Datafast Annual Report 2002 - Eftel · Vertel, be converted into 300 million shares at 1 cent per...

Datafast Telecommunications Limited17 The Boulevard

North Geelong VIC. 3215Ph: (03) 5272 8600Fax: (03) 5278 3334www.datafast.net.au

ACN 073 238 178ABN 47 073 238 178

datafastT E L E C O M M U N I C A T O N S

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datafastT E L E C O M M U N I C A T O N S

annual report

www.datafast.net.au

WE OFFER A VARIETY OF TELECOMMUNICATIONS NETWORK

SOLUTIONS TO CUSTOMERS IN NICHE MARKETS SUCH AS

REGIONAL AND RURAL VICTORIA AND SOUTHEASTERN

AUSTRALIA, CORPORATE AND WHOLESALE.

TABLE

TABLEof CONTENTS

CHAIRMAN’S & MD’S REVIEW [ 02 ]

DIRECTOR’S REPORT [ 04 ]

CORPORATE GOVERNANCE STATEMENT [ 09 ]

FINANCIAL REPORT [ 12 ]

STATEMENT of FINANCIAL PERFORMANCE [ 13 ]

STATEMENT of FINANCIAL POSITION [ 14 ]

STATEMENT of CASH FLOWS [ 15 ]

NOTES to the FINANCIAL STATEMENTS [ 16 ]

DIRECTOR’S DECLARATION [ 38 ]

AUDIT REPORT [ 39 ]

SHAREHOLDER’S INFORMATION [ 40 ]

COMPANY’S PARTICULARS [ 42 ]

of CONTENTS

LETTER

CHAIRMAN’S &

MANAGINGDIRECTOR’SREVIEW

BackgroundIn line with the commitment to shareholders given

at the preceding annual general meeting, Datafast

has continued to pursue its core business of the

provision of data and internet services.

Datafast’s focus has been to expand its penetration

in its target markets of retail, wholesale and

commercial internet and data services.

This year has seen a full year of operations with

the acquired entities of Northvoice and VivaNet. The

businesses associated with these entities have been

fully integrated into Datafast’s core business. The

year has seen the consolidation of the acquired

networks and businesses achieving economies

of scale, efficiencies and cost reductions.

Throughout the year Datafast acquired the internet

business of Realestate.com and Ocean Internet.

These acquisitions were cash flow positive and

enabled Datafast to utilise space capacity in its

network.

Datafast has expanded its network to 65 points

of presence. The network is reliable and boasts

the only 34 Mb microwave data network in Western

Victoria of its kind. The microwave network offers

significant cost benefits over conventional networks

located in regional Victoria. The expansion of the

network this year has been gradual and has been

sustained by demand.

In May, Datafast successfully launched its retail

and business broadband ADSL product. ADSL is a

broadband product, which operates up to 26 times

faster than a normal dial up internet service. ADSL

operates through your standard phone line without

interrupting the use of your telephone. This means

that you can use the phone line for the internet

and still receive and make telephone calls whilst

connected to the internet. Details of our ADSL

product can be found at www.adsl.datafast.net.au

The product has been well received by the

market with its take up exceeding all expectations.

This product continues to grow exponentially. Its

technical delivery has been the subject of numerous

accolades in the technical internet forum

www.whirlpool.net.au.

Financial ResultsDatafast continues to maintain a strong balance

sheet with net tangible assets of $3.3 million.

The results for the year, a consolidated loss of

$4.647 million does not portray the marked

improvements in the operations through out the

year. The above results include the following

extraneous items:-

1. One off communications set up costs in the order

of $300,000

2. Duplication of networks whilst the Vivanet

network was dismantled and the Datafast

network extended to cater for the increased

business in the order of $650,000

3. Write down in assets reflecting a loss

of $1.1 million

4. Write off of goodwill reflecting a loss

of $2.4 million

5. The gain (profit) obtained in the debt forgiveness

by Lucent of $3.13 million

6. Staff redundancies and mine rehabilitation costs

of $210,000

7. Legal and professional fees for the Vertel

transaction and the unsuccessful attempted

acquisition of Phoneware of $265,000

Setting aside the above items, operating

revenue has increased to $8.263 million from

$6,123 million in the corresponding previous period.

The second half of the current period demonstrated

the improvement in the overall business. Operating

cashflow for the second half of the year was

positive $310,000 compared to negative $2.854

million in the first half year.

Subsequent to year end, Vertel have entered

into an agreement to pay $3.25 million for the

radio business and some ancillary tower and

radio equipment. This transaction is subject to

shareholder, ASIC and ASX approval. The funds

from the sale will be used to extinguish the Vertel

loan of $3 million. The above transaction, upon

completion, will supersede the option granted to

Vertel to purchase the radio business alone and

to subscribe for equity as approved by shareholders

on 29 November 2001. Full details of this transaction

will be supplied to shareholders by way of

explanatory memorandum.

REVIEW

[ 02 ]

CHAIRMAN’S & MD’S

CHAIRMAN’S &

MANAGINGDIRECTOR’S

REVIEW

[ 03 ]Network Developments and TechnologyThe network utilises asynchronous transfer

mode (ATM) technology to deliver telephony

services, high speed internet and data services

to its customers.

Datafast employs a number of broadband and

conventional technologies to deliver its services

to its customers and throughout its network. These

technologies include:-

• Fibre

• Satellite

• G.HDSL

• HDSL

• ADSL

• Wireless links (WIPs)

• Microwave Links

Datafast has continued to fine tune its network

to increase reliability and reduce costs.

Datafast’s engineering skills and the complement

of products has enabled Datafast to continue to

grow its customer base and provide solutions

which are not readily available in the market place.

Competition & the IndustryWith the collapse of several major

telecommunications and internet companies

there has been a marked decline in customer and

business confidence. Many internet companies are

struggling as revenues decline. Datafast is one of

the few companies which has continued to grow

albeit the growth in revenues have been slower

than expected.

Many internet providers have not had the revenue

or the infrastructure to leverage the advantages that

have appeared in the market place. Datafast has

adhered to its strategy of concentrating on its niche

markets and review its operations to ensure cost

efficiencies are achieved where ever possible.

The key to survival is the aggregation of businesses

to leverage on existing infrastructure and obtain

increased cost advantages from suppliers as a result

of the increased scale. The uncertainty in the market

has resulted in several opportunities to acquire

businesses, however several have not been

successful due to the lack of cash reserves.

FutureDuring the year the company has continued

discussions with a number of parties with a view

to injecting new capital into Datafast and a merger

of the Datafast operations with those of other

internet operators. These steps are necessary for

Datafast to continue as a going concern and to

meet the obligations the company has to Lucent.

These discussions continue as at the date of this

report.

REVIEW

Andrew Guy

CHAIRMAN

Frank Romanin

MANAGING DIRECTOR

CHAIRMAN’S & MD’S

DIRECTOR’S

DATAFAST TELECOMMUNICATIONS LIMITED AND CONTROLLED ENTITIES

DIRECTOR’SREPORT

Your directors present their report on the

consolidated entity consisting of Datafast

Telecommunications Limited and the entities

it controlled at the end of, or during, the year

ended 30 June 2002.

DirectorsThe following persons are directors of Datafast

Telecommunications Limited at the date of this

report:

• Andrew Guy – Chairman

• Frank Romanin – Chief Executive Officer

(appointed as a Director 3 August 2001)

• David Lauritz

• David Findlay (appointed as a Director

1 February 2002)

Andrew Watson resigned as a Director on

3 August 2001.

Kimley Wood resigned as Managing Director on

3 August 2001, and as a Director of the Company

on 27 November 2001.

Rodney Foster resigned as a Director

on 27 November 2001.

The Directors have been in office since the start

of the financial year to the date of this report unless

otherwise stated.

Principal activitiesThe Company’s principal activity during the financial

year was the provision of telecommunications

related services.

Going ConcernAccounts have been prepared on a going concern

basis. The continued viability of the economic entity

and its ability to meet debts as and when they fall

due is dependant on it being successful in a number

of instances as listed in Note 1(a) to the financial

statements.

Significant changes in the state of affairsSignificant changes in the state of affairs of the

consolidated entity during the financial year were

as follows:

On 31st July 2001 Datafast received a $3 million

loan (Loan Facility) financing facility from Vertical

Telecoms Pty Ltd (Vertel) as part of a restructure

arrangement. Vertel is a radio communications

business and telecommunications carrier.

This financing facility was used to underwrite

Datafast’s financial position over the last 12 months.

On 29 November 2001, Shareholders approved

the restructure arrangement which provided the

following; The Loan Facility may, at the option of

Vertel, be converted into 300 million shares at 1 cent

per share, at any time up to the 31 January 2003.

In addition, Vertel and/or its nominees have the right

to acquire an additional 60 million shares at one

cent per share, at any time up to 31st January 2003.

(“Right to Acquire Shares”)

As at 31st July, Vertel assumed management control

and as a result a number of management personnel

voluntarily resigned and/or were retrenched. Kimley

Wood resigned as CEO. Vertel nominated the current

Chief Executive Officer pursuant to its rights to do

so, who was the Chief Operating Officer of Vertel.

The appointment was made in accordance with the

arrangement that the CEO employee costs were

paid by Vertel.

Vertel was granted the option to acquire Datafast’s

trunked radio business for consideration of $3

million. The option to acquire the trunked radio

and site access business is only exercisable within

a window of 1 August 2002 to 31 January 2003.

Vertel must either exercise this option to purchase

the trunked radio business and various site access

businesses or convert the $3 million into 300

million shares as specified above, but not both.

Throughout the year Datafast acquired the

following significant internet businesses, namely

Realestate.com and Ocean Internet, for the sum

of $100,000 and $95,000 respectively.

REPORT

[ 04 ]

DIRECTOR’S

DIRECTOR’SREPORT

DividendsThe directors of Datafast Telecommunications

Limited recommend that no dividends be declared

or paid for the year ended 30 June 2002.

Review of operationsThe Chairman’s and Managing Director’s Review

as set out on pages 2 to 3 contains an overview

and more detailed review of the operations of the

consolidated entity during the financial year ended

30 June 2002. These are to be read along with and

to form part of the Directors’ Report.

Matters subsequent to the end of the financial yearSubsequent to year end, Vertel have entered

into an agreement to pay $3.25 million for the

radio business and some ancillary tower and

radio equipment. This transaction is subject to

shareholder, ASIC and ASX approval. The funds

from the sale will be used to extinguish the Vertel

loan of $3 million. The above transaction, upon

completion, will supersede the option granted to

Vertel to purchase the radio business alone and to

subscribe for equity as approved by shareholders

on 29 November 2001. Full details of this transaction

will be supplied to shareholders by way of

explanatory memorandum.

Environmental regulationCurrent operations involve:

• telecommunication network services; and

• the relinquishing of mining and exploration

interests.

