IONIC RARE EARTHS LIMITED — Interim / Quarterly Report 2003

Mar 11, 2003

$\overline{\mathbf{r}}$

$\mathfrak{t}$

TELEPHONE: (08) 9486 8598

FACSIMILE: (08) 9486 8597

FACSIMILE

COMPANY ANNOUNCEMENTS PLATFORM (ASX) TO:

1900 999 279 FAX NO:

Ezenet Limited FROM:

12 March 2003 DATE:

TOTAL PAGES: 26 (INCLUDING COVER PAGE)

SUBJECT: HALF YEARLY REPORTS - 31 DECEMBER 2002

Attached are the following:

Appendix 4B Independent Review Report Directors Report Directors Declaration

Why. Ooy

William M Day Company Secretary

GROUND FLOOR, ZURICH HOUSE
66 KINGS PARK ROAD, WEST PERTH WA 6005

EMAIL: linton@ezenet.com.au
EZENET LIMITED ACN 083 646 477

$P. 2$

EZENET LIMITED ACN 083 646 477

DIRECTORS' REPORT

Your directors submit their report for the half-year ended 31 December 2002.

DIRECTORS

The names of the directors of the company in office during the half year and until the date of this report are:

L H Chapman GRO'Dea W G Martinick (Appointed 13/1/03) N T O'Loughlin (Appointed 13/1/03) (Appointed 23/10/02, Resigned 10/1/03) M D Cardaci (Resigned 16/10/02) P J Whyte

OPERATING RESULTS

The net loss for the period was \$391,399.

REVIEW OF OPERATIONS

Since 30 June 2002 the company has focussed on the development of its business of the supply of digital movies and other programmes to the hospitality and mining industries.

The company now has contracts in place to service 5,837 rooms over 58 properties

In order to meet its targets for future growth the company will require further funds to be raised either by equity or borrowings. The directors are currently evaluating various options and sources of funding.

SUBSEQUENT EVENT

In January 2003 a share placement was made to private investors which raised \$261,758.

COMPANY'SOLVENCY

After considering the current cash position, the cash flow forecasts for the 12 months ending 31 December 2003, and the probability that the company will be able to raise the funds necessary for the future growth of its business either by way of share rights issues, share placements, exercise of existing options or borrowings, in the opinion of the directors, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors

L H Chapman Managing Director

Perth, 7 March 2003

到FRNST & YOUNG

INDEPENDENT REVIEW REPORT

To the members of Ezenet Limited

We have reviewed the financial report of Ezenet Limited in the form of Appendix 4B of the Australian Stock Exchange (ASX) Listing Rules, as set out on pages 1 to 19 and the Directors' Declaration for the half-year ended 31 December 2002, but excluding the following sections:

• material factors affecting the revenues and expenses of the company for the current period (page 17 of $1)$ Appendix 4B);
• compliance statement (page 19 of Appendix 4B). $\overline{2}$

The disclosing entity's directors are responsible for the financial report. We have performed an independent review of the financial report in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with Accounting Standard AASB 1029 "Interim Financial Reporting" and other mandatory professional reporting requirements in Australia, statutory requirements and ASX Listing Rules as they relate to Appendix 4B, and in order for the disclosing entity to lodge the financial report with the Australian Securities and Investments Commission and the ASX.

Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements. Our review was limited primarily to inquiries of the entity's personnel and analytical review procedures applied to financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than that given in an audit. We have not performed an audit and accordingly, we do not express an audit opinion.

Review Statement

As a result of our review, we have not become aware of any matter that makes us believe that the half-year financial report, as defined in the scope section, of Ezenet Limited is not in accordance with:

• the Corporations Act 2001, including: a)
• giving a true and fair view of the entity's financial position as at 31 December 2002 and of its $(i)$ performance for the half-year ended on that date; and
• complying with Accounting Standard AASB 1029 "Interim Financial Reporting", and the Corporations $(ii)$ Regulations 2001; and
• other mandatory professional reporting requirements in Australia and ASX Listing Rules as they relate to b) Appendix 4B.

Inherent Uncertainty Regarding Continuation of Going Concern

Without qualification of the above, attention is drawn to the following matter. As disclosed in note 19.2, the ability of the company to pay its debts as and when they fall due is dependant on the continued development of the business model which requires the securing of additional funds either by equity or borrowings. There is uncertainty whether the entity will be able to continue as a going concern without securing additional funding and therefore whether it will be able to pay its debts as and when they fall due and realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

rnst & Young

J P Dowling Partner $l$ 200 Perth $\mathbf{1}$ Date:

Liability limited by the Accountants Scheme, approved under the Professional Standards Act 1994 (NSW)

JPD:HU:EZENET:025

F Central Park 152 St Georges Terrace Ferth WA 6000 Australia GPO Box M939

Perth WA 6843

Tel 61 8 9429 2222 Fax: 61 8 9429 2436

Rules 4.1, 4.3

Appendix 4B

Half yearly report

Introduced 30/6/2002.

