TZ Limited
Annual Report 2003

Plain-text annual report

Annual Report 2003 CED Australasia Limited (Formerly Cendant Australasia Limited) ABN 26 073 979 272 contents i year in review ii financial report directory DIRECTORS J A Nissen (Chairman) J H Whiting K D Whiteman COMPANY SECRETARY C J McKeown REGISTERED OFFICE Ormond Corporate Centre Level 1, 596 North Road Ormond, Victoria, 3204 Telephone +61 3 9578 5933 Email investors@cedaust.com.au BANKERS National Australia Bank Limited AUDITORS PKF Chartered Accountants Level 11 CGU Tower 485 La Trobe Street Melbourne, Vic., 3000 SOLICITORS Phillips Fox SHARE REGISTRY Computershare Investor Services Pty Limited Level 12, 565 Bourke Street Melbourne, Victoria, 3000 Telephone +61 3 9611 5711 Facsimile +61 3 9611 5710 STOCK EXCHANGE Australian Stock Exchange Code: CED CED AUSTRALASIA LIMITED ABN 26 073 979 272 CED AUSTRALASIA LIMITED ABN 26 073 979 272 2003 FINANCIAL REPORT index 1 8 9 10 12 31 32 33 34 DIRECTORS’ REPORT STATEMENTS OF FINANCIAL PERFORMANCE STATEMENTS OF FINANCIAL POSITION STATEMENTS OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDIT REPORT BOARD OF DIRECTORS ADDITIONAL INFORMATION i CED AUSTRALASIA LIMITED DIRECTORS’ REPORT The directors of CED Australasia Limited present their report together with the financial reports of the parent entity and its controlled entities for the financial year ended 30 June 2003 Directors The directors of the company during the year and to the date of this report are: Mr John A Nissen - Chairman Mr John H Whiting Mr Ken D Whiteman Particulars of the qualifications, experience and special responsibilities (if any) of each director, as at the date of this report, are set out on page 33 of this report. Directors Meetings The number of directors’ meetings and number of meetings attended by each of the directors of the company during the financial year were: Mr J A Nissen Mr J H Whiting Mr K D Whiteman Directors Meetings Audit Committee Meetings No. of Meetings Held 10 10 10 No. of Meetings Attended 10 10 10 No. of Meetings Held 2 2 - No. of Meetings Attended 2 2 - There were a total of 10 Directors Meetings and 2 Audit Committee Meetings held. Directors and Executive Officers Emoluments The company’s policy for determining the nature and amount of emoluments of board members and senior executives of the company is as follows: Directors’ Fees are paid to Non Executive Directors as approved from time to time by shareholders. The last increase was approved by shareholders at the Annual General Meeting held 25 October 1996 and allowed for a fixed sum not exceeding $165,000. Emoluments paid to senior executives of the company are determined by the Chief Executive Officer and / or the Board of Directors. The broad remuneration policy is to ensure the remuneration package properly reflects the person’s duties and responsibilities and that remuneration is competitive in attracting, retaining and motivating people of the highest quality. Executive Directors and Executive Officers may receive bonuses based on the achievement of specific goals related to the performance of the consolidated entity or, in particular circumstances, a subsidiary company or business unit. - 1 - CED AUSTRALASIA LIMITED DIRECTORS’ REPORT Details of the nature and amount of each major element of the emoluments of each director of the company and the consolidated entity are: Non Executive Directors: Parent Entity Directors Fees J. A. Nissen J. H. Whiting K. D. Whiteman Directors’ Benefits $ 65,455 33,000 33,000 Superanuation Contributions $ - 3,000 3,000 Total $ 65,455 36,000 36,000 Particulars of Directors’ Benefits are disclosed in Note 16 and Note 18. Indemnification and Insurance of Directors and Officers The parent entity has not taken out an insurance policy indemnifying directors and officers for the financial year nor has the company provided any indemnification during the year. Interests of Directors The relevant interest of each director in the share capital of the company as at the date of this report is: Name J A Nissen J H Whiting K D Whiteman Ordinary Shares 2,192,916 NIL 18,100 Principal Activities Options NIL NIL NIL The principal activities of the consolidated entity during the financial year were the delivery of account packaging programs for financial institutions, loyalty programs for corporate and retail clients, Shoppers Hotline, The Presidential Card discount program, and the development and commercialisation of the Golf Link National Handicap System. There was no significant change in the nature of the consolidated entity’s principal activities during the year. Operating Results The operating loss after income tax for the year ended 30 June 2003 was $1,379,637 (2002: Loss $11,554,788). Dividends No dividend has been paid or declared since the commencement of the financial year. The directors do not recommend the payment of a dividend. Review of Operations Company Name On 9 December 2002 the company changed its name from Cendant Australasia Limited to CED Australasia Limited CED Licences At 30 June 2002 the two CED Licences held by the consolidated entity were recorded at fair value. Fair value was calculated based on the agreements reached with CIMS Limited on 12 September 2002 for the sale of the two licences, which provided for a total payment of US$1,000,000 (A$1,839,820) and extinguishment of debts totalling $2,066,805 which were included in the consolidated entity’s liabilities as at 30 June 2002. - 2 - Asian Operations During the year ended 30 June 2003 the company concluded an agreement with local management in Singapore and the Philippines to sell 75% of the company’s interest in those operations to the local country managers. The Company therefore retains a 25% shareholding in CAP Singapore, formerly Cendant Asia Pacific, which in turn holds a 25% interest in Cendant Philippines. Golf Link In the first half of the financial year the company completed negotiations with the AGU and other state-based golfing bodies to attempt to find a solution for the commercialisation and roll out of Golf Link. These negotiations culminated in the AGU Executive accepting the company’s proposal for the introduction of a user-pays fee of $2.75 (GST inclusive) per annum per golfer utilising a new Internet based delivery system. This proposal was presented to each of the state-based golfing bodies in order to gain their support for the introduction of a fee. With the support of the States and the AGU, the fee proposal was presented to the AGU’s Annual General Meeting held on 19 September 2002. The company’s fee