DATA#3 LIMITED — Annual Report 2005

Aug 25, 2005

Appendix 4E

ASX Preliminary Final Report

Name of entity:	Data # 3 Limited
ABN:	31 010 545 267
Reporting period:	Year ended 30 June 2005

Previous corresponding period: Year ended 30 June 2004

Results for announcement to the market

Results
Revenues from ordinary activities	UD.		$11.9\%$ to \$197,141,000
Profit from ordinary activities after tax attributable to members	UD	$15.3\%$ to	\$3,912,000
Net profit for the period attributable to members	UD.	$15.3\%$ to	\$3,912,000

Dividends	Amount per security	Franked amount per security
Current period
Interim dividend	$7.5$ cents	7.5 cents
Final dividend	$11.5$ cents	$11.5$ cents
Previous corresponding period
Interim dividend	$6.0$ cents	$6.0$ cents
Final dividend	9.5 cents	9.5 cents

The Record Date for determining entitlements to the dividend is 16 September 2005.

Brief explanation of the figures reported above:

The current period's results are the best ever reported, and reflect consistently strong performance across all of the company's product and services offerings.

Appendix 4E - ASX Preliminary Final Report For the year ended 30 June 2005

Please refer to the attached audited Annual Financial Report for the year ended 30 June 2005 for the following information:

Statements of Financial Performance

Statements of Financial Position

Statements of Cash Flows

Notes to the financial statements

Appendix 4E - ASX Preliminary Final Report For the year ended 30 June 2005

Retained profits

	Current year \$7000	Previous year \$'000
Retained profits (accumulated losses) at the beginning of financial period	3.742	2,352
Net profit attributable to members	3,912	3,393
Net transfers to and from reserves
Dividends provided for or paid	(2,582)	(2,003)
Retained profits at end of financial period	5,072	3,742

Additional dividend information

Details of dividends declared or paid during or subsequent to the year ended 30 June 2005 are as follows:

Record date	Payment date	Type	Amount per security	Franked amount per security	Total dividend \$'000
16 September 2004	30 September 2004	Final	9.5 cents	9.5 cents	1,439
17 March 2005	31 March 2005	Interim	7.5 cents	7.5 cents	1,143
16 September 2005	30 September 2005	Final	$11.5$ cents	$11.5$ cents	1,765

Total dividend per security (interim plus final)

	Current year	Previous vear
Ordinary securities	19.0 cents	$15.5$ cents

Data^#3 Limited Dividend Reinvestment Plan

Shares under the Data ^$\pi$ 3 Dividend Reinvestment Plan are issued at a discount of 5% to the weighted average market price of all shares sold on the ASX on the first day on which those shares are quoted ex-dividend in relation to the dividend and on the following 4 trading days.

The last date for the receipt of an election notice for participation in the plan is the Record Date.

Appendix 4E - ASX Preliminary Final Report For the year ended 30 June 2005

Net tangible assets per security

	Current year	Previous year
Net tangible asset backing per ordinary security	\$0.62	\$0.46

Control gained over entities having a material effect

Not applicable

Loss of control of entities having a material effect

Not applicable

Details of aggregate share of profits (losses) of associates and joint venture entities

Not applicable

Adoption of Australian equivalents to IFRS

For disclosure of the impacts of the adoption of Australian equivalents to IFRS please refer to Note 37. Impacts of adopting Australian equivalents to IFRS, on pages 42 to 44 of the attached Annual Financial Report.

In summary, these impacts are not expected to be material.

Appendix 4E - ASX Preliminary Final Report For the year ended 30 June 2005

Commentary on the results for the period

2005 closed as the best year the company has vet reported with basic earnings per share of 25.7 cents and fully franked dividends for the full year of 19.0 cents per share. This represented distribution of profit of 74% and a yield of 7.5% (based on the \$2.525 average of the 30 June 2004 and 30 June 2005 share prices).

Highlights include:

• Best ever reported result with EBITDA of \$6.2 million, NPAT of \$3.9 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.
• A significant investment and improvement in expertise in our staff while maintaining staff costs within our targeted percentage of gross margin generated.
• 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 businesses with deep $\bullet$ expertise around market leading technologies.
• Substantial improvement in the performance of our Enterprise Infrastructure business and in $\bullet$ . the number of new 'blue chip' customers introduced to the company.
• Improvement in margin in sales of server, networking and personal systems volume products.
• $\bullet$ Very strong growth in Recruitment.
• $\bullet$ Growth in all geographies with a doubling of operating profit (before corporate expense) in New South Wales and Victoria over the previous year.

