SERVICE STREAM LIMITED — Annual Report 2002

Dec 5, 2004

ABN 46 072 369 870

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FINANCIAL REPORT

FOR THE YEAR ENDED 30 JUNE 2002

CONTENTS	PAGE
Director's Report	$1 - 2$
Statement of Financial Performance	3
Statement of Financial Position	4
Statement of Cash Flows	5
Notes to the Financial Statements	$6 - 15$
Directors' Declaration	16
Independent Audit Report to the Members	17

DIRECTORS' REPORT

The directors submit the financial statements for the year ended 30 June 2002.

Directors

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The names of the directors in office at the date of this report are:

James J. Cooney - appointed 8 January 1996 Mark A. Stackpool - appointed 1 May 2001 Rodney A. Stanton – appointed 1 August 2001

Principal Activities

The principal activity of the company during the financial year was telecommunications infrastructure project management.

No significant change in the nature of the activity occurred during the year.

Results and Dividends

The net profit after providing for income tax amounted to $3,929,012.

Fully franked dividends of $427,175 were paid during the year.

Indemnification of Officers

The company has not, during or since the end of the financial year, in respect of any person who is or has been an officer or auditor of the company or of a related body corporate:

indemnified or made any relevant agreement for indemnifying against a liability, including costs and expenses in successfully defending legal proceedings; or

paid or agreed to pay a premium in respect of a contract insuring against a liability for the costs or expenses to defend legal proceedings.

Matters Subsequent to the End of the Financial Year

No matters or circumstances have arisen since 30 June 2002 that have significantly affected or may significantly affect in subsequent financial years:

• the operations of the company; $(i)$
• (ii) the results of those operations: or
• (iii) the state of affairs of the Company.

DIRECTORS' REPORT (Cont)

Capital Commitments

The company has no capital commitments as at 30 June 2002.

Future Developments

Disclosure of information in relation to likely developments in the operations of the company and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the company.

Signed in accordance with a resolution of the directors:

—………………………

Director

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Rodney A. Stanton

Director

$Mark A. Stackpool$ $6/9/02$

Dated

STATEMENT OF FINANCIAL PERFORMANCE

FOR THE YEAR ENDED 30 JUNE 2002

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	Note	2002S	2001S
REVENUE FROM ORDINARY ACTIVITIES	2	32,646,888	39,002,923
EXPENSES FROM ORDINARY ACTIVITIES	3	27,026,245	36,134,647
PROFIT FROM ORDINARY ACTIVITIESBEFORE INCOME TAX		5,620,643	2,868,276
Income Tax Expense	4	1,691,631	1,005,664
PROFIT FROM ORDINARY ACTIVITIESAFTER INCOME TAX EXPENSE		3.929,012	1,862,612

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

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2002

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	Note	2002$	2001$
CURRENT ASSETS
Cash	5	4,263,357	2,739,036
Receivables	6	6,037,211	4,231,660
Other	7	315,599	236,785
Inventories	8	894,655	565,164
TOTAL CURRENT ASSETS		11,510,822	7,772,645
NON-CURRENT ASSETS
Property, Plant and Equipment	9	694,201	1,143,637
Receivables	10	1,204,538	1,224,838
Deferred Tax Assets	11	104,301	110,358
TOTAL NON-CURRENT ASSETS		2,003,040	2,478,833
TOTAL ASSETS		13,513,862	10,251,478
CURRENT LIABILITIES
Payables	12	4,996,758	5,307,481
Borrowings	13	473,877	533,015
Current Tax Liabilities	14	680,536	44,693
Provisions	15	184,261	151,220
TOTAL CURRENT LIABILITIES		6,335,432	6,036,409
NON-CURRENT LIABILITIES
Borrowings	16	66,047	512,521
Deferred Tax Liabilities	17		118,476
Provisions	18	26,474
TOTAL NON-CURRENT LIABILITIES		92,521	630,997
TOTAL LIABILITIES		6,427,953	6,667,406
NET ASSETS		7,085,909	3,584,072
EQUITY
Contributed Equity	19	$\overline{2}$	2
Retained Profits	20	7,085,907	3,584,070
TOTAL EQUITY		7,085,909	3,584,072

