DATA#3 LIMITED — Annual Report 2007

Aug 21, 2007

Appendix 4E

ASX Preliminary Final Report

Name of entity:

ABN:

Data[#] 3 Limited

31 010 545 267

Reporting period: Year ended 30 June 2007

Previous corresponding period: Year ended 30 June 2006

Results for announcement to the market

Results
Revenues from ordinary activities	up	19.0 % to	$285,117,000
Profit from ordinary activities after tax attributable to members	up	26.0 % to	$7,197,000
Net profit for the period attributable to members	up	26.0 % to	$7,197,000

Dividends	Amount per security	Franked amount per security
Current period
Interim dividend	14.0 cents	14.0 cents
Final dividend	22.0 cents	22.0 cents
Previous corresponding period
Interim dividend	11.0 cents	11.0 cents
Final dividend	17.0 cents	17.0 cents
The Record Date for determining entitlements to the dividend is 14 September 2007.

Brief explanation of the figures reported above:

The current period’s results are the best ever reported, and reflect consistently strong performance across all areas of the company’s business.

1

Data[#] 3 Limited and Controlled Entities

Appendix 4E – ASX Preliminary Final Report For the year ended 30 June 2007

Please refer to the attached audited Annual Financial Report for the year ended 30 June 2007 for the following information:

Income Statements

Balance Sheets

Statements of Changes in Equity

Cash Flow Statements

Notes to the financial statements

2

Data[#] 3 Limited and Controlled Entities

Appendix 4E – ASX Preliminary Final Report For the year ended 30 June 2007

Retained profits

	Current year $’000	Previous year $’000
Retained profits (accumulated losses) at the beginning of financial period Net profit attributable to members Net transfers to and from reserves Dividends provided for or paid	7,334 7,197 - (4,841)	5,091 5,713 - (3,470)
Retained profits at end of financial period	9,690	7,334

Additional dividend information

Details of dividends declared or paid during or subsequent to the year ended 30 June 2007 are as follows:

Record date	Payment date	Type	Amount per security	Franked amount per security	Total dividend $’000
15/9/2006	29/9/2006	Final	17.0 cents	17.0 cents	2,658
16/3/2007	30/3/2007	Interim	14.0 cents	14.0 cents	2,183
14/9/2007	28/9/2007	Final	22.0 cents	22.0 cents	3,409

Total dividend per security (interim plus final)

	Ordinary securities	Current year	Previous year
		36.0 cents	28.0 cents

Data[#] 3 Limited Dividend Reinvestment Plan

The Data[#] 3 Dividend Reinvestment Plan has been suspended from 1 September 2006 until further notice from the Board.

3

Data[#] 3 Limited and Controlled Entities

Appendix 4E – ASX Preliminary Final Report For the year ended 30 June 2007

Net tangible assets per security

	Net tangible asset backing per ordinary security	Current year	Previous year
		$0.94	$0.78

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

Compliance with IFRS

The attached Annual Financial Report complies with Australian Accounting Standards, which include AIFRS. Compliance with AIFRS ensures that the financial report complies with International Financial Reporting Standards (IFRS).

4

Data[#] 3 Limited and Controlled Entities

Appendix 4E – ASX Preliminary Final Report For the year ended 30 June 2007

Commentary on the results for the period

2007 closed as the best year the company has yet reported with basic earnings per share of 46.1 cents and fully franked dividends for the full year of 36.0 cents per share. This represented distribution of profit of 78% and an average yield of 7.4% (based on the $4.85 average of the 30 June 2006 and 30 June 2007 share prices), or a yield of 6.0% based on the 30 June 2007 share price of $6.00.

Highlights include:

• Total revenue of the group was $285,117,000, a 19% increase from last year with growth in all geographic regions.

• Operating profit of the group before interest (net) and tax was $9,902,000; and the net profit after tax was $7,197,000, a 26% increase from last year.

• Total dividends of 36.0 cents per share fully franked, a 29% increase from last year.

• Services revenues increased 30% to $70,245,000, driven by particularly strong growth in recruitment revenues.

• Product revenues increased by 16% to $214,414,000, driven by strong growth in software licensing and ICT product revenues.

• Gross margin dollars increased by 16%, with most significant growth in the specialist areas of Licensing Solutions and Recruitment Solutions.

• The overall gross margin percentage decreased only fractionally from 20.8% to 20.3%, reflecting the shift in revenue mix to lower margin areas.

• Internal staff costs and operating expenses declined as a percentage of gross margin by 1.5%

• Internal staff costs increased by 15% in support of growth and deepening expertise particularly in ICT Services.

• Strong net operating cash inflows, to some degree reflecting the timing benefit of receipts from customers in advance of payments to suppliers.

• A strong financial position, with essentially no long-term borrowings.

Compliance Statement

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

Signed:

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John Grant Managing Director Date: 22 August 2007

5

Data[#] 3 Limited ABN 31 010 545 267 Annual Financial Report Year Ended 30 June 2007

Directors’ report

Your directors present their report on Data[#] 3 Limited and its subsidiaries (the group) for the year ended 30 June 2007.

PRINCIPAL ACTIVITIES

The principal activities of the group during the course of the financial year related to the delivery of information technology solutions, which draw on the group’s broad range of products and services and its alliances with other industry providers. These activities included software licensing and software asset management; the design, deployment and operation of desktop, network and data centre hardware and software infrastructure; and the provision of contract and permanent recruitment services.

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

DIVIDENDS

DIVIDENDS
	Cents	$’000
Final dividend recommended	22.0	3,409
Dividends paid in the year:
Interim for the year	14.0	2,183
Final for the year ended 30 June 2006	17.0	2,658
		4,841

OPERATING AND FINANCIAL REVIEW

• Total revenue of the group was $285,117,000, a 19% increase from last year with growth in all geographic regions.

• Operating profit of the group before interest (net) and tax was $9,902,000; and the net profit after tax was $7,197,000, a 26% increase from last year.

• Total dividends of 36.0 cents per share fully franked, a 29% increase from last year.

• Services revenues increased 30% to $70,245,000, driven by particularly strong growth in recruitment revenues.

• Product revenues increased by 16% to $214,414,000, driven by strong growth in software licensing and ICT product revenues.

• Gross margin dollars increased by 16%, with most significant growth in the specialist areas of Licensing Solutions and Recruitment Solutions.

• The overall gross margin percentage decreased only fractionally from 20.8% to 20.3%, reflecting the shift in revenue mix to lower margin areas.

• Internal staff costs and operating expenses declined as a percentage of gross margin by 1.5%.

• Internal staff costs increased by 15% in support of growth and deepening expertise particularly in ICT Services.

• Strong net operating cash inflows, to some degree reflecting the timing benefit of receipts from customers in advance of payments to suppliers.

• A strong financial position, with essentially no long-term borrowings and a current ratio of 1.21 (2006: 1.26).

Data[#] 3 Limited | Annual report 2007 | 2

Directors’ report (continued)

BUSINESS STRATEGY

Our vision is to be an exceptional company - one that unites to enable our customers’ success through technology; inspires our people to do their best every day; and rewards investors’ confidence and support.

• To achieve this vision, our focus is on three key areas:

• Remarkable people – who are inspired and supported in their passion for excellence and doing do their best every day; who meet the challenge of work / life balance; who are empowered to contribute to positive change; and who are rewarded and celebrated both as members of the team and as individuals.

• Outstanding solutions - that embody market-leading expertise in technologies from vendors that are driving the industry globally and quickly adapt to changes in the environment.

• Organisational excellence – embedded processes that continuous review and improve the effectiveness of our business operations to ensure we remain a leader in our industry.

Achieving the objectives we have in each of these areas will see expertise and solutions in technology unite through our solutions framework to enable customer success.

Our customers’ success will in turn deliver exceptional performance with the appropriate rewards to all stakeholders.

EARNINGS PER SHARE

EARNINGS PER SHARE
	2007	2006
	Cents	Cents
Basic earnings per share	46.13	36.88
Diluted earnings per share	46.13	36.84

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

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

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

No matter or circumstance has arisen since 30 June 2007 that has significantly affected, or may significantly affect:

(a) the group’s operations in future financial years; or

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

• (c) the group’s state of affairs in future financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

In 2008 we expect buoyant but competitive market conditions to remain in place and are targeting continued organic growth in all areas of the business. We also expect the current pressure on staff recruitment and retention in the ICT labour market to continue. To maintain Data[#] 3’s position as an employer of choice we intend to invest further in developing the expertise of our staff and in associated infrastructure. Overall we expect to contain operating expense relative to gross margin generated to a level similar to that achieved in the previous year.

We will continue to look for appropriate partnerships and acquisitions to enhance either our geographic scale or our expertise in specific areas and ultimately further improve financial performance. For shareholders we expect financial performance to improve on the record 2007 result and are looking to continue to deliver dividends that balance the need for working capital and the provision of returns near the top of the sector.

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

Further information on likely developments in the operations of the group 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 group.

Data[#] 3 Limited | Annual report 2007 | 3

Directors’ report (continued)

DIRECTORS

The following persons were directors of Data[#] 3 Limited during the whole of the financial year and up to the date of this report:

R A Anderson J E Grant W T Powell

Mr G R Clark was a director from the beginning of the financial year until 8 November 2006, the date of his retirement.

Names, qualification, experience and special responsibilities

R A Anderson, OAM, BCom, FCA (chairman, non-executive director)

Independent non-executive director since 1997 and chairman since 2000. Formerly a partner with PricewaterhouseCoopers, the firm’s managing partner in Queensland, and a member of the firm’s National Committee. Previously a member of the Capital Markets Board of Queensland Treasury Corporation and president of CPA Australia in Queensland.

During the past three years Mr Anderson has also served as a 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.

Special responsibilities:

Chairman of the board. Member of audit committee.

Chairman of superannuation policy committee (not a committee of the board of directors).

J E Grant, BEng (managing director)

Director of the company from its foundation in 1984; managing director from 1996 to 2000; Chief Executive Officer from 2000 to 2004; re-appointed managing director effective 1 July 2004; extensive experience in the IT industry; member of the Federal Government’s former ICT Advisory Board, whose charter was to provide advice to the Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, on ICT industry and research priorities; member of the Queensland Government’s Ministerial Advisory Group, whose charter is to provide advice to the Minister for State Development, Employment and Industrial Relations, Mr John Mickel on Queensland ICT industry development policy; a member of the Queensland government’s Smart State Council established by Premier Peter Beattie; 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.