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 yields near the top of the sector.

Compliance Statement

This report is based on financial statements that have been audited.

Signed:

Bun Examt.

John Grant Managing Director

Date:

26 August 2005

Data#3 Limited ABN 31 010 545 267

Annual Financial Report
Year Ended 30 June 2005

Directors' report

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

Princinal activities

The principal activities of the consolidated entity during the course of the financial vear 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. $\bullet$
• Operating profit of the consolidated entity before interest (net), tax, depreciation and amortisation was $\ddot{\phantom{a}}$ \$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 $\bullet$ 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). $\bullet$
• 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 $\bullet$ vield 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 ٠ expertise around market leading technologies.
• Growth in all geographies with a doubling of operating profit (before corporate expense) in New South Wales $\bullet$ and Victoria over the previous year.

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 $\bullet$ 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 $\bullet$ further develop their expertise
• Through continuous review and improvement, accelerate Development of the Organisation to generate $\bullet$ 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.

Directors' report (continued)

Earnings per share

	2005 Cents	2004 Cents
Basic earnings per share	-25.67	-22.77
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; or

• (b) the results of those operations in future financial years; or
• (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 inprove financial performance.

For shareholders we expect financial performance to improve on the record 2005 result and are looking to continue to defiver 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 Data⁸3 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	4	4
H L Stack	15	18	4	4
G R Clark	16	18	岑	*
W T Powell	17	18	岑	*
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.

Directors' report (continued)

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 Oueensland Treasury Corporation, and President of the Brisbane Polo Club and of CPA Australia in Oueensland.

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.

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 Oueensland 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 vears: 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 W T Powell formed the business in 1977.

Other current directorships: Not applicable.

Former directorships in the last three years: Not applicable.

Special responsibilities: Chairman of superannuation policy committee.

Directors' report (continued)

Information on directors (continued)

W T 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.

J E Grant, BEng - Managing Director

Experience and expertise:

Director of the conpany 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 Oueensland 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.

Directors' report (continued)

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
• $\mathbb{C}$ 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.

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 $\bullet$
• $\ddot{\phantom{0}}$ performance-related bonuses
• long-term incentives through participation in the Data#3 Limited Employee Option Plan $\bullet$
• $\bullet$ 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' report (continued)

Remuneration report (continued)

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. Nonexecutive 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 vear.

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.

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 bomases 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.

		Primary Salary	Cash	Non-	Post- Employment	Equity	Other Benefits	Total
Name		& fees s.	bonus \$	monetary S	Superannuation Ъ	Options S.	Ŝ.	\$
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

Directors of Data^#3 Limited

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.

Directors' report (continued)

Remuneration report (continued)

Other executives of Data^#3 Limited

	Primary			Post-	Equity	Other	Total
	Salary	Cash	Non-	Employment		Benefits
Name	& fees	Bonus	Monetary	Superannuation	Options	Termination
	\$	\$	S	\$	\$	\$	\$
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	$\ddot{\phantom{a}}$	11,585		u.	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
Hill, B.*			Chief Financial Officer and Company Secretary
2005	137,550	32,045	950	11,585		w	182,130
2004	111,000 Manager - Victoria	26,625	3,543	11,002	935		153,105
Lavett, J. 2005	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, P.	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

* 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 above 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.

Directors' report (continued)

Remuneration report (continued)

Cash bonuses

For each cash bonus included in the above 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 %
Baynham, L.	100	$\blacksquare$
Bowser, M.	100	$\tilde{\phantom{a}}$
Colledge, B.	100	$\tilde{\phantom{a}}$
Crouch, B.	100	w.
Esler, M.	100	$\blacksquare$
Grant, J.	100	$\mathbf{u}$
Hill, B.	100	$\overline{\phantom{a}}$
Lavett, J.	54	46
McPherson, L.	100	$\bullet$
Murphy, P.	100	$\overline{\phantom{a}}$

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.
• Performance-related bonus of up to \$100,000 may be earned for each of the years ended 30 June 2005 and $\bullet$ 30 June 2006, with the bonus amount and performance targets to be reviewed annually thereafter by the board of directors.

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 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	Ontion 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	S 0.91	\$2.90	\$1.99	\$39.800

Directors' report (continued)

Shares under option

Unissued ordinary shares of Data^#3 Limited under option at the date of this report are as follows:

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

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.

