SEQUOIA FINANCIAL GROUP LTD — Annual Report 2004

Aug 30, 2004

		%		$'000
Revenue from ordinary activities	Down	99.6	Tо	10
Net (Loss) from ordinary activities after taxattributable to members	Down	26.2	Tо	(251)
Net (Loss) attributable to members	Down	26.2	Tо	(251)

Net tangible assets (NTA per share

NTA per share	-2004	$(0.35\ell)$
NTA per share	2003	(0.29)

Dividends

No dividends have been paid or proposed during the year (2003: nil)

Commentary on Results

The consolidated entity has incurred a loss of $250,594 for the year ended 30 June 2004 (2003: loss of $198,526). Expenses incurred include administration fees, listing fees of ASX and NZX, audit fees and other administrative expenses.

Currently the Directors are considering various strategies to realise value from the Group and in particular are seeking a suitable businesses to acquire which would benefit from CommSoft's dual listings on the ASX & NZSE and its carry forward tax losses. The Directors would like to re-list its shares as soon as practical, potentially via a back door listing of a business which meets the approval of the directors and shareholders.

Contents	Page
Statement of Financial Performance
Statement of Financial Position
Statement of Cash Flows
Notes to the Financial Statements

Statement of Financial Performance For the year ended 30 June 2004

		Consolidated		Parent Entity
	Notes	2004S	2003$	2004T	2003$
Revenue from ordinary activities	3	10,214	2.282,795	10,214	1.270,282
Cost of sales of goods	4		(101, 507)
Employee benefits expense		(32, 283)	(802, 172)	(32, 283)
Borrowing costs	4		(46, 696)		(46, 418)
Management charge
Depreciation and amortisation expenses	4		(243,769)		(180,000)
Write off of asset due to liquidation ofsubsidiaries	4(a)		(398, 137)
Write off of assets and liabilities due to theDeed of Company arrangement	4(a)		(23, 238)		(1,746,899)
Communication costs			(144, 632)
Rental cost	4		(19, 884)		(215)
Administrators expenses		(94, 745)		(60, 586)
Legal expenses		(10, 170)	(183, 854)	(10, 170)	(100, 902)
Consultancy expenses		(63, 155)	(202, 146)	(63, 155)	(84,290)
Accounting and audit fees		(28, 526)	(143, 860)	(28, 526)	(42,056)
Share Registry fees		(19,630)		(19,630)
Other expenses from ordinary activities	4	(12, 299)	(171, 426)	(12, 299)	(164, 147)
Loss from ordinary activities beforeincome tax expense		(250, 594)	(198, 526)	(216, 435)	(1,094,645)
Income tax expense	5
Net Loss attributable to members ofCommSoft Group Limited		(250, 594)	(198, 526)	(216, 435)	(1,094,645)
Valuation adjustments recorded directly inequity			ж
Total changes in equity other than thoseresulting from transactions with owners asowners		(250, 594)	(198, 526)	(216, 435)	(1,094,645)
Basic carnings per share (cents per share)	18	(0.06)	(0.06)
Diluted earnings per share (cents per share)	18	(0.06)	(0.06)

The above Statement of Financial Performance should be read in conjunction with the accompanying notes.

CommSoft Group Limited and its Controlled Entities ABN 90 091 744 884 Appendix 4E - Results for announcement to the MarketFor the year ended 30 June 2004

Statement of Financial Position As at 30 June 2004

		Consolidated		Parent Entity
	Notes	2004S	2003£.	2004S.	2003$
Current assets
Cash assets	6	137,443	83,216	137,443	49,057
Receivables	7		295,000		295,000
Other	$\mathcal S$	275	51,048	275	51,048
Total current assets		137,718	429,264	137,718	395,105
Non-current assets
Property, plant and equipment	9
Other financial assets	10		$\mathbf{I}$		L
Total non-current assets		÷	$\mathbf{I}$	÷	L
TOTAL ASSETS		137,718	429,265	137,718	395,106
Current liabilities
Payables	II	24,040	64,993	24,040	64,993
Total current liabilities		24,040	64,993	24,040	64,993
Non-current liabilities
Interest bearing liabilities	12	1,483,148	1,483,148	1,483,148	1,483,148
Total non-current liabilities		1,483,148	1,483,148	1,483,148	1,483,148
TOTAL LIABILITIES		1,507,188	1,548,141	1,507,188	1,548,141
NET LIABILITIES		(1,369,470)	(1, 118, 876)	(1,369,470)	(1, 153, 035)
Equity
Contributed equity	13	26,620,314	26,620,314	26,620,314	26,620,314
Accumulated losses	$l$ 4	(27,989,784)	(27, 739, 190)	(27,989,784)	(27, 773, 349)
NET DEFICIENCY INSHAREHOLDERS FUNDS		(1,369,470)	(1,118,876)	(1,369,470)	(1, 153, 035)

