GREAT PACIFIC CAPITAL LIMITED ABN 57 096 781 716 AND ITS CONTROLLED ENTITIES FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2004

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	Page No.
Corporate Governance Statement	1
Directors' Report	9
Statement of Financial Performance	17
Statement of Financial Position	18
Statement of Cash Flows	19
Notes to the Financial Statements	20
Directors' Declaration	38
Independent Auditors' Report	39
Shareholder Information	40

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 23, 123 Pitt Street, Sydney, NSW 2000.

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CORPORATE GOVERNANCE STATEMENT

Background

Corporate governance is the manner in which companies are managed and directed. It is the way in which the Board makes decisions that adds value to the company, and therefore the shareholders, while still remaining a good corporate citizen.

On the 31st March 2003 the ASX Corporate Governance Council introduced the 10 Principles of Good Corporate Governance and Best Practice Recommendations. The ASX Listing Rule 4.10.3 requires all listed entities to disclose in a statement the extent to which the entity has followed the best practice recommendations set by the ASX Corporate Governance Council during the reporting period.

The Board is committed to improving its corporate governance practices and embracing the principles put out by the ASX Corporate Governance Council, however, the Board is of a view that the adoption of the practices and principles should be in line with the growth in size, changes in the nature and increase in complexity of the company's business.

The Board aims to achieve all of the Best Practice Recommendations in stages as the company grows and its circumstances change over time. One of the initial steps taken this year to commence this process has been to engage the Company Secretary to recommend policies to the Board and subsequently, document and implement these corporate governance policies within the company.

This statement sets out the key corporate governance principles and practices of the company for the financial year ended.

Principle 1: Lay Solid Foundations For Management And Oversight

The Company is structured such that there are clearly defined roles, segregation of duties and responsibilities and approved levels of authority between the management and the governance of the company.

The Board sets the overall corporate governance policy for the company including determining the strategic direction, establishing policies and goals for management and monitoring the achievement of them. The Board then delegates responsibility for the day to day management of the company to the Chief Executive Officer and the senior executive team.

The key responsibilities of the Board include:

setting the long-term strategy and annual business plan including objectives and milestones to be achieved:
evaluating capital, cash and operating risk budgets and making appropriate recommendations on an annual basis;
reviewing and approving the company's financial, strategic and operational goals and assessing key business developments as formulated by management in line with the objectives and goals set by the Board:
monitoring the performance of the company against the financial objectives and operational goals set by the Board using Key Performance Indicators and reviewing the implementation of Board approved strategies;
assessing the appropriateness of the skill sets and the levels of experience of the members of the Board, individually and as a whole and selecting new members to join the Board when a vacancy exists;
appointing, removing and determining the terms of engagement of the Directors, Chief Executive Officer and Company Secretary;
overseeing the delegation of authority for the day to day management of the company;
ensuring that the risk management systems, financial reporting and information systems, personnel, policies and procedures are all operating efficiently and effectively by establishing a framework of internal controls and compliance;
reviewing major contracts, goods or services on credit terms, acceptance of counter-party risks and issuing guarantees on behalf of the company;
approving the capital structure and major funding requirements of the company;
making recommendations as to the terms of engagement, independence and the appointment and removal of the external auditors:

CORPORATE GOVERNANCE STATEMENT

setting the Code of Conduct for the company and ensuring that appropriate standards of corporate governance and ethics are effectively communicated throughout the company and complied with:
reviewing the adherence by each director to the Directors' Code of Ethics;
establishing policies to ensure that the company complies with the ASX Continuous Disclosure Policy;
approving the company's half year and full year reports to the shareholders, ASX and ASIC; and
ensuring that recruitment, retention, termination, remuneration, performance review and succession planning policies and procedures are in place and complied with.

Principle 2: Structure The Board To Add Value

The Board is presently structured to maximise value to the company and the shareholders. The Board is of a size and composition that is conducive to making decisions expediently, with the benefit of a variety of perspectives, experiences and skills.

Board Composition

As at the end of the financial year, the Board composed of three members only as one of the executive Directors resigned during the year. The details of each of the three directors' position, date of appointment, qualifications, experience and expertise and assessment of independence is listed in the table below.

Alfred Wong (Age 43)

Chairman (Non Executive)

Date of appointment: 21 May 2001

Qualifications: MBA (NSW University), BA (HKU), ASIA

Experience and expertise: Alfred is the founder and the Managing Director of the Great Pacific Financial Group, a well respected private financial institution with over 10 years experience in property investment banking. Alfred has also held a number of executive management positions in leading financial institutions and banks in Australia, including Capita Financial Group and State Bank NSW.

Directorships: He is also the non-executive Chairman of the Pacific International Hotel Group and Executive Chairman of the Green Pacific Energy Limited, an ASX listed company.

Assessment of independence: Alfred holds 750,000 shares (6.31% of total share capital) and therefore, is not an independent director.

Danny Au-Yeung (Age 44)

Director (Chief Executive Officer)

Date of appointment: 21 May 2001

Qualifications: Fellow of the Chartered Association of Certified Accountants (UK), Member of the Australian Society of Certified Practising Accountants

Experience and expertise: Danny brings with him 20 years of experience in the financial industry, having held senior positions in Ernst & Young and Capita Financial Group. He is highly experienced in the structuring of subordinated financing structures for properties and infrastructure projects.

Directorships: Danny is a non executive director of Green Pacific Energy Limited, an ASX listed company,

Assessment of independence: As Danny is the Chief Executive Officer of the Company, he is an executive director and is not an independent director.

Ivan Wong (Age 41)

Director (Non Executive) Date of appointment: 21 May 2001 Qualifications: BSc (Hons)

CORPORATE GOVERNANCE STATEMENT

Experience and expertise: Ivan is an IT specialist. He also has extensive experience in the mortgage industries being the Director of Great Pacific Finance Pty Ltd, a leading specialist mortgage originator with over $500 million in funds under management. He also has access to in-depth and instantaneous information on the property industry as the founder of Universal Title Searchers, a leading provider of public, legal and business information with the first and only windows-based software package for electronic information transfer in Australia.

Assessment of independence: As Ivan holds 250,000 shares in the company making him one of the top 20 shareholders, he is not an independent director.

It is noted that the company's board composition is not in keeping with the commentary and guidance to Best Practice Recommendations 2.1. The company is only in its first full year of operation since listing on the Australian Stock Exchange on 21 March 2003 and is still in the development stage of laying the foundation for future growth. The Board is of the opinion that the current stage of growth which the company is at requires the company to have a board, which has more of a hands-on and technical experience in order to enhance company performance. The company also relies on the experience and expertise of its current Board members to develop the long term objectives of the company. However, the board is committed to follow the guidance to Best Practice Recommendations 2.1 by appointing independent directors to the Board in the coming year.

The Chairman is also not an independent director as recommended by Best Practice Recommendations 2.2, however, the role of the Chairman is held by someone other than the Chief Executive Officer, in order to ensure that no single individual has unfettered powers.

Term of Office

The members of the Board are elected by the shareholders to ensure that the Board has the appropriate mix of expertise and experience. One-third of the Board retires and make themselves available for re-election at the following AGM, with the exception of the Chief Executive Officer. No director, with the exception of the Chief Executive Officer, is allowed to retain office for more than 3 years without submitting himself or herself for reelection.

When a vacancy exists on the Board, the Board appoints the most suitable candidate from a panel of candidates, who then must stand for election at the next Annual General Meeting if he or she wishes to continue as a member of the Board in the following year.

Personal Interests & Conflicts

Directors must not take advantage of their position as directors and must not allow their personal interests, or the interests of any associated person to interfere or exert undue influence on their conduct or decisions as a director.

Directors also have a duty to avoid conflicts of interest between the best interests of the company and their own personal or commercial interests. Conflicts of interest can be either actual or potential. If a conflict of interest arises, directors must disclose their interests to the Board immediately. The directors concerned must not be present at the meeting while the matter is being considered and must not be allowed to vote on the matter either.

Independent Professional Advice

Each director has the right to seek independent professional advice at the company's expense, however prior approval from the Chairman is required, which may not be unreasonably withheld. Where the Chairman wishes to obtain independent professional advice, the Chairman is required to make a request to, and obtain the prior authorisation of, the Chairman of the Audit & Risk Management Committee.

Nomination Responsibilities

The Board also has responsibility in relation to the following functions:

advise the Board on the appropriateness of the composition and size of the Board;
establish formal procedures to identify and assess potential candidates for the Board with reference to their skills, experience, expertise and personal qualities;
identify, nominate and recommend appropriate candidates to the Board with the help of external consultants, if appropriate; and
draw up an appointment letter stating the terms and conditions of the appointment and retirement of any newly appointed members of the Board;

CORPORATE GOVERNANCE STATEMENT

The Board has decided not to formally set up a Nomination Committee at this stage as it has managed this part of its responsibility quite effectively given the current stage of its development. However, the Board will engage external consultants to give advice and make recommendations to the whole Board.

