HARRIS TECHNOLOGY GROUP LIMITED — Annual Report 2007

Aug 23, 2007

THE SWISH GROUP LIMITED ABN 93 085 545 973 AND CONTROLLED ENTITIES

PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2007 PROVIDED TO THE ASX UNDER LISTING RULE 4.3A

THE SWISH GROUP LIMITED AND CONTROLLED ENTITIES (ABN 93 085 545 973)

Appendix 4E

Preliminary final report For year ended 30 June 2007

(Comparative period: year ended 30 June 2006)

Results for announcement to the market

Results for announcement to the market	Results for announcement to the market	Results for announcement to the market	Results for announcement to the market
% Change $ Revenues from ordinary activities_(item 2.1) Down 11% to 4,558,394 Loss from ordinary activities after tax attributable to members(item 2.2) Down 40% to (1,901,138) Net loss attributable to members(item 2.3)_ Down 40% to (1,901,138)
Dividends (distributions)(item 2.4)		Amount per security	Franked amount per security
Interim dividend Final dividend		Nil ¢ Nil¢	Nil ¢ Nil¢
Record date for determining entitlements to the dividends (item 2.5) N/A Brief explanation of any of the figures reported above necessary to enable the figures to be understood (item 2.6): Total revenue for the year ended 30 June 2007 was $4.6m (2006: $5.1m). Swish Black Cat Pty Ltd contributed $2.3m of total revenue for the year ended 30 June 2007 (2006: $0.2m). During the year Swish Group continued to develop its digital media businesses. The Company has focused on building its digital signage, digital production, digital music and telecommunications services businesses. The consolidated entity incurred an EBITDA loss of $1.7m and a net loss of $1.9m in the year ended 30 June 2007 (2006: loss $3.2m). Because the Company’s digital media businesses are still being commercialised the Company’s income for the year ended 30 June 2007 has been insufficient, on its own, to service its operating expenses. Accordingly, the Company has undertaken a number of small capital raisings during the year to fund the continuing development of its digital media businesses. The Company had net liabilities of $0.4m at 30 June 2007 (2006: net liabilities $0.2m). The Company does not propose to pay a dividend. No dividend or distribution plans are in operation_(item 7)._

THE SWISH GROUP LIMITED AND CONTROLLED ENTITIES

COMMENTARY ON RESULTS

FOR THE YEAR ENDED 30 JUNE 2007

1. EARNINGS PER SECURITY AND THE NATURE OF ANY DILUTION ASPECTS

Basic earnings per share: (0.4) cents Net loss attributable to members: ($1,901,138) Weighted average number of shares used in calculating basic earnings per share: 423,557,997 Diluted earnings per share: (0.4) cents Weighted average number of shares used in calculating diluted earnings per share: 510,520,505

2. RETURNS TO SHAREHOLDERS INCLUDING DISTRIBUTIONS AND BUY BACKS

There were no distributions, buy backs or other returns to shareholders in the year ended 30 June 2007.

3. SIGNIFICANT FEATURES OF OPERATING PERFORMANCE

(a) Financial performance

Total revenue for the year ended 30 June 2007 was $4.6m (2006: $5.1m). During the financial year the Company continued to develop its digital media businesses by investing in its digital signage, digital production, digital music and telecommunications services businesses.

Overheads were at a similar level to the previous financial year. The Company has continued to exercise strict cost controls given its continued reliance on capital raisings.

Earnings before interest, tax, depreciation and amortisation ( EBITDA ) were a loss of $1.7m (2006: loss $1.8m). Depreciation was $0.2m (2006: $0.4m). The consolidated entity incurred a net loss of $1.9m in the year ended 30 June 2007 (2006: loss $3.2m).

(b) Financial position

Net liabilities at 30 June 2007 were $0.4m (2006: net liabilities $0.2m).

Receivables were $0.2m as at 30 June 2007 (2006: $0.9m).

The Company had $0.3m net book value of plant and equipment as at 30 June 2007 (2006: $0.6m). As at 30 June 2007 the Company had $0.8m (2006: $0.3m) of intangible assets, representing goodwill.

Payables were $1.4m at 30 June 2007 (2006: $1.5m). The Company had borrowings of $0.3m as at 30 June 2007 (2006: $0.6m).

(c) Cash flows

The consolidated entity incurred net operating cash outflows of $1.4m during the year ended 30 June 2007 (2006: outflow $1.5m). Net investing cash inflows were $0.1 in the year ended 30 June 2007 (2006: net inflow $0.01m).