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

CommSoft Group Limited and its Controlled Entities Commont Group Linned and its Controlled EmmesABN 90 091 744 884Appendix 4E - Results for announcement to the MarketFor the year ended 30 June 2004

Statement of Cashflows For the year ended 30 June 2004

	Consolidated			Parent Entity
	Notes	2004S	2003$	2004$	2003$
Cash flows from operating activities
Receipts from customers			731,162		17,197
Interest received		222		222
Payments to suppliers and employees		(204, 567)	(1,806,755)	(170, 408)	(1, 173, 578)
Interest paid		(46, 420)		(46, 420)
Net cash used in operating activities	16	(250, 765)	(1,075,593)	(216,606)	(1, 156, 381)
Cash flows from investing activities
Proceeds from sale of property, plant andequipment.			255,000		255,000
Proceeds from sale of intellectual property		295,000		295,000
Proceeds from sale of investments		9,992		9,992
Net cash generated by investing activities		304,992	255,000	304,992	255,000
Cash flows from financing activities
Proceeds from issues of shares			778,286		778,286
Proceeds from convertible notes			116,000		116,000
Payments for share issue transaction costs			(55,386)	w	(55,386)
Net cash inflows generated by financingactivities			838,900		838.900
Net increase/(decrease) in cash held		54,227	18,307	88,386	(62, 481)
Cash at beginning of the financial period		83,216	64,909	49,057	111,538
Cash at end of the financial period	6	137,443	83,216	137,443	49,057

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

Note 1. Summary of significant accounting policies

This general-purpose financial report has been prepared in accordance with Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations Act 2001.

It is prepared in accordance with the historical cost convention. Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year.

(a) Basis of preparation of financial statements

The Economic entity has experienced an operating loss and the economic entity has experienced negative cash flows during the year ended 30 June 2004. As at 30 June 2004, the economic entity has a deficiency in net assets of $1,369,470 and has incurred a loss of $250,594 during the year. The financial result accords with the business recovery plan established by the Board of Directors.

The financial report has been prepared on the basis of going concern on the following assumptions:-

• (i) That budgets, business plans and cashflow forecasts will be met:
• (ii) That trading activities will produce positive cashflows:
• (iii) That funding will be available from investors; and
• (iv) The convertible note holders will not call for the repayment of the $1,483,148 of convertible notes until the time the company has sufficient funds to make such payment.

The directors believe that these assumptions will be met and on that basis the financial statements have been prepared on a going concern basis.

(b) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by CommSoft Group Limited as at 30 June 2004 and the results of all controlled entities for the year then ended. CommSoft Group Limited and its controlled entities together are referred to in this financial report as the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full. Outside equity interests in the results and equity of controlled entities, where applicable, are shown separately in the consolidated statement of financial performance and statement of financial position respectively.

Where control of an entity is obtained during a financial period, its results are included in the consolidated statement of financial performance from the date on which control commences. Where control of an entity ceases during a financial period its results are included for that part of the period during which control existed.

$(c)$ Income tax

Tax effect accounting procedures are followed whereby the income tax expense in the statement of financial performance is matched with the profit/(loss) from ordinary activities after allowing for permanent differences. The future tax benefit relating to tax losses and net timing differences is not carried forward as an asset unless the benefit is virtually certain of realisation. Income tax on cumulative timing differences which result in a deferred income tax balance are recorded at the rates which are expected to apply when those timing differences reverse.

