QUESTE COMMUNICATIONS LIMITED — Interim / Quarterly Report 2011

Feb 28, 2011

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HALF YEAR REPORT

31 December 2010

THIS DOCUMENT SHOULD BE READ IN CONJUNCTION WITH THE 30 JUNE 2010 ANNUAL REPORT OF THE COMPANY

www.queste.com.au

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www.queste.com.au ASX Code: QUE QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 Level 14, The Forrest Centre, 221 St Georges Terrace, Perth Western Australia 6000 T | + 61 (8) 9214 9777 F | + 61 (8) 9322 1515 E | info@queste.com.au

31 DECEMBER 2010

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

CONTENTS

CONTENTS
ASX Appendix 4D Half Year Report	2
Directors’ Report	4
Auditor’s Independence Declaration	13
Consolidated Statement of	14
Comprehensive Income
Consolidated Statement of	15
Financial Position
Consolidated Statement of	16
Changes in Equity
Consolidated Statement of Cash Flows	17
Notes to Financial Statements	18
Directors’ Declaration	24
Auditor’s Independent Review Report	25
Securities Information	27

CORPORATE DIRECTORY

BOARD

Farooq Khan (Chairman & Managing Director) Simon Cato (Director) Azhar Chaudhri (Director) Yaqoob Khan (Director)

COMPANY SECRETARY

Victor Ho

PRINCIPAL & REGISTERED OFFICE

Level 14, The Forrest Centre 221 St Georges Terrace Perth, Western Australia 6000 Telephone: (08) 9214 9777 Facsimile: (08) 9322 1515 Email: info@queste.com.au Website: www.queste.com.au

SHARE REGISTRY

Advanced Share Registry Services Suite 2, 150 Stirling Highway Nedlands, Western Australia 6009 Telephone: (08) 8 9389 8033 Facsimile: (08) 8 9389 7871 Email: admin@advancedshare.com.au Website: www.advancedshare.com.au

www.queste.com.au

Visit our website for:  Latest News  Market Announcements  Financial Reports

STOCK EXCHANGE

Australian Securities Exchange Perth, Western Australia

ASX CODE

QUE

Register your email with us to receive latest Company announcements and releases

EMAIL US AT:

info@queste.com.au

AUDITORS

BDO (WA) Pty Ltd 38 Station Street Subiaco, Western Australia 6008 Telephone: (08) 6382 4600 Facsimile: (08) 6382 4601 Website: www.bdo.com.au

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APPENDIX 4D HALF YEAR REPORT

This Half Year Report is provided to the Australian Securities Exchange ( ASX ) under ASX Listing Rule 4.2A.3.

Current Reporting Period: 1 July 2010 to 31 December 2010 Previous Corresponding Period: 1 July 2009 to 31 December 2009 Balance Date: 31 December 2010 Company: Queste Communications Ltd ( Queste or QUE ) Consolidated Entity: Queste and controlled entities, being Orion Equities Limited (ACN 000 742 843) ( Orion or OEQ ) and controlled entities of Orion.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Consolidated	31 Dec 2010 31 Dec 2009 % Change Up/Down
	$ $
Total revenues Total expenses Profit before tax Income tax expense Profit for the half year Net profit attributable to minority interests Profit after tax attributable to members of the Company Basic earnings per share (cents) Diluted earnings per share (cents)	2,617,277 7,896,020 67% Down (1,499,733) (2,844,104) 47% Down
	1,117,544 5,051,916 78% Down - (849,387) n/a n/a
	1,117,544 4,202,529 73% Down (602,062) (2,213,573) 73% Down
	515,482 1,988,956 74% Down
	3.7 14.0 73% Down 2.3 8.7 73% Down

BRIEF EXPLANATION OF RESULTS

NTA backings at the Consolidated Entity level are reported net of minority interests.

The Consolidated Entity’s results incorporates the results of controlled entity, ASX listed investment company, Orion Equities Limited ( Orion or OEQ ).

At the Consolidated Entity level:

Total revenues of $2,617,277 include:

• (1) $1,534,447 net gain on financial assets held at fair value through profit or loss (2009: $5,346,256);

• (2) $851,912 share of Associate entity’s profit (2009: $1,569,230 loss);

• (3) $172,234 income from sale of olive oils (2009: $897,545); and

• (4) $15,000 dividend income (2009: $18,517).

Total expenses of $1,499,733 include:

• (1) $475,059 personnel expenses (2009: $572,014);

• (2) $367,612 olive grove and oils operations (which does not include revaluation and depreciation expenses) (2009: $937,774);

• (3) $292,681 costs in relation to land operations (2009: $22,377); and

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APPENDIX 4D HALF YEAR REPORT

(4) $77,777 Occupancy costs (2009: $35,291) (The Directors note that a portion of the expenses recognised in the financial half year relate to expenses attributable to the previous financial year as a consequence of timing of receipt of relevant invoices).

Please refer to the Directors’ Report and Financial Report for further information on a review of the operations and the financial position and performance of Queste for the half year ended 31 December 2010.

DIVIDENDS

The Directors have not declared a dividend in respect of the half year ended 31 December 2010.

ASSOCIATE ENTITIES

The Company did not gain or lose an interest in an associate or joint venture entity during the half year.

Orion has accounted for the following share investment at Balance Date as investments in an Associate entity (on an equity accounting basis):

• (1) 28.34% interest in ASX listed Bentley Capital Limited (ACN 008 108 218) ( BEL ) (30 June 2010: 28.49%).

CONTROLLED ENTITIES

The Company did not gain or cease control of any entities during the half year.

During the financial half year, Orion deregistered AquaVerde Holdings Pty Ltd (ACN 128 938 090), which was held (as to 50%) by Orion’s wholly owned subsidiary, Silver Sands Developments Pty Ltd.

On 22 October 2010, the Company acquired 505,026 shares in Orion, being a further 2.84% interest held in the controlled entity. This acquisition resulted in an increase in the Company’s interest in Orion to 50.88%.

For and on behalf of the Directors,

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Date: 28 February 2011

Victor Ho Company Secretary Telephone: (08) 9214 9777

Email: vho@queste.com.au

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DIRECTORS’ REPORT

The Directors present their report on Queste Communications Ltd ( Company or Queste ) and its controlled entities (the Consolidated Entity ) for the half year ended 31 December 2010 ( Balance Date ).

