REDCASTLE RESOURCES LIMITED — Annual Report 2003

Sep 25, 2003

GREAT PACIFIC CAPITAL LIMITED ABN 57 096 781 716 AND ITS CONTROLLED ENTITIES FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2003

CONTENTS

Corporate Governance Statement	Page No.
Directors' Report	2
Statement of Financial Performance	6
Statement of Financial Position	7
Statement of Cash Flows	8
Notes to the Financial Statements	9
Directors' Declaration	24
Independent Auditors' Report	25
Shareholder Information	26

Great Pacific Capital Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is Level 7, $27 - 31$ Macquarie Place, Sydney, NSW 2000.

$\mathbf{1}$

GREAT PACIFIC CAPITAL LIMITED AND CONTROLLED ENTITIES

CORPORATE GOVERNANCE STATEMENT

Corporate Governance

Since 21 March 2003, when the ordinary shares of Great Pacific Capital Limited were officially quoted on the Australian Stock Exchange, the Company has started the process of preparing a Corporate Governance Policy based on ASX's Principles of Good Corporate Governance and Best Practice Recommendations. However, with the relatively short time frame, this process is still ongoing. The Directors of the Company fully support the principles of Corporate Governance with the aim of achieving the highest standard of Corporate behaviour and accountability.

As at the date of this report, the Board consists of two non-executive Directors and two executive Directors. The two non-executive Directors are the Chairman, Mr Alfred Wong and Mr Ivan Wong. The executive Directors are Mr Danny Au-Yeung and Mr Graham Werry.

The Company will establish the criteria for Board membership and the guidelines to select appropriate members of the Board in the process of preparing the Corporate Governance Policy. Shareholders' approval will be sought on the composition of the Board.

The Company's policies regarding the terms and conditions relating to the appointment and retirement of Board members are governed by its Constitution. The Company will seek professional advice in establishing the policies for setting the Directors' remuneration.

The remuneration and terms and conditions for the executive directors and senior management are governed by individual executive contracts with reference to the market rate of remuneration for executives in business of similar size. The company will consider establishing a specific committee to handle the responsibility of nominating and remunerating board members and senior management in the process of preparing the Corporate Governance Policy.

Non-executive members of the Board have the right to seek independent professional advice in the furtherance of their duties as Directors at the Company's expense.

In relation to trading in the Company's security, the Directors and employees of the Company are restricted from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the share price.

Audit Committee

At the date of this report, the audit committee has only one executive as its member and the Company will actively seek to appoint at least one non-executive member to this committee.

When all the members of this committee are appointed, it will take up the following responsibilities:

• oversee the existence and maintenance of internal controls and accounting systems;
• monitor the financial reporting process; $\overline{\phantom{a}}$
• nominate external auditors; and $\ddot{\phantom{0}}$
• $\overline{a}$ review the existing external audit arrangements.

DIRECTORS' REPORT

The Directors present their report on the consolidated entity consisting of Great Pacific Capital Limited and the entities it controlled for the year ended 30 June 2003.

Directors

The following persons held office as Directors at any time during or since the end of the financial year:

Alfred Wong, Chairman Danny Au-Yeung Ivan Wong Graham Werry

Principal activity

The principal activity of the consolidated entity during the year is the development of structured finance products, in particular the provision of subordinated debt facilities in funding residential and commercial property development and infrastructure projects.

Results

The net result of the consolidated entity after applicable income tax for the year ended 30 June 2003 was a profit of $3.514,621 (30 June 2002: $1,472.736) which is in line with the forecast made in the prospectus dated 22 October 2002.

Dividends

A final dividend of 5 cents per share was recommended by Directors for the year ended 30 June 2003.

Review of operations

On 21 March 2003, the ordinary shares of the Company was officially quoted on the Australian Stock Exchange at a price of $1.00 each. Since then, the shares of the company have been trading at around this price.

The Consolidated entity continued to be involved in the provision of debt facilities in funding several residential property development projects and property related transactions. One major project will be completed by the end of the year and progress repayments have been occurring during the year and after the end of the year.

During the year, the Company has provided finance to a consortium for the acquisition of Bellambi West Colliery which is in the North Wollongong suburbs.

Likely developments and expected results of operations

The consolidated entity will continue to actively pursue its objective in the provision of debt facilities in relation to property related transactions and expects to have results similar to the current financial year. The company may consider the possibility of acquiring business of similar nature to expand its activities.

Significant changes in the state of affairs

During the financial year, there are no significant changes in the state of affairs of the Company and its controlled entities.

DIRECTORS' REPORT

Matters subsequent to the end of financial year

There are no matters or circumstances that have arisen since 30 June 2003 that have significantly affect, or may significantly affect:

• (a) The consolidated entity's operations in the future financial years, or
• (b) The result of those operations in future financial years, or
• (c) The consolidated entity's state of affairs in the future financial years.

Insurance of directors and officers

During the financial year, the Company effected an insurance policy to insure the Directors and officers of the Company and its controlled entities.

The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the consolidated group. The contract prohibits the disclosure of the amount of premium.

Danetwelcher af Dinastano

Information on Directors

Directors	Age	Qualifications	Experience	SpecialResponsibilities	interest in sharesCapital Limited	ганвлиать от ілістотьandoptions of Great Pacific
					OrdinaryShares	Options *
Alfred Wong	42	MBA (NSWUniversity)BA (HKU),ASIA	Managing Director ofthe Great PacificFinancial Group,Non-ExecutiveChairman of thePacific InternationalHotel Group.	Chairman	750,000	2,500,000
Danny Au-Yeung	43	FCCA (UK)ASCPA	Company Director,Accountant	Chief ExecutiveOfficer	750,000	2,500,000
GrahamWerry	45	BA, LLB(NSW)University)	Company Director,Lawyer	ExecutiveDirector	750,000	2,500,000
Ivan Wong	40	BSc (Hon)(University ofQLD)	Company Director,IT Specialist	Non ExecutiveDirector	250,000	2,500,000

All the shares issued to the Directors are under escrow for a period of 2 years from 21 March 2003.

