TESORO GOLD LTD — Annual Report 2004

Aug 19, 2004

VAN EYK THREE PILLARS LIMITED

ABN 91 106 854 175

APPENDIX 4E

PRELIMINARY FINAL REPORT PERIOD ENDED 30 JUNE 2004

Incorporated 29 October 2003

VAN EYK THREE PILLARS LIMITED ABN 91 106 854 175

RESULTS FOR ANNOUNCEMENT TO THE MARKET PERIOD ENDED 30 JUNE 2004

	8 Months to June 2004 \$'000	2003 Year \$'000	% change prior year	Up/ Down
Revenues from ordinary activities	3.457	N/a	N/a	N/a
Profit from ordinary activities after tax attributable to members	2,926	N/a	N/a	N/a
Net profit before tax for the period attributable to members	3.178	N/a	N/a	N/a
Net Tangible Assets per share	\$1.03	N/a	N/a	N/a

DIVIDENDS

No dividends were paid or payable in the period ended 30 June 2004.

The following dividend was declared subsequent to the end of the financial year:

	Dividend Rate	Total Amount \$'000	Date of Payment	Percentage Franked %
Ordinary (Final)	1.5 CPS	\$744	25/11/04	100%

The record date for determining entitlement to the interim dividend is 20/10/04.

COMMENTARY ON THE RESULTS FOR THE PERIOD

The Company listed on 28 January 2004 and was quickly fully invested. At the time of listing the NTA per share was 97 cents. By 30 June 2004 the NTA had increased to \$1.03. There was a significant increase in the value of the portfolio, as reflected by the Earnings Per Share of 9.4 cents.

While the five months return for the fund of 6.76% is below the S&P/ASX 300 Accumulation Index of 8.63% the directors believe the consistent application of the van Eyk Research investment philosophy will continue to provide strong returns.

The Company's Portfolio is made up of three sub portfolios, The following process has been applied to the construction of the sub portfolios (Blue Chip, Growth and Special Situations) and will continue to be applied in the ongoing management of the

VAN EYK THREE PILLARS LIMITED ABN 91 106 854 175

Portfolio. The sub portfolios will be blended with consideration given to the appropriate balance between large and small entities as well as diversification by industry sectors and van Eyk Research's Company 'classifications'. The van Eyk Research share selection process ranks key financial variables and valuation assessments for each of the ASX 300 constituent entities. This is a six-stage process that incorporates quality assessment, classification, valuation, ranking, portfolio construction and blending.

Due to the strong run in Small Caps since March 2003, and the fall in relative attractiveness compared to the large caps, a proportion near the maximum amount allowable under the prospectus was invested into the 'Blue Chip' portfolio. The remaining amount was split between the 'Growth' and 'Special Situations' portfolios, which have a bias towards small caps. The portfolio has been split 48/22/30 between the Large-Mid-Small Cap sectors after allowing for cash.

This report is based on the audited financial statements for the period ended 30 June 2004.

All the documents comprise the information required by listing rule 4.3A.

For any queries please contact:

Peter Roberts Company Secretary Telephone: +61 2 8236 7700 Facsimile: +61 2 9221 1194 Email: pr@whitefunds.com.au

van Eyk Three Pillars Limited

Incorporated 29 October 2003

ABN 91 106 854 175

Financial Report For the period ended 30 June 2004

Contents

For the period ended 30 June 2004

Directory	3
Directors' review	4
Corporate governance statement	6
Portfolio shareholdings at 30 June 2004	10
Directors' report	11
Statement of financial performance	15
Statement of financial position	16
Statement of cash flows	17
Notes to the financial statements	18
Directors' declaration	26
Independent audit report to the members	27
Members information	29

Directory

Investment Manager

van Eyk Research Limited Level 2 210 George Street Sydney NSW 2000 Telephone: (02) 9225 6000

Directors

David J lliffe David G Davis Cameron S McCullagh

Company Secretary

Peter Roberts

Registered Office

Level 5 14 Martin Place Sydney NSW 2000 Telephone: (02) 8236 7700

Accounting & Administration

White Funds Management Pty Ltd Level 5 14 Martin Place Sydney NSW 2000 Telephone: (02) 8236 7700 Fax: (02) 9221 1194

Auditors

Grosvenor Schiliro Chartered Accountants Level 2 333 George Street Sydney NSW 2000

Share Registrar

Registries Limited Level 2 28 Margaret Street Sydney NSW 2000 Shareholder enquiries telephone: (02) 9290 9600

Company secretarial & all other enquiries

Telephone: (02) 8236 7700

Directors' Review

Operating Results

The Company listed on 28 January 2004 and was quickly fully invested. At the time of listing the NTA per share was 97 cents. By 30 June 2004 the NTA had increased to \$1.03. There was a significant increase in the value of the portfolio, as reflected by the Earnings Per Share of 9.4 cents.

While the five months return for the fund of 6.76% is below the S&P/ASX 300 Accumulation Index of 8.63% the directors believe the consistent application of the van Eyk Research investment philosophy will continue to provide strong returns.

Dividends

No dividends were paid or declared during the financial period. However on 10 August 2004 the Directors declared a dividend of 1.5 cents per share payable on 25^th November 2004.

Investment Portfolio Construction and Returns

Portfolio Performance

Since inception the portfolio has returned 6.76% compared to the S&P/ASX300 Accumulation Index return of 8.63% over the same period. The under performance is largely attributed to a small company bias. The directors believe the consistent application of the van Eyk Research investment philosophy will continue to provide strong absolute returns, in varying market conditions.