(d) Foreign currency translation

$(i)$ Transactions

Foreign currency transactions are initially translated into Australian currency at the rate of exchange at the date of the transaction. At balance date amounts payable and receivable in foreign currencies are translated to Australian currency at rates of exchange current at that date. Resulting exchange differences are recognised in determining the profit or loss for the year.

(ii) Foreign controlled entities

As the foreign controlled entities are integrated with the activities of CommSoft Group Ltd, the assets, liabilities and equity of the foreign controlled entities are consolidated into CommSoft Group Ltd using the temporal method of translation. Under this method, non-monetary assets and liabilities and equity items, including revenue and expenses, are translated using historical rates of exchange, and monetary assets and liabilities are translated using rates of exchange current at the reporting date. Any resultant exchange differences are recorded as revenue or expense by the consolidated entity.

Note 1. Summary of significant accounting policies (continued)

(e) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. Revenue is recognised when the following has occurred:

• A purchase order has been received $(i)$
• (ii) Goods have been shipped in accordance with the customers instructions and
• (iii) Collection of the contract price is probable

Under the terms of the distribution agreement with Techtel in the United Kingdom, revenue from UK sales is recognised when the cash is received by the Company.

Receivables $(f)$

All trade debtors are recognised at the amounts receivable as they are due for settlement, with credit terms varying from 30 days to 90 days. Collectibility of trade debtors is reviewed on an ongoing basis. Debts, which are known to be uncollectible, are written off. A provision for doubtful debts is raised when some doubt as to collection exists. Receivables from the UK distributor are only due for settlement, when the customer has paid the distributor.

$\left( \mathbf{g} \right)$ Recoverable amount of non-current assets

The recoverable amount of an asset is the net amount expected to be recovered through the cash inflows and outflows arising from its continued use and subsequent disposal.

Where the carrying amount of a non-current asset is greater than its recoverable amount, the asset is written down to its recoverable amount. Where net cash inflows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group of assets. The decrement in the carrying amount is recognised as an expense in net profit or loss in the reporting period in which the recoverable amount write-down occurs. The expected net cash flows included in determining recoverable amounts of non-current assets are undiscounted.

(h) Depreciation of property, plant and equipment

Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and equipment over its expected useful life to the consolidated entity. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. The expected useful lives are as follows:

Office equipment $3 - 5$ vears

Note 1. Summary of significant accounting policies (continued)

(i) Trade and other creditors

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial period and which are unpaid.

(j) Interest bearing liabilities

Loans and debentures, where applicable, are carried at their principal amounts, which represent the present value of future cash flows associated with servicing the debt. Interest is accrued over the period it becomes due and is recorded as part of other creditors.

(k) Employee entitlements

$(i)$ Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other creditors in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave

The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provision for employee benefits and is measured in accordance with (i) above. The liability for long service leave expected to be settled more than 12 months from the reporting date is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using interest rates on national government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outflows.

(iii) Superanmuation

Contributions are charged as an expense as the contributions are paid or become payable.

(iv) Employee benefit on-costs

Employee benefit on-costs, including payroll tax, are recognised and included in employee benefit liabilities and costs when the employee benefits to which they relate are recognised as liabilities.

Borrowing costs $(1)$

Borrowing costs, where applicable, are recognised as expenses in the period in which they are incurred.

Borrowing costs, when incurred include:

• interest on bank overdrafts and short-term and long-term borrowings (including Convertible Notes)
• amortisation of discounts or premiums relating to borrowings
• amortisation of ancillary costs incurred in connection with the arrangement of borrowings
• finance lease charges, and
• $\blacksquare$ certain exchange differences arising from foreign currency borrowings.

(m) Cash

For purposes of the statement of cash flows, cash includes cash on hand, deposits at call which are readily convertible to eash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.

(n) Earnings per share

(i) Basic earnings per share

Basic earnings per share is determined by dividing net profit after income tax attributable to members of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial period, adjusted for bonus elements in ordinary shares issued during the period.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with the dilative potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilative potential ordinary shares.

