SKS TECHNOLOGIES GROUP LIMITED — Interim / Quarterly Report 2011

Feb 20, 2011

Rules 4.2A.3 Appendix 4D

Half Year Report

Name of entitySTOKES (AUSTRALASIA) LIMITED
ABN or equivalent companyreference	Half yearly(tick)		Half year ended ('current period')
24 004 554 929		31 December 2010(Comparative period - 31 December 2009)
2. Results for announcement to the market
		31-Dec-2010	31-Dec-2009	Increase/(Decrease)	$\frac{1}{2}$
2.1 Income		7,917,664	8,693,834	(776, 170)	$-9%$
Profit (loss) for the period		(86, 272)	408,674	(494, 946)	$-121%$
Profit (loss) attributable to members of the parent		(86, 272)	408,674	(494, 946)	$-121%$
2.4 Amount of interim dividend / Final Dividend			No Dividend has been proposed
+Record date for determining entitlements to thedividend,		N/A
2.5 Brief explanation of any of the figures reported above necessary to enable the figures to be understood.
Refer to the Directors report in the Financial Report for the Half-Year ended 31 December 2010.

This financial report is all the half-year information provided to the Australian Stock Exchange under listing rule 4.2A. The report also satisfies the half-year reporting requirements of the Corporations Act 2001.

This half yearly financial report it is to be read in conjunction with the most recent annual financial report.

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NTA backing	Current period	PreviouscorrespondingPeriod
Net tangible asset backing per $+$ ordinary security	$0.46	$0.43

Control gained or lost over entities having material effect

4.1 Name of entity (or group of entities).

Dividends

• $5.1$ Date the dividend (distribution) is payable
• Details of individual and total dividends or distributions and $\sqrt{\frac{N}{A}}$ $5.2$ dividend or distribution payments.

1. The +dividend or distribution plans shown below are in operation.

N/A
The last date(s) for receipt of election notices for the $^+$ dividend ordistribution plans	N/A
7. Details of Associates / Joint Venture Holdings	N/A
8. Foreign Entities – accounting standards used to prepare report	N/A
9. Entities subject to review / audit dispute	N/A

$N/A$

$N/A$

STOKES (AUSTRALASIA) LIMITED ACN 24 004 554 929

and Controlled Entities

Condensed Half Year Financial Report

for the period ended 31 December 2010

CONTENTS

Directors' Report	$\mathbf{2}$
Auditor's Independence Declaration	5
Statement of Comprehensive Income	6
Statement of Financial Position	7
Statement of Cash Flows	8
Statement of Changes in Equity	9
Notes to Half Year Financial Statements	10
Directors' Declaration	16
Independent Auditor's Review Report	17

Directors' Report

The directors submit their report for the half-year ended 31 December 2010.

DIRECTORS

The names of the company's directors in office during the half-year and until the date of this report are set out below. Each of the directors was in office for this entire period, unless otherwise stated.

Ian P. Alexander, Chairman

Gordon B. Elkington, Secretary

William R. Stokes

David G. M. Welsh

REVIEW AND RESULTS OF OPERATIONS

As reported in the 2010 Annual Report the last guarter of the 2010 financial year was very challenging and such challenging trading conditions have continued for the six month period to 31 December 2010.

Sales of $7,917,664 were achieved for the period as compared to $8,693,834 for the previous corresponding period. As a result a loss of $86,272 was incurred for the period as compared to a profit of $408,674 for the previous corresponding period.

The decline in the trading result for the six month period to 31 December 2010 as compared to the previous corresponding period is mainly attributable to

• Decline in Sales $(i)$
• Reduction in margins in relation to the existing sales $(ii)$
• $(iii)$ Increase in labour costs as from 1 July 2010 following the wage freeze implemented during the 2010 financial vear.
• $(iv)$ Directors fees being paid for the six month period as compared to only one month being paid during the previous corresponding period.
• Legal costs being incurred as a result of the company taking steps to protect its trade mark $(v)$ and goodwill.

