BEACH HOUSE SEASIDE RESORT LIMITED ABN FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

BEACH HOUSE SEASIDE RESORT LIMITED ABN 37 010 534 764 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 CONTENTS Page Directors' Report 1 Auditor's Independence Declaration under Section 307C of the Corporations Act 2001 4 Statement of Comprehensive Income 5 Statement of Financial Position 6 Statement of Changes in Equity 7 Statement of Cash Flows 8 Notes to the Financial Statements 9 Directors' Declaration 25 Independent Auditor's Report 26

Directors' Report 30 June 2010 The directors present their report on the company for the financial year ended 30 June 2010. Directors The names of the directors in office at any time during or since the end of the year are: Frankie Bonomo Brian Irby Roslyn Jackson Bruce Harper Ramy Filo Anthony Wilson Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Principal Activities The principal activity of the company during the financial year was that of a timeshare resort operator. No significant change in the nature of these activities occurred during the year. Review of Operations The directors have reviewed operations for the year ended 30 June 2010 and report that operations have been consistent with the 2010 operating budget, long term building maintenance and refurbishment requirements. The result from operations was a profit/(loss) after tax for the year ended 30 June 2010 of ($826,902) (2009: $5,957,886). Significant Changes in the State of Affairs No significant changes in the company s state of affairs occurred during the financial year. Dividends No dividends have been paid or declared since the start of the financial year (2009: $nil). Matters Subsequent to the End of the Financial Year There have been no matters or circumstances since the end of the financial year which significantly affected or may significantly affect the operations of the company, the results of those operations, or the state of affairs of the company in future financial years. Environmental Regulation The company's operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a state or territory. Information on Directors Frankie Bonomo Fellow of the Australian Institute of Company Directors (FAICD) Board member since 1991. Previously a Director of Black & White Cabs Ltd and Black & White Co-operative in Brisbane. Previously employed by Telecom for 18 years, then for Commonwealth government agencies ATSIS and Attorney-Generals for 10 years. Currently employed as a Senior Advisor in the Queensland Government. Presently the Chairman of Beach House Seaside Resort Limited, a director of Beachcomber International Resort Limited and Surfers Royale Limited, and President of the Limousine Association of Queensland. Brian Irby Licensed Builder; Justice of the Peace Board member since 1996. Founded a successful building company in Sydney and has a current builder s license. Served on Parish Council for many years. Member of internal building committee. Roslyn Jackson Bachelor of Business, University of Technology, Sydney. Board member since 2003. Currently employed as a Tax Manager with a medium sized Chartered Accounting firm in Sydney. She has worked in public accounting since graduating from university with specific expertise in tax law and business management. Roslyn has been a director of R&O Pty Limited (family company) since 1994. Member of the Internal Finance and Audit Committee. 1

Directors' Report 30 June 2010 Information on Directors (cont) Bruce Harper Board member since 1990. Member of Institute of Chartered Accountants for 42 years before retirement from Practice in 1999. In Practice for 35 years as well as extensive commercial experience in both Accounting & Management in Public Companies. Currently a Member of the internal Finance & Audit Committee, and external member & Chair of three (3) Time Share Schemes Compliance Committees. Ramy Filo Bachelor of Mechanical Engineering, FAICD Board member since 2000. Currently CEO of the Classic Group of Companies. President of the Australian Timeshare & Holiday Ownership Council. Previously 12 years management experience with an international engineering corporation (Bently Nevada) as South East Asia Regional Manager. Anthony Wilson CPA, FAICD, Authorised Representative for Securitor Financial Group Ltd, Company Secretary. Board member since 2007. Accountant in public practice since 1994. Extensive commercial accounting and management experience. Office holder in a number of other timeshare companies and compliance committee member of a number of timeshare Managed Investment Schemes. Member of the internal Finance and Audit Committee. Key Management Personnel Remuneration Policy The company's policy for determining the nature and amount of remuneration of key management is as follows: The remuneration structure for key management personnel is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the company. The contracts for service between the company and key management personnel are on a continuing basis, the terms of which are not expected to change in the immediate future. Details of key management personnel remuneration is shown in Note 5 to the accounts. Meetings of Directors During the financial year, 4 meetings of directors were held. Attendances by each director during the year were as follows: Number of meetings Number of meetings Name Frankie Bonomo held while a Director 4 attended 4 Brian Irby 4 4 Roslyn Jackson 4 4 Bruce Harper 4 4 Ramy Filo 4 3 Anthony Wilson 4 4 Likely Developments Likely developments in the operations of the company and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the company. Options No options over issued shares or interests in the company were granted during or since the end of the financial year and there were no options outstanding at the date of this report. 2

