CORE ENERGY MINERALS LTD — Annual Report 2004

Aug 29, 2004

PRELIMINARY FINAL REPORT

Name of entity
Global Approach Limited
ABN or equivalent company reference	Financial year ended ('current period')
009 118 861	30 June 2004
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Revenues from ordinary activities		up		$216%$ to	\$746,457
Net profit (loss) from ordinary activities after tax attributable to members		down	465%	to	\$(601,469)
Net profit (loss) for the period attributable to members		down	465%	to	\$(601,469)
NTA backing		Current period		Previous period	corresponding
Net tangible asset backing per ordinary security		\$0.009			\$0.051

• 1 This report has been prepared in accordance with AASB Standards, other AASB authoritative pronouncements and Urgent Issues Group Consensus Views or other standards acceptable to ASX.
• 2 This report, and the accounts upon which the report is based (if separate), use the same accounting policies.
• 3 This report does give a true and fair view of the matters disclosed.
• 4 No final dividend has been declared for the current year and no dividend was declared or paid for the previous year.
• 5 The accounts are in the process of being audited.

The consolidated entity financial information includes significant income and expenses with respect to the results of MusicHall on-line casino for the six months ended 30 June 2004 which are unaudited where the auditors have been otherwise unable to substantiate. Due to the significant nature of the MusicHall transactions, the auditors are expected to qualify their audit report in relation to a limitation of scope.

6 Results for the period

The results for the year ended 30 June 2004 includes six months of the operations of the EVENTS software business which was demerged from the company. At the time of the demerger the company changed its name from Amlink group Limited to Global Approach Limited and acquired 100% of Global Approach Operations Limited which holds the licence to operate an on-line casino MusicHall casino (www.musichallcasino.com) and three new directors were appointed to the board.

The board took the decision that as the casino operation was relatively young, a considerable amount of the funds generated in the first six months was put back into the operation to increase market share. We now have over 27,000 real players with in excess of 5,000 of these players having deposited funds with the casino and regularly play at the site.

When an internet casino is first launched it needs to build its player base. MusicHall has focused on this for the first six months and successfully built the business to have 5,000 Depositing Players from 127 countries. We now believe that MusicHall casino is entering its profitable phase with an exciting outlook for the current financial year. July 2004 was profitable and August 2004 has shown significant growth in all areas.

In June 2004 the company also acquired a strategic stake of 23% in UK Club Holdings Pty Ltd which holds a software licence for another on-line casino (www.ukcasinoclub.com and www.ukcasinoclub.co.uk). This decision was taken to give us access to the lucrative European market.

Sign here:	(Director)	Date: 30 August 2004
Print name:	David Barwick

APPENDIX 4E FINANCIAL INFORMATION

FOR THE YEAR ENDED 30 JUNE 2004

APPENDIX 4E FINANCIAL INFORMATION

FOR THE YEAR ENDED 30 JUNE 2004

INDEX

Company Particulars
Statements of Financial Performance	2.
Statements of Financial Position	з.
Statements of Cash Flows	4
Notes to the Financial Statements

GLOBAL APPROACH LIMITED

(formerly Amlink Group Limited)
$ACN$ 009 118 861

Annual Financial Report

for the year ended 30 June 2004

COMPANY PARTICULARS

Board of Directors

Mr David K. Barwick	- Executive chairman
Mr Mike Veverka	- Non executive director
Mr Ian Mackay	- Non executive director
Mr Bill Lyne	- Non executive director

Secretary

Mr Bill Lyne

Bankers

National Australia Bank Limited

Auditors

KPMG Corporate Centre One Cnr Bundall Road & Slatyer Avenue Bundall Gold Coast Qld 4217

Registered Office

Level 14, 145 Eagle Street Brisbane Qld 4000

Share Registry

Computershare Investor Services Pty Ltd Central Plaza 1, Level 27 345 Queen Street Brisbane Qld 4000

Principal office

Level 14, 145 Eagle Street Brisbane Qld 4000

GPO Box 996 Brisbane Qld 4001 Ph: $(07)$ 3317 2226 Fax: $(07)$ 3317 2243

STATEMENTS OF FINANCIAL PERFORMANCE

FOR THE YEAR ENDED 30 JUNE 2004

	Note		Consolidated	The Company
		2004	2003	2004	2003
		\$	\$	S	\$
Revenues from ordinary activities	3	746,457	236,509	97,526	252,789
Total revenue	3	746,457	236,509	97,526	252,789
Professional and directors fees		273,275	188,901	273,275	180,441
Borrowing costs	4	1,526	5,538	1,329	5,538
Occupancy costs		18,131	27,996	18,131	27,996
Carrying amount of investments sold	4	6,545	168,705
Insurance costs		17,596	10,938	17,596	10,938
Shareholder and share registry costs		61,141	25,488	61,141	25,488
Consultant fees		25,092	53,292	25,092	3,375
Other expenses from ordinary activities		20,604	23,192	33,793	85,842
Write down of carrying value of investment			58,033
Marketing expenses		332,340
Licence and management fees		227,629
Other gaming expenses		389,394
Amortisation of intangible assets	4	43,529
Share of associate losses of prior periods
reversed	24		(208, 033)
Share of net (profit)/losses of associates and
joint ventures accounted for using the equity method	24
		(68, 876)	(282, 158)
Profit/(loss) from ordinary activities
before related income tax expense Income tax (expense)/benefit relating to		(601, 469)	164,617	(332, 831)	(86, 829)
ordinary activities	5(a)
Net profit/(loss) after related income tax
expense	17	(601, 469)	164,617	(332, 831)	(86, 829)
Non-owner transaction changes in equity
Net exchange difference on translation of
financial statements of self-sustaining foreign
operations	16		(313)
Total changes in equity from non-owner related transactions attributable to the
members of the parent entity		(601, 469)	164,304	(332, 831)	(86, 829)
Basic earnings/(loss) per share	7	(\$0.0187)	\$0.008
Diluted earnings/(loss) per share	7	(\$0.0187)	\$0.008

The statements of financial performance are to be read in conjunction with the notes to and forming part of the financial statements.