Mr Grant is currently deputy chairman of the Australian Information Industry Association, the ICT industry’s peak representative body and a non-executive director of Sargent Group.

W T Powell, BEcon (non-executive director)

Non-executive director since 2002. 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. Re-joined the board of Data[#] 3 Limited in 2002.

Special responsibilities:

Chairman of audit committee.

Interests in shares and options

As at the date of this report, the interests of the directors in the shares of Data[#] 3 Limited were:

	Number of
	ordinaryshares
R A Anderson	50,000
W T Powell	510,000
J E Grant	861,520

Data[#] 3 Limited | Annual report 2007 | 4

Directors’ report (continued)

DIRECTORS (continued)

Meetings of directors

The number of meetings of the company’s board of directors (including meetings of the audit committee) held during the year, and the numbers of meetings attended by each director were:

Name	Full meetings of directors Meetings of audit committee Meetings attended Meetings held Meetings attended Meetings held	Full meetings of directors Meetings of audit committee Meetings attended Meetings held Meetings attended Meetings held
R A Anderson G R Clark J E Grant W T Powell	14 14 4 5 5 14 14 13 14 4	4 4

• = Not a member of the committee during the year.

COMPANY SECRETARY

Mr B I Hill, BBus, was appointed to the position of company secretary in 1997. He has served as the financial controller or chief financial officer of the company since 1992 and is a member of CPA Australia and a fellow of Chartered Secretaries Australia.

REMUNERATION REPORT

All information in this remuneration report has been audited by the company’s auditor with the exception of section E. The remuneration report is set out under the following main headings:

• A Principles used to determine the nature and amount of remuneration

• B Details of remuneration

• C Employment contracts

• D Share-based compensation

• E Additional information

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 group’s operations, achieving the group’s strategic objectives, and increasing shareholder wealth.

Executive pay

The executive pay and reward framework has four components:

• Base pay and benefits

• Performance-related bonuses

• Long-term incentives through participation in the Data[#] 3 Limited Employee Option Plan

• • Other remuneration such as superannuation.

The combination of these comprises the executive’s remuneration.

Base pay

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

Data[#] 3 Limited | Annual report 2007 | 5

Directors’ report (continued)

REMUNERATION REPORT (continued)

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 2007 the proportion of the planned total executive remuneration that was performance-related was 36% (2006: 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 2007 the planned profit-related component represented 85% of the total executive bonuses (2006: 81%). The balance of the executive bonus entitlement is determined by performance against agreed key performance indicator targets relevant to each individual.

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

Directors’ fees

Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. The board determines remuneration of non-executive directors within the maximum amount approved by the shareholders from time to time. This maximum currently stands at $350,000 per annum in total for salary and fees, to be divided among the non-executive directors in such a proportion and manner as they agree. Non-executive directors are paid a fixed remuneration, comprising base fees and superannuation. Non-executive directors do not receive bonus payments or share options, and are not provided with retirement benefits other than statutory superannuation. The board was comprised of three non-executive directors and one executive director during the financial year until November 2006, when one non-executive director retired. 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

Compensation paid, payable, or provided by the group or on behalf of the group, to key management personnel is set out below. Key management personnel include all directors of the company and certain executives who, in the opinion of the board and managing director, have authority and responsibility for planning, directing and controlling the activities of the group directly or indirectly. Comparative information is not shown for individuals who were not considered to be key management personnel in the previous year. The following also includes the five most highly remunerated executives of the group.

Data[#] 3 Limited | Annual report 2007 | 6

Directors’ report (continued)

REMUNERATION REPORT (continued)

REMUNERATION REPORT (continued)
Short-term Long- term	Post- employ- ment Other benefit s
Cash salary and fees $ Cash bonus $ Non- monetary benefits $ Long service leave $	Super- annuatio n $ Termina- tion $ Total $
Non-executive directors Anderson, R. 2007 90,000 - - - Chairman 2006 90,000 - - -	8,100 - 98,100 8,100 - 98,100
Clark, G. – Director 2007 19,583 - - - (retired 8 November 2006) 2006 55,000 - - -	1,763 - 21,346 4,950 - 59,950
Powell, W.T. 2007 65,000 - - - Director 2006 55,833 - - -	5,850 - 70,850 5,025 - 60,858
2007 - - - - Stack, H. – Director (resigned 23 December 2005) 2006 32,500 - - -	- - - 2,925 - 35,425
2007 174,583 - - - Subtotals - non-executive directors 2006 233,333 - - -	15,713 - 190,296
	21,000 - 254,333
Executive director Grant, J. * 2007 243,165 107,079 69,985 3,016 Managing Director 2006 229,012 100,000 70,203 2,998	12,686 - 435,931 12,139 - 414,352
Other key management personnel Baynham, L. 2007 184,207 138,637 - 5,903 General Manager 2006 170,000 142,055 - 2,831	12,686 - 341,433 12,139 - 327,025
Bowser, M. – Manager, 2007 140,000 115,676 - 5,703 Managed Accounts Group 2006 128,998 110,175 - 1,948	12,686 - 274,065 12,139 - 253,260
Colledge, B. – Manager, 2007 145,000 159,531 - 4,924 Licensing Solutions 2006 130,973 138,304 - 2,181	12,686 - 322,141 12,139 - 283,597
Crouch, B. – Manager, 2007 155,000 143,276 - 4,919 Enterprise Solutions 2006 141,973 129,406 - 2,364	12,686 - 315,881 12,139 - 285,882
2007 162,750 96,802 - 3,113 Crouch, P. – Manager, NSW (from 1November 2005) 2006 103,333 70,336 - 1,721	12,686 - 275,351 8,093 - 183,483
Esler, M. * – Manager, 2007 123,570 95,858 21,747 1,161 ICT Product Solutions 2006 106,525 115,302 23,185 1,199	12,686 - 255,022 20,826 - 267,037
2007 157,314 49,410 - 6,436 Hill, B. * – Chief Financial Officer/ Company Secretary 2006 136,000 33,240 5,963 2,365	12,686 - 225,846 12,139 - 189,707
Lavett, J. – Manager, Victoria 2007 39,733 - - - (terminated 31 August 2006) 2006 138,397 72,778 3,900 2,201	3,577 59,599 102,909 12,139 - 229,415
MacPherson, L. * – Manager, 2007 119,890 29,286 - 3,079 Organisational Development & 2006 108,991 29,480 - 1,815 Human Resources	12,686 - 164,941 12,139 - 152,425
Murphy, P. 2007 150,000 78,384 - 4,331 Manager, ICT Services 2006 135,000 79,759 - 2,248	12,686 - 245,401 12,139 - 229,146
Peters, W. – Manager, 2007 130,000 104,910 - 1,388 Recruitment Solutions 2006 120,000 105,828 - 1,998	12,686 - 248,984 12,139 - 239,965
Rackham, J. – Manager, 2007 133,333 72,781 - 2,221 Victoria (from 1 Sept. 2006)	10,572 - 218,907
2007 2,058,545 1,191,630 91,732 46,194 Totals – key management personnel 2006 1,882,535 1,126,663 103,251 25,869	169,408 59,599 3,617,108
	171,309 - 3,309,627

• Denotes those executives who were employed by the parent entity for the year ended 30 June 2007 and represent the four most highly remunerated officers of the parent entity. There were no other officers of the parent entity for the year ended 30 June 2007 (2006: nil).

Data[#] 3 Limited | Annual report 2007 | 7

Directors’ report (continued)

REMUNERATION REPORT (continued)

No director or executive received compensation in the form of share-based payments during the year ended 30 June 2007 (2006: nil).

C Employment contracts

Terms of employment for the managing director and other key management personnel are formalised under rolling contracts. The contracts state that base salary and performance-related bonuses will be agreed annually, which occurs at the commencement of each financial year. The company may terminate the contracts without notice for gross misconduct; otherwise, either party may terminate the contract early with the agreed notice period, subject to termination payments as detailed below. For all key management personnel, except those listed below, termination notice of one month is required and no termination benefit is payable. Other major provisions of the contracts relating to remuneration of the managing director and certain other key management personnel are as follows:

J Grant ( managing director)

Mr Grant’s current employment contract commenced on 1 July 2004. Key provisions under his present contract are as follows:

• Termination notice of six months is required.

• Payment of a termination benefit on early termination by the company, other than for gross misconduct, of twelve months of his packaged salary together with an additional amount representing the performancerelated bonus earned up to the date of termination. From 1 July 2006, if at the annual renewal date the company chooses not to continue the agreement, the company must provide six months notice and Mr Grant will be entitled to his packaged salary and performance bonus calculated up to the date of his termination.

L Baynham, B Hill and L MacPherson

• Termination notice of three months is required.

• Payment of a termination benefit on early termination by the company, other than for gross misconduct, of six months of the packaged salary including performance-related bonuses. A termination benefit is provided for these individuals as these positions are considered most likely to be subject to early termination in the event of a significant business combination.

D Share-based compensation

Subject to shareholder approval, additional options may be granted to directors and key management personnel under the Data[#] 3 Limited Employee Option Plan. All directors and key management personnel of Data[#] 3 Limited and its subsidiaries are eligible to participate in the plan. Options are issued for $1 per parcel of options issued and are exercisable from two years prior to the expiry date; the options lapse 30 days following cessation of the option holder’s employment. The exercise price of the options that were last issued 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. When exercisable, each option is convertible into one ordinary share.

No options were granted to directors or key management personnel during the year ended 30 June 2007 (2006: nil), and no options vested or lapsed during the year (2006: nil).

Details of the value of options exercised by directors and key management personnel during the year were as follows:

Key management person Exercise date Number of options	Option exercise price Fair value per share at exercise date	Value of options at exercise date Aggregate value at exercise date
2007 Not applicable
2006 MacPherson, L. 11 November 2005 20,000	$0.91 $3.39	$2.48 $49,600

Data[#] 3 Limited | Annual report 2007 | 8

Directors’ report (continued)

REMUNERATION REPORT (continued)

E Additional information (unaudited)

Relationship between remuneration and company performance

The overall level of executive reward takes into account the performance of the group over a number of years, with greater emphasis given to improving performance over the prior year. Since 2002, the group’s net profit has grown at an average rate of 18% per annum, shareholder wealth has grown at an average rate of 30% per annum, and the average executive remuneration has increased by approximately 8% per annum.

