First Graphene Ltd. — Annual Report 2003

Sep 4, 2003

TOLHURST NOALL GROUP LTD

ABN 50 007 870 760

APPENDIX 4E PRELIMINARY FINAL REPORT 30 JUNE 2003

CONTENTS

PAGE

RESULTS FOR ANNOUNCEMENT TO THE MARKET
THE CHAIRMAN'S REVIEW OF THE YEAR ENDED 30 JUNE 2003
STATEMENT OF FINANCIAL PERFORMANCE
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
OTHER INFORMATION

RESULTS FOR ANNOUNCEMENT TO THE MARKET

				\$A'000
Revenues from ordinary activities	up.	$2\%$	to	25,989
Profit from ordinary activities after tax attributable to members	up	$102\%$	to	148
Net profit for the period attributable to members	up.	102%	to	148

Revenues from ordinary activities were up \$556,140 or 2% from \$25.4M to \$26.0M.

Profit from ordinary activities after tax was up \$7.9M to \$147,819 profit from a loss last year of \$7.7M.

The company does not propose to pay any dividends.

THE CHAIRMAN'S REVIEW OF THE YEAR ENDED 30 JUNE 2003

This is the first full year result reported by Tolhurst Noall Group Limited following the merger during the previous financial year of Noall Group Ltd and Tolhurst Securities Limited.

I am pleased to say that our new Managing Director, John Wilson, has settled well into his role and that the impact of his hard work and industry knowledge is evident in the improving performance of the company. John has also made a substantial contribution to the company's strategic planning capability.

The reported pre-tax loss for the year ended 30 June 2003 was \$503,806, which compares to a pre-tax loss of \$7.843 million for the previous corresponding period. The Directors consider the result was creditable given the difficult operating environment experienced during the greater part of the year. On an after tax basis, the Group recorded a profit of \$147,819 which compares to a loss of \$7.740 million for the previous corresponding period. Earnings per share were 0.22 cents compared to a loss of (14.23) cents. No dividend will be paid in respect of the year.

The result reflects the restructuring of the stockbroking business which was largely completed in the first half of the year. The restructuring process was responsible for around \$250,000 of the loss for the year. It is pleasing to note that, despite the downsizing of the private client business, overall broking and commission revenue for the year was 11.3% higher than the previous year. Taking into account reduced transaction costs and improved efficiencies, the stockbroking result was a marked improvement on the previous vear's loss. Options made a positive contribution to the Group's results for the second consecutive year.

Tolhurst Noall Corporate again made a good contribution to the Group in 2003, albeit at a lower level than last year. This was achieved despite revenue from underwriting activity being 21.8% lower than the previous year which reflects the substantial reduction in IPO's and equity capital market activity generally. The company remains confident that the Corporate Department will make an increasingly strong contribution to the success of Tolhurst.

The funds management business reduced its loss from \$780,000 to \$227,000 in the year. However, the performance of our 50% owned associate company, Tolhurst Funds Management Pty Ltd continues to be disappointing and very much worse than expected at the time the investment was made. The result, an equity accounted loss of \$247,692, reflects a number of factors including weak investment markets leading to reduced portfolio values and costs and delays attributable to the introduction of new administration systems.

The Directors wish to acknowledge the dedication and commitment of staff, many of whom have assumed additional responsibilities following the restructuring.

Since the end of the financial year, the core broking and corporate finance businesses have experienced increased stockmarket turnovers and improved operating results above budget. The company has also announced its intention to undertake a pro-rata renounceable rights issue on a 1 for 4 basis at an issue price of \$0.04 per share to raise approximately \$700,000.

The primary purpose of the capital raising is to fund the working capital requirements of the company necessitated by increasing transaction volumes, to enhance the prudential and regulatory capital of the company and to improve the debt/equity ratio of the company.

John Harry - Chairman

STATEMENT OF FINANCIAL PERFORMANCE FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

		CONSOLIDATED		COMPANY
	NOTE	2003	2002	2003	2002
		\$	S	\$	\$
Revenue from ordinary activities	2	25,989,459	25,433,319	1,135,312	219,475
Dealers rebates		(10,939,763)	(11,770,468)
Administration costs		(5,349,708)	(6,682,991)	(366, 200)	(357,180)
Depreciation and amortisation
expense	3	(1,068,960)	(3,362,151)		(435,000)
Borrowing costs	3	(543,082)	(477, 826)	(3, 154)	(85,196)
Employee benefits expense		(5,591,266)	(7, 539, 579)	(136, 663)
Occupancy costs		(1,580,682)	(1, 578, 138)
Communication costs		(1,259,276)	(1, 523, 471)
Share of net loss of associate accounted for using the equity	9
method		(247, 692)	(379, 411)
Provision for diminution of
investments in controlled entities				(735,606)	(6,545,057)
Net unrealised gain from investments		87,165	37,264
Loss from ordinary activities
before income tax expense		(503, 806)	(7, 843, 452)	(106, 311)	(7,202,958)
Income tax benefit relating to
ordinary activities	4	651,625	102,762	3,300
Profit/(Loss) from ordinary
activities after income tax expense		147,819	(7,740,690)	(103, 011)	(7,202,958)
Total changes in equity other than those resulting from transactions
with owners as owners		147,819	(7,740,690)	(103, 011)	(7,202,958)
Earnings per share	21
Basic earnings per share (cents per share)		0.22	(14.23)
Diluted earnings per share (cents per share)		0.22	(14.20)

Note: Franked dividends per share have not been disclosed, as the consolidated entity did not distribute any dividends during the financial year.

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2003

		CONSOLIDATED		COMPANY
	NOTE	2003	2002	2003	2002
		\$	S	\$	£
CURRENT ASSETS
Cash assets Receivables	22(i) 5	5,965,920 24,303,986	5,787,718 29,306,166	571 4,668,573	4,121,125
Other	6	155,509	174,336		1,518
Investment properties	8	82,500
Financial assets	7	290,263	1,025,206	1,247	293,021
TOTAL CURRENT ASSETS		30,798,178	36,293,426	4,670,391	4,415,664
NON-CURRENT ASSETS
Receivables	5			1,285,252	1,285,252
Investments accounted for using the equity method	9	1,122,897	1,370,591
Investment properties	8	82,500	165,000
Financial assets	7	3,356,297	3,336,295	42,896	2,178,502
Property, plant and equipment	10	1,190,526	1,866,771
Deferred tax assets	4	653,759		3,300
Other	6	147,766	154,965
TOTAL NON-CURRENT ASSETS		6,553,745	6,893,620	1,331,448	3,463,754
TOTAL ASSETS		37,351,923	43,187,046	6,001,839	7,879,418
CURRENT LIABILITIES Payables Interest bearing liabilities Current tax liabilities Provisions	11 12 4 13	27,165,571 1,320,796 42,637 483,472	32,740,368 2,956,347 35,565 816,672	373,446 180,000	1,384,108 326,986
TOTAL CURRENT LIABILITIES		29,012,476	36,548,952	553,446	1,711,094
NON-CURRENT LIABILITIES Payables	11				1,040,000
Interest bearing liabilities	12	3,772,577	3,142,284	1,140,580	1,320,000
Deferred tax liabilities	4	2,234
Provisions	13	539,087	220,580
TOTAL NON-CURRENT LIABILITIES		4,313,898	3,362,864	1,140,580	2,360,000
TOTAL LIABILITIES		33,326,374	39,911,816	1,694,026	4,071,094
NET ASSETS		4,025,549	3,275,230	4,307,813	3,808,324
SHAREHOLDERS' EQUITY
Contributed equity	14	19,072,490	18,469,990	19,072,490	18,469,990
Accumulated losses	15	(15,046,941)	(15, 194, 760)	(14, 764, 677)	(14,661,666)
TOTAL SHAREHOLDERS' EQUITY		4,025,549	3,275,230	4,307,813	3,808,324

STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

		CONSOLIDATED		COMPANY
	NOTE	2003	2002	2003	2002
		\$	S	\$	\$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers		26,191,595	18,009,920
Payments to suppliers and employees		(26,046,211)	(24,605,706)	(309,769)	(326, 807)
Dividends received		114,328	211,360	839,027	2,100
Borrowing costs		(597, 092)	(477, 826)	(3,154)	(85,196)
Interest received		287,779	275,391	163	60,679
Income tax credit received		7,183	102,762
Net cash provided by/(used in) operating activities	22(ii)	(42, 418)	(6,484,099)	526,267	(349, 224)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments		809,343	941.639	296,122	1,338,425
Acquisition of property, plant & equipment		(384, 621)	(107,748)
Purchases of shares		(110,300)	(1,067,999)
Proceeds from sale of property plant & equipment		75,378	896,064
Proceeds from the acquisition of controlled entity			4,194,025
Net cash provided by/(used in) investing activities		389,800	4,855,981	296,122	1,338,425
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of Finance lease obligations Proceeds from borrowings		(23, 138)
directors		750,000	480,134
other		590,057	1,966,917	260,000
Repayment of borrowings
directors		(52, 449)	(429, 862)		(453,000)
other		(323, 737)	(566, 917)	(1,677,332)	(631, 491)
Proceeds of share issues		602,500		602,500
Net cash provided by/(used in) financing activities		1,543,233	1,450,272	(814, 832)	(1,084,491)
Net increase/(decrease) in cash held		1,890,615	(177, 846)	7,557	(95, 290)
Cash at the beginning of the financial year		3,174,509	3,352,355	(6,986)	88,304
Cash at the end of the financial year	22(i)	5,065,124	3,174,509	571	(6,986)

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The significant policies which have been adopted in the preparation of these financial statements are:

(a) Basis of Preparation

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

The financial report covers the consolidated entity of Tolhurst Noall Group Ltd and controlled entities, and Tolhurst Noall Group Ltd as an individual parent entity.

Tolhurst Noall Group Ltd is a listed public company, incorporated and domiciled in Australia.

The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(b) Principles of Consolidation

A controlled entity is any entity controlled by Tolhurst Noall Group Ltd. Control exists where Tolhurst Noall Group Ltd has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with Tolhurst Noall Group Ltd to achieve the objectives of Tolhurst Noall Group Ltd. A list of controlled entities is contained in Note 7 to the financial statements.

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses have been eliminated on consolidation.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included from the date control was obtained or until the date control ceased.

(c) Goodwill

Goodwill, representing the excess of the purchase consideration plus incidental costs over the fair value of the identifiable net assets acquired on the acquisition of businesses, is amortised on a straight-line basis over the period of time which the benefits are expected to arise, which is taken to be 10 years.

The unamortised balance of goodwill is reviewed at least at each reporting date. Where the balance exceeds the value of expected future benefits, the difference is charged to net profit/(loss).

(d) Cash and Cash Equivalents

Cash on hand and in banks and short-term deposits are stated at the lower of cost and net realisable value.

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

Bank overdrafts are carried at the principal amount. Interest is charged as an expense as it accrues.

The Cash Trusts account is used for the retention of client funds and is subject to the regulations under the ASX Business Rules.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

(e) Receivables

Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

Receivables from related parties are recognised and carried at the nominal amount due. Interest is taken up as income on an accrual basis.

(f) Provision for Doubtful Debts

The collectibility of debts is assessed at year-end and a provision is made for any specific doubtful accounts. In addition a general provision is maintained.

$(g)$ Taxes

Income Taxes

The consolidated entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on the profit from ordinary activities adjusted for any permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue and expense are included in the determination of accounting profit and taxable income are brought to account as either a provision for deferred income tax or as a future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable.

Future income tax benefits are not bought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits in relation to tax losses are not bought to account unless there is virtual certainty of realisation of the asset.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realized and comply with the conditions of deductibility imposed by the law.

Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except:

• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables 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 is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

(h) Financial Assets

Current

Marketable equity securities are valued at market value. Other securities are carried at the lower of cost or recoverable amount. Dividends are brought to account as they are received. The gains or losses, whether realised or unrealised, are included in profit from ordinary activities before income tax.

Non-Current

Controlled Entities

Investments in controlled entities are carried in the company's financial statements at the lower of cost and recoverable amount. Dividends and distributions are brought to account to net profit/(loss) when they are proposed by the controlled entities except when dividends are paid from pre-acquisition retained earnings. These dividends are netted against the carrying value of the investment.

Other Securities

Marketable equity securities are valued at the lower of cost and net market value. Other securities are carried at the lower of cost or recoverable amount. Dividends are brought to account as they are received.

(i) Investments in Associates

Investments in associate companies are recognised in the financial statements by applying the equity method of accounting.

Investment Properties (i).

Investment units and land are valued at valuation.

(k) Property, Plant and Equipment

Plant and equipment are measured on the cost basis. All fixed assets are depreciated so as to write off the depreciable amount of each item over its estimated useful life.

The gain or loss on disposal of all fixed assets is determined as the difference between the carrying amount of the asset at the time of disposal and the proceeds of disposal, and is included in the results of the consolidated entity in the year of disposal.

Depreciation is provided on a diminishing value basis or straight-line method on all property, plant and equipment.

Major depreciation periods are:	2003	2002
$\div$ Leasehold Improvements	$6.5 - 10$ years	$6.5 - 10$ years
$\div$ Plant and Equipment	$2.5 - 7$ years	$2.5 - 7$ years
$\div$ Motor Vehicles	$4 - 5$ years	$4 - 5$ years

$(1)$ Recoverable Amount of Non-Current Assets

Non-current assets are written down to recoverable amount where the carrying value of any non-current asset exceeds recoverable amount. In determining recoverable amount of non-current assets, the expected net cash flows have not been discounted to their present value.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

(m) Payables

Liabilities for trade creditors and other amounts are carried at cost which is fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the consolidated entity.

Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accrual basis.

Deferred cash settlements are recognised as the present value of the outstanding consideration payable on the acquisition of an asset discounted at prevailing commercial borrowing rates.

(n) Interest Bearing Liabilities

All loans are measured at the principal amount. Interest is charged as an expense as it accrues. Finance lease liability is determined in accordance with the requirements of AASB 1008, Leases.

(o) Employee Benefits

Provision is made for the company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year together with entitlements arising from wages and salaries, annual and sick leave which will be settled after one vear, have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Other employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

The value of the Employee Share Scheme as described in Note 19 is not being charged as an employee entitlement expense.

(p) Leases

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Operating leases

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense in the periods in which they are incurred.

Finance leases

Leases which effectively transfer substantially all of the risks and benefits incidental to ownership of the leased item to the consolidated entity are capitalised at the present value of the minimum lease payments and disclosed as property, plant and equipment under lease. A lease liability of equal value is also recognised.

Capitalised lease assets are depreciated over the shorter of the estimated useful life of the assets and the lease term. Minimum lease payments are allocated between interest expense and reduction of the lease liability with the interest expense calculated using the interest rate implicit in the lease and charged directly to net profit/(loss).

The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements, and amortised over the unexpired period of the lease or the estimated useful lives of the improvements, whichever is the shorter.

(a) Contributed Equity

Issued and paid up capital is recognised at the fair value of the consideration received by the company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

(r) Earnings Per Share

Basic earnings per share is calculated as net profit attributable to members, adjusted to exclude 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.

Diluted earnings per share is calculated as net profit attributable to members, adjusted for:

• costs of servicing equity (other than dividends) and preference share dividends;
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(s) Financial Instruments

Refer to note 26 for accounting policies, terms and conditions associated with other financial instruments.

Revenue Recognition $(t)$

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.

Revenue from share trading is recognised at the time of completion of the contract.

Dividend revenue is recognised when the right to receive a dividend has been established.

Interest revenue is recognised when the right to receive the interest has been established.

