ORCODA LIMITED — Annual Report 2011

Sep 29, 2011

SmartTrans Holdings Limited ABN 86 009 065 650

2011 Annual Report

TABLE OF CONTENTS

Chairman's Report 1
Directors' Report 2
Independent Auditor's Report 8
Directors' Declaration 10
Consolidated Statement of Comprehensive Income 11
Consolidated Statement of Financial Position 12
Consolidated Statement of Changes in Equity 13
Consolidated Statement of Cash Flows 14
Notes to the Financial Statements 15
Auditor's Independence Declaration 35
Corporate Governance 36
Shareholder Information 39
Summary of Mining Tenements 40

CORPORATE DIRECTORY

Directors

John P C FORSYTH AM Chairman Andrew D FORSYTH Llb Non-executive Director Bryan E CARR BSc Executive Director Geoffrey W RABY Non-Executive Director BEc (Hons) MEc PhD

Company Secretary

James P LAURIE BSc, MAusIMM Mark S BUCKLAND LLB (Hons), LLM, B.Sc (Psych), GDLP, GradDipAppCorpGov, DipProfCouns, ACIS

Senior Management

James P LAURIE General Manager BSc, MAusIMM

Registered Office

Suite 3, First Floor 614 Newcastle Street LEEDERVILLE WA 6007

Head Office

Suite 3, First Floor 614 Newcastle St LEEDERVILLE WA 6007 Telephone: (61-8) 9228 1199 Facsimile: (61-8) 9228 2299

email: smarttrans@smarttrans.com.au Homepage: www.smarttrans.com.au

Auditors

RSM Bird Cameron Partners 8 St Georges Terrace PERTH WA 6000

Bankers

Westpac Banking Corporation 275 George Street SYDNEY NSW 2000

Solicitors

Norton Rose Level 18, Grosvenor Place 225 George Street SYDNEY NSW 2000

Securities Quoted

Australian Securities Exchange Home Exchange – Australian Securities Exchange (Perth)

Share Registry

Computershare Registry Services Level 2, 45 St Georges Terrace PERTH WA 6000

Telephone: (61-8) 9323 2000 Facsimile: (61-8) 9323 2033

CHAIRMAN'S REPORT

The Company conducts business on two diverse fronts, the provision of mobile phone and transport systems and mineral exploration.

MOBILE PHONE and TRANSPORT SYSTEMS

The Company is strongly focussed on the execution of an agreement with the China Mobile Shanxi Group, the expansion of its agreement with Yamei Electronics, the roll-out of the VODOne Lottery Application and generally broadening its client base in China and Australia.

The Company increased its equity in Sm@rtTrans Limited from 95% to 100%. As a result, Sm@rtTrans Limited is now a wholly-owned subsidiary.

I was pleased to announce on 1 July 2011 that Australia's former Ambassador to China, Dr Geoff Raby agreed to join the Boards of SmartTrans Holdings Limited and Sm@rtTrans Limited in August 2011.

Dr Raby served as Australia's Ambassador to China since February 2007 and previously twice served as head of the Embassy's Economic Section in Beijing. He is expected to play a key role in SmartTrans' business relationships with important Chinese organisations, in particular China Mobile Group Shanxi, China Minmetals Group, China National Heavy Machinery Corporation (CHMC) and Yamei.

Also in July the company announced the completion of a placement which raised \$550,000 including a strategic investment of \$500,000 by Zhenya Tsvetnenko, Chief Executive Officer of the Zhenya Group of Companies. (http://about.me/zhenyatsvetnenko).

Mr Tsvetnenko, who has successfully pioneered mobile telephone technology and premium mobile messaging services across the globe, was the national winner of the prestigious Ernst and Young, Entrepreneur of the Year 2010 young category, and the Western Australian Business News 40 under 40 awards 2010. Mr Tsvetnenko pioneered advertising on the Google content network to build a campaign delivering 22 billion views of advertisements (http://au.linkedin.com/in/zhenyatsvetnenko) and continues to look for opportunities in the on-line field. The Company looks forward to further developing a successful alliance with the Zhenya Group of Companies.

MINERAL EXPLORATION

Exploration continued at the Company's lead-zinc project at Riversleigh and our joint venture partner, the China Minmetals Group (MMG) completed Stage Two of the Wangunda Joint Venture and has now progressed to Stage Three.

At our Mount Mackenzie project in Central Queensland we believe there is significant potential for significant high grade deposits. With the current high gold price such deposits may suit various mining companies and the Company is seeking a suitable joint venture partner from the ranks of Australia's current list of active gold producers and explorers.

On behalf of Directors, my thanks go to the SmartTrans team which has worked extremely hard during the year.

John Forsyth AM Chairman

30 September 2011

DIRECTORS' REPORT

Your directors present their report on the economic entity consisting of SmartTrans Holdings Limited and the entities it controls at the end of and during the year ended 30 June 2011.

Directors

The directors' names and qualifications during the financial year and up to the date of this report are:

John P C Forsyth AM James P Laurie BSc, MAusIMM Andrew D Forsyth Llb Bryan Carr BSc Geoffrey Raby BEc (Hons) MEc PhD

John P C Forsyth AM – Chairman

Chairman of directors of the Dymocks Group of Companies, Sm@rtTrans Limited, Tandragee Pty Limited, Coolgardie Units Pty Limited and Jamajon Pty Limited. Also a director of the company's subsidiaries Sm@rtTrans Limited, SmartTrans Technology (Beijing) Limited and SmartTrans (HK) Ltd. No directorships of other listed companies are held.

James P Laurie – Director

Director and geologist with over thirty years in mining and exploration for gold and base metals. Also a director of Sm@rtTrans Limited. No directorships of other listed companies are held. Resigned on 30 July 2011.

Andrew D Forsyth – Director

Solicitor and a director of Dymocks Group of Companies, Sm@rtTrans Limited, Tandragee Pty Limited, Coolgardie Units Pty Limited and Jamajon Pty Limited. Also a director of the company's subsidiaries Sm@rtTrans Limited, SmartTrans Technology (Beijing) Limited and SmartTrans (HK) Ltd. No directorships of other listed companies are held.

Bryan E Carr – Director

Executive Director, appointed 26 July 2011, with significant experience in the information technology sector and its application to the transport industry. Also a director of the company's subsidiaries Sm@rtTrans Limited, SmartTrans Technology (Beijing) Limited and SmartTrans (HK) Ltd.

Dr Geoffrey W Raby: Director

Director appointed 6 August 2011, also a director of the company's subsidiary Sm@rtTrans Limited. Dr Raby served as Australia's Ambassador to China since February 2007 and has extensive experience in business in China. Also a director of Fortescue Metals Group and OceanaGold Corporation.

Company Secretaries

James P Laurie & Mark S Buckland

Dividends

There were no dividends declared or paid during the course of the financial year and no dividend is recommended.

Principal Activities

The principal activities of the economic entity during the year were mineral exploration and an investment in a subsidiary company which provides on-line intelligent transport systems, software and services that comprise consignment, route and delivery optimisation, proof of delivery, mobile data, GPS tracking and vehicle telemetry, the China Mobile Platform, the Yamei Systems, Event Track and the VODOne Lottery Application.

Operating Results

The consolidated operating loss of the economic entity amounted to \$3,826,327 (2010: \$1,482,378 loss).

As at 30 June 2011 the Company had net assets of \$3,882,361.

Review of Operations

For further information refer to Chairman's Report.

Changes in State of Affairs

During the financial year there was no significant change in the state of affairs of the economic entity.

Likely Developments and Results

The likely developments, future prospects and business strategies, of the economic entity for subsequent years will depend upon exploration success at all or any of its projects and the success of its EventTrack, e-Route, e-Track, e-PoD, mobile data and vehicle telemetry products the China Mobile Platform, the Yamei Systems and the VODOne Lottery Application.

In March 2011 SmartTrans Technology (Beijing) Company Limited, a wholly owned subsidiary of Sm@rtTrans Limited, announced that it had entered into an agreement with VODOne's Beijing Caishijie Information Technology Company Limited (www.caishijie.com) for the distribution of its VODOne Lottery Application in China.

Under the agreement, SmartTrans has been granted the exclusive right to provide the VODOne Lottery Application to customers of the China Mobile group of companies in China and the non-exclusive right to provide that application to other subscribers in China. SmartTrans is entitled to commission on all amounts wagered by customers using the VODOne Lottery Application accessed from the SmartTrans platform.

Players will simply register and download the lottery software from SmartTrans' mobile telephone based AMP software and self-pick or quick-pick their lottery numbers, study lottery information and check their account balance through their handsets.

The VODOne Lottery Application to be distributed by SmartTrans will enable users to access and participate in lotteries run by the China Welfare Lottery Management Center (www.zhcw.com) and provide access to VODOne's portal named "Lottery Lifestyle" which broadcasts lottery related news and information exclusively supplied by the Ministry of Civil Affairs of the People's Republic of China.

VODOne - www.vodone.com - is a company listed on the Hong Kong Stock Exchange (0082.HK). According to VODOne, it is one of the first authorised service providers of mobile lottery betting service for mobile end users in China and mobile lottery has the advantage of surpassing other traditional lottery purchasing methods because players can make their purchasing decision whenever and wherever.