Investment Philosophy and Process $\bullet$

The Company's Portfolio is made up of three sub portfolios, The following process has been applied to the construction of the sub portfolios (Blue Chip, Growth and Special Situations) and will continue to be applied in the on going management of the Portfolio. The sub portfolios will be blended with consideration given to the appropriate balance between large and small entities as well as diversification by industry sectors and van Eyk Research's Company 'classifications'. The van Eyk Research share selection process ranks key financial variables and valuation assessments for each of the ASX 300 constituent entities. This is a six-stage process that incorporates quality assessment, classification, valuation, ranking, portfolio construction and blending.

The selection criteria for each sub portfolio is as follows:

• El Blue Chip This sub portfolio is taken from the Top 100 stocks by market capitalisation, using the rankings from van Eyk Research Free Cash Flow, valuation methodology. The aim is to select a diversified 12 stock portfolio of quality companies at a reasonable price. The 'Blue Chip' is the most conservative of the three sub portfolios, and aims for low turnover.
• Growth The Growth sub portfolio selection is taken form the van Eyk Research 'Dynamic Growth' and 'Stalwart' classifications, which are at the high end of van Eyk Research quality scale. The aim is to select a 12 stock portfolio of quality growth companies at bargain prices, whilst maintaining reasonable diversification across sectors.
• □ Special Situation The Special Situations portfolio is a selection of 12 undervalued stocks, which may have the potential for market re-rating, turnaround or takeover. The selection is taken from the lower end of the quality scale. The selection has a contrarian flavour. The portfolio is selected from the van Eyk Research Slug, Cyclical, Turnaround and Asset Situation classification. By its very nature this selection will be the most adventurous of the three sub portfolios.

Due to the strong run in Small Caps since March 2003, and the fall in relative attractiveness compared to the large caps, a proportion near the maximum amount allowable under the prospectus was invested into the 'Blue Chip' portfolio. The remaining amount was split between the 'Growth' and 'Special Situations' portfolios, which have a bias towards small caps. The portfolio has been split 48/22/30 between the Large-Mid-Small Cap sectors after allowing for cash.

Directors' Review

Investment Outlook

The following investment outlook was provided by the Investment Manager van Eyk Research.

"The Australian economy is showing signs of stabilising at around trend growth of 3% to 3.5% with consumer spending currently receiving a boost from the 2004 budget measures and continued high levels of borrowing. Our inflation forecasts are 2.4% for 2004 rising to 3% for 2005. As has been the case recently, the main risks to these forecasts emanate from offshore.

The ongoing resilience in the Australian economy resulting from continued strong consumer sentiment coupled with the booming export sector has surprised some commentators by its longevity, but fundamentally the overall outlook is still quite sound moving forward. There are some obvious risks to the outlook such as continued high oil prices, terrorist threats, a property hard landing and the Chinese economy, but our base scenario is that the economy will continue to grow but at a slower pace next year.

Our valuation indicator shows that Australian equities are approaching fair value following their strong rise over the last year. Within the market, our measurements have indicated a convergence in valuation by company size and style. The recovery in the risk appetite and declining credit spreads were beneficial to lower quality companies over the last few years, reflected in the strong performance of the 'value' end of the market, however the valuation differential between 'value' and 'growth' has essentially been eroded. In a general sense we expect higher quality growth companies have a better probability of outperforming.

As such the positioning of the 'Three Pillars' portfolio shows a modest bias to our 'growth/quality' classifications, with the large cap weighting towards the maximum prescribed in the prospectus. In terms of the major sectors, banks and property are underweight, materials are neutral and industrials, consumer staples, consumer discretionary and healthcare overweight. The cash weight is approximately 7%.

Dated this 20^th day of August, 2004

Cameron McCullagh Director

Corporate Governance Statement

This statement outlines the main corporate governance practices adopted by the Company, which comply with the ASX Corporate Governance Council recommendations unless otherwise stated

Board of Directors and Its Committees

Role of the Board

The Board's primary role is the protection and enhancement of long-term shareholder value. To fulfill this role the Board seeks to address:

• (a) the prudential control of the Company's operations:
• (b) the resourcing, review and monitoring of executive management;
• (c) the timeliness and accuracy of reporting to shareholders; and
• (d) the determination of the Company's broad objectives.

Board Processes

The Board has established a number of Board Committees including a Nomination Committee, a Remuneration Committee and an Audit Committee. These committees have written mandates and operating procedures which are reviewed on a regular basis. The Board has also established a range of policies which govern its operation.

The Board will hold four scheduled meetings each year plus any other strategic meetings as and when necessitated by the Company's operations. The agenda for meetings is prepared through the input of the Chairman, the Administration Manager (White Funds Management Pty Limited) and the Company Secretary. Standing items include matters of Compliance and Reporting, Financials, Shareholder Communications and Investment Strategy and Outcomes. Submissions are circulated in advance.

Composition of the Board

The names of the directors of the Company in office at the date of this Statement are set out in the Directors' Report.

