ComOps Limited - 2008 Annual Report by ComOps

COMPANY PARTICULARS

ComOps Limited ABN 79 000 648 082 The Company’s shares are quoted on the official list of the Australian Securities Exchange Limited The Company’s ASX code is “COM”

Directors

Geoffrey Charles WILD AM non-executive chairman Richard Edward BRADLEY managing director Graham Richard LIBBESSON non-executive director Stuart Matthew CLARK finance director Cameron Arthur BROWN sales & marketing director Andrew Jake ROBERTS client services director

Secretary

Stuart Matthew CLARK

Registered Office and Head Office Level 6, 77 Pacific Highway North Sydney NSW 2060 Telephone 1300 853 099 Facsimile (02) 9923 8099

Web Address

www.comops.com.au

Share Registry

Computershare Investor Services Pty Limited Level 3, 60 Carrington Street Sydney NSW 2000 Telephone 1300 850 505 Facsimile (02) 8235 8150

Auditors

RSM Bird Cameron Chartered Accountants Level 12, 60 Castlereagh Street Sydney NSW 2000

Bankers

Bendigo Bank Fountain Court, Bendigo VIC 3550 St George Bank Level 12, 55 Market Street Sydney NSW 2000

Solicitors

Truman Hoyle Level 11, 68 Pitt Street Sydney NSW 2000

01 ANNUAL REPORT 2008

CONTENTS

1 3 4-12 13 14-15

COMPANY PARTICULARS LETTER FROM THE CHAIRMAN DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION INDEPENDENT AUDIT REPORT

DIRECTORS’ DECLARATION

INCOME STATEMENT

BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CASH FLOW STATEMENT

21-50

NOTES TO THE FINANCIAL STATEMENTS

51-53

CORPORATE GOVERNANCE STATEMENT

SECURITIES EXCHANGE INFORMATION

TOP 20 SHAREHOLDERS

ENCLOSED

NOTICE OF ANNUAL GENERAL MEETING

ENCLOSED

PROXY FORM

Annual general meeting

The 2009 annual general meeting of the members of ComOps Limited will be held at the North Sydney Harbourview Hotel, 17 Blue Street, North Sydney on Tuesday 26 May 2009 at 11am. A formal notice of meeting is enclosed together with a proxy form for those members unable to attend but who wish to vote on the resolutions to be considered at the meeting.

ANNUAL REPORT 2008 02

LETTER FROM THE CHAIRMAN

Dear shareholder, 2008 was a significant year for your Company. In the period ending December 31 our revenues reached $17.8 million. This was a massive increase from our $12.9 million result in 2007... up by 38%. Clearly, our investment in Human Capital Solutions Group Pty Ltd, Microster Solutions Pty Ltd and Australian Workplace Software Pty Ltd has enabled us to reap the rewards which we envisaged when we were contemplating these acquisitions. And whilst the effort and investment in amalgamating these three new entities into the Group has taken longer than originally contemplated, we are pleased at how well they are individually performing. We have every confidence that their profit contribution will continue to increase in the years ahead, particularly as the benefits from synergies are realised. As to the year ahead, we are cautiously optimistic. The current economic crisis is, of course, very worrying but at the time of writing this letter to shareholders, the ComOps Group continues to perform well. We will be monitoring our position carefully. One of the most heartening aspects of your Company is the management team we have now established. The acquisition of the three new Companies to the Group has enabled us to add significant support to our founder and CEO, Richard Bradley, who has done a wonderful job not only in leading the acquisitions but bedding down the new Companies in the Group. As I have observed in previous years, our performance during both the strong and lean periods would not have been possible without Richardâ&#x20AC;&#x2122;s leadership and funding. My grateful thanks go also to my fellow non-executive director, Graham Libbesson for his continuing contribution and wise counsel. Finally, my sincere thanks yet again to our dedicated staff, many of whom have been with the Company for decades. And, to my fellow shareholders; we deeply appreciate your continuing commitment and support. Yours sincerely

Geoffrey C Wild AM Chairman 31 March 2009

03 ANNUAL REPORT 2008

DIRECTOR’S REPORT

The directors of ComOps Limited submit herewith the annual financial report for the year ended 31 December 2008. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: The names and particulars of the directors of the Company during or since the end of the financial year are: Back from left: Cameron Brown, Andrew Roberts, Stuart Clark Front from left: Richard Bradley, Geoffrey Wild AM, Graham Libbesson

Mr Geoffrey C Wild AM (non-executive chairman)

Geoffrey is chairman of WPP Holdings (Australia) including related entities. He is also deputy chairman of Arab Bank Australia and a director of Ibisworld Business Information, oOh! Media, Thomas Bryson International and the PGA (Professional Golf Association). He has previously been vice president and a director of the Sydney 2000 Olympic Bid Company and the chairman of the NSW Tourism Commission. He is a Fellow of the Australian Institute of Company Directors and a Fellow of the Advertising Institute of Australia. Mr Wild was awarded the Order of Australia (member of general division) in June 2000. Mr Wild is the chairman of the Company’s remuneration and nomination committee. He is also a member of the Company’s audit committee.

Mr Richard E Bradley (managing director)

Richard founded the ComOps business in 1972 and has been involved in all aspects of the Company’s development. He has had extensive business dealings with the IT industry over a 40 year period which includes holding a number of positions on advisory boards. His prior and current directorships include a number of private and unlisted public companies. He is a fellow of the Australian Institute of Company Directors.

Mr Graham R Libbesson (non-executive director)

Graham is a chartered accountant, and is a director of eServGlobal Limited (ASX and AIM) and chairman of East Coast Minerals NL (ASX) and various private software companies. Graham has extensive involvement in the IT industry through various directorships and consulting roles. He is a retired managing partner and a senior tax partner of a large firm of chartered accountants. His 32 years of experience as a chartered accountant and tax advisor, strong background in corporate law and governance and operational experience in the IT industry bring expertise in all areas of the Company’s activities and commercial transactions. Graham holds a Bachelor of Laws and a Bachelor of Commerce from the University of New South Wales. He is a member of the Institute of Chartered Accountants in Australia (ACA). He is chairman of the Company’s audit committee and a member of the remuneration and nomination committee.

Mr Stuart M Clark (finance director)

Stuart is ComOps chief financial officer, company secretary and a member of the board of directors. With 25 years commercial, finance and management experience as well as seasoned capabilities in human resources, project management and change management, he brings strong operational skills to the ComOps team. Stuart has held senior finance roles for both public and private companies including Nudie Foods, Global Television, Hoyts and the Walt Disney Company. He holds a Bachelor of Commerce and is a member of the Institute of Chartered Accountants.

Mr Cameron A Brown (sales & marketing director)

Cameron is a seasoned business executive with over 20 years experience in the IT industry in Australia, New Zealand, Asia Pacific, Japan and the United States. He has extensive commercial experience in business aggregation, acquisition integrations, business analysis/ strategy, sales, marketing, professional services operations and general management. Prior to joining ComOps he has held senior leadership roles with industry heavyweights such as Peoplesoft, Siebel Systems, DACG, Tracker Software and Saba Software. He is a member of the Australian Institute of Company Directors.

Mr Andrew J Roberts (client services director)

Andrew founded Human Capital Solutions Group Pty Ltd and was the only shareholder until ComOps Limited purchased the company in November 2007. As part of the conditions of purchase, Andrew was to be appointed to the ComOps Limited Board at the next General Meeting of shareholders and was appointed to the Board at the 2008 Annual General Meeting held on 21 May 2008. Andrew brings to the Board a wealth of commercial knowledge, especially in the field of information technology.

Mr Kim D Redstall (business development director)

Kim was appointed to the Board in December 2007. He was responsible for the investigation and negotiation with the owners of potential companies targeted by ComOps. Kim brought to the Board 20 years of IT experience in a range of private and public companies. In addition to founding several start-ups, he held a variety of sales, management and consulting roles in various IT business in both Australia and New Zealand. Kim is a member of the Australian Institute of Company Directors. Mr Redstall retired as a director on the 25 August 2008.

ANNUAL REPORT 2008 04

DIRECTOR’S REPORT

Directorships of other listed companies Directorships of other locally and internationally listed companies held by directors in the 3 years immediately before the end of the financial year are as follows:

Name

Company

Period of directorship

Mr Geoffrey C Wild AM

WPP Holdings (Australia) Arab Bank Australia oOh! Media

1996-current 1996-current 2007-current

Mr Graham R Libbesson

eServglobal Limited East Coast Minerals NL

2003-current 2007-current

Company secretary

Review of Operations

Mr Stuart M Clark Stuart is the chief financial officer and a director of ComOps Limited. He was appointed company secretary on 26 September 2007. Mr Clark is a commerce graduate from the University of New South Wales and a member of the Institute of Chartered Accountants.

During the year ended 31 December 2008 the Company continued to strengthen its performance in all areas, improving revenue, profit before income tax and net profit after income tax, resulting in a significant growth when compared with the same period last year. The amalgamation of the three Companies purchased at the end of the 2007 financial year and during 2008 incurred a great deal of management time and additional expenditure, but we are pleased to report that the period of amalgamation is now behind us with the total group fully integrated and performing strongly.

Former Partners of the Audit Firm None of the officers of the Company were a partner in the auditor of the Company at any time prior to or during the financial year.

Principal Activities The consolidated entity’s principal activities during the course of the financial year were continuing to license the six software products owned and developed by the consolidated entity, plus the amalgamation of the new businesses purchased in late 2007 and during 2008. The consolidated entity also continued providing professional and support services to new and existing customers. During the financial year ComOps Limited purchased the business of Australian Workplace Software Pty Ltd and Microster Pty Ltd, both Companies fall under the business pillar of Human Capital Management.

Revenue Profit before Income Tax Income Tax Expense Net Profit after Income Tax

05 ANNUAL REPORT 2008

2009 has all the markings of remaining strong, and providing that the world wide economic crisis does not adversely affect our market place, we are cautiously optimistic that ComOps will experience another year of growth. The ComOps Group’s results for the year ending 31 December 2009 will be the first year that a full year’s trading generated by each of the new subsidiaries will be included. The Directors are pleased to report that for the year ending 31 December 2008 Revenues grew 38% from $12.92 million to $17.77 million. Profit before Taxation grew 9% from $3.19 million to $3.47 million and Profit after Taxation grew 9% from $2.31 million to $2.52 million.

Year ended 31 December 2008 $,000

Year ended 31 December 2007 $,000

Percentage increase $,000 %

17,766 3,470 955 2,515

12,921 3,190 883 2,306

38 9 8 9

DIRECTOR’S REPORT

ComOps has now entered its 37th year as an IT specialist, the last nine of which have been as a publicly listed company on the Australian Securities Exchange. ComOps’ principal objective has always been to form value added business partnerships with each and every customer, by providing a competitive advantage through the delivery of products and services of the finest quality, utilising the most advanced technologies. The Company’s new strategic plan as detailed in the 2007 Annual Report was to build ComOps’ size and scale by progressively acquiring a portfolio of quality technology companies and growing their sales revenues and profits for the benefit of all stakeholders. The ComOps Group has moved forward with this strategic plan successfully integrating during 2008, the company and business of Human Capital Solutions Group Pty Ltd, and the businesses of Australian Workplace Software Pty Ltd and Microster Solutions Pty Ltd. To help achieve this objective, ComOps continually monitors the quality of not only its own activities but also its suppliers and associates. The Company is now endorsed under the 9001:2008 Quality Standard which requires two independent audits a year and remains a Government Endorsed Supplier.

20,000

18,000

16,000

14,000

12,000

8,000

6,000

4,000

2,000

2004

Revenue

2005

2006

2007

NPbT

2008

NPaT

ComOps has many partners with the two most significant being Microsoft and Progress Software. During the year the Company continued as a Gold Certified Partner with Microsoft, the highest level offered, and also increased the number of competencies achieved to 9. The Company also remains a Premier Partner with Progress.

Advanced Infrastructure Solutions Custom Development Solutions Data Management Solutions ISV Software Solutions Mobility Solutions

Networking Infrastructure Solutions Security Solutions SOA and Business Process Solutions Business Intelligence Solutions

Corporate Structure The ComOps Group now consists of a number of wholly owned operating subsidiaries as detailed below. As part of this new structure, a range of functions have been centralised within the holding company, ComOps Limited, to provide a more efficient level of resource utilisation across the group:

ANNUAL REPORT 2008 06

DIRECTORâ&#x20AC;&#x2122;S REPORT

Branch Structure The Companies operate through the ComOps Group Branch Infrastructure. Each Branch is connected via the ComOps international network, allowing voice and video conferencing communication through the internet.

Pune, India

Melbourne, Australia Sydney, Australia Brisbane, Australia Newcastle, Australia Auckland, New Zealand

Business Pillars and Product Families The ComOps Group of products are marketed under a number of Business Pillars:

Business Solutions

Development

07 ANNUAL REPORT 2008

Human Capital Management

DIRECTOR’S REPORT

Divisional Structure

Revenue for the period was earned through ComOps’ 4 Divisions across 9 product families as follows:

Product family BMS Unibis SAM e-Com BI UniBorne HCS Microster AWS

2008 %

2007 %

8 18 11 2 9 9 25 *16 *2

12 25 10 7 14 10 22 nil nil

100

*It should be noted that Microster was only a member of the Group for 7 months and AWS for 4 months. The addition of HCS, Microster and AWS to the group in 2007 and 2008 has had the effect of lowering the percentage participation of the traditional product families. Research and development has continued during the year in line with the Company’s objective of ensuring the continuing delivery of products to our customers of the finest quality, utilising the most advanced technologies. ComOps’ Group installed base customers have continued to support the Company during 2008 and a significant number of new names have been added to the list of ComOps’ clients.

