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group of companies

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Chairman’s Report ....................................................................................................................... 2 Chief Executive Officer’s Report ................................................................................................... 3 Directors’ Report ......................................................................................................................... 5 Auditors Independence Declaration ........................................................................................... 21 Income Statements ................................................................................................................... 22 Balance Sheets ......................................................................................................................... 23 Statements of Changes in Equity ............................................................................................... 24 Cash Flow Statements .............................................................................................................. 25 Notes to the Financial Statements ............................................................................................. 26 Directors’ Declaration ................................................................................................................ 65 Independent Audit Report to the Members ................................................................................ 66 Corporate Governance Information ............................................................................................ 68 Shareholder Information ............................................................................................................. 69

Chairman’s Report

Dear Ansearch Shareholders,

The year just passed has been full of opportunities and challenges for the Company. A significant amount of repair work was required after the period of instability at the end of 2007, however this is now well behind us and we are clearly focused on what lies ahead for Ansearch.

The matters that were addressed at the end of 2007 presented us with an opportunity to appoint an entirely new board of directors, all of who have significant and relevant industry experience, and all of whom play an active role in governing and operating the Company.

We appointed a highly capable CEO early in 2008, Mr David Burden, who brings the requisite leadership and management capability to execute on the Company’s plans. In addition we have appointed a new senior management team with business building capability.

The business has been restructured and simplified into three core divisions, each with clear operational boundaries. We have reduced the number of brands in the market allowing us to invest more fully in the three brands that remain, removing some legacy brands that were impacting adversely on our reputation.

Our reputation in the market was certainly buoyed by the news that Ansearch had won 1st place in the Victorian section and 2nd place overall in the Deloitte Technology Fast 50 Australia for rapidly growing companies. Even more pleasing is that we were able to follow this up with being awarded 8th place overall in Deloitte’s Fast 500 Asia region.

The year just passed was not without its challenges. The board instability in late 2007, the Opes Prime crisis, changes in the market environment forcing the severing of low quality revenue streams and unprofitable customers (now stabilised), some historical legal matters and dealing with a number of legacy commercial issues all required management’s attention. I am pleased to report that each of these matters has been appropriately dealt with and the focus of the entire business has returned to revenue growth and building value into the Company.

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the commitment of the team at Ansearch and their desire to see the business grow. The team continues to identify

emerging global opportunities in the online and mobile advertising space, and new ways to help small and medium business do ‘better business online’

The investment made in growing our revenue means we remained in a loss making position during the year. The board has elected to adopt a conservative stance and conduct a number of non-cash adjustments and impairment of intangibles, which together more than doubled the underlying operating loss.

We have cemented our business partnerships with Google and Yahoo, created a number of impressive new business partnerships, and closed a range of business deals with highly regarded market participants.

In a tightening market we have taken swift action to reduce our costs of doing business, and re-focused our investment into infrastructure needed to transform the business from an entrepreneurial start-up to a solid and robust business capable of scaling rapidly.

I am delighted to be a part of a company with such exciting prospects, and to have the opportunity to participate in building and transforming the organisation into one that all stakeholders can be proud of.

Yours faithfully,

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Andrew Barlow Chairman Ansearch Limited

30 September 2008

Despite these trials, the Company has increased its revenue almost 50% over the previous year, and we continue to make progress towards returning the company to sustainable profitability – a testament to

CHAIRMAN’S REPORT

CEO’s Report

Since stepping into the business in February of this year I have conducted a full review of the operations of the company, and I am delighted with the underlying core assets of the business. Webfirm with its customer base of SME’s, the Ansearch and Anzwers search engines, our agreements with Yahoo and Google, our growing portfolio of online publishers we represent and our team of dedicated professionals who work in the business are solid assets to build upon.

During the year under review, and in particular in the past six months since the formation of the new team, we have achieved a great deal. We have bedded down the acquisition of Webfirm made late last financial year and put in place a new strategy for its expansion. We have completed a number of vital technology infrastructure projects to improve reliability and productivity. We have consolidated and centralised the back office support functions of the business and driven a renewed focus on corporate compliance.

Furthermore we have structured the organisation into three core business divisions:

Webfirm – with a focus on assisting SME’s grow their business online, through the provision of Web design, production and hosting, as well as search engine optimisation and search engine marketing, mobile sites and advertising;
Ansearch Media – whose role is to represent the advertising inventory of local and international website publishers and to promote this to Australian advertisers; and
Searchworld – which includes our owned and operated sites including the new look Ansearch and Anzwers search engines, our search syndication products, and our new search advertising network.

In terms of new business development, we have expanded the Webfirm business to the eastern states, opening an innovative new retail store in Melbourne, with plans to roll out additional offices in both Perth and on the east coast in the coming year. We have established a number of significant new business partnerships, and have signed attractive deals with both Navteq and blinkx. Further we have signed deals to represent some large international website publishers advertising inventory, such as Intergi.com; the GoFish network; Break.com; Bullz-Eye.com and Savvy.com. Ansearch Media now represents websites with some 100 million page impressions per month.

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According to the June 2008 IAB report, online advertising expenditure in Australia for the 12 months ended 30 June 2008 totalled $1,523.5 million. This is the first time the market has

exceeded $1.5 billion in a 12-month period. This is an increase of $324 million (or 27.0%) from the 12 months ended 30 June 2007. Of this growth our two key areas of activity in Ansearch Media and Searchworld saw the display advertising sector grow 23% and Search & Directories Advertising sector grew 34% based on expenditure for the 2008 Financial Year[1] .

Online advertising expenditure in Australia is forecast to continue growing by 27% next year, Mobile internet use has doubled in the past 12 months[2] , providing excellent opportunities for Ansearch. Our highly pro-active Board is continuing to support the executive team in the identification of future strategic initiatives that will drive strong domestic and international growth.

Our 2008 group revenues of $12.3 million are up from $8.4 million last year – a very pleasing result – and the Company has a further $1.0 million in sales made and awaiting booking as revenue as services are delivered.

Our reportable result for the year was a loss of $6.7 million, however this result was impacted by a number of non-cash adjustments and write downs. Our normalised operating result, after adjusting for the non-cash effects of the $1.0 million unearned revenue adjustment and $0.2 million share based expense was a loss of $2.8 million.

The result was affected by:

the investment in new infrastructure to support the maturation of the business;
reclassifying some booked revenue to unearned revenue on the balance sheet;
The impairment of the carrying value of some intangible assets and goodwill;
atypical expenses such as departing CEO and Chairman in 2007;
thorough review and clean out of the accounts providing an orderly set to take into FY 2009; and
fixing a number of legacy issues.

Pleasingly our results for the second half have demonstrated a steady improvement. Our losses have been decreasing steadily during 2008, and we are driving toward becoming profitable during this financial year.

1 Source: IAB Report June 2008 2 Source: www.admob.com/metrics

CEO’s REPORT

CEO’s Report cont...

Our cost reduction program has resulted in shedding 20% of the non-essential positions across the group, and the termination of projects not seen as core to our strategy or not able to demonstrate sufficient returns. We are continually driving greater operational efficiency and productivity across all areas of the business.

We have a dedicated team of employees who desire success for the business and we have realigned our compensation schemes to ensure every person working in the business is incentivised to build value for the shareholders.

The unique and diverse skills within Ansearch will support our aim of helping our SME customers to build, promote and profit from their online activities – to do ‘better business online’. Furthermore, Ansearch is well positioned to play a major role in the growing online media space both regionally and globally. 2009 will be a year where Ansearch builds out from its core strengths: via organic growth in each of its three core operating divisions, and via identifying and capitalizing on new opportunities presenting themselves to the company. With this we expect to restore investor confidence, and drive greater value into the business.

Yours faithfully,

David Burden CEO Ansearch Limited

30 September 2008

Our 2008 group revenues of $12.3 million are up from $8.4 million last year – a very pleasing result

CEO’s REPORT

Directors’ Report

Your Directors present their report, together with the financial report of Ansearch Limited ACN 001 287 510 (‘the Company’) and its controlled entities for the financial year ended 30 June 2008 and the auditor’s report thereon.

Directors

The Directors in office during financial year and until the date of this report were:

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Appointed Resigned
Mr Andrew Barlow (Chairman from 7 Dec 2007) 22-Oct-07
Mr David Burden (CEO from 6 Feb 2008) 08-Apr-08
Mr Adrian Giles 19-Dec-07
Mr Adrian Vanzyl 28-Apr-08
Mr Charles Ellison 22-Dec-04 28-Apr-08
Mr Dean Jones 22-Oct-07 11-Apr-08
Mr Peter Jermyn (Chairman 22 Oct 2007 to 7 Dec 2007) 26-Aug-02 07-Dec-07
Mr Glenn Ridge (Chairman 18 May 2007 to 22 Oct 2007) 16-Mar-05 22-Oct-07
Mr Terry Grigg 01-Apr-05 22-Oct-07
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Information on Directors

Mr Andrew Barlow (Age 35)

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Chairman

Mr Barlow is an experienced entrepreneur who acts as an investor and mentor to early-stage technology companies with unique IP, highly scalable business models and strong executive teams. Mr Barlow is well-known as a Founder of Hitwise (www.hitwise.com), a US-based company that provides real-time competitive intelligence on website performance to Fortune 500 companies around the world. Hitwise was ranked one of the Top 10 fastest growing companies by Deloittes for 5 years running, before being sold to Experian Group (LSX.EXPN) in May 2007 for US$240m. Mr Barlow is also the Founder of Max Super (www.maxsuper.com), a low-cost, commission-free, retail superannuation fund distributed directly to Australians via the web. Max Super was sold to Orchard Funds Management in May 2007. Mr Barlow is also a Founder of Adslot, a revenue optimisation platform for online media publishers, and is an investor in a number of other technology ventures, including NitroPDF

(the second biggest distributor of PDF editing software in the world), Qmecom (which personalises video advertising on the fly) and QMCodes (makes print media interactive via mobile devices). Mr Barlow has significant expertise in online media and business building with a strong understanding of the UK and North America markets.

Directorships held in other listed entities: no directorships currently or formerly held in listed companies.

Interests in shares and options: 21,403,981 ordinary share and 20,000,000 unlisted options.

DIRECTORS REPORT

Mr David Burden (Age 46)

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Managing Director and Chief Executive Officer

Mr David Burden is an entrepreneur and one of the true pioneers of interactive marketing and services within Australia. David founded Australia’s largest and best-recognised interactive and mobile services company Legion Interactive in 1994.

As CEO from 1994 to 2006, David spearheaded the evolution and growth of the product, the growth of the sales and marketing and Research & IT Development teams, and guided the business through its MBO from the French Lagardere Group in 2001, the acquisition of BlueSkyFrog (Australia’s first mobile ringtone company) and MediaZoo and the subsequent push of the business into the mobile space commencing in 1998. During his time at Legion, David was a worthy Industry Activist with

leading roles on the Premium Rate Advisory Council (PRAC), the Telephone Information Services Standards (TISSC) and the Vice Chairman of Australian Direct Marketing Association (ADMA). David was also founding Chairman of ADMA’s Mobile Marketing Council which was primarily responsible for the introduction of regulation and consumer protection for mobile services.

Directorships held in other listed entities: no directorships currently or formerly held in listed companies.

Interests in shares and options: 20,642,825 ordinary shares.

Mr Adrian Giles (Age 34)

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Director

Adrian Giles is an entrepreneur, venture consultant and investor specialising in the Internet and information technology industry. Adrian founded Australia’s first SEO (Search Engine Optimisation) company in 1997, and in the same year founded Hitwise. As Managing Director from 1997 to 2000, Adrian spearheaded the evolution and growth of the product, the growth of the sales and marketing and Research & Development teams, and guided the business through numerous capital raisings to help fund its international growth. Prior to forming Hitwise, Adrian led numerous Internet divisions for corporate groups, including the Beam Group of Companies, Australia’s largest software and multimedia developers, where he was responsible for

developing and marketing a range of technical products and solutions around the world. Adrian studied a Bachelor of Computing Degree at Monash University as well as an Associate Diploma of Business. Adrian was also a finalist in the 2003 ‘Entrepreneur of the Year’ awards.

Directorships held in other listed entities: no directorships currently or formerly held in listed companies.

Interests in shares and options: 15,418,981 ordinary shares and 10,000,000 unlisted options.

DIRECTORS REPORT

Dr Adrian Vanzyl (Age 40)

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Director

Dr. Vanzyl has spent his career in Silicon Valley and Australia, working as a technology executive with software, advertising driven search, ad network and security focused Internet companies. His experience includes working as a Principal at the technology/investment bank Gramercy Ventures (where he focused on cross border technology deals particularly between the US and Asia), as VP of Business Development for Eurekster (the leading provider of vertical, community and social network based search). Prior to this he was CTO and Entrepreneur in Residence at Blumberg Capital in San Francisco. Whilst at Blumberg he ran two of their portfolio companies, and as the CEO of Seclarity, a security hardware and software firm, successfully raised funding from Intel Capital, Valley Ventures and Blumberg Capital. Adrian was Group Business Development Manager for Microsoft’s bCentral small business portal, where his group managed business both in the US and internationally (where he helped launch in 22 countries in two years). He joined

Microsoft as a result of his role as VP International at LinkExchange (the largest global ad network at the time). Adrian worked for two years as CTO of LookSmart, where he was responsible for managing the core search engine technology as well as building the company’s US-based team of engineers. Before moving to the US, he worked as CTO at Sausage Software (creators of the HotDog web publishing tool), Australia’s first listed Internet software company. He was a member of the three person board of directors that successfully took the company public on the Australian Stock Exchange. Adrian has an MD degree (MB BS degrees with Honors) from Monash University Australia,

Directorships held in other listed entities: no directorships currently or formerly held in listed companies.

Interests in shares and options: 4,166,666 ordinary shares and 10,000,000 unlisted options.

Damian Element

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Company Secretary and Chief Financial Officer

Damian Element was appointed Company Secretary and Chief Financial Officer of Ansearch Limited on 1 November 2007. He was formerly Chief Financial Officer and Company Secretary of Myinternet Limited and prior to that held a range of technical and commercial senior management positions in the ICT industry. He has also undertaken a number of consulting and contracting assignments for various commercial and not for profit organisations. Damian is a member of CPA Australia, a member of the Australian Institute of Company Directors and a Chartered Secretaries Australia affiliate.

Interests in shares and options: 2,364,252 ordinary shares and 6,000,000 unlisted options.

DIRECTORS REPORT

Operating Results

The consolidated operating loss after income tax attributable to the members of Ansearch Limited is $6,720,666 (2007: Loss $1,333,349).

Dividends

The Directors do not recommend the declaration of a dividend. No dividend has been declared or paid during the year.

Review of Operations

Ansearch Media (formerly Soush and adsAlliance):

Ansearch Media represents popular websites’ advertising inventory. This is facilitated through signing up the advertising rights of high visitation websites and representing this advertising inventory on those sites to the Australian online advertising industry. Operationally over the past 12 months our strategy has expanded to firstly focus on high Australian visitation international websites and secondly on solid Australian Websites. This has succeeded in the acquisition of sites such as blinkx, the Biggest Loser and many other individual sites and performance based ad networks. Mr Steve Jones was appointed to run the Media team in April 2008 and since his appointment Mr Jones has been busy rebuilding the team and re-educating the market as to Ansearch Media’s current offering. The ad operations part of the business has also been upgraded with a change to the DoubleClick platform for adserving.

