,345)
Net income reflected directly in equity Profit for the half-year	44,147,691 7,866,223	8,218,332 3,037,904
Total recognised income and expense for the half-year	52,013,914	11,256,236
Attributable to: Shareholders Minority interests	52,013,898 16	11,256,234 2
	52,013,914	11,256,236
Transactions with shareholders in their capacity as shareholders Shares issued during the half-year: - through the dividend reinvestment plan - under the executive and non-executive long term incentive plan Payments for share buy-backs Dividends paid to shareholders	139,942 2,999 (1, 124, 328) (3,491,819)	782.417 1,000 (5,925,024) (3,823,435)
Total transactions with shareholders in their capacity as shareholders	(4, 473, 206)	(8,965,042)
Net increase in equity for the half-year	47,540,708	2,291,194
Equity at the beginning of the half-year	167,406,124	155,218,516
EQUITY AT THE END OF THE HALF-YEAR	214.946.832	157.509.710

cash flow statement . . . . . . . . . . . . . . . . . . . .

for the half-year ended 31 December 2006

	Consolidated 31 Dec 2006	21 Dec 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts in the course of operations Cash payments in the course	1,056,933	412,825
of operations Interest received Dividends received Interest paid	(3, 435, 311) 1,376,048 2,757,418 (52, 926)	(1,493,296) 1,318,979 2,477,235 (57,300)
Income taxes paid	(4,291,428)	(710, 513)
Net cash flows (used in)/provided by operating activities	(2,589,266)	1,947,930
CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant
and equipment Payments for investment property Payments for equity investments Payments for controlled entities	(25, 507) (16, 335, 587)	(1,007) (2,833,994) (19, 436, 045)
net of cash acquired Proceeds on disposal of		(190,000)
equity investments Loans provided Loans repaid	14,097,748 (10, 492, 338) 3,712,159	2,947,546 (2,985,058) 6,057,191
Net cash flows used in investing activities	(9,043,525)	(16,441,367)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings Dividends paid to members		2,100,000
of the parent entity Payments for share buy-backs issue of shares	(3,404,824) (1, 124, 328) 139,942	(2,957,018) (5,925,024)
Net cash flows used in financing activities	(4,389,210)	(6,782,042)
Net decrease in cash held Cash at the beginning of	(16,022,001)	(21,275,479)
the half-year	24,194,797	41,277,130
CASH AT THE END OF THE HALF-YEAR	8,172,796	20,001,651

Level 42, Suncorp Place, 259 George Street, Sydney NSW 2000 Telephone +612 9087 8000 Facsimile +612 9087 8088 www.cvc.com.au ABN 34 002 700 361