RAIDEN RESOURCES LIMITED — Interim / Quarterly Report 2009

Mar 14, 2012

SHELL VILLAGES AND RESORTS LIMITED AND CONTROLLED ENTITIES

ABN: 68 009 161 522

Half-Year Financial Report 31 December 2008

CONTENTS

Directors' Report	1
Auditor's Independence Declaration	2
Consolidated Income Statement	3
Consolidated Balance Sheet	4
Consolidated Statement of Changes in Equity	5
Consolidated Cash Flow Statement	6
Notes to Financial Statements	7
Directors' Declaration	16
Independent Auditor's Review Report	17

DIRECTORS' REPORT

The Directors of Shell Village and Resorts Limited submit the financial report of the consolidated group for the half-year ended 31 December 2008. On 2 September 2011, the Company changed its name to SVC Group Limited.

Directors

The names of Directors who held office during or since the end of the half-year are:

Mr John Bennett (resigned 21 October 2008) Mr Corey Budd (appointed 26 February 2008, resigned 28 April 2010) Mr Greg Cornelson (appointed 11 February 2011, resigned 14 February 2011) Mr Anthony Crimmins (appointed 1 September 2011) Mr Brett Crowley (appointed 11 February 2011) Mr David Diamond (appointed 28 April 2010, resigned 8 February 2011) Mr Ian Dorney (appointed 11 February 2011) Mr Peter Dunne (resigned 17 October 2008) Mr Stephen Grimson (resigned 7 July 2008) Mr Rohan Kerr (appointed 21 October 2008, resigned 28 April 2010) Mr Boris Patkin (appointed 11 December 2008, resigned 31 August 2011) Mr Richard Prichard (appointed 28 April 2010) Mr Steve Taylor (appointed 4 October 2008, resigned 16 December 2008)

Operating Results

The consolidated loss of the consolidated group after providing for income tax for the half-year ended 31 December 2008 was $1,027,723 (2007: Loss of $880,084).

Review of Operations

The new Board appointed on 28 April 2010 has proceeded to raise capital and work towards satisfying compliance with ASX Listing Rules with a view to have the Company's securities reinstated for trading with ASX. The Board has also been restructuring the group's capital structure as described in Note 1. The new Board has also been reviewing the various past transactions instigated by the previous management to ascertain that they were in the best interests of the consolidated group.

Auditor's Independence Declaration

The auditor's independence declaration under section 307C of the Corporations Act 2001 is set out on page 2.

This report is signed in accordance with a resolution of the Board of Directors.

Richard Pritchard Director

Dated this 13th day of March 2012

AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF SHELL VILLAGES AND RESORTS LIMITED

I declare that, to the best of my knowledge and belief, for the half-year ended 31 December 2008 there have been:

• (i) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
• (ii) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Shell Villages and Resorts Limited and the entities it controlled during the period.

PROSPERITY AUDIT SERVICES

LUKE MALONE Associate Director

13 March 2012

Sydney

Sydney

Level 2 580 George Street Sydney NSW 2000 PO Box 20726 World Square NSW 2002 T 02 9261 2288 F 02 9261 2376

Newcastle

Hunter Mall Chambers 2nd Floor, 175 Scott Street Newcastle NSW 2300 PO Box 234 Newcastle NSW 2300 T 02 4907 7222 F 02 4929 6759

Brisbane

Suite 1, Level 3 200 Creek Street Brisbane QLD 4000 GPO Box 2246 Brisbane QLD 4001 T 07 3839 1755 F 07 3839 1037

mail@prosperityadvisers.com.au www.prosperityadvisers.com.au

Chartered Accountants Prosperity Audit Services ABN 87 879 283 831

Chartered Accountants Liability limited by a Scheme approved under the Professional Standards Legislation.

