DATA#3 LIMITED — Annual Report 2005

Sep 28, 2005

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annual general meeting

The Annual General Meeting of Data'3 Limited will 10.30am on Friday 4th November 2005 in Data 3's corpora head office, Level 2, Data'3 Centre, 80 Jephson Street Tooweng, Queensland Hill Hill

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The pictures throughout capture some of the Data'3 team at work

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COMMUNISTICS
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EXECUTIVE AND LESS CONTRACTS
Corporate Governance Statement 19
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COMBANY DIOT

Since listing in 1997, Data'3 has evolved from a Queensfand oriented Information and Communication Technology (ICT) Solutions Company to one of national significance. In our first year of listing, Data"3 revenues were \$69 million and staff numbered 250. This year revenues were \$197 million and over 520 permanent and contract staff served customers from offices in Brisbane, Sydney, Melbourne, Canberra, Townsville, Rockhampton and Gladstone.

Data^*3 is an ICT Solutions Company that seeks to deliver exceptional value to its customers by applying expertise in:

• Software that enhances productivity and information management
• The design, implementation, management and support of reliable ICT infrastructure
• Cost effective procurement of ICT hardware and software
• Sourcing people with the right ICT skills.

Integrating this expertise in its broadest sense can provide 'single-source' solutions to a wide range of our customers' ICT needs and a point of differentiation in the market. This in turn can maximise shareholder value by delivering performance that meets or exceeds our financial objectives.

Our customers cover a wide range of industries including banking and finance, mining, tourism and leisure, legal, healthcare, manufacturing, distribution, government and utilities, and are located throughout Australia, the South Pacific and Asia.

Our vision is to be recognised as "Australia's leading ICT Solutions Company - the one that everyone wants to work for, buy from, or own shares in."

To achieve this vision our strategy is to:

• & Strengthen Customer Commitment by engaging to better understand their needs, leveraging all our expertise to meet these needs and exceeding their expectations
• B Position ourselves competitively as a market leader with expertise in selected technologies (from vendors that are driving the industry globally) applied to deliver results for customers
• Maintain commitment to Staff Development processes that recruit, nurture and retain the 'right' people and further develop their expertise
• Internal manufacturies eview and improvement. accelerate Development of the Organisation to generate innovation and flexibility at the lowest possible cost and risk.

We believe we will have achieved our vision when over 90% of our staff consistently recommends Data'3 to others as their preferred employer; our key customers consistently tell us that we are their preferred ICT supplier; our key vendors consistently recognise our expertise and performance; and we consistently deliver total returns to shareholders exceeding those provided by like companies.

Our core values underpin the manner in which we approach the business of doing business:

• We act with honesty and integrity in everything we do
• We always go the extra mile
• We believe in and exhibit mutual respect
• ^■ We take responsibility
• ^■ We strive for excellence and innovation.

Highlights

• \$8 Best ever reported result with EBITDA of \$6.244 million. NPAT of \$3.912 million and basic earnings per share of 25.7 cents
• . Full year dividends to shareholders of 19.0 cents per share
• Strong underlying net operating cash inflows, to some degree reflecting the timing benefit of receipts from customers in advance of payments to suppliers, and essentially no long term debt
• A significant investment and improvement in expertise in our staff while maintaining staff costs within our targeted percentage of gross margin qenerated
• A reduction in total operating costs in real terms and as a percentage of gross margin generated
• \$8 Strong growth in Software Licensing and the successful establishment of a complementary software asset management consultancy
• & Repositioning of our ICT Services and Microsoft Application Solutions businesses with deep expertise around market leading technologies
• \$8 Substantial improvement in the performance of our Enterprise Infrastructure business and in the number of new 'blue chip' customers
• the improvement in margin in sales of ICT Products
• Wery strong growth in Recruitment
• Scrowth in all geographies with a doubling of operating profit (before corporate expense) in New South Wales and Victoria over the previous year.

Objectives for 2006

In 2006 we expect buoyant but competitive market conditions to remain in place and are targeting continued organic growth in all areas of the business. We will continue to invest in developing the expertise of our staff and in the associated infrastructure to maintain our competitive positioning, and are proposing to lower overhead expenses relative to gross margin generated.

We will continue to look for appropriate partnerships and acquisitions to enhance either our geographic scale or our expertise in specific areas and ultimately further improve financial performance.

For shareholders we expect financial performance to improve on the record 2005 result and are looking to continue to deliver dividends that balance the need for working capital and provide returns near the top of the sector.

Financial Highlights

	2000 \$'000	2001 \$'000	2002 \$'000	2003 \$'000	2004 \$'000	2005 \$'000
Sales revenue
- Products	101,771	99,100	145,058	160,684	146,222	158,443
– Services	28,582	27,249	26,474	31,925	29,275	38,052
	130,353	126,349	171,532	192,609	175,497	196,495
Other revenue	117	78	274	196	698	646
Share of net profits of joint venture partnerships accounted for using
the equity method	253	734	784	80
Total revenue	130,723	127,161	172,590	192,885	176,195	197,141
Earnings before interest (net), tax, depreciation, amortisation
and abnormal / significant items	2,133	(505)	5,240	4,549	5,356	6,244
Abnormal / significant items	(832)	(1,965)
Earnings before interest (net), tax, depreciation and amortisation (EBITDA)	1,301	(2,470)	5,240	4,549	5,356	6,244
Depreciation and lease amortisation	(597)	(590)	(651)	(611)	(484)	(436)
Goodwill amortisation	(334)	(414)	(316)	(323)	(328)	(312)
Net interest (expense) / income	(230)	(625)	(111)	(60)	315	368
Profit / (loss) from ordinary activities before tax	140	(4,099)	4,162	3,555	4,859	5,864
Tax expense	(224)	(163)	(992)	(1,296)	(1,466)	(1,952)
Net profit / (loss) after tax	(84)	(4, 262)	3,170	2,259	3,393	3,912
Basic earnings per share		$(0.6)$ cents $(29.25)$ cents	$21.7$ cents	$15.5$ cents	$22.8$ cents	25.7 cents
Dividends per share	2.5 cents	$0.0$ cents	$0.0$ cents	$10.0$ cents	15.5 cents	19.0 cents
Share price at 30 June	\$1.26	\$0.51	\$1.21	\$1.00	\$2.05	\$3.00

outline of our business

Data^r3 operates six areas of specialisation nationally -Licensing Solutions; Microsoft Application Solutions; ICT Services; Enterprise Infrastructure Solutions; ICT Product Procurement: and Data^r3 Recruitment Solutions, These businesses are focused discretely on developing and applying market leading expertise in the technologies and services that underpin their specialisation. Their engagement with customers is facilitated by our Customer Solutions Group whose responsibility is to understand our customers' needs and ensure the appropriate expertise is engaged in an integrated fashion to meet these needs.

The business is supported by a range of Corporate Services functions and the company has permanent staff located in Brisbane, Sydney, Melbourne, Canberra, Adelaide, Gladstone, Townsville and Rockhampton.

Licensing Solutions

Licensing Solutions provides expertise in volume software licensing and software asset management to help our customers procure and manage software under licensing agreements with the industry's global software vendors including Microsoft, IBM, Symantec, Computer Associates, Veritas and Citrix. Our Licensing Solutions consultants are appropriately certified and experienced in vendor licensing terms and conditions and the business benefits of managing software as an asset. They are supported by Data'3's Licensing Online web-based system that allows customers access to their licensing information and to purchase licensed software product. This expertise was recognised with Microsoft awarding Data'3 the 2004 Microsoft Large Account Reseller Sales Excellence Award.

In providing a comprehensive software licensing service to one of Australia's foremost transport organisations, Data^*3 has continually met that company's high expectations at every level. With around 2,000 desktops and servers Australia-wide covered under the terms of the agreement, the relationship between the two organisations is such that Data^r3 is now considered one of the company's most essential partners in maintaining the efficiency of its IT environment.

Microsoft Application Solutions

The Microsoft Application Solutions (MAS) business meets the needs of customers looking to improve employee productivity and customer service levels through management and accessibility of information and automation of business processes. Focused only on Microsoft technologies - SharePoint, Content Management Server, Enterprise Project Server and Customer Relationship Management - our MAS consultants have developed a unique Online Service Delivery (OSD) platform that provides early return on investment and applies their expertise to greatest advantage for customers. Acknowledgement of this expertise is embodied in certification of Data'3 as a Microsoft Gold Partner in Integrated E-Business Solutions, as a Certified Software Adviser for Microsoft CRM, and being recognised with Microsoft naming Data*3 its 2004 CRM Partner of the Year.

In partnering with Data^®3 for the design and implementation of a complete Microsoft-based electronic service delivery infrastructure, a major state government department was able to reap significant benefits in staff productivity from a collaboration workspace with the flexibility and scalability to meet all the needs of its internal and external customers. Underpinning the success of the project was Data"3's commitment to helping the department fully appreciate the scope of capabilities inherent within the technologies being implemented.

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ICT Services

Customers addressing the challenges of designing, deploying and supporting reliable, high performance and secure network and communications infrastructure engage our ICT Services business. This business invests in developing and maintaining market leading expertise and the highest levels of certification in mainstream technologies from global leaders Cisco Systems, Microsoft, Citrix and NetIQ. This expertise has been acknowledged by our Gold Partner status with Cisco for their Advanced Technologies - VPN Security, Wireless LAN, Network Management, Routing and Switching and IP Communications - and Gold Partner status with Microsoft for Integrated E-Business and Advanced Infrastructure Solutions. Additionally Data'3 was nominated as the only Australian finalist in Microsoft's Worldwide Partner of the Year Award for "Technology Innovation" in the Advanced Infrastructure Solutions Award category.

This expertise is applied to solve our customers' networking, communications, security, infrastructure management and support challenges through:

• Consulting Services to design the appropriate solution
• to Integration Services to implement the chosen design
• ^■ A range of onsite and offsite Managed Services to support and manage the implemented infrastructure.

Where one of Australia's largest retail operations initially saw the need only for an anti-virus solution, Data'3 security experts audited the customer's environment and uncovered numerous security risks totally unrelated to viruses and other malicious software. In developing an end-to-end security solution encompassing tightly integrated Cisco and Trend Micro technologies, Data^®3 delivered a competitive edge through a secure and highly efficient transaction environment across the customer's entire 600-plus store network.

Enterprise Infrastructure Solutions

Enterprise Infrastructure Solutions (EIS) designs and implements cost effective and high performance solutions for the 'data centre' and meets our customers' needs in the areas of enterprise application deployment, business continuity, database, storage and systems management, server consolidation and virtualisation.

Partnering with the world's leading enterprise computing vendors IBM, HP and Cisco Systems, EIS has invested in the skills and infrastructure to position the business as a leader in this area, as recognised in part by our second annual award as IBM's Storage Partner of the Year. Further consolidation of this leadership is demonstrated by continuing investment in Australia's first TotalStorage™ Solution Centre (TSSC) in partnership with IBM, In the TSSC, customers work with a range of specialists to design, test and pilot storage and storage management solutions prior to deployment.

"The expertise, experience and professionalism of the Data*3 Enterprise Infrastructure Solutions group was a key component in the success of this project. We were in the difficult position of needing to implement a complete hardware refresh to support our Oracle 11i upgrade. This was a project that had absolutely no room for error. It had to be done right the first time! The Data®3 team gave us precisely what we needed - a technically innovative and solid implementation of a new IBM pSeries and storage platform that now forms the basis of our most mission-critical applications. Added to this is the advantage of working with a company that has a seamless relationship with IBM, giving us the ability to leverage fully the business values both companies bring to $us.$ "

Andrew Wheeler

Infrastructure and Communications Manager Boral Limited

ICT Product Procurement

ICT Product Procurement leverages the investments Data'3 has made in our people and our systems and processes to meet our customers' needs for competitive pricing, appropriate quality and ease of doing business in acquiring technology product in volume. Data'3's experienced account executives, our 'tele-centre' based account management team and our logistics and warehousing teams are committed to providing superior customer service and applying consistent business processes. They are supported by our online procurement system, CustomerNet, which provides product information, pricing, quotation, order processing and order status reporting, and invoicing information.

"Long term relationships in the IT industry are somewhat of a rarity. The fact that we have maintained our relationship with Data^*3 since 1996 is testament to the consistent high quality of service and competitive pricing we receive on our server, networking and personal systems hardware and software. One of the definite advantages we've gained by partnering with Data®3 is the enormous breadth of support upon which we are able to call. Whether it's the provision of new servers and desktops, software licensing or even staff recruitment, Data^®3 delivers unfailingly."

Bill Clarke

Director - Information Management Services Department of Education and the Arts Queensland Government

Data'3 Recruitment Solutions

For customers requiring contract or permanent ICT staff and for whom quality, responsiveness and industry knowledge are key criteria, Data*3 Recruitment Solutions

provides temporary and permanent personnel from an extensive database of candidates across all IT disciplines.

Data^*3 Recruitment Solutions also provides a range of specialist services including psychometric profiling, contractor performance management and outplacement. These services can be tailored to meet each customer's specific requirements.

"One of the definite advantages in partnering with Data"3 Recruitment Solutions is that we have a technology services company taking on the responsibility of recruiting technology personnel. We're dealing with recruitment personnel who have a full understanding of our technology needs; and use that understanding to provide us with candidates from project managers and administrators through to technical writers and support staff who are of the highest possible calibre."

John Richards Service Delivery Manager Advanced Data Integration

Corporate Services

Corporate Services provides the shared services of human resources, finance and accounting, ICT systems and processes, and corporate marketing.

'Single source' Solutions

Each of our areas of specialisation answers discrete challenges for our customers by providing expertise in people and processes to maximise return on their IT investment. Where our customers' needs cover a number of these areas and they either lack the skills internally or seek to have one partner responsible, Data'3 offers a 'single-source' solution by seamlessly integrating the reguired products and services.

On behalf of the Board I am pleased to report on the 2005 financial year in which the company's performance once again bettered the previous best.

In a welcome departure from previous years, this overall excellent performance was achieved through consistently strong performance across all the company's product and services offerings. Further examination of the 2005 performance and a review of our expectations for the 2006 financial year are contained in the Managing Director's review.

The financial performance of the company continues to deliver overall returns to shareholders in excess of our targets. This is reflected in the strength of the company's ASX traded share price and dividends for the second half of 11.5 cents per share pavable on 30 September 2005. adding to the first half's 7.5 cents for a total of 19.0 cents per share for the full year.

This result demonstrates that sustainable profitability is firmly established, providing the basis for attractive ongoing returns to shareholders. Our aim remains to continue to increase these returns over time. At the start of the financial year, the Board set two prime objectives for management - the development of a greater quality of earnings across all areas of the business and the development of opportunities for future growth. Progress was achieved in both aspects. All areas of the business, both national lines and each of the geographies contributed strongly, in relative terms, to overall earnings. The Board sees opportunities for future organic growth from all of the current businesses and from new offerings that can emerge through a combination of the capabilities and skills across the business. A number of initiatives were introduced to secure this future growth including:

ta introduction of a software asset management consulting offering in the Licensing business

• B Further investment in a Technology Solutions Laboratory in each of Brisbane and Sydney integrating the previous TotalStorage³⁶ Solution Centre (TSSC), the Cisco Laboratory and the Microsoft Solution Centre
• & A shift in focus in the ICT Product Procurement area from server and personal systems to networking and communications products
• ^■ An investment in new management software in the Remote Management Centre to improve efficiency and allow a range of new and advanced managed services offerings
• An investment in an e-learning platform for internal professional and technical education and training for our staff.

In addition, opportunities for accelerated growth through partnerships, joint ventures and acquisitions are being sought, however sustainable value remains elusive.

Management, as expected, continues to focus on areas for operational improvement and on maintaining a well-developed, stable and cost-efficient structure. The 2006 business plans recently approved by the Board incorporate little change in terms of the operating structure of the business which has proven to be most effective in the current market. There is however a relatively significant increase in expenditure proposed to upgrade internal application systems, in infrastructure to support a renewed focus on managed services and to extend the Technology Solution Laboratory into Victoria, and on an enhanced marketing function. This proposed investment is prefaced on continuing strong market conditions and our strategic commitment to our key vendors - Cisco Systems, HP, IBM and Microsoft - as our primary access to market.

Revenue and cost management, together with control of cash flow and other balance sheet items, continues to be maintained through a strong focus by the company's Corporate Services team. This will be enhanced further through the proposed internal systems replacement. The company remains debt free.

Externally the company's range of products and services has strengthened considerably through enhanced expertise in specific technologies core to our customers' ICT requirements. This has also afforded differentiation and brought continuing success in the competitive and constantly changing marketplace.

Current non-executive directors Mr Howard Stack and Mr Terry Powell will stand for re-election at the AGM on 4th November 2005. All other current members of the Board continue in office

We expect a continuation of the relatively buoyant market for ICT products and services and this has been confirmed by early trading results. However Data'3 operates in a continuously challenging and competitive marketplace. There is now no doubt that the company is able to do so profitably and is well placed to continue to build on its success. This is due in no small measure to the dedicated efforts of the company's management team and staff. The Board very much acknowledges their contribution on behalf of all shareholders.

I trust that shareholders share the confidence of management and the Board in the company's future success.

Puduan

Richard Anderson Chairman

manacíng director's review

2005 once again saw performance better the previous best. With basic earnings per share of 25.7 cents and a fully franked dividend of 19.0 cents per share, 74% of profit was distributed to shareholders. This represented a yield of 7.5% based on the average share price over the year. We trust we have met the expectations of our shareholders and are pleased with the continuing positive sentiment towards the company.

