An icon of resilience and versatility, the Bottle tree prospers in the harsh soils of centralQueensland and arid Kimberley region of Western Australia. With a tested ability tosurvive and flourish in its own native environment, the Bottle trees enduring strengthmeans it is also able to sustain others.For example, a broad trunk that might be dismissed as merely unattractive by a casual eye, is actually an enormous reserve of water in a climate where onemight expect to find none. For those with the patient vision to allow a resource to grow to maturity, and the wisdom not to be discouraged by its sometimesinelegant appearance, the Bottle tree has been a trusted provider of not only water, but also food, medicine, and shelter for succeeding generations.
With over twenty years experience in the managed investment industry, the CVC Group has shared its maturity and strength with over seventy companies. Our established investment philosophy has yielded a proven reputation for partnering businesses with solid growth potential. Our survival and prosperity hasshown that for those prepared to patiently seek out opportunities hidden beneath surfaces where others may not take the time and effort to look, the rewardscan be substantial and enduring.
bottle tree[ Brachychiton rupestris : Adansonia gregorii ]
CVC Sustainable Investments Limited ABN 35 088 731 837
chairmans reportfor the year ended 30 June 2006
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Dear Shareholder,
On behalf of the Board of Directors I am pleased to present thefifth annual report for CVC Sustainable Investments Limited("the Company").
I am pleased to report a net profit for the year ended 30 June 2006 of $206,708 ($1,088,683 in 2005). Whilelower than 2005, this profit represents the continuing positiveimprovement in the assets of the fund during a significantgrowth period.
The 2006 financial year has been a significant one for theCompany. In December 2005, the Company undertook a furthercapital raising, successfully raising an additional $3.4 millionthrough a combined rights issue and public offer. The impact of the new raising and the continued growth of our existinginvestments has increased the total equity as at 30 June 2006of the Company to almost $10 million.
During the financial year, we made three new investments.
> Australian Ethanol Limited ($1 million) - ASX listedAustralian Ethanol Limited, (ASX:AAE) is a biofuelsdeveloper in the process of establishing multiple facilitiesboth in Australia and overseas. AAE has an approveddevelopment site for an ethanol production facility at SwanHill, Victoria, set to be Australias largest ethanol facility.AAE has also acquired the rights to develop a large biodieselfacility in the USA. The investment of $1 million was part ofa $12 million placement at a price of $0.30 per share andwas a co-investment with CVC REEF, the CVC Groupsspecialist renewable energy fund. AAEs biofuels businessmodel provides significant social, economic andenvironmental benefits including increased regionalemployment, energy supply security, improved air qualitywith significant health benefits and lower greenhouseemissions than petroleum based fuels.
> Biodiesel Producers Limited ($500,000) - BiodieselProducers Limited (BPL) is a biodiesel developer in theprocess of constructing its first facility in the Wodonga area.Construction has commenced on the site and BPL is noweligible to draw down on the first instalment of its federalgovernment grant for $9.6 million. The Wodonga plant willproduce 60 million litres of biodiesel per annum, 4,000
tonnes of glycerol and 1,200 tonnes of potassium sulphate.Negotiations are afoot to secure further feedstock supply.The investment in BPL is a co-investment with CVC REEFLimited, the CVC Groups specialist renewable energy fundand ANZ Infrastructure Services who have committed $30 million to the project.
> Plantic Technologies Limited during the year, the Company made a follow on investment of $56,697 as part of a $10 million rights issue. The funds were provided forfurther working capital, the establishment of distributionchannels in key offshore markets and for development offurther applications for their 100% biodegradable plasticsubstitute product.
Since 30 June 2006, the Company has made a furtherinvestment in Environmental Group Limited (ASX:EGL). EGL is an ASX listed environmental services company withinvolvement in the water and waste management sector. We believe that EGL has excellent growth prospects and welook forward to working with them in the future.
The Company now has an interesting portfolio of environmentallysustainable Australian growth companies across a diverse range ofsectors. A summary of the Companies that we have used yourfunds to invest in to date and their progress during the 2006 yearis provided following this report.