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2010 Restated NOTE 2010 2009 $ $ Revenue 2 4,598,324 10,797,974 Auditors' remuneration (17,045) (15,400) Impairment of financial assets (116,406) (38,584) Body corporate expenses (438,328) (433,082) Depreciation and amortisation expense (932,135) (505,959) Employee benefits expenses (1,557,520) (1,595,431) Operating expenses (1,286,231) (1,227,369) Occupancy expenses (743,423) (689,299) Office expenses (163,871) (169,182) Other expenses (170,267) (165,782) Profit/(Loss) before income tax 3 (826,902) 5,957,886 Income tax expense 4 - - PROFIT/(LOSS) FOR THE YEAR (826,902) 5,957,886 Other comprehensive income for the year - - TOTAL COMPREHENSIVE INCOME FOR THE YEAR, ATTRIBUTABLE TO MEMBERS (826,902) 5,957,886 The accompanying notes form part of these financial statements. 5

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2010 Restated Restated NOTE 2010 2009 1 July 2008 $ $ $ CURRENT ASSETS Cash and cash equivalents 7 3,090,438 4,469,144 1,360,716 Trade and other receivables 8 3,096,649 3,074,952 974,049 Inventory 9 4,406 9,737 36,028 Other current assets 10 15,386 10,119 43,087 TOTAL CURRENT ASSETS 6,206,879 7,563,952 2,413,880 NON-CURRENT ASSETS Trade and other receivables 8 149,101 384,751 - Property, plant and equipment 11 65,907 95,347 97,881 Other non-current assets 10 4,535,346 2,906,227 1,276,976 TOTAL NON-CURRENT ASSETS 4,750,354 3,386,325 1,374,857 TOTAL ASSETS 10,957,233 10,950,277 3,788,737 CURRENT LIABILITIES Trade and other payables 12 3,806,485 2,982,915 1,798,803 Short-term provisions 13 112,063 129,156 110,818 TOTAL CURRENT LIABILITIES 3,918,548 3,112,071 1,909,621 NON-CURRENT LIABILITIES Long-term provisions 13 47,949 20,568 19,364 TOTAL NON-CURRENT LIABILITIES 47,949 20,568 19,364 TOTAL LIABILITIES 3,966,497 3,132,639 1,928,985 NET ASSETS 6,990,736 7,817,638 1,859,752 EQUITY Issued capital 14 6,737 6,737 6,737 Reserves 15 2,886,091 5,106,971 737,619 Retained earnings 4,097,908 2,703,930 1,115,396 TOTAL EQUITY 6,990,736 7,817,638 1,859,752 The accompanying notes form part of these financial statements. 6

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2010 NOTE Issued Capital Refurbishment Reserves Retained Earnings Total $ $ $ $ Balance at 1 July 2008 6,737 802,220 1,292,385 2,101,342 Correction of prior period error 6 - (64,601) (176,989) (241,590) Re-stated total equity at the beginning of the financial year 6,737 737,619 1,115,396 1,859,752 Total comprehensive income for the year as reported in the 2009 financial statements: Profit/(loss) for the year - - 6,106,234 6,106,234 Other comprehensive income - - - - Correction of prior period error 6 - - (148,348) (148,348) Restated total comprehensive income for the year - - 5,957,886 5,957,886 Transfers to reserves - 6,433,462 (6,433,462) - Transfers to retained earnings - (2,064,110) 2,064,110 - Balance at 30 June 2009 6,737 5,106,971 2,703,930 7,817,638 Balance at 1 July 2009 6,737 5,106,971 2,703,930 7,817,638 Total comprehensive income: Profit/(loss) for the year - - (826,902) (826,902) Other comprehensive income - - - - Total comprehensive income for the year - - (826,902) (826,902) Transfers to reserves - 180,289 (180,289) - Transfers to retained earnings - (2,401,169) 2,401,169 - Balance at 30 June 2010 6,737 2,886,091 4,097,908 6,990,736 The accompanying notes form part of these financial statements. 7

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2010 NOTE 2010 2009 Inflows Inflows (Outflows) (Outflows) $ $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 5,559,868 10,020,297 Payments to suppliers and employees (4,616,150) (4,251,052) Interest received 174,897 186,902 GST recovered/(paid) 34,493 (715,043) NET CASH FROM/(USED IN) OPERATING ACTIVITIES 16 1,153,108 5,241,104 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (7,070) (34,187) Payments for deferred refurbishment expenditure (2,524,744) (2,098,489) NET CASH FROM/(USED IN) INVESTING ACTIVITIES (2,531,814) (2,132,676) CASH FLOWS FROM FINANCING ACTIVITIES - - NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES - - Net increase/(decrease) in cash held (1,378,706) 3,108,428 Cash at the beginning of the year 4,469,144 1,360,716 CASH AT THE END OF THE YEAR 7 3,090,438 4,469,144 The accompanying notes form part of these financial statements. 8