Principle 3: Promote Ethical And Responsible Decision-Making

Code of Conduct & Ethics

The company has a Code of Conduct, which sets the standards in accordance with which each director, manager and employee of the company is expected to act. The code is communicated to all levels of the company and deals with areas such as professional conduct, customers/consumers, suppliers, advisers/regulators, competitors, the community and the employees.

In addition to the Code of Conduct, the company also has a Directors' Code of Ethics, which sets out particular issues relevant to directors' obligations to the company.

Share Trading Policy

The constitution permits directors, senior executives and other officers of the company to trade in company shares as long as they comply with the company's Share Trading Policy. The Share Trading Policy is a code that is designed to minimise the potential for insider trading.

Directors must notify the Chairman of the Board, before they buy or sell shares in the company. If the Chairman of the Board intends to trade in the company shares, the Chairman of the Board must give prior notice to the Chairman of the Audit & Risk Management Committee. The details of the share trading must be given to the Company Secretary, in writing, within 3 business days of completion of such trade and the Company Secretary must lodge details of changes in a director's shareholding in the company with the ASX within 5 business days of such trading.

Currently, all the shares held by the Directors are under escrow until 21 March 2005 and as such, these shares cannot be traded by the Directors.

Senior executives must give prior notice to the Chief Executive Officer, while other officers must notify the Company Secretary, before trading in the company shares and details of all such transactions must be given, in writing, to the Company Secretary within 7 business days.

Any changes in substantial shareholding of the directors, senior executives or other officers must be reported to the ASX within 2 business days of such trading. The policy also recommends that trading in the company shares only occur in the following trading windows:

30 days after the announcement of the company's half year results; and
30 days after the announcement of the company's full year results.

Principle 4: Safeguard Integrity In Financial Reporting

Sign-off by Chief Executive Officer and Chief Financial Officer

In order to give assurance as to the integrity of the financial statements, the Chief Executive Officer and the Chief Financial Officer have provided a statement in writing to the Board stating that the company's financial reports present a true and fair view, in all material respects, of the company's financial condition and operational results and are in accordance with relevant accounting standards.

Audit & Risk Management Committee - audit responsibilities

The Board has decided to establish an Audit & Risk Management Committee, which acts as an advisory body to the Board in relation to the following responsibilities:

CORPORATE GOVERNANCE STATEMENT

review the company's financial statements and any other financial information distributed externally and ٠ make an assessment of whether the management processes are sufficient for supporting external reporting;
monitor the procedures in place to ensure that the company is in compliance with all relevant legislation and accounting standards, including the Corporations Act and ASX Listing Rules;
ensure that there is compliance with the Code of Conduct and the Directors' Code of Ethics and is periodically reviewed;
review policies to avoid conflicts of interest and review past or proposed transactions between members of the Board and the company and assess the impact on directors' independence;
assess the procedures and make recommendations for the selection and appointment of the external auditor $\bullet$ and for the rotation of external audit engagement partners;
assess the performance and independence of the external auditors and whether independence of this ۰ function has been compromised having regard to the provision of non-audit services; and
assess the reasonableness of the external audit fees proposed for the audit work to be performed;

The Audit & Risk Management Committee also has delegated responsibility from the Board in relation to:

the external audit planning process, in terms of the scope of the audit and the nature and impact of accounting policy and standard changes;
reviewing the external audit recommendations in terms of the review points raised and where major deficiencies in controls or procedures have been identified, whether prompt remedial action has been put in place; and
reviewing the draft financial report and making the necessary recommendations to the Board for the approval of the financial report.

As at the date of this report, the company has not appointed any member to the Audit & Risk Management Committee and as such, the responsibilities and duties of this Committee were taken up by the Board during the year. The small size and the hands on approach of the current Board enable it to handle particular issues relevant to verifying and safeguarding the integrity of the company's financial reporting with the same efficiency as an audit committee.

The Board adopted a formal charter for the Audit & Risk Management Committee to reflect the matters set out in the commentary and guidance to Best Practice Recommendation 4.2. The Board is aware that the small size of the current Board and the absence of independent Directors do not allow the Board to structure the Audit $&$ Risk Management Committee in accordance to the commentary and guidance to Best Practice Recommendation 4.3, but is committed to follow the recommendation once independent directors are appointed in the coming vear.

The board's responsibilities in relation to risk management matters are detailed under Principle 7: Recognise And Manage Risk.

Principle 5: Make Timely And Balanced Disclosure

The company is committed to ensuring that all information that may have a material impact on the share value of the company if a reasonable person had access to such information, is disclosed to the market in a timely and balanced manner. To ensure accountability, the implications of this commitment is communicated to all employees, through the implementation of the Continuous Disclosure Policy, which is also in accordance with the ASX Listing Rules and the Corporations Act requirements on Continuous Disclosure.

The Board has appointed the Chief Executive Officer and the Company Secretary as the two officers responsible for all disclosure under this policy. The officers must review and verify the information before the Company Secretary, who is the authorised contact for communications with the ASX, releases it to the market through the ASX.

The company acknowledges that the continuous disclosure regime allows listed companies a high degree of judgement as to the information that must be disclosed and when the disclosure is required. The company will adopt a best practice approach to ensure that the company meets the substance and the spirit of the continuous disclosure regime on a consistent basis.

CORPORATE GOVERNANCE STATEMENT

The company also makes regular disclosure of its results through other communications such as the following:

in late February, the company's half year results were announced to the market;
in late August, the company's full year results were announced to the market: and
in late September, the annual report will be sent to shareholders.

Principle 6: Respect The Rights Of Shareholders

Communication to Shareholders

The company has implemented an External Communications Policy, to ensure that all external communication (including but not limited to market releases and public relations materials) is submitted to the Chief Executive Officer for approval. External communication can only be released with his/her written consent. This is important for ensuring that only factual, clear and balanced information is disseminated to all shareholders equally and in a timely manner. During the year the following information was made available to all shareholders:

half year and full year results announcements;
2003 annual report;
ASX releases regarding progress in establishing the fund raising strategy; and
notices of meeting and explanatory information for shareholder meetings.

Shareholders may also request information, such as the Constitution, minutes of shareholders' meeting or any other information on the company by writing to the Company Secretary.

Annual General Meeting

The Board encourages full participation of shareholders at the Annual General Meeting (to be held on 26 November 2004) to ensure a high level of accountability and identification with the company's strategy and goals. To assist shareholders in communicating issues to the Board, reply paid question cards will be issued with the annual report. A list of the issues and questions will be made available to shareholders attending the Annual General Meeting.

The Board has also requested representatives from Hall Chadwick, the company's external auditor, to be present at the Annual General Meeting to answer questions that shareholders might have about the scope and conduct of the audit and the preparation of the auditor's report.

Principle 7: Recognise And Manage Risk

Risk management responsibilities

A significant function of the Audit & Risk Management Committee is the monitoring and assessment of risk oversight and internal compliance and control systems. The committee acts as an advisory body to the Board in relation to the following responsibilities:

review and advise on the acceptance of major contracts, goods or services on credit terms, acceptance of counter-party risks and issuing guarantees on behalf of the company;
evaluate the long-term strategy and the annual business plan, and identify the significant risks associated with the capital and operating budgets;
assess risks arising from actions by competitors, industrial disputes, government policy changes, environmental issues and the use of information systems and technology;
monitor internal control framework especially the information systems used to collect and collate the data and any enhancements that can be made;
review the reports produced from the systems, especially reports on any major defalcations, frauds, and thefts from the company and any significant or abnormal transactions; and
review reports on the adequacy of insurance coverage.

CORPORATE GOVERNANCE STATEMENT

As explained in the discussion under Principle 4: Safeguard Integrity In Financial Reporting, the Board is currently undertaking these specific functions of the Audit & Risk Management Committee with the same efficiency as a formal committee structure.

Sign-off by Chief Executive Officer and Chief Financial Officer

The Chief Executive Officer and the Chief Financial Officer have provided a statement in writing to the Board stating that the integrity of the company's financial reports are founded on a sound system of risk management and internal compliance and control, which implemented the policies adopted by the Board. The statement also certifies that the company's risk management and internal compliance and control systems are also operating efficiently and effectively in all material respects.

Principle 8: Encourage Enhanced Performance

Performance Evaluation

The Board also has responsibility with respect to the following functions:

develop policies and procedures to identify, assess and enhance the skills, expertise and competencies of the directors individually and the Board as a whole; and
develop a process and establish the criteria for evaluating the performance of the directors and the Board as a whole:

Formal appraisals will also be conducted annually for all employees and Key Performance Measures are the primary basis for performance reviews. Key individual performance targets are set for senior management. which are linked to the company's business plan and goals. Personal development and continuous learning is also strongly encouraged and agreed with either, the Chief Executive Officer or the Chief Financial Officer and regular feedback on progress against these targets and performance measures is given to encourage and enhance employee performance and management effectiveness.