Cash bonuses

For each cash bonus included in the previous table in Section B, 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.

other performance-related criteria, are set out below.
	Earned	Forfeited
Name	%	%
Baynham, L.	98	2
Bowser, M.	100	-
Colledge, B.	100	-
Crouch, B.	100	-
Crouch, P.	92	8
Esler, M.	91	9
Grant, J.	99	1
Hill, B.	99	1
MacPherson, L.	97	3
Murphy, P.	78	22
Peters, W.	100	-
Rackham, J.	97	3

SHARES UNDER OPTION

No unissued ordinary shares of Data[#] 3 Limited are under option at the date of this report. No share options were granted or exercised during the financial year. Furthermore, there has been no movement in shares under option since year end up to the date of this report.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

During the financial year, Data[#] 3 Limited paid a premium of $24,103 to insure the directors and members of the executive management team of the company and the group 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 group 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 REGULATION AND PERFORMANCE

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

ROUNDING

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.

Data[#] 3 Limited | Annual report 2007 | 9

Directors’ report (continued)

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

Johnston Rorke continues in office in accordance with section 327 of the Corporations Act 2001. During the year the following fees were paid or payable to the auditor for audit and non-audit services:

	Consolidated	Consolidated
	2007	2006
	$	$
Audit services
Audit and review of financial reports and other audit work under
theCorporations Act 2001	97,000	92,500
Non-audit services
Due diligence services on potential acquisition	860	1,500
Corporate services	720	940
IFRS accounting services	-	10,000
Tax compliance services	6,030	5,140
	104,610	110,080

Non-audit services

The company employs Johnston Rorke on assignments additional to its statutory duties where the auditor’s expertise and experience with the company and/or the group 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 (refer above) 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 APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risk and rewards.

A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 11.

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

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R A Anderson Director

Brisbane

22 August 2007

Data[#] 3 Limited | Annual report 2007 | 10

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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 2007, I declare that, to the best of my knowledge and belief, there have been:

• i. no contraventions of the auditor 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

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J J Evans Partner

Brisbane, Queensland 22 August 2007

Data[#] 3 Limited | Annual report 2007 | 11

Income Statements

For the year ended 30 June 2007

Consolidated Parent 2007 2006 2007 2006 Notes $’000 $’000 $’000 $’000	Consolidated Parent 2007 2006 2007 2006 Notes $’000 $’000 $’000 $’000
Revenue Sale of goods 214,414 Services 70,245 Other 4 458	185,042 - - 53,926 - 49 644 13,924 10,490
285,117	239,612 13,924 10,539
Other income 5 60	157 - -
Expenses Changes in inventories of finished goods 1,722 Purchase of goods (188,580) Employee and contractor costs directly on-charged (cost of sales on services) (34,305) Other cost of sales on services (5,754) Other employee and contractor costs (38,970) Telecommunications (901) Software maintenance and licensing (305) Rent 6 (2,568) Travel (1,473) Professional fees (601) Depreciation and amortisation 6 (614) Finance costs 6 (22) Management charges – subsidiaries - Other (2,468)	901 - - (163,147) - - (22,302) - - (4,800) - - (33,776) (3,412) (3,936) (823) (250) (219) (173) (294) (286) (2,444) (171) (249) (1,203) (121) (100) (500) (272) (197) (501) (222) (162) (7) (12) (3) - (545) (924) (2,635) (396) (517)
(274,839)	(231,410) (5,695) (6,593)
Profit before income tax expense 10,338 Income tax expense 7 (3,141)	8,359 8,229 3,946 (2,646) (219) (286)
Net profit 7,197	5,713 8,010 3,660
Cents Basic earnings per share 8 46.13	Cents 36.88
Diluted earnings per share 8 46.13	36.84

The above income statements should be read in conjunction with the accompanying notes.

Data[#] 3 Limited | Annual report 2007 | 12

Balance Sheets As at 30 June 2007

Consolidated Parent 2007 2006 2007 2006 Notes $’000 $’000 $’000 $’000	Consolidated Parent 2007 2006 2007 2006 Notes $’000 $’000 $’000 $’000
Current assets Cash and cash equivalents 10 17,367 Trade and other receivables 11 51,396 Inventories 12 4,985 Other 13 1,609	13,997 15,926 13,811 34,553 2,436 4,190 3,263 - - 1,259 346 321
Total current assets 75,357	53,072 18,708 18,322
Non-current assets Available-for-sale financial assets 14 5 Other financial assets 15 - Property and equipment 16 1,084 Deferred tax assets 7 1,087 Intangible assets 17 4,470	5 5 5 - 14 14 1,352 420 503 912 180 131 4,626 64 117
Total non-current assets 6,646	6,895 683 770
Total assets 82,003	59,967 19,391 19,092
Current liabilities Trade and other payables 18 53,736 Current tax liabilities 1,391 Provisions 19 685 Other 20 6,293	37,275 2,607 1,752 1,454 1,391 1,454 584 298 273 2,806 1,507 4,918
Total current liabilities 62,105	42,119 5,803 8,397
Non-current liabilities Provisions 19 490 Other 20 331	424 53 48 527 208 313
Total non-current liabilities 821	951 261 361
Total liabilities 62,926	43,070 6,064 8,758
Net assets 19,077	16,897 13,327 10,334
Equity Contributed equity 22 9,387 Retained earnings 9,690	9,563 9,387 9,563 7,334 3,940 771
Total equity 19,077	16,897 13,327 10,334

The above balance sheets should be read in conjunction with the accompanying notes.

Data[#] 3 Limited | Annual report 2007 | 13

Statements of Changes in Equity For the year ended 30 June 2007

Number of Ordinary Shares ’000 Contributed Equity $’000	Retained Earnings $’000 Total Shareholders’ Equity $’000
Consolidated Balance at 1 July 2005 15,350 8,706 Net profit - -	5,091 13,797 5,713 5,713
Total recognised income and expense - - Issuance of ordinary shares 285 857 Payment of dividends - -	5,713 5,713 - 857 (3,470) (3,470)
Balance at 30 June 2006 15,635 9,563	7,334 16,897
Net profit - -	7,197 7,197
Total recognised income and expense - -	7,197 7,197
Repurchase of ordinary shares (44) (176)	- (176)
Payment of dividends - -	(4,841) (4,841)
Balance at 30 June 2007 15,591 9,387	9,690 19,077

Parent
Balance at 1 July 2005	15,350	8,706	581	9,287
Net profit	-	-	3,660	3,660
Total recognised income and expense	-	-	3,660	3,660
Issuance of ordinary shares	285	857	-	857
Payment of dividends	-	-	(3,470)	(3,470)
Balance at 30 June 2006	15,635	9,563	771	10,334
Net profit	-	-	8,010	8,010
Total recognised income and expense	-	-	8,010	8,010
Repurchase of ordinary shares	(44)	(176)	-	(176)
Payment of dividends	-	-	(4,841)	(4,841)
Balance at 30 June 2007	15,591	9,387	3,940	13,327

The above statements of changes in equity should be read in conjunction with the accompanying notes.

Data[#] 3 Limited | Annual report 2007 | 14

Cash Flow Statements

For the year ended 30 June 2007

Consolidated Parent Entity 2007 2006 2007 2006 Notes $’000 $’000 $’000 $’000	Consolidated Parent Entity 2007 2006 2007 2006 Notes $’000 $’000 $’000 $’000
Cash flows from operating activities Net profit before income tax 10,338 Depreciation and amortisation 614 Impairment of goodwill 6 Impairment of software assets - Bad and doubtful debts 84 Loss on sale of property and equipment 4 Reduction of doubtful debt provision (60) Income taxes paid (3,344) Change in operating assets and liabilities, net of effects from purchase and sale of businesses (Increase) / decrease in trade receivables (17,405) (Increase) in inventories (1,722) (Increase) / decrease in other operating assets (338) (Increase) / decrease in net deferred tax assets (175) Increase / (decrease) in trade payables 14,435 Increase / (decrease) in unearned income 3,487 Increase / (decrease) in other operating liabilities 1,844 Increase / (decrease) in current tax liabilities 140 Increase in liability for employee benefits 153	8,359 8,229 3,946 501 222 162 70 - - 84 - - 63 - - 45 4 1 (115) - - (2,071) (3,344) (2,067) (4,264) - 14 (901) - - (283) (17) 8 (146) (49) - 4,993 - - 809 - - 754 750 171 180 (63) 755 81 30 26
Net cash inflow from operating activities 8,061	8,159 5,762 3,016
Cash flows from investing activities Proceeds received from former joint venture partner 526 Payments for property and equipment (197) Payments for software assets (3) Payment for investment in subsidiary - Other -	- - - (399) (87) (46) (325) (3) (85) - - (14) 2 - 2
Net cash inflow (outflow) from investing activities 326	(722) (90) (143)
Cash flows from financing activities Proceeds from issues of shares - Proceeds/(repayments) from amounts due to/from subsidiaries - Payment of dividends 9 (4,841) Repurchase of ordinary shares 22 (176)	18 - 18 - 1,460 4,380 (2,631) (4,841) (2,631) - (176) -
Net cash inflow (outflow) from financing activities (5,017)	(2,613) (3,557) 1,767
Net increase in cash and cash equivalents held 3,370 Cash and cash equivalents, beginning of financial year 13,997	4,824 2,115 4,640 9,173 13,811 9,171
Cash and cash equivalents, end of financial year 10 17,367	13,997 15,926 13,811

Non-cash investing and financing activities 30 Financing arrangements 21

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

Data[#] 3 Limited | Annual report 2007 | 15

Notes to the financial statements

Note 1. Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(a) Basis of preparation of financial report

This general purpose financial report has been prepared in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations), the Corporations Act 2001, and other requirements of the law. These financial statements have also been prepared under the historical cost convention, except for available-for-sale investments, which have been measured at fair value.

