www neptunems com...highlight the fact that shareholders support the company’s growth strategy....

NEPTUNE MARINE SERVICES LIMITED

LeveL 16, 140 St GeorGeS terracePertH, WeSterN aUStraLIa 6000

teLePHoNe: +61 (0) 8 9424 1111FacSIMILe: +61 (0) 8 9424 1110

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annual report

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NePtU

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t 2009

SOLICITORS

cowell clarke

Level 5, 62 Pirie Street

adelaide South australia 5000

SHARE REGISTRY

computershare Investor Services Pty Ltd

Level 2, reserve Bank Building

45 St Georges terrace

Perth Western australia 6000

telephone: +61 (0) 8 9323 2000

Facsimile: +61 (0) 8 9323 2033

STOCK EXCHANGE

australian Stock exchange Limited

exchange Plaza

2 the esplanade


ASX CODE

NMS

DIRECTORS

Mr christian Lange

CEO & Managing Director

Mr ross Kennan

Chairman

Mr David agostini

Non-Executive Director

Mr robert Scott


Mr Geoff Newman


COMPANY SECRETARY

Mr Gabriel chiappini

PRINCIPAL OFFICE

Level 16, 140 St Georges terrace


telephone: +61 (0) 8 9424 1111

Facsimile: +61 (0) 8 9424 1110

REGISTERED OFFICE

Level 16, 140 St Georges terrace


AUDITORS

Stantons International

Level 1, 1 Havelock Street

West Perth Western australia 6005

corporate directory

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CONTENTS

Highlights 3

Chairman’sReport 5

ManagingDirector’sReport 9

Directors’Report 15

Auditor’sIndependenceDeclaration 40

IncomeStatement 41

BalanceSheet 42

StatementofChangesinEquity 43

CashFlowStatement 44

NotestotheFinancialStatements 45

Directors’Declaration 90

IndependentAuditReport 91

AdditionalInformationfor

PublicListedCompanies 93

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2009representedayearofsignificantand

acceleratedgrowthforNeptuneMarine

Servicesthatcontinuestodevelopapresence

asaproviderofinnovativesolutionstothe

globaloilandgas,marineandrenewable

energyindustries.

Thecombinationofestablished,proven

expertiseacrossfourmajorgeographical

regionsandtheidentificationandexecution

ofadditionalstrategicgrowthopportunities

hasresultedintheconsolidationofand

collaborationbetweenthevariousentities

thatcollectivelyformtheGroup.

ThiscombinationhasNeptunewellplacedto

takeadvantageofthecurrentandemerging

growthopportunitiesthatexistacrossitsglobal

targetindustriesandhelpsensurethatthe

Grouphasthescopetofurtherdevelopits

capabilitiesasaleadingoilfieldservices

company.

2009 HigHligHts

• Significantrevenuegrowthto$188.9million

(FY08:$86.7million)

• Normalisednetprofitaftertaxof$25.1million

(FY08:$10.9million)

• EBITDAof$43.6million(FY08:$15.3million)

• Normalisedearningspershareof8.32cents

• Newandextendedcontractsinexcessof

$100million

• ExpansionoftheVessel&ROVDivision–

acquired70.05mDP2SupportVessel,

Nor Sea(subsequentlyrenamedMV Neptune

Trident)andthreeworkclassROVs

• Acquiredtwobusinessesforatotal

considerationof$15million

• IntroductionoftheNEPSYS®technologyinto

theNorthSea(UK)

• Completionofthe860kmsubseagas

pipelineroutesurveyontheIchthysGasField

Development,offshoreWesternAustralia

• SignificantorganicgrowthacrosstheGroup

• SuccessfulexpansionintoAsia

• Capitalraisingstotaling$53million

• Expandedandstrengthenedmanagement

andboardstructure

• EntryintotheS&P/ASX300

• Strategicpositioningforcontinuedgrowth

anddevelopmentinto2010

HIGHLIGHTS

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Thelast12monthshaveproventobevery

challengingoperationallyastheinstabilityand

turbulenceassociatedwiththemuchpublicised

GlobalFinancialCrisis(GFC)hasimpacted

andcontinuestoimpactonallfacetsofthe

internationalbusinesscommunity.

WhileAustraliamanagedtoavoid‘technical’

recession,ourboomingresourceindustry

quicklyfelttheeffectsofwhatdevelopedinto

amajorcyclicaltroughthatsawadramatic

fallininvestmentandactivity,allagainstthe

backdropofeverincreasingunemployment.

Contrarytosomeofthepressheadlinesthat

weattractedduringtheyear,Neptunewasnot

immunetotheeffectsoftheGFC,particularly

whenyouconsiderourpositioninlightofthe

ramificationsexperiencedwithinourGulfof

MexicoandNorthSea/UKtargetmarkets.As

weenterthe2009/2010financialyearhowever,

wehavecompellingevidencethatourproven

businessstrategyhashelpedustorideoutthe

worstofthestormtodate.

Eveninthefaceofoneofthemostchallenging

economicenvironmentsinhistory,the

underlyingstrengthofNeptune’soperations

anditsgrowthstrategywasclearlyevidentasit

continuedtoevolveintoaleadingglobaloilfield

servicescompanyandforgeastrongpresence

inthemarketsinwhichitoperates.

Notonlydidthecompanymanagetodeliver

recordrevenueandearnings,itcontinued

toidentifyandsecureanumberofgrowth

opportunitiesthatwillsignificantlystrengthen

itspositionin2010andbeyond.Withindustry

analystsaroundtheworldcontinuingtopredict

theonsetandscaleoftherecoveryprocess,

Neptunewillcontinuetomoveforward,albeit

witheducatedcaution.

RecoRd Results, futuRe stRengtH

Neptunehasemergedamuchstronger

companythanatthestartoftheyear;a

testamenttothecommitmentandexpertiseof

theCEO,hishighlyexperiencedmanagement

teamandthebroaderNeptunecommunity.This

commitmenthasresultedintheestablishment

ofasolidfoundationuponwhichNeptunecan

buildandallaretobecommendedontheir

efforts.

Profitandrevenueresultsfortheyearwere

bothatrecordlevels.Comparedtothe

correspondingFY08period,normalised

netprofitaftertaxincreased130%to

$25.1million;earningsbeforeinterest,tax,

depreciationandamortisation(EBITDA)grew

to$43.6million;normalisedearningspershare

was8.32cents;andrevenuewasup120%to

almost$190million.

Complementingthisperformanceisthestrength

ofourendofyearbalancesheetthatreveals

positiveoperatingcashflowsinexcessof$35

millionwhichwillhelptofundfuturegrowth,

a33%increaseincashreservesoverthe

correspondingFY08periodandveryconservative

netdebt/equitygearing.

Neptunealsocontinuestobenefitfromits

strategyofpursuinggrowthbothorganically

andviastrategicacquisition.Theexisting

operationsexperiencedverystronggrowth

intheorderof98%duringtheyearwhilethe

newlyacquiredbusinessesalsocontributed

positivelytorevenueandearnings.Thisyear’s

performanceisanexcellentbellwetherofthe

strengthofNeptune’sunderlyingoperations.

CHAIRMAN’S REPORT

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investment in ouR people

Whilemanycompanieswentintopreservation

modeduringtheyear,Neptunecontinuedto

investinitsteam.Theglobalworkforcehas

growntomorethan600peopleandwehave

beenproactiveinattractingthebestandthe

brightesttothecompany.Wehaveactively

recruitedtalentedindividualsatalllevels,

andinlinewiththat,itispleasingtonotethat

Neptune’sIntegratedGraduateDevelopment

Programistobeexpandedfollowingthe

successofitsinauguralintake.

Fosteringthenextgenerationofleadersisa

rolewetakeseriously.Itmeansfutureleaders

willbeattractedtoNeptuneasanemployerof

choice,ortheywillbemoreinclinedtoengage

Neptuneasapreferredcontractingpartner.

Thislongtermapproachhelpstobuildahighly

regardedorganisationwithatrustedbrand.In

relationtothis,theCEOhasthefullsupportof

theBoardfortheproposedrestructureofthe

seniormanagementteam(asoutlinedinhis

report)thatwillhelptodrivetheinternational

growthanddevelopmentoftheNeptuneGroup

intothefuture.

DuringtheyeartheBoardtoowassubject

torestructuring,theresultofwhichwas

agreaterfocusonfinancialadministration

andtheestablishmentofaCapital

ManagementCommittee.

Thisfocuscoincidedwiththeappointmentto

theBoardofMrGeoffNewmanasaNon-

ExecutiveDirector.Geoff’sextensiveexperience

incorporatefinancecombinedwithhisintimate

knowledgeoftheoilandgasindustry

willbeavaluableadditiontotheBoard.

Asimilarlyvaluablecontributiondrewto

conclusionearlyin2009withtheresignation

fromtheBoardoffellowNon-Executive

DirectorMsCathrynCurtinwho,duringher

tenure,playedasignificantroleinfostering

thedevelopmentandcommercialisationofthe

NEPSYS®technology.

OnbehalfofmycolleaguesIwouldliketothank

Cathrynforheryearsofcommittedserviceand

welcomeGeofftohisnewrole.

A suppoRtive And gRowing sHAReHoldeR bAse

Neptunecontinuestoenjoyverystrongsupport

fromshareholdersandIwouldliketotake

thisopportunitytothankallshareholdersfor

thissupport.InJuneweannounceda$40

millioncapitalraisingwithinstitutionaland

sophisticatedinvestors,anda$13.16million

SharePurchasePlantoexistingshareholders.

Botheventswereverywellsupportedand

highlightthefactthatshareholderssupportthe

company’sgrowthstrategy.

DuringtheyearNeptune’sstronggrowthwas

alsomeasuredbythecompany’sentryintothe

S&P/ASX300index,makingitoneofthe300

largestASX-listedcompaniesasmeasured

bymarketcapitalisation.Boththecompany’s

capitalraisinginitiativesandtheentryinto

theS&P/ASX300havebroughtmanynew

shareholderstoNeptuneandonbehalfof

theBoard,Iwouldliketowelcomethemto

thecompany.

YouR boARd’s stewARdsHip

Neptune’sgrowthiscontinuingatasignificant

rate.Inordertocapitaliseonthisgrowth,the

Boardcontinuallystrivestomaintainabalance

betweenguidingthestrategicdevelopmentof

thebusinessandmanagingtheincidenceof

everpresentrisks.

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TheDirectorshaveagainbeenactivein

reviewingmanagement’sgrowthstrategies,

reviewingNeptune’soperationsthroughout

theworldandengagingwiththecompany’s

employees,shareholdersandcustomers.

Thisactiveparticipationthat,duringtheyear

includedvisitstovariousNeptuneworksites,

participationininvestorbriefingsand

involvementinthereviewofHSEQprocedures

andinitiatives,willcontinueasthecompany

takesthenextstepinitsdevelopment.

well plAced foR tHe YeAR AHeAd

Neptuneenters2010inexcellentshape.

Ourfavourableoutlookissupportedbythe

consistentleveloftenderingactivitythatexists

acrossallofthemarketsinwhichweoperate

and,withthatasaprelude,Icanassure

shareholdersthatNeptune’sbestdaysarestill

aheadofus.

Ross Kennan

Chairman

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Theprogressmadeduringtheyearhasbrought

Neptuneastepclosertoitsaspirationof

providinganunparalleledsuiteofservicesto

theglobaloffshoreOil&Gasindustry.

Ourstrategytoachievethisremainsunchanged

–identifyandcompletestrategicacquisitions,

fosterorganicgrowth,integrateservicesand

resourcesandattractandretainexceptional

people.Throughouttheyear,wehaveover

deliveredinalltheseareas.

AsmentionedintheChairman’sReport,

during2009wewereoperatingina

challengingmacroeconomicenvironment,yet

stilldeliveredrecordresultsinallareasofthe

business.Thiscertainlyconfirmsthatwehave

therightgrowthstrategy,itisrobust,anditwill

generateincreasedshareholdervalueoverthe

longerterm.

oRgAnic gRowtH RemAins tHe keY dRiveR

Itispleasingtonotethatorganicgrowthwas

Neptune’smaingrowthdriverduringtheyear.

Thecompanysecuredmorethan$100million

ofnewworktoaddtoexistingworkinhandand

theworkflowfrommasterserviceagreements.

Particularlypleasinghasbeenthegrowth

indemandfortheNEPSYS®technology

anditsvisibilityininternationalmarkets.We

successfullyintroducedNEPSYS®intothe

NorthSeaandtheuptakehasbeensignificant.

AcceleratedpenetrationintotheGulfofMexico

hasalsobeenencouragingwithmorethan$14

millionofnewworksecuredandcompleted.

secuRing quAlitY Acquisitions tHAt deliveR sustAinAble eARnings gRowtH

Acquisitionshavebeenanimportantpartin

buildingthefoundationsofNeptune’sgrowth

strategy.Duringtheyear,wecontinuedto

investinbusinessesthatexpandedourrange

ofservicesandincreasedourgeographical

presence.InJuly2008,wecompleted

theacquisitionofPerth-basedAccess

Management(WA)PtyLtd,whichincreased

ourpresencethroughoutAustralasiaand

strengthenedouroperationsinSingapore.

Sixmonthslaterwecompletedtheacquisition

ofAberdeen-basedSubseaEngineering

ServicesLimited.Asaresult,Neptunenow

hasmorethan100peopleinoneoftheleading

globaloilandgashubs,andwecontinue

toinvestigateadditionalopportunitiesfor

expansionintheregion.

Wehavebeencontinuallysuccessfulat

securinghighqualitybusinessesthathave

minimalintegrationriskandpossessstrong

organicgrowthprospectsintheirownright.All

ofthesebusinessesareoutperformingunder

Neptune’sownership.

Sincetheendof2009,weannouncedanother

importantacquisitionwhichiscurrentlyunder

finalduediligenceandcontractnegotiations.

TheproposedacquisitionofSubmersible

TechnologyServices(Holdings)Limited

(STS)inAberdeen,announcedinAugust,

willincreaseourcriticalmassintheUKand

broaderEuropeanmarket.Possessingan

excellentreputationwithintheindustry,STSwill

provideuswithafleetof11ROVswhichhave

operatedinallofthemajoroilandgasmarkets

throughouttheworld.

Locally,wehaveinvestedfurtherinourown

fleet,withtheadditionoftheMV Neptune

TridentinOctober2008.Sincedelivery,the

Tridenthasbeeninstrumentalinhelping

Neptuneaccelerateorganicgrowthwitha

rangeofnewcontractssecured.

MANAGING DIRECTOR’S REPORT

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Contributingfurthertothisarethethreework

classROVsthathavebeeninconstantdemand

sinceacquisition.

integRAting ouR seRvices And ResouRces

Theintegrationofourservicesandresources

isverymuchagrowthdriverforNeptune

andacrossallofourbusinesseswehave

seenexcellentcooperationandcollaboration

ofservices.

Onesuchexampleistheprojectsecured

inMarchofthisyearonWesternAustralia’s

NorthWestShelf.UtilisingtheNeptune Trident,

Neptunewasengagedtoprovidesurveyand

constructionsupportservicesusingtwoofour

ROVs.Thesuccessfuldeliveryofprojectssuch

astheserequiresclosecooperationbetween

businessunitsandtheabilitytointegrateour

servicesandpersonnel.

AttRActing tHe best people And ensuRing tHeiR sAfetY

Neptunehasbeenanactiverecruiterduring

2009,recordinga34%increaseinfulltime

staffbetweenFY08andFY09.Ourreputation

asadynamic,entrepreneurialandfast-paced

organisation,combinedwithourvaluesbased

culture,continuestobearealattractionfor

manypeopleintheoilandgasindustry.We

havealsofocusedonhelpingourpeople

developtheirskillswithaccesstothelatest

trainingtechniquesandopportunitiesfor

ongoingprofessionaldevelopment.

Thosenewtoorconsideringacareerwithin

theindustryhavealsohadtheopportunity

toexperienceandcontributetothe

NeptunecultureviaourIntegratedGraduate

DevelopmentProgramthatwasestablished

earlierintheyear.

Themainaimoftheprogramistoattract

thehighestcalibreoilandgasengineering

graduatestothecompanyduringtheearly

stagesoftheirstudiesviatheestablishmentof

mutuallybeneficialrelationships.

Thesuccessoftheinitialintakeoffivestudents

isexpectedtoresultinanexpansionofthe

programin2010toincludeawiderrange

ofindustryandcommercialdisciplines.Itis

anticipatedthatthisproactiveapproachto

earlysuccessionplanningwillhelpensure

theongoinggrowthanddevelopmentofthe

businessintothefuture.

CentraltoNeptune’sbusinesscultureisthe

understandingthatresponsiblemanagement

oftheenvironmentandasafeandhealthy

workforcebuildsbusinesssuccess.In

accordancewiththis,Neptunehasdeveloped

theNepSafeprogramcomprisingthesystem,

processesandtoolsthatallowourpeople

toeffectivelymanagetheHealth,Safetyand

Environmental(HSE)aspectsoftheirwork.

Neptune’sHSEpoliciesprovidetheguidance

andvisionthatiscentraltoachievingsuccess

andcanbesummarisedasfollows:

• Ourbusinessactivitiesshouldhavetheleast

possibleeffectontheenvironmentand,

wherepossible,shouldleaveitbetterthan

whenwefoundit.

• Thesafetyandwellbeingofouremployees,

andeveryoneaffectedbyourundertakings,is

underpinnedbythephilosophythatnojobis

worthaninjuryandthebeliefthatinjuriesand

workrelateddiseasesarepreventable.

Overthepastyear,NepSafehasbeena

centralpillarofourongoingbusinessactivities

andacorefocusduringtheintegrationof

newbusinesses.Theactiveinvolvementand

leadershipdisplayedbyseniormanagementin

allaspectsofHSEmanagement,fromworksite

inspectionstomanagementreviews,continues

tosendastrongmessagethatourpeopleand

theenvironmentwillnotbecompromised.

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Neptune’speoplehavebeenrewardedfor

theirongoingeffortsinmanagingHSEand

continuouslyimprovingNepSafe.Atthe

operationallevel,manyNeptuneemployees

havereceivedmonthlyHSEawardsorthe

covetedCEO’sSafetyAwards,howeverthe

realrewardhasbeenNeptune’ssignificantly

improvedHSEperformancewhichhas

directlyresultedinreducedriskofinjuryto

ourpeopleordamagetotheenvironment,

reducedtimelost,reducedcostsand

improvedbusinessefficiency.

blue cHip customeRs

DuringtheyearNeptunepartneredwithsome

oftheleadingEPICcontractorsandbluechip

energycompaniesacrossarangeofprojects

andsectors.Inachallengingenvironmentour

customersremainthebedrockofourcompany

andIwouldliketosincerelythankthemfortheir

ongoingsupportandcollaboration.

Ourcustomersarealsofundamentalto

ourinternationalexpansion.Manyofthem

haveastrongglobalpresenceandthis

providesNeptunewithopportunitiestowork

collaborativelywiththeminmanyoftheworld’s

geographicalregions.Ourstrongrelationships

andtrackrecordfordeliveringfavourable

projectoutcomesprovidesNeptunewith

significantupsidefortheyearsahead.

tHe stRong outlook continues

Asweenter2010,Neptuneisagainverywell

placedtodeliverstronggrowthrates.Inthe

comingyearweexpectgrowthtobewell

balancedbetweenorganicgrowthopportunities

andacquisitionsthatstrengthenourexisting

operationsandmakeanimmediatecontribution

toourearnings.Weareconservativelygeared

andwithourstrongcashflowsupporting

operations,wecanlooktostartfundinggrowth

fromexistingcashreserves.

Thefundamentalsoftheoilandgas

industryremainverycompelling.Oilandgas

infrastructurecontinuestoageandthevast

majorityofourinternationalservicesaredirectly

gearedtomeettheneedsofthismarket.

Ontheglobalscale,spendingonoilandgas

subseainfrastructureisexpectedtoexceed

$125billionoverthenextfiveyearsandwith

aneverexpandinginternationalfootprintin

largeoilandgasmarkets,Neptuneisverywell

placedtocapitaliseonthisinvestment.

Similarly,investmentindeepwaterproduction

isexpectedtotop$137billioninthenextfive

yearsand,again,Neptunehasthenecessary

skillsandinfrastructuretoparticipateinthis

market.NorthAmerica,BrazilandTheMiddle

Easthavebeenidentifiedasmarketswhere

weseesignificantpotentialandweareactively

reviewingopportunitiesthere.

Neptuneisalsowellplacedtobenefitfromthe

substantialinvestmentthatistakingplacein

WesternAustraliaandQatar’sLiquefiedNatural

Gas(LNG)market.Developmentofnaturalgas

fieldsacrosstheNorthWestShelfandBrowse

BasinandtheGiantNorthFieldinQatariseither

underwayorinthefinalplanningstages,and

Neptuneexpectstosecurearangeofworksto

supporttheseprojects.Thelongertermpotential

inAustralia’sgrowingLNGsectorpresents

significantupsideforestablishedoilandgas

servicescompaniessuchasNeptuneanditis

ourintentiontobeakeyplayerinthisspace.