proposal was accepted and the company is now planning the implementation of the Internet based system to all AGU affiliated golf clubs. This outcome allows the company to separate operational and marketing components of the Golf Link project as the fee will provide sufficient funding for the ongoing support and operations of Golf Link, while marketing activities can be undertaken without the added burden of having to provide returns to cover Golf Link operational costs. The Presidential Card & Shoppers Hotline The Shoppers Hotline operation provided an improved product turnover for the year ended 30 June 2003 thanks primarily to the success of the AdvantEdge program, which has approximately 90,000 members as at 30 June 2003. Merchandise sales were in excess of $320,000 during the year, demonstrating the value of the company’s shopping service to its member base. The Presidential Card business encountered further difficulties during the year with client losses and fee pressure arising due to new competition in the market. Management is currently reappraising all aspects of the Presidential Card operations in order to increase market share and return the division to profitability. The company is now actively exploring alternative models for the business and will continue to develop new opportunities as they arise. Significant Changes in the State of Affairs No significant changes in the state of affairs of the consolidated entity occurred during the financial year, other than those set out in this report. Significant After Balance Date Events Share Placement At an extraordinary meeting held on 9th July 2003 shareholders approved the placement of 50 million shares. The placement of these shares was completed on 29th August 2003 and raised $1.5 million. - 3 - CED AUSTRALASIA LIMITED DIRECTORS’ REPORT Significant After Balance Date Events (cont.) Other Apart from the matters set out above, no matter or circumstance has arisen since the end of the financial year that has significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in future financial years. Share Options On 21st January 2003 options over 17,350,000 unissued ordinary shares expired and thus no ordinary shares were issued. During or since the end of the financial year no share options have been granted over unissued shares in the parent company or any controlled entity. Likely Developments The particular information required by s299(1) of the Corporations Act (2002) has not been included in this report, as the inclusion of such information is likely to result in unreasonable prejudice to the company. Environmental Issues The consolidated entity’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory. Signed at Melbourne this 30th day of September 2003 in accordance with a resolution of the Board of Directors. J A Nissen Director - 4 - CED AUSTRALASIA LIMITED FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2003 CED Australasia Limited is a company incorporated in Victoria, Australia Registered Office and Principal Place of Business: Level 1 596 North Road Ormond VIC 3204 Refer to the Directors’ Report for nature of operations and principal activities There were 8 employees of the parent entity as at 30 June 2003. - 5 - CED AUSTRALASIA LIMITED STATEMENTS OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2003 Sales Revenue Cost of Sales Gross Profit Employee Related expenses Occupancy Expenses Communications Expenses Operating Lease Minimum Lease Payments Depreciation Amortisation of Intangibles Professional & Corporate Services Write-off Presidential Card Trademark Write-off Investment in Subsidiary Write-down Intercompany Loans Write-down Goodwill on Consolidation Redundancy Costs Revenue from Disposal of Licences Carrying Value of Licenses Sold Other Expenses from Ordinary Activities Loss on Disposal of Controlled Entity Other Revenue from Ordinary Activities Profit/(Loss) from ordinary activities before income tax expense Income tax expense relating to ordinary activities Profit/(Loss) from ordinary activities after related income tax expense Profit/(Loss) from extraordinary items after related income tax expense Note Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 3 3 1,208,038 (667,314) 3,441,686 682,927 (1,502,653) (457,664) 2002 $ 1,484,402 (924,036) 540,724 1,939,033 225,263 560,366 (791,672) (125,100) (228,798) (165,853) (228,453) (2,570,650) (473,195) (1,280,506) (416,960) (125,100) (517,907) (74,974) (263,345) (165,853) (401,734) (126,076) (252,105) (147,390) (263,345) (172,738) - - (493,280) - 10 8 6 10 3 4 5 (317,255) (516,456) (292,410) (304,055) - - - - - (1,962,185) - - (6,400,702) (100,000) - - - - 3,906,625 - 2,375,886 (3,906,625) - (2,375,886) - (8,515,261) (8,872,188) - (100,000) - - (73,790) (179,230) 190,060 (392,563) (19,124) (60,423) - - - 522,881 151,889 529,360 (1,379,367) (11,573,868) (899,579) (18,878,285) - - - 65,562 (1,379,367) (11,573,868) (899,579) (18,812,723) - - - - Net Profit/(Loss) (1,379,367) (11,573,868) (899,579) (18,812,723) Net (Profit)/Loss attributable to outside equity interests 15 - 19,080 - - Net Profit/(Loss) attributable to members of the parent entity (1,379,367) (11,554,788) (899,579) (18,812,723) Increase in Asset Revaluation Reserve Net exchange difference on translation of financial reports of self-sustaining foreign operations Total revenues, expenses and valuation adjustments attributable to members of the parent entity and recognised directly in equity 2, 14 - - - 3,906,625 (8,652) 3,897,973 - - - 2,375,886 - 2,375,886 Total changes in equity other than those resulting from transactions with owners as owners 14 (1,379,367) (7,656,815) (899,579) (16,436,837) Basic Earnings Per Share (Cents) (2.0) (21.8) The above Statements of Financial Performance are to be read in conjunction with the attached notes. - 6 - CED AUSTRALASIA LIMITED STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2003 CURRENT ASSETS Cash Assets Receivables Inventories TOTAL CURRENT ASSETS NON-CURRENT ASSETS Receivables Investments Property, Plant and Equipment Intangibles Note Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 478,585 40,011 12,315 299,162 333,328 147,423 34,728 40,011 4,264 153,977 42,424 41,757 530,911 779,913 79,003 238,158 - 10 215,476 - 6,311 488,778 596,044 263 166,320 251,403 263 288,274 - 3,906,625 - 2,375,886 6 7 6 8 9 10 TOTAL NON-CURRENT ASSETS 215,486 4,401,714 762,627 2,915,826 TOTAL ASSETS CURRENT LIABILITIES Payables Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Payables Provisions 746,397 5,181,627 841,630 3,153,984 101,045 49,428 2,584,052 