global strength / local knowledge Annual Report 2008 / ACN

Transcription

1 global strength / local knowledge Annual Report 2008 / ACN

2 Corporate Directory Corporate Directory Directors Peter M Burns [ Chairman ] Terence H Opie [ Managing Director ] Peter G Kailis [ Non-Executive Director ] Sin Jen Hwang [ Non-Executive Director ] Kenneth S McKinnon [ Executive Director ] Registered Office Suite 28, The Hyatt Centre, 87 Adelaide Terrace Perth Western Australia 6000 Telephone: +61 [ 08 ] Facsimile: +61 [ 08 ] Auditors Grant Thornton Level 1, 10 Kings Park Road West Perth, Western Australia 6005 Annual Report 2008 Share Registry Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross, Western Australia 6153 Telephone: +61 [ 08 ] Facsimile: +61 [ 08 ] Bankers National Australia Bank 50 St Georges Terrace Perth, Western Australia 6000 Stock Exchange Listing and Domicile JV Global Limited is a public company limited by shares, registered and domiciled in Australia, with shares listed on the Australian Stock Exchange. ASX Code JVG

3 CHAIRMAN S REPORT JV GLOBAL LIMITED ANNUAL REPORT Dear Shareholder I know that most of you are well aware of the company s progress and projects through the Quarterly Shareholder Updates and the Shareholder briefings that we have held during the 2008 financial year. We continued to be very active with our joint ventures and in addition spent considerable time and funds in expanding the operations and scope of our wholly owned subsidiary, Component Homes. We have continued to pursue opportunities in the Middle East and have established some very important contacts which we believe will shortly produce positive results. I truly believe that 2008/2009 will be the year that you as shareholders have been patiently waiting for and we as a board have been working hard to achieve. Whilst the results for the 2008 year are very disappointing, the reasons why and how they occurred has been fully monitored and assessed and steps and procedures put into place to ensure that the company produces profits for the ensuing year and into the future. As your elected representatives, the board has continued to work extremely hard over the past year, and has spent enormous amounts of time reviewing and assessing every aspect of the company s operations. I am most appreciative not only for their dedication and commitment but also for their professional approach to the task of managing a listed public company. Terry Opie, as Managing Director, and Ken McKinnon, as Company Secretary, have continued to work diligently over this past year in driving the business and the company and addressing the seemingly endless tasks and matters that have occurred. On your behalf I want to publicly acknowledge their individual efforts and thank them most sincerely. Finally I want to thank you, our loyal shareholders, for your patience and perseverance. Peter Burns Chairman 1

4 Directors Report JV GLOBAL LIMITED ANNUAL REPORT Your directors submit their report for the year ended 30 June This annual report covers both JV Global Limited as an individual entity and the consolidated entity comprising JV Global Limited and its subsidiaries. The Group's functional and presentation currency is AUD (). A description of the Group's operations and its principal activities is included in the review of operations and activities in the directors' report on pages 3 and 4. The directors' report is not part of the financial report. DIRECTORS The names and details of the company s directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Names, qualifications, experience and special responsibilities Terence H Opie Managing Director, executive director, a director since 14 February 2005 Experience and special responsibilities Mr Opie has over thirty years experience in the financial services industry including consulting to Asian investment bankers and assisting with the establishment of lease finance companies in South East Asia. Mr Opie established JV International Pty Ltd a company concerned with the marketing and sales of CNC roll-forming plant and equipment for overseas markets. Mr Opie subsequently incorporated JV Global Australia Pty Ltd to participate in overseas joint ventures. During the past three years Mr Opie has not served as a director of any other listed company. Peter M Burns FCPA, FTIA, FNTAA Chairman, independent non-executive director, a director since 14 February 2005 Experience and special responsibilities Mr Burns is Chairman of the Audit Committee. He is a Certified Practising Accountant with over 35 years experience in Public Practice. Mr Burns is Chairman of Burns & Baker Accountants Pty Ltd, past Divisional Councillor of CPA Australia (Western Australia) and past Chairman of The Public Accountants Group (Western Australia). During the past three years Mr Burns has served as a director of Kingsway Community Financial Services Limited which holds a franchise from the Bendigo Bank. Sin J Hwang Non-executive director, a director since 7 June 2005 Experience and special responsibilities Mr Hwang is a businessman with many years of corporate and commercial experience within Australia and South-East Asia. He has extensive and diversified business interests throughout the region covering manufacturing, mining, hotel and serviced apartments, residential and commercial property development. Over the past 10 years Mr Hwang has focused on the emerging market of China. His in-depth knowledge of doing business in China has lead to the successful development of business interests in property development and manufacturing. During the past three years Mr Hwang has not served as a director of any other listed company. Peter G Kailis Non-executive director, a director since 15 August Mr Kailis has enjoyed a long and highly successful business career and is well known within the Australian business community. Highlights of his business career include establishing: Red Rooster Pty Ltd, Coldale Constructions Pty Ltd, Perth Fibre Box Pty Ltd, Consolidated Pine Industries Pty Ltd; and Kailis Organic Olive Groves Limited, the world s largest organic certified extra virgin olive oil producer. Mr Kailis s provides substantial management and planning expertise as the Company pursues its growth phase. Mr Kailis has during the past three years and continues to serve as a director of Hydrogen Technology Limited and as an alternate director of Kailis Organic Olive Groves Limited. Kenneth S McKinnon B.Bus, Post Grad Dip Acc., EMBA, CPA Executive director, a director since 5 August 2008 Mr McKinnon has been a Certified Practising Accountant for 23 years and has over 20 years experience in public company management. He holds a Bachelor of Business Degree and an Executive Master of Business from the University of Western Australia. 2

5 Directors Report continued JV GLOBAL LIMITED ANNUAL REPORT COMPANY SECRETARY Kenneth S McKinnon B.Bus, Post Grad Dip Acc., EMBA, CPA Mr McKinnon has held the position of Company Secretary of JV Global Limited since 21 September He has been a Certified Practising Accountant for 23 years and has over 20 years experience in public company management. Interests in the shares and options of the company and related bodies corporate As at the date of this report, the interests of the directors in the shares and options of JV Global Limited were: Number of Ordinary Shares Number of Options (October 2008 JVGO) Employee Share Options Terence H. Opie 8,776,974 8,788,011 6,000,000 Peter M. Burns 400,100-1,500,000 Sin J. Hwang 4,275,000 4,275,000 - Peter G Kailis 7,501,850 2,750,000 - Kenneth S McKinnon 223, ,500 1,500,000 DIVIDENDS No dividends were paid or proposed by the Directors in respect of the financial years ended 30 th June and 30 th June PRINCIPAL ACTIVITIES The Consolidated Entity s principal activities are the manufacture and sale of steel building products, the global marketing and sales of CNC roll forming production lines, associated technology transfer and joint ventures for the manufacture of steel building products. SHARES ISSUED DURING THE YEAR Issuing entity Number of shares issued Class of shares Issue price Date of issue JV Global Limited 1,500,000 Ordinary fully paid shares Employee incentive - issued at no cost JV Global Limited 20,000 Ordinary fully paid shares Issued pursuant to exercise of options at 20 cents each 23 August 24 April 2008 OPERATING AND FINANCIAL REVIEW Highlight of the Year The Company s joint venture factory in Mumbai, India commenced commercial production in January 2008 Component Homes rapid expansion continues with strong growth trends indicating good results during the forthcoming year. The Company s strategic alliance with Trafalgar Building Products Pty Ltd has been expanded from the United Arab Emirates to incorporate India. Commercial production commenced at the Company s Indian joint venture factory in January This follows the official opening of the factory in November only six months after site development began. Production commenced in January 2008 after commissioning the roll forming equipment in December. The factory provides over 2000sqm of enclosed production area, an administration building, water station and back-up power generation units. We are extremely proud of this facility and the 2.8 hectare site is sufficiently large to accommodate any future factory expansion. Sharus Steel Product Pvt Ltd (40% JVG), our joint venture company, has appointed twenty administrative and production staff as well as a sales team of six. Additionally, agents have been appointed in New Delhi, Chennai, Gujarat, Kerala and Hyderabad. Sample frames have been delivered to several projects, including those being undertaken by our joint venture partner, and India s oldest construction firm, the Shapoorji Pallonji Group. Negotiations are continuing with Trafalgar Building Products Pty Ltd, a subsidiary of the listed Norfolk Group Limited, for the manufacture of fire rated doors at our joint venture factory in India. 3

6 Directors Report continued OPERATING AND FINANCIAL REVIEW (continued) JV GLOBAL LIMITED ANNUAL REPORT The manufacture of fire rated doors in conjunction to steel door frames the presently manufactured would significantly increase sales revenues and enable our joint venture company, Sharus Steel Product Pvt Ltd, to offer a total door solution to developers. In addition to the fire rated doors, Sharus Steel Product Pvt Ltd is actively investigating products to expand its product range with only minor capital investment. India s inherent low labour costs and tariff free access to Middle East markets makes it an ideal manufacturing base for the region. The year ended 30th June 2008 has seen rapid growth at the Company s wholly owned subsidiary, JVG Framing Pty Ltd, which trades as Component Homes. Revenues increased to nearly 150% of pre-acquisition levels and forward orders continue to expand rapidly with each month yielding increased production levels. Whilst demand remained buoyant through the year ended 30th June 2008 production delays were experienced with the introduction of material increased specifications for homes built in Region D cyclonic areas of Australia. Component Homes order book contained a large number of homes affected by this revised building standard and delays of several weeks were experienced whilst re-engineering of their designs took place. Since that time Component Homes have expanded sales into the Region D cyclonic area and are presently capitalizing on their improved designs. The Companies joint venture operations in the United Arab Emirates (UAE) progressed during the year with Arabian Profile Global LLC (JVG 46%) expanding sales and cementing their presence in the local market. In November Arabian Profile Global LLC signed an agreement with Trafalgar Building Products Pty Ltd for the distribution and manufacturing of fire rated doors in the UAE. The process of gaining all necessary government approvals in the UAE is continuing and marketing of the fire rated door sets is anticipated to commence shortly. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS During the financial year there were no significant changes in the state of the affairs of the consolidated entity other than that referred to in the financial statements or notes thereto. SIGNIFICANT EVENTS AFTER THE BALANCE DATE On the 5th August 2008 Mr Kenneth McKinnon was appointed as an executive director. On the 25th September 2008 JV Global Limited entered into a memorandum of understanding with Mr Ali Rahma and Mr Jonathan Green both of whom are residents of the United Arab Emirates. The Memorandum of Understanding is for the parties to form a joint venture company for the purpose of establishing light gauge steel framing production facilities within the MENA region. On the 25 th August 2008 the Company raised an unsecured loan of 450,000. On the 6 th of September 2008 the Company issued a redeemable convertible note to the value of 300,000 pursuant to this loan agreement. The terms of this note allow the holder to convert 300,000 of the debt to equity through subscribing for shares, each with a free attaching option, at ten cents each. The free attaching options are to be exercisable at 30 cents each and expiring 12 th August A further 150,000 of unsecured was also raised on the 25 th August The Company will seek shareholder approval for the issue of a further convertible note on the same terms and conditions as stated above for 150,000. LIKELY DEVELOPMENTS AND EXPECTED RESULTS Disclosure of information regarding likely developments in the operations of the Consolidated Entity in future financial years and the expected results of those operations is likely to result in unreasonable commercial prejudice to the Consolidated Entity. Accordingly, this information has not been disclosed in this report. ENVIRONMENTAL REGULATION AND PERFORMANCE The Consolidated Entity s operations are not subject to any particular and significant environmental regulation under a law of the Commonwealth or of a State or Territory. 4

7 Directors Report continued JV GLOBAL LIMITED ANNUAL REPORT SHARE OPTIONS Unissued shares As at the date of this report, there were 76,929,568 options on issue, each to subscribe for one ordinary share (63,617,750 at 30 th June ). Refer to note 22 of the financial statements for further details of the options outstanding. Option holders do not have any right, by virtue of the option, to participate in any share issue of the company or any related body corporate or in the interest issue of any other registered scheme. Options At the date of this report, the unissued ordinary shares JV Global Limited under option are as follows: Grant Date Date of Expiry Exercise Price Number under Option 19 January October each 62,397, August 23 August each 10,050, April April each 300,000 72,747,750 During the year ended 30 th June 2008, no ordinary shares of JV Global Limited were issued on the exercise of options granted under the JV Global Limited Employee Option Plan. No further shares have been issued since that date. During the year ended 30 June 2008, the following ordinary shares of JV Global Limited were issued on the exercise of options granted on 19 January No amounts are unpaid on any of the shares. Grant Date Exercise Price Number of Shares Issued 19 January ,000 No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate. Shares issued as a result of the exercise of options During the financial year 20,000 options were exercised to acquire fully paid ordinary shares in JV Global Limited resulting in the issue of 20,000 ordinary fully paid shares at an exercise price of 0.20 each to raise 4,000. No options have been exercised since the end of the financial year. INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS During the financial year, the Company paid a premium in respect of a contract insuring the directors of the Company (as named above), the company secretary, Mr K.S. McKinnon, and all executive officers of the Company and of any related body corporate against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor. 5