Net financing cash inflows of $1.5m (2006: net inflow $0.8m) in the year ended 30 June 2007 included $1.8m proceeds from equity capital raisings. Because the Company’s digital media businesses are still being commercialised the Company’s income for the year ended 30 June 2007 has been insufficient, on its own, to service its operating expenses. Accordingly, the Company has undertaken a number of small capital raisings during the year to fund the continuing development of its digital media businesses. During the financial year the Company repaid borrowings of $0.5m and incurred capital raising costs of $72,000.

Cash balances were $0.2m as at 30 June 2007 (2006: $0.1m).

THE SWISH GROUP LIMITED AND CONTROLLED ENTITIES

COMMENTARY ON RESULTS

FOR THE YEAR ENDED 30 JUNE 2007

4. RESULTS OF SEGMENTS

The company operates in the digital media and film industries within Australia.

5. TRENDS IN PERFORMANCE

The Company will continue to pursue its strategy of developing and commercialising its various digital media businesses, with particular emphasis on its digital signage and digital video on demand businesses. The Company will also continue to develop its digital signage, digital production, digital music and telecommunications services businesses as sources of cash flow. The Company will continue to seek out suitable acquisition and joint venture opportunities in the digital media sector. The Board is not yet in a position to give an accurate forecast of revenue and profitability for the financial year ending 30 June 2008.

6. OTHER MATERIAL FACTORS

Because the Company is continuing to develop its various digital media businesses which are not yet cash flow positive, the Company continued to rely on equity capital raisings to finance the continuing development of these businesses during the period.

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Note Revenue 2 Cost of sales Production costs Employee benefits expense 3 Administrative expenses 3 Impairment losses 3 Depreciation expense 3 Finance costs 3 Other Loss before income tax Income tax benefit Loss for the year Loss attributable to minority interests Net loss attributable to the members of parent 5 Earnings per share (cents per share) - Basic earnings per share - Diluted earnings per share 6 6	Consolidated Consolidated 2007 2006 $ $ 4,558,394 5,102,457 (417,478) (207,867) (3,119,194) (3,603,991) (1,519,615) (1,364,323) (738,409) (1,053,575) (12,500) (1,214,735) (172,641) (359,730) (26,968) (51,028) (526,156) (674,867)
	(1,974,567) (3,427,659) - 238,360
	(1,974,567) (3,189,299) 73,429 4,827
	(1,901,138) (3,184,472)
	(0.4) (0.4) (1.0) (0.9)

The accompanying notes form part of these financial statements.

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED BALANCE SHEET

AS AT 30 JUNE 2007

Note CURRENT ASSETS Cash and cash equivalents 7 Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Short-term borrowings Current portion of long-term borrowings Short-term provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Long-term borrowings TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET DEFICIENCY OF ASSETS EQUITY Share capital 8 Options granted reserve Accumulated losses 5 Foreign currency translation reserve Parent entity interest Minority equity interest TOTAL EQUITY	Consolidated Consolidated 2007 2006 $ $ 211,064 128,877 208,786 877,931
	419,850 1,006,808
	253,839 587,045 760,500 259,000
	1,014,339 846,045
	1,434,189 1,852,853
	1,438,468 1,494,838 247,747 270,020 88,530 220,694 22,421 25,051
	1,797,166 2,010,603
	- 88,530
	- 88,530
	1,797,166 2,099,133
	(362,977) (246,280)
	17,766,008 16,402,008 492,405 - (18,494,285) (16,593,147) - (1,465)
	(235,872) (192,604) (127,105) (53,676)
	(362,977) (246,280)

The accompanying notes form part of these financial statements.

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

TOTAL EQUITY AT THE BEGINNING OF THE YEAR Profit/(loss) for the year Exchange differences on translation of foreign operations Total recognised income and expense for the period Attributable to: Members of the parent Minority interest Options Reserve: Option based payments Options issued Transactions with equity holders in their capacity as equity holders: Contributions TOTAL EQUITY AT THE END OF THE YEAR The accompanying notes form part of these financial statements.	Consolidated Consolidated 2007 2006 $ $ (246,280) 1,946,684
	(1,974,567) (3,189,299) 1,465 (1,465)
	(1,973,102) (3,190,764)
	(1,899,673) (3,185,937) (73,429) (4,827)
	(1,973,102) (3,190,764)
	51,800 440,605
	492,405
	1,364,000 997,800
	1,364,000 997,800
	(362,977) (246,280)