* These options are issued under the Directors, Executives and Staff Share Option Plan at an exercise price of $2.50, which may be exercisable at any time during the period up to 30 June 2004. They are valued in accordance with the Black Scholes option pricing model and included as part of the remuneration of the Directors as disclosed below.

GREAT PACIFIC CAPITAL LIMITED AND CONTROLLED ENTITES DIRECTOR'S REPORT

Meetings of Directors

The numbers of meetings of the company's board of Directors held during the financial year ended 30 June 2003 and the number of meetings attended by each Director were as follows:

	Full Meetings of Directors
Number of meetings held	10
Number of meetings attended by:
Alfred Wong	10
Danny Au-Yeung	10
Graham Werry	10
Ivan Wong	10

Directors' and executive officers' Emoluments

Directors	S.	Fees	Superannuation	Options	Total
			Contributions
		$	$	S
Alfred Wong		-		-
Danny Au-Yeung	120.		10,800	-	130,800
Graham Werry		130,800	-	-	130,800
Ivan Wong
Executive Officer
Edwin Yeung	1001	-	9,000	-	109,000

The emoluments of the executive directors and officers have been determined by individual executive contract, with reference to the market rate of emoluments for senior management.

The options granted to Directors has been valued using the Black Scholes option pricing model, with reference to current market price of shares and the risk free rate of return. As at 30 June 2003, the exercise price of the option of $2.50 is higher than the current market price of $1.09 per share. The company does not expect the share price to be volatile in the next twelve months to the expiration of the option and therefore the options as at 30 June 2003 have no value.

GREAT PACIFIC CAPITAL LIMITED AND CONTROLLED ENTITES DIRECTOR'S REPORT

Environmental regulations

The consolidated entity's operations are not subject to environmental regulations under either Commonwealth or State legislation.

Proceedings on behalf of Company

No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings.

The company was not a party to any such proceedings during the year.

Signed at Sydney this 24th day of September 2003 in accordance with a resolution of the Directors.

....................................... Alfred Wong Director

,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, Danny Au-Yeung Director

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated2003	Consolidated2002	Parent entity2003	Parent Entity2002
	Notes		$\mathbb{S}$	$\mathbf S$	$
Interest income	2	11,518,112	7,007,848	96,676	23,788
Interest expense	$\overline{2}$	(5, 224, 174)	(3,594,635)	(108, 219)	(96)
Net interest income		6,293,938	3,413,213	(11, 543)	23,692
Fee and commission income	3	1,207,090	786,775	4,123,196	490,275
Fee and commission expense	3	(19,681)	(221,261)
Net fee and commission income		1,187,409	565,514	4,123,196	490,275
Other income		1,575	658	1,575	385
Deferred expense written off		(75,000)	(193, 750)	(75,000)	(193,750)
Depreciationandamortisationexpense	4	(420, 678)	(242, 557)	(17,097)	(8,704)
Employee expense		(433, 489)	(378, 208)	(433, 489)	(378,208)
Lease and rental expense		(126, 026)	(94,325)	(126, 026)	(94, 325)
Legal and professional fees		(975, 920)	(614, 496)	(814, 136)	(493, 362)
Other expenses from ordinaryactivities		(208, 701)	(167, 343)	(157, 829)	(137, 590)
Profit / (loss) from ordinaryactivities before income tax		5,243,108	2,288,706	2,489,651	(791, 587)
Income tax (expense) / benefitrelating to ordinary activities	5	(1,728,487)	(815,970)	(782, 391)	178,118
Net profit / (loss) attributable tomembers of the parent entity		3,514,621	1,472,736	1,707,260	(613, 469)
revaluationIncreaseinassetreserve	22	657,981
Total changes in equity otherresultingthanthosefromtransactionswithownersas
owners		4,172,602	1,472,736	1,707,260	(613, 469)
			Cents per share
Basic earnings per share	7	33.39	23.46
Diluted earnings per share	7	18.70	11.21

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

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2003

		Consolidated	Consolidated	ParentEntity	Parent Entity
		2003	2002	2003	2002
	Notes	$	$	$	$
Assets
Cash and liquid assets	$\mathbf{1}$	5,253,682	5,252,749	375,118	3,470,869
Receivables	12	19,255,928	7,220,483	7,609,132	663,753
Loans	13	21,466,446	15,230,253
Deferred tax assets	14	1,684,766	725,697	98,975	178,118
Investment - unlisted securities	15		112,500
Investment - controlled entities	15			14	7
Other assets	16	90,707	161,764	81,250	156,250
Property, plant and equipment	17	2,767,595	987,818	117,595	130,199
Intangible assets	18	366,666	766,666
Total assets		50,885,790	30,457,930	8,282,084	4,599,196
Liabilities
Payables	19	5,044,020	1,867,100	1,649,367	2,350,075
Current tax liabilities		873,412	26,394	777,443
Provision – annual leave		25,983	12,590	25,983	12,590
Borrowings	20	31,205,727	22,713,838
Deferred tax liabilities		3,355,810	1,515,272
Total liabilities		40,504,952	26,135,194	2,452,793	2,362,665
Net assets		10,380,838	4,322,736	5,829,291	2,236,531
Equity
Share capital	21	4,735,500	2,850,000	4,735,500	2,850,000
Asset revaluation reserve	22	657,981
Retained profits / accumulatedlosses	23	4,987,357	1,472,736	1,093,791	(613, 469)
Total equity		10,380,838	4,322,736	5,829,291	2,236,531