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

STATEMENT OF CASH FLOWS

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FOR THE YEAR ENDED 30 JUNE 2002

	Note	2002$	2001S
Cash Flows from Operating Activities:
Receipts from Operations		29,970,537	38,438,107
Interest Received		252,042	266,846
Payment to Suppliers & Employees		(26, 561, 151)	(35, 734, 825)
Income Tax PaidInterest & Other Cost of Finance		(1,168,205)	(1,816,745)
Paid		(66, 572)	(85,706)
Net Cash Provided by (Used in)
Operating Activities	21(a)	2,426,651	1,067,677
Cash Flows from Investing Activities:
Proceeds from Property, Plant & Equipment		225,521
Payment for Property, Plant & Equipment		(202, 253)	(272, 502)
Net Cash Provided by (Used in)
Investing Activities		23,268	(272, 502)
Cash Flows from Financing Activities:
Finance Lease Repayments		(411, 170)	(316, 878)
Increase in Borrowings		(87,253)	85,664
Dividends Paid		(427, 175)	(2,328,812)
Net Cash Provided by (Used in)
Financing Activities		(925, 598)	(2,559,726)
Net Increase (Decrease) in Cash Held		1,524,321	(1,764,551)
Cash at Beginning of Financial Year		2,739,036	4,503,587
CASH AT END OF FINANCIAL YEAR	21(b)	4,263,357	2,739,036

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

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2002

$\mathbf{1}$ STATEMENT OF ACCOUNTING POLICIES

The company is not a reporting entity because in the directors' opinion, users are unlikely to exist who are unable to command the preparation of reports tailored so as to satisfy specifically all of their information needs.

This is a special purpose financial report that has been prepared for the sole purpose of complying with the Corporations Act 2001 requirements to prepare and distribute a financial report to members and must not be used for any other purpose. The directors have determined that the accounting policies adopted are appropriate to the needs of members.

The company has applied Accounting Standard AASB1025, Application of the Reporting Entity Concept and Other Amendments, which amends the application clauses of all existing standards so that they now apply only to companies that qualify as reporting entities. However, the financial report has been prepared in accordance with AASB1018 Statement of Financial Performance. AASB1034: Information to be Disclosed in Financial Reports, AASB1040 Statement of Financial Position and other applicable Accounting Standards and Urgent Issues Group Consensus Views, with the exception of the following.

AASB1005 – Financial Reporting by Segments AASB1017 - Related Party Disclosures AASB1033 - Presentation and Disclosure of Financial Instruments

The financial report has been prepared on the basis of historical costs and does not take into account changing money values or, except where stated, current valuations on non-current assets. The accounting policies have been consistently applied, unless otherwise stated.

The following is a summary of the material accounting policies adopted by the company in the preparation of the financial report.

Revenue Recognition

Sales revenue is recognised upon the issue of invoice to the customer.

Income Tax

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Tax-effect accounting procedures are adopted whereby the income tax expense is calculated on the operating profit, adjusted for permanent differences between taxable and accounting income.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2002

$\overline{1}$ STATEMENT OF ACCOUNTING POLICIES(Cont.)

Income Tax (continued)

Timing differences, which arise due to the different accounting periods in which items of revenue and expense are included in the determination of operating profit and taxable income, are brought to account as either a provision for deferred income tax or a future income tax benefit.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits relating to entities with tax losses are only brought to account when their realisation is virtually certain.

Inventories

Inventories are measured at the lower of cost and net realisable value.

Property, Plant and Equipment

Property, plant and equipment is brought to account at cost or at director's valuation, less where applicable, any accumulated depreciation.

Depreciation is calculated so as to write off the net cost of each depreciable non-current asset over its expected useful life. Estimates of remaining useful lives are reviewed on a regular basis for all assets, with annual reassessments for major items. The depreciation rates used for each class of asset are as follows:

Plant and Equipment	$6% - 20%$
Motor Vehicles	$11% - 22.5%$
Office Furniture and Equipment	$6% - 20%$
Assets under Lease	$6% - 20%$

Leases

Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership are transferred to the company are classified as finance leases. Finance leases are capitalised recording an asset and a liability equal to the present value of the minimum lease payments, including any guaranteed residual value. Leased assets are amortised over their estimated useful lives. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Lease payments under operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Employee Benefits

Provision is made, or a current liability for the legal liability to permanent employees for annual leave. Long Service Leave is not provided until a permanent employee attains five years continuous service. Sick Leave is expensed as incurred.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2002

$\mathbf{I}$ STATEMENT OF ACCOUNTING POLICIES(Cont.)