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

Note Cash flows from operating activities Receipts from customers Operating grant receipts Payments to suppliers and employees Interest received Borrowing costs Income tax benefit received Net cash used in operating activities 7 Cash flows from investing activities Purchase of businesses Payment for property, plant and equipment Proceeds from sale of plant and equipment Disposal of subsidiary entity Net cash provided by investing activities Cash flows from financing activities Proceeds from share and option issues Proceeds from borrowings Repayment of borrowings Capital raising costs Net cash provided by financing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year 7	Consolidated Consolidated 2007 2006 $ $ 5,345,542 4,796,413 - 32,513 (6,762,069) (6,507,174) 1,168 10,360 (26,968) (51,028) - 238,360
	(1,442,327) (1,480,556)
	(139,000) (10,000) (18,357) (30,142) 219,568 - - 50,000
	62,211 9,858
	1,780,605 960,000 227,747 210,020 (470,714) (292,449) (72,000) (37,200)
	1,465,638 840,371
	85,522 (630,327) 125,542 755,869
	211,064 125,542

The accompanying notes form part of these financial statements.

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

1. BASIS OF PREPARATION OF THE FINANCIAL REPORT

(a) Basis of preparation of the financial report

The preliminary financial report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E and in accordance with Accounting Standard AASB 134 ‘Interim Financial Reporting’ and the Corporations Act 2001.

The preliminary financial report covers The Swish Group Limited and controlled entities as a consolidated entity. The Swish Group Limited is a listed public company, limited by shares, incorporated and domiciled in Australia.

The financial report has been prepared in accordance with the historical cost convention and, except where stated, does not take into account changing money values or current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. The financial report is presented in Australian dollars.

The following is a summary of material accounting policies adopted by the consolidated entity in the preparation and presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(b) Statement of compliance

The financial report of The Swish Group Limited and controlled comply with Australian equivalents to International Financial Reporting Standards (AIFRS).

Australian Accounting Standards include Australian Equivalents to International Financial Reporting Standards (AIFRSs). Compliance with AIFRS ensures compliance with International Financial Reporting Standards (IFRSs).

(c) Going concern basis of accounting

The financial statements have been prepared on a going concern basis. The consolidated entity incurred a loss for the year ended 30 June 2007 of $1,901,138 and had a deficiency in net assets as at 30 June 2007 of $362,977. The consolidated entity’s income has been insufficient on its own to service its debt obligations and other running expenses. The operations of the consolidated entity for the year ended 30 June 2007 were funded out of revenues and the proceeds of a number of share issues. Without such continued financial support and ability to raise capital, there is uncertainty as to whether the consolidated entity will be able to continue as a going concern and it may become necessary for it to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different from those stated in the financial statements.

In view of the circumstances outlined above, the Directors are of the opinion that the consolidated entity will have sufficient funding and that it is appropriate to prepare the accounts on a going concern basis.

(d) Principles of consolidation

The consolidated financial statements are those of the consolidated entity, comprising the financial statements of the parent entity and of all entities, which The Swish Group Limited controlled from time to time during the year and at balance date.

The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies, which may exist. All intercompany balances and transactions, including any unrealised profits or losses have been eliminated on consolidation. Minority interests in the equity and results of the entities that are controlled are shown separately in the consolidated financial report.

A controlled entity is any entity controlled by The Swish Group Limited. Control exists where The Swish Group Limited has the capacity to dominate the decision-making in relation to the financial and operational policies of another entity so that the other entity operates with The Swish Group Limited to achieve the objectives of The Swish Group Limited.

(e) Revenue recognition

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

reliably. Revenue from the provision of services to customers is recognised upon delivery of the service to the customer.

Government grants received that relate to specific assets or expenses are deferred and recognised as income in the same period as the asset is consumed or when the associated expenses are incurred. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

All revenue is stated net of the amount of goods and services tax (GST).

(f) Cash and cash equivalents

Cash and cash equivalents include cash on hand and at banks, short-tem deposits with an original maturity of three months or less held at call with financial institutions and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.

(g) Property, plant and equipment

Cost

Property, plant and equipment is stated at cost less depreciation and any accumulated impairment losses.