Name of entity EZENET LIMITED
Half yearly Preliminary ABN or equivalent company final $(iick)$ (nck) reference	Half year ended ('current period')
84 083 646 477		31 DECEMBER 2002
For announcement to the market Extracts from this report for announcement to the market (see note 1).		\$A
Revenues from ordinary activities (item 1.1)	18.5% down	175,541 to
(Loss) from ordinary activities after tax attributable to members (item 1.22)	16.0% up	(391, 399) to
Profit (loss) from extraordinary items after tax attributable to members ( item 2.5( d ))	gain (loss) of
Net (Loss) for the period attributable to members (item 1.11)	16.0% up	(391, 399) to
Dividends (distributions)	Amount per security	Franked amount per security
Final dividend (Preliminary final report only - item 15.4) Interim dividend (Half yearly report only - item 15.6)	Nile	Nild
Previous corresponding period (Preliminary final report - item 15.5; half yearly report - item 15.7)	Nik	Nile
*Record date for determining entitlements to the N/A dividend, (in the case of a trust, distribution) (see item $15.2$ ) Brief explanation of any of the figures reported above (see Note 1) and short details of any bonus or cash issue or other item(s) of importance not previously released to the market:

If this is a half yearly report it is to be read in conjunction with the most recent annual financial report.

⁺ See chapter 19 for defined terms.

	Condensed consolidated statement of financial performance
		Current period	Previous corresponding
		SA	period - SA
1.1	Revenues from ordinary activities (see items 1.23 $-1.25$	175,541	216,251
1.2	Expenses from ordinary activities (see items 1.26 & 1.27)	566,940	(553,215)
1.3 1.4	Borrowing costs Share of net profits (losses) of associates and joint venture entities (see item 16.7)
1.5	Profit (loss) from ordinary activities before tax	(391, 399)	(336, 964)
1.6	Income tax on ordinary activities (see note 4)
1.7	Profit (loss) from ordinary activities after tax	(391, 399)	(336,964)
1.8	Profit (loss) from extraordinary items after tax (see item $2.5$ )
1,9	Net profit (loss)	(391, 399)	(336,964)
1.10	Net profit (loss) attributable to outside $+$ equity interests
1.11	Net profit (loss) for the period attributable to members	(391, 399)	(336,964)
	Non-owner transaction changes in equity
1.12 1.13	Increase (decrease) in revaluation reserves Net exchange differences recognised in equity
1.14	Other revenue, expense and initial adjustments recognised directly in equity (attach details) transitional from UIG adjustments Initial
1. I S	provisions
1.16	Total transactions and adjustments recognised directly in equity (items 1.12 to 1.15)
1.17	Total changes in equity not resulting from transactions with owners as owners
	Varnings ner security (FPS).	Current period	Previous corresponding

Earnings per security (EPS)	_ _ _ _ _ _ _	corresponding period
Basic EPS 1.18	$(0.01)$ cents	$(1.24)$ cents
Diluted EPS 1.19	$(0.01)$ cents

⁺ See chapter 19 for defined terms.

Notes to the condensed consolidated statement of financial performance

Profit (loss) from ordinary activities attributable to members

		Current period	Previous
		5Α	corresponding period -
			\$A
1.20	Profit (loss) from ordinary activities after tax (item 1.7)	(391, 399)	(336, 964)
1.21	Less (plus) outside $+$ equity interests
1.22	Profit (loss) from ordinary activities after tax, attributable to members	(391,399)	(336,964)

Revenue and expenses from ordinary activities

(see note $15$ )

		Current period	Previous
		\$A	corresponding period -
			SA
1.23	Revenue from sales or services
	Sale of goods	5,291	155,962
	Sale of services	161,968	48,748
		167,259	. 204,710
		8,282	11,541
1.24	Interest revenue
1.25	Other relevant revenue
1.26	Details of relevant expenses
	Cost of Sales	7,055	152,364
	Marketing Expenses	158,612	55,434
	Occupancy Expenses
	Operating Lease Rent	17,399	8,842
	Other	8,408	10,659
	Administration Expenses	212,970	203,321
	Operating Expenses
	Provision for Write Down of Inventories		(10, 148)
		13,845	3,503
	Amortisation of Digital Film Library	2,235
	Provision for Employee Entitlements Provision for Doubtful Debts		(12,500)
	Depreciation	48,517	25,851
	Other	97,899	115,889
		566,940	553,215
	excluding amortisation	62,362	29,354
1.27	Depreciation and amortisation of intangibles (see item 2.3)
	Capitalised outlays
1.28	Interest costs capitalised in asset values

⁺ See chapter 19 for defined terms.