The above factors were partially offset by a reduction in interest costs.

DEBT MANAGEMENT

The company's existing relationship with Oxford Funding Pty Ltd (a member of the Bendigo and Adelaide Bank Group) for its ongoing financing requirements continues and is operating well within its limits.

The status of the company's gross borrowings is:

	31 December 2010	30 June 2010
Bank	650,978	392,152
Finance lease liabilities	2,818	7,912
Total	653,796	400,064
Cash to Hand	436,104	461,322
Net Cash (Debt)	(217, 692)	61,258

The company has maintained strong control over the working capital requirements of the business.

Directors' Report

EDIS PTY LIMITED

Edis Pty Limited became a wholly owned subsidiary on 1 December 2009. The trading performance of Edis Pty Ltd for the six month period to 31 December 2010 was in line with the expectations of the Directors.

STOKES CORE BUSINESS

The major business activity of Stokes is the wholesaling and distribution of appliance parts and industrial products. Other business activities include manufacturing, which operates to support the trading division with appliances and industrial elements, and the supply of badges and related consumer products.

STOKES MISSION

Stokes mission is to maximise the long term return to shareholders. We aim to achieve this by:

• Satisfying the needs of customers through the provision of goods and services on a competitive and professional basis.
• Empowering our employees and rewarding good performance.
• Acting with integrity and honesty in dealings both inside and outside the company. $\bullet$
• . Utilising the warehouse and its capacity as a logistics centre for other spare parts distributions.
• Creating a greater focus on industrial projects.

FUTURE EXPECTATIONS

The Directors expect continued challenging trading conditions for the rest of the financial year and this will be compounded following the resignation of a Stokes distributor in Victoria from 1 January 2011. Stokes management have been taking steps in recent months to:

• $(i)$ Broaden the current customer base.
• Broaden the current product offering in regard to both branded and generic products. $(ii)$
• Improve customer service. $(iii)$
• $(iv)$ Broaden the sourcing arrangements.
• $(v)$ Increase resourcing in regard to customer representation.

The results for the 2011 year will depend very much on the state of the economic conditions and consumer sentiment in the markets in which the company operates.

The directors are confident that the company is in a much better position on which it can meet the challenges arising from a very competitive market place than has been previously the case. This is a result of in no small part the implementation of the Business Review initiated in June 2009 and which is continuing to be progressively implemented.

ACKNOWLEGEMENT

The Directors would like to thank the Chief Executive Officer and staff for their ongoing efforts over the past six months despite challenging market conditions.

Directors' Report

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AUDITOR'S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration in relation to the review for the half-year is provided with this report on page 5.

Signed in accordance with a resolution of the directors.

P. Chezare

I. P. Alexander Chairman

Veain Stites

W. R. Stokes Director

Melbourne Date: 17 February 2011

Auditor's Independence Declaration to the Directors of Stokes (Australasia) Limited

In relation to our review of the financial statements of Stokes (Australasia) Limited and its controlled entities for the half year ended 31 December 2010, to the best of our knowledge and belief, there have been:

$(a)$ no contraventions of the independence requirements of the Corporations Act 2001 in relation to the review; and

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$(b)$ no contraventions of any applicable code of professional conduct in relation to the review.

UHY Pheine Norm

UHY Haines Norton Chartered Accountants

R.H. Hutton Partner

Melbourne

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Dated: 17 TH FEBRUARY 2011

Liability limited by a scheme approved under Professional Standards Legislation. Level 8, 607 Bourke Street Chartered Accountants: $+61396294700$ ABN 48 259 373 375 Melbourne, Vic 3000 $f$ + 61 3 9629 4722 Harold Lourie Adam G Roberts e mail@melb.uhyhn.com.au Richard J Lindner GPO Box 1735 Joelia F Gould Melbourne, Vic, 3001 w www.uhyhn.com.au Rodney H Hutton An association of independent firms throughout Australia and a member of UHY, an international association of independent accounting and consulting firms