The carrying amount of plant and equipment is reviewed for impairment annually by the Directors for events or changes in circumstances that indicate the carrying value may not be recoverable. If any such indication exists and where the carrying value exceeds the estimated recoverable amount, the assets are written down to their recoverable amount. Impairment losses are recognised in the income statement under “other expenses” (see note 3).

Depreciation

The depreciable amounts of fixed assets are depreciated on a straight-line basis or diminishing balance basis as appropriate over their estimated useful lives commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The useful lives for each class of assets are:

or each class of assets are:
	2007	2006
Plant and equipment:	2 to 10 years	2 to 10 years
Leasehold improvements:	2 to 10 years	2 to 10 years

(h) Leases

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Finance Leases

Leases of fixed assets, where substantially all of the risks and benefits incidental to ownership of the asset, but not the legal ownership, are transferred to entities within the consolidated entity are classified as finance leases. Finance leases are capitalised, recording at the inception of the lease an asset and liability equal to the present value of the minimum lease payments, and disclosed as plant and equipment under lease. Leased assets are depreciated over the shorter of the estimated useful life of the assets and the lease term. Lease payments are allocated between interest expense and reduction of the lease liability. The interest expense is calculated using the interest rate implicit in the lease and is included in finance costs in the Income Statement.

The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements, and amortised over the unexpired period of the lease or the estimated useful lives of the improvements, whichever is the shorter.

Operating Leases

Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses in the period in which they are incurred.

(i) Intangibles

Goodwill

Goodwill on consolidation represents the excess of the cost of an acquisition over the fair value of the Group’s share of net identifiable assets of the acquired entities at the date of acquisition.

Goodwill is not amortised but is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired. Goodwill is carried at cost less accumulated impairment losses.

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

(j) Impairment of assets

Assets with an indefinite useful life are not amortised but are tested annually for impairment in accordance with AASB 136. Assets subject to annual depreciation or amortisation are reviewed for impairment whenever events or circumstances arise that indicate that the carrying amount of the asset may be impaired. An impairment loss is recognised where the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and value in use.

(k) Taxes

Current income tax expense or revenue is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities.

A balance sheet approach is adopted under which deferred tax assets and liabilities are recognised for temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred tax asset or liability is recognised in relation to temporary differences arising from the initial recognition of an asset or a liability if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for temporary differences and unused tax losses only when it is probable that future taxable amounts will be available to utilise those temporary differences and losses

Current and deferred tax balances attributable to amounts recognized directly in equity are also recognised directly in equity.

(l) Employee benefits

Liabilities arising in respect of wages and salaries, annual leave, sick leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date.

Share-based payments

The group operates an employee share option plan. The bonus element over the exercise price for the grant of options is recognised as an expense in the Income Statement in the period(s) when the benefit is earned.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options at grant date. The fair value of options at grant date is determined using a Black-Scholes option pricing model, and is recognised as an employee expense over the period during which the employees become entitled to the option.

(m) Financial instruments

Classification

The group classifies its financial instruments in the following categories: loans and receivables and financial liabilities. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition.

Loans and Receivables

Loan and receivables are measured at fair value at inception and subsequently at amortised cost using the effective interest rate method.

Financial Liabilities

Financial liabilities include trade payables, other creditors and loans from third parties including inter-company balances and loans from or other amounts due to director-related entities.

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

(n) Foreign Currencies

Functional and Presentation Currency

The financial statements of each group entity are measured using its functional currency, which is the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars, as this is the parent entity’s functional and presentation currency.

Transactions and Balances

Transactions in foreign currencies of entities within the consolidated entity are translated into functional currency at the rate of exchange ruling at the date of the transaction.

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising under foreign currency contracts where the exchange rate for that monetary item is fixed in the contract) are translated using the spot rate at the end of the financial year.

Resulting exchange differences arising on settlement or re-statement are recognised as revenues and expenses for the financial year.

Group Companies

The financial statements of foreign operations whose functional currency is different from the group’s presentation currency are translated as follows:

• Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

• Income and expenses are translated at average exchange rates for the period; and

• All resulting exchange differences are recognised as a separate component of equity.

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve as a separate component of equity in the balance sheet.