$P. 7$

Appendix 4B Half yearly report

$\overline{\phantom{a}}$

1.29 Outlays capitalised in intangibles (unless $\mu$
arising from an $+$ acquisition of a business)

Consolidated retained profits

		Current period \$A	Previous corresponding period - \$A
1.30	Retained profits (accumulated losses) at the	(3,422,886)	(2,590,370)
	beginning of the financial period	(391, 399)	(336,964)
1.31	Net profit (loss) attributable to members (item 1 H D
1.32	Net transfers from (to) reserves (details if material)
1.33	Net effect of changes in accounting policies	$\overline{ }$
1.34	Dividends and other equity distributions paid or payable
1.35	Retained profits (accumulated losses) at end of financial period	(3,814,285)	(2,927,334)

Intangible and extraordinary items

			Consolidated - current period
		Before tax \$A'000 (a)	Related tax SA'000 (b)	Related outside $^+$ equity interests \$A'000	Amount (after tax) attributable to members \$A'000 $\phi$
				(c)
2.1	Amortisation of goodwill
$2.2^{\circ}$	Amortisation of other intangibles
2.3	Total amortisation of intangibles
2.4	items Extraordinary (details)
2.5	Total extraordinary items

$\bar{t}$

⁺ See chapter 19 for defined terms.

Comparison of half year profits (Preliminary final report only)

• $3.1$ Consolidated profit (loss) from ordinary
  activities after tax attributable to members reported for the Ist half year (item 1.22 in the half yearly report)
• Consolidated profit (loss) from ordinary
  activities after tax attributable to members for $3.2\,$ the 2nd half year

Current year - \$A'000	Previous year - SA'000

⁺ See chapter 19 for defined terms.

	Condensed consolidated statement of financial position	٥f At end current period \$A	As shown in last annual report \$A	As in last half yearly report ŚΑ
	Current assets
4.1	Cash	154,825	678,817	469,315
4.2	Receivables	47,074	54,162	15,012
4.3	Investments			60,687
4,4	Inventories			181,842
4.5	Tax assets (GST Receivable)	12,848
4.6	Other (provide details if material)	19,095	23,619	27,887
4.7	Total current assets	233,842	756,598	754,743
4.8	Non-current assets Receivables
4.9	Investments (equity accounted)
4.10	Other investments
4.11	Inventories
4.12	Exploration and evaluation expenditure capitalised (see para .71 of AASB 1022)
4.13	$($ 'mining properties Development entities)
4.14	Other property, plant and equipment (net)	457,933	349,071	292.544
4.15	Intangibles (net)
4.16	Tax assets
4.17	Other (provide details if material)
4.18	Total non-current assets	457,933	349,071	292,544
4.19	Total assets	691,775	1,105,669	1,047,287
	Current liabilities
4.20	Payables	93,279	135,461	106,046
4.21	Interest bearing liabilities	17,453
4.22	Tax liabilities
4.23	Provisions exc. tax liabilities	13,371	11,137	7,311
4.24	Other (provide details if material)			1,420
4.25	Total current liabilities	124,103	146,598	114,777
	Non-current liabilities
4.26	Payables
4.27	Interest bearing liabilities
4.28	Tax liabilities
4.29	Provisions exc. tax liabilities
4.30	Other (provide details if material)
4.31	Total non-current liabilities

$\mathcal{L}_{\mathcal{A}}$

⁺ See chapter 19 for defined terms.

4.32	Total liabilities	124,103	146,598	114,777
4.33	Net assets	567,672	959,071	932,510
	Equity
4.34	Capital/contributed equity	4,352,957	4,352,957	3,859,844
4.35	Reserves	29,000	29,000
4.36	Retained profits (accumulated losses)	(3,814,285)	(3,422,886)	(2,927,334)
4.37	Equity attributable to members of the	567,672	959,071	932,510
4.38	parent entity Outside + equity interests in controlled entities	$\overline{\phantom{a}}$
4.39	Total equity	567,672	959,071	932,510
4.40	Preference capital included as part of 4.37

Condensed consolidated statement of financial position continued

Notes to the condensed consolidated statement of financial position

Exploration and evaluation expenditure capitalised
(To be completed only by entities with mining interests if amounts are material. Include all expenditure incurred.)

		Current period \$A'000	Previous corresponding period - \$A'000
5.1	Opening balance
5.2	Expenditure incurred during current period
5.3	Expenditure written off during current period
5.4	Acquisitions, disposals, revaluation increments, etc.
5.5	Expenditure transferred to Development Properties
5.6	Closing balance as shown in the consolidated balance sheet (item 4.12)	N/A	N/A

Development properties

(To be completed only by entities with mining interests if amounts are material)

Current period \$A'000	Previous corresponding period - \$A'000

• Expenditure incurred during current period $6.2$
• Expenditure transferred from exploration and 6.3 evaluation

Opening balance $6.1$

⁺ See chapter 19 for defined terms.