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

Indemnity/insurance of officers

During the financial year, Data⁸3 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.

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 nonaudit 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 decisionmaking capacity for the company, acting as advocate for the company or jointly sharing economic risk and rewards.

Directors' report (continued)

A copy of the auditors' independence declaration as required under section 307c of the Corporations Act 2001 is set out on page 12.

Non-audit services (continued)

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

	Consolidated
	2005	2004
	\$	\$
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	7.190	8,500
	99.730	93.750

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

L Alenderson

R A Anderson Director

Brisbane 26 August 2005

Chartered Accountants

Floor 5 National Bank House 255 Adelaide Street Brisbane Q 4000 GPO Box 1144 Brisbane Q 4001 Pb 07 3222 8444 / Fax 07 3221 7779 Website www.jr.com.au Email ir@in.com.au

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

Stalker/

R.C.N. Walker Partner

Brisbane, Queensland 26 August 2005

Statements of Financial Performance

For the year ended 30 June 2005
---------------------------------	--	--	--

	Notes	Consolidated		Parent Entity
		2005 \$'000	2004 \$300	2005 \$'000	2004 \$'000
Revenues from ordinary activities
Sale of goods	2	158,443	146,222
Services	$\overline{2}$	38,052	29,275	218	443.
Other	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		(27, 877)	(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	(1,952)	(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.

Statements of Financial Position As at 30 June 2005

	Notes		Consolidated		Parent Entity
		2005 \$'000	2004 \$'000	2005 \$'000	2004 \$'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	$\overline{\overline{J}}$		500
Other financial assets	10	7	7	1,752	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	937	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.

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 Proceeds from sale of property, plant and		(149)	(183)	(97)	(10)
equipment		12	18	7	5
Proceeds from sale of business assets	28	175
Proceeds received from former joint
venture partner		619	620
Payments for purchase of business Repayment of loans from controlled	29		(65)
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				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 Financing arrangements	33 34

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

Notes to the financial statements For the vear 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.

Principles of consolidation $(a)$

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. Data³3 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.

$\overline{a}$ 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 whollyowned 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.

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.

Recoverable amount of non-current assets $(e)$

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

Listed and unlisted securities and controlled entities

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.

Depreciation of plant and equipment $(g)$

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:

$3 - 20$ years Plant and equipment

$(h)$ 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.

Notes to the financial statements For the vear ended 30 June 2005

Note 1. Summary of significant accounting policies (continued)

$\ddot{\Omega}$ 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.

$(k)$ 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 nonaccumulating, are recognised when the leave is taken and measured at the rates paid or payable.

Notes to the financial statements For the vear ended 30 June 2005

Note 1. Summary of significant accounting policies (continued)

$(k)$ Employee benefits (continued)

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:

• 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; or
• 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.

$\mathbf{a}$ 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;
• amortisation of ancillary costs incurred in connection with the arrangement of borrowings; and
• finance lease charges. $\bullet$

Cash $(m)$

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.

Notes to the financial statements For the year ended 30 June 2005

Note 1. Summary of significant accounting policies (continued)

Trade and other creditors $(0)$

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.

$(a)$ 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 accruals.

$(q)$ 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.

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.

GST $(s)$

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 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: $5^th$ Floor National Bank House 255 Adelaide Street BRISBANE OLD 4000 Its principal place of business is: Level 2 Data⁸3 Centre 80 Jephson Street TOOWONG OLD 4066

Notes to the financial statements For the year ended 30 June 2005

	Consolidated		Parent Entity
	2005 \$'000	2004 \$'000	2005 \$'000	2004 \$'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		ш	6,134	6,028
Forgiveness of debt - controlled entities		u.		1,194
Dividends – controlled entities		$\omega$	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	138,264	127,678
Depreciation Plant and equipment	139	234	39	48
Amortisation
Leasehold improvements	182	161	104	105
Plant & equipment under finance leases	55	89	55	89
Software licenses	60	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	$\overline{a}$
Goodwill	312	328		$\overline{\phantom{a}}$
Total amortisation	609	578	159	194

Notes to the financial statements For the year ended 30 June 2005

	Consolidated		Parent Entity
	2005 \$'000	2004 \$'000	2005 \$'000	2004 \$'000
Note 3. Profit from ordinary activities (continued)
Other charges against assets
Write-down of goodwill	69.
Bad and doubtful debts	57	8
Inventory obsolescence		6
Rental expenses on operating leases	2,181	1,883	272	124
Rental expenses - other	68	64
	2,249	1,947	272	124
(Profit)/loss on disposal of plant and equipment	92	128	l	60
Significant items
Included in other expenses from ordinary activities are the following specific items:
Reversal of provision against Powerlan (Qld) receivable		(500)

Note 4. Income tax

Tax consolidation legislation

As disclosed in note $I(b)$ . 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 3 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 Data⁸3 Limited.