At present, mining operations involve the continued

rehabilitation of the Ballarat East Gold Mine. In

October 2000 the Goldmine plant was sold. The

plant was then dismantled and removed from the

site in early 2001. Rehabilitation of the open pits and

tailing dams commenced early March 2001 and is

expected to be finished by the end of 2002. It is

estimated that 80% of works have been completed

to date of this report. Officers from the Department

of Mineral Resources and Environment visit the site

regularly. No significant issues or non compliances

have arisen during the year with regard to this

activity.

The telecommunications activities of the

company are subject to the Telecommunications

Act 1997. There are several general references

to environmental aspects throughout schedule

3 of the Act, which all carriers including Datafast

Telecommunications are subject to. The company

has noted these regulations and implemented the

necessary operational processes to ensure that it

complies with these regulatory requirements.

The Australian Communications Authority

has also introduced regulatory arrangements

concerning exposure to electromagnetic radiation

and electromagnetic compatibility under the Radio

Communications Act 1992. The company is

aware of these developments and has ensured

that its network operations comply with these

requirements.

Environmental matters are an integral part of the

management reporting. The board are regularly

updated with the progress of issues, including

reports on the mine rehabilitation.

REPORT

[ 05 ]

DIRECTOR’S

DIRECTOR’SREPORT

REPORT

[ 06 ] Particulars of directors’ interests

in share and options of Datafast

Telecommunications Limited

Notes Ordinary Options

Shares

250,000

1,093,333 41,667

Note 1

Information on Directors

Mr Andrew Guy (LLB, MBA, (IMEDE))

Chairman (Age 54)

Andrew was elected Chairman upon his appointment to the

Board on 12 August 1999. He was the former managing partner

of Allens Arthur Robinson. Andrew has broad experience with

issues confronting Australian companies, both within Australia

and with their international investments. Andrew is a director

of CGNU Australia Holdings Limited, Djerriwarrh Investments

Limited and Paperlinx Limited.

Mr Frank Romanin (LLB, M App Fin (Macquarie))

Managing Director (Age 42)

Frank was initially on secondment from Vertical Telecoms

Pty Ltd but as of July 1 2002 is an employee of Datafast in the

capacity of Managing Director / C.E.O. Frank has held several

directorships in public companies, Macro Corporation Ltd as

Managing Director and Grange Resources Ltd as Non Executive

Director. He has 12 years of management experience and 10

years as a practising lawyer. Of the 12 years in management, 5

were in a senior position in banking culminating in management

of a branch network of 22 branches and the balance as the Chief

Operating or Chief Executive Officer in companies in the marine,

retail, venture capital and telecommunications industries.

Mr David Lauritz (A.S.I.A)

Non Executive Director (Age 64)

David is a former director of The Stock Exchange of Melbourne

Limited and of Randall and Company, sharebrokers. He has over

30 years experience in financial analysis.

Mr David Findlay

Non-Executive Director (Age 63)

David is a director in the following companies; Vertical Telecoms

Pty Ltd, Vertical Telecoms WA Pty Ltd, Vertical Telecoms QLD

Pty Ltd, Vertical Telecoms SA Pty Ltd, Luxspice Pty Ltd, Investor

Nominees Pty Ltd, Biscom WA Pty Ltd, Balglen Pty Ltd, Seebring

Finance Company Pty Ltd, Datadrive Communication Pty Ltd and

R F Technology Pty Ltd.

David was appointed as a director to Datafast on 1 February 2002

Notes

1. David Findlay is a director and major shareholder in Vertel,

which has the “Right to Acquire” 360,000,000 shares for 1 cent.

DIRECTOR’S

DIRECTOR’SREPORT

Directors’ benefitsInformation on directors’ benefits is set out in the

following notes to the consolidated accounts:

(a) Note 19: Remuneration of Directors

(b) Note 26: Related Parties

Directors’ and officers emolumentsThe Board determines remuneration policies

and practices generally and makes specific

recommendations on remuneration packages

and other terms of employment for executive

directors, other senior executives and non

executive directors.

Executive remuneration and other terms of

employment are reviewed annually by the Board

having regard to performance, relevant comparative

information and independent expert advice. As

well as a base salary, remuneration packages

include superannuation and a motor vehicle where

applicable. Executives are also eligible to participate

in the Datafast Employee Option Plan.

Remuneration packages are set at levels that are

intended to attract and retain executives capable

of managing the entity’s operations.

Remuneration and other terms of employment

for the Managing Director and certain other

directors are formalised in employment contracts

and agreements as approved by the Board.

Remuneration of non executive directors is

determined by the Board within the maximum

amount approved by the shareholders from time

to time.

The Board will undertake an annual review of its

performance and the performance of the Board

committees against goals set at the start of the year.

Bonuses are not payable to non executive directors.

Details of the nature and amount of each

of the emoluments of each director of Datafast

Telecommunications and the officers of the

company and the consolidated entity receiving

the highest emoluments are set out in the

following table:

REPORT

[ 07 ]Meeting of directorsThe number of meetings of the company’s board of directors held during the year ended 30 June 2002,

and the number of meetings attended by each director were:

Held during No. of

term in office meetings attended

Number of meetings held:

Number of meetings attended by:

Andrew Guy 7 6

Kimley Wood 5 3

David Lauritz 7 6

Rodney Foster 5 5

David Findlay 3 3

Frank Romanin 7 7

Non executive directors of Datafast Telecommunications Limited

Name Director’s Base Fee Superannuation Other Benefits Total

Andrew Guy 35,000 2,800 - 37,800

David Lauritz 20,000 1,600 - 21,600

Rodney Foster - - 8,017 8,017

David Findlay 20,000 - - 20,000

Executive directors of Datafast Telecommunications Limited

Name Base Salary Superannuation Motor Vehicle Redundancy Other Benefits Total

Andrew Watson 25,602 867 6,709 80,000 - 113,178

Kimley Wood 29,565 1,536 7,770 41,667 - 80,538

Frank Romanin 18,333 4,666 8,133 - 40,000 71,132

DIRECTOR’S

Andrew Guy

CHAIRMAN

Melbourne 30th September 2002

Frank Romanin

MANAGING DIRECTOR

DIRECTOR’SREPORT

REPORT

[ 08 ] Share options granted to directors and officersThere were no options over unissued ordinary shares of Datafast Telecommunications Limited granted during

or since the end of the financial year to any of the directors or the officers of the company and consolidated

entity as part of their remuneration.

Shares under optionUnissued ordinary shares of Datafast Telecommunications Limited under option at the date of the report are

as follows:

Notes Number Exercise price Expiry date

Listed Options 6,404,464 20 cents 30/11/05

Employee Options 1 & 2 1,000,000 20 cents 14/06/10

Employee Options 1 445,000 20 cents 16/11/05

Vertel right to acquire shares 3 360,000,000 1 cent 31/01/03

367,849,464

No option holder has any right under the options to participate in any other share issue of the

company or entity:

1 Exercise of these options is subject to various performance hurdles and minimum exercise periods.

2 These Options were issued to Phillip Britt and are disclosed pursuant to section 300(1) and (5) of the

Corporations Act, 2001.

3 This “right to acquire” shares in the company was approved by the shareholders on 29 November 2001.

This arose upon the extension of $3,000,000 finance from Vertel to the company. Vertel have the right to

transfer 60,000,000 of the shares to Frank Romanin, Melbourne Holdings Limited, or Vertel in accordance

with the before mentioned shareholder approval.

Shares issued on the exercise of optionsNo ordinary shares of Datafast Telecommunications Limited were issued during the year ended 30 June 2002

through the exercise of options.

Insurance of officersDuring the financial year, Datafast Telecommunications Limited paid a premium of $33,158.00 to insure

directors and officers of the company and related bodies corporate.

The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings

that may be brought against the officers in their capacity as officers of entities in the consolidated entity.

Proceedings on behalf of CompanyNo person has applied for leave of Court to bring proceedings on behalf of the Company or intervene

in proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the

Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

This report is made in accordance with a resolution of the directors.

CORPORATE GOVERNANCE


STATEMENT

The directors are responsible to the shareholders

for the performance of the company in both the

short and the longer term and seek to balance these

sometime competing objectives in the best interests

of the company as a whole. Their focus is to

enhance the interests of shareholders and other key

stakeholders and to ensure the company, including

its controlled entities are properly managed. The

Board draws on relevant corporate governance best

practice principles to assist it to contribute to the

performance of the company.

The functions of the Board include:• review and approval of corporate strategies, the

annual budget and financial plans

• overseeing and monitoring organisational

performance and the achievement of the

company’s strategic goals and objectives

• monitoring financial performance including

approval of the annual and half year financial

reports and liaison with the company’s auditors

• appointment of, and assessment of the

performance of, the Managing Director and the

members of the senior management team

• ensuring there are effective management

processes in place and approving major

corporate initiatives

• enhancing and protecting the reputation

of the organisation

• ensuring the significant risks facing the company

and its controlled entities have been identified

and appropriate and adequate control, monitoring

and reporting mechanisms are in place, and

• reporting to shareholders.

A description of the company’s main corporate

governance practices is set out below. All these

practices, unless otherwise stated, were in place

for the entire year.

The Board of DirectorsThe Board operates in accordance with the

following broad principles:

• the Board should comprise of both executive and

non executive directors with a majority of non

executive directors. At the date of signing the

Directors’ Report, the Board consisted of three

non executive directors and one executive direc-

tor, Frank Romanin. Further information about the

directors is set out in the Directors’ Report under

the heading “Information on directors”.

• in recognition of the importance of independent

views and the Board’s role in supervising the

activities of management, the Chairman should

be a non executive director

• the Chairman of the Board is elected by the

full Board and should meet regularly with the

Managing Director

• there is sufficient benefit to the company in

maintaining a mix of directors on the Board from

different backgrounds with complementary skills

and experience

• the Board should undertake an annual Board

performance review and consider the appropriate

mix of skills required by the Board to maximise

its effectiveness and its contribution to the

company.

The Board’s current practice is that the review

discussion is facilitated by the Chairman outside

the normal programe of Board meetings.

The Board has established a number of committees.

Current committees of the Board are the Corporate

Governance and Audit committees. Each is

comprised entirely of non-executive directors.

The committee structure and membership is

reviewed on an annual basis.

Due to the size of the Board, no committees were

formed. The Board took on the functions of the

Audit and the Compliance committees. All relevant

matters were covered by the Board during the year.

Once the Board review is completed in the new

financial year it is expected that the committee

membership and functions will be reconsidered.

The company’s Constitution specifies that all

directors (with the exception of the Managing

Director) must retire from office no later than the

third annual general meeting (AGM) following their

last election. Where eligible, a director may stand

for re-election.

In addition the Board seeks to ensure that the

membership at any point in time represents an

appropriate balance between directors with

experience and knowledge of the company and

directors with an external or fresh perspective.