(u) Reclassification of Prior Year Comparatives

Where applicable, prior year figures have been reclassified to enhance comparability with current year figures.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

	CONSOLIDATED		COMPANY
	2003	2002	2003	2002
	S	\$	S	\$
NOTE 2 REVENUE FROM ORDINARY ACTIVITIES
Revenue from operating activities
Broking and commission	21,339,717	19,164,499
Underwriting	1,477,499	1,889,893
Management services	135,380	147,484
Share trading	1,578,433	1,659,471
Total revenues from operating activities	24,531,029	22,861,347
Revenues from non-operating activities
Dividends
Other Corporations	114,328	211,359		2,100
Controlled entities			839,027
Interest
Other persons Controlled Entities	224,893	280,128	163	19,456 41,223
Proceeds from sale of investments	809,343	941,639	296,122	156,696
Proceeds from sale of property, plant and
equipment	75,378	896,064
Rental revenue	234,488	242,782
Total revenues from outside the operating activities	1,458,430	2,571,972	1,135,312	219,475
Total revenues from ordinary activities	25,989,459	25,433,319	1,135,312	219,475
NOTE 3 EXPENSES AND LOSSES
Depreciation of non-current assets
Plant and equipment	933,934	852,321
Total depreciation of non-current assets	933,934	852,321
Amortisation of non-current assets
Leasehold improvements		50,258
Lease prepaid term charges Expenditure carried forward	85,026	10,419 366,089		435,000
Goodwill on Consolidation	50,000	2,083,064
Total amortisation of non-current assets	135,206	2,509,830		435,000
Total depreciation and amortisation expenses	1,068,960	3,362,151		435,000
Borrowing costs expensed
Interest expense
Directors	288,861	142,082
Other related parties		2,905
Other persons	254,221	332,839	3,154	85,196
Total borrowing costs expensed	543,082	477,826	3,514	85,196

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

	CONSOLIDATED		COMPANY
	2003	2002	2003	2002
	s,	\$	Š,	\$
NOTE 3 EXPENSES AND LOSSES (cont)
Bad and doubtful debts - trade debtors	69,339	115,498
Operating lease rental	1,643,701	1,525,007
Net loss/(gain) on disposal of assets
- property, plant $\&$ equipment	51,554
- investments	8,771		(4,348)
NOTE 4 INCOME TAX
Net loss from ordinary activities	(503, 806)	(7,843,452)	(106,311)	(7,202,958)
Prima facíe tax benefit at 30%	(151, 141)	(2,353,036)	(31,893)	(2,160,887)
Tax effect of permanent differences:
- Other items	152,675	226,765	3,622
- Amortisation	15,000	570,508
Rebateable dividends	(17,971)		(181,311)
Losses transferred to other group entities			21,606
Tax losses not brought to account Under/(over) provision of income tax in prior	260,104	1,131,320	199,076	2,160,887
years	(100)	321,681
Timing differences and tax losses brought to
account	(910, 192)		(14, 400)
Income tax benefit attributable to operating loss	(651, 625)	(102, 762)	(3,300)
Deferred tax assets and liabilities
Current tax payable	42,637	35,565
Provision for deferred income tax - non current	2,234
Future income tax benefit - non current
Timing differences	653,759		3,300
Income Tax Losses
Future income tax benefits not brought to account
as assets
Tax losses - revenue	1,527,050	1,630,742	1,242,743	1,043,667
Tax losses - capital	900,450	900,450	835,402	835,402
Timing differences		546,396		14,400
	2,427,500	3,077,588	2,078,145	1,893,469

Taxation benefits will only be obtained if the company:

a) has future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions to be realised;

b) continues to comply with the conditions for deductibility imposed by income tax law; and

c) is not adversely affected by changes in income tax legislation in relation to the benefit from the deductions.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

		CONSOLIDATED		COMPANY
		2003	2002	2003	2002
		S	£.	S	\$
NOTE 5 RECEIVABLES
Current
Client and dealer balances		23,597,849	28,480,908
Provision for doubtful debts		(276,000)	(226,000)
		23,321,849	28,254,908
Sundry debtors	5(a)	315,847	339,294
Unsecured Ioans	5(a)	(6,320)	144,024
Amounts other than trade debts
receivable from related parties:
Wholly-owned group
- controlled entities	20(c)			4,668,573	4,121,125
Directors and director related entities - directors	20(c)	120,000	(29,763)
- director-related	20(c)	147,609	106.923
Other related parties
- associated companies	20(c)	405,001	490,780
		24,303,986	29,306,166	4,668,573	4,121,125
Non-current
Amounts receivable from related parties:
Wholly-owned group - controlled entities	20(c)			1,285,252	1,285,252
				1,285,252	1,285,252

(a) Terms and conditions

Terms and conditions relating to the above financial instruments

Client and dealer balances are on 3 business day terms and are interest bearing at the ANZ reference rate plus 2% on all $(i)$ balances overdue (ie T+3).

Sundry debtors are non-interest bearing and amounts are generally paid within 30 days. $(ii)$

Unsecured loans are payable within 12 months and are generally interest bearing at the ANZ reference rate plus 2%. $(iii)$

Details of the terms and conditions of related party receivables are set out in note 20. $(iv)$

NOTE 6 OTHER ASSETS

Current
Prepayments and other debtors	155,509	174,336		1,518
	155,509	174,336		1,518
Non-current
Expenditure carried forward:
ASX membership fee	125,000	125,000
Capitalised costs	187,192	109,365	$\overline{\phantom{a}}$
Software license fees	59,339	59,339
	371,531	293,704	$\overline{\phantom{0}}$
Accumulated amortisation	(223,765)	(138, 739)
	147,766	154,965

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

		CONSOLIDATED		COMPANY
		2003	2002	2003	2002
		S	£	S	\$
NOTE 7 FINANCIAL ASSETS
Current
Shares listed on a prescribed stock exchange at market value Shares listed on a prescribed stock		94,763	1,025,206	1.247	293,021
exchange at cost	7(f)	195,500
		290,263	1,025,206	1,247	293,021
Non-current - at cost
Shares in controlled entities	7(c)			7,280,766	8,680,766
Provision for diminution				(7.280, 663)	(6, 545, 057)
				103	2,135,709
Shares in listed public company	7(b)	42.793	42,793	42,793	42,793
Investment Units - Grosvenor	7(a)	2,419,727	2,419,727
Provision – Writedown	7(a)	(326, 227)	(326, 227)
Shares in other corporations	7(e)	1,220,004	1,200,002
		3,356,297	3,336,295	42,896	2,178,502

(a) The fair value of the units has been determined by reference to an independent valuation previously obtained from Michael Henderson, AAPI Certified Practising Valuer of Herron Todd White, the report dated 27 June 2001. The valuations are performed on an open market basis, being the amounts for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable seller in an arms length transaction at the valuation date.

(b) Quoted market value of shares listed on a
prescribed stock exchange	63.139	43.408

(c) Investments in controlled entities are unquoted and comprise:

	Class of Share	2003 % Holding	2003 S	2002 % Holding	2002 \$
William Noall Holdings Limited Provision for diminution	Ordinary	100	1,650,000 (1,650,000)	100	1,650,000 (1,650,000)
Weyton Pty Limited Alliance Properties Strata (Qld) Pty	Ordinary Ordinary	100 100	100 2	100 100	100
Limited
Alliance Properties (Cairns) Pty Limited	Ordinary	100		100
Tolhurst Securities Ltd	Ordinary	100	5,630,663	100	7,030,663
Provision for diminution			(5,630,663)		(4,895,057)
			103		2.135.709

All subsidiaries are incorporated in Australia

(d) Deeds of cross-guarantee between Tolhurst Securities Ltd, William Noall Holdings Ltd, Tolhurst Noall Group Ltd, Tolhurst Holdings Pty Ltd and Company Zebra Ltd were enacted during the financial year and relief was obtained from preparing a financial report for Tolhurst Securities Ltd, William Noall Holdings Ltd and Company Zebra Ltd under ASIC Class Order 98/1418. Under the deeds, Tolhurst Noall Group Ltd guarantees to support the liabilities and obligations of Tolhurst Securities Ltd, William Noall Holdings Ltd and Company Zebra Ltd.

