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Orchid Capital Ltd (ORC)

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Friday 23 September, 2005

Orchid Capital Ltd

Annual Report and Accounts

Orchid Capital Ltd
23 September 2005



                              ORCHID CAPITAL LIMITED
                                  (ACN 073 099 171) 
 
                                  ANNUAL REPORT AND 
                                FINANCIAL STATEMENTS 
 
                              YEAR ENDED 30 JUNE 2005 

                                  TABLE OF CONTENTS 



CORPORATE DIRECTORY 
CHAIRMAN'S REPORT 
REVIEW OF OPERATIONS 
CORPORATE GOVERNANCE 
DIRECTORS' REPORT 
STATEMENT OF FINANCIAL PERFORMANCE 
STATEMENT OF FINANCIAL POSITION 
STATEMENT OF CASHFLOWS 
DIRECTORS' DECLARATION 
INDEPENDENT AUDIT REPORT 
AUDIT INDEPENDENCE LETTER 
ADDITIONAL STOCK EXCHANGE INFORMATION 
  

                                     CORPORATE DIRECTORY

 
DIRECTORS 
 
C McKee
N Grafton
A Tan
J Sandt
 
COMPANY SECRETARY 
 
N Grafton
 
ADMINISTRATION AND REGISTERED OFFICE 
 
Suite 3, Ground Floor
610 Murray Street
West Perth, Western Australia, 6005
Telephone: +618 9321 3664
Facsimile: +618 9322 6887
Email: [email protected]
Website: www.orchidcapital.net

AUDITORS 
 
Stanton Partners
Level 1
1 Havelock Street
West Perth, Western Australia, 6005
 
SHARE REGISTRY 
 
Advanced Share Registry Services Pty Ltd
110 Stirling Highway
Nedlands, Western Australia, 6909
Telephone: +618 9389 8033
Facsimile: +618 9389 7871
 
STOCK EXCHANGE LISTING 
 
The Company is triple-listed on the Australian Stock Exchange Limited, the
Alternative Investment Market (AIM) and Deutsche Borse AG.
Home Exchange - Perth, Australia

ASX Code - ORC
AIM Code - ORC
WKN Code - 924249 
 
AUSTRALIAN COMPANY NUMBER AND AUSTRALIAN BUSINESS NUMBER 
 
A C N 073 099 171
A B N 30 073 099 171 

                                 CHAIRMAN'S REPORT

 
CHAIRMAN'S REPORT 
 
On behalf of the Board of Orchid Capital Limited ('the Company'), I present the Annual Report for the year ended 30
June 2005.

This has been a very difficult year for the Company as its most exciting investment in the Chinese resources industry
faced multiple difficulties which ultimately resulted in our withdrawal. It took a lot of hard work by the company to
progress the Company's ambition to explore in the Tibetan Autonomous Region (TAR), one of the worlds' last frontiers,
not only in a geological sense but also in its development.

Despite this failure, it must be recognized that management made a tremendous effort in progressing the objectives of
ORL. It was and still is the first and only approved foreign cooperative joint venture company in the TAR in the
mining industry. Despite these pioneering achievements, after contemplating the various commercial realities with
progressing the Company's efforts in unlocking the potential wealth in TAR and the difficulties faced, the Board
chose not to pursue its mining activities.

Orchid EMARB continued to perform in line with the Board's expectations and produced healthy returns on the funds
invested.

The performance of the Company's Asian investments was affected by the Boxing Day Tsunami. Again, we note that the
hotel management worked diligently, and despite reduced tourist arrivals in Phuket, successfully maintained occupancy
rates above its peers.

I welcome Mr Julian Sandt as the new CEO of Orchid Capital. Mr Sandt is based in Singapore and is reviewing a number
of investment opportunities in the health and pharmaceutical sector as well as in the renewable energy sector.

The Company continues to hold a healthy cash balance and has implemented plans to significantly reduce costs.

Your Board of Directors is optimistic that further opportunities will arise whereby shareholder value can be
enhanced. I am confident that Orchid will be able to participate in the strong growth taking place in Asia.

I would like to thank the Board for its contribution to the progress of the Company during the year and also to the
employees for their efforts, and we look forward to an exciting and productive year.

 

                                       REVIEW OF OPERATIONS

The year has been a busy one for Orchid Capital Limited (ORC), culminating in achieving an official listing on the
Alternative Investment Market (AIM) of the London Stock Exchange in June. Listing on London's AIM adds to Orchid's
other listings on the Australian Stock Exchange (ASX) and Germany's Deutsche Borse (DAX). The listing on AIM offers
the Company additional international exposure and increases the potential to attract European investors and increases
access to capital.

In June 2004, ORC established a fully owned subsidiary, Orchid Resources Limited (ORL), to pursue the exploration and
development of resource opportunities in the People's Republic of China.

ORL contracted its initial mining deal in December 2004 by becoming the first foreign company in the world to receive
approval for a mining Cooperative Joint Venture in Tibet. The Tibet Pioneer Mining Company (TPMC) is a joint venture
between ORL (70%) and the China Tibet Institute of Geology Survey (CTIGS) (30%).

In addition to the existing gold project at Nagarze, ORL also signed Letters of Intent in February 2005 to acquire,
explore and potentially develop two copper porphyry deposits at Qu Long (pronounced choo long) and Jia Ma (pronounced
gee-ah mah), both located east of Tibet's capital, Lhasa.

In April 2005, independent Australian mining consulting group Ausenco Limited conducted a full technical due
diligence evaluation of the Qu Long and Jia Ma projects. The report concluded that the resource for Qu Long was
appropriately classified as an Inferred Resource under the Joint Ore Reserves Committee (JORC) classification system.

Unfortunately, in August 2005, the Company was made aware of a competing bidder for the Qu Long project, and has
subsequently concluded that the chances for success in view of the competition were slim. It was with great
disappointment that the Board had to review its position with the China Tibet Institute of Geology Survey and
concluded that it would no longer pursue the projects covered by the Letter of Intent with the CTIGS. The Board
formed the view that it would be difficult for the Tibet Autonomous Region government to deal with ORL in view of the
local competitor, who, we believe, will be the likely winner in such a bid.

ORL has also completed the 200 metre adit at the Nagarze gold prospect, together with accompanying assays. Much of
the adit has anomalous gold values in the range of 0.2 to 0.4 g/t Au. Peak value was 2.06 g/t in the adit, which
compared with peak surface values of 5.6 g/t Au. The adit tested an area which was indicated with the use of ASTER
(Advanced Space borne Thermal Emission Reflection Radiometer) satellite imagery. After due commercial consideration,
the Company decided that it would not proceed with test drilling of the prospect.

The Company has been released from its obligations under the joint venture agreement, including its obligations to
fund tenement exploration and feasibility study and is now considering other alternatives with regard to its
investment in ORL.

Orchid EMARB Ltd (EMARB) is an international offshore fund established in 2002 with funds of euro2.5 million. The
fund invests principally in investment grade euro bonds. Orchid enjoyed a profit for the year of euro418,710, an
increase of 108% year on year. This is a return of 13.4% on funds invested. At the end of the financial year ending
30 June 2005, cash represented 27% of the portfolio. The Board continues to monitor the market closely and maintains
a conservative perspective in its investments.

Orchid has a 23.2% interest in the Jiva Resort and Spa located in Kata Beach, Phuket. The Board certainly has the
utmost respect for the forces of nature as yet again another external factor adversely affected our investments.
However, we were fortunate that the 2004 Boxing Day tsunami which devastated large areas of southern Asia, did not
physically damage the Resort, and all staff and guests at Jiva Resort were reported safe. Although the resort was
spared the worst of the tragedy, occupancy for the following months was significantly impacted. Management of Jiva
has done a tremendous job, and is now looking towards a return to normal occupancy and rates.

The Company currently has approximately $5 million in liquid assets, and is seeking to rationalize some of its
investments. The Board is actively pursuing other high growth opportunities, in particular with a view to taking
advantage of strong growth potential in China and the impact of such growth on various industries.

 
  
 
                                        CORPORATE GOVERNANCE

 
 
The Board of Directors of Orchid Capital Limited ('Orchid') is responsible for the corporate governance of the
economic entity. The Board guides and monitors the business and affairs of Orchid on behalf of the shareholders by
whom they are elected and to whom they are accountable.

To ensure that the Board is well equipped to discharge its responsibilities, it has established guidelines for the
nomination and selection of directors and for the operation of the Board.
 
COMPOSITION OF THE BOARD 
 
The composition of the Board is determined in accordance with the following principles and guidelines:

 
• the Board should comprise at least four directors and it intends to establish a majority of non-executive
directors;
 
• the Chairman should be a non-executive director, although this has not yet been achieved;
 
• the Board should comprise directors with an appropriate range of qualifications and expertise; and
 
• the Board shall meet at regular intervals and follow meeting guidelines set down to ensure all directors are made
aware of, and have available all necessary information, to participate in an informed discussion of all agenda items.
When a vacancy exists, through whatever cause, or where it is considered that the Board would benefit from the
service of a new director with particular skills, the Board selects a candidate or panel of candidates with the
appropriate expertise.

The Board then appoints the most suitable candidate, who must stand for election at the next general meeting of
shareholders. The Company does not have a formal Nomination Committee.
 
REMUNERATION COMMITTEE 

Remuneration levels are set by the Board in accordance with industry standards to attract suitable qualified and
experienced Directors and senior executives.
 
AUDIT COMMITTEE 

The company is not of a size that justifies having a separate Audit Committee. However, matters typically dealt with
by such committees are dealt with by the full Board.
 
BOARD RESPONSIBILITIES 

As the Board acts on behalf of and is accountable to the shareholders, it seeks to identify the expectations of the
shareholders, as well as other regulatory and ethical expectations and obligations. In addition, the Board is
responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately
manage those risks. The Board seeks to discharge these responsibilities in a number of ways.

The responsibility for the operation and administration of the economic entity is delegated by the Board to the
Managing Director. The Board ensures that the Managing Director is appropriately qualified and experienced to
discharge his responsibilities, and has in place procedures to assess the performance for the Company's officers,
contractors and consultants.

The Board is responsible for ensuring that management's objectives and activities are aligned with the expectations
and risks identified by the Board. It has a number of mechanisms in place to ensure this is achieved, including the
following:

 
• Board approval of a strategic plan, designed to meet shareholder needs and manage business risk; 
• implementation of operating plans and budgets by management and Board monitoring progress against budget; 
• procedures to allow directors, in the furtherance of their duties, to seek independent professional advice at the
Company's expense.  
MONITORING OF THE BOARD'S PERFORMANCE AND COMMUNICATION TO SHAREHOLDERS 

In order to ensure that the Board continues to discharge its responsibilities in an appropriate manner, the
performance of all directors is to be reviewed annually by the chairperson. Directors whose performance is
unsatisfactory are asked to retire.

BEST PRACTICE RECOMMENDATION 

Outlined below are the 10 Principles of Good Corporate Governance and Best Practice Recommendations as outlined by
the ASX and the Corporate Governance Council, along with details as to whether the Principles had been adopted at 30
June 2005 and if not, the reasons why not adopted.

