SEQUOIA FINANCIAL GROUP LTD — Annual Report 2012

Aug 30, 2012

31 August 2012

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ASX Announcement & Media Release

MDS Financial Group Limited

ACN 091 744 884

Appendix 4E: 30 June 2012 Preliminary Final Report

Level 37

Rialto South Tower 525 Collins Street Melbourne VIC 3000

T: +61 3 9617 0600 F: +61 3 9617 0699 asx@mdsfi nancial.com.au

MDS Financial Group (the “Company”) has today released its Appendix 4E Preliminary Final Report for the fi nancial year ended 30 June 2012.

Preliminary Result

The Company announces a revenue result of $7,365,432, a slight decrease (1.1%) on the prior year.

ASX Code: MWS

Directors

This revenue result includes an increase of 101.5% in the Company’s Stock Broking operating segment following the acquisition and integration of its wholly owned subsidiary D2MX Pty Limited and a decrease (by 17.6%) in Data Subscriptions and Sales which has resulted in the restructure of this business segment through the lowering of costs and improvements in effi ciencies.

Sean Rothsey

Chairman and Non Executive Director

Wayne Johnson

Deputy Chairman and Executive Director

Richard Symon

Executive Director

Jamie Khoo

Independent Non-Executive Director

Secretariat

Andrew Phillips

Company Secretary

317.1 million listed shares

12.5 million unlisted options

Revenue from the Company’s Corporate Advisory segment was impacted by an adjustment for unrealised losses on unlisted options held by the Company that were included in the prior year’s income.

The loss from ordinary activities of $2,892,244 was an increase of 124.4% on the prior year’s loss and is predominantly attributable to adjustments in corporate fee options held of $455,442 and an impairment of $1,093,458 from redundant software development and software as a result of restructuring the data and software business.

In summary there was a series of one-off adjustments made during the year which negatively affected the result, but have been taken up to provide a fair and true assessment of the Company’s balance sheet, to allow these legacy items to be eliminated during this fi nancial year as part of the rationalisation process of the Company. These adjustments include:

• The revaluation of the unlisted options held from Corporate Advisory activities referenced above - $455,442;

• The impairment of the redundant in-house software development resulting from the IRESS strategic alliance announced on 30 November 2011 - $1,093,458;

• Staff redundancies as part of the acquisitions of D2MX and restructure - $263,045;

• The allowance of Doubtful Debts as part of the Group’s assessment of operations - $94,416.

The total of these one-off adjustments is $1,906,361. To normalise the result on an operational basis, the Company’s loss recorded equates to $985,883.

Outlook

The Directors are satisfi ed that all legacy items have now been resolved and the Company is in the fi nal stages of a capital restructure. The TCA loan facilities remain available to the Company, however the Directors are reviewing other alternatives currently available, and an announcement is likely to be made in September 2012 which will allow the Company to reach its further potential.

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Page 1 of 2

31 August 2012

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ASX Announcement & Media Release

The existing strategies will provide a strong platform for growth. As announced in the 4C Commentary, the Broking business continues to perform and is increasing market share and the development of the Corporate Advisory business, with the engagement of key revenue-producing staff, has introduced a strong mandate pipeline.

Cost saving initiatives, as previously announced, and staff restructuring will allow the Company to operate on a lower cost base. The full effects of the cost saving initiatives are only available from 1 July 2012 and will be fully realised throughout the new fi nancial year.

ABOUT MDS FINANCIAL GROUP

MDS Financial Group is a full-service corporate advisory and capital markets specialist with clients in Australia and the Asia-Pacifi c region. The Company is listed on the Australian Securities Exchange Ltd (ASX), and has three licensed subsidiaries. One of its licensed subsidiaries is an ASX market participant, with institutional and third-party wholesale brokerage facilities underpinned by substantial retail online trading and market data services.