STATEMENT

[ 09 ]


CORPORATEGOVERNANCESTATEMENT

Appointment of DirectorsAt the Annual General Meeting, as an ordinary

resolution, Mr David Findlay, having been appointed

by Directors since the last Annual General Meeting

in accordance with the constitution of the Company,

offers himself for election.

Conflict of interestsThe policy of the board is that where a conflict

arises, depending on the severity of the conflict,

Directors will either substain from voting or absent

themselves from the meeting. All directors are

required to declare their interest in any matters

under consideration prior to determination. Related

party transactions are disclosed at Note 26.

Independent professional advice Directors and Board committees have the right,

in connection with their duties and responsibilities,

to seek independent professional advice at the

company’s expense. Prior written approval of the

Chairman is required, but this will not be

unreasonably withheld.

Corporate Governance committeeThe Corporate Governance committee was

established in September 1999 and consists of the

non executive directors, Andrew Guy (Chairman)

and David Lauritz.

The committee’s charter is as follows:

• the composition and membership of the Board

and its committees

• appropriate levels of remuneration of non

executives, directors, the chief executive officer

and senior executives

• a general overview of remuneration and

employment policies and practices throughout

the group

• corporate governance procedures in light

of Australian best practice

• important issues that arise between Board

meetings, and

• other matters which are referred to it by the Board

from time to time.

Audit committeeThe audit committee was established in September

1999. It was dissolved on or about 3rd August, 2001.

The Board currently undertakes the functions of the

committee.

The main responsibilities of the Board in relation to

the audit committee role are to:

• oversee and appraise the quality of the audits

conducted by the company’s external auditors.

• maintain, by scheduling regular meetings, open

lines of communications among the board and

the external auditors to exchange views and

information, as well as confirm their respective

authority and responsibilities.

• serve as an objective party to review the financial

information presented by management to the

Board, shareholders, regulators and the general

public.

• determine the adequacy of the company’s

administrative, operating and accounting

controls, and policies.

• the appointment, removal and remuneration

of the external auditors, and review the terms

of their engagement and the scope and quality

of the audit.

The audit committee has authority, within the scope

of its responsibilities, to seek any information it

requires from any employee or external party.

Risk assessment and managementThe company’s focus on risk management

recognises that risk management is, prima facie,

an issue for line management. Management are

required to ensure that appropriate controls are

in place to effectively manage those risks. This is

monitored by the Board on a regular basis.

STATEMENT

[ 10 ]



STATEMENT

Ethical standardsThe company requires that at all times all company

personnel act with the utmost integrity, objectivity

and in compliance with the letter and the spirit of

both the law and company policies.

The purchase and sale of company securities by

directors and employees is only permitted during

the sixty day period following the release of the half

yearly and annual financial results to the market

or the annual general meeting. Any transactions

undertaken must be notified to the Chairman (in the

case of Directors) or the Managing Director (in the

case of employees) in advance.

Continuous disclosureThe company has adopted continuous disclosure

standards. It reports information on a timely basis

to keep all shareholders informed of events and

developments as they occur.

Information is communicated to shareholders

as follows:

• the annual report is distributed to all shareholders

which includes relevant information about the

operations of the economic entity during the year,

changes in the state of affairs and details

of future developments in addition to the other

disclosures required by the Corporations Law

and Australian Stock Exchange Listing Rules

• half yearly reports that contain summarised

financial information and brief review of the

operations of the economic entity during the

period. Half yearly financial statements undergo

review by the auditors and are lodged with the

Australian Stock Exchange and the Australian

Securities and Investments Commission. The half

yearly report is sent to any shareholder who

requests a copy

• quarterly reports that contain cash flow and

related information are lodged with the Australian

Stock Exchange

• by announcement throughout the Australian

Stock Exchange, and

• by posting of material items onto the company’s

web site. (www.datafast.net.au)

STATEMENT

[ 11 ]

FINANCIAL

The financial report covers both Datafast Telecommunications Limited as an individual entity and the

consolidated entity consisting of Datafast Telecommunications Limited and its controlled entities.

Datafast Telecommunications Limited is a company limited by shares, incorporated and domiciled in Australia.

Its registered office and principle place of business is:

17 The Boulevard

North Geelong Victoria 3215

A description of the nature of the consolidated entity’s operations and its principal activities is included

in the review of operations and activities on pages 2 and 3 and the directors report on pages 6 to 10.

Through the use of our website (www.datafast.net.au) further timely information can be viewed on a regular basis.

[ 12 ]STATEMENT of FINANCIAL PERFORMANCE [ 13 ]

STATEMENT of FINANCIAL POSITION [ 14 ]

STATEMENT of CASH FLOWS [ 15 ]

NOTES to the FINANCIAL STATEMENTS [ 16 ]

DIRECTORS’ DECLARATION [ 38 ]

AUDIT REPORT [ 39 ]

SHAREHOLDER’S INFORMATION [ 40 ]

COMPANY’S PARTICULARS [ 42 ]

REPORT

FINANCIALREPORT

DATAFAST TELECOMMUNICATIONS LIMITED FINANCIAL REPORT – 30 JUNE 2002

STATEMENT of FINANCIAL

STATEMENTof FINANCIAL

PERFORMANCE

PERFORMANCE

[ 13 ]Statement of Financial PerformanceFor the year ended 30 June 2002

Notes Consolidated Parent Entity

2002 2001 2002 2001

Revenue from ordinary activities 2 11,513,253 6,797,844 8,930,870 6,631,895

Changes in inventories of finished

goods and work in progress (27,300) (466,077) (27,300) (466,077)

Communication expenses (5,056,014) (2,840,143) (2,464,610) (2,663,297)

Employee benefits expenses (2,104,502) (3,120,728) (1,883,768) (3,080,370)

Depreciation and amortisation expenses (2,366,617) (1,748,834) (1,899,320) (1,572,537)

Goodwill writeoff (2,426,637) (3,984,535) (2,426,637) (605,266)

Borrowing costs expense (117,194) (112,611) (117,194) (112,611)

Other expenses from ordinary activities 3 (4,062,042) (3,562,830) (3,224,788) (3,503,940)

Loss from ordinary activities before

income tax expense (4,647,053) (9,037,914) (3,112,747) (5,372,203)

Income tax expense - - - -

Loss from ordinary activities after

income tax expense (4,647,053) (9,037,914) (3,112,747) (5,372,203)

Net loss attributable to members of

Datafast Telecommunications Ltd (4,647,053) (9,037,914) (3,112,747) (5,372,203)

Total changes in equity other than those

resulting from transactions with owners

owners as owners (4,647,053) (9,037,914) (3,112,747) (5,372,203)

Cents Cents

Basic earnings per share (2.6) (6.3)

Diluted earnings per share (2.6) (6.3)

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

STATEMENT of

STATEMENT of FINANCIALPOSITION

FINANCIAL POSITION

[ 14 ] Statement of Financial PositionAs at 30 June 2002


2002 2001 2002 2001

Current assets

Cash assets 5 728,836 1,229,643 714,156 1,223,183

Receivables 6 1,012,366 976,017 494,558 576,898

Inventories 7 44,801 34,654 10,147 -

Other 8 532,174 501,988 468,726 423,390

Total current assets 2,318,177 2,742,302 1,687,587 2,223,471

Non current assets

Receivables 6 - - 4,546,817 982,000

Other financial assets 9 - - 1,052,260 1,052,260

Property, plant and equipment 10 9,791,411 12,872,171 9,132,735 10,574,578

Intangible assets 11 116,357 2,553,155 116,357 2,553,155

Total non current assets 9,907,768 15,425,326 14,848,169 15,161,993

Total assets 12,225,945 18,167,628 16,535,756 17,385,464

Current liabilities

Payables 12 2,313,137 2,123,345 1,595,767 957,374

Interest bearing liabilities 13 734,121 362,810 734,121 346,211

Provisions 14 290,501 870,952 281,942 618,850

Other 15 802,303 6,034,126 638,026 3,020,923

Total current liabilities 4,140,062 9,391,233 3,249,856 4,943,358

Non current liabilities

Interest bearing liabilities 13 1,617,185 662,285 1,617,185 662,285

Provisions 14 27,292 22,478 27,292 22,478

Other 15 3,000,000 - 3,000,000 -

Total non current liabilities 4,644,477 684,763 4,644,477 684,763

Total liabilities 8,784,539 10,075,996 7,894,333 5,628,121

Net assets 3,441,406 8,091,632 8,641,423 11,757,343

Equity

Contributed Equity 16 25,294,233 25,297,406 25,294,233 25,297,406

Accumulated losses 18 (21,852,827) (17,205,774) (16,652,810) (13,540,063)

Total equity 3,441,406 8,091,632 8,641,423 11,757,343

Contingent liabilities 23

Commitments for expenditure 24

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

STATEMENT of

STATEMENT of CASH FLOWS

CASH FLOWS

[ 15 ]Statement of Cash FlowsFor the year ended 30 June 2002


2002 2001 2002 2001

Cash flows from operating activities

Receipts from customers 7,964,130 5,854,706 5,960,953 5,691,550

Payments to suppliers and employees (10,125,294) (10,368,987) (6,533,266) (9,428,474)

Interest received 34,016 238,679 32,853 238,679

Interest paid (107,502) (112,611) (107,502) (112,611)

Net cash used in operating activities 29 (2,234,650) (4,388,213) (646,962) (3,610,856)

Cash flows from investing activities

Payment for purchase of controlled

entities, net of cash acquired (145,000) 219,985 (145,000) (37,265)

Payments for plant and equipment (168,888) (787,185) (168,888) (787,393)

Proceeds from sale of business 74,330 - 74,330 -

Loans to related parties - (500,000) (1,612,507) (982,000)

Proceeds from sale of plant and equipment 33,300 415,000 33,300 415,000

Net cash used in investing activities (206,258) (652,200) (1,818,765) (1,391,658)

Cash flows from financing activities

Proceeds from issues of shares - 395,600 - 395,600

Share issue transaction costs (3,172) (299,631) (3,172) (299,631)

Acquisition costs (332,259) - (332,259) -

Repayment of equipment finance (375,145) - (375,145) -

Proceeds from borrowings 3,000,000 - 3,000,000 -

Repayment of lease liability (332,724) (706,250) (332,724) (706,250)

Net cash (used in) generated by 1,956,700 (610,281) 1,956,700 (610,281)

financing activities

Net increase (decrease) in cash held (484,208) (5,650,694) (509,027) (5,612,795)

Cash at the beginning of the financial year 1,213,044 6,863,738 1,223,183 6,835,978

Cash at the end of the financial year 5 728,836 1,213,044 714,156 1,223,183

Financing arrangements 13

Non cash financing and investing activities 30

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

NOTES to the FINANCIAL

Note 1: Summary of significant accounting policiesThis general purpose financial report has been

prepared in accordance with Accounting Standards,

other authoritative pronouncements of the

Australian Accounting Standards Board,

Urgent Issues Group Consensus Views

and the Corporations Act 2001.