Tolhurst Noall Group Ltd and William Noall Holdings Ltd belong to Closed Group 1 and Tolhurst Noall Group Ltd, Tolhurst Securities Ltd, Tolhurst Holdings Pty Ltd and Company Zebra Ltd belong to Closed Group 2. "Closed Group" being the holding entity and wholly owned entities which are parties to the deed of cross-guarantee. The "parties to the deed of cross- guarantee" are the same as the parties in Closed Group 1 and Closed Group 2 mentioned above.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

NOTE 7 FINANCIAL ASSETS (cont)

	Financial information in relation to:	Closed Group 1	Closed Group 2
	(i) Statement of financial performance Profit/(loss) from ordinary activities before income tax Income tax benefit relating to ordinary activities	(178, 883) 3,300	2,001,140 3,300
	Profit/(Loss) from ordinary activities after income tax benefit	(175, 583)	2,004,440
	Total changes in equity other than those resulting from transactions with owners as owners	(175, 583)	2,004,440
	(ii) Retained Profits Accumulated losses at the beginning of the financial year Profit/(Loss) from ordinary activities after income tax benefit	(11,912,940) (175, 583)	(17,205,368) 2,004,440
	Accumulated losses at the end of the financial year	(12,088,523)	(15,200,928)
	(iii) Statement of Financial Position
	CURRENT ASSETS Cash assets Receivables Financial assets	571 44,040	8,817 4,650 44,040
	TOTAL CURRENT ASSETS	44,611	57,507
	NON-CURRENT ASSETS Receivables Financial assets Deferred tax asset	4,668,573 5,990,165 3,300	6,844,033 1,805,706 3,300
	TOTAL NON-CURRENT ASSETS	10,662,038	8,653,039
	TOTAL ASSETS	10,706,649	8,710,546
Payables	CURRENT LIABILITIES Interest bearing liabilities	373,346 180,000	465,595 420,000
	TOTAL CURRENT LIABILITIES	553,346	885,595
Payables	NON-CURRENT LIABILITIES Interest bearing liabilities	1,278,756 1,890,580	2,753,096 1,200,293
	TOTAL NON-CURRENT LIABILITIES	3,169,336	3,953,389
	TOTAL LIABILITIES	3,722,682	4,838,984
	NET ASSETS	6,983,967	3,871,562
EQUITY	Contributed equity Accumulated losses	19,072,490 (12,088,523)	19,072,490 (15,200,928)
		6,983,967	3,871,562

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

NOTE 7 FINANCIAL ASSETS (cont)

(e) Other investments

The shares in other corporations includes:

• The consolidated entity holds 20% (2002:20%) ownership interest in Carroll Pike & Piercy Pty Ltd. The carrying amount $\bullet$ of this investment at 30 June 2003 is \$1,200,000 (2002: \$1,200,000).
• The consolidated entity holds 20% (2002;20%) ownership interest in THG Investments Pty Ltd. The carrying amount of this investment at 30 June 2003 is \$2 (2002: \$2).
• The consolidated entity holds 20% (2002:20%) ownership interest in Tolhurst. Wells and Lee Pty Ltd. The carrying amount of this investment at 30 June 2003 is \$20,000 (2002: \$nil).
• The consolidated entity holds 50% (2002:100%) ownership interest in Elstree Tolhurst Investment Management Pty Ltd who provide a fixed interest funds management service. The carrying amount of this investment at 30 June 2003 is \$2 $(2002; 3nil)$

(f) Included in listed shares are two parcels of Medical Monitors Ltd. an ASX listed stock, which were the subject of a subunderwriting shortfall. These shares have been valued at cost. Mr Johnson has guaranteed a shortfall of \$75,000 and Mr Wigzell, a director of the broker subsidiary Tollurst Noall Ltd, has guaranteed \$120,500.

	CONSOLIDATED		COMPANY
	2003	2002	2003	2002
NOTE 8 INVESTMENT PROPERTIES
Current
Land at fair value	82.500
Non Current
Land at fair value	82,500	165,000

The fair value of the land has been determined by reference to an independent valuation previously obtained from Michael Henderson, AAPI Certified Practising Valuer of Herron Todd White, the report dated 27 June 2001. The valuations are performed on an open market basis, being the amounts for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable seller in an arms length transaction at the valuation date. With respect to security refer to note $12(a)$ .

NOTE 9 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investment in associates	1,122,897	1,370,589	-	-
(a) Interest in associates Name	Balance date		Ownership interest
			2003	2002
Tolhurst Funds Management Pty Ltd	$30$ June		50%	50%

(i) Principal activity

Tolhurst Funds Management Pty Ltd provides investment services to domestic and international clients.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

	CONSOLIDATED			COMPANY
	2003	2002	2003	2002
NOTE 9 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (cont)	S	\$	S	$\mathbf{r}$
(ii) Share of associate's profits/(losses) Share of associate's:
- Net loss from ordinary activities before income
tax expense	(247, 692)	(354, 411)
- Income tax expense
Share of associate's net losses from ordinary
activities after income tax	(247, 692)	(354.411)
Adjusted for: - amortisation of goodwill on acquisition		(25,000)
Share of associate's net losses	(247, 692)	(379.411)
The associated entity is currently reporting losses, and consequently no dividends are payable to the shareholders of Tolhurst
Noall Group Ltd.
(iii) Carrying amount of investment in associate
Balance at beginning of the financial year	1,370,591
- investment at cost in associate entity		1,750.002
- share of associate's net losses for the financial
year	(247, 692)	(379, 411)
- dividends received from associate Carrying amount of investment in associate at the
end of the financial year	1.122,897	1,370,591
(iv) Share of associate's assets and liabilities
Current assets	201,959	316,408
Non current assets	583,132	627,637
Current liabilities	(537, 043)	(448, 306)
Non current liabilities
Net assets	248,048	495,739
(v) Accumulated losses of the consolidated entity attributable to associate
Balance at the beginning of the financial year	(379, 411)
Share of associate's net losses	(247, 692)	(379, 411)
Dividends received from associate
Balance at the end of the financial year	(627, 103)	(379, 411)

A subsidiary of Tolhurst Noall Group Ltd proposes to enter into a loan agreement under which it will advance working capital to a maximum of \$300,000 to Tolhurst Funds Management Pty Ltd.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

		CONSOLIDATED		COMPANY
		2003	2002	2003	2002
		S	S	Ś,	\$
NOTE 10 PROPERTY, PLANT & EQUIPMENT
Plant and equipment ~ cost		5,342,746	5,347,246
Accumulated depreciation		(4,152,220)	(3,480,475)
		1,190,526	1,866,771
Reconciliations of the carrying amounts of property, plant and equipment
Plant and Equipment:
Carrying amount at beginning		1,866,771	322,788
Additions		384,620	749,831
Additions through acquisition of entities/operations			1,835,663
Depreciation expense		(933, 934)	(852, 321)
Disposals		(126, 931)	(189, 190)
		1,190,526	1,866,771
Assets pledged as security Refer to Note 12a
NOTE 11 PAYABLES
Current
Client and dealer balances payable	11(a)	23,682,638	29,672,269
Funds held in trust		260,000		260,000
Other creditors and accruals	11(a)	3,052,082	2,845,161	98,346	198,544
Amounts payable to related parties:
Wholly-owned group - controlled entities	20(c)			100	1,170,564
Directors and director related entities
- director related	20(c)	100,000	100,000	15,000	15,000
Other related parties - associated companies	20(c)	70,851	122,938
		27,165,571	32,740,368	373,446	1,384,108
Non Current
Amounts payable to related parties:
Wholly-owned group - controlled entities	20(c)				1,040,000
					1,040,000

(a) Terms and conditions

Terms and conditions relating to the above financial instruments:

$(i)$ Client and dealer balances payable are non-interest bearing and on 3 business day terms.