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity Beach House Seaside Resort Limited ('the company') is an unlisted public company limited by shares incorporated and domiciled in Australia. The financial statements cover Beach House Seaside Resort Limited as an individual entity. The company is primarily involved in the operation of a timeshare resort in Australia. The financial statements were authorised for issue by the board of directors on 26 August 2010. Basis of Preparation Statement of Compliance The financial statements of Beach House Seaside Resort Limited are general purpose financial statements prepared in accordance with Australian Accounting Standards including Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board (AASB), Urgent Issues Group Interpretations and the Corporations Act 2001. The financial statements of Beach House Seaside Resort Limited comply with International Financial Reporting Standards (IFRS) in their entirety. The Company has adopted the following amended Australian Accounting Standards as of 1 July 2009: AASB 101 Presentation of Financial Statements (revised 2009) effective 1 July 2009. The revised standard separates owner and non-owner changes in equity. As there have been no non-owner changes in equity, the adoption of the revised standard has had little impact on the reporting of the company, other than to change the name of the primary statements and move changes in equity during the period, other than changes resulting from transactions with owners in their capacity as owners, to the statement of comprehensive income. The company has elected to present all items of recognised income and expense in a single Statement of Comprehensive Income. Reporting Basis and Conventions The financial statements are presented in Australian dollars. The preparation of financial statements in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that effect the application of policies and the reported amounts of assets, liabilities, revenue and expenses. Critical Accounting Estimates and Judgements The estimates and judgements incorporated into the financial statements are based on historical experiences and the best available current information on current trends and economic data, obtained both externally and within the company. The estimates and judgements made assume a reasonable expectation of future events but actual results may differ from these estimates. Key Estimates Impairment The company assesses impairment at each reporting date by evaluating conditions specific to the company that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision effects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. There were no key adjustments during the year which required accounting estimates and judgements. The financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. 9

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) The following is a summary of the material accounting policies adopted by the company in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated. (a) Income Tax The charge for current income tax expense is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted at the reporting date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. Because of the principle of mutuality, only income arising from non-member activities is subject to income tax. The company is able to identify all non-member income. (b) Inventories Inventories are measured at the lower of cost and net realisable value. (c) Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Property The company has entered into a 99 year lease with the co-owners of the resort to lease the resort property for a nominal rent of $1, plus a requirement that the company maintain the building in good order and condition and refurbish the units on a regular basis. Plant and equipment The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have not been discounted to their present values in determining recoverable amounts. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are included in profit or loss in the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets including capitalised lease assets is depreciated on a straight line basis over their useful lives to the company commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Plant and equipment Motor Vehicles Depreciation rate 6% - 50% 10% - 15% 10

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (c) Property, Plant and Equipment (cont) The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An assets' carrying amount is written down immediately to its recoverable amount if the assets' carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in profit or loss in the period in which they arise. (d) Deferred Refurbishment Assets Refurbishment costs are deferred where it is expected the value of the resort property is improved by such expenditure. Deferred refurbishment costs are amortised on a straight-line basis over a period of 6 years. (e) Leases Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset, but not legal ownership, are transferred to the entity are classified as finance leases. Finance leases are capitalised recording an asset and a liability equal to the present value of the minimum lease payments, including any guaranteed residual value. Leased assets are amortised on a straight-line basis over their estimated useful lives. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Lease payments for operating leases, where substantially all risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred as this represents the pattern of benefits derived from the leased assets. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term. (f) Financial Instruments Recognition Financial instruments are initially measured at fair value on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below. Financial assets at fair value through profit and loss A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term or if so designated by management and within the requirements of AASB 139: Recognition and Measurement of Financial Instruments. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in profit or loss in the period in which they arise. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed maturities, and it is the company s intention to hold these investments to maturity. Any held-to-maturity investments held by the company are stated at amortised cost using the effective interest rate method. Available-for-sale financial assets Available-for-sale financial assets include any financial assets not included in the above categories. Availablefor-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity. Financial liabilities Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation. 11

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (f) Financial Instruments (cont) Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in profit or loss in the period in which they arise. (g) Impairment of Assets At each reporting date, the company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset s fair value less costs to sell and value in use, is compared to the asset s carrying value. Any excess of the asset s carrying value over its recoverable amount is included in profit or loss for the period. (h) Employee Entitlements Provision is made for the company's liability for employee entitlements arising from services rendered by employees to reporting date. Employee entitlements expected to be settled within one year together with entitlements arising from wages and salaries, and annual leave which will be settled after one year, have been measured at their nominal amount. Other employee entitlements payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those entitlements. (i) (j) Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Provisions Provisions are recognised when the company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. (k) Revenue Revenue is measured at the fair value of considered received or receivable, net of discounts. Revenue is recognised to the extent that it is probable that economic benefits will flow to the company, and revenue can be realiably measured. Levy revenue is recognised on a straightline basis over the financial year to which it relates. Revenue from the sale of goods is recognised upon the delivery of goods to the customer. Levy penalties are recognised as received. Revenue from rental pool participation is recognised when the right to receive the payment is established. Rental income earned from operating leases is recognised on a straightline basis over the period of the lease. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. All revenue is stated net of the amount of goods and services tax (GST). 12

