ADAVALE RESOURCES LIMITED — Annual Report 2007

Oct 29, 2007

MP/PKTLTRS.299

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30 October 2007

ASX LIMITED

Dear Sir / Madam

The directors of PocketMail Group Limited wish to confirm that the 2007 Annual Report together with the Notice of Annual General Meeting, Explanatory Memorandum and Proxy Form have been despatched to all shareholders.

Yours faithfully POCKETMAIL GROUP LIMITED

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DAVID McARTHUR Company Secretary

PocketMail Group Limited ABN 96 008 719 015 Level 2, 45 Stirling Highway, Nedlands WA 6009, PO Box 985, Nedlands WA 6909 Tel: +61 8 9389 8799 Fax:+ 61 8 9389 8327 Web: www.pocketmail.com.au

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G R O U P L I M I T E D AND ITS CONTROLLED ENTITIES ACN 008 719 015

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P O C K E T M A I L G R O U P L I M I T E D

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	CORPORATE DIRECTORY 1 REVIEW OF OPERATIONS 2 CORPORATE GOVERNANCE STATEMENT 6 DIRECTORS’ REPORT 11 AUDITOR’S INDEPENDENCE DECLARATION 16 INCOME STATEMENT 17 BALANCE SHEET 18 CASH FLOW STATEMENT 19 STATEMENT OF CHANGES IN EQUITY 20 NOTES TO THE FINANCIAL STATEMENTS 21 DIRECTORS’ DECLARATION 35 INDEPENDENT AUDIT REPORT 36 ADDITIONAL INFORMATION 38

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C O R P O R AT E D I R E C T O RY

DIRECTORS

Richard Poole Roger Steinepreis Philip Suriano John Risinger Mark Stevenson

SHARE REGISTRY

Computer Investor Services Pty Limited Level 2, 45 St Georges Terrace Perth WA 6000

AUDITOR

Robert Nielson Partners

SECRETARY

STOCK EXCHANGE

David McArthur

REGISTERED OFFICE

Level 2, 45 Stirling Highway Nedlands WA 6009 Telephone +(618) 9389 8799 Facsimile +(618) 9389 8327

Australian Stock Exchange Limited 20 Bridge Street Sydney NSW 2000

ASX CODE

PKT (fully paid ordinary shares)

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P O C K E T M A I L G R O U P L I M I T E D

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R E V I E W O F O P E R AT I O N S

The strategy that was implemented towards the end of the last fiscal year including the restructure has proved positive and allowed the existing mobile email business to continue to operate without negatively impacting the company’s capacity to investigate other opportunities.

The group incurred a net loss of $406,161 which compared with a net loss from continuing operations for the prior year of $396,811, and a net loss of $909,622 in 2005.

During the year, the group continued to focus on the existing Pocketmail business in Australia while also researching new opportunities for the group.The key highlights throughout the year were as follows:

1. The acquisition of Adavale Minerals Pty Ltd and Adavale Queensland Pty Ltd. (refer below project overview)

2. The appointment of two new board directors – John Risinger and Mark Stephenson

3. Additional capital raised totalling $2,238,431 net of expenses.

The future strategy of the Board is to continue to develop the Pocketmail business in Australia and to continue to explore the potential of the group’s mineral tenements.The board will also assess other opportunities for the company as they arise.

ADVALE PROJECT OVERVIEW

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Project Locations
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1. LAKE SURPRISE – SOUTH AUSTRALIA

The Lake Surprise Project in South Australia consists of 3 leases totalling an area of 2705km[2] and is located 550km north of Adelaide. The targets are surficial uranium ore bodies in a number of suitable host rocks, and roll front style ore bodies developed in both Tertiary and Mesozoic host rocks.

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Radiometric Image

Exploration was carried out between 1969 and 1972 by Pechiney (Australia) Exploration Pty Ltd who explored the area between Murnpeowie and George Creek, an area mostly within the project. Pechiney’s work confirmed the prospectivity and results included:

• 41 radiometric anomalies identified;

• several areas registered high radiometric anomalies (1,000 to 2,000 counts per second) from the air;

• widely scattered concentrations of radioactive minerals in the silicified Tertiary sequence; and the uranium mineral Tyuyamunite (the calcium analogue of Carnotite) identified in surface rocks at several locations.

Recent petrographic analysis has confirmed the presence of the uranium mineral Carnotite in the system. Economically, carnotite is the most important mineral in surficial uranium deposits.

There are three primary sources of uranium in the project area. The uraniferous rocks of the northern Flinders ranges, the uraniferous basement rocks and the mound springs that lie on deep seated fracture systems and form part of the hydrothermal activity that acts to mobilise and concentrate uranium.

Encouraging results were obtained from fieldwork conducted over EL 3620, 3621 and 3622 during the June quarter of 2007. Ongoing exploration identified a shallow sedimentary basin of Tertiary age. Surface sampling along the length of a 13 kilometre structure within the basin returned numerous (20+) assays from a portable spectrograph from 100ppm to 440ppm U308.These levels are economic in the event a suitable resource is defined with a drilling program.

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R E V I E W O F O P E R AT I O N S

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Clayton Basin Prospect

The exploration program in relation to EL 3622 has identified a shallow sedimentary basin of Tertiary age and radioactive anomalies and occurrences of the uranium mineral carnotite are widespread. Economically, carnotite is the most important uranium mineral in a sedimentary deposit.

This basin is informally named the Clayton Basin and has an area of approximately 120 square kilometres.The basin margin is scarp bounded in part, or comprises low plateau and mesa erosional landforms and has radial slopes and palaeochannels orientated towards the basin depocentre. The unconformity between the Tertiary quartzose sandstones (Murnpeowie Formation), and a deeply weathered profile (Morney Profile) developed in underlying Lower Cretaceous sedimentary rocks, is exposed intermittently around the basin margin.The Murnpeowie Formation up to 2m above the unconformity has relatively high radioactivity (above 100cps) and in places contains visible carnotite.Within the basin there are a few low scarps, associated with faults and folds that also have above background radioactivity and have visible carnotite.

Notably, one scarp section averaging 3 metres in height has continuous ‘spots’ of carnotite over a horizontal distance of 1.2 kilometres. Broad areas between outcrops are covered by surficial sediments and these too emit anomalous radioactivity in many places.

Surface sampling along a 13 kilometre structure in the Clayton Basin returned numerous (20+) assays from a portable spectrograph between 100ppm to 440ppm.

Mumpy Prospect

In addition to the Clayton Basin Prospect, an area of possible concealed palaeochannels has been detected in airborne radiometric mapping of adjacent licence, EL 3620. Although unconsolidated sediments can completely mask or attenuate measurable radioactivity, three areas were identified in the field which have greater than 100cps radioactivity and are targets for reconnaissance drilling.

The geophysical data has also highlighted a number of significant targets to be investigated.The Company intends to commence sampling and mapping programmes to prioritise the identified targets which will form part of the Company’s initial drilling programme.

Drilling Program

First stage drilling at Lake Surprise was completed during September 2007, with samples sent for assay. Due to a backlog of work at the laboratory, results are not expected for 8-10 weeks.

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Radiometric Image

2. SPRINGVALE PROJECT (QUEENSLAND)

Tenements

The Springvale Project consists of 10 leases (applications) totalling an area of 3000km[2] and is located between Boulia and Bedourie in South West Queensland. The targets are tabular style ore bodies developed in and adjacent to the weathered Toolebuc Formation, and in the channel sediments of the Georgina-Hamilton river system. The Toolebuc Formation is enriched in uranium, vanadium, molybdenum and various other metals.

Exploration within the project area has been limited to nine stratigraphic holes drilled to test radiometric anomalies in the Springvale area in 1972. The holes intersected the Toolebuc Formation and gamma ray logs were well off the scale. Samples recently taken from the Geoscience Australia library core at intervals showing high gamma counts were found to contain significant uranium.

The prospectivity of the project is confirmed by:

• the presence of significant concentrations of both vanadium and uranium in the Toolebuc Formation and in Tertiary calcrete;

• the large area (600km[2] ) with a strong uranium radiometric signature;

• the strong radiometric anomalies seen in bore holes;

• the presence of either shallow Toolebuc Formation or suitable trap sites close to large areas where the Toolebuc Formation has been eroded; and

• the large amounts of uranium and vanadium that have been eroded and moved through the Hamilton – Georgina River system.

There are three sources of the uranium in the project area. The Toolebuc oil shale, the uranium carried by the waters and sediments of the Georgina and Hamilton rivers which drain the uranium rich Mt Isa block and both the alkaline artesian water and the plutonic waters from the basement of the great artesian basin. Rocks of Mt Isa Block form the basement in the project area are known to be enriched in uranium.

Proposed Exploration

The proposed exploration program includes reviewing existing data, air photo interpretation, radiometrics and drilling.

Targets at Springvale are shallow. Reconnaissance can be quick and relatively cheap allowing an exploration strategy of rapid evaluation and exploration focus. The exploration effort is very cost effective. The Company has the relevant technical disciplines in place that allow for a continuous exploration program.