Withmorethan600peopleoperatinginthe

majoroilandgasmarketsthroughoutthe

world,Neptuneispoisedforitsnextphase

ofgrowth.Wearearapidlyexpandingand

evolvingcompanyandtheyearaheadpresents

anumberofexcitingopportunities.

Inordertotakefulladvantageofthesenew

andemergingopportunities,areorganisation

oftheNeptuneseniormanagementteamwas

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commissionedwiththeintentiontotakeeffect

asofthestartofthenew2009/2010fiscalyear.

Reflectingourexpandingscaleand

geographicalpresence,thereorganisation

representsadynamicnewdirectioninthe

leadershipandmanagementoftheNeptune

GroupofCompanies;anexcitingdevelopment

intheevolutionofthecompanythatwillhelp

driveourinternationalgrowthanddevelopment.

Therestructurewillbringmanyofthebusiness

unitstogetherunderonededicatedfunctionto

providegreatercapacitytoshareandleverage

systems,resourcesandbusinessopportunities.

Thisinturnwillalsoallowustocapitaliseon

developingandacquiringnewbusinessesthat

spanourspecialistbusinessunits.

From1July2009,theglobalbusinesswill

operateunderthetwodistinctdivisionsof:

• NeptuneOffshoreServices

• NeptuneEngineeringServices

TwoGroupVicePresidents,sourcedfromwithin

thecurrentseniormanagementteam,willbe

appointedtomanagethedivisionsataglobal

level.Additionally,fourRegionalVicePresident

roleswillbecreatedtooverseelocaloperations

inAustralia,Asia,EuropeandNorthAmerica.

Thesesixnewpositionstogetherwiththeroles

ofChiefFinancialOfficer,DirectorofHuman

ResourcesandHSEQManagerwillcollectively

formtheSeniorManagementTeam.

AstheNeptuneGroupofCompaniesprepares

toembarkonthislatestphaseofgrowthand

development,Iwouldliketotaketheopportunity

tothankallofourpeoplefortheirhardwork

anddedicationduringtheyear.Lookingtothe

future,weremainmotivatedbytheopportunities

beforeusandstrivetomeettheneedsand

expectationsofourvaluedstakeholders.

Christian Lange

ManagingDirectorandChiefExecutiveOfficer

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Yourdirectorspresenttheirreportonthe

companyanditscontrolledentitiesforthe

financialyearended30June2009.

Thenamesofdirectorsinofficeatanytime

duringorsincetheendoftheyearare:

MrChristianLange

MrRossKennan

MsCathrynCurtin

(resigned2ndJanuary2009)

MrDavidAgostini

MrRobertScott

MrGeoffNewman

(appointed16October2008)

Directorshavebeeninofficesincethestart

ofthefinancialyeartothedateofthisreport

unlessotherwisestated.

compAnY secRetARY

MrGabrielChiappiniheldthepositionof

CompanySecretaryatthedateofthisreport.

MrChiappiniwasappointedcompany

secretaryon20August2007.Heiscurrently

companysecretaryforanumberofASX

listedcompanies.MrChiappiniisaChartered

AccountantandmemberoftheAustralian

InstituteofCompanyDirectors.Hegraduated

fromEdithCowanUniversityin1990witha

BachelorofBusinessmajoringinFinanceand

Accountingandhasworkedpredominantly

inLondonandPerthwithexperiencein

theproperty,investmentbankingand

biotechnologysectors.

pRincipAl Activities

Theprincipalactivitiesoftheconsolidated

Groupduringthefinancialyearwere:

• theprovisionandexpansionofanintegrated

suiteofsubseaservicestotheoilandgas,

marineandrenewableenergysectors,both

domesticallyandinternationally;

DIRECTOR’S REPORT• theidentificationandexecutionof

projectsutilisingtheGroup’ssuiteof

complementaryservices;

• migrationoftheNeptuneMarineintegrated

servicemodelintointernationaltarget

markets;and

• ongoinginternationalcommercialisation

oftheNEPSYS®DryUnderwater

WeldingTechnology.

opeRAting Results

TheconsolidatedprofitoftheGroupafter

providingforincometaxamountedto$20.971

million(2008:$7.407million).

dividends pAid oR Recommended

Nodividendhasbeendeclaredorpaidbythe

Companytothedateofthisreportandno

dividendisproposedinrespectoftheyear

ended30June2009.

Review of opeRAtions

Arealignmentofthebusinessduringtheyear

resultedintheestablishmentoftwodistinct

divisions,namelyOffshoreServicesand

EngineeringServices.Acrossthetwodivisions,

morethan$100millionworthofnewand

extendedcontractswereawardedduring

theperiod.

offsHoRe seRvices

Acombinationofconsistentlyhighlevelsof

organicgrowthandthecontributionofnew

acquisitionsresultedinthedivisiongenerating

revenuesof$128.1millionforthefullyear.

Earlyintheperiodthecapabilitiesofthe

divisionwereexpandedviatheacquisitionof

PerthbasedAccessManagement(WA)PtyLtd,

oneofthelargestspecialist(difficult)access

companiesintheAsiaPacificregion.

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WithoperationsinbothPerthandSingapore,

theservicesprovidedbyAccessManagement

(tradingasNeptuneAccessIRM)directly

complementNeptune’sintegratedservice

offeringanditsfocusondevelopingagreater

presenceintheAustralasianregion.

Contributingfurthertothisfocuswasthe

acquisitionoftheNor Sea,a70.05metre

dynamicallypositionedanchorhandling,tug

andsupply(AHTS)constructionsupportvessel.

RenamedtheMV Neptune Trident,thevessel

generatedconsistentrevenuesthroughout

theyear.

TheMV Neptune Tridentcomplementsthe

serviceprovidedbytherecentlyrefurbished

MV Neptune ROV Supporterandprovidesthe

businesswithgreaterscopeandflexibilityin

theexecutionofoffshoreprojects.Bothvessels

werefittedwithNeptune’snewbuildSwiftXL

remotelyoperatedvehicles(ROVs)duringthe

year.AtotalofthreeROVswerepurchased

duringtheperiod.

Amajorhighlightduringtheyearwasthe

completion,bytheNeptuneGeomatics

businessunit,ofthesubseagaspipelineroute

surveyontheIchthysGasFieldDevelopment

offshoreWesternAustralia.Atsome860

kilometres,thesurveywasoneofthelongestof

itstypetobecompletedinAustralianwaters.

Withitscomprehensiverangeofsubsea

inspection,maintenanceandrepairsolutions,

NeptuneDivingServices(Australia)continued

tobeareliableperformerthroughoutthe

Australasianregionwhile,intheUnitedStates,

USUnderwaterServicesbenefitedfrom

increasedindustrydemandfortheNEPSYS®

DryUnderwaterWeldingTechnology.

TheuniqueadvantagesofNEPSYS®

wererealisedfurtherduringtheyearwith

internationalcontractsawardedandcompleted

intheGulfofMexicoandthehistorically

challengingNorthSea.Representingafirstfor

thetechnologyintheUK,theNorthSeaproject

wasmobilisedoutofNeptune’sAberdeen

basefollowingacomprehensivephaseof

prequalificationandassociatedengineering

designandfabrication.

Theeffectivesolutiontosubseapipeline

stabilisationandprotectionprovidedby

Neptune’sSea-Structbusinessunitresulted

intheawardandcompletionofnumerous

contractsthroughoutAustralia,Brunei,China,

Indonesia,Vietnam,Malaysia,TaiwanandHong

Kong.ThesynergiesthatexistinSouthEast

AsiabetweenSea-Struct,NeptuneAccessIRM

andtheROV&VesselDivisionareexpectedto

resultinfurthergrowthopportunitiesacrossthe

regionfortheNeptuneGroup.

engineeRing seRvices

Additionalinternationalcapacityandan

industryreputationforqualityandcapability

resultedinthedivisiongeneratingrevenuesof

$60.8millionforthefullyear.Aswasthecase

forOffshoreServices,theEngineeringServices

divisionwasstrengthenedfurtherduringthe

periodviatheacquisitionofAberdeenbased

SubseaEngineeringServices,aspecialist

providerofsubseaconsultancyandproject

servicestotheglobaloilandgasindustry.

RegardedasavitalcomponentinNeptune’s

internationalgrowthstrategy,theacquisition

ofSubseaEngineeringServices(subsequently

renamedNeptuneSubseaEngineering)further

enhancesNeptune’ssubseacapabilities

andbuildsonthesuccessfulintegrationof

NeptuneDeeptechtoprovidesignificantgrowth

opportunitiesfortheGroupintheresurgent

NorthSearegion.

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Additionally,theacquisitionprovidesNeptune

withgreatermarketpresenceintheUKand

advancedtechnicalcapabilitiesinthedesign

ofspecialistsubseaequipment.

TheadditionofNeptuneSubseaEngineering

alsobroughtwithitcomplementaryengineering

supporttoNeptuneDeeptechthatcontinued

tooperateatornearcapacitythroughout

theyear.Inadditiontothefabricationof

specialistsubseaandoffshoreoilandgas

equipmentforitsbluechipclientbase,Neptune

Deeptechalsoadvanceditspartnershipin

thedevelopmentofmarinerenewableenergy

(wave)technologiesforcommercialapplication.

Locally,PerthbasedLinkWeldEngineering

maintainedafullorderbookthroughoutthe

year,headlinedbythefabricationoftwo

majorsubseaspoolpackagesforWoodside’s

PlutoLNGProjectandGreaterEnfieldArea

Project09,bothofwhicharelocatedoffshore

WesternAustralia.

Providingengineeringsupporttotheseanda

rangeofotherprojectswasthePerthbased

teamfromSubseaDevelopmentsAustralasia.

finAnciAl position

Thenetassets,includinggoodwillof$144.3

millionoftheconsolidatedGrouphave

increasedto$181.9millionat30June2009

from$133.6millionat30June2008.This

increaseisaresultofthefollowingfactors:

• improvedoperatingperformance

oftheGroup;

• thepurchaseoftwonewbusinesses

throughtheissuingofadditionalshares

inthecompanyduringtheyear.

ThedirectorsbelievetheGroupisinastrong

andstablefinancialpositiontoexpandand

growitscurrentoperations.

significAnt cHAnges in stAte of AffAiRs

Thefollowingsignificantchangesinthestate

ofaffairsoftheparententityoccurredduring

thefinancialyear:

(i) Thepurchaseoftwotradingentitiesto

beincludedintheNeptuneGroup.

TheentitiespurchasedwereAccess

Management(WA)PtyLtdandNeptune

SubseaEngineeringLtd.

(ii) TheissuingofsharesinNeptuneMarine

ServicesLimitedtoprovidethefundsto

purchasetheentitiesat(i).

(iii) Loans&borrowings

On30September2008,Neptuneborrowed

$25millionfromtheNationalAustraliaBank.

Theloanwasusedtofinancethepurchaseof

theNor Seavessel.Theloanissecuredthrough

registeredmortgagesovertwovesselsknown

astheNor SeaandROV Supporter,aswellas

fixedandfloatingchargesovertheassetsofthe

NeptuneCompaniesexcludingtheUSentities.

Neptunehasenteredintoaninterestrateswap

for$17millionofthedebtfacilityatafixed

interestrateof5.99%.Theremainingportionof

theloanisatfloatingrates.

On7thJanuary2009,NeptuneborrowedGBP

$3millionfromtheNationalAustraliaBank.

Theloanwasusedtofundthepurchaseof

NeptuneSubseaEngineeringLtd,aUKbased

acquisition.Theloanissecuredthroughfixed

andfloatingchargesovertheassetsofthe

NeptuneCompaniesexcludingtheUSentities.

On25thSeptember2008,Neptuneborrowed

$7.4millionfromtheNationalAustraliaBankas

adebtorfacility.

Photo courtesy of Les Black.

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AfteR bAlAnce sHeet dAte events

1) NeptuneMarineServicesLimitedhassigned

aLetterOfIntent(LOI)fortheacquisitionof

SingaporebasedCoreIRMPteLtd(“Core

IRM”),amajorproviderofinspection,repair

&maintenance(IRM)servicestotheoil&

gasandpetrochemicalindustries.

Underthetermsoftheagreement,Neptune

proposestoacquiretheentireissued

capitalforSGD$13million(AUD$11.35

million*)withtheaddedconsiderationofa

SGD$1million(AUD$872,000*)conditional

paymentthatwillbebasedonCoreIRM’s

EBITperformanceforthe12monthperiod

to31December2009.Theacquisitionwill

befunded90%bywayofequityfunds

raisedviatheshareplacementthatwas

announcedon5June,2009,and10%via

theissueofNeptune’sordinarysharesto

thevendor.Theacquisitionissubjecttothe

completionofsatisfactoryduediligenceand

contractualdocumentation.

*Foreignexchangerateof$1.1460asat

15July2009forAUD$:SGD$equivalent.

2) NeptuneMarineServicesLimitedclosed

anoversubscribedSharePurchasePlanon

22July2009.Applicationswerereceived

forapproximately$26.49millionor52.99

millionshares.Asannouncedon5June

2009,theSPPwastobecappedat

$10million,withtheflexibilitytoaccept

oversubscriptions.Inaccordancewiththe

termsoftheSPP,thesharesappliedforin

eachapplicationwerescaledbackonapro-

ratabasisby50%regardlessoftheamount

appliedfor.Accordingly,$13.33millionwas

refundedbacktotheinvestors.

3) NeptuneMarineServicesLimitedheld

itsExtraordinaryGeneralMeetingon13

July2009whereinshareholdersvoted

overwhelminglyinfavourofthetranche

2placementof56.0millionsharesto

institutionalandsophisticatedinvestors

aspartofitsA$40millioncapitalraising

announcedon5June,2009.Capitalraised

viatheplacementwouldbeusedtofund

Neptune’songoinggrowthanddevelopment

andwillfocusoncorporateacquisitions,

newassetacquisitionsandcontinued

organicgrowthofNeptune’sexisting

operations.

4) NeptuneMarineServicesLimitedhassigned

aLetterOfIntent(LOI)fortheacquisitionof

AberdeenbasedSubmersibleTechnology

Services(Holdings)Limited(“STS”),a

leadingproviderofremotelyoperated

vehicle(“ROV”)andsurveysupportservices

totheoffshoreoilandgasindustry.

Underthetermsoftheagreement,Neptune

proposestoacquiretheentireissued

capitalofSTSforGBP16million(AUD

$31.39million*)(plusanadjustmentforSTS

workingcapitallessdebtatcompletion

oftheacquisition)withaddedconditional

considerationbasedonSTS’sEBITDA

performanceforthecalendaryear2009.

Theacquisitionwillbefunded91-95%

byacashpayment,withthebalancevia

theissueofNeptune’sordinaryshares

toaportionofthevendorswhoare

partoftheSTSmanagementteam.The

acquisitionissubjecttothecompletionof

satisfactoryduediligenceandcontractual

documentation.

*Foreignexchangerateof$0.5098for

AUD$:GBPequivalent.

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diRectoRs’ inteRests

Therelevantinterestofeachdirectorinthe

sharesandoptionsissuedbythecompany

atthedateofthisreportisasfollows:

Ordinaryshares

Optionsoverordinaryshares

MrChristianLange 459,267 7,000,000

MrRossKennan 290,047

MrDavidAgostini 145,120 200,000

MrRobertScott 126,892

MrGeoffNewman 41,786

futuRe developments, pRospects And business stRAtegies

Tofurtherimprovetheconsolidated

Group’sprofitandmaximiseshareholder

wealth,thefollowingstrategieswillcontinue

tobeimplemented:

(i) Continuetofocusonandexpandthe

integratedservicesmodeloftheNeptune

Group,toincludethenewlyacquired

businessesandNEPSYS®technology.

(ii) Continuetobuildstrong,longterm

relationshipswithbluechipcustomers,

EPICcontractorsandoilandgasoperators

aboveandbeyondtherelationshipsthat

alreadyexistwiththesevaluableclients.

Thesestrategies,togetherwithaccelerating

internationalexposureoftheNeptune

Group,expandingserviceandregional

capability,continuedselectedacquisitions

inbothAustraliaandinternationally,and

thecontinuedgrowthandexpansionofthe

NEPSYS®technologyinternationallypave

thewayfortheNeptuneGrouptobecomea

significantproviderofserviceswithintheoil

andgasindustry.

enviRonmentAl issues

Thecompanycontinuestodevelopand

maintainitsenvironmentalmanagementsystem

inaccordancewiththerequirementsofthe

DepartmentofEnvironmentalProtection.

Therewerenobreachesrecordedduringthe

financialyear.

infoRmAtion on diRectoRs

Mr Christian Lange

ChiefExecutiveOfficerandManagingDirector

Qualifications

MBAfromCurtinUniversity;Member,Australian

InstituteofCompanyDirectors.

Experience

MrLange,aged42,isaformerinternational

VicePresidentfortheglobaloilfieldservices

Group,SchlumbergerLimited.Ina16-year

careerwithSchlumberger,MrLangehelda

rangeofSeniorExecutivepositionsresponsible

foroperations,capitalmarkets,marketing,

businessstrategyandgeneralmanagement.

HeisalsoaformerManagingDirectorand

ChiefExecutiveOfficerofthemineralsbased

manufacturinganddistributioncompany,SDS

CorporationLimited.

MrLangecurrentlychairstheRiskManagement

committeeatNeptuneMarineServicesLtd.

Directorships held in other listed entities

MrLangewasanon-executiveDirectorof

CoretrackLimited,acompanylistedonthe

ASX,untilheresignedinJune2006.MrLange

iscurrentlyanon-executiveDirectorofSurtron

TechnologiesandMobilarmLtd.

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Mr Ross Kennan

Chairman

Qualifications

Fellow,InstitutionofEngineers,Australia;

Fellow,AustralianInstituteofCompany

Directors;Member(Retired),RoyalAustralian

ChemicalInstitute;CharteredEngineer,

CharteredChemist(Retired).

Experience

MrKennan,aged70,hashadanaccomplished

internationalcareer,mostnotablyasVice

PresidentandSBUCo-chairforinternational

diversifiedtechnologyandmanufacturing

company,HoneywellInc,wherehespent

26yearsinSeniorExecutivepositions.

MrKennanhasover17yearsofinternational

experiencewhichenablehimtoprovide

strategicadvicetofurthersupportNeptune

Marine’scontinualglobalgrowth.

MrKennancurrentlychairstheHuman

ResourceandCompensationcommittee

atNeptuneMarineServicesLimited.


MrKennancurrentlysitsonseveralboards

andhasrecentlyretiredfromhispositionas

aChairpersonofCEOmentoringGroup,The

ExecutiveConnection.MrKennandoesnot

holdanyDirectorshipsinotherlistedentities.

Ms Cathryn Curtin

CathrynCurtinresignedonthe

2ndJanuary2009.

Mr David Agostini

Non-ExecutiveDirector

Qualifications

BachelorofScienceinGeologicalEngineering

fromNCSU;Fellow,InstitutionofEngineers;

CharteredEngineer;GraduateoftheInstitute

ofCompanyDirectors.

Experience

MrAgostini,aged70,ishighlyexperienced

inworkingwithGovernment,universitiesand

researchGroups.MrAgostiniiscurrentlythe

AdjunctProfessorattheCentreofOilandGas

Engineering,attheUniversityofWA,chaired

theSchool’sindustryadvisoryboardandthe

IndustryReferenceGroupsupportingtheWA

StateGovernmentinreformingWesternPower

inWA.Healsoholdsasimilarpositionwiththe

advisoryboardoftheAustralianResources

ResearchCentre.

MrAgostiniisthechairmanofthegoverning

boardoftheWAEnergyResearchAllianceand

wasamemberofthefour-manpanelchaired

bySenatorWarwickParerwhichcarriedoutthe

AustralianEnergyMarketsReviewforCOAG

over12monthsin2002.

Hisprofessionalcareerincludespositions

asGeneralManagerofWoodside’sNorth

WestShelfinterests,includingthedecision-

makingforumformarketingLNGintoAsia;

andisaformerWoodsideGeneralManager

ofOperations,coveringthe3TrainLNGplant,

domesticgasplant,NorthRankinandGoodwin

offshoreplatforms,theCossackPioneerfloating

productionsystemandoffshoredrillingrigs.

MrAgostiniisalsoaformerGeneralManager

GasforWoodside;andDeputyStrategy

ManagerforShellinTheHague,covering

downstreamrefiningandLNGoperationsinthe

USA,Africa,andtheMiddleEast.

MrAgostinicurrentlychairstheOccupational

Health,SafetyandEnvironmentcommitteeat

NeptuneMarineServicesLimited.


MrAgostinidoesnotholdanyDirectorshipsin

otherlistedentities.

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Mr Robert Scott

Non-ExecutiveDirector

Qualifications

FellowoftheInstituteofCharteredAccountants

inAustralia.

Experience

MrScott,aged62,hashadadistinguished

careerspanning35yearsasaChartered

Accountantwithmajoraccountingfirms.

HeretiredasanInternationalPartnerofArthur

Andersenin1995andcurrentlyconsultsin

corporatestructuringandtaxationplanningto

GoodingPervanCharteredAccountants.