STATEMENTS OF FINANCIAL POSITION

AS AT 30 JUNE 2004

	Note	Consolidated		The Company
		2004	2003	2004	2003
		\$	$\mathbb{S}$	$\mathbb S$	$\mathbb S$
Current assets
Cash assets		262,836	93,908	284,258	93,425
Receivables	8	59,248	30,101
Other financial assets	10	110,724	110,724
Other current assets	12		17,596		17,596
Total current assets		432,808	252,329	284,258	111,021
Non-current assets
Receivables	8			163,043	61,715
Investments accounted for using the
equity method	9		664,578
Other financial assets	10	337,418	147,269	1,495,662	1,605
Intangible assets	11	1,044,688
Total non-current assets		1,382,106	811,847	1,658,705	63,320
Total Assets		1,814,914	1,064,176	1,942,963	174,341
Current liabilities
Payables	13	317,292	45,500	317,292	45,500
Provisions	14	7,470	7,470	7,470	7,470
Other current liabilities	14		15,542
Total current liabilities		324,762	68,512	324,762	52,970
Total Liabilities		324,762	68,512	324,762	52,970
Net Assets		1,490,152	995,664	1,618,201	121,371
Equity
Contributed equity	15	9,881,602	8,245,788	9,881,602	8,245,788
Reserves	16	205,169	11,322	193,847
Accumulated losses	17	(8,596,619)	(7,261,446)	(8, 457, 248)	(8, 124, 417)
Total Equity		1,490,152	995,664	1,618,201	121,371

The statements of financial position are to be read in conjunction with the notes to and forming part of the financial statements.

STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2004

	Note	Consolidated		The Company
		2004	2003	2004	2003
		\$	\$	S	\$
Cash flows from operating activities
Cash receipts in the course of operations		733,695		93,600	262,000
Cash payments in the course of operations		(1,367,197)	(318, 581)	(415,501)	(352, 363)
Borrowing costs paid		(1,526)	(5,538)	(1,329)	(5, 538)
Interest received		27,705	25,404	3,926	789
Net cash used in operating activities	18(b)	(607, 323)	(298, 715)	(319,304)	(95,112)
Cash flow from investing activities
Payments for investments Proceeds from redemption of equity		(6,056)		(6,056)
investments Payment for controlled entities (net of cash)		85,362	210,556
		67,423		(12,001)
Proceeds of loan from/(to) associated entities		(139)	(30,075)	(139)
Proceeds of loan from/(to) controlled entities				(101, 328)	316,736
Joint venture distributions			310,000
Net cash provided by/(used in) investing
activities		146,590	490,481	(119, 524)	316,736
Cash flow from financing activities
Proceeds from issue of shares, options and
convertible notes		659,880		659,880
Transaction costs from issue of shares		(30,219)		(30,219)
Repayment of borrowings			(200,000)		(230, 139)
Proceeds from borrowings
Net cash provided by/(used in) financing activities		629,661	(200,000)	629,661	(230, 139)
Net increase/(decrease) in cash held		168,928	(8,234)	190,833	(8,515)
Cash at beginning of the financial year		93,908	102,142	93,425	101,940
Cash at end of the financial year	18(a)	262,836	93,908	284,258	93,425

The statements of cash flows are to be read in conjunction with the notes to and forming part of the financial statements.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

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

$1.$ STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

$\alpha$ Basis of preparation

The financial report is a general purpose financial report which has been prepared in accordance with Accounting Standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

It has been prepared on the basis of historical costs and except where stated, does not take into account changing money values or fair values of non-current assets.

These accounting policies have been consistently applied by each entity in the consolidated entity and, except where there is a change in accounting policy, are consistent with those of the previous year.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

$1.$ STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

$b)$ Principles of Consolidation

Controlled entities

The financial statements of controlled entities are included from the date control commences until the date control ceases.

Associates

Associates are those entities, other than partnerships, over which the consolidated entity exercises significant influence and which are not intended for sale in the near future.

In the consolidated financial statements investments in associates are accounted for using equity accounting principles. Investments in associates are carried at the lower of the equity accounted amount and recoverable amount. The consolidated entity's equity accounted share of the associates' net profit or loss is recognised in the consolidated statement of financial performance from the date the significant influence commences until the date significant influence ceases. Other movements in reserves are recognised directly in consolidated reserves.

Joint Ventures

A joint venture is either an entity or operation that is jointly controlled by the consolidated entity.

In the consolidated financial statements investments in joint venture entities, including partnerships, are accounted for using equity accounting principles. Investments in joint venture entities are carried at the lower of the equity accounted amount and recoverable amount.

The consolidated entity's share of the joint venture entity's net profit or loss is recognised in the consolidated statement of financial performance from the date joint control commences until the date joint control ceases. Other movements in reserves are recognised directly in consolidated reserves.

Transactions eliminated on consolidation

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

Unrealised gains and losses resulting from transactions with associates and joint ventures are eliminated to the extent of the consolidated entity's interest. Unrealised gains relating to associates and joint venture entities are eliminated against the carrying amount of the investment. Unrealised losses are eliminated in the same way as unrealised gains, unless they evidence a recoverable amount impairment.

Revenue recognition $\mathcal{C}$

Rendering of services

Revenue from rendering services is recognised in proportion to the stage of completion of the contract to which it relates.

Gaming revenue

Revenue from gaming is recognised when the results of a game have been determined and when the amount of revenue can be reliably determined.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

$1.$ STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont..)

$\mathfrak{c}$ Revenue recognition (cont..)

Interest revenue

Interest income is recognised as it accrues.

Sale of non-current assets

The gross proceeds of asset sales are included as revenue of the consolidated entity at the date control of the asset passes to the buver, usually when an unconditional contract is signed. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.

$\mathbf{d}$ Taxation

The consolidated entity adopts the income statement liability method of tax effect accounting.

Income tax expense is calculated on operating profit adjusted for permanent differences between taxable and accounting income. The tax effect of timing differences, which arise from items being brought to account in different periods for income tax and accounting purposes, is carried forward in the statement of financial position as a future income tax benefit or a provision for deferred income tax.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits relating to tax losses are only brought to account when their realisation is virtually certain. The tax effect of capital losses is not recorded unless realisation is virtually certain.

To the extent that dividends are proposed by controlled entities incorporated overseas, the consolidated entity has provided for withholding tax. A provision is also made for the withholding tax on the balance of unremitted profits, which eventually will be remitted to the Company.

Capital gains tax, if applicable is provided for in establishing period income tax expense when an asset is sold.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

$\epsilon$ Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

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

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

$1.$ STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

$\boldsymbol{D}$ Acquisition of assets

All assets acquired including property, plant and equipment and intangibles other than goodwill are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition. When equity instruments are issued as consideration, their market price at the date of acquisition is used as fair value except where 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 up to the extent of proceeds received, otherwise expensed.

Expenditure is only recognised as an asset when the entity controls future economic benefits as a result of the costs incurred, it is probable that those future economic benefits will eventuate, and the costs can be measured reliably. Costs attributable to feasibility and alternative approach assessments are expensed as incurred.