Webfirm

Webfirm was acquired by Ansearch in June 2007. As Perth’s largest builder of SME websites it has a solid reputation in the marketplace. As the business had been in a sale process for some time, it was quickly noted by the new Executive team that several key changes were required to be made to the business. These included the appointment of Mr. Andrew Beecher as the executive officer, the revamping of the sales operation to improve results and lower costs, the upgrading of internal technology to improve efficiency and the replacement of the hosting environment to upgrade our hosting reliability and service levels. In addition we have expanded the business to Melbourne with the opening of a storefront on busy St.Kilda road. A number of projects have been mapped out for FY 2008 to increase sales, productivity and geographical distribution.

Searchworld (formally Searchtown)

Searchworld retains its relationships with Google and Yahoo and has continued to expand relationships over the course of the year to include Looksmart, blinkx and ASK. Financially the year started well for Searchworld, but the Internet traffic attracted through the syndication of search feeds was of relatively low quality and unfortunately the business was unviable to continue. A review of the operations by the new Executive team cut a number of projects in development and associated resources and set about planning a new business, later launched as the Searchworld Network. In addition the business rejuvenated the Ansearch Search engine (www.ansearch.com.au) incorporating feeds from blinkx and ASK.

Principal Activities

The principal activities of the consolidated entity during the year comprised:

Online display advertising sales and publisher representation
Syndication of paid and organic contextual search
Website design, development and promotion
Search engine marketing and optimisation
Operating owned and operated search engines

There have been no significant changes in the nature of these activities during the year except as detailed below.

Significant changes in the state of affairs

The following significant changes in the state of affairs of Ansearch Limited occurred during the financial year:

Share Issue

The Company completed the raising of approximately $7,600,000 through a one for four entitlements offer in fully paid ordinary shares in Ansearch Limited at an issue price of $0.06 per share paid in three equal tranches. As at 30 June 2007 all conditions precedent to the entitlements issue had been met, and as of the date of this report the entitlements issue has been completed. These shares were issued to assist in the funding of acquisitions and working capital as detailed in the Prospectus.

Board Composition

In October 2007 the Company announced a number of changes to the Board of Directors, with Mr Glenn Ridge and Mr Terry Grigg resigning from the Board and Mr Andrew Barlow and Mr Dean Jones

DIRECTORS REPORT

being appointed. Subsequently, Mr David Burden, Mr Adrian Giles and Mr Adrian Vanzyl have been appointed to the Board, with Mr Charles Ellison and Mr Dean Jones stepping down following these appointments.

Acquisitions

In October 2007 the Company finalised all payments pursuant to the acquisition of Webfirm for $3.5 million in cash plus 18,722,854 fully paid Ansearch shares. There were no other acquisitions or mergers during the year.

Organisational Restructure

During the second half of the year the incoming CEO announced a restructure of the business, with three core divisions in addition to head office being formed: Searchworld; Webfirm; and Ansearch Media. A cost reduction program was initiated across all business divisions, with staff numbers reducing from approximately 85 down to 65.

Business Partnership Agreements

The Ansearch Media division acquired exclusive Australian advertising representational rights to the advanced video search engine blinkx.

Ansearch Media division entered into an exclusive arrangement with Navteq allowing Ansearch to represent the Navteq Direct Access solution for location based advertising in Australia and New Zealand.

The Webfirm division entered into a partnership agreement with INeedHits and commenced sales of its new search engine marketing products in May 2008.

Matters Subsequent to 30th June 2008

On 29 July 2008 the Company announced a capital raising program consisting of the issue of fully paid ordinary shares in the company at an issue price of $0.012 in three tranches as follows:

i) the issue of 72,000,000 fully paid ordinary shares to sophisticated investors and specialist institutions;
ii) the issue of approximately 34,333,334 fully paid ordinary shares to directors and senior management subject to shareholder approval; and
iii) an offer to all shareholders under a share purchase plan to be conducted in September 2008.

On 15 August 2008 the company called an extraordinary general meeting in order that shareholders be given an opportunity to approve the issue of shares and options to directors, and to ratify the various elements of the capital raising program (referred to in the paragraph above). The meeting was held 16 September 2008 and all resolutions put to the meeting were passed.

On 27 August 2008, pursuant to the board approved 2009 staff remuneration plan, shares and options were granted to executive and non-executive employees for services performed or to be performed (an employee share option plan was approved by an extraordinary general meeting of the shareholders on 16 June 2006), as follows.

i) 4,142,824 ordinary shares (in aggregate) were issued to the majority of employees of the Group for nil consideration;
ii) 30,100,000 options (in aggregate) were allotted to executives and managers of the Group for nil consideration. These options vest in three tranches and have vesting conditions attached.

On 4 September 2008 the Company announced the launch of its new global search advertising solution – the Searchworld AdCentre, and on 11 September the Company announced its intention to expand the business development activities of its Searchworld AdCentre platform into the United States

On 8 September 2008 four 100% owned Ansearch Limited subsidiary companies effected a change of name. Refer to note 19.

Apart from the above, no matter or circumstance has arisen since the end of the financial year that has significantly affected or may significantly affect the operations of Ansearch Limited, the results of those operations or the state of affairs of the business, in future financial years.

Likely future developments and expected results

In the opinion of the Directors, disclosure of information regarding future developments in the operations of Ansearch Limited in forthcoming financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Company. Accordingly, beyond information contained elsewhere in this report, no further information has been disclosed.

DIRECTORS REPORT

Environmental Regulations

The economic entity’s operations are not subject to any significant environmental regulations under the Commonwealth, State or any other country in which the entity operates.

A. Principles used to determine the nature and amount of remuneration

Directors’ and Executives’ Remuneration

The Board of Directors is responsible for determining and reviewing compensation arrangements for the Directors and the Executive Team.

Directors’ Meetings

The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June 2008 and the number of meetings attended by each Director.

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No of
No of
Meetings
Director Meetings
eligible
Attended
to attend
Mr Andrew Barlow 11 11
Mr David Burden 4 4
Mr Adrian Giles 9 9
Mr Adrian Vanzyl 3 3
Mr Charles Ellison 10 8
Mr Dean Jones 8 8
Mr Peter Jermyn 7 6
Mr Glenn Ridge 5 5
Mr Terry Grigg 5 5
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The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and Executive Team. There is no direct link between the directors’ and executives’ remuneration and the performance of the Company.

The Board determined that the Directors should receive payment of directors fees for the 2008 financial year and thereafter as approved by the members at the 2006 Annual General Meeting. The directors’ fees for 2007 were not paid until the 2008 financial year.

Benefits

Directors received no benefits based on performance conditions. Two key management personnel were eligible for and received benefits based on performance conditions.

All matters previously delegated to the Audit Committee have been attended to by the full board in consultation with the Company’s auditors.

REMUNERATION REPORT (Audited)

The remuneration report is set out under the following headings:

A. Principles used to determine the nature
and amount of remuneration
B. Details of remuneration
C. Service agreements D. Share-based compensation

The information provided under headings A-D includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures. These disclosures have been transferred from the financial report and have been audited.

DIRECTORS REPORT

B. Details of remuneration

Details of the remuneration of the directors and the key management personnel (as defined by AASB 124 Related Party Disclosures) of Ansearch Limited and its controlled entities are set out in the following tables.

The key management personnel of Ansearch Ltd and its controlled entities include the following directors and executive officers:

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Directors
Mr Andrew Barlow Non-Executive Director Appointed 22 October 2007
Chairman From 7 December 2007
Mr David Burden Chief Executive Officer Appointed 6 February 2008
Managing Director From 8 April 2008
Mr Adrian Giles Non-Executive Director Appointed 19 December 2007
Mr Adrian Vanzyl Non-Executive Director Appointed 28 April 2008
Mr Charles Ellison Non-Executive Director Resigned 28 April 2008
Mr Dean Jones Non-Executive Director Appointed 22 October 2007
Resigned 11 April 2008
Mr Peter Jermyn Non-Executive Director 1 July 2007 to 22 October 2007
Chairman 22 October 2007 to 7 December 2007
Resigned 7 December 2007
Mr Glenn Ridge Non-Executive Director Resigned 22 October 2007
Chairman 1 July 2007 to 22 October 2007
Mr Terry Grigg Non-Executive Director Resigned 22 October 2007
Executive Officers
Mr Robert Edge Chief Executive Officer (Resigned 1 November 2007)
Ms Jan Macpherson Company Secretary (Resigned 22 October 2007)
Mr Damian Element Company Secretary / CFO (Appointed 1 November 2007)
Mr Andrew Beecher Executive Officer – Webfirm Pty Ltd (Appointed 21 September 2007)
Mr Josh Edis Global Head of “Search” –
Searchworld Pty Ltd
Mr Steve Jones General Manager – Ansearch (Appointed 7 April 2008)
Media Pty Ltd
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DIRECTORS REPORT

B. Details of remuneration (cont)

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Consolidated Short-term benefits Long-term Post- Share-based
Entity 2008 benefits employment payment
benefits
Name Salary Bonus Non- Termination Super- Shares Options Total
& fees monetary benefits annuation & rights
benefits
$ $ $ $ $ $
Executive director
Mr D Burden (iii) 151,096 5,058 40,500 196,654
Non-executive directors
Mr A Barlow 34,589 59,000 93,589
(from 22/10/07)
Mr P Jermyn (to 7/12/07) 100,000 100,000
Mr G Ridge (to 22/10/07) 53,271 53,271
Mr C Ellison 35,000 35,000
Mr T Grigg 10,859 10,859
Mr D Jones (iv) 105,281 24,473 59,000 188,754
Mr A Giles 26,644 26,644
Mr A Vanzyl 8,750 8,750
Other key management
personnel
Mr R Edge (i) 114,474 100,000 4,046 2,950 221,470
Ms J Macpherson (ii) 43,412 16,667 60,079
Mr D Element 217,500 217,500
(from 1/11/07)
Mr A Beecher 195,500 10,000 7,600 9,554 222,654
(from 21/09/07) (v)
Mr J Edis (v) 200,000 10,000 12,139 70,000 292,139
Mr S Jones (from 7/4/08) 29,605 2,327 31,932
Totals 1,325,981 44,473 33,124 178,117 1,759,295
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(i) Resigned 1 November 2007.

(ii) Paid to Flexpertise who engages Blairgowrie Pty Ltd, Ms Macpherson’s employer to provide General Counsel

and Company Secretary services. Resigned 22 October 2007.

(iii) Chief Executive Officer from 6 February 2008 and Managing Director from 8 April 2008.

DIRECTORS REPORT

B. Details of remuneration (cont)

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Consolidated Short-term benefits Post-employment Share-
Entity 2007 benefits based
payment
Name Salary Bonus Non- Other Super- Other Options Total
& fees monetary annuation long-term & rights
benefits employee
benefit
$ $ $ $ $ $
Non-executive director
Mr P Jermyn 250,000 250,000
Mr G Ridge 30,000 30,000
Mr C Ellison 30,000 30,000
Mr T Grigg 30,000 30,000
Other key management
personnel
Mr D Jones 258,334 12,139 281,833 552,306
Mr J Edis 187,843 11,605 139,484 338,932
Mr E Balafas 139,083 10,163 4,228 153,474
Mr D London 120,000 10,346 22,005 152,351
Ms J Macpherson (i) 114,965 27,506 142,471
Mr T Ward 111,513 8,663 3,383 123,559
Mr A Wolf 101,136 8,195 109,331
Mr R Edge 75,641 3,035 78,676
Mr K Morris 48,814 4,281 11,003 64,098
Totals 1,497,329 44,473 68,427 489,442 2,055,198
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(i) Paid to Flexpertise who engages Blairgowrie Pty Ltd, Ms Macpherson’s employer to provide General Counsel and Company Secretary services.

C. Service agreements

The remuneration and other terms of agreement for the directors and other key management personnel appointed since 1 November 2007 are formalised in service agreements. The remuneration and other terms of agreement for the directors and some key management personnel appointed prior to 1 November 2007 were not formalised in service agreements as there was previously no legal expertise on staff. The service agreement summarises the Board policies and terms, including compensation, relevant to the office of director or key management personnel. The major provisions of the agreements entered into subsequent to 1 November 2007 are set out below.

Andrew Barlow, Chairman and Non-Executive Director

Term of agreement – effective 22 October 2007. Base salary, inclusive of superannuation, of $75,000 per annum, to be reviewed annually by the Board of Directors.
No termination benefits payable on termination by the Company.

DIRECTORS REPORT

C. Service agreements

David Burden, Managing Director and Chief Executive Officer

Term of agreement – on-going commencing 6 February 2008.
Base salary, inclusive of superannuation, of $380,000 per annum, to be reviewed annually by the Board of Directors.
No termination benefits payable on termination by the Company.

Mr Adrian Giles, Non-Executive Director

Term of agreement – effective 19 December 2007. To hold office until the conclusion of the next AGM at which point he will become eligible for election as a director.
Base salary, inclusive of superannuation, of $50,000 per annum, to be reviewed annually by the Board of Directors
No termination benefits payable on termination by the Company.

Mr Adrian Vanzyl, Non-Executive Director

Term of agreement – effective 28 April 2008. To hold office until the conclusion of the next AGM at which point he will become eligible for election as a director.
Base salary, inclusive of superannuation, of $50,000 per annum, to be reviewed annually by the Board of Directors.
No termination benefits payable on termination by the Company.

Damian Element, Company Secretary and Chief Financial Officer

Term of agreement – on-going commencing 1 November 2007.
Professional fees of $1,250 plus GST per day, calculated daily.
No termination benefits payable on termination by the Company.

Steve Jones, General Manager, Ansearch Media Pty Ltd

Term of agreement – on-going commencing 4 April 2008.
Base salary, inclusive of superannuation, of $150,000 per annum, to be reviewed annually by the Board of Directors.
No termination benefits payable on termination by the Company.

Mr Andrew Beecher

Term of agreement – ongoing.
Base salary, inclusive of superannuation, of $220,000 per annum, to be reviewed annually by the Board of Directors.
No termination benefits payable on termination by the Company.

Mr Josh Edis

Term of agreement – ongoing.
Base salary, inclusive of superannuation, of $215,000 per annum, to be reviewed annually by the Board of Directors.
No termination benefits payable on termination by the Company.

DIRECTORS REPORT

D. Share-based compensation

The following options were granted to executive employees during the year, for services performed:

Options - 2008

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Issue Date Number of Expiry Date Exercise Value of Fair Value Date
Options Price options at Per Option vested and
$ grant date $ exercisable
17-Oct-2007 833,333 30-Jun-2010 0.15 16,667 0.0200 30-Jun-2008
03-Mar-2008 20,500,000 10-Apr-2011 0.10 147,500 0.0072 Immediately
02-Apr-2008 5,000,000 30-Jun-2009 0.10 8,500 0.0017 Immediately
02-Apr-2008 5,000,000 30-Jun-2009 0.15 4,500 0.0009 30-Jun-2008
02-Apr-2008 5,000,000 31-Dec-2009 0.20 6,500 0.0013 31-Dec-2008
02-Apr-2008 5,000,000 30-Jun-2010 0.25 9,000 0.0018 30-Jun-2009
02-Apr-2008 5,000,000 31-Dec-2010 0.30 12,000 0.0024 31-Dec-2009
204,667
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These options were subject to the performance condition that they would vest immediately if the volume weighted average price of Ansearch Limited shares trade at more than the exercise price of the option for 30 consecutive days; or the Company is sold at an implicit valuation of $150 million or more; or the CEO of the Company is made redundant.