VODOne also advises that, currently, the lottery betting services of VODOne Lottery View covers all nationwide welfare lotteries in China.

Xinhua, the official press agency of the government of the People's Republic of China, reports that, according to the Welfare Lottery Distribution and Management Center (WLDMC), China sold CNY96.8 billion worth of welfare lotteries in 2010 and sales of welfare lotteries posted an annual increase of 18.7 percent over the past five years, from CNY41.2 billion in 2006 to CNY96.8 billion in 2010 inclusive. (http://news.xinhuanet.com/fortune/2011-02/08/c_13722112.htm)

SmartTrans expects to grow its Australian business with identified expansion projects with existing customers expected to take the SmartTrans solution to additional locations.

The functionality of the SmartTrans system will continue to increase as enhancements developed for the EventTrack project are integrated into the full suite of logistics products

Significant Events after the Reporting Date

During July 2011, the Company raised \$550,000 through a placement of 29,411,765 shares including a strategic investment of \$500,000 by Zhenya Tsvetnenko, Chief Executive Officer of the Zhenya Group of Companies which successfully pioneered mobile phone technology and premium mobile phone messaging services across the globe.

Australia's Ambassador to China Dr Geoff Raby joined the Boards of SmartTrans Holdings Limited and Sm@rtTrans Limited on 6 August 2011 on his retirement from Department of Foreign Affairs and Trade. Dr Raby served as Australia's Ambassador to China since February 2007 and twice served as head of the Embassy's Economic Section in Beijing. Dr Raby is expected to play a key role in SmartTrans' business relationships with important Chinese organisations, in particular China Mobile Group Shanxi, China Minmetals Group, China National Heavy Machinery Corporation (CHMC) and Yamei.

Bryan Carr joined the Board of SmartTrans Holdings Limited on 26 July 2011 and James Laurie resigned as a director on 30 July 2011 and took up the positions of General Manager and Company Secretary.

On 19 August 2011, SmartTrans announced that it had signed a binding agreement with China Mobile's CMPay E-Commerce Center (www.cmpay.com) that will allow SmartTrans to collect payment from China Mobile customers.

This arrangement gives SmartTrans billing access to China Mobile's 616 million customers (Source: www.chinamobileltd.com) and allows for China Mobile users to buy SmartTrans products including SmartTrans e-Solution logistics software and other content, on their mobile telephones and pay via their China Mobile CMPay account.

China Mobile's CMPay is a mobile payment service based on the mobile network and internet. It allows users to conduct e-commerce operations though their mobile phone, such as payments, recharging, transferring or enquiries. Users can make payments through their mobile payment account or the payment gateway of China Mobile.

Environmental Regulation

The Company is committed to environmental care and aims to carry out its activities in an environmentally-responsible and scientificallysound way. In performing exploration activities, some disturbance of the land in the creation of tracks, drill rig pads, sumps and the clearing of vegetation occurs. These activities have been managed in a way that reduces environmental impact to a practical minimum. Rehabilitation of any land disturbance commences as soon as practicable after exploration activity in an area has been completed.

The Company has, as far as the directors are aware, complied with all statutory requirements relating to its exploration activities.

Non-Audit Services

The economic entity has engaged RSM Bird Cameron on assignments additional to their statutory audit duties. These assignments involved provision of professional technical advice and preparation of the Company's income tax return for which RSM Bird Cameron was paid \$2,900 and \$10,965 respectively.

The Board of Directors is satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• a) all non-audit services have been reviewed by the Board of Directors to ensure they do not impact on the integrity and objectivity of the auditor; and
• b) none of the services undermined the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.

Insurance of Directors and Officers

During the financial year, SmartTrans Holdings Limited insured all Directors and Officers of the economic entity for all liabilities and costs relating to any claim made against them arising out of their conduct whilst acting as a Director or Officer of the economic entity, other than conduct involving a wilful breach of duty in relation to the economic entity.

Meetings of Directors

The following table sets out the number of formal meetings of the Company's directors during the year ended 30 June 2011 and the number of meetings attended by each director:

Number of meetings held: 13

Director	No. of meetings	No. of
	held whilst Director	Meetings Attended
John P C Forsyth AM	13	13
James P Laurie	13	13
Andrew D Forsyth	13	13

Corporate Governance

In recognising the need for the highest standards of corporate behaviour and accountability, the directors of SmartTrans Holdings Limited support and have adhered to the principles of corporate governance. The Company's statement of corporate governance practice is included in this Annual Report.

Proceedings on Behalf of Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

REMUNERATION REPORT

Your directors present their Remuneration Report for the year 1 July 2010 to 30 June 2011.

Role of Board of Directors

The Board determines the appropriate nature and amount of remuneration. The Board seeks to ensure that executive reward satisfies the following criteria for good reward governance practice:

• competitiveness and reasonableness;
• acceptability to shareholders;
• alignment of executive remuneration to performance;
• transparency; and
• capital management.

Non-Executive Directors

Fees paid to non-executive directors reflect the demands which are made on non-executive directors in the current corporate governance environment and are reviewed annually by the Board of Directors to ensure such fees are appropriate and not out of line with the market.

Executives

Executive director and key management personnel remuneration comprises base salary and superannuation. Base salary is reviewed annually by the Board having regard to the overall levels of remuneration of executives in comparable Australian companies.

Chairman

The services of the Chairman are provided by the Dymocks Group to the Company, the details of which are disclosed in Note 18(b), and were confirmed by the Board at a meeting held on November 22, 1990. The level of the remuneration, which includes office rental and other services supplied by Dymocks, was recommended to the Board by the then Chief Executive Officer with the benefit of research into published information as to the level of remuneration paid to chairpersons of comparable companies.

Letter of Appointment

Remuneration and other terms of employment for the executive director are formalised in a letter of appointment that also contains comprehensive provisions in relation to termination, confidentiality and suspension.

Remuneration of Directors and Key Management Personnel

(a) Names and positions held of Parent Entity Directors and Key Management Personnel in office at any time during the financial year are:

Parent Entity Directors
John P. C. Forsyth AM	Chairman — Non-Executive
James P. Laurie	Director — Executive
Andrew D. Forsyth	Director — Non-Executive

Key Management Personnel

Bryan E. Carr Chief Operating Officer (Sm@rtTrans Limited)

(b) Parent Entity Directors' Remuneration

	Primary							Total
	Salary, Fees &		Superannuation
	Commissions		Contribution		Other – Note 18 (b)
	2011	2010	2011	2010	2011	2010	2011	2010
	\$	\$	\$	\$	\$	\$	\$	\$
John P.C. Forsyth AM					*240,000	*240,000	*240,000	*240,000
James P. Laurie	210,804	211,536	15,204	14,460	-	-	226,008	225,996
Andrew D. Forsyth	18,350	18,350	1,650	1,650	-	-	20,000	20,000
Total	229,154	229,886	16,854	16,110	240,000	240,000	486,008	485,996

*Includes office accommodation, administrative services, secretarial assistance, miscellaneous travel and other expenses. 240,000

The service and performance criteria set to determine remuneration are set out in paragraph (e) of the Remuneration Report. There was no directors' share-based compensation during the year.

(c) Key Management Personnel Remuneration
		Primary		Consulting Fees		Superannuation	Total
		Salary				Contribution
	2011	2010	2011	2010	2011	2010	2011	2010
	\$	\$	\$	\$	\$	\$	\$	\$
Bryan E. Carr*	-	98,494	216,000	216,000	-	-	216,000	314,494
Total	-	98,494	216,000	216,000	-	-	216,000	314,494

*Fees were paid to I.T.S. Worldwide Ltd in which Bryan E. Carr has an interest and of which he is a director. I.T.S Worldwide Ltd has provided the services of a Chief Operating Officer to Sm@rtTrans Limited since 1/7/2009.

The service and performance criteria set to determine remuneration are set out in paragraph (e) of the Remuneration Report. There was no key management personnel share-based compensation during the year. The company did not issue options to directors and there are no options issued as remuneration to directors.

(d) Shareholdings

Number of Shares held directly or indirectly by Parent Entity Directors and Key Management Personnel

Balance 1 July 2009	Net Change*	Balance 1 July 2010	Net Change*	Balance 30 June 2011
330,969,001	154,496,284	485,465,285	-	485,465,285
20,236,120	8,208,193	28,444,313	-	28,444,313
128,571	64,286	192,857	-	192,857
580,869	13,850,000	14,430,869	41,990,000	56,420,869
351,914,561	176,618,763	528,533,324	41,990,000	570,523,324

*Net Change refers to shares bought and sold.

(e) Remuneration Practices

The Company's policy for determining the nature and amount of emoluments of directors and key management personnel of the Company is as follows:

The remuneration structure for the executive director and key management personnel is based on a number of factors including length of service, particular experience of the individual concerned, and overall performance of the Company. Employment between the Company and the executive director and key management personnel is on a continuing basis, not formalized by service agreements, the terms of which are not expected to change in the immediate future. Upon retirement the executive director and key management personnel are paid employee benefit entitlements accrued to date of retirement. The executive director and key management personnel are paid a percentage of their salary (determined by the Board at the time) in the event of redundancy. Additionally, remuneration and other terms of employment for the executive director are formalised in a letter of appointment that also contains comprehensive provisions in relation to termination, confidentiality and suspension.