$\frac{1}{2}$

٦

Appendix 4B Half yearly report

Expenditure written of tduring current period $6.4\,$ Acquisitions, disposals, revaluation $6.5$ increments, etc. Expenditure transferred to mine properties 6.6 $\overline{\text{N/A}}$ $\overline{N/A}$ Closing balance as shown in the $6.7\,$ consolidated balance sheet (item 4.13)

	Condensed consolidated statement of cash flows
--	------------------------------------------------	--	--	--	--

		Current period	Previous
		\$A	corresponding period
			\$Α
	Cash flows related to operating activities	146,396	167,827
7.1	Receipts from customers	(512,050)	(485, 623)
7.2	Payments to suppliers and employees
7.3	Dividends received from associates
7.4	Other dividends received	8,282	12,129
7.5	Interest and other items of similar nature
	received
7.6	Interest and other costs of finance paid
7.7	income taxes paid		(16, 854)
7.8	Other (provide details if material)	(12, 848)
		(370, 220)	(322, 521)
7.9	Net operating cash flows
	Cash flows related to investing activities
7.10	Payment for purchases of property, plant and	(171, 225)	(94, 786)
	equipment Proceeds from sale of property, plant and
7.11	equipment
7.12	Payment for purchases of equity investments
7.13	Proceeds from sale of equity investments
7.14	Loans to other entities		(60, 687)
7.15	Loans repaid by other entities
7.16	Other (provide details if material)
7.17	Net investing cash flows	(171, 225)	(155, 473)
	Cash flows related to financing activities
7.18	Proceeds from issues of + securities (shares,		195,000
	options, etc.)
7.19	Proceeds from borrowings	25,042
7.20	Repayment of borrowings	(7, 589)
7.21	Dividends paid
7,22	Other (provide details if material)
7.23	Net financing cash flows	17,453	195,000

⁺ Sec chapter 19 for defined terms.

7.24	Net increase (decrease) in cash held	(523, 992)	(282, 994)
7.25	Cash at beginning of period (see Reconciliation of cash)	678,817	752,308
7.26	Exchange rate adjustments to item 7.25.
7.27	Cash at end of period (see Reconciliation of cash)	154,825	469,314

Non-cash financing and investing activities

Details of financing and investing transactions which bave had a material effect on consolidated assets and liabilities but did not involve cash flows are as follows. (If an amount is quantified, show comparative amount.)

There were no non-cash financing and investing transactions.

Reconciliation of cash

Reconciliation of cash at the end of the period (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.		Current period SΑ	Previous corresponding period - \$A
8.1	Cash on hand and at bank	29,407	110,897
8.2	Deposits at call	125,418	163,418
8.3 8.4	Bank overdraft Other (Bank Commercial Bills)		195,000
8.5	Total cash at end of period (item 7.27)	154,825	469,315

Other notes to the condensed financial statements

Ratios		Current period	Previous corresponding period
9.1	Profit before tax / revenue Consolidated profit (loss) from ordinary activities before tax (item $l.5$ ) as a percentage of revenue ( item $l$ . l )	(223.0%)	$(156.0\%)$
9.2	Profit after $\text{tax}/\text{+}$ equity interests Consolidated net profit (loss) from ordinary activities after tax attributable to members $(i$ (item $1.11$ ) as a percentage of equity (similarly attributable) at the end of the period (item 4.37)	(68.9%)	$(36.1\%)$

⁺ See chapter 19 for defined terms.

Earnings per security (EPS)

Details of basic and diluted EPS reported separately in accordance with paragraph 9 and 18 of 10. AASB 1027: Earnings Per Share are as follows.

	31 December 2002 A\$		31 December 2001 A\$
	Basic EPS	Diluted EPS	Basic EPS	Diluted EPS
Numerator (Net loss as per statement of financial performance)	(391, 399)	(391, 399)	(336,964)	(336,964)
Weighted average number of ordinary shares and potential ordinary shares used as the denominator	34,900,000	63,900,000	27,102,174	27,102,174
Weighted average number of converted, lapsed, or cancelled potential ordinary shares used in the calculation of diluted EPS
Number and nature of any potential ordinary shares that are not dilutive and are therefore not used in the calculation of diluted EPS
Any conversion to, calling of, or subscription of ordinary shares that occurred between 31 December 2002 and the time of completion of this report
Any issue of potential ordinary shares that occurred between 31 December 2002 and the time of completion of this report

NTA backing (see note 7)	Current period	Previous corresponding period
Net tangible asset backing per + ordinary 11.1 security	$1.63$ cents	$3.10$ cents

Discontinuing Operations

(Entities must report a description of any significant activities or events relating to discontinuing operations in accordance with paragraph 7.5 (g) of AASB 1029 Interim Financial Reporting, or, the details of discontinuing operations they have
disclosed in their accuunts in accordance with AASB 1042: Discontinuing Operations (see note 17).)

