Investing for Our Future

Fantastic Holdings Limited

Annual Report 2007
Annual Report to Shareholders
for the year ended June 30 2007

Contents
04 Chairman’s Report 25 Cash Flow Statements
05 Managing Director’s Report 26 Notes to Financial Statements
06 Directors’ Report 50 Directors’ Declaration
21 Financial Highlights 51 Independent Auditor’s Report
22 Income Statements 52 Shareholding Information
23 Balance Sheets 55 Corporate Directory
24 Statements of Changes in Equity Back Store Locations

Financial Calendar 2007

F 2007 full year results announced to Australian Stock Exchange 27 August 2007
F Record date for entitlements to the final dividend 26 September 2007
F Final dividend for 2007 financial year to be paid 10 October 2007
F Annual General Meeting 31 October 2007

Support Office Fantastic Imports/Lounge Factory Royal Comfort Bedding

10-28 Biloela St 71 Seville St 167-169 Woodpark Rd
Villawood, NSW 2163 Fairfield East NSW 2165 Smithfield NSW 2164

New Distribution Centre, Fairfield NSW

2 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries Annual Report 2007 - 3
 Chairman’s Report
for the year ended 30 June 2007
The Board and I are pleased to present this Annual Report on the
performance of the Fantastic Holdings Group for the year ended
30 June 2007.
Despite the continuation of very challenging trading conditions
for the Australian furniture sector, this financial year saw a
strong period of performance, consolidation and innovation
for your Company.
Net profit before tax from continuing operations was up 16 % to $25
million and retail sales (including franchised sales) increased 16%
to $302 million for the year and we are pleased to announce a fully
franked final dividend of 5.51 cents for the year. This dividend will
be paid on 10th October 2007. The closing date for shareholders
to be registered for this dividend is 5pm on 26 September 2007.
This brings the total year’s dividend to 11.02 cents per share.
The year was one of consolidation within the organisation with
a number of important decisions actioned. Trading conditions
throughout our store network were strong with the exception
of our home state of New South Wales. We are pleased to see
that the trend in New South Wales has been reversing in the
past few months and should this continue, it bodes well for the
current financial year. Continued full employment, tax cuts and
an upswing in house building statistics should pave the way for a
strong performance in the June 2008 financial year. Small rises in
interest rates appear to be absorbed by the market place without
too much detrimental consumer reaction, but we remain cautious
of the impact that higher costs for home ownership or renting can
have on the Australian furniture market. However as a retailer who
places price, service and value at the core of its proposition, we
traditionally attract customers when consumers need to seek out
the very best value for their furniture needs. Consumer demand
remains strong, but we would welcome any initiatives which are
designed to stimulate the housing sector.
 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
Sales at our new stores in Queensland and South Australia have
been pleasing and Fantastic Furniture now has a total of 57
stores, Plush has 19 stores and The Original Mattress Factory has
five stores.
Sustained growth continues to be our priority and we expect that
the addition of 17 new stores in the last 18 months will impact
very positively on our sales and profit during the financial year to
June 2008.
Under our remuneration and performance policy, we offer
eligible staff participation in our Employee Share Plans.
With strict eligibility rules, these Plans give employees the
opportunity to sacrifice a portion of their remuneration for the
purchase of ordinary shares, with a matching contribution
by the Company of one share for every ten purchased.
During the financial year, we issued 271,793 shares to staff
under these Plans.
Your Board will continue to focus on the core values of the Group
- excellent service to our millions of customers, consistent value
for money and confidence in our ability to offer innovative designs
and unbeatable prices. We will continue to place emphasis on
customer satisfaction, staff training and the ongoing strength and
dominance of our brands.
Once again we congratulate our team on a wonderful effort and
look forward with continued confidence to the coming year.
George Bennett
Chairman
Dated this 7th day of September 2007
Managing Director’s Report
for the year ended 30 June 2007
Every year produces many new and varied challenges in the
furniture industry and we accept these challenges as part of our
everyday operations. We are therefore pleased to report that
the Fantastic Group has recorded another successful year with a
strong financial performance.
The Fantastic Furniture brand continued to grow successfully and
our store opening plan met all deadlines and sales targets. We
relocated a store to Rutherford, relocated our Prospect store to a
larger site previously tenanted by Ikea and opened a new store in
Bathurst New South Wales. New stores were opened at Underwood,
Toowoomba, Kawana Waters and Hervey Bay in Queensland and
at Windsor Gardens in South Australia. This brings total Fantastic
Furniture stores to 57. There are plans in place to open a further
six stores over the next year.
Our Plush brand is now better established in the marketplace and
there were strong increases in store traffic and sales towards the
end of the financial year. As previously advised, we fine-tuned the
Plush product offering, re-worked the structure and developed a
far more effective and consistent advertising plan. This resulted in
significant sales growth over the past few months which we believe
will continue in coming months. We opened one Plush store during
the financial year at Prospect in Sydney and expect to open at least
two more stores in Sydney in the coming year. There are now
a total of 19 Plush stores located in Victoria, New South Wales,
South Australia and Queensland.
Our new Original Mattress Factory brand is still at a development
and testing stage. We successfully opened our first store at Prospect
in July 2006 and four further stores in the last few months. These
new stores are located at Erina, Campbelltown, Rutherford and
Bathurst. We are stringently testing this retail concept across a
variety of markets to ensure its ultimate success. We will review
progress later this year and if the results come up to expectations,
we will roll out the concept throughout Australia.
Management remains fully focussed on delivering superior service
throughout the business. This year we have strengthened our team
with a number of new appointments, with particular emphasis on
key areas such as Information Technology and Supply Logistics.
We have identified these two areas as vital future success factors
in equipping the Group for its next stage of growth.
China’s transition to a manufacturing super power has greatly
influenced the future of furniture retailing in Australia. With the
exception of large, low priced items such as sofas and mattresses,
it is becoming harder for local manufacturers to compete with
imported furniture products. Focus is required by all retailers
to manage their supply chain and this year we instigated a
review of this area for all of our products from manufacture to
home delivery. We expect that this will take three years to fully
implement and will go hand in hand with the development of
superior information systems.
Investing for Our Future
REPORTS
In September 2007, we relocated our Imports and Lounge
Divisions to Fairfield, New South Wales. The building was purpose
built to our specifications with 12 metre high clearance and the
ability to handle 40 semi trailers simultaneously. This impressive
facility now provides us with affordable state of the art premises to
manage our continued growth. We also introduced new software
into our Imports facility to enable us to efficiently handle higher
volumes of stock movements.
Our Lounge Factory continues to grow by manufacturing value low
cost sofas with minimum warehousing costs. Over the past financial
year, our Lounge Factory proudly manufactured over 125,000 sofas
for Australian homes.
The dual pressure of a stronger currency and competition from
Chinese factories forced us to take the hard decision to close
our Metal Factory in New South Wales in May 2007. Whilst we
are disappointed to see another loss to Australia’s manufacturing
base, the harsh reality is that we will not manufacture unless we
can remain competitive.
Last July, we announced that we had purchased a medium
sized mattress manufacturer to bolster our vertically integrated
retail model. The acquisition was completed in July 2006 but
faced challenges for a large part of the year. New management
was introduced in February 2007 and a complete overhaul of
processes was affected. The mattress factory now profitably
supplies low cost mattresses to all of our New South Wales
Fantastic Furniture stores.
We continue to plan the growth of our businesses from a strong
solid foundation. Our existing brands are all still on a growth
cycle. This year, not only will we increase the number of Fantastic
Furniture stores but we will also introduce more exciting products.
Plush will be expanded with more stores in Sydney to continue to
meet demand.
We have a team of highly skilled and motivated people devoted to
driving the business forward and once again I congratulate them
all on their passion, energy and dedication to providing superior
service and value to our customers and shareholders.
Julian Tertini
Managing Director
Dated this 7th day of September 2007
Annual Report 2007 - 
 Directors’ Report DIRECTORS’ MEETINGS
The number of Directors’ meetings held during the financial year (including meetings of Committees of Directors), and those attended by
each Director were:
for the year ended 30 June 2007
Audit and Compliance Remuneration Committee
Director Board Meetings Committee Meetings Meetings
A B A B A B
The Directors present their report together with the financial report of Fantastic Holdings Limited (’the Company’) and of the consolidated George Bennett 14 14 2 2 2 2
entity, being the Company and its subsidiaries, for the year ended 30 June 2007 and the Auditors’ Report thereon. The Directors have been
in office since the start of the financial year to the date of this report, unless otherwise stated. Denis McCormack 13 14 2 2 2 2
Geoffrey Squires 13 13 2 2 2 2
NON-EXECUTIVE DIRECTORS
Julian Tertini 14 14 - - 2 2
George Bennett FCA
Peter Brennan 13 14 - - - -
(76) Independent Non-executive Chairman since 29 July 1999
A- Number of meetings attended
Chairman of Audit and Compliance Committee
B - Number of meetings held during the time the Director held office during the 2007 financial year
Member of Remuneration Committee
George Bennett was the Executive Chairman of KPMG Peat Marwick in Australia and a member of the KPMG International Board and
Executive Committee from 1987 to 1993. During the past three years, Mr Bennett has also served as a Director of the following PRINCIPAL ACTIVITIES
listed companies: The principal activities of the consolidated entity during the financial year were the retail, manufacture and import of household furniture.
• Australian Pipeline Limited since 2000 In May 2007, the assets of the Metal Factory division were sold to a third party and the factory was subsequently closed down. The dual
• Macquarie Leisure Management Limited since 1998 pressure of a stronger currency and competition from Chinese factories made the division uncompetitive. There were no other significant
• Macquarie Property Management Limited since 1999 changes in the nature of the activities of the consolidated entity during the year.
• Brazin Limited – resigned 30 January 2007
Denis McCormack FAMI, FAIA, AIFS, MACUI REVIEW OF OPERATIONS AND FINANCIAL CONDITION
(58) Independent Non-executive Director since 29 July 1999 In the following review of operations and financial condition, the Directors have not included information otherwise required under
Chairman of Remuneration Committee Section 299A(1)(c) concerning the consolidated entity’s business strategies and prospects for future financial years, as they believe it is
Member of Audit and Compliance Committee likely to result in unreasonable prejudice to the consolidated entity.
Denis McCormack is Managing Director of marketing consultancy Southside Six Pty Ltd and has over four decades experience in marketing.
A former advertising agency director, he joined St George Building Society in the early 70s and as Chief General Manager of Marketing
COMPANY OVERVIEW
played a key role in the conversion to St George Bank and the building of the St George brand over more than 20 years. Denis has served
on a number of boards over the past decade and is currently a board member of the NSW Lotteries Corporation, The Landsdowne Club • OBJECTIVES
Limited and Sutherland Credit Union Ltd. The objective of the consolidated entity is to bring sustained growth and profitability to our shareholders by careful planning in store
Geoffrey Squires BEC, MBA, FAICD placement and prominence, consistently strong marketing, ongoing product innovation, quality service and a high level of staff
development and motivation. Underlying this is our core proposition of great value for money and a frugal approach to operating costs.
(58) Independent Non-executive Director since 22 August 2006
Member of Audit and Compliance Committee
Member of Remuneration Committee • PERFORMANCE INDICATORS
Geoffrey Squires has 37 years experience in the building and construction industry. He spent 24 years with Monier Limited, a supplier of The Board and management monitor the consolidated entity’s overall result against prior year, budget and forecast performance and use
concrete and clay tiles and was the General Manager - Roofing division from 1986 - 1994. key performance indicators in the assessment. These include:
Mr Squires currently serves on a number of private company boards in the building and shipping industries. - EBIT margin - Gross margin by product
- Operating costs as a percentage of sales - Inventory turnover and availability
EXECUTIVE DIRECTORS - Comparable and total store sales growth - Quality/return rates
- Contribution of existing and new stores - Staff turnover
Julian Tertini
- Sales per square metre - Return on assets and equity
(59) Managing Director since 21 April 1998 - Strike rate, traffic and average dollar sales - Earnings per share
Member of Remuneration Committee
Julian Tertini has 29 years experience in the retail industry and was a founding shareholder and an Executive Director responsible for retail • DYNAMICS OF THE BUSINESS
operations and product development of Freedom Furniture. During his time at Freedom Furniture, the operations grew from one store to a
All retailers are affected by changing economic conditions, particularly regarding consumer sentiment, interest rates, levels of employment
national chain.
and inflation. The key is to be able to prepare for such changes and adapt quickly to them. The consolidated entity believes it has the
Mr Tertini has served on a number of private company boards in the retail, hospitality and broadcasting industries.
ability to do this, particularly as a retailer who places price, service and value at the core of its proposition. Also, the mix of manufactured
Peter Brennan BSc Econ (Hons) FCA and imported products gives the consolidated entity a greater flexibility than that of many competitors and allows more of a balance at
(51) Director of Finance since 12 December 1996 times of large exchange rate fluctuations. A key element of the consolidated entity’s business strategy is to lease sites at a realistic
Member of Audit and Compliance Committee to 22 August 2006 cost, even if this means slowing the planned store opening schedule.
Peter Brennan is a Fellow of the Institute of Chartered Accountants in Ireland and an Associate of the Institute of Chartered Accountants
in Australia with 30 years experience in accountancy. He spent ten years in the banking and finance sector and held a number of senior REVIEW OF OPERATIONS
management positions with St George Bank Limited (1989 – 1995).
• OPERATING RESULTS
Mr Brennan has served on a number of public and private boards and is currently Chairman of Rainsystems Limited, an unlisted public
company, Rain Plantations Pty Limited and The Lansdowne Club Limited (Ireland-Australia Business Network). The consolidated entity experienced an increase in sales and in profit this financial year. Total sales from continuing operations were up
17% to $273.4 million, while comparable store sales increased 2% for the 12 months ended 30 June 2007. Net profit after tax from
COMPANY SECRETARY continuing operations increased 16% to $17.4 million, while net profit attributable to members increased 14% to 16.4 million.
Profit before tax as a percentage of revenue from continuing operations decreased from 9.24% at 30 June 2006 to 9.13% at 30 June
Susan Caruso BComm CA 2007. The reduction in percentage return on sales is attributed to:
(41) Company Secretary since 11 September 2001 a) five of the 11 stores being opened in the last three months of the financial year;
Susan Caruso is an Associate of the Institute of Chartered Accountants in Australia and has 20 years experience in accountancy. She spent b) start-up of mattress manufacturing plant;
five years in the chartered accountancy profession followed by 15 years holding various management positions in the retail sector. c) development and testing of Original Mattress Factory concept; and
Ms Caruso is also the Group’s Chief Financial Officer. d) investment in infrastructure for future growth.