8 Directors Report continued JV GLOBAL LIMITED ANNUAL REPORT REMUNERATION REPORT - AUDITED This report outlines the remuneration arrangements in place for directors and executives of JV Global Limited (the company). Non-executive director remuneration JV Global Limited s Board determines the remuneration policies and levels for directors and executives. The Managing Director is responsible for setting the remuneration of all the employees under his control, within broad policy and guidelines that may be set by the Board from time to time. The Board will review the remuneration packages, as recommended by the Managing Director, in respect of the senior executives. Directors fees will be set at appropriate levels that take into account the size of the Company, its industry, the time required of directors in properly fulfilling their respective roles, the risks involved, and the general market in Australia for directors fees. Whenever necessary, the overall level of Directors fees will be submitted to a meeting of shareholders for approval. A distinction is made between the remuneration of non-executive and executive directors. Executive directors will normally be remunerated as part of their employment package. The Consolidated Entity did not have any performance incentive remuneration arrangements with any director or other employee during the year. On the 17 th August 2008 shareholders approved the JVG Employee Share Option Scheme rules and the approval of granting of options to directors. Further details of these Employee Options and the Consolidated Entity s equity based remuneration arrangements are set out in note 26 of the financial Statements. In setting remuneration levels for executives and directors, it is the board s policy to link such levels with the direct or indirect benefits estimated to accrue to shareholders; that is, to strike an appropriate balance between cost and benefit. Performance bonuses may be payable from time to time and will be a benefit to shareholders by way of dividend or increased share prices. The fee arrangements for non-executive directors do not contain a bonus element other than the granting of Employee Options to Mr Burns. Company performance, shareholder wealth and director s and executive s remuneration The remuneration policy is monitored to ensure continued alignment between remuneration of directors and executives and the creation of shareholder wealth through the Company s financial performance. Current remuneration packages for directors and executives reflect the loss made in the current year and the present stage of the Company s development. Director and executive details The Directors of JV Global Limited during the year were: Terence H Opie - appointed 14 February Peter M Burns - appointed 14 February Sin Jen Hwang - appointed 7 June Peter George Kailis - appointed 15 August The group executives of JV Global Limited during the year were: Kenneth S McKinnon, Chief Financial Officer and Company Secretary, appointed as an executive 1 st November 2005 Jarrod G Opie, Executive General Manager Arabian Profile Global LLC, appointed 18 th February Keith Hutson, Technical and Operations Manager, appointed 1 st August. Michael Ian Hutson, Manager JVG Framing Pty Ltd, 2 nd April There were no directors appointed or executives employed by group companies other than as stated above and no remuneration was paid by group companies during the reporting period. Elements of director and executive remuneration Remuneration packages contain the following key elements: Fixed remuneration - Salary and fees; Variable remuneration: Short term benefits; - the Company currently does not pay short term incentives; Long term benefits the Company currently does not pay long term incentives; Non monetary benefits includes the provision of benefits other than by cash; and Post-employment benefits including superannuation and prescribed retirement benefits 6

9 Directors Report continued REMUNERATION REPORT - AUDITED (continued) Remuneration of directors and named executives JV GLOBAL LIMITED ANNUAL REPORT Table 1: Directors and executive s remuneration for the year ended 30 June 2008 Short term benefits Long Term benefits Post employment Salary& Fees Non monetary benefits Superannuation % performance related Cash STI LTI Total P.M. Burns , ,298-39,573 0% Non-executive Chairman 18, ,750 0% T.H. Opie , ,380 92, ,880 0% Managing Director 145, , ,375 0% S.J. Hwang , ,000 0% Non-executive Director 15, ,000 0% PG Kailis , ,500 0% Non-executive Director (appointed 15 th August ) K.S. McKinnon , ,298 39, ,340 0% Company Secretary 89, , ,425 0% J.G. Opie , , ,250 0% Executive General Manager, Arabian Profile Global LLC 45, ,100 8,400 78,949 0% Keith Hutson , , ,821 0% Technical & Operations Manager 90, ,175 95,063 0% Michael Hutson , ,173 6,888 85,599 0% General Manager, JVG Framing Pty Ltd (appointed 2 April ) 16, ,486 17,999 0% Note: No retirement benefits or other benefits were paid to directors or named executives during the financial years ended 30 th June 2008 or 30 th June. On the 17 th August 2008 shareholders in General Meeting approved the JVG Employee Share Option Plan rules and the granting of 6,000,000 Employee Share Options to Mr T. Opie and 1,500,000 Employee Share Options to Mr P Burns and the issue of 1,500,000 ordinary shares to Mr Jarrod Opie. The following executive staff were also granted Employee Share Options: Mr K McKinnon being granted 1,500,000 Employee Share Options, Mr K Hutson being granted 750,000 Employee Share Options and Mr M Hutson was granted 300,000 Employee Share Options. DIRECTORS MEETINGS The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director was as follows: Directors' Meetings Meetings held whilst in office Meetings attended Terence H Opie - appointed 14 February Peter M Burns - appointed 14 February Sin Jen Hwang - appointed 7 June Peter G Kailis Appointed 15 th August Committee membership Members acting on the Audit Committee, during the year were P.M. Burns (committee chairman) and K.S. McKinnon. The Audit Committee was the only committee formed by the Board as at the date of this report. The number of meetings of the Audit Committee held during the year and the number of meetings attended by each committee member were as follows: Audit Committee Meetings Meetings held whilst in office Meetings attended Peter M Burns - appointed 26 August Kenneth S McKinnon appointed 21 September

10 Directors Report continued JV GLOBAL LIMITED ANNUAL REPORT PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the year. AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES Auditor s Independence Declaration to the Directors of JV Global Limited In relation to the audit of the financial report of JV Global Limited for the financial year ended 30 June 2008, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. NON-AUDIT SERVICES No non-audit services were provided by the entity s auditor, Grant Thornton (WA) Partnership during the reporting period to the date of this report. Accordingly the directors are satisfied that the entity s relationship with the auditor meets is in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. Signed in accordance with a resolution of the directors P.M. Burns Chairman Perth, 30 th September

11 AUDITOR S INDEPENDENCE DECLARATION TO THE DIRECTORS OF JV GLOBAL LIMITED Grant Thornton (WA) Partnership ABN: Level 1 10 Kings Park Road West Perth WA 6005 PO BOX 570 West Perth WA 6872 T F E admin@gtwa.com.au W In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of JV Global Limited for the year ended 30 June 2008, I declare that, to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b. No contraventions of any applicable code of professional conduct in relation to the audit. GRANT THORNTON (WA) PARTNERSHIP Chartered Accountants P W WARR Partner Perth, 30 September 2008 Liability limited by a scheme approved under Professional Standards Legislation. Grant Thornton (WA) Partnership is an independent business entitled to trade under the international name Grant Thornton. Grant Thornton is a trademark owned by Grant Thornton International and used under licence by independent firms and entities throughout the world. 9

12 Directors Report continued JV GLOBAL LIMITED ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT The Board of Directors of JV Global Limited is responsible for the corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of JV Global Limited on behalf of the shareholders by whom they are elected and to whom they are accountable. Details of the Company s Corporate Governance policies can be found on the Company s website at JV Global Limited s Corporate Governance Statement is structured with reference to the Corporate Governance Council s principles and recommendations, which are as follows: Introduction The Board of Directors is responsible for the Corporate Governance of JV Global Limited and its controlled entities (referred to in this document as the Company ). The Directors are focused on fulfilling their responsibilities individually and as a Board to all of the Company s stakeholders. This involves recognition of and a need to adopt principles of good corporate governance. The Board supports the guidelines on the Principles of Good Corporate Governance and Best Practice Recommendations established by the ASX Corporate Governance Council. Given the size and structure of the Company and the cost of strict compliance with all of the recommendations, the Company has adopted some modified systems, procedures and practices which it considers allows it to meet the principles of good corporate governance. At the end of this Corporate Governance Statement there is a table detailing the recommendations with which the Company does not strictly comply. A description of the Company s practices in complying with the principles is set out below. Principle 1: Laying Solid Foundations for Management and Oversight. The role of the Board is to lead and oversee the management and direction of the Company and its controlled entities. The Board s roles include: - Defining and setting the business objectives and corporate mission; - Devising strategies to achieve objectives and monitoring performance towards the objectives; - Overseeing compliance with corporate policies and laws, taking responsibility for risk management and reviewing executive management of the Company; - Monitoring and approving business tactics, financial performance, and available resources; - Maintaining liaison with the Company s auditor; and - Reporting to Shareholders. Principle 2: Structure the Board to Add Value. The recommendations of the Corporate Governance Council are that the composition of the Board be determined so as to provide the Company with a broad base of industry, business, technical, administrative and corporate skill and experience considered necessary to represent Shareholders and fulfil the business objectives of the Company. The recommendations of best practice are that the majority of the Directors and in particular the chairperson should be independent. An independent director is one who: - does not hold an executive position; - is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company; - has not within the last three years been employed in an executive capacity by the Company or other group member, or been a director after ceasing to hold any such employment; - is not a principal of a significant professional adviser or a significant consultant of the Company or other group member, or an employee materially associated with the service provided; - is not a significant supplier or customer of the Company or other group member, or an officer of, or otherwise associated directly or indirectly with a significant supplier or customer; - has no significant contractual relationship with the Company or other group member other than as a Director of the Company; and - Is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director s ability to act in the best interests of the Company. Individual board members do not fulfil all of these criteria but the overall profile of the Board is considered the most appropriate for the activities of the Company. Details of the members of the Board, their experience, expertise, qualifications, term of office and independent status are set out in the Directors Report. Materiality thresholds in determining the independence of non-executive directors are: 10

13 Directors Report continued JV GLOBAL LIMITED ANNUAL REPORT A relationship that accounts for more than 10% of the Director s gross income (other than director s fees paid by the company). Where the relationship is with a firm, company or entity, in respect of which the Director (or any associate) has more than a 20% shareholding if a private company or 2% if a listed company. Mr Burns is considered by the Board to not have any relationship or interest that may affect his independence and the Board considers Mr Burns to be a non-executive independent director. Mr Opie is Managing Director and is a substantial shareholder in JV Global Limited. The Board has determined that Mr Opie is not an independent director. Mr Hwang is a non-executive director of the Company and a substantial shareholder. Mr Hwang is considered by the Board not to have any relationship or interest that may affect his independence other than any transaction that may be influenced by his substantial shareholding. The Board has determined that Mr Hwang is not an independent director. Mr Kailis is a non-executive director of the Company and a substantial shareholder. Mr Kailis is considered by the Board not to have any relationship or interest that may affect his independence other than any transaction that may be influenced by his substantial shareholding. The Board has determined that Mr Kailis is not an independent director. Mr McKinnon is an executive director of the Company. The Board has determined that Mr McKinnon is not an independent director. Term of Office The Company s Constitution specifies that at the annual general meeting each year, one third of the Directors (with certain exceptions, including the Managing Director) must retire from office. Independent Professional Advice Directors and Board Committees have the right, in connection with their duties and responsibilities as Directors, to seek independent professional advice at the Company s expense. Prior written approval of the Chairman is required, and this will not be unreasonably withheld. Board Committees Nomination Committee The Company does not have a Nomination Committee. The full Board undertakes the role of reviewing Board membership. Remuneration Committee The Company does not have a Remuneration Committee. The full Board undertakes the role of reviewing remuneration of executives and directors. Audit Committee The Company established an audit committee on 26 August The Audit Committee operates in accordance with Principle 4 of the Principles of Good Corporate Governance and Best Practice Recommendations. The main responsibilities of the Audit Committee are to: Review, assess and approve the annual report, the half year financial report and all other financial information published by the Company or released to the market. Review the effectiveness of the Group s internal control environment, including the effectiveness and efficiency of operations, the reliability of financial reporting and compliance with applicable laws and regulations. Oversee the effective operation of the risk management framework Recommend the appointment, removal and remuneration of the external Auditor, and review the terms of their engagement, the scope and quality of their audit and assess their performance. Consider the independence and competence of the external Auditor on an ongoing basis. Review and monitor related party transactions and assess their propriety. Report on matters relevant to the committee s role and responsibilities. Principle 3: Promotion of Ethical and Responsible Decision-Making. Directors, officers, employees and consultants to the Company are required to observe high standards of behaviour and business ethics on behalf of the Company and they are required to maintain a reputation of integrity on the part of both the Company and themselves. The Company does not contract with or otherwise engage any person or party where it considers integrity may be compromised. Directors are required to disclose to the Board actual or potential conflicts of interest that may or might reasonably be thought to exist between the interests of the director or the interests of any other party in so far as it affects the activities of the Company and to act in accordance with the Corporations Act 2001 if conflict cannot be removed or if it persists. That involves taking no part in the decision making process or discussions where that conflict does arise. 11