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Sean Rothsey Chairman

END

For more information please contact:

Sean Rothsey Chairman MDS Financial Group Limited Phone: +852 6204 7956

Wayne Johnson Deputy Chairman MDS Financial Group Limited Phone: +61 2 8226 3330 Mobile: +61 411 544 449

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Page 2 of 2

MDS Financial Group Limited Appendix 4E ASX Preliminary Final Report 30 June 2012 Lodged with the ASX under Listing Rule 4.3A

This report is based on the Financial Report which is in the process of being audited.

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Contents

Results for Announcement to the Market	3
Full Year Comparison	3
Dividends	3
Statement of Comprehensive Income	4
Statement of Financial Position	5
Statement of Changes in Equity	6
Statement of Cash Flows	7
Notes to Financial Information	8
Compliance Statement	24

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Results for Announcement to the Market

Summary of Financial Information

The Board of MDS Financial Group Limited (“the Group”) announced today consolidated group revenue for the year ended 30 June 2012 of $7,365,432 and a net loss after tax of $2,892,244 after writing down the carrying value of capitalised software development costs and unlisted options.

Review of Results

Revenue from the Group’s Broking businesses increased by $1,974,229 (101.5%) to $3,919,449 from $1,945,200 in the previous year reflecting the successful integration into the Group of stockbroker D2MX Pty Ltd (acquired in April 2011) and former employees of MINC Financial Services Pty Ltd and the utilisation of the client list acquired as part of the purchase of assets from MINC Financial Services Pty Ltd in April 2011.

The Company’s Data Subscriptions business experienced a decline in revenue with total current year revenue of $3,179,215 being down $681,167 (17.6%) on the previous year’s $3,860,382. During the second half of the financial year, the Company completed a substantial upgrade to its software offerings: The Bourse and Market Analyser, integrating technology and data services provided by IRESS Market Technology. The Board expects significant ongoing cost savings to arise subsequent to the reporting period as a result of those changes. The cessation of previous internal software development projects as a consequence of the IRESS integration resulted in recognition of an impairment cost of $1,093,458.

Revenue from the Company’s Corporate Advisory business was reduced to $248,294 after recognition of unrealised losses of $455,442 arising from the revaluation of unlisted options included in prior year income of $1,627,528.

Full Year Comparison

Full Year Comparison
	12 months ended 30 June 2012 $	12 months ended 30 June 2011 $	Increase %
Revenue from ordinary activities	7,365,432	7,448,877	-1.12
Loss from ordinary activities	2,892,244	1,288,793	+124.41
Loss for period attributable to members	2,892,244	1,288,793	+124.41

Dividends

Dividends
	Amount per Security	Franked amount per Security
Current period
Final Dividend	-	-
Previous corresponding period
Final Divided	-	-
Net Tangible Assets per Security
	Current Period	Previous CorrespondingPeriod
Net tangible assets per security	-0.40 cents	0.165 cents

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 3

Statement of Comprehensive Income

For the year ended June 2012

Note Revenue from continuing operations 3 Expenses Data fees Dealing and settlement Employee benefits 4 Occupancy Telecommunications Marketing General and administrative Depreciation and impairment 4 Other Loss before income tax from continuing operations Income tax expense 5 Loss after income tax from continuing operations Other comprehensive income for the year, net of tax Total comprehensive income for the year Loss for the year is attributable to: Owners of MDS Financial Group Limited Total comprehensive income for the year is attributable to: Owners of MDS Financial Group Limited Basic earnings per share 24 Diluted earnings per share 24	Consolidated 2012 2011 $ $ 7,365,432 7,448,877 (1,940,928) (2,125,107) (2,317,281) (1,817,352) (2,379,542) (2,120,809) (419,893) (348,817) (330,135) (239,814) (307,578) (220,392) (910,207) (617,443) (1,315,320) (1,157,180) (336,792) (90,756)
	(2,892,244) (1,288,793) - -
	(2,892,244) (1,288,793) - -
	(2,892,244) (1,288,793)
	(2,892,244) (1,288,793)
	(2,892,244) (1,288,793)
	(2,892,244) (1,288,793)
	(2,892,244) (1,288,793)
	Cents Cents (0.922) (0.486) (0.922) (0.486)