Data#3 Limited and Controlled Entities

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%) Tax effect of permanent differences:	1,759	1,458	743	1,038
Amortisation of goodwill	94	99
Non-assessable gain - joint venture partnership		(150)
Non-assessable gain - debt forgiveness				(358)
Non-assessable dividends	L.		(600)	(600)
Non-allowable items	78	60	4	5
Income tax adjusted for permanent differences	1,931	1,467	147	85
Underprovision (overprovision) in previous year		(1)		(28)
Other	21
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)			5,386	3,398
Income tax calculated at 30% (2004: 30%) Tax effect of permanent differences:			1,616	1,020
Amortisation of goodwill			94	99
Non-assessable gains				(150)
Non-allowable item - debt forgiveness				358
Other non-allowable items			74	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	1,413
			1,952	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).

Notes to the financial statements For the year ended 30 June 2005

	Parent Entity 2005	2004 \$'000
Note 5. Dividends Final dividend for the year ended 30 June 2004 of 9.5 cents per fully paid ordinary share paid on 30 September 2004 (2003: 7.5 cents), 100% franked based on tax rate of 30%	\$700 1,439	1,099
Interim dividend of 7.5 cents per fully paid ordinary share paid on 31 March 2005 $(2004: 6.0 \text{ cents})$ , 100% franked based on tax rate of 30%	1,143 2,582	904 2,003
Dividends paid in eash or satisfied by the issue of shares under the dividend reinvestment plan during the years ended 30 June 2005 and 2004 were as follows:
Paid in eash Satisfied by issue of shares	2,102 480 2,582	1,687 316 2,003
Dividends not recognised at year end In addition to the above dividends, since year end the directors have declared a final dividend of 11.5 cents (2004: 9.5 cents) per fully paid ordinary share, fully franked based on tax paid at 30%. The aggregate amount of the declared dividend to be paid on 30 September 2005 out of retained profits at 30 June 2005, but not recognised as a hability at year end in accordance with the company's accounting policy described at note 1(q):	1,765	1,437
Franked dividends The franked portions of the final dividends declared after 30 June 2005 will be franked out of existing franking credits or out of franking credits arising from the payment of meome tax in the year ending 30 June 2005.
Franking credits available for subsequent financial years	5,312	4,648
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for: franking credits that will arise from the payment of the current tax liability; $\left( i\right)$ franking debits that will arise from the payment of dividends recognised as a liability at the reporting (ii) date;

• franking credits that will arise from the receipt of dividends recognised as receivables at the reporting $(iii)$ date; and
• franking credits that may be prevented from being distributed in subsequent financial years. $(iv)$

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.

	Consolidated		Parent Entity
	2005 \$'000	2004 \$'000	2005 \$'000	2004 \$'000
Note 6. Cash assets
Cash at bank and on hand	1,673	1.797	1.671	1.795
Deposits at call	7.500	5,000	7,500	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%).

Notes to the financial statements For the year ended 30 June 2005

	Consolidated		Parent Entity
	2005 \$'000	2004 \$'000	2005 \$'000	2004 \$'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	78	261	46	39.
Receivable from Powerlan Qld	1,853	1,972
Provision for doubtful debt	(1, 442)	(1, 442)
	411	530	w	$\overline{\phantom{a}}$
Amounts receivable from controlled entities Tax-related amounts receivable from controlled			8,075	9,687
entities			1,363	180
	30,192	27,673	9,498	9,930
Non-current
Receivable from Powerlan Qld		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 Qld

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

Note 8. Inventories

Finished goods – at cost Provision for obsolescence	2,362	1,150 (35)	$\bullet$
	2,362	1,115
Note 9. Other current assets
Prepayments	341	527	334	282
Security deposits	82	88		8
Accrued rebates	598	313	$\bullet$
	1,021	928	335	290