14 Directors Report continued JV GLOBAL LIMITED ANNUAL REPORT Directors are required to make disclosure of any share trading. The Company s policy in relation to share trading is that Directors and senior management are prohibited to trade while in possession of unpublished price sensitive information. Price sensitive information is information that a reasonable person would expect to have a material affect on the price or value of the Company s shares. It is a recommendation that an officer discuss the proposal to acquire or sell shares with the Chairman or the Company Secretary prior to doing so to ensure that there is no price sensitive information of which that officer might not be aware. The undertaking of any trading in shares must be notified to the Company Secretary who makes disclosure to the ASX. Principle 4: Safeguard Integrity in Financial Reporting. The audit committee is expected to play an active role in monitoring the affairs of the Company. The Directors are also required to monitor the activities of the Company to ensure compliance with the ASX s Continuous Disclosure requirements. The Chief Executive Officer and the Chief Financial Officer state in writing to the Board that the Company s financial reports present a true and fair view, in all material respects, of the Company s financial condition and operational results and are in accord with relevant accounting standards. Each member of the Board has access to the external Auditor and the Auditor has access to each Board member. Principle 5: Make Timely and Balanced Disclosure. The Company Secretary is the person responsible for overseeing and co-ordinating the disclosure of information to the ASX as well as communication with the ASX. This involves compliance with the Continuous Disclosure requirements of the Listing Rules. Principle 6: Respect the Rights of Shareholders. The Board s fundamental responsibility to Shareholders is to work towards meeting the Company objectives so as to add value. The Board seeks to inform Shareholders of all major developments affecting the Company by: Preparing half yearly and yearly financial reports; Making announcements in accordance with the Listing Rules and the Continuous Disclosure obligations; Annually, and more regularly if required, holding a general meeting of Shareholders and forwarding to them the annual report together with notice of meeting and proxy form. The Annual General Meeting enables Shareholders to receive reports and participate in the meeting by attendance or by written communication. The Board seeks to inform all Shareholders so they can be fully informed annually for the appointment of Directors and so as to enable them to have discussion at the Annual General Meeting with the Directors and/or the Auditor of the Company who will attend the Annual General Meeting. Principle 7: Recognise and Manage Risk. The Board is conscious of the need to continually maintain systems of risk management and controls in order to manage all of the assets and affairs of the Company. It is the policy of the Company that all operations are conducted as far as reasonably practicable in a manner that is conducive to: The health and safety of all employees, consumers, customers, visitors to our sites and others who may be affected by the Company s operations; Compliance with all applicable legislation; Protection of assets and earning capacity against loss, and where possible enhancement of profitability and growth of assets; Entering contracts when the Company has the technical and financial capability to deliver on time and on budget; Protection of the environment. In conjunction with the Certification of Financial Reports under Principle 4, the Managing Director and Chief Executive Officer and Chief Financial Officer state in writing to the Board each reporting period that: The statement given in accordance with Principle 7 is founded on a sound system of risk management and internal control which implements the policies adopted by the Board; and The Combined Group s risk management and internal compliance and control system is operating efficiently and effectively in all material respects. 12

15 Directors Report continued JV GLOBAL LIMITED ANNUAL REPORT Principle 8: Encourage Enhanced Performance. The Board regularly discusses and reviews its performance. The Directors individual performances are reviewed on a regular basis. The Board discusses and agrees objectives of the Company on an on-going basis and reviews the effectiveness of carrying out those objectives. Principle 9: Remunerate Fairly and Responsibly. No director receives any performance based remuneration and nor do any of them have contracts with the Company that give them any form of certain tenure. Directors must seek re-election by Shareholders every three years, with the exception of the Managing Director. Each member of the Board has committed to spending sufficient time to enable them to carry out their duties as a Director of the Company. A maximum amount of remuneration for non-executive Directors is fixed by Shareholders in general meeting and can be varied in the same manner. In determining the allocation (if any) the Board must take account of the time demands on the Directors together with such factors as fees paid to other corporate directors and to the responsibility undertaken by them. There has been no equity based executive remuneration. Principle 10: Recognise the Legitimate Interests of Stakeholders. The Company recognises that its responsibilities extend beyond Shareholders to clients, customers, consumers and regulators. The Company is committed to providing detail, accuracy in that detail and meeting principles of equity and fairness in all of its dealings. Departures from the Recommendations of the ASX Corporate Governance Council Recommendati on Number Departure from Recommendation 2.1 Three of the four Directors of the Company do not satisfy all of the tests of independence. 2.4 A separate Nomination Committee has not been formed. 4.3 The Audit Committee does not consist of only: Non-executive directors A majority of independent directors Have at least three members 8.1 There is no written process for performance evaluation of the Board, committees, individual Directors and key executives. 9.1, 9.2 and 9.3 There is no written policy other than as disclosed in the Directors Report pursuant to the requirements of the Corporations Act A formal Remuneration Committee has not been established There has been no disclosure of a code of conduct to deal with compliance for legal and other obligations to legitimate stakeholders Explanation for Departure Each of the Directors is aware of and capable of acting in an independent manner and in the best interests of all Shareholders. Given the nature and size of the Company and its business interests, the Board is of the view that it has a broad mix of required skills and relevant experience. The role of the Nomination Committee is carried out by the full Board. The Board considers that, given its size, no efficiencies or other benefits would be gained by establishing a separate Nomination Committee. The Audit Committee has only 2 members of which only one is an independent director. The Audit Committee Chairman, Peter Burns, is an independent non-executive director. The Board consists of four directors, of which only one is independent. Accordingly it is impossible logistically to comply with the guidelines. The Directors monitor, review and discuss the performance of the key executives and implement changes where necessary. The Board subscribes to Principle 8 and is developing procedures to comply with the Recommendations flowing from it. Remuneration of Board members has been, and continues to be, in accordance with the general principles recommended by the ASX. Directors receive a fixed fee for their services and do not receive performance-based remuneration. The Board regularly reviews, and where warranted, changes the remuneration paid to Directors. Similarly the remuneration and other benefits paid to key executives is regularly reviewed and changed as needed. The Board is committed to establishing an enhanced framework for determining, reviewing and reporting on remuneration of Directors and executives in accordance with Principle 9. The business practices adopted by the Board recognise this Principle. A formal code is currently in the process of being reviewed by the Board. 13

16 Income Statement JV GLOBAL LIMITED ANNUAL REPORT Note CONSOLIDATED PARENT Sales revenue 2,708, ,202-37,168 Rendering of services 24,153-24,153 - Rental revenue 56,738 65, Gains on foreign exchange 7, Materials used in production (1,310,081) (151,775) - (29,634) Employee benefits expense 4(a) (1,990,519) (741,554) (939,394) (605,748) Depreciation and amortisation expense 4(b) (155,444) (99,329) (16,627) (20,653) Administration expenses 4(c) (745,905) (489,799) (328,692) (359,163) Employee share options (222,975) - (222,975) (37,038) Results from operating activities (1,627,688) (1,107,924) (1,483,535) (1,015,068) Bank interest 24,177 39,334 11,065 38,739 Finance costs 4(d) (70,027) (10,690) (32,519) (3,866) Net financing revenue (45,850) 28,644 (21,454) 34,873 Share of loss from equity accounted investees (79,824) (Loss) before income tax (1,753,362) (1,079,280) (1,504,989) (980,195) Income tax benefit/(expense) 5 26,133 13,588 4,168 17,425 (Loss) attributable to members of the parent (1,727,229) (1,065,692) (1,500,821) (962,770) Earnings per share (cents per share) 6 basic loss for the year attributable to ordinary equity holders of the parent (2.29) (1.59) diluted loss for the year attributable to ordinary equity holders of the parent (2.29) (1.59) Dividends per share (cents per share) The above financial accounts should be read in conjunction with the accompanying notes 14

17 Balance Sheet AS AT 30 JUNE 2008 JV GLOBAL LIMITED ANNUAL REPORT Note CONSOLIDATED PARENT ASSETS Current Assets Cash and cash equivalents 8 879, , , ,253 Trade and other receivables 9 192,699 11,636-20,779 Inventories , ,673 79,167 79,168 Prepayments 65,920 50,042 9,251 2,271 Other current assets , ,729 - Total Current Assets 1,623,497 1,286,043 1,055, ,471 Non-current Assets Trade & Other Receivables ,320,339 2,495,926 Other financial assets , ,375 55,851 55,800 Investment in associates , , Property, plant and equipment , ,365 52,197 63,148 Deferred income tax assets 5 66,664 29,815 31,534 24,881 Intangible assets 16 3,205,742 3,175, Total Non-current Assets 5,115,429 5,067,970 2,459,921 2,639,755 TOTAL ASSETS 6,738,926 6,354,013 3,515,469 3,256,226 LIABILITIES Current Liabilities Trade and other payables , ,438 84,058 83,360 Financial liabilities 18 1,199, , ,000 - Provisions ,942 67,254 55,719 45,422 Total Current Liabilities 1,811, ,467 1,049, ,782 Non-current Liabilities Financial liabilities , , ,000 - Provisions 19 26,995 19, Deferred tax liabilities 5 19,776 9,452 2, Total Non-current Liabilities 803, , , TOTAL LIABILITIES 2,614, ,513 1,662, ,463 NET ASSETS 4,124,246 5,624,500 1,852,917 3,126,763 EQUITY Equity attributable to equity holders of the parent Issued capital 20 19,525,856 19,521,856 19,525,856 19,521,856 Retained earnings 21 (15,706,685) (13,979,456) (17,978,014) (16,477,193) Reserves ,075 82, ,075 82,100 TOTAL EQUITY 4,124,246 5,624,500 1,852,917 3,126,763 The above financial accounts should be read in conjunction with the accompanying notes 15

18 Statement of Changes in Equity CONSOLIDATED Statement of Changes in Equity from 1 July 2006 to 30 June Issued Share Capital Accumulated losses Share Option Reserve Total Balance at 1 July ,265,943 (12,913,764) 86,643 4,438,822 (Loss) for year - (1,065,692) - (1,065,692) 17,265,943 (13,979,456) 86,643 3,373,130 Shares issued during year 2,387, ,387,043 Options granted during year - - (4,543) (4,543) Capital raising costs (131,130) - - (131,130) Balance as at 30 June 19,521,856 (13,979,456) 82,100 5,624,500 Statement of Changes in Equity from 1 July to 30 June 2008 Balance at 1 July 19,521,856 (13,979,456) 82,100 5,624,500 (Loss) for year - (1,727,229) - (1,727,229) 19,521,856 (15,706,685) 82,100 3,897,271 Shares issued during year 4, ,000 Employee option expense transferred to option reserve , ,975 Balance as at 30 June ,525,856 (15,706,685) 305,075 4,124,246 PARENT Statement of Changes in Equity from 1 July 2006 to 30 June Issued Share Capital Accumulated losses Share Option Reserve Total Balance at 1 July ,265,943 (15,514,423) 86,643 1,838,163 (Loss) for year - (962,770) - (962,770) 17,265,943 (16,477,193) 86, ,393 Shares issued during year 2,387, ,387,043 Options granted during year - - (4,543) (4,543) Capital raising costs (131,130) - - (131,130) Balance as at 30 June 19,521,856 (16,477,193) 82,100 3,126,763 Statement of Changes in Equity from 1 July to 30 June 2008 Balance at 1 July 19,521,856 (16,477,193) 82,100 3,126,763 (Loss) for year - (1,500,821) - (1,500,821) 19,521,856 (17,978,014) 82,100 1,625,942 Shares issued during year 4, ,000 Employee options to reserves , ,975 Balance as at 30 June ,525,856 (17,978,014) 305,075 1,852,917 The above financial accounts should be read in conjunction with the accompanying notes 16