Options - 2007

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Issue Date Number of Expiry Date Exercise Value of Fair Value Date
Options Price options at Per Option vested and
$ grant date $ exercisable
13-Oct-2006 6,666,666 30-Jun-2008 0.10 178,630 0.0.027 Immediately
13-Oct-2006 4,166,667 30-Jun-2008 0.15 92,118 0.022 Immediately
13-Oct-2006 4,166,667 30-Jun-2008 0.20 78,071 0.019 Immediately
30-Jun-2007 2,500,000 30-Jun-2009 0.15 72,498 0.029 30-Jun-2007
30-Jun-2007 1,833,332 30-Jun-2009 0.10 60,514 0.033 30-Jun-2007
30-Jun-2007 299,999 30-Jun-2009 0.10 7,611 0.025 30-Jun-2007
489,442
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The options in both years were granted in accordance with an employee share option plan which was approved by an extraordinary general meeting of the shareholders on 16 June 2006. When exercisable, each option is convertible into one ordinary share of Ansearch Limited.

The exercise price of the options is based on a pre-set exercise price.

Options granted carry no dividend or voting rights.

There is no Board policy in place to limit the executive employees’ exposure to risk in relation to securities issued as remuneration.

DIRECTORS REPORT

D. Share-based compensation (continued)

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Number of options granted Number of options vested
during the year during the year
Name 2008 2007 2008 2007
Directors of Ansearch Limited
Mr A Barlow 10,000,000 - 10,000,000 -
Chairman 7-Dec-07
to 30-Jun-08
- - - -
Mr P Jermyn
Chairman 22-Oct-07
to 07-Dec-07
- - - -
Mr G Ridge
Chairman 18-May-07
to 22-Oct-07
Mr David Burden 25,000,000 - 10,000,000 -
CEO & MD 6-Feb-08
to 30-Jun-08
Mr Adrian Giles - - - -
- - - -
Mr Adrian Vanzyl
Mr D Jones 10,000,000 12,500,000 10,000,000 12,500,000
Mr C Ellison - - - -
- - - -
Mr T Grigg
Other Key Management
Personnel
- -
Mr R Edge 500,000 500,000
Ms J Macpherson 833,333 833,333 833,333 833,333
Mr D Element - - - -
Mr J Edis - 5,000,000 - 5,000,000
Mr A Beecher - - - -
Mr S Jones - - - -
Mr D London - 666,666 - 666,666
Mr K Morris - 333,333 - 333,333
Mr E Balafas - 166,666 - 166,666
Mr T Ward - 133,333 - 133,333
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The assessed fair value at issue date of the options granted to the executive is allocated equally over the period from issue date to vesting date, and the amount is included in the remuneration tables above. Fair values at issue date are independently determined using the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at issue date and the expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

DIRECTORS REPORT

The model inputs for options granted during the year ended 30 June 2008 included:

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Model Input Class #1 Class #2 Class #3 Class #4 Class #5 Class #6 Class #7
Grant Date 17/10/07 31/03/08 02/04/08 02/04/08 02/04/08 02/04/08 02/04/08
Exercise Date 30/06/08 03/03/08 02/04/08 30/06/08 31/12/08 30/06/09 31/12/09
Expiry Date 30/06/10 10/04/11 30/06/09 30/06/09 31/12/09 30/06/10 31/12/10
Exercise Price $0.15 $0.10 $0.10 $0.15 $0.20 $0.25 $0.30
Exercise Factor 2.5 2.5 2.5 2.5 2.5 2.5 2.5
Price at $0.064 $0.019 $0.015 $0.015 $0.015 $0.015 $0.015
Grant Date
Expected 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Volatility
Expected 0% 0% 0% 0% 0% 0% 0%
Dividend Yield
Risk Free 6.56% 6.26% 6.26% 6.26% 6.26% 6.26% 6.26%
Interest Rate
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The model inputs for options granted during the year ended 30 June 2007 included:

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Model Input Class #1 Class #2 Class #3 Class #4 Class #5 Class #6 Class #7
Grant Date 13/10/06 13/10/06 13/10/06 13/10/06 13/10/06 13/10/06 13/10/06
Exercise Date 13/10/06 13/10/06 30/06/07 30/06/07 30/06/07 30/06/07 30/06/07
Expiry Date 30/06/08 30/06/08 30/06/09 30/06/08 30/06/09 30/06/09 06/09/09
Exercise Price $0.20 $0.15 $0.15 $0.10 $0.10 $0.10 $0.10
Exercise Factor 2.5 2.5 2.5 2.5 2.5 1.5 1.5
Price at $0.064 $0.064 $0.064 $0.064 $0.064 $0.064 $0.064
Grant Date
Expected 114.5% 114.5% 114.5% 114.5% 114.5% 114.5% 114.5%
Volatility
Expected 0% 0% 0% 0% 0% 0% 0%
Dividend Yield
Risk Free 5.78% 5.78% 5.78% 5.78% 5.78% 5.78% 5.78%
Interest Rate
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DIRECTORS REPORT

E. Additional information

Further details relating to options are set out below:

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Name A B C D
Remuneration Value at grant date Value at exercise date Value at lapse date
consisting of options
Mr A Barlow 63.04% 59,000 - -
- - - -
Mr P Jermyn
- - - -
Mr G Ridge
Mr D Burden 20.59% 40,500 - -
Mr A Giles - - - -
- - - -
Mr A Vanzyl
Mr D Jones 31.26% 59,000 - -
Mr C Ellison - - - -
- - - -
Mr T Grigg
Mr R Edge 1.33% 2,950 - -
Ms J Macpherson 27.74% 16,667 - -
Mr D Element - - - -
Mr J Edis - - - -
Mr A Beecher - - - -
Mr S Jones - - - -
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A = The percentage of value of remuneration consisting of options based on the value at grant date as set out in column B
B = The value at grant date calculated in accordance with AASB 2 Share Based Payment of options granted during the year as part of remuneration

C = The value at exercise date of options that were granted as part of remuneration and were exercised during the year

D = The value at lapse date of options that were granted as part of remuneration and that lapsed during the year

This marks the end of the audited remuneration report.

DIRECTORS REPORT

Other Information

Shares under option

Unissued ordinary shares of Ansearch Limited under option at the date of signing this report:

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Issue Type Expiry Date Exercise Price $ Number under option
Ordinary options 10 Apr 2011 0.10 17,500,000
Ordinary options 30 Jun 2009 0.10 5,000,000
Ordinary options 30 Jun 2009 0.15 7,500,000
Ordinary options 31 Dec 2009 0.20 5,000,000
Ordinary options 30 Jun 2010 0.25 5,000,000
Ordinary options 31 Dec 2010 0.30 5,000,000
Ordinary options 10 Apr 2011 0.10 500,000
Ordinary options 30 Jun 2009 0.10 1,066,665
Ordinary options 30 Jun 2010 0.15 1,066,665
Ordinary options 31 Dec 2008 0.04 12,385,400
Ordinary options 30 Jun 2012 0.02 30,100,000
Total 90,118,730
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No option holder has any right under the options to participate in any other share issue of the company or any other entity.

Indemnification and Insurance of Officers

The Company has during the financial year, in respect of each person who is or has been an officer of the company or a related body Corporate, made a relevant agreement for indemnifying against a liability incurred as an officer, including costs and expenses in successfully defending legal proceedings.

Since the end of the financial year, the Company has paid premiums to insure all directors and officers of Ansearch Limited and the Ansearch Group of companies, against costs incurred in defending any legal proceedings arising out of their conduct as a director and officer of the Company, other than for conduct involving:

(a) a wilful breach of duty; or
(b) a contravention of Sections 232(5) or (6) of the Corporations Act, as permitted by section 241A(3) of the Corporations Act.

Disclosure of the premium amount is prohibited by the insurance contract.

DIRECTORS REPORT

Auditor’s Independence Declaration

The lead auditor’s independence declaration for the year ending 30 June 2008 has been received and can be found on page 21 of the financial report.

Proceedings on behalf of the Company

Default on sale by Wavtech Pty Ltd

Ansearch Limited successfully pleaded a claim for summary judgement against Wavtech Pty Ltd for its default on settling the sale of 650 shares in Optum ES Pty Ltd for $800,000, however the judgement required the Company to seek specific performance which it is now doing. Whilst it is unlikely that there are sufficient funds in Wavtech to meet the judgement amount, action against the individual directors may follow a successful action to wind up the defaulting company. Costs of this matter, should it proceed to trial are estimated at $40,000 – $90,000.

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 on independence for auditors imposed by the Corporate Government Act 2001. The Directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:

All non–audit services are reviewed and approved by Directors, prior to commencement to ensure they do not adversely effect the integrity and objectivity of the auditor; and
The nature of the services provided did not compromise the general principals relating to the auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

Auditor

BDO Kendalls Audit & Assurance (NSW-VIC) Pty Ltd is the Company’s appointed auditor.

This report is made in accordance with a resolution of directors.

Andrew Barlow

Chairman 30 September 2008

DIRECTORS REPORT

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AUDITORS INDEPENDENCE DECLARATION

Income Statements

For the year ended 30 June 2008

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CONSOLIDATED COMPANY
2008 2007 2008 2007
Notes $ $ $ $
Total revenue from continuing operations 3 12,266,960 8,406,407 79,752 98,637
- -
Direct costs of revenue generation (5,232,046) (4,229,194)
Depreciation and amortisation expenses (180,520) (31,133) (96,177) (16,154)
Finance costs (6,862) (131) (2,111) (236)
Salaries and employment related costs (7,915,629) (2,973,486) (1,855,780) (1,271,481)
(including contractors)
Telephone and internet (198,029) (76,800) (78,685) (44,438)
Share based payment expense (225,167) (520,074) (225,167) (520,074)
Marketing costs (196,699) (498,411) (52,467) (147,997)
Lease – rental premises (452,151) (181,799) (203,121) (73,096)
- -
Provision for impairment of intangibles (310,000) (30,870)
Provision for impairment of receivables (220,016) (87,943) (1,585,491) (440,368)
- - -
Impairment of Intangibles (2,132,469)
ASX fees (153,326) (142,773) (153,326) (142,773)
Legal fees (240,066) (63,383) (146,102) (57,772)
Travel expenses (465,320) (221,808) (275,018) (146,083)
Domain names and licences (32,144) (42,272) - -
Audit and accountancy fees (271,703) (125,489) (255,536) (125,035)
Other expenses (755,479) (514,190) (434,091) (268,367)
Loss before income tax expense 4 (6,720,666) (1,333,349) (5,283,320) (3,155,237)
Income tax expense 5 - - - -
Loss from continuing operations (6,720,666) (1,333,349) (5,283,320) (3,155,237)
Profit/(loss) from discontinued 20 - - - -
operations
Loss for the year (6,720,666) (1,333,349) (5,283,320) (3,155,237)
- - - -
Loss attributable to minority interest
Loss attributable to members 17 (6,720,666) (1,333,349) (5,283,320) (3,155,237)
of Ansearch Limited
2008 2007
Cents Cents
Earnings per share (EPS) from loss from
continuing operations attributable to the
ordinary equity holders of the company
Basic earnings per share 18 (1.22) (0.30)
Earnings per share (EPS) from loss
attributable to the ordinary equity holders
of the company
Basic earnings per share 18 (1.22) (0.30)
Diluted earnings per share (1.22) (0.30)
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The above Income Statements should be read in conjunction with the accompanying notes.

INCOME STATEMENTS 22 For the year ended 30 June 2008

Balance Sheets As at 30 June 2008

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CONSOLIDATED COMPANY
2008 2007 2008 2007
Notes $ $ $ $
CURRENT ASSETS
Cash and cash equivalents 7 1,443,689 3,109,520 327,167 592,538
Trade receivables 8 1,250,855 3,490,562 38,945 204,894
Other 9 183,021 8,749 15,766 4,970
Total current assets 2,877,565 6,608,831 381,878 802,402
NON-CURRENT ASSETS
Receivables 10 - - - 1,517,963
Other financial assets 11 - - 1,935,028 1,716,829
Property, plant & equipment 12 647,310 347,043 385,016 171,244
Intangible assets 13 3,150,000 4,982,823 - -
Total non-current assets 3,797,310 5,329,866 2,320,044 3,406,036
Total assets 6,674,875 11,938,697 2,701,922 4,208,438
CURRENT LIABILITIES
Payables 14 2,215,590 3,261,177 398,100 530,833
Other 15 692,894 2,460,000 - 360,000
Total current liabilities 2,908,484 5,721,177 398,100 890,833
Total liabilities 2,908,484 5,721,177 398,100 890,833
NET ASSETS 3,766,391 6,217,520 2,303,822 3,317,605
EQUITY
Issued capital 16 35,714,937 31,670,567 35,714,937 31,670,567
Reserves 17 3,630,720 3,405,553 3,630,720 3,405,553
Retained losses 17 (35,579,266) (28,858,600) (37,041,835) (31,758,515)
TOTAL EQUITY 3,766,391 6,217,520 2,303,822 3,317,605
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The above Balance Sheets should be read in conjunction with the accompanying notes.

BALANCE SHEETS As at 30 June 2008 23

Statements of Changes in Equity For the year ended 30 June 2008

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CONSOLIDATED COMPANY
2008 2007 2008 2007
Notes $ $ $ $
Total equity at the beginning of the 6,217,520 1,057,198 3,317,605 (20,829)
financial year
Increase in employee share based 17 225,167 520,074 225,167 520,074
payments reserve
Net expense recognised 225,167 520,074 225,167 520,074
directly in equity
Loss for the year attributable to 17 (6,720,666) (1,333,349) (5,283,320) (3,155,237)
members of the company
- - - -
Loss attributable to minority
interests
Total recognised income and (6,720,666) (1,333,349) (5,283,320) (3,155,237)
expense for the year
- - - -
Transactions with equity holders in
their capacity as equity holders:
Contributions of equity, net of 4,044,370 5,973,597 4,044,370 5,973,597
transaction costs
- - - -
Changes in minority interests
from disposals
Total equity at the end of the 3,766,391 6,217,520 2,303,822 3,317,605
financial year
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The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.

STATEMENTS OF CHANGES IN EQUITY 24 For the year ended 30 June 2008

Cash Flow Statements For the year ended 30 June 2008

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CONSOLIDATED COMPANY
For the year ended 30 June 2008
2008 2007 2008 2007
Notes $ $ $ $
CASH FLOWS FROM OPERATING
ACTIVITIES
Receipts from trade and other 14,462,829 5,975,725 87,625 47,186
debtors (inclusive of GST)
Interest received 109,513 49,640 79,752 59,707
Payments to trade creditors, other (17,118,195) (7,111,440) (3,516,857) (2,534,790)
creditors and employees (inclusive
of GST)
Interest paid (6,862) (131) (2,112) (236)
Net cash outflows from operating 27 (2,552,714) (1,086,206) (3,351,592) (2,428,133)
activities
CASH FLOWS FROM INVESTING
ACTIVITIES
Payments for property, plant and (480,787) (231,218) (309,950) (161,082)
equipment
-
Payments for controlled entities, (2,246,700) (1,574,173) (216,829)
net of cash acquired
Loans to controlled entities - - (218,199) (1,517,962)
Net cash outflows from investing (2,727,487) (1,805,391) (528,149) (1,895,873)
activities
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issue of shares 3,614,370 4,833,596 3,614,370 4,833,596
- -
Repayment of convertible note (222,242) (222,242)
Net cash inflows from financing 3,614,370 4,611,354 3,614,370 4,611,354
activities
Net (decrease)/increase in (1,665,831) 1,719,757 (265,371) 287,348
cash held
Cash at the beginning of the 3,109,520 1,389,763 592,538 305,190
financial year
CASH AT THE END OF THE 7 1,443,689 3,109,520 327,167 592,538
FINANCIAL YEAR
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The above Cash Flow Statements should be read in conjunction with the accompanying notes.