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C O R P O R AT E G O V E R N A N C E S TAT E M E N T

This statement outlines the main Corporate Governance practices in place throughout the financial year, which comply with the Australian Stock Exchange (ASX) Corporate Governance Council recommendations, unless otherwise stated.

ROLE OF THE BOARD

The Board’s primary role is the protection and enhancement of long-term shareholder value.

To fulfill this role, the Board is responsible for the overall Corporate Governance of the consolidated entity including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

BOARD PROCESSES

The Board currently holds at least four scheduled meetings each year, plus strategy meetings and any extraordinary meetings at such other times as may be necessary to address any specific significant matters that may arise.

COMPOSITION OF THE BOARD

The names of the directors of the company in office at the date of this Statement are set out in the directors’ report of this financial report.

The composition of the Board is determined using the following principles:

• the Board should comprise at least three directors;

• the Chairman of the Board should be an independent non-executive director;

• the Board should comprise a majority of non-executive directors, with at least 50% of the Board being independent nonexecutive directors;

• the Board should comprise directors with a broad range of expertise both nationally and internationally;

• directors appointed by the Board are subject to election by shareholders at the following annual general meeting and thereafter directors (other than the executive director) are subject to re-election at least every three years.The tenure for executive director is linked to his holding of executive office.

The composition of the Board is reviewed on an annual basis to ensure that the Board has the appropriate mix of expertise and experience. When a vacancy exists, through whatever cause, or where it is considered that the Board would benefit from the services of a new director with particular skills, potential candidates are identified by the Board with advice from external consultants if necessary. The Board then appoints the most suitable candidate who must stand for election at the next general meeting of shareholders.

NOMINATION COMMITTEE

Given the small size of the Board and of the Company, a nomination committee has not been established.

EVALUATION OF BOARD PERFORMANCE

No performance evaluation for the Board and its members took place in the reporting period. Given the small size of the Board and of the Company, the directors are of the opinion that such a review is not efficient nor practicable.

CONFLICT OF INTEREST

In accordance with the Corporations Act, 2001 and the Company’s constitution, directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists, the director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered.

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DIRECTOR DEALINGS IN COMPANY SHARES

The Constitution permits directors and employees to acquire shares in the Company. Company policy prohibits directors and senior management from dealing in Company shares or exercising options:

• except between 3 and 30 days after either the release of the Company’s half-year and annual results to the ASX, the annual general meeting or any major announcement;

• whilst in possession of price sensitive information.

Directors must obtain the approval of the Chairman of the Board and notify the Company Secretary before they sell or buy shares in the Company. This is reported to the Board and is subject to Board veto. In accordance with the provisions of the Corporations act 2001 and the Listing Rules of the ASX, directors advise the Exchange of any transactions conducted by them in shares in the Company.

REMUNERATION OF EXECUTIVES

Due to the small size of the Board and of the Company, a Remuneration Committee has not been established, but the Board establishes and monitors remuneration packages and policies applicable to the Chief Executive Officer, based on the performance in job and comparative remuneration packages in the market and financial position of the Company.

The remuneration levels for the Chairman and non-executive directors were established in February 2000, and have not changed since that time.

Remuneration levels are competitively set to attract and retain qualified and experienced directors, executives and staff.Where necessary, independent advice is sought on the appropriateness of remuneration packages, given trends in comparative companies and industry surveys , and having regard for the overall performance of the Company.

INDEPENDENT PROFESSIONAL ADVICE AND ACCESS TO COMPANY INFORMATION

Each director has the right of access to all relevant company information and to the Company’s executives and, subject to prior consultation with the Chairman, may seek independent professional advice at the consolidated entity’s expense.A copy of advice received by the director is made available to all other members of the Board.

AUDIT COMMITTEE

All members of the Committee must be non-executive directors. The role of the Committee is to advise on the establishment and maintenance of a framework of internal control and appropriate ethical standards for the management of the consolidated entity.

It also gives the Board of Directors additional assurance regarding the quality and reliability of financial information prepared for use by the Board in determining policies or for inclusion in the financial report.

Due to the small size of the board there are currently no members of the Audit Committee.

The external auditors, the Chief Executive Officer and Financial Accountant, are invited to Audit Committee meetings at the discretion of the Committee.

Ordinarily the Committee meets at least twice during the year. During this financial year just ended, there was just one meeting of the Committee. Due to the composition of the Board decreasing to just 3 directors in November 2005, matters that would normally have been handled in the past by the Audit Committee are currently being dealt with by the full Board.

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C O R P O R AT E G O V E R N A N C E S TAT E M E N T

The responsibilities of the Audit Committee include:

• reviewing the financial report and other financial information distributed externally;

• reviewing any new accounting policies to ensure compliance with Australian Accounting Standards and generally accepted accounting principles;

• reviewing the Company’s policies and procedures for convergence with International Financial Reporting Standards;

• reviewing external audit reports to ensure that where major deficiencies or breakdowns in controls or procedures have been identified appropriate and prompt remedial action is taken by management;

• reviewing the nomination and performance of the auditor.The current external auditors were appointed in 2006;

• considering whether non-audit services provided by the external auditor are consistent with maintaining the external auditor’s independence;

• liaising with the external auditors and ensuring that the annual and half-year statutory audits are conducted in an effective manner;

• monitoring the establishment of an appropriate internal control framework and considering enhancements;

• monitoring the establishment of appropriate ethical standards;

• monitoring the procedures in place to ensure compliance with the Corporations Act, 2001 and ASX Listing Rules and all other regulatory requirements;

• addressing any matters outstanding with auditors, Australian Taxation Office, Australian Securities and Investments Commission, ASX and financial institutions;

• improving the quality of the accounting function;

• reviewing the declaration from the Company Secretary on compliance with statutory responsibilities.

The Audit Committee reviews the performance of the external auditors on an annual basis and normally meets with them during the year as follows:

Audit planning

• To discuss the external audit plan;

• To discuss any significant issues that may be foreseen;

• To discuss the impact of any proposed changes in accounting policies on the financial statements;

• To review the nature and impact of any changes in accounting policies adopted by the consolidated entity during the year;

• To review the fees proposed for the audit work to be performed.

Prior to announcement of results

• To review the pro forma half-yearly and pro forma preliminary final report prior to lodgement of those documents with the ASX, and any significant adjustments required as a result of the audit;

• To make the necessary recommendation to the Board for the approval of these documents.

Half-year and annual reporting

• To review the results and findings of the auditor, the adequacy of accounting and financial controls, and to monitor the implementation of any recommendations made;

• To review the draft financial report and the audit report and to make the necessary recommendation to the Board for the approval of the financial report.

As required

To organise, review and report on any special reviews or investigations deemed necessary by the Board.

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INTERNAL CONTROL FRAMEWORK

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility, the Board has instigated an internal control framework that can be described under the following headings:

• Financial reporting - there is a comprehensive monthly reporting system with monthly results being prepared and presented to the Board within 3 weeks of the month-end. The consolidated entity reports to shareholders half-yearly. The Chief Executive Officer and the Chief Financial Officer states 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.

• Continuous disclosure – the consolidated entity has a policy that all shareholders and investors have equal access to the Company’s information and has procedures to ensure that all price sensitive information is disclosed to the ASX in accordance with the continuous disclosure requirements of the Corporations Law and ASX Listing Rules.

• Quality and integrity of personnel – formal appraisals are conducted at least annually for all employees.

• Investment appraisal – the consolidated entity has clearly defined guidelines for capital expenditure. These include annual budgets, detailed appraisal and review procedures, and levels of approval authority.

• Internal Audit - the company does not have an internal audit function but utilises its financial resources as needed to assist the Board in ensuring compliance with internal controls.

BUSINESS RISK MANAGEMENT

Comprehensive practices are established such that:

• Capital expenditure and revenue commitments above a certain size require prior Board approval.

• Occupational health and safety standards and management systems are monitored and reviewed to achieve high standards of performance and compliance with regulations.

• Business transactions are properly authorised and executed.

ETHICAL STANDARDS

All directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the consolidated entity. A comprehensive Staff Handbook given to all staff promotes and communicates appropriate policies.

THE ROLE OF SHAREHOLDERS

The Board of Directors aims to ensure that the shareholders are informed of all major developments affecting the consolidated entity’s state of affairs. Information is communicated to shareholders as follows:

• The full annual financial report is distributed to all shareholders, unless a shareholder has specifically requested not to receive it;

• the half-yearly report contains summarised financial information and a review of the operations of the consolidated entity during the period. The half-year reviewed financial report is prepared in accordance with the requirements of applicable Accounting Standards and the Corporations Act 2001 and is lodged with the Australian Securities and Investments Commission and the ASX. The financial report is sent to any shareholder who requests it;

• proposed major changes in the consolidated entity which may impact on share ownership rights are submitted to a vote of shareholders;

• notices of all meetings of shareholders.

All documents that are released publicly are made available on the consolidated entity’s internet web site at www.pocketmail.com

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C O R P O R AT E G O V E R N A N C E S TAT E M E N T

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the consolidated entity’s strategy and goals. Important issues are presented to the shareholders as single resolutions.