Notes to the financial statements For the year ended 30 June 2005

	Consolidated		Parent Entity
	2005	2004	2005	2004
Note 10. Other financial assets - non-current	\$'000	\$7000	\$000	\$'000
Investments traded on organised markets
Shares in other corporations $-$ at cost	7	7	7	7.
Other (non-traded) investments
Shares in controlled entities - at cost (note 27)			6,117	6,123
Provision for write down to recoverable amount		w	(4,372)	(4,372)
	u,	w.	1,745	1,751
	7	7	1,752
				1,758
Note 11. Property, plant and equipment
Leasehold improvements - at cost	1,457	1,408	1,042	1,042
Accumulated amortisation	(672)	(491)	(521)	(417)
	785	917	521	625
Plant and equipment - at cost Accumulated depreciation	1,036 (793)	1,872 (1, 477)	699 (568)	360 (279)
	243	395	131	81
Plant and equipment under finance lease		298		298
Accumulated amortisation		(243)		(243)
		55		55.
	1.028	1,367	652	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.

	Leasehold improvements	Plant and equipment	Leased plant and equipment	Total
	\$'000	\$'000	\$'000	\$2000
Consolidated
Carrying amount at 1 July 2004	917	395	55	1,367
Additions	50.	99		149
Disposal of business assets (note 28)		(8)		(8)
Disposals		(104)		(104)
Depreciation/amortisation expense	(182)	(139)	(55)	(376)
Carrying amount at 30 June 2005	785	243		1,028
Parent entity
Carrying amount at 1 July 2004	625	81	55	761
Additions		97		97
Disposals		(8)		(8)
Depreciation/amortisation expense	(104)	(39)	(55)	(198)
Carrying amount at 30 June 2005	521	131		652

Notes to the financial statements For the year ended 30 June 2005

	Consolidated		Parent Entity
	2005 \$'000	2004 \$2000	2005 \$'000	2004 \$'000
Note 12. Deferred tax assets
Future income tax benefit	649	831	649	831
Note 13. Intangible assets
Goodwill Accumulated amortisation	6,236 (2,139)	6,623 (1, 818)
	4,097	4,805	ш.
Software licenses Accumulated amortisation	180 (60) 120	180 180	w	$\blacksquare$
	4,217	4,985
Note 14. Payables
Trade creditors - secured (note 34) $-$ unsecured	8,510 18,337	8,994 15,227		$\mathbf{11}$
	26,847	24,221		11
Other creditors and accruals - unsecured	4,185	4,246	1,476	1,601
	31,032	28,467	1,476	1,612
Note 15. Interest bearing liabilities
Current Lease liabilities - secured (note 22)		64		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

Notes to the financial statements For the year ended 30 June 2005

	Consolidated 2005 \$'000	2004 \$300	Parent Entity 2005 \$'000	2004 \$'000
Note 18. Other liabilities
Current Unearned income
Lease incentives	1,801 104	2,110 104	104	104
Amounts payable to controlled entities		$\tilde{\phantom{a}}$	7,515	6,079
	1,905	2,214	7,619	6,183
Non-current
Lease incentives Tax-related amounts payable to controlled entities	417 $\tilde{\phantom{a}}$	521 $\blacksquare$	417 520	521 695
	417	521	937	1,216
	Parent Entity		Parent Entity
	2005 Shares	2004 Shares	2005 \$'000	2004 \$'000
Note 19. Contributed equity	$000*$	000"
(a) Share capital
Ordinary shares - fully paid	15,350	15,126	8,706	8,190

(b) Movements in ordinary share capital

Details	Notes	Number of Shares	Issue Price S	\$'000
Opening balance – 1 July 2003		14,653,819		7,459
Issue for f5 business acquisition	(ii)	155,160	1.80	279
Exercise of options under Data " 3 Limited Employee Option Plan	30	150,000	0.91	136
Dividend reinvestment plan issue	$\rm _{(i)}$	100.153	1.77	177
Dividend reinvestment plan issue	(i)	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	$\left( i\right)$	93,700	2.22	208
Dividend reinvestment plan issue	(i)	90,020	3.03	272
Balance – 30 June 2005		15,349,773		8,706

The company has established a dividend reinvestment plan under which holders of ordinary shares may $(i)$ 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).

Notes to the financial statements For the year ended 30 June 2005

Note 19. Contributed equity (continued)

(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	\$300	\$'000	\$'000
Note 20. Retained profits
Retained profits at the beginning of the financial year	3,742	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

Note 21. Contingent liabilities

At 30 June 2005 bank guarantees 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.

