Announcement PDF F O R T H E Y E A R E N D E D 3 0 T H J U N E 2 0 0 5 2 1 S T A N N U A L R E P O R T 05 Chairman’s Message 1 Managing Director’s Review 2 Financial Report Contents 13 Financial Report 13 Corporate Governance Statement 14 Directors’ Report 17 Remuneration Report 23 Statement of Financial Performance 25 Statement of Financial Position 26 Statement of Cashflows 27 Notes to the Financial Statements 28 Directors’ Declaration 65 Independent Audit Report 66 Shareholdings Substantial Shareholders 68 DIRECTORS Paul Rengel (Chairman) John Chan (Managing Director) Loh Kee Kong John Cheak Richard Rimington COMPANY SECRETARY Darren Pateman REGISTERED OFFICE Level 3 15 Labouchere Road SOUTH PERTH WA 6151 Telephone: +61 8 9474 4460 Facsimile: +61 8 9474 4458 Email: info@finbar.com.au POSTAL ADDRESS GPO Box 113 SOUTH PERTH WA 6951 SHARE REGISTRY Computershare Investor Services Pty Ltd Level 2, Reserve bank Building 45 St Georges Terrace PERTH WA 6000 Telephone: +61 8 9323 2000 AUDITORS KPMG 132-158 St Georges Terrace PERTH WA 6000 SOLICITORS Chalmers & Partners Level 6 524 Hay Street PERTH WA 6000 STOCK EXCHANGE LISTING Australian Stock Exchange Limited (Perth) ASX Code: FRI WEBSITE www.finbar.com.au CORPORATE DIRECTORY CHAIRMAN’S REPORT On behalf of your Board of Directors I am pleased to present to you the 21st Annual Report of your company. The fiscal year to 30 June 2005 has been a year of significant achievements for Finbar International Limited. The company has enjoyed continuing demand in its market segment for medium to high density high quality accommodation located at short distances to the centre of Perth. The Directors are confident that the continuing strength of the Western Australian economy and anticipated population growth into the medium term will provide an environment of continuing demand within the company’s market sector. The financial results for the fiscal year are quite outstanding with a 47% increase in net profit from just under $4,500,000 to almost $6,600,000 in a continuing trend of improving profits. A cash benefit to shareholders by way of a dividend of $0.03 per share has been announced representing an increase of 50% of dividend being paid over the previous fiscal year. The net assets of the company have also increased significantly from $31,000,000 to just under $38,000,000 which reflects a net tangible asset backing per share of $0.38 from the prior years $0.35. At the same time the market share price of the company’s quoted securities has seen a 48% increase from $0.27 per share to $0.40 per share as at 30 June 2005. The company is now without doubt a well established leading participant in its market sector and with continuing projects in hand at various stages of progress with a value of almost $500,000,000 the Directors are confident that the company will maintain its momentum in profitability and growth. Contemporary economic forecasts and population growth predictions for Perth indicate prevailing conditions for the continuing success of the company. A notable highlight among the company’s achievements for the year has been the successful placement of 10,000,000 shares at an issue price of $0.38 each during the fiscal year raising an additional $3,800,000 of issued capital. The resultant increase in the share spread has provided additional volume in the trading of the company’s listed securities which has been a contributing factor to the increase in the share price. This movement in the share price has been particularly satisfying to the company’s directors who had felt for some time that an investment in the company’s shares should not only represent a sound investment but should also provide shareholders with a fairly priced market for their shareholdings. The successful performance of any company is the result of not only economic and commercial opportunities but also the efforts of the executive directors and management. Finbar continues to be well served by a highly competent and dedicated team at the same time by a strong Board of Directors who have implemented sound policies of best practice in management and corporate governance. As Non-Executive Chairman I am pleased to commend to the shareholders the confidence and dedicated efforts of the company’s executive team. On behalf of the Non-Executive Directors also, I am pleased to assure shareholders of our continued commitment to maintain the highest possible value for your investment. In closing I also thank the shareholders for their continued support of the company and I encourage them to read and consider the contents of the attached annual report and to attend and participate in the forthcoming Annual General Meeting of your company. With compliments Paul Anthony Rengel Chairman of Directors 1 2 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 