SIETEL LIMITED — Annual Report 2004

Dec 19, 2004

BOARD OF DIRECTORS	REGISTERED ANDPRINCIPAL BUSINESSOFFICE	AUDITORS	SECRETARY
D. G. Rees, ChairmanR. Rees, Managing DirectorG. E. Nanscawen, Director	463-467 Warrigal RoadMoorabbin Vic. 3189Phone: (03) 9553 5740	INPACT McDonald CarterBusiness Advisors &Chartered AccountantsLevel 6/31 Queen StreetMelbourne Vic 3000	R. Rees, B. Comm., C.A.
SOLICITORSBrian Ward and PartnersEggleston WhelanPrior and Prior	BANKERSNational Australia Bank Ltd3/330 Collins StreetMelbourne Vic 3000Australia and New ZealandBanking Group	SHARE REGISTERASX PerpetualRegistrarsLocked Bag A14Sydney South NSW 1235	Australian CompanyNo. 004 217 734ABN 75 004 217 734
	5/287 Queen StreetMelbourne Vic 3000

NOTICE OF MEETING

Notice is hereby given that the Annual General Meeting of Shareholders of Sietel Limited will be held at 11.00 am on Thursday 20th January 2005 at the Registered Office of the Company, 463-467 Warrigal Road, Moorabbin, Victoria, for the purpose of transacting the following business:

• $11$ To receive and consider the Statement of Financial Position as at September 30, 2004 and Statement of Financial Performance of the Company and the economic entity for the year ended and Reports of the Directors and Auditors thereon.
• $\overline{2}$ . Mr. D. G. Rees retires being over the age of 72 and being eligible offers himself for re-election.
• $\overline{3}$ To transact any other business as may legally be brought forward.

By Order of the Board.

R. Rees B. Comm., C.A.

Moorabbin, 13 December 2004

PROXIES:

A member is entitled to appoint no more than two other persons to attend the Meeting and to act on his behalf. Where a member appoints two proxies, the proportion of the members' voting rights given in favour of each proxy must be specified. An additional proxy form will be supplied by the Company on request. The proxy must be deposited at the Office of the Company not less than 48 hours before the time of the Meeting. A proxy may, but need not be a member of the Company. Under the Company's Constitution Preference Shareholders are entitled to vote at this Meeting and have four votes for each share held.

SIETEL LIMITED AND CONTROLLED ENTITIES

DIRECTORS REPORT FOR YEAR ENDED 30 SEPTEMBER 2004

In accordance with a resolution of the Directors dated 13 December 2004, the Directors of the Company have pleasure in reporting on the Statements of Account of the Chief Entity and the Economic Entity for the financial year ended 30 September 2004 and the state of affairs as at 30 September 2004.

The Directors of the Chief Entity in office at the date of this report are:- Delwyn Garland Rees, Richard Rees, and Geoffrey Ernest Nanscawen. The directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Refer table "Directors Meetings" page 3 of this report.

PRINCIPAL ACTIVITIES:

The Chief Entity is engaged principally in investment in industrial and commercial real estate, provision of finance and lease facilities and plant and management services to its controlled entities and management, evaluation and expansion of these and other business opportunities. No significant change in the principal activities of the Chief Entity occurred during the year.

The wholly owned controlled entity Cooks Body Works Pty Ltd continued trading as a commercial vehicle body builder.

The controlled entity. The Cylinder Company Pty Ltd, provided equipment to related companies and is the trustee company for the Sierac Unit Trust.

Agua-Max Pty Ltd has operated a research and development division since it became a controlled entity.

Agua-Max Pty Ltd Manufacturing division continued production and sales of water heaters during the year.

There were no significant changes in the nature of the economic entity's activities during the year.

DIVIDENDS:

No dividends were paid or recommended since the end of the previous financial year.

REVIEW OF OPERATIONS:

The properties owned by the Chief Entity have been tenanted for the full year with a number of buildings at the Moorabbin location occupied by controlled entities.

The water heating business, operated by a controlled entity, has experienced cost pressures from rising prices of materials and components. Competitive market conditions has made it difficult to fully recover increased costs. Engineering costs associated with research and development have also increased as plant processes and the model range have been improved and expanded to meet new government requirements and changing consumer demand.

The body building business operated by a controlled entity has benefited from improved turnover and manufacturing efficiencies during the year. The strong demand for transport equipment has provided opportunity for this business's proprietary products and participation in fleet upgrade contracts.

Continuation of a strong economy and demand for the group entities services and products is important for future profitability.

OPERATING RESULTS:

The consolidated profit of the Economic Entity after providing for income tax amounted to $1,304,204 (2003 $$1.089.861$ .

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS:

There have been no significant changes in the state of affairs of the economic entity during the financial year.

EVENTS SUBSEQUENT TO BALANCE DATE:

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Economic Entity and the results of those operations or the state of affairs of the economic entity in financial years subsequent to the financial year ended 30 September 2004.

FUTURE DEVELOPMENTS:

No information has been included on the likely developments of the Chief Entity or the economic entity as the directors are of the opinion that to include such comments would be unreasonably prejudicial to the interests of the economic entity.

INFORMATION ON DIRECTORS.

INFORMATION ON DIRECTORS.MR. DELWYN G. REESQualifications	DIRECTOR (CHAIRMAN) Age 78Diploma of Commerce (Melbourne University)Member of Australian Society of AccountantsCertified Practising Accountant
Experience	Board Member since 1967Appointed Chairman in 1970An accountant in public practice for over 30 years
Interests in Contracts	Director of a company which provides financial and management services to theChief Entity. Consultant to Garland Consulting Services which providesconsulting and secretarial services to the Chief Entity.
Interests in Shares	Refer to Table headed Directors' Interest in Ordinary Shares on page 22 whichis to be read as forming part of this report.
MR. RICHARD REESQualifications	MANAGING DIRECTOR Age 54Bachelor of Commerce (Melbourne University)
Experience	Member of the Institute of Chartered Accountants in AustraliaBoard Member and Chief Executive of Chief Entity since 1981.
Interests in Contract	Has a service and share option agreement with the Chief Entity dated March 1984.Receives allowance for the provision of motor vehicles for use by the EconomicEntity. Share options taken up during 1996/1997 in accordance with the Trust Deedof Sietel Limited "A Staff Equity Participation Plan" ("the plan") which expired inFebruary 2002.
Interest in Shares	Refer to Table headed Directors' Interest in Ordinary Shares on page 22 which is tobe read as forming part of this report.
MR. GEOFFREYNANSCAWEN	DIRECTOR Age 56
Experience	Board Member since 2001 and marketing executive of a subsidiary since 1994.Over 30 years experience in the gas industry occupying numerous managerialpositions, particularly in marketing, sales and advertising.Member of various Committees within the industry, including the Australian GasAssociation. Involved in the product development of many local gas appliances aswell as overseas products.
Interests in Contract	Share options taken up during 1996/1997 in accordance with the Trust Deed "A StaffEquity Participation Plan" ("the plan") which expired in February 2002.

DIRECTORS' MEETINGS

During the financial year the attendance at Directors' meetings was as follows:

	Meetings held	Meetings attended
D.G. Rees	11	11
R. Rees	11	11
G. E. Nanscawen	11	11

INDEMNIFICATION OF OFFICERS AND AUDITORS

During the financial vear, the company paid a premium in respect of a contract insuring the directors of the company (as named above) and all executive officers of the company and of any related body corporate against a liability incurred as such a director, secretary or executive officer to the extent of the policy limits with a current $5ml in aggregate.