Investing for Our Future

 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
REPORTS Annual Report 2007 - 
 Directors’ Report
Corporate Governance Statement and be approved by either the Managing Director or
Recognising that shareholders, employees, customers, regulatory the Chief Financial Officer;
(continued)
bodies and the community expect a high standard of performance, iii. an executive can never approve his or her own
for the year ended 30 June 2007 accountability and ethical behaviour, the Board of Fantastic Holdings expenditure item. Items must be approved by the
Limited acknowledges its responsibility for and commitment to a executive deemed to be on the next delegative level
strong culture in corporate governance. above the relevant executive; and
iv. authorities cannot be sub-delegated without prior
• SHAREHOLDER RETURNS Set out below are the ten core principles identified by the Australian authority from the next delegative level up.
Stock Exchange Corporate Governance Council (“the Council”) as
2007 2006 2005 2004 2003 underlying good corporate governance, followed by an outline of the Council Principle 2:

Basic earnings per share (EPS)(cents) 17.32 15.75 20.87 20.97 15.09 main corporate governance practices of Fantastic Holdings Limited Structure the Board to add value.
and its subsidiaries (“the Fantastic Group”). Unless otherwise Council Recommendation 2.1: A majority of the Board should
Dividends per share (DPS)(cents) 11.02 11.02 11.00 10.30 7.70 stated, the Fantastic Group’s corporate governance practices were be independent Directors.
Return on equity (%) 31.65 32.06 43.40 48.83 45.44 in place throughout the 2006/2007 financial year and comply with
the Council’s best practice recommendations. The Fantastic Group’s practice:
Share price at 30 June ($) 4.29 2.70 3.57 4.19 2.53 The Board currently consists of five Directors, two of whom are
Available franking credits ($) 17,141,744 16,254,599 14,361,822 10,307,161 6,931,034 Council Principle 1: Executive Directors and three of whom are Non–executive,
Lay solid foundations for management and oversight. independent Directors. A Director is deemed to be “independent”
Returns to shareholders increase through both dividends and capital growth. Dividends were 100% franked in 2007 and it is expected if they are independent of management and free of any
Council Recommendation 1.1: Formalise and disclose the business or other relationship that could materially interfere
that dividends in future years will continue to be fully franked.
functions reserved to the Board and those delegated to with, or could reasonably be perceived to materially interfere
Note: Disclosures for years 2003 and 2004 were calculated in accordance with previous Australian GAAP. Disclosures for years 2005 to management. with, the exercise of their independent judgement. Specifically,
2007 were calculated in accordance with Australian Accounting Standards (AASBs). It should also be noted that there were three 11 for an independent Director:
The Fantastic Group’s practice:
10 share splits approved and granted to shareholders in the financial years ended 30 June 2004 to 30 June 2006. i. is not a substantial shareholder of the Fantastic
In general, the Board, directly or through its Committees, is Group (as defined by the Corporations Act 2001);
responsible for and has the authority to determine all matters ii. has not been employed as a Director or executive by
INVESTMENTS FOR FUTURE PERFORMANCE relating to the policies, practices, management and operations of the Fantastic Group within the last three years;
The consolidated entity acquired property, plant and equipment totalling $10,709,713 during the year. This was mainly attributable to : the Fantastic Group. The Board has responsibility for the control iii. has not been a principal of any professional advisor
(i) the fitout of 11 new stores and the refurbishment of existing stores, in line with the consolidated entity’s store roll-out program; and direction, or stewardship, of all operations of the Fantastic or consultant to the Fantastic Group within the last
(ii) the purchase of the assets of the mattress manufacturing facility; Group. Without intending to limit this general role of the Board, the three years;
(iii) relocation and racking of the imports distribution centre; Board’s specific or principal functions and responsibilities include: iv. is not a supplier or customer of the Fantastic Group;
(iv) relocation of the lounge factory and support office; and a. approving the Fantastic Group’s strategic direction, goals v. has no contractual relationships with the
(v) purchase of land and buildings of the Launceston store. and annual business plans; Fantastic Group;
b. reviewing progress on strategic issues; vi. has not served on the Board for a period which
The investments in the factory, distribution and support office facilities were done to increase efficiencies, bolster the vertically c. monitoring the Fantastic Group’s operational and financial could be reasonably perceived to materially interfere
integrated model, and allow these divisions to support the continual growth of the group. performance as well as senior management’s performance; with the Director’s ability to act in the best interests
d. setting the various internal controls and reporting of the Fantastic Group; and
REVIEW OF FINANCIAL CONDITION framework for the management of the risks inherent in the vii. is free from any interest and any business or other
Fantastic Group’s operations; relationship, which could be reasonably perceived to
• CAPITAL STRUCTURE e. ensuring that the Fantastic Group operates ethically and materially interfere with the Director’s ability to act in
During the financial year, 271,793 ordinary shares were issued to employees in accordance with the consolidated entity’s responsibly and in compliance with internal codes of the best interests of the Fantastic Group.
Employee Share Plans. conduct and legal and regulatory requirements;
f. approving and monitoring major expenditure, acquisitions, The names of the independent Directors of Fantastic Holdings Limited
The debt to equity ratio is 17.63% in the current year and was 10.39% in the prior year. divestments and funding; are GeorgeBennett, Denis McCormack and Geoffrey Squires.
g. setting of discretionary financial and related operating limits
• CASH FLOWS FROM OPERATIONS for management; From 22 August 2006, the Board comprises a majority of
h. appointment of and reviewing the performance, independent Directors. Up until this point, while the Fantastic
The cash flow from operations of the consolidated entity decreased from $15,053,255 in the previous year to $13,674,676 in the
remuneration and succession planning for the position of Group was not in compliance with Council Recommendation 2.1,
current year. Whilst there was an increase in sales receipts from new stores, there was also an increase in inventory of $6.6 million.
Managing Director; and there were certain measures in place to ensure that independence
i. establishing and determining the powers and functions in decision making was still achieved. These included the fact that
• LIQUIDITY AND FUNDING
of the committees of the Board, including the Audit and the Chairman is an independent Director and has the casting vote
The consolidated entity has overdraft, trade, asset finance and indemnity guarantee facilities with the ANZ Bank totalling $12,150,000. Compliance Committee and the Remuneration Committee. at Board Meetings in the event of a deadlock. Also, to assist in the
As at 30 June 2007, $11,005,927 of these facilities were unused. There are no restrictions on the ability to transfer funds from one effective discharge of their duties, Directors may, in consultation
part of the Group to meet the obligations of other parts of the Group. There are also interest only bank loans of $6,795,000 in relation The Board delegates authority to management in relation to various with the Chairman, seek independent legal advice on their duties
to the Dandenong and Launceston properties, payable in June 2012. Hire purchase contracts are also in place for factory equipment, operational functions. These authorities include expenditure, and responsibilities at the Fantastic Group’s expense and in due
amounting to $2,337,321, which will be finalised by October 2011. disciplinary action, remuneration changes, recruitment of new course, make all Board members aware of both instructions to
staff, termination of staff, release of intellectual property, entering advisors and the advice obtained.
• IMPACT OF LEGISLATION AND OTHER EXTERNAL REQUIREMENTS lease commitments, product pricing, introduction of new products
There were no significant impacts on the consolidated entity by any legislation or external requirements not already disclosed. and services and commitment to promotional and advertising Should the need arise to confidentially discuss particular issues,
expenditure programs. the independent Directors may meet separately prior to the
RISK MANAGEMENT AND CORPORATE GOVERNANCE commencement of monthly Board Meetings. Finally, the provisions
The following rules take precedence over specific delegations: of section 195 of the Corporations Act 2001 govern the Board’s
The Board is responsible for ensuring that risks are identified on a timely basis and that the objectives of the consolidated entity are aligned procedures where there are conflicts of interest involving Directors.
with these risks. The Board’s risk management process and corporate governance principles are detailed in the Corporate Governance i. there has to be a budget for the expenditure; That section, which has application to listed companies, prohibits
Statement that follows. ii. items not in the budget that are considered material a Director who has a material personal interest in a matter being
must have been subsequently approved by the considered by the Board from voting on the matter or being present
Board, or it must be within the overall budget limit while the matter is being discussed, unless the Board specifically
passed a resolution overriding that prohibition.