CASH FLOW STATEMENTS For the year ended 30 June 2008 25

Notes to the Financial Statements For the year ended 30 June 2008

1. Summary of Significant Accounting Policies

The financial report covers Ansearch Limited and controlled entities (“Group”), and Ansearch Limited as an individual parent company (“Company”). Ansearch Limited is a listed public company, incorporated and domiciled in Australia. The financial report is for the financial year ended 30 June 2008 and is presented in Australian dollars.

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Going concern

The financial report for the year ended 30 June 2008 has been prepared on a going concern basis.

As a developing business, the Group has experienced full year operating losses of $6,270,666 and net cash outflows from operating activities of $2,552,714 and has a working capital deficiency. The continuing viability of the company and its ability to continue as a going concern is dependent upon the Group being successful in its current efforts in accessing additional sources of capital and/or revenue.

As a result there is a level of uncertainty whether the Group will continue as a going concern and, therefore, whether it will realise its assets and settle its liabilities and commitments in the normal course of business and at the amounts stated in the financial report. However, the directors believe that the Group will be able to access sufficient sources of funds and, accordingly, have prepared the annual financial report on a going concern basis. At this time, the directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the financial report at 30 June 2008.

Accordingly, no adjustments have been made to the financial report relating to the recoverability and classification of the asset carrying amounts or the amount and classification of liabilities that might be necessary should the Group not continue as a going concern.

Refer to note 1(x) for a description of the significant items considered by management in assessing the going concern of the Group.

(b) Basis of preparation

This general purpose financial report has been prepared in accordance with Australian Accounting Standards (including Australian Accounting Interpretations), other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001 .

Compliance with IFRS

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial statements and notes of Ansearch Limited comply with International Financial Reporting Standards (IFRS).

Adoption of new and revised accounting standards

The Group adopted the following Standards as listed below which only impacted on the Group’s financial statements with respect to disclosure:

Revised AASB 101 Presentation of Financial Statements (issued October 2006)
AASB 7 Financial Instruments: Disclosures

Early adoption of standards

The Group has elected to apply s.334(5) of the Corporations Act 2001 to apply AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 even though the Standards are not required to be applied until reporting periods beginning on or after 1 January 2009. AASB 8 replaces AASB 114 Segment Reporting.

AASB 8 is a disclosure standard which has resulted in a redesignation of the Group’s reportable segments (see note 2), but has no impact on the reported results or financial position of the Group.

NOTES TO THE FINANCIAL STATEMENTS 26 For the year ended 30 June 2008

The operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by senior management in order to allocate resources to the segment and to assess its performance. This has resulted in an increase in the number of reportable segments presented. As goodwill is allocated by management to groups of cash generating units at a segment level, the change in reportable segments has required a reallocation of goodwill of $5,132,469 from the Ansearch operating segment to the newly identified operating segment ‘web development and hosting’. This in itself has not resulted in any impairment of goodwill.

Historical cost convention

These financial statements have been prepared under the historical cost convention.

Critical accounting estimates

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates. The estimates and associated assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

(c) Principles of consolidation

Subsidiaries

The consolidated financial statements comprise those of the Company, and the entities it controlled at the end of, or during, the financial year. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefit from its activities. The balances and effects of transactions between entities in the consolidated entity included in the financial statements have been eliminated. Where an entity either began or ceased to be controlled during the year, the results are included only from the date control commenced or up to the date control ceased. The accounting policies adopted in preparing the financial statements have been consistently applied by entities in the consolidated entity.

Investments in subsidiaries are accounted for at cost in the individual financial statements of Ansearch Limited.

(d) Cash and cash equivalents

For the purposes of the cash flow statement, cash includes deposits at call which are readily convertible to cash and are not subject to significant risk of changes in value, net of bank overdrafts.

(e) Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

Depreciation is calculated on a straight line basis for all plant and equipment. Estimates of remaining useful lives are made on a regular basis.

The following depreciation rates are used for each class of depreciable asset:

Computer & Offce Equipment	20 – 40% per annum
Furniture & Fittings	20 – 25% per annum
Leasehold Improvements	20% per annum
Software	40% per annum
R & D Equipment	30 – 40% per annum

(f) Receivables

Trade receivables are recognised initially at fair value and thereafter are measured at amortised cost, less provision for impairment. They are non-derivative financial assets with fixed or determinable amounts not quoted in an active market. Trade accounts receivable are generally settled between 14 and 60 days and carried at amounts recoverable.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 27

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement. Subsequent recoveries of amounts previously written off are credited against the allowance account.

(g) Trade and other creditors

Trade accounts payable and other creditors represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 45 days of recognition.

(h) Borrowings

Borrowings are initially recognised at fair value (less transaction costs) and subsequently measured at amortised cost. Any difference between the proceeds and the redemption amount is recognised in the income statement over the period of the borrowing using the effective interest rate method.

(i) Finance costs

Finance costs are recognised as expenses in the period in which they are incurred except where they are incurred in the construction of a qualifying asset in which case the finance costs are capitalised as part of the asset.

(j) Income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

Tax consolidation legislation

Ansearch Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Ansearch Limited, and the controlled entities in the tax consolidated group account for their own current and tax deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, Ansearch Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

NOTES TO THE FINANCIAL STATEMENTS 28 For the year ended 30 June 2008

(k) Employee benefits

Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are recognised in other creditors in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

Long service leave

The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in current payables and is measured at the amount expected to be paid when the liabilities are settled. The liability for long service leave expected to be settled more than 12 months from the reporting date, is recognised in the non-current provision for employee benefits. It is accrued in respect of all employees at the present value of future amounts expected to be paid based on a projected weighted average increase in wage and salary rates over an average period of 12 years. Present values are calculated using a weighted average rate based on government guaranteed securities. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

Share-based compensation benefits

Shares options granted before 7 November 2002 and/or vested before 1 January 2005

No expense is recognised in respect of these options. The shares are recognised when the options are exercised and the proceeds received allocated to share capital.

Shares options granted after 7 November 2002 and vested after 1 January 2005

The fair value of options is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is determined using a binomial option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

Upon the exercise of options, the balance of the share-based payments reserve relating to those options is transferred to share capital and the proceeds received, net of any directly attributable transaction costs, are credited to share capital.

(l) Intangible Assets

Goodwill

Goodwill is calculated as the excess of the fair value of consideration paid over the fair value of the identifiable net assets of the entity or operations acquired. Goodwill acquired in business combinations is not amortised. Instead, goodwill is tested for impairment annually, being allocated to the cash flows of the relevant cash generating unit and is carried at cost less accumulated impairment losses.

Intellectual property

The intellectual property relates to the names, branding and domains acquired as a result of the acquisition of Webfirm and Searchworld. The carrying value is tested for impairment annually or more frequently if events or changes in circumstances indicate impairment. It is carried at cost less impairment losses.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 29

Research & Development expenditure

Expenditure on research activities, undertaken with the prospect of obtaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense when it is incurred.

Expenditure on development activities, being the application of research findings or other knowledge to a plan or design for the production of new or substantially improved products or services before the start of commercial production or use, is capitalised if the product or service is technically and commercially feasible and adequate resources are available to complete development. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected benefit. The carrying value is tested annually for impairment.

Domain name

The Anzwers domain name was acquired in February 2006 and brought to account at cost. The carrying value is tested for impairment annually or more frequently if events or changes in circumstances indicate impairment. It is carried at cost less impairment losses.

(m) Leased assets

Leases of assets under which the consolidated entity assumes substantially all the risks and benefits of ownership are classified as finance leases as distinct from operating leases under which the lessor effectively retains substantially all such risks and benefits. Property, plant and equipment acquired by finance leases is capitalised at the present value of the minimum lease payments as a finance lease asset and as a corresponding lease liability from date of inception of the lease. Lease assets are amortised over the period the entity is expected to benefit from the use of the assets or the term of the lease, whichever is shorter. Finance lease liabilities are reduced by the component of principal repaid. Lease payments are allocated between the principal component of the liability and interest expense.

Other operating lease payments are charged to the income statement on a straight-line basis over the period of lease term.

(n) Other financial assets

The company only has investments in controlled entities which are carried in the financial report at cost less any impairment losses.

(o) Goods and services tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

i. Where the amount of GST incurred is not recoverable from taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or

ii. For receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

(p) Revenue recognition

Amounts disclosed as revenue are net of returns, allowances and duties and taxes paid.

Revenue is recognised for the major business activities as follows:

Rendering of services

Service revenue is recognised when all of the benefits of the service have been passed onto the customer.

Website development revenue is recorded based on a twelve (12) week program of project delivery. Any projects not completed within this period are deemed to be twenty percent (20%) incomplete. Website hosting, search engine renewal and domain name registration revenue is recorded over a one year duration. Prepaid revenue calculated in this regard is excluded from revenue and is being treated as unearned revenue in the Balance Sheet.

NOTES TO THE FINANCIAL STATEMENTS 30 For the year ended 30 June 2008

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 net gain from the sale of non-current asset sales is recognised in income at the date control of the asset passes to the buyer, usually when the signed contract of sale becomes unconditional.

(q) Acquisition of assets

The purchase method of accounting is used for all acquisitions of assets regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their market price as at the date of acquisition, unless the notional price at which they could be placed in the market is a better indicator of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Any deferred settlement of cash consideration is discounted to its present value as at the date of acquisition. The discount rate used is the incremental borrowing rate that the Company can obtain from an independent financier under comparable terms and conditions.

(r) Leasehold improvements

The cost of improvements to leasehold properties is amortised over the unexpired period of the lease or the estimated useful life of the improvement to the consolidated entity, whichever is the shorter.

(s) Earnings per share

Basic earnings per share

Basic earnings per share for continuing operations and total operations attributable to members of the Company are determined by dividing net profit after income tax from continuing operations and the net profit attributable to members of the Company respectively, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial period. The number of shares used in the calculation at any time during the period is based on the physical number of shares issued.

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 income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(t) Dividends

Provision is made for the amount of any dividend determined or recommended by the directors on or before the end of the financial year but not distributed at balance date.

(u) Discontinued operations

A discontinued operation is a business unit or investment of the Company that has been disposed of or which the Company has lost control of, or in the case of an investment in a joint venture where the Company has ceased active involvement or the operating activities of the investee. The results of discontinued operations are disclosed separately on the face of the income statement.

(v) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 31

(w) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Chief Executive Officer.

(x) Critical accounting judgements and key sources of estimation uncertainty

Critical judgements in applying the entity’s accounting policies

The following are the critical judgements (apart from those involving estimations, which are dealt with below), that management has made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements:

(i) Revenue recognition

In light of the record of total contract revenue in advance in web development and web hosting business operations, management was required to consider whether it was appropriate to recognise the revenue from these transactions in the current period, in line with Group’s general policy of recognising revenue to be comparable with services rendered. In making its judgement, management considered the standard duration of such contracts, stage of progress in contracts and commencement date of such contracts. Accordingly, management has deferred recognising some web development and web hosting revenue comparable with services to be rendered in the future.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future and other key estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

(i) Impairment of goodwill and intangible assets

Determining whether goodwill and intangible assets are impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value.

The carrying amount of goodwill and intangible assets at the balance sheet date was $3,150,000 (2007: $4,982,823) after an impairment loss of $2,432,469 (2007: $30,870) was recognised during the current financial year. Refer to Note 13 for further details.

(ii) Going concern

As described in note 1(a), the financial statements have been prepared on a going concern basis. Significant matters considered by the Directors in determining that it is appropriate for the financial report to be prepared on a going concern basis include:

A cash injection for additional issued capital was received subsequent to year end in the amount of $1,276,000;
The Directors believe that the Group will be successful in raising additional sources of capital in the future from the share purchase plan currently being offered to all shareholders;
The Group has recently launched new products in the Searchworld and Webfirm divisions, which the directors expect to gain traction over the coming months;
Operating profitability has been improving with the appointment of a new CEO; and
Management will continue to monitor and reduce expenditure if further revenues do not materialise, or should the share purchase plan not receive the anticipated take up rate.

NOTES TO THE FINANCIAL STATEMENTS 32 For the year ended 30 June 2008

(y) New standards and interpretations issued but not effective

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2008 reporting periods, and have not yet been adopted by the Group. The Group’s and the parent entity’s assessment of the impact of these new standards and interpretations is set out below.

Revised AASB 101 Presentation of Financial Statements introduces as a financial statement (formerly ‘primary’ statement) the ‘Statement of Comprehensive Income’. The revised standard does not change the recognition, measurement or disclosure of transactions and events that are required by other AASBs. The revised AASB 101 will become mandatory for the Group’s 30 June 2010 financial statements. The Group has not yet determined the potential effect of the revised standard on the Group’s disclosures.
Revised AASB 123 Borrowing Costs removes the option to expense borrowing costs and requires that entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The revised AASB 123 will become mandatory for the Group’s 30 June 2010 financial statements, but will not represent a change of accounting policy for the Group.
Revised AASB 3 Business Combinations makes certain changes affecting future acquisitions only (such as the requirement to expense instead of capitalising acquisition costs, and a different treatment of step acquisitions). As there is no impact on the accounting treatment of previous acquisitions, there should be no financial impact upon initial adoption of this revised standard.
Revised AASB 127 Consolidated and Separate Financial Statements makes certain changes in relation to measurement of subsidiaries held for sale. This amendment will have no impact when first adopted because the Group uses the cost method to account for its investments in subsidiaries.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 33

2. Segment Information

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2008 Corporate Search Display Owned & Web Unallocated Total
Media Media Operated Development or Eliminated
Sites & Hosting
Business
segments
Revenue
External sales - 5,718,873 1,944,977 759,585 3,586,741 140,300 12,150,476
Total revenue - 5,718,873 1,944,977 759,585 3,586,741 140,300 12,150,476
from continuing
operations
Result
Segment result (5,117,727) 1,415,221 (831,139) (741,892) (484,779) 1,649,294 (4,111,022)
from continuing
operations
Interest revenue - - - - - - 109,513
- - - - - -
Interest expense (6,862)
Other income - - - - - - 6,971
Share based and - - - - - - (276,797)
other expenses
- - - - - -
Impairment of (2,442,469)
intangibles
Loss before tax - - - - - - (6,720,666)
Income tax - - - - - - -
expense
Loss for the - - - - - - (6,720,666)
period from
continuing
operations
Other segment
items included in the
income statement
are as follows:
-
Depreciation 53,815 7,653 6,347 53,928 3,392 125,135
(note 12)
Amortisation 42,362 - - - 13,023 - 55,385
(note 12)
Additions to non- 328,018 - 265 - 177,644 16,490 522,417
current assets
Balance Sheet
Segment assets 11,307,211 2,241,967 965,548 6,422,801 3,471,400 (17,734,052) 6,674,875
Segment liabilities (8,638,701) (2,097,700) (2,805,588) (9,075,448) (5,429,671) 25,138,624 (2,908,484)
Net assets 2,668,510 144,267 (1,840,040) (2,652,647) (1,958,271) 7,404,572 3,766,391
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NOTES TO THE FINANCIAL STATEMENTS 34 For the year ended 30 June 2008

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2007 Corporate Search Display Owned & Web Unallocated Total
Media Media Operated Development or Eliminated
Sites & Hosting
Business
segments
Revenue
External sales - 1,809,566 1,696,800 2,810,645 1,898,585 102,186 8,317,782
Total revenue - 1,809,566 1,696,800 2,810,645 1,898,585 102,186 8,317,782
from continuing
operations
Result
Segment result (2,319,611) 446,167 (608,560) 775,564 917,331 (112,660) (901,769)
from continuing
operations
Interest revenue - - - - - - 49,640
- - - - - -
Interest expense (131)
Other income - - - - - - 38,985
Share based and - - - - - - (520,074)
other expenses
Loss before tax - - - - - - (1,333,349)
Income tax - - - - - - -
expense
Loss for the - - - - - - (1,333,349)
period from
continuing
operations
Other segment
items included in the
income statement
are as follows:
- -
Depreciation 10,209 3,354 8,969 1,824 24,356
(note 12)
Amortisation 6,777 - - - - - 6,777
(note 12)
Additions to non- 161,082 - 21,838 12,657 121,769 8,114 325,460
current assets
Balance Sheet
Segment assets 10,062,578 1,798,566 628,327 4,334,302 1,244,367 (6,129,443) 11,938,697
Segment liabilities (6,744,974) (1,352,399) (1,633,137) (6,296,732) (837,068) 11,143,133 (5,721,177)
Net assets 3,317,604 446,167 (1,004,810) (1,962,430) 407,299 5,013,690 6,217,520
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Notes to and forming part of the segment information

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 35

Business segments

The consolidated entity is organised into the following segments by product and service type:

Search Media

Driving on-line users to websites through provision of contextually mapped search advertising.

