REDCASTLE RESOURCES LIMITED — Annual Report 2003

Sep 10, 2003

PRELIMINARY FINAL REPORT GIVEN TO THE ASX UNDER LISTING RULE 4.3A

Name of Entity

Great Pacific Capital Limited

ABN or equivalent reference # 57 096 781 716

Reporting period $30 - Jun - 03$ Previous corresponding period $30 - Jun - 02$

Contents

	Page No
Results for announcement to the market
Statement of Financial Performance	2
Statement of Financial Position	3
Statement of Cash Flows	4
Notes to the Financial Statements	5
Other information regarding this preliminary final report	20

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Revenue from ordinary activities	up	63.26%	to.	\$12,726,777
Profit from ordinary activities after income tax attributable to members	uр	138.65%	ĩО	\$3,514,621
Net profit for the year attributable to members	uр	138.65%	ĩО	\$3,514,621

Dividends per Share	Amount per share	Franked amount per share at 30% tax
Final	5 cents	0 cents
Interim	0 cents	0 cents

Record date for determining entitlements to dividends is 10 October 2003.

Review of operations

Great Pacific Capital Limited was formed in May 2001. During the current year, 1,885,500 shares were issued via a public offer to raise \$1,885,500 and the ordinary shares of the Company were listed on the Australian Stock Exchange in March 2003.

The principal activity of the Company and its controlled entities 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.

The first year of operation included period for establishing the business and therefore did not reflect a normal full year operating result.

As indicated in our prospectus dated 22 October 2002, the profit after income tax for the current year ended 30 June 2003 is forecasted to be \$3,387,000 which reflects the expected growth of the company. The actual result of \$3,514,621 as disclosed above is slightly better than the forecast.

The increase in profit is also reflected in the increase in the basic earnings per share by 42.33% to 33.39 cents per share although the percentage increase is somewhat distorted by the new shares issued during the year. Taking into account the potential share issue if the Directors exercise the 10,000,000 share options issued to them, the earnings per shares for the current year is diluted to 18.70 cents per share. These share options were issued to Directors in May 2001 for their services to the Company and have an exercise price of \$2.40.

The Company and its controlled entities will continue to actively pursue its objective in the provision of debt facilities in relation to property related transactions and expect the results for the year ending 30 June 2004 to be similar to the current year. The Company may consider the possibility of acquiring business of similar nature to expand its activities.

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated 2003	Consolidated 2002	Parent entity 2003	Parent Entity 2002
	Notes	\$	\$	\$	\$
Interest income	$\overline{2}$	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)
Depreciation and amortisation expense	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 & professional fees		(975, 920)	(614, 496)	(814, 136)	(493, 362)
Other expenses from ordinary activities		(208,701)	(167, 343)	(157, 829)	(137, 590)
Profit / (loss) from ordinary activities before income tax		5,243,108	2,288,706	2,489,651	(791, 587)
Income tax (expense) / benefit relating to ordinary activities	5	(1,728,487)	(815,970)	(782, 391)	178,118
Net profit / (loss) attributable to members of the parent entity		3,514,621	1,472,736	1,707,260	(613, 469)
revaluation Increase in asset reserve	22	657,981
Total changes in equity other resulting than those from transactions with owners as
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 statements of financial performance are to be read in conjunction with the notes to the financial statements.

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2003

		Consolidated	Consolidated	Parent Entity	Parent Entity
		2003	2002	2003	2002
	Notes	S	\$	S	\$
Assets
Cash and liquid assets	$\mathbf{11}$	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	$\tau$
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 / accumulated losses	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 statements of financial position are to be read in conjunction with the notes to the financial statements.

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2003

		Consolidated 2003	Consolidated 2002	Parent Entity 2003	Parent Entity 2002
	Notes	$\mathbb S$	\$	$\mathbb{S}$	\$
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)
Payments for 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 Repayment of loans from director		1,885,500	1,500,000	1,885,500	1,500,000 (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)
Net increase in amounts payable to
controlled entities				2,968,937	4,384,208
provided by financing Net cash
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
Cash at the beginning of the financial 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 statements of cash flows are 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 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.

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 Building

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 2003.

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

	Consolidated 2003	Consolidated 2002	Parent Entity 2003	Parent Entity 2002
	$\mathbf S$	\$	\$	\$
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 and expense
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

	Consolidated 2003	Consolidated 2002	Parent Entity 2003	Parent Entity 2002
5. Income tax	S	S	S	S
Reconciliation of prima facie tax on profit / (loss) from ordinary activities before income tax expense / (benefit) to income tax attributable to operating profit / (loss):
Profit $/$ (loss) from ordinary activities before income 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 goodwill	120,000	70,000
Write-off of deferred expenses	22,500	58,125	22,500	58,125
Other non-deductible expenses	2,889	1,233	2,830	1,233
Under provision for Income Tax of prior year	10,166		10,166
Income tax expense / (benefit) attributable to operating 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. Final dividend will be payable on 10 November 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).