Consolidated Income Statement

For The Half-Year Ended 31 December 2008

		Half-Yearended 31December2008$	Half-Yearended 31December2007$
Revenue from continuing operations		-	623,130
Other income
Interest income		128	-
Expenses
Consulting fees		(101,104)	(152,858)
Depreciation and amortisation expense		-	(108,019)
Directors fees		(68,125)	-
Employee benefits expense		(40,285)	(115,166)
Finance costs		(11,763)	(582,016)
Legal fees		(74,933)	-
Other expenses		(166,339)	(541,222)
Loss before income tax expense		(462,421)	(876,151)
Income tax expense		-	-
Loss from continuing operations		(462,421)	(876,151)
Loss from discontinued operations	3	(565,302)	(3,933)
Loss for the period		(1,027,723)	(880,084)
Loss attributable to:
-members of the Parent Entity		(1,027,723)	(880,084)
Loss per share
Basic and diluted loss per share (cents)		(1.97)	(2.7)

The accompanying notes form part of this financial report.

Consolidated Balance Sheet

As at 31 December 2008

	31 December2008$	30 June2008$
ASSETS
CURRENT ASSETS
Cash and cash equivalents	8,864	46,361
Trade and other receivables	45,003	137,746
Fixed assets held for sale	9,754,070	13,162,063
Other current assets	86,811	124,015
TOTAL CURRENT ASSETS	9,894,748	13,470,185
NON-CURRENT ASSETS
Plant and equipment	-	3,942
Intangible assets	-	600,000
Other non-current assets	-	5,262
	-	609,204
TOTAL ASSETS	9,894,748	14,079,389
CURRENT LIABILITIES
Trade and other payables	1,338,694	944,793
Financial liabilities	11,214,849	13,724,000
TOTAL CURRENT LIABILITIES	12,553,543	14,668,793
NON-CURRENT LIABILITIES
Financial liabilities	-	1,195,000
TOTAL NON-CURRENT LIABILITIES	-	1,195,000
TOTAL LIABILITIES	12,553,543	15,863,793
NET LIABILITIES	(2,658,795)	(1,784,404)
EQUITY
Issued capital	41,947,181	41,793,849
Reserves	493,152	493,152
Retained profits	(45,099,128)	(44,071,405)
TOTAL EQUITY	(2,658,795)	(1,784,404)

The accompanying notes form part of this financial report .

Consolidated Statement of Changes In Equity

For The Half-Year Ended 31 December 2008

	Issuedcapital	Reserves	Accumulatedlosses	Total
	$	$	$	$
Balance at 1 July 2007	40,083,421	493,152	(38,873,413)	1,703,160
Shares issued during the period	1,253,509	-	-	1,253,509
Loss attributable to members of
parent entity	-	-	(880,084)	(880,084)
Balance at 31 December 2007	41,336,930	493,152	(39,753,497)	(2,076,585)
Balance at 1 July 2008	41,793,849	493,152	(44,071,405)	(1,784,404)
Shares issued during the period	153,332	-	-	153,332
Loss attributable to members of
parent entity	-	-	(1,027,723)	(1,027,723)
Balance at 31 December 2008	41,947,181	493,152	(45,099,128)	(2,658,795)

The accompanying notes form part of this financial report.

Consolidated Cash Flow Statement

For the Half-Year Ended 31 December 2008

	Half-Yearended 31December2008$	Half-Yearended 31December2007$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers	500,688	667,193
Payments to suppliers and employees	(205,616)	(1,020,909)
Interest received	136	4,980
Interest paid	(322,236)	(477,403)
Net cash used in operating activities	(27,028)	(826,139)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of non-current assets	-	3,864
Purchase of non-current assets	(272)	(129,123)
Proceeds from repayment of deposits	-	(4,800)
Proceeds from sale of investment	50,000	-
Proceeds from sale of subsidiary	3,750,000	-
Net cash provided by / (used in) Investing activities	3,799,728	(130,059)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares	120,000	-
Proceeds from borrowings	-	650,000
Repayment of borrowings	(3,930,197)	-
Net cash provided by / (used in) financing activities	(3,810,197)	650,000
Net (decrease)/increase in cash and cash equivalents	(37,497)	(306,198)
Cash and cash equivalents at the beginning of period	46,361	306,588
Effect of exchange rates on cash holdings in foreign currencies	-	(58)
Cash and cash equivalents at the end of period	8,864	332

The accompanying notes form part of this financial report.