The financial report is prepared on an accruals

basis in accordance with the historical cost

convention, except for certain assets which, as

noted, are at valuation. Unless otherwise stated,

the accounting policies adopted are consistent with

those of the previous year. Comparative information

is reclassified where appropriate to enhance

comparability.

(a) Going Concern

The accounts have been prepared on a going

concern basis, which contemplates continuity of

normal business activities and the realisation of

assets and settlement of liabilities in the ordinary

course of business.

The continued viability of the economic entity and

its ability to meet debts as and when they fall due

is dependent on it being successful in:

(i) the successful renegotiation of the terms and

conditions of vendor finance provided to the

economic entity by Lucent Technologies Pty Ltd;

and

(ii) the successful renegotiation of the terms and

conditions of the sale of the radio business and

certain other assets, with Vertel;

(iii) the successful negotiation of the merger with

other ISP operations and the injection of equity

capital into Datafast, by a third party;

(iv) the economic entity continuing to maintain

positive cashflows in ensuing periods to

generate sufficient cashflow to enable

creditor obligations to be met.

At this time the directors believe that the economic

entity will be successful in the above matters and

accordingly have prepared the financial statements

on a going concern basis.

(b) Principles of consolidation

The consolidated financial statements incorporate

the assets and liabilities of all entities controlled by

Datafast Telecommunications Limited (“company”

or “parent entity”) as at 30 June 2002 and the

results of all controlled entities for the year then

ended. Datafast Telecommunications Limited and its

controlled entities together are referred to in this

financial report as the consolidated entity. The

effects of all transactions between entities in the

consolidated entity are eliminated in full.

Where control of an entity is obtained during

the financial year, its results are included in the

consolidated statement of financial performance

from the date on which control commences. Where

control of an entity ceases during a financial year its

results are included for that part of the year during

which control existed.

(c) Income tax

Tax effect accounting procedures are followed

whereby the income tax expense in the statement

of financial performance is matched with the

accounting profit or loss after allowing for

permanent differences. The future tax benefit

relating to tax losses is not carried forward as

an asset unless the benefit is virtually certain

of realisation. Income tax on cumulative timing

differences is set aside to the deferred income tax

or the future income tax benefit accounts at the

rates which are expected to apply when those

timing differences reverse.

(d) Foreign currency translation

Foreign currency transactions are initially

translated into Australian currency at the rate of

exchange at the date of the transaction. At balance

date, amounts payable and receivable in foreign

currencies are translated to Australian currency

at rates of exchange current at that date. Resulting

exchange differences are brought to account in

determining the profit or loss for the year.

(e) Acquisitions of assets

The purchase method of accounting is used for all

acquisitions of assets regardless of whether shares

or other assets are acquired. Cost is determined as

the fair value of the assets given up, shares issued

or liabilities undertaken at the date of acquisition

plus incidental costs directly attributed to the

acquisition. Where shares are issued in an

acquisition, the value of the shares is determined

as the market price as at acquisition date.

Transaction costs arising on the issue of equity

instruments are recognised directly in equity.

A liability for restructuring costs is recognised as at

the date of acquisition of an entity or part there of

when there is a demonstrable commitment to a

restructuring of the acquired entity and a reliable

estimate of the amount of the liability can be made.

[ 16 ]

NOTES to theFINANCIALSTATEMENTS

STATEMENTS

NOTES to the FINANCIAL

NOTES to theFINANCIAL

STATEMENTS

Goodwill is brought to account on the basis

described in note 1(n)

(f) Exploration and evaluation expenditure

and mine properties

Development expenditure incurred in respect of a

mine property after commencement of production

is carried forward as part of that mine property, only

when substantial future economic benefits are

thereby established, otherwise such expenditure

is classified as part of the cost of production.

The net carrying value of each mine property is

reviewed regularly and to the extent to which this

value exceeds its recoverable amount, that excess is

fully provided against in the financial year in which

it is determined.

(g) Recoverable amount of non current assets

The recoverable amount of an asset is the net

amount expected to be recovered through the net

cash inflows arising from its continued use and

subsequent disposal. These net cash flows are

not discounted.

Where the carrying amount of a non-current asset

is greater than its recoverable amount, the asset is

written down to its recoverable amount. Where net

cash inflows are derived from a group of assets

working together, recoverable amount is determined

on the basis of the relevant group of assets. The

decrement in the carrying amount is recognised

as an expense in net profit or loss in the reporting

period in which the recoverable amount write-down

occurs.

(h) Revenue recognition

Amounts disclosed as revenue are net of returns,

trade allowances and duties and taxes paid. The

basis of revenue recognition for the main business

of telecommunications, internet based services and

voice services is dependent on the nature of the

product or service provided to customer.

Installation services involve establishing the

customer’s infrastructure required to receive the

company’s services. This service typically includes

hardware installation, purchase of hardware on the

customer’s behalf and application of technical staff

resources. The customer is invoiced on completion

of installation. Revenue is recognised when the

service is installed.

Internet Subscription fees are billed in advance,

generally, on a monthly basis and revenue is

recognised on billing date. Bulk hours are

purchased in advance and the revenue is

deferred and recognised as the hours are used.

Usage charges are based on bytes per second,

hours used, amount of storage space used or some

other variable measure. Usage charges are billed in

arrears, typically within one week of the customer’s

monthly anniversary date. Usage billing revenue

is recognised on invoicing.

Voice sales are invoiced in arrears on the customer’s

anniversary date. Revenue from these services are

recognised when the services are used.

Site and Radio clients are billed in advance

primarily on a monthly basis and the revenue is

taken up in the month to which the billing relates.

When clients are billed yearly in advance, the

revenue is deferred and brought to account

on a monthly basis over the term of the contract.

All revenue is stated net of the amount of goods

and services tax.

(i) Receivables

All trade debtors are included in receivables.

Collectability of trade debtors is reviewed on

an ongoing basis. Debts which are known to be

uncollectible are written off. A provision for doubtful

debts is raised where some doubt as to collection

exists.

(j) Inventories

Materials, stores and finished goods are stated

at the lower of cost and net realisable value. Cost

comprises the amounts invoiced by our suppliers.

Costs are assigned to individual items of stock on

the basis of weighted average costs.

(k) Depreciation of property, plant

and equipment

Depreciation is calculated on a straight line basis

and is charged so as to write down these assets

(other than freehold land) to their estimated residual

values over their anticipated useful lives. Estimates

of remaining useful lives are made on a regular

basis for all assets, with annual reassessment for

major items. The expected useful lives of the plant

and equipment is 10 years. The exception to this is

the Lucent equipment with its useful life expected

to be 5 years.

Profits and losses on disposal of property, plant and

equipment are taken into account in determining

the result for the year.

[ 17 ]

STATEMENTS

(l) Leasehold improvements

The cost of improvements to or on leasehold

properties is amortised over the unexpired period

of the lease or the estimated useful life of the

improvement to the consolidated entity,

whichever is the shorter.

(m) Leased non current assets

A distinction is made between finance leases,

which effectively transfer from the lessor to the

lessee substantially all the risks and benefits

incidental to ownership of leased non current

assets, and operating leases under which the

lessor effectively retains substantially all such

risks and benefits.

Finance leases are capitalised. A lease asset and

liability are established at the present value of

minimum lease payments. Lease payments are

allocated between the principal component of the

lease liability and the interest expense. The lease

asset is amortised on a straight line basis over

the term of the lease, or where it is likely that the

consolidated entity will obtain ownership of the

asset, the life of the asset.

Other operating lease payments are charged to the

statement of financial performance in the periods

in which they are incurred, as this represents the

pattern of benefits derived from the leased assets.

(n) Intangible assets - goodwill

On acquisition of some, or all, of the assets of

another entity or, in the case of an investment in a

controlled entity, on acquisition of some, or all, of

the equity of that controlled entity, the identifiable

net assets acquired are measured at fair value. The

excess of the fair value of the cost of acquisition

over the fair value of the identifiable net assets

acquired, including any liability for restructuring

costs, is brought to account as goodwill is

amortised on a straight line basis over 10 years,

being the period during which the benefits are

expected to arise.

(o) Trade and other creditors

These amounts represent liabilities for goods and

services provided to the consolidated entity prior

to the end of the financial year and which are

unpaid. These amounts are unsecured and are

usually paid within 30 days of recognition.

(p) Borrowings

Loans are carried at their principal amounts. Interest

is accrued over the period it becomes due and is

recorded as part of other creditors. The Vendor

Equipment finance loan has been restated at its

Net Present Value with the interest to be brought to

account when principal repayments are made. This

is in accordance with AASB 1014.

(q) Employee entitlements

Liabilities for wages and salaries and annual leave

are recognised, and are measured as the amount

unpaid at the reporting date at current pay rates in

respect of employees’ services to that date.

A liability for long service leave is recognised,

and is measured as the present value of expected

future payments to be made in respect of services

provided by employees up to the reporting date.

Consideration is given to expected future wage and

salary levels, experience of employee departures

and periods of service. Expected future payments

are discounted using interest rates on securities

with terms to maturity that match, as closely

as possible, the estimated future cash outflows.

The amount charged to the statement of financial

performance in respect of superannuation

represents the contributions made by the

consolidated entity to the employees’

nominated superannuation funds.

(r) Net fair values of financial assets

and liabilities

In assessing whether financial assets and liabilities

are carried at reasonable amounts, the net fair

values of financial instruments are determined

on the following bases:

Monetary financial assets and liabilities not traded

on an organised financial market – the carrying

amounts of trade debtors, trade accounts payable,

accruals and dividends payable are determined on a

cost basis (which approximates net market value).

Fixed rate loans are determined using current risk

adjusted market rates. Investments in shares and

other equity securities and debentures and other

debt securities not traded in an organised financial

market (other investments) are determined at cost.

[ 18 ]


NOTES to the FINANCIALSTATEMENTS


STATEMENTS

(s) Borrowing costs

Borrowing costs are recognised as expenses in the

period in which they are incurred. Borrowing costs

include interest on bank overdrafts and short term

and long term borrowings, amortisation of ancillary

costs incurred in connection with the arrangement

of borrowings and finance lease charges.

(t) Cash

For purposes of the Statements of Cash Flows,

cash includes deposits at call which are readily

convertible to cash on hand and are subject to

an insignificant risk of changes in value, net of

outstanding bank overdrafts.

(u) Earnings per share

Basic earnings per share is determined by dividing

the operating profit after income tax attributable to

members of the company by the weighted average

number of ordinary shares outstanding during the

financial year.

Diluted earnings per share adjusts the figures used

in the determination of basic earnings per share by

taking into account any reduction in earnings per

share that will probably arise from the exercise of

options outstanding during the financial year.

