COMPLII FINTECH SOLUTIONS LTD — Capital/Financing Update 2005

Aug 7, 2005

G Retail Limited ACN 098 238 585

Level 6, 15 Castlereagh Street Sydney NSW 2000 Phone: 02 9287 6394 Fax: 02 8915 1148

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

8 August 2005

Dear Sir

COMPANY UPDATE AND ENGAGEMENT OF CORPORATE ADVISORS

Please find attached an announcement in connection with recent trading conditions and the appointment of corporate advisors.

Yours faithfully

Varleson

Chris Charleson Company Secretary

G Retail Limited ACN 098 238 585

Level 6, 15 Castlereagh Street Svdney NSW 2000 Phone: 02 9287 6394 Fax: 02 8915 1148

COMPANY UPDATE AND ENGAGEMENT OF CORPORATE ADVISORS

On 24 March 2005. G Retail Limited ("GBR" or "the Company") reported its interim results for the 2005 financial year, and provided a detailed update of progress made on a number of strategic fronts, including overall rehabilitation, people and the Company's supply chain.

Under the strategy approved by the Board of Directors in late 2004, the Company increased its investment in systems which enable a diversity of offering within the Gowings stores to be maintained, and provide the capability to turn inventory more rapidly. We noted at that time that this strategy was inherently more difficult to execute and would take longer to achieve results. since it involved a deliberate increase in the number of Support Office personnel. However, it is intended that this infrastructure will provide a solid base for the expansion, in due course, of the number of stores, over which the increased Support Office expense can be amortised.

In this respect, the Company has continued to make significant progress. We have significantly rationalised the number of suppliers to the Company, whilst emphasising the use of EDI within the supply chain. In turn, we are well advanced in our goal to have "live update" stock modeling in early calendar 2006. At all times, we have been careful to ensure the continued appeal of the "Gowings" brand.

These changes, together with other initiatives, have enabled the Company to reduce inventory. However, some of the cash flow gains achieved from the reduction in inventory, have been disbursed in the form of reduced creditors.

Recent Trading Conditions and Forecast Result¹

This progress within the business has not been matched by the recent trading performance of the Company. Retail conditions in the third quarter of the financial year were patchy but have proved more difficult in the past two months. This has been exacerbated by heavy discounting by major retailers in the Sydney CBD. It is no surprise that contributions from our two non CBD stores - Oxford Street and Hornsby have improved meaningfully from the corresponding period.

Greater pricing discipline and an anticipated lower shrinkage are likely to result in a close to 4% increase in realised percentage margin over the course of fiscal 2005 relative to the prior year. Whilst concession income has contracted, the closure of the loss making Parramatta store and corporate business is likely to see profit generated at the store level, prior to direct, indirect, marketing and support office costs, increase by around 15%. This has been recently assisted by implementation of new staff rostering systems which have enabled GBR to reduce store staffing expenses in recent months.

However, the necessity to implement improved support office infrastructure has seen costs (excluding marketing expenses) increase by over 20% in the area. As a result, the Company's loss before tax and individually significant items in fiscal 2005 is likely to be approximately \$3million, which would only be a 10% improvement on the \$3.3million out-turn in the 2004 fiscal vear.

Despite this loss, the Company has to date maintained a debt free balance sheet. This has been made possible by equity raised in late 2004, and inventory reductions from \$8.4million at end July 2004 to current levels of about \$6million. In turn, we have ensured our suppliers are promptly paid, with creditors also being reduced by over \$1million. Net tangible assets are still in excess of \$5million, or over \$0.13 per share.

Future Strategy and Engagement of Corporate Advisors

The results of the initiatives taken to date continue to emphasise the desirability of diversifying the number and geography of Gowings outlets away from the Sydney CBD - where the Company generates three quarters of its current sales of around \$27 million per annum.

To ensure that this initiative can be enacted in a timely fashion, the Company has engaged Baron Partners Limited ("Baron") as Corporate Advisors to assist in the sourcing, review and implementation of appropriate strategic and financing opportunities for G Retail Limited.

Further details of the Company's financial performance for the 2004/05 financial year will be released in September 2005.

For further information:

Andrew Brown Chairman (02) 9239 8744 / 0418 215 255

Notes:

$1:$ All details of results are sourced from management accounts to end June 2005 and are subject to audit and stocktakes.