Investing for Our Future

 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
REPORTS Annual Report 2007 - 
 Directors’ Report
for the year ended 30 June 2007
Corporate Governance Statement (continued)
The skills, experience and expertise relevant to the position of each
Director who is in office at the date of the Annual Financial Report
and their term of office are detailed on Page 6 in this Directors’
Report. The Directors believe the skill base of the current Directors
is very appropriate and adequate for the Fantastic Group at its
present size and stage of development. The Board will continue
to monitor the need for additional skills on the Board and make
further appointments as appropriate.
Council Recommendation 2.2: The Chairperson should be an
independent Director.
The Fantastic Group’s practice:
The Chairman of the Board is George Bennett, an independent
Director as disclosed at 2.1.
Council Recommendation 2.3: The roles of Chairperson and
Chief Executive Officer should not be exercised by the same
individual.
The Fantastic Group’s practice:
The Chairperson cannot also be the Managing Director. The
Chairperson of Fantastic Holdings Limited, George Bennett, and the
Managing Director and CEO, Julian Tertini, have separate roles.
Council Recommendation 2.4: The Board should establish a
Nomination Committee.
The Fantastic Group’s practice:
In view of its size, the Board has not established a Nomination
Committee. While this is not in compliance with Council
Recommendation 2.4, the Board believes it is in a position
to perform the functions typically carried out by a Nomination
Committee, such as:
a. assessing the necessary and desirable competencies of
Board Members. This includes an evaluation of the range of
skills, expertise and experience on the Board before a The Fantastic Group prevents its Directors, executive officers and
candidate is recommended for appointment who will best
complement Board effectiveness;
b. reviewing Board succession plans;
c. evaluating the Board’s performance. This includes periodic
review of the size and composition of the Board to ensure
that these are conducive to making decisions expediently,
with the benefit of a variety of perspectives and skills;
d. considering the appointment and removal of Directors.
Selection is made having regard to the skills and experience
a new Director can contribute, particularly having regard to
the Fantastic Group’s size and its various businesses. and uninvolved with any such developments and for which there
The Board looks for candidates with a proven ability to contemporary conditions.
make a contribution to the Board’s strategy, policies,
stewardship and effectiveness. The Board may seek Council Recommendation 3.2: Disclose the policy
assistance from external independent consultants concerning trading in company securities by Directors,
when considering the appointment of Directors. The names
of candidates submitted for election to shareholders are
accompanied by key supporting information including The Fantastic Group’s practice:
biographical details, qualifications and competencies, any transactions which have the direct or indirect impact of altering
directorships and other relevant business relationships
including any relationships which might involve or be Holdings Limited. Directors should disclose in particular the
perceived to involve the Fantastic Group, the term of office
currently served by Directors subject to re-election and of reducing the Director’s disclosed security holding in Fantastic
other particulars required by law;
10 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
(continued)
e. ensuring that an effective induction process is in place; and
f. ensuring that effective continuing education is in place.
Should there be a specific instance where the Board considers
it advantageous to establish a Nomination Committee, the Board
will do so.
Council Principle 3:
Promote ethical and responsible decision making.
Council Recommendation 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 and investigating reports of unethical practices.
The Fantastic Group’s practice:
The Fantastic Group’s core activities centre on the retail,
manufacture and import of furniture. To this end, the Fantastic
Group is committed to maintaining the highest ethical standards in
delivering quality products and services to its customers.
The Board has adopted a Code of Conduct which sets out the
expectations placed on Directors, executive officers and employees
in their business dealings. The Code of Conduct requires high
standards of personal integrity and honesty in all dealings, a
respect for the privacy of customers and others and observance of
the law. It is designed to let everyone know the values that should
guide him or her in their daily business activities. The Fantastic
Group’s reputation for honesty, integrity, excellence and fairness
is one of its most important assets and the highest standards
should govern all actions. Decisions made within the Fantastic
Group should honour the spirit and the letter of applicable laws.
employees from taking advantage of Fantastic Group property,
information or using their position for personal gain or to compete
with the Fantastic Group. They should deal fairly and honestly with
customers, each other, business suppliers and competitors.
All Directors, executive officers and employees are responsible
for taking appropriate action in proven cases of illegal behaviour
or behaviour outside the spirit of the Code of Conduct in the
workplace. All concerns or reports regarding any impropriety or
breaches of the Code are dealt with confidentially. The Code is
regularly reviewed by the Board to ensure its continued relevance to
officers and employees.
The Board aims to ensure that shareholders are informed of
all major dealings in the shares of Fantastic Holdings Limited.
Directors, executive officers and employees of the Fantastic Group
are subject to insider trading restrictions under the Corporations Act
2001 relating to dealing in Fantastic Holdings Limited’s shares.
Corporate Governance Statement (continued)
The following policy supplements those restrictions:
Directors, executive officers and employees should not deal in (i.e.
buy, sell or encumber) the shares of Fantastic Holdings Limited
(or any related company) when they have or may be perceived
as having relevant unpublished price sensitive information. Also,
they are only permitted to deal in such shares in accordance with
these guidelines.
Directors, executive officers and employees should notify the
Company Secretary before buying or selling Fantastic Holdings
Limited shares, except where such purchases or sales are made:
(i) within three and 30 days following the release of Group’s financial reports present a true and fair view, in all
the Fantastic Group’s half-yearly and annual results
to the Australian Stock Exchange; or
(ii) during the period from three days after the release standards. This statement is required at the time of signing the
of the Annual Financial Report to 30 days after Half-Year and Annual Financial Reports.
the Annual General Meeting, in which case they
should notify the Company Secretary following any Council Recommendation 4.2: The Board should establish an
such sale or purchase.
It is recognised that it is the responsibility of each Director, executive
officer, and employee to ensure that they comply with the spirit
and letter of any insider trading laws. Notification to the Company
Secretary under these guidelines in no way implies approval or
validation of any transaction.
Directors and executive officers should not purchase shares in
Fantastic Holdings Limited with the intention of undertaking short
term trading.
This policy, as it applies to Directors, executive officers and
employees will also apply to dealings in Fantastic Holdings Limited
shares of which they are aware, by their spouse and dependent
children, by any company in which they or their spouse holds a
controlling interest and by any trust under which the trustee must
act at the direction of their spouse, and by any company in which
a Director, executive officer or employee, or their spouse is an
officer (i.e. a Director, secretary, executive officer or employee)
unless appropriate arrangements are in place within that company
to ensure that they take no part in the company’s decision to
deal in the shares of Fantastic Holdings Limited or any related
entity. For the purposes of this policy a “spouse” shall include a
“de facto spouse.”
It is inappropriate for a Director, executive officer and employee to
procure others to trade Fantastic Holdings Limited shares when
they are precluded from trading.
The Fantastic Group reserves the right to preclude trading of shares
outside the trading window notably if there are developments of
potential commercial significance which have yet to be disclosed
to the market. Not withstanding this, the Fantastic Group may
permit once-off transactions by employees if they are unaware
are compelling circumstances. The Fantastic Group may restrict
dealings in shares of Fantastic Holdings Limited by certain
employees during any period if, in its opinion, information is
available to those employees, which, if published, could affect the
price of the shares.
Directors should disclose to the Board and the market details of
the effective exposure of the disclosed security holding in Fantastic
purchase of any put option or similar security that has the effect
Holdings Limited.
Investing for Our Future
REPORTS
Council Principle 4: Safeguard integrity in financial reporting.
Council Recommendation 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.
The Fantastic Group’s practice:
The Board requires that the Managing Director and the Chief
Financial Officer sign a statement declaring that the Fantastic
material respects, of the Fantastic Group’s financial condition and
operational results and are in accordance with relevant accounting
Audit Committee.
The Fantastic Group’s practice:
An Audit Committee was established by the Board in
November 1999.
Council Recommendation 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
Chairperson of the Board, and at least three members.
The Fantastic Group’s practice:
From 22 August 2006, the Audit and Compliance Committee
consist of three Non-executive independent Directors. The names
and qualifications of the members of the Audit and Compliance
Committee and their attendance at meetings of the Committee are
included on Pages 6 and 7 in this Directors’ Report.
The Managing Director, Finance Director and Chief Financial Officer
attend meetings by invitation.
The Committee members are all required to be financially literate.
At least one must have specific experience in financial or accounting
matters and at least one must have an understanding of the
Fantastic Group’s industry, namely the retail furniture industry. The
Chairman of Fantastic Holdings Limited cannot be the Chairman
of the Audit and Compliance Committee, unless they are the
only independent Director with specific experience in financial or
accounting matters. The Chairman of Fantastic Holdings Limited,
George Bennett, is a Chartered Accountant and is considered to be
the most appropriate independent Non-executive Director to chair
the Audit and Compliance Committee.
Council Recommendation 4.4: The Audit Committee should
have a formal charter.
The Fantastic Group’s practice:
The Audit and Compliance Committee’s functions include:
a. reviewing the Fantastic Group’s financial statements and
other financial information distributed externally, and
overseeing the financial reporting process;
b. reviewing reports prepared by the internal and external
auditors including meeting with them both with and without
management being present and ensuring that any major
deficiencies identified are actioned;
c. monitoring accounting and internal controls and
recommending enhancements;
Annual Report 2007 - 11
 Directors’ Report
for the year ended 30 June 2007
Corporate Governance Statement (continued)
d. monitoring compliance with the Corporations Act 2001,
Australian Stock Exchange Listing Rules (including reporting of risk as part of the annual planning process. More
continuous disclosure of financial aspects) and other Council Recommendation 6.1: Design and disclose a
legislation and any matters outstanding with taxation and
other regulatory authorities;
e. reviewing risks and the effectiveness and adequacy
of the Fantastic Group’s insurance and risk
management programs;
f. reviewing related party and significant transactions Oversight and Nature of Risk-
which are not a normal part of the Fantastic Group’s The Board reviews the financial and related operations of the
business, and considering the adequacy of disclosure of
those transactions in the financial statements;
g. reviewing the effectiveness and adequacy of external audit
arrangements and making any recommendations to the
Board where appropriate regarding replacement of the
auditor, changes to their terms of appointment and rotation
of the engagement partner;
h. assessing whether non-audit services provided by the Typically, mitigation processes comprise a range of options including
external auditor are consistent with maintaining the external
auditor’s independence. Each reporting period, the external
auditor provides an independence declaration in relation to
the audit or review; and
i. providing advice to the Board in respect of whether the product liability and indemnity insurance, to cover unexpected or
provision of the non-audit services by the external auditor is
compatible with the general standard of independence of
auditors imposed by the Corporations Act 2001.
Council Principle 5:
Make timely and balanced disclosure.
Council Recommendation 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.
The Fantastic Group’s practice:
The Board aims to ensure that the shareholders are informed
of all major developments affecting the Fantastic Group’s
state of affairs, notably but not solely financial and operational
information needed by a normal investor to make an informed
assessment of the Fantastic Group’s activities and trading results.
The Company Secretary is responsible for the timely preparation
of announcements.
Announcements (other than mechanical regulatory announcements
which the Company Secretary is authorised to make) are checked
for completeness, correctness and clarity by the Board and are
approved prior to release. It is the responsibility of the Board of
Directors and the Company Secretary for ensuring that the Fantastic
Group complies with its disclosure obligations and deciding what
information will be disclosed. Where uncertainty arises as to
the meeting of continuous disclosure obligations, the Company
Secretary may seek external legal advice. The Board monitors the
implementation and effectiveness of the continuous disclosure
procedures and promotes the understanding of compliance.
12 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
(continued)
Council Principle 6:
Respect the rights of shareholders.
communications strategy to promote effective communication
with shareholders and encourage effective participation at
general meetings.
The Fantastic Group’s practice:
Information is communicated to shareholders as follows:
i) The Notice of Annual General Meeting is distributed to all
shareholders, while the Half-Yearly Financial Report
and Annual Financial Report are distributed to all
shareholders that have requested a hard copy. In
June 2007, legislation was passed to amend the default
option for receiving the Annual Report, to be via an entity’s
website, with hard copies only sent to shareholders who
request them. Fantastic Holdings Limited will be
implementing changes in line with this legislation in the
next few months to encourage the usage of electronic
communication by our shareholders.
The Notice of Annual General Meeting and Half-Yearly and Annual
Financial Reports can be found on the Fantastic Group’s website.
ii) Announcements (which include media releases) are made
to the Australian Stock Exchange in respect of half-yearly
and annual results and on other occasions under the
continuous disclosure requirements when the Fantastic
Group becomes aware of information which might materially
affect the price of its shares.
These announcements are placed on the website after they
have been released to the Australian Stock Exchange. Where
information or presentation material has been prepared for external
promotional and communication purposes, especially for analysts,
institutional and media markets, such material will be released to
the Australian Stock Exchange and will be included on the Fantastic
Group’s website.
The Board encourages full participation of shareholders at the
Annual General Meeting. Important issues are presented to
shareholders as single resolutions. The shareholders are requested
to vote on the Remuneration Report. This vote is advisory only and
is not binding on the Directors.
Council Recommendation 6.2: Request the external auditor to
attend the Annual General Meeting and be available to answer
shareholder questions about the conduct of the audit and the
preparation and content of the Auditors’ Report.
The Fantastic Group’s practice:
The Fantastic Group’s external auditor is requested to attend the
Annual General Meeting and be available to answer shareholder
questions about the conduct of the audit and the preparation and
content of the Auditors’ Report. The Chairman of the meeting is to
allow a reasonable opportunity for shareholders to ask questions
of the auditor regarding the audit and Auditors’ Report.
Corporate Governance Statement (continued)
Council Principle 7:
Recognise and manage risks.
Council Recommendation 7.1: The Board or appropriate
Board Committee should establish policies on risk oversight
and management.
The Fantastic Group’s practice:
The Board regularly reviews the identification, management and
frequent reviews are undertaken as conditions or events dictate. In
the first instance, reviews are undertaken by management under the
direction of the Chief Financial Officer and are then reviewed by the
Audit and Compliance Committee. The Board’s risk management
process comprises the following aspects:
Fantastic Group on a monthly basis. The identification and
monitoring of critical risk factors forms an integral part of the
associated monthly management reporting processes. Risks may
be of a financial or non-financial nature.
Risk Mitigation-
The Board regularly reviews avenues to mitigate identified risk.
revising/enhancing controls and procedures, limiting contractual
obligations, introducing improved education and training, improving
quality assurance and the appointment of external service providers
on a needs basis. The Fantastic Group also has insurance, including
unforeseen events and reduce any adverse consequences.
Monitoring of Risk Management Process-
The Board is responsible for reviewing the effectiveness of the risk
management process. As part of the review process, the Board
considers the extent to which the risk process has been successful
in retrospect with regards to the identification and mitigation
of risks.
Council Recommendation 7.2: The Chief Executive Officer (or
equivalent) and the Chief Financial Officer (or equivalent) should
state to the 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; and
7.2.2 the company’s risk management and internal compliance
and control system is operating efficiently and effectively in all
material respects.
The Fantastic Group’s practice:
The Managing Director and Chief Financial Officer are required
to report to the Board in writing that the statement given in
accordance with best practice Recommendation 4.1 is founded
on a sound system of risk management and internal compliance
and control which allows the implementation of policies adopted
by the Board. They must also confirm that the Fantastic Group’s
risk management and internal compliance and control system is
operating efficiently and effectively in all material respects.
Investing for Our Future
REPORTS
Council Principle 8:
Encourage enhanced performance.
Council Recommendation 8.1: Disclose the process for
performance evaluation of the Board, its committees and
individual directors, and key executives.
The Fantastic Group’s practice:
It is the responsibility of the Chairman to ensure Directors contribute
appropriately, and he monitors this in an informal manner at each
Board and Committee meeting. If there is a matter of improvement
to be raised, this will be done either on an individual or group level,
as appropriate. The Chairman also reviews the effectiveness of
meetings, and makes recommendations as to areas of possible
improvement for future meetings where appropriate.
The number of Board and Committee meetings attended by each
Director is provided on Page 7 in this Directors’ Report, as it is
important that individual Board members devote the necessary
time to the Board. To this end, there is a review of the time required
from a Non-executive Director and whether they are meeting this.
A Non-executive Director should inform the Chairperson before
accepting any new Board appointments.
The size and composition of the Board are also reviewed, to
ensure that these are conducive to achieving the best possible
performance from Directors with the skills necessary for good
stewardship of the Fantastic Group.
The performance of key executives is monitored via regular monthly
management and Board reporting for each of their divisions,
attendance on a periodic basis at Board meetings, and review by
the Board of the financial performance of their divisions compared
to budget and forecast on a monthly basis.
Council Principle 9:
Remunerate fairly and responsibly.
Council Recommendation 9.1: Provide disclosure in relation
to the company’s remuneration policies to enable investors
to understand (i) the costs and benefits of those policies and
(ii) the link between remuneration paid to Directors and key
executives and corporate performance.
The Fantastic Group’s practice:
The Board considers advice from the Remuneration Committee in
regards to the structure and quantum of executive and Director
remuneration. The Committee also takes advice from time to time
from special personnel consulting groups so as to ensure that the
Committee remains informed of market trends and practices.
The remuneration policy ensures that remuneration packages
properly reflect the person’s duties and responsibilities and that
remuneration is competitive in attracting, retaining and motivating
people of the highest quality. The amount of remuneration, both
monetary and non-monetary, for certain executives and all Directors
for the year are provided on pages 17 and 18 in this Directors’
Report. Where remuneration is of a non-cash nature, such benefit
is quantified as closely as possible to a cash equivalent basis.
In addition to normal salary and superannuation, senior executive
benefits typically include bonuses paid in cash or shares based on
the achievement of specific goals related to the performance of
business units within the Fantastic Group.
Issues of shares under the Fantastic Group’s share plans
are subject to shareholder approval or subsequent
shareholder ratification.
Annual Report 2007 - 13
 Directors’ Report
for the year ended 30 June 2007
Corporate Governance Statement (continued)
When an employment contract is deemed to have triggered a
continuous disclosure obligation, the Fantastic Group will provide
to the market a summary of the main elements and terms of
the relevant agreement including termination entitlements. No
individual is able to become directly involved or participate in the
decision involving their own remuneration.
Council Recommendation 9.2: The Board should establish a
Remuneration Committee.
The Fantastic Group’s practice:
A Remuneration Committee was established by the Board in
November 1999.
The Remuneration Committee reviews and makes recommendations
to the Board on Director and senior executive remuneration and
overall staff remuneration and incentive policies. When making
recommendations, the Committee aims to design policies that
motivate executives to pursue appropriate growth strategies while
marrying performance with remuneration. Remuneration for senior
executives typically comprises a package of fixed and performance
based components. The Committee may, from time to time, seek
advice from external experts.
Aspects considered by the Committee include the following:
a. the basis of the calculation for senior executives’ and to legitimate stakeholders.
Directors’ remuneration annually (including valuation The Fantastic Group’s practice:
protocols adopted when valuing non-cash benefits) to
ensure that they are reasonable;
b. monitoring current industry practice and the generally Final dividend 100% franked
accepted market range for remuneration, and publications
of professional recruitment organisations;
c. assessing different methods for remunerating senior Interim dividend 100% franked
executives and Directors;
d. reviewing and monitoring existing or proposed share/option
and other incentive schemes;
e. considering superannuation payments;
f. considering retirement and termination payments;
g. monitoring fringe benefits;
h. reviewing professional indemnity and liability
insurance policies;
i. reviewing disclosure of senior executive remuneration in the
financial statements; and
j. making recommendations to the Board as appropriate.
14 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
CHANGES IN THE STATE OF AFFAIRS
(continued) In the opinion of the Directors, there were no significant changes in the state of affairs of the consolidated entity that occurred during the
financial year.
AFTER BALANCE DATE EVENTS
There has not arisen in the interval between the end of the financial year and the date of this report, any item, transaction or event
of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the
The names and qualifications of the members of the Remuneration
consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.
Committee and their attendance at meetings of the Committee are
included on Pages 6 and 7 in this Directors’ Report. LIKELY DEVELOPMENTS
Council Recommendation 9.3: Clearly distinguish the structure Information about likely developments in the operations of the consolidated entity and the expected results of those operations in future
of Non-executive Directors’ remuneration from that of executives. financial years is likely to result in unreasonable prejudice to the consolidated entity. Accordingly, this information has not been disclosed
in this report.
The Fantastic Group’s practice:
Non-executive Directors are remunerated by way of directors’ fees
ENVIRONMENTAL REGULATION
and superannuation. They do not participate in schemes designed The operations of the consolidated entity are not subject to any significant Environmental Regulation under a law of the Commonwealth or
for the remuneration of executives and do not receive retirement State. However, the Board believes that the consolidated entity has adequate systems in place for the management of its environmental
benefits (other than statutory superannuation), bonus payments or requirements and is not aware of any breach of those environmental requirements as they apply to the consolidated entity.
incentive shares.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Council Recommendation 9.4: Ensure that payment of equity-
During the financial year and in accordance with the Company’s constitution, the Company has paid premiums to insure each of the
based executive remuneration is made in accordance with
Directors and Officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their
thresholds set in plans approved by shareholders.
conduct while acting in the capacity of Director or Officer of the Company (other than conduct involving a wilful breach of duty in relation
The Fantastic Group’s practice: to the Company).
Details of the Share Plans approved by shareholders are disclosed These insurance policies do not contain details of the amount of premium paid in respect of individual Directors and Officers of the
in Note 17 (d) of the financial report. Company. The total amount of premium is not included as part of remuneration as detailed on pages 17 and 18 in this Directors’ Report.
Council Principle 10: The insurance policies prohibit disclosure of the nature of the liabilities and the amounts of premium payable. Under this circumstance,
the Corporations Act 2001 does not require disclosure of this information.
Recognise the legitimate interests of stakeholders.
Council Recommendation 10.1: Establish and disclose a code DIVIDENDS
of conduct to guide compliance with legal and other obligations
Dividends paid or declared by the Company since the end of the previous financial year were:
Total Amount Tax Rate for
Type Cents per Share $ Date of Payment Franking Credit
As outlined in Council Principle 3, the Fantastic Group has a In respect of the previous financial year:
corporate Code of Conduct which sets out the expectations
5.51 5,208,113 10/10/06 30%
placed on Directors, executive officers and employees in their
business dealings. The Fantastic Group is committed to delivering In respect of the current financial year:
shareholder value by managing resources at its disposal in the
5.51 5,219,670 02/04/07 30%
best way possible to achieve the most desirable outcome. Whilst
maximising the dollar value of the Fantastic Group is of utmost 10,427,783
importance, the Fantastic Group also considers that human, social
A final dividend of 5.51 cents per share, totalling $5,235,758 will be paid on 10 October 2007, and will be fully franked at
and natural assets are of great importance.
30 cents per share.
Other Information This dividend was declared at a meeting of Directors on 24 August 2007 and its financial effect has not been brought to account in the
Further information relating to the Fantastic Group’s corporate financial statements for the year ended 30 June 2007, but will be recognised in a subsequent financial report.
governance practices and policies has been made publicly available
on the Fantastic Group website at www.fantasticfurniture.com.au, DIRECTORS’ INTERESTS
under “Company Information.” The relevant interest of each Director in the shares issued by the companies within the consolidated entity and other related bodies
corporate, as notified by the Directors to the Australian Stock Exchange in accordance with Section 205G (1) of the Corporations Act 2001,
at the date of this report is as follows:
Ordinary shares held in
Director Fantastic Holdings Limited
Julian Tertini 40,842,074
Peter Brennan 10,519,929
George Bennett 512,149
Denis McCormack 26,620
Geoffrey Squires 1,580
Total 51,902,352
SHARE OPTIONS
During or since the end of the financial year, there were no share options granted to Directors or Officers of the Company.
Investing for Our Future
REPORTS Annual Report 2007 - 15
 Directors’ Report
Remuneration Report (continued)
(continued)
DIRECTORS’ AND EXECUTIVES REMUNERATION (Audited)
for the year ended 30 June 2007
Details of the nature and amount of each major element of remuneration of each Director of the Company, each of the five named Company
and consolidated entity executives who receive the highest remuneration and other key management personnel are:

NON-AUDIT SERVICES 12 Months ended 30 June 2007

During the year, Felsers, the Company’s auditor, has performed certain other services in addition to their statutory duties. The Board has Short-term Post Employment Equity
considered the non-audit services provided during the year by the auditor and in accordance with written advice provided by resolution of
Cash Proportion which
the Audit and Compliance Committee, is satisfied that the provision of these non-audit services during the year by the auditor is compatible
Salaries and Incentive Superannuation is Performance
with and did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
Fees Payments Contributions Shares Total Related
- all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Audit
$ $ $ $ $ %
and Compliance Committee to ensure they do not impact the integrity and objectivity of the auditor; and
- the non-audit services provided do not undermine the general principles relating to auditor independence, as they did not involve reviewing Company Executive Directors
or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an advocate for the
Company, or jointly sharing risks and rewards. Julian Tertini* - Managing Director 218,000 - 1,800 - 219,800 0%

A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act 2001 is included on page 20 in Peter Brennan** - Finance Director 186,000 - 1,800 - 187,800 0%
this Directors’ Report. Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are Company Non-executive Directors
disclosed in Note 6 of the financial report.
George Bennett - Chairman 60,000 - 5,400 - 65,400 0%
REMUNERATION REPORT
COMPENSATION POLICY FOR DIRECTORS, SECRETARIES AND KEY MANAGEMENT PERSONNEL (Audited) Denis McCormack 30,000 - 2,700 - 32,700 0%
Remuneration of Directors, Secretaries and key management personnel is referred to as compensation as defined by AASB 124.
Geoffrey Squires 25,833 - 2,325 - 28,158 0%
Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company and
the consolidated entity. Key management personnel comprise the Directors of the Company and executives of the Company and the 519,833 - 14,025 - 533,858
consolidated entity, including the five most highly remunerated S300A executives.
The compensation policy ensures that compensation levels for key management personnel and secretaries of the Company and of the Consolidated Entity
consolidated entity properly reflect the person’s duties and responsibilities, and is competitive in attracting, retaining and motivating Executives
people of the highest quality. The Board considers advice from the Remuneration Committee in regards to the structure and quantum
of this compensation. Susan Caruso - Chief Financial
Officer/Company Secretary 173,721 18,375 17,125 42,875 252,096 24.3%
• KEY MANAGEMENT PERSONNEL AND SECRETARIES - EXCLUDING DIRECTORS
Compensation packages for key management personnel and secretaries, excluding Directors, include a mix of fixed and variable Robert De Nicola - General
Manager Plush 172,802 - 15,523 60,000 248,325 24.2%
components. Fixed compensation consists of a base salary as well as employer contributions to superannuation funds. Variable
compensation is performance linked and is paid as a minimum of 50% in shares (long term incentive) and the remainder in cash (short
Carolyn Cox - Retail Operations
term incentive). Financial performance measures include sales, profitability, earnings per share and return on capital as measured 171,168 - 8,887 59,122 239,177 24.7%
Manager Fantastic Furniture
for business units and/or the consolidated entity as applicable to the individual, compared to budget and prior year. Non-financial
performance measures include leadership, maintaining company culture, staff development, innovation and goal achievement. By paying Richard Frost - Group Products
150,401 26,136 15,718 26,135 218,390 23.9%
part of the bonus in shares, this provides the long term incentive for key management personnel, excluding Directors, to increase and Development Manager
shareholder return, as does the use of earnings per share as a performance measure.
David Drummond - General
The consolidated entity performs a detailed budget process each year and sets performance targets based on market conditions and 146,101 - 13,067 30,000 189,168 15.9%
Manager Imports and Logistics
expectations, as well as the Company’s estimated growth rates. While individual divisions are involved in setting their budgets, the
Board has final sign off to ensure the budgets are consistent with the consolidated entity’s financial goals. For these reasons, the Board 814,193 44,511 70,320 218,132 1,147,156
believes that the achievement of budget targets is a relevant measure of performance. Once the Company reaches further maturity,
Company Executives
performance measures may include comparison to industry standards in addition to comparison to internal budgets and prior year.
Performance reviews are done each year to provide an assessment of the individual’s performance which in turn will determine the Norman Role - General Manager
138,021 15,200 13,790 15,200 182,211 16.7%
potential amount of the bonus to be paid. At the end of the financial year, the actual financial performance of the consolidated entity Fantastic Lounge Factory
and individual business units are assessed. Except in very special circumstances, no bonuses will be payable if the net profit is equal Total Compensation of Key
to or less than the previous year. Where budget targets are not met, the Remuneration Committee will examine all circumstances that Management Personnel : 1,472,047 59,711 98,135 233,332 1,863,225
led to the result and devise a formula for that particular year to determine the percentage of bonus payment that each individual will be Consolidated Entity
eligible for.
Total Compensation of Key
• EXECUTIVE DIRECTORS Management Personnel : Company 657,854 15,200 27,815 15,200 716,069
Executive Directors are paid a set directors’ fee and superannuation thereon. They do not receive any performance based compensation.
They also receive a service fee, based on a set hourly rate, for services rendered to the consolidated entity.
• NON-EXECUTIVE DIRECTORS
*Bytenew Pty Limited, a company associated with Julian Tertini, received the sum of $198,000 by way of fees for services rendered.
Non-executive Directors are paid a set directors’ fee and superannuation thereon. They do not receive any performance based
compensation and do not receive retirement benefits (other than statutory superannuation).
**Nonad Financial Services Pty Limited, a company associated with Peter Brennan, received the sum of $166,000 by way of fees for
Total compensation for all Non-executive Directors is not to exceed $200,000 per annum and is set with reference to fees paid to other services rendered.
Non-executive Directors. Non-executive Directors base fees are currently at $160,000 per annum.