Non-current assets $g)$

The carrying amounts of non-current assets are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non-current asset exceeds the recoverable amount, the asset is written down to the lower amount. The write-down is recognised as an expense in the net profit or loss in the reporting period in which it occurs.

In assessing recoverable amounts of non-current assets, the relevant cash flows have not been discounted to their present value, except where specifically stated.

$-10-$

GLOBAL APPROACH LIMITED ACN 009 118 861

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

$1₁$ STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

$\boldsymbol{h}$ Receivables

Trade debtors

Trade debtors, which are normally settled within 30 days, are carried at amounts due. The collectability of debts is assessed at balance date and specific provision is made for any doubtful debts.

i) Investments

Controlled entities

Investments in controlled entities are carried in the Company's financial statements at the lower of cost and recoverable amount. Dividends and distribution are brought to account in the statement of financial performance when they are declared by the controlled entities.

Other entities

Shares in listed companies held for resale within 12 months are classified as current assets and are valued by the directors at the market value of those shares as stated on the relevant stock exchange at balance date. The gains or losses, whether realised or unrealised, are included in the operating profit before tax.

Investments in other listed and unlisted companies held as long-term investments and classified as noncurrent assets are carried at the lower of cost and recoverable amount

Dividends are brought to account when the Company's entitlement to the dividend is determined.

j) Depreciation and amortisation

Useful lives

All assets, including intangibles, have limited useful lives and are depreciated/amortised using the straight line method over their estimated useful lives.

Items of property, plant and equipment, including buildings and leasehold property but excluding freehold land, are depreciated using the straight line and diminishing value methods over their estimated useful lives.

The depreciation rates used for each class of asset are as follows:

$24\% - 28\%$ Plant and equipment

Assets are depreciated from the date of acquisition.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

$k$ Source code

The cost of acquiring computer source code is reflected as an asset. The source code is written off over the period of time economic benefits are expected to be realised.

$\boldsymbol{l}$ Accounts payable

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the Company or consolidated entity. Trade accounts payable are normally settled within 30 days.

$\boldsymbol{m}$ Unearned income

Income received or receivable at balance date which relates to goods and/or services to be provided after balance date, is recognised as unearned income in the statement of financial position.

Employee benefits $\boldsymbol{n}$

Wages, salaries and annual leave

Liabilities for employee benefits for wages, salaries and annual leave represent present obligations resulting from employees' services provided to reporting date, calculated at undiscounted amounts based on remuneration wage and salary rates that the consolidated entity expects to pay as at reporting date including related on-costs, such as, workers compensation insurance and payroll tax.

Long service leave

The provision for employee benefits to long service leave represents the present value of the estimated future cash outflows to be made resulting from employees' services provided up to balance date.

The provision is calculated using estimated future increases in wage and salary rates including related oncosts and expected settlement dates based on turnover history and is discounted using the rates attaching to national government securities at balance date which most closely match the terms of maturity of the related liabilities. The unwinding of the discount is treated as long service leave expense.

Superannuation plan

The Company and controlled entities contribute to a defined contribution superannuation plan. Contributions are charged against income as they are made.

$\boldsymbol{\theta}$ Earnings per share

Basic earnings per share ("EPS") is calculated by dividing the net profit attributable to members of the parent entity for the reporting period, after excluding any costs of servicing equity (other than ordinary shares and converting preference shares classified as ordinary shares for EPS calculation purposes), by the weighted average number of ordinary shares of the Company, adjusted for any bonus issue.

Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs associated with dilutive potential ordinary shares and the effect on revenues and expenses of conversion to ordinary shares associated with dilutive potential ordinary shares, by the weighted average number of ordinary shares and dilutive potential ordinary shares adjusted for any bonus issue.

$-11-$

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

$1.$ STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)

Financial instruments issued $\boldsymbol{p}$

Where financial instruments, such as convertible notes, issued by the Company, give rise to a contractual obligation to deliver cash to the holder they are classified as liabilities to the extent of the obligation.

Where the financial instruments are redeemable at the option of the holder, redeemable at a fixed date or perpetual instruments with cumulative interest obligations, the proceeds received are classified as a liability and related distributions as interest expense.

Where the financial instruments are redeemable but either the holder or the Company has an option to convert them into ordinary shares of the Company, they are classified as compound instruments. The liability component is measured as the present value of the principal and interest obligations, discounted at the prevailing market rate for a similar liability that does not have an equity component. The residual of the net proceeds received on issuing the instrument is classified as equity.

Interest expense on compound instruments is determined based on the liability component and includes the actual interest paid to holders. The liability accretes over the life of the instruments to the original face value if they are not previously converted. There are no dividends associated with the equity component.

$q$ Foreign currency

Transactions

Foreign currency transactions are translated to Australian currency at the rates of exchange ruling at the dates of the transactions. Amounts receivable and payable in foreign currencies at balance date are translated at the rates of exchange ruling on that date.

Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account as exchange gains or losses in the statement of financial performance in the financial year in which the exchange rates change.

Translation of controlled foreign entities

The assets and liabilities of overseas controlled entities, including associates and joint ventures, that are selfsustaining are translated at the rates of exchange ruling at balance date. Equity items are translated at historical rates. The statements of financial performance are translated at a weighted average rate for the year. Exchange differences arising on translation are taken directly to the foreign currency translation reserve.

The balance of the foreign currency translation reserve relating to a controlled entity that is disposed of is transferred to retained earnings in the year of disposal.

s) Intangibles

The gaming sub-licence has been brought to account at cost and is amortised over the minimum licence period of 25 years.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

$2.$ DIVIDENDS

There were no dividends proposed or paid by the Company during the financial year or in the previous financial year.