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (l) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. (m) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the item of expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. (n) Comparative Figures Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current financial year. (o) Receivables Levies are included in Levies receivable and are recorded at the reporting date. Receivable amounts are due within 30 days of invoice. Levies are billed in June each year for the coming July to June period. (p) Trade Creditors and Accruals A liability is recorded for goods and services received prior to reporting date, whether invoiced or not. Trade creditors are settled in accordance with supplier payment terms. (q) Statement of Cash Flows For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in money market instruments, net of any outstanding bank overdrafts. (r) New Accounting Standards and Interpretations Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2010 reporting periods. The company's assessment of the impact of the relevant new standards and interpretations is set out below. AASB 9: Financial Instruments and AASB 2009-11: Amendments to Australian Accounting Standards arising from AASB 9 (applicable for annual reporting periods commencing 1 January 2013). AASB 9: Financial Instruments addresses the classification and measurement of financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption. The company is yet to assess the full impact of the new standard however, initial indications are that the standard is not expected to have any impact on the company's financial statements. Revised AASB 124: Related Party Disclosures and AASB 2009-12: Amendments to Australian Accounting Standards (applicable for annual reporting periods commencing 1 January 2011). The revised AASB 124: Related Party Disclosures amends the related party disclosure reporting requirements for government related entities and clarifies and simplifies the definition of a related party. The standard is effective for accounting periods beginning on or after 1 January 2011 and must be applied retrospectively. The company is yet to assess the full impact of the new standard however, initial indications are that the standard is not expected to have any impact on the company's financial statements. 13

2010 2009 NOTE 2 - REVENUE $ $ Levy income - annual 3,943,306 3,665,880 Levy income - special (9,251) 6,393,087 Levy penalties 11,616 7,265 Interest received 194,555 217,587 Rental income 22,330 6,182 Sundry income 142,968 170,355 Beach House Commercial Plaza Property Trust distribution 292,800 337,618 Total Revenue 4,598,324 10,797,974 NOTE 3 - PROFIT/(LOSS) BEFORE INCOME TAX Profit/(Loss) before income tax expense has been determined after: Expenses Auditors' remuneration - Auditing or reviewing the financial statements 14,475 13,445 - Assistance with financial statements preparation 2,570 1,955 Impairment losses - financial assets - Trade receivables 116,406 38,584 Superannuation expense 123,180 125,260 NOTE 4 - INCOME TAX The prima facie tax payable on Profit/(Loss) before income tax is reconciled to the income tax expense as follows: Prima facie tax payable on Profit/(Loss) before income tax at 30% (2009: 30%) (248,071) 1,787,366 Increase/(decrease) in income tax expense due to: - Amounts excluded under Principle of Mutuality 331,965 (1,695,423) - Benefit of tax losses not previously taken to account (83,894) (91,943) Income tax attributable to operating profit - - Deferred tax assets, the benefits of which will only be realised if the conditions for deductibility of tax losses set out in Note 1 occur based on corporate tax rate of 30% (2009: 30%) - Losses 518,156 601,595 - Timing differences 2,625 3,080 NOTE 5 - KEY MANAGEMENT PERSONNEL REMUNERATION Directors Frankie Bonomo Brian Irby Roslyn Jackson Bruce Harper Ramy Filo Anthony Wilson 520,781 604,675 The directors of the company are directly accountable and responsible for the strategic direction and operational management of the company. During the year there were no executives of the company. 14