Strategy Sessions

The Board reviews and approves the long-term strategy (3-5 years) and the annual business plan including the objectives and milestones to be achieved. To facilitate this process, the Board and the senior executives met in November 2003 and March 2004 to discuss the company's financial, strategic and operational goals and key business developments. The Board regularly discusses and reviews the business operations against the financial, strategic and operational goals set during the year.

Monthly Financial Results

The Chief Financial Officer distributes the monthly financial results of the company to members of the Board before each monthly Board meeting. This will ensure the Board is kept up to date with all the necessary information to effectively discharge their duties in its discussions and deliberations. The Board is also free to meet and question individual members of management to clarify issues on any matter pertaining to the company.

Director Induction and Training

New directors are provided with an induction program to introduce them to the company structure, culture and business operations. The program includes an information pack comprising the company's most recent annual and half year reports, the current year business plan, the Constitution and the Director's Code of Ethics. Sessions are also organised for new directors to meet the senior management and visit the key assets (such as construction site of borrowers) of the company.

Directors are also encouraged to undertake continuous professional development, at the company's expense, to keep their skills up to date.

Principle 9: Remunerate Fairly And Responsibly

Remuneration Responsibilities

The Board also has responsibilities with respect to the following functions:

CORPORATE GOVERNANCE STATEMENT

review the remuneration of directors to ensure there is a clear relationship between individual/corporate performance and their remuneration;
review and make recommendations on the remuneration packages and policies applicable to the Managing Director, Chief Financial Controller and other senior personnel including the share option scheme, incentive performance packages, superannuation entitlements, retirement and termination entitlements, fringe benefits, professional indemnity and liability insurances; and
obtain market comparisons, Australian and International benchmarks and seek external professional advice periodically on the appropriateness of the remuneration packages so as to be able to attract, motivate and retain exceptional performers.

Board Remuneration

The total remuneration for all non-executive directors is not to exceed an amount that has been agreed to by resolution of the Board and approved by the shareholders at the AGM. Currently, only executive directors are remunerated in accordance to their executive contract. No remuneration has been paid to the two non-executive directors. Equity-based remuneration in the form of share options was granted to all directors when the company was incorporated, however, all these share options expired on 30 June 2004.

The details of the nature and amount of each element of the emolument paid to each of the directors for the year ended is disclosed in the directors' Report.

Executive Remuneration

The details of the nature and amount of each element of the emolument paid to the executives of the company for the year ended is disclosed in the Directors' Report

The Board has decided not to set up a Remuneration Committee at this stage of the development of the company. The Board is of a view that the existing Board can effectively and efficiently manage the relatively simple remuneration system of the company given the small size of the Board, the minimal number of executives and the simple remuneration structure currently adopted by the company. However, the Board will regularly review the situation of the company to ensure a remuneration committee of appropriate structure as per recommendation 9.2 is set up when the growth in complexity in structure and operations of the company warrant a formal committee structure.

Principle 10: Recognise The Legitimate Interests Of Stakeholders

The company is involved in the financial service industry that is governed by various legislation, in particular, trade practices and fair dealing laws, consumer protection, respect for privacy and Financial Service Reform Act and the Corporations Act. Compliance with these legislations will help to maintain legitimacy, fairness and ethics in the company's dealing with various stakeholders. The company engages external consultants and advisors of appropriate expertise to help the Board to ensure compliance with various relevant legislations, especially in the preparation of disclosure documents to external stakeholders such as borrowers and investors. The company is indirectly involved in the property development industry through the provision of finance. Most of these developments, especially the larger scale one, invariably have an impact on the environment. In the process of approving the provision of loan facilities to such projects, compliance with environmental issues in accordance with EPA requirements will usually be checked as a prerequisite.

The Board in representing all stakeholders, like the employees, creditors, suppliers, customers, community and government bodies, must also be mindful of the competing interests of their shareholders whom they represent. In doing so, the company must strike a balance between attractive returns to the shareholders and environmentally sound practices, which has been included as one of the strategic review in the company's long term business plan.

The company's Code of Conduct also sets out the standards in accordance with which the company expects all its employees to behave. This was discussed under Principle 3: Promote Ethical And Responsible Decision-Making.

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 2004.

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 (resigned 16 December 2003)

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 2004 was a profit of $5,115,468 (30 June 2003: $3,514,621).

Dividends

No dividends were declared for the year ended 30 June 2004 (30 June 2003:$594,276).

Review of operations

Company overview and strategy

1. Brief history and vision

Great Pacific Capital Limited is a Sydney-based company listed on the Australian Stock Exchange (ASX code "GRP") which specialises in 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 Company was incorporated in 2001 with a vision of becoming a leading specialist in providing subordinated debt facilities while delivering excellent returns to the shareholders. One major step towards achieving this was to obtain official quotation to the Australian Stock Exchange (ASX) which happened in March 2003. This participation in the public arena provides the Company with opportunities to access to the financial market as well as larger scale property development and infrastructure projects.

Another important strategy to achieve the Company's objective is to maximise capital productivity by diversifying beyond our more accustomed range of commercial and residential projects into large-scale infrastructure project financing.

2. Dynamics of the business

(a) Residential property cycle in Australia

Housing has fuelled Australian economic activity for the last three years as the dominant economic growth engine. We have witnessed property price growth, especially residential property price, which peaked in the last year and overshot every capital city in Australia. Most of the economists agreed that Australia is now in a riskier part of the housing cycle with affordability under pressure and sectors of the housing market already suffering and therefore predicted that we will see a more volatile and diverse residential market in the year ahead resulting in price falls in some areas.

DIRECTORS' REPORT

However, most economists expect a soft landing relative to other cycles instead of a price crash when house prices fall by 23 to 45 percent. Most economists agreed that the most important triggers for a widespread crash, namely, a major increase in interest rates, high unemployment, a severe economic downturn and a massive slump in underlying demand, will not appear in the next year.

(b) Commercial property cycle in Australia

As expected, the commercial property market, especially the office buildings market has been weak for the past 2 1/2 years as an extended set back in the long upswing phase of the office cycle.

Office cycles as measured by real effective rents, are traditionally 17 years, peak to peak. In most markets, the problems have been demand-related rather than supply-related. This was evidenced in last year's weak market induced by a slump in annual total office employment, led by three of the biggest sectors: property and business services; telecommunications and finance. This was the result of the global economic downturn and recessions in Asia and the United States.

However, most economists are now convinced that all the leading indicators such as the strengthening domestic and global economies, improving business conditions and increasing company profits all point to an increase in demand for white collar workers and begin to fuel demand for office space. As long as the economy holds up, we are expecting a turn around in the commercial property market in late 2004.

The Company has focused on creating a niche market for its business. This involves employing our expertise to identify development projects that contribute to achieving our objective. This, in terms of residential properties, translates to projects with high quality finish, in good locations, and with appealing lifestyle facilities. The Company will then create the most attractive funding structure that will benefit all participants. This approach has served the Company well in the last three years as evidenced in the continuous growth of the Company, both in term of revenue and profit. This approach is also supported by the view of most economists, who despite predicting a down turn in the residential market for the next year, believe that properties of good quality and unique location will still fare well in the next year and beyond.

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As explained in last year's annual report, the Company started to look at projects of longer time frame with future development potential.

The approach taken by the Company to enter into this market is to identify significantly under-valued business assets (including properties) of future development potential and then involves in the arrangement of debt and equity for its acquisition.

The Company's role may be either as an arranger or provider of finance or origination of equity participating syndicate. The Company may then be directly or indirectly involved as the asset manager to manage and unlock the potential of such assets.

Operating results for the year

1. Results

The net result of the consolidated entity after applicable income tax for the year ended 30 June 2004 was a profit of $5,115,468, an increase of 45.5% from $3,514, 621 in 2003.

During the year, the loan provided by GPC No.4 (North Sydney) Pty Ltd secured by the mortgage of a commercial building was fully repaid upon the sale of the property by the borrower.

Another loan provided by GPC No.11 Pty Ltd secured by the mortgage of properties at West Dapto was also fully repaid through the refinancing activity of the borrower.

Both of these contributed to the revenue and profit for the current year.

DIRECTORS' REPORT

The loan provided by GPC No.1 (City Quarter) to finance the redevelopment project at the former Camperdown Children's Hospital had a maturity date of 31 December 2003. However, due to the delay in construction and hence settlement, the loan was only partly repaid as at 31 December 2003 and was subsequently extended until the end of December 2004.