SERVICE AGREEMENTS (Audited)

There are no fixed term service agreements with any Director or key management personnel of the consolidated entity. Directors and
key management personnel may terminate employment with the Company in accordance with statutory notice periods, and there are no
onerous termination conditions or payments to be made in respect of any Director or key management personnel.

Investing for Our Future

16 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
REPORTS Annual Report 2007 - 17
 Directors’ Report
Remuneration Report (continued)
(continued)
ANALYSIS OF CASH INCENTIVE PAYMENTS AND SHARE INCENTIVE PAYMENTS INCLUDED IN REMUNERATION (Unaudited)
for the year ended 30 June 2007
Details of the vesting profile of the short term cash incentive payments and share incentive payments awarded as remuneration to
each Director of the Company, each of the five named Company executives and relevant consolidated entity executives and other key
management personnel are detailed below.
Remuneration Report (continued)

DIRECTORS’ AND EXECUTIVES REMUNERATION (Audited) Short-term Cash Incentive Payment Share Incentive Payment

12 Months ended 30 June 2006 Included in Included in

Remuneration % Vested % Forfeited Remuneration % Vested % Forfeited
Short-term Post Employment Equity $ (A) in Year in Year (B) $ (A) in Year in Year (B)
Cash Proportion which Company
Salaries and Incentive Superannuation is Performance Directors Not applicable Not applicable
Fees Payments Contributions Shares Total Related
Consolidated
$ $ $ $ $ %
Entity
Company Executive Directors Executives
Julian Tertini* - Managing Director 197,000 - 1,800 - 198,800 0% Susan Caruso 18,375 50% 50% 42,875 50% 50%
Peter Brennan** - Finance Director 182,000 - 1,800 - 183,800 0%
Robert De Nicola - - - 60,000 50% 50%
Company Non-executive Directors
George Bennett - Chairman 60,000 - 5,400 - 65,400 0% Carolyn Cox - - - 59,122 50% 50%

Denis McCormack 30,000 - 2,700 - 32,700 0% Richard Frost 26,136 50% 50% 26,135 50% 50%
469,000 - 11,700 - 480,700
David Drummond - - - 30,000 50% 50%
Consolidated Entity
Company
Carolyn Cox - Retail Operations Executives
166,720 - 14,691 - 181,411 0%
Manager Fantastic Furniture
Norman Role 15,200 50% 50% 15,200 50% 50%
Robert De Nicola - General
162,538 - 14,400 - 176,938 0%
Manager Plush
Susan Caruso - Chief Financial (A) Amounts included in remuneration for the financial year represent the amount vested in the financial year based on achievement of
159,574 - 14,232 - 173,806 0%
Officer/Company Secretary proposed goals and satisfaction of specified performance criteria. No amounts vest in future financial years in respect of incentives for the
2007 year.
Santina Rigoli - Merchandise
Manager Fantastic Furniture 150,163 - 13,313 - 163,476 0%
(resigned 9 August 2006) (B) The amounts forfeited are due to performance or service criteria not being met in relation to the current financial year.

Richard Frost - Group Products and

146,925 - 13,050 - 159,975 0%
Development Manager
David Drummond - General
125,000 - 11,250 - 136,250 0%
Manager Imports and Logistics
910,920 - 80,936 - 991,856

Company Executives
Norman Role - General Manager
149,955 - 13,496 - 163,451 0%
Fantastic Lounge Factory
Total Compensation of Key
Management Personnel : 1,529,875 - 106,132 - 1,636,007
Consolidated Entity
Total Compensation of Key
618,955 - 25,196 - 644,151
Management Personnel : Company

*Bytenew Pty Limited, a company associated with Julian Tertini, received the sum of $177,000 by way of fees for services rendered.

**Nonad Financial Services Pty Limited, a company associated with Peter Brennan, received the sum of $162,000 by way of fees for
services rendered.

Note: No short term or long term performance based payments were paid in relation to the financial year ended 30 June 2006, as the key
performance criteria of profitability of the consolidated entity exceeding the prior year was not met.

Investing for Our Future

18 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
REPORTS Annual Report 2007 - 19
 Financial Highlights 17% 280

➜
for the year ended 30 June 2007 for the year ended 30 June 2007

273.40m
240

233.38m
220.97m
AUDITOR’S INDEPENDENCE DECLARATION 200

20.97c
20

20.87c
10%

➜
18

182.96m
14%

17.32c
➜
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2007 there have been:

17.37m
160

16.39m
15

15.75c
15

15.74m

15.09c
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in

14.4m
relation to the audit; and

134.20m
12 120

(ii) no contraventions of any applicable code of professional conduct in relation to the audit. 10

10.56m
9
80

Felsers 6
5
Chartered Accountants 40
3

03 04 05 06 07 03 04 05 06 07 03 04 05 06 07
0 0 0
Net Profit After Tax Earnings Per Share (EPS) Revenue
Net profit after tax of $16.39 million, EPS of 17.32 cents, Sales revenue of $273.4 million,
up by 14% in 2007. up by 10% in 2007. up by 17% in 2007.

10%

➜
80

80
70

70
Glenda A Nixon
Partner 12 60

60
11.02c
11.02c
11.00c
Dated: 7 September 2007 10

54
50 50

10.30c

48.83%

47
45.44%

43.40%
8 40 40
0.41

➜
7.70c
points
6 30 30

32.06%

31.65%
4 20 20

2 10 10

This Report is made in accordance with a resolution of the Directors 03 04 05 06 07 03 04 05 06 07 03 04 05 06 07

0 0 0
Dividends Per Share (DPS) Return On Equity (ROE) Store Numbers
DPS of 11.02 cents, unchanged in 2007. ROE was 31.65%, down by 0.41 There are 80 stores,
The dividends are all franked to 100%. Percentage points in 2007. up by 10 in 2007.

12

12.08%
0.11

11.24%

➜
11.14%
points
9

9.24%

9.13%
_____________________________ ______________________________
George Bennett Julian Tertini 6
Chairman Managing Director
Profit before Tax/Revenue Note: (i) Disclosures for years 2003 and 2004 were calculated in
3 Profit before tax as a accordance with previous Australian GAAP. Disclosures for years
percentage of revenue 2005 to 2007 were calculated in accordance with AASBs.
Dated this 7th day of September 2007 was 9.13%, down by 0.11 (ii) 11 for 10 share splits were undertaken in the years ended
03 04 05 06 07
0 percentage points in 2007. June 2004 to 2006.

Investing for Our Future

20 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
REPORTS Annual Report 2007 - 21
 Income Statements Balance Sheets
for the year ended 30 June 2007 for the year ended 30 June 2007

Notes Consolidated Entity Company Notes Consolidated Entity Company

30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June
2007 $ 2006 $ 2007 $ 2006 $ 2007 $ 2006 $ 2007 $ 2006 $
Sales revenue from continuing Current Assets
273,404,908 233,376,630 32,018,667 30,115,895
operations
Cash and cash equivalents (7) 5,988,105 8,274,495 3,018,911 4,016,624
Cost of sales (158,274,841) (136,501,872) (30,225,984) (27,937,715)
Trade and other receivables (8) 7,100,313 5,292,702 451,801 674,150
Gross Profit 115,130,067 96,874,758 1,792,683 2,178,180
Inventories (9) 45,889,847 39,249,796 1,929,934 1,694,829
Other income 1,961,766 1,041,535 4,059 30,169
Total Current Assets 58,978,265 52,816,993 5,400,646 6,385,603
Employment expenses (2) (38,991,634) (33,171,008) (699,704) (419,069)
Non-Current Assets
Property expenses (25,200,370) (18,246,152) - -
Investments (11) - - 9,062,108 16,141,172
Marketing expenses (17,229,072) (16,162,439) - -
Property, plant and equipment (12) 24,808,832 17,405,295 1,158,465 856,912
Other expenses (11,005,524) (9,186,615) (552,371) (575,701)
Intangible assets (13) 2,520,020 2,301,771 - -
Results from Continuing Operations 24,665,233 21,150,079 544,667 1,213,579 Deferred tax assets (4b) 3,007,221 2,315,383 490,470 415,462
Financial income 429,455 434,447 269,304 20,293,064 Other (10) 8,237 2,364 - -
Financial expense (129,234) (16,590) - - Total Non-Current Assets 30,344,310 22,024,813 10,711,043 17,413,546
Net Financing Income (3) 300,221 417,857 269,304 20,293,064 TOTAL ASSETS 89,322,575 74,841,806 16,111,689 23,799,149
Profit Before Tax from Current Liabilities
24,965,454 21,567,936 813,971 21,506,643
Continuing Operations
Bank overdraft (7) - - 589,822 73,789
Income tax expense (4a) (7,527,253) (6,573,870) (257,199) (479,976)
Trade and other payables (14) 16,985,993 17,452,104 1,101,435 1,233,440
Profit After Tax from
17,438,201 14,994,066 556,772 21,026,667 Interest-bearing loans
Continuing Operations (15) 553,420 121,252 - -
and borrowings
Loss after Tax from
(5) (1,047,807) (583,475) - - Current tax payable (16) 545,559 91,163 545,559 91,163
Discontinued Operations
Profit Attributable to the Equity Employee benefits (17) 6,347,868 5,300,544 1,036,529 846,798
(19) 16,390,394 14,410,591 556,772 21,026,667
Holders of the Company Provisions (18) 1,363,879 986,931 79,974 75,000
Earnings Per Share for Profit Total Current Liabilities 25,796,719 23,951,994 3,353,319 2,320,190
Attributable to the Equity Holders of
the Company: Non-Current Liabilities

Basic earnings per share Interest-bearing loans

17.32 15.75 (15) 8,578,901 4,547,971 - -
(cents per share) and borrowings

Diluted earnings per share Employee benefits (17) 588,010 519,944 248,664 233,896
17.32 15.75
(cents per share) Provisions (18) 2,346,530 867,773 256,237 -
Weighted average number of shares Deferred tax liabilities (4c) 220,368 - 4,105 -
used in the calculation of earnings 94,635,010 91,490,577
Total Non-Current Liabilities 11,733,809 5,935,688 509,006 233,896
per share
TOTAL LIABILITIES 37,530,528 29,887,682 3,862,325 2,554,086
Earnings Per Share for Profit from
Continuing Operations: NET ASSETS 51,792,047 44,954,124 12,249,364 21,245,063
Basic earnings per share Equity
18.43 16.39
(cents per share)
Share capital (19) 7,155,584 6,280,272 7,155,584 6,280,272
Diluted earnings per share
18.43 16.39 Retained earnings (19) 44,636,463 38,673,852 5,093,780 14,964,791
(cents per share)
TOTAL EQUITY 51,792,047 44,954,124 12,249,364 21,245,063
Dividends per share (cents per share) 11.02 11.02

The Balance Sheets are to be read in conjunction with the Notes to the Financial Statements
The Income Statements are to be read in conjunction with the Notes to the Financial Statements

Investing for Our Future

22 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 23
 Statements of Changes in Equity Cash Flow Statements
for the year ended 30 June 2007 for the year ended 30 June 2007

Notes Consolidated Entity Company Notes Consolidated Entity Company

30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June
2007 $ 2006 $ 2007 $ 2006 $ 2007 $ 2006 $ 2007 $ 2006 $
Share Capital Cash Flows from
Operating Activities:
Ordinary shares at beginning of
6,280,272 5,826,340 6,280,272 5,826,340
the financial year Cash receipts from customers 301,745,683 258,165,944 35,224,999 33,160,670
Shares issued during the year 875,312 453,932 875,312 453,932 Cash payments to suppliers
(280,964,460) (234,880,660) (26,987,530) (26,957,392)
and employees
Ordinary Shares at End of the
(19) 7,155,584 6,280,272 7,155,584 6,280,272
Financial Year Dividend received - - - 20,000,000
Retained Earnings Interest received 440,997 432,756 278,811 290,458
Retained earnings at the Interest paid (453,990) (371,962) - -
38,673,852 34,198,172 14,964,791 3,873,035
beginning of the financial year
Income tax paid (7,093,554) (8,292,823) (7,093,554) (8,292,823)
Profit after tax attributable
16,390,394 14,410,591 556,772 21,026,667 Net Cash Provided by
to equity holders (26) 13,674,676 15,053,255 1,422,726 18,200,913
Operating Activities
Dividends paid (10,427,783) (9,934,911) (10,427,783) (9,934,911)
Cash Flows from
Retained Earnings at the End of Investing Activities:
(19) 44,636,463 38,673,852 5,093,780 14,964,791
the Financial Year
Payments for acquisitions of
(10,709,713) (4,725,417) (464,139) (228,653)
Total Equity as at the property, plant and equipment
51,792,047 44,954,124 12,249,364 21,245,063
End of the Financial Year
Proceeds from sale of property,
plant and equipment - continuing 68,887 74,424 1,074 7,875
operations
The Statements of Changes in Equity are to be read in conjunction with the Notes to the Financial Statements
Proceeds from sale of property,
plant and equipment - discontinued 279,524 - - -
operation
Payment for investment - - - (4)
Loans (to)/repaid by subsidiaries - - 7,079,064 (6,521,552)
Payment of goodwill (218,249) - - -
Net Cash Used in Investing
(10,579,551) (4,650,993) 6,615,999 (6,742,334)
Activities
Cash Flows from Financing
Activities:
Proceeds from issue of shares 875,312 453,932 875,312 453,932
Proceeds from external borrowings 4,603,841 - - -
Repayments of hire purchase
(432,885) (121,253) - -
liability principal
Dividends paid (10,427,783) (9,934,911) (10,427,783) (9,934,911)
Net Cash Used in Financing
(5,381,515) (9,602,232) (9,552,471) (9,480,979)
Activities
Net Increase/(Decrease) in
(2,286,390) 800,030 (1,513,746) 1,977,600
Cash Held
Cash at the Beginning of the
8,274,495 7,474,465 3,942,835 1,965,235
Financial Year
Cash at the End of the
(7) 5,988,105 8,274,495 2,429,089 3,942,835
Financial Year

The Cash Flow Statements are to be read in conjunction with the Notes to the Financial Statements

