ENECO REFRESH LTD — Interim / Quarterly Report 2009

Mar 12, 2009

Appendix 4D Half year report Period ending on 31 December 2008

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Results for announcement to the market

1. Results for the half year to 31 December 2008 and the corresponding period to 31 December 2007

Company Result Revenue from ordinary activities up 18% to Profit for the period attributable to members down 239% to	A$’000 2,984 (317)

For the Period ending Net tangible asset per share Net asset per share	31 Dec 08 $0.06 $0.08	31 Dec 07
		$0.07 $0.09

Dividends No interim dividend is payable

2. Brief Explanation of the Result

Loss for the half year to December 2008 includes a provision for doubtful debts of $120k. Bad debts for the Company is normally less than 0.5% of sales. If the provision is not taken into consideration, actual loss of $197k compares favourably with the previous half-year. After deducting a once-off capital gain of $551k derived from sale of its Perth property, loss for the previous half-year was $323k.

For more explanation, please refer to directors’ report on page 3.

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Appendix 4D Half year report Period ending on 31 December 2008

3. Details of entities over which control has been gained or lost during the period

Nil

4. Details of individual and total dividends or distributions and dividend or distribution payments

Nil

5. Details of any dividend or distribution reinvestment plans in operation and the last date for the receipt of an election notice for participation in any dividend or distribution reinvestment plan

Nil

6. Details of associates and joint venture entities including the name of the associate or joint venture entity and details of the reporting entity’s percentage holding in each of these entities and – where material to an understanding of the report - aggregate share of profits (losses) of these entities, details of contributions to net profit for each of these entities, and with comparative figures for each of these disclosures for the previous corresponding period.

Associates Restock Distributors Pty Ltd	% Share 49.9	Share of Losses 31 Dec 08 31 Dec 07 - ($30,272)

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Refresh Group Limited

and its controlled entities

ABN 28 079 681 244

Half-Year Financial Report 31 December 2008

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REFRESH GROUP LIMITED – HALF YEAR REPORT

Table of Contents

DIRECTORS’ REPORT .............................................................................................................. 3 AUDITOR'S INDEPENDENCE DECLARATION ………………………………………….…..…… 4 INCOME STATEMENT … ........................................................................................................... 5 BALANCE SHEET ………………………...……………………………………………………………6 CASH FLOW STATEMENT ........................................................................................................ 7 STATEMENT OF CHANGES IN EQUITY .................................................................................. 8 1. CORPORATE INFORMATION ........................................................................................ 9 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................................. 9 3. SEGMENT INFORMATION ……………..………………..……………………….………...10 4. REVENUE, INCOME AND EXPENSES ........................................................................ 10 5. CASH AND CASH EQUIVALENTS .............................................................................. 11 6. COMMITMENTS AND CONTINGENCIES .................................................................... 11 7. CONTRIBUTED EQUITY ............................................................................................... 12 8. GOODWILL IMPAIRMENT ........................................................................................... 12 9. EVENTS AFTER THE BALANCE SHEET DATE ......................................................... 12 DIRECTORS’ DECLARATION ................................................................................................. 13 INDEPENDENT REVIEW REPORT .......................................................................................... 14

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REFRESH GROUP LIMITED – HALF YEAR REPORT

DIRECTORS’ REPORT

Your directors submit their report for the half-year ended 31 December 2008.

DIRECTORS

The names of the directors of the Company in office at the date of this report or during the half-year are:-

Henry Heng

Edmund Teo

Alan Ong (elected 27 Nov 08)

Murray Smith (resigned 27 Nov 08)

REVIEW AND RESULTS OF OPERATIONS

Refresh Group is on track with our target of profitability and growth. Except for our Brisbane operations, all other branches have increased profits or reduced losses. Despite the bleak economic environment, we achieved a year-todate organic growth of 18% p.a.

The Brisbane operations have experienced very strong growth. Distribution now covers Sunshine Coast to the north, Gold Coast to the south and Ipswich to the west. However, as a result of delays in obtaining the necessary approvals to commence production, losses have increased. Production is now scheduled to start in late March 2009. Once operational, it is expected to not only provide substantial cost savings but produce additional revenue streams.