Although the repayment of this loan was not as originally scheduled, the delay has not affected the profitability and recoverability of this transaction as the current value of the security provided for this loan has been assessed to be sufficient.

During the year, the consolidated entities have provided a short term facility to a consortium to acquire the Nardell Coal Mine at the Hunter Valley region. This facility will be repaid by the end of the year when the consortium has completed a major fund raising program. This is part of the Company's initiative to be involved in larger scale projects of longer time frame with future development potential.

2. Shareholder returns

Basic earnings per share for the year was 43.04 cents per share, an increase of 28.9% from 33.39 cents per share in 2003. Net asset of the group also increased to $17.14 million as compared to $10.38 million in 2003. This reflected the continuous growth in strength of the Company.

In term of shareholders' wealth, the net tangible asset backing per ordinary share increased to $1.44 as compared to $0.84 in 2003. This when compared to the original listing price of $1.00 per share represented a gain in value of about 44%.

Review of financial condition

1. Capital structure and treasury policy

The capital structure of the company was originally set up to ensure the business operates within the general market acceptable leverage level of around 12:1. Currently, the Company is operating well within this level allowing room for further expansion.

The Company obtains its funding from investors to finance its loan portfolio. As such it is important that the inflow and outflow of funds are properly matched both in terms of timing and amount.

The Company has established a policy to ensure that there is proper balance in allocating funds between

(i) creating loan portfolio for future income:
(ii) providing liquidity to service redemption of investment and payment of interest as well as operating costs; and
(iii) maintaining contingency support in case of unexpected events.

2. Cash from operations and other sources of eash

Cash from operations represents interest and fees received when loans are repaid by the borrower. The term of the loan provided by the Company usually allows interest to be capitalised until payment on maturity. Therefore, cash inflow in the form of interest receipts will not be on a regular monthly or quarterly basis. During the year, two loans have been fully repaid and one partly repaid resulting in a large sum of cash inflow in the term of interest income.

Other sources of cash inflow are in the form of loan repayment from borrower; investments from investor or short to medium term finance provided by other financial institutions. These activities usually occur on a recurring basis as the company continues its growth.

3. Liquidity and funding

Given the nature of the Company's loan portfolio which will not provide regular monthly or quarterly cash inflows, management of the liquidity of the Company is of utmost importance. The proper balance is achieved by matching of cash inflow and outflow both in terms of amount and time frame.

DIRECTORS' REPORT

Occasional mismatch could happen, as there will be unexpected delay in development projects and therefore delay in repayment schedule. To manage this situation, the Company will maintain a buffer when setting up a loan portfolio both in term of amount and duration although the cost of maintaining this is quite high. As an alternative, the Company also has access to short term finance from other financial institutions which have previous dealings with the Company and are familiar with the operation of the Company. The cost of such short term finance will then depend on the time frame required and the amount of securities provided.

4. Resources of the Company

The Company's focus is on the quality of the projects and therefore the typical transactions of the Company are of high value but low volume. As such, the Company is able to operate with the minimal number of executives and staff with an emphasis on the experience of the provision of sub-ordinated debt facilities.

The Company's approach is to maintain this core structure of minimum executives and staff who has the skills and experience in identifying quality projects and creating the most appropriate funding structures. They are then complemented by external consultants who are retained on an as needed basis to provide the most appropriate expertise to complete the relevant projects. This approach will allow flexibility to meet the specific need of transactions as they arise without carrying a large employee overhead.

5. Impact of legislation and other external requirements

Any new legislation such as the introduction of vendors tax in New South Wales or other external factors such as increase in interest rates will affect the housing industry and therefore the business of the Company. However, with the Company focusing on high quality projects with good potential, the experience of the staff of the Company and the flexibility of the Company's approach, the Company believes it can easily adapt to changes in the trends of the industry and maintain its niche position in the industry.

Likely developments and expected results of operations

The Board is of a view that the Company has grown to a stage that major changes may be required to enable the Company to achieve its next stage of growth. This may involve expansion of existing activities through acquisition of businesses of similar nature and the corresponding changes in management and capital structure. The Board is currently investigating all the available avenues to take the Company to this next level of growth which will bring long term benefits to the Company and its shareholders.

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.

Matters subsequent to the end of financial year

There are no matters or circumstances that have arisen since 30 June 2004 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.

DIRECTORS' REPORT

Information on Directors

$\sim$

$\sim 10^{-11}$

Directors	Age	Qualifications	Experience	SpecialResponsibilities	ParticularsofDirectorsinterest inshares andoptions ofGreatPacificCapitalLimited
Alfred		MBA (NSWUniversity)	Managing Director of the Great PacificFinancialGroup,Non-ExecutiveChairman of the Pacific InternationalHotel Group and Executive Chairmanof Green Pacific Energy Limited, anASX listed company.		OrdinaryShares
Wong	43	BA (HKU),ASIA$\alpha$ , $\beta$	Mr Wong had also held a number ofexecutive management positions inleading financial institutions and banksAustralia, including Capita FinancialGroup and State Bank NSW	Chairman	750,000
			Company Director, Accountant, Non-executive Director of Green PacificEnergy Limited,ASX listedancompany.	Chief ExecutiveOfficer
Danny Au-Yeung	44	FCCA (UK)ASCPA	Mr Au-Yeung had held senior positionsin Ernst & Young and Capita FinancialGroup and is also a member of theAustralianSocietyоfCertifiedPracticing Accountants and a fellow ofthe Chartered Association of CertifiedAccountants, UK.		750,000
GrahamWerry(resigned16December2003)	46	BA, LLB(NSWUniversity)	Company Director, Lawyer.	ExecutiveDirector	750,000

DIRECTORS' REPORT

Information on Directors (continued)

Directors	Age	Qualifications	Experience	SpecialResponsibilities	Particulars$\underline{\mathbf{of}}$Directorsinterest inshares andoptions ofGreatPacificCapitalLimited
					OrdinaryShares
			Company Director, IT Specialist.	Non ExecutiveDirector
Ivan Wong	41	BSc (Hon)(University ofQLD)$\mathcal{A}^{\mathcal{A}}$	Mr Wong is also the Director of GreatPacific Finance Pty Ltd, a leadingspecialist mortgage originator withover $500 million in funds underfounder ofmanagement and theUniversal Title Searchers, a leadingprovider of public, legal and businessinformation with the first and onlywindows-based software package forelectronic informationtransfer- inAustralia.		250,000

All the shares issued to the Directors are under escrow for a period of 2 years from 21 March 2003. All the share options previously issued to Directors expired on 30 June 2004.

Information on Company Secretary

Name	Qualifications	Experience
Edwin Yeung	ASCPA, FCCA (UK),HKSA	Mr Edwin Yeung is a registered company auditor with over 20 yearsexperience in the accounting and auditing fields. He started hiscareer as an auditor with Coopers & Lybrand and had since heldvarious senior accounting and internal audit positions with variouslarge insurance and financial institutions.

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 2004 and the number of meetings attended by each Director were as follows:

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

Directors' and executive officers' Emoluments

Disclosure relating to directors' and executive officers' emoluments has been included in Note 9 of the financial report.

Options

All options held by the directors as at 30 June 2003 lapsed on 30 June 2004.

$\mathcal{A}$

DIRECTOR'S REPORT

Environmental regulations

$\bar{z}$

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 29 day of September 2004 in accordance with a resolution of the Directors.

$\sim 10^4$ Alfred Wong Director

Danny Au-Yeung Director

STATEMENT OF FINANCIAL PERFORMANCE FOR

THE YEAR ENDED 30 JUNE 2004

		Consolidated2004	Consolidated2003	Parent entity2004	Parent Entity2003
	Notes	$	$	$	$
Interest income	$\boldsymbol{2}$	12,649,099	11,518,112	622,883	96,676
Interest expense	2	(5, 442, 584)	(5,224,174)	(391,040)	(108, 219)
Net interest income		7,206,515	6,293,938	231,843	(11, 543)
Fee and commission income	3	3,016,599	1,207,090	4,636,228	4,123,196
Fee and commission expense	3	(302, 357)	(19,681)	(20, 090)
Net fee and commission income		2,714,242	1,187,409	4,616,138	4,123,196
Other income		317,765	1,575	89,151	1,575
Deferred expense written offDepreciationandamortisation		(75,000)	(75,000)	(75,000)	(75,000)
expense	4	(382, 895)	(420, 678)	(10, 924)	(17,097)
Employee expense		(490, 110)	(433, 489)	(490, 110)	(433, 489)
Lease and rental expense		(315,229)	(126, 026)	(138, 414)	(126, 026)
Legal and professional fees		(912, 098)	(975, 920)	(714, 412)
Fixed assets written off		(99, 291)		(99, 291)	(814, 136)
Other expenses fromordinary
activities		(461, 479)	(208,701)	(211,368)	(157, 829)
Profit from ordinary activitiesbefore income tax		7,502,420	5,243,108	3,197,613	2,489,651
Income tax expense relating toordinary activities	5	(2,386,952)	(1,728,487)	(985, 509)	(782, 391)
Netattributableprofittomembers of the parent entity		5,115,468	3,514,621	2,212,104	1,707,260
Increaseinrevaluationassetreserve	21	2,240,527	657,981
Totalchanges in equity otherthanthoseresultingfromtransactionswithownersasowners		7,355,995	4,172,602	2,212,104	1,707,260

