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2008 BUSINESS REVIEW AND FINANCIAL REPORT

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this is

Commquest Limited ABN 95 123 287 025

the difference!

Contents:

02 TheDifferenceis

08 Chairman’sReport

10 CEO’sReview

12 BoardofDirectors

14 OperationsReview

19 FinancialReview

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CommQuest is unlike any other company. Although we are often compared to others in our sector, if you take a closer look at CommQuest, there are many things that set us apart.

We have grown the business and delivered financially sound results. Even in a turbulent year, CommQuest has performed well. We have achieved this through a combination of organic growth, new clients, strategic acquisitions, streamlining business processes and a disciplined management structure.

CommQuest is also the owner of the largest digital agency in Australasia, The Next Digital Group. This acquisition has seen the size of CommQuest almost double, and has provided access to some of Australia’s biggest companies as clients and expand the Group’s geographical footprint into China and Thailand. Next Digital provides CommQuest with a focus for the marketing strategies of the future.

The expansion of the Company’s Bongo product represents an exciting step forward in the convergence of the internet and the mobile phone. Bongo will be re-launched as The Bongo Virus, a complete content, delivery and social networking tool that will not only allow consumers to get Any Question Answered (AQA) but be the single point for all their entertainment needs; accessible through their mobile handset and computer. The Bongo Virus’ first call to action will be to its existing user base.

This is why CommQuest is different…

CommQuest 2008 Business Review & Financial Report


THE DIFFERENCE TRUE INTEGRATION HAVE A STRATEGY RESULTS DO MATTER CHAIRMAN’S REPORT CEO’S REVIEW BOARD OF DIRECTORS OPERATIONS REVIEW THE BONGO VIRUS FINANCIAL REVIEW

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Two streamsCommquestLimited(CommQuest)hasalwaysbeenadiversemixofbusinesses,whichcoverareasofservicefromcustomeracquisitionandadvertisingtothelatesttechnology-drivensolutionsintherapidlydevelopingdigitalandmobilefrontiers.

However,theCompanyhasnotalwaysbeenviewedthiswaybythemarket.ItisforthisreasonthatCommQuesthasmadeastructuralchangeandintroducedtwostreamsofoperation;IntegratedMarketingandDigital&MobileMarketing.Thischangesegmentsthebusinessesprimarilyoperatinginthetraditionalmarketingandcommunicationssectorfromthoseofferingservicesintheemergingdigitalandmobilearena.

CommQuestbelievesthatwhilstthetwodivisionswillcontinuetoworkcollaboratively,thisdistinctionwillprovidegreatertransparencyandproducerelevantandconsistentmarketinformationtoitsexternalstakeholders.

Diversified business mixTheCompany’sbroadrangeofserviceofferingsanditstwokeystreamsofoperationdemonstratesdiversityandisCommQuest’spointofdifferentiationfromitscompetitorsinthemarketingandcommunicationssector.

CommQuest’sportfolioincludesstrategic,directandmobilemarketingtopublicandinvestorrelations,eventmanagement,advertisingandmediaplanning.

Cross pollinationCommQuestisfosteringacollaborativegroupofoperatingentitiesthatintegratetoprovideauniqueandresultsbasedpropositionforitsclients.CollectivelyCommQuestreviewstheclient’scampaignandsuggestssolutionsthatcutacrossallentitiesintheCommQuestGrouptodeliverthebestresulttotheclient.

Integrated Marketing Services Digital and Mobile Marketing

�

Next Digital is a full service digital marketing & services company, providing strategic, integrated, digital driven business and marketing solutions for the consumer and business markets.

Specialising in digital and interactive media, Bland is a simple yet exciting organisation that focuses on client outcomes and functionality along with best-in-class design to deliver the most effective digital communication strategy.

Impulse Business Solutions is the provider of the popular AQA service ‘Bongo’. Operating in Australia, New Zealand, and United Kingdom and soon to be released in Ireland, Canada and the USA.

With sophisticated Premium SMS Gateway technology, SMS Central provides the backbone to the Group’s Mobile Marketing strategy, with development now focusing on MMS and video via mobile technologies.

Inspirus is an online broadcast SMS / MMS platform allowing businesses to send SMS and MMS to their customers through an easy to use, inexpensive, self service portal.

Platinum TV puts content on screens in premium public places via its ‘on-premise digital TV’ network. The network is featured in bars, pubs and retail outlets providing a platform for advertisers and media agencies to target the 18-30 year old affluent demographic.

*MobiData is a specialist developer of mobile products & solutions across different phone operating systems & complex IT architectures.

* Infodial provides a range of premium rate 1900, toll free 1300 & free call 1800 interactive communications solutions.

Top 3 direct sales and marketing company in Australia focusing on customer acquisition and contact centre operations via sophisticated technology backend. Listed in the top 30 of BRW Fast 100 four years in a row.

Strategic marketing, creative agency with specialisations in brand and advertising concepts as well as in the direct marketing space. Winner of the AdNews 2006 Direct Agency of the Year and B&T Emerging Agency of the Year 2004.

Event management organisation that specialises in the total end to end solution for its clients, ensuring that it creates not only a fantastic event, but a live brand experience so that the event itself becomes a major marketing tool.

Specialists in strategic campaigns for both national and international clients. Programs include brand development, market research, web design, copy writing, communications, crisis management and stakeholder relations.

PyroMedia was established to deliver market leading media strategy and buying opportunities for clients looking beyond the traditional agency approach. Offering true channel neutral strategic planning and buying.

Channel is a leading Australian corporate and financial communication consultancy, providing communication counsel to listed and unlisted companies, fund managers and intermediaries.

Austral Media Group is a custom publishing and marketing group specialising in community and emergency service group publications throughout Australia.

Point9 is a marketing analytics and marketing effectiveness research company dedicated to quantifying the value that marketing has back to the bottom line. Using behavioural data, Point9 builds individually tailored econometric models, measurement, data systems and even predictive communications spend models. This delivers a true picture of the ROI that marketing communications can deliver.

* denotes that acquisition occurred post 30 June 2008 and therefore the entity does not contribute to the group’s financial performance for the period to 30 June 2008

true integrationThe difference is:

Investor Relations

Events Management

Public Relations

Media Buying

Advertising Direct Sales

Strategic Marketing

Mobile Marketing

Digital & Interactive

�

Pro forma Revenue

by Segment

Pro forma EBITDA

by Segment

Digital and Mobile Marketing

Traditional Marketing Services

2008 Pro forma Results

44.4%

55.6%



53.7%

46.3%

Trad

ition

al Marketing Services

Digital and Mobile Mar

keti

ng

Content Provisioning

Mobile Gateway Services




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Active Acquisition Programme

Fiveacquisitionscompletedsincelistingto�0June�008:

Channel Financial Communication

Next Digital Group

Platinum TV

Austral Media Group

Inspirus

Majorityofacquisitionsfundedthrough50:50mixtureofcashandescrowedCommQuestshares

Channel Financial Communication

Specialistfinancialcommunicationbusinessadvisinglistedcorporations,fundmanagersandfinancialintermediaries

Foundedin�000,Sydney-based

Serviceofferingincludes:

Communicationstrategydevelopment

Investorrelationscounsel

Transaction-relatedcommunication

Corporateaffairssupport

Publicrelationsservices

Negotiationstrategy

Strategicfacilitation

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Next Digital Group

LargestdigitalgroupinAustralasia

FullservicedigitalagencyprovidingdigitalservicesandsolutionstobluechipclientsbothinAustraliaandglobally

�00staffinMelbourne,Sydney,Brisbane,ShanghaiandBangkok


Digitaladvertising

Websiteanalytics

Conversiondesign

Searchengineoptimisation

Sitestructureandpersuasivearchitecture

Digitalcommunication

Developmentandinfrastructureservices

Platinum TV

Facilitationofdigitalsignageinpremiumlocationssuchasbars,clubsandpubs

SysteminstalledthroughoutSydneyandMelbourne


Digitalsignage

TargetedAdvertising

ContentProvisioning

CommQuestowns�0%ofPlatinumTV

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Austral Media Group

Custompublishingandadvertisingcompany,specialisinginpublicationsforassociationsandcharitieswithparticularfocusontheemergencyservices

�0staffinMelbourneandAdelaide


CustomPublishing

TypeSettingandContentEditorial

Telemarketing

Inspirus

OnlinebroadcastSMS/MMSplatformallowingselfserviceforbusinessestocommunicateeffectivelywiththeircustomerbase

OperatinginMelbourneandSydneypredominantly


BroadcastSMS

BroadcastMMS

IntegrationofSMSsystemintoothersoftwareapplications

Acquisitions after 30 June 2008 include:

MobiDataHoldingsLtd

InfoDialAustraliaPtyLtd

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Organic Growth

Strong organic growth potential in each Operating Entity

Well-positioned in key growth segments: direct marketing, digital and mobile marketing

Management incentive schemes to drive further growth

Growth Through Acquisitions

Selective acquisitions

Strategic and financial value

Specialists which enhance the group’s overall

service offering

Cross-selling Opportunities

Cross-selling and cross-promotion between specialist Operating Entities

Leverage existing client relationships to deliver broader

service offering

Integrated End-to-End Marketing and Communications

Centralised Back Office Functions

we have a strategyThe difference is:

�

Digital & Mobile

Marketing

2004

2010



Digital & Mobile

Marketing

25%

25%75%

75%

Digital & Mobile Marketing Destined to Supersede Traditional Mediums by 2010

Our Growth Plan

EvenindifficulteconomictimesCommQuestisstillplanningforverytargetedgrowthandtocontinueitsimpressiverecordofexpansionintonichemarketsegments.CommQuestwillcontinuetolookatstrategicacquisitionswhilstpursuingorganicgrowthsolutions,developmentofitsownkeyIPandproductsincludingthelaunchofTheBongoVirus.ThiswillbeakeydevelopmentinthegrowthoftheCompanymovingforwardwherebyCommQuest,throughitsexistingbrandedproductBongo,willprovideuserswithanentertainingandinteractivejavaandWAP-basedmobilephoneplatformcomplementedbyawebsite.ThisisthefirstofitskindaspreviouslysuchplatformshaveonlyavailableviatheinternetonPCs.

Management Structure

AlongwithdevelopingtwocorestreamsofoperationsbeingCommQuestIntegratedMarketingandCommQuestDigital&MobileMarketing,theCompanyisalsostructuringitskeymanagementinamoreefficientandservicecentricwaytoimprovecrosspollinationbetweentheGroup.ThisnewmanagementstructurewillfurtherimproveonthedynamicwayCommQuestdoesbusiness.Itwillenablethebusinessunitstofacilitatebetterandmoretargetedresponsestouniqueexternalinfluencesaffectingeachstream.

of revenue85%5 key

business units




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Our position is sound

Statutory 30 June 2008

Cash $6.5m

WorkingCapital $7.5m

FixedAssets $�.8m

IntangibleAssets $60.�m

Provisions ($�.7m)

Borrowings ($�7.8m)

DeferredSettlementObligations ($5.5m)

NetOtherLiabilities ($0.�m)

Net Assets $41.80m

7

Proformaworkingcapitalhasincreasedowingtotimingdifferencesassociatedwithcut-offofcashflowsattimeofIPObacktooriginalvendors

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Resultsareinlinewithupdatedguidance

Underlyingorganicgrowthexistsofapprox.�0%–�5%

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Fullyearproformaresultsareskewedtosecondhalfduetotimingofworkinoperatingentities’(suchasImpulseexpandingintoUK)

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Capexislowerthananticipated,howeverintegrationplansareaheadofschedule

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CASh

$6.5M

EBITDA Margin

14.04%

Our performance is positive

Year Ending 30 June 2008 Pro forma Statutory

Revenue $74.1m $50.9m

EBITDA $10.4m $6.0m

EBIT $8.9m $�.9m

EBITDAMargin 14.04% ��.79%

NetProfitafterTax $3.6m $�.�m

EPS 4.36 cents �.85cents

results do matterThe difference is:

Our Funding

$44m debt facility secured with ANZ, November 2007, further increase to $48.1m in February 2008:

$35m earmarked for acquisitions

$13.1m for operating capital

Favourable average interest rate of 7.58% locked in for 2 years (drawdowns of facility for first two acquisitions – Channel & Next Digital)

Current level of drawdown $27.83m

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6 CommQuest 2008 Business Review & Financial Report6



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FinancialCommunication),custompublishing(AustralMediaGroup),broadcastSMS/MMS(Inspirus),digitalsignageandcontentprovisioning(PlatinumTV),aswellasofferingthesinglelargestdigitalagencyinAustralasiabeingtheNextDigitalGroup.CommQuesthasahighlytalentedworkforcewhoarefocusedonwhatthebusinessstandsfor;clientresultbasedoutcomesandgrowingthebusiness.

Alreadyinthe�009financialyeartheCompanyhasattractedinvestmentfromthehighlyregardedLazardCarnegieWyliegroup.Thisisanexcitingstarttothischallengingfinancialyearaswelooktocontinueourgrowthtrajectorywhilefocusingonthecorecomponentsofthebusinessandtheentrepreneurialspirititwasfoundedon.

JohnHallIndependent Non-Executive Chairman

Placement of Shares to Lazard Carnegie Wylie

On�9August�008,CommQuestenteredintoanagreementtoplace�5%oftheCompany’ssharecapitalwithinvestmentfundsmanagedbyLazardCarnegieWylieforapricepershareof$0.�5.

Theplacementwillbesplitintotwotranches,oneofwhichwasissuedon�September�008withthesecondtranchetobeissuedafterobtainingshareholderapprovalattheCompany’sAGMinNovember�008.

TheCompanyispleasedwiththeplacementandinvestmentthatLazardCarnegieWyliehasmadeinthebusiness.TheBoardandManagementlookforwardtotheopportunitiesandsupportaninvestorofthiscalibrecanbringtothegrowthprospectsofCommQuest.

LazardCarnegieWylieInvestmentManagementPtyLtdispartoftheLazardCarnegieWyliegroupofcompanies,whicharewhollyownedsubsidiariesofLazardLimited(NYSE:LAZ).

Lazard,oneoftheworld’spre-eminentfinancialadvisoryandassetmanagementfirms,operatesfrom�0citiesacross��countriesinNorthAmerica,Europe,Australia,Asia,CentralandSouthAmerica.Withoriginsdatingbackto�8�8,thefirmprovidesadviceonmergersandacquisitions,restructuringandcapitalraising,aswellasassetmanagementservices,tocorporations,partnerships,institutions,governmentsandindividuals.

FormoreinformationonLazard,pleasevisitwww.lazard.com.

8

Chairman’s ReportJohnHall

DearShareholders,

ItiswithpleasurethatIprovidetoyoutheCompany’sfirstannualreportsinceitslistinginNovember�007.

CommquestLimitedhasexperiencedaturbulentstarttoitslifeasalistedservicescompany.

Duringthisfinancialyear,wehaveseenacombinationofexcitinggrowthacrossanumberofkeydivisionsandfivestrategicpost-IPOacquisitionscompletedto�0June�008.However,thereductionintheCompany’ssharepriceoverthisperiodhasdampenedtheimpactthesegainshavemadetotheCompany,mainlybroughtaboutbythecurrenteconomicenvironmentandunderperformanceinsomeofouroperatingentities.

AlthoughtheCompanyannouncedadowngradeinits��monthpro-formaresultsto�0June�008onthebackofslowdownsintwomajorcontractswithinboththeadvertisinganddirectmarketingsectorsofourbusiness,theCompanystillachieved�8.07%growthinEBITDAasayearonyearcomparisontotheresultachievedinthefinancialyearending�0June�007.The�0June�008EBITDAof$�0.�mwasachievedthroughamixofbothorganicandacquisitivegrowthacrosstheorganisation.

ThekeyhighlightsfortheCompanywereitsrapidexpansionandrevenueandearningsgrowthexperiencedinboththedigitalandmobilemarketingsectors.ThisgrowthwasmainlyattributedtotheacquisitionoftheNextDigitalGroupandtheinternationalexpansionofImpulseBusinessSolutions.TheDigital&MobiledivisionofCommQuesthasexperiencedstronggrowth,withrevenuesincreasingby��.�%andEBITDAby��.6%overthepast��months.TheCompanywillcontinuetofocusalotofitseffortsintothisemergingsectorasmanyclientslooktoharnesstheinternetandmobilephonetechnologytoengageandbuildarelationshipwiththeircustomerinanewandmoretargetedway.

SinceIPO,CommQuesthassteeredthestrategicgrowthofitsbusinessthroughanumberofacquisitionsinkeyareasoftheorganisation.Theobjectiveoftheseacquisitionswastoincreaseourexistingserviceofferingortoprovidenewserviceofferingsandcapabilitiestoourclients.TheacquisitionsalsoexpandedourgeographicfootprintwiththeCompanynowhavingofficesinfourstatesofAustralia,twocountriesoutsideofAustralia(beingChinaandThailand)andoperatingwithinafurthertwointernationalmarkets,NewZealandandtheUnitedKingdom.Theacquisitionshaveintroducedexcitingnewservicesandtalentintotheorganisationwithofferingsnowinfinancialcommunication(Channel




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http://www.lazard.com/

��

AskBongoanything!Thefunctionalityofthisproductisbothengagingandentertainingforthemobileuser.Iencourageshareholderstovisitwww.thebongovirus.comtoseethefullextentofthisnewproductandtheexcitingopportunitiesitpresentstoourbusiness.

TheBongoVirusisaprimecandidateforsuccessandseekstorapidlyincreaseBongo’sexistinguserbasebyembracingarelativelynewphenomenon;ViralMarketing.Viralmarketingworksbydeliveringatargetedmessagetoconsumerswhothencommunicatethismessagetoothersthroughwordofmouth.Providedthemessageisexcitingandrelevant,viralmarketingisaneffectiveandlowcostmethodofquicklyincreasingbrandawarenessandloyalty.

Thisreportalsogivesmeachancetointroducetoourshareholdersandotherstakeholders,anumberofindividualswithinCommQuestthatassistmeinleadingtheorganisation.EachoneoftheseindividualsisaspecialistintheirfieldandprovidesbothCommQuestanditsoperatingcompanieswithagreatdealofexperienceintheirchosenfieldsofspecialty.Thefollowingpeopleassistmeinoperatinga700peoplestrongorganisationspreadacrosssuchawidegeographicareaonadaytodaybasis.

William Scott ChiefExecutiveOfficer

Boyd Coulson AbovetheLine&Creative

Arthur Spanos Digital&Mobile

David Lindsay InvestorRelations

Jordan Muir BelowtheLine&Operations

Flynn Dunton Mobile–Creative&Sales

Jonathon Meredith-Smith ChiefFinancialOfficer

BoilerRoom

PyroMedia

Think

Shac

SmartPR

Bland

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NextDigital

MobiDataGroup

PlatinumTV

SMSCentral

Inspirus

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ChannelFinancialComm-unication

ü TheSmartGroup

AustralMediaGroup

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ImpulseBusinessSolutions

Infodial

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Finance

HR

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AlloftheseindividualsareextremelydedicatedandprovideleadershiptotheirareasofresponsibilityandtotheCompanyasawhole.Ilookforwardtocontinuingtoworkwitheachofthemandeveryotherstaffmemberwithinourorganisationoverthecourseofthenextfinancialyear.

Thenext��monthswillbeachanceforCommQuesttoconsolidateitsserviceofferingsandconcentrateontheneedsofitsclientswhilealsoexpandingtheCompany’sreachandinteractionwithconsumersgloballythroughitsownintellectualproperty.Ilookforwardtothechallengesthatawaitusandmaking�008/09asuccessfulyearforCommQuest.

WilliamScottChief Executive Officer/Executive Director

DearShareholders,

IwouldliketotakethisopportunitytonotonlyreflectonCommQuest’sactivitiesandperformanceinthepastfinancialyearbuttoalsoexpandupontheinitiativesandstrategiesthatCommQuestislookingtoimplementoverthecoming��months.

Thebusinesshassuccessfullycompletedanumberofacquisitionsoverthepast��monthswhichhavebeenextremelypositivetotheorganisationfromnotonlyafinancialstandpointbutalsofromaserviceandgeographicperspective.Wehavefocusedstronglyontechnology-drivenareastotakeadvantageofthechangingmodelsofdoingbusiness.Movingforwardwewilllooktocontinueourexpansionofthebusinessinthedigitalandmobilemarketingsectorincluding,whereappropriate,assessingasmallnumberofstrategicacquisitionsinthisspaceinthenext��months.

Whileinvestigatingtheopportunitiesthatmayariseforthebusinesstocompletefurtheracquisitions,wealsoarekeenlyawareoftheeffectthatbeinginaservicebasedindustryhasonthefinancialperformanceofthebusinessaseconomicconditionstighten.AlthoughthebusinessunitsofCommQuestareoperatingefficientlyandproducingyear-on-yeargrowth,theorganisationstillseekstoachievedouble-digitgrowth.Assuch,wehavelookedinternallytoidentifythoseassetsthatwecanfurtherdeveloptodeliverourdesiredgrowthevenifmarketscontinuetobechallenging.

Ourstrategyistoreduceoperatingcostswherepossible,identifyandexpandonCommQuestownedconsumerproductsandtargetbusinesssegmentsthatarelesslikelytobeaffectedbytimesofeconomicretraction.ThisassessmenthasidentifiedtheCompany’sownproduct,Bongo,andthemobilephoneindustryasthoseingredientsthatcanhelpsupplementtheorganisation’squestforgrowthinaslowingmarket.

CommQuesthasdevelopedTheBongoVirusasanewsocial,interactiveandtechnologydrivensolutionthattheCompanyprovidesdirectlytotheconsumer.Withanexistingbaseofglobalusers,TheBongoVirusisanewwayinwhichtheconsumercanhavethefunctionalityoftheinternetwiththeportabilityofthemobilephone.Itisaconvergenceofthesetwoarenasintotheoneuser-friendlyplatform.TheBongoViruswillallowuserstochattooneanotherthroughinstantmessaging,downloadringtonesandgames,thelatestgossipand,asalways,

Chief Executive Officer’s ReviewWilliamScott

CommQuest 2008 Business Review & Financial Report�0



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John hall (a) Independent Non-Executive Chairman

Member of Audit and Risk Committee

Member of Nomination and Remuneration Committee

William Scott (b) Executive Director

Chief Executive Officer

Member of Nomination and Remuneration Committee

Member of Mergers and Acquisitions Committee

Paul Tobin (c) Non-Executive Director

Chairman of Nomination and Remuneration Committee

Chairman of Mergers and Acquisitions Committee

Jordan Muir (d) Executive Director

Chief Operating Officer

Member of Mergers and Acquisitions Committee

Boyd Coulson (e) Executive Director

Chief Marketing Officer

Member of Audit and Risk Committee

Tom O’Brien AM (f) Independent Non-Executive Director

Chairman of Audit and Risk Committee

(d) (e) (f)

The Board and Senior

Management

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(a) (b)

(c)




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CommQuest’straditionalmarketingcapabilityincludesstrategicmarketing,directmarketing,directsales,publicrelationsandpublicaffairs,financialcommunications,eventmanagement,advertisingandmediaplanning.

Oursuccesscanbeattributedtoseveralkeyfactors,butessentiallyitistheuniquecombinationandintegrationoftheseservicesthatseparatesusfromsomeoftheothermarketinggroupsbothoperationallyandfinancially.

New business wins prove integrated model works

ThemodelworksonthebasisoftwoormoreCommQuestoperatingentitiesworkingincollaborationwiththeclienttoproduceanoutcomethatismeasurableandaboveexpectations:

Primus Telecommunications

FKP Property Group

Southern Cross Health

Simply Energy

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�5

EBITDA Growth by Sector

12%

New Clients of the Integrated Model

7in 2008

Case Study 1BOILERROOM, POINT9 and PYROMEDIA for FKP PROPERTY

BoilerRoomdevelopedanintegratedadvertisingandmarketingcampaignforFKPacrossmostmainmedia.OperatingbehindBoilerRoomwasmediaplanningspecialistPyroMedia

andmarketinganalyticsspecialistPoint9.PyroMediadrovethecommunicationsstrategywhilePoint9useditsuniquemediaeffectivenessandsegmentationmodellingtodeterminewhichtypesofmediawouldbethemosteffectiveatdrawingsalesandmaximisingthereturnforFKPontheirmarketingspend.

TheSaltwaterCoastdevelopmentwillcontinuetogrowandprosperoverthenextfivetoeightyearsasprogressiveprecinctsarereleasedtothepublic.ThenextchallengesforFKPandBoilerRoomaretomaintainthemomentumofthecampaignandtocontinuemonitoringtheprofilingdatatodrivedownthecostofmarketingeachblock.

Case Study 2SMART PR and ThINK CREATIVE for EXITREALITY’S GLOBAL LAUNCh

ThelaunchofExitRealitymarkedthedaytheentireWorldWideWebenteredthreedimensions.From�8September�008,everysinglewebsiteisnowabletobeviewedin�D–ExitRealityhasturnedtheInternetintoawalkingvirtualreality.

SmartPRwastheleadontheaccountandwasofficiallyappointedtohandlethelong-termpublicrelationsactivity

forExitReality.Forthemonthsleadinguptothegloballaunchon�8September,SmartPRpreppedselectedkeyinternationalandnationalmediainpersonalised,one-on-onedemonstrations.

InAugust,SmartPRbroughtThinkCreative,theeventmanagementcompanyintotheequation.WhileSmartPRwasresponsibleforhandlingtheworldwidemediapublicity,ThinkCreativemanagedthespectacular,historymakinggloballauncheventattheBMWEdgeTheatreinFederationSquare.

Thelaunchwasanincrediblesuccess,withapproximately�00guests,includingjournalistsandreportersfromvariousmediaattending.Sincethelaunch,ExitRealityhasbeenaconstantfeatureintheprint,TV,radioandonlinemedia,withover�00newsstoriesappearinginternationallyandnationallytodate.CoveragehasincludedtheinfluentialUSwebsiteDrudgeReportandvariousinternationalmediasuchasSBSTVWorldNews,Channel7Sunrise,SkyNews,theTelegraphUK,andfrontpagesofMXSydney,MelbourneandBrisbane.

Teco

1300 Insurance

ExitReality

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Integrated Marketing Services

��

Our success can be attributed to several key factors, but essentially it is the unique combination and integration of these services that separates us from some of the other marketing groups both operationally and financially.

Our capability

Direct Marketing & Sales

Advertising

Channel Planning

Financial Communications

Investor Relations

Public Relations

Media Planning & Buying

Strategic Communications

Events Management




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Case Study 2NEXT DIGITAL, SMS CENTRAL, MOBIDATA GROUP, SMART PR and ThINK CREATIVE for ThE BONGO VIRUS

WhilstCommQuestistheclient,TheBongoVirusisprobablythebestexampleofcollaboration,withintheGrouptodate.ForThe

BongoVirusproject,CommQuestdrewontheco-operationofNextDigital,SMSCentralandMobiDatatodeliveramobilephoneportalwithabilitytoreceiveandsendcontent,buildforaninteractivewebsitethataggregatesmultiplecontentprovisionsfromgames,tunestoinstantmessagingplatformsandsocialnetworking.

AstheBongoVirusislivefrom�9October�008,CommQuesthasbegunutilisingtheexpertiseofSmartPRandThinkCreativetoensurethatthemobilegenerationwilldiscovertheBongorevolutioninthismobileanddigitalentertainmentarena.

Case Study 1BLAND, SMART GROUP, SMS CENTRAL and SMART PR for 1300 INSURANCE

On�June�008,��00InsuranceapproachedTheSmartGrouptoperformconsultativeservicesincludingahostedIVR(voice-automatedresponseplatform)solutionfortheiraggregatedInsuranceproductportfolioto

retailcustomers.FromtheinitialmeetingitwasidentifiedthattheCommQuestGroupwasabletodeliveradditionalservicesthroughBlandandSMSCentraltoassistinmarketingandpromotingthe��00insuranceproduct.

Bland,aspecialistindigitalcommunicationstrategyproducedanew,cleanwebsitefor��00InsurancewhileSMSCentralintegrateditsSMSgatewayinto

Smart’scallcentreoperationstoallowpotentialcustomerstotextforaninsurancequote,ineffectaleadgeneratorfor��00Insuranceandtheirassociates.

SmartintegratedthefullIVRsolution,whichconnectedallof��00’sassociatesanddeliveredafullreportingbackendsolutionontimeandwithinbudget.

�7

Mobile Subscribers

4.81Bworldwide by 2012

Mobile Phone Advertising Marketing

forecasts to be

20Bby 2012

Number of Monthly visitors to Social Networking

Sites =

100MWorldwide

Throughafusionofideasandtechnology,CommQuestprovidesdigitalandmobilesolutionsthatareasuniqueasourclientsandareattheforefrontoftheindustry.Ourcomprehensiverangeofservicesincludeswebdevelopmentandsurveycapabilitiesthroughtosoftwaredesignanddevelopmentformobilemarketingrequirements.

It’s a different landscape nowAsarelativelynewdivisionforCommQuest,ourcollaborativeapproachofmeetingclientneedswithcuttingedgeDigital&MobileMarketingsolutionswillbefullyrealisedinthecomingyearhoweveroursubsidiarieshavebeguntoworktogethertoachievesignificantandsuccessfulresults.

�6

Our capability

Web Design

Interactive Media

Mobile Marketing

SMS Message Information Services

Digital Marketing

Premium SMS & MMS Aggregator

Mobile Application Development

Digital & Mobile Marketing

It is believed that about half of all traditional advertising does not reach the right audience. Advertising on the web and on mobile phones has huge potential to connect brands with consumers at any time of the day and night, within a specific location but it must be creative, relevant and non-intrusive.