2 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 The year under review ending 30 June 2005 has been arguably the Company's best on record assessed over a number of different measures, returns to shareholders, profitability, earnings and share price. Perhaps the best indicator of that successful year is in the 50 per cent rise in dividend from 2 cents per share to 3 cents. One of the most significant of Finbar International's achievements has been recording a net profit of $6.58 million, a 47 per cent rise over the 2003/2004 figure of $4.47 million. Another illustration of the Company's substance is that overall we have half a billion dollars worth of projects, at various stages, on our books being launched, under construction and completing. Net assets have risen from $31 million in 2003/2004 to $37.9 million at 30 June 2005. The Company's share of joint revenue was $77.3 million with $6.5 million attributed to its sole projects. And at the end of the reporting period, net tangible asset backing per share reached 38.4 cents while earnings per share rose to 7 cents, an increase of about 34 per cent. In June, we finished our largest flagship project, Westralian Riverfront Apartments at 78 Terrace Road, East Perth which had an end value of $80 million. It was virtually sold out at 30 June 2005 with a penthouse attracting a record price for the area of $3.38 million. There is no doubt that these results are partly attributable to the continuing strength of the Western Australian economy in producing a healthy environment in which the Company has been able to continue to grow its business. This momentum is being fuelled by population and employment growth which gives no indication of slowing in the medium term. While such burgeoning economies can produce shortages of labour, so far the effect has been manageable. And while strong economic growth may result in some cost increases, the fact is that prices for new project inner city residences are correspondingly rising. Additionally, to reduce the impact of some local material price increases the Company is able to source various items from overseas. For example, Finbar now uses granite tops from India and tiles from China, Malaysia and Hong Kong. Some shareholders have asked whether the slowdown in activity in Eastern States markets is likely to be reflected in the WA economy but as Eastern States activity is now trending upwards again, it seems likely that the WA performance will pick up further having not shown the diminution in activity experienced in other States. A measure of our ongoing momentum can be seen in our acquisition of six new projects during 2005/2006. The new projects are: • 15-19 Carr Street in West Perth • 375 Hay Street in East Perth • 96-102 Terrace Road, East Perth • Lot 135 Adelaide Terrace, East Perth • The Palladio, Mandurah Ocean Marina • Whatley Crescent in Maylands Of these, the Mandurah, Carr Street and Whatley Crescent projects are wholly owned by Finbar. The next six months will be additionally active as we replace completed projects. A major part of the Company's normal operations is seeking out and analysing new opportunities and in some instances we buy in new projects to maintain momentum. Finbar International now provides about 30 per cent to 40 per cent of Perth's inner city-style residences and we believe this market will continue to grow as baby boomers retire and seek lifestyle changes as well as improved investment outcomes. Many baby boomers are choosing to invest in inner city units because they assess this to be a better investment vehicle than traditional superannuation funds. Besides the financial returns for the owner through leasing and capital gain, it also gives them the opportunity to enjoy a better lifestyle when they retire. MANAGING DIRECTOR’S REVIEW Other factors driving this market's growth include rising energy prices, particularly motor vehicle fuel, and the government's policy of encouraging more inner city residential development to relieve it of the costs of increasing suburban infrastructure. Of course, the other major influence will be big population increases predicted for Perth in the next three decades. A major Finbar strength is its excellent long-term relationship with its builders, one which produces efficiencies and economies which assist in making us very competitive. The company's continuous support from the four major banking institutions including Westpac, BankWest, Commonwealth Bank Australia and National Australia Bank, further strengthen its position in the industry. In my review a year ago, I pointed out the Company's need for greater liquidity and I am pleased to be able to report that this has been assisted by our placement of 10 million shares during the year taking the total on issue to 98.7 million. Two matters