Consolidated Statement of Comprehensive Income

FOR HALF-YEAR ENDED 31 DECEMBER 2010	Notes	CONSOLIDATED
		December2010	December2009
INCOME	$\overline{2}$	7,917,664	8,693,834
COST OF SALES		(5,048,328)	5,619,042
GROSS PROFIT		2,869,336	3,074,792
OTHER INCOME		30,704	27,161
EXPENSES		(2,986,312)	(2,636,305)
PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE		(86, 272)	465,648
INCOME TAX EXPENSE			(56, 974)
PROFIT/(LOSS) FOR THE PERIOD		(86, 272)	408,674
OTHER COMPREHENSIVE INCOME FOR THE PERIOD
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		(86, 272)	408,674
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Members of Stokes (Australasia) LimitedNon-Controlling Interests		86,272	408,674
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		(86, 272)	408,674
Basic earnings per share (cents per share)		(1.2)	5.6
Diluted earnings per share (cents per share)		(1.2)	5.6

Consolidated Statement of Financial Position

AS AT 31 DECEMBER 2010	CONSOLIDATED
	December2010	June2010
CURRENT ASSETS
Cash and cash equivalents	436,104	461,322
Trade and other receivables	1.958,278	2,087,613
Inventories	3,613,455	3,207,283
Other	90,276	52,666
TOTAL CURRENT ASSETS	6,098,113	5,808,884
NON-CURRENT ASSETS
Goodwill	25,001	25,001
Plant and equipment	256.130	299,615
TOTAL NON-CURRENT ASSETS	281,131	324,616
TOTAL ASSETS	6,379,244	6,133,500
CURRENT LIABILITIES
Trade and other payables	1,402,974	1,370,790
Interest-bearing loans and borrowings	653,796	400,064
Income tax payable	31,437	31,437
Provisions	839,098	827,039
TOTAL CURRENT LIABILITIES	2,927,305	2,629,330
NON-CURRENT LIABILITIES
Provisions	85,505	51,464
TOTAL NON-CURRENT LIABILITIES	85,505	51,464
TOTAL LIABILITIES	3,012,810	2,680,794
NET ASSETS	3,366,434	3,452,706
EQUITY
Total parent entity interest in equity	6,208,884	6,208,884
Accumulated losses	(2,842,450)	(2,756,178)
TOTAL EQUITY	3,366.434	3,452,706

Consolidated Statement of Cash Flows

HALF-YEAR ENDED 31 DECEMBER 2010	CONSOLIDATED
	December2010	December2009
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers	8,834,403	8,910,600
Payments to suppliers and employees	(8,785,870)	(8, 185, 610)
Interest received	3,966
Interest paid	(22, 188)	(58, 708)
Goods and Services tax paid	(296, 313)
NET CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES	(266, 002)	666,282
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for Subsidiary		(175,000)
Acquisition of fixed assets	(12, 948)	(34, 292)
Proceeds from sale of plant and equipment		986
NET CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES	(12, 948)	(208, 306)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of Shares		144,339
Finance lease Payments	(5,094)
Increase / (Repayments) of borrowings	258.826	(551, 659)
NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES	253,732	(407, 320)
NET INCREASE / (DECREASE) IN CASH HELD	(25, 218)	50,656
Cash and cash equivalents at beginning of period	461,322	198,854
CASH AND CASH EQUIVALENTS AT END OF PERIOD	436,104	249,510

Reconciliation of cash

For the purpose of the Cash Flow Statement, cash and cash equivalents comprise the following as at 31 December 2010:

Cash at bank and in hand

249,510 436,104

Consolidated Statement of Changes in Equity

HALF YEAR ENDED 31 DECEMBER 2009

HALF TEAR ENDED 31 DECEMBER 2009	Attributable to equity holders of theNotesparent			NonControllinginterest	Total equity
CONSOLIDATED	Issuedcapital	Retainedearnings	Otherreserves	Total
At 1 July 2009	6.064.546	(3,493,265)	Ξ.	2,571,281	148,524	2,719,805
Profit attributable to membersof the Parent Entity	$\bullet$	408.674	×.	408,674		408,674
Non Controlling interestsacquired		(1, 476)	÷,	(1, 476)	(148, 524)	(150,000)
Share issue during the period	144,338		$\blacksquare$	144,338		144,338
At 31 December 2009	6,208,884	(3,086,067)		3.122.817		3,122,817

HALF YEAR ENDED 31 DECEMBER 2010

.	Notes	Attributable to equity holders of theparent			NonControllinginterest	Total equity
CONSOLIDATED	Issuedcapital	Retainedearnings	Otherreserves	Total
At 1 July 2010	6,208,884	(2,756,178)	٠	3,452,706	э	3,452,706
Profit attributable to membersof the Parent Entity	$\blacksquare$	(86, 272)	$\hat{\phantom{a}}$	(86, 272)	$\overline{\phantom{a}}$	(86, 272)
Non Controlling interestsacquired				$\tilde{\phantom{a}}$	C.
Share issue during the period				٠
At 31 December 2010	6,208,884	(2,842,450)	۰	3.366.434		3.366,434

Notes to the Half-Year Financial Statements

31 DECEMBER 2010

BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT $\mathbf{1}$

The half-year financial statements do not include all notes of the type normally included within the annual financial statements and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial statements.

The half-year financial statements should be read in conjunction with the annual financial statements of Stokes (Australasia) Limited for the year ended 30 June 2011.

It is also recommended that the half-year financial statements be considered together with any public announcements made by Stokes (Australasia) Limited and its controlled entities during the half-year ended 31 December 2010 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

Basis of accounting $(a)$

The half-year financial statements are general-purpose financial statements, which have been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards, including AASB 134: Interim Financial Reporting, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board.

The half-year financial statements have been prepared in accordance with the historical cost convention.

For the purpose of preparing the half-year financial statements, the half-year has been treated as a discrete reporting period.

$(b)$ Statement of significant accounting policies

The half year consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2010.

Basis of consolidation $(c)$

The consolidated financial statements for the half-year ended 31 December 2010 comprise the financial statements of Stokes (Australasia) Limited and its subsidiaries, Stokes Investments Pty Limited and Edis Pty Limited ('the Group'). Edis Pty Ltd became a 100% owned subsidiary of Stokes on 1 December 2009.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

In preparing the financial statements, all intercompany balances and transactions, income and expenses and profits and losses resulting from intra-group transactions have been eliminated in full.

Notes to the Half-Year Financial Statements

31 DECEMBER 2010

Going concern basis of accounting $(d)$

The financial statements have been prepared in accordance with generally accepted accounting principles which are based on the entity continuing as a going concern.

The entity has reached an agreement with Oxford Funding Pty Ltd (a member of the Bendigo and Adelaide Bank Group) for its ongoing financing requirements.

The ability to continue as a going concern is dependent on the continuing financial support of our new financier Oxford Funding Pty Limited and the ongoing profitability of the Group.

$(e)$ Financial Risk Management

The consolidated entity's financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements for the year ended 30 June 2010.

$(f)$ Operating Segments

From 1 July 2009, operating segments are identified and segment information disclosed on the basis of internal reports that are requiarly provided to, or reviewed by the Board of Directors. In this regard, such information is provided using different measures to those used in preparing the statement of comprehensive income and the statement of financial position. Reconciliations of such management information to the statutory information contained in the interim report have been included.