Our growth is only constrained by the lack of capital. The Board considered many options including merger and acquisition opportunities with several companies but none of them were considered beneficial to existing shareholders. The current economic environment does not encourage capital raising. However, one of Refresh’s strengths is its very low gearing with minimal borrowing. As such, the Board decided to take up a $500,000 invoice discounting facility with Bibby Financial Services to fund the Company’s growth. The Board is confident it could secure additional borrowing as and when required.

AUDITOR’S INDEPENDENCE DECLARATION

We have obtained an independence declaration from our auditors, Grant Thornton (WA) Partnership, which is included on page 4.

Signed for and on behalf of the directors in accordance with a resolution of the Board.

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Henry Heng Executive Chairman Dated 27 February 2009 Perth, Western Australia

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10 Kings Park Road West Perth WA 6005 PO BOX 570 West Perth WA 6872

T +61 8 9480 2000 F +61 8 9322 7787 E admin@gtwa.com.au W www.grantthornton.com.au

AUDITOR’S INDEPENDENCE DECLARATION

TO THE DIRECTORS OF REFRESH GROUP LIMITED

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Refresh Group Limited and its controlled entity for the half-year ended 31 December 2008, 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.

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GRANT THORNTON (WA) PARTNERSHIP Chartered Accountants

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P W WARR Partner

Perth, 27 February 2009

Grant Thornton (WA) Partnership ABN 17 735 344 518, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389. Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation.

REFRESH GROUP LIMITED – HALF YEAR REPORT

INCOME STATEMENT

FOR THE HALF YEAR ENDED 31 DECEMBER 2008

Note Revenue Cost of Goods sold Other income 4 Employee benefits expense 4 Depreciation and amortisation expense Finance costs 4 Professional fees Advertising expenses Motor vehicle expenses Occupancy expenses Other expenses Share of net losses of associates accounted for using equity method Profit/(Loss) From Operations Before Income Tax Income tax expense Net Profit/(Loss) attributable to members of Refresh Group Limited Basic earnings/(loss) per share (cents per share) Diluted earnings/(loss) per share (cents per share)	CONSOLIDATED 2008 $ 2007 $ 2,983,517 2,521,570 (1,217,645) (939,938) 4,496 598,118 (1,131,833) (1,097,040) (90,692) (108,884) (25,117) (41,429) (54,346) (37,068) (114,478) (38,318) (99,671) (87,553) (204,538) (151,288) (366,674) (249,287) - (30,272)
	(316,981) 338,611 - (110,938)
	(316,981) 227,673
	(0.71) 0.51
	(0.71) 0.51

The accompanying notes form part of the financial statements

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REFRESH GROUP LIMITED – HALF YEAR REPORT

BALANCE SHEET AS AT 31 DECEMBER 2008

Notes ASSETS Current Assets Cash and cash equivalents 5 Trade and other receivables Inventories Total Current Assets Non Current Assets Other financial assets Property, plant and equipment Intangible assets Total Non Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Interest-bearing loans and borrowings 6b Provisions Total Current Liabilities Non-Current Liabilities Interest-bearing loans and borrowings 6b Provisions Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Equity attributable to equity holders of the parent Issued capital 7 Reserves Accumulated losses TOTAL EQUITY	CONSOLIDATED 31 December 2008 $ 30 June 2008 $
	288,126 738,446 785,716 670,051 740,324 605,318
	1,814,166 2,013,815
	1,050 1,050 2,008,370 1,997,110 971,137 969,774
	2,980,557 2,967,934
	4,794,723 4,981,749
	749,143 598,171 67,813 65,236 104,005101,593
	920,961 765,000
	117,246 151,810 26,075 17,517
	143,321 169,327
	1,064,282 934,327
	3,730,441 4,047,422
	4,778,991 4,778,991 127,888 127,888 (1,176,438) (859,457)
	3,730,441 4,047,422

The accompanying notes form part of the financial statements

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REFRESH GROUP LIMITED – HALF YEAR REPORT

