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Transol Corporation Limited

Annual Report - 30 June 2011

ABN 73 089 224 402

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30 June 2011Corporate directory

Adrien Wing

500 Collins Street

Level 14

Martin Ralston(Non-Executive Chairman)Angus Edgar(Executive Director)Adrien Wing

AUSTRALIA

Quinert Rodda & Associates

Melbourne, VIC 3000

Level 14Principal place of business

Registered office

Share register

AUSTRALIAMelbourne, VIC 3000

BentleysAuditorLevel 7

(Non-Executive Director)

Melbourne VIC 3000

Applecross WA 6153770 Canning HighwaySecurity Transfer Registrars

31 Queen Street

Company secretary

www.transolcorp.com.au

Transol Corporation Limited shares are listed on the Australian Securities Exchange (ASX code: TNC)

Website address

Stock exchange listing

Directors

31 Queen StreetMelbourne VIC 3000

Solicitors

114 William Street

Level 19

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Activities Report

The activities of the Company which it either owns or has an interest in are described in the following paragraphs.

Valleyarm Digital

During the year, the Company increased its shareholding in Valleyarm Digital, making it a 100% owned subsidiary.

Valleyarm specialises in the digital distribution, publishing and online marketing of music and video content focused primarily on content and services within the Asia Pacific Region, along with representation in eastern and southern Africa, the Pacific and Europe. Valleyarm incorporates a unique solution emphasising an “Asia-In” “Asia-Out” model providing digital music content distribution and sub-publishing services which enable Asian content owners to monetise content external from their homeland, and to provide an Asian gateway for western acts and labels to monetise their content in non-traditional fast growing markets.

Valleyarm focused its resources on building a solid business framework by enhancing its IT infrastructure to support its proprietary software coordinating and business development activities to establish itself as a key music content distributor in the Asia Pacific Region. It also significantly increased its digital music catalogue to over 1.8 million tracks. Originally operating from Melbourne, Valleyarm now has established offices in Singapore, New York and Berlin, and partners throughout Asia, the Pacific, the Middle East, UK and Europe.

According to the International Federation of the Photographic Industry’s report dated 21 February 2011, in 2010, the worldwide trade value of the digital music market was US$4.6 billion, and it is expected that digital music revenues in Asia Pacific will reach US$13.5 billion in 2014, making the Asia Pacific Region the largest market for digital retail revenues around the world.

During the year, Valleyarm entered into a number of agreements with leading digital suppliers with noteworthy artists and labels for digital distribution, which puts the Company in a good position to leverage off these relationships and including future revenue within the Asia Pacific Region.

In 2010, music downloads were the dominant source of revenue and continued growth in the digital music market. With market penetration of smart phones such as the iPhone and Android devices significantly increasing, and the growing proportion of music downloads in 2010 coming from such handsets, there has been significant focus by record companies, internet services providers and telecommunications carriers on developing commercial partnerships.

Valleyarm signed commercial partnerships with key digital stores including Telstra BigPond, Maxis Malaysia, R2G China and Ithos for Singapore. Combined with its focus on developing its IT infrastructure to effectively deliver content to digital stores either directly or via partners within Asia Pacific, Europe and the USA, the Company is now in a position to act as the key gateway distributor moving forward for western content owners to monetise their content in the Asia Pacific Region, and for asian content owners to access the Western Market.

Outside the Asia Pacific Region, Valleyarm entered into Agreements with two of Europe’s largest content owners, being Believe Digital GmbH and Kontor, who wish to gain access to the Asia Pacific Region through Valleyarm’s gateway. In addition, large Asian labels such as Musica, who dominate in Indonesia

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and Malaysia, have entered into an Agreement with Valleyarm to gain access to existing Stores outside of Asia such as Apple Itunes and Amazon.

Valleyarm is also set to take advantage of new marketing partnerships with Mix Max Music for offering iPhone and Android apps and the Electric Sheep Company for online 3D video streaming to supply audiences with online experiences of live performances via a Facebook application.

The growing number of commercial partnerships and investments into online IT content delivery infrastructure sets up Valleyarm to consolidate into a very vibrant and growing market landscape.

The Valleyarm catalogue consists of over 2 million tracks spread over 20,000 artists and 5000 labels including high profile artists such as Elvis Presley, Birds of Tokyo, Ella Fitzgerald, Jimi Hendrix, D'Masiv, Diesel, Johnny Cash, Nidji, Joan Jett, Peterpan, T-Rex, Delta Goodrem, Small Faces and Tim Minchin to name a few.

CLTNet System – Computerised Theory Testing System (100% owned subsidiary)

Following the successful implementation of the Company’s Computerised Theory Testing System (CTT) across the entire New Zealand Transport Agency (“NZTA”) Agent Network in 2009, CTT has been operating in a “business as usual mode” and is the core service delivery platform across the NZTA’s network.

During the year, the Company’s wholly owned subsidiary CLTNet NZ Limited (CLTNet NZ) renewed its Software and Services Agreement with the NZTA for a minimum term of five years with an option to extend to seven years. The Company considers the renewed agreement as an endorsement of its technology and services.

The renewed Agreement includes the licensing of CLTNet’s CCT, the delivery of online driver education web services and provision for the supply of additional testing services for the transport industry in New Zealand. CLTNet NZ will receive annual license and consulting fees from the NZTA and income from the sale of education and practice tests to the New Zealand public.

During the year CLTNet NZ and the NZTA collaborated to deliver a national computerised testing and education service to the New Zealand public through a network of over 100 licence testing centres and online through the website www.roadcodepractice.co.nz. The NZTA expect to conduct up to 150,000 tests each year for learner drivers and over 200,000 practice tests a year.

Leading up to the renewal of the Agreement, CLTNet NZ introduced new functionality to its website to support reseller channels for the sale of practice tests by driving instructors, schools and retailers. With the agreement signed these were activated and commenced generating sales. This was highlighted by an agreement with the New Zealand Automobile Association (“NZ AA”) for the promotion and sale of its learner driver road code practice tests. NZ AA is contracted to the NZTA, and has approximately 80% of the driver testing market in New Zealand, and is expected to become a significant sales channel for CLTNet NZ.

Under the terms of the agreement, NZ AA will promote and refer customers to the CLTNet NZ website (roadcodepractice.co.nz) through advertisements on its NZ AA website, and sell prepaid practice test vouchers from NZ AA’s physical locations.

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The Company considers these key Agreements have provided CLTNet NZ with an opportunity to extend the use of its systems, develop new services and expand its presence in the New Zealand market.

Quick-Links (Aust) Pty Ltd (70% owned subsidiary)

During the year, the Quick-Links (Aust) Pty Ltd (“Quick-Links”) focused on the rollout of CORUS, its enterprise social collaboration platform, to small and medium sized businesses in line with the marketing plan. It formalised a global marketing agreement with consultancy firm MATH Marketing who implemented the use of CORUS with a number of multinational companies in Europe and North America.

The consumerisation of the enterprise is happening globally, causing companies to look at software platforms that provide a Facebook-like social network experience for employees and customers. Forrester Research has identified collaboration and social networking for the enterprise as one of the hottest current technologies.

In a survey of businesses using enterprise software, the research firm found that on a scale of 1 to 5, with 5 being the most important, 58% of the survey respondents rated collaboration technologies as a four or five in terms of helping to meet their companies' current business goals. Gartner Research predicts that by 2014, social networking and collaboration services will replace e-mail as the primary vehicle for interpersonal communications for 20 percent of business users and forecasts the global market for Social Enterprise Software to reach USD$1 billion by the end of 2012.

During the year the Quick-Links worked closely with its users and customers to enhance the platform in order meet customer requirements and position itself as a leading provider of social enterprise and collaboration software. From these efforts and the growth forecasted for the sector, the Company is expecting significant customer growth in the coming year.

Digistore Solutions International Pty Ltd

During the year, the Company acquired an equity interest in Digistore Solutions International Pty Ltd (“DSSI”), a company that has the exclusive worldwide distribution rights for the Centurion range of data storage optical backup and archive solutions for small and medium-sized businesses. DSSI is also an 80% equity interest owner of Digistore Solutions Holdings PTE LTD (“DSSH”), a Singapore incorporated entity that owns the intellectual property associated with its Centurion DiscHub and Centurion iHub and has new optical data storage products under development. DSSI has achieved some significant milestones including major partnerships with Ingram Micro (the largest distributor of IT products in the world) and a number of Original Equipment Manufacturer (OEM) deals with EMC, IBM and CA Technologies. OEM and partnership discussions are also well advanced with other international OEM distributors.

DSSI provides a range of data storage products for businesses, enabling them to meet their compliance obligations more affordably and effectively. DSSI currently achieves this through the sales and marketing of its Centurion DiscHub range of products. The Centurion DiscHub is a platform for digital data storage that uses multiple optical discs contained within carousel-style housing. The platform also ensures that software layers can be added to the product set to extend functionality of the devices for different market applications. DSSI is planning to release the Centurion DiscHub Blu-Ray in Q4 2011 which will have a data capacity of 5 to 10 Terabytes, depending upon functionality and product features. DSSI also has a new product due for release in Q1 2012, the Centurion iHub, which is based on a combination of Network

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Attached Storage (NAS) and optical technology targeted at the enterprise market. The Centurion iHub product is rack mountable and has a data storage capacity in excess of 220 Terabytes. This product will compete on an equivalent or superior feature set, and be substantially lower in price as compared to its competitors. Current OEM partners have indicated strong interest in the Centurion iHub product because of its unique features created by the fast accessibility of NAS and the durability and unalterability of optical media.

To date, the Company holds its 16.67% equity interest in DSSI by the subscription of 3,054,336 new shares and the payment of $1,100,000. The equity interest held to date includes the subscription and payment of $275,000 for 763,584 shares subsequent to balance date.

Excluding Transol’s interest in DSSI, Mr Edgar holds a 54.46% interest in the company.

Liberty Mining International Pty Ltd

During the year, the Company received shareholder approval to dispose of the Liberty Group for a consideration of USD$600,000 in cash, and:

� Issue of shares 600,000 Class “A” common shares in a Canadian entity which is in the process of seeking to list its business onto the Toronto Stock Exchange (TSX); and

� A net smelter royalty of 2.5% on the Banlung, Banlung North, Oyadao and Oyadao South licenses to a maximum aggregate payment of US$800,000.

Corporate

During the quarter, the Company received the resignation of Executive Director Richard Stanger, following the sale of the Liberty Group. Mr Adrien Wing, Company Secretary, replaced Mr Stanger as a Non-executive Director. Mr Wing is a Certified Practising Accountant and specialises in the public company environment. He practised in the audit and corporate divisions of a chartered accounting firm before providing corporate/accounting consulting and company secretary services to public companies. His experience includes accounting, administration, compliance, company secretarial, re-structuring and recapitalising companies on ASX. Mr Wing currently provides these services to several public companies on the ASX. He has served on a number of public company boards and related committees. During the quarter, the Company announced that it intended undertaking a non renounceable rights issue whereby shareholders would be offered two new shares for every three shares held at the Record date at $0.001 per new share. Each new share comes with a free attaching option exercisable at $0.002 on or before 20 December 2014. On 22 August 2011, the rights issue closed receiving subscriptions of 336,158,532 shares (and free attaching options) representing $336,158.53. The Company is in the process of placing the shortfall shares and options (427,841,468 shares representing $427,841.47)

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During the financial year the principal continuing activities of the consolidated entity consisted of:- the assessment, further development and exploitation of the company’s computerised license testing system(CLTNet)- the development of its digital music and video business- investment in mineral exploration assets

There were no dividends paid or declared during the current or previous financial year.

On 7 June 2011, the company sold its shares in Liberty Mining International Pty Ltd and its subsidiaries ('LMI Group')which comprised its mining industry business. The disposal of the LMI Group is disclosed in the financial report as adiscontinued operation.

On 28 June 2011, a Prospectus was issued for a fully underwritten non-renounceable rights issue of two (2) sharesfor every three (3) shares held at $0.001, together with one (1) free-attaching option having an exercise price of 0.2cents each ($0.002) exercisable on or before 20 December 2014.

Review of operationsThe loss for the consolidated entity after providing for income tax and non-controlling interest amounted to $271,880(30 June 2010: $32,694).

Significant changes in the state of affairs

Mr Angus Edgar

30 June 2011

Please refer to the detailed review of operations which precedes this Directors' Report.

Mr Martin Ralston

The directors present their report, together with the financial statements, on the consolidated entity (referred tohereafter as the 'consolidated entity') consisting of Transol Corporation Limited (referred to hereafter as the 'company'or 'parent entity') and the entities it controlled for the year ended 30 June 2011.

Directors


Principal activities

Mr Adrien Wing (appointed on 5 May 2011)Mr Phillip Jackson (resigned on 16 September 2010)Mr Richard Stanger (resigned on 5 May 2011)

The following persons were directors of Transol Corporation Limited during the whole of the financial year and up tothe date of this report, unless otherwise stated:

Directors' report

There were no other significant changes in the state of affairs of the consolidated entity during the financial year.

Dividends

On 31 May 2011, 252,416,261 options with an exercise price of $0.02 lapsed unexercised.

During the year the company also acquired a 13.05% interest in Digital Solutions International Pty Ltd for $825,000 forthe issue of 2,290,752 shares.

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30 June 2011

Transol Corporation LimitedDirectors' report

Angus Edgar has been employed in the finance/stockbroking industry for 25 yearssince 1985 with the majority of that time employed with various share brokingcompanies. During that period he has been directly involved with providing corporateadvisory services to private and ASX listed companies and the listing of several newcompanies onto the ASX.

Mr Edgar is a member of the company’s Audit & Risk Committee and RemunerationCommittee.

NoneFormer directorships (in the last 3 years):Special responsibilities:

Non-Executive Chairman

373,096,285

Subsequent to the end of the financial year, the company announced that it intended undertaking a non renounceablerights issue whereby shareholders would be offered two new shares for every three shares held at the record date at$0.001 per new share. Each new share comes with a free attaching option exercisable at $0.002 on or before 20December 2014. On 22 August 2011, the rights issue closed receiving subscriptions of 336,158,532 shares (and freeattaching options) representing $336,158.53. The company intends placing the shortfall of 427,841,468 sharesrepresenting $427,841.47.

Other current directorships:Former directorships (in the last 3 years):

22,000,000 options expiring on December 2012149,118,515 options expiring on December 2014

Interests in shares:Interests in options:

Information on likely developments in the operations of the consolidated entity and the expected results of operationshave not been included in this report because the directors believe it would be likely to result in unreasonableprejudice to the consolidated entity.