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Financial Statements

CommQuest 2008 Business Review & Financial Report �9

a new kind of beatThe difference is:

�8

Viral Campaigns to attract customers

Web, TV, Print and SMS

campaigns

(i.e. YouTube)with call to action

SMS

199B

ongo

visi

t th

ebon

govi

rus.

com

Users receive the Bongo Virus on mobile or join

The Bongo People’s Front on the web

to have access to the apps

Customer Data Storage

(Data Base Sales)

Customer Demographics StoredCommQuest Marketing

(Push marketing campaigns)

Potential Mobile & Web

Advertising Customers

(i.e.

free

gam

es f

or

wat

chin

g a

ds)

BONGO Peoples Front

ASK BONGO

BONGO Tunes

BONGO Chat

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�0 CommQuest 2008 Business Review & Financial Report ��

Inrelationtoremuneration,theNominationandRemunerationCommitteeisresponsibleformattersincludingreviewing,approvingandrecommendingtotheBoardforadoptionexecutiveremunerationandincentivepoliciesandpracticesandannuallyconsidering,approvingandrecommendingtotheBoardbothexecutiveandnon-executiveremuneration.

(e) Audit and Risk Committee

TheAuditandRiskCommitteeshouldideallycompriseatleastthreeDirectors,amajorityofwhoareindependentdirectorsandthechairmanofwhichisindependentandnotthechairmanoftheBoard.

TheprincipalfunctionsoftheAuditandRiskCommitteeinclude:

(i) HelpingtheBoardtoachieveitsobjectivesinrelationto:

(A) Financialreporting;

(B) Theapplicationofaccountingpolicies;

(C) Complianceandimplementationofbusinesspoliciesandpractices;

(D) Legalandregulatorycompliance;and

(E) Internalcontrolandriskmanagementsystems.

(ii) Promotingacultureofcompliance;and

(iii) EnsuringeffectiveexternalandinternalauditfunctionsandcommunicationsbetweentheBoardandtheexternalandinternalauditors.

(f) Mergers and Acquisitions Committee

ThepurposeoftheCompany’sMergersandAcquisitionsCommitteeistoassisttheBoardinitsresponsibilityrelatingtoassetsandbusinessboughtandsoldbytheGroup.

TheMergersandAcquisitionsCommitteemustconsistof(asaminimum):

i) atleastonenon-executivedirector;and

ii) theCompany’sChiefExecutiveOfficer

ThedutiesandresponsibilitiesoftheMergersandAcquisitionsCommitteeare:

(A) toreceiveamonthlyreportfrommanagementdetailinganytransactionsbeingconsideredbyanycompanyintheGroup;

(B) theMergersandAcquisitionsCommitteemustdeterminewhatfurtherinformation,ifany,itrequiresinconnectionwithanyprospectivetransaction;

(C) thecommitteemustprovideongoingadvicetomanagementabouttheprices,term,structure,integrationplans,andstrategicmanagement,amongothermatters,ofproposedtransactions,andassistinframingtheoverallstrategicgoalsofmergersandacquisitionactivitybytheGroup;and

(D) thecommitteemustkeepthefullBoardofDirectorsappraisedofkeymatters,anddirectmanagementtoseektheadviceandconsentofthefullBoardasandwhennecessary.

(g) Code of Conduct

CommQuesthasadoptedacodeofconductforDirectorsandCommQuestemployeesandcontractors.AswellasthelegalandequitabledutiesownedbyDirectorsandCommQuestemployeesandcontractors,thepurposeofthiscodeofconductisto:

(i) articulatethehighstandardsofintegrity,ethicalandlaw-abidingbehaviourexpectedofDirectorsandCommQuestemployeesandcontractors;

(ii) requiretheobservanceofthosestandardtoprotectandpromotetheinterestofCommQuest;

(iii) protectshareholdersandotherstakeholders(includingemployees,customers,suppliersandcreditors);and

(iv) setouttheresponsibilityandaccountabilityofDirectorsandCommQuestemployeesandcontractorstoreportandinvestigateanyreportedviolationsofthecodeorunethicalorunlawfulbehaviour.

(h) Securities trading policy

CommQuesthasadoptedasecuritiestradingpolicywhichoutlineswhenDirectors,seniormanagementandotheremployeesandcontractorsofCommQuestmaydealinsharesandothersecuritiesofCommQuesttradedonASX.

(i) ASX Corporate Governance Council

UndertheListingRules,CommQuestisrequiredtoprovideastatementinitsannualreportdisclosingtheextenttowhichithasfollowedintherelevantreportingperiodtheGoodCorporatePrinciplesandRecommendationspublishedbytheASXCorporateGovernanceCouncilon�August�007.TheASXCorporateCouncilhasrecognisedthattherangeinsizeanddiversityofcompaniesissignificantandthatitmaynotbecommerciallypracticableforsomecompanies(suchasCommQuest)tofollowalloftherecommendations.AsatthedateofthisReport,CommQuestcomplieswithanumberof,butnotall,oftherecommendations.

Corporate Governance StatementFor the year ended 30 June 2008

TheDirectorsofCommQuesthaveadoptedpracticesandproceduresforthecorporategovernanceoftheGroup.TheseestablishtheframeworkofhowtheDirectorscarrytheirdutiesandobligationsonbehalfofshareholders.

(a) Market disclosure protocol

CommQuesthasadoptedamarketdisclosureprotocol.Theobjectivesofthisprotocolaretoensurethat:

(i) CommQuestimmediatelydisclosesallpricesensitiveinformationtoASXasrequiredundertheListingRules;and

(ii) officersandemployeesofCommQuestareawareoftheCompany’scontinuousdisclosureobligations.

AnypricesensitiveinformationshallbereportedtotheBoardbytheCEO,CFOorCompanySecretarytohelptheBoardachieveitsobjectivetoestablish,implementandsuperviseaneffectivecontinuousdisclosuresystem.

TheBoardisresponsiblefor:

(i) establishingasystemtomonitorcompliancewithcontinuousdisclosureobligations;

(ii) decidingifinformationshouldbedisclosedtoASX;and

(iii) monitoringregulatoryrequirementssothattheprotocolcontinuestoconformwiththoserequirements.

(b) Board of Directors and its composition

TheBoardisaccountabletotheshareholdersfortheoveralldirection,performance,managementandcorporategovernanceofCommQuest.TheBoardhasbeenstructuredtoprovideablendofexperienceandskillstoensuretheeffectivegovernanceoftheCompany.Itcomprisesthreenon-executivedirectors,includingtheChairmanandthethreeexecutivedirectors,includingtheChiefExecutiveOfficer.

TheBoard’sresponsibilitiesinclude:

(i) overseeingtheGroup,includingitsaccountabilityandcontrolsystem;

(ii) appointingtheCEO;

(iii) ratifyingseniorexecutiveappointments,organisationalchangesandseniorexecutiveperformance,remunerationpoliciesandpractices;

(iv) approvingthecorporatestrategyoftheGroupandmonitoringperformanceobjectives;

(v) approvingandmonitoringtheprogressofmajorcapitalexpenditures,capitalmanagementinitiatives,acquisitionsanddivestitures;

(vi) reviewing,ratifyingandmonitoringsystemofriskmanagement,internalcomplianceandcontrolandlegalcompliancetoensureappropriatecomplianceframeworksandcontrolsareinplace;and

(vii) approvingandmonitoringfinancialandotherreporting.

(c) Board committees

TheBoardhasestablishedthefollowingcommitteestoassistitincarryingoutitsresponsibilitiestosharedetailedworkandtoconsidercertainissuesandfunctionsindetail:

(i) NominationandRemunerationCommittee;

(ii) AuditandRiskCommittee;and

(iii) MergersandAcquisitionsCommittee.

(d) Nomination and Remuneration Committee

TheNominationandRemunerationCommitteewillideallycompriseatleastthreeDirectors,amajorityofwhomareindependentdirectors.TheobjectiveoftheNominationandRemunerationCommitteeistohelptheBoardachieveitsobjectivetoensureCommQuest:

(i) hastheBoardofaneffectivecomposition,sizeandCommitteetoadequatelydischargeitsresponsibilitiesandduties;

(ii) hascoherentremunerationpoliciesandpracticestoattractandretainexecutivesandDirectorswhowillcreatevalueforshareholders;

(iii) observesthoseremunerationpoliciesandpractices;and

(iv) fairlyandresponsiblyrewardsexecutiveshavingregardtotheperformanceofCommQuest,theperformanceoftheexecutivesandthegeneralremunerationenvironmentinmarketsinwhichitoperates.

TheNominationandRemunerationCommitteeisresponsibleformattersincludingidentifyingandrecommendingtotheBoardnomineesformembershipoftheBoardincludingtheCEOandensuringsuccessionplansareinplacetomaintainanappropriatebalanceofskillsontheBoardandreviewingthoseplans.



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�� CommQuest 2008 Business Review & Financial Report ��

Mr Eric B Coulson(ExecutiveDirectorandChiefMarketingOfficer)

BoydiscurrentlyanexecutivedirectorandtheCMOofCommquestLimited.Priortothis,BoydstartedasagraphicdesignerbeforestudyingadvertisingatRMITandwinningtheRMITSextonMediaStrategyAward.BoydstartedatMitchellMediainamediaplanningandbuyingrole.BoydthenjoinedDMB&Binthemediadepartmentbeforegoingtoanewadvertisingagency,Mattingly&PartnersinSydney.BoydthencamebacktoMelbournetojoinLeoBurnettConnaghan&MaybeforejoiningOptimediawhereheworkedasastrategist.

Throughhisexperiences,Boyddevelopedaninterestinanalysingthebehaviouralsideofmarketingresults,througheconometricsandmodelbuilding.DuringhistimeatOptimedia,Boydreceivedanumberofmediaeffectivenessawards.

In�00�,BoydandKellyAddiscreatedBoilerRoomandwerelaterjoinedbyJonathonNoal.BoydhasbeenwithBoilerRoomasStrategicPlanningDirectorsinceitsinceptionandseenitgrowtoateamofover�0professionals.BoilerRoomhasreceivednumerousawardsincludingwinnerofthe�006AdNewsDirectAgencyoftheYearandwasfinalistinthe�006AdNewsAgencyoftheYear.

HeisamemberoftheBoard’sAuditandRiskCommittee.

DuringthepastthreeyearsMrCoulsonhasnotservedasadirectorforanyotherlistedcompanies.

Mr Paul X TobinB.Arts(PoliticalScience&History),DoctorateofLaw(Non-ExecutiveDirector)

Pauliscurrentlyanon-executivedirectorforCommquestLimited.Priortothis,PaulhashadanexecutivecareerinAustraliaandoverseasfocusedongrowingcompaniesbythesuccessfulpurchaseandintegrationofcomplementarybusinesses.Paulhasover�0yearsglobalseniorexecutiveexperienceinmergersandacquisitions,operations,integration,changemanagement,corporatestrategy,customerandinvestorrelations,disputeresolutionandelectroniccommerce.

HismostrecentexecutiverolewasasChiefLegalOfficerandCompanySecretaryofComputershareLtd(ASX:CPU),acompanythatgrewinrevenueoversixfoldduringhissevenyeartenure,primarilythroughacquisitions.

HeisChairmanoftheBoard’sNominationandRemunerationCommitteeandChairmanoftheBoard’sMergersandAcquisitionsCommittee.

DuringthepastthreeyearsMrTobinhasnotservedasadirectorforanyotherlistedcompanies.

Mr Thomas O’BrienAM,B.Commerce(Hons),B.Economics.,F.C.A,F.C.P.A.(Non-ExecutiveDirector)

Tomiscurrentlyanon-executivedirectorofCommquestLimited.Priortothis,TomwasChiefExecutiveOfficerforErnst&YounginMelbournefor��yearsandChairmanofErnst&YoungAustraliain�995and�996.BeforehisinvolvementinthemanagementofErnst&Young,Tomwasaleadingcorporatetaxandcorporatefinancepartner.

TomisChairmanofCCIInvestmentManagementLtd,DomainesTatiarraLtdandthelistedcompany,AscentPharmahealthLtd.HeisalsoDirectorofUltraPayLimited,NewzealLtdandVirtualCommunitiesLimited.

TomwasadmittedasaMemberoftheOrderofAustraliain�00�forhisworkwithreligiousandcharitableorganisationsandcontributiontobusiness.

HeisChairmanoftheBoard’sAuditandRiskCommittee.

DuringthepastthreeyearsMrO’Brienhasalsoservedasadirectorofthefollowingotherlistedcompanies:

UltraPayLimited–AppointedJune�000*

AscentPharmahealthLtd–AppointedApril�00�*

*Denotescurrentdirectorship

ü

ü

Yourdirectorssubmittheirreportfortheyearended�0June�008.

Directors

ThenamesanddetailsoftheCompany’sdirectorsinofficeduringthefinancialyearanduntilthedateofthisreportareasfollows:

Directorswereinofficeforthisentireperiodunlessotherwisestated.

Names, qualifications, experience and special responsibilities

Mr John A hallMBAFAICD(Non-ExecutiveChairman)

Johnisthenon-executiveChairmanofCommquestLimitedandisaprofessionalnon-executivedirector.HeisadirectoroftheBankofChina(Australia)Limited,theAustralianretailbankingsubsidiaryoftheBankofChina.

HeisaDirectorofPayPalAustraliaLimited,asubsidiaryofeBayInc.JohnrecentlysteppeddownafterthreeyearsasChairmanofChannelFinancialCommunicationPtyLtd,aleadinginvestorrelationsconsultingfirm.HewasDirectorofthelistedcompanyTribecaLearningLimitedfromNovember�00�untilitsacquisitionin�006byKaplanInc,asubsidiaryoftheWashingtonPostGroup.

JohniscurrentlyChairmanofthePsychiatricRehabilitationAssociationIncandaDirectorofHockeyAustralia.

Priortohiscareerasanon-executivedirector,JohnwasChiefExecutiveOfficer,AustralianInstituteofCompanyDirectorsforthreeyearsuntilJanuary�00�.HewasManagingDirectorofAustraclearLimited,theoperatorofthecentralsecuritiesdepositoryandsettlementsystemtotheAustralianfinancialmarketsfrom�995toDecember�000.Between�98�and�995hewasCEOoftheInternationalBanks’andSecuritiesAssociationofAustralia.JohnhasaMBAfromDeakinUniversityandapost-graduatediplomainmanagementfromRMIT.HeisaFellowoftheAustralianInstituteofCompanyDirectors.

HeisamemberoftheBoard’sAuditandRiskCommitteeandNominationandRemunerationCommittee.

DuringthepastthreeyearsMrHallhasalsoservedasadirectorofthefollowingotherlistedcompanies:

TribecaLearningLimited–AppointedNovember�00�;ResignedMay�006ü

Mr William h A ScottB.Arts(PublicRelations)(ExecutiveDirectorandChiefExecutiveOfficer)

WilliamisthefounderandCEOofCommquestLimitedwhichwascreatedinearly�007andsubsequentlylistedinNovember�007ontheASX.Williamwasalsoco-founderandCEOofoneofAustralia’sfastestgrowingsalesandmarketingcompany,TheSmartGroup.TheSmartGroupwasinthetop�0oftheBRWTop�00forfourconsecutiveyearsunderWilliam’sleadership.TheSmartGrouphasalsobeenrecognisedthroughtheAustralianAchieverAwardsforexcellenceincustomerrelations.Williammostrecentlywasawardedthe�008ADMAVictorianYoungDirectMarketeroftheYear.

WilliamholdsaBachelorofArtsdegreemajoringinPublicRelations,fromRMITUniversity,Melbourne.InAugust�006,WilliamwasfinalistintheErnst&YoungEntrepreneuroftheYearAwards–YoungCategory.

HeisamemberoftheBoard’sNominationandRemunerationCommitteeandMergersandAcquisitionsCommittee.

DuringthepastthreeyearsMrScotthasnotservedasadirectorofanyotherlistedcompanies.

Mr Jordan K MuirB.Business(Marketing)(ExecutiveDirectorandChiefOperatingOfficer)

JordanisbothanexecutivedirectorandCOOofCommquestLimited.PriortothisJordanwasaco-founderwithWilliamScottandiscurrentlyTheChiefExecutiveOfficerofSalesMarketingandRealTechnologies–SmartPtyLtd.JordanhasplayedanintegralpartinbuildinganddevelopingtheinformationtechnologyandaccountingsystemsthathavefacilitatedTheSmartGroupinbecomingoneofAustralia’sfastestgrowingmarketingcompanies.

JordanhasworkedonanumberofintegratedmarketingcampaignswithcompaniesincludingNewsLimited,Optus,Vodafone,MCIWorldcomandalistofothertelecommunicationsandelectricityproviders.Inhispositionhehasdevelopedsystemsthatmanagelargeamountsofdata,salesdistributionandcommissions.

JordanholdsaBachelorofBusinessmajoringinMarketingfromMonashUniversity,Melbourne.

HeisamemberoftheBoard’sMergersandAcquisitionsCommittee.

DuringthepastthreeyearsMrMuirhasnotservedasadirectorforanyotherlistedcompanies.

Directors’ Report30 June 2008



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Direct Marketing

Thedirectmarketingsegmentisprimarilymadeupofthreebusinesseswithintheorganisation,beingTheSmartGroup,AustralMediaGroupandBoilerRoomDirect.Thissegmenthasproficienciesincustomeracquisition,contactcentresolutions,custompublishinganddirectmarketingcampaigns.

ThecurrentyearhasbeenrelativelygoodforthedirectmarketingdivisionoftheGroupwithyearonyearrevenuegrowthup�8%andyearonyearEBITDAgrowthup88%.SegmentSaleswere$�6.�millionfortheperiodending�0June�008withstrongrevenuegrowthcomingthroughinthelatterpartofthefinancialperiodduetosometimingdelaysonkeyclientcampaigns.

Advertising and Communications

TheadvertisingandcommunicationssegmentconsistsofanumberofbusinesseswithintheGroup,beingBoilerRoomGroup,ThinkCreative,PyroMedia,Point9,ChannelFinancialCommunicationandShac.Thissegmentspecialisesinadvertising,events,mediaplanning,analysis,financialcommunicationsandpublicrelations.ThissegmenthasexperiencedsteadygrowththroughouttheyearasawholewithSalesfromthisSegmentbeing$9.�millionandEBITDAof$0.59�millionfortheperiodending�0June�008withonlysometimingdelaysinacoupleofcontractsrestrictingstrongergrowthinthisSegmenttowardstheendofthisperiod.


ThedigitalandmobilemarketingsegmentconsistsofbusinesseswithintheGroupsuchasNextDigitalGroup,SMSCentralAustralia,ImpulseBusinessSolutions,PlatinumTVandInspirus.Thissegmentspecialisesindigitalmarketingandstrategy,mobilemarketing,premiumandstandardSMS/MMSsolutionsincludingaggregation,aswellasdigitalpubliccontentprovisioning.ThissegmenthasexperiencedverystronggrowththroughouttheyearasawholewiththeSalesfromthisSegmentbeing$�9.9millionandEBITDAof$�.�millionfortheperiodending�0June�008withexceptionalperformancesnotedthroughbothImpulseBusinessSolutionsandtheacquisitionofWebDevelopmentGroup(NextDigital).

Performance Indicators

ManagementandtheBoardmonitortheGroup’soverallperformance,fromitsimplementationofthemissionstatementandstrategicplanthroughtotheperformanceoftheGroupagainstoperatingplansandfinancialbudgets.TheBoard,togetherwithmanagement,haveidentifiedkeyperformanceindicators(KPIs)thatareusedtomonitorperformance.KeymanagementmonitorKPIsonaregularbasis.DirectorsreceivetheKPIsforreviewpriortoeachmonthlyBoardmeetingallowingalldirectorstoactivelymonitortheGroup’sperformance.

Dynamics of the Business

WiththeGrouplistingontheASXinNovember�007,themarketconditionsinwhichthebusinessoperateshavechangeddramaticallyinwhatisarelativelyshorttimeperiod.ThegeneralmarketandeconomicconditionshavesignificantlyretractedwhichisevidencedinnotonlythesharepriceoftheCompanyitself,butthemarketasawholeand,inparticular,themarketcomparablesofCommQuest.

TheCompany,albeithavingprovidedthemarketwithatradingupdateastoitsresultsfortheproformaperiodending�0June�008werebelowtheCompany’sinitialexpectations,itremainsoperationallystrongandinaverygoodpositiontocontinuetogrowprimarilyduetoitsdiversificationinserviceofferingssplitacrossitsthreekeysegments.

ManagementbelievethattheGroupasawholehasperformedwellinaslowingmarketwhichtraditionallyhasnotassistedinthegrowthofotherbusinessesinthemarketingandcommunicationsindustry.However,CommQuestispositionedwellgoingforwardandmanagementarecautiouslyconfidentoftheGroup’sabilitytocontinueitsgrowthambitionsandtosuitablymitigateanyexposuresadown-turningeconomymayhaveontheGroup.

Directors’ Report (continued)

30 June 2008

Interests in the shares and options of the company and related bodies corporate

Asatthedateofthisreport,theinterestsofthedirectorsinthesharesandoptionsofCommquestLimitedwere:

Number of Ordinary

Shares

Number of Preference

Shares

Number of

Options over

Ordinary Shares

MrJHall ��5,000 Nil Nil

MrWScott ��,79�,��8 Nil �50,000

MrJMuir ��,989,��0 Nil ��,500

MrBCoulson

�,�97,8�0 Nil ��,500

MrPTobin �00,000 Nil 80,000

MrTO’Brien

Nil Nil 80,000

Company Secretaries

Mr Jonathon Meredith-SmithB.Business.C.P.A.

JMeredith-SmithisjointcompanysecretaryofCommquestLimitedandtheCompany’sChiefFinancialOfficer.

Ms Sophie KarzisB.Juris,LLB

SKarzisisjointcompanysecretaryofCommquestLimited.

Dividends

Nodividendswerepaidordeclaredduringtheyearended�0June�008.

Principal Activities

Theprincipalactivitiesduringtheyearofentitieswithintheconsolidatedentitywere:

Directmarketing

AdvertisingandCommunications

Digitalandmobilemarketing

ü

ü

ü

Operating and Financial Review

CommquestPtyLtdwasincorporatedon�January�007.Fromthatdateuntil�5November�007,thedateitwaslistedontheASX,itremaineddormantanddidnottrade.FollowingitslistingontheASXandtheacquisitionoftheportfoliocompanies,itcommenceditsbusinessoperationsandcontinuesasanongoingconcern.

Duringtheyearended�0June�008,theDirectorsidentifiedthatthebusinesscombinationbetweenCommQuestandtheportfoliocompaniesconstitutedareverseacquisitionasdefinedunderAccountingStandardAASB�BusinessCombinations.Thereforeoneoftheportfoliocompanies,SalesMarketingandRealTechnologies–SMARTPtyLtd,wasidentifiedastheacquirer.CommquestLimitedisthelegalparentandalloftheportfoliocompanies,includingSalesMarketingandRealTechnologies–SMARTPtyLtd,arelegalsubsidiaries.

Theconsolidatedfinancialstatementsfortheyearended�0June�008havethereforebeenissuedunderthenameofthelegalparent,CommquestLimited,butrepresentacontinuationofthefinancialstatementsofthelegalsubsidiary,SalesMarketingandRealTechnologies–SMARTPtyLtdasthedeemedacquirerforaccountingpurposes.

Thecomparativeresultsfor�007arefortheexistingSalesMarketingandRealTechnologies–SMARTPtyLtdandtheconsolidatedfiguresfor�008showtheresultsforthenewSMARTgroup(comprisingSalesMarketingandRealTechnologies–SMARTPtyLtd,TheAdvertisingCentrePtyLtd,SMARTPRCorporationPtyLtd,IBSUnitTrust/ImpulseBusinessSolutionsPtyLtd)forthe��monthsto�0June�008,whichincludestheresultsoftheotherentitiesfromtheapplicableacquisitiondates.



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30 June 2008

Asset and capital structure

Debts

2008 Total

Operations $

2007 Total

Operations $

Tradeandotherpayables

��,065,�� ,�6�,8��

Interestbearingloansandborrowings

�7,8��,675 �,7��,6�6

Cashandcashequivalents

(6,5��,�06) (��7,�55)

Netdebt ��,�57,60� �,960,��5

Totalequity ��,80�,958 785,7�6

Totalcapitalemployed

7�,�59,560 �,7�6,0��

Gearing ��% 8�%*

Fair value/ Consideration Share issue Cash Shares price

Entity $ # $

TheAdvertisingCentrePtyLtd – – –

SMARTPRCorporationPtyLtd ��7,�57 ��7,�57 �.00

IBSUnitTrust* – – –

ImpulseBusinessSolutionsPtyLtd �,��5,0�� ,��5,0�� .00

ShacPtyLtd ��5,606 �77,�8� �.00

SMSCentralAustraliaPtyLtd* �,000,000 – –

PyroMediaPtyLtd 7�,500 7�,500 �.00

ThinkCreativeManagementPtyLtd 87�,55� 87�,55� �.00

BoilerRoomGroupPtyLtd �,675,8�5 �,675,8�5 �.00

BoilerRoomDirectPtyLtd(subsidiaryofBoilerRoomGroupPL) �,�07,7�6 �,�07,7�6 �.00

BoilerRoomInteractivePtyLtd(subsidiaryofBoilerRoomGroupPL) – – –

BlandConsultingPtyLtd(subsidiaryofBoilerRoomGroupPL) – – –

ChannelFinancialCommunicationPtyLtd �,��5,000 �,�5�,6�6 �.�7

WebDevelopmentGroupPtyLtd �0,000,000 7,��,580 0.6�andcontrolledentities �,��0,0�� 0.5�

AustralMediaGroupPtyLtd �,756,�50 �,756,�50 0.�8

PlatinumTVPtyLtd �00,000 – –

Point9PtyLtd – – –

InspirusPtyLtd �,�78,�0� ��,0�� 0.�5

*At�0June�008,theGrouphasrecognisedadeferredsettlementobligationinrespectoftheseentitiesandaccordinglyasatthedateofthisreport,noadditionalcashorshareshadbeenissued.

Gearing

ThelevelofgearingintheGroupatJune�008iswithintheacceptablelimitssetbythedirectors.Management’spoliciesfordeterminingwhetherfixedorfloatingratesofinterestareenteredintoareexaminedonayearlybasis.

*Thelevelofgearingfortheyearended�0June�007

representswhenthecompanywasprivatecompany.

Share issues during the year

Thefollowingacquisitionswerefundedbybothcashandbytheissueofordinaryshares.

Operating Results for the Year

Theyearwasanexcellentperiodwherethecompany’sstrategyofgrowthwasachievedthroughtheacquisitionofmoreclients,thefurtherexpansionofexistingclientsandtheacquisitionofspecialistmarketingservicesbusinesses.

TheGroup’snetprofitfortheyearafterincometaxis$�,�8�,��(�007:$6��,��7)representinganincreaseof�70%(�007:��0%)fromthepreviousyear.Theacquisitionofbusinessesduringtheyearasdetailedinnote�8tothefinancialstatementshasalsoassistedinthegrowthoftheGroup.

2008 $

2007 $

Change %

Netprofitfromcontinuingoperations

�,�8�,�� 6��,��7 �70

Summarisedoperatingresultsareasfollows:

Business Segments

2008 Revenues

$

2008 Results

$

Directmarketing �6,��,6�� ,�6�,9�7

Advertisingandcommunications

9,�6�,08� 59�,�70

Digitalandmobilemarketing

�9,97�,5�� ,��7,�59

Consolidatedentityadjustments

(5,�0�,760) –

Financecosts – (�,�85,�75)

Incometaxexpense – (�,��,�5�)

Non-segmentandunallocatedrevenues

550,9�� –

Non-segmentandunallocatedexpenses

– (�,59�,809)

Consolidatedentityrevenueandprofitfortheyear

50,895,�07 �,�8�,��

Shareholder Returns

TheGroupispleasedtoreportthatreturntoshareholdersthroughcapitalgrowthhasstartedtoreflectthemanyinitiativesputinplacebymanagement.Thisisreflectedinthesignificantimprovementinmostfinancialmeasuresforthecurrentyear.TheCompanywillfurtherelaborateonthesemeasuresinfutureupdatestothemarketnowthatithasbeentradingforasignificantperiodoftimebywhichfutureShareholderReturnswillbesuitablycomparedagainst.

Review of Financial Condition

Liquidity and Capital Resources

Theconsolidatedcashflowstatementillustratesthattherewasanincreaseincashandcashequivalentsintheyearended�0June�008of$6,�05,�5�(�007:$��,��).Theincreaseincashinflowincomparisonwiththeprioryearistheresultofanumberoffactors.Operatingactivitiesgenerated$�,7�8,07�(�007:$�,0�9,�86)ofnetcashin-flows.Thisincreaseincomparisonto�0June�007islargelyduetofundingofacquisitionsofthesubsidiarieswhicharedisclosedindetailatNote�8oftheannualreportresultingfromthestrategiesimplementedbytheBoard.Thisnetincreaseinthecashflowsfromoperatingactivitieshasbeenoffsetbyanetincreaseintheamountofcashusedforinvestingactivitiesto$�9,�9�,��5(�007:$�,�7�,7�6),whichwasmainlyattributabletotheacquisitionsofsubsidiarieswhicharedisclosedindetailatNote�8oftheannualreport.Therewasalsoa$��,�50,6��cashinflow(�007:$�86,76�cashinflow)fromfinancingactivitieslargelyduetopaymentsowedtoVendorsoftheacquisitionstheGroupmadethroughouttheyear.



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Ofthe��.5millionofsharesbeingplaced,�.9�millionwillbeissuedonorabout�September�008withthebalancesubjecttoCommQuestshareholderapproval,whichwillbesoughtattheCompany’sAGMinNovemberofthisyear.TheCompanyispermittedtoissueupto�5%ofitscapitalina��monthperiodwithoutshareholderapprovalandasthecompanyhasalreadyissued/isrequiredtoissue7.��millionsharesasconsiderationpayableinrelationtothebusinessesacquiredatandafterIPO(forwhichnowaiverofASXListingRule7.�applies),CommQuestshareholderapprovalwillberequiredforpartoftheplacement.