Discontinuing Operations $12.1$

NOT APPLICABLE

⁺ See chapter 19 for defined terms.

Control gained over entities having material effect

13.1 Name of entity (or group of entities)

NOT APPLICABLE

NOT APPLICABLE

• 13.2 Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) since the date in the current period on which control was ⁺acquired
• 13.3 Date from which such profit has been calculated
• 13.4 Profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period

Loss of control of entities having material effect

• 14.1 Name of entity (or group of entities)
• 14.2 Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the current period to the date of loss of control
• 14.3 Date to which the profit (loss) in item 14.2 has been calculated
• 14.4 Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) while controlled during the whole of the previous corresponding period
• Contribution to consolidated profit (loss) from ordinary $14.5$ activities and extraordinary items from sale of interest leading to loss of control

Dividends (in the case of a trust, distributions)

• 15.1 Date the dividend (distribution) is payable
• ⁺Record date to determine entitlements to the dividend $15.2$ (distribution) (ie, on the basis of proper instruments of transfer received by 5.00 pm if ⁴securities are not ⁺CHESS approved, or security holding balances established by 5.00 pm or such later time permitted by SCH Business Rules if ⁺securities are ⁺CHESS approved)
• 15.3 If it is a final dividend, has it been declared? (Preliminary final report only)

$\pmb{\mathbb{S}}$
$\mathbb{S}$
\$

NOT APPLICABLE

• See chapter 19 for defined terms.

Appendix 4B Page 11

Amount per security

		Amount per security	Franked amount per security at % tax (see note	Amount per security of foreign source dividend
15.4	(Preliminary final report only) Final dividend: Current year	Nil¢	Nil $\epsilon$	Nil¢
15.5	Previous year	Nil¢	Nil¢	Nile
15.6	(Half yearly and preliminary final reports) Interim dividend: Current year	Nil¢	Nil¢	Nil¢
15.7	Previous year	Nil¢	Nil¢	Nile

Total dividend (distribution) per security (interim plus final)

(Preliminary final report only)

		Current year	Previous year
15.8	+Ordinary securities	Nil¢	Nil¢
-15.9	Preference + securities	Nil¢	Nil¢

Half yearly report - interim dividend (distribution) on all securities or Preliminary final report - final dividend (distribution) on all securities

		Current period \$A'000	Previous corresponding period - \$A'000
		Nil	Nil
15.10	+Ordinary securities (each class separately)	Nil	Nil
15.11	Preference + securities (each class separately)	Nil	Nil
15.12	Other equity instruments (each class separately)
		Nil	Nil
15.13	Total

The ⁺dividend or distribution plans shown below are in operation.

No dividend or distribution plans are in operation

The last date(s) for receipt of election notices for the ⁺dividend or distribution plans

Any other disclosures in relation to dividends (distributions). (For half yearly reports, provide details in accordance with paragraph 7.5(d) of AASB 1029 Interim Financial Reporting)

⁺ See chapter 19 for defined terms.

entities	Group's share of associates' and joint venture	Current period \$A'000		Previous corresponding period - SA'000
entities':				Nil
16.1	Profit (loss) from ordinary activities before tax		Nil
16.2	Income tax on ordinary activities		Nil	Nil
16.3	Profit (loss) from ordinary activities after tax		Nil	Nil
16.4	Extraordinary items net of tax		Nil	Nil
16.5	Net profit (loss)		Nil	Nil
16.6	Adjustments		Nil	Nil
16.7	Share of net profit (loss) of associates and joint venture entities		Nil	Nil

Material interests in entities which are not controlled entities
The economic entity has an interest (that is material to it) in the following entities. (If the interest was acquired or disposed of during either the cu or disposal ("to dd/mm/yy").)

Name of entity		Percentage of ownership interest held at end of period or date of disposal		Contribution to net profit (loss) (item (1, 9)
17.1	Equity accounted associates and joint venture entities	Current period	Previous corresponding period	Current period \$A'000	Previous corresponding period- \$A'000
	NOT APPLICABLE
17.2	Total
17.3	Other material interests
	NOT APPLICABLE
17.4	Total

+ See chapter 19 for defined terms.