My review looks at the financial results in some detail, outlines progress we made against the strategic imperatives we identified at the beginning of the year and sets out our objectives and outlook for 2006.

FINANCIAL PERFORMANCE

Total revenue for the year finished at \$197.141 million against the previous year's \$176.195 million - an increase of 12%. Total gross margin generated (excluding 'Other Revenue') increased by 6.8% from \$38.369 million to \$40.977 million and average gross margin reduced from 21.9% to 20.9%. This reduction came as a consequence of very strong growth in Recruitment revenues at relatively low margins, and lower Application Services revenues following the closure or sale of most elements of the Applications Services business at the end of the previous financial year. Normalisation of revenue and gross margin to reflect the lower application revenues gives higher growth rates than shown above.

The full year product revenue increased by 8.4% from \$146,222 million to \$158,443 million and consisted of the following elements:

臘 ICT Products	\$68.0 million
■ Software Licensing	\$60.5 million
■ Enterprise Infrastructure	\$30.0 million

Gross margin generated from product sales increased by 8.8% from \$18.544 million to \$20.179 million with the gross margin percentage unchanged at 12.7%.

Services revenue of \$38.052 million compared with \$29.275 million in the previous year - an increase of 30% - with growth in most areas but particularly in Recruitment. Gross margin generated from Services increased by 5% from \$19.825 million to \$20.798 million. reflecting the higher revenues at lower margins in Recruitment, the reduction in Application Services revenues and higher cost of delivery in ICT Services due to a shortage of permanent skilled resources in the market.

The full year services revenue consisted of the following elements:

※ ICT Services	$$22.1$ million
翳 Recruitment i	\$13.8 million

Microsoft Application Services \$2.1 million

Our objective in terms of operating expenses is that they decline over time as a percentage of gross margin generated. While total staff related costs increased by 6% and total non-staff related costs declined by 0.25%, we met our objective with total operating expenses declining as a percentage of gross margin generated from 89.2% to 87.3%.

EBITDA increased by 17% to \$6.244 million up from \$5.356 million in the previous year (EBITDA margin increased from 3.0% to 3.2%) and net profit before tax increased 21%, from \$4.859 million to \$5.864 million.

Net profit after tax increased by 15% from \$3.393 million. to \$3.912 million. Basic earnings per share increased by 13% from 22.8 cents to 25.7 cents and allowed a dividend of 19.0 cents per share, a payout ratio of 74%.

Staff numbers at the close of the financial year stood at 527 which included 197 contractors engaged through the Data'3 Recruitment Solutions business. This compared with 439 and 130 respectively at the end of the previous year.

Underlying operating cash flow for the year was approximately \$8.8 million, to some degree reflecting the timing benefit of receipts from customers in advance of payments to suppliers. Interest-bearing debt was reduced from the previous year. The key debtor indicator of average days' sales outstanding (DSOS calculated as the average monthly balance sheet debtors divided by average day's sales) was on target.

Our financial targets for 2005 assumed operating expenses would increase due to continuing investment in training and recruitment of our people and in the associated infrastructure. Our objective was to be second to none in terms of expertise in technologies from our key vendors that were core to our customers' business systems. This assumption applied across all areas of the business but particularly in ICT Services. In addition the plan assumed investment in the Organisational Development and Human Resources function and increases in non-staff related operating costs again as a general consequence of a more buoyant market and the more rigorous governance environment.

We expected these investments in people and the associated infrastructure to generate:

• & A small decline in contribution from ICT Services but a repositioning that would underpin product sales and afford services growth opportunities in 2006
• Increased contribution from ICT Product sales through the Customer Solutions Group, presuming we held contracts in Queensland
• Continued growth and an increase in contribution from Enterprise Infrastructure and Licensing, albeit at reduced net margins as operating costs increased
• 88 Contribution from our Microsoft Application Solutions business which was targeted to be in a leadership position in Queensland by year end

& A further improvement in contribution from Data'3 Recruitment Solutions given an expansion of the operation outside Queensland and a more buoyant recruitment market.

Actual results were generally in line with the assumptions, as set out below:

• @ Operating expenses As reported above, staff related expenses increased by 6% but contrary to the assumption and through careful management, non-staff expenses declined by 0.25% even given a relatively substantial increase in the Organisational Development and Human Resources function
• While revenue increased by 14% in ICT Services confirming the success of the 'expertise' oriented strategy, the contribution declined from the previous year in line with the plan primarily due to one-off restructuring charges, higher contractor costs in Integration services due to the shortage of permanent skilled resources in the market and investment in new infrastructure to support the business's competitive positioning
• % Key procurement contracts in Queensland were retained and there was a marginal increase in overall contribution from ICT Product sales. However, within this product area the market was highly competitive and as a consequence, revenue and margins from the volume supply of server and personal systems products declined significantly. This was offset by Increased volume of Cisco networking and communications products flowing from our status as a Gold partner, success in a number of significant projects that delivered product sales and in securing a major supply contract with a government agency

• W The Enterprise Infrastructure business increased gross margin generated by 20% and contribution before allocations by 13% as planned. It was successful in a number of major projects with our key vendors IBM and HP introducing many new 'blue chip' customers to the business
• ® Outstanding growth was achieved in Licensing Solutions with an increase in gross margin generated of 34% and in contribution of 33%. In a marketplace where cutting prices was the primary sales tool of our competition, we held our margin percentage and acquired 67 new contracts. We achieved this by expanding our team in all locations, coordinating marketing with our key vendors, particularly Microsoft, and applying our skills in software license management and software asset management to differentiate our offerings
• The Microsoft Application Solutions business 贂 improved its contribution as planned and anecdotally at least is seen as one of the two leading suppliers in Queensland. It completed projects for many high profile Government and commercial customers in the year
• 28 Data'3 Recruitment Solutions had a very strong year in a market where demand clearly exceeded supply. Gross margin generated increased by 80% and contribution by 190% off a relatively small base in 2004. Margins dipped slightly but understandably with such significant increases in volume. Contribution from outside Queensland was on plan and resources are in place to deliver growth in 2006.

STRATEGIC PERFORMANCE

The 2005 planning process determined a number of strategic imperatives for the business to remain competitively positioned. These imperatives, and our progress against them, are detailed below:

Adapt our business strategy and 'go to market' model to the changing market

In a relatively buoyant market where our customers' focus was on risk management and business continuity; security; network expansion; and application integration, our 'expertise oriented' strategy aligned strongly. The 'go to market' we implemented relied on our Customer Solutions Group (CSG) to identify and manage engagement of our specialist lines of business with existing customers, and our specialist lines of business to engage either directly or through our key vendors to acquire new customers. This was substantially successful and, with further development of skills in the CSG team, we expect increasing success in 2006.

Select our key vendors from those that are driving the industry globally and align our offerings and 'go to market' with their market segmentation

We committed our financial and people resources fully to our key vendors - Cisco Systems, HP, IBM and Microsoft. In addition we developed stronger alignment with 'emerging' vendors for Data''3 such as Citrix, Symantec and NetIQ. Our offerings built on our vendors' core technologies to produce specific customer solutions and our marketing team conducted 95 campaigns across all focations in 2005 aligning our 'go to market' with our vendors' segmentation.

Grow and leverage our specialist capabilities in selected technologies from our key vendors to become a market leader

Given the confidentiality of competitive benchmark information, it is difficult to determine whether we were a market leader.

What we do know is that our expertise, measured by the number and breadth of certification levels across the business, increased substantially in the year and that as a consequence, anecdotally at least, our key vendors acknowledged an improvement in our competitive positioning. Our recent customer satisfaction survey indicated our customers appreciate the value we are able to deliver through the engagement process we have in place.

Attract, develop and retain the right people

Throughout the year we were fortunate to attract some of the best people in the market in the areas in which we were targeting to be a leader. We also retained the bulk of those who were already part of the team. While inevitably in a very competitive and 'skill starved' market some chose to move on, the net change was significantly in our favour and we reached a position where we have market leading expertise in all locations and in all chosen technologies. Support for the business was echoed in our annual staff survey in which over 92% of staff indicated they saw Data'3 as an excellent company to work for and one they would recommend as an employer to others in the industry.

To develop cross-business 'packaged' offerings

The objective of developing cross-business offerings was to create higher levels of differentiation in the solutions we offer to our customers. The most obvious cross-business 'packaging' was between ICT Services and ICT Product sales. We were successful in a number of integrated projects around security. IP Telephony and network extension based on Microsoft and Cisco technologies. We identified opportunities for joint offerings between Licensing and ICT Integration Services; Enterprise and ICT Managed Services; and Recruitment and ICT Services but made no material progress in bringing those to market during 2005. It remains a strong focus for 2006.

Leverage all Data*3 solutions to meet customer needs

During 2005 we defined a measure for 'cross-selling' to customers. For our top 100 customers in 2005 we averaged engagement, at a reasonable level of business, by two of our specialist lines. Clearly there are many situations where we were unable to engage broadly but our belief is that we can increase this level further and it remains a key focus for 2006.

Increase % of revenue as annuity

With the exception of our Enterprise Solutions business which relies on large and complex transactions, all areas had considerable levels of annuity revenue. In 2005. 51% of the total revenue of \$197 million came from contracts with customers and this represented an increase of 3% on the previous year.

Operate at the highest levels of efficiency and the lowest possible cost

We measured operational efficiency in a number of ways, some of which are highlighted below:

• m in volume product sales we measured order turnaround times and average stock balances turnaround times held over the year in spite of significant vendor supply chain issues and poor service levels but only through carrying higher average levels of committed 'forward-order' inventory
• In Corporate Services we measured:
• debtor collection levels through monthly collection targets, debtor aging and average days sales outstanding (DSOS) - we met our targets, reducing average debtor ageing considerably from the previous year

• · cash management through interest income received - we exceeded our targets
• . help desk service levels we exceeded our targets
• · number of operational processes implemented in electronic workflow - increased over the previous year
• . level of conformance with the quality management targets - independently audited, we exceeded all targets with zero non-conformances
• t in service delivery we used a number of measures includina:
• . utilisation improved over the previous year
• · project profitability acceptable but impacted by higher contractor costs
• · average call 'close' times met objectives but impacted by availability

We will be increasing our focus on these and other measures as we further enhance our service delivery methodologies in 2006. Having said this, it should be noted that our processes were independently audited twice in the year - by NATA as part of our ongoing quality audit, and, for our Remote Management Centre, in accordance with a European standard for IT Governance for one of our multinational customers. We passed both audits with commendation

In sales we measured tender response and success rates.

Overall, we met the vast majority of our operational targets and costs were within our targets as a percentage of gross margin generated - 87.2% against the target of 89.1%.

Substantially improve contribution from locations outside Queensland

We doubled the operating profit from New South Wafes and Victoria over the previous year.

Overall 2005 was another satisfying year for all stakeholders. Shareholders were rewarded with a dividend of 19.0 cents and significant gains in share price from \$2.05 to \$3.00 (at year end); customers indicated that the value we deliver as an IT Solutions Company is substantial, with over 80% of respondents to our customer survey indicating we were their preferred supplier in the areas in which we engage; and our staff survey recorded a further increase in satisfaction with 92% (up from 88% in the previous year) rating Data''3 as an excellent company to work for and one that they would recommend to others as an employer. The management team and staff are to be congratulated for their commitment to the task in a year that presented significant challenges. We are well prepared to continue this performance in 2006.

OBJECTIVES AND OUTLOOK FOR 2006

The experiences of 2005 have contributed to the foundation for our strategy in 2006. Specifically we have determined that we need to:

• Maintain and grow our expertise in selected technologies to be a market leader - while requiring continuing investment in people and $the$ infrastructure to support them, this is clearly where we need to be positioned to secure our customers' commitment. We will continue to focus on technologies from our key vendors and look to other 'emerging' vendors (for Data'3) that are delivering market leading offerings. With our broad range and depth of expertise based offerings, we have a unique value proposition for customers who want to deal with a limited number of suppliers
• dentify, develop and retain the right people clearly necessary as an underpinning of our 'expertise oriented' strategy, we will continue to enhance our recruitment processes and to invest in making Data"3 an 'employer of choice'

• 88 Enhance the marketing function to lead the strategic development of the business - we have done a very good job in an 'action-oriented' sense running 95 marketing campaigns over all locations in 2005. However, the demands of our customers and the competitiveness in the market demand a more strategic approach to positioning the business for success. We will invest in the right people to lead this marketing function and will develop a strategic framework for growth that will clearly direct our marketing and business development activities
• Maintain the total gross margin generated from volume ICT Product sales - customer ICT budgets still include substantial expenditure on ICT product. A relationship in this area provides the opportunity for a broader engagement across other areas over time and enhanced profitability. We are targeting strong growth in Cisco product revenues, underpinned by further investment in our Gold Partner status. discrete sales targets, certification of the sales team and enhancement of the pre-sales capability in all locations. We will also make investments in technical presales for HP product to improve our competitiveness in the server and personal systems area and introduce 'value-oriented' components to the base product
• 88 Operate at the highest levels of efficiency and the lowest levels of risk and cost - while clearly a prerequisite in our market given the operating margins available, we intend to take a more constructive approach to opportunities that may have some attached risk but offer higher levels of return.

Our stakeholder objectives remain:

To have over 90% of our staff consistently recommend Data'3 to others as their preferred employer

• 88 To have our key customers consistently tell us that we are their preferred IT supplier
• XX To have our key vendors consistently recognise our expertise and performance
• 38 To consistently deliver total returns to shareholders exceeding those provided by like companies.

To achieve these objectives, our high level strategy for 2006 differs only marginally from that of the previous vear and is to:

• & Strengthen Customer Commitment by engaging to better understand their needs, leveraging all our expertise to meet these needs and exceed their expectations
• 88 Position ourselves competitively as a market leader with expertise in selected technologies (from vendors that are driving the industry globally) applied to deliver results for customers
• Maintain commitment to Staff Development processes that recruit, nurture and retain the 'right' people and further develop their expertise
• EX Through continuous review and improvement. accelerate Development of the Organisation to generate innovation and flexibility at the lowest possible cost and risk.

This strategy is implemented within our business by identifying specific outcomes, setting targets, ensuring the organisation structure and the people are in place, defining specific actions and continuously reviewing progress and changing where necessary.

Structurally there are no changes from the previous year. Our six specialty lines of business engage with existing customers through the Customer Solutions Group and with new customers, independently and with our key vendors.

The financial plan for 2006 assumes operating expenses will increase through further investment in improving the skills of our people and in the associated infrastructure.

Subject to certain assumptions set our below, we expect these investments to generate strong organic growth across the business:

• Example 12 Eublect to the appointment of appropriately skilled licensing and software asset management specialists, continued strong growth in increased revenue and financial performance; enhancement of our positioning as a 'value solutions' provider through the software asset management consultancy
• Microsoft Application Solutions consolidation of the leadership position in Queensland; an increase in business from outside Queensland: further enhancement of service delivery processes and some 'packaging' of our offerings for wider market appeal

• ICT Services subject to availability of the appropriately skilled staff, an increase in financial contribution through growth in integration projects around IP Telephony, security and communications, and in managed services; capitalisation on the investment in new management systems for the Remote Management Centre with retention of existing contracts and success in winning new contracts; and implementation of improved service delivery processes

• Enterprise Infrastructure subject to an improvement in the contribution from the Victorian operation and reasonable levels of manufacturer rebates, continued improvement in financial performance; particular success with 'data centre' solutions providing compliance to regulatory requirements, business continuity and disaster recovery; increased customer adoption of 'virtualisation' technologies; and introduction of offerings generating annuity revenues

• W ICT Products subject to retention of existing procurement contracts, an increase in contribution over the previous year; significant growth in Cisco product revenues offsetting any further decline in contribution from commodity servers and personal systems: establishment of a specialisation in print management solutions
• & Recruitment strong growth in financial performance in a strong market; focus on recruitment in the application and managed services markets; and investment in enhancing current operational systems to accommodate the expected increases in transaction volumes
• & Cross-selling an increase in the average level of engagement of our specialist businesses in our top 100 customers
• & Growth Planning completion of a Strategic Framework for Growth that will direct further development of our current businesses and expansion through partnerships or acquisitions.

On balance, we expect financial performance to improve on the record 2005 result.

CONCLUSION

With another 'best ever' performance and the repositioning afforded by the 'expertise-oriented' strategy, we have now demonstrated sustained profitability and aim to consistently deliver dividends to shareholders at vields near the top of the sector. We are intent upon maintaining this momentum.

My sincere thanks once again go to the people who make up the Data'3 team. They have taken on board the need to be experts in their field and have applied this to deliver results to our customers throughout the past year. My thanks also go to our customers who continue to choose us to partner them in meeting their business goals and whose needs drive us to evermore creative solutions; to our suppliers whose support has shown the true value of our partnership and whose product excellence is the solid base on which our solutions are built: and to our shareholders whose continued support is being rewarded with the appropriate returns.

Buildard.

John Grant Managing Director

directors' profiles

Richard Anderson OAM Non-executive Chairman

Richard ioined the Board of Data^®3 Limited in 1997 and was appointed Chairman in September 2000. He is a member of the Board of Namol Cotton Cooperative

Limited, Lindsay Australia Limited and Villa World Limited, President of the Guide Dogs for the Blind Association of Queensland, a member of the Council of the Queensland Art Gallery Foundation and patron of the Brisbane Polo Club Limited. Formerly a partner of PricewaterhouseCoopers, he was the firm's managing partner in Queensland and a member of the firm's National Committee. He previously has been a member of the Board of Trustees of Brisbane Grammar School and the Capital Markets Board of Queensland Treasury Corporation, President of the Brisbane Polo Club and President of CPA Australia in Queensland.