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012

4

Statement of Financial Position

As at 30 June 2012

Note Assets Cash and cash equivalents 6 Trade and other receivables 7 Financial assets at fair value through profit or loss 8 Other assets 9 Total current assets Financial assets at fair value through profit or loss 8 Plant and equipment 10 Intangible assets 11 Other assets 9 Total non-current assets Total assets Trade and other payables 12 Borrowings 13 Deferred income 14 Employee benefits 15 Total current liabilities Employee benefits 15 Total non-current liabilities Total liabilities Net assets Equity Contributed equity 16 Reserves 17 Accumulated losses 18 Total equity	Consolidated 2012 2011 $ $ 288,755 892,338 434,680 376,057 8,840 65,698 565,670 58,010
	1,297,945 1,392,103
	239,350 694,792 94,601 141,128 1,250,361 2,405,608 130,673 124,673
	1,714,985 3,366,201
	3,012,930 4,758,304
	1,799,277 1,127,818 476,655 - 375,354 494,151 205,236 196,083
	2,856,522 1,818,052
	31,327 18,165
	31,327 18,165
	2,887,849 1,836,217
	125,081 2,922,087
	21,940,384 21,845,146 46,384 46,384 (21,861,687) (18,969,443)
	125,081 2,922,087

The above statement of financial position should be read in conjunction with the accompanying notes.

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012

5

Statement of Changes in Equity

For the year ended 30 June 2012

Consolidated Balance at 1 July 2010 Loss after income tax expense for the year Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Shares bought back Share based payments Balance at 30 June 2011 Consolidated Balance at 1 July 2011 Loss after income tax expense for the year Total comprehensive income for the year Transactions with owners in their capacity as owners: Share based payments Balance at 30 June 2012	Contributed Equity Reserves Accumulated Losses Total Equity $ $ $ $ 20,671,655 3,080 (17,683,730) 2,991,005 - - (1,288,793) (1,288,793)
	- - (1,288,793) (1,288,793) 1,213,542 - - 1,213,542 (40,051) - - (40,051) - 43,304 3,080 46,384
	21,845,146 46,384 (18,969,443) 2,922,087
	Contributed Equity Reserves Accumulated Losses Total Equity $ $ $ $ 21,845,146 46,384 (18,969,443) 2,922,087 - - (2,892,244) (2,892,244)
	- - (2,892,244) (2,892,244) 95,238 - - 95,238
	21,940,384 46,384 (21,861,687) 125,081

The above statement of changes in equity should be read in conjunction with the accompanying notes.

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012

6

Statement of Cash Flows

For the year ended 30 June 2012

Note Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employers Interest received Interest paid Net Cash used in operating activities 22 Cash flows from investing activities Proceeds from sale of investments Proceeds from repayment of bonds and guarantees Payment for property, plant and equipment Payment for investments Payment for other asset Payments for intangible assets Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings Proceeds from issue of securities net of costs Repayment of borrowings Payment for share buy back Net cash provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 July Cash and cash equivalents at 30 June 6	Consolidated 2012 2011 $ $ 8,296,919 6,305,360 (9,283,366) (6,933,729) 10,175 23,247 (35,772) (3,953)
	(1,012,044) (609,075)
	62,700 30,000 - 36,420 (4,707) (28,984) - (35,550) (6,000) - (108,839) (544,130)
	(56,846) (542,244)
	571,429 - - 1,213,542 (106,122) - - (40,051)
	465,307 1,173,491
	(603,583) 22,172 892,338 870,166
	288,755 892,338

The above statement of cash flows should be read in conjunction with the accompanying notes.