Experience and expertise:

None

Mr Angus Edgar

Mr Ralston is a member of the company’s Audit & Risk Committee andRemuneration Committee.237,500Interests in shares:

Interests in options:

Special responsibilities:

Name:Title: Executive Director

Martin Ralston has been involved in the information technology sector since 1970.He has worked for BHP, Computer Accounting Services and Accenture (previouslyAndersen Consulting) where he was a partner from 1985 to his retirement in August2001. Mr Ralston is also a non-executive director of DWS Advanced BusinessSolutions Ltd.DWS Advanced Business Solutions Ltd.

Matters subsequent to the end of the financial year

Name:

Environmental regulationThe consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth orState law.

Mr Martin Ralston

Information on directors

Likely developments and expected results of operations

No other matter or circumstance has arisen since 30 June 2011 that has significantly affected, or may significantlyaffect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs infuture financial years.

Regal Resouces Limited


Other current directorships:

None

Title:

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30 June 2011




Interests in shares:

Name:


Former directorships (in the last 3 years):

Title:

Non-Executive Director (appointed 5 May 2011)Experience and expertise:

Title:

None

Special responsibilities:


Mr Philip Jackson

None

Since 1987, Mr Stanger has worked as a management consultant, both in a privatecapacity and also with Proudfoot Consulting and with the Jamieson Consulting Groupin a wide variety of industries including mining (underground and open-cut) and in aninternational capacity for some of the largest and most prestigious multi-national andnational companies.None

Mr Jackson is the Managing Director of Enhanced Biogenic Methane Ltd, whichfollows a successful period with Energy Infrastructure Resources Ltd as GeneralManager, Development and has over 20 years experience in coal seam gasexploration, resource management, environmental and risk management as well asa background in microbiology.

Non-Executive Director (resigned 16 September 2010)

Name:

Special responsibilities:None

Mr Richard Stanger

None

None


Name:

None39,466,670

Special responsibilities:Interests in shares:

New Age Exploration LimitedNone

Executive Director (resigned 5 May 2011)

Interests in shares:

Title:Mr Adrien Wing


Mr Adrien Wing is CPA qualified. He practised in the audit and corporate divisions ofa chartered accounting firm before working with a number of public companies listedon the Australian Securities Exchange as a corporate/accounting consultant andcompany secretary. �

NoneOther current directorships:

NoneNone

None

None


'Other current directorships' quoted above are current directorships for listed entities only and excludes directorshipsin all other types of entities, unless otherwise stated.

'Former directorships (in the last 3 years)' quoted above are directorships held in the last 3 years for listed entities onlyand excludes directorships in all other types of entities, unless otherwise stated.

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30 June 2011


Attended Held

12 12 12 12 4 4 8 8 3 3

ABCD

Details of remuneration

The remuneration report is set out under the following main headings:Principles used to determine the nature and amount of remuneration

In accordance with best practice corporate governance, the structure of non-executive directors and executiveremunerations are separate.

The remuneration report, which has been audited, outlines the director and executive remuneration arrangements forthe consolidated entity and the company, in accordance with the requirements of the Corporations Act 2001 and itsRegulations.

Remuneration report (audited)

It is the Remuneration Committee’s policy that employment letters are issued to directors and executives. Theseletters contain their responsibilities and remuneration paid.

The number of meetings of the company's Board of Directors held during the year ended 30 June 2011, and thenumber of meetings attended by each director were:

Remuneration philosophyThe performance of the company depends upon the quality of its directors and executive officers. To prosper, thecompany must attract, motivate and retain highly skilled directors and executive officers.

The directors emoluments are comparable to similar sized companies in the technology and junior mining industry.There is no formal link between the economic entity’s performance and the directors’ emoluments.

All directors, executives and employees have the opportunity to qualify for participation in the Employee IncentiveOption Scheme, which provides incentives based upon share price growth.

Remuneration CommitteeThe Remuneration Committee is responsible for determining and reviewing compensation arrangements for thedirectors and the executive team. The Remuneration Committee assesses the appropriateness of the nature andamount of emoluments of such officers on a periodic basis by reference to relevant market conditions with the overallobjective of ensuring maximum stakeholder benefit from the retention of an experienced and high quality Board andexecutive team. Such officers are given the opportunity to receive their base emolument in a variety of formsincluding cash and superannuation salary sacrifice.

Service agreementsShare-based compensation

Held: represents the number of meetings held during the time the director held office.

A Principles used to determine the nature and amount of remuneration

Mr Martin Ralston

Full Board

Meetings of directors

Mr Angus EdgarMr Adrien WingMr Richard StangerMr Phillip Jackson

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30 June 2011


Amounts of remunerationDetails of the remuneration of the directors, other key management personnel (defined as those who have theauthority and responsibility for planning, directing and controlling the major activities of the consolidated entity) andspecified executives of Transol Corporation Limited are set out in the following tables.

B Details of remuneration

Non-executive directors remuneration

The company aims to reward its executives with a level and mix of remuneration commensurate with their positionand responsibilities within the economic entity, so as to reward executives for meeting or exceeding targets set byreference to appropriate benchmarks; align the interests of executives with those of shareholders; and ensureremuneration is competitive by market standards.

It is the Remuneration Committee's policy that employment contracts must be entered into with the Chief ExecutiveOfficer and senior executives. Remuneration consists of fixed remuneration and variable remuneration including theissue of shares and options as a short term and long-term incentive. The proportion of shares and options issued isbased upon the level of experience and knowledge of the global payment industry that is brought to the company withthe expectation that executives will secure significant contracts for the benefit of the company and its shareholders.The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to theposition and competitive in the market. Fixed remuneration is reviewed annually by the Remuneration Commiteee aspart of an assessment on that executive’s performance. The Board has access to external independent advice if

All incentives offered by the compnay over the last five years to staff including directors, executives, management andemployees did not have internal performance conditions nor were they tied to company performance other than theexercise price.

The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shallbe determined from time-to-time by a General Meeting. The latest determination was at the Annual General Meetingheld 18 November 2003 when shareholders approved an aggregate remuneration of $200,000 per annum to beapportioned amongst non-executive directors.

Executive remuneration

Non-executive directors are required to sign a Letter of Appointment that outlines the directors duties andresponsibilities and the remuneration fee to be paid to that director in carrying out his duties. This fee covers boththe Board and any committee position where the non-executive director is a member. In prior years, non-executivedirectors have been granted options under the Employee Incentive Scheme as a form of remuneration that replaces acash payment for carrying out duties as a director of the company and was considered to be fair as compared tooptions issued to other employees at that time.

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Post-employment Long-term Share-based

benefits benefits payments

Cash salary Non- Super- Long service Equity-and fees Bonus monetary annuation leave settled Total

$ $ $ $ $ $ $

27,000 - - 2,430 - - 29,430

66,000 - - - - - 66,000

144,000 - - 2,160 - - 146,160

127,273 - - - - - 127,273

97,500 - - - - - 97,500

160,125 - - - - - 160,125 621,898 - - 4,590 - - 626,488

*

*****

**** Director of Valleyarm Digital Pty Ltd

Mr Gary MacKenzie ****

Other Key Management Personnel:Mr Greg Bound ***

resigned on 5 May 2011.

Short-term benefits

Mr Adrien Wing *

2011

Name

Mr Richard Stanger **

Mr Phillip Jackson resigned on 16 September 2010, and his remuneration for the year was $nil.

appointed on 5 May 2011 (Includes fees paid to an entity associated with Mr Wing, Northern Star Nominees PtyLtd for the 12 months to 30 June 2011 for company secretarial services).

Executive director of CLTNet Pty Ltd

Non-Executive Directors:

Executive Directors:Mr Angus Edgar

Mr Martin Ralston

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30 June 2011


Post-employment Long-term Share-based

benefits benefits payments

Cash salary Non- Super- Long service Equity-and fees Bonus monetary annuation leave settled Total

$ $ $ $ $ $ $

27,000 - - 2,430 - - 29,430

136,500 - - 2,160 - - 138,660

150,000 - - - - - 150,000

90,000 - - - - - 90,000 403,500 - - 4,590 - - 408,090

*

Mr Martin Ralston

Non-Executive Directors:

Name

There were no options issued to directors and other key management personnel as part of compensation that wereoutstanding as at 30 June 2011.

Options

D Share-based compensation

Key management personnel have no entitlement to termination payments in the event of removal for misconduct.

Executive director of CLTNet Pty Ltd

There were no other service agreements with key management personnel.

Other Key Management Personnel:

Mr Angus Edgar

In the 2007 financial year, Mr Angus Edgar was appointed under contract as thecompany's Chief Executive Officer for the purpose of managing the company's day today affairs until the company was in a position to appoint a Chief Executive Officer ina permanent role. Mr Edgar's fee is $12,000 per month plus GST.

Issue of sharesThere were no shares issued to directors and other key management personnel as part of compensation during theyear ended 30 June 2011.

Executive Directors:

Mr Phillip Jackson's remuneration for the year was $nil.

Short-term benefits2010

Mr Greg Bound *

Mr Angus EdgarMr Richard Stanger

C Service agreements

Executive DirectorName:Title:Details:

Remuneration and other terms of employment for key management personnel are formalised in service agreements.Details of these agreements are as follows:

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30 June 2011


Exercise Numberprice under option

$0.020 22,000,000

Shares issued on the exercise of options

Proceedings on behalf of the company

During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of thecompany or any related entity.

Expiry dateGrant date

This concludes the remuneration report, which has been audited.

The company has not otherwise, during or since the financial year, indemnified or agreed to indemnify the auditor ofthe company or any related entity against a liability incurred by the auditor.

Indemnity and insurance of auditor

During the financial year, the company paid a premium in respect of a contract to insure the directors of the companyagainst a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosureof the nature of liability and the amount of the premium.

Indemnity and insurance of officers

Officers of the company who are former audit partners of BentleysThere are no officers of the company who are former audit partners of Bentleys.

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings onbehalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of takingresponsibility on behalf of the company for all or part of those proceedings.

There were no non-audit services provided during the financial year by the auditor.

There were no shares of Transol Corporation Limited issued on the exercise of options during the year ended 30 June2011.

Shares under option

Non-audit services

Unissued ordinary shares of Transol Corporation Limited under option at the date of this report are as follows:

30 Nov 2012

71,590,606 options expired on 31 May 2011 (Mr Angus Edgar 36,723,930, and Mr Richard Stanger 34,866,676).These options were not granted as part of remuneration, but were related to rights issues.

The company has indemnified the directors of the company for costs incurred, in their capacity as a director, for whichthey may be held personally liable, except where there is a lack of good faith.

There were no options granted to or exercised by directors and other key management personnel as part ofcompensation during the year ended 30 June 2011.

14 Dec 2007

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30 June 2011


Bentleys continues in office in accordance with section 327 of the Corporations Act 2001.Auditor

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act2001.

Auditor's independence declarationA copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is setout on the following page.

Melbourne

15 September 2011

Director

________________________________Angus Edgar

On behalf of the directors

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CORPORATE GOVERNANCE

COMPLIANCE WITH ASX CORPORATE GOVERNANCE RECOMMENDATIONS Introduction Transol Corporation Ltd ("Company") has adopted systems of control and accountability as the basis for the administration of corporate governance. These policies and procedures are summarised below. Corporate governance is the system by which companies are directed and managed. It influences how the objectives of the Company are achieved, how risk is monitored and assessed and how performance is optimised. The Board and management are committed to corporate governance and, to the extent that they are applicable to the Company, have adopted the Eight Essential Corporate Governance Principles as set out in the Corporate Governance Principles and Recommendation (2nd Edition) as published by the ASX Corporate Governance Council. Whilst the Board has demonstrated, and continues to demonstrate, its commitment to best practice in corporate governance, it emphasises that good corporate governance is only one factor contributing to the success of the Company's operations. Additional information about the Company's corporate governance practices is set out on the Company's website at www.transolcorp.com.au. The table below summarises the Company’s compliance with the Corporate Governance Council’s Recommendations:

Principle ASX Corporate Governance Council Recommendations Comply1 Lay solid foundations for management and oversight

1.1 Establish the functions reserved to the board and those delegated to senior executives and disclose those functions.

Yes

1.2 Disclose the process for evaluating the performance of senior executives. Yes 1.3 Provide the information indicated in the Guide to reporting on principle 1. Yes 2 Structure the Board to add value

2.1 A majority of the board should be independent Directors. No 2.2 The chair should be an independent director. Yes 2.3 The roles of chair and chief executive officer should not be exercised by the same

individual. Yes

2.4 The board should establish a nomination committee. Yes 2.5 Disclose the process for evaluating the performance of the board, its committees and

individual Directors. Yes

2.6 Provide the information indicated in the Guide to reporting on principle 2. Yes 3 Promote ethical and responsible decision-making

3.1 Establish a code of conduct and disclose the code or a summary as to: Yes � the practices necessary to maintain confidence in the Company’s integrity; � the practices necessary to take into account the Company’s legal obligations and

the reasonable expectations of its stakeholders; and

� the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

3.2 Establish a policy concerning diversity and disclose the policy or a summary of that policy which includes requirements for the board to establish measurable objectives for achieving gender diversity and for the board to assess annually the objectives and progress in achieving them.

No

3.3 Disclose annually the measurable objectives set for achieving gender diversity and progress towards achieving them.

No

3.4 Disclose annually the proportion of woman employees in the whole organization, women in senior executive positions and women on the board.

No

3.5 Provide the information indicated in the Guide to reporting on principle 3. Yes 4 Safeguard integrity in financial reporting

4.1 The board should establish an audit committee. Yes 4.2 The audit committee should be structured so that it:

� consists only of non-executive Directors; No � consists of a majority of independent Directors; Yes � is chaired by an independent chair, who is not chair of the board; and Yes � has at least three members. Yes

4.3 The audit committee should have a formal charter Yes

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4.4 Provide the information indicated in the Guide to reporting on principle 4. Yes 5 Make timely and balanced disclosure

5.1 Establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at senior executive level for that compliance and disclose those policies or a summary of those policies.

Yes

5.2 Provide the information indicated in the Guide to reporting on principle 5. Yes 6 Respect the rights of shareholders

6.1 Design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose the policy or a summary of that policy.

Yes

6.2 Provide the information indicated in the Guide to reporting on principle 6. Yes 7 Recognise and manage risk

7.1 Establish policies for the oversight and management of material business risks and disclose a summary of those policies.

Yes

7.2 The board should require management to design and implement the risk management and internal control system to manage the Company’s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the Company’s management of its material business risks.

Yes

7.3 The board should disclose whether it had received assurance from the chief executive officer and the chief financial officer that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

Yes

7.4 Provide the information indicated in the Guide to reporting on principle 7. Yes 8 Remunerate fairly and responsibly

8.1 The board should establish a remuneration committee. Yes 8.2 The remuneration committee should be structured so that :

- it consists of a majority of independent directors; - it is chaired by an independent director; - has at least three members.

Yes Yes No

8.3 Clearly distinguish the structure on non-executive Directors’ remuneration from that of executive Directors and senior executives.

