REDCASTLE RESOURCES LIMITED — Annual Report 2002

Mar 18, 2003

GREAT PACIFIC CAPITAL LIMITED ABN 57 096 781 716 AND ITS CONTROLLED ENTITIES FINANCIAL REPORT FOR THE PERIOD FROM 11 MAY 2001 TO 30 JUNE 2002

CONTENTS

Directors' Report
Statements of Financial Performance
Statements of Financial Position	5
Statements of Cash Flows	6
Notes to the Financial Statements
Directors' Declaration	18
Independent Auditors' Report	19

Page No.

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' REPORT

The Directors present their report on the consolidated entity consisting of Great Pacific Capital Limited and the entities it controlled for the financial period from 11 May 2001 to 30 June 2002.

Directors

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

Alfred Wong, Chairman Danny Au-Yeung Ivan Wong Graham Keith Werry Michael John Ivkovic (resigned 23 September 2001)

Principal activity

The principal activity of the consolidated entity during the period 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 financial period ended 30 June 2002 was a profit of $1,472,736.

Dividends

No dividends were paid in, or declared in respect of, the period from 11 May 2001 to 30 June 2002.

Review of operations

The Company commenced its business on 11 May 2001. Since then the Consolidated entity has been involved in the provision of debt facilities in funding several residential property development projects and property related transactions.

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. The entity may apply for official listing on the Australia Stock Exchange in the next twelve months.

Significant changes in the state of affairs

During the financial period, 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 period

On 7 August 2002, a consortium comprised of Great Pacific Capital Limited and other investors was nominated as the preferred bidder for the purchase of Bellambi West Colliery, which is adjacent to the residential zone in the north Wollongong suburbs. Exchange of contracts will happen in September with a settlement period of up to 90 days. Under the terms of the bid, the consortium is positioned to acquire the right to mine the colliery with the prospect of earning significant cash royalties for many years. Great Pacific Capital Limited will be involved in arranging finance for this transaction.

Other than the matter noted above, no other matter or circumstance has arisen since 30 June 2002 that has 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 period, a related party of the Company effected an insurance policy to insure the Directors and secretary 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.

Algebraic C. Discotory interest

Information on Directors

Director	Experience	SpecialResponsibilities	PAPTICULARS OF DIFECTORS INTERESTin Shares and options of GreatPacific Capital Limited
			Ordinary Shares	Options *
Alfred Wong	Managing Director of the GreatPacific Financial Group, Non-Executive Chairman of the PacificInternational Hotel Group.	Chairman	750,000	2,500,000
Danny Au-Yeung	Company Director,Accountant	Chief ExecutiveOfficer	750,000	2,500,000
Graham Werry	Company Director,Lawyer	Executive Director	750,000	2,500,000
Ivan Wong	Company Director,IT Specialist	Non ExecutiveDirector	250,000	2,500,000

* 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.

GREAT PACIFIC CAPITAL LIMITED AND CONTROLLED ENTITES DIRECTOR'S REPORT

$\omega \rightarrow \omega$

$\alpha=1$

Meeting of Directors

The numbers of meetings of the company's board of Directors held during the financial period ended 30 June 2002 and the numbers of meetings attended by each Director were as follows:

	Full Meeting of Directors
Numbers of meetings held	$\ddot{6}$
Numbers of meetings attended by:
Alfred Wong	6
Danny Au-Yeung	6
Graham Werry	6
Ivan Wong	4
Micheal Ivkovic (resigned 23 September $2001 - 2$meetings held while a Director)	2

Environmental regulation

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 26th day of September 2002 in accordance with a resolution of the Directors.

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

. . . . . . . . . . . . . .