                                                                                                                      
                                                                              Action taken and reasons                
                                                                                   if not adopted                     
                                                                                                                      
  Recognise and publish the respective roles and                Adopted                                               
  responsibilities of the board and management                                                                        
  Principle 1: Lay solid foundation for management and                                                                
  oversight                                                                                                           
  1.1     Formalise and disclose the functions reserved to                                                            
  the Board and those delegated to management                                                                         
                                                                                                                      
  Have a board of an effective composition, size and            Adopted except as follow:-                            
  commitment to adequately discharge its responsibilities and   The company is not of a size that justifies having a  
  duties                                                        separate Nomination, Remuneration and Audit           
  Principle 2: Structure the board to add value                 Committees. However, matters typically dealt with by  
  2.1     A majority of the Board should be independent         such committees are dealt with by the full Board.     
  2.2     The chairperson should be an independent director     Only one of the five Board members is considered      
  2.3     The roles of chairperson and chief executive          independent. This matter will be addressed over the   
  officer should not be exercised by the same individual        next few years, depending upon the growth of the      
  2.4     The board should establish a nomination committee     Company.                                              
  2.5     Provide the information indicated in 'Guide to                                                              
  reporting on Principle 2                                                                                            
      


                                                                                                                      
  Actively promote ethical and responsible decision-making      Adopted                                               
  Principle 3: Promote ethical and responsible                                                                        
  decision-making                                                                                                     
  3.1     Establish a code of conduct to guide the directors,                                                         
  the chief executive officer (or equivalent), the chief                                                              
  financial officer (or equivalent) and any other key                                                                 
  executives as to:                                                                                                   
  3.1.1     the practices necessary to maintain confidence in                                                         
  the company's integrity                                                                                             
  3.1.2     the responsibility and accountability of                                                                  
  individuals for reporting or investigating reports of                                                               
  unethical practices                                                                                                 
  3.2     Disclose the policy concerning trading in company                                                           
  securities by directors, officers and employees                                                                     
  3.3     Provide the information indicated in 'Guide to                                                              
  Reporting on Principle 3'                                                                                           
                                                                                                                      
  Have a structure in place to independently verify and         Adopted                                               
  safeguard the integrity of the company's financial                                                                  
  reporting                                                                                                           
  Principle 4: Safeguard integrity in financial reporting                                                             
  4.1     Require the chief executive officer (or equivalent)                                                         
  and the chief financial officer (or equivalent) to 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 accordance with relevant accounting standards.                                                           
  4.2     The board should establish an audit committee         The company is not of a size that justifies having a  
                                                                separate Audit Committees. However, matters typically 
                                                                dealt with by such committees are dealt with by the   
                                                                full Board.                                           
                                                                                                                      
  4.3     Structure the audit committee so that it consists                                                           
           of:                                                                                                          
          •  Only non-executive directors                                                                               
          •  A majority of independent directors                                                                        
          •  An independent chairperson who is not the chairperson                                                      
             of the Board                                                                                               
          •  At least three members                                                                                     
   
                                                                                                                      
  4.4     The audit committee should have a formal operating                                                          
           charter                                                                                                      
      
                                                                                                                        
4.5     Provide the information indicated in the 'Guide to                                                          
        reporting on Principle 4'                                                                                       
   
                                                                                                                      
                                                                Adopted                                               
  Promote timely and balanced disclosure of all material                                                              
  matters concerning the companyPrinciple 5: Make timely and                                                          
  balanced disclosure                                                                                                 
  5.1     Establish written policies and procedures designed                                                          
  to ensure compliance with ASX Listing Rule disclosure                                                               
  requirements and to ensure accountability at a senior                                                               
  management level for that compliance                                                                                
  5.2     Provide the information indicated in the 'Guide to                                                          
  reporting on Principle 5'                                                                                           
                                                                                                                      
  Respect the rights of shareholders and facilitate the         Adopted                                               
  effectiveness of those rights                                                                                       
  Principle 6: Respect the rights of shareholders                                                                     
  6.1     Design and disclose a communications strategy to                                                            
  promote effective communication with shareholders and                                                               
  encourage effective participation at general meetings.                                                              
  6.2     Request the external audit to attend the annual                                                             
  general meeting and be available to answer shareholder                                                              
  questions about the audit and the preparation and content                                                           
  of the auditor's report                                                                                             
                                                                                                                      
 
 

                                                                                                                      
  Establish a sound system of risk oversight and management and 
internal control                                                                   Adopted  

  Principle 7: Recognise and manage risk                                                                              

  7.1     The Board or appropriate Board committee should establish policies 
          on risk oversight and management                                                                              
                           
  7.2     The chief executive officer (or equivalent) and the chief financial 
          officer (or equivalent) should state tot he Board in writing that:                                            
                             
  7.2.1     the statement given in accordance with best practice recommendation 
            4.1 (the integrity of financial statements) is founded on a sound 
            system of risk management and internal compliance and control which 
            implements the policies adopted by the Board                                                          
  7.2.2     the company's risk management and internal compliance and control 
            system is operating efficiently and effectively in all material 
            respects.                                                               
  7.3     Provide the information indicated in the 'Guide to reporting on 
          Principle 7'                                
                                                                                                                      
  Fairly review and actively encourage enhanced board and management effectiveness   Adopted  
  Principle 8: Encourage enhanced performance                                                                         

  8.1     Disclose the process for performance evaluation of the Board, its 
          committees and individual directors, and key executives                                                       
                               
                                                                                                                      
  Ensure that the level and composition of remuneration is sufficient and           Adopted  
  reasonable and that its relationship to corporate and individual performance 
  is defined                                                     

  Principle 9: Remunerate fairly and responsibly                                                                      

  9.1     Provide disclosure in relation to the company's remuneration policies
          to enable investors to understand (i) the cost and benefits of these 
          policies and (ii) the link between remuneration paid to directors and 
          key executives and corporate performance.                                                             
  9.2     The board should establish a remuneration committee                                                         
  9.3     Clearly distinguish the structure of non-executive directors' 
          remuneration from that of executives                                                                          
                               
  9.4     Ensure that payment of equity-based executive remuneration is made in 
          accordance with thresholds set in plans approved by shareholders                                              
                                
                                                                                                                      
  Recognise the legal and other obligations of all legitimate stakeholders          Adopted  
  Principle 10: Recognise the legitimate interest of stakeholders                                                     
  10.1     Establish and disclose a code of conduct to guide compliance with 
           legal and other obligations to legitimate stakeholders                                                       
                                  
                                                                                                                      
 

                                          DIRECTORS' REPORT

 
The Board of Directors of Orchid Capital Limited have pleasure in presenting their report on the consolidated entity
consisting of Orchid Capital limited and the entities controlled at the end of or during the year ended 30 June 2005.
 
DIRECTORS 
 
The names and details of the Directors in office at the date of this report are:

Clive McKee (Chairman)  
Mr McKee has extensive experience in global asset management and corporate finance through his previous positions
with securities and fund management companies such as Yamaichi Securities, Societe General, Australia and New Zealand
Banking Group Limited, Westminster Fund Management GMBH, Pacific Fund Management Asia, Pacific Rim Investment
Corporation Limited and formerly Chairman of Magna Pacific (Australia) Holdings Limited. Directorships in listed
companies over the past three years are BKM Management Limited and Magna Pacific (Holdings Limited).

Norman Grafton (Finance Director and Company Secretary)  
Mr Grafton (FCPA, FCIS) has had considerable experience in both Australian and international commerce, having
previously been based in Singapore, Indonesia, Papua New Guinea and Jamaica. Prior to returning to Australia, he was
Director of Finance and Company Secretary of the largest agro-industrial operation in Jamaica on secondment from a
major UK firm of corporate managers. No other Directorships were held in listed companies over the past three years.

Alvin Tan (Managing Director) 
Mr Tan is a Bachelor of Commerce graduate with Honours from the University of Western Australia and worked for KPMG
Peat Marwick in Kuala Lumpur from 1993 to 1995. He has also worked with stockbroking house, DJ Carmichael Pty Ltd, as
an investment adviser where he specialized in the Asia Pacific Equity Markets. He has previously served on the Board
of Pacific Rim Investment Corporation and is currently a Director of Blink Models Limited. One Directorships in
listed companies over the past three years was BKM Management Limited.

Julian Sandt (Non-Executive Director) 
Mr Sandt holds a German MBA from the Koblenz Business School (WHU Koblenz). From 1993 to 2000, he held various
positions with Commerzbank AG in Frankfurt, Paris and Singapore. Last position held was Manager Capital Markets and
Syndications. From 2000 to 2004, Mr Sandt was Managing Partner of TFG Venture Capital (Asia) Pte Ltd, Singapore.
Since 2004, Mr Sandt has held the position of Senior Partner at Aegis Private Capital Pte Ltd, Singapore. No other
Directorships were held in listed companies over the past three years.

DIRECTORS' INTERESTS 
 
As at the date of this report, the interests of the Directors in the shares and options of the Company are:
 

                                                                                      
                                  Names        Fully Paid Shares     30 November 2006 
                                                                    Options (Listed)* 
                                  C McKee               1,250,000            1,250,000
                                  N Grafton                     -            1,000,000
                                  A Tan                   460,000            1,750,000
                                  J Sandt                 100,000            1,000,000
* Listed, exercisable at 5 cents on or before 30 November 2006

REMUNERATION REPORT 
 
Messrs McKee and Tan's contracts expire on 25 June 2006, and Mr Grafton's contract expires on 30 June 2007. Current
annual salaries are as follows:
          Mr McKee          $139.732
          Mr Tan            $197,222
          Mr Grafton        $130,000

A new contract is in the process of being written for Mr Sandt.

The above salaries were not based on the Company's performance.

Should the Directors' contracts be terminated before the end of their nominated term, the contracts are to be paid
out for the remainder of the term.
 
Directors' Remuneration 

The Board reviews the remuneration packages of all Directors and any Executive Officers. The Board does not have any
formal remuneration policy, but any decision on remuneration increases or bonuses is made having due regard to the
Consolidated Entity's performance and other relevant factors.

Details of the nature and amount of each element of remuneration of each Director of the Consolidated Entity paid or
payable by the Consolidated Entity during the financial year are as follows:

Remuneration of Specified Directors and Specified Executives  
Specified Directors 

                                                                                                                      
                                                                                        Equity Compensation           
                                                                                             Benefits                 
  Name of Specified                                                 Superan-nuation             $                     
  Director                                      Salary     Fees            $                                   Total  
                       Office Held                 $         $                                                   $  
  
  C McKee              Chairman (Appointed 9           -   141,552                  -                      -   141,552
                       September 2005)                                                                                
  A Tan                Managing Director         158,333         -             14,250                      -   172,583
                       (resigned and became a                                                                         
                       non executive director                                                                         
                       on 20 September 2005)                                                                          
  N Grafton            Finance Director &        110,696         -             34,000                      -   144,696
                       Company Secretary                                                                              
  J Sandt              Non-Executive Director          -    31,709                  -                      -    31,709
                       (appointed Managing                                                                            
                       Director on 20                                                                                 
                       September 2005)                                                                                
  R Kestel             Chairman (Retired 1             -    31,354                  -                      -    31,354
                       July 2005)                                                                                     
  D Tyrwhitt           Chairman (Appointed 1           -         -                  -                      -         -
                       July 2005, Retired 9                                                                           
                       September 2005)                                                                                


Specified Executives 

                                                                                                                      
                                                   Salary &                            Equity Compensation            
                                               Consultancy Fees                             Benefits                  
  Name of Specified                                                Superan-nuation              $                     
  Executive                                            $                  $                                    Total  
                        Office Held                                                                              $    

  D Tyrwhitt            Exploration Director              226,000                  -                 320,000   546,000
                        of Orchid Resources                                                                           
                        Limited (Resigned 1                                                                           
                        September 2005)                                                                               
  S Dobson              Executive Director                 80,500              7,245                  75,000   162,745
                        of Orchid Resources                                                                           
                        Limited (Resigned                                                                             
                        February 2005) 
                                                                               
OPTIONS 
 
At the date of this report, the unissued ordinary shares of Orchid Capital Limited under option are as follows:

Date of Expiry     Exercise Price     Number under
                       $                   Option

30 November 2006     0.05               99,255,521

No person entitled to exercise these options had or has any right by virtue of the option to participate in any share
issue of any other body corporate.