for shareholder information is that the Board has decided that after this financial year, the company will pay an interim and final dividend and that future financial reports are now required to comply with the Australian equivalents of the International Financial Reporting Standards (IFRS)*. The likely impact of adopting IFRS has been included in note 29 of the attached financial statements. In conclusion, the Board believes the strong performance and growth of the company will continue, notwithstanding the timing issues that profits under IFRS will bring. John Chan Managing Director *For further information on IFRS, visit www.finbar.com.au/ifrs $0.40 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 2000 2001 2002 2003 2004 2005 Net Tangible Assets Per Share $1,000,000 2005 2004 2003 2002 2001 2000 After Tax Net Profit $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $0.01 2005 2004 2003 2002 2001 2000 Earnings Per Share $0.07 $0.06 $0.05 $0.04 $0.03 $0.02 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 3 4 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 4 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 APARTMENTS 93 - 1,2 and 3 bedroom COMMERCIAL 1 AVERAGE SALE PRICE TO DATE $343,457 % SOLD 95% SALES TO DATE $31,598,023 APPROXIMATE END VALUE $33,188,023 ESTIMATED COMPLETION DATE Works complete PROJECT COMPANY Boas Gardens Estate Pty Ltd APARTMENTS 96 - 2 and 3 bedroom COMMERCIAL 2 AVERAGE SALE PRICE TO DATE $786,736 % SOLD 93% SALES TO DATE $74,740,000 APPROXIMATE END VALUE $80,190,000 ESTIMATED COMPLETION DATE Works complete PROJECT COMPANY 78 Terrace Road Joint Venture Pty Ltd CURRENT PROJECTS (CURRENT AT 10 OCTOBER 2005) MARKETRISE - 9 DELHI ST, WEST PERTH WESTRALIAN - 78 TERRACE RD, EAST PERTH APARTMENTS 50 - 1,2 and 3 Bedroom COMMERCIAL 1 AVERAGE SALE PRICE TO DATE $324,706 % SOLD 100% SALES TO DATE $16,560,000 APPROXIMATE END VALUE $16,560,000 ESTIMATED COMPLETION DATE Works complete PROJECT COMPANY 175 Hay Street Joint Venture Pty Ltd APARTMENTS 7 - 3 bedroom and 7 - 1 bedroom COMMERCIAL 0 AVERAGE SALE PRICE TO DATE $480,214 % SOLD 100% SALES TO DATE $6,723,000 APPROXIMATE END VALUE $6,723,000 ESTIMATED COMPLETION DATE Works complete PROJECT COMPANY Finbar International Limited 175 HAY - 175 HAY ST, EAST PERTH RIVERSTONE - 15 STONE ST, SOUTH PERTH F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 5 6 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 6 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 APARTMENTS 63 - 1,2 and 3 bedroom COMMERCIAL 1 AVERAGE SALE PRICE TO DATE $297,811 % SOLD 96% SALES TO DATE $18,166,500 APPROXIMATE END VALUE $19,326,500 ESTIMATED COMPLETION DATE October 2005 PROJECT COMPANY 188 Adelaide Terrace Joint Venture Pty Ltd APARTMENTS 93 - 2 and 3 bedroom COMMERCIAL 4 AVERAGE SALE PRICE TO DATE $287,424 % SOLD 95% SALES TO DATE $26,443,000 APPROXIMATE END VALUE $28,032,000 ESTIMATED COMPLETION DATE Works complete PROJECT COMPANY Rivervale Concepts Pty Ltd CURRENT PROJECTS (CURRENT AT 10 OCTOBER 2005) COSMOPOLITIAN - 269 HAY ST, EAST PERTH ARUM & SAMPHIRE - TANUNDA DVE, RIVERVALE APARTMENTS 120 - 1,2 and 3 bedroom COMMERCIAL 3 AVERAGE SALE PRICE TO DATE $618,020 % SOLD 89% SALES TO DATE $71,690,366 APPROXIMATE END VALUE $80,772,866 ESTIMATED COMPLETION DATE November 2006 PROJECT COMPANY 132 Terrace Road Joint Venture Pty Ltd APARTMENTS 103 - 1,2 and 3 bedroom COMMERCIAL 1 AVERAGE SALE PRICE TO DATE $307,258 % SOLD 83% SALES TO DATE $27,960,550 APPROXIMATE END VALUE $33,435,550 ESTIMATED COMPLETION DATE July 2006 PROJECT COMPANY 175 Hay Street Joint Venture Pty Ltd ALTAIR - 132 TERRACE RD, EAST PERTH ONE 28 - 128 ADELAIDE TCE, EAST PERTH F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 7 8 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 8 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 APARTMENTS 76 - 2 and 3 bedroom COMMERCIAL 0 AVERAGE SALE PRICE TO DATE $577,211 % SOLD 70% SALES TO DATE $30,015,000 APPROXIMATE END VALUE $42,640,000 ESTIMATED COMPLETION DATE September 2006 PROJECT COMPANY Rivervale Concepts Pty Ltd APARTMENTS 78 - 1,2 and 3 bedroom COMMERCIAL 2 AVERAGE SALE PRICE TO DATE $317,547 % SOLD 87% SALES TO DATE $23,181,000 APPROXIMATE END VALUE $26,211,000 ESTIMATED COMPLETION DATE December 2006 PROJECT COMPANY 188 Adelaide Terrace Joint Venture Pty Ltd CURRENT PROJECTS (CURRENT AT 10 OCTOBER 2005) AVENA - TANUNDA DVE, RIVERVALE SOHO - 188 ADELAIDE TCE, EAST PERTH APARTMENTS 49 - 1, 2 and 3 bedroom COMMERCIAL 0 AVERAGE SALE PRICE TO DATE $581,224 % SOLD 100% SALES TO DATE $28,480,000 APPROXIMATE END VALUE $28,480,000 ESTIMATED COMPLETION DATE January 2007 PROJECT COMPANY Finbar International Limited SOL - 19 CARR STREET - WEST PERTH APARTMENTS 60 - 2 and 3 bedroom COMMERCIAL 0 AVERAGE SALE PRICE TO DATE $373,425 % SOLD 95% SALES TO DATE $21,325,000 