The company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the company or of any related body corporate against a liability incurred as such an officer or auditor.

DIRECTOR 3 REMONERATION
NAME	OFFICE	SALARY/FEES	BENEFITS	TOTAL
D. G. Rees	Director	10,000		10,000
R. Rees	Director	152.012	133,112	285.124
G. E. Nanscawen	Director	144.387	59.095	203.482
				498.606

DIBECTOBIC BEMINIEBATION

There are no proceedings on behalf of the company.

Signed in accordance with a resolution of the Directors made pursuant to S.298 (2) of the Corporations Act 2001. On behalf of the Board

D. G. Rees, Director

R. Rees, Director

Moorabbin, 13 December 2004

CORPORATATE GOVERNANCE

The Directors set out below their comments on the ten essential corporate governance principles as provided by the Australian Stock Exchange as a guide for listed companies.

Lay solid foundations for management and oversight. The Board oversees the performance of $1.$ management of the company and its controlled entities and provides a central place for discussion and decision making for senior executives under the guidance of the Chairman.

The role of the Board is not set out in proscriptive terms but left to the Chairman and Managing Director to determine depending on their assessment of current circumstances and annunciate to management by face to face discussions.

$\overline{2}$ Structure the Board to add value

The Board has no independent directors. The Chairman and Managing Director have a relevant interest in entities, as they are substantial shareholders, and both directors have been members of the Board for over twenty years. The one other Director is an executive of the Company.

The members of the Board, however, are experienced in business generally and more particularly that of the company and its controlled entities. All Directors devote their time to the Group's affairs and have no major outside business interests which conflict and require their excessive time. The Chairman is not an executive of any Group companies and has served for over thirty years as Chairman of the Company providing balance with the other two executive Directors.

The size of the Group, the Board, board members remuneration levels and the stable composition of the Board does not warrant, in the Director's view, a nomination committee or prescriptive procedure for new appointments.

The Chairman can seek independent professional advice in the furtherance of his duties as a Director and has direct access to senior staff of the Company. The Company will pay claims by Directors for reimbursement of this expenditure provided prior written authority of the expenditure and amount has been obtained from the Chairman or one other Director.

CORPORATE GOVERNANCE (cont.)

$\overline{3}$ . Promote ethical responsible decision making

The Directors will continue to maintain their high standard of decision making and promote and encourage ethical behaviour of all employees.

The Directors believe personal integrity and honesty is the key, rather than documented codes or company regulations, to enable maintenance of high standards of business practice.

The Directors believe the most important matter, when considering an investment in the Company's shares, is that it is for the long term and short term buying or selling is discouraged no matter when the purchase or sale may be made.

$\Delta$ Safequard integrity in financial reporting

The small size of the Board does not lend itself or provide any advantage in the appointment of committees and for this reason the Board has retained the responsibility for all committee work including audit and corporate governance committees.

The stability of the Board, the long term association with the industry and the combined expertise of its members assists in the maintenance of reliable reporting systems and preparation of true and fair accounts.

To further support the above measures the Board has provided for the Auditor, or appointed representative, to be available at the AGM to answer any shareholder questions on financial report matters.

1. Make timely and balanced disclosure

The Board has the policy that all company announcements to the shareholders and ASX are approved prior to issue by at least two Directors and are timely, factual and in accordance with the law.

The Board also appreciates the need in the very competitive industries in which its controlled entities operate, that disclosure to the market does not disclose competitive sensitive information which would be unnecessarily prejudicial to the interests of the Group and the Company shareholders.

1. Respect the rights of shareholders

A hardcopy of the annual report is sent to all shareholders who have their current address registered with the Company and includes a notice to attend the Annual General Meeting (AGM).

The Annual Report is prepared, on a no nonsense, uncluttered and to the point basis, to assist non technocrats to gain a reasonable understanding of the group and individual entities performance over the year and financial position at year end.

The AGM is held at the Company's premises which provides free parking and easy access. The format of the meeting provides shareholders with the opportunity to ask questions of the Directors and the Auditor or his nominated representative.

Shareholder inquiries during the course of the year are addressed by the Managing Director or Chairman in a timely manner.

The two manufacturing subsidiaries have web sites which provide information relevant to their products. This allows shareholders to become better acquainted with these businesses.

CORPORATE GOVERNANCE (cont.)

$\overline{7}$ . Recognise and manage risk

The Company and its controlled entities operate in an environment of increasing risk because of government and related party regulation and the onus on businesses and Directors to protect the rights of employees, customers, contractors, consumers, small businesses and the public at large.

The Directors have followed the principle that direct day to day involvement with all these parties at all levels by Directors, combined with experienced and knowledge of the industries in which the group operates, is the best way of managing risk.

In relation to the traditional risks relating to group physical assets and operating facilities, insurance cover and policies are reviewed regularly with the Company's insurance brokers. Also regular inspections by underwriters' risk surveyors of the businesses and premises along with action required reports, has assisted in reducing exposure.

The Board encourages and fosters a culture of continual improvement and review of past problem areas experienced by group companies or other businesses to further address the issue of risk control and minimisation.

1. Encourage enhanced performance

The relative small size of the group and individual businesses, plus the very competitive nature of the markets in which operations are conducted, provide a good background against which Directors and staff can review the group and their performances.

Internal promotion and or recruitment by direct knowledge of applicants backgrounds has been a principle adopted by the Board to assist with obtaining suitable personnel for board and key executive positions.

Directors have access to all staff and if required independent professional advice with the cost of the latter being funded by the Company provided prior approval of one other Director is obtained for the specific amount of the proposed expenditure.

1. Remunerate fairly and responsibly

The Board, with its experience in the relevant industries in which group companies operate plus reference to independent survey information combined with regular indepth meetings between staff and the Managing Director, have implemented a policy of fair remuneration based on individual and relevant company or divisional and group performance.

Long term rather than short term performance has been the overriding objective, along with assessment of the dedication and commonly held objectives, plus the ability of the relevant business to achieve a return on the investment in time, money and intellectual property.

$10.$ Recognise the legitimate interests of stakeholders

The Board believes in conducting the group businesses in an environment where all stakeholders are treated fairly and appropriately but do not shy away from the basic principle that all actions must be in the long term interests of shareholders not other third parties or the popular presses short term political objectives.

The enhancement of the long term corporate reputation of the group and its member companies is seen by Directors as important but in the context of the role which companies of the size and resources should play and separate from that of governments and the welfare state.

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF SIETEL LIMITED

Scope

We have audited the financial report of Sietel Limited and controlled entities for the financial year ended 30 September 2004 as set out on pages 8 to 24.

The financial report includes the consolidated financial statements of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year. The company's directors are responsible for the financial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the members of the company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements in Australia and statutory requirements so as to present a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and performance as represented by the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the financial report of Sietel Limited is in accordance with:

• the Corporations Act 2001, including: $\mathbf{a}$
  • giving a true and fair view of the company's and consolidated entity's financial $\mathbf{i}$ . position as at 30 September 2004 and of their performance for the year ended on that date: and
  • complying with Accounting Standards in Australia and the Corporations iì. Regulations 2001; and
• $b.$ other mandatory professional reporting reguirements in Australia.

INPACT McDonald Carter

Chartered Accountants

G.S. Parker Partner

Dated this 13th day of December, 2004 Melbourne

DIRECTORS' DECLARATION

The directors declare that:

• $a)$ The attached financial statements and notes (pages 9 to 24) thereto comply with accounting standards;
• $b)$ The attached financial statements and notes thereto give a true and fair view of the financial position and performance of the company and the economic entity;
• $c)$ In the directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001: and
• $\mathsf{d}$ 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.