Queste is a public company limited by shares that is incorporated and domiciled in Western Australia and has been listed on the Australian Securities Exchange ( ASX ) since November 1998.

The Consolidated Entity’s results incorporates the results of controlled entity, ASX listed investment company, Orion Equities Limited ( Orion Equities or OEQ ). The Company has a 50.88% shareholding interest in Orion (30 June 2010: 48.04%).

OPERATING RESULTS

CONSOLIDATED ENTITY	Dec 2010 Dec 2009
	$ $
Total revenues Total expenses Profit before tax Income tax expense Profit for the half year Net profit attributable to minority interests Profit after tax attributable to members of the Company Basic earnings per share (cents)	2,617,277 7,896,020 (1,499,733) (2,844,104)
	1,117,544 5,051,916 - (849,387)
	1,117,544 4,202,529 (602,062) (2,213,573)
	515,482 1,988,956
	3.7 14.0

At the Consolidated Entity level:

Total revenues of $2,617,277 include:

• (1) $1,534,447 net gain on financial assets held at fair value through profit or loss (2009: $5,346,256);

• (2) $851,912 share of Associate entity’s profit (2009: $1,569,230 loss);

• (3) $172,234 income from sale of olive oils (2009: $897,545); and

• (4) $15,000 dividend income (2009: $18,517).

Total expenses of $1,499,733 include:

• (1) $475,059 personnel expenses (2009: $572,014);

• (2) $367,612 olive grove and oils operations (which does not include revaluation and depreciation expenses) (2009: $937,774);

• (3) $292,681 costs in relation to land operations (2009: $22,377); and

• (4) $77,777 Occupancy costs (2009: $35,291).

EARNINGS PER SHARE

CONSOLIDATED ENTITY	31 Dec 2010 31 Dec 2009
Basic earnings per share (cents) Weighted average number of fully paid ordinary shares in the Company outstanding during the half year used in the calculation of basic earnings per share	4.8 14.0 29,927,379 29,927,379

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DIRECTORS’ REPORT

The Company’s 20,000,000 partly paid ordinary shares, to the extent that they have been paid (1.5225 cents per share), have been included in the determination of the basic earnings per share.

DIVIDENDS

The Directors have not declared a dividend in respect of the half year ended 31 December 2010.

FINANCIAL POSITION

CONSOLIDATED ENTITY	31 Dec 2010 $ 30 Jun 2010 $
Cash Current investments Non-current investments Investments in Associate entity Inventory Receivables Intangibles Deferred tax assets Other assets Total Assets Tax liabilities (current and deferred) Other payables and liabilities Net Assets Issued capital Reserves Non-controlling interest Retained earnings Total Equity	2,526,308 2,585,981 9,193,799 8,629,841 2,142,393 2,169,180 8,464,890 7,835,522 2,072,460 2,119,400 91,461 211,577 884,683 884,683 2,403,576 2,102,191
	27,779,570 26,538,375 (2,403,576) (2,102,191) (627,871) (585,917)
	24,748,123 23,850,267
	6,192,427 6,192,427 2,449,066 2,431,707 10,996,132 10,961,550 5,110,498 4,264,583
	24,748,123 23,850,267

SECURITIES IN THE COMPANY

At the date of this report, the Company has the following securities on issue:

• (i) 28,404,879 listed fully paid ordinary shares; and

• (ii) 20,000,000 unlisted partly paid ordinary shares, each paid to 1.5225 cent with 18.4775 cents per partly paid ordinary share outstanding (or $3,695,000 in total).

There were no securities issued or granted by the Company during or since the financial half year.

The terms of issue of the partly paid shares are disclosed in the Prospectus for the initial public offering of shares in the Company dated 6 August 1998.

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DIRECTORS’ REPORT

REVIEW OF OPERATIONS

1. Orion Equities Limited (OEQ)

1.1. Current Status of Investment in Orion

Orion Equities Limited is an ASX listed investment entity (ASX Code: OEQ).

The Company holds 9,063,153 shares in Orion, being 50.88% of its issued ordinary share capital (30 June 2010: 8,558,127 shares or 48.04%). Orion has been recognised as a controlled entity and included as part of the Queste Consolidated Entity’s results since 1 July 2002.

Queste shareholders are advised to refer to the 31 December 2010 Half Year Directors’ Report and financial statements and monthly NTA disclosures lodged by Orion for further information about the status and affairs of such company.

Information concerning Orion may be viewed from its website: orionequities.com.au

Orion’s market announcements may also be viewed from the ASX website (asx.com.au) under ASX code “OEQ”.

Sections 1.2 to 1.5 below contain information extracted from Orion’s public statements.

1.2. Orion’s Operating Results for half year ended 31 December 2010

ORION EQUITIES LIMITED Consolidated Entity	31 Dec 2010 31 Dec 2009
	$ $
Total revenues Total expenses Profit before tax Income tax expense Profit after tax Profit attributable to members of the Company Basic and diluted earnings per share	2,485,829 8,763,777 (1,195,911) (3,349,553)
	1,289,918 5,414,224 - (1,154,032)
	1,289,918 4,260,192
	1,289,918 4,260,192
	7.2 23.9
ORION EQUITIES LIMITED Consolidated Entity	31 Dec 2010 30 Jun 2010
	$ $
Net tangible assets (before tax) Pre-Tax NTA Backing per share Less deferred tax assets and tax liabilities Net tangible assets (after tax) Pre-Tax NTA Backing per share Based on total issued share capital	21,501,576 20,211,659
	1.207 1.135 - -
	21,501,576 20,211,659
	1.207 1.135
	17,814,389 17,814,389

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DIRECTORS’ REPORT

Orion’s total revenues of $2,485,829 include:

• (1) $1,520,804 net gains on financial assets held at fair value through profit or loss (December 2009: $5,404,906);

• (2) $785,400 share of Associate entities’ net profit (December 2009: $1,569,230); and

• (3) $172,234 income from olive grove operations (December 2009: $897,545).

Orion’s total expenses of $1,195,911 include:

• (1) $418,331 olive grove operations (which includes depreciation) (December 2009: $999,510);

• (2) $318,472 personnel costs (including Directors’ fees) (December 2009: $296,238);

• (3) $292,68 land operations costs (December 2009: $22,377)

1.3. Orion’s Dividends

Orion has not declared a dividend in respect of the financial half year ended 31 December 2010.