BasedinPerth,MrScottisnowaprofessional

non-executiveDirectorofvariouspublic

companiesintheenergyandfinancial

servicessectors.


MrScottcurrentlyholdsthefollowing

Directorships,AmadeusEnergyLimited–

DirectorsinceMarch1996,bioMDLimited

–ChairmansinceJune1999,Australian

RenewableFuelsLimited–Directorsince

December2002,HomeloansLimited–Director

sinceNovember2000,CGAMiningLtd–

DirectorsinceJanuary2009,allofwhichare

listedentities.MrScottresignedfromNew

GuineaEnergyLtd–wherehewasaDirector

sinceJuly2006–31May2009.MrScottwas

alsoaNon-ExecutiveDirectorofETWLimited

fromJuly2005toAugust2007.

Mr Geoff Newman

Non-ExecutiveDirector(appointed

16October2008)

Qualifications

MrNewmanhasaBachelorofEconomics

(Honours)andaMasterofBusiness

AdministrationfromtheUniversityofWestern

Australia.HeisalsoFellowoftheAustralian

SocietyofCertifiedPractisingAccountants

(FCPA)andaFellowoftheAustralianInstitute

ofCompanyDirectors(FAICD).MrNewman

chairstheCapitalManagementcommitteeat


Experience

MrNewman,aged57,hasover25years

experienceinfinance,marketingandgeneral

managementrolesinorganisationseither

directlyinvolvedintheresourcessectoror

providingservicesandproductstobusinesses

inthatsector.In1995,aftermanaging

BunningsPulpwoodoperationsforanumber

ofyears,hejoinedCoogeeChemicalsPty

LtdasCommercialManagerandthenwas

appointedtotheBoardasFinanceDirectorin

thefollowingyear.UntilAugust2005,hewas

FinanceDirector/CFOandCompanySecretary

ofbothCoogeeChemicalsanditsoilandgas

subsidiaryCoogeeResourcesLimitedbefore

heretiredfromtheCoogeeGroupofcompanies

attheendofJune2006.MrNewmanis

ChairmanofMtMagnetSouthandtheunlisted

publiccompanyLedgeFinanceLimited.He

isalsoPrincipalofGerylAdvisoryServices,a

firmprovidingcorporateandfinancialadviceto

companiesintheresourcessector.


MrNewmancurrentlyholdsthefollowing

Directorships;MountMagnetSouthNL

–ChairmansinceMay2006.

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RemuneRAtion RepoRt (Audited)

Thisreportdetailsthenatureandamountof

remunerationforeachdirectorofNeptune

MarineServicesLimited,andfortheexecutives

receivingthehighestremuneration.

Remuneration Policy

TheremunerationpolicyofNeptuneMarine

ServicesLimitedhasbeendesignedto

aligndirectorandexecutiveobjectiveswith

shareholderandbusinessobjectivesby

providingafixedremunerationcomponent

andofferingspecificlong-termincentives

basedonkeyperformanceareasaffecting

theconsolidatedGroup’sfinancialresults.

TheBoardofNeptuneMarineServices

Limitedbelievestheremunerationpolicytobe

appropriateandeffectiveinitsabilitytoattract

andretainthebestexecutivesanddirectors

torunandmanagetheconsolidatedGroup,

aswellascreategoalcongruencebetween

directors,executivesandshareholders.

Theexecutivedirectorsandexecutivesreceive

asuperannuationguaranteecontribution

requiredbythegovernment,whichiscurrently

9%,anddonotreceiveanyotherretirement

benefits.Someindividuals,however,have

chosentosacrificepartoftheirsalaryto

increasepaymentstowardssuperannuation.

Allremunerationpaidtodirectorsand

executivesisvaluedatthecosttothe

companyandexpensed.Sharesgivento

directorsandexecutivesarevaluedasthe

differencebetweenthemarketpriceofthose

sharesandtheamountpaidbythedirector

orexecutive.Optionsarevaluedusingthe

Binomialmethodology.

Company Performance, Shareholder Wealth

and Director and Executive Remuneration

Theremunerationpolicyhasbeentailored

toincreasegoalcongruencebetween

shareholders,directorsandexecutives.There

havebeentwomethodsappliedinachieving

thisaim,thefirstbeingaperformancebased

bonusbasedonkeyperformanceindicators,

andthesecondbeingtheissueofoptions

tothemajorityofexecutivestoencourage

thealignmentofpersonalandshareholder

interests.Thecompanybelievesthispolicy

willhavetheeffectofincreasingshareholder

wealthinthefuture.

Directors and Key Management

Remuneration Policy

Theboard’spolicyfordeterminingthe

natureandamountofremunerationofkey

managementfortheGroupisasfollows:

Theremunerationstructureforkey

managementpersonnelisbasedonanumber

offactors,includinglengthofservice,particular

experienceoftheindividualconcerned,and

overallperformanceofthecompany.The

contractsforservicebetweenthecompanyand

keymanagementpersonnelareonacontinuing

basis,thetermsofwhicharenotexpected

tochangeintheimmediatefuture.Upon

retirementkeymanagementpersonnelarepaid

employeebenefitentitlementsaccruedtodate

ofretirement.Anyoptionsnotexercisedbefore

oronthedateofterminationlapse.

Thekeyperformanceareasinclude

OccupationalHealth,SafetyandEnvironment,

HumanResourcesManagement,Financial

Performance,FinancialManagementandTotal

Shareholderreturn.

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Thekeymanagementpersonnelarealso

remuneratedbasedonkeyperformance

areasthatincludeOccupationalHealth,

SafetyandEnvironment,HumanResources

Management,FinancialPerformance,Financial

ManagementandTotalShareholderreturn.

HealthandSafetytargetsaremeasuredon

meetingindustrystandardsthatincludebutare

notlimitedtosuchareasaslosttimeinjuries

andmedicaltreatmentcases.Asapartof

meetingEnvironmentalstandards,Neptune

iscommittedtoestablishingandmaintaining

anEnvironmentalManagementSystemwith

measurableobjectivesandtargetsthatare

tobemetbykeymanagementpersonnel.

HumanResourcesManagementismeasured

bystaffturnoverandkeystaffretention.Key

managementpersonnelarealsoremunerated

basedonfinancialperformanceand

managementviaagreedearnoutschemesper

businesssector.

Alongwiththesekeyareasandinlightofthe

Company’sneedtoattract,retainandmotivate

keyexecutives,theboardofdirectorsofthe

Companyengagesremunerationconsultants

toassisttheBoard’sreviewoftheemployment

marketforkeyexecutives,andbestpracticein

executiveremunerationandincentiveprograms,

frombothashorttermandlongterm

perspective.ThereviewsresultedintheBoard

adoptingtheExecutiveLongTermIncentive

PerformanceRightsPlan(LTIPlan)andthe

ExecutiveShortTermIncentivePerformance

RightsPlan(STIPlan).TheobjectoftheLTIPlan

istorewardperformancethatachieveslong

termgrowthinshareholdervalue.

TheobjectoftheSTIPlanistoreward

successfulimplementationofstrategiesfor

growththroughacquisitionsandsubsequent

integrationandcompletionoflargerprojects.

Bothplansseektorewardandincentivisethe

executiveinpartbyaligningtheinterestsof

keyexecutiveswiththoseofshareholders,

andisintendedtoformpartoftheoverall

remunerationpackageoftheexecutive.Aspart

oftheAustralianFederalGovernmentBudget

for2009,itintroducedchangestoCompany

EmployeeShareOptionplansresultinginmost

ASXcompanieseitherdeferringtheirExecutive

andemployeeoptionplansorputtingafreeze

ontheoptionplansuntilthelegislationhas

beenfinalised.

InlinewiththesechangesNeptuneMarine

ServicesLimiteddeferredit’sExecutiveOption

planandasaninterimmeasuretoensurewe

continuetorewardperformance,theincentives

awardedforSTIandLTIperformanceduring

FY2009wereapprovedtobepaidincash.

Pleaserefertotheremunerationtableonpage

30fordetailsinrelationtotheCEOandCFO.

Subjecttoasatisfactoryoutcomefromthe

Government’slegislation,itisthecompany’s

philosophytoreturntotheSTI&LTIequity

incentiveplansoutlinedabove.Theemployment

conditionsoftheManagingDirector,Mr

Lange,andotherkeymanagementpersonnel

areformalisedincontractsofemployment.

ManagingDirectorandthekeymanagement

personnelarepermanentemployeesof


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mAnAging diRectoR’s seRvice AgReement

Mr Christian Lange

TheCompanyenteredintoanexecutiveservice

agreementwithMrLangetoactasManaging

DirectoroftheCompanyeffectivefrom

February2008.IftheCompanyterminatesthe

agreementforanyreasonotherthanpursuant

tospecifiedcircumstances,includingoffences

involvingfraudordishonestyorcommittalofa

seriousorpersistentbreachoftheagreement

whichwasincapableofsatisfactoryremedy,the

CompanywouldberequiredtopaytoMrLange

allremunerationaccrueduptoandincluding

thedateoftermination,paymentinlieuof

annualleaveandlongserviceleavetowhich

heisentitledatthedateoftermination,andan

amountequalto12monthsbasesalaryplus

anyaccruedperformanceentitlements.

MrLange’scurrentcashsalaryatthedateof

thisreportis$750,000perannum.

Theremunerationcommitteedeterminesthe

proportionoffixedandvariablecompensation

foreachkeymanagementpersonnel.

Refernextpage.

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diR

ecto

Rs

An

d k

eY m

An

Ag

emen

t pe

Rso

nn

el R

emu

neR

Ati

on

(A

ud

ited

)

Short-term

Benefits

Post

Employment

Benefits

Other

Long-term

Benefits

Share-based

Payment

Total

Cash,salary&

commissions

$000

Bonus

$000

Non-cash

benefit

$000

Other

$000

Superannuation

$000

Other$000

Equity

$000

Options

$000

$000

2009

D

irect

ors

MrChristianLange

650

400

14(40)

61–

–425

1,510

MrRossKennan

120

––

–11

–20

–151

MsCathrynCurtin

30–

––

3–

5–

38

MrDavidAgostini

60–

–7

6–

10–

83

MrRobertScott

60–

–15

7–

10–

92

MrGeoffNewman

40–

–3

4–

8–

55

Key

Man

agem

ent P

erso

nnel

MrGeoffreyEdwards

262

150

7(6)

24–

–123

560

MrDavidHusband

180

––

1118

––

–209

MrMarkLindsay

180

––

2750

––

–257

MrRussellCollins

180

1–

1518

––

–214

1,762

551

2132

202

–53

548

3,169

Accrued

Bonus

$000

Totalincluding

accrued

bonus

$000

Proportionof

remuneration

basedon

performance

%

Valueof

optionsas

proportionof

remuneration

%

2009

D

irect

ors

MrChristianLange

1,040

2,550

73%

17%

MrRossKennan

–151

0%0%

MsCathrynCurtin

–38

0%0%

MrDavidAgostini

–83

0%0%

MrRobertScott

–92

0%0%

MrGeoffNewman

–55

0%0%

Key

Man

agem

ent P

erso

nnel

MrGeoffreyEdwards

209

769

63%

16%

MrDavidHusband

–209

0%0%

MrMarkLindsay

–257

0%0%

MrRussellCollins

–214

1%0%

1,249

4,418

Theaboveindividualswereidentifiedaskeymanagementpersonnelastheycollectivelyformthestrategicmanagementcommittee.

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Short-term

Benefits

Post

Employment

Benefits

Other

Long-term

Benefits

Share-based

Payment

Total

Proportionof

remuneration

basedon

performance

Valueof

optionsas

proportionof

remuneration

Cash,

salary&

commissions

$000

Bonus

$000

Non-cash

benefit

$000

Other

$000

Superannuation

$000

Other

$000

Equity

$000

Options

$000

$000

%%

2008

D

irect

ors

MrChristianLange

563

–9

3053

––

831

1,486

56%

56%

MrRossKennan

72–

10–

105

–20

–207

0%0%

MsCathrynCurtin

66–

10–

6–

10–

920%

0%

MrDavidAgostini

34–

109

40–

10–

103

0%0%

MrRobertScott

67–

1017

8–

10–

112

0%0%

Key

Man

agem

ent P

erso

nnel

MrGeoffreyEdwards

211

3012

–19

––

161

433

44%

37%

MrGeoffreyO’Connor

171

386

1517

––

81328

36%

25%

MrGraemeCreedon

5234

(1)

–53

––

–138

24%

0%

MrColinMurphy

54–

715

111

––

42229

0%18%

MrTimothyProctor

194

––

–17

––

–211

0%0%

MrDavidHusband

148

––

2051

––

–219

0%0%

MrRussellCollins

180

1–

1918

––

–218

1%0%

MrNinoAmato

240

––

2023

––

49332

0%15%

MrMikeErinakes

161

––

––

––

82243

0%34%

MrMarkLindsay

137

–8

2346

––

–214

0%0%

MrAnthonyKerr

137

–11

2346

––

–217

0%0%

MrBartvanderGroen

137

–8

2346

––

–214

0%0%

MrMartinAnderson

171

––

––

––

–171

0%0%

MrDavidMcLean

57–

––

6–

––

630%

0%

2,852

103

100

214

665

–50

1,246

5,230

Theshorttermincentivebonusisforperformanceduringthe30June2009financialyearusingthecriteriaassetoutineachexecutiveoremployees’contract.The

amountwasdeterminedafterperformancereviewswerecompletedandapprovedbytheBoardpostbalancesheetdate.

Thefairvalueoftheoptionsiscalculatedatthedateofgrantusingabinomialmodelandallocatedtoeachreportingperiodevenlyovertheperiodfromgrantdateto

vestingdate.Thevaluedisclosedistheportionofthefairvalueoftheoptionsrecognisedinthisreportingperiod.

Duringtheyearthecompanypaidapremiumof$68,500inrespectofdirectors’andofficers’liabilityinsurancepolicy,insuringthedirectorsofthecompany,the

companysecretary,andallexecutiveofficersofthecompanyagainstaliabilityincurredwhileactinginthecapacityofadirector,secretary,orexecutiveofficerto

theextentpermittedbytheCorporationsAct2001.Theinsurancepoliciesdonotcontaindetailsofpremiumspaidinrespectofindividualdirectorsorofficersofthe

company.Asaresult,thepremiumhasnotbeenallocatedtothedirectorsandkeymanagementpersonnel.

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seRvice AgReements

Non-Executive Directors

NeptuneMarineServicesLimited

– TermsofAgreement–AllNon-Executive

Directorshaveongoingagreementsof

employment.

– OnethirdoftheNon-ExecutiveDirectors

mustretireeachyear,andcanbere-elected

attheAGM.

– AllNon-ExecutiveDirectorsarepaida

monthlybasesalaryandsuperannuation.

– Terminationiscontrolledbasedonfive

(5)optionsandpaidfullytothedateof

terminationoftheappointmentonly:

1.Onethirdretireannuallyforre-election

2.Ifheldofficeformorethanthreeyearsthen

seekre-election

3.Atanytimebywrittennoticebythe

individual,timenotificationnotstated

4.Ifnotre-electedatanAGMor

5.ByCompanyresolution.

Mr Geoffrey Edwards

ChiefFinancialOfficer–NeptuneMarine

ServicesLimited

– Termsofagreement–Ongoingbasis

commenced30October2006.

– Remunerationincludesbasesalary,

superannuation,carallowance,incentive

optionsandbonusscheme.

– Thereisnoothercompensationthanthat

statedabove.

– Thereisnoclauseofremunerationreview

timingorrequirementinthecontract.

– Terminationtermsarebymutualconsent

viawriting,withoutnoticeformisconductor

breachofconditions,byNeptunegivingsix

monthsnotice,orbytheexecutivegiving

threemonthsnotice,oriftheemployee

becomesincapableofperforminghis

obligationsformorethan60consecutivedays.

Mr David Husband

GroupVicePresident–Engineering–Neptune

MarineServicesLimited

– Termsofagreement–Minimumof3years

commenced2March2007.


superannuation,carallowanceand

incentiveoptions.


statedabove.





breachofconditions,byNeptunegivingtwo

monthsnotice,oriftheemployeebecomes

incapableofperforminghisobligationsfor

morethan60consecutivedays.

Mr Mark Lindsay

GroupVicePresident–Offshore–Neptune

MarineServicesLimited


commenced1August2007.



incentiveoptions.


statedabove.









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Mr Russell Collins

PipelineBusinessManager–NeptuneMarine

ServicesLimited


commenced2March2007.



incentiveoptions.


statedabove.









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options gRAnted As pARt of RemuneRAtion foR tHe YeAR ended 30 June 2009

OptionsareissuedtoemployeesandDirectorsaspertheincentiveoptionschemedetailedinnote28.

OptionsGrantedAsRemuneration Terms&ConditionsforEachGrant

2009

Vestedin2008/2009

(1) GrantedNo GrantDate

ValueperOptionatGrantDate

$

ExercisePrice

$

FirstExercise

Date

LastExercise

Date

Directors

MrChristianLange 1,000,000 1,000,000 13/12/2008 0.14 0.28 13/12/2009 12/12/2013

1,000,000 13/12/2008 0.14 0.28 13/12/2010 12/12/2013

1,000,000 13/12/2008 0.14 0.28 13/12/2011 12/12/2013

Key Management Personnel

MrGeoffreyEdwards 225,000 133,334 13/12/2008 0.14 0.28 13/12/2009 12/12/2013

133,333 13/12/2008 0.14 0.28 13/12/2010 12/12/2013

133,333 13/12/2008 0.14 0.28 13/12/2011 12/12/2013

1,225,000 3,400,000

(1)Optionsvestedrelatetooptionsgrantedinprioryears

2008

Vestedin2007/2008

(1) GrantedNo GrantDate

ValueperOptionatGrantDate

$

ExercisePrice

$

FirstExercise

Date

LastExercise

Date

Directors

Nil


MrGeoffreyEdwards 100,000 125,000 22/08/2007 0.49 0.84 22/08/2008 22/08/2012

125,000 22/08/2007 0.49 0.84 22/08/2009 22/08/2012

125,000 22/08/2007 0.49 0.84 22/08/2010 22/08/2012

125,000 22/08/2007 0.49 0.84 22/08/2011 22/08/2012

MrGeoffreyO’Connor 100,000 100,000 22/08/2007 0.49 0.84 22/08/2007 22/08/2012

MrColinMurphy - 100,000 22/08/2007 0.49 0.84 22/08/2008 22/08/2012

200,000 700,000

(1)Optionsvestedrelatetooptionsgrantedinprioryears.

Alloptionsgranted,vestwithinonetofouryearsofgrantdate.

Exercisepriceequalsthemarketpriceatdateofthegrantforthoseoptionsgrantedpriortothe18June,2008.Thereafter,theBoardapprovedthattheexercisepricewillbethehigherof12monthVWAPor30tradingdayVWAPplus10%.

Theserviceandperformancecriteriasettodetermineremunerationareincludedinthisremunerationreport.

Onterminationwithcauseanyunvestedoptionswillimmediatelybeforfeited.

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options gRAnted As pARt of RemuneRAtion

2009

ValueofOptionsGranted

$

ValueofOptions

Exercised$

ValueofOptionsLapsed

$

RemunerationConsistingof

Options%

Directors

MrChristianLange 422,700 – – 17%


MrGeoffreyEdwards 56,360 – – 16%

479,060 – –

2008

ValueofOptionsGranted

$

ValueofOptions

Exercised$

ValueofOptionsLapsed

$

RemunerationConsistingof

Options%


MrGeoffreyEdwards 244,900 – – 37%

MrGeoffreyO’Connor 48,980 – – 25%

MrGrahamCreedon 48,980 21,745 52,210 0%

342,860 21,745 52,210

sHARes issued on exeRcise of compensAtion options

2009No.ofShares

Issued

PriceperShare

$

UnpaidperShare

$

Directors


Nil Nil Nil Nil

2008

Directors


MrGrahamCreedon 66,000 0.59 Nil

66,000

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meetings of diRectoRs

Duringthefinancialyear,11meetingsofdirectors(includingcommitteesofdirectors)wereheld.

Attendancesbyeachdirectorduringtheyearwereasfollows:

Directors’MeetingsAudit&GovernanceCommitteeMeetings

HumanResources&Compensation

CommitteeMeetings

Numbereligibletoattend

Numberattended


Numberattended


Numberattended

Directors

MrChristianLange 11 11 – – – -

MrRossKennan 11 11 5 5 2 2

MsCathrynCurtin 6 5 – – 1 1

MrDavidAgostini 11 10 – – – –

MrRobertScott 11 11 5 5 1 1

MrGeoffNewman 9 9 3 3 – –

CapitalManagementCommittee

OccupationalHealth,Safety&Environment

Committee


Numberattended


Numberattended

Directors

MrChristianLange 5 5 5 5

MrRossKennan 5 5 1 1

MsCathrynCurtin N/A N/A N/A N/A

MrDavidAgostini – – 5 5

MrRobertScott N/A N/A N/A N/A

MrGeoffNewman 5 5 – –

indemnifYing officeRs

TheCompanyhasagreedtoindemnifycurrent

andformerdirectorsofthecompanyagainst

allliabilitiestoanotherperson(otherthanthe

companyorarelatedbodycorporate)that

mayarisefromtheirpositionasdirectors

ofthecompanyanditscontrolledentities,

exceptwheretheliabilityarisesoutofconduct

involvingalackofgoodfaith.