118,689 110,526 1,506,422 94,293 32,158 150,473 2,702,741 142,684 1,600,715 - 24,285 567,979 23,911 695,948 13,907 695,948 23,911 11 12 11 12 TOTAL NON-CURRENT LIABILITIES 24,285 591,890 709,555 719,859 TOTAL LIABILITIES 174,758 3,294,631 852,239 2,320,574 NET ASSETS EQUITY Issued Capital Reserves 571,639 1,886,996 (10,609) 833,410 13 25,420,010 25,364,450 25,420,010 25,364,450 - 2,375,886 14 3,800,475 - Accumulated Losses 14 (24,848,371) (27,269,479) (25,430,619) (26,906,926) Shareholders’ equity attributable to members of the parent entity Outside equity interests in controlled entity TOTAL EQUITY 15 14 571,639 1,895,446 (10,609) 833,410 - (8,450) - 571,639 1,886,996 (10,609) 833,410 The above Statements of Financial Position are to be read in conjunction with the attached notes. - 7 - CED AUSTRALASIA LIMITED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2003 Cash Flows from Operating Activities: Receipts from Customers Payments to Suppliers and Employees Interest Received Interest Paid Net Cash (Used in) Provided by Operating Activities Cash Flows from Investing Activities: Proceeds from sale of license Proceeds from Sale of Plant and Equipment Payment for Plant and Equipment Loan from Controlled Entity Loan to Controlled Entity Aggregate Cash Flows from entity disposed of Net Cash Provided by (Used in) Investing Activities Cash Flows from Financing Activities: Share Issue Proceeds from borrowings Repayment of borrowing Note Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 1,481,928 (3,119,211) 26,863 - 3,543,246 (6,578,473) 22,643 (27,000) 758,897 (2,405,981) 23,697 - 1,594,299 (3,444,108) 46,714 (27,000) 2 (1,610,420) (3,039,584) (1,623,387) (1,830,095) 1,802,516 - (39,296) - - - 6,549 (4,862) - - 1,802,516 - (9,297) - (344,641) - 4,037 - - (583,108) (28,937) - - - 1,734,283 1,687 1,448,578 (579,071) 55,560 300,000 (300,000) 2,079,000 55,560 300,000 (300,000) 2,079,000 Net Cash (Used in)/Provided by Financing Activities 55,560 2,079,000 55,560 2,079,000 Net Increase (Decrease) in Cash Held 179,423 (958,897) (119,249) (330,166) Cash at beginning of year Effects of exchange rate fluctuations on the balances of cash held in foreign currencies 1 1 299,162 1,274,791 153,977 484,143 - (16,732) - - Cash at end of year 478,585 299,162 34,728 153,977 - 8 - CED AUSTRALASIA LIMITED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2003 NOTES TO THE STATEMENTS OF CASH FLOWS 1. Reconciliation of Cash For the purpose of the statements of cash flows, cash includes: Cash at Bank and on Hand 2. Reconciliation of Cash Flow from Operations with Operating Result After Income Tax Operating Profit/(Loss) after Income Tax Non-Cash Flows in Operating Profit/(Loss): Amortisation Depreciation Amortisation of Goodwill Write-off Presidential Card Trademark Write-off Investment in Subsidiary Write-down Intercompany Loans Write-down Goodwill on Consolidation Unrealised Exchange Loss Employee Entitlements Stock Obsolescence Doubtful Debts Restructure Marketing Costs Loss on Disposal of Controlled Entity Loss on Sale of Fixed Assets Profit on Sale of Fixed Assets Foreign Currency Translation Movement Outside Equity Interest Changes in Assets and Liabilities (Increase)/Decrease in Trade Debtors (Increase)/Decrease in Prepayments and Other Debtors (Increase)/Decrease in Inventories (Decrease)/Increase in Trade Creditors (Dccrease)/Increase in Creditors and Accruals Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 478,585 299,162 34,728 153,977 (1,379,637) (11,573,868) (899,579) (18,812,723) - 228,453 - - - - - - (23,135) - (3,542) (45,752) - 179,230 5,175 - - 8,450 139,169 46,491 - (764,661) 115,423 401,734 377,857 1,962,185 - - 6,400,702 82,673 (70,480) (64) (20,596) (478,752) (85,431) - 6,107 (344) (8,652) - 86,361 365,578 69,879 (138,356) (201,612) - 126,076 - - - - - - (26,687) - (3,542) (45,752) - - 5,175 - - - 5,955 - 37,493 - (821,865) - 172,738 - - 8,515,261 8,872,188 - - (61,337) (64) (40,596) (478,490) - - 4,305 (344) - 109,779 62,067 1,088 (7,019) (96,528) (Decrease) in Deferred Membership Income and Sales (661) (329,928) (661) (70,420) Cash Flows Provided by/(Used in) Operations (1,610,420) (3,039,584) (1,623,387) (1,830,095) 3. Entities disposed of Consideration received Carrying amount of assets at deemed date of disposal (1 July 2002) Cash Debtors Inventory Investments Plant and Equipment Trade Creditors - - 28,937 154,148 100,932 6,301 78,970 (548,518) (179,230) - 9 - - - - - - - - - - - - - - - - - - - - - - - - - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 1. SUMMARY OF ACCOUNTING POLICIES The financial report is a general purpose financial report which has been drawn up in accordance with applicable Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views, and the Corporations Act 2001. The financial report has been prepared on the historical cost basis and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. Fair value means the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arms length transaction. The recoverable amount of non current assets is assessed on the basis of the expected net cash flows which will be received from the asset’s employment and subsequent disposal. The expected net cash flows have not been discounted to their present values in determining recoverable amounts, unless otherwise stated. The accounting policies have been consistently applied and, except where stated, are consistent with those of the previous year. Where necessary, comparative information has been reclassified to achieve consistency in disclosure with current financial year amounts and disclosures. The significant accounting policies which have been adopted in the preparation of this financial report are: (a) Principles of Consolidation The consolidated financial statements comprise the financial statements of CED Australasia Limited and all its controlled entities (refer note 8). Entities have been consolidated in the financial statements from the date that control exists. All intercompany balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Outside equity interest comprises the aggregate of the equity of controlled entities, other than that held either directly or indirectly by the parent entity, after making adjustments for unrealised profits and losses of controlled entities and other adjustments necessary to comply with Accounting Standards. On 2 June 2003 the group disposed of a 75% interest in CAP Singapore, formerly Cendant Asia Pacific Pte Ltd for nil consideration. It was not practical to obtain appropriate figures for the operations of this entity for the