Likely Developments and Expected Results

TheCommQuestGrouphasstartedthenewyearwellwiththeGroupexpectedtosignificantlyoutperform�008.CommQuestwillcontinuetoinvestinconsolidatingandimprovingthesystems,processesandinfrastructureofitsbusinessessoastosupportthegrowthandsustainabilityofitsdomesticandemerginginternationalbusinesses.InformationonfuturedevelopmentsintheGroup’soperationsandexpectedresultsofoperationshavenotbeenincludedinthisreport,asthedirectorsbelievethatthiswouldbelikelytoresultinunreasonableprejudicetothecompany.

Share Options

Unissued Shares

Asatthedateofthisreport,therewere750,000unissuedordinarysharesunderoptions(750,000atthereportingdate).Refertonote�6ofthefinancialstatementsforfurtherdetailsoftheoptionsoutstanding.Optionholdersdonothaveanyright,byvirtueoftheoption,toparticipateinanyshareissueofthecompanyoranyrelatedbodycorporate.

Shares issued as a result of the exercise of options

Duringthefinancialyear,therewerenooptionsexercisedtoacquirefullypaidordinarysharesinCommquestLimited.

Indemnification and Insurance of Directors and Officers

CommQuesthasenteredintoaDeedofAccess,InsuranceandIndemnitythatgrantseachDirectoracontractualrightto:

indemnityfromCommQuestforliabilitiesincurredasanofficerofCommQuest(andifapplicable,otherentitieswithintheGroup)(totheextentpermittedbytheCorporationsAct);

directors’andofficers’insurancecover(totheextentpermittedbytheCorporationsAct)fortheperiodthattherelevantDirectorisadirectorofCommQuest(anditapplicableotherentitieswithintheGroup)andfor7yearsafterthatDirectorceasestoholdoffice;and

accesstodocumentsandrecordsofCommQuestandanyotherentitywithintheGroup,bothwhiletherelevantDirectorisadirectorofCommQuest(andifapplicable,otherentitieswithintheGroup)andafterthatDirectorceasestoholdofficeforthepurposesexpresslypermittedbythedeed.

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30 June 2008

Risk Management

TheGrouptakesaproactiveapproachtoriskmanagement.TheBoardisresponsibleforensuringthatrisks,andalsoopportunities,areidentifiedonatimelybasisandthattheGroup’sobjectivesandactivitiesarealignedwiththerisksandopportunitiesidentifiedbytheBoard.TheGroupbelievesthatitiscrucialforallBoardmemberstobeapartofthisprocessofidentifyingrisksandopportunities,oncemattersareidentifiedwhichrequirefurtherattention,thesearedelegatedtotheAuditandRiskCommittee.

TheBoardhasanumberofmechanismsinplacetoensurethatmanagement’sobjectivesandactivitiesarealignedwiththerisksidentifiedbytheBoard.Theseincludethefollowing:

Boardapprovalofastrategicplan,whichencompassestheGroup’svision,missionandstrategystatements,designedtomeetstakeholders’needsandmanagebusinessrisk.

ImplementationofBoardapprovedoperatingplansandbudgetsandBoardmonitoringofprogressagainstthesebudgets,includingtheestablishmentandmonitoringofKPIsofbothafinancialandnon-financialnature.

Significant Changes in the State of Affairs

Thecompanysecureda$��millionDebtfacilitywithANZinNovember�007;thefacilitysubsequentlyincreasedinFebruary�008to$�8.�million.$�5millionwillbeusedtofundacquisitionsand$��.�millionwillbeusedforoperationalfundingrequirements.Drawdownsat�0June�008totalled$�6.98millionandtothedateofthisreporttotal$�5.88million.

Thecompanycompletedthefollowingacquisitionsinthe6monthstoJune�008:

WebDevelopmentGroupPtyLtdshareacquisitioncompletedon�9February�008.

PlatinumTVPtyLtdpartshareacquisitioncompletedon��May�008.

Point9PtyLtdshareacquisitioncompletedon�June�008.

AustralMediaGroupPtyLtdshareacquisitioncompletedon�June�008.

InspirusPtyLtdbusinessacquisitioncompletedon�6June�008.

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InMay�008thecompanyacquired�0%oftheissuedcapitalofPlatinumTVPtyLtd“PlatinumTV”withacommitmenttoacquiretheremaining80%overthenextfourtofiveyears.Theremaining80%willbeachievedin�tranchesandwilldependentonPlatinumTVachievingspecificfinancialperformancehurdles.Ifthesearenotmetthenthecompanyhastherighttoterminatetheagreement.

InJune�008thecompanyenteredintoabindingsaleagreementtoacquirethebusinessofInfodialAustraliaPtyLtdwhichwasnotyetcompletedatthedateofthisreport.

Significant Events After the Balance Date

ThecompanycompletedtheacquisitionofMobiDataHoldingsLtd“MobiData”on�July�008.Purchaseconsiderationwasmadeupofapre-completionpayoutof$�00,000,usedtosecurethetransaction,paidinApril�008,subjecttospecificconditionssetoutinthesaleagreement,adeferredpaymentandanapplicationrevenuepayment.Theapplicationrevenuepaymentistobeequalto50%oftherevenuesgeneratedfora�0monthperiodfromtheacquiredapplicationsoftwarelaunchdate.Themaximumamountpayablebythecompanyiscappedat$�6,000,000.Thedeferredpaymentelementofthepurchaseconsiderationwillonlybepayableiftheapplicationrevenuepaidbythecompanyislessthan$�00,000fortheperiodfromthelaunchdateto��December�008.Thedeferredpaymentiscalculatedbysubtractingapplicationrevenuepaidfrom$�00,000withthedifferencepayableonorbefore��January�009.

CommQuesthasreachedagreementtoplace��.5millionnewCommQuestshareswithinvestmentfundsmanagedbyLCWIMat�5centseach,raising$�.6�million.Thiswillrepresent�5%ofCommQuest’spost-placementissuedcapital.ProceedswillinitiallybeappliedinthereductionoftheCompany’sexistingdebt.



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ThedirectorsreceivedthefollowingdeclarationfromtheauditorofCommquestLimited.

Auditor Independence and Non-Audit Services

Directors’ Meetings

Thenumberofmeetingsofdirectors(includingmeetingsofcommitteesofdirectors)heldduringtheyearandthenumberofmeetingsattendedbyeachdirectorwereasfollows:

Meetings of Committees

Directors’ Meetings

Audit and Risk

Mergers and Acquisitions

Nomination and

Remuneration

Number of meetings held 8 � � –

Number of meetings attended:

MrJHall 7 � – –

MrWScott 8 – � –

MrJMuir 8 – � –

MrBCoulson 7 � – –

MrPTobin 8 – � –

MrTO’Brien 8 � – –

AlldirectorswereeligibletoattendtheDirectors’MeetingsheldandtherelevantCommitteememberswereeligibletoattendalloftheCommitteeMeetingsheld.

Committee membership

Asatthedateofthisreport,thecompanyhadanAuditandRiskCommittee,aNominationandRemunerationCommitteeandaMergersandAcquisitionsCommitteeoftheBoardofDirectors.

MembersactingonthecommitteesoftheBoardduringtheyearwere:

Audit and Risk

Nomination and Remuneration

Mergers and Acquisitions

MrTO’Brien* MrPTobin* MrPTobin*

MrJHall MrJHall MrWScott

MrBCoulson MrWScott MrJMuir

*Designatesthechairmanofthecommittee


30 June 2008



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Nomination and Remuneration Committee

TheNominationandRemunerationCommitteewillideallycompriseatleastthreeDirectors,amajorityofwhomareindependentdirectors.

TheobjectiveoftheNominationandRemunerationCommitteeistohelptheBoardachieveitsobjectivetoensureCommQuest:

(i) hasaBoardofaneffectivecomposition,sizeandcommitmenttoadequatelydischargeitsresponsibilitiesandduties;

(ii) hascoherentremunerationpoliciesandpracticestoattractandretainexecutivesandDirectorswhowillcreatevalueforshareholders;

(iii) observesthoseremunerationpoliciesandpractices;and

(iv) fairlyandresponsiblyrewardsexecutiveshavingregardtotheperformanceofCommQuest,theperformanceoftheexecutivesandthegeneralremunerationenvironmentinmarketsinwhichitoperates.

TheNominationandRemunerationCommitteeisresponsibleformattersincludingidentifyingandrecommendingtotheBoardnomineesformembershipoftheBoardincludingtheCEOandensuringsuccessionplansareinplacetomaintainanappropriatebalanceofskillsontheBoardandreviewingthoseplans.

Inrelationtoremuneration,theNominationandRemunerationCommitteeisresponsibleformattersincludingreviewing,approvingandrecommendingtotheBoardforadoptionexecutiveremunerationandincentivepoliciesandpracticesandannuallyconsidering,approvingandrecommendingtotheBoardbothexecutiveandnon-executiveremuneration.

Remuneration Philosophy

TheperformanceoftheCompanydependsuponthequalityofitsdirectorsandexecutives.Toprosper,theCompanymustattract,motivateandretainhighlyskilleddirectorsandexecutives.

Tothisend,theCompanyembodiesthefollowingprinciplesinitsremunerationframework:

providecompetitiverewardstoattracthighcalibreexecutives;

linkexecutiverewardstoshareholdervalue;

haveasignificantportionofexecutiveremuneration‘atrisk’;and

establishappropriate,demandingperformancehurdlesforvariableexecutiveremuneration.

Remuneration Structure

Inaccordancewithbestpracticecorporategovernance,thestructureofnon-executivedirectorandexecutiveremunerationisseparateanddistinct.

Non-Executive Director Remuneration

TheBoardseekstosetaggregateremunerationatalevelthatprovidestheCompanywiththeabilitytoattractandretaindirectorsofthehighestcalibre,whilstincurringacostthatisacceptabletoshareholders.

Structure

TheConstitutionandtheASXListingRulesspecifythattheaggregateremunerationofnon-executivedirectorsshallbedeterminedfromtimetotimebyageneralmeeting.Thedeterminationofthecurrentlevelofremunerationreceivedbynon-executivedirectorswasbasedonmarketlevelsofcompensationforcomparablenon-executiveroleswithanaggregateremunerationof$�5�,500peryear(�008:$��8,�0�).

Theamountofaggregateremunerationsoughttobeapprovedbyshareholdersandthefeestructurewillbereviewedannually.TheBoardwillconsiderthefeespaidtonon-executivedirectorsofcomparablecompanieswhenundertakingtheannualreviewprocess.

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30 June 2008

Non-Audit Services

Thefollowingnon-auditserviceswereprovidedbytheentity’sauditor,Ernst&Young.Thedirectorsaresatisfiedthattheprovisionofnon-auditservicesiscompatiblewiththegeneralstandardofindependenceforauditorsimposedbytheCorporationsAct�00�.Thenatureandscopeofeachtypeofnon-auditserviceprovidedmeansthatauditorindependencewasnotcompromised.

Ernst&Youngreceivedorareduetoreceivethefollowingamountsfortheprovisionofnon-auditservices:

$

Taxcomplianceservices �6,55�

IPOservices �,068,��8

Remuneration Report (Audited)

ThisRemunerationReportoutlinesthedirectorandexecutiveremunerationarrangementsoftheCompanyandtheGroupinaccordancewiththerequirementsoftheCorporationsAct�00�anditsRegulations.ForthepurposesofthisreportKeyManagementPersonnel(KMP)oftheGrouparedefinedasthosepersonshavingauthorityandresponsibilityforplanning,directingandcontrollingthemajoractivitiesoftheCompanyandtheGroup,directlyorindirectly,includinganydirector(whetherexecutiveorotherwise)oftheparentcompany,andincludesthefiveexecutivesintheParentandtheGroupreceivingthehighestremuneration.

Forthepurposesofthisreport,theterm‘executive’encompassestheChiefExecutive,seniorexecutives,generalmanagersandcompanysecretariesoftheParentandtheGroup.

Details of key management personnel (including the five highest paid executives of the Company and the Group)

(i) Directors

J.A.HallW.H.A.ScottJ.K.MuirE.B.CoulsonP.X.TobinT.O’BrienAM

Chairman(Non-Executive)ChiefExecutiveOfficerChiefOperatingOfficerChiefMarketingOfficerDirector(Non-Executive)Director(Non-Executive)

(ii) Executives

MrJMeredith-Smith ChiefFinancialOfficer

MrFDunton HeadofMobileMarketing

MrASpanos* ManagingDirector,NextDigitalGroup

MrPKelly** Director,ChannelFinancialCommunication

MrBShaw CorporateManager

MsKPalethorpe*** CorporateLawyer

MrRRamnarain NationalOperationsManager,TheSmartGroup

MrDStewart NationalSalesManager,TheSmartGroup

* Keymanagementpersonfrom�9February�008** Keymanagementpersonfrom�January�008***Keymanagementpersonfrom�December�007



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TheGrouphaspredeterminedbenchmarksthatmustbemetinordertotriggerpaymentsundertheSTIscheme.Onanannualbasis,afterconsiderationofperformanceagainstKPIs,theNominationandRemunerationCommittee,inlinewithitsresponsibilities,determinestheamount,ifany,oftheshorttermincentivetobepaidtoeachexecutive.Thisprocessusuallyoccurswithinthreemonthsafterthereportingdate.

TheaggregateofannualSTIpaymentsavailableforexecutivesacrosstheGroupissubjecttotheapprovaloftheNominationandRemunerationCommittee.Paymentsmadearedeliveredasacashbonusinthefollowingreportingperiod.

STI bonus for 2007 and 2008 financial years

Thebonusesthathavebeenpaidduringtheperiodrelatetothespecificperformanceoftheindividualsthathavereceivedthosebonusesandaretiedtorelevantfinancialmeasurementssuchasprofitand/orrevenuegeneration.Thebonusesarecalculatedeitheronamonthly,quarterlyorannualbasisandarepaidorbecomepayablewhentheCompanybecomesreasonablyawarethattherelevantfinancialmeasurementtargetshavebeenachievedbytheparticularindividualseligibletoreceivebonuses.

Variable Remuneration – Long Term Incentive (LTI)

Objective

TheobjectiveoftheLTIplanistorewardexecutivesinamannerthatalignsremunerationwiththecreationofshareholderwealth.Assuch,LTIgrantsareonlymadetoexecutiveswhoareabletoinfluencethegenerationofshareholderwealthandthushaveanimpactontheGroup’sperformanceagainsttherelevantlongtermperformancehurdle.

Structure

LTIgrantstoexecutivesaredeliveredintheformofshareoptionsundertheEmployeeShareOptionPlan.Shareoptionsaregrantedtoexecutiveswithmorethan��monthsservice.Theshareoptionswillvestoveraperiodoftwoyearssubjecttomeetingperformancehurdles,withnoopportunitytoretest.Executivesareabletoexercisetheshareoptionsforuptothreeyearsaftervestingbeforetheoptionslapse.

Performance hurdle

ThecompanyusesoptionsheldoverordinarysharesintheCompanyastheperformancehurdlefortheLTIplan.OptionswereselectedastheLTIperformancehurdleasitensuresthatlongtermgoalsofdirectorsandkeyexecutivesiscentredaroundbuildingsharepriceandhenceshareholdervalueandthatkeypeoplewithintheorganisationwouldberewardedonthatbasis.

Inassessingwhethertheperformancehurdlesforeachgranthavebeenmet,theGrouptakesintoconsiderationtherulesofitsExecutiveOptionandSharePlanaswellastheperformanceoftheCompany,particularlyfromthepointofviewastoincreaseinitssharepriceovertime.

Table�providesdetailsofLTIoptionsgrantedandthevalueofoptionsgranted,exercisedandlapsedduringtheyear.

Employment Contracts

Allexecutiveshaverollingcontracts.Thecompanymayterminatetheexecutive’semploymentagreementbyprovidingeightweekswrittennoticeorprovidingpaymentinlieuofthenoticeperiod(basedonthefixedcomponentoftheexecutive’sremuneration).Onterminationonnoticebythecompany,anyLTIoptionsthathavevestedorthatwillvestduringthenoticeperiodwillbereleased.LTIoptionsthathavenotyetvestedwillbeforfeited.Thecompanymayterminatethecontractatanytimewithoutnoticeifseriousmisconducthasoccurred.Whereterminationwithcauseoccurstheexecutiveisonlyentitledtothatportionofremunerationthatisfixed,andonlyuptothedateoftermination.Onterminationwithcauseanyunvestedoptionswillimmediatelybeforfeited.


30 June 2008

Eachnon-executivedirectorreceivesabasefeeof$�5,000forbeingadirectoroftheGroup.Anadditionalfeeof$9,0��ispaidtotheChairoftheBoardofDirectors.Thepaymentofadditionalfeesrecognisestheadditionaltimecommitmentrequiredbythenon-executivedirectortobeChairmanoftheBoardofDirectors.

Theremunerationofnon-executivedirectorsfortheperiodending�0June�008and�0June�007isdetailedintable�and�respectivelyofthisreport.

Executive Remuneration

Objective

TheGroupaimstorewardexecutiveswithalevelandmixofremunerationcommensuratewiththeirpositionandresponsibilitieswithintheGroupsoasto:

rewardexecutivesforGroup,businessunitandindividualperformanceagainsttargetssetbyreferencetoappropriatebenchmarks;

aligntheinterestsofexecutiveswiththoseofshareholders;and

ensuretotalremunerationiscompetitivebymarketstandards.

Structure

Indeterminingthelevelandmake-upofexecutiveremuneration,theNominationandRemunerationCommitteeconsidersthemarketlevelsofcompensationforcomparableexecutiverolesandthensettherelevantcompensationamountsaccordingly.

TheNominationandRemunerationCommitteehasenteredintoadetailedcontractofemploymentwiththeChiefExecutiveOfficerandastandardcontractwithotherexecutives.Detailsofthesecontractsareprovidedbelow.

Remunerationconsistsofthefollowingkeyelements:

Fixedremuneration(basesalary,superannuationandnon-monetarybenefits);

Variableremuneration–shorttermincentive(STI);and–longtermincentive(LTI).

Theproportionoffixedremunerationandvariableremuneration(potentialshorttermandlongtermincentives)foreachexecutiveissetoutintable�.

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Fixed Remuneration

Objective

FixedremunerationisreviewedannuallybytheNominationandRemunerationCommittee.Theprocessconsistsofareviewofcompany,businessunitandindividualperformance.

Structure

Executivesaregiventheopportunitytoreceivetheirfixed(primary)remunerationinavarietyofformsincludingcashandfringebenefitssuchasmotorvehicles.ItisintendedthatthemannerofpaymentchosenwillbeoptimalfortherecipientwithoutcreatingunduecostfortheGroup.

Thefixedremunerationcomponentofexecutivesisdetailedintable�.

Variable Remuneration – Short Term Incentive (STI)

Objective

TheobjectiveoftheSTIprogramistolinktheachievementoftheGroup’soperationaltargetswiththeremunerationreceivedbytheexecutiveschargedwithmeetingthosetargets.ThetotalpotentialSTIavailableissetatalevelsoastoprovidesufficientincentivetotheexecutivetoachievetheoperationaltargetsandsuchthatthecosttotheGroupisreasonableinthecircumstances.

Structure

ActualSTIpaymentsgrantedtoeachexecutivedependontheextenttowhichspecifictargetssetatthebeginningofthefinancialyeararemet.ThetargetsconsistofanumberofKeyPerformanceIndicators(KPIs)coveringbothfinancialandnon-financial,corporateandindividualmeasuresofperformance.Typicallyincludedaremeasuressuchascontributiontonetprofitaftertax,customerservice,riskmanagement,productmanagement,andleadership/teamcontribution.Thesemeasureswerechosenastheyrepresentthekeydriversfortheshorttermsuccessofthebusinessandprovideaframeworkfordeliveringlongtermvalue.



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Table 2: Remuneration for the year ended 30 June 2007

ThecomparativeinformationprovidedbelowrepresentsthatofthelegalsubsidiarySalesMarketingandRealTechnologies–SMARTPtyLtdalone.

Short-term

Post Employ-

mentLong Term

Share-Based

Payment Total

Perform- ance

related

Base Salary

Cash bonus Other

Super- annuation

Long Service

Leave

$ $ $ $ $ $ $ %

Non-executive directors

MrJHall – – – – – – – –

MrTO’Brien – – – – – – – –

MrPTobin – – – – – – – –

Sub-total non-executive directors

– – – – – – – –

Executive directors

MrWScott 5�,�9� – �79,89� �,90� – – ��9,�9� –

MrJMuir 5�,�9� – �65,�69 �,90� – – ��,667 –

MrBCoulson – – – – – – – –

Other key management personnel (KMP)

MrJMeredith-Smith 8�,��9 – ��,500 7,�09 – – ��,��8 –

MrFDunton – – – – – – – –

MrASpanos – – – – – – – –

MrPKelly – – – – – – – –

MrBShaw �7,6�6 – – �,�87 – – 5�,9�� –

MsKPalethorpe – – – – – – – –

MrRRamnarain – ��0,�9� – – – – ��0,�9� �00.00

MrDStewart �9,75� 9�,��6 9,55� ��,679 – – �6�,��0 60.90

Sub-total executive KMP 288,696 301,318 377,214 34,183 – – 1,001,411

Totals 288,696 301,318 377,214 34,183 – – 1,001,411


30 June 2008

Table 1: Remuneration for the year ended 30 June 2008

Short-term

Post Employ-

mentLong Term

Share-Based

Payment Total

Perform- ance

related

Base Salary

Director fees

Cash bonus Other

Super- annuation

Long Service

Leave Options

$ $ $ $ $ $ $ %

Non-executive directors

MrJHall – �5,8�� – �00,000*

8,�8� – – �5�,0�� –

MrTO’Brien – ��,�8� – – �,7�6 – ��,78� 56,78� –

MrPTobin – ��,�8� – – �,7�6 – ��,78� 56,78� –

Sub-total non-executive directors

– 128,401 – 100,000 15,613 – 23,564 267,578 –

Executive directors

MrWScott ��0,��9 – – �0�,�88**

�5,�� – ��,09� �78,8�� –

MrJMuir �00,688 – – 68,0�8**

��,506 – �6,569 �99,8�� –

MrBCoulson �00,9�7 – – 6,600**

6,565 – �6,569 ��0,65� –

Other key management personnel

MrJMeredith-Smith

�5�,8�� – – – ��,�89 – ��,0�6 �75,�58 –

MrFDunton �09,�86 – – – 9,��6 – 8,8�7 ��7,5�9 –

MrASpanos 95,8�� – – – ��,��0 – – �09,96� –

MrPKelly �0�,679 – 75,000 – ��,�� – – �00,000 �6.�7

MrBShaw �0�,799 – ��,000 – ��,��7 – 8,8�7 ��5,86� ��.�0

MsKPalethorpe

67,�85 – �6,000 – 9,��9 – – �0�,8�� 7.56

MrRRamnarain

��5,596 – 96,986 – �5,�� – – ��8,0�� 6.�6

MrDStewart 5�,988 – �08,�87 �8,666**

��,658 – – �9�,799 60.70

Sub-total executive KMP

1,342,323 – 327,473 194,602 145,136 – 83,950 2,093,484

Totals 1,342,323 128,401 327,473 294,602 160,749 – 107,514 2,361,062

* MrJHallreceivedsharesaspartofhisremuneration.** OtherbenefitsconsistedofpaymentsmadebytheCompanyformotorvehiclesand/orrentalproperty/staffaccommodation

onbehalfofidentifiedkeymanagementpersonnel.



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Table 4: Options granted as part of remuneration

Value of options granted during

the year

Value of options exercised during

the year

Value of options forfeited during

the year

Remuneration consisting of

options for the year

$ $ $ %

MrWScott ��,09� – – 5.8

MrTO’Brien ��,78� – – �0.7

MrPTobin ��,78� – – �0.7

MrJMuir �6,569 – – 5.5

MrBCoulson �6,569 – – ��.7

MrJMeredith-Smith ��,0�6 – – 6.�

MrBShaw 8,8�7 – – 6.�

MrFDunton 8,8�7 – – 6.9

MrHerchenbach 6,6�7 – 6,6�7 –

MrAnderson �,9�6 – – –

Total 117,087 – 6,627

Fordetailsonthevaluationoftheoptions,includingmodelsandassumptionsused,pleaserefertonote�7.

TherewerenoalterationstothetermsandconditionsofoptionsgrantedasremunerationsincetheirgrantdateandtherewasoneforfeiturebyM.Herchenbach.

Therewerenosharesissuedonexerciseofcompensationoptionsduringthecurrentorpriorperiods.

SignedinaccordancewitharesolutionoftheDirectors:

Mr.WScott MrJHallDirector Chairman

�9August�008 �9August�008


30 June 2008

Table 3: Compensation options: Granted and vested during the year (Consolidated)

Granted Terms and Conditions for each Grant Vested

30 June 2008 No. Grant Date

Fair Value per

option at grant

date(note 26)($)

Exercise price per option

(note 26)($)

Expiry Date

First Exercise

Date

Last Exercise

Date No. %

MrWScott 75,000 �/�0/�007 0.�7 �.00 �0/09/�0�� /�0/�009 �0/09/�0�� – –

75,000 �/�0/�007 0.�� .�0 �0/09/�0�� /�0/�009 �0/09/�0�� – –

MrTO’Brien �0,000 �/�0/�007 0.�7 �.00 �0/09/�0�� /�0/�009 �0/09/�0�� – –

�0,000 �/�0/�007 0.�� .�0 �0/09/�0�� /�0/�009 �0/09/�0�� – –

MrPTobin �0,000 �/�0/�007 0.�7 �.00 �0/09/�0�� /�0/�009 �0/09/�0�� – –

�0,000 �/�0/�007 0.�� .�0 �0/09/�0�� /�0/�009 �0/09/�0�� – –

MrJMuir 56,�50 �/�0/�007 0.�7 �.00 �0/09/�0�� /�0/�009 �0/09/�0�� – –

56,�50 �/�0/�007 0.�� .�0 �0/09/�0�� /�0/�009 �0/09/�0�� – –

MrBCoulson 56,�50 �/�0/�007 0.�7 �.00 �0/09/�0�� /�0/�009 �0/09/�0�� – –

56,�50 �/�0/�007 0.�� .�0 �0/09/�0�� /�0/�009 �0/09/�0�� – –

Executives

MrJMeredith-Smith

�7,500 �/�0/�007 0.�7 �.00 �0/09/�0�� /�0/�009 �0/09/�0�� – –

�7,500 �/�0/�007 0.�� .�0 �0/09/�0�� /�0/�009 �0/09/�0�� – –

MrBShaw �0,000 �/�0/�007 0.�7 �.00 �0/09/�0�� /�0/�009 �0/09/�0�� – –

�0,000 �/�0/�007 0.�� .�0 �0/09/�0�� /�0/�009 �0/09/�0�� – –

MrHAnderson �0,000 �/�0/�007 0.�7 �.00 �0/09/�0�� /�0/�009 �0/09/�0�� – –

�0,000 �/�0/�007 0.�� .�0 �0/09/�0�� /�0/�009 �0/09/�0�� – –

MrFDunton �0,000 �/�0/�007 0.�7 �.00 �0/09/�0�� /�0/�009 �0/09/�0�� – –

�0,000 �/�0/�007 0.�� .�0 �0/09/�0�� /�0/�009 �0/09/�0�� – –

MrMHerchenbach*

��,500 �/�0/�007 0.�7 �.00 �0/09/�0�� /�0/�009 �0/09/�0�� – –

��,500 �/�0/�007 0.�� .�0 �0/09/�0�� /�0/�009 �0/09/�0�� – –

Total 795,000

*MrMHerchenbachresignedon��November�007,grantedoptionshadnotyetvestedandaccordinglywereforfeited.

Niloptionsissuedintheyearended�0June�007.



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Note Consolidated Parent

2008 2007 2008 2007 $ $ $ $

CURRENT ASSETS

Cash and cash equivalents 10 6,542,406 137,155 1,652,336 –

Other receivables 11 8,503,732 2,580,020 22,490,861 60,456

Trade and other receivables 12 12,469,410 1,418,347 46,021 –

TOTAL CURRENT ASSETS 27,515,548 4,135,522 24,189,218 60,456

NON-CURRENT ASSETS

Investments in associates 13 401,000 37,598 400,000 –

Investments in subsidiaries 14 – 300 79,476,701 –

Deferred tax assets 8 2,076,498 99,950 729,571 –

Plant and equipment 15 2,763,532 1,043,663 472,109 –

Goodwill and other intangible assets 16 60,111,990 343,068 255,999 –

TOTAL NON-CURRENT ASSETS 65,353,020 1,524,579 81,334,380 –

TOTAL ASSETS 92,868,568 5,660,101 105,523,598 60,456

CURRENT LIABILITIES

Trade and other payables 17 11,065,333 2,364,824 1,479,778 155,105

Interest bearing liabilities 18 5,842,574 1,306,227 3,250,000 –

Deferred settlement obligations 19 5,548,298 – 4,587,180 –

Provisions 20 1,384,113 107,424 35,529 –

Income tax payable 8 2,415,757 664,476 2,415,757 –

TOTAL CURRENT LIABILITIES 26,256,075 4,442,951 11,768,244 155,105

NON-CURRENT LIABILITIES

Interest bearing liabilities 18 21,992,101 426,419 21,504,351 –

Deferred tax liabilities 8 2,534,678 – – –

Provisions 20 283,756 5,015 – –

TOTAL NON-CURRENT LIABILITIES 24,810,535 431,434 21,504,351 –

TOTAL LIABILITIES 51,066,610 4,874,385 33,272,595 155,105

NET ASSETS 41,801,958 785,716 72,251,003 (94,649)

EQUITY

Contributed equity 22 39,309,359 400 74,852,881 2

Reserves 23 110,458 – 110,458 –

Retained earnings 2,382,141 785,316 (2,712,336) (94,651)

TOTAL EQUITY 41,801,958 785,716 72,251,003 (94,649)

The above balance sheet should be read in conjunction with the accompanying notes.

