NORWOOD SYSTEMS LIMITED - Annual Report 2007

MONTERAY GROUP LIMITED

A.C.N. 062 959 540

FINANCIAL REPORT

FOR THE YEAR ENDED 30 JUNE 2007

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|Directors' Report|Page 2|
|Corporate Governance Statement|Page 12|
|Auditors’ Independence Declaration|Page 18|
|Auditors' Report|Page 19|
|Directors’ Declaration|Page 21|
|Income Statement|Page 22|
|Statement of Changes in Equity|Page 23|
|Balance Sheet|Page 24|
|Cash Flow Statement|Page 25|
|Notes to the Financial Statements|Page 26|

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MONTERAY GROUP LIMITED

DIRECTORS’ REPORT 30 June 2007

The Directors present the following report for the financial year ended 30 June 2007:

DIRECTORS

The directors of Monteray Group Limited in office at any time during or since the end of the financial year:

Current Directors

GRAHAM WILFRED HALBISH (Aged 58 years) Executive Chairman (Director since 28 August 2002)

Mr. Halbish has a Finance and Accounting background and experience in commercial business development and management and was formerly CEO of the Australian Cricket Board. He is the General Manager of Japan Australia Project Support Coy Pty Ltd.

ALASTAIR PATERSON WILKIE (Aged 48 years) Executive Director/Chief Executive Officer (Director since 2 April 2007)

Mr Wilkie is a senior business professional with experience in the creation and growth of new businesses. He has experience in operational management of technology and service based organisations and delivering large-scale innovative business solutions. Over the past 5 years he has established a variety of companies and held Directorships of a Financial Services business, Software Development and Support organisation and a Flexible Benefits Solutions company. Prior to this he was Managing Director UK of Vision Consulting who managed the design, build and launch of an Internet bank and call centre (Intelligent Finance) for Halifax Building Society. Alastair also spent 12 years with Digital Equipment Corporation and Logica Industry plc and latterly he was General Manager Scotland for the French IT company Bull Information Systems. He also spent 10 years in the Information Services Division of Christian Salversen operating throughout Europe.

KEVIN JOHN DART (Aged 56 years) Non-Executive Director (Director since 29 August 2005)

Mr. Dart has extensive experience in bringing new technologies to the market over the last ten years. Mr. Dart also has over 24 years experience in all aspects of the property industry, as well as general investment, and has been involved in listed and unlisted public companies over the last 17 years. Mr. Dart has extensive experience in capital raisings, new listings, mergers and acquisitions and cross border transactions in the US, UK, Hong Kong and Japan. Mr. Dart was a founding director of ASX listed company Charter Pacific Corporation Limited.

ROGER VINCENT MICHAEL BYRNE (Aged 45 years)

Non-Executive Director (Director since 2 April 2007 )

Mr. Byrne was previously a Board member of the Company between April 2004 and August 2005. He is a former partner of Clayton Utz with extensive experience as a corporate lawyer and engaged in mergers and acquisitions, public capital raisings, private equity raisings and corporate structuring. Roger is now an investment banker providing corporate finance advice.

Former Director

STEVEN ALLAN COLE (Aged 54 years) (Appointed 15 December 2003 Retired 2 April 2007)

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DIRECTORS’ REPORT (continued)

Company Secretary

STEVEN ALLAN COLE (Aged 54 years) (APPOINTED 6 SEPTEMBER 2006)

Mr. Cole has ten years domestic and international banking experience with the Commercial Bank of Australia Limited from 1971 to 1981. He then spent 5 years as a Chief Financial Officer in the property industry. Since 1986 Mr. Cole has been involved in all aspects of public company administration including start ups, IPO’s, ASX listings, capital restructures, merger and acquisitions with responsibilities as Chief Financial Officer, Company Secretary and Director of both listed and unlisted public companies.

Former Company Secretary

LEIGHTON STUART BEAMSLEY (Aged 63 years) (Appointed 8 October 1998 – Retired 31 October 2006)

DIRECTORS’ MEETINGS

Directors	Number of Meetings Whilst a Director Directors Audit	Number of Meetings Whilst a Director Directors Audit	Number of Meetings Attended Directors Audit	Number of Meetings Attended Directors Audit	Years as a Director
G Halbish S Cole K Dart R Byrne A Wilkie	15 14 15 1 1	2 2 0 0 0	15 14 15 1 1	2 2 0 0 0	5 4 2 0 0

Number of Directors' Meetings held during the financial period: 15.

Number of Audit Committee Meetings held in conjunction with Directors’ Meetings during the period: 2.

PRINCIPAL ACTIVITIES

Monteray is an investment company, its major investment is 100% ownership of GPen Pty Ltd a company that operates an internet enabled superannuation administration software platform. The company is currently in the process of investigating and assessing a number of possible investment opportunities.

Refer also to review of operations and results below.

DIVIDENDS

No dividends have been paid or declared in the current financial year (2006: Nil).

The directors do not recommend the payment of a dividend in respect of the financial year ended 30 June 2007.

REVIEW OF OPERATIONS AND RESULTS

Operations

Net loss after income tax of the economic entity for the year ended 30 June 2007 was $1,432,621 (2006: Loss $699,186). The acquisition of GPen Pty Ltd has been accounted for in the current financial year. The contribution by GPen Pty Ltd to the economic entity’s result is a loss of $42,428 (2006: Equity Accounted Loss $234,020).

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DIRECTORS’ REPORT (continued)

REVIEW OF OPERATIONS AND RESULTS (continued)

Operations (continued)

The company acquired 100% of the issued capital in GPen Pty Ltd on 14 July 2006 and its operations and results have been consolidated from that date. In the 2006 Financial Year, Monteray Group Limited owned 36.34% of the issued capital of GPen Pty Ltd and equity accounted this investment. The company has continued to evaluate other investment opportunities.

Financial Position

Refer to Balance Sheet and Cash Flow Statement.

The company’s major investment, GPen Pty Ltd is commercialising it’s superannuation administration platform in Australia. The revenue streams from the commercialisation of the GPen platform are growing but not yet producing profits. The company has access to funding as required to meet its operating costs. The Directors are also investigating various other business opportunities that will provide revenue streams into the company in the short term.

Mr. Alastair Wilkie was appointed a director and CEO of the company on 2 April 2007. Mr. Wilkie is a senior business professional with experience in the creation and growth of new businesses. He has experience in operational management of technology and service based organisations and delivering large-scale innovative business solutions. Over the past 5 years Mr. Wilkie has established a variety of companies and held Directorships of a Financial Services business, Software Development and Support organisation and a Flexible Benefits Solutions company.

Mr. Wilkie’s skills will be a great asset to the Company at Board level and also the operational level for the commercialisation of the Company’s main enterprise, the GPen superannuation administration software platform.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

Monteray proceeded with the acquisition of 100% of the issued capital in GPen Pty Ltd as approved by shareholders at an Extraordinary General Meeting held on 14 July 2006. This acquisition resulted in the company issuing 120 million ordinary fully paid shares on14 July 2006.

LIKELY FUTURE DEVELOPMENTS

Refer to Review of Operations and Results above.

The particular information required by section 299(1)(e) of the Corporations Law has been omitted from the report because the directors believe that it would result in unreasonable prejudice to the company.

EVENTS AFTER BALANCE DATE

All significant matters arising after balance date have been covered in the review of operations and results above.

Other than the matters described in the review of operations and above, there are no other circumstances that have arisen since the end of the financial period that have significantly affected or may significantly affect the operations of the entity, the results of those operations or the state of affairs of the company in future financial years.

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DIRECTORS' REPORT (continued)

REMUNERATION REPORT

Remuneration Policies

Remuneration levels for directors, secretaries and, if required, senior executives of the company (“the directors and senior executives”) will be competitively set to attract and retain appropriately qualified and experienced directors and senior executives. The Chairperson will obtain independent advice on the appropriateness of remuneration packages given trends in comparative companies both locally and internationally and the objectives of the company’s remuneration strategy.

The remuneration structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The remuneration structures take into account:

the capability and experience of the directors and senior executives;
the directors and senior executives ability to control the relevant performance;
the entity’s performance; and
the amount of incentives within each directors and senior executives remuneration.

Remuneration packages include a mix of fixed remuneration and variable remuneration and short and long-term performance-based incentives.

Fixed remuneration

Fixed remuneration consists of base remuneration, as well as employer contributions to superannuation funds.

Remuneration levels are if necessary reviewed annually by the Chairperson through a process that considers individual and overall performance of the entity. If required, external consultants provide analysis and advice to ensure the directors’ and senior executives’ remuneration is competitive in the market place.

Performance-linked remuneration

Performance linked remuneration includes both short-term and long-term incentives and is designed to reward executive directors and senior executives for the results achieved during the preceding year. The short-term incentive (STI) is an “at risk” bonus provided in the form of cash, while the long-term incentive (LTI) is provided as options over ordinary shares of Monteray Group Limited under the rules of the Executive and Employee Option Plan.

Short-term incentive bonus

Each year the Chairperson and Chief Executive Officer if required review the performance of the executive directors and senior executives. The performance generally includes measures relating to the entity, the relevant segment, and the individual, and include financial, people, and strategy and risk measures. The measures are chosen as they directly align the individual’s reward to the performance of the entity and to its strategy and performance.

The financial performance objectives are “profit after tax” and “return on capital” compared to budgeted amounts. The non-financial objectives vary with position and responsibility and include measures such as achieving strategic outcomes.

At the end of the financial year if required the Chairperson and Chief Executive Officer assess the actual performance of the entity. The Chairperson and Chief Executive Officer may obtain independent advice on bonus levels. The results and advice are reviewed by the Chairperson and Chief Executive Officer and a recommendation is then approved by the Board. The Board approves the cash incentive to be paid to the individuals.

Long-term incentive

Options are issued under the Executive and Employee Option Plan (made in accordance with thresholds set in plans approved by shareholders at a general meeting dated 29 May 2001), and it provides for eligible employees to be granted options over ordinary shares at the absolute discretion of the Board.

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DIRECTORS' REPORT (continued)

REMUNERATION REPORT (continued)

Long-term incentive (continued)

The nature of the company’s business does not always allow for the returns and results of the performance by eligible employees to be measured quantitatively on an annual basis. Therefore the decision to issue options under the Executive and Employee Option Plan is primarily based upon the eligible employees reaching certain strategic milestones with the company’s investments. Such milestones are measured against those established at the time of the initial investment. Examples may include: restructuring of a company, completion of an M&A, taking an investee company to a public listing. These types of examples may increase the long term value of the company’s investment without necessarily producing immediate profits.

In considering the entity’s performance and benefits for shareholders’ wealth, the Chairperson has regard to the following indices in respect of the current financial year and the previous four financial years.

	2007	2006	2005	2004	2003
Net profit/(loss) Share price Change in share price Earnings per share	($1,432,621) $0.045 $0.036 ($0.019)	($699,186) $0.009 $- ($0.001)	($ 1,413,427) $0.009 ($0.004) ($0.003)	(458,534) $0.013 $0.004 ($0.001)	($321,944) $0.009 ($0.004) ($0.001)

Net profit is considered in setting the STI as one of the financial performance targets is “profit after tax”. Changes in share price and dividend are included in the total shareholder return (TSR) calculation which is one of the performance criteria assessed for the LTI. The other performance criteria assessed for the LTI is growth in earnings per share, which again takes into account the entity’s net profit and the achievement of strategic milestones.

None of the remuneration provided to directors and executives during the year was linked to achievement of a performance milestone.

Service agreements

It is the entity’s policy that service contracts for executive directors and senior executives be entered into.

A service contract with an executive director or senior executive would provide for the payment of benefits where the contract is terminated by the entity or the individual. The executive directors and senior executives would also be entitled to receive on termination of employment their statutory entitlements of accrued annual and long service leave, together with any superannuation benefits.

A service contract would outline the components of remuneration paid to the executive directors and senior executives but would not prescribe how remuneration levels are modified year to year. Remuneration levels will be reviewed each year to take into account cost-of-living changes, any change in the scope of the role performed by the senior executive and any changes required to meet the principles of the remuneration policy.

At any time the service contract can be terminated either by the entity or the executive director or senior executive providing notice for a period of time in line with market practice at the time the terms are agreed. The company may make a payment in lieu of notice for the same period of time, equal to 100% of base salary.

The executive director or senior executive would have no entitlement to termination payment in the event of removal for misconduct.

The former CEO Mr. Malcolm Park was appointed under a five year contract that allowed for termination by either party on six months notice or immediately by payment of salary in lieu of the notice period or immediately without notice in the case of misconduct.

