HALLMARK

ABN 12 000 817 023

ANNUAL REPORT 2003

DIRECTORS

John W Barr (Chairman) Neil Biddle Adrian Corp

COMPANY SECRETARY

Christopher Bath

REGISTERED OFFICE

Level 3, 30 Richardson Street West Perth Western Australia 6005

PO Box 1176 West Perth Western Australia 6872

Telephone: (08) 9327 0900 Facsimile: $(08)$ 9327 0901 Website: www.hallmarkconsolidated.com Email: [email protected]

SHARE REGISTRY

Computershare Investor Services Pty Limited Level 2, Reserve Bank Building 45 St George's Terrace Perth Western Australia 6000

$(08)$ 9323 2000 Telephone: Facsimile: $(08)$ 9323 2033

AUDITORS

KPMG

AUSTRALIAN STOCK EXCHANGE

ASX Code:

Shares HLM

CORPORATE

Hallmark reports a consolidated net profit after tax of \$1,233,570 (2001: loss of \$922,231).

The principal activities during the course of the 2003 financial year were completing the sale of Chemist Club, reviewing business opportunities and management of the interest in the Cawse Extended Project.

The review of new business opportunities led directly to the involvement in Batavia Mining Limited (BTV), and the recent capital return via the in specie distribution of Batavia shares to all Hallmark shareholders.

Hallmark has been advised that mining at the Cawse Extended Project has commenced. As a result Hallmark will receive royalty payments.

Hallmark is in a strong financial position with liquid assets totaling in excess of \$6 million, comprising cash, loans that have been repaid since year end and investments in listed companies with a market value as at the date of this report of \$2.9 million.

BATAVIA MINING LIMITED

During the last eight months Hallmark sponsored the reconstruction of Batavia, including assistance with a Deed of Company Arrangement and a shareholder's meeting. Hallmark also provided funds by way of loans and capital and sold a number of tenements to Batavia. Hallmark was issued shares for the capital provided and the tenements sold and was issued a convertible note with a face value of \$1.06 million in satisfaction of other amounts owed.

At a meeting of Hallmark shareholders in June 2003 approval was given for a reduction of capital, satisfied by a one for one pro-rata distribution of the majority of the shares in Batavia that Hallmark had received.

In September 2003, Hallmark lodged a notice of conversion to convert its 10.6 million convertible notes into Batavia shares. The notes were converted at a conversion price of five (5) cents. The financial effect of this transaction has not been brought to account in the financial statements for the year ended 30 June 2003.

In order to continue effective exploration and exploitation of its mining tenements Batavia raised additional funds by way of a 1 for 3 rights issue, with a free attached option, at an issue price of 10 cents per share. Hallmark now holds approximately 27 million Batavia shares.

Following the recommencement of trading of its shares Batavia is now vigorously continuing exploration of its many tenements, particularly the Deflector Project and has recently announced a resource upgrade to 170,000 oz (gold equivalent basis).

Shareholders are encouraged to visit the Batavia web page, which is located at. www.bataviamining.com.au for further and ongoing information.

EXPLORATION PROJECTS

Hallmark is involved in several exploration projects. A summary of the exploration projects follows:

CAWSE EXTENDED PROJECT

The OM Group Inc. ("OMG") owns and manages the Cawse Nickel-Cobalt Operation. OMG and Hallmark jointly own the Cawse Extended Project, which is located adjacent to the Cawse Nickel-Cobalt Operation.

The Cawse Extended Project covers 39km² and is located along strike immediately to the north west of the main development at the Cawse Nickel-Cobalt Operation. Hallmark's interest in the Cawse Extended Project is 20% free-carried to production, convertible at Hallmark's election to a 2% net smelter return.

During the year OMG completed sufficient exploration at the Unicorn Pit on Cawse Extended to allow them to make a decision to mine. To further encourage OMG to mine the Unicorn Pit ore Hallmark has agreed to a wet tonne rather than the 20% free-carried interest or 2% net smelter return options. This agreement applies only to ore mined from the Unicorn Pit. It is believed that the resources at the Unicorn Pit represent a relatively small proportion of the total mineable resource on Cawse Extended.

The base case payment is AU\$0.70/wt and the Agreement has been structured to allow for variations in the nickel price and the AUD/USD exchange rate with a minimum and maximum payment of AU\$0.50/wt and AU\$0.90/wt respectively.

Using AU\$0.70 per wet tonne and the presently forecast mining production of 735,000 tonnes Hallmark expects to receive a gross royalty income of \$514,000 from the December 2003 quarter through to the March 2005 quarter.

OMG have further advised that, subject to infill drilling of Jedbob and Yowie Pits, there is potential to mine up to a further 2.7 million tonnes over 4 years from Cawse Extended.

OTHER EXPLORATION PROJECTS

Hallmark holds an interest in three other tenement groups in Western Australia. In each case Hallmark is not contributing towards exploration expenditure, the projects being subject to joint venture, or options for sale.

During the year Hallmark owned and acquired and explored tenements at Deflector and Paynes Find. These tenements have now been sold to Batavia Mining Limited.

KINTORE EAST

Hallmark holds tenements covering an area of 789 hectares north west of Kalgoorlie. Joint Venture partner, Mines and Resources Australia Pty Ltd (MRA) manage the project. MRA are not currently undertaking any significant exploration on this project. Hallmark's interest in the tenements is 23.75%, diluting to 20%, at which stage it reverts to a 2% gold return interest calculated on production.

MCTAVISH

Hallmark holds tenements covering an area of 664 hectares located west of Kookynie. The tenements are joint ventured with Barminco Pty Ltd and its subsidiary Kookynie Resources NL. Hallmark's interest in the tenements is 10.1%, diluting to a 3% gross royalty, with 25% of Hallmark's interest held in trust for another party.

DUPLEX HILL SOUTH

Hallmark previously entered into an agreement in relation to one exploration licence, and two prospecting licence applications. The purchaser withdrew from the exploration licence but retains the right to purchase the PLA's for \$60,000.

Hallmark has granted an option to sell the exploration licence for \$50,000, plus a further royalty of \$100,000 to another party.

CHEMIST CLUB

During the year Hallmark sold its interest in Chemist Club for a consideration of \$2.0 million which included repayment of the loan made by Hallmark to Chemist Club.

This statement outlines the main Corporate Governance practices that were in place throughout the financial year, unless otherwise stated.

BOARD OF DIRECTORS

The Board is elected by shareholders to represent all shareholders. It is a Director's responsibility, in all decisions he or she is called upon to make concerning the Company's affairs, to conscientiously weigh the interests of shareholders in light of the circumstances and to consider the effects of such decisions on the interests of all shareholders.

Role of the Board

The Board's primary role is the protection and enhancement of medium to long-term shareholder value.

To fulfil this role, the Board is responsible for the overall Corporate Governance of the consolidated entity including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

Composition of the Board

The names of the Directors of the Company at the date of this statement are set out in the Directors Report. The Board will review its composition on an annual basis to ensure that the Board has the appropriate mix of expertise and experience. Where a vacancy exists, for whatever reason, or where it is considered that the Board would benefit from the services of a new Director with particular skills, the Board will select appropriate candidates with relevant qualifications, skills and experience.

Relationship of Board with Management

Management of the day to day business of the Company is to be conducted by or under the supervision of the Board, and by those other officers and employees to whom the management function is properly delegated by the Board.

The Board will adopt appropriate structures and procedures to ensure that the Board functions independently of management. Appropriate procedures may involve the Board meeting on a regular basis without management present or may involve expressly assigning the responsibility for administering the Board's relationship to management to a Committee of the Board.

Information is formally presented to the Board at monthly board meetings by way of board reports and review of performance to date.

Independent Advice to Directors

Subject to the approval of the Chairman, an individual Director may engage an outside adviser at the expense of the Company for the purposes of seeking independent advice in appropriate circumstances.

Constitution of Hallmark Consolidated Limited

The Directors must adhere to, and the Board must conduct itself in accordance with, the Constitution of the Company.

Fair Dealings and Related Party Transactions

Directors and senior management will convey to all stakeholders the message that integrity and effective control cannot be compromised when dealing with any supplier, particularly if a supplier is a related party.

A Director, or an entity over which a Director has control or significant influence, who enters into a transaction with the Company must make full disclosure of all material elements of the transaction to the Chairman or, if the Director involved is the Chairman, to the Board.

In particular, the following contracts with Directors, or entities over which Directors have control or significant influence, must be approved by the Board in advance of committing the Company:

contracts for the supply of goods and/or services which extend beyond one year, or where the total value of goods and/or services supplied under the contract may, in any one year, exceed $$10,000;$
agreements for the lease of property; and
agreements for the acquisition or disposal of property. ×

Disclosure of Information

The Company has an objective of honest and open disclosure of information in dealing with stakeholders, subject to appropriate commercial considerations associated with competitive and sensitive information. Such disclosure may, in appropriate circumstances, exceed statutory requirements.

Confidentiality

All Directors must ensure that they abide by requirements of the Company's Constitution regarding secrecy and confidentiality of information.

Share Dealings

The Board has adopted a policy on dealings in securities of the Company by Directors and employees.

The policy on dealings in securities will be reviewed from time to time to ensure the policy's effectiveness.

INTERNAL CONTROL FRAMEWORK

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility, the Board has instigated an internal control framework that can be described under three headings:

Financial reporting there is a comprehensive budgeting system with an annual budget $\blacksquare$ approved by the Directors. Monthly actual results are reported against budget and revised forecasts for the year are prepared regularly. The consolidated entity reports to shareholders half-yearly.
Continuous disclosure the consolidated entity has a policy that all shareholders and investors $\blacksquare$ have equal access to the Company's information and has procedures to ensure that all price sensitive information is disclosed to the ASX in accordance with the continuous disclosure requirements of the Corporations Act 2001 and ASX Listings Rules. All information provided to the ASX is immediately posted to the Company's web site:
a comprehensive process is in place to identify matters that may have a material effect on the price of the Company's securities
the Company Secretary is responsible for interpreting the Company's policy and where necessary informing the Board
the Company Secretary is responsible for all communication with the ASX.
Quality and integrity of personnel formal appraisals are conducted at least annually for all employees.