Display Media

Commercialises the audience by generating revenue from a websites’ end users through traditional display advertising.

Owned & Operated Sites

Directed at audience acquisition through provision of high quality search engines.

Web Development and Hosting

Designing and developing websites, maintenance of the sites ongoing, and promoting the websites.

Geographical information

Revenues from external customers are attributed to individual countries based on the invoiced address for the services. Revenue for the 2007 financial year was generated in Australia.

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Revenue from external Non-current assets
customers
2008 2007 2008 2007
$ $ $ $
Continuing Operations
Australia 9,432,527 8,406,407 3,797,310 5,329,866
North America 2,834,433 - - -
Total revenue from continuing operations 12,266,960 8,406,407 3,797,310 5,329,866
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Accounting policies

Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by a segment and consist primarily of operating cash, receivables, capitalised R&D and other intangible assets, net of related provisions but does not include non-current inter-entity assets and liabilities which are considered quasi-equity in substance. Segment liabilities consist primarily of trade and other creditors, employee benefits and sundry provisions and accruals. Segment assets and liabilities do not include income taxes.

Inter-segment transfers

Segment revenues, expenses and results include transfers between segments. Such transfers are priced on an arm’s-length basis and are eliminated on consolidation.

NOTES TO THE FINANCIAL STATEMENTS

36 For the year ended 30 June 2008

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
3. Revenue
Continuing Operations
Sales revenue 12,150,476 8,317,782 - -
Interest revenue 109,513 49,640 79,752 59,707
Gain on settlement of convertible note - 37,758 - 37,758
-
Sundry income 6,971 1,227 1,172
Total revenue from continuing operations 12,266,960 8,406,407 79,752 98,637
CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
4. Expenses
Loss before income tax includes the following
specific expenses:
Amortisation and depreciation
Amortisation – Leasehold improvements: 55,385 6,777 42,362 6,777
Depreciation – Plant & Equipment 125,135 24,356 53,815 9,377
Finance costs
Interest paid/payable to unrelated entities 6,862 131 2,111 236
Other charges against assets
- -
Impairment of intangibles 2,432,469 30,870
Impairment of receivables 220,016 87,943 1,585,491 440,368
Rental expense – operating leases 452,151 181,799 203,121 73,096
-
Defined contribution superannuation expense 432,422 148,262 53,214
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NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 37

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
5. Income Tax Expense
(a) Numerical reconciliation of income tax
expense to prima facie tax benefit
Loss for the year (6,720,666) (1,333,349) (5,283,320) (3,155,237)
Prima facie tax benefit on loss before income tax at
30% (2007: 30%)
- -
Economic entity (2,016,200) (400,004)
- -
Parent entity (1,584,996) (946,571)
Tax effect of:
Other non-allowable items 48,870 20,259 19,658 3,810
Write-downs to recoverable amounts 729,741 - - 9,234
Share options expensed during year 67,550 156,022 67,550 156,022
Sundry items (956) (6,339) (663) (6,339)
(1,170,995) (230,062) (1,498,451) (783,844)
Deferred tax assets not recognised 1,170,995 230,062 1,498,451 783,844
- - - -
Income tax expense attributable to entity
(b) Deferred Tax Assets Not Brought to Account
Deferred tax assets not brought to account, the
benefits of which will only be realised if the conditions
for deductibility set out on Note 1(j) occur
Temporary differences 178,053 808,599 25,317 737,914
Tax Losses:
Operating losses 1,782,288 1,072,137 1,782,288 1,072,137
Capital losses 34,764 252,335 34,764 252,335
1,995,105 2,133,071 1,842,369 2,062,386
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Deferred tax assets not brought to account at 30 June 2008 are less than closing comparative balance plus current year movements. This is due to forfeiture of some carry forward tax losses due to changes in business operations and ownership. These changes have resulted in the group no longer meeting the same business or same ownership tests.

NOTES TO THE FINANCIAL STATEMENTS 38 For the year ended 30 June 2008

6. Dividends

No dividends were declared in the current year or prior year by the Company. There are no franking credits available to shareholders of the Company.

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
7. Cash and cash equivalents
Cash at bank and on hand 1,443,689 3,109,520 327,167 592,538
8. Receivables
Current:
Trade debtors 1,500,502 3,249,732 38,945 233,950
-
Provision for impairment of receivables (249,647) (96,737) (29,056)
1,250,855 3,152,995 38,945 204,894
Other receivables 2,163,343 2,500,910 2,163,343 2,163,343
Provision for impairment of other receivables (ii) (2,163,343) (2,163,343) (2,163,343) (2,163,343)
1,250,855 3,490,562 38,945 204,894
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‘Other receivable’ amounts generally arise from transactions outside the usual operating activities of the consolidated entity. No interest is chargeable and collateral is generally not obtained.

a) Impairment of receivables:

(i) The average credit period on sale of goods and rendering of services in the owned & operated site and search and display media segments is 45 days. No interest is charged on trade receivables exceeding normal credit terms. An allowance has been made for estimated non-recoverable trade receivable amounts arising from the past sale of goods and rendering of services, determined by reference to past default experience.

The website development and hosting segment invoices the customer on the full sales values at sale date with collection terms being related to various contract completion stages of website development and annual hosting services. A particular debt exceeding 90 days does not necessarily mean delinquent debt as the contract may still be at work in progress stage with corresponding debtor balance not due for collection.

Before accepting any new customers, the Group internally reviews the potential customer’s credit quality. A substantial deposit on contract in website development and hosting segment of the Group mitigates initial credit risk.

Included in the Group’s trade receivable balances are debtors with a carrying amount of $548,527 (2007: $818,861) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral over these balances. The average age of these receivables is 96 days (2007: 97 days).

(ii) Included in other receivables is an amount of $800,000 due under the terms of a Sale and Purchase Agreement pursuant to the disposal of 65% equity in Optum ES Pty Ltd. This amount has become delinquent and the company has commenced legal action in the Supreme Court of Western Australia. A full provision has therefore been made against this amount. Also included is an amount of $1,363,343 which was the outstanding balance on the intercompany loan from Ansearch Limited to Optum E S Pty Ltd at the date of deconsolidation. As this is no longer an intercompany account, it has been recognised in ‘Other receivables’ from 2007. The balance has been fully provided for in prior years and the impairment provision has also been reclassified to this note.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 39

Ageing of receivables is as follows:

Ageing of past due but not impaired

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
60 – 90 days 131,897 312,644 - -
- -
Over 91 days 44,829 3,109,520
- -
176,726 818,861
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Movement in the allowance for doubtful debts

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
- -
Balance at beginning of the year 96,737 29,056
-
Provision for impairment recognised during the year 277,614 96,737 29,056
Amounts written off as uncollectible (63,385) - (29,056) -
- - -
Amounts recovered during the year (61,319)
-
Balance at the end of the year 249,647 96,737 29,056
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In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.

b) Fair value of receivables:

Fair value of receivables at year end is measured to be the same as receivables net of provision for impairment.

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
9. Current Assets – Other
Income tax refundable 96,470 - - -
- - -
Sundry 14,792
Prepayments (i) 71,759 8,749 15,766 4,970
183,021 8,749 15,766 4,970
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(i) Prepayments have amortisation periods of less than 12 months.

NOTES TO THE FINANCIAL STATEMENTS 40 For the year ended 30 June 2008

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
10. Receivables
Non-current:
- -
Amounts owing by controlled entities 7,632,873 7,565,345
- -
Impairment of amounts (7,632,873) (6,047,382)
- - -
1,517,963
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Due to the deconsolidation of Optum E S Pty Ltd , the amounts that had been loaned to that entity whilst a controlled entity have been reclassified as ‘Other receivables’ as that entity is no longer part of the Ansearch Group. The sum total of those amounts had previously been fully provided for and the provision has also been reclassified into ‘Other receivables’.

Following a review of the recoverability of amounts loaned to controlled entities during the 2008 financial year, the Board concluded that the recoverability of these balances was not probable and have made a provision for impairment of these amounts.

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CONSOLIDATED COMPANY
2008 2007 2008 2007
Notes $ $ $ $
11. Other Financial Assets
Non-current:
Share in controlled entities 19 - - 1,935,028 5,216,837
- - -
Impairment of investments (3,500,008)
- -
1,935,028 1,716,829
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The increase in the share in controlled entities relates to the direct contribution of Ansearch Limited to the acquisition of Webfirm and Searchworld being the issue of share capital and incurring the costs of acquisition. Refer to Note 21 – Business Combinations.

Following a review of the carrying of the Group’s investment in Webfirm and Searchworld, the Board concluded that the amount and probability of receipt of the cash flows expected to be generated by the Group’s investment in these businesses justified the carrying value and no impairment of the investment was made during the year.

Following a review of the carrying of the Group’s investment in other controlled entities in the year ended 30 June 2008, the Board concluded that the amount and probability of receipt of the cash flows expected to be generated by the Group’s investment in these businesses justified the net carrying value and no further change to the impairment amount was made during the year.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 41

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
12. Non-Current Assets –
Property, plant and equipment
Leasehold improvements – at cost 336,848 149,079 242,652 122,823
Less: Accumulated amortisation (55,149) (42,318) (42,125) (42,318)
281,699 106,761 200,527 80,505
Plant and equipment – at cost 271,894 131,512 248,724 101,158
Less: Accumulated depreciation (67,113) (32,926) (64,235) (10,419)
204,781 98,586 184,489 90,739
- -
Computer equipment – at cost 231,170 161,361
- -
Less: Accumulated depreciation (70,340) (19,665)
- -
160,830 141,696
Total carrying amount of property, plant and equipment 647,310 347,043 385,016 171,244
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Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current financial year are set out below:

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2008 Leasehold Plant and Computer
Total
Improvements Equipment Equipment
$ $ $ $
CONSOLIDATED
Carrying amount at 1 July 2007 106,761 98,586 141,696 347,043
Additions 248,391 165,488 108,538 522,417
Disposals/write offs (18,068) (2,839) (20,723) (41,630)
Depreciation/amortisation expense (55,385) (56,454) (68,681) (180,520)
Carrying amount at 30 June 2008 281,699 204,781 160,830 647,310
COMPANY
-
Carrying amount at 1 July 2007 80,505 90,739 171,244
Additions 180,452 147,566 - 328,018
Disposals/write offs (18,068) - - (18,068)
-
Depreciation/amortisation expense (42,362) (53,816) (96,178)
-
Carrying amount at 30 June 2008 200,527 184,489 385,016
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NOTES TO THE FINANCIAL STATEMENTS 42 For the year ended 30 June 2008

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2007 Leasehold Plant and Computer
Total
Improvements Equipment Equipment
$ $ $ $
CONSOLIDATED
Carrying amount at 1 July 2006 25,081 18,694 8,941 52,716
Additions 88,457 84,583 152,420 325,460
Depreciation/amortisation expense (6,777) (4,691) (19,665) (31,133)
Carrying amount at 30 June 2007 106,761 98,586 141,696 347,043
COMPANY
-
Carrying amount at 1 July 2006 25,081 1,235 26,316
Additions 62,201 98,881 - 161,082
-
Depreciation/amortisation expense (6,777) (9,377) (16,154)
-
Carrying amount at 30 June 2007 80,505 90,739 171,244
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13. Non-Current Assets – Intangible Assets

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2008 Intellectual Domain
Goodwill Total
Property Name
$ $ $ $
CONSOLIDATED
Year ended 30 June 2008
Opening net book amount 200,000 250,000 4,532,823 4,982,823
-
Acquisitions/restatements 10,000 599,646 609,646
Impairment of assets (160,000) (150,000) (2,132,469) (2,442,469)
Carrying amount at 30 June 2008 50,000 100,000 3,000,000 3,150,000
At 30 June 2008
Cost 3,897,328 250,000 5,132,469 9,279,797
Accumulated amortisation/impairment (3,847,328) (150,000) (2,132,469) (6,129,797)
Carrying amount at 30 June 2008 50,000 100,000 3,000,000 3,150,000
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NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 43

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2007 Intellectual Domain
Goodwill Total
Property Name
$ $ $ $
CONSOLIDATED
Year ended 30 June 2007
- -
Opening net book amount 250,000 250,000
-
Acquisitions – business combinations 200,000 4,532,823 4,732,823
Carrying amount at 30 June 2007 200,000 250,000 4,532,823 4,982,823
At 30 June 2007
Cost 3,887,328 250,000 4,532,823 8,670,151
- -
Accumulated amortisation/impairment (3,687,328) (3,687,328)
Carrying amount at 30 June 2007 200,000 250,000 4,532,823 4,982,823
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Goodwill

Goodwill relates to the acquisition of Webfirm and Searchworld as disclosed in Note 21 – Business Combinations.

(a) Impairment tests for goodwill

Goodwill is allocated to the Group’s cash generating units (CGUs) identified according to business segments and country of operation. All goodwill relates to the acquisition of Webfirm and Searchworld as disclosed in Note 21 – Business Combinations . It has been allocated to the web development and hosting CGU.

The recoverable amount of the CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using an estimated growth rate of 7.5%. The growth rate does not exceed the expected long-term average growth rate for the business in which the CGU operates.

The recoverable amount of goodwill is estimated to be approximately $3 million, thus the carrying value of goodwill has been impaired by $2,132,469.

(b) Key assumptions used in value-in-use calculations

The following are the key assumptions in the director’s estimation of the recoverable amount of goodwill. The director’s believe the revenue growth expectations are achievable, and believe the forecast net profit after tax as a percentage of revenue are conservative estimates.