Mr. Graham Halbish was appointed Executive Chairman of the Company for a 12 month period commencing 1 October 2006. The agreement is for a fixed term and does not provide for the payment of benefits on termination. The total remuneration payable is $150,420 inclusive of superannuation. Non-executive directors fees are not payable to Mr. Halbish for the period of the agreement.

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DIRECTORS' REPORT (continued)

REMUNERATION REPORT (continued)

Non-executive directors

Total remuneration for all non-executive directors, last voted upon by shareholders, is not to exceed $150,000 per annum and fees are set based on fees paid to other non-executive directors of comparable companies. Directors’ base fees are presently set at $48,000 per annum. The company does not enter into individual contracts with nonexecutive directors.

The Chairperson received $12,000 whilst a non executive director between 1 July 2006 and 30 September 2006. Non-executive directors do not receive performance related remuneration in the form of STI’s and LTI’s. Directors’ fees cover all main board activities however, as approved by shareholders at an Extraordinary General Meeting of the Company held on 14 July 2006, five million options were issued to each of Mr. Halbish, Mr. Dart and Mr. Cole in recognition for their past services to the company, (refer Note 4 – Share Based Payments).

The Company does not have a Director’s Retirement Scheme in place at present.

Directors' and Executive Officers’ Remuneration

Details of the nature and amount of each major element of remuneration of each director of the company and the company executives who receive the highest remuneration are:

Non-executive directors	Non-executive directors	Short term employee benefits Salary $ Bonus $ Non- monetary benefits $	Short term employee benefits Salary $ Bonus $ Non- monetary benefits $	Short term employee benefits Salary $ Bonus $ Non- monetary benefits $	Post- employment benefits Pension & Superannuation $	Equity settled share based payments Shares $ Options $ Options %	Equity settled share based payments Shares $ Options $ Options %	Equity settled share based payments Shares $ Options $ Options %	TOTAL $
K Dart R Byrne S Cole (retired 2 April 2007)	2007 2006 2007 2006 2007 2006	48,000 40,000 12,000 8,000 36,000 48,000	- - - - - -	- - - - - -	4,320 3,600 1,080 720 3,240 4,320	- - - - - -	136,040 - - - 136,040 -	72% - - - 78% -	188,360 43,600 13,080 8,720 175,280 52,320
Executive officers
G Halbish A Wilkie (appointed 2 April 2007) M Park (retired 9 February 2007)	2007 2006 2007 2006 2007 2006	35,000 48,000 125,000 - 183,088 -	- - - - - -	- - - - - -	90,895 4,320 11,250 - 15,378 -	- - - - - -	136,040 - - - 28,277 -	52% - - - 12% -	261,935 52,320 136,250 - 226,743 -
Totals
	2007 2006	439,088 144,000	- -	- -	126,163 12,960	- -	436,397 -	44% -	1,001,648 156,960

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DIRECTORS' REPORT (continued)

REMUNERATION REPORT (continued)

Value of Options issued to directors and executives

The following table summarises the value of options granted, exercised or lapsed during the annual reporting period to the identified directors and executives:

	Value of options granted at the grant date (i) $	Value of options exercised at the grant date $	Value of options lapsed at the date of lapse $	Total $
K Dart S Cole (retired 2 April 2007) G Halbish M Park (retired 9 February 2007)	136,040 136,040 136,040 28,349	- - - -	- - - 72	136,040 136,040 136,040 28,277

(i) The value of options granted during the period is recognised in compensation over the vesting period of the grant.

Details of Directors and Executives are as follows:

Details of Directors and Executives are as follows:
Current Directors	Directorships of other ASX listed companies in the preceding three years
Graham Wilfred Halbish – Executive Chairman Nil Alastair Paterson Wilkie CEO (Appointed 2 April 2007) Nil Kevin John Dart – Non-Executive Director Director since 29 August 2005 Charter Pacific Corporation Limited ChemGenex Pharmaceuticals Limited (resigned 8 February 2007) Roger Vincent Michael Byrne – Non-Executive Director (Appointed 2 April 2007) ChemGenex Pharmaceuticals Limited (resigned 8 February 2007) Former Directors Directorship of other ASX listed companies in the preceding three years
Steven Allan Cole – Non-Executive Director (retired 2 April 2007) Nil Former Executive Directorship of other ASX listed companies in the preceding three years
Malcolm Park CEO (resigned 9 February 2007)	Nil

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DIRECTORS' REPORT (continued)

REMUNERATION REPORT (continued)

INTERESTS OF DIRECTORS IN SHARES AND SHARE OPTIONS

Directors’ Interests

The relevant interest of each director in the shares or options issued by the companies within the entity and other related bodies corporate, as notified by the directors to the Australian Stock Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows:

Directors	Balance 30/06/06	Balance after Consolidation of Capital (ii)	Issued in lieu of directors fees	Other interests and acquisitions	Balance 21/09/07
G Halbish (i) A Wilkie K Dart (i) R Byrne S Cole Retired 2/4/07	5,484,000 - 202,000,000 910,000 -	548,400 - 20,200,000 91,000 -	200,000 - 160,000 320,000 320,000	- - 10,541,508 - -	748,400 - 30,901,508 411,000 320,000

Notes

(i) Includes shares in which a relevant interest is held of which the Director is not the registered holder.

(ii) On 14 July 2006 the shareholders approved the consolidation of ordinary shares in the Company on the basis that ten fully paid ordinary shares on issue be converted into one fully paid ordinary share.

Options

Options
Directors	Balance 30/06/06	Balance after Consolidation of Capital (ii)	Issues approved At EGM	Balance 21/09/07
G Halbish (i) A Wilkie K Dart (i) R Byrne S Cole Retired 2/4/07	5,484,000 - 195,000,000 910,000 -	548,400 - 19,500,000 91,000 -	5,000,000 - 5,000,000 - 5,000,000	5,548,400 - 24,500,000 91,000 5,000,000

Notes

(i) Includes options in which a relevant interest is held of which the Director is not the registered holder.
(ii) On 14 July 2006 the shareholders approved the consolidation of ordinary shares in the Company on the basis that ten fully paid ordinary shares on issue be converted into one fully paid ordinary share. Consequently the Company was required to reorganise its options by consolidating them on the same basis as the shares and adjust the exercise price for the options in inverse proportion to the consolidation ratio.

(iii) All options in the table above are vested and exercisable at $0.10 per share at the reporting date.

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DIRECTORS' REPORT (continued)

SHARE OPTIONS

During the year ended 30 June 2007 a total of 17,526 listed options were exercised and shares issued at the rate of 1 fully paid ordinary share for each option exercised. The Exercise price for each option was 10 cents.

Since the end of the financial year a total of 4,310 listed options have been exercised and shares issued at the rate of 1 fully paid ordinary share for each option exercised. The Exercise price for each option was 10 cents.

During the financial year, as approved by shareholders at the Extraordinary General Meeting on 14 July 2006, the following options over shares in Monteray Group Limited were issued to directors in recognition for past services to the company:

Directors	No of Options	Exercise Price	Expiry Date
G Halbish K Dart S Cole	5,000,000 5,000,000 5,000,000	$0.10 $0.10 $0.10	14/07/2011 14/07/2011 14/07/2011

During the financial year, the following options over shares in Monteray Group Limited were issued to the following of the five most highly remunerated officers of the Company as part of their remuneration:

Officers	No. of Options	Exercise Price	Expiry Date
M. Park – CEO resigned 9 February 2007	1,000,000 1,000,000 1,000,000 1,000,000 1,000,000	$0.10 $0.30 $0.50 $0.75 $1.00	14/07/2011 14/07/2011 14/07/2011 14/07/2011 14/07/2011

During the financial year the following options that were issued during the period to the following of the five most highly remunerated officers of the Company as part of their remuneration were cancelled:

Officers	No. of Options	Exercise Price	Expiry Date
M. Park – CEO resigned 9 February 2007	1,000,000 1,000,000 1,000,000	$0.50 $0.75 $1.00	14/07/2011 14/07/2011 14/07/2011

At the date of this report the following options are vested and exercisable by the following of the five most highly remunerated officers of the Company as part of their remuneration:

Officers	No. of Options	Exercise Price	Expiry Date
M. Park – CEO resigned 9 February 2007	1,000,000 1,000,000	$0.10 $0.30	14/07/2011 14/07/2011

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DIRECTORS' REPORT (continued)

INTERESTS OF DIRECTORS IN SHARES AND SHARE OPTIONS (continued)

Options over unissued ordinary shares

At the date of this report the following options over ordinary shares in Monteray Group Limited are on issue and outstanding:

	No. of Options	Exercise Price	Expiry Date
Listed Options Unlisted Options Executive and Employee Option Plan	50,155,229 17,200,000 350,000	$0.10 $0.10 $0.10	31/12/2008 14/07/2011 14/07/2011
	67,705,229

INDEMNIFICATION OF OFFICERS AND AUDITORS

The company has agreed to indemnify directors and officers for all liabilities to another person (other than the company or a related body corporate) that may arise from their position in the company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the company will meet the full amount of any such liabilities, including costs and expenses.

The company has not, during or since the financial year, indemnified or agreed to indemnify an auditor of the company or of any related body corporate against a liability incurred as an auditor.

NON-AUDIT SERVICES

The auditors did not provide any non-audit services for the year ended 30 June 2007.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration under section 307C is attached at page 18 and forms part of this Directors’ report.

Signed in accordance with a resolution of the Directors.

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G Halbish Chairman 21 September 2007 Melbourne

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MONTERAY GROUP LIMITED

CORPORATE GOVERNANCE STATEMENT

This statement outlines the main Corporate Governance practices in place throughout the financial year, which comply with the ASX Corporate Governance Council recommendations, unless otherwise stated.

Board of Directors

Role of the Board

The Board’s primary role is the protection and enhancement of long-term shareholder value.

To fulfil this role, the Board is responsible for the overall Corporate Governance of the entity including formulating its strategic direction, approving and monitoring capital expenditure, setting remuneration, appointing, removing and creating succession policies for directors and senior executives, establishing and monitoring the achievement of management’s goals and ensuring the integrity of internal control and management information systems. It is also responsible for approving and monitoring other reporting.

During the financial year the Board retained responsibility for operation and administration of the company through the appointment of the Chairman to an executive position within the company on 1 October 2006 for a 12 month period. On 2 April 2007 a Chief Executive Officer was appointed. The Chief Executive Officer has assumed responsibility for the operation and administration of the company and reports to the Board. The Board will review the performance of the Chief Executive Officer annually.

Board Processes

The Board has assumed the responsibilities an Audit Committee. The Board has not established a Nomination Committee or a Remuneration Committee because of the limited size and nature of operations of the company, the Board itself undertakes these responsibilities. The Board has established a framework for the management of the company including a system of internal control, a business risk management process and the establishment of appropriate ethical standards.

The full Board currently holds twelve scheduled meetings each year and any extraordinary meetings at such other times as may be necessary to address any specific significant matters that may arise.

The agenda for meetings is prepared in conjunction with the Chairperson. Standing items include the financial reports, strategic matters, governance and compliance. Submissions are circulated in advance.

Director Education

The entity does not have a formal process to educate new directors about the nature of the business, current issues, the corporate strategy and the expectations of the Company concerning performance of directors. However, when the company expands its present business activities a formal process will be initiated to educate new and existing Directors to gain a better understanding of business operations.

Independent Professional Advice and Access to Company Information

Each director has the right of access to all relevant company information and, subject to prior consultation with the Chairperson, may seek independent professional advice from a suitably qualified adviser at the Company’s expense. The director must consult with an advisor suitably qualified in the relevant field, and obtain the Chairperson’s approval of the fee payable for the advice before proceeding with the consultation. A copy of the advice received by the director is made available to all other members of the Board.

Composition of the Board

The names of the directors of the company in office at the date of this report are set out in the Directors’ Report on page 2 of this report.

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CORPORATE GOVERNANCE STATEMENT (continued)

Composition of the Board (continued)

The composition of the Board is determined using the following principles:

the Board should comprise not more than ten directors and not less than three directors. This number may be increased where it is felt that additional expertise is required in specific areas, or when an outstanding candidate materialises;
a majority of directors having extensive knowledge of the company’s industries, and those which do not have extensive expertise in significant aspects of auditing and financial reporting, or risk management of large companies;
a non-executive independent director is appointed as Chairperson. (The chairperson was appointed an executive of the company on 1 October 2006 for a 12 month period in the absence of a Chief Executive Officer);
the Board should comprise directors with a broad range of expertise both nationally and internationally;
• directors appointed by the Board are subject to election by shareholders at the following annual general meeting and thereafter directors (other than the Managing Director) are subject to re-election at least every three years. The tenure for executive directors is linked to their holding of executive office.