		Parent Entity
2005	2004	2005	2004 \$'000
2,163	2.053	982	1,013
5,531	5.970	3,007	3,132
	637		637
7.694	8,660	3,989	4,782
	\$'000	Consolidated \$200	\$'000

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.

Notes to the financial statements For the year ended 30 June 2005

Note 22. Commitments for expenditure (continued)

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

Note 23. Deed of cross guarantee

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			Balance		As at 30 June 2005
	30 June 2004	Granted as remuneration	Exercised	30 June 2005	Vested	Exercisable	Unexercisable
Specified directors
Directors hold no options over ordinary shares of Data # 3 Limited $(2004 - \text{nil})$ .
Specified executives
Bowser, M.	20,000		(20,000)	w
MacPherson, L.	20.000	M		20.000	20.000	20,000
	40.000	w	(20.000)	20,000	20,000	20,000

Notes to the financial statements For the year ended 30 June 2005

Note 24. Director and executive disclosures (continued)

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
Specified directors $-$ nil
Specified executives
Bowser, M.	20,000	0.91	$\bullet\bullet$

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

Number of shares in Data^#3 Limited held by specified directors and executives

	Balance	Granted as	Options	Net change	Balance
	30 June 2004	Remuneration	Exercised	Other	30 June 2005
Specified directors
Anderson, R.	40,000				40,000
Clark, G.	668,880		$\blacksquare$	(50,000)	618,880
Grant, J.	861,520	w	$\overline{\phantom{a}}$		861,520
Powell, W.	680.000	$\overline{\phantom{a}}$	$\blacksquare$	(60.000)	620,000
Stack, H.	10,000		$\blacksquare$		10,000
Specified executives
Baynham, L.	54,905			(3,305)	51,600
Bowser, M.			20,000		20,000
Colledge, B.	23,600		$\overline{\phantom{a}}$	L	23,600
Crouch, B.	10.000		$\blacksquare$		10,000
Esler, M.	760.100		$\overline{\phantom{a}}$		760,100
Hill, B.	20.000			7,000	27,000
	3,129,005		20,000	(106.305)	3,042,700

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.

Notes to the financial statements For the year ended 30 June 2005

Note 24. Director and executive disclosures (continued)

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

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

	Consolidated		Parent Entity
	2005	2004	2005	2004
	\$	\$	\$	\$
Note 25. Remuneration of auditor
During the year the following fees were paid or payable to the auditor for audit and non-audit services:
Assurance services
Audit services
Audit and review of financial reports and other
audit work under the Corporations Act 2001	82,000	79,000	82,000	79,000
Other assurance services
Due diligence services on potential acquisition	5,900	5,750	5,900	5,750
Corporate services	1,140	500	1,140	500.
IFRS consultancy services	3,500	w	3,500
Taxation services
Tax compliance services	7,190	8,500	7,190	8,500
Total remuneration	99,730	93,750	99,730	93,750

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.

Notes to the financial statements For the year ended 30 June 2005

Note 26. Related parties

Wholly-owned group

The wholly-owned group consists of the ultimate parent entity Data^*3 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 Data^#3 Limited for accounting, administrative services, management and $\blacksquare$ use of assets (refer note 2);
• Management charges from controlled entities for use of assets and provision of systems and services $\bullet$ (refer Statement of Financial Performance);
• $\blacksquare$ Dividends received by Data ^$\theta$ 3 Limited (refer note 2):
• Transactions between Data*3 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). $\blacksquare$

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 or incorporation	Equity holding (ordinary shares)
		2005 %	2004 %
Data 8 3 Business Systems Pty Ltd	Australia	100	100.
Data #3 Client Services Pty Ltd Data 8 3 (Gold Coast) Pty Ltd	Australia Australia	$\overline{\phantom{a}}$	100 100
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 Data^#3 Client Services Pty Ltd and Data^#3 (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).