The shareholders are requested to vote on the appointment and aggregate remuneration of directors, the granting of options and shares to directors and changes to the Constitution. Copies of the Constitution are available to any shareholder who requests it.

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D I R E C T O R S ’ R E P O R T

The directors present their report on the Company and its controlled entities for the financial year ended 30 June 2007.

DIRECTORS

The directors of the Company at any time during or since the end of the financial year are:

Name and qualifications	Interests in Shares and Options	Experience and special responsibilities
Richard Poole,	16,693,200 fully paid ordinary shares	Appointed Chairman on 12 July 2004.
Non-Executive Director,		Board member since 12 July 2004.
Chairman	19,193,200 options to acquire	Director of Merchant House Limited,
LLB, B Juris, B Comm ASIA	ordinary shares at $0.02 each	Australian Power & Gas Limited,
		Alexanders Securities Limited,
	7,333,334 options to acquire	Strathfield Group Limited,
	ordinary shares at $0.04 each	BBX Holdings Limited.
		Former Directorships include Amerod Resources
		Limited, Computercorp Limited and
		Hudson Resources Limited.
Roger Steinepreis	16,693,200 fully paid ordinary shares	Mr Steinepreis graduated from the University of
Non- Executive Director		Western Australia where he completed his law
LLB, B Juris	19,193,200 options to acquire	degree. He was admitted as a barrister and solicitor
	ordinary shares at $0.02 each	of the Supreme Court of Western Australia in 1987
		and has been practicing as a lawyer for
	7,333,333 options to acquire	approximately 19 years.
	ordinary shares at $0.04 each	Current Directorships include Imugene Limited and
		Commoditel Limited.
		Former directorships include Ottoman
		Energy Limited and Reward Minerals Limited.
Philip Suriano	5,000,000 fully paid ordinary shares	Director of Real Brand Holdings Limited.
Non-Executive Director		Former directorships include Microview Limited.
B Bus, Bkg & Fin, Monash
John Risinger	24,885,000 fully paid ordinary shares	Mr Risinger has over 35 years experience in the
Non-Executive Director		drilling industry and in managing and in managing
Appointed 16 April 2007	11,613,000 Converting Performance shares	drilling and operations in mineral exploration. He has
		had many years experience at the board level of
		a number of listed and unlisted public companies.
Mark Stevenson	22,500,000 fully paid ordinary shares	Mr Stevenson is President and CEO of Holloman
Non-Executive Director		Holdings Corporation and has had over 30 years
Appointed 16 April 2007	10,500,000 Converting Performance shares	experience in management, engineering and
		operations in the upstream Oil and Gas Industry.
		He holds a B.S. in Constructional Engineering from
		Texas Tech University, Lubbock Texas.

COMPANY SECRETARY
David McArthur	David McArthur is a chartered accountant with
Company Secretary	25 years experience in the accounting profession.
B.Com,A.C.A.	For the past 17 years he has specialised in the
	financial and corporate management of public listed
	and unlisted companies, and is a director and
	company secretary of a number of public
	companies.

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D I R E C TO R S ’ R E P O RT

DIRECTORS’ MEETINGS

The number of directors’ meetings (including meetings of committees of directors and approvals by circular resolution) and number of meetings attended by each of the directors of the Company during the financial year were:

		Board Meetings
Director	Eligible		Attended
R Poole	1		1
P Suriano	1		1
R Steinepreis	1		1
J Risinger	Nil		Nil
M Stevenson	Nil		Nil

All other business of the board was dealt with by circular resolutions.There were 6 circular resolutions during the year.

Due to the composition of the Board being only 5 directors, no committees have been formed.

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the financial year were the sale and marketing of PocketMail mobile e- mail devices and the provision of the PocketMail mobile e-mail service operated through the Company’s wholly owned subsidiary PocketMail Operations Pty Ltd.

There were no significant changes in the nature of these activities during the year.The Company does however continue to make small investments in Adavale Minerals Pty Ltd, a wholly owned subsidiary of the Company, to enable it to complete an 80 hole exploration programme that has just been completed at Lake Surprise.

REVIEW AND RESULTS OF OPERATIONS

The consolidated loss of the economic entity was $406,161 which compared with a net profit for the prior year of $4,327,253. This loss included nil (2006: profit of $4,724,064) in respect of the disposal of discontinued operations.

DIVIDENDS

No dividends were paid during the financial year and the directors recommend that no dividend be paid in respect of the year ended 30 June 2007.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no significant changes to the state of affairs of the group during the year other than as disclosed elsewhere in the attached financial statements.

EVENTS SUBSEQUENT TO BALANCE DATE

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in subsequent financial years.

FUTURE DEVELOPMENTS

During the next financial year the Company expects that both its subscriber base and revenues from the PocketMail business will continue to decrease. Faced with declining revenues, the Company is reducing further its costs of operations.

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REMUNERATION REPORT

Directors

The emoluments of each director of the Company are as follows:

	Salary Expatriate Benefits & Fees & Remuneration Superannuation Total $ $ $ $
(a) Company Directors’ remuneration 2007 Richard Poole Roger Steinepreis Philip Suriano John Risinger Mark Stevenson 2006 Robert Hodges - Director (non–executive) David Marchant - Director & CEO	35,000 - - 35,000 20,000 - - 20,000 43,150 - - 43,150 - - - - - - - -
	98,150 - - 98,150
	3,486 - 313 3,799 371,133 - 9,104 380,237
	374,133 - 9,417 384,036

Fees payable to Mr Poole were paid to Arthur Phillip Pty Limited a company controlled by him.

Fees payable to Mr Steinepries were paid to Steinepries Paganin a firm of which he is a partner.

Fees payable to Mr Suriano refer to the period from May 2006 to June 2007 and have been accrued.

Key Management Personnel

The Group had no other key management personnel during the year.

(b) Remuneration policies

The Board establishes and monitors the remuneration of the Chief Executive Officer. Currently no Chief Executive Officer has been appointed.

Remuneration levels are competitively set to attract and retain qualified and experienced directors, executives and staff, and having regard for the overall performance of the Company.Where necessary the Board obtains independent advice on the appropriateness of remuneration packages, given trends in comparative companies and industry surveys.

(c) Share options issued as remuneration

The Company does not operate an employee option scheme. No options were issued as remuneration to directors during the year.

(d) Summary of key employment terms

The majority of the Company’s Australian employees are employed by PocketMail Operations Pty Ltd under the Telecommunications Services Industry Award 2002 (as varied October 2004). Remaining Australian employees (“nonAward employees”) receive fixed annual cash remuneration with no additional benefits.

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D I R E C TO R S ’ R E P O RT

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INDEMNIFICATION OF OFFICERS AND AUDITORS

The Company indemnifies, to the extent permitted by law, all directors of the Company and all former directors, against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as directors of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses.

The Company also indemnifies the current directors of its controlled entities for all liabilities to another person (other than the Company or a related body corporate) that may arise from their position, except where the liability arises out of conduct involving a lack of good faith.The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses.

The Company also indemnifies executive officers of the Company and its controlled entities for all liabilities to another person (other than the Company or a related body corporate) that may arise from their position in the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith.

The Company does not indemnify its auditors.

OPTIONS

At the date of this report the unissued ordinary shares of PocketMail Group Limited under option are as follows:-

Date of Grant	Date of Expiry	Number	Exercise Price
	16 July 2007	806,250	$0.40
	31 December 2008	41,006,800	$0.02
15 May 2007	31 March 2010	27,000,000	$0.04

During the financial year the following ordinary shares in Pocketmail Group Limited were issued on the exercise of options. No further shares have been issued since that date

further shares have been issued	since that date
Exercise Price	Number
$0.02	18,993,200

ENVIRONMENTAL ISSUES

The Company’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory.

NON-AUDIT SERVICES

The Board of directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the nature of the services disclosed below did not compromise the external auditor’s independence.

No non-audit services were paid/payable to the current auditor for the year ended 30th June 2007.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration for the year ended 30 June 2007 has been received and can be found on page 16 of the directors’ report.