An independent director is a director who is not a member of management (a non-executive director) and who:

holds less than 5% of the voting shares of the company and is not an officer of, or otherwise associated, directly or indirectly, with a shareholder of more than 5% of the voting shares of the company;
has not within the last three years been employed in an executive capacity by the company or another group member, or been a director after ceasing to hold any such employment;
within the last three years has not been a principal or employee of a material professional advisor or a material consultant to the company or another group member;
is not a material supplier or customer of the company or another group member, or an officer of or otherwise associated, directly or indirectly, with a material supplier or customer;
has no material* contractual relationship with the company or another group member other than as a director of the company;
is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially* interfere with the director’s ability to act in the best interests of the company.
the Board considers ‘material’, in this context, to be where any director-related business relationship has represented, or is likely in the future to represent the lesser of at least 10% of the relevant segment’s or the director-related business’ revenue. The Board considered the nature of the relevant industries’ competition, and the size and nature of each director-related business relationship, in arriving at this threshold.

Remuneration

The Board assumes the role of the remuneration committee and the Chairperson reviews remuneration packages and policies applicable to the directors and employees.

Chairperson is also responsible for share option schemes, incentive performance packages, superannuation entitlements, retirement and termination entitlements, fringe benefits policies and professional indemnity and liability insurance policies none of which are applicable to the Company at the present time.

The total remuneration for all non-executive directors, last voted upon by shareholders, is not to exceed $150,000 per annum. The current remuneration for each non-executive director is $48,000 per annum. Non-executive directors do not receive bonuses nor are they issued options on securities however, as approved by shareholders at an Extraordinary General Meeting of the Company held on 14 July 2006, five million options were issued to each of Mr. Halbish, Mr. Dart and Mr. Cole in recognition for their past services to the company, (refer Note 4 – Share Based Payments). The Chairperson in his role as the Executive Chairperson receives remuneration of $150,420 per annum inclusive of superannuation for a fixed term of one year from 1 October 2006.

Remuneration Report

The remuneration report is set out on pages 5 to 9 and forms part of the directors’ report for the financial year ended 30 June 2007.

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CORPORATE GOVERNANCE STATEMENT (continued)

Audit Committee

The Board assumes the role of the Audit Committee. The Company has a documented Audit Committee charter, approved by the Board. The external auditors, and the Board conduct the equivalent to Audit Committee meetings. The auditors and Board met twice during the year and the attendance record is disclosed in the table of directors’ meetings.

The Chief Executive Officer and Chief Financial Officer have declared in writing to the Board that the financial records of the company for the financial year have been properly maintained, the company’s financial reports for the year ended 30 June 2007 comply with accounting standards and present a true and fair view of the company’s financial condition and operational results. These declarations are required annually.

The external auditor met with the Board twice during the year.

The responsibilities of the Audit Committee as assumed by the Board include:

reviewing the annual, half year concise financial reports and other financial information distributed externally. This includes approving new accounting policies to ensure compliance with Australian Accounting Standards and generally accepted accounting principles, and assessing whether the financial information is adequate for shareholder needs;
assessing corporate risk assessment processes;
reviewing the company’s policies and procedures for convergence with Australian equivalents to International Financial Reporting Standards for reporting periods beginning on 1 July 2005;
assessing the performance and objectivity of the internal audit function;
assessing whether non-audit services provided by the external auditor are consistent with maintaining the external auditor’s independence. Each reporting period the external auditor provides an independence declaration in relation to the audit or review;
providing advice to the Board in respect of whether the provision of the non-audit services by the external auditor is compatible with the general standard of independence of auditors imposed by the Corporations Act 2001;
assessing the adequacy of the internal control framework and the company’s code of ethical standards;
organising, reviewing and reporting on any special reviews deemed necessary by the Board;
reviewing the nomination and performance of the external auditor. The external auditors were appointed in 1989. The lead external audit engagement partner was last rotated in the 2005 financial year;
monitoring the procedures to ensure compliance with Corporations Act 2001 and the ASX Listing Rules and all other regulatory requirements; and
addressing any matters outstanding with auditors, Australian Taxation Office, Australian Securities and Investments Commission, ASX and financial institutions.

The Board reviews the performance of the external auditors on an annual basis and normally meets with them during the year to:

discuss the external audit plans, identifying any significant changes in structure, operations, internal controls or accounting policies likely to impact the financial statements and to review the fees proposed for the audit work to be performed;
review the half yearly and preliminary final report prior to lodgement with the ASX, and any significant adjustments required as a result of the auditor’s findings, and to recommend Board approval of these documents, prior to announcement of results;
review the draft annual and half year financial report, and recommend board approval of the financial report; and
review the results and findings of the auditor, the adequacy of accounting and financial controls, and to monitor the implementation of any recommendations made.

Page 14 of 57

CORPORATE GOVERNANCE STATEMENT (continued)

Risk Management

Oversight of the Risk Management System

The Board has implemented a Risk Management System for assessing, monitoring and managing operational, financial reporting, and compliance risks for the Company because of the limited size and scope of the Company’s operations. The Board has assessed the financial reporting risk management and associated compliance and controls and found them to be operating efficiently and effectively. The operational and other risk management compliance and controls, have also been assessed and found to be operating efficiently and effectively. All risk assessments covered the whole financial year and the period up to the signing of the annual financial report for all material operations in the entity, and material associates and joint ventures.

Risk Profile

The risk management program is aimed at ensuring risks are identified, assessed and appropriately managed. Major risks for the entity arise from such matters as actions by competitors, government policy changes, environment, occupational health and safety, property, financial reporting, and the purchase, development and use of information systems.

Financial risk exposures arise in the course of the day-to-day operating activities of the entity, largely due to cash flow and interest rate movements. The primary objective of financial exposure management is to reduce the volatility of cash flows and asset values arising from such movements. The cash funds invested by the company are generally in short term investments with Australian banks.

Risk Management and Compliance and Control

The Board is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities. The Board’s policy on internal controls is comprehensive and comprises the company’s internal compliance and control systems, including:

financial reporting – there is a budgeting system with an annual budget approved by the directors. Monthly actual results are reported against budget and revised forecasts for the year are prepared regularly. The entity reports to shareholders half yearly;
continuous disclosure – the entity has a policy that all shareholders and investors have equal access to the company’s information and has procedures to ensure that all price sensitive information is disclosed to the ASX in accordance with the continuous disclosure requirements of the Corporations Act 2001 and ASX Listing Rules;
a comprehensive process is in place to identify matters that may have a material effect on the price of the company’s securities and notify them to the Board;
the Company Secretary is responsible for interpreting the company’s policy and where necessary informing the Board,
the Company Secretary is responsible for all communications with the ASX.

Risk Management and Compliance and Control continued

investment appraisal – the entity has clearly defined guidelines for capital expenditure. These include detailed appraisal and review procedures, levels of authority and due diligence requirements where businesses are being acquired or divested.

Comprehensive practices have been established to ensure:

capital expenditure and revenue commitments above a certain size obtain prior Board approval;
business transactions are properly authorised and executed;
financial reporting accuracy and compliance with the financial reporting regulatory framework.

Financial Reporting

The Chief Executive Officer and Chief Financial Officer have declared, in writing to the Board that the company’s financial reports are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board.

Monthly actual results are reported against budgets and revised forecasts for the year are prepared regularly.

Page 15 of 57

CORPORATE GOVERNANCE STATEMENT (continued)

Risk Management (continued)

Environmental Regulation

The entity aims to ensure that the highest standard of environmental care is achieved. The Board aims to ensure that the entity and associated investments’ environmental policies are adhered to and are in compliance with all relevant environmental legislation.

The company’s operations are not subject to any significant environmental regulations under either Commonwealth or State legislation.

Assessment of Effectiveness of Risk Management

The Board ensures compliance of the internal controls and risk management programs by reviewing the effectiveness of the compliance and control systems.

Ethical Standards

All directors, executives and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the entity. The Board reviews the Ethical Standards policy regularly and processes are in place to promote and communicate these policies.

Conflict of Interest

Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the company. The Board has developed procedures to assist directors to disclose potential conflicts of interest.

Where the Board believes that a significant conflict exists for a director on a Board matter, the director concerned is not present at the meeting whilst the item is considered. Details of director-related entity transactions with the entity are set out in Note 22.

Code of Conduct

The entity has advised each director, executive and employee that they must comply with the Ethics Standards policy. The policy covers the following:

aligning the behaviour of the Board and management with the code of conduct by maintaining appropriate core company values and objectives;
fulfilling responsibilities to shareholders by delivering shareholder value;
usefulness of financial information by maintaining appropriate accounting policies and practices and disclosure;
employment practices such as occupational health and safety, employment opportunity, the level and structure of remuneration, and conflict resolution;
responsibilities to the community, such as environmental protection policies, supporting the community activities and sponsorships and donations;
responsibilities to the individual, such as privacy, use of privileged or confidential information, and conflict resolution;
compliance with legislation including policies on legal compliance in countries where the legal systems and protocols are significantly lower than Australia’s;
conflicts of interest;
corporate opportunities such as preventing directors and key executives from taking advantage of property, information or position for personal gain;
confidentiality of corporate information;
fair dealing;
protection and proper use of company’s assets;
compliance with laws; and
reporting of unethical behaviour.

Page 16 of 57

CORPORATE GOVERNANCE STATEMENT (continued)

Ethical Standards (continued)

Trading in General Company Securities by Directors and Employees

The key elements of the Trading in General Company Securities by directors and employees policy are:

identification of those restricted from trading – directors and employees may acquire shares in the company, but are prohibited deal dealing in company shares or exercising options;
except between three and thirty days after the release of the company’s half year and annual results to the Australian Stock Exchange, the annual general meeting or any major announcement;
whilst in possession of price sensitive information nor yet released to the market;
raising the awareness of legal prohibitions including transactions with colleagues and external advisers;
requiring details to be provided of intended trading in the company’s shares; and
requiring details to be provided of the subsequent confirmation of the trade.

Directors and employees must obtain approval of the Chairperson of the Board and notify the Company Secretary before they sell or buy shares in the company and is subject to Board veto. In accordance with the provisions of the Corporations Act 2001 and the Listing Rules of the Australian Stock Exchange, directors must advise the ASX of any transactions conducted by them in shares in the company.

Communication with Shareholders

The Board provides shareholders with information using a comprehensive Continuous Disclosure policy which includes identifying matters that may have a material effect on the price of the company’s securities, notifying them to the ASX, and issuing media releases.

In summary, the Continuous Disclosure policy operates as follows:

the Company Secretary is responsible for interpreting the company’s policy and where necessary informing the Board. The Company Secretary is responsible for all communications with the ASX. Such matters are advised to the ASX on the day they are discovered, and all senior executives must follow a continuous disclosure discovery process, which involves monitoring all areas of the entity’s internal and external environment;
the annual financial report is distributed to all shareholders (unless a shareholder has specifically requested not to receive the document), including relevant information about the operations of the entity during the year, changes in the state of affairs of the entity and details of future developments;
the half yearly report contains summarised financial information and a review of the operations of the entity during the period. The half year reviewed financial report is lodged with the Australian Securities and Investments Commission and the ASX, and sent to any shareholder who requests it;
proposed major changes in the entity which may impact on share ownership rights are submitted to a vote of shareholders;
notices of all meetings of shareholders; and
the external auditor attends the annual general meetings to answer any questions concerning the conduct of the audit, the preparation and content of the auditor’s report, accounting policies adopted by the company and the independence of the auditor in relation to the conduct of the audit.

All of the above information, including that of the previous three years, is made available upon request to all shareholders who lodge their contact details with the company.

The Board encourages full participation of shareholders at the annual general meeting, to ensure a high level of accountability and identification with the entity’s strategy and goals. Important issues are presented to the shareholders as single resolutions.

The shareholders are requested to vote on the appointment and aggregate remuneration of directors, the granting of options and shares to directors, the remuneration report and changes to the constitution. Copies of the constitution are available to any shareholder who requests it.

Page 17 of 57

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INDEPENDENCE DECLARATION

TO : THE DIRECTORS MONTERAY GROUP LIMITED

As lead engagement partner for the audit of Monteray Group Limited and its controlled entities for the year ended 30 June 2007, 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 audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.