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 Conputing (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:

	2005
Carrying amount of assets and liabilities at date of disposal:	\$2000
Plant and equipment	8
Goodwill	327
Provision for employee benefits	(79)
Net assets	256
Loss on disposal:
Consideration received	175
Consideration receivable	-65
Carrying amount of net assets sold	(256)
Warranty costs	(102)
Loss on sale before income tax	(118)

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:

	2004 \$'000
Fair value of identifiable net assets acquired:
Other current assets	3
Plant and equipment	50
Deferred tax assets	6
Software licenses	180
Unearned income	(24)
Provision for employee benefits	(21)
Net identifiable assets acquired	194
Goodwill	150
	344
Consideration:
Cash paid	65
Shares issued	279
	344

Notes to the financial statements For the year ended 30 June 2005

Note 29. Acquisitions of business (continued)

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

On 15 August 2002, Powerlan Limited announced that its subsidiary Powerlan (Old) Pty Ltd (Powerlan Old) 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 Pricewaterhouse-Coopers as Receivers. Powerlan Old was the joint venture partner of a controlled entity, Data^#3 Business Systems Pty Ltd (Data^#3) in Oueensland Desktop Services (ODS) and Oueensland Software Services (QSS). Negotiations with the Powerlan Qld 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 Old. The consolidated entity is the largest creditor of Powerlan Old, representing approximately 25% of total creditors.

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 \$'000	2004 \$2000	2005 \$'000	2004 \$'000
Note 30. Employee benefits
Employee benefits and related on-costs
liabilities
Included in other creditors $\sim$ current (note 14) Provision for employee benefits – current	2,754	2,595	320.	226
(note 17)	507	410	259	213
Provision for employee benefits - non-current
(note 17)	311	327	31	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	275	263.	42	37

Notes to the financial statements For the vear ended 30 June 2005

Note 30. Employee benefits (continued)

Data^#3 Limited Employee Share Scheme

The establishment of the Data⁸3 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 ^$\theta$ 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 direction 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 Employee Option Plan

The establishment of the Data⁸3 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 vear	Balance at end of the year
			Number	Number	Number	Number	Number
	Consolidated and parent entity - 2005
22 November	21 November
2002	2005	\$0.91	60,000		40.000	-	20,000
	Consolidated and parent entity - 2004
22 November	28 February
2002	2004	\$0.91	20.000	۰.	20,000
22 November	21 November
2002	2005	\$0.91	190.000	$\overline{\phantom{a}}$	130,000	$\blacksquare$	60.000
			210.000		150.000	L	60.000

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

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:

		Consolidated		Parent entity
Exercise date	Fair value per share at issue date	2005 Number	2004 Number	2005 Number	2004 Number
31 August 2004	\$2.45	20,000	w	20.000	$\overline{\phantom{a}}$
24 June 2005	\$2.90	20,000	$\blacksquare$	20.000	$\omega$
24 November 2003	\$1.78	$\overline{\phantom{a}}$	20,000		20,000
19 December 2003	\$1.79	$\overline{\phantom{a}}$	40,000	$\overline{\phantom{a}}$	40.000
10 March 2004	\$2.27	$\overline{\phantom{a}}$	90,000	$\blacksquare$	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 s	2004 \$	2005 S	2004 \$
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	107.000	311,500

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.

Notes to the financial statements For the year ended 30 June 2005

	Consolidated		Parent entity
	2005 \$'000	2004 \$'000	2005 \$'000	2004 \$'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	2,331	3,408
Depreciation and amortisation	748	812	198	242
Write-down of goodwill	69
Reversal of provision for doubtful debt - Powerlan
Qld		(500)
(Profit) loss on sale of plant and equipment	92	128	1	60
Loss on sale of business assets	118
Gain - debt forgiveness				(1, 194)
Write-off of investment in subsidiaries			6
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	155	(442)	(52)	(142)
(Increase) / decrease in net deferred tax assets	182	82	182	(730)
Increase / (decrease) in trade creditors	2.626	(14, 141)	(11)	11
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	39	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.

Notes to the financial statements For the year ended 30 June 2005

	Consolidated		Parent Entity
	2005 \$'000	2004 \$'000	2005 \$7000	2004 \$'000
Note 33. Non-cash financing and investing activities
Dividends satisfied by issue of shares (note 5)	480	316	480	316
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.

Notes to the financial statements For the year ended 30 June 2005

Note 34. Financing arrangements (continued)

	Consolidated		Parent Entity
	2005	2004	2005	2004
	\$'000	\$'000	\$'000	\$'000
Secured liabilities
Total secured liabilities (current and non-current) are:
Lease liabilities (note 22)	$\overline{\phantom{a}}$	64		64
Lease incentives (note 18)	521	625	521	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). $\bullet$
• There are a number of individually significant debtors. At 30 June 2005, the ten largest debtors comprised approximately 30% (2004: 30%) of total debtors.

Notes to the financial statements For the year ended 30 June 2005

Note 35. Financial instruments (continued)

(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.