Other creditors and accruals are non-interest bearing and are normally settled within 30 days. $(ii)$

Details of terms and conditions of related party payables are set out in note 20. $(iii)$

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

		CONSOLIDATED			COMPANY
		2003	2002	2003	2002
		S	\$	S	\$
NOTE 12 INTEREST BEARING LIABILITIES
Current
Bank overdraft	12(a)	900,796	2,613,209		6,986
Lease liability	12(a)		23,138
$Loans - secured$	12(a)	420,000	320,000	180,000	320,000
		1,320,796	2,956,347	180,000	326,986
Non-current
Subordinated loans	12(a)	1,822,284	1,822,284
$Loans - secured$	12(a)	1,200,293	1,640,000	1,140,580	1,320,000
Directors and director related entities
- directors	12(a)	450,000
- director related	12(a)	300,000
		3,722,577	3,142,284	1,140,580	1,320,000

(a) Terms and conditions

Terms and conditions relating to the above financial instruments

• The bank overdraft is secured by a registered mortgage debenture over the assets and undertakings of the company, $\ddot{\Omega}$ excluding Grosvenor. Interest is charged at the bank's benchmark rate.
• The secured loans are secured by a first registered mortgage over the "Grosvenor", Corner of McLeod and Grove St, $(ii)$ Cairns. Interest is currently 6.06% and the facilities are currently rolled on a monthly basis. Also, Tolhurst Noall Ltd has guaranteed a fully drawn advance facility, drawn down by a related entity, with the ANZ Banking Group (2003 \$299,713; 2002 \$nil).
• Lease liabilities are secured via a charge of the assets to which they relate. The average interest rate implicit in the liability $(iii)$ is $8\%$ and the average repayment term is 4 years.
• Subordinated loans and director loans are interest bearing at an average rate of 12%. There is no agreed repayment term. $(iv)$ Refer note $20(c)$ .

NOTE 13 PROVISIONS

Current
Employee entitlements	19	483,472	816,672	$\overline{\phantom{a}}$
		483.472	816,672
Non-current
Other - claims and penalties	$\mathbf{13}(\mathbf{a})$	513.993	195,000
Employee entitlements	19	25,094	25,580
		539,087	220,580

(a) The non-current claims and penalties provision exists to cover known and unknown, client claims, fines, penalties or other settlements. The amount has been determined using known events multiplied by a probability factor plus an estimate for unknown events.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

		CONSOLIDATED		COMPANY
		2003	2002	2003	2002
		S	\$	Ŝ	\$
NOTE 14 CONTRIBUTED EQUITY
Issued and paid up capital
69,368,696 ordinary shares	14(a)	19,072,490	18,469,990	19,072,490	18,469,990
Fully Paid (2002: 66,958,696)
(a) Movements in shares on issue
Beginning of the financial year		18,469,990	11,439,327	18,469,990	11,439,327
Acquisition of Tolhurst Securities Ltd
$(a)$ 14 cents			7,030,663		7,030,663
Allotted to Balgreggan @ 25 cents	14(b)	540,000		540,000
Allotment of staff shares $\omega$ 25 cents	19	62,500		62,500
End of the financial year		19,072,490	18,469,990	19,072,490	18,469,990
		No.	No.	No.	No.
Beginning of financial year		66,958,696	16,739,674	66,958,696	16,739,674
Acquisition of Tolhurst Securities Ltd			50,219,022		50,219,022
Allotted to Balgreggan		2,160,000		2,160,000
Allotment of staff shares		250,000		250,000
		69,368,696	66,958,696	69,368,696	66,958,696

Terms and condition of contributed equity

Ordinary Shares

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.

(b) Placement to Balgreggan Financial Investments Limited

Shareholders of Tolhurst Noall Group Limited (Tolhurst) approved the issue of 4 million ordinary shares in Tolhurst to Balgreggan Financial Investments Limited (Balgreggan) together with the grant of 16 million options on the terms set out in the general meeting documentation forwarded to shareholders.

Since that approval, Tolhurst has received a total of \$800,000 from Balgreggan. Of that sum, shares have been issued in accordance with the shareholder resolution in respect of \$540,000. No shares have as yet been issued in respect of the further sum of \$260,000 received by Tolhurst. No options have as yet been issued pursuant to the resolution.

Tolhurst has announced a general meeting to approve the allotment of 1.040,000 fully paid ordinary shares to Balgreggan $(260,000)$ , together with a placement to Balgreggan of 4,200,000 fully paid ordinary shares at \$0.04 per share (\$168,000).

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

CONSOLIDATED			COMPANY
2003	2002	2003	2002
	J		э

NOTE 14 CONTRIBUTED EOUITY (cont)

(c) Share options

Options over ordinary shares:

During the financial year, 3,334,000 options were issued over ordinary shares. The options have an exercise price of \$0.25.

Unissued shares

As at the date of this report, there were 4,203,100 unissued ordinary shares under options as follows:

• ÷ 300,000 options to take up one ordinary share in Tolhurst Noall Group Ltd at an issue price of \$0.30. The options expire on 10 December 2004.
• ÷ 150,000 options to take up one ordinary share in Tolhurst Noall Group Ltd at an issue price of \$0.75. The options expire on 21 August 2005.
• ÷. 132,100 options to take up one ordinary share in Tolhurst Noall Group Ltd at an issue price of \$0.47. The options expire on 14 August 2005.
• $\mathcal{L}_{\mathcal{P}}$ 237,000 options to take up one ordinary share in Tolhurst Noall Group Ltd at an issue price of \$0.33. The options expire on 25 July 2006.
• $\frac{1}{2}$ 50,000 options to take up one ordinary share in Tolhurst Noall Group Ltd at an issue price of \$0.20. The options expire on 28 February 2005.
• $\mathcal{L}_{\mathbf{c}}$ 600,000 options to take up one ordinary share in Tolhurst Noall Group Ltd at an issue price of \$0.25. The options expire on 30 June 2005.
• ÷ 2,734,000 options to take up one ordinary share in Tolhurst Noall Group Ltd at an issue price of \$0.25. The options expire on 30 June 2006.

NOTE 15 ACCUMULATED LOSSES

Balance at the beginning of year	(15, 194, 760)	(7,468,270)	(14,661,666)	(7,458,708)
Net profit/(loss) attributable to members of the group Transfer of asset revaluation reserve	147.819	(7,740,690) 14,200	(103, 011)	(7,202,958)
Balance at end of year	(15,046,941)	(15, 194, 760)	(14,764,677)	(14,661,666)
NOTE 16 AUDITORS' REMUNERATION
Amounts received or due and receivable by the Auditors of the Company for: - an audit of the financial reports of the entity and any other entity in the consolidated entity	72,000	114,500	11,000	114,500
- other services	69,733	38,566	300.	3,000
	160,693	153,066	11,300	117,500

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

	CONSOLIDATED		COMPANY
	2003	2002	2003	2002
	S	S	S	\$
NOTE 17 CAPITAL AND LEASING COMMITMENTS
Non-cancellable operating leases contracted for but not capitalised in the financial
statements
Not later than 1 year $\overline{\phantom{a}}$	1.774,732	1,769,096
Later than 1 year but not later than 5 years $\overline{\phantom{a}}$	5.437,946	4,298.109
Later than 5 Years	431,379	723,200
	7,644,057	6,790,405

These payments represent amounts owing on operating lease agreements for premises occupied by the controlled entity. The lease terms vary from 0 to 6 years.