(o) Comparatives

Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

2. REVENUE

Revenue from operating activities Sale of goods Sale of services Total sales revenue Revenue from non-operating activities Grant income Other revenue Bank interest receivable Total other revenue Total revenue 3. EXPENSES Employee benefits expense Wages and salaries Option based payments Workers’ compensation costs Payroll tax Defined contribution plan expense Annual leave provision Total employee benefits expense Administrative expenses Occupancy costs Advertising and marketing expenses Equipment rental costs Communications costs Professional fees Office administration costs Other expenses Total other expenses Other expenses Bad debts expense Doubtful debts Net foreign exchange differences Impairment losses - goodwill Loss on disposal of fixed assets Gain on disposal of subsidiary entity Other Impairment losses Impairment loss on capitalised Research and development Impairment loss on goodwill Depreciation expense Depreciation of non-current assets: Plant and equipment Leasehold improvements Total depreciation expense Finance costs Interest expense: Other loans Finance charges payable under hire purchase contracts Total finance costs	Consolidated Consolidated 2007 2006 $ $ 79,633 200,059 4,426,679 4,782,313
	4,506,312 4,982,372
	- 32,513 50,914 77,212 1,168 10,360
	52,082 120,085
	4,558,394 5,102,457
	Consolidated Consolidated 2007 2006 $ $ 1,394,589 1,293,378 51,800 - (355) 13,447 53,385 33,891 22,826 43,608 (2,630) (20,001)
	1,519,615 1,364,323
	115,947 135,595 19,395 3,557 19,583 211,490 79,333 62,966 128,110 151,137 339,848 388,031 36,193 100,799
	738,409 1,053,575
	- - 2,953 35,248 36,678 792 - 29,537 - 93,936 - (43,481) (33,630) (15,233)
	6,001 100,799
	- 1,214,735 12,500 -
	12,500 1,214,735
	162,661 351,474 9,980 8,256
	172,641 359,730
	9,149 13,218 17,819 37,810
	26,968 51,028

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

4. DIVIDENDS

The Company does not intend to pay a dividend in respect of the financial year ended 30 June 2007 (2006: $Nil).

5. ACCUMULATED LOSSES

Balance at beginning of financial year Net loss for the year Balance at end of financial year	Consolidated Consolidated 2007 2006 $ $ (16,593,147) (13,408,675) (1,901,138) (3,184,472)
	(18,494,285) (16,593,147)

6. EARNINGS PER SHARE

	Consolidated	Consolidated
	2007	2006
Basic earnings per share	(0.4) cents	(1.0) cents
Diluted earnings per share	(0.4) cents	(0.9) cents
Net loss	($1,901,138)	($3,184,472)
Weighted average number of shares used in calculating
basic earnings per share	423,557,997	327,266,504
Share options	86,962,508	10,495,205
Weighted average number of shares used in calculating
diluted earnings per share	510,520,505	337,761,709

7. CASH AND CASH EQUIVALENTS

Cash Deposits at call Security deposits Bank overdraft	Consolidated Consolidated 2007 2006 $ $ 186,045 103,864 19 13 25,000 25,000
	211,064 128,877 - (3,335)
	211,064 125,542

Cash includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash at bank earns interest at floating rates based on daily bank deposit rates. Deposits at call earn interest at short-term deposit rates.

Security deposits consisted of $25,000 which is held by National Australia Bank Limited to secure a bank guarantee in favour of the landlord to secure lease obligations.

Reconciliation of net loss after tax to net cash flows from operations Net loss Adjustments for: Depreciation of non-current assets Impairment losses Options issued to directors Accrued payables related to acquisitions Bad and doubtful debts Gain on disposal of property, plant & equipment Capitalisation of research and development costs Changes in assets and liabilities: (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other payables Increase/(decrease) in provisions Net cash used in operating activities

Consolidated Consolidated 2007 2006 $ $ (1,974,567) (3,189,299) 172,641 359,730 12,500 1,214,735 51,800 - (279,000) - 2,953 31,248 (42,134) - - (278,016) 669,145 (448,105) (53,035) 834,018 (2,630) (4,867)

(1,442,327) (1,480,556)