Notes to Financial Statements For the Half-Year Ended 31 December 2008

1. Basis of Preparation

These general purpose financial statements for the interim half-year reporting period ended 31 December 2008 have been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting

This interim financial report is intended to provide users with an update on the latest annual financial statements of Shell Villages and Resorts Limited and its controlled entities (the Group). As such it does not contain all the notes of the type normally included in an annual financial report. It is therefore recommended that this financial report be read in conjunction with the annual financial statements of the Group for the year ended 30 June 2008, together with any public announcements made during the half-year in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The same accounting policies and methods of computation have been followed in this interim financial report as were applied in the most recent annual financial statements.

(a) Impact of new and revised standards

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current reporting period. The adoption of these amendments has not resulted in any changes to the Group's accounting policies and has no effect on the amounts reported for the current or prior periods.

Certain new accounting Standards and Interpretations have been published that are not mandatory at 31 December 2008. Management has assessed the new accounting standards and interpretations that have been published but are not mandatory for the half-year reporting period and concluded that none of these new standards and interpretations is relevant to the Group.

(b) Going concern basis of accounting

During the half-year ended 31 December 2008, the consolidated entity recorded a consolidated operating loss of $1,027,723 and reported net liabilities of $2,658,795. In addition, the Company has converted total liabilities of $1,674,923 into equity subsequent to balance date. However, the entity continued its reliance upon shareholder capital and unsecured borrowings to meet its business and loan obligations. The continuing viability of the entity and its ability to continue as a going concern and meet its debts and commitments as and when they fall due is dependent upon the following key events:

• ongoing support from the Company's creditors;
• accomplishing a capital raising of $1,700,000; and
• development of new business opportunities and profitable projects.

Subsequent to 31 December 2011, the Company has issued new shares to private investors on 31 January 2012 and 23 February 2012. In addition, the Company commenced a capital raising of $1.7million. Details of those transactions and a Pro-forma Statement of Financial Position as at 31 December 2011 are set out below. The Pro-forma Statement of Financial Position is prepared on the assumption that all proposed share issues are accomplished as though they occurred at 31 December 2011:

	Actual as at31December2011	Debtrestructureand sharesissuedsubsequentto balancedate(I)	Pro-formabeforeproposedcapitalraising	Proposedcapitalraising(II)	Pro-Formaas at 13March 2012
	$	$	$	$	$
CURRENT ASSETS
Cash and cash equivalents	20,576	27,952	48,528	1,615,000	1,663,528
Financial assets	50,222	-	50,222	-	50,222
Other current assets	38,079	-	38,079	-	38,079
TOTAL CURRENT ASSETS	108,877	27,952	136,829	1,615,000	1,751,829
TOTAL ASSETS	108,877	27,952	136,829	1,615,000	1,751,829
CURRENT LIABILITIES
Trade and other payables	548,778	(269,000)	279,778	-	279,778
Financial liabilities	219,400	(199,400)	20,000	-	20,000
TOTAL CURRENT LIABILITIES	768,178	(468,400)	299,778	-	299,778
TOTAL LIABILITIES	768,178	(468,400)	299,778	-	299,778
NET (LIABILITIES)/ASSETS	(659,301)	496,352	(162,949)	1,615,000	1,452,051
EQUITY
Issued capital	44,918,677	496,352	45,415,029	1,615,000	47,030,029
Reserves	493,152	-	493,152	-	493,152
Accumulated losses	(46,071,130)	-	(46,071,130)	-	(46,071,130)
TOTAL EQUITY	(659,301)	496,352	(162,949)	1,615,000	1,452,051

1. Basis of Preparation (continued)

I. Debt restructure

The Company has accomplished the following debt restructure to convert certain debts into equity subsequent to the balance date:

• (i) The Company has issued 20,000,000 ordinary shares on 1 September 2011 to convert its 1,300,000 convertible notes into equity. The carrying value of the convertible notes as at 30 June 2011 was $796,804.
• (ii) the Company has issued 10,000,000 ordinary shares on 1 September 2011 to Mr B Patkin, a previous director, to settle the amounts owed to Mr B Patkin. This has resulted in a conversion of $691,000 debts into equity.
• (iii) the Company has issued 14,870,000 ordinary shares to the directors on 1 September 2011 to settle the directors' fees payable of $161,695.
• (iv) the Company has issued 2,430,000 ordinary shares and 564,775 ordinary shares on 1 September 2011 and 9 September 2011 respectively to two creditors to settle a total payable balance of $42,064.
• (v) Pursuant to a deed dated 18 March 2010 and approval by the annual general meeting at 31 August 2011, the Company agreed to settle a payable balance of $269,000 with a creditor by converting the payable balance into ordinary shares. The share conversion is yet to occur.
• (vi) On 31 January 2012, the Company allotted 39,880,000 fully paid ordinary shares at $0.005 each to raise total capital of $199,400. Total proceeds of $199,400 were received as at 31 December 2011 and recognised as financial liabilities at balance date.
• (vii) On 23 February 2012, the Company issued 18,634,654 fully paid ordinary shares at $0.0015 each to raise total capital of $27,952

II. Proposed capital raising

Subject to shareholders' approval, the Company proposes to issue 10,000,000 pre consolidation shares at $0.0015 each to raise $15,000.

The Company also commenced a capital raising of $1.7 million through a prospectus which is subject to shareholders' approval. These funds will be used to fulfill the Company's obligation under the Hunter Valley JV agreement and other business plan in exploring new investment opportunities.

The figures presented in the pro-forma Statement of Financial Position reflect a gross capital raising of $1,715,000 less estimated share issue cost of $100,000.

The Company's financial position will be strengthened when the share offer is successful.

1. Basis of Preparation (continued)

III. Business plan

In 2008 the then Board of Directors of the Company embarked on a sell down of all the property assets held within the portfolio, 2008 coincided with the GFC and property prices were depressed, at the end of this liquidation period the Company was left in a difficult financial position. The residential property market stabilised in 2009-10 in line with improvements to domestic, economic and financial conditions. The resilience of the labour market has maintained consumer confidence levels and minimised the forced sale of residential homes throughout Australia. The situation in 2010-11 is a slightly more risky one, with rising interest rates and weak levels of dwelling commencements prevailing in the first few months of the year. Longer term, strong population growth combined with a physical shortage of housing is expected to place increased pressure for the development of new housing.

With the over-65 demographic growing at double the rate of the rest of the population, Australia would require a minimum of 2100 additional retirement villages, or more than 311,000 dwellings, by 2050, according to the Retirement Village Association.

In view of the above the Company is broadening its property development focus to a range of development proposals that are available and have the potential for significant returns in the current market, targeting properties with the potential of an uplift in zonings followings the NSW State Government's direction to standardise local Council LEPs, residential subdivisions and development of senior living and affordable housing products.

To enable the search and selection of the most desirable projects the Company has contracted HD Consulting Pty Ltd. to search, propose, and negotiate terms for possible acquisitions. HD Consulting Pty Ltd has an excellent track record in property development in NSW with many successful developments having been sourced and developed successfully on their own behalf, for clients, and syndicates.

In tandem with this business plan the Company will continue to asses other business opportunities within and outside of the property industry.

1. Basis of Preparation (continued)

On 3 October 2011, the Company announced the execution of a Joint Venture Agreement with Coast and Country Developments Pty Ltd to develop a land in the Hunter Valley to size up to 70 low cost homes. The Company has also commenced a capital raising for a minimum share subscription of $1,000,000 to fund the Company's obligation under the Joint Venture Agreement.

The Directors continued their efforts to provide satisfaction to ASX that the Company is in compliance with listing rules to enable the Company to be re-quoted.