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

$\bf 8$

GREAT PACIFIC CAPITAL LIMITED AND CONTROLLED ENTITIES

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated2003	Consolidated2002	ParentEntity2003	Parent Entity2002
	Notes	$	$	$\mathbb{S}$	$
Cash flows from operating activities
Interest received		750,610	256,991	45,674	23,788
Interest paid		(2,364,690)	(1,893,324)		(96)
Fee received		170,015	412,425	90,175	16,275
Fee paid		(19,664)	(220, 495)
Operating receipts		477,866	12,972	1,725	790,385
Operating payments		(1,988,450)	(1, 184, 352)	(1,956,851)	(1,068,339)
Net cash used in operating activities	26(a)	(2,974,313)	(2,615,783)	(1,819,277)	(237, 987)
Cash flows from investing activities
Payment for investments			(112,500)	(7)	(7)
Proceeds from sale of investment		112,500
Proceeds from repayment of loans		8,415,060	6,789,864
Loans to developers and borrowers		(14,651,251)	(22,020,117)
Payment for option fees to purchase
property		(169, 557)
Paymentsfor property,plant and
equipment		(1,108,894)	(996, 521)	(4, 493)	(138,902)
Net increase in amounts receivable
from controlled entities				(7,876,411)	(1, 836, 443)
Net cash used in investing activities		(7, 402, 142)	(16, 339, 274)	(7,880,911)	(1,975,352)
Cash flows from financing activities
Proceeds from issue of share capital		1,885,500	1,500,000	1,885,500	1,500,000
Repayment of loans from director					(200,000)
Proceeds from borrowing		871,888	659,995
Payments for borrowing cost			(6,033)
Proceeds from issue of promissory
notes		13,970,000	28,238,923	1,750,000
Redemption of promissory notes		(6,350,000)	(6, 185, 079)	(1,750,000)
Net increase in amounts payable to
controlled entities				4,718,937	4,384,208
Net cashprovidedfinancingby
activities		10,377,388	24,207,806	6,604,437	5,684,208
Net increase / (decrease) in cash held		933	5,252,749	(3,095,751)	3,470,869
Cashat thebeginningofthefinancial year		5,252,749		3,470,869
Cash at the end of the financial year	26(b)	5,253,682	5,252,749	375,118	3,470,869

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

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

1. Summary of significant accounting policies

Basis of preparation of financial report

This general purpose financial report for the year ended 30 June 2003 has been prepared in accordance with Australian Accounting Standards, in particular AASB1032: Specific Disclosure by Financial Institutions, other authoritative pronouncements of the Australia Accounting Standard Board, Urgent Issues Group Consensus Views and the Corporations Act 2001.

The financial report covers the economic entity of Great Pacific Capital Limited and controlled entities, and Great Pacific Capital Limited as an individual parent entity. Great Pacific Capital Limited is a listed public company, incorporated and domiciled in Australia.

The financial report has 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. Cost is based on the fair values of the consideration given in exchange for assets.

Accounting policies adopted has been consistently applied with those of previous year, unless otherwise specified.

The following is a summary of the significant accounting policies adopted by the consolidated entity in the preparation of the financial report.

(a) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Great Pacific Capital Limited ("the Company or Parent entity") as at 30 June 2003 and the results of all controlled entities for the financial year then ended.

Control exists where Great Pacific Capital Limited 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 Great Pacific Capital Limited to achieve the objectives of Great Pacific Capital Limited. A list of controlled entities is contained in Note 24 to the financial statements.

Great Pacific Capital Limited and its controlled entities together are referred to in this financial report as the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full.

(b) Revenue

Fees, commissions and interest income from the provision of financial services are recognised on an accrual basis.

(c) Taxation

$(i)$ Income tax

Tax effect accounting procedures are followed. Income tax expense is calculated on the operating profit adjusted for permanent differences between taxable and accounting income. Any future income tax benefit relating to tax losses is not carried forward as an asset unless the benefit can be regarded as being virtually certain of realisation. Income tax on net cumulative timing differences is set aside to the deferred income tax and future income tax benefit accounts at the tax rates which are expected to apply when those timing differences reverse.

(ii) Tax Consolidation regime

Great Pacific Capital Limited and its wholly-owned Australian subsidiaries will form an income tax consolidated group under the Tax Consolidation Regime. Great Pacific Capital Limited will recognise the current and deferred tax assets and liabilities for the tax consolidated group. The Group will notify the ATO when lodging the tax return for the year ended 30 June 2003. Each company in the Group will contribute to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group.

$1010$

GREAT PACIFIC CAPITAL LIMITED AND CONTROLLED ENTITIES

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

1. Summary of significant accounting policies (continued)

(iii) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as part of current receivables and payables in the statement of financial position.

(d) Investments

Interests in unlisted securities in the consolidated financial statements, are brought to account at cost.

Controlled entities are brought to account at cost in the consolidated financial statements.

(e) Land and Buildings

Land and buildings are measured on the fair value basis, being the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. They will be revalued by an independent third party registered property valuer on a as required basis but at least once every three years.

(f) Depreciation

Depreciation on property, plant and equipment is calculated on a straight line basis. The depreciation rate used is based on the expected useful life of the assets. The expected useful lives are as follows:

Office fittings	13 years
Computer equipment	4 years
Communication equipment	7 years
Furniture and fixtures	13 years

(g) Recoverable amount of non-current assets

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

(h) Deferred expenses

The deemed value of shares issued to the Directors and the underwriter for the initial public offer are classified as deferred expenses and are written off over three years. Should the carrying value of the deferred expenses be assessed to be in excess of their recoverable amounts, the deferred expenses will be written down to the recoverable amount immediately.