period up until its date of disposal for inclusion in the financial report at 30 June 2003. The directors believe the result for the period to 2 June 2003 was a loss which would have resulted in a corresponding gain on disposal and no net impact on the consolidated results. The directors consider that the net revenues and expenses omitted from the annual report are not significant. Although maintaining a 25% interest in the company the group has no direct involvement in the Asian operations, no board representation and no commitment to provide future funding. The investment has nil carrying value and the directors do not believe they are in a position to exert significant influence over the operations of the company. (b) Inventories Inventories are measured at the lower of cost and net realisable value. Costs are assigned on a first in first out basis. (c) Investments Investments are recognised in the financial statements at cost. (d) Property, Plant and Equipment Property, plant and equipment is included at cost, less where applicable, any accumulated depreciation or amortisation. The carrying amount of property, plant and equipment is reviewed annually by directors to ensure it does not exceed the recoverable amount. The depreciation rates used for each class of asset are as follows: * Office Furniture and Equipment 13% - 33% * Motor Vehicles 20% The depreciable amount of all fixed assets is depreciated on a straight line basis over their estimated useful lives commencing from the time the asset is held ready for use. - 10 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 1. SUMMARY OF ACCOUNTING POLICIES (Cont.) (e) Intangibles The carrying value of all intangible assets are assessed at least each reporting date to ensure they do not exceed their recoverable amount. Where the carrying value exceeds this recoverable amount the excess of the carrying value over the recoverable amount of the intangible asset is immediately recognised as an expense, except to the extent to which the decrement reverses an increment previously recognised in an Asset Revaluation Reserve. (i) Trade Marks Trademarks owned by the consolidated entity are recorded at cost and amortised on a straight line basis over 20 years, subject always to the recoverable amount test referred to above. In the previous financial year the Presidential Card trademark was written-off. (ii) Goodwill Goodwill, representing the excess of the purchase consideration over the fair value of the identifiable net assets acquired on the acquisition of a controlled entity, is amortised on a straight line basis over 20 years being the minimum period of time during which benefits are expected to arise. (iii) Licences Licences owned by the consolidated entity are recorded at fair value based on the Directors’ assessment of the amount for which the assets could be exchanged between knowledgeable, willing parties in an arm’s length transaction. Revaluations are made at least at each reporting date to ensure the carrying value of the assets do not differ materially from their fair values. (f) Membership Income Memberships are generally for a period of twelve months. Under the terms and conditions of membership, members are entitled to a full refund within forty-five days of renewal or take up of membership. The membership fees received are initially recorded as deferred income and amortised as income in equal instalments over the annual term of the membership. (g) Membership Acquisition Costs (i) Annual Memberships Membership acquisition costs, which include costs associated with membership solicitations, mailings, membership kits, postage, printing and publications, are charged to the profit and loss account in the year in which they are incurred. (ii) Long-term Memberships Membership acquisition costs relating to Payment Card Protection programs operated by CED Asia Pacific Pte Ltd are amortised in equal instalments over the term of the membership. (h) Receivables and Payables Trade accounts receivable, amounts due from related parties and other receivables represent the principal amounts due at balance date plus accrued interest less, where applicable, any provisions for doubtful accounts. Accounts payable represent the principal amounts outstanding at balance date plus, where applicable, any accrued interest. (i) Employee Entitlements The provisions for employee entitlements to wages, salaries and annual leave represent the amount which the consolidated entity has a present obligation to pay resulting from employees’ services provided up to balance date. The provision has been calculated at nominal amounts and includes related on-costs. The liability for employee entitlements to long service leave represents the present value of the estimated future cash outflows to be made by the employer resulting from employees’ services provided up to the balance date. - 11 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 1. SUMMARY OF ACCOUNTING POLICIES (Cont.) (j) Income Tax The consolidated entity adopts the liability method of tax-effect accounting whereby the income tax expense for the period is based on the operating result after adjusting for items which, as a result of their treatment under income tax legislation, create permanent differences between that result and the taxable income or loss. Timing differences, which arise due to the different accounting periods in which items of revenue and expense are included in the determination of operating result, income tax and taxable income are brought to account as either provision for deferred income tax or an asset described as future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable. Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of realisation of the benefit. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated entity will derive sufficient future assessable income and comply with the conditions of deductibility imposed by the law to permit a future income tax benefit to be realised. (k) Leases Lease payments under operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the period in which they are incurred. Where assets are acquired by means of finance leases, the present value of minimum lease payments is established as an asset at the beginning of the lease term and amortised on a straight line basis over the expected economic life. A corresponding liability is also established and each lease payment is allocated between such liability and interest expense. (l) Foreign Currency Transactions and Balances Transactions in foreign currencies are initially measured and brought to account at the rate of exchange in effect at the date of each transaction. Exchange differences relating to monetary items are brought to account in the Statements of Financial Performance in the financial year in which the exchange rates change as exchange gains or losses. (m) Translation of Controlled Foreign Entities The Statements of Financial Position of overseas controlled entities that are self-sustaining foreign operations are translated at the rates of exchange ruling at balance date. The Statements of Financial Performance are translated at the average rates ruling during the year. Exchange differences arising on translation are taken directly to the foreign currency translation reserve. (n) Revenue Recognition (i) Sales Revenue Sales Revenue comprises revenue earned from the provision of products or services to entities outside the consolidated entity. Sales revenue is recognised when the goods or services are provided or, in relation to Membership Income, as set out in 1(f). (ii) Other Revenue - Direct Cost Recovery Direct Cost Recovery revenue comprises revenue earned from the provision of services, the costs of which are directly recoverable from the client as they are incurred. (iii) Interest Revenue Interest Revenue is recognised as it accrues. 2. CHANGE IN ACCOUNTING POLICY In 2002 the consolidated entity changed the measurement basis of the Cendant Licence from cost to fair value to reflect the impact of the agreement to dispose of the licences. - 12 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 326,223 853,494 326,223 881,815 2,588,192 356,704 853,494 630,908 1,208,038 3,441,686 682,927 1,484,402 317,384 349,930 808,371 317,384 694,282 140,280 667,314 1,502,653 457,664 26,863 5,175 36,029 22,643 23,697 6,549 15,199 5,175 1,024 190,060 522,881 151,889 529,360 - - - 29,585 808,371 115,665 924,036 478,490 46,714 4,037 119 3. REVENUES FROM ORDINARY ACTIVITIES Sales Revenue Sale of Goods Rendering of Services Total Sales Revenue Cost of Sales Cost of Goods Sold Services Expenses (Benefits) Total Cost of Sales Non-operating revenue Interest Disposal of assets other than goods Sundry revenue items Total non-operating revenue Interest from related parties included in total interest revenue Entities in the wholly-owned group Partly owned subsidiaries 4. LOSS FROM ORDINARY ACTIVITIES Loss from ordinary activities includes: Reversal of Provisions/Accruals not required 121,993 478,490 121,993 Net losses on disposals of property, plant & equipment Aggregate inventory write-downs and other losses 8,773 43,817 6,107 8,773 41,485 31,633 4,305 16,236 Amortisation of non-current assets Trademarks Goodwill - - 115,423 377,857 493,280 - - - - - Bad and Doubtful Debts expense 3,083 23,934 (3,542) (8,431) Net expense resulting from deductions from the carrying amounts of assets Net foreign currency exchange loss from ordinary operations - - 8,362,887 104,828 - - 17,387,449 - - 13 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 5. INCOME TAX The amount provided in respect of income tax differs from the amount prima facie payable on the operating result. The difference is reconciled as follows: Prima Facie Income Tax on the Operating Result Before Income Tax at 30% (i) Tax Effect of Permanent Differences: Amortisation of Intangibles Write-off Intangible Assets Write-off Investment in Controlled Entity Write-off Intercompany Debts Other Non-Allowable Expenses (413,810) (3,472,160) (269,873) (5,643,817) - - - - 147,984 2,508,866 - - - - - - (695) (20,307) (695) - - 2,661,656 2,554,578 (20,324) (204,440) (ii) Future Income Tax Benefit not Recognised (252,584) - (iii) Tax Losses not Carried Forward 414,505 1,088,201 270,568 586,785 Income Tax Expense/(Credit) Attributable to Result The income tax expense/(credit) comprises amounts set aside to: Provision for Tax Payable Provision for Deferred Tax Future Income Tax Benefits - - - - - - - - - - - - - - - (65,562) (65,562) - - (65,562) 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. 5,503,946 5,089,441 1,940,411 1,669,843 - 14 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 6. RECEIVABLES Current: Trade Debtors Sundry Debtors Provision for Doubtful Debts Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 76,059 - (36,048) 261,304 60,371 (32,965) 49,434 - (9,423) 47,438 - (12,965) Sub-total 40,011 288,710 40,011 34,473 Other Debtors and Prepayments - 44,618 - 7,951 40,011 333,328 40,011 42,424 Non-Current: Amounts Receivable from: Controlled Entities Included in the above are aggregate amounts receivable from Controlled Entities 7. INVENTORIES Finished Goods - at Cost - - - - - - 596,044 596,044 251,403 251,403 596,044 251,403 12,315 147,423 4,264 41,757 - 15 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 Consolidated 2003 $ 2002 $ Parent Entity 2003 $ 2002 $ 8. INVESTMENTS Shares in Controlled Entities - unquoted - at Cost Shares - Other – unquoted at Cost - 10 10 - 6,311 6,311 253 10 263 253 10 263 During the year ended 30 June 2003 the company concluded an agreement with local management in Singapore and the Philippines to sell 75% of the company’s interest in those operations to the local country managers. The Company therefore retains a 25% shareholding in CAP Singapore, formerly Cendant Asia Pacific, which in turn holds a 25% interest in Cendant Philippines. Controlled Entities CED Membership Services Pty Ltd (Inc in Victoria) The Presidential Card Pty Ltd (Inc in Victoria) Golf Link Partners Pty Limited (Inc in Victoria) CUC Australasia Pty Ltd (Inc in Victoria) CED Online Pty Ltd (Inc in Victoria) Golf Partners Australia Pty Ltd (Inc in Victoria) Golf Partners International Pty Ltd (Inc in Victoria) CED Asia Pacific Pte Ltd (Inc in Singapore)(Refer Note 1a) CED Hong Kong Limited (Inc in Hong Kong)(1) CED Philippines Inc (Inc in Philippines)(1) (1) Owned by CED Asia Pacific Pte Ltd (the 6.25% represents CED Australasia Ltd’s indirect interest Holding 2003 % Holding 2002 % 100 100 100 100 100 100 100 94.25 94.25 100 100 100 100 100 100 25 6.25 6.25 - 16 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 9. PROPERTY, PLANT AND EQUIPMENT Office Furniture and Equipment Cost Accumulated Depreciation Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 1,761,419 (1,545,943) 2,715,259 (2,226,481) 1,159,702 (993,382) 1,468,114 (1,179,840) Total Property, Plant and Equipment 215,476 488,778 166,320 288,274 Office Furniture and Equipment Movements during the year: Beginning of year Additions Disposals Depreciation expense Net foreign currency exchange differences arising on the translation of the