19 Cash Flow Statement JV GLOBAL LIMITED ANNUAL REPORT Note CONSOLIDATED PARENT Cash flows from operating activities Receipts from customers 2,645, ,462 29,976 36,354 Payments to suppliers and employees (3,823,105) (1,355,990) (1,260,814) (951,960) Finance Costs (58,133) (7,474) (20,625) (3,866) Net cash flows (used in) operating activities 8(b) (1,235,288) (943,002) (1,251,463) (919,472) Cash flows from investing activities Proceeds from sale of property, plant and equipment Interest received 23,395 39,060 11,065 38,739 Repayments of advances to subsidiaries ,599 - Purchase of property, plant and equipment (149,605) (318,872) (5,676) (2,578) Advances to subsidiaries - - (174,574) (1,500,549) Advances to associates (60,742) (105,137) - - Investments in associates - (476,786) - - Investments in subsidiaries - - (51) (100) Payment for businesses (30,409) (323,740) - - Other (274,753) - (164,752) 481 Net cash flows provided by/(used in) investing activities (492,114) (1,185,475) 11,611 (1,464,007) Cash flows from financing activities Proceeds from issue of shares 4,000 2,302,043 4,000 2,302,043 Transaction costs of issue of shares - (131,130) - (131,130) Proceeds from borrowings 1,520, ,500 1,520,000 - Repayment of borrowings (85,559) (3,063) - - Net cash provided by financing activities 1,438,441 2,399,350 1,524,000 2,170,913 Net increase/(decrease) in cash and cash equivalents (288,961) 270, ,148 (212,566) Cash and cash equivalents at beginning of period 997, , , ,819 Cash and cash equivalents at end of period 8(a) 708, , , ,253 The above financial accounts should be read in conjunction with the accompanying notes 17

20 Notes to the Financial Statements 1 CORPORATE INFORMATION JV GLOBAL LIMITED ANNUAL REPORT JV Global Limited (the Company) is a public company registered in Western Australia with its registered office at Suite 28 The Hyatt Centre, 87 Adelaide Terrace Perth, Western Australia. The financial report of JV Global Limited for the year ended 30 June 2008 was authorised for issue in accordance with a resolution of the directors on 30 th September JV Global Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian stock exchange. The nature of the operations and principal activities of the Group are described in note 3. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. (b) Statement of compliance The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS) excepting those International Financial Reporting Standards (IFRS) not yet adopted (see note 2 (x)). (c) Basis of consolidation The consolidated financial statements comprise the financial statements of JV Global Limited and its subsidiaries as at 30 June each year (the Group). The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group (d) Significant accounting judgments, estimates and assumptions (i) Impairment The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period is impairment of goodwill. The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating units to which the goodwill is allocated. The assumptions used in this estimation of recoverable amount and the carrying amounts of goodwill are discussed in note 16. (ii) Share-based payment transactions The Group measures the cost of equity-settled transactions with suppliers by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a binomial model. The assumptions used in the valuation of share based transactions are discussed in note 31. (iii) Recoverability of intercompany loans At the date of this report there are no plans for the repayment of intercompany loans, which are held as investments at cost. Based upon current projections and other available information intercompany loans are considered to be recoverable in full. (e) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: (i) Sale of goods Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer. 18

21 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (ii) Construction of light gauge steel framed buildings Where the outcome of the construction contract can be reliably estimated the revenue and expenses arising from that contract are recognised in the income statement by reference to stage of completion of the contract as at the reporting date. Where losses are anticipated at a percentage completion stage they are provided for in full. (iii) Rendering of services Contract revenue is recognised when the Group's right to receive payment is established. (iv) Interest income Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. (f) Borrowing costs Borrowing costs are recognised as an expense when incurred. (g) Cash and cash equivalents Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (h) Trade and other receivables Trade receivables, which generally have day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified. (i) Foreign currency translation Both the functional and presentation currency of JV Global Limited and its Australian subsidiaries are Australian dollars (). Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity. As at the reporting date the assets and liabilities of these subsidiaries are translated into the presentation currency of JV Global Limited at the rate of exchange ruling at the balance sheet date and their income statements are translated at the weighted average exchange rate for the year. The exchange differences arising on the translation are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss. (j) Investment in associate The Group s investment in its associate is accounted for using the equity method of accounting in the consolidated financial statements. The associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture. Under the equity method, the investment in the associate is carried in the consolidated balance sheet at cost plus postacquisition changes in the Group's share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group s net investment in the associate. The consolidated income statement reflects the Group's share of the results of operations of the associate. 19

22 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (j) Investment in associate (continued) Where there has been a change recognised directly in the associate's equity, the Group recognises its share of any changes and discloses this in the consolidated statement of recognised income and expense. Where the reporting dates of the associate and the Group are not identical, adjustments shall be made to the last financial statements of the associate for the effects of significant transactions or events that occur between that date and the date of the Group s financial statements. In any case In any case, the difference between the reporting date of the associate and that of the Group shall be no more than three months. The length of the reporting periods and any difference in the reporting dates shall be the same from period to period. (k) Income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. (l) Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and Receivables and payables, which are stated with the amount of GST included. 20

23 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (l) Other taxes (continued) The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (m) Property, plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Buildings over 20 years Plant and equipment over 5 to 20 years The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. (i) Impairment The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cashgenerating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value. An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the income statement in the cost of sales line item. However, because land and buildings are measured at revalued amounts, impairment losses on land and buildings are treated as a revaluation decrement. (ii) Revaluations Following initial recognition at cost, land and buildings are carried at a revalued amount which is the fair value at the date of the revaluation less any subsequent accumulated depreciation on buildings and any subsequent accumulated impairment losses. Fair value is determined by reference to market-based evidence, which is the amount for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm s length transaction as at the valuation date. Any revaluation increment is credited to the asset revaluation reserve included in the equity section of the balance sheet, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. Any revaluation decrease is recognised in profit or loss, except that a decrease offsetting a previous revaluation increase for the same asset is debited directly to the asset revaluation reserve to the extent of the credit balance existing in the revaluation reserve for that asset. An annual transfer from the asset revaluation reserve to retained earnings is made for the difference between depreciation based on the revalued carrying amounts of the assets and depreciation based on the assets' original costs. Additionally, any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amounts of the assets and the net amounts are restated to the revalued amounts of the assets. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings. Independent valuations are performed with sufficient regularity to ensure that the carrying amounts do not differ materially from the assets' fair values at the balance sheet date. (iii) Derecognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. 21

24 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (n) Goodwill Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group s interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated: represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and Is not larger than a segment based on either the Group s primary or the Group s secondary reporting format determined in accordance with AASB 114 Segment Reporting. Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which the goodwill relates. When the recoverable amount of the cash-generating unit (group of cashgenerating units) is less than the carrying amount, an impairment loss is recognised. When goodwill forms part of a cash-generating unit (group of cash-generating units) and an operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. Impairment losses recognised for goodwill are not subsequently reversed. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. (o) Impairment of assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (p) Trade and other payables Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. (q) Interest-bearing loans and borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised. 22

25 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (r) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. (s) Employee leave benefits (i) Wages, salaries, annual leave and sick leave Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. (ii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. (t) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (u) Earnings per share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for: costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; Divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (v) Inventories Inventories are valued at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a first in first out basis. (w) Going Concern The financial report has been prepared on a going concern basis. The Company s investment Component Homes is fully operational and is self sustaining. Expansion of Component Homes operations may require a further raising of debt or equity and the Company will undertake this as and when required. The Company s investment in Arabian Profile Global LLC, a company registered in Sharjah, in the United Arab Emirates became operational March. It is anticipated that Arabian Profile Global LLC will become self-sustaining and will not require further investment from the Company. The Company s investment in Sharus Steel Products Pvt Ltd, a company registered in India, became operational in January It is anticipated that Sharus Steel Products Pvt Ltd will become self-sustaining and will not require further investment from the Company, however further expansion and working capital requirements may require a further raising of debt or equity and the Company will undertake this as and when required. (x) New standards and interpretations not yet adopted The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. No material adverse impacts have been identified upon the adoption of these standards. The identified standards are available for early adoption at 30 June 2008, but have not been applied in preparing this financial report: 23

26 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (x) New standards and interpretations not yet adopted' (continued) AASB 7 Financial Instruments: Disclosures (August 2005) replaces the presentation requirements of financial instruments in AASB 132. AASB 7 is applicable for annual reporting periods beginning on or after 1 January 2008, and will require extensive additional disclosures with respect to the Group's financial instruments and share capital. AASB Amendments to Australian Accounting Standards (September 2005) makes consequential amendments to AASB 132 Financial Instruments Disclosure and Presentation, AASB 101 Presentation of Financial Statements, AASB 114 Segment Reporting, AASB 117 Leases, AASB 133 Earnings Per Share, AASB 139 Financial Instruments: Recognition and Measurement, AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards, AASB 4 Insurance Contracts, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts arising from the release of AASB 7. AASB is applicable for annual reporting periods beginning on or after 1 January 2008 and is expected to only impact disclosures contained within the consolidated financial report. AASB 8 Operating Segments replaces the presentation requirements of segment reporting in AASB 114 Segment Reporting. AASB 8 is applicable for annual reporting periods beginning on or after 1 January 2009 and is not expected to have an impact on the financial results of the Company and the Group as the standard is only concerned with disclosures AASB Amendments to Australian Accounting Standards arising from AASB 8 makes amendments to AASB 5 Non-current Assets Held for Sale and Discontinued Operations, AASB 6 Exploration for and Evaluation of Mineral Resources, AASB 102 Inventories, AASB 107 Cash Flow Statements, AASB 119 Employee Benefits, AASB.127 Consolidated and Separate Financial Statements, AASB 134 Interim Financial Reporting, AASB 136 Impairment Assets, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. AASB is applicable for annual reporting periods beginning on or after 1 January 2009 and must be adopted in conjunction with AASB 8 Operating Segments. This standard is only expected to impact disclosures contained within the financial report. Interpretation 10 Interim Financial Reporting and Impairment prohibits the reversal of an impairment loss recognised in a previous interim period in respect of goodwill, an investment in an equity instrument or a financial asset carried at cost. Interpretation 10 will become mandatory for the Group's 2008 financial statements, and will apply to goodwill, investments in equity instruments, and financial assets carried at cost prospectively from the date that the Group first applied the measurement criteria of AASB 136 and AASB 139 respectively (i.e., 1 July 2004 and 1 July 2005, respectively). The adoption of Interpretation 10 will result in a decrease in retained earnings and goodwill of 320 thousand, related to an impairment loss on goodwill that was recognised initially in the fourth quarter of 2004 and reversed in the first quarter of Interpretation 11 AASB 2 Share based Payment -- Group and Treasury Share Transactions addresses the classification of a share-based payment transaction (as equity or cash settled), in which equity instruments of the parent or another group entity are transferred, in the financial statements of the entity receiving the services. Interpretation 11 will become mandatory for the Group's 2008 financial report. Interpretation 11 is not expected to have any impact on the financial report. The potential effect of the Interpretation on the Company's financial report has not yet been determined. AASB Amendments to Australian Accounting Standards arising from AASB Interpretation II amends AASB 2 Share-based Payments to insert the transitional provisions of IFRS 2 previously contained in AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards. AASB is applicable for annual reporting periods beginning on or after 1 March 2008 and is not expected to have any impact on the consolidated financial report. The potential impact on the Company has not yet been determined. AASB Amendments to Australian Accounting Standards arising from AASB Interpretation 12 makes amendments to AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards, AASB 117 Leases, AASB 118 Revenue, AASB 120 Accounting for Government Grants and Disclosure of Government Assistance, AASS 121 The Effects of Changes in Foreign Exchange Rates, AASB 127 Consolidated and Separate Financial Statement, AASB 131 Interest in Joint Ventures, and AASB 139 Financial Instruments: Recognition and Measurement. AASB is applicable for annual reporting periods beginning on or after 1 January 2008 and must be applied at the same time as Interpretation 12 Service Concession Arrangements. AASB Amendments to Australian Accounting Standards also amends references to "UIG Interpretation" to interpretations. This amending standard is applicable to annual reporting periods ending on or after 28 February