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012

7

Notes to Financial Information

Note 1: Basis of preparation

This preliminary financial report has been prepared in accordance with ASX listing rule 4.3A and has been derived from the unaudited financial report. The financial report has been prepared in accordance with the measurement and recognition requirements of Australian Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The preliminary financial report does not include all notes of the type normally included in an annual report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2011, the halfyear report for the period ended 31 December 2011 and any public announcements made by the Group during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. These policies have been consistently applied to all the years presented.

This report is based on the Financial Report, which is in the process of being audited.

The current reporting period in the preliminary financial report is the year ended 30 June 2012 while the previous corresponding period is the year ended 30 June 2011.

Note 2. Operating Segments

Identification of reportable operating segments

The consolidated entity is organised into three operating segments: data subscriptions, broking and corporate advisory. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments.

The CODM reviews both adjusted earnings before interest, tax, depreciation and amortisation (segment result) and profit before income tax.

The information reported to the CODM is on at least a monthly basis.

Types of products and services

The principal products and services of each of these operating segments are as follows: Data subscriptions provision of financial market data and analysis tools for sophisticated traders Broking provision of execution only, online trading and retail advisory Corporate advisory provision of capital markets advice and related services

All products and services are provided predominantly to customers in Australia.

Intersegment transactions

Intersegment transactions were made at cost. Intersegment transactions are eliminated on consolidation.

Intersegment receivables, payables and loans

Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 8

Notes to Financial Information

Note 2. Operating Segments (continued)

2012 Revenue Segment result before impairment expense and revaluation increments to fair value Impairment – software development Revaluation increment to fair value – unlisted options Segment result Income tax expense Loss after income tax expense Assets Segment assets Total assets Acquisition of non-current assets Liabilities Segment liabilities Total liabilities 2011 Revenue Segment result Income tax expense Loss after income tax expense Assets Segment assets Total assets Acquisition of non-current assets Liabilities Segment liabilities Total liabilities	Broking Data Subscriptions Corporate Advisory Unallocated $ $ $ $ 3,919,449 3,179,215 248,294 18,474	Consolidated $ 7,365,432
	(671,692) (533,011) (138,641) - - (1,093,458) - - - - (455,442) -	(1,343,344) (1,093,458) (455,442)
	(671,692) (1,626,469) (594,083) -	(2,892,244) -
	1,129,755 1,489,889 393,286 -
		(2,892,244)
		3,012,930
	- 113,546 - - 711,548 1,906,800 259,501 -	3,012,930
		113,546 2,887,849
	Broking Data Subscriptions Corporate Advisory Unallocated $ $ $ $ 1,945,220 3,860,382 1,627,528 15,747
		2,887,849
		Consolidated $ 7,448,877
	(1,187,128) (504,747) 391,288 11,794	(1,288,793) -
	785,820 3,239,589 732,895 -
		(1,288,793)
		4,758,304
	238,381 334,733 - - 387,527 1,434,389 14,301 -	4,758,304
		573,114 1,836,217
		1,836,217

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 9

Notes to Financial Information

Note 3. Revenue

Continuing Operations Data subscription fees Brokerage and commissions revenue Corporate advisory revenue Other revenue Interest Net fair value gain on other financial investments Other Note 4. Expenses Loss before income tax includes the following specific expenses: Employee benefits expense Wages and salaries Other employment costs Expense of share based payments Depreciation Plant and equipment Leasehold improvements Amortisation Software development Websites ASX membership Client list Impairment Goodwill Software development Websites Total depreciation, amortisation and impairment	Consolidated 2012 2011 $ $ 3,397,165 4,025,367 3,547,060 1,690,270 697,894 923,240
	7,642,119 6,638,877
	10,175 23,247 (449,600) 696,788 162,738 89,965
	(276,687) 810,000
	7,365,432 7,448,877
	2,116,497 1,929,574 263,045 145,851 - 45,384
	2,379,542 2,120,809
	41,360 69,682 9,874 16,411
	51,234 86,093
	125,452 54,623 3,676 3,676 27,500 - 14,000 3,676
	170,628 58,299
	- 995,288 1,093,458 - - 17,500
	1,093,458 1,012,788
	1,315,320 1,157,180