Signed, in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.

On behalf of the Directors

Director, Mr. D. G. Rees Director, Mr. R. Rees

Moorabbin, 13 December 2004

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 SEPTEMBER 2004

Note	Economic Entity				Chief Entity
	2003$	2004$		2004$	2003$
20212121	21,734,12320,395,966226,5131,111,644	23,552,37722,288,424162,7161,101,237	Revenues from ordinary activitiesExpenses from ordinary activitiesBorrowing expensesProfit (loss) from ordinary activities beforeincome tax expense	3,342,7812,717,431162,716462,634	4,657,3272,761,010226,4791,669,838
22	21,783	(202, 967)	Income tax expense/(revenue) relating toordinary activities	92,561	(182, 711)
2331	1,089,861	1,304,204	Profit (loss) from ordinary activities afterincome tax expense	370,073	1,852,549
			Total revenues, expenses and valuationadjustments attributable to members of theparent entity and recognised directly inequity.
	1,089,861	1,304,204	Total changes in equity other than thoseresulting from transactions with owners asowners.	370,073	1,852,549
32	13.61	16.28	Earnings per share - Basic (cents per share)
32	13.48	16.13	Earnings per share - Diluted (cents per share)

Notes to and forming part of the accounts are set out on pages 12 to 24.

STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2004

Note Economic Entity

Chief Entity

	2003$	2004$		2004$	2003$
			Current Assets
	1,901,250	917,881	Cash assets	131,779	43,641
2	1,449,253	1,747,524	Receivables	52,405	33,369
3			Other financial assets	1,792,379	2,478,409
4	2,392,984	2,670,765	Inventories
5	85,225	70,204	Other	69,273	84,856
	5,828,712	5,406,374	Total Current Assets	2,045,836	2,640,275
			Non-Current Assets
6	85,123	21,776	Receivables	21,776	85,123
7	28,587	28,587	Other financial assets	1,186,298	1,186,298
8	11,348,707	11,511,006	Property, plant and equipment	8,994,214	9,242,725
9	384,622	350,647	Intangibles
10	942,787	1,166,425	Deferred tax assets	923,177	852,381
11	318,836	179,782	Other
	13,108,662	13,258,223	Total Non-Current Assets	11,125,465	11,366,527
	18,937,374	18,664,597	Total Assets	13,171,301	14,006,802
			Current Liabilities
12	2,293,931	2,279,568	Payables	85,503	119,854
13	1,318,212	452,389	Interest bearing liabilities	452,389	1,318,212
14	3,030,526	3,019,543	Provisions	698,912	658,200
15	336,793	(90, 410)	Current tax liabilities	14,921	102,419
	6,979,462	5,661,090	Total Current Liabilities	1,251,725	2,198,685
			Non-Current Liabilities
16	1,071,746	813,132	Interest bearing liabilities	813,132	1,071,746
	1,071,746		813,132 Total Non-Current Liabilities	813,132	1,071,746
	8,051,208	6,474,222	Total Liabilities	2,064,857	3,270,431
	10,886,166	12,190,375	Net Assets	11,106,444	10,736,371
			Equity
18	4,257,129	4,257,129	Contributed equity	4,257129	4,257,129
19	1,223,241	1,223,241	Reserves	1,223,241	1,223,241
	5,405,796	6,710,005	Retained profits	5,626,074	5,256,001
	10.886.166	12,190,375	Total Shareholders' Equity	11.106.444	10,736,371

Notes to and forming part of the accounts are set out on pages 12 to 24.

STATEMENT OF CASH FLOWS FOR YEAR ENDED 30 SEPTEMBER 2004

NoteEconomic Entity				Chief Entity
	2003	2004		2004	2003
	$	$		$	$
			Cash flows from Operating Activities
	22,420,733	25,597,425	Receipts from customers	3,696,425	5,003,173
	(19, 413, 867)	(22, 994, 545)	Payment to suppliers and employees	(2,261,895)	(1,872,439)
	(53, 798)	(464, 439)	Income Tax Paid	(267, 421)	(66, 051)
	51,226	63,548	Interest received	2,063	1,238
	(111, 360)	(162, 716)	Borrowing costs	(162, 716)	(226, 479)
31(i)	2,892,934	2,039,273	Net cash provided by/(used in) operatingactivities	1,006,456	2,839,442
			Cash flows from Investing Activities
			Cash paid for investments
	23,800	2,000	Proceeds from sale of property, plant andequipment	2,000	8,800
		181,430	Proceeds from sale of investments	181,430
	(1,290,831)	(1,876,135)	Payment for property, plant andequipment	(457,091)	(223, 883)
	(9,585)		Payment for Research and Developmentand Intangibles
	1,560	1,500	Dividends received	750	780
	(1, 275, 056)	(1,691,205)	Net cash provided by/(used in )investingactivities	(272, 911)	(214, 303)
			Cash flows from Financing Activities
			Loans (to)/repaid by Controlled Entities	686,030	(1,635,587)
			Proceeds from borrowings
	(1,013,236)	(1, 331, 437)	Repayment of borrowings	(1, 331, 437)	(1,013,236)
	(1,013,236)	(1, 331, 437)	Net cash provided by/(used in) financingactivities	(645, 407)	(2,648,823)
	604,642	(983, 369)	Net increase/(decrease) in cash held	88,138	(23, 684)
	1,296,608	1,901,250	Cash as at 1 October 2003	43,641	67,325
31(i)	1,901,250	917,881	Cash as at 30 September 2004	131,779	43,641

Notes to and forming part of the accounts are included on pages 12 to 24.

STATEMENT OF ACCOUNTING POLICIES Note 1

Financial Reporting Framework

The financial report is a general purpose financial report which has been prepared in accordance with the Accounting Standards, Urgent Issues Group Consensus Views, and other authoritative pronouncements of the Australian Accounting Standards Board.

$(A)$ Significant Accounting Policies

Accounting policies are selected and applied in a manner which helps ensure that the resultant financial information satisfies the concepts of relevance and reliability, thereby, ensuring that the substance of the underlying transactions and other events is reported. The financial report has been prepared on an accruals basis and is based on historical costs and does not take into account changing money values or, except where stated, current valuations of noncurrent assets. Cost is based on the fair values of the consideration given in exchange for assets. The accounting policies have been consistently applied, unless otherwise stated.

In addition to the accounting policies prescribed by applicable Accounting Standards and Urgent Issues Group Consensus Views, the following significant accounting policies have been adopted in the preparation and presentation of the financial report.

$(B)$ Property, Plant and Equipment and Investments

Depreciation has been charged in the accounts using either the reducing balance or straight line method on all classes of depreciable assets so as to write off their book value over the estimated useful life of the asset including buildings classified as investments. The economic entity's land and buildings leased to third parties and land and buildings occupied by the economic entity have been classified as Property, Plant and Equipment. The following estimated useful lives are used in the calculation of depreciation. Buildings: $20 - 25$ vears and Plant and Equipment $4 - 8$ vears. The policy of the company is to review its valuations of land and buildings every 3 years. There has also been no capital gains tax taken into account in determining revalued amounts.