The composition of the Board is determined using the following principles:

• A minimum of three directors; ٠
• An independent, non-executive director as Chairman;
• A majority of independent non-executive directors;

An independent director is considered to be a director:

• (a) who is not a member of management and
• (b) who has not within the last three years been employed in an executive capacity by the Company or been a principal of a professional adviser or consultant to the Company
• (c) is not a significant supplier to the Company
• (d) has no material contractual relationship with the Company other than as a director and
• (e) is free from any interest or business or other relationship which could materially interfere with the director's ability to act in the best interests of the Company.

Directors have a usual term of two years, and a maximum term of 3 years.

Performance Evaluation of Directors

Given that the Company has not been listed for a full twelve months, a directors performance evaluation has not been conducted for the current period. The Company will commence annual reviews of directors performance once the company has been listed for a full year.

Corporate Governance Statement

Nomination Committee

The Nomination Committee oversees the selection and appointment process for directors. The Committee annually reviews the composition of the Board and makes recommendations on the appropriate skill mix, personal qualities, expertise and diversity required. Where a vacancy exists the Committee develops a selection criteria and generates a list of potential candidates, for review, determination of an order of preference and ultimate selection by the Board or shareholders.

The Nomination Committee meets annually unless otherwise required.

The Nomination Committee comprised the following members during the year:

• David Davis (Chairman) Independent Non-Executive $\bullet$
• David Iliffe Independent Non-Executive
• Cameron McCullagh Executive

The terms and conditions of the appointment and retirement of non-executive directors are set out in a letter of appointment. The performance of all directors is reviewed annually by the Chairman. Directors whose performance is unsatisfactory are asked to retire.

Director Dealing in Company Shares

Directors and senior management may acquire shares in the Company, but are prohibited from dealing in Company shares:

(a) In the two weeks following the release of the Company's net asset backing to the ASX; or

(b) whilst in possession of price-sensitive information.

Independent Professional Advice and Access to Company Information

Each director has the right of access to all relevant Company information and to the Company's executives and subject to prior consultation with the Chairman, may seek independent professional advice at the entity's expense. A copy of advice received by the director is made available to all other members of the board.

Remuneration Committee

The Remuneration Committee reviews and makes recommendations to the Board on remuneration of the directors themselves.

The members of the Remuneration Committee during the period were:

• David Iliffe (Chairman) $\bullet$
• David Davis
• Cameron McCullagh $\bullet$

The Remuneration Committee meets once a year.

Full details on Directors' remuneration are provided in the Directors' Report.

Corporate Governance Statement

Audit Committee

The Audit Committee has a documented Charter, approved by the Board. All members must be non-executive directors. The Chairman is not the Chairman of the Board. The Committee is responsible for considering the effectiveness of the systems of internal control and financial reporting.

The members of the Audit Committee during the year were:

• David Davis (Chairman)
• David Iliffe

The Audit Committee will meet at least two times per year.

The responsibilities of the Audit Committee are to ensure that:

• 1. Relevant, reliable and timely information is available to the Board to monitor the performance of the Company:
• 1. External reporting is consistent with committee members' information and knowledge and is adequate for shareholder needs;
• 1. Management process support external reporting in a format which facilitates ease of understanding by shareholders and institutions;
• 1. The external audit arrangements are adequate to ensure the maintenance of an effective and efficient external audit. This involves:
• (a) reviewing the terms of engagement, scope and auditor's independence;
• (b) recommendations as to the appointment, removal and remuneration of an auditor and
• (c) reviewing the provision of non-audit services provided by the external auditor ensuring they do not adversely impact on audit independence:
• 1. Review the Company's risk profile and assess the operation of the Company's internal control system.

On listing the Company formed an Executive Committee whose role it was to monitor and report on all major risks affecting the Company, and in doing so develop strategies and policies to assist in mitigating these risks. On subsequent review, the Board considered that the role of this committee was adequately covered by the Audit Committee.

Risk Management Policy

The Board acknowledges that it is responsible for the overall system of internal control but recognises that no cost effective internal control system will preclude all errors and irregularities. The Board has delegated responsibility for reviewing the risk profile and reporting on the operation of the internal control system to the Audit Committee.

The Audit Committee:

• (a) requires the administrator White Funds Management to report annually on the operation of internal controls.
• (b) reviews the external audit of internal controls and liaises with the external auditor and
• (c) conducts any other investigations and obtains any other information it requires in order to report to the Board on the effectiveness of the internal control system.

Executive Management

The companies operations are conducted through van Eyk Research Pty Ltd (Investment Manager) and White Funds Management Pty Ltd (Administration Manager). These entities incorporate the specialist wholesale investment and administration personnel who have undertaken the Company's executive operations since inception. The Company has contracted with van Evk Research Pty Limited and White Funds Management Pty Ltd to provide all investment management and administration services.

Corporate Governance Statement

The Company's executive management arrangements have been structured to provide investors with an extremely cost efficient investment vehicle and access to a significant depth of professional resources.

Ethical Standards

The Board expects all executive and non-executive directors to act professionally in their conduct and with the utmost integrity and objectivity. All executive and non-executive directors must comply with the Company's Code of Conduct and Ethics.

Shareholder Communications

The Board informs shareholders of all major developments affecting the Company's state of affairs as follows:

• All information lodged with the ASX is available on the Company's website at $\bullet$ www.irate.vanevk.com.au
• Quarterly reports will be sent via email to shareholders who register their interest; $\blacksquare$
• An Annual Report will be mailed to shareholders at the close of the financial year;
• Net asset backing per share is released to the ASX by the 14^th day following each month- $\bullet$ end:
• Any information of a material nature affecting the Company is disclosed to the market through release to the ASX as soon as the Company becomes aware of such information, in accordance with the ASX Continuous Disclosure requirement.