The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000), unless otherwise stated, under the option available to the company under ASIC Class Order 98/0100. The company is an entity to which the class order applies.

Compliance with IFRS

This financial report complies with Australian Accounting Standards, which include AIFRS. Compliance with AIFRS ensures that the consolidated financial report, comprising the financial statements and related notes, complies with International Financial Reporting Standards (IFRS). The parent entity financial statements and notes also comply with IFRS except that the company has elected to apply the relief provided to parent entities in respect of certain disclosure requirements contained in AASB 132 Financial Instruments: Disclosure and Presentation.

Early adoption of accounting standard

The group has elected to apply AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments to the annual reporting period beginning 1 July 2006. No changes to accounting policies were required, and there was no impact on the parent entity or consolidated financial statements of the group or the earnings per share.

(b) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Data[#] 3 Limited (“company” or “parent entity”) as at 30 June 2007 and the results of all subsidiaries for the year then ended. Data[#] 3 Limited and its subsidiaries together are referred to in this financial report as the group or the consolidated entity.

Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the group.

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of the subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

(c) Foreign currency translation

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The group’s functional and presentation currency is Australian dollars.

Foreign currency transactions are translated to Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. As at balance sheet date the group has not entered any hedge transactions, as the risk to the group from foreign-denominated transactions is insignificant.

(d) Revenue recognition

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Sale of goods

Revenue from the 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 customer.

Data[#] 3 Limited | Annual report 2007 | 16

Notes to the financial statements

Note 1. Summary of significant accounting policies (continued)

(d) Revenue recognition (continued)

(ii) Rendering of services

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 for each contract. 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.

(iii) Interest income

Revenue is recognised as interest accrues using the effective interest method.

(iv) Dividends

Dividend income is recognised as revenue when the right to receive payment is established.

(e) Income tax

Income tax expense for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences arising from the initial recognition of an asset or a liability, except that no deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction (other than a business combination) that did not affect either accounting or taxable profit or loss at the time of the transaction.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax basis of investments in subsidiaries where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. Deferred tax assets and deferred tax liabilities are offset only if they relate to the same taxable entity and the same taxation authority, and a legally enforceable right exists to set off current tax assets against current tax liabilities.

Tax consolidation legislation

Data[#] 3 Limited and its wholly-owned Australian subsidiaries are part of a tax-consolidated group under Australian taxation law. Data[#] 3 Limited and the controlled entities in the tax-consolidated group, continue to account for their own current and deferred tax amounts. These amounts are measured as if each entity in the tax-consolidated group continues to be a stand-alone taxpayer in its own right. Data[#] 3 Limited, as the head entity, immediately assumes current tax liabilities or assets and the deferred tax assets arising from unused tax losses and unused tax credits from controlled entities in the tax consolidated group, in addition to its own current and deferred tax amounts. The entities have also entered into tax sharing and funding agreements. Refer to note 7.

(f) Leases

Leases of property and equipment where the group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property or the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Lease payments are allocated between the liability and the interest expense. The leased asset is depreciated on a straight-line basis over the shorter of the asset’s useful life or the lease term.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Operating lease payments, net of any incentives received from the lessor, are charged to the income statement on a straight-line basis over the period of the lease. Where the group is required to return the premises to their original condition on cessation of the lease, a provision for lease remediation is recorded for the present value of the estimated liability.

Data[#] 3 Limited | Annual report 2007 | 17

Notes to the financial statements

Note 1. Summary of significant accounting policies (continued)

(g) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, and other short-term, highly-liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For purposes of the cash flow statement, cash includes cash and cash equivalents, net of outstanding bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

(h) Trade receivables

Trade receivables, which are non-interest bearing and generally due for settlement within 30 days, are recognised initially at fair value and subsequently measured at amortised cost, less an allowance for doubtful debts. Collectibility of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off. An allowance for doubtful debts is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables.

(i) Inventories

Inventories are stated at the lower of cost and net realisable value. Costs are assigned to individual items of inventory on a specific identification basis and are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

(j) Business combinations

The purchase method of accounting is used to account for all business combinations, 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 incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the fair value of the instruments is their published market price as at the date of exchange, unless it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill (refer to note 1(p)). If the cost of acquisition is less than the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

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 exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

(k) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows.

(l) Non-current assets held for sale

Non-current assets or disposal groups are classified as held for sale and stated at the lower of their carrying amounts or fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use.

Data[#] 3 Limited | Annual report 2007 | 18

Notes to the financial statements

Note 1. Summary of significant accounting policies (continued)

(m) Investments and other financial assets

The group classifies its investments in the following categories: financial assets at fair value through profit or loss, available-for-sale financial assets, loans and receivables, and held-to-maturity investments. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and reevaluates this designation at each reporting date where appropriate. Purchases and sales of investments are recognised on trade date.

Investments are initially recognised at fair value plus, for all financial assets not carried at fair value through profit and loss, transaction costs. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active, and for unlisted securities, the group establishes fair value using other valuation techniques such as reference to the fair values of recent arms’ length transactions involving the same or similar instruments, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances. The group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. The group considers various factors in determining whether to recognise an impairment charge, including the length of time and extent to which the fair value has been less than the group’s cost basis, the financial condition and near-term prospects of the investee.

Financial assets at fair value through profit and loss and available-for-sale financial assets are subsequently carried at fair value. Realised and unrealised gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the income statement. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any discount or premium on acquisition over the period of maturity. For investments carried at amortised cost, gains and losses are recognised in income when the investments are derecognised or impaired, as well as through the amortisation process.

As at balance sheet date the group has not entered any derivative contracts.

(n) Fair value of financial instruments other than investments

The fair value of certain of the group’s financial instruments, including cash and cash equivalents, trade and other receivables (net of allowance for doubtful accounts) and trade and other payables, accrued compensation, and other accrued liabilities, approximate cost because of their short maturities.

(o) Property and equipment

Property and equipment is stated at cost, less accumulated depreciation and amortisation. Depreciation of equipment is computed using the straight-line method to allocate cost net of residual values over the estimated useful lives of the assets, being three to 20 years. Amortisation of leasehold improvements is computed using the straight-line method over two to ten years.

Upon impairment, an asset’s carrying amount is written down immediately to its recoverable amount (refer to note 1(k)).

Data[#] 3 Limited | Annual report 2007 | 19

Notes to the financial statements

Note 1. Summary of significant accounting policies (continued)

(p) Goodwill and purchased intangible assets

Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Subsequently goodwill is carried at cost less any accumulated impairment losses. Goodwill is tested for impairment on an annual basis, and between annual tests in certain circumstances, and written down when impaired.

Purchased intangible assets other than goodwill are amortised over their useful lives unless these lives are determined to be indefinite. Purchased intangibles are carried at cost less accumulated amortisation and impairment losses. Amortisation is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years.

(q) Trade and other payables

These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year which are unpaid. The amounts are generally unsecured and are usually paid within 30-60 days of recognition.

(r) Financial guarantee contracts

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less any cumulative amortisation.

The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.

Change in accounting policy

The policy set out above was adopted for the first time in the current financial year, following the change to AASB 139 Financial Instruments: Recognition and Measurement made in September 2005. In previous reporting periods a liability for financial guarantee contracts was only recognised if it was probable that the debtor would default and a payment would be required under the contract. The new policy has been applied retrospectively. There was no impact on the parent entity or consolidated financial statements of the group or the earnings per share.

(s) Provisions

Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the obligation at the balance sheet date. The increase in the provision due to the passage of time is recognised as interest expense.

Where the group expects some or all of a provision to be reimbursed, such as under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

(t) Employee benefits

Wages, salaries, annual leave and sick leave

Liabilities for wages, salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date, and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for sick leave, which is non-accumulating, are recognised when the leave is taken and measured at the rates paid or payable.

Long service leave

The liability for long service leave is recognised in the 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.

Data[#] 3 Limited | Annual report 2007 | 20

Notes to the financial statements

Note 1. Summary of significant accounting policies (continued)

(t) Employee benefits (continued)

Post-employment benefits

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

Bonus plans

A liability for employee benefits in the form of bonus plans is recognised in other payables when the group has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. 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.

Share-based compensation benefits

Share-based compensation benefits are provided to employees via the Data[#] 3 Limited Employee Option Plan and an employee share scheme.

For share options granted before 7 November 2002 and/or vested before 1 January 2005, no expense is recognised. The shares are recognised when the options are exercised and the proceeds received are allocated to share capital.

For share options granted after 7 November 2002 and vested after 1 January 2005, the fair value of the options granted is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. Fair value is determined using the an appropriate option pricing model and takes into account factors such as exercise price, the term of the option, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

At each balance sheet date, the group revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. Upon the exercise of options, the balance of the share-based payments reserve relating to those options is transferred to share capital.

The market value of shares issued under the employee share scheme is recognised in the balance sheet as share capital, with employee benefits expense, measured as the difference between the market value of the shares and the consideration paid by the employee, if any.

(u) Contributed equity

Ordinary shares are classified as equity. Issued and paid up capital is recognised at the fair value of the consideration received. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

(v) Earnings per share

Basic earnings per share is computed as profit attributable to equity holders of the company, adjusted to exclude costs of servicing equity (other than ordinary shares), divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after-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.

Data[#] 3 Limited | Annual report 2007 | 21

Notes to the financial statements

Note 1. Summary of significant accounting policies (continued)

(w) Accounting standards not yet effective

Australian Accounting Standards that have recently been issued or amended but are not yet effective and have not been adopted for the annual reporting period ended 30 June 2007, are as follows:

Standard/Interpretation Application date of standard*	Application date for thegroup*
2007-7Amendments to Australian Accounting Standards – June 2007 1 July 2007	1 July 2007
AASB 7Financial Instruments: Disclosures 1 January 2007	1 July 2007
AASB 8Operating Segmentsand consequential amendments to other accounting standards resulting from its issue 1 January 2009	1 July 2009
AASB 101Presentation of Financial Statements– revised standard 1 January 2007	1 July 2007
AASB 123Borrowing Costsrevised and consequential amendments to other accounting standards resulting from its issue 1 January 2009	1 July 2009
Interpretation 10Interim Financial Reporting and Impairment 1 November 2006	1 July 2007
Interpretation 11AASB 2 – Group and Treasury Share Transactions 1 March 2007	1 July 2007
Interpretation 12Service Concession Arrangements 1 January 2008	1 July 2008
Interpretation 13Customer Loyalty Programs 1 July 2008	1 July 2008
Interpretation 14Limit on a defined benefit asset, Minimum Funding Requirements and their Interaction 1 January 2008	1 July 2008

• Application date is for annual reporting periods beginning on or after the date shown in the above table.