Investing for Our Future

24 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 25
 Notes to Financial Statements
for the year ended 30 June 2007
1. Significant Accounting Policies
Reporting Entity
The consolidated financial report of the Company as at and for the
financial year ended 30 June 2007 comprises the Company and its
subsidiaries (together referred to as the ‘consolidated entity’).
Statement of Compliance
The financial report is a general purpose financial report which has
been prepared in accordance with Australian Accounting Standards
(AASBs) (including Australian Accounting Interpretations) adopted
by the Australian Accounting Standards Board, and the Corporations
Act 2001. The consolidated financial report of the consolidated
entity also complies with International Financial Reporting Standards
(IFRSs) and Interpretations adopted by the International Accounting
Standards Board. The Company’s financial report does not comply
with IFRSs as the Company has elected to apply the relief provided
to parent entities by AASB 132 Financial Instruments: Presentation
and Disclosure in respect of certain disclosure requirements.
The financial statements were approved by the Board of Directors
on 7 September 2007.
Basis of Measurement
The financial report is presented in Australian dollars using the
historical cost basis unless otherwise stated.
Use of Estimates and Judgements
The preparation of financial statements requires management
to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets, liabilities,
income and expenses.
The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates. In particular, refer
to the following notes for estimates and associated judgements in
the financial report:
Note 17 – Measurement of share based payments
Note 20 – Valuation of financial instruments
Note 28 - Contingencies
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised and in any future
periods affected.
Significant Accounting Policies
The accounting policies set out below have been applied consistently
to all periods presented in the consolidated financial report. The
entity has not elected to early adopt any accounting standards. The
comparative Income Statement and Notes 2, 3 and 4 have been
re-presented as if an operation discontinued during the current
period had been discontinued from the start of the comparative
period. (see Note 5)
26 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
(a) Basis of Consolidation
i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists
when the Company has the power, directly or indirectly, to govern
the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, potential voting
rights that presently are exercisable or convertible are taken into
account. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control
commences until the date that control ceases.
Investments in subsidiaries are carried at their cost of acquisition
in the Company’s financial statements and include interest-free
loans made to the subsidiaries with no fixed repayment date.
ii) Transactions Eliminated on Consolidation
Inter-entity balances and any unrealised income and expenses
arising from inter-entity transactions are eliminated in preparing
the consolidated financial statements.
(b) Foreign Currency
Foreign Currency Transactions
Transactions in foreign currencies are translated at the foreign
exchange rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the balance
sheet date are translated to Australian dollars at the foreign
exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the Income Statements.
(c) Financial Instruments
i) Non-derivative Financial Instruments
Non-derivative financial instruments comprise trade and other
receivables, cash and cash equivalents, trade and other payables,
and loans and borrowings.
Trade and other receivables are stated at their amortised cost
less impairment losses (see accounting policy (g)). Cash and cash
equivalents comprise cash balances, short term bills and deposits
at call. Bank overdrafts that are repayable on demand and form
an integral part of the consolidated entity’s cash management are
included as a component of cash and cash equivalents for the
purpose of the Cash Flow Statements.
Trade and other payables are stated at their cost and are non
interest-bearing, while loans and borrowings are stated at their
cost and are interest-bearing.
ii) Share Capital
Ordinary Shares
Incremental costs directly attributable to the issue of ordinary
shares and share options are recognised as a deduction from
equity, net of any related income tax benefit.
Dividends
Dividends are recognised as a liability in the period in which they
are declared.
(d) Property, Plant and Equipment
i) Owned Assets
Items of property, plant and equipment are measured at cost less
accumulated depreciation and impairment losses (see accounting
policy (g)). Cost includes expenditures that are directly attributable
to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials, direct labour, the initial estimate,
where relevant, of the costs of dismantling and removing the
items and restoring the site on which they are located and an
appropriate proportion of production overheads. Where parts of
an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant
and equipment.
ii) Reclassification to Investment Property
Property that is being constructed or developed for future use as
investment property is classified as property, plant and equipment
and measured at cost until construction or development is complete,
at which time it is remeasured to fair value and reclassified as
investment property. Any gain or loss arising on remeasurement is
recognised in the Income Statements.
When the use of a property changes from owner-occupied to
investment property, the property is remeasured to fair value
and reclassified as investment property. Any loss arising on
remeasurement is recognised in the revaluation reserve to the extent
that an amount is included in a revaluation reserve for that property,
with any remaining loss recognised immediately in profit or loss. Any
gain arising on remeasurement is recognised in profit or loss to the
extent the gain reverses a previous impairment loss on that property,
with any remaining gain recognised directly in a revaluation reserve
in equity.
(iii) Leased Assets
Leases in terms of which the consolidated entity assumes
substantially all the risks and rewards of ownership are classified
as finance leases. The owner-occupied property acquired by way
of finance lease is stated at an amount equal to the lower of its
fair value and the present value of the minimum lease payments
at inception of the lease, less accumulated depreciation and
impairment losses (see accounting policy (g)). Other leases are
operating leases and are not recognised in the consolidated entity’s
Balance Sheets. Lease payments are accounted for as described
in accounting policy (k).
(iv) Subsequent Costs
The consolidated entity recognises in the carrying amount of an
item of property, plant and equipment the cost of replacing part
of such an item when that cost is incurred if it is probable that
the future economic benefits embodied within the item will flow to
the consolidated entity and the cost of the item can be measured
reliably. All other costs are recognised in the Income Statements
as an expense as incurred.
(v) Depreciation
Depreciation is charged to the Income Statements over the
estimated useful lives of each part of an item of property, plant
and equipment. Land is not depreciated.
The estimated useful lives in the current and comparative periods
are as follows:
• buildings 40 years
• plant and equipment 3-12 years
• fixtures and fittings 5-12 years
Investing for Our Future
FINANCIALS
The residual value, the useful life and the depreciation method
applied to an asset are reassessed at least annually.
(vi) Fair Value
The fair value of property, plant and equipment and investment
property is based on market values. The market value of property is
the estimated amount for which a property could be exchanged on
the date of valuation between a willing buyer and a willing seller in an
arm’s length transaction after proper marketing wherein the parties
had each acted knowledgably, prudently and without compulsion.
The market value of items of plant, equipment, fixtures and fittings
is based on the quoted market prices for similar items.
e) Intangible Assets
Goodwill
Business Combinations
Business Combinations Prior to 1 July 2003
Goodwill is included on the basis of its deemed cost, which
represents the amount recorded under previous GAAP.
Business Combinations Since 1 July 2003
All business combinations are accounted for by applying the
purchase method. Goodwill represents the difference between the
cost of the acquisition and the fair value of the net identifiable
assets acquired. Fair value is based on the discounted cash
flows expected to be derived from the use and eventual sale of
the assets.
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units and is tested
annually for impairment (see accounting policy (g)).
Negative goodwill arising on an acquisition is recognised directly
in profit or loss.
(f) Inventories
Inventories are measured at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion
and selling expenses.
The cost of inventories is based on the first-in first-out principle
and includes expenditure incurred in acquiring the inventories
and bringing them to their existing location and condition. In the
case of manufactured inventories and work in progress, cost
includes an appropriate share of overheads based on normal
operating capacity.
(g) Impairment
(i) Financial Assets
A financial asset is considered to be impaired if objective evidence
indicates that one or more events have had a negative effect on
the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows.
Individually significant financial assets are tested for impairment on
an individual basis. The remaining financial assets are assessed
collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or loss. An impairment
loss is reversed if the reversal can be related objectively to an event
occurring after the impairment loss was recognised. For financial
assets measured at amortised cost, the reversal is recognised in
profit or loss.
Annual Report 2007 - 27
 Notes to Financial Statements
for the year ended 30 June 2007
(ii) Non-Financial Assets
The carrying amounts of the consolidated entity’s non-financial
assets, other than inventories (see accounting policy (f)) and
deferred tax assets (see accounting policy (l)), are reviewed at
each reporting date to determine whether there is any indication
of impairment. If any such indication exists then the asset’s
recoverable amount is estimated. For goodwill and intangible
assets that have indefinite useful lives or that are not yet
available for use, the recoverable amount is estimated at each
reporting date.
An impairment loss is recognised if the carrying amount of an
asset or its cash-generating unit exceeds its recoverable amount.
A cash-generating unit is the smallest identifiable asset group that
generates cash flows that largely are independent from other assets
and groups. Impairment losses are recognised in profit or loss.
Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill
allocated to the units and then to reduce the carrying amount of
the other assets in the unit (group of units) on a pro rata basis.
The recoverable amount of an asset or cash-generating unit is the
greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money
and the risks specific to the asset.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had
been recognised.
(h) Employee Benefits
i) Short-term Benefits
Liabilities for employee benefits for wages, salaries, annual leave
and sick leave that are expected to be settled within 12 months
of the reporting date represent present obligations resulting from
employees’ services provided to reporting date. These liabilities
are calculated at undiscounted amounts based on wage and salary
rates that the consolidated entity expects to pay as at the reporting
date including related on-costs, such as superannuation, workers
compensation insurance and payroll tax.
A provision is recognised for the amount expected to be paid under
short-term cash bonus or profit-sharing plans if the consolidated
entity has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and
the obligation can be estimated reliably.
ii) Long-term Benefits
The consolidated entity’s net obligation in respect of long-term
service benefits is the amount of future benefit that employees have
earned in return for their service in the current and prior periods.
28 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
(continued)
The obligation is calculated using expected future increases in
wage and salary rates including related on-costs and expected
settlement dates and is discounted using the rates attached to the
Commonwealth Government bonds at the balance sheet date which
have maturity dates approximating the terms of the consolidated
entity’s obligations.
iii) Share-based Payment Transactions
The details regarding share plans are provided in Note 17 (d) of the
financial report.
iv) Termination Benefits
Termination benefits are recognised as an expense when the
consolidated entity is demonstrably committed, without realistic
possibility of withdrawal, to a formal detailed plan to terminate
employment before the normal retirement date. Termination benefits
for voluntary redundancies are recognised if the consolidated entity
has made an offer encouraging voluntary redundancy, it is probable
that the offer will be accepted and the number of acceptances can
be estimated reliably.
(i) Provisions
i) Lease Incentives
Lease incentives received under operating leases (for example, a
rent free period or contribution to certain costs) are recognised as
a liability and are brought to account as reductions in rent expense
over the term of the lease on a straight line basis.
ii) Fixed Rental Increases
Payments under operating leases are expensed on a straight line
basis over the term of the lease. Fixed rate increases to lease
rental payments excluding contingent or index based rental
increases such as CPI, turnover rental and other similar increases,
are recognised on a straight line basis over the lease term. A
liability is raised on the initial recognition of the increase and is
then amortised over the term of the lease on a straight line basis
as a reduction in rent expense.
iii) Make Good
An estimate of the costs to dismantle, remove and restore the site
on which property plant and equipment is located is included in
the measurement of its initial cost and a corresponding provision
included as a liability.
(j) Revenue Recognition
Revenues are recognised at the fair value of the consideration
received, net of returns, discounts and the amount of goods
and services tax (GST) payable to the Australian Taxation Office.
The consolidated entity recognises revenue when the amount of
revenue can be reliably measured and it is probable that future
economic benefits will flow to the entity. The amount of revenue
is not considered to be reliably measurable until all contingencies
relating to the sale have been resolved. The consolidated entity
bases its estimates on historical results, taking into consideration
the type of customer, the type of transaction and the specifics of
each arrangement.
Sale of Goods
Sales are recognised as revenue only when the sale becomes
unconditional and ownership of a product has passed to the
customer, after delivery. Sales revenue includes retail sales by
Company owned stores and sales by the consolidated entity’s
import and manufacturing divisions to franchise stores and
excludes retail sales by franchise stores.
(k) Expenses
i) Operating Lease Payments
Payments made under operating leases are recognised in the
Income Statements on a straight-line basis over the term of the
lease.
ii) Finance Lease Payments
Minimum lease payments are apportioned between the finance
charge and the reduction of the outstanding liability. The finance
charge is allocated to each period during the lease term so as
to produce a constant periodic rate of interest on the remaining
balance of the liability.
iii) Financial Income and Expense
Financial income and expense comprise interest payable on
borrowings, interest receivable on funds invested and dividend
income. Borrowing costs are expensed as incurred and included
in net financing costs.
Interest income is recognised in the Income Statements as it
accrues. Dividend income is recognised in the Income Statements
on the date the entity’s right to receive payments is established.
l) Income Tax
i) Income Tax
Income tax expense comprises current and deferred tax and is
recognised in the Income Statements.
Current tax is the expected tax payable on the taxable income for
the year, using tax rates enacted or substantively enacted at the
reporting date and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognised using the balance sheet method,
providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. The following temporary
differences are not provided for: initial recognition of goodwill,
the initial recognition of assets or liabilities that affect neither
accounting nor taxable profit and differences relating to investments
in subsidiaries to the extent that they will probably not reverse
in the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the reporting date.
Deferred tax assets are recognised only to the extent that it is
probable that future taxable profits will be available against which
the temporary differences can be utilised. Deferred tax assets
are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be
realised.
Investing for Our Future
FINANCIALS
ii) Tax Consolidation
The Company and its wholly-owned Australian resident entities
formed a tax-consolidated group with effect from 1 July 2002
and are therefore taxed as a single entity from that date.
The head entity within the tax-consolidated group is Fantastic
Holdings Limited.
Current tax expense and deferred tax assets or liabilities arising
from temporary differences of the members of the tax-consolidated
group are recognised in the separate financial statements of the
members of the tax-consolidated group using the ‘separate taxpayer
within group’ approach by reference to the carrying amounts of
assets and liabilities in the separate financial statements of each
entity and the tax values applying under tax consolidation.
Any current tax liabilities and deferred tax assets arising from unused
tax losses of the subsidiaries are assumed by the head entity in
the tax-consolidated group and are recognised by the Company as
amounts payable to other entities in the tax-consolidated group
in conjunction with any tax funding arrangement amounts (refer
below). Any difference between these amounts is recognised by the
Company as an equity contribution or distribution.
The Company recognises deferred tax assets arising from unused
tax losses of the tax-consolidated group to the extent that it is
probable that future taxable profits of the tax-consolidated group
will be available against which the asset can be utilised. Any
subsequent period adjustments to deferred tax assets arising
from unused tax losses as a result of revised assessments of the
probability of recoverability is recognised by the head entity only.
iii) Nature of Tax Funding and Sharing Arrangements
The head entity, in conjunction with other members of the tax-
consolidated group, has entered into a tax funding and sharing
arrangement which:
(i) sets out the funding obligations of members within the tax-
consolidated group in respect of tax amounts. The tax funding
arrangements require payments to/from the head entity equal to
the current tax liability/asset assumed by the head entity and any
tax-loss deferred tax asset assumed by the head entity, resulting
in the head entity recognising an inter-entity receivable/payable
equal in amount to the tax liability/asset assumed. Contributions
to fund the current tax liabilities are payable as per the tax funding
arrangement and reflect the timing of the head entity’s obligation
to make payments for tax liabilities to the relevant tax authorities;
and
(ii) provides for the determination of the allocation of income tax
liabilities between the entities should the head entity default on its
tax payment obligations.
No amounts have been recognised in the financial statements in
respect of this agreement, as payments of any amounts under the
tax sharing agreement is considered remote.
(m) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount
of goods and services tax (GST) except where the amount of GST
incurred is not recoverable from the Australian Tax Office (ATO). In
these circumstances, the GST is recognised as part of the cost
of acquisition of the asset or as part of an item of the expense.
Receivables and payables are stated with the amount of GST
included. The net amount of GST recoverable from, or payable to
the ATO, is included as a current asset or liability in the Balance
Sheets. Cash flows are included in the Cash Flow Statements
on a gross basis. The GST components of cash flow arising from
investing and financial activities which are recoverable from, or
payable to, the ATO are classified as operating cash flows.
Annual Report 2007 - 29
 Notes to Financial Statements (continued)
Consolidated Entity