Company staff are also entitled and encouraged to participate in the Company's Employee Share Option Plan .

Options granted under the arrangement do not carry dividend or voting rights. Each option is entitled to be converted into one ordinary share and is valued using the Black-Scholes methodology.

(f) Options

At the date of this report, the unissued ordinary shares of SmartTrans Holdings Limited under option are as follows:

Grant Date	Date of Expiry	Exercise Price	Number under Option
7/9/2011	7/10/2012	\$0.0186	6,666,666
7/9/2011	7/10/2013	\$0.0186	6,666,667
7/9/2011	7/10/2014	\$0.0186	6,666,667

Option holders do not have any rights to participate in any issues of shares or other interests in the company or any other entity. There have been no unissued shares or interests under option of any controlled entity within the Group during or since the end of the reporting period.

For details of options issued to directors and key management personnel, refer to paragraphs (b) and (c) of the remuneration report.

Auditor's Independence Declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is included in these financial statements.

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

BRYAN E CARR Director Melbourne, Victoria

Dated: 30 September 2011

RSM Bird Cameron Partners 8 St George's Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 8 9261 9100 F +61 8 9261 9101 www.rsmi.com.au

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SMARTTRANS HOLDINGS LIMITED

Report on the Financial Report

We have audited the accompanying financial report of SmartTrans Holdings Limited, which comprises the consolidated statement of financial position as at 30 June 2011, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of 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 of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply 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 about whether the financial report is free from material misstatement.

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.

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

Liability limited by a scheme approved under Professional Standards Legislation Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms. RSM International is the name given to a network of independent accounting and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity. - 8 -

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of SmartTrans Holdings Limited, would be in the same terms if given to the directors as at the time of this auditor's report.

Opinion

In our opinion:

• (a) the financial report of SmartTrans Holdings Limited is in accordance with the Corporations Act 2001, including:
• (i) giving a true and fair view of the consolidated entity's financial position as at 30 June 2011 and of its performance for the year ended on that date; and
• (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
• (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the Remuneration Report contained within the directors' report for the year ended 30 June 2011. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion the Remuneration Report of SmartTrans Holdings Limited for the year ended 30 June 2011 complies with section 300A of the Corporations Act 2001.

RSM BIRD CAMERON PARTNERS Chartered Accountants

Perth, WA D J WALL Dated: 30 September 2011 Partner

DIRECTORS' DECLARATION

The directors of the company declare that:

• 1. the financial statements and notes are in accordance with the Corporations Act 2001 and:
• a. comply with Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and
• b. give a true and fair view of the financial position as at 30 June 2011 and of the performance for the year ended on that date of the company and consolidated group;
• 1. the Chief Executive Officer and Chief Finance Officer have each declared that:
• a. the financial records of the company for the financial year have been properly maintained in accordance with s 286 of the Corporations Act 2001;
• b. the financial statements and notes for the financial year comply with Accounting Standards; and
• c. the financial statements and notes for the financial year give a true and fair view; and
• 1. in the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

On behalf of the Directors

BRYAN E CARR Director

Melbourne, Victoria

Dated: 30 September 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2011

	Note	2011 \$	2010 \$
Revenue	4	898,137	1,080,383
Employee salaries and benefits expense		(1,020,412)	(1,003,202)
Depreciation expense		(44,892)	(78,907)
Management and administration services expense	18(b)	(240,000)	(240,000)
Share based payment		(85,163)	-
Goodwill on consolidation written off		(1,206,722)	-
Other expenses		(1,869,095)	(1,421,849)
Material and installation costs		(245,697)	(357,483)
Loss before income tax	5	(3,840,844)	(2,021,058)
Income tax benefit	6	14,517	538,680
Loss for the year		(3,826,327)	(1,482,378)
Other comprehensive income		-	-
Total comprehensive loss for the year		(3,826,327)	(1,482,378)
Total comprehensive loss for the year attributable to:
Members of the parent equity		(3,826,327)	(1,426,182)
Non Controlling Interest		-	(56,196)
		(3,826,327)	(1,482,378)
Basic loss per share (cents per share)	19	(0.36)	(0.22)
Diluted loss per share (cents per share)	19	(0.36)	(0.22)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As At 30 June 2011

	Note	2011 \$	2010 \$
Current Assets
Cash and cash equivalents	7	274,435	699,032
Trade and other receivables	8	93,443	433,143
Other current assets	9	11,638	13,619
Total Current Assets		379,516	1,145,794
Non-Current Assets
Trade and other receivables	8	34,578	61,650
Property, plant and equipment	11	24,207	61,203
Exploration, evaluation and development costs	12	4,042,800	4,629,226
Total Non-Current Assets		4,101,585	4,752,079
TOTAL ASSETS		4,481,101	5,897,873
Current Liabilities
Trade and other payables	13	315,254	334,344
Provisions	14	283,486	259,562
TOTAL LIABILITIES		598,740	593,906
NET ASSETS		3,882,361	5,303,967
Equity
Issued capital	15	60,501,486	58,238,124
Reserves		85,163	-
Accumulated losses		(56,704,288)	(52,877,961)
Non-controlling interest		-	(56,196)
TOTAL EQUITY		3,882,361	5,303,967

The accompanying notes form part of these financial statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2011

	Note
		Ordinary Share Capital \$	Non Controlling Interest \$	Reserves \$	Accumulated Losses \$	Total Equity \$
Balance at 1 July 2009		56,495,378	-	-	(51,451,779)	5,043,599
Shares issued during the year		1,742,746	-	-	-	1,742,746
Total Comprehensive Loss for the year		-	(56,196)	-	(1,426,182)	(1,482,378)
Balance at 30 June 2010	15	58,238,124	(56,196)	-	(52,877,961)	5,303,967
Balance at 1 July 2010		58,238,124	(56,196)	-	(52,877,961)	5,303,967
Shares issued during the year		2,263,362	-	-	-	2,263,362
Share based payments		-	-	85,163	-	85,163
Transactions with non-controlling
interests		-	56,196	-	-	56,196
Total Comprehensive Loss for the year		-	-	-	(3,826,327)	(3,826,327)
Balance at 30 June 2011	15	60,501,486	-	85,163	(56,704,288)	3,882,361

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2011

	Note	2011 \$ \$	2010 \$ \$
Cash Flows from Operating Activities
Receipts from customers and government grants		1,028,431	1,120,213
Payments to suppliers and employees		(2,729,719)	(3,110,655)
Research and development tax concession		241,473	405,474
Interest received		11,504	9,110
Net cash used in Operating Activities	22	(1,448,311)	(1,575,858)
Cash Flows from Investing Activities
Exploration and evaluation expenditure		(81,226)	(94,755)
Payments for plant and equipment	11	(7,896)	(11,865)
Net cash used in Investing Activities		(89,122)	(106,620)
Cash Flows from Financing Activities
Proceeds from Issue of Shares, net		1,112,836	1,742,746
Net cash provided by Financing Activities		1,112,836	1,742,746
Net increase/(decrease) in cash and cash equivalents		(424,597)	60,268
Cash and cash equivalents at the beginning of year		699,032	638,764
Cash and cash equivalents at the end of year	7	274,435	699,032

For the year ended 30 June 2011

NOTE 1 : STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report covers the economic entity of SmartTrans Holdings Limited and controlled entities (―Group‖). SmartTrans Holdings Limited is a listed public company, incorporated and domiciled in Australia.

The separate financial statements of the parent entity, SmartTrans Holdings Limited have not been presented within this financial report as permitted by the Corporation Act 2001.

The financial report was authorised for issue on 30 September 2011 by the Board of Directors.

The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards.

The following is a summary of the material accounting policies adopted by the group in the preparation of the financial statements. The accounting policies set out below have been consistently applied, unless otherwise stated.

The financial statements have been prepared on an accruals basis and are based on historical costs except for financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Basis of Preparation

The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.

As disclosed in the financial statements, the company and consolidated entity incurred losses of \$3,515,717 and \$3,826,327 respectively and the consolidated entity had net cash outflows from operating activities of \$1,448,311 for the year ended 30 June 2011. As at that date the company and consolidated entity had net current liabilities of \$28,945 and \$219,224 respectively.