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2009 2010 2011 2012 2013
Revenue ($million) 5.2 6.4 7.5 8.6 9.9
Revenue growth 44% 22% 18% 15% 15%
Net profit after tax 3.3% 3.6% 5.1% 6.8% 8.8%
(as a % of revenue)
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Discount rate of 20%
Perpetuity growth rate of 7.5% from 2013

NOTES TO THE FINANCIAL STATEMENTS 44 For the year ended 30 June 2008

(c) Impairment charge

The impairment charge arose from the following key events:

Consideration of the latest year-to-date results for the CGU being below initial expectations
Further deterioration of capital markets indices during September, and the impact these market conditions will have on the company’s ability to raise capital for investment in this CGU
Decision to adopt a conservative approach to profitability targets for this CGU

Intellectual property

Intellectual property relates to the various business names and domain names held as a result of the Webfirm acquisition (Note 21). During the year the directors decided to change the branding of the Webfirm business and have reassessed the fair value of this intellectual property to be $50,000. This intellectual property pertains to the Web Development & Hosting segment (refer Note 2).

Domain Name

The Anzwers domain name was purchased in February 2006. The directors have determined that the carrying value of the Anzwers domain name should be written down to $100,000 (impairment of $150,000) on the basis of current revenue and cash flow forecasts and a decision to delay further investment in this search engine platform.

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
14. Current liabilities – Payables
Trade creditors 995,181 1,688,010 253,926 263,519
-
Employee benefits 123,833 144,200 42,314
Other creditors 778,285 1,084,070 144,174 35,000
- - -
GST payable 94,971
- -
PAYG, superannuation and employment creditors 223,320 154,897
Related entities - 190,000 - 190,000
2,215,590 3,261,177 398,100 530,833
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All current liabilities of the Group have settlement dates of less than one year. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
15. Current liabilities – Other
Webfirm/Searchworld acquisition - 2,460,000 - 360,000
consideration balance
- - -
Webfirm/Searchworld unearned revenue 692,894
-
692,894 2,460,000 360,000
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Refer Note 21 – Business Combinations for details regarding terms and conditions regarding the Webfirm/Webfirm Search acquisition.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 45

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
16. Contributed equity
Ordinary Shares – Fully Paid 558,314,045 399,558,057 35,714,937 26,846,970
Ordinary Shares – Partly Paid - 127,782,229 - 4,823,597
558,314,045 527,340,286 35,714,937 31,670,567
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There is no limit on the ordinary shares authorised for issue. Ordinary shares have no par value.

Movements in Paid-Up Capital

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Date Details Number of Issue Capital Value
shares price raising costs
$ $
01-Jul-06 Opening balance 384,308,057 - - 25,696,971
03-Jan-07 1 for 4 entitlements issue – 128,124,047 0.020 329,260 2,444,533
Instalment 1 (i)
31-Jan-07 Exercise of 2008 options 250,000 0.040 - 10,000
03-May-07 1 for 4 entitlements issue – - 0.020 - 2,708,323
Instalment 2 (ii)
03-May-07 Forfeiture of Entitlement shares (341,818) - - -
31-May-07 Issue of shares to Webfirm vendors 15,000,000 0.076 - 1,140,000
30-Jun-07 Balance 527,340,286 - - 31,670,567
04-Jul-07 Issue of shares to Webfirm vendors 3,722,854 0.097 - 360,000
24-Aug-07 1 for 4 entitlements issue – - 0.020 - 2,534,938
Instalment 3 (iii)
29-Aug-07 Forfeiture of Entitlement shares (1,219,220) - - -
11-Sep-07 1 for 4 entitlements issue – 200,000 0.020 - 4,000
Instalment 3 (iii)
13-Sep-07 Issue of share- Key management 1,000,000 0.070 - 70,000
personnel
18-Sep-07 1 for 4 entitlements issue – 433,750 0.020 - 8,675
Instalment 3 (iii)
11-Oct-07 Exercise of 2008 options 5,000,000 0.040 - 200,000
15-Oct-07 Exercise of 2008 options 10,000,000 0.040 - 400,000
15-Oct-07 1 for 4 entitlements issue – 260,000 0.020 - 5,200
Instalment 3 (iii)
17-Oct-07 Exercise of 2008 options 5,000,000 0.040 - 200,000
19-Oct-07 Exercise of 2008 options 5,000,000 0.040 - 200,000
24-Oct-07 Exercise of 2008 options 1,500,000 0.040 - 60,000
24-Oct-07 1 for 4 entitlements issue – 76,000 0.020 - 1,520
Instalment 3 (iii)
13-Nov-07 Exercise of 2007 options 375 0.100 - 37
30-Jun-08 Balance 558,314,045 - 329,260 35,714,937
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(i) Entitlements issue 6 cent shares – first instalment of 2 cents to pay to 2 cents – net of costs of capital raised.

(ii) Entitlements issue 6 cent shares – second instalment of 2 cents to pay to 4 cents.

(iii) Entitlements issue 6 cent shares – third instalment of 2 cents to pay to 6 cents.

NOTES TO THE FINANCIAL STATEMENTS 46 For the year ended 30 June 2008

Options issued, exercised and lapsed during the financial year and options outstanding at the end of the year are summarised below:

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Issue Type Notes Expiry Date Exercise Balance at Issued Expired Exercised Balance at
Price $ beginning during the during during the end of the
of the year year the year year year
(Number) (Number) (Number) (Number) (Number)
Ordinary options 31/12/08 0.04 38,885,400 - - (26,500,000) 12,385,400
Ordinary options (i) 10/04/11 0.10 26,666,666 20,000,000 (29,166,666) - 17,500,000
Ordinary options (i) 10/04/11 0.15 4,166,666 - (4,166,666) - -
Ordinary options (i) 10/04/11 0.20 4,166,666 - (4,166,666) - -
Ordinary options (ii) 06/09/07 0.10 100,000 - (100,000) - -
Ordinary options (iii) 31/12/07 0.10 63,891,114 - (63,890,739) (375) -
Ordinary options (iii) 31/12/07 0.10 63,891,114 - (63,891,114) - -
Ordinary options (ii) 30/06/08 0.10 6,666,666 - (6,666,666) - -
Ordinary options (ii) 30/06/08 0.15 4,166,667 - (4,166,667) - -
Ordinary options (ii) 30/06/08 0.20 4,166,667 - (4,166,667) - -
Ordinary options (ii) 30/06/09 0.10 3,266,662 5,000,000 (2,199,997) - 6,066,665
Ordinary options (ii) 30/06/09 0.15 2,500,000 5,000,000 - - 7,500,000
Ordinary options (iv) 10/04/11 0.10 - 500,000 - - 500,000
Ordinary options (ii) 30/06/08 0.15 - 2,199,997 (1,133,332) - 1,066,665
Ordinary options (ii) 31/12/09 0.20 - 5,000,000 - - 5,000,000
Ordinary options (ii) 30/06/10 0.25 - 5,000,000 - - 5,000,000
Ordinary options (ii) 31/12/10 0.30 - 5,000,000 - - 5,000,000
222,534,288 47,699,997 (183,715,180) (26,500,375) 60,018,730
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(i) Options issued to directors following shareholder approval at the December AGM. Refer to Note 25 – Key Management Personnel Disclosures
(ii) Options issued to employees for services rendered. Refer to Note 25 – Key Management Personnel Disclosures
(iii) Options issued during 2007 relating to partly paid entitlement shares
(iv) Options issued to former CEO as part of termination package. Refer to Note 25 – Key Management Personnel Disclosures

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
17. Reserves and Retained Losses
Reserves
Share–based payments reserve 3,630,720 3,405,553 3,630,720 3,405,553
Share–based payments reserve
Opening balance 3,405,553 2,885,479 3,405,553 2,885,479
Option expense 225,167 520,074 225,167 520,074
Closing balance 3,630,720 3,405,553 3,630,720 3,405,553
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NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008

The Share-based payments reserve is used to record the value of options accounted for in accordance with AASB2: Share Based Payments.

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
Retained Losses
Retained losses at the beginning of the financial year (28,858,600) (27,525,251) (31,758,515) (28,603,278)
Net loss attributable to the members of the Company (6,720,666) (1,333,349) (5,283,320) (3,155,237)
Retained losses at the end of the financial year (35,579,266) (28,858,600) (37,041,835) (31,758,515)
2008 2007
Cents Cents
18. Earnings Per Share
(a) Basic earnings per share
Loss from continuing operations attributable to the members of the Company (1.22) (0.30)
- -
Profit from discontinued operations
Loss attributable to the ordinary equity holders of the Company (1.22) (0.30)
(b) Diluted earnings per share
Loss from continuing operations attributable to the members of the Company (1.22) (0.30)
- -
Profit from discontinued operations
Loss attributable to the ordinary equity holders of the Company (1.22) (0.30)
(c) Reconciliation of earnings used on calculating
earnings per share
Loss from continuing operations (6,720,666) (1,333,349)
- -
Loss from continuing operations attributable to minority interest
Loss from continuing operations attributable to the members of the Company (6,720,666) (1,333,349)
Used on calculating basic earnings per share
- -
Profit from discontinued operations
Loss from continuing operations attributable to the members of the Company (6,720,666) (1,333,349)
Used on calculating basic and diluted earnings per share
(d) Weighted average number of shares used as the denominator
Weighted average number of shares on issue used in the calculation of diluted EPS 550,306,527 448,463,638
(e) Weighted average number of shares used as the denominator
Weighted average number of shares on issue used in the calculation of diluted EPS 550,306,527 448,463,638
Weighted average number of options that could potentially dilute basic earnings per 216,639,514 153,068,750
share in the future, but are not included in the calculation of diluted EPS because
they are anti-dilutive for the period presented.
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NOTES TO THE FINANCIAL STATEMENTS 48 For the year ended 30 June 2008

19. Controlled Entities

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Name Country of Ordinary Share
Incorporation Consolidated Equity Interest
2008 2007
% %
Parent entity
Ansearch Limited Australia
Controlled entities
Ads Alliance Pty Ltd Australia 100 100
Ansearch.com.au Pty Ltd Australia 100 100
Ansearch Group Services Pty Ltd [1] Australia 100 100
Ansearch Inc United States 100 100
Ansearch Media Pty Ltd [2] Australia 100 100
Austpacific Marketing Pty Ltd Australia 0 100
Austpacific Property Group Pty Ltd Australia 100 100
Austpacific Project Services Pty Ltd Australia 100 100
Australian Golf Resort Developments Pty Ltd Australia 50 100
Bestway Hotels Australia Pty Ltd Australia 0 100
Bestway Mortgage Corporation Pty Ltd Australia 0 100
Bestsitic Australia Pty Ltd Australia 0 100
Enedia Pty Ltd Australia 100 100
Golden Beach Properties Pty Ltd Australia 0 100
Searchworld Pty Ltd [3] Australia 100 100
Webfirm Pty Ltd Australia 100 100
Webfirm Search Pty Ltd [4] Australia 100 100
Westmark Equities Pty Ltd Australia 0 100
Victoria Bridge Holdings Pty Ltd Australia 0 100
Investments in other entities
Optum E S Pty Ltd Australia 15 15
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Equity interests in all controlled entities are by way of ordinary shares

Companies were deregistered during the year

1 Formerly Ansearch Resourcing Pty Ltd

2 Formerly Soush Pty Ltd

3 Formerly Searchtown Pty Ltd

4 Formerly Searchworld Pty Ltd

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 49

20. Discontinued Operations

During the year, the following dormant companies were deregistered:

Austpacific Marketing Pty Ltd; Bestway Hotels Australia Pty Ltd; Bestway Mortgage Corporation Pty Ltd; Bestsitic Australia Pty Ltd; Golden Beach Properties Pty Ltd; and Westmark Equities Pty Ltd. Victoria Bridge Holdings Pty Ltd was a 100% owned subsidiary of Westmark Equities Pty Ltd which was deregistered during the year.

These companies held no assets or liabilities as at the date of deregistration.

21. Business Combinations

Webfirm Pty Ltd and Webfirm Search Pty Ltd (formerly Searchworld Pty Ltd)

On 31 May 2007 Ansearch Limited acquired all of the assets and liabilities of Webfirm Pty Ltd and 100% ownership in Webfirm’s subsidiary Webfirm Search Pty Ltd, a premier website design and online media company operating in Perth.

The acquired business contributed revenues of $580,170 and a net profit of $308,660 to the Group for the period from 1 June 2007 to 30 June 2007, and contributed revenues of $3,590,164 and a loss of $491,357 to the Group for the period 1 July 2007 to 30 June 2008. These amounts have been calculated using the Group’s accounting policies.

The amount of revenue and profits for the combined entity as if the acquisition had occurred on 1 July 2006 has not been disclosed because it’s not practicable to obtain this information.

The purchase consideration was made up of cash and equity and payable in three tranches as follows:

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Tranche 1 – Paid 31 May 2007
Cash 1,500,000
Equity - 15,000,000 fully paid ordinary shares @ 7.6 cents per share 1,140,000
Tranche 2 - Payable 4 July 2007
Cash 1,000,000
Equity – 3,722,854 fully paid ordinary shares @ 9.67 cents per share 360,000
Tranche 3 - Payable 31 October 2007
Cash 1,000,000
Monthly cash earn out payments
Actual based upon July 2007 to October 2007 EBIT performance 113,462
Transaction Costs 435,028
Total consideration 5,548,490
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NOTES TO THE FINANCIAL STATEMENTS 50 For the year ended 30 June 2008

Details of net assets acquired and goodwill are as follows:

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Acquiree’s Fair
Carrying Value
Amount
$ $ $
Purchase consideration 5,548,490
Fair value of net identifiable assets acquired
Cash and cash equivalents 142,364 142,364
Trade debtors less unearned income 61,716 61,716
Property, plant and equipment 89,412 89,412
-
Intellectual property 200,000
Payables (77,471) (77,471)
Net identifiable assets/(deficiency) acquired 216,021 416,021 (416,021)
Goodwill 5,132,469
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Intellectual property consisted of domain names and customer contracts.

The directors have assessed the recoverable amount of goodwill in accordance with AASB 136 Impairment of Assets as outlined in Note 13.

22. Contingencies

On 31 December 2005, 65% of Optum E S Pty Ltd was disposed of for an amount of $800,000 due under the terms of a Sale and Purchase Agreement however, this amount was not paid and the company commenced legal action in the Supreme Court of Western Australia. A full provision has therefore been made against this amount.

Should there be a successful outcome to the legal action, the Company may recognise additional income of $800,000.

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
23. Commitments
Total lease expenditure contracted for at balance date
but not capitalised in the financial statements payable:
-
Within 1 year 320,447 244,146 244,146
-
Between 1 and 5 years 452,074 535,910 535,910
-
772,521 780,056 780,056
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The lease commitments detailed above relate entirely to rental premises occupied by the Ansearch Group.

Capital commitments

The consolidated entity and the Company had not entered any capital expenditure contracts at reporting date that are not recognised as liabilities on the Balance Sheets.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 51

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
24. Remuneration of auditors
During the year the following fees were paid/payable
to the auditor of the company:
Audit services
Audit and review of financial reports 107,000 114,000 107,000 114,000
Non-audit services
- -
Taxation compliance services 8,000 8,000
----- End of picture text -----*

*BDO Kendalls Corporate Tax (WA) Pty Ltd continue to provide the group with non-audit taxation compliance services, however are a related practice of the former auditor of the Company (pre-December 2006). They are thus not included in the above disclosures.