APPROXIMATE END VALUE $22,450,000 ESTIMATED COMPLETION DATE Early 2007 PROJECT COMPANY 17-19 Carr Street Pty Ltd DELMAR - 3 THE PALLADIO, MANDURAH OCEAN MARINA, MANDURAH FUTURE PROJECTS (CURRENT AT 10 OCTOBER 2005) F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 9 10 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 10 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 FUTURE PROJECTS (CURRENT AT 10 OCTOBER 2005) APARTMENTS 109 - 1,2 and 3 bedroom COMMERCIAL 2 AVERAGE SALE PRICE TO DATE $385,533 % SOLD 65% SALES TO DATE $27,460,000 APPROXIMATE END VALUE $42,160,000 ESTIMATED COMPLETION DATE Late 2007 PROJECT COMPANY 135 Adelaide Terrace Developments Pty Ltd INFINITY - 131 ADELAIDE TERRACE, EAST PERTH 375 HAY STREET - EAST PERTH APARTMENTS 80 APPROXIMATE END VALUE $30,000,000 ESTIMATED COMPLETION DATE Middle 2007 PROJECT COMPANY 375 Hay Street Pty Ltd FUTURE PROJECTS (CURRENT AT 10 OCTOBER 2005) APARTMENTS 138 - 2 and 3 bedroom APPROXIMATE END VALUE $108,270,000 ESTIMATED COMPLETION DATE Mid 2008 COMMERCIAL 4 PROJECT COMPANY Burt Way Developments Pty Ltd CERESA - TANUNDA DRIVE, RIVERVALE APARTMENTS 113 - 2 and 3 bedroom APPROXIMATE END VALUE $49,000,000 ESTIMATED COMPLETION DATE Late 2007 COMMERCIAL 0 PROJECT COMPANY Rivervale Concepts Pty Ltd WHATLEY CRESCENT - MAYLANDS APARTMENTS 131 APPROXIMATE END VALUE $40,000,000 ESTIMATED COMPLETION DATE Early 2008 PROJECT COMPANY Lot 1 to 10 Whatley Crescent Pty Ltd BURTWAY - 96-102 TERRACE ROAD, EAST PERTH F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 11 FI N A N C I A L RE P O RT for the year ended 30th June 2005 FINBAR INTERNATIONAL LIMITED ABN 97 009 113 473 ACN 009 113 473 CO N T E N T S CORPORATE GOVERNANCE STATEMENT 14-16 DIRECTORS’ REPORT 17-21 REMUNERATION REPORT 23-24 STATEMENT OF FINANCIAL PERFORMANCE 25 STATEMENT OF FINANCIAL POSITION 26 STATEMENT OF CASH FLOWS 27 NOTES TO THE FINANCIAL STATEMENTS 28-64 DIRECTORS’ DECLARATION 65 INDEPENDENT AUDIT REPORT 66-67 SHAREHOLDINGS 68 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 13 14 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 14 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 This statement outlines the main Corporate Governance practices that were in place throughout the financial year, which comply with ASX Corporate Governance Council recommendations, unless otherwise stated. BOARD OF DIRECTORS The Board is responsible for the Corporate Governance of the Company including its strategic direction establishing goals for management and monitoring achievement of these goals. The Board monitors and evaluates the effectiveness of management and itself. The Company is not currently considered to be of the size, nor are its affairs of such complexity to justify the establishment of separate committees, a formal Board charter or a code of conduct. Accordingly, all matters which may be capable of delegation to a committee are dealt with by the full Board. In the current financial year ended 30 June 2005 the Board has not conducted a review of its own effectiveness. The Board communicate regularly and meet when considered appropriate, and attend to the majority of the governance matters via circular resolution. Each Director has the right to seek independent professional advice at the Company’s expense on matters relating to his position as a Director of the Company, subject to obtaining prior approval of the Chairman which shall not be unreasonably withheld. COMPOSITION OF BOARD The procedures for the election and retirement of Directors are governed by the Company’s constitution and the listing Rules of the Australian Stock Exchange Limited (“ASX”). The composition of the Board is determined using the following principles: • The Board shall comprise Directors with a range of expertise encompassing the current and proposed activities of the Company. • Have a non-executive independent Director as Chairperson. • Where a vacancy is considered to exist, the Board selects an appropriate candidate through consultation with external parties and consideration of the needs of shareholders and the Company. Such appointments are referred to shareholders at the next opportunity for re-election in general meeting. • New Directors are provided the opportunity to meet with management and familiarise themselves with the business operations of the Company. An independent Director is a Director who is not a member of management (a non-executive Director) and who: • Holds less than 5% of the voting shares of the company; • Within the last three years has not been a principal or employee of a material professional adviser or a material consultant to the Company; • Is not a material supplier or customer of the Company or an officer of or otherwise associated directly or indirectly with a material supplier of customer; • Has no material