DATADOT TECHNOLOGY LIMITED — Interim / Quarterly Report 2010

Feb 18, 2010

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ABN 54 091 908 726

Financial Report for the half-year ended 31 December 2009

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Contents of the Financial Report

Corporate Information.......................................................................................................................... 3
Directors’ Report.................................................................................................................................. 4
Auditor’s Independence Declaration ................................................................................................... 7
Statement of Financial Position ........................................................................................................... 8
Statement of Comprehensive Income .................................................................................................. 9
Statement of Changes in Equity ......................................................................................................... 11
Statement of Cash Flows.................................................................................................................... 12
Notes to the Financial Statements ...................................................................................................... 13
1. Corporate Information............................................................................................................... 13
2. Basis of Preparation and Accounting Policies .......................................................................... 13
3. Operating Segments .................................................................................................................. 14
4. Revenue, Income and Expenses ................................................................................................ 16
5. Cash and Cash Equivalents ....................................................................................................... 17
6. Dividends Paid or Proposed ...................................................................................................... 17
7. Commitments and Contingencies - Contingent liabilities ........................................................ 17
8. Related Party Disclosures ......................................................................................................... 18
9. Events after the Balance Sheet Date ......................................................................................... 18
Directors’ Declaration ........................................................................................................................ 19
Independent Auditor’s Review Report .............................................................................................. 20

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Corporate Information

ABN 54 091 908 726

This half-year report covers the consolidated entity comprising DataDot Technology Limited (DDT) and its subsidiaries. The Group’s functional and presentation currency is AUD ($).

A description of the Group’s operations and of its principal activities is included in the review of operations and activities in the Directors’ Report on page 4. The Directors’ Report is unaudited and does not form part of the financial report.

DIRECTORS

COMPANY SECRETARY REGISTERED OFFICE

Mr B. Rathie (Chairman) Mr G.J. Loughlin Unit 9 Mr B. Bootle (Chief Executive Officer) 19 Rodborough Road Mr G. Flowers Frenchs Forest NSW 2086 Ms C. Lo Lin Sye Phone (02) 8977 4900 Fax (02) 9975 4700

AUDITORS

BANKERS COMPANY WEBSITE

PKF National Australia Bank www.datadotdna.com Level 10 Northern Beaches BBC 1 Margaret Street Level 1, 818 Pittwater Road Sydney NSW 2000 Dee Why NSW 2099

SHARE REGISTER

STOCK EXCHANGE OTHER INFORMATION

Ordinary shares and Options Registries Ltd Level 7, 207 Kent Street Sydney NSW 2000 Phone 1300 737 760 Fax 1300 653 459

The Company is listed on the DataDot Technology Ltd, Australian Stock Exchange. incorporated and domiciled in The Home Exchange is Australia, is a publicly listed Sydney. company limited by shares.

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Directors’ Report

Your Directors submit their report for the half-year ended 31 December 2009.

DIRECTORS

The names of the company’s directors in office during the half-year and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated.

Mr B. Rathie (Chairman) – appointed 16 October 2009 Mr B.W. Bootle (Managing Director and Chief Executive Officer) Mr A.R. Farrar– resigned 16 October 2009 Mr G. Flowers Ms C. Lo Lin Sye Mr M. George - resigned 18 February 2010

REVIEW AND RESULTS OF OPERATIONS

The underlying earnings of the company represented by Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) and before Impairment Losses (net of Government Grants) from the continuing operations of DataDot Technology Limited (DDT) increased by $1,509,054 up from ($704,888) to $804,166.

Trading conditions for DDT over the reporting period improved in most regions with total revenues from the continuing operations increasing by $1,117,561 (28.1%) from $3,974,402 to $5,091,963. Revenue from DataDot Technology (UK) Limited (DDUK) increased by $1,639,358 (669%) from $245,034 to $1,884,392. This was partially offset by reductions in revenue from DataDot Technology (Australia) Pty Limited (DDA) (down 10.6%) and DataDot Technology USA, Inc. (DDUS) (down 12.0%).

As detailed in DDT’s 2009 Annual Report, DataDot South Africa (Proprietary) Limited (DDSA) is now reflected in the financial statements as a discontinued operation of DDT and prior year income statements and segment information have been restated accordingly.

Consolidated net profit from continuing operations after income tax for the half-year was $632,300 (2008: loss of $7,641,398). This reflects the results of the restructure undertaken in 2009 transitioning DDT to an NPAT-driven culture.