	CONSOLIDATED
	December2010	December2009
MATERIAL ITEMS OF INCOME AND EXPENSE$2-$
Profit /(loss) before income tax expense includes the followingincome and expenses whose disclosure is relevant in explaining thefinancial performance of the entity:
Income(i)
Revenue from services or sale of goods	7,917,664	8,693,834
Other Income(ii)
Sundry Income	30,704	27,161
(iii)Expenses
Finance costs	22,188	93,708
Depreciation and amortisation	56,433	82,933
Employee benefits	1,858,310	1,681,983
Operating lease expense	290,993	228,944
Slow moving stock	(45, 736)	(155, 109)

Notes continued

31 DECEMBER 2010

3. CONTINGENT ASSETS AND LIABILITIES

Since the last annual reporting date, there has been no material change in any contingent assets and liabilities.

4. OPERATING SEGMENTS

identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources.

The Group is managed on the basis of products category and service offerings. Operating segments are therefore determined on the same basis

Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics.

Types of services by segments are manufacturing and appliance parts.

Assets and liabilities of the entity are used across all of the above operating segments and are not identified and allocated to each operating segment.

Notes continued

31 DECEMBER 2010

(a) SEGMENTS PERFORMANCE

	Manufacturing	Merchandising/Distribution	All othersegments	Total
	$	S	S	$
December 2010
Revenue
External sales	1,601,551	6,312,147		7,913,698
Inter-segment sales	172,500	115,205		287,705
Interest Revenue		3,966		3,966
Total segment revenue	1,774,051	6,431,318	٠	8,205,369
Reconciliation of segment revenue
to group revenue
Inter-segment elimination	(172, 500)	(115,205)		(287, 705)
Total group revenue	1,601,551	6,316,113	÷,	7,917,664
Segment net profit before tax	162,045	390,406		552,451
Reconciliation of segment result togroup net profit before tax
Amounts not included in segment resultbut reviewed by Board
- Other			(638, 723)	(638, 723)
Net profit before tax from continuingoperations	162,045	390,406	(638, 723)	(86, 272)
	Manufacturing	Merchandising/Distribution	All othersegments	Total
	$	$	s	$
December 2009
Revenue
External sales	1,725,422	6,968,412		8,693,834
Inter-segment sales	131,890	57,603		189,493
Interest Revenue
Total segment revenue	1,857,312	7,026,015	$\overline{a}$	8,883,327
Reconciliation of segment revenue
to group revenue
Inter-segment elimination
Total group revenue	(131, 890)1,725,422	(57,603)6,968,412	$\blacksquare$	(189, 493)8,693,834
Segment net profit before tax	193,510	895,278		1,088,788
Reconciliation of segment result togroup net profit before tax
Amounts not included in segment resultbut reviewed by Board
- OtherNet profit before tax from continuing			(623, 140)	(623, 140)

Notes continued

31 DECEMBER 2010

(b) SEGMENT ASSETS

	Manufacturing	Merchandising/Distribution	All othersegments	Total
	$	$	$	$
December 2010Segment asset increases for the period
- Capital expenditure	÷.	10,837	56,878	67,715
Segment assets	2,146,726	4,370,886		6,517,612
Reconciliation of segment assets togroup assets
Inter-segment eliminationsUnallocated assets:		(196, 979)	۰	(196, 979)
- Fixed assets	$\blacksquare$		33,610	33,610
- Intangibles		25,001		25,001
Total group assets	2,146,726	4,198,908	33,610	6,379,244

	Manufacturing$	Merchandising/DistributionS	All othersegments5	Total$
December 2009
Segment asset increases for the period
- Capital expenditureAcquisition	2,771	31,521		34,292
- Investment in Edis Pty Ltd		175,000		175,000
	2,771	206,521		209,292
Segment assets	2,001,315	4,252,797		6,254,112
Reconciliation of segment assets togroup assets
Inter-segment eliminationsUnallocated assets:		(181, 923)		(181, 923)
- Fixed assets			36,310	36,310
- Intangibles		25,001		25,001
Total group assets	2,001,315	4,095,875	36,310	6,133,500