(o) Cost of sale of goods

Costs comprise direct materials, freight, installation fees and direct labour costs. In the prior year, direct labour included the annual amortisation of capitalised research and development costs, incurred in the development of the Company's and Consolidated entity's software solutions. The Consolidated entity does not produce or hold inventory.

(p) Comparative figures

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

Note 2. Segment information

Primary Reporting - Industry Segments

During 2004, the consolidated entity did not trade. During 2003, the consolidated entity was organised on a global basis developing and marketing Communication Management Systems and Customer Relationship Management software solutions.

Secondary Reporting - Geographical Segments

During 2004, the consolidated entity did not trade. During 2003, although the consolidated entity's divisions were managed on a global basis they operated in the following countries:

Australia

The home country of the Parent Entity which was also the main operating entity. The areas of operation were principally the provision of Communication Management Systems and Customer Relationship Management software solutions. This operating entity went into liquidation on 24 March 2003, and ceased operation as at that date.

United Kingdom ٠

The areas of operation were principally the provision of Communication Management Systems and Customer Relationship Management solutions. The United Kingdom operation was operated via an exclusive distributor agreement.

New Zealand

New Zealand provided the majority of services for management, research and development and production to the Parent Entity. It also provided to end users and resellers Communication Management Systems and Customer Relationship Management solutions. This operation went into liquidation on 24 March 2003, and ceased operation as at that date.

٠ South Africa

The areas of operation were principally the provision of Communication Management Systems and Customer Relationship Management solutions. This operation was operated via an exclusive distributor agreement.

CommSoft Group Limited and its Controlled Entities ABN 90 091 744 884 Appendix 4E - Results for announcement to the Market For the year ended 30 June 2004

Note 2. Segment information (continued)

Geographic segments:

2004

The consolidated entity did not trade.

There were no acquisition of property, plant and equipments and intangibles during the year ended 30 June 2004.

2003

	New Zealand12 monthsS	South Africa12 monthsA3	Australia12 months	Inter SegmentEliminations	nmal12 months
Sales to customersoutside theconsolidated equity	244,646		247,856		491,564
Other Revenue	493,523	43.573	1,253,197		1,790,293
Total SegmentRevenue	738,169	43,573	1,501,653		2,282,795
Segment Assets		w	378,217		378,217

Note 3. Revenue

	Consolidated		Parent Entity
	2004S	2003S	2004$	2003S
Revenue from operating activities
Sale of goods		492,502		7,528
Interest received – other persons/corporations	222	938	222	938.
Proceeds of disposal of investment	9,992		9,992
Total revenue from operating activities	10.214	493,440	10,214	493,440
Revenue from outside the operatingactivities
Proceeds on sale of non-current assets (i)		550,000		550,000
Gain on debt defeasance (ii)	$\overline{\phantom{a}}$	1,239,355		711,816
		1,790.293		1,262,754
Revenues from ordinary activities		2,282.795		1,270,282
Net Gain on sale of non-current assets	9,991	550,000	9,991	550,000

$(i)$ This is the sale of the company's intellectual property on 29 January 2003 to an external third party.

$(ii)$ On 28 April 2003, an agreement was reached with the creditors of the parent company to forgive its outstanding debts.

Note 4. Loss from ordinary activities

	Consolidated		Parent Entity
	2004S	2003S	2004$	2003S
Loss from ordinary activities before income taxexpense includes the following specific netgains and expenses:
Expenses
Cost of sales – Refer to note $1(s)$ for adescription of the costs associated with the saleof goods.		101,507
Borrowing costs		46,696		46,418
Depreciation-plant and equipment		63,769
Amortisation
Goodwill		180,000		180,000
Total amortisation	ш,	180,000	w.	180,000
Provisions - employee entitlements
Rental expenditure relating to operating leases		19,884		215
Foreign exchange losses		93,316		5,213
(a) Individually significant items
Write off of investment in subsidiaries				959,132
Write off of inter-company balances				801,901
Write off of other assets due to the Deed ofCompany Arrangement		23,238		23,238
Assets written-off due to liquidation ofsubsidiaries		398,137
Total write off of Assets and Liabilities	u.	421,375	u,	1,746,899

CommSoft Group Limited and its Controlled Entities ABN 90 091 744 884 Appendix 4E - Results for announcement to the Market For the year ended 30 June 2004