ETHICAL STANDARDS

The Board's policy for the Directors and management is to conduct themselves with the highest ethical standards. All Directors and employees will be expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the consolidated entity.

THE ROLE OF SHAREHOLDERS

The Board of Directors aims to ensure that the shareholders are informed of all major developments affecting the consolidated entity's state of affairs. Information is communicated to shareholders as follows:

the annual report is distributed to all shareholders. The Board ensures that the annual report $\blacksquare$ includes relevant information about the operations of the consolidated entity during the year, changes in the state of affairs of the consolidated entity and details of future developments, in addition to the other disclosures required by the Corporations Act 2001.
the half-yearly report contains summarised financial information and a review of the operations of the consolidated entity during the period. The half-year audited financial report is prepared in accordance with the requirements of applicable Accounting Standards and the Corporations Act 2001 and is lodged with the ASX. The half-yearly report is sent to any shareholder who requests it.
the quarterly report contains summarised cash flow financial information and details about the consolidated entity's activities during the quarter. The quarterly report is sent to any shareholder who requests it.
proposed major changes in the consolidated entity which may impact on share ownership rights are submitted to a vote of shareholders.

All documents that are released publicly are made available on the consolidated entity's internet web site at www.hallmarkconsolidated.com.

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the consolidated entity's strategy and goals. Important issues are presented to the shareholders as single resolutions.

The shareholders are requested to vote on the appointment and aggregate remuneration of directors, the granting of options and shares to directors and changes to the Constitution. Copies of the Constitution are available to any shareholder who requests it.

AUDIT COMMITTEE

Due to the consolidated entity's size and structure it is not considered appropriate to have a formal audit committee. All matters that would have been dealt with by the audit committee have been dealt with by the Board.

EXTERNAL AUDITORS

The present external auditors were appointed on 26 October 2000. The lead external auditing engagement partner will be rotated off the engagement during the 2010 financial year.

The Directors present their report together with the financial report of Hallmark Consolidated Limited ("the Company") and of the consolidated entity, being the Company and its controlled entities, for the year ended 30 June 2003 and the auditor's report thereon.

DIRECTORS

The Directors of the Company at any time during or since the end of financial year are:

John W Barr CA, FAICD - Chairman

Mr John W Barr is a Chartered Accountant and Fellow of the Australian Institute of Company Directors. He has extensive Australian and international experience with exposure to manufacturing, mining and mineral exploration and development in respect to several commodities including gold, platinum, nickel and copper.

Mr Barr has managed his own consultancy business since 1987 which specialises in the management of public companies including advice on capital raisings, mergers and acquisitions, negotiating onshore and offshore acquisitions and joint ventures, negotiating commodity based funding, and compliance with corporate and stock exchange requirements.

Mr Barr is also Chairman of Batavia Mining Limited and Cavendish Corporation Limited.

Appointed December 1998.

Neil Biddle B.App.Sc(Geology), M.Aus.IMM

Mr Neil G Biddle is a geologist and company director with over 16 years professional and management experience in listed public companies involved in mining and exploration and was formerly managing director of Border Gold Ltd (1995-1999) and Consolidated Victorian Mines NL (1991-1995).

Mr Biddle is also a director of Batavia Mining Limited.

Appointed December 1998.

Adrian Corp B.Sc, B.Com

Mr S Adrian Corp holds degrees' in science and commerce and qualified as a Chartered Accountant. He has acted as a Director of listed companies since 1985.

From 1985 to 1999 Mr Corp was a director of a management consultancy business, which specialised in the management of ASX listed companies including advice on capital raisings, mergers and acquisitions, negotiating joint ventures, and compliance with corporate and stock exchange requirements. Through the management consultancy business, Mr Corp was also involved in a number of successful IPO's.

Mr Corp is also a director of Kanowna Lights Limited.

Appointed October 2001.

Gary Snow

Mr Gary Snow is a Pharmacist with extensive retail experience having owned his own pharmacies for the past 25 years. Following the sale of Chemist Club Pty Ltd in July 2002 he did not seek re-election at the Company's annual general meeting in September 2002.

DIRECTORS MEETINGS

The number of Director's meetings and number of meetings attended by each of the Directors of the Company during the financial year are:

Director	Number of meetings held during the time the Director held office	Number of meetings attended
J W Barr	16	16
N G Biddle	16	14
S A Corp	16	16
G A Snow		تى

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the course of the financial year were completing the sale of Chemist Club; the management of its exploration properties; management of the Company's interest in the Cawse Extended Project and reviewing business opportunities.

Other than the sale of Chemist Club and the involvement in Batavia Mining Limited, there were no other significant changes in the nature of the activities of the consolidated entity during the year.

REVIEW AND RESULTS OF OPERATIONS

The operating profit of the consolidated entity after income tax for the year was \$1,233,570 (2002: loss of \$922,231).

A review of the operations during the financial year is set out on pages 1 to 2.

DIVIDENDS

The Directors do not recommend that a dividend be paid. Since the end of the previous financial year, no dividend has been paid.

STATE OF AFFAIRS

Significant changes in the state of affairs of the consolidated entity during the financial year were as follows:

The Company completed the sale of its interest in Chemist Club for a consideration of \$2 million which included repayment of the loan made by Hallmark to Chemist Club of \$653,075.
During the year the Company incorporated a new wholly owned subsidiary called South Murchison Mines Pty Ltd (SMM). SMM acquired various exploration assets during the year. In June 2003 the Company's interest in SMM and other mining tenements were sold to Batavia Mining Limited.
In June 2003 the shareholders approved a return of capital to be satisfied by the in specie distribution of shares in Batavia Mining Limited on a 1 for 1 basis.

ENVIRONMENTAL REGULATIONS

The consolidated entity's operations are not subject to any significant environmental regulations under either Commonwealth or State legislation. However, the Board believes that the consolidated entity has adequate systems in place for the management of its environmental requirements and is not aware of any breach of those environmental requirements as they apply to the consolidated entity.

EVENTS SUBSEQUENT TO REPORTING DATE

On 5 September 2003 the Company lodged a notice of a notice of conversion to convert its 10.6 million convertible notes to 21.2 million BTV shares. The notes were converted at a conversion price of five (5) cents. The financial effect of this transaction has not been brought to account in the financial statements for the year ended 30 June 2003.

LIKELY DEVELOPMENTS

The consolidated entity will continue to pursue a policy of selective exploration. The consolidated entity will also consider suitable investment propositions to achieve an acceptable return on liquid resources.

Additional comments on likely developments of the consolidated entity are included under the review of operations and activities on pages 1 to 2 of this report.

DIRECTORS' AND SENIOR EXECUTIVES' EMOLUMENTS

The Board will review the remuneration packages and policies applicable to the executive directors, senior executives and non-executive directors on an annual basis. Remuneration levels will be competitively set to attract qualified, experienced Directors and senior executives. Where necessary the Board will obtain independent advice on the appropriateness of remuneration packages.

The following table discloses the remuneration of the directors and officers of the Company and the consolidated entity:

	Directors Fees	Consulting Fees	Base Emolument s	Super Contributions	Options Issued	Total s
Director
J W Barr	20,000	93,500		1,800	$\qquad \qquad -$	115,300
N G Biddle	20,000	101,558		1,800	-	123,358
S A Corp	20,000	44.500		1,800	40.000	106.300
G A Snow	4,728	$\overline{\phantom{m}}$		426		5.154
Executive Officer
C J Bath			100.000	26.314	4.000	130.314

The options issued during the year were valued using the Black-Scholes methodology.

All options issued expire on 30 June 2004 and each option entitles the holder to purchase one ordinary share in the Company.

OPTIONS

During or since the end of financial year, the Company granted options over unissued ordinary shares to the following Director and Officer as part of their remuneration:

	Number of options granted	Exercise price	Expiry date
Director S A Corp	1,000,000	\$0.25	30 June 2004
Executive Officer C J Bath	4.000	\$0.20	30 June 2004

Shareholders approved the issue of options in September 2002. All options were granted during the financial year. No options have been granted since the end of the financial year. As noted below, following the capital reduction the exercise price of these options was reduced to \$0.19 and \$0.14 respectively.

OPTIONS

At the date of this report unissued ordinary shares of the Company under option are:

Expiry Date	Exercise price	Number of options
30 June 2004	\$0.19	4,280,000
30 June 2004	\$0.14	180,000

In June 2003 shareholders approved a capital reduction, which resulted in a reduction in the exercise price of options previously issued of \$0.06 per option.

No shares were issued on the exercise of options during the year.

The options do not entitle the holder to participate in any share issue of the Company or any other body corporate.

DIRECTORS' INTEREST

The relevant interest of each Director in the shares, debentures, interests in registered schemes and rights or options over such instruments issued by the companies within the consolidated entity and other related body corporates, as notified by the Directors to the ASX in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows:

Director	Ordinary Shares	Options over Ordinary Shares
J W Barr	8,700,000	1,000,000
N G Biddle	5,643,372	1,000,000
S A Corp	8,000,000	1,000,000

INDEMNIFICATION AND INSURANCE OF OFFICERS

The Company has previously agreed to indemnify the following current directors and officers, J W Barr, N Biddle, S Corp and C Bath and former directors A Van Noort and G Snow against all liabilities to another person (other than the Company or a related body corporate), including legal expenses that may arise from their position as directors and officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith or for a pecuniary penalty under section 1317G or a compensation order under section 1317H of the Corporations Act 2001.

INSURANCE PREMIUMS

Since the end of the previous financial year the Company has not paid any insurance premiums (2002: Nil) in respect of directors' and officers' liability insurance for current directors and officers.

Signed in accordance with a resolution of the Directors.