Portfolio shareholdings at 30 June 2004

Security	Value \$	% of portfolio
Blue Chip
ANZ Banking Group Limited	3,244,700	6.34%
Commonwealth Bank of Australia	3,349,224	6.55%
John Fairfax Holdings Limited	2,260,380	4.42%
Leighton Holdings Limited	1,768,005	3.46%
Lion Nathan Limited	2,477,392	4.84%
National Australia Bank Limited	3,192,880	6.24%
Publishing and Broadcasting Limited	2,309,145	4.51%
QBE Insurance Ltd	2,551,859	4.99%
Tabcorp Holdings Limited	2,581,456	5.05%
Toll Holdings Limited	2,424,478	4.74%
Woolworths Limited	2,112,420	4.13%
	28,271,939	55.27%
Growth
Adelaide Bank Limited	746,929	1.46%
Cabcharge Australia Limited	791,544	1.55%
Colorado Group Limited	1,063,936	2.08%
HPAL Limited	754,880	1.48%
Healthscope Limited	767,434	1.50%
Housewares International Limited	608,665	1.19%
Oceana Gold Limited	954,695	1.87%
Oamps Limited	694,902	1.36%
Programmed Maintenance Services Limited	844,896	1.65%
Sigma Company Limited	1,059,786	2.07%
Suncorp-Metway Limited	1,023,820	2.00%
Technology One Limited	777,952	1.52%
	10,089,439	19.73%
Special Situations
Collection House Limited	355,376	0.69%
Downer EDI Limited	1,013,760	1.98%
Futuris Corporation Trust	779,730	1.52%
G.U.D Holdings Limited	674,309	1.32%
Lend Lease Limited	935,480	1.83%
Perilya Limited	642,669	1.26%
Portman Limited	1,927,376	3.77%
PMP Ltd	690,468	1.35%
Sims Group Limited	1,587,210	3.10%
Wattyl Limited	621,377	1.21%
	9,227,755	18.03%
Cash	3,570,164	6.97%
	51,159,297	100.00%

Directors' report For the period ended 30 June 2004

The directors present their report on the Company for the financial period ended 30 June 2004.

Directors

The names of directors in office at any time during or since the end of the period are:

David J Iliffe (appointed 29/10/03) David G Davis (appointed 29/10/03) Cameron S McCullagh (appointed 29/10/03)

Prior to listing the Company changed its name from Granite Three Pillars Limited to van Eyk Three Pillars Limited.

Principal Activities

The principal activity of the Company during the period was investment in securities listed on the Australian Stock Exchange.

There were no changes in the nature of the Company's principal activity during the financial period.

Operating Results

The profit of the Company after providing for income tax is \$2,926,131.

Dividends

No dividends were declared or paid during the period. However on 10 August 2004 the Directors declared a dividend of 1.5 cents per share payable on 28th October 2004.

Review of operations	2004
Profit from ordinary activities before income tax expense	3.177.886
Income tax expense	251.755
Profit from ordinary activities after income tax expense	2,926,131

$9.4$

The net tangible asset backing of the Company as at 30 June 2004 was \$1.03 cents per share.

Earnings per share

Basic earnings per share (cents per share)

Significant changes in the state of affairs

No significant changes in the Company's state of affairs occurred during the financial period.

Matters subsequent to the end of the financial period

No matter or circumstance has arisen since 30 June 2004 to the signing date of this report that has significantly affected, or may significantly affect:

(a) the Company's operations in future financial years; or

(b) the results of those operations in future financial years; or

(c) the Company's state of affairs in future financial years.

Directors' report (continued) For the period ended 30 June 2004

Environmental regulation

The Company's operations are not subject to any significant environmental regulations under either Commonwealth or State legislation.

To the extent that any environmental regulations may have an incidental impact on the Company's operations, the Directors of the Company are not aware of any breach by the Company of those regulations.

Future Developments

The Company will continue to pursue its investment objectives for the long term benefit of the members. This will require continual review of the investment strategies that are currently in place and may require changes to these strategies to maximise returns.

Further information on 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.

Directors' benefits

No Director of the Company has received or become entitled to receive a benefit, other than a remuneration benefit as disclosed in note 12(b) to the financial statements, by reason of a contract made by the Company or a related entity with the director or with a firm of which he is a member, or with a Company in which he has a substantial interest.

Directors' report (continued) For the period ended 30 June 2004

Information on Directors

Director	Experience, Qualifications and Special Responsibilities	Particulars of directors' interest in shares & options of the Company
David Iliffe (Chairman)	Fellow of Institute of Chartered Accountants Fellow of Taxation Institute of Australia, Member of Institute of Company Directors Chartered Accountant in Public Practice 1972-2000 Chairman Whitefield Limited and Director since 1990 Chairman Sylvastate Limited and Director since 1990 Director - Employers Mutual Limited Member of Nomination and Audit Committees Chairman of Remuneration Committee Non-executive director	50,000 shares 50,000 options
David Davis (Independent Director)	Qualified Solicitor (Retired) Associate, Executor & Trustee Institute (AETI) Non Executive Director - Spotless Group Limited, Foundation for National Parks & Wildlife. Former Managing Director - Permanent Trustee Company Limited Past President & State President NSW - Trustee Corporations Association Member of Remuneration Committee Chairman of Audit and Nomination Committees Non-executive director	$20,000$ shares 20,000 options
Cameron McCullagh (Executive Director)	Associate of Institute of Chartered Accountants Gained professional qualifications with KPMG prior to working for Ernst & Young in Italy and Macquarie Bank Limited Partner in Moore Stephens WI CEO of Employers Mutual Limited Director - White Funds Management Pty Limited Member of Nomination Committee and Remuneration Committee Executive director	720,000 shares 720,000 options