1.4. Orion’s Portfolio Details as at 31 December 2010

Asset Weighting

	% of Net Assets
	Dec 2010 Jun 2009
Australian equities Agribusiness1 Property held for development and resale Net tax liabilities (current year and deferred tax assets/liabilities) Net cash/other assets and provisions TOTAL	76% 75% 16% 16% 7% 10% - - 1% (1%)
	100% 100%

Major Holdings in Securities Portfolio

	Fair Value % of ASX
Equities	$’million Net Assets Code Industry Sector Exposures
1. Strike Resources Limited 2. Bentley Capital Limited 3. Alara Resources Limited TOTAL	6.32 28.24% SRK Materials 5.54 24.74% BEL Diversified Financials 2.64 11.79% AUQ Energy/Materials 14.50 64.77%

1 Agribusiness net assets include olive grove land, olive trees, water licence, buildings, plant and equipment and inventory (bulk and packaged oils)

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DIRECTORS’ REPORT

Note: The investment in Strike Resources Limited comprises the following securities:

Fair Value $’million % of Net Assets ASX Code

(a) 13,190,802 shares (b) 1,833,333 unlisted $0.178 (9 Feb 2011) Options (c) 1,666,667 unlisted $0.278 (9 Feb 2011) Options Sub-total

5.67 25.34% SRK 0.42 1.89% Unlisted Fair value is based on a Black-Scholes options valuation model applying the following assumptions: (i) SRK’s share price being $0.43 (the last bid price as at 31 December 2010). (ii) A risk free rate of return of 5.02% (based on the 90 day bond yield rate as at 31 December 2010). (iii) An estimated future volatility of SRK’s share price of 80%. 0.23 1.01% 6.32 28.24%

Subsequent to the 31 December 2010 Balance Date, Orion exercised 1,833,333, 17.8 cent options and 1,666,667, 27.8 cent options held in Strike, at a total cost of $0.79 million. Orion now holds a total of 16,690,802 shares in Strike, being 12.5% of its total issued capital, with a value of $8.01 million based on Strike’s closing price of 48 cents on 15 February 2011.

1.5. Outline of Orion’s Major Assets

An outline of the major assets of Orion is described below:

Strike Resources Limited (ASX Code: SRK)

Strike Resources Limited is a minerals development company with iron ore projects in Peru and a thermal coal project in Indonesia. Orion Director, William Johnson is a Non-Executive Director of Strike and until his resignation in February 2011, Queste and Orion Director, Farooq Khan, was also a Non-Executive Director of Strike.

Orion holds 13,190,802 shares, being 10.14% of Strike’s issued ordinary share capital (30 June 2010: 13,190,802 shares and 10.14%) and 3.5 million unlisted options with exercise prices of $0.178 and $0.278 per option (as at 31 December 2010).

The value of Orion’s holding in Strike declined by $1,234,672 during the course of the half year. Historically, the share and option holdings in Strike were predominantly earned through the sale of various mining assets to Strike. These assets were acquired and funded to the point of sale to Strike at a cost of approximately $1.25 million.

They were subsequently on sold to Strike in tranches for a total consideration of $19 million comprising 11,166,667 Strike shares and 3.5 million unlisted Strike options (with exercise prices of $0.178 and $0.278 per option). Orion has also acquired 2,024,135 additional Strike shares on-market and via the conversion of options at $0.20 each.

As at 31 December 2010, the value of Strike share and option holdings of $6.32 million (based on a Strike share price of $0.43 as at 31 December 2010) indicates the generation of significant value for the Queste group. The Company notes that Strike’s closing share price as at 23 February 2011 was $0.455.

Subsequent to the 31 December 2010 Balance Date, Orion has exercised 1,833,333, 17.8 cent options and 1,666,667, 27.8 cent options held in Strike. These unlisted options were due to expire on 9 February 2011 and their exercise prices were well below Strike’s closing share price as at 9 February 2011 of 46 cents.

The total cost of exercising these options was $0.79 million.

As of 31 December 2010, the carrying value of these options recognised in the Consolidated Entity’s accounts (using a Black-Scholes valuation model) was $0.65 million. The value of these additional 3.5 million Strike shares now held by the Consolidated Entity as a result of Orion exercising the options (at a cost of $0.79 million) is $1.61 million (based on Strike’s closing share price as at 9 February 2011 of 46 cents).

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DIRECTORS’ REPORT

Orion now holds a total of 16,690,802 shares in Strike, being 12.5% of its total issued capital.

Orion drew down $400,000 under a $500,000 revolving loan facility from the Company to meet a portion of the costs of exercising the above Strike options. The loan is unsecured and attracts 10% interest per annum and the facility has a 2 year term expiring in July 2011.

Alara Resources Limited (ASX Code: AUQ)

Alara Resources Limited is a minerals exploration and development company with precious and base metals projects in Saudi Arabia, Oman and Chile and Australia. Queste and Orion Director, Farooq Khan and Orion Director, William Johnson, are Executive Directors of Alara and Orion Director and Queste and Orion Company Secretary, Victor Ho, is also Company Secretary of Alara.

Orion 7,332,744 shares, being 5.8% of Alara’s issued ordinary share capital (30 June 2010: 9,332,744 shares and 11.59%), in Alara.

The value of Orion’s holding in Alara appreciated by $1,827,839 during the course of the half year. Historically, the share holding in Alara occurred through the sale of Orion’s 25% interest in various uranium tenements to Alara in conjunction with Strike Resources Limited (who held the balance of 75% interest in the same). These assets were acquired and funded to the point of sale to Strike previously at a cost of approximately $0.05 million. Orion’s residual 25% interest was free-carried by Strike thereafter.

Orion’s interests in these uranium tenements were subsequently on-sold to Alara for vendor shares in the initial public offering of Alara for a consideration of $1,562,500 comprising 6,250,000 Alara shares. Orion has also acquired 3,082,744 additional Alara shares via the Alara IPO, on-market purchases and via an inspecie distribution from Strike Resources Limited, at a total cash cost of $0.59 million.

The value of Alara share holdings of $2.6 million (based on an Alara share price of $0.36 as at 31 December 2010) indicates the generation of significant value for the Queste group. Alara’s closing share price as at 23 February 2011 was $0.38, valuing Orion’s shareholding at $2.79 million (up by $0.19 million from 31 December 2010).

Bentley Capital Limited (ASX Code: BEL)

Bentley is a listed investment company with a current exposure to Australian equities. Queste and Orion Director, Farooq Khan and Orion Director, William Johnson, are Executive Directors of Bentley and Orion Director and Queste and Orion Company Secretary, Victor Ho, is also Company Secretary of Bentley.