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Directors’ Report (continued)

REVIEW AND RESULTS OF OPERATIONS (continued)

The Group’s half-year Earnings Before Interest and Tax (EBIT), Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) and EBITDA before Impairment Losses net of Government Grants from continuing operations for the prior period are disclosed below.

ContinuingOperations	2009 2008 $ $
Profit /(Loss) after income tax Add back: Income Tax Expense Interest Expense Profit /(Loss) before Interest and Tax (EBIT) Add back: Depreciation and amortisation expense Profit /(Loss) before interest, tax, depreciation and amortisation (EBITDA) Add back: Impairment losses net of government grants EBITDA before impairment losses net of government grants	632,300 (7,641,398) 4,943 1,089,415 25,431 31,824
	662,674 (6,520,159)
	141,492 226,366
	804,166 (6,293,793)
	- 5,588,905
	804,166 (704,888)

Australasia

Product sales for the half-year decreased by $382,778 (10.6%) from $3,614,436 to $3,231,658, primarily due to the loss of one auto OEM customer during the period. Increased sales from DataDot Taiwan helped to offset this decline. Net profit increased to $1,299,384 from $1,041,481, an increase of $257,903 (24.8%), reflecting production efficiencies and the focus on cost containment implemented during 2009.

United States

The half-year loss in the United States operations was reduced by $168,187 (53.7%) from $313,366 in 2008 to $145,179 in 2009 despite a decline in sales revenue of $61,101 (12.0%) from $508,738 to $447,737. The global focus on cost containment has reduced costs and more savings are yet to be realised.

Europe

The growth in European revenues continued with sales $1,639,358(669.0%) higher than the same period last year (2009: $1,884,392 compared to 2008: $245,034). Net profit increased to $738,850 from a loss of $80,787, an increase of $819,637.

Joint Venture – DataTraceDNA Pty Limited

The share of loss from the DataTraceDNA Pty Limited joint venture was $59,808 for the halfyear ended 31 December 2009 (2008:195,452), an improvement of $135,644 (69.4%). Management continues to build the sales pipeline and Research and Development is restricted to customer funded activities.

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Directors’ Report (continued)

REVIEW AND RESULTS OF OPERATIONS (continued)

AgTechnix

In October 2009, DDT announced the development of a new seed protection technology that is being commercialised through AgTechnix Pty Limited, a 51% majority owned subsidiary of DataDot Technology Limited. It is anticipated that final documentation setting up this structure will be completed shortly. Sales and marketing activities are continuing, while at the same time, the technology is undergoing testing in a controlled environment by a number of international seed breeding companies who are prospective customers. The immaterial costs incurred to date have been absorbed by DDT and Ipeco Pty Limited (the 49% minority shareholder of AgTechnix Pty Limited).

In conclusion, Directors are very pleased with the performance of the business during this period given difficult economic conditions generally, the state of the auto industry specifically, restrained availability of capital and distracting corporate issues. Management is to be commended for delivering such a good turnaround result in this challenging period.

The company continues to aggressively pursue revenue growth in its core operations as well as roll out new products and applications. There is ongoing focus on cost control and it is expected that these initiatives will deliver results going forward.

The auditor’s independence declaration as required under section 307c of the Corporations Act 2001 is set out on page 7 and forms part of the Directors’ Report.

Signed in accordance with a resolution of the Board of Directors.

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B. Rathie Chairman Sydney, 19[th] February 2010

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Auditor's Independence Declaration

As lead auditor for the review of DataDot Technology Limited for the half year ended 31 December 2009, I declare that to the best of my knowledge and belief there have been:

• (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (b) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of DataDot Technology Limited and the entities it controlled during the half year.

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PKF

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Grant Saxon Partner

19 February 2010 Sydney

Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia DX 10173 | Sydney Stock Exchange | New South Wales

The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Liability limited by a scheme approved under Professional Standards Legislation.