NOTE 18(a) REMUNERATION OF DIRECTORS

Income paid or payable, or otherwise made available in respect of the financial year to all directors of each entity in the economic entity, directly or indirectly, by the entities of which they are directors or any related party.	1,588,800	2,051,702
Income paid or payable, or otherwise made
available in respect of the financial year to all directors of the parent entity, directly or indirectly
by the parent entity or any related parties.			769,844	1,189,391
The number of directors of the parent entity			Number of	Number of
whose income (including superannuation			Directors	Directors
contributions) falls within the following bands:
$$0 - $9.999$			2	$\frac{2}{2}$
\$10,000 - \$19,999
\$20,000 - \$29,999			3	3
\$50,000 - \$59,999
\$70,000 - \$79,999
$$110,000 - $119,999$
\$120,000 - \$129,999
\$150,000 - \$159,999
$$170,000 - $179,999$
\$180,000 - \$189,999
\$200,000 - \$209,999
\$210,000 - \$219,999
\$240,000 - \$249,999
\$260,000 - \$269,999
			10	13

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

	CONSOLIDATED			COMPANY
	2003	2002	2003	2002
	S,	\$	Ś,	\$
NOTE 18(b) REMUNERATION OF EXECUTIVES
Remuneration received or due and receivable by executive officers of the economic entity whose remuneration is \$100,000 or more, from entities in the economic entity or any related parties, in connection with the management of the affairs of the entities in the economic entity whether as an executive officer or otherwise	689,336	833,207
The number of executives of the economic entity
whose income (including superannuation contributions) falls within the following bands:
\$120,000 - \$129,999		I
\$130,000 - \$139,999		I
\$150,000 - \$159,999	2
\$160,000 - \$169,999		I
\$170,000 - \$179,999
\$180,000 - \$189,999		I
\$200,000 - \$209,999
\$210,000 - \$219,999		L
	4	5
NOTE 19 EMPLOYEE BENEIFTS
The aggregate of employee benefits liability is comprised of:
Accrued wages, salaries and on costs	120,775	465,309
Provisions - current	483,472	816,672
Provisions – non-current	25,094	25,580
	629,341	1,307,561
Number of employees and advisors at year end	172	228

Employee/Advisor share option arrangement:

An employee/advisor share option scheme has been established where employees/advisors of the consolidated entity are issued with options over the ordinary shares of Tolhurst Noall Group Ltd. The options, issued for nil consideration, are issued in accordance with performance guidelines established by the Directors of Tolhurst Noall Group Ltd. The options cannot be transferred and will not be quoted on the ASX.

Details of share options outstanding as at 30 June 2003:

• $\bullet$ 2,734,000 (2002: nil) options with an exercise price of 25 cents
• 132,100 (2002: 189,300) options with an exercise price of 47 cents (2002: 47 cents)
• 237,000 (2002: 237,000) options with an exercise price of 33 cents (2002: 33 cents) $\bullet$
• $50,000$ (2002; $50000$ ) options with an exercise price of 20 cents

Expiry dates are 30 June 2006, 14 August 2005, 25 July 2006 and 28 February 2005 respectively.

During the year no options were exercised under the Employee Option Scheme, (2002: nil).

During the year 57,200 Options lapsed as a result of employment ceasing for a particular employee.

The value of the employee option scheme is not being charged as an employee entitlement expense.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

		CONSOLIDATED		COMPANY
	2003	2002	2003	2002
		c۱
THE TIME FROM THE REAL TRANSPORTED WAS SERVED FROM THE WAVE TAKEN BY A RELEASED WAS ARRESTED FOR A 45 YO F.	$\sim$

NOTE 19 EMPLOYEE ENTITLEMENTS (cont)

Employee share arrangement:

A Staff Share Plan has been established whereby eligible employees of the consolidated entity are issued with up to \$1,000 of ordinary shares of Tolhurst Noall Group Ltd at the discretion of the Board. The shares, issued for nil consideration, may not be disposed of by the employee until the earlier of:

• the end of the period of 3 years commencing at the time of acquisition of the Shares by the employee; $(i)$
• $(ii)$ the time when the employee is no longer employed by the company; and

the end of such other period or such other circumstances as determined by the Board. $(iii)$

At 30 June 2003 there are (250,000) shares on issue under the Staff Share Plan (2002: nil).

NOTE 20 RELATED PARTY INFORMATION

a) The names of each person holding the position of director of Tolhurst Noall Group Ltd during the financial year were:

Peter Chapman	Russell McKimm
Donald Taig	Craig Graham-Smith
John Nagle I	John Wilson (appointed 24/3/03)
John Harry	Andrew McDouall (appointed 15/11/02)
Ian Johnson.	Ross Hall (resigned 22/5/03)

b) Interests in securities held by Directors of the parent entity as at 30 June 2003:

	ORDINARY SHARES
	2003	PURCHASE	SELL	2002
D. Taig	237.526			237,526
J. Nagle	3,533,004		$\overline{\phantom{a}}$	3,533,004
P. Chapman	1,029,039		$\overline{\phantom{a}}$	1,029,039
J Harry	169,230			169,230
I Johnson	16,446.364	60.000	$\overline{\phantom{a}}$	16,386,364
R McKimm	1.239.173		$\overline{\phantom{a}}$	1,239,173
C Graham-Smith	750.000		$\overline{\phantom{a}}$	750.000
J Wilson (Appointed 24 March 2003)			$\overline{\phantom{a}}$	$\overline{\phantom{0}}$
A McDouall (Appointed 15 November 2002)	2,160,000	2,160.000	$\overline{\phantom{a}}$	$\overline{\phantom{0}}$
R Hall (Resigned 22 May 2003)				$\qquad \qquad =$

b) Interests in securities held by Directors of the parent entity as at 30 June 2003:

	ORDINARY SHARE OPTIONS
	2003	PURCHASE	EXERCISED	2002
D. Taig
J. Nagle
P. Chapman
J Harry *
I Johnson
R McKimm
C Graham-Smith
J Wilson (Appointed 24 March 2003) *	۰
A McDouall (Appointed 15 November 2002)
R Hall (Resigned 22 May 2003)

* As part of Mr Wilson's and Mr Harry's terms of engagement they are entitled to issues of options which are yet to be approved by the Board of Tolhurst Noall Group Ltd. When these matters have been determined, a resolution will be put to shareholders.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

CONSOLIDATED			COMPANY
2003	2002.	2003	2002
э	э		\$

NOTE 20 RELATED PARTY INFORMATION (cont)

Interests in Tolhurst Noall Group Ltd:

Included in directors shareholdings are beneficial interest held via related companies as disclosed.

Tizon Pty Ltd, a company controlled by Mr Taig, holds 237,526 Shares (2002:237,526 shares). MT Consumer Services Limited, a company controlled by Mr Nagle holds 3,120,846 Shares (2002; 3,120,846 shares). Fexco, a company controlled by Mr Nagle holds 412,158 shares (2002; 412,158 shares). Loquela, a company controlled by Mr Johnson holds 160,000 shares (2002: 100,000 shares). Balgreggan Financial Investments Limited, a company controlled by Mr McDouall holds 2.160.000 shares (2002: NIL).

During the year, Tolhurst Noall Limited acted as broker for transactions conducted on behalf of directors and director controlled entities. These transactions involved the purchase and sale of shares and were conducted under normal trading terms and conditions.

During the year, Mr Johnson provided sub-underwriting. The Related Party Transactions Sub-Committee approved all such transactions.

No other benefits have been received or are receivable by directors, other than those already disclosed in the notes to the financial statements.

Tolhurst Noall Group Ltd is the ultimate parent entity.

Liquidity guarantee by Directors

Mr Johnson and Mr Edwards, a director of the broker Tolhurst Noall Ltd (TNL), have signed various letters of undertaking on behalf of themselves and private companies in which they have a controlling interest, whereby they have lodged a portfolio of ASX listed securities with the broker. These letters expire on 31 December 2003 & 30 June 2004. The undertakings provide up to 100% of the value of each of these portfolios giving TNL unencumbered access to the entire share portfolio for the purpose of securing various staff and inter-company loans treated as current assets by the broker in the calculation of ASX capital liquidity requirement. Rule 1A. The value of these guarantees at 30 June 2003 was \$3,909,954 (2002; 3,780,442). No fees have been paid or accrued on these guarantees.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