25. Key Management Personnel Disclosures

Directors

The following persons were directors of the Company during the financial year:

Mr. Andrew Barlow (Appointed 22 October 2007) (Chairman from 7 December 2007) Mr Peter Jermyn (Resigned 7 December 2007) (Chairman from 22 October 2007 to 7 December 2007) Mr Glenn Ridge (Resigned 22 October 2007) (Chairman from 18 May 2007 to 22 October 2007) Mr David Burden (Appointed 6 February 2008) Mr Adrian Giles (Appointed 19 December 2007) Mr Adrian Vanzyl (Appointed 28 April 2008) Mr Charles Ellison (Resigned 28 April 2008) Mr Dean Jones (Director from 18 May 2007 to 6 August 2007 and from 22 October 2007 to 11 April 2008) Mr Terry Grigg (Resigned 22 October 2007)

Other key management personnel

The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the financial year:

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Name Position
Mr Robert Edge * Chief Executive Officer (Resigned 1 November 2007)
Company Secretary (25 May 2007 to 1 November 2007)
Mr Andrew Beecher Executive Officer – Webfirm Pty Ltd
Mr Josh Edis * Global Head of “Search” – Searchworld Pty Ltd
Mr Steve Jones General Manager–Ansearch Media Pty Ltd (Appointed 7 April 2008)
Mr Damian Element Company Secretary / CFO (Appointed 1 November 2007)
Ms Jan Macpherson * Company Secretary (Resigned 22 October 2007)
----- End of picture text -----

Also key management personnel during the year ended 30 June 2007.

NOTES TO THE FINANCIAL STATEMENTS 52 For the year ended 30 June 2008

Key management personnel compensation

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
Short-term employee benefits 1,378,054 1,497,329 942,548 1,096,783
Post-employment benefits 33,124 68,427 17,647 37,125
- - - -
Other long-term employee benefits
- -
Termination benefits 100,000 100,000
Share based payments 248,117 489,442 248,117 470,828
Total compensation 1,759,295 2,055,198 1,038,312 1,604,736
----- End of picture text -----

Other transactions with key management personnel

On 1 July 2006 Ansearch Limited acquired Enedia Pty Ltd from parties related to Key Management Personnel. Refer to Note 21 – Business Combinations for further details.

The aggregate amounts payable to key management personnel and related interest charges are set out below:

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CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
Amounts payable to key management personnel - 190,000 - 190,000
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NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 53

Option holdings

The number of options over ordinary shares in the company held during the financial year by each director of Ansearch Limited and other key management personnel of the group, including their personally related parties are set out below:

2008

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Name Balance at the Granted Exercised Other changes Balance at Vested and
start of the during the during during the the end of the exercisable at
year (Number) year as the year year (Number) year (Number) the year end
compensation (Number) (Number)
(Number)
Directors
Mr A Barlow - 10,000,000 - - 10,000,000 10,000,000
Mr D Burden - 25,000,000 - - 25,000,000 10,000,000
Mr A Giles - - - - - -
- - - - - -
Mr A Vanzyl
Mr C Ellison 7,500,000 - - - 7,500,000 7,500,000
Mr D Jones 16,900,001 10,000,000 - (26,900,001) - -
- - - -
Mr P Jermyn 12,603,112 (12,603,112)
- - - -
Mr G Ridge 7,545,625 (7,545,625)
- - - -
Mr T Grigg 7,540,000 (7,540,000)
Other key management
personnel of the Group
- - -
Mr R Edge 500,000 500,000 500,000
- - -
Ms J Macpherson 875,833 833,333 (1,709,166)
Mr D Element - - - - - -
Mr J Edis 5,500,000 - - (2,500,000) 3,000,000 3,000,000
Mr A Beecher - - - - - -
Mr S Jones - - - - - -
Totals 58,464,571 46,333,333 - (58,797,904) 46,000,000 31,000,000
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NOTES TO THE FINANCIAL STATEMENTS

54 For the year ended 30 June 2008

2007

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Name Balance at the Granted Exercised Other changes Balance at Vested and
start of the during the during during the the end of the exercisable at
year (Number) year as the year year (Number) year (Number) the year end
compensation (Number) (Number)
(Number)
Directors
- -
Mr P Jermyn 12,500,000 103,112 12,603,112 12,603,112
Mr C Ellison 7,500,000 - - - 7,500,000 7,500,000
- -
Mr G Ridge 7,500,000 45,625 7,545,625 7,545,625
- -
Mr T Grigg 7,500,000 40,000 7,540,000 7,540,000
Other key management
personnel of the Group
- - - - - -
Mr R Edge
Mr D Jones - 12,500,000 - 4,400,000 16,900,000 16,900,000
Mr J Edis 500,000 5,000,000 - - 5,500,000 5,500,000
- -
Ms J Macpherson 833,333 42,500 875,833 875,833
Mr D London - 666,666 - 352,500 1,019,166 1,019,166
Mr K Morris 500,000 333,333 - - 833,333 833,333
- - -
Mr E Balafas 166,666 166,666 166,666
- -
Mr T Ward 250,000 133,333 383,333 383,333
Totals 36,250,000 19,633,331 - 4,983,737 60,867,068 60,867,068
----- End of picture text -----

No other options were granted to any other directors or key management personnel of Ansearch Limited.

No options provided as remuneration were exercised during the year.

Equity holdings and transactions

The numbers of shares in the company held during the financial year by each director of Ansearch Limited and other key management personnel of the Group, including their personally related parties, are set out below.

The Chief Operating Officer (Josh Edis) was granted 1,000,000 fully paid ordinary shares on 13 September 2007 as a contractual obligation in the company exceeding a contractual sales benchmark for the year ended 30 June 2007.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 55

2008

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----- Start of picture text -----

Name Held at Received during Received during Other Held at
1 July 2007 the year on the year as changes 30 June 2008
exercise of compensation
options
Ordinary shares
Directors
Mr Andrew Barlow 12,235,000 - - 2,918,981 15,153,981
Mr David Burden 420,000 - - 1,539,491 1,959,491
Mr Adrian Giles 725,000 - - 3,743,981 4,468,981
- - - - -
Mr Adrian Vanzyl
- - -
Mr P Jermyn 1,031,128 1,031,128
Mr C Ellison - - - - -
- -
Mr G Ridge (i) 416,250 1,000,000 1,416,250
- - -
Mr T Grigg 760,000 760,000
Mr D Jones 35,200,000 - - (35,200,000) -
Other key management
personnel of the Group
Mr J Edis - - 1,000,000 - 1,000,000
Mr A Beecher - - - 150,000 150,000
Mr S Jones - - - - -
Mr D Element - - - 1,459,491 1,459,491
- - -
Ms J Macpherson 385,000 (385,000)
- - - - -
Mr R Edge
Totals 51,172,378 - 1,000,000 (24,773,056) 27,399,322
----- End of picture text -----

(i) Mr Ridge had ceased to be a director when the 1,000,000 were acquired during the year.

NOTES TO THE FINANCIAL STATEMENTS

56 For the year ended 30 June 2008

2007

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----- Start of picture text -----

Name Held at Received during Received during Other Held at
1 July 2006 the year on the year as changes 30 June 2007
exercise of compensation
options
Ordinary shares
Directors
- -
Mr P Jermyn 816,902 214,226 1,031,128
Mr C Ellison - - - - -
- - -
Mr G Ridge 416,250 416,250
- -
Mr T Grigg 600,000 160,000 760,000
Other key management
personnel of the Group
Mr D Jones 35,200,000 - - - 35,200,000
Mr J Edis - - - - -
Mr D London 4,000,000 - - (495,000) 3,505,000
Mr K Morris 500,000 - - - 500,000
Mr T Ward - - - 250,000 250,000
Mr E Balafas - - - 63,750 63,750
- -
Ms J Macpherson 150,000 235,000 385,000
- - - - -
Mr R Edge
Mr A Wolf - - - - -
Totals 51,172,378 - - (24,773,056) 27,399,322
----- End of picture text -----

26. Share Based Payments

Following approval by shareholders at the Annual General Meeting held on 7 December 2007, options were granted on 31 March 2008 to two directors appointed to the board of directors on 22 October 2007. The options were exercisable immediately upon grant and may be exercised at any time prior to 11 April 2011 on the condition that those directors are still working for Ansearch at that date. When exercisable, each option is convertible into one ordinary share of Ansearch Limited.

Options were granted to executive employees on 17 October 2007 for services performed (an employee share option plan which was approved by an extraordinary general meeting of the shareholders on 16 June 2006). Options granted on 17 October 2007 were exercisable for most executives on June 30 2008 on condition that those executives are still working for Ansearch at that date. When exercisable, each option is convertible into one ordinary share of Ansearch Limited.

Options granted carry no dividend or voting rights.

The options were not issued on a performance basis. All options were issued at the discretion of the Board of Directors to provide an opportunity for key management personnel and other employees to share in the success of the company.

No other options were granted to any other directors or key management personnel of Ansearch Limited.

No options provided as remuneration were exercised during the year.

Set out below are summaries of options granted to key management personnel employees of the Ansearch Group during the year in lieu of services rendered.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 57

Consolidated and Company 2008

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----- Start of picture text -----

Grant Date Expiry Date Exercise Balance Granted Exercised Lapsed Balance Vested and
Price at start of during during during at end of exercisable
the year the year the year the year the year at the end
Number Number Number Number Number of the year
Number
30/06/06 10/04/11 0.10 26,666,666 20,000,000 - (29,166,666) 17,500,000 17,500,000
30/06/06 10/04/11 0.15 4,166,666 - - (4,166,666) - -
30/06/06 10/04/11 0.20 4,166,666 - - (4,166,666) - -
13/10/06 30/06/08 0.10 6,666,666 - - (6,666,666) - -
13/10/06 30/06/08 0.15 4,166,667 - - (4,166,667) - -
13/10/06 30/06/08 0.20 4,166,667 - - (4,166,667) - -
30/06/07 30/6/09 0.15 2,500,000 5,000,000 - - 7,500,000 7,500,000
30/06/07 30/6/09 0.10 1,833,332 5,000,000 - (1,833,332) 5,000,000 5,000,000
30/06/07 30/6/09 0.10 1,366,664 - - (299,999) 1,066,665 1,066,665
01/04/08 10/04/11 0.10 - 500,000 - - 500,000 500,000
17/10/07 30/06/08 0.15 - 2,199,997 - (1,133,332) 1,066,665 1,066,665
04/04/08 31/12/09 0.20 - 5,000,000 - - 5,000,000 -
04/04/08 30/06/10 0.25 - 5,000,000 - - 5,000,000 -
04/04/08 31/12/10 0.30 - 5,000,000 - - 5,000,000 -
Total 55,699,994 47,699,997 - (55,766,661) 47,633,330 32,633,330
Weighted average exercise price $0.125 $0.155 - $0.123 $0.154 $0.110
----- End of picture text -----

Consolidated and Company 2007

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----- Start of picture text -----

Grant Date Expiry Date Exercise Balance Granted Exercised Lapsed Balance Vested and
Price at start of during during during at end of exercisable
the year the year the year the year the year at the end
Number Number Number Number Number of the year
Number
30/06/06 10/04/11 0.10 26,666,666 - - - 26,666,666 26,666,666
30/06/06 10/04/11 0.15 4,166,666 - - - 4,166,666 4,166,666
30/06/06 10/04/11 0.20 4,166,666 - - - 4,166,666 4,166,666
13/10/06 30/06/08 0.10 - 6,666,666 - - 6,666,666 6,666,666
13/10/06 30/06/08 0.15 - 4,166,667 - - 4,166,667 4,166,667
13/10/06 30/06/08 0.20 - 4,166,667 - - 4,166,667 4,166,667
13/10/06 30/06/09 0.15 - 2,500,000 - - 2,500,000 2,500,000
13/10/06 30/06/09 0.10 - 1,833,332 - - 1,833,332 1,833,332
13/10/06 30/06/09 0.10 - 1,533,330 - - 1,366,664 1,366,664
Total - 34,999,998 20,866,662 - - 55,699,994 55,699,994
Weighted average exercise price $0.118 $0.138 - - $0.125 $0.125
----- End of picture text -----

No options expired during the periods covered by the above tables.

NOTES TO THE FINANCIAL STATEMENTS 58 For the year ended 30 June 2008

The model inputs for options granted during the year ended 30 June 2008 included:

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----- Start of picture text -----

Model Input Class #1 Class #2 Class #3 Class #4 Class #5 Class #6 Class #7 Class #8
Grant Date 17/10/07 17/10/07 31/03/08 02/04/08 02/04/08 02/04/08 02/04/08 02/04/08
Exercise Date 30/06/08 30/06/08 03/03/08 02/04/08 30/06/08 31/12/08 30/06/09 31/12/09
Expiry Date 30/06/10 30/06/10 10/04/11 30/06/09 30/06/09 31/12/09 30/06/10 31/12/10
Exercise Price $0.15 $0.15 $0.10 $0.10 $0.15 $0.20 $0.25 $0.30
Exercise Factor 2.5 1.5 2.5 2.5 2.5 2.5 2.5 2.5
Price at Grant Date $0.064 $0.064 $0.019 $0.015 $0.015 $0.015 $0.015 $0.015
Expected Volatility 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Expected Dividend 0% 0% 0% 0% 0% 0% 0% 0%
Yield
Risk Free 6.56% 6.56% 6.26% 6.26% 6.26% 6.26% 6.26% 6.26%
Interest Rate
----- End of picture text -----

The volatility calculation is based upon historical share price information of the Company from the commencement of listing (17 December 1987) up to the grant date of the options.

The model inputs for options granted during the year ended 30 June 2007 included:

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----- Start of picture text -----

Model Input Class #1 Class #2 Class #3 Class #4 Class #5 Class #6 Class #7
Grant Date 13/10/06 13/10/06 13/10/06 13/10/06 13/10/06 13/10/06 13/10/06
Exercise Date 13/10/06 13/10/06 30/06/07 30/06/07 30/06/07 30/06/07 30/06/07
Expiry Date 30/06/08 30/06/08 30/06/09 30/06/08 30/06/09 30/06/09 06/09/09
Exercise Price $0.20 $0.15 $0.15 $0.10 $0.10 $0.10 $0.10
Exercise Factor 2.5 2.5 2.5 2.5 2.5 1.5 1.5
Price at Grant Date $0.064 $0.064 $0.064 $0.064 $0.064 $0.064 $0.064
Expected Volatility 114.5% 114.5% 114.5% 114.5% 114.5% 114.5% 114.5%
Expected Dividend 0% 0% 0% 0% 0% 0% 0%
Yield
Risk Free 5.78% 5.78% 5.78% 5.78% 5.78% 5.78% 5.78%
Interest Rate
----- End of picture text -----

The volatility calculation is based upon historical share price information of the Company from the commencement of listing (17 December 1987) up to the grant date of the options.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 59

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----- Start of picture text -----

CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
27. Cash Flow reconciliation
Reconciliation of Net Cash Flows from Operating
Activities to Loss for the year
Loss for the year (6,720,666) (1,333,349) (5,283,320) (3,155,237)
Depreciation and amortisation 180,520 31,133 96,177 16,154
- -
Impairment of Intangibles 2,442,469 30,870
- -
Gain on convertible note repayment (37,758) (37,758)
Share based payment 225,167 520,074 225,167 520,074
- -
Issue of share to employee 70,000 70,000
Provision for impairment of receivables 220,016 87,943 1,585,491 440,368
Changes in assets and liabilities (net of effects
of acquisition and disposal of entities)
(Increase)/decrease in trade and other debtors 2,166,318 (2,246,187) 161,898 (604,627)
-
Decrease/(increase) in other financial assets (90,951) (119,218) 285,728
Increase/(decrease) in trade and other creditors, (1,045,587) 1,980,286 (492,733) 392,893
employee benefits and other provisions
Net cash outflow from operating activities (2,552,714) (1,086,206) (3,351,592) (2,428,133)
----- End of picture text -----

28. Financial Risk Management

The Group’s operations expose it to various financial risks including market, credit, liquidity and cash flow risks. Risk management programmes and policies are employed to mitigate the potential adverse effects of these exposures on the results of the Group.