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Statement of Financial Position As at 31 December 2009

Statement of Financial Position As at 31 December 2009
Note	Consolidated 31.12.09 30.06.09 $ $
ASSETS Current Assets Cash and cash equivalents 5 Trade and other receivables Inventories Total Current Assets Non-Current Assets Plant and equipment Investment accounted for using the equity method Intangible assets Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Interest-bearing loans and borrowings Provisions Total Current Liabilities Non-Current Liabilities Interest-bearing loans and borrowings Other non-current liabilities Provisions Total Non-Current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Equity attributable to equity holders of the parent Contributed equity Accumulated losses Reserves Parent interests Outside equity interests TOTAL EQUITY	1,571,195 761,490 1,771,596 2,214,732 589,443 631,191
	3,932,234 3,607,413
	583,805 759,472 25,192 - 338,500 300,347
	947,497 1,059,819
	4,879,731 4,667,232
	1,007,112 1,044,340 23,422 232,063 642,945 747,818
	1,673,479 2,024,221
	- 4,733 344,552 379,446 5,513 7,263
	350,065 391,442
	2,023,544 2,415,663
	2,856,187 2,251,569
	28,034,195 28,151,106 (25,667,092) (26,299,392) 489,084 399,855
	2,856,187 2,251,569 - -
	2,856,187 2,251,569

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Statement of Comprehensive Income For the Half-Year Ended 31 December 2009

Statement of Comprehensive Income For the Half-Year Ended 31 December 2009
Note	Consolidated 31.12.09 31.12.08 $ $
Continuing operations Sale of goods Rendering of services Licence fees Royalties Finance revenue 4(a)(i) Revenue Cost of sales Gross Profit Other income 4(a)(ii) Employee benefits expense Administrative expenses Advertising and promotional expenses Occupancy expenses Travel expenses Finance costs 4(a)(iii) Depreciation and amortisation expense Bad and doubtful debts Restructuring expenses Impairment Losses Share of profit /(loss) of joint venture Profit / (loss) from continuing operations before income tax Income tax expense 4(b) Net profit / (loss) from continuing operations after income tax Discontinued Operations Profit from discontinued operations after income tax Net Profit / (Loss) for the period Other comprehensive income Foreign currency translation Other comprehensive income for the period net of tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	4,634,545 3,448,881 353,389 433,923 11,178 21,965 86,405 56,224 6,446 13,409
	5,091,963 3,974,402 (1,458,078) (1,274,838)
	3,633,885 2,699,564 - 1,357,797 (1,334,148) (1,621,489) (789,833) (836,871) (139,062) (308,427) (184,271) (214,412) (86,340) (206,610) (25,431) (31,824) (141,492) (226,366) (37,523) (21,191) (198,734) - - (6,946,702) (59,808) (195,452)
	637,243 (6,551,983) (4,943) (1,089,415)
	632,300 (7,641,398)
	- 25,020
	632,300 (7,616,378)
	89,229 626,812
	89,229 626,812
	721,529 (6,989,566)

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Statement of Comprehensive Income (continued)

For the Half-Year Ended 31 December 2009

For the Half-Year Ended 31 December 2009
Note	Consolidated 31.12.09 31.12.08 $ $
PROFIT FOR THE PERIOD IS ATTRIBUTED TO: Profit attributable to outside equity interest Owners of the parent TOTAL COMPREHENSIVE INCOME FOR THE PERIOD Profit attributable to outside equity interest Owners of the parent Earnings per share attributable to the equity holders of the parent: - basic and dilutive, earnings per share	- 129,268 632,300 (7,745,646)
	632,300 (7,616,378)
	- 129,268 721,529 (7,118,834)
	721,529 (6,989,566)
	Cents Cents 0.18 (2.08)

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Statement of Changes in Equity

For the Half-Year Ended 31 December 2009

	Attributable to equityholders of theparent
	Ordinary shares Accumulated losses Foreign currency translation reserve Total Non- controlling interest Total equity $ $ $ $ $ $
At 1 July 2009 Profit for the period Other comprehensive income Total comprehensive income for the half-year Transactions with owners in their capacity as owners Shares issued Transaction costs on share issue Share-based payments At 31 December 2009*	28,151,106 (26,299,392) 399,855 2,251,569 - 2,251,569 - 632,300 - 632,300 - 632,300 - - 89,229 89,229 - 89,229
	- 632,300 89,229 721,529 - 721,529 - - - - - - (116,911) - - (116,911) - (116,911) - - - - - -
	28,034,195 (25,667,092) 489,084 2,856,187 - 2,856,187
	26,456,519 (15,185,063) (368,758) 10,902,698 470,373 11,373,071 - (7,745,646) - (7,745,646) 129,268 (7,616,378) - - 626,812 626,812 - 626,812
	- (7,745,646) 626,812 (7,118,834) 129,268 (6,989,566) - - - - - - - - - - - - - - - - - -

• Transaction costs on share issue in the current period relate to unforseen legal costs incurred in redistributing shares pursuant to an order of the Takeovers Panel dated 26 June 2009.