In addition to growing the Companys financial assets throughinvestment activity, the management team and the Board ofDirectors remain committed to expanding the size of theCompany by raising more capital. Plans are currently underwayto open a prospectus to raise further funds to take advantage ofsubstantial opportunities in the high growth environmentalsector. We also retain the objective of listing the Companysshares on ASX at a future stage.
Once again I thank you for supporting CVC SustainableInvestments which I am pleased to report is proving it ispossible to earn above average returns from environmentallysustainable investing.
Vanda GouldChairman
table of contents01 Chairmans Report
02 Review of Investments
03 Directors Report
06 Income Statement
07 Balance Sheet
08 Statement of Changes in Equity
09 Cash Flow Statement
10 Notes to the Financial Statements
26 Directors Declaration
27 Auditors Independence Declaration
28 Independent Auditors Report
29 Company Particulars
CVC Sustainable Investments Limited
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CVC Sustainable Investments Limited
review of investmentsfor the year ended 30 June 2006
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PRO-PAC PACKAGING LIMITEDPro-Pac (ASX:PPG) is a leading manufacturer and distributorof biodegradable and environmentally friendly packagingsolutions for the general industrial and warehouse packaging sector. Pro-Pac has recently appointed a new CEO, Trevor Morrow following the retirement of companyfounder Jonathan Kahn. Mr Morrow is very experienced inmanufacturing, service and distribution. Mr Kahn remains onthe board in a non-executive capacity. Pro-Pac has recentlyacquired another general packaging business and continuesits expansion strategy.
WIND CORPORATION AUSTRALIA LIMITEDWind Corporation Australia Limited (WCA) is an energydevelopment company with a portfolio of existing andplanned renewable and low emission energy projects. Thecompany was established in 2000 by founding investor CVCREEF Limited to develop and commission the Hampton WindPark. Hampton is a wind park located near Lithgow in NSWwhich supplies clean electricity to the main electricity grid.WCA is exploring opportunities to develop new wind farmprojects in NSW.
BIODIESEL PRODUCERS LIMITEDBiodiesel Producers Limited (BPL) is a biodiesel developerin the process of constructing its first facility in theWodonga area. The Wodonga plant will produce 60 millionlitres of biodiesel per annum, 4,000 tonnes of glycerol and1,200 tonnes of potassium sulphate. Negotiations are afoot to secure further feedstock supply. The investment inBPL is a co-investment with CVC REEF Limited, the CVC Groups specialist renewable energy fund and ANZInfrastructure Services.
TRAFFIC TECHNOLOGIES LIMITEDTraffic Technologies Limited (ASX:TTI), is a solutions providerto the roads and traffic industry in Australia. Part of itsbusiness develops, markets and sells traffic signal systemswhich utilise Light Emitting Diode (LED) technology whichoffers significant energy savings over the incumbent trafficlight technology.
SOILWISE PTY LIMITEDSoilwise Pty Limited is in the process of establishing anetwork of up to ten regional composting facilities, starting inthe Murrumbidgee Irrigation Area of NSW. Its goal is to supplyhigh quality, humus rich compost to Australias agriculturaland horticultural industry as an alternative to chemical based,soil depleting fertilizers. The process that is used to createcompost avoids the production of methane gas which resultsfrom the biomass decomposing in landfills. The methodemployed by Soilwise optimises and controls the conditions incompost windrows to ensure that micro-organisms proliferateto accelerate the breakdown of the waste.
PLANTIC TECHNOLOGIES LIMITEDThe Plantic thermoformed tray is an innovative product usedfor dry goods packaging. It is made from corn-starch (maize)that is Australian grown and non-genetically modified. Thebase sheet material is manufactured in Australia and it canbe processed to form many different packaging applications.It is 100% biodegradable and dissolvable in water. Thecompany remains in the early stages of commercialisation ofits core product. Plantic is now targeting new products andapplications in areas such as high performance films, barrierlayers and injection moulding.
AUSTRALIAN ETHANOL LIMITEDAustralian Ethanol Limited (AAE) has an approveddevelopment site for an ethanol production facility at Swan Hill, Victoria, set to be Australias largest ethanolfacility. AAE has also acquired the rights to develop thelargest biodiesel facility in the USA. Our investment of $1 million was part of a $12 million p