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 10

Notes to Financial Information

Note 4. Expenses (continued)

Rental expense on operating leases Property lease Finance costs Interest paid/payable Note 5. Income Tax Expense Income tax expense Current tax Numerical reconciliation of income tax expense to prima facie income tax payable Loss before income tax from continuing operations Tax at the Australian rate of 30% Tax effect amounts which are not deductible/(taxable) in calculating taxable income: - Impairment of goodwill - Impairment and amortisation of intangible assets - share based payments - black-hole expenditure - unrealised loss/(gain) on investments - other items Current year tax losses not recognised Income tax expense Tax losses Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @30%	Consolidated Consolidated 2012 2012 $ $ 206,135 188,750
	35,772 3,953
	- -
	- -
	2,892,244 1,288,793
	(867,673) (386,638) - 298,586 379,226 - 28,571 13,915 (3,431) (10,116) 136,663 (209,646) 61,008 8,509 265,636 285,390
	- -
	8,319,781 7,434,327
	2,495,934 2,230,298

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 11

Notes to Financial Information

Note 6. Cash and Cash Equivalents

Note Current Cash at bank and on hand Reconciliation to cash and cash equivalents at the end of the financial year The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement of cash flows as follows: Balance as per statement of cash flows	Consolidated 2012 2011 $ $ 288,755 892,338
	288,755 892,338

Note 7. Trade and Other Receivables

Current Trade receivables Allowance for doubtful debts Other receivables	Consolidated 2012 2011 $ $ 518,157 297,228 (94,416) (30,797)
	423,741 266,431 10,939 109,626
	434,680 376,057

Impairment of receivables

The company has recognised a loss of $63,619 (2011: 30,797) in profit or loss in respect of impairment of receivables for the year ended 30 June 2012.

The ageing of the impaired receivables recognised above are as follows:

1 to 30 days overdue 31 to 60 days overdue Over 60 days overdue	Consolidated 2012 2011 $ $ - - - - 94,416 30,797
	94,416 30,797

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 12

Notes to Financial Information

Note 7. Trade and Other Receivables (continued)

Movements in the provision for impairment of receivables are as follows:

Opening balance Additional provisions recognised Receivables written off during the year as uncollectable Unused amounts reversed Closing balance	Consolidated 2012 2011 $ $ 30,797 - 84,783 30,797 (18,182) - (2,982) -
	94,416 30,797

Past due but not impaired

Customers with balances past due but without provision for impairment of receivables amount to $42,546 as at 30 June 2012 ($52,110 as at 30 June 2011). The consolidated entity did not consider a credit risk on the aggregate balances after reviewing agency credit information and credit terms of customers based on recent collection practices.

The aging of the past due but not impaired receivables are as follows:

1 to 30 days overdue 31 to 60 days overdue Over 60 days overdue Note 8. Financial assets at fair value through profit or loss Current Ordinary shares - held for trading Reconciliation Reconciliation of the fair values at the beginning and end of the current and previous financial year are set out below: Opening fair value Additions Disposals Revaluation increments to fair value Closing fair value	Consolidated 2012 2011 $ $ 7,576 7,568 12,855 31,961 22,115 12,581
	42,546 52,110
	2012 2011 $ $ 8,840 65,698
	8,840 65,698
	65,698 10,500 - 75,550 (62,700) (30,000) 5,842 9,648
	8,840 65,698

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 13

Notes to Financial Information

Note 8. Financial assets at fair value through profit or loss (continued)

Non-current Unlisted options – designated at fair value through profit or loss Share in other corporations – available for sale Reconciliation Reconciliation of the fair values at the beginning and end of the current and previous financial year are set out below: Opening fair value Impaired Revaluation increments to fair value Closing fair value	Consolidated 2012 2011 $ $ 239,198 694,640 152 152
	239,350 694,792
	694,792 7,652 - 7,500 (455,442) 694,640
	239,350 694,792

Unlisted options held by the company, being options over ordinary shares of an Australian company whose shares are listed on the Australian Securities Exchange, are restricted securities and subject to escrow until 28 February 2013. The options may be exercised at any time up to 28 February 2014.