(v) Directors’ and executives’ remuneration

Directors’ and executives’ remuneration disclosed

in the financial statements have been calculated in

accordance with the Urgent Issues Group Abstract

14, in relation to Directors’ Remuneration.

Remuneration includes monetary amounts for

options granted on the basis of the assessed value

at the date of grant.

(w) Restoration, rehabilitation and

environmental expenditure

Restoration, rehabilitation and environmental costs

necessitated by exploration and evaluation activities

are accrued to the extent they are foreseen to

cost and treated as exploration and evaluation

expenditure.

Restoration, rehabilitation and environmental

costs necessitated by development and production

activities have been fully brought to account and

treated as costs of production.

Restoration, rehabilitation and environmental obli-

gations recognised include the costs of reclamation,

plant and waste site closure and subsequent moni-

toring of the environment. Costs are estimated on

the basis of current undiscounted costs, current

legal requirements and current technology.

[ 19 ]

Note 2. Revenue

Consolidated Parent Entity

2002 2001 2002 2001

Revenue from operating activities

Sale of goods 18,960 162,623 18,960 162,623

Provision of services 8,244,108 5,960,060 5,667,188 5,794,111

8,263,068 6,122,683 5,686,148 5,956,734

Revenue from outside the operating activities

Interest received other persons 34,016 260,161 32,853 260,161

Proceeds from sale of plant and equipment 33,300 415,000 33,300 415,000

Other 3,182,869 - 3,178,569 -

3,250,185 675,161 3,244,722 675,161

Total revenue 11,513,253 6,797,844 8,930,870 6,631,895


[ 20 ] Note 3. Profit (loss) from ordinary activities


2002 2001 2002 2001

(a) Net gains and expenses

Operating profit (loss) before income tax includes the

following specific net gains and expenses:

Net gains

Net gain (loss) on disposal of non current assets 27,242 385,024 27,242 385,024

Expenses

Cost of sales of goods 27,300 466,077 27,300 466,077

Borrowing costs

Borrowing costs - other persons and or corporations 117,194 112,611 117,194 112,611

Employee benefits expense

Redundancy payments 92,675 426,155 92,675 426,155

Other Employee benefits 2,011,827 2,694,573 1,791,093 2,654,215

Total Employee benefits 2,104,502 3,120,728 1,883,768 3,080,370

Depreciation

Plant and equipment 2,078,116 1,213,929 1,610,818 1,054,379

Total depreciation 2,078,116 1,213,929 1,610,818 1,054,379

Amortisation

Plant and equipment under finance leases 158,340 185,174 158,340 185,174

Goodwill 130,161 349,729 130,161 332,982

Total amortisation 288,501 534,903 288,501 518,156

Other charges against assets

Doubtful debts 71,740 160,127 - 152,905

Total doubtful debts 71,740 160,127 - 152,905

Other provisions

Employee entitlements (51,300) 889 (8,746) 889

Total other provisions (51,300) 889 (8,746) 889

Rental expense relating to operating leases

Minimum lease payments 920,947 635,171 605,243 107,686

Total operating lease expense 920,947 635,171 605,243 107,686

(b) Individually significant items

Gains

Consideration for sale of mining assets - 380,000 - 380,000

Lucent debt forgiveness 3,131,820 - 3,131,820 -

Expenses

Writedown of goodwill as future benefits are considered

no longer recoverable 2,426,637 3,984,535 2,426,637 605,266

Writedown of carrying value of plant and equipment 1,111,658 - 800,161 -



[ 21 ]In view of the current economic climate, the costs of the acquisition and integration of Network

Technologies and Radio Technologies coupled with the downturn in the industry and performance issues,

it is considered that the goodwill for these entities is not likely to be recovered from future operations of the

business associated with the above entities. Accordingly, the Directors have agreed to write down the value

of the goodwill associated with the acquisitions of those companies, to their recoverable amount.

Note 4. Income tax


2002 2001 2002 2001

(a) The aggregate amount of income tax

attributable to the financial year differs from the

amount calculated on the operating loss. The

differences are reconciled as follows:

Operating loss before income tax (4,647,053) (9,037,914) (3,112,747) (5,372,203)

Prima facie tax (payable) credit @ 30% (2001 – 34%) 1,394,116 3,072,891 933,824 1,826,549

Tax effect of permanent differences:

Debt forgiveness (953,571) - (953,571) -

Legal fees (45,281) (64,319) (45,281) (64,319)

Amortisation of acquired goodwill (767,039) (1,473,650) (767,039) (319,004)

Other (115,182) - (115,102) -

Prima facie tax adjustment for permanent differences (486,957) 1,534,922 (947,169) 1,443,226

Future tax benefits not brought to account - (1,534,922) - (1,443,226)

Utilisation of prior year losses 486,957 - 947,169 -

Income tax attributable to operating loss - - - -

(b) The directors estimate that the potential future

income tax benefit at 30 June 2000 in respect of:

Tax losses 2,407,053 2,894,010 1,713,616 2,660,785

Timing differences 193,964 387,146 70,111 268,173

2,601,017 3,281,156 1,783,727 2,928,958

This benefit for tax losses will only be obtained if:

(i) the company derives future assessable income of a nature and of an amount sufficient to enable the

benefit from the deductions for the losses to be realised, or

(ii) the losses are transferred to an eligible entity in the consolidated entity, and

(iii) the consolidated entity continues to comply with the conditions for deductibility imposed by tax

legislation, and

(iv) no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the

deduction for the losses.

Note 5. Cash assets


2002 2001 2002 2001

Cash at bank and on hand 328,836 479,643 314,156 473,183

Deposits at call 400,000 750,000 400,000 750,000

728,836 1,229,643 714,156 1,223,183

The above figures are reconciled to cash at the end of the financial year as shown in the statements of cash

flows as follows;


STATEMENTS



2002 2001 2002 2001

Balance as above 728,836 1,229,643 714,156 1,223,183

Less: Bank overdrafts (Note 13) - (16,599) - -

Balances per statement of cashflow 728,836 1,213,044 714,156 1,223,183

Deposits at call

The deposits at call are earning interest at a rate of 4.0%

Note 6. Receivables


2002 2001 2002 2001

Current

Trade debtors 1,348,907 1,256,479 565,355 746,607

Less: Provision for doubtful debts (347,781) (320,830) (82,037) (210,077)

1,001,126 935,649 483,318 536,530

Other debtors 11,240 40,368 11,240 40,368

1,012,366 976,017 494,558 576,898

Non current

Amounts receivable from wholly - owned subsidiaries - - 4,546,817 982,000

- - 4,546,817 982,000

Note 7. Current assets - Inventories


2002 2001 2002 2001

Current

Finished goods - at cost 144,113 133,966 10,147 -

Less: Provision of obsolescence (99,312) (99,312) - -

44,801 34,654 10,147 -

Note 8. Current assets - Other


2002 2001 2002 2001

Current

Prepayments 404,239 218,649 343,320 203,786

Other 127,935 283,339 125,406 219,604

532,174 501,988 468,726 423,390

Note 9. Non-Current assets – Other financial assets


2002 2001 2002 2001

Other investments - unlisted

Shares in controlled entities – - - 1,052,260 1,052,260

at cost (Note 27)

- - 1,052,260 1,052,260

[ 22 ]



Note 10. Non-Current assets - Property, plant and equipment


2002 2001 2002 2001

Land

Freehold land – at cost 50,000 50,000 50,000 50,000

50,000 50,000 50,000 50,000

Plant and Equipment

Plant and equipment – at cost* 13,248,584 14,681,633 12,420,367 11,288,011

Less: Accumulated depreciation (4,483,939) (2,968,981) (4,314,398) (1,872,952)

8,764,645 11,712,652 8,105,969 9,415,059

Plant and equipment – under finance lease 1,563,903 1,544,372 1,563,903 1,544,372

Less: Accumulated amortisation (587,137) (434,853) (587,137) (434,853)

976,766 1,109,519 976,766 1,109,519

Total Property, Plant & Equipment 9,791,411 12,872,171 9,132,735 10,574,578

Refer to note 13 for information on non-current assets pledged as security by the parent entity or its

consolidated entities.

Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and

end of the current year are set out below.

Plant & Leased Plant Land Total

Equipment & Equipment

Economic entity

Carrying amount at 1st July 2001 11,712,652 1,109,519 50,000 12,872,171

Additions 168,888 29,915 - 198,803

Additions through acquisition of entity 75,000 - - 75,000

Disposals (25,000) (10,384) - (35,384)

Depreciation expense (2,078,116) (158,340) - (2,236,456)

Writedowns – at cost (1,651,937) - - (1,651,937)

Accumulated Depreciation on

writedowns and disposals 563,158 6,056, - 569,214

Carrying amount at 30 June 2002 8,764,645 976,766 50,000 9,791,411

Plant & Leased Plant Land Total

Equipment & Equipment

Parent entity

Carrying amount at 1 July 2001 9,415,059 1,109,519 50,000 10,574,578

Additions 168,888 29,915 - 198,803

Additions through acquisitions of entity 75,000 - - 75,000

Disposals (25,000) (10,384) - (35,384)

Depreciation expense (1,610,818) (158,340) - (1,769,158)

Writedowns – at cost (1,269,602) - - (1,269,602)

Accumulated Depreciation on

writedowns and disposals 492,320 6,056 - 498,376

Transfers from related entities - net 860,122 - - 860,122

Carrying amount at 30 June 2002 8,105,969 976,766 50,000 9,132,735

[ 23 ]


STATEMENTS


Note 11. Non – Current intangible assets


2002 2001 2002 2001

Goodwill – at cost 120,000 7,060,152 120,000 3,664,135

Less: Accumulated amortisation (3,643) (4,506,997) (3,643) (1,110,980)

116,357 2,553,155 116,357 2,553,155

Note 12. Current liabilities - Payables


2002 2001 2002 2001

Current

Trade creditors and accruals 2,313,137 2,123,345 1,595,767 957,374

2,313,137 2,123,345 1,595,767 957,374

Note 13. Interest bearing liabilities


2002 2001 2002 2001

Current

Secured

Bank overdrafts - 16,599 - -

Vendor equipment finance 435,251 - 435,251 -

Lease liabilities (note 24) 298,870 346,211 298,870 346,211

734,121 362,810 734,121 346,211


2002 2001 2002 2001

Non Current

Secured

Vendor equipment finance 1,209,619 - 1,209,619 -

Lease liabilities (note 24) 407,566 662,285 407,566 662,285

1,617,185 662,285 1,617,185 662,285

Financing arrangements

Datafast Telecommunications Limited has existing communications equipment and motor vehicle leases

through a range of financial institutions.