Meetings of Directors of the Company

The following table sets out the number of meetings of the Company's directors held during the period ended 30 June 2004, and the numbers of meetings attended by each director of the Company:

	Full meetings	Full meetings	Audit Committee	Audit Committee
	Number of meetings held	Meetings attended	Number of meetings held	Meetings attended
David Iliffe	8	8
David Davis	8	8
Cameron McCullagh			n/a	n/a

Directors' remuneration

The remuneration of the Chairman was \$13,443 per annum and that of the non-executive director was \$13,443 per annum. The executive director was not paid any directors fees.

The remuneration is inclusive of superannuation where applicable.

Directors' report (continued) For the period ended 30 June 2004

Directors' remuneration (continued)

Name of directors	Base fee	Superannuation	Total
David Iliffe David Davis	12,333 12.333	1.110 1.110	13.443 13.443
	24,666	2.220	26,886

Insurance of directors

During the financial period the Company has given indemnity and paid insurance premiums to insure directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the Company, other than conduct involving a wilful breach of duty in relation to the Company. Total premium paid was \$18,129.

The directors & officers liability of the Company insures any past, present or future director, secretary, executive officer or employee of van Eyk Three Pillars Limited.

Options:

Options were issued equivalent to shares issued at listing.

At the date of this report, the unissued ordinary shares of van Eyk Three Pillars Limited under option are:

Grant Date	Date of Expiry	Exercise Price	Number Under Option
28/01/2004	19/05/05	\$1.00	49.558.826

No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought against or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

Auditor

Grosvenor Schiliro has been appointed as auditors in accordance with Section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of the Directors of the Company.

Cameron McCullagh Director

Sydney

20th August, 2004

Statement of financial performance

For the period ended 30 June 2004

	Notes	2004
		\$
Revenue from ordinary activities:
Investment income
Dividends		968,052
Interest		276,846
Unrealised changes in the net fair value of investments		2,116,415
Realised gains on sale of investments		95,309
Total investment income from ordinary activities		3,456,622
Expenses
Management fees		198,448
Audit fees	10	11,500
Share registry fees		6,554
Directors fees		26,885
Insurance		18,129
ASX listing fees		10,883
Other		6,337
Total expenses from ordinary activities		278,736
Profit from ordinary activities before income tax expense		3,177,886
Income tax expense relating to ordinary activities	11(a)	251,755
Profit from ordinary activities after income tax expense		2,926,131
Net profit attributable to members of van Eyk Three Pillars Limited		2,926,131
Total changes in equity other than those resulting from transactions with owners as owners		2,926,131
Basic earnings per share	17	Cents 9.4
Diluted earnings per share	17	9.4

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

Statement of financial position As at 30 June 2004

	Notes	2004 \$
Investments	3	47,589,133
Current assets
Cash assets		3,570,164
Receivables	4	195,995
Current tax assets	5(a)	24,610
Prepayments		38,580
Total current assets		3,829,349
Non-current assets
Deferred tax assets	5(b)	358,560
Total non-current assets		358,560
Total assets		51,777,042
Current liabilities
Payables	6	64,784
Total current liabilities		64,784
Non-current liabilities
Deferred tax liabilities	$\overline{7}$	634,925
Total non-current liabilities		634,925
Total liabilities		699,709
Net assets		51,077,333
Equity
Contributed equity	8	48, 151, 202
Reserves	9(a)	1,481,490
Retained earnings	9(b)	1,444,641
Total equity		51,077,333

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

Statement of cash flows For the period ended 30 June 2004

	Notes	2004 \$
Cash flows from operating activities
Dividends received		795,816
Interest received		262,199
Investment manager's fees paid		(164, 619)
Income tax paid and refund received
Other expenses paid		(97,024)
Net cash inflow from operating activities	15(a)	796.372
Cash flows from investing activities
Proceeds from sale of investments		2,488,539
Purchase of investments		(47, 865, 949)
Net cash outflow from investment activities		(45,377,410)
Cash flows from financing activities
Proceeds from issue of shares		49,594,827
Share issue and listing costs		(1,479,625)
Options exercised		36,000
Net cash inflow from financing activities		48, 151, 202
Net increase in cash held		3,570,164
Cash at the beginning of the financial period
Cash at the end of the financial period		3,570,164

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

Notes to the financial statements For the period ended 30 June 2004

1 Summary of significant accounting policies

$(a)$ Basis of accounting

This general purpose financial report has been prepared in accordance with Accounting Standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The financial report covers van Eyk Three Pillars Limited which is a listed public Company, incorporated and domiciled in Australia. The financial report has been prepared on an accruals basis, with the exception of valuation of investments as described in (b) (ii) below.

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

$(b)$ Investments

(i) Classification

The business objectives of the Company include earning revenue from dividends and holding investments for market appreciation and trading opportunities. All the investments held are readily marketable and are traded as future market conditions dictate. The directors hold the view that it is therefore not possible to determine the period each investment will be held. Consequently, investments are not classified as current or non-current.