$(C)$ Inventories

• All entities in the economic entity have:
• $(i)$ Valued stocks at the lower of cost and net realisable value
• Calculated costs by including all variable manufacturing cost, and an appropriate portion of fixed $(ii)$
• manufacturing cost, but excluding selling, distribution and administration expenses, and
• Assigned cost to inventory quantities on hand at balane date on a first in first out basis. $(iii)$

$(D)$ Goodwill

Goodwill is recorded initially at the amount by which the purchase price for a business exceeds the fair value attributed to its net tangible assets at date of acquisition. Goodwill is amortised on a straight line basis over the period in which the future benefits are expected to arise, but not exceeding 20 years. The balances are reviewed annually and any balance representing future benefits, the realisation of which is considered to be no longer probable, are written off.

$(E)$ Research and Development Expenditure

Research and development expenditure on new major projects is deferred where it is expected beyond

reasonable doubt that sufficient future benefits will be derived so as to recover those defered costs.

Deferred research and development expenditure is amortised on a straight line basis over the period duringwhich the related benefits are expected to be realised.

$(F)$ Employee Entitlements

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and are capable of being measured reliably.

Provisions made in respect of wages and salaries, annual leave and long service leaveexpected to be settled within 12 months are measured at their nominal values. Provisions made in respect of other employee entitlements, (annual leave, long service leave), which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the economic entity in respect of services provided by employees up to the reporting date

$(G)$ Leases

Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to entities within the economic entity and classified as finance leases. Finance leases are capitalised recording an asset and a liability equal to the present value of the minimum lease payments, including any quaranteed residual values. Lease payments are allocated to the reduction of the lease liability. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

$(H)$ Comparative Figures

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

$($ i Receivables

Trade receivables and other receivables are recorded at amounts due less any provision for doubtful debts.

$(J)$ Recoverable Amount of Non-Current Assets

Non-current assets are written down to recoverable amounts where the carrying value of any non-current assets exceed recoverable amounts. In determining the recoverable amount of non-current assets, the expected net cash flows have been discounted to their present value.

Investment in subsidiary companies are valued at cost although in the case of one subsidiary the net assets are less than the company's investment. The Directors have written down this investment as they believe there is a permanent diminution in value.

$(K)$ Accounts Pavable

Trade payables and other accounts payable are recognised when the economic entity becomes obliged to make future payments resulting from the purchase of goods and services.

$(L)$ Principles of Consolidation

The consolidated accounts comprise the accounts of Sietel Limited and all of its controlled entities . A controlled entity is any entity controlled by Sietel Limited. Control exists where Sietel Limited has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with Sietel Limited to achieve the objectives of Sietel Limited. A list of controlled entities is contained in Note 23 to the financial statements.

All intercompany balances and transactions between entities in the economic entity, including any unrealised profit or losses, have been eliminated on consolidation.

$(M)$ Revenue

Revenue from the sale of goods is recognised upon the delivery and invoicing of goods to customers.

Revenue from rent is recognised on expiration of time. The holding company recognises rental income from all properties as normal operating income.

Interest revenue is recognised on proportional basis taking into account the interest rates applicable to the financial assets.

Revenue from the rendering of a service is recognised upon the delivery and invoicing of the service to the customers.

$(N)$ Provision for Warranties

Provision is made in respect of the economic entity's estimated liability on products under warranty at balance date.

$(O)$ Income Tax

The economic entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on the profit from ordinary activities adjusted for any permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue and expense are included in the determination of accounting profit and taxable income are brought to account as either a provision for deferred income tax or as a future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty or realisation of the benefit.

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

The Group accounts have been prepared on the basis that the Company and its wholly owned controlled entities will form a tax consolidation group from 1st October 2003.

	Economic Entity			Chief Entity
	2004$	2003$	2004$	2003s
Note 2 CURRENT RECEIVABLES
Trade ReceivablesOther	1,658,04889,476	1,413,88435,369	52,405	33,369
	1,747,524	1,449,253	52,405	33,369
Note 3 OTHER FINANCIAL ASSETSInvestments in controlled entities
- Loans			1,792,379	2,478,409
			1,792,379	2,478,409
Note 4 CURRENT INVENTORIES
Raw materials and stores	970,691	996,824
Work in progress	737,273	772,047
Finished goods	962,801	624,113
	2,670,765	2,392,984
Note 5 OTHER CURRENT ASSETSPre-payments	70,204	85,225	69,273	84,856
Note 6 NON-CURRENT RECEIVABLES
Receivables	21,776	85,123	21,776	85,123
	$\overline{21,776}$	85,123	21,776	85,123
Note 7 NON-CURRENT OTHER FINANCIAL ASSETS
Investments in controlled entities
- Loans at Cost			400,000	400,000
- Shares at Cost			771,713	771,713
			1,171,713	1,171,713
Investments in other companies- Shares at cost	28,587	28,587	14,585	14,585
	28,587	28,587	14,585	14,585
	28,587	28,587	1,186,298	1,186,298
Note 8 PROPERTY PLANT AND EQUIPMENT
Plant and Equipment at cost	14,322,421	12,676,752	5,748,025	5,314,395
Less Accumulated depreciation	(10, 852, 133)	(9,545,670)	(4, 794, 529)	(4,289,295)
	3,470,288	3,131,082	953,496	1,025,100
Leased Plant and Equipment	2,045,292	2,079,967	2,045,292	2,079,967
Less Accumulated depreciation	(1,028,789)	(815, 914)	(1,028,789)	(815, 914)
	1,016,503	1,264,053	1,016,503	1,264,053
Total Plant and Equipment	4,486,791	4,395,135	1,969,999	2,289,153
Property
Land at Directors Valuation 1998*	3,702,937	3,702,937	3,702,937	3,702,937
Land at Cost*	1,273,568	1,273,568	1,273,568	1,273,568
Total Land	4,976,505	4,976,505	4,976,505	4,976,505
Buildings at Directors Valuation 1998*	1,989,750	1,989,750	1,989,750	1,989,750
Buildings at Cost*	379,659	674,457	379,659	674,457
Additions at Cost*	498,818		498,818
Less Accumulated depreciation	(820, 517)	(687, 140)	(820, 517)	(687, 140)
Total Buildings	2,047,710	1,977,067	2,047,710	1,977,067
Total Property	7,024,215	6,953,572	7,024,215	6,953,572
Total Property Plant and Equipment	11,511,006	11,348,707	8,994,214	9,242,725

* In 2004 the Directors resolved to leave the current book value for the Group properties at this stage at 1998 Directors valuations or at cost. An independent valuation of interests in land and buildings was carried out by Mr. N. Walsh, certified practising valuer F.A.P.I., A.R.E.I. 1st October, 2004. The valuation was carried out for the company's bankers to provide the current market value for mortgage security purposes.

Valuation October 2004	$11,690,000
WD Book Value as at 30 September 2004	$7.024.215
Net Gain	$4,665,785
Capital Gain subject to Capital Gains tax as per above	$1.761.699

Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year.