Note 9. Other Assets

Current Prepayments Bonds and guarantees Non-current Bonds and guarantees Note 10. Plant and Equipment Non-current Plant and equipment – at cost Accumulated depreciation Leasehold improvements – at cost Accumulated depreciation Total plant and equipment – net book value	2012 2011 $ $ 215,670 58,010 350,000 -
	565,670 58,010
	130,673 124,673
	470,839 502,127 (390,981) (385,616)
	79,858 116,511
	42,471 42,471 (27,728) (17,854)
	14,743 24,617
	94,601 141,128

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 14

Notes to Financial Information

Note 10. Plant and Equipment (continued)

Reconciliations

Reconciliation of the carrying amount of plant and equipment at the beginning and end of the current financial year

Consolidated Balance at 1 July 2009 Additions Depreciation Balance at 30 June 2011 Additions Depreciation Balance at 30 June 2012	Plant and equipment Leasehold improvements Total $ $ $ 157,209 41,028 198,237 28,984 - 28,984 (69,682) (16,411) (86,093)
	116,511 24,617 141,128 4,707 - 4,707 (41,360) (9,874) (51,234)
	79,858 14,473 94,601

Note 11. Intangible Assets

Non-current Goodwill Cost Accumulated impairment losses Websites Cost Accumulated impairment Accumulated amortisation Software development Cost Accumulated impairment Accumulated amortisation Other intangible assets Cost Accumulated amortisation Total intangibles	Consolidated 2012 2011 $ $ 2,056,120 2,056,120 (995,288) (995,288)
	1,060,832 1,060,832
	38,381 38,381 (20,000) (20,000) (7,352) (3,676)
	11,029 14,705
	1,273,533 1,164,694 (1,093,458) - (180,075) (54,623)
	- 1,110,071
	220,000 220,000 (41,500) -
	178,500 220,000
	1,250,361 2,405,608

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 15

Notes to Financial Information

Note 11. Intangible assets (continued)

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Consolidated Balance at 1 July 2010 Acquisition through business combination Client list Impairment Amortisation Internal development Balance at 30 June 2011 Impairment Amortisation Internal development Balance at 30 June 2012	Goodwill Websites Software Development Assets Other Intangible Assets Total $ $ $ $ $ 2,056,120 17,500 858,945 - 2,932,565 - - - 150,000 150,000 - - - 70,000 70,000 (995,288) (17,500) - - (1,012,788) - (3,676) (54,623) - (58,299) - 18,381 305,749 - 324,130
	1,060,832 14,705 1,110,071 220,000 2,405,608 - - (1,093,458) - (1,093,458) - (3,676) (125,452) (41,500) (170,628) - - 108,839 - 108,839
	1,060,832 11,029 - 178,500 1,250,361

Impairment testing

Goodwill acquired through business combinations has been allocated to the following cash generating units:

Data subscriptions segment	Consolidated 2012 2011 $ $ 1,060,832 1,060,832
	1,060,832 1,060,832

The recoverable amount of the consolidated entity’s goodwill has been determined by a value-in-use calculation using a discounted cash flow model, based on a 12 month projection period approved by management and extrapolated for a further 4 years by using a steady rate, together with a terminal value.

Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.

The following key assumptions were used in the discounted cash flow model for the Data Subscriptions division: a. 15% (2011: 15%) pre-tax discount rate; and, b. 0% (2011: -10%) per annum projected revenue growth rate.

The discount rate of 15% pre-tax reflects management’s estimate of the time value of money and the consolidated entity’s weighted average cost of capital adjusted for the risk free rate and the volatility of the share price relative to market movements.

Management believes that previous declines in subscription revenue growth will be contained through wider acceptance of its renewed product offering and that further cost savings will arise from changes to the underlying delivery platform.