(i) Goodwill

On acquisition of some, or all the equity of an entity in the case of an investment in a controlled entity, the identifiable net assets acquired are measured at fair value. The excess of the fair value of the cost of acquisition over the fair value of the identifiable net assets acquired, is brought to account as goodwill and amortised on a straight line basis over 30 months, being the period during which the benefits are expected to arise.

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

1. Summary of significant accounting policies (continued)

(j) Employee benefits

(i) Wages and salaries and annual leave

Liabilities for wages and salaries and annual leave are recognised, and are measured as the amount unpaid at the reporting date at current pay rates in respect of employee's services up to that date.

(ii) Superannuation

The amount charged to the statement of financial performance in respect of superannuation represents the contributions made by the consolidated entity to various superannuation funds nominated by the employees.

(k) Borrowing costs

Borrowing costs are recognised as expenses in the period in which they are incurred, except where they are included as part of the costs of acquiring land and building for redevelopment. Borrowing costs carried forward are amortised over the life of the loan or 5 years, whichever is earlier.

(I) Comparatives

Certain comparatives have been reclassified to ensure comparability with current reporting year.

The comparative figures reflect the company's first period of trading from 11 May 2001 to 30 June 2002.

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

	Consolidated2003	Consolidated2002	Parent Entity2003	Parent Entity2002
	$\mathbf S$	$	$	$
2. Interest income and expense
Interest income
Loans and advances	11,377,396	6,967,845	51,002
Other	140,716	40,003	45,674	23,788
Total interest income	11,518,112	7,007,848	96,676	23,788
Interest expense
Borrowings	5,156,991	3,594,539	108,219
Other	67,183	96		96
Total interest expense	5,224,174	3,594,635	108,219	96
3. Fee and commission income andexpense
Fee and commission income
Arranger fee	68,175	121,775	68,175	115,275
Establishment fee		200,000
Management fee	60,500	90,000	2,995,946
Success fee	900,000	375,000	900,000	375,000
Other	178,415		159,075
Total fee and commission income	1,207,090	786,775	4,123,196	490,275

Management fee charged by Great Pacific Capital Limited to its controlled entities represents the fee for managing the loan portfolio of the controlled entities and is based on a fixed rate of 12% on the value of the loan portfolio.

Fee and commission expense
Arranger fee	1,805	220,495
Management fee	17,876	766
Total fee and commission expense	19,681	221.261
4. Depreciation and amortisation
Depreciation	17,097	8.704	17,097	8.704
Amortisation - borrowing costs	3.581	520
Amortisation - goodwill	400,000	233,333
	420,678	242,557	17.097	8.704

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

	Consolidated2003	Consolidated2002	Parent Entity2003	Parent Entity2002
5. Income tax	S	S	S	S
Reconciliation of prima facie tax on profit /(loss) from ordinary activities before incometax expense $/$ (benefit) to incometaxattributable to operating profit / (loss):
Profit $/$ (loss) from ordinary activities beforeincome tax	5,243,108	2,288,706	2,489,651	(791, 587)
Prima facie tax thereon at 30%	1,572,932	686,612	746,895	(237, 476)
Tax effect of permanent differences:Amortisation of goodwillWrite-off of deferred expensesOther non-deductible expensesUnder provision for Income Tax in prior year	120,00022,5002,88910,166	70,00058,1251,233	22,5002,83010,166	58,1251,233
Income tax expense / (benefit) attributable tooperating profit / (loss)	1,728,487	815,970	782,391	(178, 118)

6. Dividends and dividend franking account

A final unfranked dividend of 5 cents per share totalling $594,275 (2002: $NIL) was declared in respect of the year ending 30 June 2003.

The simplified imputation system came into effect on 1 July 2003 and requires the franking account to be maintained on a tax paid basis. The disclosure below including prior year comparative reflects the new tax paid basis.

The balance of the franking account, which arises from income tax paid, after adjusting for any franking credits which will arise from the payment of income tax provided for in the financial statements and franking debits from the payment of dividends declared at the reporting date, is $18,619 (30 June 2002: $NIL).

	Consolidated2003	Consolidated2002
7. Earnings per share	Cents per share
Basic earnings per share	33.39	23.46
Diluted earnings per share	18.70	11.21
(a) Reconciliation of earnings to net profit
Net profit	3,514,621	1,472,736
Earnings used in the calculation of basic earnings per share	3,514,621	1,472,736
Notional earnings on options after tax based on 180 days bank bill rate	323,400	300,613
Earnings used in the calculation of diluted earnings per share	3,838,021	1,773,349

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

	Consolidated2003	Consolidated2002
7. Earnings per share (continued)	Number of shares
(b) Weight average number of sharesWeighted average number of shares used in the calculations of basic earningsper share	10,526,907	6.277.644
Weighted average number of options outstanding	10,000,000	9,543,269
Weighted average number of shares used in the calculations of diluted earningsper share	20,526,907	15,820,913

(c) Classification of Securities

The options outstanding have been classified as potential ordinary shares and are included in determination of diluted earnings per share.

