COMPLII FINTECH SOLUTIONS LTD — AGM Information 2004

Dec 13, 2004

The Manager Company Announcements Office Australian Stock Exchange Level 6, 20 Bridge Street SYDNEY NSW 2000

14 December 2004

Dear Sirs

CHAIRMAN'S ADDRESS TO SHAREHOLDERS OF GOWINGS RETAIL LIMITED

Attached is the Chairman's address to the Shareholders of Gowings Retail Limited that will be delivered at the AGM at 10.00 AM today.

Yours faithfully

Clarleson

Chris Charleson Company Secretary

F:\PEOPLE\Amanda Stewart\Letters\2004\041214 ASX.doc

CHAIRMANS ADDRESS TO SHAREHOLDERS OF GOWINGS RETAIL LTD. ANNUAL GENERAL MEETING 14 DECEMBER 2004

You are in the meeting room of the Australian Retailers Association – a place where over the past few years there has been great rejoicing. Consumers have continued to expand their exposure to personal credit, fuelling strong retail sales. The Australian dollar has strengthened, expanding margins for importers. Wage inflation has been modest. Technology has enhanced the supply chain, increasing stock turns and reducing capital tied up on the retailer's balance sheet. In all, a period of virtually unprecedented buoyancy for the sector.

And the stock market isn't slow to notice this. Over the three years that your company has been listed, we can look out of the windows here at Market Street and see David Jones (\$1.20 to \$2.33 a share excluding dividends), even Coles Myer (\$8.20 to \$9.60). Angus and Coote (\$6.40 to \$10). We daren't look further afield – Noni B (74cents to \$2.70) and Colorado (\$2.20 to over \$6). And all have paid dividends too.

The performance of your company's shares $- $1.00$ to $25c - is$ unfortunately a reasonable reflection of its operating performance over this period. In my piece within the Annual Report, I attempted to explain what had gone wrong over this period. The results of 2004 were not simply a reflection of the company over this year, but resulted from a series of pent-up problems, which finally came home to roost.

Let's be clear. The previous management team and board of the company weren't oblivious to the issues. They had a series of ideas to fix the problems. Some of them weren't necessarily the right ideas, perhaps, but many were – and are in the process of being implemented. The key, of course, is in the implementation, which in the past has not been up to scratch.

We have started to embark on some bold changes at Gowings Retail. Ringing in our ears could well be five lines from Goethe in the 1835 translation of his epic "Faust", which have great application to our situation here:

"Then indecision brings its own delays And days are lost lamenting over lost days Are you in earnest? Seize this very minute: What you can do, or dream you can do, begin it; Boldness has genius, power and magic in it."

So at Gowings, no more lamenting – we have begun in earnest. But as you all know, problems which have built up over a long period don't take five minutes to $fix$ – unless you demolish the structure which caused them. To some degree we have to do this. They say in investment that the four most dangerous words are "it's different this time". Ironically the six most dangerous words at Gowings Retail are – "we've always done it this way".

At the outset, let's establish one thing that's not changing – our trading name. Whilst there is a resolution to change the name of the Company to "G Retail Limited" on the agenda today, the stores will still operate as "Gowings". This arises from the intellectual property agreement between the Company and Gowing Brothers Limited. It is an intrinsic and agreed part of the recapitalisation of the Company that these brands will be licensed, in perpetuity, to your Company, from Gowing Brothers Limited. There is still some negotiation to be done with Gowing Brothers in relation to certain explicit conditions of the new agreement. However, without this agreed transfer, the August recapitalisation would not have taken place.

Since the board changes in August, your Directors have focused on five key areas:

• $\blacksquare$ People
• Training $\overline{a}$
• Systems $\blacksquare$
• Relationships
• Finance $\overline{a}$

People are our key asset. They represent the face of the company to our customers. One great salesperson gives the customer a tremendous view of the stores; a melancholy attitude spells the same about our business. And whilst people can't be on a high 24 hours a day, we can help them sustain their efforts with better conditions, better procedures and better money.

We have recently brought in a number of incentives for assisted sales, which I believe are the first in the 138-year history of the stores. We are giving store managers more control over their stores, and gradually what is in them, and providing proper incentives based on store performance as well as a far greater number of spot bonuses.

We have also hired a very talented head of Human Resources to ensure our people are properly looked after in the areas of awards, OH&S, discrimination, and proper evaluation of their performance against what is reasonably expected.

Of course, what we can expect from people needs to be judged against what tools we give them to do the job. The simple fact is that for many years, the tools haven't been as good as they should be in two areas: training and systems.

Our new managing Director, Tony Gattari, not only comes from a background with Harvey Norman Computers but from having spent the last two years running his own training and coaching company. He is a voracious digester of all that is good in coaching not just work based ideals, but lifestyle and life balance. Tony's training was the first for some years at Gowings, giving our people the confidence, skills, tools and desire to assist the customer. Rest assured there will be plenty more to come. Training is a non discretionary investment.

