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Annual Report

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Welcome to the 2007 Coffey Annual Report.

I’m thrilled by everything we have accomplished this year.

And there is still so much more we can achieve – for staff, for clients, for shareholders and for the communities in which we work.

Roger OldsManaging DirectorCoffey International Limited

Coffey International Limited www.coffey.comASX Code COF ABN 16 003 835 112

InteRnAtIonAl Development BusIness

Australia

Adelaide

Indonesia

Jakarta

Papua New Guinea

Port Moresby

Philippines

Manila

Poland

Warsaw

United Arab Emirates

Dubai

United Kingdom

Reading

United States of America

New Jersey

VietnamHanoi

Project Offices

Afghanistan

Africa

Albania

Angola

Australia

Bangladesh

Belize

Botswana

Cambodia

China

Democratic Republic of Congo

Dominica

Dominican Republic

Fiji

Georgia

Ghana

Grenada

Guyana

Haiti

India

Indonesia

Iraq

Jamaica

Kenya

Kosovo

Lesotho

Malawi

Maldives

Micronesia

Mongolia

Mozambique

Namibia

Nepal

Nigeria

Pacific

Pakistan

Papua New Guinea

Philippines

Poland

Romania

Rwanda

Samoa

South Africa

Sri Lanka

St Lucia

St Vincent

Sudan

Swaziland

Tajikistan

Tanzania

Tonga

Uganda

United Kingdom


Uzbekistan

Vietnam

West Bank & Gaza

Zambia

Design by Celsius DesignConcept, project management and words by Through

Redevelopment of St John of God Hospital Subiaco – photograph used with permission of St John of God Health Care

NTTPEP has provided a box of fiction and non-fiction books to every Grade 1, 2 and 3 classroom in over 1,000 schools in Ende, Sikka and Ngada Districts in Flores, Indonesia

The Coffey Leadership Program is providing our staff with the tools they need to thrive in an environment of rapid growth, allowing them to generate new habits of thinking and to confront difficult issues.

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Coffey International Development has managed more than 130 education and training programs in over 30 countries, which are creating the foundations for economic development and a better quality of life.

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Coffey Geotechnics and Coffey Environments are providing specialist services to allow the development of the $US10 billion Ichthys Gas Field Development Project in Western Australia. Proudly, our work has resulted in minimal impact on the environment and a strong culture of safety.

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Marc Woodward joined Coffey when we acquired Soil and Rock Engineering in 2003. We highly regard Marc’s people skills and technical knowledge. He currently holds the positions of General Manager – Technical Operations and Senior Principal at Coffey Geotechnics.

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Coffey Projects managed the $A102 million redevelopment of Subiaco Hospital for St John of God Health Care. Full operational capabilities were maintained during the three-plus year project, which included the installation of sensitive calibrated equipment.

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Milalin Javellana is General Manager of Coffey International Development in the Philippines. She is also the Facility Director of AusAID’s $A57 million Philippines Australia Human Resource Development Facility project, which is improving the capacity of the country’s institutions.

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Coffey Natural Systems is conducting the environmental and social impact assessment for Atlas Iron Limited’s Pardoo Iron Ore Project in Western Australia. The proposed project includes an iron ore mine, haulage to the coast and the export of the ore through Port Hedland.

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Tara Halliday joined Coffey Natural Systems as a graduate environmental engineer. Today she manages our new Darwin office and her work takes her to exciting locations around the world, including Chile, Mexico, Brazil and the United States of America.

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Coffey Geotechnics’ specialist ground engineering knowledge is enabling the Ballina Bypass to be built on one of the deepest patches of soft soil in Australia. To stabilise the ground, we have introduced technology never before used in Australia.

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our brands

roger olds Managing Director

Glen simpson Executive Director

andrew white Company Secretary

simon curtis Company Secretary

stuart black Non-executive Director & Chair Audit Committee

charles Jamieson am Non-executive Director

roger olds Managing Director

stephen williams Chairman and Non-executive Director

our board & manaGement team

simon curtis Chief Financial Officer

bob simpson Corporate Development Officer

clive Parsons Chief Information Officer

cheryl-anne salton Group Manager People and Performance

Glen simpson Chief Executive Officer Coffey International Development

matt thomas Chief Executive Officer Coffey Geotechnics

Peter mirkov Chief Executive Officer Coffey Environments

dan o’toole Chief Executive Officer Coffey Mining

stuart Jones Chief Executive Officer Coffey Natural Systems

Peter coney Chief Executive Officer Coffey Projects

ManageMent teaMBoard

0 150,000 200,000 250,000 300,000 350,000 400,000

02–03

03–04

04–05

05–06

06–07 368,655

financial charts TOTAl rEvENuE ($’000) OPErATING EArNINGS bEFOrE INTErEST, TAx AND AMOrTISATION ($’000)*

0 10,000 20,000 30,000 40,000

02–03

03–04

04–05

05–06

06–07 32,315

year in review

another record profit for coffey international limited

revenue increased 46% to $368.7 million

operating eBita of $32.3 million, up 44% before share-based payment expense for acquisitions

Profit after tax before amortisation and share-based payment expense of $19.0 million, up 42%

$80 million rights issue oversubscribed

earnings per share prior to amortisation and share-based payment expense of 21.1 cents, up 11%

a fully franked dividend to 15 cents per share, up two cents or 15%

* before share-based payment expense (under AIFrS)

EArNINGS PEr ShArE* (cents per share)

DIvIDENDS PEr ShArE (cents per share)

PrOFIT AFTEr TAx ($’000)*

0 5,000 10,000 15,000 20,000

02–03

03–04

04–05

05–06

06–07 19,006

0 5 10 15 2520

02–03

03–04

04–05

05–06

06–07 21.1

0 3 6 9 1512

02–03 special

03–04

04–05

05–06

06–07 15.0

new financial system implemented in 12-month period

new branding launched

systems and people development expanded further to support future growth

acceleration of global footprint

eight new companies acquired this year

track record in successfully integrating and growing acquired companies, with annual eBita almost doubling across our 15 major acquisitions since 2003

year in review

Delivering for shareholdersFor six consecutive years, Coffey International limited has delivered a record profit to shareholders.

This year, due to amortisation and share-based payment expense relating to acquisitions, our published profit is different to our operating profit. Our accounts detail this, but our reporting excludes these non-cash items in order to better reflect the true operating performance of Coffey International limited. These changes are caused by the new AIFrS requirements.

For the 2006-07 year, we achieved revenue growth of 46 percent to $368.7 million. Our operating profit growth is 44 percent, with operating earnings before interest, tax and share-based payment expense relating to acquisitions and amortisation (operating EbITA) of $32.3 million.

The result has been delivered through 17 percent organic growth from existing businesses and contribution growth of 46 percent from 2006-07 acquisitions.

This is offset by 19 percent growth in group expenses, as we continue to expand our systems and people development to support continued growth.

Our profit after tax before amortisation and share-based payment expense of $19.0 million is up 42 percent year-on-year.

Earnings per share prior to amortisation and share-based payment expense of 21.1 cents has grown 11 percent following our $80 million rights issue.

Coffey International limited has declared a fully franked final dividend of eight cents per share, bringing our full-year dividend to 15 cents per share and two cents per share up on last year.

Our full-year dividend represents 72 percent of earnings per share pre-amortisation and share-based payment expense, which is within our 60-80 percent payout policy.

We have also continued the dividend reinvestment plan at a five percent discount.

Strategy set for long-term growthWith rapid urbanisation and global population growth, there is a need for infrastructure to develop in challenging and highly regulated environments and for communities to develop and prosper.

While continuing to deliver strong earnings growth, we are building a strong global consulting company, with a range of specialist services to meet the needs of the burgeoning global physical and social infrastructure markets.

Each of our businesses is a market leader and offers a specialised, knowledge-based service that is built on powerful client relationships.

coffey international limited continues to deliver strong earnings growth while building an enduring global consulting company.

During the year, we launched our new brands and further entrenched our leadership position in the markets in which we work. We also focused on expanding and replicating this success in other geographical areas that have penetration and growth potential – ensuring our success is not linked only to Australia’s future success.

To allow for profitable international expansion, we have invested in our brand and the development of systems, structures and processes, including a common technology platform. This allows us to not only expand to new locations, but also diversify into other services within the social and physical infrastructure markets such as project transactions.

As part of this strategy, we have implemented a new financial system during the year, to provide common project control and management reporting across all parts of the business.

While it did have a negative impact on productivity and cashflow in the first half year, this was an important initiative to underpin our international expansion and future growth.

And to cap off the year, we completed a fully underwritten $80 million rights issue, which was heavily oversubscribed. The issue has put Coffey International limited in an excellent position to continue our growth strategy.

National, international and sector expansionDuring the year, we acquired another eight companies, the same number we acquired in the previous financial year. Five of these companies joined our Consulting business and the other three have been integrated into our Project Management business.

These new companies have extended our international reach and strengthened the services we provide to clients. All of them are now well established within Coffey, with most already using Coffey systems and brand.

This year has also seen our businesses establish a number of new office locations and strengthen the capacity of our existing offices.

Coffey Geotechnics acquired Edge Consultants, allowing us to gain a foothold in the united Kingdom, where we believe major growth prospects exist. Foundation Engineering, a major player in the New Zealand market, also joined Coffey Geotechnics during the year.

In both cases, we will focus on building market-leading businesses, replicating the position we hold in Australia.

With 23 offices throughout Australia, Coffey Geotechnics is the biggest player in the market. The two recent international acquisitions mean we now have a significant presence in New Zealand and the united Kingdom.

as part of our growth strategy, we have extended our international reach and strengthened the services we provide to clients. coffey international limited continues to focus on organic and acquisition growth.

year in review

We will continue to investigate expansion prospects in international geotechnical markets that have growth and penetration potential.

We combined all our environmental businesses on 1 July 2006, forming Coffey Environments, our specialists in living and working places.

The acquisition of ATA Environmental has given Coffey Environments a stronger presence in the West Australian market, which is growing as a result of changes to environmental regulations.

los Angeles-based CTl Environmental, which was purchased near the end of the financial year, is our springboard into the large united States of America environmental services market.

Through acquisition and organic growth, Coffey Environments has added another six offices during the year.

rSG Global joined Coffey Mining during the year, making us a major player in the resources market. We now have significant operations in Africa – including Ghana, South Africa and Senegal – and substantial projects in South America and Canada.

Our project management capability strengthened in the second year of operation at Coffey, both in terms of the sectors in which we work and the geographical spread.

Through the acquisition of the Carson Group, we now have significant market share in

New Zealand. We also enhanced our capability to service federal government agencies through our purchase of Canberra-based haralambous Dowse and Associates.

The purchase of Duncan rhodes in South Africa means we now provide project management as well as mining and international development services throughout a variety of African nations.

We brought our project management businesses together and formed Coffey Projects on 1 July 2007.

During the year, Enesar, which has recently been rebranded as Coffey Natural Systems, expanded into Adelaide and Darwin.

Our specialist environmental and social impact assessment business has also been strengthened in Western Australia and Queensland.

At the beginning of the financial year, our international development companies united under the Coffey International Development brand.

We are delighted that Enterplan, which we acquired in 2006, has recently moved to our brand, giving us significant brand presence in the united Kingdom and Poland. During the year, we have also established new offices in the united Arab Emirates and the united States of America.

With our increased focus on corporate capability, we will continue to increase our market penetration and footprint. We have the ability to acquire

coffey international limited now provides mining, project management and international development services throughout africa. through our international development and environment businesses, we have also commenced our move into the United states of america.

strategically important businesses and smoothly and profitably integrate them into our business.

Our track record with acquisitions is impressive: across the 15 biggest acquisitions completed since 2003, we have increased the annual EbITA of these businesses from about $20 million to about $35 million.

42% Consulting business profit growth The Consulting business – which is made up of Coffey Geotechnics, Coffey Environments, Coffey Mining and Coffey Natural Systems – enjoyed another extraordinary year.

It delivered 79 percent of the Coffey International limited’s EbITA before group expenses, won a number of high-profile projects and increased the penetration of services and markets.

Operating EbITA for the division is $36.4 million, a rise of $10.8 million on last year.

The consulting division headcount is now approximately 1,550, and it has a broad spread of clients including constructors, developers, government, upstream and downstream oil and gas, industrial and resource companies.

During the year, our businesses have expanded their international footprints, with office locations and substantial operations now in the united States

of America, New Zealand, the united Kingdom and African markets.

The market outlook remains strong for our consulting services, with continued investment in physical infrastructure and resources sector expected for the foreseeable future. Projects also face increasing environmental legislation, which bodes well for our specialist services.

International Development business expands into four continentsOur International Development business, which consists of Coffey International Development and Specialist Training Australia, now has a truly global capability, with major operations in the Asia Pacific and Europe, and entry points into the Middle East, the united States of America and Africa.

As a result of investment in business development, set-up costs in new markets and some one-off items amounting to about $1.6 million, EbITA for the division has fallen from $3.7 million last year to $2.0 million this year. This includes a disappointing result for Specialist Training Australia, with the business making a loss due to delays in a major project.

however, the division has significantly improved its project wins during the year, most of which have three-to-five year terms. We also have substantial business potential in the Middle East, as a result of our business development investment.

With continued world-wide investment in infrastructure and resources, the outlook for our consulting division remains extremely robust. our businesses are also able to help clients deal with growing environmental regulation.

With a new global structure in place and acquisition prospects well advanced in the united States of America and Europe, our International Development business is now primed to deliver stronger profit moving forward.

headcount for the division is around 500 staff – approximately 80 permanent staff and 420 contractors on projects.

Project Management business EbITA up 167%Our Project Management business, Coffey Projects, has expanded rapidly during the year, with significant growth into the government and defence sector and solidifying our position in the booming united Arab Emirates market. We also now have a significant foothold in the New Zealand and rapidly growing sub-Saharan African markets.

Specialist project management skills have been in strong demand during the year, and Coffey Projects has obtained a significant market share. EbITA for the division is up $5.0 million to $8.0 million for the year, while revenue has risen 146 percent to $56.0 million.

The business has performed strongly in 2006-07, its second year in Coffey, and is now well set up for further growth in 2007-08 with our expanded international footprint.

The Project Management business now employs around 400 people, working on property development, retail, sporting, infrastructure, land and other commercial development contracts.

Attracting and empowering talented peopleCoffey International limited continues to strengthen our people and performance function to ensure our businesses have the tools to attract, retain and empower talented staff.

In a time of global skills shortage, we have increased staff numbers from 1,700 to 2,500 during the year.

We have been able to attract some of the best specialists from around the world, who are drawn to working in our market-leading businesses, and be involved in technically challenging and rewarding projects.

With our increasing global footprint, we are able to offer staff the opportunity to travel and work overseas.

To facilitate this, we now have a global internal vacancies portal, where staff can transfer across businesses or regions – meaning we retain valuable staff within the Coffey group.

year in review

in a time of global skill shortage, coffey international limited has been able to attract and retain some of the best specialists from around the world. and with our global footprint, we are able to offer staff the opportunity to travel and work overseas.

During the year, we have:

introduced an Employee Assistance Program for Australian and New Zealand employees and their immediate families

increased staff retention rates to above industry standard for Coffey Geotechnics

strengthened our people and performance team, with a focus on specialist capabilities including recruitment, learning and development and payroll, as well as extending our capability in overseas locations

launched the Coffey leaders Program, providing a further 25 staff with support to establish new habits of thinking and behaving. To date 43 staff have received formal transformational leadership training

conducted targeted management training across the group with a focus on Coffey systems

improved our internal recruitment processes to allow all employees access to opportunities

introduced up to eight weeks paid maternity leave

launched the Coffey Employee Exempt Share Plan to enable employees to acquire shares on a tax concessional basis

implemented a salary-continuance insurance option to all Australian staff.

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Systems to support growthAs a knowledge-based organisation, the systems that support us are critical if we are to achieve our global growth plans.

For that reason, we have invested heavily in systems to support communication and knowledge sharing across the group.

That means staff will be able to access vital project and technical information and prior learnings, regardless of where they are located.

It also allows us to disseminate information about our service delivery systems, ensuring we have a consistent service offering and uniform use of our brand.

During the year, we have:

rolled out infrastructure to over 25 offices, including offices in New Zealand, united Arab Emirates, South Africa and the Philippines

implemented a new system across 26 of our laboratories

deployed a single billing and financial system across the group in Australia, allowing staff to easily review forecast project profitability, resource scheduling and budget versus actual project profitability

changed our domain name to the more international coffey.com.

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in a major achievement for any organisation, we have deployed a single billing and financial system across the australian group during the year, with international rollout set in motion for this coming year.

year in review

launch of our new brandOn 1 July last year, we launched the new Coffey brand. It seems such a long time ago because our distinctive new brand is already well entrenched in the markets in which we operate.

Our brand has really set us apart from our competitors and clearly defines for our clients what we stand for and what they can expect from us.

On 1 July this year, our Project Management business – all four companies – became Coffey Projects, with offices decorated in a sea of Ferrari red to mark this special day.

The red represents the results-oriented culture of our project management division – and the numbers have supported this, with strong growth coming from this business.

Enterplan also rebranded in July, giving our Coffey International Development brand substantial brand awareness in Europe.

Enesar’s turn to rebrand occurred in August, with the birth of Coffey Natural Systems, Coffey’s specialists in people and place.

The Coffey Natural Systems brand launch coincided with the opening of a new office in Darwin, which also houses Coffey Projects, Coffey Geotechnics and Coffey Environments.

To support the Coffey brand, we launched a number of programs during the year, including a website with a new look and functionality.

We also launched our global magazine, Infusion, during the year, which communicates the range of specialist services we offer and provides opportunities to cross-sell among the group.

We have focused on developing new communication and support material to market our specialist skills to clients, and our media strategy has been expanded.

Our brand has been profiled in the international media, both in specialist publications and the finance and business media.

Enhanced communications capacityAs part of our commitment to developing our brand globally, we have enhanced our communications capacity, with the recruitment of experienced communications experts into many areas of the business.

We now have a communications manager to focus on group communication strategy – including enhancing staff communication – and dedicated web and intranet specialists.

Coffey Geotechnics, Coffey Environments and Coffey International Development have also employed dedicated marketing or communications specialists.

coffey international limited launched our new brand during the year. this has really set us apart from our competitors, clearly defining for our clients what we stand for and what they can expect from us.

Future

Through the implementation of a sound business strategy, a willingness to invest in essential systems and corporate capability, and the commitment of our great people, Coffey International limited has created the conditions for future profit growth.

The market outlook is extremely favourable, with investment in physical infrastructure expected to continue momentum.

According to a recent report, it is estimated that modernising and expanding the water, electricity and transportation systems of the cities of the world over the next 25 years will require around $uS40 trillion.*

The development assistance sector also continues to attract global attention and increased funding. Population growth is stretching social and community infrastructure, and climate change is increasing the need for sustainable environmental development.

Today, it is estimated that 515 million young people live on less than $uS2 a day,** and conflicts in fragile states make daily headlines.

At present we have relatively small entry points into the much larger markets of the united Kingdom, the united States of America, Eastern Europe and Africa.

While our businesses are not yet at a scale to create efficient market leadership, within just 12 months

we have created an excellent platform from which to launch major growth of our businesses.

We acknowledge this has taken up some of the possible profit we could have made, if we had just focused on the very strong Australian market.

however, we believe now is the ideal time to expand our business internationally and will prove to be the start of the next major expansion phase, securing the long-term success of Coffey.

Continued focus on client delivery, systems and peopleCoffey International limited’s board and management team will continue to work with our businesses, ensuring our services meet the needs of these dynamic infrastructure markets. The outcomes we deliver for clients and the enduring relationships we nurture will be the cornerstone for delivering strong organic growth for our shareholders.

Our systems will be rolled out to our global office network, leveraging the investment we have made over the last two years.

We will also continue to invest in and develop our people with a range of initiatives, including new graduate development and mentoring programs, updated induction processes and the introduction of a candidate management system.

With booming market conditions, we believe now is the ideal time to expand internationally. this is the start of coffey international limited’s next expansion phase and it will secure the long-term success of our business.

Our people and performance function will also focus on learning and development, career development and succession planning.

The external face of Coffey, our brand, will play an important role in our business. We have planned a number of initiatives that will cement our unique position in the market and provide opportunities for greater service penetration.

Our communications team will continue to work with our new businesses, providing them with support tools as they move to the Coffey brand.

New sectors, new capacityCoffey International limited will progress strategically appropriate acquisition opportunities. This not only supports growth, but also diversifies the business across a range of services, sectors and geographies.

We believe this is important for our future success, as it protects us from a downturn in any one part of our business having a material effect on our financial performance.

At the beginning of the new financial year, we acquired the combined businesses of Asia Pacific rail and John Wertheimer Consultants. More than 50 track, signalling, rail infrastructure and project management specialists joined Coffey, providing us with specialist skills in the rail sector and boosting our established project management capability.

Asia Pacific rail, which will continue to operate under its current name in the short term, will spearhead the formation of a new specialist rail business within Coffey.

The business will specialise in rail infrastructure planning, delivery, operation and maintenance, which we see growing rapidly through organic and acquisition growth.

The other component of this acquisition, John Wertheimer Consultants, provides project and contract management services and will be incorporated into Coffey Projects.

Acquisitions into strategic markets open more doorsThe Peron Group, a high-level strategic advisory business operating in the public infrastructure space, has recently joined Coffey.

It provides advice on a range of infrastructure asset and service transaction issues including investment justifications, regulatory reform, project governance, procurement and commercial structuring.

The company’s annual turnover is currently $8 million and it has been engaged on projects including Queensland’s Western Corridor recycled Water Scheme and brisbane’s North-South bypass Tunnel, as well as victoria’s Goldfields Super-pipe and bus reform.

Future

coffey international limited will progress strategically appropriate acquisitions to support growth and diversify our business across a range of services, sectors and geographies.

In recent times, Peron has also worked for multilateral agencies on projects in Africa, Indonesia and Papua New Guinea.

The acquisition is strategically important for Coffey, as it allows us to be involved in the full lifecycle of a project, from concept to completion.

This means in addition to our considerable experience managing the delivery of projects, we now have the expertise to provide advice on the front-end aspects of a project, including investment option analysis, commercial structuring, transaction arrangements and taking a project to the market.

Coffey will now have access to projects across the full scope of infrastructure developments including economic, social and environmental projects. This ‘cradle to grave’ expertise encourages strong, long-term relationships with our infrastructure clients.

We will also be able to pursue opportunities we may not have been previously aware of and extend our reach into other areas of the infrastructure market, such as water and energy.

To expand our strategic advisory business, The Peron Group will be integrated with Stratcorp Consulting, which we purchased at the time of writing the annual report.

Stratcorp Consulting is a boutique consultancy, providing high-level strategic advice in the area of large sporting and leisure projects. Its specialist

services include master planning, business cases, community consulting, market research, lobbying, funding proposals and project delivery, specifically for the sporting and leisure industry.

Clients include a number of high-profile names, including the Australian Football league, Gold Coast City Council, City of Sydney, the Australian Jockey Club and racing victoria.

The company also recently completed a regional strategy to drive the development of aquatic leisure facilities for the next 10 to 15 years in the City of Auckland region. Its further geographic expansion will be one of our first strategic considerations.

What makes the future so exciting for us is not just our expanded capability, but the flow-on impacts to other parts of the Coffey group, providing a strong platform to capture and expand market share in infrastructure across the globe.

Together we really can create something extraordinary for communities around the world.

* Doshi, v., Shulman, G. and Gabaldon, D. “lights, Water, Motion”, Strategy and business, Issue 46, Spring 2007, pp. 1-15.

**united Nations World Youth report 2005

our ‘cradle to grave’ expertise encourages strong, long-term relationships with our infrastructure clients and provides flow-on opportunities for each part of our business. the future has immense opportunities for coffey international limited.

industry recognises the value specialist geotechnical engineers bring to a project.

as a result, our services are becoming a crucial component of modern projects, with our clients turning to us for specialist knowledge from the early planning phase and right through construction and maintenance.