DIRECTORS' MEETINGS 
 
During the year ended 30 June 2005 the Company held eight meetings of Directors. The attendances of Directors at
meetings of the Board were:

Name                    Number held and           Number  
                    entitled to attend           attended 

N Grafton                    8                    8
C McKee                      8                    8
A Tan                        8                    8
R Kestel                     8                    8
J Sandt                      8                    6

PRINCIPAL ACTIVITIES 

The principal activities of the economic entity during the year were investment and mineral exploration.

RESULTS OF OPERATIONS 

The operating loss after income tax of the economic entity for the year ended 30 June 2005 was $4,125,594 (2004:
$1,551,357).

DIVIDENDS 

No dividend has been paid during the financial year and no dividend is recommended for the current year.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS AND REVIEW OF OPERATIONS 

There were no significant changes in the state of affairs of the economic entity during the financial year not
otherwise dealt with in this report and the financial statements. A full review on the operations of the Orchid
Group, are set out under 'Review of Operations' in the Annual Report.

INDEMNITIES 

The Company has entered into an Officer's Protection Deed with the Directors to indemnify each of them against any
liability that may be incurred in relation to his duties as an officer of the Company to the extent permitted by the
law.
FUTURE DEVELOPMENTS 

The Directors continue to examine other high growth investment opportunities, with the view to taking advantage of
strong growth potential in China and the impact of such growth on various industries. The Company is also seeking to
expedite the rationalisation of non-performing assets to increase the capital base for other investment
opportunities.
 
EVENTS SUBSEQUENT TO BALANCE DATE 

The Directors are not aware of any matters or circumstances at the date of the report, other than those referred to
in this report or the financial statements or notes thereto, that have significantly affected or may significantly
affect the operations, the results of operations or the state of affairs of the Consolidated Entity in subsequent
financial years.

NON-AUDIT SERVICES 

The Board of directors is satisfied that the provision of non-audit services during the year is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that
the services disclosed below did not compromise the external auditor's independence for the following reasons:
 
* All non-audit services are reviewed by the Board prior to commencement to ensure they do not adversely affect the
integrity and objectivity of the auditor, and 
* The nature of the services do not compromise the general principles relating to auditors independence as set out in
the Institute of Chartered Accountant's in Australia and CPA Australia's Professional Statement F1; Professional
Independence.

Tax Services               $3,751
Working Capital Report     $18,060

AUDITOR'S INDEPENDENCE DECLARATION 

The lead auditor's independence declaration for the year ended 30 June 2005 has been received and is set out on page
41.

This report is made in accordance with a resolution of the Directors.

Alvin Tan
Managing Director
Perth, Western Australia
23 September 2005
 

                                                             STATEMENT OF FINANCIAL PERFORMANCE
                                                               FOR THE YEAR ENDED 30 JUNE 2005 

                                                                                 
                                                                   Consolidated Entity            Parent Entity  
                                                                                                                      
                                                                   2005          2004          2005          2004     
                                                       Note         $              $             $             $      
                                                                                                                      
  Revenue from ordinary activities                       2        13,823,398     5,305,664       115,561       136,245
  Employee benefits expense                                        (366,717)     (420,651)     (366,717)     (420,651)
  Depreciation expense                                              (16,855)      (10,435)      (16,855)      (10,435)
  Consultancy and other professional fees                          (234,500)     (234,464)     (228,701)     (228,567)
  Computer and office expenses                                     (190,885)     (171,058)     (190,885)     (170,352)
  Travelling and entertainment expenses                             (39,828)      (40,080)      (39,828)      (40,080)
  Provision for write down of investments                           (56,670)      (93,220)     (229,696)     (870,669)
  Cost of investments sold                                      (13,049,851)   (4,826,210)      (49,750)      (20,000)
  Exploration and evaluation costs written off                   (3,500,194)     (354,499)             -             -
  AIM listing expenses                                             (146,881)             -     (146,881)             -
  Write off of unrecoverable investment & loan                             -             -   (3,165,080)             -
  Share of net losses of associates accounted for                  (201,966)     (589,023)             -             -
  using equity method                                                                                                 
  Other expenses from ordinary activities                          (144,645)     (117,381)      (65,238)      (48,082)
  Loss from ordinary activities before income tax        3       (4,125,594)   (1,551,357)   (4,384,070)   (1,672,591)
  expense                                                                                                             
  Income tax expense relating to ordinary activities     4                 -             -             -             -
  Net loss attributable to members of the parent                 (4,125,594)   (1,551,357)   (4,384,070)   (1,672,591)
  entity                                                                                                              
  Total changes in equity other than those resulting     14      (4,125,594)   (1,551,357)   (4,384,070)   (1,672,591)
  from transactions with owners as owners                                                                             
  Basic earning per share (cents per share)              15           (2.72)        (1.12)                
            
Diluted earnings per share has not been included, as it results in a more favourable earnings per share figure than
basic earnings per share.

The accompanying notes form part of these financial statements.

 
 
                                                        STATEMENT OF FINANCIAL POSITION
                                                                AS AT 30 JUNE 2005 

                                                                                 
                                                              Consolidated Entity            Parent Entity  
                                                                                                                 
                                                           2005           2004           2005           2004     
                                               Note         $              $              $              $       
      CURRENT ASSETS                                                                                             
      Cash assets                              16(b)       2,162,621      2,774,618        595,489      1,482,137
      Receivables                                5            45,111         34,620         24,142          5,515
      Other financial assets                     6         3,160,971      4,125,506              -              -
      TOTAL CURRENT ASSETS                                 5,368,703      6,934,744        619,631      1,487,652
      NON CURRENT ASSETS                                                                                         
      Receivables                                5             4,337              -          4,337        354,499
      Investments                                7           936,192      1,206,307      5,255,652      5,535,098
      Property, plant and equipment              8            48,340         39,212         48,340         39,212
      Exploration and evaluation expenditure     9                 -              -              -              -
      TOTAL NON-CURRENT ASSETS                               988,869      1,245,519      5,308,329      5,928,809
      TOTAL ASSETS                                         6,357,572      8,180,263      5,927,960      7,416,461
      CURRENT LIABILITIES                                                                                        
      Payables                                   10          164,204         48,075        148,094         33,238
      Provisions                                 11           55,053         23,628         55,053         23,628
      Other financial liabilities              22(c)               -         38,834              -              -
      TOTAL CURRENT LIABILITIES                              219,257        110,537        203,147         56,866
      NON CURRENT LIABILITIES                                                                                    
      Provisions                                 11           38,333         23,565         38,333         23,565
      TOTAL NON CURRENT LIABILITIES                           38,333         23,565         38,333         23,565
      TOTAL LIABILITIES                                      257,590        134,102        241,480         80,431
      NET ASSETS                                           6,099,982      8,046,161      5,686,480      7,336,030
      EQUITY                                                                                                     
      Contributed Equity                         12       31,612,407     28,846,935     31,612,407     28,846,935
      Reserves                                   13          142,058        728,115        564,678        595,630
      Accumulated losses                         14     (25,654,483)   (21,528,889)   (26,490,605)   (22,106,535)
      TOTAL EQUITY                                         6,099,982      8,046,161      5,686,480      7,336,030

The accompanying notes form part of these financial statements.
 

                                                                 STATEMENT OF CASHFLOWS
                                                              FOR THE YEAR ENDED 30 JUNE 2005 
 
 

                                                                                 
                                                                      Consolidated Entity          Parent Entity  
                                                                                                                      
                                                                  2005             2004          2005         2004    
                                                          Note             $         $             $            $     
  CASH FLOWS FROM OPERATING ACTIVITIES                                                                                
  Payments to suppliers, contractors and                             (908,618)     (828,329)     (823,663)   (759,115)
  employees                                                                                                           
  Sundry income                                                          1,290             -         1,290           -
  Interest received                                                    295,144       219,441        44,819      89,775
  Effect of translating foreign financial                             (78,462)             6             -           -
  statements                                                                                                          
  Net cash used in operating activities           16(a)              (690,646)     (608,882)     (777,554)   (669,340)
  CASH FLOWS FROM INVESTING ACTIVITIES                                                                                
  Purchase of plant and equipment                                     (26,077)      (32,041)      (26,077)    (32,041)
  Payment for investments                                         (12,436,293)   (7,714,700)      (64,103)   (124,671)
  Mining tenements and exploration expenditure                     (1,900,194)     (354,499)             -           -
  Proceeds from investments                                         13,338,566     4,956,120        68,043      29,670
  Net receipts on derivative instruments                               157,314       123,801             -           -
  Net cash generated (used in)/from investing                        (866,684)   (3,021,319)      (22,137)   (127,042)
  activities                                                                                                          
  CASH FLOWS FROM FINANCING ACTIVITIES                                                                                
  Net proceeds from share and option issues                          1,059,521       420,540     1,059,521     420,540
  Loan provided to an entity                                                 -     (450,000)             -   (450,000)
  Repayment of loan provided to an entity                                    -       450,000             -     450,000
  Loan provided to a subsidiary                                              -             -   (1,146,478)   (354,499)
  Net cash inflow financing activities                               1,059,521       420,540      (86,957)      66,041
  Net (decrease) in cash held                                        (497,809)   (3,209,661)     (886,648)   (730,341)
  Cash assets at 1 July 2004                                         2,774,618     5,893,064     1,482,137   2,212,478
  Effect of exchange rates on cash holdings in                       (114,188)        91,215             -           -
  foreign operations                                                                                                  
  Cash assets at 30 June 2005                     16(b)              2,162,621     2,774,618       595,489   1,482,137

The accompanying notes form part of these financial statements.

1.     STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED 30 JUNE 2005 

Financial Reporting Framework 

The financial report is a general-purpose financial report, which has been prepared in accordance with Australian
Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues
Group Consensus Views and the Corporations Act 2001. The financial report covers the economic entity of Orchid
Capital Limited and controlled entities and Orchid Capital Limited as an individual parent entity. Orchid Capital
Limited is a listed public company, incorporated and domiciled in Australia.

The financial report has been prepared on an accruals basis and in accordance with the historical cost convention and
does not take into account changing money values or, except where stated, current valuations of non-current assets.
Cost is based on the fair values of the consideration given in exchange for assets.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of
the financial report. Unless otherwise stated, the accounting policies adopted are consistent with those of the
previous year.

Significant Accounting Policies 

Accounting policies are selected and applied in a manner that ensures that the resultant financial information
satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying
transactions and other events is reported. Comparative information is reclassified where appropriate to enhance
comparability.

In addition to the accounting policies prescribed by applicable Accounting Standards, the following significant
accounting policies have been adopted in the preparation and presentation of the financial report:

(a)     Recoverable Amount of Non-Current Assets 

     Non-current assets are not revalued to an amount above their recoverable amount, and where carrying values
exceed this recoverable amount assets are written down. In determining such recoverable amounts, the expected net
cash flows have not been discounted to their present value.

(b)     Depreciation 

     Depreciation is provided on property, plant and equipment, excluding land and investment properties.
Depreciation is calculated on a straight-line basis so as to write off the net cost of each asset over its expected
useful life. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever
is the shorter, using the straight-line method.