John W Barr Chairman

12 September 2003

Statements of Financial Performance For the Year Ended 30 June 2003

	Note	Consolidated 2003	2002	Parent Entity 2003	2002
		\$	\$	\$	\$
Revenue from sale of goods and services	3		1,552,749
Other revenues from ordinary
activities	3	4,619,506	298,181	4,066,161	329,015
Total revenue		4,619,506	1,850,930	4,066,161	329,015
Marketing costs			199,469
Borrowing costs	4(b)		4,818
Occupancy costs		91,454	70,608	91,454	29,726
Administrative costs - Chemist Club			1,002,085
Administrative costs - Other		294,783	273,895	276,961	246,737
Corporate costs Other		416,434	700,225	379,042	560,301
Goodwill amortisation	4(b)		417,420
Write down in value of investment
in controlled entity Provision for diminution in listed	4(a)				572,257
investments	4(a)	78,134		78,134
Carrying amount of controlled entities/investments disposed		1,857,642		2,096,927
Carrying amount of non-current
assets disposed		500,452		635
Other expenses from ordinary activities		147,037	104,641	45,429	114,304
Profit/(loss) from ordinary
activities before related income
tax expense		1,233,570	(922, 231)	1,097,579	(1, 194, 310)
Income tax expense relating to
ordinary activities	6
Profit/(loss) from ordinary activities after related income tax		1,233,570	(922, 231)	1,097,579	(1, 194, 310)
expense
Net Profit/(loss) attributable to members of the parent entity	23	1,233,570	(922, 231)	1,097,579	(1, 194, 310)
Basic earnings per share	7	\$0.023	(\$0.017)
Diluted earnings per share	7	\$0.023	(\$0.017)

The statements of financial performance are to be read in conjunction with the notes to the financial statements set out on pages 13 to 40.

		Consolidated		Parent Entity
	Note	2003	2002	2003	2002
		\$	\$	\$	\$
Current Assets	9
Cash assets Receivables	10	2,303,422	4,393,214 208,148	2,299,759	4,299,860
Inventories	11	988,755	162,824	988,057	61,669
Other	13	5,824	19,584	5,824	8,661
Total Current Assets		3,298,001	4,783,770	3,293,640	4,370,190

Non-Current Assets
Receivables	10				653,075
Other financial assets	12	1,242,025	188,930	1,642,025	1,935,856
Plant and equipment	14	69,050	327,161	67,841	61,644
Exploration expenditure	15	5,088.187	5,302,103	70,000	70,000
Intangible assets	16		1,252,259
Total Non-Current Assets		6,399,262	7,070,453	1,779,866	2,720,575
Total Assets		9,697,263	11,854,223	5,073,506	7,090,765
Current Liabilities
Payables	17	116,433	195,835	116,393	79,720
Interest-bearing liabilities	18		25,668
Current tax liabilities	6(b)		37,999		37,999
Provisions	20	23,734	36,411	23,734	20,676
Total Current Liabilities		140,167	295,913	140,127	138,395
Non-Current Liabilities
Non-interest bearing liabilities	19			476,066	357,852
Total Non-Current Liabilities				476,066	357,852
Total Liabilities		140,167	295,913	616,193	496,247
NET ASSETS		9,557,096	11,558,310	4,457,313	6,594,518
Equity
Contributed equity	21	3,471,866	6,706,650	3,471,866	6,706,650
Reserves	22	4,653,656	4,653,656	70,000	70,000
Retained profits/(losses)	23	1,431,574	198,004	915,447	(182, 132)
TOTAL EQUITY		9,557,096	11,558,310	4,457,313	6,594,518

The statements of financial position are to be read in conjunction with the notes to the financial statements set out on pages 13 to 40.

		Consolidated		Parent Entity
	Note	2003 \$	2002 \$	2003 \$	2002 \$
Cash flows from operating
activities
Cash receipts in the course of operations			1,503,321		54,930
Cash payments in the course of
operations		(757, 912)	(1,969,603)	(699,536)	(829,381)
Interest received		264,340	238,725	222,801	237,529
Borrowing costs paid			(4,748)
Income taxes paid Net cash used in operating	6(b)	(37,999)	(37,992)	(37,999)	(37, 992)
activities	29(b)	(531,571)	(270, 297)	(514,734)	(574, 914)
Cash flows from investing
activities
Proceeds on disposal of non-current
assets		300	78,800	300	69,028
Proceeds on disposal of controlled
entities (net of cash disposed) Loan to controlled entities	28(b)	1,297,712		1,346,925 (2, 196, 069)	237,512
Loans repaid to controlled entities					(240, 592)
Advances to other parties		(2,090,860)		(914,110)
Advances from other parties Repayment of advances to other		286,643
parties		753,075		653,075
Payments for plant and equipment		(27, 513)	(60, 398)	(26,096)	(12, 605)
Payments for investments		(348, 140)	(6,000)	(348, 140)	(6,000)
Payments for exploration expenditure		(1,429,438)	(192, 901)	(1, 252)	(200)
Net cash used in investing
activities		(1,558,221)	(180,499)	(1,485,367)	47,143
Cash flows from financing
activities
Share buy-back Finance lease payments			(63,793) (133, 120)		(63, 793)
Net cash used in financing
activities			(196, 913)		(63, 793)
Net decrease in cash held		(2,089,792)	(647,709)	(2,000,101)	(591, 563)
Cash at the beginning of the financial year		4,393,214	5,040,923	4,299,860	4,891,423
Cash at the end of the financial
year	29(a)	2,303,422	4,393,214	2,299,759	4,299,860

The statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 13 to 40.

$\mathbf{1}$ Statement of significant accounting policies

The significant accounting policies which have been adopted in the preparation of this financial report are:

$(a)$ Basis of preparation

The financial report is a general purpose financial report which 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.

It has been prepared on the basis of historical costs and except where stated, does not take into account changing money values or fair values of non-current assets.

These accounting policies have been consistently applied by each entity in the consolidated entity and, except where there is a change in accounting policy as set out in Note 2, are consistent with those of the previous year.

Principles of consolidation $(b)$

Controlled entities

The financial statements of controlled entities are included in the consolidated financial statements from the date control commences until the date control ceases.

Transactions eliminated on consolidation

Unrealised gains and losses and inter-entity balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.

Unrealised gains resulting from transactions with associates and joint ventures are eliminated to the extent of the consolidated entity's interest. Unrealised gains relating to associates and joint venture entities are eliminated against the carrying amount of the investment. Unrealised losses are eliminated in the same way as unrealised gains, unless they evidence a recoverable amount impairment.

$(c)$ Revenue recognition

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) payable to the taxation authority. Exchanges of goods or services of the same nature and value without any cash consideration are not recognised as revenues.

Sale of goods and services

Revenue from the sale of goods is recognised (net of returns, discounts and allowances) when control of the goods passes to the customer.

Revenue from services is recognised at the time the service is provided.

Interest revenue

Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.

Sale of non-current assets

The gross proceeds of non-current asset sales are included as revenue at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed.

The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.

Dividends

Revenue from dividends from controlled entities is recognised by the parent entity when they are declared by the controlled entities.

$(d)$ Goods and services tax

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 (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(e) Borrowing costs

Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs incurred in connection with arrangement of borrowings and lease finance charges.

Ancillary costs incurred in connection with the arrangement of borrowings are capitalised and amortised over the life of the borrowings.

Taxation $(f)$

The consolidated entity adopts the income statement liability method of tax effect accounting.

Income tax expense is calculated on operating profit adjusted for permanent differences between taxable and accounting income. The tax effect of timing differences, which arise from items being brought to account in different periods for income tax and accounting purposes, is carried forward in the statement of financial position as a future income tax benefit or a provision for deferred income tax.

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 tax losses are only brought to account when their realisation is virtually certain. The tax effects of capital losses are not recorded unless realisation is virtually certain.

$(q)$ Acquisition of assets

All assets acquired including plant and equipment and intangibles other than goodwill are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition. When equity instruments are issued as consideration, their market price at the date of acquisition is used as fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity subject to the extent of proceeds received, otherwise expensed.

Where settlement of any part of cash consideration is deferred, the amounts payable are recorded at their present value, discounted at the rate applicable to the company if a similar borrowing were obtained from an independent financier under comparable terms and conditions.

Subsequent additional costs

Costs incurred on assets subsequent to initial acquisition are capitalised when it is probable that future economic benefits in excess of the originally assessed performance of the asset will flow to the consolidated entity in future years. Costs that do not meet the criteria for capitalisation are expensed as incurred.

$(h)$ Receivables

The collectibility of debts is assessed at balance date and specific provision is made for any doubtful accounts.

Trade debtors

Trade debtors to be settled within 60 days are carried at amounts due.

$(i)$ Inventories

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

Costs include direct materials, direct labour and other direct variable costs necessary to bring inventories to their present location and condition.

Net realisable value

Net realisable value is determined on the basis of each inventory line's normal selling pattern. Expenses of marketing, selling and distribution to customers are estimated and are deducted to establish net realisable value.

$(i)$ Investments

Controlled entities

Investments in controlled entities are carried in the Company's financial statements at the lower of cost and recoverable amount.

Other entities

Investments in other listed and unlisted entities are carried at lower of cost and recoverable amount.

(k) Leased assets

Leases under which the Company or its controlled entities assume substantially all the risks and benefits of ownership are classified as finance leases. Other leases are classified as operating leases.

Operating leases

Payments made under operating leases are expensed on a straight line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property.

$(1)$ Exploration expenditure

Exploration costs are accumulated in respect of each separate area of interest.

Exploration costs are carried forward where right of tenure of the area of interest is current and they are expected to be recouped through sale or successful development and exploitation of the area of interest, or, where exploration and evaluation activities in the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

When an area of interest is abandoned or the Directors decide that it is not commercial, any accumulated costs in respect of that area are written off in the financial period the decision is made.

(m) Recoverable amount of non-current assets valued on cost basis

The carrying amounts of non-current assets valued on the cost basis, other than exploration expenditure carried forward (refer note 1(I)), are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non-current asset exceeds its recoverable amount, the asset is written down to the lower amount. The write-down is expensed in the reporting period in which it occurs.

Where a group of assets working together supports the generation of cash inflows, recoverable amount is assessed in relation to that group of assets.

In assessing recoverable amounts of non-current assets the relevant cash flows have not been discounted to their present value, except where specifically stated.

(n) Goodwill

Goodwill represents the excess of the purchase consideration plus incidental costs over the fair value of the identifiable net assets acquired.

(o) Depreciation and amortisation

Useful lives

All assets, including intangibles, have limited useful lives and are depreciated/amortised using the straight line method over their estimated useful lives, with the exception of carried forward exploration costs and finance lease assets which are amortised over the term of the relevant lease or where it is likely the consolidated entity will obtain ownership of the asset, the life of the asset.