			Cents per share
Basic earnings per share	7	43.04	33.39
Diluted earnings per share	$\overline{\overline{J}}$	43.04	18.70

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 2004

		Consolidated2004	Consolidated2003	Parent Entity2004	Parent Entity
	Notes	S	$	S	2003$
Assets
Cash and liquid assets	10	1,248,758	5,253,682	271,506	375,118
Receivables	11	19,862,643	19,255,928	8,152,192	6,035,740
Loans	12	18,226,959	21,466,446	8,208,354
Deferred tax assets	13	1,162,587	1,684,766	1,162,587	98,975
Investment - controlled entities	14			16	14
Other assets	15	19,109	90,707	6,250	81,250
Property, plant and equipment	16	5,814,039	2,767,595	14,039	117,595
Intangible assets	17		366,666
Total assets		46,334,095	50,885,790	17,814,944	6,708,692
Liabilities
Payables	18	2,927,368	5,044,020	245,566	75,975
Current tax liabilities		2,861,917	873,412	2,861,917	777,443
Provision - annual leave		28,265	25,983	28,265	25,983
Borrowings	19	20,141,911	31,205,727	4,000,000
Deferred tax liabilities		3,232,077	3,355,810	3,232,077
Total liabilities		29,191,538	40,504,952	10,367,825	879,401
Net assets		17,142,557	10,380,838	7,447,119	5,829,291
Equity
Contributed equity	20	4,735,500	4,735,500	4,735,500	4,735,500
Reserves	21	2,898,508	657,981
Retained profits	22	9,508,549	4,987,357	2,711,619	1,093,791
Total equity		17,142,557	10,380,838	7,447,119	5,829,291

÷,

$\bar{\beta}$

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

$\sim$

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2004

		Consolidated2004	Consolidated2003	Parent Entity2004	Parent Entity2003
	Notes	$	$	$	$
Cash flows from operating activities
Interest received		12,878,273	750,610	21,380	45,674
Interest paid		(5,905,307)	(2,364,690)	(238,076)
Fee received		2,000,625	170,015	1,151,125	90,175
Fee paid		(272, 490)	(19,664)
Operating receipts		415,014	477,866		1,725
Operating payments		(2,672,455)	(1,988,450)	(1,858,434)	(1,636,156)
Net amounts receivable / (payable)
from controlled entities				4,693,212	(320, 695)
Net cash provided by / (used in)
operating activities	25(a)	6,443,660	(2,974,313)	3,769,207	(1, 819, 277)
Cash flows from investing activities
Payment for investments				(2)	(7)
Proceeds from sale of investment			112,500
Proceeds from repayment of loans		23,483,237	8,415,060
Loans to developers and borrowersPayment for option fees to purchase		(20, 243, 750)	(14, 651, 251)
propertyPayments for property, plant and			(169, 557)
equipmentNet increase in amounts receivable		(845,009)	(1,108,894)	(6,100)	(4,493)
from controlled entities				749,995	(7,876,411)
Net cash provided by / (used in)
investing activities		2,394,478	(7,402,142)	743,893	(7,880,911)
Cash flows from financing activitiesProceeds from issue of shares
			1,885,500		1,885,500
Payment for dividends		(574,082)		(574,082)
Proceeds from borrowings		7,969,864	871,888	7,100,000
Repayments of borrowingsProceeds from issue of debenture /		(3,100,000)		(3,600,000)
promissory notes		5,860,000	13,970,000		1,750,000
Redemption of promissory notesNet increase in amounts payable to		(22,998,844)	(6,350,000)		(1,750,000)
controlled entities				(7,542,630)	4,718,937
Net cash (used in) / provided by
financing activities		(12, 843, 062)	10,377,388	(4, 616, 712)	6,604,437
Net (decrease) / increase in cashheld		(4,004,924)	933	(103, 612)	(3,095,751)
Cash at the beginning of the
financial year		5,253,682	5,252,749	375,118	3,470,869
Cash at the end of the financial year	25(b)	1,248,758	5,253,682	271,506	375,118

$\mathcal{L}^{\text{max}}$ and $\mathcal{L}^{\text{max}}$

$\bar{\beta}$

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 2004

1. Summary of significant accounting policies

Basis of preparation of financial report

This general purpose financial report for the year ended 30 June 2004 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 2004 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 23 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.

Future income tax benefits arising as a result of timing differences are only bought to account when realisation of the asset is assured beyond reasonable doubt. Benefits arising as a result of tax losses are bought to account, as realisation of this asset is virtually certain in the coming years.

21

GREAT PACIFIC CAPITAL LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

1. Summary of significant accounting policies (continued)

(ii) Tax Consolidation regime

Great Pacific Capital Limited and its wholly-owned Australian subsidiaries have formed 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 2004. 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.

Under this arrangement, the head entity recognises all the current and deferred tax assets and liabilities for the tax consolidation group in its own accounts.

(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 vears.

(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.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

1. Summary of significant accounting policies (continued)

(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. As at 30 June 2004, all the goodwill was fully amortised.

(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.

(l) Comparatives

Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current year.

(m) Adoption of Australian Equivalents to International Financial Reporting Standards

The introduction of International Financial Reporting Standards (IFRS) effective for financial years commencing 1 January 2005, requires the production of accounting data for future comparative purposes at the beginning of the next financial year.

The economic entity's management are assessing the significance of these changes and preparing for their implementation.

The directors are of the opinion that the key differences in the economic entity's accounting policies, which will arise from the adoption of IFRS are:

Goodwill on consolidation

Under the proposed changes to the IAS 22: Business Combinations, goodwill is to be capitalised to the statement of financial position and subjected to an annual impairment test. Amortisation of goodwill is to be prohibited. Current accounting policy of the entity is to amortise goodwill on a straight line basis over the lesser of the benefit period or 20 years. However, as at 30 June 2004 all goodwill has been fully amortised.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

1. Summary of significant accounting policies (continued)

(m) Adoption of Australian Equivalents to International Financial Reporting Standards (continued)

Income Tax

Currently, the economic entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on the accounting profit adjusted for any permanent differences. Timing differences are currently brought to account as either a provision for deferred income tax or future income tax benefit. Under the Australian equivalent to IAS 12, the economic entity will be required to adopt a balance sheet approach under which temporary differences are identified for each asset and liability rather than the effects of the timing and permanent differences between taxable income and accounting profit.

Impairment of assets

The group currently assesses the carrying amount of non-current assets by determining the recoverable amount on the basis of undiscounted cash flows. Under Australian equivalents to IFRSs, the group will be required to determine the recoverable amount as the higher of fair value less costs to sell and value in use which is determined using discounted cash flows. It is possible that when discounting is initially applied, impairment losses may need to be recognised on some major assets.

$\sim$

$\bullet$

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated2004	Consolidated2003	Parent Entity2004	Parent Entity2003
2. Interest income and expense	$	$	$	$

Interest income
Loans and advances	12,542,768	11,377,396	601,503	51,002
Other	106,331	140,716	21,380	45,674
Total interest income	12,649,099	11,518,112	622,883	96,676

Interest expense
Borrowings	5,434,154	5,156,991	390,451	108,219
Other	8,430	67,183	589
Total interest expense	5,442,584	5,224,174	391,040	108,219
3. Fee and commission income andexpense
Fee and commission income
Arranger fee	151,125	68,175	151,125	68,175
Establishment fee	350,000		350,000
Management fee	49,500	60,500	1,669,129	2,995,946
Success fee	525,000	900,000	525,000	900,000
Other	1,940,974	178,415	1,940,974	159,075
Total fee and commission income	3,016,599	1,207,090	4,636,228	4,123,196

The management fee charged by Great Pacific Capital Limited to its controlled entities represents the fee formanaging the loan portfolio of the controlled entities and is based on a fixed rate of 12% on the value of the l portfolio.