30 June 30 June 30 June

Company

30 June
for the year ended 30 June 2007 2007 $ 2006 $ 2007 $ 2006 $

2. Expenses from Continuing

Operations
(n) Discontinued Operations - AASB 2007-3 Amendments to Australian Accounting Standards Employment expenses:
A discontinued operation is a component of the consolidated arising from AASB 8 makes amendments to AASB 5 Non-
~wages, salaries and bonuses 41,760,789 35,898,093 7,577,777 7,340,144
entity’s business that represents a separate major line of business current Assets Held for Sale and Discontinued Operations,
or geographical area of operations that has been disposed of or AASB 6 Exploration for and Evaluation of Mineral Resources, ~superannuation 3,745,201 3,221,710 660,671 652,054
is held for sale, or is a subsidiary acquired exclusively with a view AASB 102 Inventories, AASB 107 Cash Flow Statements, AASB
~other associated wage on-costs 5,683,067 4,138,993 930,764 925,362
for resale. Classification as a discontinued operation occurs upon 119 Employee Benefits, AASB 127 Consolidated and Separate
disposal or when the operation meets the criteria to be classified Financial Statements, AASB 134 Interim Financial Reporting, ~increase/(decrease) in annual leave 206,308 307,900 (109,079) (52,497)
as held for sale, if earlier. When an operation is classified as a AASB 136 Impairment Assets, AASB 1023 General Insurance ~increase/(decrease) in long
Contracts and AASB 1038 Life Insurance Contracts. AASB 2007- 610,730 42,101 264,733 (17,676)
discontinued operation, the comparative income statement is service leave
restated as if the operation had been discontinued from the start 3 is applicable for annual reporting periods beginning on or after
1 January 2009 and must be adopted in conjunction with AASB ~equity settled transactions 875,312 453,932 28,889 28,605
of the comparative period.
8 Operating Segments. This standard is only expected to impact Total 52,881,407 44,062,729 9,353,755 8,875,992
(o) Earnings Per Share disclosures contained within the financial report.
Included in Income Statements as:
The consolidated entity presents basic and diluted earnings per - Interpretation 10 Interim Financial Reporting and Impairment
share (EPS) data for its ordinary shares. Basic EPS is calculated Employment expenses 38,991,634 33,171,008 699,704 419,069
prohibits the reversal of an impairment loss recognised in a
by dividing the profit or loss attributable to ordinary shareholders previous interim period in respect of goodwill, an investment Cost of sales 13,889,773 10,891,721 8,654,051 8,456,923
of the Company by the weighted average number of ordinary in an equity instrument or a financial asset carried at cost. 52,881,407 44,062,729 9,353,755 8,875,992
shares outstanding during the period. Diluted EPS is determined by Interpretation 10 will become mandatory for the consolidated
adjusting the profit or loss attributable to ordinary shareholders and Depreciation and amortisation of
entity’s 2008 financial statements, and will apply to goodwill, 2,608,752 1,745,531 161,082 170,300
the weighted average number of ordinary shares outstanding for property, plant and equipment
investments in equity instruments, and financial assets carried at
the effects of all dilutive potential ordinary shares, which comprise cost prospectively from the date that the consolidated entity first Increase/(decrease) in provisions:
convertible notes and share options granted to employees. applied the measurement criteria of AASB 136 and AASB 139
~fixed lease increases 400,244 (96,219) 172,922 (70,146)
respectively (i.e. 1 July 2004 and 1 July 2005, respectively). There
(p) New Standards and Interpretations not yet Adopted will be no financial impact from Interpretation 10 on the financial ~lease incentives 1,664,203 296,996 163,289 -
The following standards, amendments to standards and report. ~make good (208,742) - (75,000) -
interpretations have been identified as those which may impact the
entity in the period of initial application. They are available for early - Interpretation 11 AASB 2 Share-based Payment – Group and Inventory write downs 501,873 408,657 83,583 150,660
adoption at 30 June 2007, but have not been applied in preparing Treasury Share Transactions addresses the classification of a Impairment loss on trade receivables 67,770 45,602 - -
this financial report: share-based payment transaction (as equity or cash settled), in
which equity instruments of the parent or another group entity Net loss on disposal of property, plant
- AASB 7 Financial Instruments: Disclosures (August 2005) and equipment 123,309 21,178 182 5,714
are transferred, in the financial statements of the entity receiving
replaces the presentation requirements of financial instruments the services. Interpretation 11 will become mandatory for the
in AASB 132. AASB 7 is applicable for annual reporting periods consolidated entity’s 2008 financial report. Interpretation 11 is 3. Financial Income and Expense
beginning on or after 1 January 2007, and will require extensive not expected to have any impact on the consolidated financial Interest income 429,455 434,447 269,304 293,064
additional disclosures with respect to the consolidated entity’s report. The potential effect of the Interpretation on the Company’s
financial instruments and share capital. financial report has not yet been determined. Dividend income - - - 20,000,000
Financial Income 429,455 434,447 269,304 20,293,064
- AASB 2005-10 Amendments to Australian Accounting Standards - AASB 2007-1 Amendments to Australian Accounting Standards
(September 2005) makes consequential amendments to AASB arising from AASB Interpretation 11 amends AASB 2 Share- Interest expense (129,234) (16,590) - -
132 Financial Instruments: Presentation and Disclosure, AASB based Payments to insert the transitional provisions of IFRS 2, Financial Expense (129,234) (16,590) - -
101 Presentation of Financial Statements, AASB 114 Segment previously contained in AASB 1 First-time Adoption of Australian
Reporting, AASB 117 Leases, AASB 133 Earnings Per Share, Net Financing (Costs)/Income 300,221 417,857 269,304 20,293,064
Equivalents to International Financial Reporting Standards. AASB
AASB 139 Financial Instruments: Recognition and Measurement,
2007-1 is applicable for annual reporting periods beginning on
AASB 1 First-time Adoption of Australian Equivalents to or after 1 March 2007 and is not expected to have any impact
International Financial Reporting Standards, AASB 4 Insurance on the consolidated financial report. The potential impact on the
Contracts, AASB 1023 General Insurance Contracts and AASB Company’s financial report has not yet been determined.
1038 Life Insurance Contracts arising from the release of AASB
7. AASB 2005-10 is applicable for annual reporting periods
beginning on or after 1 January 2007 and is expected to only
impact disclosures contained within the consolidated financial
report.

- AASB 8 Operating Segments replaces the presentation

requirements of segment reporting in AASB 114 Segment
Reporting. AASB 8 is applicable for annual reporting periods
beginning on or after 1 January 2009 and is not expected to
have an impact on the financial results of the Company and
the consolidated entity as the standard is only concerned with
disclosures.

Investing for Our Future

30 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 31
 Notes to Financial Statements
5. Discontinued Operation
(continued) (a) Description
for the year ended 30 June 2007 On 1 May, an agreement was entered to sell the assets of the Fantastic Metal Furniture division. The division ceased trading and was closed
down by 30 June 2007. The dual pressure of a stronger currency and competition from Chinese factories made the division uncompetitive.
The division is reported in this financial report as a discontinued operation. The division was not a discontinued operation at 30 June 2006
and the comparative income statement has been re-presented to show the discontinued operation separately from continuing operations.

Notes Consolidated Entity Company Financial information relating to the discontinued operation for the period to the date of disposal which is included in loss from discontinued
30 June 30 June 30 June 30 June operations per the Income Statement is set out below.
2007 $ 2006 $ 2007 $ 2006 $
4. Taxation Consolidated Entity
(a) Income Tax Expense 30 June 30 June
2007 $ 2006 $
Current Tax Expense
(b) Financial Performance and Cash Flow Information
~Current year 8,305,908 6,659,309 368,615 431,364
Revenue 288,421 442,160
~Adjustment for prior years (14,459) 33,998 (1,631) 5,909
Expenses (1,641,787) (1,265,886)
8,291,449 6,693,307 366,984 437,273
Loss before tax (1,353,366) (823,726)
Deferred Tax Expense
Income tax benefit 407,209 240,251
~Origination and reversal of
(764,196) (119,437) (109,785) 42,703
temporary differences Loss After Tax of Discontinued Operations (946,157) (583,475)
Income Tax Expense From Continuing Loss on sale of assets before income tax (145,214) -
7,527,253 6,573,870 257,199 479,976
Operations Income tax benefit 43,564 -
Income tax benefit from discontinued (5)
(407,209) (240,251) - - Loss on Sale of Assets After Income Tax (101,650) (583,475)
operations (excluding loss on sale)
Loss From Discontinued Operations (1,047,807) (583,475)
Income tax benefit on loss of sale (5) (43,564) - - -
Earnings Per Share :
Total Income Tax Expense 7,076,480 6,333,619 257,199 479,976
Basic (loss) per share (cents per share) (1.11) (0.64)
Numerical Reconciliation Between Tax
Expense and Pre-tax Net Profit Diluted (loss) per share (cents per share) (1.11) (0.64)
Profit before tax 23,466,874 20,744,210 813,971 21,506,643 Net cash (outflow) from operating activities (922,486) (528,362)
Income tax at 30% 7,040,062 6,223,263 244,191 6,451,993 Net cash inflow from investing activities (2007 includes
an inflow of $279,524 from disposal of plant and 1,129,507 601,223
Increase in income tax expense due to:
equipment)
~non deductible expenses 52,677 73,781 14,639 22,074
Net cash (outflow) from financing activities (122,182) (102,979)
Decrease in income tax expense due to:
Net Increase (Decrease) in Cash Generated by the
84,839 (30,118)
~tax exempt revenues - - - (6,000,000) Division
7,092,739 6,297,044 258,830 474,067 (c) Carrying Amounts of Assets and Liabilities
Under/(over) provided in prior years (16,259) 36,575 (1,631) 5,909 Cash 45,281
Income Tax Expense on Pre-tax Net Profit 7,076,480 6,333,619 257,199 479,976 Trade and other receivables - 101,137
(b) Deferred Tax Assets Inventories - 1,215,583
Attributable to the following: Property, plant and equipment - 418,981
Property, plant and equipment 381,674 306,604 4,748 54,936 Deferred tax assets - 146,432
Employee benefits 1,288,910 1,086,744 324,860 278,026 Total Assets - 1,927,414
Provisions 1,219,623 770,911 100,862 22,500 Trade and other payables - 1,563,440
Trade and other payables 117,014 150,000 60,000 60,000 Employee benefits - 128,571
Sundry items - 1,124 - - Interest-bearing loans and borrowings - 149,223
3,007,221 2,315,383 490,470 415,462 Total Liabilities - 1,841,234
(c) Deferred Tax Liabilities Net Assets - 86,180
Receivables and prepayments 24,807 - 4,105 -
Interest capitalised 195,561 - - -
220,368 - 4,105 -
The benefit of the deferred tax assets will only be obtained if:
i. the consolidated entity derives future assessable income of a nature and amount sufficient to enable the benefit to be realised;
ii. the consolidated entity continues to comply with the conditions for deductibility imposed by the law; and
iii. no changes in tax legislation adversely affect the consolidated entity in realising the benefit.

Investing for Our Future

32 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 33
 Notes to Financial Statements (continued) 30 June
2007 $
Consolidated Entity
30 June
2006 $
30 June
2007 $
Company
30 June
2006 $
for the year ended 30 June 2007
11. Investments
In subsidiaries - - 9,062,108 16,141,172
Incorporated in Australia:
Consolidated Entity Company
Parent Entity
30 June 30 June 30 June 30 June
2007 $ 2006 $ 2007 $ 2006 $ Fantastic Holdings Limited
6. Auditors’ Remuneration Subsidiaries
Remuneration of the auditor of the Fantastic Furniture Pty Ltd
Company for: Fantastic Furniture (Licensing) Pty Ltd
~auditing or reviewing the financial report 130,255 113,500 130,255 113,500 Best Buy Furniture Pty Ltd
~other services 41,805 35,000 41,805 35,000 Fantastic Metal Furniture Pty Ltd

172,060 148,500 172,060 148,500 Original Mattress Factory Pty Ltd

Fantastic Art Pty Ltd
Auditors’ remuneration is paid by the Company on behalf of the consolidated entity.
Royal Comfort Bedding Pty Ltd
7. Cash and Cash Equivalents Fantastic Property Pty Ltd
Cash at bank and on hand 2,969,694 4,258,371 500 500 The Package Deal Kings Pty Ltd
Deposits at call 3,018,411 4,016,124 3,018,411 4,016,124 Fantastic Furniture Share Plan Pty Ltd
Cash and Cash Equivalents 5,988,105 8,274,495 3,018,911 4,016,624 Incorporated in New Zealand:
Bank overdraft - - (589,822) (73,789) Fantastic Furniture Limited (NZ)
Cash and Cash Equivalents in the Cash Flow Fantastic Furniture - The Package Deal Kings
Statements 5,988,105 8,274,495 2,429,089 3,942,835 Limited (NZ)
The investment comprises:
8. Trade and Other Receivables Shares at cost - - 129 129
Current Loans receivable - - 9,061,979 16,141,043
Trade receivables - - 9,062,108 16,141,172
~external 2,843,228 2,488,356 397,504 351,495 The loans receivable are non-interest bearing and have no fixed date of repayment.
~related parties 230,187 176,376 9,490 21,832 All of the above entities are 100% owned and have a balance date of 30 June.
3,073,415 2,664,732 406,994 373,327
Other receivables and prepayments 4,026,898 2,627,970 44,807 300,823

7,100,313 5,292,702 451,801 674,150

At 30 June 2007, trade receivables are shown net of an allowance for doubtful debts of $30,000 (2006: $30,000) arising from the
potential uncollectability of specific customer debtors. The impairment loss recognised in the current year was $67,770
(2006 : $45,602).

9. Inventories
Raw materials and consumables 1,603,891 1,793,437 1,385,655 1,331,862
Work in progress 195,965 365,001 177,731 163,395
Finished goods 44,089,991 37,091,358 366,548 199,572
45,889,847 39,249,796 1,929,934 1,694,829

Carrying amount of inventories subject to

4,513,480 6,528,353 649,364 727,210
retention of title clauses

10. Other
Non-current
Security deposits 8,237 2,364 - -

Investing for Our Future

34 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 35
 Notes to Financial Statements (continued)
Consolidated Entity
30 June 30 June 30 June
Company
30 June
for the year ended 30 June 2007 2007 $ 2006 $ 2007 $ 2006 $
Depreciation and Impairment Losses
Land and Buildings

Consolidated Entity Company Balance at beginning of year 61,077 30,538 - -

Depreciation 30,969 30,539 - -
30 June 30 June 30 June 30 June
2007 $ 2006 $ 2007 $ 2006 $ Balance at End of Year 92,046 61,077 - -
12. Property, Plant and Equipment Plant and Equipment
Cost Balance at beginning of year 2,730,132 1,870,034 639,042 489,561
Land and Buildings Depreciation 1,072,290 890,998 148,879 158,561
Balance at beginning of year 4,853,124 4,853,124 - - Disposals (846,684) (30,900) (1,822) (9,080)
Acquisitions 2,396,931 - - - Balance at End of Year 2,955,738 2,730,132 786,099 639,042
Balance at End of Year 7,250,055 4,853,124 - - Fixtures and Fittings
Plant and Equipment Balance at beginning of year 2,264,754 1,435,828 63,643 53,985
Balance at beginning of year 5,152,893 4,128,690 1,406,235 1,208,795 Depreciation 1,026,362 837,800 11,900 9,658
Acquisitions 4,243,062 1,137,037 431,101 220,109 Disposals (131,986) (8,874) - -
Disposals (1,465,912) (112,834) (3,063) (22,669) Balance at End of Year 3,159,130 2,264,754 75,543 63,643
Balance at End of Year 7,930,043 5,152,893 1,834,273 1,406,235 Leasehold Improvements
Fixtures and Fittings Balance at beginning of year 1,406,162 1,307,400 193,998 191,917
Balance at beginning of year 8,107,402 6,043,513 150,001 145,737 Amortisation 542,714 100,038 303 2,081
Acquisitions 2,258,741 2,083,812 33,038 4,264 Disposals (353,214) (1,276) (192,816) -
Disposals (248,300) (19,923) - - Balance at End of Year 1,595,662 1,406,162 1,485 193,998
Balance at End of Year 10,117,843 8,107,402 183,039 150,001 Total
Leasehold Improvements Balance at beginning of year 6,462,125 4,643,800 896,683 735,463
Balance at beginning of year 5,192,942 3,788,850 197,359 193,079 Depreciation 2,672,335 1,859,375 161,082 170,300
Acquisitions 1,744,126 1,407,987 - 4,280 Disposals (1,331,884) (41,050) (194,638) (9,080)
Disposals (404,484) (3,895) (193,079) - Balance at End of Year 7,802,576 6,462,125 863,127 896,683
Balance at End of Year 6,532,584 5,192,942 4,280 197,359 Carrying Amounts
Capital Works in Progress Land and Buildings
Balance at beginning of year 561,059 110,767 - - At beginning of year 4,792,047 4,822,586 - -
Acquisitions 931,008 450,292 - - At End of Year 7,158,009 4,792,047 - -
Transfers (711,184) - - - Plant and Equipment
Balance at End of Year 780,883 561,059 - - At beginning of year 2,422,761 2,258,656 767,193 719,234
Total At End of Year 4,974,305 2,422,761 1,048,174 767,193
Balance at beginning of year 23,867,420 18,924,944 1,753,595 1,547,611 Fixtures and Fittings
Acquisitions 11,573,868 5,079,128 464,139 228,653 At beginning of year 5,842,648 4,607,685 86,358 91,752
Disposals/Transfers (2,829,880) (136,652) (196,142) (22,669) At End of Year 6,958,713 5,842,648 107,496 86,358
Balance at End of Year 32,611,408 23,867,420 2,021,592 1,753,595 Leasehold Improvements
At beginning of year 3,786,780 2,481,450 3,361 1,162
At End of Year 4,936,922 3,786,780 2,795 3,361
Capital Works in Progress
At beginning of year 561,059 110,767 - -
At End of Year 780,883 561,059 - -
Total
At beginning of year 17,405,295 14,281,144 856,912 812,148
At End of Year 24,808,832 17,405,295 1,158,465 856,912

Investing for Our Future

36 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 37
 Notes to Financial Statements (continued)
Consolidated Entity
30 June 30 June 30 June
Company
30 June
for the year ended 30 June 2007 2007 $ 2006 $ 2007 $ 2006 $
15. Interest-Bearing Loans
and Borrowings
Current
Impairment loss
During the financial year ended 30 June 2007, there were no impairment losses for the consolidated entity. Hire purchase 553,420 121,252 - -
Non-current
Security
At 30 June 2007, land and buildings under construction with a carrying amount of $4,758,964 (2006: $4,792,047) are subject to a Bank loans ~secured (a) 6,795,000 4,520,000 - -
registered first mortgage to secure a bank loan (see Note 15). Hire purchase 1,783,901 27,971 - -
8,578,901 4,547,971 - -
Property, Plant and Equipment Under Construction
The consolidated entity has land and buildings under construction with a carrying amount of $4,758,964 (2006: $4,792,047). (a) Each company within the consolidated entity has entered into cross guarantee arrangements supported by Registered Mortgage
The intention is to develop the site into a bulky goods value centre, for future use as an investment property. Further costs incurred Debentures with the ANZ Bank. The bank loans are also secured by a registered first mortgage over freehold land and buildings of the
since acquisition to 30 June 2007 total $777,006 (2006: $410,925), and have been classified as capital works in progress. consolidated entity and are payable by June 2012.