     The expected useful lives are as follows:
 
          Fixtures and fitting          3 years
          Computer equipment            3 years

(c)  Income Tax 

     Tax-effect accounting is applied using the liability method whereby income tax expense or benefit is calculated
on the accounting profit or loss from ordinary activities after allowing for permanent differences. To the extent
time differences occur between the time items are recognised in the accounts and when items are taken into account in
determining taxable income, the net related taxation benefit or liability, calculated at current rates, is disclosed
as a future income tax benefit or a provision for deferred income tax. The net future income tax benefit relating to
tax losses and timing differences is not carried forward as an asset unless the benefit is virtually certain of being
realised.

(d)   Investments 

     Interests in listed and unlisted securities and debt instruments, other than controlled entities and associates
in the consolidated financial statements, are brought to account at the lower of cost and net realisable value and
dividend income is recognised in the statement of financial performance when receivable. Controlled entities and
associates are accounted for in the consolidated financial statements as set out in Note 1(i).
 
     The debt instruments are carried at fair value.

(e)     Derivative Instruments 

     All derivative instruments are carried at fair value on the Statement of Financial Position and are reported as
'positive' or 'negative' replacement values. Fair values are obtained from quoted market prices and dealer price
quotations. Realised or unrealised gains or losses are recognised in 'net results from derivative instruments'.

(f)     Cash 

For the purposes of the statement of cash flows, cash includes cash on hand and in banks, and money market
investments readily convertible to cash within two working days, net of outstanding bank overdrafts.

(g)     Capital Gains Tax 

     No provision has been made for capital gains tax which may arise in the event of sale of revalued assets as no
decision has been made to sell any of these assets.

(h)     Employee Entitlements 
  
        Annual Leave    
        Provision is made for the annual leave liability owed to employees at balance date. Employee benefits expected 
to settle within one year have been measured at the amounts expected to be paid when the liability is settled, plus 
related on-costs.

(h)     Employee Entitlements (cont'd) 
 
     (ii)     Long Service Leave
              A liability for long service leave is recognised, and is measured as the present value of expected
future payments to be made in respect of services provided by employees up to the reporting date. Consideration is
given to expected future wage and salary levels, experience of employee departures and periods of service. Expected
future payments are discounted using interest rates on national government guaranteed securities with terms to
maturity that match, as closely as possible, the estimated future cash outflows.
 
     (iii)    Share and Options on remuneration
          The value of shares and options granted to directors, employees and contractors as part of remuneration for
past or future services is accounted for in the statement of financial performance as an expense. The value of shares
issued is taken as the market value of the shares at date of approval by shareholders (in the case of directors) or
the date of issue for employees and contractors. The options are valued using the Black Scholes Option Value
Methodology and the proportion of the value from date of grant to balance date is expensed and the remaining value of
the options granted are taken up as an expense over the vesting period.
 
(i)     Principles of Consolidation 
 
     The consolidated financial statements incorporate the assets and liabilities of all entities controlled by
Orchid Capital Limited ('company' or 'parent entity') as at 30 June 2005 and the results of all controlled entities
of the year then ended. Orchid Capital Limited and its controlled entities together are referred to in this financial
report as the consolidated entity. The effects of all transactions between entities in the consolidated entity are
eliminated in full. Outside equity interests in the results and equity of controlled entities are shown separately in
the consolidated statement of financial performance and statement of financial position respectively.
 
     Where control of an entity is obtained during a financial year, its results are included in the consolidated
statement of financial position from the date on which control commences. Where control of an entity ceases during a
financial year its results are included for that part of the year during which control existed.
 
     Investments in associates are accounted for in the consolidated financial statements using the equity method.
Under this method, the consolidated entity's share of the profits or losses of associates is recognised as revenue in
the Consolidated Statement of Financial Performance, and its share of movements in reserves is recognised in
consolidated reserves. Associates are those entities over which the consolidated entity exercises significant
influence, but not control.
 
(j)     Leased Non-Current Assets 
 
     A distinction is made between finance leases which effectively transfer from the lessor to the lessee
substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating leases
under which the lessor effectively retains substantially all such risks and benefits. Finance leases are capitalised.
A lease asset and liability are established at the present value of minimum lease payments.

(j)     Leased Non-Current Assets (cont'd) 
     
     Lease payments are allocated between the principal component of the lease liability and the interest expense.
The lease asset is amortised on a straight-line basis over the term of the lease, or, where it is likely that the
consolidated entity will obtain ownership of the asset, the life of the asset.

     Other operating lease payments are charged to the Statement of Financial Performance in the periods in which
they are incurred, as this represents the pattern of benefits derived from the leased assets.
 
(k)     Foreign Currency 

     All foreign currency transactions during the financial year are brought to account using the exchange rate in
effect at the date of transaction. Foreign currency monetary items at reporting date are translated at the exchange
rate existing at that date.

     Exchange differences are recognised in the statement of financial performance in the period in which they arise
except that:

i.     exchange differences which relate to assets under construction for future productive use are included in the
cost of those assets; and
 
ii.     exchange differences on transactions entered into in order to hedge the purchase or sale of specific goods
and services are deferred and included in the measurement of the purchase or sale.

Exchange differences relating to foreign currency monetary items forming part of the net investment in a
self-sustaining foreign operation are transferred on consolidation to the foreign currency translation reserve.

Financial statements of self-sustaining foreign controlled entities are translated at reporting date using the
current rate method and exchange differences are taken directly to the foreign currency translation reserve.

(l)     Mineral exploration and evaluation costs 

There was a change in accounting policy with respect to mineral exploration and evaluation expenditure during the
year ended 30 June 2005. Mineral exploration and evaluation expenditure is now capitalised with effect from 1 July
2004 according to the following basis:-

 
     (i)   where such costs are expected to be recouped through successful development and exploitation of the area, or
alternatively by its sale, or

     (ii)     exploration and/or evaluation activities in the area have not yet reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to the areas are continuing.

(l)     Mineral exploration and evaluation costs (cont'd) 
 
Accumulated costs in respect of areas of interest, which are abandoned, are written off in the Statement of Financial
Performance in the financial period in which the area is abandoned.
 
The net carrying value of each property is reviewed regularly and, to the extent to which this value exceeds its
recoverable amount, the excess is fully provided against in the financial period in which this is determined.
 
There is no financial effect of this change in policy in this financial year as the Board decided to abandon all
projects in China resulting a total write off of $3,500,194.

                                                                           
                                                                       Consolidated        Parent Entity 
                                                                                                         
                                                                         2005        2004       2005      2004   
                                                                           $            $          $         $    
2.     REVENUE                                                                            
                    Interest income                                      287,393     262,364    46,228   106,575
                    Proceeds on disposal of investments               13,338,567   4,956,120    68,043    29,670
                    Net results from derivative investments              196,148      87,180         -         -
                    Sundry income                                          1,290           -     1,290         -
                                                                      13,823,398   5,305,664   115,561   136,245
 

                                                                                                                      
  3.     LOSS FROM ORDINARY ACTIVITIES    
                                                                            
       Loss from ordinary activities before income tax has been                                                       
  determined after:                                                                                                   
                                                                                                                      
       Gains/(Expenses)                                                                                               
       Depreciation of plant and equipment                              (16,855)    (10,435)      (16,855)    (10,435)
       Employee benefit expenses                                       (366,717)   (420,651)     (366,717)   (420,651)
       Provision for write down of investments                          (56,670)    (93,220)     (229,696)   (870,669)
       Share of net losses of associates                               (201,966)   (589,023)             -           -
       Write-off of property, plant and equipment                           (94)       (550)          (94)       (550)
       Exploration and evaluation costs written off                  (3,500,194)   (354,499)             -           -
       Write off of unrecoverable investment & loan                            -           -   (3,165,080)           -
       Options issued to directors                                             -    (71,700)             -    (71,700)
       Options issued to specified executives                           (75,000)    (14,340)      (75,000)    (14,340)
       Net gain on disposal of investments                               288,716     129,910        18,293       9,670
       Net exchange (loss)/gain                                                -     (8,878)             -           -
       Net results from derivative instruments                           196,148      87,180             -           -
                                                                           
                                                                          Consolidated              Parent Entity 
                                                                                                                      
                                                                       2005         2004         2005         2004    
                                                                         $            $            $            $     
  4.     INCOME TAX 
                                                                                                  
       Prima facie tax on operating loss before income tax at 30%    (1,237,678)   (465,407)   (1,315,221)   (501,777)
       Tax effect of permanent differences                              127,154     230,485        66,564     287,013
       Carried forward tax losses                                       (62,885)           -             -           -
       Future income tax benefit not brought to account                1,173,409     234,922     1,248,657     214,764
       Income tax attributable to operating loss                               -           -             -           -
 
The Directors have considered it prudent not to bring to account the future income tax benefit of income tax losses
and exploration deductions until there is virtual certainty of deriving assessable income of a nature and amount to
enable such benefit to be realised.

The Company has estimated income losses and capital losses of $9,473,000 and $5,087,000 respectively (2004:
$9,243,000 and $4,137,000 respectively). The benefit of these losses and timing differences will only be obtained if:

(a)     the Company derives future assessable income of a nature and an amount sufficient to enable the benefit from
the deductions for the loss to be realised;

(b)     the Company continues to comply with the condition of deductibility imposed by law; and

(c)     no changes in tax legislation adversely affect the Company in realising the benefit from the deduction for
the loss.

                                                                                                                      
                                                             Consolidated                       Parent Entity         
                                             Note        2005              2004               2005             2004   
                                                              $            $                 $                 $    
  5.  RECEIVABLES (CURRENT)                                                                                        
       Sundry debtors                                        22,736           5,536               24,142         5,515
       Interest receivable from debt  instruments            22,375          29,084                    -             -
                                                                                                         
                                                             45,111          34,620               24,142         5,515
       RECEIVABLES (NON CURRENT)                                                                                      
       Deposit                                                4,337               -                4,337             -
       Loan receivable from a subsidiary                          -               -                    -       354,499
                                                              4,337               -                4,337       354,499
                                                                                                                      
  Loan provided to Orchid Resources Limited was unsecured, interest free and has no fixed term of repayment. The 
  loan was used to fund the exploration and evaluation activities in Tibet. The amount of the loan as at 30 June 2005 
  was $3,165,050 and has been fully provided for. 
                                                                    
                                                             Consolidated                       Parent Entity         
                                             Note        2005              2004               2005             2004   
                                                           $                 $                 $                 $    
  6.     OTHER FINANCIAL ASSETS (CURRENT)                                                                             
       Investments in debt instruments                    2,808,125       3,713,525                    -             -
       Investments in equities                              352,846         411,981                    -             -
                                                          3,160,971       4,125,506                    -             -
                                                                                                                      
                                                                                                                      
  7.     INVESTMENTS (NON-CURRENT)                                           
                                                                                                                      
                                       Country of            Percentage Interest             Cost of Parent Entity's   
                                  Incorporation                    Held                          Investment          
                                                              2005            2004           2005             2004    
                                                                                               $                $     
       (i) Investment in controlled entities   
                                                                       
       Orchid Emarb Ltd (Note 7(a))        BVI                      100%        100%         4,261,460       4,261,460
       Orchid Thailand Ltd (Note        Thailand                    100%        100%            89,048          89,048
        7(b)) 
       Less: Provision for write down                                                          (31,048)        (21,718)
                                                                                                58,000          67,330
       Orchid Resources Limited       Mauritius                     100%           -                 -               -
       (Note 7(c))                                                                               
                                                                                             4,319,460       4,328,791
                                                                                                                    