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Statement of Cash Flows

For the Half-Year Ended 31 December 2009

Note	Consolidated 31.12.09 31.12.08 $ $
Cash flows from /(used in) operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest paid Income tax paid Net cash flows from /(used in) operating activities Cash flows from /(used in) investing activities Proceeds from sale of plant and equipment Interest received Purchase of plant and equipment Purchase of investment accounted for using the equity method Payment for development expenditure Receipt of Government Grant Proceeds/(payments) from/(to) related party loans Net cash flows used in investing activities Cash flows from financing activities Transaction costs from issues of shares Repayment of borrowings Repayment of finance lease payments Net cash flows from financing activities Net increase / (decrease) in cash held Net foreign exchange differences Cash at beginning of period Cash at end of period 5	5,647,444 6,533,927 (4,103,646) (6,811,355) (10,457) (16,469) (4,943) (97,982)
	1,528,398 (391,879)
	82,745 - 1,600 15,477 (16,079) (71,892) (85,000) (711,953) (70,644) (66,815) - 55,366 (174,732) 324,800
	(262,110) (455,017)
	(116,911) - (210,357) (32,146) (109,887) (57,046)
	(437,155) (89,192)
	829,133 (936,088) (19,428) 78,260 761,490 2,639,463
	1,571,195 1,781,635

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Notes to the Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER 2009

1. Corporate Information

The half-year financial report of DataDot Technology Limited (the Company), for the half-year ended 31 December 2009 was authorised for issue in accordance with a resolution of the directors on 19 February 2010.

DataDot Technology Limited is a company incorporated in Australia and limited by shares, which are publicly traded on the Australian Stock Exchange.

2. Basis of Preparation and Accounting Policies

Basis of preparation

This general purpose condensed financial report for the half-year ended 31 December 2009 has been prepared on the basis of a going concern and in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

It is recommended that the half-year financial report be read in conjunction with the annual report for the year ended 30 June 2009 and considered together with any public announcements made by DataDot Technology Ltd during the half-year ended 31 December 2009 in accordance with the continuous disclosure obligations of the ASX listing rules .

Significant accounting policies

The accounting policies applied in preparing the financial statements for the half-year ended 31 December 2009 are consistent with those applied in presenting the comparative information presented in these financial statements and are the same as those applied by DataDot Technology Limited in its consolidated financial report for the year ended 30 June 2009 except as outlined below:

• (a) Revised AASB 101 Presentation of Financial Statements is applicable to annual reporting periods commencing on or after 1 January 2009. The standard results in changes to the financial statements including the addition of a Statement of Comprehensive Income. This standard does not result in any changes to the financial results but affects how the results are presented.

• (b) AASB 8 Operating Segments is applicable to annual reporting periods commencing on or after 1 January 2009. The change from the previous standard (AASB 114 Segment Reporting) to this standard has resulted in the changes as outlined in Note 3 to the Financial Statements.

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Notes to the Financial Statements (Continued)

3. Operating Segments

DataDot Technology Limited has adopted AASB 8 Operating Segments with effect from 1 July 2009. AASB 8 requires operating segments to be identified on the basis of internal reports about components of the company that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The operating segments are identified by management based on the location of the selling segment. Discrete financial information about each of these operating businesses is reported to the executive management team on at least a monthly basis.

Accounting policies and inter- segment transactions

The accounting policies used by the group in reporting segments internally is the same as those used in note 2 to the accounts and in the prior annual report.

The following tables present the revenue, profit/ (loss) before tax, assets and liabilities information regarding operating segments for the half-year periods ended 31 December 2009 and 31 December 2008.

Half-year ended 31 December 2009 Revenue Sales to external customers Other revenues from external customers Inter-segment sales Total segment revenue Proportionately consolidated revenue Inter-segment elimination Other revenue Total revenue per the statement of comprehensive income Result Segment Result Unallocated expenses Profit before tax and finance costs Finance costs Share of loss of joint venture Net profit before income tax per statement of comprehensive income Segment Assets Investment in joint venture Unallocated assets Total assets Segment Liabilities Unallocated liabilities Total liabilities	Continuing Operations Australasia USA Europe $ $ $	Discontinued Operations * Total Operations Total South Africa $ $ $
	2,596,883 283,386 1,754,276 437,173 13,799 - 197,602 150,552 130,116	4,634,545 - 4,634,545 450,972 - 450,972 478,270 - 478,270
	3,231,658 447,737 1,884,392	5,563,787 - 5,563,787 (478,270) - (478,270) 6,446 - 6,446
	1,299,384 (145,179) 738,350 2,517,965 350,552 1,202,092 25,192 413,588 42,090 491,304
		5,091,963 - 5,091,963
		1,892,555 - 1,892,555 (1,170,073) - (1,170,073)
		722,482 - 722,482 (25,431) - (25,431) (59,808) - (59,808)
		637,243 - 637,243
		4,070,609 - 4,070,609 25,192 - 25,192 783,930 - 783,930
		4,879,731 - 4,879,731
		946,982 - 946,982 1,076,562 - 1,076,562
		2,023,544 - 2,023,544