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PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied for leave of court to bring proceedings on behalf of the Company, or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

Signed in accordance with a resolution of the directors:

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Richard Poole

Chairman

Dated at Sydney this 31st day of August 2007

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P O C K E T M A I L G R O U P L I M I T E D

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A U D I T O R S I N D E P E N D E N C E D E C L A R AT I O N

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16
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A N N U A L R E P O R T 2 0 0 7

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I N C O M E S TAT E M E N T

FOR THE YEAR ENDED 30 JUNE 2007

Notes	Consolidated Parent Entity 2007 2006 2007 2005 $ $ $ $
Revenue from ordinary activities 2 Total revenue from ordinary activities Employee expenses Cost of sales Telecommunications & hosting expenses Interest paid Insurance Premises expenses Contractor and consultants expenses Legal expenses Marketing Share registry fees Travel expenses Other expenses from ordinary activities Loss from ordinary activities before related income tax expense Income tax (expense)/benefit relating to ordinary activities Loss from continuing operations Profit from discontinued operations Net (Loss)/Profit Total changes in equity from non-owner related transactions attributable to the members of the parent entity Overall Operations Basic (loss)/earnings/ per share 6 Diluted (loss)/earnings/ per share 6 Continuing Operations Basic (loss)/earnings/ per share Diluted (loss)/earnings/ per share	579,103 1,307,434 61,010 10,618
	1,307,434 10,618 (358,645) (831,451) - - (183,100) - (86,728) (33,673) - (1,933) (154,745) - - (27,359) - (42,500) (43,473) - (175,320) (48,880) (120,000) - (52,815) (54,851) (52,815) - (337) (93,917) (80,007) (80,007) (1,204) (11,339) (1,141) - (185,775) (221,457) (151,147) (149,286)
	(406,161) (396,811) (344,100) (138,668) - - - -
	(406,161) (396,811) (344,100) (138,668) - 4,724,064 - 2,377,376
	(406,161) 4,327,253 (344,100) 2,238,708
	(406,161) 4,327,253 (344,100) 2,238,708
	$(0.0013) 9.2 cents $(0.0011) 9.2 cents - (0.8) cents - (0.8) cents

Discontinued Operations
Basic (loss)/earnings/ per share	-	10 cents

The accompanying notes form part of these financial statements.

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B A L A N C E S H E E T

AS AT 30 JUNE 2007

Notes	Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $
CURRENT ASSETS Cash assets 7 Receivables 8 Other TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment 9 Financial Assets 10 Other 11 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Payables 12 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS/(LIABILITIES) EQUITY Contributed equity 13 Reserves Accumulated losses TOTAL EQUITY	3,000,576 1,291,489 2,924,918 1,291,489 35,194 57,527 299,423 - 22,173 - 32,754
	3,057,943 1,349,016 3,224,341 1,324,243
	12,633 - - - - 1,500,000 - 1,640,755 -
	1,653,388 - 1,500,000 -
	4,711,331 1,349,016 4,724,341 1,324,243
	157,917 155,276 111,716 133,354
	157,917 155,276 111,716 133,354
	157,917 155,276 111,716 133,354
	4,553,414 1,193,740 4,612,625 1,190,889
	29,987,140 26,252,737 29,987,140 26,252,737 31,433 31,433 (25,465,159) (25,058,998) (25,405,948) (25,061,848)
	4,553,414 1,193,740 4,612,625 1,190,889

The accompanying notes form part of these financial statements.

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C A S H F L O W S TAT E M E N T

FOR THE YEAR ENDED 30 JUNE 2007

Notes	Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $
Cash flows from operating activities Cash receipts in the course of operations Cash payments in the course of operations Interest received Net cash provided by/(used in) operating activities 20(b) Cash flows from investing activities Purchase of property, plant and equipment Exploration expenses capitalised Net cash (used in) investing activities Cash flows from financing activities Proceeds from borrowings: - Related parties Proceeds from issue of Shares Costs of share issue Loans to controlled entities Repayment of borrowings: Profit on disposal Net cash provided by (used in) financing activities Net increase/(decrease) in cash held Cash at beginning of financial year Disposal of cash Cash at end of financial year 20(a)	552,892 1,374,659 - (1,003,524) (1,566,449) (424,740) (113,896) 61,071 10,618 61,009 10,618
	(389,561) (181,172) (363,731) (103,278)
	(13,492) - - - (140,956) - -
	(154,448) - - -
	- 11,323 - 2,376,037 2,084,562 2,375,836 2,084,562 (110,000) (134,795) (110,000) (134,795) (12,941) (280,000) - (555,000) - (555,000) 90,211 - -
	2,253,096 1,484,978 1,997,160 1,394,767
	1,709,087 1,303,806 1,633,429 1,291,489 1,291,489 39,485 1,291,489 - (51,802) -
	3,000,576 1,291,489 2,924,918 1,291,489

The accompanying notes form part of these financial statements.

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S TAT E M E N T O F C H A N G E S I N E Q U I T Y

FOR THE YEAR ENDED 30 JUNE 2007

Note Economic Entity	Share Capital $	Option Foreign Currency Retained Revaluation translation Profits Reserve reserve Total $ $ $ $
Balance at 1 July 2005 Profit (Loss) attributable to members of the entity Proceeds on issue of shares Cost of share issue Balance at 30 June 2006 Balance at 1 July 2006 Profit (Loss) attributable to members of the entity Capital refunds Purchase of shares in subsidiaries Proceeds on issue of shares Cost of share issue Share based payments 22 Balance at 30 June 2007 Parent Company	24,302,971 -	(29,386,251) (15,344) (5,098,624) 4,327,253 - 4,327,253 15,344 15,344
	2,084,562 (134,796)	- - 2,084,562 - - (134,796)
	26,252,737	(25,058,998) - 1,193,739
	26,252,737 (4,028) 1,500,000 2,379,864 (141,433)	(25,058,998) - 1,193,739 (406,161) (406,161) (4,028) 1,500,000 2,379,864 (141,433) 31,433 31,433
	29,987,140	(25,465,159) 31,433 4,553,414
	Note	Share Retained Revalution Capital Profits Reserves Total $ $ $ $
Balance at 1 July 2005 Profit (Loss) attributable to members of the entity Proceeds on issue of shares Cost of share issue Balance at 30 June 2006 Balance at 1 July 2006 Profit (Loss) attributable to members of the entity Capital refunds Purchase of shares in subsidiaries Proceeds on issue of shares Cost of share issue Share based payments 22 Balance at 30 June 2007		24,302,971 (27,300,556) - (2,997,585) - 2,238,708 - 2,238,708 2,084,562 - - 2,084,562 (134,796) - - (134,796)
		26,252,737 (25,061,848) - 1,190,889
		26,252,737 (25,061,848) - 1,190,889 - (344,100) - (344,100) (4,028) (4,028) 1,500,000 1,500,000 2,379,864 - - 2,379,864 (141,433) - - (141,433) 31,433 31,433
		29,987,140 (25,405,948) 31,433 4,612,625

The accompanying notes form part of these financial statements.

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

FOR THE YEAR ENDED 30 JUNE 2007

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The significant policies, which have been adopted in the preparation of this financial report are:

(a) Basis of preparation

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The financial report covers Pocketmail Group Limited and its controlled entities. Pocketmail Group Limited is a listed public company, incorporated and domiciled in Australia.

The financial of Pocketmail Group Limited and its controlled entities, and Pocketmail Group Limited as an individual parent entity comply with all International Financial Reporting Standards in their entirety,

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities to which fair value basis of accounting has been applied.

The following is a summary of the material accounting policies adopted by the company in the preparation of the financial report.The accounting policies have been consistently applied, unless otherwise stated.

(b) Principles of consolidation

Controlled entities

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by PocketMail Group Limited (the parent entity) as at 30 June 2006 and the results of all controlled entities for the year then ended. PocketMail Group Limited and its controlled entities together are referred to in this financial report as the consolidated entity.

Transactions eliminated on consolidation

Unrealised gains and losses and inter-entity balances resulting from transactions with or between controlled entities are eliminated in on consolidation.

(c) Revenue recognition

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST). Exchanges of goods or services of the same nature and value without any cash consideration are not recognised as revenues.

Sale of goods

Revenue from the sale of goods is recognised (net of returns, discounts and allowances) when control of the goods passes to the customer.

Revenue from subscription services

Revenue from subscription services is recognised in the period in which the service is provided to the customer, having regard to the stage of completion of the contract.

Interest revenue

Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.

Sale of non-current assets

The gross proceeds of non-current asset sales are included as revenue at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed.

The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.

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N OT E S TO T H E F I N A N C I A L S TAT E M E N T S

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1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Continued

(c) Revenue recognition (Continued)

Grants

Export market grants are recognised as revenue at the time the grant is received. Grants are received after the related costs have been expensed and paid for.

Revenue from contract

Revenues from the contract for use of Pocket Mail technology with the United States Government were recognised in the periods when economic benefit was transferred and when services were performed. Revenue recognition under the contract closely matched the cash receipts under the contract in the financial year.

(d) 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 statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities, which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(e) Foreign currency transactions and balances

Functional and presentation currency

The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates.The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year end exchange rate. Non-monetary items measured at historical cost continued to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at their fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognized in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognized directly in equity to the extent that the gain or loss is directly recognized in equity, otherwise the exchange difference is recognized in the income statement.

Group Companies

The financial results and position of foreign operations whose functional currency is different from the Group’s presentational currency are translated as follows:

Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

Income and expenses are translated at average exchange rates for the period; and

Retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in the balance sheet.These differences are recognized in the income statement in the period in which the operation is disposed.

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(f) Taxation

Current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income tax legislation and the anticipation that the company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

PocketMail Group Limited and its wholly-owned Australian controlled entities have formed an income tax consolidated group under the Tax Consolidation Regime from 1 July 2002. The Company, as the head entity in the tax consolidated group, is responsible for recognising current and deferred tax amounts relating to transactions, events and balances of the whollyowned Australian controlled entities in this group as if those transactions, events and balances were its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances.