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PKF

Chartered Accountants

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D J Garvey Partner 21 September 2007 Melbourne

PKF is a national association of independent chartered accounting and consulting firms, each trading as PKF. PKF Australia Ltd is also a member of PKF International, an association of legally independent chartered accounting and consulting firms.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MONTERAY GROUP LIMITED

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Scope

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

Directors’ Responsibility for the Financial Report

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

Auditor’s Responsibility

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

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

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

Independence

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

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Auditor’s Opinion

In our opinion the financial report of Monteray Group Limited is in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their performance for the year ended on that date; and
(b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

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PKF D J Garvey
Chartered Accountants Partner
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21 September 2007, Melbourne

MONTERAY GROUP LIMITED

DIRECTORS’ DECLARATION 30 June 2007

In the opinion of the Directors of Monteray Group Limited:

a. the accompanying financial statements and notes are in accordance with the Corporations Act 2001, comply with accounting standards and give a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and their performance for the year ended on that date;

b. at the date of this declaration there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable, for the reasons set out in note 1(xvi).

c. as required by Section 295A of the Corporations Act 2001 declarations have been received from Mr. Alastair Wilkie (as Chief Executive Officer) and Mr. Alan Beck (as Chief Financial Officer).

Signed in accordance with a resolution of the Directors.

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G Halbish Chairman 21 September 2007 Melbourne

Page 21 of 57

MONTERAY GROUP LIMITED

INCOME STATEMENT FOR THE YEAR ENDED 30 June 2007

NOTE	CONSOLIDATED THE COMPANY 2007 2006 2007 2006 $ $ $ $
Revenue from continuing activities 2 Administration expenses Director benefits Finance costs Personnel expenses 3 Professional fees Project expenses Other expenses 3 Share of net losses of associates accounted for using the equity method 11 Loss before income tax from continuing activities Income Tax Expense 6	2,306,797 5,650 32,567 5,650
	(245,219) (138,344) (223,556) (138,344) (638,656) (156,960) (638,656) (156,960) (45,572) (48,140) (45,572) (48,140) (1,732,022) - (283,486) - (587,690) - (177,783) - - (118,133) - (118,133) (490,259) (9,239) (53,707) (9,239) - (234,020) - (234,020)
	(1,432,621) (699,186) (1,390,193) (699,186) - - - -
NET LOSS ATTRIBUTABLE TO THE MEMBERS OF MONTERAY GROUP LIMITED	(1,432,621) (699,186) (1,390,193) (699,186)
Basic loss per share (cents per share) 25 Diluted loss per share (cents per share) 25	(1.96) (1.36) (1.96) (1.36)

The above Income Statement is to be read in conjunction with the attached notes.

Page 22 of 57

MONTERAY GROUP LIMITED

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2007

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||||||
|---|---|---|---|---|
|CONSOLIDATED|THE COMPANY|
|2007|2006|2007|2006|
|$|$|$|$|
|ISSUED CAPITAL|
|75,003,612 (2006: 515,860,138) fully|
|paid ordinary shares|
|Opening balance|64,881,035|64,880,435|64,881,035|64,880,435|
|Issued during the period|2,341,753|600|2,341,753|600|
|-|-|
|Capital reduction|(62,380,083)|(62,380,083)|
|Closing balance|4,842,705|64,881,035|4,842,705|64,881,035|
|SHARE OPTION RESERVE|
|Opening balance|-|-|-|-|
|Equity compensation|451,363|-|451,363|-|
|Closing balance|451,363|-|451,363|-|
|ACCUMULATED LOSSES|
|Opening balance|(65,273,174)|(64,573,988)|(65,273,174)|(64,573,988)|
|Capital reduction|62,380,083|-|62,380,083|-|
|Loss for the period|(1,432,621)|(699,186)|(1,390,193)|(699,186)|
|Closing balance|(4,325,712)|(65,273,174)|(4,283,284)|(65,273,174)|

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The above Statement of Changes in Equity is to be read in conjunction with the attached notes.

Page 23 of 57

MONTERAY GROUP LIMITED

BALANCE SHEET AS AT 30 June 2007

NOTE	CONSOLIDATED THE COMPANY 2007 $ 2006 $ 2007 $ 2006 $
ASSETS CURRENT ASSETS Cash and cash equivalents 7 Trade and other receivables 8 Total current assets Other financial assets 9 Investments accounted for using the equity method 11 Plant and equipment 12 Intangible assets 13 Total non-current assets	72,858 9,934 16,631 9,934 201,591 567,510 451,860 567,510
	274,449 577,444 468,491 577,444 - - 1,462,285 - - 262,285 - 262,285 38,968 - - - 1,766,053 - - -
	1,805,021 262,285 1,462,285 262,285
TOTAL ASSETS	2,079,470 839,729 1,930,776 839,729
LIABILITIES CURRENT LIABILITIES Trade and other payables 14 Other financial liabilities 15 Employee benefits 16 Total current liabilities	207,194 242,226 136,081 242,226 841,911 989,642 783,911 989,642 62,009 - - -
	1,111,114 1,231,868 919,992 1,231,868
TOTAL LIABILITIES	1,111,114 1,231,868 919,992 1,231,868

NET ASSETS/ (LIABILITIES)	968,356 (392,139) 1,010,784 (392,139)
EQUITY Issued Capital 20 Reserves Accumulated losses 21	4,842,705 64,881,035 4,842,705 64,881,035 451,363 - 451,363 - (4,325,712) (65,273,174) (4,283,284) (65,273,174)
TOTAL EQUITY	968,356 (392,139) 1,010,784 (392,139)

The above Balance Sheet is to be read in conjunction with the attached notes.

Page 24 of 57

MONTERAY GROUP LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 June 2007

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|||||||
|---|---|---|---|---|---|
|NOTE|CONSOLIDATED|THE COMPANY|
|2007|2006|2007|2006|
|$|$|$|$|
|CASH FLOWS FROM OPERATING|
|ACTIVITIES|
|Receipts from customers|2,325,177|-|-|-|
|Interest received|11,256|127|1,414|127|
|Payments to suppliers and employees|(2,877,484)|(451,898)|(698,455)|(451,898)|
|Net Cash Utilised in Operating Activities|26|(541,051)|(451,771)|(697,041)|(451,771)|
|CASH FLOWS FROM INVESTING|
|ACTIVITIES|
|Acquisition of plant and equipment|(41,035)|-|-|-|
|Cash acquired on purchase of business|10|94,561|-|-|-|
|-|-|-|
|Net Cash Provided by Investing Activities|53,526|
|CASH FLOWS FROM FINANCING|
|ACTIVITIES|
|Proceeds from share issues|1,752|600|1,752|600|
|Proceeds from borrowings|548,697|953,837|548,697|953,837|
|-|
|Loan to subsidiary (2006: Associate)|(539,825)|153,289|(539,825)|
|Net Cash Provided by Financing Activities|550,449|414,612|703,738|414,612|
|Net increase / (decrease) in cash held|62,924|(37,159)|6,697|(37,159)|
|Cash and cash equivalents at beginning of|
|the year|9,934|47,093|9,934|47,093|
|CASH AND CASH EQUIVALENTS AT|
|THE END OF THE FINANCIAL YEAR|26|72,858|9,934|16,631|9,934|

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The above Cash Flow Statement is to be read in conjunction with the attached notes.

Page 25 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

INTRODUCTION

Monteray Group Limited is a listed public company incorporated and domiciled in Australia.

Operations and principal activities

Operations comprise commercialising the GPen superannuation administration software platform and investigating and assessing possible investment opportunities.

Scope of financial statements

The consolidated financial statements cover Monteray Group Limited as an individual entity, and together with its subsidiaries as a consolidated entity for the year ended 30 June 2007. Monteray Group Limited is the parent company within the consolidated group.

Currency

The financial report is presented in Australian dollars and rounded to the nearest one dollar.

Registered office

Level 18, 50 Cavill Avenue, Surfers Paradise, Queensland 4217

Authorisation of financial report

The financial report was authorised for issue on 21 September 2007 by the directors.

1 SUMMARY OF ACCOUNTING POLICIES

(i) Overall Policy

The principal accounting policies adopted by Monteray Group Limited are stated in order to assist in a general understanding of the financial report.

Basis of preparation

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001 . The consolidated financial report of the Group also complies with the IFRSs and interpretations adopted by the International Accounting Standards Board.

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis.

Significant Judgments and Key Assumptions

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes:

Note 10 - Acquisition of subsidiary and intangible assets

Note 4 - Share-based payments

Note 13 - Intangible assets

Page 26 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

1 SUMMARY OF ACCOUNTING POLICIES (continued)

(i) Overall Policy (continued)

Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

The comparative consolidated financial statements presented for the 2006 financial year were prepared using the equity method of accounting to include Monteray Group Limited’s 36.34% share of the income and expenses of its then associate company GPen Pty Ltd. Monteray Group Limited acquired a 100% interest in GPen in July 2006 and the 30 June 2007 consolidated financial statements include the financial statements of GPen Pty Ltd on a consolidated basis from 1 July 2006.

Basis of consolidation

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. In the Company's financial statements, investments in subsidiaries are carried at cost.

(ii) Revenue Recognition

(a) Sale of goods

Revenue from the sale of goods is recognised when all significant risks and rewards of ownership have been transferred to the buyer. In most cases this coincides with the transfer of legal title or the passing of possession to the buyer.

(b) Rendering of services

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the percentage of the services performed.

(c) Interest revenue

Interest revenue is recognised using the effective interest method. It includes the amortisation of any discount or premium.

(iii) Income Taxes

Income taxes are accounted for using the comprehensive balance sheet liability method whereby:

the tax consequences of recovering (settling) all assets (liabilities) are reflected in the financial statements;
current and deferred tax is recognised as income or expense except to the extent that the tax relates to equity items or to a business combination;
a deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available to realise the asset; and
deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled.

Page 27 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

1 SUMMARY OF ACCOUNTING POLICIES (continued)

(iv) Financial Assets and Financial Liabilities

Financial assets and financial liabilities are recognised on the balance sheet when the company becomes party to the contractual provisions of the financial instrument.

A financial asset is derecognised when the contractual rights to the cash flows from the financial assets expire or are transferred and no longer controlled by the entity.

A financial liability is removed from the balance sheet when the obligation specified in the contract is discharged or cancelled or expires.

Financial assets and financial liabilities classified as held for trading are measured at fair value through profit or loss.

Upon initial recognition a financial asset or financial liability is designated as at fair value through profit or loss when doing so results in more relevant information, because either:

(i) it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising gains or losses on them on different bases.
(ii) a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to key management personnel.

Investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured are not designated as at fair value though profit or loss.

A gain or loss arising from a change in the fair value of a financial asset or financial liability classified as at fair value through profit or loss is recognised in profit or loss.

Financial assets not measured at fair value comprise:

(a) loans and receivables with fixed or determinable payments that are not quoted in an active market. These are measured at amortised cost using the effective interest method.
(b) held-to-maturity investments with fixed or determinable payments and fixed maturity that will be held to maturity. These are measured at amortised cost using the effective interest method.
(c) investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured. These are measured at cost.

Available-for-sale financial assets are non-derivative financial assets which are designated as available-for-sale or that are not classified as loans and receivables, held-to-maturity investments or financial assets as at fair value through profit or loss.

A gain or loss arising from a change in the fair value of an available-for-sale financial asset is recognised directly in equity, through the statement of changes in equity (except for impairment losses and foreign exchange gains and losses) until the financial asset is derecognised at which time the cumulative gain or loss previously recognised in equity is recognised in profit or loss.

Purchases of financial assets are accounted for as follows:

financial assets held for trading - at trade date
held-to-maturity investments - at trade date
loans and receivables - at trade date
available-for-sale financial assets - at trade date

Page 28 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

1 SUMMARY OF ACCOUNTING POLICIES (continued)

(iv) Financial Assets and Financial Liabilities (continued)

Except for the following all financial liabilities are measured at amortised cost using the effective interest rate method.

(a) financial liabilities at fair value through profit and loss
(b) financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or is accounted for using the continuing involvement approach.

The amortised cost of a financial asset or a financial liability is the amount initially recognised minus principal repayments, plus or minus cumulative amortisation of any difference between the initial amount and maturity amount and minus any write-down for impairment or uncollectibility.

(v) Trade and other receivables

Trade accounts and notes receivable and other receivables represent the principal amounts due at balance date plus accrued interest and less, where applicable, any unearned income and provisions for doubtful accounts.

(vi) Investments in Associates

An associate is an entity over which the economic entity has significant influence.

Investments in associates are accounted for using the equity method (refer (vii) below) except when the investment is classified as held for sale in which case it is measured at the lower of its carrying amount and fair value less costs to sell.

(vii) Equity Method of Accounting for Investments

The equity method is a method of accounting whereby the investment is initially recorded at cost and adjusted thereafter for the post acquisition change in the investor's share in net assets of the investee. The profit or loss of the investor includes the investor's share of the investee profit or loss after tax.

(viii) Property, Plant and Equipment

Items of property, plant and equipment are stated at cost less accumulated depreciation.