The ComOps Group also operates through 4 Divisions each of which is managed by a member of the ComOps Group Executive Team. These Divisions are: Solutions Marketing is responsible for generating sales revenue from the licensing of the ComOps Group’s software applications, plus the sale of other third party hardware and software products. Professional Services provides consulting, training, implementation, content development and facilities management services to ComOps Group customers, and has grown significantly during the year. The installed base customers provided the backbone of Professional Services revenue. Customer Support provides ongoing technical assistance and software support to ComOps Group customers. This division is also responsible for the ongoing research and development of all new and existing products. Revenue flows to this division from annual maintenance contracts representing approximately 20% of the original software licence fees which are indexed to the Consumer Price Index. Application Hosting enables organisations to save time and money by outsourcing application hosting. HCS’s state of the art hosting environments are secure, fast and easily accessible. The division also manages applications and installs patches and upgrades. Revenue for the year was earned through the ComOps Group’s operational Divisions as follows:

Division Solutions Marketing Professional Services Customer Support Application Hosting

2008 %

2007 %

15 40 40 5

18 43 35 4

100

ANNUAL REPORT 2008 08

DIRECTOR’S REPORT

Changes in State of Affairs During the financial year there was no significant change in the state of affairs of the consolidated entity other than that referred to in the financial statements or the notes thereto.

Subsequent Events Other than the matter referred to in note 34 of the financial statements, there has not been any matter or circumstance that has arisen since the end of the financial year that has significantly affected, or may significantly effect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future years.

Future Developments Disclosure of information regarding likely developments in the operations of the consolidated entity in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the consolidated entity. Accordingly, apart from the statements in the preceding review of operations, this information has not been disclosed in this report.

Dividends In respect of the financial year ended 31 December 2008 the directors do not recommend the payment of a dividend. No dividends were paid during the year in respect of the financial year ended 31 December 2007.

Share Options Directors’ Option Plan No options have been issued to directors during 2008, however details regarding options issued to directors in the prior year are as follows: 100,000 options were issued to Mr Geoffrey C Wild AM on 12 December 2007. The options were issued under the Directors’ Option Plan and were exercisable at 20 cents each. These options expired on 31 December 2008. The options were issued subsequent to a review of Mr Wild’s total remuneration by the remuneration and nomination committee. 200,000 options were issued to Mr Graham R Libbesson on 12 December 2007. The options were issued under the Directors’ Option Plan and are exercisable at 20 cents each. These options will expire on 31 December 2010. The options were issued pursuant to the negotiated agreement the Company entered into upon Mr Libbesson’s appointment as a director. The options were valued based on the Black Scholes model and were recognised as an expense in the year of issue. Employees’ Option Scheme No options were issued to employees during 2008 and there are nil on issue as at 31 December 2008.

09 ANNUAL REPORT 2008

Indemnification of Officers and Auditors In May 2008 the Company entered into a contract insuring the directors and officers of the Company against liabilities incurred by such a director or officer to the extent permitted by the Corporations Act 2001. The insurance cover is effective from May 2008 for a period of 13 months. The aggregate amount of such insurance cover is $10,000,000. Under the provisions of the constitution of the Company, to the extent permitted by law, each officer of the Company is indemnified by the Company against liability incurred to another person (other than the Company or a related body corporate) except where the liability arises out of conduct involving a lack of good faith. Accordingly, each officer of the Company is indemnified against any liability for costs and expenses incurred by the officer in defending proceedings, whether civil or criminal, in which judgement is given in favour of the officer or in which the officer is acquitted, or in connection with an application in relation to such proceedings in which the court grants relief to the officer under the Corporations Act 2001. 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’S REPORT

Directors’ meetings The following table sets out the number of directors’ meetings (including meetings of sub-committees of directors) held during the financial year, and the number of meetings attended by each director (while they were a director or committee member). During the financial year, 12 board meetings, 3 audit sub-committee meetings and 4 remuneration and nomination sub-committee meetings were held.

Board meetings

Director

Geoffrey C Wild AM Richard E Bradley* Graham R Libbesson Stuart M Clark* Andrew J Roberts Kim D Redstall Cameron A Brown

Audit sub-committee meetings

Remuneration and nomination sub-committee meetings

held

attended

held

attended

held

attended

12 12 12 12 7 7 12

3 3 3 3 -

2 3 3 3 -

4 4 4 4 -

4 4 4 2 -

*Mr R E Bradley and Mr S M Clark attended the audit sub-committee and remuneration and nomination sub-committee meetings during the year by invitation.

Directors’ Shareholdings The following table sets out each director’s relevant interest in shares and options over unissued shares of the Company as at the date of this report:

Director

Geoffrey C Wild AM Richard E Bradley Graham R Libbesson Andrew J Roberts Cameron A Brown

Fully Paid Ordinary Shares

Directors’ Option Plan Options

305,000 36,328,504 200,000 15,031,921 243,000

200,000 -

Remuneration Report Remuneration policy for directors and executives: The board of directors has established a remuneration and nomination committee to review the remuneration packages of all directors and executive officers on an annual basis and to make recommendations to the board of directors. Remuneration of the executive directors is determined by the non-executive directors. Remuneration packages are reviewed with due regard to performance and other relevant factors.

ANNUAL REPORT 2008 10

DIRECTOR’S REPORT

The directors’ details of ComOps Limited during the year were: Geoffrey C Wild (chairman, non-executive director) Richard E Bradley (managing director) Graham R Libbesson (non-executive director) Stuart M Clark (finance director) Cameron A Brown (sales & marketing director) Kim D Redstall (business development director) resigned 25/08/2008 Andrew J Roberts (client services director) appointed 19/06/2008

Elements of director and executive remuneration Remuneration packages contain the following key elements: a) b) c) d)

Primary benefits-salary/fees, bonuses and non-monetary benefits including the provision of motor vehicle benefits; Post – employment benefits – including superannuation contributions; Equity – share options granted under the Employees’ Option Scheme and Directors’ Option Plan; and Other benefits

The executives’ details of ComOps Limited during the year were: Mary F Clarke (managing director-ComOps Solutions) Andrew J Roberts (managing director-HCS) Stuart M Clark (chief financial officer) resigned Kim D Redstall (business development GM) Cameron A Brown (sales & marketing GM) Michael J Bowman (R&D manager-Microster) appointed Phillip J Walker (sales director-Microster) appointed Moshe D Woods (managing director-AWS) appointed appointed Peter S Morris (client services director-AWS) Michael W Panosh (branch manager-Melbourne) appointed Mark P Heard (branch manager-Auckland) appointed

The following table discloses the remuneration of the directors of the Company and the executives who represent the key management of the consolidated entity. 25/08/2008 02/06/2008 02/06/2008 01/09/2008 01/09/2008 13/10/2008 13/10/2008

Short term benefits 2008 Remuneration (i)

Post-employment benefits

Share based payments Equity options

Total

Salary & fees

Non-monetary

Other

Superannuation

60,000 338,860 40,000 176,236 192,172 188,622 202,250 28,978 26,244 41,154 43,419 124,001 36,697 34,258

7,710 7,710 7,710 7,710 904 895 1,947 1,947

5,000 15,600 27,125 89,290 2,659

61,140 68,764 18,465 17,094 18,203 2,362 60,929 57,318 9,077 3,303 3,083

60,000 407,710 40,000 257,710 233,947 232,841 228,163 29,882 29,501 102,083 100,737 222,368 41,947 41,947

1,532,891

36,533

139,674

319,738

2,028,836

Geoffrey C Wild AM Richard E Bradley Graham R Libbesson Mary F Clarke Andrew J Roberts Cameron A Brown Stuart M Clark Mark P Heard Michael W Panosh Michael J Bowman Phillip J Walker Kim D Redstall Moshe D Woods Peter S Morris Total

(i) For the purpose of the above disclosure, “executive” is defined as an individual who is responsible for planning, directing and controlling the activities of the entity directly or indirectly. (ii) Included in the category of “other” for Mr Redstall is a $67,790 termination payment.

11 ANNUAL REPORT 2008

DIRECTOR’S REPORT

Short term benefits 2007 Remuneration (i) Geoffrey C Wild AM Richard E Bradley John Bowie Wilson Graham R Libbesson Mary F Clarke Andrew J Roberts Cameron A Brown Kim D Redstall Harmeet S Lamba Luis A Munoz Anthony J Hittmann Vivian G Makila Jeffrey N Rimington Robert D Ayris Gerald J Ardu Stuart M Clark Peter M Scown Total

Share based payments Equity options

Total

Salary & fees

Non-monetary

Other

Superannuation

60,000 251,034 25,000 13,334 156,076 125,000 105,500 111,000 112,385 112,385 45,164 119,175 118,596 104,445 134,773 78,205 61,200

7,416 7,416 7,416 2,170 17,431 11,462 3,800 3,698 2,854 3,487

11,306 2,879 -

45,186 10,000 57,435 6,565 6,565 6,565 10,115 10,115 3,824 73,045 13,674 12,950 11,263 7,038 -

10,646 29,437 -

70,646 303,636 25,000 52,771 232,233 131,565 112,065 117,565 122,500 129,916 54,037 209,651 143,732 121,195 149,734 88,097 64,687

1,733,272

67,150

14,185

274,340

40,083

2,129,030

Elements of remuneration related to performance The entire component of the 2008 salaries for the executive group was at an agreed annual rate. However, during the year monthly performance reviews were undertaken by the managing director of each subsidiary with each of their key managers. The five major performance elements reviewed each month and submitted to the board of directors for their review were: (a) (b) (c) (d) (e)

Post-employment benefits

revenue; staff utilisations (and costs); profit and cash flow; quality; and customer satisfaction

The salaries for the key management personnel are determined annually and are linked to their performance and their contribution to the above-mentioned 5 major elements, as well as the overall results for the group. Service contracts for key management personnel As per the Company constitution, one-third of the directors (excluding the managing director) stand for re-election at each annual general meeting. The executives have in place standard contracts with the Company which allow either party to give between 7 days and 3 months notice to terminate the contract of employment.

Executives There have been nil options issued to employees during the financial year. Non-audit Services The directors are satisfied that the provision of non-audit services during the year by the auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. Details of the amount paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in note 6 to the financial statements. Auditor’s Independence Declaration The auditor’s independence declaration is included on page 13. Signed in accordance with a resolution of the directors made pursuant to section 298(2) of the Corporations Act 2001. On behalf of the directors

Geoffrey C Wild AM Director

Value of options issued to directors and executives Directors There have been nil options issued to directors during the financial year, however, the remuneration and nomination committee agreed that a recommendation will be made to the shareholders to issue 200,000 options to Mr Stuart Clark. As this recommendation is subject to the approval of the shareholders at the 2009 annual general meeting, the options have not been recognised as an expense in 2008. The options if approved will be exercisable at the average closing price for the last 5 days prior to the date of the relevant remuneration and nomination committee meeting. The relevant meeting was held on 30 September 2008 and therefore the proposed exercise price is 12.8 cents. It is proposed that the options will vest 3 years from 30 September 2008 and be exercisable from the vesting date.

Richard E Bradley Director Sydney 31 March 2009

ANNUAL REPORT 2008 12

Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +6 2 9233 8933 F +61 2 9233 8521 www.rsmi.com.au

AUDITORâ&#x20AC;&#x2122;S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Comops Limited for the year ended 31 December 2008, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i)

the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

(ii)

any applicable code of professional conduct in relation to the audit.

RSM BIRD CAMERON PARTNERS Chartered Accountants

C J Hume Partner Sydney, NSW Dated: 31 March 2009

Liability limited by a scheme approved under Professional Standards Legislation

Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms.

Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +6 2 9233 8933 F +61 2 9233 8521 www.rsmi.com.au

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF Report on the Financial Report

COMOPS LIMITED

We have audited the accompanying financial report of ComOps Limited (“the company”), which comprises the balance sheet as at 31 December 2008, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors' declaration 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. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

E:\MMD\JOBS\_PRINZ\COMOPS\Content\Email Audit Report.doc

Liability limited by a scheme approved under Professional Standards Legislation

Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms.

Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s Opinion In our opinion: (a) the financial report of ComOps Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the company's and consolidated entity’s financial position as at 31 December 2008 and of their performance for the year ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Report on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the financial year ended 31 December 2008. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Auditor’s Opinion In our opinion the Remuneration Report of ComOps Limited for the financial year ended 31 December 2008 complies with section 300A of the Corporations Act 2001. [

RSM BIRD CAMERON PARTNERS Chartered Accountants

Sydney, NSW Dated: 31 March 2009

E:\MMD\JOBS\_PRINZ\COMOPS\Content\Email Audit Report.doc

C J Hume Partner

DIRECTORâ&#x20AC;&#x2122;S DECLARATION

The directors of the company declare that: 1.