(g) Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date basis, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below

Financial assets at fair value through profit and loss

A financial instrument is classified in this category if acquired principally for the purpose of selling in the short term, or if so designated by management and within the requirements of AASB 139: Recognition and Measurement of Financial Instruments. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise.

Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at cost using the effective interest rate method.

Held-to-Maturity Investments

These investments have fixed maturities and it is the company’s intention to hold these investments to maturity. Any heldto-maturity investments held by the company are stated at amortised cost using the effective interest rate method.

Available-for-Sale Financial Instruments

Available-for-sale financial instruments include any financial assets not included in the above categories. Available-for-sale financial instruments are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

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N OT E S TO T H E F I N A N C I A L S TAT E M E N T S

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1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Continued

(g) Financial Instruments (Continued)

Financial Liabilities

Non-derivative financial instruments are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Fair Value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the value of all unlisted securities, including recent arms length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement.

(h) Impairment of Assets

At each reporting date the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement.

(i) Receivables

The collectibility of debts is assessed at balance date and specific provision is made for any doubtful accounts.

(j) Investments

Controlled entities

Investments in controlled entities are carried in the Company’s financial statements at the lower of cost and recoverable amount.

(k) Depreciation and amortisation

Useful lives

All assets, including intangibles, have limited useful lives and are depreciated/amortised using the straight line method over their estimated useful lives, with the exception of finance lease assets which are amortised over the term of the relevant lease, or where it is likely the consolidated entity will obtain ownership of the asset, the life of the asset.

Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed assets, from the time an asset is completed and held ready for use. Goodwill balances are reviewed annually and any balance representing future benefits for which the realization is considered to be no longer probable are written off.

Depreciation and amortisation rates and methods are reviewed annually for appropriateness. When changes are made, adjustments are reflected prospectively in current and future periods only. Depreciation and amortisation are expensed.

The depreciation/amortisation rates used for each class of asset during the current and prior year are as follows:

	2007	2006
Plant and equipment	3–5 years	3–5 years
Field Equipment	3–5 years	N/A

(l) Payables

Liabilities are recognised for amounts to be paid in the future for goods or services received.

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(m) Employee benefits

Provision is made for the company’s liability for employee benefits arising from services rendered by employees to balance date.

(n) Provisions

A provision is recognised when a legal or constructive obligation exists as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation.

(o) Cash

For the purposes of the statement of cash flows, cash includes deposits at call with financial institutions and other highly liquid investments with short periods to maturity which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.

(p) Earnings per share

(i) Basic earnings per share

Basic earnings per share is determined by dividing net profit after income tax attributable to members of the Company by the weighted average number of ordinary shares outstanding during the financial year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to be have been issued for no consideration in relation to dilutive potential ordinary shares.

(q) Authorisation

The financial report was authorised for issue on 31 August 2007 by the board of directors.

	Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $
REVENUE FROM ORDINARY ACTIVITIES Revenue from operating activities Subscription services Revenue from outside the operating activities Interest: - Other parties Other revenue Total revenue from ordinary activities	349,942 1,296,816 - -
	349,942 1,296,816 - - 61,071 10,618 61,010 10,618 168,000 - - -
	229,071 10,618 61,010 10,618
	579,013 1,307,434 61,010 10,618

2. REVENUE FROM ORDINARY ACTIVITIES

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N OT E S TO T H E F I N A N C I A L S TAT E M E N T S

3. DISCONTINUED OPERATIONS

On 29th March 2006, the economic entity placed the Australian subsidiary, Pocketmail Australia Pty Limited into voluntary administration.An agreement was entered into with Pocketmail Inc to transfer the Australian and New Zealand operations to that company.

On 26th May 2006, the economic entity sold the US subsidiary, Pocketmail Inc.

Financial information relating to the discontinued operations to the date of disposal is set out below and in Note 8 Segment Reporting.

The financial performance of the discontinued operations to the date of disposal which is included in the profit and loss from discontinued operations per the income statement is as follows:

	Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $
Revenue from Ordinary Activities Expenses from Ordinary Activities Loss before income tax Income tax expense Profit attributable to members of the parent entity Profit on sale Income tax expense Profit on sale after income tax The net cash flows of the discontinued divisions which have been incorporated into the statement of cashflows are as follows: Net cash inflow/(outflow) from operating activities Net cash inflow/(outflow) from investing activities Net cash inflow/(outflow) from financing activities AUDITORS’ REMUNERATION Audit services: - Auditors of the Company - Prior year audit (BDO) Other services: - Taxation services - Corporate services relating primarily to the voluntary deregistration of controlled entities	3,459,525 - 2,966,038 -
	493,487 - - -
	- - - - - -
	4,230,577 -
	4,724,064 -
	90,211 - - - - -
	90,211 -
	19,900 5,500 - - - 74,304 - -
	19,900 79,804 - -
	- - 13,712 5,804

4. AUDITORS’ REMUNERATION

• Corporate services relating primarily to the voluntary deregistration of controlled entities

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		Consolidated				Parent Entity
	2007		2006		2007		2006
	$		$		$		$
TAXATION
Income tax expense attributable to operating profit/(loss)		-		-		-		-

5. TAXATION

The Directors have not recognised any tax assets in respect of losses, as they do not believe that the conditions for recognition set out in Note 1(g) have been met.

	recognition set out in Note 1(g) have been met.
6. 7. 8.			Consolidated 2007 2006 $ $
	BASIC AND DILUTED EARNINGS/(LOSS) Net Net tangible assets per share Basic Diluted Earnings/(loss) used in the calculation of basic and diluted Weighted average number of ordinary shares used in the calculation of basic and diluted EPS in the calculation of basic EPS in the calculation of diluted EPS Number of options not considered dilutive Information concerning classification of securities	PER SHARE EPS Consolidated 2007 2006 $ $	0.0095 0.025 0.0133 0.025 (406,161) 4,327,253
			305,101,292 47,172,036 360,909,682 47,172,036 Nil 60,806,250 Parent Entity 2007 2006 $ $
	CASH ASSETS Cash at bank RECEIVABLES Current Trade receivables Less: Provision for impairment of receivables Other receivables Amount receivable from wholly owned subsidiary Total current receivables	3,000,576 1,291,489	2,924,917 1,291,489
		22,253 - - -	19,423 - -
		22,253 - 35,114 57,527 280,000	19,424 - - 32,754
		57,367 57,527	299,423 32,754

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N OT E S TO T H E F I N A N C I A L S TAT E M E N T S

9. 10.		Consolidated 2007 2006	Parent 2007 2006
	PROPERTY, PLANT AND EQUIPMENT Field equipment At cost Accumulated depreciation Office equipment At cost Accumulated depreciation Total property, plant and equipment – Net book value Movement in Carrying Values	7,614 500	- - - -
		7,114	- -
		5,878 359	- - - -
		4,519	- -
		12,633	- -
			Field Office Equipment Equipment
	Opening Balance Additions Disposals Depreciation Closing balance	Consolidated 2007 2006	- - 7,614 5,878 (500) (359)
			7,114 4,519
			Parent 2007 2006
	FINANCIAL ASSETS Available-for-sale Shares in controlled entities	- -	1,500,000 -

Available-for-sale financial assets comprise investments in ordinary issued shares of controlled entities.There are no fixed returns or fixed maturity dates attached to these investments.

11. OTHER NON-CURRENT ASSETS

OTHER NON-CURRENT ASSETS
Exploration Licences Exploration expenditure capitalised Exploration and evaluation phase	1,499,799 - - - 140,956 - - -
	1,640,755 - - -

Exploration Licences are carried at cost of acquisition.

Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and sale of uranium ore.

Capitalised costs amounting to $140,956 (2006 nil) have been included in cash flows from investing activities in the cash flow statement.

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12. 13.		Consolidated Parent 2007 2006 2007 2006
	PAYABLES Trade creditors Other creditors and accruals Notes	94,524 146,954 39,119 133,354 63,393 8,323 72,597 -
		157,917 155,276 111,716 133,354
		Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $
	CONTRIBUTED EQUITY Issued and paid-up share capital Ordinary shares, fully paid 436,916,370 (2006: 277,538,555) Converting Performance shares 35,000,000 (2006; nil) Number	29,987,140 26,252,737 29,987,140 26,252,737 - - - -
		29,987,140 26,252,737 29,987,140 26,252,737
		No No No No
	Ordinary Shares Balance at the beginning of the year Placement of 72,000,000 ordinary shares at 0.05 cents Consolidation on basis of 1 for 20 Conversion of convertible notes into 60,000,000 ordinary shares at 0.25 cents Rights issue of 139,856,215 ordinary shares at 1 cent Issue of 50,000,000 ordinary shares at 1 cent Exercise of options at $0.02 per share Rights issue at $0.02 per share Share placement at $0.065 per share Share issue at $0.02 per share Balance at the end of the year	277,538,555 481,623,312 277,538,555 481,623,312 72,000,000 72,000,000 (525,940,972) (525,940,972) 60,000,000 60,000,000 139,856,215 139,856,215 50,000,000 50,000,000 18,993,200 18,993,200 50,000,000 50,000,000 15,384,615 15,384,615 75,000,000 75,000,000
		436,916,370 277,538,555 436,916,370 277,538,555

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’ meetings.