		CONSOLIDATED			COMPANY
		2003	2002	2003	2002
		\$	\$	S	\$
NOTE 20 RELATED PARTY INFORMATION (cont)
c) Transactions with controlled entities/directors/employees
Wholly owned group
Loan to Alliance Strata (Qld) Pty Ltd	$\left \right $			255,130	661,567
Loan to APL (Cairns) Pty Ltd	$\left \right $			2,395,034	2,308,706
Loan to William Noall Holdings Limited	$\left \right $			1,285,252	1,285,252
Loan to Tolhurst Noall Limited	$\bf{I}$			2,018,409	1,150,852
Loan from Wevton Pty Limited	$\left \right $			(100)	(1,170,564)
Loan from Tollurst Securities Ltd	$\left \cdot \right $				(1,040,000)
Interest received from William Noall					41,223
Holdings Limited
Associated companies
Loan to Carroll, Pike and Piercy Pty Ltd	$\mathbf{I}$	300,000	472,423
Loan to Tolhurst Funds Management P/L	$\mathbf{I}$	85,001	18,357
Loan to Elstree Tolhurst Investment	$\left \right $	20,000
Management Pty Ltd
Loan from Carroll, Pike and Piercy Pty Ltd	$\bf{I}$	(6,231)
Loan from THG Investments Pty Ltd	$\left \right $	(64, 620)	(122,938)
Loans from directors & director related entities
Dorcan Pty Ltd **	$\left \right $	(15,000)	(15,000)	(15,000)	(15,000)
TM Edwards	4)	(200,000)
RA McKimm	4)	(100,000)
BJ & JK Dunn ****	4)	(30,000)
MA Wigzell ****	4)	(70,000)
GL Leigh ****	4)	(50,000)
Loquela Pty Ltd *	4)	(200,000)
Dorcan Pty Ltd **	4)	(50,000)
Taminich Securities Pty Ltd *	4)	(36,000)
Katarina Corp Pty Ltd ****	4)	(14,000)
Success in Planning Pty Ltd *	$\mathbf{I}$	(40,000)	(40,000)
Minapet Finance Pty Ltd *	$\left \cdot \right $	(45,000)	(45,000)
Loan to directors & director related entities
C Graham-Smith	3)	90,000
M Wigzell ****	3)	30,000
Pensive Investments Pty Ltd ***	$\mathbf{I}$	110,828	72,818
Success in Planning Pty Ltd *	$\left \cdot \right $	36,781	34,105
Subordinated debt
I M Johnson & entities controlled by I M	2)	(699,000)	(699,000)
Johnson
T M Edwards	2)	(533, 284)	(533, 284)
C Graham-Smith	2)	(340,000)	(340,000)
R Mc Kimm	2)	(250,000)	(250,000)

entities controlled by 1 M Johnson $\ast$

** entity controlled by P F Chapman

*** entity controlled by 1 M Johnson & T M Edwards

**** entities and persons associated with directors of Tolhurst Noall Ltd

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

NOTE 20 RELATED PARTY INFORMATION (cont)

1) There is no interest charge or fixed repayment term on the loan.

• $2)$ Interest is charged at 12% and there is no fixed repayment term on the loans.
• 3) During the year the Group advanced funds of \$30,000 to Mr Wigzell (a director of the subsidiary Tolhurst Noall Ltd) and \$90,000 to Mr Graham-Smith. The loan to Mr Wigzell is repayable over 10 months and the loan to Mr Graham-Smith is at call. Interest is charged on both loans at 12%.
• 4) Interest is charged at 12% and there is no fixed repayment term on the loans. The loans have an attaching right of convertibility of the outstanding balance of the loan, at any time, into shares of Tolhurst Noall Group Ltd at a price of \$0.25 per share, exercisable in whole only, until 30 June 2004.

NOTE 21 EARNINGS PER SHARE

The following reflects the income and share data used in the calculations of basic and diluted earnings per share:

	CONSOLIDATED
	2003	2002
	S
Earnings used in calculating basic and diluted earnings per share	147,819	(7,740.690).
Weighted average number of shares used to calculate basic earnings per share Effect of diluted securities:	67.895.792	54,403,941
Share options		96.938
Adjusted weighted average number of ordinary shares used in calculating diluted
earnings per share	67,895,792	54,500,879

There are no potential ordinary shares outstanding at 30 June 2003 that are dilutive as the exercise prices on the 4,453,100 options are greater than the market price of the shares. There have been no other conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date and before the completion of this financial report.

		CONSOLIDATED		COMPANY
	2003	2002	2003	2003
NOTE 22 STATEMENT OF CASH FLOWS

i) Reconciliation of cash

For the purposes of the statement of cash flows, cash includes cash on hand and at bank, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the balance sheet as follows:

	5,065,124	3,174,509	571	(6,986)
Bank overdraft	(900,796).	(2,613,209)	$\overline{\phantom{0}}$	(6.986)
	5,965,920	5,787,718	571
Trust Account	4.316,834	4,392.633	$\sim$
Cash at bank	1.649.086	1,395,085	571	-

Included in cash at bank is a term deposit of \$1,328,423, which are funds deposited with the ANZ bank as security for bank guarantees to support various lease agreements.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

	CONSOLIDATED	COMPANY
	2003	2002	2003	2003
	\$	\$	S	S
NOTE 22 STATEMENT OF CASH FLOWS (cont.)
(ii) Reconciliation of operating profit/(loss) after income tax to net cash provided by operating activities
Profit/(loss) from ordinary activities after income tax	147,819	(7,740,690)	(103, 011)	(7,202,958)
Depreciation	933,934	852,321
Amortisation of goodwill	50,000	2,083,064
Other amortisation costs	85,026	426,766		435,000
Decrement/(increment) in value of investments	(87, 165)	37,262		(156, 696)
Net (profit) / loss on disposal of financial assets Net (profit) / loss on disposal of property, plant and	8,771	(37,264)	(4,348)
equipment Provision for diminution of investment in	51,554
controlled entities			735,606	6,545,057
Loss on equity accounting Changes in assets & liabilities net of effects from	247,692	379,411
acquisition/disposal of controlled entities
Debtors	2,891,496	(8,352,959)
Prepayments and sundry debtors	(85,982)	905,347	1,518	142,887
Payables	(3,626,426)	5,721,688	(100, 198)	(112, 514)
Provisions	(659, 137)	(759, 045)	(3,300)
Net cash provided by operating activities	(42, 418)	(6,484,099)	526,267	(349, 224)
(iii) Financing facilities available
At balance date, the following financing facilities had been negotiated and were available:
Total facilities
- bank overdraft		750,000
- bank loans	1,620,713	1,640,000	1,321,000	1,640,000
- foreign currency dealing limit	20,000	20,000
- asset finance revolving	150,000
- indemnity guarantee	1,489,500
Facilities used at balance date
- bank overdraft	900,796	2,613,209
- unpresented cheques	(900, 796)	(2,117,898)
- bank overdraft utilised		495,311
- bank loans	1,619,993	1,640,000	1,321,000	1,640,000
- foreign currency dealing limit
- indemnity guarantee	1,385,818
Facilities unused at balance date
- bank overdraft		254,689
- bank loans	720
- foreign currency dealing limit	20,000	20,000
- asset finance revolving	150,000
- indemnity guarantee	103,682

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

	CONSOLIDATED			COMPANY
	2003	2002	2003	2003
NOTE 22 STATEMENT OF CASH FLOWS (cont)

(iv) Acquisition of controlled entities

On 30 September 2001, Tolhurst Noall Group Ltd acquired 100% of the share capital of Tolhurst Securities Ltd, an unlisted Company, specialising in broking services. Consideration for the acquisition was the issue of shares for \$7,030,663.

Net assets of Tolhurst Securities Ltd at 30 September 2001:

Cash	4,194,025
Receivables	14,718,099
Property, plant $\&$ equipment	1,835,663
Investments	3,313,923
Other	1,018,662
	25,080,372
Accounts payable	(17, 151, 627)
Provisions	(1,276,441)
Borrowings	(1, 112, 872)
Fair value of net tangible assets acquired	5,539,432
Goodwill arising on acquisition	1,491,231
	7,030,663
Cash consideration paid
Cash included in net assets acquired	4,194,025
Cash proceeds from controlled entity as reflected in
the consolidated financial report	4.194.025

NOTE 23 CONTINGENT LIABILITIES

Peter Pan

D & D Tolhurst Limited (the Company) and one of its directors, Mr Ian Johnson, are the seventh and sixth cross-respondents respectively in proceeding V963 of 2000 issued out of the Victorian Registry of the Federal Court. The proceeding relates generally to a proposed stage production of 'Peter Pan'. The applicants represent the class of investors in the production who make various claims against seven respondents fnot including the Company or Mr Johnson, but including one Mr Peter Williams and the firm of accountants of which he was a principal, Williams Hatchman & Kean (the Firm)]. Mr Williams and the Firm have issued cross proceedings against the Company. Mr Johnson and the other respondents seeking damages and contribution to, or indemnity against, any amount for which Mr Williams or the Firm are liable.