Employee Benefits (cont.)

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Contributions are made by the company to an employee superannuation fund and are charged as expenses when incurred. The company has no legal obligation to provide benefits to employees on retirement.

Change in Accounting Policy for Employee Benefits

The above policy was implemented as at 30 June 2002. The previous policy was to bring long service leave to account as incurred.

The changed policy has the effect of reducing net profit before tax in the current year by $26,474.

Foreign Currency Transactions and Balances

Foreign currency transactions during the period are converted to Australian currency at the rate of exchange applicable at the date of the transactions. Amounts receivable and payable in foreign currency at balance date are converted at the rates of exchange ruling at that date.

The gains and losses from conversion of short term assets and liabilities, whether realised or unrealised, are included in operating profit before income tax as they arise.

Maintenance and Repairs

Maintenance, repair costs and minor renewals are charged as expenses as incurred.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2002

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		2002$	2001$
$\mathbf{2}$	REVENUE
	Revenue form operating activities
	Sale of Services	32,157,842	38,711,386
	Revenue from outside the operating activities
	Interest received	252,042	266,846
	Other	237,004	24,241
		32,646,888	39,002,923
3	PROFIT FROM ORDINARY ACTIVITIES
	Profit from ordinary activities before income
	tax expense includes the following specific
	net expenses:
	Depreciation	232,251	128,219
	Amortisation	191,979	259,664
	Employee Costs	2,537,525	3,189,438
4	INCOME TAX EXPENSE
	The prima facie tax payable on operating profit is
	reconciled to the income tax provided in the accounts as follows:
	Prima facie tax payable on operating profit &
	extraordinary items at $30%$ (2001 - 34%)	1,686,192	975,214
	Add tax effect of permanent differences:
	Entertainment	4,389	14,183
	Non-deductible expenditure	1,051	223
		1,691,632	989,620
	Less tax effect of:
	Timing differences not taken up		1,329
	Net Adjustment to deferred tax assets to
	reflect the decrease in company tax rate to 30%		14,715
	Income Tax Expense	1,691,632	1,005,664

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2002

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		2002$\mathbf S$	2001$
5	CASH
	CURRENT
	Cash on Hand		200
	Cash at Bank	4,263,357	2,738,836
		4,263,357	2,739,036
6	RECEIVABLESCURRENT
	Trade Debtors	4,518,221	4,050,229
	Other Debtors	16,588	19,165
	Retentions Held By Hutchison	99,159
	Unsecured Loans
	TCI UK Limited	610,138	37,407
	Habagou Properties	124,860	124,859
	Total Communications Innovations Ltd	668,245
		6,037,211	4,231,660
$\overline{7}$	OTHER ASSETSCURRENT
	Prepayments	227,383	135,995
	Deposits	88,216	100,790
		315,599	236,785
8	INVENTORIES
	Work in Progress – At Cost	894,655	565,164

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2002

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		2002$	2001
9	PROPERTY, PLANT & EQUIPMENT		S.
	Furniture & Fittings - At Cost	164,044	155,498
	Less: Accumulated Depreciation	88,374	78,506
		75,670	76,992
	Office Furniture & Equipment - At Cost	463,359	373,180
	Less: Accumulated Depreciation	272,292	179,066
		191,067	194,114
	Other Assets under Lease	686,022	1,238,768
	Less: Accumulated Amortisation	363,750	503,422
		322,272	735,346
	Motor Vehicles - At Cost	281,018	182,800
	Less: Accumulated Amortisation	175,826	141,604
		105,192	41,196
	Leasehold Improvements - At Cost	120,165	114,853
	Less: Accumulated Depreciation	120,165	18,864
			95,989
	Total Property, Plant & Equipment	694,201	1,143,637