TheagreementstipulatesthattheCompanywill

meettothemaximumextentpermittedbylaw,

thefullamountofanysuchliabilities,including

costsandexpenses.

Thecompanyhasalsoagreedtoindemnify

certainseniorexecutivesandofficersforall

liabilitiestoanotherperson(otherthanthe

companyorarelatedbodycorporate)that

mayarisefromtheirpositioninthecompany

anditscontrolledentities,exceptwherethe

liabilityarisesoutofconductinvolvingalack

ofgoodfaith.

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emploYee detAils

Detailsofthenumberoffulltimeequivalent

employeesintheconsolidatedGroupasat30

June2009aresetoutbelow:

2009

No.

2008

No.

Fulltimeequivalentemployees 609 397

non-Audit seRvices

Amountspaidtotheauditorofthecompany,

StantonsInternational,anditsrelatedpractices

forallnon-auditservicesprovidedduringthe

yearwerenil.

AuditoR’s independence declARAtion

Theleadauditor’sindependencedeclaration

fortheyearended30June2009hasbeen

receivedandcanbefoundonpage40.

Rounding of Amounts

ThecompanyisanentitytowhichASICClass

Order98/100applies.Accordingly,amountsin

thefinancial98/100statementsanddirectors’

reporthavebeenroundedtothenearest

thousanddollars.

Signedinaccordancewitharesolutionofthe

BoardofDirectors.

Mr Ross Kennan Mr Christian Lange

Chairman ChiefExecutiveOfficerandManagingDirector

Datedthis24thdayofSeptember2009.

TheagreementstipulatesthattheCompanywill

meettothemaximumextentpermittedbylaw,

thefullamountofanysuchliabilities,including

costsandexpenses.

Thecompanypaidapremium,duringtheyear

inrespectofadirectors’andofficers’liability

insurancepolicy,insuringthedirectorsof

thecompany,thecompanysecretary,andall

executiveofficersofthecompanyagainsta

liabilityincurredwhileactinginthecapacityof

adirector,secretary,orexecutiveofficertothe

extentpermittedbytheCorporationsAct2001.

Thedirectorshavenotincludeddetailsofthe

natureoftheliabilitiescoveredortheamount

ofthepremiumpaidinrespectofthedirectors’

andofficers’liabilityandlegalexpenses’

insurancecontracts,assuchdisclosureis

prohibitedunderthetermsofthecontract.

options

Atthedateofthisreport,theunissuedordinary

sharesofNeptuneMarineServicesLimited

underoptionareasfollows:

Weightedaverage

exerciseprice

Numberunderoption

Listed $0.20 15,362,922

Unlisted $0.56 17,786,250

33,149,172

pRoceedings on beHAlf of compAnY

NopersonhasappliedforleaveofCourtto

bringproceedingsonbehalfofthecompany

orinterveneinanyproceedingstowhichthe

companyisapartyforthepurposeoftaking

responsibilityonbehalfofthecompanyforall

oranypartofthoseproceedings.

Thecompanywasnotapartytoanysuch

proceedingsduringtheyear.

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Consolidated Group Parent Entity

2009 2008 2009 2008

Note $000 $000 $000 $000

Revenue 2 188,959 86,713 15,206 14,218

CostofSales 3 (93,389) (41,487) (9,173) (11,674)

Grossprofit 95,570 45,226 6,033 2,544

Otherincome 2 2,045 1,851 19,831 9,201

Derivativefinancialinstrument (480) - (480) -

Marketingexpenses (1,018) (469) (752) (322)

Occupancyexpenses 3 (4,370) (2,135) (1,080) (734)

Corporateandadministrativeexpenses (13,421) (10,348) (4,914) (2,811)

Depreciationofproperty,plantandequipment 3 (7,251) (1,534) (316) (186)

Technicalexpenses (256) (4) (256) (4)

Employeebenefitsexpense 3 (33,177) (18,282) (7,869) (3,712)

Sharebasedpayments 3 (1,143) (1,583) (1,143) (1,583)

Foreignexchangegain/(loss) 3 389 (118) 14,697 (4,794)

Financecosts 3 (2,326) (497) (1,950) (51)

Repairsandmaintenance 3 (2,130) (451) (76) (52)

Financecosts–DeferredPayments(inferred) 3 (2,545) (1,878) (2,218) (1,363)

Otherexpenses - (14) - -

Profit/(loss)beforeincometax 29,887 9,764 19,508 (3,867)

Incometax(expense)/credit 4 (8,916) (2,357) (2,341) 999

Profit/(loss)fromcontinuingoperations 20,971 7,407 17,167 (2,868)

Profit/(loss)fortheyear 20,971 7,407 17,167 (2,868)

Profit/(loss)attributabletomembersoftheparententity 20,971 7,407 17,167 (2,868)

Earnings per Share

Basicearningspershare(centspershare) 8 6.94 3.00

Dilutedearningspershare(centspershare) 8 6.85 2.95

Theaccompanyingnotesformpartofthesefinancialstatements.

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2009

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2009 2008 2009 2008

Note $000 $000 $000 $000

ASSETS

CURRENTASSETS

Cashandcashequivalents 9 24,277 18,155 9,887 10,857

Tradeandotherreceivables 10 38,355 19,884 4,653 6,850

Inventories 11 4,602 3,310 594 101

Othercurrentassets 16 2,297 1,014 1,511 569

TOTALCURRENTASSETS 69,531 42,363 16,645 18,377

NON-CURRENTASSETS

Tradeandotherreceivables 10 998 1,473 71,550 76,628

Financialassets 12 - - 147,326 58,550

Property,plantandequipment 14 69,277 23,067 1,482 5,760

Deferredtaxassets 19 4,299 1,630 1,782 1,797

Intangibleassets 15 145,810 114,776 1,543 1,440

Othernon-currentassets 16 339 - 339 -

TOTALNON-CURRENTASSETS 220,723 140,946 224,022 144,175

TOTALASSETS 290,254 183,309 240,667 162,552

LIABILITIES

CURRENTLIABILITIES

Tradeandotherpayables 17 46,665 21,488 22,096 11,106

Financialliabilities 18 12,835 2,094 9,537 456

Currenttaxliabilities 19 6,781 3,417 2,080 35

Short-termprovisions 20 1,888 867 527 258

Derivativefinancialinstruments 21 205 - 205 -

TOTALCURRENTLIABILITIES 68,374 27,866 34,445 11,855

NON-CURRENTLIABILITIES

Tradeandotherpayables 17 12,717 18,020 10,518 15,576

Financialliabilities 18 24,335 3,545 23,825 213

Deferredtaxliabilities 19 2,620 297 58 -

Derivativefinancialinstruments 21 275 - 275 -

TOTALNON-CURRENTLIABILITIES 39,947 21,862 34,676 15,789

TOTALLIABILITIES 108,321 49,728 69,121 27,644

NETASSETS 181,933 133,581 171,546 134,908

EQUITY

Issuedcapital 22 157,733 139,405 157,733 139,405

Reserves 23 6,981 (2,072) 5,267 4,124

Accumulatedprofits/(losses) 17,219 (3,752) 8,546 (8,621)

Parentinterest 181,933 133,581 171,546 134,908

TOTALEQUITY 181,933 133,581 171,546 134,908


BALANCE SHEET AS AT 30 JUNE 2009

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Share Capital

Accumulated Earnings /

(Losses)

Foreign Currency

Translation Reserve

Option Reserve Total

Consolidated $000 $000 $000 $000 $000

Balance at 1 July 2007 66,011 (11,159) (315) 2,110 56,647

Sharesissuedduringtheyear 74,394 - - - 74,394

Transactioncosts(includingdeferredtaxprovision) (1,771) - - - (1,771)

Profitattributabletomembersofparententity - 7,407 - - 7,407

Adjustmentsfromtranslationofforeigncontrolledentities - - (5,881) - (5,881)

Exerciseofoptions 771 - - - 771

Costofsharebasedpayments - - - 2,014 2,014

Sub-total 73,394 7,407 (5,881) 2,014 76,934

Balance at 30 June 2008 139,405 (3,752) (6,196) 4,124 133,581


Transactioncosts(includingdeferredtaxprovision) (555) - - - (555)


Adjustmentsfromtranslationofforeigncontrolledentities - - 7,910 - 7,910



Sub-total 18,328 20,971 7,910 1,143 48,352

Balance at 30 June 2009 157,733 17,219 1,714 5,267 181,933


Ordinary Share

Capital

Accumulated Earnings /

(Losses)

Foreign Currency

Translation Reserve

Option Reserve Total

Parent Entity $000 $000 $000 $000 $000

Balance at 1 July 2007 66,011 (5,753) - 2,110 62,368


Transactioncosts(includingdeferredtaxprovision) (1,771) - - - (1,771)

Lossattributabletomembersofparententity - (2,868) - - (2,868)



Sub-total 73,394 (2,868) - 2,014 72,540

Balance at 30 June 2008 139,405 (8,621) - 4,124 134,908


Transactioncosts(includingdeferredtaxprovision) (555) - - - (555)




Sub-total 18,328 17,167 - 1,143 36,638

Balance at 30 June 2009 157,733 8,546 - 5,267 171,546


STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2009

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2009 2008 2009 2008

Note $000 $000 $000 $000

CASHFLOWSFROMOPERATINGACTIVITIES

Receiptsfromcustomers 187,491 83,331 20,846 12,143

Interestreceived 671 1,126 604 897

Paymentstosuppliersandemployees (144,483) (70,010) (23,431) (17,850)

Interestpaid (2,450) (529) (1,910) (81)

Incometaxpaid (5,803) (2,994) (13) -

Netcashprovidedby(usedin)operatingactivities 27a 35,426 10,924 (3,904) (4,891)

CASHFLOWSFROMINVESTINGACTIVITIES

Proceedsfromsaleofproperty,plantandequipment 168 252 - 1

Purchaseofproperty,plantandequipment (49,199) (16,531) (797) (5,425)

Expenditureondevelopmentcosts (193) (1,440) (193) (1,440)

Acquisitioncostspaid (570) (1,882) (570) (1,636)

Paymentforsubsidiaries,netofcashacquired (11,553) (44,971) (11,553) (14,171)

Bankguarantee 475 (591) - (411)

Paymentofdeferredpayments (9,591) (2,003) (7,663) (2,003)

Loanfromcontrolledentity - - (18,961) (34,564)

Netcash(usedin)investingactivities (70,463) (67,166) (39,737) (59,649)

CASHFLOWSFROMFINANCINGACTIVITIES

Proceedsfromissueofshares 12,000 60,461 12,000 60,461

Proceedsfromtheexerciseofoptions 25 813 25 813

Proceedsfromborrowings 38,952 257 38,952 317

Share/optionissuecosts (767) (132) (767) (132)

Borrowingcosts (956) - (956) -

Repaymentofborrowings (8,469) (2,465) (6,188) (387)

Netcashprovidedbyfinancingactivities 40,785 58,934 43,066 61,072

Netincrease/(decrease)incashheld 5,748 2,692 (575) (3,468)

Cashatbeginningoffinancialyear 18,155 16,030 10,857 14,325

Effectofexchangeratesoncashholdingsinforeigncurrencies 374 (567) (395) -

Cashatendoffinancialyear 9 24,277 18,155 9,887 10,857


CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2009

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NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Accounting policies

(a) Principles of Consolidation

AcontrolledentityisanyentitythatNeptune

MarineServicesLimitedhasthepowerto

controlthefinancialandoperatingpoliciesso

astoobtainbenefitsfromitsactivities.

AlistofcontrolledentitiesiscontainedinNote

13tothefinancialstatements.Allcontrolled

entitieswiththeexceptionofNeptuneMarine

Europe(ApS)haveaJunefinancialyear-end.

Allinter-companybalancesandtransactions

betweenentitiesintheconsolidatedGroup,

includinganyunrealisedprofitsorlosses,have

beeneliminatedonconsolidation.Accounting

policiesofsubsidiarieshavebeenchanged

wherenecessarytoensureconsistencieswith

thosepoliciesappliedbytheparententity.

Wherecontrolledentitieshaveenteredorleft

theconsolidatedGroupduringtheyear,their

operatingresultshavebeenincluded/excluded

fromthedatecontrolwasobtainedoruntilthe

datecontrolceased.

(b) Income Tax

Incometaxexpensecomprisesofcurrentand

deferredtax.Thechargeforcurrentincome

taxexpenseisbasedontheprofitfortheyear

adjustedforanynon-assessableordisallowed

items.Itiscalculatedusingthetaxratesthat

havebeenenactedoraresubstantiallyenacted

bythebalancedate.

Deferredtaxisaccountedforusingthebalance

sheetliabilitymethodinrespectoftemporary

differencesarisingbetweenthetaxbasesof

assetsandliabilitiesandtheircarryingamounts

inthefinancialstatements.Nodeferred

incometaxwillberecognisedfromtheinitial

recognitionofanassetorliability,excludinga

businesscombination,wherethereisnoeffect

onaccountingortaxableprofitorloss.

Thefinancialreportisageneralpurposefinancial

reportthathasbeenpreparedinaccordance

withAustralianAccountingStandards,

includingAustralianAccountingInterpretations,

otherauthoritativepronouncementsofthe

AustralianAccountingStandardsBoardandthe

CorporationsAct2001.

Thefinancialreportcoverstheconsolidated

GroupofNeptuneMarineServicesLimited

andcontrolledentities,andNeptuneMarine

ServicesLimitedasanindividualparententity.

NeptuneMarineServicesLimitedisalisted

publiccompany,incorporatedanddomiciled

inAustralia.

Theconsolidatedfinancialreportofthe

consolidatedentityandthefinancialreport

ofthecompanycomplywiththeInternational

FinancialReportingStandards(“IFRSs”)and

interpretationsadoptedbytheInternational

AccountingStandardsBoard.

Thefollowingisasummaryofthematerial

accountingpoliciesadoptedbytheconsolidated

Groupinthepreparationofthefinancialreport.

Theaccountingpolicieshavebeenconsistently

applied,unlessotherwisestated.

bAsis of pRepARAtion

Theaccountingpoliciessetoutbelow

havebeenconsistentlyappliedtoallyears

presented.

Reporting Basis and Conventions

Thefinancialreporthasbeenpreparedonan

accrualsbasisandisbasedonhistoricalcosts

modifiedbytherevaluationoffinancialassets

andfinancialliabilitiesforwhichthefairvalue

basisofaccountinghasbeenapplied.

Thefinancialstatementswereapprovedbythe

Boardon24September2009.

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Plant and Equipment

Plantandequipmentaremeasuredonthe

costbasis.Thecarryingamountofplantand

equipmentisreviewedannuallybydirectors

toensureitisnotinexcessoftherecoverable

amountfromtheseassets.Therecoverable

amountisassessedonthebasisofthe

expectednetcashflowsthatwillbereceived

fromtheassetsemploymentandsubsequent

disposal.Theexpectednetcashflowshave

beendiscountedtotheirpresentvaluesin

determiningrecoverableamounts.

Depreciation

Thedepreciableamountofallfixedassets

includingcapitalisedleaseassets,is

depreciatedonadiminishingvaluebasisover

theirusefullivestotheconsolidatedGroup

commencingfromthetimetheassetisheld

readyforuse.Leaseholdimprovementsare

depreciatedovertheshorterofeitherthe

unexpiredperiodoftheleaseortheestimated

usefullivesoftheimprovements.

Thedepreciationratesusedforeachclassof

depreciableassetsare:

ClassofFixedAsset DepreciationRate

Computerequipment 33%–100%

Leaseholdimprovements

20%–33%

Plantandequipment 20%–40%

Vehicles 20%

ROV’s 10%

Vessels 5%

Theassets’residualvaluesandusefullivesare

reviewed,andadjustedifappropriate,ateach

balancesheetdate.Anasset’scarryingamount

iswrittendownimmediatelytoitsrecoverable

amountiftheasset’scarryingamountisgreater

thanitsestimatedrecoverableamount.

Gainsandlossesondisposalsaredetermined

bycomparingproceedswiththecarrying

Deferredtaxiscalculatedatthetaxratesthat

areexpectedtoapplytotheperiodwhenthe

assetisrealisedorliabilityissettled.Deferred

taxiscreditedintheincomestatementexcept

whereitrelatestoitemsthatmaybecredited

directlytoequity,inwhichcasethedeferredtax

isadjusteddirectlyagainstequity.

Deferredincometaxassetsarerecognised

totheextentthatitisprobablethatfuturetax

profitswillbeavailableagainstwhichdeductible

temporarydifferencescanbeutilised.

Theamountofbenefitsbroughttoaccountor

whichmayberealisedinthefutureisbased

ontheassumptionthatnoadversechangewill

occurinincometaxationlegislationandthe

anticipationthattheconsolidatedGroupwill

derivesufficientfutureassessableincometo

enablethebenefittoberealisedandcomply

withtheconditionsofdeductibilityimposed

bythelaw.

(c) Inventories

Inventoriesarevaluedatthelowerofcostand

netrealisablevalue.

Costsincurredinbringingeachproducttoits

presentlocationandconditionareaccounted

forasfollows:

– rawmaterials–purchasecostonafirst-in,

first-outbasis;

– finishedgoodsandwork-in-progress

-costofdirectmaterialsandlabourand

aproportionofmanufacturingoverheads

basedonnormaloperatingcapacitybut

excludingborrowingcosts.

(d) Property, Plant and Equipment

Eachclassofproperty,plantandequipment

iscarriedatcostorfairvalueless,where

applicable,anyaccumulateddepreciationand

impairmentlosses.

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES cont

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Loans and Receivables

Loansandreceivablesarenon-derivative

financialassetswithfixedordeterminable

paymentsthatarenotquotedinanactive

marketandarestatedatamortisedcostusing

theeffectiveinterestratemethod.

Financial Liabilities

Non-derivativefinancialliabilitiesarerecognised

atamortisedcost,comprisingoriginaldebtless

principalpaymentsandamortisation.

Derivative Instruments

Derivativeinstrumentsaremeasuredatfair

value.Gainsandlossesarisingfromchanges

infairvaluearetakentotheincomestatement

unlesstheyaredesignatedhedges.

Fair Value

Fairvalueisdeterminedbasedoncurrentbid

pricesforallquotedinvestments.Valuation

techniquesareappliedtodeterminethefair

valueforallunlistedsecurities,includingrecent

arm’slengthtransactions,referencetosimilar

instrumentsandoptionpricingmodels.

Derecognition

Financialassetsarederecognisedwherethe

contractualrightstoreceiptofcashflows

expiresortheassetistransferredtoanother

partywherebytheentitynolongerhasany

significantcontinuinginvolvementinthe

risksandbenefitsassociatedwiththeasset.

Financialliabilitiesarederecognisedwhere

therelatedobligationsareeitherdischarged,

cancelledorexpired.Thedifferencebetween

thecarryingvalueofthefinancialliability

extinguishedortransferredtoanotherpartyand

thefairvalueofconsiderationpaid,including

thetransferofnon-cashassetsorliabilities

assumed,isrecognisedinprofitorloss.

amount.Thesegainsandlossesareincluded

intheincomestatement.Whenrevaluedassets

aresold,amountsincludedintherevaluation

reserverelatingtothatassetaretransferredto

retainedearnings.

(e) Leases

Leasesoffixedassetswheresubstantially

alltherisksandbenefitsincidentaltothe

ownershipoftheasset,butnotthelegal

ownershipthataretransferredtoentities

intheconsolidatedGroupareclassifiedas

financeleases.Financeleasesarecapitalised

byrecordinganassetandaliabilityatthe

loweroftheamountsequaltothefairvalue

oftheleasedpropertyorthepresentvalueof

theminimumleasepayments,includingany

guaranteedresidualvalues.Leasepayments

areallocatedbetweenthereductionofthe

leaseliabilityandtheleaseinterestexpensefor

theperiod.

Leasedassetsaredepreciatedonadiminishing

valuebasisovertheshorteroftheirestimated

usefullivesortheleaseterm.Leasepayments

foroperatingleases,wheresubstantiallyallthe

risksandbenefitsremainwiththelessor,are

chargedasexpensesintheperiodsinwhich

theyareincurred.Leaseincentivesunder

operatingleasesarerecognisedasaliability

andamortisedonastraight-linebasisoverthe

lifeoftheleaseterm.

Operatingleasepaymentsarerecognisedasan

expenseintheperiodtheyareincurred.

(f) Financial Instruments

Recognition

Financialinstrumentsareinitiallymeasuredat

costontradedate,whichincludestransaction

costs,whentherelatedcontractualrights

orobligationsexist.Subsequenttoinitial

recognitiontheseinstrumentsaremeasuredas

setoutbelow.


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Research and Development

Expenditureonresearchactivities,undertaken

withtheprospectofgainingnewscientificor

technicalknowledgeandunderstanding,is

recognisedintheprofitorlosswhenincurred.