NOTE 5 - KEY MANAGEMENT PERSONNEL REMUNERATION (CONT) The directors' remuneration paid during the year was as follows: Short-term Benefits Salary, Fees & Allowances Super Bonus Post-employment Benefits Non-cash Benefits Long Service Leave $ $ $ $ $ $ 30 June 2010 Frankie Bonomo 1,750 - - - - 1,750 Brian Irby 2,000 - - - - 2,000 Roslyn Jackson 2,000 - - - - 2,000 Bruce Harper 2,000 - - - - 2,000 Ramy Filo - - - - - - Anthony Wilson - - - - - - Total compensation 7,750 - - - - 7,750 30 June 2009 Frankie Bonomo 1,750 - - - - 1,750 Brian Irby 2,000 - - - - 2,000 Roslyn Jackson 2,000 - - - - 2,000 Bruce Harper 2,000 - - - - 2,000 Ramy Filo - - - - - - Anthony Wilson - - - - - - Total compensation 7,750 - - - - 7,750 NOTE 6 - PRIOR PERIOD ERROR During the year the ATO issued four (4) Interpretive Decisions (ATOID 2010/18, 19, 20 and 23) in respect of the application of the GST legislation by the timeshare industry. As a result of applying the Interpretive Decisions and other GST legislation the company has identified that GST was incorrectly charged to members on various supplies and the company has over claimed a portion of Input Tax Credits on various purchases. Consequently expenditure recorded in the Statement of Comprehensive Income and expenditure on non-current assets recorded in the Statement of Financial Position, has been under stated. In accordance with the GST legislation the company is required to define the over claimed Input Tax Credits and re-state BAS returns submitted to the ATO for a period of four (4) years. Over claimed Input Tax Credits must then be repaid to the ATO. The company has also undertaken to seek a GST Refund from the ATO on behalf of members for amounts previously remitted to the ATO in relation to GST paid on levies for the past four (4) years. The company will be required refund the relevant members by way of credit to their account and then recover the GST refunded amount from the ATO. A portion of the GST refund may need to be recovered from each member by way of a special levy to facilitate the repayment of over claimed Input Tax Credits to the ATO. Total 15

NOTE 6 - PRIOR PERIOD ERROR (CONT) The error has been corrected by restating each of the affected financial statement line items in the statement of comprehensive income and statement of financial position for previous periods as follows: 2009 Restatement - 30 June 2009 2009 Adjustment Restated $ $ $ Trade and other receivables 1,529,411 1,545,541 3,074,952 TOTAL CURRENT ASSETS 6,018,411 1,545,541 7,563,952 Other non-current assets 2,714,191 192,036 2,906,227 TOTAL NON-CURRENT ASSETS 3,194,289 192,036 3,386,325 TOTAL ASSETS 9,212,700 1,737,577 10,950,277 Trade and other payables 855,400 2,127,515 2,982,915 TOTAL CURRENT LIABILITIES 984,556 2,127,515 3,112,071 TOTAL LIABILITIES 1,005,124 2,127,515 3,132,639 Reserves 5,330,592 (223,621) 5,106,971 Retained earnings 2,870,247 (166,317) 2,703,930 TOTAL EQUITY 8,207,576 (389,938) 7,817,638 Depreciation and amortisation expense (486,723) (19,236) (505,959) Other expenses (36,670) (129,112) (165,782) PROFIT/(LOSS) FOR THE PERIOD 6,106,234 (148,348) 5,957,886 1 July 2008 Restatement - 1 July 2008 1 July 2008 Adjustment Restated $ $ $ Trade and other receivables 362,504 611,545 974,049 TOTAL CURRENT ASSETS 1,802,335 611,545 2,413,880 Other non-current assets 1,224,724 52,252 1,276,976 TOTAL NON-CURRENT ASSETS 1,322,605 52,252 1,374,857 TOTAL ASSETS 3,124,940 663,797 3,788,737 Trade and other payables 893,416 905,387 1,798,803 TOTAL CURRENT LIABILITIES 1,004,234 905,387 1,909,621 TOTAL LIABILITIES 1,023,598 905,387 1,928,985 Reserves 802,220 (64,601) 737,619 Retained earnings 1,292,385 (176,989) 1,115,396 TOTAL EQUITY 2,101,342 (241,590) 1,859,752 2010 2009 NOTE 7 - CASH AND CASH EQUIVALENTS $ $ Cash on hand 2,250 2,250 Cash at bank 1,088,188 2,466,894 Short-term deposits 2,000,000 2,000,000 Cash at bank is invested with Westpac Banking Corporation and earns interest at the current variable rate. Short-term deposits are invested with the Commonwealth Bank of Australia at fixed rates. 3,090,438 4,469,144 16

NOTE 7 - CASH AND CASH EQUIVALENTS (CONT) Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows: Cash and cash equivalents 2010 2009 $ $ 3,090,438 4,469,144 Balance as per statement of cash flows 3,090,438 4,469,144 NOTE 8 - TRADE AND OTHER RECEIVABLES Current Levies receivable 995,048 1,203,254 Less: impairment of receivables (95,756) (34,884) Other receivables 2,197,357 1,906,582 3,096,649 3,074,952 Non-Current Levies receivable 149,101 384,751 NOTE 9 - INVENTORY 3,245,750 3,459,703 Goods held for resale, at lower of cost and net realisable value 4,406 9,737 4,406 9,737 NOTE 10 - OTHER ASSETS Current Prepayments and deposits 15,386 10,119 15,386 10,119 Non-Current Deferred refurbishment costs 6,663,601 5,382,479 Less accumulated amortisation (2,128,255) (2,476,252) 4,535,346 2,906,227 4,550,732 2,916,346 Movements in Carrying Amounts Movements in the carrying amounts of deferred refurbishment expenses between the beginning and the end of the current financial year: Refurbishment 2010 2009 $ $ Written down value at the beginning of the year 2,906,227 1,276,976 Additions at cost 2,524,744 2,098,489 Disposals at WDV - - Amortisation expense (895,625) (469,238) Written down value at the end of the year 4,535,346 2,906,227 17