Howard Stack Non-executive director

Howard served as non-executive Chairman of Data⁸3 Limited from 1997 to September 2000 and continues as a director. He was a partner in the Brisbane based

commercial law firm Feez Ruthning from 1969, and managing partner from 1992 until its merger with Allen Allen and Hemslev in 1996. He retired from Allen Allen and Hemsley in 2001. He is a director of Flight Centre

Limited and Chairman of Magnetica Limited. He is also a director of the unlisted Brisbane hotel group Abney Limited. He previously served as a director of Australian National Industries (1987-1997) and Chairman of Southern Cross Pumps and Irrigation (1996-1997) and of Voxson Limited (1999-2003). In the community he has been Chairman of Brisbane Grammar School Board of Trustees since 1991, and served as a director of Queensland Events Corporation (1996-1998).

Graham Clark Non-executive director

Graham has been a director of Data^r3 Limited, its subsidiaries and its predecessor, Powell Clark and Associates, since 1977. He retired from management responsibilities

within Data^®3 in 1997 after a 34 year career in IT, but remains as a non-executive director. His specific management responsibilities included product and system development, finance, quality and internal systems. Graham began his career in IT as a biometrician with the Queensland Government. He was employed by IBM from 1966 until 1976 in sales, software development and systems engineering. He formed Powell Clark and Associates with Terry Powell in 1977 and Powell Clark and Associates evolved into Data'3 in 1984. He has been a member of the Australian Computer Society since 1966. His professional focus has always been software development and he has authored scientific and commercial applications used in Australia and Asia.

Terry Powell Non-executive director

Terry was executive Chairman of Data'3 from its foundation in 1984 and then Managing Director from 1989 to June 1996. Prior to 1984, Terry was Managing Director of

Powell Clark & Associates, formed in 1977 with Graham Clark. As part of Data^r3 Limited's listing on the Australian Stock Exchange, he resigned as Chairman in October 1997 to allow for the appointment of a non-executive Chairman. Terry re-joined the Data'3 Limited board in February 2002. Prior to retirement from Data*3 in 2001, Terry was General Manager Group Operations with responsibility for Data'3's Year 2000 and eBusiness strategy development. In that position Terry had responsibility for the group's systems and processes, operations and logistics, business improvement and human resources. Terry's career in IT began at IBM's Data Processing Division in 1966. He continued with IBM until 1976, enjoying considerable success in systems engineering and sales roles.

John Grant Executive director

John was a director of Data'3 from its foundation in 1984 and then Managing Director from 1996. He stepped down from the Board as a director in November 2000 along

with all other executive directors and took the position of Chief Executive Officer. He was reappointed as Managing Director in July 2004. From 1980 until he joined Data'3 in 1982, John worked with IBM in sales. John has a degree in Engineering with Honours from the University of Queensland and worked as a civil engineer with the Brisbane City Council from 1970 until John is a national director of the Australian 1980. Information Industry Association, the ICT industry's peak representative body; a member the Federal Government's ICT Advisory Board whose charter is to provide advice to the Minister for Communications. Information Technology and the Arts, Senator Helen Coonan, on ICT industry and research priorities; a member of the Queensland Government's Ministerial Advisory Group whose charter is to provide advice to the Minister for Small Business, Multi-cultural Affairs and IT Policy, Mr Chris Cummins on ICT industry development policy: a member of the Queensland Government's Smart State Council which has been established by Premier Peter Beattie to provide advice and input to the State Government's Smart State strategy; and a member of Hewlett Packard's Asia Pacific Partner Advisory Board whose charter is to provide advice and input to HP on its relationship with its distribution and reseller partners in Asía Pacific.

comorate governance statement

Data*3 has a well established corporate governance framework to provide greater clarity and openness, and to aid in the ongoing focus on shareholder value and sustainable performance.

Corporate governance is an area of increasing focus in all businesses and in 2004/2005 the company continued to build on the governance systems put in place in prior years and following the release of the ASX Corporate Governance Council's "Principles of Good Corporate Governance and Best Practice Recommendations" in March 2003.

One of the features of the ASX Principles and Recommendations is an "if not, why not" disclosure obligation in relation to practices that differ from the ASX recommendations. With three minor exceptions (set out below), the company's corporate governance practices accord with the ASX recommendations.

A description of the company's main corporate governance practices is set out below. All of these practices, unless otherwise stated, were in place for the entire year.

Responsibilities and functions of the board

The board is ultimately responsible to shareholders for the building of sustainable shareholder value within an appropriate risk framework, having regard to the interests of other stakeholders.

To fulfil that responsibility, the board approves company goals and directions, strategic plans and performance targets and ensures that appropriate policies, procedures and systems are in place to manage risk, optimise business performance and maintain high standards of ethical behaviour and legal compliance.

The most significant responsibilities of the board are:

■ Reporting to shareholders and the market

• Ensuring compliance with applicable regulations and standards
• ® Ensuring adequate risk management processes
• Reviewing internal controls, and internal and external audit reports to maintain the integrity of accounting and financial records and reporting
• Monitoring and influencing the culture and reputation of the company
• Monitoring board composition, director selection and board processes and performance
• Approving key executive appointments, transfers and terminations and ensuring executive succession planning
• ^■ Reviewing the performance of the Managing Director and the senior management team
• Reviewing and approving remuneration policies and practices generally and determining remuneration packages and other terms of employment for directors (within the maximum amount approved by the shareholders) and senior executives
• Ensuring that the board has a sufficient understanding of each substantial segment of the business
• the development of, & Participating in and subsequently approving, corporate strategy to position the company so that its sustainable value, and shareholders' ability to realise that value, is maximised
• Reviewing the assumptions and rationale underlying the annual plans and budgets and approving such plans and budgets
• Reviewing business results, monitoring budgetary control and corrective actions
• Authorising and monitoring major strategic investment commitments.

The board has delegated authority and powers to the Managing Director and the senior management team as necessary to implement the strategies approved by the board and to manage the operation and administration of the business affairs of the company. The board ensures that this team is appropriately qualified and experienced to discharge its responsibilities and has in place procedures to assess the performance of the Managing Director and other members of the senior management team.

Board composition and committees

Details of the members of the board, their experience, expertise, qualifications, term of office and independence status are set out in the Directors' Report under the heading "Information on Directors". There are four non-executive directors, all of whom are deemed independent under the principles set out below, and one executive director at the date of signing the Directors' Report.

The board has determined that its optimum composition will:

• Conform with the Constitution of the company (being not less than three nor more than twelve in number)
• Have a majority of directors as non-executive
• . Reflect the company's geographic operations and strategic objectives.

Nomination and remuneration committees

The ASX Corporate Governance Council recommends that companies' boards of directors establish separate nomination and remuneration committees. Considering the size of the company and the number of its directors, the board considers that the establishment of separate nominations and remuneration committees is not necessary.

In relation to nominations, the board is responsible for:

• EX Assessment of the necessary and desirable competencies of board members
• ※ Review of board succession plans
• & Evaluation of the board's performance
• 88 Appointment and removal of directors.

Directors are initially appointed by the board, subject to election by the shareholders at the next Annual General Meeting (AGM). The company's Constitution specifies that all directors (with the exception of the Managing Director) must retire from office no later than the third AGM following their last election. Where eligible, a director may stand for re-election.

addresses remuneration The full board also requirements, information on directors' and executives' remuneration is set out in the Directors' Report, under the heading "Remuneration Report", and in note 24 to the financial statements.

Audit committee

The board has established an audit committee to give particular attention to, and report to the full board on, the integrity of financial reporting processes, treasury activities, internal control systems and internal and external audit processes. The current membership is H L Stack (Chairman) and R A Anderson, with the Managing Director and the Chief Financial Officer participating by invitation.

The audit committee structure meets the ASX Corporate Governance Council recommendations with one exception, being that it does not consist of at least three members, and consequently the company will give further consideration to the appointment of an additional member to the audit committee.

annual (11 report

Superannuation policy committee

The board is also assisted by the superannuation policy committee, which reviews the corporate superannuation funds and provides liaison between the fund members and the fund managers. The committee meets at least once a year and more frequently if regulred. Current membership of the superannuation policy committee is G R Clark (Chairman), L MacPherson, J M Pickard, K. J Woods and N F Bennett (staff members)

Board commitment

The board holds normal meetings on a monthly basis and convenes at other times as required. The board also meets formally on a regular basis with the senior management team. The meetings are chaired by the non-executive Chairman or, in his absence, his nominee. The Chairman is responsible for ensuring that the governance objectives of the board are pursued and that the conduct of the meetings is efficient and appropriate. The Company Secretary and other executive management attend the meetings by invitation, when appropriate.

The number of meetings of the company's board of directors and audit committee held during the year ended 30 June 2005, and the number of meetings attended by each director, is disclosed in the Director's Report.

Non-executive directors are expected to make the necessary commitment to preparing for and attending board and committee meetings and associated activities. The commitments of non-executive directors are considered by the full board prior to the director's appointment to the board and are reviewed each year as part of the annual performance assessment. Prior to appointment or being submitted for re-election, each non-executive director is required to specifically acknowledge that he has and will continue to have the time available to discharge his responsibilities to the company as outlined above.

Directors' independence

Based on guidance set out in the ASX Corporate Governance Council's "Principles of Good Corporate Governance and Best Practice Recommendations", the board has adopted specific principles in relation to directors' independence. These state that to be deemed independent, a director must be non-executive and:

• ^■ Not a substantial shareholder of the company or an officer of, or otherwise associated directly with, a substantial shareholder of the company (substantial being more than 5% of the company's shares on issue)
• Within the last three years not employed in an executive capacity by the company or a related body corporate of the company, or been a director after ceasing to hold any such employment
• Within the last three vears not a principal of a material professional adviser or a material consultant to the company or a related body corporate of the company, or an employee materially associated with the services provided
• ® Not a material supplier or customer of the company or a related body corporate of the company, or an officer of or otherwise associated directly or indirectly with a material supplier or customer
• Have no material contractual relationship with the company or a related body corporate of the company other than as a director of the company
• Not been on the board for a period which could, or could reasonably be perceived to, materially interfere with the director's ability to act in the best interests of the company
• ® Not have any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director's ability to act in the best interests of the company.

Materiality for these purposes is an amount of over 5% of the annual turnover of the group. In addition, a transaction of any amount or a relationship is deemed material if knowledge of it impacts the shareholders' understanding of the director's performance.

Managing Director

Our most senior executive, the Managing Director, is selected by the board and is subject to annual performance reviews by the non-executive directors. The Managing Director recommends policy and strategic direction for board approval, is responsible for managing day-to-day operations, and is the board's principal link to senior management.

Board appraisal

A structured process has been established to review and evaluate the performance of the board and its committees, and the performance of the individual directors and the Managing Director on an ongoing basis. The issues examined in the review include the board's interaction with management, the type of information provided to the board by management, and management performance in helping the board meet its objectives.

External auditor

The board is responsible for the initial appointment of the external auditor, and the appointment is ratified by the members at the Annual General Meeting. The audit committee and the board assess the performance of the external auditor annually. This assessment includes the quality and rigour of the audit; the quality of the service provided; the audit firm's internal control procedures; relationships between the external auditor and the company; and the independence of the auditor.

Should a change in auditor be considered necessary, a formal tendering process will be undertaken. The board will identify the relevant evaluation criteria and will ensure that the selection process is sufficiently robust to ensure selection of an appropriate auditor. In selecting an auditor particular consideration will be given to determining whether the fee quoted is appropriate for the work required; that the work is to be undertaken by people with an appropriate level of seniority and skill; and whether the work proposed is sufficient to meet the company's needs and expectations.

On an annual basis the board discusses with the auditor the provisions the audit firm has in place for rotation of the lead engagement partner and the independent review partner, and the overall succession plan regarding the professional staff assigned to the company's audit. The rotation of the lead engagement partner will occur prior to the audit for the financial year ending 30 June 2006.

Directors' arrangements with the company

The Constitution provides that a director may enter into an arrangement with the company or with a related body corporate of the company. Directors or their firms may act in a professional capacity for the company or a related body corporate of the company, other than to act as an auditor of the company. These arrangements are subject to the restrictions of the Corporations Act. Financial services must be provided to directors under terms and conditions that would normally apply to the public, or in the case of an executive director under terms and conditions that would normally apply to employees. Directors' arrangements with the company in the past have not been material and have therefore not adversely impacted the directors' independent status. Disclosure of related party transactions is set out in note 24 to the financial statements.

When a potential or actual conflict of interest or a material personal interest arises in relation to any matter that concerns the affairs of the company, the director concerned (i) must give the other directors immediate notice of such interest and (ii) does not receive copies of the relevant board papers and withdraws from participating in the board meeting whilst such matters are considered. Accordingly, the director concerned takes no part in discussions or exercises any influence over other members of the board if a potential conflict of interest exists.

Board and committee agenda

Board and committee agenda are structured throughout the year to reflect their defined responsibilities, to give the board a detailed overview of the performance and significant issues confronting each business unit and the company, and to identify major risk elements for review to ensure that assets are properly valued and that protective strategies are in place.

Directors receive detailed financial and operational reports from senior management monthly, and management is available to discuss the reports with the board.

Independent professional advice

Directors and board committees have the right, in connection with their duties and responsibilities, to obtain independent professional advice at the company's expense. Prior written approval of the Chairman is required, but this will not be withheld unreasonably. If appropriate, any advice so received will be made available to all directors.

Code of conduct

The directors, managers and employees are expected to act with the utmost integrity and objectivity, observe the

highest standards of behaviour and business ethics, and strive at all times to enhance the reputation and performance of the company.

The company has developed an extensive code of conduct, which is encapsulated in the corporate governance statement and the company's terms and conditions of employment and conduct guidelines that apply to all employees.

The terms and conditions of employment and conduct quidelines address:

• The underlying values and vision of the company
• Business ethics and protocol
• Relevant policies and procedures
• & Employee entitlements
• ^■ Responsibilities and expectations of the company and the employees
• Compliance with relevant legal and stakeholder obligations.

All employees have position descriptions that reinforce their duties, rights and responsibilities, and all are required to reconfirm their acceptance of the terms and conditions of employment annually. Performance plans are developed for all employees at the start of each financial year, and align their goals and key performance indicators with those of the business. The actual performance against these plans is reviewed at six-monthly or annual intervals, and more frequently if required.

The company also has a well-established business improvement program that encourages regular feedback, review, and continuous improvement, so as to maintain and enhance the desired corporate culture and standard of ethical hebaviour

Policy for trading in company securities

Directors, officers and employees must not buy, sell or subscribe for securities in the company if they are in possession of 'inside information', i.e. information that is not generally available, and, if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of the securities in the company. The Corporations Act provides that a reasonable person would be taken to expect information to have a material effect on the price or value of securities of a body corporate if the information would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to subscribe for, buy or sell the securities.

It is the board's policy that directors, officers and employees may trade in the company's securities, subject to the insider trading restrictions above, within the four-week period following each half-yearly profit announcement, Annual General Meeting or date of issue of a prospectus. Directors must discuss their intention to trade in the company's securities with the Chairman of the company prior to trading.

The board's policy also reinforces the directors' and company's statutory obligations to notify the ASX regarding any dealing in the company's securities which results in a change in the relevant interests of the director in the company's securities. As contemplated in the ASX listing rules, each director has agreed to provide notice of such dealings to the company within three business days of any such dealing to enable the company to comply with its corresponding obligation to notify the ASX.

In unusual or pressing circumstances and subject to the insider trading restrictions above, directors, officers and employees may trade outside the specified periods after discussion with the Chairman. In addition, directors will not trade in the shares of any other entity if inside

information on such entity comes to the attention of the director by virtue of holding office as a director of the company.

Remuneration of directors

The remuneration policy for directors and the remuneration of each director is set out in the Directors' Report, under the heading "Remuneration Report".

Remuneration and succession planning for executives

The full Board reviews the succession planning for executive management and sets the remuneration packages applicable to the Managing Director and senior executives. The remuneration policy for executives and details on the remuneration of executives are set out in the Directors' Report, under the heading "Remuneration Report", and in note 24 to the financial statements.

Continuous disclosure and shareholder communication

The board has established written policies and procedures that focus on continuous disclosure and improving access to information for all investors.

The Company Secretary, working closely with the Managing Director and Chairman, has been delegated responsibility for:

• ... Ensuring that the company complies with its continuous disclosure requirements
• M Overseeing and co-ordinating the disclosure of information to the ASX, analysts, brokers, shareholders and the media
• 88 Educating directors and employees on the company's disclosure policies and procedures and raising awareness of the principles underlying continuous disclosure.

Price sensitive information is publicly released through the ASX before it is disclosed to analysts or other external parties. This information is then posted in the "Investor Relations" section of the company's website, so as to ensure that it is accessible to the widest audience.

The board has also developed procedures for safeguarding confidential corporate information to avoid premature disclosure, and for responding to market rumours, leaks and inadvertent disclosures.

All shareholders receive a copy of the company's annual and half yearly reports. In addition, all recent company announcements, media briefings, details of company meetings, press releases for the last three years, and financial reports for the last four years are available on the company's website www.data3.com.au. The website also includes a mechanism for shareholders to provide feedback and comments. Shareholders can raise questions by contacting the company by telephone, facsimile, email or post. Contact details are provided on the company's internet site and in the "Corporate Directory" section of this annual report.

directors' report

Data'3 Limited and Controlled Entities

Your directors present their report on Data'3 Limited and its controlled entities (the consolidated entity) for the year ended 30 June 2005.

