Limited ACN 099 945 516 Annual Financial Report 30 June 2008 For personal use only CP1 Limited ACN 099 945 516 TABLE OF CONTENTS CORPORATE DIRECTORY 1 DIRECTORS’ REPORT 2 LEAD AUDITOR'S INDEPENDENCE DECLARATION 20 INCOME STATEMENTS 21 STATEMENTS OF RECOGNISED INCOME AND EXPENSE 22 BALANCE SHEETS 23 STATEMENTS OF CASH FLOWS 24 NOTES TO THE FINANCIAL STATEMENTS 25 INDEPENDENT AUDIT REPORT 67 ASX ADDITIONAL INFORMATION 69 OFFICES AND OFFICERS 70 For personal use only CP1 Limited ACN 099 945 516 CORPORATE DIRECTORY Company Auditors of the Company CP1 Limited KPMG ACN 099 945 516 Level 11, Corporate Centre One Cnr Bundall Road and Slatyer Avenue Registered Office Bundall QLD 4217 Level 12, 300 Queen Street Brisbane QLD 4000 Lawyers for the Company National number 13 4679 McCullough Robertson Phone (07) 3229 7129 Level 12 Fax (07) 3229 5796 Central Plaza Two 66 Eagle Street Gold Coast Office Brisbane QLD 4000 City Pacific House 2 Miami Key Blake Dawson Broadbeach Waters QLD 4218 Level 39 National number 13 4679 101 Collins Street Phone (07) 5554 0200 Melbourne VIC 3000 Fax (07) 5575 6366 Melbourne Office Level 7, 50 Market Street Melbourne VIC 3000 Phone (03) 9629 1777 Fax (03) 9629 1677 Postal Address PO Box 783 Pacific Fair QLD 4218 Directors Philip Sullivan Stephen Mackay Daniel Grollo Stephen Scanlon Share Registry Link Market Services Limited Level 12, 300 Queen Street Brisbane QLD 4000 For personal use only - 1 - CP1 Limited ACN 099 945 516 DIRECTORS’ REPORT The Directors present their report together with the financial report of CP1 Limited (“the Company” or “CP1”) and of the Group, being the Company and its controlled entities and the Group’s interest in jointly controlled entities, for the year ended 30 June 2008 and the auditor’s report thereon. DIRECTORS The Directors of the Company in office at any time during or since the end of the financial year are: Philip Keith Sullivan Managing Director Appointed 2002 Mr Sullivan has been actively involved in property investment and development for over 30 years across many sectors of the property market. He currently holds directorships on a number of private Australian investment and development companies. Mr Sullivan has been a director of CP1 since commencement of the Company’s business in 2002. He is also Managing Director and Chief Executive Officer of City Pacific Limited since its incorporation in July 1997 and was a director of Indigo Pacific Capital Limited from February 2004 until September 2005. Mr Sullivan has a detailed understanding of the elements necessary to properly manage large scale property based construction projects which assist CP1 to assess, manage and monitor the project values and risks effectively. Stephen Mackay – BCOM, FPNA FAIM Non-Executive Director Appointed 2002 Mr Mackay holds a degree in Accounting and Business Administration, is a Fellow of the National Institute of Accountants and an Fellow of the Australian Institute of Management. Mr Mackay formerly held senior executive roles with the Queensland Tourist and Travel Corporation and the Daikyo Group. He is a past senior vice president of the Urban Development Institute of Australia. Mr Mackay has been a director of CP1 since commencement of the Company’s business in 2002. Mr Mackay has also been a director of Indigo Pacific Capital Limited since its incorporation in February 2004, and is the former Company Secretary of City Pacific Limited. Daniel Grollo - GAICD Non-Executive Director Appointed 2007 Daniel Grollo is Chief Executive Officer of Grocon Pty Ltd, Australia’s largest privately owned development and construction company. The Grocon business was established by Mr Grollo’s grandfather in the late 1950s and substantially expanded by Mr Grollo’s father, Bruno Grollo, throughout the 1970s and 1980s. Mr Grollo joined Grocon in the late 1980s and worked his way up to eventually take over the business from his father in 1999. Grocon completed central Melbourne’s QV development, the distinctive Eureka Tower on Southbank and the Melbourne Cricket Ground redevelopment for the 2006 Commonwealth Games. Mr Grollo is also a director of the Green Building Council of Australia and in October 2006 he was appointed a non- executive director of the board of BlueScope Steel. Stephen Scanlon – BBUS, CA, GAICD Non-Executive Director Appointed 2007 Stephen Scanlon is a Chartered Accountant, and Chief Financial Officer and Company Secretary of Grocon Pty Ltd Group, Australia’s largest privately owned development and construction company. Mr Scanlon is also General Manager – Investment Management of Grocon’s fund management business and an Executive Director of Grocon Investment Management Pty Ltd. For personal use only He has over twenty years experience in commercial and financial roles having gained exposure to a broad range of financial and industrial environments, both from within the professional services sector, with KPMG, and in “hands on” management roles in the industry. In his roles as Chief Financial