Assets are depreciated or amortised from the date of acquisition.

Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until commercial production commences.

Depreciation and amortisation rates and methods are reviewed annually for appropriateness. When changes are made, adjustments are reflected prospectively in current and future periods only. Depreciation and amortisation are expensed, except to the extent that they are included in the carrying amount of another asset as an allocation of production overheads.

The depreciation/amortisation rates for each class of assets are as follows:

	2003	2002
Property, plant and equipment
Leasehold improvements	33-50%	33-50%
Plant and equipment	$20 - 40%$	$20 - 40%$
Leased assets
- plant and equipment	÷.	25-33%
Intangibles
Goodwill	5 vears	5 years

$(p)$ Payables

Liabilities are recognised for amounts to be paid in the future for goods or services received. Trade accounts payable are normally settled within 60 days.

Employee entitlements $(q)$

Wages, salaries, annual leave and sick leave

Liabilities for employee benefits for wages, salaries, annual leave and sick leave expected to be settled within 12 months of the year-end represent present obligations resulting from employees' services provided to reporting date, calculated at undiscounted amounts based on remuneration wage and salary rates that the consolidated entity expects to pay as at reporting date including related on-costs.

Non-accumulating non-monetary benefits, such as interest free loans, are expensed based on the net marginal cost to the consolidated entity as the benefits are taken by the employees.

Employee share and option plans

Where shares or options are issued to employees as remuneration for past services, the difference between fair value of the shares or options issued and the consideration received, if any, from the employee is expensed. The fair value of the shares or options issued is recorded in contributed equity.

Other share or options issued to employees are recorded in contributed equity at the fair value of consideration received, if any.

Transactional costs associated with issuing shares and options are recognised in equity subject to the extent of the proceeds received, otherwise expensed. Other administrative costs are expensed.

Superannuation plans

The Company and controlled entities contribute to several defined contribution superannuation plans. Contributions are recognised as an expense as they are made.

$(r)$ Joint ventures

The consolidated entity's interest in an unincorporated joint venture is brought to account by including its interest in the following amounts in the appropriate categories in the statement of financial position and statement of financial performance:

each of the individual assets employed in the joint venture $\bullet$
liabilities incurred by the consolidated entity in relation to the joint venture and the liabilities for which it is jointly and/or severally liable
expenses incurred in relation to the joint venture
revenue from sale of output.

$(s)$ Earnings per share

Basic earning per share (EPS) is calculated by dividing the net profit attributable to members of the parent entity for the reporting period, after excluding any costs of servicing equity (other than ordinary shares and converting preference shares classified as ordinary shares for EPS calculation purposes), by the weighted average number of ordinary shares of the Company, adjusted for any bonus issue.

Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs associated with dilutive potential ordinary shares and the effect on revenues and expenses of conversion to ordinary shares associated with dilutive potential ordinary shares, by the weighted average number of ordinary shares and dilutive potential ordinary shares adjusted for any bonus issue.

$\overline{2}$ Change in Accounting Policy

$(a)$ Employee benefits

The consolidated entity has applied the revised AASB 1028 "Employee Benefits" for the first time from 1 July 2002.

The liability for wages and salaries, annual leave and sick leave is now calculated using the remuneration rates the Company expects to pay as at each reporting date, not wage and salary rates current at reporting date.

The initial adjustments to the consolidated financial report as at 1 July 2002 as a result of this change are nil.

As a result of this change in accounting policy, employee benefits expense increased by \$1,608 (the Company: \$1,609) for the current year to 30 June 2003.

Provisions and contingent liabilities $(b)$

The consolidated entity has applied AASB 1044 "Provision, Contingent Liabilities and Contingent Assets" for the first time from 1 July 2002.

Dividends are now recognised at the time they are declared, determined or publicly recommended. Previously, final dividends were recognised in the financial year to which they related, even though the dividends were announced after the end of that financial year.

The adjustments to the consolidated and Company financial reports as at 1 July 2002 as a result of this change are nil.

There was no impact on net profit for the current financial year to 30 June 2003.

Notes to the Financial Statements

		Consolidated		Parent Entity
		2003 \$	2002 s	2003 s	2002 s.
3	Revenue from ordinary activities
	Sale of goods and services revenue from operating activities		1,552,749
	Other revenues: From operating activities Interest:
	Other parties	260,475	209,004	218,936	207,807
	From outside operating activities Gross proceeds from sale of non-
	current assets Other.	4,347,225 11,806	78,880 10,377	3,847,225	69,028 52,180
	Total other revenues	4,619,506	298,181	4,066,161	329,015
	Total revenue from ordinary activities	4,619,506	1,850,930	4.066,161	329,015
(a)	Profit/(Loss) from ordinary activities before income tax expense Individually significant items
	included in profit/(loss) from ordinary activities before income tax expense Proceeds from sale of controlled
	entities/investments Carrying amount of controlled	(3,846,925)		(3,846,925)
	entities/investments sold	1,857,642		2,096,927
	Net gain	(1,989,283)		(1,749,998)
	Proceeds from sale of mineral assets Carrying amount of mineral assets	(500,000)
	sold	499,817	$\overline{\phantom{0}}$
	Net gain	(183)
	Exploration expenditure written-off Provision for diminution in listed	106,840	10,797	1,251	200
	investments	78,134	12,324	78,134	12,324
	Write down in value of investments
	in controlled entity				572,257

Notes to the Financial Statements

		Consolidated 2003	2002	Parent Entity 2003 2002
4	Profit/(loss) from ordinary activities before income tax expense (continued)	\$	\$	\$	\$
(b) -	Profit/(Loss) from ordinary activities before income tax expense has been arrived at after charging/(crediting) the following items: Depreciation of:
	Plant and equipment	23,653	201,561	23,482	20,199
	Amortisation of: Leased plant and equipment Goodwill Leasehold improvements Total depreciation and amortisation	2,027 25,680	91,201 417,420 33,295 743,477	2,027 25,509	5,746 25,945
	Borrowing Costs: Other parties Finance charges on capitalised leases Bank overdraft		4.748 70 4,818	$\overline{\phantom{a}}$
	Net expense/(benefit) from movements in provision for: Employee entitlements	(3,059)	21,388	(3,059)	12,896
	Operating lease rental expense: Minimum lease payments	92,456	117,503	92,456	78,378
	Net (gain)/loss on disposal of non- current assets: Plant and equipment Mineral assets	335 (183)	3,586	335	82
	Controlled entities/Investments	(1,989,283) (1,989,131)	(9, 416) (5,830)	(1,749,998) (1,749,663)	(9, 416) (9, 334)
5	Auditors' remuneration
	Audit services Auditors of the Company - KPMG	23,250	21,500	23,250	16,000

		Consolidated		Parent Entity
		2003	2002	2003	2002
		\$	\$	\$	\$
6	Taxation
(a)	Income tax expense
	Prima facie income tax
	expense/(benefit) calculated at 30%
	(2002:30%) on the profit/loss from ordinary activities	370,071	(276, 669)	329,274	(358, 293)

	Increase in income tax expense due
	to:
	Amortisation of goodwill Entertainment	2,579	125,226 3,888	2,579	3,079
	Legal costs	10,596	29,255	10,596	29,062
	Write down in investment in
	controlled entity				171,677
	Write down in value of investments	23,440	3,697	23,440	3,697
	Other Decrease in income tax expense due	7,437	1,055	7,812	1,055
	to:
	Non assessable profit on disposal
	of controlled entity	(596,785)		(524, 999)
	Income tax benefit not brought to account	182,662	113,548	151,298	149,723
	Income tax expense benefit
	attributable to operating profit/(loss)

(b)	Current tax liabilities
	Provision for current income tax
	Movements during the year:
	Balance at beginning of year	37,999	75,991	37,999	75,991
	Income tax paid	(37, 999)	(37, 992) 37,999	(37,999)	(37,992) 37,999

	Current year's income tax expense
	on operating profit
			37,999		37,999
(c)	Future income tax benefit not
	taken to account
	The potential future income tax
	benefit arising from tax losses has not
	been recognised as an asset because

recovery of tax losses is not virtually certain

371,723 210,267 289,782 125,309

6 Taxation (continued)

The potential future income tax benefit will only be obtained if:

$(i)$ the relevant company derives future assessable income of a nature and an amount sufficient to enable the benefit to be realised, or the benefit can be utilised by another company in the consolidated entity in accordance with Division 170 of the Income Tax Assessment Act 1997;
$(ii)$ the relevant company and/or the consolidated entity continues to comply with the conditions for deductibility imposed by the law; and
$(iii)$ no changes in tax legislation adversely affect the relevant company and/or the consolidated entity in realising the benefit.

$\overline{ }$ Earnings per share

Classification of securities as ordinary shares

The consolidated entity has only one category of ordinary shares included in basic earnings per share.

Classification of securities as potential ordinary shares

Options outstanding under the Executive Share Option Plan The Executive Share Options have not been included in the calculation of diluted earnings per share as they are not dilutive. Refer Note 21(b).

	Consolidated
	2003	2002
	\$	\$
Earnings reconciliation
The net profit/(loss) is equal to basic earnings.
Basic earnings	1,233,570	(922, 231)
Diluted earnings	1,233,570	(922, 231)
Weighted average number of shares used as the	Number	Number
denominator
Number for basic earnings per share
Ordinary shares	53,478,270	53,604,738
Number for diluted earnings per share
Ordinary shares	53,478,270	53,604,738

8 Segment Reporting

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise income-earning assets and revenue, interest-bearing loans, borrowings and expenses, and corporate assets and expenses.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.

Business Segments

The consolidated entity comprises the following main business segments, based on the consolidated entity's management reporting system.

Exploration	Exploration and development of nickel and gold.
Investments	Investments in listed public companies.

In 2002 the consolidated entity had the following business segment, which was disposed of in 2003: Chemist Club Loyalty programme and marketing for independent pharmacies.

Geographical segments

The consolidated entity's business segments all operate in Australia.