Key servicesGeotechnical engineering – analysis and design, site investigation, geo-environmental engineering, groundwater, geophysics and laboratory testing

Key sectors Infrastructure, industrial, land development, mining, oil and gas, and buildings

StaffAround 700

Watch this spaceWatch us become a global player in the geotechnical industry

Exciting news about our testing operations

Continued commitment to reduce our clients’ risk and provide outstanding services

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Major achievements for 06/07First steps taken in the creation of a global geotechnical business, with key acquisitions in the united Kingdom and New Zealand

Coffey Geotechnics’ strength in the Australian infrastructure market, with increasing size and number of contracts written

2006 ACEA Award for Excellence – Project of the Year for the lawrence hargrave Drive, New South Wales

Securing two major alliance projects – hume highway and ballina bypass

Appointment of another five senior principals to the Council of Senior Principals, our program which fosters innovation and technical excellence

Staff retention rate now higher than industry standards

Attracting outstanding staff, all keen to taste the Coffey experience

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the demand for environmental-related services is the result of increasing legislation and the need to address the legacy of contamination – and is compounded by the dramatic rise in the needs of the resource sector.

coffey environments is developing strategic people programs and providing flexible working conditions. We are also extending the types of specialist services we offer and expanding into north america, new Zealand and europe.

Key servicesSustainable engineering

Workplace health and safety

Environmental

Environmental impact assessment and field ecology

Waste management

Analytical

StaffAround 500

Key geographical areasAustralia, united States of America, New Zealand, Southeast Asia and the Pacific Islands

Did you know?We not only study and report on environmental problems, we also implement practical solutions

Watch this spaceWatch us drive energy management programs with our infrastructure clients

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Major achievements for 06/07Creation of the single largest environmental, health and safety and sustainability consultancy in Australia through the merger of Coffey’s five separate businesses

Delivered financial performance in a year of significant change

Entered the united States of America market through the acquisition of CTl Environmental Services

Developed a team who are world leaders in their areas of expertise

Extension of major contracts with Mobil and CbA, continued significant projects with Caltex, Shell, Department of Defence, Telstra and Sydney Airport

Won Shell Karachi, Marat Island and Midlands rail projects

Strengthened expertise in a range of areas including electrical engineering, toxicology, industrial hygiene, asbestos, green building ratings and waste treatment

Added six new offices

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the industry continues to expand due to demand from emerging economies. Both capital and investment markets continue to globalise, necessitating an ever-increasing international presence.

With a professional skills shortage, coffey Mining is investing in and supporting tertiary training courses. We are also increasing recruitment and training of professionals from eastern europe, West africa and south america.

Key sectorsMining

StaffAround 300

Proud of thishaving operated in West Africa for over 10 years, it is truly gratifying to witness the political, economic, social and environmental development resulting from mineral investment and mining

Coffey Mining and balance were entrusted to investigate the cause of the rockfall at beaconsfield Mine in Tasmania, complete geotechnical studies and help develop a safety framework to allow the mine to reopen

Watch this spacePlans to open offices in North and South America in 2007-08, and in Europe in 2008-09

Major achievements for 06/07Through the acquisition of rSG Global, we now provide a full complement of mining-related disciplines, including geology, exploration, resources, mining engineering and metallurgy

Expansion of African markets, with a new office in Zambia and expansion of our Johannesburg office

Increased services to North and South American markets

launch of subsidiary companies – Coffey Mine Development and balance, our strategic advisory business

Established measurement and instrumentation group

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Mineral commodity and energy prices are at historically high levels and this is likely to continue for some time due to the near-simultaneous urbanisation and industrialisation of the two most populous nations, china and india.

this provides booming market conditions in the mining and upstream oil and gas sectors. the infrastructure sector is also very strong due to a decade of robust domestic economic growth and a backlog of spending on infrastructure projects.

Key services Environmental and social impact assessment, technical services including geographic information systems (GIS) and environmental management

Key sectors Mining and minerals processing, upstream oil and gas, and infrastructure

StaffAround 70

Project locations for 06/07Australia, brazil, Canada, Chile, Ethiopia, Ghana, Guinea, haiti, Indonesia, Iran, laos, Mexico, the Philippines, Papua New Guinea, Solomon Islands and united States of America

What do clients look to us for?Assistance in obtaining environmental approvals for their projects, which often have a capital value in excess of $500 million

At the cutting edge of technologyMining seafloor deposits of gold and base metals 1,500 metres below the sea surface

Electricity generation by wave power

Sample of projects won 06/07PNG lNG Project for ExxonMobil

Pardoo Iron Ore Project for Atlas Iron limited

Solwara 1 EIS for Nautilus Minerals

ramu Nickel Project for China Metals and Metallurgy

Carrapateena Gold and Copper Prospect for TeckCominco

Kanmantoo Copper Project for hillgrove resources

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it is becoming harder to make developments feasible, and therefore clients are turning to specialist leaders to think strategically and laterally to make development possible.

Because we specialise in project management and are independent of design or construction, our clients know their projects are in safe hands.

Key services Strategic advice on developments

Feasibility advice

Management of design and construction process

Establishment of best procurement approach for each project

Management of tender and post-construction processes

StaffAround 400

Office locationsAustralia, New Zealand, Asia, South Africa and united Arab Emirates

Did you know?We are a Global registered Education Provider for the Project Management Institute 2007 to 2008

Coffey Geotechnics introduced us to the Port of brisbane Corporation, and we have now joined the team working on the ground improvement trials for the reclamation of 235 hectares of sub-tidal flats. To meet the project’s complex nature and tight timeframes, we are project managing the trial works and helping to plan future reclamation works

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What stands us apart?Independent company able to meet clients’ needs locally, nationally and internationally

We allocate senior staff to each project

We provide formal project management training courses for industry and for our staff

Decisive leadership and management of projects

largest project management resource base in the Southern hemisphere

Major achievements for 06/07bringing four companies together to form Coffey Projects

Expansion of New Zealand and South African markets

Increased penetration of government and defence sectors

Providing great outcomes for clients and contributing to Coffey’s profit growth

Seven awards for project and employer excellence

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coffey international development’s clients have access to the best knowledge from around the world. and it is all delivered through our local specialists, who have an intimate understanding of the culture and the community.

Key services Specialist services that transform governance systems, public services and business models in emerging markets

Key sectors Public sector development, private sector growth, stabilisation and recovery

StaffAround 500, including contractors

Major achievements for 06/07Putting in place a global operation, with offices in New Jersey, reading, Warsaw, Dubai, hanoi, Manila, Port Moresby, Adelaide and Jakarta

Setting up our Europe and Africa business, Enterplan, to become part of the Coffey International Development brand

What stands us apart?Global capability, local expertise

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Watch this spaceWe expect to have some great news coming from our work in the Middle East

Major projects won in 06/07AusAID’s Enterprise Challenge Fund for Pacific and South East Asia, a $20 million, six-year pilot which will cover Fiji, Papua New Guinea, eastern Indonesia, southern Philippines, vanuatu, Solomon Islands, Cambodia, laos PDr and East Timor

Institutional Strengthening for rural Finance, laos PDr

learning Assistance Program for Islamic Schools – Teacher Training, Indonesia

Sub-National Strategy, Papua New Guinea

reconstruction Program, Nias Island, Indonesia

The Department for International Development Global livelihoods resource Centre, united Kingdom

Advocacy Fund: business Sector Programme Support, Kenya

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comPany Locations

consUlting BUsiness

Australia

Adelaide

Albury

Alstonville

Armidale

bendigo

brisbane

Canberra

Coffs harbour

Darwin

Dunsborough

Frankland

Geelong

Gosford

hobart

Kalgoorlie

launceston

Maroochydore

Melbourne

Newcastle

Nowra

Perth

Port Macquarie

Sydney

Townsville

Tuncurry

ulverstone

Wollongong

Ghana

Accra

New Zealand

Auckland

Orewa

Tauranga

Philippines

Manila

South Africa

Johannesburg

united Kingdom

burton-upon-Trent

Glasgow

Manchester

reading

united States of America

los Angeles

Zambia

lusaka

Project ManageMent BUsiness

Australia

Adelaide

brisbane

bunbury

Cairns

Canberra

Darwin

Melbourne

Newcastle

Perth

Sydney

Townsville

New Zealand

Auckland

Christchurch

Queenstown

Wellington

South Africa

Johannesburg

united Arab Emirates

Dubai

vietnam

ho Chi Minh City

Welcome to the 2007 Coffey Annual Report.

I’m thrilled by everything we have accomplished this year.

And there is still so much more we can achieve – for staff, for clients, for shareholders and for the communities in which we work.

Roger OldsManaging DirectorCoffey International Limited


InteRnAtIonAl Development BusIness

Australia

Adelaide

Indonesia

Jakarta

Papua New Guinea

Port Moresby

Philippines

Manila

Poland

Warsaw

United Arab Emirates

Dubai

United Kingdom

Reading


New Jersey

VietnamHanoi

Project Offices

Afghanistan

Africa

Albania

Angola

Australia

Bangladesh

Belize

Botswana

Cambodia

China

Democratic Republic of Congo

Dominica

Dominican Republic

Fiji

Georgia

Ghana

Grenada

Guyana

Haiti

India

Indonesia

Iraq

Jamaica

Kenya

Kosovo

Lesotho

Malawi

Maldives

Micronesia

Mongolia

Mozambique

Namibia

Nepal

Nigeria

Pacific

Pakistan

Papua New Guinea

Philippines

Poland

Romania

Rwanda

Samoa

South Africa

Sri Lanka

St Lucia

St Vincent

Sudan

Swaziland

Tajikistan

Tanzania

Tonga

Uganda

United Kingdom


Uzbekistan

Vietnam

West Bank & Gaza

Zambia

Design by Celsius DesignConcept, project management and words by Through

Redevelopment of St John of God Hospital Subiaco – photograph used with permission of St John of God Health Care

NTTPEP has provided a box of fiction and non-fiction books to every Grade 1, 2 and 3 classroom in over 1,000 schools in Ende, Sikka and Ngada Districts in Flores, Indonesia

Annual Report

2007

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Financial Report

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Design by Celsius Design

1 Corporate directory 2 Directors’ report 17 Auditors’ independence declaration 18 Corporate governance statement 23 Financial reports 24 Income statements 25 Balance sheets 26 Statements of changes in equity 27 Cash flow statements 28 Notes to the financial statements 28 1 Summary of significant accounting policies 36 2 Financial risk management 36 3 Critical accounting estimates and judgements 38 4 Segment information 40 5 Revenue 41 6 Other income 41 7 Expenses 42 8 Income tax expense 43 9 Current assets – Cash and cash equivalents 44 10 Current assets – Receivables 44 11 Current assets – Inventories 44 12 Non-current assets – Receivables 45 13 Non-current assets – Other financial assets 45 14 Non-current assets – Property, plant and equipment 46 15 Non-current assets – Deferred tax assets 47 16 Non-current assets – Intangible assets 48 17 Current liabilities – Payables

48 18 Current liabilities – Borrowings 48 19 Current liabilities – Provisions 49 20 Non-current liabilities – Borrowings 51 21 Non-current liabilities – Deferred tax liabilities 51 22 Non-current liabilities – Provisions 52 23 Contributed equity 53 24 Reserves and retained profits 54 25 Minority interest 54 26 Dividends 55 27 Director and executive disclosures 58 28 Remuneration of auditors 59 29 Contingencies 59 30 Commitments 60 31 Related party transactions 61 32 Business combinations 70 33 Subsidiaries 73 34 Interests in joint ventures 74 35 Economic dependency 74 36 Events occurring after the balance sheet date 75 37 Reconciliation of profit after income tax to net

cash inflow from operating activities 75 38 Earnings per share 76 39 Share-based payments 79 Directors’ declaration 80 Independent audit report to the members 82 Shareholder information


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Corporate DireCtory

DirectorsStephen r Williams LL.B Chairman and Non-Executive Director

Stuart a Black FCa, FaiCD Non-Executive Director

Charles e Jamieson aM, Ba, Diped, Hon.Faiex, MaiCD Non-Executive Director

roger J olds Be (Hons), Dip. Geo. eng, Fie aust, Cpeng Managing Director

Glen H Simpson phD, B.ag.Sc. (Hons), QDa (Hons), FaiCD Executive Director

SecretariesSimon C Curtis FCa

andrew C White Cpa

Notice of annual General Meetingthe annual general meeting of Coffey international Limited will be held at: Macquarie Graduate School of Management Level 6, 51 – 57 pitt Street Sydney NSW 2000time: 11.30amDate: 23 November 2007

a formal notice of meeting is enclosed.

principal registered office in australiatower 1, Level 3 495 Victoria avenue Chatswood NSW 2067 telephone +61 2 8404 4300 Facsimile +61 2 9419 5689

Share registerregistries Limited Level 2, 28 Margaret Street Sydney NSW 2000

auditorpricewaterhouseCoopers Chartered accountants 201 Sussex Street Sydney NSW 2000

SolicitorsKennedys Level 31, Citigroup Centre 2 park Street Sydney NSW 2000

Kemp Strang Lawyers Level 14, 55 Hunter Street Sydney NSW 2000

BankersWestpac Banking Corporation Level 3, Westpac place 275 Kent Street Sydney NSW 2000

Stock exchange listingsCoffey international Limited shares are listed on the australian Stock exchange. aSX Code = CoF

Website addresswww.coffey.com

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your directors present their report on the consolidated entity consisting of Coffey international Limited and the entities it controlled at the end of, or during, the year ended 30 June 2007.

Directorsthe following persons were directors of Coffey international Limited during the whole of the financial year and up to the date of this report:

Stephen r Williams (Chairman and Non-executive Director)Stuart a Black (Non-executive Director)Charles e Jamieson (Non-executive Director)roger J olds (Managing Director)Glen H Simpson (executive Director)

principal activitiesDuring the year the principal continuing activities of the consolidated entity consisted of providing engineering, scientific and project management services throughout australia and overseas.

there were no significant changes in the nature of the activities of the consolidated entity during the year.

DividendsDividends paid to members during the current year are as follows: 2007

$’0002006

$’000

Final ordinary dividend for the year ended 30 June 2006 of 8 cents (2005: 7 cents) per fully paid share paid on 31 october 2006 6,157 5,166

Special dividend for the year ended 30 June 2005 of 2 cents per fully paid share paid on 31 october 2005 – 1,462

interim ordinary dividend of 7 cents (2006: 5 cents) per fully paid share paid on 2 april 2007 7,457 3,683

13,614 10,261

in addition to the above dividends, since the end of the financial year the directors have recommended the payment of a final ordinary dividend of $8,746,000 (8 cents per fully paid share) to be paid on 31 october 2007 out of retained profits at 30 June 2007. the Company’s dividend reinvestment plan will be activated for this dividend, at a discount of 5%.

review of operationsa summary of consolidated revenues and results for the year by significant industry segments is set out below:

Segment Revenue Segment Result

2007 $’000

2006 $’000

2007 $’000

2006 $’000

Consulting Business 219,848 142,708 35,765 25,622

international Development Business 93,047 86,343 1,438 3,251

project Management 56,219 22,835 2,534 1,781

eliminations (459) – – –

Consolidated 368,655 251,886 39,737 30,654

Unallocated expenses (14,396) (10,074)

interest expense (5,258) (3,196)

Profit before income tax expense 20,083 17,384

income tax expense (6,443) (5,723)

profit attributable to minorities (640) (79)

Net profit attributable to the members of Coffey International Limited 13,000 11,582

Comments on the operations of Coffey international Limited, and the results of those operations for the year under review, are set out in the published annual report and form part of this report.

earnings per share 2007

Cents2006

Cents

Basic earnings per share 14.4 16.5

Significant changes in the state of affairsDuring the year, the Company acquired rSG Global Consulting pty Limited, ata environmental, eDGe Consultants UK Ltd, Carson Group, Haralambous Dowse, Duncan rhodes (proprietary) Limited, Foundation engineering and Xeon inc. refer to note 32 for further information on these acquisitions.

on 22 November 2006 the company invited its shareholders to subscribe to a rights issue of 22,194,833 ordinary shares at an issue price of $3.55 per share on the basis of 2 shares for every 7 fully paid ordinary shares held, with such shares to be issued on 29 December 2006, and rank for dividends after 29 December 2006. the issue was fully underwritten.

DireCtorS’ report

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in the opinion of the directors, there were no other significant changes in the state of affairs of Coffey international Limited that occurred during the year under review, not otherwise disclosed in this report or the financial statements.

Matters subsequent to the end of the financial yearon 2 July 2007 the Company acquired 100% of the voting shares in asia pacific rail pty Limited and John Wertheimer Consultants pty Limited for $6.9 million in cash and shares.

on 8 august 2007 the Company acquired 100% of the voting shares in the peron Group pty Limited for $17.6 million in cash and shares.

on 3 September 2007 the Company acquired the business assets of Stratcorp Consulting pty Ltd for $6.9 million in cash and shares.

on 24 September 2007 the Company announced it had signed an agreement to acquire 100% of the voting shares in Geoexplore Consultoria e Serviços Ltda for approximately $8.0 million in cash and shares.

except for these items, no other matter or circumstance has arisen since 30 June 2007 that has significantly affected, or may significantly affect:

(a) the consolidated entity’s operations in future financial years, or(b) the results of those operations in future financial years, or(c) the consolidated entity’s state of affairs in future financial years.

Likely developments and expected results of operationsComments on expected results of certain operations of the consolidated entity are included in the annual report. Further information on likely developments in the operations of the consolidated entity and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.

environmental regulationCoffey international Limited is committed to the protection of the environment, to the health and safety of its employees, customers and the public at large, and to the compliance with all applicable environmental laws, rules and regulations in the jurisdictions in which it conducts its business. the consolidated entity is not subject to significant environmental regulation in respect of its operations. there are small disposals of waste from the consolidated entity’s soil science laboratories. this waste is disposed under licence to an appropriate disposal facility.

information on directors

Director ExperienceSpecial responsibilities

Particulars of director’s interests in shares of Coffey International Limited Ordinary Shares

Stephen r Williams, LL.B Chairman and Non-executive Director, age 54

Mr Williams joined the board as Chairman in November 1994. prior to this he had an extensive involvement with the Company as a professional advisor on its public listing in 1989. Mr Williams has many years of experience specialising in commercial and corporate areas in law and business generally. He is based in Sydney and is a partner with Kemp Strang Lawyers.

Mr Williams is also a director of Saltbush agricultural Management Limited, an unlisted public company.

Mr Williams is Chairman of the board, Chairman of the remuneration Committee and a member of the audit Committee.

131,912

Stuart a Black, FCa, FaiCD Non-executive Director, age 52

Mr Black joined the board in March 2002. He is based in Sydney and is a partner in the chartered accounting firm Chapman & eastway. He heads up the firm’s management advisory division, as well as servicing his own accountancy and taxation clients. He is a former president of the institute of Chartered accountants in australia, is a former acting chair and current director of the australian professional and ethical Standards Board and is a non-executive director of the Country education Foundation of australia Ltd.

Mr Black is Chairman of the audit Committee and a member of the remuneration Committee.

112,508

DireCtorS’ report

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roger J olds, Be (Hons), DipGeoeng, Fie aust, Cpeng Managing Director, age 51

Mr olds joined the Company in 1979. He was appointed to the board in 1995 and as Managing Director in april 1996. He was also Chief executive officer of Coffey Geosciences from 1995 to 2003. Mr olds has extensive operational and management experience with the Group and is Senior principal Geotechnical engineer. He is based in Melbourne.

Mr olds does not hold any other directorships.

Mr olds is accountable for the overall performance and strategic direction of the Company, and is the prime point of media and investor contact. in addition, Mr olds is a member of the remuneration Committee.

1,595,954

Charles e Jamieson, aM, Ba, Diped, Hon.Faiex, MaiCD Non-executive Director, age 63

Mr Jamieson has had an extensive career in the international business arena including his term as the Managing Director of austrade from 1996 to 2002. prior to this he held senior trade and diplomatic positions in a wide range of global market regions.

Mr Jamieson was appointed as a Member of the order of australia in 2004. He is currently a non-executive director with Linfox pty Ltd. He is also the Special trade envoy to the Middle east for the Victorian Government and acts as an independent advisor to companies in international business.

Mr Jamieson is a member of the audit Committee.

Nil



Glen H Simpson, phD, B.ag.Sc(Hons), QDa(Hons), FaiCD executive Director age 63

Dr Simpson was appointed to the board in august 2000, following the Company’s acquisition of SaGriC international. Dr Simpson has been the Managing Director of SaGriC international since 1987. He has extensive experience in managing and directing international development contracts in more than 30 countries, since 1975. Dr Simpson is a past director of a number of companies operating in the international development field, and is a Foundation Fellow of the australian institute of Company Directors. He is based in adelaide.

Dr Simpson does not hold any other directorships.

Dr Simpson heads the Company’s international development business.

254,407

DireCtorS’ report

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Company Secretarythe company secretaries are Simon C Curtis, Ma, FCa (appointed to the position in 2001) and andrew C White, Ba, Cpa (appointed to the position in 2000).

prior to joining Coffey international Limited Mr Curtis led group finance functions in two other listed companies and Mr White held financial management positions in the resources sector.

Meetings of directorsthe numbers of meetings of the Company’s board of directors and of each board committee held during the year ended 30 June 2007, and the numbers of meetings attended by each director were:

Full meeting of directors Meetings of committees

Number of meetings attended by:

audit Commitee

remuneration Commitee

A B A B A B

S r Williams 19 19 6 6 2 2

S a Black 19 19 6 6 2 2

C e Jamieson aM 19 19 6 6 * *

r J olds 19 19 * * 2 2

G H Simpson 19 19 1 1 * *

* Not a member of the relevant committee during the year

a = Number of meetings held while in office B = Number of meetings attended while in office.

Retirement, election and continuation in office of directors

in accordance with article 12.3 of the articles of association Mr S a Black retires as a director of the Company at the annual General Meeting by way of rotation and, being eligible, offers himself for re-election. in accordance with Company policy and as outlined in the Corporate Governance Statement Mr S r Williams, having been a director for more than ten years and being eligible, offers himself for re-election.

remuneration reportthe remuneration report is set out under the following main headings:

A principles used to determine the nature and amount of remuneration

B Details of remuneration

C Service agreements

D Share-based compensation

E additional information.

the information provided in Sections a – D includes remuneration disclosures that are required under accounting Standard aaSB 124 Related Party Disclosures. these disclosures have been transferred from the financial report and have been audited. the disclosures in Section e are additional disclosures required by the Corporations Act 2001 and the Corporations Regulations 2001 which have not been audited.

A principles used to determine the nature and amount of remuneration (audited)

the Company acknowledges that its major asset and competitive advantage is its people and for this reason its remuneration strategy is critical in attracting, rewarding and retaining its intellectual capital base. the objective of the Company’s executive reward framework is therefore to ensure reward for performance is competitive and appropriate for the results delivered.

the framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and the board ensures that executive reward satisfies the following key criteria for good reward governance practices:

• competitiveness and reasonableness

• acceptability to shareholders

• performance linkage/alignment of executive compensation

• transparency

• capital management.

the Company’s executive remuneration strategy balances the interests of shareholders and employees.

alignment to shareholders’ interests is achieved by providing incentives which reward outcomes not just effort, and which include both profit and capital based Kpi’s. For selected key executives, economic value added compensation is a core component of the remuneration strategy. this strategy assists in attracting and retaining high calibre executives.

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alignment to employees’ interests is achieved by rewarding capability and experience, reflecting reward for individual and team contribution to growth in shareholder wealth, providing clear structure for earning rewards and providing recognition for contribution.

the framework provides a mix of fixed and incentive-based remuneration, and a blend of short and long-term incentives. as executives gain seniority with the Group, the balance of this mix generally shifts to a higher proportion of “at risk” rewards.

Non-executive directors

Fees and payments made to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors’ fees and payments are reviewed annually by the board. the board also has referred to the advice of independent remuneration consultants to ensure non-executive directors fees and payments are appropriate and in line with the market. the Chairman’s fees are determined independently to the fees of non-executive directors based on comparative roles in the external market. the Chairman is not present at any discussions relating to determination of his own remuneration. No directors receive share options.

the current fee for non-executive directors was last reviewed with effect from 1 october 2006 and is inclusive of committee fees. Non-executive directors’ fees are determined within an aggregate directors’ fee limit, which is periodically recommended for approval by shareholders. the current aggregate limit is $500,000.