2010 2009 NOTE 11 - PROPERTY, PLANT AND EQUIPMENT $ $ Plant and equipment, at cost 111,992 126,676 Less accumulated depreciation (76,172) (75,261) 35,820 51,415 Motor vehicles, at cost 152,616 152,616 Less accumulated depreciation (122,529) (108,684) 30,087 43,932 Total property, plant and equipment 65,907 95,347 Movements in Carrying Amounts Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year: 30 June 2010 Motor Vehicles Plant & Equipment Total $ $ $ Written down value at the beginning of the year 43,932 51,415 95,347 Additions - 7,070 7,070 Disposals - - - Depreciation Expense (13,845) (22,665) (36,510) Written down value at the end of the year 30,087 35,820 65,907 30 June 2009 Written down value at the beginning of the year Additions Disposals Depreciation Expense Written down value at the end of the year 58,392 39,489 97,881 2,521 31,666 34,187 - - - (16,981) (19,740) (36,721) 43,932 51,415 95,347 2010 2009 NOTE 12 - TRADE AND OTHER PAYABLES $ $ Current Trade creditors 193,532 248,911 Sundry creditors and accruals 930,295 637,188 Income received in advance 2,682,658 2,096,816 NOTE 13 - PROVISIONS 3,806,485 2,982,915 Current Employee entitlements 112,063 129,156 Non-Current Employee entitlements 47,949 20,568 160,012 149,724 Provision for Long-term Employee Entitlements A provision has been recognised for non-current employee entitlements relating to long service leave for employees. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based upon historical data. The measurement and recognition criteria for employee entitlements has been included in Note 1. 18

2010 2009 NOTE 14 - ISSUED CAPITAL $ $ Share Capital 6,737 fully paid $1 ordinary shares (2009: 6,737). 6,737 6,737 Balance at beginning of the year Balance at the end of the year Number of shares 2010 Transfers of shares are restricted and must be approved by the Directors. NOTE 15 - RESERVES Number of shares 2009 $ $ 6,737 6,737 6,737 6,737 6,737 6,737 6,737 6,737 The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders meetings. In the event of winding up the company, all shareholders participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Owners may have their share entitlements forfeited and on-sold at the discretion of the company where levies are outstanding for a period greater than 12 months. Refurbishment Fund Reserve The refurbishment fund reserve is maintained for the ongoing capital expenditure requirements relating to fit out of rooms and common areas, building works and grounds development. Special Refurbishment Fund The special refurbishment fund reserve is a special purpose fund generated through the raising of a special levy, and for the purpose of a major refurbishment projects or other capital works which have been specifically planned for in the short term. Special Refurbish - ment Fund Refurbishment Fund Total $ $ $ Balance at 1 July 2008 802,220-802,220 Correction of prior period error (64,601) (64,601) Restated balance at 1 July 2008 737,619-737,619 Transfers to reserves 40,375 6,393,087 6,433,462 Transfers to retained earnings (288,443) (1,775,667) (2,064,110) Balance at 30 June 2009 489,551 4,617,420 5,106,971 Transfers to reserves 189,540 (9,251) 180,289 Transfers to retained earnings (528,154) (1,873,015) (2,401,169) Balance at 30 June 2010 150,937 2,735,154 2,886,091 19