	Land	Buildings	Plant andEquipment	Leased plantAndEquipment	Total
Balance at the beginning of the year	4.976.505	1.977.067	3,131,082	1.264.053	11,348,707
Additions		204,020	1,530,373	207,000	1,941,393
Disposals			(4,400)		(4,400)
Depreciation expense		(133, 377)	(1,247,627)	(393, 690)	(1,774,694)
Transfers to plant and equipment				(241, 675)	(241, 675)
Transfers from leased plant andequipment			241,675		241,675
Transfers to plant and equipment(depreciation)				180.815	180,815
Transfersfromleasedplantandequipment (depreciation)			(180, 815)		(180, 815)
Carrying amount at the end of the year	4.976.505	2,047,710	3,470,288	1.016.503	11,511,006

	Economic Entity		Chief Entity
	2004	2003	2004	2003
	s	S	S
Note 9 INTANGIBLES
Goodwill at cost	679,495	679,495
Accumulated amortisation	(328, 848)	(294,873)
Total intangibles	350,647	384,622
Note 10 DEFERRED TAX ASSETSFuture income tax benefit
- The future income tax benefit is made upof the following estimated tax benefits:
- tax losses
- timing difference	1,166,425	942,787	923,177	852,381
	1,166,425	942,787	923,177	852,381
Note 11 OTHER NON-CURRENT ASSETSResearch and Development ExpenditureRef Note 1 (e)
Balance 1 st October	2,568,895	2,559,310
Capitalised during the year		9,585
Balance 30th September	2,568,895	2,568,895
Less accumulated amortisation	(2,389,113)	(2,250,059)
	179,782	318,836
Note 12 CURRENT ACCOUNTS PAYABLEUnsecured:
Trade Creditors	2,158,052	2,036,778	42,347	29,498
Sundry Creditors	121,516	257,153	43,156	90,356
Amounts payable to controlled entities whollyowned
	2,279,568	2,293,931	85,503	119,854

	NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2004Economic Entity		Chief Entity
	2004ŝ	2003	2004Ŝ	2003
		$		$
Note 13 INTEREST BEARING LIABILITIESUnsecured:
Secured:Bank Overdraft (i)
Commercial Bills (i)		900,000		900,000
Finance Lease Liabilities (ii)	398,014	367,251	398,014	367,251
Hire Purchase Creditors (ii)	58,283	58,283	58,283	58,283
Less Unexpired term changes	(3,908)	(7, 322)	(3,908)	(7, 322)
	54,375452,389	50,9611,318,212	54,375452,389	50,9611,318,212
(i) Bank overdraft and commercial bills securedby 1 st ranking registered mortgage over free holdproperty and 1 st ranking debentures overundertaking of the chief entity.
(ii) Effectively secured over the assets leased orhired.
Note 14 CURRENT PROVISIONS
Employee entitlements :Annual Leave	742,088	797,959	510,477	484,720
Long Service Leave	522,455	482,567	168,435	158,480
Sick Pay
Directors' FeesOther: Provision for Warranty	30,0001,725,000	25,0001,725,000	20,000	15,000
	3,019,543	3,030,526	698,912	658,200
Total No. of employees	116	122	11	12
Note 15 CURRENT TAX LIABILITIES
Current
- Income Tax	(90, 410)	336,793	14,921	102,419
Note 16 NON-CURRENT BORROWINGS
Secured:Lease Liability (ii) above in Note 13	789,415	993,655	789,415	993,655
Hire Purchase Creditor	24,285	82,568	24,285	82,568
Less Unexpired term charges	(568)23,717	(4, 477)78,091	(568)23,717	(4, 477)78,091
	813,132	1,071,746	813,132	1,071,746
Note 17 NON-CURRENT PROVISIONSEmployee Entitlements Long service leave
Note 18 SHARE CAPITALIssued and Paid Up Capital8,007,479 Ordinary Shares fully
Paid (2003 8,007,479)75,000 Preference Shares 5% Cumulative fully	4,107,129150,000	4,107,129150,000	4,107,129150,000	4,107,129150,000
paid (2003 75,000) Refer to Note 24	4,257,129	4,257,129	4,257,129	4,257,129
Note 19 RESERVES
Asset revaluation - Land and Buildings	1,223,241	1,223,241	1,223,241	1,223,241
As per Balance Sheet	1,223,241	1,223,241	1,223,241	1,223,241

	Economic Entity			Chief Entity
	2004	2003	2004	2003
	$	$	$	$
Note 20 REVENUE FROM ORDINARY ACTIVITIES
Operating:
Sales Revenue	22,193,091	20,525,685
Dividends
- Controlled Entities				1,650,000
- Other Corporations	1,500	1,560	750	780
Interest Received
- Controlled Entities			50,000	50,000
- Other Corporations	63,548	51,226	2,063	1,238
Rent Revenue
- Controlled Entities			513,048	573,048
- Other Corporations	299,361	291,200	299,361	291,200
Internal Leases
- Controlled Entities			584,486	613,742
Management Fees
- Controlled Entities			1,360,296	1,110,945
Other Revenue	811,447	840,652	349,347	357,574
	23,368,947	21,710,323	3,159,351	4,648,527
Non Operating:
Proceeds on disposal
- property, plant and equipment- investments	2,000181,430	23,800	2,000181,430	8,800
	183,430	23,800	183,430	8,800
Total Revenue from ordinary activities	23,552,377	21,734,123	3,342,781	4,657,327
Note 21 EXPENSES FROM ORDINARY
ACTIVITIES
(a) Operating profit before income tax has been
determined after:
Cost of goods sold	10,955,637	9,949,042
Overheads	6,131,834	5,756,778	2,586,334	2,467,989
Administration expenses	828,408	662,468	112,086	24,850
Selling expenses	3,995,656	3,596,790	14,757	13,482
Finance expenses	376,889	430,888	4,254	254,689
Total expense from ordinary activities	22,288,424	20,395,966	2,717,431	2,761,010
Depreciation included above:
- Buildings	133,377	129,297	133,377	129,297
- Plant and equipment owned	1,247,626	1,092,146	385,534	428,057
- Plant and equipment leased	393,691	415,988	393,691	415,988
Amortisation of:
- Goodwill	33,975	33,973
- Research and development costs	139,055	216,386
	1,947,724	1,887,790	912,602	973,342
(b) Borrowing expenses:
- Interest paidOther corporations	70,606	111,360	70,606	111,326
Finance leases	92,110	115,153	92,110	115,153
	162,716	226,513	162,716	226,479
(c) Net transfers to (from) provisions for:
- Employee entitlements	(10, 983)	425,534	40,712	140,949
- Provision for doubtful debts
(d) Research and Development Costs	3,246,523	2,294,174

	Economic Entity		Chief Entity
	2004	2003	2004$	2003$
Note 22 INCOME TAX REVENUE	$	$
a) The prima facie tax on operating profit is
reconciled to the income tax expense (benefit) in
the accounts as follows:
Operating profit (loss) before income tax	1,101,237	1,111,644	462,634	1,669,838
Prima Facie income tax expense applicable to
Operating Profit at 30% (2003 30%)	330,371	333,493	138,790	500,952
Add/Deduct tax effect of:
Permanent differences
Amortisation of Goodwill	3,000	3,000
Depreciation on Buildings	17,736	16,590	17,736	16,590
Legal Expenses	6,270
Entertainment Expenses	9,658	11,387
Research and Development Expenditure	(333, 489)	(172,063)
S46 Dividend Rebate				(495,000)
Timing differences (not brought to account since
1988)
Tax losses not previously recognised now brought
to account	(54, 429)		(54, 429)
Tax losses transferred from 100% owned entity to
Chief Entity				(35, 157)
Reclassification of brought forward timing
differences and over provision for tax	(182,084)	(170, 624)	(9,536)	(170,096)
Income Tax Expense/(Revenue) per Accounts	(202,967)	21,783	92,561	(182,711)

Note 23 CONTROLLED ENTITIES

(a) Entities controlled by ultimate parent entitySietel Ltd and contribution to Consolidated Profit(Loss)

Name of controlledEntity of Sietel Limited	Beneficially Owned bySietel Ltd		Contribution to consolidatedoperating Profit (loss) afterincome tax attributable tomembers of the chief entity		Investment by Sietel Ltd at cost
	2004%	2003%	2004	2003	2004	2003S
Cooks Body Works PtyLtd	100	100	183,229	(140, 508)	290,000	290,000
The Cylinder Co Pty Ltd	100	100	911	(2,342)
Aqua-Max Pty Ltd	100	100	677,913	860.914	481.713	481,713
Sietel Limited	N/A	N/A	442,151	371,797
			1,304,204	1.089,861	771,713	771.713

*All companies incorporated in Australia.