         (ii) Investment in unlisted associated companies                                                           
         Asia Island Homes Ltd (Note 7(d))                   Thailand    23.81%   23.81%     3,072,606     3,072,606
         Less: Provision for write down                                                    (3,072,606)   (3,020,288)
                                                                                                     -        52,318
         Jiva Kata Resort Co. Ltd (Note 7(e))                Thailand     23.2%    23.2%     1,343,763     1,343,763
         Less: Provision for write down                                                      (788,763)     (639,115)
                                                                                               555,000       704,648
                                                                                               555,000       756,966
7.     INVESTMENTS (NON-CURRENT) (cont'd) 
 

                                                                                                                      
                                     Country of           Percentage Interest             Cost of Parent Entity's    
                                   Incorporation                    Held                          Investment           
                                                             2005           2004            2005              2004    
                                                                                              $                 $     
       (iii) Investment in                                                                                            
  non-controlled unlisted entities                                                                                    
                                                                                                                      
       Advent Television Ltd (Note       Singapore                                             595,581         595,581
       7(f))                                                                                                 
       Less: Provision for write down                                                        (575,581)       (575,250)
                                                                                                20,000          20,331
                                                                                                20,000          20,331
                                                                                                                      
       (iv) Investment held for resale                                                                                
       Pangala Holdings Limited (Note       BVI                   100%        100%             274,151         274,151
       7(g))                                                                                         
       (v) Investment in                                                                                              
  non-controlled listed entities                                                                                      
                                                                                                                      
       Golden Cross Resources Ltd        Australia                                              32,120          50,188
       (Note 7(h))                                                                                      
                                                                                                                      
       Cangold Ltd (Note 7(i))             Canada                                               54,921          54,921
                                                                                                                      
       Tritton Resources Ltd (Note       Australia                                                   -          20,000
        7(j))                                                                                                     
                                                                                                                      
       Arc Energy NL (Note 7(k))         Australia                                                   -          29,750
                                                                                                87,041         154,859
       Total Investments - Parent                                                            5,255,652       5,535,098
 

                                                                                                      
                       Total Investment - Parent                                              5,255,652      5,535,098
                       Investment - Subsidiaries                                             (4,319,460)    (4,328,791)
                       Reversal of provision for write down in associates                     3,861,369      3,659,403
                       Share of losses brought forward                                       (3,659,403)    (3,070,380)
                       Share of net profit/(losses) of associates                              (201,966)     (589,023)
                       Total Investments - Consolidated                                          936,192     1,206,307
                                                                                                                      
  (a)     Orchid Emarb Limited                                            
          Orchid Emarb Limited ('OEL'), a company incorporated in the British Virgin Islands and is a wholly owned    
      subsidiary of Orchid Capital Limited. It is an investment company and seeks maximum capital appreciation and    
      financial returns by channelling its funds to prospective debt financial instruments, equities and financial    
      derivatives. At 30 June 2005, the majority of its portfolio resides in Europe.                   

  (b) Orchid Thailand Limited ('OTL'), a company incorporated in Thailand and is a wholly owned subsidiary of   
      Orchid Capital Limited. It is an investment holding company seeking opportunities in investing in high growth    
      companies in Thailand. The company remains dormant since the incorporation.                     
                                                                                                                      
       The Directors considered the fair value of the investment at 30 June 2005 to be $58,000 and as a consequence a 
       write down of $9,330 was made and charged to the Statement of Financial Performance for the financial year under 
       review.    
                                                   
   (c)  Orchid Resources Limited ('ORL'), a company incorporated in Mauritius and is a wholly owned subsidiary of  
        Orchid Capital Limited. ORL was created with an immediate focus on Qu Long Copper Project and Nagarze Gold      
        Project in the People's Republic of China. ORL has resolved not to proceed further with the two projects after  
        due commercial consideration and in view of a competing bidder for the Qu Long Copper Project, who the Board    
        believes, will be the likely winner. The Board has therefore resolved to write off a total of $3,165,080 cost of
        investment in ORL and loan provided to ORL.        
                                  
   (d)  Asia Island Homes Inc / Asia Island Homes Limited                              
        In September 2001, a 16% interest in Asia Island Homes Inc ('AIH'), a company registered in the British Virgin  
        Islands, was acquired at a cost of $2,822,581. AIH is the holding company for a group of companies engaged in   
        real estate development and housing construction in Phuket, Thailand. An additional investment of $250,000 was  
        made in April 2002 to increase its holding to 23.81%. However, in line with the management's divestment plans, a
        new company was set up namely Asia Island Homes Limited ('AIHL'), a company incorporated in Thailand. Assets and
        liabilities of AIH were effectively transferred to AIHL on 11 September 2002 and new shares issue in proportion 
        to the existing shareholders of AIH, all of which was completed on 11 September 2002.                 
        The Directors considered the fair value of the investment at 30 June 2005 to be nil (2004, $52,318) and as a  
        consequence the balance of the investment was fully provided for with a further write down of $52,318 (2004     
        $365,856) charged to the Statement of Financial Performance for the financial year under review.          
       
  (e)   Jiva Kata Resort Company Limited                                      
        The Company holds a 23.2% interest in Jiva Kata Resort Company Ltd, a company registered in the Thailand. The   
        directors have considered the fair value of the investment at 30 June 2005 to be $555,000 (2004 $704,648) and as
        a consequence a write down of $149,648 (2004, $99,824) was made and charged to the Statement of Financial       
        Performance for the financial year under review. Under equity accounting, a share of loss amounting to $149,648 
        (2004 a loss of $223,167) was reported in the consolidated accounts for this associate for the year ended 30    
        June 2005.       

 (f)    Advent Television Limited                                          
        The Company has invested in Advent Television Limited, a company incorporated in Singapore. The directors have  
        considered the fair value of the investment at 30 June 2005 to be $20,000 (2004, $20,331) and as a consequence a
        write down of $331 (2004, $76,245) was made and charged to the Statement of Financial Performance for the       
        financial year under review. The Company also holds 3,500,000 options in Advent Television Ltd, exercisable at  
        S$0.50 each, and in the case of an IPO, 20% below the IPO price. Advent's management plans an IPO within 2005.  
       
 (g)     Pangala Holdings Limited                                          
         Pangala Holdings Limited ('PHL') a company incorporated in the British Virgin Islands and is a wholly owned  
         subsidiary of Orchid Capital Limited. PHL has been set up to hold the land at Lot 12 at Samsara, which was     
         pledged by the associate - Asia Island Homes Inc. ('AIH') as collateral for a loan granted to them in          
         2002/2003. During the previous financial year, the Company exercised its right over the land after AIH's       
         failure to repay the full loan amount and interest totalling $240,000 and $34,151 respectively. As such, an    
         amount of $274,151 was reclassified from receivable to investment. It is the intention to sell PHL to a third  
         party and it is its opinion that the amount recoverable from the sale of the land is expected to be higher than
         the amount owed. Considering the nature of the holding, the investment has been treated as investment held for 
         resale and thus no consolidation is performed to incorporate the company's financial position and state of     
         affairs into the Consolidated Financial Statements.
                                                     
 (h)     Golden Cross Resources Limited                                       
         The Company holds 1,003,751 shares in Golden Cross Resources Ltd. A further provision of $18,068 for the    
         diminution in value was made during the year to report the investment at market value at balance date.
         
(i)      Cangold Ltd                                                 
         The Company holds 500,000 shares in Cangold Ltd at 30 June 2005.
                        
(j)      Tritton Resources Ltd                                            
         The Company sold its shares holding in Tritton Resources Ltd during the year.                 
         
(k)      Arc Energy NL                                                
         The Company sold its shares holding in Arc Energy NL during the year. 
                    
8(a).     PROPERTY, PLANT AND EQUIPMENT 
 

                                                                                                                   
                                                              Consolidated and                    Consolidated and 
                                                                 Parent Entity                       Parent Entity
                                                                        2005                                2004 
                                                               $                                   $               
    Fixtures, fittings and computers - at cost                         86,684                              76,632  
             Accumulated depreciation                                 (38,344)                            (37,420) 
                                                                       48,340                              39,212  
8(b).     MOVEMENTS IN CARRYING VALUES 
 

                                                                                                 
                                                                         Fixtures, Fittings and Computers  
                                                                                              $                 
                        Parent and Consolidated Entity                                           
                        Balance at the beginning of the year                               39,212
                        Additions                                                          26,077
                        Write off                                                            (94)
                        Depreciation                                                     (16,855)
                        Carrying amount at end of year                                     48,340
                                                                                                                      
                                                                  Consolidated                     Parent Entity        
                                                             2005             2004             2005             2004  
                                                               $               $                $                $    
                                                                                                                      
  9.     EXPLORATION AND EVALUATION EXPENDITURE                                                                       
                                                                                                                      
       All mineral exploration and evaluation                         -            -                    -            -
       expenditure has been written off at balance date 
                                                                                                                      
  10.     PAYABLES (CURRENT)                                                                                          
       Trade creditors and accruals                             164,204       48,075              148,094       33,238
                                                                                                                
                                                              Consolidated                     Parent Entity        
                                                       2005             2004             2005             2004  
                                                         $               $                $                $    
                                                                                                                
        11.     PROVISIONS                                                                                      
             Employee entitlements (Current)               55,053       23,628               55,053       23,628
             Employee entitlements (Non Current)           38,333       23,565               38,333       23,565
                                                           93,386       47,193               93,386       47,193
                                                                                                                
                                                               No           No.                  No           No. 
        Number of employees at year end                         5            5                    4            4
                                                                                                                      
                                                                    Number of Shares         Issue            Total   
                                                                                             Price             $      
  12(a).     CONTRIBUTED EQUITY                                                                                       
                                                                                                                      
  Balance as at 30 June 2004                                               143,370,296                      28,846,935
  Option conversions                                                        21,190,417        5 cents        1,059,521
  Option premium transferred to share capital upon conversion of                     -                         105,951
  options                                                                                                             
  Shares issued for consultancy work in Tibet*                              10,000,000       16 cents        1,600,000
  Balance as at 30 June 2005                                               174,560,713                      31,612,407

  * Included in the 10,000,000 shares issued for the consultancy work in Tibet, 2,000,000 shares were issued to Dr D  
  Tyrwhitt, the Exploration Director of Orchid Resources Limited during the year. The shares issued were valued at 16 
  cents each based on the market price at the date the shares were issued. The value of the shares were capitalised   
  as part of the exploration and evaluation expenditure. These expenses were subsequently written off in view of the  
  management's decision to abandon all exploration projects in Tibet.                                                 
                                                                                                                      
                                                                Number of Options        Issue Price         Total    
                                                                                                                $     
  12(b).      OPTIONS PREMIUM RESERVE                                                                                 
       Exercisable at 5 cents on or before 30 November 2006                                                           
       Balance as at 30 June 2004                                       117,445,938                            595,630
       Exercised during the year                                       (21,190,417)                          (105,951)
       Issued to consultant with no consideration (as part of             3,000,000              0.025          75,000
       his remuneration)                                                                                   
       Balance as at 30 June 2005                                        99,255,521                          (564,678)
                                                                                                                      
  12(c).     ORDINARY SHARES                                                                                          
                                                                                                                      
       Ordinary shares entitle the holder to participate in dividends and the proceeds on    
       winding up of the Company in proportion to the number of and amounts paid on the      
       share issues. On a show of hands every holder of ordinary shares present at a meeting 
       in person or by proxy, is entitled to one vote, and upon a poll each share is         
       entitled to one vote.                                                                 
                                                                                                                      