Balance Sheetat 30 June 2008


2008 2007 2008 2007 $ $ $ $

Rendering of services 50,042,010 18,997,154 459,130 –

Other revenue 6 853,397 – 91,792 –

Revenue 50,895,407 18,997,154 550,922 –

Depreciation and amortisation 7c 1,097,100 227,464 30,112 –

IT and telecommunications 2,850,897 390,147 161,853 2,000

Operating lease rental 943,528 276,835 – –

Advertising 3,930,855 183,142 612,928 –

Consulting fees 1,529,868 210,192 856,753 –

Motor vehicle expenses 806,573 640,511 542 –

Occupancy 1,797,929 449,951 103,752 –

Employee benefits expenses 7d 20,371,895 5,669,355 1,202,676 88,827

Contractor expenses 8,332,896 6,951,572 88,134 –

Finance costs 7b 1,185,475 207,166 993,619 –

Travel and accommodation 1,081,456 636,810 39,833 –

Other expenses 7a 3,264,551 2,054,342 152,286 3,824

Share of profit/(loss) of an associate 13 1,908 13,556 – –

PROFIT/(LOSS) BEFORE INCOME TAX 3,704,292 1,113,223 (3,691,566) (94,651)

INCOME TAX BENEFIT/(EXPENSE) 8 (1,322,151) (469,776) 1,073,881 –

PROFIT/(LOSS) AFTER INCOME TAX 2,382,141 643,447 (2,617,685) (94,651)

ATTRIBUTABLE TO: MEMBERS OF COMMQUEST LIMITED 2,382,141 643,447 (2,617,685) (94,651)

Cents Cents

Earnings per share for profit attributable to the ordinary equity holders of the company 9

Basic earnings per share 4.85 2.41

Diluted earnings per share 4.85 2.41

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

Income Statementfor the year ended 30 June 2008



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Note Contributed Retained Equity Reserves Earnings Total

$ $ $ $

CONSOLIDATED

As at 1 July 2006 200 – 141,869 142,069

Profit/(loss) for the year – – 643,447 643,447

Proceeds from issue of shares 22 200 – – 200

As at 30 June 2007 400 – 785,316 785,716

As at 1 July 2007 400 – 785,316 785,716

Profit/(loss) for the year – – 2,382,141 2,382,141

Proceeds from issue of shares – IPO 22 32,849,432 – – 32,849,432

Proceeds from issue of shares – Post IPO 22 9,295,278 – – 9,295,278

Share issue costs (3,730,593) – – (3,730,593)

Retained earnings distribution – – (785,316) (785,316)

Deferred tax in relation to share issue costs 894,842 – – 894,842

Share-based payments 27 – 110,458 – 110,458

As at 30 June 2008 39,309,359 110,458 2,382,141 41,801,958

PARENT

As at 1 July 2006 2 – – 2

Profit/(loss) for the year – – (94,651) (94,651)

Proceeds from issue of shares 22 – – – –

As at 30 June 2007 2 – (94,651) (94,649)

As at 1 July 2007 2 – (94,651) (94,649)

Profit/(loss) for the year – – (2,617,685) (2,617,685)

Proceeds from issue of shares – IPO 22 68,393,352 – – 68,393,352

Proceeds from issue of shares – Post IPO 22 9,295,278 – – 9,295,278

Share issue costs (3,730,593) – – (3,730,593)

Deferred tax in relation to share issue costs 894,842 – – 894,842

Share-based payments 27 – 110,458 – 110,458

As at 30 June 2008 74,852,881 110,458 (2,712,336) 72,251,003

Statement of Changes in Equityfor the year ended 30 June 2008


2008 2007 2008 2007 $ $ $ $

CASh FLOWS FROM OPERATING ACTIVITIES

Receipts from customers

(inclusive of GST) 49,265,832 18,703,268 459,022 –

Payments to suppliers and employees (inclusive of GST) (45,464,813) (17,476,816) (1,940,533) –

Income tax received/(paid) (811,947) – –

Interest received 134,615 – 91,792 –

Interest paid (1,375,614) (207,166) (1,183,758) –

NET CASh FLOWS FROM/ (USED IN) OPERATING ACTIVITIES 24 1,748,073 1,019,286 (2,573,477) –

CASh FLOWS FROM INVESTING ACTIVITIES

Purchase of plant and equipment (1,130,639) (816,618) (502,221) –

Purchase of intangible assets (1,025,669) (330,766) (255,999) –

Acquisition of investment (66,666) (25,342) (66,666) –

Acquisition of business (1,275,798) – – –

Acquisition of subsidiaries (26,331,087) – (32,318,013) –

Distribution of equity (8,878,260) – – –

Distribution to shareholders of accounting parent (785,316) – – –

NET CASh FLOWS FROM/ (USED IN) INVESTING ACTIVITIES (39,493,435) (1,172,726) (33,142,899) –

CASh FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings 25,272,551 168,331 24,754,350 –

Repayment of borrowings (7,649,039) 118,231 (13,912,642) –

Proceeds from issue of shares 30,257,694 200 30,257,597 –

Share issue costs (3,730,593) – (3,730,593) –

NET CASh FLOWS FROM / (USED IN) FINANCING ACTIVITIES 44,150,613 286,762 37,368,712 –

NET INCREASE/(DECREASE) IN CASh AND CASh EQUIVALENTS 6,405,251 133,322 1,652,336 –

Cash and cash equivalents at beginning of period 137,155 3,833 – –

CASh AND CASh EQUIVALENTS AT END OF PERIOD 10 6,542,406 137,155 1,652,336 –

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

Cash Flow Statementfor the year ended 30 June 2008



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Reference Title Summary

Application date of standard

Impact on Group financial report

Application date for Group

AASBInt.��9

ServiceConcessionArrangements:Disclosures

Requiresdisclosureofprovisionsorsignificantfeaturesnecessarytoassistinassessingtheamount,timingandcertaintyoffuturecashflowsandthenatureandextentofthevariousrightsandobligationsinvolved.Thesedisclosuresapplytobothgrantorsandoperators.

�January�008

RefertoAASBInt.��andAASB�007-�above.

�July�008

AASBInt.��

CustomerLoyaltyProgrammes

Dealswiththeaccountingforcustomerloyaltyprogrammes,whichareusedbycompaniestoprovideincentivestotheircustomerstobuytheirproductsorusetheirservices.

�July�008 TheGroupdoesnothaveanycustomerloyaltyprogrammesandassuchthisinterpretationisnotexpectedtohaveanyimpactontheGroup’sfinancialreport.

�July�008

AASBInt.��

AASB��9–TheLimitonaDefinedBenefitAsset,MinimumFundingRequirementsandtheirInteraction

Aimstoclarifyhowtodetermineinnormalcircumstancesthelimitontheassetthatanemployer’sbalancesheetmaycontaininrespectofitsdefinedbenefitpensionplan.

�January�008

TheGroupdoesnothaveadefinedbenefitpensionplanandassuchthisinterpretationisnotexpectedtohaveanyimpactontheGroup’sfinancialreport.

�July�008

AASB�007-9

AmendmentstoAustralianAccountingStandardsarisingfromtheReviewofAASs�7,�9and��

TheamendmentswereissuedasaresultofthereviewofAAS�7FinancialReportingbyLocalGovernments,AAS�9FinancialReportingbyGovernmentDepartmentsandAAS��FinancialReportingbyGovernmentsandlargelyrelocatestheseindustry-basedstandardstotopic-basedstandards.

�July�008 TheseamendmentsareonlyapplicabletothepublicsectorandassucharenotexpectedtohaveanyimpactontheGroup’sfinancialreport.

�July�008

1 Corporate information

ThefinancialreportofCommquestLimited(theCompany)fortheyearended�0June�008wasauthorisedforissueinaccordancewitharesolutionofthedirectorson�9August�008.CommquestLimited(theparent)isacompanylimitedbysharesincorporatedinAustraliawhosesharesarepubliclytradedontheAustralianStockExchange.

ThenatureoftheoperationsandprincipalactivitiesoftheGrouparedescribedintheDirectors’Reportandnote5.

2 Summary of significant accounting policies

Basis of preparation

Thefinancialreportisageneral-purposefinancialreport,whichhasbeenpreparedinaccordancewiththerequirementsoftheCorporationsAct�00�,AustralianAccountingStandardsandotherauthoritativepronouncementsoftheAustralianAccountingStandardsBoard.Thefinancialreporthasalsobeenpreparedonahistoricalcostbasis.

(a) Compliance with IFRS

ThefinancialreportcomplieswithAustralianAccountingStandardsasissuedbytheAustralianStandardsBoardandInternationalFinancialReportingStandards(IFRS)asissuedbytheInternationalAccountingStandardsBoard.

(b) New accounting standards and interpretations

ExceptfortheamendmentsarisingfromAASB�007-�:AmendmentstoAustralianAccountingStandardsarisingfromED�5�andOtherAmendments,whichtheGrouphasearlyadopted,AustralianAccountingStandardsandInterpretationsthathaverecentlybeenissuedoramendedbutarenotyeteffectivehavenotbeenadoptedbytheGroupfortheannualreportingperiodending�0June�008.Theseareoutlinedinthetablebelow.





AASBInt.��andAASB�007-�

ServiceConcessionArrangementsandconsequentialamendmentstootherAustralianAccountingStandards

Clarifieshowoperatorsrecognisetheinfrastructureasafinancialassetand/oranintangibleasset–notasproperty,plantandequipment.

�January�008

UnlesstheGroupentersintoserviceconcessionarrangementsorpublic-private-partnerships(PPP),theamendmentsarenotexpectedtohaveanyimpactontheGroup’sfinancialreport.

�July�008

AASBInt.�(Revised)

DeterminingwhetheranArrangementcontainsaLease

TherevisedInterpretationspecificallyscopesoutarrangementsthatfallwithinthescopeofAASBInterpretation��.

�January�008

RefertoAASBInt.��andAASB�007-�above.

�July�008

Notes to the Financial StatementsFor the year ended 30 June 2008



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Notes to the Financial Statements (continued)

For the year ended 30 June 2008






AASB�05�

DisaggregatedDisclosures

ThisstandardcontainstherequirementsforthereportingofdisaggregatedinformationbylocalgovernmentsfromAASs�7and�9,substantivelyunamended(withsomeexceptions).

�July�008 RefertoAASB�007-9above.

�July�008

AASB8andAASB�007-�

OperatingSegmentsandconsequentialamendmentstootherAustralianAccountingStandards

NewstandardreplacingAASB��SegmentReporting,whichadoptsamanagementreportingapproachtosegmentreporting.

�January�009

ManagementhasassessedthereportablebusinesssegmentsunderAASB��SegmentReportingandhavedeterminedthatonadoptionofAASB8SegmentReporting(applicablefrom�January�009),additionaloperatingsegmentswillmostlikelynotbereported.

�July�009

AASB��(Revised)andAASB�007-6

BorrowingCostsandconsequentialamendmentstootherAustralianAccountingStandards

TheamendmentstoAASB��requirethatallborrowingcostsassociatedwithaqualifyingassetbecapitalised.

�January�009

TheseamendmentstoAASB��requirethatallborrowingcostsassociatedwithaqualifyingassetbecapitalised.TheGrouphasnoborrowingcostsassociatedwithqualifyingassetsandassuchtheamendmentsarenotexpectedtohaveanyimpactontheGroup’sfinancialreport.

�July�009





AASB�00�(revised)

Contributions ThisstandardcontainstheoriginalrequirementsoncontributionsfromAASB�00�asissuedinJuly�00�,aswellastherequirementsoncontributionsfromAASs�7,�9and��substantivelyunamended(withsomeexceptions).


�July�008

AASBInt.�0�8(Revised)

ContributionsbyOwnersMadetoWholly-OwnedPublicSectorEntities

ThisinterpretationhasbeenrevisedasaconsequenceofrevisedAASB�00�.


�July�008

AASB�0�9

WholeofGovernmentandGeneralGovernmentSectorFinancialReporting

NewstandardtoaddressdifferencesbetweenGenerallyAcceptedAccountingPrinciples(GAAP)andGovernmentFinanceStatistics(GFS).


�July�008

AASB�050

AdministeredItems

ThisstandardcontainstherequirementsforthedisclosureofadministereditemsfromAAS�9,substantivelyunamended(withsomeexceptions).


�July�008

AASB�05�

LandUnderRoads

Thisstandardcontainsthespecifictransitionalrequirementsrelatingtolandunderroads.Itappliestogeneralpurposefinancialreportsoflocalgovernments,governmentdepartmentsandwholeofgovernmentsandfinancialstatementsofGGSs.


�July�008

2 Summary of significant accounting policies (continued)

(b) New accounting standards and interpretations (continued)



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AASB�(Revised)

BusinessCombinations

Therevisedstandardintroducesanumberofchangestotheaccountingforbusinesscombinations,themostsignificantofwhichallowsentitiesachoiceforeachbusinesscombinationenteredinto–tomeasureanon-controllinginterest(formerlyaminorityinterest)intheacquireeeitheratitsfairvalueoratitsproportionateinterestintheacquiree’snetassets.Thischoicewilleffectivelyresultinrecognisinggoodwillrelatingto�00%ofthebusiness(applyingthefairvalueoption)orrecognisinggoodwillrelatingtothepercentageinterestacquired.Thechangesapplyprospectively.

�July�009 TheGroupmayenterintosomebusinesscombinationsduringthenextfinancialyearandmaythereforeconsiderearlyadoptingtherevisedstandard.TheGrouphasnotyetassessedtheimpactofearlyadoption,includingwhichaccountingpolicytoadopt.

�July�009

AASB��7(Revised)

ConsolidatedandSeparateFinancialStatements

Undertherevisedstandard,achangeintheownershipinterestofasubsidiary(thatdoesnotresultinlossofcontrol)willbeaccountedforasanequitytransaction.

�July�009 IftheGroupchangesitsownershipinterestinexistingsubsidiariesinthefuture,thechangewillbeaccountedforasanequitytransaction.Thiswillhavenoimpactongoodwill,norwillitgiverisetoagainoralossintheGroup’sincomestatement.

�July�009

AASB�008-�

AmendmentstoAustralianAccountingStandardsarisingfromAASB�andAASB��7

AmendingstandardissuedasaconsequenceofrevisionstoAASB�andAASB��7.

�July�009 RefertoAASB�(Revised)andAASB��7(Revised)above.

�July�009





AASB�0�(Revised)andAASB�007-8

PresentationofFinancialStatementsandconsequentialamendmentstootherAustralianAccountingStandards

Introducesastatementofcomprehensiveincome.

Otherrevisionsincludeimpactsonthepresentationofitemsinthestatementofchangesinequity,newpresentationrequirementsforrestatementsorreclassificationsofitemsinthefinancialstatements,changesinthepresentationrequirementsfordividendsandchangestothetitlesofthefinancialstatements.

�January�009

TheseamendmentsareonlyexpectedtoaffectthepresentationoftheGroup’sfinancialreportandwillnothaveadirectimpactonthemeasurementandrecognitionofamountsdisclosedinthefinancialreport.TheGrouphasnotdeterminedatthisstagewhethertopresentasinglestatementofcomprehensiveincomeortwoseparatestatements.

�July�009

AASB�008-�

AmendmentstoAustralianAccountingStandard–Share-basedPayments:VestingConditionsandCancellations

Theamendmentsclarifythedefinitionof‘vestingconditions’,introducingtheterm‘non-vestingconditions’forconditionsotherthanvestingconditionsasspecificallydefinedandprescribetheaccountingtreatmentofanawardthatiseffectivelycancelledbecauseanon-vestingconditionisnotsatisfied.

�January�009

TheGrouphasshare-basedpaymentarrangementsthatmaybeaffectedbytheseamendments.However,theGrouphasnotyetdeterminedtheextentoftheimpact,ifany.

�July�009

AASB�008-�

AmendmentstoAustralianAccountingStandards–PuttableFinancialInstrumentsandObligationsarisingonLiquidation

Theamendmentsprovidealimitedexceptiontothedefinitionofaliabilitysoastoallowanentitythatissuesputtablefinancialinstrumentswithcertainspecifiedfeatures,toclassifythoseinstrumentsasequityratherthanfinancialliabilities.

�January�009

TheseamendmentsarenotexpectedtohaveanyimpactontheGroup’sfinancialreportastheGroupdoesnothaveonissueorexpecttoissueanyputtablefinancialinstrumentsasdefinedbytheamendments.

�July�009





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CommQuest 2008 Business Review & Financial Report 5�





Amend-mentstoInter-nationalFinancialReportingStandards

ImprovementstoIFRSs

Theimprovementsprojectisanannualprojectthatprovidesamechanismformakingnon-urgent,butnecessary,amendmentstoIFRSs.TheIASBhasseparatedtheamendmentsintotwoparts:Part�dealswithchangestheIASBidentifiedresultinginaccountingchanges;PartIIdealswitheitherterminologyoreditorialamendmentsthattheIASBbelieveswillhaveminimalimpact.

�January�009exceptforamend-mentstoIFRS5,whichareeffectivefrom�July�009.

TheGrouphasnotyetdeterminedtheextentoftheimpactoftheamendments,ifany.

�July�009

IFRIC�5 AgreementsfortheConstructionofRealEstate

Thisinterpretationproposesthatwhentherealestatedeveloperisprovidingconstructionservicestothebuyer’sspecifications,revenuecanberecordedonlyasconstructionprogresses.Otherwise,revenueshouldberecognisedoncompletionoftherelevantrealestateunit.

�January�009

TheGroupdoesnotenterintoagreementstoprovideconstructionservicestothebuyer’sspecificationsandassuchthisinterpretationisnotexpectedtohaveanyimpactontheGroup’sfinancialreport.

�July�009

IFRIC�6 HedgesofaNetInvestmentinaForeignOperation

Thisinterpretationproposesthatthehedgedriskinahedgeofanetinvestmentinaforeignoperationistheforeigncurrencyriskarisingbetweenthefunctionalcurrencyofthenetinvestmentandthefunctionalcurrencyofanyparententity.Thisalsoappliestoforeignoperationsintheformofjointventures,associatesorbranches.

�January�009

TheInterpretationisunlikelytohaveanyimpactontheGroupsinceitdoesnotsignificantlyrestrictthehedgedriskorwherethehedginginstrumentcanbeheld.

�July�009

*designatesthebeginningoftheapplicableannualreportingperiod





Amend-mentstoInter-nationalFinancialReportingStandards

CostofanInvestmentinaSubsidiary,JointlyControlledEntityorAssociate

ThemainamendmentsofrelevancetoAustralianentitiesarethosemadetoIAS�7deletingthe‘costmethod’andrequiringalldividendsfromasubsidiary,jointlycontrolledentityorassociatetoberecognisedinprofitorlossinanentity’sseparatefinancialstatements(i.e.,parentcompanyaccounts).Thedistinctionbetweenpre-andpost-acquisitionprofitsisnolongerrequired.However,thepaymentofsuchdividendsrequirestheentitytoconsiderwhetherthereisanindicatorofimpairment.

AASB��7hasalsobeenamendedtoeffectivelyallowthecostofaninvestmentinasubsidiary,inlimitedreorganisations,tobebasedonthepreviouscarryingamountofthesubsidiary(thatis,shareofequity)ratherthanitsfairvalue.

�January�009

Recognisingalldividendsreceivedfromsubsidiaries,jointlycontrolledentitiesandassociatesasincomewilllikelygiverisetogreaterincomebeingrecognisedbytheparententityafteradoptionoftheseamendments.

Inaddition,iftheGroupentersintoanygroupreorganisationestablishingnewparententities,anassessmentwillneedtobemadetodetermineifthereorganisationmeetstheconditionsimposedtobeeffectivelyaccountedforona‘carry-overbasis’ratherthanatfairvalue.

�July�009





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(f) Investments in subsidiaries and associates

Investmentsinsubsidiariesandassociatesareinitiallyrecognisedatcostintheparentcompany’sseparatefinancialstatementsandsubsequentlyaremeasuredatthelowerofcostandrecoverableamount.

Investmentsinassociatesareaccountedforusingtheequitymethodintheconsolidatedfinancialstatements.TheassociatesareentitiesoverwhichtheGrouphassignificantinfluenceandthatareneithersubsidiariesnorjointventures.

TheGroupgenerallydeemstheyhavesignificantinfluenceiftheyhaveover�0%ofthevotingrights.

Undertheequitymethod,investmentsintheassociatesarecarriedintheconsolidatedbalancesheetatcostpluspost-acquisitionchangesintheGroup’sshareofnetassetsoftheassociates.Goodwillrelatingtoanassociateisincludedinthecarryingamountoftheinvestmentandisnotamortised.Afterapplicationoftheequitymethod,theGroupdetermineswhetheritisnecessarytorecogniseanyimpairmentlosswithrespecttotheGroup’snetinvestmentinassociates.

TheGroup’sshareofitsassociates’post-acquisitionprofitsorlossesisrecognisedintheincomestatement,anditsshareofpost-acquisitionmovementsinreservesisrecognisedinreserves.Thecumulativepost-acquisitionmovementsareadjustedagainstthecarryingamountoftheinvestment.Dividendsreceivablefromassociatesarerecognisedasdividendrevenueintheparententity’sincomestatement,whileintheconsolidatedfinancialstatementstheyreducethecarryingamountoftheinvestment.

WhentheGroup’sshareoflossesinanassociateequalsorexceedsitsinterestintheassociate,includinganyunsecuredlong-termreceivablesandloans,theGroupdoesnotrecognisefurtherlosses,unlessithasincurredobligationsormadepaymentsonbehalfoftheassociate.

ThereportingdatesoftheassociatesandtheGroupareidenticalandtheassociates’accountingpoliciesconformtothoseusedbytheGroupforliketransactionsandeventsinsimilarcircumstances.

(g) Plant and equipment

Plantandequipmentisstatedatcostlessaccumulateddepreciationandanyaccumulatedimpairmentlosses.Suchcostincludesthecostofreplacingpartsthatareeligibleforcapitalisationwhenthecostofreplacingthepartsisincurred.

Depreciationiscalculatedonastraight-linebasisovertheestimatedusefullifeoftheassetasfollows:

2008 2007

Fixturesandfittings �to7years �to7yearsPlantandequipment �to�years �to�yearsMotorvehicles �to7years �to7yearsLeaseholdimprovements �to7years �to7years

Anitemofplantandequipmentisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpectedtoarisefromthecontinueduseoftheasset.

Anygainorlossarisingonderecognitionoftheasset(calculatedasthedifferencebetweenthenetdisposalproceedsandthecarryingamountoftheitem)isincludedintheincomestatementintheyeartheitemisderecognised.

Impairment

Thecarryingvaluesofplantandequipmentarereviewedforimpairmentateachreportingdate,withrecoverableamountbeingestimatedwheneventsorchangesincircumstancesindicatethatthecarryingvaluemaybeimpaired.

Therecoverableamountofplantandequipmentisthehigheroffairvaluelesscoststosellandvalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.

Foranassetthatdoesnotgeneratelargelyindependentcashinflows,recoverableamountisdeterminedforthecash-generatingunittowhichtheassetbelongs,unlesstheasset’svalueinusecanbeestimatedtobeclosetoitsfairvalue.

Animpairmentexistswhenthecarryingvalueofanassetorcash-generatingunitexceedsitsestimatedrecoverableamount.Theassetorcash-generatingunitisthenwrittendowntoitsrecoverableamount.Assetsthathavebeenimpairedaretestedforpossiblereversaloftheimpairmentwhenevereventsorchangesincircumstancesindicatethattheimpairmentmayhavereversed.

Impairmentlossesarerecognisedintheincomestatementasaseparateexpensecategory.



Adoption of new accounting standard

TheGrouphasadoptedAASB7FinancialInstruments:DisclosuresandallconsequentialamendmentswhichbecameapplicabletotheGroupon�July�007,includingcomparativedisclosures.Theadoptionofthisstandardhasonlyaffectedthedisclosureinthesefinancialstatements.Therehasbeennoaffectonprofitandlossorthefinancialpositionoftheentity.

(c) Basis of consolidation

CommquestLimited(‘CommQuest’)wasincorporatedon�January�007.

ForthepurposeofpreparingtheCommQuestconsolidatedfinancialstatements,theacquisitionoftheportfoliocompanieshasbeenaccountedforasareverseacquisition,withSalesMarketingandRealTechnologies–SMARTPtyLtd(‘SMART’)identifiedastheacquirerinaccordancewithAASB�BusinessCombinations.TheCommQuestconsolidatedaccountsarepresentedasacontinuationoftheSMARTconsolidatedgroup(the‘Group’).

TheinitialaccountingforthebusinesscombinationsofChannelFinancialCommunicationPtyLtd,WebDevelopmentGroupPtyLtdandAustralMediaGroupPtyLtdhaveonlybeendeterminedprovisionallybecausethevaluationsnecessaryforapplyingthepurchasemethodarestillbeingfinalisedbyanindependentvaluer.Forthepurposesoftheconsolidatedbalancesheettheassetsandliabilitieshavebeenrecordedattheirprovisionfairvaluesandexcessconsiderationpaidovertheprovisionalfairvalueshasbeenallocatedtogoodwill.UnderAustralianAccountingStandards,CommQuesthas��monthsfromthedateofacquisitiontocompleteitsinitialacquisitionaccounting.

Anyadjustmentstofairvalues,includingtaxadjustments,willhaveanequalandoppositeimpactonthegoodwillrecordedonacquisition.Accordingly,anysuchadjustmentswillhavenoimpactontheaggregateofthenetassetsofCommquestLimited,butcouldhaveamaterialimpactonanypotentialamortisationchargesinthecurrentandfuturefinancialperiods.

TheconsolidatedfinancialstatementsofCommQuestincludethefinancialstatementsofCommQuest,itslegalsubsidiariesandShacPtyLtdwhichis�0%ownedbyCommQuest.ShacPtyLtdhasbeenconsolidatedasthecompanyiscontrolledbyCommQuest.Theconsolidationprocesseliminatesallinter-entityaccountsandtransactions.Thefinancialstatementsofallsubsidiariesarepreparedforthesamereportingperiod.

Theresultsofsubsidiariesacquiredordisposedofduringtheperiodareincludedintheconsolidatedincomestatementfromtheeffectivedateofacquisitionoruptotheeffectivedateofdisposal,asappropriate.

Forthepurposeofcalculatingearningsanddividendspershare,itistheordinarysharesofthelegalparent,CommQuest,thatisused.

(d) Cash and cash equivalents

Cashandshort-termdepositsinthebalancesheetcomprisecashatbankandinhandandshort-termdepositswithanoriginalmaturityofthreemonthsorlessthatarereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue.

Forthepurposesofthecashflowstatement,cashandcashequivalentsconsistofcashandcashequivalentsdefinedabove.

(e) Trade and other receivables

Tradereceivables,whichgenerallyhavebetween��-60dayterms,arerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,lessanallowanceforimpairment.

Collectabilityoftradereceivablesisreviewedonanongoingbasisatanoperatingunitlevel.Individualdebtsthatareknowntobeuncollectablearewrittenoffwhenidentified.AnimpairmentprovisionisrecognisedwhenthereisobjectiveevidencethattheGroupwillnotbeabletocollectthereceivable.Theamountoftheimpairmentlossisthereceivablecarryingamountcomparedtothepresentvalueofestimatedfuturecashflows,discountedattheoriginaleffectiveinterestrate.



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CommQuest 2008 Business Review & Financial Report 55

Theusefullifeofanintangibleassetwithanindefinitelifeisreviewedeachreportingperiodtodeterminewhetherindefinitelifeassessmentcontinuestobesupportable.Ifnot,thechangeintheusefullifeassessmentfromindefinitetofiniteisaccountedforasachangeinanaccountingestimateandisthusaccountedforonaprospectivebasis.

Web site development costs

Researchcostsareexpensedasincurred.AnintangibleassetarisingfromdevelopmentexpenditureonaninternalprojectisrecognisedonlywhentheGroupcandemonstratethetechnicalfeasibilityofcompletingtheintangibleassetsothatitwillbeavailableforuseorsale,itsintentiontocompleteanditsabilitytouseorselltheasset,howtheassetwillgeneratefutureeconomicbenefits,theavailabilityofresourcestocompletethedevelopmentandtheabilitytomeasurereliablytheexpenditureattributabletotheintangibleassetduringitsdevelopment.Followingtheinitialrecognitionofthedevelopmentexpenditure,thecostmodelisappliedrequiringtheassettobecarriedatcostlessanyaccumulatedamortisationandaccumulatedimpairmentlosses.Anyexpendituresocapitalisedisamortisedovertheperiodofexpectedbenefitfromtherelatedproject.

Thecarryingvalueofanintangibleassetarisingfromdevelopmentexpenditureistestedforimpairmentannuallywhentheassetisnotyetavailableforuse,ormorefrequentlywhenanindicationofimpairmentarisesduringthereportingperiod.

AsummaryofthepoliciesappliedtotheGroup’sintangibleassetsisasfollows:

Software

Useful livesFinite–�years.Theexpectedusefullifeisreassessedateachfinancialyear-end.

Amortisation method usedAmortisedovertheexpectedusefullifeonastraight-linebasis.

Internally generated or acquiredInternallygeneratedandacquired.

Impairment testingWhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.

Brand names

Useful livesFinite–�5yearsTheexpectedusefullifeisreassessedateachfinancialyear-end.

Amortisation method usedNoamortisation.

Internally generated or acquiredAcquired.

Impairment testingAnnuallyandmorefrequentlywhenanindicationofimpairmentexists.

Customer contracts and relationships

Useful livesFinite–upto�0years.Theexpectedusefullifeisreassessedateachfinancialyear-end.


Internally generated or acquiredAcquired.

Impairment testingWhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.