(b) Statement of Operations by Business

		Revenue		Results		Assets		Liabilities		Depreciation
	2004	2003	2004	2003	2004	2003	2004	2003	2004	2003
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$2000
Manufacturing Vehicle Bodies	3.450	2.174	183	(141)	1.349	1.048	412	325	41	31
Manufacturing Hot Water
Services	19.367	19.001	678	861	4.144	3,883	3,997	4.456	994	883
Equipment services		$\overline{\phantom{a}}$		(2)	$\overline{r}$
Total Manufacturing	22.817	21.175	862	718	5.493	4.931	4.409	4.781	.035	914
Investment	735	559.	442	372	13.171	14.006	2.065	3.270	913	973
Total Investment	735	559.	442	372	13.171	14,006	2.065	3,270	913	973
	23.552	21.734	1.304	1,090	18.664	18,937	6.474	8,051	1,948	1.887
$\cdots$$\sim$ $\sim$	.

*All businesses operated within Australia.

Internal revenue has been eliminated.

	Economic Entity		Chief Entity
	2004	2003	2004	2003
	$
Note 24 DIVIDENDS PAID AND
PROPOSED
5% Cumulative Preference	NIL	NIL	NIL	NIL
A preference dividend was last paid for
the half year ended 31 st March 1987.
Adjusted Franking Account Balance	464.439	53.798	267.420	66.051

The directors intention at this stage is to apply amounts in franking credits to dividends paid for ordinary shares even when paid in the future. The balance of the above Franking Account will remain unchanged following the current vear results as the Group has not generated a taxable income for this period.

Note 25 REMUNERATION OF DIRECTORS AND EXECUTIVES

Income received or due and receivable by all directors of each entity in the Economic Entity from all entities in the Economic Entity and any related bodies corporate:$620.605 (2003 $474.254), including superannuation as disclosed below.

Income received or due and receivable by all directors of the Chief Entity from the Chief Entity and any related bodies corporate $498,606 (2003 $474.254) including superannuation as disclosed below.

Number of Chief Entity Directors whose income from the Chief Entity and related bodies corporate was within the following bands: $\overline{a}$ $\sim$

	2004	2003
$$10,000 - $19,999$
$190,000 - $199,999
$200,000 - $209,999
$260,000 - $269,999
$280,000 - $289,999

Retirement and Superannuation payments paid on retirement from office or to prescribed superannuation funds for the provision of retirement benefits of Directors of the Chief Entity : $115,202 (2003 - $96,978)

The names of Chief entity directors who have held office during the financial year:

Mr Delwyn Garland Rees	Mr Richard Rees		Mr. Geoffrey Ernest Nanscawen
		Economic Entity		Chief Entity
		2004	2003	2004	2003
		$	$	$	$
Note 26 AUDITORS REMUNERATION
Amount received or due and receivable by the Chief
Entity Auditors for:
- Auditing the accounts		24,500	23,000	8,575	8,050
- Other services
		24,500	23,000	8,575	8,050
Note 27 CAPITAL AND LEASING EQUIPMENT
(a) Finance leasing Commitments
Payable
- not later than one year		473,494	455,678	473,494	455,678
- later than one year and not later than five years		836,783	1,082,892	836,783	1,082,892
Minimum lease payments		1,310,277	1,538,570	1,310,277	1,538,570
Less future finance charges		122,848	177,664	122,848	177,664
Total finance lease liability		1,187,429	1,360,906	1,187,429	1,360,906
Represented by:
Current liability	Note 13	398,014	367,251	398,014	367,251
Non-current liability	Note 16	789,415	993,655	789,415	993,655
(b) Hire purchase commitments
Payable
- not later than one year		58,283	58,283	58,283	58,283
- later than one year and not later than five years		24,285	82,568	24,285	82,568
Minimum hire purchase payments		82,568	140,851	82,568	140,851
Less future finance charges		4,476	11,798	4,476	11,798
Total hire purchase liability		78,092	129,053	78,092	129,053
Represented by:
Current liability	Note 13	54,375	50,962	54,375	50,962
Non-current liability	Note 16	23,717	78,091	23,717	78,091

	Economic Entity		Chief Entity
	2004	2003	2004	2003
	S		æ.	$
Note 28 STANDBY ARRANGEMENTS AND
UNUSED CREDIT FACILITIES
Standby arrangements with banks to provide funds
and support facilities
Credit facility	5,850,000	6,350,000	5,850,000	6,350,000
Amount Utilised	1,265,520	2,389,959	1,265,520	2,389,959
Unused credit facility	4,584,480	3,960,041	4,584,480	3,960,041
The major facilities are as follows:

Lease Facilities $3,000,000 (2003 $3,000,000)

Commercial Bill Facility

$2,000,000 (2003 $2,500,000) variable interest rate facility provided by an Australian bank. As at 30 September 2004

SNIL (2003 $900,000) was utilised.

Banking Overdrafts - Bank overdraft facilities are arranged with an Australian bank with the general terms and conditions being set and agreed to from time to time.

Finance will be provided under all facilities provided the company and the economic entity have not breached any borrowing requirements and the required financial ratios are met.

Note 29 SUPERANNUATION COMMITMENTS

Sietel Ltd, Cook's Body Works Pty Ltd and Aqua-Max Pty Ltd each sponsor a Colonial Select Superannuation plan and other industry based superannuation plans for their respective employees. The benefits are the accumulation of contributions by the employer and if applicable the employees which become available on retirement, death or total and permanent disability. Contributions are made in accordance with the Superannuation Guarantee Charge Act. The relevant company has a legal obligation to contribute to its superannuation fund in accordance with relevant requirements of the Superannuation Guarantee legislation. Sietel Ltd also has another fund called the Senior Staff Superannuation fund where the benefits are the accumulation of contributions by the employer and if applicable the employees which become payable on retirement, death or total and permanent disability. Contributions are at the discretion of the employer or the employee.

	Economic Entity2004$	2003$	Chief Entity2004S	2003$
Note 30 RELATED PARTY TRANSACTIONSTransactions between related parties are on normalcommercial terms and conditions unless otherwisestated.(a) Transactions with directors and director-relatedentities -
- Motor vehicles are leased by the Chief Entity fromMr. R. Rees	12,000	14,000	12,000	14,000
- Consulting fees are paid to a company of which Mr.D. G. Rees is a Director for financial and managementservices provided.- Directors of entities within the economic entity areable to receive goods and services at discountedprices and participate in field testing of new products.(b) Controlling entities	10,500	10,500	10,500	10,500
- Personnel charges by Chief Entity to:
Cooks Body Works Pty Ltd			310,800	254,400
Aqua-Max Pty Ltd			1,049,496	856,545
Interest Received:
Cooks Body Works Pty Ltd			50,000	50,000
Aqua-Max Pty Ltd
Rent received from premises for:
Cooks Body Works Pty Ltd			120,000	120,000
Aqua-Max Pty Ltd			393,048	453,048
Lease rentals for plant :
Cook's Body Works Pty Ltd			78,645	60,000
Aqua-Max Pty Ltd			505,841	553,742
Data Processing:
Aqua-Max Pty Ltd			40,000	20,000
Equipment rental:
Aqua-Max Pty Ltd			60,000	80,000
Increase in provision for doubtful debts in Cooks Body				250,000
Works Pty Ltd
-Guarantees and Indemnities given by Chief Entity to
controlled entities banker for facilities:
Cooks Body Works Pty Ltd	50,000	50,000	50,000	50,000
Aqua-Max Pty Ltd	100,000	100,000	100,000	100,000
- Guarantees and Indemnities given by ControlledEntity to Chief Entity's banker for facilities:Directors acquired 41,300 ordinary shares in Sietel	3,750,000	3,750,000	3,750,000	3,750,000

Ltd, the Chief Entity. Directors sold 0 ordinary shares.