Principal activities

The principal activities of the consolidated entity during the course of the financial year related to the delivery of information technology solutions, which draw on the entity's broad range of products and services and its alliances with other industry providers.

These activities included the procurement of information and communication technology (ICT) products; the design, implementation and support of ICT infrastructure solutions; the provision of ICT recruitment services; and the supply, implementation and support of application software solutions.

There were no significant changes in the nature of the activities of the consolidated entity during the year.

Dividends

A fully franked final dividend for the year ended 30 June 2004 of \$1,439,000 (9.5 cents per share) was paid on 30 September 2004. A fully franked interim dividend of \$1,143,000 (7.5 cents per share) was paid on 31 March 2005. In addition, since the end of the financial year the directors have declared a fully franked final dividend of \$1,765,000 (11.5 cents per share) to be paid on 30 September 2005 out of retained profits at 30 June 2005.

Review of operations and results

• Total revenue of the consolidated entity for the year was \$197,141,000, a 12 % increase from last year
• ® Operating profit of the consolidated entity before interest (net), tax, depreciation and amortisation was \$6,244,000; and the net profit after these expenses was \$3,912,000
• Strong underlying net operating cash inflows, to some degree reflecting the timing benefit of receipts from customers in advance of payments to suppliers
• A strong financial position, with essentially no long-term debt and a current ratio of 1.25 (2004: 1.16)
• A significant investment and improvement in expertise in our staff while maintaining staff costs within our targeted percentage of gross margin generated
• § Gross margin decreased from 21.9% to 20.9% due to the very strong growth in Recruitment revenues which yield lower margins than other areas of the business and lower Application Services revenue following the closure or sale of most elements of the Applications Services business at the end of the previous financial year
• A reduction in total operating costs as a percentage of gross margin generated
• Strong growth in Software Licensing and the successful establishment of a complementary software asset management consultancy
• Repositioning of our ICT Services and Microsoft Application Solutions areas of specialisation with deep expertise around market leading technologies
• Growth in all geographies with a doubling of operating profit (before corporate expense) in New South Wales and Victoria over the previous year.

annual l'Interport

Business strategy

Our vision is to be recognised as "Australia's leading ICT Solutions Company - the one that everyone wants to work for, buy from, or own shares in."

To achieve this vision, our strategy is to:

• Strengthen Customer Commitment by engaging to better understand their needs, leveraging all our expertise to meet these needs and exceeding their expectations
• Position ourselves competitively as a market leader with expertise in selected technologies (from vendors that are driving the industry globally) applied to deliver results for customers
• Maintain commitment to Staff Development processes that recruit, nurture and retain the 'right' people and further develop their expertise
• Through continuous review and improvement, accelerate Development of the Organisation to generate innovation and flexibility at the lowest possible cost and risk.

We believe we will have achieved our vision when over 90% of our staff consistently recommends Data'3 to others as their preferred employer; our key customers consistently tell us that we are their preferred ICT supplier; our key vendors consistently recognise our expertise and performance; and we consistently deliver total returns to shareholders exceeding those provided by like companies.

a ran start	2005 Cents	2004 Cents
Basic earnings per share	25 67	,, ,
Diluted earnings per share	25 63.	22.65

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the consolidated entity during the year other than as disclosed in the financial report.

Matters subsequent to the end of the financial vear

No matter or circumstance has arisen since 30 June 2005 that has significantly affected, or may significantly affect:

• (a) the consolidated entity's operations in future financial years
• (b) the results of those operations in future financial years
• (c) the consolidated entity's state of affairs in future financial years.

Likely developments and expected results of operations

In 2006 we expect buoyant but competitive market conditions to remain in place and are targeting continued organic growth in all areas of the business. We will continue to invest in developing the expertise of our staff and in associated infrastructure to maintain our competitive positioning, and are proposing to lower overhead expense relative to gross margin generated.

We will continue to look for appropriate partnerships and acquisitions to enhance either our geographic scale or our expertise in specific areas and ultimately further improve financial performance.

directors' report

Data'3 Limited and Controlled Entities

Likely developments and expected results of operations (continued)

For shareholders we expect financial performance to improve on the record 2005 result and are looking to continue to deliver dividends that balance the need for working capital and provide returns near the top of the sector.

Additional comments on the operations of the consolidated entity and the expected results of those operations are included in the review of operations of the consolidated entity set out in the Annual Report.

Further information on likely developments in the operations of the consolidated entity and the expected results of operations has not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.

Meetings of directors

The names of all directors of Data'3 Limited during the financial year together with the numbers of meetings of the company's board of directors and of the audit committee held during the year, and the numbers of meetings attended by each director are:

Name		Full meetings of directors	Meetings of audit committee
	Meetings attended	Meetings held.	Meetings attended	Meetings held
R A Anderson	18	18
HL Stack	15	18
G R Clark	16	18
WT Powell	17	18	圣
J E Grant	18	18

$*$ = Not a member of the committee during the year.

Each person listed above was a director for the whole of the financial year and up to the date of this report.

Information on directors

R A Anderson, OAM, BCom, FCA - Chairman, non-executive director

Experience and expertise:

Independent non-executive director for eight years and Chairman since 2000. Formerly a partner with Pricewaterhouse-Coopers and a member of the firm's National Committee. Previously a member of the Brisbane Grammar School Board of Trustees and the Capital Markets Board of Queensland Treasury Corporation, and President of the Brisbane Polo Club and of CPA Australia in Queensland.

Other current directorships:

Non-executive director of three other public companies: Namoi Cotton Cooperative Limited (director since 2001), Lindsay Australia Limited (director since 2002) and Villa World Limited (director since 2002). President of the Guide Dogs for the Blind Association of Queensland.

Former directorships in the last three years:

Not applicable.

Special responsibilities:

Chairman of the board. Member of audit committee.

Freport atman

Information on directors (continued)

H L Stack, LLB - non-executive director

Experience and expertise:

Independent non-executive director for eight years and Chairman from 1997 to 2000. Formerly a partner with law firm Allens Arthur Robinson, a non-executive director of Australian National Industries and Queensland Events Corporation, and Chairman of Southern Cross Pumps and Irrigation.

Other current directorships:

Non-executive director of Flight Centre Limited (director since 1995) and Chairman of Magnetica Limited (director since 2004). Non-executive director of unlisted Brisbane hotel group Abney Limited and Chairman of Brisbane Grammar School Board of Trustees.

Former directorships in the last three years:

Chairman of Voxson Limited (non-executive director from 1999 to 2003).

Special responsibilities:

Chairman of audit committee.

G R Clark, BSc, Dip. Comp. Sc. - non-executive director

Experience and expertise:

Non-executive director for eight years. Extensive experience in the IT industry, including being director of the company and its predecessor, Powell Clark and Associates, since he and WT Powell formed the business in 1977.

Other current directorships:

Not applicable.

Former directorships in the last three vears: Not applicable.

Special responsibilities:

Chairman of superannuation policy committee.

WT Powell, BEcon - non-executive director

Experience and expertise:

Non-executive director for three years. Executive Chairman of the company from its foundation in 1984 and then Managing Director from 1989 to 1996. Prior to 1984 had extensive experience in the IT industry and was Managing Director of Powell Clark and Associates, formed in 1977 with G R Clark. Re-joined the board of Data'3 Limited in 2002.

Other current directorships:

Not applicable.

Former directorships in the last three years: Not applicable.

Special responsibilities: Not applicable.

directors' report

Data'3 Limited and Controlled Entitles

Information on directors (continued)

J E Grant, BEng - Managing Director

Experience and expertise:

Director of the company from its foundation in 1984; Managing Director from 1996 to 2000; and Chief Executive Officer from 2000 to 2004. Re-appointed Managing Director effective from 1 July 2004. Extensive experience in the IT industry. Member of the Federal Government's ICT Advisory Board whose charter is to provide advice to the Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, on ICT industry and research priorities; member of the Queensland Government's Ministerial Advisory Group whose charter is to provide advice to the Minister for Small Business, Multi-cultural Affairs and IT Policy, Mr Chris Cummins, on ICT industry development policy; a member of the Queensland Government's Smart State Council which has been established by Premier Peter Beattie to provide advice and input to the State Government's Smart State strategy; and a member of Hewlett Packard's Asia Pacific Partner Advisory Board whose charter is to provide advice and input to HP on its relationship with its distribution and reseller partners in Asia Pacific.

Other current directorships:

A national director of the Australian Information Industry Association, the ICT industry's peak representative body.

Former directorships in the last three years: Not applicable.

Special responsibilities:

Managing Director.

Company secretary

Mr B I Hill, BBus, was appointed to the position of company secretary in 1997. He has served as Financial Controller or Chief Financial Officer of the company since 1992 and is a member of CPA Australia and a Fellow of Chartered Secretaries Australia.

Remuneration report

All information in this remuneration report has been audited by the company's auditor with the exception of the section titled "Cash bonuses"

The remuneration report is set out under the following main headings:

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

The board addresses remuneration policies and practices generally, and determines remuneration packages and other terms of employment for senior executives.

Executive remuneration and other terms of employment are reviewed annually by the board having regard to performance against goals set at the start of the year, relevant comparative information and independent expert advice. Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the consolidated entity's operations, achieving the company's strategic objectives, and increasing shareholder wealth.

lo, renort anna

Remuneration report (continued)

A Principles used to determine the nature and amount of remuneration (continued)

The overall level of executive reward takes into account the performance of the consolidated entity over a number of years, with greater emphasis given to improving performance over the prior year. From 2001 to 2002, the consolidated entity's profit from ordinary activities after income tax improved from a loss of \$4,262,000 to a profit of \$3,170,000. From 2002 to 2005, the consolidated entity's profit from ordinary activities after income tax has grown at an average rate of 7% per annum. From 2001 to 2005 shareholder wealth has grown at an average rate of 20% per annum, and over that same five year period the average executive remuneration has increased by approximately 10% per annum.

Executive pay

The executive pay and reward framework has four components:

• Base pay and benefits
• Performance-related bonuses
• Long-term incentives through participation in the Data'3 Limited Employee Option Plan
• Other remuneration such as superannuation.

The combination of these comprises the executive's remuneration.

Base pay

Base pay is structured as a total employment cost package which may be delivered as a combination of cash and prescribed non-financial benefits at the executive's discretion. There are no guaranteed base pay increases included in any senior executives' contracts.

Performance-related bonuses

Performance-related cash bonus entitlements are linked to the achievement of individual objectives, both financial and non-financial, which are relevant to meeting the company's business objectives. In 2005 the proportion of the planned total executive remuneration that was performance-related was 36% (2004: 37%).

A major part of the bonus entitlement is determined by the actual performance against planned group and divisional profit targets relevant to each individual. Using a profit target ensures variable reward is only available when value has been created for shareholders and when profit is consistent with the business plan. In 2005 the planned profit-related component represented 88% of the total executive bonuses. The balance of the executive bonus entitlement is determined by performance against agreed key performance indicator targets relevant to each individual.

The executives' cash bonus entitlements are assessed and paid either quarterly or six-monthly, based on the actual performance against the relevant full-year profit and key performance indicator targets. The board, together with certain senior managers, is responsible for assessing whether an individual's targets have been met, and profit targets and key performance indicator targets are reviewed and reset annually.

Directors' fees

Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. The board determines remuneration of non-executive directors within the maximum amount approved by the shareholders from time to time. This maximum currently stands at \$350,000 per annum in total for salary and fees, to be divided among the directors in such a proportion and manner as they agree. Non-executive directors are paid a fixed remuneration, comprising base fees and superannuation. Non-executive directors do not receive bonus payments or share options, and are not provided with retirement benefits other than statutory superannuation. The board was comprised of four non-executive directors and one executive director during the financial year.

The board undertakes an annual review of its performance and the performance of the board committee against goals set at the start of the year.

directors' report

Data'3 Limited and Controlled Entities

Hemuneration report (continued)

B Details of remuneration

Remuneration paid, payable, provided or otherwise made available, directly or indirectly, to directors or executives by the disclosing entity or any related party in connection with the management of affairs of the entity and its subsidiaries is set out below. The cash bonuses are dependent on the satisfaction of performance conditions as set out under the Performance-related bonuses heading above. Specified directors include all directors of the company, and specified executives include those executives who, in the opinion of the board and Managing Director, have the greatest authority for the strategic direction and management of the consolidated entity. The following group of specified executives also includes the five most highly remunerated executives of the consolidated entity.

Directors of Data*3 Limited

	Primary	Cash	Non-	Post-	Equity	Other Benefits	Total
	Salary & fees £	bonus 繿	monetary R.	Employment Superannuation	Options 繿	邓	M
Specified directors
Anderson, R.	Chairman (non-executive)
2005	90,000			8,100			98,100
2004	70,000			6,300			76,300
Clark, G.	Director (non-executive)
2005	55,000			4,950			59,950
2004	42,500			3,825			46,325
Grant, J.*		Managing Director (effective 1 July 2004)
2005	212,541	100,000	75,923	11,536			400,000
2004
Powell, W.	Director (non-executive)
2005	55,000			4,950			59,950
2004	42,500			3,825			46,325
Stack, H.	Director (non-executive)
2005	65,000			5,850			70,850
2004	47.500			4,275			51,775
	Total Remuneration: Specified directors
2005	477,541	100,000	75,923	35,386			688,850
2004	202.500			18,225			220,725

*The directors' remuneration for 2005 includes the remuneration of Mr J E Grant, who was appointed as a director effective 1 July 2004. His remuneration was included in executive remuneration in 2004.

annual() h report

Remuneration report (continued)

B Details of remuneration (continued)

Other executives of Data'3 Limited
------------------------------------	--	--

	Primary Salary & fees	Cash Bomus Æ	Non- monetary	Post- Employment Superannuation	Equity Options	Other Benefits Termination 鉴	Total Á.
Specified executives
Baynham, L.	General Manager
2005	170,000	140,700		11,585			322,285
2004	148,998	106,815		11,002	2,335		269,150
Bowser, M.		Manager - New South Wales
2005	128,998	141,999		11,585			282,582
2004	128,998	97,395		11,002	935		238,330
Colledge, B.		Manager-Licensing Solutions
2005	128,998	164,070		11,585			304,653
2004	128,998	114,634		11,002	935		255,569
Crouch, B.		Manager - Enterprise Solutions
2005	128,998	137,682		11,585			278,265
2004	128,998	127,644		11,002	935		268,579
Esler, M.	Manager - Queensland
2005	107,448	103,588	22,710	19,842			253,588
2004	117,222	44,260	18,988	13,189			193,659
Grant, J.		Chief Executive Officer (Managing Director from 1 July 2004)
2004	203,402	81,692	68,468	28,131			381,693
$\mathsf{Hill}, \mathsf{B}$ .		Chief Financial Officer and Company Secretary
2005	137,550	32,045	950	11,585			182,130
2004	111,000	26,625	3,543	11,002	935		153,105
Lavett, J. 2005	Manager - Victoria 130,000	54,090	23,400	11,585			219,075
2004	111,197	27,773	23,400	11,002			173,372
MacPherson, L.*		Manager - Organisational Development & HR
2005	99,083	26,704		11,167			136,954
2004
Murphy, R	Manager - ICT Services
2005	125,000	46,442		11,585			183,027
2004	98,000	38,751		11,002			147,753
White, M.		Manager - Application Solutions (resigned 31/10/03)
2004	46,023	90,890		10,501		125,250	272,664
	Total Remuneration: Specified executives
2005	1,156,075	847,320	47,060	112,104			2,162,559
2004	1,222,836	756,479	114,399	128,835	6,075	125,250	2,353,874

directors' report

Data''3 Limited and Controlled Entities

Remuneration report (continued)

B Details of remuneration (continued)

* Denotes those executives who were employed by the parent entity for the year ended 30 June 2005 and represent the four most highly remunerated officers of the parent entity. There were no other officers in the parent entity for the year ended 30 June 2005.

The amounts disclosed for remuneration as equity options in the previous table are the assessed fair values at the date they were granted. Fair values were determined using the Black Scholes Option Pricing Model and take into account factors such as exercise price, the term of the option, current price and expected volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. No director or executive received remuneration consisting of options during the year ended 30 June 2005.

Group totals in respect of 2004 do not necessarily equal the sums of amounts disclosed for 2004 for individuals specified for 2005, as different individuals may have been specified as executives in 2004.

Cash bonuses

For each cash bonus included in the previous tables, the percentage of the planned bonus that was actually earned in the financial year, and the percentage that was forfeited because the person did not meet the relevant profit or other performance-related criteria, are set out below.

Name ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	Earned %	Forfeited 3 / 0
Baynham, L.	100	$\overline{\phantom{a}}$
Bowser, M.	100	BA
Colledge, B.	100	$\sim$
Crouch, B.	100	$\sim$
Ester, M.	100	$\sim$
Grant, J.	100	٠
Hill, B.	100	$\mathbf{r}$
Lavett, J.	54	46
MacPherson, L.	100	٠
Murphy, P.	100	$\mathbf{r}$

C Service agreements

Remuneration and other terms of employment for Mr J E Grant, Managing Director, are formalised in a service agreement. The company may terminate the agreement without notice for gross misconduct; otherwise, the company may terminate the agreement early with three months notice and payment of twelve months of his packaged salary together with an additional amount representing the performance-related bonus earned up to the date of termination. Mr Grant may resign his employment at any time with six months notice. Other major provisions of the agreement are as follows:

• Term of agreement two years commencing 1 July 2004, then reviewed annually
• Base salary, inclusive of superannuation, for the year ended 30 June 2005 of \$300,000, thereafter to be reviewed annually by the board of directors
• ³⁶ Performance-related bonus of up to \$100,000 may be earned for each of the years ended 30 June 2005 and 30 June 2006, with the bonus amount and performance targets to be reviewed annually thereafter by the board of directors.

hanon anna

Remuneration report (continued)

D Share-based compensation

Subject to shareholder approval, additional options may be granted to directors and executives under the Data'3 Limited Employee Option Plan. All directors and executives of Data^*3 Limited and its controlled entities are eligible to participate in the plan. Options are issued for \$1 per parcel of options issued and are exercisable from 2 years prior to the expiry date to the expiry date; the options lapse 30 days following cessation of the option holder's employment. The exercise price of the options on issue was determined as the higher of 90 cents per share or the weighted average price of the shares as listed with the ASX within the 5 days immediately prior to the offer date. Options granted under the plan carry no dividend or voting rights. Options may only be granted with shareholder approval. The Plan must be reviewed and approved at an Annual General Meeting prior to the granting of additional options. When exercisable, each option is convertible into one ordinary share.