Fee and commission expense
Application fee	119,821		20,090
Arranger fee	10,000	1,805
Commission	122,490
Management fee	50,046	17,876
Total fee and commission expense	302,357	19,681	20,090
4. Depreciation and amortisation
Depreciation	10,924	17.097	10,924	17,097
Amortisation - borrowing costs	5.305	3.581
Amortisation - goodwill	366,666	400,000
	382,895	420,678	10,924	17,097

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated2004	Consolidated2003	Parent Entity2004	Parent Entity2003
5. Income tax	$	S	$	$
Reconciliation of prima facie tax on profitfrom ordinary activities before income taxexpense to income taxattributable- tooperating profit:
Profit from ordinary activities before incometax	7,502,420	5,243,108	3,197,613	2,489,651
Prima facie tax thereon at 30%	2,250,727	1,572,932	959,284	746,895
Tax effect of permanent differences:
Amortisation of goodwill	110,000	120,000
Write-off of deferred expenses	22,500	22,500	22,500	22,500
Other non-deductible expenses	3,125	2,889	3,125	2,830
Under provision for Income Tax in prior year	600	10,166	600	10,166
Income tax expense attributable to operating
profit	2,386,952	1,728,487	985,509	782,391

6. Dividends and dividend franking account

No dividend (2003: $594,275) was declared in respect of the year ending 30 June 2004.

$\sqrt{2}$ , $\sqrt{2}$

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 $18,841 (30 June 2003: $18,619).

$\bar{\mathbf{x}}$

	Consolidated2004	Consolidated2003
7. Earnings per share	Cents per share
Basic earnings per share	43.04	33.39
Diluted earnings per share	43.04	18.70
(a) Reconciliation of earnings to net profit
Net profit	5,115,468	3,514,621
Earnings used in the calculation of basic earnings per share	5,115,468	$3,51\overline{4,621}$
Notional earnings on options after tax based on 180 days bank bill rate		323,400
Earnings used in the calculation of diluted earnings per share	5,115,468	3,838,021

$\cdot$

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated2004	Consolidated2003
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	11,885,500	10,526,907
Weighted average number of options outstanding	۰	10,000,000
Weighted average number of shares used in the calculations of diluted earningsper share	11,885,500	20,526,907

The options outstanding in 2003 have been classified as potential ordinary shares and are included in determination of diluted earnings per share. The options expired on 30 June 2004.

	Cansolidated2004	Consolidated2003	Parent Entity2004	Parent Entity2003
8. Auditors' remuneration	$	S	S
Amounts paid, or due and payable for audit orreview services of statutory financial reports	41,000	41,500	41.000	41.500
Amounts paid, or due and payable for otherservices	35,386	15.391	35.386	15,391
Total auditors' remuneration	76,386	56,891	76,386	56,891

9. Directors' and executive remuneration

(a) Names and positions held of Consolidated Entity Directors and Specified Executives in office at any time during the financial year are:

Consolidated Entity Directors

Alfred Wong	Chairman – Non executive
Danny Au-Yeung	Chief Executive Officer – Excecutive
Ivan Wong	Director – Non executive
Graham Werry	Director – Executive, resigned 16 December 2003
Specified Executives
Edwin Yeung	Financial Controller and Company Secretary

$\bar{z}$

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

9. Directors' and executive remuneration (continued)

(b) Consolidated entity Directors' remuneration

	Primary		PostEquity		Total
			Employment
	Salary & Fees	Non-Cash	Superannuation	Options
		Benefits
Consolidated Entity Directors
Wong, A
2004
2003
Au-Yeung, D
2004	120,000		10,800		130,800
2003	120,000		10,800		130,800
Wong, I
2004
2003
Werry, G
2004	54,500				54,500
2003	130,800				130,800
	Total remuneration: Consolidated entity Directors
2004	174,500		10,800		185,300
2003	250,800		10,800		261,600

Specified Executive
Yeung, E
2004	100,000	26,406	9,000		135,406
2003	100,000		9,000		109,000
	Total remuneration: Specified executive
2004	100,000	26,406	9,000		135,406
2003	100,000		9,000		109,000

There is only one specified executive involved in the strategic direction and management of the consolidated entity during the year.

(b) Shareholdings

Consolidated Entity Directors

	Balance as at 1July 2003	Optionsexercised	Net purchasesor sales	Balance as at 30June 2004
Wong, A	750,000			750,000
Au-Yeung, D	750,000		$\overline{\phantom{0}}$	750,000
Wong, I	250,000		$\sim$	750,000
Werry, G	750,000			750,000
Specified Executive
Yeung, E	2,000			2,000
Total	2,502,000	÷		2,502,000

$\ddot{\phantom{a}}$

All the shares held by the Directors are under escrow until 21 March 2005.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

9. Directors' and executive remuneration (continued)

(c) Remuneration options

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 2004, options issued have lapsed, As at 30 June 2003, the options had no value since its current market price in 2003 of $1.09 per share was substantially lower than the exercise price of $2.50.

(d) Remuneration practices

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.

	Consolidated2004	Consolidated2003	Parent Entity2004	Parent Entity2003
	S.	S	S	$
10. Cash and liquid assets
Cash and cash at bank	1,148,758	5,228,682	271,506	350,118
Term deposits	100,000	25,000		25,000
	1,248,758	5,253,682	271,506	375,118
11 Receivables
Interest on loans and advances	19,382,193	17,578,441	2,493,825
Receivable from controlled entitiesReceivable from controlled entities -			1,444,598	4,536,587
tax related			4,024,848
Other debtors	480,450	1,677,487	188,921	1,499,153
	19,862,643	19,255,928	8,152,192	6,035,740
12. Loans
Loans - other	18,226,959	21,466,446	8,208,354
Maturity analysis:
Not longer than 3 monthLonger than 3 and not longer than 12		2,964,949
months	18,226,959	8,410,195	8,208,354
Longer than 1 and not longer than 5years		10,091,302
	18,226,959	21,466,446	8,208,354

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 owned 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 2004

	Note	Consolidated2004$	Consolidated2003S	Parent Entity2004S	Parent Entity2003Ŝ
13. Deferred tax assets
Future income tax benefit:
- timing differences– tax losses		66,5651,096,022	16,2721,668,494	66,5651,096,022	14,24584,730
		1,162,587	1,684,766	1,162,587	98,975
14. Investments
Investment in controlled entities	24			16	14
		$\blacksquare$	$\blacksquare$	16	$\overline{14}$
15. Other assets
Deferred expensesAccumulated deferred expenseswritten off		350,000	350,000	350,000	350,000
		(343,750)	(268,750)	(343,750)	(268,750)
		6,250	81,250	6,250	81,250
Borrowing costs		22,265	13,558
Accumulated amortisation		(9,406)	(4, 101)
		12,859	9,457
		19,109	90,707	6,250	81,250
16. Property, plant and equipment
Land and buildings
At independent valuation		5,800,0005,800,000	2,650,000
			2,650,000
Furniture, fixtures and fittings		1,752	110,140	1,752	110,140
Accumulated depreciation		(326)	(13, 352)	(326)	(13, 352)
Written down value		1,426	96,788	1,426	96,788
Computer and other equipment		30,337	33,255	30,337	33,255
Accumulated depreciation		(17, 724)	(12, 448)	(17, 724)	(12, 448)
Written down value		12,613	20,807	12,613	20,807
		5,814,039	2,767,595	14,039	117,595

$\cdot$

Valuations

The independent valuations on land and buildings owned by the consolidated entity were carried out between 15 July and 29 July 2004 by TC Wetherall (JP, API, RAPI, AIBS) of TCW Consulting Pty Ltd, Wollongong.

The valuations were performed on the basis of market value as at balance date.

The net increment arising from the valuations has been transferred to the asset revaluation reserve (Note 21).

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated2004Ş	Consolidated2003$	Parent Entity2004$	Parent Entity2003$
16. Property, plant and equipment(continued)
Reconciliations:
(i) Land and buildingsBalance at the beginning of the yearAdditionsRevaluations during the year	2,650,000909,4732,240,527	857,6191,134,400657,981
Balance as at the end of the year	5,800,000	2,650,000	a.
(ii) Furniture, fixtures and fittingsBalance at the beginning of the yearAdditionsDepreciation expenseWrite off	96,7881,600(3,084)(93, 878)	103,5252,034(8,771)	96,7881,600(3,084)(93, 878)	103,5252,034(8,771)
Balance as at the end of the year	1,426	96,788	1,426	96,788
(iii) Computer and other equipmentBalance at the beginning of the yearAdditionsDepreciation expenseWrite off	20,8075,060(7, 840)(5, 414)	26,6742,459(8,326)	20,8075,060(7, 840)(5,414)	26,6742,459(8,326)
Balance as at the end of the year	12,613	20,807	12,613	20,807
17. Intangible assets
Goodwill at costAccumulated amortisation	999,999(999, 999)	999,999(633,333)
	$\pmb{\mathsf{w}}$	366,666	۰
18. Payables
Accrued expensesAmount payable to - related entities– otherInterest payable on - promissory notes$-$ borrowing	74,571531,7382,160,595160,464	31,70010,000487,1454,515,175	54,20730,895160,464	31,70010,00034,275
	2,927,368	5,044,020	245,566	75,975

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated2004Ъ	Consolidated2003S	Parent Entity20045
19. Borrowings
Bank loan - secured	2,401,747	1,531,883
Promissory and debenture notes	12,535,000	29,673,844
Other short term borrowings	5,205,164		4,000,000
	20,141,911	31,205,727	4,000,000
Maturity analysis:
Not longer than 3 months	5,205,164	850,000	4,000,000
Longer than 3 and not longer than 12 months	7.794,995	22,158,839
Longer than 1 and not longer than 5 years	7,141,752	8,196,888
	20,141,911	31,205,727	4,000,000

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 and debenture 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 15% are payable upon maturity of the promissory and debenture notes.