	The Company
	2004	2003
Dividend franking account		S
30% franking credits available to shareholders of
Global Approach Limited for subsequent financial
vears	115.982	94,681

The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:

franking credits that will arise from the payment of the amount of the provision for income tax a)

$b)$ franking credits that will arise from the payment of dividends recognised as a liability at year-end

$c)$ franking credits that will arise from the receipt of dividends recognised as receivables at the year-end

$\mathbf{d}$ franking credits that the entity may be prevented from distributing in subsequent years

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

			Consolidated	The Company
3.	REVENUE FROM ORDINARY	2004	2003	2004	2003
	ACTIVITIES	S	S	S	S
	Operating revenue
	Gaming revenue	703,177
	Other revenues:
	From operating activities
	Interest received	27,705	25,404	3,926	789
	Gross proceeds on the sale of shares		45,500
	Management fees from controlled entities			93,600	252,000
	From outside operating activities
	Gross proceeds from sale of investment		165,605
Sundry		15,575
	Total other revenues	43,280	236,509	97,526	252,789
	Total revenue from ordinary activities	746,457	236,509	97,526	252,789

$4.$ PROFIT / (LOSS) FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE

Profit / (loss) from ordinary activities before $a)$ income tax expense has been arrived at after charging/(crediting) the following items:

Net gain/(loss) on foreign exchange	4.550	$\sim$	(10.167)	56,197
Interest expense
Other parties	1.526	5.538	1.329.	5.538
Amortisation of intangible assets	43.529	$\overline{\phantom{0}}$
Loss on disposal of investments	6.545	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

2004 2004 2003 2003 \$ \$ S Income tax expense \$ a) Prima facie income tax expense/(benefit) calculated $\omega$ 30% (2003: 30%) on the profit/(loss) from ordinary activities 49,385 (180, 441) (99, 849) Increase/(decrease) in income tax due to non deductible/(non assessable): Non deductible (assessable) items (7,604) Non-assessable net gain on discontinuation of equity accounted investment (45,000) Future income tax benefit (utilised) not brought to (4,385) 99,849 26,049 188,045 account Income tax expense/(benefit) attributable to operating profit/ (loss) b) Deferred tax assets Future income tax benefit not taken to account The potential future income tax benefit, calculated at 30% (2003: 30%) arising from tax losses and timing differences has not been recognised as an asset because recovery of tax losses is not virtually certain and recovery of timing differences is not assured beyond a reasonable doubt: 359,820 171,775 259,100 Tax losses carried forward	5.	TAXATION	Consolidated	The Company
					(26, 049)
					159,251
		Timing differences
359,820 171,775 259,100					159,251

The potential future income tax benefit will only be obtained if:

• the relevant company derives future assessable income of a nature and an amount sufficient to enable $(a)$ the benefit to be realised, or the benefit can be utilised by another company in the consolidated entity in accordance with Division 170 of the Income Tax Assessment Act 1997;
• the relevant company and/or the consolidated entity continues to comply with the conditions for $(b)$ deductibility imposed by the law; and
• no changes in tax legislation adversely affect the relevant company and/or the consolidated entity in $(c)$ realising the benefit.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

6. CONTINGENT LIABILITIES

The consolidated entity and the company have resolved the legal matters in relation to disputed agreements which were referred to in the prior financial year. The matter was resolved without any additional costs borne by the consolidated entity.

7. EARNINGS PER SHARE

The following securities have been classified as ordinary shares and included in basic earnings per share:

Ordinary shares

		Consolidated
	2004	2003
	S	S
Earnings reconciliations
Net $profit/(\text{loss})$	(601, 469)	164,617
Net loss attributable to outside equity interests
Basic earnings	(601, 469)	164,717
After tax effect of costs of options
Diluted earnings	(601,469)	164,617
Weighted average number of shares used as the denominator
Number for basic earnings per ordinary share	32,174,469	19,384,705
Effect of share options on issue
Number for diluted earnings per share	32,174,469	19,384,705

The following share options have not been included in the calculation of diluted EPS as they are not dilutive:

• Options outstanding, expiring 30 November 2004, exercisable at 16 cents per option.
• Options outstanding, expiring 31 January 2006, exercisable at 10 cents per option.

$-17-$

GLOBAL APPROACH LIMITED ACN 009 118 861

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated		The Company
8. RECEIVABLES	2004	2003	2004	2003
	S		S	S
Current
Other debtor	59,248	30,101
	59,248	30,101
Non-current
Loans to controlled entities		$\blacksquare$	833,145	1,908,387
Less: Provision for doubtful debts		$\overline{\phantom{a}}$	(670, 102)	(1, 846, 672)
			163,043	61,715

Loans to controlled entities have been provided for to the extent that their recoverability, from the expected cashflows from the operating and investing activities of each controlled entity, is not expected.

$9₁$ INVESTMENTS ACOUNTED FOR USING THE EQUITY METHOD

	Note
Associates	24(a)	$\blacksquare$	$\blacksquare$
Joint venture entity	24(b)	$\sim$	664,578	-	$\overline{\phantom{a}}$
		$\sim$	664,578		-

10. OTHER FINANCIAL ASSETS

Current

Investments in other entities
Other securities at cost	110,724	110,724
	110,724	110,724
Non-current
Investments in controlled entities
Unlisted shares at cost		$\blacksquare$	5,077,397	3,865,396
Less: provision for diminution		۰.	(3,863,791)	(3,863,791)
		-	1,213,606	1,605
Investments in other entities
Unlisted shares at cost	282,056		282,056
Other securities at cost	55,362	147,269
	337,418	147,269	1,495,662	1,605

The provision for diminution in the value of shares in controlled entities was based upon the Directors' estimate of the underlying net assets of these entities.

On 15 June 2004 the company acquired a 23% interest in UK Club Holdings Pty Ltd for a total net cost of \$282,056. The directors believe that they do not exert significant influence in this entity and accordingly, this entity has not been equity accounted as at 30 June 2004.

$-18-$

GLOBAL APPROACH LIMITED ACN 009 118 861

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

		Consolidated		The Company
		2004	2003	2004	2003
11.	INTANGIBLE ASSETS				S
	Gaming sub-licence at cost	1,088,217	$\overline{\phantom{a}}$
	Accumulated amortisation	(43, 529)			$\overline{\phantom{0}}$
		1.044.688	۰		-

The gaming sub-licence relates to the on-line casino, MusicHall Casino. The consolidated entity has a sublicence with an expected minimum term of 25 years. The casino incurred an operating loss from the period of acquisition on 5 January 2004 to 30 June 2004. The directors have prepared cash flow forecasts that support the recoverability of this asset. If forecast results are not achieved this asset will require write-down. Refer note 23 for additional information.

$12.$ OTHER CURRENT ASSETS

Current
Prepayments	$\sim$	17,596	$\sim$	7.596
	$\sim$	7,596	$\overline{\phantom{0}}$	7,596

PAYABLES 13.

Current
Creditors	317.292	45.361	317.292	45,361
Other $\text{loans}-\text{related parties}$	$\overline{\phantom{0}}$	139	$\overline{\phantom{0}}$	139
	317.292	45.500	317.292	45,500

Included in creditors is \$276,000 relating to the acquisition of an interest in the UK Club Holdings Pty Ltd which was settled after year end by the issue of shares.

PROVISIONS & OTHER 14.