Primary Reporting Business Segments	Exploration \$	Investments \$	Total \$
2003 Revenue External segment revenue	500,000		500,000
Inter-segment revenue Total segment revenue	500,000		500,000
Other unallocated revenue			4,119,506
Total revenue			4,619,506
Result Segment result	(106, 657)	(102, 474)	(209, 131)
Unallocated corporate revenues/(expenses) Profit from ordinary activities before income tax Income tax expense			1,442,701 1,233,570
Net profit Individually significant items Exploration expenditure written off Provision for diminution in listed investments	106,840	78,134	1,233,570 106,840 78,134
Assets Segment assets Unallocated corporate assets Consolidated total assets	5,088,187	182,025	5,270,212 4,427,051 9,697,263
Liabilities Segment liabilities Unallocated corporate liabilities Consolidated total liabilities			140,167 140,167

8. Segment Reporting (continued)

	Chemist Club	Exploration	Investment	Eliminations	Total
Primary Reporting Business Segments	\$	Ś	s Ś.	\$	\$
2002
Revenue
External segment revenue	1,552,749		63,416		1,616,165
Total segment revenue	1,552,749		63,416		1,616,165
Other unallocated revenue					234,765
Total revenue					1,850,930
Result
Segment result	(532,754)	(10, 797)	9,416		(534, 136)
					(388,095)
Unallocated corporate expenses
Loss from ordinary activities before income tax					(922, 231)
Income tax expense
Net loss					(922, 231)
Depreciation and amortisation	717,529				717,529
Individually significant items
Exploration expenditure written off		10,797			10,797
Provision for diminution in listed
investments			12,324		12,324
Net gain on sale of investments			(9, 416)		(9, 416)
Assets
Segment assets	1,877,508	5,302,103	188,930		7,368,541
Unallocated corporate assets					4,485,682
Consolidated total assets					11,854,223
Liabilities
Segment liabilities	653,075			(653, 075)
Unallocated corporate liabilities					295,913
Consolidated total liabilities					295,913

Notes to the Financial Statements

			Consolidated		Parent Entity
	Note	2003 \$	2002 \$	2003 \$	2002 \$
9	Cash assets
	Cash	7,089	137,188	3,426	52,124
	Bank short term deposits, maturing within 90 days and paying interest at a weighted average interest rate of
	4.73% (2002 4.74%) at 30 June 2003	2,296,333	4,256,026	2,296,333	4,247,736
		2,303,422	4,393,214	2,299,759	4,299,860
10	Receivables
	Current
	Trade debtors Other debtors	9,157 979,598	129,391	9,157	5,181
		988,755	78,757 208,148	978,900 988,057	56,488 61,669

	Non current
	Loans to controlled entities		$\overline{\phantom{0}}$	1,753,236	2,402,030
	Less: Provision for doubtful debts			(1,753,236)	(1,748,955)
					653,075
11	Inventories
	Current
	Stock held for resale - at cost		162,824
12	Other financial assets
	Non Current 28 Investments in controlled entities
	Unlisted shares at cost			1,235,938	3,155,121
	Less: Provision for diminution		$\overline{\phantom{0}}$	(835,938)	(1,408,195)
				400,000	1,746,926
	Investments in other entities
	Listed shares/options at cost	543,204	477,987	543,204	477,987
	Less: Provision for diminution Unlisted shares at cost	(361, 179)	(306, 846) 17,789	(361, 179)	(306, 846) 17,789
		182,025	188,930	182,025	188,930
	Convertible Note	1,060,000		1,060,000

		1,242,025	188,930	1,642,025	1,935,856

The market value of listed shares as at 30 June 2003 was \$182,025, this includes 6.5 million shares in Batavia Mining Limited at a cost of \$65,217.

The market value of listed shares as at 10 September 2003 was \$2,921,587. The increase since year end is a result of the re-listing of Batavia Mining Limited, which has a market value of \$0.105 at 10 September 2003 and the conversion of convertible notes.

The convertible notes comprising of 10.6 million convertible notes at a face value of \$0.10 each are non interest bearing and may be converted to Batavia shares at any time in whole or part prior to 31 July 2004 at the election of the Company. Provided the BTV shares are trading, the conversion price is 80% of the average weighted price of the Batavia shares traded on the ASX on the five business days prior to the conversion date, otherwise there is a minimum conversion price of five (5) cents. Failing conversion, the face value of the convertible notes is repayable on 30 September 2004. On 5 September 2003 the Company lodged a notice of conversion at the minimum conversion price of five (5) cents.

Notes to the Financial Statements

		Consolidated		Parent Entity
		2003	2002	2003	2002
13	Other current assets	\$	\$	\$	\$
	Prepayments	5,824	19,584	5,824	8,661
14	Plant & equipment
	Leasehold improvements
	At cost	16,525	79,207	16,525	16,525
	Accumulated amortisation	(16, 525)	(77, 180)	(16, 525)	(14, 498)
	Plant & equipment	um.	2,027	$\overline{\phantom{a}}$	2,027
	At cost	177,694	698,589	176,314	146,436
	Accumulated depreciation	(108, 644)	(409, 459)	(108, 473)	(86, 819)
		69,050	289,130	67,841	59,617
	Leased plant & equipment At capitalised cost		296,134
	Accumulated amortisation		(260, 130)
		um.	36,004	w
	Total plant and equipment net book
	value	69,050	327,161	67,841	61,644
	Reconciliations
	Reconciliations of the carrying amounts for each class of plant and equipment are set out below:
	Leasehold improvements
	Carrying amount at beginning of year	2,027	34,478	2,027	6,929
	Additions Amortisation	(2,027)	844		844
	Carrying amount at end of year		(33, 295) 2,027	(2,027)	(5,746) 2,027

	Plant & equipment
	Carrying amount at beginning of year Additions	289,130 33,721	452,512 57,179	59,617 32,341	73,747 11,761
	Disposals	(635)	(19,000)	(635)	(5,692)
	Depreciation	(23, 653)	(201, 561)	(23, 482)	(20, 199)
	Disposal of entity	(229,515)
	Carrying amount at end of year	69,050	289,130	67,841	59,617
	Leased plant & equipment
	Carrying amount at beginning of year	36,004	127,205
	Acquisition through entity acquired Amortisation		(91, 201)
	Disposal of entity	(36,004)
	Carrying amount at end of year		36,004

		Consolidated		Parent Entity
		2003	2002	2003	2002
15	Exploration expenditure		Ś	s	\$
	Costs carried forward in respect
	of areas of interest in: Exploration	5,088,187	5,302,103	70,000	70.000

The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and commercial exploitation or sale of the respective areas.

Valuation

An independent valuation was carried out in January 2000 by Continental Resource Management Pty Ltd and used the Prospectivity Enhancement Multiplier method, which is based on previous exploration expenditure and, in the case of Cawse Extended, the vardstick, or comparative deal method. The Cawse Extended valuation was also cross checked against the discounted insitu contained metal value of the tenement. The Directors are of the opinion that this basis provides a reasonable estimate of recoverable amount.

In June 2002 Continental Resource Management Pty Ltd provided an updated valuation of Cawse Extended. CRM concluded that the value of Cawse Extended falls within the range of \$4,800,000 to \$8,600,000, with a preferred value of \$7,200,000.

The commencement of mining at the Unicorn Pit at Cawse Extended represents a very positive step forward for this project. The Directors believe this further supports the carrying value of this asset.

			Consolidated		Parent Entity
					2002 \$
Intangibles
Goodwill - at cost Accumulated amortisation			2,087,099 (834, 840)
		m		$\overline{\phantom{a}}$
Payables
Current					25,541
Other creditors and accruals		73,252	156,199	73,212	54,179
		116,433	195,835	116,393	79,720
Interest bearing liabilities
Current Lease liabilities	25

Non-interest bearing liabilities
Non-Current Other loans - controlled entities	34			476,066	357,852
	Trade creditors	Note	2003 \$ 43,181	2002 \$ 1,252,259 39,636 25,668	2003 \$ 43,181

Notes to the Financial Statements

			Consolidated		Parent Entity
		Note	2003 \$	2002 \$	2003 \$	2002 \$
20	Provisions
	Current
	Employee entitlements	31	23,734	36,411	23,734	20,676
	Number of employees Number of employees at year end		4	11	4	5.
21	Contributed equity
	Issued and paid-up share capital 53,478,270 (2002:53,478,270)
	ordinary shares, fully paid		3,471,866	6,706,650	3,471,866	6,706,650
(a)	Ordinary shares
	Balance at the beginning of year Shares bought back		6,706,650	6,770,443	6,706,650	6,770,443
	Nil (2002:449,312) shares Capital Reduction			(63,793)		(63,793)
	In specie distribution		(3,234,784)		(3,234,784)
	Balance at end of year		3,471,866	6,706,650	3,471,866	6,706,650

Distribution of capital

In June 2003 shareholders approved a capital reduction pursuant to section 256B and 256C of the Corporations Act 2001. The capital reduction was effected and satisfied by the Company distributing in specie 53,478,270 shares in Batavia Mining Limited on a 1 for 1 basis at the cost to the Company of these shares.

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 of the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds from liquidation.

(b) Options

Movements in issued options of the Company during the last two years were as follows:

Date	Details	Number of options
30.06.01	Opening Balance	3,280,000
11.10.02	Options issued	1,180,000
30.6.03	Closing Balance	4,460,000

			Consolidated		Parent Entity
22	Reserves	2003	2002	2003	2002 \$
	Asset revaluation	4,653,656	4,653,656	70,000	70,000

There was no movement in the asset revaluation reserve during the year.

Nature and purpose of reserves

Asset Revaluation

The asset revaluation reserve includes the net revaluation increments and decrements arising from the revaluation of non-current assets in accordance with AASB 1041. An amount of \$4,653,656 (the Company: \$70,000) is not available for future asset write-downs as a result of using the deemed cost election for exploration expenditure when adopting AASB 1041.

