TIVAN LIMITED — Interim / Quarterly Report 2003

Feb 12, 2003

HALLMARK CONSOLIDATED LIMITED

ACN 000 817 023

HALF-YEAR FINANCIAL REPORT

31 DECEMBER 2002

Company Particulars

Directors

John W Barr (Chairman) Neil Biddle Adrian Corp

Company Secretary

Christopher Bath

Registere d Office

Level 3 30 Richardson Street West Perth WA 6005 Telephone: (08) 9327 0900 Facsimile: (08) 9327 0901

Website: www.hallmarkconsolidated.com corporate@hallmarkconsolidated.com Email:

Auditors

KPMG

Share Registry

Computershare Investor Services Pty Limited Level 2 Reserve Bank Building 45 St George's Terrace Perth WA 6000 Telephone: (08) 9323 2000 Facsimile: (08) 9323 2033

ASX Code: HLM

Directors' Report

The Directors present their report together with the consolidated financial report for the half-year ended 31 December 2002 and the auditor's review report thereon.

Directors

The Directors of the Company in office during the whole of the half-year and until the date of this report are:

Name John W Barr (Chairman) Neil Biddle Adrian Corp

Review of Operations and Activities

Menzies Gold Strategic Alliance

In December 2002, a strategic alliance was entered into between Hallmark and Menzies Gold Limited ("Menzies"). Menzies owns the King Solomon Mines Project ("the Project"), which is located approximately 100 kilometres from Paynes Find and includes a 300,000 tonne per annum CPI processing plant.

Under the alliance, Hallmark has expended a total of \$1.5 Million to acquire the Deflector tenement and provide funds to Menzies as a secured loan. Hallmark will receive a royalty on Deflector production and will investigate opportunities to fast track exploration at Paynes Find where it is anticipated the alliance may assist in bringing forward production.

Subsequent to the end of the half-year Menzies was placed into voluntary administration. Hallmark is the major secured creditor and plans to work closely with the Administrator and management to restructure the company.

Deflector Tenement

Hallmark acquired the Deflector Tenement for \$629,000, and granted Menzies the conditional right to continue mining operations. This right was terminated following the appointment of an Administrator to Menzies.

Deflector Resource

At Deflector, Menzies has identified the following resource;

Category	Tonnes	Gold	Gold	Copper	Copper
		Grade	Ounces	Grade	Tonnes
		(g/t)		$( \% )$
Indicated Resource	477,656	4.8	73,832		8,300
Inferred Resource	176.700	4.3	24,428	2.0	3.532

As a consequence of the appointment of an Administrator to Menzies, Hallmark has now collected all available data in respect to the Deflector and is reviewing it prior to a proposed exploration program.

Secured loan

Hallmark has also advanced the Menzies a secured loan of \$871,000.

Terms of the loan include:

• The loan is repayable on or before 30 June 2003; $\bullet$
• Interest is payable monthly; and
• The loan is secured by a charge over all of the assets of Menzies and its operating subsidiary King Solomon Mines Ltd.

As a result of the appointment of the Administer the loan is now due. Hallmark has decided not to immediately appoint a receiver in respect to the loan.

The Directors are confident that the funds advanced under the loan will be recovered.

Paynes Find Project

During the half-year a wholly owned subsidiary, Hallmark Mining Limited ("HMI") exercised the option to acquire M 59/244.

HMI also has an option to acquire other tenements at Paynes Find, on or before 31 May 2003, for a consideration of \$450,000.

Combined, these tenements cover most of the historic mines in the Paynes Find gold mining centre and are considered to have the potential to contain high-grade ore.

Interpretation of the recent reverse circulation drilling completed during the quarter at the Paynes Find project has been completed.

Narrow high-grade gold shoots have been intersected in the Lakeview and Carnation areas. Drilling in the Lakeview area returned 3m at 11.0 g/t Au with a peak of 1m at 23.90 g/t Au (previously reported). In the Carnation area, several intersections were returned with the best being 3m at 10.97 $g/t$ Au (previously reported). Both the Carnation and the Cracker shoots were intersected with two or more holes. The possible southern extension of the Marigold shoot was also intersected in one hole.

Drilling at the Scaddens lode has intersected the shoot position with drilling returning an intersection of $2m \ (\hat{a})\ 4.00$ $g/t$ Au (previously reported) which interprets well with earlier Hallmark RC drilling (2m at 20.20 $g/t$ Au).

Future exploration on this project will consist of closely spaced RC drilling to help define the geometry of these shoots.

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.

Hallmark's 20% interest is free-carried to production, and is convertible to a 2% net smelter return, at Hallmark's election. Hallmark's current resource estimate on the Cawse Extended Project (Using a cut off grade of 0.5% Nickel) is 84.1 million tonnes $\omega$ 0.84 %Ni equivalent.

During the half-year the parties continued discussions in respect to the Joint Venture.

Other Projects

Hallmark holds interests in other tenements located at Duplex Hill South, Kintore East and McTavish. In each case Hallmark is not contributing towards exploration expenditure, and the project is subject to a joint venture or an option for sale.

Chemist Club

During the half-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 of \$653,075.