Orion holds 20,513,783 shares, being 28.34% of Bentley’s issued ordinary share capital (30 June 2010: 20,513,783 shares and 28.49%), in Bentley. The investment is accounted for (by the Consolidated Entity) as an investment in an Associate entity (on an equity accounting basis).

Bentley has net assets of $31.718 million (as at 31 December 2010) and returned an after tax net profit of $2.837 million for the financial half year. Bentley’s asset weighting as at 31 December 2010 was 95% Australian equities and 5% net cash/ other assets.

Queste and Orion have been in receipt of significant dividend payments from Bentley, having received two fully franked dividends of 1 cent each in calendar 2010. This represents a grossed up dividend yield of 11.45% based on Bentley’s volume weighted average share price of $0.2496 during this same period.

Agribusiness Assets

These assets relate to Orion’s 143 hectare commercial olive grove operations located in Gingin, Western Australia (approximately 100 kilometres North of Perth) producing olive oil from approximately 64,500, 11 year old olive tree plantings, together with the Dandaragan Estate Ultra Premium Olive Oil brand. The Dandaragan Estate Ultra premium brand was acquired in June 2009 to facilitate the transition of oil

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DIRECTORS’ REPORT

production from the grove from the wholesale market to the higher value retail market. Orion also has a one gigalitre per annum water licence for the olive grove.

During the half year total income from the sale of bulk and premium olive oils was $172,234 (Dec 2009: $897,545) with total olive grove and oils operations costs (excluding revaluation and depreciation expenses) of $367,612 (Dec 2009: $937,774). It is noted that due to the timing of the annual harvest in approximately March - April of each year, there is some carry-over of costs (and oil inventories) from one financial year to the next.

Other Property Assets

This relates to Orion’s property located in Mandurah, Western Australia. Orion is undertaking a renovation of this property for the rental market.

2. Other Investments

In addition to the investment in Orion, which is valued at $3,398,682 (30 June 2010: $3,252,088) and Bentley, which is valued at $461,266, Queste holds cash of $1,850,182 (30 June 2010: $2,188,451) and investments in other listed securities of $121,052.

During the half year, Queste has undertaken investments in ASX listed securities, generating:

• (a) $2,710 net realised gain (31 December 2009: $9,474); and

• (b) $79,907 net unrealised gain (31 December 2009: $49,177 loss). This relates predominantly to a $62,625 market increment in value of Queste’s investment in Bentley Capital Limited from $0.225 (30 June 2010) to $0.265 as at 31 December 2010. The Board notes that this is substantially below the underlying value of Bentley as reflected by its after tax NTA backing of $0.439 as at 31 December 2010.

Queste will continue to look at undertaking investments in listed securities where appropriate to endeavour to achieve a return on investments beyond that afforded by the interest rates applicable on term deposits.

DIRECTORS

Information concerning Directors in office during or since the half year are:

Farooq Khan	Executive Chairman and Managing Director
Appointed	10 March 1998
Qualifications	BJuris , LLB. (Western Australia)
Experience	Mr Khan is a qualified lawyer having previously practised principally in the field of corporate law. Mr
	Khan has extensive experience in the securities industry, capital markets and the executive
	management of ASX listed companies. In particular, Mr Khan has guided the establishment and
	growth of a number of public listed companies in the investment, mining and financial services sector.
	He has considerable experience in the fields of capital raisings, mergers and acquisitions and
	investments.
Relevant interest in	6,113,944 shares
shares
Other current	Executive Chairman of:
directorships in listed entities	(1) Bentley Capital Limited (since 2 December 2003) (2) Orion Equities Limited (since 6 October 2006)
	Executive Director of:
	(3) Alara Resources Limited (since 14 May 2007)
	Non-Executive Chairman of:
	(4) ITS Capital Investments Ltd (Director since 27 April 2006)

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DIRECTORS’ REPORT

Azhar Chaudhri Non-Executive Director Appointed 4 August 1998 Qualifications Bachelor of Science degree in Maths and Physics and a Masters degree in Economics and postgraduate computer studies Experience Mr Chaudhri has considerable expertise in computer systems, analysis and design and advanced programming experience, particularly with respect to business and information technology systems and Data Base computing. In particular Mr Chaudhri has formed and led software development teams creating integrated database and management information systems for utilities, local government land tax departments, hospitals, libraries and oil terminals. Relevant interest in 4,337,780 shares shares 20,000,000 partly paid shares Other current None directorships in listed entities

Yaqoob Khan Non-Executive Director Appointed 10 March 1998 Qualifications BCom (Western Australia), Master of Science in Industrial Administration (Carnegie Mellon) Experience After working for several years in the Australian Taxation Office, Mr Khan completed his postgraduate Masters degree and commenced work as a senior executive responsible for product marketing, costing systems and production management. Mr Khan has been an integral member of the team responsible for the pre-IPO structuring and IPO promotion of a number of ASX floats and has been involved in the management of such companies. Mr Khan brings considerable international experience in key aspects of corporate finance and the strategic analysis of listed investments. Relevant interest in 157,920 shares shares Other current Non-Executive Directors of Orion Equities Limited (since 5 November 1999). directorships in listed entities

Simon K. Cato Non-Executive Director Appointed 6 February 2008 Qualifications B.A. (USYD) Experience Mr Simon Cato has had over 25 years capital markets experience in broking, regulatory roles and as director of listed companies. He initially was employed by the ASX in Sydney and in Perth. Over the last 17 years he has been an executive director and/or responsible executive of three stockbroking firms and in those roles he has been involved in many aspects of broking including management issues such as credit control and reporting to regulatory bodies in the securities industry. As a broker he has also been involved in the underwriting of a number of IPO’s and has been through the process of IPO listing in the dual role of broker and director. Currently he holds a number of executive and non executive roles with listed companies in Australia.