	Consolidated2003	Consolidated2002	Parent Entity2003	Parent Entity2002
8. Auditors' remuneration	S	S	S	S
Amounts paid, or due and payable for audit orreview services of statutory financial reports	41,500	27,800	41.500	27,800
Amounts paid, or due and payable for otherservices	15.391	54,878	15.391	54,878
Total auditors' remuneration	56,891	82,678	56,891	82.678

9. Directors' remuneration

Income paid or payable or otherwise made available to Directors of the entity or related entities in relations to the management of affairs of the entities

affairs of the entities	261.600	259,200	261,600	259,200
	ConsolidatedNo.	No.	Consolidated Parent EntityNo.	Parent EntityNo.
The number of Directors whose remuneration
was within the following bands:
S.$0 - 9.999$
$$120,000 - 129,999$
$$130,000 - 139,999$

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

	Consolidated2003$	Consolidated2002$	Parent Entity20031	Parent Entity2002$
10. Executive officers' remunerationRemuneration received or receivable byexecutive officers whose remuneration exceed
$100,000	109,000	108,000	109,000	108,000
The number of executive officer whose	ConsolidatedNo.	ConsolidatedNo.	Parent EntityNo.	Parent EntityNo.
remuneration was within the following bands:$100,000 - 109,999	1	1	1	1
	Consolidated2003S	Consolidated2002$	Parent Entity2003T	Parent Entity2002S
11. Cash and liquid assets
Cash and cash at bank30 day billTerm deposits	5,228,68225,000	2,722,4561,505,2931,025,000	350,11825,000	940,5761,505,2931,025,000
	5,253,682	5,252,749	375,118	3,470,869
12. Receivables
Interest on loans and advances	17,578,44	6,812,123
Receivable from controlled entitiesOther debtors	1,677,41	408,360	6,109,91,499,1:	288,753375,000
	19,255,921	7,220,483	7,609,1.	663,753
13. Loans
$Loans - other$	21,466,446	15,230,253
Maturity analysis:Not longer than 3 monthLonger than 3 and not longer than 12	2,964,949
months	8,410,195	500,000
Longer than 1 and not longer than 5years	10,091,302	14,730,253
	21,466,446	15,230,253	-

Loans are all secured by mortgage over land, residential and commercial properties and guarantee from borrowers.

The loans made by the consolidated entities as disclosed above were negotiated with independent third parties borrowers on arm's length terms and are secured against properties owed by independent third parties. The relevant subsidiaries undertake thorough due diligence in respect of each loan. Part of that due diligence involves commissioning valuation reports from registered property valuers to assess the value of the properties against which the loans are secured. The Directors of the Company were and continue to be satisfied at the time of this financial report that there is sufficient residual value in the properties against which the loans are secured to repay the loans after security interests ranking ahead of those of its subsidiaries are fully satisfied.

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

	Note	Consolidated2003$	Consolidated2002$	Parent Entity2003$	Parent Entity2002$
14. Deferred tax assets
Future income tax benefit:$-$ timing differences- tax losses		16,2721,668,494	544,355181,342	14,24584,730	17,160160,958
		1,684,766	725,697	98,975	178,118
15. Investments
Investment in Huntley Trust (unlisted)Investment in controlled entities	24		112,500	14	7
			112,500	14	$\overline{\tau}$
16. Other assets
Deferred expenses		350,000	350,000	350,000	350,000
Accumulated deferred expenseswritten off		(268,750)	(193,750)	(268,750)	(193, 750)
		81,250	156,250	81,250	156,250
Borrowing costsAccumulated amortisation		13,558(4,101)	6,034(520)
		9,457	5,514
		90,707	161,764	81,250	156,250
17. Property, plant and equipment
Land and buildingsAt costAt independent valuation - 2003		2,650,000	857,619
		2,650,000	857,619
Furniture, fixtures and fittingsAccumulated depreciationWritten down value		110,140(13, 352)96,788	108,106(4,581)103,525	110,140(13, 352)96,788	108,106(4, 581)103,525
Computer and other equipmentAccumulated depreciation		33,255(12, 448)	30,796(4,122)	33,255(12, 448)	30,796(4, 122)
Written down value		20,807	26,674	20,807	26,674
		2,767,595	987,818	117,595	130,199

Valuations

The independent valuation on land and buildings owned by the consolidated entity was carried out on 30 July 2003 by James Sharpe (B. Bus, AVLE) of Valuers Illawarra Pty Ltd, Illawarra.

The valuation was performed on the basis of market value as at balance date.

The net increment of $657,981 arising from the valuation has been transferred to the asset revaluation reserve (Note 22).

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

	Consolidated2003S	Consolidated2002$	Parent Entity2003$	Parent Entity2002$
17. Property, plant and equipment(continued)
Reconciliations:
(i) Land and buildingBalance at the beginning of the yearAdditionsRevaluation during the year	857,6191,134,400657,981	857,619
Balance as at the end of the year	2,650,000	857,619	$\overline{\phantom{0}}$
(ii) Furniture, fixtures and fittingsBalance at the beginning of the yearAdditionsDepreciation expense	103,5252,034(8,771)	108,106(4,581)	103,5252,034(8,771)	108,106(4,581)
Balance as at the end of the year	96,788	103,525	96,788	103,525
(iii) Computer and other equipmentBalance at the beginning of the yearAdditionsDepreciation expense	26,6742,459(8,326)	30,796(4,122)	26,6742,459(8,326)	30,796(4,122)
Balance as at the end of the year	20,807	26,674	20,807	26,674
18. Intangible assets
Goodwill at costAccumulated amortisation	999,999(633,333)	999,999(233, 333)
	366,666	766,666	$\blacksquare$
19. Payables
Accrued expensesAmount payable to - related entities- controlled entities$-$ other	31,70010,000487,145	92,96710,0006,817	31,70010,0001,573,39234,275	87,46710,0002,245,2357,373
Interest payable on promissory notes	4,515,175	1,757,316
	5,044,020	1,867,100	1,649,367	2,350,075

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

	Consolidated2003S	Consolidated2002S	Parent Entity2003S	Parent Entity2002
20. Borrowings
Bank loan – secured	1,531,883	659,995
Promissory notes	29,673,844	22,053,843
	31,205,727	22,713,838
Maturity analysis:
Not longer than 3 months	850,000	1,085.000
Longer than 3 and not longer than 12 months	22,158,839	500.000
Longer than 1 and not longer than 5 years	8,196,888	21,128.838
	31,205,727	22,713.838

The bank loan is secured by first mortgage over the consolidated entity's land and buildings and fixed and floating charges over the assets of the controlled entities acquiring the land and buildings.