Yes

8.4 Provide the information indicated in the Guide to reporting on principle 8. Yes

Council Principle 1: Lay solid foundations for management and oversight

1.1 Role of the Board The Board's primary role is the protection and enhancement of medium to long term shareholder value. To fulfill this role, the Board is responsible for the overall Corporate Governance of the consolidated entity including its strategic direction, establishing goals for management and monitoring the achievement of these goals. 1.2 Responsibility of the Board

The Board is collectively responsible for promoting the success of the Company by:

� Supervising the Company’s framework of control and accountability systems to enable risk to be assessed and managed;

� Ensuring the Company is properly managed; � Approving and monitoring the progress of major capital expenditure, capital management, and acquisitions

and divestitures; � Approval of the annual budget; � Monitoring the financial performance of the Company; � Approving and monitoring financial and other reporting; � Overall corporate governance of the Company, including conducting regular reviews of the balance of

responsibilities within the Company to ensure division of functions remain appropriate to the needs of the Company;

� Liaising with the Company’s external auditors as appropriate; and � Monitoring, and ensuring compliance with, all of the Company's legal obligations, in particular those

obligations relating to the environment, native title, cultural heritage and occupational health and safety. The Board must convene regular meetings with such frequency as is sufficient to appropriately discharge its responsibilities. Between regular meetings it will also ensure that important matters are addressed by way of circular resolutions. The Board may, from time to time, delegate some of the responsibilities listed above to its senior management team.

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1.3 Materiality threshold The Board has agreed on both quantitative and qualitative guidelines for assessing the materiality of matters. Qualitative indications of materiality would include if:

� They impact on the reputation of the Company;� They involve a breach of legislation; � They are outside the ordinary course of business; � They could affect the Company’s rights to its assets; or � If accumulated they would trigger the quantitative tests.

1.4 The Chairman The chairman is responsible for leadership of the Board, for the efficient organisation and conduct of the Board's function and for the briefing of all directors in relation to issues arising at Board meetings. The chairman is also responsible for chairing shareholder meetings, and arranging Board performance evaluation. 1.5 The Managing Director The managing director is responsible for running the affairs of the Company under delegated authority from the Board and to implement the policies and strategy set by the Board. In carrying out his/her responsibilities the managing director must report to the Board in a timely manner and ensure all reports to the Board present a true and fair view of the Company’s financial condition and operational results. 1.6 Role and responsibility of management The role of management is to support the managing director and implement the running of the general operations and financial business of the Company, in accordance with the delegated authority of the Board. Management is responsible for reporting all matters which fall within the Materiality Threshold at first instance to the managing director or if the matter concerns the managing director then directly to the chairman or the lead independent director, as appropriate. 1.7 Relationship of Board with management

Management of the day-to-day business of the Company is to be conducted by or under the supervision of the Board, and by those other officers and employees to whom the management function is properly delegated by the Board. The Board will adopt appropriate structures and procedures to ensure that the Board functions independently of management. Appropriate procedures may involve the Board meeting on a regular basis without management present, or may involve expressly assigning the responsibility for administering the Board's relationship to management to a Committee of the Board. Information is formally presented to the Board at Board meetings by way of Board reports and review of performance to date. When directors are providing information about opportunities for the Company, this should always be through the Board. Council Principle 2: Structure the board to add value The Company presently has two non-executive directors and one executive director. Two directors are independent in accordance with the terms of the ASX Corporate Governance Council’s definition of an independent director. The Chairman (Mr Martin Ralston) is a non-executive and independent director in terms of the ASX Corporate Governance Council’s definition of an independent director. The Board considers that its structure has been and continues to be appropriate in the context of the Company’s current projects and operations. The Company considers that each director possesses skills and experience suitable for building the Company. Furthermore, the Board considers that in the current phase of the Company's growth, the Company's shareholders are better served by directors who have a vested interest in the Company. The Board intends to reconsider its composition as the Company's operations evolve, and appoint independent directors as appropriate. The full board of directors performs the role of the nomination committee.

Council Principle 3: Promote ethical and responsible decision-making The Company complies with this recommendation other than with regard to the adoption of a diversity policy. The Company has adopted a code of conduct incorporating all corporate executives. It requires all business affairs to

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be conducted legally, ethically and with integrity. The code provides for reporting of breach of the code by others. The code of conduct has been made available on the Company’s website. The Board has prepared a draft diversity policy and currently is still taking advice with regard to a diversity policy prior to its adoption. The draft policy contemplates the recommendations of the Corporate Governance Council on diversity, which includes:

� requirements for the board to establish objectives for achieving gender diversity; � the annual assessment and measurement of the company against these objectives; � the annual disclosure of the measurement and progress in achieving the set objectives; and � the disclosure of the proportion of women employed in the whole organization, women in senior executive

positions and women on the board. Currently there are six women in the organisation all levels. Other than the board members, there are employees within the company and its 100% subsidiary, Valleyarm Digital Pty Ltd . Where applicable, the Company has a broad policy of “outsourcing” immediately. The formulation of a final policy will also contemplate these issues and how they affect the Company. Council Principle 4: Safeguard integrity in financial reporting The Company’s Managing Director and Chief Financial Officer (or equivalent) report in writing to the Board that the consolidated financial statements of the Company and its controlled entities for each half and full year present a true and fair view, in all material aspects, of the Company’s financial condition and operational results and are in accordance with accounting standards. The Company has established an audit committee and the committee fulfills its role by:

� Monitoring the integrity of the financial statements of the Company, and reviewing significant financial reporting judgments.

� Reviewing the Company’s internal financial control system and risk management systems. � Reviewing the appointment of the external auditor and approving the remuneration and terms of

engagement. � Monitoring and reviewing the external auditor’s independence, objectivity and effectiveness, taking into

consideration relevant professional and regulatory requirements.

Council Principle 5: Make timely and balanced disclosure

Compliance procedures for ASX Listing Rule disclosure requirements have been adopted by the Company. It has appointed an officer of the Company to be responsible for compliance. Council Principle 6: Respect the rights of shareholders

Information will be communicated to shareholders as follows:

� The annual report is distributed to all shareholders. The Board ensures that the annual report includes relevant information about the operations of the consolidated entity during the year, changes in the state of affairs of the consolidated entity and details of future developments, in addition to the other disclosures required by the Corporations Act. The annual report is made available on the Company’s website, and is provided in hard copy format to any shareholder who requests it.

� The half-yearly report contains summarised financial information and a review of the operations of the consolidated entity during the year. The half-year audited financial report is prepared in accordance with the requirements of applicable Accounting Standards and the Corporations Act and is lodged with the Australian Securities Exchange. The half-yearly report is made available on the Company’s website, and is sent to any shareholder who requests it.

� The quarterly report contains summarised cash flow financial information and details about the Company’s activities during the quarter. The quarterly report is made available on the Company’s website, and is sent to any shareholder who requests it.

� Proposed major changes in the consolidated entity which may impact on share ownership rights are submitted to a general meeting of shareholders.

� The Company's website is well promoted to shareholders and shareholders may register to receive updates, either by email or in hard copy.

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The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the consolidated entity’s strategy and goals. Important issues are presented to the shareholders as resolutions.

The shareholders are requested to vote on the appointment and aggregate remuneration of directors, the granting of options and shares to directors and changes to the constitution. Copies of the constitution are available to any shareholder who requests it.

Company's website

The Company maintains a website at www.transolcorp.com.au

On its website, the Company makes the following information available on a regular and up to date basis:

� Company announcements; � latest information briefings; � notices of meetings and explanatory materials; and � quarterly, half yearly and annual reports.

The website is being continuously updated with any information the directors and management may feel is material. The Company also ensures that the audit partner attends the Annual General Meeting.

Council Principle 7: Recognise and manage risk

The Company has developed an initial framework for risk management and internal compliance and control systems which covers organisational, financial and operational aspects of the Company's affairs. The framework is the subject of ongoing review and yet to be finalised. It appoints the Managing Director and Company Secretary as being responsible for ensuring that the systems are maintained and complied with. Council Principle 8: Remunerate fairly and responsibly

The Board has established a remuneration committee. The remuneration committee is responsible for administering the remuneration policy adopted by the Company and the remuneration arrangements for non executive Directors, executive Directors and executives of the Company.

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Page

23252627287475

Level 1431 Queen StreetMelbourne VIC 3000

Transol Corporation Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Itsregistered office and principal place of business is:

A description of the nature of the consolidated entity's operations and its principal activities are included in thedirectors' report, which is not part of the financial report.

The financial report was authorised for issue, in accordance with a resolution of directors, on 15 September 2011. The directors have the power to amend and reissue the financial report.


For the year ended 30 June 2011Financial report

Contents

Financial report

Notes to the financial statementsDirectors' declaration

Independent auditor's report to the members of Transol Corporation Limited

The financial report consists of the financial statements, notes to the financial statements and the directors'declaration.

Statement of comprehensive incomeStatement of financial positionStatement of changes in equityStatement of cash flows

General information

The financial report covers Transol Corporation Limited as a consolidated entity consisting of Transol CorporationLimited and the entities it controlled. The financial report is presented in Australian dollars, which is TransolCorporation Limited's functional and presentation currency.

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Note 2011 2010$ $

4 1,361,092 300,574

5 473,233 -

(697,851) (67,775)(862,065) (257,311)(219,867) (375,053)

6 (11,089) (15,723)(256,987) (432,347)(342,422) (116,125)(112,421) (29,309)(58,727) (99,880)

6 (1,642) (2,847)

(728,746) (1,095,796)

7 - -

(728,746) (1,095,796)

8 456,763 994,518

(271,983) (101,278)

10,000 - (168,504) (11,805)

(158,504) (11,805)

(430,487) (113,083)

(103) (68,584)(271,880) (32,694)

(271,983) (101,278)

(103) (68,584)(430,384) (44,499)

(430,487) (113,083)

Non-controlling interest

Other comprehensive income for the year, net of tax

Total comprehensive income for the year

Loss for the year is attributable to:

Foreign currency translation

Loss before income tax expense from continuing operations

Loss on the revaluation of available-for-sale financial assets, net of tax

Consolidated

ExpensesAdministration and corporate expenses


For the year ended 30 June 2011Statement of comprehensive income

Employee benefits expense

Advertising and marketing

Legal and professional fees

Impairment of assets

Owners of Transol Corporation Limited

Other income

Revenue from continuing operations

Depreciation and amortisation expense

Occupancy costs

Other expenses

Finance costs

Total comprehensive income for the year is attributable to:Non-controlling interestOwners of Transol Corporation Limited

Loss after income tax expense from continuing operations

Profit after income tax expense from discontinued operations

Other comprehensive income

Loss after income tax expense for the year

Income tax expense

The above statement of comprehensive income should be read in conjunction with the accompanying notes23

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Note 2011 2010$ $

Consolidated


For the year ended 30 June 2011Statement of comprehensive income

Cents Cents

35 (0.07) (0.11)35 (0.07) (0.11)

35 0.04 0.10 35 0.04 0.10

35 (0.03) - 35 (0.03) -

Basic earnings per share


Diluted earnings per share


Earnings per share from discontinued operations attributable to the owners of Transol Corporation LimitedBasic earnings per share

Earnings per share for loss attributable to the owners of Transol Corporation Limited

Earnings per share from continuing operations attributable to the owners of Transol Corporation Limited


The above statement of comprehensive income should be read in conjunction with the accompanying notes24

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Note 2011 2010$ $

9 188,392 694,162 10 86,937 44,348 11 75,547 50,290

350,876 788,800

12 - 97,298 13 1,133,600 - 14 32,670 126,925 16 - 548,368

1,166,270 772,591

1,517,146 1,561,391

17 258,318 272,317 18 54,606 - 19 5,932 2,886 20 12,000 -

330,856 275,203

21 - 3,334 - 3,334

330,856 278,537

1,186,290 1,282,854

22 22,794,586 22,315,213 23 571,361 1,623,280

(22,132,196) (22,585,529)1,233,751 1,352,964

(47,461) (70,110)

1,186,290 1,282,854

Transol Corporation LimitedStatement of financial positionAs at 30 June 2011

Consolidated

Trade and other payablesBorrowings

Provisions

Total assets

Contributed equityEquity

Non-current liabilities

Total non-current liabilities

Net assets

Borrowings

Total equity

Accumulated losses

Trade and other receivables

Total current liabilities

Current liabilities

Non-current assets

Total current assets

Other financial assetsAvailable-for-sale financial assets

Other current assets

Employee benefits

Current assets

Assets

Cash and cash equivalents

Non-controlling interestEquity attributable to the owners of Transol Corporation Limited

Reserves

Property, plant and equipment

Total liabilities

Exploration and evaluation assets

Liabilities

Total non-current assets

The above statement of financial position should be read in conjunction with the accompanying notes25

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Totalequity

$ $ $ $ $ $

22,315,213 1,635,085 (22,552,835) (1,526) 1,395,937

- - (11,805) - - (11,805)

- - - (32,694) (68,584) (101,278)

- - (11,805) (32,694) (68,584) (113,083)

- 22,315,213 1,623,280 (22,585,529) (70,110) 1,282,854

Totalequity

$ $ $ $ $ $

22,315,213 1,623,280 (22,585,529) (70,110) 1,282,854

- - (158,504) - - (158,504)

- - - (271,880) (103) (271,983)

- - (158,504) (271,880) (103) (430,487)

479,373 - - - 479,373 - (747,965) 747,965 - -

- (145,450) - (145,450)

- (22,752) 22,752 -

- 22,794,586 571,361 (22,132,196) (47,461) 1,186,290

Accumulatedlosses interest

Non-controlling

Contributedequity Reserves

Accumulatedlosses

Non-controlling

interest

ConsolidatedBalance at 1 July 2009



Balance at 30 June 2010

Consolidated


For the year ended 30 June 2011Statement of changes in equity

Other comprehensive income for the year, net of tax

equityContributed

Reserves

Other comprehensive income for the year, net of taxLoss after income tax expense for the year


Balance at 1 July 2010

Equity on increase in ownership interest in

Contributions of equity, net of transaction costsExpiry of optionsDerecognition on disposal of subsidiary


Transactions with owners in their capacity as owners:

The above statement of changes in equity should be read in conjunction with the accompanying notes26

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Note 2011 2010$ $

1,703,681 - (2,755,296) (2,077,029)

(1,051,615) (2,077,029)10,866 27,790 (1,642) (2,847)

- 216,228 - 1,610,027

33 (1,042,391) (225,831)

(825,000) - 14 (82,163)

(43,450) (48,368)552,097 - 50,000 -

- 48,150 (50,000) - 260,531 -

(55,822) (82,381)

389,373 - - (325,000) - (79,975)

(5,340) (5,342)50,000 -

150,000 -

584,033 (410,317)

(514,180) (718,529)694,162 1,424,496

8,410 (11,805)

9 188,392 694,162

Net decrease in cash and cash equivalents

Proceeds on borrowings to EBM repaid

Loans to associated and other entities

Cash flows from financing activities

Loan to related entities

Net cash used in investing activities

Repayment of borrowingsProceeds from borrowings - from related parties

Payments for investments

Proceeds on disposal of EBM

Payments for property, plant and equipment

Proceeds on disposal of Regal shares

Proceeds on disposal of LMI


For the year ended 30 June 2011Statement of cash flows

Cash and cash equivalents at the beginning of the financial year

Cash and cash equivalents at the end of the financial year

Cash flows from investing activities

Net cash from/(used in) financing activities

Proceeds from sale of property, plant and equipment

Net proceeds from issue of shares

Consolidated

Cash flows from operating activitiesReceipts from customers (inclusive of GST)

Interest received

Payments for exploration assets

Payments to suppliers and employees (inclusive of GST)

Proceeds from farm in

Interest and other finance costs paid

Net cash used in operating activities

Effects of exchange rate changes on cash

Loans from/(to) related and other parties

Other income

The above statement of cash flows should be read in conjunction with the accompanying notes27

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New, revised or amending Accounting Standards and Interpretations adopted

Note 1. Significant accounting policies

The consolidated entity has applied AASB 2009-12 from 1 January 2011. These amendments make numerouseditorial amendments to a range of Australian Accounting Standards and Interpretations, which had no major impacton the requirements of the amended pronouncements. The main amendment was to AASB 8 'Operating Segments'and required an entity to exercise judgement in assessing whether a government and entities known to be under thecontrol of that government are considered a single customer for the purposes of certain operating segmentdisclosures.