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the company or the group. The circumstances addressed by Interpretations 10, which prohibits the reversal of certain impairment losses, does not affect either the company’s or the group’s previously reported results and accordingly, there will be no impact to these financial statements on adoption of the Interpretation. The application of AASB 101 (revised), AASB 7, AASB 8, AASB 123, AASB 2007-7 and Interpretation 11 may change the disclosures presently made in relation to the company’s and the group’s assets, liabilities, segments, financial instruments and the objectives, policies and processes for managing capital. The circumstances addressed by Interpretations 12, 13, and 14 do not have application to the business of the company or the group.

(x) Corporate information

This financial report covers both Data[#] 3 Limited as an individual entity (parent entity) and the group consisting of Data[#] 3 Limited and its subsidiaries. Data[#] 3 Limited is a public company limited by shares, incorporated and domiciled in Australia. The financial report was authorised for issue in accordance with a resolution of the directors on 22 August 2007.

Its registered office and principal place of business is:

Level 2 Data[#] 3 Centre 80 Jephson Street TOOWONG QLD 4066

Data[#] 3 Limited | Annual report 2007 | 22

Notes to the financial statements

Note 2. Significant accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant accounting estimates and assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next financial year are discussed below.

Impairment of goodwill

The group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash generating units to which the goodwill is allocated. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill are discussed in note 17.

Note 3. Financial risk management

The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the group. To date the group has not used derivative financial instruments.

Risk management is carried out by the chief financial officer (CFO) under policies approved by the Board of Directors. The CFO identifies, evaluates and mitigates financial risks in close cooperation with senior management.

(a) Market risk

(i) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. The group operates internationally in New Caledonia; the revenue contracts and employee benefits are denominated in Pacific francs. At 30 June 2007 accounts receivable denominated in Pacific francs amounted to $519,000 Australian dollars (2006: nil), and accounts payable denominated in Pacific francs amounted to $247,000 Australian dollars (2006: $176,000).

(ii) Price risk

The group is exposed to an immaterial amount of equity securities price risk, arising from investments held by the group and classified on the balance sheet as available-for-sale. The group is not exposed to commodity price risk.

(b) Credit risk

The maximum exposure to credit risk on financial assets which have been recognised on the balance sheet is the carrying amount of those assets. Except as noted below, the group has no significant concentrations of credit risk. The group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history; collateral is not normally obtained. Specific information as to the group’s credit risk exposures is as follows:

• During the 2007 year, sales to one Queensland government customer comprised 14% of revenue (2006: 11%).

• • There are a number of individually significant debtors. At 30 June 2007, the ten largest debtors comprised approximately 44% of total debtors (2006: 29%), of which 41% were accounts receivable from a number of Queensland Government customers (2006: 34%).

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the business, the group aims at maintaining flexibility in funding by keeping committed credit lines available. The group manages liquidity risk by monitoring cash flows and ensuring that adequate cash and unutilised borrowing facilities are maintained.

(d) Cash flow and fair value interest rate risk

The group’s exposure to interest rate risk arises predominantly from cash and cash equivalents bearing variable interest rates, as the group intends to hold fixed rate assets and liabilities to maturity. As the group has no other significant interest-bearing assets, the group’s income and operating cash flows are not materially exposed to changes in market interest rates.

Data[#] 3 Limited | Annual report 2007 | 23

Notes to the financial statements

Note 3. Financial risk management (continued)

(e) Net fair values

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

Consolidated Parent 2007 2006 2007 2006 $’000 $’000 $’000 $’000	Consolidated Parent 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Note 4. Other revenue Interest 458 597 457 Corporate charges - - 5,967 Dividends - - 7,500 Other - 47 -	549 6,936 3,000 5
458 644 13,924	10,490
Note 5. Other income Foreign exchange gain - 42 - Reversal of provision against Powerlan (Qld) receivable 60 115 -	- -
60 157 -	-
Note 6. Expenses Cost of goods sold 186,858 162,246 - Depreciation: property and equipment 99 86 62 Amortisation Leasehold improvements 362 288 104 Software 153 127 56	- 37 104 21
Total amortisation 515 415 160	125
Defined contribution superannuation expense 2,944 2,423 287 Employee benefits expense (excluding superannuation) 31,432 25,731 2,339 Foreign exchange loss 133 - - Other charges against assets Impairment of goodwill 6 70 - Impairment of software assets - 84 - Bad and doubtful debts 84 63 - Rental expenses on operating leases Minimum lease payments 2,363 2,226 130 Contingent rentals (43) 3 (1) Rental expenses–other 248 215 42	296 3,237 - - - - 250 (1) -
2,568 2,444 171	249
Finance costs Interest and finance charges paid/payable 12 3 12 Unwinding of discount on provisions 10 4 -	3 -
22 7 12	3
Loss on disposal of property and equipment 4 45 4	1

Data[#] 3 Limited | Annual report 2007 | 24

Notes to the financial statements

Consolidated Parent 2007 2006 2007 2006 $’000 $’000 $’000 $’000	Consolidated Parent 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Note 7. Income tax Income tax expense The major components of income tax expense are: Current income tax expense 3,315 2,776 269 Deferred income tax relating to the origination and reversal of temporary differences (126) (146) (49) Under (over) provision in prior year (48) 16 (1)	286 - -
Income tax expense 3,141 2,646 219	286
A reconciliation between income tax expense and the product of accounting profit before income tax multiplied by the group’s applicable income tax rate is as follows: Accounting profit before income tax 10,338 8,359 8,229	3,946
Income tax calculated at the Australian tax rate: 30% (2006: 30%) 3,101 2,508 2,469 Tax effect of amounts which are not deductible/ (taxable) in calculating taxable income: Non-taxable dividends - - (2,250) Non-deductible items 61 77 1 Other 1 45 -	1,184 (900) 2 -
3,163 2,630 220	286
Difference in overseas tax rates 26 - - Under (over) provision in prior year (48) 16 (1)	- -
Income tax expense 3,141 2,646 219	286

Consolidated Balance Sheet Income Statement 2007 2006 2007 2006 $’000 $’000 $’000 $’000	Consolidated Balance Sheet Income Statement 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Deferred income tax Deferred income tax at 30 June for the group relates to the following: Deferred tax assets Accrued liabilities 688 571 117 Provisions 406 355 51 Lease incentive liability 158 217 (59) Foreign tax losses - - (45) Other 14 - 10	137 48 (59) - (39)
1,266 1,143 74	87
Deferred tax liabilities Lease incentive asset (158) (217) 59 Other (21) (14) (7)	59 -
(179) (231) 52	59
Net deferred tax assets 1,087 912	146
Deferred income tax revenue 126

Data[#] 3 Limited | Annual report 2007 | 25

Notes to the financial statements

Parent Balance Sheet Income Statement 2007 2006 2007 2006 $’000 $’000 $’000 $’000	Parent Balance Sheet Income Statement 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Note 7. Income tax (continued) Deferred income tax Deferred income tax at 30 June for the parent entity relates to the following: Deferred tax assets Accrued liabilities 81 49 32 Provisions 105 95 10 Lease incentive liability 94 125 (31) Other 11 - 11	7 8 (31) (11)
291 269 22	(27)
Deferred tax liabilities Lease incentive asset (94) (125) 31 Other (17) (13) (4)	31 (4)
(111) (138) 27	27
Net deferred tax assets 180 131	-
Deferred income tax revenue 49

Unrecognised temporary differences

The parent entity has recorded impairment charges of $6,117,000 in respect of its investment in a subsidiary (refer notes 15, 27). No deferred tax asset has been recognised in relation to these accumulated impairment charges (2006: nil).

Tax consolidation legislation

Data[#] 3 Limited and its wholly-owned Australian subsidiaries have implemented the tax consolidation legislation as of 1 July 2003. The accounting policy in relation to this legislation is disclosed in note 1(e).

The entities in the tax-consolidated group entered into tax sharing and funding agreements. Under the terms of these agreements, the wholly-owned subsidiaries reimburse Data[#] 3 Limited for any current tax payable assumed and are compensated by Data[#] 3 Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Data[#] 3 Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned subsidiaries’ financial statements.

The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax installments. The funding amounts are recognised as current intercompany receivables or payables.

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 subsidiaries in the case of a default by Data[#] 3 Limited.

The group has no tax losses available for offset against future taxable profits (2006: nil).

Data[#] 3 Limited | Annual report 2007 | 26

Notes to the financial statements

	Consolidated 2007 2006 Number Number
Note 8. Earnings per share (a) Weighted average number of shares Weighted average number of ordinary shares for basic earnings per share Effect of dilution: Share options	15,600,001 15,492,196 - 15,253
Weighted average number of ordinary shares and potential ordinary shares for diluted earningsper share	15,600,001 15,507,449

(b) Other information concerning earnings per share

• Earnings for the purpose of the calculation of basic earnings per share and also diluted earnings per share is the net profit.

• Options granted are considered to be potential ordinary shares. Details relating to options are set out in note 28. In 2006 the options were considered dilutive and were therefore included in the calculation of diluted earnings per share. No options were on issue during 2007.

	Parent 2007 2006 $’000 $’000
Note 9. Dividends Dividends paid on ordinary shares during the year Final fully franked dividend for 2006: 17.0c (2005: 11.5c) Interim fully franked dividend for 2007:14.0c (2006: 11.0c)	2,658 1,766 2,183 1,704
	4,841 3,470
Dividends declared (not recognised as a liability at year end) Final fullyfranked dividend for 2007: 22.0c(2006: 17.0c)	3,409 2,658
The tax rate at which dividends paid have been franked is 30% (2006: 30%). Dividends declared will be franked at the rate of 30% (2006: 30%). Franking credit balance Franking credits available for subsequent financial years based on a tax rate of 30% (2006: 30%)	7,836 6,596

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

(a) franking credits that will arise from the payment of the current tax liability;

(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and

(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.