The Directors believe that it is reasonably foreseeable that the company and consolidated entity will continue as going concerns and that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following factors:

• In July 2011, the company announced it raised \$550,000 through a placement of 29,411,765 shares including a strategic investment of \$500,000 by Zhenya Tsvetnenko, Chief Executive Officer of the Zhenya Group of Companies, which successfully pioneered mobile phone technology and premium mobile phone messaging services across the globe;
• On 19 August 2011, SmartTrans announced that it had signed a binding agreement with China Mobile's CMPay E-Commerce Center, that will allow SmartTrans to derive revenue from China Mobile's customers. SmartTrans' mobile telephone based software products and services are budgeted to launch in China this year and SmartTrans is presently negotiating a number of additional supply and service agreements, which SmartTrans expects will broaden its market reach in China and aid expansion;
• The China Mobile's CMPay arrangement gives SmartTrans billing access to China Mobile's 627 million customers and allows for China Mobile users to buy SmartTrans products including SmartTrans e-Solution logistics software and other content, on their mobile telephones and pay via their China Mobile CMPay account;
• SmartTrans expects to benefit, from its exclusive right to provide the VODOne Lottery Application to customers of the China Mobile group of companies in China and its non-exclusive right to provide that application to other subscribers in China, taking advantage of the rapid growth in welfare lottery expenditure. According to Xinhua, the official press agency of the government of the People's Republic of China, welfare lotteries posted an annual increase of 18.7 percent over the past five years to CNY96.8 billion in 2010 (http://news.xinhuanet.com/fortune/2011-02/08/c_13722112.htm);
• The Company's new website and mobile site will incorporate the VODOne Lottery Application and attract paying subscribers, advertising revenue, monthly fees from consumers and sales revenue from the sale of applications;
• The announced appointment of the former Australian Ambassador to China, Dr Geoff Raby to the Board of Directors, provides to the Company a wealth of expertise, contacts and experience in doing business in China;

For the year ended 30 June 2011

NOTE 1 : STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Basis of Preparation (cont.)

• The Company intends to raise funds through a Rights Issue and a placement to sophisticated investors during the next twelve months. These funds will provide working capital for the Company to launch its Mobile Telephone and Web-based software services in China and to launch and market the VODOne mobile phone lottery system, for which SmartTrans will receive a royalty percentage for all amounts wagered, and
• The Company has the ability to further reduce operational cost levels, to conserve cash in the event that the capital raisings are delayed or partial.

New Accounting Standards and Interpretations

In the current year, the economic entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of these new and revised Standards and Interpretations has not resulted in a significant or material change to the consolidated entity's accounting policies.

At the date of this financial report the following standards, which may impact the entity in the period of initial application, have been issued but are not yet effective:

Reference	Title	Summary	Application date (financial years beginning)	Expected Impact
AASB 9	Financial Instruments	Replaces the requirements of AASB 139 for the classification and measurement of financial assets. This is the result of the first part of Phase 1 of the IASB's project to replace IAS 39.	1 January 2013	No expected impact on the entity
AASB 124	Related Party Disclosures	Revised standard. The definition of a related party is simplified to clarify its intended meaning and eliminate inconsistencies from the application of the definition	1 January 2011	Disclosure only

The economic entity has decided against early adoption of these standards.

Accounting Policies

(a) Principles of consolidation

A controlled entity is any entity SmartTrans Holdings Limited has the power to control the financial and operating policies of so as to obtain benefits from its activities.

A list of controlled entities is contained in Note 10 to the financial statements. All controlled entities have a June financial year end.

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

For the year ended 30 June 2011

NOTE 1 : STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont)

(b) Income tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the financial position date.

Deferred tax is accounted for using the financial position liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

(c) Recoverable amount of non-current assets

The carrying values of non current assets are recorded at their recoverable amounts, which are determined by reference to the present value of future net cash flows expected to be generated by those assets.

The present value of future net cash flows expected to be generated by the parent entity's investment in Sm@rtTrans Ltd cannot be assessed with certainty as it is dependent upon a continuation of the successful development and commercialisation of the on-line intelligent transport systems, software, services and other technology. Although the directors are budgeting for the business to be profitable from and including the year ending 30 June 2011, on the basis of conservatism and prudence, the directors have elected to raise provisions against the parent entity's investment in and loan to Sm@rtTrans Ltd until the budgeted profit has been achieved.

(d) Property, plant and equipment

Each class of property, plant and equipment is carried at cost less any accumulated depreciation and any impairment losses.

Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets.

Depreciation

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

The useful lives for each class of depreciable assets are:

Class of Fixed Asset	Useful lives
Plant and equipment	2 to 10 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each financial position date.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income.

For the year ended 30 June 2011 (Cont)

NOTE 1 : STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont)

(e) Exploration, evaluation and development expenditure

Exploration, evaluation and development expenditure is accumulated in respect of each identifiable area of interest. The expenditure relating to an area of interest is carried forward provided the rights to tenure of the area of interest are current, and provided further that either:-

• (i) it is expected that the expenditure will be recovered through successful development and exploitation of the area of interest, or alternatively by its sale, or
• (ii) exploration and/or evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area are continuing.

Accumulated expenditure in relation to an abandoned area is written off in full against profit in the year in which the decision to abandon the area is made.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward expenditure in relation to an area of interest.

Site restoration is completed after the end of each exploration phase and the restoration costs are included as part of the exploration costs.

(f) Financial instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Held- to- maturity investments

The investments have fixed maturities, and it is the group's intention to hold these investments to maturity. Any held-to-maturity investments held by the group are stated at amortised cost using the effective interest rate method.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Available-for-sale financial assets

Available-for-sale financial assets include any financial assets not included in the above categories.

Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

Financial liabilities

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

Impairment

At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the statement of comprehensive income.

(g) Impairment of assets

At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the statement of comprehensive income.

Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

For the year ended 30 June 2011 (Cont)

NOTE 1 : STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont)

(h) Interests in joint ventures

The economic entity's share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the consolidated statement of comprehensive incomes and financial positions. Details of the economic entity's interests are shown in Note 23.

(i) Intangibles

Research and development

Expenditure during the research phase of a project is recognised as an expense when incurred. Products and software development costs, including the economic entity's route optimisation and mobile data systems technology, are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.

Products and software development costs have a finite life and are amortised on a systematic basis over the useful live of the project which is estimated to be 4 to 5 years. Products and software development costs are carried at cost less accumulated amortisation and any impairment loss.

(j) Employee benefits

Provision is made for the Group's liability for employee benefits arising from services rendered by employees to financial position date. Employee benefits expected to be settled within one year together with benefits arising from wages and salaries and annual leave which will be settled after one year, have been measured at their nominal amount. Other employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

The Group operates an employee share ownership plan. Share-based payments to employees are measured at the fair value of the instruments issued and amortised over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black-Scholes pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest.

(k) Earnings per share

Basic earnings per share is determined by dividing the operating loss after income tax attributable to members of SmartTrans Holdings Limited by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share are calculated by dividing the operating loss after income tax attributable to members of SmartTrans Holdings Limited by the weighted average number of ordinary shares outstanding during the financial year, adjusted for the effects of all dilutive potential ordinary shares.

(l) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and less bank overdrafts if any.

(m) Comparative figures

Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current financial year.

(n) Revenue

Revenue from the sale of goods is recognised upon the delivery of goods to customers. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. A government grant is recognised on the receipt of the grant.

For the year ended 30 June 2011 (Cont)

NOTE 1 : STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont)

(o) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial positions are shown inclusive of GST.

Cash flows are presented in the Statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(p) Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(q) Leases

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

(r) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of directors.

(s) Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the Group's entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is recognised in profit or loss.

Group companies

The financial results and position of foreign operations, whose functional currency is different from the Group's presentation currency, are translated as follows:

• assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
• income and expenses are translated at average exchange rates for the period; and
• retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial position. These differences are recognised in profit or loss in the period in which the operation is disposed.

For the year ended 30 June 2011 (Cont)

NOTE 2 : FINANCIAL RISK MANAGEMENT

The group's activities expose it to a variety of financial risks: market risk (mainly interest rate risk), credit risk and liquidity risk. The group's overall risk management program focuses on liquidity and seeks to minimise potential adverse effects on the financial performance of the group. The group uses different methods to measure different types of risks to which it is exposed. These methods include sensitivity analysis in the case of interest rate risks and ageing analysis for credit risk.

Risk management is carried out by senior management in consultation with the Board of Directors. The group's overall risk management program focuses on managing the risk identified below:

Credit Risk

The group trades only with recognized, creditworthy third parties. The group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. In addition, receivable balances are monitored on an ongoing basis with the result that the group's exposure to debt is minimal. There are a number of individually significant debtors. At 30 June 2011, the four largest debtors comprised approximately 55% of the total debtors. One debtor comprised approximately 18% of total debtors. The debt has been paid by the date of this financial report. Generally customers do not have external credit ratings. Management believes the credit quality of the Consolidated Group's customers is high based on the very low bad debt write-offs experienced historically.

Liquidity Risk

The group has appropriate procedures in place to manage cash flows including continuous monitoring of forecast and actual cash flows to ensure funds are available to meet commitments. The group's equity management is determined by funds required to undertake software development and marketing, and exploration activities and meet its corporate and other costs. Where joint venture partners participate in particular projects the partners contribute cash calls in proportion to their respective interest or as agreed under any buy-in agreements.

Foreign exchange risk

The group's exposure to Foreign exchange risk for changes in currency rates relates primarily to the US dollar and Chinese Renminbi. The group has very low exposure to foreign exchange variation at this time.

Interest rate risk

The group's exposure to market risk for changes in interest rates relates primarily to interest on deposits with banking institutions. The group has no borrowings or finance leases. See Note 24 (b).