Web site development costs

Useful livesFinite–5years.Theexpectedusefullifeisreassessedateachfinancialyear-end.


Internally generated or acquiredInternallygenerated.

Impairment testingAnnuallyforassetsnotyetavailableforuseandmorefrequentlywhenanindicationofimpairmentexists.

Gainsorlossesarisingfromderecognitionofanintangibleassetaremeasuredasthedifferencebetweenthenetdisposalproceedsandthecarryingamountoftheassetandarerecognisedinprofitorlosswhentheassetisderecognised.


(h) Goodwill and other intangible assets

Goodwill

GoodwillacquiredinabusinesscombinationisinitiallymeasuredatcostbeingtheexcessofthecostofthebusinesscombinationovertheGroup’sinterestinthenetfairvalueoftheacquiree’sidentifiableassets,liabilitiesandcontingentliabilities.

Followinginitialrecognition,goodwillismeasuredatcostlessanyaccumulatedimpairmentlosses.

Forthepurposesofimpairmenttesting,goodwillacquiredinabusinesscombinationis,fromtheacquisitiondate,allocatedtoeachoftheGroup’scash-generatingunits,orgroupsofcash-generatingunits,thatareexpectedtobenefitfromthesynergiesofthecombination,irrespectiveofwhetherotherassetsorliabilitiesoftheGroupareassignedtothoseunitsorgroupsofunits.

Impairmentisdeterminedbyassessingtherecoverableamountofthecash-generatingunit(groupofcash-generatingunits)towhichthegoodwillrelates.TheGroupperformsitsimpairmenttestingatapproximatelythesametimeeachyearusingavalueinuse,discountedcashflowmethodology.However,foracquisitionsmadeduringthecurrentreportingperiod,thecarryingvalueisconsideredareasonableapproximationoffairvaluelesscoststosellintheabsenceofevidencetothecontrarysuchasspecificeventsormarketconditionsthatoccurbetweenthedateoftheacquisitioninthecurrentreportingperiodandthebalancedate.

Whentherecoverableamountofthecash-generatingunit(groupofcash-generatingunits)islessthanthecarryingamount,animpairmentlossisrecognised.Whengoodwillformspartofacash-generatingunit(groupofcash-generatingunits)andanoperationwithinthatunitisdisposedof,thegoodwillassociatedwiththeoperationdisposedofisincludedinthecarryingamountoftheoperationwhendeterminingthegainorlossondisposaloftheoperation.Goodwilldisposedofinthismannerismeasuredbasedonrelativevaluesoftheoperationdisposedofandtheportionofthecash-generatingunitretained.

Impairmentlossesrecognisedforgoodwillarenotsubsequentlyreversed.

Identifiable intangible assets

Intangibleassetsacquiredseparatelyorinabusinesscombinationareinitiallymeasuredatcost.Thecostofanintangibleassetacquiredinabusinesscombinationisitsfairvalueasatthedateofacquisition.Followinginitialrecognition,intangibleassetsarecarriedatcostlessanyaccumulatedamortisationandanyaccumulatedimpairmentlosses.

Theusefullivesofintangibleassetsareassessedtobeeitherfiniteorindefinite.Intangibleassetswithfinitelivesareamortisedovertheusefullifeandassessedforimpairmentwheneverthereisanindicationthattheintangibleassetmaybeimpaired.Theamortisationperiodandtheamortisationmethodforanintangibleassetwithafiniteusefullifeisreviewedatleastateachfinancialyear-end.Changesintheexpectedusefullifeortheexpectedpatternofconsumptionoffutureeconomicbenefitsembodiedintheassetareaccountedforbychangingtheamortisationperiodormethod,asappropriate,whichisachangeinaccountingestimate.Theamortisationexpenseonintangibleassetswithfinitelivesisrecognisedinprofitorlossinthedepreciationandamortisationexpensecategory.

Intangibleassetswithfiniteusefullivesaretestedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.

Intangibleassetswithindefiniteusefullives,whicharethereforenotamortised,aretestedforimpairmentannuallyormorefrequentlyifeventsorchangesincircumstancesindicatethattheymightbeimpaired.

Animpairmentlossisrecognisedfortheamountbywhichtheasset’scarryingamountexceedsitsrecoverableamount.Recoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalueinuse.Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashinflowsthatarelargelyindependentofthecashinflowsfromotherassetsorgroupsofassets(cash-generatingunits).Finite-livedintangiblesthathavebeenimpairedaretestedforpossiblereversaloftheimpairmentwhenevereventsorchangesincircumstancesindicatethattheimpairmentmayhavereversed.



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Provisionsaremeasuredatthepresentvalueofmanagement’sbestestimateoftheexpenditurerequiredtosettlethepresentobligationatthebalancesheetdateusingadiscountedcashflowmethodology.Therisksspecifictotheprovisionarefactoredintothecashflowsandassucharisk-freegovernmentbondraterelativetotheexpectedlifeoftheprovisionisusedasadiscountrate.Iftheeffectofthetimevalueofmoneyismaterial,provisionsarediscountedusingacurrentpre-taxratethatreflectsthetimevalueofmoneyandtherisksspecifictotheliability.

Theincreaseintheprovisionresultingfromthepassageoftimeisrecognisedinfinancecosts.

Wages, salaries annual leave and sick leave

Liabilitiesforwagesandsalaries,includingnon-monetarybenefitsandannualleaveexpectedtobesettledwithin��monthsofthereportingdatearerecognisedinotherpayablesinrespectofemployees’servicesuptothereportingdate.Theyaremeasuredattheamountsexpectedtobepaidwhentheliabilitiesaresettled.Expensesfornon-accumulatingsickleavearerecognisedwhentheleaveistakenandaremeasuredattheratespaidorpayable.

Long service leave

Theliabilityforlongserviceleaveisrecognisedandmeasuredasthepresentvalueofexpectedfuturepaymentstobemadeinrespectofservicesprovidedbyemployeesuptothereportingdatetheprojectedunitcreditmethod.

Considerationisgiventoexpectedfuturewageandsalarylevels,experienceofemployeedepartures,andperiodsofservice.Expectedfuturepaymentsarediscountedusingmarketyieldsatthereportingdateonnationalgovernmentbondswithtermstomaturityandcurrenciesthatmatch,ascloselyaspossible,theestimatedfuturecashoutflows.

(n) Contributed equity

Ordinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofnewsharesoroptionsareshowninequityasadeduction,netoftax,fromtheproceeds.

(o) Revenue recognition

RevenueisrecognisedandmeasuredatthefairvalueoftheconsiderationreceivedorreceivabletotheextentitisprobablethattheeconomicbenefitswillflowtotheGroupandtherevenuecanbereliablymeasured.Thefollowingspecificrecognitioncriteriamustalsobemetbeforerevenueisrecognised:

Rendering of services

Revenuefromtherenderingofaserviceisrecognisedbyreferencetothestageofcompletionofacontractorcontractsinprogressatbalancedateoratthetimeofcompletionofthecontractandbillingtothecustomer.Stageofcompletionismeasuredbyreferencetosurveysofworkperformedorservicesperformedtodateasapercentageoftotalservicestobeperformed.

Whenthecontractoutcomecannotbeestimatedreliably,revenueisrecognisedonlytotheextentoftheexpensesrecognisedthatarerecoverable.

Interest

Revenueisrecognisedasinterestaccruesusingtheeffectiveinterestmethod.Thisisamethodofcalculatingtheamortisedcostofafinancialassetandallocatingtheinterestincomeovertherelevantperiodusingtheeffectiveinterestrate,whichistheratethatexactlydiscountsestimatedfuturecashreceiptsthroughtheexpectedlifeofthefinancialassettothenetcarryingamountofthefinancialasset.

(p) Income Tax

Currenttaxassetsandliabilitiesforthecurrentandpriorperiodsaremeasuredattheamountexpectedtoberecoveredfromorpaidtothetaxationauthorities.Thetaxratesandtaxlawsusedtocomputetheamountarethosethatareenactedorsubstantivelyenactedbythebalancesheetdate.

Deferredincometaxisprovidedonalltemporarydifferencesatthebalancesheetdatebetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsforfinancialreportingpurposes.

Deferredincometaxliabilitiesarerecognisedforalltaxabletemporarydifferencesexcept:

whenthedeferredincometaxliabilityarisesfromtheinitialrecognitionofgoodwillorofanassetorliabilityinatransactionthatisnotabusinesscombinationandthat,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;or

ü


(i) Business combinations

Thepurchasemethodofaccountingisusedtoaccountforallbusinesscombinationsregardlessofwhetherequityinstrumentsorotherassetsareacquired.Costismeasuredasthefairvalueoftheassetsgiven,sharesissuedorliabilitiesincurredorassumedatthedateofexchangepluscostsdirectlyattributabletothecombination.Whereequityinstrumentsareissuedinabusinesscombination,thefairvalueoftheinstrumentsistheirpublishedmarketpriceasatthedateofexchange.Transactioncostsarisingontheissueofequityinstrumentsarerecogniseddirectlyinequity.

Exceptfornon-currentassetsordisposalgroupsclassifiedasheldforsale(whicharemeasuredatfairvaluelesscoststosell),allidentifiableassetsacquiredandliabilitiesandcontingentliabilitiesassumedinabusinesscombinationaremeasuredinitiallyattheirfairvaluesattheacquisitiondate.TheexcessofthecostofthebusinesscombinationoverthenetfairvalueoftheGroup’sshareoftheidentifiablenetassetsacquiredisrecognisedasgoodwill.IfthecostofacquisitionislessthantheGroup’sshareofthenetfairvalueoftheidentifiablenetassetsofthesubsidiary,thedifferenceisrecognisedasagainintheincomestatement,butonlyafterareassessmentoftheidentificationandmeasurementofthenetassetsacquired.

(j) Trade and other payables

Tradepayablesandotherpayablesarecarriedatamortisedcostandduetotheirshorttermnaturetheyarenotdiscounted.TheyrepresentliabilitiesforgoodsandservicesprovidedtotheGrouppriortotheendofthefinancialyearthatareunpaidandarisewhentheGroupbecomesobligedtomakefuturepaymentsinrespectofthepurchaseofthesegoodsandservices.Theamountsareunsecuredandareusuallypaidwithin�5daysofrecognition.

(k) Leases

Financeleases,whichtransfertotheGroupsubstantiallyalltherisksandbenefitsincidentaltoownershipoftheleaseditemandincludehirepurchaseliabilities,arecapitalisedattheinceptionoftheleaseatthefairvalueoftheleasedassetor,iflower,atthepresentvalueoftheminimumleasepayments.

Leasepaymentsareapportionedbetweenthefinancechargesandreductionoftheleaseliabilitysoastoachieveaconstantrateofinterestontheremainingbalanceoftheliability.Financechargesarerecognisedasanexpenseinprofitorloss.

CapitalisedleasedassetsaredepreciatedovertheshorteroftheestimatedusefullifeoftheassetortheleasetermifthereisnoreasonablecertaintythattheGroupwillobtainownershipbytheendoftheleaseterm.

Operatingleasepaymentsarerecognisedasanexpenseintheincomestatementonastraight-linebasisovertheleaseterm.

(l) Interest bearing loans and borrowings

Allloansandborrowingsareinitiallyrecognisedatthefairvalueoftheconsiderationreceivedlessdirectlyattributabletransactioncosts.

Afterinitialrecognition,interest-bearingloansandborrowingsaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.Feespaidontheestablishmentofloanfacilitiesthatareyieldrelatedareincludedaspartofthecarryingamountoftheloansandborrowings.

Borrowingcostsarerecognisedasanexpensewhenincurred.

(m) Employee benefits and other provisions

ProvisionsarerecognisedwhentheGrouphasapresentobligation(legalorconstructive)asaresultofapastevent,itisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligationandareliableestimatecanbemadeoftheamountoftheobligation.

WhentheGroupexpectssomeorallofaprovisiontobereimbursed,forexampleunderaninsurancecontract,thereimbursementisrecognisedasaseparateassetbutonlywhenthereimbursementisvirtuallycertain.Theexpenserelatingtoanyprovisionispresentedintheincomestatementnetofanyreimbursement.



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ThenetamountofGSTrecoverablefrom,orpayableto,thetaxationauthorityisincludedaspartofreceivablesorpayablesinthebalancesheet.

CashflowsareincludedintheCashFlowStatementonagrossbasisandtheGSTcomponentofcashflowsarisingfrominvestingandfinancingactivities,whichisrecoverablefrom,orpayableto,thetaxationauthorityisclassifiedaspartofoperatingcashflows.

CommitmentsandcontingenciesaredisclosednetoftheamountofGSTrecoverablefrom,orpayableto,thetaxationauthority.

(r) Share-based Payment Transactions

TheGroupprovidesbenefitstoitsemployees(includingkeymanagementpersonnel)intheformofshare-basedpayments,wherebyemployeesrenderservicesinexchangeforsharesorrightsovershares(equity-settledtransactions).

Thereiscurrentlyoneplaninplacetoprovidethesebenefits–theEmployeeShareOptionPlan,whichprovidesbenefitstoexecutivesandotheremployees.

Thecostoftheequity-settledtransactionswithemployeesismeasuredbyreferencetothefairvalueoftheequityinstrumentsatthedateatwhichtheyaregranted.ThefairvalueisdeterminedusingaBlack-Scholesoptionpricingmodel,furtherdetailsofwhicharegiveninnote�7.

Invaluingequity-settledtransactions,noaccountistakenofanyvestingconditions,otherthanconditionslinkedtothepriceofthesharesofCommQuest(marketconditions)ifapplicable.

Thecostofequity-settledtransactionsisrecognised,togetherwithacorrespondingincreaseinequity,overtheperiodinwhichtheperformanceand/orserviceconditionsarefulfilled(thevestingperiod),endingonthedateonwhichtherelevantemployeesbecomefullyentitledtotheaward(thevestingdate).

Ateachsubsequentreportingdateuntilvesting,thecumulativechargetotheincomestatementistheproductof(i)thegrantdatefairvalueoftheaward;(ii)thecurrentbestestimateofthenumberofawardsthatwillvest,takingintoaccountsuchfactorsasthelikelihoodofemployeeturnoverduringthevestingperiodandthelikelihoodofnon-marketperformanceconditionsbeingmet;and(iii)theexpiredportionofthevestingperiod.

Thechargetotheincomestatementfortheperiodisthecumulativeamountascalculatedabovelesstheamountsalreadychargedinpreviousperiods.Thereisacorrespondingcredittoequity.

Equity-settledawardsgrantedbyCommQuesttoemployeesofsubsidiariesarerecognisedinthelegalparent’sseparatefinancialstatementsasanadditionalinvestmentinthesubsidiarywithacorrespondingcredittoequity.Theseamountsareeliminatedonconsolidation.Asaresult,theexpenserecognisedbyCommQuestinrelationtoequity-settledawardsonlyrepresentstheexpenseassociatedwithgrantstoemployeesoftheparent.TheexpenserecognisedbytheGroupisthetotalexpenseassociatedwithallsuchawards.

Untilanawardhasvested,anyamountsrecordedarecontingentandwillbeadjustedifmoreorfewerawardsvestthatwereoriginallyanticipatedtodoso.Anyawardsubjecttoamarketconditionisconsideredtovestirrespectiveofwhetherornotthatmarketconditionisfulfilled,providedthatallotherconditionsaresatisfied.

Ifthetermsofanequity-settledawardaremodified,asaminimumanexpenseisrecognisedasifthetermshadnotbeenmodified.Anadditionalexpenseisrecognisedforanymodificationthatincreasesthetotalfairvalueoftheshare-basedpaymentarrangement,orisotherwisebeneficialtotheemployee,asmeasuredatthedateofmodification.

Ifanequity-settledawardiscancelled,itistreatedasifithadvestedonthedateofcancellation,andanyexpensenotyetrecognisedfortheawardisrecognisedimmediately.However,ifanewawardissubstitutedforthecancelledawardanddesignatedasareplacementawardonthedatethatitisgranted,thecancelledandnewawardaretreatedasiftheywereamodificationoftheoriginalaward,asdescribedinthepreviousparagraph.

Thedilutiveeffect,ifany,ofoutstandingoptionsisreflectedasadditionalsharedilutioninthecomputationofdilutedearningspershare.


(p) Income Tax (continued)

whenthetaxabletemporarydifferenceisassociatedwithinvestmentsinsubsidiariesorassociates,andthetimingofthereversalofthetemporarydifferencecanbecontrolledanditisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.

Deferredincometaxassetsarerecognisedforalldeductibletemporarydifferences,carry-forwardofunusedtaxcreditsandunusedtaxlosses,totheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferences,andthecarry-forwardofunusedtaxcreditsandunusedtaxlossescanbeutilised,except:

whenthedeferredincometaxassetrelatingtothedeductibletemporarydifferencearisesfromtheinitialrecognitionofanassetorliabilityinatransactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;or

whenthedeductibletemporarydifferenceisassociatedwithinvestmentsinsubsidiariesorassociates,inwhichcaseadeferredtaxassetisonlyrecognisedtotheextentthatitisprobablethatthetemporarydifferencewillreverseintheforeseeablefutureandtaxableprofitwillbeavailableagainstwhichthetemporarydifferencecanbeutilised.

Thecarryingamountofdeferredincometaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowallorpartofthedeferredincometaxassettobeutilised.

Unrecogniseddeferredincometaxassetsarereassessedateachbalancesheetdateandarerecognisedtotheextentthatithasbecomeprobablethatfuturetaxableprofitwillallowthedeferredtaxassettoberecovered.

Deferredincometaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheyearwhentheassetisrealisedortheliabilityissettled,basedontaxrates(andtaxlaws)thathavebeenenactedorsubstantivelyenactedatthebalancesheetdate.

ü

ü

ü

Deferredtaxassetsanddeferredtaxliabilitiesareoffsetonlyifalegallyenforceablerightexiststosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandthedeferredtaxassetsandliabilitiesrelatetothesametaxableentityandthesametaxationauthority.

Tax consolidation legislation

CommquestLimitedanditswholly-ownedAustraliancontrolledentitiesimplementedthetaxconsolidationlegislationasof8November�007.

Theheadentity,CommquestLimitedandthecontrolledentitiesinthetaxconsolidatedgroupcontinuetoaccountfortheirowncurrentanddeferredtaxamounts.TheGrouphasappliedthegroupallocationapproachindeterminingtheappropriateamountofcurrenttaxesanddeferredtaxestoallocatetomembersofthetaxconsolidatedgroup.Membersofthegrouphaveenteredintoataxsharingagreementthatprovidesfortheallocationofincometaxliabilitiesbetweentheentitiesshouldtheheadentitydefaultonitstaxpaymentobligations.Noamountshavebeenrecognisedinthesefinancialstatementsinrespectofthisagreementonthebasisthatthepossibilityofdefaultisremote.

MembersofthegrouphavealsoenteredintoataxfundingagreementwherebyCommquestLimited,astheheadentityofthetaxconsolidatedgroup,willchargeorreimburseitswholly-ownedsubsidiariesforcurrenttaxliabilitiesorassetsitincursinconnectionwiththeiractivities.Asaconsequence,CommquestLimitedwillrecognisethecurrenttaxbalancesofitswholly-ownedsubsidiariesasifthosewereitsowninadditiontothecurrentanddeferredtaxamountsarisinginrelationtoitsowntransactions,eventsandbalances.Amountsreceivableorpayableunderataxfundingagreementwiththetaxconsolidatedentitiesarerecognisedseparatelyastax-relatedamountsreceivableorpayable.

(q) Other Taxes

Revenues,expensesandassetsarerecognisednetoftheamountofGSTexcept:

whentheGSTincurredonapurchaseofgoodsandservicesisnotrecoverablefromthetaxationauthority,inwhichcasetheGSTisrecognisedaspartofthecostofacquisitionoftheassetoraspartoftheexpenseitemasapplicable;and

receivablesandpayables,whicharestatedwiththeamountofGSTincluded.

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3 Financial risk management objectives and policiesTheGroup’sprincipalfinancialinstrumentscomprisereceivables,payables,bankloansandoverdrafts,financeleases,cashandshort-termdeposits.

TheGroupmanagesitsexposuretokeyfinancialrisks,includinginterestrate,inaccordancewiththeGroup’sfinancialriskmanagementpolicy.TheobjectiveofthepolicyistosupportthedeliveryoftheGroup’sfinancialtargetswhilstprotectingfuturefinancialsecurity.

ThemainrisksarisingfromtheGroup’sfinancialinstrumentsareinterestraterisk,creditriskandliquidityrisk.TheGroupusesdifferentmethodstomeasureandmanagedifferenttypesofriskstowhichitisexposed.Theseincludemonitoringlevelsofexposuretointerestrateriskandassessmentsofmarketforecastsforinterestrates.Ageinganalysesandmonitoringofspecificcreditallowancesareundertakentomanagecreditrisk,liquidityriskismonitoredthroughthedevelopmentoffuturerollingcashflowforecasts.

TheBoardreviewsandagreespoliciesformanagingeachoftheserisksassummarisedbelow.PrimaryresponsibilityforidentificationandcontroloffinancialrisksrestswiththeAuditandRiskCommitteeundertheauthorityoftheBoard.TheBoardreviewsandagreespoliciesformanagingeachoftherisksidentifiedbelow,includingthesettingoflimitsforinterestbearingdebt,creditallowances,andfuturecashflowforecastprojections.

Risk Exposures and Responses

Interest rate risk

TheGroup’sexposuretomarketinterestratesrelatesprimarilytotheGroup’sshort-termdebtobligations.Thelevelofdebtisdisclosedinnote�8.

Atbalancedate,theGrouphadthefollowingmixoffinancialassetsandliabilitiesexposedtoAustralianVariableinterestrateriskthatarenotdesignatedincashflowhedges:

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

Financial Assets

CashandCashequivalents 6,542,406 ��7,�55 1,652,336 –

Financial Liabilities

CommercialBills 24,754,351 – 24,754,351 –

DebtorFinancing 2,232,593 �,0�8,755 – –

HirePurchaseliability 847,732 69�,89� – –

Netexposure (21,292,270) (�,595,�9�) (23,102,015) –

TheGroupconstantlyanalysesitsinterestrateexposure.Withinthisanalysisconsiderationisgiventopotentialrenewalsofexistingpositions,alternativefinancing,alternativehedgingpositionsandthemixoffixedandvariableinterestrates.

Thefollowingsensitivityanalysisisbasedontheinterestrateriskexposuresinexistenceatthebalancesheetdate:

At�0June�008,ifinterestrateshadmoved,asillustratedinthetablebelow,withallothervariablesheldconstant,posttaxprofitandequitywouldhavebeenaffectedasfollows:

Net Profit Net Assets Higher/(Lower) Higher/(Lower)

2008 �007 2008 �007 $ $ $ $

CONSOLIDATED

+0.6%(60basispoints) (134,451) (�0,075) (134,451) (�0,075)

–0.6%(60basispoints) 134,451 �0,075 134,451 �0,075

PARENT

+0.6%(60basispoints) (145,878) – (145,878) –

–0.6%(60basispoints) 145,878 – 145,878 –


(s) Segment reporting

Abusinesssegmentisadistinguishablecomponentoftheentitythatisengagedinprovidingproductsorservicesthataresubjecttorisksandreturnsthataredifferenttothoseofotheroperatingbusinesssegments.ManagementhasassessedthereportablebusinesssegmentsunderAASB��SegmentReportingandhavedeterminedthatonadoptionofAASB8SegmentReporting(applicablefrom�January�009),additionaloperatingsegmentswillmostlikelynotbereported.Ageographicalsegmentisadistinguishablecomponentoftheentitythatisengagedinprovidingproductsorserviceswithinaparticulareconomicenvironmentandissubjecttorisksandreturnsthataredifferentthanthoseofsegmentsoperatinginothereconomicenvironments.

(t) Earnings per share

Basicearningspershareiscalculatedasnetprofitattributabletomembersofthelegalparent,adjustedtoexcludeanycostsofservicingequity(otherthandividends)andpreferencesharedividends,dividedbytheweightedaveragenumberofordinaryshares,adjustedforanybonuselement.

Dilutedearningspershareiscalculatedasnetprofitattributabletomembersoftheparent,adjustedfor:

costsofservicingequity(otherthandividends)andpreferencesharedividends;

theaftertaxeffectofdividendsandinterestassociatedwithdilutivepotentialordinarysharesthathavebeenrecognisedasexpenses;and

othernon-discretionarychangesinrevenuesorexpensesduringtheperiodthatwouldresultfromthedilutionofpotentialordinaryshares.

dividedbytheweightedaveragenumberofordinarysharesanddilutivepotentialordinaryshares,adjustedforanybonuselement.

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(u) Comparatives

Asexplainedinnote�(c),CommQuest’sacquisitionsonlistinghavebeenaccountedforasareverseacquisitioninaccordancewiththerequirementsofAASB�BusinessCombinations.UnderAASB�SMARThasbeendeemedtobetheacquirertoformtheGroupforaccountingpurposes,notwithstandingthatCommQuestisthelegalacquirer.

ThecomparativesintheseconsolidatedfinancialstatementsreflecttheSMARTresultsforthe��monthsended�0June�007.



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3 Financial risk management objectives and policies (continued)

6 –12 1 – 5 <6 months months years >5 years Total $ $ $ $ $

PARENT

Year ended 30 June 2008

Financial assets

Cashandcashequivalents 1,652,336 – – – 1,652,336

Tradeandotherreceivables – 22,490,861 – – 22,490,861

1,652,336 22,490,861 – – 24,143,197

Financial liabilities

Tradeandotherpayables 6,066,958 – – – 6,066,958

Interestbearingloansandborrowings – 3,250,000 19,500,000 2,004,351 24,754,351

6,066,958 3,250,000 19,500,000 2,004,351 30,821,309

Net maturity (4,414,622) 19,240,861 (19,500,000) (2,004,351) (6,678,112)


Financial assets

Cashandcashequivalents – – – – –

Tradeandotherreceivables 60,�56 – – – 60,�56

60,�56 – – – 60,�56


Tradeandotherpayables �55,�05 – – – �55,�05

Interestbearingloansandborrowings – – – – –

�55,�05 – – – �55,�05

Net maturity (94,649) – – – (94,649)

Atbalancedate,theGrouphasavailableapproximately$�6.�millionofunusedcreditfacilitiesavailableforitsimmediateuse.

Credit risk

CreditriskarisesfromthefinancialassetsoftheGroup,whichcomprisecashandcashequivalentsandtradeandotherreceivables.TheGroup’sexposuretocreditriskarisesfrompotentialdefaultofthecounterparty,withamaximumexposureequaltothecarryingamountoftheseinstruments.

TheGroupdoesnotholdanycreditderivativestooffsetitscreditexposure.

TheGroupendeavourstotradewithrecognised,creditworthythirdparties,andassuchcollateralisnotrequestednorisittheGroup’spolicytosecuritiseitstradeandotherreceivables.

ItistheGroup’spolicytomonitorallcustomerswhotradeoncredittermsviaassessmentofpastexperienceandindustryreputation.Risklimitsaresetforeachindividualcustomerinaccordancewithparameterssetbytheboard.Theserisklimitsareregularlymonitored.

Inaddition,receivablebalancesaremonitoredonanongoingbasiswiththeresultthattheGroup’sexposuretobaddebtsisnotsignificant.

Fair value

Themethodsforestimatingfairvalueareoutlinedintherelevantnotestothefinancialstatements.

3 Financial risk management objectives and policies (continued)

Liquidity risk

Liquidityriskincludestheriskthat,asaresultoftheCompany’soperationalliquidityrequirements:

–itwillnothavesufficientfundstosettleatransactionontheduedate;

–itwillbeforcedtosellfinancialassetsatavaluethatislessthanwhattheyareworth;or

–itmaybeunabletosettleorrecoverafinancialassetatall.

Thisriskismanagedthroughtheestablishmentofaminimumcashbalanceandareviewofthisbalancetomaximisereturnsontheavailablefunds.Insettingthisminimumbalance,theAuditandRiskCommitteereviewsthevariousrisksthatCommQuestfacesinachievingitsobjectivesandconsiderstheliquidityrequiredtomanagetheday-to-dayactivitiesoftheGroup.

Thesetbalanceisthespecifiedminimumacceptablesurplusofcommittedfacilitiesaccessibleforthenext��monthsineachgroupcompanyandisreviewedannuallyorearlierupontheoccurrenceofasignificantevent.

Thetablebelowreflectsallcontractuallyfixedpay-offsandreceivablesforsettlement,repaymentsandinterestresultingfromrecognisedfinancialassetsandliabilitiesasof�0June�008.Theamountsrepresenttherespectiveundiscountedcashflowsfortherespectiveupcomingfinancialyears.Cashflowsforfinancialassetsandliabilitieswithoutfixedamountortimingarebasedontheconditionsexistingat�0June�008.

TheremainingcontractualmaturitiesoftheGroup’sandparententity’sfinancialliabilitiesare:

6 –12 1 – 5 <6 months months years >5 years Total $ $ $ $ $

CONSOLIDATED


Financial assets

Cashandcashequivalents 6,542,406 – – – 6,542,406

Tradeandotherreceivables 21,445,945 – 369,216 – 21,815,161

27,988,351 – 369,216 – 28,357,567


Tradeandotherpayables 13,094,025 – – – 13,094,025

Interestbearingloansandborrowings 2,232,593 3,250,000 19,500,000 2,004,351 26,986,944

15,326,618 3,250,000 19,500,000 2,004,351 40,080,969

Net maturity 12,661,733 (3,250,000) (19,130,784) (2,004,351) (11,723,402)


Financial assets

Cashandcashequivalents ��7,�55 – – – ��7,�55

Tradeandotherreceivables �,998,�67 – – – �,998,�67

�,��5,5�� – – – �,��5,5��


Tradeandotherpayables �,�6�,8�� – – – �,�6�,8��

Interestbearingloansandborrowings �,�7�,955 ��,�99 ��7,�9� – �,7��,6�6

�,5�6,779 ��,�99 ��7,�9� – �,097,�70

Net maturity 598,743 (133,199) (427,492) – 38,052



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5 Segment informationTheGroup’sprimarysegmentreportingformatisbusinesssegmentsastheGroup’srisksandreturnsareaffectedpredominantlybydifferencesintheproductsandservicesproduced.Secondarysegmentinformationisreportedgeographically.