No options were granted to any director or executive during the year ended 30 June 2005, and no options vested or lapsed during the year.

Details of the value of options exercised by directors and executives during the year were as follows:

Executive	Exercise date	Number of options	Option exercise price	Fair value per share at exercise date	Value of options at exercise date	Aggregate value at exercise date
Bowser, M.	24 June 2005	20,000	\$0.91	\$2.90	\$1.99	\$39,800

Shares under option

Unissued ordinary shares of Data⁴3 Limited under option at the date of this report are as follows:

		Issue price	Number
Grant date	Expiry date	of shares	under option
22 November 2002	21 November 2005	\$0.91	20.000 gammageoognaamed

No option holder has any right under the options to participate in any other share issue of the company or of any other entity. No share options were granted during the financial year. Furthermore, there has been no movement in shares under option since year end up to the date of this report.

Shares issued on the exercise of options

The following ordinary shares of Data'3 Limited were issued during the year ended 30 June 2005 on the exercise of options granted under the Data"3 Limited Employee Option Plan. No further shares have been issued since that date. No amounts are unpaid on any of the shares.

	Issue price	Number of
Grant date	of shares	shares issued
22 November 2002	\$0.91	40.000 SEBBRIERBEBBBBBBBBB

Indemnity/insurance of officers

During the financial year, Data"3 Limited paid a premium of \$37,379 to insure the directors and members of the executive management team of the company and the consolidated entity against any liability incurred by them in their capacity as officers, unless the liability arises out of conduct involving a lack of good faith. The executive officers of the consolidated entity are also indemnified against any liability for costs and expenses incurred in defending civil or criminal proceedings involving them as such officers if judgement is given in their favour or if they are acquitted or granted relief.

Environmental regulations

The consolidated entity is not subject to any particular and significant environmental regulations.

directors' report

Data'3 Limited and Controlled Entities

Rounding of amounts to nearest thousand dollars

The company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities & Investments Commission, relating to the "rounding off" of amounts in the directors' report and financial report. Amounts in the directors' report and financial report have been rounded off to the nearest thousand dollars, or in certain cases to the nearest dollar, in accordance with that Class Order.

Auditor

Johnston Rorke continues in office in accordance with section 327 of the Corporations Act 2001.

Non-audit services

The company may decide to employ Johnston Rorke on assignments additional to its statutory duties where the auditor's expertise and experience with the company and/or the consolidated entity are important.

The board of directors has considered the position and, in accordance with the advice received from the audit committee is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor
• None of the services undermine the general principles relating to auditor independence as set out in Professional Statement F1, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risk and rewards.

A copy of the auditors' independence declaration as required under section 307c of the Corporations Act 2001 is set out on page 37.

During the year the following fees were paid or payable to the auditor for audit and non-audit services:

	Consolidated
	2005	2004
	S	S
Assurance services
Audit services
Audit and review of financial reports and other audit work under
the Corporations Act 2001	82,000	79,000
Other assurance services
Due diligence services on potential acquisition	5,900	5.750
Corporate services	1.140	500
IFRS consultancy services	3,500
Taxation services
Tax compliance services	7190	8,500
	99,730	93,750
This report is made in accordance with a resolution of the directors.

RA Anderson Director Brisbane 26 August 2005

Charltonnel Aentarseitariés

Stoor 5 Notional Bank House 255 Adelaiste Savet Dristians O 4008 GPO Box 1144 Brisbane Q 4004 Ph 07 3222 8444 / Fax 07 3221 777% Website www.jr.com.zu Email je@gr.ecrn.ac

The Directors Data'3 Limited Level 2, Data'3 Centre 80-88 Jephson Street TOOWONG QLD 4066

Auditor's Independence Declaration

As lead engagement partner for the audit of the financial report of Data'3 Limited for the financial year ended 30 June 2005, I declare that, to the best of my knowledge and belief, there have been:

i. no contraventions of the independence requirements of the Corporations Act 2001 in relation to the audit; and

ii. no contraventions of any applicable code of professional conduct in relation to the audit.

JOHNSTON RORKE

Chartered Accountants

Whalker

R C N Walker Partner Brisbane, Queensland 26 August 2005

Data'3 Limited and Controlled Entities

Statements of Financial Performance for the year ended 30 June 2005

	Notes		Consolidated		Parent Entity
		2005	2004	2005	2004
		\$'000	\$'000	\$'000	\$'000
Revenues from ordinary activities
Sale of goods	$\overline{2}$	158,443	146,222
Services	$\overline{2}$	38,052	29.275	218	443
Other	$\overline{2}$	646	698	8,484	9.463
Total		197,141	176,195	8,702	9,906
Expenses from ordinary activities
Changes in inventories of finished goods		1,212	331
Purchase of goods		(139, 476)	(128,009)
Employee and contractor costs directly on-charged
(cost of sales on services)		(13.917)	(7, 645)
Other cost of sales on services		(3,338)	(1,805)
Other employee and contractor costs		(27877)	(26, 308)	(3,745)	(3,684)
Telecommunications		(839)	(1,069)	(226)	(318)
Rent	3	(2,249)	(1, 947)	(272)	(124)
Travel		(952)	(1,001)	(100)	(148)
Depreciation and amortisation	3	(748)	(812)	(198)	(242)
Borrowing costs		(15)	(27)	(15)	(27)
Management charges - controlled entities				(781)	(1,101)
Other		(3.078)	(3,044)	(887)	(801)
Total		(191, 277)	(171, 336)	(6,224)	(6,445)
Profit from ordinary activities before
income tax expense	3	5,864	4.859	2,478	3,461
Income tax expense	4	11,952	(1,466)	(147)	(53)
Net profit	20	3,912	3,393	2,331	3,408
		Cents	Cents
Basic earnings per share	36	25.67	22.77
Diluted earnings per share	36	25.63	22.65

The above statements of financial performance should be read in conjunction with the accompanying notes.

annual() is report

Statements of Financial Position for the year ended 30 June 2005

	Notes	Consolidated		Parent Entity
		2005	2004	2005	2004
		\$'000	\$'000	\$'000	\$'000
Current assets
Cash assets	6	9,173	6.797	9,171	6,795
Receivables	7	30,192	27,673	9,498	9,930
Inventories	8	2,362	1,115
Other	9	1,021	928	335	290
Total current assets		42,748	36,513	19,004	17,015
Non-current assets
Receivables	7		500
Other financial assets	10	7		1752	1,758
Property, plant and equipment	11	1,028	1,367	652	761
Deferred tax assets	12	649	831	649	831
Intangible assets	13	4.217	4,985
Total non-current assets		5,901	7,690	3,053	3,350
Total assets		48,649	44,203	22,057	20,365
Current liabilities
Payables	14	31,032	28,467	1,476	1,612
Interest bearing liabilities	15		64		64
Current tax liabilities	16	699	268	699	268
Provisions	17	507	410	259	213
Other	18	1,905	2,214	7,619	6,183
Total current liabilities		34,143	31,423	10,053	8,340
Non-current liabilities
Provisions	17	311	327	31	38
Other	18	417	521	927	1,216
Total non-current liabilities		728.	848	968	1,254
Total liabilities		34.871	32,271	11,021	9,594
Net assets		13,778	11,932	11.036	10, 771
Equity
Contributed equity	19	8,706	8,190	8,706	8,190
Retained profits	20	5,072	3.742	2,330	2,581
Total equity		13,778	11,932	11,036	10,771

The above statements of financial position should be read in conjunction with the accompanying notes.

Data'3 Limited and Controlled Entities

Statements of Cash Flows for the year ended 30 June 2005

	Notes		Consolidated	Parent Entity
		2005	2004	2005	2004
		\$'000	\$'000	\$'000	\$'000
Cash flows from operating activities
Receipts in the course of operations		213.052	199,886	6,385	6,542
Payments to suppliers and employees		(208, 221)	(204, 354)	(5.621)	(10, 148)
Interest received		371	352	331	196
Borrowing costs		(15)	(27)	(15)	(27)
Income taxes paid		(1,531)	(1,521)	(1.071)
Income taxes refunded		193
Dividends received				2,000	2,000
Net cash inflow (outflow) from
operating activities	32	3,849	(5,664)	2,009	(1,437)
Cash flows from investing activities
Payments for property, plant and equipment		(149)	(183)	(97)	(10)
Proceeds from sale of property,
plant and equipment		$\mathbf{12}$	18	7	5.
Proceeds from sale of business assets	28	ira
Proceeds received from former
joint venture partner Payments for purchase of business	29	619	620 (65)
Repayment of loans from controlled entities				429
Loans to controlled entities					(1, 429)
Net cash inflow (outflow) from investing activities		657	390	339	(1,434)
Cash flows from financing activities
Repayment of borrowings			(870)		(870)
Repayment of lease liabilities		(64)	(167)	(64)	(167)
Proceeds from issues of shares		36	136	36	136
Payment of dividends	5	(2, 102)	(1,687)	(2, 102)	(1,687)
Repayment of loans to controlled entities					(2,396)
Loans from controlled entities		Martin		2,158
Net cash inflow (outflow) from financing activities		(2,130)	(2,588)	28	(4,984)
Net increase (decrease) in cash held		2,376	(7,862)	2,376	(7,855)
Cash at the beginning of the financial year		6,797	14.659	6,795	14,650
Cash at the end of the financial year	6	9,173	6,797	9,171	6,795
Non-cash financing and investing activities	33

The above statements of cash flows should be read in conjunction with the accompanying notes.

34

Financing arrangements

annual Linteport

Notes to the Financial Statements for the year ended 30 June 2005

Note 1. Summary of significant accounting policies

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

It is prepared in accordance with the historical cost convention. Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year.

(a) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Data'3 Limited ("company" or "parent entity") as at 30 June 2005 and the results of all controlled entities for the year then ended. Data'3 Limited and its controlled entities together are referred to in this financial report as the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full.

Where control of an entity is obtained during a financial year, its results are included in the consolidated statement of financial performance from the date on which control commences. Where control of an entity ceases during a financial year its results are included for that part of the year during which control existed.

(b) Income tax

Tax effect accounting procedures are followed whereby the income tax expense in the statements of financial performance is matched with the accounting profit after allowing for permanent differences. The future tax benefit relating to tax losses is not carried forward as an asset unless the benefit is virtually certain of realisation. Income tax on cumulative timing differences is set aside to the deferred income tax or the future income tax benefit accounts at the rates which are expected to apply when those timing differences reverse.

Tax consolidation legislation

Data'3 Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July 2003. As a consequence, Data'3 Limited, as the head entity in the tax consolidated group, recognises current and deferred tax amounts relating to transactions, events and balances of the wholly-owned controlled entities in this group as if those transactions, events and balances were its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances. Amounts receivable or payable under an accounting tax funding agreement with the tax-consolidated entities are recognised as tax-related amounts receivable or payable. Expenses and revenues arising under the tax funding agreement are recognised as a component of income tax expense (revenue).

The deferred tax balances recognised by the parent entity in relation to wholly-owned entities joining the tax consolidated group are measured based on their carrying amounts at the level of the tax consolidated group before the implementation of the tax consolidation regime, with one exception. The deferred tax balances relating to assets that had their tax values reset on joining the tax consolidated group were remeasured in 2004 based on the carrying amount of those assets at the tax-consolidated group level and their reset tax values. The remeasurement adjustments to these deferred tax balances are also recognised in the consolidated financial statements as income tax expense or revenue. The impact on the income tax expense for the year is disclosed in note 4.

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005.

Note 1. Summary of significant accounting policies (continued)

(c) Acquisitions 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 directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their market price as at the acquisition date, 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.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of the acquisition. The discount rate used is the incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Goodwill is brought to account on the basis described in note 1(n).

(d) Inventories

Inventories are stated at the lower of cost and net realisable value. Costs are assigned to individual items of stock on an actual cost basis.

(e) Recoverable amount of non-current assets

The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising from its continued use and subsequent disposal. Where the carrying amount of a non-current asset is greater than its recoverable amount, the asset is written down to its recoverable amount. Where net cash inflows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group of assets. The decrement in the carrying amount is recognised as an expense in net profit or loss in the reporting period in which the recoverable amount write-down occurs. The expected net cash flows included in determining recoverable amounts of non-current assets are not discounted to their present values.

(f) Investments

Interests in listed and unlisted securities, other than controlled entities in the consolidated financial statements, are brought to account at cost and dividend income is recognised in the statements of financial performance when receivable. Controlled entities are accounted for in the consolidated financial statements as set out in note 1(a). Where there has been a diminution in the value of any individual investment, a provision for write down to recoverable amount is made.

(g) Depreciation of plant and equipment

Depreciation is calculated on a straight-line or diminishing value basis to write off the net cost of each item of plant and equipment over its expected useful life to the consolidated entity. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. The expected useful lives are as follows:

Plant and equipment $3 - 20$ vears

(h) Leasehold improvements

The cost of improvements to or on 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. Leasehold improvements held at the reporting date are being amortised on a straight-line basis over 10 years.

hnom annual

Notes to the Financial Statements for the year ended 30 June 2005

Note 1. Summary of significant accounting policies (continued)

(i) Leased non-current assets

A distinction is made between finance leases that effectively transfer from the lessor to the lessee substantially all of the risks and benefits incidental to ownership of leased non-current assets, and operating leases under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the interest expense. The lease asset is amortised on a straight-line basis over the term of the lease, or where it is likely that the consolidated entity will obtain ownership of the asset, the life of the asset. Leased assets held at the reporting date are being amortised over a period of 4 to 5 years.

Incentives received on entering into operating leases are recognised as liabilities. Lease payments are allocated between rental expense and reduction of the liability.

Operating lease payments are charged to expense in the periods in which they are incurred, as this represents the pattern of benefits derived from the leased assets.

(i) Receivables and revenue recognition

Receivables

All trade debtors are recognised at the amounts receivable, as they are generally due for settlement no more than 30 days from the date of recognition. Collectibility of debtors is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off. A provision for doubtful debts is raised where significant doubt as to collection exists.

Revenue

Revenue includes revenue earned (net of returns, discounts and allowances) from the provision of goods or services to entities outside the consolidated entity.

Revenue from sale of goods is recognised when the goods are shipped to a customer pursuant to a sales order and the associated risks have passed to the carrier or customer.

Revenue from services is recognised in accordance with the percentage of completion method. The stage of completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour hours. Where it is probable that a loss will arise from a fixed price service contract, the excess of total costs over revenue is recognised as an expense immediately.

Revenue from corporate charges is recognised when the relevant services are performed.

Accrued rebates

Accrued rebates comprise amounts receivable from suppliers of inventories and are normally based on volume purchased during the year. Accrued rebates are recognised as a reduction in cost of goods sold when the entitlement to them arises.

Unearned income

Unearned income represents contract revenue received but not earned in the current financial year. The revenue is recognised over the term of the relevant contract.

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

Note 1. Summary of significant accounting policies (continued)

(k) Employee benefits

Wages, salaries, annual leave and sick leave

Liabilities for wages, salaries and annual leave expected to be settled within 12 months of the reporting date are recognised in other creditors in respect of employees' service up to the reporting date, and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for sick leave, which is non-accumulating, 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 the current provision for employee benefits and is measured in accordance with the above. 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 and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Superannuation

Contributions are made by the consolidated entity to defined contribution superannuation funds. Contributions are charged to expense as they are incurred.

Employee benefit on-costs

Employee benefit on-costs, including payroll tax, are recognised and included in employee benefit liabilities and costs when the employee benefits to which they relate are recognised as liabilities.

Bonus plans

A liability for employee benefits in the form of bonus plans is recognised in other creditors when there is no realistic alternative but to settle the liability and at least one of the following conditions is met:

• 飈 There are formal terms in the plan for determining the amount of the benefit
• The amounts to be paid are determined before the time of completion of the financial report 膦
• Past practice gives clear evidence of the amount of the obligation.

Liabilities for bonus plans are expected to be settled within 12 months and are measured at the amounts expected to be paid when they are settled.

Equity-based compensation benefits

The company grants options to employees under an Employee Option Plan. Further information in relation to the Plan is set out in note 30. No accounting entries are made in relation to the Employee Option Plan until options are exercised, at which time the amounts receivable from employees are recognised in the statement of financial position as share capital. The amounts disclosed for remuneration of executives include the assessed fair values of options at the date they were granted.

manari annnai

Notes to the Financial Statements for the year ended 30 June 2005

Note 1. Summary of significant accounting policies (continued)

(I) Borrowing costs

Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs include:

• Interest on bank overdrafts and short-term and long-term borrowings;
• Amortisation of discounts and premiums relating to borrowings; 鏘
• Amortisation of ancillary costs incurred in connection with the arrangement of borrowings; and YA
• 鼝 Finance lease charges.