2010 2009 NOTE 16 - CASH FLOW INFORMATION $ $ Reconciliation of net cash from/(used in) operating activities to operating profit/(loss) after income tax: Net profit/(loss) after income tax (826,902) 5,957,886 Adjustment for non cash items Amortisation 895,625 469,238 Depreciation 36,510 36,721 Adjustment for changes in assets and liabilities Decrease/(increase) in: Levy debtors 443,856 (1,458,207) Other debtors (39,136) (121,383) Inventories 5,331 26,291 Other current assets (8,487) 32,968 Increase/(decrease) in: Trade and other creditors (10,691) (485,981) Fees and levies in advance 585,842 736,097 Provision for employee entitlements 10,288 19,542 Provision for impairment of receivables 60,872 27,932 Net cash from/(used in) operating activities 1,153,108 5,241,104 NOTE 17 - RELATED PARTY TRANSACTIONS (a) (b) Directors' Names The names of directors who have held office during the financial year and their interest in timeshares are: Frankie Bonomo 2 Brian Irby 2 Roslyn Jackson 1 Bruce Harper 1 Ramy Filo 1 Anthony Wilson # 1 # Held as nominee for T Wilvest Pty Ltd atf HWC Services Trust. Shares and Share Options The direct, indirect, and beneficial holdings of directors and their director-related entities in holiday shares of the company as at 30 June 2010 are shown below. 2010 2009 Shares 319 254 No options have been issued by the company. (c) Transactions with directors and director related entities: (i) Management fees totalling $264,575 (2009: $373,438) were paid in the ordinary course of business to Classic Leisure Pty Ltd, a company of which Ramy Filo is a director. (i) (ii) (ii) (iii) (iv) Management fees totalling $132,287 (2009: $nil) were paid in the ordinary course of business to Classic Property Holdings Pty Ltd, a company of which Ramy Filo is a director. Reservations, Bookkeeping and IT fees totalling $196,605 (2009: $281,273) were paid in the ordinary course of business to Classic Leisure Pty Ltd, a company of which Ramy Filo is a director. Reservations, Bookkeeping and IT fees totalling $98,303 (2009: $nil) were paid in the ordinary course of business to Classic Property Holdings Pty Ltd, a company of which Ramy Filo is a director. Debt collection fees totalling $24,797 (2009: $7,288) were paid in the ordinary course of business to Classic Leisure Pty Ltd, a company of which Ramy Filo is a director. Accounting fees totalling $25,942 (2009: $28,384) were paid in the ordinary course of business to HWC Accountants, a firm of which Anthony Wilson is the principal. 20

NOTE 17 - RELATED PARTY TRANSACTIONS (CONT) (v) (vi) (vii) (viii) (ix) (x) (xi) Forfeited timeshare weeks with overdue levies of $nil (2009: $5,661) were sold for $nil (2009: $nil) to Classic Property Management Pty Ltd, a company of which Ramy Filo is a director. An amount of $6,690 (2009: $6,690) is included in trade debtors at the year-end in respect of the 2008 transaction. Classic Property Management Pty Ltd is required to pay full annual levies on all timeshare interests acquired. Prepaid theme park tickets totalling $nil (2009: $42,802) were purchased from Classic Leisure Pty Ltd, a company of which Ramy Filo is a director. An amount of $nil (2009: $4,876) is included in Inventory at year-end with respect these purchases. Fees for IT Support services totalling $358 (2009: $1,060) were paid in the ordinary course of business to Classic Leisure Pty Ltd, a company of which Ramy Filo is a director. Fees for other services totalling $349 (2009: $nil) were paid in the ordinary course of business to Classic Leisure Pty Ltd, a company of which Ramy Filo is a director. Commission from internet kiosk totalling $4,617 (2009: $4,606) was paid in the ordinary course of business to Classic Leisure Pty Ltd, a company of which Ramy Filo is a director. Special levy management fees totalling $nil (2009: $360,323) were paid in the ordinary course of business to Classic Leisure Pty Ltd, a company of which Ramy Filo is a director. Fees for professional services totalling $2,154 (2009: $nil) were paid in the ordinary course of business to HWC Accountants, a firm of which Tony Wilson is the principal. NOTE 18 - FINANCIAL INSTRUMENTS Financial Risk Management The company s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and accounts payable. The directors overall risk management strategy seeks to assist the company in meeting its financial targets, whilst minimising the potential adverse effects on financial performance. Risk management policies are approved and reviewed by the Board of Directors on a regular basis. These include the credit risk policies and future cash flow requirements. The main purpose of non-derivative financial instruments is to manage cash flow for operations. The company does not have any derivative instruments at 30 June 2010. i. Treasury Risk Management The directors of the company meet on a regular basis to review interest rates and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. ii. Financial Risks The main risks the company is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk. Interest Rate Risk Interest rate risk is managed through floating rate bank accounts. Cash Flow Sensitivity Analysis for Variable Rate Instruments The sensitivity analysis has been determined based on the exposure of the company to interest rates for nonderivative financial instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 1% increase or decrease is used when reporting interest rates internally to key management personnel and represents management s assessment of the possible change in interest rates. At 30 June 2010, if the interest rates had changed by 1% from the period-end rates with all other variables held constant, post-tax profit for the year for the company would have been $30,399 (30 June 2009 $2,311) lower/higher mainly as a result of lower/higher interest income on cash and cash equivalents. 21