In the event of winding up of the Company ordinary shareholders rank after all creditors and are fully entitled to any proceeds of liquidation.

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N OT E S TO T H E F I N A N C I A L S TAT E M E N T S

13. CONTRIBUTED EQUITY Continued

CONTRIBUTED EQUITY Continued
Notes	Consolidated Parent Entity 2007 2006 2007 2006 No No No No
Converting Performance Shares Number Balance at the beginning of the year Issue of to purchase shares in Adavale Minerals Pty Ltd	- - - - 35,000,000 - 35,000,000 -
	35,000,000 35,000,000

Holders of Converting Performance shares do not have the right to vote at shareholders meetings or to receive dividends as declared from time to time.The shares are not transferable.

In the event of a winding up of the Company the Converting Performance shareholders are entitled to a repayment of capital of $0.00001 per Converting Performance share.

The Converting Performance shares will convert on the basis of 1 Converting Performance share for 1 Ordinary share within 24 months of settlement of the purchase of shares in Adavale Minerals Pty Ltd upon satisfaction of the following performance hurdles:-

• (a) an inferred resource of a minimum of 5,000 tonnes of U3O8 equivalent including molybdenum and vanandium credits counting as U3O8 equivalents at the spot price for these commodities as at 22 January 2007 is delineated in respect of the exploration tenements held by the group; and

• (b) the minimum resource referred to above has a U3O8 grade at a minimum of 0.03% i including molybdenum and vanandium credits counting as U3O8 equivalents at the spot price for these commodities as at 22 January 2007.

If the above performance hurdles are not achieved by the required date then all of the Converting Performance shares held by a shareholder relating to that performance hurdle will be automatically redeemed by Pocketmail Limited for the sum of $0.000001 per Converting Performance share.

The directors have determined that at the present time there is insufficient data available to make an informed assessment of likelihood that the performance hurdles will be met.The Converting Performance shares have therefore been shown at nil value in the contributed equity.

14. RESERVES

The option reserve records items recognised as expenses incurred in raising capital.

15. DIVIDENDS

The Directors do not recommend a dividend for the year ended 30 June 2007. No dividend was paid for the year ended 30 June 2007.

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A N N U A L R E P O R T 2 0 0 7

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16. FINANCIAL INSTRUMENTS DISCLOSURE

(a) Interest rate risk

The consolidated entity is exposed to interest rate fluctuations.

Interest rate risk exposures

The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

assets and financial liabilities is set out below:
Weighted average interest Note rate	Fixed interest maturing in: Floating Non- Interest 1 year or 1 to 5 more than Interest Rate Less years 5 years Bearing Total $ $ $ $ $ $
2007 Financial assets Cash assets 7 4.1% Receivables 8 - Financial liabilities Payables 12 - 2006 Financial assets Cash assets 7 5% Receivables 8 - Financial liabilities Payables 12 -	3,000,576 3,000,576 35,194 57,367
	3,035,770 3,057,943
	157,917 157,917
	157,917 157,917
	1,291,489 - - - - 1,291,489 - - - - - -
	1,291,489 - - - - 1,291,489
	- - - - 155,276 155,276
	- - - 155,276 155,276

(b) Net fair values of financial assets and liabilities

Valuation approach

Net fair values of financial assets and liabilities are determined by the consolidated entity on the following basis:

Monetary financial assets and financial liabilities not readily traded in an organised financial market are determined by valuing them at the present value of contractual future cash flows on amounts due from customers (reduced for expected credit losses) or due to suppliers. Cash flows are discounted using standard valuation techniques at the applicable market yield having regard to the timing of the cash flows. The carrying amounts of bank term deposits, trade debtors, other debtors, accounts payable, bank loans and lease liabilities approximate net fair value.

The net fair value of investments in unlisted shares in other corporations is determined by reference to the underlying net assets and an assessment of future maintainable earnings and cash flows of the respective corporations.

The balances of financial assets and liabilities approximate their net fair value.

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P O C K E T M A I L G R O U P L I M I T E D

N OT E S TO T H E F I N A N C I A L S TAT E M E N T S

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16. FINANCIAL INSTRUMENTS DISCLOSURE Continued

(c) Credit risk exposures

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The credit risk on financial assets, excluding investments, of the consolidated entity, which have been recognised on the statement of financial position, is the carrying amount, net of any provision for doubtful debts.

In relation to PocketMail subscribers, all service is prepaid, and credit exposure is limited to the period immediately following the end of the prepaid period until time of temporary suspension. Currently this is 15 days.

	Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $
COMMITMENTS Minimum expenditure commitments on exploration licences Committed but not provided for and payable: Within one year One year or later and no later than five years Later than five years	350,000 - - - 700,000 - - -
	1,050,000 - - -

17. COMMITMENTS

18. SEGMENT INFORMATION

The Group operates in one industry segment being the sale and marketing of PocketMail mobile e-mail devices and the provision of the PocketMail mobile e-mail service.

19. CONTROLLED ENTITIES

Particulars in relation to controlled entities

Particulars in relation to controlled entities
		Ordinary Share
		Consolidated Entity Interest
Name	Note	2007	2006
		%	%
Company:
PocketMail Group Limited
Controlled entities:
Pocketmail Operations Pty Limited		100	100
Adavale Minerals Pty Ltd		100	-
Adavale Queensland Pty Ltd		100	-

All controlled entities were incorporated in Australia.

On 29 April 2007 the parent entity acquired 100% of Adavale Minerals Pty Ltd and Adavale Queensland Pty Ltd for a purchase consideration of $1,500,000. Pocketmail Group Limited is entitled to all profits earned by these companies from that date.

The purchase consideration was a bona fide arms length negotiation agreed between the directors of Pocketmail Group Limited and the vendors after discussion with the company’s advisors. On this basis the carrying value of the shares is considered to approximate the fair value of the investment.

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A N N U A L R E P O R T 2 0 0 7

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20. NOTES TO THE STATEMENTS OF CASH FLOWS

(a) (b)	Notes	Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $
	Reconciliation of cash For the purposes of the statements of cash flows, cash includes cash on hand and at bank and short term deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the statements of financial position as follows: Cash at bank 7 Reconciliation of the operating loss after tax to the net cash flows from operations Profit/(loss) from ordinary activities after income tax Add/(less) non cash items: - Depreciation of non-current assets - Forgiveness of debt - Amount set aside for provisions Changes in assets and liabilities: - (Increase)/decrease in receivables - Increase/(decrease) in trade creditors and accruals Net cash provided by/(used in) operating activities	3,000,576 1,291,489 2,924,918 1,291,489
		(406,161) 4,327,253 (344,100) 2,238,708 859 - - (2,442,585) (2,442,585) (1,900,012) -
		(405,302) (15,344) (344,100) (203,877) 13,100 (28,017) 13,331 - 2,641 (137,811) (32,962) 100,599
		(389,561) (181,172) (363,731) (103,278)

21. SHARE BASED PAYMENTS

On 15 May 2007 12,333,333 options were granted to Euroz Securities Limited to accept ordinary shares at an exercise price of $0.07 at any time up to 31 December 2008 as consideration for the provision of capital raising services to the Company.

The price was calculated using a Black Scholes option pricing model applying the following inputs:-

Weighted average share price over previous 12 months	$0.04
Life of option	1.63 years
Risk free rate of return	6.08%
Expected share volatility	1.28

Historical volatility has been the basis for determining expected share price volatility as this is assumed to be indicative of future patterns.This may not eventuate.The life of the option is the maximum term to the date that they lapse.

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P O C K E T M A I L G R O U P L I M I T E D

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N OT E S TO T H E F I N A N C I A L S TAT E M E N T S

22. RELATED PARTIES

Apart from the details disclosed in this note, no director has entered into a material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year-end.

Directors’ transactions with the Company or its controlled entities

	Consolidated		Parent Entity
	2007	2006	2007	2006
		$	$	$ $
Consulting fees paid to Arthur Phillip Pty Limited,
a company controlled by Mr Richard Poole
for provision of administration and management
services during the year	120,000		120,000
Fees paid to Steinepries Paganin, a firm of which
Mr Roger Steinepries is a partner, for the provision
of legal services during the year	52,815		52,815
Fees paid to Larca Consulting Pty Limited,
a company controlled by Mr John Risinger for the
provision of exploration services during the year	55,320		-

The terms and conditions of the transactions with directors and their director-related entities were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-Director-related entities on an arm’s length basis.