The adoption of these Accounting Standards and Interpretations did not have any impact on the financial performanceor position of the consolidated entity. The following Accounting Standards and Interpretations that are most relevant tothe consolidated entity include:

The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretationsissued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not beenearly adopted.

AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements ProjectThe consolidated entity has applied AASB 2010-3 amendments from 1 July 2010. The amendments result in someaccounting changes for presentation, recognition or measurement purposes, while some amendments that relate toterminology and editorial changes had no or minimal effect on accounting. The main changes were: AASB 127 'Consolidated and Separate Financial Statements' and AASB 3 'Business Combinations' - clarifies thatcontingent consideration from a business combination that occurred before the effective date of revised AASB 3 is notrestated; the scope of the measurement choices of non-controlling interest is limited to when the rights acquiredinclude entitlement to a proportionate share of net assets in the event of liquidation; requires an entity in a businesscombination to account for the replacement of acquiree's share-based payment transactions, unreplaced andvoluntarily replaced, by splitting between consideration and post combination expenses.

AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual ImprovementsProjectThe consolidated entity has applied AASB 2010-4 from 1 January 2011. These amendments were a consequence ofthe annual improvements project and make numerous non-urgent but necessary amendments to a range ofAustralian Accounting Standards and Interpretations. The amendments provided clarification of disclosures in AASB 7 'Financial Instruments: Disclosures', in particular emphasis of the interaction between quantitative and qualitativedisclosures and the nature and extent of risks associated with financial instrument; clarified that an entity can presentan analysis of other comprehensive income for each component of equity, either in the statement of changes in equityor in the notes in accordance with AASB 101 'Presentation of Financial Instruments'; and provided guidance on thedisclosure of significant events and transactions in AASB 134 'Interim Financial Reporting'.

AASB 2009-12 Amendments to Australian Accounting Standards

The consolidated entity has applied AASB 2009-10 from 1 July 2010. The amendments clarified that rights, options orwarrants to acquire a fixed number of an entity's own equity instruments for a fixed amount in any currency are equityinstruments if the entity offers the rights, options or warrants pro-rata to all existing owners of the same class of itsown non-derivative equity instruments. The amendment therefore provides relief to entities that issue rights in acurrency other than their functional currency from treating the rights as derivatives with fair value changes recorded inprofit or loss.

Notes to the financial statementsTransol Corporation Limited

30 June 2011

The principal accounting policies adopted in the preparation of the financial statements are set out below. Thesepolicies have been consistently applied to all the years presented, unless otherwise stated.

AASB 2009-10 Amendments to AASB 132 - Classification of Rights Issues

Any significant impact on the accounting policies of the consolidated entity from the adoption of these AccountingStandards and Interpretations are disclosed in the relevant accounting policy.

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30 June 2011

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entityare eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment ofthe asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistencywith the policies adopted by the consolidated entity.

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilitiesand non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity.The consolidated entity recognises the fair value of the consideration received and the fair value of any investmentretained together with any gain or loss in profit or loss.

Subsidiaries are all those entities over which the consolidated entity has the power to govern the financial andoperating policies, generally accompanying a shareholding of more than one-half of the voting rights. The effects ofpotential exercisable voting rights are considered when assessing whether control exists. Subsidiaries are fullyconsolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated fromthe date that control ceases.

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Transol CorporationLimited ('company' or 'parent entity') as at 30 June 2011 and the results of all subsidiaries for the year then ended.Transol Corporation Limited and its subsidiaries together are referred to in these financial statements as the'consolidated entity'.

Critical accounting estimates

Historical cost convention

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requiresmanagement to exercise its judgement in the process of applying the consolidated entity's accounting policies. Theareas involving a higher degree of judgement or complexity, or areas where assumptions and estimates aresignificant to the financial statements, are disclosed in note 2.

The financial statements have been prepared under the historical cost convention, except for, where applicable, therevaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss,investment properties, certain classes of property, plant and equipment and derivative financial instruments.

Basis of preparation

Note 1. Significant accounting policies (continued)


These general purpose financial statements have been prepared in accordance with Australian Accounting Standardsand Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001.These financial statements also comply with International Financial Reporting Standards as issued by theInternational Accounting Standards Board ('IASB').

The consolidated entity has applied AASB 2010-5 from 1 January 2011. These amendments make numerouseditorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments toreflect changes made to the text of International Financial Reporting Standards by the International AccountingStandards Board.

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidatedentity only. Supplementary information about the parent entity is disclosed in note 29.

Parent entity information

Principles of consolidation

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Refer to the 'businesscombinations' accounting policy for further details. A change in ownership interest, without the loss of control, isaccounted for as an equity transaction, where the difference between the consideration transferred and the bookvalue of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

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30 June 2011

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposedof.


Rendering of services - Valleyarm Digital Pty Ltd Revenue is recognised as sales of digital content are made from the Valleyarm Digital website or by royalty for sale ofdigital content on other's distribution platforms.

InterestInterest revenue is recognised as interest accrues using the effective interest method. This is a method of calculatingthe amortised cost of a financial asset and allocating the interest income over the relevant period using the effectiveinterest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of thefinancial asset to the net carrying amount of the financial asset.

Other revenueOther revenue is recognised when it is received or when the right to receive payment is established.

Operating segments are presented using the 'management approach', where the information presented is on thesame basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM isresponsible for the allocation of resources to operating segments and assessing their performance.

Foreign currency transactions

Foreign operations

Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and therevenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

Revenue recognition

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at thereporting date. The revenues and expenses of foreign operations are translated into Australian dollars using theaverage exchange rates, which approximates the rate at the date of the transaction, for the period. All resultingforeign exchange differences are recognised in the foreign currency reserve in equity.

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates ofthe transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from thetranslation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currenciesare recognised in profit or loss.

The financial report is presented in Australian dollars, which is Transol Corporation Limited's functional andpresentation currency.


Rendering of services - CLTNet Pty Ltd Revenue is recognised as services are rendered and the risks and rewards are transferred to the customer and thereis a valid sales contract. Revenue includes royalty, licence, maintenance, and consultancy fees. Revenue isrecognised on an accrual basis in accordance with the substance of the relevant agreement. Revenue determined ona time basis is recognised on a straight line basis over the period of the agreement.

Operating segments

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30 June 2011

●

● When the taxable temporary difference is associated with investments in subsidiaries, associates orinterests in joint ventures, and the timing of the reversal can be controlled and it is probable that thetemporary difference will not reverse in the foreseeable future.

A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as heldfor sale and that represents a separate major line of business or geographical area of operations, is part of a singleco-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusivelywith a view to resale. The results of discontinued operations are presented separately on the face of the statement ofcomprehensive income.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply whenthe assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,except for:

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assetsagainst current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the sametaxable authority on either the same taxable entity or different taxable entity's which intend to settle simultaneously.

Current TaxThe tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in theconsolidated statement of comprehensive income because of items of income or expense that are taxable ordeductible in other years and items that are never taxable or deductible. The consolidated entity’s liability for currenttax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on theapplicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributableto temporary differences and unused tax losses and under and over provision in prior periods, where applicable.

Income tax


Discontinued operations

When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset orliability in a transaction that is not a business combination and that, at the time of the transaction, affectsneither the accounting nor taxable profits; or

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probablethat future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferredtax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be availablefor the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extentthat it is probable that there are future taxable profits available to recover the asset.

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Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired orhave been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.

Investments and other financial assets are measured at either amortised cost or fair value depending on theirclassification. Classification is determined based on the purpose of the acquisition and subsequent reclassification toother categories is restricted. The fair values of quoted investments are based on current bid prices. For unlistedinvestments, the consolidated entity establishes fair value by using valuation techniques. These include the use ofrecent arms length transactions, reference to other instruments that are substantially the same, discounted cash flowanalysis, and option pricing models.

Investments and other financial assets

Going concern

Other receivables are recognised at amortised cost, less any provision for impairment.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable arewritten off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised whenthere is objective evidence that the consolidated entity will not be able to collect all amounts due according to theoriginal terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enterbankruptcy or financial reorganisation and default or delinquency in payments (more than 60 days overdue) areconsidered indicators that the trade receivable may be impaired. The amount of the impairment allowance is thedifference between the asset’s carrying amount and the present value of estimated future cash flows, discounted atthe original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect ofdiscounting is immaterial.


Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using theeffective interest method, less any provision for impairment. Trade receivables are generally due for settlement within30 days.

The directors believe the consolidated entity will be able to continue as a going concern and meet its debts andcommitments as they fall due for the next 12 months.

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,highly liquid investments with original maturities of three months or less that are readily convertible to known amountsof cash and which are subject to an insignificant risk of changes in value.

The consolidated entity has prepared this financial report on a going concern basis which assumes the realisation iofassets and the extinguishment of liabilities in the normal course of business at the amount stated in the financialstatements.

The consolidated entity experienced operating losses and negative operating cash flows during the year ended 30June 2011 and as such there is a material uncertainty about the consolidated entity's ability to continue as a goingconcern. The continuing viability of the consolidated entity and its ability to continue as a going concern and meet itsdebts and commitments as they fall due are subject to estimating revenue from its investment in CLTNet project andsales, revenue from Valleyarm Digital Pty Ltd, establishing renenue from future investments and/or accessingadditional capital.

Subsequent to the end of the financial year, the company announced that it intended undertaking a non renounceablerights issue whereby shareholders would be offered two new shares for every three shares held at the Record date at$0.001 per new share. Each new share comes with a free attaching option exercisable at $0.002 on or before 20December 2014. On 22 August 2011, the rights issue closed receiving subscriptions of 336,158,532 shares (and freeattaching options) representing $336,158.53. The company intends placing the shortfall of 427,841,468 sharesrepresenting $427,841.47.



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Available-for-sale financial assets are considered impaired when there has been a significant or prolonged decline invalue below initial cost. Subsequent increments in value are recognised directly in the available-for-sale reserve.

An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to theconsolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit orloss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.

The consolidated entity assesses at the end of each reporting period whether there is any objective evidence that afinancial asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of theissuer or obligor; a breach of contract such as default or delinquency in payments; the lender granting to a borrowerconcessions due to economic or legal reasons that the lender would not otherwise do; it becomes probable that theborrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for thefinancial asset; or observable data indicating that there is a measurable decrease in estimated future cash flows.


3 - 5 years

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical costincludes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant andequipment (excluding land) over their expected useful lives as follows:


Impairment of financial assets

Plant and equipment

Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets, principally equity securities, that are eitherdesignated as available-for-sale or not classified as any other category. After initial recognition, fair value movementsare recognised directly in the available-for-sale reserve in equity. Cumulative gain or loss previously reported in theavailable-for-sale reserve is recognised in profit or loss when the asset is derecognised or impaired.

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at eachreporting date.

The amount of the impairment allowance for loans and receivables carried at amortised cost is the differencebetween the asset’s carrying amount and the present value of estimated future cash flows, discounted at the originaleffective interest rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that wouldhave been had the impairment not been recognised and is reversed to profit or loss.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted inan active market. They are carried at amortised cost using the effective interest rate method. Gains and losses arerecognised in profit or loss when the asset is derecognised or impaired.

Loans and receivables

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Intangible assets

GoodwillWhere an entity or operation is acquired in a business combination, the identifiable net assets acquired are measuredat fair value. The excess of the fair value of the cost of the acquisition over the fair value of the identifiable net assetsacquired is brought to account as goodwill. Goodwill is not amortised. Instead, goodwill is tested annually forimpairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carriedat cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are notsubsequently reversed.

Patents and licences

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fairvalue at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Intangibleassets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised inprofit or loss arising from the derecognition of intangible assets are measured as the difference between net disposalproceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangibles arereviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively bychanging the amortisation method or period.

Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over theperiod of their expected benefit, being their finite life of 10 years.

Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current iscarried forward as an asset in the statement of financial position where it is expected that the expenditure will berecovered through the successful development and exploitation of an area of interest, or by its sale; or explorationactivities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of theexistence or otherwise of economically recoverable reserves. Where a project or an area of interest has beenabandoned, the expenditure incurred thereon is written off in the year in which the decision is made.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that thecarrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amountof the exploration and evaluation asset (or the cash-generating unit(s) to which it has been allocated, being no largerthan the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where animpairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of itsrecoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amountthat would have been determined had no impairment loss been recognised for the asset in previous years.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies,exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation andamortisation of assets used in exploration and evaluation activities. General and administrative costs are onlyincluded in the measurement of exploration and evaluation costs where they are related directly to operationalactivities in a particular area of interest.


Exploration and evaluation assets assets

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These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of thefinancial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and notdiscounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Finance costs

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially allthe risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessoreffectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the present value of minimum leasepayments. Lease payments are allocated between the principal component of the lease liability and the finance costs,so as to achieve a constant rate of interest on the remaining balance of the liability.

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are testedannually for impairment, or more frequently if events or changes in circumstances indicate that they might beimpaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by whichthe asset's carrying amount exceeds its recoverable amount.

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangementand requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific assetor assets and the arrangement conveys a right to use the asset.

Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date,the loans or borrowings are classified as non-current.