The dividend recommended by the directors since year end, but not recognised as a liability at year end, will result in a reduction in the franking account of $1,461,000 (2006: $1,139,000).

Data[#] 3 Limited | Annual report 2007 | 27

Notes to the financial statements

Consolidated Parent 2007 2006 2007 2006 $’000 $’000 $’000 $’000	Consolidated Parent 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Note 10. Cash and cash equivalents Cash at bank and on hand 3,867 2,497 2,426 Deposits at call 13,500 11,500 13,500	2,311 11,500
Balances per cash flow statements 17,367 13,997 15,926	13,811

Cash is bearing floating interest rates of approximately 4.5% per annum (2006: 4.4%). Deposits at call comprise deposits with financial institutions available at call and are bearing a floating interest rate of approximately 5.8% per annum (2006: 5.3%). The weighted average interest rate in relation to cash and cash equivalents for 2007 was 5.4% (2006: 5.2%).

Consolidated Parent 2007 2006 2007 2006 $’000 $’000 $’000 $’000	Consolidated Parent 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Note 11. Trade and other receivables Trade receivables 51,407 34,079 - Allowance for doubtful debts (182) (175) -	- -
51,225 33,904 -	-
Other receivables 111 123 44	52
Receivable from Powerlan (Qld) 1,327 1,853 - Allowance for doubtful debt (1,267) (1,327) -	- -
60 526 -	-
Amounts receivable from subsidiaries - - 2,392	4,138
51,396 34,553 2,436	4,190

Other receivables

These amounts generally arise from accrued rebates or transactions outside the usual operating activities of the group. Interest is normally not charged, collateral is not normally obtained, and the receivables are normally due within 30 days of recognition.

Receivables from subsidiaries

These amounts are at call, unsecured, interest-free and repayable in cash.

Consolidated Parent 2007 2006 2007 2006 $’000 $’000 $’000 $’000	Consolidated Parent 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Note 12. Inventories Finished goods – at cost 4,985 3,263 -	-

Inventories recognised as an expense for the year ended 30 June 2007 totalled $186,858,000 (2006: $162,246,000) for the group and are included in the cost of goods sold line item (refer to note 6).

Data[#] 3 Limited | Annual report 2007 | 28

Notes to the financial statements

Consolidated 2007 2006 $’000 $’000	Parent 2007 2006 $’000 $’000	Parent 2007 2006 $’000 $’000
	2007
	$’000
Note 13. Other current assets Prepayments 529 777 Security deposits 82 76 Accrued rebates 998 406		320 1 -
	345
	1
	-
1,609 1,259	346	321
Note 14. Available-for-sale financial assets (non-current) Shares in listed corporations – at fair value 5 5		5
	5
Available-for-sale investments consist of investments in ordinary shares, and therefore have no fixed maturity date or coupon rate. Note 15. Other financial assets (non- current) Shares in subsidiaries – at cost (note 27) - - Accumulated impairment - -		6,131 (6,117)
	6,131
	(6,117)
- -	14	14
Note 16. Property and equipment Leasehold improvements – at cost 2,369 2,335 Accumulated amortisation (1,476) (1,114)		1,042 (625)
	1,042
	(729)
893 1,221	313	417
Equipment – at cost 659 882 Accumulated depreciation (468) (751)		671 (585)
	372
	(265)
191 131	107	86
1,084 1,352	420	503
Leasehold improvements $’000	Equipment $’000	Total $’000
Consolidated Carrying amount at 1 July 2005 1,182 Additions 327 Disposals - Depreciation/amortisation expense (288)	190 72 (45) (86)	1,372 399 (45) (374)
Carrying amount at 30 June 2006 1,221	131	1,352
Additions 34	163	197
Disposals -	(4)	(4)
Depreciation/amortisation expense (362)	(99)	(461)
Carrying amount at 30 June 2007 893	191	1,084

Data[#] 3 Limited | Annual report 2007 | 29

Notes to the financial statements

Note 16. Property and equipment (continued)

Leasehold improvements $’000 Equipment $’000	Total $’000
Parent entity Carrying amount at 1 July 2005 521 78 Additions - 46 Disposals - (1) Depreciation/amortisation expense (104) (37)	599 46 (1) (141)
Carrying amount at 30 June 2006 417 86	503
Additions - 87	87
Disposals - (4)	(4)
Depreciation/amortisation expense (104) (62)	(166)
Carrying amount at 30 June 2007 313 107	420

	Consolidated 2007 2006 $’000 $’000	Parent 2007 2006 $’000 $’000	Parent 2007 2006 $’000 $’000
Note 17. Intangible assets Goodwill – at cost Accumulated impairment	4,409 4,409	- - - -
	(76) (70)
	4,333 4,339	- -
Software assets – at cost Accumulated amortisation and impairment	580 578	147 145 (83) (28)
	(443) (291)
	137 287	64 117
	4,470 4,626	64 117
	Consolidated Goodwill $’000 Software assets $’000	Total $’000	Parent Software assets $’000
Carrying amount at 1 July 2005 Additions Amortisation expense/impairment charge	4,409 173 - 325 (70) (211)	4,582 325 (281)	53 85 (21)
Carrying amount at 30 June 2006	4,339 287	4,626	117
Additions	- 3	3	3
Amortisation expense/impairment charge	(6) (153)	(159)	(56)
Carrying amount at 30 June 2007	4,333 137	4,470	64

Intangibles – software assets

Software assets, which have been externally acquired, have been capitalised at cost and are amortised on a straight-line basis over the asset’s useful economic life which is generally two to three years. The useful lives and potential impairment of the software assets are reviewed at the end of each financial year.

Data[#] 3 Limited | Annual report 2007 | 30

Notes to the financial statements

Note 17. Intangible assets (continued)

Goodwill impairment testing

Goodwill acquired through business acquisitions has been allocated to the smallest identifiable group of assets that generates largely independent cash inflows and which are expected to benefit from synergies of the combination. Due to the nature of Data[#] 3 operations and internal management reporting and monitoring of goodwill, goodwill has been allocated to the consolidated group. Under AIFRS, goodwill must be tested at least annually for impairment. Management has carried out impairment testing as at each reporting date.

The recoverable amount has been determined based on a value-in-use calculation using cash flow projections based on financial projections approved by senior management for financial year 2008. The before-tax discount rate applied to cash flow projections is 13%. Cash flows beyond the 2008 financial year have been extrapolated using an average growth rate of 9.8%.

Key assumptions used in value-in-use calculations

Budgeted gross margins have been determined based on past performance and management’s expectations for the future. The discount rate was estimated based on the company’s weighted average cost of capital at the date of impairment test.

Consolidated Parent Entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000	Consolidated Parent Entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Note 18. Trade and other payables Trade payables - secured (note 21) 12,697 11,325 - -unsecured 33,578 20,515 -	- -
46,275 31,840 -	-
Other payables-unsecured 7,461 5,435 2,607	1,752
53,736 37,275 2,607	1,752
Note 19. Provisions Current Employee benefits 685 584 298	273
Non–current Employee benefits 367 315 48 Lease remediation (note 1(f)) 123 109 5	43 5
490 424 53	48
Total 1,175 1,008 351	321
Movements in provisions other than employee benefits: Consolidated Lease remediation $’000 Parent Entity Lease remediation $’000 Balance at 1 July 2006 109 5 Arising during the year 4 - Increase to present value 10 - Balance at 30 June 2007 123 5

Data[#] 3 Limited | Annual report 2007 | 31

Notes to the financial statements

Consolidated Parent Entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000	Consolidated Parent Entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Note 20. Other liabilities Current Unearned income 6,097 2,610 - Lease incentives 196 196 104 Amounts payable to subsidiaries - - 1,403	- 104 4,814
6,293 2,806 1,507	4,918
Non–current Lease incentives 331 527 208	313
Unearned income comprises amounts received in advance of the provision of goods or services. Payables to subsidiaries are at call, unsecured, interest-free and repayable in cash. Note 21. Financing arrangements Unrestricted access was available at balance date to the following lines of credit: Bank overdrafts 600 600 600 Bill facility 3,955 3,955 3,955	600 3,955
4,555 4,555 4,555	4,555

All financing facilities were unused as at 30 June 2007 and 2006.

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 10.3% (2006: 9.7%).

Bill facility

The facility is subject to annual review. No bills were outstanding as at 30 June 2007 or 2006.

Consolidated Parent Entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000	Consolidated Parent Entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Secured liabilities (current and non-current) Lease incentives (note 20) 527 Trade payables (note 18) 12,697	723 312 417 11,325 - -
Total secured liabilities 13,224	12,048 312 417

Assets pledged as security

All the assets of the group are pledged as security for bank facilities and certain trade creditor facilities as noted above. Leasehold improvements (refer note 16) effectively secure lease incentive liabilities as noted above.

Note 22. Contributed equity

Data[#] 3 Limited | Annual report 2007 | 32

Notes to the financial statements

(a) Movements in ordinary share capital

Details Notes	Number of shares Issue price $ $’000
Balance – 1 July 2005 Exercise of options under Data#3 Limited Employee Option Plan Dividend reinvestment plan issue Dividend reinvestment plan issue 28 (i) (i)	15,349,773 8,706 20,000 125,211 140,067 0.91 2.96 3.35 18 371 468
Balance – 30 June 2006	15,635,051 9,563
Repurchase of ordinary shares (ii)	(44,115) 4.00 (176)
Balance – 30 June 2007	15,590,936 9,387

• (i) The company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or part of their dividend entitlements satisfied by the issue of new ordinary shares rather than being paid in cash. Shares are issued under the plan at a discount to the market price of up to 10%; the shares issued under the plan during the 2006 year were offered to shareholders at a discount of 5%. The dividend reinvestment plan has been suspended indefinitely from 1 September 2006.

• (ii) The company commenced a 12 month on-market buyback of up to 10% of the company’s ordinary shares beginning 1 September 2006. All shares purchased under the buyback are cancelled.