Theoperatingbusinessesareorganisedandmanagedseparatelyaccordingtothenatureoftheproductsandservicesprovided,witheachsegmentrepresentingastrategicbusinessunitthatoffersdifferentproductsandservesdifferentmarkets.

Direct Marketing

Thedirectmarketingsegmentisprimarilymadeupofthreebusinesseswithintheorganisation,beingTheSmartGroup,AustralMediaGroupandBoilerRoomDirect.Thissegmenthasproficienciesincustomeracquisition,contactcentresolutions,custompublishinganddirectmarketingcampaigns.

Advertising and Communications

TheadvertisingandcommunicationssegmentconsistsofanumberofbusinesseswithintheGroup,beingBoilerRoomGroup,ThinkCreative,PyroMedia,ChannelFinancialCommunicationandShac.This

Advertising Digital and Direct and com- mobile Marketing munications marketing Total $ $ $ $


Revenue

Salestoexternalcustomers 24,918,240 8,777,843 15,767,035 49,463,118

Otherrevenue 814,822 39,496 27,049 881,367

Inter-segmentsales 480,578 543,744 4,177,438 5,201,760

Totalsegmentrevenue 26,213,641 9,361,083 19,971,522 55,546,245

Inter-segmentelimination (5,201,760)

Unallocatedrevenue 550,922

Totalconsolidatedrevenue 50,895,407

Result

Segmentresults 2,462,039 592,470 4,427,159 7,481,668

Unallocatedexpenses (2,593,809)

Profit/(loss)beforetaxandfinancecosts 4,887,859

Financecosts (1,185,475)

Shareofprofitofassociate 1,908 – – 1,908

Profit/(loss)beforeincometax 3,704,292

Incometaxexpense (1,322,151)

Netprofit/(loss)fortheyear 2,382,141

segmentspecialisesinadvertising,events,mediaplanning,analysis,financialcommunicationsandpublicrelations.


ThedigitalandmobilemarketingsegmentconsistsofbusinesseswithintheGroupsuchasNextDigitalGroup,SMSCentralAustralia,ImpulseBusinessSolutions,PlatinumTVandInspirus.Thissegmentspecialisesindigitalmarketingandstrategy,mobilemarketing,premiumandstandardSMS/MMSsolutionsincludingaggregation,aswellasdigitalpubliccontentprovisioning.

Transferpricesbetweenbusinesssegmentsaresetonanarm’slengthbasisinamannersimilartotransactionswiththirdparties.Segmentrevenue,segmentexpenseandsegmentresultincludetransfersbetweenbusinesssegments.Thosetransfersareeliminatedonconsolidation.

Business segments

Thefollowingtablespresentrevenueandprofitinformationandcertainassetandliabilityinformationregardingbusinesssegmentsfortheyearsended�0June�008and�0June�007.

4 Significant accounting judgements, estimates and assumptions

Thepreparationofthefinancialstatementsrequiresmanagementtomakejudgements,estimatesandassumptionsthataffectthereportedamountsinthefinancialstatements.Managementcontinuallyevaluatesitsjudgementsandestimatesinrelationtoassets,liabilities,contingentliabilities,revenueandexpenses.Managementbasesitsjudgementsandestimatesonhistoricalexperienceandonothervariousfactorsitbelievestobereasonableunderthecircumstances,theresultofwhichformthebasisofthecarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Actualresultsmaydifferfromtheseestimatesunderdifferentassumptionsandconditions.

Managementhasidentifiedthefollowingcriticalaccountingpoliciesforwhichsignificantjudgements,estimatesandassumptionsaremade.Actualresultsmaydifferfromtheseestimatesunderdifferentassumptionsandconditionsandmaymateriallyaffectfinancialresultsorthefinancialpositionreportedinfutureperiods.

Furtherdetailsofthenatureoftheseassumptionsandconditionsmaybefoundintherelevantnotestothefinancialstatements.

(i) Significant accounting judgements

Impairment of non-financial assets other than goodwill

TheGroupassessesimpairmentofallassetsateachreportingdatebyevaluatingconditionsspecifictotheGroupandtotheparticularassetthatmayleadtoimpairment.Theseincludetechnology,futureproductexpectationsandtheeconomicenvironment.Ifanimpairmenttriggerexiststherecoverableamountoftheassetisdetermined.

Capitalised development costs

DevelopmentcostsareonlycapitalisedbytheGroupwhenitcanbedemonstratedthatthetechnicalfeasibilityofcompletingtheintangibleassetisvalidsothattheassetwillbeavailableforuseorsale.

Taxation

TheGroup’saccountingpolicyfortaxationrequiresmanagement’sjudgementastothetypesofarrangementsconsideredtobeataxonincomeincontrasttoanoperatingcost.Judgementisalsorequiredinassessingwhetherdeferredtaxassetsandcertaindeferredtaxliabilitiesarerecognisedonthebalancesheet.Deferredtaxassets,includingthosearisingfromunrecoupedtaxlosses,capitallossesandtemporarydifferences,arerecognisedonlywhereitisconsideredmorelikelythannotthattheywillberecovered,whichisdependentonthegenerationofsufficientfuturetaxableprofits.Deferredtaxliabilitiesarisingfromtemporarydifferencesininvestments,causedprincipallybyretainedearningsheldinforeigntaxjurisdictions,arerecognisedunlessrepatriationofretainedearningscanbecontrolledandarenotexpectedtooccurintheforeseeablefuture.

Assumptionsaboutthegenerationoffuturetaxableprofitsandrepatriationofretainedearningsdependonmanagement’sestimatesoffuturecashflows.Thesedependonestimatesoffutureproductionandsalesvolumes,operatingcosts,restorationcosts,capitalexpenditure,dividendsandothercapitalmanagementtransactions.Judgementsarealsorequiredabouttheapplicationofincometaxlegislation.Thesejudgementsandassumptionsaresubjecttoriskanduncertainty,hencethereisapossibilitythatchangesincircumstanceswillalterexpectations,whichmayimpacttheamountofdeferredtaxassetsanddeferredtaxliabilitiesrecognisedonthebalancesheetandtheamountofothertaxlossesandtemporarydifferencesnotyetrecognised.Insuchcircumstances,someorallofthecarryingamountsofrecogniseddeferredtaxassetsandliabilitiesmayrequireadjustment,resultinginacorrespondingcreditorchargetotheincomestatement.

(ii) Significant accounting estimates and assumptions

Impairment of goodwill and intangibles with indefinite useful lives

TheGroupdetermineswhethergoodwillandintangibleswithindefiniteusefullivesareimpairedatleastonanannualbasis.Thisrequiresanestimationoftherecoverableamountofthecash-generatingunits,usingavalueinusediscountedcashflowmethodology,towhichthegoodwillandintangibleswithindefiniteusefullivesareallocated.Theassumptionsusedinthisestimationofrecoverableamountandthecarryingamountofgoodwillandintangibleswithindefiniteusefullivesincludingasensitivityanalysisarediscussedinnote�6.

Share-based payment transactions

TheGroupmeasuresthecostofequity-settledtransactionswithemployeesbyreferencetothefairvalueoftheequityinstrumentsatthedateatwhichtheyaregranted.ThefairvalueisdeterminedusingaBlack-Scholesoptionpricingmodel,withtheassumptionsdetailedinnote�7.Theaccountingestimatesandassumptionsrelatingtoequity-settledshare-basedpaymentswouldhavenoimpactonthecarryingamountsofassetsandliabilitieswithinthenextannualreportingperiodbutmayimpactexpensesandequity.

Estimation of useful lives of assets

Theestimationoftheusefullivesofassetshasbeenbasedonhistoricalexperienceasleaseterms(forleasedequipment)andturnoverpolicies(formotorvehicles).Inaddition,theconditionoftheassetsisassessedatleastonceperyearandconsideredagainsttheremainingusefullife.Adjustmentstousefullivesaremadewhenconsiderednecessary.

Depreciationchargesareincludedinnote�5.



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5 Segment information (continued)

Advertising Digital and Direct and Com- Mobile Marketing munications marketing Total $ $ $ $


Revenue

Salestoexternalcustomers �8,997,�5� – – �8,997,�5�

Otherrevenuesfromexternalcustomers – – – –

Otherrevenue – – – –

Inter-segmentsales – – – –

Totalsegmentrevenue �8,997,�5� – – �8,997,�5�

Inter-segmentelimination –

Unallocatedrevenue –

Totalconsolidatedrevenue �8,997,�5�

Result

Segmentresults �,�06,8�� – – �,�06,8��

Unallocatedexpenses –

Profit/(loss)beforetaxandfinancecosts �,�06,8��

Financecosts (�07,�66)

Shareofprofitofassociate ��,556 – – ��,556

Profit/(loss)beforeincometax �,��,��

Incometaxexpense (�69,776)

Netprofit/(loss)fortheyear 6��,��7

Assets and liabilities

Segmentassets 5,6��,�0� – – 5,6��,�0�

Investmentinassociate �7,898 – – �7,898

Unallocatedassets – – – –

Totalassets 5,660,�0�

Segmentliabilities �,87�,�85 – – �,87�,�85

Unallocatedliabilities – – – –

Totalliabilities �,87�,�85

Other segment information

Capitalexpenditure 8�6,6�8 – – 8�6,6�8

Depreciation and amortisation

Impairmentlosses ��7,�6� – – ��7,�6�

Cash flow information

Netcashflowfromoperatingactivities �,0�9,�86 – – �,0�9,�86

Netcashflowfrominvestingactivities (�,�7�,7�6) – – (�,�7�,7�6)

Netcashflowfromfinancingactivities �86,76� – – �86,76�


Advertising Digital and Direct and Com- Mobile Marketing munications marketing Total $ $ $ $

Assets and liabilities

Segmentassets 23,896,647 10,191,819 18,294,955 52,383,421

Investmentinassociate 1,000 – – 1,000

Unallocatedassets 40,484,147

Totalassets 92,868,568

Segmentliabilities 9,695,954 3,364,635 8,467,103 21,527,692

Unallocatedliabilities 29,538,918

Totalliabilities 51,066,610

Advertising Digital and Direct and Com- Mobile Marketing munications marketing Unallocated Total $ $ $ $ $


Capitalexpenditure(includescostofsegmentsassetsacquiredbywayofbusinesscombinations) 541,224 484,190 880,369 505,476 2,411,258

Depreciationandamortisation 771,824 93,071 202,093 30,112 1,097,100

Cash flow information

Netcashflowfromoperatingactivities 1,735,738 (596,559) 3,037,889 (2,428,995) 1,748,073

Netcashflowfrominvestingactivities (6,061,906) 39,787 (1,914,362) (31,556,954) (39,493,435)

Netcashflowfromfinancingactivities 5,674,840 1,213,357 503,839 36,758,577 44,150,613



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Consolidated Parent

2008 2007 2008 2007 $ $ $ $

6 Other revenueInterest 134,615 – 91,792 –

Managementfees 354,994 – – –

Rentalincome 202,487 – – –

Other 161,301 – – –

853,397 – 91,792 –

7 Expenses

(a) Other expensesBadanddoubtfuldebts 709,805 �85,��7 – –

Equipmenthire 169,063 – – –

Insurance 125,196 ��,7�9 57,391 –

(b) Finance costsBankloansandcommercialbills 987,175 – 993,619 –

Debtorfinancingfacility 176,062 �77,0�� – –

Financechargespayableunderhirepurchaseliabilities 22,238 �0,�55 – –

Totalfinancecosts 1,185,475 �07,�66 993,619 –

(c) Depreciation and amortisationDepreciation 650,955 �0�,9�� 30,112 –

Amortisation 446,145 ��,5�� – –

1,097,100 ��7,�6� 30,112 –

(d) Employee benefits expenseWagesandsalaries 17,590,610 5,596,8�7 1,006,986 88,8�7

Share-basedpaymentsexpense 110,458 – 110,458 –

Superannuationcontribution 1,576,253 7�,5�8 75,742 –

Otheremployeebenefitsexpense 1,094,574 – 9,490 –

20,371,895 5,669,�55 1,202,676 88,8�7


Geographical segments

TheGroup’sgeographicalsegmentsaredeterminedbasedonthelocationoftheGroup’sassets.

Thefollowingtablepresentsrevenue,expenditureandcertainassetinformationregardinggeographicalsegmentsfortheyearsended�0June�008and�0June�007.

United New Australia Kingdom Zealand Total $ $ $ $


Revenue

Salestoexternalcustomers 48,168,295 996,326 298,497 49,463,118

Otherrevenuesfromexternalcustomers 881,367 – – 881,367

Externalrevenues 49,049,662 996,326 298,497 50,344,485

Unallocatedrevenue 550,922

Segmentrevenue 50,895,407


Segmentassets 52,383,421 – – 52,383,421

Unallocatedassets 40,484,147 – – 40,484,147

Investmentinassociate 1,000 – – 1,000

Totalassets 92,868,568

Capitalexpenditure 2,411,258 2,411,258


Revenue

Salestoexternalcustomers �8,997,�5� – – �8,997,�5�

Otherrevenuesfromexternalcustomers – – – –

Externalrevenues �8,997,�5� – – �8,997,�5�

Unallocatedrevenue –

Segmentrevenue �8,997,�5�

Othersegmentinformation

Segmentassets 5,6��,�0� – – 5,6��,�0�

Unallocatedassets – – – –

Investmentinassociate �7,898 – – �7,898

Totalassets 5,660,�0�

Capitalexpenditure 8�6,6�8 8�6,6�8



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8 Income Tax (continued)

Consolidated Parent

2008 2008 2007 2007 2008 2008 2007 2007 $ $ $ $ $ $ $ $

Current Deferred Current Deferred Current Deferred Current Deferred income income income income income income income income tax tax tax tax tax tax tax tax

Openingbalance 1,539,348 – – – – – – –

Chargedtoincome 1,688,406 (30,871) 66�,�76 569,7�6 2,415,757 (550,532) – –

Chargedtoequity – 894,842 – – – 894,842 – –

Otherpayments (811,997) – – – – – – –

Acquisitions – – – – – – – –

Closingbalance 2,415,757 863,971 66�,�76 569,7�6 2,415,757 (344,310) – –

Taxexpenseinincomestatement 1,322,151 �69,776 (1,073,881) –

Amountsrecognisedinthebalancesheet:

DeferredTaxasset 2,076,498 99,950 729,571 –

Deferredtaxliability (2,534,678) – – –

863,971 569,7�6 (344,310) –

Balance sheet

2008 2007 $ $

Deferredincometaxat�0June�008relatestothefollowing:

CONSOLIDATED

(i) Deferred tax liabilities

Foreigncurrencybalances – –

Accelerateddepreciation:plantandequipment,motorvehicles – –

Developmentcosts – –

Other 2,534,678 –

Grossdeferredtaxliabilities 2,534,678 –

Set-offofdeferredtaxassets – –

Netdeferredtaxassets 2,534,678 –

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

8 Income Tax

(a) Income tax expenseThemajorcomponentsofincometaxexpenseare:

Income Statement

Current income tax

Currentincometaxcharge 1,591,300 �6�,��9 (1,073,881) –

Adjustmentsinrespectofcurrentincometaxofpreviousperiods (269,149) – – –

Deferredincometax

Relatingtooriginationandreversaloftemporarydifferences – �07,657 – –

Incometaxexpensereportedintheincomestatement 1,322,151 �69,776 (1,073,881) –

(b) Amounts charged or credited directly to equityDeferredincometaxrelatedtoitemscharged(credited)directlytoequity 894,842 – 894,842 –

(c) Numerical reconciliations between aggregate tax expense recognised in the income statement and tax expense calculated per the statutory income tax rateAreconciliationbetweentaxexpenseandtheproductofaccountingprofitbeforeincometaxmultipliedbytheGroup’sapplicableincometaxrateisasfollows:

Accountingprofitbeforetaxfromcontinuingoperations 3,704,292 �,��,�� (3,691,566) (9�,65�)

Attheparententity’sstatutoryincometaxrateof�0%(�007:�0%) 1,111,288 ��,667 (1,107,470) (�8,�95)

Entertainment 68,781 – 18,969 –

Legalfees – – – –

Share-basedpayments 110,458 – 110,458 –

Other 300,773 ��5,809 (95,838) �8,�95

Aggregateincometaxexpense 1,591,300 �69,776 (1,073,881) –

PreAcquisitionAdjustment (269,149) – – –

Adjustment

Closingincometaxexpense 1,322,151 – – –



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(e) Tax lossesTheGrouphasAustraliancapitaltaxlossesforwhichnodeferredtaxassetisrecognisedonthebalancesheetof$0(�007:$0)whichareavailableindefinitelyforoffsetagainstfuturecapitalgainssubjecttocontinuingtomeetrelevantstatutorytests.

(f) Unrecognised temporary differencesAt�0June�008,therearenounrecognisedtemporarydifferencesassociatedwiththeGroup’sinvestmentsinsubsidiariesorassociate,astheGrouphasnoliabilityforadditionaltaxationshouldunremittedearningsberemitted(�007:$nil).

(g) Tax consolidation

(i) Members of the tax consolidated group and the tax sharing arrangement

CommquestLimitedandits�00%ownedAustralianresidentsubsidiariesformedataxconsolidatedgroupwitheffectfrom8November�007.CommquestLimitedistheheadentityofthetaxconsolidatedgroup.Membersofthegrouphaveenteredintoataxsharingagreementthatprovidesfortheallocationofincometaxliabilitiesbetweentheentitiesshouldtheheadentitydefaultonitstaxpaymentobligations.Noamountshavebeenrecognisedinthefinancialstatementsinrespectofthisagreementonthebasisthatthepossibilityofdefaultisremote.

(ii) Tax effect accounting by members of the tax consolidated group

MeasurementmethodadoptedunderUIG�05�TaxConsolidationAccountingTheheadentityandthecontrolledentitiesinthetaxconsolidatedgroupcontinuetoaccountfortheirown

currentanddeferredtaxamounts.TheGrouphasappliedthegroupallocationapproachindeterminingtheappropriateamountofcurrenttaxesanddeferredtaxestoallocatetomembersofthetaxconsolidatedgroup.ThecurrentanddeferredtaxamountsaremeasuredinasystematicmannerthatisconsistentwiththebroadprinciplesinAASB��IncomeTaxes.Thenatureofthetaxfundingagreementisdiscussedfurtherbelow.

Inadditiontoitsowncurrentanddeferredtaxamounts,theheadentityalsorecognisescurrenttaxliabilities(orassets)andthedeferredtaxassetsarisingfromunusedtaxlossesandunusedtaxcreditsassumedfromcontrolledentitiesinthetaxconsolidatedgroup.

NatureofthetaxfundingagreementMembersofthetaxconsolidatedgrouphaveenteredintoataxfundingagreement.Underthefundingagreementthefundingoftaxwithinthegroupisbasedonaccountingprofit,whichisnotanacceptablemethodofallocationunderUIG�05�.Thetaxfundingagreementrequirespaymentsto/fromtheheadentitytoberecognisedviaaninter-entityreceivable(payable)whichisatcall.TotheextentthatthereisadifferencebetweentheamountchargedunderthetaxfundingagreementandtheallocationunderUIG�05�,theheadentityaccountsfortheseasequitytransactionswiththesubsidiaries.

Theamountsreceivableorpayableunderthetaxfundingagreementaredueuponreceiptofthefundingadvicefromtheheadentity,whichisissuedassoonaspracticableaftertheendofeachfinancialyear.Theheadentitymayalsorequirepaymentofinterimfundingamountstoassistwithitsobligationstopaytaxinstalments.

Taxconsolidationcontributions/(distributions)CommquestLimitedhasrecognisedthefollowingamountsastax-consolidationcontributionadjustments:

Parent

2008 2007 $ $


Totalincrease/(reduction)totaxpayableofCommquestLimited 2,415,757 –

Totalincrease/(reduction)tointercompanyassetsofCommquestLimited 3,647,424 –

Totalincrease/(reduction)toinvestmentinsubsidiaryaccountsofCommquestLimited – –


Balance sheet

2008 2007 $ $


CONSOLIDATED

(i) Deferred tax assets

Accruedexpenses 483,575 –

Provisionfordoubtfuldebts 376,688 –

Provisionslongserviceleaveandannualleave 500,361 5�,66�

Equityraisingcosts 715,874 –

Other – �8,�88

Grossdeferredtaxassets 2,076,498 99,950


Netdeferredtaxassets 2,076,498 99,950


PARENT

(i) Deferred tax liabilities

Foreigncurrencybalances – –

Accelerateddepreciation:plantandequipment,motorvehicles – –

Developmentcosts – –

Other – –

Grossdeferredtaxliabilities – –


Netdeferredtaxassets – –


PARENT

(i) Deferred tax assets

Interestpayable – –

Financeleases – –

Provisionslongserviceleaveandannualleave 10,659 –

Equityraisingcosts 715,874 –

Other 3,038 –

Grossdeferredtaxassets 729,571 –


Netdeferredtaxassets 729,571 –



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Consolidated Parent

2008 2007 2008 2007 $ $ $ $

11 Other receivables (current)Contractdepositsandprepayments 743,968 �7�,05� 278,699 60,�56

Accruedrevenue 4,991,421 �,��,0�� – –

Sundryreceivables 2,221,408 �9,�67 125,903 –

Refundabledeposits 369,216 �5,8�� – –

Relatedpartyreceivables:(a)

Loantosubsidiaries – – 22,086,259 –

Loanstoemployees 111,992 – – –

Otherrelatedparties 308,560 975,8�� – –

Allowanceforimpairmentloss(b) (242,833) (��6,�85) – –

8,503,732 �,580,0�0 22,490,861 60,�56

(a) Related party receivablesFortermsandconditionsofrelatedpartyreceivablesrefertonote�5.

(b) Allowance for impairment lossAllamountsarereceivableinAustralianDollars.Aprovisionforimpairmentlossisrecognisedwhenthereisobjectiveevidencethatanindividualreceivableisimpaired.Animpairment$�,�5�(�007:nil)hasbeenrecognisedbytheGroupand$nil(�007:$nil)bytheCompanyinthecurrentyear.Thesehavebeenincludedinthelineitemotherexpensesoftheincomestatement.

Movementsintheprovisionforimpairmentlosswereasfollows:

At�July�007 246,185 ��6,�85 – –

Chargefortheyear – – – –

Amountswrittenoff (3,352) – – –

At�0June�008 242,833 ��6,�85 – –

(c) Fair value and credit riskDuetotheshorttermnatureofthesereceivables,theircarryingvalueisassumedtoapproximatetheirfairvalue.

Themaximumexposuretocreditriskisthefairvalueofreceivables.Collateralisnotheldassecurity,norisittheGroup’spolicytotransfer(on-sell)receivablestospecialpurposeentities.

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

12 Trade and other receivables (current)Tradereceivables 13,725,038 �,�78,��8 46,021 –

Allowanceforimpairmentloss(a) (1,255,628) (59,77�) – –

12,469,410 �,��8,��7 46,021 –

9 Earnings per shareThefollowingreflectstheincomeusedinthebasicanddilutedearningspersharecomputations:

Consolidated

2008 2007 $ $

(a) Earnings used in calculating earnings per share

Forbasicanddilutedearningspershare

Netprofitattributabletoordinaryequityholdersoftheparent 2,382,141 6��,��7

2008 2007 Number Number

(b) Weighted average number of shares

Weightedaveragenumberofordinarysharesforbasicearningspershare 48,673,875 �6,665,659

Effectofdilutiveshareoptions 27,277 –

Weightedaveragenumberofordinarysharesfordilutedearningspershare 48,701,152 �6,665,659

Therearenoinstruments(egshareoptions)excludedfromthecalculationofdilutedearningspersharethatcouldpotentiallydilutebasicearningspershareinthefuturebecausetheyareantidilutiveforeitheroftheperiodspresented.

Therehavebeennotransactionsinvolvingordinarysharesorpotentialordinarysharesthatwouldsignificantlychangethenumberofordinarysharesorpotentialordinarysharesoutstandingbetweenthereportingdateandthedateofcompletionofthesefinancialstatements.

(c) Information on the classification of securitiesOptionsgrantedtoemployees(includingKMP)asdescribedinnote�7areconsideredtobepotentialordinarysharesandhavebeenincludedinthedeterminationofdilutedearningspersharetotheextenttheyaredilutive.Theseoptionshavenotbeenincludedinthedeterminationofbasicearningspershare.

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

10 Cash and cash equivalentsCashatbankandinhand 4,967,218 ��7,�55 77,148 –

Escrowfunds* 1,575,188 – 1,575,188 –

6,542,406 ��7,�55 1,652,336 –

*FundsheldinescrowarenotavailableforusebytheGroup.Escrowfundsrepresentamountswithheldfromrespectivevendorsinrelationtosubsidiaryacquisitionsmadeduringtheperiod.



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Consolidated Parent

2008 2007 2008 2007 $ $ $ $

13 Investment in associates (non-current)

(a) Investment details

Unlisted:

SMSMessengerPtyLtd 1,000 �,000 – –

SmartPRCorporationPtyLtd* – �6,898 – –

PlatinumTVPtyLtd 400,000 – 400,000 –

401,000 �7,898 400,000 –

*Onthe8November�007theremaining75%sharecapitalofSmartPRCorporationPtyLtdwasbyacquiredbySalesMarketingandRealTechnologies–SMARTPtyLtd.

(b) Movements in the carrying amount of the Group’s investment in associates

SMSMessengerPtyLtd

At�July�007 1,000 �,000

Shareofprofitsafterincometax – –

At�0June�008 1,000 �,000

SmartPRCorporationPtyLtd

At�July�007 36,898 ��,��

Shareofprofitsafterincometax – ��,556

�00%Sharecapitalacquired(referto�8) (36,898) –

At�0June�008 – �6,898

PlatinumTVPtyLtd

At�July�007 – –

Acquisitionofinitialinterestatcost 400,000 –

Shareofprofitsafterincometax – –

At�0June�008 400,000 –

(c) Summarised financial informationThefollowingtableillustratessummarisedfinancialinformationrelatingtotheGroup’sassociates:

2008 2007 $ $

Extract from associates’ balance sheets:

Currentassets 53,043 –

Non-currentassets 8,824 –

Totalassets 61,867 –

Currentliabilities 82,258 –

Non-currentliabilities – –

Totalliabilities 82,258

Netassets (20,391) –

Shareofassociates’netassets (4,078) –

Extract from associates’ income statements:

Revenue – –

Netprofit – –

12 Trade and other receivables (current) (continued)

(a) Allowance for impairment lossTradereceivablesarenon-interestbearingandaregenerallyon�0-60dayterms.Aprovisionforimpairmentlossisrecognisedwhenthereisobjectiveevidencethatanindividualtradereceivableisimpaired.Animpairmentlossof$709,805(�007:$�5,��0)hasbeenrecognisedbytheGroupand$nil(�007:$nil)bytheCompanyinthecurrentyear.Thesehavebeenincludedinthelineitemotherexpensesoftheincomestatement.

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

Movementsintheprovisionforimpairmentlosswereasfollows:

At�July�007 59,771 �5,8�� – –

Additionalprovisionthroughacquisition 486,052 – – –

Chargefortheyear 709,805 �5,��0 – –

Amountswrittenoff (��,�9�) – –

At�0June�008 1,255,628 59,77� – –

At�0Junetheageinganalysisoftradereceivablesisasfollows,whereby“PDNI”and“CI”denotepastduenotimpairedandconsideredimpairedrespectively:

0-30 31-60 61-90 61-90 +91 +91 Total days days days days days days PDNI CI PDNI CI

2008 Consolidated 13,725,038 6,415,182 3,261,420 565,412 – 2,227,396 1,255,628

Parent 46,021 33,000 – 4,950 – 8,071 –

�007 Consolidated �,�78,��8 869,85� ��8,�� 09,�� – �0,97� 59,77�

Parent – – – – – – –

Receivablespastduebutnotconsideredimpairedare:Consolidated$�,79�,808(�007:$��0,�8�);Parent$��,0��(�007:$nil).Eachoperatingunithasbeenindirectcontactwiththerelevantdebtorandissatisfiedthatpaymentwillbereceivedinfull.

Otherbalanceswithintradeandotherreceivablesdonotcontainimpairedassetsandarenotpastdue.Itisexpectedthattheseotherbalanceswillbereceivedwhendue.

(b) Fair value and credit riskDuetotheshorttermnatureofthesereceivables,theircarryingvalueisassumedtoapproximatetheirfairvalue.

Themaximumexposuretocreditriskisthefairvalueofreceivables.Collateralisnotheldassecurity,norisittheGroup’spolicytotransfer(on-sell)receivablestospecialpurposeentities.