(ii) Valuation

Investments are stated at net fair value as at the reporting date. Net fair value of investments is the last sale price quoted on the relevant exchange at the close of business at period end, less an appropriate allowance for costs expected to be incurred in realising the investments. The net fair value of any monetary asset where no last sale price exists is based upon discounting the expected future cash flows by the current interest rates for assets with similar risk profiles.

(iii) Unrealised gains and losses

Changes in the net fair value of investments represent the unrealised gains or losses on investments arising from the increment or decrement between the net fair value at the reporting date and the net fair value as at the prior period end (or cost if the investment was acquired during the period).

The unrealised gains or losses are transferred to the unrealised profits and losses reserve, net of any potential tax charge that may arise from the future sale of investments. The balance in the unrealised profits and losses reserve is equal to the cumulative after tax unrealised gains or losses on investments.

$(c)$ Revenue from ordinary activities

Revenue from ordinary activities consists of dividends, interest, trust distributions, other income and gross proceeds from the sale of investments.

Interest and dividend revenue are recognised when earned.

Investment income $(d)$

The change in the net fair value of investments as mentioned in note b(iii) above is recognised as income in determining the profit and loss for the period.

The realised gains or losses on the sale of investments represent the difference between the net proceeds and the net fair value of the investments at the prior period end or cost if acquired during the period.

Notes to the financial statements For the period ended 30 June 2004

$\blacktriangleleft$ Summary of significant accounting policies (continued)

$(e)$ Income to pay dividends

The Directors of the Company hold the opinion that unrealised gains and losses should not be taken into account in determining the income of the Company available to pay dividends. The transfer to and from the unrealised profits and losses reserve will be such that the income available to pay dividends will only include realised gains and losses. The transfers to and from the reserve will include the amounts of unrealised gains and losses recognised in the statement of financial performance for the period and prior period unrealised gains and losses that become realised as a result of the sale of investments during the period.

$(f)$ Income tax

Tax effect accounting procedures are followed whereby the income tax expense in the statement of financial performance is matched with the accounting profit after allowing for permanent differences. Income tax on cumulative timing differences is set aside to the deferred income tax or future income tax benefit accounts at the rates which are expected to apply when those timing differences reverse. Future income tax benefits relating to tax losses are not carried forward as an asset unless the benefit can be regarded as being virtually certain of realisation.

Cash $(g)$

For the purposes of the statement of cash flows, cash includes deposits held at call with financial institutions net of bank overdrafts

$(h)$ Receivables

Receivables may include amounts for dividends, interest and securities sold. Dividends are receivable when they have been declared and are legally payable. Interest is accrued at the period end from the time of last payment. Amounts received for securities sold are recorded when a sale has occurred. Amounts are generally received within 30 days of being recorded as a receivable.

$(i)$ Payables

Payables represent liabilities for goods and services provided to the Company prior to the end of the financial period which are unpaid at the reporting date. Payables are unsecured and are usually paid within 30 days of recognition.

$(1)$ Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

$(k)$ Earnings per share

Basic earnings per share is determined by dividing the operating result after income tax by the weighted average number of ordinary shares on issue during the financial period.

$(1)$ Comparative figures

This is the first year of operations therefore, no comparative information has been included in this report.

Notes to the financial statements For the period ended 30 June 2004

$\overline{2}$ Adoption of Australian Equivalents to International Financial Reporting Standards

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

The Company's management, along with its auditors, are assessing the significance of these changes and preparing for their implementation. The Board will oversee and manage the Company's transition to IFRS. We will seek to keep stakeholders informed as to the impact of these new standards as they are finalised. The key accounting policies which will impact the Company on adoption of IFRS are:

Non-current Investments

Under the pending AASB 139: Financial Instruments: Recognition and Measurement, financial instruments that are classified as available for sale instruments must be carried at fair value. Unrealised gains or losses may be recognised either in income or directly to equity. Current accounting policy is to measure non-current investment at fair value.

Income Tax

Currently, the Company 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 Company 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.

		Note	2004
3	Investments		\$
	Listed securities- at market value	1(b)(ii)	47,589,133
4	Receivables
	Current
	Accrued interest and dividends		186,882
	GST receivable		9,113
			195,995
5	Tax assets
(a)	Current
	Income tax refund receivable		24,610
(b)	Non-current
	Future income tax benefit		358,560
6	Payables
	Current
	Trade creditors		15,485
	PAYG withheld		6,928
	Management & performance fees		42,371
			64,784
7	Tax liabilities
	Non-current
	Deferred income tax		634,925

Notes to the financial statements For the period ended 30 June 2004

		2004	2004
8	Contributed Equity	No.	s
	Ordinary shares	49,630,827	48, 151, 202
		No.	\$
	Incorporation - 29 October 2003
	Initial public offer	49,594,826	49,594.826
	Cost of initial public offer		(1,479,625)
	Options exercised	36,000	36,000
	Closing balance	49,630,827	48, 151, 202

Terms and conditions

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders meetings.

In the event of winding up the Company ordinary shareholders rank after creditors and are fully entitled to any proceeds of liquidation.

		2004
9	Reserves
(a)	Unrealised profits reserve
	Unrealised gains during the period	2.116.415
	Deferred income tax on movement in the period	(634.925)
	Balance at the end of the financial period	1.481.490

The unrealised profits and losses reserve is used to record the cumulative after tax unrealised gains or losses on investments.