There were no other key assumptions for the data subscriptions division.

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 16

Notes to Financial Information

Note 11. Intangible assets (continued)

Based on the above, Management is satisfied that there are no indicators of impairment to the current carrying value of goodwill. In 2011 an impairment of $995,288 was applied as the carrying amount of goodwill exceeded its recoverable amount for the data subscriptions division.

Websites

Websites are amortised on a straight-line basis over a period of two to five years.

Software development assets

Software development is amortised on a straight-line basis over the period of the useful life of the underlying asset, which is currently estimated to be 10 years.

On 30 November 2011, the Company announced that a Heads of Agreement had been reached between the Company and IRESS Market Technology (ASX:IRE) under which IRESS would become an integral supplier to the Company’s Data Subscriptions business. Following the subsequent successful integration of the IRESS platform and upgrades to the Company’s existing data products: The Bourse and MA7, the Board reviewed its commitment to the Company’s existing software development and determined that there was no longer a commercial value associated with that software development. As a consequence, software development assets were fully impaired at 30 June 2012.

Other intangible assets

ASX membership

The cost of acquiring D2MX Pty Ltd’s market participant status of the Australian Securities Exchange will be amortised over a period of five years commencing from the time that the Group’s existing third-party execution facilities are transferred to D2MX Pty Ltd in August 2012.

Client list

The client list was acquired by the Group from the MINC Financial Services group. The client list has a finite life considered to be five years, amortised on a straight-line basis.

Note 12. Trade and Other Payables

Current Trade payables Other payables Accruals	Consolidated 2012 2011 $ $ 1,212,421 668,535 144,979 149,830 441,877 309,453
	1,799,277 1,217,818

Note 13. Borrowings Current Other loans	476,655 -
	476,655 -

Other loans comprise outstanding principal on the draw-down of USD$600,000 under the terms of a USD $2 Million facility entered into on 16[th] March 2012. Interest is payable at a rate of 12.0 percent per annum.

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 17

Notes to Financial Information

Note 14. Deferred Income

Deferred income, classified as current, consists of customer subscription fees paid in advance for the provision of services expected to be earned over the next 12 months.

Note 15. Employee Benefits

Current Liability for annual leave Liability for long service leave Non-current Liability for long service leave Note 16. Equity - contributed 317,072,916 (2011: 312,311,011) Fully Paid Ordinary shares 12,500,000 (2011: 12,500,000) Unlisted options	Consolidated 2012 2011 $ $ 114,493 112,998 90,743 83,085
	205,236 196,083
	31,327 18,165
	21,940,384 21,845,146 - -
	21,940,384 21,845,146

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 18

Notes to Financial Information

Note 16. Equity – contributed (continued)

Movements in ordinary share capital

Details Date Balance 1 July 2010 Shares bought back 31 August 2010 Issue of share to employee share scheme 17 September 2010 Issue of shares 1 March 2011 Issue of shares 15 April 2011 Issue of shares 27 May 2011 Share issue transaction costs Balance 30 June 2011 Issue of shares 23 March 2012 Balance 30 June 2012	No of shares Issue price 250,396,612 (1,668,804) $0.024 583,203 $0.024 37,000,000 $0.020 8,000,000 $0.020 18,000,000 $0.020 312,311,011 4,761,905 $0.020 317,072,916	$ 20,671,655 (40,051) 13,997 740,000 160,000 360,000 (60,455)
		21,845,146 95,238
		21,940,384

Ordinary shares

Ordinary shares have the right to receive dividends as declared, and, in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company. The shares have no par value.

Share buy-back

There is no current on-market share buy-back.

On 18 June 2010 the Directors announced that the Company would commence the process for the buy-back of ordinary shares from shareholders holding less than a “marketable parcel” (defined in the ASX Listing Rules as a parcel of securities of not less than $500 in value). The closing date of the buy-back was 30 July 2010. On 30 August 2010 the company bought back and cancelled 1,668,804 ordinary shares for a total cost of $40,051.