Impairment of non-financial assets

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs areexpensed in the period in which they are incurred, including:

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of theasset’s useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtainownership at the end of the lease term.

Trade and other payables

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.They are subsequently measured at amortised cost using the effective interest method.


Leases

Recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. The value-in-use is thepresent value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to theasset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows aregrouped together to form a cash-generating unit.

Borrowings

- interest on hire purchases- interest on short-term and long-term borrowings

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●

●

Wages and salaries, annual leave and sick leave

Equity-settled and cash-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchangefor the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where theamount of cash is determined by reference to the share price.

from the end of the vesting period until settlement of the award, the liability is the full fair value of the liabilityat the reporting date.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over thevesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award,the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. Theamount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date lessamounts already recognised in previous periods.

All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cashpaid to settle the liability.

Provisions

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leaveexpected to be settled within 12 months of the reporting date are recognised in current liabilities in respect ofemployees' services up to the reporting date and are measured at the amounts expected to be paid when theliabilities are settled. Non-accumulating sick leave is expensed to profit or loss when incurred.

Employee benefits


Market conditions are taken into consideration in determining fair value. Therefore any awards subject to marketconditions are considered to vest irrespective of whether or not that market condition has been met, provided all otherconditions are satisfied.

Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of apast event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can bemade of the amount of the obligation. The amount recognised as a provision is the best estimate of the considerationrequired to settle the present obligation at the reporting date, taking into account the risks and uncertaintiessurrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-taxrate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a financecost.

Share-based payments

The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying eitherthe Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which theaward was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independentlydetermined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price,the term of the option, the impact of dilution, the share price at grant date and expected price volatility of theunderlying share, the expected dividend yield and the risk free interest rate for the term of the option, together withnon-vesting conditions that do not determine whether the consolidated entity receives the services that entitle theemployees to receive payment. No account is taken of any other vesting conditions.

during the vesting period, the liability at each reporting date is the fair value of the award at that datemultiplied by the expired portion of the vesting period.

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Business combinations

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equityinstruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree ismeasured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisitioncosts are expensed as incurred to profit or loss.


If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remainingexpense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelledand new award is treated as if they were a modification.

Contributed equity

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controllinginterest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existinginvestment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value isless than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the differenceis recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessmentof the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any,the consideration transferred and the acquirer's previously held equity interest in the acquirer.

Ordinary shares are classified as equity.

Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equityinterest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previouscarrying amount is recognised in profit or loss.

The acquisition method of accounting is used to account for business combinations regardless of whether equityinstruments or other assets are acquired.

If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy thecondition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employeeand is not satisfied during the vesting period, any remaining expense for the award is recognised over the remainingvesting period, unless the award is forfeited.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net oftax, from the proceeds.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not beenmade. An additional expense is recognised, over the remaining vesting period, for any modification that increases thetotal fair value of the share-based compensation benefit as at the date of modification.

On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilitiesassumed for appropriate classification and designation in accordance with the contractual terms, economicconditions, the consolidated entity's operating or accounting policies and other pertinent conditions in existence at theacquisition-date.

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Comparative figures


Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxauthority.

Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of the entity after deduction of allits liabilities. Equity instruments issued by the Group are recognised as proceeds received net of direct issue costs.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financingactivities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.


Goods and Services Tax ('GST') and other similar taxes

Financial liabilities and equity instruments issued by the Group

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is notrecoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or aspart of the expense.


Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GSTrecoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement offinancial position.

When required by Accounting Standards, comparative figures have been restated to conform to changes inpresentation for the current period.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take intoaccount the after income tax effect of interest and other financing costs associated with dilutive potential ordinaryshares and the weighted average number of shares assumed to have been issued for no consideration in relation todilutive potential ordinary shares.

Basic earnings per share is calculated by dividing the profit attributable to the owners of Transol Corporation Limited,excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinaryshares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during thefinancial year.

Earnings per share

Classification as debt or equityDebt and equity instruments are classified as either financial liabilities or as equity in accordance with the substanceof the contractual arrangement.

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Financial liabilitiesFinancial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'.

These amendments are applicable to annual reporting periods beginning on or after 1 January 2011. Theseamendments make numerous editorial amendments to a range of Australian Accounting Standards andInterpretations, which have no major impact on the requirements of the amended pronouncements. The mainamendment is to AASB 8 'Operating Segments' and requires an entity to exercise judgement in assessing whether agovernment and entities known to be under the control of that government are considered a single customer for thepurposes of certain operating segment disclosures. The adoption of these amendments from 1 July 2011 will nothave a material impact on the consolidated entity.

Other financial liabilitiesOther financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Otherfinancial liabilities are subsequently measured at amortised cost using the effective interest rate method, with interestexpense recognised on an effective yield basis.

This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1January 2013 and completes phase I of the IASB's project to replace IAS 39 (being the international equivalent toAASB 139 'Financial Instruments: Recognition and Measurement'). This standard introduces new classification andmeasurement models for financial assets, using a single approach to determine whether a financial asset ismeasured at amortised cost or fair value. To be classified and measured at amortised cost, assets must satisfy thebusiness model test for managing the financial assets and have certain contractual cash flow characteristics. All otherfinancial instrument assets are to be classified and measured at fair value. This standard allows an irrevocableelection on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in othercomprehensive income, with dividends as a return on these investments being recognised in profit or loss. In addition,those equity instruments measured at fair value through other comprehensive income would no longer have to applyany impairment requirements nor would there be any ‘recycling’ of gains or losses through profit or loss on disposal.The accounting for financial liabilities continues to be classified and measured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relating to the entity’s own credit risk is to be presented inother comprehensive income unless it would create an accounting mismatch. The consolidated entity will adopt thisstandard from 1 July 2013 but the impact of its adoption is yet to be assessed by the consolidated entity.

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yetmandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June2011. The consolidated entity's assessment of the impact of these new or amended Accounting Standards andInterpretations, most relevant to the consolidated entity, are set out below.

AASB 9 Financial Instruments, 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and2010-7 Amendments to Australian Accounting Standards arising from AASB 9

New Accounting Standards and Interpretations not yet mandatory or early adopted


Financial liabilities are classified at FVTPL when the financial liability is either held for trading or designated as atFVTPL. A financial liability is classified as held for trading if it has been acquired for the purpose of repurchasing it inthe near term or on initial recognition it is part of a portfolio of identified financial instruments the the Group managestogether and has a recent actual pattern of short-term profit-taking. Financial assets are stated at fair value, with anygains or losses arising on remeasurement recognised in profit and loss.


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AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual ImprovementsProject

This revised standard is applicable to annual reporting periods beginning on or after 1 January 2011. This revisedstandard simplifies the definition of a related party by clarifying its intended meaning and eliminating inconsistenciesfrom the definition. The definition now identifies a subsidiary and an associate with the same investor as relatedparties of each other; entities significantly influenced by one person and entities significantly influenced by a closemember of the family of that person are no longer related parties of each other; and whenever a person or entity hasboth joint control over a second entity and joint control or significant influence over a third party, the second and thirdentities are related to each other. This revised standard introduces a partial exemption of disclosure requirement forgovernment-related entities. The adoption of this standard from 1 July 2011 will not have a material impact on theconsolidated entity.


AASB 2010-8 Amendments to Australian Accounting Standards- Deferred Tax: Recovery of Underlying Assets


AASB 124 Related Party Disclosures (December 2009)

These amendments are applicable to annual reporting periods beginning on or after 1 January 2011. Theseamendments makes numerous editorial amendments to a range of Australian Accounting Standards andInterpretations, including amendments to reflect changes made to the text of International Financial ReportingStandards by the International Accounting Standards Board. The adoption of these amendments from 1 July 2011 willnot have a material impact on the consolidated entity.

AASB 2010-6 Amendments to Australian Accounting Standards - Disclosures on Transfers of Financial Assets

These amendments are applicable to annual reporting periods beginning on or after 1 January 2011. Theseamendments are a consequence of the annual improvements project and make numerous non-urgent but necessaryamendments to a range of Australian Accounting Standards and Interpretations. The amendments provideclarification of disclosures in AASB 7 'Financial Instruments: Disclosures', in particular emphasis of the interactionbetween quantitative and qualitative disclosures and the nature and extent of risks associated with financialinstruments; clarifies that an entity can present an analysis of other comprehensive income for each component ofequity, either in the statement of changes in equity or in the notes in accordance with AASB 101 'Presentation ofFinancial Instruments'; and provides guidance on the disclosure of significant events and transactions in AASB 134'Interim Financial Reporting'. The adoption of these amendments from 1 July 2011 will not have a material impact onthe consolidated entity.

These amendments are applicable to annual reporting periods beginning on or after 1 January 2012 and a practicalapproach for the measurement of deferred tax relating to investment properties measured at fair value, property, plantand equipment and intangible assets measured using the revaluation model. The measurement of deferred tax forthese specified assets is based on the presumption that the carrying amount of the underlying asset will be recoveredentirely through sale, unless the entity has clear evidence that economic benefits of the underlying asset will beconsumed during its economic life. The consolidated entity is yet to quantify the tax effect of adopting theseamendments from 1 July 2012.

These amendments are applicable to annual reporting periods beginning on or after 1 July 2011. These amendmentsadd and amend disclosure requirements in AASB 7 about transfer of financial assets, including the nature of thefinancial assets involved and the risks associated with them. The adoption of these amendments from 1 July 2011 willincrease the disclosure requirements on the consolidated entity when an asset is transferred but is not derecognisedand new disclosure required when assets are derecognised but the consolidated entity continues to have a continuingexposure to the asset after the sale.

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IAS 1 (AASB 101) Presentation of Financial Statements (Revised)This revised standard is applicable to annual reporting periods beginning on or after 1 July 2012. The amendmentsrequires grouping together of items within other comprehensive income on the basis of whether they will eventually be‘recycled’ to the profit or loss. The change provides clarity about the nature of items presented as othercomprehensive income and their future impact. The adoption of the revised standard from 1 July 2012 will impact theconsolidated entity’s presentation of its statement of comprehensive income.

AASB 1054 Australian Additional DisclosuresThis Standard is applicable to annual reporting periods beginning on or after 1 July 2011. The standard sets out theAustralian-specific disclosures, which are in addition to International Financial Reporting Standards, for entities thathave adopted Australian Accounting Standards. The adoption of these amendments from 1 July 2011 will not have amaterial impact on the consolidated entity.

AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Projectand AASB 2011-2 Amendments to Australian Accounting Standards arising from the Trans-Tasman ConvergenceProject – Reduced Disclosure RequirementsThese amendments are applicable to annual reporting periods beginning on or after 1 July 2011. They make changesto a range of Australian Accounting Standards and Interpretations for the purpose of closer alignment to IFRSs andharmonisation between Australian and New Zealand Standards. The amendments remove certain guidance anddefinitions from Australian Accounting Standards for conformity of drafting with International Financial ReportingStandards but without any intention to change requirements. The adoption of these amendments from 1 July 2011 willnot have a material impact on the consolidated entity.

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management PersonnelDisclosure RequirementThese amendments are applicable to annual reporting periods beginning on or after 1 July 2013, with early adoptionnot permitted. They amend AASB 124 ‘Related Party Disclosures’ by removing the disclosure requirements forindividual key management personnel (KMP). The adoption of these amendments from 1 July 2013 will remove theduplication of relating to individual KMP in the notes to the financial statements and the directors report. As theaggregate disclosures are still required by AASB 124 and during the transitional period the requirements may beincluded in the Corporations Act or other legislation, it is expected that the amendments will not have a materialimpact on the consolidated entity.

AASB 2011-5 Amendments to Australian Accounting Standards – Extending Relief from Consolidation, the EquityMethod and Proportionate Consolidation and AASB 2011-6 Amendments to Australian Accounting Standards –Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation – Reduced DisclosureRequirementsAASB 2011-5 is applicable to annual reporting periods beginning on or after 1 July 2011 and AASB 2011-6 on or after1 July 2013. These amendments extend relief from consolidation, the equity method and proportionate consolidationwhere the ultimate or intermediate parent applies not-for-profit Aus paragraphs in Australian IFRSs as adopted inAustralia, or Australian Accounting Standards – Reduced Disclosure Requirements (RDR). The adoption of theseamendments from 1 July 2011 and 1 July 2013 respectively will not have impact on the consolidated entity.

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The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment,whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with theaccounting policy stated in note 1. The recoverable amounts of cash-generating units have been determined basedon value-in-use calculations. These calculations require the use of assumptions, including estimated discount ratesbased on the current cost of capital and growth rates of the estimated future cash flows.

The consolidated entity is required to classify financial instruments, measured at fair value, using a three levelhierarchy, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices)or indirectly (derived from prices); and Level 3: Inputs for the asset or liability that are not based on observable marketdata (unobservable inputs). An instrument is required to be classified in its entirety on the basis of the lowest level ofvaluation inputs that is significant to fair value. Considerable judgement is required to determine what is significant tofair value and therefore which category the financial instrument is placed in can be subjective.

The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level ofprovision is assessed by taking into account the recent sales experience, the ageing of receivables, historicalcollection rates and specific knowledge of the individual debtors financial position.

Provision for impairment of receivables

The fair value of financial instruments classified as level 3 is determined with reference to recent transactions of asimilar nature and offers received by the consolidated entity.

Estimation of useful lives of assets

The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair valueof the equity instruments at the date at which they are granted. The fair value is determined by using either theBinomial or Black-Scholes model taking into account the terms and conditions upon which the instruments weregranted. The accounting estimates and assumptions relating to equity-settled share-based payments would have noimpact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profitor loss and equity.

Fair value and hierarchy of financial instruments

Goodwill and other indefinite life intangible assets

Share-based payment transactions

The preparation of the financial statements requires management to make judgements, estimates and assumptionsthat affect the reported amounts in the financial statements. Management continually evaluates its judgements andestimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases itsjudgements, estimates and assumptions on historical experience and on other various factors, including expectationsof future events, management believes to be reasonable under the circumstances. The resulting accountingjudgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptionsthat have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within thenext financial year are discussed below.

Note 2. Critical accounting judgements, estimates and assumptions

The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges forits property, plant and equipment and definite life intangible assets. The useful lives could change significantly as aresult of technical innovations or some other event. The depreciation and amortisation charge will increase where theuseful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have beenabandoned or sold will be written off or written down.

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The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite lifeintangible assets at each reporting date by evaluating conditions specific to the consolidated entity and to theparticular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset isdetermined. This involves fair value less costs to sell or value-in-use calculations, which incorporate a number of keyestimates and assumptions.

The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement isrequired in determining the provision for income tax. There are many transactions and calculations undertaken duringthe ordinary course of business for which the ultimate tax determination is uncertain. The consolidated entityrecognises liabilities for anticipated tax audit issues based on the consolidated entity’s current understanding of thetax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences willimpact the current and deferred tax provisions in the period in which such determination is made.