Notes continued

31 DECEMBER 2010

SEGMENT LIABILITIES $(c)$

	Manufacturing$	Merchandising/Distribution$	All othersegments	TotalS
December 2010				2,447,722
Segment liabilitiesReconciliation of segment liabilities	725,768	1,721,954
to group liabilities
Inter-segment eliminations		(196, 979)		(196, 979)
Unallocated liabilities:
- Other financial liabilities			650,978	650,978
- Current liabilities		31,437	79,652	111,089
Total group liabilities	725,768	1,556,412	730,630	3,012,810
December 2009
Segment liabilitiesReconciliation of segment liabilitiesto group liabilities	611,998	1,427,994		2,039,992
Inter-segment eliminationsUnallocated liabilities:		(181, 923)		(181, 923)
- Other financial liabilities			684,295	684,295
- Deferred tax liabilities		56,974		56,974
- Current liabilities			81,456	81,456
Total group liabilities	611,998	1,303,045	765,751	2,680,794

CONSOLIDATED
AS AT	AS AT
31 Dec 2010	30 June 2010

5. DIVIDENDS PAID OR PROVIDED FOR ON ORDINARY SHARES

There were no dividends proposed or recognised during the half-year ended 31 December 2010.

6. ADDITIONAL INFORMATION

Issued and paid up capital 7,239,177 7,239,177 $(a)$

7. SUBSEQUENT EVENTS

There were no subsequent events to report.

Directors' Declaration

In accordance with a resolution of the directors of Stokes (Australasia) Limited, we state that:

In the opinion of the directors:

• the financial statements and notes of the consolidated entity: $(a)$
  • give a true and fair view of the financial position as at 31 December 2010 and $(i)$ the performance for the half-year ended on that date of the consolidated entity; and
  • comply with the Accounting Standard AASB 134 Interim Financial Reporting $(ii)$ and the Corporations Regulations 2001; and
• there are reasonable grounds to believe that the company will be able to pay its debts $(b)$ as and when they become due and payable.

On behalf of the Board

Ule and

I. P. Alexander Chairman

· Stites R. Stokes Director

Date: 17 February 2011

INDEPENDENT AUDITOR'S REVIEW REPORT

TO THE MEMBERS OF STOKES (AUSTRALASIA) LIMITED

Report on the half-year financial statements

We have reviewed the accompanying half-year financial statements of Stokes (Australasia) Limited and the entities it controlled during the half year, which comprise the statement of financial position as at 31 December 2010, and the statement of comprehensive income. statement of changes in equity and statement of cash flows for the half-year ended on that date. other selected explanatory notes and the directors' declaration.

Directors' responsibility for the half-year financial statements

The directors of the company are responsible for the preparation of the half-year financial statements that give a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 200 and for such control as the directors determine is necessary to enable the preparation of the half-year financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

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

SOLLUIONS

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

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001 which has been given to the directors of Stokes (Australasia) Limited. would be in the same terms if given to the directors as at the time of this auditor's report.

Level 8, 607 Bourke Street	$t + 61396294700$	Chartered Accountants:	ABN 48 259 373 375
Melbourne, Vic 3000	$f$ + 61 3 9629 4722	Harold Lourie	Adam G Roberts
GPO Box 1735	mail@melb.uhyhn.com.au	Richard J Lindner	Joella F Gould
Melbourne, Vic. 3001	w www.uhyhn.com.au	Rodney H Hutton

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial statements of Stokes (Australasia) Limited and the entities it controlled during the half year, is not in accordance with:

• a. the Corporations Act 2001, including:
  • (i) giving a true and fair view of the consolidated entity's financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and
  • (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
• other mandatory financial reporting requirements in Australia. $b$

UHY Hacker Non

UHY Haines Norton Chartered Accountants

R.H. Hutton Partner

Melbourne

Dated: 17 February 2011

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