Issued and quoted securities at end of current period
(Description must include rate of interest and any redemption or conversion rights together with prices and dates)

	Category of + sccurities	Total number	Number quoted	Issue price per security (see note 14) (cents)	Amount paid up por security (see note 14) (cents)
18.1	Preference *securities (description)	Nil
18.2	Changes during current period (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions	Nil
18.3	+Ordinary securities	34,900,000
184	Changes during current period through (b) Increases issues (b) Decreases through returns of capital, buybacks	Nil
18.5	+ Convertible debt securities (description and conversion factor)	Nil
18.6	Changes during current period (a) Increases through issues (b) Decreases through securities matured, converted	Nil
18.7	Options (description and conversion factor) Options over ordinary shares issued for 0.1 cent each and can be exercised from 1 July 2003 to 31 July 2003	29,000,000	29,000,000	Exercise Price 10 cents	Expiry date $(i f \, any)$ 31 July 2003
18.8	Issued during current period	Nil
18.9	Exercised during current period	Nil
18.10	Expired during current period	Nil

⁺ See chapter 19 for defined terms.

18.11	Debentures (description)	Nil
18.12	Changes during current period (a) Increases through issues	Nil
	(b) Decreases through securities matured, converted	Nil
18.13	Hasecured notes (description)	Nil
18.14	Changes during current period (a) Increases through issues	Nil
	(b) Decreases through securities matured, converted	Nil

Segment reporting

(Information on the business and geographical segments of the entity must be reported for the current period in accordance with AASB 1005: Segment Reporting and for half year reports, AASB 1029: Interim Financial Reporting. Because entities employ different structures a pro forma cannot be provided. Segment information in the layout employed in the entity's ⁺accounts should be reported separately and attached to this report.)

The company operates in the one geographical segment being Australia and in the one industry being the supply of digital movies, internet services and related equipment to the hospitality and mining industries.

	Current Period \$A	Previous Corresponding Period \$A
Revenue
Sales to customers outside the entity	167,259	204,710
Intersegment revenues
Total segment revenue	167,259	204,710
Segment result	(391, 399)	(336,964)
Unallocated expenses
Loss from ordinary activities before income tax	(391, 399)	(336, 964)
Segment assets	691,775	1,047,287
Unallocated assets	n
	691,775	1,047,287

• See chapter 19 for defined terms.

Comments by directors

(Comments on the following matters are required by ASX or, in relation to the half yearly report, by AASB 1029: Interim Financial Reporting. The comments do not take the place of the directors' report and statement (as required by the Corporations Act) and may be incorporated into the directors' report and statement. For both half yearly and preliminary final reports, if there are no comments in a section, state NIL. If there is insufficient space to comment, attach notes to this report.)

Basis of financial report preparation

• 19.1 If this report is a half yearly report, it is a general purpose financial report prepared in accordance with the listing rules and AASB 1029: Interim Financial Reporting. It should be read in conjunction with the last 'annual report and any announcements to the market made by the entity during the period. The financial statements in this report are "condensed financial statements" as defined in AASB 1029: Interim Financial Reporting. This report does not include all the notes of the type normally included in an annual financial report. [Delete if preliminary final report.]
• 19.2 Material factors affecting the revenues and expenses of the economic entity for the current period. In a half yearly report, provide explanatory comments about any scasonal or irregular factors affecting operations.

The growth in revenues flowing from the company's business of supply of digital movies to the hospitality and mining industries has increased 126% compared with the half year ended 30 June 2002.

As the business continues to expand operating expenses are increasing in line with the growth of the business and are necessary for future growth.

The Appendix 4B has been prepared in accordance with

• 1) AASB Standards
• 2) Other Authoritative Pronouncements of the Australian Accounting Standards Board
• 3) Urgent Issues Group Consensus Views

The Appendix 4B has been prepared using the historical costs basis and the half year has been treated as a discrete reporting period.

The accounting policies followed are consistent with that applied in the most recent Financial Report.

The interim Appendix 4B does not include notes of the type normally included in an Annual Financial Report.

There have been no material events or circumstances arising subsequent to the end of the interim period that have not been recognised in the Appendix 4B.

⁺ See chapter 19 for defined terms.

19.3 A description of each event since the end of the current period which has had a material effect and which is not already reported clsewhere in this Appendix or in attachments, with financial effect quantified (if possible).

In January 2003 a share placement was made to private investors which raised \$261,758. These funds will be utilised in the purchase of equipment and general working capital.

19.4 Franking credits available and prospects for paying fully or partly franked dividends for at least the next year.

The company has no franking credits and the directors do not anticipate paying a dividend for at least the next year.

19.5 Unless disclosed below, the accounting policies, estimation methods and measurement bases used in this report are the same as those used in the last annual report. Any changes in accounting policies, estimation methods and measurement bases since the last annual report are disclosed as follows. (Disclose changes and differences in the half yearly report in accordance with AASB 1029: Interim Financial Reporting. Disclose changes in accounting policies in the preliminary final report in accordance with AASB 1001: Accounting Policies-Disclosure).

Nil

• 19.6 Revisions in estimates of amounts reported in previous interim periods. For half yearly reports the nature and amount of revisions in estimates of amounts reported in previous +annual reports if those revisions have a material effect in this half year.
• Nil
• Changes in centingent liabilities or assets. For half yearly reports, changes in contingent liabilities and 19.7 contingent assets since the last 'annual report.