Current

Provision for unclaimed monies brought forward	7,470	7,550	7,470	7,550
Cheques presented during the year		(80)		(80)
	7,470	7,470	7,470	7,470
Other current liabilities
Other	$\overline{\phantom{a}}$	15,542
	$\overline{\phantom{a}}$	15,542
Number of employees
Number of employees at year end

$-19-$

GLOBAL APPROACH LIMITED ACN 009 118 861

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated		The Company
	2004	2003	2004	2003
15. CONTRIBUTED EQUITY	S	S	S	S
Issued and paid up capital 45,908,933 (2003: 19,384,705) ordinary shares,
fully paid	9,881,602	8,245,788	9,881,602	8,245,788
Movement in ordinary share capital Balance at the beginning of the financial year	8,245,788	8,245,788	8,245,788	8,245,788
Shares issued:
- 20,000,000 for acquisition of investments	1,200,000		1,200,000
- 3,135,343 from the exercise of options	313,534		313,534
- 3,388,885 from conversion of convertible notes	152,500		152,500
Transaction costs for share issue	(30,219)		(30,219)
Share reduction on demerger of joint venture	( l )		(1)
Balance at the end of the financial year	9,881,602	8,245,788	9,881,602	8,245,788

Share reduction

In December 2003 the company completed a share reduction on the demerger of Events Software Pty Ltd approved by shareholders at the extraordinary general meeting held on 28 November 2003. The total value of the share reduction was \$733,705 which represented the consolidated carrying value of 50% of the Amlink Technologies joint venture. The share reduction was allocated in the following proportions:

	Consolidated Company
Share capital		\$1
Retained profits	\$733,704	-
	\$733,705	\$1

Terms and conditions

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders' meetings. In the event of winding up of the consolidated entity ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds of liquidation.

$-20-$

GLOBAL APPROACH LIMITED ACN 009 118 861

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

15. CONTRIBUTED EQUITY (cont..)

Convertible notes

The company issued an interest free convertible note to Academic Growth Institute Fund Pty Ltd for the purpose of raising additional funding of \$152,500. The convertible note was subsequently converted to 3,388,885 shares at a conversion price of 4.5 cents per share.

Options

Movements during the year

Expiry date	Exercise price	No. of options 1 July 2003	Options granted	Options lapsed	Options exercised	No. of options 30 June 2004
11 December 2003	55 cents	390,000	$\blacksquare$	(390,000)	-	$\overline{\phantom{a}}$
30 June 2004	41 cents	16,510,571	۰	۰	$\blacksquare$	16,510,571
30 November 2004	16 cents	750,000	$\blacksquare$	$\blacksquare$	$\blacksquare$	750,000
31 January 2006	10 cents		19,384,705		(3, 135, 343)	16,249,362
		17.650.571	19,384,705	(390,000)	(3, 135, 343)	33,509,933

The 41 cent options expired on 30 June 2004.

Employee Option Plan

All employees of the Company are eligible to receive options.

At 30 June 2004 there were nil (2003: 390,000) options over unissued ordinary shares in the Company under the Employee Option Plan. These options expired on 11 December 2003 and none of these options were exercised.

As at 30 June 2004 there are no options held pursuant to the Employee Option Plan.

$-21-$

GLOBAL APPROACH LIMITED ACN 009 118 861

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated		The Company
	2004	2003	2004	2003
RESERVES 16.	S	S	\$	\$
Foreign currency translation	11,322	11,322
Options reserve	193,847		193,847
	205,169	11,322	193,847
Movement in the Reserves during the year was as follows:
Foreign currency translation reserve-
Opening balance Transfer share of foreign currency translation reserve to retained earnings on disposal of joint	11,322	16,289
venture interest		(4,654)
Share of joint venture entity's foreign currency translation reserve - equity accounted		(313)
Closing balance	11,322	11,322

The foreign currency translation reserve records the foreign currency differences arising from the translation of self sustaining foreign operations.

	۰
193.847	$\overline{\phantom{0}}$	193.847
193.847	$\blacksquare$	193.847

The options reserve reflects consideration received upon the issue of options.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

17.	ACCUMULATED LOSSES		Consolidated	The Company
		2004	2003	2004	2003
		S	S	S	S
	Accumulated losses at the beginning of the vear	(7,261,446)	(7,430,717)	(8,124,417)	(8,037,588)
	Transfer from foreign currency translation reserve		4,654
	Demerger of joint venture Net profit/(losses) attributable to members	(733, 704)
	of the parent entity	(601, 469)	164,617	(332, 831)	(86, 829)
	Accumulated losses at end of the year	(8,596,619)	(7,261,446)	(8,457,248)	(8,124,417)

18. CASH FLOW RECONCILIATION

$(a)$ For the purpose of the statements of cash flows, cash includes cash on hand and at bank on short term deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the statements of financial position as follows:

	Cash at bank and on hand	262,836	93,908	284,258	93,425
(b)	Reconciliation of cash flow from operations with operating profit after income tax:
	Operating profit (loss) after income tax Add/(less) non-cash items:	(601, 469)	164,617	(332, 831)	(86, 829)
	Amortisation of licence:	43,529
	Loss (gain) on sale of investments	6,545	(41, 851)
	Share of associates and joint venture entity's
	loss/(profit)	(68, 876)	(282, 158)
	Write-down of investments		58,033
	Share of associate profits of prior year reversed		(208, 033)
	Net cash provided by operating activities
	before changes in assets and liabilities	(620, 271)	(309, 392)	(332, 831)	(86, 829)
	(Increase)/decrease in receivables	15,213	20,705		10,000
	(Increase)/decrease in other assets	17,596	(6,658)	17,596	(6,648)
	Increase /(decrease) in payables	(19, 861)	(3,290)	(4,069)	(11, 555)
	Increase (decrease) in other liabilities and provisions		(80)		(80)
	Net cash provided by/(used in) operating activities	(607, 323)	(298, 715)	(319, 304)	(95,112)

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated		The Company
19. AUDITORS' REMUNERATION	2004	2003	2004	2003
	\$	S	S	\$
Audit services:
Auditors of the Company - KPMG
Audit and review of the financial reports	17.945	22.025	17.945	22,025
Other services:
Auditors of the Company - KPMG
Accounting assistance	8,000	9.000	8,000	9,000
Taxation services	6,800	6,000	6,800	6,000
	32,745	37.025	32,745	37.025

ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE 20.

Foreign Exchange Risk and Commodity Price Risk

The economic entity has foreign currency risk exposure with respect to its on line gaming business which is predominantly in US dollars. The company has minimal commodity risk.