The financial statements and notes, as set out on pages 17 to 50, are in accordance with the Corporations Act 2001 and:

a. comply with Accounting Standards and the Corporations Regulations 2001; and

b. give a true and fair view of the financial position as at 31 December 2008 and of the performance for the year ended on that date of the company and consolidated group;

The Chief Executive Officer and Chief Finance Officer have each declared that:

a. the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;

b. the financial statements and notes for the financial year comply with the Accounting Standards; and

c. the financial statements and notes for the financial year give a true and fair view;

In the directorsâ&#x20AC;&#x2122; opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Geoffrey C Wild AM Director

Richard E Bradley Director Sydney 31 March 2009

ANNUAL REPORT 2008 16

INCOME STATEMENT for the financial year ended 31 December 2008

Company

Consolidated 2008

2007

2008

2007

17,766,395

12,920,829

1,172,369

1,247,693

( 8,943,435) ( 1,616,494) (110,409) ( 80,022) ( 233,616) ( 644,636) ( 278,878) ( 141,722) ( 920,778) ( 452,493) ( 873,831)

(5,574,849) (1,347,049) (103,248) ( 28,930) 15,378 ( 648,709) ( 367,409) ( 105,530) ( 675,642) ( 256,687) ( 638,571)

(1,294,256) (414,220 ) (110,409 ) 1,639,033 (641,653 ) (166,230 ) (79,317) (66,615) (403,028 )

2(b)

3,470,081

3,189,583

(364,326 )

662,572

( 955,351)

(883,281)

109,298

( 198,772 )

Profit from continuing operations

2,514,730

2,306,302

( 255,028 )

463,800

Profit for the year

2,514,730

2,306,302

( 255,028 )

463,800

Profit attributable to members of the parent entity

2,514,730

2,306,302

( 255,028 )

463,800

2.2 2.2

4.3 4.3

Note

Revenue

2(a)

Employee benefits expense Consultantsâ&#x20AC;&#x2122; fees Directorsâ&#x20AC;&#x2122; fees Depreciation expense Bad debts expense Finance costs Communication expenses Corporate activity costs Occupancy expenses Travel expenses Other expenses

Profit before income tax Income tax (expense)/benefit

Earnings per share

Basic (cents per share) Diluted (cents per share)

29 29

Notes to the financial statements are included on pages 21 to 50

17 ANNUAL REPORT 2008

( 103,248 ) 31,440 ( 384,875 ) (94,455) (33,983)

BALANCE SHEET Balance Sheet as at 31 December 2008

Company

Consolidated 2008

2007

2008

2007

Note

31(a) 7 8 9 10

674,664 6,502,038 2,407,550 2,264,197 244,176

3,035,802 5,131,065 1,457,845 2,242,531 145,396

19 -

2,357,760 -

12,092,625

12,012,639

2,357,760

1,571,794 300,766 17,691,198 1,178,061 657,446 308,625

2,204,321 129,322 11,250,480 407,712 308,625

2,963,110 13,825,540 3,256 3,623,122 1,178,061 -

6,944,830 7,262,041 3,623,122 -

Total Non-Current Assets

21,707,890

14,300,460

21,593,089

17,829,993

Total Assets

33,800,515

26,313,099

21,593,108

20,187,753

2,750,091 848,472 331,093 1,922,294 1,207,086 2,055,624 2,205,904

1,413,830 244,083 500,000 1,271,830 742,572 1,698,530 1,290,943

600,000 331,093 2,160,624 -

500,000 1,698,530 -

11,320,564

7,161,788

3,091,717

2,198,530

1,273,852 273,003 209,147

2,281,143 187,778 139,346 318,241

1,251,701 -

2,281,143 187,778 -

1,756,002

2,926,508

1,251,701

2,468,921

Total Liabilities

13,076,566

10,088,296

4,343,418

4,667,451

Net Assets

20,723,949

16,224,803

17,249,690

15,520,302

23,305,095 ( 2,581,146)

21,320,679 ( 5,095,876)

23,305,093 ( 6,055,403)

21,320,677 (5,800,375 )

20,723,949

16,224,803

17,249,690

15,520,302

Current Assets Cash and cash equivalents Trade receivables Other receivables Work in progress Other

Total Current Assets Non-Current Assets Other receivables Other financial assets Property, plant and equipment Goodwill Software asset Deferred tax asset Other

Current Liabilities Trade and other payables Other payables to taxation authorities Income received in advance Borrowings Provisions Provision for income tax Unearned maintenance income

11 12 13 14 14 3 31(c)

15(a) 15(b) 16 17 18 3 19

Total Current Liabilities Non-Current Liabilities Borrowings Income received in advance Provisions Other

20 21 22 23

Total Non-Current Liabilities

Equity Issued capital Accumulated losses

Total Equity

25 26

Notes to the financial statements are included on pages 21 to 50

ANNUAL REPORT 2008 18

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the financial year ended 31 December 2008

Consolidated Issued capital - Ordinary

Retained earnings

Total

Shares issued during the year Profit attributable to members of parent entity

9,693,584 11,627,095 -

( 7,402,178 ) 2,306,302

2,291,406 11,627,095 2,306,302

Balance as at 31 December 2007

21,320,679

( 5,095,876 )

16,224,803

Balance as at 1 January 2008 Shares issued during the year Profit attributable to members of parent entity

21,320,679 1,984,416 -

( 5,095,876 ) 2,514,730

16,224,803 1,984,416 2,514,730

Balance as at 31 December 2008

23,305,095

( 2,581,146 )

20,723,949

Balance as at 1 January 2007

Company Issued capital - Ordinary

Retained earnings

Total

Shares issued during the year Profit attributable to members of parent entity Adjustment related to prior period receivable (note 26)

9,693,584 11,627,093 -

( 7,072,005 ) 463,800 807,830

2,621,579 11,627,093 463,800 807,830

Balance as at 31 December 2007

21,320,677

( 5,800,375 )

15,520,302

Balance as at 1 January 2008 Shares issued during the year Profit attributable to members of parent entity

21,320,677 1,984,416 -

( 5,800,375 ) ( 255,028 )

15,520,302 1,984,416 ( 255,028 )

Balance as at 31 December 2008

23,305,093

( 6,055,403 )

17,249,690

Balance as at 1 January 2007

Notes to the financial statements are included on pages 21 to 50

19 ANNUAL REPORT 2008

CASH FLOW STATEMENT for the financial year ended 31 December 2008

Company

Consolidated

Note

2008

2007

2008

2007

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest and other costs of finance paid Net cash (used in)/provided by operating activities

18,043,779 ( 15,594,429 ) 84,844 ( 275,681 )

12,047,102 ( 14,575,943 ) 37,471 ( 428,405 )

1,089,118 ( 3,267,802) 83,251 ( 274,871)

1,245,142 ( 726,737 ) 2,551 ( 397,295 )

31(e)

2,258,513

( 2,919,775 )

( 2,370,304)

123,661

31(b)

( 3,398,005 ) ( 44,304 ) ( 195,713 ) ( 268,117 ) -

( 3,500,000 ) 385,056 ( 71,653 ) ( 230,929 ) -

(3,398,005 ) 44,304 ( 268,117) 5,080,165

( 3,500,000 ) 385,056 ( 230,929 ) ( 2,486,457 )

( 3,906,139 )

( 3,417,526 )

1,369,739

( 5,832,330 )

643,664 ( 1,357,176 )

8,304,509 5,444,455 ( 4,410,706 )

( 1,357,176 )

8,304,509 4,172,626 ( 4,410,706 )

( 713,512 )

9,338,258

( 1,357,176 )

8,066,429

( 2,361,138 )

3,000,957

( 2,357,741 )

2,357,760

Cash flows from investing activities Payment for acquisition of business Cash held by business acquired Payments for plant and equipment Payments for other non-current assets (Advance to)/Payment from controlled entity Net cash (used in)/provided by investing activities

Cash flows from financing activities Proceeds from issue of shares Proceeds from borrowings Repayment of borrowings Net cash provided by/(used in) financing activities Net (decrease)/increase in cash held Cash at the beginning of the financial year Cash at the end of the financial year

31(a)

3,035,802

34,845

2,357,760

674,664

3,035,802

2,357,760

Notes to the financial statements are included on pages 21 to 50

ANNUAL REPORT 2008 20

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

1. SUMMARY OF ACCOUNTING POLICIES Adoption of new and revised Australian Accounting Standards In the current year, the Company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for annual reporting periods beginning on 1 January 2008.

New standards and interpretations issued but not yet effective At the date of this financial report the following standards and interpretations, which may impact the entity in the period of initial application, have been issued but are not yet effective:

Reference

Title

Summary

Application date

(financial years beginning)

Expected Impact

AASB 1004

Contributions (revised December 2007)

Relocates requirements on contributions from public sector standards AAS 27, AAS 29 and AAS 31

1 July 2008

Nil impact

AASB 2007-9

Amendments to Australian Accounting Standards arising from the review of AASs 27,29 and 31

Amends AASB 3, AASB 5, AASB 8, AASB 101, AASB114, AASB 116, AASB 127 and AASB 137 as a result of the review of AAS 27, AAS 29 and AAS 31 and relocation of the requirements of those standards.

1 July 2008

Nil impact

AASB 123

Borrowing Costs

Revised standard â&#x20AC;&#x201C; requires borrowing costs directly attributable to qualifying assets to be capitalised, where previously they could be immediately expensed.

1 January 2009

Nil impact

AASB 2007-6

Amendments to Australian Accounting Standards arising from AASB 123

Amends AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12 as a result of issue of AASB 123

1 January 2009

Nil impact

AASB 8

Segment Reporting

New standard which replaces AASB 114. Applies to listed entities only.

1 January 2009

Disclosures only

AASB 2007-3

Amendments to Australian Accounting Standards arising from AASB 8

Amends AASB 5, AASB 6, AASB 102, AASB 107, AASB 119, AASB 127, AASB 134, AASB 136, AASB 1023 & AASB 1038 as a result of issue of AASB 8

1 January 2009

Disclosures only

AASB 101

Presentation of Financial Statements

Revised standard â&#x20AC;&#x201C; amends disclosure requirements and format of financial statements

1 January 2009

Disclosures only

AASB 2007-8

Amendments to Australian Accounting Standards arising from AASB 101

Amends the majority of standards and Interpretations as a result of issue of AASB 101

1 January 2009

Disclosures only

21 ANNUAL REPORT 2008

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

1. SUMMARY OF ACCOUNTING POLICIES (continued) Reference

Title

Summary

Application date

Expected Impact

(financial years beginning)

AASB 2008-9

Amendments to AASB 1049 for Consistency with AASB 101

Amends AASB 1049 to reflect revised requirements of AASB 101 – applies to public sector (Whole of Government) entities only

1 January 2009

Disclosures only

AASB 2008-1

Amendments to Australian Accounting Standards Share Based Payments – Vesting Conditions and Cancellations

Amends AASB 2 to clarify requirements relating to vesting conditions and cancellations

1 January 2009

Nil impact

AASB 2008-2

Amendments to Australian Accounting Standards – Puttable Financial Instruments and Obligations Arising on Liquidation

Amends AASB 132, AASB 139, AASB 7, AASB 101 and Interpretation 2 to introduce an exception to the definition of financial liability for certain puttable financial instruments

1 January 2009

Nil impact

AASB 3

Business Combinations

Revised Standard

1 July 2009

May impact accounting for future acquisitions but nil impact on acquisitions made as at 31 December 2008

AASB 127

Consolidated and Separate Financial Statements

Revised Standard

1 July 2009

Nil impact

AASB 2008-3

Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127

Amends a number of standards and Interpretations as a result of the issue of AASB 3 and AASB 127

1 July 2009

May impact accounting for future acquisitions but nil impact on acquisitions made as at 31 December 2008

AASB 2008-7

Amendments to Australian Accounting Standards – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate [AASB 1, AASB 118, AASB 121, AASB 127 & AASB 136]

Amends a number of standards in relation to the cost of an investment in a subsidiary, jointly controlled entity or associate, including treatment of preacquisition dividends.

1 January 2009

May impact accounting for future acquisitions but nil impact on acquisitions made as at 31 December 2008

AASB 2008-8

Amendments to Australian Accounting Standards Eligible Hedged Items [AASB 139]

Amends AASB 139 to clarify how the principles that determine whether a hedged risk or portion of cash flows is eligible for designation as a hedged item, should be applied in particular situations.

1 July 2009

Nil impact

Interpretation 16

Hedges of a Net Investment in a Foreign Operation

This Interpretation provides guidance on accounting for the hedge of a net investment in a foreign operation in an entity’s consolidated financial statements.

1 October 2008

Nil impact

ANNUAL REPORT 2008 22

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

1. SUMMARY OF ACCOUNTING POLICIES (continued)

Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards, including Australian Accounting Interpretations, and complies with other requirements of the law, Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with the A-IFRS ensures that the consolidated financial statements and notes of the consolidated entity comply with International Financial Reporting Standards (‘IFRS’). The parent entity financial statements and notes also comply with IFRS.

Basis of preparation The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets and financial liabilities for which the fair basis of accounting has been applied. The following significant accounting policies, which are consistent with the prior year, have been adopted in the preparation and presentation of the financial report:

A Going concern The directors have prepared the financial statements on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business.

B Revenue recognition Sale of licences Revenue from the sale of software is recognised when the consolidated entity has transferred to the customer the significant risks and rewards of ownership of the goods. Rendering of services Revenue from a contract to provide installation or maintenance services that is separate from the sale of software is recognised by reference to the stage of completion of the contract. Royalties Royalty revenue from royalties is recognised on an accruals basis in accordance with the substance of the relevant agreement. Dividend and Interest revenue Dividend and Interest revenue is recognised on a receivable basis.

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

23 ANNUAL REPORT 2008

D Comparative amounts Comparative figures are, where appropriate, re-classified so as to be comparable with the figures presented for the current financial year.

E Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments, net of outstanding bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

F Provisions Provisions are recognised when the consolidated entity has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.

G Share-based payments Equity-settled share-based payments granted are measured at fair value at the date of grant. Fair value is measured by use of the Black Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the consolidated entity’s estimate of shares that will eventually vest.

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

1. SUMMARY OF ACCOUNTING POLICIES (continued)

H Property, plant and equipment Plant and equipment, leasehold improvements and equipment under finance lease are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition. Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. The following estimated useful lives are used in the calculation of depreciation. Leasehold improvements Plant and equipment Furniture and fittings Motor vehicles

6 years 2-5 years 5-10 years 4-7 years

I Employee benefits Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave and sick leave when it is probable that settlement will be required and they are capable of being measured reliably. Provisions made in respect of employee benefits, expected to be settled within the next 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Provisions made in respect of employee benefits 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 consolidated entity in respect of services provided by employees up to the reporting date. Contributions to defined contribution superannuation plans are expensed when incurred.

J Financial instruments issued by the consolidated entity Debt and equity instruments Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual agreement.

K Foreign currency All foreign currency transactions during the financial year have been brought to account using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate existing at that date. Exchange differences are brought to account in the profit or loss in the period in which they arise.

L Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (â&#x20AC;&#x153;GSTâ&#x20AC;?), except: i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or ii. for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

M Goodwill Goodwill, representing the excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities acquired, is recognised as an asset and not amortised, but tested for impairment annually and whenever there is an indication that the goodwill may be impaired. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.