		Consolidated		Parent Entity
23	Retained profits/(losses)	2003 \$	2002 \$	2003 \$	2002 \$
	Retained profits/(losses) at beginning of year Profit/(loss) attributable to members of	198,004	1.120.235	(182.132)	1,012,178
	the parent entity Retained profits/(losses) at the end of	1,233,570	(922,231)	1,097,579	(1, 194, 310)
	the year	1,431,574	198.004	915.447	(182.132)

24 Additional financial instruments disclosure

(a) Interest rate risk

Interest rate risk exposures

The consolidated entity's exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

	Note	Weighted average interest rate	Floating Interest rate 1 year or	Non interest Bearing	Total
		%	less	\$
			\$		\$
2003
Financial Assets
Cash at bank	9	0.01	6,789	300	7,089
Interest bearing deposits	9	4.73	2,296,333		2,296,333
Receivables	10			988,755	988,755
Other financial assets	12			1,242,025	1,242,025
			2,303,122	2,231,080	4,534,202
Financial Liabilities
Payables	17			116,433	116,433
Employee entitlements	20			23,734	23,734
				140,167	140,167

2002
Financial Assets
Cash at bank	9	1.09	98,505	38,683	137,188
Interest bearing deposits	9	4.74	4,247,736	8,290	4,256,026
Other financial assets	12			188,930	188,930
Receivables	10			208,148	208,148
			4,346,241	444,051	4,790,292
Financial Liabilities
Payables	17			195,835	195,835
Lease liabilities	18	7.90	25,668		25,668
Employee entitlements	20			36,411	36,411
			25.668	232.246	257.914

			Consolidated
		2003		2002
		Carrying amount \$	Net fair value \$	Carrying Amount \$	Net fair Value \$

24	Additional financial instruments disclosure (continued)
	Net fair values of financial assets and liabilities Net fair values Recognised financial instruments The carrying amounts and net fair values of financial assets and liabilities as at the reporting date are as follows:
	Financial assets
	Cash assets	7,089	7.089	137,188	137,188
	Interest bearing deposits	2,296,333	2,296,333	4,256,026	4,256,026
	Receivables	988,755	988,755	208,148	208,148
	Other financial assets:
	Investments in other entities - listed in other entities Investments	182,025	182,025	188,930	177,081
	unlisted			17,789	17,789
	Convertible notes	1,060,000	1,060,000
	Financial liabilities
	Payables	116,433	116,433	195,835	195,835
	Lease liabilities			25,668	25,668
	Employee entitlements	23,734	23,734	36,410	36,410

Cash assets and listed shares in other corporations are readily traded on organised markets in a standardised form. All other financial assets and liabilities are not readily traded on organised markets in a standardised form.

25 Commitments

Exploration expenditure commitments

In order to maintain current rights of tenure to exploration tenements, the Company and the consolidated entity are required to perform minimum exploration work to meet the minimum expenditure requirements specified by various State governments. These obligations are subject to renegotiation when application for a mining lease is made and at other times.

	Consolidated		Parent Entity
	2003	2002	2003	2002 s
Exploration commitments not provided for in the financial report payable:
Not later than one year	71,800	294,800	-	31.600

		Consolidated		Parent Entity
		2003.	2002	2003.	2002
25	Commitments (continued)	\$	\$	\$	\$
	Non-cancellable operating lease expense commitments
	Future operating lease commitments not provided for in the financial statements and payable:
	Within one year One year or later and no later than	98,504	137,563	98,504	93,838
	five years	22,642	60,126	22,642	23,689
		121.146	197.689	121.146	117.527

The consolidated entity leases property under non-cancellable operating leases expiring within two years. Leases generally provide the consolidated entity with a right of renewal at which time all terms are renegotiated.

		Consolidated		Parent Entity
	Note	2003 \$	2002 \$	2003 \$	2002 \$
Finance lease payment commitments
Finance lease commitments are payable:
Within one year			27,240
One year or later and no later than five years
			27,240
Less: Future lease finance charges			1,572
			25,668
Lease liabilities provided for in the financial statements:
Current	18		25,668
Non-current	18
Total lease liability			25,668

The consolidated entity leases plant and equipment under finance leases expiring from one to three years. At the end of the lease term the consolidated entity has the option to purchase the equipment.

Contingent liabilities	Consolidated 2003 \$	2002 \$	Parent Entity 2003 Ś.
The details and estimated maximum amounts of contingent liabilities that may become payable are set out below. The Directors are not aware of any circumstance or information which could lead them to believe that these liabilities will crystallise and consequently no provisions are included in the financial statements in respect of these matters.
Tenement acquisition The consolidated entity has entered into option agreements to acquire certain mining tenements		610,000
Litigation Constructive trust claim over the Kanowna Securities. Refer below.	277,000		277,000
Indemnities Indemnities have been provided to Directors and certain executive officers of the Company in respect of liabilities to third parties arising from their positions, except where the liability arises out of conduct involving a lack of good faith. No monetary limit applies to these agreements and there are no known obligations still outstanding at 30 June 2003.
Total estimated contingent
liabilities	277,000	610.000	277,000

Resolution of matters arising from 1998

In the period September to December 1998 management control of Hallmark was held by interests associated with Davis Samuel Pty Ltd (Davis Samuel). The Davis Samuel nominee directors committed Hallmark to a series of transactions involving expenditure totalling \$1,526,000. The Australian Stock Exchange (ASX) ruled that the transactions required shareholder approval. Shareholders subsequently voted against approving the transactions.

In December 1998, Hallmark entered into a settlement agreement with Davis Samuel and its directors which effectively provided for the repayment of the funds expended, and Hallmark would in turn transfer its shares and options in Kanowna Lights Limited (the Kanowna Securities) to Davis Samuel.

The Commonwealth of Australia (the Commonwealth) in proceedings in the Supreme Court of the Australian Capital Territory claimed that it was entitled to a constructive trust over the Kanowna Securities and obtained an injunction preventing Hallmark from selling or otherwise disposing of them. The Commonwealth has claimed that as constructive trustee, the Commonwealth claims Hallmark is liable to account for the market value of the shares at the time they were acquired. The Commonwealth gave an undertaking as to damages.

Subsequently, in September 1999, Davis Samuel purported to rescind the December 1998 Settlement Agreement.

The Commonwealth is on notice that if Hallmark suffers damages as a result of the Commonwealth's injunction, and the Commonwealth ultimately fails to prove its constructive trust claim, Hallmark will claim the damages from the Commonwealth.

26 Contingent liabilities (continued)

Legal action against Davis Samuel

Hallmark, as a party to the proceedings instituted by the Commonwealth, has now issued cross-claims against Davis Samuel and several other parties including Messrs Allan Endresz, Peter Cain, William Forge, David Muir and Peter Clark.

In July 2001 Messrs William Forge, David Muir and Peter Clark were charged in relation to offences under the Corporations Law of Western Australia relating to the October 1998 transactions, pursuant to which Hallmark expended \$1,526,000.

If successful prosecutions are achieved, Hallmark will seek an order making the above parties personally liable for the recovery of the Hallmark losses.

27 Deed of cross guarantee

Pursuant to ASIC Class Order 98/1418 dated 13 August 1998 the wholly owned subsidiaries listed below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports.

It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Law, the Company will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event that the Company is wound up.

The subsidiaries subject to the Deed are Connaught Mining NL and Hallmark Exploration NL.

In accordance with the terms of the Class Order a consolidated statement of financial performance and consolidated statement of financial position comprising the entities that are party to the Deed should be disclosed.

A consolidated statement of financial performance and consolidated statement of financial position, comprising the Company and subsidiaries which are a party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 30 June 2003 is set out on the following page.

		Consolidated
		2003	2002
		\$	\$
27	Deed of cross guarantee (continued)
	Statement of financial performance
	Profit/(loss) from ordinary activities before income tax Income tax benefit relating to ordinary activities	953,560	(1, 199, 900)
	Profit/(loss) from ordinary activities after related
	Income tax expense	953,560	(1,199,900)
	Net profit/(loss)	953,560	(1, 199, 900)
	Retained profits at beginning of year	478,014	1,677,914
	Retained profits at end of year	1,431,574	478,014
	Statement of financial position
	Cash assets	2,303,422	4,346,541
	Receivables	988,755	68,836
	Other	5,824	8,661
	Total current assets	3,298,001	4,424,038
	Receivables		653,075
	Other financial assets	1,242,025	1,535,855
	Plant & equipment	69,050	61,643
	Exploration expenditure Total non-current assets	5,088,187 6,399,262	5,302,103 7,552,676
	Total assets	9,697,263	11,976,714

	Payables	116,433	79,721
	Current tax liabilities		37,999
	Provisions	23,734	20,675
	Total current liabilities	140,167	138,395
	Total non-current liabilities
	Total liabilities	140,167	138,395
	Net assets	9,557,096	11,838,319
	Contributed equity	3,471,866	6,706,649
	Reserves	4,653,656	4,653,656
	Retained profits	1,431,574	478,014
	Total Equity	9,557,096	11,838,319

		Country of Incorporation	2003 % of Equity Interest	2002 % of Eauity Interest
Controlled entities 28 - Particulars in relation to controlled (a) entities Controlled entities
Connaught Mining NL Hallmark Mining Limited Chemist Club Pty Limited		Australia Australia Australia	100 100 $\overline{\phantom{a}}$	100 100 100
	2003	Consolidated 2002	Parent Entity 2003	2002
(b) Acquisition/disposal of controlled entities The following controlled entities were acquired or disposed of during the financial year: Acquisition of entities On 10 December 2002, South Murchison Mines Pty Ltd was incorporated as a wholly owned subsidiary. Disposals of entities During the financial year, the consolidated entity disposed of all the ordinary shares of South Murchison Mines Pty Ltd and Chemist Club Pty Ltd. Details of the disposals are as follows (in aggregate):	\$	\$	\$	\$.
Consideration (cash) Consideration (non cash) Less carrying amount of disposal Profit on disposal	1,346,925 2,500,000 1,857,642 1,989,283	$\qquad \qquad -$ $\overline{\phantom{000000000000000000000000000000000000$ $\equiv$	1,346,925 2,500,000 2,096,927 1,749,998	$\equiv$
Net assets of entities disposed of acquired: Cash Plant and equipment Receivables Inventories Mineral exploration Other assets Loans Trade creditors	49,213 265,519 177,444 162,824 1,036,698 10,920 (286,643) (810, 592) 605,383	$\overline{\phantom{0}}$ $\equiv$ $\overline{\phantom{0}}$ $\qquad \qquad -$ $\overline{\phantom{000000000000000000000000000000000000$ $\overline{\phantom{0}}$ $\sim$	49,213 265,519 177,444 162,824 1,036,698 10,920 (286, 643) (810, 592) 605,383	$\overline{\phantom{0}}$