$11,$

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2002

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	2002	2001
	S	$
9PROPERTY, PLANT & EQUIPMENT (cont'd)
(a) Movements in Carrying Amounts
Furniture & Fittings
Balance at the beginning of year	76,992	79,532
Additions	8,546	15,785
Depreciation expense	(9,868)	(18, 325)
Carrying amount at the end of year	75,670	76,992
Office Furniture & Equipment
Balance at the beginning of year	194,114	157,676
Additions	90,178	106,614
Depreciation expense	(93, 226)	(70, 176)
Carrying amount at the end of year	191,066	194,114
Other Assets under Lease
Balance at the beginning of year	735,346	903,745
Additions		40,115
Disposals	(221,095)
Amortisation expense	(191, 979)	(208, 515)
Carrying amount at the end of year	322,272	735,346
Motor Vehicles
Balance at the beginning of year	41,196	35,611
Additions	98,218	35,250
Depreciation expense	(34, 222)	(29, 665)
Carrying amount at the end of year	105,192	41,196
Leasehold Improvements
Balance at the beginning of year	95,989
Additions	5,312	114,853
Depreciation expense	(101, 301)	(18, 864)
Carrying amount at the end of year		95,989
Total Carrying Amount of Property, Plant & Equipment	694,201	1,143,637

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2002

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		2002S	2001$
10	RECEIVABLES
	NON - CURRENT
	Loan - Habagou Properties	1,204,538	1,224,838
	11 DEFERRED TAX ASSETS
	NON - CURRENT
	Future Income Tax Benefit	104,301	110,358
12	PAYABLES
	Trade Creditors & Accrued ExpensesGST Payable	4,919,27957,479	5,090,188214,376
	Income in Advance	20,000	2,917
13	BORROWINGSCURRENT	4,996,758	5,307,481
	Lease Liability	253,707	410,975
	Loan - Related Parties	220,170	122,040
		473,877	533,015
14	TAX LIABILITIESCURRENT
	Provision for Income Tax	680,536	44,693
15	PROVISIONSCURRENT
	Provision for Annual Leave	184,261	151,220
16	BORROWINGSNON-CURRENT
	Lease LiabilityLoan - Unsecured	66,047	319,949192,572
		66,047	512,521

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2002

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		2002S	2001S.
17	DEFERRED TAX LIABILITIES
	NON-CURRENT
	Provision for Income Tax		118,476
18	PROVISIONS
	NON-CURRENT
	Provision for Long Service Leave	26,474
19	CONTRIBUTED EQUITY
	Paid Up Capital
	2 Ordinary Shares (1998: 2 of $1 each) fully paid
20	RETAINED PROFITS
	Balance at beginning of the year	3,584,070	4,050,270
	Net Profit for the year	3,929,012	1,862,612
	Dividends Paid	(427, 175)	(2,328,812)
	Balance at end of the year	7,085,907	3,584,070
21	LEASE COMMITMENTS
	Other Assets under Lease
	Not later than one year	270,890	453,568
	Later than one year and not later
	than two years	41,450	270,942
	Later than two years and not later		69,567
	than five years	29,429341,769	794,077
	Less: Future Finance Charges	22,015	63,153
		319,754	730,924
	Operating Leases
	Not later than one year	483,381	327,844
	Later than one year and not later
	than two years	164,676	22,103
	Later than two years and not later
	than five years	240,487888,544	33,155383,102

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH JUNE 2002

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		2002S	2001S.
21	STATEMENT OF CASH FLOWS
(a)	Reconciliation of Net Cash provided by OperatingActivities to Operating Profit after Income Tax
	Operating Profit (Loss) after Income Tax	3,929,012	1,862,612
	Non Cash Flows and Non OperatingItems in Operating Profit:
	Unrealised Foreign Exchange Loss	(10, 877)	3,071
	Amortisation	191,979	259,664
	Depreciation	232,251	128,219
	Extraordinary Expense		125,125
	Profit on sale of Property, Plant & Equipment	4,416
	Changes in Assets & Liabilities:
	Decrease (Increase) in Receivables	(1,785,251)	(1, 153, 893)
	Increase in Deferred Tax Asset	6,057	110,358
	Decrease (Increase) in Prepayments	(78, 814)	88,741
	Decrease (Increase) in Inventories	(329, 490)	634,814
	Increase (Decrease) in Trade Creditors	(310, 723)	(87,012)
	Increase (Decrease) in Borrowings		(85, 664)
	Increase (Decrease) in Provisions	578,091	(597, 642)
	Net Cash Provided (Used) by Operating Activities	2,426,651	1,067,677
(b)	Reconciliation of CashCash at the end of the financial year as shown in thestatement of cash flow is reconciled to the related itemin the balance sheet as follows:
	Cash at Bank	4,263,357	2,739,036