The Directors believe that the Company will be successful in the above matters, and realise its assets and settle its liabilities and commitments in the normal course of business and at the amounts stated in the financial report. Accordingly, the directors have prepared the financial report on a going concern basis.

Uncertainties

Prior to the share offer, the Company will restructure its current capital structure to consolidate the total issued capital on a 1 for 7 basis. This is subject to shareholders' approval. In addition, successful share capital raising is subject to the ability of the Company to attract investors to subscribe for new shares. Due to this, there exists uncertainty that the Company will not successfully raise capital and therefore the Company may not be able to realise its assets and extinguish its liabilities in the normal course of business at the amounts stated in the financial report. Accordingly, the going concern basis used in the preparation of the financial report would not be appropriate.

Notes to Financial Statements

For the Half-Year Ended 31 December 2008 (continued)

2. Segment reporting

Business Segments

The consolidated group was involved in managing "Over 50's Residential Gated Communities" during the year. The parent entity is engaged in provision or corporate services to the consolidated entity and from the beginning of the reporting period is not primarily involved in medical operations.

Geographical Segments

The consolidated entity primarily managed "Over 50's Residential Gated Communities" in Australia. Geographical segment revenue from sales overseas is less than 10% of the consolidated entity's external revenues and secondary assets are less than 10% of all business segments assets and as a consequence, no secondary reporting of geographical segments is provided.

Primary Reporting – Business Segments

	Unallocatedcorporateoffice	Discontinuedoperations	Total	Unallocatedcorporateoffice	Discontinuedoperations	Total
	$	$	$	$	$	$
		HALF-YEAR ENDED 31 DECEMBER 2008			HALF-YEAR ENDED 31 DECEMBER 2007
Segment revenue	-	500,688	500,688	623,130	26,796	649,926
Interest income	128	8	136	-	-	-
Total revenue	128	500,696	500,824	623,130	26,796	649,926
Segment result	(462,421)	(565,302)	(1,027,723)	(876,151)	(3,933)	(880,084)
		AS AT 31 DECEMBER 2008			AS AT 30 JUNE 2008
ASSETS
Segment assets	66,842	9,827,906	9,894,748	117,835	13,961,554	14,079,389
LIABILITIES
Segment liabilities	6,027,271	6,526,272	12,553,543	5,734,593	10,129,200	15,863,793

3. Discontinued operations and sale of subsidiary

During the half-year ended 31 December 2008, the Group sold its 100% interests in Shell Villages and Resorts HV Pty Ltd ("SVC HV") in October 2008 for a total consideration of $3,750,000. This subsidiary together with two other subsidiaries, Shell Villages and Resorts BRT Pty Ltd and Shell Villages and Resorts Cooroy Pty Ltd (disposed in April 2009 and May 2009 respectively) were reported in the prior year financial report as discontinued operations.

(i) The carrying amount of assets and liabilities of SVC HV at the date of sale was:

	$
Property, plant and equipment	3,482,748
Trade and other receivables	108,896
Total assets	3,591,644
Total liabilities	(186,171)
Net assets disposed	3,405,473
Consideration received	3,750,000
Gain on disposal	344,527

(ii) Results attributable to the discontinued operations for the half-year ended 31 December 2008 were as follows:

	2008	2007*
	$	$
Revenue	500,696	26,796
Expenses	(1,410,525)	(39,622)
	(909,829)	(12,826)
Income tax expense	-	-
Loss after tax before gain on sale of discontinued operations	(909,829)	(12,826)
Gain on sale of discontinued operations	344,527	8,893
Loss for the period	(565,302)	(3,933)

* The comparative figures of the operating results represent those of the heart monitoring segment which was sold on 23 August 2007. The comparative figures of the operating results information of the above subsidiary disposed were not restated and separately presented due to unavailability of financial records of previous years to the new management team.