Transactions with related parties in wholly owned group

Interest free loan advanced to Adavale Minerals Pty Ltd - - 280,000

23. COMPANY DETAILS

The registered office of the company is:-

Level 2, 45 St Georges Terrace

PERTH WA 6000

The principal place of business is:-

Level 14, 5-9 Bent Street

SYDNEY NSW 2000

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A N N U A L R E P O R T 2 0 0 7

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D I R E C T O R S ’ D E C L A R AT I O N

The directors of the Company declare that:

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

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

3. (b) give a true and fair view of the financial position as at 30 June 2007 and of the performance for the year ended on that date of the company;

4. the Chief Executive Officer and the Chief Financial Officer have each declared that:

5. (a) the financial records of the Company for the financial year have been properly maintained in accordance with Section 286 of the Corporations Act 2001;

6. (b) The financial statements and notes for the financial year comply with the Accounting Standards, and;

7. (c) The financial statements and notes for the financial year give a true and fair view;

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

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

On behalf of the Directors

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Mr R Poole

Chairman

Dated at Sydney this 31st day of August 2007

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P O C K E T M A I L G R O U P L I M I T E D

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I N D E P E N D E N T A U D I T R E P O R T

TO THE MEMBERS OF POCKETMAILGROUP LIMITED

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P O C K E T M A I L G R O U P L I M I T E D

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A D D I T I O N A L I N F O R M AT I O N

Additional information included in accordance with the Listing Rules of the Australian Securities Exchange Limited.

1. SHAREHOLDER INFORMATION

(a) Distribution of holders at 5 October 2007

Distribution of holders at 5 October 2007
	Fully paid ordinary shares
Number of Holders Distribution is: 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and Over Holding less than a marketable parcel	5,151 3,492 295 150 743 471
	5,151
	1,295

(b) Voting rights

There are no restrictions on voting rights attached to the ordinary shares. On a show of hands every member present in person shall have one vote and upon a poll, every member present or by proxy shall have one vote every share held.

(c) Substantial shareholders

The Company’s register of substantial shareholders shows the following:

Shareholder	Number of shares
Zero Nominees Pty Ltd	30,693,394
Byron Deveson Superannuation Fund Pty Ltd	24,885,000
Larca Pty Ltd	24,885,000
Holloman Minerals Limited	22,500,000

(d) Shareholders

The twenty largest shareholders hold 46.92% of the total issued ordinary shares in the Company as at 5 October 2007.

(e) Unlisted 31 December 2008 Options

There are 40,764,000 options held by 3 holders on issue and are exercisable at 2 cents on or before 31 December 2008. The option holders do not have any voting rights.

(f) Unlisted 31 March 2010 Options

There are 30,000,000 options held by 6 holders on issue and are exercisable at 4 cents on or before 31 March 2010. The option holders do not have any voting rights.

• (g) There are 35,000,000 performance shares on issue.

• (h) There are 69,000,000 shares issued subject to voluntary escrow until 15 May 2008.

• (i) There are 30,000,000 options exercisable at 4 cents each by 31 March 2010 on issue subject to voluntary escrow until 31 March 2008.

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2. QUOTATION

Listed securities in PocketMail Group Limited are quoted on the Australian Securities Exchanges.

3. AUDIT COMMITTEE

As at the date of the Directors’ Report, the Company did not have an audit committee of the board of directors. The Company is not of a size, nor are the affairs of a complexity, sufficient to warrant the existence of a separate audit committee. All matters which could be delegated to such a committee are dealt with by the full Board.

Top Twenty Shareholders at 5 October 2007

Top Twenty Shareholders at 5 October 2007
Name	Number % of Issued of Shares Shares
1. Zero Nominees Pty Ltd 2. Byron Deveson Superannuation Fund Pty ltd 3. Larca Pty Ltd 4. Holloman Minerals Limited 5. Blueknight Corporation Pty Ltd 6. Arthur Phillip Nominees Pty Ltd 7. Citicorp Nominees Pty Limited 8. Macajaba Investments Pty Ltd 9. Icon Holdings Pty Ltd 10. Elita Pty Ltd 11. Mr Jay Evan Dale Hughes 12. Ms Melissa Suriano 13. Mr Philip Mark Struthers & Mrs Jodi Anne Struthers 14. Tejiman Holdings Pty Ltd 15. Nodlaw Investments Pty Ltd 16. Mr Graham Layton Rosen Teal 17. ANZ Nominees Limited 18. Mr Geoffrey Francis Brown 19. Elect Equity Pty Ltd 20. McLean Corporate Promotions Pty Ltd	30,693,394 7.02 24,885,000 5.69 24,885,000 5.69 22,500,000 5.15 16,693,200 3.82 15,401,285 3.52 9,147,179 2.09 8,800,000 2.01 6,854,000 1.57 6,685,874 1.53 6,500,000 1.49 5,000,000 1.14 4,100,000 0.94 3,777,097 0.86 3,500,000 0.80 3,500,000 0.80 3,313,157 0.76 3,000,000 0.69 3,000,000 0.69 2,900,000 0.66
	205,135,186 46.92

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THIS PAGE IS BLANK INTENTIONALLY

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G R O U P L I M I T E D AND ITS CONTROLLED ENTITIES

www.pocketmail.com

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POCKETMAIL GROUP LIMITED

ABN 96 008 719 015

NOTICE OF ANNUAL GENERAL MEETING PROXY FORM

AND

EXPLANATORY MEMORANDUM

Date of Meeting Friday, 30 November 2007

Time of Meeting 11.00am (EST)

Place of Meeting

Offices of Arthur Phillip Level 14, 15-19 Bent Street Sydney, New South Wales

POCKETMAIL GROUP LIMITED ABN 96 008 719 015

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of the Shareholders of PocketMail Group Limited will be held at the office of Arthur Phillip, Level 14, 15-19 Bent Street, Sydney on Friday, 30 November 2007 at 11.00am (EST).

In order to determine voting entitlements, the register of Shareholders will be closed at 11.00am (EST) Wednesday, 27 November 2007.

An Explanatory Memorandum containing information in relation to each of the resolutions to be put to the meeting accompanies this Notice.

AGENDA

To consider and, if thought fit, to pass the following resolutions.

ORDINARY BUSINESS

2007 Accounts

To receive and consider the Directors’ report and income statement for the year ended 30 June 2007, the balance sheet at that date, the Auditors’ report and the Directors’ declaration on the accounts.

Non-binding Ordinary Resolution 1: Directors’ Remuneration Report

To receive and consider the Directors’ Remuneration Report for the year ended 30 June 2007.

That pursuant to and in accordance with section 250R (2) of the Corporations Act the Directors’ Remuneration Report contained within the Directors’ Report be adopted.

Ordinary Resolution 2: Re-election of a Director

That Mr Roger Steinepreis, a director retiring by rotation in accordance with the Company’s Constitution, is reelected a director of the Company.

Information about Mr Steinepreis is set out in the Company’s 2007 Annual Report.

Ordinary Resolution 3: Re-election of a Director

That Mr Phil Suriano, a director retiring by rotation in accordance with the Company’s Constitution, is re-elected a director of the Company.

Information about Mr Suriano is set out in the Company’s 2007 Annual Report.

• 1 -

Ordinary Resolution 4: Ratification of Share Issue

That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, the Company ratifies the allotment and issue of 20,000,000 fully paid ordinary shares in the capital of the Company at an issue price of 5.5 cents each on the terms and conditions contained in the Explanatory Memorandum.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Directors and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form, or it is cast by the person chairing the Meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Special Resolution 5: Ratification of Option Issues

That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, the Company ratifies the allotment and issue of 10,000,000 unlisted options on the terms and conditions contained in the Explanatory Memorandum.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Directors and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form, or it is cast by the person chairing the Meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

The Chairman to close the meeting.

By Order of the Board

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D M McARTHUR

Company Secretary

Dated: 10 October 2007

• 2 -

POCKETMAIL GROUP LIMITED

ABN 96 008 719 015

EXPLANATORY MEMORANDUM

This Explanatory Memorandum is intended to provide shareholders with sufficient information to assess the merits of the Resolutions contained in the accompanying Notice of Annual General Meeting (“ Notice ”) of the Company.

The Directors of the Company (“ Directors ”) recommend shareholders read this Explanatory Memorandum in full before making any decision in relation to the resolutions.

The following information should be noted in respect of the various matters contained in the accompanying Notice:

NON-BINDING ORDINARY RESOLUTION 1 – Directors’ Remuneration Report

Pursuant to Section 250R (2) of the Corporations Act, a resolution adopting the Directors’ Remuneration Report contained within the Directors’ Report must be put to the vote.

Shareholders are advised that pursuant to Section 250R (3) of the Corporations Act, this resolution is advisory only and does not bind the Directors or the Company.

The Director’s Remuneration Report is set out within the Director’s Report. The Report:

• explains the Board’s policy for determining the nature and amount of remuneration of executive and non executive Directors and senior executives of the Company;

• sets out remuneration details for each Director and the 4 most highly remunerated senior executives of the Company;

• details and explains any performance conditions applicable to the remuneration of executive Directors and senior executives of the Company; and

• provides an explanation of share based compensation payments for each Director and senior executives of the Company.

A reasonable opportunity will be provided for discussion of the Directors’ Remuneration Report at the Meeting.

The Board unanimously recommends that shareholders vote in favour of adopting the Directors’ Remuneration Report.