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

Financing facilities available At balance date, the following financing facilities had been negotiated and were available: Facilities Hire Purchase facility – National Australia Bank Limited Hire Purchase facility – Capital Finance Australia Limited Loan facility – third party Bank overdraft facility – Bank of New Zealand Total Facilities used at reporting date Hire Purchase facility – National Australia Bank Limited Hire Purchase facility – Capital Finance Australia Limited Loan facility – third party Bank overdraft facility – Bank of New Zealand Total Facilities unused at reporting date Hire Purchase facility – National Australia Bank Limited Hire Purchase facility – Capital Finance Australia Limited Loan facility – third party Ban overdraft facility – Bank of New Zealand Total 8. ISSUED CAPITAL Ordinary shares Issued and fully paid Movements in ordinary shares on issue At 1 July 2006 Shares issued during the year: 1. Issue of shares on 3 August 2006 2. Issue of shares on 16 August 2006 3. Issue of shares on 20 December 2006 4. Issue of shares on 20 December 2006 5. Issue of shares on 8 May 2007 Transaction costs relating to share issues As at 30 June 2007	Consolidated Consolidated 2007 2006 $ $ 600,000 600,000 160,000 160,000 - 100,000 - 20,000 760,000 880,000 78,328 241,469 10,202 67,755 - 100,000 - 3,335 88,530 412,559 521,672 358,531 149,798 92,245 - - - 16,665 671,470 467,441 2007 2006 $ $ 17,766,008 16,402,008
	Number of Shares $ 358,938,193 16,402,008 33,333,333 400,000 15,833,334 190,000 25,000,000 300,000 8,000,000 96,000 30,000,000 450,000 - (72,000)
	471,104,860 17,766,008

1. On 3 August 2006 the Company completed a placement of 33,333,333 shares to sophisticated investors at 1.2 cents per share raising $400,000 to provide working capital and to finance potential acquisitions.

2. On 16 August 2006 the Company completed a placement of 15,833,334 shares to sophisticated investors at 1.2 cents per share raising $190,000 to provide working capital and to finance potential acquisitions.

3. On 20 December 2006 the Company completed a placement of 25,000,000 shares with 25,000,000 attaching options exercisable at to sophisticated investors at 2 cents per share raising $300,000 to provide working capital and to finance potential acquisitions.

4. On 20 December 2006 the Company issued 8,000,000 shares to vendors at 1.2 cents per share raising $96,000 as purchase consideration for businesses acquired by the Company.

5. On 8 May 2007 the Company completed a placement of 30,000,000 shares with 15,000,000 attaching options exercisable at to sophisticated investors at 2 cents per share raising $450,000 to provide working capital and to finance potential acquisitions.

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

9. RETURNS TO SHAREHOLDERS INCLUDING DISTRIBUTIONS AND BUY BACKS

There were no distributions, buy backs or other returns to shareholders in the financial year ended 30 June 2007.

10. NET TANGIBLE ASSET BACKING PER SECURITY

Net tangible asset backing per ordinary security at 30 June 2007 was 0.0 cents (2006: 0.0 cents).

11. ENTITIES OVER WHICH CONTROL HAS BEEN GAINED OR LOST DURING THE PERIOD

The Company acquired control over the following entities during the year ended 30 June 2007:

Date	Subsidiary entity	%	Description	Consideration	Goodwill
July 2006	Swish Torque	51%	Communications reseller	$120,000	$120,000
	Communications Pty Ltd
April 2007	Swish MG Distribution Pty	51%	Distributor of Indian feature films	$380,000	$380,000
	Ltd
May 2007	Swish Communications Pty	51%	Brand management services	$Nil	$Nil
	Ltd
The Company	acquired control over the following entities		during the year ended 30 June	2006:
Date	Subsidiary entity	%	Description	Consideration	Goodwill
August 2005	Swish Ambient Pty Ltd	100%	Advertising sales	$12,500	$12,500
September 2005	Swish Black Cat Pty Ltd	51%	Film production	$72,500	$72,500
September 2005	Swish Films Pty Ltd	100%	TV and film production	$Nil	$Nil
October 2005	Swish Ambient New Zealand	51%	Advertising sales	$Nil	$Nil
	Limited
December 2005	Australian Vision Systems	51%	Import and supply of audio-visual	$Nil	$Nil
	Pty Ltd		equipment
April 2006	Swish Amphead Pty Ltd	51%	Wholesaler of online digital music	$124,000	$124,000

The Company did not acquire any assets or liabilities other than goodwill as a result of these acquisitions.

Operating details of entities over which control has been gained or lost during the period:

Gain of control of entities

Contribution to consolidated loss from ordinary activities after income tax by the controlled entities since the dates in the current period on which control was acquired.

Swish Torque Communications Pty Ltd	($75,329)
Swish MG Distribution Pty Ltd	($42,398)
Swish Communications Pty Ltd	($30,144)

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

Loss of control of entities

During the year ended 30 June 2007 the Company lost control of its owned subsidiary entities Swish Ambient Pty Ltd (100%) and Swish Ambient New Zealand Limited (51%).