$(b)$ Retained earnings

10

Opening balance
Net profit for the current period	2,926,131
Transfer to unrealised profits reserve	(1,481,490)
	1,444,641
Auditors remuneration Amounts received and receivable, by the auditor of the Company for:
Auditing the accounts	11,500
Other services

11,500

rvices

Notes to the financial statements For the period ended 30 June 2004

11 (a)	Income tax The income tax from the financial period differs from the amount calculated on the profit. The differences are	2004 \$
	reconciled as follows:
	Profit from ordinary activities before income tax expense	3,177,886
	Prima facie tax expense at 30%	953.366
	Tax effect of permanent difference:
	- deductible capital expenses	(443, 888)
	- imputation gross-up on dividends received	(257,723)
	Income tax expense/(benefit) attributable to profit from
	ordinary activities	251.755

Related party information $12₂$

$(a)$ Directors

The names of the persons who were directors of the Company during the financial period were:

David Iliffe David Davis Cameron McCullagh

	2004
(b) Directors' remuneration

Income paid to directors by the Company and related parties in connection with the management of affairs of the Company were:

Directors Fees Paid

Name of directors	Base fee	Superannuation	Total
David Iliffe	12,333	1.110	13.443
David Davis	12.333	1.110	13,443
	24,666	2.220	26.886

The number of directors of the Company whose income from the Company falls within the following bands are as follows:

	2004
	No.
$$0 - $9,999$	и
\$10,000 - \$19,999	Ð

The directors' remuneration excludes insurance premiums paid and payable by the Company in respect of directors' liability insurance.

Apart from the details disclosed in this note, no director has entered into a material contract with the Company during the financial period.

Notes to the financial statements For the period ended 30 June 2004

• $12$ Related party information
• Directors' remuneration (Continued) $(b)$

Management Agreements

van Eyk Three Pillars Limited has a contractual agreement with White Funds Management Pty Limited, where White Funds Management Pty Limited provides back office and managerial services for a fee charged as a percentage of the portfolio value on a monthly basis.

Mr Cameron McCullagh received no fees as an individual, but is a director and shareholder of White Funds Management Pty Limited which received management fees during the financial period for the management of the Company.

White Funds Management Pty Limited	2004
Fees paid during the period	70.660
Fees payable at period end	17.549
	88.209

Transactions with directors and director-related entities $(c)$ concerning shares

Director	No. of Ordinary	No. of Ordinary
	Shares Held	Options Held
David Iliffe	50.000	50.000
David Davis	20,000	20,000
Cameron McCullagh	720.000	720,000
	790.000	790.000

Directors' transactions concerning dividends and ordinary shares are on the same terms and conditions applicable to ordinary members.

Notes to the financial statements For the period ended 30 June 2004

13 Segment information

The Company was engaged in investment activities conducted in Australia and derived revenue from dividend, interest income and from the sale of investments.

Financial instruments 14

Credit risk $(a)$

Credit risk is the risk that a counterpart will fail to perform contractual obligations (i.e. default in either whole or part) under a contract.

Market prices generally incorporate credit assessments into valuations and risk of loss is implicitly provided for in the carrying value of items on the statement of financial position and liabilities as they are marked to market at period end. The total credit risk for items on the statement of financial position is therefore limited to the amount carried on the statement of financial position.

The Company is not exposed to any individually material credit risk.

$(b)$ Interest rate risk

The Company has interest rate risk exposures from the holdings of financial assets and liabilities in the normal course of business.

As at 30 June 2004, the Company's exposure to interest rate risk and the effective weighted average interest rate for each class of financial asset and financial liability is set out in the table below:

	Weighted average interest rate $(\%$ pa)	Floating interest rate \$	Non- interest bearing \$	Total \$
Financial assets
Cash assets	2.61%	3,570,164		3,570,164
Receivables		۰	195,995	195,995
Listed securities			47,589,133	47,589,133
		3,570,164	47,785,128	51,355,292
Financial liabilities
Payables			64,784	64,784
			64.784	64,784
Net financial assets		3,570,164	47.720.344	51.290.508

Net fair value of financial assets and liabilities $(c)$

The net fair value of financial assets and financial liabilities and derivative financial instruments included in the statement of financial position approximates their carrying amount.

Notes to the financial statements For the period ended 30 June 2004

		2004
15	Statement of cash flows	\$
(a)	Reconciliation of net profit from ordinary activities after income tax to net cash utilised in operating activities
	Profit from ordinary activities after income tax expense	2,926,131
	Unrealised changes in the net fair value of investments	(2, 116, 415)
	Realised gains on sale of investments	(95,309)
	Change in operating assets and liabilities:
	Increase in receivables	(195, 995)
	Increase in prepayments	(38,580)
	Increase in payables	64.784
	Increase in tax liabilities	251,756
	Net cash inflow from operating activities	796.372

16 Events occurring after reporting date

No significant events have occurred since the reporting date which would impact on the financial position of the Company as disclosed in the statement of financial position as at 30 June 2004 and the results and cash flows of the Company for the period ended on that date, other than the declaration of a 1.5 cents per share fully franked dividend.