• (iii) Effective 1 July 1998, the corporations legislation in place abolished the concepts of authorised capital and par value shares. Accordingly, the company does not have authorised capital or par value in respect of its issued shares.

(b) Ordinary shares

All ordinary shares issued as at 30 June 2007 and 2006 are fully paid. 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.

(c) Share options

No share options remain outstanding as at 30 June 2007 (refer note 28).

Note 23. Contingent liabilities

At 30 June 2007 bank guarantees totalling $410,000 (2006: $410,000) were provided to lessors as security for premises leased by the parent entity and the subsidiaries. The guarantees will remain in place for the duration of the operating leases. Bank guarantees are secured by charges over all of the group’s assets.

Cross guarantees have been provided by the parent entity and its Australian wholly-owned subsidiaries as described in note 27.

Consolidated Parent Entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000	Consolidated Parent Entity 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Note 24. Commitments Future minimum rentals payable under non- cancelable operating leases as at 30 June are as follows: Within one year 2,035 2,187 989 Later than one year but not later than five years 3,079 4,439 2,058	1,001 2,638
5,114 6,626 3,047	3,639

Data[#] 3 Limited | Annual report 2007 | 33

Notes to the financial statements

Note 24. Commitments (continued)

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 subsidiaries.

Note 25. Key management personnel

Directors

The following persons were directors of Data[#] 3 Limited during the 2006 and 2007 financial years, except as noted:

R Anderson Chairman – non-executive G Clark Non-executive director (from 1 July 2005 to 8 November 2006, the date of his retirement) J Grant Managing director W Powell Non-executive director H Stack Non-executive director (from 1 July 2005 to 23 December 2005, the date of his resignation)

Other key management personnel

The following persons also had authority and responsibility for planning, directing and controlling the activities of the group, directly or indirectly, during the financial year:

Name Position

Employer

Baynham, L. General Manager Bowser, M. Manager – Managed Accounts Group Colledge, B. Manager – Licensing Solutions Crouch, B. Manager – Enterprise Solutions Crouch, P. Manager – New South Wales Esler, M. Manager – ICT Product Solutions Hill, B. Chief Financial Officer and Company Secretary Lavett, J. Manager – Victoria MacPherson, L. Manager – Organisational Development and HR Murphy, P. Manager – ICT Services Peters, W. Manager – Recruitment Solutions Rackham, J. Manager – Victoria

Data#3 Business Systems Pty Ltd Data#3 Business Systems Pty Ltd Data#3 Business Systems Pty Ltd Data#3 Business Systems Pty Ltd Gratesand Pty Ltd Data#3 Limited Data#3 Limited Gratesand Pty Ltd Data#3 Limited Data#3 Business Systems Pty Ltd Data#3 Business Systems Pty Ltd Gratesand Pty Ltd

All of the above persons were also key management personnel during the year ended 30 June 2006, except for P Crouch and J Rackham, who were promoted to their positions on 1 November 2005 and 1 September 2006, respectively. J Lavett was a key management person from 1 July 2005 to 31 August 2006, the date of his termination.

Key management personnel compensation

Key management personnel compensation	Key management personnel compensation
Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $
Short-term employee benefits 3,341,907 3,112,450 1,191,887 Long-term employee benefits 46,194 25,869 13,692 Post-employment benefits 169,408 171,309 66,457 Other benefits 59,599 - -	1,191,234 8,377 78,243 -
3,617,108 3,309,627 1,272,036	1,277,854

The company has taken advantage of the relief provided by regulation 2M.6.04 of the Corporations Regulations 2001 and has transferred the detailed remuneration disclosures to the directors’ report. The relevant information can be found at Sections A-D of the remuneration report.

Data[#] 3 Limited | Annual report 2007 | 34

Notes to the financial statements

Note 25. Key management personnel (continued)

Equity instrument disclosures relating to key management personnel

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 28. No options were granted in the 2006 and 2007 financial years. Information in respect of options held as at 30 June 2007, whether directly, indirectly or beneficially, by each key management person, including their personally-related entities, is set out below.

Balance Balance Balance 30 June 2005 Exercised 30 June 2006 Exercised 30 June 2007	Vested and exercisable 30 June 2006 30 June 2007
MacPherson, L. 20,000 (20,000) - - -	- -

Shares issued on exercise of Data[#] 3 Limited remuneration options during the years ended 30 June 2007 and 2006

Key management person	Shares issued	Paid per	Unpaid per
		share	share
	Number	$	$
2007
Not applicable.
2006
MacPherson, L.	20,000	0.91	-

Number of shares in Data[#] 3 Limited held by key management personnel

Ordinary shares held directly, indirectly or beneficially by each key management person, including their personallyrelated entities are shown below.

Balance 30 June 2005 Options exercised	Other changes	Balance 30 June 2006 Other changes	Balance 30 June 2007
Directors: Anderson, R. Clark, G. Grant, J. Powell, W.T. Stack, H. 40,000 618,880 861,520 620,000 10,000 - - - - - Other executives: Baynham, L. Bowser, M. Colledge, B. Crouch, B. Esler, M. Hill, B. MacPherson, L. 51,600 20,000 23,600 10,000 760,100 50,000 - - - - - - - 20,000	5,000 (35,148) - (55,000) *(10,000) - (10,000) - - - - -	45,000 583,732 861,520 565,000 - 5,000 *(583,732) - (55,000) -	50,000 - 861,520 510,000 -
		51,600 10,000 23,600 10,000 760,100 50,000 20,000 - - - - - - (8,000)	51,600 10,000 23,600 10,000 760,100 50,000 12,000
3,065,700 20,000	(105,148)	2,980,552 (641,732)	2,338,820

• Reflects retirement or resignation of director; the shares were not sold

Key management personnel who are not shown in the tables above held no shares or options in Data[#] 3 Limited. There has been no movement in key management personnel shareholdings since year end up to the date of this report.

Data[#] 3 Limited | Annual report 2007 | 35

Notes to the financial statements

Note 25. Key management personnel (continued)

Other transactions with key management personnel

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.

commercial terms and conditions and at market rates.
2007 $	2006 $
Amounts recognised as expense Other expense 21,318	21,325

There were no other transactions during the year with key management personnel or their personally–related entities.

Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $	Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $
Note 26. Remuneration of auditor During the year the following fees were paid or payable to the auditor for audit and non-audit services: Audit services Audit and review of financial reports and other audit work under theCorporations Act 2001 97,000 92,500 97,000 Non-audit services Due diligence services on potential acquisition 860 1,500 860 Corporate services 720 940 720 IFRS accounting services - 10,000 - Tax compliance services 6,030 5,140 6,030	92,500 1,500 940 10,000 5,140
Total remuneration 104,610 110,080 104,610	110,080

There was no remuneration paid to related practices of Johnston Rorke. It is the group’s policy to employ Johnston Rorke on assignments additional to its statutory audit duties where Johnston Rorke’s expertise and experience with the group are important.

Note 27. Related parties

Wholly–owned group

The consolidated financial statements include the financial statements of Data[#] 3 Limited and the subsidiaries listed in the following table.

Name of entity	Country of formation	Equity holding	Equity holding
	or incorporation	(ordinary shares)
		2007	2006
		%	%
Data#3 Business Systems Pty Ltd	Australia	100	100
Gratesand Pty Ltd	Australia	100	100
Data#3 NC SARL	New Caledonia	100	100

Data[#] 3 Limited | Annual report 2007 | 36

Notes to the financial statements

Note 27. Related parties (continued)

Transactions between Data[#] 3 Limited and other entities in the wholly-owned group during the years ended 30 June 2007 and 30 June 2006 consisted of:

• Loans advanced to/by subsidiaries and repayments (refer Cash Flow Statement);

• Recovery of corporate charges received by Data[#] 3 Limited for accounting, administrative services, management and use of assets (refer note 4);

• Management charges from subsidiaries for use of assets and provision of systems and services (refer Income Statement);

• Dividends received by Data[#] 3 Limited (refer note 4); and

• Transactions between Data[#] 3 Limited and its wholly-owned subsidiaries under the tax sharing and funding agreements described in note 7. The parent entity recognised a receivable of $3,046,000 in relation to its subsidiaries’ current tax amounts for the year ended 30 June 2007 (2006: a receivable of $2,778,000).

Loans provided are at call, interest-free and unsecured and have no fixed repayment terms (refer notes 11 and 20). Corporate charges by the parent entity are based on budgeted cost. Management charges by subsidiaries are based on discounted retail price. Unless otherwise stated, transactions are on commercial terms and conditions.

Management has carried out impairment testing as at each reporting date in relation to the parent entity’s investment in its subsidiaries. As at 1 July 2004 an impairment loss of $1,745,000 was recognised against the net investment in CICtechnology (Gratesand Pty Ltd). In 2006 the investment’s carrying value was written down to zero on the basis of the value-in-use calculation used to determine the asset’s recoverable amount.

Entities subject to class order relief

Data[#] 3 Limited, Data[#] 3 Business Systems Pty Ltd (Business Systems), and Gratesand Pty Ltd (Gratesand) are parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering into the deed, these wholly-owned entities have been relieved from the requirements to prepare a financial report and directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities & Investments Commission. Data[#] 3 Limited and Business Systems both have net assets as at 30 June 2007. However, Gratesand has net liabilities of $7,776,000 as at 30 June 2007 (2006: 8,536,000); this deficiency includes a payable to Data[#] 3 Limited of $1,424,000 (2006: 4,458,000). Management believes no provision is necessary in relation to the net deficiency in Gratesand, as Gratesand traded profitably in 2007 and is expected to continue trading profitably in the foreseeable future. Additionally, trading profits in other subsidiaries who are party to the deed of cross guarantee, particularly Business Systems, are more than sufficient to cover the deficiency in Gratesand.

The above companies, which comprise the parent entity and all of its Australian subsidiaries, represent a “Closed Group” for the purposes of the class order. The consolidated income statements for the closed group for the years ended 30 June 2007 and 2006 are set out in the following table.