NOTE 3 : CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions.

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Recoverability of exploration expenditure

The group tests annually whether the exploration and evaluation expenditure incurred in identifiable areas of interest is expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of reserves and further work is expected to be performed. All expenditure that does not meet these criteria is expensed in accordance with Note 1(e).

For the year ended 30 June 2011 (Cont)

	2011 \$	2010 \$
NOTE 4 : REVENUE
Operating activities:
Consulting fees	94,420	27,000
Maintenance contracts	31,162	78,611
Installations	215,315	440,220
Access fees	517,804	420,957
	858,701	966,788
Non-operating activities:
Interest received	11,504	9,110
Government grants (a)	2,260	112,485
Other revenue	25,672	(8,000)
	39,436	113,595
	898,137	1,080,383

(a) Export Market Development Grants of \$2,260 (2010: \$112,485) were recognized during the year. There are no unfulfilled conditions or other contingencies attaching to these grants. The group did not benefit directly from any other forms of government assistance.

	2011 \$	2010 \$
NOTE 5 : LOSS BEFORE INCOME TAX
Loss before income tax has been determined after charging the following items:
Mineral exploration and evaluation written off Rental expense on operating leases	667,651 175,684	1,362 165,223

For the year ended 30 June 2011 (Cont)

NOTE 6 : INCOME TAX

No income tax is payable by the economic entity as it incurred losses for income tax purposes for the year. The economic entity also has available for recoupment, income tax and capital losses at balance date.

The tax benefit for the year consists of a research and development tax concession received or receivable for the year.

	2011	2010
(a) Reconciliation	\$	\$
The prima facie income tax benefit on the loss from ordinary
activities is reconciled as follows:
Loss from ordinary activities before income tax	(3,840,844)	(2,021,058)
Income tax benefit at 30%	(1,152,253)	(606,317)
Less tax effect of expenses not deductible
Expenditure and amortisation not deductible	27,600	1,878
Goodwill written off	345,158	-
Exempt income not taxable	105,692	(45,391)
Tax effect on research & development tax concession	14,517	538,680
Tax effect of temporary differences and tax losses not recognised	673,803	649,830
Income tax expense	14,517	538,680

(b) Deferred Tax Assets and Liabilities comprise the following:

Deferred Tax Assets
Tax losses	9,392,835	8,871,842
Other provisions	85,046	77,869
Other assets	58,686	14,121
Total deferred tax assets not recognised	9,536,567	8,963,832
Deferred Tax Liabilities
Mining and exploration expenditure	1,212,840	1,313,768
Other assets	335	475
Total deferred tax liabilities not recognised	1,213,175	1,314,243
Net deferred tax assets not recognised	8,323,392	7,649,589
Capital losses not recognised	1,093,920	1,093,920

The above benefits will only be obtained if:

(i) The Company derives future assessable income of a nature and of an amount sufficient to enable the benefits to be realised;

(ii) the Company continues to comply with the conditions for deductibility imposed by tax legislation; and

(iii) no changes in tax legislation adversely affect the Company in realising the benefits.

NOTE 7 : CASH AND CASH EQUIVALENTS

Cash on hand	1,300	1,300
Cash at bank	207,034	482,694
Deposits at call	66,101	215,038
	274,435	699,032

The effective interest rate on deposits was 2.17 % (2010: 1.67%) per annum.

For the year ended 30 June 2011 (Cont)

NOTE 8 : TRADE AND OTHER RECEIVABLES

	2011	2010
	\$	\$
Current
Trade receivables	68,559	180,157
Tax recoverable	-	226,956
Sundry receivables	24,884	26,030
	93,443	433,143
Non Current
Performance bonds	34,578	61,650
	34,578	61,650

The ageing of trade receivables is as follows:

0-30 days	45,562	121,120
31-60 days#	6,237	25,624
61-90 days#	16,760	33,413
>90 days	- 68,559	- 180,157

overdue but not impaired

(a) Trade and other receivables

Trade receivables that are classified as ―overdue but not impaired‖ have been substantially recovered after balance date. There is no impairment of sundry receivables as all were recovered within one month of balance date.

The Group does not hold any collateral in relation to the above receivables.

(b) Foreign exchange and interest rate risk

Information about the Group's exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in Note 2.

(c) Fair value and credit risk

Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.

The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. Refer to Note 2 for more information on the risk management policy of the Group and the credit quality of the group's trade receivables.

NOTE 9 : OTHER CURRENT ASSETS	2011 \$	2010 \$
Prepayments	11,638	13,619

For the year ended 30 June 2011 (Cont)

NOTE 10 : CONTROLLED ENTITIES

Investment in Controlled Entities:

	Place of
	Incorporation		Equity Holding
		2011	2010
Parent Entity:		\$	\$
SmartTrans Holdings Limited	Australia
Controlled Entities:
Sm@rtTrans Limited	Australia	100%	95%
E-Trans Pty Ltd	Australia	100%	100%
SmartTrans Technology (Beijing) Ltd	PRC	100%	-
SmartTrans (HK) Ltd	HK	100%	-

a) During the year the Company increased its equity in Sma@rtTrans Limited from 95% to 100% for a consideration of 41,990,000 shares in SmartTrans Holdings Limited.

Acquisition of non-controlling interest	\$
Purchase acquisition by way of issuing company's shares	1,150,526
Net Liabilities acquired from controlling interest	56,196
Goodwill	1,206,722

b) Two companies SmartTrans Technology (Beijing) Ltd and SmartTrans (HK) Ltd were incorporated during the financial year.

	2011 \$	2010 \$
NOTE 11 : PROPERTY, PLANT AND EQUIPMENT
Plant and equipment
Cost	670,563	662,667
Accumulated depreciation	(646,356)	(601,464)
Total property, plant and equipment	24,207	61,203
	2011	2010
	\$	\$
Plant and Equipment
Balance at the beginning of the year	61,203	128,245
Additions	7,896	11,865
Depreciation	(44,892)	(78,907)
Carrying amount at the end of year	24,207	61,203

For the year ended 30 June 2011 (Cont)

NOTE 12 : EXPLORATION, EVALUATION AND DEVELOPMENT COSTS

	2011 \$	2010 \$
Exploration tenements – at cost	4,042,800	4,629,226
Balance at beginning of the year	4,629,226	4,535,833
Expenditure incurred during the year	81,225	94,755
Expenditure written off during the year	(667,651)	(1,362)
Balance at end of the year	4,042,800	4,629,226

The ultimate recoupment of exploration and evaluation expenditure carried forward is dependent on the successful development and commercial exploitation, or alternatively, the sale of the respective areas as further discussed in Note 1(e)

NOTE 13 : TRADE AND OTHER PAYABLES	2011	2010
	\$	\$
Trade creditors and accruals	315,254	334,344

NOTE 14: PROVISIONS

Employee entitlements	283,486	259,562
Balance at the beginning of the year	259,562	349,226
Additional provisions	102,678	140,612
Amount used	(78,754)	(230,276)
Balance at end of the year	283,486	259,562

NOTE 15 : ISSUED CAPITAL

1,119,674,661 (2010 : 1,004,230,850) fully paid ordinary shares	60,501,486	58,238,124
Ordinary Shares
	Number	Number
At beginning of the year	1,004,230,850	654,444,711
Shares issued	115,443,811	349,786,139
At the end of year	1,119,674,661	1,004,230,850

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

Ordinary shares have no par value and the company does not have a limited amount of authorised capital.

Options

• i. For information relating to the SmartTrans Holdings Limited employee option plan, including details of options issued, exercised and lapsed during the financial year and the options outstanding at year-end, refer to Note 27: Share-based Payments.
• ii. For information relating to share options issued to key management personnel during the financial year, refer to Note 27.

For the year ended 30 June 2011 (Cont)

NOTE 15 : ISSUED CAPITAL (Cont)

Capital Management

Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern.

The group's debt and capital includes ordinary share capital, and financial liabilities, supported by financial assets.

There are no externally imposed capital requirements.

Management effectively manages the group's capital by assessing the group's financial risks on a monthly basis and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.

There have been no changes in the strategy adopted by management to control the capital of the group since the prior year. The group's gearing ratio is kept at a minimum. There is no intention to incur debt funding on behalf of the group. Ongoing operations will be funded via equity or joint ventures with other companies.

NOTE 16 : REMUNERATION OF DIRECTORS AND EXECUTIVES

The Directors' Report sets out the remuneration of the SmartTrans Holdings directors and key management personnel.