Resolution of matters arising from 1998

The Company continued to attempt to recover funds totalling \$1,526,000 that was committed to transactions in 1998, when nominees of Davis Samuel Pty Ltd managed Hallmark. This task continues to be difficult and time consuming because of the complexity of the matter.

The nominees of Davis Samuel Pty Ltd namely Messrs W Forge, D Muir and P Clark, have been charged with offences under the Corporations Act in relation to the 1998 transactions. If successful prosecutions are achieved, Hallmark will seek an order making those persons personally liable for the recovery of the funds.

Hallmark has also issued civil proceedings for the recovery of the funds against Davis Samuel Pty Ltd, the nominees of Davis Samuel Pty Ltd, and other parties.

Signed in accordance with a resolution of the Directors:

John W Barr Chairman

12 February 2003

Statement of Financial Performance For The Half-Year Ended 31 December 2002

		Consolidated
	Note	2002	2001
		S	\$
Revenue from operating activities		128,896	795,583
Revenue from outside the operating activities		1,346,925	119,099
Revenue from ordinary activities		1,475,821	914,682
Marketing costs			137,357
Borrowing costs			3,918
Occupancy costs		46,076	16,431
Administrative costs - Chemist Club			667,395
Administrative costs - other		165,216	160,370
Corporate costs		220,507	219,964
Carrying value of controlled entity sold		1,066,916
Other expenses from ordinary activities		67,793	226,512
Loss from ordinary activities before income tax expense		(90, 687)	(517,265)
Income tax expense
Net loss attributable to members of Hallmark Consolidated Limited	3	(90,687)	(517,265)
Basic earnings per share		(0.002)	(0.010)
Diluted earnings per share		(0.002)	(0.010)

The Statement of financial performance is to be read in conjunction with the notes to the half-year financial statements set out on pages 9 to 10.

Statement of Financial Position As at 31 December 2002

		Consolidated
		31 December
	Note	2002	2002
		\$	\$
Current Assets
Cash assets		4,080,426	4,393,214
Receivables		923,033	208,148
Inventories			162,824
Other		106,631	19,584
Total Current Assets		5,110,090	4,783,770
Non-Current Assets
Other financial assets - investments		149,061	188,930
Plant and equipment		52,729	327,161
Intangible assets			1,252,259
Exploration expenditure		6,257,868	5,302,103
Total Non-Current Assets		6,459,658	7,070,453
Total Assets		11,569,748	11,854,223
Current Liabilities
Payables		48,212	195,835
Interest-bearing liabilities			25,668
Current tax liabilities		19,003	37,999
Provisions		34,910	36,411
Total Current Liabilities		102,125	295,913
Total Liabilities		102,125	295,913
Net Assets		11,467,623	11,558,310
Equity
Contributed Equity	4	6,706,650	6,706,650
Reserves		4,653,656	4,653,656
Retained profits	3	107,317	198,004
Total Equity		11,467,623	11,558,310

The Statement of financial position is to be read in conjunction with the notes to the half-year financial statements set out on pages 9 to 10.

	Statement of Cash Flows
		For the Half-Year Ended 31 December 2002

	Consolidated
	2002	2001
	\$	S
Cash flows from operating activities
Cash receipts in the course of operations		901,118
Cash payments in the course of operations	(538,992)	(1,146,721)
Interest received	112,822	113,857
Payments for income taxes	(18,996)
Interest & finance costs paid		(681)
Refund of income tax	31,469
Net cash outflow from operating activities	(413, 697)	(132, 427)
Cash flows from investing activities
Payments to acquire tenements	(731, 652)	(57,751)
Payments for exploration expenditure	(223,916)
Payments for plant and equipment	(2,050)	(85,707)
Payments for investments	(23,800)
Advances to other companies	(871,000)
Repayment of advances to other Companies	653,075
Proceeds from sale of investment (net of cash)	1,300,252
Net cash outflow from investing activities	100,909	(143, 458)
Cash flows from financing activities
Repayment of borrowings		(135, 438)
Payments for shares (buy-back)		(63,793)
Net cash outflow from financing activities		(199, 231)
Net decrease in cash held	(312,788)	(475,116)
Cash at the beginning of the half-year	4,393,214	5,040,923
Cash at the end of the half-year	4,080,426	4,565,807

The Statement of Cash flows is to be read in conjunction with the notes to the half-year financial statements set out on pages 9 to 10.

1. Statement of significant accounting policies

Basis of preparation of half-year financial report $(a)$

The half-year consolidated financial report is a general purpose financial report which has been prepared in accordance with Accounting Standard AASB 1029 "Interim Financial Reporting", the recognition and measurement requirements of applicable AASB standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. This half-year financial report is to be read in conjunction with the 30 June 2002 Annual Financial Report and any public announcements by Hallmark Consolidated Limited and its Controlled Entities during the halfyear in accordance with continuous disclosure obligations arising under 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 disclosed, are consistent with those applied in the 30 June 2002 Annual Financial Report.

The half-year report does not include full disclosures of the type normally included in an annual financial report.