Lease make good provision

Note 2. Critical accounting judgements, estimates and assumptions (continued)

Income tax

Impairment of non-financial assets other than goodwill and other indefinite life intangible assets

A provision has been made for the present value of anticipated costs for future restoration of leased premises. Theprovision includes future cost estimates associated with closure of the premises. The calculation of this provisionrequires assumptions such as application of closure dates and cost estimates. The provision recognised for each siteis periodically reviewed and updated based on the facts and circumstances available at the time. Changes to theestimated future costs for sites are recognised in the statement of financial position by adjusting both the expense orasset, if applicable, and provision.

The consolidated entity is organised into four (4) operating segments: Mining exploration, CLTNet, Digital Music andVideo and Mangement Services. These operating segments are based on the internal reports that are reviewed andused by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessingperformance and in determining the allocation of resources. There is no aggregation of operating segments.

Identification of reportable operating segments

Note 3. Operating segments

The CODM reviews both adjusted earnings before interest, tax, depreciation and amortisation (segment result) andprofit before income tax.

The information reported to the CODM is on at least a monthly basis.

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unallocated Consolidated$ $ $ $ $ $

828,563 329,885 861,029 - 2,019,477 - - - 218,137 (218,137) -

828,563 329,885 861,029 218,137 (218,137) 2,019,477 - - 238 643,173 643,411

828,563 329,885 861,267 861,310 (218,137) 2,662,888

459,791 (36,626) (267,442) (104,960) - 50,763 (3,028) - - (11,089) - (14,117)

- (50,000) (256,987) - - (306,987) - - - (1,642) - (1,642)

456,763 (86,626) (524,429) (117,691) - (271,983) -

(271,983)

- 95,197 81,694 1,313,322 26,933 1,517,146 1,517,146

- - - 1,133,600 1,133,600

- 313,369 17,487 - - 330,856 330,856

CLTNet Management

Sales to external customers

Segment assets

Intersegment sales

Segment liabilities

Operating segment information

Mining &

Total revenue

Total assets

2011

Total sales revenue

Digital music

Liabilities

Other income

Loss after income tax expense


Acquisition of non-current assets

Depreciation and amortisation

Note 3. Operating segments (continued)

eliminations/

Total assets includes:

Exploration

Finance costs

(Discontinued)

Total liabilities

Income tax expense

Segment result

Assets

Revenue

services

Profit/(loss) before income tax expense

Intersegment

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unallocated Consolidated$ $ $ $ $ $

1,599,916 189,291 17,794 93,489 - 1,900,490 - - 326,225 (326,225) -

1,599,916 189,291 17,794 419,714 (326,225) 1,900,490 1,599,916 189,291 17,794 419,714 (326,225) 1,900,490

998,454 (330,963) (91,007) (455,180) - 121,304 (3,936) - - (10,799) - (14,735)

- (205,000) - - - (205,000) - - - (2,847) - (2,847)

994,518 (535,963) (91,007) (468,826) - (101,278) -

(101,278)

661,471 78,808 30,870 1,412,741 (622,499) 1,561,391 1,561,391

119,732 - - 108,097 - 227,829

5,079,057 819,078 144,629 72,274 (5,836,501) 278,537 278,537

2011 2010 2011 2010$ $ $ $

911,557 93,489 1,166,270 141,057 329,885 189,291 - 631,534

- 1,599,916 - - - 17,794 - -

1,241,442 1,900,490 1,166,270 772,591

Geographical information

Australia

(Discontinued)eliminations/exploration

Profit/(loss) before income tax expenseIncome tax expense


Major Customers

New Zealand Transport Authority was a major customer for CLTNet NZ.

Total revenue

Liabilities


Finance costs

Segment liabilities

Total assets includes:

Segment result

Acquisition of non-current assets


CLTNet

2010

Total sales revenue

CambodiaAsia

Intersegment sales

The geographical non-current assets above are exclusive of, where applicable, financial instruments, deferred taxassets, post employment benefits assets and rights under insurance contracts.

New Zealand

AssetsSegment assets

Note 3. Operating segments (continued)

Mining &


Intersegment

Geographicalnon-current assets

ManagementDigital music

Loss after income tax expense

Total liabilities

Revenue

services

Total assets

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2011 2010$ $

328,686 189,207 861,029 17,794

- - 1,189,715 207,001

11,310 27,790 - 811

160,067 64,972 - - 171,377 93,573

- - 1,361,092 300,574

2011 2010$ $

420,531 - 52,702 -

- - 473,233 -

2011 2010$ $

11,089 15,723

- 205,000 207,277 - 50,000 227,702

(290) (355)

- - 256,987 432,347

Plant and equipment

Other revenueInterest received - other persons

Professional services revenue

Consolidated

From continuing operations

Sales revenue

Net gain on disposal of investments

Consolidated

Other revenueProfit on sale of plant and equipment

Consolidated

Revenue from continuing operations

Note 5. Other income

Note 6. Expenses

Loss before income tax includes the following specific expenses:

Loans to related entities

Total impairment

Trademarks and licences

Digital music sales

Other income

Impairment


Depreciation

Reversal of provision for impairment of assets

Note 4. Revenue

Write back of investment in associate

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2011 2010$ $

1,642 2,847

48,497 137,621

862,065 257,311

2011 2010$ $

(728,746) (1,095,796)

456,763 994,518

- - (271,983) (101,278)

(81,595) (30,383)

77,096 - 5,916 118,566

165,288 430,329 (47,756) (30,436)

- (488,076)(52,133) - (51,005) - (15,811) -

- - - -

4,139,536 11,961,943

- - 1,241,861 3,588,583

Income tax expense

Consolidated

Non allowable items

Interest and finance charges paid/payable

Rental expense relating to operating leases


Potential tax benefit @ 30%

Loss before income tax expense from continuing

Note 6. Expenses (continued)

Other assessable items

Tax losses not bought to account

Consolidated

Tax losses not recognised

Taxable loss on sale of assetsOther non-assessable

Accounting gain on sale of assets


Numerical reconciliation of income tax expense to prima facie tax payable

Note 7. Income tax expense

Profit before income tax expense from discontinued operations

Other allowable items

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:

Minimum lease payments

The above potential tax benefit for tax losses has not been recognised in the statement of financial position. Thesetax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the samebusiness test is passed.

Finance costs

Tax at the Australian tax rate of 30%


Unused tax losses for which no deferred tax asset has been recognised

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2011 2010$ $

581,807 1,599,916 - - 581,807 1,599,916

(8,525) (230,620)(151,260) (213,393)

- (27,651)(3,027) (3,936)(2,490) -

- (113)(32,194) (31,565)

(174,304) (98,120) - - (371,800) (605,398)

- - 210,007 994,518 - - - -

- - 210,007 994,518

246,756 - - - - -

- - 246,756 -

- - 456,763 994,518

2011 2010$ $

(4,471) 9,280

- - (4,471) 9,280

Administration and corporate expenses

Financial performance information

Note 8. Discontinued operations

Gain on sale after income tax expense

Total expenses

Income tax expense

Other expenses

Total revenue

Income tax expense

The financial performance presented below is for the period 1 July 2010 - 7 June 2011.

Cash flow information

Consolidated

Net cash from/(used in) operating activities


Profit before income tax expense

Legal and professional fees

On 7 June 2011, Transol Corporation Limited sold its shares in Liberty Mining International Pty Ltd and its subsidiaries ('LMI Group') which comprised its mining industry business. The disposal of the LMI Group is disclosed in thefinancial report as a discontinued operation.

Advertising and marketing

Sale of tenements

Description

Depreciation and amortisation expense

Occupancy costs

Net increase/(decrease) in cash and cash equivalents from discontinued operations

Gain on sale before income tax

Profit after income tax expense

Profit after income tax expense from discontinued operations

Consolidated

Loss on sale of assets

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2011 2010$ $

6,895 - 250

71,729 - 591,818 -

- - 670,692 -

23,936 - - - 23,936 -

- - 646,756 -

2011 2010$ $

748,062 - (646,756) - 145,450 -

- - 246,756 - - - - -

- - 246,756 -

2011 2010$ $

15 1,225 92,842 218,021 95,535 474,916

- - 188,392 694,162


Consolidated


Total liabilities

Note 8. Discontinued operations (continued)

Cash on deposit

Derecognition of foreign currency reserve

The total purchase consideration is made up of $558,992 of cash received plus shares valued at $188,600. Theproceeds recognised in the Statement of Cash Flows is $552,097 which is net of the $6,895 of cash disposed of.

Exploration & evaluation assets

Note 9. Current assets - cash and cash equivalents

Carrying amounts of assets and liabilities

Income tax expense

Net assets

Details of the sale

Total assets

Gain on sale after income tax

Consolidated


Trade and other payables

Gain on sale before income tax

Consolidated

Carrying amount of net assets soldTotal sale consideration

Cash on handCash at bank

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2011 2010$ $

253,775 29,736 (207,277) -

- - 46,498 29,736

580 1,488 444 -

39,415 13,124

- - 86,937 44,348

2011 2010$ $

207,277 -

2011 2010$ $

207,277 -

2011 2010$ $

6,362 7,000 69,185 43,290

- - 75,547 50,290

Note 11. Current assets - other current assets

Additional provisions recognised

PrepaymentsOther debtors

Consolidated

The ageing of the impaired receivables recognised above are as follows:

Other receivables

Trade receivables

Interest receivable

Consolidated

Movements in the provision for impairment of receivables are as follows:

The consolidated entity has recognised a loss of $207,277 (30 June 2010: $Nil) in profit or loss in respect of provisionfor impairment of receivables for the year.

Consolidated

Note 10. Current assets - trade and other receivables

$86,937 (2010: $44,348) in trade and other receivables are current and not impaired and not past due.

Consolidated

Less: Provision for impairment of receivables

GST receivable

Over 6 months overdue

Impairment of receivables

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2011 2010$ $

- 150,000 225,000 175,000

- (52,702)(225,000) (175,000)

- - - 97,298

Loan - other entitiesLoan - asssociated entities

As at 1 July 2010 the provision for impairment of loans to other entities was $175,000. During the year ended 30 June2011 a provison for impairment of loans to other entities of $50,000 was raised without any reversal of the provision.This resulted in a total provision for impairment of laons to other entities at 30 June 2010 of $225,000.

The loans outstanding have been fully provided for.

Enhanced Biogenic Methane Pty Ltd, an associated entity was sold during the period and the loan ($150,000) andimpairment ($52,702) have been brought to account against the proceeds of the sale during the year. The $52,702provision was raised in the prior year.

As at 1 July 2009 the provision for impairment of loans to other entities was $nil. During the year ended 30 June 2010a provison for impairment of loans to other entities of $175,000 was raised without any reversal of the provision. Thisresulted in a total provision for impairment of laons to other entities at 30 June 2010 of $175,000.

Note 12. Non-current assets - other financial assets

Consolidated

Provision for impairment of loans - other entitiesProvision for impairment of loans - associated entities

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2011 2010$ $

188,600 - 825,000 - 120,000 -

- - 1,133,600 -

- - 1,165,000 -

(41,400) - 10,000 -

- - 1,133,600 -

2011 2010$ $

71,892 181,226 (39,222) (54,301)

- - 32,670 126,925

Reconciliation

Shares in the Australian listed entity were received from related entity, Regal Resources Limited, in consideration ofsale of investment.

Consolidated

Reconciliation of the fair values at the beginning and end of the current and previous financial year are set out

Revaluation increments

Consolidated

Closing fair value

Disposals

The directors have determined that the fair value of the shares in the Australian unlisted entity carried at cost cannotbe reliably measured as variability in the range of reasonable fair value estimates is significant. Consequently theinvestment has been recognised at cost and their fair values have also been stated at cost in the table above.

Listed - shares in Australian listed entity - at fair value

AdditionsOpening fair value

Shares in the overseas unlisted entity, Prairie Pacific Mining Corporation, were received as proceeds on the sale ofthe LMI Group and have been valued at fair value. The fair value is based on a current offer received by the Group forsale of the investment.

Unlisted - shares in overseas unlisted entity - at fair valueUnlisted - shares in Australian unlisted entity - at cost

Note 14. Non-current assets - property, plant and equipment

Less: Accumulated depreciation

Note 13. Non-current assets - available-for-sale financial assets

Refer to note 24 for detailed information on financial instruments.

Plant and equipment - at cost

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Total$ $ $ $ $ $

- - - - 111,760 111,760 - - - - 82,163 82,163 - - - - (47,339) (47,339) - - - - (19,659) (19,659)

- - - - 126,925 126,925 - - - - (80,138) (80,138) - - - - (14,117) (14,117)

- - - - 32,670 32,670

2011 2010$ $

- 1,050,862 - (1,050,862)

- - - -

205,000 205,000 (205,000) (205,000)

- - - -

- - - -


Additions

Reconciliations

Less: Impairment

Consolidated

Plant & Equip

Note 15. Non-current assets - intangibles

Note 14. Non-current assets - property, plant and equipment (continued)

Depreciation expense


Disposals

Depreciation expense

Reconciliations of the written down values at the beginning and end of the current and previous financial year are setout below:

Consolidated

Disposals

Patents and licences - at costLess: Impairment

During the previous period the consolidated entity reviewed indicators of impairment in the value of trademarks andlicences in QL (Aust) Pty Ltd, and impaired their full amount of $205,000.

During the period ending 30 June 2009, impairment of $1,050,862 was recognised in respect of the goodwill onconsolidation of the LMI Group. The impairment resulted from the under performance of the LMI Group and itsassociated exploration assets.

The goodwill is in relation to the LMI Group which was disposed. Refer note 8.


Goodwill - at cost

$3,028 in depreciation expense and $80,138 in disposals relate to the disposal of the LMI Group.

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2011 2010$ $

- 548,368

Total$ $ $ $ $ $

500,000 500,000 48,368 48,368

- - - - 548,368 548,368 43,450 43,450

(591,818) (591,818)

- - - - - -

2011 2010$ $

240,831 54,718 17,487 217,599

- - 258,318 272,317

2011 2010$ $

50,000 - 4,606 -

- - 54,606 -

Exploration

Consolidated

Note 16. Non-current assets - exploration and evaluation assets


Note 17. Current liabilities - trade and other payables

Additions


Consolidated

Exploration and evaluation - at cost

AdditionsDisposals


ReconciliationsReconciliations of the written down values at the beginning and end of the current and previous financial year are setout below:

The goodwill is in relation to the LMI Group which was disposed. Refer note 8.

Trade payablesSundry payables and accrued expenses

Hire purchase

Consolidated


Unsecured Loan - Related entity

Consolidated

Note 18. Current liabilities - borrowings

The loan from Northern Star Holding Limited, a related entity of Mr Adrien Wing, is unsecured, at no interest and atcall.