Developmentactivitiesinvolveaplanordesign

fortheproductionofneworsubstantially

improvedproductsandprocesses.

Developmentexpenditureiscapitalised

onlyifdevelopmentcostscanbemeasured

reliably,theproductorprocessistechnically

andcommerciallyfeasible,futureeconomic

benefitsareprobable,andtheNeptuneGroup

intendstoandhassufficientresourcesto

completedevelopmentandtouseorsellthe

asset.Theexpenditurecapitalisedincludes

thecostofmaterial,directlabourandcosts

thataredirectlyattributabletopreparingthe

assetforitsintendeduse.Otherdevelopment

expenditureisrecognisedintheprofitorloss

asincurred.

Developmentcostshaveafinitelifeandare

amortisedonasystematicbasismatchedto

thefutureeconomicbenefitsovertheusefullife

oftheproject.

(i) Foreign Currency Transactions

and Balances

Functional and Presentation Currency

ThefunctionalcurrencyofeachoftheGroup’s

entitiesismeasuredusingthecurrencyofthe

primaryeconomicenvironmentinwhichthat

entityoperates.Theconsolidatedfinancial

statementsarepresentedinAustraliandollars

whichistheparententity’sfunctionaland

presentationcurrency.

Thefunctionalcurrenciesofthecompany’s

subsidiariesareasfollows:

Australia AUD

Asia USD

UnitedStatesofAmerica USD

UnitedKingdom GBP

(g) Impairment of Assets

Ateachreportingdate,theGroupreviews

thecarryingvaluesofitstangibleand

intangibleassetstodeterminewhetherthere

isanyindicationthatthoseassetshavebeen

impaired.Ifsuchanindicationexists,the

recoverableamountoftheasset,beingthe

higheroftheasset’sfairvaluelesscosts

tosellandvalueinuse,iscomparedtothe

assetscarryingvalue.Anyexcessoftheassets

carryingvalueoveritsrecoverableamountis

expensedtotheincomestatement.

Impairmenttestingisperformedannually

forgoodwillandintangibleassetswithindefinite

lives.

Whereitisnotpossibletoestimatethe

recoverableamountofanindividualasset,

theGroupestimatestherecoverableamount

ofthecash-generatingunittowhichthe

assetbelongs.

(h) Intangibles

Goodwill

Goodwillandgoodwillonconsolidationare

initiallyrecordedattheamountbywhich

thepurchasepriceforabusinessorforan

ownershipinterestinacontrolledentity

exceedsthefairvalueattributedtoitsnet

assetsatdateofacquisition.Goodwillon

acquisitionsofsubsidiariesisincludedin

intangibleassets.Goodwillonacquisition

ofassociatesisincludedininvestments

inassociates.Goodwillistestedannually

forimpairmentandcarriedatcostless

accumulatedimpairmentlosses.Impairment

isdeterminedbyassessingtherecoverable

amountofthecash-generatingunittowhich

thegoodwillrelates.

Gainsandlossesonthedisposalofanentity

includethecarryingamountofgoodwillrelating

totheentitysold.


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currencytranslationreserveinthebalance

sheet.Thesedifferencesarerecognisedinthe

incomestatementintheperiodinwhichthe

operationisdisposed.

(j) Employee Benefits

Wages, Salaries, Annual Leave and Non-

Monetary Benefits

Provisionismadeforthecompany’sliability

foremployeebenefitsarisingfromservices

renderedbyemployeestobalancedate.

Employeebenefitsthatareexpectedtobe

settledwithinoneyearhavebeenmeasured

attheamountsexpectedtobepaidwhenthe

liabilityissettled,plusrelatedon-costs.

Employeebenefitspayablelaterthanoneyear

havebeenmeasuredatthepresentvalueofthe

estimatedfuturecashoutflowstobemadefor

thosebenefits.

Equity-settled Compensation

Anexpenseisrecognisedforallequity-based

remuneration,includingsharesandoptions

issuedtoemployeesanddirectors.Thefair

valueofsecuritiesgrantedisrecognised,

togetherwithacorrespondingincrease

inequity,overtheperiodinwhichthe

performanceconditionsarefulfilled,ending

onthedateonwhichtherelevantemployees

becomefullyentitledtotheaward(‘vesting

date’).Thefairvalueofoptionsgrantedis

measuredusingagenerallyaccepted

valuationmodel,takingintoaccountthe

termsandconditionsuponwhichtheoptions

weregranted.

(k) Provisions

ProvisionsarerecognisedwhentheGrouphas

alegalorconstructiveobligation,asaresult

ofpastevents,forwhichitisprobablethatan

outflowofeconomicbenefitswillresultandthat

outflowcanbereliablymeasured.

Transactions and Balances

Foreigncurrencytransactionsaretranslated

intofunctionalcurrencyusingtheexchange

ratesprevailingatthedateofthetransaction.

Foreigncurrencymonetaryitemsaretranslated

attheyearendexchangerate.Non-monetary

itemsmeasuredathistoricalcostcontinueto

becarriedattheexchangerateatthedateof

thetransaction.Non-monetaryitemsmeasured

atfairvaluearereportedattheexchangerate

atthedatewhenfairvaluesweredetermined.

Exchangedifferencesarisingonthetranslation

ofmonetaryitemsarerecognisedintheincome

statement,exceptwheredeferredinequityasa

qualifyingcashflowornetinvestmenthedge.

Exchangedifferencesarisingonthetranslation

ofnon-monetaryitemsarerecogniseddirectly

inequitytotheextentthatthegainorloss

isdirectlyrecognisedinequity,otherwise

theexchangedifferenceisrecognisedinthe

incomestatement.

Group Companies

Thefinancialresultsandpositionofforeign

operationswhosefunctionalcurrencyis

differentfromtheGroup’spresentation

currencyaretranslatedasfollows:

– assetsandliabilitiesaretranslatedat

yearendexchangeratesprevailingatthat

reportingdate;

– incomeandexpensesaretranslatedat

weightedaverageexchangeratesforthe

period;and

– retainedearningsaretranslatedatthe

exchangeratesprevailingatthedate

ofthetransaction.

Exchangedifferencesarisingontranslation

offoreignoperationsforwhichsettlement

isneitherplannedorlikelytooccur,are

transferreddirectlytotheGroup’sforeign


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orsale,areaddedtothecostofthoseassets,

untilsuchtimeastheassetsaresubstantially

readyfortheirintendeduseorsale.

Otherborrowingcostsincludeinterestand

financechargesinrespectoffinanceleases,

andareexpensedasincurred.

(o) Goods and Services Tax (GST)

Revenues,expensesandassetsarerecognised

netoftheamountofGST,exceptwherethe

amountofGSTincurredisnotrecoverable

fromtheAustralianTaxOffice.Inthese

circumstancestheGSTisrecognisedaspartof

thecostofacquisitionoftheassetoraspartof

anitemoftheexpense.

Receivablesandpayablesinthebalancesheet

areshowninclusiveofGST.

Cashflowsarepresentedinthecashflow

statementonagrossbasis,exceptfortheGST

componentofinvestingandfinancingactivities,

whicharedisclosedasoperatingcashflows.

(p) Business Combinations

Thepurchasemethodofaccountingisusedto

accountforallbusinesscombinations,including

businesscombinationsinvolvingentitiesor

businessesundercommoncontrol,regardless

ofwhetherequityinstrumentsorotherassets

areacquired.Costismeasuredasthefairvalue

oftheassetsgiven,equityinstrumentsissued

orliabilitiesincurredorassumedatthedate

ofexchangepluscostsdirectlyattributable

totheacquisition.Whereequityinstruments

areissuedinanacquisition,thefairvalue

oftheinstrumentsistheirpublishedmarket

priceatthedateofexchangeunless,inrare

circumstances,itcanbedemonstratedthatthe

publishedpriceatthedateofexchangeisan

unreliableindicatoroffairvalueandthatother

evidenceandvaluationmethodsprovideamore

reliablemeasureoffairvalue.Transactioncosts

arisingontheissueofequityinstrumentsare

recogniseddirectlyinequity.

(l) Cash and Cash Equivalents

Cashandcashequivalentsincludecashon

hand,depositsheldatcallwithbanks,other

short-termhighlyliquidinvestmentswith

originalmaturitiesofthreemonthsorless,

andbankoverdrafts.Bankoverdraftsare

shownwithinshort-termborrowingsincurrent

liabilitiesonthebalancesheet.

(m) Revenue

Revenueismeasuredatfairvalueofthe

considerationreceivedorreceivable,netof

returns,tradediscountsorvolumerebates.

Revenueisrecognisedtotheextentthat

itisprobablethattheeconomicbenefitswill

flowtotheGroupandtherevenuecanbe

reliablymeasured.

Revenuefromthesaleofgoodsisrecognised

uponthedeliveryofgoodstocustomers.

Revenuefromtherenderingofaserviceis

recogniseduponthedeliveryoftheserviceto

thecustomer.

Interestrevenueisrecognisedonaproportional

basistakingintoaccounttheinterestrates

applicabletothefinancialassets.

Licencefeerevenueisrecognisedonan

accrualsbasiswhentheGrouphastherightto

receivepaymentundertherelevantagreement

andhasperformeditsobligations.

Governmentgrantsarerecognisedatfairvalue

wherethereisareasonableassurancethatthe

grantwillbereceivedandallgrantconditions

willbemet.

Allrevenueisstatednetoftheamountofgoods

andservicestax(GST).

(n) Borrowing Costs

Borrowingcostsdirectlyattributabletothe

acquisition,constructionorproductionof

assetsthatnecessarilytakeasubstantial

periodoftimetopreparefortheirintendeduse


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expectationoffutureeventsandarebasedon

currenttrendsandeconomicdata,obtained

bothexternallyandwithintheGroup.

Key Estimates – Impairment

TheGroupassessesimpairmentateach

reportingdatebyevaluatingconditionsspecific

totheGroupthatmayleadtoimpairmentof

assets.Whereanimpairmenttriggerexists,the

recoverableamountoftheassetisdetermined.

Value-in-usecalculationsperformedin

assessingrecoverableamountsincorporatea

numberofkeyestimates,includingforecasting

ofprofits,cashflows,anddiscountrates.Refer

toNote15fordetailsongoodwillimpairment.

Key Estimates – Depreciation

Theestimationoftheusefullivesofassetshas

beenbasedonhistoricalexperienceaswell

asmanufacturers’warranties(forplantand

equipment),leaseterms(forleasedequipment)

andturnoverpolicies(formotorvehicles).

Inaddition,theconditionoftheassetsis

assessedatleastonceperyearandconsidered

againsttheremainingusefullife.Adjustments

tousefullifearemadewhenconsidered

necessary.Depreciationchargesareincludedin

note14.

Key Estimates – Share Based Payments

TheGroupmeasuresthecostofequitysettled

transactionswithemployeesbyreferenceto

thefairvalueoftheequityinstrumentsatthe

dateatwhichtheyaregranted.Thefairvalue

isdeterminedbyanexternalvaluerusinga

binomialmodel,withtheassumptionsdetailed

innote28.

Key Estimates – Deferred Payments

TheGrouptogetherwithexternaladvice

makesjudgementsonthepotentialprofits

ofthenewlyacquiredsubsidiaries.These

judgementshaveanimpactontheamountand

classificationofdeferredpaymentsdisclosed

onthebalancesheet.

Identifiableassetsacquired,liabilitiesand

contingentliabilitiesassumedinabusiness

combinationaremeasuredinitiallyattheirfair

valuesattheacquisitiondate,irrespectiveof

theextentofanyminorityinterest.Theexcess

ofthecostofacquisitionoverthefairvalue

oftheGroup’sshareoftheidentifiablenet

assetsacquiredisrecordedasgoodwill.Ifthe

costofacquisitionislessthantheGroup’s

shareofthefairvalueoftheidentifiable

netassetsofthesubsidiaryacquired,the

differenceisrecogniseddirectlyintheincome

statement,butonlyafterareassessmentof

theidentificationandmeasurementofthenet

assetsacquired.

Wherethesettlementofanypartofcash

considerationisdeferred,theamounts

payableinthefuturearediscountedattheir

presentvalueasatthedateofexchange.The

discountrateusedistheentity’sincremental

borrowingrate,beingtherateatwhicha

similarborrowingcouldbeobtainedfroman

independentfinancierundercomparableterms

andconditions.

(q) Comparative Figures

Whenrequiredbyaccountingstandards,

comparativefigureshavebeenadjustedto

conformtochangesinpresentationforthe

currentfinancialyear.

(r) Rounding of Amounts

Theparententityhasappliedthereliefavailable

toitunderASICClassOrder98/100and

accordingly,amountsinthefinancialreportand

directorsreporthavebeenroundedofftothe

nearest$1,000.

(s) Critical Accounting Estimates

and Judgments

Thedirectorsevaluateestimatesandjudgments

incorporatedintothefinancialreportbasedon

historicalknowledgeandbestavailablecurrent

information.Estimatesassumeareasonable


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–againorlossofcontrolwillrequire

thepreviousownershipintereststobe

remeasuredtotheirfairvalue;

–thereshallbenogainorlossfrom

transactionsaffectingaparent’s

ownershipinterestofasubsidiarywithall

transactionsrequiredtobeaccountedfor

throughequity(thiswillnotrepresenta

changetotheGroup’spolicy);

–dividendsdeclaredoutofpre-acquisition

profitswillnotbedeductedfromthecost

ofaninvestmentbutwillberecognised

asincome;

–impairmentofinvestmentsinsubsidiaries,

jointventuresandassociatedshallbe

consideredwhenadividendispaidby

therespectiveinvestee;and

–wherethereis,insubstancenochangeto

Groupinterests,parententitiesinserted

aboveexistingGroupsshallmeasure

thecostofitsinvestmentatthecarrying

amountofitsshareoftheequityitems

showninthebalancesheetoftheoriginal

parentdateofreorganisation.

TheGroupwillneedtodeterminewhether

tomaintainitspresentaccountingpolicyof

calculatinggoodwillacquiredbasedonthe

parententity’sshareofnetassetsacquiredor

changeitspolicysogoodwillrecognisedalso

reflectsthatofthenon-controllingentity.

• AASB8:OperatingSegmentsandAASB

2007-3:AmendmentstoAustralian

AccountingStandardsarisingfromAASB

8[AASB5,AASB6,AASB102,AASB107,

AASB119,AASB127,AASB134,AASB136,

AASB1023&AASB1038](applicablefor

annualreportingperiodscommencingfrom

1January2009).AASB8replacesAASB

114andrequiresidentificationofoperating

segmentsonthebasisofinternalreports

(t) New Accounting Standards

and Interpretations

Certainnewaccountingstandardshavebeen

publishedthatarenotmandatoryfor30June

2009reportingperiods.TheGrouphasnot

appliedanyofthefollowingandhasnotyet

determinedthepotentialeffectofamendments

ontheGroup’sfinancialreport.

• AASB3:BusinessCombinations,AASB

127:ConsolidatedandSeparateFinancial

Statements,AASB2008-3:Amendments

toAustralianAccountingStandardsarising

fromAASB3andAASB127[AASBs1,2,

4,5,7,101,107,112,114,116,121,131,

132,133,134,136,137,138&139and

Interpretations9&107](applicableforannual

reportingperiodscommencingfrom1July

2009)andAASB2008-7:Amendmentsto

AustralianAccountingStandards–Cost

ofanInvestmentinaSubsidiary,Jointly

ControlledEntityorAssociate[AASB1,

AASB118,AASB121,AASB127&AASB

136](applicableforannualreportingperiods

commencingfrom1January2009).These

standardsareapplicableprospectivelyand

sowillonlyaffectrelevanttransactionsand

consolidationsoccurringfromthedateof

application.Inthisregard,itsimpacton

theGroupwillbeunabletobedetermined.

Thefollowingchangestoaccounting

requirementsareincluded:

–acquisitioncostsincurredina

businesscombinationwillnolonger

berecognisedingoodwillbutwillbe

expensedunlessthecostrelatedto

issuingdebtorequitysecurities;

–contingentconsiderationwillbe

measuredatfairvalueattheacquisition

dateandmayonlybeprovisionally

accountedforduringaperiodof12

monthsafteracquisition;


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construction,orproductionofaqualifying

asset.Managementhasdeterminedthat

therewillbenoeffectontheGroupasa

policyofcapitalisingqualifyingborrowing

costshasbeenmaintainedbytheGroup.

• AASB2008-1:AmendmentstoAustralian

AccountingStandard–Share-based

Payments:VestingConditionsand

Cancellations[AASB2](applicablefor

annualreportingperiodscommencingfrom

1January2009).ThisamendmenttoAASB

2clarifiesthatvestingconditionsconsistof

serviceandperformanceconditionsonly.

Otherelementsofashare-basedpayment

transactionshouldthereforebeconsidered

forthepurposesofdeterminingfairvalue.

Cancellationsarealsorequiredtobetreated

inthesamemannerwhethercancelledbythe

entityorbyanotherparty.

thatareregularlyreviewedbythe

Group’sBoardforthepurposesofdecision

making.Whiletheimpactofthisstandard

cannotbeassessedatthisstage,thereis

thepotentialformoresegmentstobe

identified.Giventhelowereconomiclevels

atwhichsegmentsmaybedefined,andthe

factthatcashgeneratingunitscannotbe

biggerthanoperatingsegments,impairment

calculationsmaybeaffected.Management

doesnotpresentlybelieveimpairmentwill

resulthowever.

• AASB101:PresentationofFinancial

Statements,AASB2007-8:Amendments

toAustralianAccountingStandards

arisingfromAASB101,andAASB2007-

10:FurtherAmendmentstoAustralian

AccountingStandardsarisingfromAASB

101(allapplicabletoannualreporting

periodscommencingfrom1January2009).

TherevisedAASB101andamendments

supersedethepreviousAASB101and

redefinesthecompositionoffinancial

statementsincludingtheinclusionofa

statementofcomprehensiveincome.There

willbenomeasurementorrecognitionimpact

ontheGroup.Ifanentityhasmadeaprior

periodadjustmentorreclassification,athird

balancesheetasatthebeginningofthe

comparativeperiodwillberequired.

• AASB123:BorrowingCostsandAASB2007-

6:AmendmentstoAustralianAccounting

StandardsarisingfromAASB123[AASB

1,AASB101,AASB107,AASB111,AASB

116&AASB138andinterpretations1&

12](applicableforannualreportingperiods

commencingfrom1January2009).The

revisedAASB123hasremovedtheoptionto

expenseallborrowingcostsandwilltherefore

requirethecapitalisationofallborrowing

costsdirectlyattributabletotheacquisition,


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2009 2008 2009 2008

Note $000 $000 $000 $000

Revenue

–renderingofservicesrevenuefromoperatingactivities 188,959 86,713 15,206 14,218

TotalRevenue 188,959 86,713 15,206 14,218

OtherRevenue

–Interestreceived 2(a) 136 1,149 5,687 2,541

–Governmentsubsidiesreceived 535 469 535 469

–Corporateoverheadrecovery - - 13,069 5,975

–Otherrevenue 1,374 233 540 216

TotalOtherRevenue 2,045 1,851 19,831 9,201

TotalSalesRevenueandOtherRevenue 191,004 88,564 35,037 23,419

(a)Interestrevenuefrom:

–Other 136 1,149 5,687 2,541

TotalInterestRevenue 136 1,149 5,687 2,541

NOTE 2 REvENUE

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2009 2008 2009 2008

$000 $000 $000 $000

Expenses

CostofSales 93,389 41,487 9,173 11,674

Financecosts:

–Financechargespayableunderfinanceleasesandhire 65 69 27 51

–Otherpersons–interesttounrelatedparties 2,261 428 1,923 -

TotalFinanceCosts 2,326 497 1,950 51

InterestonDiscountedDeferredPayments(inferred) 2,545 1,878 2,218 1,363

Depreciation:

–Depreciationofleaseholdimprovements 181 82 102 41

–Depreciationofleasedvehicle 234 194 3 3

–Depreciationofofficefurnitureandequipment 393 207 111 95

–Depreciationofplantandequipment 2,142 1,051 100 47

–DepreciationofROV’s&vessels 4,301 - - -

TotalDepreciation 7,251 1,534 316 186

Foreignexchange(gains)/losses (389) 118 (14,697) 4,794

Net(gain)/lossondisposalofplantandequipment 61 42 - 4

Badanddoubtfuldebts 186 - 42 -

EmployeeBenefitExpenses

–Salariesandwages 26,612 14,630 6,385 2,835

–Superannuation 1,600 1,201 385 153

–Employeeentitlements 507 620 1 12

–Other 4,458 1,831 1,098 712

TotalEmployeeBenefitExpenses 33,177 18,282 7,869 3,712

Sharebasedpayments 1,143 1,583 1,143 1,583

Occupancycosts 4,370 2,135 1,080 734

Repairsandmaintenance 2,130 451 76 52

Amortisation 90 - 90 -

NOTE 3 EXPENSES

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2009 2008 2009 2008

Note $000 $000 $000 $000

(a) The Components of Tax Expense Comprise:

Currenttax 9,102 2,878 2,080 35

Deferredtax 19 304 (837) 764 (1,003)

Incometaxcredit–R&Dtaxoffset (480) - (480) -

Underprovisioninrespectofprioryears (10) 316 (23) (31)

8,916 2,357 2,341 (999)

(b) The prima facie tax on profit from ordinary activities before income tax is as follows

Primafacietaxpayableonprofitfromordinaryactivitiesbeforeincometaxat30%(2008:30%)

–ConsolidatedGroup 8,966 2,929 - -

–Parententity - - 5,852 (1,160)

Add:

Taxeffectof:

–Othernon-allowableitems 162 46 39 994

–Shareoptionsexpensedduringyear 343 475 343 475

–Taxlossesdeducted (47) (705) - (705)

–Deferredtaxpreviouslyunrecognised (41) (837) - (1,003)

–Non-deductibleinterestondeferredpayments 763 563 665 409

–R&DOffset (480) (9) (480) (9)

–Consolidationadjustment - 39 - -

–JPDAincome 10 (57) - -

–Differencesduetoforeigntaxrates (446) (87) - -

–Interestrateswapexpense 144 - 144 -

–Taxlossesnotrecognised 715 - -

10,089 2,357 6,563 (999)

Less:

Taxeffectof:

–Non-assessableincome 1,073 - - -

–30%Investmentallowance 75 - 12 -

–Overprovisionofprioryearincometax 25 - (9) -

–Foreignexchangegains/losses - - 4,219 -

Incometaxattributabletoentity 8,916 2,357 2,341 (999)

Theapplicableweightedaverageeffectivetaxratesareasfollows:

30% 24% 12% 26%

(c) Tax Consolidation Legislation

NeptuneMarineServicesLimitedhasnotimplementedthetaxconsolidationlegislationasof30June2009.