Relevant interest in 193,000 shares shares Chairman of: Other current directorships in listed (1) Convergent Minerals Limited (since 25 July 2006) entities (2) Advanced Share Registry Limited (since 22 August 2007) Non-Executive Director of: (3) Transactions Solutions International Limited (since 24 February 2010) (4) Greenland Minerals and Energy Ltd (since 21 February 2006)

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DIRECTORS’ REPORT

COMPANY SECRETARY

Information concerning the Company Secretary in office during or since the half year are:

Victor P. H. Ho	Company Secretary
Appointed	30 August 2000
Qualifications	BCom, LLB (Western Australia)
Experience	Mr Ho has been in executive and company secretarial roles with a number of public
	listed companies since early 2000. Previously, Mr Ho had 9 years experience in the
	taxation profession with the Australian Tax Office and in a specialist tax law firm. Mr Ho
	has been actively involved in the structuring and execution of a number of corporate
	transactions, capital raisings and capital management matters and has extensive
	experience in public company administration, corporations law, stock exchange
	compliance and shareholder relations.
Relevant interest in shares	17,500 shares
Other current positions	Executive Director and Company Secretary of:
held in listed entities	(1) Orion Equities Limited (Secretary since 2 August 2000 and Director since 4 July
	2003)
	Company Secretary of:
	(2) Bentley Capital Limited (since 5 February 2004)
	(3) Alara Resources Limited (since 4 April 2007)

AUDITORS’ INDEPENDENCE DECLARATION

A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 forms part of this Directors Report and is set out on page 13. This relates to the Auditor’s Independent Review Report, where the Auditors state that they have issued an independence declaration.

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

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Farooq Khan Chairman and Managing Director

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Simon Cato Non-Executive Director

28 February 2011

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38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

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28 February 2011

The Directors Queste Communications Limited Level 14, The Forrest Centre 221 St Georges Terrace WA 6000

Dear Sirs,

DECLARATION OF INDEPENDENCE BY CHRIS BURTON TO THE DIRECTORS OF QUESTE COMMUNICATIONS LIMITED

As lead auditor for the review of Queste Communications Limited for the half-year ended 31 December 2010, I declare that to the best of my knowledge and belief, there have been:

• no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Queste Communications Limited and the entities it controlled during the period.

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Chris Burton Director

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BDO Audit (WA) Pty Ltd Perth, Western Australia

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

HALF YEAR REPORT l 13

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

31 DECEMBER 2010

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the half year ended 31 December 2010

for the half year ended 31 December 2010
		31 Dec 10	31 Dec 09
	Note	$	$
Revenue from continuing operations	2 a	229,675	961,586
Other income
- Net gains on financial assets held at fair value through profit or loss		1,534,447	5,365,204
- Share of Associate entity's net profits	6	851,912	1,569,230
- Other		1,243	-
		2,617,277	7,896,020
Expenses	2 c
Costs of goods sold in relation to olive grove and oils operations		(418,331)	(999,510)
Impairment of property held for development and resale		-	(950,000)
Other costs in relation to land operations		(292,681)	(22,377)
Occupancy		(77,777)	(35,291)
Personnel		(475,059)	(572,014)
Financing		(3,666)	(4,983)
Borrowing cost		(1,366)	-
Corporate		(99,405)	(46,891)
Other administration expenses
– depreciation		(3,327)	(3,626)
– other		(128,121)	(209,412)
Profit before income tax		1,117,544	5,051,916
Income tax expense		-	(849,387)
Profit after income tax		1,117,544	4,202,529
Other comprehensive income
Changes in asset revaluation reserve, net of tax		17,359	-
Other comprehensive income, net of tax		1,134,903	4,202,529
Profit attributable to:
Owners of Queste Communications Ltd		515,482	1,988,956
Non-controlling interest		602,062	2,213,573
		1,117,544	4,202,529
Total comprehensive income for the year attributable to
Owners of Queste Communications Ltd		532,841	1,988,956
Non-controlling interest		602,062	2,213,573
		1,134,903	4,202,529
Basic earnings per share	3	3.7	14.0
Diluted earnings per share	3	2.3	8.7

The accompanying notes form part of this financial statements

HALF YEAR REPORT | 14

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

31 DECEMBER 2010

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2010

as at 31 December 2010
		31 Dec 10	30 Jun 10
	Note	$	$
CURRENT ASSETS
Cash and cash equivalents	4	2,526,308	2,585,981
Financial assets held at fair value through profit and loss	5	9,193,799	8,629,841
Trade and other receivables		58,638	178,754
Inventories - Olive Oils		572,460	619,400
Other current assets		12,642	-
TOTAL CURRENT ASSETS		12,363,847	12,013,976
NON CURRENT ASSETS
Trade and other receivables		32,823	32,823
Inventories - Land		1,500,000	1,500,000
Investments accounted for using the equity method	6	8,464,890	7,835,522
Property, plant and equipment		2,064,251	2,103,680
Olive trees		65,500	65,500
Intangible assets		884,683	884,683
Deferred tax assets		2,403,576	2,102,191
TOTAL NON CURRENT ASSETS		15,415,723	14,524,399
TOTAL ASSETS		27,779,570	26,538,375
CURRENT LIABILITIES
Trade and other payables		422,190	432,415
TOTAL CURRENT LIABILITIES		422,190	432,415
NON CURRENT LIABILITIES
Provisions		205,681	153,502
Deferred tax liabilities		2,403,576	2,102,191
TOTAL NON CURRENT LIABILITIES		2,609,257	2,255,693
TOTAL LIABILITIES		3,031,447	2,688,108
NET ASSETS		24,748,123	23,850,267
EQUITY
Issued capital		6,192,427	6,192,427
Reserves		2,449,066	2,431,707
Retained earnings		5,110,498	4,264,583
Parent interest		13,751,991	12,888,717
Non-controlling interest		10,996,132	10,961,550
TOTAL EQUITY		24,748,123	23,850,267

The accompanying notes form part of this financial statements

HALF YEAR REPORT | 15

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

31 DECEMBER 2010

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the half year ended 31 December 2010

		Option	Asset		Non-
Note	Issued	Premium	Revaluation	Retained	controlling
	Capital	Reserves	Reserves	earnings	Interest	Total
	$	$	$	$	$	$
At 1 July 2009	6,192,427	2,138,012	307,633	4,093,050	10,398,104	23,129,226
Profit for the half year	-	-	-	1,988,956	2,213,573	4,202,529
Total comprehensive income for the half year	-	-	-	1,988,956	2,213,573	4,202,529
At 31 December 2009	6,192,427	2,138,012	307,633	6,082,006	12,611,677	27,331,755
At 1 July 2010	6,192,427	2,138,012	293,695	4,264,583	10,961,550	23,850,267
Profit for the half year	-	-	-	515,482	602,062	1,117,544
Changes in asset revaluation reserve	-	-	17,359	-	-	17,359
Total comprehensive income for the half year	-	-	17,359	515,482	602,062	1,134,903
Transactions with owners in
their capacity as owners:
Transactions with non-controlling interest	-	-	-	330,433	(567,480)	(237,047)
At 31 December 2010	6,192,427	2,138,012	311,054	5,110,498	10,996,132	24,748,123