Names of entities Swish Ambient Pty Ltd Swish Ambient New Zealand Limited Dates of loss of control Control over Swish Ambient was lost in October 2006 Control over Swish Ambient New Zealand was lost in July 2006 Contribution to consolidated loss from ordinary activities after income tax Swish Ambient Pty Ltd contributed ($2,099) by the controlled entities to the date in the current period when control was lost. Swish Ambient New Zealand Limited contributed $Nil Profit/(loss) from ordinary activities after tax of the controlled entities for Swish Ambient Pty Ltd contributed ($17,942) the whole of the previous corresponding period Swish Ambient New Zealand Limited contributed $19,740

During the year ended 30 June 2006 the Company disposed of its subsidiary entity Kids Connect Pty Ltd for a cash consideration of $50,000. Kids Connect Pty Ltd did not make a contribution to consolidated profit/(loss) during the year ended 30 June 2006.

12. ASSOCIATES AND JOINT VENTURE ENTITIES

The Company did not have any interests in associates or joint venture entities during the financial years ended 30 June 2006 and 2007.

13. CONTINGENT LIABILITIES

The parent company has guaranteed the obligations of its subsidiary entity Swish Afterpost Pty Ltd under a Hire Purchase facility provided by National Australia Bank Limited.

14. SUBSEQUENT EVENTS

The following are significant matters which have arisen post 30 June 2007 that may affect the consolidated entity in financial years subsequent to 30 June 2007:

On 6 July 2007 the Company completed a placement of 20,000,000 shares to sophisticated investors at 1 cent per share raising $200,000 to provide working capital and to finance potential acquisitions.

An Extraordinary General Meeting of the Company will be held on 29 August 2007 at which shareholders will be asked to ratify previous issues of shares and options and to provide approval for the Board to issue up to 50,000,000 fully paid ordinary shares in the Company by 29 November 2007. The purpose of the proposed share issue is to raise capital for the Company to provide working capital for the Company to pay its short term trading accounts and for the development of the Company’s digital signage, digital music, film and television production and media sales businesses and to finance potential acquisitions.

The financial effects of the above transactions have not been brought to account at 30 June 2007.

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

15. SEGMENT REPORTING

The major services from which the economic entity derived revenue during the year were digital media and film production.

The economic entity operates in Australia.

Inter-segment pricing is determined on an arms length basis.

Business Segments 2007 External sales Internal sales Total Revenue RESULT Segment operating loss after tax Segment Depreciation Segment other non-cash expenditure ASSETS Segment Assets LIABILITIES Segment liabilities 2006 External sales Internal sales Total Revenue RESULT Segment operating loss after tax Segment Depreciation Segment other non-cash expenditure ASSETS Segment Assets LIABILITIES Segment liabilities
	Digital Media Film Production Elimination Consolidated
	2,166,249 2,392,145 4,558,394 191,215 (191,215)
	2,357,464 2,392,145 (191,215) 4,558,394
	(3,356,867) (137,658) 1,593,387 (1,901,138) (172,641) (172,641) (253,881) (253,881) 1,791,430 53,666 (410,907) 1,434,189 5,687,990 254,006 (4,144,830) 1,797,166
	Digital Media Film Production Elimination Consolidated
	4,926,121 176,336 5,102,457 194,602 (194,602)
	5,120,723 176,336 (194,602) 5,102,457
	(4,291,035) (62,682) 1,169,245 (3,184,472) (359,730) (359,730) (967,967) (967,967) 3,037,680 50,592 (1,235,419) 1,852,853 5,296,682 113,274 (3,310,823) 2,099,133

THE SWISH GROUP LIMITED & CONTROLLED ENTITIES NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

INDEPENDENT AUDIT REPORT

STATUS OF AUDIT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

This Preliminary Financial Report is based on the annual financial report to which one of the following applies:

� The accounts have been � The accounts have been audited. subject to review. X process of being audited or The accounts are in the � been audited or reviewed. The accounts have not yet subject to review.

Description of likely dispute or qualification if the accounts have not yet been audited or subject to review or are in the process of being audited or subjected to review

The likely outcome of the audit will be an emphasis of matter in relation to inherent uncertainty regarding going concern. This was also disclosed in the prior year’s independent audit report.