The National Bank of Australia holds a fixed and floating charge over the assets of the consolidated entity. The

said security, secures the financial leases granted to Datafast Telecommunications in relation to the Microwave

Radio equipment forming part of the Telecommunications Network. The extent of the commitments are detailed

in Note 24. The fixed and floating charge also secures a bank guarantee in the sum of $751,000 provided to

the Department of Natural Resources and Environment on behalf of the Company for rehabilitation bond

requirements at the Ballarat East and other gold projects (see note 23).

The Vendor Equipment Finance specified relates to the value of the Lucent Equipment, which forms the

majority of the Telecommunications Network. Datafast is currently negotiating payment terms with Lucent

Technologies upon certain conditions being met. During this year the total amount owed was reduced by

$3,131,820. There are current negotiations continuing at the date of this report and it is expected that a further

debt reduction will take place in the 2003 financial year. These commitments are now disclosed as interest

bearing as the debt is now accounted for as its present value and interest is determined and brought to

account at date of repayments. $24,855 was brought to account this year. This debt was disclosed in “Other

Liabilities” in the prior year.

[ 24 ]



Vertel extended $3.0 million to the Company by way of Loan Facility as part of the restructure arrangement,

details of which are contained in the Directors Report on page 4. The Loan Facility is secured by a fixed and

floating charge over the asset radio business and the microwave assets of the organisation. The said charge

ranks in priority to the National Bank in respect to the assets comprising the radio business but otherwise

is deferred to the National Bank.

Note 14. Provisions


2002 2001 2002 2001

Current

Employee entitlements (note 25) 78,848 134,962 72,325 85,885

Site rehabilitation 140,090 446,811 140,090 446,811

Other 71,563 289,179 69,527 86,154

290,501 870,952 281,942 618,850

Non - Current

Employee entitlements (note 25) 27,292 22,478 27,292 22,478

27,292 22,478 27,292 22,478

Note 15. Other liabilities


2002 2001 2002 2001

Current

Deferred revenue (note 1(h)) 752,303 881,912 588,026 680,380

Vendor equipment finance - 5,152,214 - 2,340,543

Other 50,000 - 50,000 -

802,303 6,034,126 638,026 3,020,923


2002 2001 2002 2001

Non - Current

Vertel Finance 3,000,000 - 3,000,000 -

3,000,000 - 3,000,000 -

Vertel extended $3.0 million to the Company in exchange for the right to acquire 360,000,000 shares or the sale

of the radio business. This agreement was approved by shareholders on 29 November 2001.

Note 16. Contributed equity


2002 2001 2002 2001

Shares Shares Shares Shares

(a) Share capital

Ordinary shares fully paid 178,965,657 178,965,657 178,965,657 178,965,657

[ 25 ]


STATEMENTS


(b) Movements in ordinary share capital

The movements in the ordinary share capital during the past five years were as follows:

Date Details Notes Number of Issue price $

Shares (cents)

30/06/98 Balance as at 30 June 1998 28,750,100 4,800,020

24/05/99 Placement (d) 4,200,000 0.10 420,000


12/08/99 Placement (e) 44,000,000 0.10 4,390,000

27/09/99 Prospectus issue (f) 30,000,000 0.20 6,000,000

16/11/99 Option Commission – Service Agreement (g) 750,000 0.20 150,000

19/11/99 Employee Share Option Plan (ESOP) issues (h) 25,000 0.20 5,000

19/11/99 Option Conversion – Service Agreement (g) 750,000 0.40 300,000

24/11/99 Option Conversion – Seed Options (i) 750,000 0.20 150,000



03/12/99 Placement (j) 16,000,000 0.40 6,400,000





03/02/00 Placement (j) 2,500,000 0.40 1,000,000


15/06/00 Placement (l) 3,750,000 0.20 750,000


17/03/01 Placement (m) 10,000,000 .045 450,000

30/04/01 Placement (n) 9,890,000 .04 395,600

20/06/01 Issue to ex-VivaNET Shareholders (o) 24,475,557 .036 881,120

20/06/01 Issue to ex-VivaNET Vendor (p) 2,000,000 .086 171,140

Total movements 178,965,657 26,487,880

Less: Transaction costs arising on share issues 1,193,647

Balance as at 30 June 2002 25,294,233

(c) Details of options over unissued shares at balance date are as follows:

The number of unissued ordinary shares under option plans are listed below. These options are unlisted.

Notes 2002 Number 2001 Number

Seed Capital Options (i) - 4,625,050

Employee Share Option Plan (ESOP) (h) - 100,000

Employee Option Plan (EOP) (k) 1,445,000 7,490,000

Vendor Options (e) 28,000,000 28,000,000

Listed Options (r) 6,404,464 -

[ 26 ]



Options issued or converted during the financial year were as follows:

Notes Number of Options Conversion Price

Issued to:

29/11/01 Vertel – right to acquire (q) 360,000,000 0.01

Converted by:

There were none converted during the year

Cancelled or Lapsed:

Various Seed Capital Options 4,625,050 0.20

Various Employee Options 6,025,000 0.20

Various Employee Options 20,000 0.416

10,670,050

(d) The purpose of this placement was to provide working capital.

(e) The placement and issue of options was made to the vendors of the Radio Technologies business and was

approved by shareholders on 12 August 1999. The options were exercisable at 0.20 cents on or before 31

July 2002, and have therefore expired since balance date.

(f) These shares were issued pursuant to a Prospectus dated 27 August 1999.

(g) These shares were issued on conversion of options granted pursuant to a Service Agreement with Lease

Management Systems Pty Ltd dated 24 August 1999 for the services of Mark Bernard.

(h) These shares were issued on conversion of employee options issued pursuant to an Employee

Share Option Plan authorised by shareholders on 10 October 1997. They were exercisable at 0.20 cents

on or before 31 December 2001. These have now lapsed.

(i) These shares were issued on conversion of Seed Options issued pursuant to a Prospectus dated

8 November 1996, they are exercisable at 0.20 cents on or before 1 July 2001. These options have

now lapsed.

(j) The purpose of this placement was to bring forward plans to roll out the telecommunications network

throughout Victoria and have a Sydney presence. These placements were approved by shareholders

on 31 January 2000.

(k) These options were issued to executives and staff pursuant to a new Employee Option Plan approved

by shareholders on 31 January 2000 and 29 November 2001. The number has been reduced in 2002 due

to expired options primarily from employees resigning.

(l) The placement was made to the vendor of Network Technology Pty Ltd.

(m) The placement was made to the vendor of Northvoice Communications Pty Ltd.

(n) The purpose of this placement was to cover costs associated with the VivaNET Ltd acquisition and for

general working capital.

(o) The issue was made pursuant to a court order 8 June 2001 approving the acquisition of VivaNET Ltd.

(p) The issue was made on acquisition of VivaNET Limited to prior vendor of Business Technologies Pty Ltd.

(q) On 29 November 2001, shareholders approved the share option and radio business sale to Vertical

Telecoms Pty Ltd (Vertel). Vertel extended a $3.0 million loan facility to the company. These options can

be exercised up to 31 January 2003.

(r) These options are a result of the Scheme of Arrangement between Datafast and VivaNET Limited.

[ 27 ]


STATEMENTS


[ 28 ]



Note 17. Financial instruments(a) Credit risk exposures

The credit risk on the financial assets of the consolidated entity which have been recognised on the balance

sheet, other than investment in shares, is generally the carrying amount, net of any provisions for doubtful

debts.

(b) Interest rate exposures

The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate for each

class of financial assets and financial liabilities is set out in the following table.

Fixed interest rate maturing in

30 June 2002 Variable 1 year or less 1 to 5 years Over 5 years Non interest Total

interest bearing

Financial assets

Cash (note 5) 328,836 400,000 - - - 728,836

Trade debtors (note 6) - - - - 1,012,366 1,012,366

Total financial assets 328,836 400,000 - - 1,012,366 1,741,202

Weighted average

interest rate 3.5% 4.0% - - - -

Financial liabilities

Accounts payable (note 12) - - - - 2,313,137 2,313,137

Lease liabilities (note 13) - 298,870 407,566 - - 706,436

Vendor equipment finance - 435,251 1,209,619 - - 1,644,870

Vertel finance - - - - 3,000,000 3,000,000

Total financial liabilities - 734,121 1,617,185 - 5,313,137 7,664,443

Weighted average

interest rate - 10.01% 10.01% - - -

Net financial

assets (liabilities) 328,836 (334,121) (1,617,185) - (4,300,771) (5,923,241)

Fixed interest rate maturing in

30 June 2001 Variable 1 year or less 1 to 5 years Over 5 years Non interest Total

interest bearing

Financial assets

Cash (note 5) 479,643 750,000 - - - 1,229,643

Trade debtors (note 6) - - - - 935,649 935,649

Total financial assets 479,643 750,000 - - 935,649 2,165,292

Weighted average

Interest rate 4.0% 5.82% - - - -

Financial liabilities

Accounts payable (note 12) - - - - 2,123,345 2,123,345

Lease liabilities (note 13) - 346,211 662,285 - - 1,008,496

Total financial liabilities - 346,211 662,285 - 2,123,345 3,131,841

Weighted average

Interest rate - 10.5% 10.5% - - -

Net financial

Assets (liabilities) 479,643 403,789 (662,285) - (1,187,696) (966,549)

Note 18. Retained losses


2002 2001 2002 2001

Retained losses at beginning of financial year (17,205,774) (8,167,860) (13,540,063) (8,167,860)

Net loss attributable to members

of Datafast Telecommunications Limited (4,647,053) (9,037,914) (3,112,747) (5,372,203)

Retained losses at end of financial year (21,852,827) (17,205,774) (16,652,810) (13,540,063)

Note 19. Remuneration of directors

Directors of Directors of

Entities in the Parent Entity

Consolidated Entity

2002 2001 2002 2001

Income paid or payable, or otherwise made

available, to directors by entities in the

consolidated entity and related parties in

connection with the management of affairs

of the parent entity or its controlled entities 387,915 886,165 332,581 886,165

Details of options granted to and exercised by directors during the year are set out in note 26.

The numbers of parent entity directors whose total income from the parent entity or related parties that were

within the specified bands were as follows:

2002 2001

$ $ Number Number

0 - 9,999 1 -

20,000 - 29,999 1 2

30,000 - 39,999 1 1

40,000 - 49,999 - 1

70,000 - 79,999 1 -

80,000 - 89,999 1 -

110,000 - 119,999 1 -

150,000 - 159,999 - 1

260,000 - 269,999 - 1

320,000 - 329,999 - 1

[ 29 ]


STATEMENTS


Note 20. Remuneration of executives

Executive Executive

officers of officers of

Consolidated the Parent

Entity Entity

2002 2001 2002 2001

Remuneration received, or due and receivable, from

entities in the consolidated entity and related parties by

Australian based executive officers (including directors)

whose remuneration was at least $100,000:

Executive officers of the parent entity 359,968 1,024,777 228,674 1,024,777

Executive officers remuneration last financial year was substantially higher than the current year as a result

of the termination and redundancy payments.