N Financial assets Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs. Subsequent to initial recognition, investments in subsidiaries are measured at cost in the separate financial statements of the parent. Loans and receivables Trade receivables, loans and other receivables are recorded at amortised cost less impairment.

Interest and dividends Interest and dividends are classified as expenses or as distributions of profit consistent with the balance sheet classification of the related debt or equity instrument or component parts of compound instruments.

ANNUAL REPORT 2008 24

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

1. SUMMARY OF ACCOUNTING POLICIES (continued)

O Income tax Current tax Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable). Deferred tax Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items. In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the consolidated entity is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the consolidated entity expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company/ consolidated entity intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the period Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

25 ANNUAL REPORT 2008

Tax consolidation The Company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. ComOps Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the â&#x20AC;&#x2DC;separate taxpayer within groupâ&#x20AC;&#x2122; approach. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax-consolidated group are recognised by the Company (as head entity in the tax-consolidated group).

P Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in the profit and loss in the period in which they are incurred.

Q Leased assets Operating lease payments are recognised as an expense on a basis which reflects the pattern in which economic benefits from the leased assets are consumed. Lease incentives In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefits of incentives are recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

R Principles of consolidation The consolidated financial statements have been prepared by combining the financial statements of all the entities that comprise the consolidated entity, being the Company (the parent entity) and its controlled entities as defined in Australian Accounting Standard AASB 127: Consolidated and Separate Financial Statements. A list of subsidiaries appears in note 28 to the financial statements. Consistent accounting policies have been employed in the preparation and presentation of the consolidated financial statements. The consolidated financial statements include the information and results of each subsidiary from the date on which the Company obtains control and until such time as the Company ceases to control such entity. In preparing the consolidated financial statements, all inter-company balances and transactions, and unrealised profits arising within the consolidated entity are eliminated in full.

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

1. SUMMARY OF ACCOUNTING POLICIES (continued)

S Research and development costs Expenditure on research activities are recognised as an expense in the period in which it is incurred. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period as incurred. An intangible asset arising from the development (or from the development phase of an internal project) is recognised if, and only if, all of the following are demonstrated: • • • • • •

the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intention to complete the intangible asset and use or sell it; the ability to use or sell the intangible asset; how the intangible asset will generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and the ability to measure reliably the expenditure attributable to the intangible asset during its development.

T Significant Accounting Estimates Impairment of Assets At each reporting date, the consolidated entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the consolidated entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Impairment Test Components Discount rate % 2009 sales increase 2010 sales increase 2011-2013 sales increase Overhead growth Risk factor reduction Residual/exit value

Goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be impaired. An impairment of goodwill is not subsequently reversed. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase. The basic assumptions utilised with respect to the impairment of assets for each of the cashgenerating units (“CGU’s”) are as follows (refer note 14 also for discussion of CGU’s and impairment tests):

Unibis, BI, e-Com

HCS & Concentric

Microster

AWS

13.25% 5% 5% 5% 5% 5% 0%

13.25% 2009 budget 12% 15% 5% 5% 0%

13.25% 2009 budget 12% 15% 10% 5% 0%

The projected sales growth rate is based on the expected impact of the synergies and efficiencies arising from the integration of the recent acquisitions. Sensitivity Analysis for all CGU’s The above assumptions are utilised to arrive at a cash-flow estimate over five years which is then discounted to arrive at a net present value for each CGU. Overall the assumptions are considered conservative, particulary the decision to utilise a nil residual/exit value. However, should the actual cash generated result in net cash contribution less than indicated by the above assumptions, the carrying value of the cash generating units would need to be reduced. The following table indicates the extent to which the net cash flow can be reduced without impacting the carrying value:

Unibis, BI, e-Com

HCS & Concentric

Microster

AWS

46%

43%

25%

ANNUAL REPORT 2008 26

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

2. PROFIT FROM OPERATIONS

Company

Consolidated 2008

2007

2008

2007

2,733,992 14,949,153

2,490,284 10,401,738

17,683,145

12,892,022

83,250

28,807

83,251

2,551

1,089,118

1,245,142

17,766,395

12,920,829

1,172,369

1,247,693

17,766,395

12,920,829

1,172,369

1,247,693

433,018 211,618

263,834 384,875

430,035 211,618

384,875

644,636

648,709

641,653

384,875

80,022

28,930

233,616 -

( 15,378 ) -

(a) Revenue Revenue from continuing and discontinuing operations consisted of the following items: Sales revenue: Revenue from the sale of licences Revenue from the rendering of services

Interest revenue: Bank deposits Royalties

Attributable to: Continuing operations

(b) Profit before income tax Profit before income tax has been arrived at after charging the following (gains) and losses from continuing and discontinuing operations. The line items below combine amounts attributable to both continuing and discontinuing operations: Finance costs: Other entities Director and director-related entities

Depreciation of non-current assets Net bad and doubtful debts arising from: Other entities Related Entities

(1,639,033 )

( 31,440 ) -

Employee benefit expense: Post employment benefits: Defined contribution plans Other employee benefits Share-based payments: Equity-settled share-based payments

988,750 7,954,685

547,499 4,987,267

108,001 1,186,255

40,083

8,943,435

5,574,849

1,294,256

Operating lease rental expenses: Minimum lease payments

920,778

675,642

79,317

Research and development costs immediately expensed

1,120,903

1,115,135

27 ANNUAL REPORT 2008

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

3. INCOME TAX

Company

Consolidated 2008

2007

2008

2007

(a) Income tax recognised in profit or loss Tax (expense)/income comprises: Current tax expense Deferred tax expense relating to the origination and reversal of temporary differences

( 1,220,206)

( 919,066 )

109,298

( 198,772 )

249,735

35,785

15,120

Total tax (expense)/benefit

( 955,351)

( 883,281)

109,298

(198,772 )

Attributable to: Continuing operations Discontinued operations

( 955,351) -

( 883,281) -

109,298 -

(198,772 ) -

( 955,351)

( 883,281)

109,298

(198,772 )

3,470,081

3,189,583

( 364,326)

662,572

Profit from operations

3,470,081

3,189,583

( 364,326)

662,572

Income tax benefit/(expense) calculated at 30%

( 1,041,024)

( 956,875 )

109,298

(198,772 )

Non-deductible expenses

(13,498)

(10,042)

Other prior year adjustments

15,120

Research and development tax benefit

84,051

83,636

( 955,351)

( 883,281)

109,298

Tax payable related to current year trading Tax payable related to acquisitions

1,759,171 296,453

770,281 928,249

1,864,171 296,453

770,281 928,249

Income tax payable

2,055,624

1,698,530

2,160,624

1,698,530

657,446

407,712

657,446

407,712

Overâ&#x20AC;&#x201C;provision from prior periods

The prima facie income tax expense on pre-tax accounting profit reconciles to the income tax (expense)/benefit in the financial statements as follows: Profit/(loss) from continuing operations Profit/(loss) from discontinuing operations

(198,772 )

(b) Current tax assets and liabilities

ANNUAL REPORT 2008 28

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

3. INCOME TAX (continued) Taxable and deductible temporary differences arise from the following:

2008

Opening balance

Consolidated Charged to income

Closing balance

15,853 391,859

41,842 207,892

57,695 599,751

407,712

249,734

657,446

Gross deferred tax assets: Doubtful debts Provisions, accruals and lease incentives

Attributable to: Continuing operations Discontinued operations

657,446 657,446

Company

Consolidated 2008

2007

2008

2007

200,062

691,772

Unrecognised deferred tax balances The following deferred tax assets have not been brought to account as assets: Temporary differences â&#x20AC;&#x201C; capital

Tax consolidation Relevance of tax consolidation to the consolidated entity The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from 1 July 2003 and have therefore been taxed as a single entity from that date. The head entity within the tax-consolidated group is ComOps Limited. The members of the tax-consolidated group are identified at note 28. Nature of tax funding arrangements and tax sharing agreements Entities within the tax-consolidated group have entered into a tax funding agreement and a tax sharing agreement. ComOps Limited and each of the entities in the tax-consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-consolidated group.

29 ANNUAL REPORT 2008

The tax sharing agreement entered into between members of the tax-consolidated group provide for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote.

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

4. KEY MANAGEMENT PERSONNEL COMPENSATION Details of executives and non-executives The key management positions (executives and non-executives) of ComOps Limited during the year were: Geoffrey C Wild AM (chairman, non-executive director) Richard E Bradley (managing director) Graham R Libbesson (non-executive director) Stuart M Clark (finance director) Cameron A Brown (sales & marketing director) Kim D Redstall (business development director) resigned Andrew J Roberts (client services director) appointed Mary F Clarke (managing director-ComOps Solutions) Michael J Bowman (R & D manager-Microster) appointed Phillip J Walker (sales director-Microster) appointed Moshe D Woods (managing director-AWS) appointed Peter S Morris (client services director-AWS) appointed Michael W Panosh (branch manager Melbourne) appointed Mark P Heard (branch manager Auckland) appointed

25/08/2008 19/06/2008 02/06/2008 02/06/2008 01/09/2008 01/09/2008 13/10/2008 13/10/2008

Key management personnel compensation policy Remuneration packages are reviewed and determined with due regard to current market rates and are benchmarked against comparable industry salaries, adjusted by a performance factor to reflect changes in the performance of the Company.

Key management personnel compensation The aggregate compensation of the key management personnel of the consolidated entity is set out below:

Company

Consolidated

Short-term employee benefits Post-employment benefits Share-based payments

2008

2007

2008

2007

1,709,098 319,738 -

1,814,607 274,340 40,083

100,000 -

98,334 10,000 40,083

2,028,836

2,129,030

100,000

148,417

Directors’ Option Plan There have been nil options issued to directors during the financial year. The status with respect to the Directors Option Plan is as follows: 100,000 options were issued to Mr Geoffrey C Wild AM on 12 December, 2007. The options were issued under the Directors’ Option Plan and were exercisable at 20 cents each. These options expired on 31 December 2008. 200,000 options were issued to Mr Graham R Libbesson on 12 December 2007. The options were issued under the Directors’ Option Plan and are exercisable at 20 cents each. These options will expire on 31 December 2010. The options were valued, based on the Black Scholes model and were recognised as an expense in the year of issue. The remuneration and nomination committee agreed that a recommendation will be made to the shareholders to issue 200,000 options to Mr Stuart M Clark. As this recommendation is subject to the approval of the shareholders at the 2009 annual general meeting, the

options have not been recognised as an expense in 2008. The options if approved will be exercisable at the average closing price for the last 5 days prior to the date of the relevant remuneration and nomination committee meeting. The relevant meeting was held on 30 September 2008 and therefore the proposed exercise price is 12.8 cents. It is proposed that the options will vest 3 years from 30 September 2008 and be exercisable from the vesting date. Employees’ Option Scheme No options were issued to employees during 2008 and there are nil on issue as at 31 December 2008.

Service contracts for key management personnel As per the Company constitution, one-third of the directors and any directors (excluding the managing director) who have held office for 3 years or more, stand for re-election at each annual general meeting. The executives have in place standard contracts with the Company which allow either party to give between 7 days and 3 months notice to terminate the contract of employment.

ANNUAL REPORT 2008 30

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

5. EXECUTIVE SHARE OPTION PLAN Directors’ Option Plan

The Company has two ownership-based remuneration schemes for directors and employees. The following sets out the rules for each scheme.

Employees’ Option Scheme The Employees’ Option Scheme entitles the directors to offer employees of the Company (or any other member of the group) options to subscribe for shares in the Company at an exercise price being not less than the higher of the amount prescribed in the Listing Rules or the volume weighted average price of the shares in the Company trading on the ASX over the 5 trading days immediately prior to the date of offer. Options are offered to employees at the discretion of the board of directors from time to time following recommendations from the remuneration and nomination committee made on the basis of employee performance. The number of shares over which the options relate must not exceed 5% of the then total number of issued shares of the Company. The offer of options may be accepted by the employee or an associate of the employee being a close relative or a company controlled by the employee. Under the Employees’ Option Scheme, there are various limits on the exercise of the options if the employee ceases to be an employee of the Company or a member of the group, dies, becomes totally and permanently disabled, retires, ceases to be an eligible person, fails to comply in a material respect with the terms and conditions of the Employees’ Option Scheme or becomes an insolvent under administration. Subject to these qualifications, options may be exercised at any time from the date of their vesting to the date of their expiry. The options carry no rights to dividends and no voting rights. The Employees’ Option Scheme may be amended by the Company in general meeting.

2008 Number

2007 Number

Balance as at 1 January Granted during the financial year Exercised during the financial year Lapsed during the financial year

200,000 200,000 -

Balance on issue at end of the financial year

Employees’ Option Scheme

31 ANNUAL REPORT 2008

The board of directors can, at its discretion and in accordance with the Company’s Constitution, the Corporations Act 2001 and the ASX Listing Rules, issue options to directors to subscribe for shares on terms and conditions as determined by the board of directors from time to time. Directors (or companies controlled by the directors) have been, or are entitled to be, issued options to subscribe for ordinary shares in the capital of the Company under the Directors’ Option Plan. Options issued under the Directors’ Option Plan have certain conditions including staged vesting rights and continued involvement of directors with the Company for specified periods of time. The options carry no rights to dividends and no voting rights.