The carrying amount of property, plant and equipment is reviewed for impairment when events or changes in circumstances indicate that carrying value may not be recoverable. If any such indication exists and where the carrying amount values exceeds the estimated recoverable amount the assets are written down to the recoverable amounts.

The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the entity commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Depreciation Rate Office equipment 10% - 33% Furniture & Fittings 10% - 25% Computer Software 40%

Page 29 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

1 SUMMARY OF ACCOUNTING POLICIES (continued)

(ix) Intangible Assets

Intangible assets acquired as part of a business combination are identified and recognised separately at fair value at the date of acquisition.

Intellectual property

Intellectual property in the GPen software (as disclosed in Note 10) is deemed to have a finite useful life. Amortisation is charged to the income statement on a straight line basis over the remaining useful life.

Class of Intangible Asset

Amortisation Rate

Intellectual property

10% per annum

Intangible assets are tested annually for impairment where an indicator of impairment exists. Useful lives are examined on an annual basis and adjustments, where applicable, are made on a prospective basis.

The remaining amortisation period for the GPen software is 9 years.

(x) Trade and other payables

Trade accounts and other payables and accrued liabilities represented the principal amounts outstanding at balance date plus, where applicable, any accrued interest.

(xi) Interest bearing loans and borrowings

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowings.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as through the amortisation process.

Borrowing costs are expensed as incurred.

(xii) Employee Benefits

Provision is made for the economic entity's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year together with benefits arising from wages and salaries, annual leave and sick leave, which will be settled after one year, have been measured at the amounts expected to be paid when the liability is settled plus related on costs.

Contributions are made by the economic entity to employee's superannuation funds and are charged as expenses when incurred.

(xiii) Share-based payment arrangements

Goods or services received or acquired in a share-based payment transaction are recognised as a increase in equity if the goods or services were received in an equity-settled share-based payment transaction or as a liability if the goods and services were acquired in a cash settled share-based payment transaction.

Page 30 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

1 SUMMARY OF ACCOUNTING POLICIES (continued)

(xiii) Share-based payment arrangements (continued)

For equity-settled share-based transactions, goods or services received are measured directly at the fair value of the goods or services received provided this can be estimated reliably. If a reliable estimate cannot be made the value of the goods or services is determined indirectly by reference to the fair value of the equity instrument granted.

Transactions with employees and others providing similar service are measured by reference to the fair value at grant date of the equity instrument granted.

(xiv) Contingent Liabilities

A contingent loss is recognised as an expense and a liability if it is probable that future events will confirm that after taking into account any related probable recovery, an asset has been impaired or a liability incurred and, a reasonable estimate of the amount of the resulting loss can be made.

(xv) Events after the Balance Sheet Date

Assets and liabilities are adjusted for events occurring after the balance date that provide evidence of conditions existing at the balance date.

(xvi) Going Concern

The Directors are developing and commercialising the GPen superannuation administration platform as well as continuing to investigate other various business opportunities. They have access to funding to meet the operating costs of the Company.

The company’s largest shareholder Charter Pacific Corporation Limited has undertaken to provide financial support to the company, to continue its operations until it has sufficient working capital either from business operations or capital raisings to fund its activities.

The Directors have reviewed the forecasts and budgets for the next twelve months and consider that the development of the business suggests that if the budget is achieved the company will generate sufficient cash flows to fund its operations and if the low end of the forecasts are achieved that with the support provided by Charter Pacific Corporation Ltd in the next twelve months the company will be able to meet its commitments and carry out its business plan.

(xvii) New accounting standards and interpretations not yet effective

The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2007, but have not been applied in preparing this financial report:

AASB 7 Financial Instruments: Disclosures (August 2005) replaces the presentation requirements of financial instruments in AASB 132. AASB 7 is applicable for annual reporting periods beginning on or after 1 January 2007, and will require extensive additional disclosures with respect to the Group’s financial instruments and share capital.
AASB 2005-10 Amendments to Australian Accounting Standards (September 2005) makes consequential amendments to AASB 132 Financial Instruments: Disclosure and Presentation , AASB 101 Presentation of Financial Statements , AASB 114 Segment Reporting , AASB 117 Leases , AASB 133 Earnings Per Share , AASB 139 Financial Instruments: Recognition and Measurement , AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards and AASB 1023 General Insurance Contracts arising from the release of AASB 7. AASB 2005-10 is applicable for annual reporting periods beginning on or after 1 January 2007 and is expected to only impact disclosures contained within the consolidated financial report.

Page 31 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

1 SUMMARY OF ACCOUNTING POLICIES (continued)

(xvii) New accounting standards and interpretations not yet effective (continued)

AASB 8 Operating Segments replaces the presentation requirements of segment reporting in AASB 114 Segment Reporting . AASB 8 is applicable for annual reporting periods beginning on or after 1 January 2009 and is not expected to have an impact on the financial results of the Company and the Group as the standard is only concerned with disclosures.
AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 makes amendments to AASB 5 Non-current Assets Held for Sale and Discontinued Operations , AASB 107 Cash Flow Statements , AASB 119 Employee Benefits , AASB 127 Consolidated and Separate Financial Statements , AASB 134 Interim Financial Reporting , AASB 136 Impairment Assets and AASB 1023 General Insurance Contracts . AASB 2007-3 is applicable for annual reporting periods beginning on or after 1 January 2009 and must be adopted in conjunction with AASB 8 Operating Segments . This standard is only expected to impact disclosures contained within the financial report.
Interpretation 10 Interim Financial Reporting and Impairment prohibits the reversal of an impairment loss recognised in a previous interim period in respect of goodwill, an investment in an equity instrument or a financial asset carried at cost. Interpretation 10 will become mandatory for the Group’s 2008 financial statements. The Group has not recognised an impairment loss in relation to goodwill, investments in equity instruments or financial assets carried at cost in an interim reporting period nor subsequently reversed the impairment loss in the annual report. Application of the interpretation will therefore have no current impact on the Group’s or the parent entity’s financial statements.
Interpretation 11 AASB 2 Share-based Payment -- Group and Treasury Share Transactions addresses the classification of a share-based payment transaction (as equity or cash settled), in which equity instruments of the parent or another group entity are transferred, in the financial statements of the entity receiving the services. Interpretation 11 will become mandatory for the Group’s 2008 financial report. Interpretation 11 is not expected to have any impact on the consolidated financial report. The potential effect of the Interpretation on the Company’s financial report has not yet been determined.
AASB 2007-1 Amendments to Australian Accounting Standards arising from AASB Interpretation II amends AASB 2 Share-based Payments to insert the transitional provisions of IFRS 2, previously contained in AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards . AASB 2007-1 is applicable for annual reporting periods beginning on or after 1 March 2007 and is not expected to have any impact on the consolidated financial report. The potential impact on the Company has not yet been determined.
Interpretation 12 Service Concession Arrangements addresses the accounting for service concession operators, but not grantors, for public to private service concession arrangements. Interpretation 12 will apply for the Group’s 2009 financial report. The potential effect of the interpretation on the financial report has not yet been determined. At this time an entity must adopt the revised Interpretation 4 Determining when an arrangement contains a lease and Interpretation 129 Service Concession Arrangements: Disclosures .
AASB 2007-2 Amendments to Australian Accounting Standards arising from AASB Interpretation 12 makes amendments to AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards , AASB 117 Leases , AASB 118 Revenue , AASB 121 The Effects of Changes in Foreign Exchange Rates , AASB 127 Consolidated and Separate Financial Statement , and AASB 139 Financial Instruments: Recognition and Measurement . AASB 2007- 2 is applicable for annual reporting periods beginning on or after 1 January 2008 and must be applied at the same time as Interpretation 12 Service Concession Arrangements.
AASB 2007-2 Amendments to Australian Accounting Standards also amends references to “UIG Interpretation” to interpretations. This amending standard is applicable to annual reporting periods ending on or after 28 February 2007.

Page 32 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

2 REVENUE FROM CONTINUING ACTIVITIES

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----- Start of picture text -----

||||||
|---|---|---|---|---|
|CONSOLIDATED|THE COMPANY|
|2007|2006|2007|2006|
|$|$|$|$|
|Sales revenue|
|Services revenue|1,295,541|-|-|-|
|Licence fees|1,000,000|-|-|-|
|2,295,541|-|-|-|
|Other revenue|
|Interest|11,256|5,650|32,567|5,650|
|2,306,797|5,650|32,567|5,650|

----- End of picture text -----

3 EXPENSES FROM CONTINUING ACTIVITIES

Loss for the year has been arrived at after charging the following expenses:

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----- Start of picture text -----

||||||
|---|---|---|---|---|
|Finance costs|
|Interest|45,572|48,140|45,572|48,140|
|Personnel expenses|
|Salaries|1,201,506|-|-|-|
|Share and Option based|
|-|-|
|payments|283,242|283,242|
|Superannuation|105,055|-|-|-|
|Provision for Annual Leave|41,458|-|-|-|
|Other personnel expenses|100,761|-|244|-|
|-|-|
|1,732,022|283,486|
|Depreciation and amortisation|
|Plant & Equipment|11,596|-|-|-|
|-|-|-|
|Intellectual Property|202,213|
|213,809|-|-|-|
|Operating Leases|
|Rental expense on operating|
|leases|43,323|-|-|-|

----- End of picture text -----

Depreciation, amortisation and operating lease rentals are included in other expenses on the Income Statement.

4 SHARE BASED PAYMENTS

In July 2006 120 million ordinary shares were issued at fair value of $0.01 per share or $1,200,000 to purchase the remaining 63.66% of the shares in the associate company GPen Pty Ltd.

In July 2006 24 million ordinary shares were issued at fair value of $0.01 per share or $240,000 to employees of GPen Pty Ltd in consideration for retaining their services.

In August 2006 1 million shares were issued to directors at fair value of $0.10 or $100,000 in payment of outstanding directors fees.

In August 2006 8 million shares were issued at fair value of $0.10 or $800,000 in repayment of loans from Charter Pacific Corporation Ltd.

The fair value of shares has been determined as the Australian Stock Exchange quoted price at issue date.

Page 33 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

4 SHARE BASED PAYMENTS (continued)

OPTIONS

Listed Options

No listed options have been used for the purpose of making equity based payments.

Unlisted Options

On 14 August 2006 the following unlisted options over unissued ordinary shares in Monteray Group Limited were granted:

15,000,000 to directors for past services, vesting on issue.

2,000,000 executive incentive options, vesting on issue.

8,000,000 executive incentive options, with vesting conditional on the Company’s share price exceeding the exercise prices of the options and the continued employment of the executive at the vesting dates indicated in the table below:

200,000 employee incentive options, vesting on issue.

550,000 employee incentive options, vesting conditional on continued employment for 1 year.

The terms and conditions of the grants made during the financial year are as follows:

Grant Date	Options Granted	Vesting Date	Exercise Price	Number forfeited	Number outstanding at 30 June 2007	Expiry Date
14 August 2006 14 August 2006 14 August 2006 14 August 2006 14 August 2006 14 August 2006 14 August 2006 14 August 2006	15,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 200,000 550,000	14 August 2006 14 August 2006 14 January 2007 14 July 2007 14 July 2008 14 July 2009 14 August 2006 14 July 2007	$0.10 $0.10 $0.30 $0.50 $0.75 $1.00 $0.10 $0.10	- 1,000,000 1,000,000 2,000,000 2,000,000 2,000,000 - 200,000	15,000,000 1,000,000 1,000,000 - - - 200,000 350,000	14 July 2011 14 July 2011 14 July 2011 14 July 2011 14 July 2011 14 July 2011 14 July 2011 14 July 2011
TOTAL	25,750,000			8,200,000	17,550,000

No unlisted options were on issue at the beginning of the period.

No unlisted options were exercised during the period.

No unlisted options expired during the period.

8,200,000 unlisted options were forfeited due to cessation of employment.

17,200,000 unlisted options had vested and were exercisable at the end of the period with a weighted average exercise price of $0.11.

The remaining contractual life of the options is approximately 4 years ending 14 July 2011.

Page 34 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

4 SHARE BASED PAYMENTS (continued)

OPTIONS (continued)

The fair value of share options has been calculated at grant date using the Black Scholes Valuation Method with the following assumptions.