Retirement allowances for directors

in line with recent guidance on executive and non-executive directors’ remuneration, there are no retirement allowances for directors.

Executive pay

the executive pay and reward framework has three components:

• fixed remuneration

• short-term performance incentives

• long-term incentives through participation in the Coffey international employee Leveraged Share plan, on which information is set out in note 39 to the financial statements.

the combination of these comprises the executive’s total remuneration.

Fixed remuneration

executives are offered a competitive fixed remuneration package which is a total employment cost package that may be delivered as a mix of cash and prescribed non-financial benefits at the executives’ discretion. external benchmarking is periodically undertaken to ensure the market competitiveness of fixed remuneration, and the level of remuneration for senior executives is reviewed annually and on promotion.

there are no guaranteed increases in fixed remuneration in any senior executives’ employment arrangements other than as disclosed in Section C of the remuneration report.

Short-term incentives

Should the Company achieve pre-determined financial and non-financial targets set by the board then short-term incentives (Sti) are available for selected executives. each executive has a target Sti opportunity depending on the accountabilities of the role and impact on organisation or business unit performance. Stis are payable as soon as practicable after the release of the Company’s full year results.

each year, the remuneration committee considers the appropriate targets and key performance indicators (Kpis) to link the Sti scheme and the level of payout if targets are met. this includes setting any maximum payout under the Sti plan, and minimum levels of performance to trigger payment of Sti. the Kpis are a combination of company, team and individual performance measures.

Economic value added compensation

the board was not satisfied that the Sti scheme was appropriate for three key members of the executive management team, being the two executive directors (r J olds and G H Simpson) and Chief Financial officer (S C Curtis). it therefore implemented an economic value added (“eVa”) compensation scheme in 2003, which rewards these key executives by recognising their worth to the organisation, having regard to the value they create for the business by delivering results above a set return to shareholders.

Moreover, they are rewarded over a three-year period with one third of the bonus payable in the relevant year and the balance deferred and ascribed to a pool which can either grow or be reduced depending on the continued success of the executive team in achieving or exceeding the minimum acceptable return to shareholders.

this model was first implemented for the year ended 30 June 2003 for the three key executives and the board is satisfied that it essentially places those senior executives responsible for the delivery of results in the same shoes as shareholders in so far as a bonus for their performance is concerned.

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the eVa compensation scheme has the following characteristics:

• the board and the remuneration Committee retain flexibility and discretion in the application of the scheme;

• a minimum of 80% of profit against budget must be achieved for the scheme to operate in any one year, irrespective of the returns achieved for shareholders;

• the calculations may be adjusted for changes in the capital structure or for abnormal items during the course of any one financial year;

• the bonus pool is established above a post-tax return on capital of 12%, this being the Company’s minimum return on capital threshold;

• the board set a floor of 12%, being an estimate of the Company’s weighted average cost of capital in 2003, below which there would be a negative result which would involve a clawback of the deferred component of the bonuses;

• the board set a cap on the total bonus payment in any financial year at one times fixed remuneration;

• the individual bonuses are subject to the board’s assessment of each executive’s individual performance in each year; and

• payment of the deferred cash bonus component is subject to the relevant executive still being employed by the Company.

the board is satisfied that this eVa compensation scheme is a responsible and effective incentive to the senior executive team to earn bonuses which do not rely solely on the growth or size of the organisation but rather require them to balance growth with acceptable and sustainable shareholder returns and value.

the deferred cash bonus amounts in the tables below relate to incentives earned in 2006. the deferred cash bonus amounts expensed in 2006 are payable (subject to satisfaction of the conditions outlined above) in 2008 and 2009.

Retirement benefits

retirement benefits are delivered via superannuation arrangements, the nature of which is subject to legislation regarding employee choice of fund.

B Details of remuneration (audited)

Details of the remuneration of the directors and the key management personnel (as defined in aaSB 124 related party Disclosures) of Coffey international Limited and the Coffey international Limited Group are set out in the following tables.

the key management personnel of Coffey international Limited includes the directors (see pages 3 to 4 above) and the following executive officers:

• S C Curtis (Chief Financial officer)

• r p Simpson (Corporate Development officer)

• C J parsons (Chief information officer)

• C a M Salton (Group Manager people & performance).

the key management personnel of the Group are the directors of Coffey international Limited (see pages 3 to 4 above), the executive officers of Coffey international Limited as listed above, and the other executives who report directly to the Managing Director.

the executives are:

• S C Curtis (Chief Financial officer)

• r p Simpson (Corporate Development officer)

• C J parsons (Chief information officer)

• C a M Salton (Group Manager people & performance)

• M C thomas (Chief executive officer, Coffey Geotechnics)

• p Mirkov (Chief executive officer, Coffey environments)

• D o’toole (Chief executive officer, Coffey Mining)

• S G Jones (Chief executive officer, Coffey Natural Systems)

• p D Coney (Chief executive officer, Coffey projects).

the 5 group executives who received the highest remuneration for the year ended 30 June 2007 were:

• p D Coney (Chief executive officer, Coffey projects)

• M e Duncan (Managing Director, Coffey projects South africa)

• r S rhodes (Senior project Director, Coffey projects Middle east)

• K t tucker (Chief operating officer, Coffey projects australia)

• p Mirkov (Chief executive officer, Coffey environments).

the cash bonuses are dependent on the satisfaction of performance conditions set out in the section headed Short Term Incentives above. part of the non-monetary benefits, being the shares issued under the long-term incentive plan, are subject to performance conditions.

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Key management personnel of the Coffey international Limited 2007

Short-term employee benefits Post-employment

Name

Cash salary and fees

$

Cash bonus

$

Non-monetary benefits

$

Superannuation $

Retirement benefits

$

Long Service Leave

$

Share Based payment

$

Total $

Non-executive directors:

S r Williams 57,339 – – 62,011 – – – 119,350

S a Black 96,651 – – 8,699 – – – 105,350

C e Jamieson 59,908 – – 29,142 – – – 89,050

Executive directors:

r J olds 446,712 – 5 12,686 – 38,520 – 497,923

G H Simpson 285,580 – – 14,300 – 17,739 – 317,619

Other key management personnel:

S C Curtis ^ 245,093 – 1,741 12,686 – 7,625 3,990 271,135

r p Simpson ^ 203,353 25,520 142 12,686 – 6,564 9,847 258,112

C J parsons ^ 192,313 16,800 – 12,686 – 513 – 222,312

C a M Salton ^ 109,501 7,500 850 10,672 – 503 503 129,529

Other parent entity executive:

D a Goodin ^* 100,721 22,600 71 8,940 – 2,667 – 135,000

^ denotes one of the 5 highest paid executives of the parent entity, as required under the Corporations act 2001.* D a Goodin took on the role of executive, Coffey international Limited in January 2007.

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Key management personnel of the Coffey international Limited Group 2007


Name


$

Cash bonus

$

Deferred cash bonus under EVA

compensation scheme


$

Superannuation

$

Retirement benefits

$

Long Service

Leave $

Share-based payment

$

Total $


S r Williams 57,339 – – 62,011 – – – – 119,350

S a Black 96,651 – – 8,699 – – – – 105,350

C e Jamieson 59,908 – – 29,142 – – – – 89,050


r J olds 446,712 – – 5 12,686 – 38,520 – 497,923

G H Simpson 285,580 – – – 14,300 – 17,739 – 317,619


S C Curtis 245,093 – – 1,741 12,686 – 7,625 3,990 271,135

r p Simpson 203,353 25,520 – 142 12,686 – 6,564 9,847 258,112

C J parsons 192,313 16,800 – – 12,686 – 513 – 222,312

C a M Salton 109,501 7,500 – 850 10,672 – 503 503 129,529

M C thomas 210,733 80,500 – 246 13,412 – 2,177 – 307,068

p Mirkov ^ 240,422 – – 891 33,686 – 42,430 – 317,429

D o’toole 212,170 42,412 – 1,521 12,686 – 25,475 5,619 299,883

S G Jones 192,661 55,000 – – 17,339 – 26,777 – 291,777

p D Coney ^ 414,495 225,000 – – 26,505 – 12,236 – 678,236

Other group executives:

M e Duncan ^* 240,000 443,735 – 11,053 – – – – 694,788

r S rhodes ^* 204,000 443,735 – 12,409 – – – – 660,144

K t tucker ^ 241,294 110,000 – 11,000 22,706 – 16,241 – 401,241

^ denotes one of the 5 highest paid executives of the Group, as required under the Corporations act 2001.* the cash bonuses payable to M e Duncan and r S rhodes represent incentives pursuant to the group’s acquisition of Duncan rhodes (pty) Ltd in 2006-07.

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Key management personnel of the Coffey international Limited Group 2006


Name


$

Cash bonus

$

Deferred cash bonus under EVA

compensation scheme


$

Superannuation

$

Retirement benefits

$

Long Service

Leave $

Share-based payment

$

Total $


S r Williams – – – – 100,550 – – – 100,550

S a Black 68,624 – – – 6,176 – – – 74,800

C e Jamieson 63,899 – – – 5,751 – – – 69,650


r J olds 412,543 105,060 99,368 3,685 13,893 – 38,376 – 672,925

G H Simpson 244,719 – – – 47,460 – 16,204 – 308,383


S C Curtis 218,790 71,240 79,494 1,448 12,139 – 1,180 – 384,291

r p Simpson 183,750 58,000 – – 12,139 – 897 4,317 259,103

C J parsons 175,910 38,000 – – 12,139 – 616 – 226,665

C a M Salton 87,423 10,500 – 579 7,894 – 485 250 107,131

a C White 158,613 – – – 14,450 – 9,932 2,981 185,976

i a Hosking 221,380 8,500 – 1,653 20,563 – – 3,567 255,663

p Mirkov 198,237 49,992 – 1,000 21,138 – 4,575 – 274,942

S G Jones 161,354 32,400 – – 14,521 – 15,914 – 224,189

p D Coney 220,606 – – – 94,394 – 11,604 – 326,604

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the relative proportions of remuneration that are linked to performance and those that are fixed are as follows:

Name Fixed remuneration At risk STI At risk LTI

2007 2006 2007 2006 2007 2006

Executive directors

r J olds 50% 50% 17% 17% 33% 33%

G H Simpson 50% 50% 17% 17% 33% 33%

Other key management personnel of Group

S C Curtis 50% 50% 17% 17% 33% 33%

r p Simpson 70% 70% 20% 20% 10% 10%

C J parsons 77% 75% 16% 15% 7% 10%

C a M Salton 76% 80% 12% 10% 12% 10%

M C thomas 66% N/a 23% N/a 11% N/a

p Mirkov 68% 70% 24% 20% 8% 10%

D o’toole 70% N/a 21% N/a 9% N/a

S G Jones 72% 70% 18% 20% 10% 10%

p D Coney 50% 50% 50% 50% 0% 0%

Other parent entity and group executives

a C White N/A 73% N/A 19% N/A 8%

i a Hosking N/A 70% N/A 20% N/A 10%

M e Duncan 100% N/a 0% N/a 0% N/a

r S rhodes 100% N/a 0% N/a 0% N/a

K t tucker 67% 67% 33% 33% 0% 0%

D a Goodin 83% N/a 17% N/a N/A N/a

C Service agreements (audited)

remuneration and other terms of employment for the managing director, chief financial officer and the key management personnel are covered in employment agreements. each of these agreements provides for the provision of performance-related cash bonuses and participation, when eligible and to the extent determined by the board, in the Coffey international Limited employee Leveraged Share plan.

the Company does not operate any share option schemes.

all employment arrangements with executives may be terminated by either party with 4 weeks written notice in writing other than as noted in the table below, and no termination benefits exist other than as required by the relevant legislation. the respective executives’ remuneration is reviewed as of 1 october each year by the remuneration Committee.

Name TitleTerm of

agreement

Current base salary including superannuation Termination notice

r J olds Managing Director

No fixed term $470,000 6 months by employee, 18 months by employer

G H Simpson executive Director

No fixed term $315,000 4 weeks

S C Curtis Chief Financial officer


r p Simpson Corporate Development

officer


C J parsons Chief information officer


C a M Salton Group Manager people &

performance


D a Goodin executive Coffey international Ltd


M C thomas Chief executive officer, Coffey

Geotechnics


p Mirkov Chief executive officer, Coffey environments


D o’toole Chief executive officer, Coffey

Mining


DireCtorS’ report

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Name TitleTerm of

agreement

Current base salary including superannuation Termination notice

S G Jones Chief executive officer, Coffey

Natural Systems


p D Coney Chief executive officer, Coffey

projects

expires 30 June 2008 and base

salary increased by Cpi each year

$441,000 N/a Until 30 June 2008, then 3

months by either party thereafter

M e Duncan Managing Director, Coffey projects South

africa


r S rhodes Senior project Director, Coffey projects Middle

east


K t tucker Chief operating officer, Coffey

projects


D Share-based compensation (audited)

Shares issued under the Coffey international Limited employee Leveraged Share plan are accounted for as share-based payments as required by aaSB 2. they are deemed to be equity-settled share-based payments for employee services. an option expense has been recognised for the fair value of the shares, with a corresponding increase in reserves. the fair value is expensed for each share issue on a straight line basis, this being the vesting period attaching to the shares.

the establishment of the Coffey international Limited employee Leveraged Share plan entitles nominated employees in the Coffey international Limited Group (including executive directors) to purchase shares in the Coffey international Limited entity, funded by way of interest free loans from Coffey international Limited for a subscription price. the loans are repayable from dividend entitlements. allocations of shares are determined by the directors and the issue price of the shares is at a discount to market value as defined by Section 139Fa of the income tax assessment act 1936.

at the most recent grant date of the issue of shares under the scheme 431 were eligible to participate in the scheme.

the shares issued under the scheme are subject to a two-year vesting condition during which period the employee must remain employed by the Group (subject to certain exceptions as set out in the scheme’s trust deed).

the shares issued to the Coffey international Limited employee Leveraged Share plan rank equally with all other fully-paid ordinary shares on issue.

Details of issues under the Coffey international Limited employee Leveraged Share plan are as follows:

Date Number of shares Issue price $’000

16 april 1996 2,140,000 $0.49 1,049

11 June 1998 221,000 $0.60 133

15 June 2001 199,350 $0.526 105

1 November 2002 607,525 $0.448 272

5 November 2003 585 $1.128 1

5 November 2004 220,980 $1.938 428

23 November 2005 144,640 $3.37 487

29 December 2006 373,172 $3.55 1,325

total 3,907,252 3,800

the directors obtained an independent valuation of the shares in the Coffey international Limited employee Leveraged Share plan, on the basis that the shares granted in the plan required valuation as options, with an exercise price equal to the loan repayment value plus the net present value of expected dividends over the vesting period.

the valuation methodology used to determine the share-based payment expense was the Black-Scholes / Merton option pricing Model. as required by aaSB 2, the model took into account the exercise price of the option, the life of the option, the current price of the underlying shares, the expected volatility of the share price, the dividends expected on the shares and the risk-free interest rate for the life of the option.

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the model inputs were as follows for the options subject to valuation:

5 November 2003

5 November 2004

23 November 2005

29 December 2006

risk-free rate 5.84% 5.50% 5.56% 6.47%

Standard deviation 34.169% 35.26% 42.60% 27.45%

Share price at effective date $1.094 $1.858 $3.60 $4.10

exercise price (loan repayment) $1.128 $1.858 $3.37 $3.55

annualised dividend yield 4.375% 4.435% 3.542% 4.17%

Number of options (shares) 24,042 44,196 144,640 373,172

performance conditions None None None None

Fair value of the share-based payment $1.41 $2.39 $1.17 $1.74

Details of the shares held by the Coffey international Limited employee Leveraged Share plan on behalf of the key management personnel in 2006 and 2007, in respect of the above four share issues, are given below:

Number of shares issued during

the year

Number of shares vested during

the year

Number of shares transferred out of share plan during

the year

2007 2006 2007 2006 2007 2006

Non-executive directors

S r Williams – – – – – –

S a Black – – – – – –

C e Jamieson – – – – – –

Number of shares issued during

the year

Number of shares vested during

the year

Number of shares transferred out of share plan during

the year

2007 2006 2007 2006 2007 2006

Executive directors

r J olds – – – – 221,080 –

G H Simpson – – – – – –

Other key management personnel

S C Curtis 9,566 – – – – –

r p Simpson 13,192 6,677 7,735 6,650 – –

C J parsons – – – – – –

C a M Salton 212 742 – – – –

M C thomas – – – – – –

p Mirkov – – – – – –

D o’toole 12,007 – 7,735 3,325 – –

S G Jones – – – – – –

p D Coney – – – – – –

i a Hosking^ – 4,451 – 6,650 – 80,000

a C White^ – 4,451 – 6,650 – –

Other parent entity and group executives

M e Duncan – – – – – –

r S rhodes – – – – – –

K t tucker – – – – – –

D a Goodin – – – – – –

^ not a key management person in 2007.

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E additional information (unaudited)

Principles used to determine the nature and amount of remuneration: relationship between remuneration and company performance

the overall level of executive reward takes into account the performance of the Group over a number of years, with greater emphasis given to the current year.

over the past five years, the consolidated entity’s profit from ordinary activities after income tax has grown at an average rate of 33% per annum, and shareholder wealth based on the Company’s share price alone has grown at an average rate of 65% per annum. During the same period, average executive remuneration has grown by approximately 15% per annum.

Details of remuneration: Cash bonuses

For each cash bonus in the above tables the percentage of the available bonus that was paid in the financial year and the percentage that was forfeited because the person did not meet the performance criteria is set out below. other than eVa compensation, no part of the bonuses in the table below is payable in future years.

Financial year 2007 Cash bonus

Name Paid % Forfeited %

r J olds (via eVa compensation) – 100

G H Simpson (via eVa compensation) – 100

S C Curtis (via eVa compensation) – 100

r p Simpson 40 60

C J parsons 40 60

C a M Salton 40 60

D a Goodin 40 60

M C thomas 100 –

p Mirkov – 100

D o’toole 65 35

S Jones 100 –

p D Coney 50 50

M e Duncan* 100 –

r S rhodes* 100 –

K t tucker 80 20

*the cash bonuses payable to M e Duncan and r S rhodes represent incentives pursuant to the Group’s acquisition of Duncan rhodes (pty) Ltd in 2006-07.

Details of Remuneration: Share-based payments

the table below sets out the details of the shares issued to the Coffey international Limited employee Leveraged Share plan on behalf of the key management personnel for 2006 and 2007, together with the vesting details of those shares.

Name Year granted Vested Forfeited Vesting dates

Fair value of grant yet

to vest

% % $

S C Curtis 2004 N/a N/a N/a N/a

2005 N/a N/a N/a N/a

2006 – – 29 December 2008 16,684

r p Simpson 2004 100 – 5 November 2006 N/a

2005 – – 23 November 2007 7,812

2006 – – 29 December 2008 23,008

C J parsons 2004 N/a N/a N/a N/a



C a M Salton 2004 N/a N/a N/a N/a

2005 – – 23 November 2007 868

2006 – – 29 December 2008 370

D a Goodin 2004 N/a N/a N/a N/a



M C thomas 2004 N/a N/a N/a N/a



p Mirkov 2004 N/a N/a N/a N/a



D o’toole 2004 100 – 5 November 2006 N/a


2006 – – 29 December 2008 20,941

DireCtorS’ report

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Name Year granted Vested Forfeited Vesting dates

Fair value of grant yet

to vest

% % $

S G Jones 2004 N/a N/a N/a N/a



p D Coney 2004 N/a N/a N/a N/a



M e Duncan 2004 N/a N/a N/a N/a



r S rhodes 2004 N/a N/a N/a N/a



K t tucker 2004 N/a N/a N/a N/a



a C White 2004 100 – 5 November 2006 N/a

2005 – – 23 November 2006 5,208


i a Hosking 2004 100 – 5 November 2006 N/a

2005 – – 23 November 2006 –


Further details relating to the shares component of 2007 key management personnel remuneration are set out below.

Name

A Value

at grant date

B Value

at exercise date

C Remuneration

consisting of shares

Total of columns

A & B

$ $ % $

S C Curtis 16,684 – 1.5 16,684

r p Simpson 23,008 – 3.8 23,008

C J parsons – – – –

C a M Salton 370 – 0.4 370

D a Goodin – – – –

M C thomas – – – –

p Mirkov – – – –

D o’toole 20,941 – 1.9 20,941

S G Jones – – – –

p D Coney – – – –

M e Duncan N/a N/a N/a N/a

r S rhodes N/a N/a N/a N/a

K t tucker N/a N/a N/a N/a

a = the value at grant date calculated in accordance with aaSB 2 Share-based Payment of options granted during the year as part of remuneration.

B = the value at exercise date of options that were granted as part of remuneration and were exercised during the year, being the intrinsic value of the options at that date.

C = the percentage of the value of remuneration consisting of options, based on the value of options expensed during the current year.

the above tables include the relevant disclosures in respect of directors and the five most highly remunerated officers.

Insurance of officers

During the financial year, the Coffey international Limited Group paid a premium of $40,000 to insure the directors and secretaries of the Company and its australian-based controlled entities, and the general managers of each of the divisions of the consolidated entity.

DireCtorS’ report

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the liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the consolidated entity, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else. it is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

Proceedings on behalf of Company

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

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations act 2001.

Non-audit services

the Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the consolidated entity are important.

Details of the amounts paid or payable to the auditor (pricewaterhouseCoopers) for audit and non-audit services provided during the year are set out in note 28.

the board of directors has considered the position and, in accordance with the advice received from the audit Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations act 2001. the directors are satisfied that the provision of non-audit services by the auditor, as set out in note 28 to the financial statements, did not compromise the auditor independence requirements of the Corporations act 2001 for the following reasons:

• all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor

• none of the services undermine the general principles relating to auditor independence as set out in apeS 110 Code of ethics for professional accountants.

Details of the amounts paid or payable to pricewaterhouseCoopers for audit services provided during the year are set out in note 28 to the financial statements.

Auditors Independence Declaration

a copy of the auditors’ independence declaration as required under section 307C of the Corporations act 2001 is set out on page 17.

Rounding of amounts

the Company is of a kind referred to in Class order 98/0100, issued by the australian Securities & investments Commission, relating to the “rounding off” of amounts in the directors’ report. amounts in the directors’ report have been rounded off in accordance with that Class order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

Auditor

pricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations act 2001.

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

Stephen r Williams Chairman

roger J olds Managing Director

Sydney 26 September 2007

DireCtorS’ report

��

aUDitorS’ iNDepeNDeNCe DeCLaratioN

as lead auditor for the audit of Coffey international Limited for the year ended 30 June 2007, i declare that to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

this declaration is in respect of Coffey international Limited and the entities it controlled during the year.

BK Hunter partner pricewaterhouseCoopers


Liability limited by a scheme approved under professional Standards Legislation.

PricewaterhouseCoopersABN 52 780 433 757

Darling park tower 2201 Sussex StreetGpo BoX 2650SyDNey NSW 1171DX 77 Sydneyaustraliawww.pwc.com/autelephone +61 2 8266 0000Facsimile +61 2 8266 9999

��

the Board of Directorsthe board operates in accordance with the broad principles set out in its charter, which details the board’s functions and powers, together with the matters reserved to the board for its own decision.

Board compositionthe board has adopted the following principles in respect of board composition:

• the board is to be comprised of both executive and non-executive directors with the non-executive directors able to exercise a majority of the votes. Non-executive directors bring a fresh perspective to the board’s consideration of strategic, risk and performance matters and are best placed to exercise independent judgement and review and constructively challenge the performance of management

• in recognition of the importance of independent views and the board’s role in supervising the activities of management, the Chairman must be an independent non-executive director and all directors are required to bring independent judgement to bear in their board decision-making

• the Chairman is elected by the full board and is required to meet regularly with the Managing Director

• the Company is to maintain a mix of directors on the board from different backgrounds with complementary skills and experience

• the board is required to undertake an annual board performance review and consider the appropriate mix of skills required by the board to maximise its effectiveness and its contribution to the Group

• directors are not required to hold shares in the Company but are encouraged to do so.

responsibilitiesthe responsibilities of the board include:

• contributing to the development of and approving the corporate strategy

• reviewing and approving business plans, the annual budget and financial plans including available resources, major capital expenditure initiatives, acquisitions and divestments

• overseeing and monitoring:

– organisational performance and the achievement of the Group’s strategic goals and objectives

– compliance with the Company’s code of conduct

– progress of significant corporate projects including any acquisitions or divestments

• monitoring financial performance including approval of the annual and half-year financial reports and liaison with the Company’s external auditors

• appointment, performance assessment and, if necessary, removal of the Managing Director

• ratifying the appointment and/or removal and contributing to the performance assessment for the members of the senior management team including the Chief Financial officer (CFo) and the Company Secretary

• ensuring there are effective management processes in place and approving major corporate initiatives

• enhancing and protecting the reputation of the Group

• ensuring the significant risks facing the Group, including those associated with its legal compliance obligations have been identified and appropriate and adequate control, monitoring, accountability and reporting mechanisms are in place

• ensuring management have appropriate policies in place to monitor the statutory responsibilities of directors, such as oH&S and taxation

• reporting to shareholders and protecting their interests.