(m) Cash

For purposes of the statements of cash flows, cash includes cash at bank and on hand and deposits at call which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.

(n) Goodwill

Where an entity or operation is acquired, the identifiable net assets acquired are measured at fair value. The excess of the fair value of the cost of acquisition over the fair value of the identifiable net assets acquired is brought to account as goodwill and amortised on a straight-line basis over the period during which the benefits are expected to arise, with the maximum term of 20 years.

The unamortised balance of goodwill is reviewed at each reporting date. Where the balance exceeds the value of expected future benefits, it is written down.

(o) Trade and other creditors

These amounts 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, unless stated otherwise, and are usually paid within 30-60 days of recognition.

(p) Interest-bearing liabilities

Interest-bearing liabilities are carried at their principal amounts, which represent the present value of future cash flows associated with servicing the debt. Interest is charged as an expense over the period it accrues and is included in other creditors and accruais.

(a) Dividends

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

(r) Earnings per share

Basic earnings per share

Basic earnings per share is determined by dividing the net profit after income tax, excluding any cost of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

Note 1. Summary of significant accounting policies (continued)

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.

$(s)$ GST

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 taxation authority, it is recognised as part of the 鯵 cost of acquisition of an asset or as part of an item of expense; or
• 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.

(t) Rounding of amounts

The company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the "rounding off" of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

(u) General

This financial report covers both Data"3 Limited as an individual entity (parent entity) and the consolidated entity consisting of Data"3 Limited and its controlled entities. Data"3 Limited is a public company limited by shares, Incorporated and domiciled in Australia.

Its registered office is:

Level 5 National Bank House 255 Adelaide Street BRISBANE QLD 4000 Its principal place of business is:

Level 2 Data^r3 Centre 80 Jephson Street TOOWONG QLD 4066

annual(1¹) report

Notes to the Financial Statements for the year ended 30 June 2005

		Consolidated	Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000	\$'000	\$'000
Note 2. Revenue
Revenue from operating activities
Sale of goods	158,443	146,222
Services	38,052	29.275	218	443
	196,495	175,497	218	443
Revenue from outside the operating activities
Interest	383	342	343	186
Proceeds from sale of non-current assets	12	18		5
Corporate charges - controlled entities			6,124	6,028
Forgiveness of debt - controlled entities				1,194
Dividends - controlled entities			2,000	2,000
Other	251	338		50
	646	698	8,484	9,463
Revenue from ordinary activities	197,141	176,195	8,702	9,906

Included in consolidated revenue from operating activities for 2005 above is revenue derived from specified contracts with the Queensland government, formerly serviced by the QDS and QSS joint venture partnerships for the sale of goods totaling approximately \$12,824,000. Revenue generated under these contracts totaled approximately \$20,900,000 for the year ended 30 June 2004.

Note 3. Profit from ordinary activities

Profit from ordinary activities before income tax includes the following specific items:

Cost of sales of goods

Depreciation

Plant and equipment

Amortisation

Leasehold improvements

Plant & equipment under finance leases

• Software licenses
• Goodwill

Total amortisation

Consolidated		Parent Entity
2005	2004	2005	2004
\$'000	\$'000	\$'000	\$'000
138,264	127.678	r.	ĸ
139	234	39	48
182	161	104	105
55.	89	55	89
60	Ä.	æ
$\mathfrak{U}12$	328
609	578	159	194

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

Note 3. Profit from ordinary activities (continued)

Other charges against assets Write-down of goodwill Bad and doubtful debts Inventory obsolescence

Rental expenses on operating leases Rental expenses - other

(Profit)/loss on disposal of plant and equipment

Significant items

Included in other expenses from ordinary activities are the following specific items:

Reversal of provision against Powerlan (Qld) receivable

Note 4. Income tax

Tax consolidation legislation

As disclosed in note 1(b), Data'3 Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July 2003. The wholly-owned entities have fully compensated Data^r3 Limited for deferred tax liabilities assumed by Data'3 Limited on the date of the implementation of the legislation and have been fully compensated for any deferred tax assets transferred to Data''3 Limited.

The entities have also entered into tax sharing and funding agreements. Under the terms of these agreements, the wholly-owned entities reimburse Data'3 Limited for any current or deferred tax liabilities arising in respect of their activities. Data''3 Limited also reimburses its wholly-owned entities for the benefit of any tax losses or deferred tax assets arising in respect of their activities. In the opinion of the directors, the tax sharing agreement is also a valid agreement under the tax consolidation legislation and limits the joint and several liability of the wholly-owned entities in the case of a default by Data'3 Limited.

annual()^Fyreport

MANAGERINAL SENATORISM

Notes to the Financial Statements for the year ended 30 June 2005

		Consolidated	Parent Entity
	2005 \$'000	2004 \$'000	2005 \$'000	2004 \$'000
Note 4. Income tax (continued)
The income tax for the financial year differs from the
amount calculated on the profit. The differences are
reconciled as follows:
Profit from ordinary activities before income tax	5,864	4,859	2,478	3,461
Income tax calculated at 30% (2004: 30%)	1,759	1,458	743	1,038
Tax effect of permanent differences:
Amortisation of goodwill	94	99
Non-assessable gain - joint venture partnership		(150)
Non-assessable gain - debt forgiveness				(358)
Non-assessable dividends Non-allowable items	78	60	(600)	(600) Б
Income tax adjusted for permanent differences	1,931	1,467	147	85.
Underprovision (overprovision) in previous year		(1)		(28)
Other	P4
Benefit of tax losses transferred from controlled entities				(4)
Income tax expense before impact of tax consolidation	1,952	1,466	147	53
Profit from ordinary activities before income tax
- tax consolidated group (excluding parent entity)			5.396	3,398
Income tax calculated at 30% (2004: 30%)			1,616	1,020
Tax effect of permanent differences:
Amortisation of goodwill			94	99.
Non-assessable gains				(150)
Non-allowable item - debt forgiveness Other non-allowable items			74	358 55
Income tax adjusted for permanent differences			1,784	1,382
Underprovision in previous year				27.
Other			21	4
Income tax expense - tax consolidated group
(excluding parent entity)			1,805 1,952	1,413 1,466
Net compensation received/receivable from tax
consolidated group entities			(1,805)	(1, 413)
Income tax expense attributable to profit from
ordinary activities	1,952	1,466	147	53

No part of the future income tax benefit shown in note 12 is attributable to tax losses (2004: nil). The directors estimate that the potential future income tax benefit at 30 June 2005 in respect of tax losses not brought to account is nil (2004:nil).

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

Parent Entity 2004

	2005	2004
	\$'000	\$'000
ary share
30%	1,439	1,099
5
	1.143	904
	2,582	2.003
ws:
	2,102	1,687
	480	316
	2,582	2,003
final
d based
iň
≩S a
ed at
	1,765	1,437
ranked
ant of
	5,312	4,648

Note 5. Dividends

Final dividend for the year ended 30 June 2004 of 9.5 cents per fully paid ordina paid on 30 September 2004 (2003: 7.5 cents), 100% franked based on tax rate of

Interim dividend of 7.5 cents per fully paid ordinary share paid on 31 March 200 (2004: 6.0 cents), 100% franked based on tax rate of 30%

Dividends paid in cash or satisfied by the issue of shares under the dividend reinvestment plan during the years ended 30 June 2005 and 2004 were as follo

Paid in cash Satisfied by issue of shares

Dividends not recognised at year end

In addition to the above dividends, since year end the directors have declared a dividend of 11.5 cents (2004: 9.5 cents) per fully paid ordinary share, fully franke on tax paid at 30%. The aggregate amount of the declared dividend to be paid o 30 September 2005 out of retained profits at 30 June 2005, but not recognised a liability at year end in accordance with the company's accounting policy describ note $1(q)$ :

Franked dividends

The franked portions of the final dividends declared after 30 June 2005 will be f out of existing franking credits or out of franking credits arising from the payme income tax in the year ending 30 June 2005.

Franking credits available for subsequent financial years

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:

• (i) franking credits that will arise from the payment of the current tax liability;
• (ii) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
• (iii) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
• (iv) franking credits that may be prevented from being distributed in subsequent financial years.

Franking credits of \$2,057,000 were transferred from wholly-owned entities to the parent entity at the time these entities entered the tax consolidated group on 1 July 2003.

in report annual

Notes to the Financial Statements for the year ended 30 June 2005 Consolidated Parent Entity 2005 2004 2005 2004 \$'000 \$'000 \$'000 \$'000 Note 6. Cash assets THE SERVE AND THE SERVE AND THE SERVE Cash at bank and on hand 1,673 1,797 $1671$ 1,795 Deposits at call 7500 5,000 7500 5,000 Balances per statements of cash flows $9,173$ 6,797 ▒ $9,171$ 6,795

Cash is bearing floating interest rates of approximately 4.2% per annum (2004: 4.2%). Deposits at call comprise deposits with financial institutions available at call and are bearing a floating interest rate of approximately 5.2% per annum (2004: 5.0%).

	Consolidated		Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000	\$'000	\$'000
Note 7. Receivables
Current
Trade debtors	29,824	27,105	14	24
Provision for doubtful debts	(121)	(223)
	29.703	26,882	14	24
Other debtors	28	261	46	39.
Receivable from Powerlan Old	1,853	1972
Provision for doubtful debt	(1,442)	(1, 442)
	AU	530
Amounts receivable from controlled entities			8,075	9,687
Tax-related amounts receivable from controlled entities			1,363	180
	30,192	21,673	9,498	9,930
Non-current
Receivable from Powerlan Old		500

Other debtors

These amounts generally arise from accrued rebates or transactions outside the usual operating activities of the consolidated entity. Interest is normally not charged, and collateral is not normally obtained.

Receivable from Powerlan Old

The amount receivable from Powerlan Qld is discussed in note 29. Interest is not charged on this balance.

Data'3 Limited and Controlled Entities

800000000000000000000000000000000000000

Notes to the Financial Statements for the year ended 30 June 2005

	Consolidated		Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000	\$'000	\$'000.
Note 8. Inventories
Finished goods - at cost	2,362	1,150
Provision for obsolescence		(35)
	2,362	1,115
Note 9. Other current assets
Prepayments	341	527	334	282
Security deposits	82	88		8
Accrued rebates	598	313
	1,021	928	335	290
Note 10. Other financial assets - non-current
Investments traded on organised markets
Shares in other corporations - at cost	J.	7.	J.	7
Other (non-traded) investments
Shares in controlled entities - at cost (note 27)			6,117	6,123
Provision for write down to recoverable amount			(4,372)	(4,372)
			1,745	1,751
	7	$\frac{1}{2}$	1,752	1758
Note 11. Property, plant and equipment
Leasehold improvements - at cost	1,457	1,408	1,042	1,042
Accumulated amortisation	16721	(491)	(521)	(417)
	785	917	52	625
Plant and equipment - at cost	1,036	1,872	699	360
Accumulated depreciation	(793)	:::::::: ::::::::: (1, 477)	(568)	(279)
	243,	395	131	▒
Plant and equipment under finance lease		298		298
Accumulated amortisation		(243)		(243)
		55		55
	1,028	1.367	652 mum	761

Reconciliations

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.

annual() interiori

1,367 149 $(8)$ $(104)$ $(376)$ 1,028

$761$ 97 $\left( 8\right)$ $(198)$ 652.

Notes to the Financial Statements for the year ended 30 June 2005

Note 11. Property, plant and equipment (continued)

			Leasehold Plant and Leased plant	Total
	\$'000	$$'000$ –	improvements equipment and equipment \$'000	\$'000
Consolidated
Carrying amount at 1 July 2004	917	395	55	1,36
Additions	50.	99.		$\mathcal{U}$
Disposal of business assets (note 28)		(8)		$\mathfrak{g}$
Disposals		(104)		(10)
Depreciation/amortisation expense	(182)	(139)	55)	(37)
Carrying amount at 30 June 2005	785.	243		1.02
Parent entity
Carrying amount at 1 July 2004	625	81	55	$T\xi$
Additions		97		Ş
Disposals		(8)		ť
Depreciation/amortisation expense	01041	(39)	(58)	(19)
Carrying amount at 30 June 2005	521	131		65

Note 12, Deferred tax assets

Future income tax benefit

Note 13. Intangible assets Goodwill

Accumulated amortisation

Software licenses Accumulated amortisation

Note 14. Payables

Trade creditors - secured (note 34) - unsecured

Other creditors and accruals - unsecured

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

		Consolidated		Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000	\$'000	\$'000
Note 15. Interest bearing liabilities
Current
Lease liabilities - secured (note 22)		84.		64
Note 16. Current tax liabilities
Income tax	699	268	699	268
Note 17. Provisions
Current
Employee benefits (note 30)	507	410.	259	213.
Non-current
Employee benefits (note 30)	311	327,	31	38
Note 18. Other liabilities
Current
Unearned income	1,801	2,110
Lease incentives	104	104	104	104
Amounts payable to controlled entities			7515	6,079
	1,905	2,214	7619	6/183
Non-current
Lease incentives	47	521	417	521
Tax-related amounts payable to controlled entities			520	695
	417	521	937	1,216
		Parent Entity		Parent Entity
	2005	2004	2005	2004
	Shares '000	Shares '000	\$'000	\$'000

Note 19. Contributed equity

(a) Share capital

Ordinary shares - fully paid

annual() hyreport

Notes to the Financial Statements for the year ended 30 June 2005

Note 19. Contributed equity (continued)

(b) Movements in ordinary share capital

and the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the comp Details	Notes Mumber of Number Strate Price			\$'000
		Shares	\$
Opening balance - 1 July 2003		14.653.819		7.459
Issue for f5 business acquisition	(i)	155.160	1.80	279
Exercise of options under Data ® Limited Employee
Option Plan	30	150.000	0.91	136
Dividend reinvestment plan issue	${ii}$	100.153	1.77	177
Dividend reinvestment plan issue	$(\dagger)$	66,921	2.08	139
Balance -- 30 June 2004		15,126,053		8.190
Exercise of options under Data*3 Limited
Employee Option Plan	30	40.000	0.91	36
Dividend reinvestment plan issue	$(\dagger)$	93.700	2.22	208
Dividend reinvestment plan issue	$($ i)	90,020	3.03	272
Balance - 30 June 2005		15,349,773		8.706

(i) the company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or part of their dividend entitlements satisfied by the issue of new ordinary shares rather than being paid in cash. Shares are issued under the plan at a discount to the market price of up to 10%; currently the discount offered to shareholders is 5%.

(ii) on 5 November 2003 the company issued 155,160 fully paid ordinary shares to the vendors of f5 as part of the consideration for the business purchased (refer to note 29 for details of the acquisition).

(c) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(d) Share options

For details as to the number of share options outstanding as at 30 June 2005, refer note 30.

	Consolidated		Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000	\$'000	\$'000
Note 20. Retained profits
Retained profits at the beginning of the financial year	$-3.749$	2.352	2,581	1.176
Net profit	3.912	3.393	2,331	3,408
Dividends paid (note 5)	(2,582)	(2.003)	(2,582)	(2.003)
Retained profits at the end of the financial year	5.072	3.742	2,330	2.581

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

Note²¹. Contingent liabilities

At 30 June 2005 bank quarantees totalling \$410,000 (2004: \$438,000) were provided to lessors as security for premises leased by the consolidated entity. The guarantees will remain in place for the duration of the operating leases.

Bank guarantees are secured by charges over the consolidated entity's assets.

Note 22. Commitments for expenditure

Commitments in relation to non-cancellable operating leases contracted for at the reporting date but not recognised as liabilities, payable: Within one vear Later than one year but not later than 5 years Later than 5 years

Operating leases include leases of premises, motor vehicles and office equipment. Under the relevant lease agreements (mainly premises) the rentals are subject to periodic review to market and/or for CPI increases. Operating leases are under normal commercial operating lease terms and conditions. Certain operating lease commitments of the parent entity, mainly comprising premises, are paid for and recognised as expenses by controlled entities.

	Consolidated		Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000	\$'000	\$'000
Commitments in relation to finance leases
are payable as follows:
Within one year		67		67
Minimum lease payments		67		67
Less: Future finance charges		(3)		(3)
		64		64
Representing lease liabilities:
Current (note 15)		1548		64

Finance leases comprised leases of items of plant and equipment under normal commercial finance lease terms and conditions. The weighted average interest rate implicit in the leases was 8.2% in 2004.

Lease liabilities were effectively secured as the rights to leased assets reverted to the lessor in the event of default.

mirenon. an mata

Notes to the Financial Statements for the year ended 30 June 2005

Note 23 Deed of cross quarantee

Data'3 Limited, Data'3 Business Systems Pty Ltd, and Gratesand Pty Ltd (added by Assumptions Deed dated 31 May 1999) are parties to a Deed of Cross Guarantee under which each company guarantees the debts of the others. By entering into the deed, the wholly-owned entities have been relieved from the requirements to prepare a financial report and directors' report under Class Order 98/1418 (as amended by Class Orders 98/2017, 00/0321, 01/1087, 02/0248 and 02/1017) issued by the Australian Securities & Investments Commission.

The above companies, which comprise the parent entity and all of its controlled entities, represent a "Closed Group" for the purposes of the Class Order.

Note 24. Director and executive disclosures

Director and executive disclosures in relation to remuneration are set out in the directors' report under the heading "Remuneration report".

Shares under option

Subject to shareholder approval, additional options may be granted to directors and executives under the Data^*3 Limited Employee Option Plan, details of which are set out in note 30. Information in respect of options held as at 30 June 2005, whether directly, indirectly or beneficially, by each specified director and specified executive, including their personally-related entities, is set out below.