                                                  Consolidated                                     Parent Entity      
                                        2005                   2004                            2005           2004    
                                          $                      $                               $             $      
  13.     RESERVES                                                                                                    
                      Option           564,678                        595,630                 564,678          595,630
                      premium                                                                                         
                      reserve                                                                                         
                      (Refer note                                                                                     
                      12(b))                                                                                          
                      Foreign         (422,620)                       132,485                       -                -
                      currency                                                                                        
                      translation                                                                                     
                      reserve                                                                                         
                      Balance at       142,058                        728,115                 564,678          595,630
                      end of year                                                                                     
                                                                                                                      
  14.     ACCUMULATED LOSSES                                                                                          
                      Balance as       21,528,889                  19,977,532              22,106,535       20,433,944
                      at beginning                                                                                    
                      of the year                                                                                     
                      Net loss for      4,125,594                   1,551,357               4,384,070        1,672,591
                      year                                                                                            
                      Balance as       25,654,483                  21,528,889              26,490,605       22,106,535
                      at end of                                                                                       
                      year                                                                                            
                                                                                                                      
  15.     EARNINGS PER SHARE          151,768,454                 138,212,504                                         
  Weighted average number of                                                                                          
  ordinary shares used in                                                                                             
  calculation of basic earnings                                                                                       
  per share                                                                                                           
                                                                                                                      

16.     STATEMENT OF CASHFLOWS
(a)    Reconciliation of net cash used in
       operating activities to operating
       loss after income tax
       Operating (loss) after tax                 (4,125,594)      (1,551,357)            (4,384,070)      (1,672,591)
       Add:
       Depreciation of property, plant and             16,855           10,435                16,855           10,435
       equipment
       Write-off of property, plant and                    94              550                    94              550
       equipment




16.     STATEMENT OF CASHFLOWS (cont'd)


                                                       Consolidated                       Parent Entity
                                                  2005              2004              2005            2004

                                                    $                $                 $                $
       Net gain on sale of investments              (288,715)       (129,910)         (18,293)          (9,670)
       Net results form derivative                  (196,148)        (87,180)                -                -
       instruments
       Share in associated company net losses         201,966         589,023                -                -
       Provision for write down of                     56,670          93,220          229,696          870,669
       investments
       Write off of unrecoverable investment                -               -        3,165,080                -
       & loan
       Exploration and evaluation costs             3,500,194         354,499                -                -
       written off
       Employee/director option remuneration           75,000          86,040           75,000           86,040
       Foreign exchange translation effects          (78,462)               6                -                -
       Changes in net assets and liabilities
       (Increase) in Receivables                     (14,828)        (35,161)         (22,965)         (11,850)
       Decrease in Prepayments                              -          12,393                -           12,375
       Increase in Payables                           116,129           8,454          114,856            4,596
       Increase in Provisions                          46,193          40,106           46,193           40,106
                                                    (690,646)       (608,882)        (777,554)        (669,340)

(b)    Reconciliation of cash
       Cash at bank and on hand                     2,162,621       2,774,618          595,489        1,482,137
                                                    2,162,621       2,774,618          595,489        1,482,137

17.     REMUNERATION OF SPECIFIED DIRECTORS AND SPECIFIED EXECUTIVES - YEAR ENDED 30 JUNE 2005

                                        Primary            Post Employment        Equity     Other      Total

                                  Salary &     Non    Superannuation Retirement  Options     Other
                                    Fees    Monetary                  Benefits              Benefits
                                                            $
                                      $         $                        $                     $
                                                                                    $                     $

Specified Directors
       R Kestel  Non Executive
       Chairman (retired 1 July
       2005)
                             2005    31,354         -              -          -          -          -    31,354
                             2004    25,000         -              -          -     14,340          -    39,340

       A Tan  Managing Director
                             2005   158,333         -         14,250          -          -          -   172,583
                             2004   130,000         -         11,700          -     14,340          -   156,040

       N Grafton  Finance
       Director        and
       Company Secretary
                             2005   110,696         -         34,000          -          -          -   144,696
                             2004    93,500         -          8,415          -     14,340          -   116,255




17.     REMUNERATION OF SPECIFIED DIRECTORS AND SPECIFIED EXECUTIVES - YEAR ENDED 30 JUNE 2005 (cont'd)

                                        Primary            Post Employment        Equity     Other      Total
                                  Salary &     Non    Superannuation Retirement  Options     Other
                                    Fees    Monetary                  Benefits              Benefits
                                                            $
                                      $         $                        $                     $
                                                                                    $                     $


       C McKee Executive Director
                             2005   141,552         -              -          -          -          -   141,552
                             2004   140,725         -            975          -     14,340          -   156,040
       J Sandt Non Executive
       Director
                             2005    31,709         -              -          -          -          -    31,709
                             2004    25,000         -              -          -     14,340          -    39,340

Total Remuneration - Specified
Directors
       2005                         473,644         -         48,250          -          -          -   521,894
       2004 (1)                     414,225         -         21,090          -     71,700          -   507,015


Specified Executives
       Dr D Tyrwhitt Exploration
       Director of Orchid
       Resources Limited
       (appointed as Executive
       Chairman on 1 July 2005
       and resigned on 9
       September 2005)
                             2005    226,000          -          -          -    320,000          -    546,000
                             2004          -          -          -          -          -          -          -
       S Dobson  Exploration
       Director of Orchid
       Resources Limited
       (resigned on 15 February
       2005)
                             2005     80,500          -      7,245          -     75,000          -    162,745
                             2004     46,000          -          -          -          -          -     46,000

Total Remuneration - Specified
Executives
       2005                          306,500          -      7,245          -    395,000          -    708,745
       2004 (1)                       46,000          -          -          -          -          -     46,000


(1)     The 2003/04 remuneration includes a total of $14,340 per director in relation to a total of 5,000,000 share
options issued to directors in November 2003 (1,000,000 each). The value of such options for the period to 30 June
2004 was been booked in the statement of financial performance. The options are exercisable at 5 cents each and were
granted on 26 November 2003 and expire 30 November 2006. The total value of the options issued to the directors is
$71,700 using the Black Scholes Methodology.

Remuneration levels are set by the Board in accordance with industry standards to attract suitable qualified and
experienced Directors and senior executives.

The Board reviews the remuneration packages of all Directors and any Executive Officers. The Board does not have any
formal remuneration policy, but any decision on remuneration increases or bonuses is made having due regard to the
Consolidated Entity's performance and other relevant factors.

There were 3,000,000 options granted to Mr Stephen Dobson and 2,000,000 shares to Dr D Tyrwhitt, specified executives
of the Consolidated Entity, during the year. The options were valued at 2.5 cents each and shares were valued at 16
cents each based on the market price at the date the options and shares were issued and are disclosed under
remuneration as equity. The benefits were recognised in this year's financial report.

Dr Tyrwhitt's contract stipulated that if the Joint Venture Agreement in relation to the Nagarze project was
terminated, he would be entitled to three months' severance pay.

                                                                                             
18.     SHARE AND OPTION HOLDING DETAILS FOR SPECIFIED DIRECTORS  
                                                                                                   
                     Shares and Options Held at     Fully Paid Shares    30 November 2006 Options  
                     30 June 2005                                                                  

                     R Kestel                                -                    250,000          
                     N Grafton                               -                   1,000,000         
                     C McKee                            1,250,000                1,250,000*        
                     J Sandt                              100,000                1,000,000         
                     A Tan                                 460,000               1,750,000    
     
* 250,000 are listed, exercisable at 5 cents on or before 30 November 2006 and were issued in a prior year. 1,000,000
30 November 2006 options were issued to each of the directors in late November 2003 (refer note 17). Further details
on the value of the options issued to directors as remuneration in November 2003 are outlined in Note 17. There were
no movements in the shareholdings of the directors from 1 July 2004 to 30 June 2005 apart from the sale of 750,000
options by Mr Kestel.

                                                                                                                      
                                                                   Consolidated             Parent Entity        
                                                                  2005         2004            2005             2004  
                                                                   $            $                $               $    
  19.     AUDITORS' REMUNERATION      
                                                                                
                            Amounts received or due and                                                               
                            receivable by the auditors of the                                                         
                            Company:                                                                                  
                            Auditing accounts                         28,500   20,000              28,500       20,000
                            Other services                            21,811    5,603              21,811        5,603
                                                                      50,311   25,603              50,311       25,603

                            The other services were in relation to the provision of taxation services (including tax  
                            preparation and general tax advice) and preparation of a working capital report relating  
                            to the proposal for the Company to list on the Alternative Investments Market (AIM) in    
                            London.                                                                                   
                            Remuneration of other auditors of          4,295    3,300                   -            -
                            controlled entities for the audit                                                         
                            or review of the financial reports                                                        
                            of any entity in the consolidated                                                         
                            entity                                                                                    
                                                                                                                      
  20.     COMMITMENTS                                                                                                 
                                                                                                                      
  (a)                    There were no outstanding commitments, which are not disclosed in the financial statements   
                         of the economic entity and the Company as at 30 June 2005. The economic and parent entities  
                         have the following outstanding commitments:-                                                 
                                                                                                                      
                         Commitments on the Co-operative Joint Venture                                                
                         As the Co-operative Joint Venture contract between China Tibet Institute of Geology Survey   
                         ('CTIGS') and Orchid Resources Limited ('ORL') of June 2004, is now in process of being      
                         terminated, ORL has no further spending obligations.                                         
                                                                                                                      
  (b)    Remuneration Commitments                                                                                     
         The Company has the following remuneration commitments payable to directors and executives, which have not   
         been recognised as a liability in the financial statements as at 30 June 2005:                               
                                                                                                                      
                                                                    Consolidated              Parent Entity        
                                                              2005           2004              2005            2004   
                                                                $              $                $                $    
                              Due within 1 year                   455,416    688,850            455,416       388,850
                              Due 1 to 5 years                     75,833   1,404,121             75,833       444,450
                              Due after 5 years                         -     360,000                  -             -
                                                                  531,249   2,452,971            531,249       833,300
 

                                                                                                                      
                                                                                                                      
  (c)    Operating Lease Commitments                                                                                  
                                                                  Consolidated & Parent    Consolidated & Parent  
                                                                        Entity 2005             Entity 2004   
                                                                                 $                     $               
         Non-cancellable operating lease contracted                                                                   
         for but not recognised in the financial                                                                      
         statements                                                                                                   
         Due within 1 year                                                      26,020                  27,747
         Due 1 to 5 years                                                       26,020                       -
         Due after 5 years                                                      23,852                       -
                                                                                75,892                  27,747
                                                                                                                      
                                                                                                                      
  (d)    Other Commitments                                                                                            
                                                                                                                      
         The Company has entered into an engagement letter with Nabarro Wells to which Nabarro Wells has been         
         appointed as the Company's nominated adviser and broker for the purpose of Alternative Investment Market     
         (AIM) listing. The Company agreed to pay Nabarro Wells the on-going total service fees of £40,000 per annum  
         and to grant Nabarro Wells options to subscribe for £100,000 worth of the Company's shares at the closing    
         mid-market price on the day of Admission exercisable at that price at any time up to the fourth anniversary  
         of Admission. The options are yet to be issued at the date of this report. The number of options to be       
         issued based on the closing mid market price at the day of admission is 1,811,988. The appointment is for an 
         initial term of one year and after that is terminable by either party on three month notice.                 
                                                                                                                      
  21.     RELATED PARTY DISCLOSURES    
                                                                               
  (a)                                  The Directors of the Company during the financial year and prior year were:    
                                       R Kestel                                                                       
                                       N Grafton                                                                      
                                       C McKee                                                                        
                                       J Sandt                                                                        
                                       A Tan                                                                          
                                                                                                                      