Danny Au-Yeung Director

STATEMENTS OF FINANCIAL PERFORMANCE FOR THE PERIOD FROM 11 MAY 2001 TO 30 JUNE 2002

		Consolidated	Parent Entity
	Notes	2002S	2002$
Interest income	$\overline{c}$	7,007,848	23,788
Interest expense	$\overline{2}$	(3,594,635)	(96)
Net interest income		3,413,213	23,692
Fee and commission income	3	786,775	490,275
Fee and commission expense	3	(221, 261)
Net fee and commission income		565,514	490,275
Other income		658	385
Lease expense		(4, 348)	(4,348)
Depreciationamortisationandexpense	4	(242, 557)	(8,704)
Other expensesfromordinary
activities		(1,443,774)	(1, 292, 887)
Profit /(loss) fromordinary
activities before income tax		2,288,706	(791, 587)
Income tax (expense) /benefitrelating to ordinary activities	5	(815,970)	178,118
Net profit / (loss) attributable tomembers of the parent entity		1,472,736	(613, 469)
Total changes in equity other than
those resulting from transactions
with owners as owners		1,472,736	(613, 469)

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

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GREAT PACIFIC CAPITAL LIMITED AND CONTROLLED ENTITIES

STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2002

		Consolidated	Parent Entity
		2002	2002
	Notes	S	S
Assets
Cash and liquid assets	9	5,252,749	3,470,869
Receivables	10	8,309,576	663,753
Loans	11	15,230,253
Deferred tax assets	12	725,697	178,118
Investment - unlisted securities	13	112,500
Investment - controlled entities	13		7
Other assets	14	161,764	156,250
Property, plant and equipment	15	987,818	130,199
Intangible assets	16	766,666
Total assets		31,547,023	4,599,196
Liabilities
Payables	17	2,956,193	2,350,075
Current tax liabilities		26,394
Provision - annual leave		12,590	12,590
Borrowings	18	22,713,838
Deferred tax liabilities		1,515,272
Total liabilities		27,224,287	2,362,665
Net assets		4,322,736	2,236,531
Equity
Share capital	19	2,850,000	2,850,000
Retained profits / accumulated loss	20	1,472,736	(613, 469)
Total equity		4,322,736	2,236,531

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

$\overline{a}$

STATEMENTS OF CASH FLOWS FOR THE PERIOD FROM 11 MAY 2001 TO 30 JUNE 2002

	- Consolidated	Parent Entity
	2002	2002
Notes	S	$
Cash flows from operating activities
Interest received	256,991	23,788
Interest paid	(1,893,324)	(96)
Fee received	412,425	16,275
Fee paid	(220, 495)
Operating receipts	12,972	790,385
Operating payments	(1, 184, 352)	(1,068,339)
23(a)Net cash used in operating activities	(2,615,783)	(237, 987)
Cash flows from investing activities
Payment for investments	(112,500)	(7)
Proceeds from repayment of loans	6,789,864
Loans to developers and borrowers	(22,020,117)
Payments for property, plant and	(996, 521)	(138,902)
equipmentNet increase in amounts receivable from
controlled entities		(1, 836, 443)
Net cash used in investing activities	(16, 339, 274)	(1,975,352)
Cash flows from financing activities
Proceeds from issue of share capital	1,500,000	1,500,000
Repayment of loans from director		(200,000)
Proceeds from borrowing	659,995
Payments for borrowing cost	(6,033)
Proceeds from issue of promissory
notes	28,238,923
Redemption of promissory notes	(6, 185, 079)
Net increase in amounts payable to
controlled entities		4,384,208
Net cash provided by financing
activities	24,207,806	5,684,208
Net increase in cash held	5,252,749	3,470,869
Cash at the beginning of the financialperiod
Cash at the end of the financialperiod	5,252,74923(b)	3,470,869

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

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 11 MAY 2001 TO 30 JUNE 2002

1. Summary of significant accounting policies

Basis of preparation of financial report

This general purpose financial report has been prepared in accordance with Accounting Standards, in particular Accounting Standard 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 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.

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 2002 and the results of all controlled entities for the financial period 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 21 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) Goods and services tax

J.

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.

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 11 MAY 2001 TO 30 JUNE 2002

1. Summary of significant accounting policies (continued)

(d) 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 & fixtures	13 years

(e) 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.

(f) 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.

(g) Deferred Expenses

The deemed value of shares issued to the Directors and the underwriter for the initial public offer is classified as deferred expenses. They are written off over a three years period. 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.

(h) 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.

(i) Employee Entitlements

(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.

(j) 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 2 years.