	Economic Entity2004$	2003$	Chief Entity2004$	2003$
Note 31 NOTES TO THE STATEMENT OF CASHFLOWS(i) Reconciliation of Cash
For the purpose of the statement of cash flowscash includes:
(a) Cash on hand and at call deposits with banks orfinancial institutions
(b) Investments in money market instruments with lessthan 14 days to maturity
Cash at the end of the year is shown in the balance
sheet as:Cash on handBank overdrafts	917,881	1,901,250	131,779	43,641
- Secured
- Unsecured
(ii) Reconciliation of cash flows from operations	917,881	1,901,250	131,779	43,641
with Operating Profit after Income Tax
Operating Profit after Income Tax	1,304,204	1,089,861	370,073	1,852,551
Cash flows in Operating Profit attributable to Non-Operating activities
Dividends Received	(1,500)	(1,560)	(750)	(780)
Non-cash flows in Operating Profit
- Amortisation	173,030	250,360
- Depreciation	1,920,842	1,637,431	912,602	973,342
- Bad Debts
- Income TaxCharges to provisions	(202, 967)	21,783	92,561	(182, 711)
- tax	(464, 439)	(53,798)	(267, 420)	(66,051)
- employee entitlements	(10, 983)	425,534	40,712	140,950
(Profit)/Loss on sale of Plant and Equipment	(2,000)	(20, 695)	(2,000)	(8,800)
(Profit)/Loss on sale of Investments	(181, 430)		(181, 430)
Changes in assets and liabilities
(Increase)/Decrease trade debtors	(218, 362)	(232, 520)	60,875	45,113
(Increase)/Decrease in pre-payments	15,021	12,309	15,583	12,668
(Increase)/Decrease in inventories	(277, 781)	(898, 951)
Increase/(Decrease) in trade creditors	(14, 362)	663,180	(34, 350)	73,160
(iii) Net cash provided by operating activities	2,039,273	2,892,934	1,006,456	2,839,442
the statement of cash flows should be read inconjunction with Note 28- Standby Arrangements andUnused Credit Facilities
		Economic Entity20042003
Note 32 EARNINGS PER SHARE
Basic earnings per share (cents per share)There were NIL options on issue at the end of the year. Options that		16.28	13.61
were on issue expired February 2002. (2003 NIL)Diluted earnings per share (cents per share)		16.13	13.48
The weighted average number of ordinary shares on issue used in thecalculation of basic earnings per share.		8,007,479	8,007,479
Basic EPS = Profit/loss for the period x $100%$ = 1,304,204 x 100%No. of ordinary securities8,007,479	$= 16.28$
Diluted EPS = $\frac{\text{Profit/loss for the period}}{x}$ + 100% = 1,304,204 x 100%No. of ordinary securities8,007,479+75,000	$= 16.13$

$+$ Preference securities

Note 33 FINANCIAL INSTRUMENTS

(a) Significant Accounting Policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which revenues and expenses are recognised. In respect of each class of financial asset. financial liability and equity instrument are disclosed in note 1 to the accounts.

(b) Significant Terms and Conditions more model all

Cap interest Rate Option Agreement
Contracts	Principal Amount	Cap Rate	Maturity Date	Premíum Amount
10 JAN 2001	2,500,000	7.00% PA	9 AUGUST 2005	44.200
(c) Interest Rate Risk
		The following details the economic entity's exposure to interest rate risk as at the reporting date.
	2004	2004	2003	2003
	Average	Total	Average	Total
	Interest		Interest
	Rate %	$	Rate %	$
Financial Assets
Trade receivables (net)		1.658.048		1.413.884
Other receivables		89.476		35,369
Cash	$2.2,$	917,881	2.0	1,901,250
		2.665.405		3.350.503
Financial Liabilities
Trade Payables		2,158,052		2,036,778
Lease liabilities	7.0	1,187,429	7.5	1,360,906
Other liabilities		1,924,607		3,011,205
Employee entitlements		1,294,544		1,305,526
		6,564,632		7,714,415

(d) Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the economic entity. The economic entity has adopted the policy of only dealing with creditworthyounterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The economic entity measures credit risk on a fair value basis.

(e) Net Fair Value

The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective net fair values, determined in accordance with the accounting policies disclosed in note 1 to the accounts.

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Correspondence:	ASX Perpetual RegistrarsLocked Bag A14Sydney South NSW 1232
Website:	www.pitcherregistries.com.au; Share Enquiries

Note 34 ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

For the reporting period beginning on or after 1 January 2005. Sietel Limited must comply with International Financial Reporting Standards (IFRS) as issued by the Australian Accounting Standards Board. This requires the production of accounting data for future comparative purposes at the beginning of the next financial year.

The economic entity's management, along with its auditors, are assessing the significance of these changes and preparing for their implementation. This process involves identifying and evaluating the key differences in accounting policies and the effect on the consolidated entity's financial performance and financial position. We will seek to keep stakeholders informed as to the impact of these new standards as they are finalised.

The directors are of the opinion that the key differences in the economic entity's accounting policies which will arise from the adoption of International Financial Reporting Standards are:

Research and Development Expenditure

Pending standard AASB 138: Intangible Assets further requires that costs associated with research bexpensed in the period in which they are incurred. In terms of current policy, research costs are capitalised to the statement of financial position where it is expected beyond any reasonable doubt that sufficient future benefits will be derived so as to recover these deferred costs.

Impairment of Assets

The economic entity currently determines the recoverable amount of an asset on the basis oundiscounted net cash flows that will be received from the assets use and subsequent disposal. In terms of pending AASB 136: Impairment of Assets, the recoverable amount of an asset will be determined as the higher of fair value less costs to sell and value in use. It is likely that this change in accounting policy will lead to impairments being recognised more often than under the existing policy.

Goodwill on Consolidation

Under the proposed changes to the IAS 22: Business Combinations, goodwill is to be capitalised to the statement of financial position and subjected to an annual impairment test. Amortisation of goodwill is to be prohibited. Current accounting policy of the entity is to amortise goodwill on astraight line basis over the period of 20 years.

Employee Benefits - Defined Benefit Superannuation Plan

The economic entity does not record, as an asset or a liability, the difference between the defined benefit superannuation plan's accrued benefits and the net market value of the plan's assets. In terms of the Australian equivalent to IAS 19; Employee benefits, the entity will be required to recognise actuarial gains and losses relating to such plans in the statement of financial performance as they arise.

Non-current Investments

Under the pending AASB 139: Financial Instruments: Recognition and measurement, financial instruments that are classified as available for sale instruments must be carried at fair value. Unrealised gains or losses may be recognised either in income or directly to equity. Current accounting policy is to measure non-current investments at cost, with an annual review by directors to ensure that the carrying amounts are not in excess of the recoverable value of the instrument.