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Notes to the Financial Statements (Continued)

3. Operating Segments (Continued)

Half-year ended 31 December 2008 Revenue Sales to external customers Other revenues from external customers Inter-segment sales Total segment revenue Proportionately consolidated revenue Inter-segment elimination Other revenue Total revenue per the statement of comprehensive income Result Segment Result Unallocated expenses Profit before tax and finance costs Finance costs Share of loss of joint venture Net (loss)/profit before income tax per statement of comprehensive income Income tax expense Net (loss)/profit after income tax per statement of comprehensive income Segment Assets Investment in joint venture Unallocated assets Total assets Segment Liabilities Unallocated liabilities Total liabilities	Continuing Operations Australasia USA Europe $ $ $	Discontinued Operations * Total Operations Total South Africa $ $ $
	2,865,824 338,023 245,034 430,293 25,595 - 318,319 145,122 -	3,448,881 1,343,887 4,792,768 455,888 - 455,888 463,441 - 463,441
	3,614,436 508,740 245,034	4,368,210 1,343,887 5,712,097 (463,441) - (463,441) 69,633 39,500 109,133
	1,041,481 (313,366) (80,787) 2,743,521 713,721 478,903 808,406 705,680 175,839 487,205
		3,974,402 1,383,387 5,357,789
		647,328 156,295 803,623 (6,972,035) - (6,972,035)
		(6,324,707) 156,295 (6,168,412) (31,824) (244) (32,068) (195,452) - (195,452)
		(6,551,983) 156,051 (6,395,932) (1,089,415) (131,031) (1,220,446)
		(7,641,398) 25,020 (7,616,378)
		3,936,145 1,779,595 5,715,740 808,406 - 808,406 886,577 - 886,577
		5,631,128 1,779,595 7,410,723
		1,368,724 179,599 1,548,323 1,478,895 - 1,478,895
		2,847,619 179,599 3,027,218

• On 11 March 2009, DataDot Technology Limited decided to progressively dispose of the Company’s 42.5% equity interest in DataDot Technology South Africa (Proprietary) Limited (DDSA) to the two South African shareholders who manage DDSA. Effective 11 March 2009, DDSA became a deconsolidated entity and DDSA results are shown as a discontinued operation. Refer to Note 9 of the 2009 Annual Report for additional information regarding Discontinued Operations.

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Notes to the Financial Statements (Continued)

4. Revenue, Income and Expenses

(a) Revenue, Income and Expenses from Continuing Operations (i) Breakdown of finance revenue: Bank interest receivable Interest receivable on loans: - Other interest income Total finance revenue (on historical cost basis) (ii) Other income Government grants: - Government grants released (iii) Finance costs Bank loans and overdrafts Other loans (including convertible note interest) Finance charges payable under finance leases and hire purchase contracts Total finance costs (on historical cost basis) (b) Income tax expense Income tax expense Total income tax expense	Consolidated 31.12.09 31.12.08 $ $
	1,600 8,630 4,846 4,779
	6,446 13,409
	- 1,357,797
	- 1,357,797
	3,957 4,777 14,974 16,043 6,500 11,004
	25,431 31,824
	4,943 1,089,415
	4,943 1,089,415

At 31 December 2009, no deferred tax assets in respect of losses have been recognised. Deferred tax assets and liabilities in respect of temporary differences have been offset against each other with nil impact on the profit and loss.

At 31 December 2008, in recognition of the poor financial performance of the United State subsidiary and the significant downturn in the US auto industry, the Directors of DataDot Technology Limited decided to writedown the carrying value of tax losses in the US operations. These carried forward tax losses had previously been recognised as a deferred tax asset during the 2008 financial year.