Board membersDetails of the members of the board, their experience, expertise, qualifications, term of office and independent status are set out in the directors’ report under the heading “information on directors”. there are three non-executive directors, all of whom are deemed independent under the principles set out below, and two executive directors at the date of signing the directors’ report.

in addition the board seeks to ensure that:

• at any point in time, its membership represents an appropriate balance between directors with experience and knowledge of the Group and directors with an external or fresh perspective and the ability to add value to the board’s deliberations on current and emerging issues

• the size of the board is conducive to effective discussion and efficient decision making.

Directors’ independencethe board has adopted specific principles in relation to directors’ independence. these state that to be deemed independent, a director must be a non-executive and:

• not a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company

Corporate GoVerNaNCe StateMeNt

��

• within the last three years not employed in an executive capacity by the Company or a controlled entity, or been a director after ceasing to hold any such employment

• within the last three years not a principal of a material professional adviser or a material consultant to the Company or a controlled entity, or an employee materially associated with the service provided

• not a material supplier or customer of the Company or a controlled entity, or an officer of or otherwise associated directly or indirectly with a material supplier or customer

• must have no material contractual relationship with the Company or a controlled entity other than as a director of the Group

• not been on the board for a period which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the Company.

Materiality for these purposes is determined on both quantitative and qualitative bases. an amount of over 5% of annual turnover of the Company or Group or 5% of relevant supplier or customer is considered material for these purposes. in addition, a transaction of any amount or a relationship is deemed material if knowledge of it impacts the shareholders’ understanding of the director’s performance.

Current thinking on corporate governance offers the view that a director’s independence may be perceived to be impacted by lengthy service on the board. to avoid any potential concerns in this regard, the board now requires any director with ten or more years of service as a director to offer himself for re-election every year and by doing so the board will provide shareholders with the opportunity to make a balanced assessment of the director’s actual and perceived independence.

Non-executive directorsthe three non-executive directors met once during the year, in a scheduled session without the presence of management, to discuss the operation of the board and a range of other matters. relevant matters arising from these meetings were shared with the full board.

term of officethe Company’s articles of association specify that one third of all directors (with the exception of the Managing Director) must retire from office at each annual general meeting (aGM). Where eligible, a director may stand for re-election subject to the limitation that on attaining the age of 72 years the director will retire, by agreement, at the next aGM and will not seek re-election.

Chairman and Managing Directorthe Chairman is responsible for leading the board, ensuring that board activities are organised and efficiently conducted and for ensuring directors are properly briefed for meetings. the Managing Director is responsible for implementing Group strategies and policies.

Commitmentsthe board normally holds at least ten scheduled board meetings and an additional corporate strategy workshop during the year. Some of these meetings are held at operational sites of the Company and the directors generally meet with local management on these occasions. additional board meetings are held at short notice if required to consider urgent matters such as acquisitions.

Non-executive directors are expected to spend at least thirty days a year preparing for and attending board and committee meetings and associated activities.

the number of meetings of the Company’s board of directors and of each board committee held during the year ended 30 June 2007, and the number of meetings attended by each director is disclosed on page 5.

it is the Company’s practice to allow its executive directors to accept appointments outside the Company with prior written approval of the board. No appointments of this nature were accepted during the year ended 30 June 2007.

the commitments of non-executive directors are reviewed each year as part of the annual performance assessment.

prior to appointment or being submitted for re-election each non-executive director is required to specifically acknowledge that they have and will continue to have the time available to discharge their responsibilities to the Company.

Conflict of interestsDirectors are expected to inform the board of any potential conflicts of interest.

entities connected with Mr S r Williams had business dealings with the consolidated entity during the year, as described in note 27 to the financial statements. Mr S r Williams declared his interest in those dealings to the Company and took no part in decisions relating to them or the preceding discussions.


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independent professional adviceDirectors and board committees have the right, in connection with their duties and responsibilities, to seek independent professional advice at the Company’s expense. prior written approval of the Chairman is required, but this will not be unreasonably withheld.

performance assessmentit is the board’s policy that it consistently review the performance of the Group and management, as well as the performance of the board and its sub-committees. the board formally reviewed its own performance in June 2007 and obtained feedback from an independent expert in board performance assessment. the results of this review, including action plans, were documented in the board minutes.

the Chairman annually assesses the performance of individual directors and meets privately with each director to discuss this assessment.

Corporate reportingthe Managing Director and CFo have made the following certifications to the board:

• that the Company’s financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the Company and Group

• that the above statement is founded on a sound system of internal control and risk management which implements the policies adopted by the board and that the Company’s risk management and internal controls are operating efficiently and effectively in all material respects.

in addition, the Chief executive officer and Finance Manager of each operating division have made similar certifications to the board as those required by the Managing Director and CFo of the Company. this procedure was performed for the year ended 30 June 2007.

Board committeesthe board has established two committees to assist in the execution of its duties and to allow detailed consideration of complex issues. Current committees of the board are the remuneration Committee and audit Committee. the remuneration Committee is comprised of a majority of non-executive directors and the audit Committee is comprised entirely of non-executive directors. the committee structure and membership is reviewed on an annual basis.

each of these committees has its own written charter setting out its role and responsibilities, composition, structure, membership requirements and the manner in which the committee is to operate. these charters are reviewed on an annual basis. all matters determined by committees are submitted to the full board as recommendations for board decision.

Minutes of committee meetings are tabled at the immediately subsequent board meeting. additional requirements for specific reporting by the committees to the board are addressed in the charter of the individual committees.

the board has not established a nomination committee as it believes that it is not warranted, having regard to the Company’s size, structure and complexity. the responsibilities which in larger companies may be carried out by the nomination committee are instead handled by the full board of Coffey international Limited.

When the need for a new director is identified or an existing director is required to stand for re-election, the full board reviews the range of skills, experience and expertise on the board, identifies its needs and prepares a short-list of candidates with appropriate skills and experience. Where necessary, advice is sought from independent search consultants.

the full board then appoints the most suitable candidate who must stand for election at the next aGM of the Company.

the board has resolved that notices of meeting for the election of directors will fully comply with the aSX Corporate Governance Council’s corporate governance principles and recommendations.

New directors are provided with a letter of appointment setting out their responsibilities, rights and the terms and conditions of their employment. all new directors participate in a comprehensive, formal induction program which covers financial, strategic, operations and risk management issues as well as expectations for director behaviour.

remuneration Committeethe current members of the remuneration Committee are as follows:

S r Williams (Chairman)S a Black (Non-executive Director)r J olds (Managing Director)S C Curtis (Secretary)

Details of the directors’ qualifications, experience and attendance at remuneration committee meetings are set out in the directors’ report on pages 5 to 15.


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the remuneration Committee operates in accordance with its charter. it advises the board on remuneration policies and practices generally, and makes specific recommendations on remuneration packages and other terms of employment for executive directors and other senior executives. the Company’s remuneration practices are disclosed in greater detail in the remuneration report included in the directors’ report on pages 5 to 15.

Committee members receive briefings from an external remuneration expert on recent developments on remuneration and related matters as required.

each member of the senior executive team has an employment contract covering a range of matters including their duties, rights, responsibilities and any entitlements on termination. the standard contract refers to a specific formal job description.

executive remuneration and other terms of employment are reviewed annually by the committee having regard to personal and corporate performance, contribution to long term growth, relevant comparative information and independent expert advice.

Further information on directors’ and executives’ remuneration is set out in the directors’ report and note 27 to the financial statements.

the remuneration Committee’s terms of reference include responsibility for reviewing any transactions between the organisation and the directors, or any interest associated with the directors, to ensure the structure and the terms of the transaction are in compliance with the Corporations Act 2001 and are appropriately disclosed.

audit Committeethe current members of the audit Committee are as follows:

S a Black (Chairman)S r Williams (Non-executive Director)C e Jamieson (Non-executive Director)S C Curtis (Secretary)

Details of the directors’ qualifications, expertise, experience and attendance at audit committee meetings are set out in the directors’ report on pages 3 to 4.

the audit Committee has appropriate financial expertise and all members have a working knowledge of the industries in which the Group operates.

the audit committee operates in accordance with a charter. the main responsibilities of the committee are to:

• review, assess and approve the annual report, the half-year financial report and all other financial information published by the Company or released to the australian Stock exchange (aSX)

• assist the board in reviewing the effectiveness of the Company’s internal control environment covering:

– reliability of financial reporting

– effectiveness and efficiency of operations

– compliance with applicable laws and regulations

• recommend to the board the appointment, removal and remuneration of the external auditor, and review the terms of their engagement, the scope and quality of the audit and assess their performance

• consider the independence and competence of the external auditor on an ongoing basis

• review and approve the level of non-audit services provided by the external auditor and ensure it does not adversely impact on auditor independence

• review and monitor related party transactions and assess their propriety

• oversee the Company’s internal audit peer review process

• report to the board on matters relevant to the committee’s role and responsibilities.

in fulfilling its responsibilities, the audit Committee:

• receives regular reports from management and the external auditor

• meets with the external auditor at least twice a year or more frequently if necessary

• requires the Managing Director and CFo to state in writing to the board that the Company’s financial reports present a true and fair view, in all material respects, of the Company’s and Group’s financial condition, operational results and are in accordance with relevant accounting standards

• requires the Chief executive officer and Finance Manager of each operating division to make similar certifications to the board as those required by the Managing Director and CFo of the Company

• reviews any significant disagreements between the external auditor and management, irrespective of whether they have been resolved

• meets separately with the external auditor at least once a year without the presence of management

• provides the external auditor with a clear line of direct communication at any time to either the Chairman of the audit committee or the Chairman of the board.

the audit Committee has authority, within the scope of its responsibilities, to seek any information it requires from any employee or external party


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external auditorsthe Company and audit Committee policy is to appoint external auditors who clearly demonstrate quality and independence. the performance of the external auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking into consideration assessment of performance, existing value and tender costs.

in view of the introduction of a five year rotation requirement under CLerp 9, it is pricewaterhouseCoopers’ policy to rotate audit engagement partners on listed companies at least every five years (previously seven years). the current audit engagement partner was introduced for the audit for the year ended 30 June 2007, and in accordance with the transitional provisions of the new requirement, will rotate off the engagement at the conclusion of the 30 June 2011 audit.

an analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is provided in note 28 to the financial statements. it is the policy of the external auditors to provide an annual declaration of their independence to the audit committee.

the external auditor is requested to attend the aGM and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

risk assessment and managementthe board is responsible for ensuring there are adequate policies in relation to overseeing and managing risk and internal control systems. in summary, the Company policies are designed to ensure strategic, operational, legal, reputation and financial risks are identified, assessed, addressed and monitored to enable achievement of the Group’s business objectives.

Considerable importance is placed on maintaining a strong control environment. there is an organisation structure with clearly drawn lines of accountability and delegation of authority. adherence to the code of conduct is required at all times and the board actively promotes a culture of quality and integrity.

each division reports regularly to the Managing Director and the board on the key business risks in their area, in accordance with the risk management policy.

Detailed policies and procedures cover management accounting, financial reporting, appraisal of potential acquisitions, environment, health and safety, it security, compliance and other risk management issues. the Company does not have an independent internal audit department as it believes that such a department is unwarranted, having regard to the size, structure and complexity of the Company.

the board holds an annual corporate strategy workshop attended by the board and executive management. this is held over several days and reviews the Group’s strategic direction in detail and includes specific focus on the identification of the key business and financial risks which could prevent the Company from achieving its objectives.

in addition the board requires that each major proposal submitted to the board for decision be accompanied by a comprehensive risk assessment and, where required, management’s proposed mitigation strategies.

Code of Conductthe Company recognises the need for directors and employees to observe the highest standards of behaviour and business ethics when engaging in corporate activity. each division currently has its own Code of Conduct and ensures compliance with it. the Code requires that at all times all Company personnel act with the utmost integrity, objectivity and in compliance with the spirit of the law and Company policies.

the purchase and sale of Company securities by directors and employees is only permitted during the 21 day period following the release of the half-yearly and annual financial results to the market and the Company’s aGM.

the Code of Conduct and the Company’s trading policy are provided to each new employee as part of their induction training and all employees are required to comply with them.

Continuous disclosure and shareholder communicationthe Company Secretary has been nominated as the person responsible for communications with the aSX. this role includes responsibility for ensuring compliance with the continuous disclosure requirements in the aSX listing rules and overseeing and co-ordinating information disclosure to the aSX, analysts, brokers, shareholders, the media and the public.

When analysts are briefed on aspects of the Group’s operations, the material used in the presentation is either specifically released to the aSX before the presentation or is already publicly available information. in the event that any price sensitive information has been inadvertently disclosed, this information is also immediately released to the aSX.

all shareholders receive a copy of the Company’s annual and half yearly reports. all recent Company announcements, media releases, details of Company meetings, certain of the Company’s corporate governance information and financial reports for the last 3 years are available on the Company’s website, www.coffey.com. the website also provides a mechanism for shareholders to communicate with the Company through electronic means.


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this financial report covers both Coffey international Limited as an individual entity and the consolidated entity consisting of Coffey international Limited and its subsidiaries. the financial report is presented in australian currency.

Coffey international Limited is a company limited by shares, incorporated and domiciled in australia. its registered office and principal place of business is:

Coffey international LimitedLevel 3, tower 1495 Victoria avenueChatswood NSW 2067.

a description of the nature of the consolidated entity’s operations and its principal activities is included in the review of operations and activities on page 2 in the directors’ report, which is not part of this financial report.

the financial report was authorised for issue by the directors on 26 September 2007. the Company has the power to amend and reissue the financial report.

through the use of the internet, the Company has ensured that its corporate reporting is timely, complete, and available globally at minimum cost to the Company. all media releases, financial reports and other information are available on our website: www.coffey.com.

FiNaNCiaL reportS 30 JUNe 2007

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Consolidated Parent Entity

Notes2007

$’0002006

$’0002007

$’0002006

$’000

Revenue from continuing operations 5 368,655 251,886 14,307 2,041

other income 6 – 46 – –

raw materials, subcontractor costs and consumables used (112,539) (74,509) – –

employee benefits expense (183,844) (125,744) (254) (105)

Depreciation and amortisation expenses 7 (6,837) (3,509) – –

occupancy costs (9,218) (6,285) – –

other expenses from continuing operations 7 (30,876) (21,305) – –

Finance costs 7 (5,258) (3,196) – –

Profit before income tax 20,083 17,384 14,053 1,936

income tax expense 8 (6,443) (5,723) (244)

Profit for the year 13,640 11,661 13,809 1,936

profit attributable to minority interests (640) (79) – –

Profit attributable to the members of Coffey International Limited 13,000 11,582 13,809 1,936

Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company:

Basic earnings per share (cents) 38 14.4c 16.5c

Diluted earnings per share (cents) 38 14.2c 16.1c

the above income statements should be read in conjunction with the accompanying notes.

iNCoMe StateMeNtS For tHe year eNDeD 30 JUNe 2007

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Notes2007

$’0002006

$’0002007

$’0002006

$’000

ASSETSCurrent assetsCash and cash equivalents 9 14,609 10,572 468 – trade and other receivables 10 96,463 64,082 120,967 – inventories 11 9,953 7,398 – – total current assets 121,025 82,052 120,565 – Non-current assetsreceivables 12 1,485 101 91 40,918 other financial assets 13 – 13 100,145 82,048 plant and equipment 14 17,841 11,193 – – Deferred tax assets 15 4,766 2,825 493 13 intangible assets 16 143,626 76,711 – – total non-current assets 167,718 90,843 100,729 122,979 Total assets 288,743 172,895 221,294 122,979 LIABILITIESCurrent LiabilitiesBank overdraft 18 251 – – 2,129trade and other payables 17 34,950 33,462 38,706 54,528 Borrowings 18 1,328 1,423 1,336 250 Current tax liabilities 1,893 1,424 2,244 1,815 provisions 19 4,814 3,304 – – total current liabilities 43,236 39,613 42,286 58,722 Non-current liabilitiesBorrowings 20 61,346 63,937 700 1,434 provisions 22 2,010 2,347 – – total non-current liabilities 63,356 66,284 700 1,434 Total liabilities 106,592 105,897 42,986 60,156 Net assets 182,151 66,998 178,308 62,823 EQUITYContributed equity 23 165,972 53,620 165,972 53,620 reserves 24 3,217 250 3,101 164 retained profits 24 12,384 12,998 9,235 9,039 parent entity interest 181,573 66,868 178,308 62,823 Minority interest 25 578 130 – –Total equity 182,151 66,998 178,308 62,823

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

BaLaNCe SHeetS aS at 30 JUNe 2007

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2007 $’000

2006 $’000

2007 $’000

2006 $’000

Total equity at the beginning of financial year 66,998 34,211 62,823 39,898

exchange difference on translation of foreign operations 29 86 – –

Net income recognised directly in equity 29 86 – –

Profit for the year 13,640 11,661 13,809 1,936

Total recognised income and expenses for the year 13,669 11,747 13,809 1,936

Transactions with equity holders in their capacity as equity holders:

Contributions of equity, net of costs 112,353 31,145 112,353 31,145

Dividends paid (13,614) (10,261) (13,614) (10,261)

Share-based payment reserve 2,937 105 2,937 105

Minority interests on acquisition of subsidiary net – 51 – –

acquisition of minority interests (192) – – –

101,484 21,040 101,676 20,989

Total equity at the end of the year 182,151 66,998 178,308 62,823

Total recognised income and expenses for the year is attributable to:

Members of Coffey international Limited 13,029 11,668 13,809 1,936

Minority interests 640 79 – –

13,669 11,747 13,809 1,936

the above statements of changes in equity should be read in conjunction with the accompanying notes.

StateMeNtS oF CHaNGeS iN eQUity For tHe year eNDeD 30 JUNe 2007

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Notes2007

$’0002006

$’0002007

$’0002006

$’000

Cash flows from operating activities

receipts from customers (inclusive of goods and services tax) 347,647 235,770 – –

payments to suppliers and employees (inclusive of goods and services tax) (341,489) (222,248) – –

6,158 13,522 – –

Dividends received – 194 13,500 1,999

interest received 401 230 – 42

interest paid (5,258) (3,196) – –

income taxes paid (8,726) (5,682) (6,563) (6,068)

reimbursement received from tax consolidation entities – – 6,559 5,967

Net cash (outflow) inflow from operating activities 37 (7,425) 5,068 13,496 1,940

Cash flows from investing activities

payments for plant and equipment (9,095) (5,186) – –

payment for purchase of companies/controlled entities, net of cash acquired (40,722) (36,013) (8,471) (31,494)

payment for other financial assets – (13) – –

proceeds from sale of plant and equipment 369 – – –

Net cash (outflow) from investing activities (49,448) (41,212) (8,471) (31,494)

Cash flows from financing activities

(repayment of)/proceeds from borrowings (5,960) 49,474 352 –

proceeds from issue of shares, net of costs 76,856 86 76,856 87

Dividends paid to shareholders 26 (10,312) (8,003) (10,312) (8,003)

Loans (advanced to)/repaid from controlled entities – – (69,324) 35,254

Net cash inflow/(outflow) from financing activities 60,584 41,557 (2,428) 27,338

Net increase/(decrease) in cash held 3,711 5,413 2,597 (2,216)

Cash and cash equivalents at the beginning of the financial year 10,572 5,173 (2,129) 87

effects of exchange rate changes on cash 75 (14) – –

Cash and cash equivalents at the end of the year 9 14,358 10,572 468 (2,129)

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

CaSH FLoW StateMeNtS For tHe year eNDeD 30 JUNe 2007

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1 Summary of significant accounting policiesthe principal accounting policies adopted in the preparation of the financial report are set out below. these policies have been consistently applied to all years presented, unless otherwise stated. the financial report includes separate financial statements for Coffey international Limited as an individual entity and the consolidated entity consisting of Coffey international Limited and its subsidiaries.

a) Basis of preparation

this general purpose financial report has been prepared in accordance with australian accounting Standards (aiFrS), other authoritative pronouncements of the australian accounting Standards Board, Urgent issues Group interpretations and the Corporations Act 2001.

Compliance with International Financial Reporting Standards (IFRS)

australian accounting Standards include australian equivalents to international Financial reporting Standards (aiFrS). Compliance with aiFrS ensures that the consolidated financial statements and notes of Coffey international Limited comply with to iFrS. the parent entity financial statements and notes also comply with iFrS.

Early adoption of standards

the Group has not elected to apply any amended accounting standards early on the basis that those standards which have been amended do not materially affect the policies of Coffey international Limited.

Historical cost convention

these financial statements have been prepared under the historical cost convention.

Critical accounting estimates

the preparation of financial statements in conformity with aiFrSs requires the use of certain critical accounting estimates. it also requires management to exercise its judgement in the process of applying the Group’s accounting policies. the areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

b) principles of consolidation

(i) Subsidiaries

the consolidated financial statements incorporate the assets and liabilities of all entities controlled by Coffey international Limited (“Company” or “parent entity”) as at 30 June 2007 and the results of all controlled entities for the year then ended. Coffey international Limited and its controlled entities together are referred to in this financial report as “Group” or “consolidated entity”.

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. the existence and effect of potential voting rights that are currently exerciseable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date from which control is transferred to the Group. they are de-consolidated from the date that control ceases.

the purchase method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 1(e)).

investments in joint venture operations are accounted for as set out in note 1(s).

the Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recorded in the income statement. purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of identifiable net assets of the subsidiary.

intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.

accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income statement and balance sheet respectively.

investments in subsidiaries are accounted for at cost in the individual financial statements of Coffey international Limited.

NoteS to tHe FiNaNCiaL StateMeNtS For tHe year eNDeD 30 JUNe 2007

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(ii) Employee Share Trusts

the Group has formed trusts to administer the Group’s employee share schemes. these trusts are consolidated, as the substance of the relationship is that the trust are controlled by the Group. Shares held by the Coffey international Limited employee Leveraged Share plan and the Carson employee Share trusts are disclosed as treasury shares and deducted from contributed equity.

c) income tax

the income tax expense for the year is the tax payable on the current year’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction.

the relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. an exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

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

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

Tax Consolidation legislation

Coffey international Limited and its wholly-owned australian controlled entities have implemented the tax consolidation legislation as of 1 July 2003.

the head entity, Coffey international Limited, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. these tax amounts are measured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in its own right.

in addition to its own current and deferred tax amounts, Coffey international Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and used tax credits assumed from controlled entities in the tax consolidated group.

assets or liabilities arising under tax funding arrangements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the group. Details about the tax funding arrangements are disclosed in note 8.

any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

d) Foreign currency translation

(i) Functional and presentation currency

items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). the consolidated financial statements are presented in australian dollars, which is Coffey international Limited’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.


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(iii) Group Companies

the results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

• income and expenses for each income statement are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

• all resulting exchange differences are recognised as a separate component of equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

e) Business combinations

the purchase method of accounting is used to account for all acquisitions of assets (including business combinations) regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition.

Where equity instruments are issued in an acquisition, the value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. transaction costs arising on the issue of equity instruments are recognised directly in equity.

identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. if the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. the discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

f) Segment reporting

a business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. a geographical segment is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those of segments operating in other economic environments.

g) revenue recognition

revenue is measured at the fair value of the consideration received or receivable. amounts disclosed as revenue are net of returns, trade allowances and amounts collected on behalf of third parties. revenue is recognised for the major business activities as follows:

(i) Consulting Business

Where the outcome of a contract to provide consulting services can be estimated reliably, revenue arising from the contract is recognised by reference to the stage of completion of the contract and recognised proportionately in the financial year when the services are rendered.