Share price at grant date $0.10 Exercise price $0.10 Expected volatility (based on the historic volatility of companies whose circumstances and share price volatility are reflective of the expected future circumstances and share price volatility of Monteray Group Limited) 29.53% Option life (expressed as weighted average life) 3 Years Expected dividends $Nil Risk-free interest rate (based on government bonds) 5.50% Fair value at grant date (rounded to the nearest one cent) $0.03 Total fair value expensed on the issue of unlisted options $451,363

5 AUDITORS' REMUNERATION

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----- Start of picture text -----

||||||
|---|---|---|---|---|
|CONSOLIDATED|THE COMPANY|
|2007|2006|2007|2006|
|$|$|$|$|
|Audit or review of financial reports|26,000|27,350|26,000|27,350|
|Non-Audit services|-|-|-|-|
|26,000|27,350|26,000|27,350|

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Page 35 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

6 INCOME TAXES

Major components of income tax expense

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||||||
|---|---|---|---|---|
|CONSOLIDATED|THE COMPANY|
|2007|2006|2007|2006|
|$|$|$|$|
|Current income tax expense|-|-|-|-|
|Income tax expense|-|-|-|-|
|Reconciliation between income tax|
|expense and Prima facie tax on|
|accounting loss|
|Accounting loss|(1,432,621)|(699,186)|(1,390,193)|(699,186)|
|Tax calculated at 30% on operating|
|result|(429,786)|(209,756)|(417,058)|(209,756)|
|Add/(Less)|
|Tax effect of permanent differences|
|- Non allowable expenses|207,409|123,837|207,409|123,837|
|Timing differences and tax losses not|
|brought to account as future income|
|tax benefits|222,377|85,919|209,649|85,919|
|-|-|-|-|
|Income Tax Expense|
|The applicable tax rate is the national|
|tax rate in Australia of 30%|
|Amount of franking credits available for|
|subsequent Reporting periods|-|-|-|-|
|Unrecognised deferred tax balances|
|The following deferred tax assets have|
|not been brought to account.|
|Tax losses - revenue|1,534,353|683,618|1,053,521|683,618|
|1,534,353|683,618|1,053,521|683,618|

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The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can realise the benefits therefrom.

7 CASH

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||||||
|---|---|---|---|---|
|Cash at bank|72,858|9,934|16,631|9,934|
|72,858|9,934|16,631|9,934|

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Page 36 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

8 RECEIVABLES

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||||||
|---|---|---|---|---|
|CONSOLIDATED|THE COMPANY|
|2007|2006|2007|2006|
|$|$|$|$|
|Current|
|Trade debtors|192,360|-|-|-|
|Other debtors|9,231|9,828|16,314|9,828|
|-|
|Amounts due from controlled entity 10|557,682|435,546|557,682|
|201,591|567,510|451,860|567,510|

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The carrying amounts of trade and other receivables approximate fair value.

9 OTHER FINANCIAL ASSETS

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----- Start of picture text -----

||||
|---|---|---|
|Investment in subsidiary|
|Represented by|
|-|-|-|
|Investment in GPen Pty Ltd|1,462,285|
|-|-|-|
|Investment in subsidiary|1,462,285|

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Monteray Group Limited has a 100% equity interest in GPen Pty Ltd (2006: 36.34%). GPen Pty Ltd is incorporated and domiciled in Australia.

10 ACQUISITION OF SUBSIDIARY

As approved by shareholders in an Extraordinary General Meeting on 14 July 2006 the consolidated entity acquired the remaining 63.66% of the shares in the associate company GPen Pty Ltd for $1,318,132 as follows:

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----- Start of picture text -----

|||
|---|---|
|120,000,000 fully paid ordinary shares issued in the company at fair value|$1,200,000|
|Professional fees directly attributable to combination|$118,132|
|Total (refer Note (ii) below)|$1,318,132|

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The issue of 120,000,000 fully paid ordinary shares for the acquisition of 63.66% of GPen Pty Ltd was made prior to the consolidation of capital detailed in Note 20.

Fair value was based on the ASX closing share price for the company on 14 July 2006 of $0.01.

GPen Pty Ltd owns and is commercialising superannuation administration software in Australia. The operations of the subsidiary have been consolidated from the date of acquisition of control and the subsidiary contributed revenue of $2,305,383 and a loss of $42,428 from the date of acquisition.

Page 37 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

10 ACQUISITION OF SUBSIDIARY (continued)

The acquisition has been accounted for at 30 June 2007. The acquisition had the following effect of the consolidated entity’s assets and liabilities.

	Carrying amounts immediately before combination determined in accordance with AASBs Amounts recognised at acquisition date
NOTE Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS Property, plant and equipment Intellectual property (i) TOTAL NON-CURRENT ASSETS TOTAL ASSETS Trade and other payables TOTAL CURRENT LIABILITIES NET ASSETS(ii)	$ $ 94,561 94,561 222,904 222,904
	317,465 317,465
	9,529 9,529 3,639,832 1,968,266
	3,649,361 1,977,795
	3,966,826 2,295,260
	832,975 832,975 832,975 832,975
	3,133,851 1,462,285

Note (i) Fair value adjustment on acquisition of GPen Pty Ltd of $1,671,566. Intellectual property relates to the GPen superannuation administration software platform. The fair value of the intellectual property was determined as the difference between the fair value of the net tangible assets of GPen Pty Ltd, excluding the intellectual property, and the implied fair value of 100% of the shares in GPen Pty Ltd at the price per share paid to acquire the remaining 63.66% of the shares in GPen Pty Ltd.

(ii) The amount recognised at acquisition date of $1,462,285 represents the fair value of the entire net assets of GPen Pty Ltd at the date of acquisition. The costs incurred of $1,318,132 relate only to the remaining 63.66% of GPen Pty Ltd acquired at that date. No goodwill was recognised on the acquisition.

Page 38 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

11 EQUITY ACCOUNTED INVESTMENT

	THE COMPANY 2007 $ 2006 $
Investment in associate Equity accounted investments in associates Share of associates’ Profit/(loss) before income tax Income tax expense Profit or (loss) Summarised financial information of associates Aggregated amounts of Assets Liabilities Revenue Profit or (loss) Significant Associate GPen Pty Limited, a software development company incorporated in Australia. Ownership interest as at Associates reporting date	- 262,285
	- (234,020) - -
	- (234,020)
	- 3,967,295 - 833,444
	- 3,133,851
	- 914,407
	- (643,975)
	100% 36.34%

Page 39 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

12 PLANT AND EQUIPMENT

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||||||
|---|---|---|---|---|
|CONSOLIDATED|THE COMPANY|
|2007|2006|2007|2006|
|$|$|$|$|
|Cost|
|Opening balance|-|-|-|-|
|Acquisition through business|
|combination (refer note 10)|13,739|-|-|-|
|Additions|41,035|-|-|-|
|-|-|-|-|
|Disposals|
|Closing Balance|54,774|-|-|-|
|Depreciation|
|Opening balance|-|-|-|-|
|Acquisition through business|
|combination (refer note 10)|4,210|-|-|-|
|Depreciation charge for the year|11,596|-|-|-|
|-|-|-|-|
|Disposals|
|Closing Balance|15,806|-|-|-|
|Carrying amounts|
|-|-|-|-|
|At 1 July 2006|
|At 30 June 2007|38,968|-|-|-|
|13|INTANGIBLE ASSETS|
|Cost|
|Opening balance|-|-|-|-|
|Acquisition through business|
|-|-|-|
|combination (refer note 10)|2,372,692|
|Closing Balance|2,372,692|-|-|-|
|Amortisation|
|Opening balance|-|-|-|-|
|Acquisition through business|
|combination (refer note 10)|404,426|-|-|-|
|-|-|-|
|Amortisation charge for the year|202,213|
|Closing Balance|606,639|-|-|-|
|Carrying amounts|
|-|-|-|-|
|At 1 July 2006|
|At 30 June 2007|1,766,053|-|-|-|

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Page 40 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

14 PAYABLES

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||||||
|---|---|---|---|---|
|CONSOLIDATED|THE COMPANY|
|2007|2006|2007|2006|
|$|$|$|$|
|Current|
|Trade Creditors and Accruals|85,114|29,446|14,001|29,446|
|Amounts payable to Directors|122,080|212,780|122,080|212,780|
|207,194|242,226|136,081|242,226|

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The carrying amounts of trade and other payables approximate fair value.

15 OTHER FINANCIAL LIABILITIES

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||||
|---|---|---|
|Current|
|-|-|
|Loan payable to related party|783,911|783,911|
|Charter Pacific Corporation Ltd|
|-|-|
|783,911|783,911|

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The loan is unsecured and subject to interest at 12% pa and is repayable on demand however, the related party has undertaken to provide financial support to the Company to continue its operations. (refer to Note 1(xvi)).

The carrying amounts of other financial liabilities approximate fair value.

16 EMPLOYEE BENEFITS

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||||
|---|---|---|
|-|-|-|
|Liability for Annual Leave|62,009|
|-|-|-|
|Total employee benefits|62,009|

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17 SUPERANNUATION COMMITMENTS

The Company contributes to superannuation funds which generally provide benefits for employees or their dependents on retirement, resignation, disablement or death. The superannuation funds provide benefits in the form of lump sum payments or pension income.

Employees contribute to the funds at various percentages of their wages and salaries. The Company has no legally enforceable obligation to contribute to the funds other than to comply with Superannuation Industry Award requirements.

18 OPERATING LEASES

The group leases computer equipment under operating leases. Non cancellable operating lease rentals are payable as follows:

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||||||
|---|---|---|---|---|
|Less than one year|42,660|-|-|-|
|-|-|-|
|Between one and five years|8,581|
|51,241|-|-|-|

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Page 41 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

19 FINANCIAL INSTRUMENTS; INTEREST AND CREDIT RISK EXPOSURE

Exposure to interest rate risk on financial Assets and Liabilities

CONSOLIDATED	Non Interest Bearing $ Floating Interest $ Total $
2007 Financial assets – current Cash and cash equivalents Trade and other receivables	49,979 22,879 72,858 201,591 - 201,591
	251,590 22,879 274,449
Range of effective interest rates	Nil to 4%
2007 Financial liabilities - current Trade and other payables Aggregated amounts payable to related parties	265,194 - 265,194 - 783,911 783,911
	265,194 783,911 1,049,105
Range of effective interest rates	Nil to 12%
2006 Financial assets - current Cash and cash equivalents Trade and other receivables	- 9,934 9,934 - 567,510 567,510
	- - 577,444 577,444
Range of effective interest rates	Nil to 12%
2006 Financial liabilities - current Trade and other payables Aggregated amounts payable to related parties	242,226 - 242,226 - 989,642 989,642
	242,226 989,642 1,231,868
Range of effective interest rates	Nil to 12%

Page 42 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

19 FINANCIAL INSTRUMENTS; INTEREST AND CREDIT RISK EXPOSURE (continued)

THE COMPANY	Non Interest Bearing $ Floating Interest $ Total $
2007 Financial assets - current Cash and cash equivalents Trade and other receivables Amounts due from related parties	- 16,631 16,631 16,314 - 16,314 - 435,546 435,546
	16,314 452,177 468,491
Range of effective interest rates	Nil to 12%
2007 Financial liabilities - current Trade and other payables Aggregated amounts payable to related parties	136,081 - 136,081 - 783,911 783,911
	136,081 783,911 919,992
Range of effective interest rates	Nil to 12%
2006 Financial assets - current Cash and cash equivalents Trade and other receivables	- 9,934 9,934 - 567,510 567,510
	- 577,744 577,444
Range of effective interest rates	4% to 12%
2006 Financial liabilities - current Trade and other payables Aggregated amounts payable to related parties	242,226 - 242,226 - 989,642 989,642
	242,226 989,642 1,231,868
Range of effective interest rates	Nil to 12%

CREDIT RISK EXPOSURE

The maximum credit risk exposure for each class of financial assets is represented by the carrying amounts of the class of asset:

Significant concentrations of credit risk

The group had no significant concentrations of credit risk with any single counterparty or group of counterparties.

Page 43 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

20 ISSUED CAPITAL

	2007 Number of Shares 2007 $ 2006 Number of Shares 2006 $
Issued Ordinary shares – no par value (fully paid) The Company has unlimited authorised capital Reconciliation of movement during year Opening Balance Issue of share capital (refer note 10) Share options exercised Sub total 1 for 10 consolidation (14 July 2006 rounded up) Issue of share capital Share options Exercised	75,003,612 4,842,705 515,860,138 64,881,035
	515,860,138 64,881,035 515,800,138 64,880,435 144,000,000 1,440,000 - - - - 60,000 600
	659,860,138 66,321,035 515,860,000 64,881,035 65,986,086 (62,380,083) - - 9,000,000 900,000 - - 17,526 1,753 - -
Closing Balance	75,003,612 4,842,705 515,860,138 64,881,035

There are no restrictions on distributions of dividends or repayment of capital.