CASH FLOW STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2008

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Borrowing costs Interest received Net cash flows from/(used in) operating activities Cash flows from investing activities Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Proceeds from disposal of equity investments Acquisition of subsidiaries, net of cash acquired Net cash flows from/(used in) investing activities Cash flows from financing activities Proceeds from borrowing Repayment of borrowings Net cash flows from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	CONSOLIDATED 2008 $ 2007 $
	3,148,537 2,285,890 (3,463,374) (2,430,194) (10,163) (31,117) 12,340 15,196
	(312,660) (160,225)
	7,844 2,252,190 (113,517) (267,436) - 53,000 - (565,000)
	(105,673) 1,472,754
	2,577 141,500 (34,564) (918,818)
	(31,987) (777,318)
	(450,320) 535,211 738,446 435,507
	288,126 970,718

The accompanying notes form part of the financial statements

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REFRESH GROUP LIMITED – HALF YEAR REPORT

STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2008

CONSOLIDATED At 1 July 2007 Profit/(Loss) for the year Total income and expense for the period Shares issued Transfer of revaluation reserve to retained earnings Tax adjustment taken to equity At 31 December 2007 CONSOLIDATED At 1 July 2008 Profit/(Loss) for the year Total income and expense for the period At 31 December 2008	Issued Capital Other Reserves Retained Earnings / (Accumulated Losses) Revaluation Reserve Total
	4,728,991 114,758 (1,471,145) 690,734 4,063,338
	- - 227,673 - 227,673
	- - 227,673 - 227,673 50,000 - - - 50,000 - - 551,522 (551,522) - - - - (139,212) (139,212)
	4,778,991 114,758 (691,950) - 4,201,799
	Issued Capital Other Reserves Retained Earnings / (Accumulated Losses) Revaluation Reserve **Total **
	4,778,991 127,888 (859,457) - 4,047,422
	- - (316,981) - (316,981)
	- - (316,981) - (316,981)
	4,778,991 127,888 (1,176,438) - 3,730,441

The accompanying notes form part of the financial statements

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REFRESH GROUP LIMITED – HALF YEAR REPORT NOTES TO FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2008

1. CORPORATE INFORMATION

The financial report of Refresh Group Limited for the half-year ended 31 December 2008 was authorised for issue in accordance with a resolution of the directors on 27 February 2009. Refresh Group Limited is a company incorporated in Australia and limited by shares which are publicly traded on the Australian Securities Exchange.

The nature of the operations and principal activities of the Company are described in the directors’ report.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The half-year financial report does not include all of the 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.

The half-year financial report should be read in conjunction with the annual Financial Report of Refresh Group Limited as at 30 June 2008.

It is also recommended that the half-year financial report be considered together with any public announcements made by Refresh Group Limited and its controlled entities during the half-year ended 31 December 2008 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

(a) Basis of preparation

The half-year consolidated financial report is a general purpose financial report, which has been prepared in accordance with the requirement of the Corporations Act 2001, applicable accounting standards including AASB 134 “Interim Financial Reporting” and Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board. The half-year financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

(b) Significant accounting policies

The half-year consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2008.

In the half-year ended 31 December 2008, the Group has reviewed all of the new and revised standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning in or after 1 July 2008. It has been determined by the Group that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore no change is necessary to the Group's accounting policies.

Change in accounting policies

The following accounting policies were available for early adoption but have not been applied in preparing these consolidated interim financial statements.

AASB 101 Presentation of Financial Statements (Revised 2007) AASB 8 Operating Segments AASB 123 Borrowing Costs (Revised 2007)

The adoption of AASB 101 (Revised 2007) is applicable for annual reporting periods beginning on or after 1 January 2009. It makes certain changes to the format and titles of the primary financial statements and to the presentation of some items within these statements. It also gives rise to additional disclosures. The measurement and recognition of the Group’s assets, liabilities, income and expenses is unchanged. However, some items that were recognised directly in equity will be recognised in other comprehensive income, for example revaluation of property, plant and equipment. AASB 101 affects the presentation of owner changes in equity and introduces a “Statement of comprehensive income”.

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REFRESH GROUP LIMITED – HALF YEAR REPORT NOTES TO FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2008

AASB 8 is applicable for annual reporting periods beginning on or after 1 January 2009. It will not affect the identified operating segments for the Group. Reported segment results are based on internal management reporting information that is regularly reviewed by the chief operating decision maker.

AASB 123 (Revised 2007) requires the capitalisation of borrowing costs to the extent they are directly attributable to the acquisition, production or construction of qualifying assets that need a substantial period of time to get ready for their intended use or sale. There will be no effect of the application of the new standard given that the Group already capitalise borrowing costs related to qualifying assets.