NOTE 18 - FINANCIAL INSTRUMENTS (CONT) There has been no change to the company's exposure to interest rate risk or the manner in which it manages and measures the risk from the previous year. The company s exposure to interest rate risk, which is the risk that a financial instrument s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on those financial assets and financial liabilities, is as follows: Weighted Average Interest Rate Fixed Interest Rate Floating Interest Rate Non-Interest Bearing Total $ $ $ $ 2010 Financial Assets Cash and cash equivalents 5.56% 2,000,000 1,088,188 2,250 3,090,438 Trade and other receivables - - 3,341,506 3,341,506 Total Financial Assets 2,000,000 1,088,188 3,343,756 6,431,944 Financial Liabilities Trade and other payables - - 1,123,827 1,123,827 Total Financial Liabilities - - 1,123,827 1,123,827 2009 Financial Assets Cash and cash equivalents 3.41% 2,000,000 2,466,894 2,250 4,469,144 Trade and other receivables - - 3,494,587 3,494,587 Total Financial Assets 2,000,000 2,466,894 3,496,837 7,963,731 Financial Liabilities Trade and other payables - - 886,099 886,099 Total Financial Liabilities - - 886,099 886,099 Foreign Currency Risk The company is not exposed to fluctuations in foreign currencies. Liquidity Risk The company manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash reserves are maintained. Trade payables are short term in nature. The company is not exposed to any significant liquidity risk. The following are contractual maturities of financial liabilities: 30 June 2010 $ $ $ $ $ Trade and other payables 1,123,827 1,123,827 1,123,827 - - 30 June 2009 Carrying amount Carrying amount Contractual cash flows Contractual cash flows Less than one year 1-5 years over 5 years Less than one year 1-5 years over 5 years $ $ $ $ $ Trade and other payables 886,099 886,099 886,099 - - 22

NOTE 18 - FINANCIAL INSTRUMENTS (CONT) Credit Risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. The company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the company's maximum exposure to credit risk without taking account of the value of any collateral obtained. The ageing of the company's trade and other receivables at the reporting date was: 2010 2009 Gross Impairment Gross Impairment $ $ $ $ Not Past due (current) 2,599,015-2,668,356 - Past due 0-30 days ( 30 day ageing) 9,201 - - - Past due 31-60 days ( 60 day ageing) 673-510 - Past due more than 60 days ( +90 day ageing) 732,617 95,756 825,721 34,884 3,341,506 95,756 3,494,587 34,884 The remaining balance of the past due receivables at 30 June 2010 was not impaired because it is expected that these amounts will be received in full through various recovery actions in the normal course of business. Movements in Carrying Amounts Movements in the carrying amounts of impairment expenses between the beginning and the end of the current financial year: Impairment $ Trade and other receivables assessed as impaired at the beginning of the year 34,884 Annual Impairment expense included in impairment of financial assets in the statement of comprehensive income 116,406 Trade and other receivables assessed as impaired and written off during the year (55,534) Trade and other receivables assessed as impaired at the end of the year Price Risk The company is not exposed to any material commodity price risk. 95,756 Capital Risk Management The directors manage the capital to ensure that the company is able to continue as a going concern and able to satisfy future capital needs of the resort, through the optimisation of debt and equity balances. The capital structure of the company consists of cash and cash equivalents and equity comprising of share capital, reserves and retained earnings. The board reviews this structure and the associated risks with each class of capital on a regular basis. Capital risk management policies remain unchanged from the prior year. Net Fair Values The net fair values of financial assets and liabilities approximate their carrying value. No financial assets and financial liabilities are readily traded on organised markets in standardised form. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statement of financial position and in the notes to the financial statements. 23

NOTE 19 - CONTINGENT LIABILITIES The company has no contingent liabilities at the date of the financial statements. NOTE 20 - EVENTS AFTER THE REPORTING DATE No material events occurred after the reporting date and to the date of the financial statements requiring disclosure. NOTE 21 - MEMBER RENTAL POOL The rental pool is maintained by the company for and on behalf of timeshare owners. The rental pool does not form part of the company's financial statements for the year ended 30 June 2010. NOTE 22 - COMPANY DETAILS The registered office of the company is: Beach House Seaside Resort Limited Bermuda Point Suite 101, 20 Lake Orr Drive VARSITY LAKES QLD 4227 The principal place of business is: Beach House Seaside Resort Limited 52-58 Marine Parade COOLANGATTA QLD 4225 24

INDEPENDENT AUDITOR'S REPORT To the members of Beach House Seaside Resort Limited Report on the Financial Statements We have audited the accompanying financial statements of Beach House Seaside Resort Limited (the company) which comprises the statement of financial position as at 30 June 2010, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors' declaration. The Responsibility of the Directors for the Financial statements The directors of the company are responsible for the preparation and fair presentation of the financial statements in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial statements, comprising the financial statements and notes, comply with International Financial Reporting Standards. Auditor's Responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Total Financial Solutions WHK Pty Ltd trading as WHK Horwath Brisbane is a member of Crowe Horwath International Association, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal entity. Member Crowe Horwath International WHK Horwath Brisbane Level 16, WHK Horwath Centre 120 Edward Street Brisbane Queensland 4000 Australia GPO Box 736 Brisbane Queensland 4001 Australia Telephone +61 7 3233 3555 Facsimile +61 7 323 3567 Email info.bri@whkhorwath.com.au www.whkhorwath.com.au A WHK Group firm 26