Nil

⁺ See chapter 19 for defined terms.

Additional disclosure for trusts

• Number of units held by the management 20.1 company or responsible entity or their related parties.
• A statement of the fees and commissions 20.2 payable to the management company or $N/A$ responsible entity.

Identify:

• initial service charges $\bullet$
• management fees
• other fees

Annual meeting

(Preliminary final report only)

The annual meeting will be held as follows:

Place

Date

Time

Approximate date the 'annual report will be available

Compliance statement

This report has been prepared in accordance with AASB Standards, other AASB authoritative ¹ pronouncements and Urgent Issues Group Consensus Views or other standards acceptable to ASX (see note 12).

Identify other standards used

Nil

• This report, and the "accounts upon which the report is based (if separate), use the same $\overline{2}$ accounting policies.
• This report gives a true and fair view of the matters disclosed (see note 2). 3

This report is based on "accounts to which one of the following applies. 4

(Tick one)	The $\frac{1}{2}$ accounts have been $\checkmark$ audited.	The "accounts have been subject to review.
	The * accounts are in the process of being audited or subject to review.	The "accounts have not yet been audited or reviewed.

N/A

$N/A$

$+$ See chapter 19 for defined terms.

• If the audit report or review by the auditor is not attached, details of any qualifications are 5 attached/will follow immediately they are available* (delete one). (Half yearly report only the audit report or review by the auditor must be attached to this report if this report is to satisfy the requirements of the Corporations Act.)
• The entity does not have a formally constituted audit committee. 6

Sign here:	,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	Date:
	Company Secretary

William Michael Day Print name:

Notes

• For announcement to the market The percentage changes referred to in this section are the 1. percentage changes calculated by comparing the current period's figures with those for the previous corresponding period. Do not show percentage changes if the change is from profit to loss or loss to profit, but still show whether the change was up or down. If changes in accounting policies or procedures have had a material effect on reported figures, do not show either directional or percentage changes in profits. Explain the reason for the omissions in the note at the end of the announcement section. Entities are encouraged to attach notes or fuller explanations of any significant changes to any of the items in page 1. The area at the end of the announcement section can be used to provide a cross reference to any such attachment.
• True and fair view If this report does not give a true and fair view of a matter (for example, $2.$ because compliance with an Accounting Standard is required) the entity must attach a note providing additional information and explanations to give a true and fair view.

Condensed consolidated statement of financial performance 3.

• The definition of "revenue" and an explanation of "ordinary activities" are set Item 1.1 out in AASB 1004: Revenue, and AASB 1018. Statement of Financial Performance.
• This item refers to the total tax attributable to the amount shown in item 1.5. Item 1.6 Tax includes income tax and capital gains tax (if any) but excludes taxes treated as expenses from ordinary activities (eg, fringe benefits tax).
• Income tax If the amount provided for income tax in this report differs (or would differ but 4. for compensatory items) by more than 15% from the amount of income tax prima facie payable on the profit before tax, the entity must explain in a note the major items responsible for the difference and their amounts. The rate of tax applicable to the franking amount per dividend should be inserted in the heading for the column "Franked amount per security at % $\text{tax}$ " for items 15.4 to 15.7.

$+$ See chapter 19 for defined terms.

Condensed consolidated statement of financial position 5.

Format The format of the consolidated statement of financial position should be followed as closely as possible. However, additional items may be added if greater clarity of exposition will be achieved, provided the disclosure still meets the requirements of AASB 1029: Interim Financial Reporting, and AASB 1040: Statement of Financial Position. Also, banking institutions. trusts and financial institutions may substitute a clear liquidity ranking for the Current/Non-Current classification.

Basis of revaluation If there has been a material revaluation of non-current assets (including investments) since the last 'annual report, the entity must describe the basis of revaluation adopted. The description must meet the requirements of AASB 1010. Accounting for the Revaluation of Non-Current Assets. If the entity has adopted a procedure of regular revaluation, the basis for which has been disclosed and has not changed, no additional disclosure is required.