	2011 \$	2010 \$
NOTE 17 : REMUNERATION OF AUDITORS Remuneration of the auditor of the parent entity for:
Auditing or reviewing the financial statements Other services including preparation of tax returns and accounting	32,500	29,250
advice regarding an ESOP and employee matters.	13,865 46,365	19,478 48,728

NOTE 18 : RELATED PARTY INFORMATION

(a) Names of directors

The names of persons who were directors of SmartTrans Holdings Limited at any time during the financial year are as follows:

• John P.C. Forsyth AM
• Andrew D. Forsyth
• James P. Laurie

(b) Transactions of directors and director-related entities

Transactions with directors during the year, that were made on normal commercial terms and conditions, were as follows:

• The Dymocks Group, of which Messrs John P.C. Forsyth AM and Andrew D. Forsyth are directors, provided management, office accommodation and administrative services to the Company totalling \$240,000 (2010: \$240,000).
• The company acquired the balance 5% interest in Sm@rtTrans Limited from ITS Worldwide Limited, a company which is controlled Mr Bryan Carr, a director of the Company. The consideration for the acquisition was the issue of 41,990,000 ordinary shares in the Company. Based on the volume weighted average share price of the Company's shares over the 10 trading days up to 1 April 2011, the deemed issue price is \$0.0274 per share. All of the shares issued in consideration for the acquisition will be subject to voluntary escrow for 12 months, 50% for 24 months and 25% for 36 months.

(c) Directors' Shareholdings

Directors and director- related entities held directly, indirectly or beneficially at balance date, the following equity interests in the Company.

		Number of Shares
	2011	2010
Parent Entity Directors
John P.C. Forsyth AM	485,465,285	485,465,285
Andrew D. Forsyth	28,444,313	28,444,313
James P. Laurie	192,857	192,857

For the year ended 30 June 2011 (Cont)

NOTE 18 : RELATED PARTY INFORMATION (Cont)

(d) Economic entity

The economic entity consists of SmartTrans Holdings Limited and its subsidiaries as disclosed in Note 10. Transactions between the parent entities and other entities in the group consisted of the loans advanced and interest was charged at 6.35% per annum. Additionally, the parent has provided a letter to a controlled entity, undertaking to give or arrange any financial assistance which the controlled entity may need to ensure that it is solvent at the date upon which it incurs a debt within the meaning of section 588G of the Corporations Act 2001. Such financial assistance is not quantifiable at balance date, as it is dependent upon the trading performance of the controlled entity in the succeeding financial year.

		2011 \$	2010 \$
	NOTE 19 : EARNINGS PER SHARE
(a)	Operating loss used to calculate basic and diluted EPS	(3,826,327)	(1,482,378)
(b)	Weighted average number of ordinary shares outstanding during the year used in calculating basic and diluted EPS	1,064,875,467	775,742,462

NOTE 20 : SEGMENT INFORMATION

The economic entity has identified its operating segments based on internal reports that are provided to the Board of Directors on a regular basis. Management has identified two operating segments based on the main business fronts of the economic entity as follows:

• Mineral exploration;
• Mobile phone and transport systems in Australia and China.

(a) Intersegment transactions

There are no intersegment transactions.

(b) Segment assets

Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority economic value from that asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.

(c) Segment liabilities

Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

(d) Unallocated items

The following items of expenses, assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment:

• Cash at bank
• Head office Plant & Equipment
• General Administration costs.
• Current tax liabilities
• Staff leave provisions

For the year ended 30 June 2011 (Cont)

NOTE 20 : SEGMENT INFORMATION (Cont)

(e) Business Segment Summary

For the year ended 30 June 11

	Mineral Exploration	Mobile Phone and Transport Systems		Total
		Australia	China
Total Segment Revenue Segment Loss	- (667,651)	858,701 (262,088)	4,981 (828,322)	877,722 (1,758,061)
Segment Assets as at 30 June 2011	4,060,900	142,839	59,117	4,262,856
Segment Liabilities as at 30 June 2011	-	(312,233)	(43,532)	(355,765)

For the year ended 30 June 10

	Mineral Exploration		Mobile Phone and Transport Systems	Total
		Australia	China
Total Segment Revenue Segment Loss	- (1,362)	966,832 (376,611)	112,485 (772,374)	1,079,317 (1,150,347)
Segment Assets as at 30 June 2010	4,677,826	583,290	48,761	5,309,877
Segment Liabilities as at 30 June 2010	-	(365,586)	(34,362)	(399,948)
Reconciliation of reportable segment loss			2011	2010
Total loss for reportable segments			(1,758,061)	(1,150,347)
Management and Administration services			(240,000)	(240,000)
Share based payments			(85,163)	-
Corporate costs			(1,757,620)	(630,711)
Loss before income tax			(3,840,844)	(2,021,058)
Reconciliation of reportable segment assets
			30 June 2011	30 June 2010
Reportable segment assets			4,262,856	5,309,877
Unallocated Assets			218,245	587,996
Total Assets			4,481,101	5,897,873
Reconciliation of reportable segment liabilities
			30 June 2011	30 June 2010
Reportable segment liabilities			(355,765)	(399,948)
Unallocated Liabilities			(242,975)	(193,958)
Total Liabilities			(598,740)	(593,906)

Major Customers

The Group has a number of customers to whom it provides services. The Group supplies four external customers in the Mobile Phone and Transport Systems (Australia) segment who account for 56% of external revenue. The next most significant client accounts for 9.2% of external revenue.

For the year ended 30 June 2011 (Cont)

NOTE 21 : COMMITMENTS AND CONTINGENT LIABILITIES

(a) Capital Expenditure

There are no capital expenditure commitments as at financial position date.

(b) Exploration Work

The Company has certain obligations to perform minimum exploration work and expend minimum amounts of money on its mining tenements and its share of joint venture contractual commitments. The obligations are expected to amount to \$601,200 in the year ended 30 June 2011 (2010: \$1,031,000) and be fulfilled in the normal course of operations of the Company. The estimated expenditure may be varied as a result of expenditure by joint venturers or exemptions to be requested.

	2011 \$	2010 \$
(c) Operating Lease Commitments
Payable
Not later than one year	15,176	36,206
Later than one year but not later than five years	-	-
Total operating lease liability	15,176	36,206

The property leases are non cancellable with two to three year terms. Rents are payable monthly in advance and are indexed annually to the CPI.

(d) Contingent Liabilities

The Company and its controlled entities have no known material contingent liabilities as at 30 June 2011.

	2011 \$	2010 \$
NOTE 22 : NOTES TO THE STATEMENT OF CASH FLOWS
Reconciliation of net cash used in operating activities to net loss
Net loss after income tax	(3,826,327)	(1,482,378)
Non-cash flows in loss
Depreciation	44,892	78,907
Equity based payment	85,163	-
Impairment of Goodwill	1,206,722	-
Exploration expenditure written off	667,651	1,362
Change in net assets and liabilities:
Increase/(decrease) in receivables	369,970	(55,694)
Increase/(decrease) in other assets	(1,216)	(2,397)
Increase/(decrease) in payables	(19,090)	(25,994)
Increase/(decrease) in provisions	23,924	(89,664)
Net Cash used in Operating Activities	(1,448,311)	(1,575,858)

NOTE 23 : INTERESTS IN JOINT VENTURES

The Company is a participant in the South Connors Arch Project where it has earned a 60% interest in three tenements at Mount Mackenzie. No assets are employed by the joint venture. Expenditure incurred by the Company in respect of this joint venture is included in deferred exploration expenditure, (Note 12). MMG Australia Limited, formerly OZ Minerals Australia Limited, operates the Wangunda Joint Venture which covers the company's Base Metals Project. MMG can earn 70% equity by spending in excess of \$10 million.

For the year ended 30 June 2011 (Cont)

NOTE 24 : FINANCIAL INSTRUMENTS

(a) Financial Instrument Composition and Maturity Analysis

2011				Fixed interest maturing in:
	Weighted average	Floating interest rate	1 year or less	1 to 5 years	Non-interest bearing	Total
	effective interest rate	\$	\$	\$	\$	\$
Financial assets
Cash	2.17%	273,135	-	-	1,300	274,435
Receivables		-	-	-	128,021	128,021
		273,135	-	-	129,321	402,456
Financial liabilities Payables		-	-	-	(315,254)	(315,254)
Net financial assets		273,135	-	-	(185,933)	87,202
2010
Financial assets
Cash	1.67%	697,732	-	-	1,300	699,032
Receivables		-	-	-	494,793	494,793
		697,732	-	-	496,093	1,193,825
Financial liabilities
Payables		-	-	-	(334,344)	(334,344)
Net financial assets		697,732	-	-	161,749	859,481

(b) Interest Rate Risk

The groups's exposure to interest rate risk is the risk that a financial instrument will fluctuate as a result of changes in market interest rates and effective average interest rates on those financial assets and liabilities. Management only places funds on short term deposit with reputable banks and optimises interest rates by negotiation.

The following table summarises the sensitivity of the group's financial assets to movements in interest rates of 100 percentage basis points.

			Interest Rate Risk
	Carrying	+1%		-1%
	Amount	Profit	Equity	Profit	Equity
30 June 2011 Financial assets
Cash and cash equivalents	273,135	2,731	2,731	(2,731)	(2,731)
		2,731	2,731	(2,731)	(2,731)
			Interest Rate Risk
	Carrying Amount	+1%		-1%
30 June 2010		Profit	Equity	Profit	Equity
Financial assets
Cash and cash equivalents	697,732	6,977	6,977	(6,977)	(6,977)
		6,977	6,977	(6,977)	(6,977)

The group does not have borrowings.