financial statements of self- sustaining foreign operations 488,778 45,000 (89,849) (228,453) 904,265 4,862 (12,312) (401,734) 288,274 15,000 (10,878) (126,076) 520,527 - (59,515) (172,738) - (6,303) - - End of year 215,476 488,778 166,320 288,274 10. INTANGIBLES CED Licence: Fair Value - 3,906,625 2,375,886 - - Total Intangible Assets - 3,906,625 2,375,886 - 17 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 10. INTANGIBLES (Cont.) Trademark Movements during the year: Beginning of year Additions Disposals Amortisation expense Write-offs End of year Goodwill on Consolidation Movements during the year: Beginning of year Additions Write-offs Amortisation expense End of year CED Licence Movements during the year: Beginning of year Revaluation increment Write-offs End of year Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ - - - - - - - - - - - 2,077,608 - - (115,423) (1,962,185) - 6,720,151 58,408 (6,400,702) (377,857) - - - - - - - - - - - - - - - - - - - - - 3,906,625 - 3,906,625 - 3,906,625 - 2,375,886 - (2,375,886) - 2,375,886 - - 3,906,625 - 2,375,886 CED Licences At 30 June 2002 the two CED Licences held by the consolidated entity were recorded at fair value. Fair value was calculated based on the agreements reached with CIMS Limited on 12 September 2002 for the sale of the two licences, which provided for a total payment of US$1,000,000 (A$1,839,820) and extinguishment of debts totalling $2,066,805 which were included in the consolidated entity’s liabilities as at 30 June 2002. - 18 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 11. PAYABLES Current: Trade Creditors Other Creditors and Accruals Deferred Membership Income and Sales Non-Current: Amounts Payable to: - Controlled Entities Other Creditors Included in the above are aggregate amounts payable to Controlled Entities Accounts payable are non-interest bearing (2002: non- interest bearing) 12. PROVISIONS Current: Employee Entitlements Restructure Non-Current: Employee Entitlements Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 59,165 41,880 - 578,589 2,004,802 661 25,381 85,145 - 406,021 1,099,740 661 101,045 2,584,052 110,526 1,506,422 - - - - - 567,979 695,948 - 695,948 - - 567,979 695,948 695,948 - 695,948 695,948 49,428 - 72,937 45,752 32,158 - 48,541 45,752 - 49,428 118,689 32,158 94,293 24,285 23,911 13,607 23,911 Aggregate Employee Entitlements 73,713 96,848 45,765 72,452 - 19 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 13. ISSUED CAPITAL Issued and Paid Up Capital: 67,478,527 (2002: 65,626,525) Fully Paid Ordinary Shares Movements during the year: Opening Balance Share Placement Closing Balance 25,420,010 25,364,450 25,420,010 25,364,450 25,364,450 23,285,450 25,364,450 23,285,450 55,560 2,079,000 55,560 2,079,000 25,420,010 25,364,450 25,420,010 25,364,450 (i) Share Placements On 30 May 2003 the parent entity issued 1,852,002 fully paid ordinary shares at 3 cents per share in the capital of CED Australasia Limited under the Shareholder Purchase Plan. The issue raised $55,560. On 29th August 2003 the parent entity finalised the issue of 50,000,000 fully paid ordinary shares at 3 cents per share in the capital of CED Australasia Limited, following approval by shareholders at a General Meeting of the company held on 9th July 2003. The issue was undertaken for the purpose of raising additional capital to invest in and develop future business operations. In September 2003 a further 412,216 fully paid ordinary shares were issued by the parent entity at 5.337 cents per share in the capital of CED Australasia limited under the Shareholder purchase plan. The issue raised $22,000. (ii) Share Options No share options were granted over unissued shares in CED Australasia Limited during the current or previous financial year. No shares have been issued by virtue of an exercise of an option during the year or to the date of this report. At the end of the year there were no unissued ordinary shares in respect of which options were outstanding. During the course of the financial year 17,350,000 options previously issued under the Executive Share Option Plan expired. (iii) Employee Share Option Plan No shares have been issued by virtue of an exercise of an option during the year or to the date of this report. - 20 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 14. RESERVES, RETAINED PROFITS AND TOTAL EQUITY Reserves Foreign Currency Translation Reserve Asset Revaluation Reserve Foreign Currency Translation Reserve Movements during the year: Opening Balance Adjustment arising from the translation of foreign controlled entity’s financial statements Transfer to Retained Profits/Losses Closing Balance Asset Revaluation Reserve Movements during the year: Opening Balance Increase (decrease) recognised in the statement of financial performance on revaluation of assets Transer to Retained Profits on Write off on sale of license Closing Balance Retained Profits/(Losses) Balance at beginning of year Net Profit/(Loss) attributable to members of the parent entity Transfers from Asset Revaluation Reserve Transfers from Foreign Currency Translation Reserve Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ - - - (106,150) 3,906,625 3,800,475 (106,150) (97,498) - 106,150 - (8,652) - (106,150) - - - - - - 3,906,625 - 2,375,886 - 2,375,886 2,375,886 - - - - - (3,906,625) - 3,906,625 - 3,906,625 - 2,375,886 (2,375,886) - - 2,375,886 (27,269,479) (15,714,691) (26,906,926) (8,094,203) (1,379,367) 3,906,625 (11,554,788) - (899,579) 2,375,886 (18,812,723) - (106,150) - - - Balance at end of year (24,848,371) (27,269,479) (25,430,619) (26,906,926) Total Equity Total Equity at beginning of year Total Changes in Equity recognised in the Statement of Financial Performance Transactions with owners as owners Contribution of Equity 1,886,996 7,359,886 833,410 15,191,247 (1,379,367) (7,656,815) (899,579) (16,436,837) 55,560 2,079,000 55,560 2,079,000 Total changes in Outside Equity Interest 8450 104,925 - - Total Equity at end of year 571,639 1,886,996 (10,609) 833,410 - 21 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 15. OUTSIDE EQUITY INTERESTS IN CONTROLLED ENTITY Outside equity interests comprise: Interest in accumulated losses at the beginning of the financial year Interest in operating loss after income tax Dilution of outside equity interest on acquisition of additional equity Transfer on disposal of controlled entity Interest in accumulated losses at the end of the financial year Interest in Share capital Interest in Reserves Total outside equity interests 16. DIRECTORS’ REMUNERATION Total income paid