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2011 2010$ $

4,606 -

2011 2010$ $

5,932 2,886

2011 2010$ $

12,000 -

Lease makegood

$ $ $ $ $

- 12,000

- - - - 12,000

Consolidated

Carrying amount at the start of the year

Movements in provisions

Consolidated - 2011

Movements in each class of provision during the current financial year, other than employee benefits, are set outbelow:

Note 19. Current liabilities - employee benefits

Note 20. Current liabilities - provisions

Additional provisions recognised

Other

Annual leave

Consolidated

Assets pledged as security

Carrying amount at the end of the year

Note 18. Current liabilities - borrowings (continued)

Hire purchase

Total secured liabilities

Consolidated

The lease liabilities are effectively secured as the rights to the leased assets recognised in the statement of financialposition revert to the lessor in the event of default.

The total secured current liabilities are as follows:

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2011 2010$ $

- 3,334

2011 2010$ $

4,606 3,334

2011 2010 2011 2010Shares Shares $ $

1,145,867,926 975,867,926 22,794,586 22,315,213

No of shares Issue price $

975,867,926 22,315,213

975,867,926 22,315,213 115,000,000 $0.003 345,000

- (30,627)30,000,000 $0.003 90,000 25,000,000 $0.003 75,000

1,145,867,926 22,794,586

Hire purchase

Total secured liabilities

Note 21. Non-current liabilities - borrowings

The lease liabilities are effectively secured as the rights to the leased assets recognised in the statement of financialposition revert to the lessor in the event of default.


Consolidated

Assets pledged as security

Details

Ordinary shares - fully paid

Ordinary shares

Consolidated

The total secured liabilities (current and non-current) are as follows:

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company inproportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value.

2 March 2011

Balance

Consolidated

Share issue costs

Hire purchase

Balance

Balance

30 June 2011

Issue of shares - Valleyarm acquisitionIssue of shares

Consolidated

Note 22. Equity - contributed

Date

Movements in ordinary share capital

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

7 June 2011

1 July 2009

Issue of shares30 June 201023 December 2010

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2011 2010$ $

10,000 - (18,419) 295,536 579,780 1,327,744

- - 571,361 1,623,280

Total$ $ $ $ $ $

307,340 1,327,745 - 1,635,085 (11,805) - (11,805)

- - 295,535 1,327,745 - 1,623,280 (168,504) - - (168,504)

- (747,965) (747,965) - - 10,000 10,000

(145,450) - - (145,450)

- - (18,419) 579,780 10,000 571,361

currency

Consolidated

In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid toshareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The consolidated entity's objectives when managing capital are to safeguard its ability to continue as a going concern,so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capitalstructure to reduce the cost of capital.



Derecognition on disposal of subsidiary

Note 23. Equity - reserves

Available-for

Capital risk management

Foreign

The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seenas value adding relative to the current parent entity's share price at the time of the investment. The consolidated entityis not actively pursuing additional investments in the short term as it continues to integrate and grow its existingbusinesses in order to maximise synergies.

Note 22. Equity - contributed (continued)

reserveGeneral

There is no current on-market share buy-back.

-sale

Consolidated

Available-for-sale adjustment

ReserveOptions

Foreign currency translationExpiry of options

Available-for-sale reserve


Options reserve

Share buy-back


Foreign currency reserve

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2011 2010 2011 2010$ $ $ $

- 636,593 - 5,044,639 52,293 43,174 25,564 12,675

52,293 679,767 25,564 5,057,314

New Zealand dollarsUS dollars

The reserve is used to recognise exchange differences arising from translation of the financial statements of foreignoperations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments inforeign operations.

The reserve is used to recognise increments and decrements in the fair value of available-for-sale financial assets.

Foreign currency reserve

The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilitiesat the reporting date was as follows:

Note 24. Financial instruments

The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk,price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk managementprogram focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on thefinancial performance of the consolidated entity. The consolidated entity uses different methods to measure differenttypes of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreignexchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios todetermine market risk.

Liabilities

The consolidated entity has a foreign subsidiary, but at reporting date there is no significant exposure to foreigncurrency risk.

Financial risk management objectives

Share-based payments reserve

Market risk

Foreign currency risk

Risk management is carried out by the Board. The policies employed to mitigate risk include identification andanalysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits. TheBoard identifies risk and evaluates the effectiveness of its responses.

Assets

Consolidated

Available-for-sale reserve

The reserve is used to recognise the value of equity benefits provided to employees and directors as part of theirremuneration, and other parties as part of their compensation for services.

Note 23. Equity - reserves (continued)

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Weighted average

interest rate Balance

Weighted average

interest rate Balance% $ % $

4.85 188,392 3.60 694,162

188,392 694,162

As at the reporting date, the consolidated entity had the following variable rate assets and liabilities:

The consolidated entity is exposed to significant price risk in available-for-sale financial assets based on marketconditions and volatility on listed investments and the inactive markets for unlisted investments. A sensitivity analysishas not been completed due to lack of information available to calculate fair value based on inputs.

Note 24. Financial instruments (continued)

In 2010 Transol Corporation Limited had significant exposure to one of its wholly-owned subsidiaries, Liberty MiningInternational Pty Ltd. The LMI Group was sold during the year.

Price risk

Credit risk

The consolidated entity is not exposed to any significant interest rate risk, and therefore no sensitivity analysis hasbeen completed.

At 30 June 2011 the total value of receivable past due was $207,277 (2010 : Nil) and an impairment has beenrecognised for the full amount past due.

During the period, a provision of $50,000 (2010: $nil) for non-recovery of a loan to Quicklinks.net was raised.

Credit risk is managed on a consolidated entity basis. Credit risk refers to the risk that a counterparty will default on itscontractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has a strict code ofcredit, including obtaining agency credit information, confirming references and setting appropriate credit limits. Theconsolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit riskat the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment ofthose assets, as disclosed in the statement of financial position and notes to the financial statements. Theconsolidated entity does not hold any collateral.


2011

Net exposure to cash flow interest rate risk

All financial instruments are stated at fair value except for the investment in shares in the Australian unlisted entitywhich is valued at the cost of acquisition due to the lack of information available to reliably calculate fair value.

2010

Interest rate risk

Consolidated

Price risk is assessed and managed by the Board on all financial instruments.

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Weighted average

interest rate1 year or

lessBetween 1 and 2 years

Between 2 and 5 years Over 5 years

Remaining contractual maturities

% $ $ $ $ $

- 240,831 - - - 240,831 - 17,487 - - 17,487 - 50,000 - - - 50,000

9.00 4,606 - - - 4,606 312,924 - - - 312,924

Weighted average

interest rate1 year or

lessBetween 1 and 2 years

Between 2 and 5 years Over 5 years


% $ $ $ $ $

- 257,817 - - - 257,817 - 14,500 - - - 14,500

272,317 - - - 272,317

Non-interest bearing

Consolidated - 2011

Non-derivatives


Other payablesOther loans

Trade payables

Hire purchase

Other loans

Trade payables

The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities.The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest dateon which the financial liabilities are required to be paid. The tables include both interest and principal cash flowsdisclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in thestatement of financial position.

The consolidated entity's working capital, being current assets less current liabilities was $20,020 at 30 June 2011.During the period the consolidated entity had negative net cash flows of $674,596. Based on the information on goingconcern in note 1, the directors are satisfied that the consolidated entity will have sufficient funds to pay its debts asand when they fall due.


The cash flows in the maturity analysis above are not expected to occur significantly earlier than disclosed.

Total non-derivatives

Non-derivatives

Consolidated - 2010

Total non-derivatives

Non-interest bearing

The consolidated entity manages liquidity risk by maintaining adequate cash reserves by continuously monitoringactual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash andcash equivalents) to be able to pay debts as and when they become due and payable.

Liquidity risk

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Level 1 Level 2 Level 3 Total$ $ $ $

120,000 - - 120,000 - - 825,000 825,000 - - 188,600 188,600

120,000 - 1,013,600 1,133,600

Total$ $ $ $ $

- -

- - - - -

188,600 188,600

825,000 825,000

- - - 1,013,600 1,013,600

The directors have determined that the fair value of the shares in the Australian unlisted entity carried at cost cannotbe reliably measured as variability in the range of reasonable fair value estimates is significant. Consequently theinvestment has been recognised at cost and their fair values have also been stated at cost in the table above.



Movements in level 3 financial instruments during the current and previous financial year are set out below:

Shares in the overseas unlisted entity, Prairie Pacific Mining Corporation, were received as proceeds on the sale ofthe LMI Group and have been valued at fair value. The fair value is based on a current offer received by the companyfor sale of the investment.

Investment in Prairie Pacific Mining Corp at fair value

Unlisted investment - shares in Australian unlisted entity

Changing one or more inputs would not significantly change the fair value of level 3 financial instruments.

All financial instruments are stated at fair value except for the investment in shares in the Australian unlisted entitywhich is valued at the cost of acquisition due to the lack of information available to reliably calculate fair value.

Movements in level 3 financial instruments

Available-


Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

Consolidated - 2011

Assets

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)


There were no transfers between levels during the financial year.

for-sale

Fair value of financial instruments

Consolidated - 2011

The following tables detail the consolidated entity's fair values of financial instruments categorised by the followinglevels:

Investment in Digistore Solutions International Pty Ltd at cost

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, eitherdirectly (as prices) or indirectly (derived from prices)

Listed investment - shares in Australian listed entity

Unlisted investment - shares in overseas unlisted entityTotal assets

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30 June 2011

Carrying amount Fair value

Carrying amount Fair value

$ $ $ $

188,392 188,392 694,162 694,162 93,299 93,299 44,348 44,348

1,133,600 1,133,600 - - 1,415,291 1,415,291 738,510 738,510

240,831 240,831 272,317 272,317 17,487 17,487 - - 50,000 50,000 - - 4,606 4,606 3,334 3,334

312,924 312,924 275,651 275,651

Other payables

Mr Greg Bound - Executive Director of CLTNet Pty Ltd

The following persons were directors of Transol Corporation Limited during the financial year:

Mr Richard Stanger - Executive Director (resigned 5 May 2011)Mr Phillip Jackson - Non-executive Director (resigned 16 September 2010)

Note 25. Key management personnel disclosures

Mr Adrien Wing - Non-executive Director (appointed 5 May 2011)

Directors


2010

Trade and other receivables - current

Shares in unlisted Australian entity are at cost.

Cash and cash equivalentsAssets

Mr Angus Edgar - Executive DirectorMr Martin Ralston - Non-executive Chairman

The following persons also had the authority and responsibility for planning, directing and controlling the majoractivities of the consolidated entity, directly or indirectly, during the financial year:

Mr Gary MacKenzie - Director of Valleyarm Digital Pty Ltd

Other key management personnel

Available-for-sale financial assets

Liabilities

2011

Consolidated

Other loans

Trade and other payables - current

Hire purchase

The fair values of financial assets and liabilities, together with their carrying amounts in the statement of financialposition, for the consolidated entity are as follows:

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30 June 2011

2011 2010$ $

621,898 403,500 4,590 4,590

- - 626,488 408,090

Balance at Received Balance atthe start of as part of Disposals/ the end of

the year remuneration Additions other the year

237,500 - - 237,500 198,977,770 - 25,000,000 - 223,977,770

39,466,670 - - (39,466,670) - 238,681,940 - 25,000,000 (39,466,670) 224,215,270

******

Balance at Received Balance atthe start of as part of Disposals/ the end of

the year remuneration Additions other the year

237,500 - - - 237,500 198,977,770 - - - 198,977,770

39,466,670 - - - 39,466,670 238,681,940 - - - 238,681,940

* No other KMP holds options in the Company

The aggregate compensation made to directors and other members of key management personnel of theconsolidated entity is set out below:

The number of shares in the parent entity held during the financial year by each director and other members of keymanagement personnel of the consolidated entity, including their personally related parties, is set out below:

Ordinary shares

Shareholding

Resigned 5 May 2011

Mr Martin Ralston

Mr Richard Stanger

Approved by shareholders at a General Meeting on 7 June 2011 to issue the shares in relation to the placement

2010

No other KMP holds shares in the Compnay

Mr Richard Stanger **Mr Angus Edgar *

Consolidated

Post-employment benefits

Compensation

2011

Mr Martin RalstonOrdinary shares

Mr Angus Edgar

Note 25. Key management personnel disclosures (continued)

Short-term employee benefits

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30 June 2011

Balance at Expired/ Balance atthe start of forfeited/ the end of

the year Granted Exercised other the year

58,723,930 - - (36,723,930) 22,000,000 34,866,676 - - (34,866,676) - 93,590,606 - - (71,590,606) 22,000,000

*

Vested atVested and the end ofexercisable the year

22,000,000 - 22,000,000 22,000,000 - 22,000,000

Balance at Expired/ Balance atthe start of forfeited/ the end of

the year Granted Exercised other the year

58,723,930 - - - 58,723,930 34,866,676 - - - 34,866,676 93,590,606 - - - 93,590,606

Vested atVested and the end ofexercisable the year

58,723,970 - 58,723,970 34,866,676 - 34,866,676 93,590,646 - 93,590,646

unexercisable

Mr Angus Edgar *

Note 25. Key management personnel disclosures (continued)

Mr Angus EdgarMr Richard Stanger

2010

2011

Mr Angus Edgar

Vested and2010

Mr Richard Stanger

unexercisable

Related party transactionsFor details of other transactions with KMP refer to note 28. Related Party Transactions

Vested and

The number of options over ordinary shares in the parent entity held during the financial year by each director andother members of key management personnel of the consolidated entity, including their personally related parties, isset out below:

Option holding

Options expired on 31 May 2011

2011

Options over ordinary shares

Options over ordinary sharesMr Angus Edgar


Mr Richard Stanger *


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30 June 2011

2011 2010$ $

35,000 33,330

2011 2010$ $

- 63,906 - 63,906

- - - 127,812

48,497 93,924 - 43,697

- - 48,497 137,621

Within one year

During the financial year the following fees were paid or payable for services provided by Bentleys, the auditor of thecompany, and its related practices:

Consolidated

Note 27. Commitments for expenditure

Note 26. Remuneration of auditors

Committed at the reporting date but not recognised as liabilities, payable:

Audit or review of the financial report

Consolidated

Audit services - Bentleys (2010: Bentleys)

Key management personnel

Operating lease commitments are the non-cancellable operating lease on office space expiring within 1 year with anoption to extend. The lease has various escalation clauses. On renewal, the terms of the lease are renegotiated.

One to five years

Disclosures relating to key management personnel are set out in note 25 and the remuneration report in the directors'report.

Subsidiaries

Parent entity

Operating leases

Exploration expenditureCommitted at the reporting date but not recognised as liabilities, payable:

Note 28. Related party transactions

Within one year

One to five years

Interests in subsidiaries are set out in note 31.

Transol Corporation Limited is the parent entity.