For the year ended 30 June 2011 (Cont)

NOTE 24 : FINANCIAL INSTRUMENTS (Cont)

(c) Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date, to recognised financial assets is the carrying amount, net of any provisions for impairment of debts, as disclosed in the statement of financial positions and notes to the financial statements.

Surplus cash is placed with reputable banks.

(d) Liquidity Risk

Trade and sundry payables are expected to be paid in less than six months.

(e) Net Fair Value of Financial Assets and Liabilities

The net fair value of financial assets and liabilities of the group approximates their carrying amounts.

The group has no financial assets and liabilities where the carrying amount exceeds the net fair values at balance date.

No financial assets and financial liabilities are readily traded on organised markets in standardised form.

The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the financial positions and in the notes to the financial statements.

NOTE 25 : SUBSEQUENT EVENTS

Apart from the items shown in the ―Significant Events after the Reporting Date‖ section in Directors' Report, here has not arisen, in the interval between the end of the financial year and the date of this report, any matter or circumstance likely, in the opinion of the directors, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group in current and subsequent financial years.

For the year ended 30 June 2011 (Cont)

NOTE 26 : PARENT ENTITY STATEMENT OF FINANCIAL POSITION

		Company
	2011	2010
	\$	\$
Total Current Assets	214,031	580,261
Total Non-Current Assets	4,309,544	5,061,469
TOTAL ASSETS	4,523,575	5,641,730
TOTAL CURRENT LIABILITIES	242,976	193,945
NET ASSETS	4,280,599	5,447,785
Equity
Issued capital	60,501,486	58,238,124
Reserves	85,163	-
Accumulated losses	(56,306,056)	(52,790,339)
TOTAL EQUITY	4,280,593	5,447,785
Loss for the year	3,515,717	1,354,219
Other comprehensive income/(loss) for the year	-	-
Total comprehensive loss for the year	3,515,717	1,354,219
Commitments of the parent entity are disclosed in Note 21

For the year ended 30 June 2011 (Cont)

NOTE 27 : SHARE BASED PAYMENTS

• (i) On 14 July 2010, 6,000,000 share options were granted to eligible staff and essential independent contractors under the SmartTrans Holdings Limited Employee Share Option Plan to take up ordinary shares at an exercise price of \$0.005 each. The options are exercisable on or before 14 July 2011. The options had no voting or dividend rights and are not transferable.
• (ii) There were no options granted to key management personnel or directors.
• (iii) The company established the SmartTrans Holdings Limited Employee Share Option Scheme on 14 July 2010 as a reward for past services and as an incentive to staff and essential independent contractors during the forthcoming year.
• (iv) Options are forfeited once the holder ceases to be employed by the Group, unless the Board determines otherwise (this is usually only in the case of retirement, redundancy, death or disablement).
• (v) A summary of company options issued is as follows:

	Number	Weighted Average Exercise Price
Granted	6,000,000	\$0.005
Options outstanding as at 30 June 2011	6,000,000	\$0.005
Options exercisable as at 30 June 2011	6,000,000	-

The weighted average remaining contractual life of options outstanding at year-end was 43 days. The exercise price of outstanding shares at the end of the reporting period was \$0.005.

The fair value of the options granted to employees is deemed to represent the value of the employee services received over the vesting period.

The weighted average fair value of options granted during the year was \$0.015. These values were calculated using the Black-Scholes option pricing model applying the following inputs:

Weighted average exercise price:	\$0.005
Weighted average life of the option:	1 year
Expected share price volatility:	104%
Risk-free interest rate:	4.52%

Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future movements.

The life of the options is based on the historical exercise patterns, which may not eventuate in the future.

NOTE 28 : COMPANY DETAILS

The principal places of business are:

SmartTrans Holdings Limited	Sm@rtTrans Limited	Sm@rtTrans Limited
Suite 3, First Floor	Suite 4, Level 7	G.05
614 Newcastle Street	11 Queens Road	55 Miller Street
Leederville WA 6007	Melbourne VIC 3004	Pyrmont NSW 2009

RSM Bird Cameron Partners 8 St Georges Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 8 9261 9100 F +61 8 9261 9111 www.rsmi.com.au

AUDITOR'S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of SmartTrans Holdings Limited for the year ended 30 June 2011, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
• (ii) any applicable code of professional conduct in relation to the audit.

RSM BIRD CAMERON PARTNERS Chartered Accountants

Perth, WA D J WALL Dated: 30 September 2011 Partner

Liability limited by a scheme approved under Professional Standards Legislation Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms. RSM International is the name given to a network of independent accounting and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity.

• 35 -

CORPORATE GOVERNANCE

The Company is committed to implementing the highest practical standards of corporate governance. The Company is pleased to advise that its practices are largely consistent with the ASX Corporate Governance Council's Principles of Good Corporate Governance and Best Practice Recommendations (Second Edition) (ASX Corporate Governance Principles).

Where the Company's corporate governance practices differ from the practices recommended by the ASX Corporate Governance Principles, the Company will explain its position bearing in mind that not all the practices are appropriate having regard to the size and current activities of the Company.

Board of Directors

Role of the Board

The Board's role is to govern the Company rather than to manage it. In governing the Company, the directors must act in the best interests of the Company as a whole. It is the role of senior management to manage the Company in accordance with the direction and delegations of the Board.

In September 2008 the Board adopted a Board Charter to clarify the role, powers and responsibilities of the Board, a copy of which is available on the Company's website.

Composition of the Board

Membership

The Board's size and composition is designed to effectively discharge its responsibilities, duties and encourage enhanced performance of the Company. The Board is comprised of carefully selected individuals whose experience and skill base is commensurate with the requirements and profile of the Company.

Details regarding the skills, experience and expertise of the current members of the Board are included in Directors' Report.

Independence

The Board does not fully comply with the practices recommended in Recommendation 2 of the ASX Corporate Governance Principles as it does not have any independent directors (including the Chairman of the Board). Directors are appointed based on the specific skills required by the Company and on the independence of their decision-making and judgment. The Board has determined that the current structure of the Board, comprising two non executive directors and one executive director, is appropriate for the size and current development of the Company.

Each director is aware of the importance of bringing an independent judgment to bear on board decisions and, to facilitate this, there is a procedure agreed by the Board to have access in appropriate circumstances to independent professional advice at the Company's expense.

The role of the Chairman and the Chief Executive Officer are not exercised by the same individual and the Board Charter outlines a clear division of power between the Chairman and the Chief Executive Officer.

The issue of the appointment of independent directors will be kept under review and one or more independent directors will be appointed if and when it is appropriate to do so.

Responsibilities of the Board

The division of responsibility between the Board and management is outlined in the Board Charter. In summary, and without intending to limit the role of the Board, the principal functions and responsibilities of the Board include the following.

Leadership of the Organisation: overseeing the Company and establishing codes that reflect the values of the Company and guide the conduct of the Board, management and employees.

Strategy Formulation: working with senior management to set and review the overall strategy and goals for the Company and ensuring that there are policies in place to govern the operation of the Company.

Risk Management: identifying the principal risks of the Company's business, examining the Company's risk profile and overseeing the Company' systems of internal risk compliance and control.

Shareholder Liaison: ensuring effective communications with shareholders through an appropriate communications policy, ensuring the full and timely disclosure of all material information and promoting participation at general meetings of the Company.

Management: appointing and removing the Chief Executive Officer, Company Secretary and senior executives and ensuring remuneration and conditions of service are adequate.

Performance and Remuneration: reviewing the performance and remuneration of the senior executives and undertaking performance evaluations of the Board and reviewing Board succession plans.

Company Finances: approving and monitoring acquisitions, divestitures and financial and other reporting and reviewing financial statements and other financial information distributed externally.

Audit Function: liaising with the external auditor and ensuring that the annual audits and half year audit reviews are conducted in an effective manner.

Delegation of Authority: delegating appropriate powers to senior management to ensure the effective day-to-day management of the Company.

Corporate Governance Policies

In addition to the Board Charter, in September 2008 the Board revised and introduced the following written policies and conducts annual reviews of compliance with the policies to assess compliance and effectiveness.

Copies of the Company's policies are publically available on the Company's website.

Continuous Disclosure and Shareholder Communication Policy

The Board recognises that all investors should have equal and timely access to material information concerning the Company and that shareholders are provided with an opportunity to participate at general meetings.

The Company has adopted a Continuous Disclosure and Shareholder Communications Policy, to be administered and implemented by the Board, to ensure that Company announcements are made in a timely manner, are factual and do not omit material information and are expressed in a clear and objective manner and that shareholders have ready access to

CORPORATE GOVERNANCE (Cont)

balanced and understandable information about the Company and corporate proposals.

Risk Management Policy

The Company has adopted a Risk Management Policy for the oversight and management of material business risks. The Board is of the opinion that the Company has a sound system of risk management and internal control in place and that the system is operating effectively in all material respects in relation to financial reporting risks

Due to the Company's size and current activities, the Company has determined that it is not appropriate to establish a separate risk management committee and instead the whole Board acts to ensure that the risk management policies reflect the Company's risk profile and to conduct an annual review of the policy and the Company's compliance. In addition, the Chief Executive Officer of the Company is responsible for ensuring the policy is implemented and must report any breaches of the Policy to the Board.