The accompanying notes form part of this financial statements

HALF YEAR REPORT | 16

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

31 DECEMBER 2010

CONSOLIDATED STATEMENT OF CASH FLOWS for the half year ended 31 December 2010

CONSOLIDATED STATEMENT OF CASH FLOWS for the half year ended 31 December 2010
	Note	31 Dec 10	31 Dec 09
CASH FLOWS FROM OPERATING ACTIVITIES		$	$
Receipts from customers		173,477	897,545
Sale proceeds from trading portfolio		1,138,680	1,059,608
Payments for trading portfolio		(168,190)	-
Payments to suppliers and employees		(1,502,495)	(2,065,210)
Interest received		78,311	55,703
Interest paid		(1,366)	-
Income tax paid		-	(833)
Dividends received		237,544	223,655
NET CASH OUTFLOW/(INFLOW) FROM OPERATING ACTIVITIES		(44,039)	170,468
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment		(15,634)	(1,002)
Payments for investment securities		-	(553,883)
Proceeds from sale of investment securities		-	58,359
NET CASH OUTFLOW FROM INVESTING ACTIVITIES		(15,634)	(496,526)
NET DECREASE IN CASH HELD		(59,673)	(326,058)
Cash and cash equivalents at beginning of the financial half year		2,585,981	3,440,088
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL HALF YEAR	4	2,526,308	3,114,030

The accompanying notes form part of this financial statements

HALF YEAR REPORT | 17

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

31 DECEMBER 2010

NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2010

1. SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The half-year financial statements are a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 'Interim Financial Reporting'. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. These half-year financial statements do not include notes of the type normally included in the annual financial statements and shall be read in conjunction with the most recent annual financial statements and the Company's ASX announcements released from 1 July 2010 to the date of this report.

Basis of preparation

The financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

2. CONSOLIDATED PROFIT FOR THE HALF YEAR

Profit for the half year includes the following items of revenue and expenses below.

(a) Revenue from continuing operations Dividends received Income from sale of olive oils Interest received - other Other income Net gains on financial assets held at fair value through profit or loss Share of Associate entity's profit Other income (c) Expenses from continuing operations Costs in relation to olive grove operations - Cost of goods sold - Depreciation expenses - Other expenses Costs in relation to land operations - Impairment of property held for development and resale - Other expenses Occupancy expenses Personnel - remuneration and other - employee entitlements Finance expenses Borrowing cost Corporate expenses - Consultancy - Other corporate expenses Administration expenses - Communications - Professional fees - Brokerage fees - Realisation cost of share portfolio provision - Write off fixed assets - Depreciation expenses - other assets - Other expenses	31 Dec 10 $ $ 15,000 18,517 897,545 42,441 45,524 172,234 31 Dec 09
	961,586 229,675
	851,912 1,569,230 1,534,447 5,365,204 1,243 -
	2,387,602 6,934,434
	2,617,277 7,896,020
	2,040 3,327 23,145 3,626 22,654 57,734 9,990 31,715 29,176 13,402 3,666 1,366 - 77,777 41,671 22,377 575,099 4,983 - 292,681 950,000 468,342 23,746 1,200 50,719 6,717 6,177 27,811 1,208 35,291 (3,085) 349,723 857,936 77,483 114,677 61,736 17,889 79,838
	1,499,733 2,844,104

HALF YEAR REPORT | 18

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

31 DECEMBER 2010

NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2010

EARNINGS PER SHARE Basic earnings per share (cents) Diluted earnings per share (cents) Profit used to calculate earnings per share ($) (a) Basic earnings per share Net Profit ($) Weighted average number of ordinary shares (i) The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:	3.7 14.0 31 Dec 10 31 Dec 09
	2.3 8.7
	1,117,544 4,202,529
	4,202,529 29,927,379 29,927,379 31 Dec 10 31 Dec 09 1,117,544

3. EARNINGS PER SHARE

(i) The Consolidated Entity's partly paid shares, to the extent that they have been paid (1.5225 cent per share), have been included in the determination of the basic earnings per share.

The Consolidated Entity's partly paid shares, to the extent of the balance of the call (18.4775 cents per share), have not been included in the determination of basic earnings per share. These securities are included in the determination of diluted earnings per share on the basis that each partly paid share will become fully paid.

	(b) Diluted earnings per share
	The earnings and weighted average number of ordinary and potential ordinary shares used in the	31 Dec 10	31 Dec 09
	calculation of diluted earnings per share are as follows:
	Net Profit ($)	1,117,544	4,202,529
	Weighted average number of ordinary shares (i)	48,404,879	48,404,879
	Weighted average number of shares used as the denominator
	The weighted average number of ordinary shares used as the denominator in calculating basic
	earnings) per share	29,927,379	29,927,379
	Adjustments for calculation of diluted earnings per share
	Portion of partly-paid ordinary shares that remain unpaid	18,477,500	18,477,500
		48,404,879	48,404,879
4.	CASH AND CASH EQUIVALENTS	31 Dec 10	30 Jun 10
		$	$
	Cash at bank	1,895,006	940,709
	Term deposit	631,302	1,645,272
		2,526,308	2,585,981
5.	FINANCIAL ASSETS HELD AT FAIR VALUE THROUGH PROFIT AND LOSS
	Current
	Listed securities at fair value	8,544,619	7,669,346
	Unlisted options in listed corporations at cost	10,000	10,000
	Add: net change in fair value	639,180	950,495
		649,180	960,495
		9,193,799	8,629,841
	Net gains on financial assets held at fair value through profit or loss	1,534,447	2,572,398