The proceeding is largely in abeyance pending the outcome of another Federal Court action (in which neither the Company nor Mr Johnson is a party) relating to the production of 'Crazy for You'. That case has gone to trial and judgment is awaited. It is not possible to say at this point whether the Company will incur any liability in the 'Peter Pan' proceeding or, if it will, for what amount.

ASX Matters

Tolhurst Noall Ltd has been notified by the ASX that it will need to respond in respect of two matters in relation to alleged breaches of ASX Business Rules.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

NOTE 24 SEGMENT INFORMATION

Segment products and locations

The consolidated entities operating companies are organised and managed separately according to the nature of products and services that they provide, with each segment offering different products and serving different markets.

The primary segment, stockbroking, provides extensive knowledge of overseas and Australian equity markets to a mix of institutional and private clients.

Funds management provides investment services to domestic and international clients.

The group invests in property with the intention of generating capital profits and rental returns.

Geographically the Group operates within Australia.

Segment accounting policies

The group does not undertake any inter segment sales and transfers. Segment accounting policies are the same as the consolidated entity's policies described in Note 1. During the financial year, there were no changes in segment accounting policies that had a material effect on segment information.

Business Segments	Stockbroking		Funds	Management		Property Investment		Other		Consolidated
	2003 \$300	2002 \$7000	2003 \$7000	2002 \$7000	2003 \$'000	2002 \$'000	2003 \$7000	2002 \$'000	2003 \$'000	2002 \$700
Revenue
Revenue outside the economic entity Share of net profit/(loss) of equity accounted	24,104	25,156	1,394	244	195	178	296	235	25,989	25,813
investment			(248)	(380)					(248)	(380)
Total segment revenue	25,304	25,156	(53)	(136)	195	178	296	235	25,742	25,433
Result
Segment result Unallocated expenses	641	(4,959)	(227)	(780)	27	21	(945)	(660)	(504)	(6,378) (1, 465)
Consolidated entity profit / (loss) from ordinary activities before income tax									(504)	(7, 843)
Income tax benefit									652	102
Net profit / (loss) from ordinary activities									148	(7,741)
Assets
Segment assets Unallocated assets	32,988	37,750	1,269	1,441	2,397	2,359	45	1,537	36,698 654	43,087 100
Total assets									37,352	43,187
Liabilities
Segment liabilities Unallocated liabilities	31,232	35,261	398	85	1,321		373	4,566	33,324 2	39,912
Total liabilities									33.326	39.912

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

NOTE 24 SEGMENT INFORMATION (cont)

		Management				Other		Consolidated
2003 \$'000	2002 \$7000	2003 \$2000	2002 \$7000	2003 \$'000	2002 \$'000	2003 \$7000	2002 \$300	2003 \$'000	2002 \$'000
Other segment information
	$\overline{\phantom{a}}$	1,123	496	$\cdot$			$\overline{\phantom{a}}$	1.123	496.
1.019	1,267	50.	12	$\;$		$\;$	2,083	1.069	3,362
385	1,836							385	1,836
	135								135
		Stockbroking		Funds		Property Investment

NOTE 25 SUBSEQUENT EVENTS

2003

On 5 August 2003 the Board of Tolhurst Noall Group Limited announced its decision to make a renounceable rights issue. offering to its shareholders ordinary shares on a 1 for 4 basis at an issue price of \$0.04 per share to raise a total of approximately \$700,000.

There have been no other events, other than noted elsewhere occurring after balance date that materially affect the financial statements as at 30 June, 2003.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

NOTE 26 FINANCIAL INSTRUMENTS

26(a) Interest rate risk

The consolidated entity's exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at the balance date, are as follows:

Financial Instruments	Floating interest rate	Fixed interest rate maturing in: 1 year or less	Non-interest bearing	Total carrying amount as per the statement of financial position	Weighted average effective interest rate
	2003	2003	2003	2003	2003
	\$	Ŝ.	\$	Ŝ	$\%$
(i) Financial assets
Cash		1,328,423	4,637,497	5,965,920	Nil
Trade debtors			23,321,849	23,321,849	N/A
Sundry debtors			352,508	352,508	N/A
Listed Shares			333,056	333,056	N/A
Investment in Grosvenor			2,093,500	2,093,500	N/A
Unlisted shares			2,342,901	2,342,901	N/A
Total financial assets		1,328,423	33,081,311	34,409,734
(ii) Financial liabilities
Bank overdraft	$\overline{ }$		900,796	900,796	N/A
Current Payables			23,942,638	23,942,638	N/A
Other creditors and accruals			3,010,082	3,010,082	N/A
Subordinated loans	1,822,284			1,822,284	12.0
Loans - Related parties	750,000		170,851	920,851	12.0
Loans - Secured		1,620,293		1,620,293	6.06
Total financial liabilities	2,572,284	1,620,293	28,024,367	32,216,944

Financial Instruments	Floating interest rate	Fixed interest rate maturing in: 1 year or less	Non-interest bearing	Total carrying amount as per the statement of financial position	Weighted average effective interest rate
	2002	2002	2002	2002	2002
(i) Financial assets	s	Ŝ	\$	S	$\%$
Cash			5,787,718	5,787,718	N/A
Trade debtors			28,254,907	28,254,907	N/A.
Sundry debtors		$\overline{ }$	482,644	482,644	N/A
Listed Shares			1,110,792	1,110,792	N/A
Investment in Grosvenor			2,093,500	2,093,500	N/A
Unlisted shares			10,419,000	10,419,000	N/A
Total financial assets			48,148,561	48,148,561

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2003

NOTE 26 FINANCIAL INSTRUMENTS (cont)

Financial Instruments	Floating interest rate 2002 S	Fixed interest rate maturing in: 1 year or less 2002 5	Non-interest bearing 2002 \$	Total carrying amount as per the statement of financial position 2002 S	Weighted average effective interest rate 2002 $\%$
(ii) Financial liabilities
Bank overdraft	495,311		2,117,898	2,613,209	8.60
Current Payables			29,672,269	29,672,269	N/A
Other creditors and accruals			2,845,161	2,845,161	N/A
Lease liability		23,138		23,138	8.05
Subordinated loans	1,822,284			1,822,284	11.00
Loans - Related parties			222,938	222,938	N/A
Loans – Secured		1,640,000	$\cdot$	1,640,000	5.22
Total financial liabilities	2,317,595	1,663,138	34,858,266	38,838,999

$26(b)$ Net Fair Value

The carrying values of financial assets and liabilities approximate fair values. The following methods and assumptions are used to determine the net fair values of financial assets and liabilities:

Cash and cash equivalents: The carrying amount approximates fair value because of their short-term to maturity. Trade receivables, trade creditors: The carrying amount approximates fair value.

Short-term borrowings: The carrying amount approximates fair value because of their short-term to maturity.

Long-term borrowings: Long-term borrowings are stated at carrying values except for employee entitlements which are estimated using discounted cash flow analysis based on current incremental borrowing rates.

Long-term financial assets: A reasonable estimate of the fair value is determined by reference to the underlying net asset base of the controlled entity.

$26(c)$ Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognise financial assets is the carrying amount, net of any provisions for doubtful debts, as disclosed in the statement of financial position and notes to the financial statements.

The economic entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the economic entity.

OTHER INFORMATION

NET TANGIBLE ASSETS PER SECURITY

арт таачирд моорто градсоват г	CONSOLIDATED
	2003	2002
Net tangible assets (cents per share)	5.8	4.89

AUDIT STATEMENT

This report is based on the accounts, which have been audited.