Interest rate risk

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

				Fixed Interest Maturing In:
2004	Weighted average interest	Floating interest rate \$	1 Year or less	Over $1$ to 5 vears	More than 5 years S	Non- interest bearing	Total
Financial assets	rate		S	S		\$	S
Cash	2.2%	262,836					262,836
Receivables - current	$\overline{\phantom{a}}$					59,248	59,248
Other financial assets	11.4%		110.724	55,362			166,086
		262,836	110,724	55,362		59.248	488,170
Financial liabilities
Payables						317.292	317,292
Borrowings
				۰		317.292	317.292

			Fixed Interest Maturing In:
2003 Financial assets	Weighted average interest rate	Floating interest rate \$	1 Year or less S	Over 1 to 5 vears S	More than 5 years S	Non- interest bearing S	Total S
Cash	$1.8\%$	93,908				۰	93,908
Receivables - current	۰				$\blacksquare$	30,101	30,101
Other financial assets	11.4%	$\overline{\phantom{0}}$	110.724	140,723	-	6,546	257,993
		93,908	110,724	140,723		36.647	382,002
Financial liabilities
Payables
Borrowings	$\blacksquare$			٠	$\blacksquare$	45,500	45,500
				$\overline{\phantom{0}}$	۰	45,500	45,500

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

$20.$ ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE (cont)

$\boldsymbol{a}$ Credit risk exposures

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

The economic entity minimises concentrations of credit risk by undertaking transaction with a number of customers.

$b)$ Net fair values of financial assets and liabilities

Valuation approach

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

Listed shares included in investments and convertible notes issued are traded in an organised financial market. The net fair value of listed shares are determined by valuing them at the current or latest quoted market bid price for an asset or offer price for a liability, adjusted for transaction costs necessary to realise the asset or settle the liability or any other adjustments required to reflect a realisable value.

Monetary financial assets and financial liabilities not readily traded in an organised financial market are determined by valuing them at the present value of contractual future cash flows on amounts due from customers (reduced for expected credit losses) or due to suppliers. Cash flows are discounted using standard valuation techniques at the applicable market yield having regard to the timing of the cash flows.

The net fair values of all other financial assets and liabilities of the consolidated entity are represented by the carrying amount of these items. The net fair value of investments in unlisted shares in other corporations is determined by reference to the underlying net assets of the respective corporations.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

DIRECTOR AND EXECUTIVE DISCLOSURES FOR DISCLOSING ENTITIES $21.$

Remuneration of specified directors and specified executives by the consolidated entity

Remuneration levels are competitively set to attract and retain appropriately qualified and experienced directors and senior executives. The directors obtain independent advice on the appropriateness of remuneration packages, given trends in comparative companies both locally and internationally. Remuneration packages include a mix of fixed remuneration, performance-based remuneration and equitybased remuneration.

The remuneration structures explained below are designed to attract suitably qualified candidates, and to effect the broader outcome of increasing the consolidated entity's net profit attributable to members of the parent entity.

The following table provides the details of all directors of the Company ("specified directors") and the five or more executives of the consolidated entity with the greatest authority ("specified executives") and the nature and amount of the elements of their remuneration for the year ended 30 June 2004.

$-26-$

GLOBAL APPROACH LIMITED ACN 009 118 861

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

DIRECTOR AND EXECUTIVE DISCLOSURES FOR DISCLOSING ENTITIES (cont..) 21.

Remuneration of specified directors and specified executives by the consolidated entity (cont..)

				Primary			Post-employment	Equity compensation	Other compensation
Specified directors		Salary & fees	Bonus Ť.	Long term incentive bonus Š.	Non- monetary benefits Š.	Super benefits S	Prescribed benefits	Value of options	Termination benefits S	Insurance premiums \$	Total
Mr D Barwick	2004	36,104	$\blacksquare$		۰	3,249		$\tilde{\phantom{a}}$			39,353
	2003	21,966			۰.	1,760		٠			23,726
Mr M Veverka	2004	6,167				555		۰			6,722
	2003				۰		$\tilde{\phantom{a}}$	۰		$\blacksquare$
Mr I Mackay	2004	12,000			$\blacksquare$	1,080		$\blacksquare$			13,080
	2003				٠			٠		$\blacksquare$
Mr B Lyne	2004	12,000			۰.	1,080	$\tilde{\phantom{a}}$	۰		$\blacksquare$	13,080
	2003				٠			$\overline{\phantom{a}}$
Miss D Taylor	2004	3,000			٠	270		$\blacksquare$			3,270
	2003				۰.		$\tilde{\phantom{a}}$	۰		$\blacksquare$
Mr T Gardiner	2004	21,465				1,932		$\blacksquare$			23,397
	2003	30,000			٠	2,400		۰			32,400
Mr C Hayward	2004	21,465			$\sim$	1,932	$\tilde{\phantom{a}}$	$\blacksquare$			23,397
	2003	30,000			$\sim$	2,400	$\blacksquare$	$\tilde{\phantom{a}}$		$\overline{\phantom{a}}$	32,400
Total specified directors	2004	112,201			۰.	10,098	$\blacksquare$	$\blacksquare$			122,299
	2003	81,966				6,560		٠			88,526

Specified executives

There are no specified executives of the consolidated entity who are not directors.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

DIRECTOR AND EXECUTIVE DISCLOSURES FOR DISCLOSING ENTITIES (cont..) $21.$

Equity instruments

All options refer to options over ordinary shares of Global Approach Limited, which are exercisable on a one-for-one basis.

Option holdings

The movement during the reporting period in the number of options over ordinary shares in Global Approach Limited held directly, indirectly or beneficially, by each specified director including their personally related entities, is as follows:

	Held at 1			Other	Held at 30	Vested $\&$ exercisable at 30 June
Specified directors	July 2003	Purchases	Exercised	changes	June 2004	2004
David Barwick	275,000	983,659	۰	$\blacksquare$	1,258,659	1.258.659
Mike Veverka	۰	9,430,000	٠	٠	9,430,000	9.430.000
Ian Mackay	٠	500,000	$\overline{\phantom{a}}$	٠	500.000	500.000
Trevor Gardiner	4,218,580	399,537	$\blacksquare$	$\blacksquare$	4,618,125	4,618.125
Christopher Hayward	1,231,894	51,000	۰	$\tilde{\phantom{a}}$	1,282,894	1,282,894

No options held by specified directors are vested but not exercisable.

The above table includes 41 cent options expiring on 30 June 2004.

Specified executives

There are no specified executives of the consolidated entity who are not directors.