HALF YEAR REPORT | 19

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

31 DECEMBER 2010

NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2010

6. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Name of Associate Principal Activity Bentley Capital Limited (BEL) Investments Movement in Investments in Associate Shares in listed Associate entity brought forward Share of profit before income tax expense Share of income tax expense Dividend from Associate entity Acquisition of BEL shares Carrying amount at the end of the financial period Fair value of listed investments in Associate Net tangible asset value of listed investments in Associate Share of Associate's profits Profit before income tax Share of income tax expense Profit after income tax Summarised Financial Position of Associate Current assets Non current assets Total assets Current liabilities Non current liabilities Total liabilities Net assets Revenues Profit after income tax of Associate Ownership Interest 30.8% Group share of: 31 Dec 10 30 Jun 10 28.5%	8,464,890 7,835,522 Carrying Amount 31 Dec 10 30 Jun 10 $ $
	8,464,890 7,835,522
	553,780 - 7,835,522 6,851,981 851,912 - - $ (222,544) 874,850 (445,089) 31 Dec 10 30 Jun 10 $
	8,464,890 7,835,522
	5,897,418 5,007,242
	9,124,307 9,769,685
	- - 851,912 874,850
	851,912 874,850
	9,780,987 9,169,156 133,313 42,624
	9,914,300 9,211,780
	(134,770) (44,567) (15,772) (39,368)
	(150,542) (83,935)
	9,763,758 9,127,845
	874,850 1,065,638 1,282,312 851,912

Bentley Capital Limited - Lease Commitments

BEL and its subsidiary, Scarborough Equities Pty Ltd , have the same lease commitments as disclosed in Note 9.

HALF YEAR REPORT | 20

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

31 DECEMBER 2010

NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2010

7. RELATED PARTY DISCLOSURES

(a) Transactions with related parties

The Company is deemed to control Orion Equities Limited (OEQ). During the financial half year, there were transactions between the Company, OEQ and Associate entity of OEQ, Bentley Capital Limited (BEL), pursuant to shared office and administration expense arrangements. Interest is not charged on such outstanding amounts and amounts were fully received/(paid) by balance date. The following transactions also occurred with these parties:

Dividends received from:

Bentley Capital Limited

31	Dec 10	31 Dec 09
	$	$
	222,544	445,089

On 14 October 2010, the Company acquired 2.84% of the issued capital of its subsidiary, Orion Equities Limited (OEQ) increasing its shareholding to 50.88%. The acquisition was purchased on-market for a cash consideration of $219,686.

• (b) Other transactions with key management personnel

A Director, Mr Simon Cato, is also a director of Advanced Share Registry Limited, which provides share registry services to the Consolidated Entity.

Amounts recognised as expense Share registry fees	2010 2009 4,341 - $ $

There were no other transactions with key management personnel (or their personally related entities) during the financial year.

8. SEGMENT INFORMATION

The Consolidated Entity has considered the product and geographical perspective of the operating results and determined that the Consolidated Entity operates only in Australia with segments in Investments and Olive Grove. Unallocated items comprise predominantly of corporate assets, office expenses and income tax assets and liabilities.

	Investments	Olive Grove	Unallocated	Total
31 Dec 10	$	$	$	$
Total segment revenue	2,401,359	172,234	43,684	2,617,277
Adjusted EBITDA	2,101,423	(214,141)	(737,659)	1,149,623
Total segment asset	19,158,689	3,605,228	-	22,763,917
Total segment liabilities	-	(170,504)	-	(170,504)
6 months to 31 Dec 09
Total segment revenue	6,952,951	897,545	45,524	7,896,020
Adjusted EBITDA	6,920,584	(40,229)	(829,764)	6,050,591
Year to 30 Jun 10
Total segment asset	17,965,361	3,725,056	-	21,690,417
Total segment liabilities	(116,455)	(147,245)	-	(263,700)

HALF YEAR REPORT | 21

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

31 DECEMBER 2010

NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2010

8. SEGMENT INFORMATION (continued)

• (a) Other segment information

• (i) Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

The adjusted EBITDA excludes net change in fair value in investments and impairment of assets.

Adjusted EBITDA Interest revenue Discount on acquisition Impairment of property held for development and resale Finance cost Realisation cost of share portfolio provision Fixed assets written off Depreciation Profit before income tax (ii) Segment assets Unallocated: Cash and cash equivalents Trade and other receivables Other current assets Property, plant and equipment Deferred tax asset Total assets as per the Statement of Financial Position (iii) Segment liabilities Unallocated: Trade and other payables Provisions Deferred tax liability Total liabilities as per the Statement of Financial Position COMMITMENTS Not longer than one year Between 12 months and 5 years	31 Dec 10 31 Dec 09 (4,983) (54,046) (65,362) (22,654) (1,200) (2,040) (13,402) - (5,032) $ $ (950,000) 1,149,623 6,050,591 42,441 45,524
	1,117,544 5,051,916
	22,763,917 21,690,417 39,051 12,643 - 2,585,981 159,786 2,526,308 2,403,576 2,102,191 34,075 -
	27,779,570 26,538,375
	(163,715) (251,687) (153,502) (2,403,576) (2,102,191) (205,680) (170,504) (263,700)
	(3,031,447) (2,688,108)
	84,697 82,633 127,002 $ $ 170,384 31 Dec 10 30 Jun 10
	211,699 253,017

9. COMMITMENTS

The non-cancellable operating lease commitment is the Consolidated Entity's share of the office premises at Level 14, The Forrest Centre, 221 St Georges Terrace, Perth, Western Australia, and includes all outgoings (exclusive of GST). The lease is for a 7 year term expiring 30 June 2013 and contains a rent review increase each year alternating between 5% and the greater of market rate or CPI + 1%.

HALF YEAR REPORT | 22

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

31 DECEMBER 2010

NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2010

10. CONTINGENT ASSETS AND LIABILITIES

(a) Directors' Deeds

The Company and OEQ have entered into deeds of indemnity with each of their Directors indemnifying them against liability incurred in discharging their duties as directors/officers of the Company. At the end of the financial period, no claims have been made under any such indemnities and accordingly, it is not possible to quantify the potential financial obligation of the Consolidated Entity under these indemnities.

(b) Royalty on Tenements

The Consolidated Entity is entitled to receive a royalty of 2% of gross revenues (exclusive of GST) from any commercial exploitation of any minerals from various Australian tenements - EL 47/1328 and PL 47/1170 (the Paulsens East Project tenements currently held by Strike Resources Limited), EL 24879, 24928 and 24929 and ELA 24927 (the Bigryli South Project tenements in the Northern Territory, currently held by Alara Resources Limited (Alara)) and EL 46/629 and a right to earn and acquire a 85% interest in ELA 46/585 (excluding all manganese mineral rights) (the Canning Well Project tenements in Western Australia, currently held by Alara).