ORDINARY RESOLUTION 2 – Re-election of Roger Steinepreis as a Director of the Company

ASX Listing Rule 14.4 and Rule 12.2 of the Company’s Constitution provide that at every Annual General Meeting of the Company one-third of the Directors (other than alternate Directors and the Managing Director) shall retire from office. The Directors to retire at an Annual General Meeting are those who have been longest in office since their last election. A retiring Director is eligible for re-election.

Accordingly, Roger Steinepreis, being a Director of the Company, retires by way of rotation and, being eligible, offers himself for re-election as a Director of the Company.

ORDINARY RESOLUTION 3 – Re-election of Phil Suriano as a Director of the Company

ASX Listing Rule 14.4 and Rule 12.2 of the Company’s Constitution provide that at every Annual General Meeting of the Company one-third of the Directors (other than alternate Directors and the Managing Director) shall retire from office. The Directors to retire at an Annual General Meeting are those who have been longest in office since their last election. A retiring Director is eligible for re-election.

Accordingly, Phil Suriano, being a Director of the Company, retires by way of rotation and, being eligible, offers himself for re-election as a Director of the Company.

• 3 -

ORDINARY RESOLUTION 4 – Ratification of Previous Issue of 20,000,000 Shares

Listing Rule 7.4

Listing Rule 7.4 permits the ratification of previous issues of securities made without prior shareholder approval, provided the issue did not breach the 15% threshold set by Listing Rule 7.1. The effect of such ratification is to restore a Company’s maximum discretionary power to issue further shares up to 15% of the issued capital of the Company without requiring shareholder approval.

Information for Shareholders

Resolution 4 has been included so that shareholders may approve and ratify pursuant to Listing rule 7.4 the issue of a total of 20,000,000 shares in the capital of the Company to Crosby Active Opportunities Master Fund Limited. The shares were issued pursuant to Section 708 of the Corporations Act.

The Shares were issued at 5.5 cents each. The Shares are fully paid ordinary shares in the Company and rank equally with the existing ordinary fully paid shares in the Company. The funds were raised for working capital purposes.

No shares were issued to directors or their associates.

The Company wishes to ratify the issue in order to allow the company to have the right to place a further 15% of its issued capital at any time in the next twelve months.

The Company will disregard any votes cast on this Resolution 4 by any person who participated in the issue or any associate of that person. However the company will not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

ORDINARY RESOLUTION 5 – Ratification of Previous Issue of 10,000,000 Options

On 8 October 2007 the Company advised that it had appointed Crosby Corporate Finance (Holdings) Limited (“Crosby”) as a corporate advisor to assist in the development of the Company.

As part of the appointment the Company issued 5,000,000 unlisted options exercisable at 6 cents each by 30 November 2011 and 5,000,000 unlisted option exercisable at 6.5 cents by 1 December 2011 to Crosby.

Listing Rule 7.4

Listing Rule 7.4 permits the ratification of previous issues of securities made without prior shareholder approval, provided the issue did not breach the 15% threshold set by Listing Rule 7.1. The effect of such ratification is to restore a Company’s maximum discretionary power to issue further shares up to 15% of the issued capital of the Company without requiring shareholder approval.

Information for Shareholders

Resolution 5 has been included so that shareholders may approve and ratify pursuant to Listing rule 7.4 the issue of a total of 10,000,000 options in the capital of the Company. The options were issued pursuant to Section 708 of the Corporations Act.

The Options were issued for Nil consideration.

No options were issued to directors or their associates.

The Company wishes to ratify the issue in order to allow the company to have the right to place a further 15% of its issued capital at any time in the next twelve months.

• 4 -

The Company will disregard any votes cast on this Resolution 5 by any person who participated in the issue or any associate of that person. However the company will not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

The Options were issued on the following terms and conditions:

• (i) each option entitles the holder, when exercised, to one (1) Share;

• (ii) subject to the Corporations Act, the Constitution and the ASX Listing Rules, the options are fully transferable;

• (iii) the options are exercisable by delivering to the registered office of the Company a notice in writing stating the intention of the option holder to exercise a specified number of options, accompanied by an option certificate, if applicable, and a cheque made payable to the Company for the subscription monies due, subject to the funds being duly cleared funds. The exercise of only a portion of the options held does not affect the holder’s right to exercise the balance of any options remaining;

• (iv) all Shares issued upon exercise of the options will rank pari passu in all respects with the Company’s then issued Shares;

• (v) the options will not be listed on the Official List of ASX;

• (vi) there are no participating rights or entitlements inherent in the options and the holder will not be entitled to participate in new issues of options to Shareholders during the currency of the options. However, the Company will ensure that, for the purpose of determining entitlements to any issue, option holders will be notified of the proposed issue at least seven (7) business days before the record date of any proposed issue. This will give option holders the opportunity to exercise the options prior to the date for determining entitlements to participate in any such issue;

• (vii) in the event of any reconstruction (including consolidation, subdivision, reduction or return of capital) of the issued capital of the Company prior to the expiry date of the options, all rights of the option holder will be varied in accordance with the ASX Listing Rules; and

• (viii) in the event the Company makes a pro rata issue of securities, the exercise price of the options will change in accordance with the formula set out in ASX Listing Rule 6.22.2.

• 5 -

PROXY FORM

APPOINTMENT OF PROXY POCKETMAIL GROUP LIMITED ABN 96 008 719 015

ANNUAL GENERAL MEETING

I/We Address being a Member of PocketMail Group Ltd entitled to attend and vote at the Meeting, hereby Appoint

Name of proxy

or failing the person so named or, if no person is named, the Chairman of the Meeting or the Chairman’s nominee, to vote in accordance with the following directions or, if no directions have been given, as the proxy sees fit at the Annual General Meeting to be held at the office of Arthur Phillip, Level 14, 15-19 Bent Street, Sydney, NSW; on Friday, 30 November 2007 at 11.00am (EST) and at any adjournment thereof.

Voting on Business of the Annual General Meeting FOR AGAINST ABSTAIN Resolution 1 Directors’ Remuneration Report Resolution 2 Re-election of Mr R Steinepreis as a Director Resolution 3 Re-election of Mr P Suriano as a Director Resolution 4 Ratification of Issue of Shares Resolution 5 Ratification of Issue of Options

OR

In relation to the Resolutions, if the Chairman is to be your proxy and you do not wish to direct your proxy how to vote on these Resolutions, please place a mark in this box

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By marking this box, you acknowledge that if you have appointed the Chairman as your proxy the Chairman may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of the interest. The Chairman intends to vote in favour of all of the resolutions.

YOU MUST EITHER MARK THE BOXES DIRECTING YOUR PROXY HOW TO VOTE OR MARK THE BOX INDICATING THAT YOU DO NOT WISH TO DIRECT YOUR PROXY HOW TO VOTE, OTHERWISE THIS APPOINTMENT OF PROXY FORM WILL BE DISREGARDED.

If you mark the abstain box for a particular item, you are directing your proxy not to vote on that item on a show of hands or on a poll and that your shares are not to be counted in computing the required majority on a poll.

If two proxies are being appointed, the proportion of voting rights this proxy represents is

%

Signed this day of 2007

By:

Individuals andjoint holders Signature Signature Signature	Companies(affix common seal if appropriate)
Signature	Director
Signature	Director/CompanySecretary
Signature	Sole Director and Sole CompanySecretary

Instructions for Completing ‘Appointment of Proxy’ Form

1. A member entitled to attend and vote at the Meeting is entitled to appoint not more than two proxies.

2. If a member appoints two proxies, each proxy must be appointed to represent a specified portion or number of the member’s voting rights and neither proxy may vote on a show of hands.

3. If a member appoints two proxies, and the appointment does not specify the proportion or number of the member’s votes each proxy may exercise, each proxy may exercise half of the votes.

4. A proxy need not be a member of the Company.

5. If a corporate representative is to attend the meeting on behalf of a corporation, a formal notice of appointment must be brought to the meeting.

6. The Proxy Form must be signed by the shareholder or the shareholder’s attorney. If the shareholder is a corporation, the Proxy Form should be signed under its common seal, or by two directors (or a director and a company secretary), or if a corporation with a sole director and sole secretary by that director, with the office held printed under each signature. Alternatively, a corporation can sign by its attorney or duty authorised officer.

7. The Proxy Form and any power of attorney or authority under which it is signed must be received at the registered office of the Company not less than 48 hours prior to the appointed time of Meeting. Proxy Forms can be lodged:

in person at: PocketMail Group Limited C/- Arthur Phillip Level 14, 15-19 Bent Street SYDNEY NSW 2000

by post to: PocketMail Group Limited C/- Arthur Phillip PO Box H101 AUSTRALIA SQUARE NSW 1215

by facsimile on: (61 2) 8257 6501

1. In accordance with Regulation 7.11.37 of the Corporations Regulations 2001, the Directors have set a snapshot date to determine the identity of those entitled to attend and vote at the Meeting. The snapshot date is 11.00am (EST) on Wednesday, 28 November 2007.