2008 Number

2007 Number

Balance as at 1 January Granted during the financial year Exercised during the financial year Lapsed during the financial year

300,000 100,000

300,000 -

Balance on issue at end of the financial year

200,000

300,000

Directors’ Option Plan

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

5. EXECUTIVE SHARE OPTION PLAN (continued) Share options issued by ComOps Limited to key management personnel

Balance 01/01/2008 Number

Exercised Number

Expired Number

Balance 31/12/2008 Number

Balance vested at 31/12/2008 Number

Vested but not exercisable Number

Vested and exercisable Number

Options vested during year Number

100,000 200,000

100,000 -

200,000

300,000

200,000

Geoffrey C Wild AM (i) Graham R Libbesson (ii)

Details regarding the options issued to current employees and directors are: (i) On 12 December 2007 the Company issued 100,000 options to subscribe for 100,000 ordinary shares in the unissued capital of the Company to Mr Geoffrey C Wild AM. These options were exercisable at $0.20 per share, vesting on 1 June 2008 and were exercisable from vesting date. The options were valued, using the Black Scholes method, at $0.106 per option. The expense attributable to these options was recognised in full in the year ending 31 December 2007. It was resolved by the remuneration sub-committee to recommend the issue of the options on 26 September 2007 at which time the shares were trading at $0.20. The options expired on 31 December 2008.

(ii) On 12 December 2007, the Company issued 200,000 options to subscribe for 200,000 ordinary shares in the unissued capital of the Company to Mr Graham R Libbesson. These options are exercisable at $0.20 per share. The options will expire on 31 December 2010. The options were valued, using the Black Scholes method, at $0.147 per option. The expense attributable to these options was recognised in full in the year ending 31 December 2007 It was resolved by the remuneration sub-committee to recommend the issue of the options on 26 September 2007 at which time the shares were trading at $0.20.

Options model â&#x20AC;&#x201C; key assumptions

Inputs into the model Grant date share price Exercise price Annualised standard deviation in value of asset Option life Dividend yield Risk-free interest rate

G C Wild

G R Libbesson

$0.28 $0.20 30% 1 year 0% 5%

$0.28 $0.20 30% 3 year 0% 5%

ANNUAL REPORT 2008 32

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

Company

Consolidated 2008

2007

2008

2007

89,000

65,000

6,500

5,000

1,000

90,000

65,000

7,500

5,000

6. REMUNERATION OF AUDITOR Auditor of the parent entity: Audit of the financial report RSM Bird Cameron Partners Accounting & taxation services

7. CURRENT TRADE RECEIVABLES Trade receivables Provision for impairment of receivables

6,642,751 (140,713 )

5,183,907 ( 52,842 )

6,502,038

5,131,065

8. CURRENT OTHER RECEIVABLES Receivables as per contractual arrangements

2,407,550

1,457,845

9. WORK IN PROGRESS Cost of product development costs based on requirements of customers. The cost of this work in progress is expected to be fully recovered during 2009 when the product will be recognised as revenue.

2,264,197

2,242,531

244,176

145,396

1,571,794

2,204,231

3,629,982 ( 666,872)

9,250,735 ( 2,305,905 )

1,571,794

2,204,231

2,963,110

6,944,830

10. OTHER CURRENT ASSETS Prepayments

11. NON-CURRENT OTHER RECEIVABLES Receivables as per contractual arrangements to be received over the next 4 years. Other receivable from wholly owned controlled entity Allowance for doubtful debts

Ageing summaries of total current and non-current receivables as at 31 December 2008 and 31 December 2007 are set out in the following tables. Management consistently reviews aged receivables levels with a view to the collection of cash within the shortest possible time-frame. Ideally trade receivables are collected within 7 days however it is often the case that extended terms must be granted to win contracts and maintain long-term relationships in an increasingly competitive market. Therefore, management is confident that the 21% of receivables that are past due but not impaired, will be collected. All balances invoiced in the last three months are considered to be within standard trading terms.

33 ANNUAL REPORT 2008

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

11. NON-CURRENT OTHER RECEIVABLES (continued) 2008 Receivables Ageing Trade & other Receivables

>2 years

>1 years

>6 months

>3 months

Within Standard Terms

Total

Total Receivables Ageing percentage

$139,014 1%

$641,738 6%

$531,890 5%

$908,721 9%

$8,260,019 79%

$10,481,382 100%

Trade & other Receivables

>2 years

>1 years

>6 months

>3 months

Within Standard Terms

Total

Total Receivables Ageing percentage

$192,277 2%

$119,626 1%

$216,645 3%

$733,367 8%

$7,531,226 86%

$8,793,141 100%

2007 Receivables Ageing

Company

Consolidated

12. OTHER NON-CURRENT FINANCIAL ASSETS Shares in controlled entities at cost (note 28)

2008

2007

2008

2007

13,825,540

7,262,041

13. PROPERTY, PLANT AND EQUIPMENT

Consolidated Plant and Furniture and equipment fittings at cost at cost

Motor vehicles at cost

Leasehold improvement at cost

TOTAL

284,870 89,507 374,377 118,174 492,551

436,231 7,481 443,712 100,621 544,333

13,930 13,930 24,094 38,024

96,173 96,173 12,146 108,319

831,204 96,988 928,192 255,035 1,183,227

( 278,746) ( 13,615) ( 292,361) ( 3,569) ( 46,842) ( 342,772)

(436,224) ( 770) (436,994) (10,453) ( 447,447)

(13,930) (13,930) ( 6,150) ( 20,080)

( 41,040) (14,545) ( 55,585) (16,577) ( 72,162)

( 769,940 ) ( 28,930 ) ( 798,870 ) (3,569 ) ( 80,022 ) ( 882,461)

As at 31 December 2007

82,016

6,718

40,588

129,322

As at 31 December 2008

149,779

96,886

17,944

36,157

300,766

Gross carrying amount Balance at 31 December 2006 Additions Balance at 31 December 2007 Additions Balance at 31 December 2008

Accumulated depreciation Balance at 31 December 2006 Depreciation expense Balance at 31 December 2007 Disposals Depreciation expense Balance at 31 December 2008

Net book value

ANNUAL REPORT 2008 34

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

14. INTANGIBLE ASSETS 2008

2007

2008

2007

10,877,465

3,623,122

6,813,733 17,691,198 1,178,061 18,869,259

7,627,358 11,250,480 11,250,480

3,623,122 1,178,061 4,801,183

3,623,122 3,623,122

Goodwill Gross carrying amount: At beginning of the financial year Goodwill related to entity acquisitions At end of the financial year (Note 14 (c)) Software asset Total intangible assets

Company

Consolidated

There was no impairment during the financial year. Overview The increase in goodwill of $6.8 million largely relates to two significant acquisitions during the current financial year (refer notes 28 and 31(b)). The total goodwill recognised also includes the below consideration components, excluding future potential top up amounts (due to the uncertainty of the quantum as at financial year end), as well as the legal, accounting, consultancy, due diligence and other costs incurred as part of the acquisition process. The nature of the acquired businesses and their operational and strategic impact is discussed in the directors’ report.

(a) Purchase of the Business of Microster Pty Limited (“Microster”)

On 2 June 2008 the company entered into a business purchase agreement to acquire the business of Microster Pty Limited. The completion and settlement of the purchase of the Microster business took place following the completion of satisfactory due diligence and obtaining relevant shareholder approval at the annual general meeting on 21 May 2008.

The principals of Microster that remain with the business over the next 3 years will receive top-up payments based on the future growth of Microster’s profitability, provided NPAT growth exceeds 15% per annum. The contingent payments have not been recognised, as the budgeted profits do include growth in excess of 15% and accordingly, the payments are not considered probable.

The purchase price of $5.95 million is comprised of cash of $2.75 million, shares of $2 million, and deferred payments over a 12 month period of $1.2 million in cash or shares. Other costs related to the Microster purchase that were capitalised totalled $0.39 million giving a total acquisition cost of $6.34million. The other costs of $0.39 million are the legal, accounting and consulting costs relating to due diligence as well as the stamp duty associated with the acquisition.

The business of Microster is now operated by Microster Solutions Pty Limited, a wholly owned subsidiary of the Company.

ComOps Limited acquired the following business assets and liabilities: software assets of $527,729, fixed assets of $47,509, work in progress of $292,210, employee provisions of $87,186 and unearned maintenance income of $455,024 as at 2 June 2008. The assets and liabilities arising from the acquisition are recognised at fair values which are equal to their carrying value at acquisition date. The difference between the total acquisition costs of $6,341,014 and the net assets acquired of $325,238 has been recorded as goodwill of $6,015,776.

35 ANNUAL REPORT 2008

(b) Purchase of Australian Workplace Software Pty Ltd (“AWS”)

100% of the shares in AWS were acquired. Control of the businesses was effectively taken on 1 September 2008 with final settlement occurring on 18 September 2008. ComOps Limited acquired the following business assets and liabilities: trade debtors of $98,639, fixed assets of $69,573, cash overdraft of $44,272, trade payables of $7,751, employee provisions of $165,478 and unearned income of $200,859 as at 1 September 2008. The assets and liabilities arising from the acquisition are recognised at fair values which are equal to their carrying value at acquisition date. Goodwill of $424,942 is represented by the total acquisition costs of $174,794 plus the net asset deficiency of $250,148. The acquisition costs of $174,794 relate to legal, accounting and consulting costs incurred as part of due diligence plus additional leave accruals not recognised in the acquiree’s accounting records.

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

14. INTANGIBLE ASSETS (continued) 3 tranches after the end of the final years ending 30/6/08, 30/6/09 and 30/6/10, and will be calculated as an amount consisting of the increase in net profit after tax of HCS compared to the previous financial year over and above 15% of annual growth multiplied by 3.75, and that amount will be paid as one third in cash and two thirds in shares.

The agreed consideration for AWS is represented by future instalments payable annually, the quantum of which will be determined based on the future performance of AWS over the 4 year period to 30 June 2012. These future instalments are payable in 4 tranches after the years ending 30/6/09, 30/6/10, 30/6/11 and 30/6/12 and will be calculated as an amount consisting of the increase in net profit after tax of AWS compared to the previous financial year over and above 15% of annual growth multiplied by 3. The instalment amount will be paid, at the vendor’s discretion, in either cash or shares or a combination of the 2. The contingent payments have not been recognised, as the budgeted profits do include growth in excess of 15% and accordingly, the payments are not considered probable.

In 2007, goodwill increased by $7,254,343 due to the acquisition of two companies during the prior financial year when 100% of the shares in both companies were acquired. Control of both businesses was effectively taken on 2 July 2007 with final settlement occurring on 5 December 2007, when the final instalment of consideration was paid in the form of share issues. The businesses acquired were Human Capital Solutions Group Pty Ltd (“HCS”) and Concentric Business Solutions Limited (“Concentric”). The purchase price paid for HCS was $6.5 million, comprised of cash and shares. The purchase price was arrived at by applying a multiple of 4 to the HCS net profit after tax for the year ended 30 June 2007. The number of shares issued was calculated based on the 20 cent share price as at the close of business on the last business day prior to 2 July 2007. The agreed consideration includes potential further top up amounts depending on the future performance of HCS over a 3 year period from 1 July 2007. These top-up amounts are payable in

The purchase price paid for Concentric of $300,000 was comprised wholly of shares. The number of shares issued was calculated based on the 20 cent share price as at the close of business on the last business day prior to 2 July 2007. The agreed consideration includes future potential issues of up to 24 million ordinary shares in the Company, depending on the share price performance of the Company and forecast annual net profit after tax of the acquisitions made under the Concentric strategy during the period of 5 years after the completion of the acquisition. The minimum share price hurdle is $0.45 and the minimum net profit after tax hurdle is $5 million and the number of shares attached to this minimum hurdle is 5 million shares. Further hurdles are set on a similar basis with the next 7 hurdle stages each involving 2 million shares set at ComOps share prices of $0.55, $0.65, $0.75, $0.85, $0.95, $1.05 and $1.15 and net profit after tax hurdles respectively of $7 million, $9 million, $11 million, $13 million, $15 million, $17 million and $19 million. The final hurdle involving 5 million shares is set at a Company share price of $1.25 and a net profit after tax hurdle of $24 million. The total goodwill recognised includes the above consideration components, excluding future potential top up amounts (due to the uncertainty of the quantum as at financial year end), as well as the legal, accounting, consultancy, due diligence and other costs incurred as part of the acquisition process.

(d) Components of Goodwill

Goodwill related to entity acquisitions relates to the following cash generating units:

Company

Consolidated 2008

2007

2008

2007 $

3,623,122 7,627,358 6,015,776 424,942

3,623,122 7,627,358 -

3,623,122 -

17,691,198

11,250,480

3,623,122

Goodwill arising from Acquisitions Unibis, BI, e-Com HCS & Concentric Microster AWS Total Goodwill

ANNUAL REPORT 2008 36

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

14. INTANGIBLE ASSETS (continued) Allocation of goodwill to cash-generating units Goodwill of $3,623,122 has been allocated for impairment testing purposes to the Unibis, BI, e-Com cash-generating units. Goodwill of $14,068,076 relates to the entities and businesses acquired during 2007 and 2008.

Unibis, BI, e-Com

The recoverable amount of the Unibis, BI and e-Com operations is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by management and a discount rate of 13.25% (2007-14.25%). The cash flow projections are based on historical results to 31 December 2008 and forecast incremental cash impacts to 31 December 2013 across the Unibis, e-Com and BI products. For impairment testing purposes, the forecast sales increase across all products from 2009 to 2012 is 5%. The actual sales growth for these same products from 2007 to 2008 was 31%. Therefore, the forecast sales increase is considered conservative. Management believes that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the Unibis operations carrying amount to exceed its recoverable amount.

Human Capital Solutions Group Pty Ltd and Concentric Business Solutions Limited

The goodwill related to Human Capital Solutions Group Pty Ltd totals $7,171,251. The goodwill related to Concentric Business Solutions Limited totals $456,107. The recoverable amount of the entities acquired in 2007 is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by management and a discount rate of 13.25% (2007-14.25%). The cash flow projections are based on the current budget to 31 December 2009 and forecast incremental cash impacts to 31 December 2013 across all segments of the acquired businesses. For impairment testing purposes the forecast sales increase across both entities for 2010 is 12% and then 15% from 2011 to 2013. There is also a risk factor reduction of 5% applied to the EBITDA margins calculated. Management believes that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the new entities’ carrying amount to exceed the recoverable amount.