(ii) International Development Business – Long term contracts

Contract revenue and expenses are recognised in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. Where it is probable that a loss will arise from a long term contract, the excess of total costs over revenue is recognised as an expense immediately.

Where the outcome of a contract cannot be reliably estimated, contract costs are recognised as an expense as incurred, and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred.

For fixed price contracts, the stage of completion is measured by reference to costs incurred to date as a percentage of estimated total costs for each contract. revenue from cost plus contracts is recognised by reference to the recoverable costs incurred during the reporting period plus the percentage of fees earned. percentage of fees earned is measured by the proportion that costs incurred to date bear to the estimated total costs of the contract.

(iii) Project Management

project management revenue and expenses are recognised on an accrual basis as the amounts are earned. Where it is probable that a loss will arise from a long term contract, the excess of total costs over revenue is recognised as an expense immediately.


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(iv) Interest income

interest income is recognised on a time proportion basis using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. interest income on impaired loans is recognised using the original effective interest rate.

(v) Dividends

Dividends are recognised as revenue when the right to receive payment is established.

(iv) Other Income

other income is brought to account when received or receivable.

h) trade receivables

all trade receivables are recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. trade receivables are generally due for settlement no more than 30 days from the date of recognition.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. a provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. the amount of the provision is recognised in the income statement.

i) inventories

(i) Consulting Business – Work in Progress

Work in progress represents the sales value of unbilled labour and expenses less provisions for amounts considered non-recoverable.

(ii) International Development Business – Long Term Contracts

Long term contract work in progress is stated at the aggregate of contract costs incurred to date plus recognised profits less recognised losses and progress billings. if there are contracts where progress billings exceed the aggregate costs incurred plus profits less losses, the net amounts are presented under other liabilities.

Contract costs include all costs directly related to specific contracts, costs that are specifically chargeable to the customer under the terms of the contract and an allocation of overhead expenses incurred in connection with the consolidated entity’s activities in general.

(iii) Project Management Business

Work-in-progress on construction management contracts is stated at the aggregate of contract costs incurred to date plus recognised profits less recognised losses and progress billings. if there are contracts where progress billings exceed the aggregate costs incurred plus profits less losses, the net amounts are presented under other liabilities.

Contract costs include all costs directly related to specific contracts, costs that are specifically chargeable to the customer under the terms of the contract and an allocation of overhead expenses incurred in connection with the Group’s construction management and project management activities in general.

j) impairment of assets

assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. an impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

the recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash flows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of impairment at each reporting date.

k) investments and other financial assets

interests in listed and unlisted securities, other than controlled entities in the consolidated financial statements, are brought to account at fair value and dividend income is recognised in the income statement when receivable. Controlled entities are accounted for in the consolidated financial statements as set out in note 1(b). interests in joint venture operations are accounted for as set out in note 1(s).

the Group does not hold any investments that meet the recognition and measurement requirements under aaSB 132 Financial instruments: Disclosure and presentation and aaSB 139 Financial instruments: recognition and Measurement.

l) plant and equipment

all plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.


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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 Group and the cost of the item can be measured reliably. all other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation is calculated on either a straight line basis or on a diminishing value basis to write off the net cost of each item of plant and equipment (excluding land) over its expected useful life to the consolidated entity. estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. the expected useful lives are as follows:

plant and equipment: 3 – 20 years

the assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each balance sheet date.

an asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying value is greater than its estimated recoverable amount.

Where items of plant and equipment have separately identifiable components which are subject to regular replacement, those components are assigned useful lives distinct from the item of plant and equipment to which they relate.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. these are included in the income statement.

m) Leasehold improvements

the cost of improvements to or on leasehold properties is amortised over the unexpired period of the lease or the estimated useful life of the improvement to the consolidated entity, whichever is the shorter. Leasehold improvements held at the reporting date are being amortised over 3 to 8 years.

n) Leases

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. the corresponding rental obligations, net of finance charges, are included in other long term payables.

each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. the interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the

remaining balance of the liability for each period. the property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight line basis over the period of the lease.

incentives received on entering into operating leases are recognised as liabilities. the liability is reduced in line with the lease term.

o) intangible assets

(i) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill acquired in business combinations is not amortised. instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. each of those cash-generating units represents the Group’s investment in each country of operation by each primary reporting segment.

(ii) Customer Contracts and customer relationships

Customer contracts and related customer relationships, where reliably measurable, acquired as part of a business combination have a finite useful life and are carried at valuation less accumulated amortisation and impaired losses. amortisation is calculated based on the timing of the projected cash flows of the contracts over their estimated useful lives, which currently vary from 1 to 3 years.

(iii) Brand Names

Brand names have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. amortisation is calculated using the straight-line method to allocate the cost of brand names over their estimated useful lives, which vary from 3 to 5 years.


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p) trade and other payables

these amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. the amounts are unsecured and are usually paid within 45 days of recognition.

q) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not incremental costs relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

r) Dividends

provision is made for the amount of any dividend declared, determined or publicly recommended by the directors on or before the end of the financial year but not distributed at balance date.

s) Joint venture operations

the proportionate interests in the assets, liabilities and expenses of joint venture operations have been incorporated in the financial statements under the appropriate headings.

t) employee benefits

(i) Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

(ii) Long service leave

the liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provision of employee benefits and is measured in accordance with (i) above.

the liability for long service leave expected to be settled more than 12 months from the reporting date is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. expected future payments are discounted using interest rates on national government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outflows.

(iii) Bonus plans

a liability for employee benefits in the form of bonus plans is recognised in other payables when there is no realistic alternative but to settle the liability and at least one of the following conditions is met:

• there are formal terms in the plan for determining the amount of the benefit;

• the amounts to be paid can be reliably determined before the time of completion of the financial report; or

• past practice gives clear evidence of the amount of the obligation.

Liabilities for bonus plans regardless of whether they are expected to be settled within 12 months or more than 12 months, are measured at amounts expected to be paid when they are settled.

(iv) Superannuation

the amount charged to the income statement in respect of superannuation represents the contributions made by Coffey international Limited to superannuation funds as requested by the employees.

(v) Employee benefit on-costs

employee benefit on-costs, including payroll tax, are recognised and included in employee benefit liabilities and costs when the employee benefits to which they relate are recognised as liabilities.

(vi) Ownership-based remuneration schemes

ownership-based remuneration is provided to employees via the Coffey international Limited employee Leveraged Share plan and the Carson Group employee Share trusts. Shares issued under these schemes are treated as options in accordance with aaSB 2 Share-based payments. information relating to these share plans is set out in note 39.


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the fair value of shares granted under the Coffey international Limited employee Leveraged Share plan and the Carson Group Share trusts are recognised as an employee benefit expense with a corresponding increase in equity. the fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the shares.

the fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

the fair value of the options granted excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. at each balance sheet date, the entity revises its estimate of the number of options that are expected to become exercisable. the employee benefit expense recognised each period takes into account the most recent estimate. the impact of the revision to original estimates, if any, is recognised in the income statement with a corresponding adjustment to equity.

Where shares are issued to employees, as compensation for the provision of services and receipt by the employee is subject to completion of a service period, the market value of the shares issued is recognised as an employee benefit expense with a corresponding increase in equity when the employees become entitled to the shares.

Upon the exercise of options, the balance of the share based payments reserve relating to those options is transferred to share capital.

u) Borrowing costs

Borrowing costs are expensed in the income statement over the period of the borrowings using the effective interest method.

Borrowing costs include:

• interest on bank overdrafts and short-term and long-term borrowings;

• amortisation of discounts or premiums relating to borrowings;

• amortisation of ancillary costs incurred in connection with the arrangement of borrowings;

• finance lease charges; and

• certain exchange differences arising from foreign exchange borrowings.

v) Cash and cash equivalents

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 amounts of cash and which are subject to an insignificant risk of change in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

w) Contributed equity

ordinary shares are classified as equity.

incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration.

x) provisions

provisions for legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. a provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date. the discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. the increase in the provision due to the passage of time is recognised as interest expense.

y) earnings per share

(i) Basic earnings per share

Basic earnings per share is determined by dividing net profit after income tax attributable to equity holders of the company by the weighted average number of ordinary shares outstanding during the financial year, adjusted for any bonus elements in ordinary shares issued during the year.


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(ii) Diluted earnings per share

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

options granted to employees which are accounted for as share based payments are considered to be potential ordinary earnings and have been included in the determination of diluted warnings per share. the options have not been included in the determination of basic earnings per share.

z) Goods and Services tax

revenues, expenses and assets are recognised net of the amount of associated GSt, unless the GSt incurred is not recoverable from the taxation authority. in this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

receivables and payables are stated inclusive of the amount of GSt receivable or payable. the net amount of GSt recoverable from the taxation authority is included with other receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. the GSt components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.

aa) rounding of amounts

the Company is of a kind referred to in Class order 98/0100, issued by the australian Securities & investments Commission, relating to the “rounding off” of amounts in the financial report. amounts in the financial report have been rounded off in accordance with that Class order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

(ab) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2007 reporting periods. the Group’s and the parent entity’s assessment of the impact of these new standards and interpretations is set out below.

(i) AASB 7 Financial Instruments: Disclosures and AASB 2005-10

amendments to australian accounting Standards [aaSB 132, aaSB 101, aaSB 114, aaSB 117, aaSB 133, aaSB 139, aaSB 1, aaSB 4, aaSB 1023 & aaSB 1038] aaSB 7 and aaSB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. aaSB 7 introduces new disclosures to improve the information about financial instruments. it requires the

disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. it replaces aaSB 130 Disclosures in the Financial Statements of Banks and Similar Financial institutions and the disclosure requirements in iaS 32 Financial instruments: Disclosure and presentation. it is applicable to all reporting entities. the amendment to aaSB 101 introduces disclosures about the level of an entity’s capital and how it manages capital. the Group assessed the impact of aaSB 7 and the amendment to aaSB 101 and concluded that the main additional disclosures will be the sensitivity analysis to market risk and the capital disclosures required by the amendment of aaSB 101. the Group will apply the standards for annual reporting periods beginning 1 July 2007.

(ii) Revised AASB 101 Presentation of Financial Statements

a revised aaSB 101 was issued in october 2006 and is applicable to annual reporting periods beginning on or after 1 January 2007. the Group has not adopted the standard early. application of the revised standard will not affect any of the amounts recognised in the financial statements, but will remove some of the disclosures currently required, including the disclosure about economic dependencies.

(iii) AASB-I 11 AASB 2 – Group and Treasury Share Transactions and AASB 2007-1

amendments to australian accounting Standards arising from aaSB interpretation 11 aaSB-i 11 and aaSB 2007-1 are effective for annual reporting periods commencing on or after 1 March 2007. aaSB-i 11 addresses whether certain types of share-based payment transactions should be accounted for as equity-settled or as cash settled transactions and specifies the accounting in a subsidiary’s financial statements for share-based payment arrangements involving equity instruments of the parent. the Group will apply aaSB-i 11 from 1 July 2007, but it is not expected to have any impact on the Group’s financial statements.

(iv) AASB 8 Operating Segments and AASB 2007-3

amendments to australian accounting Standards arising from aaSB 8 and aaSB 2007-3 are effective for annual reporting periods commencing on or after 1 January 2009. aaSB 8 will result in a significant change in the approach to segment reporting, as it requires adoption of a “management approach” to reporting on the financial performance. the information being reported will be based on what the key decision-makers use internally for evaluating segment performance and deciding how to allocate resources to operating segments. the Group has not yet decided when to adopt aaSB 8. application of aaSB 8 may result in different segments, segment results and different types of information being reported in the segment note of the financial report. However, it will not affect any of the amounts recognised in the financial statements.


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(v) AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments and AASB 2007-7

amendments to australian accounting Standards [aaSB 1, aaSB 2, aaSB 4, aaSB 5, aaSB 107 & aaSB 128] aaSB 2007-4 and aaSB 2007-7 are applicable to annual reporting periods beginning on or after 1 July 2007. the amendments introduce a number of options that existed under iFrS but had not been included in the original australian equivalents to iFrS and remove many of the additional australian disclosure requirements, for example the detailed disclosures in relation to the financial position and funding of defined benefit superannuation plans.

the financial statements may be affected by the ability to use the indirect method for presenting cash flow statements and discount rates for employee benefits obligations to be based on corporate bonds if there is a deep market in australia (previous guidance mandated the use of government bond rates).

the Group will adopt the amendments arising from aaSB 2007-4 and aaSB 2007-7 for the financial year ending 30 June 2008. However, it does not intend to apply any of the new options now available. as a consequence, application of the revised standards will not affect any of the amounts recognised in the financial statements, but it may remove some of the disclosures that are currently required. in relation to the discount rates used in the measurement of employee benefit obligations, the Group has not yet reached a conclusion as to whether there is a deep market in corporate bonds in australia and hence has not yet determined the financial effect, if any, on the obligations from the adoption of aaSB 2007-4.

2 Financial risk managementthe Group’s activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk, and cash flow interest rate risk. the Group’s overall risk management program seeks to minimise potential adverse effects on the financial performance of the Group.

risk management is carried out under a policy approved by the Board of Directors.

a) Market risk

(i) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency.

the group operates internationally and is exposed to foreign exchange risks arising from currency exposures to UK pounds sterling in particular. Where possible, the Group seeks to naturally hedge its currency exposures.

(ii) Interest rate risk

refer to (c) below.

b) Credit risk

the Group has no significant concentrations of credit risk. the Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history.

c) Liquidity risk

prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close-out market positions. Due to the dynamic nature of the underlying businesses, the Group aims at maintaining flexibility in funding by keeping committed credit lines available.

d) Cash flow and interest rate risk

as the Group has no significant interest-bearing assets, the Group’s income is substantially independent of changes in market interest rates.

the Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest-rate risk. Borrowings issued at fixed rates expose the Group to fair value interest-rate risk.

3 Critical accounting estimates and judgementsestimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

a) Critical accounting estimates and assumptions

the Group makes estimates and assumptions concerning the future. the resulting accounting estimates will, by definition, seldom equal the related actual results. the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.


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(i) Estimated impairment of goodwill:

the Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1(o)(i). the recoverable amounts of cash-generating units have been determined applying a ‘value in use’ method using assumptions of future profit margins. refer to note 16 for the details of these assumptions and the potential impact of changes to the assumptions.

(ii) Income taxes

the Group is subject to income taxes in australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the worldwide provision for income taxes. there are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. the Group recognises liabilities for anticipated tax audit issues based on whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

b) Critical judgements in applying the entity’s accounting policies

(i) Intangible assets and business combinations

aaSB 3 and aaSB 138, the australian standards on business combinations and intangibles respectively, require the acquirer to separately identify the acquiree’s identifiable assets and liabilities, including other intangibles arising on acquisition. this means that the acquirer must recognise other intangible assets, separately from goodwill, where the definition of an intangible asset is met and the fair value of the intangible asset can be measured reliably.

the directors commissioned an independent expert, having satisfied themselves that the expert was appropriately qualified to form a view on the matters under consideration. the directors reviewed the methodologies used by the expert and made enquiries with management to assure themselves that the factual information used by the expert was correct.

the directors accept the expert’s opinion that contracts in hand and brand names as at the date of acquisition should be separated out from goodwill and recorded as a separate intangible asset subject to amortisation. accordingly, the Group capitalised $4,507,000 relating to contracts in hand and brand names (2006:$3,111,000) and amortised them as described in note 1(o)(ii) and (iii).

the directors concur with the expert’s view that customer relationships could not be separated out from goodwill and recorded as a separate intangible asset. in addition to the arguments put forward by the expert, the directors believe that the questions of reliability of measurement and separability are key issues in their decision not to ascribe a balance sheet value to customer relationships.

(ii) Revenue recognition in relation to long term contracts

the timing of revenue recognition in relation to long term contracts, primarily in the international Development Business, is subject to significant judgement. Management ensures that the timing of revenue recognition in relation to these contracts is appropriate through regular reassessments of the percentage completion and the costs to completion of the projects.

(iii) Accounting treatment of payments to vendors in the form of shares, subject to service conditions

the directors have received accounting advice from KpMG in relation to the accounting treatment of purchase consideration paid in the form of shares to vendors. KpMG have advised that where the terms of the acquisition consideration include payment for a service related benefit, the service benefit should be measured at fair value and accounted for separately from the business combination as a remuneration expense.

aaSB 2 notes that where consideration paid for services received from employees is in the form of shares, the valuation of the service element is made by reference to the fair value of the equity instruments granted. in the case of Coffey’s acquisition of Carson Group and other similar investments, it is not possible to identify the fair value of the service received via reference to the number of shares issued. accordingly, the directors have obtained separate valuations from KpMG and DMr Corporate in relation to fair value of the service element. the directors have also considered various matters raised by the company’s auditor, pricewaterhouseCoopers. the valuations of the service element considered by the Directors in relation to the Carson Group acquisition were of a significant range. the significant range of valuations reflects the difficulty in reliably measuring the service related element of the share based consideration paid to the vendors of Carson Group of $17,640,000. Having considered all of the available information and relevant accounting requirements, the directors have recognised an amount separate from goodwill of $1,952,000 in respect of Carson Group and $3,291,000 in respect of the Coffey Group as a whole on the same basis in relation to future services. this amount will be recognised in the profit and loss account over the vesting period of 3-4 years in accordance with the requirements of aaSB 2.

in the year ended 30 June 2007 the Group expensed a total of $1,487,000 in respect of share-based payments relating to payments to vendors for the acquisitions completed in the year.

the company has also reviewed its accounting treatment of previous acquisitions and found the adjustment to be immaterial. accordingly the accounting treatment has not been amended.


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4 Segment information

primary Segment information – Business Segments

2007

Consulting

$’000

International Development

Business $’000

Project Management

$’000

Total continuing Operations

$’000

Eliminations

$’000

Consolidated

$’000

Services revenue 219,848 93,047 56,219 369,114 – 369,114

intersegment sales – – – – (459) (459)

total sales revenue 219,848 93,047 56,219 369,114 (459) 368,655

Segment result 35,765 1,438 2,534 39,737 39,737

Unallocated expenses (14,396)

interest expense (5,258)

Profit before income tax 20,083

income tax expense (6,443)

Minorities (640)

Profit for the year 13,000

Segment assets 197,059 25,638 55,503 278,200 278,200

Unallocated assets 10,543

total assets 288,743

Segment Liabilities 71,078 4,775 6,105 81,958 81,958

Unallocated Liabilities 24,634

total Liabilities 106,592

Depreciation and amortisation expenses 2,155 719 3,102 5,976 5,976

Unallocated 861

total Depreciation and amortisation 6,837

acquisitions of plant and equipment and intangibles 6,003 121 5,256 11,380 11,380

Unallocated 3,879

total acquisitions 15,259


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2006

Consulting

$’000

International Development

Business $’000

Project Management

$’000

Total continuing Operations

$’000

Consolidated

$’000

Services revenue 142,708 86,343 22,835 251,886 251,886

intersegemnt sales – – – – –

total sales revenue 142,708 86,343 22,835 251,886 251,886

other revenue/loss (42) 92 (4) 46 46

total segment revenue 142,666 86,435 22,831 251,932 251,932

Segment result 25,622 3,251 1,781 30,654 30,654

Unallocated expenses (10,074)

interest expense (3,196)

Profit before income tax 17,384

income tax expense (5,723)

Minorities (79)

Profit for the year 11,582

Segment assets 70,771 40,123 61,060 171,954 171,954

Unallocated assets 941

Total Assets 172,895

Segment Liabilities 84,166 12,928 8,053 105,147 105,147

Unallocated Liabilities ` 750

Total Liabilities 105,897

Depreciation and amortisation expenses 1,438 648 1,423 3,509 3,509

acquisitions of plant and equipment and intangibles 3,107 146 5,044 8,297 8,297


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4 Segment information (continued)

Change in segment accounting policy

the consolidated group has changed the allocation method of some administrative costs. these costs now form part of unallocated costs, accordingly 2006 segment data has been restated to reflect the change in cost allocation.

Business segments

the above business segments derive revenue from the principal activities of the Coffey international Limited Group being the provision of engineering, scientific and project management services in the development assistance, earth sciences, natural resources and property sectors throughout australia and overseas.

the Consulting Business comprises the Coffey Geotechnics, Coffey environments, Coffey Mining, and Coffey Natural Systems businesses both in australia and overseas. the international Development Business comprises Coffey international Development and Specialist training australia. the project Management business comprises Clifton Coney Group, Duncan rhodes and the Carson Group.

Secondary Segment information – Geographical Segments

Segment revenues from sales to external

customers Segment assets

Acquisitions of plant and equipment,

intangibles and other non-current segment

assets

2007 $’000

2006 $’000

2007 $’000

2006 $’000

2007 $’000

2006 $’000

australia 234,290 155,104 213,153 137,853 13,234 7,138

South east asia 37,388 30,963 13,785 7,360 147 –

pacific region 50,469 50,296 25,231 10,204 738 –

other Countries 46,508 15,523 26,031 16,537 1,140 1,159

368,655 251,886 278,200 171,954 15,259 8,297

Unallocated assets 10,543 941

total assets 288,743 172,895

Geographical segments

the consolidated entity’s divisions operate in the following main geographical areas:

australia is the home country of the parent entity and principal area of operation for the Consulting Business and the project Management Business.

South east asia comprises operations carried on in indonesia, philippines, Vietnam, and Cambodia.

pacific region comprises operations carried on in New Zealand, papua New Guinea and the pacific islands.

other comprises operations carried on in the United arab emirates and other Gulf States, South africa, Senegal, US, UK, China, Sri Lanka, india, Mongolia, the Maldives and Central asian republics.

all business segments operate within the above geographical segments.

5 revenue


2007 $’000

2006 $’000

2007 $’000

2006 $’000

From continuing operations

Services 368,254 251,462 – –

Other revenue

interest 401 230 807 42

Dividends – 194 13,500 1,999

368,655 251,886 14,307 2,041

revenue from services includes long term contract revenue of 93,047 86,343 – –


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6 other income


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Net foreign exchange gains (refer to note a below) – 46 – –

a) Net foreign exchange gains/(losses)

Foreign exchange gains/(losses) 255 136 – –

Foreign exchange (losses) (421) (90) – –

Net foreign exchange gains/(losses) recognised in profit before income tax for the year (166) 46 – –

7 expenses


2007 $’000

2006 $’000

2007 $’000

2006 $’000

profit before income tax includes the following specific expenses:

Depreciation

plant and equipment 1,371 1,837 – –

Leasehold improvements 297 275 – –

release of leasehold improvements liability – (288) – –

it equipment 1,810 – – –

Motor Vehicles 209 – – –

total Depreciation 3,687 1,824 – –

Amortisation

Contracts and brand names on acquisition 3,150 1,685 – –

total amortisation 3,150 1,685 – –

Finance Costs

interest and finance charges paid/payable 5,258 3,196 – –

Net loss on disposal of plant and equipment 25 110 – –

rental expense relating to operating leases 7,395 4,733 – –

Net foreign exchange losses recognised in profit before income tax for the year (refer to note 6a) 166 – – –


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8 income tax expense


2007 $’000

2006 $’000

2007 $’000

2006 $’000

a) income tax expense

Current tax 9,781 5,463 724 12

Deferred tax (124) (480) 4

(over) under provided in prior years (640) 384 – (16)

6,443 5,723 244 –

income tax expense is attributable to:

profit from continuing operations 6,443 5,723 244 –

aggregate income tax expense 6,443 5,723 244 –

Deferred income tax (revenue) expense included in income tax expense comprises:

Decrease (increase) in deferred tax assets (note 15) (1,753) (122) (480) 4

(Decrease) increase in deferred tax liabilities (note 21) (945) (2) – –

(124) (480) 4


2007 $’000

2006 $’000

2007 $’000

2006 $’000

b) Numerical reconciliation of income tax expense to prima facie tax payable

profit from continuing operations before income tax expense 20,083 17,384 14,053 1,936

tax at the australian tax rate of 30% (2006: 30%) 6,025 5,215 4,216 581

tax effect of amounts which are not deductible (taxable) in calculating taxable income:

entertainment 102 87 – –

Share based payments 881 31 78 31

Non-taxable compensation receipt (202) – – –

Non-deductible expenses 306 – – –

Non-taxable dividends – – (4,050) (600)

7,112 5,333 244 12

Difference in overseas tax rates (29) 6 – 4

(over) under provision in prior years (640) 384 – (16)

income tax expense 6,443 5,723 244 –


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2007 $’000

2006 $’000

2007 $’000

2006 $’000

c) amounts recognised directly in equity

aggregate current and deferred tax arising in the reporting period and not recognised in the profit or loss but directly debited or credited to equity – – – –

Current tax – credited to equity – – – –

Net deferred tax – debited (credited) directly to equity – – – –

– – – –

d) tax losses

Unused tax losses for which no deferred tax asset has been recognised 817 817 – –

potential tax benefit @ 30% 245 245 – –

the unused tax losses were incurred by a combination of australian and overseas entities.

e) Unrecognised temporary differences

temporary differences relating to investments in subsidiaries for which deferred tax liabilities have not been recognised. – – – –

potential tax benefit @ 30% – – – –

f) tax consolidation legislation

Coffey international Limited and its wholly-owned australian controlled entities have implemented the tax consolidation legislation as of 1 July 2003. the accounting policy in respect of this legislation is set out in note 1(c).

the entities have entered into a tax funding arrangement under which the wholly-owned entities fully compensate Coffey international Limited for any current tax payable assumed and are compensated by Coffey international Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Coffey international Limited under the tax consolidation legislation. the funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.

the amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. the head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. the funding amounts are recognised as intercompany receivables or payables (see note 31(d)).