• Condensed consolidated statement of cash flows For definitions of "cash" and other terms 6. used in this report see AASB 1026: Statement of Cash Flows. Entities should follow the form as closely as possible, but variations are permitted if the directors (in the case of a trust, the management company) believe that this presentation is inappropriate. However, the presentation adopted must meet the requirements of $AASB 1026$ . ⁺Mining exploration entities may use the form of cash flow statement in Appendix 5B.
• Net tangible asset backing Net tangible assets are determined by deducting from total $7.$ tangible assets all claims on those assets ranking ahead of the $+$ ordinary securities (ie, all liabilities, preference shares, outside $+$ equity interests etc). $+$ Mining entities are not required to state a net tangible asset backing per ⁺ordinary security.
• Gain and loss of control over entities The gain or loss must be disclosed if it has a material 8. effect on the 'accounts. Details must include the contribution for each gain or loss that increased or decreased the entity's consolidated profit (loss) from ordinary activities and extraordinary items after tax by more than 5% compared to the previous corresponding period.
• Rounding of figures This report anticipates that the information required is given to the 9, nearest \$1,000. If an entity reports exact figures, the \$A'000 headings must be amended. If an entity qualifies under ASIC Class Order 98/0100 dated 10 July 1998, it may report to the nearest million dollars, or to the nearest \$100,000, and the \$A'000 headings must be amended.
• Comparative figures Comparative figures are to be presented in accordance with AASB 1018 10. or AASB 1029 Interim Financial Reporting as appropriate and are the unadjusted figures from the latest annual or half year report as appropriate. However, if an adjustment has been made in accordance with an accounting standard or other reason or if there is a lack of comparability, a note explaining the position should be attached. For the statement of financial performance, AASB 1029 Interim Financial Reporting requires information on a year to date basis in addition to the current interim period. Normally an Appendix 4B to which AASB 1029 Interim Financial Reporting applies would be for the half year and consequently the information in the current period is also the year to date. If an Appendix 4B Half yearly version is produced for an additional interim period (eg because of a change of reporting period), the entity must provide the year to date information and comparatives required by AASB 1029 Interim Financial Reporting. This should be in the form of a multi-column

⁺ See chapter 19 for defined terms.

version of the consolidated statement of financial performance as an attachment to the additional Appendix 4B.

• Additional information An entity may disclose additional information about any matter, and $11.$ must do so if the information is material to an understanding of the reports. The information may be an expansion of the material contained in this report, or contained in a note attached to the report. The requirement under the listing rules for an entity to complete this report does not prevent the entity issuing reports more frequently. Additional material lodged with the ⁺ASIC under the Corporations Act must also be given to ASX. For example, a director's report and declaration, if lodged with the ⁺ASIC, must be given to ASX.
• Accounting Standards ASX will accept, for example, the use of International Accounting $12.$ Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if one exists) must be complied with.
• Corporations Act financial statements This report may be able to be used by an entity 13. required to comply with the Corporations Act as part of its half-year financial statements if prepared in accordance with Australian Accounting Standards.
• Issued and quoted securities The issue price and amount paid up is not required in items $|4\rangle$ 18.1 and 18.3 for fully paid securities.
• Details of expenses AASB 1018 requires disclosure of expenses from ordinary activities $15₁$ according to either their nature or function. For foreign entities, there are similar requirements in other accounting standards accepted by ASX. $\widehat{A}$ SB ED 105 clarifies that the disclosures required by $AASB$ 1018 must be either all according to nature or all according to function. Entities must disclose details of expenses using the layout (by nature or function) employed in their $+$ accounts.

The information in lines 1.23 to 1.27 may be provided in an attachment to Appendix 4B.

Relevant Items AASB 1018 requires the separate disclosure of specific revenues and expenses which are not extraordinary but which are of a size, nature or incidence that disclosure is relevant in explaining the financial performance of the reporting entity. The term "relevance" is defined in AASB 1018. There is an equivalent requirement in AASB 1029. Interim Financial Reporting. For foreign entities, there are similar requirements in other accounting standards accepted by ASX.

Dollars If reporting is not in A\$, all references to \$A must be changed to the reporting 16 currency. If reporting is not in thousands of dollars, all references to "000" must be changed to the reporting value.

Discontinuing operations $17.$

Half yearly report

All entities must provide the information required in paragraph 12 for half years beginning on or after 1 July 2001.

Preliminary final report

⁺ See chapter 19 for defined terms.

Entities must either provide a description of any significant activities or events relating to discontinuing operations equivalent to that required by paragraph 7.5 (g) of $AASB$ 1029: Interim Financial Reporting, or, the details of discontinuing operations they are required to disclose in their ^*accounts in accordance with AASB 1042 Discontinuing Operations.

In any case the information may be provided as an attachment to this Appendix 4B.

18. Format

This form is a Word document but an entity can re-format the document into Excel or similar applications for submission to the Companies Announcements Office in ASX.

⁺ See chapter 19 for defined terms.

EZENET LIMITED ACN 083 646 477

DIRECTORS' DECLARATION

In accordance with a resolution of the directors of Ezenet Limited, I state that:

In the opinion of the directors:

• the financial statements and notes of the company: $(a)$
• give a true and fair view of the financial position at 31 December 2002 $(i)$ and its performance for the half-year ended on that date; and
• comply with Accounting Standard AASB 1029: Interim Financial $(ii)$ Reporting and the Corporations Regulations; and
• subject to the matters referred to in the directors' report concerning the $(b)$ funding of the future growth of the company's business, 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

L H Chapman Managing Director

Perth, 7 March 2003