The promissory notes are repayable at various maturity dates and secured by floating charges over assets of the controlled entities issuing these notes. Interest is payable monthly in arrears with rates ranging from 5% per annum to 9% per annum.

Bonus payments with rates ranging from 8% to 14% are payable upon maturity of the promissory notes.

21. Share capital

11.885.500 ordinary shares $(2002:10,000,000)$

4.735.500	2.850.000	4.735.500	2.850.000

During the year, 1,885,500 ordinary shares were issued to raise $1,885,500 under the prospectus dated 22 October 2002 and the supplementary prospectus dated 22 January 2003.

Ordinary shares entitle the holder to participate in the dividends and the proceeds on winding up in proportion to the number of and amounts paid on the shares held.

At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

22. Reserve

Asset revaluation reserve	657,981
Movement during the year:
Asset Revaluation ReserveBalance at the beginning of the year
Revaluation increment of land and building	657.981
Balance at the end of the year	657,981

The asset revaluation reserve records revaluations of non-current assets.

23. Retained profits / (accumulated losses)

Balance at the beginning of the yearNet profit $/($ loss) attributable to the members	1.472.736		(613, 469)
of Great Pacific Capital Limited	3.514.621	1.472.736	1,707,260	(613, 469)
Balance at the end of the year	4,987,357	1,472.736	1,093,791	(613, 469)

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

24. Investments in controlled entities

Name of Entities	Place of Incorporation	Class of Shares	Equity Holding
GPC No. 1 (City Quarter) Pty Ltd	NSW, Australia	Ordinary	100%
GPC No. 2 (Camperdown) Pty Ltd	ACT, Australia	Ordinary	100%
GPC No. 3 (Huntley) Pty Ltd	NSW, Australia	Ordinary	100%
GPC No. 4 (North Sydney) Pty Ltd	NSW, Australia	Ordinary	100%
GPC No. 5 (Wombarra) Pty Ltd	NSW, Australia	Ordinary	100%
GPC No. 6 (Barrack Point) Pty Ltd	NSW, Australia	Ordinary	100%
GPC No. 7 Pty Ltd	NSW, Australia	Ordinary	100%
GPC No. 8 (Bulli) Pty Ltd	NSW, Australia	Ordinary	100%
GPC No. 9 (Shell Harbour) Pty Ltd	NSW, Australia	Ordinary	100%
GPC No. 10 Pty Ltd	NSW, Australia	Ordinary	100%
GPC No. 11 Pty Ltd	ACT, Australia	Ordinary	100%
GPC No. 12 Pty Ltd	ACT, Australia	Ordinary	100%
GPC No. 13 (Balmoral) Pty Ltd	NSW, Australia	Ordinary	100%
GPC No. 15 (Newcastle) Pty Ltd	NSW, Australia	Ordinary	100%
GPC Mineral Investments Pty Ltd	NSW, Australia	Ordinary	100%

25. Related parties

Directors

The names of persons who were Directors of Great Pacific Capital Limited at anytime during the financial year are as follows;

Mr Alfred Wong, Mr Danny Au-Yeung, Mr Graham Werry, Mr Ivan Wong.

Directors' holdings of shares and options

			Ordinary	Share options
			shares
			Number held	Number held
The interests of Directors of the consolidated entity and their related entities in
shares and share options of the Company at balance date and at 30 June 2002
are			2.500,000	10,000,000
Related Parties
	Consolidated	Consolidated	Parent Entity	Parent entity
	2003	2002	2003	2002
	$	S	S	S
Payable to Great Pacific Financial Group for
legal fees paid on behalf	10.000	10.000	10,000	10,000

Promissory Notes

The consolidated entity has issued promissory notes totalling $2,415,843 (2002: $2,140,843) to related parties of Mr Graham Werry for funds provided to the consolidated entity under the same terms and conditions as issued to other noteholders by the consolidated entity.

Other than those transactions as disclosed above and the remunerations received by Directors as disclosed in Note 9, there are no other Directors related transactions entered into by the consolidated entity during the financial year ended 30 June 2003 and the previous financial period ended 30 June 2002.

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

25. Related Parties (continued)

Write off of deferred expenses

Other

Wholly-owned group

The wholly-owned group consists of Great Pacific Capital Limited and its wholly-owned controlled entities set out in note 24.

Transactions between Great Pacific Capital Limited and other entities in the wholly-owned group during the financial year consisted of:

• (a) Loans advanced by Great Pacific Capital Limited and its controlled entities.
• (b) Loans repaid to Great Pacific Capital Limited and its controlled entities.
• (c) The payment of interest on the above loans. (d) Management fee payable to Great Pacific Capital Limited by its controlled entities for managing (d) Management fee payable to Great Pacific Capital Limited by its contr their loan portfolio.

There are no fixed terms for the repayment of principal on loans advanced between entities within the consolidation group. The management fee is charged at a fixed rate of 12% based on the value of loan portfolio.