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30 June 2011

2011 2010$ $

24,034 23,642

60,880 37,626

240,000 -

120,000 112,500

127,273 130,500

97,500 90,000

66,000 -

Company secretarial services provided for the 12 months to 30 June 2011 to Transol Corporation Ltd by Northern Star Nominees Pty Ltd, an associated entity of Adrien Wing *

Managing Director and CEO services provided to Transol Corporation Limited by Mungala Investments Pty Ltd, an associated entity of Mr Angus Edgar

Note 28. Related party transactions (continued)

Rental and adminstrative expenses charged to Regal Resources Limited, an associated entity of Mr Angus Edgar

Transactions with related parties

Other income:

Shares received from related entity, Regal Resources Limited, in consideration of sale of EBM

Rental and administrative expenses charged to Melbourne Capital Limited, an associated entity of Mr Angus Edgar

Consolidated

Consultancy services provided to CLTNet Pty Ltd by Aztech Venture Partners, an associated entity of Mr Greg Bound

* Includes fees paid to an entity associated with Mr Wing, Northern Star Nominees Pty Ltd for the 12 months to 30June 2011 for company secretarial services.

The following transactions occurred with related parties:

Exploration consultancy services provided to Liberty Mining International Pty Ltd by Liberty Mining Corporation Pty Ltd, an associated entity of Mr Richard Stanger

Payment for goods and services:

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30 June 2011

2011 2010$ $

7,000 7,000

7,500 7,500

- 81,945

2011 2010$ $

- 150,000

50,000 -

Note 28. Related party transactions (continued)

Consolidated

Consolidated

Mr Angus Edgar is a majority shareholder in Digistore Solutions International Pty Ltd ("DSSI"). The company holds aninvestment of 13.05% in DSSI.

The company holds shares in Regal Resources Limited, a director-related entity.

The following balances are outstanding at the reporting date in relation to loans with related parties:

Current receivables:

Other related party relationships

All transactions were made on normal commercial terms and conditions and at market rates, other than the loan fromNorthern Star Holding Limited, a related entity of Mr Adrien Wing, which is unsecured, at no interest and at call.

Terms and conditions

Receivable from and payable to related partiesThe following balances are outstanding at the reporting date in relation to transactions with related parties:

Loan receivable from Enhanced Biogenic Methane Pty Ltd, an associated Company

Loans to/from related parties

Current payables:

Short-term funding provided to Liberty Mining International Pty Ltd by Mr Richard Stanger

Underwriting services provided by Serec Pty Ltd, an associated entity of Mr Angus Edgar

Current borrowings:

Loan from Northern Star Nominees Pty Ltd, an associated entity of Mr Adrien Wing

Consultancy services provided by Aztech Venture Partners, an asociated entity of Mr Greg Bound

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Transol Corporation LimitedNotes to the financial statements30 June 2011

Note 29. Parent entity information

Set out below is the supplementary information about the parent entity.

Statement of comprehensive incomeParent

2011 2010$ $

Loss after income tax (142,385) (1,153,652)

Total comprehensive income (142,385) (1,153,652)

Statement of financial positionParent

2011 2010$ $

Total current assets 648,082 1,175,214

Total assets 1,814,251 1,316,646

Total current liabilities 205,906 68,940

Total liabilities 205,906 72,274

Equity Contributed equity 22,794,586 22,315,213 Reserves 589,780 1,327,744 Accumulated losses (21,775,921) (22,398,960)

Total equity 1,608,445 1,243,997

Contingent liabilitiesThe parent entity had no contingent liabilities at 30 June 2011 and 30 June 2010. Capital commitments - Property, plant and equipmentThe commitment of the parent is identical to those of the consolidated entity. Refer to note 27.

Significant accounting policiesThe accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following: ● Investments in subsidiaries are accounted for at cost, less any impairment. ● Investments in associates are accounted for at cost, less any impairment.

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30 June 2011

2011 2010% %

- 100.00

- 100.00 - 100.00

100.00 100.00 100.00 100.00 80.00 80.00

- 100.00

- 100.00 - 100.00

- 100.00 100.00 100.00 100.00 100.00 100.00 70.00

- -

- 22.50

During the period, The company acquired the remaining 30% shareholding in Valleyarm, making it a 100% ownedsubsidiary. 30 million shares were issued to the to the vendors, along with the issue of a further 10 million shares tothe vendors in the event that Valleyarm achieves EBITDA of $500,000 in any 12 month period within 18 months ofsigning.

Note 30. Business combinations

CLTNet NZ LtdCambodia

incorporation

Enhanced Biogenic Methane Pty Ltd

Australia

Australia

Australia

Maxum Metals Pty Ltd

Cambodia

Maxum Metals Pty Ltd

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries inaccordance with the accounting policy described in note 1:

Country of

Transol Mining & Exploration Company Pty Ltd


Name of entity

Note 31. Subsidiaries


Australia

New ZealandQL Pty Ltd (NZ)

QL (Aust) Pty Ltd

AustraliaCLTNet Pty LtdCLTNet NZ Pty Ltd

Liberty Mining International (Cambodia) Pty Ltd

Cambodia

Australia

Equity holding

Transol Mining & Exploration Company Pty Ltd

Australia

Associated EntityAustraliaValleyarm Digital Pty Ltd

Cambodia

New Zealand

A 70% interest in Valleyarm Digital Pty Ltd (“Valleyarm”) was acquired on 25 May 2010.

The major class of assets comprising the acquisition of the company at the date of acquisition was:

2010 $Cash and cash equivalents 70Net assets acquired 70Consideration paid -

No cash was paid for the acquisition of 70% of the Issued Capital of Valleyarm.

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30 June 2011

During the year, the company's interest in Enhanced Biogenic Methane Pty Ltd (EBM) increased to 50% with theadvance of additional loan funds as per the Variation to the Loan Deed. The company later sold its 50% interest toRegal Resources Limited (Regal). The transaction was completed on 23 November 2010 with the shareholders ofRegal approving the issue of 20 million shares to the company as consideration for the sale. The transaction alsoinvolved the return to the company of all loan funds previously advanced to EBM and no ongoing obligation to providemore loan funds. The company will retain a 2.5% royalty on well head production from commercial quantities ofmethane produced from the use of EBM technology within Australia and Northern Ireland.

No other matter or circumstance has arisen since 30 June 2011 that has significantly affected, or may significantlyaffect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairsin future financial years.

Subsequent to the end of the financial year, the company announced that it intended undertaking a non renounceablerights issue whereby shareholders would be offered two new shares for every three shares held at the record date at$0.001 per new share. Each new share comes with a free attaching option exercisable at $0.002 on or before 20December 2014. On 22 August 2011, the rights issue closed receiving subscriptions of 336,158,532 shares (and freeattaching options) representing $336,158.53. The company intends placing the shortfall of 427,841,468 sharesrepresenting $427,841.47.

Note 31. Subsidiaries (continued)

Note 32. Events occurring after the reporting date

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30 June 2011

2011 2010$ $

- - (271,983) (101,278)

11,089 19,659 - 227,702 - 205,000 - (811)

207,277 - 50,000 -

(290) - (270,000) - (150,531) - (52,702) -

(246,286) - 103 -

(301,470) 73,743 (16,979)

(25,257) - (7,387) (630,097)3,046 (2,770)

12,000 -

- - (1,042,391) (225,831)

Consolidated

Reversal of impairment in investment in EBM

Impairment of non-current assets

Note 33. Reconciliation of loss after income tax to net cash used in operating activities

Decrease in trade and other payables

Impairment of trade and other receivables

Write back of investment in associate

(Increase)/decrease in trade and other receivables

Increase in other operating assets

Impairment of intangibles

Adjustments for:

Gain on disposal of Regal shares

Change in operating assets and liabilities:

Increase/(decrease) in employee benefits

During the period the company received 600,000 shares in Prairie Pacific Mining Corporation in consideration for thesale of the LMI Group.

During the period the company received 20,000,000 shares in Regal Resources Ltd, a director related entity inconsideration for the sale of 50% of its share holding in Enhanced Biogenic Methane Pty Ltd.

Net cash used in operating activities



Gain on disposal of EBM

Net gain on disposal of non-current assets

Gain on disposal of LMI

Increase in other provisions

Note 34. Non-cash investing and financing activities

Increase in prepayments

During the period the company issued 30,000,000 ordinary shares at an issue price of $0.003 to acquire theremaining 20% equity interest in Valleyarm Digital Pty Ltd.


Impairment of other financial assets

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30 June 2011

2011 2010$ $

(728,746) (1,095,796)103 68,584

(728,643) (1,027,212)

Number Number

1,040,319,981 975,867,926

1,040,319,981 975,867,926

Cents Cents

(0.070) (0.110)(0.070) (0.110)

2011 2010$ $

456,763 994,518

Number Number

1,040,319,981 975,867,926

1,040,319,981 975,867,926

Cents Cents

0.040 0.100 0.040 0.100


Loss after income tax attributable to the owners of Transol Corporation Limited


Consolidated

Weighted average number of ordinary shares used in calculating diluted earnings per share

Note 35. Earnings per share

Consolidated

Earnings per share from discontinued operations

Loss after income tax

Weighted average number of ordinary shares used in calculating basic earnings per share



Earnings per share from continuing operations





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30 June 2011

Notes to the financial statements


2011 2010

$ $

(271,983) (101,278)103 68,584

(271,880) (32,694)

Number Number

1,040,319,981 975,867,926

1,040,319,981 975,867,926

Cents Cents

(0.030) - (0.030) -



Note 35. Earnings per share (continued)

Basic earnings per shareDiluted earnings per share

Note 36. Variation from Preliminary Report

In accordance with ASX Listing Rule 4.5A, set out below are certain differences between information contained in theAppendix 4E lodged with the ASX and this financial report.

Loss after income taxEarnings per share for loss



A detailed review of the transactions related to the disposal of the LMI Group and associated costs and foreignexchange translation, resulted in the following differences;

(i) The loss after income tax from continuing operations has increased from $243,383 to $728,746.(ii) The profit after income tax from discontinued operations increased by $121,735 to $456,763.(iii) The loss for the year attributable to the owners has increased from ($121,648) to ($271,983)(iv) Total comprehensive income for the year increased by $99,776.(v) These differences have not resulted in any material change to net assets

Consolidated

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●

●

●

●

________________________________

The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5) of the Corporations Act 2001. On behalf of the directors

Melbourne

15 September 2011

Angus EdgarDirector

Directors' declarationTransol Corporation Limited

there are reasonable grounds to believe that the company will be able to pay its debts as and when theybecome due and payable.

In the directors' opinion:

the attached financial statements and notes thereto comply with the Corporations Act 2001, the AccountingStandards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

the attached financial statements and notes thereto give a true and fair view of the consolidated entity'sfinancial position as at 30 June 2011 and of its performance for the financial year ended on that date; and

the attached financial statements and notes thereto comply with International Financial Reporting Standardsas issued by the International Accounting Standards Board as described in note 1 to the financialstatements;

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Numberof holdersof ordinary

shares

476 219 92

400 578

1,765

1,324

Numberof holdersof options

19 17 11 48 92

- - - - 187

- - - - 139

100,001 and over 10,001 to 100,000

Holding less than a marketable parcel

1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000100,001 and over


Distribution of equitable securities

30 June 2011

The shareholder information set out below was applicable as at 15 September 2011.

Shareholder information

Analysis of number of equitable security holders by size of holding:

1 to 1,000

Holding less than a marketable parcel

5,001 to 10,000 1,001 to 5,000

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30 June 2011Shareholder information

% of totalshares

Number held issued

274,993,010 18.68 212,000,000 14.40

90,410,688 6.14 60,000,000 4.08 31,850,000 2.16 30,000,000 2.04 26,166,672 1.78 25,000,000 1.70 20,000,000 1.36 16,690,000 1.13 16,666,667 1.13 16,666,667 1.13 16,666,667 1.13 14,144,791 0.96 14,000,000 0.95 12,500,000 0.85 11,000,000 0.75 10,000,000 0.68 10,000,000 0.68 10,000,000 0.68

918,755,162 62.41

Layton Stephen <Super Account>

Serec Pty Ltd

ABN Amro Clearing Sydney <Cust Account>

SD1 Pty LtdStanger Richard F <Inceptum Account>Kurtze Ross James + F J Great Aust Res Ltd

Stock Assist Group Pty LtdMitpan Inv Pty Ltd

Twenty largest quoted equity security holders

Ordinary shares

Equity security holders

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

Chaldjian Peter Kevork

Pretorius Leon EugeneEevo Pty Ltd

Ohio Holdings Pty LtdEL Bocaito Pty Ltd <Day Off Fam Account>

Regal Resources Ltd

Stanger Richard + Serena <Stanger Superfund Account>

Mungala Inv Pty LtdBodie Inv Pty LtdDistinct Racing & Breeding

Sanchez Luis Alberto

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% of totaloptions

Number held issued

109,997,204 33.70 84,800,000 25.98 36,164,276 11.08 10,000,000 3.06

6,666,667 2.04 6,666,667 2.04 6,666,667 2.04 5,657,920 1.73 3,333,334 1.02 3,333,334 1.02 3,052,348 0.94 3,002,756 0.92 2,466,667 0.76 2,000,000 0.61 1,803,334 0.55 1,490,368 0.46 1,466,667 0.45 1,358,170 0.42 1,333,334 0.41 1,333,334 0.41

292,593,047 89.64

% of totalshares

Number held issued

370,558,598 25.17 212,000,000 14.40

76,690,000 5.21

% of totaloptions

Number held issued

109,997,204 33.70 84,800,000 25.98 36,164,276 11.08

Quoted Options

Serec Pty LtdRegal Resources LtdMungala Inv Pty Ltd

Risini SophiaMambat Pty LtdThomson T + B H T C S <Thomson Fam SMSF A>Melanko NicholasA L Lyster Pty Ltd <Superfund Account>Octifil Pty LtdEdgar Angus <Superfund Account>Mungala Inv Pty Ltd <No 2 Account>Hay Trevor NeilGama Nominees Pty Ltd <Trading Account>Thng Hooi Haw

Serec Pty LtdRegal Resources LtdMungala Inv Pty LtdKurtze Ross James + F JOhio Holdings Pty LtdEL Bocaito Pty Ltd <Day Off Fam Account>Sanchez Luis AlbertoABN Amro Clearing Sydney <Cust Account>Spartan Nominees Pty Ltd <Spartan Superfund Account>

Quoted Options

Ordinary shares

Angus Edgar (and associated entities)Regal Resources LtdStephen Layton (and associated entities)

Substantial holdersSubstantial holders in the company are set out below:

Unquoted equity securitiesThere are no unquoted equity securities.

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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.

Ordinary shares

There are no other classes of equity securities.

Voting rightsThe voting rights attached to ordinary shares are set out below:

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