(c) Basis of consolidation

The half-year consolidated financial statements comprise the financial statements of Refresh Group Limited and its controlled subsidiaries (‘the Group’).

(d) Going Concern

The financial report has been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The Group incurred a loss of $316,981 for the half-year ended 31 December 2008.

The ability of the Group to continue paying its debts as and when they fall due is dependent upon the Group’s improving profitable operations, the raising of additional equity funds and finance funding (as and when required) or limiting the Group’s cash burn rate.

In the event that the Group is unable to continue as a going concern, it may be required to realise all assets at amounts different from that recorded in the balance sheet, settle liabilities other than in the ordinary course of business, and make provision for other costs which may arise as a result of cessation or curtailment of normal business procedures.

3. SEGMENT INFORMATION

For the six months ended 31 December 2008, the Group continued to operate in one business segment being the processing and sale of purified water, and one geographical segment being Australia.

4. REVENUE, INCOME AND EXPENSES

		CONSOLIDATED	CONSOLIDATED
		31/12/08	31/12/07
		$	$
(a)	Other income
	Interest received	12,340	15,196
	Gain / (loss) on disposal of property, plant and equipment	(7,844)	549,922
	Gain on disposal of investment	-	33,000
		4,496	598,118
(b)	Finance costs
	Bank loans and overdrafts	16,937	29,104
	Finance charges payable under finance lease and hire purchase contracts	8,180	12,325
	Total finance costs (on historical cost basis)	25,117	41,429
(c)	Employee benefits expense
	Wages and Salaries	866,024	852,086
	Workers’ compensation costs	123,540	118,753
	Superannuation costs	112,522	130,862
	Provisions for Annual and Long Service Leave	29,747	(4,661)
		1,131,833	1,097,040

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REFRESH GROUP LIMITED – HALF YEAR REPORT NOTES TO FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2008

5. CASH AND CASH EQUIVALENTS

For the purposes of the half-year cash flow statement, cash and cash equivalents comprised the following:

Cash at bank and in hand Short-term deposits	CONSOLIDATED 31/12/08 $ 30/06/08 $
	288,126 738,446 - -
	288,126 738,446

6. COMMITMENTS AND CONTINGENCIES

(a) Operating lease commitments - Group as lessee

The Group has entered into commercial leases where it is not in the best interest of the Group to purchase these assets.

Perth Kalgoorlie Melbourne Sydney Brisbane Toowoomba	Expiry	Term
	30/06/13	7+3+3 years
	21/12/10	Takenup2-yearoption
	16/02/09	Takenup2-yearoption
	31/08/10	Takenup2-yearoption
	31/03/13	5+5 years
	31/03/09	3+3 years

Renewal terms are included in the contracts. Renewals are at the option of the specific entity that holds the lease. Perth office rental was taken up under the sale and leaseback agreement when the Group sold its land and building last year.

There are no restrictions placed upon the lessee by entering into these leases.

Future minimum rentals payable under non-cancellable operating leases as at 31 December 2008 and 30 June 2008 are as follows:

CONSOLIDATED Minimum lease payments Within one year After one year but not more than five years Total	31/12/08 30/06/08 $ $
	366,038 284,917 942,046 789,542
	1,308,084 1,074,459

(b) Finance lease and hire purchase commitments

The Group has finance leases and hire purchase contracts for various items of plant and machinery. These leases have no terms of renewal or purchase options and escalation clauses.

Future minimum lease payments under finance leases and hire purchase contracts are as follows:

CONSOLIDATED Minimum lease payments Within one year After one year but not more than five years Total	31/12/08 30/06/08
	$ $ 67,813 65,236 117,246 151,810
	185,059 217,046

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REFRESH GROUP LIMITED – HALF YEAR REPORT NOTES TO FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2008

7. CONTRIBUTED EQUITY

Ordinary shares Issued and fully paid Movements in ordinary shares on issue At 1 July 2008 Issued Capital At 31 December 2008	Number 44,361,233 -	CONSOLIDATED 31/12/08 30/06/08 $ $ 4,778,991 4,778,991
		$ 4,778,991 - 4,778,991
	44,361,233

8. GOODWILL IMPAIRMENT

Due to the current economic environment, changes to the Company’s operating results and forecasts, and a significant reduction in the Company’s market capitalisation, the Company determined a triggering event had occurred and performed a goodwill impairment test at balance date.