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 11 MAY 2001 TO 30 JUNE 2002

	Consolidated2002$	Parent Entity2002S
2. Interest income and expense
Interest income
Loans and advances	6,967,845
Other	40,003	23,788
Total interest income	7,007,848	23,788
Interest expense
Borrowings	3,587,256
Other	7,379	96
Total interest expense	3,594,635	96
3. Fee and commission income and expense
Fee and commission income
Arranger fee	121,775	115,275
Establishment fee	200,000
Management fee	90,000
Success fee	375,000	375,000
Total fee and commission income	786,775	490,275
Fee and commission expense
Arranger fee	220,495
Management fee	766
Total fee and commission expense	221,261
4. Depreciation and amortisation
Depreciation	8,704	8,704
Amortisation - borrowing cost	520
Amortisation - goodwill	233,333
	242,557	8,704

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 11 MAY 2001 TO 30 JUNE 2002 $\mathcal{L}^{\text{max}}$

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	Consolidated	Parent Entity
	2002	2002$
	S
5. Income tax
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	2,288,706	(791, 587)
Prima facie tax thereon at 30%	686,612	(237, 476)
Tax effect of permanent differences:Amortisation of goodwillWrite-off of deferred expensesOther non-deductible expenses	70,00058,1251,233	58,1251,233
Income tax expense / (benefit) attributable tooperating profit / (loss)	815,970	(178, 118)

6. Dividends and dividend franking account

No dividends were paid in, or declared in respect of the period from 11 May 2001 to 30 June 2002. 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 recognised as a liability at the reporting date, is $26,394.

7. Auditors' remuneration

Amounts paid, or due and payable for audit orreview services of statutory financial reports	27,800	27,800
Amounts paid, or due and payable for otherservices	54,878	54,878
Total auditors' remuneration	82,678	82,678
8. Directors' remuneration
Income paid or payable or otherwise madeavailable to Directors of the entity or relatedentities in relations to the management ofaffairs of the entities	259,200	259,200
The number of parent entity Directors whoseremuneration was within the following bands:
S$0 - 9.999$$$120,000 - 129,999$	32	32

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 11 MAY 2001 TO 30 JUNE 2002

	Note	Consolidated2002S	Parent Entity2002S
9. Cash and liquid assets
Cash and cash at bank		2,722,456	940,576
30 day bill		1,505,293	1,505,293
Term deposits		1,025,000	1,025,000
		5,252,749	3,470,869
10. Receivables
Interest on loans and advances		7,911,216
Receivable from related entities			288,753
Other debtors		398,360	375,000
		8,309,576	663,753
11. Loans
Loans - other		15,230,253
Maturity analysis:
Longer than 3 and not longer than 12 months		500,000
Longer than 1 and not longer than 5 years		14,730,253
		15,230,253

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

12. Deferred tax assets

Future income tax benefit – timing differences		544,355	17,160
- tax losses		181,342	160,958
		725,697	178,118
13. Investments
Investment in Huntley Trust (unlisted)		112,500
Investment in controlled entities	21		$\tau$
		112,500
14. Other assets
Deferred expenses		350,000	350,000
Deferred expenses written off		(193, 750)	(193, 750)
		156,250	156,250
Borrowing costs		6,034
Accumulated amortisation		(520)
		5,514
		161,764	156,250

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 11 MAY 2001 TO 30 MAY 2002 $\mathcal{L}^{\text{eff}}$

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	Consolidated	Parent Entity
	2002$	2002$
15. Property, plant and equipment
Land and building $-$ at cost	857,619
Furniture, fixtures and fittings	108,106	108,106
Accumulated depreciation	(4, 581)	(4, 581)
Written down value	103,525	103,525
Computer and other equipment	30,796	30,796
Accumulated depreciation	(4,122)	(4,122)
Written down value	26,674	26,674
	987,818	130,199
Reconciliations:
(i) Land and building
Balance at the beginning of the period
Additions	857,619
Balance as at 30 June 2002	857,619
(ii) Furniture, fixtures and fittings
Balance at the beginning of the period
Additions	108,106	108,106
Depreciation expense	(4, 581)	(4, 581)
Balance as at 30 June 2002	103,525	103,525
(iii) Computer and other equipment
Balance at the beginning of the period
Additions	30,796	30,796
Depreciation expense	(4, 122)	(4,122)
Balance as at 30 June 2002	26,674	26,674
16. Intangible assets
Goodwill at cost	999,999
Accumulated amortisation	(233, 333)
	766,666