20. Contributed equity

11,885,500 ordinary shares
(2003:11,885,500)	4,735,500**************************************	4,735,500	4,735,500	4,735,500

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.

21. Reserves

Asset revaluation reserve	2,898,508	657,981
Movement during the year:
Asset Revaluation Reserve
Balance at the beginning of the year	657.981		-
Revaluation increment of land and buildings	2.240.527	657.981
Balance at the end of the year	2,898,508	657.981

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

22. Retained profits

Balance at the end of the year	9,508,549	4,987,357	2,711,619	1,093,791
Great Pacific Capital LimitedDividends paid	5,115,468(594.276)	3.514,621	2,212,104(594.276)	1,707,260
Balance at the beginning of the yearNet profit attributable to the members of	4,987,357	1.472,736	1,093,791	(613, 469)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

23. 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 Equipment Pty Ltd	NSW, Australia	Ordinary	100%
GPC Mineral Investments Pty Ltd	NSW, Australia	Ordinary	$100%$
GPC Finance Pty Ltd	NSW, Australia	Ordinary	100%
Great Pacific Hotel Investments Pty Ltd	NSW, Australia	Ordinary	100%

GPC Finance Pty Ltd and Great Pacific Hotel Investment Pty Ltd were respectively incorporated during the financial year on 13 August 2003 and 1 March 2004. Great Pacific Capital Limited subscribed for all the shares of these two entities for $1 each.

24. 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 (resigned 16 December 2003) and Mr Ivan Wong.

Directors' holdings of shares and options

	Ordinaryshares	Share options	Ordinaryshares	Share options
	Number held2004	Number held2004	Number held2003	Number held2003
TheinterestsDirectorsоftheοfconsolidated entityand theirrelatedentities in shares and share options of the
Company	2,500,000		2,500,000	10,000,000
Related Parties	Consolidated2004	Consolidated2003	Parent Entity2004	Parent entity2003
	$	$	$	S
Payable to Great Pacific Financial Group forlegal fees paid on behalf		10,000		10,000

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

24. Related Parties (continued)

Promissory Notes

During the year, all the promissory notes issued to related parties of Mr Graham Werry (2003: $2,415,843) were fully redeemed. These notes were issued 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 2004 and the previous financial period ended 30 June 2003.

Wholly-owned group

The wholly-owned group consists of Great Pacific Capital Limited and its wholly-owned controlled entities set out in note 23.

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 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 Entity20045	Parent Entity2003
Management fee income	1,669,129	2,995,947
Aggregate amounts receivable / payable to entities in the wholly-owned groupat balance date
Receivable from controlled entities – operating expenses	1,444,598	6,109,979
- tax related	4,024,848
	5,469,446	6,109,979
Payable to controlled entities		1,583,392

Other related entity

Great Pacific Equity Loan Pty Limited is a company owned by one of the Directors of Great Pacific Capital Limited. Mr Danny Au-Yeung and is regarded as a related entity.

Transactions between Great Pacific Capital Limited and its controlled entities and Great Pacific Equity Loan Pty Limited during the financial year consisted of:

(a) Investments by Great Pacific Equity Loan Pty Limited in the consolidated entity.
(b) Loans advanced by Great Pacific Equity Loan Pty Limited to the consolidated entity.
(c) The payment of interest on the above investments and loans.

Investments by Great Pacific Equity Loan Pty Limited are in the form by debenture notes issued by GPC Finance Pty Limited under the same terms and conditions as those issued to all other third party investors.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

24. Related Parties (continued)

Loans advanced by Great Pacific Equity Loan Pty Limited have no fixed term of repayment and interest is charged at between 20% to 25% per annum which is exactly the same as the rate paid by Great Pacific Equity Loan Pty Limited to obtain the funds.

Aggregate amounts included in the determination of the operating profit before income tax that resulted from transactions with Great Pacific Equity Loan Pty Limited:

	Consolidated	Consolidated	Parent Entity	Parent entity
	2004	2003	2004	2003

Interest paid on debenture notes	16,074	$\blacksquare$	$\bullet$	$\overline{\phantom{a}}$
Interest paid on loan advances	965.651	w

Total	981.725			$\bullet$

Aggregate amounts payable to Great Pacific Equity Loan Pty Limited at balance date:

Debenture notesLoan advances	550,0001,205,164
Total payable	1,755,164	$\overline{a}$
	Consolidated2004	Consolidated2003	Parent Entity2004	Parent Entity2003
25. Notes to the statement of cash flows	$	$	$	5
(a) Reconciliation of net cash provided by /(used in) operating activities to profit fromordinary activities after income tax
Net cash provided by / (used in) operating
activities	6,443,660	(2,974,313)	3,769,207	(1,819,277)
Depreciation	(10,924)	(17,097)	(10, 924)	(17,097)
Amortisation - borrowing cost	(5,305)	(3,581)
Amortisation - goodwill	(366, 666)	(400,000)
Write off of deferred expenses	(75,000)	(75,000)	(75,000)	(75,000)
Establishment fee capitalised	350,000		350,000
Fixed assets written off	(99, 281)		(99,291)
Other	8,698	7,524
Increase / (decrease) in operating assets
Interest receivable	1,803,751	10,766,318	1,069,749
Other receivables	(1, 197, 037)	1,129,570	1,596,769	4,432,846
Other	(522, 179)	959,069	1,123,861	(79, 143)
(Increase) / decrease in operating liabilities
Interest payable	2,194,118	(2,757,859)	(160, 464)
Payables	(1,541,313)	(419,061)	(32,970)	55,767
Provisions for tax	(1,988,505)	(847,018)	(2,084,474)	(777, 443)
Provisions	121,451	(1,853,931)	(3,234,359)	(13, 393)
Profit from ordinary activities after income
tax	5,115,468	3,514,621	2,212,104	1,707,260

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

25. Notes to the statement of cash flows (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 Statement of Financial Position:

Cash and cash at bank	1,148,758	5,228,682	271,506	350,118
Term deposits	100.000	25,000		25,000
	1,248,758	5,253,682	271,506	375,118

26. 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.

27. Events occurring after reporting date

There are no matters or circumstances that have arisen since 30 June 2004 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.

28. Contingencies

Litigations

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 2004, there are two outstanding legal claims detailed as follows:

(1) Great Pacific Capital Limited had received a written notice of demand for damages arising from wrongful termination of an employment contract lodged by a former employee of Bellpac Pty Ltd, the legal owner of the Bellambi West Colliery. Although Great Pacific Capital Limited was not the employer of this employment contract, it has been included as one of the defendants in the claim. At this stage, no claim for a specific amount of damages has been lodged and there is no scheduled date for hearing at the Supreme Court of New South Wales.
(2) The administrators of Thin Seam Mining Pty Ltd, a mining contractor in the Bellambi West Colliery before its acquisition by Bellpac Pty Ltd, started a claim for the indemnity of cost incurred during the administration process. The cost incurred was estimated to be about $800,000 although there has been no claim for a specific amount. The company denied the existence of such an idemnity and the case was heard in the Supreme Court in July 2004 and will continue in October 2004.

Guarantees Provided

Some entities within the consolidated entity have provided guarantees to third parties in relation to the performance and obligations of certain borrowers or other entities within the consolidated entity in respect to loan facility and equipment lease rentals. The guarantees are for the term of the facility and leases. The periods covered by the guarantees range from 3 to 5 years. The consolidated entity charges a guarantee fee based on the amount of the facility for providing such guarantees.

The total value of the facilities provided whereby guarantees have been provided to third parties amounted to $25 million. This amount represents the maximum exposure to the consolidated entity.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

29. Lease commitments

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

Pavable- Not later than 1 year- Later than 1 year but not later than 5 years	346.3321,837,352	119.816148.582	110.5781,051,504	119,816148.582
	2,183,684	268.398	1.162.082	268,398

The property lease is a non-cancellable lease with a ten year term, with rent payable monthly in advance. The lease agreement provide for rent to be increased by 4 % per annum. There is an option to extend the lease term for four years.