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15 Property, plant and equipment (non-current) (continued)

Plant and Leasehold Fixtures Motor Equipment improvements and fittings Vehicles Total $ $ $ $ $

PARENT


At�July�007netofaccumulateddepreciationandimpairment – – – – –

Additions 157,111 345,109 – – 502,220

Disposals – – – – –

Depreciationchargefortheyear (6,857) (23,254) – – (30,111)

At�0June�008netofaccumulateddepreciationandimpairment 150,254 321,855 – – 472,109

At 30 June 2008

Costorfairvalue 157,111 345,109 – – 502,220

Accumulateddepreciationandimpairment (6,857) (23,254) – – (30,111)

Netcarryingamount 150,254 321,855 – – 472,109


At�July�006netofaccumulateddepreciationandimpairment – – – – –

Additions – – – – –


Depreciationchargefortheperiod – – – – –

At�0June�007netofaccumulateddepreciationandimpairment – – – – –

At 30 June 2007

Costorfairvalue – – – – –

Accumulateddepreciationandimpairment – – – – –

Netcarryingamount – – – – –

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

14 Investment in subsidiaries (non-current)

Investmentincontrolledentities

Refernote�5–atcost – – 79,476,701 –

15 Plant and equipment (non-current)

(a) Reconciliation of carrying amounts at the beginning and end of the period Plant and Leasehold Fixtures Motor Equipment improvements and fittings Vehicles Total $ $ $ $ $

CONSOLIDATED


At�July�007netofaccumulateddepreciationandimpairment 798,764 7,093 15,023 222,783 1,043,663

Additions 477,967 385,728 169,275 – 1,032,970

Acquisitionofsubsidiaries(note�8) 1,144,614 343 14,710 218,620 1,378,287

Disposals (5,799) – (947) (33,687) (40,433)

Depreciationchargefortheyear (425,635) (29,789) (31,733) (163,797) (650,955)

At�0June�008netofaccumulateddepreciationandimpairment 1,989,911 363,375 166,327 243,919 2,763,532

At 30 June 2008

Cost 3,051,634 394,149 238,148 705,095 4,389,026

Accumulateddepreciationandimpairment (1,061,722) (30,774) (71,822) (461,176) (1,625,494)

Netcarryingamount 1,989,911 363,375 166,327 243,919 2,763,532


At�July�006netofaccumulateddepreciationandimpairment 68,�6� – �8,��8 ��,�66 ��9,977

Additions 807,�88 7,8�� ,599 – 8�6,6�8


Depreciationchargefortheyear (76,787) (7�8) (�,7��) (��0,68�) (�0�,9��)

At�0June�007netofaccumulateddepreciationandimpairment 798,76� 7,09� �5,0�� ,78� �,0��,66�

At 30 June 2007

Costorfairvalue 9�9,�7� 7,8�� ,�87 5��,�6� �,5��,75�

Accumulateddepreciationandimpairment (��0,508) (7�8) (�9,�6�) (��9,68�) (�70,09�)

Netcarryingamount 798,76� 7,09� �5,0�� ,78� �,0��,66�



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16 Intangible assets and goodwill (non-current) (continued)

Software

$

PARENT


At�July�007netofaccumulateddepreciationandimpairment –

Additions–internaldevelopment 255,999

Acquisitionofsubsidiaries –

Impairment –

Amortisation –

At�0June�008netofaccumulatedamortisationandimpairment 255,999

At 30 June 2008

Cost(grosscarryingamount) 255,999

Accumulatedamortisationandimpairment –

Netcarryingamount 255,999

(b) Description of the Group’s intangible assets and goodwill

(i) Software

Softwareiscarriedatcostlessaccumulatedamortisationandaccumulatedimpairmentlosses.Thisintangibleassethasbeenassessedashavingafinitelifeandisamortisedusingthestraightlinemethodoveraperiodof�to5years.Theamortisationhasbeenrecognisedintheincomestatementinthelineitemdepreciationandamortisation.Ifanimpairmentindicationarises,therecoverableamountisestimatedandanimpairmentlossisrecognisedtotheextentthattherecoverableamountislowerthanthecarryingvalue.

(ii) Brand names

Brandnameshavebeenacquiredthroughbusinesscombinationsandarecarriedatcostlessaccumulatedamortisationandaccumulatedimpairmentlosses.Thisintangibleassethasbeenassessedashavingafinitelifeandisamortisedusingthestraightlinemethodoveraperiodof�5years.Theamortisationhasbeenrecognisedintheincomestatementinthelineitemdepreciationandamortisation.Ifanimpairmentindicationarises,therecoverableamountisestimatedandanimpairmentlossisrecognisedtotheextentthattherecoverableamountislowerthanthecarryingvalue.

(iii) Customer contracts and relationships

Customercontractsandrelationshipcostsarecarriedatcostlessaccumulatedamortisationandaccumulatedimpairmentlosses.Thisintangibleassethasbeenassessedashavingafinitelifeandisamortisedusingthestraightlinemethodoveraperiodof9.6to��.6years.Theamortisationhasbeenrecognisedintheincomestatementinthelineitemdepreciationandamortisation.Ifanimpairmentindicationarises,therecoverableamountisestimatedandanimpairmentlossisrecognisedtotheextentthattherecoverableamountislowerthanthecarryingvalue.

(iv) Goodwill

Afterinitialrecognition,goodwillacquiredinabusinesscombinationismeasuredatcostlessanyaccumulatedimpairmentlosses.Goodwillisnotamortisedbutissubjecttoimpairmenttestingonanannualbasisorwheneverthereisanindicationofimpairment(refertosectioncofthisnote).

16 Intangible assets and goodwill (non-current)

(a) Reconciliation of carrying amounts at the beginning and end of the period

Customer Brand contracts and Software Names relationships Goodwill Total $ $ $ $ $

CONSOLIDATED


At�July�007netofaccumulateddepreciationandimpairment 343,068 – – – 343,068

Additions–internaldevelopment 662,042 – – – 662,042

Acquisitionofsubsidiaries 841,122 2,668,000 1,618,900 54,425,003 59,553,025

Impairment – – – – –

Amortisation (218,159) (117,928) (110,058) – (446,145)

At�0June�008netofaccumulatedamortisationandimpairment 1,628,073 2,550,072 1,508,842 54,425,003 60,111,990

At 30 June 2008

Cost(grosscarryingamount) 2,012,799 2,668,000 1,618,900 54,425,003 60,724,702

Accumulatedamortisationandimpairment (384,726) (117,928) (110,058) – (612,712)

Netcarryingamount 1,628,073 2,550,072 1,508,842 54,425,003 60,111,990


At�July�006netofaccumulateddepreciationandimpairment �6,8�5 – – – �6,8�5

Additions–internaldevelopment ��0,765 – – – ��0,765

Impairment – – – – –

Amortisation (��,5��) – (��,5��)

At�0June�007netofaccumulatedamortisationandimpairment ��,068 – – – ��,068

At 30 June 2007

Cost(grosscarryingamount) �0�,�� – – – �0�,��

Accumulatedamortisationandimpairment (6�,�66) – – – (6�,�66)

Netcarryingamount ��,068 – – – ��,068

Goodwill,brandnamesandcustomercontractsandrelationshipswerepurchasedaspartofbusinesscombinations.Softwarewasmixtureofinternallygenerated,$66�,0��(�007:$��0,765)andpurchasedaspartofabusinesscombination$8��,��(�007:$nil).



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Consolidated Parent

2008 2007 2008 2007 $ $ $ $

17 Trade and other payables (current)Tradepayables 3,703,366 80�,�88 677,587 –

Otherpayables 6,276,329 �,�5�,�68 802,191 –

Accruedexpenses 871,076 – – –

Incomeinadvance 72,763 – – –

10,923,534 �,055,556 1,479,778

Relatedpartypayables:(b)

Loansfromkeymanagementpersonnel 141,799 – – –

Associates – �09,�68 – –

11,065,333 �,�6�,8�� 1,479,778 –

(a) Fair value and credit riskDuetotheshorttermnatureofthesepayables,theircarryingvalueisassumedtoapproximatetheirfairvalue.

(b) Related party payablesFortermsandconditionsofrelatedpartypayablesrefertonote�5.

(c) Interest rate and liquidity riskInformationregardinginterestrateandliquidityriskexposureissetoutinnote�.

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

18 Interest bearing loans and borrowingsCurrent

Debtorfinancingfacility 2,232,593 �,0�8,755 – –

Hirepurchaseliability(note�8) 359,981 �67,�7� – –

Commercialbills 3,250,000 – 3,250,000 –

5,842,574 �,�06,��7 3,250,000 –

Non-current

Hirepurchaseliability(note�8) 487,750 ��6,��9 – –

Commercialbills 21,504,351 – 21,504,351 –

21,992,101 ��6,��9 21,504,351 –

(a) Fair valueThecarryingamountoftheGroup’scurrentandnon-currentborrowingsapproximatetheirfairvalue.

(b) Interest rate and liquidity riskDetailsregardinginterestrateandliquidityriskisdisclosedinnote�.

16 Intangible assets and goodwill (non-current) (continued)

(c) Impairment tests for goodwill and intangibles with indefinite useful lives

(i) Description of the cash generating units and other relevant information

Goodwillacquiredthroughbusinesscombinationshasbeenallocatedtoitsownindividualcashgeneratingunit,beingtheentityacquiredtowhichthegoodwillisattributableto.

Goodwill

Individual cash-generating units $

SMARTPRCorporationPtyLtd 240,814

ImpulseBusinessSolutionsPtyLtd 8,006,325

BoilerRoomGroupPtyLtd 5,681,053

BoilerRoomDirectPtyLtd 4,070,303

BlandConsultingPtyLtd 1,809,195

SMSCentralAustraliaPtyLtdanditscontrolledentity 3,026,078

InspirusPtyLtd 1,339,702

ThinkCreativeManagementPtyLtd 1,608,252

PyroMediaPtyLtd 163,812

ShacPtyLtd 446,459

ChannelFinancialCommunicationPtyLtd 4,774,205

WebDevelopmentGroupPtyLtdanditscontrolledentities 19,696,804

AustralMediaGroupPtyLtd 3,414,160

CommquestLimited* 147,840

*CommquestLimitedbeingtheaccountingsubsidiaryofSMARTPtyLtd.

TheinitialaccountingforthebusinesscombinationsofChannelFinancialCommunicationPtyLtd,WebDevelopmentGroupPtyLtd,AustralMediaGroupPtyLtdandInspirusPtyLtdhaveonlybeendeterminedprovisionallybecausethevaluationsnecessaryforapplyingthepurchasemethodarestillbeingfinalisedbyanexternalvaluer.Forthepurposesoftheconsolidatedbalancesheettheassetsandliabilitieshavebeenrecordedattheirprovisionfairvaluesandexcessconsiderationpaidovertheprovisionalfairvalueshasbeenallocatedtogoodwill.UnderAustralianAccountingStandards,CommQuesthas��monthsfromthedateofacquisitiontocompleteitsinitialacquisitionaccounting.

Anyadjustmentstofairvalues,includingtaxadjustments,willhaveanequalandoppositeimpactonthegoodwillrecordedonacquisition.Accordingly,anysuchadjustmentswillhavenoimpactontheaggregateofthenetassetsofCommquestLimited,butcouldhaveamaterialimpactonanypotentialamortisationchargesinthecurrentandfuturefinancialperiods.

(ii) Key assumptions used in value in use calculations for the business units for 30 June 2008

Duringthefinancialperiod,theGroupassessedtherecoverableamountofgoodwillandbrandnamesanddeterminedthattheywerenotimpaired.Therecoverableamountofeachcash-generatingunitwasassessedbyreferencetothecash-generatingunit’svalueinusecalculationusingcashflowprojectionsbasedonfinancialbudgetsapprovedbyseniormanagementcoveringafiveyearperiod.

Thediscountrateappliedtocashflowprojectionsis�6.68%andcashflowsbeyondthefiveyearperiodareextrapolatedusing�%growthratetodetermineterminalvalue,whichisthecompany’sestimateofthelongtermaveragegrowthratefortheindustryinwhichthecompanyoperates.Atthecurrenttime,managementbelievethatnoreasonablepossiblechangeinanyoftheaboveassumptionswouldcausethecarryingvalueofgoodwillrelatingtoeachofthegoodwillbalancesdisclosedinNote�8tomateriallyexceeditsrecoverableamount.



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Consolidated Parent

2008 2007 2008 2007 $ $ $ $

20 Provisions (current)AnnualLeave 1,050,472 �07,�� 35,529 –

LongServiceLeave 102,510 – – –

Provisionforbonuses 231,131 – – –

1,384,113 �07,�� 35,529 –

21 Provisions (non-current)AnnualLeave – 5,0�5 – –

LongServiceLeave 283,756 – – –

283,756 5,0�5 –

22 Contributed equityOrdinaryshares 39,309,359 �00 74,852,881 �

(a) Ordinary sharesIssuedandfullypaid 39,309,359 �00 74,852,881 �

Fullypaidordinarysharescarryonevotepershareandcarrytherighttodividends.

Consolidated Parent

Number $ Number $

Movement in ordinary shares on issue

Atthe�July�006 200 �00 – –

Shareissue 200 �00 2 �

Transactioncosts – – – –

Atthe�July�007 400 �00 2 �

Shareissue–IPO 32,849,432 ��,8�9,�� 68,393,352 68,�9�,�5�

Sharesissuedforassetpurchases* 142,011 6�,90� 142,011 6�,90�

Sharesissuedforsubsidiaries** 13,842,510 9,��,�7� 13,842,510 9,��,�7�

Transactioncosts*** – (�,7�0,59�) – (�,7�0,59�)

Deferredtaxinrelationtotransactioncosts – 89�,8�� 89�,8��

At�0June�008 46,834,353 �9,909,�59 82,377,875 7�,85�,88�

* Issuedonthe�6ofJune�008inexchangefortheassetpurchasebeingthebusinessofInspirusPtyLtd.

** Thefollowingshareswereissuedaspartconsiderationfortheacquisitionofsubsidiaries.Refertonote�7.

TheinitialaccountingforthebusinesscombinationsforWebDevelopmentGroupPtyLtd,ChannelFinancialCommunicationPtyLtd,AustralMediaGroupPtyLtdandInspirusPtyLtdhaveonlybeendeterminedprovisionallybecausethevaluationsnecessaryforapplyingthepurchasemethodarestillbeingfinalisedbyanexternalvaluer.

***Thetransactioncostsrepresentthecostsofissuingoptionsandshares.

18 Interest bearing loans and borrowings (continued)

(c) Assets pledged as securityThecarryingamountsofassetspledgedassecurityforcurrentandnon-currentinterestbearingliabilitiesare:

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

Current

Floating charge

Cash 4,967,218 – 77,148 –

Receivables 13,725,038 – 46,021 –

Totalcurrentassetspledgedassecurity 18,692,256 – 123,169 –

Non-current

Hire Purchase liabilities

Leasedplantandequipment 654,521 – – –

Floating charge

Plantandequipment 1,335,390 – 416,225 –

Totalnon-currentassetspledgedassecurity 1,989,911 – 416,225 –

Totalassetspledgedassecurity 1,989,911 – 416,225 –

Thetermsandconditionsrelatingtothefinancialassetsareasfollows:

Cashandcashequivalentsandtradereceivablesarepledgedagainstthedebtorfinancingfacilityonanongoingfloatingbasisforthetermofthedebtorfinancingfacility.

CashandcashequivalentsandallotherassetsoftheGrouparepledgedagainstthecommercialbillfacilityonanongoingfloatingbasisforthetermofthecommercialbillfacility.

(d) Defaults and breachesDuringthecurrentandprioryears,therewerenodefaultsorbreachesonanyoftheloans.

(e) Facility detailsBelowisadescriptionanddetailsoftheGroup’scurrentdrawdownfacilitywhicharesubjecttoannualreview.

Facility Details Balance Yield Rate Term

InvoiceFinanceFacility $�,��,59� * –FixedRateCommercialBillFacility �,756,�50 7.59 March�0�0FixedRateCommercialBillFacility �,500,000 7.50 March�0�0FixedRateCommercialBillFacility 7,500,000 7.59 March�0�0VariableRateCommercialBillFacility �,000,000 * –VariableRateCommercialBillFacility �,��8,�0� * –VariableRateCommercialBillFacility �,750,000 * –VariableRateCommercialBillFacility �,000,000 * –

*YieldRateforVariableRateCommercialBillFacilitywillbetheBankBillSwapRate

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

19 Deferred settlement obligation (current)Deferredsettlementobligation 5,548,298 – 4,587,180 –

UnderthetermsoftheSharePurchaseAgreementsontheacquisitionofportfoliocompanies,totheextenttheportfoliocompaniesactualfull-yearEarningsBeforeInterestandTax(“EBIT”)tothe�0June�008,exceedstheforecastfullyearto�0June�008EBITonwhichtheBusinesswasacquired,CommquestLimitediscontractuallyobligatedtomakefurtherpaymentsineithercashorshares.



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25 Related party disclosure

(a) SubsidiariesTheconsolidatedfinancialstatementsincludethefinancialstatementsofthelegalparentCommquestLimited,theaccountingparentSalesMarketingandReatTechnologies–SMARTPtyLtdandthesubsidiarieslistedinthefollowingtable.

Country of % Equity Interest Investment $Name Incorporation 2008 2007 2008 2007

The Sales Marketing and Real Technologies – SMART Pty Ltd and its controlled entities

–SMARTPRCorporationPtyLtd Australia 100 �5 297,855 ��,��

–ImpulseBusinessSolutionsPtyLtd Australia 100 – 9,611,180 –

–IBSUnitTrust Australia 100 – – –

–TheAdvertisingCentrePtyLtd Australia 100 – – –

TotalSalesMarketingandRealTechnologies–SMARTPtyLtd 9,909,035 ��,��

Commquest Limited and its controlled entities

–TheSalesMarketingandRealTechnologies–SMARTPtyLtd Australia 100 – 35,543,915 –

–BoilerRoomGroupPtyLtdanditscontrolledentities Australia 100 – 7,351,670 –

–BoilerRoomDirectPtyLtd Australia 100 – 4,215,472 –

–BoilerRoomInteractivePtyLtd Australia 100 – – –

–BlandConsultingPtyLtd Australia 100 – 1,816,089 –

–SMSCentralAustraliaPtyLtdanditscontrolledentity Australia 100 – 3,437,758 –

–InspirusPtyLtd Australia 100 – 1 –

–ThinkCreativeManagementPtyLtd Australia 100 – 1,749,108 –

–PyroMediaPtyLtd Australia 100 – 145,000 –

–ShacPtyLtd Australia 20 – 512,790 –

–ChannelFinancialCommunicationPtyLtd Australia 100 – 5,161,926 –

–WebDevelopmentGroupPtyLtdanditscontrolledentities; 100 – 15,438,026 –

–NextDigitalPtyLtd Australia 100 – – –

–NextDigitalShanghai China 100 – – –

–AlfrescoDesignPtyLtd Australia 100 – – –

–ResultMediaPtyLtd Australia 100 – – –

–SMSIntelligencePtyLtd Australia 100 – – –

–AustralMediaGroupPtyLtd Australia 100 – 4,104,946 –

TotalCommquestLimited 79,476,701 –

(b) Ultimate parentCommquestLimitedistheultimatelegalparententityandSalesMarketingandRealTechnologies–SMARTPtyLtdistheultimateaccountingparententity,bothofwhichwereincorporatedinAustralia.

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

23 Reserves

(a) Movements in other reserves were as follows:Employeeequitybenefitsreserve

Balanceatthe�July�007 – – – –

Sharebasedpayment 110,458 – 110,458 –

Balanceat�0June�008 110,458 – 110,458 –

Employee equity benefits reserve

Theemployeeequitybenefitsreserveisusedtorecordthevalueofsharebasedpaymentsprovidedtoemployees,includingKMP,aspartoftheirremuneration.Refertonote�7forfurtherdetailsoftheseplans.

24 Cash flow statement reconciliation(a) Reconciliation of net profit after tax to net cash flows from operations

Consolidated Parent

2008 2007 2008 2007

NetProfit 2,382,141 6��,��7 (2,617,685) –

Adjustments for:

Depreciationandamortisation 1,097,100 ��7,�6� 30,112 –

Shareofassociates’net(profits)/losses (1,098) (��,556) – –

Sharebasedpaymentsexpense 110,458 – 110,458 –

Changes in assets and liabilities

(Increase)/decreaseintradeandotherreceivables (6,705,469) (�,�77,597) (390,168) –

(Increase)/decreaseinprepayments (�08,0��) – –

(Increase)/decreaseindeferredtaxassets (1,210,552) ��,��8 (1,231,667) –

(Decrease)/increaseindeferredtaxliabilities 1,233,158 – – –

(Decrease)/increaseintradeandotherpayables 3,995,787 �,0��,8�� 1,489,944 –

(Decrease)/increaseinprovisions 846,548 �90,��0 35,529

Netcashfromoperatingactivities 1,748,073 �,0�9,�86 (2,573,477) –

(b) Non-cash financing and investing activitiesSettlementofsubsidiarypurchasewithshares(note�8) 9,295,278 – 9,295,278 –



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26 Key management personnel

(a) Details of Key Management Personnel

(i) Directors

MrJohnAHall Chairman(non-executive)MrWilliamHAScott ChiefExecutiveOfficerMrJordanKMuir ChiefOperatingOfficerMrEricBCoulson ChiefMarketingOfficerMrPaulXTobin Director(non-executive)MrThomasJRO’Brien Director(non-executive)

(ii) Executives

MrJMeredith-Smith ChiefFinancialOfficerMrFDunton HeadofMobileMarketingMrASpanos ManagingDirector,NextDigitalGroupMrPKelly Director,ChannelFinancialCommunicationMrBShaw CorporateManagerMsKPalethorpe CorporateLawyerMrRRamnarain NationalOperationsManager,TheSmartGroupMrDStewart NationalSalesManager,TheSmartGroupMrMichaelHerchenbach GeneralCounselandCompanySecretary(Resigned��November�007)

TherewerenochangesoftheCEOorKMPafterreportingdateandbeforethedatethefinancialreportwasauthorisedforissue.

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

(b) Compensation for Key Management Personnel

Short-termemployeebenefits 2,118,799 967,��8 1,452,564 –

Post-employmentbenefits 160,749 ��,�8� 94,198 –

Otherlong-termbenefits – – – –

Terminationbenefits – – – –

Share-basedpayment 107,512 – 107,512 –

Totalcompensation 2,387,060 �,00�,�� 1,654,274 –

RefertotheRemunerationReportsectionoftheDirectors’Reportforfurtherinformationontheremunerationofdirectorsandexecutives.

25 Related party disclosure (continued)

(c) Key management personnelDetailsrelatingtoKMP,includingremunerationpaid,areincludedinnote�6.

(d) Transactions with related partiesThefollowingtableprovidesthetotalamountoftransactionsthatwereenteredintowithrelatedpartiesfortherelevantfinancialyear(forinformationregardingoutstandingbalancesonrelatedpartytradereceivablesandpayablesatyear-end,refertonotes��and�7respectively)

Sales to Purchases from Other transactionsRelated party related parties related parties with related parties

StayinBedMilkandBreadPtyLtd 2008 1,252,136 – –

StayinBedMilkandBreadPtyLtd �007 8�,0�0 – –

SMSDiagnosticsLtd 2008 73,125 – –

�007 – – –

Terms and conditions of transactions with related parties

Salestoandpurchasesfromrelatedpartiesaremadeinarm’slengthtransactionsbothatnormalmarketpricesandonnormalcommercialterms.

Termsandconditionsofthetaxfundingandtaxsharingarrangementsaresetoutinnote8.

Outstandingbalancesatyear-endareunsecured,interestfreeandsettlementoccursincash.

(e) Loans to related partiesSalesMarketingandRealTechnologies–SMARTPtyLtdhadprovidedloanstothefollowingdirectorrelatedentitieswiththesebalancesatreportingdate:

2008 2007 $ $

IcePtyLtd – 6�,�58

JKMPropertiesPtyLtd – �5�,�69

WHASPropertiesPtyLtd – �6�,0�5

CommquestPtyLtd* – �55,�05

MUMsPtyLtd 231,319 ��6,�85

StayinBedMilkandBreadPtyLtd 77,241 –

308,560 975,8��

*DuringthefinancialyearJune�007,CommquestPtyLtdwasadirectorrelatedentityofSalesMarketingandRealTechnologies–SMARTPtyLtdtheaccountingacquirer.



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26 Key management personnel (continued)

Balance Granted as On-Market Balance 1 July 2007 Remuneration Purchases 30 June 200830 June 2007 Ord Ord Ord Ord

Directors

MrJHall – – – –

MrWScott – – � �

MrJMuir – – � �

MrBCoulson – – – –

MrPTobin – – – –

MrTO’Brien – – – –

Executives

MrJMeredith-Smith – – – –

MrFDunton – – – –

MrASpanos – – – –

MrPKelly – – – –

MrBShaw – – – –

MsKPalethorpe – – – –

MrRRamnarain – – – –

MrDStewart – – – –

Total – – 2 2

AllequitytransactionswithKMPotherthanthosearisingfromtheexerciseofremunerationoptionshavebeenenteredintoundertermsandconditionsnomorefavourablethanthosetheGroupwouldhaveadoptedifdealingatarm’slength.

27 Share-based payment plans

(a) Recognised share-based payment expensesTheexpenserecognisedforemployeeservicesreceivedduringtheyearisshowninthetablebelow:

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

Expensesarisingfromequity-settledshare-basedpaymenttransactions(note7(d)) 110,458 – 110,458 –

Theshare-basedpaymentplansaredescribedbelow.MrMHerchenbachresignedon��November�007,grantedoptionshadnotyetvestedandaccordinglywereforfeited.

(b) Types of share-based payment plansCommQuesthasadoptedanexecutiveshareoptionplan(“ESOP”).

TheESOPprovideseligibleemployeesandDirectorswithanopportunitytoacquireafinancialinterestintheCompanywhichwillaligntheirinterestsmorecloselywithshareholdersandprovidegreaterincentiveforthemtofocusontheCompany’slonger-termgoals.

Eligibleemployeeswhomaybeofferedoptionstosubscribeforsharesincludefull-timeorpermanentpart-timeemployeesorDirectors(executiveandnon-executive)ofCommQuestortheGroup.

TheBoardhasdiscretiontodeterminetheformandcontentofanyinvitation,theexerciseprice,exerciseperiod,optionfee(ifany),expirydateofoptionsandperformanceconditions(ifany).

Anoptionmaynotbeexercisedbeforetheexercisedatedeterminedinrespectoftheoptions.AnoptionmayonlybeexercisedinaperiodspecifiedintheCompany’scorporategovernancepoliciesorwithinperiodsasdeterminedbytheBoard.OptionsexercisedwillentitletheholdertooneShareforeachoptionexercised.TheSharesissuedontheexerciseofoptionswillrankequallywithexistingSharesonissue.

26 Key management personnel (continued)

(c) Option holdings of Key Management Personnel (Consolidated)

Balance at Granted Balance at Vestedat�0June�008 Beginning as Options Net End of Not of Period Remun- Exer- Change Period Exer- Exer-30 June 2008 1 July 07 eration cised Other * 30 June 08 Total cisable cisable

Directors

MrWScott – �50,000 – – �50,000 �50,000 – �50,000

MrJMuir – ��,500 – – ��,500 ��,500 – ��,500

MrBCoulson – ��,500 – – ��,500 ��,500 – ��,500

MrPTobin – 80,000 – – 80,000 80,000 – 80,000

MrTO’Brien – 80,000 – – 80,000 80,000 – 80,000

Executives

MrJMeredith-Smith – 75,000 – – 75,000 75,000 – 75,000

MrFDunton – 60,000 – – 60,000 60,000 – 60,000

MrASpanos – – – – – – – –

MrPKelly – – – – – – – –

MrBShaw – 60,000 – – 60,000 60,000 – 60,000

MsKPalethorpe – – – – – – – –

MrRRamnarain – – – – – – – –

MrDStewart – – – – – – – –

MrMHerchenbach – �5,000 – (�5,000) – – – –

Total – 775,000 – (45,000) 730,000 730,000 – 730,000

*Includesforfeiture.

Therewerenooptionsissuedpriorto�July�007andconsequentlythereisnocomparativeinformationtodisclosefortheyearended�0June�007.

(d) Shareholdings of Key Management Personnel (Consolidated)

Shares held in Commquest Limited (number)

Balance Granted as On-Market Balance 1 July 2007 Remuneration Purchases 30 June 200830 June 2008 Ord Ord Ord Ord

Directors

MrJHall – �00,000 ��5,000 ��5,000

MrWScott � – ��,79�,��6 ��,79�,��7

MrJMuir � – ��,989,��0 ��,989,��

MrBCoulson – – �,�97,8�0 �,�97,8�0

MrPTobin – – �00,000 �00,000

MrTO’Brien – – – –

Executives

MrJMeredith-Smith – – 9�,66� 9�,66�

MrFDunton – – �8,000 �8,000

MrASpanos – – 6,58�,��0 6,58�,��0

MrPKelly – – 9��,055 9��,055

MrBShaw – – 7�,66� 7�,66�

MsKPalethorpe – – 8,000 8,000

MrRRamnarain – – ��,950 ��,950

MrDStewart – – 5,000 5,000

Total 2 100,000 37,157,239 37,257,241



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27 Share-based payment plans (continued)

(g) Option pricing modelDuringtheyearended�0June�008thefollowingoptionsweregrantedoverordinaryshares,exercisableuponmeetingthevestingconditionsdetailedabove.ThefairvaluesoftheoptionsareestimatedatthedateofgrantusingtheBlack-Scholesoptionpricingmodel.Thefollowingtablealsoliststheinputstothemodelusedfortheyearended�0June�008.

1 October 2007 1 October 2007

NumberofOptions �97,500 �97,500

Grantdate �October�007 �October�007

FirstVestingdate �0September�009 �0September�009

ExpiryDate �0September�0�� 0September�0��

Sharepriceatgrantdate $�.00 $�.00

Expectedvolatility 60%* 60%*

Risk-freeinterestrate 6.�6% 6.�6%

Dividendyield nil nil

Optionexerciseprice $�.00 $�.�0

Expectedlifeofoption �years** �.5years**

* CompanylistedontheASXon�5November�007andthereforenohistoricalinformationavailable.Expectedvolatilitywasobtainedwithreferencetoanentityinasimilarindustrywithasimilarbusinessmodelandcharacteristics.

**Theeffectsofearlyexercisehavebeenincorporatedintothecalculationsbyusinganexpectedlifefortheoptionthatisshorterthanthecontractuallifebasedonhistoricalexercisebehaviour,whichisnotnecessarilyindicativeofexercisepatternsthatmayoccurinthefuture.