Aggregate amounts included in the determination of the operating profitbefore income tax that resulted from transactions with entities in the wholly-owned group:			Parent Entity2003S	Parent Entity2002$
Management fee incomeAggregate amounts receivable / payable to entities in the wholly-owned groupat balance date			2,995,947
Receivable from controlled entities			6,109,979	288,753
Payable to controlled entities			1,583,392	2,245,235
	Consolidated2003	Consolidated2002	Parent Entity2003	Parent Entity2002
26. Notes to the statement of cash flows	S	$	S	S
(a) Reconciliation of net cash used inoperating activities to profit / (loss) fromordinary activities after income tax
Net cash used in operating activitiesDepreciationAmortisation - borrowing costAmortisation - goodwill	(2,974,313)(17,097)(3,581)(400,000)	(2,615,783)(8,704)(520)(233, 333)	(1,819,277)(17,097)	(237,987)(8,704)

Increase / (decrease) in operating assets Interest receivable 6,812,123 10,766,318 Other receivables 1,129,570 398,360 375,000 4,432,846 Other 959,069 725,697 178,118 $(79, 143)$ (Increase) / decrease in operating liabilities Interest payable $(2,757,859)$ $(1,757,316)$ Pavables 55,767 $(713, 556)$ $(419,061)$ $(99.782)$ Provisions $(2,700,949)$ $(1,554,256)$ $(790, 836)$ $(12,590)$ Profit / (loss) from ordinary activities after income tax 3,514,621 1,472,736 1,707,260 $(613, 469)$

$(75,000)$

7,524

$(193,750)$

$(75,000)$

$(193, 750)$

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

	Consolidated2003$	Consolidated2002$	Parent Entity2003S	Parent Entity2002$
26. Notes to the statement of cash flows(continued)
(b) Reconciliation of cash
For the purpose of the Statement of CashFlows, cash at the end of the financial year isreconciled to the following items in theStatement of Financial Position:
Cash and cash at bank	5,228,682	2.722,456	350,118	940,576
30 day bill		1.505,293		1,505,293
Term deposits	25,000	1.025.000	25,000	1.025.000
	5,253,682	5.252.749	375,118	3,470,869

27. Segment information

The consolidated entity operates in one geographical segment, being Australia and in one business segment, being the provision of subordinated debt facilities in funding residential and commercial property development.

28. Events occurring after reporting date

There are no matters or circumstances that have arisen since 30 June 2003 that have significantly affect, or may significantly affect:

• (a) The consolidated entity's operations in the future financial years, or
• (b) The result of those operations in future financial years, or
• (c) The consolidated entity's state of affairs in the future financial years.

29. Contingencies

In the normal course of business operations, Great Pacific Capital Limited and its controlled entities enter into various types of business contracts that may give rise to contingent liabilities. As at 30 June 2003, there are no contingent liabilities arising from such business contracts or any pending litigation that may give rise to any contingent liabilities.

30. Lease commitments

Non-cancellable operating lease contracted for but not capitalised in the financial statements:

Payable- Not later than 1 year- Later than 1 year but not later than 5 years	119.816148.582	112,833256,554	119.816148.582	112.833256.554
	268.398	369,387	268.398	369.387

The property lease is a non-cancellable lease with a five year term, with rent payable monthly in advance. The lease agreement provide for rent to be increased by at least 5% per annum. There is no option to extend the lease term.

The lease allows for subletting and assignment of the lease to third parties by obtaining written consent from the lessor.

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

31. Financial instruments

(a) Interest rate risk

The exposure to interest rate risk and the weighted average effective interest rates on the financial assets and liabilities of the consolidated entity are summarised in the following tables:

Consolidated Fixed interest rate maturing in: Weighted Floating Nonaverage More interest interest rate 1 vear or Over 1 to than interest ra less $\cdot$ 5 bearing Total 30 June 2003 $\hat{\mathbf{S}}$ $\ddot{\bullet}$ $\hat{\mathbf{S}}$ $\theta_{\rm As}$ Ś Financial assets: Cash and liquid assets 5,228,67 25.000 ă 5,253,682 2.2 Receivables 19,003,631 19,003,631 Loans 11,375,144 10,091,302 21,466,446 34.6 $\overline{a}$ $5.228.67$ 11.400.144 10.091,302 19.003.634 45.723.759 Financial liabilities Payables 4,556,877 4,556,877 Promissory Notes 22,348,844 7.325,000 29,673,844 18.8 Bank loan 659.995 871,888 l, 1,531.883 6.9 23,008,839 8,196,888 4,556,877 35,762,604 30 June 2002 Financial assets: Cash and liquid assets 2,722,45 2,530,293 5,252,749 $3.5$ $\mathbf{1}$ Receivables 7,220,483 7.220.483 Loans 15,230,253 $35.0$ 500,000 14,730,251 l. 2,722,45 3,030,293 14,730,253 7,220,484 27,703,485 Financial liabilities Payables 1,867,100 1,867,100 Promissory Notes 1,585,000 18.8 20,468,841 22,053,843 Bank loan 659.99 659,995 6.7 659.99 1,585,000 20,468,843 1,867,100 24,580,938

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

31. Financial instruments (continue)

(b) Credit risk

The credit risk exposures of the consolidated entity are to the non-repayment of receivables, loans and advances due from third parties and the amounts are as indicated by the carrying amount of the financial assets recognised in the balance sheet. There is a concentration of credit risk due to the small number of debtors in the consolidated entity's model of operation.

The consolidated entity has taken steps to minimise the risk of default by undertaking loans which are secured by mortgage over land, residential and commercial properties and guarantee from borrowers.

(c) Net fair values

The net fair values of financial assets and liabilities are either equal to or approximate their carrying amounts. The carrying amounts of all financial assets and liabilities are reviewed to ensure they are not in excess of the net fair value.