9 Current assets – Cash and cash equivalents


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Cash at bank and in hand 13,618 8,947 468 –

Deposits on call 991 1,625 – –

14,609 10,572 468 –

a) reconciliation to cash at the end of the year

Balances as above 14,609 10,572 468 –

Bank overdrafts (note 18) (251) – – (2,129)

Balances per statement of cash flows 14,358 10,572 468 (2,129)

the above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows.


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Cash at bank

the cash at bank bears floating interest rates between 0% and 5.57% (2006: 0% and 4.25%)

Deposits on call

the deposits are bearing floating interest rates between 5% and 6.15% (2006: 5% and 5.3%). these deposits have an average maturity one day.

10 Current assets – receivables


2007 $’000

2006 $’000

2007 $’000

2006 $’000

trade receivables 90,479 61,995 – –

Less: provision for doubtful debts (1,763) (929) – –

88,716 61,066 – –

Loans to controlled entities – – 119,574 –

other receivables 6,442 1,315 523 –

prepayments 1,305 1,701 – –

96,463 64,082 120,097 –

Further information on loans to controlled entities is set out in note 31(f).

a) impaired trade receivables

the Group has recognised a loss of $623,000 (2006: $250,000) in respect of impaired trade receivables during the year ended 30 June 2007. the loss has been included in “other expenses” in the income statement.

b) other receivables

these amounts generally arise from transactions outside the normal operating activities of the Group. interest may be charged at commercial rates where the terms of repayment exceed six months. Collateral is not normally obtained.

c) effective interest rates and credit risk

information concerning the effective interest rate and credit risk of both current and non-current receivables is set out in the non-current receivables note (note 12).

11 Current assets – inventories

Contract work in progress (amounts due from customers for contract work):


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Contract costs incurred and recognised profits less recognised losses 9,953 7,398 – –

9,953 7,398 – –

amounts totalling $8,207,000 (2006: $2,713,000) received as advances on contracts in progress are included in consolidated other creditors.

12 Non-current assets – receivables


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Loans to controlled parties – – – 40,918

other receivables 1,485 101 91 –

1,485 101 91 40,918

a) Fair values

the fair value and carrying amounts of non–current receivables of the Group are as follows:

2007 Carrying Amount

$’000

Fair Value

$’000

2006 Carrying amount

$’000

Fair Value

$’000

other receivables 1,485 1,485 101 89

1,485 1,485 101 89


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b) interest rate risk

the Group’s exposure to interest rate risk is nil as all current and non-current receivables are non-interest bearing.

c) Credit risk

there is no concentration of credit risk with respect to current and non-current receivables, as the Group has a large number of customers. please refer to note 2 for more on the risk management policy of the Group.

13 Non-current assets – other financial assets


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Shares in subsidiaries – – 101,020 82,911

other investments – 13 – 12

– 13 101,020 82,923

Less: provision for write-down to recoverable amount – – (875) (875)

– 13 100,145 82,048

these financial assets are carried at cost.

14 Non-current assets – property, plant and equipment

Consolidated

Plant and equipment

$’000

Leasehold improvements

$’000

Total

$’000

At 1 July 2005

Cost 11,821 1,307 13,128

accumulated depreciation (7,937) (122) (8,059)

Net book amount 3,884 1,185 5,069

Year ended 30 June 2006

opening net book amount 3,884 1,185 5,069

additions 7,321 1,067 8,388

Disposals (150) (2) (152)

Depreciation charge (1,837) (275) (2,112)

Closing net book amount 9,218 1,975 11,193

At 30 June 2006

Cost 20,108 3,073 23,181

accumulated depreciation (10,890) (1,098) (11,988)

Net book amount 9,218 1,975 11,193

Consolidated

Plant and equipment

$’000

Leasehold improvements

$’000

Total

$’000


opening net book amount 9,218 1,975 11,193

additions 8,251 2,502 10,753

Disposals (394) – (394)

Foreign exchange rate Differences (22) (2) (24)

Depreciation charge (3,390) (297) (3,687)

Closing net book amount 13,663 4,178 17,841

At 30 June 2007

Cost 28,773 5,573 34,346

accumulated depreciation (15,110) (1,395) (16,505)

Net book amount 13,663 4,178 17,841

refer to note 20(b) for information on non-current assets pledged as security by the parent and its controlled entities.


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15 Non-current assets – Deferred tax assets

the balance comprises temporary differences attributable to:


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Amounts recognised in profit or loss

Doubtful debts 331 239 – –

employee benefits 4,029 2,780 – –

Lease incentives 205 13 – –

amortisation of assets 149 76 493 –

accrued expenses 1,100 214 – –

5,814 3,322 493 –

amounts recognised directly in equity – – – –

Share issue expenses – 13 – 13

5,814 3,335 493 13

Set off of deferred tax liabilities pursuant to set off provisions (note 21) (1,048) (510) – –

Net deferred tax assets 4,766 2,825 493 13


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Movements:

opening balance at 1 July 3,335 2,330 13 17

(Credited)/charged to the income statement (note 8) 1,753 122 480 (4)

acquisition of subsidiary (note 32) 726 883 – –

Closing balance at 30 June 5,814 3,335 493 13

Deferred tax assets to be recovered after more than 12 months 5,814 3,335 493 13

Deferred tax assets to be recovered within 12 months – –

5,814 3,335 493 13


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16 Non-current assets – intangible assets

ConsolidatedContracts

$’000Brand $’000

Goodwill $’000

Total $’000

At 1 July 2005

Cost or fair value – – 20,652 20,652

accumulated amortisation and impairment – – (6,911) (6,911)

Net book amount – – 13,741 13,741


opening net book amount – – 13,741 13,741

acquisitions of subsidiaries 3,111 – 61,544 64,655

amortisation charge ** (1,685) – – (1,685)

Closing net book amount 1,426 – 75,285 76,711

At 30 June 2006

Cost or fair value 3,111 – 75,285 78,396

accumulated amortisation and impairment (1,685) – – (1,685)

Net book amount 1,426 75,285 76,711


opening net book amount 1,426 – 75,285 76,711

acquisition of subsidiary 3,670 835 65,560 70,065

amortisation charge ** (3,084) (66) – (3,150)

Closing net book amount 2,012 769 140,845 143,626

At 30 June 2007

Cost or fair value 6,782 835 140,845 148,462

accumulated amortisation and impairment (4,770) (66) – (4,836)

Net book amount 2,012 769 140,845 143,626

** amortisation of $3,150,000 ( 2006:$1,685,000 ) is included in depreciation and amortisation expense in the income statement

the basis of valuation of contracts and brand names is disclosed in note 3b(i).

a) impairment tests for goodwill

Goodwill is allocated to the Group’s cash generating units (CGUs) identified according to business segment and country of operation.

a segment level summary of the goodwill allocation is presented below.

Australia

2007 $’000

2006 $’000

Consulting 78,146 31,955

international Development 7,129 7,285

project Management 55,570 36,045

140,845 75,285

the recoverable amount of each CGU is determined based on value-in-use calculations. these calculations use cash flow projections based on financial plans approved by management covering a three year period, this being the time period over which the Company prepares its strategic plan. Cash flows beyond this three year period are extrapolated using the estimated growth rate stated below. the growth rate does not exceed the long-term average growth rate for the business in which the CGU operates.

b) Key assumptions used for value in use calculations

Management determined budgeted gross margin based on a combination of past performance and the future expectations for each CGU.

in carrying out the impairment tests for goodwill, a growth rate of 2% was assumed, this being a conservative estimate of the likely growth beyond current levels. a post-tax discount rate of 10.5% was generally used, this representing an estimate of the Group’s weighted average cost of capital as used by various analysts in their research reports on the Group. the equivalent pre-tax discount rate is 17%. the same discount rates and growth rates were used in both 2006 and 2007.

c) impact of possible changes in key assumptions

the key assumptions used in the CGU impairment tests were conservative hence the risk of any goodwill amounts being at potential risk of impairment is considered to be low.

each of the value-in-use calculations produced results which demonstrated that each CGU has sufficient recoverable amount to exceed its carrying value.


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17 Current liabilities – payables


2007 $’000

2006 $’000

2007 $’000

2006 $’000

trade payables 7,063 11,011 – –

other payables 27,887 22,451 7 793

amounts owed to controlled entities (refer note 31) – – 38,699 53,735

34,950 33,462 38,706 54,528

18 Current liabilities – Borrowings


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Secured

Bank overdrafts 251 – – 2,129

total secured current borrowings 251 – – 2,129

Unsecured

other loans 1,328 1,423 1,336 250

total unsecured current borrowings 1,328 1,423 1,336 250

total current borrowings 1,579 1,423 1,336 2,379

Details of the security relating to each of the secured liabilities and further information on the bank overdraft are set out below.

a) other loans

other loans represent deferred consideration payable on company acquisitions and are not subject to interest.

b) interest rate exposures

Details of the Group’s exposure to interest rate changes on borrowings are set out in note 20.

c) Fair value disclosures

Details of the fair value of borrowings for the Group are set out in note 20.

d) Security

Details of the security relating to each of the secured liabilities and further information on the bank overdrafts and bank bills are set out in note 20.

19 Current liabilities – provisions


2007 $’000

2006 $’000

2007 $’000

2006 $’000

employee benefits – long service leave 4,814 3,304 – –

4,814 3,304 – –


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20 Non-current liabilities – Borrowings


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Secured

Bills payable 58,500 62,000 – –

total secured non-current interest bearing borrowings 58,500 62,000 – –

Unsecured

other loans 2,846 1,937 700 1,434

total non secured non-current interest bearing borrowings 2,846 1,937 700 1,434

61,346 63,937 700 1,434

a) total secured liabilities

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


2007 $’000

2006 $’000

2007 $’000

2006 $’000


Bills payable 58,500 62,000 – –

total secured bearing borrowings 58,751 62,000 – 2,129

b) assets pledged as security

the bank loans, overdraft and bill acceptance facilities of the parent entity and its controlled entities are secured by a deed of interlocking guarantee between relevant entities in the Group as well as a fixed and floating charge over all assets in the Group.

the carrying amounts of assets pledged as security for current and non current interest bearing liabilities are:


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Current

Floating charge

Cash and cash equivalents 14,609 10,572 – –

receivables 96,463 64,082 120,097 –

inventories 9,953 7,398 – –

total current assets pledged as security 121,025 82,052 120,097 –

Non-current

Floating charge

receivables 1,485 101 – 40,918

other financial assets – 13 – 82,048

plant and equipment 17,841 11,193 – –

other intangible financial assets 4,766 2,825 493 13

total non-current assets pledged as security 24,092 14,132 493 122,979

total assets pledged as security 145,117 96,184 120,590 122,979


�0

c) other loans

other loans comprise of some amounts which are repayable in September 2008 and the remainder with no fixed dates of repayment. they bear interest at between 7% and 9% per annum.

d) Financing arrangements

Credit standby arrangements


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Total facilities

Bank overdrafts 20,000 13,000 20,000 13,000

Secured bill acceptance facility 95,000 62,000 95,000 62,000

115,000 75,000 115,000 75,000

Used at balance date


Secured bill acceptance facility 58,500 62,000 – –

Secured bill acceptance facility utilised by other group companies – – 58,500 62,000

58,751 62,000 58,500 64,129

Unused at balance date

Bank overdrafts 19,749 13,000 20,000 10,871

Unsecured bill acceptance facility 36,500 – 36,500 –

56,249 13,000 56,500 10,871

Bank loan facilities

total facilities 115,000 75,000 115,000 75,000

Used at balance date 58,751 62,000 58,500 64,129

Unused at balance date 56,249 13,000 56,500 10,871

the $115,000,000 facilities are in the form of a multi-option facility which can be utilised for a combination of bank bills, bank overdrafts or bank guarantees. at balance date $2,057,000 was utilised in bank guarantees (note 29).

the multi-option facility has a three year term.

the current interest rates are 7.19% on the bill facility and 8.38% on the overdraft (2006: 6.78% and 7.91% respectively).

(i) Interest rate risk exposures

the following table sets out the Group’s exposure to interest rate risk, including the effective weighted average interest rate by maturity periods.

exposures arise predominantly from liabilities bearing variable interest rates.

Floating Interest Rate

2007 $’000

2006 $’000

Bills payable (note 20(a)) 58,500 62,000

other loans (notes 18 and 20) 2,846 3,360

total 61,346 65,360

Weighted average interest rate 7% 6%

e) Fair Value

the carrying amounts and fair values of borrowings at balance date were:

2007 2006

Carrying amount

$’000

Fair Value $’000

Carrying amount

$’000

Fair Value $’000

On balance sheet

Non-traded financial liabilities

Bills payable 58,500 58,500 62,000 62,000

other loans 4,174 4,174 3,360 3,360

62,674 62,674 65,360 65,360

Off-balance sheet

Contingencies – – – –

None of the above classes are traded on organised markets in a standardised form.

Fair value is inclusive of costs which should be incurred on settlement of a liability.


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(i) On-balance sheet

the fair value of borrowings is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for liabilities with similar risk profiles.

(ii) Off-balance sheet

the parent entity and certain controlled entities have potential financial liabilities which may arise from certain contingencies disclosed in note 29. as explained in this note, no material losses are anticipated in respect of any of those contingencies and the fair value disclosed above is the directors’ estimate of amounts which would be payable by the Group as consideration for the assumption of those liabilities by another party.

21 Non-current liabilities – Deferred tax liabilities

the balance comprises temporary differences attributable to:


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Amounts recognised in profit or loss

prepayments – – – –

inventories – 53 – –

plant & equipment 214 6 – –

Amounts recognised through balance sheet

arising as a result of business combinations 834 451 – –

1,048 510 – –

Set off of deferred tax liabilities pursuant to set off provisions (note 15) (1,048) (510) – –

– – – –


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Movements:

opening balance at 1 July 510 – – –

(Credited)/charged to the income statement (note 8) (945) (2) – –

Credited to balance sheet 1,483 451 – –

acquisition of subsidiary (note 32) – 61 – –

Closing balance at 30 June 1,048 510 – –

Deferred tax liabilities to be settled after more than 12 months 623 451 – –

Deferred tax liabilities to be settled within 12 months 425 59 – –

1,048 510 – –

22 Non-current liabilities – provisions


2007 $’000

2006 $’000

2007 $’000

2006 $’000

employee benefits 2,010 2,347 – –

2,010 2,347 – –


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23 Contributed equity

Parent Entity Parent Entity

2007 Number of

shares

2006 Number of

shares

2007 $’000

2006 $’000

a) ordinary shares

ordinary shares

Fully paid 108,386,058 74,993,771 171,418 55,631

Less: treasury Shares (Coffey international Limited employee Leveraged Share plan)

(1,733,247) (2,536,405) (2,686) (2,011)

Less: treasury Shares (Carson Share trusts) (766,667) – (2,760) –

105,886,144 72,457,366 165,972 53,620

b) Movements in share capital

Date Details Number of shares

Issue price

$’000

01-July-2005 opening balance 63,115,639 22,47505-July-2005 Shares issued on purchase

of BFp Consultants pty Ltd270,798 2.50 677

23-September-2005 Shares issued on purchase of Farsands Solutions pty Ltd

8,084,074 3.46 27,971

31-october-2005 Dividend reinvestment plan issues (note(d))

468,657 3.04 1,426

09-November-2005 Shares issued on Farsands Solutions pty Ltd dissenting shareholders

43,905 3.46 152

11-November-2005 Dividend reinvestment plan issues (note(d))

288,448 2.89 832

Various Coffey international Limited employee Leveraged Share plan issues excercised

185,845 0.47 87

72,457,366 53,620

Date Details Number of shares

Issue price

$’000

26-September-2006 Shares issued on purchase of rSG Global Consulting pty Ltd

2,254,985 3.07 6,923

16-october-2006 Shares issued on purchase of ata environmental

324,952 3.07 997

30-october-2006 Shares issued on purchase of eDGe Consulting Ltd

538,650 3.07 1,654

07-December-2006 Dividend reinvestment plan issues (note(d))

463,127 3.32 1,538

20-December-2006 Shares issued on purchase of Haralambous Dowse

366,363 3.58 1,312

29-December-2006 Shares issued on purchase of Carson Group

4,357,677 3.60 15,688

04-March-2007 right issues net of costs* 22,194,833 3.55 76,771

14-March-2007 Shares issued on purchase of Foundation engineering

594,311 3.91 2,324

13-april-2007 Shares issued on purchase of Forum 226 Ltd

211,639 3.47 734

04-June-2007 Dividend reinvestment plan issues (note(d))

466,615 3.78 1,764

05-June-2007 Shares issued to exempt employees share sheme

122,210 4.13 505

30-June-2007 Shares issued on purchase of Xeon inc

357,086 4.18 1,492

Various Coffey international Limited employee Leveraged Share plan issues excercised

1,176,330 0.55 650

105,886,144 165,972

*Capital raising cost of $2,020,000 incurred in the 2007 year have been netted from the above figures.


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c) ordinary Shares

ordinary shares entitle the holder to participate in dividends and proceeds on winding-up of the Company in proportion to the number of and amounts paid on the shares held.

on a show of hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote.

d) Dividend reinvestment plan

the Company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or part of their dividend entitlements satisfied by the issue of new ordinary shares rather then being paid in cash. Shares issued under the plan have been issued at a 5% discount to the market price.

e) Coffey international Limited employee Leveraged Share plan and Carson Group Share trusts

information relating to the Coffey international Limited employee Leveraged Share plan and Carson Group Share trusts, including details of shares issued under the plan, are set out in note 39.

f) rights issue

on 22 November 2006 the company invited its shareholders to subscribe to a rights issue of 22,194,833 ordinary shares at an issue price of $3.55 per share on the basis of 2 shares for every 7 fully paid ordinary shares held, with such shares to be issued on 29 December 2006, and rank for dividends after 29 December 2006. the issue was fully underwritten.

24 reserves and retained profits


2007 $’000

2006 $’000

2007 $’000

2006 $’000

a) reserves

Foreign currency translation reserve 116 86 – –

Share based payments reserve 3,101 164 3,101 164

3,217 250 3,101 164

Movements:

Foreign Currency translation reserve

Balance at 1 July 86 – –

Currently translation differences arising during the year 30 86 – –

Balance at 30 June 116 86 – –

Movements:

Share based payments reserve

Balance at 1 July 164 59 164 59

Share based payment expense for parent 254 105 254 105

Share based payment expense for employees of subsidiaries 2,683 – 2,683 –

Balance at 30 June 3,101 164 3,101 164

(i) Foreign currency translation reserve

exchange differences arising on translation of foreign controlled entities are taken to the foreign currency translation reserve, as described in note 1(d). the reserve is recognised in profit and loss when the net investment is disposed of.


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(ii) Share-based payments reserve

the share-based payments reserve is used to recognise the fair value of options issued but not exercised.

b) retained profits

Movements in retained earnings were as follows:


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Balance at 1 July 12,998 11,677 9,039 17,364

Net profit for the year 13,000 11,582 13,809 1,936

Dividends paid (13,614) (10,261) (13,613) (10,261)

12,384 12,998 9,235 9,039

25 Minority interest


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Interest in:

Share Capital – 128 – –

reserves (47) (1) – –

retained profits 625 3 – –

578 130 – –

26 Dividends

parent entity

2007 $’000

2006 $’000

Ordinary shares

Final ordinary dividend for the year ended 30 June 2006 of 8 cents (2006: 7 cents) per fully paid share paid on 31 october 2006 6,157 5,116

Special dividend for the year ended 30 June 2005 of 2 cents per fully paid share paid on 31 october 2005 – 1,462

interim ordinary dividend of 7 cents (2006: 5 cents) per fully paid share paid on 2 april 2007 7,457 3,683

13,614 10,261

Dividends paid in cash or satisfied by the issue of shares under the dividend reinvestment plan during the years ended 30 June 2007 and 2006 were as follows:

paid in cash 10,312 8,003

Satisfied by issue of shares 3,302 2,258

13,614 10,261

a) Dividends not recognised at year end

in addition to the above dividends, since year end directors have recommended the payout of a final dividend of 8 cents per fully paid share (2006: 8 cents per share final dividend) fully franked based on tax paid at 30%. the aggregate amount of the proposed dividend to be paid on 31 october 2007 out of retained profits, but not recognised as a liability at year end, is $8,746,000 (2006: $6,203,000).


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b) Franked Dividends

the franked portions of the final dividend recommended after 30 June 2007 will be franked out of existing franking credits or out of franking credits arising from the payment of income tax in the year ended 30 June 2007.


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Franking credits available for subsequent financial years based on a tax rate of 30% (2006: 30%) 18,489 14,397 18,489 14,397

the above amount represents the balance of the franking account as at the end of the financial year, adjusted for:

(a) franking credits that will arise from the payment of the amount of the provision for income tax.

(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date.

(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.

the consolidated amounts include franking credits that would be available to the parent entity if distributable profits of subsidiaries were paid as dividends.

the impact on the franking account of the dividend recommended by the directors since year end, but not recognised as a liability at year end, will be a reduction in the franking account of $3,733,000 (2006: $2,658,000).

27 Director and executive disclosures

a) Directors

the following persons were directors of Coffey international Limited during the financial year:

S r Williams (Chairman and Non-executive Director)S a Black (Non-executive Director)C e Jamieson (Non-executive Director)r J olds (Managing Director)G H Simpson (executive Director)

b) other key management personnel

the following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the financial year:

Name Position Employer

S C Curtis Chief Financial officer Coffey international Limited

r p Simpson Corporate Development officer Coffey international Limited

C J parsons Chief information officer Coffey international Limited

C a M Salton Group Manager people & performance Coffey international Limited

M C thomas Chief executive officer Coffey Geotechnics

p Mirkov Chief executive officer Coffey environments

D o’toole Chief executive officer Coffey Mining

S G Jones Chief executive officer Coffey Natural Systems

p D Coney Chief executive officer Coffey projects

all of the above persons were also key management persons throughout the year ended 30 June 2006, except for M C thomas who commenced his role as Chief executive officer Coffey Geotechnics in august 2006 and D o’toole who took on the new role of Chief executive officer Coffey Mining in July 2006.

Mr a C White (General Manager Finance & administration, Coffey international Development) and Mr i a Hosking (formerly Chief operating officer Coffey Geosciences) were key management persons in the year ended 30 June 2006 but not the year ended 30 June 2007.