  (b)                                  The following related party transaction occurred during the financial year and 
                                       previous financial year:                                                       
                                       On 30 June 2004, Mr N Grafton entered into a new 3 year employment contract    
                                       with the Company. The current annual remuneration is $130,000 exclusive of     
                                       statutory superannuation.                                                      

22.       FINANCIAL INSTRUMENTS


                                                           Fixed Interest Rate Maturing

                   Notes     Weighted       Floating       1 year or      Over 1-5           Non
                                            Average         Interest       less years       interest
                                            Interest          Rate                           bearing         Total
                                               Rate
                                                $             $              $                  $               $ 

2005                                                                                                                
  Financial Assets                                                                                                      
       
  Cash               16(b)       1.08%            -         450,000            -          1,712,621          2,162,621
  Receivables          5             -            -               -            -             49,448             49,448
  Other                6         4.31%            -       2,808,125            -            352,846          3,160,971
  financial                                                                                                           
  assets                                                                                                              
  Investments          7             -            -               -            -            936,192            936,192
  Total                                           -       3,258,125            -          3,051,107          6,309,232
  Financial                                                                                                           
  Assets                                                                                                              
  Financial                                                                                                           
  Liabilities                                                                                                         
  Payables            10             -            -               -            -            164,204            164,204
  Provisions          11             -            -               -            -             93,386             93,386
  Total Financial                                 -               -            -            257,590            257,590
  Liabilities                                                                                                         
  Net Financial                                   -       3,258,125            -          2,793,517          6,051,642
  Assets                                                                                                              
  2004                                                                                                                
  Financial Assets                                                                                                    
  Cash               16(b)       3.26%      231,987       2,021,078            -            521,553          2,774,618
  Receivables            5           -            -               -            -             34,620             34,620
  Other financial        6       5.65%            -       3,713,525            -            411,981          4,125,506
  assets                                                                                                              
  Investments            7           -            -               -            -          1,206,307          1,206,307
  Total Financial                           231,987       5,734,603            -          2,174,461          8,141,051
  Assets                                                                                                              
  Financial                                                                                                           
  Liabilities                                                                                                         
  Payables              10           -            -               -            -             48,075             48,075
  Provisions            11           -            -               -            -             47,193             47,193
  Other financial        22(c)       -            -               -            -             38,834             38,834
  liabilities                                                                                                         
  Total Financial                                 -               -            -            134,102            134,102
  Liabilities                                                                                                         
  Net Financial                             231,987       5,734,603            -          2,040,359          8,006,949
  Assets                                                                                                              
 

                                                                                              
                      Reconciliation of Net Financial Assets/(Liabilities) to Net Assets  
                                                                                               
                                                                                               
                                                               2005                    2004    
                                                                 $                       $     
                        Net Financial Assets/(Liabilities)    6,051,642               8,006,949
                        Property Plant and Equipment             48,340                  39,212
                        Prepaid Expenses                              -                       -
                        Net Assets                            6,099,982               8,046,161

22.     FINANCIAL INSTRUMENTS (cont'd) 

                                                                                                                      
  (a)    Credit Risk                                                                                                  

         The maximum exposure to credit risk, excluding the value of any collateral or other security, net of any     
         provisions for doubtful debts of those assets, as disclosed in the Statement of Financial Position and notes 
         to the financial statements.   
                                                                              
         The economic entity does not have any material credit risk exposure to any single debtor or group of debtors 
         under financial instruments entered into by the economic entity.                                             

  (b)    Net Fair Values                                                                                              

         The net fair values of listed investments have been valued at the quoted market bid price at balance date,   
         adjusted for any transaction costs expected to be incurred.                                                  

         For unlisted investments where there is no organised financial market the net fair value has been based on a 
         reasonable estimation of the underlying net assets or discounted cash flows of the investment. Note 7        
         provides details of these investments.                                                                       

  (c)    Derivative Financial Investments                                                                             

         Orchid Capital Limited and certain of its controlled entities are parties to derivative financial            
         instruments with the objective of benefiting from the fluctuations in foreign exchange rates. There were no  
         outstanding contracts at 30 June 2005.                                                                       
                                          
 23.     SEGMENT REPORTING  
                                                                    
                       Australia            Asia            Europe           Eliminations           Consolidated      
  Geographical          2005     2004     2005    2004     2005    2004           2005   2004           2005      2004
  segments                                                                                                            
                        $000     $000     $000    $000     $000    $000           $000   $000           $000      $000
  REVENUE                                                                                                             
  External sales         115      136        -       1   13,708   5,169              -      -         13,823     5,306
  Inter-segment            -        -        -       -        -       -              -      -              -         -
  sales                                                                                                               
  Total sales            115      136        -       1   13,708   5,169              -      -         13,823     5,306
  revenue                                                                                                             
  Share of net             -        -    (202)   (589)        -       -              -      -          (202)     (589)
  profit or                                                                                                           
  (loss) result                                                                                                       
  of associates                                                                                                       
  Total segment          115      136    (202)   (588)  13,708    5,169              -      -         13,621     4,717
  revenue                                                                                                             
  RESULT                                                                                                              
  Segment Result     (1,007)  (1,188)  (3,705)   (996)      587     633              -      -        (4,126)   (1,551)
  Unallocated                                                                                              -         -
  corporate                                                                                                           
  expenses                                                                                                            
  Profit or                                                                                          (4,126)   (1,551)
  (Loss) from                                                                                                         
  ordinary                                                                                                            
  activities                                                                                                          
  before income                                                                                                       
  tax expense                                                                                                         
  Income tax                                                                                               -         -
  expense                                                                                                             
                                                                                                     (4,126)   (1,551)
  Extraordinary                                                                                            -         -
  items after                                                                                                         
  income tax                                                                                                          
  expense                                                                                                             
  Net                                                                                                (4,126)   (1,551)
  profit/(Loss)                                                                                                       

For the year ended 30 June 2005, the results related to investment operations, except for $3,500,194 (2004: $354,499)
relating to mineral exploration in Tibet.

                                                                                                                      
23.     SEGMENT REPORTING (cont'd)                                                                  
                         Australia           Asia          Europe            Eliminations            Consolidated     
                           2005    2004   2005   2004     2005    2004           2005      2004           2005    2004
                           $000    $000   $000   $000     $000    $000           $000      $000           $000    $000
  ASSETS                                                                                                              
  Segment assets          5,928   7,416     70     77    5,561   5,442        (5,201)   (4,755)          6,358   8,180
  Unallocated                                                                                                -       -
  corporate assets                                                                                                    
  Consolidated                                                                                           6,358   8,180
  total assets                                                                                                        
  LIABILITIES                                                                                                         
  Segment                   203      80     12     11        4      43              -         -            219     134
  liabilities                                                                                                         
  Unallocated                                                                                                -       -
  corporate                                                                                                           
  liabilities                                                                                                         
  Consolidated                                                                                             219     134
  total liabilities                                                                                                   
  OTHER                                                                                                               
  Investments                                                                                            (202)   (589)
  accounted for                                                                                                       
  using the equity                                                                                                    
  method -                                                                                                            
  Profit/(Loss) -                                                                                                     
  Asia                                                                                                                
  Acquisitions of                                                                                           26      32
  property, plant                                                                                                     
  and equipment                                                                                                       
  and intangible                                                                                                      
  assets                                                                                                              
  Depreciation and                                                                                        (17)    (10)
  amortisation of                                                                                                     
  segment assets                                                                                                      
  Other non cash                                                                                       (3,632)   (179)
  segment expenses                                                                                                    
                                                                                                                      
24.  CONTINGENT LIABILITIES                                                                                      

  The Company has entered into an agreement with each of its directors, whereby the company agreed to indemnify  
  the officers against any liability to any person except liability arising out of conduct involving a lack of good   
  faith on the part of the officer.                                                                                   
       In the event that any share options issued at 5 cents per share are not exercised by 30 November 2006, the     
  option premium relating to the unexercised options is considered to be a capital gain for tax purposes. At 30 June  
  2005, the option premium relating to unexercised share options totals $564,678 (2004: $595,630).                    
                                                                                                                      
25.     EVENTS OCCURRING AFTER REPORTING DATE                                                                       
                                                                                                                      
  On 31 August 2005, it was announced that Orchid Resources Limited (ORL) has resolved not to proceed further with    
  the projects in Tibet namely, Qu Long and Jia Ma Copper Projects and Nagarze Gold Project after due commercial      
  consideration and in view of a competing bidder for the Qu Long Copper Project, who the Board believes, will be the 
  likely winner.                                                                                                      
                                                                                                                      
  On 1 July 2005, Dr David Tyrwhitt was appointed a director and Chairman and he resigned on 9 September 2005.        
                                                                                                                      
  On 20 September 2005. Alvin Tan stepped down as Managing director to become a Non Executive Director. Mr Julian     
  Sandt was appointed Managing Director from the same date.                                                           
                                                                                                                      
 
 
 
26.     IMPACT OF APPLYING INTERNATIONAL FINANCIAL REPORTING STANDARDS 'IFRS' 

The Australian Accounting Standards Board (AASB) is adopting International Financial Reporting Standards (IFRS) for
application to reporting periods beginning on or after 1 January 2005. The AASB has issued Australian equivalents to
IFRS, and the Urgent Issues Group has issued interpretations corresponding to IASB interpretations originated by the
International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee. These
Australian equivalents to IFRS are referred to hereafter as AIFRS.

Entities complying with AIFRS for the first time will be required to restate their comparative financial statements
to amounts reflecting the application of AIFRS to that comparative period. The consolidated entity must therefore
prepare an opening statement of financial position in accordance with AIFRS as at 1 July 2004. This will form the
basis of accounting for AIFRS in the future, and is required when Orchid Capital Limited prepares its first fully
AIFRS-compliant financial reports for the half-year ending 31 December 2005 and the year ending 30 June 2006.

Set out below are the key areas where accounting policies are expected to change on adoption of AIFRS, and the
Company's best estimate of the quantitative impact on the financial statements. The figures disclosed are
management's best estimates as at the date of preparing the 30 June 2005 financial report. The actual effects of
transition to AIFRS may differ from the estimates disclosed due to (i) ongoing work being undertaken to assess AIFRS
standards; (ii) potential amendments to AIFRS and interpretations thereof being issued by the standard-setters; and
(iii) emerging accepted practice in the interpretation and application of AIFRS and UIG Interpretations.
 
Income Tax - Under AASB 112 Income Taxes, the Group's income tax balances will be calculated based on the 'balance
sheet approach', replacing the 'income statement approach' applied under the current accounting policy. This method
recognises deferred tax balances when there is a difference between the carrying value of an asset or liability for
accounting purposes and its tax base. No impact has been identified on the consolidated or parent entity's statement
of financial position or performance as a result of this change in approach as the consolidated and the parent
entities have accumulated tax losses of which, in the opinion of the Directors, are not virtually certain to be
recovered in the near future.

Impairment of Assets - under AASB 136 Impairment of Assets, the recoverable amount of an asset is determined as the
higher of its net disposal value and its value in use, determined by the present value of the future cash flows it is
expected to generate. This will result in a change in the Group's current accounting policy, which determines
recoverable amount of an asset on the basis of undiscounted cash flows. No impact has been identified on the
consolidated or parent's entity's statement of financial position or performance as a result of the change in policy.