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 11 MAY 2001 TO 30 JUNE 2002

$\alpha=1$

	Consolidated2002	Parent Entity2002
	$	S
17. Payables
Accrued expenses	92,967	87,467
Amount payable to - related entities		2,245,235
$-$ other	6,817	17,373
Interest payable on promissory notes	2,856,409
	2,956,193	2,350,075
18. Borrowings
Bank loan - secured	659,995
Promissory notes	22,053,843
	22,713,838
Maturity analysis:
Not longer than 3 months	1,085,000
Longer than 3 and not longer than 12 months	500,000
Longer than 1 and not longer than 5 years	21,128,838
	22,713,838

Bank loan is secured by first mortgage over the consolidated entity's land and building.

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 7% per annum to 9% per annum.

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

19. Share capital

Ordinary shares	2,850,000	2,850,000
The share capital is made up of:
2,500,00 ordinary shares issued to Directors at a deemed value of 5 cents each		125,000
2,000,000 ordinary shares issued to Surich or its nominee for underwriting the Initial PublicOffer at a deemed value of 5 cents each		100,000
2,500,000 ordinary shares issued to Surich or its nominee in consideration for them agreeing tothe cancellation of the subscription agreement, at deemed value of 5 cents each.		125,000
1,000,000 ordinary shares issued at $0.50 each under the Initial Public Offer		500,000
1,000,000 ordinary shares issued at $1.00 each to sophisticated investors		1,000,000
1,000,000 ordinary shares issued at $1.00 each to purchase GPC No 1 (City Quarter) Pty Ltd		1,000,000

2,850,000

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.

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 11 MAY 2001 TO 30 JUNE 2002

	Consolidated2002	Parent Entity2002
	S
20. Retained profits / (accumulated loss)
Balance at the beginning of the period
Net profit / (loss) attributable to the member ofGreat Pacific Capital Limited	1,472,736	(613, 469)
Balance at the end of the period	1.472.736	(613, 469)

21. Investments in controlled entities

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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 Pty Ltd	NSW. Australia	Ordinary	100%

GPC No. 8 Pty Ltd changed its name to GPC No. 8 (Bulli) Pty Ltd on the 8 August 2002.

22. Related parties

Directors

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

Mr Alfred Wong, Mr Danny Au-Yeung, Mr Graham Werry, Mr Ivan Wong, and Mr Michael Ivkovic (resigned on 23 September 2001).

Directors' holdings of shares and options

	OrdinarysharesNumber held	Share optionsNumber held
The interests of Directors of the consolidated entity and their related entities inshares and share options of the Company at balance date are	2.500,000	10,000,000
Share and options transactions of Directors and their related entities during the
financial period are:Aggregated acquisition	2,500,000	10,000,000
Aggregated disposal

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 11 MAY 2001 TO 30 JUNE 2002

22. 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 21.

Transactions between Great Pacific Capital Limited and other entities in the wholly-owned group during the financial period 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.

There are no fixed terms for the repayment of principal on loans advanced between entities within the consolidation group.

Parent Entity

$\overline{\phantom{m}}$

Aggregate amounts included in the determination of the operating profit beforeincome tax that resulted from transactions with entities in the wholly-ownedgroup:	Parent Entity2002S.
Aggregate amounts receivable / payable to entities in the wholly-owned groupat balance date
Receivable from controlled entities	Ň,	288,753
Payable to controlled entities		2,245,235
	Consolidated2002$	Parent Entity2002$
23. Notes to the statements of cash flows
(a) Reconciliation of net cash used in operatingactivities to profit / (loss) from ordinaryactivities after income tax
Net cash used in operating activities	(2,615,783)	(237,987)
Depreciation	(8,704)	(8,704)
Amortisation - borrowing cost	(520)
Amortisation - goodwill	(233, 333)
Write off of deferred expenses	(193, 750)	(193, 750)
Increase / (decrease) in operating assets
Interest receivable	7,911,216
Other receivables	398,360	375,000
Other	725,697	178,118
(Increase) / decrease in operating liabilities
Interest payables	(2,856,409)
Payables	(99, 782)	(713, 556)
Provisions	(1, 554, 256)	(12,590)
Profit / (loss) from ordinary activities after
income tax	1,472,736	(613, 469)