The Business of Microster Pty Limited (“Microster”)

The goodwill related to the purchase of the business of Microster totals $6,015,776. The recoverable amount of the business is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by management and a discount rate of 13.25% (2007-14.25%). The cash flow projections are based on the current budget to 31 December 2009 and forecast incremental cash impacts to 31 December 2013 across all segments of the acquired business. For impairment testing purposes the forecast sales increase for 2010 is 12% and then 15% from 2011 to 2013. There is also a risk factor reduction of 5% applied to the EBITDA margins calculated. Management believes that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the Microster operations carrying amount to exceed the recoverable amount.

37 ANNUAL REPORT 2008

Australian Workplace Software Pty Ltd (“AWS”)

The goodwill related to the purchase of Australian Workplace Software Pty Ltd totals $424,942. The recoverable amount of the business is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by management and a discount rate of 13.25% (2007-14.25%). The cash flow projections are based on the current budget to 31 December 2009 and forecast incremental cash impacts to 31 December 2013 across all segments of the acquired business. For impairment testing purposes the forecast sales increase for 2010 is 12% and then 15% from 2011 to 2013. There is also a risk factor reduction of 5% applied to the EBITDA margins calculated. Management believes that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the AWS operations carrying amount to exceed the recoverable amount.

(e) Accounting Error in Prior Period

The accounting for the HCS and Concentric goodwill recognised in 2007 did not include all liabilities relating to the acquisitions. A total of $0.37 million due to the crystallisation of pre-acquisition bad debts ($0.11 million) and pre-acquisition bonuses ($0.17 million) as well as stamp duty, legal fees and other costs ($0.09 million) has been adjusted into the prior year. The aggregate effect of the accounting error on the annual financila statements for the year ended 31 December 2007 is as follows:

Previously 2007 stated Adjustments

Restated

10,877,465

373,015

11,250,480

1,040,815

373,015

1,413,830

Income Statement Goodwill Trade Payables

(f) Software Asset

The software capitalised relates to costs incurred in undertaking extensive due diligence on the Microster software asset to ensure compliance with the longer term strategies of the ComOps group. This capitalised software of $0.65 million plus the purchased software of $0.53 million brings the total software acquisition cost to $1.2 million. The software asset was under development during the current year and this will be amortised over the next 5 years.

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

Company

Consolidated 2008

2007

2008

2007

2,364,659 385,432

784,423 629,407

600,000 -

2,750,091

1,413,830

600,000

848,472

244,083

848,472

244,083

331,093

500,000

331,093

500,000

6,800 1,915,494

1,271,830

1,922,294

1,271,830

1,207,086

742,572

2,205,904

1,290,943

1,251,701

2,281,143

1,251,701

2,281,143

1,273,852

2,281,143

1,251,701

2,281,143

187,778

156,442 116,561

26,390 112,956

273,003

139,346

209,147

318,241

15. (a) CURRENT TRADE & OTHER PAYABLES Trade payables Accruals

15. (b) OTHER PAYABLES TO TAXATION AUTHORITIES Taxes payable to the Australian Taxation Office (other than income tax) are currently under discussion and negotiation to determine an agreed payment schedule.

16. CURRENT INCOME RECEIVED IN ADVANCE Income received in advance from customer

17. CURRENT BORROWINGS Unsecured: other entities Secured: other entities (i) (i) Secured by a fixed and floating charge over the assets of the consolidated entity.

18. CURRENT PROVISIONS Employee benefits

19. OTHER CURRENT LIABILITIES Unearned maintenance income

20. NON-CURRENT BORROWINGS Unsecured Secured: Director and director-related entity (notes 30(e),(i))

22,151

(i) Secured by a fixed and floating charge over the assets of the consolidated entity.

21. NON-CURRENT INCOME RECEIVED IN ADVANCE Income received in advance from customer

22. NON-CURRENT PROVISIONS Employee benefits Make good (note 24)

23. OTHER NON-CURRENT LIABILITIES Lease incentive (note 27)

ANNUAL REPORT 2008 38

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

Company

Consolidated 2008

2007

2008

2007

Balance at beginning of financial year Additional provisions recognised

112,956 3,605

111,851 1,105

Balance at end of financial year

116,561

112,956

24. PROVISIONS Make good provision (i)

(i) The make good provision estimates the make good amount payable at lease termination for both the Sydney and Melbourne leases.

Consolidated & Company 2007

2008 No.

No.

Balance at beginning of financial year Issue of shares on exercise of Employeesâ&#x20AC;&#x2122; Option Plan options Issue of shares under private placement Issue of shares as consideration Issue of shares under prospectus

107,865,004

21,320,679

47,820,004

9,693,584

8,130,081 -

1,984,416 -

200,000 43,300,000 16,500,000 45,000

20,000 8,301,515 3,296,589 8,991

Balance at end of financial year

115,995,085

23,305,095

107,865,004

21,320,679

25. ISSUED CAPITAL Fully paid ordinary shares

Fully paid ordinary shares carry one vote per share and carry the rights to dividend. The Company does not have a limited amount of authorised capital and issued shares do not have a par value.

Company

Consolidated 2008

2007

2008

2007

(5,095,876)

( 7,402,178)

(5,800,375 )

( 7,072,005)

2,514,730

2,306,302

( 255,028 )

463,800

( 2,581,146)

( 5,095,876)

26. ACCUMULATED LOSSES Balance at beginning of the financial year Net profit attributable to the members of the parent entity Reduction in allowance for doubtful debts related to prior period receivable from wholly owned controlled entity not recognised in current year Income Statement Balance at end of the financial year

39 ANNUAL REPORT 2008

(6,055,403 )

807,830

( 5,800,375)

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

27. LEASES Operating leases Leasing arrangements The consolidated entity has a commitment in respect of 5 non-cancellable operating leases over premises located in Sydney, Melbourne, Brisbane, Newcastle and Auckland.

Company

Consolidated 2008

2007

2008

2007

1,345,700 1,461,990

1,055,550 1,768,241

2,807,690

2,823,791

The lease expiration dates for each of the premises are set out below. Sydney: 30 November 2010 Melbourne: 23 September 2010 Brisbane: 31 January 2011 Newcastle: 30 June 2009 Auckland: 6 October 2012 The following are the commitments of the consolidated entity over the lease period for all operating leases presented on the basis that the agreed rent and estimated out-goings are paid over the contracted lease period: Not longer than 1 year Longer than 1 year and not longer than 5 years

In respect of the non-cancellable operating lease for premises occupied in Sydney by the consolidated entity, the financial statements recognise lease incentives negotiated in the lease. At the end of the financial year the unamortised lease incentive was $209,147 (2007 $318,241).

Finance leases Leasing arrangements The consolidated entity does not have any finance leases.

28. SUBSIDIARIES

Parent entity ComOps Limited (i)

Subsidiaries

ComOps Solutions Pty Ltd (ii) Human Capital Solutions Group Pty Ltd ComOps (NZ) Limited Concentric Business Solutions Limited Microster Solutions Pty Ltd Australian Workplace Software Pty Ltd

Country of incorporation

Ownership interest Dec 2008 %

Dec 2007 %

100% 100% 100% 100% 100% 100%

100% 100% 100% 100% 0% 0%

Australia

Australia Australia New Zealand New Zealand Australia Australia

(i) ComOps Limited is the head entity within the tax consolidated group. (ii) ComOps Australia Pty Ltd had its company name changed to ComOps Solutions Pty Ltd in March 2009.

ANNUAL REPORT 2008 40

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

28. SUBSIDIARIES (continued) On 2 June 2008 the company entered into a business purchase agreement to acquire the business of Microster Pty Limited (“Microster”). Under the terms of this business purchase agreement, control of the business of Microster passed to ComOps Limited as at 2 June 2008 and the results for the ComOps consolidated group reflect the Microster results from that date. The business of Microster is now operated by Microster Solutions Pty Limited. Since the date of acquisition, Microster has contributed $3,038,465 to revenue and $1,007,823 to net profit after tax. Had the results relating to the business of Microster been consolidated from 1 January 2008, consolidated revenue attributable to Microster would have been $4,105,205 and consolidated net profit after tax attributable to Microster would have been $1,236,417 for the year ended 31 December 2008. Final settlement in relation to the purchase of Australian Workplace Software Pty Ltd (“AWS”) occurred on 18 September 2008. Under the terms of the share purchase agreement, control of the business of AWS passed to ComOps Limited as at 1 September 2008 and the results for the ComOps consolidated group reflect the AWS results from that date. Since the date of acquisition, AWS has contributed

$600,202 to revenue and $102,964 to net profit after tax. Had the results relating to the business of AWS been consolidated from 1 January 2008, consolidated revenue attributable to AWS would have been $1,228,448 and consolidated net loss after tax attributable to AWS would have been $36,468 for the year ended 31 December 2008. Had both the business of Microster and AWS formed part of the Group for the full financial year, the estimated consolidated revenue for the Group would be $19,881,381, whilst the estimated consolidated net profit after income tax would be $2,848,892. Control of Human Capital Solutions Group Pty Ltd (“HCS”) and Concentric Business Solutions Limited (“Concentric”) passed to ComOps Limited as at 2 July 2007 and the 2007 results for the ComOps consolidated group reflect the results for those subsidiaries from that date. Had HCS and Concentric formed part of the group for the full 2007 financial year, the profit after income tax, attributable to those entities would have totalled $1,666,760.

2008 cents per share

29. EARNINGS PER SHARE

Basic earnings per share (from continuing operations) Diluted earnings per share (from continuing operations)

Basic EPS disclosure

Diluted EPS disclosure

2.2 2.2

4.3 4.3

2008 $

2007 $

2,514,730 2,514,730

2,306,302 2,306,302

Number

112,550,952

53,733,470

2008 $

2007 $

2,514,730 2,514,730

2,306,302 2,306,302

Number

112,550,730

53,733,470

200,000

300,000

112,750,730

54,033,470

Earnings used in EPS calculation Net profit

Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share

2007 cents per share

Earnings used in diluted EPS calculation Net profit Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share

Shares deemed to be issued for no consideration - options

Weighted average number of ordinary shares used in the calculation of diluted EPS

41 ANNUAL REPORT 2008

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

30. RELATED PARTY DISCLOSURES (a) Key management personnel compensation

Details of specified key management personnel remuneration are disclosed in note 4 to the financial statements.

At 31 December 2008, the Company had 200,000 outstanding options to subscribe for unissued share capital of the Company under the Directors’ Option Plan. Further details of the Directors’ Option Plan and the Employees’ Option Scheme are contained in the directors’ report and note 5 to the financial statements

(b) Equity interests in related parties

Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 28 to the financial statements.

As at 31 December 2008, key management personnel and their personally related entities held a total of 55,175,860 (2007: 53,879,867) fully paid ordinary shares.

(d) Fully paid ordinary shares issued by ComOps Limited

2008 Geoffrey C Wild AM Richard E Bradley Graham R Libbesson Mary F Clarke Andrew J Roberts Cameron A Brown Michael J Bowman Phillip J Walker

Balance January

Granted as compensation

Received on exercise of options

Net other change

Balance December

Balance held nominally

Number

300,000 36,020,004 80,000 332,000 15,000,000 193,000 -

5,000 183,500 40,000 7,000 31,921 50,000 1,833,384 1,100,051

305,000 36,203,504 120,000 339,000 15,031,921 243,000 1,833,384 1,100,051

51,925,004

3,250,856

55,175,860

1,833,333 shares were issued to Mr Michael Bowman during the course of the year in consideration for Mr Bowman selling his ownership position in the business of Microster Pty Ltd. The business was sold as a going concern on 2 June 2008 (refer notes 14 and 31(b)).

2007 Geoffrey C Wild AM Richard E Bradley Graham R Libbesson John Bowie Wilson Mary F Clarke Andrew J Roberts Cameron A Brown Kim D Redstall Luis A Munoz

1,100,000 shares were issued to Mr Phillip Walker during the course of the year in consideration for Mr Walker selling his ownership position in the business of Microster Pty Ltd. The business was sold as a going concern on 2 June 2008 (refer notes 14 and 31(b)).

Balance January

Granted as compensation

Received on exercise of options

Net other change

Balance December

Balance held nominally

Number

300,000 36,020,004 1,099,863 32,000 5,000

200,000 -

80,000 100,000 15,000,000 193,000 850,000 -

300,000 36,020,004 80,000 1,099,863 332,000 15,000,000 193,000 850,000 5,000

37,456,867

200,000

16,223,000

53,879,867

ANNUAL REPORT 2008 42

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

30. RELATED PARTY DISCLOSURES (continued)

Company

Consolidated (e) Loan disclosures

2008

2007

2008

2007

1,239,685 12,016

2,213,813 67,330

1,239,685 12,016

2,213,813 67,330

1,251,701

2,281,143

1,251,701

2,281,143

211,618

384,875

211,618

384,875

Directorâ&#x20AC;&#x2122;s loans to the Company in existence at 31 December (Mr R E Bradley): Non-current secured (note 20) principal Non-current secured (note 20) interest

Interest of $211,618 (2007: $384,875) has accrued on this loan from the beginning of the year. Interest is charged on an armâ&#x20AC;&#x2122;s length basis.

(f) Other transactions with key management personnel The profit from operations includes the following items of revenue and expense that resulted from transactions with directors or their personally related entities other than remuneration, loans or equity holdings: Interest expense on loan from director

(g) Parent entities The ultimate parent entity in the wholly-owned group is ComOps Limited.

(h) Transactions involving the parent entity Amounts receivable by the ultimate parent entity from wholly-owned subsidiaries are disclosed in note 11 to the financial statements. During the financial year ComOps Solutions Pty Ltd made a royalty payment to the ultimate parent entity on sale of in-house software licences of $1,089,118 (2007: $1,245,142). There were also professional services totalling $476,572 provided by Human Capital Solutions Group Pty Ltd to three companies in the group: ComOps Solutions Pty Ltd ($474,450); Australian Workplace Software Pty Ltd ($1,313); and Microster Solutions Pty Ltd ($809). There were also professional services totalling $1,733 provided by Australian Workplace Software Pty Ltd to Human Capital Solutions Group Pty Ltd. These services were provided at standard market rates. There was no other transaction between entities in the wholly-owned group during the financial year.