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

	Consolidated 2003 Cents per share	Consolidated 2002
7. Earnings 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
	Number of shares
(b) Weighted average number of shares used in the calculations of basic earnings per share	10,526,907	6,277,644
Weighted average number of shares used in the calculations of diluted earnings per share
Weighted average fully paid ordinary shares	10,526,907	6.277,644
Potential ordinary shares: Weighted average options	10,000,000	9.543,269
Total used in the calculation of diluted earnings per 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.

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

8. Auditors' remuneration	Consolidated 2003 T	Consolidated 2002 \$	Parent Entity 2003 T	Parent Entity 2002 \$
Amounts paid, or due and payable for audit or review services of statutory financial reports	41,500	27,800	41,500	27,800
Amounts paid, or due and payable for other services	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 relation to the management of
affairs of the entities	261,600	259,200	261,600	259,200
The number of Directors whose remuneration	Consolidated No.	Consolidated No.	Parent Entity No.	Parent Entity No.
was within the following bands: $0 - 9,999$ \$ \$120,000 - 129,999	$\overline{2}$	3 $\overline{2}$	2	3 $\overline{2}$
\$130,000 - 139,999	$\overline{2}$		$\mathbf{2}$
10. Executive officers' remuneration
	Consolidated 2003 S	Consolidated 2002 \$	Parent Entity 2003 S	Parent Entity 2002 S
Remuneration received or receivable by executive officers whose remuneration exceed
\$100.000	109,000	108,000	109,000	108,000

The number of parent entity executive officer whose remuneration was within the following bands: $$100,000 - 109,999$

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2003	2002	2003	2002
	S	\$	S	S
11. Cash and liquid assets
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
12. Receivables
Interest on loans and advances	17,578,441	6.812,123
Receivable from related entities			6,109,979	288,753
Other debtors	1,677,487	408,360	1,499.153	375,000
	19.255.928	7 220 483	7.609.132	663 753

Consolidated

No.

$\mathbf{1}$

Consolidated Parent Entity Parent Entity

No.

$\mathbf{1}$

No.

$\mathbf{1}$

No.

$\mathbf{1}$

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

13. Loans	Note	Consolidated 2003 S	Consolidated 2002 \$	Parent Entity 2003 S	Parent Entity 2002 \$
$Loans - other$		21,466,446	15,230,253
Maturity analysis: Not longer than 3 month Longer than 3 and not longer than 12		2.964,949
months		8,410,195	500,000
Longer than 1 and not longer than 5 years		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.

14. Deferred tax assets

Future income tax benefit:
- timing differences	16,272	544,355	14,245	17,160
- tax losses	1,668,494	181,342	84,730	160,958
	1,684,766	725,697	98,975	178,118
15. Investments
Investment in Huntley Trust (unlisted)		112,500
Investment in controlled entities	24		14	7
		112,500	14	7.
16. Other assets
Deferred expenses Accumulated deferred expenses	350,000	350,000	350,000	350,000
written off	(268,750)	(193,750)	(268,750)	(193,750)
	81,250	156,250	81,250	156,250
Borrowing costs	13,558	6,034
Accumulated amortisation	(4,101)	(520)
	9,457	5,514
	90,707	161,764	81,250	156,250

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

	Consolidated 2003 S	Consolidated 2002 \$	Parent Entity 2003 \$	Parent Entity 2002 \$
17. Property, plant and equipment
Land and buildings
At cost		857,619
At independent valuation - 2003	2,650,000
	2,650,000	857,619	$\blacksquare$
Furniture, fixtures and fittings	110,140	108,106	110,140	108,106
Accumulated depreciation	(13, 352)	(4, 581)	(13, 352)	(4,581)
Written down value	96,788	103,525	96,788	103,525
Computer and other equipment	33,255	30,796	33,255	30,796
Accumulated depreciation	(12, 448)	(4,122)	(12, 448)	(4, 122)
Written down value	20,807	26,674	20,807	26,674
	2,767,595	987,818	117,595	130,199
Reconciliations:
(i) Land and building
Balance at the beginning of the year	857,619
Additions	1,134,400	857,619
Revaluation during the year	657,981
Balance as at the end of the year	2,650,000	857,619	$\overline{\phantom{0}}$
(ii) Furniture, fixtures and fittings
Balance at the beginning of the year	103,525		103,525
Additions	2,034	108,106	2,034	108,106
Depreciation expense	(8,771)	(4,581)	(8,771)	(4,581)
Balance as at the end of the year	96,788	103,525	96,788	103,525
(iii) Computer and other equipment
Balance at the beginning of the year	26,674		26,674
Additions	2,459	30,796	2,459	30,796
Depreciation expense	(8,326)	(4,122)	(8,326)	(4,122)
Balance as at the end of the year	20,807	26,674	20,807	26,674
18. Intangible assets
Goodwill at cost	999,999	999,999
Accumulated amortisation	(633, 333)	(233, 333)
	366,666	766,666	$\overline{\phantom{0}}$
19. Payables
Accrued expenses	31,700	92,967	31,700	87,467
Amount payable to - related entities	10,000	10,000	1,583,392	2,255,235
$\sim$ other Interest payable on promissory notes	487,145	6,817 1,757,316	34,275	7,373
	4,515,175
	5,044,020	1,867,100	1,649,367	2,350,075