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

Property leased in prior year had been reassigned to a third party. There are no outstanding obligation on this lease.

The equipment lease is for mining equipment with a total value of $1,000,000 for a term of 60 months with lease payments payable on a monthly basis. The equipment has been subleased to Bellpac Pty Limited, the company which operates the coal mine at Bellambi West Colliery, under similar terms and conditions.

30. 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:

30 June 2004	Floatinginterestrate$	1 year orless$	Over 1 to5 years$	Morethan5years$	Non-interestbearing$	Total$	Weightedaverageinterest rate$%$
Financial assets:
Cash and liquid
assets	1,148,757	100,000	$\blacksquare$		1	1,248,758	2.81
Receivables				$\blacksquare$	19,862,643	19,862,643
Loans	8,208,354	10,018,605	$\bullet$			18,226,959	21.78
	9,357,111	10,118,605			19,862,644	39,338,360
Financial liabilities
PayablesPromissory and					2,827,368	2,827,368
debenture notesOther short term		7,135,000	5,400,000		۰	12,535,000	18.96
borrowings		5,205,164				5,205,164	27.30
Bank loan		659,995	1,741,752			2,401,747	7.38
		13,000,159	$7,\overline{1}41,752$		2,827,368	22,969,279

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

30. Financial instruments (continued)

			ConsolidatedFixed interest rate maturing in:
	Floatinginterestrate	1 year orless	Over 1 to5 years	Morethan5years	Non-interestbearing	Total	Weightedaverageinterest rate
30 June 2003	Ş	$	$	$	$	$	S
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
	щ.	23,008,839	8,196,888		4,556,877	35,762,604

(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 cither 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.

31. Company details

DIRECTORS' DECLARATION

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

(a) the financial statements and notes, set out on pages 17 to 37 are in accordance with the Corporations Act 2001:
- (i) give a true and fair view of the financial position of the Company and consolidated entity as at 30 June 2004 and of their performance for the financial year ended on that date; and
- (ii) comply with Accounting Standards and the Corporation Regulations 2001; and
(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 29 day of September 2004 in accordance with a resolution of the Directors.

Alfred Wong Director

Danny Au-Yeung Director

Hall Chodwick

d Accountants & Rusiness Advisers

Sydney

Level 29 St. Martins Tower 31 Market Street Sydney, NSW 2000

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for Great Pacific Capital Limited (the company) and Great Pacific Capital Limited (the consolidated entity), for the year ended 30 June 2004. The consolidated entity comprises both the company and the entities it controlled during that year.

GREAT PACIFIC CAPITAL LIMITED

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF

ABN 57 096 781 716

GREAT PACIFIC CAPITAL LIMITED

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report

Audit Approach

We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgment, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows.

We formed our audit opinion on the basis of these procedures, which included:

Examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
Assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

Indenendence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Audit Opinion

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

a. the Corporations Act 2001, including:
- giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2004 and of their performance for the year ended on that date; and
- complying with Accounting Standards in Australia and the Corporations Regulations 2001; ii. and

b. other mandatory professional reporting requirements in Australia.

Hall Chadwick

Level 29, 31 Market Street Sydney, NSW 2000

Drew Townsend Date: 30 September 2004

GPO Box 3555 Sydney, NSW 2001 n×

DX 1451 Sydney

Telephone: (02) 9263 2600 Facsimile: (02) 9263 2800 Email: hesydinfo@ hallchadwick.com.an

Penrith

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

Partners Robert Elliott Geoffrey McDonald Drew Townsend David Kenney Richard Albarran Gino Malaeco Paul Lerov

Associates Steven Gladman Mitchell Ball

Other firms in: Melbourne Brisbane Perth Adelaide Cairns

www.hallchadwick.com.au

National Association Hall Chadwick

International Association AGN International

Association of Independent Firms

Liability is limited by the Accountants Scheme, approved under the Professional Standards Act 1994 (NSW)

GREAT PACIFIC CAPITAL LIMITED

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 31 August 2004, the 20 largest holders of Ordinary Shares held 9,625,545, shares equal to 80.97 percent of the total number of shares on issue.

	Number of Shares	Q
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%
David & Catherine Hewett Pty Ltd	345,000	2.90%
Gold Merit Investments Limited	302,895	2.55%
Helen Ho*	285,200	2.40%
Ivan Wong*	250,000	2.10%
Nels Tong	246,350	2.07%
Crocodile Investments Pty Ltd	220,000	$1.85%$
Paul Ho	200,000	$1.68%$
Carolyn Wong*	166,100	1.40%
Mrs Beryl Joyce Clough	161,000	$1.35%$
Francis Young*	102,000	0.86%
Susanne Chu & Victor Chu*	100,000	0.84%
	9,625,545	80.97%

*Represent shares under escrow as explained above.

Substantial Shareholders

At 31 August 2004, 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

GREAT PACIFIC CAPITAL LIMITED

Distribution of Shareholdings

At 31 August 2004, the distribution of shareholdings was as follows:

Range	Number ofHolders	% ofholders	Number ofShares	% ofShares
$1 - 1,000$ shares	7	2.08	5,868	0.05
$1,001 - 5,000$ shares	234	69.43	536,047	4.51
$5,001 - 10,000$ shares	31	9.20	276,485	2.33
$10,001 - 100,000$ shares	47	13.95	1,741,555	14.65
100,001 shares and over	18	5.34	9,325,545	78.46
	337	100.00	11,885,500	100.00

As at 31 August 2004, 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 $\ddot{\phantom{a}}$
- poll one vote per full paid ordinary share.

Registered Office:

$\overline{a}$

Level 23, Angel Place 123 Pitt Street Sydney NSW 2000 GPO Box 3364 Sydney NSW 2001 Telephone: (02) 9202 3000 Facsimile: (02) 9202 3098

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.

AI assistant

REDCASTLE RESOURCES LIMITED — Annual Report 2004

65668_rns_2004-09-29_52aa5c23-c70f-42fb-b38f-b396b7b9cb43.pdf

GREAT PACIFIC CAPITAL LIMITED ABN 57 096 781 716 AND ITS CONTROLLED ENTITIES FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2004

CONTENTS

CORPORATE GOVERNANCE STATEMENT

Background

Principle 1: Lay Solid Foundations For Management And Oversight

CORPORATE GOVERNANCE STATEMENT

Principle 2: Structure The Board To Add Value

Board Composition

Alfred Wong (Age 43)

Danny Au-Yeung (Age 44)

Ivan Wong (Age 41)

CORPORATE GOVERNANCE STATEMENT

Term of Office

Personal Interests & Conflicts

Independent Professional Advice

Nomination Responsibilities

CORPORATE GOVERNANCE STATEMENT

Principle 3: Promote Ethical And Responsible Decision-Making

Code of Conduct & Ethics

Share Trading Policy

Principle 4: Safeguard Integrity In Financial Reporting

Sign-off by Chief Executive Officer and Chief Financial Officer

Audit & Risk Management Committee - audit responsibilities

CORPORATE GOVERNANCE STATEMENT

Principle 5: Make Timely And Balanced Disclosure

CORPORATE GOVERNANCE STATEMENT

Principle 6: Respect The Rights Of Shareholders

Communication to Shareholders

Annual General Meeting

Principle 7: Recognise And Manage Risk

Risk management responsibilities

CORPORATE GOVERNANCE STATEMENT

Sign-off by Chief Executive Officer and Chief Financial Officer

Principle 8: Encourage Enhanced Performance

Performance Evaluation

Strategy Sessions

Monthly Financial Results

Director Induction and Training

Principle 9: Remunerate Fairly And Responsibly

Remuneration Responsibilities

CORPORATE GOVERNANCE STATEMENT

Board Remuneration

Executive Remuneration

Principle 10: Recognise The Legitimate Interests Of Stakeholders

DIRECTORS' REPORT

Directors

Principal activity

Results

Dividends

Review of operations

Company overview and strategy

1. Brief history and vision

2. Dynamics of the business

(a) Residential property cycle in Australia

DIRECTORS' REPORT

Operating results for the year

1. Results

DIRECTORS' REPORT

2. Shareholder returns

Review of financial condition

1. Capital structure and treasury policy

2. Cash from operations and other sources of eash

3. Liquidity and funding

DIRECTORS' REPORT

4. Resources of the Company

5. Impact of legislation and other external requirements

Likely developments and expected results of operations

Significant changes in the state of affairs

Matters subsequent to the end of financial year

Insurance of directors and officers

DIRECTORS' REPORT

DIRECTORS' REPORT

Information on Company Secretary

DIRECTOR'S REPORT

Meetings of Directors

Directors' and executive officers' Emoluments

Options

REDCASTLE RESOURCES LIMITED Annual Report 2004