Financial risk management is carried out by the Chief Financial Officer with oversight provided by the Board.

(a) Market risks

The Group’s activities expose it primarily to the financial risks of changes in foreign currency. In the current reporting period the foreign currency related exposure is not considered to be material to the entity’s overall business operation. Foreign currency exposure is monitored by the Board on a quarterly basis. The Board has considered that any specific risk mitigation action is not required at this time.

(b) Credit risk

The Group has no significant concentrations of credit risk. As disclosed in Note 8 a), ‘Impairment of receivables’, The Group has policies in place to ensure that sales of services are made to customers with appropriate credit history. Before accepting any new customers, the Group internally reviews the potential customer’s credit quality. A substantial deposit on contract in website development and hosting segment of the Group mitigates initial credit risk.

NOTES TO THE FINANCIAL STATEMENTS 60 For the year ended 30 June 2008

The Group and the Company hold the following financial assets and liabilities with potential credit risk exposure:

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----- Start of picture text -----

CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
Financial assets
Cash and cash equivalents 1,443,689 3,109,520 327,167 592,538
Trade and other receivables 1,250,855 3,490,562 38,945 204,894
2,694,544 6,600,082 366,112 797,432
----- End of picture text -----

(c) Liquidity risk

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----- Start of picture text -----

CONSOLIDATED COMPANY
2008 2007 2008 2007
$ $ $ $
Financial liabilities
Trade and other payables 2,215,590 5,721,177 398,100 890,833
----- End of picture text -----

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close-out market positions. Due to the dynamic nature of the underlying business, the Board aims at maintaining flexibility in funding by keeping committed credit lines and sufficient cash available.

All financial liabilities are expected to be settled within 12 months of the reporting date, per the contractual terms of the obligations.

(d) Cash flow and fair value interest rate risk

As the Group has no significant interest-bearing assets or liabilities (except cash), the Group’s income and operating cash flows are not materially exposed to changes in market interest rates.

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on exposure to interest rates on interest bearing bank balances throughout the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates (also comparable to movement in interest rates during the reporting year).

At reporting date, if interest rates had been 100 basis points higher or lower and all other variables were held constant, the Group’s net profit would increase by $12,345 and decrease by $14,568 (2007: increase by $4,442 and decrease by $6,308). This is mainly attributable to the Group’s exposure to interest rate on its bank balances bearing variable interest rates.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 61

Interest rate risk exposures

The Group’s exposure to interest rate risk, and the effective weighted average interest rate for each class of financial assets and financial liabilities, is set out below.

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----- Start of picture text -----

2008 Notes Weighted Floating 1 Year Over 1 More Non- Total
Average Interest Or Less To 5 Than 5 Interest $
Interest Rate $ Years Years Bearing
Rate $ $ $ $
CONSOLIDATED
Financial assets
Cash assets 7 6.4% 805,385 219,308 - - 418,996 1,443,689
Receivables 8 & 9 - - - - 1,250,855 1,250,855
- -
Total financial assets 805,385 219,308 1,669,851 2,694,544
Financial liabilities
Trade and other 14 - - - - (2,215,590) (2,215,590)
creditors
- - - - - -
Webfirm and
Searchworld
Unearned revenue 15 - - - - (692,894) (692,894)
- - - -
Total financial liabilities (2,908,484) (2,908,484)
- -
Net financial assets 805,385 219,308 (1,238,633) (213,940)
----- End of picture text -----

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----- Start of picture text -----

2007 Notes Weighted Floating 1 Year Over 1 More Non- Total
Average Interest Or Less To 5 Than 5 Interest $
Interest Rate $ Years Years Bearing
Rate $ $ $ $
CONSOLIDATED
Financial assets
Cash assets 7 6.1% 1,916,634 179,418 - - 1,013,468 1,443,689
Receivables 8 - - - - 3,490,562 1,250,855
- -
Total financial assets 1,916,634 179,418 4,504,030 2,694,544
Financial liabilities
Trade and other 14 - - - - (3,261,177) (3,261,177)
creditors
Webfirm acquisition 15 - - - - (2,460,000) (2,460,000)
balance
- - - -
Total financial liabilities (5,721,177) (5,721,177)
- -
Net financial assets 1,916,634 179,418 (1,217,147) 878,905
----- End of picture text -----

NOTES TO THE FINANCIAL STATEMENTS 62 For the year ended 30 June 2008

Net fair value of financial assets and liabilities

On-balance sheet

The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities of the consolidated entity approximates their carrying value.

The net fair value of other monetary financial assets and financial liabilities is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for assets and liabilities with similar risk profiles.

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, other than investments, of the consolidated entity which have been recognised in the Balance Sheet is the carrying amount net of any provision for doubtful debts.

29. Events Subsequent to Reporting Date

On 29 July 2008 the Company announced a capital raising program consisting of the issue of fully paid ordinary shares in the company at an issue price of $0.012 in three tranches as follows:

i) the issue of 72,000,000 fully paid ordinary shares to sophisticated investors and specialist institutions;
ii) the issue of approximately 34,333,334 fully paid ordinary shares to directors and senior management subject to shareholder approval; and
iii) an offer to all shareholders under a share purchase plan to be conducted in September 2008.

On 15 August 2008 the company called an extraordinary general meeting in order that shareholders be given an opportunity to approve the issue of shares and options to directors, and to ratify the various elements of the capital raising program (referred to in the paragraph above). The meeting was held on 16 September 2008 and all resolutions put to the meeting were passed.

On 27 August 2008, pursuant to the board approved 2009 staff remuneration plan, shares and options were granted to executive and non-executive employees for services performed or to be performed (an employee share option plan which was approved by an extraordinary general meeting of the shareholders on 16 June 2006), as follows:

i) 71,428 ordinary shares were issued to the majority of employees of the Group for nil consideration;
ii) 30,100,000 options were allotted to executives and managers of the Group for nil consideration. These options vest in three tranches and have vesting conditions attached

On 8 September 2008 four 100% owned Ansearch Limited subsidiary companies effected a change of name. Refer to note 19.

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2008 63

30. Variance between the Appendix 4E ‘Preliminary Final Report’ and the Annual Report

Losses in the Annual Report are $2,432,469 greater than the Appendix 4E “Preliminary Final Report” due to impairment of intangible assets (including goodwill). Accordingly, net assets have decreased by the same amount.

The Directors held a meeting on 24 September 2008 and again reviewed the recoverable amounts of intangible assets and goodwill. The directors considered new information available to them, including:

the results of the August trading month,
the further deterioration of capital markets indices during September and the impact of market conditions on the ability of Ansearch to raise capital for investment,
the decision to delay further investment in the Anzwers search engine platform, and
a decision to move some of the business formerly being transacted by Searchworld into Webfirm.

Having regard to these matters, and electing to take a conservative approach, the directors have determined that it would be prudent to impair the carrying value of goodwill and intangible assets held on the books of the company. Further details are included in Note 13.

NOTES TO THE FINANCIAL STATEMENTS 64 For the year ended 30 June 2008

Director’s Declaration

The directors declare that the financial statements and notes set out on pages 27 to 65:

(a) comply with Australian Accounting Standards the Corporations Regulations 2001 and other mandatory professional reporting requirements in Australia; and
(b) give a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2008 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date.

In the directors’ opinion:

(a) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
(b) the audited remuneration disclosures set out on pages 11 to 18 of the Directors’ Report comply with section 300A of the Corporations Act 2001.

The directors have been given the declaration by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001.

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

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Andrew Barlow Chairman Ansearch Limited

30 September 2008

DIRECTOR’S DECLARATION

INDEPENDENT AUDIT REPORT TO THE MEMBERS

==> picture [506 x 776] intentionally omitted <==

INDEPENDENT AUDIT REPORT TO THE MEMBERS

Corporate Governance Statement

The directors of Ansearch Limited have a commitment to maintain long term shareholder value, and recognise the benefits of good corporate governance in achieving this aim.

Having regard to the size and resources available to the company, the company endeavours at all times to comply with the Australian Stock Exchange Corporate Governance Principles and Recommendations (‘ASX Principles’). Unless otherwise stated, the company complies with the ASX recommendations.

Principle 1: Lay solid foundations for management

and oversight

The company has separate functions for board and senior management. The company has yet to disclose this publicly. The board meet regularly to perform their prescribed functions. The company has a process for evaluating the performance of senior executives. The company has yet to disclose this publicly. The performance of the chief executive officer and senior executives of the company has taken place prior to the date of this report, in accordance with the established process.

Principle 2: Structure the board to add value

The majority of the board are independent directors. Independent directors include Mr Andrew Barlow, Mr Adrian Giles and Mr Adrian Vanzyl. The only non-independent director in Mr David Burden who holds the office of chief executive officer. The chair of the board, Mr Andrew Barlow, is an independent director. The role of chair and chief executive officer are held by different individuals. The company has a board consisting of four directors, and the directors collectively perform the functions of a nomination committee as the directors do not consider that any increase in efficiency or effectiveness would be achieved through the formation of a nomination committee. The directors have access to professional advisors who provide advice and assistance as requested by the directors. The company is yet to implement a process for evaluating the performance of the board, its committees or individual directors.

Principle 3: Promote ethical and responsible decision making

The company has a code of conduct for directors and a code of conduct for employees. The company actively complies with this policy. The company has a policy concerning trading in company securities by directors and employees. The company actively complies with this policy. The board allows individual directors to seek independent professional advice to enable a director to carry out his duties after discussion with the chairman in the first instance. Any necessary advice is obtained at the company’s expense and advice obtained is made available to all directors.

Principle 4: Safeguard integrity in financial reporting

The directors collectively perform the functions of an audit committee as the directors do not consider that any increase in efficiency or effectiveness would be achieved through the formation of an audit committee. The directors have access to professional advisors who provide advice and assistance as requested by the directors. The board while collectively performing the functions of an audit committee consists of a majority of independent directors and has at least three members. Compliance with accounting and financial reporting standards and procedures are subject to board review and review by the external auditors. The nonexecutive directors have direct access to the external auditor and are permitted to make such enquiries of the auditor as they feel are necessary. The external auditor is invited to attend the annual general meeting and make himself or herself available to answer any questions pertaining to the conduct of the audit, the content of the audit report or the financial affairs of Ansearch.

Principle 5: Make timely and balanced disclosure

The company has a policy of complying with ASX disclosure requirements. The directors and senior management have received education and training on the subject of ASX disclosure requirements. The company actively complies with this policy.

CORPORATE GOVERNANCE STATEMENT

Principle 6: Respect the rights of shareholders

The company has a policy for promoting effective communication with shareholders. The company actively complies with this policy, by way of ASX announcements, letters posted to shareholders, and shareholder presentations.

Principle 7: Recognise and manage risk

Business risks are identified by senior management and bought to the attention of the board if deemed material. The company does not have a formal business risk management plan. In accordance with section 295A of the Corporation Act, the board has received assurance from both the CEO and CFO that a system of risk management and internal control appropriate to the size and nature of the organisation is in place and is operating effectively in all material respects.

Principle 8: Remunerate fairly and responsibly

The directors collectively perform the functions of a remuneration committee as the directors do not consider that any increase in efficiency or effectiveness would be achieved through the formation of a remuneration committee. The directors have access to professional advisors who provide advice and assistance as requested by the directors. The non-executive directors and the executive directors and senior management of the company have clearly distinguishable remuneration structures which are set out in documented service agreements. Full remuneration details for directors and key executives are provided in the director’s report and the notes to the annual financial statements in this annual report.

Corporate Directory

Directors

Mr Andrew Barlow – Chairman/

Non-Executive Director Mr David Burden – CEO/Managing Director Mr Adrian Giles – Non-Executive Director Mr Adrian Vanzyl – Non-Executive Director

Auditors

BDO Kendalls Audit & Assurance (NSW-VIC) Pty Ltd The Rialto Level 30, 525 Collins Street MELBOURNE VIC 3000

Solicitors

Chief Executive Officer

Mr David Burden

Company Secretary Mr Damian Element

Head Office

Ansearch Limited Level 3, 95 Coventry Street South Melbourne Vic 3205 Australia Phone: + 61 3 8695 9199 Fax: + 61 3 9696 0700 Toll free 1300 852 722

Minter Ellison Level 23,525 Collins Street Melbourne VIC 3000

Bankers

National Australia Bank Limited 424 St Kilda Road St Kilda VIC 3004

Share Register

Computershare Registry Services Pty Ltd Yarra Falls 452 Johnston Street Abbotsford, VIC 3001

Registered Office

Ansearch Limited Level 3, 95 Coventry Street South Melbourne Vic 3205 Australia Phone: + 61 3 8695 9199 Fax: + 61 3 9696 0700 Toll free 1300 852 722

Home Stock Exchange

Australian Stock Exchange Limited Level 45, South Tower Rialto, 525 Collins St Melbourne, VIC 3000 ASX Code: ANH

CORPORATE DIRECTORY

AI assistant

ADSLOT LTD. — Annual Report 2008

64306_rns_2008-10-23_f6ff1db5-57c4-4995-acde-8a50783faff9.pdf

group of companies

Contents

Chairman’s Report

Dear Ansearch Shareholders,

CEO’s Report

CEO’s Report cont...

Directors’ Report

Directors

Information on Directors

Mr Andrew Barlow (Age 35)

Chairman

Mr David Burden (Age 46)

Managing Director and Chief Executive Officer

Mr Adrian Giles (Age 34)

Director

Dr Adrian Vanzyl (Age 40)

Director

Damian Element

Company Secretary and Chief Financial Officer

Operating Results

Dividends

Review of Operations

Ansearch Media (formerly Soush and adsAlliance):

Webfirm

Searchworld (formally Searchtown)

Principal Activities

Significant changes in the state of affairs

Share Issue

Board Composition

Acquisitions

Organisational Restructure

Business Partnership Agreements

Matters Subsequent to 30th June 2008

Likely future developments and expected results

Environmental Regulations

A. Principles used to determine the nature and amount of remuneration

Directors’ and Executives’ Remuneration

Directors’ Meetings

Benefits

REMUNERATION REPORT (Audited)

B. Details of remuneration

B. Details of remuneration (cont)

B. Details of remuneration (cont)

C. Service agreements

Andrew Barlow, Chairman and Non-Executive Director

C. Service agreements

David Burden, Managing Director and Chief Executive Officer

Mr Adrian Giles, Non-Executive Director

Mr Adrian Vanzyl, Non-Executive Director

Damian Element, Company Secretary and Chief Financial Officer

Steve Jones, General Manager, Ansearch Media Pty Ltd

Mr Andrew Beecher

Mr Josh Edis

D. Share-based compensation

Options - 2008

Options - 2007

D. Share-based compensation (continued)

E. Additional information

Other Information

Shares under option

Indemnification and Insurance of Officers

Auditor’s Independence Declaration

Proceedings on behalf of the Company

Default on sale by Wavtech Pty Ltd

Non Audit Services

Auditor

Income Statements

For the year ended 30 June 2008

Balance Sheets As at 30 June 2008

Statements of Changes in Equity For the year ended 30 June 2008

Cash Flow Statements For the year ended 30 June 2008

Notes to the Financial Statements For the year ended 30 June 2008

1. Summary of Significant Accounting Policies

(a) Going concern

(b) Basis of preparation

Compliance with IFRS

Adoption of new and revised accounting standards

ADSLOT LTD. Annual Report 2008