21 ACCUMULATED LOSSES

	CONSOLIDATED THE COMPANY 2007 $ 2006 $ 2007 $ 2006 $
Accumulated Losses Balance at beginning of year Capital reduction Net loss attributable to members of Monterey Group Limited Total available for appropriation	(65,273,174) (64,573,988) (65,273,174) (64,573,988) 62,380,083 - 62,380,083 - (1,432,621) (699,186) (1,390,193) (699,186)
	(4,325,712) (65,273,174) (4,283,284) (65,273,174)
Balance at end of year	(4,325,712) (65,273,174) (4,283,284) (65,273,174)

As approved by shareholders at the Annual General Meeting on 30 November 2006 and in accordance with sections 256B and 256C(1) of the Corporations Act 2001 the Company’s issued capital was reduced as follows :

(a) the issued share capital was reduced from $67,222,788 to $4,842,705

(b) the reduction was made without any shares in the company being cancelled or any payment to any Shareholders of any paid up share capital; and

(c) by applying the resultant amount of cancelled paid up share capital of $62,380,083 in eliminating the same amount in the carried forward accumulated losses.

Page 44 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

22 RELATED PARTIES

Key Management Persons

Key Management Persons
The names of each Key Management Person	Position	Date(s) of period of responsibility where less than reporting period
G. W. Halbish K. J. Dart R. V. Byrne S. A. Cole S. A. Cole M. J. Park A. P. Wilkie	Chairman Director Director Director Company Secretary Chief Executive Officer Chief Executive Officer	appointed 2 April 2007 retired 2 April 2007 appointed 6 September 2006 resigned 9 February 2007 appointed 2 April 2007

Directors’ Interests

Shares – 2007

Shares– 2007	Shares– 2007
Directors		Opening Balance	Balance after Consolidation of Capital (ii)	Issued in lieu of directors fees	Other interests and acquisitions	Balance 30/06/07
G Halbish A Wilkie K Dart R Byrne S Cole Retired 2/4/07	(i) (i)	5,484,000 - 202,000,000 910,000 -	548,400 - 20,200,000 91,000 -	200,000 - 160,000 320,000 320,000	- - 10,541,508 - -	748,400 - 30,901,508 411,000 320,000

Notes (i) Includes shares in which a relevant interest is held of which the Director is not the registered holder.

Shares – 2006

Shares– 2006	Shares– 2006
Directors		Opening Balance	Other interests and acquisitions	Balance 30/06/06
G Halbish A Wilkie S Cole K Dart R Byrne S Cole Retired 2/4/07	(i) (i)	5,484,000 - - - 910,000 -	- - - 202,000,000 - -	5,484,000 - - 202,000,000 910,000 -

Notes (i) Includes shares in which a relevant interest is held of which the Director is not the registered holder.

Page 45 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

22 RELATED PARTIES (continued)

Directors’ Interests (continued)

Options - 2007

Options- 2007	Options- 2007
Directors		Balance 30/06/06	Balance after Consolidation of Capital (ii)	Issued as part of remuneration	Balance 30/06/07
G Halbish A Wilkie K Dart R Byrne S Cole Retired 2/4/07	(i) (i)	5,484,000 - 195,000,000 910,000 -	548,400 - 19,500,000 91,000 -	5,000,000 - 5,000,000 - 5,000,000	5,548,400 - 24,500,000 91,000 5,000,000

Notes (i) Includes options in which a relevant interest is held of which the Director is not the registered holder.

(ii) On 14 July 2006 the shareholders approved the consolidation of ordinary shares in the Company on the basis that ten fully paid ordinary shares on issue be converted into one fully paid ordinary share. Consequently the Company was required to reorganise its options by consolidating them on the same basis as the shares and adjust the exercise price for the options in inverse proportion to the consolidation ratio.
(iii) All options in the table above are vested and exercisable at $0.10 per share at the reporting date.

Options - 2006

Options- 2006	Options- 2006
Directors		Balance 1/07/05	Other Interests and Acquisitions	Balance 30/06/06
G Halbish K Dart R Byrne S Cole Retired 2/4/07	(i) (i)	5,484,000 - 910,000 -	- 195,000,000 - -	5,484,000 195,000,000 910,000 -

Notes (i) Includes options in which a relevant interest is held of which the Director is not the registered holder.
(ii) All options in the table above are vested and exercisable at $0.10 per share at the reporting date.

Transactions with Directors and Director related entities

During the year Charter Pacific Corporation Ltd purchased 2,541,508 ordinary shares on the Australian Stock Exchange. Mr. K. Dart is a director of Charter Pacific Corporation Ltd.

During the year the directors and their director-related entities other than Charter Pacific Corporation Ltd purchased on the Australian Stock Exchange, in aggregate, Nil ordinary shares and Nil options in the company. During the year the directors and their director-related entities did not sell any ordinary shares or options in the company.

During the year the directors and their director related entities had Nil transactions with the company other than Charter Pacific Corporation Ltd providing working capital to the company and purchasing shares on the Australian Stock Exchange.

Page 46 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

22 RELATED PARTIES (continued)

Directors' and Executive Officers’ Remuneration

Loans and other transactions with specified directors and specified executives

Loans

There were no loans outstanding at the reporting date to directors.

There were no loans made, guaranteed or secured by any entity in the economic entity to any of the directors.

Remuneration Policies

Remuneration levels for directors, secretaries and if required senior executives of the company (“the directors and senior executives”) will be competitively set to attract and retain appropriately qualified and experienced directors and senior executives. The Chairperson will obtain independent advice on the appropriateness of remuneration packages given trends in comparative companies both locally and internationally and the objectives of the company’s remuneration strategy.

the capability and experience of the directors and senior executives;
the directors and senior executives ability to control the relevant performance;
the entity’s performance; and
the amount of incentives within each directors and senior executives remuneration.

Remuneration packages include a mix of fixed remuneration and variable remuneration and short and longterm performance-based incentives.

Fixed remuneration

Fixed remuneration consists of base remuneration, as well as employer contributions to superannuation funds.

Remuneration levels are if necessary reviewed annually by the Chairperson through a process that considers individual and overall performance of the entity. If required external consultants provide analysis and advice to ensure the directors’ and senior executives’ remuneration is competitive in the market place.

Performance-linked remuneration

Short-term incentive bonus

Page 47 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

22 RELATED PARTIES (continued)

Directors' and Executive Officers’ Remuneration (continued)

Short-term incentive bonus (continued)

Long-term incentive

The nature of the company’s business does not always allow for the returns and results of the performance by eligible employees to be measured quantitatively on an annual basis. Therefore the decision to issue options under the Executive and Employee Option Plan is primarily based upon the eligible employees reaching certain strategic milestones with the company’s investments. Such milestones are measured against those established at the time of the initial investment. Examples may include: restructuring of a company, completion of an M&A, taking a company to a public listing. These types of examples may increase the long term value of the company’s investment without necessarily producing immediate profits.

In considering the entity’s performance and benefits for shareholders’ wealth the Chairperson has regard to the following indices in respect of the current financial year and the previous four financial years.

==> picture [462 x 69] intentionally omitted <==

----- Start of picture text -----

|||||||
|---|---|---|---|---|---|
|2007|2006|2005|2004|2003|
|Net profit/(loss)|($1,432,621)|($699,186)|($ 1,413,427)|($458,534)|($321,944)|
|Share price|$0.045|$0.009|$0.009|$0.013|$0.009|
|-|
|Change in share price|$0.036|$|($0.004)|$0.004|($0.004)|
|Earnings per share|($0.019)|($0.001)|($0.003)|($0.001)|($0.001)|

----- End of picture text -----

None of the remuneration provided to directors and executives during the year was linked to achievement of a performance milestone.

Service agreements

It is the entity’s policy that service contracts for executive directors and senior executives be entered into. A service contract with an executive director or senior executive would provide for the payment of benefits where the contract is terminated by the entity or the individual. The executive directors and senior executives would also be entitled to receive on termination of employment their statutory entitlements of accrued annual and long service leave, together with any superannuation benefits.

Page 48 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

22 RELATED PARTIES (continued)

Directors' and Executive Officers’ Remuneration (continued)

Service agreements (continued)

The executive director or senior executive would have no entitlement to termination payment in the event of removal for misconduct.

Mr. Graham Halbish was appointed Executive Chairman of the Company for a 12 Month period commencing 1 October 2006. The agreement is for a fixed term and does not provide for the payment of benefits on termination. The total remuneration payable is $150,420 inclusive of superannuation. Non-executive directors fees are not payable to Mr. Halbish for the period of the agreement.

Non-executive directors

The Company does not have a Director’s Retirement Scheme in place at present.

Page 49 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

22 RELATED PARTIES (continued)

Directors' and Executive Officers’ Remuneration (continued)

Directors' and Executive Officers’ Remuneration

Details of the nature and amount of each major element of remuneration of each director of the company and the company executives who receive the highest remuneration are:

Non-executive directors	Non-executive directors	Short term employee benefits Salary $ Bonus $ Non- monetary benefits $	Short term employee benefits Salary $ Bonus $ Non- monetary benefits $	Short term employee benefits Salary $ Bonus $ Non- monetary benefits $	Post- employment benefits Pension & Superannuation $	Equity settled share based payments Shares $ Options $ Options %	Equity settled share based payments Shares $ Options $ Options %	Equity settled share based payments Shares $ Options $ Options %	TOTAL $
K Dart R Byrne S Cole (retired 2 April 2007)	2007 2006 2007 2006 2007 2006	48,000 40,000 12,000 8,000 36,000 48,000	- - - - - -	- - - - - -	4,320 3,600 1,080 720 3,240 4,320	- - - - - -	136,040 - - - 136,040 -	72% - - - 78% -	188,360 43,600 13,080 8,720 175,280 52,320
Executive officers
G Halbish A Wilkie (appointed 2 April 2007) M Park (retired 9 February 2007)	2007 2006 2007 2006 2007 2006	35,000 48,000 125,000 - 183,088 -	- - - - - -	- - - - - -	90,895 4,320 11,250 - 15,378 -	- - - - - -	136,040 - - - 28,277 -	52% - - - 12% -	261,935 52,320 136,250 - 226,743 -
Totals
	2007 2006	439,088 144,000	- -	- -	126,163 12,960	- -	436,397 -	44% -	1,001,648 156,960

Page 50 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

22 RELATED PARTIES (continued)

Directors' and Executive Officers’ Remuneration (continued)

Value of Options issued to directors and executives

The following table summarises the value of options granted, exercised or lapsed during the annual reporting period to the identified directors and executives:

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----- Start of picture text -----

||||||
|---|---|---|---|---|
|Value of options|Value of options|Value of options|Total|
|granted at the|exercised at the|lapsed at the|
|grant date (i)|grant date|date of lapse|
|$|$|$|$|
|K Dart|136,040|-|-|136,040|
|S Cole|
|(retired 2 April 2007)|136,040|-|-|136,040|
|G Halbish|136,040|-|-|136,040|
|M Park|
|(retired 9 February 2007)|28,349|-|72|28,277|

----- End of picture text -----

(i) The value of options granted during the period is recognised in compensation over the vesting period of the grant.

Loans with Associated Companies

During the year the company’s largest shareholder Charter Pacific Corporation Ltd has provided financial support in the amount of $548,697 to Monteray Group Limited to continue its operations. The loan is subject to arms length commercial terms and conditions and is unsecured. Interest is charged at 12%pa and $45,572 was included in the loan balance of $783,911 at 30 June 2007. Monteray Group Ltd paid $800,000 to Charter Pacific Corporation by issue of 8 million ordinary shares as approved by shareholders on 14 July 2006. Mr. K Dart is a director of Charter Pacific Corporation Ltd.

Loans to Subsidiary

During the year the company has provided financial support to GPen Pty Ltd to continue its operations. The loan is subject to arms length commercial terms and conditions and is unsecured. Interest is charged at 12%pa and $31,153 was included in the loan balance of $435,546 at 30 June 2007. GPen Pty Ltd made repayments of $153,209 during the year. Mr. K Dart is a director of GPen Pty Ltd.

23 GROUP ENTITIES

Parent Entity

Monteray Group Limited

==> picture [374 x 68] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Significant Subsidiaries|Country of Incorporation|Ownership|
|GPen Pty Ltd|Australia|100%|
|Hookswood Pty Ltd|Australia|100%|
|Hookswood Pty Ltd is a wholly owned subsidiary of GPen Pty Ltd.|

----- End of picture text -----

In the financial statements of the Company investments in subsidiaries are measured at cost.

Page 51 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

24 SEGMENT INFORMATION

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the consolidated group.

The groups primary business segment is Software Development and Commercialisation in Australia.

30 June 2007	Software Development and Commercialisation $	Investment $	Consolidated $
Revenue Capital expenditure Depreciation Amortisation Share based payment expense Results Assets Liabilities	2,295,541 41,035 11,596 202,213 408,121 (1,443,877) 2,079,470 1,111,114	11,256 - - - 283,242 11,256 - -	2,306,797 41,035 11,596 202,213 691,363 (1,432,621) 2,079,470 1,111,114

30 June 2006

For the year ended 30 June 2006 the company operated as an Investment vehicle in Australia.