Income Tax

Currently, the economic entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on the accounting profit adjusted for any permanent differences. Timing differences are currently brought to account as either a provision for deferred income tax or future income tax benefit. Under the Australian equivalent to IAS 12, the economic entity will be required to adopt a balance sheet approach under which temporary differences are identified for each asset and liability rather than the effects of the timing and permanent differences between taxable income and accounting profit.

Converting Preference Shares

The economic entity has converting cumulative preferenceshares which are currently accounted for partly as equity. Under pending AASB 132, entities that have issued hybrid financial instruments, currently classified as equity, may be required to classify those instruments as debt depending on the terms and conditions of the instruments.

Derivative Financial Instruments

The economic entity does not currently recognise derivative financial instruments in the financial statements. Pending AASB 139: Financial Instruments: Recognition and Measurement will require a change to the method of accounting for derivative financial instruments and hedging activities so that they are recorded in the financial statements.

STATEMENT IN COMPLIANCE WITH AUSTRALIAN ASSOCIATED STOCK EXCHANGES LISTING REQUIREMENTS.

DIRECTORS' INTEREST IN ORDINARY SHARES AS AT 30TH SEPTEMBER 2004

Director	Ordinary Shares inname of Director	Ordinary shares in whichDirectors
		may have relevant interest
D. G. Rees	28.237	5,141,756
R.Rees	467.461	5.865.401

Substantial Shareholders

Triple Two Investments Ptv. Ltd., Lyntina Ptv. Ltd., Delvest Ptv. Ltd. and The Three Pumpkins Ptv. Ltd. of Suite 3, 15 Tintern Avenue Toorak are shown in the Substantial Shareholder Register as holding 2,310,891; 689,000; 652,000 and 560,000 Ordinary shares respectively.

20 Largest Shareholders at 30th September 2004

The twenty largest Ordinary Shareholders of the Company held 6,885,724 Ordinary Shares representing 86% of the voting shares of the Company. The twenty largest preference Shareholders of the Company held 71,300 Preference Shares which attract votes on the basis of four for each $2 Preference Share held while there are Dividends in arrears as is the present situation.

List of the twenty largest Shareholders for each class of Shares have been supplied to The Stock Exchange of Melbourne Limited.

Directors

There were no loans to Directors during the financial year nor do any loans to Directors exist. The Company has not entered into any service agreement with any Director or with a Company in which a Director has a direct or indirect interest, except for a service and option agreement with the Managing Director, lease of a motor vehicle and supply of motor vehicles. There is no contingent liability or termination under this agreement.

Distribution of Shareholding as at 30th September 2004

	Number of Shareholders	Number of Shares Held
Ord	Pref
320	45	Up to $1,000$
196	з	1,001 to 5,000
21		5,001 to 10,000
38		10,001 and over

The number of shareholders holding less than marketable parcels is: 320 Ordinary 45 Preference

SIETEL LIMITED

A.B.N. 75 004 217 734 Registered Office: 463-467 Warrigal Road, Moorabbin 3189

FORM OF PROXY

I/We
of
Being a member of Sietel Limited and entitled to
HEREBY APPOINT
of

or failing him the Chairman of the Meeting as my/our proxy vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held at 11.00 am on the 20th January 2005 and at the adjournment thereof.

Should you desire to direct your proxy how to vote please complete the following section of this form by inserting X in the appropriate boxes. If you do not direct your proxy on any item he will vote on it as he thinks fit or may abstain from voting.

I/WE INSTRUCT MY/OUR PROXY TO VOTE AS INDICATED BELOW IN RESPECT OF:-

	FUK.	AGAINST
Adoption of Reports and Accounts
Election of a Director - Mr. D. G. Rees
As witness on this
Signature

A member entitled to attend and vote is entitled to appoint not more than two proxies. Where a member appoints more than one proxy, each proxy must be appointed a specified portion of the members voting rights. A proxy need not be a member of the Company. To be effective Proxies and any Power of Attorney under which a Proxy may be signed must be lodged at the company's registered office, 463-467 Warrigal Road, Moorabbin, not less than 48 hours before the time for holding the Meeting. A proxy executed by a Corporation must be under seal. In accordance with the Company Constitution, Preference Shareholders are entitled to vote at the Annual General Meeting and are entitled to four votes for each share held.

SIETEL LIMITED SHAREHOLDER RANKING PREFERENCE SHARES AS AT 30 SEPTEMBER 2004

NUMBER	NAME	RANKING	NO. OFSHARESHELD	$%$ OFSHARESHELD
10001	WINPAR HOLDINGS LIMITED	1	16,300	21.73
10055	OPAL MAX PTY LTD	$\overline{2}$	15,100	20.13
4370	ELKINGTON, DR GORDON BRADLEY	3	11,500	15.33
4380	ELKINGTON , MILLY	4	11,500	15.33
30036	LYNTINA PTY LTD	$\overline{5}$	5,300	7.07
7650	LEAVER GRAHAM ALLAN	6	4,800	6.40
1119	ALITON PTY LTD	7	1,600	2.13
4800	FLINT GRACE LAMOND	$\overline{8}$	1,200	1.60
7655	LEAVER, GRAHAM ALAN AND	$\overline{9}$	500	0.67
8355	MANNERIM PTY LTD	10	500	0.67
8380	MARSHALL EST. OF THE LATE GUY	11	500	0.67
3480	CROFTON HENRY EDWARDS MELVILLE	12	400	0.53
8430	MARTINDALE MARJORIE HILDA	13	300	0.40
11515	ROSS DORIS ISABEL	14	300	0.40
30027	BRENTALL, GWENDOLINE	15	300	0.40
30108	KENEALLY, SUZANNE DENISE	16	300	0.40
30109	MORTLOCK, PATRICIA GAIL	17	300	0.40
2110	BODLE MARY CATHERINE	18	200	0.27
2538	BROWN, PATRICIA FLORENCE EMILY	19	200	0.27
4930	FOWLES HERBERT ALEXANDER	20	200	0.27

SIETEL LIMITED SHAREHOLDER RANKING ORDINARY SHARES AS AT 30 SEPTEMBER 2004

NUMBER	NAME	RANKING	NO. OFSHARESHELD	$%$ OFSHARESHELD
13180	TRIPLE TWO INVESTMENTS PTY LTD	1	2,271,666	28.37
8018	LYNTINA PTY LTD	$\overline{2}$	689,000	8.60
3790	DELVEST PTY LTD	3	590,000	7.37
30034	THE THREE PUMPKINS PTY LTD	4	560,000	6.99
30016	MERBEN PTY LTD	5	425,050	5.31
11170	REES RICHARD	6	353,800	4.42
12100	SIDERFIN HOLDINGS PTY LTD	7	337,250	4.21
9170	METASOKOL PTY LTD	$\overline{8}$	333,000	4.16
4370	ELKINGTON, DR GORDON BRADLEY	9	313,200	3.91
30049	SIDERFIN HOLDINGS PTY LTD	10	219,645	2.74
9140	MERBEN PTY LTD	11	121,450	1.52
12104	SIDERFIN HOLDINGS PTY LTD	12	120,000	1.50
30015	REES RICHARD	13	111,661	1.39
9840	NIGHTINGALE JOHN KENNING	14	101,250	1.26
30021	MERBEN PTY LTD	15	68,865	$\overline{0.86}$
30120	PELZ, RALF	16	68,162	0.85
11090	REDEN INVESTMENTS PTY LTD	17	62,000	0.77
30024	DELVEST PTY LTD	18	62,000	0.77
30030	TRIPLE TWO INVESTMENTS PTY LTD	19	39,225	0.49
7770	LILLIE JAMES MOAR	20	38,500	0.48