contractual relationship with the Company other than as a Director. • 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 practices of the Company. CORPORATE GOVERNANCE STATEMENT CORPORATE GOVERNANCE STATEMENT F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 15 The Board considers material in the above context to be where any Director-related business relationship to represent at least 5% of the Director-related business’ revenue. The Board considered the nature of the relevant industries’ competition, and the size and nature of each Director-related business relationship in arriving at this threshold. Refer to Director's report for details of, and policies on, remuneration of Directors and Executives. The Board currently consists of one Independent Director and four Non-Independent Directors. The Company is not currently considered to be of the size nor have the shareholder spread to warrant the appointment of additional independent directors. The company Chairman is a Non-Executive independent director who holds this position in the interest of minority shareholders. TRADING IN COMPANY SECURITIES The key elements of the Trading in Company securities Policy are: • Identification of those restricted from trading - Directors and all Senior Executives including all staff of J&R Management Pty Ltd may acquire shares in the company but are prohibited from dealing in Company shares and exercising options: - Within 48 hours after either the release of the Company’s half-year and annual results to the Australian Stock Exchange (“ASX”), the Annual General Meeting or any major announcement; - Whilst in possession of price sensitive information not yet released to the market. • Raising the awareness of legal prohibitions including transactions with colleagues and external advisors. • Requiring details to be provided of confirmation of trades in securities of the Company. • Identification of processes for unusual circumstances where discretions may be exercised in cases such as financial hardship. REMUNERATION REPORT The Remuneration Report set out on pages 23 to 24 forms part of the Directors’ Report for the financial year ended 30 June 2005. AUDITORS Whilst the Company does not have a formally constituted audit committee, the Board reviews the performance of the external auditors on an annual basis and a representative of the Board meets with them at least twice a year to review: • The results and findings of the audit, the adequacy of the accounting and the financial controls, and to obtain feedback on implementation of recommendations made; and • The draft financial statements and audit/review reports at year end and half-year. The Board monitors the need to form an audit committee on a periodic basis. 16 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 16 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 CORPORATE GOVERNANCE STATEMENT The Board considers annually the necessity to request the attendance of the auditors at Annual General Meetings so as to be available to answer shareholder questions about the conduct of the audit and content of the auditor’s report. INTERNAL CONTROL FRAMEWORK The Board acknowledges that it is responsible for the overall control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility, the Board has instigated an internal control framework that can be described as follows: FINANCIAL REPORTING There is a comprehensive accounting system. Monthly financial accounts are prepared by the Company’s accountant for review by Directors. The Company reports to shareholders half-yearly. Procedures are in place to ensure price sensitive information is reported to the ASX in accordance with Continuous Disclosure Requirements. The Board, given the close involvement of various executive members in the operations of the company, sees no necessity for management to formally sign off on the financial reports as per 4.1 and 7.2 of ASX Corporate Governance Principles. ETHICAL STANDARDS The Company recognises the need for Directors and employees to observe the highest standard of behaviour and business ethics in conducting its business. RELATED PARTY TRANSACTIONS A review is undertaken at year end of all related party transactions. BUSINESS RISKS The Board adopts practices to identify significant areas of business risk and to effectively manage those risks in accordance with the Company’s risk profile. Where necessary, the Board draws on the expertise of appropriate external consultants to assist in dealing with or mitigating such risk. ROLE OF SHAREHOLDERS The Board of Directors ensures that the shareholders in all jurisdictions are informed of all major developments affecting the Company’s state of affairs by way of annual reporting and the continuous disclosure of significant events by way of announcements to the ASX Company