The numbers of Australian based executive officers (including directors) whose remuneration from entities

in the consolidated entity and related parties that were within the specified bands were as follows:

Executive Executive

officers of officers of

Consolidated the Parent

Entity Entity

2002 2001 2002 2001

$ - $

100,000 - 109,999 1 - 1 -

110,000 - 119,999 - 1 - 1

120,000 - 129,999 1 - 1 -

130,000 - 139,999 1 - - -

150,000 - 159,999 - 1 - 1

160,000 - 169,999 - 1 - 1

260,000 - 269,999 - 1 - 1

320,000 - 329,999 - 1 - 1

Options are granted to executive officers under the Employee Option Plan, details of which are set

out in note 26.

Note 21. Remuneration of auditors


2002 2001 2002 2001

Remuneration for audit or review of the financial reports

of the parent entity in the consolidated entity:

Auditors of parent entity - BDO 32,800 42,000 32,800 42,000

Other Auditors of controlled entities - PWC - 1,200 - -

Remuneration for other services

Auditors of parent entity - BDO

- Taxation 12,035 6,105 12,035 6,105

- General Advice 11,425 - 11,425 -

Total remuneration of Auditors 56,260 49,305 56,260 48,105

[ 30 ]



Note 22. Payables denominated in foreign currency


2002 2001 2002 2001

Amounts not effectively hedged

Payables

Current, not effectively hedged

United States Dollars - 113,975 - 113,975

- 113,975 - 113,975

Note 23. Contingent liabilitiesDetails and estimates of maximum amounts of contingent liabilities are as follows:


2002 2001 2002 2001

As a result of the Company’s former activities

in gold exploration and development, Bank

Guarantees have been provided by the

National Australia Bank to cover:

Rehabilitation Bonds required by

the Department of Natural

Resources and Environment on

gold tenements including

Ballarat East 751,000 751,000 751,000 751,000

Telstra ADSL Services 60,000 - 60,000 -

811,000 751,000 811,000 751,000

[ 31 ]


STATEMENTS


Note 24. Commitments for expenditure


2002 2001 2002 2001

Capital commitments

Commitments for the acquisition of plant and

equipment contracted for at the reporting date but

not recognised as liabilities, payable:

Not later than one year - 5,851,362 - 3,039,691

Operating lease commitments

Commitments for minimum lease payments in

relation to non cancelable operating leases are

payable as follows:

Not later than one year 256,726 266,142 38,764 42,924

Later than one year but not later than 5 years 103,779 369,029 16,485 64,762

Commitments not recognised in the financial statements 360,505 635,171 55,249 107,686

Finance lease commitments

Commitments in relation to finance leases are payable

as follows:

Not later than one year 355,232 423,191 355,232 423,191

Later than one year but not later than 5 years 429,664 736,279 429,664 736,279

Minimum lease payments 784,896 1,159,470 784,896 1,159,470

Less: Future finance charges (78,460) (150,974) (78,460) (150,974)

Recognised as a liability 706,436 1,008,496 706,436 1,008,496

Representing lease liabilities:

Current (note 13) 298,870 346,211 298,870 346,211

Non current (note 13) 407,566 662,285 407,566 662,285

706,436 1,008,496 706,436 1,008,496

The weighted average interest rate implicit in the finance leases is 10.01%.

Under the terms of the particular leases the company has an option to acquire the leased assets at rates

between 0% and 40% of their fair value on the expiry of the lease. This option is not conditional upon any

factors other than the payment of the regular lease payments.


2002 2001 2002 2001

Remuneration commitments

Commitments for the payment of salaries and other

remuneration under long term employment contracts

in existence at the reporting date but not recognised

as liabilities, payable:

Not later than one year

Later than one year, but not 133,000 603,750 133,000 453,750

later than 5 years - 62,500 - 111,667

133,000 666,250 133,000 565,417

[ 32 ]



Mining expenditure commitments

The company holds one mining license at Ballarat East. The only anticipated future expenditure, which may

be incurred, is rehabilitation work at Ballarat East.

Datafast has commenced Rehabilitation of Ballarat East, which involves dismantling and selling the gold

treatment plant (completed during this financial year) and rehabilitation of the mine site including open

pits and talings dam. The remaining cost of rehabilitation is provided for in the Site Rehabilitation provision

of $140,090. Completion of these works are expected to occur during the calender year of 2002.

VivaNET Pty Ltd holds four mining leases, 90% interest in one Prospecting License and 90% interest in

one mining lease application. The tenement interests are in the process of being sold to a third party who

is currently meeting all expenditure commitments. It is not anticipated that VivaNET will be required to make

any contribution.

Note 25. Employee entitlements


2002 2001 2002 2001

Employee entitlements

Provision for employee entitlements

Current (note 14) 78,848 134,962 72,325 85,885

Non current (note 14) 27,292 22,478 27,292 22,478

106,140 157,440 99,617 108,363

Employee numbers

Average number of employees during the financial year 39 43 38 43

Datafast Telecommunications Employee Share Option Plan and Employee Option Plan

Datafast Telecommunications has two plans currently in place:

(a) Employee Share Option Plan (ESOP)

This plan was established when the company was known as Goldminco NL, and was approved

by shareholders on 10 October 1997.

Since its inception 500,000 options have been issued to three staff members. Each option is convertible

into one ordinary share at a fixed price of 20 cents per share. The options are unlisted and expired

at 5.00pm on 31 December 2001.

(b) Employee Option Plan (EOP)

This plan was established with approval of shareholders on 31 January 2000.

Each option is convertible into one ordinary share at a fixed price of 20 cents per share, or market price

at date of granting, whichever is the greater. The options are granted for no consideration. The options

are unlisted and are conditional upon specific performance hurdles being met. The options are, except in

defined special circumstances, not exercisable for a period of 2 years from the date of granting, and have

expiry dates ranging between 5 and 10 years.

As at 30 June 2002, there are 445,000 options granted under the EOP to 10 eligible employees.

Note 26. Related parties(a) Directors

The directors named in the attached Directors’ Report each held office as a director of the company during the

year ended 30 June 2002:

• Andrew Guy – Chairman

• Kimley Wood – (Resigned as Director on 27 November 2001)

[ 33 ]


STATEMENTS


• David Lauritz

• Rodney Foster – (resigned as director on 27 November 2001)

• Andrew Watson - (resigned as director on 3 August 2001)

• Frank Romanin (C.E.O.) – (appointed as Director on 3 August 2001)

• David Findlay - (appointed as Director on 1 February 2002)

(b) Transactions with directors and director related entities

Remuneration and retirement benefits

Information on remuneration benefits of directors is disclosed in note 19.

Loans from directors and director related entities

David Findlay is the major shareholder and director of Vertical Telecoms Pty Ltd, which has loaned the

Company $3.0 million, the terms and conditions were approved by shareholders on 29 November 2001.

Transactions of directors and director related entities concerning shares or share options

Aggregate numbers of shares and share options of Datafast Telecommunications Limited acquired or disposed

of by directors of the company and consolidated entity or their director related entities from the company:

Parent Entity and Consolidated

2002 Number 2001 Number

Acquisitions

Ordinary shares - 83,333

Ordinary share options - 41,667

Disposals

Ordinary shares - 21,766,000

Aggregate numbers of shares and share options of Datafast Telecommunications Limited held directly, in

directly or beneficially by directors of the company or the consolidated entity or their director related entities

at balance date:

Parent Entity and Consolidated

2002 Number 2001 Number

Ordinary shares 1,343,333 26,787,373

Options over ordinary shares 360,041,667 34,586,667

A more detailed explanation of the directors’ interest in shares and options over ordinary shares is also noted

in the Directors’ Report, under the “Information from Directors” heading.

Other transactions with directors and director related entities

During the 2001 year, the company entered into lease agreements with the persons related to the directors

Gary Wilkinson and Andrew Watson. The leases are in respect of commercial properties used in the operations

of business at Geelong and Ballarat. During the 2002 year, no payments were made while they were Directors,

however, since their retirements a total of $23,793 was paid to surrender the lease.

David Findlay is a director of Vertical Telecoms Pty Ltd (Vertel). The Company sublets space on Melbourne

Central Tower to Vertel as well as charging $250 per base station plus additional charges for extra services.

The Company also pays Vertel Commissions for Biscom clients that are signed through them. The total amount

the Company was invoiced during 2002 was $1,606.

Vertel also extended the company $3.0 million loan facility under an option / radio business sale agreement

that was approved by shareholders on 29 November 2001. David Findlay was not a Director at this time.

Vertel nominated the current CEO and in accordance with its rights and the arrangement as detailed in the

Directors Report on page 4.

[ 34 ]



(c) Wholly owned group

The wholly owned group consists of Datafast Telecommunications Limited and its wholly owned controlled

entities. Ownership interests in these controlled entities are set out in note 27.

Note 27. Investments in controlled entities

Country of Class of Equity Cost of

incorporation shares holding parent

entity’s

investment

2002 % 2001 % 2002 $ 2001 $

Parent Entity

Datafast Telecommunications Ltd - -

Controlled Entity

Datafast Carrier Services Pty Ltd Australia Ordinary 100% 100% - -

Network Technologies Pty Ltd Australia Ordinary 100% 100% - -

Northvoice Communications Pty Ltd Australia Ordinary 100% 100% - -

VivaNET Pty Ltd Australia Ordinary 100% 100% 1,052,260 1,052,260

Datafast Carrier Services Pty Ltd, Network Technologies Pty Ltd, Northvoice Communications Pty Ltd are small

proprietary companies.

VivaNET Ltd is a large proprietary company, which has a 100% equity holding in 3 other small proprietary

companies. Namely Business Technologies Pty Ltd, Viva.com Pty Ltd and VivaNET Australia Pty Ltd.

Acquisition of controlled entities

No purchases of controlled entities in 2002.

Payment for purchase of controlled entities, net of cash acquired


2002 2001 2002 2001

Outflow of cash to acquire controlled entities,

net of cash acquired

Cash consideration - (100,000) - (100,000)

Less: balances acquired in cash

Cash - 319,985 - 34,976

- 219,985 - (65,024)

Add: acquisition costs paid - - - -

Inflow of cash - 219,985 - (65,024)

[ 35 ]


STATEMENTS



Note 28. Segment information

2002 Telecommunications Mining Consolidated

Sales to customers outside the consolidated entity 8,263,068 - 8,263,068

Other revenue 3,250,185 - 3,250,185

Total revenue 11,513,253 - 11,513,253

Segment profit (loss) including abnormal and

extraordinary items (4,647,053) - (4,647,053)

Consolidated operating profit loss before income tax (4,647,053) - (4,647,053)

Segment assets 12,225,945 - 12,225,945

Total assets 12,225,945 - 12,225,945

Segment liabilities 8,784,539 - 8,784,539

Total liabilities 8,784,539 - 8,784,539

Depreciation and amortisation of segment assets 2,366,167 - 2,366,167

2001 Telecommunications Mining Consolidated

Sales to customers outside the consolidated entity 6,045,733 - 6,045,733

Other revenue 295,161 456,950 752,111

Total revenue 6,340,894 456,950 6,797,844

Segment profit (loss) including abnormal and

extraordinary items (9,290,092) 252,178 (9,037,914)

Consolidated operating profit loss before income tax (9,290,092) 252,178 (9,037,914)

Segment assets 18,167,628 - 18,167,628

Total assets 18,167,628 - 18,167,628

Segment liabilities 10,075,996 - 10,075,996

Total liabilities 10,075,996 - 10,075,996

Depreciation and amortisation of segment assets 1,748,832 - 1,748,832

Mining and mineral exploration

Geographic segments

The telecommunications business presently carries on operations predominantly within Victoria, and

exclusively within Australia.