The Board receives assurance from the Chief Executive Officer that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

Code of Conduct

All stakeholders are entitled to expect the highest professional standard from employees and directors of the Company. The Company has adopted a Code of Conduct, details of which are summarised below, which sets out the way the Company conducts business and guides the behaviour of employees and directors of the Company, clearly stating the Company's firm commitment to behaving honestly and fairly.

Board Committees

Audit Committee

As the Board consists of only three members, and due to the Company's size and current activities, the Company does not have a separate audit committee as recommended by Recommendation 4.1 of the ASX Corporate Governance Principles.

Responsibility for the Company's financial reporting rests with the Board and the Board has implemented processes to ensure that the Board considers and attends to all issues that would otherwise be dealt with by an audit committee.

The Board has adequate technical expertise, including directors who are financially literate and have an understanding of the industries in which the Company operates. In accordance with the Board Charter, the Board reviews and considers the financial statements, and is generally responsible for ensuring the integrity of the Company's financial reporting. The Board also seeks external advice and guidance, where appropriate,.

RSM Bird Cameron Partners remained as the Company's external auditor during 2009/2010.

The Board annually assesses the independence and performance of the external auditor and considers requirements for the rotation of external audit partners. The Board is responsible for the

selection and appointment of the external auditor as required (in accordance with the requirements of the Corporations Act) and will conduct an examination of any potential auditor's experience, skills and independence in order to make such an appointment.

Remuneration Committee

As the Board consists of only three members, and due to the Company's size and current activities, the Company does not have a separate remuneration committee as recommended by Recommendation 8.1 of the ASX Corporate Governance Principles.

The Board as a whole is responsible for setting and reviewing the remuneration of directors, senior executives and employees of the Company, however, no person is to be directly involved in determining their own remuneration. The Board will, where appropriate, seek external advice and guidance.

Non-executive director Remuneration Policy

Non-executive directors are paid their fees out of the maximum aggregate amount (currently \$80,000) approved by shareholders for the remuneration of non-executive directors. Non-executive directors do not receive performance based bonuses and do not participate in equity schemes of the Company other than rights issues of securities, underwriting of the issue of securities and the Companys Employee Share Option Plan.

Executive Remuneration Policy

Executive directors and senior executives are paid a base salary and superannuation which is calculated by the Board, and where necessary with guidance from external consultants, based on the role and responsibilities of the executive, the results of any performance review conducted and the levels of remuneration of executives in comparable Australian companies.

Remuneration Review

The Board reviewed and increased the remuneration of the executive director during 2008-2009. The remuneration of the executive director and non executive members of the Board during 2009-2010 remained unchanged.

Nomination Committee

As the Board consists of only three members, and due to the Company's size and current activities, the Company does not have a separate nomination committee as recommended by Recommendation 2.4 of the ASX Corporate Governance Principles.

The Board is responsible for the selection and appointment practices of the Company for the review of the performance of directors, senior executives and employees of the Company and has implemented processes to ensure that in the Board considers and attends to all issues that would otherwise be dealt with by a nomination committee.

No new appointments to the Board

In accordance with the requirements of the Company's Constitution, James Laurie resigned as a director of the Company and was re-elected at the Company's Annual General Meeting held on 26 November 2009.

There were no further changes to the composition of the Board.

Performance review of employees and senior executives

The Board regularly reviews the performance of all employees and senior executives, where necessary using an external

CORPORATE GOVERNANCE (Cont)

consultant. The review involves conducting an interview with the employee or senior executive and, where appropriate, seeking feedback from employees, senior executives and any third parties regularly interacting with the employee or senior executive to determine whether the employee or senior executive is adequately fulfilling their roles and responsibilities.

A performance review of all employees and senior executives was conducted by the Board during the course of 2009/2010.

Performance review of Directors and the Board

The Company carried out a performance review of the directors and Board during the year in accordance with the Board Charter.

Company Code of Conduct

As part of its commitment to recognising the legitimate interests of stakeholders, the Company has established a Code of Conduct to guide compliance with legal and other obligations to legitimate stakeholders. The Company is committed to ensuring that the practices necessary to maintain confidence in the Company's integrity by stakeholders including employees, clients, customers, government authorities, creditors and the community as whole. The Code of Conduct applies to all directors, senior executives and employees of the Company.

The Code of Conduct includes:

Responsibilities to Stakeholders, Clients, Customers and Consumers

Each employee has an obligation to use their best efforts to deal in a fair and responsible manner with each of the Company's clients, customers and consumers.

Employment Practices

The Company endeavours to provide a safe workplace in which there is equal opportunity for all employees at all levels of the Company. The Company does not tolerate the offering or acceptance of bribes or the misuse of Company assets or resources.

Obligations Relative to Fair Trading and Dealing

The Company aims to conduct its business fairly and to compete ethically and in accordance with relevant competition laws.

Conflicts of Interest

Employees and directors must avoid conflicts as well as the appearance of conflicts between personal interests and the interests of the Company. Directors must disclose to the Board actual or potential conflicts of interest that may or might reasonably be thought to exist between the interests of the director and the interests of any other parties in carrying out the activities of the Company.

Trading in the Company's Shares

Directors and employees are prohibited from trading in the Company's securities while in the possession of unpublished price sensitive information concerning the Company. Directors and certain employees and their associates are also prohibited from trading in the Company's securities during designated closed periods.

SHAREHOLDER INFORMATION

The following details are according to the Share Registry's records as at 31 August 2011.

(a) Substantial Shareholders

The Company's register of substantial shareholders, prepared in accordance with the Corporations Law, recorded the information summarised below:

	ACN	No. of Shares
Dymocks Securities Pty Ltd	077 162 522	518,046,869
Tandragee Pty Ltd	008 776 949	537,878,963
Coolgardie Units Pty Ltd	050 049 191	537,878,963
Jamajon Pty Ltd (includes subsidiaries)	008 502 770	518,046,869
Mr J P C Forsyth AM	N/A	518,046,869
Mr A D Forsyth and the following companies of which he is a director:	N/A	101,941,437
Canala Services Pty Ltd	079 016 630	101,941,437

(b) Twenty Largest Shareholders

The names of the twenty largest shareholders of fully paid shares in the Company are:

		No. of Ordinary Fully Paid Shares Held	Percentage Held Issued Ordinary Capital
1	Dymocks Securities Pty Ltd	365,846,072	31.67%
2	Jamajon Pty Ltd	70,081,812	6.07%
3	Tandragee Pty Limited	47,619,902	4.12%
4	I T S Worldwide Limited	41,990,000	3.64%
5	Coolgardie Units Pty Ltd	34,489,441	2.99%
6	Lydian Enterprises Pty Ltd	26,737,968	2.31%
7	Canala Services Pty Ltd	19,832,094	1.72%
8	JP Morgan Nominees Australia Limited	19,287,725	1.67%
9	HSBC Custody Nominees (Australia) Limited	13,821,143	1.20%
10	Flush Nominees Pty Ltd	13,105,273	1.13%
11	Templevale Pty Limited	11,475,000	0.99%
12	FBOB Pty Ltd	10,000,000	0.87%
13	Ceildh Enterprises Pty Ltd	9,332,349	0.81%
14	Isatsan Pty ltd	8,874,792	0.77%
15	Paradise Orchid Pty Ltd	8,000,000	0.69%
16	Citicorp Nominees Pty Ltd	7,000,984	0.61%
17 Mr	Mr Benjamin Corser	6,760,709	0.59%
18	Maryfair Pty Ltd	6,100,000	0.53%
19	Lloyd com Pty Ltd	5,882,352	0.51%
20	Kanaslex Pty Limited	5,416,250	0.47%
		731,653,866	63.36%

SHAREHOLDER INFORMATION (Cont.)

(c) Distribution of Shareholders

(i) Ordinary Shareholders (Ordinary shares paid to 30 cents)

	Spread of Holding	Holders	%	Shares Held
	1 - 1,000	232	0.01	131,103
	1,001 - 5,000	625	0.16	1,888,438
	5,001 - 10,000	456	0.32	3,679,361
	10,001 - 100,000	1,211	4.19	48,444,379
	100,001 and over	634	95.32	1,100,943,145
		3,158	100.00	1,155,086,426
(ii)	Shareholders of less than a marketable parcel	1570	0.79%	9,136,778

(d) Options over Unissued Shares

A total of 20,000,000 options are on issue. These are issued to one director under the SmartTrans Employee Share Option Plan.

SUMMARY OF MINING TENEMENTS AS AT 30 JUNE 2011

Project	Tenements	Group Interest	Joint Venture Partners
Riversleigh Base Metals Project	EPM 16900	100%	MMG Australia Limited
Mount Mackenzie Project	EPM 10006	60%	Australia Oriental Minerals NL
	EPM 12546	60%	Australia Oriental Minerals NL
	EPM 17515	60%	Australia Oriental Minerals NL
Waitara Project	EPM 11134	54.08%	Australia Oriental Minerals NL
	EPM 12361	54.08%	Australia Oriental Minerals NL