16

GREAT PACIFIC CAPITAL LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 11 MAY 2001 TO 30 JUNE 2002

	Consolidated2002S	Parent Entity2002S
23. Notes to the statements of cash flows
(b) Reconciliation of cashوحودا
For the purpose of the Statement of CashFlows, cash at the end of the financial period isreconciled to the following items in theStatements of Financial Position:
Cash and cash at bank	2,722,456	940,576
30 day bill	1,505,293	1,505,293
Term deposits	1,025,000	1,025,000
	5,252,749	3,470,869

24. 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.

25. Event occurring after reporting date

On 7 August 2002, a consortium comprised of Great Pacific Capital Limited and other investors was nominated as the preferred bidder for the purchase of Bellambi West Colliery, which is adjacent to the residential zone in the north Wollongong suburbs. Exchange of contracts will happen in September with a settlement period of up to 90 days. Under the terms of the bid, the consortium is positioned to acquire the right to mine the colliery with the prospect of earning significant cash royalties for many years. Great Pacific Capital Limited will be involved in arranging finance for this transaction.

26. 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 2002, there are no contingent liabilities arising from such business contracts or any pending litigation that may give rise to any contingent liabilities.

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 11 MAY 2001 TO 30 JUNE 2002

27. 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:
2002	FloatinginterestrateS	1 year orless$	Over 1 to 5yearsS	Morethan 5years$	Non-interestbearingS	TotalS	Weightedaverageinterestrate$%$
Financial assets:
Cash and liquid
assets	2,722,455	2,530,293				5,252,749	3.91
Receivables					8,309,576	8,309,576
Loans		500,000	14,730,253			15,230,253	35.03
	2,722,455	3,030,293	14,730,253		8,309,577	28,792,578
Financial liabilities
Payables					2,956,193	2,956,193
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		2,956,193	25,670,031

(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 first year 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 value of financial assets and liabilities are either equal or approximates 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.

28. 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.

17

DIRECTORS' DECLARATION

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

• the financial statements and notes, set out on pages 4 to 17, 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 2002 and of their performance, as represented by the results of their operations and their cash flows, for the financial period ended on that date; and
  • comply with Accounting Standards and the Corporation Regulations 2001; and $(ii)$
• $(b)$ there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed at Sydney this 26th day of September 2002 in accordance with a resolution of the Directors.

Alfred Wong Director

Danny Au-Yeung Director

$\bigoplus$ Hall Chadwick hartered Accountants & Business Advisers

GREAT PACIFIC CAPITAL LIMITED ABN 57 096 781 716 AND CONTROLLED ENTITIES INDEPENDENT AUDIT REPORT. TO THE MEMBERS OF GREAT PACIFIC CAPITAL LIMITED

Scope

We have audited the financial report of Great Pacific Capital Limited and controlled entities for the financial period ended 30 June 2002 as set out on pages 4 to 18.

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 opinion 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 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 ì. financial position as at 30 June 2002 and of their performance for the period ended on that date; and
• complying with Accounting Standards and the Corporations Regulations ii. 2001; and

b.

other mandatory professional reporting requirements.

Hall Chadwick

Level 29, St Martins Tower

31 Market Street, SYDNEY NSW 2001

Drew Townsend Partner Dated: 26th September, 2002

Sydney Level 29 St Martins Tower 31 Marker Street Sydney 2000 New South Woles

GPO Box 3555 SYDNEY NSW 2004

DX 1451 Sydney

Telephone: (02) 9263 2600Facsimile: (02) 9263 2800 Email: haydinfo@hail chadwick.com.au

Penrith

Telephone: (02) 4721 8144 Facsimile: (02) 4721 8155

Liverpool Telephone: (02) 9602 9444Facsimile: (02) 9602 9555

Parmers Robert Ellort Robert Brossil ...................................... Drew Townsend David Kennev Richard Albarran Gina Maiacco Paul Leroy

Associates Steven Gladman

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