Number of options held by specified directors and executives in Data'3 Limited

	Balance 30 June	Granted as		Balance		As at 30 June 2005
	2004	remuneration Exercised		30 June 2005	Vested	Exercisable	Unexercisable
Specified directors
		Directors hold no options over ordinary shares of Data'3 Limited (2004 – nil).
Specified executives
Bowser, M.	20.000		(20.000)
MacPherson, L.	20,000 40 വാവം	クルマン	20.0001	20,000 20,000	20,000 20.000	20.000 20.000

The options outstanding at 30 June 2005 were granted on 22 November 2002 and expire on 22 November 2005; the exercise price is 91.0 cents per share, and the value of each option at grant date was 8.0 cents. All of the options became exercisable on 22 November 2003.

Shares issued on exercise of Data'3 Limited remuneration options during the year ended 30 June 2005

	Shares issued Number	Paid per share \$	Unpaid per share s.
Specified directors - nil
Specified executives Bowser, M.	20,000 300000000000000000000000000000000000000	0.91	÷

Ordinary shares held directly, indirectly or beneficially by each specified director and specified executive, including their personally-related entities are shown below.

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

Note 24. Director and executive disclosures (continued)

Number of shares in Data^r3 Limited held by specified directors and executives

	Balance	Granted as	Options -	Net change	Balance
	30 June	Remuneration	Exercised	Other	30 June
	2004				2005
Specified directors
Anderson, R.	40,000	w	$\overline{\phantom{a}}$		40,000
Clark, G.	668,880	×,	×.	(50,000)	618,880
Grant, J.	861,520	$\mathbf{a}$	$\mathbf{r}$		861,520
Powell, W.	680,000	$\mathbf{v}$	×.	(60,000)	620,000
Stack, H.	10,000	$\mathbf{v}$	$\mathbf{r}$		10,000
Specified executives
Baynham, L.	54,905	$\mathbf{a}$		(3,305)	51,600
Bowser, M.			20,000		20,000
Colledge, B.	23,600		۰		23,600
Crouch, B.	10,000				10,000
Esler, M.	760,100		ú.		760,100
Hill, B.	20,000			7,000	27,000
	3,129,005		20000	(106, 305)	3,042,700 Ŵ,

Specified executives who are not shown in above tables held no shares or options in Data"3 Limited. There has been no movement in directors' and executives' shareholdings since year end up to the date of this report.

Loans to / (from) specified directors and executives

There were no loans during the 2005 or 2004 years.

Other transactions with specified directors and executives

Mr J E Grant, an executive director, is a director of Wood Grant & Associates Pty Ltd and has the capacity to significantly influence decision making of that entity. Data'3 Limited engages Wood Grant & Associates Pty Ltd to assist with design and production of the annual and half-yearly financial reports. These transactions are made on normal commercial terms and conditions and at market rates.

	2005	2004
Amounts recognised as expense
Other expense	12,525	40.415 September 1999

There were no other transactions during the year with specified executives, directors or director-related entities.

anual l'ivenort

There was no remuneration paid to related practices of Johnston Rorke. Other services mainly comprise tax advice and reporting on acquisitions. It is the consolidated entity's policy to employ Johnston Rorke on assignments additional to its statutory audit duties where Johnston Rorke's expertise and experience with the consolidated entity are important.

Note 26. Related parties

Wholly-owned group

The wholly-owned group consists of the ultimate parent entity Data^r3 Limited and its wholly-owned controlled entities. Ownership interests in those controlled entities are set out in note 27.

Transactions between Data'3 Limited and other entities in the wholly-owned group during the years ended 30 June 2005 and 30 June 2004 consisted of:

• Loans advanced to / by controlled entities and repayments (refer Statement of Cash Flows);
• ^■ Corporate charges received by Data⁸3 Limited for accounting, administrative services, management and use of assets (refer note 2);
• Management charges from controlled entities for use of assets and provision of systems and services (refer Statement of Financial Performance);
• B Dividends received by Data'3 Limited (refer note 2):

• Transactions between Data^r3 Limited and its wholly-owned controlled entities under the accounting tax sharing and funding agreements described in note 4; and

• Debt forgiveness (refer notes 2 and 27).

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

Note 26. Related parties (continued)

Loans are provided interest free and unsecured and have no fixed repayment terms (refer notes 7 and 18). Corporate charges by the parent entity are based on budgeted cost. Management charges by controlled entities are based on discounted retail price.

Unless otherwise stated, transactions are on commercial terms and conditions.

Note 27, Investments in controlled entities

Name of entity	Country of formation		Equity holding
	or incorporation	(ordinary shares)
		2005	2004
		%	%
Data*3 Business Systems Pty Ltd	Australia	100	100
Data*3 Client Services Pty Ltd	Australia	w.	100
Data*3 (Gold Coast) Pty Ltd	Australia	$\mathbf{v}$	100
Gratesand Pty Ltd	Australia	100	100

As at 30 June 2001 a provision for write-down of \$4,372,000 was recognised against the net investment in CICtechnology (Gratesand Pty Ltd). The investment's carrying value was written down to \$1,745,000 on the basis of the reassessed value of the assets acquired.

The companies Data⁴3 Client Services Pty Ltd and Data⁴3 (Gold Coast) Pty Ltd were deregistered during 2005. As part of the winding down process, intercompany amounts due from Data*3 Limited to each of these entities were forgiven in 2004, and the amount forgiven was recognised as revenue by the parent entity (refer note 2).

Mreport annual

Notes to the Financial Statements for the year ended 30 June 2005

Note 28 Sale of business assets

On 5 July 2004 the consolidated entity sold the part of its business that was involved in reselling Microsoft Navision software and providing associated development and support services, to Eclipse Computing (Australia) Pty Ltd. Consideration for the sale was based primarily on the gross profit arising from maintenance contract renewals and other revenues generated by the business unit during the 12 month period commencing 5 July 2004. Under the sale agreement the consolidated entity was also obligated to reimburse Eclipse Computing (Australia) Pty Ltd at an agreed rate for warranty-related support services provided to customers of the business unit on contracts originating prior to 5 July 2004.

Details of the sale of the business unit are as follows:

Carrying amount of assets and liabilities at date of disposal:

Plant and equipment Goodwill Provision for employee benefits

Net assets

Loss on disposal:

Consideration received Consideration receivable Carrying amount of net assets sold Warranty costs

Loss on sale before income tax

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

Note 29. Acquisitions of business

(a) Acquisition of f5 business

In November 2003 the consolidated entity acquired the f5 business for \$344,000. The operating results of the acquired business have been included in the consolidated statement of financial performance since 6 November 2003. Details of the acquisition are as follows:

Fair value of identifiable net assets acquired:

Other current assets Plant and equipment Deferred tax assets Software licenses Unearned income Provision for employee benefits Net identifiable assets acquired Goodwill

Consideration: Cash paid Shares issued

(b) Receivership and administration of Powerlan Qid and the acquisition of QDS and QSS

On 15 August 2002, Powerlan Limited announced that its subsidiary Powerlan (Qld) Pty Ltd (Powerlan Qld) had been placed into voluntary administration. The Administrators appointed were from KPMG. On the same day the Australia and New Zealand Banking Group Limited (ANZ), as a creditor of Powerlan Limited secured by, among other things, a guarantee and mortgage debenture provided by Powerlan Old, appointed partners of PricewaterhouseCoopers as Receivers. Powerlan Old was the joint venture partner of a controlled entity, Data'3 Business Systems Pty Ltd (Data'3) in Queensland Desktop Services (QDS) and Queensland Software Services (QSS). Negotiations with the Powerlan Qid Receivers and Administrators were concluded on 25 November 2002 (the Agreement) and various outstanding claims and issues relating to this matter were settled. The Agreement confirmed the consolidated entity's right to prove as a creditor for a receivable from Powerlan Old in the amount of \$3,092,000.

In December 2002 a Deed of Company Arrangement (DOCA) was executed by Powerlan Limited under which Powerlan Limited committed to pay the Administrators \$2,600,000 by 30 June 2003, and a further \$100,000 per month for 24 months commencing from 1 July 2003. The DOCA also approved the transfer of the secured charge over the assets of Powerlan Limited and its controlled entities, to the creditors of Powerlan Qid. The consolidated entity is the largest creditor of Powerlan Qld, representing approximately 25% of total creditors.

.
Linda annual

Notes to the Financial Statements for the year ended 30 June 2005

Note 29. Acquisitions of business (continued)

At 30 June 2003 the consolidated entity had estimated that it would recover at least \$1,150,000 of the \$3,092,000 Powerlan Old receivable, and recognised a \$1,942,000 provision for doubtful debt. In March 2004 the consolidated entity received an interim distribution of \$620,000 from the Administrators, which reduced the balance of the current receivable to \$530,000. At 30 June 2004, based on an updated assessment from the Administrators, the provision for doubtful debt was reduced by \$500,000 to reflect the additional expected recovery. At 30 June 2004 the consolidated entity recognised part of the Powerlan receivable as non-current as it was not expected to be recovered within twelve months of that reporting date.

In November 2004 the consolidated entity received a second interim distribution of \$619,000 from the Administrators. Based on the latest advice provided by the Administrators in May 2005, the consolidated entity expects to receive the final distribution by December 2005. This distribution is expected to at least settle the remaining \$411,000 receivable; any additional funds that may be received in excess of this receivable are not expected to be material.

	Consolidated		Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000	\$'000	\$'000
Note 30. Employee benefits
Employee benefits and related on-costs liabilities
Included in other creditors - current (note 14)	2.754	2,595	320	226
Provision for employee benefits – current (note 17)	507	410	259	213
Provision for employee benefits - non-current (note 17)	-311	327	- 81	38.
Aggregate employee benefit and related on-costs liabilities	3,572	3.332	610	477
		Number		Number
Employee numbers
Number of employees at end of financial year.	27F	つなつ	!!!!!!!!!!!!!!!!!!!!!!! $\Lambda$	270

Employee n

Number of employees at end of financial

Data*3 Limited Employee Share Scheme

The establishment of the Data"3 Limited Employee Share Scheme was approved at an extraordinary general meeting of the company held on 26 February 1999. All full-time and part-time employees, excluding directors, of Data'3 Limited and its controlled entities are eligible to participate in the scheme. To 30 June 2005 no shares have been issued under the scheme.

Under the scheme, eligible employees may be offered a minimum of 200 shares at a price determined by the directors where the discount of the share price is not more than 25% of the weighted average price of the shares trading on the ASX over the five trading days immediately prior to the Board resolution. Offers under the scheme are at the sole discretion of the board of directors. The market value of shares issued under the scheme, measured as the weighted average market price on the day of issue of the shares, is recognised in the statement of financial position as share capital, and compensation expense, measured as the difference between the market value of the shares and the consideration paid by the employee, is recorded as part of employee benefits costs.

The board of directors may, by resolution, restrict shares issued under the scheme from being sold for a specified period of time after their issue, up to a maximum of three years. In all other respects the shares rank equally with other fully paid ordinary shares on issue (see note 19(c)).

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

Note 30. Employee benefits (continued)

Data''3 Limited Employee Option Plan

The establishment of the Data''3 Limited Employee Option Plan (the Plan) was approved at an extraordinary general meeting of the company held on 5 November 1997.

All full-time and part-time employees, including directors, of Data"3 Limited and its controlled entities are eligible to participate in the plan. Options are issued for \$1 per parcel of options issued and are exercisable from 2 years prior to the expiry date to the expiry date; the options lapse 30 days following cessation of the option holder's employment. The exercise price of the options on issue was determined as the higher of 90 cents per share or the weighted average price of the shares as listed with the ASX within the 5 days immediately prior to the offer date. Options granted under the plan carry no dividend or voting rights. Options may only be granted with shareholder approval. The Plan must be reviewed and approved at an Annual General Meeting prior to the granting of additional options. When exercisable, each option is convertible into one ordinary share.

Set out below are summaries of options granted under the plan:

Grant Date	Expiry date	Exercise price	Balance at start of the year	Issued during the year	Exercised during the year	Lapsed/ cancelled during the year	Balance at end of the year
			Number	Number	Number	Number	Number
	Consolidated and parent entity - 2005
22 November 2002	21 November 2005	\$0.91	60.000		40.000		20,000
	Consolidated and parent entity - 2004
22 November	28 February
2002	2004	\$0.91	20,000		20,000
22 November	21 November
2002	2005	\$0.91	190.000		130.000		60.000
			210,000		150,000		60,000

Options outstanding at 30 June 2005 were vested and became exercisable on 22 November 2003.

in e port annual

Notes to the Financial Statements for the year ended 30 June 2005

Note 30 Employee benefits (continued)

Details of the options exercised during the years ended 30 June 2005 and 2004 are as follows:

go de la la seguencia a la meza distritudi , where the contract of the state $\mathcal{O}(1)$ , and the contract contract of the state $\mathcal{O}(1)$ . The state is the contract of the contract of the state of the state of the state of the state of the state of the state of		Consolidated		Parent Entity
Exercise date	Fair value per	2005	2004	2005	2004
	share at issue date	Number	Number	Number	Number
31 August 2004	\$2.45	20,000		20,000	allillingge
24 June 2005	\$2.90	20,000	MW -	20,000
24 November 2003	\$1.78	$\sim$	20,000		20,000
19 December 2003	\$1.79		40,000		40,000
10 March 2004	\$2.27		90,000		90,000
		40,000	150,000	40,000	150,000

The fair value of shares issued on the exercise of options is the closing price at which the company's shares were traded on the Australian Stock Exchange on the date the options were exercised.

		Consolidated		Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000	\$'000	\$'000
Aggregate proceeds received from employees on the
exercise of options and recognised as issued capital	36.400	136.500	36.400	136.500
Aggregate fair value of shares issued to employees on the exercise of options as at their issue date	107.000	311.500	107000	311.5002

The parent entity credits proceeds received to issued capital upon exercise of options. No remuneration expense is recognised at the time of granting options.

Note 31. Segment information

Business segment

The consolidated entity predominantly operates in one segment. Its activities include the procurement of information and communication technology (ICT) products; the design, implementation and support of ICT infrastructure solutions; the provision of ICT recruitment services; and the supply, implementation and support of application software solutions.

Geographical segment

The consolidated entity's operations are based predominantly in Australia.

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

		Consolidated	Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000	\$'000	\$'000
Note 32. Reconciliation of net profit after income tax to net cash flow from operating activities
Net profit after income tax	3.912	3,393	2,231	3,408
Depreciation and amortisation	748	812	198	242
Write-down of goodwill	69,
Reversal of provision for doubtful debt -- Powerlan Old		(500)
Loss on sale of plant and equipment	92	128		60
Loss on sale of business assets	118
Gain -- debt forgiveness				(1, 194)
Write-off of investment in subsidiaries			F.
Change in operating assets and liabilities, net of effects from purchase of businesses
(Increase) / decrease in trade debtors	(2,821)	6.224	10.	(24)
(Increase) / decrease in inventories	(1,247)	(325)
(Increase) / decrease in other operating assets	1551	(442)	(52)	(142)
(Increase) / decrease in net deferred tax assets	182	82	182	(730)
Increase / (decrease) in trade creditors	2,626	(14, 141)	т	TT
Increase / (decrease) in unearned income	(309)	444
Increase / (decrease) in other operating liabilities	(267)	(1, 265)	(1,126)	(3,377)
Increase / (decrease) in income tax payable	431	(137)	431	268
Increase in liability for employee benefits	160	63	29	41
Net cash inflow (outflow) from operating activities	3,849	(5,664)	2,009	(1,437)

The outflow of cash in 2004 of approximately \$5.7 million was due to the receipts and payments under a former joint venture partnership contract. Under the contract for the year ended 30 June 2003, approximately \$15 million was received from the customer before balance date and a similar amount was paid to corresponding creditors after balance date. At 30 June 2004, under the same contract, approximately \$5 million was received from the same customer with a similar amount payable to corresponding creditors in the 2005 financial year. This particular contract terminated at 30 June 2004. Excluding the effect of these cash flow items, cash flow from operating activities in 2005 and 2004 was a net inflow of approximately \$8.8 million and \$4.3 million, respectively.

annual()^Fyreport

Notes to the Financial Statements for the year ended 30 June 2005

	Consolidated		Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000	\$'000	\$'000
Note 33. Non-cash financing and
investing activities
Dividends satisfied by issue of shares (note 5)	480	316 000000000000000000000000000000000000000	480	316 MANACH SEINER AN DER SEINER AUCH SEINER EINER EINER EINER EINER EINER EINE
Shares issued on acquisition of business (note 29)		279
Note 34. Financing arrangements
Unrestricted access was available at balance date to
the following lines of credit:
Total facilities
Bank overdrafts	600	600	600	600
Bill facility	3,955	3,955	3,955	3,955
	4,555	4,555	4,555	4,555
Used at balance date
Bank overdrafts
Bill facility
Unused at balance date
Bank overdrafts	600	600	600	600
Bill facility	3,955	3,955	3.955	3,955
	4,555	4,555	4,555	4,555

Bank overdrafts

The bank overdraft facilities are subject to annual review, may be drawn at any time and may be terminated by the bank without notice. Interest is variable and is charged at prevailing market rates. The weighted average interest rate at year end was 9.5% (2004: 9.2%).

Bill facility

The facility is subject to annual review. No bills are outstanding as at 30 June 2005.