43 ANNUAL REPORT 2008

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

31. NOTES TO THE CASH FLOW STATEMENT

Company

Consolidated 2008

2007

2008

674,664

3,035,802

(a) Reconciliation of cash

2007 $

For the purposes of the cash flow statement, cash includes cash on hand and at bank, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the cash flow statement is reconciled to the related items in the balance sheet as follows: Cash

(b) Businesses acquired

The Company acquired two businesses during the current financial year and the cash consideration component relating to these acquisitions was $3.4 million. On 2 June 2008 the company entered into a business purchase agreement to acquire the business of Microster Pty Limited (“Microster”). The purchase price was $5.95 million and is comprised of cash of $2.75 million, shares of $2 million, and deferred payments over a 12 month period of $1.2 million in cash or shares. Settlement occurred on 6 June 2008 when the final instalment of the $4.75million up-front consideration was paid. As at 31 December 2008, all deferred payments that had fallen due since 2 June 2008 had been paid. Under the terms of this business purchase agreement, control of the business of Microster passed to ComOps Limited as at 2 June 2008. The business of Microster is now operated by Microster Solutions Pty Limited, a wholly owned subsidiary of the company. Microster is an Australian-based organisation developing, delivering and supporting strategic workforce management systems scaled for medium to large organisations. A wide range of professional services are provided to configure, implement, refine and support the Microster application suite to deliver personnel optimisation, reduced labour costs and reduced fatigue risk outcomes.

2,357,760

Final settlement in relation to the purchase of Australian Workplace Software Pty Ltd (“AWS”) occurred on 18 September 2008. Under the terms of the share purchase agreement, control of the business of AWS passed to ComOps Limited as at 1 September 2008. The agreed consideration for AWS is represented by future instalments payable annually, the quantum of which will be determined based on the future performance of AWS over the 4 year period to 30 June 2012 (refer note 14). AWS is a specialist provider of Workplace Health and Safety and Risk Management software solutions and related services. AWS has a blue chip client base, is a Microsoft Certified Partner and its applications are developed using Microsoft .NET technologies. The acquired businesses and their operational and strategic impact in the context of the ComOps Group of companies is discussed further in the directors’ report. The calculation of goodwill relating to these acquisitions is discussed in note 14.

ANNUAL REPORT 2008 44

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

31. NOTES TO THE CASH FLOW STATEMENT (continued)

Other non-current assets of $308,625 (2007: $308,625) represent a security bond in respect of the Companyâ&#x20AC;&#x2122;s premises, which is not readily available on demand.

Company

Consolidated 2008

2007

2008

2007

(d) Financing facilities Secured loan facility - amount used - amount unused

1,915,494 -

1,271,830 -

1,915,494

1,271,830

The Bendigo Bank facility is available to a maximum of $4 million and to the extent that agreed balance sheet ratios are achieved. These ratios are largely related to the level of services and products delivered and the companyâ&#x20AC;&#x2122;s management of its working capital.

(e) Reconciliation of profit for the year to net cash flows from operating activities

Profit /(Loss)for the year Depreciation of property, plant and equipment (Increase)/decrease in assets: Current receivables Work in progress Other current assets Non-current receivables Other non-current assets Future income tax benefits Increase/(decrease) in liabilities: Current trade payables and accruals Current provisions Other current liabilities Other non-current liabilities Cash received in advance from customers Net cash from operating activities

45 ANNUAL REPORT 2008

Company

Consolidated 2008

2007

2008

2007

2,514,730 80,022

2,306,302 28,930

( 255,028 ) -

463,800 -

( 2,570,678 ) ( 21,666 ) ( 98,780 ) 632,527 ( 249,734 )

( 2,138,818) ( 1,433,593) ( 76,064) 745,903 113,000

( 31,440) ( 4) 148,785

625,845 926,608 744,961 24,563 ( 349,885 )

( 3,080,267) 571,151 (154,821) (17,536) 216,038

600,000 ( 2,358,591) ( 356,685)

(524,733) (148,785) 216,038

( 2,919,775)

( 2,370,304)

123,661

2,258,513

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

32. SEGMENT INFORMATION The consolidated entity is organised into 4 major operating divisions for management purposes. Each division is individually managed and is responsible for profitability, quality and customer satisfaction. -The Solutions Marketing division is responsible for generating sales revenue from the licensing of ComOps’ 9 software applications plus the sale of other third party hardware and software products.

-The Hosting division is currently represented entirely by the Managed Application Services (MAS) division within the HCS subsidiary. This division enables organisations to save time and money by outsourcing application hosting. The division also installs patches and upgrades. Revenue for the year is earned from the consolidated entity’s 4 divisions which include the 9 product families: BI, BMS, e-Com, SAM, Unibis, UniBorne, HCS, Microster and AWS. Unallocated segment results include head office overheads.

-The Professional Services division provides consulting, training and implementation and facilities management services to the consolidated entity’s clients. -The Customer Support division provides ongoing technical assistance and software support to the consolidated entity’s clients. This division is also responsible for the ongoing research and development of all new and existing products. This division of the consolidated entity now includes the Content Solutions division within the Human Capital Solutions Group Pty Ltd subsidiary (“HCS”).

The consolidated entity did not establish new divisions as part of the Microster and AWS acquisitions, however these acquisitions have resulted in expansion of all divisions.

Consolidated 2008

2007

Segment revenues

Solutions Marketing Professional Services Customer Support Hosting Unallocated

2,733,992 7,014,721 7,023,416 911,015 83,251

2,490,284 4,989,220 4,870,835 541,682 28,808

17,766,395

12,920,829

Solutions Marketing Professional Services Customer Support Hosting

1,422,241 3,197,445 2,522,114 362,477

1,494,831 2,225,831 1,789,851 348,860

Total of all segments

7,504,277

5,859,373

Head office costs and interest

( 4,034,196)

(2,669,790)

Profit before tax

3,470,081

3,189,583

( 955,351)

( 883,281)

2,514,730

2,306,302

Segment results

Income tax (expense)/benefit Profit for the year from continuing operations

ANNUAL REPORT 2008 46

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

32. SEGMENT INFORMATION (continued)

Liabilities

Assets 2008

2007

2008

2007

Solutions Marketing Professional Services Customer Support Hosting

9,104,508 13,500,301 6,978,801 2,167,824

5,598,095 9,379,547 5,171,239 1,893,279

530,825 1,131,498 2,977,695 23,937

241,770 924,875 2,036,557 60,544

Total

31,751,434

22,042,160

4,663,955

3,263,746

2,049,081

4,270,939

8,412,611

6,824,550

33,800,515

26,313,099

13,076,566

10,088,296

Segment assets and liabilities

Unallocated (Loans and head office)

Solutions Marketing

Professional Services

Customer Support

Hosting

2008

2007

2008

2007

2008

2007

2008

2007

15,666

6,413

28,543

9,954

34,728

11,991

1,085

572

21,120

10,017

3,254

1,760

81,169

Other segment information Depreciation and amortisation of segment assets Other non-cash expenses Significant revenues or expenses: Bad debt expense

47 ANNUAL REPORT 2008

128,073

( 27,155 )

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

33. FINANCIAL INSTRUMENTS (a) Financial risk management objectives

The consolidated entity does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The consolidated entityâ&#x20AC;&#x2122;s activities expose it primarily to the financial risks of changes in interest rates. Exposure limits are reviewed by the board of directors on a continuous basis.

(b) 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 financial statements.

The consolidated entityâ&#x20AC;&#x2122;s only exposures to interest rate risk as at the reporting date are as follows: Maturity profile of financial instruments

1.70 8.10 4.90 Nil

234,020 74,605 -

623,852 -

50,812 10,481,382

674,664 234,020 74,605 10,481,382

Nil 11.76 11.76 10.93 10.25

332,051 848,472 1,915,494

1,251,701 -

2,364,659 28,951

2,364,659 332,051 848,472 1,251,701 1,944,445

Interest rate 2008

Variable interest maturity

Fixed interest maturity less than 1 year $

Less than 1 year

1 to 5 years

Non-interest bearing

Total

Financial assets Cash Cash on deposit Cash on deposit Trade receivables

Financial liabilities Trade payables ATO payable-income tax ATO payable-other taxes Related party loan Other entities loan

All other financial assets and liabilities are non-interest bearing.

ANNUAL REPORT 2008 48

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

33. FINANCIAL INSTRUMENTS (continued)

3.90 7.21 6.78 6.35 7.25 Nil

1,250,000 1,500,000 234,020 74,605 -

155,600 -

132,461 8,846,076

288,061 1,250,000 1,500,000 234,020 74,605 8,846,076

Nil 10.65 11.95

1,271,830

2,281,143 -

1,028,506 -

1,028,506 2,281,143 1,271,830

Interest rate 2007

Variable interest maturity

Fixed interest maturity less than 1 year $

Less than 1 year

1 to 5 years

Non-interest bearing

Total

Financial assets Cash Cash on deposit Cash on deposit Cash on deposit Cash on deposit Trade receivables

Financial liabilities Trade payables Related party loan Other entities loan

All other financial assets and liabilities are non-interest bearing.

(d) Credit risk management

(f) Liquidity risk management

The consolidated entity does not have any significant credit risk exposure to any single customer. There is one customer at balance date that has a receivable total in excess of $500,000, another customer that has a receivable total in excess of $1 million and a third customer that has a receivable balance in excess of $2 million. Two of the above-mentioned companies are considered blue-chip organisations, and the other is a government agency and therefore the credit risk exposure in all three cases is considered minimal.

The loan from other entities is a financing facility made available by Bendigo Bank at a variable interest rate subject to changes in the interest rate released by the Reserve Bank of Australia from time to time. It is a revolving line of credit of up to $4 million which is utilised and repaid based on the Companyâ&#x20AC;&#x2122;s working capital levels. The level of debt and working capital is reviewed on an on-going basis by management and the board of directors. It is expected that the facility will not need to be repaid over the next 12 months as the company expects to maintain its working capital at current levels.

Credit risk refers to the risk that a customer will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has adopted the policy of only dealing with creditworthy customers and inquires into each customerâ&#x20AC;&#x2122;s ability to satisfy the consideration prior to undertaking a sale as a means of mitigating the risk of financial loss from defaults.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the consolidated entityâ&#x20AC;&#x2122;s maximum exposure to credit risk.

(e) Fair value of financial instruments

The directors consider that the carrying amount of financial assets and liabilities recorded in the financial statements approximates their fair values, determined in accordance with the accounting policies disclosed in note 1 to the financial statements.

49 ANNUAL REPORT 2008

The related party loan relates to funds made available by the managing director, Mr R E Bradley. It has been agreed that funds are to be repaid when, in the opinion of the board of directors, the Company has sufficient surplus funds available. Interest is payable on the loan at a commercial rate equivalent to the overdraft as specified by the National Australia Bank plus a margin of 1%.

Non-interest bearing amounts and the ATO liability fall due over the next 12 months. The company expects to meet these obligations through cash-flows from its operation and the collection of receivables. The company prepares forward-looking cash flow projections to ensure sufficient funds are available to meet cash out-goings as they fall due.

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2008

33. FINANCIAL INSTRUMENTS (continued)

34. SUBSEQUENT EVENTS

(g) Capital management

Subsequent to balance date, a demand for payment has been received by the Company from Mrs. Lisa Redstall for an amount of $248,266. The claim arises over an offer made on behalf of the Company that was subsequently withdrawn, to negate any further liability over the issue of shares to Mrs. Redstall based on the agreement to purchase Concentric Business Solutions Limited. The purchase of Concentric Business Solutions Limited was approved at a General Meeting of Shareholders held on 23 October 2007. The Directors are adamant that no agreement existed and based on legal advice received from the Company’s Lawyers’ will defend the claim and seek to recover costs and any damages that could be applicable.

Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern. The group’s debt and capital includes ordinary share capital, redeemable preference shares, convertible preference shares and financial liabilities, supported by financial assets. There are no externally imposed capital requirements. Management effectively manages the group’s capital by assessing the group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.

(h) Sensitivity Analysis

Interest Rate Risk, Foreign Currency Risk and Price Risk The group is not exposed to any foreign currency risk or price risk at balance date. The group has performed sensitivity analysis relating to its exposure to interest rate risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in interest rate risk. Interest Rate Sensitivity Analysis At 31 December 2008, the effect on profit and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows:

Otherwise, there has not been any matter or circumstance that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

35. AMENDMENTS TO FINANCIAL STATEMENTS The net profit after taxation reported in the annual report differs by $245,000 and the revenue by $420,000 as compared to the figures reported in the appendix 4E lodged with the ASX on 27 February 2009. The reason for these differences was caused by a disagreement between the Company and the Auditors on the timing treatment of a number of revenue items. It should be noted that these revenue items will now appear in the Company’s results for the 2009 year.

36. ADDITIONAL COMPANY INFORMATION ComOps Limited is a listed public company incorporated and operating in Australia.

Consolidated

Change in profit Increase in interest rate by 2% Decrease in interest rate by 2% Change in Equity Increase in interest rate by 2% Decrease in interest rate by 2%

2008

2007

( 68,748) 68,748

( 6,775) 6,775

( 68,748) 68,748

( 6,775) 6,775

Registered office and principal place of business Level 6, 77 Pacific Highway, North Sydney NSW 2060.

ANNUAL REPORT 2008 50

CORPORATE GOVERNANCE STATEMENT

The following statement outlines the principal corporate governance practices and procedures that were in place throughout the financial year and the extent to which they depart from the second edition of best practice recommendations of the ASX Corporate Governance Council released in August 2007.