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Notes to the Financial Statements (Continued)

5. Cash and Cash Equivalents

Cash and Cash Equivalents
For the purpose of the half-year cash flow statement, cash and cash equivalents are comprised of the following: Cash at bank and in hand	Consolidated 31.12.09 31.12.08 $ $
	1,571,195 1,781,636
	1,571,195 1,781,636

6. Dividends Paid or Proposed

No dividends were declared or paid during the half-year (2008: Nil).

7. Commitments and Contingencies - Contingent liabilities

DataTraceDNA Pty Ltd

On the 31[st] of October, 2005 the Company entered into a number of agreements with the CSIRO establishing DataTraceDNA Pty Ltd as a jointly controlled entity. Under the terms of the agreement, the Company is required to contribute working capital until the Directors of DataTraceDNA determine that the joint venture entity has consistent positive cash flows to support itself.

Legal Claims

All potential claims referred to in the 2009 Annual Report were resolved and provisions made for all settlements during the reporting period. Any amounts that had not already been provided for have been included in the current period in restructuring expenses.

Guarantees

Included in payables to other parties is an amount of £193,225 ($344,552) which DataDot Technology (UK) Ltd (DDUK) has borrowed on an interest free basis. The loan, which is guaranteed by the Company, is repayable on the earlier of the termination of the DDUK shareholders agreement, the DDUK licence agreement and 15 December 2012.

Insurance Company Initiative

Included in provisions is $10,510 (30 June 2008: $1,110) being an estimate of amounts payable that may arise under a sales agreement with an insurance company under which the Company has agreed to remit the insurance policy excess on behalf of insurance policy holders who have applied dots to their vehicles and whose vehicles have been stolen. The estimate is based on the probability of claims being made. Should these estimates prove incorrect then an adjustment may have to be made to either increase or decrease the amount due and payable.

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Notes to the Financial Statements (Continued)

8. Related Party Disclosures

The following table provides the total amount of transactions that were entered into with related parties for the half-year ended 31 December 2009 and 2008.

	Service fees to related parties Amounts owed by related parties Related party $ $ Joint venture in which the parent is a venturer DataTraceDNA Pty Limited 2009 350,767 84,568 2008 425,293 143,343

Terms and condition of transactions with related parties

Sales to related parties are made in accordance with the Management Services Agreement under which the Company has been contracted to provide management services to DataTraceDNA Pty Limited.

Outstanding balances at year-end are unsecured, interest free and settlement occurs in cash.

For the half-year ended 31 December 2009, the Company has not made any allowance for doubtful debts relating to amounts owed by related parties as the payment history has been excellent (2008: $nil).

9. Events after the Balance Sheet Date

On 22 January 2010, the Company announced that DataTraceDNA Pty Ltd, the joint venture company owned by DataDot Technology Limited and CSIRO, has jointly developed with South African company Holomatrix (Pty) Limited a method of authenticating and identifying large scale electrical conductors used by utility companies. AuthentiCable enables electrical conductor manufacturers and owners of electric utilities to incorporate a unique monofilament into electrical cables. The monofilament contains both serialized microscopic identifiers as well as DataTraceDNA, which together provide the means of authenticating the cable, identifying the batch number and identifying the customer to whom it was supplied by cross-referencing an international database. AuthentiCable is easily incorporated into electrical cable, steel and conventional ropes at the time of manufacture with minimal changes to production methods.

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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT

Directors’ Declaration

In the opinion of the directors of DataDot Technology Limited:

• (a) the financial statements and notes of the consolidated entity set out in pages 8 to 18 are in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the financial position as at 31 December 2009 and of its performance for the half-year ended on that date; and

• (ii) complying with Accounting Standards AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

• (b) there are reasonable grounds to believe that DataDot Technology Limited will be able to pay its debts as and when they become due and payable.

On behalf of the Board

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B. Rathie Chairman Sydney, 19[th] February 2010

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of DataDot Technology Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of DataDot Technology Limited, which comprises the consolidated statement of financial position as at 31 December 2009, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, other selected explanatory notes and the directors’ declaration for the consolidated entity of DataDot Technology Limited. The consolidated entity comprises both DataDot Technology Limited (the company) and the entities it controlled at 31 December 2009 or from time to time during the half year ended on that date.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation and fair presentation of the half-year 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 control relevant to the preparation and fair presentation of the half-year 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.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the company’s financial position as at 31 December 2009 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of DataDot Technology Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

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

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The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Liability limited by a scheme approved under Professional Standards Legislation.

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of DataDot Technology Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2009 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

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PKF

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Grant Saxon Partner

19 February 2010 Sydney

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