While the Company had an overdraft at balance date, the overdraft facility of the consolidated entity is unutilised as it is based on the
Consolidated Entity Company
balance of all the bank accounts of the consolidated entity, which are subject to a set-off arrangement.
30 June 30 June 30 June 30 June
2007 $ 2006 $ 2007 $ 2006 $ Financing Arrangements
13. Intangible Assets Every company in the consolidated entity has
Goodwill at Cost access to the following lines of credit:

Balance at beginning of year 2,962,424 2,962,424 - - Total Facilities Available:

Acquisition of previously Bank overdraft 2,650,000 2,650,000 2,650,000 2,650,000

franchised stores 218,249 - - - Trade finance 3,500,000 3,500,000 3,500,000 3,500,000

Balance at end of year 3,180,673 2,962,424 - - Indemnity guarantee 2,000,000 2,000,000 2,000,000 2,000,000

Amortisation and Impairment Losses Asset finance 4,000,000 - 4,000,000 -

Balance at beginning of year 660,653 660,653 - - Bank loan 14,320,000 4,520,000 14,320,000 4,520,000

Impairment charges - - - - 26,470,000 12,670,000 26,470,000 12,670,000

Balance at End of Year 660,653 660,653 - - Facilities Utilised at Balance Date:

Carrying Amount of Goodwill Bank overdraft - - - -

At beginning of year 2,301,771 2,301,771 - - Trade finance 551,989 433,533 551,989 433,533

At End of Year 2,520,020 2,301,771 - - Indemnity guarantee 592,084 691,611 592,084 691,611
Asset finance - - - -
14. Trade and Other Payables Bank loan 6,795,000 4,520,000 6,795,000 4,520,000
Current 7,939,073 5,645,144 7,939,073 5,645,144
Trade creditors (a) 6,386,784 8,772,975 649,364 748,985 Facilities Not Utilised at Balance Date:
Sundry creditors and accruals 10,599,209 8,679,129 452,071 484,455 Bank overdraft 2,650,000 2,650,000 2,650,000 2,650,000
16,985,993 17,452,104 1,101,435 1,233,440 Trade finance 2,948,011 3,066,467 2,948,011 3,066,467
(a) Foreign currency liabilities Indemnity guarantee 1,407,916 1,308,389 1,407,916 1,308,389
Current, not hedged - United States dollars 685,549 1,741,115 - - Asset finance 4,000,000 - 4,000,000 -
Bank loan 7,525,000 - 7,525,000 -
18,530,927 7,024,856 18,530,927 7,024,856

Interest
For more information about the consolidated entity’s exposure to interest rate risk see Note 20.

16. Income Current Tax Payable

The current tax liability for the consolidated entity and Company of $545,559 (2006: $91,163) represents the amount of income tax
payable in respect of the current financial year. In accordance with the tax consolidation legislation, the Company as the head entity of the
Australian tax consolidated group has assumed the current tax liability initially recognised by the members in the tax consolidated group.

Investing for Our Future

38 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 39
 Notes to Financial Statements (continued)
Year Ended Date Shares
Issued
Number of
Shares Issued
Fair Value
at Issue Date:
Per Share
Fair Value
at Issue Date:
Aggregate
for the year ended 30 June 2007 $ $
30 June 2007 4-Sep-06 19,098 2.58 49,273
4-Oct-06 60,390 2.96 178,754
Consolidated Entity Company 15-Dec-06 105,962 3.16 334,810
30 June 30 June 30 June 30 June 14-Mar-07 43,398 3.43 148,855
2007 $ 2006 $ 2007 $ 2006 $
6-Jun-07 42,945 3.81 163,620
17. Employee Benefits 271,793 875,312
(a) Employee Benefits 30 June 2006 15-Sep-05 74,102 3.35 248,241
Aggregate liability for employee benefits, 15-Dec-05 33,566 2.68 89,957
including on-costs
9-Mar-06 10,074 2.79 28,107
Current
19-Jun-06 34,635 2.53 87,627
Salary and wages accrued (i) 2,646,996 2,206,008 209,811 160,966
152,377 453,932
Annual leave liability 3,196,895 2,734,546 576,753 502,232
Long service leave liability 503,977 359,990 249,965 183,600 The fair value at issue date is based on the weighted average closing price of the shares on the Australian Stock Exchange for the five
trading days up to and including the date of purchase, discounted by 10%.
6,347,868 5,300,544 1,036,529 846,798
Non-current The amounts recognised in the financial statements of the Company and consolidated entity in relation to the Share Plans during the
financial year were:
Long service leave liability 588,010 519,944 248,664 233,896
Note Consolidated Entity Company
6,935,878 5,820,488 1,285,193 1,080,694
30 June 30 June 30 June 30 June
(i) Includes accruals for salaries, wages, bonuses and on-costs.
2007 $ 2006 $ 2007 $ 2006 $
(b) Superannuation Plan
Issued capital (19) 875,312 453,932 875,312 453,932
The Company and subsidiaries contributed
to the Colonial First State Superannuation 3,841,270 3,356,661 660,671 652,054 Employment expenses (2) 875,312 453,932 28,889 28,605
Fund

(c) Employee Numbers Number Number Number Number

18. Provisions
Lease Incentive Lease Increases Make Good Total
Number of employees at balance date 988 909 167 160
Consolidated

(d) Share Based Payments Balance at 1 July 2006 1,282,709 271,995 300,000 1,854,704
The Company issued shares under two employee share plans during the year- Provisions made during the year 2,629,364 431,635 - 3,060,999
(i) The Fantastic Holdings Limited Employee Share Participation Plan (“FHLESPP”); and Provisions used during the year (965,161) (31,391) (208,742) (1,205,294)
(ii) The Fantastic Holdings Limited Employee Share Trust (“FHLEST”)
Balance at 30 June 2007 2,946,912 672,239 91,258 3,710,409
(i) The Fantastic Holdings Limited Employee Share Participation Plan (“FHLESPP”) Current 1,019,043 253,578 91,258 1,363,879
The FHLESPP was established to give permanent employees with six months continuous service the opportunity to own shares in the
Non-current 1,927,869 418,661 - 2,346,530
Company. Employee participants sacrifice a nominated portion of their salary, which will be used to acquire ordinary shares at a 10%
discount of their market price. 2,946,912 672,239 91,258 3,710,409
Company
Shares under the FHLESPP are acquired within 75 days of the quarters ended 30 September, 31 December, 31 March and 30 June and
are registered in the name of the employee. They are subject to a trading lock that restricts trading on the Australian Stock Exchange for a Balance at 1 July 2006 - - 75,000 75,000
period of three, six or ten years as nominated, from the date of issue of the shares, or from resignation, whichever is the earlier. Shares Provisions made during the year 189,477 172,922 - 362,399
issued under the FHLESPP rank equally with other fully paid ordinary shares, including full dividend and voting rights. The FHLESPP has no
conditions that could result in a recipient forfeiting ownership of shares. Provisions used during the year (26,188) - (75,000) (101,188)
Balance at 30 June 2007 163,289 172,922 - 336,211
(ii) The Fantastic Holdings Limited Employee Share Trust (“FHLEST”)
Current 38,883 41,091 - 79,974
The FHLEST was established to give permanent employees with six months continuous service the opportunity to own shares in the
Company. Participation in the FHLEST is by way of unitholding in a trust (Units). Employee participants sacrifice a nominated portion of their Non-current 124,406 131,831 - 256,237
salary, which will be used to acquire ordinary shares. The Trustee will acquire Fantastic Holdings Limited Shares on behalf of employees 163,289 172,922 - 336,211
with an additional matching contribution by the Company of one share for every ten at the market value at the time of purchase for all
participating employees. Shares are acquired on a quarterly basis within 75 days of the quarters ended 30 September, 31 December, 31
March and 30 June. They are subject to a trading lock that restricts trading on the Australian Stock Exchange for a period of two years, from
the date of issue of the shares, or from resignation, whichever is the earlier. In addition, further share allocations, at the discretion of the
Board of Directors of the Company, will be offered to selected employees. These allocations may be subject to vesting conditions. Shares
issued under the FHLEST rank equally with other fully paid ordinary shares, including full dividend and voting rights. The FHLEST has no
conditions that could result in a recipient forfeiting ownership of shares.

Investing for Our Future

40 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 41
 Notes to Financial Statements
20. Financial Instruments
(continued) (a) Interest Rate Risk
for the year ended 30 June 2007 The consolidated entity’s exposure to interest rate risk is the risk that a financial instrument’s fair value will fluctuate as a result of changes
in market interest rates. The effective weighted average interest on financial assets and financial liabilities is as follows:

Floating Fixed Fixed Non

Interest Interest Rate Interest Rate Interest-
Consolidated Entity Company Rate 1 Year 1-5 Years Bearing Total
30 June 30 June 30 June 30 June Notes $ or Less $ $ $ $
2007 $ 2006 $ 2007 $ 2006 $ 2007
19. Equity Financial Assets
Share Capital Cash and cash equivalents (7) 5,988,105 - - - 5,988,105
94,773,794 (2006: 94,502,001) Trade and other receivables (8) - - - 7,100,313 7,100,313
7,155,584 6,280,272 7,155,584 6,280,272
ordinary shares, fully paid (a)
5,988,105 - - 7,100,313 13,088,418
Ordinary shares at beginning of the
6,280,272 5,826,340 6,280,272 5,826,340 Weighted average interest rate 6.0%
financial year
Financial Liabilities
Shares issued during the year (a) 875,312 453,932 875,312 453,932
Trade and other payables (14) - - - 16,985,993 16,985,993
Ordinary Shares at the End of the
7,155,584 6,280,272 7,155,584 6,280,272
Financial Year Interest-bearing loans - - - - -
Retained Earnings and borrowings (15) - - 9,132,321 - 9,132,321
Retained earnings at the beginning - - 9,132,321 16,985,993 26,118,314
38,673,852 34,198,172 14,964,791 3,873,035
of the financial year
Weighted average interest rate 7.60%
Profit after tax attributable to equity
16,390,394 14,410,591 556,772 21,026,667 Net Financial Assets/(Liabilities) 5,988,105 - (9,132,321) (9,885,680) (13,029,896)
holders
Dividends paid (10,427,783) (9,934,911) (10,427,783) (9,934,911)
2006
Financial Assets
Retained Earnings at the End of
44,636,463 38,673,852 5,093,780 14,964,791
the Financial Year Cash and cash equivalents (7) 8,274,495 - - - 8,274,495
Total Equity as at the End of the Trade and other receivables (8) - - - 5,292,702 5,292,702
51,792,047 44,954,124 12,249,364 21,245,063
Financial Year
8,274,495 - - 5,292,702 13,567,197
Weighted average interest rate 5.20%
(a) Shares have been issued in accordance with the Fantastic Holdings Limited Employee Share Plans detailed in Note 17 (d). During the
year ended 30 June 2007, 271,793 shares were issued for $875,312. Financial Liabilities
Trade and other payables (14) - - - 17,452,104 17,452,104
The holders of ordinary shares are entitled to receive dividends as declared and have voting rights that allow one vote for each fully paid
share held. All shares rank equally with regard to the Company’s residual assets. Interest-bearing loans -
and borrowings (15) - - 4,669,223 - 4,669,223
Effective 1 July 1998, the Company Law Review Act abolished the concept of par value shares and the concept of authorised capital.
- - 4,669,223 17,452,104 22,121,327
Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.
Weighted average interest rate 7.90%
Net Financial Assets/(Liabilities) 8,274,495 - (4,669,223) (12,159,402) (8,554,130)

(b) Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets
is the carrying amount of those assets, net of any provisions for doubtful debts as disclosed in the Balance Sheets and in the Notes to
the Financial Statements.

(c) Fair Value of Financial Assets and Liabilities

For cash and cash equivalents, receivables and payables with a remaining life of less than one year, the notional carrying amount on the
Balance Sheets is a reasonable approximation of fair value.

For interest-bearing loans and borrowings, their fair value is calculated based on the present value of expected future principal and interest
cash flows, discounted at the market rate of interest at the reporting date and is $7,898,826 (2006: $4,472,853). The interest rate used
to discount estimated cashflows was 10.35%.

(d) Foreign Exchange Risk

The consolidated entity has a foreign currency risk in respect of payables (Note 14) as at 30 June 2007. The consolidated entity manages
its exposure to foreign currency risk by paying its overseas suppliers promptly, applying a conservative pricing policy in respect of foreign
sourced products, and utilising forward exchange contracts. There are no open forward exchange contracts in place at year end.

Investing for Our Future

42 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 43
 Notes to Financial Statements (continued) 30 June
2007 $
Company
30 June
2006 $
for the year ended 30 June 2007
(b) Dividend Franking Account
Balance of franking account at year end adjusted for franking credits which will arise from the
payment of income tax provided for in the financial statements and after deducting franking credits
to be used in payment of the dividend on 10 October 2007.
Consolidated Entity Company
30% Franking Credits 17,141,744 16,254,599
30 June 30 June 30 June 30 June
2007 $ 2006 $ 2007 $ 2006 $
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. In accordance
21. Operating Leases with the tax consolidation legislation, the Company as the head entity in the tax consolidated group has assumed the benefit of the
franking credits.
Non-cancellable operating lease rentals are
payable as follows:
23. Non-Key Management Personnel Disclosures
Less than one year 24,625,982 17,435,299 23,680,124 14,321,158
Transactions with non-key management personnel related parties are on normal commercial terms and conditions no more favourable than
Between one and five years 43,365,644 32,708,047 40,564,853 27,771,941
those available to other parties, unless otherwise stated. The Company is not aware of any non-key management personnel related party
More than five years 340,878 84,941 325,519 84,941 transactions requiring disclosure in this financial report, other than as set out below:
68,332,504 50,228,287 64,570,496 42,178,040
Consolidated Entity Company
The consolidated entity leases property under operating leases typically expiring from one to five years. Leases generally provide the
30 June 30 June 30 June 30 June
consolidated entity with a right of renewal at which time all terms are renegotiated. Lease payments are increased based on either fixed 2007 $ 2006 $ 2007 $ 2006 $
terms, movements in the Consumer Price Index, or other operating critera. During the financial year ended 30 June 2007, $25,101,791
was recognised as an expense in the Income Statements in respect of operating leases (2006: $17,995,790) for the consolidated Subsidiaries
entity and $1,490,716 (2006: $821,348) for the Company. Sub-lessee income for the year ended 30 June 2007 was $851,238 (2006: Supply of furniture between subsidiaries for distribution through
$496,212). - - 30,343,442 28,122,313
the consolidated entity’s retail division
Amounts receivable from subsidiaries (a) - - 9,061,979 16,141,043
22. Dividends Dividends received or due and receivable by the - - - 20,000,000
(a) Dividends Paid or Declared by the Company Were: Company from subsidiaries

Type Cents per Total Date of Tax Rate for Management fee paid to subsidiaries - - 639,555 602,283
Share Amount $ Payment Franking Credit
(a) Loans outstanding between the Company and its subsidiaries have no fixed date of repayment and are non interest-bearing. These loans
2007 have been recognised as an additional investment in subsidiaries - refer Note 11.
In respect of the previous financial year:
Identity of Related Parties
Final dividend 100% franked 5.51 5,208,113 10/10/2006 30% Details of shares in subsidiaries are set out in Note 11 of the financial report.
In respect of the current financial year: Details of key management personnel are set out in Note 24 of the financial report.
Interim dividend 100% franked 5.51 5,219,670 2/04/2007 30%
24. Key Management Personnel Disclosures
10,427,783
(a) Key Management Personnel
2006
The following were key management personnel at any time during the reporting period and unless otherwise indicated
In respect of the previous financial year: were key management personnel for the entire period:
Final dividend 100% franked 5.51 4,729,758 10/10/2005 30%
Non-Executive Directors
In respect of the current financial year: Mr George Bennett (Chairman)
Interim dividend 100% franked 5.51 5,205,153 18/04/2006 30% Mr Denis McCormack
Mr Geoffrey Squires (appointed 22 August 2006)
9,934,911
Executive Directors
A final dividend of 5.51 cents per share, totalling $5,235,758 will be paid on 10 October 2007 and will be fully franked at 30 cents per
share. This dividend was declared at a meeting of Directors on 24 August 2007 and as such the financial effect has not been brought into Mr Julian Tertini (Managing Director)
account in the financial statements for the year ended 30 June 2007, but will be recognised in a subsequent financial report. Mr Peter Brennan (Finance Director)

Executives ~ Consolidated Entity

Susan Caruso ~ Chief Financial Officer and Company Secretary
Carolyn Cox ~ Retail Operations Manager Fantastic Furniture
Robert De Nicola ~ General Manager Plush
David Drummond ~ General Manager Imports and Logistics
Richard Frost ~ Group Products and Development Manager