Equity holdings

The movement during the reporting period in the number of ordinary shares of Global Approach Limited held directly, indirectly or beneficially, by each specified director, including their personally related entities is as follows:

			Received on
	Held at 1 July		exercise of		Held at 30
Specified director	2003	Purchases	options	Sales	June 2004
David Barwick	982,142	1,508,873	٠	(60,000)	2,431,015
Mike Veverka	$\tilde{\phantom{a}}$	8,548,817	۰	$\blacksquare$	8,548,817
Ian Mackay		75,000	۰	-	75,000
Trevor Gardiner	4,847,465	$\overline{\phantom{a}}$	٠	(4,847,465)	-
Christopher Hayward	1,289,980	۰	۰	(1,289,980)	۰

Specified executives

There are no specified executives of the consolidated entity who are not directors.

$-27-$

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

$21.$ DIRECTOR AND EXECUTIVE DISCLOSURES FOR DISCLOSING ENTITIES (cont..)

Other transactions with the company or its controlled entities

Transactions between specified directors or their personally related entities are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

• The company paid \$11,665 to Barwick Investments Pty Ltd of which Mr David Barwick is a director, for $\mathbf{1}$ administration services during the year.
• 2 The company paid \$16,331 to Barwick Investments Pty Ltd, of which Mr David Barwick is a director, for the use of a serviced office during the year.
• 3 The company paid \$72,376 to D K Barwick Investments Pty Ltd, of which Mr David Barwick is a director, as consideration for the part purchase of Global Approach Operations Pty Ltd. 1,206,273 company shares were issued to D K Barwick Investments Pty Ltd and are subject to escrow by the Australian Stock Exchange
• 4 The company paid \$103,136 to Queensland Underwriters Ltd, of which Mr David Barwick is a director, as consideration for the part purchase of Global Approach Operations Pty Ltd. 1,718,933 company shares were issued to Queensland Underwriters Ltd.
• 5 The company paid \$1,800 to Queensland Underwriters Limited, of which Mr David Barwick is a director, for rental of premises.
• The company paid \$14,000 to Britany Pty Ltd, of which Mr Christopher Hayward is a director, for 6. accounting services.
• 7 The company paid \$6,358 to Sectant Pty Ltd, of which Mr Mike Veverka is a director, for consulting fees.
• The company paid \$217,129 to Jumbo Corporation Limited, of which Mr Mike Veverka is a director, as 8 consideration for the part purchase of Global Approach Operations Pty Ltd. 3,618,817 company shares were issued to Jumbo Corporation Limited and are subject to voluntary escrow.
• 9 The company paid \$14,000 to Company Secretarial Services Pty Ltd, of which Mr Bill Lyne is a director, for secretarial services.

$-29-$

GLOBAL APPROACH LIMITED ACN 009 118 861

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

22. SEGMENT INFORMATION

The consolidated entity operates an internet gaming business worldwide excluding Australia.

Statement of Operations of Segments

	Internet Gaming			Information Technology		Investment		Consolidated
Primary reporting	2004	2003	2004	2003	2004	2003	2004	2003
Business segments	э	S	S		S	s
(a) Revenue
External segment revenue	703.177			191.009	43.280	45,500	746,457	236,509
Inter-segment revenue
Total revenue	703,177			191.009	43.280	45,500	746,457	236,509
Segment result Share of profit/(loss) of equity accounted	(450, 423)		(237, 156)	(128, 041)	17.234	10,500	(670, 345)	(117,541)
investments			68.876	282.158			68.876	282,158
Net profit	(450, 423)		(168, 280)	154.117	17.234	10,500	(601.469)	164,617

$-30-$

GLOBAL APPROACH LIMITED ACN 009 118 861

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

SEGMENT INFORMATION (cont..) 22.

							Consolidated
2004 s	2003 s	2004 S	2003 S	2004 S	2003 s	2004	2003
			208.033				208,033
$\mathbf{u}$		$\blacksquare$	(58, 033)				(58,033)
			31,900				31,900
		٠			$\blacksquare$
$\blacksquare$	$\blacksquare$	$\mathbf{u}$	181,900	$\mathbf{u}$		$\blacksquare$	181,900
1,096,749			393,053	718,165	41,545	1,814,914	399,598
		$\overline{\phantom{a}}$	664,578				664,578
1.096,749			1,057,631	718,165	41,545	1,814,914	1,064,176
25,347			68.512	299,415		324,762	68,512
		Internet Gaming		Information Technology		Investment

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

23. CONTROLLED ENTITIES

Particulars in relation to controlled entities $(a)$

	Country of	Percentage owned
Parent entity	Incorporation	2004	2003
		$\%$	%
Global Approach Limited	Australia
Subsidiaries of Global Approach
Limited
Global Approach Operations Pty	Australia	100
Ltd
A.T. Capital Pty Ltd	Australia	100	100
Amlink Solutions Pty Ltd	Australia	100	100
Amlink Technologies Marketing	Australia	100	100
Pty Ltd
Amlink Staff Pty Ltd	Australia	100	100
Amlink Technologies (USA) Inc	USA	100	100

$\mathbf{b}$ Acquisition / disposal of controlled entities

Acquisition of entities

During the financial year the consolidated entity purchased 100% of the voting shares of Global Approach Operations Pty Ltd. No acquisitions were made during the prior year. Details of the acquisitions are as follows:

	Consolidated		The Company
	2004	2003	2004	2003
	\$	S	S	\$
Consideration - shares	1,200,000
- cash	12,001
Total consideration	1,212,001
Consideration - cash	12,001
Cash acquired	(79, 424)
Outflow (inflow) of cash on acquisition	(67, 423)
Fair value of net assets of entity acquired
Property, plant and equipment
Cash assets	79,424
Receivables	44,360
Gaming sub-licence	1,088,217
Payables
Consideration	1,212,001

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

23. CONTROLLED ENTITIES (cont..)

Global Approach Operations Pty Ltd was acquired on 5 January 2004 and the operating results of the entity from that date have been included in the consolidated operating profit. The entity holds the licence to operate an on-line casino MusicHall Casino.

The acquisition is subject to certain conditions being met by 31 December 2004 therefore the shares issued are subject to an escrow agreement pending satisfaction of the conditions. The conditions are:

• 5,000,000 shares restricted and to be cancelled if the company 's EBITDA is less than \$250,000 in the calendar year ended 31 December 2004.
• The vendors will be entitled to an additional 5,000,000 shares in the company if the company achieves an EBITDA profit in excess of \$1,000,000 profit for the 12 months ended 31 December 2004. The value of this bonus is agreed to be \$300,000.
• If MusicHall casino ceases to be viable i.e., cash flows from operating activities and investing activities for the 12 months ended 31 December 2004 are not in surplus or the company loses effective control of MusicHall casino, the investment will be repurchased by the vendors at a deemed value of \$1.00 and cancellation of 20,000,000 vendor shares.