(d) Amounts Charged or Credited Directly to Equity

Deferredincometaxoncapitalraisingcosts 211 400 211 400

NOTE 4 INCOME TAX

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2009 2008 2009 2008

$000 $000 $000 $000

(e) Tax Rates

Thetaxratesusedinthetaxreconciliationisthecorporatetaxrateof30%payablebyAustraliancorporateentitiesontaxableprofitsunderAustraliantaxlaw.Therehasbeennochangeinthecorporatetaxratecomparedtoprioryears.

(f) Tax Losses

Unusedtaxlossesforwhichnodeferredtaxassethasbeenrecognised

2,384 - - -

Potentialtaxbenefitat17% 405 - - -

AllunusedtaxlosseswereincurredbySingaporeentities.ThecorporatetaxrateinSingaporeis17%.


2009 2008 2009 2008

$000 $000 $000 $000

Shorttermemployeebenefits 3,615 3,269 3,615 2,937

Postemploymentbenefits 202 665 202 665

Otherlong-termbenefits - - - -

Sharebasedpayments 601 1,296 601 1,214

4,418 5,230 4,418 4,816

(a) Names and positions held of the Group and parent entity key management personnel in office at any time during the financial year are:

Directors Position

MrChristianLange ChiefExecutiveOfficerandManagingDirector

MrRossKennan NonExecutiveDirector

MsCathrynCurtin NonExecutiveDirector(resigned2ndJanuary2009)

MrDavidAgostini NonExecutiveDirector

MrRobertScott NonExecutiveDirector

MrGeoffNewman NonExecutiveDirector(appointed16thOctober2008)


MrGeoffreyEdwards ChiefFinancialOfficer

MrDavidHusband GroupVicePresident–Engineering

MrMarkLindsay GroupVicePresident–Offshore

MrRussellCollins PipelineBusinessManager

(b) Refer to Remuneration Report contained in the Directors’ Report for details of remuneration paid or payable to each member of the Group’s key management personnel for the year ended 30 June 2009.

NOTE 4 INCOME TAX cont

NOTE 5 DIRECTOR AND KEY MANAGEMENT PERSONNEL COMPENSATION

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(c) Options Holdings

NumberofOptionsheldbyKeyManagementPersonnel

2009

Balance 1 July 2008

Granted as Compensation

Options Exercised

Net Change

Other

Balance 30 June

2009

Total Vested

30 June 2009

Total Exercisable

30 June 2009

Total Unexercisable

30 June 2009

MrChristianLange 4,000,000 3,000,000 - - 7,000,000 4,000,000 4,000,000 3,000,000

MrDavidAgostini 200,000 - - - 200,000 200,000 200,000 -

MrGeoffreyEdwards 900,000 400,000 - - 1,300,000 325,000 325,000 975,000

5,100,000 3,400,000 - - 8,500,000 4,525,000 4,525,000 3,975,000

2008

Balance 1 July 2007

Granted as Compensation

Options Exercised

Net Change

Other

Balance 30 June

2008

Total Vested

30 June 2008

Total Exercisable

30 June 2008

Total Unexercisable

30 June 2008

MrChristianLange 4,000,000 - - - 4,000,000 3,000,000 3,000,000 1,000,000

MrDavidAgostini 200,000 - - - 200,000 200,000 200,000 -

MrGeoffreyEdwards 400,000 500,000 - - 900,000 100,000 100,000 800,000

MrGeoffreyO’Connor 400,000 100,000 - - 500,000 200,000 200,000 300,000

MrGraemeCreedon 100,000 100,000 (66,000) (134,000) - - - -

MrColinMurphy - 100,000 - - 100,000 - - 100,000

MrNinoAmato 400,000 - - - 400,000 200,000 200,000 -

MrMikeErinakes 400,000 - - - 400,000 100,000 100,000 -

5,900,000 800,000 (66,000) (134,000) 6,500,000 3,800,000 3,800,000 2,200,000

Note that Ross Kennan, Geoff Newman, Robert Scott, David Husband, Mark Lindsay and Russell Collins have not been granted any options.

The‘NetChangeOther’columnaboveincludesthoseoptionsthathavebeenforfeitedbyholdersaswellasoptionsissuedduringtheyearunderreview.Furtherdisclosureofoptionsgrantedandexercisedduringtheyearcanbefoundonpage36and37oftheDirectors’Report.

NOTE 5 DIRECTOR AND KEY MANAGEMENT PERSONNEL COMPENSATION cont

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(d) Shareholdings

NumberofSharesheldbyKeyManagementPersonnel

2009Balance

1 July 2008 Received as

CompensationOptions

ExercisedNet Change

Other*Balance

30 June 2009

Directors

MrChristianLange 429,267 - - - 429,267

MrRossKennan 118,618 71,429 - - 190,047

MsCathrynCurtin 133,230 17,857 - - 151,087

MrDavidAgostini 63,691 35,715 - 35,714 135,120

MrRobertScott 61,178 35,714 - - 96,892

MrGeoffNewman - 26,786 - - 26,786

Key Management Personnel -

MrGeoffreyEdwards 88,567 - - 17,754 106,321

MrDavidHusband 2,837,573 - - 1,587,285 4,424,858

MrMarkLindsay 2,928,109 - - 1,124,378 4,052,487

MrRussellCollins 2,887,573 - - 1,631,715 4,519,288

9,547,806 187,501 - 4,396,846 14,132,153

2008Balance

1 July 2007 Received as

CompensationOptions

ExercisedNet Change

Other*Balance

30 June 2008

Directors

MrChristianLange 413,478 - - 15,789 429,267

MrRossKennan - 22,355 - 96,263 118,618

MsCathrynCurtin 84,000 11,178 - 38,052 133,230

MrDavidAgostini 47,250 11,178 - - 58,428

MrRobertScott - 11,178 - 52,513 63,691


MrGeoffreyEdwards 70,067 - - 18,500 88,567

MrGeoffreyO’Connor 3,150 - - 41,750 44,900

MrGraemeCreedon - - 66,000 - 66,000

MrColinMurphy 328,125 - - - 328,125

MrTimothyProctor 3,700 - - 68,720 72,420

MrDavidHusband 2,767,573 - - 70,000 2,837,573

MrRussellCollins 2,767,573 - - 120,000 2,887,573

MrNinoAmato 402,711 - - 119,014 521,725

MrMikeErinakes 6,123,438 - - (204,988) 5,918,450

MrMarkLindsay - - - 2,928,109 2,928,109

MrAnthonyKerr - - - 2,930,531 2,930,531

MrBartvanderGroen - - - 2,296,422 2,296,422

MrDavidMcLean - - - 1,199,716 1,199,716

13,011,065 55,889 66,000 9,790,391 22,923,345

*‘NetChangeOther’referstosharespurchased,soldorgrantedaspartofanacquisitionduringthefinancialyear.

NOTE 5 DIRECTOR AND KEY MANAGEMENT PERSONNEL COMPENSATION cont

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2009 2008 2009 2008

$000 $000 $000 $000

Remunerationoftheauditoroftheparententityfor:

–auditingorreviewingthefinancialreport 323 248 282 187

–otherservices - - - -

323 248 282 187

Remunerationofotherauditorsofsubsidiariesfor:

–auditingorreviewingthefinancialreportofsubsidiaries 134 152 - -

Consolidated Group

2009 2008

$000 $000

Basicearningspershare(cents) 6.94 3.00

Dilutedearningspershare(cents) 6.85 2.95

(a)Profit/(Loss)usedinthecalculationofEPS 20,971 7,407

No. No.

(b)WeightedaveragenumberofordinarysharesoutstandingduringtheyearusedincalculatingbasicEPS

302,274,954 246,714,736

(c)WeightedaveragenumberofordinarysharesoutstandingduringtheyearusedincalculatingdilutiveEPS

306,234,246 251,256,873

Nodividendshavebeenprovidedfororpaidduringtheyear1July2008to30June2009.

NOTE 6 AUDITORS’ REMUNERATION

NOTE 7 DIvIDENDS

NOTE 8 EARNINGS PER SHARE

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2009 2008 2009 2008

$000 $000 $000 $000

Cashatbankandinhand 14,751 7,798 361 500

Deposits 9,526 10,357 9,526 10,357

24,277 18,155 9,887 10,857

Reconciliationofcashandcashequivalents

Cashattheendofthefinancialyearasshowninthecashflowstatementisreconciledtoitemsinthebalancesheetasfollows:

Cashandcashequivalents 24,277 18,155 9,887 10,857

24,277 18,155 9,887 10,857


2009 2008 2009 2008

$000 $000 $000 $000

CURRENT

Tradereceivables 34,542 18,189 4,324 5,287

Provisionforimpairmentofreceivables - - - -

34,542 18,189 4,324 5,287

Otherreceivables 3,839 1,695 146 1,563

Amountsreceivablefrom:

–wholly-ownedsubsidiaries - - 209 -

Less:Provisionfordoubtfulamounts–otherreceivables (26) - (26) -

38,355 19,884 4,653 6,850

NON-CURRENT

Amountsreceivablefrom:

–wholly-ownedentities - - 71,002 76,080

Securitydeposit 998 1,473 548 548

998 1,473 71,550 76,628

NOTE 9 CASH AND CASH EQUIvALENTS

NOTE 10 TRADE AND OTHER RECEIvABLES

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2009 2008 2009 2008

$000 $000 $000 $000

CURRENT

Atcost

Workinprogress 4,012 3,292 594 101

Finishedgoods 590 18 - -

4,602 3,310 594 101


2009 2008 2009 2008

Note $000 $000 $000 $000

NONCURRENT

Investmentincontrolledentities–atcost (a) - - 147,333 58,557

Less:provisionfordiminutioninvalue - - (7) (7)

- - 147,326 58,550

(a) Investments in controlled entities

(ii)Unlisted

Investmentatcost–NeptuneMarineEuropeApS - - 29 29

Less:provisionfordiminutioninvalue-NeptuneMarineEuropeApS

- - (7) (7)

Investmentatcost–NeptuneDivingServicesPtyLtd* - - 7,884 7,822

Investmentatcost–Other - - 3 82

Investmentatcost–NeptuneMarineServicesInternational - - 9,535 9,535

Investmentatcost–NeptuneGeomaticsLimited - - 34,462 32,509

Investmentatcost–Sea-StructPtyLtd - - 10,290 8,580

Investmentatcost–NeptuneAccessIRMLimited - - 9,401 -

Investmentatcost–NeptuneAsiaHoldingsPteLtd - - 75,729 -

- - 147,326 58,550

*AlliedDivingServicesPtyLtdandTerritoryDivingServicesPtyLtdweremergedduringtheyearended30June2009toformNeptuneDivingServicesPtyLtd.

NOTE 11 INvENTORIES

NOTE 12 FINANCIAL ASSETTS

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(a) Controlled Entities Consolidated Country of Incorporation Percentage Owned (%)*

2009 2008

Parent Entity:

NeptuneMarineServicesLimited Australia

Ultimate Parent Entity:

NeptuneMarineServicesLimited Australia

Subsidiaries of Neptune Marine Services Limited:

NeptuneDivingServicesPtyLtd** Australia 100.00% 100.00%

NeptuneMarineServicesInternationalPtyLtd Australia 100.00% 100.00%

LinkweldEngineeringPtyLtd Australia 100.00% 100.00%

SubseaDevelopments(Australasia)PtyLtd Australia 100.00% 100.00%

USUnderwaterServicesLLC UnitedStatesofAmerica 100.00% 100.00%

NeptuneDelawareHoldingsInc UnitedStatesofAmerica 100.00% 100.00%

USUnderwaterManagementLLC UnitedStatesofAmerica 100.00% 100.00%

USUnderwaterServicesLP UnitedStatesofAmerica 100.00% 100.00%

NeptuneMarineEurope(ApS) Denmark 100.00% 100.00%

Tri-SurvGeomaticsPtyLtd(tradingasNeptuneGeomaticsLimited) Australia 100.00% 100.00%

Tri-SurvDeepwaterPtyLtd Australia 100.00% 100.00%

Sea-StructPtyLtd Australia 100.00% 100.00%

NeptuneScotlandHoldingsLtd UnitedKingdom 100.00% 100.00%

NeptuneDeeptechLtd UnitedKingdom 100.00% 100.00%

NeptuneDeeptechSymonsLtd UnitedKingdom 100.00% 100.00%

NeptuneAsiaHoldingsPteLtd Singapore 100.00% 100.00%

NeptuneMarinePacificPteLtd Singapore 100.00% 100.00%

Sea-StructInternationalPteLtd Singapore 100.00% 100.00%

PTSea-StructIndonesia Indonesia 100.00% 100.00%

AccessManagement(WA)PtyLtd(tradingasNeptuneAccessIRMLimited) Australia 100.00% 0.00%

AccessManagementPteLtd(tradingasNeptuneAccessIRMPteLtd) Singapore 100.00% 0.00%

NeptuneMarineOffshorePteLtd Singapore 100.00% 0.00%

NeptuneSubseaEngineeringLtd UnitedKingdom 100.00% 0.00%

*Percentageofvotingpowerisinproportiontoownership

**AlliedDivingServicesPtyLtdandTerritoryDivingServicesPtyLtdwereoperationallymergedduringtheyearended30June2009toformNeptuneDivingServicesPtyLtd.

(b) Acquisition of Controlled Entities

Detailsoftheacquisitionsofcontrolledentitiesduringtheyearended30June2009canbefoundatNote32‘BusinessCombinations’.

NOTE 13 CONTROLLED ENTITIES

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NOTE 14 PROPERTY, PLANT AND EQUIPMENT


2009 2008 2009 2008

$000 $000 $000 $000

PLANTANDEQUIPMENT

PlantandEquipment:

Atcost 15,865 12,085 624 457

Accumulateddepreciation (5,746) (3,420) (213) (113)

10,119 8,665 411 344

LeaseholdImprovements

Atcost 1,088 412 775 320

Accumulateddepreciation (283) (104) (171) (69)

TotalLeaseholdImprovements 805 308 604 251

LeasedVehicle

Atcost 1,478 1,087 34 33

Accumulateddepreciation (546) (303) (21) (18)

932 784 13 15

OfficeFurnitureandEquipment

Atcost 3,020 2,116 714 540

Accumulateddepreciation (1,446) (967) (260) (149)

1,574 1,149 454 391

RemoteOperatingVehicles

Atcost 9,070 3,624 - 3,624

Accumulateddepreciation (519) - - -

8,551 3,624 - 3,624

Vessels

Atcost 50,651 8,537 - 1,135

Accumulateddepreciation (3,373) - - -

47,278 8,537 - 1,135

ConstructioninProgress

Atcost 18 - - -

TotalPlantandEquipment 69,277 23,067 1,482 5,760

TotalProperty,PlantandEquipment 69,277 23,067 1,482 5,760

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NOTE 14 PROPERTY, PLANT AND EQUIPMENT cont

(a) Movements in Carrying Amounts

Movementsincarryingamountsforeachclassofproperty,plantandequipmentbetweenthebeginningandtheendofthecurrentfinancialyear.

Office Furniture

and Equipment

$000

Leasehold Improve-

ments $000

Plant and Equipment

$000

Leased Vehicle

$000

ROV’s and Vessel

$000

Construction in Progress

$000Total $000

Consolidated Group:

Balanceat1July2007 607 126 2,530 823 - - 4,086

Additions 612 265 3,383 110 12,161 - 16,531

Disposals (11) - (61) (208) - - (280)

Additionsthroughacquisitionofentities

162 - 4,109 290 - - 4,561

Depreciationexpense (207) (82) (1,051) (194) - - (1,534)

Foreignexchange (14) (1) (245) (37) - - (297)

Balanceat30June2008 1,149 308 8,665 784 12,161 - 23,067

Additions 539 659 3,045 311 44,515 130 49,199

Disposals (43) - (65) (121) - (92) (321)

Transfers - - (23) 23 - - -

Additionsthroughacquisitionofentities

689 - - 80 - - 769

Depreciationexpense (393) (181) (2,142) (235) (4,300) - (7,251)

Foreignexchange (367) 19 639 90 3,453 (20) 3,814

Balanceat30June2009 1,574 805 10,119 932 55,829 18 69,277

Parent Entity:

Balanceat1July2007 377 46 83 19 - - 525

Additions 113 246 307 - 4,759 - 5,425

Disposals (4) - - - - - (4)

Depreciationexpense (95) (41) (46) (4) - - (186)

Balanceat30June2008 391 251 344 15 4,759 - 5,760

Additions 174 455 168 - - - 797

Disposals - - - - - - -

Transfers - - - - (4,759) - (4,759)

Depreciationexpense (111) (102) (100) (3) - - (316)

Balanceat30June2009 454 604 412 12 - - 1,482

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NOTE 15 INTANGIBLE ASSETS


2009 2008 2009 2008

$000 $000 $000 $000

Goodwill

Cost 140,770 117,903 - -

Accumulatedoperationalincreaseinearnouts 10,777 7,098 - -

Accumulatedreductionindeferredpayments (1,670) (922) - -

Accumulatedforeignexchangedifferences (715) (5,848) - -

Accumulatedimpairmentlosses (4,895) (4,895) - -

Netcarryingvalue 144,267 113,336 - -

Development Costs

Cost 1,633 1,440 1,633 1,440

Accumulatedamortisationandimpairment (90) - (90) -

Netcarryingvalue 1,543 1,440 1,543 1,440

Total Intangibles 145,810 114,776 1,543 1,440

Movements

Goodwill

Balanceat1July2008 113,336 44,482 - -

Acquisitions 22,867 66,883 - -

OperationalIncreaseinearnouts 3,679 7,098 - -

Reductionindeferredpayments (747) - - -

Foreignexchangedifferences 5,132 (5,127) - -

Impairment - - - -

Balanceat30June2009 144,267 113,336 - -

Development Costs

Balanceat1July2008 1,440 - 1,440 -

Acquisitions 193 1,440 193 1,440

Amortisation (90) - (90) -

Balanceat30June2009 1,543 1,440 1,543 1,440

Total Intangible Assets 145,810 114,776 1,543 1,440

Intangibleassets,otherthangoodwillhavefiniteusefullives.ThecurrentamortisationchargesinrespectofintangibleassetsisdisclosedunderNote3.Goodwillhasaninfinitelifeandistestedannuallyforimpairment.

TherecoverableamountofeachCashGeneratingUnit(CGU)isdeterminedbasedonavalue-in-usecalculation.ThesecalculationsusecashflowprojectionsbasedonfinancialbudgetsapprovedbytheBoardcoveringaoneyearperiod.Cashflowsbeyondtheoneyearperiodareextrapolatedusinga5%growthrateperyearover10years.Pre-taxdiscountratesof11.09%havebeenusedwhichincorporateassociatedrisksovertheperiodoftime.Thediscountrateincludestherisk-freeyieldof10yeargovernmentbonds(5.52%)atbeginningofthebudgetperiod.

Managementdeterminedbudgetedearningsbeforeinterest,tax,depreciationandamortisation(EBITDA)basedonpastperformanceanditsexpectationsofthefuture.Thegrowthrateof5%usedisconsideredconservativebymanagementcomparedwithforecastsincludedinindustryreportsandgiventhestrengthoftheoilandgasIndustryandhasbeenusedonlyfortheimpairmentreviews.