11. EVENTS AFTER BALANCE DATE

• (a) On 8 February 2011, Orion Equities exercised 1,833,333, 17.8 cent options and 1,666,667, 27.8 cent options held in ASX listed Strike Resources Limited (ASC Code: SRK). These unlisted options were due to expire on 9 February 2011 and their exercise prices were well below Strike’s closing share price as at 9 February 2011 of 46 cents. The total cost of exercising these options was $789,667.

As of 31 December 2010, the carrying value of these options recognised in the Consolidated Entity’s accounts (using a Black-Scholes valuation model) was $0.65 million. The value of these additional 3.5 million Strike shares now held by the Consolidated Entity as a result of exercising the options (at a cost of $0.79 million) is $1.56 million (based on Strike’s closing share price as at 23 February 2011 of 44.5 cents).

The Consolidated Entity now holds a total of 16,690,802 shares in Strike, being 12.5% of its total issued capital.

• (b) On 2 February 2011, Orion Equities drew down $400,000 under a $500,000 revolving loan facility from the Company to meet a portion of the costs of exercising the above Strike options. The loan is unsecured and attracts 10% interest per annum and the facility has a 2 year term expiring in July 2011.

• (c) On 28 February 2011, Associate entity, Bentley Capital Limited, announced the declaration of a one cent per share fully franked dividend, to be paid on or about 15 March 2011. The Company share of this dividend will be ~$17,406 and Orion Equities' share of this dividend will be ~$205,138 .

No other matter or circumstance has arisen since the end of the financial period that significantly affected, or may significantly affect, the operations of the Consolidated Entity, the results of those operations, or the state of affairs of the Consolidated Entity in future financial periods.

HALF YEAR REPORT | 23

31 DECEMBER 2010

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of Queste Communications Ltd made pursuant to sub-section 303(5) of the Corporations Act 2001, we state that:

In the opinion of the directors:

• (a) The financial statements and notes of the Consolidated Entity and Company are in accordance with the Corporations Act 2001, including:

• (i) giving a true and fair view of the Consolidated Entity’s and Company’s financial position as at 31 December 2010 and of their performance for the half year ended on that date; and

• (ii) complying with Accounting Standards AASB 134 “Interim Financial Reporting” and Corporations Regulations 2001; and

• (b) There are reasonable grounds to believe that the Consolidated Entity and Company will be able to pay their debts as and when they become due and payable.

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Farooq Khan Chairman and Managing Director 28 February 2011

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Simon Cato Non-Executive Director

HALF YEAR REPORT | 24

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

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INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF QUESTE COMMUNICATIONS LIMITED

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Queste Communications Limited, which comprises the Statement of Financial Position as at 31 December 2010, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the halfyear ended on that date, notes comprising a statement of accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the disclosing entity and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the disclosing entity are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Queste Communications Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we 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 Queste Communications Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

HALF YEAR REPORT l 25

==> picture [78 x 30] intentionally omitted <==

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Queste Communications Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001 .

BDO Audit (WA) Pty Ltd

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Chris Burton Director

Perth, Western Australia. Dated this 28[th] day of February 2011

HALF YEAR REPORT l 26

31 DECEMBER 2010

QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164

SECURITIES INFORMATION as at 31 December 2010

DISTRIBUTION OF LISTED ORDINARY FULLY PAID SHARES

Spread	of	Holdings	Number of Holders	Number of Units	% of Total Issue
					Capital
1	-	1,000	12	8,251	0.029%
1,001	-	5,000	63	188,548	0.664%
5,001	-	10,000	73	690,825	2.432%
10,001	-	100,000	128	3,536,120	12.449%
100,001	-	and over	26	23,981,135	84.426%
Total			302	28,404,879	100.00%

DISTRIBUTION OF UNLISTED PARTLY PAID ORDINARY SHARES

Name No. of Partly Paid Shares Chi Tung Investments Ltd 20,000,000

These 20,000,000 ordinary shares were issued at a price of 20 cents per share and have been partly paid to 1.5225 cent each and have an outstanding amount payable of 18.4775 cents per share.

TOP TWENTY ORDINARY FULLY PAID SHAREHOLDERS

Rank Shareholder	Sh Hld Ttl Sh % Issued
	ares e oa ares Capital
1 CLEOD PTY LTD BELL IXL INVESTMENTS LIMITED CELLANTE SECURITIES PTY LIMITED 2 FAROOQ KHAN ISLAND AUSTRALIA PTY LTD SKIN-PLEX LABORATORIES PTY LTD THE ESSENTIAL EARTH PTY LTD MR FAROOQ KHAN 3 MR AZHAR CHAUDHRI CHI TUNG INVESTMENTS LTD RENMUIR HOLDINGS LTD 4 MANAR NOMINEES PTY LTD MANAR NOMINEES PTY LTD 5 MR ANDREW GRAEME MOFFAT & ELIZABETH ANN MOFFAT	867,644 3,603,659 2,053,282 Sub-total 6,524,585 22.970 2,399,484 3,668,577 20,000 20,000 21,883 Sub-total 6,129,944 21.581 10,000 1,050,000 3,277,780 Sub-total 4,337,780 15.271 1,725,663 180,500 Sub-total 1,906,163 6.711 1,150,000 4.049
6 DONALD GORDON MACKENZIE & GWENNETH EDNA MACKENZIE 7 DATABASE SYSTEMS LTD 8 MRS AMBREEN CHAUDHRI 9 MS ROSANNA DE CAMPO 10 MR AYUB KHAN	849,360 2.990 826,950 2.911 386,500 1.361 268,100 0.944 215,000 0.757
11 MRS AFIA KHAN 12 GIBSON KILLER PTY LTD 13 TOMATO 2 PTY LTD 14 SAMDY NOMINEES PTY LTD 15 MR JOHN CHENG-HSIANG YANG & MS PEGA PING PING MOK	215,000 0.757 200,000 0.704 185,019 0.651 150,000 0.528 136,125 0.479
16 MR ANTHONY NEALE KILLER & MRS SANDRA MARIE KILLER 17 MR SIMON KENNETH CATO 18 MR GREGORY JOHN MATHESON 19 MR EUGENE RODRIGUEZ 20 NICHOLAS PASTERNATSKY	130,000 0.458 118,000 0.415 110,742 0.390 110,000 0.387 103,750 0.365
Total	24,053,018 84.679

• A substantial shareholder of the Company

HALF YEAR REPORT | 27