	Note	Consolidated 2003 \$.	2002 \$	Parent Entity 2003 \$.	2002 \$
29 Notes to the statements of cash flows
(a) Reconciliation of cash
For the purposes of the statements of cash flows, cash includes cash on hand and at bank and short term deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the statements of financial positions as follows:
Cash assets	9	2,303,422	4,393,214	2,299,759	4,299,860
(b) Reconciliation of profit/(loss) from ordinary activities after income tax to net cash provided by operating activities Profit/(loss) from ordinary activities after income tax Add/(less) items classified as investing/financing activities: Profit on sale of controlled entities/investments Loss on sale of non-current assets		1,233,570 (1,989,283) 152	(922, 231)	1,097,579 $(5,830)$ (1,749,998) 335	(1, 194, 310) (9, 334)
Add/(less) non-cash items: Amounts set aside to provisions Depreciation/amortisation Diminution in value of investments Write-down in value of investments Provision for non-recovery of loan Dividend received Exploration expenditure written off Net cash used by operating activities before		25,680 78,134 24,340 106,840	743,477 12,324 10,797	25,509 78,134 24,340 4,282 1,251	14 25,945 42,274 584,581 200.
change in assets and liabilities Change in assets and liabilities adjusted for effects of sale of controlled entity during the financial year:		(520, 567)	(161, 463)	(518, 568)	(550, 630)
Increase in inventories Decrease in prepayments Decrease/(increase) in debtors Decrease in provision for income tax (Decrease)/increase in accounts payable Increase in provisions		2,838 30,470 (37,999) (9,372) 3,059	(14, 219) 18,203 102,558 (37, 992) (189, 534) 12,150	2,838 35,353 (37,999) 583. 3,059	12,089 (5,647) (37, 992) (5,630) 12,896
Net cash used in operating activities		(531, 571)	(270, 297)	(514,734)	(574, 914)

(c) Non-cash financing and investing activities

During the year, the Company loaned King Solomon Mines Pty Ltd (a wholly owned subsidiary of Batavia Mining Limited, formally Menzies Gold Limited) an amount of \$1,060,000. On 26 June 2003, Batavia satisfied the amount owing by issuing the Company with 10,600,000 convertible notes each at an issue price of ten (10) cents.

On 27 June 2003, the Company sold its interest in South Murchison Mines and the Paynes Find Project to Batavia Mining Limited for consideration of 30 million ordinary shares in Batavia at 10 cents per share.

A return of capital was undertaken during the year. Shareholders approved this transaction on 24 June 2003. The paid up share capital of the Company was reduced by \$3.2 million. The reduction was satisfied by the Company distributing in specie 53,478,270 BTV shares to shareholders on the basis of one BTV share each valued at \$0.055 for every Hallmark share.

		Parent Entity
	2003	2002
		\$
nds

30 Dividends

No dividends have been declared or paid during the year.

Dividend franking account

30% franking credits available to shareholders of Hallmark Consolidated Limited for subsequent financial years.

The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:

franking credits that the entity may be prevented from distributing in subsequent years. $a)$

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.

Change in measurement of dividend franking account

In accordance with the New Business Tax System (Imputation) Act 2002, the measurement basis of the dividend franking account changed on 1 July 2002 from an after-tax profits basis to an income tax paid basis.

The amount of franking credits available to shareholders disclosed as at 30 June 2003 has been measured under the new legislation and represents income tax paid amounts available to frank distributions. The balance disclosed as at 30 June 2002 has been measured under the legislation existing at 30 June 2002 and represents after-tax profits able to be distributed fully franked at the current tax rate.

The change in the basis of measurement does not change the underlying value of franking credits or tax offsets available to shareholders from the dividend franking account.

Comparative information has not been restate for this change in measurement. Had the comparative information been calculated on the new basis, the "franking credits available" balance as at 30 June 2002 would have been \$999,070.

			Consolidated		Parent Entity
		Note	2003	2002	2003	2002
			\$	\$	\$	\$
31.	Employee Benefits
	Aggregate liability for employee benefits, including on-costs
	Current
	Employee benefits provision	20	23.734	36,411	23,734	20.676
			23,734	36,411	23,734	20,676

Equity-based plans

Employee share option plan

The Company has a Hallmark Incentive Option Scheme plan approved by shareholders at a general meeting held on 30 June 2000.

Each option is convertible to one ordinary share. The exercise price of the options, determined in accordance with the rules of the plan, are based on the weighted average price of the Company's shares traded during the five business days preceding the date of granting the option.

All options expire on the earlier of their expiry date or termination of the employee's or Director's relationship with the Company or a subsidiary, other than by reason of death, retirement or retrenchment of that participant.

1,037,062 2,331,163

$31$ Employee Benefits (continued)

Summary of options over unissued ordinary shares

Consolidated and Company 2003

Grant date	Expiry date	Exercise price	Number of options at the beginning of year	Options granted	Options lapsed	Number of options at end of year on issue
		$\blacktriangleright$
30 June 2000	30 June
	2004	0.19	3,280,000			3,280,000
11 October 2002	30 June 2004	0.14		1,180,000		1,180,000
			3,280,000			4,460,000
Consolidated and Company 2002
30 June 2000	30 June 2004	0.19	3,360,000	m	(80,000)	3,280,000
			3,360,000			3,280,000

	32 Directors' Remuneration

Directors' income

The number of Directors of the Company whose income from the Company or any
related party falls within the following bands:

\$1,000 10,999 - \$ \$50,000 59,999 - \$ \$60,000 $-$ \$ 69,999 \$80,000 $-$ \$ 89,999 \$90,000 -\$99,999 \$110,000 $-$ \$119,999 \$120,000 $-$ \$129,999 \$140,000 $-$ \$149,999
	والمراسم والمستقيد لالتقاسم وسياسي والتوا	and an experimental and material and state of

	Consolidated		Parent Entity
	2003	2002	2003 s	2002 s
Total income paid or payable, or otherwise made available, to all Directors of the Company, from the Company or any related
party	310.112	441.922	245.704	317.426

The remuneration bands are not consistent with the emoluments disclosed in the Directors' Report as the basis of calculation differs due to the differing requirements of the Corporations Act 2001 and the Accounting Standards.

Parent Entity

2002

2003

Notes to the Financial Statements

	Consolidated		Parent Entity
	2003	2002	2003	2002
33 Executives' remuneration
The number of executive officers of the Company and of controlled entities, including executive Directors, whose remuneration from the Company or related parties, and from entities in the consolidated entity, falls within the following bands:
$$120,000 - $129,999$ \$140,000 - \$149,999	1	1	ı
Total income in respect of the financial year received, or due and receivable, from the Company, entities in the consolidated entity or related parties by executive officers of the Company and of controlled entities whose
income is \$100,000 or more	126,314	268.925	126,314	144,429

Executive officers are those officers involved in the strategic direction, general management or control of business at a company or operating division level.

Executives' remuneration includes amounts paid by the Company during the year to indemnify executives, and an allocation of insurance premiums paid by the Company or related parties in respect of directors' and officers' liabilities and legal expenses' insurance contracts, in accordance with common commercial practice.

The remuneration bands are not consistent with the emoluments disclosed in the Director's Report as the basis of calculation differs due to the differing requirements of the Corporations Act 2001 and the Accounting Standards.

34 Related parties

Directors

The names of each person holding the position of Director of Hallmark Consolidated Limited during the financial year are Messrs J W Barr, N G Biddle, S A Corp, G A Snow.

Apart from the details disclosed in this note, no Director has entered into a material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material contracts involving Directors' interests subsisting at year end.

The interests of Directors' of the reporting entities and their director related entities in shares of the Company at year end are set out below:

	2003 Number held ordinary shares	2003 Number held option to purchase shares	2002 Number held ordinary shares	2002 Number held option to purchase shares
J W Barr	8,700,000	1,000,000	8,700,000	1,000,000
N G Biddle S A Corp	5,643,372 8,000,000	1,000,000 1,000,000	5,659,602 7,769,330	1,000,000

Directors' transactions in shares and share options

During the year the Company granted 1,000,000 options (2002: Nil) over unissued shares under the Share Option Plan. During the year 1,214,440 (2002: 6,416,500) shares were purchased and 1,000,000 (2002: 3,664,971) shares were sold in aggregate by Directors and their director related entities.

34 Related parties (continued)

Transactions with Directors' and director related entities

The following transactions are based on commercial terms and conditions and were no more favourable than similar transactions to non-director related entities on an arm's length basis.

A Director of the Company, Mr J W Barr, has an interest as a director in Kensington Consulting Pty Ltd, which provides management consulting services to the Company.

A Director of the Company, Mr N G Biddle, has an interest as a related party in Biddle Partners Pty Ltd, which provides geological and management consulting services to the Company.

A Director of the Company, Mr S A Corp, has an interest as a director in Flea Pty Ltd, which provides management consulting services to the Company.

The value of the transactions (also included in Note 32) during the year with Directors and their director related entities were as follows:

		Consolidated		Parent Entity
		2003	2002	2003	2002

J W Barr	Kensington Consulting Pty Ltd	93.500	74,800	70,400	74.800
N G Biddle	Biddle Partners Pty Ltd	101.558	66,000	74.250	60.060
S A Corp	Flea Pty Ltd	44.500	35,000	30,500	35,000

Amounts payable to directors and their director related entities at balance date arising from these transactions total \$8,250 (2002: Nil).

The Company invoiced Hillcrest Resources Limited Nil (2002: \$126,213) for the reimbursement of office and administration costs. Mr Barr was a director of Hillcrest Resources Limited.

The Company invoiced Vincorp Wineries Limited Nil (2002: \$79,347) for the reimbursement of office and administration costs. Messrs Barr and Biddle were directors of Vincorp Wineries Limited.

The Company invoiced Renewable Investments Limited Nil (2002: \$5,504) for the reimbursement of office and administration costs. Mr Biddle was a director of Renewable Investments Limited.