Impact of Possible Changes in Key Assumptions

ManagementandtheBoarddonotconsiderthatachangeinanyofitsrecentlyestablishedkeyassumptioncriteriawouldmateriallyimpacttheassessmentofimpairmentforanyCGU.

Assumingallotherassumptionsremainconstantbutthediscountrateisincreasedto14%,GoodwillwouldnotbeimpairedatanyoftheCGU’s.

Assumingallotherassumptionsremainconstantbutthegrowthratedropsto2%perannum,GoodwillwouldnotbeimpairedatanyoftheCGU’s.

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NOTE 16 OTHER ASSETS

NOTE 17 TRADE AND OTHER PAYABLES


2009 2008 2009 2008

$000 $000 $000 $000

CURRENT

Prepayments 2,226 976 1,511 569

Deposits 46 38 - -

Accruedincome 11 - - -

Otherassets 14 - - -

2,297 1,014 1,511 569

NON-CURRENT

Prepayments 339 - 339 -


2009 2008 2009 2008

$000 $000 $000 $000

CURRENT

Unsecuredliabilities

Tradepayables 16,362 5,688 3,840 3,261

Sundrypayablesandaccruedexpenses 12,096 6,430 4,279 1,763

Deferredconsideration 18,207 9,370 13,977 6,082

46,665 21,488 22,096 11,106

NON-CURRENT


Deferredconsideration 12,717 18,020 10,507 15,559

Unsecuredloanowingtocontrolledentity - – 11 17

12,717 18,020 10,518 15,576

Deferredconsiderationismadeupofanestimateof71%cashand29%sharestovendorsoftheacquiredsubsidiariesbasedonanearnoutcalculationthatisdiscountedtoaccountforthetimevalueofmoneyandinterestexpense.Theinterestexpensehasbeenbroughttoaccountintheincomestatement,andamountsto$2,545,000fortheyearended30June2009(2008:$1,878,000).

Financial Guarantees

TheGrouphasprovidedthefollowingfinancialguaranteestoitsbusinessassociateswhichcommitstheGrouptomakepaymentsonbehalfoftheseentitiesuponfailuretoperformunderthetermsoftherelevantcontracts.

Performanceguarantees 924 171 - -

Guaranteesrelatedtoleases 548 548 548 548

Theguaranteesrelatedtoleasesaresecuredbycash 1,472 719 548 548

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NOTE 18 FINANCIAL LIABILITIES


2009 2008 2009 2008

Note $000 $000 $000 $000

CURRENT


Hirepurchaseliability 24,18(a) 486 318 94 85

Other 18(a) 757 370 758 371

1,243 688 852 456

Securedliabilities

Bankloans 18(b),(c) 7,759 1,406 4,852 -

Debtorsfacility 18(b),(c) 3,833 - 3,833 -

11,592 1,406 8,685 -

12,835 2,094 9,537 456

NON-CURRENT


Hirepurchaseliabilities 24(a) 566 596 133 213

566 596 133 213

Securedliabilities

Bankloans 18(b),(c) 23,769 2,949 23,692 -

23,769 2,949 23,692 -

24,335 3,545 23,825 213

(a)Totalcurrentandnon-currentunsecuredliabilities:

Hirepurchaseliability 1,052 915 227 298

Other 757 369 758 372

1,809 1,284 985 670

(b)Totalcurrentandnon-currentsecuredliabilities:

Bankloans18(d)(i),(ii),(iv)

31,528 4,355 28,544 -

Debtorsfacility 18(d)(iii) 3,833 - 3,833 -

35,361 4,355 32,377 -

(c)Thebankloansaresecuredbychargeovertheassetsoftheparententityandthesubsidiaries.

(d)(i)On30September2008,Neptuneborrowed$25,000,000fromtheNationalAustraliaBankattheinterestofbankbillrate+1.9%.TheloanwasusedtofinancethepurchaseoftheNor Seavessel.TheloanissecuredthroughregisteredmortgagesovertwovesselsknownastheTridentandROV Supporter,aswellasfixedandfloatingchargesovertheassetsoftheNeptuneCompaniesexcludingtheUSentities.Neptunehasenteredintoainterestrateswapfor$17,000,000ofthedebtfacilityatafixedinterestrateof5.99%.Theremainingportionoftheloanisatfloatingrates.Theloanisrepayablebyinstalmentsof$700,000perquarteruntil30thSeptember2011.Theremainingportionoftheloanispayableasaballoonpaymentatmaturity.Duringtheyearthecompanyrepaid$2,100,000ofthefacility.

(ii)On7thJanuary2009,NeptuneborrowedGBP3,000,000fromtheNationalAustraliaBankattheinterestofoverseascurrencyrate+2.5%.TheloanwasusedtofundthepurchaseofNeptuneSubseaEngineeringLtd,aUKbasedacquisition.TheloanissecuredthroughfixedandfloatingchargesovertheassetsoftheNeptuneCompaniesexcludingtheUSentities.TheloanisrepayablebyinstalmentsofGBP250,000perquarteruntil31stDecember2011.Theremainingportionoftheloanispayableatmaturity.DuringtheyearthecompanyrepaidGBP250,000againstthisloan.

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NOTE 18 FINANCIAL LIABILITIES cont

(iii)On25thSeptember2008,Neptuneborrowed$7,400,000fromtheNationalAustraliaBankasadebtorfacilityattheinterestoflendingindicatorrate+1.5%.Theloanisrepayableby30thSeptember2011.Duringtheyearthecompanyrepaid$3,600,000towardsthisfacility.

(iv) TheUSAsubsidiaryUSUnderwaterServiceshasabalanceonthetermloanofUSD2,284,781asat30June2009withFifthThirdBank.TheloanissecuredthroughchargesoverassetsofUSUnderwaterServices.PrincipalpaymentsrangefromUSD83,333toUSD104,616withaballoonpaymentatmaturitydue1February2010.DuringtheyeartheUSUnderwaterServicesrepaidUSD1,034,789againstthisloan.

NOTE 19 TAX


2009 2008 2009 2008

$000 $000 $000 $000

Liabilities

CURRENT

IncomeTax 6,781 3,417 2,080 35

TOTAL 6,781 3,417 2,080 35

2009Opening Balance

$000Acquisitions

$000

Not Previously

Recognised $000

Charged to Income

$000

Charged Directly to

Equity $000

Closing Balance

$000

Consolidated Group

Deferred Tax Assets

Provisions 154 21 (22) 104 - 257

Accruals 201 20 (72) 1,608 - 1,757

Transactioncostsonequityissue 1,184 - - (386) 211 1,009

Property,plantandequipment 91 - (73) - - 18

Intangibleassets - - - 27 - 27

Unusedtaxlosses - - 1,487 (271) - 1,216

Other - - 406 (391) - 15

Balanceasat30June2009 1,630 41 1,726 691 211 4,299

2008

Consolidated Group

Deferred Tax Assets

Provisions - - - 154 - 154

Accruals - - - 201 - 201

Transactioncostsonequityissue - - - - 1,184 1,184

Property,plantandequipment - - - 91 - 91

Balanceasat30June2008 - - 446 1,184 1,630

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NOTE 19 TAX cont

2009

Opening Balance

$000Acquisitions

$000

Not Previously

Recognised $000

Charged to Income

$000

Charged Directly to

Equity $000

Closing Balance

$000

Parent Entity

Deferred Tax Asset

Provisions&unrealisedforeignexchange 548 - - (440) - 108

Accruals 62 - (446) 1,012 - 628

Transactioncostsonequityissue 1,184 - - (386) 211 1,009

Property,plantandequipment 3 - 7 - - 10

Intangibleassets - - - 27 - 27

Unusedtaxlosses - - 933 (933) - -

Balanceasat30June2009 1,797 - 494 (720) 211 1,782

2008

Parent Entity

Deferred Tax Asset

Provisions&unrealisedforeignexchange - - - 548 - 548

Accruals - - - 62 - 62

Transactioncostsonequityissue - - - - 1,184 1,184


Balanceasat30June2008 - - - 613 1,184 1,797

Deferred Tax Liabilities

2009

Consolidated Group

Deferred Tax Liability

Provisions - - - 5 - 5

Property,plantandequipment 297 9 270 99 - 675

Intangibleassets - - 808 675 - 1,483

Other - - 240 217 - 457

Balanceasat30June2009 297 9 1,318 996 - 2,620

2008

Consolidated Group



Balanceasat30June2008 - - - 297 - 297

2009

Parent Entity


Other - - 46 12 - 58

Balanceasat30June2009 - - 46 12 - 58

2008

Parent Entity


Other - - - - -

Balanceasat30June2008 - - - - - -

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NOTE 20 PROvISIONS

NOTE 21 DERIvATIvE FINANCIAL INSTRUMENTS


2009 2008 2009 2008

$000 $000 $000 $000

CURRENT

Provisionforemployeeentitlements 1,284 867 327 258

Otherprovision 604 - 200 -

Totalprovisions 1,888 867 527 258

Analysis of Total Provisions

Current 1,888 867 527 258

Non-current - - - -

1,888 867 527 258

Provision for Employee Entitlements

Noprovisionhasbeenrecognisedforemployeeentitlementsrelatingtolongserviceleave.Thecalculationsperformedincludingprobabilitycalculations,showedthattherewasnotarequirementtoprovideforlongserviceleaveintheparententityoranyofthesubsidiaries.


2009 2008 2009 2008

$000 $000 $000 $000

Current assets

Interestrateswap 205 - 205 -

205 - 205 -

Non-current assets

Interestrateswap 275 - 275 -

275 - 275 -

480 - 480 -

Interestrateswapwasnotinitiallydesignatedanaccountinghedgeatinception.Gainsandlossesarisingfromchangesinfairvaluearerecordedintheincomestatement.

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NOTE 22 ISSUED CAPITAL


2009 2008 2009 2008

$000 $000 $000 $000

334,643,474(2008:292,737,786)fullypaidordinaryshares 157,733 139,405 157,733 139,405

157,733 139,405 157,733 139,405


2009 2008 2009 2008

(a) Ordinary Shares No $ $ $ $

Atthebeginningofreportingperiod 204,964,014 139,404,964 66,011,332 139,404,964 66,011,332

Sharesissuedduringtheprioryear

10July2007–Exerciseofoptions 85,462 - 17,092 - 17,092

10July2007–Exerciseofoptions(employee) 34,000 - 20,060 - 20,060

25July2007–Exerciseofoptions 410,600 - 82,120 - 82,120

9August2007–Exerciseofoptions 53,600 - 10,720 - 10,720

17August2007–Vendorshares–TriSurv 7,332,188 - 6,012,394 - 6,012,394

30August2007–Exerciseofoptions 300,000 - 60,000 - 60,000

6September2007–Exerciseofoptions 230,490 - 46,098 - 46,098



18September2007–Exerciseofoptions(employee) 35,000 - 20,650 - 20,650

8October2007–Exerciseofoptions 100,000 - 20,000 - 20,000

9October2007–Vendorshares–LinkWeld 183,980 - 150,000 - 150,000

23October2007–Exerciseofoptions 108,450 - 21,690 - 21,690

5November2007–Exerciseofoptions 341,456 - 68,291 - 68,291

5November2007–Exerciseofoptions(employee) 31,000 - 18,290 - 18,290

21November2007–Exerciseofoptions 332,000 - 66,400 - 66,400

6December2007–Exerciseofoptions 191,787 - 38,357 - 38,357

21December2007–Placement 32,100,000 - 30,495,000 - 30,495,000


21December2007–Exerciseofoptions(employee) 100,000 - 50,900 - 50,900


8January2008–Exerciseofoptions 109,711 - 21,942 - 21,942

17January2008–Exerciseofoptions 470,500 - 94,100 - 94,100

1February2008–NEDSharePlan 55,888 - 50,000 - 50,000

1February2008–Placement 32,100,000 - 30,495,000 - 30,495,000

4February2008–Vendorshares–TDS 68,720 - 82,210 - 82,210

7February2008–SharePurchasePlan 1,956,997 - 1,859,227 - 1,859,227

1March2008–Exerciseofoptions 5,000 - 1,000 - 1,000

18Mar2008–Exerciseofoptions 50 - 10 - 10

8April2008–Vendorshares–LinkWeld 276,223 - 150,000 - 150,000

28April2008–Vendorshares–SeaStruct 10,197,584 - 5,100,000 - 5,100,000

2May2008–Exerciseofoptions 230,500 - 46,100 - 46,100

23June2008–Exerciseofoptions - 1,000 - 1,000

Lesstransactioncostsforcapitalraisingactivities

CapitalraisingcoststoJune2008(includingdeferredtax) - (1,771,536) - (1,771,536)

Balanceat30June2008 292,737,786 139,404,964 139,404,964

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NOTE 22 ISSUED CAPITAL cont

Shares issued during the current year

17July2008–Vendorshares–AccessManagement 2,122,222 900,459 - 900,459 -

6August2008–Exerciseofoptions 5,000 1,000 - 1,000 -

19August2008–Vendorshares–TriSurv 2,692,914 1,370,693 - 1,370,693 -

6October2008–Vendorshares–LinkWeld 296,637 149,999 - 149,999 -

10October2008–Exerciseofoptions(employee) 52,500 525 - 525 -

12December2008–Exerciseofoptions(employee) 80,000 800 - 800 -

30December2008–NEDshareplan 223,214 62,500 - 62,500 -

14January2009–Vendorshares-SubseaEngineeringServices

6,820,532 2,086,699 - 2,086,699 -

24March2009–VendorsharesTerritoryDivingServices

391,017 109,274 - 109,274 -

8April2009–Vendorshares–LinkWeld 402,797 150,002 - 150,002 -

29May2009–Vendorshares-SubseaDevelopments

2,844,570 1,126,075 - 1,126,075 -

12June2009–Placement 24,000,000 12,000,000 - 12,000,000 -

12June2009–Exerciseofoptions(employee) 75,000 750 - 750 -

22June2009–Exerciseofoptions 56,700 11,340 - 11,340 -

22June2009–Exerciseofoptions(employee) 16,250 625 - 625 -

26June2009–Vendorshares–SeaStruct 1,826,335 911,746 - 911,746 -

Lesstransactioncostsforcapitalraisingactivities

–CapitalraisingcoststoJune2009(includingdeferredtax)

(554,818) - (554,818) -

At reporting date 334,643,474 157,732,633 139,404,964 157,732,633 139,404,964

Ordinarysharesparticipateindividendsandtheproceedsonwindingupoftheparententityinproportiontothenumberofsharesheld.

Attheshareholdersmeetingseachordinaryshareisentitledtoonevotewhenapolliscalled,otherwiseeachshareholderhasonevoteonashowofhands.

(b) Options

(i)ForinformationrelatingtotheNeptuneMarineServicesLimitedemployeeoptionplan,includingdetailsofoptionsissued,exercisedandlapsedduringthefinancialyearandtheoptionsoutstandingatyear-endrefertoNote28:Share-basedPayments.

(ii)ForinformationrelatingtoshareoptionsissuedtokeymanagementpersonnelduringthefinancialyearrefertoNote28:Share-basedPayments.

(c) Capital Management

ManagementcontrolsthecapitaloftheGroupinordertomaintainagooddebttoequityratio,providetheshareholderswithadequatereturnsandensurethattheGroupcanfunditsoperationsandcontinueasagoingconcern.

Therearenoexternallyimposedcapitalrequirements.

ManagementeffectivelymanagestheGroup’scapitalbyassessingtheGroup’sfinancialrisksandadjustingitscapitalstructureinresponsetochangesintheserisksandinthemarket.Theseresponsesincludethemanagementofdebtlevels,distributionstoshareholdersandshareissues.

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NOTE 22 ISSUED CAPITAL cont

TherehavebeennochangesinthestrategyadoptedbymanagementtocontrolthecapitaloftheGroupsincetheratiosfortheyearended30June2009and30June2008areasfollows:


2009 2008 2009 2008

Note $000 $000 $000 $000

Totalborrowings 18 37,170 5,639 33,362 669

Lesscashandcashequivalents 9 (24,277) (18,155) (9,887) (10,857)

Netdebt 12,893 (12,516) 23,475 (10,188)

Totalequity 181,933 133,581 171,546 134,908

Totalcapital 194,826 121,065 195,021 124,720

Gearingratio 7% N/A 12% N/A

NOTE 23 RESERvES


2009 2008 2009 2008

Note $000 $000 $000 $000

Reserves:

Foreigncurrencytranslationreserve 1(I) 1,714 (6,196) - -

Optionreserve 5,267 4,124 5,267 4,124

6,981 (2,072) 5,267 4,124

Movements:

Foreigncurrencytranslationreserve

Balanceat1July (6,196) (315) - -

Currencytranslationdifferencearisingduringtheyear 7,910 (5,881) - -

Balanceat30June 1,714 (6,196) - -

Optionreserve

Balanceat1July 4,124 2,110 4,124 2,110

Costofoptionsissuedtoemployees 1,143 2,014 1,143 2,014

Balanceat30June 5,267 4,124 5,267 4,124

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NOTE 24 CAPITAL AND LEASING COMMITMENTS

NOTE 25 CONTINGENT LIABILITIES AND CONTINGENT ASSETS


2009 2008 2009 2008

Note $000 $000 $000 $000

(a) Finance Lease Commitments

Payable—minimumleasepayments

—notlaterthan12months 521 329 81 86

—between12monthsand5years 580 609 148 215

—greaterthan5years - - - -

Minimumleasepayments 1,101 938 229 301

Lessfuturefinancecharges (49) (23) (2) (3)

Presentvalueofminimumleasepayments 18 1,052 915 227 298

Thefinanceleasesrelatedtomotorvehicles,atruckandtheleaseholdimprovementofpremisesforNeptuneMarineServicesLimitedandseveralofthesubsidiaries.Allfinanceleaseswillbesettledwithinthenext5years.

(b) Operating Lease Commitments

Non-cancellableoperatingleasescontractedforbutnotcapitalisedinthefinancialstatements

Payable—minimumleasepayments

—notlaterthan12months 2,375 1,460 682 466

—between12monthsand5years 6,585 4,482 2,657 1,958

—greaterthan5years 1,530 2,158 779 1,143

10,490 8,100 4,118 3,567

Alloperatingleasesoftheparentandconsolidatedentityrelatetotheleasingofpremises.Allleasesarepayablemonthly.

(c) Capital Expenditure Commitments

Therewerenocapitalexpenditurecommitmentsasat30June2009.

TheconsolidatedGroupofNeptuneMarineServicesat30June2009hasacontingentliabilityinrelationtothepurchaseofCoreIRMPteLtdandSubmersibleTechnologyServices(Holdings)Limited(“STS”).Thepurchaseiscontingentonduediligence.Pleaserefertonote29fordetails.

TheconsolidatedGroupofNeptuneMarineServicesat30June2009hasacontingentliabilityinrelationtolegalproceedingsbroughtagainstitsGroupentityUSUnderwaterServicesLP,wherebysomeformeremployeeshavebroughtclaimsarisingoutoftheiremployment.Theamountsoftheseclaimshavenotbeenascertainedandarecurrentlybeingdefended.

Related Party Guarantees Provided by the Parent Entity

TheparententityhasprovidedguaranteestothirdpartiesinrelationtotheinterestbearingloaninUSUnderwaterServices,theguaranteeissecuredovertheassetsoftheconsolidatedGroupofNeptuneMarineServices,totheextentoftheinterestbearingliabilityintheUnitedStates.

At30June2009theoutstandingprincipaloftheinterestbearingliabilitywas$2,815,850.

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NOTE 26 SEGMENT REPORTING

Engineering Offshore Services Total

2009 2008 2009 2008 2009 2008

$000 $000 $000 $000 $000 $000

Primary Reporting — Business Segments

REVENUE

Externalsales 60,844 42,174 128,115 44,539 188,959 86,713

Othersegments 4,169 5,753 13,736 4,901 17,905 10,654

Totalsalesrevenue 65,013 47,927 141,851 49,440 206,864 97,367

Segmentdepreciation 634 360 6,617 1,174 7,251 1,534

Financecosts 377 1,089 4,495 1,286 4,871 2,375

Segmentprofit 7,037 7,165 39,413 11,020 46,450 18,185

Nonoperatingmovement (25,479) (10,778)

RESULTS

Profit/(Loss) 20,971 7,407

ASSETS

Netadditions 970 2,299 48,229 18,513 49,199 20,812

Totalsegmentassets 78,943 53,006 211,311 130,303 290,254 183,309

LIABILITIES

Segmentliabilities 18,566 11,975 89,755 37,753 108,321 49,728

Non-OperatingMovementincludesEmployeeShareBasedPayments,GovernmentGrants,InterestIncome,InterestExpense,IncomeTaxExpense,InterestonDeferredTaxPaymentsandHeadOfficeExpenses.

Asaresultoffurtheracquisitionsduringthefinancialyear,ManagementandtheBoardmodifiedtheclassificationofbusinesssegmentstobemoreinlinewiththetypeofoperationsbeingperformed.

NeptuneMarineServicesconsistsofthetwodistinctdivisions,EngineeringServicesandOffshoreServices.

TheEngineeringServicesDivisionprovidesarangeofservicesencompassingdetailedengineeringanddesignandspecialisedfabrication.