4. Equity securities issued

	2008shares	2007shares	2008$	2007$
Issue of ordinary shares during the
half-year
- 5 September 2007	-	1,511,667	-	453,500
- 19 September 2007	-	1,011,926	-	455,360
- 1 November 2007	-	166,666	-	50,000
- 15 November 2007	-	694,666	-	167,000
- 23 November 2007	-	425,495	-	127,649
- 2 July 2008 (a)	1,200,000	-	120,000	-
- 28 August 2008 (b)	333,333	-	33,332	-
	1,533,333	3,810,420	153,332	1,253,509

a. Issued by private placement at $0.10 each for cash consideration of $120,000

b. Issued on conversion of debt to equity at $0.10 each

Notes to Financial Statements

For the Half-Year Ended 31 December 2008 (continued)

5. Contingent liabilities and contingent assets

The Company has sought legal advice in respect of the clawback of assets or their value, disposed of in 2008 and 2009. A claim is currently being quantified but is otherwise subject to legal professional privilege and there will be a further announcement by the directors.

6. Events after Balance Date

There has not arisen in the interval since 31 December 2008 and up to the date of this report, any matter that, in the opinion of the directors, has significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the group in future financial years other than:

• (a) On 25 February 2009, the Company issued 1,075,641 shares to a director as director's remuneration at $0.10 each;
• (b) In April 2009, the Company sold its wholly owned subsidiary Shell Villages and Resorts BRT Pty Ltd in April 2009 for a total consideration of $7,830,000. The Gain on disposal was $781,093;
• (c) In May 2009, the Company sold its wholly owned subsidiary Shell Villages and Resorts Cooroy Pty Ltd for a total consideration of $2,600,000. The loss on disposal was $1,027,076;
• (d) On 30 June 2009, the Company issued 3,500,000 shares at $0.10 each to convert its convertible notes of $350,000;
• (e) On 15 February 2011 the Company issued 26,250,000 ordinary shares at an issue price of $0.01 each in settlement of debts. This issue of shares was approved by shareholders at a general meeting held on 8 February 2011;
• (f) On 24 February 2011 the Company issued 8,250,000 ordinary shares at an issue price of $0.01 each in settlement of debts. This issue of shares was approved by shareholders at a general meeting held on 8 February 2011;
• (g) On 9 May 2011 the Company issued 4,500,000 ordinary shares at an issue price of $0.01 each to raise $45,000 as working capital. This issue of shares was approved by shareholders at a general meeting held on 8 February 2011;
• (h) On 22 June 2011 the Company issued 1,982,040 shares at a consideration of $0.025 each to convert a payable balance of $49,532 into equity;
• (i) On 1 September 2011 the Company issued 17,300,000 shares at a consideration of $0.01 each and 30,000,000 shares at a consideration of $0.04 each in settlement of debts as approved by shareholders at the annual general meeting held on 31 August 2011;
• (j) On 2 September 2011 the Company changed its name to SVC Group Limited;
• (k) On 9 September 2011 the Company issued 564,775 shares at $0.025 each to convert a payable balance of $14,119 into equity;
• (l) On 3 October 2011 the Company announced the execution of a Joint Venture Agreement with Coast and Country Developments Pty Ltd to develop a land in the Hunter Valley to size up to 70 low cost homes; and
• (m) On 21 October 2011 the Company issued a replacement Prospectus for the issue of up to 200,000,000 shares at $0.01 each to raise up to $2,000,000 with minimum subscription of 100,000,000 shares at $0.01 each to raise $1,000,000. Pursuant to the Prospectus, the Company is also conducting a professional and sophisticated offer of shares to raise $300,000.