or payable, or otherwise made available to all directors of the company and all directors of each entity in the consolidated entity from the company or any related party Number of directors of the parent entity whose total income falls within the following bands: $ 0 - $ 9,999 $ 10,000 - $ 19,999 $ 20,000 - $ 29,999 $ 30,000 - $ 39,999 $ 40,000 - $ 49,999 $ 50,000 - $ 59,999 $ 60,000 - $ 69,999 Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ (8,450) - (113,375) (19,080) - 8,450 - - - - 89,607 (42,848) 33,477 921 (8,450) - - - - - - - - - - - - - - 131,455 448,112 131,455 337,333 - - - 2 - - 1 2 - - 2 - - 1 Directors of the parent entity who have held office during the financial year are: John A Nissen John H Whiting Ken D Whiteman - 22 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 17. EXECUTIVES REMUNERATION Total income received or due and receivable by executive officers whose total income exceeds $100,000 Number of executive officers whose total income exceeds $100,000 $100,000 - $109,999 $110,000 - $119,999 $120,000 - $129,999 $130,000 - $139,999 $230,000 - $239,999 18. RELATED PARTY TRANSACTIONS (a) Controlled Entities Loan to Controlled Entities - Non-Current Loan from Controlled Entities - Current Loan from Controlled Entities - Non-Current These loans are interest free. There are no fixed terms of repayment. Charges by Controlling Entity Interest These fees are charged on a commercial basis. (b) Purchases from Controlled Entities Purchases from controlled entities were made on a commercial basis. (c) Shares Held by Directors. Aggregate number of shares held by directors and their related entities in CED Australasia Limited at balance date Aggregate number of shares purchased by directors and their related entities during the year Aggregate number of shares disposed of by directors and their related entities during the year - - - - - - - - - - - 859,745 - 616,506 1 1 1 2 - - - - - - - - - - - - 1 1 1 1 596,044 - 695,948 251,403 - 695,948 - 29,586 15,058 No. No. 2,211,016 2,211,016 35,600 1,000 - 23 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 19. FOREIGN CURRENCY MONETARY ITEMS Current Liabilities not effectively hedged: - US Dollar 20. FINANCIAL INSTRUMENTS Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ - 264,423 - 264,423 The financial assets and liabilities are recognised in the financial statements at values approximating their net fair values. The company has no significant concentration or exposure to credit risk. The maximum credit risk exposure of financial assets is represented by the carrying amount of the assets in the balance sheet. 21. STATEMENT OF OPERATIONS BY SEGMENT Year ended 30 June 2003 The consolidated entity operates within Australia in the provision of membership-based business and consumer services. All sales are to customers outside the consolidated entity. Year ended 30 June 2002 Operating Revenue Australia $ Asia $ Total $ Sales to customers outside the consolidated entity Inter-segment sales Unallocated Revenue Total Revenue Segment results Unallocated Expenses 3,213,942 - - 750,625 - - 3,964,567 - - 3,213,942 750,625 3,964,567 (3,736,122) - (1,143,184) - (4,879,306) (6,694,562) Consolidated Operating Loss before Tax (3,736,122) (1,143,184) (11,573,868) Segment Assets Unallocated Assets (eliminations) 3,265,806 - 1,915,821 - 5,181,627 - Total Assets 3,265,806 1,915,821 5,181,627 - 24 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 22. COMMITMENTS FOR EXPENDITURE (a) Operating Lease Commitments Payable: - Not later than one year - Later than one year but not later than five years - Later than five years (b) Golf Link Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 110,825 281,532 - 195,195 443,300 5,038 110,825 281,532 - 195,195 443,300 5,038 392,357 643,533 392,357 643,533 In accordance with the parent entity’s agreement with the Australian Golf Union the consolidated entity retains a commitment to rollout the Golf Link National Handicap System to all AGU affiliated golf clubs in Australia however the future liability in relation to this commitment is unable to be quantified as at 30 June 2003. (c) Financial Support The parent entity has undertaken to provide ongoing financial support to its controlled entity CED Asia Pacific Pte Ltd, which as from 12 September 2003 is a wholly owned subsidiary of the parent entity. 23. EARNINGS PER SHARE Consolidated Entity 2003 Consolidated Entity 2002 Basic Earnings Per Share (cents per share) (2.0) (21.8) Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share: Earnings used in the calculation of basic earnings per share: 24. EVENTS SUBSEQUENT TO REPORTING DATE SHARE ISSUES 65,849,373 53,101,046 ($1,379,367) ($11,554,788) On 29th August 2003 the parent entity finalised the issue of 50,000,000 fully paid ordinary shares at 3 cents per share in the capital of CED Australasia Limited, following approval by shareholders at a General Meeting of the company held on 9th July 2003. The issue was undertaken for the purpose of raising additional capital to invest in and develop future business operations. In September 2003 a further 412,216 fully paid ordinary shares were issued by the parent entity at 5.337 cents per share in the capital of CED Australasia limited under the Shareholder purchase plan. The issue raised $22,000. - 25 - CED AUSTRALASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 Consolidated Parent Entity 2003 $ 2002 $ 2003 $ 2002 $ 25. AUDITOR’S REMUNERATION Auditors of the Parent Entity Other Services from Auditors of the Parent Entity Other Auditors Other Services from Other Auditors 25,000 3,850 - - 35,620 19,909 31,648 3,261 25,000 3,850 - - 22,120 19,909 - - The auditors received no other fees or benefits. - 26 - CED AUSTRALASIA LIMITED DIRECTORS’ DECLARATION The directors of the company declare that: 1. the financial statements and notes of the company and of the economic entity: (a) comply with Accounting Standards and the Corporations Act 2001; and (b) give 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 year ended on that date; 2. in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors. J A Nissen Director Dated this 30th day of September 2003 Melbourne - 27 - A Member Firm of PKF International INDEPENDENT AUDIT REPORT TO MEMBERS OF CED AUSTRALASIA LIMITED Scope The Financial Report and Directors’ Responsibility flows, accompanying notes The financial report comprises the statement of financial position, statement of financial performance, statement of cash financial statements, and the directors’ declaration for both CED Australasia Limited