Executives ~ Company
Norman Role ~ General Manager Fantastic Lounge Factory

Investing for Our Future

44 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 45
 Notes to Financial Statements (continued)
Balance of
Shares
1/07/2005
Received as
Remuneration
Shares
Purchased,
Sold or
Balance of
Shares
30/06/2006
Options over
Ordinary
Shares
for the year ended 30 June 2007 Reconstructed
Number Number Number Number Number
Company Directors
(b) Key Management Personnel Compensation Julian Tertini 37,129,309 - 3,712,765 40,842,074 Nil
The key management personnel compensation included in employment expenses at Note 2 is as follows:
Peter Brennan 9,563,610 - 956,319 10,519,929 Nil
George Bennett 465,590 - 46,559 512,149 Nil
Consolidated Entity Company
Denis McCormack 24,200 - 2,420 26,620 Nil
30 June 30 June 30 June 30 June
2007 $ 2006 $ 2007 $ 2006 $ Geoffrey Squires - - - - Nil
Short-term employee benefits 1,531,758 1,529,875 673,054 618,955 Executives
Post employment benefits 98,135 106,132 27,815 25,196 Carolyn Cox 1,299,100 7,462 128,381 1,434,943 Nil
Share based payments 233,332 - 15,200 - Norman Role 1,231,959 4,477 66,861 1,303,297 Nil
1,863,225 1,636,007 716,069 644,151 Robert De Nicola 106,700 11,940 11,864 130,504 Nil
Richard Frost 104,500 7,462 11,196 123,158 Nil
Individual Directors and Executives Compensation Disclosures
Susan Caruso 83,569 9,104 9,267 101,940 Nil
Information regarding individual Directors and executives compensation and some equity instruments disclosures as permitted by
Corporations Regulations 2M 3.03 and 2M 6.04 are provided in the Remuneration Report included in the Directors’ Report on David Drummond 19,470 - 1,947 21,417 Nil
pages 16 to 19. Santina Rigoli - 3,043 304 3,347 Nil
Apart from the details disclosed in this Note, no Director has entered into a material contract with the Company or the consolidated entity 50,028,007 43,488 4,947,883 55,019,378 Nil
since the end of the previous financial year and there were no material contracts involving Directors’ interests existing at year end.
(d) Loans to Key Management Personnel and their Related Parties
(c) Shareholdings There were no loans outstanding at the reporting date to key management personnel or their related parties where the individual’s
(i) There were no options over ordinary shares in Fantastic Holdings Limited held directly, indirectly or beneficially by any key management aggregate loan balance exceeded $100,000 at any time in the reporting period.
person including their related parties.
(e) Other Key Management Personnel Transactions with the Company or its Subsidiaries
(ii) The movement during the reporting period in the number of ordinary shares in Fantastic Holdings Limited held directly, indirectly or The Caringbah store franchise is held by an entity associated with Julian Tertini, the Managing Director. During the year, the following
beneficially by each key management person including their related parties is as follows: transactions took place with the Caringbah store on normal commercial terms:

Shares Consolidated Entity Company

Balance of Purchased, Balance of Options over
30 June 30 June 30 June 30 June
Shares Received as Sold or Shares Ordinary
2007 $ 2006 $ 2007 $ 2006 $
1/07/2006 Remuneration Reconstructed 30/06/2007 Shares
Franchise fees received 164,639 213,080 - -
Number Number Number Number Number
Sale of inventory 2,559,996 2,646,308 689,631 774,193
Company Directors
Amounts receivable from the Caringbah store franchise 230,187 176,376 9,490 21,832
Julian Tertini 40,842,074 - - 40,842,074 Nil
Provision of contract employees 551,439 579,469 - -
Peter Brennan 10,519,929 - - 10,519,929 Nil
A company associated with Julian Tertini received rent in
George Bennett 512,149 - - 512,149 Nil 501,798 476,695 - -
respect of a Company store on normal commercial terms of:
Denis McCormack 26,620 - - 26,620 Nil
Geoffrey Squires - - 1,500 1,500 Nil
Executives 25. Segment Information
Norman Role 1,303,297 - (41,111) 1,262,186 Nil The consolidated entity operates in one industry and geographical segment.
Carolyn Cox 1,434,943 - (217,630) 1,217,313 Nil Fantastic Furniture is a retailer, manufacturer and importer of household furniture in Australia.

Richard Frost 123,158 - 8,235 131,393 Nil

Susan Caruso 101,940 - (9,266) 92,674 Nil
Robert De Nicola 130,504 - (84,936) 45,568 Nil
David Drummond 21,417 - 8,234 29,651 Nil
55,016,031 - (334,974) 54,681,057 Nil

Investing for Our Future

46 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 47
 Notes to Financial Statements
29. Deed of Cross Guarantee
(continued) Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the wholly-owned subsidiaries listed below
for the year ended 30 June 2007 are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and
Directors’ Report.

It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of
the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding up of any of the subsidiaries
26. Notes to the Cash Flow Statements under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only be
liable in the event that after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the
Consolidated Entity Company event that the Company is wound up.
30 June 30 June 30 June 30 June
2007 $ 2006 $ 2007 $ 2006 $ The subsidiaries subject to the Deed dated 28 June 2007 are:
Fantastic Furniture Pty Ltd
Reconciliation of Profit After Tax to Net Cash Fantastic Furniture (Licensing) Pty Ltd
Provided by Operating Activities Best Buy Furniture Pty Ltd
Profit after tax 16,390,394 14,410,591 556,772 21,026,667 Fantastic Metal Furniture Pty Ltd
Original Mattress Factory Pty Ltd
Add/(Less) non-cash items: Fantastic Art Pty Ltd
Depreciation and amortisation of property, plant 2,672,335 1,859,375 161,082 170,300 Royal Comfort Bedding Pty Ltd
and equipment Fantastic Property Pty Ltd
The Package Deal Kings Pty Ltd
Loss on disposal of property, plant and equipment 268,523 21,178 182 5,714 Fantastic Furniture Share Plan Pty Ltd
Charges to provisions and employee benefits 2,971,095 444,405 465,710 (243,081)
The consolidated Income Statements and consolidated Balance Sheets, comprising the Company and subsidiaries which are a party
Net Cash Provided by Operating Activities Before
22,302,347 16,735,549 1,183,746 20,959,600 to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 30 June 2007, are the same as the
Change in Assets and Liabilities
consolidated Income Statements and consolidated Balance Sheets included in this financial report.
Change in Assets and Liabilities
(Increase)/decrease in trade and other receivables (1,515,469) (1,022,313) 222,349 (174,519)
(Increase) in inventories (6,640,051) (1,390,712) (235,105) (292,497)
(Increase)/decrease in other assets (5,873) 33,986 - -
(Increase)/decrease in deferred tax assets (691,838) (25,888) (75,008) 53,571
Increase in deferred tax liabilities 220,368 - 4,105 -
Increase/(decrease) in trade and other payables (449,204) 2,655,949 (131,757) (411,926)
Increase/(decrease) in income tax payable 454,396 (1,933,316) 454,396 (1,933,316)
Net Cash Provided by Operating Activities 13,674,676 15,053,255 1,422,726 18,200,913

27. Events Subsequent to Balance Date

There has not arisen, in the interval between the end of the financial year and the date of this report, any item, transaction or event of a
material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the consolidated
entity, the result of these operations, or the state of affairs of the consolidated entity in future financial years.

28. Contingencies
The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of
economic benefits will be required or the amount is not capable of reliable measurement.

Contingent Liabilities Considered Remote

Guarantees

(i) Under the terms of a Deed of Cross Guarantee, described in Note 29, the Company has guaranteed the repayment of all current
and future creditors in the event any of the entities party to the Deed is wound up.

(ii) Each company within the consolidated entity has entered into cross guarantee arrangements supported by Registered Mortgage
Debentures with the ANZ Bank.

Investing for Our Future

48 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
FINANCIALS Annual Report 2007 - 49
 Directors’ Declaration
for the year ended 30 June 2007

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF
FANTASTIC HOLDINGS LIMITED AND ITS SUBSIDIARIES
In the opinion of the Directors of Fantastic Holdings Limited (”the Company”):
REPORT ON THE FINANCIAL REPORT
We have audited the accompanying financial report of Fantastic Holdings Limited (the company) and Fantastic Holdings Limited and its
(a) The financial statements and notes set out on pages 22 to 49, and the remuneration disclosures included in the Remuneration subsidiaries (the consolidated entity), which comprises the balance sheet as at 30 June 2007, and the income statement, statement
Report on pages 16 to 19, are in accordance with the Corporations Act 2001, including: of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies and other
explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s
(i) giving a true and fair view of the financial position of the Company and consolidated entity as at 30 June 2007 and of their end or from time to time during the financial year.
performance, as represented by the results of their operations and their cash flows, for the year ended on that date; and As permitted by the Corporations Regulations 2001, the company has disclosed information about the remuneration of directors and
executives (remuneration disclosures), required by Accounting Standard AASB 124 : Related Party Disclosures, under the heading
“Remuneration Report” in the directors’ report and not in the financial report.
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL REPORT
Regulations 2001; and The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian
Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes
(b) the remuneration disclosures contained in the Remuneration Report in the Directors’ Report comply with designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free
from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting
Australian Accounting Standard AASB 124 “Related Party Disclosures”; and estimates that are reasonable in the circumstances. In Note 1, the directors also state, the consolidated financial report of the Group also
complies with the IFRSs and interpretations adopted by the International Accounting Standards Board. The Company’s financial report does not
(c) the consolidated financial report of the consolidated entity also complies with International Financial Reporting Standards and comply with IFRSs as the Company has elected to apply the relief provided to parent entities by AASB 132 Financial Instruments: Presentation
Interpretations as disclosed in Note 1; and and Disclosure in respect of certain disclosure requirements.
The directors are also responsible for the preparation and presentation of the remuneration disclosures contained in the directors’ report in
accordance with the Corporations Regulations 2001.
(d) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian
There are reasonable grounds to believe that the Company and the subsidiaries identified in Note 11 will be able to meet any obligations Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and
or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement and that the
subsidiaries pursuant to ASIC Class Order 98/1418. remuneration disclosures in the directors’ report comply with Accounting Standard AASB 124.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures
The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief Executive Officer and selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
Chief Financial Officer for the financial year ended 30 June 2007. presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
Signed in accordance with a resolution of the Directors. policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the
financial report and the remuneration disclosures in the directors’ report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
INDEPENDENCE
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the
independence declaration required by the Corporations Act 2001, provided to the directors of Fantastic Holdings Limited and its subsidiaries
on 30 June 2007, would be in the same terms if provided to the directors as at the date of this auditor’s report.
AUDITOR’S OPINION
In our opinion:
a) the financial report of Fantastic Holdings Limited and its subsidiaries is in accordance with the Corporations
Act 2001, including:
______________________ 1. Giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their
George Bennett performance for the year ended on that date; and
Chairman 2. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001.
b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1; and
c) the remuneration disclosures that are contained in pages 16 to 19 of the directors’ report comply with Accounting
Standard AASB 124.
Felsers
Chartered Accountants

______________________
Julian Tertini
Managing Director Glenda A Nixon
Partner
Dated : 7 September, 2007
Dated this 7th day of September 2007

Investing for Our Future

50 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
REPORTS Annual Report 2007 - 51
 Shareholding Information Twenty Largest Shareholders (31 August 2007)

Shareholder No. of Ordinary Percentage of

for the year ended 30 June 2007
Fully Paid Capital Held
Shares Held
Bytenew Pty Limited 40,842,074 42.98%
Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report is set Citicorp Nominees Pty Limited 12,789,585 13.46%
out below.
JP Morgan Nominees Australia Limited 6,451,476 6.79%
Australian Stock Exchange Company Security Code HSBC Custody Nominees (Australia) Limited 5,952,808 6.26%

The shares of Fantastic Holdings Limited are listed on the Australian Stock Exchange under the trading symbol “FAN”. The Home Exchange Patricia Brennan 5,259,965 5.54%
is Sydney. Peter Brennan 3,083,427 3.24%
National Nominees Limited 2,783,664 2.93%
Other Information
RBC Dexia Investor Services Australia Nominees Pty Limited 2,567,756 2.70%
Fantastic Holdings Limited, incorporated and domiciled in Australia, is a publicly listed company on the Australian Stock Exchange and is
a company limited by shares. Nonad Financial Services Pty Limited 2,176,537 2.29%
Norman Role 1,266,673 1.33%
Class of Shares and Voting Rights
Carolyn Cox 1,237,185 1.30%
At 31 August 2007, there were 95,022,825 ordinary shares of the Company issued.
ANZ Nominees Limited 1,235,980 1.30%
The voting rights attached to the ordinary shares, set out in clause 5.8 of the Company’s Constitution are: WMS Staff Super Fund Pty Limited 771,086 0.81%
“Subject to this Constitution and any rights or restrictions for the time being attached to any class of shares:
Dromore Finance Pty Limited 512,149 0.54%
(a) at meetings of members or classes of members, each member entitled to attend and vote
may attend and vote in person or by proxy … Budetch Pty Limited 478,276 0.50%
(b) on a show of hands, every member present in person has one vote … Sandhurst Trustees Limited 183,401 0.19%
(d) on a poll, every member present in person has the following voting rights:
(i) in the case of fully paid shares, one vote for each share held by the member; and Australian Executor Trustees NSW Limited 160,000 0.17%
(ii) in the case of partly paid shares, for each share, a fraction of a vote equivalent to the Richard Frost 139,108 0.15%
proportion which the amount paid up bears to the total issue price for the shares.”
Carisle Pty Limited 133,100 0.14%
Distribution of Shareholders (at 31 August 2007) Eileen Therese Guthrie 133,100 0.14%
88,157,350 92.77%
Number of Holders

Category Ordinary Shares Options

On-Market Buy-Back
1 – 1,000 497 -
There is no current on-market buy-back.
1,001 – 5,000 563 -
5,001 – 10,000 188 -
10,001 – 100,000 149 -
100,001 and over 28 -
1,425 -

The number of shareholdings held in less than marketable parcels is 18.

Substantial Shareholders
The names of the substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001
as at 31 August 2007 are:

Shareholder Number of Ordinary

Fully Paid Shares Held

Bytenew Pty Limited 40,842,074

Commonwealth Bank of Australia 11,898,570
Peter Brennan 10,519,929
Hyperion Asset Management Limited 9,414,566

Investing for Our Future

52 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
INFORMATION Annual Report 2007 - 53
 Directors (L-R) Julian Tertini,

Corporate Directory Denis McCormack, Peter Brennan,

Geoffrey Squires and George Bennett.

Directors
George Bennett Non-executive Chairman
Julian Tertini Managing Director
Peter Brennan Finance Director
Denis McCormack Non-executive Director
Geoffrey Squires Non-executive Director

Executive Officer
Susan Caruso Company Secretary

Registered Office
Level 6, 1 Chifley Square
Sydney NSW 2000
Telephone: 02 9221 1655
Facsimile: 02 9233 8616

Auditors
Accru Felsers Chartered Accountants
Level 6, 1 Chifley Square
Sydney NSW 2000
Telephone: 02 9221 1655
Facsimile: 02 9233 8616

Share Registry
Computershare Investor Services Pty Limited
Level 3, 60 Carrington St
Sydney NSW 2000
Telephone: 1300 855 080
Facsimile: 02 8234 5050

Annual General Meeting

The Annual General Meeting of the Company will be held on
31 October 2007, commencing at 10.30am at Rydges Bankstown,
Prospect, NSW Corner Hume Highway and Strickland Street, Bass Hill NSW

Printed on Environmentally Friendly Papers

ISO 14001 Accreditation
Cover: Pacesetter Offset 250gsm
Text: Jupiter Offset 100gsm

Investing for Our Future

54 - Fantastic Holdings Limited ABN 19 004 000 775 and its subsidiaries
INFORMATION Annual Report 2007 - 55
ACT QUEENSLAND NEW SOUTH WALES NEW SOUTH WALES
Fyshwick Hervey Bay Albury Bathurst
Kawana Waters Auburn Campbelltown
NEW SOUTH WALES
Morayfield Crows Nest Erina
Albury
Toowoomba Liverpool Prospect
Armidale
Underwood Newcastle Rutherford
Artarmon
Port Macquarie
Auburn SOUTH AUSTRALIA
Prospect
Balgowlah Munno Para
Bankstown Windsor Gardens QUEENSLAND
Bathurst Bundall
TASMANIA
Bennetts Green
Hobart SOUTH AUSTRALIA
Campbelltown
Launceston Marion
Caringbah
Mile End
Castle Hill VICTORIA
Munno Para
Coffs Harbour Ballarat
Dubbo Dandenong VICTORIA
Erina Geelong Ballarat
Griffith Hoppers Crossing Dandenong
Lismore Knox Knox
Moore Park Maribyrnong Nunawading
Nowra Mildura Preston
Penrith Moorabbin Richmond
Port Macquarie Nunawading Shepparton
Prospect Preston Taylors Lakes
Rockdale Richmond
Rutherford Shepparton
Singleton Taylors Lakes
Stanmore Thomastown
Tamworth Traralgon
Taree Warrnambool
Tuggerah
Wagga
Warrawong
Warwick Farm

Fantastic Holdings Limited

www.fantasticfurniture.com.au • www.plush.net.au • www.omf.net.au