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

	Consolidated 2003 S	Consolidated 2002 S	Parent Entity 2003 S	Parent Entity 2002 S
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	500.00
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 Reserve Balance 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 year Net profit $/($ loss) attributable to the members	1.472.736	$\blacksquare$	(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)

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 it 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 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 profit before income tax that resulted from transactions with entities in the wholly-	Parent Entity 2003	Parent Entity 2002
owned group:
Management fee income	2.995.947
Aggregate amounts receivable / payable to entities in the wholly-owned group at balance date
The contract for the communication of the following the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contra	6 100 AMA	noo gra

Receivable from controlled entities			6,109,979	288,753
Payable to controlled entities			1,583,392	2,245,235
	Consolidated 2003	Consolidated 2002	Parent Entity 2003	Parent Entity 2002
26. Notes to the statements of cash flows	\$	\$	S	S
(a) Reconciliation of net cash used in operating activities to profit / (loss) from ordinary activities after income tax
Net cash used in operating activities	(2,974,313)	(2,615,783)	(1,819,277)	(237, 987)
Depreciation	(17,097)	(8,704)	(17,097)	(8,704)
Amortisation - borrowing cost	(3,581)	(520)
Amortisation - goodwill	(400,000)	(233, 333)
Write off of deferred expenses	(75,000)	(193,750)	(75,000)	(193, 750)
Other	7,524
Increase / (decrease) in operating assets
Interest receivable	10,766,318	6,812,123
Other receivables	1,129,570	398,360	4,432,846	375,000
Other	959,069	725,697	(79, 143)	178,118
(Increase) / decrease in operating liabilities
Interest payable	(2,757,859)	(1,757,316)
Payables	(419,061)	(99, 782)	55,767	(713, 556)
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)

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

26. Notes to the statements of cash flows	Consolidated 2003 \$	Consolidated 2002 S	Parent Entity 2003 S	Parent Entity 2002 S
(continued)
(b) Reconciliation of cash
For the purpose of the Statement of Cash Flows, cash at the end of the financial year is reconciled to the following items in the Statements 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:

• (e) The consolidated entity's operations in the future financial years, or
• (f) The result of those operations in future financial years, or
• $(g)$ 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 commitment

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

Pavable - Not later than 1 year 119.816 112,833 119.816 112.833 - Later than 1 year but not later than 5 years 148,582 256,554 148,582 256,554 - Later than 5 years 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:
	Floating interest rate	1 year or less	Over 1 to 5 years	More than 5 years	Non- interest bearing	Total	Weighted average interest rate
30 June 2003	\$	\$	$\mathbb{S}$	\$	S	\$	$\frac{6}{2}$
Financial assets: Cash and liquid
assets	5,228,679	25,000			3.	5,253,682	2.23
Receivables					19,003,631	19,003,631
Loans		11,375,144	10,091,302			21,466,446	34.61
	5,228,679	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	18.84
Bank loan		659,995	871,888			1,531,883	6.93
	$\blacksquare$	23,008,839	8,196,888	$\overline{\phantom{a}}$	4,556,877	35,762,604
30 June 2002
Financial assets: Cash and liquid
assets	2,722,455	2,530,293			1	5,252,749	3.91
Receivables					7,220,483	7,220,483
Loans		500,000	14,730,253			15,230,253	35.03
	2,722,455	3,030,293	14,730,253	$\overline{\phantom{a}}$	7,220,484	27,703,485
Financial liabilities
Payables					1,867,100	1,867,100
Promissory Notes		1,585,000	20,468,843			22,053,843	18.85
Bank loan	659,995					659,995	6.75
	659.995	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.

	Consolidated	Consolidated
	2003	2002
32. Net tangible assets per ordinary share
(NTA backing)	0.84	0.34

Other information regarding this preliminary final report

The information contained in this preliminary report is based on accounts which are in the process of being audited.