		Floating interest rate	Fixed interest maturing in 1 year or less	Non $-$ interest bearing	Total
2005	Notes	\$300	\$'000	\$'000	\$'000
Financial assets
Cash assets	6	9,173			9,173
Receivables	7			30,192	30,192
Other financial assets	10		$\blacksquare$	7	7.
		9,173	$\blacksquare$	30,199	39,372
Weighted average interest rate		$5.0\%$
Financial liabilities
Payables	14			31,032	31,032
		$\tilde{\phantom{a}}$	$\tilde{\phantom{a}}$	31,032	31,032
Net financial assets /(liabilities)		9,173	$\tilde{\phantom{a}}$	(833)	8,340
2004
Financial assets
Cash assets	$\,$ 6 $\,$	6,797			6,797
Receivables	7			28,173	28,173
Other financial assets	10			7	7
		6,797	w.	28,180	34,977
Weighted average interest rate		4.8%
Financial liabilities
Lease liabilities	15		64		64
Payables	14	w	$\blacksquare$	28,467	28,467
		$\overline{a}$	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.

Notes to the financial statements For the vear ended 30 June 2005

Note 35. Financial instruments (continued)

(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.

	Consolidated
	2005	2004
Note 36. Earnings per share	Cents	Cents
Basic earnings per share	25.67	22.77
Diluted earnings per share	25.63	22.65
Weighted average number of ordinary shares used as the denominator in	Number	Number
calculating basic earnings per share	15,236,746	14,899,426
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share	15.264.258	14,978,470

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.
• Options granted are considered to be potential ordinary shares. Details relating to options are set out in $c$ $\lambda$ 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.
• Reconciliation of the weighted average number of ordinary shares is as follows: $e$ )

	Number	Number
Number used in calculating basic earnings per share	15.236,746	14.899.426
Weighted average number of options outstanding	27.512	79.044
Number used in calculating diluted earnings per share	15.264.258	14,978.470

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 AIFRS, 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.

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 inmacts 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 GAAP change	AIFRS	Existing GAAP	Effect of change	AIFRS
	\$2000	\$'000	\$'000	\$'000	\$'000	\$2000
Profit from ordinary activities
before income tax (note a)	5,864	312	6.176	2.478	$\overline{\phantom{a}}$	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 GAAP	Effect of change	AIFRS	Existing GAAP	Effect of change	AIFRS
	\$2000	\$'000	\$'000	\$'000	\$'000	\$200
Total assets (notes a, b)	48,649	300	48.949	22,057	(520)	21,537
Total liabilities	34,871	$\blacksquare$	34,871	11,021	(520)	10,501
Total equity	13,778	300	14.078	11,036	$\overline{\phantom{a}}$	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.

Notes to the financial statements For the vear 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 mcome 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

In the opinion of the directors:

• $(a)$ the attached financial statements and notes are in accordance with the Corporations Act 2001, including:
• complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory $\bigoplus$ professional reporting requirements; and
• giving a true and fair view of the company's and consolidated entity's financial position as at 30 June $(ii)$ 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
• there are reasonable grounds to believe that the company will be able to pay its debts as and when they $(b)$ become due and pavable; and
• at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group $(c)$ 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.

1 Aavancon

RA Anderson Director

Brisbane 26 August 2005

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:

• examining, 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.

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 requirements 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

Solalker

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:

			Class of security
			Ordinary shares	Options for ordinary shares
	$\blacksquare$	1,000	399	$\blacksquare$
1,001	$\blacksquare$	5,000	837	٠
5,001	$\blacksquare$	10,000	210	$\overline{\phantom{a}}$
10,001	$\blacksquare$	100,000	140
100,001 and over			20	$\bullet$
			1,606

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

2. Twenty largest quoted equity security holders

Name	Ordinary shares
	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	1.11
J T Populin	169,014	1.10
W T 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

Data#3 Limited and Controlled Entities

Shareholder information (continued)

3. Substantial shareholders

Substantial shareholders in the company are set out below:

Name	Number held	Percentage
Souls Funds Management Limited	1,469,408	9.57
Equity Trustees Limited	1,111,100	7.24
Paradice Cooper Investors Pty Ltd	864.605	5.63
J E Grant / Wood Grant & Associates Pty Ltd	861.520	5.61
Unquoted equity securities 4.
	Number held	Number of holders
Options issued under Data 8 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:

(a) every shareholder present at a general meeting has one vote on a show of hands; and

(b) on a poll, each shareholder has one vote for each fully paid share held.

Options have no voting rights.