[ 36 ]


Note 29. Reconciliation of operating profit (loss) after income tax to net cash flow from operating activities


2002 2001 2002 2001

Operating profit (loss) after income tax (4,647,053) (9,037,914) (3,112,747) (5,372,203)

Depreciation and amortisation 2,366,617 5,733,603 1,899,320 2,178,043

Amortisation write-off 2,426,637 - 2,426,637 -

Net (gain) loss on sale of non current assets (27,242) (380,000) (27,242) (380,000)

Deferred revenue (129,607) (364,326) (92,354) (444,864)

Write down of fixed assets 1,111,658 - 800,161 -

Financing transaction costs 332,259 - 332,259 -

Forgiveness of debts (3,178,569) - (3,178,569) -

Mine development expenditure written off - (53,189) - (53,189)

Profit on sale of business (74,330) - (74,330) -

Change in operating assets and liabilities, net

of effects from purchase of controlled entity

Decrease (increase) in trade debtors (36,349) 559,970 82,340 635,417

Decrease (increase) in inventories (10,147) 192,083 (10,147) 181,916

(Increase) in other operating assets (30,186) - (45,336) -

Increase (decrease) in accounts payable 452,980 (971,212) 685,141 (285,854)

Increase (decrease) in other provisions (791,318) (67,228) (332,095) (70,122)

Net cash inflow (outflow) from operating activities (2,234,650) (4,388,213) (646,962) (3,610,856)

Note 30. Non cash financing and investing activities


2002 2001 2002 2001

Acquisition of plant and equipment by

finance leases 28,215 594,348 28,215 594,348

Acquisition of plant and equipment by other

non cash means 75,000 999,782 75,000 999,782

Acquisition of controlled entities by equity issue - 26,925,557 - 26,925,557

Note 31. Earnings per share

2002 2001

cents cents

Basic earnings (loss) per share – cents (2.6) (6.3)

Diluted earnings (loss) per share – cents (2.6) (6.3)

Weighted average number of ordinary shares outstanding during the year used

in the calculation of basic earnings per share 178,965,687 141,681,376

Reconciliation of earnings used in calculating earnings per share

2002 2001

Net Profit (4,647,053) (9,037,914)

Diluted Earnings per share

The Diluted Earnings per share is the same value as basic earnings. This is due to the 360,000,000 shares that

Vertel have the right to acquire and all Options on issue have not been included in any Diluted Earnings per

share calculation as the exercise price of these options is greater than the company’s current share price.

[ 37 ]


STATEMENTS


DIRECTOR’S

[ 38 ] The directors declare that the financial statements and notes set out on pages 15 to 37

(a) comply with Accounting Standards, the Corporations Regulations and other mandatory professional

reporting requirements; and

(b) give a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2002

and of their performance, as represented by the results of their operations and their cash flows, for the

financial year ended on that date.

In the directors’ opinion:

(a) the financial statements and notes are in accordance with the Corporations Act 2001; and

(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they

become due and payable on the basis that the matters referred to in note 1(a) of the financial notes, are

concluded successfully and thereby the company continuing to trade as a going concern.

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

DECLARATION

DIRECTOR’SDECLARATION

Andrew Guy

Director Director

Melbourne: 30 September 2002

Frank Romanin

REPORTAUDIT

DATAFAST TELECOMMUNICATIONS LIMITED AND CONTROLLED ENTITIESABN 47 073 238 178

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF DATAFAST TELECOMMUNICATIONS LIMITED

ScopeWe have audited the financial report of Datafast Telecommunications Limited and controlled entities for

the financial year ended 30 June 2002 comprising the Directors’ Declaration, Statement of Financial

Performance, Statement of Financial Position, Statement of Cash Flows and notes to and forming part

of the financial statements.

The financial report includes the consolidated financial statements of the consolidated entity comprising the

company and the entities it controlled at the year’s end or from time to time during the financial year. The

company’s directors are responsible for the financial report. We have conducted an independent audit

of this financial report in order to express an opinion on it to the members of the company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable

assurance whether the financial report is free of material misstatement. Our procedures included examination,

on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the

evaluation of accounting policies and significant accounting estimates. These procedures have been

undertaken to form an opinion whether, in all material respects, the financial report is presented fairly

in accordance with Accounting Standards, other mandatory professional reporting requirements and

statutory requirements so as to present a view which is consistent with our understanding of the company’s

and consolidated entity’s financial position, and performance as represented by the results of their operations

and their cash flows.

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

(a) the Corporations Act 2001, including:

(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June

2002 and of their performance for the year ended on that date; and

(ii) complying with Accounting Standards and the Corporations Regulations 2001; and

(b) other mandatory professional reporting requirements.

Emphasis of MatterWithout qualification to the opinion expressed above, attention is drawn to the following matter. As set out in

Note 1 (a), the financial statements have been prepared on a going concern basis on the assumption that the

conditions outlined in Note 1(a) are achieved. If the group is unable to continue as a going concern it may be

required to realise assets and extinguish liabilities other than in the normal course of business and at amounts

different from those stated in the financial report.

In our opinion, knowledge of the economic entity’s ability to continue as a going concern is necessary for

a proper understanding of the financial report.

BDO

Chartered Accountants

C M J BRYAN

Partner

Melbourne: 30 September 2002

[ 39 ]

AUDIT REPORT

SHAREHOLDER’S

SHAREHOLDER’SINFORMATION

[ 40 ] The shareholder information set out below was applicable as at 28 June 2002.

A. Distribution of equity securitiesAnalysis of numbers of equity security holders by size of holding:

Class of equity security

Ordinary shares Options

1 - 1,000 1,274 1938

1,001 - 5,000 2,209 569

5,001 - 10,000 1,150 46

10,001 - 100,000 1,428 75

100,001 + over 276 13

6,337 2,641

B. Equity security holdersTwenty largest quoted equity security holders

The names of the twenty largest holders of quoted equity securities are listed below:

Number of ordinary Percentage

Name shares held of issued shares

Wireless Network (Australia) Pty Ltd 16,192,000 9.05

Northvoice Communications Inc 3,653,295 2.04

Mr Phillip Britt 2,812,500 1.57

Mr David Rowe 2,150,000 1.20

Mr Gregory Colin Marshall Moore 2,043,895 1.14

Amcil Limited 1,750,000 .98

Ms Maren Anke Maria Goerdel 1,615,302 .90

F H Nominees Pty Ltd 1,505,749 .84

Mrs Jo-Anne George 1,400,000 .78

Savcrete Pty Ltd 1,360,000 .76

Trade Pro Services Pty Limited 1,317,873 .74

Mr Allen Guy 1,300,000 .73

Ms Ying Zhao 1,260,000 .70

Mr Carlos Gutierrez 1,250,000 .70

Mr Norman Garcia 1,203,895 .67

Bruce Birnie Pty Ltd 1,166,667 .65

Mrs Kathryn Ven Der Zwan 1,140,997 .64

Mr David Lauritz 1,093,333 .61

Miss Allahna Edwards 1,000,000 .56

45,215,506 25.26

INFORMATION

SHAREHOLDER’S

Unquoted equity securities

Options Notes Number on issue Number of holders

Employee Share Option Plan (ESOP) (a) 1,000,000 1

Employee Option Plan (EOP) 445,000 10

Vendor Options 28,000,000 23

29,445,000 34

(a) Issued under Corporation Law

C. Substantial shareholders

Substantial shareholders in the Company are set out below:

Number of ordinary

Name Notes shares held

Andrew Watson 17,160,000

D. Voting rights

The voting rights attaching to each class of equity securities are set out below:

(a) Ordinary shares

On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon

a poll each share shall have one vote.

(b) Options

There are no voting rights attached to the options.

INFORMATION

SHAREHOLDER’SINFORMATION

[ 41 ]

COMPANY’S

DirectorsAndrew Guy (Chairman)

Frank Romanin (Managing Director)

David Lauritz

David Findlay

SecretaryFrank Romanin

Notice of annual general meetingThe annual general meeting of Datafast

Telecommunications Limited will be held at:

The Theatrette

Australian Stock Exchange

530 Collins Street

Melbourne

Time:

9:30am

Date:

Monday 23rd December, 2002

A formal notice of meeting is enclosed

Principal registered office in Australia17 The Boulevard

North Geelong VIC 3215

Ph: (03) 5272 8600

Fax: (03) 5278 3334

ACN 073 238 178

ABN 47 073 238 178

www.datafast.net.au

Share register

Computershare Investor Services Pty Ltd

Level 12, 565 Bourke St

Melbourne VIC 3000

Ph: (03) 9275 7999

Fax: (03) 9670 6373

Auditor

BDO

Chartered Accountants and Advisers

563 Bourke Street

Melbourne VIC 3000

SolicitorsAllens Arthur Robinson

530 Collins St

Melbourne VIC 3000

BankersNational Australia Bank

9 Yarra St

Geelong VIC 3220

Stock exchange listingDatafast Telecommunications Limited shares

are listed on the Australian Stock Exchange.

PARTICULARS

COMPANY’SPARTICULARS

[ 42 ]

NOTES

NOTES

MANY INTERNET PROVIDERS HAVE NOT HAD THE REVENUE OR

THE INFRASTRUCTURE TO LEVERAGE THE ADVANTAGES THAT HAVE

APPEARED IN THE MARKET PLACE. DATAFAST HAS ADHERED TO

ITS STRATEGY OF CONCENTRATING ON ITS NICHE MARKETS AND

REVIEW ITS OPERATIONS TO ENSURE COST EFFICIENCIES ARE

ACHIEVED WHERE EVER POSSIBLE.

NOTES

NOTES

DATAFAST’S FOCUS HAS BEEN TO EXPAND ITS PENETRATION

IN ITS TARGET MARKETS OF RETAIL, WHOLESALE AND

COMMERCIAL INTERNET AND DATA SERVICES.

DATAFAST ANNUAL REPORT 2002

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