Announcements Offices. A copy of these announcements are placed on the Company’s web site for easy access by all shareholders. DIRECTORS’ REPORT F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 17 The Directors herewith present the financial report of Finbar International Limited (“the Company”) for the year ended 30 June 2005 and the auditors’ report thereon. DIRECTORS The Directors of the Company at any time during or since the financial year are: Mr Paul Anthony RENGEL (Chairman) Mr John CHAN (Managing Director) Mr John Boon Heng CHEAK Mr Kee Kong LOH Mr Richard Dean RIMINGTON PRINCIPAL ACTIVITIES The principal activities of the Company during the course of the financial year continued to be property investment and development. The Company’s focus is in the development of medium to high-density residential buildings in the Perth metropolitan area by way of direct ownership or by joint venture involvement through companies registered specifically to conduct the development. RESULTS The net profit of the Company after income tax amounted to $6,527,454 (2004 $4,474,948). The net profit of the consolidated group after income tax amounted to $6,578,450. Consolidated financial statements have only been prepared in the current year as there were no controlled entities in the prior year (Note 14). REVIEW OF OPERATIONS During the year the Company continued to focus on its core activities of residential property development. The Company has funded its operations from cash reserves together with short-term construction finance that is project specific. ENVIRONMENTAL REGULATIONS The Company’s activities are not subject to any significant environmental regulations under either State or Commonwealth legislation. DIVIDENDS The Company paid a final dividend of $0.02 per fully paid ordinary share out of profits for the year ended 30 June 2004 on 22 November 2004, which amounted to $1,794,732. 18 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 18 F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 DIRECTORS’ REPORT (CONTINUED) DIVIDENDS (CONTINUED) The Directors recommended on 27 June 2005, the payment of a fully franked dividend of $0.03 per fully paid ordinary share for approval by the members at the Company's Annual General Meeting. The dividend recommended by the Directors amounts to $2,962,097 for shares issued at 30 June 2005. If approved the dividend will be paid on 30 September 2005 and provision has been raised for this amount at year end. SIGNIFICANT CHANGES IN STATE OF AFFAIRS In the opinion of the Directors there has been no significant change in the Company’s state of affairs that occurred during the financial year under review. EVENTS SUBSEQUENT TO BALANCE DATE In relation to 188 Adelaide Terrace Joint Venture Pty Ltd, there were six unconditional contracts in place as at 30 June 2005 that were cancelled at the discretion of the Company subsequent to year end. Finbar International Limited has recognised profits amounting to $229,000 in relation to these contracts. Four of the six properties have subsequently resold for an amount of $165,000 above the original sales prices. LIKELY DEVELOPMENTS The Company will continue planned development projects on existing land and will seek new opportunities for the acquisition of future development projects. Further information about likely development in the operations of the Company and the expected results of those operations in the future years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Company. INFORMATION ON DIRECTORS The particulars of the qualifications and experience of the Directors are as follows: PAUL ANTHONY RENGEL (APPOINTED 22/5/92) - CHAIRMAN Mr Rengel has a Bachelor of Commerce degree from the University of Western Australia. He is a Fellow of the Australian Institute of Chartered Accountants with 32 years experience in public practice in international firms. Mr Rengel is a Partner of Moore Stephens BG, Chartered Accountants. He is an associate of the Australian Institute of Company Directors and the Australian Institute of Management. As Chairman Mr Rengel attended three Directors’ meeting and one shareholders’ meeting held during the year. JOHN CHAN (APPOINTED 27/4/95) – MANAGING DIRECTOR Mr Chan has a Bachelor of Science degree from Monash University and a Master of Business Administration degree from the University of Queensland. He has considerable experience as a Director in public corporations and in the areas of trading, manufacturing, finance and property development. Mr Chan attended three Directors’ meeting and one shareholders’ meeting held during the year. DIRECTORS’ REPORT (CONTINUED) F i n b a r I n t e r n a t i o n a l L i m i t e d A n n u a l R e p o r t 2 0 0 5 19 INFORMATION ON DIRECTORS (CONTINUED) JOHN BOON HENG CHEAK (APPOINTED 28/4/93) Mr Cheak has a