the company and 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 to 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. Chartered Accountants & Business Advisers Level 11, CGU Tower 485 La Trobe Street Melbourne 3000 GPO Box 5099BB Melbourne 3001 (03) 9603 1700 Tel: Fax: (03) 9602 3870 www.pkf.com.au We formed our audit opinion on the basis of these procedures, which included: (a) examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and (b) assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors. controls over While we considered the effectiveness of management’s internal reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls. financial Audit Approach Independence the financial 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 free of material report 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. is We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company’s and the consolidated entity’s financial position, and of their performance as represented by their operations and cash flows. the results of 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 CED Australasia 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 year ended on that date, and (ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and (b) other mandatory financial reporting requirements in Australia. Chartered Accountants 30 September 2003 Melbourne A Victorian Partnership R A Dean Partner - 28 - board of directors Mr John A Nissen Non-executive Chairman - appointed 2 March 1989 John Nissen has been in the Securities industry for the past twenty-nine years and was formerly an Associate Director with a leading Melbourne stockbroker. He is Managing Director of Rhys Capital Pty Ltd, an investment and corporate advisory business; a Non-executive Director of Poltech International Limited and Chairman of two Victorian based resort companies. He is Chairman of the Audit Committee. Age 55 Mr John H Whiting Non-executive Director - appointed 12 December 1997 John Whiting’s career focus has been in retailing. From 1972-1980 he was employed by McEwans in store management and merchandising positions. After running his own manufacturing and importing business from 1980-1989, John began consulting to a wide variety of retailers and their suppliers. Clients included McEwans, Coles Myer, Mitre 10, Westralian Forest Industries, Black and Decker, Dulux and George Patterson Advertising. These projects covered a range of retail product categories, including hardware, office supplies, clothing, timber and pharmaceutical. Age 54 Mr Ken D Whiteman Non-executive Director - appointed 15 May 2003 Ken Whiteman has worked as a Self – Employed Consultant advising various businesses for the past 8 years. Prior to that he was a partner in an Accounting Practice. Ken is a Certified Practising Accountant. Age 35 - 29 - additional information 1. SHAREHOLDING – 29SEPTEMBER 2003 (a) Distribution of Shareholders Category 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Holders 32 30 20 50 31 163 (b) Shareholdings less than Marketable Parcels The number of shareholdings on the company’s register as at 29 September 2003 which are less than a marketable parcel is 115. (c) Twenty Largest Shareholders Name Nefco Nominees Pty Ltd National Nominees Limited Grande Dame Pty Ltd Sidcorp Pty Ltd Moggs Creek Pty Ltd (Superannuation Account) ANZ Nominees Limited Grange Investments Pty Ltd CUC Asia Holdings Stichting Stroeve Global Moggs Creek Pty Ltd (Superannuation Account) Citicorp Nominees Pty Limited Consolidated Investments Australasia Pty Ltd Prime Endevour Pty Ltd CED Australasia Limited-Marketable Sale Facility Westpac Custodian Nominees Limited Mr Geoffrey Sinclair Cyrtha Corporation NV DEODEO Corporation Stannington Pty Ltd Ms Laurence Isabelle Ducoin TOTAL (d) Substantial Shareholders Nefco Nominees National Nominees Limited Grande Dame Pty Ltd Sidcorp Pty Ltd Moggs Creek Pty Ltd (Superannuation Account) (e) Voting Rights All shares have equal voting rights. - 30 - % 33.88 23.03 10.18 8.48 4.49 3.21 2.54 1.72 1.70 1.50 1.27 0.85 0.78 0.64 0.62 0.47 0.36 0.34 0.33 0.25 96.64 Shareholding 39,940,655 27,152,539 12,000,000 10,000,000 5,292,651 3,786,633 3,000,000 2,024,676 2,000,000 1,766,667 1,493,105 1,000,000 915,000 754,151 736,518 550,000 425,000 400,000 390,600 300,000 113,928,195 39,940,655 27,152,539 12,000,000 10,000,000 7,059,318 additional information (cont.) 2. CORPORATE GOVERNANCE Board of Directors The Board of Directors is responsible for the Corporate Governance of the company including: * Establishing strategic direction * Approval of budgets and related business plans * Monitoring of performance against these plans * Reporting to shareholders. Composition of the Board The Board currently consists of 3 non-executive directors, including the chairman. Details of the directors currently in office are set out in the financial report. The constitution of the company provides that one third of the directors retire from office at the Annual General Meeting each year. Such retiring directors may be eligible for re-election. If a casual vacancy is created during the year, the Board identifies appropriate candidates and may appoint them as directors during the year. Such candidates must stand for election at the next Annual General Meeting. The Board reviews the remuneration of the chief executive officer and senior executives after obtaining appropriate professional advice. Non-executive directors are remunerated from the aggregate amount approved by shareholders at an Annual General Meeting. The amount paid to a director may vary depending on the level of the Board responsibilities. Details of the remuneration of directors are set out in the financial report. Audit Committee The current members of the Audit Committee are: * Mr J A Nissen * Mr J H Whiting The external auditors, chief executive officer, company secretary and other relevant personnel may be invited to attend meetings when required. The Committee’s responsibilities include: * Reviewing accounting policies and controls * Reviewing financial budgets and business plans * Reviewing the financial statements * Liaising with external parties on relevant issues. The Committee reviews the external auditor’s terms of engagement including remuneration and makes recommendations to the Board. Ethical Standards The company acknowledges the requirement of both directors and employees to adhere to the highest standards of corporate responsibility, referred to in the company’s employee handbook. - 31 - 

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