27 3 SEGMENT INFORMATION Information on business segments (primary reporting format) For management purposes the Group is divided into two major operating divisions light gauge steel building manufacture, investments. These divisions are the basis on which the Group reports its primary segment information. The principle activities of these segments are: Light gauge steel building manufacture Investments The manufacture of light gauge steel framed housing within Australia. The holding of equity investments in business engaged in manufacturing and sales of steel building products, together with machinery leased to those businesses. Other operations include the global marketing and sales of CNC roll forming production lines, associated technology transfer and joint ventures for the manufacture of steel building products. These operations did not contribute to the Group s results for the reporting period or the preceding year and were not reported separately in the Group s management structure. Segment revenues External revenue Total Light gauge steel building manufacture 2,708, ,034 2,708, ,034 Investments 56,738 65,331 56,738 65,331 Total of segments 2,765, ,365 2,765, ,365 Unallocated 55,975 76,502 55,975 76,502 Consolidated revenue 2,821, ,867 2,821, ,867 Segment results 2008 Light gauge steel building manufacture (158,731) (64,634) Investments (85,207) (33,881) Total of segments (243,938) (98,515) Unallocated (1,509,424) (980,765) Profit (loss) before tax (1,753,362) (1,079,280) Income tax benefit (expense) 26,133 13,588 Loss for year (1,727,229) (1,065,692) Segment assets and liabilities Assets Liabilities Light gauge steel building manufacture 1,474,003 1,615, , ,437 Investments 4,248,854 3,984, Total of segments 5,722,857 5,600, , ,437 Unallocated 1,016, ,809 1,700, ,076 Consolidated 6,738,926 6,354,013 2,614, ,513 Other segment information Light gauge steel Investments building manufacture Carrying value of assets accounted for using the equity method , ,541 Share of profit (loss) of associates and jointly controlled entities accounted for using the equity method , ,082 Acquisition of segment assets 174, , ,968 Impairment losses recognised Depreciation and amortisation 69,304 9,037 69,070 69,070 Unrealised foreign exchange gains (losses) - - 7,645 (29,930) 25

28 3 SEGMENT INFORMATION (continued) Information on geographic segments (secondary reporting format) The Groups two segments operate in three geographical areas Australia, United Arab Emirates and India. The composition of each geographical segment is as follows: Australia United Arab Emirates India The manufacture of light gauge steel framed housing. Equity investment in a business engaged in manufacturing and sales of steel building products, together with machinery leased to that business. Equity investment in a business engaged in manufacturing and sales of steel building products. The Group s revenue from external customers and information about its segment assets by geographical location is detailed below: Revenue from external customers Segment assets Acquisition of segment assets Australia 2,708, ,034 1,584,003 1,615,732 (1,615,732) 871,060 United Arab Emirates 56,738 65,331 2,137,914 2,118,686 19,228 57,745 India - - 1,839,114 1,861,811 (22,697) 494,248 Other ,727 3, ,752 3,975 4 REVENUE AND EXPENSES CONSOLIDATED PARENT Revenue and Expenses (a) Employee benefits expense (b) Wages and salaries 1,588, , , ,797 Directors fees 42,500 30,000 42,500 30,000 Workers' compensation costs 39,703 1,361 2,025 1,361 Fringe benefits tax - 5,607-5,607 Defined contribution plan expense 274,543 84, ,167 74,211 Annual leave provision 45,671 25,783 10,298 19,772 Depreciation and amortisation included in the income statement. 1,990, , , ,748 Depreciation of rental equipment 69,070 69, Depreciation of motor vehicles 6,761 1, Depreciation of plant and equipment 79,613 28,356 16,627 20, ,444 99,329 16,627 20,653 26

29 CONSOLIDATED PARENT 4 REVENUE AND EXPENSES (continued) (c) Administration expenses significant components Accounting and audit fees 37,523 33,697 37,523 33,697 Advertising and promotion 86,528 9,068 1,943 - Communications 76,881 35,287 36,520 33,661 Fees and charges 47,858 47,924 19,304 46,631 Insurances 18,345 17,949 11,390 12,974 Legal fees 26,239 46,260 20,207 46,260 Rental expenses - operating leases 129,747 52,746 45,094 42,364 Travel expenses 83,526 62,241 80,468 62,241 Other 239, ,627 76,243 81, , , , ,163 (d) Finance costs Bank loans and overdrafts 20,827 10, ,866 Interest on non-bank loans 49,200-31,884-70,027 10,690 32,519 3,866 5 INCOME TAX The major components of income tax expense are: Income Statement Current income tax Deferred income tax asset 36,473 11,268 6,278 6,334 Deferred income tax liability (10,340) 2,320 (2,110) 11,091 Relating to origination and reversal of temporary differences Income tax benefit (expense) reported in the income statement 26,133 13,588 4,168 17,425 27

30 5 INCOME TAX (continued) A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the Group's applicable income tax rate is as follows: CONSOLIDATED PARENT Accounting loss before income tax (1,753,362) (1,079,280) (1,504,989) (980,195) At the Group's statutory income tax rate of 30% (: 30%) (526,009) (323,784) (451,497) (294,058) Increase in deferred income tax assets 36,473 41,082 6,278 31,215 Increase (decrease) in deferred income tax liabilities (10,340) (7,132) (2,110) 10,409 Income tax loss not previously recognised Unrecognised deferred income tax asset (liability) 98,820 22,668 65,371 13,689 Unrecognised tax loss 427, , , ,170 Income tax benefit (expense) reported in the consolidated income statement 26,133 13,588 4,168 17,245 CONSOLIDATED Deferred tax liabilities Balance sheet Income statement Temporary difference (19,776) (9,452) (10,340) 2,320 Gross deferred income tax liabilities (19,776) (9,452) (10,340) 2,320 Deferred tax assets Temporary difference 66,664 29,815 36,473 11,268 Gross deferred income tax assets 66,664 29,815 36,473 11,268 Deferred tax income/ (expense) 26,133 13,588 PARENT Deferred tax liabilities Balance Sheet Income statement Temporary difference (2,775) (681) (2,110) 11,091 Gross deferred income tax liabilities (2,775) (681) (2,110) 11,091 Deferred tax assets Temporary difference 31,534 24,881 6,278 6,334 Gross deferred income tax assets 31,534 24,881 6,278 6,334 Deferred tax income/ (expense) 4,168 17,425 28

31 5 INCOME TAX (continued) At 30 June 2008, there is no recognised or unrecognised deferred income tax liability (: nil) for taxes that would be payable on the unremitted earnings of certain of the Group s subsidiaries, associate or joint venture, as the Group has no liability for additional taxation should such amounts be remitted. 6 EARNINGS PER SHARE Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the exercise of options into ordinary shares. The following reflects the income and share data used in the basic and diluted earnings per share computations: CONSOLIDATED 2008 Earnings / (loss) per share (0.0229) (0.0159) Net profit / (loss) attributable to ordinary equity holders of the parent from continuing operations (1,727,229) (1,065,692) Net profit attributable to ordinary equity holders of the parent (1,727,229) (1,065,692) 2008 Weighted average number of ordinary shares (excluding reserved shares) for basic earnings per share 75,492,235 66,912,173 Effect of dilution: Share options - - Weighted average number of ordinary shares (excluding reserved shares) adjusted for the effect of dilution 75,492,235 66,912,173 There were no transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements. 7 DIVIDENDS PAID AND PROPOSED No dividends were paid or proposed to be paid in respect of the reporting period and no dividends were paid in respect of the previous reporting period. No franking account credits are available in respect of potential future distributions. CONSOLIDATED PARENT CASH AND CASH EQUIVALENTS Cash at bank and in hand 55, ,327 54,629 35,888 Short-term deposits 824, , , , , , , ,253 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and six months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. At 30 June 2008, the Group had stand-by borrowing facilities of 79,

32 8 CASH AND CASH EQUIVALENTS (continued) (a) Reconciliation to Cash Flow Statement For the purposes of the Cash Flow Statement, cash and cash CONSOLIDATED PARENT equivalents comprise the following at 30 th June: Cash at banks and in hand 55, ,880 54,629 35,441 Short-term deposits 824, , , ,812 Bank overdraft (170,906) , , , ,253 (b) Reconciliation of net profit after tax to net cash flows from operations Net profit / (loss) (1,727,229) (1,065,692) (1,500,821) (962,770) Adjustments for: Depreciation 155,444 99,329 16,627 20,653 Net (profit) / loss on disposal of property, plant & equipment 1, Interest received (24,177) (39,060) (11,065) (38,739) Expenses paid through the granting of options 222,975 (4,543) 222,975 (4,543) Share of loss on associate 79, Foreign exchange (gains) / losses (7,644) 29, Adjustment for non-cash flow items 34, Change in assets and liabilities (Increase) / decrease in inventory (64,581) (151,631) - (4,125) Increase /(decrease) in trade receivables and others (131,502) 45,655 20,779 (814) (Increase) / decrease in prepayments (15,879) (10,804) (6,980) 36,967 (Increase) / decrease in deferred tax asset (36,849) (11,268) (6,653) (6,334) Increase /(decrease) in deferred tax liabilities 10,325 (2,320) 2,094 (11,091) (Decrease) / increase in trade and other payables 221, , ,070 (Decrease) / increase in provisions 46,257 61,099 10,885 20,254 Net outflow of funds from operating activities (1,235,289) (943,002) (1,251,463) (919,472) 30

33 CONSOLIDATED PARENT TRADE AND OTHER RECEIVABLES (current) Trade receivables (i) 82,699 11,636-20,779 Associate receivables (ii) Other receivables 110, ,699 11,636-20,779 i. Trade receivables are non-interest bearing and are generally on day terms. ii. For terms and conditions relating to related party receivables refer to note 25. Details regarding the effective interest rate and credit risk of current receivables are also disclosed in note INVENTORY Finished goods held ready for sale 79,167 79,167 79,167 79,168 Raw materials 177, , Materials 34,849 20, , ,673 79,167 79, OTHER CURRENT ASSETS (current) Unearned income 59, Withholding tax credits 1, Display building 133, , , , TRADE AND OTHER RECEIVABLES (non current) JV Global Australia Pty Ltd - - 1,925,744 1,758,283 Less provision for impairment (338,186) (338,186) JV International Pty Ltd ,455 53,868 Less provision for impairment - - (54,455) (53,868) JVG Contracting Pty Ltd - - 2,551 - JVG Framing Pty Ltd ,230 1,075,829 Loans to subsidiaries are treated as investments and held at cost. 13 OTHER FINANCIAL ASSETS (non current) - - 2,320,339 2,495,926 Bonds paid (i) 11,807 5,700 5,700 5,700 Shares at Cost Other 50,000 50,000 50,000 50,000 Loans to associated entities (ii) 376, , Less accumulated foreign exchange losses (22,285) (i) Bonds have been lodged in respect of rental premises and do not attract interest. (ii) Loans to associated entities were previously disclosed as current Trade and other receivables. 415, ,375 55,851 55,800 31

34 14 INVESTMENTS IN ASSOCIATES Name of corporation Arabian Profile Global LLC Sharus Steel Products Pvt Ltd Country of incorporation United Arab Emirates Contribution to Group profit/(loss) 2008 Percentage holding Carrying value of investment % 46% - - India (79,824) - 40% 40% 457, , , ,082 Arabian Profile Global LLC financial year to the 30 th June Current assets 103,966 61,728 Non current assets 58,415 99,435 Total assets 162, ,163 Current liabilities 789, ,947 Non current liabilities 7,730 4,392 Total liabilities 797, ,339 Net assets (634,834) (405,176) Revenue 44,444 54,778 Consolidated entity s share of the loss for the reporting period (46%) (156,839)* (172,381)* Arabian Profile Global LLC is incorporated in United Arab Emirates and is involved in the manufacture of roll formed steel building products. *As the company's investment in this associate is nil as at 30/06/2008 (nil: 30/06/), the company has not included this loss in the income statement. Sharus Steel Products Pvt Ltd is incorporated in India and is involved in the manufacture of roll formed steel building products. Sharus Steel Products Pvt Ltd commenced trading in January 2008 and consequently reported results reflect a six months trading period. Sharus Steel Pvt Ltd financial year to the 30 th June Current assets 340,907 - Non current assets 2,200,804 - Total assets 2,541,711 - Current liabilities 125,069 - Non current liabilities 1,522,552 - Total liabilities 1,647,621 - Net assets 894,090 - Revenue 18,133 - Consolidated entity s share of the loss for the reporting period (40%) 79,824 - Associates reporting periods are controlled by their countries of incorporation and their reporting periods vary from those adopted by Australian authorities. There were no impairment losses relating to an investment in an associate and no capital commitments relating to an associate. 32

35 15 PROPERTY, PLANT & EQUIPMENT CONSOLIDATED PARENT Freehold land & buildings Plant & equipment Total Freehold land & buildings Plant & equipment Total Year ended 30 th June 2008 Opening balance net of depreciation 1 July - 981, ,365-63,148 63,148 Additions - 149, ,605-5,676 5,676 Disposals - (5,365) (5,365) Depreciation charge for the year - (155,444) (155,444) - (16,627) (16,627) Closing balance net of depreciation 30 June , ,161-52,197 52,197 At 30 th June Cost - 1,128,664 1,128, , ,411 Accumulated depreciation and impairment - (147,299) (147,299) - (49,263) (49,263) Net carrying amount - 981, ,365-63,148 63,148 At 30 th June 2008 Cost - 1,265,035 1,265, , ,087 Accumulated depreciation and impairment - (294,874) (294,874) - (65,890) (65,890) Net carrying amount - 970, ,161-52,197 52,197 CONSOLIDATED PARENT Freehold land & buildings Plant & equipment Total Freehold land & buildings Plant & equipment Total Year ended 30 th June Opening balance net of depreciation 1 July , ,823-81,224 81,224 Additions - 318, ,871-2,577 2,577 Disposals Depreciation charge for the year - (99,329) (99,329) - (20,653) (20,653) Closing balance net of depreciation 30 June - 981, ,365-63,148 63,148 At 30 th June Cost or fair value - 1,128,664 1,128, , ,411 Accumulated depreciation and impairment - (147,299) (147,299) - (49,263) (49,263) Net carrying amount - 981, ,365-63,148 63,148 At 30 th June 2006 Cost or fair value - 809, , , ,833 Accumulated depreciation and impairment - (47,969) (47,969) - (28,609) (28,609) Net carrying amount - 761, ,823-81,224 81,224 The Useful life of the assets was estimated as follows for both and 2008: Land and buildings 20 years Plant and equipment 10 to 20 years 33