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c) Key management personnel compensation


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Short-term employee benefits 3,520 2,977 1,849 1,923

post-employment benefits 179 383 76 218

Long service leave 181 91 71 57

Share-based payments 20 11 14 5

3,900 3,462 2,010 2,203

the Company has taken advantage of the relief provided by Corporations regulation 2M.6.04 and has transferred the detailed remuneration disclosures to the directors’ report. the relevant information can be found in sections a to D of the remuneration report on pages 5 to 15.

d) equity instrument disclosures relating to key management personnel

Share holdings

the numbers of shares in the Company held during the financial year by each director of Coffey international Limited and other key management personnel of the Group, including their personally related parties other than shares held on their behalf by the Coffey international Limited employee Leveraged Share plan are set out below.

2007 Name

Balance at the start of the year

Changes during the year

Balance at the end of the year

S r Williams 187,059 (55,147) 131,912

S a Black 73,371 39,137 112,508

C e Jamieson – – –

r J olds 879,674 716,280 1,595,954

G H Simpson 151,386 103,021 254,407

S C Curtis – – –

r p Simpson – – –

C J parsons – – –

2007 Name




C a M Salton – – –

M C thomas – 46,158 46,158

p Mirkov 102,671 (20,000) 82,671

D o’toole – – –

S G Jones 222,725 (3,252) 219,473

p D Coney 1,303,211 (478,031) 825,180

2006 Name




S r Williams 188,811 (1,752) 187,059

S a Black 70,047 3,324 73,371

C e Jamieson – – –

r J olds 820,711 58,963 879,671

G H Simpson 146,042 5,344 151,386

S C Curtis – – –

r p Simpson – – –

C J parsons – – –

C a M Salton – – –

a C White 8,000 10,141 18,141

i a Hosking 235,000 80,000 315,000

p Mirkov 248,015 (145,344) 102,671

S G Jones 222,725 – 222,725

p D Coney – 1,303,211 1,303,211


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Share holdings accounted for as options

the numbers of shares in the Company held during the financial year by Coffey international Limited employee Leveraged Share plan on behalf of each director of Coffey international Limited and other key management personnel of the Group in 2007, including their personally related parties, are set out below.

2007 Name


Issued during

the year

Transferred out during

the year


Vested and exercisable at

end of year

S r Williams – – – – –

S a Black – – – – –

C e Jamieson – – – – –

r J olds 221,080 – (221,080) – –

G H Simpson – – – – –

S C Curtis 33,480 9,566 – 43,046 43,046

r p Simpson 46,172 13,192 – 59,364 50,779

C J parsons – – – – –

C a M Salton 742 212 – 954 –

M C thomas – – – – –

p Mirkov – – – – –

D o’toole 42,025 12,007 – 54,032 54,032

S G Jones – – – – –

p D Coney – – – – –

2006 Name


Issued during

the year

Transferred out during

the year


Vested and exercisable at

end of year

S r Williams – – – – –

S a Black – – – – –

C e Jamieson – – – – –

r J olds 221,080 – – 221,080 221,080

G H Simpson – – – – –

S C Curtis 33,480 – – 33,480 33,480

r p Simpson 39,495 6,677 – 46,172 31,760

C J parsons – – – – –

C a M Salton – 742 – 742 –

a C White 34,125 4,451 – 38,576 28,970

i a Hosking 142,865 4,451 (80,000) 67,316 55,130

p Mirkov – – – – –

S G Jones – – – – –

p D Coney – – – – –


��

e) Loans to key management personnel

Details of loans made to directors of Coffey international Limited and other key management personnel of the Group, including their personally related parties, are set out below.

Aggregate for key management personnel

Group

Balance at the start of

the year $

Interest paid and payable for the year

$

Interest not charged

$

Balance at the end of

the year $

Number in Group at the

end of the year $

2007 150,344 – 9,913 160,257 4

2006 150,458 – 10,738 156,344 6

there were no loans to individuals that exceeded $100,000 at any time during the 2006 or 2007 financial years.

Loans outstanding at the end of the current and prior year are for the purchase of shares under the Coffey international Limited employee Leveraged Share plan. the shares are issued at conditions no more favourable than those available to other employees. No interest is payable on the loan balances. the terms and conditions of the Coffey international Limited employee Leveraged Share plan are described in note 39.

No write-downs or allowances for doubtful receivables have been recognised in relation to any loans made to key management personnel.

f) other transactions with key management personnel

transactions entered into with directors of Coffey international Limited Group and specified executives of the consolidated entity are within normal employee relationships, on terms and conditions no more favourable than those available to other employees or shareholders. they include:

• Share issues under the Coffey international Limited employee Leveraged Share plan (note 31)

• Dividends from shares in Coffey international Limited

• terms of employment and reimbursement of expenses.

Legal fees of $934,293 (2006: $455,539) were paid during the year to Kemp Strang Lawyers, of which S r Williams is a partner, under normal commercial terms and conditions.

28 remuneration of auditorsDuring the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:


2007 $

2006 $

2007 $

2006 $

Audit services

Fees paid to pricewaterhouseCoopers australian firm:

audit and review of financial reports and other audit work under the Corporations act 2001 562,000 482,500 – –

Fees paid to non-pricewaterhouseCoopers audit firms for the audit or review of financial reports of any entity in the consolidated entity 48,859 42,000 – –

total remuneration for audit services 610,659 524,500 – –

Other Assurance Services

Fees paid to pricewaterhouseCoopers australian firm:

aiFrS accounting services – 51,700 – –

review of pro-forma Balance Sheet for rights issue prospectus 5,000 – – –

total remuneration for other assurance services 5,000 51,700 – –

615,659 576,200 – –

it is the Group’s policy to employ pricewaterhouseCoopers on assignments additional to their statutory audit duties where pricewaterhouseCoopers’ expertise and experience within the Group are important. these assignments are principally general advice, or where pricewaterhouseCoopers is awarded assignments on a competitive basis. it is the Group’s policy to seek competitive tenders for all major consulting products.


��

29 Contingencies

Contingent Liabilities

the parent entity and consolidated entity had contingent liabilities at 30 June 2007 in respect of:


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Guarantees

Guarantees given in respect of bank overdrafts and loans of subsidiaries and guarantees secured by fixed and floating charges over all assets of either the consolidated entity or the relevant subsidiary

2,057 3,148 – –

2,057 3,148 – –

these guarantees may give rise to liabilities in the parent entity if the subsidiaries do not meet their obligations under the terms of the overdrafts, loans, leases or other liabilities subject to the guarantees.

General

the Company has received several notifications of potential professional indemnity claims. these notifications rarely eventuate as actual liabilities but in the event they become claims and are successful it is expected they will be adequately covered by the insurance policy held by the Company.

No material losses are anticipated in respect of any of the above contingent liabilities.

30 Commitments

a) Capital commitments

Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Property, plant and equipment

payable:

Within one year – 300 – –

Later than one year but not later than five years – – – –

Later than five years – – – –

– 300 – –

b) Lease commitments – operating

Commitments for minimum lease payments in relation to non cancellable operating leases are payable as follows:


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Within one year 9,841 5,002 – –

Later than one year but not later than five years

26,931 11,332 – –

Later than five years 26,640 2,686 – –

63,412 19,020 – –

representing:

Non cancellable operating leases 63,412 19,020 – –

63,412 19,020 – –


�0

the operating lease commitments in the above table relate primarily to various office and laboratory leases which expire from within one year to within eight years. these leases have varying terms, escalation clauses and renewal rights. on renewal, the terms of the leases are renegotiated.

the Group also leases various equipment and motor vehicles under non-cancellable operating leases.

c) remuneration commitments


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Commitments for the payment of salaries and other remuneration under long-term employment contracts in existence at the reporting date but not recognised as liabilities, payable

Within one year 383 430 – –

Later than on year and not later than 5 years 90 440 – –

473 870 – –

amounts disclosed as remuneration commitments arising from the service contracts of key management personnel referred to in section C of the remuneration report on pages 11 to 12 that are not recognised as liabilities and are not included in the key management personnel compensation.

31 related party transactions

a) parent entity

the ultimate parent entity of the Group is Coffey international Limited.

b) Subsidiaries

interests in subsidiaries are set out in note 33.

c) Key management personnel

Disclosures relating to directors and specified executives are set out in note 27.

d) transactions with related parties


2007 $

2006 $

2007 $

2006 $

Tax consolidation legislation

Current tax payable assumed from wholly owned tax consolidated entities – – 6,558,975 5,967,582

Dividend Revenue

Subsidiaries – – 13,500,195 1,999,458

associates – 194,243 – –

Share-Based Payments

Compensation received from subsidiaries for:

Carson employee Share trusts – – 1,196,001 –

Shares issued but not yet vested for accounting purposes – – 1,487,025 –

– – 2,683,026 –


��

e) transactions with related parties

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


2007 $

2006 $

2007 $

2006 $

Current receivables (tax funding agreement)

Wholly-owned tax consolidated entities – – 6,558,975 5,967,582

No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or doubtful debts due from related parties.

f) Loans to/from related parties


2007 $

2006 $

2007 $

2006 $

Loans to subsidiaries

Beginning of the year – – 40,918,533 43,840,956

Loans advanced – – 80,610,051 2,612,049

Loans repayments received – – (1,954,109) (5,534,472)

end of year – – 119,574,475 40,918,533

Loans from Subsidiaries – –

Beginning of the year – – (53,734,623) (20,920,322)

Loans advanced – – (3,690,300) (38,781,883)

Loans repayments made – – 18,725,609 5,967,582

end of year – – (38,699,314) (53,734,623)

No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or doubtful debts due from related parties.

transactions relating to dividends, calls on partly paid ordinary shares and subscriptions for new ordinary shares were on the same terms and conditions that applied to other shareholders.

all other transactions were made on normal commercial terms and conditions and at market rates, except that there are no fixed terms for the repayment of loans between the parties and interest is not normally charged on loan within the wholly-owned australian group.

outstanding balances are unsecured and are repayable in cash.

32 Business combinations

Current year acquisitions

a) Duncan rhodes

Summary of acquisition

on 1 July 2006 Clifton Coney Group (africa) (pty) Limited acquired 51% of the issued share capital of Duncan rhodes (pty) Limited, Duncan rhodes Construction (pty) Limited, and Duncan rhodes procurement (pty) Limited.

the acquired business contributed revenues of $3,190,000 and net profit before tax of $1,800,000 to the Group for the period from 1 July 2006 to 30 June 2007.

at the date of acquisition, the acquired entity was involved in project management.

Details of the fair value of the assets and liabilities acquired and goodwill are as follows:

$’000

Purchase consideration: (refer to a(i) below)

Cash paid 2,068

Deferred consideration 31

Direct costs relating to the acquisition 396

Total purchase consideration 2,495

Fair value of net identifiable assets acquired (excluding goodwill) (refer to a(ii) below) (89)

Goodwill (refer to note 16) 2,289

intangible asset – Contracts (refer to note 16) 295

2,495


��

the apportionment of intangible assets is supported by an independent valuation. Specifically, customer relationships have not been recognised as a separate identifiable intangible asset. refer to note 3b(i) for more detail.

the goodwill is attributable to the high profitability of the acquired business, the skills of its staff and synergies expected to arise after the company’s acquisition of the new subsidiary.

a(i) Purchase consideration Consolidated Parent

2007 $’000

2006 $’000

2007 $’000

2006 $’000

Outflow of cash to acquire subsidiary, net of cash acquired

Cash consideration 2,068 – – –

Less: Balances acquired

Cash 436 – – –

Bank overdraft – – – –

outflow of cash 1,632 – – –

a(ii) Assets and liabilities acquired acquiree’s carrying amount

$’000Fair value

$’000

The assets and liabilities arising from the acquisition are as follows:

Cash 436 436

trade receivables 742 742

other receivables 15 15

plant and equipment 4 4

Deferred tax asset 2 2

trade payables (102) (102)

tax Liability (455) (455)

Loans (642) (642)

Deferred tax liability (on contracts) – (89)

Net assets – (89)

b) rSG Global Consulting pty Ltd


on 1 September 2006 Coffey Mining pty Limited acquired 100% of the issued share capital of rSG Global Consulting pty Limited

the acquired business contributed revenues of $20,860,000 and net profit before tax of $2,920,000 to the Group for the period from 1 September 2006 to 30 June 2007. if the acquisition had occurred on 1 July 2006, consolidated revenue and consolidated profit for the year ended 30 June 2007 would have been approximately $25,000,000 and $3,500,000 respectively.

at the date of acquisition, the acquired entity was involved in consulting to the mining industry.


$’000

purchase consideration: (refer to b(i) below)

Cash paid 7,531

Shares issued 6,923


total purchase consideration 14,873

Fair value of net identifiable assets acquired (excluding goodwill) (refer to b(ii) below) 757


intangible asset – Brand name (refer to note 16) 580

14,873


the shares component of the purchase price comprised 2,254,985 shares with a fair value of $3.07, this being the average price on the day of issue.



��

b(i) Purchase consideration Consolidated Parent

2007 $’000

2006 $’000

2007 $’000

2006 $’000




Cash – – – –



b(ii) Assets and liabilities acquired Acquiree’s carrying amount

$’000Fair value

$’000




other payables (259) (259)

provision for employee benefits (113) (113)

Deferred tax liability (on brand name) – (175)

Net assets 931 757

as a result of time constraints the initial accounting for the rSG Global Consulting pty Ltd combination has been determined provisionally as at the acquisition date. the fair values assigned to the identifiable assets, liabilities or contingent liabilities may require adjustment as at acquisition date. Under aaSB 3 Business Combinations any adjustments to those provisional values as a result of completing the initial accounting may be recognised within twelve months of the acquisition date.

c) eDGe Consultants UK Limited


on 1 September 2006 the parent company acquired 100% of the issued share capital of edge Consultants UK Limited.

the acquired business contributed revenues of $5,490,000 and net profit before tax of $520,000 to the Group for the period from 1 September 2006 to 30 June 2007. if the acquisition had occurred on 1 July 2006, consolidated revenue and consolidated profit for the year ended 30 June 2007 would have been approximately $6,600,000 and $620,000 respectively.

at the date of acquisition, the acquired entity was involved in undertaking geotechnical consulting.


$’000

purchase consideration: (refer to c(i) below)

Cash paid 3,230

Shares issued 1,654

Direct costs relating to the aquisition 317


Fair value of net identifiable assets acquired (excluding goodwill) (refer to c(ii) below) 1,944


5,201


the shares component of the purchase price comprised 538,650 shares with a fair value of $3.07, this being the average price on the day of issue.



64

c(i) Purchase consideration Consolidated Parent

2007 $’000

2006 $’000

2007 $’000

2006 $’000


Cash consideration 3,230 – 3,230 –


Cash 482 – 482 –


Outflow of cash 2,748 – 2,748 –

c(ii) Assets and liabilities acquired Acquiree’s carrying amount

$’000Fair value

$’000


Cash 482 482

Trade receivables 2,327 2,327

Inventories 52 52

Acquired Investments 1 1

Plant and equipment 121 121

Provision for employee benefits (1,039) (1,039)

Net Assets 1,944 1,944

As a result of time constraints the initial accounting for the EDGE Consulting UK Limited combination has been determined provisionally as at the acquisition date. The fair values assigned to the identifiable assets, liabilities or contingent liabilities may require adjustment as at acquisition date. Under AASB 3 Business Combinations any adjustments to those provisional values as a result of completing the initial accounting may be recognised within twelve months of the acquisition date.

d) Carson Group


On 1 November Coffey Project Management Pty Limited acquired 100% of the issued share capital of Carson Group Australia Pty Limited. On the same day, Coffey International NZ Limited acquired 100% of the issued share capital of Carson Group Ltd.

The acquired business contributed revenues of $17,238,182 and net profit before tax of $500,000 to the Group for the period from 1 November 2006 to 30 June 2007. If the acquisition had occurred on 1 July 2006, consolidated revenue and consolidated profit for the year ended 30 June 2007 would have been approximately $25,500,000 and $625,000 respectively.

At the date of acquisition, the acquired entity was involved in project management.


$’000

Purchase consideration: (refer to d(i) below)

Cash paid 10,418

Shares Issued 15,688


Total purchase consideration 26,642

Fair value of net identifiable assets acquired (excluding goodwill) (refer to d(ii) below)

(1,193)


Intangible asset – Contracts (refer to note 16) 3,377

Intangible asset – Brand name (refer to note 16) 255

26,642

The apportionment of intangible assets is supported by an independent valuation. Specifically, customer relationships have not been recognised as a separate identifiable intangible asset. Refer to note 3b(i) for more detail.

The shares component of the purchase price comprised 4,357,677 shares with a fair value of $3.60, this being the average price on the day of issue.

The goodwill is attributable to the high profitability of the acquired business, the skills of its staff and synergies expected to arise after the company’s acquisition of the new subsidiary.

NOTES TO ThE FINANCIAL STATEMENTS FOR ThE yEAR ENDED 30 JUNE 2007

��

d(i) Purchase consideration Consolidated Parent

2007 $’000

2006 $’000

2007 $’000

2006 $’000




Cash 281 – – –



d(ii) Assets and liabilities acquired Acquiree’s carrying amount

$’000Fair value

$’000


Cash 281 281

trade receivables 2,986 2,986

inventories 100 100





other payables (2,301) (2,301)


intercompany Loans (1,582) (1,582)

Deferred tax liability (on contracts and brand name) – (1,087)

Net assets (106) (1,193)

as a result of time constraints the initial accounting for the Carson Group combination has been determined provisionally as at the acquisition date. the fair values assigned to the identifiable assets, liabilities or contingent liabilities may require adjustment as at acquisition date. Under aaSB 3 Business Combinations any adjustments to those provisional values as a result of completing the initial accounting may be recognised within twelve months of the acquisition date.

e) Xeon inc


on 1 June 2007 the parent company acquired 100% of the issued share capital of Xeon inc t/a CtL environmental Services.

the acquired business contributed no revenues or net profit before tax to the group for the period 1 June 2007 to 30 June 2007. if the acquisition had occurred on 1 July 2006, consolidated revenue and consolidated profit for the year ended 30 June 2007 would have been approximately $12,500,000 and $1,800,000 respectively.

at the date of acquisition, the acquired entity was involved in environmental consulting.


$’000

Purchase consideration: (refer to e(i) below)

Cash paid 5,723

Shares issued 1,493

Deferred consideration 590



Fair value of net identifiable assets acquired (excluding goodwill) (refer to e(ii) below) 1,461


7,877


��


the shares component of the purchase price comprised 357,086 shares with a fair value of $4.18, this being the average price on the day of issue.


e(i) Purchase consideration Consolidated Parent

2007 $’000

2006 $’000

2007 $’000

2006 $’000


Cash consideration 5,723 – 5,723 –


Cash – – – –


outflow of cash 5,723 – 5,723 –

e(ii) Assets and liabilities acquired Acquiree’s carrying amount

$’000Fair value

$’000


trade receivables 989 989

inventories 745 745


Net assets 1,461 1,461

as a result of time constraints the initial accounting for the Xeon inc combination has been determined provisionally as at the acquisition date. the fair values assigned to the identifiable assets, liabilities or contingent liabilities may require adjustment as at acquisition date.

Under aaSB 3 Business Combinations any adjustments to those provisional values as a result of completing the initial accounting may be recognised within twelve months of the acquisition date.

f) other acquisitions

the following other acquisitions also took place but were immaterial to the Group:

on 1 September 2006 Coffey environments acquired the business of ata environmental.

on 1 october 2006 Coffey projects acquired the business of Haralambous Dowse & associates.

on 14 March 2007 Coffey Geotechnics (NZ) Ltd acquired the business of Foundation engineering.

Due to the different acquisition dates it is impractical to report revenue and profits on immaterial acquisitions. on a combined basis if the acquisitions had occurred on 1 July 2006, consolidated revenue and consolidated profit for the year ended 30 June 2007 would have been approximately $23,900,000 and $3,120,000 respectively.


$’000

Purchase consideration: (refer to f(i) below)

Cash paid 10,481

Shares issued 4,634






��

f(i) Purchase consideration Consolidated Parent

2007 $’000

2006 $’000

2007 $’000

2006 $’000



Less: Balances acquired – – – –

Cash – – – –



Prior year acquisitions

g) BFp Consultants pty Limited


on 5 July 2005 the parent entity acquired 100% of the issued share capital of BFp Consultants pty Limited.

the acquired business contributed revenues of $2,600,000 and net profit of $500,000 to the Group for the period from 5 July 2005 to 30 June 2006.

at the date of acquisition, the acquired entity was involved in mine engineering, geotechnical consulting and testing.


$’000

Purchase consideration: (refer to g(i) below)

Cash paid 2,823

Shares issued 677



Fair value of net identifiable assets acquired (excluding goodwill) (refer to g(ii) below) 642


3,614

the apportionment of intangible assets is supported by an independent valuation. refer to note 3(b) for more detail.

the shares component of the purchase price comprised 270,798 shares with a fair value of $2.50, this being average price on the day of issue.


g(i) Purchase consideration 2005

$’000


Cash consideration 2,823


Cash 16

Bank overdraft (586)

outflow of cash 3,393

g(ii) Assets and liabilities acquired

Acquiree’s carrying amount

$’000Fair value

$’000


Cash 16 16



inventories 102 102



acquired investments 25 25


provisions (105) (105)

Bank overdraft (586) (586)


��

g(ii) Assets and liabilities acquired

Acquiree’s carrying amount

$’000Fair value

$’000


Net identifiable assets acquired 642 642

h) Farsands Solutions pty Limited

Summary of Acquisition

on 23 September 2005 the parent entity acquired 100% of the issued share capital of Farsands Solutions pty Limited.

the acquired business contributed revenues of $39,155,000 and net profit before tax of $3,543,000 to the Group for the period from 23 September 2005 to 30 June 2006. if the acquisition had occurred on 1 July 2005, consolidated revenue and consolidated profit for the year ended 30 June 2006 would have been approximately $52,000,000 and $4,700,000 respectively.

at the date of acquisition, the acquired entity was involved in project management.


$’000

Purchase consideration: (refer to h(i) below)

Cash paid 22,120

Shares issued 28,123

Direct costs relating to the acquisition 1,095


Fair value of net identifiable assets acquired (excluding goodwill) (refer to h(ii) below)

191

Goodwill(refer to note 16) 49,143

intangible asset – Contracts (refer to note 16) 2,004

51,338


the shares component of the purchase price comprised 8,127,979 shares with a fair value of $3.46, this being the average price on the day of issue.


h(i) Purchase consideration Consolidated Parent

2007 $’000

2006 $’000

2007 $’000

2006 $’000


Cash consideration – 22,120 – 22,120


Cash – 2,202 –

Bank overdraft – (2,478) –

outflow of cash – 22,396 – 22,120

h(ii) Assets and liabilities acquired Acquiree’s carrying amount

$’000Fair value

$’000


Cash 2,202 2,202


other receivables 1,049 1,049

inventories 594 594

plant and equipment 2,670 2,670


acquired investments 933 933

trade payables (5,893) (5,893)

provisions (1,205) (1,205)


��

h(ii) Assets and liabilities acquired Acquiree’s carrying amount

$’000Fair value

$’000

Bank overdraft (2,478) (2,478)

provision for employee benefits (1,766) (1,766)

Deferred tax liability (61) (61)

Loans (3,915) (3,915)

Net assets 78 78

Minority interests 113 113

Net identifiable assets acquired 191 191

i) Coffey international Development Holdings Ltd (formerly Forum 226 Ltd)


on 6 March 2006 the parent entity acquired 100% of the issued share capital of Coffey international Development Ltd.

the acquired business contributed revenues of $4,000,000 and net profit of $125,000 to the Group for the period from 6 March 2006 to 30 June 2006. if the acquisition had occurred on 1 July 2005, consolidated revenue and consolidated profit for the year ended 30 June 2006 would have been approximately $12,000,000 and $1,000,000 respectively.

at the date of acquisition, the acquired entity was involved in international development and aid projects.