Financial Instruments - under AASB 139 'Financial Instruments: Recognition and Measurement' financial instruments
will be required to be classified into five categories and to be measured based on the nature of the classification.
 
The five categories and basis of measurement are:
 
- Financial asset or financial liability measured at fair value through the statement of financial performance;
- Held to maturity investments measured at amortised cost, subject to impairment;
- Loans and receivables measured at amortised cost, subject to impairment;
- Available for sale assets measured at fair value with changes in fair value measured directly in equity; and
- Financial liability measured at amortised cost.

26.     IMPACT OF APPLYING INTERNATIONAL FINANCIAL REPORTING STANDARDS 'IFRS' (cont'd) 
 
Business Combination - under AASB 3 Business Combinations goodwill would not be permitted to be amortised but instead
is subject to impairment testing on an annual basis or upon the occurrence of triggers which may indicate a potential
impairment. No impact has been identified on the consolidated or parent's entity's statement of financial position or
performance as a result of the change in policy.



(a)        Reconciliation of equity as presented under Australian Generally Accepted Accounting Principles 
('AGAAP') to IFRS
                                                   Consolidated                       Parent Entity
                                          30 June         30 June              30 June         30 June
                                                              2004                                  2004
                                           2005                                  2005
                                                                $                                    $

                              Note           $                                    $
Total equity under AGAAP                    6,099,982          8,046,161         5,686,480           7,336,030

Adjustments to accumulated
losses
Effect of mark-to-market
investments held for
trading                       (i)            263,986             71,710                 -                   -
Adjustments to net gains on
available-for-sale
financial assets
Effect of mark-to-market
investments available for
sale                         (ii)                  -             49,911                 -              49,911

Total equity under IFRS                     6,363,968          8,167,782         5,686,480           7,385,941


(b)        Reconciliation of net loss under AGAAP to that under IFRS


                                                   Consolidated                       Parent Entity
                              Note         2005               2004               2005               2004

                                             $                  $                 $                  $
Net loss as reported under
AGAAP                                      (4,125,594)        (1,551,357)       (4,384,072)         (1,672,591)

Effect of mark-to-market
investments held for
trading                       (i)            192,276             71,710                 -                   -

Total equity under IFRS                   (3,933,318)        (1,479,647)       (4,384,072)         (1,672,591)




26.       IMPACT OF APPLYING INTERNATIONAL FINANCIAL REPORTING STANDARDS 'IFRS'
(cont'd)


(c)        Reconciliation of net gains on available-for-sale financial assets reserve under AGAAP to that
under IFRS


                                                   Consolidated                       Parent Entity
                                          30 June         30 June              30 June         30 June
                                                              2004                                  2004
                                           2005                                  2005
                                                                $                                    $
                              Note           $                                    $
Reserve as reported under
AGAAP                                        -                  -                 -                   -

Effect of mark-to-market
investments available for
sale                          (ii)           -             49,911                 -              49,911

Total equity under IFRS                      -             49,911                 -              49,911



(i)         Under AASB 139, financial assets that held for trading are measured at fair value through the Statement of 
Financial Performance.



(ii)        Under AASB 139, financial assets that are available for sale are measured at fair value with changes in fair
value measured directly to equity (net gains on available-for-sale financial assets reserve).


                                        DIRECTORS' DECLARATION


The Directors of the Company declare that:



1.         the financial statements and notes, as set out on pages 13 to 37 are
in accordance with the Corporations Act 2001:



(a)        comply with Accounting Standards, the Corporations Regulations 2001;
 and

(b)        give a true and fair view of the financial position as at 30 June
2005 and of the performance for the year ended on that date as of the company
and economic entity;

2.         in the directors' opinion there are reasonable grounds to believe
that the company will be able to pay its debts as and when they become due and
payable.


The Directors have been given the declarations required by Section 295A of the
Corporations Act 2001 from the chief executive officer and chief financial
officer for the financial year ended 30 June 2005.


This declaration is made in accordance with a resolution of the Board of
Directors.


Director


                     Alvin Tan

Dated at Perth this 23rd day of September 2005




                            INDEPENDENT AUDIT REPORT


                               STANTON PARTNERS


                               1 HAVELOCK STREET
                                WEST PERTH 6005
                               WESTERN AUSTRALIA

                           TELEPHONE: (08) 9481 3188

                           Facsimile: (08) 9321 1204

                       e-mail:  [email protected]


                            INDEPENDENT AUDIT REPORT

                               TO THE MEMBERS OF

                             ORCHID CAPITAL LIMITED


SCOPE



The financial report and directors' responsibility



The financial report comprises the statement of financial position, statement of
financial performance, statement of cash-flows, accompanying notes to the
financial statements, and the director's declaration for Orchid Capital Limited
(the Company) and the consolidated entity, for the year ended 30 June 2005.  The
consolidated entity comprises both the Company and the entities it controlled
during the year.



The directors of the Company are responsible for the preparation and true and
fair presentation of the financial report in accordance with the Corporations
Act 2001. This includes responsibility for the maintenance of adequate
accounting records and internal controls that are designed to prevent and detect
fraud and error, and for the accounting policies and accounting estimates
inherent in the financial report.



Audit approach



We conducted an independent audit in order to express an opinion to the members
of the Company. Our audit was conducted in accordance with Australian Auditing
Standards in order to provide reasonable assurance as to whether the financial
report is free of material misstatement.  The nature of an audit is influenced
by factors such as the use of professional judgement, selective testing, the
inherent limitations of internal control, and the availability of persuasive
rather than conclusive evidence. Therefore, an audit cannot guarantee that all
material misstatements have been detected.



We performed procedures to assess whether in all material respects the financial
report presents fairly, in accordance with the Corporations Act 2001, including
compliance with Accounting Standards and other mandatory financial reporting
requirements in Australia, a view which is consistent with our understanding of
the Company's and consolidated entity's financial position, and of their
performance as represented by the results of their operations and cash flows.


We formed our opinion on the basis of these procedures, which included:

  • examining, on a test basis, information to provide evidence supporting the
    amounts and disclosures in the financial report, and

  • assessing the appropriateness of the accounting policies and disclosures
    used and the reasonableness of significant accounting estimates made by the
    directors.



While we considered the effectiveness of management's internal controls over
financial reporting when determining the nature and extent of our procedures,
our audit was not designed to provide assurance on internal controls.



INDEPENDENCE



In conducting our audit, we followed applicable independence requirements of
Australian professional ethical pronouncements and the Corporations Act 2001.



AUDIT OPINION



In our opinion, the financial report of Orchid Capital Limited is in accordance
with:



a)    the Corporations Act 2001, including:



(i)    giving a true and fair view of the Company's and consolidated entity's
financial position as at 30 June 2005 and of their performance for the six
months ended on that date; and



(ii)   complying with Accounting Standards in Australia and the Corporations
Regulations 2001; and



b)    other mandatory professional reporting requirements in Australia.





STANTON PARTNERS





J P Van Dieren
Partner



Perth, Western Australia
23 September 2005





                           AUDIT INDEPENDENCE LETTER



                                STANTON PARTNERS

                               1 HAVELOCK STREET   
                                WEST PERTH 6005
                               WESTERN AUSTRALIA

                           TELEPHONE: (08) 9481 3188

                           Facsimile: (08) 9321 1204

                       e-mail:  [email protected]



23 September 2005



Board of Directors
Orchid Capital Ltd
Suite 3
610 Murray Street
WEST PERTH  WA  6005


Dear Directors


RE:     Orchid Capital Ltd


In accordance with section 307C of the Corporations Act 2001, I am pleased to
provide the following declaration of independence to the directors of Orchid
Capital Ltd.



As Audit Partner for the audit of the financial statements of Orchid Capital Ltd
for the year ended 30 June 2005, I declare that to the best of my knowledge and
belief, there have been no contraventions of:



(i)      the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and



(ii)      any applicable code of professional conduct in relation to the audit.



Yours sincerely

STANTON PARTNERS







John Van Dieren
Partner

                             ADDITIONAL STOCK EXCHANGE INFORMATION



Additional information required by Australian Stock Exchange Limited and not
shown elsewhere in this Annual Report is as follows. The information is made up
to 8 September 2005.



DISTRIBUTION OF SHARE AND OPTION HOLDERS


                                           Fully Paid                     Options
                                             Shares                  30 November 2006
1- 1,000                                       58                            3
1,001 - 5,000                                  95                            9
5,001 -  10,000                                108                          16
10,001 - 100,000                               242                          69
100,001 and over                               65                           61
                                               568                          158



HOLDERS OF NON-MARKETABLE PARCELS



There are 262 fully paid ordinary shareholders who hold less than a marketable
parcel of shares.



Voting Rights



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.



TWENTY LARGEST SHARE AND OPTION HOLDERS


 Fully Paid                           Shareholders                              Number           Percentage
   Shares

                ANZ Nominees Ltd                                                108,085,333             61.918
                McNeil Nominees Pty Ltd                                           7,645,994              4.380
                National Nominees Ltd                                             6,484,423              3.715
                LC Asia Limited                                                   5,000,000              2.864
                Merrill Lynch (Australia) Nominees Pty Ltd                        4,285,054              2.455
                Straight Investments SA                                           2,718,857              1.558
                Asialink Holdings Ltd                                             2,413,569              1.383
                Mr Pat Volpe                                                      2,200,000              1.260
                Tao Yuan Limited                                                  2,000,000              1.146
                Dr David S Tyrwhitt                                               2,000,000              1.146
                IFTC Broking Services Ltd                                         1,250,000              0.716
                Walpett Engineering Pty Ltd                                       1,140,000              0.653
                Cheung Shun Resources Limited                                     1,000,000              0.573
                Innovation Marketing & Finance Pty Ltd                              928,496              0.532
                Asterbell Pty Ltd                                                   838,875              0.481
                Mr Johnnie Fullford                                                 820,000              0.470
                Mr Maxwell Deason & Mrs Gillian Deason                              750,000              0.430
                Mr Bruce R Pettit                                                   700,000              0.401
                Trayburn Pty Ltd                                                    700,000              0.401
                Westpac Custodian Nominees Limited                                  676,162              0.387



30 November 2006
   Listed                            Shareholders                              Number            Percentage
  Options

                McNeil Nominees Pty Ltd                                         33,971,428              34.226
                Mr Ang Tong Shing                                                6,000,000               6.045
                Ms Bee Hun Thean                                                 6,000,000               6.045
                Innovation Marketing & Finance Pty Ltd                           5,614,209               5.656
                ANZ Nominees Ltd                                                 5,248,655               5.288
                International Mining Finance Pty Ltd                             4,331,264               4.364
                Essential Consulting &Business Services Pty Ltd                  3,000,000               3.023
                Mr Paul Hartley Watts                                            2,550,000               2.569
                Colvic Pty Ltd                                                   2,524,503               2.543
                Asterbell Pty Ltd                                                2,255,286               2.272
                Mr & Mrs Michael Lim                                             2,000,000               2.015
                Gilventures Pty Ltd                                              1,310,000               1.320
                ITFC Broking Services Ltd                                        1,250,000               1.259
                Tao Yuan Limited                                                 1,000,000               1.008
                Clive McKee                                                      1,000,000               1.008
                Ostle Investments Pty Ltd                                        1,000,000               1.008
                Julian Sandt                                                     1,000,000               1.008
                Norman Grafton                                                   1,000,000               1.008
                Temtor Pty Ltd                                                   1,000,000               1.008
                Mr & Mrs Barry Headland                                            800,000               0.806



SUBSTANTIAL SHAREHOLDERS


There are no shareholders recorded in the Register of Substantial Shareholders.



                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                        

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