36 CONSOLIDATED PARENT INTANGIBLE ASSETS Goodwill at cost Gross carrying amount Balance at beginning of year 5,906,513 5,336, Additions arising from business combinations occurring during the reporting period 30, , Balance at end of reporting period 5,936,922 5,906, Accumulated impairment loss Balance at beginning of year 2,731,180 2,731, Impairment loss for the reporting period Balance at end of reporting period 2,731,180 2,731, Net book value At the beginning of the financial year 3,175,333 2,605, At the end of the financial year 3,205,742 3,175, There was no impairment loss recognised during the 2008 financial year. An impairment loss of 2,731,180 was recognised in a previous reporting period (2006) which represented the write-down of those intangible assets to fair value less costs to sell. The recoverable amount was based on fair value less costs to sell and was determined at the cash-generating unit level. The cash-generating unit consists of the JV international Pty Ltd relating to the sale of turn-key roll formed steel manufacturing operations. The directors considered JV international Pty Ltd trading history since acquisition and likely prospects in the foreseeable future. IMPAIRMENT TESTING Goodwill acquired through business combinations has been allocated to two individual cash generating units, which are reportable segments, for impairment testing as follows: Joint ventures for the manufacturing of roll formed steel building products unit; Sale of turn key roll form steel manufacturing operations unit; and Manufacture and sale of light gauge steel framed housing unit Joint ventures for the manufacturing of roll formed steel building products unit The recoverable amount of the steel framed housing unit has been determined based on a value in use calculation using cash flow projections based on financial budgets approved by senior management. Principal assumptions made include: The projection covers a five-year period and no allowance is made for growth beyond this period. The discount rate applied to cash flow projections is 9% (: 9%) representing an estimate of the weighted average cost of capital employed. Revenue growth has been forecast based upon market survey data prepared by AC Nielsen. Costs associated with production and administration have been estimated, based on in-country experience of the staff at Sharus Steel Products Pvt Ltd, the joint venture company. Sale of turn key roll form steel manufacturing operations unit Since acquisition the turn key unit has not generated a cash flow and the directors considered that there existed little prospect of future economic benefits flowing to the Group from this cash generating unit. Consequently an amount equal to the total goodwill on acquisition has been recognised. 34

37 16 INTANGIBLE ASSETS (continued) Manufacture and sale of light gauge steel framed housing unit The recoverable amount of the steel framed housing unit has been determined based on a value in use calculation using cash flow projections based on financial budgets approved by senior management. Principal assumptions made include: The projection covers a five to seven year periods and no allowance is made for growth beyond this period. The discount rate applied to cash flow projections is 9% (: n/a) representing an estimate of the weighted average cost of capital employed. Revenue growth has been forecast based upon anticipated expanded production facilities in the 2008 financial year and assuming the same growth in the light gauge steel housing market as recorded over the past decade. Carrying amount of goodwill allocated to each of the cash generating units CONSOLIDATED PARENT Steel Framed Housing CGU Joint Venture CGU Turn Key CGU Total Carrying amount of goodwill 600, ,718 2,605,615 2,605, ,205,742 3,175, TRADE AND OTHER PAYABLES CONSOLIDATED PARENT Trade payables (i) 365, ,733 5,745 49,802 Other 140, ,705 78,313 33,558 (i) Trade payables are non-interest bearing and are normally settled on 30 to 60 day terms. Information regarding the effective interest rate and credit risk of current payables is set out in note , ,438 84,058 83, FINANCIAL LIABILITIES (current) Bank overdraft 170, Bank loan secured (a) 42,739 38, Interest bearing loans unsecured (b) 450,000 Interest bearing - unsecured with convertible note (c) 460, ,000 Vendor loan on acquisition of Component Homes 76, ,919 1,199, , ,000 - FINANCIAL LIABILITIES (non current) Bank loan secured (a) 146, , Interest bearing loans unsecured (d) 610, , , , ,000-35

38 18 FINANCIAL LIABILITIES (continued) Details of the borrowings as at 30 th June 2008 were as follows: (a) Bank loan - secured: JVG Framing Pty Ltd has acquired machinery on a financing agreement to the value of 231,500. Interest is variable and is currently at 7.85%. The loan is repayable over 5 years. (b) Unsecured loan: JV Global Ltd has entered into a loan with a value of 450,000 at an interest rate of 11.25% to fund working capital requirements. The loan is repayable in December (c) Convertible Note JV Global Ltd has entered into a loan with a value of 460,000 at an interest rate of 11.25% to fund working capital requirements. The terms include a redeemable convertible note that allows the holder to convert the debt to equity through subscribing for shares at eleven cents each at any time prior to the repayment of the loan. The loan maturity date is 9th April 2009 however the Company may repay all or part of the loan prior to the maturity date. (d) Unsecured loan JV Global Ltd has entered into a loan agreement with Kailis Consolidated Pty Ltd, for 610,000 at an interest rate of 11.25% to fund working capital requirements. The terms of the loan allow the note holder to require JV Global Limited to seek shareholder approval for the issue of a redeemable convertible note that allows the holder to convert the debt to equity through subscribing for shares at eleven cents each at any time prior to the repayment of the loan. The loan maturity date is not before 30 th June 2009 however the Company may repay all or part of the loan prior to the maturity date. CONSOLIDATED PARENT 19 PROVISIONS (current liability) Annual Leave As at 1 st July 67,254 25,650 45,422 25,650 Utilised (108,275) (29,781) (55,815) (29,778) Arising during year 145,963 71,385 66,112 49,550 At 30 th June 104,942 67,254 55,719 45,422 PROVISIONS (non current liability) Long service leave As at 1 st July 19, Utilised Arising during year 7,983 19, At 30 th June 26,995 19, Provision for Long-term Employee Benefits: A provision has been recognised for employee entitlements relating to long service leave. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits has been included in Note 2 to this report. 36

39 20 CONTRIBUTED EQUITY Ordinary shares 19,525,856 19,521,856 19,525,856 19,521,856 Number of ordinary shares on issue: As at 1 July 74,208,235 62,220,735 74,208,235 62,220,735 Number of ordinary shares issued during the year 1,520,000 11,987,500 1,520,000 11,987,500 As at 30 June 75,728,235 74,208,235 75,728,235 74,208,235 The company has authorised share capital amounting to 75,728,235 ordinary shares of no par value. (a) Movements in ordinary share capital of the company during the past two years were: (i) On the 21 st July 2006 the company issued 200,000 ordinary fully paid shares pursuant to the exercise of options with an exercise value of 40,000. (ii) On the 23 rd August 2006 the company issued 100,000 ordinary fully paid shares pursuant to the exercise of options with an exercise value of 20,000. (iii) On the 6 th October 2006 the company issued 260,000 ordinary fully paid shares pursuant to the exercise of options with an exercise value of 52,000. (iv) On the 13 th February the company issued 10,927,500 ordinary fully paid shares at an issue price of 20 cents each to raise 2,185,500 less issue expenses of 131,130. (v) On the 23 rd April the company issued 500,000 ordinary fully paid shares at an issue price of 0.17 each as partial consideration for the acquisition of the business trading as Component Homes by JVG Framing Pty Ltd. (vi) On the 23 rd August the company issued 1,500,000 ordinary fully paid shares as an Employee incentive and the cost will be accrued over a 3 year period. (vii) On the 24 th April 2008 the company issued 20,000 ordinary fully paid shares pursuant to the exercise of options with an exercise value of 4,000. (b) Options 15 October 2008 (i) On 21 December 2005 the company granted a total of 2,300,000 options (each convertible into one ordinary share at a fixed price of 20 cents per share) exercisable on or before 15 October The options were free and were issued as part of the share issue on the same date. (ii) On the 6 th October ,000 options (15 October 2008 expiry) were exercised at a value of 52,000. (iii) On 21 December 2005 the company granted a total of 5,463,750 options (each convertible into one ordinary share at a fixed price of 20 cents per share) exercisable on or before 15 October The options were free and were issued as part of the share issue on the same date. (iv) On the 24 th April ,000 options (15 October 2008 expiry) were exercised at a value of 4,000. (c) Options 30 April 2008 (i) On the 7 June 2006 the company granted 1,000,000 options (each convertible into one ordinary share at a fixed price of 20 cents per share) exercisable on or before 30 April The options were granted as consideration for corporate consulting services. (ii) On the 21 st July ,000 options (30 April 2008 expiry) were exercised at a value of 40,000. (iii) On the 23 rd August 100,000 options (30 April 2008 expiry) were exercised at a value of 20,000. (iv) On the 30 th April ,000, being the outstanding balance of the 30 th April 2008 options, expired. (d) Employee Options Options For information relating to JV Global Limited Employee Share Option Plan, including details of options issued, exercised and lapsed during the financial year and the options outstanding at year-end refer to Note 32 Share-based Payments. For information relating to share options issued to key management personnel during the financial year, refer to Note 32 Share-based Payments. (i) On the 23 rd August the company granted 10,050,000 options (each convertible into one ordinary share at a fixed price of 30 cents per share) expiring on 23 August The options were granted as incentives to employees. (ii) On the 28 th April 2008the company granted 300,000 options (each convertible into one ordinary share at a fixed price of 30 cents per share) expiring on 23 August The options were granted as incentives to an employee. 37

40 20 CONTRIBUTED EQUITY (continued) Options outstanding (e) Capital Management Number of options Exercise price Expiry date 30 th June ,397, each 15 October ,050, each 23 August , each 28 April th June 62,417, each 15 October , each 30 April 2008 Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern. The group s debt and capital includes ordinary share capital, redeemable preference shares and financial liabilities, supported by financial assets. There are no externally imposed capital requirements. Management effectively manages the group s capital by assessing the group s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. There have been no changes in the strategy adopted by management to control the capital of the group since the prior year. This strategy is to ensure that the group s gearing ratio remains low. CONSOLIDATED PARENT 21 RETAINED EARNINGS Opening (13,979,456) (12,913,764) (16,477,193) (15,514,423) Net loss for year (1,727,229) (1,065,692) (1,500,821) (962,770) Minority share Closing (15,706,685) (13,979,456) (17,978,014) (16,477,193) 22 RESERVES Opening 82,100 86,643 82,100 86,643 Proceeds from the granting of options 222, ,975 - Exercise of options - (4,543) - (4,543) Closing 305,075 82, ,075 82,100 Option Reserve The option reserve records items recognised as expenses on valuation of employee share options. 23 FINANCIAL INSTRUMENTS Financial Risk Management Objectives and Policies The Group s principal financial instruments comprise bank loans, hire purchase agreements, convertible notes, cash and shortterm deposits. The main purpose of these financial instruments is to raise finance for the Group s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the period under review, the Group s policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group s financial instruments are cash flow interest rate risk, liquidity risk, and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements. 38

41 23 FINANCIAL INSTRUMENTS (continued) Credit risk The Group trades only with recognised, creditworthy third parties. It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group s exposure to bad debts is not significant. Since the Group trades only with recognised third parties, there is no requirement for collateral. Liquidity risk The Group s objective is to maintain a balance between continuity of funding and maximising value for shareholders. Funds raised are maintained at levels that are sufficient for operational requirements but to not require excessive capital subscriptions or debt levels. Financial Instruments Fair values The Group s carrying values of financial assets and financial liabilities are equal to the respective assets and liabilities fair values during both and 2008 financial years. (a) Provision for Impairment of Receivables Current trade and term receivables are non-interest bearing loans and generally on 30 day terms. Non-current trade and term receivables are assessed for recoverability based on the underlying terms of the contract. A provision for impairment is recognised when there is objective evidence that an individual trade or term receivable is impaired. These amounts have been included in the other expenses item. Movement in the provision for impairment of receivables is as follows: Opening Balance Charge for the Year Amounts Written Off Closing Balance Parent Entity Current associated companies (391,573) (392,054) Opening Balance Charge for the Year Amounts Written Off Closing Balance Parent Entity Current associated companies (392,054) (392,054) There are no balances within trade and other receivables that contain assets that are not impaired and are past due. It is expected these balances will be received when due. Impaired assets are provided for in full. 39