Officer and General Manager – Investment Management, Mr Scanlon has overseen the funds management, commercial and financial aspects of over $1 billion of property transactions, primarily relating to property developments and property trusts. - 2 - CP1 Limited ACN 099 945 516 DIRECTORS’ REPORT DIRECTORS (cont) Company Secretary Mrs Lee Danahay was appointed Company Secretary on 16 March 2007. Mrs Danahay holds a degree in Accounting and Business Administration and has been with City Pacific Limited for seven years. She has grown with the company progressing from senior accountant and compliance officer to human resources manager and is currently Group Executive of Investor Relations for City Pacific Limited. Prior to joining City Pacific Limited, Mrs Danahay worked in the Audit and Risk Advisory division of KPMG. Directors’ Meetings The number of directors’ meetings (including meetings of committees of directors) held and the number of meetings attended by each of the Directors of the Company during the financial year are: Board meetings Audit committee A B A B Mr P K Sullivan 24 24 - - Mr S Mackay 24 24 2 2 Mr D Grollo 24 24 2 2 Mr S Scanlon 23 24 2 2 A - Number of meetings attended B - Number of meetings held during the time the director held office during the year To assist in the execution of its responsibilities, the Board has established an Audit Committee. Due to the size of the Board and to maintain efficiency, the Board fulfils the role of nomination and remuneration committee. Senior executives and staff of City Pacific Limited perform services for and on behalf of the Company and the Group pursuant to the Management and Administrative Services agreement between CP1 and City Pacific Limited (“the Management and Services Agreement”). As such, CP1 does not have any direct employees and so there were no remuneration committee meetings held during the year. For personal use only - 3 - CP1 Limited ACN 099 945 516 DIRECTORS’ REPORT CORPORATE GOVERNANCE STATEMENT This statement outlines the key corporate governance practices of the Company that were in place throughout the year ended 30 June 2008 and which were fully compliant with the Australian Stock Exchange (ASX) Corporate Governance Council (CGC) recommendations, unless otherwise stated. This statement has followed the ASX CGC principles and recommendations to ensure accurate and clear reporting. Principle 1 – Lay solid foundations for management and oversight Role and responsibilities of the board and management – Recommendation 1.1 The composition of the board is reviewed on an annual basis to ensure there is an appropriate mix of expertise and experience in areas relevant to the Company. The board is currently comprised of four directors who all have extensive knowledge in either CP1’s areas of operation, financial reporting and audit, or risk management. The names of the directors of the Company in office at the date of this report, including the period of office of each director and their independency status, are set out on page 2 of this report. The composition of the board is determined using the following principles: • the board should comprise at least 4 directors; • the majority of directors should be independent, non-executive directors The board currently consists of 3 non- executive directors, however due to the size of the Company, none are independent. Although the Company does not currently comply with this requirement, the directors are committed to appointing a new independent, non- executive director as Chairman; • the Chairman of the board should be an independent, non-executive director. Although the Company does not currently comply with this requirement as it does not have a Chairman, the directors are committed to appointing a new independent, non-executive director as Chairman; • the roles of Chairman and Chief Executive Officer should not be exercised by the same individual; • a majority of directors should have extensive knowledge of CP1’s industries, and those which do not should have extensive expertise in significant aspects of auditing and financial reporting, or risk management; • the board should meet on a regular basis; • all available information in connection with items to be discussed at a meeting of the board shall be provided to each director prior to that meeting; • directors should generally serve for a maximum of 12 years and all directors should retire by the age of 72; • directors appointed to the board are subject to election by shareholders at the following annual general meeting (“AGM”) and thereafter directors other than executive directors are subject to re-election at least every 3 years. The board’s primary role is the protection and enhancement of long term shareholder value. The board has formalised its roles and responsibilities into a board charter which also outlines the roles and responsibilities that have been delegated to the executive management providing services to CP1 pursuant to the Management and Services Agreement.