Data[#] 3 Limited | Annual report 2007 | 37

Notes to the financial statements

Note 27. Related parties (continued)

	Closed Group	Closed Group
	2007	2006
	$’000	$’000
Revenues
Sale of goods	213,514	185,042
Services	67,635	51,971
Other	1,338	1,227
Total	282,487	238,240
Other income	60	115
Expenses
Changes in inventories of finished goods	1,722	901
Purchase of goods	(187,914)	(163,147)
Employee and contractor costs directly on-charged (cost of sales on services)	(34,305)	(22,302)
Other cost of sales on services	(5,514)	(4,768)
Other employee and contractor costs	(37,871)	(32,414)
Telecommunications	(880)	(795)
Software maintenance and licensing	(305)	(172)
Rent	(2,504)	(2,407)
Travel	(1,317)	(1,109)
Professional fees	(583)	(471)
Depreciation and amortisation	(607)	(501)
Finance costs	(22)	(7)
Other	(2,305)	(2,688)
Total	(272,405)	(229,880)
Profit before income tax expense	10,142	8,475
Income tax expense	(3,066)	(2,680)
Net profit	7,076	5,795

A summary of movements in consolidated retained earnings for the years ended 30 June 2007 and 2006 of the closed group is set out below.

	Closed Group
	$’000
Retained earnings at 1 July 2005	5,091
Profit after income tax/net profit (total recognised income and expense)	5,795
Dividends provided for or paid	(3,470)
Retained earnings at 1 July 2006	7,416
Profit after income tax/net profit (total recognised income and expense)	7,076
Dividends provided for or paid	(4,841)
Retained earnings at 30 June 2007	9,651

Data[#] 3 Limited | Annual report 2007 | 38

Notes to the financial statements

Note 27. Related parties (continued)

The consolidated balance sheet as at 30 June 2007 for the closed group is set out below.

	Closed Group	Closed Group
	2007	2006
	$’000	$’000
Current assets
Cash and cash equivalents	15,929	13,814
Trade and other receivables	50,863	34,667
Inventories	4,985	3,263
Other	1,604	1,218
Total current assets	73,381	52,962
Non-current assets
Available-for-sale financial assets	5	5
Other financial assets	14	14
Property and equipment	1,072	1,349
Deferred tax assets	1,075	912
Intangible assets	4,466	4,619
Total non-current assets	6,632	6,899
Total assets	80,013	59,861
Current liabilities
Trade and other payables	52,753	37,087
Current tax liabilities	1,391	1,454
Provisions	685	584
Other	5,325	2,806
Total current liabilities	60,154	41,931
Non-current liabilities
Provisions	490	424
Other	331	527
Total non-current liabilities	821	951
Total liabilities	60,975	42,882
Net assets	19,038	16,979
Equity
Contributed equity	9,387	9,563
Retained earnings	9,651	7,416
Total equity	19,038	16,979

Data[#] 3 Limited | Annual report 2007 | 39

Notes to the financial statements

Note 28. Share-based payments

Data[#] 3 Limited Employee Share Scheme

The establishment of the Data[#] 3 Limited Employee Share Scheme was approved at an extraordinary general meeting of the company held on 26 February 1999. All full-time and part-time employees, excluding directors, of Data[#] 3 Limited and its subsidiaries are eligible to participate in the scheme. To 30 June 2007 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 balance sheet 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 22(b)).

Data[#] 3 Limited Employee Option Plan

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

All full-time and part-time employees, including directors, of Data[#] 3 Limited and its subsidiaries are eligible to participate in the plan. Options are issued for $1 per parcel of options issued and are exercisable from two years prior to the expiry date; the options lapse 30 days following cessation of the option holder’s employment. The exercise price of the options last issued 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. 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 Number	Issued during the year Exercised during the year Balance at end of the year Number Number Number
Consolidated and parent entity – 2007
Not applicable.	- -	- - -
Consolidated and parent entity – 2006 22 November 2002 21 November 2005	$0.91 20,000	- 20,000 -

Data[#] 3 Limited | Annual report 2007 | 40

Notes to the financial statements

Note 28. Share-based payments (continued)

Details of the options exercised during the years ended 30 June 2007 and 2006 are as follows:

Exercise date Fair value per share at issue date	Consolidated 2007 Number 2006 Number	Parent Entity 2007 Number 2006 Number
11 November 2005 $3.39	- 20,000	- 20,000

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 2007 $ 2006 $	Parent Entity 2007 $ 2006 $
Aggregate proceeds received from employees on the exercise of options and recognised as issued capital - 18,200	- 18,200
Aggregate fair value of shares issued to employees on the exercise of options as at their issue date - 67,800	- 67,800

Refer to note 1(t) for information in relation to the company’s accounting policy for options granted. The above options were granted after 7 November 2002 and vested prior to 1 January 2005. Accordingly the exemption contained in AASB 1 First-time Adoption of Australian Equivalents to IFRS did not require the application of AASB 2 Share Based Payments to the above options.

Note 29. Segment information

Business segment

The group predominantly operates in one business segment. Its activities include software licensing and software asset management; the design, deployment and operation of desktop, network and data centre hardware and software infrastructure; and the provision of contract and permanent recruitment services.

The products and services offered by the group are similar with respect to nature, distribution methods, risks and returns, and customer bases. Revenue is generated by providing customer solutions that draw on all or several areas of specialisation, resulting in strong interdependency among our product and service offerings.

Geographical segment

The group’s operations are based predominantly in Australia.

	Consolidated	Consolidated		Parent Entity	Parent Entity
	2007	2006		2007	2006
	$’000	$’000		$’000	$’000
Note 30. Non-cash investing and
financing activities
Dividends satisfied by issue of shares (note 22)		-	839		-	839

Data[#] 3 Limited | Annual report 2007 | 41

Directors’ declaration

In the opinion of the directors:

• (a) the financial statements and notes set out on pages 12 to 41 are in accordance with the Corporations Act 2001, including:

• (i) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

• (ii) giving a true and fair view of the company’s and group’s financial position as at 30 June 2007 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date; and

• (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

• (c) the audited remuneration disclosures set out on pages 5 to 9 of the directors’ report comply with Australian Accounting Standard AASB 124 Related Party Disclosures and the Corporations Regulations 2001; and

• (d) at the date of this declaration, there are reasonable grounds to believe that the members of the closed group identified in note 27 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 27.

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.

==> picture [109 x 27] intentionally omitted <==

R A Anderson

Director

Brisbane

22 August 2007

Data[#] 3 Limited | Annual report 2007 | 42

Independent auditor’s report to the members of Data[#] 3 Limited

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Report on the financial report and AASB 124 remuneration disclosures contained in the directors’ report

We have audited the accompanying financial report of Data[#] 3 Limited, which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors' declaration for both Data[#] 3 Limited (the company) and the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.

As permitted by the Corporations Regulations 2001, the company has disclosed information about the remuneration of directors and executives (remuneration disclosures), required by Australian Accounting Standard AASB 124 Related Party Disclosures, under the heading “remuneration report” of the directors’ report and not in the financial report. We have audited these remuneration disclosures.

Directors' responsibility for the financial report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the consolidated financial report, comprising the consolidated financial statements and notes, complies with International Financial Reporting Standards.

The directors of the company are also responsible for the remuneration disclosures contained in the directors’ report.

Auditor's responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. Our responsibility is to also express an opinion on the remuneration disclosures contained in the directors’ report based on our audit.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report and the remuneration disclosures contained in the directors’ report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial report and the remuneration disclosures contained in the directors’ report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report and the remuneration disclosures contained in the directors’ report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the remuneration disclosures contained in the directors’ report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Data[#] 3 Limited | Annual report 2007 | 43

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor's opinion on the financial report

In our opinion:

• (a) the financial report of Data[#] 3 Limited is in accordance with the Corporations Act 2001, including:

• (i) giving a true and fair view of the company’s and consolidated entity's financial position as at 30 June 2007 and of their performance for the year ended on that date; and

• (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and

• (b) the consolidated financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Auditor's opinion on AASB 124 remuneration disclosures contained in the directors’ report

In our opinion the remuneration disclosures that are contained in the remuneration report in the directors’ report comply with Australian Accounting Standard AASB 124 Related Party Disclosures.

JOHNSTON RORKE

Chartered Accountants

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J J Evans Partner

Brisbane, Queensland 22 August 2007

Data[#] 3 Limited | Annual report 2007 | 44

Data[#] 3 Limited and Subsidiaries

Shareholder information

The shareholder information set out below was applicable as at 20 August 2007.

1. Distribution of equity securities

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

Class of security

Ordinary shares 1 - 1,000 493 1,001 - 5,000 972 5,001 - 10,000 257 10,001 - 100,000 153 100,001 and over 22 1,897	Options for ordinary shares
	- - - - -
	-

• (b) There were 61 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	2,088,107	13.39
Oakport Pty Ltd	571,000	3.66
Wood Grant & Associates Pty Ltd	460,429	2.95
ANZ Nominees Limited	409,181	2.62
Citicorp Nominees Pty Limited	367,336	2.36
Citicorp Nominees Pty Limited	321,315	2.06
ANZ Nominees Limited	312,607	2.01
Elterry Pty Ltd	300,000	1.92
J P Morgan Nominees Australia Limited	292,731	1.88
Powell Clark Trading Pty Ltd	278,732	1.79
Fadmoor Pty Ltd	240,002	1.54
G R Clark	205,000	1.31
Thomson Associates Pty Ltd	200,000	1.28
M R Esler	179,100	1.15
J E Grant	179,100	1.15
J T Populin	169,014	1.08
JHG Super Pty Ltd	160,771	1.03
A J & L D O’Rourke	131,910	0.85
M G Populin	120,444	0.77
D R & V J Newbold	111,489	0.72
	7,098,268	45.53

Data[#] 3 Limited | Annual report 2007 | 45

Data[#] 3 Limited and Subsidiaries

Shareholder information (continued)

3. Substantial shareholders

Substantial shareholders in the company are set out below:

Name	Number held	Percentage
Souls Funds Management Limited	1,509,995	9.69
Paradice Investment Management Pty Ltd	1,126,825	7.23
J E Grant / Wood Grant & Associates Pty Ltd	861,520	5.53

4. Unquoted equity securities

	Number held	Number of holders
Options issued under Data#3 Limited Employee
Option Plan to take upordinaryshares	-	-

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.

Data[#] 3 Limited | Annual report 2007 | 46