42 23 FINANCIAL INSTRUMENTS (continued) CONSOLIDATED Financial assets Weighted average interest rate Floating interest rate Fixed interest rate maturing in 1 to 5 years Non-interest bearing 2008 Cash 5.43% 708, ,731 Receivables , ,699 Total 708, , ,430 Financial liabilities Payables , ,264 Interest bearing loans & borrowings 11.25% 189,581 1,520, ,480 2,292, ,581 1,520,000 1,088,744 2,798,325 Net financial assets / liabilities 519,150 (1,520,000) (896,045) (1,896,895) Financial assets Cash 4.22% 997, ,692 Receivables - 11,636 11, ,692-11,636 1,009,328 Financial liabilities Payables 122, , , , , , , ,795 Net financial assets / liabilities 874,773 (228,438) (270,802) 375,533 PARENT Financial assets Weighted average interest rate Floating interest rate Fixed interest rate maturing in 1 to 5 years Non-interest bearing 2008 Cash 3.20% 798, ,401 Receivables Total 798, ,401 Financial liabilities Payables ,058 84,058 Interest bearing loans & borrowings 11.25% - 1,520,000-1,520,000-1,520,000 84,058 1,604,058 Net financial assets / liabilities 798,401 (1,520,000) (84,058) (805,657) 40

43 23 FINANCIAL INSTRUMENTS (continued) Financial assets Cash 4.62% 514, ,253 Receivables ,779 20, ,253-20, ,032 Financial liabilities Payables ,360 83, ,360 83,360 Net financial assets / liabilities 514,253 - (62,581) 451,672 Trade & Sundry Creditors are expected to be paid as follows: CONSOLIDATED PARENT Less than 6 months 506, ,795 84,058 83,360 6 months to 1 year year to 5 years Over 5 years , ,795 84,058 83,360 Sensitivity Analysis Interest Rate Risk and Foreign Currency Risk The group has performed sensitivity analysis relating to its exposure to interest rate risk and foreign currency risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks. Interest Rate Sensitivity Analysis At 30 June 2008, the effect on profit and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows: Change in loss Consolidated Group Parent Entity Increase in interest rate by 10% 4,572 1,069 2,840 - Decrease in interest rate by 10%% (4,572) (1,069) (2,840) - Change in Equity Increase in interest rate by 10% 4,572 1,069 2,840 - Decrease in interest rate by 10% (4,572) (1,069) (2,840) - 41

44 23 FINANCIAL INSTRUMENTS (continued) Foreign Currency Risk Sensitivity Analysis At 30 June 2008, the effect on profit and equity as a result of changes in the value of the Australian Dollar to the United Arab Emirates rupee and India rupee, with all other variables remaining constant is as follows: Change in loss Improvement in AUD to AED 10% and Improvement in AUD to INR 10% Decline in AUD to AED by 10% and decline in AUD to INR 10% Change in Equity Improvement in AUD to AED 10% and Improvement in AUD to INR 10% Decline in AUD to AED by 10% and decline in AUD to INR 10% Consolidated Group Parent Entity 32,672 18, (28,364) (22,973) ,672 18, (28,364) (22,973) DIRECTOR AND EXECUTIVE DISCLOSURES Directors The following persons were directors of JV Global Limited during the financial year: P M Burns Chairman (non-executive), appointed 14 February T H Opie Managing Director, appointed 14 February S J Hwang Director (non-executive), appointed 7 June P G Kailis Director (non-executive) appointed 15 August Executives (other than directors) with the greatest authority for strategic direction and management: J G Opie Executive General Manager Arabian Profile Global LLC, appointed 18 February 2005 K S McKinnon Company Secretary and Chief Financial Officer, appointed 1 November K Hutson Technical and Operations Manager, appointed 2 August. M I Hutson General Manager JVG Framing Pty Ltd, appointed 2 April Remuneration policy for directors and executives JV Global Limited s Board determines the remuneration policies and levels for directors and executives. The Managing Director is responsible for setting the remuneration of all the employees under his control, within broad policy and guidelines that may be set by the board from time to time. The board will review the remuneration packages, as recommended by the Managing Director, in respect of the senior executives. Directors fees will be set at appropriate levels that take into account the size of the Company, its industry, the time required of directors in properly fulfilling their respective roles, the risks involved, and the general market in Australia for directors fees. Whenever necessary, the overall level of directors fees will be submitted to a meeting of shareholders for approval. A distinction is made between the remuneration of non-executive and executive directors. Executive directors will normally be remunerated as part of their employment package. 42

45 24 DIRECTOR AND EXECUTIVE DISCLOSURES (continued) The Consolidated Entity did not have any equity based remuneration arrangements or performance incentive remuneration arrangements with any director or other employee during the year. In setting remuneration levels for executives and directors, it is the board s policy to link such levels with the direct or indirect benefits estimated to accrue to shareholders; that is, to strike an appropriate balance between cost and benefit. Performance bonuses may be payable from time to time and will be a benefit to shareholders by way of dividend or increased share prices. The fee arrangements for non-executive directors do not contain a bonus element. Company performance, shareholder wealth and directors and executive s remuneration The remuneration policy is monitored to ensure continued alignment between remuneration of directors and executives and the creation of shareholder wealth through the Company s financial performance. Current remuneration packages for directors and executives have been established to reflect the loss made in the current year and the present stage of the Company s development. At the present time neither short term nor long term incentives are paid to directors or executives other than 10,500,000 Employee Options granted on the 20 th August 2008 subsequent to approval by shareholders on the 17 th August 2008 of the JVG Employee Share Option Scheme rules and the approval of granting of options to directors. Details of the remuneration of each director, including their personally-related entities: Compensation of Key Management Personnel Short term benefits Salary& Fees Long Term benefits Post employment Non monetary LTI benefits Superannuation % performance related Cash STI Total P.M. Burns , ,298-39,573 0% Non-executive Chairman 18, ,750 0% T.H. Opie , ,380 92, ,880 0% Managing Director 145, , ,375 0% S.J. Hwang , ,000 0% Non-executive Director 15, ,000 0% PG Kailis , ,500 0% Non-executive Director (appointed 15 th August ) K.S. McKinnon , ,298 39, ,340 0% Company Secretary 89, , ,425 0% J.G. Opie , , ,250 0% Executive General Manager, Arabian Profile Global LLC 45, ,100 8,400 78,949 0% Keith Hutson , , ,821 0% Technical & Operations Manager 90, ,175 95,063 0% Michael Hutson , ,173 6,888 85,599 0% General Manager, JVG Framing Pty Ltd (appointed 2 April ) 16, ,486 17,999 0% 43

46 24 DIRECTOR AND EXECUTIVE DISCLOSURES (continued) Compensation of Key Management Personnel by category CONSOLIDATED PARENT Short-term 632, , , ,354 Non monetary 225,149 25, ,976 25,100 Post employment 147,813 73, ,925 72,208 1,005, , , ,662 Contracts for Service The following of the Group s Key Management Personnel have an employment agreement for a period of three years duration commencing 1 July These agreements can be terminated by the Executive on one months notice or by the Company in the event of misconduct or incapacity of the Executive: Mr Terence Opie, Mr Kenneth McKinnon, Mr Jarrod Opie, Mr Keith Hutson and Mr Michael Hutson. Director s loans No loan transactions were entered into between the Consolidated Entity and Key Management personnel during the reporting period or the corresponding prior period other than loans made to the company by Mr Kailis and Mr Hwang on commercial terms. Equity instrument disclosures relating to directors and executives Option Holdings 15 October 2008 expiry The number of options in the company held during the financial year by Key Management Personnel, including their personallyrelated entities, is set out below. No options have been granted to Key Management Personnel as remuneration and no options arising from remuneration were been exercised during the reporting period or comparative period Held at 1 July Granted as compensation Purchased Exercised Sold Held at 30 June 2008 Name Directors T H Opie 8,788, ,788,011 P M Burns S J Hwang 4,275, ,275,000 P G Kailis - - 2,750, ,750,000 Executives J G Opie 903, ,142 K S McKinnon 212, ,500 K. Hutson M Hutson Held at 1 July 2006 Granted as compensation Purchased Exercised Sold Held at 30 June Name Directors T H Opie 9,001, , ,000 8,788,011 P M Burns 10, , S J Hwang 4,275, ,275,000 Executives J G Opie 903, ,142 K S McKinnon , ,500 K. Hutson M Hutson

47 24 DIRECTOR AND EXECUTIVE DISCLOSURES (continued) Option Holdings Employee share options The number of Employee Share Options in the company held during the financial year by Key Management Personnel, including their personally-related entities, is set out below. No options have been granted to Key Management Personnel as remuneration and no options arising from remuneration were been exercised during the reporting period or comparative period Held at 1 July Granted as compensation Exercised Sold Held at 30 June 2008 Name Directors T H Opie - 6,000, ,000,000 P M Burns - 1,500, ,500,000 S J Hwang P G Kailis Executives J G Opie K S McKinnon - 1,500, ,500,000 K. Hutson - 750, ,000 M Hutson - 300, ,000 Held at 1 July 2006 Granted as compensation Exercised Sold Held at 30 June Name Directors T H Opie P M Burns S J Hwang Executives J G Opie K S McKinnon K. Hutson M Hutson Share Holdings The number of ordinary shares in the company held during the financial year by Key Management Personnel, including their personally-related entities, is set out below: 2008 Held at 1 July Issued as compensation Held at 30 June 2008 Name Purchased Sold Directors T H Opie 8,288, , ,526,974 P M Burns 170, ,000 S J Hwang 4,275, ,275,000 P G Kailis * - 7,501, ,501,850 Executives J G Opie 903,142-1,500,000-2,403,142 K S McKinnon 160,000 63, ,500 K. Hutson M Hutson * PG Kailis was appointed as a non-executive director on the 15 th August. 45

48 24 DIRECTOR AND EXECUTIVE DISCLOSURES (continued) Held at 1 July 2006 Received on exercise of options Held at 30 June Name Purchased Sold Directors T H Opie 8,319,511 36,175-67,675 8,288,011 P M Burns 10, ,000 10, ,000 S J Hwang 4,275, ,275,000 Executives J G Opie 903, ,142 K S McKinnon 70, ,000-70, ,000 K. Hutson M Hutson Other Transactions with Key Management Personnel A firm of which Mr P M Burns is a part owner provided accounting and other services to the Consolidated Entity during the reporting period. Remuneration for these services has been included in Mr Burn s remuneration shown above (2008:2,275 : 3,750) CONSOLIDATED PARENT 25 REMUNERATION OF AUDITORS Amounts received or due and receivable by the Auditor for: An audit or review of the financial report of any entity within the group 35,248 17,500 35,248 17,500 Other ,248 17,500 35,248 17, EVENTS AFTER BALANCE DATE On the 5th August 2008 Mr Kenneth McKinnon was appointed as an executive director. On the 25th September 2008 JV Global Limited entered into a memorandum of understanding with Mr Ali Rahma and Mr Jonathan Green both of whom are residents of the United Aran Emirates. The Memorandum of Understanding is for the parties to form a joint venture company for the purpose of establishing light gauge steel framing production facilities within the MENA region to investigate On the 25 th August 2008 the Company raised an unsecured loan of 450,000. On the 6 th of September 2008 the Company issued a redeemable convertible note to the value of 300,000 pursuant to this loan agreement. The terms of this note allow the holder to convert 300,000 of the debt to equity through subscribing for shares, each with a free attaching option, at ten cents each. The free attaching options are to be exercisable at 30 cents each and expiring 12 th August A further 150,000 of unsecured was also raised on the 25 th August The Company will seek shareholder approval for the issue of a further convertible note on the same terms and conditions as stated above for 150,

49 CONSOLIDATED PARENT CAPITAL AND LEASING COMMITMENTS (a) Finance Lease Commitments Payable - Minimum lease payments Not later than 12 months 56,172 56, Between 12 months and 5 years 163, , Greater than 5 years Minimum lease payments 220, , Less future finance charges (30,424) (47,740) - - Present value of minimum lease payments 189, , The finance lease on manufacturing plant and equipment, which commenced in, is a 5 year lease with an option to refinance at the end. The equipment is being leased from the Bank with lease payments paid monthly in advance. (b) Operating Lease Commitments Non-cancellable operating leases contracted for but not capitalised in the financial statements Payable - Minimum lease payments Not later than 12 months - 74,323-38,689 Between 12 months and 5 years Greater than 5 years Minimum lease payments - 74,323-38,689 The property lease is a non-cancellable lease with a 1 year term, with rent payable monthly in advance. 28 CONTINGENT LIABILITIES AND CONTINGENT ASSETS As at 30 June 2008, the Directors are not aware of any contingent assets or liabilities that may affect the operations of the economic entity, the result of those operations or the state of affairs of the economic entity in subsequent financial periods. 47