Note 5. Income Tax

		Consolidated		Parent Entity
		2004S	2003S	2004$	2003S
(a)	The income tax expense for the financialperiod differs from the amount calculatedon the loss from ordinary activities. Thedifferences are reconciled as follows:
	Prima facie tax payable on loss fromordinary activities before income tax at30% (2002: 30%)	(75, 178)	(59, 558)	(64,931)	(328, 394)
	Tax effect of permanent differences
	Non-deductible amortisation		54.000		54,000
	Intangible assets and liabilitieswritten-off		(245.394)		310,525
	Tax losses and timing differences notbrought into account	75,178	250.952	64,931	(36, 131)
	Income tax expense

The future income tax benefit for tax losses will only be obtained if:-

• the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the $(i)$ benefit from deductions for losses to be realised, or
• $(ii)$ the losses are transferred to an eligible entity in the consolidated entity, and
• $(iii)$ the consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation, and
• no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the $(iv)$ deductions for the losses.

Note 6. Current assets - Cash assets

	Cash at bank and on hand	137,444	83,216	137,444	49,057
Note 7.	Current assets - Receivables
Trade debtors		w	295,000		295,000
Less: Provision for doubtful debts		$\bullet$	m
		$\overline{\phantom{a}}$	295,000		295,000
Note 8.	Current assets - Other
Sundry Receivables		275	51.048	275	51,048

Note 9. Non-current assets - Property, plant and equipment

	Consolidated		Parent Entity
	2004S	2003s	2004$	2003S
Office equipment
Cost
Accumulated depreciation
Office equipment
Carrying amount at 1 July 2002		213,640
Additions
Depreciation expense (Note 4)		(63,769)
Write off of fixed Assets to net realisable value
Disposals
Write down on liquidation of CommSoft(Europe) Limited		(149, 871)
Carrying amount at 30 June 2004

Note 10. Non-current assets – investment in controlled entities and other Financial Assets

(a) Other Investment

As a result of the sale of intellectual property in January 2003, the company gained a 20% interest in the newly formed distribution company co-owned with the new owners of CommSoft Intellectual property. CommSoft had no control or significant influence over the new company. This investment was sold on 23 January 2004.

Note 11. Current liabilities - Payables

		Consolidated		Parent Entity
	200412 monthsS	200312 monthsS	200412 monthss.	200312 monthsS
Trade creditors	17,040	18,573	17.040	18,573
Sundry accruals	7,000	46.420	7.000	46,420
	24,040	64.993	24,040	64,993

Note 12. Non-current liabilities - Interest bearing

Convertible Notes (secured)	1483.1148	$-483,1$148	1483.1148	,483,148

The convertible notes bear interest at 10% per annum, calculated on the issue price however note holders have agreed to waive any further entitlement to interest.

The number of ordinary shares to be issued to a note holder on exercise of the right of conversion will be calculated in accordance with the following formula:

Note 12. Non-current liabilities - Interest bearing (continued)

• If the note holder elects to convert any convertible notes within 12 calendar months after the subscription date, the ٠ number of ordinary shares of the Company to be issued for each $1.00 convertible note shall be the greater number determined by:
• Dividing $1.00 by the weighted average closing price of the ordinary shares of the Company for the 15 business days $\bullet$ immediately preceding the nominated date of the conversion, less 25%; or
• Dividing $1.00 by $0.15 (i.e. 6.67). $\ddot{\phantom{a}}$

If the Subscriber elects to convert the convertible notes on a date between 13 and 24 calendar months after the subscription date, the number of ordinary shares of the Company to be issued for each $1.00 convertible note shall be the greater number determined by:

• Dividing $1.00 by the weighted average closing price of ordinary shares of the Company for the 15 business dates immediately preceding the nominated date of the conversion, less 25%; or
• Dividing $1.00 by $0.30 (i.e. 3.33).

The company on the second anniversary will redeem all convertible Notes, which have not been converted.

Under the Deed of Company Arrangement that was entered into by the company on 28 April 2003, the Convertible Note holders will not call for the repayment of the convertible notes on their due date until such time as the company has sufficient funds.