$’000

purchase consideration: (refer to i(i) below)

Cash paid 5,924

Deferred Compensation 2,227



Fair value of net identifiable assets acquired (excluding goodwill) (refer to j(ii) below) 1,359


intangible asset – Contracts (refer to note 16) 1,107

8,294



i(i) Purchase consideration Consolidated Parent

2007 $’000

2006 $’000

2007 $’000

2006 $’000

outflow of cash to acquire subsidiary, net of cash acquired

Cash consideration – 5,924 – 5,924

Less: Balances acquired – – – –

Cash – 285 – –

Bank overdraft – (772) – –

outflow of cash – 6,411 – 5,924

i(ii) Assets and liabilities acquired Acquiree’s carrying amount

$’000Fair value

$’000


Cash 285 285


other receivables 1,427 1,427


trade payables (3,308) (3,308)

Bank overdraft (772) (772)

Net assets 1,359 1,359


�0

33 Subsidiariesthe consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1(b):

Name of entity

Country of incorporation

Class of shares

Equity Holding

2007 2006 % %

Parent entity’s investment

2007 2006 $’000 $’000

Owned by Coffey International Limited

Macsis pty Limited australia ordinary 100% 100% 8,542 8,542

Coffey international Development pty Limited

australia ordinary 100% 100% 763 763

it environmental (australia) pty Limited

australia ordinary 100% 100% 6,254 6,254

Coffey Natural Systems pty Limited formerly enesar Consulting pty Limited

australia ordinary 100% 100% 2,943 2,943

Specialist training australia pty Limited

australia ordinary 100% 100% 282 282

Coffey international Development (Middle east) pty Limited

U.a.e ordinary 100% 100% – –

Coffey agriculture Uae pty Limited U.a.e ordinary 100% 100% – –

Coffey environments pty Limited australia ordinary 100% 100% – –

aquaclear technology pty Limited australia ordinary 100% 100% – –

Coffey Holdings Sdn Bhd Malaysia ordinary 100% 100% – –

Coffey philippines inc* philippines ordinary 40% 40% 6 6

BFp Consultants pty Limited australia ordinary 100% 100% 3,614 3,614

Coffey projects (australia) pty Limited formerly Clifton Coney Group pty Limited

australia ordinary 100% 100% – –

Name of entity


Class of shares

Equity Holding

2007 2006 % %


2007 2006 $’000 $’000

Clifton Coney international Limited B.V.i. ordinary 100% 100% – –

DaSCeM pty Limited australia ordinary 100% 100% – –

Farsands Facilities Management Limited


Farsands risk Management pty Limited


Farsands Solutions pty Limited australia ordinary 100% 100% 51,457 51,338

eDGe Consultants UK Ltd U.K. ordinary 100% – 5,201 –

Coffey project Management pty Ltd australia ordinary 100% – – –

Coffey international NZ Limited New Zealand ordinary 100% – 4,645 –

Coffey international inc. U.S.a. ordinary 100% – – –

Xeon inc U.S.a. ordinary 100% – 7,877 –

Coffey (UK) Limited U.K. ordinary 100% – 6 –

Owned 50% by Coffey International Limited and 50% by Macsis Pty Limited

Coffey asia Limited Hong Kong ordinary 100% 100% – –

Owned by Macsis Pty Limited

Coffey Geosciences pty Limited australia ordinary 100% 100% – –

Coffey MpW pty Limited australia ordinary 100% 100% – –

Coffey Corporate pty Limited australia ordinary 100% 100% – –

Coffey partners international pty Limited


Coffey Mining pty Limited australia ordinary 100% 100% – –

Soil & rock engineering pty Limited australia ordinary 100% 100% – –


��

Name of entity


Class of shares

Equity Holding

2007 2006 % %


2007 2006 $’000 $’000

Coffey Geotechnics pty Limited australia ordinary 100% 100% – –

Coffey Metago environmental engineers pty Limited*


Coffey Mine Development pty Limited australia ordinary 100% – – –

Balance Consulting australia pty Limited

australia ordinary 100% – – –

Coffey rail pty Limited australia ordinary 100% – – –

Owned by Coffey Geosciences Pty Limited

Water Studies pty Limited australia ordinary 100% 100% – –

Name of entity


Class of shares

Equity Holding

2007 2006 % %


2007 2006 $’000 $’000

Owned by Coffey Mining Pty Limited

rSG Global Consulting pty Ltd


Owned by RSG Global Consulting Pty Ltd

rSG Senegal SarL Senegal ordinary 100% – – –

Centre for international Dispute resolution & Management pty Limited


Owned by IT Environmental (Australia) Pty Limited

enterra pty Limited* australia ordinary 50% 50% – –

Owned by Specialist Training Australia Pty Limited

Sta Free Zone Limited Liability Company

U.a.e ordinary 100% 100% – –

Owned by Aquaclear Technology Pty Limited

aquaclear technology (pakistan) pvt Limited*

pakistan ordinary 95% 95% – –

Owned by Coffey Holdings Sdn Bhd

Coffey (Malaysia) Sdn Bhd

Malaysia ordinary 100% 100% – –

Owned by Coffey Asia Limited

Coffey thailand Limited* thailand ordinary 49% 49% – –


��

Name of entity


Class of shares

Equity Holding

2007 2006 % %


2007 2006 $’000 $’000

Owned by Coffey (UK) Limited

Coffey international Development Holdings Limited formerly Forum 226 Limited

U.K. ordinary – 100% 8,183 8,294

Owned by Coffey Projects (Australia) Pty Limited

Clifton Coney Group (NSW) pty Limited


Clifton Coney Group (QLD) pty Limited


Clifton Coney Group (Sa) pty Limited


Clifton Coney Group (ViC) pty Limited


Clifton Coney Group (Wa) pty Limited


CCG Group pty Ltd australia ordinary 100% 100% – –

project V pty Limited * australia ordinary 50% 50% – –

Owned by Coffey Project Management Pty Limited

Carson Group australia pty Limited


Owned by Coffey Project Management Pty Limited and Carson Group Australia Pty Limited

Carson Group pty Limited australia ordinary 100% – – –

Carson Group NSW admin pty Limited australia ordinary 100% – – –

Carson Group QLD pty Limited australia ordinary 100% – – –

Name of entity


Class of shares

Equity Holding

2007 2006 % %


2007 2006 $’000 $’000

Owned by Coffey Project Management Pty Limited and Carson Group Australia Pty Limited and Carson Group Pty Limited

Carson Group Vic admin pty Limited australia ordinary 100% – – –

Owned by Carson Group Vic Admin Pty Limited

Carson Group Vic pty Limited australia ordinary 100% – – –

Owned by Coffey International NZ Limited

Carson Group Ltd New Zealand ordinary 100% – – –

Coffey Geotechnics (NZ) Limited New Zealand ordinary 100% – – –

Coffey projects (New Zealand) Limited

New Zealand ordinary 100% – – –

Owned by Carson Group Limited

Carson Group (aKL) Limited New Zealand ordinary 100% – – –

Carson investments (aKL) Limited New Zealand ordinary 100% – – –

Carson Group (WGtN) Limited New Zealand ordinary 100% – – –

Carson investments (WGtN) Limited New Zealand ordinary 100% – – –

Carson Group (Si) Limited New Zealand ordinary 100% – – –

Carson investments (Si) Limited New Zealand ordinary 100% – –

Owned by Farsands Risk Management Pty Limited

MpL Group pty Limited australia ordinary 100% 100% – –


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Name of entity


Class of shares

Equity Holding

2007 2006 % %


2007 2006 $’000 $’000

Owned by Clifton Coney International Limited

Clifton Coney Group (africa) (pty) Limited

South africa ordinary 100% 100% – –

Clifton Coney Group (indo-China) Limited

B.V.i. ordinary 100% 100% – –

Clifton Coney Group (Vietnam) Limited

Vietnam ordinary 100% 100% – –

Clifton Coney Group (Me) Limited B.V.i. ordinary 100% 90% – –

Clifton Coney Group (NZ) Limited New Zealand ordinary 100% 100% – –

Owned by Clifton Coney Group (Africa)(Pty) Limited

Coffey Mining (Safrica)(pty) Limited South africa ordinary 100% – – –

rSG Global Consulting (Sa) (pty) Limited

South africa ordinary 100% – – –

Duncan rhodes (proprietary) Limited South africa ordinary 51% – – –

Duncan rhodes Construction (pty) Limited


Duncan rhodes procurement (pty) Limited


Name of entity


Class of shares

Equity Holding

2007 2006 % %


2007 2006 $’000 $’000

Owned by Coffey International Development Holdings Limited

Coffey international Development Limited formerly enterplan Limited

U.K. ordinary 100% 100% – –

enterplan polska zoo poland ordinary 100% 100% – –

rural partnerships Limited U.K. ordinary 50% 50% – –

* these entities have been consolidated in full because the group has full financial and operational responsibility and dominated decision-making.

34 interests in joint ventures

Joint venture

the consolidated entity holds interests in the following joint venture operations:

Equity Holding

Name Principal operation2007

%2006

%

NSW Deet Joint Venture Crip education 50.0 50.0

Windsor road Upgrade alliance Design and construction of road 5.0 5.0

Millstream Link Design and construction of road 5.0 5.0

inner Northern Busway – HUB alliance Design and construction of road 5.0 5.0

Hume Highway – Northern package Design and construction of road 6.0 –


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the following items represent the Group’s interests in the joint venture operations and are included under the asset and liability headings in the financial statements:

Consolidated Parent entity

2007 $’000

2006 $’000

2007 $’000

2006 $’000

Current assets

Cash 533 41 – –

receivables 1,345 1,180 – –

total assets employed 1,878 1,221 – –

Current liabilities

trade creditors and borrowings 1,286 245 – –

total liabilities 1,286 245 – –

Share of net assets employed in joint ventures 592 976 – –

35 economic dependencya controlled entity, Coffey international Development pty Limited, depends for a significant volume of revenue on ausaiD. During the year ended 30 June 2007, approximately 96% (2006: 88%) of the controlled entity’s revenue was sourced from this body, primarily in the form of long term contracts.

During the year ended 30 June 2007, approximately 19% (2006: 30%) of the Coffey international Limited Group’s revenue was sourced from this body, primarily in the form of long term contracts. additional sources of revenue are being sought to reduce the future dependency on any particular entity.

36 events occurring after the balance sheet dateon 2 July 2007 the Company acquired 100% of the voting shares in asia pacific rail pty Limited and John Wertheimer Consultants pty Limited for $6.9 million in cash and shares.

on 8 august 2007 the Company acquired 100% of the voting shares in the peron Group pty Limited also for $17.6 million in cash and shares.

on 3 September 2007 the Company acquired business assets of Stratcorp Consulting pty Ltd, for $6.9 million in cash and shares.

on 24 September 2007 the Company announced it had signed an agreement to acquire 100% of the voting Shares in Geoexplore Consultoria e Serviços Ltda for approximately $8.0 million in cash and shares.

except for these items, no other matter or circumstance has arisen since 30 June 2007 that has significantly affected, or may significantly affect:

a) the consolidated entity’s operations in future financial years, or

b) the results of those operations in future financial years, or

c) the consolidated entity’s state of affairs in future financial years.


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37 reconciliation of profit after income tax to net cash inflow from operating activities

reconciliation of profit after income tax to net cash inflow from operating activities


2007 $’000

2006 $’000

2007 $’000

2006 $’000

profit for the year 13,640 11,661 13,809 1,936

Depreciation and amortisation 6,837 3,509 – –

Non-cash employee benefits expense – share-based payments 2,937 105 254 105

Net exchange differences 190 161 – –

Net loss on sale of non-current assets 25 110 – –

Change in operating assets and liabilities, net of effects from purchase of controlled businesses

(increase) in trade debtors (20,607) (15,932) – –

Decrease/(increase) in work in progress (1,659) 2,862 – –

(increase) in future deferred tax asset (864) (573) (480) –

increase/(decrease) in future deferred tax liability (813) – – –

Decrease in other operating assets (4,966) 1,396 (516) –

increase/(decrease) in trade creditors (2,442) 3,631 – –

Decrease/(increase) in provision for income taxes payable (877) (20) 429 (101)

increase in other provisions 1,174 (1,842) – –

Net cash inflow from operating activities (7,425) 5,068 13,496 1,940

38 earnings per share

Consolidated 2007 Cents

2006 Cents

a) Basic earnings per share

profit from continuing operations attributable to the ordinary equity holders of the company 14.4 16.5

b) Diluted earnings per share

profit from continuing operations attributable to the ordinary equity holders of the company 14.2 16.1

c) reconciliations of earnings used in calculating earnings per share

Basic earnings per share

profit from continuing operations 13,640 11,661

profit from continuing operations attributable to minority interests (640) (79)

profit from continuing operations attributable to the ordinary equity holders of the company used in calculating basic earnings per share 13,000 11,582

Diluted earnings per share

profit from continuing operations attributable to the ordinary equity holders of the company used in calculating basic and diluted earnings per share 13,000 11,582


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Consolidated 2007 Cents

2006 Cents

d) Weighted average number of shares used as the denominator

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 90,133,205 70,205,565

Adjustments for calculation of diluted earnings per share:

Coffey international employee Leveraged Share plan Shares 1,028,047 1,894,600

Shares issued but not yet vested for accounting purposes 74,522 –

Carson Group employee Share trusts 19,028 –

Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 91,254,802 72,100,165

e) information concerning the classification of securities

(i) Shares issued but not yet vested for accounting purposes

Shares issued but not yet vested for accounting purposes are treated as the equivalent of options to acquire ordinary shares and are included as potential ordinary shares in the determination of diluted earnings per share.

(ii) Shares Plans

Shares granted to employees under the Coffey international Limited employee Leveraged Share plan and Carson employee Share trusts are considered to be potential ordinary shares and have been included in the denominator of diluted earnings per share to the extent to which they are dilutive. these shares have not been included in the determination of basic earnings per share. Details relating to these shares are set out in note 39.

39 Share-based payments

a) Coffey international Limited employee Leveraged Share plan

the establishment of the Coffey international Limited employee Leveraged Share plan was approved by special resolution at the annual General Meeting of the Company which was held on 21 November 1995.

the Coffey international Limited employee Leveraged Share plan entitles nominated employees in the Coffey international Limited Group (including executive directors) to purchase shares in the Coffey international Limited entity funded by way of interest free loans from Coffey international Limited for the subscription price. the loans are repayable from dividend entitlements. allocations of shares are determined by the directors and the issue price of the shares is at a discount to market value as defined by Section 139Fa of the income Tax Assessment Act 1936.

at the most recent grant date of the issue of shares under the scheme 431 employees were eligible to participate in the scheme.

the shares issued under the scheme are subject to a two year vesting condition during which period the employee must remain employed by the Group (subject to certain conditions as set out in the scheme’s trust deed).

the shares issued to the Coffey international Limited employee Leveraged Share plan rank equally with all other fully-paid ordinary shares on issue.

Details of issues under the Coffey international Limited employee Leveraged Share plan are as follows:

Date Number of shares Issue price $’000

16 april 1996 2,140,000 $0.49 1,049

11 June 1998 221,000 $0.60 133

15 June 2001 199,350 $0.526 105

1 November 2002 607,525 $0.448 272

5 November 2003 585 $1.128 1

5 November 2004 220,980 $1.938 428

23 November 2005 144,640 $3.37 487

29 December 2006 373,172 $3.55 1,325

Total 3,907,252 3,800


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the total amount outstanding on the Coffey international Limited employee Leveraged Share plan at the balance date is $2,152,000 (2006: $1,139,000). aggregate drawdowns during the year were $1,013,000 (2006 repayments: $214,000). the aggregate number of shares held under the Coffey international Limited employee Leveraged Share plan at balance date is 1,733,247 (2006: 2,536,405). the aggregate market value of those shares at 30 June 2007 was $7,400,965 (2006: $7,761,399), and the average market price at 30 June 2007 was $4.27 (2006: $3.06).

b) Valuation of share-based payments

the directors obtained an independent valuation of the shares in the Coffey international employee Leveraged Share plan, on the basis that the shares granted in the plan required valuation as options, with an exercise price equal to the loan repayment value plus the net present value of expected dividends over the vesting period.

the valuation methodology used to determine the share-based payment expense was the Black-Scholes / Merton option pricing Model. as required by aaSB 2, the model took into account the exercise price of the option, the life of the option, the current price of the underlying shares, the expected volatility of the share price, the dividends expected on the shares and the risk-free interest rate for the life of the option.

the model inputs were as follows for the options subject to valuation:

Grant date 5 November 2003

5 November 2004

23 November 2005

29 December 2006

risk-free rate 5.84% 5.50% 5.56% 6.47%

Standard deviation 34.169% 35.26% 42.60% 27.45%

Share price at effective date $1.094 $1.858 $3.60 $4.10

exercise price (loan repayment) $1.128 $1.858 $3.37 $3.55

annualised dividend yield 4.375% 4.435% 3.542% 4.17%

Number of options (shares) 24,042 44,196 144,640 373,172

performance conditions None None None None

Fair Value of the share-based payment $1.41 $2.39 $1.17 $1.74

c) Carson Group employee Share trusts

the establishment of the Carson Group employee Share trusts were approved by Carson Group prior to acquisition by Coffey international Limited on 1 November 2006.

the Carson Group employee Share trusts entities nominated employees in the Carson Group to receive shares in Coffey international Limited for no consideration.

allocation of the shares was determined by the directors (principals) of Carson Group prior to its acquisition by Coffey international Limited

at grant date of the shares under the schemes, 106 employees were eligible to participate in the schemes.

the shares issued under the schemes are subject to a three year vesting condition during which period the employee must remain employed by the Group (subject to certain conditions as set out in the trust deed).

the shares issued to the Carson Group employee Share trusts rank equally with all other fully-paid ordinary shares on issue. Details of issues under the Carson Group employee Share trusts are as follows:

Date Number of Shares Issue Price $’000

01 November 2006 766,667 $3.60 2,760

the aggregate number of shares held under the Carson Group Share trusts at balance date is 766,667. the aggregate market value of those shares at 30 June 2007 was $3,273,600. the average market price at 30 June 2007 was $4.27.

d) Valuation of share-based payments

the total value of the shares issued to the Carson Group employee Share trusts of $2,760,000 will be expensed over the three year vesting period.


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e) Shares issued but not yet vested for accounting purposes

the consideration for a number of acquisitions made during the year included shares issued to vendors, who became employees of the Group, that have not yet vested for accounting purposes.

the shares issued to these vendor employees are subject to vesting conditions of between 2 to 4 years during which period the employee must remain employed by the Group.

For further details on the accounting treatment and valuation of the payments to vendors, in the form of shares, subject to service conditions, refer to note 3 b) (iii).

f) expenses arising from share-based payment transactions

total expenses arising from share based payment transactions recognised during the period as part of employee benefit expense were as follows:


2007 $’000

2006 $’000

2007 $’000

2006 $’000

Shares issued under employee Coffey international Limited employee Leveraged Share plan 254 105 254 105

Carson employee Share trusts 1,196 – – –

Shares issued but not yet vested for accounting purposes 1,487 – – –

2,937 105 254 105


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in the directors’ opinion:

(a) the financial statements and notes set out on pages 23 to 78 are in accordance with the Corporations Act 2001, including:

(i) complying with accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

(ii) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2007 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date; and

(b) as explained in Note 1a there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and

(c) the audited remuneration disclosures set out on pages 5 to 15 of the directors’ report comply with accounting Standards aaSB 124 related party Disclosures and the Corporations Regulations 2001.

the directors have been given the declarations by the Managing Director and the Chief Financial officer required by section 295a of the Corporations Act 2001.

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

Stephen r Williams Chairman

roger J olds Managing Director


DireCtorS’ DeCLaratioN

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iNDepeNDeNt aUDitor’S report to tHe MeMBerS oF CoFFey iNterNatioNaL LiMiteD

Report on the financial report and the AASB 124 remuneration disclosures contained in the directors’ report

We have audited the accompanying financial report of Coffey international Limited (the company, which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration for both Coffey international Limited and the Coffey international Limited Group (the consolidated entity). the consolidated entity comprises the company and the entities it controlled at the year’s end or from time to time during the financial year.

We have also audited the remuneration disclosures contained in the directors’ report. as permitted by the Corporations regulations 2001, the company has disclosed information about the remuneration of directors and executives (“remuneration disclosures”), required by accounting Standard aaSB 124 related party Disclosures, under the heading “remuneration report” in the directors’ report and not in the financial report.

Directors’ responsibility for the financial report and the AASB 124 remuneration disclosures contained in the directors’ report

the directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with australian accounting Standards (including the australian accounting interpretations) and the Corporations act 2001. this responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. in Note 1, the directors also state, in accordance with accounting Standard aaSB 101 presentation of Financial Statements, that compliance with the australian equivalents to international Financial reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with international Financial reporting Standards.

the directors of the company are also responsible for the remuneration disclosures contained in the directors’ report.

Auditor’s responsibility

our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with australian auditing Standards. these auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. our responsibility is to also express an opinion on the remuneration disclosures contained in the directors’ report based on our audit.

an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report and the remuneration disclosures contained in the directors’ report. the procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report and the remuneration disclosures contained in the directors’ report, whether due to fraud or error. in making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report and the

PricewaterhouseCoopersABN 52 780 433 757

Darling park tower 2201 Sussex StreetGpo BoX 2650SyDNey NSW 1171DX 77 Sydneyaustraliawww.pwc.com/autelephone +61 2 8266 0000Facsimile +61 2 8266 9999

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iNDepeNDeNt aUDitor’S report to tHe MeMBerS oF CoFFey iNterNatioNaL LiMiteD

remuneration disclosures contained in the directors’ report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. an audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the remuneration disclosures contained in the directors’ report.

our procedures include reading the other information in the annual report to determine whether it contains any material inconsistencies with the financial report.

For further explanation of an audit, visit our website http://www.pwc.com/au/financialstatementaudit. our audit did not involve an analysis of the prudence of business decisions made by directors or management. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Independence

in conducting our audit, we have complied with the independence requirements of the Corporations act 2001.

Auditor’s opinion on the financial report

in our opinion:

(a) the financial report of Coffey international Limited is in accordance with the Corporations act 2001, including:

(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their performance for the year ended on that date; and

(ii) complying with australian accounting Standards (including the australian accounting interpretations) and the Corporations regulations 2001; and

(b) the financial report also complies with international Financial reporting Standards as disclosed in Note 1.

Auditor’s opinion on the AASB 124 remuneration disclosures contained in the directors’ report

in our opinion, the remuneration disclosures contained in the directors’ report and identified as being subject to audit, comply with accounting Standard aaSB 124.

pricewaterhouseCoopers

BK Hunter partner pricewaterhouseCoopers


Liability limited by a scheme approved under professional Standards Legislation.

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SHareHoLDer iNForMatioN

the shareholder information set out below was applicable as at 20 September 2007.

A Breakdown of shareholdingsHolders Total units %

1-1000 917 534,784 0.474%1,001-5,000 1,967 5,300,463 4.699%5,001-10,000 910 6,786,697 6.016%10,001-100,000 1,352 37,071,276 32.863%100,001 and over 127 63,112,439 55.948%

5,273 112,805,659 100.000%

B equity security holders

the names of the twenty largest holders of quoted equity securities as at 20 September 2007 are listed below:

Name Ordinary SharesNumber held Percentage of issued shares

National Nominees Limited 5,976,586 5.298%J p Morgan Nominees australia Limited 4,653,767 4.125%argo investments Limited 3,664,361 3.248%the peron Group pty Ltd (the peron Group a/c) 2,800,000 2.482%HSBC Custody Nominees (australia) Limited 2,401,308 2.129%Citicorp Nominees pty Limited (CFS Developing Companies a/c) 2,335,438 2.070%aNZ Nominees Limited (Cash income a/c) 2,280,785 2.022%evelin investments pty Limited 1,950,000 1.729%aNZ Nominees Limited (income reinvest a/c) 1,745,381 1.547%Coffey international employee Leveraged Share plan pty Ltd 1,733,247 1.536%Queensland investment Corporation 1,375,121 1.219%Cogent Nominees pty Limited 1,239,450 1.099%Mr roger John olds 988,910 0.877%Banlan pty Ltd 900,000 0.798%Mrs Fjelda Betty Martin 882,143 0.782%rBC Dexia investor Services australia Nominees pty Limited 880,165 0.780%Citicorp Nominees pty Limited 800,873 0.710%UBS Wealth Management australia Nominees pty Ltd 787,366 0.698%Mr peter Dodson Coney, Ms Deborah Donnay Coney and Ms Jennifer Lee Crouch (Coney Super Fund a/c) 778,410 0.690%invia Custodian pty Limited 753,868 0.668%total of top 20 36,927,179 34.508%

Voting rights

the voting rights attached to the ordinary shares are that 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.

Financial Report

2007

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