50 29 INVESTMENT IN SUBSIDIARIES The consolidated financial statements included in the financial statements of JV Global Limited and subsidiaries are listed below: Name Country of incorporation Equity interest (%) Investment () (Parent s carrying value) JV Global Australia Pty Ltd Australia 100% 100% - - JV International Pty Ltd Australia 100% 100% - - JVG Framing Pty Ltd (incorporated 7 March 2008) JVG Contracting Pty Ltd (incorporated 2 April 2008) Australia 100% 100% Australia 100% Acquisition of business 2008 Name of business acquired Principal activity Date of acquisition Proportion of equity acquired Cost of acquisition Component Homes Manufacture and sale of light gauge steel framed buildings 20 th April 100% 635, RELATED PARTY TRANSACTIONS All transactions with directors or director-related entities and between companies within the consolidated entity occur within a normal employee, customer or supplier relationship on terms and conditions no more favourable than those which it is reasonable to expect the entity would have adopted if dealing with the Directors or director-related entities at arm's length, unless otherwise stated. Wholly Owned Group Transactions JV Global Limited has made loans to wholly owned subsidiaries. These loans are interest free and at the date of this report no repayment schedule has been agreed. These loans are repayable on demand. Advances for the financial year ended 30 June 2008 were 174,574 (: 1,585,549). The funds advanced were used to finance equipment purchases and operating expenses. Repayments of advances for the financial year ended 30 June 2008 were 345,559 (: nil). Loans to wholly owned subsidiaries are eliminated on consolidation. Transactions with Associates JV Global Limited has made loans to associates. These loans are interest free and at the date of this report no repayment schedule has been agreed. These loans are repayable on demand. Advances for the financial year ended 30 June 2008 were 60,741 ( 28,228). The funds advanced were used to finance equipment purchases and operating expenses. Loans to wholly owned subsidiaries are eliminated on consolidation. Other Related Party Transactions Transaction with directors, other than as employees: During the year a firm of which Mr PM Burns is a partial owner provided accounting and other services to the Group. The value of these services during the financial year ended 30 June 2008 was 16,425 (: 18,750). During the year a firm of which is owned by Mr SJ Hwang provided services to the Group. The value of these services during the financial year ended 30 June 2008 were 24,000 (: 15,000). 48

51 30 RELATED PARTY TRANSACTIONS (continued) During the year the company borrowed 610,000 from a firm associated with Mr PG Kailis. These loans were for a period of twelve months then repayable at call and are unsecured. Interest is payable monthly at 11.25%pa. The borrower can require the company to convert the loan agreement into a Convertible Note whereby the debt maybe repaid by the issue of ordinary fully paid shares at eleven (11) cents each. The right of conversion into a Convertible Note is subject to prior approval by shareholders. During the year the company borrowed 450,000 from Mr SJ Hwang. The loan is for a period of twelve months then repayable at call and is unsecured. Interest is payable monthly at 11.25%pa. 31 SHARE BASED PAYMENTS The following share-based payment arrangements existed at 30 June 2008: On the 17 th August shareholders approved the establishment of the JV Global Limited Employee Share Option Plan as well as the granting of options to selected directors. Pursuant to this approval, on the 23rd August the company granted 10,050,000 options (each convertible into one ordinary share at a fixed price of 30 cents per share) expiring on 23 August The options were granted as incentives to employees. On the 28th April 2008 the company granted 300,000 options (each convertible into one ordinary share at a fixed price of 30 cents per share) expiring on 23 August The options were granted as incentives to an employee. All of the 10,350,000 Employee Share Options referred to above remain of issue at the reporting date and none were exercised during the year. The options hold no voting or dividend rights and are not transferable. All options granted to key management personnel are ordinary shares in JV Global Limited, which confer a right of one ordinary share for every option held. Outstanding at the beginning of the year Number of Options Consolidated Group Parent Entity Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Granted 10,350, cents ,350, cents - - Forfeited Exercised Expired Outstanding at yearend Exercisable at yearend 10,350, cents ,350, cents - - 5,000, cents - - 5,000, cents - - There were no options exercised during the year ended 30 th June 2008 (: nil). 49

52 31 SHARE BASED PAYMENTS (continued) The options outstanding at 30 th June 2008 had a weighted average exercise price of 0.30 and a weighted average remaining contractual life of 4.7 years. Exercise price is 0.30 for all Employee Share Options in respect of options outstanding at 30thJune The weighted average fair value of the options granted during the year was 4.96 cents each. This price was calculated by using a Black-Scholes option pricing model applying the following inputs: Weighted average exercise price 0.30 Weighted average life of the option 5 years Underlying share price 0.18 Expected share price volatility 55% Risk free interest rate 6.4% Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future tender, which may not eventuate. The life of the options is based on the maximum permitted life. Included under employee benefits expense in the income statement is 222,975 (: nil), and relates, in full, to equity-settled share-based payment transactions. 50

53 INDEPENDENT AUDITOR S REPORT To the members of JV Global Limited Grant Thornton (WA) Partnership ABN: Level 1 10 Kings Park Road West Perth WA 6005 PO BOX 570 West Perth WA 6872 T F E admin@gtwa.com.au W Report on the Financial Report We have audited the accompanying financial report of JV Global Limited, (the company) which comprises the balance sheet as at 30 June 2008, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors declaration of the consolidated entity comprising the company and the entities it controlled at the year s end or from time to time during the financial year. Directors Responsibility for the Financial Report The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards. Auditor s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. Liability limited by a scheme approved under Professional Standards Legislation. Grant Thornton (WA) Partnership is an independent business entitled to trade under the international name Grant Thornton. Grant Thornton is a trademark owned by Grant Thornton International and used under licence by independent firms and entities throughout the world. 51

54 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Electronic Presentation of Audited Financial Report This auditor s report relates to the financial report of JV Global Limited (the company) for the year ended 30 June 2008 included on the company s web site. The company s directors are responsible for the integrity of the company s web site. We have not been engaged to report on the integrity of the company s web site. The auditor s report refers only to the statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements. If users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the audited financial report to confirm the information included in the audited financial report presented on this web site. Independence In conducting our audit, we complied with applicable independence requirements of the Corporations Act Auditor s Opinion In our opinion: (a) the financial report of JV Global Limited is in accordance with 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 2008 and of their performance for the year ended on that date; and ii. complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2. Significant uncertainty regarding continuation as a going concern Without qualification to the audit opinion expressed above, attention is drawn to the following matter. As a result of the matters described in Note 2(w) in the financial report which indicates that the company s and consolidated entity s ability to continue as a going concern is dependent upon the company raising additional funds from debt or equity sources, or operations becoming profitable in the future, there exists a material uncertainty which may cast significant doubt about the company s and consolidated entity s ability to continue as a going concern and whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial report. Liability limited by a scheme approved under Professional Standards Legislation. Grant Thornton (WA) Partnership is an independent business entitled to trade under the international name Grant Thornton. Grant Thornton is a trademark owned by Grant Thornton International and used under licence by independent firms and entities throughout the world. 52

55 Report on the Remuneration Report We have audited the Remuneration Report included in pages 6 to 7 of the directors report for the year ended 30 June The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Auditor s Opinion In our opinion the Remuneration Report of JV Global Limited for the year ended 30 June 2008, complies with section 300A of the Corporations Act GRANT THORNTON (WA) PARTNERSHIP Chartered Accountants P W WARR Partner Perth, 30 September 2008 Liability limited by a scheme approved under Professional Standards Legislation. Grant Thornton (WA) Partnership is an independent business entitled to trade under the international name Grant Thornton. Grant Thornton is a trademark owned by Grant Thornton International and used under licence by independent firms and entities throughout the world. 53

56 Directors Declaration JV GLOBAL LIMITED ANNUAL REPORT The Directors of the Company declare that: the attached financial statements and notes thereto comply with Accounting Standards and Corporations Regulations 2001; and the attached financial statements and notes thereto give a true and fair view of the financial position and performance of the Group; In the Directors opinion the attached financial statements and notes thereto are in accordance with the Corporations Act 2001; and In the director s 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. The Chief Executive Officer and the Chief Financial Officer have each declared that: The financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; The financial statements and notes thereto comply with Accounting Standards; and The financial statements and notes thereto give a true and fair view. This declaration is made in accordance with a resolution of the Directors. PM Burns Perth, 30 th day of September,

57 Shareholder Information The shareholder information set out below was applicable as at 26 th September 2008 Distribution of Equity Securities (a) Analysis of numbers of equity security holders by size of holding: Ordinary shares Options Category (size of holding) Number of holders Number of holders 1-1, ,001-5, ,001-10, , , ,001 and over Total number of holders (b) There were 53 holders of less than a marketable parcel of ordinary shares based on a notional price of 11 cents per share. (c) The listed options exercisable at 0.20 per share which expire on 15 October Twenty Largest Equity Security Holders The names of the twenty largest holders of each class issued securities are listed below: SHAREHOLDERS Name of shareholder Number of listed ordinary shares held Percentage of listed ordinary shares 1 RBC Dexia Investor Services 8,098, % 2 Kailis Consolidated Pty Ltd 6,542, % 3 GIBCA Ltd 5,000, % 4 Hwang Sin Jen 4,275, % 5 Hoperidge Enterprises Pty Ltd 3,000, % 6 Wonder Holdings Pty Ltd 2,800, % 7 National Nominees Ltd 2,750, % 8 Opie, Jarrod Gregory 2,403, % 9 Drenlett Pty Ltd 1,850, % 10 Wong Sin Chong 1,650, % 11 Wildview Nominees Pty Ltd 1,402, % 12 Hwang Ming Wee 1,375, % 13 Davis, Roger and Judith 1,000, % 14 Opie, Jodie Kristine 903, % 15 Datu Nominees Pty Ltd 800, % 16 GLS INTNL LTD 752, % 17 M F Custodians Ltd 750, % 18 Tolmers Pty Ltd 700, % 19 Danreg Nominees Pty Ltd 675, % 20 Waters, Christina Maria 602, % 47,329, % 55

58 Shareholder Information (continued) JV GLOBAL LIMITED ANNUAL REPORT OPTION HOLDERS Name of option holder Number of listed options held Percentage of listed options RBC Dexia Investor Services 7,912, % GIBCA Ltd 5,000, % Hwang Sin Jen 4,270, % Hoperidge Enterprises Pty Ltd 3,000, % Wonder Holdings Pty Ltd 2,500, % Kailis Consolidated Pty Ltd 2,250, % Kelray Pty Ltd 1,650, % Wong Sin Chong 1,650, % Bluestar Management Pty Ltd 1,565, % Wildview Nominees Pty Ltd 1,433, % Watson, Peter Anthony 1,340, % Styants, Peter Robin 1,200, % Ferrier, Peter Neil 958, % McLean Corp Promotions Pty Ltd 920, % Opie, Jodie Kristine 903, % Opie, Jarrod Gregory 903, % Styants, Peter and SG 800, % Bennett & Bennett Pty Ltd 773, % Goodger, Conrad Joseph 708, % Danreg Nominees Pty Ltd 675, % Top 20 total 40,413, % Unquoted Securities There are 10,350,000 unquoted Employee Share Options with an exercise price of 30 cents each with 10,050,000 options expiring on the 23 rd August 2012 and 30,000 options expiring on 28 th April There are 1,500,000 unquoted ordinary fully paid shares on issue. Substantial Shareholders Substantial shareholders in the company (holding not less than 5% of the issued capital), as disclosed in substantial shareholder notices given to the company, are set out below: Wildview Nominees Pty Ltd and associates Number of ordinary shares held Percentage of shares on issue Number of listed options held Percentage of listed options Number of Employee Share Options held Percentage of Employee Share Options held 8,766, % 8,788, % 6,000, % GIBCA Limited 5,000, % 5,000, % - - PG Kailis & Kailis Consolidated Pty Ltd 7,301, % 2,750, % - - Voting Rights The voting rights attaching to the shares in the company are as set out below: On a show of hands, every member present in person or by proxy shall have one vote and, upon a poll, each share shall have one vote 56

59 JV Global / Assets JV Global / Joint Venture Partners

60 Suite 28 The Hyatt Centre 87 Adelaide Terrace / Perth / W.A. / 6000 Tel: / Fax: PO Box 6875 / East Perth / W.A / info@jvglobal.com.au