Goodwill is allocated to the Company’s cash generating units “CGUs”. The Company tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.

In accordance with AASB 136, “Impairment of Assets”, the Company performed its goodwill impairment test by comparing the recoverable amount of each CGU with its carrying amount, including goodwill. The recoverable amount of a CGU was determined based on value-in-use calculations. Value-in-use is calculated based on the present value of cash flow projections over a five year period including a terminal value. The growth rate assumptions ranged from 10% to 20% reflecting achievement of at least a long-term estimate of inflation in the region in which each CGU operates. Management prepared the value-in-use calculations with reference to historical results and forecasts for each CGU.

The discount rate for each CGU was estimated based on the Company’s weighted average cost of capital adapted for the regions in which the CGUs operate. The discount rate used is 10%.

No impairment was recognised.

9. EVENTS AFTER THE BALANCE SHEET DATE

The Directors are not aware of any matter or circumstance that has significantly or may significantly affect the operations or the state of affairs of the consolidated entity in the future financial years.

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REFRESH GROUP LIMITED – HALF YEAR REPORT

DIRECTORS’ DECLARATION

In accordance with a resolution of directors of Refresh Group Ltd, I state that;

In the opinion of the directors:

• a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001 , including:

(i) give a true and fair view of the financial position as at 31 December 2008 and the performance for the half-year ended on that date of the consolidated entity; and

(ii) comply with Accounting Standard AASB 134 “Interim Financial Reporting” and the Corporations Regulations; 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.

On behalf of the Board

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Henry Heng Executive Chairman Dated 27 February 2009 Perth, Western Australia

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10 Kings Park Road West Perth WA 6005 PO BOX 570 West Perth WA 6872

INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF REFRESH GROUP LIMITED

T +61 8 9480 2000 F +61 8 9322 7787 E admin@gtwa.com.au W www.grantthornton.com.au

Report on the half-year financial report

We have reviewed the accompanying half-year financial report of Refresh Group Limited, which comprises the consolidated interim balance sheet as at 31 December 2008, and the income statement, statement of changes in equity and cash flow statement for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the half-year’s end or from time to time during that half-year.

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 consolidated half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagement ASRE 2410: Review of an Interim and Other Financial Reports 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 consolidated entity’s financial position as at 31 December 2008 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 Refresh Group 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

Grant Thornton (WA) Partnership ABN 17 735 344 518, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389.

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia. Liability limited by a scheme approved under Professional Standards Legislation.

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 complied with the independence requirements of the Corporations Act 2001.

Electronic presentation of reviewed financial report

This auditor’s review report relates to the financial report of Refresh Group Limited for the half-year ended 31 December 2008 included on the Company’s web site. The Company’s directors are responsible for the integrity of its web site. We have not been engaged to report on the integrity of the Company’s web site. The auditor’s review report refers only to the statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements. If users of this report are concerned with the inherent risks arising from electronic data communications, they are advised to refer to the hard copy of the reviewed financial report to confirm the information included in the reviewed financial report presented on this web site.

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 Refresh Group Limited is not in accordance with the Corporations Act 2001, including:

• 1 giving a true and fair view of the consolidated entity’s financial position as at 31 December 2008 and of its performance for the half-year ended on that date; and

• 2 complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations Regulations 2001.

Material uncertainty regarding continuation as a going concern

Without qualification to our conclusion above, we draw attention to Note 2(d) in the halfyear financial report.

The consolidated entity incurred a loss of $316,981 for the half-year ended 31 December 2008. The consolidated entity’s ability to continue as a going concern is dependent upon additional funds raised from debt or equity sources, the operations improving profitability in the future or the entity limiting its cash burn rate. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore realise its assets and extinguish its liabilities in the normal course of business and at the amount stated in the half-year financial report.

The half-year financial report does not include any adjustments relating to the recoverability and classification of recorded assets amounts or to the amounts and classification of liabilities that might be necessary should the consolidated entity be unable to continue as a going concern.

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GRANT THORNTON (WA) PARTNERSHIP Chartered Accountants

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P W WARR Partner

Perth, 27 February 2009