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

	Consolidated		Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000		\$'000
Note 34. Financing arrangements (continued)
Secured liabilities
Total secured liabilities (current and non-current) are:
Lease liabilities (note 22)		-64		-64
Lease incentives (note 18)	-521	625	2524	625
Trade creditors (note 14)	8,510	8,994
Total secured liabilities	9.031	9,683	521	689

The bank facilities, including overdrafts, are secured by mortgages over the whole of the consolidated entity's assets. Lease liabilities were effectively secured as the rights to the leased assets reverted to the lessor in the event of default. Lease incentives are effectively secured as the rights to the leasehold improvements revert to the lessor in the event of default. Certain trade creditors are secured by registered charges over the whole of the consolidated entity's assets.

Assets pledged as security

All the assets of the consolidated entity are pledged as security for bank facilities and certain trade creditor facilities as noted above. Plant and equipment under finance lease (refer note 11) effectively secured lease liabilities as noted above. Leasehold improvements (refer note 11) effectively secure lease incentive liabilities as noted above.

Note 35. Financial instruments

(a) Credit risk exposures

The credit risk on financial assets of the consolidated entity as recognised in the statement of financial position is generally the carrying amount, net of any provisions. The consolidated entity has the following material credit risk exposures:

• During the 2005 year there were no customers to whom sales exceeded 10% of revenue (2004: nil).
• There are a number of individually significant debtors. At 30 June 2005, the ten largest debtors comprised approximately 30% (2004: 30%) of total debtors.

(b) Interest rate risk exposures

The consolidated entity'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.

Exposures arise predominantly from assets and liabilities bearing variable interest rates as the consolidated entity intends to hold fixed rate assets and liabilities to maturity.

hjepon anmal

Notes to the Financial Statements for the year ended 30 June 2005

Note 35. Financial instruments (continued)

		Floating	Fixed interest	Non-interest	⊤ Total
		interest	maturing in	bearing.
2005	Notes	rate \$'000	1 year or less \$'000	\$'000	\$'000
Financial assets
Cash assets	6	9,173			9,173
Receivables	7			30,192	30,192
Other financial assets	10				b.
		9,173		30,199	39,372
Weighted average interest rate		5.0%
Financial liabilities
Payables	14			31,032	31,032
				31,032	31,032
Net financial assets /(liabilities)		9,173		(833)	8,340
2004
Financial assets
Cash assets	6	6,791			6,797
Receivables	7			28,173	28,173
Other financial assets	10			A.	7.
		6,797		28,180	34,977
Weighted average interest rate		4.8%
Financial liabilities
Lease liabilities	15		64		64
Payables	14			29,467	28,467
			64	28,467	28,531
Weighted average interest rate			$8.2\%$
Net financial assets / (liabilities)		6,797	(64)	(287)	6,446

For interest rates on leases refer to note 22.

(c) Net fair values

The net fair values of financial assets and financial liabilities approximate their carrying amounts.

(d) Derivative financial instruments

The consolidated entity does not use derivative financial instruments.

Data'3 Limited and Controlled Entities

2005

Cents

Notes to the Financial Statements for the year ended 30 June 2005

Note 36. Earnings per share Basic earnings per share

Diluted earnings per share

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share

Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share

Information concerning earnings per share:

• a) earnings for the purpose of the calculation of basic earnings per share is the net profit
• b) earnings for the purpose of the calculation of diluted earnings per share is also the net profit
• c) options granted are considered to be potential ordinary shares. Details relating to options are set out in note 30
• d) in the circumstances of the company the options are considered dilutive and are therefore included in the calculation of diluted earnings per share
• e) reconciliation of the weighted average number of ordinary shares is as follows:

Number used in calculating basic earnings per share Weighted average number of options outstanding

Number used in calculating diluted earnings per share

Number

Note 37. Impacts of adopting Australian equivalents to IFRS

The Australian Accounting Standards Board (AASB) is adopting IFRS for application to reporting periods beginning on or after 1 January 2005. The AASB has issued Australian equivalents to IFRS, and the Urgent Issues Group (UIG) has issued interpretations corresponding to IASB interpretations originated by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee. These Australian equivalents to IFRS are referred to hereafter as AIFRS. The adoption of AIFRS will be first reflected in the consolidated entity's financial statements for the half year ending 31 December 2005 and the year ending 30 June 2006.

Entities complying with AIFRS for the first time will be required to restate their comparative financial statements to amounts reflecting the application of AIFRS to that comparative period. Most adjustments required on transition to AIFRS will be made retrospectively against opening retained earnings as at 1 July 2004. The consolidated entity has established a project team to manage transition to AlFRS, including training of staff and system and internal control changes necessary to gather all of the required financial information. The project team is chaired by the Chief Financial Officer and reports regularly to the audit committee. The project team has prepared a detailed timetable for managing the transition and is currently on schedule.

Consolidated

2004

Cents

Number

antual(Interiort

Notes to the Financial Statements for the year ended 30 June 2005

Note 37 Impacts of adopting Australian equivalents to IFRS (continued)

The project team has analysed all of the AIFRS and has identified a number of accounting policy changes that will be required. In some cases choices of accounting policies are available, including elective exemptions under Accounting Standard AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards. These choices have been analysed to determine the most appropriate accounting policy for the consolidated entity.

The known or reliably estimable impacts on the financial report for the year ended 30 June 2005 had it been prepared using AIFRS are set out below. No material impacts are expected in relation to the statement of cash flows.

Although the adjustments disclosed in this note are based on management's best knowledge of expected standards and interpretations, and current facts and circumstances, these may change. For example, amended or additional standards or interpretations may be issued by the AASB or IASB. Therefore, until the company prepares its first full AIFRS financial statements, the possibility cannot be excluded that the accompanying disclosures may require adjustment.

Impacts on the statements of financial performance

		Consolidated			Parent Entity
	Existing	Effect of	AIFRS	Existing	Effect of	AIFRS
	GAAP	change		GAAP	change
	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Profit from ordinary activities
before income tax (note a)	5.864	312	6.176	2,478		2.478
Income tax expense (note b)	(1,952)	(12)	(1, 964)	(147)		(147)
Net profit	3.912	300	4,212	2,331	▓	2,331

Impacts on the statements of financial position

	Consolidated			Parent Entity
	Existing	Effect of	AIFRS	Existing	Effect of	AIFRS
	GAAP	change		GAAP	change
	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Total assets (notes a, b)	48,649	300	48,949	22,957	(520)	21,537
Total liabilities	34,871	milling in a	34.871	11.023	(520)	10,501
Total equity	13,778	300	14,078	11,036		11,036

(a) Intangible assets

Under AASB 3 Business Combinations, amortisation of goodwill will be prohibited. Instead goodwill will be subject to impairment testing. Impairment of assets will be assessed by determining the recoverable amount as the higher of fair value less costs to sell or value in use, focusing on the cash flows of the related cash generating unit, rather than using the current method of undiscounted cash flows.

If the policy required by AASB 3 had been applied during the year ended 30 June 2005, consolidated goodwill at 30 June 2005 would have been \$312,000 higher and consolidated amortisation expense for the year ended 30 June 2005 would have been \$312,000 lower. There would have been no impact on the parent entity's financial statements.

Data'3 Limited and Controlled Entities

Notes to the Financial Statements for the year ended 30 June 2005

Note 37. Impacts of adopting Australian equivalents to IFRS (continued)

(b) Income tax

Under AASB 112 Income Taxes, deferred tax balances are determined using the balance sheet approach under which temporary differences are identified for each asset and liability based on the differences between their carrying amounts and their tax bases rather than the current income statement method which accounts for the effects of timing and permanent differences between taxable income and accounting profit. UIG 1052 requires subsidiaries to recognise current and deferred tax directly in a manner consistent with the principles of AASB 112, rather than the current method under UIG 52 whereby the head entity entity in the tax consolidated group recognises current and deferred tax amounts relating to transactions, events and balances of the wholly-owned controlled entities in this group as if those transactions, events and balances were its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances. Amounts receivable or payable under an accounting tax funding agreement with the tax-consolidated entities are recognised as tax-related amounts receivable or payable. Expenses and revenues arising under the tax funding agreement are recognised as a component of income tax expense (revenue).

If the policies required by AASB 112 and UIG 1052 had been applied during the year ended 30 June 2005, a decrease of \$12,000 in consolidated net deferred tax assets would have been recognised for the loss of tax basis on non-current assets associated with commercial debt forgiveness tax provisions and a corresponding \$12,000 increase to consolidated income tax expense would have been recognised. In the parent entity, deferred tax assets would have been \$520,000 lower and the non-current tax-related amount payable to related entities would have been \$520,000 lower.

(c) Employee benefits

Under AASB 2 Share-based Payment, from 1 July 2004 the consolidated entity is required to recognise an expense in relation to those options that were issued to employees under the Data'3 Employee Option Plan after 7 November 2002 but that had not vested by 1 January 2005; currently the consolidated entity's policy requires no recognition of expense.

No adjustment would have been required had AASB 2 been applied during the year ended 30 June 2005, as all options outstanding had vested prior to 1 January 2005.

(d) Financial instruments

The consolidated entity will be taking advantage of the exemption available under AASB 1 to apply AASB 132 Financial Instruments: Disclosure and Presentation and AASB 139 Financial Instruments: Recognition and Measurement only from 1 July 2005. This allows the consolidated entity to apply previous Australian generally accepted accounting principles (Australian GAAP) to the comparative information of financial instruments within the scope of AASB 132 and AASB 139 for the 30 June 2006 financial report.

Under AASB 132, the current classification of financial instruments issued by the entities in the consolidated entity would not change. Under AASB 139 Financial Instruments: Recognition and Measurement, financial assets held by the consolidated entity will be subject to classification as either held for trading, held to maturity, available for sale, or loans and receivables and, depending on classification, measured at fair value or amortised cost. This represents an accounting change for the consolidated entity, as investments in equity securities will be classified as available for sale and measured at fair value, with changes in fair value recognised directly in equity until the underlying asset is derecognised.

As a result of the application of the exemption referred to above, there would have been no adjustment to classification or measurement of financial assets or liabilities from the application of AIFRS during the year ended 30 June 2005. Changes to classification and measurement will be recognised from 1 July 2005.

(e) Revenue disclosures in relation to the sale of non-current assets

Under AIFRS the revenue or expense recognised in relation to the sale of non-current assets is the net gain or loss on the sale. This is in contrast to the current Australian GAAP treatment under which the gross proceeds from the sale are recognised as revenue and the carrying amount of the assets sold is recognised as an expense. The net impact on the profit or loss of this difference is nil.

If the policy required under AIFRS had been applied during the year ended 30 June 2005, the consolidated revenue from ordinary activities would have been \$12,000 lower (parent entity \$7,000 lower).

directors' declaration

Data'3 Limited and Controlled Entities

In the opinion of the directors:

• (a) the attached financial statements and notes are in accordance with the Corporations Act 2001, including:
• (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• (ii) giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2005 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date: and
• (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and
• (c) at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in note 23 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 23.

The directors have been given the declarations by the Managing Director 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.

$R$ Annum

RAA Anderson Director

Brisbane 26 August 2005

Data'3 Limited and Controlled Entities

Independent Audit Report to the Members of Data 3 Limited

Scope

The Financial Report, Remuneration Disclosures and Directors' Responsibility

The financial report comprises the Statement of Financial Position, Statement of Financial Performance, Statement of Cash Flows, accompanying notes to the financial statements, and the Directors' Declaration for both Data'3 Limited (the company) and the consolidated entity, for the year ended 30 June 2005. The consolidated entity comprises both the company and the entities it controlled during that year.

The consolidated entity has disclosed information about remuneration of directors and specified executives ("remuneration disclosures"), as required by Accounting Standard AASB1046 Director and Executives Disclosures by Disclosing Entities (AASB 1046) under the heading "Remuneration Report" which is contained in the Directors' Report, as permitted by the Corporations Regulations 2001.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report. The directors are also responsible for the remuneration disclosures contained in the Directors' Report.

Audit Approach

We conducted an independent audit of the financial report and the remuneration disclosures in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial report is free of material misstatement and the remuneration disclosures comply with AASB 1046 and the Corporations Regulations 2001. The nature of an audit is influenced by factors such as the use of professional judgment, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and of their performance as represented by the results of their operations and cash flows and whether the remuneration disclosures comply with AASB1046 and the Corporations Regulations 2001.

We formed our audit opinion on the basis of these procedures, which included:

• gexamining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report and the remuneration disclosures; and
• assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

in report anna

Independent Audit Report to the Members of Data '3 Limited (continued)

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Audit Opinion

In our opinion:

• (1) the financial report of Data''3 Limited is in accordance with:
• (a) the Corporations Act 2001, including:
• (i) giving a true and fair view of the company's and the consolidated entity's financial position as at 30 June 2005 and of their performance for the year ended on that date; and
• (ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
• (b) other mandatory financial reporting regulrements in Australia; and
• (2) the remuneration disclosures that are contained in the Directors' Report comply with the Accounting Standard AASB 1046 Director and Executive Disclosures by Disclosing Entities and the Corporations Regulations 2001.

JOHNSTON RORKE

Chartered Accountants

سر بداران

R C N Walker Partner Brisbane, Queensland 26 August 2005

Shareholder Information

The shareholder information set out below was applicable as at 24 August 2005.

1. Distribution of equity securities

(a) Analysis of numbers of equity security holders by size of holding:

$1 - 1.000$ 1,001 - 5,000 $5,001 - 10,000$ 10.001 - 100.000 100,001 and over

Class of Security Options for Ordinary Shares Ordinary Shares 399 837

(b) There were 88 holders of less than a marketable parcel of ordinary shares.

Data'3 Limited and Controlled Entities

Number held

1,469,408

1,111,100

864,605

861,520

Number held

Percentage

9.57

7.24

5.63

5.61

Number of holders

Ordinary Shares

Shareholder Information (continued)

2. Twenty largest quoted equity security holders

	Number held	Percentage of issued shares %
National Nominees Limited	1,282,709	8.36
Equity Trustees Limited	1,111,100	7.24
Wood Grant & Associates Pty Ltd	682,420	4.45
Westpac Custodian Nominees Limited	601,988	3.92
Oakport Pty Ltd	581,000	3.79
Cogent Nominees Pty Ltd	470,271	3.06
G R Clark	424,500	2.77
Elterry Pty Ltd	400,000	2.61
ANZ Nominees Limited	381,353	2.48
J P Morgan Nominees Australia Limited	320,457	2.09
RBC Global Services Australia Nominees Pty Ltd	299,262	1.95
Thomson Associates Pty Ltd	200,000	1.30
Powell Clark Trading Pty Ltd	194,380	1.27
M R Esler	179,100	1.17
J E Grant	179,100	1.17
Citicorp Nominees Pty Ltd	170,664	ោ
JT Populin	169.014	1.10
WT Powell	140,000	0.91
M G Populin	120,444	0.78
D J Klingberg Pty Ltd	116,000	0.76
	8,023,762	52.27

3. Substantial shareholders

Substantial shareholders in the company are set out below:

Name

Souls Funds Management Limited Equity Trustees Limited Paradice Cooper Investors Pty Ltd J E Grant / Wood Grant & Associates Pty Ltd

4. Unquoted equity securities

Options issued under Data''3 Limited Employee
Option Plan to take up ordinary shares	20,000

5. Voting rights

The voting rights attaching to the ordinary shares, set out in the Company's Constitution, are that every shareholder present at a general meeting has one vote on a show of hands and that on a poll, each shareholder has one vote for each fully paid share held. Options have no voting rights.

annual (Hareport

255 Adelaide Street BRISBANE OLD 4000

BANKERS Commonwealth Bank of Australia Corporate Banking Level 9 240 Oueen Street BRISBANE OLD 4000

SHARE REGISTRY ASX Perpetual Registrars Limited Level 22 300 Queen Street BRISBANE OLD 4000

G.P.O. Box 2537 BRISBANE OLD 4001 T: (02) 8280 7454 F: (02) 9287 0303 W: www.asxperpetual.com.au

ABN NUMBERS Data^r3 Limited ABN: 31 010 545 267

Data^r3 Business Systems Pty Ltd ABN: 31 010 500 642

Gratesand Ptv Ltd ABN: 49 002 725 171

ACN NUMBER 010 545 267

ASX CODE DTL

CORPORATE HEAD OFFICE Brisbane Lavel 2 Data^'3 Centre 80 Jephson Street TOOWONG OLD 4066

P.O. Box 551 INDOOROOPILLY QLD 4068

All Data^*3 locations can be reached on the following numbers for the cost of a local call. T: 1300 23 28 23 F: 1300 32 82 32 E: info@data3.com.au W: www.data3.com.au

REGISTERED OFFICE Level 5 National Bank House 255 Adelaide Street BRISBANE OLD 4000

BRANCH OFFICES Sydney Level 2 107 Mount Street NORTH SYDNEY NSW 2060

P.O. Box 426 NORTH SYDNEY NSW 2059

Melbourne Level 2 785 Toorak Road HAWTHORN EAST VIC 3123

Canherra 65 Canberra Avenue GRIFFITH ACT 2603

P.O. Box 3611 MANUKA ACT 2603

Gladstone Shop 3 93 Goondoon Street GLADSTONE QLD 4680

Townsville Aitkenvale Business Centre 250 Ross River Road AITKENVALE OLD 4814

WAREHOUSE AND SERVICE CENTRES Milton 67 Castlemaine Street MILTON OLD 4064

Silverwater Unit 4 8 Millennium Court SILVERWATER NSW 2141

BOARD OF DIRECTORS Richard Anderson (Non-executive Chairman)

Howard Stack (Non-executive director)

Graham Clark (Non-executive director)

Terry Powell (Non-executive director)

John Grant (Managing Director)

AUDITORS Johnston Rorke Level 5 National Bank House