6. Events after Balance Date (continued)

• (n) On 20 January 2012, the Company withdrew the Replacement Prospectus issued on 22 October 2011;
• (o) On 31 January 2012, the Company issued 39,880,000 fully paid ordinary shares at $0.005 each for a capital raising of $199,400;
• (p) On 8 February 2012, the Company reached an agreed mandate with Alto Capital (AFSL 279099) of Subiaco, Perth, to raise up to $1,700,000 in capital through a prospectus after approval by shareholders;
• (q) On 8 February 2012, the Board resolved to issue a Notice of Meeting to consider and vote on the following matters by the shareholders:
  • issue of 10,000,000 pre consolidation shares at $0.0015 each to raise $15,000;
  • consolidation of current share capital on a 1 for 7 basis;
  • issue of up to 85,000,000 new shares post share consolidation at 2 cents each to raise $1,700,000; and
  • issue of 24,000,000 new shares to Alto Capital upon completion of the capital raising in accordance with the Corporate Advisory Mandate Agreement; and
• (r) On 23 February 2012, the Company issued 18,634,654 fully paid ordinary shares at $0.0015 each.

DIRECTORS' DECLARATION

The Directors of the Company declare that:

• 1. The financial statements and notes, as set out on pages 3 to 15 are in accordance with the Corporations Act 2001, including:
  • a) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
  • b) giving a true and fair view of the consolidated entity's financial position as at 31 December 2008 and of its performance for the half-year ended on that date.
• 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.

Richard Pritchard Director

Dated this 13th day of March 2012

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF SHELL VILLAGES AND RESORTS LIMITED FOR THE HALF YEAR ENDED 31 DECEMBER 2008

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Shell Villages and Resorts Limited for the half-year ended 31 December 2008, which comprises the balance sheet as at 31 December 2008, and the income statement, statement of changes in equity and statement of cash flows for the half-year ended on that date, other selected explanatory notes and the directors' declaration for the Shell Villages and Resorts Group (the consolidated entity). The consolidated entity comprises both Shell Villages and Resorts Limited (the company) and the entities it controlled at the end of the half-year or from time to time during the half-year.

Directors' Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

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 Interim and Other Financial Reports 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 2008 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 the company, 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. It also includes reading the other information included with the financial report to determine whether it contains any material inconsistencies with the financial report. 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.

Sydney

Level 2 580 George Street Sydney NSW 2000 PO Box 20726 World Square NSW 2002 T 02 9261 2288 F 02 9261 2376

Newcastle

Hunter Mall Chambers 2nd Floor, 175 Scott Street Newcastle NSW 2300 PO Box 234 Newcastle NSW 2300 T 02 4907 7222 F 02 4929 6759

Brisbane

Suite 1, Level 3 200 Creek Street Brisbane QLD 4000 GPO Box 2246 Brisbane QLD 4001 T 07 3839 1755 F 07 3839 1037

mail@prosperityadvisers.com.au www.prosperityadvisers.com.au

Chartered Accountants Liability limited by a Scheme approved under the Professional Prosperity Audit Services ABN 87 879 283 831

Chartered Accountants Liability limited by a Scheme approved under the Professional Standards Legislation.

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF SHELL VILLAGES AND RESORTS LIMITED FOR THE HALF YEAR ENDED 31 DECEMBER 2008 (con't)

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the Company a written Auditor's Independence Declaration, a copy of which is included on page 2 of the financial report.

Basis for Qualified Conclusion

(a) Discontinued operations

As disclosed in Note 3, the loss from discontinued operations of $565,302 includes the operating loss from the discontinued operations of $909,829 and a gain on disposal of $344,527. In addition, the total net assets at disposal of the discontinued operations was $3,405,473. As disclosed in the cash flow statement the proceeds from sale of subsidiary was $3,750,000 and repayment of borrowings was $3,930,197 for the halfyear ended 31 December 2008.

Management of the company were unable to provide sufficient and appropriate evidence as to the disposal of the subsidiary Shell Villages and Resorts HV Pty Ltd. As such, we have not been able to complete our review of the discountinued operations to conclude whether (i) all transactions of the subsidiary have been completely and accurately recorded; (ii) matters might have come to our attention indicating that adjustments might be necessary as to the total net assets at disposal of $3,405,473, the gain on disposal of $344,527, the operating loss from the discountined operation of $909,829, the proceeds from sale of the subsidiary of $3,750,000 and repayment of borrowings of $3,930,197 for the half-year ended 31 December 2008.