Disposal of entities

During the financial year, the consolidated entity disposed of all of the ordinary shares of Events Software Pty Ltd and TSC Software Pty Ltd. Details of the disposals are as follows:

		Consolidated		The Company
	2004	2003	2004	2003
				S
Consideration
Carrying amount of disposal
Profit on disposal
Net assets of entities disposed of:
Cash
Property, plant and equipment
Trade creditors
	$\%$	$\%$	$\%$	$\%$
Interest held after disposal

Events Software Pty Ltd was disposed on 31 December 2003 and TSC Software Pty Ltd was disposed on 8 December 2003. The operating results of each entity to the date of disposal have been included in consolidated operating profit.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

			Consolidated
24.	INVESTMENTS ACCOUNTED FOR	2004	2003
	USING THE EQUITY METHOD	S	S
	Share of net profits/(losses) accounted for using the
	equity method included in the statement of
	financial performance
	- joint venture entities	68.876	282,158
		68.876	282.158

Investments in associate a)

In the 2003 year the company ceased to have a significant influence in the investment in Ledgerworks Pty Ltd, therefore the use of the equity method was discontinued in that year.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (cont) $24.$

Interests in joint venture entity: $\mathbf{b}$

	Consolidated
	2004	2003
Results of joint venture entity	\$	\$
The Company's and consolidated entity's share of
the joint venture entity's results consist of
Revenue from ordinary activities	662,423	1,602,479
Expenses from ordinary activities	(593, 547)	(1,320,321)
Profit from ordinary activities before income tax
expense	68,876	282,158
Income tax expense relating to ordinary activities
Net profit $-$ equity accounted	68,876	282,158
Share of post-acquisition retained profits
attributable to joint venture entities
Share of joint venture entity's retained profits at
beginning of year
	676,425	837,972
Less drawings made		(310,000)
Demerger of interest in joint venture	(745, 301)	(133,705)
Share of joint venture entity's net profit	68,876	282,158
Share of joint venture entity's retained profits at
end of year		676,425
Statement of financial position
The Company's and consolidated entity's share of
the joint venture entity's assets and liabilities
consist of:
Current assets		946,290
Non-current assets		140,409
Total assets		1,086,699
Current liabilities	$\overline{\phantom{a}}$	422,121
Total liabilities		422,121
Net assets - equity accounted		664,578
Movements in carrying amount of joint venture
entity
Carrying amount at beginning of year	664,578	826,438
Share of joint venture entity's reserves	250	(313)
Share of joint venture entity's net profit	68,876	282,158
Dividends received		(310,000)
Investment in joint venture entities disposed during
the year	(733, 704)	(133,705)
Carrying amount at end of year		664,578

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

24. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (cont)

Details of the investment in associates / joint venture entities are as follows:

Name	Principal activities	Balance date	Ownership Investment Consolidated		Investment carrying value Consolidated
			2004	2003	2004	2003
Amlink Technologies Pty Ltd	Software development and sale	30 June 2004	$-9/6$	50%	$\overline{\phantom{a}}$	664,578

Amlink Technologies Pty Ltd acts as the manager of the Events business joint venture. Events Software Pty Limited held the 50% joint venture interest in the Events business. On 24 December 2003 shareholders agreed to the return of shares in Events Software Pty Limited to the company's shareholders.

Accordingly, the company no longer holds an interest in this joint venture.

25. LEGAL RISK

The acquisition of investments in Global Approach Operations Pty Ltd and UK Club Holdings Pty Ltd during the year involved the assumption of pre existing agreements with respect to the operation of the online gaming casinos. These agreements comprise various management agreements, gaming licence agreements, gaming sub licence agreements, software licence agreements and shareholders agreements.

Due to international cross border jurisdictional issues and the complexity of the legal arrangements, there is an increased risk that the company may not be able to effectively enforce its rights in the event of a dispute with respect to its interests.

If the company is unable to enforce its contractual rights, it is possible that the company's assets with respect to these investments will not realise their carrying value. In such an event, significant losses may accrue to the company.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

26 EVENTS SUBSEQUENT TO REPORTING DATE

International Financial Reporting Standards

For reporting periods beginning on or after 1 January 2005, the consolidated entity must comply with International Financial Reporting Standards (IFRS) as issued by the Australian Accounting Standards Board.

This financial report has been prepared in accordance with Australian accounting standards and other financial reporting requirements (Australian GAAP). The differences between Australian GAAP and IFRS identified to date as potentially having a significant effect on the consolidated entity's financial performance and financial position are summarised below. The summary should not be taken as an exhaustive list of all the differences between Australian GAAP and IFRS. No attempt has been made to identify all disclosure, presentation or classification differences that would affect the manner in which transactions or events are presented.

The consolidated entity has not quantified the effects of the differences discussed below. Accordingly, there can be no assurances that the consolidated financial performance and financial position as disclosed in this financial report would not be significantly different if determined in accordance with IFRS.

Regulatory bodies that promulgate Australian GAAP and IFRS have significant ongoing projects that could affect the differences between Australian GAAP and IFRS described below and the impact of these differences relative to the consolidated entity's financial reports in the future. The potential impacts on the consolidated entity's financial performance and financial position of the adoption of IFRS, including system upgrades and other implementation costs which may be incurred, have not been quantified as at the transition date of 1 July 2004 due to the short timeframe between finalisation of the IFRS standards and the date of preparing this report. The impact on future years will depend on the particular circumstances prevailing in those years.

The Board intends to establish a formal project, to achieve transition to IFRS reporting, beginning with the half-year ended 31 December 2005.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2004

EVENTS SUBSEQUENT TO REPORTING DATE (cont..) 26.

Implementation phase

Potential implications of the conversion to IFRS on the consolidated entity are as follows:

• Income tax will be calculated based on the "balance sheet" approach, which will result in more deferred $\bullet$ tax assets and liabilities and, as tax effects follow the underlying transaction, some tax effects will be recognised in equity
• Goodwill and intangible assets with indefinite useful lives will be tested for impairment annually and $\bullet$ will not be amortised
• Impairments of assets will be determined on a discounted basis, with strict tests for determining whether goodwill and cash-generating operations have been impaired
• Equity-based compensation in the form of shares and options will be recognised as expenses in the periods during which the employee provides related services
• Changes in accounting policies will be recognised by restating comparatives rather than making current year adjustments with note disclosure of prior year effects.