So are decent systems. Our front end systems are not too bad, and far better than our back end. We have placed a huge emphasis on getting our supply chain management improved with improved modelling and eventually far greater automation of inventory. Even if we grow sales, this should still permit us to reduce inventory. Given our margins, it is clear that the \$8.8 million of inventory at end October noted in our prospectus is still too high. To save you the math, if we turn over about \$28 million $-$ and that's not a forecast - at a 40% realised gross margin, our stock at that level would turn less than twice a year.

That's half of what it should do. Better systems will enable us to grow and still free up your money. We now have people working full time to get there. They are being aided by a new Head of Sales and operations, Rob Savli, who had recently joined us from the very successful Woolworths store at Town Hall.

Better supply chain systems must mean better relationships with suppliers. We know some of our suppliers haven't been the happiest with Gowings over the past few years. We've undertaken to pay them in a more timely fashion, except where there's a genuine dispute, and to try and give them greater certainty of our needs. We recently held a supplier night where well over 100 of them came to hear the changes happening at our venerable company. Most left impressed. Now it's up to us to deliver.

These changes are all designed to improve the operational running of the business. Of course, there would be no point making them if the business wasn't going to be around to benefit. To be blunt, but realistic, if Tony Young and Trent Capital had not put money into this company in August, it would probably be in the hands of an administrator. It would have been unlikely that Gowings Retail could have met its commitments as and when they came due, on the basis of the terms of exit from Parramatta.

In this context, we have been very conscious of ensuring the company is properly financed. The placement to partially fund the exit of Parramatta was followed by a \$500,000 share purchase plan at the same price, and now the 1-2 rights issue also at \$0.25 per share. This has given all shareholders the opportunity to increase their investment, if they choose, at the same price as Trent Capital and Tony Young did via the placement. Tony and Trent Capital have also made available a loan facility to the company to be repaid from the rights issue, if it is called upon. I'm glad to say that, as yet, it has not. Allied to better inventory management, the \$3.1 million rights issue should put us in a position to at least test a more growth oriented business plan for the company.

On page 13 of the prospectus, we disclosed that we were tracking slightly behind last year in the three months to October when the impact of Parramatta is taken out of the fiscal 2004 figures. The period since then is a very non comparable one because of the differential timing of catalogue releases, quite different advertising campaigns etc. In addition, the next six weeks or so are amongst the busiest on the company's calendar, which makes it extremely rash to make any predictions. I will reiterate the comments in the prospectus that, in the absence of unforeseen circumstances, we do expect a significant operating loss this year.

Despite all the initiatives we have already undertaken, there are many more things to be done. Our store formats are still in need of work, and this will probably involve some delicate negotiations with our landlords over the next few months.

Your Directors, until this month, have met fortnightly since August to ensure the priorities for the business are appropriately set. In addition, they have performed massive amounts of work outside the boardroom, including writing the prospectus, analysing business cases for specific stores, bringing outside resources in to help the company, hiring key executive staff, providing valid comparisons for a number of benchmarks the company requires in areas of rent etc. These activities have enabled us to replace a number of the consultants who were previously engaged by the company.

It's sad, therefore, to see a substantial number of proxies voting against the issue of options to myself and Tony Young as non-executive Directors. Perhaps we only have ourselves to blame because we have not adequately explained our remuneration, given that we joined the board after the end of the 2004 financial year.

Lets make it crystal clear. The Company only remains in existence because of the financial support given to it by Trent Capital and Tony Young. Without our backstop loan facilities and effective underwriting of the rights issue, our auditors would have had great difficulty signing the accounts at 1 August 2004 as a going concern. No-one else was interested in underwriting the rights issue at anything like commercial rates; the underwriting is being done at about half of normal market rates for a company of this size. This alone has saved the Company in the vicinity of \$80,000.

Tony and I are each paid cash non executive Directors fees of \$25,000 per annum. What we sought, at the outset, was a remuneration basis which reflects the high personal liability we have had to take on, the much greater than normal effort that is required of ourselves and our staff, but which does not place a high cash financial burden on Gowings Retail. The company's position when we joined was very precarious, and cash needed to be conserved.

We therefore agreed at the outset, when putting money into Gowings Retail and joining the board, that we would take around two-thirds of our remuneration in the form of options for the next three years, with escalating strike prices. Over the three year period, the options, using a Black Scholes formula with 25c strike price, 6.5% interest rate, 25% volatility and no dividends, are designed to provide us, at issue, with remuneration of \$75,000 each on average per annum. It turns out to be slightly more in the first year and a bit less in the second and third year due to the escalating strike prices. We agreed with the major shareholder at the time that this was reasonable given the workload and the risks.

We believe that it aligns our interests with your as shareholders $-$ if we don't turn this company, the options are likely to be worthless. To those who voted or intend voting against the resolutions, we would ask that you see these resolutions in this light, and reevaluate your decisions.

In conclusion, we are working hard, and have made a number of bold changes – but many more are necessary and yet to come. Let's just hope the boldness at Gowings comes with power and magic in it.

Andrew Brown Chairman