25 EARNINGS PER SHARE

CONSOLIDATED 2007 2006 (re-stated)	CONSOLIDATED 2007 2006 (re-stated)
Basic and diluted loss per share (cents per share) (1.96) Weighted average number of ordinary shared used in the Calculation of basic and diluted earnings per share 73,245,444 Net result used in the calculation of basic and diluted earnings per share ($1,432,621)	(1.36) 51,584,839 ($699,186)

Potential ordinary shares that are not dilutive and not used in the calculation of diluted EPS:

Share Options 67,709,539

The share options outstanding were not dilutive, as their conversion would result in a reduction in the loss per share.

During the 2007 financial year the company issued 144,000,000 shares, consolidated its capital on 1 for 10 basis and issued an additional 9,000,000 shares (post-consolidation) as detailed in Note 20 “Issued Capital”. Also a total of 17,126 shares (post consolidation) issued upon exercise of options. The total number of shares on issue at the date of this report is 75,003,612.

The year 2006 comparatives have been re-stated to reflect the impact of the consolidation of capital.

Page 52 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

26 NOTES TO THE CASH FLOW STATEMENT

==> picture [486 x 449] intentionally omitted <==

----- Start of picture text -----

|||||||
|---|---|---|---|---|---|
|CONSOLIDATED|THE COMPANY|
|2007|2006|2007|2006|
|$|$|$|$|
|(I)|Cash and cash equivalents|
|For the purpose of the Cash flow Statement|
|cash and cash equivalents include cash on|
|hand|and|balances|with|banks|and|
|investments in money market instruments,|
|net of outstanding bank overdrafts. Cash|
|and cash equivalents included in the Cash|
|Flow Statement comprise the following:|
|Cash at bank|72,858|9,934|16,631|9,934|
|(II) Reconciliation of net cash|
|provided/used in operating activities to|
|profit or loss|
|Profit/(Loss) after income tax|(1,432,621)|(699,186)|(1,389,953)|(699,186)|
|Amortisation and depreciation|213,809|-|-|-|
|-|-|
|Expenses settled by share issue|691,363|691,363|
|Equity Accounted Loss|-|234,020|-|234,020|
|Interest on related party loans|45,572|17,948|14,419|17,948|
|Changes in Assets and Liabilities|
|(Increase) / Decrease in receivables|(1,257)|5,894|(6,461)|5,894|
|Increase / (Decrease) in accounts payable|(101,266)|(10,447)|(6,409)|(10,447)|
|-|-|-|
|Increase / (Decrease) in provisions|43,349|
|(541,051)|451,771|(697,041)|451,771|
|(III) Non-cash financing and investing|
|activities (refer note 4 Share Based|
|Payments)|
|-|-|-|
|Acquisition of subsidiary|(1,200,000)|
|-|-|
|Repayment of loan to related party|(800,000)|(800,000)|
|-|-|
|Payment of prior years directors fees|(100,000)|(100,000)|

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Page 53 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

MONTERAY GROUP LIMITED ASX ADDITIONAL INFORMATION

COMPANY DETAILS

Monteray Group Limited is a company incorporated in Australia.

Registered Office

C/- Charter Pacific Corporation Ltd Level 18, 50 Cavill Avenue Surfers Paradise Queensland 4217

Principal Place of Business

Level 18, 50 Cavill Avenue Surfers Paradise Queensland 4217 Telephone 07 5538 2558 Facsimile 07 5526 8922

During the year ended 30 June 2007 the company had 18 employees (2006: 1).

Substantial Shareholders

The Company's Register of Substantial Shareholders recorded the following information provided to it as at 31 August 2007

Name Number Of Ordinary Shares Held Charter Pacific Corporation Limited 30,541,508

Page 54 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

ASX ADDITIONAL INFORMATION (continued)

Twenty Largest Shareholders – Listed Shares not subject to Escrow

The names of the 20 largest holders of each class of equity security as at 31 August 2007 are listed below:

==> picture [483 x 304] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Number of Ordinary|Percentage|
|Shares Held as at|of Issued|
|Name|31 August|Capital|
|Charter Pacific Corporation Limited|30,541,508|40.71|
|McMullan Consulting Pty Ltd|2,728,965|3.64|
|Mr. Simon Saliba|2,519,935|3.36|
|Australian Executor Trustees Limited |2,178,125|2.90|
|Mornington Investments(Vic) Pty Ltd|1,836,530|2.45|
|Bawden Custodians Pty Ltd |1,730,000|2.31|
|Desden Pty Ltd|1,200,000|1.60|
|Mr. Ramon John Ross|1,175,000|1.57|
|Mr. Christopher Simon Purdie|800,000|1.07|
|Mr. Nicholas Tsoukatos & Mrs Hrysoula Tsoukatos|790,000|1.05|
|Mr. Andrew Moore & Mrs Lynette Moore|744,300|0.99|
||
|Firrhil Pty Ltd |740,000|0.99|
|Sire Pty Limited|720,000|0.96|
|Ken Horan|690,000|0.92|
|Neil Schoppe|690,000|0.92|
|Mr. John Anthony Cook|600,000|0.80|
|John McMullan & Tracey McMullan |600,000|0.80|
|Christopher Murray|600,000|0.80|
|Mr. Adam Furst|512,500|0.68|
|Hallmark Glen Pty Ltd|500,000|0.67|
|Sub Total – Top 20|51,896,863|69.19|

----- End of picture text -----

Number of Shareholders

Ordinary Shares as at 31 August 2007

==> picture [496 x 92] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Distribution of Holdings|No of Holders|No of Shares|
|1 – 1,000|963|472,019|
|1,001 – 5,000|578|1,469,391|
|5,001 – 10,000|150|1,238,412|
|10,001 – 100,000|212|7,647,667|
|100,001 and over|74|64,180,433|
|Total|1,977|75,007,922|
|Holdings less than a marketable parcel|1,709|3,371,158|

----- End of picture text -----

Page 55 of 57

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

ASX ADDITIONAL INFORMATION (continued)

Twenty Largest Optionholders

The names of the 20 largest holders of each class of equity security as at 31 August 2007 are listed below:

==> picture [483 x 304] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Number of Ordinary|Percentage|
|Options Held as at|of Issued|
|Name|31 August|Options|
|Charter Pacific Corporation Limited|19,500,000|38.88|
|ANZ Nominees Limited (Cash Income A/c)|4,784,180|9.54|
|Mr. Christopher Simon Purdie|2,871,064|5.72|
|Mr. Andrew Moore & Mrs Lynette Moore|1,620,399|3.23|
||
|Mornington Investments(VIC) Pty Ltd|886,530|1.77|
|Sire Pty Limited|884,637|1.76|
|Ms Natalie Clarke|815,000|1.62|
|Australian Executor Trustees Limited |788,125|1.57|
|Mrs June Purdie & Mr. David Thomas Purdie|771,238|1.54|
|Mr. Adam Furst|712,500|1.42|
|Sommerville Pty Ltd |680,000|1.36|
|D & D Biggs Holdings Pty Ltd |570,000|1.14|
|Mr. Kevin John Dart |500,000|1.00|
|Hallmark Glen Pty Ltd|500,000|1.00|
|Mr. Ramon John Ross|450,000|0.90|
|Mr. Cheong Yu Leong|400,000|0.80|
|Mr. Paul Barton Carter|350,000|0.70|
|Mr. Stephen Purdie|325,000|0.65|
|The Answer Pty Ltd |314,410|0.63|
|Ballyhoo Marketing & Communications Pty Ltd|300,000|0.60|
|Sub Total – Top 20|38,023,083|75.83|

----- End of picture text -----

Number of Optionholders

Options expiring 31 December 2008 as at 31 August 2007

==> picture [483 x 93] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Distribution of Holdings|No of Holders|No of Options|
|1 – 1,000|996|497,030|
|1,001 – 5,000|617|1,585,416|
|5,001 – 10,000|139|1,124,511|
|10,001 – 100,000|155|5,053,852|
|100,001 and over|41|41,894,420|
|Total|1,948|50,155,229|
|Holdings less than a marketable parcel|1,895|7,113,738|

----- End of picture text -----

Page 56 of 57

CORPORATE DIRECTORY

Board of Directors

Graham Halbish (Chairman) Alastair Wilkie (Chief Executive Officer) Kevin Dart Roger Byrne

Company Secretary

Steven Cole

Registered Office

Level 18, 50 Cavill Avenue Surfers Paradise, Queensland 4217

Mailing Address

P.O. Box 40

Surfers Paradise, Queensland 4217 Telephone + 61 7 5538 2558 Facsimile + 61 7 5526 8922

Auditors

P K F Level 14, 140 William Street Melbourne Victoria 3000

Bankers

National Australia Bank Ltd 308 – 322 Queen Street Brisbane Queensland 4000

Share Registry

Computershare Investor Services Pty Limited Yarra Falls, 452 Johnston Street, Abbotsford, Victoria 3067 Telephone 1300 137 328 Facsimile 1300 137 341

Australian Stock Exchange

The Company’s ordinary fully paid shares are quoted on the ASX, Code MRY

Electronic Contact

Company Secretary – email to: [email protected]

Page 57 of 57

AI assistant

NORWOOD SYSTEMS LIMITED — Annual Report 2007

65434_rns_2007-10-30_ef580fc0-d4e5-4a1c-b256-da678ff50160.pdf

MONTERAY GROUP LIMITED

A.C.N. 062 959 540

FINANCIAL REPORT

FOR THE YEAR ENDED 30 JUNE 2007

TABLE OF CONTENTS

MONTERAY GROUP LIMITED

DIRECTORS’ REPORT 30 June 2007

DIRECTORS

Current Directors

GRAHAM WILFRED HALBISH (Aged 58 years) Executive Chairman (Director since 28 August 2002)

ALASTAIR PATERSON WILKIE (Aged 48 years) Executive Director/Chief Executive Officer (Director since 2 April 2007)

KEVIN JOHN DART (Aged 56 years) Non-Executive Director (Director since 29 August 2005)

ROGER VINCENT MICHAEL BYRNE (Aged 45 years)

Former Director

STEVEN ALLAN COLE (Aged 54 years) (Appointed 15 December 2003 Retired 2 April 2007)

DIRECTORS’ REPORT (continued)

Company Secretary

STEVEN ALLAN COLE (Aged 54 years) (APPOINTED 6 SEPTEMBER 2006)

Former Company Secretary

DIRECTORS’ MEETINGS

PRINCIPAL ACTIVITIES

DIVIDENDS

REVIEW OF OPERATIONS AND RESULTS

Operations

DIRECTORS’ REPORT (continued)

REVIEW OF OPERATIONS AND RESULTS (continued)

Financial Position

Refer to Balance Sheet and Cash Flow Statement.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

LIKELY FUTURE DEVELOPMENTS

EVENTS AFTER BALANCE DATE

DIRECTORS' REPORT (continued)

REMUNERATION REPORT

Remuneration Policies

Fixed remuneration

Performance-linked remuneration

Short-term incentive bonus

Long-term incentive

DIRECTORS' REPORT (continued)

REMUNERATION REPORT (continued)

Long-term incentive (continued)

Service agreements

DIRECTORS' REPORT (continued)

REMUNERATION REPORT (continued)

Non-executive directors

Directors' and Executive Officers’ Remuneration

DIRECTORS' REPORT (continued)

REMUNERATION REPORT (continued)

DIRECTORS' REPORT (continued)

REMUNERATION REPORT (continued)

INTERESTS OF DIRECTORS IN SHARES AND SHARE OPTIONS

Directors’ Interests

Shares

Notes

Options

Notes

DIRECTORS' REPORT (continued)

SHARE OPTIONS

DIRECTORS' REPORT (continued)

INTERESTS OF DIRECTORS IN SHARES AND SHARE OPTIONS (continued)

Options over unissued ordinary shares

INDEMNIFICATION OF OFFICERS AND AUDITORS

NON-AUDIT SERVICES

AUDITOR’S INDEPENDENCE DECLARATION

MONTERAY GROUP LIMITED

CORPORATE GOVERNANCE STATEMENT

Board of Directors

Role of the Board

Board Processes

Director Education

Independent Professional Advice and Access to Company Information

Composition of the Board

CORPORATE GOVERNANCE STATEMENT (continued)

Composition of the Board (continued)

Remuneration

Remuneration Report

CORPORATE GOVERNANCE STATEMENT (continued)

NORWOOD SYSTEMS LIMITED Annual Report 2007