The Company invoiced Kanowna Lights Limited \$66,343 (2002: \$17,199) for the reimbursement of office and administration costs. Messrs Barr and Biddle were directors of Kanowna Lights Limited.

The Company invoiced Cavendish Corporation Limited \$2,250 (2002: Nil) for the reimbursement of office and administration costs. Mr Barr is a director of Cavendish Corporation Limited.

The Company invoiced Biddle Partners Pty Limited \$2,250 (2002: Nil) for the reimbursement of office and administration costs. Mr Biddle is a related party of Biddle Partners Pty Limited.

The Company paid \$4,950 to Hannan Street Corporate Charters for corporate functions. Mr Biddle is a related party of Hannan Street Corporate Charters.

Messrs Barr & Biddle are directors of Batavia Mining Limited.

Batavia acquired a wholly owned subsidiary of Hallmark called South Murchison Mines Pty Ltd (SMM) as well as various other mineral assets, comprising a mining lease, applications for prospecting licences and an option to acquire mining leases owned by another Hallmark subsidiary. The consideration for this acquisition was the issue of 30 million shares to Hallmark.

Entities within the Batavia group owed Hallmark \$1.06M. This debt has been replaced by the issue of 10.6 million convertible notes at a face value of \$0.10 each, secured by the issue of a new charge over the assets of Batavia.

The Company has provided a short term unsecured loan of \$760,049 to Batavia as part of the Deed of Company Arrangement sponsored by Hallmark. The loan was repaid on 4 September 2003.

35 Related parties (continued)

Wholly owned group

Details of interest in wholly owned controlled entities are set out in Note 28. Details of these dealings are set out below.

Loans

Loans between entities in the wholly owned group are non-interest bearing, unsecured and are repayable upon reasonable notice having regard to the financial stability of the Company.

Transactions

All transactions with controlled entities are on normal terms and conditions.

The Company received management fees totalling nil during the financial year (2002: \$45,000)

	Parent Entity
	2003 \$	2002
Balances with entities in the wholly-owned group
Receivable – non current	1,753,236	2,402,030
Provision for non recovery	(1,753,236)	(1,748,955)
		653.075

Payables - non current	476.066	357.852

36 Interests in joint ventures

				Consolidated
Joint venture party	Joint venture	Principal activities	Interest		Exploration expenditure
			2003 ۰⁄۵	2002 $\alpha_{\rm n}$	2003 \$.	2002 \$
OMG Group Inc.	Cawse Extended	Nickel/ Cobalt	20%	20%	2.695	65,183
Mines and Resources Australia Pty Ltd	Kintore East	Gold	23.75%	23.75%	1,200	200
Kookynie Resources Pty Ltd	McTavish	Gold	10.1%	10.1%	1,623	2,340
Kinross Gold Australia Pty Ltd	North Evre	Gold	Nil	Nil		$\overline{\phantom{000000000000000000000000000000000000$

Exploration expenditure represents direct expenditure incurred by the consolidated entity.

37 Events subsequent to balance date

Since 30 June 2003 the Company converted it's 10.6 million convertible notes to 21.2 million BTV shares. The notes were converted at a conversion price of five (5) cents. The financial effects of this transaction have been disclosed in note 12.

$\mathbf{L}$ In the opinion of the Directors of Hallmark Consolidated Limited:
(a) the financial statements and notes, set out on pages 10 to 40, are in accordance with the Corporations Act 2001, including:
- (i) giving a true and fair view of the financial position of the Company and consolidated entity as at 30 June 2003 and of their performance, as represented by the results of their operations and their cash flows, for the year ended on that date; and
- (ii) complying with Accounting Standards in Australia and the Corporations 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.
2 There are reasonable grounds to believe that the Company and the subsidiaries identified in Note 27 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those subsidiaries pursuant to ASIC Class Order 98/1418.

Dated at Perth this twelfth day of September 2003.

Signed in accordance with a resolution of the Directors:

John W Barr Chairman

Independent audit report to members of Hallmark Consolidated 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 both Hallmark Consolidated Limited (the "Company") and the Hallmark Consolidated Group (the "Consolidated Entity"), for the year ended 30 June 2003. The Consolidated Entity comprises both the Company and the entities it controlled during that year.

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 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, Australian 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.

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 Hallmark Consolidated Limited is in accordance with:

a) the Corporations Act 2001, including:
i. giving a true and fair view of the Company's and Consolidated Entity's financial position as at 30 June 2003 and of their performance for the financial year ended on that date; and

ii. complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
b) other mandatory professional reporting requirements in Australia.

$Kil\ell$

KPMG

Duckmark

D P McCOMISH Partner

Perth $\sqrt{\chi}$ September 2003 Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out below.

Shareholdings (as at 9 September 2003)

Substantial shareholders

Substantial holders in the Company are set out below:

Shareholder	Number	Percentage
J W Barr	8,700,000	16.27%
S A Corp	8,000,000	14.96%
Neil Biddle & Biddle Partners	5,643,372	10.55%
G A Snow	3,000,000	5.61%

Class of shares and voting rights

(a) at meetings of members or classes of members each member entitled to vote may vote in person or by proxy or attorney; and
on a show of hands every person present who is a member has one vote, and on a poll every $(b)$ person present in person or by proxy or attorney has one vote for each ordinary share held.

On-market buy-back

There is no current on-market buy-back.

Distribution of equity securities

Category	Ordinary Shares
$1 - 1,000$	48
$1,001 - 5,000$	162
$5.001 - 10.000$	135
$10,001 - 100,000$	230
100,001 and over	_65
	640

The number of shareholders holding less than a marketable parcel is 179.

Twenty largest shareholders

Name	Number of shares held	Percentage of shares held
Cavendish Corporation	5,880,000	11.00
Biddle Partners Pty Ltd	4.989.372	9.33
Claw Pty Ltd	4,309,950	8.06
Flea Pty Ltd	3,690,050	6.90
Mr Gary Alan Snow	3,000,000	5.61
Kensington Consulting Pty Ltd	2,800,000	5.24
Exchange Finance Pty Ltd	1,859,073	3.48
Lomp Pty Ltd	1,652,387	3.09
Hillcrest Resources Ltd	1,305,000	2.44
Willvest Pty Ltd	989,000	1.85
Balfes (QLD) Pty Ltd	500,000	0.93
Lanzerac Nominees Pty Ltd	500.000	0.93
Seabrooke Pty Ltd	455,000	0.85
Colbern Fiduciary Nominees	450,666	0.84
HSBC Custody Nominees (Australia) Ltd	408,500	0.76
Mr Neil Gregory Biddle	400,000	0.75
Ms Robin Lyn Rimes	400,000	0.75
Dilkara Nominees Pty Ltd	390,000	0.73
Mr Bernard Stang	363,200	0.68
Aranbay Nominees Pty Ltd	350,000	0.65
	34,692,198	64.87

The consolidated entity holds an interest in the following tenements at 30 June 2003:

Prospect	Tenements	Equity
Cawse Extended	E24/71, M24/547-548, MLA24/549-550	20% free-carried to production or
		can be converted to a 2% net
		smelter return on ore mined
Duplex South	E26/64	Niagara Mining Ltd has an option
		to acquire E26/64 by May 2004
	PLA26/2899-2901	AngloGold Australia Limited
		(formally Acacia Resources Ltd)
		can earn 100%
Kintore East	P16/1416-1420, MLA16/281-282	Diluting from 49% to 20% and a
		2% gold return royalty on
		production
McTavish	M40/77, M40/119, M40/157, P40/1001-	Diluting from 40% to a 3% gross
	1002, MLA40/194	rovalty

AI assistant

TIVAN LIMITED — Annual Report 2003

65967_rns_2003-09-14_bf6c891d-572b-496c-87d4-fb4883b5d31f.pdf

HALLMARK

ABN 12 000 817 023

DIRECTORS

COMPANY SECRETARY

REGISTERED OFFICE

SHARE REGISTRY

AUDITORS

AUSTRALIAN STOCK EXCHANGE

CORPORATE

BATAVIA MINING LIMITED

EXPLORATION PROJECTS

CAWSE EXTENDED PROJECT

OTHER EXPLORATION PROJECTS

KINTORE EAST

MCTAVISH

DUPLEX HILL SOUTH

CHEMIST CLUB

BOARD OF DIRECTORS

Role of the Board

Composition of the Board

Relationship of Board with Management

Independent Advice to Directors

Constitution of Hallmark Consolidated Limited

Fair Dealings and Related Party Transactions

Disclosure of Information

Confidentiality

Share Dealings

INTERNAL CONTROL FRAMEWORK

ETHICAL STANDARDS

THE ROLE OF SHAREHOLDERS

AUDIT COMMITTEE

EXTERNAL AUDITORS

DIRECTORS

John W Barr CA, FAICD - Chairman

Neil Biddle B.App.Sc(Geology), M.Aus.IMM

Adrian Corp B.Sc, B.Com

Gary Snow

DIRECTORS MEETINGS

PRINCIPAL ACTIVITIES

REVIEW AND RESULTS OF OPERATIONS

DIVIDENDS

STATE OF AFFAIRS

ENVIRONMENTAL REGULATIONS

EVENTS SUBSEQUENT TO REPORTING DATE

LIKELY DEVELOPMENTS

DIRECTORS' AND SENIOR EXECUTIVES' EMOLUMENTS

OPTIONS

OPTIONS

DIRECTORS' INTEREST

INDEMNIFICATION AND INSURANCE OF OFFICERS

INSURANCE PREMIUMS

Statements of Financial Performance For the Year Ended 30 June 2003

$\mathbf{1}$ Statement of significant accounting policies

$(a)$ Basis of preparation

Principles of consolidation $(b)$

Controlled entities

Transactions eliminated on consolidation

$(c)$ Revenue recognition

Sale of goods and services

Interest revenue

Sale of non-current assets

Dividends

$(d)$ Goods and services tax

(e) Borrowing costs

Taxation $(f)$

$(q)$ Acquisition of assets

Subsequent additional costs

$(h)$ Receivables

Trade debtors

$(i)$ Inventories

Net realisable value

$(i)$ Investments

Controlled entities

Other entities

(k) Leased assets

Operating leases

$(1)$ Exploration expenditure

TIVAN LIMITED Annual Report 2003