Structure of the board of directors

Roles of the board and management

• The chairman should be an independent director; and • The roles of chairman and chief executive should not be exercised by the same individual;

The board of directors is responsible for the corporate governance practices of the Company including the direction and oversight of the Company’s business on behalf of the shareholders. Responsibility for the formulation of strategy, and management of day-to-day operations and administration, is delegated by the board of directors to the managing director, Mr R E Bradley. Policy and other functions of the board of directors include: • approving goals, strategy and plans for the Company’s direction formulated by management and monitoring their implementation; • ensuring appropriate resources are available to undertake those strategies; • the appointment and supervision of the chief executive officer and secretary of the Company and ensuring that they are appropriately qualified and experienced to discharge their respective responsibilities; • receiving and approving management recommendations, such as for capital expenditure and monitoring the Company’s financial performance and results on a monthly basis; • ensuring appropriate management control and accountability systems are in place and monitoring the corporate conduct of the Company’s officers; • identifying areas of significant business risk and the management of those risks; • reviewing published reports and stock exchange announcements to ensure their accuracy and compliance with statutory requirements; • ensuring compliance with the continuous disclosure requirements of the ASX Listing Rules and the Corporations Act; • meeting statutory, regulatory and other reporting requirements of the Corporations Act and the ASX Listing Rules; and • the establishment and maintenance of appropriate ethical standards for the Company, its directors and executives. The board of directors meets monthly and directors receive comprehensive board papers which include a report from each senior manager, as well as sales reports and management accounts. At meetings of the board, the directors deal with the various policy and corporate governance matters set out above. Separate sub-committees of the board have been formed. These comprise an audit sub-committee and a remuneration and nomination sub-committee. The composition and delegated functions of these sub-committees are set out below. A formal board charter and statement of authorities delegated to management and the two sub-committees, based on the above, is in the process of being finalised, following which it will be posted on the Company web site under Investors in the Corporate section.

51 ANNUAL REPORT 2008

The composition of the board of directors is determined by the remuneration and nomination committee using the following principles which accord with the following ASX Corporate Governance Council recommendations:

Changes to the board of directors over the last two years have resulted in the board of directors having a greater mix of skills and experience and an increase in the number of executive directors, to the extent that the composition does not comply with the ASX Corporate Governance Council recommendations, in that it does not comprise a majority of independent, non-executive directors. This has been considered by the remuneration and nomination committee, who consider that the advantages of the greater mix of skills and experience and the direct insight into the day to day operations of the business outweigh any issues relating to having a minority of non-executive independent directors. The remuneration and nomination committee and the board of directors have therefore concluded that the current composition of the board of directors is appropriate to help the Company achieve its goals, strategies and plans whilst maintaining overall compliance with the Corporate Governance practices and procedures to the extent outlined in this statement and that the composition of the board of directors will continue to be reviewed on a regular basis by the remuneration and nomination committee. The directors of the Company in office at the date of this statement are: Mr Geoffrey Charles Wild AM (non-executive chairman) Mr Richard Edward Bradley (managing director and CEO) Mr Graham Richard Libbesson (non-executive director) Mr Stuart Matthew Clark (finance director) Mr Cameron Arthur Brown (sales & marketing director) Mr Andrew Jake Roberts (client services director) The skills and experience of each of these directors is set out in the accompanying directors’ report. Two of the six directors are non-executive, including the chairman, and the roles of chairman and chief executive are not exercised by the same individual. The board has considered the independence of each of the directors and has determined that both non-executive directors, including the chairman, are independent. In the event that a potential conflict of interest may arise, involved directors withdraw from deliberations concerning the matter. The directors’ terms of appointment are governed by the Constitution and one-third of the directors and any directors who have held office for three years or more (excluding the managing director) must retire at each annual general meeting of members. The dates on which each director was appointed and last re-elected are as follows:

CORPORATE GOVERNANCE STATEMENT

Director Mr Geoffrey Charles Wild AM Mr Graham Richard Libbesson (Note 1) Mr Richard Edward Bradley Mr Stuart Matthew Clark (Note 1) Mr Andrew Jake Roberts Mr Cameron Arthur Brown

Appointed

Last re-elected

25 October 1999 27 June 2007 2 September 1976 23 November 2007 21 May 2008 12 December 2007

21 May 2008 N/A Managing director – N/A 21 May 2008 N/A 21 May 2008

Note 1 Mr Graham Libbesson and Mr Stuart Clark are standing for re-election at the 2009 annual general meeting to be held on 26 May 2009 to comply with the requirement under the Constitution that one-third of directors must retire at each annual general meeting. Each director has the right to seek independent professional advice at the Company’s cost, subject to the prior approval of the chairman, which may not be unreasonably withheld, and the other directors being given a copy of such advice. The Company recognises the need for directors and employees to observe the highest standards of behaviour and business ethics when engaging in corporate activity. All directors and employees are expected to act in accordance with the law and with the highest standards of propriety.

Remuneration and nomination committee

The board of directors has established a remuneration and nomination committee which currently consists of the chairman, Mr Geoffrey Wild AM and Mr Graham Libbesson, both non-executive directors. On an annual basis the committee reviews the remuneration and performance of the managing director and senior executives and make recommendations on remuneration packages for directors and executives and terms of employment generally. The remuneration and nomination committee meets at least twice a year. Particulars of committee meetings held during the year ended 31 December 2008 and the attendance of each committee member is set out in the accompanying directors’ report. This committee also reviews the composition of the board of directors to ensure that it comprises an appropriate mix of skills and experience. When a vacancy exists on the board of directors, or where it is considered that a director with particular skills or experience is required, the committee selects a panel of candidates with the appropriate expertise and experience from which the most suitable candidate is appointed on merit.

Financial reporting and audit committee

The managing director Mr R E Bradley and the finance director Mr S M Clark are required to confirm to the Board that, for each financial reporting period, the Company’s financial reports present a true and fair view, in all material respects, of the Company’s financial position and operational results, and are in accordance with relevant accounting standards.

• the annual and half-year financial reports prior to their approval by the board of directors; • the adequacy of existing external audit arrangements, with particular emphasis on the scope and quality of the audit and the independence of the external auditor; • all areas of significant financial risk and the arrangements in place to contain those risks to acceptable levels; • any management letter sent by the external auditor to the Company; • the effectiveness of management information or other systems of internal control; • the financial statements of the Company with both management and external auditors; and • monitoring of compliance with the requirements of the Corporations Act, ASX Listing Rules, Australian Taxation Office and financial institutions. The audit committee meets at least twice a year. Particulars of committee meetings held during the year ended 31 December 2008 and the attendance of each committee member is set out in the accompanying directors’ report. The committee has a formal charter, a copy of which is available on the Company web site under Investors in the Corporate section.

Code of conduct

Board members, executive management and Company officers are made aware of the requirements to follow corporate policies and procedures, to obey the law and to maintain appropriate standards of honesty and integrity at all times. In this regard the directors have adopted a code of conduct for directors, senior executives and employees. The code of conduct covers ethical operations, compliance with laws, dealings with customers and public officials, conflicts of interest, confidential and proprietary information and insider trading. A copy of the code is available on the Company web site under Investors in the Corporate section.

The Company has established an audit sub-committee which currently consists of Mr Graham Libbesson and Mr Geoffrey Wild AM, both non-executive directors. Mr Libbesson acts as chairman of the audit sub-committee. The managing director, the finance director and external auditors are invited to attend meetings from time to time. The key matters dealt with by the audit committee include the review of:

ANNUAL REPORT 2008 52

CORPORATE GOVERNANCE STATEMENT

Share trading policy

No director, senior executive or employee shall purchase or sell Company securities, or securities of a company in a “special relationship” with the Company, while in possession of material information concerning the Company or such a company that has not previously been generally disclosed to the investing public. Nor shall an employee inform any individual or entity of any such material information, except in the necessary course of business. Employees are encouraged to invest in the Company’s securities, but must avoid trading when in possession of confidential material information which, if generally available, would reasonably be expected to either have an effect on the market price or value of those securities or affect an investor’s decision as to whether to buy, sell or hold securities in the Company. Directors and executives are required to give prior notice and obtain the approval of the chairman prior to any proposed dealings in Company securities by themselves or their associates and to provide particulars of any transactions immediately following execution. The secretary is to make the requisite notifications to the ASX.

Continuous disclosure

All directors, senior executives and employees have been made aware of the continuous disclosure requirements of the ASX Listing Rules and have been provided with a copy of the relevant rules and guidance notes. Continuous disclosure is included on the agenda for all formal meetings of the directors. Directors and senior executives are made aware of the constraints applicable to private briefings and broker and analyst presentations. The directors have allocated responsibility to the managing director and the company secretary to alert the board of directors to any operational or regulatory matters respectively which they consider may require disclosure to the market under the continuous disclosure requirements of the ASX Listing Rules. The directors then consider and approve the form of any such announcement. All Company announcements require the approval of the chairman with provision for available directors to approve urgent announcements. The company secretary is responsible for communication with ASX. The chairman is responsible for all media contact and comment. The annual report contains a review of operations.

Shareholder communication

The Company communicates with its shareholders through ASX announcements, newsletters, the half-year report, the annual report and the annual general meeting. Copies of all such ASX announcements, newsletters and reports are posted to the Company web site. The independent auditor attends the annual general meeting to respond to questions from shareholders on the conduct of the audit and the preparation and content of the audit report.

53 ANNUAL REPORT 2008

Risk management

The board of directors has accepted the role of identification, assessment, monitoring and managing the significant areas of risk applicable to the Company and its operations. It has not established a separate committee to deal with these matters, as the directors consider the size of the Company and its operations do not warrant a separate committee at this time. The board of directors has identified the significant areas of risk applicable to the Company and its operations and considers the matter of risk management on an on-going basis at its monthly meetings. Management reports to the board of directors regarding the Company’s approach to areas of material business risk.

Performance evaluation of directors and executives

The remuneration and nomination committee undertakes a review of the performance of directors, senior executives and employees on an annual basis. The committee makes any necessary recommendations to the board of directors and/or the managing director based on these reviews.

Remuneration of directors and executives

In accordance with the constitution of the Company, shareholders determine the aggregate remuneration of the non-executive directors, the maximum aggregate remuneration for non-executive directors is currently $500,000. The directors determine the allocation of the aggregate remuneration, or part thereof, between themselves. Particulars as to the remuneration of the directors and senior executives during the year ended 31 December 2008 are set out in the accompanying notes to the financial statements. There are no schemes or provisions for retirement benefits for non-executive directors other than statutory benefits and accumulated superannuation.

Recognition of legitimate interests of stakeholders

As detailed above, the Company has adopted a code of conduct which ‘inter alia’ deals with compliance with legal and other obligations to legitimate stakeholders. The full code of conduct is available on the Company web site under Investors in the corporate section.

SECURITIES EXCHANGE INFORMATION

Statement of quoted securities as at 31 March 2009

• there are 562 shareholders holding a total of 115,995,085 ordinary fully paid shares. • the twenty largest shareholders between them hold 73.97% of the total issued capital of the Company. • voting rights are that on a show of hands. Each member present in person or by proxy or attorney or representative shall have one vote, and upon a poll, every member so present shall have one vote for every share held.

Distribution of securities as at 31 March 2009 Range

Number of holders

1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - and over

31 190 101 151 89

Total holders

562

There are 272 shareholders holding less than a marketable parcel of 8,334 shares at the market price of $0.06 per share.

Substantial shareholdings as at 31 March 2009

The following shareholders have notified the Company that they are substantial shareholders. Substantial shareholder R E Bradley A J Roberts Moat Investments Pty Ltd

Total relevant interest notified

% of total issued capital

36,328,504 shares 15,031,921 shares 6,682,850 shares

31.32% 12.96% 5.76%

Directors’ shareholdings

As at 31 March 2009 directors of the Company held a relevant interest in the following shares and options in the Company. Director Richard E Bradley Andrew J Roberts Geoffrey C Wild AM Cameron A Brown Graham R Libbesson

Options

36,328,504 15,031,921 305,000 243,000 200,000

nil nil nil nil 200,000

Audit committee

The Company has a formally constituted audit committee.

On-market buy backs

At the date of this report there was no on-market buy-back scheme in relation to the Company’s shares either current or proposed.

Top twenty shareholders at 31 March 2009 Shareholder name & ranking 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Mr R E Bradley Mr Andrew Roberts Moat Investments Pty Ltd UBS Nominees Pty Ltd ANZ Nominees Limited (Cash income a/c) Michael J Bowman & Sue E Bowman (Bowman s/f) Fundhost Limited (Cygnet Microcap Opp Fund a/c) Carnethy Evergreen Pty Ltd (Carnethy Evergreen Fund a/c) Habena Pty Limited (Spencer Super Fund a/c) Citicorp Nominees Pty Limited David Oakley Mr John Joseph Alexander Dickson Ms Kathryn Emma Donaldson Equity Trustees Ltd (SGH Micro Cap Trust a/c) G D Moran & G R G Moran (Moran Financial Services s/f) P J Walker & L Walker (Walker s/f) Mr T J Hartigan & Mrs F Hartigan (The Hartigan Super Fund a/c) Reef Securities Limited BA & JP Management Services Pty Ltd J F Parker & B J Parker (J & B Financial Services s/f)

Total held by top 20 shareholders

Number of shares held

% of total

38,828,504 15,031,921 6,682,850 4,700,000 4,000,000 1,833,384 1,632,700 1,575,000 1,524,080 1,500,000 1,375,000 1,360,000 1,250,000 1,250,000 1,210,000 1,100,051 1,100,000 1,000,000 916,718 926,667

30.89 12.96 5.76 4.05 3.45 1.58 1.41 1.36 1.31 1.29 1.19 1.17 1.08 1.08 1.04 0.95 0.95 0.86 0.79 0.80

85,796,875

73.97

ANNUAL REPORT 2008 54