17 Earnings per share

	2004
Basic earnings per share (cents per share)	9.4
Diluted earnings per share (cents per share)	94
Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share	31.053.461

No adjustments are made to the profit from ordinary activities after income tax expense shown on the statement of financial performance in deriving earnings used in the calculation of basic earnings per share. Earnings per share is based on the accounting period from incorporation on 29 October 2003 to 30 June 2004.

18 Franking Account

Balance of franking account at year end adjusted for franking credits arising from payment of provision for income tax and dividends recognised as receivables, franking debits arising from payment of proposed dividends and franking credits that may be prevented from distribution in subsequent financial years.

372,682

$0.004$

19 Contingent liabilities

The Investment Management Agreement entered into by the company with van Eyk Research is for an initial period of twenty five years, commencing from the date of listing.

The Management Agreement entered into by the company with White Funds Management is for an initial period of twenty five years, commencing from the date of listing.

20 Company Details

The registered office and principal place of business of the Company is: Level 5, 14 Martin Place SYDNEY NSW 2000

Directors' declaration For the period ended 30 June 2004

The directors of the Company declare that:

• $\overline{1}$ The financial statements and notes, as set out on pages 15 to 25, are in accordance with the Corporations Act 2001:
• (a) comply with Accounting Standards and the Corporations Regulations 2001: and
• (b) give a true and fair view of the financial position as at 30 June 2004 and of the performance for the year ended on that date of the Company.
• $\overline{2}$ In the directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Cameron McCullagh Director

Dated this 20th day of August 2004

Independent audit report to the members of van Eyk Three Pillars Limited

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 Van Eyk Three Pillars Limited (the Company), for the period ended 30 June 2004 as set out on pages 15 to 26.

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 judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot quarantee 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 financial position, and its performance as represented by the results of its 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 ٠ disclosures in the financial report, and
• assessing the appropriateness of the accounting policies and disclosures used and the ٠ 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.

Independence

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 Van Eyk Three Pillars Limited is in accordance with:

a) the Corporations Act 2001, including:

• i. giving a true and fair view of the Company's financial position as at 30 June 2004 and of its performance for the period ended on that date, and
• complying with Accounting Standards in Australia and the Corporation Regulations $\ddot{\mathbf{u}}$ . $2001$ ; and

b) other mandatory financial reporting requirements in Australia.

Grosvenor Schiliro

Mark Schiliro Partner

Sydney 20th August, 2004

Members Information

$\mathbf{1}$ . Shareholding

Distribution of securities as at 30 June 2004 $(a)$

Category (size of holding)	Number of shareholders	Number of Shares
$1 - 1.000$	23	15.589
$1.001 - 5.000$	909	3.261.417
$5,001 - 10,000$	494	4.617.075
10,001 - 100,000	768	24.255.505
100,001 and over	38	17,481.241
	2.232	49.630.827

• The number of shareholdings comprising less than a marketable parcel is 8. $(b)$
• $(c)$ The names of the substantial shareholders listed in the Company's register as at 9 August 2004 are:

Shareholder	No. of shares held
Permanent Trustee Company Limited (WEA001 A/C)	9.000.000
Count Financial Limited	1.512.229

The percentage of total holding of the 20 largest holders of ordinary shares was 30.61%. $(d)$

Twenty largest holders

The names of the 20 largest holders as at 9 August 2004 are listed below:

	Number of
Name	shares held	%
Permanent Trustee Company Limited (WEA001 A/C)	9,000,000	18.134
Count Financial Limited	1,512,229	3.047
Mr Barry Lambert & Mrs Joy Lambert (Lambert Super Fund)	500,000	1.007
CSM Investments Pty Ltd	500,000	1.007
Mr Cecil George Aiken & Mrs Margaret Rose Aiken	420,000	0.846
PJR Superannuation Pty Ltd (PJR Super Fund)	350,000	0.705
Mr Peter John Robinson	250,000	0.504
Bond Street Custodian Limited (Sydney - PF0533 A/C)	250,000	0.504
Mr Gary Bruce Pennefather (The Pennefather Family A/C)	240,000	0.484
Mr Ian Thomason & Mrs Denise Thomason (1 & D Thomason Super Fund)	209,000	0.421
Maiko Pty Ltd	200,000	0.403
R W Kirby Pty Ltd	200,000	0.403
Bond Street Custodians Limited (Geff - I14410 A/C)	200,000	0.403
Mr Anthony Ross Cotton	200,000	0.403
Froth Pty Ltd (CNY Invest No 2 A/C)	200,000	0.403
DBP Custodians Pty Ltd	200,000	0.403
Grange Investments Pty Ltd	200,000	0.403
1 & L Wightwick Pty Ltd	200,000	0.403
ASWIG Management Pty Ltd	190,000	0.383
Permanent Trustee Company Limited (MAP0001 A/C)	170,000	0.343
	15,191,229	30.61

Members Information

Voting rights $(e)$

At a general meeting, on the show of hands, every ordinary member present in person shall have one vote for every share held. Proxies present at the meeting are not entitled to vote on a show of hands, but on a poll have one vote for every share held.

$(f)$ Options

A total of 49,558,825 options are on issue. All the options are held by 2,234 holders of ordinary securities.

$2.$ The name of the Company secretary is Mr Peter Roberts.

3. The registered office and principal place of business of the Company is: Level 5

14 Martin Place SYDNEY NSW 2000

Telephone: (02) 8236 7700

$\overline{4}$ . Stock Exchange Listing

Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian Stock Exchange Limited.