32. Company details

Great Pacific Capital Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is Level 7, $27 - 31$ Macquarie Place, Sydney, NSW 2000.

DIRECTORS' DECLARATION

In the opinion of the Directors of Great Pacific Capital Limited:

• the financial statements and notes, set out on pages 6 to 23, are in accordance with the Corporations Act $(a)$ 2001:
  • give a true and fair view of the financial position of the Company and consolidated entity as at 30 $(i)$ June 2003 and of their performance for the financial year ended on that date; and
  • $(ii)$ comply with Accounting Standards and the Corporation Regulations 2001; and
• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they $(b)$ become due and payable.

Signed at Sydney this 24th day of September 2003 in accordance with a resolution of the Directors.

Danny Au-Yeung Director

Alfred Wong Director

INDEPENDENT AUDITORS' REPORT

Scope

We have audited the financial report of Great Pacific Capital Limited and controlled entities for the financial period ended 30 June 2003 as set out on pages 6 to 24.

The financial report includes the consolidated financial statements of the consolidated entity comprising the company and the entities it controlled at the period end or from time to time during the financial period. The company's directors are responsible for the financial report. We have conducted an independent audit of this financial report in order to express an option on it to the members of the company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements in Australia and statutory requirements so as to present a view which is consistent with our understanding of the company's financial position, and performance as represented by the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis. Audit Opinion

In our opinion, the financial report of Great Pacific Capital Limited is in accordance with:

the Corporations Act 2001, including: a.

giving a true and fair view of the company's and consolidated entity's financial position as at 30 June $\mathbf{i}$ . 2003 and of their performance for the period ended on that date; and

ii. complying with Accounting Standards in Australia and the Corporations Regulations 2001; and

$\mathbf{b}$ . other mandatory professional reporting requirements in Australia.

Hall Chadwick Level 29, St Martins Tower 31 Market Street, SYDNEY NSW 2001

Drew Townsend Partner Dated: 24th September 2003

Shareholder Information

Restriction on Shares

Out of the total 11,885,500 shares issued, 8,260,000 shares have been placed in escrow by the Australian Stock Exchange for a period of 24 months from 21 March 2003. They include shares issued to the Directors and underwriter for the initial public offer in September 2001 which are regarded as seed capitalists under the listing rules.

The remaining 3,625,500 shares are quoted on the Australian Stock Exchange under the security code GRP.

Major Shareholders

At 29 August 2003, the 20 largest holders of Ordinary Shares held 9,410,073 shares equal to 79.17 percent of the total number of shares on issue.

	Number of Shares	չ
Skyworth Investments Limited*	1,700,000	14.30%
Edessa Holdings Pty Limited*	987,500	8.31%
Ace Bond Capital Limited*	807,500	6.79%
Graham Werry*	750,000	6.31%
Alfred Wong*	750,000	6.31%
Danny Au-Yeung*	750,000	6.31%
Osmond Kwok*	502,000	4.22%
Bernard Chiu*	500,000	4.21%
Master Max Far East Limited*	500,000	4.21%
Gold Merit Investments Limited	500,000	4.21%
Helen Ho**	500,000	4.21%
Ivan Wong*	250,000	2.10%
Paul Ho	200,000	1.68%
Carolyn Wong*	166,100	1.40%
Francis Young*	102,000	0.86%
Emily Kwok	100,000	0.84%
Susanne Chu & Victor Chu*	100,000	0.84%
Nels Tong	94,600	$0.80%$
Galina Ross	94,373	0.79%
Aston Pacific Investments Pty Ltd	56,000	0.47%
	9.410.073	79.17%

*Represent shares under escrow as explained above.

**Out of the total 500,000 shares held, 285,200 shares are under escrow.

Substantial Shareholders

At 29 August 2003, the following shareholders were regarded as substantial shareholders:

	Number of Shares
Skyworth Investments Limited	1,700.000
Edessa Holdings Pty Limited	987.500
Ace Bond Capital Limited	807.500
Graham Werry	750.000
Alfred Wong	750.000
Danny Au-Yeung	750.000

Distribution of Shareholdings

At 29 August 2003, the distribution of shareholdings was as follows:

Range	Number ofHolders	% ofholders	Number ofShares	% ofShares
$1 - 1,000$ shares	5	0.56	3,376	0.03
$1.001 - 5.000$ shares	820	92.34	1.714,650	14.43.
$5,001 - 10,000$ shares	18	2.03	160,700	1.35
$10,001 - 100,000$ shares	30	3.38	1,241,674	10.45
100,001 shares and over	15	1.69	8,765,100	73.74
	888	100.00	11.885,500	100.00

As at 29 August 2003, there was no shareholder with less than a marketable parcel of ordinary shares.

Voting Rights of Shareholders

All fully paid ordinary shareholders are entitled to vote at any meeting of the members of the Company and their voting rights are on:

• show of hands one vote per shareholder; and $\mathbf{r}$
• poll one vote per full paid ordinary share. $\mathbf{r}$

Registered Office:

Level 7, Kyle House 27-31 Macquarie Place Sydney NSW 2000 PO Box R1608 Royal Exchange NSW 1225 Telephone: (02) 8220 9800 Facsimile: (02) 8220 9811

Company Secretary

Edwin Yeung

Share Registry

Computershare Investor Services Pty Limited Level 3 60 Carrington Street Sydney NSW 2000

Mailing Address: GPO Box 7045 Sydney NSW 2001

Telephone: 1300 855 080 Facsimile: (02) 8234 5050 Website: www.computershare.com

Stock Exchange Listed Securities

Great Pacific Capital Limited's ordinary shares are listed on the Australian Stock Exchange under Security Code GRP.