	Consolidated
	2002 \$	2001 S
2. Individually significant items Individually significant items included in loss from ordinary activities before income tax expense
Gain on sale of controlled entity	280,009
Diminution in value of listed investments	45,881
3. Retained profits Retained profits at the beginning of the half-year Net losses attributable to members of the parent entity Retained profits at the end of the half-year	198,004 (90,687) 107,317	1,120,235 (517,265) 602,970
	31 December 2002 ς	30 June 2002 \$
4. Contributed equity Issued and paid-up capital
53,478,270 (June 2002: 53,478,270) ordinary shares, fully paid	6,706,650	6,706,650

In October 2002 Hallmark Consolidated Ltd granted options over 180,000 unissued shares to employees under an Employee Share Plan. The options are exercisable at a price of \$0.20 any time up to the expiry date of 30 June 2004 or the termination of the employee's employment.

A further 1,000,000 options were issued to a director with an exercise price of \$0.25 and an expiry date of 30 June 2004.

No options expired during the half-year, or the prior year.

5. Segment information

Business Segments	Exploration S	Investments S	Eliminations \$	Total \$
Revenue External Segment revenue
Total segment revenue
Other unallocated revenue				1,475,821
Total revenue				1,475,821
Result Segment result	(30, 742)	(45, 881)		(76, 623)
Unallocated corporate revenues and expenses				(14,064)
Net loss				(90,687)

2001 Business Segments	Chemist Club S	Exploration Investments S	S	Eliminations \$	Total \$
Revenue
External Segment revenue	799,664			(21, 722)	777,942
Total segment revenue					777,942
Other unallocated revenue					136,740
Total revenue					914,682
Result
Segment result	(231, 794)	(3,900)	(58, 615)	32,567	(261,742)
Unallocated corporate revenues and expenses					(255, 523)
Net loss					(517, 625)

Administration comprises the day-to-day management of the activities of the Hallmark group.
Chemist Club comprises management of the Chemist Club loyalty programme.
Exploration comprises management of tenement holdings.

Investments comprise investments in listed and unlisted entities.

6. Contingent liabilities and contingent assets

There have been no changes in contingent liabilities or contingent assets since 30 June 2002.

7. Disposal of controlled entities

Name	Date of disposal	Consolidated entity's interest	Consideration	Contribution to consolidated net profit
		2002 $\%$	2002	2002	2001
Chemist Club Pty Ltd	23 July 2002	100	1,346,925		(23,084)

2001

The consolidated entity did not lose control over any entities during the corresponding prior half-year period.

8. Events occurring after reporting date

There has not arisen in the interval between the end of the half-year and the date of this report any item, transaction or event of a material or unusual nature likely, in the opinion of the directors of the Company, to affect significantly
the operations of the consolidated entity, the results of those operations, or the state of affairs o entity, in future financial years.

Directors' Declaration

In the opinion of the directors of Hallmark Consolidated Limited ("the Company"):

• $\mathbf{1}$ the financial statements and notes set out on pages 6 to 11, are in accordance with the Corporations Act 2001, including:
• (a) giving a true and fair view of the financial position of the consolidated entity as at 31 December 2002 and of its performance, as represented by the results of its operations and its cash flows, for the half-year ended on that date; and
• (b) complying with Australian Accounting Standard AASB 1029 "Interim Financial Reporting" and the Corporations Regulations 2001; and
• $\overline{2}$ there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Directors.

John W Barr Chairman

12 February 2003

Independent review report to the members of Hallmark Consolidated Limited

Scope

We have reviewed the financial report of Hallmark Consolidated Limited for the half-year ended 31 December 2002, consisting of the statement of financial performance, statement of financial position, statement of cash flows, accompanying notes 1 to 8 and the directors' declaration. The financial report includes the consolidated financial statements of the consolidated entity comprising the Company and the entities it controlled at the end of the half-year or from time to time during the half-year. The Company's directors are responsible for the financial report.

We have performed an independent review of the financial report in order to state whether, on the basis of procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with Accounting Standard AASB 1029 "Interim Financial Reporting" and other mandatory professional reporting requirements and statutory requirements in Australia so as to present a view which is consistent with our understanding of the consolidated entity's financial position, and performance as represented by the results of its operations and its cash flows, and in order for the Company to lodge the financial report with the Australian Securities and Investments Commission.

Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements. The review is limited primarily to inquiries of Company personnel and analytical procedures applied to the financial data. Our review has not involved a study and evaluation of internal accounting controls, tests of accounting records or tests of responses to inquiries by obtaining corroborative evidence from inspection, observation or confirmation. The procedures do not provide all the evidence that would be required in an audit, thus the level of assurance is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Hallmark Consolidated Limited is not in accordance with:

• a) the Corporations Act 2001, including:
• i. giving a true and fair view of the consolidated entity's financial position as at 31 December 2002 and of its performance for the half-year ended on that date; and
• ii. complying with Accounting Standard AASB 1029 "Interim Financial Reporting" and the Corporations Regulations 2001; and
• other mandatory professional reporting requirements in Australia. b)

KPMG

m Kissen

A M KITCHEN Partner

Perth 13 February 2003