Capital risk management

The consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns to shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current parent entity’s share price at the time of the investment. The consolidated entity is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing business in order to maximise synergies.

The consolidated entity is subject to certain financing arrangements covenants and meeting these are given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year.

The capital risk management policy remains unchanged from the 30 June 2011 Annual Report.

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 19

Notes to Financial Information

Note 17. Equity – reserves

Share based payments Movement: Share based payments Balance at the beginning of the financial year Option expense Balance at the end of the financial year Note 18. Equity – accumulated losses Accumulated losses at the beginning of the financial year Loss after income tax expense for the year Share based payments Accumulated losses at the end of the financial year	Consolidated 2012 2011 $ $ 46,384 46,384
	46,384 46,384
	46,384 3,080 - 43,304
	46,384 46,384
	18,969,443 17,683,730 2,892,244 1,288,793 - (3,080)
	21,861,687 18,969,443

Note 19. Equity – dividends

Dividends No dividends have been paid or declared during 2012 (2011: Nil) Franking credits Franking credits available at the reporting date based on a tax rate of 30%	1,422,418 1,422,418

Note 20. Events occurring after the reporting date

Since 30 June 2012 one event has occurred and was reported to the market on 18 July 2012. This announcement was the resignation of a Director, Mr Isbister, effective from 17 July 2012.

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 20

Notes to Financial Information

Note 21. Reconciliation of profit after income tax to net cash from operating activities

(a) Reconciliation of loss for the year to net cash flow used in operating activities Loss for the year Non-cash flows in operating loss Depreciation, amortisation and impairment Fair value adjustment on investments Fair value adjustment on borrowings Share based payments expense Investments acquired for non-cash consideration Changes in working capital and provisions (Increase)/decrease in trade and other receivables Decrease/(increase) in other assets Increase/(decrease) in trade and other creditors Decrease in deferred income Increase/(decrease) in provisions for employee benefits Net cash used in operating activities Note 22. Non-cash investing and financing activities Acquisition of financial assets at fair value through profit or loss as fee income	Consolidated 2012 2011 $ $ (2,892,244) (1,288,793) 1,315,320 1,157,180 449,600 (696,788) 11,348 - 95,238 46,384 - (40,000) (58,623) (132,276) (507,660) 68,971 671,459 306,827 (118,797) (67,953) 22,315 37,373
	(1,012,044) (609,075)
	Consolidated 2012 2011 $ $ - 40,000

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 21

Notes to Financial Information

Note 23. Earnings per share

Earnings per share from continuing operations Loss after income tax Loss after income tax attributable to the owners of MDS Financial Group Limited Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of ordinary shares used in calculating basic earnings per share: Options* Weighted average number of ordinary shares used in calculating diluted earnings per share Basic earnings per share Diluted earnings per share	Consolidated 2012 2011 $ $ 2,892,244 1,288,793
	2,892,244 1,288,793
	Number Number 313,599,067 265,071,900 - -
	313,599,067 265,071,900
	Cents Cents (0.922) (0.486) (0.922) (0.486)

*Options to acquire ordinary shares are not considered dilutive as the exercise of the options would decrease the basic loss per share.

Note 24. Share based payments

Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows:

Options issued under employee share option plan Shares issued under employee share scheme	Consolidated 2012 2011 $ $ - 46,384 - (1,000)
	- 45,384

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 22

Compliance Statement

1. This Appendix 4E has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2012.

2. This Appendix 4E, and the accounts upon which the Appendix 4E is based (if separate), use the same accounting policies.

3. This Appendix 4E does give a true and fair vies of the matters disclosed.

4. This Appendix 4E is based on financial statements which are in the process of being audited.

5. The entity has a formally constituted audit committee.

6. 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.

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Sean Peter Rothsey Director

Melbourne 31 August 2012

MDS Financial Group Limited – Appendix 4E ASX Preliminary Final Report 2012 23

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