Note 13. Contributed equity

		Parent Entity
	2004Shares	2003Shares	2004S	2003S
Share Capital
Ordinary shares fully paid	389,857.557	389,857,557	266,620,314	26,620,314
Contributed Equity	389,857.557	358,857,557	266.620,314	26,620,314

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and in the proceeds on winding up of the Company in proportion to the number of, and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Note 14. Accumulated losses

	Consolidated		Parent Entity
	2004S	2003S	2004S	2003S
Accumulated losses at the beginningof the financial year	(27, 739, 190)	(27,540,664)	(27, 773.349)	(26, 678, 704)
Net loss attributable to members ofCommSoft Group Limited	(250,594)	(198, 526)	(216, 435)	(1,094,645)
Accumulated losses at the end of thefinancial year	(27,989,784)	(27, 739, 190)	(27,989,784)	(27, 773, 349)

Note 15. Dividends

No dividends were paid or declared during the year (2003: Nil).

Note 16. Reconciliation of loss from ordinary activities after income tax to net cash outflow from operating activities

	Consolidated		Parent Entity
	200412 monthsS	200312 monthsS	200412 monthsS.	200312 monthsS
Loss from ordinary activities after-income taxAdjusted for non-cash items	(250, 594)	(198.526)	(216, 435)	(1,094,645)
Depreciation and amortisation	$\blacksquare$	243,769		180,000
Write-off of assets of UK operations	$\overline{\phantom{a}}$	398.137
Write-off of assets and liabilities due to theDeed of Company arrangement	w	23.238		1,746,899
Profit on sale of assets	(9,991)	(550,000)	(9,991)	(550,000)
Gain on debt defeasance	$\blacksquare$	(1, 239, 355)		(711, 816)
Change in operating assets and liabilities net ofeffects from purchase of controlled entities
(Increase)/decrease in trade debtors andother receivables	50,773	261,108	50,773	(41, 379)
(Decrease) in payables and other operatingliabilities	(40, 953)	(13,965)	(40.953)	(685, 440)
Net cash used in operating activities	(250, 765)	(1,075,593)	(216, 606)	(1, 156, 381)

Note 17. Non cash financing and investing activities

Conversion of convertible note instruments to
ordinary shares	$\sim$	175.375	Contract Contract	175,375
	the control of	175.375	Section	175,375

Note 18. Earnings per share

	Consolidated200412 months	Consolidated200312 months
	cents	cents
Basic earnings per share	(0.06)	(0.06)
Diluted earnings per share	(0.06)	(0.06)
Weighted average number of ordinary shares outstanding during the period used on
the calculations of basic earnings per share.	389.857.557	337.588.425

Note 19. Impact of Adopting AASB Equivalents to IASB Standards

The company has conducted an impact assessment to isolate key areas that will be impacted by the transition to IFRS. Given the company is currently not trading and possess few assets and liabilities, the directors do not anticipate IFRS to have any impact on the results of the company.

As mentioned in the Directors' Report, the Directors would like to re-list the company's shares as soon as practical, potentially via a back door listing of a business with the approval of directors and shareholders. At such time, a reassessment of the impact of IFRS would be performed on the new business.

Compliance Statement

• $\mathbf{L}$ This report has been prepared in accordance with AASB Standards, other AASB authoritative pronouncements and Urgent Issues Group Consensus views.
• $\overline{2}$ . This report and the accounts upon which the report is based, use the same accounting policies, and these accounting policies are materially consistent with the prior year.
• $3.$ This report gives a true and fair view of the matters required to be disclosed in the ASX Appendix 4E.
• $4.$ This report is based on accounts to which one of the following applies.
  • $\Box$ The accounts have been audited $\Box$ The accounts have been subject to review
  • $\boxtimes$ The accounts are in the process $\Box$ of being audited or subject to review
    • The accounts have not yet been audited or reviewed
• $5.$ To the best of my knowledge, the audit report that will be issued (in relation to the accounts on which this Appendix 4E has been prepared) will not be qualified.

$\widehat{\mathbb{Z}}$

Signed by:

Date: 31 August 2004

Print Name: Jeff Zulman (Director)