28 Business combinationOn8November�007thelegalparententitygainedcontroloverthefollowingentitiesafterasuccessfulInitialPublicOfferingofCommQuestshares:

SalesMarketingandRealTechnologies–SMARTPtyLtdTheAdvertisingCentrePtyLtdSMARTPRCorporationPtyLtdIBSUnitTrustImpulseBusinessSolutionsPtyLtdShacPtyLtdSMSCentralAustraliaPtyLtdPyroMediaPtyLtdThinkCreativeManagementPtyLtdBoilerRoomGroupPtyLtdanditscontrolledentities:–BoilerRoomDirectPtyLtd–BoilerRoomInteractivePtyLtd–BlandConsultingPtyLtd

AstheacquisitionisareverseacquisitioninaccordancewithAASB�BusinessCombinations,thesubsidiarySMARTisreportedintheconsolidatedresultsasifitweretheparententity.Thecomparativeresultsfor�007arefortheexistingSMARTgroupandtheconsolidatedfiguresfor�008showtheresultsforthenewSMARTgroupforthe��monthsto�0June�008,whichincludestheresultsoftheotherentitiesfromtheacquisitiondateof8November�007totheperiodendof�0June�008.

ThetablesbelowshowtheassetsacquiredbySMARTduringthereverseacquisition.

27 Share-based payment plans (continued)

Participantsmayassign,transfer,sell,grantasecurityinterestoverorotherwisedealwithanoptioninaccordancewiththespecifictermsofgrantoftheoptions.OptionsmaybeexercisedonthedeathofaParticipantbytheParticipant’slegalpersonalrepresentativeorintheeventthatanorderismadefortheParticipant’sestatetobeadministeredunderthelawsrelatingtomentalhealth,thepersonwhoisappointedtoadministersuchestate.

Anoptionwilllapseandbeunabletobeexercisedontheearliestof:

–TheexpirydatespecifiedbytheBoard;

–60daysfromthecessationofaParticipant’semployment

–�0daysfromtheBoardnotifyingtheParticipantthatatakeoverbidhasoccurred;

–Theboarddeterminesperformanceconditionscannotbemet;and

–TheboarddeterminesabreachofaconditionoftheoptionhasoccurredwhichresultsintheexpiryoftheOption

OptionswillnotbequotedontheASX.IfatthetimetheSharesareissuedupontheexerciseoftheOptions,SharesarequotedontheASX,CommQuestwillapplytotheASXforquotationoftheseShares.

DuringtheyearnooptionsundertheCommQuestExecutiveandEmployeeOptionPlanswereexercisedbyemployeesincludingKMP.

Theoutstandingbalanceasat�0June�008isrepresentedby:

–�75,000optionsoverordinaryshareswithanexercisepriceof$�.00each,exercisableuponmeetingtheconditionsbelowanduntil�0September�0��

–�75,000optionsoverordinaryshareswithanexercisepriceof$�.�0each,exercisableuponmeetingtheconditionsbelowanduntil�0September�0��

VestingconditionsforbothlotsofoptionsissuedrequiretheParticipantstoremainemployedwiththeCompanyupto�0September�009atwhichtheoptionsbecomeexercisable.

(c) Summaries of options granted under ESOP arrangementThefollowingtableillustratesthenumber(No.)andweightedaverageexerciseprices(WAEP)of,andmovementsin,shareoptionsissuedduringtheyear:

2008 2008 �007 2007 No WAEP No WAEP

Outstandingatthebeginningoftheyear – – – –

Grantedduringtheyear 795,000 $1.15 – –

Forfeitedduringtheyear (45,000) – – –

Exercisedduringtheyear – – – –

Expiredduringtheyear – – – –

Outstandingattheendoftheyear 750,000 $1.15 – –

Exercisableattheendoftheyear – – – –

Theoutstandingbalanceasat�0June�008isrepresentedby:

–�75,000optionsoverordinaryshareswithanexercisepriceof$�.00each,exercisableuponmeetingtheconditionsaboveanduntil�0September�0��

–�75,000optionsoverordinaryshareswithanexercisepriceof$�.�0each,exercisableuponmeetingtheconditionsaboveanduntil�0September�0��

(d) Weighted average remaining contractual lifeTheweightedaverageremainingcontractuallifefortheshareoptionsoutstandingasat�0June�008is�.�5years(�007:Nooptionsissued).

(e) Range of exercise priceForoptionsoutstandingattheendoftheyear,theexercisepriceswere$�.00and$�.�0(�007:Nooptionsissued).

(f) Weighted average fair valueTheweightedaveragefairvalueofoptionsgrantedduringtheyearwas$0.�9(�007:Nilasnooptionsissued).



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28 Business combination (continued)

Recognised on Carrying Acquisition Value $ $

SMART PR Corporation Pty Ltd

Plantandequipment – –

Deferredtaxasset �68 �68

Cashandcashequivalents �9,�05 �9,�05

Tradereceivables 5�,890 5�,890

Otherreceivables �8,897 �8,897

90,560 90,560

Tradepayables (�0,5�8) (�0,5�8)

Interestbearingliabilities

Otherpayables (8,��) (8,��)

Provisions (�8,5�9) (�8,5�9)

(56,860) (56,860)

Fairvalueofidentifiablenetassets ��,700

Goodwillarisingfromacquisition ��0,8��

�7�,5��

Costofcombination:

Sharesissuedatfairvalue ��7,�57

Cashpaid ��7,�57

Totalcostofcombination �7�,5��

Thecashoutflowonacquisitionisasfollows:

Netcashacquiredwiththesubsidiary �9,�05

Cashpaid (��7,�57)

Netconsolidatedcashoutflow (��7,85�)

Fromthedateofacquisition,SMARTPRCorporationPtyLtdhascontributedalossof$�8,7��tothenetprofitoftheGroup.Ifthecombinationhadtakenplaceatthebeginningoftheyear,theprofitfromcontinuingoperationsfortheGroupwouldhavebeen$�,�9�,68�andrevenuefromcontinuingoperationswouldhavebeen$5�,0�8,990.



The Advertising Centre Pty Ltd

Plantandequipment ��9,76� ��9,76�

Deferredtaxasset 7,��0 7,��0

Cashandcashequivalents 5�,970 5�,970

Tradereceivables 5�5,�68 5�5,�68

Otherreceivables �08,7�� 08,7��

9�6,�50 9�6,�50

Tradepayables (�78,�9�) (�78,�9�)

Interestbearingliabilities (��6,��5) (��6,��5)

Otherpayables (��,��) (77,��8)

(9�6,�50) (90�,�75)

Fairvalueofidentifiablenetassets –

Goodwillarisingfromacquisition –

–

Costofcombination:

Sharesissuedatfairvalue

Cashpaid ��,875

Directcostsrelatingtotheacquisition (��,875)

Totalcostofcombination –


Netcashacquiredwiththesubsidiary 5�,970

Cashpaid –

Netconsolidatedcashoutflow 5�,970

Fromthedateofacquisition,TheAdvertisingCentrePtyLtdhascontributedalossof$76,656tothenetprofitoftheGroup.Ifthecombinationhadtakenplaceatthebeginningoftheyear,theprofitfromcontinuingoperationsfortheGroupwouldhavebeen$�,�69,0�8andrevenuefromcontinuingoperationswouldhavebeen$5�,��0,009.



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Shac Pty Ltd

Plantandequipment ��,�6� ��,�6�

Cashandcashequivalents �0,69� �0,69�

Tradereceivables �0�,05� �0�,05�

Otherfinancialassets �,�55 �,�55

��9,�6� ��9,�6�

Tradepayables (�5�,577) (�5�,577)

Interestbearingliabilities (��,5�7) (��,5�7)

Otherpayables (��,09�) (��,09�)

Provisions (�5,�9�) (�5,�9�)

Deferredtaxliability (8,�5�) –

(�7�,��) (�6�,677)

Fairvalueofidentifiablenetassets 66,��

Goodwillarisingfromacquisition ��6,�59

5��,790

Costofcombination:

Sharesissuedatfairvalue �77,�8�

Cashpaid ��5,606

Directcostsrelatingtotheacquisition –

Totalcostofcombination 5��,790


Netcashacquiredwiththesubsidiary �0,69�

Cashpaid ��5,606

Netconsolidatedcashoutflow (��,9��)

Fromthedateofacquisition,ShacPtyLtdhascontributedalossof$�8�,9��tothenetprofitoftheGroup.Ifthecombinationhadtakenplaceatthebeginningoftheyear,theprofitfromcontinuingoperationsfortheGroupwouldhavebeen$�,5��,9�5andrevenuefromcontinuingoperationswouldhavebeen$50,5�0,5�9.



Impulse Business Solutions Pty Ltd

Plantandequipment �,0�8 �,0�8

Cashandcashequivalents �79,��5 �79,��5

Tradereceivables 7��,�0� 7��,�0�

Otherfinancialassets �6,9�9 �6,9�9

BrandName �,6�0,000 –

�,7��,�95 �,��,�9�

DeferredTaxLiability (�8�,000) –

Tradepayables (��,65�) (��,65�)

Provisions (��,887) –

(�,��9,5�0) (��,65�)

Fairvalueofidentifiablenetassets �,60�,855

Goodwillarisingfromacquisition 8,006,��5

9,6��,�80

Costofcombination:

Sharesissuedatfairvalue �,��5,0��

Cashpaid �,��5,0��

Deferredsettlementobligation 96�,��8

Totalcostofcombination 9,6��,�80


Netcashacquiredwiththesubsidiary �79,��5

Cashpaid (�,��5,0��)

Netconsolidatedcashoutflow (�,9�5,696)

Fromthedateofacquisition,ImpulseBusinessSolutionsPtyLtdhascontributed$88�,�80tothenetprofitoftheGroup.Ifthecombinationhadtakenplaceatthebeginningoftheyear,theprofitfromcontinuingoperationsfortheGroupwouldhavebeen$�,88�,9��andrevenuefromcontinuingoperationswouldhavebeen$5�,��7,�58.



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PyroMedia Pty Ltd

Plantandequipment 665 665

665 665

Tradepayables (9,��0) 9,��0

Otherpayables (8,707) �7,�57

(�8,��7) �6,797

Fairvalueofidentifiablenetassets (�8,8��)

Goodwillarisingfromacquisition �6�,8��

��5,000

Costofcombination:

Sharesissuedatfairvalue 7�,500

Cashpaid 7�,500

Totalcostofcombination ��5,000


Netcashacquiredwiththesubsidiary –

Cashpaid (7�,500)

Netconsolidatedcashoutflow (7�,500)

Fromthedateofacquisition,PyroMediaPtyLtdhascontributedalossof$��5,997tothenetprofitoftheGroup.Ifthecombinationhadtakenplaceatthebeginningoftheyear,theprofitfromcontinuingoperationsfortheGroupwouldhavebeen$�,�6�,��9andrevenuefromcontinuingoperationswouldhavebeen$50,895,�07.



SMS Central Australia Pty Ltd

Plantandequipment 55,�05 55,�05

Deferredtaxasset ��,750 ��,750

Cashandcashequivalents ��,9�� ,9��

Tradereceivables �,��,606 �,��,606

Otherfinancialassets �00 �00

Software �77,500 –

�,8��,50� �,5�7,00�

Tradepayables (�,��,��8) (�,��,��8)

Otherpayables (�8�,�96) (77,770)

Provisions (7,890) (7,890)

(�,�0�,8��) (�,�99,098)

Fairvalueofidentifiablenetassets ��,680

Goodwillarisingfromacquisition �,0�6,078

�,��7,758

Costofcombination:

Sharesissuedatfairvalue –

Cashpaid �,000,000

Deferredsettlementobligation �,��7,758

Totalcostofcombination �,��7,758


Netcashacquiredwiththesubsidiary ��,9��

Cashpaid (�,000,000)

Netconsolidatedcashoutflow (866,057)

Fromthedateofacquisition,SMSCentralAustraliaPtyLtdhascontributed$58�,��7tothenetprofitoftheGroup.Ifthecombinationhadtakenplaceatthebeginningoftheyear,theprofitfromcontinuingoperationsfortheGroupwouldhavebeen$�,5�7,5�0andrevenuefromcontinuingoperationswouldhavebeen$5�,��5,�90.



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CommQuest 2008 Business Review & Financial Report �0�


Consolidated


BoilerRoom Group Pty Ltd and its subsidiaries

Plantandequipment ��7,989 ��7,989

Cashandcashequivalents �7�,7�9 �7�,7�9

Tradereceivables 990,��0 990,��0

Otherreceivables 7,587 7,587

Customercontractsandrelationships �,576,600 –

Brandname 86�,500 –

�,7�9,8�5 �,�00,7�5

Tradepayables (�,0�9,�7�) (�,0�9,�7�)

Otherpayables (7,557) (7,557)

Provisions (9�,7�5) (9�,7�5)

Deferredtaxliability (765,68�) –

(�,9�7,��5) (�,�5�,�5�)

Fairvalueofidentifiablenetassets �,8��,680

Goodwillarisingfromacquisition ��,560,55�

��,�8�,��

Costofcombination:

Sharesissuedatfairvalue 5,78�,57�

Cashpaid 5,78�,57�

Deferredsettlementobligation �,8�6,089

Totalcostofcombination ��,�8�,��


Netcashacquiredwiththesubsidiary �7�,7�9

Cashpaid (5,78�,57�)

Netconsolidatedcashoutflow (5,608,8��)

Fromthedateofacquisition,BoilerRoomGroupPtyLtdanditssubsidiarieshavecontributed$�,��7,6�5tothenetprofitoftheGroup.Ifthecombinationhadtakenplaceatthebeginningoftheyear,theprofitfromcontinuingoperationsfortheGroupwouldhavebeen$�,5�7,9�7andrevenuefromcontinuingoperationswouldhavebeen$5�,��9,��.



Think Creative Management Pty Ltd

Plantandequipment �6,950 �6,950

Cashandcashequivalents ��,769 ��,769

Tradereceivables ��,�88 ��,�88

Brandname �95,500 –

Customercontractsandrelationships ��,�00 –

6�9,007 ��,�07

Tradepayables (�9�,�5�) (�9�,�5�)

Interestbearingliabilities (�5,��5) (�5,��5)

Otherpayables (96,880) (96,880)

Provisions (7�,70�) (��,��)

(508,�5�) (��7,76�)

Fairvalueofidentifiablenetassets ��0,856

Goodwillarisingfromacquisition �,608,�5�

�,7�9,�08

Costofcombination:

Sharesissuedatfairvalue 87�,55�

Cashpaid 87�,55�

Directcostsrelatingtotheacquisition

Totalcostofcombination �,7�9,�08


Netcashacquiredwiththesubsidiary ��,769

Cashpaid (87�,55�)

Netconsolidatedcashoutflow (7��,785)

Fromthedateofacquisition,ThinkCreativeManagementPtyLtdhascontributed$�7�,578tothenetprofitoftheGroup.Ifthecombinationhadtakenplaceatthebeginningoftheyear,theprofitfromcontinuingoperationsfortheGroupwouldhavebeen$�,��,��7andrevenuefromcontinuingoperationswouldhavebeen$5�,60�,��9.



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Web Development Group Pty Ltd and its controlled entities

On�9February�008,thecompanyacquired�00%ofthevotingsharesofWebDevelopmentGroupPtyLtdanditscontrolledentities,afullservicedigitalmarketingandservicescompany.Totalconsiderationwas$�5.�million,payableincashandCommQuestshareswithcontingentconsiderationbasedonspecifiedfuturefinancialperformancehurdlesbeingmet.

TheconsolidatedfairvalueoftheidentifiableassetsandliabilitiesofWebDevelopmentGroupPtyLtdasatthedateofacquisitionwere:

Consolidated


Plantandequipment 860,7�9 860,7�9

Tradereceivables �,76�,�� ,76�,��

Otherreceivables �,�50,8�6 �,�50,8�6

7,07�,8�5 7,07�,8�5

Tradepayables (�,0�8,670) (�,0�8,670)

Otherpayables (�,�7�,550) (�,��5,�8�)

Provisions (558,��0) (558,��0)

Provisionforincometax (679,90�) (679,90�)

Bankoverdraftandborrowings (7,58�,�7�) (7,58�,�7�)

(��,��,605) (��,�95,5�8)

Fairvalueofidentifiablenetassets (�,�58,780)

Goodwillarisingfromacquisition �9,696,80�

�5,��8,0��

Costofcombination:

Directcostsrelatingtotheacquisition ��,08�

Sharesissuedatfairvalue 5,�96,9��

Cashpaid �0,000,000

Totalcostofcombination �5,��8,0��


Netcashacquiredwiththesubsidiary (7,58�,�7�)

Cashpaid (�0,000,000)

Netconsolidatedcashoutflow (�7,58�,�7�)

Fromthedateofacquisition,WebDevelopmentGroupPtyLtdanditscontrolledentitieshavecontributed$�,�68,775tothenetprofitoftheGroup.Ifthecombinationhadtakenplaceatthebeginningoftheyear,theprofitfromcontinuingoperationsfortheGroupwouldhavebeen$�,�08,�7�andrevenuefromcontinuingoperationswouldhavebeen$6�,06�,0�5.


Channel Financial Communication Pty Ltd

On��December�007,thecompanyacquired�00%ofthevotingsharesofChannelFinancialCommunicationPtyLtd,afinancialcommunicationsandinvestorrelationsconsultancycompany.Totalconsiderationwas$5,��,��9with$�75,000heldbyCommquestLimitedinescrow,payableincashandCommQuestshareswithcontingentconsiderationbasedonspecifiedfuturefinancialperformancehurdlesbeingmet.

ThefairvalueoftheidentifiableassetsandliabilitiesofChannelFinancialCommunicationPtyLtdasatthedateofacquisitionwere:


Plantandequipment �7,9�5 �7,9�5

Deferredtaxasset 6�,7�� 6�,7��

Cashandcashequivalents ��,6�� ,6��

Tradereceivables 596,9�� 596,9��

�,05�,��6 �,05�,��6

Tradepayables (505,995) (505,995)

Provisions (�57,5�0) (�88,98�)

(66�,505) (69�,976)

Fairvalueofidentifiablenetassets �87,7��

Goodwillarisingfromacquisition �,77�,�05

5,�6�,9�6

Costofcombination:

DirectCostsrelatingtotheacquisition 75,�96

Sharesissuedatfairvalue �,6��,��0

Cashpaid �,�75,000

Totalcostofcombination 5,�6�,9�6


Netcashacquiredwiththesubsidiary ��,6��

Cashpaid (�,�75,000)

Netconsolidatedcashoutflow �,��5,�56

Fromthedateofacquisition,ChannelFinancialCommunicationPtyLtdhascontributed$�6�,��tothenetprofitoftheGroup.Ifthecombinationhadtakenplaceatthebeginningoftheyear,theprofitfromcontinuingoperationsfortheGroupwouldhavebeen$�,755,0�5andrevenuefromcontinuingoperationswouldhavebeen$5�,699,77�.



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29 Commitments and Contingencies

(i) Leasing commitments

Operating lease commitments – Group as lessee

TheGrouphasenteredintocommercialleasesoncertainmotorvehiclesanditemsofofficeequipment.Theseleaseshaveanaveragelifeofbetween�and6yearswithoptionalrenewalperiodsincludedinthecontracts.Therearenorestrictionsplaceduponthelesseebyenteringintotheseleases.

Futureminimumrentalspayableundernon-cancellableoperatingleasesasat�0Juneareasfollows:

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

Withinoneyear 2,811,461 �,�6�,8�� 491,185 –

Afteroneyearbutnotmorethanfiveyears 5,655,435 �,8�5,777 1,792,454 –

Aftermorethanfiveyears 1,366,387 – – –

Totalminimumleasepayments 9,833,283 �,�99,6�8 2,283,639 –

Finance lease and hire purchase commitments – Group as lessee

TheGrouphasfinanceleasesandhirepurchasecontractsforvariousitemsofplantandequipmentwithacarryingamountof$�5�,875(�007:$��,78�)forboththeGroupandtheCompany.Theseleasecontractsexpirewithin�to�years.Theleaseshavetermsofrenewalbutnopurchaseoptionsandescalationclauses.Renewalsareattheoptionofthespecificentitythatholdsthelease.

Consolidated Parent

2008 2007 2008 2007 $ $ $ $

Withinoneyear 352,715 ��,68� – –

Afteroneyearbutnotmorethanfiveyears 289,019 �7�,7�� – –

Aftermorethanfiveyears – – – –

Totalminimumleasepayments 641,734 798,�98 – –

Lessamountsrepresentingfinancecharges (111,495) (�0�,507) – –

Presentvalueofminimumleasepayments 530,239 69�,89� – –

Includedinthefinancialstatementsas:

Currentinterest-bearingloansandborrowings(note�8) 570,352 �67,�7� – –

Non-currentinterest-bearingloansandborrowings(note�8) 277,380 ��6,��9 – –

Totalincludedininterest-bearingloansandborrowings 847,732 69�,89� – –


Austral Media Group Pty Ltd

On�June�008,thecompanyacquired�00%ofthevotingsharesofAustralMediaGroupPtyLtd.Totalconsiderationwas$�.079million,payableincashandCommQuestshareswithcontingentconsiderationbasedonspecifiedfuturefinancialperformancehurdlesbeingmet.

TheconsolidatedfairvalueoftheidentifiableassetsandliabilitiesofAustralPtyLtdasatthedateofacquisitionwere:


Plantandequipment 9,995 9,995

Cashandcashequivalents (�,095) (�,095)

Tradereceivables ��,50� ��,50�

Otherreceivables �,��6,88� �,��6,88�

Deferredtaxasset 5,087 5,087

�,58�,�7� �,58�,�7�

Tradepayables 60,�90 60,�90

Otherpayables 5��,6�9 5��,6�9

Provisions �07,658 �07,�59

89�,587 89�,088

Fairvalueofidentifiablenetassets 690,786

Goodwillarisingfromacquisition �,��,�60

�,�0�,9�6

Costofcombination:

Sharesissuedatfairvalue �,��,000

Cashpaid �,756,�50

Directcostsrelatingtotheacquisition �5,696

Totalcostofcombination �,�0�,9�6


Netcashacquiredwiththesubsidiary (�,095)

Cashpaid (�,756,�50)

Netconsolidatedcashoutflow (�,758,��5)

Fromthedateofacquisition,AustralPtyLtdhascontributed$5�7,690tothenetprofitoftheGroup.Ifthecombinationhadtakenplaceatthebeginningoftheyear,theprofitfromcontinuingoperationsfortheGroupwouldhavebeen$�,�50,��6andrevenuefromcontinuingoperationswouldhavebeen$5�,978,��7.

InJune�008,thecompanyacquiredthebusinessassetsofInspirusPtyLtdforcashandshareconsiderationof$�,�75,798and$6�,90�respectively.Thecarryingvalueoftheassetsacquiredwerenilwithgoodwillbeing$�,��9,70�.



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InaccordancewitharesolutionofthedirectorsofCommquestLimited,Istatethat:

�. Intheopinionofthedirectors:

(a) thefinancialstatements,notesandtheadditionaldisclosuresincludedinthedirectors’reportdesignatedasaudited,ofthecompanyandoftheconsolidatedentityareinaccordancewiththeCorporationsAct�00�,including:

(i) givingatrueandfairviewoftheCompany’sandconsolidatedentity’sfinancialpositionasat�0June�008andoftheirperformancefortheyearendedonthatdate;and

(ii) complyingwithAccountingStandardsandCorporationsRegulations�00�;and

(b) therearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable.

�. Thisdeclarationhasbeenmadeafterreceivingthedeclarationsrequiredtobemadetothedirectorsinaccordancewithsection�95AoftheCorporationsAct�00�forthefinancialyearending�0June�008.

OnbehalfoftheBoard

W.H.A.ScottDirector

Melbourne,�9August�008

Directors’ Declaration

30 Events after the balance sheet dateThecompanycompletedtheacquisitionofMobiDataHoldingsLtd“MobiData”on�July�008.Purchaseconsiderationwasmadeupofapre-completionpayoutof$�00,000paidinApril�008,adeferredpaymentandanapplicationrevenuepayment.Theapplicationrevenuepaymentistobeequalto50%oftherevenuesgeneratedfora�0monthperiodfromtheacquiredapplicationsoftwarelaunchdate.Themaximumamountpayablebythecompanyiscappedat$�6,000,000.Thedeferredpaymentelementofthepurchaseconsiderationwillonlybepayableiftheapplicationrevenuepaidbythecompanyislessthan$�00,000fortheperiodfromthelaunchdateto��December�008.Thedeferredpaymentiscalculatedbysubtractingapplicationrevenuepaidfrom$�00,000withthedifferencepayableonorbefore��January�009.

CommQuesthasreachedagreementtoplace��.5millionnewCommQuestshareswithinvestmentfundsmanagedbyLCWIMat�5centseach,raising$�.6�million.Thiswillrepresent�5%ofCommQuest’spost-placementissuedcapital.ProceedswillinitiallybeappliedinthereductionoftheCompany’sexistingdebt.

Ofthe��.5millionofsharesbeingplaced,�.9�millionwillbeissuedonorabout�September�008withthebalancesubjecttoCommQuestshareholderapproval,whichwillbesoughtattheCompany’sAGMinNovemberofthisyear.TheCompanyispermittedtoissueupto�5%ofitscapitalina��monthperiodwithoutshareholderapprovalandasthecompanyhasalreadyissued/isrequiredtoissue7.��millionsharesasconsiderationpayableinrelationtothebusinessesacquiredatandafterIPO(forwhichnowaiverofASXListingRule7.�applies),CommQuestshareholderapprovalwillberequiredforpartoftheplacement.

31 Auditors’ remuneration Consolidated Parent

2008 2007 2008 2007 $ $ $ $

AmountsreceivedorduereceivablebyErnst&YoungAustraliafor:

Anauditorreviewofthefinancialreportoftheentityintheconsolidatedgroup 546,463 �0,000 546,463 –

Otherservices

Taxcomplianceservices 24,140 – – –

Assuranceservices – 9,597 – –

IPOservices 1,068,428 – – –

1,639,031 �9,597 546,463 –



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Auditor’s Report



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CommQuest 2008 Business Review & Financial Report ��

ASX Additional Information

AdditionalinformationrequiredbytheAustralianStockExchangeLtdandnotshownelsewhereinthisreportisasfollows.Theinformationiscurrentasat��July�008.

(a) Distribution of equity securities

(i) Ordinary share capital

8�,�77,875fullypaidordinarysharesareheldby70�individualshareholders.Allissuedordinarysharescarryonevotepershareandcarrytherightstodividends.

(ii) Options

750,000optionsareheldby8individualoptionholders.Optionsdonotcarryarighttovote.

Thenumberofshareholders,bysizeofholding,ineachclassare:

Fully paid ordinary shares Options

�–�,000 �� –�,00�–5,000 �� –5,00�–�0,000 �5� –�0,00�–�00,000 �� 5�00,00�andover 6� �

70� 8

Holdinglessthanamarketableparcel �5� –

(b) Substantial shareholders Fully paidOrdinary Shareholders Number Percentage

WHASInvestmentsPtyLtd ��,7��,8�6 �6.67JKMConsolidatedHoldingsPtyLtd ��,666,�89 �5.�8FirstNelsonPtyLtd 5,705,968 6.9�MrStevenPharr �,��5,0�� 5.�5

�6,��0,00� ��.��

(c) Twenty largest holders of quoted equity securities Fully paidOrdinary Shareholders Number Percentage

WHASInvestmentsPtyLtd ��,7��,8�6 �6.67JKMConsolidatedHoldingsPtyLtd ��,666,�89 �5.�8FirstNelsonPtyLtd 5,705,968 6.9�MrStevenPharr �,��5,0�� 5.�5CogentNomineesPtyLtd �,�69,658 �.97ConfutePtyLtd �,85�,98� �.�6NotollNomineesPtyLtd �,756,�50 �.�5KAddisPtyLtd �,995,��0 �.��BCoulsonPtyLtd �,9��,8�0 �.��ANZNomineesLimited �,7��,0�� .09MrPeterJohnStirlingandMrsRosalindVerena �,��,��5 �.60JNoalPtyLtd �,�67,�� .5�UBSWealthManagementAustraliaNomineesPtyLtd�,089,8�� .��BetaGammaPtyLtd �,000,000 �.��AustExecutorTrusteesNSWLtd 98�,700 �.�0MrPaulDominicKellyandMrsCiaraYvonneKelly 9��,055 �.��ViburnumPtyLtd 9��,055 �.��InvestantPtyLtd 87�,55� �.06LonartPtyLtd 7�6,000 0.89NationalNomineesLimited 6��,�6� 0.78

60,7�8,905 7�.7�

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Directors

MrJohnAHall(Chairman)

MrWilliamHAScott(ExecutiveDirectorandChiefExecutiveOfficer)

MrJordanKMuir(ExecutiveDirectorandChiefOperatingOfficer)

MrEricBCoulson(ExecutiveDirectorandChiefMarketingOfficer)

MrPaulXTobin(Non-ExecutiveDirector)

MrThomasJRO’Brien(Non-ExecutiveDirector)

Company Secretaries

MrJonathonMeredith-SmithMsSophieKarzis

Registered Office

Level�55�ChurchStreetRichmondVictoria��

Principal Place of Business

Level�55�ChurchStreetRichmondVictoria��

Share Register

ComputershareInvestorServicesPtyLtdYarraFalls,�5�JohstonStreetAbbotsfordVictoria�067

CommquestLimitedSharesarelistedontheAustralianStockExchange(ASX)

Solicitors

MinterEllison5�5CollinsStreetMelbourneVictoria�000

Bankers

ANZLevel8,�87CollinsStreetMelbourneVictoria�000

Auditors

Ernst&Young8ExhibitionStreetMelbourneVictoria�000

Internet Address

www.commquest.com

Corporate Directory


DESIGN: COLLIER & ASSOCIATES THE STRATEGIC DESIGN COMPANY #13011

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