(b) Trade creditors

Management of the company were unable to provide sufficient and appropriate evidence as to the trade creditor balances of $163,669 of the subsidiaries Shell Villages and Resorts BRT Pty Ltd and Shell Villages and Resorts Cooroy Pty Ltd. As such we have not been able to complete our review of those trade creditor balances to conclude whether matters might have come to our attention indicating that adjustments might be necessary as to the trade creditor balances of the subsidiaries as at 31 December 2008.

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF SHELL VILLAGES AND RESORTS LIMITED FOR THE HALF YEAR ENDED 31 DECEMBER 2008 (con't)

Basis for Qualified Conclusion (continued)

(c) Qualification on opening balances

Non-current Assets Held for Sale – Cooroy Property

For the year ended 30 June 2008, the consolidated entity recognised a non-current asset held for sale with a value of $3,001,199. We were not provided with sufficient and appropriate audit evidence to determine whether or not the directors' assessment of the carrying value at the balance date complied with the requirements of Accounting Standard AASB 5 Non-current Assets Held for Sale and Discontinued Operations. We were therefore unable to quantify the possible impact (if any) that application of this standard may have had on the operating loss for the year or the balance sheet as at 30 June 2008. Since the opening balances enter into the determination of the result of operations and closing balances as at 31 December 2008. We were unable to conclude whether matters might have come to our attention indicating that adjustments might be necessary to the results of operations and opening retained earings for the half-year ended 30 June 2008 and non-current assets held for sale balance of $3,034,327 as at 31 December 2008.

Intangible Assets – Property Development Fees

As outlined in Note 25 of the 30 June 2008 financial statements, the consolidated entity paid $600,000 to a related party for development fees, which was recognised as an intangible asset. We were not provided sufficient audit evidence to determine if the recognition of the asset complied with the requirements of Accounting Standard AASB 138 Intangible Assets. Should this transaction not met the criteria of an intangible asset, the operating loss for the year ended 30 June 2008 would have been $5,460,185, total equity ($2,046,597) and intangible assets nil. Since the opening balances enter into the determination of the result of operations, we were unable to conclude whether matters might have come to our attention indicating that adjustments might be necessary to the results of operations and opening retained earings for the halfyear ended 31 December 2008.

Convertible Notes

The consolidated entity issued a number of convertible notes during the year ended 30 June 2008. The value of convertible notes recognised within the entity's accounting records was $1,550,000. We were not provided with sufficient audit evidence to support these transactions. We were unable to quantify the possible effects on the operating loss or balance sheet as at 30 June 2008. Since the opening balances enter into the determination of the results of operations and the closing balances at 31 December 2008, we were unable to conclude whether matters might have come to our attention indicating that adjustments might be necessary to the results of the operations and opening retained earings for the half year ended 31 December 2008 and the convertible notes balance of $3,446,667 as at 31 December 2008.

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF SHELL VILLAGES AND RESORTS LIMITED FOR THE HALF YEAR ENDED 31 DECEMBER 2008 (con't)

Qualified Conclusion

Except for the adjustments to the half-year financial report that we might have become aware of had we been able to satisfy ourselves as to the effects of the matters discussed in the preceding paragraphs, based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the halfyear financial report of Shell Villages and Resorts Limited is not in accordance with the Corporations Act 2001, including:

• i. giving a true and fair view of the consolidated entity's financial position as at 31 December 2008 and of its performance for the half-year ended on that date, and
• ii. complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

Material Uncertainty in relation to the going concern basis

Without qualifying our conclusion, we draw attention to Note 1 in the half-year financial report which indicates that the consolidated entity incurred a net loss of $1,027,723 for the half year ended 31 December 2008 and reported net liabilities of $2,658,795 as at 31 December 2008. These conditions along with other matters described in Note 1 indicate the existence of a material uncertainty which may cast signficiant doubt on the company's ability to continue as a going concern.

PROSPERITY AUDIT SERVICES

LUKE MALONE Associate Director

13 March 2012

Sydney