(c) Non-Cash Financing and Investing Activities

During the financial year, the company acquired plant and equipment with an aggregate fair value of $nil (2001 - $40,116) by means of finance leases (Refer Note 9). These acquisitions are not reflected in the Statement of Cash Flows.

ABN 46 072 369 870

DIRECTORS' DECLARATION

As stated in Note 1 the company is not a reporting entity because in the directors' opinion, users are unlikely to exist who are unable to command the preparation of reports tailored so as to satisfy their requirements. This is a special purpose financial report that has been prepared to meet the requirements of the Corporations Act 2001.

The directors have determined that the accounting policies adopted are appropriate to the needs of members.

The company has applied Accounting Standard AASB1025, Application of the Reporting Entity Concept and Other Amendments and other Accounting Standards to the extent described in Note 1.

In the opinion of the directors of Total Communications Infrastructure Pty Limited:

• $(a)$ the financial report and notes, set out on pages 3 to 15:
  • $(i)$ give a true and fair view of the financial position of the company as at 30 June 2002 and of its performance, as represented by the results of its operations and cash flows, for the financial year ended on that date; and
  • comply with Accounting Standards as detailed above and the Corporations $(ii)$ Regulations; and
  • (iii) are in accordance with the Corporations Act 2001.
• $(b)$ there are reasonable grounds to believe that the company will be able to meet its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors:

Director

C

ι

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

Rodney A. Stanton

$6/9/02$

Director

Mark A-Stackpool

Dated

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF

TOTAL COMMUNICATIONS INFRASTRUCTURE PTY LIMITED ABN 46 072 369 870

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We have audited the special purpose financial report of Total Communications Infrastructure Pty Limited for the year ended 30 June 2002, consisting of the Statement of Financial Performance, Statement of Financial Position, Statement of Cash Flows, Notes to the Financial Statements and the Directors' Declaration set out on pages 3 to 16. The company's directors are responsible for the financial report and have determined the accounting policies used and described in Note 1 to the financial statements. including the basis of accounting, which form part of the financial report are appropriate to meet the requirements of the Corporations Act 2001 and the needs of members. We have performed an independent audit of the financial report in order to express an opinion on it to the members of the company. No opinion is expressed as to whether the accounting policies used and described in Note 1 are appropriate to the needs of members.

The financial report has been prepared for distribution to members for the purpose of fulfilling the directors' financial reporting requirements under the Corporations Act 2001. We disclaim any assumption of responsibility for any reliance on this audit report or on the financial report to which it relates to any person other than the members, or for any purpose other than that for which they are prepared.

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

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

Audit Opinion

In our opinion the financial report of Total Communications Infrastructure Pty Limited is in accordance with:

the Corporations Act 2001, including; $(a)$

giving a true and fair view, in accordance with the accounting policies described in Note 1 of the financial report, of the company's financial position as at 30 June 2002 and its performance for the year ended on that date; and

• $(b)$ In accordance with Accounting Standards and the Corporations Regulations. The company has applied AASB 1025: Application of the Reporting Entity Concept and Other Amendments and other Accounting Standards to the extent described in Note 1 to the financial statements, and
• In accordance with other mandatory professional reporting requirements to the extent described in $(c)$ Note 1 to the financial statements.

$\sqrt{\frac{1}{1}}$ $\frac{1}{\omega}$ VJRYAN & CO

Chartered Accountants $\angle$ ele /l Peter D Wyer Partner Dated 6 gentlygen Lost

Level 5 255 George Street SYDNEY 2000