TheOffshoreServicesDivisionprovidesarangeofservicesencompassingcommercialdiving,NEPSYS®dryunderwaterwelding,ropeaccess,offshoresupportvessels,remotelyoperatedvehicles,pipelinestabilisationandgeophysicalsurvey.

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NOTE 26 SEGMENT REPORTING cont

NOTE 27 CASH FLOW INFORMATION

Segment Revenues from External Customers

Carrying Amount of Segment Assets

2009 2008 2009 2008

$000 $000 $000 $000

Secondary Reporting — Geographical Segments

Geographicallocation:

Australia 82,916 65,777 118,139 171,755

Asia 40,326 2,133 83,460 4,751

UnitedStatesofAmerica 35,544 11,531 37,239 2,676

UnitedKingdom 30,173 7,272 51,416 4,127

188,959 86,713 290,254 183,309

Accounting Policies

Segmentrevenuesandexpensesarethosedirectlyattributabletothesegmentsandincludeanyjointrevenueandexpenseswhereareasonablebasisofallocationexists.Segmentassetsincludeallassetsusedbyasegmentandconsistprincipallyofcash,receivables,inventories,intangiblesandproperty,plantandequipment,netofallowancesandaccumulateddepreciationandamortisation.Whilemostsuchassetscanbedirectlyattributedtoindividualsegments,thecarryingamountofcertainassetsusedjointlybytwoormoresegmentsisallocatedtothesegmentsonareasonablebasis.Segmentliabilitiesconsistprincipallyofpayables,employeebenefits,accruedexpenses,provisionsandborrowings.Segmentassetsandliabilitiesdonotincludedeferredincometaxes.

Intersegment Transfers

Segmentrevenues,expensesandresultsincludetransfersbetweensegments.ThepriceschargedonintersegmenttransactionsarethesameasthosechargedforsimilargoodstopartiesoutsideoftheconsolidatedGroupatanarm’slength.Thesetransfersareeliminatedonconsolidation.


2009 2008 2009 2008

$000 $000 $000 $000

(a) Reconciliation of Cash Flow from Operations with Profit/(Loss) after Income Tax

Profit/(Loss)afterincometax 20,971 7,407 17,167 (2,868)

Cashflowsexcludedfromlossattributabletooperatingactivities

Financecostsondiscounteddeferredpayments 2,545 1,878 2,218 1,363

Non-cashflowsinprofit

Depreciation 7,251 1,534 406 186

Write-offofcapitalisedexpenditure 61 31 - -

Share/optionsexpense 1,143 1,583 1,143 1,583

SharestoDirectors 53 - 53 -

Foreignexchangelosses (902) 118 (14,028) 4,794

Lossoninterestrateswap 480 46 480 -

Interest - - (5,618) (1,644)

Borrowingcosts 956 - 956 -

Corporateoverhead - - (13,069) (5,975)

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NOTE 27 CASH FLOW INFORMATION cont

NOTE 28 SHARE-BASED PAYMENTS


2009 2008 2009 2008

$000 $000 $000 $000

Changesinassetsandliabilities,netoftheeffectsofpurchaseanddisposalofsubsidiaries:

(Increase)/decreaseintradeandtermreceivables (17,182) (9,544) 2,208 (4,703)

(Increase)/decreaseinprepayments (1,649) (432) (1,282) (188)

(Increase)/decreaseininventories (1,292) (1,707) (494) (101)

(Increase)/decreaseindeferredtaxassetsandliabilities (108) - 284 -

Increase/(decrease)intradepayablesandaccruals 15,752 6,068 3,043 2,429

Increase/(decrease)inincometaxespayable 3,252 3,365 2,045 35

Increase/(decrease)infinancialliabilities 525 258 315 65

Increase/(decrease)inprovisions 417 319 269 133

Increase/(decrease)inunearnedrevenues 3,153 - - -

Cashflowfromoperations 35,426 10,924 (3,904) (4,891)

(b) Acquisition of Entities

Detailswithregardtothevariouscomponentsincludingcashpaidforthetwoentitiespurchasedduringtheyearcanbefoundatnote32‘BusinessCombinations’.

(c) Loan Facilities

Loanfacilities 8,632 6,173 7,400 5,134

Amountutilised (3,600) - (3,600) -

Unutilisedfacility 5,032 6,173 3,800 5,134

Themajorfacilitiesaresummarisedasfollows:

Revolvingloanfacility–US$1,000,000loanfacility–Asat30June2009,US$1,000,000wasavailabletobeutilised.ThereisafixedandfloatingchargeonUSassetsassecurityifthisfacilityisdrawndown.

Debtorfinancefacility–Totalfinancefacilityisfor$7,400,000–Asat30June2009,$3,800,000wasavailabletobeutilised.ThereisafixedandfloatingchargeonAustralianassetsassecurityfortheportionofthefacilitydrawndown.

FinancewillbeprovidedunderallfacilitiesprovidedthecompanyandtheconsolidatedGrouphavenotbreachedanyborrowingrequirementsandtherequiredfinancialratiosaremet.ForfulldetailsoffinancefacilitiesrefertoNote18(d).

Thefollowingshare-basedpaymentarrangementsexistedat30June2009:

Incentive Option Scheme

TheCompanyoperatesanownership-basedincentiveschemeknownastheNeptuneMarineServicesLimitedIncentiveOptionScheme(“Scheme”),whichwasapprovedbyshareholdersatageneralmeetingheldon25November2005.

TheSchemeprovidesforemployees,directorsandothersinvolvedinthemanagementoftheCompanytobeofferedoptionsfornoconsideration.Eachoptionisconvertibletooneordinaryshare.TheBoardmaydeterminetheexercisepriceoftheoptionsinitsabsolutediscretion.SubjecttotheASXListingRules,theexercisepricemaybenilbuttotheextenttheListingRulesspecifyorrequireaminimumprice,theexercisepriceinrespectofanoffermademustnotbelessthananyminimumpricespecifiedintheListingRules.OptionsissuedundertheSchemethathavenotlapsedmaybeexercisedatanytimeuptothedatewhichis5yearsafterthedateofthegrantoftheoptions,orsuchotherexpirydateastheBoarddeterminesinitsdiscretionatthetimeofgrant.Therearenovotingordividendrightsattachedtotheoptions.

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NOTE 28 SHARE-BASED PAYMENTS cont

OptionsmaynotbeofferedundertheSchemeifthetotalnumberofshareswhichwouldbeissuedwhereeachoptionaccepted,togetherwiththenumberofsharesinthesameclassoroptionstoacquiresuchsharesissuedpursuanttoallemployeeorexecutiveshareschemesduringthepreviousfiveyears,exceeds5%ofthetotalnumberofissuedsharesinthatclassasatthedateoftheoffer.

AlloptionsgrantedtokeymanagementpersonnelareordinarysharesinNeptuneMarineServicesLimitedwhichconferarightofoneordinaryshareforeveryoptionheld.

Thenumberandweightedaverageexerciseprice(WAEP)ofoptionsisasfollows:


2009 2008 2009 2008

Number of Options

Weighted Average Exercise

Price $

Number of Options


Price $

Number of Options


Price $

Number of Options


Price $

Outstandingatthebeginningoftheyear

9,345,000 0.62 5,900,000 0.62 9,345,000 0.62 5,900,000 0.62

Granted 8,765,000 0.42 3,611,000 0.57 8,765,000 0.42 3,611,000 0.57

Forfeited (100,000) 0.82 (100,000) 0.84 (100,000) 0.82 (100,000) 0.84

Exercised (223,750) 0.01 (66,000) 0.59 (223,750) 0.01 (66,000) 0.59

Outstandingatyear-end 17,786,250 0.52 9,345,000 0.62 17,786,250 0.52 9,345,000 0.62

Exercisableatyear-end 7,332,052 0.69 3,800,000 0.61 7,332,052 0.69 3,800,000 0.69

Theopeningbalanceat1July2008hasbeencorrectedtoreflectholdingsasatthatdate.

Therewere223,750optionsexercisedundertheincentiveoptionschemeduringtheyearended30June2009.

Theoptionsoutstandingat30June2009hadaweightedaverageexercisepriceof$0.52andaweightedaverageremainingcontractuallifeof4.5years.Exercisepricesrangefrom$0.28to$1.23inrespectofoptionsoutstandingat30June2009.

Theweightedaveragefairvalueperoptiongrantedduringtheyearwas$0.12.

DuringtheyearoptionsissuedwerecalculatedbyusingaBinomialoptionpricingmodelapplyingthefollowinginputs:

Mr C Lange Other Options

Weightedaverageexerciseprice $0.28 $0.50

Weightedaveragelifeoftheoption 4.4years 4.0years

Underlyingshareprice $0.28 $0.32

Expectedsharepricevolatility 50% 51%

Riskfreeinterestrate 5.25% 5.70%

Historicalvolatilityhasbeenthebasisfordeterminingexpectedsharepricevolatilityasitassumedthatthisisindicativeoffuturetrendswhichmaynoteventuate.

Thelifeoftheoptionsisbasedonthehistoricalexercisepatterns,whichmaynoteventuateinthefuture.

Includedunderemployeebenefitsexpenseintheincomestatementis$1,142,922.Thisrelatesinfull,toequity-settledshare-basedpaymenttransactions.

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NOTE 29 EvENTS AFTER THE BALANCE SHEET DATE

- NeptuneMarineServicesLimitedhassignedaLetterOfIntent(LOI)fortheacquisitionofSingaporebasedCoreIRMPteLtd(“CoreIRM”),amajorproviderofinspection,repair&maintenance(IRM)servicestotheoil&gasandpetrochemicalindustries.

Underthetermsoftheagreement,NeptuneproposestoacquiretheentireissuedcapitalforSGD$13million(AUD$11.35million*)withtheaddedconsiderationofaSGD$1million(AUD$872,000*)conditionalpaymentthatwillbebasedonCoreIRM’sEBITperformanceforthe12monthperiodto31December2009.Theacquisitionwillbefunded90%bywayofequityfundsraisedviatheshareplacementthatwasannouncedon5June,2009,and10%viatheissueofNeptune’sordinarysharestothevendor.Theacquisitionissubjecttothecompletionofsatisfactoryduediligenceandcontractualdocumentation.

*Foreignexchangerateof$1.1460asat15July2009forAUD$:SGD$equivalent.

- NeptuneMarineServicesLimitedclosedanoversubscribedSharePurchasePlanon22July2009.Applicationswerereceivedforapproximately$26.49millionor52.99millionshares.Asannouncedon5June2009,theSPPwastobecappedat$10million,withtheflexibilitytoacceptoversubscriptions.InaccordancewiththetermsoftheSPP,thesharesappliedforineachapplicationwerescaledbackonapro-ratabasisby50%regardlessoftheamountappliedfor.Accordingly,$13.33millionwasrefundedbacktotheinvestors.

- NeptuneMarineServicesLimitedhelditsExtraordinaryGeneralMeetingon13July2009whereinshareholdersvotedoverwhelminglyinfavourofthetranche2placementof56.0millionsharestoinstitutionalandsophisticatedinvestorsaspartofitsAUD$40millioncapitalraisingannouncedon5June,2009.CapitalraisedviatheplacementwouldbeusedtofundNeptune’songoinggrowthanddevelopmentandwillfocusoncorporateacquisitions,newassetacquisitionsandcontinuedorganicgrowthofNeptune’sexistingoperations.

- NeptuneMarineServicesLimitedhassignedaLetterOfIntent(LOI)fortheacquisitionofAberdeenbasedSubmersibleTechnologyServices(Holdings)Limited(“STS”),aleadingproviderofremotelyoperatedvehicle(“ROV”)andsurveysupportservicestotheoffshoreoilandgasindustry.

Underthetermsoftheagreement,NeptuneproposestoacquiretheentireissuedcapitalofSTSforGBP16million(AUD$31.39million*)(plusanadjustmentforSTSworkingcapitallessdebtatcompletionoftheacquisition)withaddedconditionalconsiderationbasedonSTS’sEBITDAperformanceforthecalendaryear2009.Theacquisitionwillbefunded91-95%byacashpayment,withthebalanceviatheissueofNeptune’sordinarysharestoaportionofthevendorswhoarepartoftheSTSmanagementteam.Theacquisitionissubjecttothecompletionofsatisfactoryduediligenceandcontractualdocumentation.

*Foreignexchangerateof$0.5098forAUD$:GBPequivalent.

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NOTE 30 RELATED PARTY TRANSACTIONS


2009 2008 2009 2008

$000 $000 $000 $000

Transactionsbetweenrelatedpartiesareonnormalcommercialtermsandconditionsnomorefavourablethanthoseavailabletootherpartiesunlessotherwisestated.

(a) Associated Companies

AlliedDivingServicesasubsidiaryofNeptuneMarineServicesLtd,currentlyleasespremisesfromPeterSareandColinMurphy(througharelatedsuperannuationfund).ColinisanemployeeoftheNeptuneMarineServicesGroup.Theleasingofthispremiseceasedduringtheyear.

10 43 - -

USUnderwaterServicesasubsidiaryofNeptuneMarineServicesLtd,currentlyleasespremisesfromMichaelandAngieErinakesandtheirassociatedentities.MichaelandAngiewerebothemployeesoftheNeptuneMarineServicesGroupandnolongerworkforNeptuneMarineServicesGroupeffectiveOctober27,2008.

87 201 - -

AccessManagementasubsidiaryofNeptuneMarineServicesLtd,currentlyleasespremisesfromMoiraMcCarthy(througharelatedsuperannuationfund).MoirawasarelatedpartyofSteveMcCarthy,anemployeeoftheNeptuneMarineServicesGroup.

96 - - -

Sea-StructasubsidiaryofNeptuneMarineServicesLtd,leasedpremisesfromTuahanasPtyLtd,atrusteefortheDavidMacleanFamilyTrustsince17April2008.DavidMacleanisanemployeeoftheNeptuneMarineServicesGroup.

75 19 - -

Salestosubsidiaries - - 7,347 729

Purchasesfromsubsidiaries - - 3,000 2,329

ManagementfeeschargedbyNeptuneMarineServicesLtd - - 13,069 5,975

Salestoandpurchasesfromrelatedpartiesaremadeinarm’slengthtransactionsandatnormalmarketprices.

Loanstosubsidiaries:

Beginningoftheyear - - 76,080 31,563

Loansadvanced/(repaid) - - (5,078) 44,517

Endofyear - - 71,002 76,080

Interestchargedtosubsidiaries 5,618 1,589

Loanstothesubsidiariesarecomprisedof:

-IntercompanyloansfromtheparenttosubsidiariesforWorkingCapitalrequirementsthatarenotinterestbearing.

-Equityloansfromtheparenttosubsidiariestofundtheacquisitionsofbusinessesthatareinterestbearingandincuraninterestchargequarterlybasedonequivalentmarketratesatthattime.At30June2009theinterestratechargedwas9%.

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NOTE 31 FINANCIAL RISK MANAGEMENT

(a) Financial Risk Management

TheGroup’sfinancialinstrumentsconsistmainlyofdepositswithbanks,localmoneymarketinstruments,short-terminvestments,accountsreceivableandpayable,loanstoandfromsubsidiaries,hirepurchases,leases,bankfinancefacilities,andderivatives.

Themainpurposeofnon-derivativefinancialinstrumentsistoraisefinanceforGroupoperations.DerivativesareusedbytheGroupforhedgingpurposes.Suchinstrumentsincludeforwardexchangeandcurrencyoptioncontractsandinterestrateswapagreements.TheGroupdoesnotspeculateinthetradingofderivativeinstruments.

RiskmanagementiscarriedoutbythegroupfinancedepartmentunderpoliciesapprovedbytheBoardofDirectors.Groupfinanceidentifies,evaluatesandhedgesfinancialrisksincloseco-operationwiththeGroup’soperatingunits.TheBoardprovidesprinciplesforoverallriskmanagement,aswellaspoliciescoveringspecificareas,suchasforeignexchangerisk,interestraterisk,creditrisk,andinvestmentandexcessliquidity.

TheGroupandtheCompanyholdthefollowingfinancialinstruments:


2009 2008 2009 2008

$000 $000 $000 $000

Financial Assets


Tradeandotherreceivables 39,353 21,357 76,203 83,478

Total 63,630 39,512 86,090 94,335


Tradeandotherpayables 59,382 39,508 32,614 26,682

Derivativefinancialinstruments 480 - 480 -

Otherfinancialliabilities 37,170 5,639 33,362 669

Total 97,032 45,147 66,456 27,351

(i) Financial Risks

ThemainriskstheGroupisexposedtothroughitsfinancialinstrumentsareinterestraterisk,foreigncurrencyrisk,andcreditrisk.

Interest Rate Risk

Cashandcashequivalents

TheGrouphelditscashreservesondepositandinchequeaccountsduringtheyear,whichearnedinterestatratesrangingbetween0%and7.20%(2008:0%and6.00%)dependingonaccountbalances.

Otherthancashandintercompanyequityloans,alltheGroup’sfinancialassetsarenon-interestbearing.

Interestbearingliabilities

Interestbearingliabilitiesarecomprisedofhirepurchaseagreementsof$1,052,000,bankloansof$35,361,000andotherfinancearrangementsof$757,000.Refernote18fordetails.

Otherthanthehirepurchaseagreements,bankloansandotherfinancearrangements,alltheGroup’sfinancialliabilitiesarenon-interestbearing.

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NOTE 31 FINANCIAL RISK MANAGEMENT cont

ThefollowingsetsouttheGroup’sexposuretointerestraterisk,includingtheeffectiveaverageinterestratebymaturityperiods.

Consolidated 30 June 2009 Consolidated

Average Interest

Rate

1 Year or Less

‘0002-5 Years

‘000Total ‘000

Financial Assets

Cashandcashequivalents 24,277 - 24,277

Financial liabilities

Hirepurchaseagreements 9.32% (486) (566) (1,052)

Bankloans 5.09% (7,759) (23,769) (31,528)

Debtorsfacility 4.75% (3,833) - (3,833)

Otherfinancearrangements* 1.95% (757) - (757)

Derivativefinancialinstruments 5.99% (205) (275) (480)

11,237 (24,610) (13,373)

*Otherfinancearrangementsincludesinsurancefundingarrangements

30 June 2008 Consolidated

Average Interest

Rate

1 Year or Less

‘0002-5 Years

‘000Total ‘000

Financial Assets

Cashandcashequivalents 18,155 18,155


Hirepurchaseagreements 8.93% (318) (596) (914)

Bankloans 5.50% (1,406) (2,949) (4,355)


16,061 (3,545) 12,516

*Otherfinancearrangementsincludesinsurancefundingarrangements

Parent Entity 30 June 2009 Parent Entity

Average Interest

Rate

1 Year or Less

‘0002-5 Years

‘000Total ‘000

Financial Assets




Bankloans 5.26% (4,853) (23,692) (28,545)

Debtorsfacility 4.75% (3,833) - (3,833)


Derivativefinancialinstruments 5.99% (205) (275) (480)

145 (24,100) (23,955)

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30 June 2008 Parent Entity

Average Interest

Rate

1 Year or Less

‘0002-5 Years

‘000Total ‘000

Financial Assets




Bankloans - - - -


10,402 (213) 10,189

GroupSensitivity

Asat30June2009,ifinterestrateshadchangedby+/-100basispointsfromtheyearendrateswithallothervariablesheldconstant,post-taxprofitfortheyearwouldhavebeen$48,000higher/lower.Thiswouldbearesultofhigher/lowerinterestrevenueondepositsandhigher/lowerinterestexpenseonborrowings.

ParentSensitivity

Asat30June2009,ifinterestrateshadchangedby+/-100basispointsfromtheyearendrateswithallothervariablesheldconstant,post-taxprofitfortheyearoftheparententitywouldhavebeen$13,000higher/lower.Thiswouldbearesultofhigher/lowerinterestrevenueondepositsandhigher/lowerinterestexpenseonborrowings.

ForeignCurrencyRisk

Theconsolidatedentityisexposedtoforeigncurrencyonsales,purchases,investments,intercompanyloansandotherborrowingsthataredenominatedinacurrencyotherthanthefunctionalcurrency.ThecurrenciesgivingrisetothisriskareprimarilyUSDollarsandGBPounds.

TheGroupentersintoforwardexchangecontractstomeetsomeforeigncurrencycommitments.Withregardtootherforeigncurrencytransactions,generallythereisnoneedtohedgecurrenciesasthereisacorrespondingassetorliabilitywhichwilloffsetanyforeigncurrencyrisk.At30June2009therewerenoforwardexchangecontractsinplace.

GroupSensitivity

Asat30June2009,thepost-taxprofitoftheconsolidatedentitywouldchangebythefollowingamountsasaresultofmovementsindifferentexchangerates:

–IftheAUDhadstrengthened/weakenedby10%againsttheGBP,post-taxprofitfortheyearwouldhavebeen$395,115higher/lower

–IftheAUDhadstrengthened/weakenedby10%againsttheUSD,post-taxprofitfortheyearwouldhavebeen$40,354lower/higher

–IftheUSDhadstrengthened/weakenedby10%againsttheSGD,post-taxprofitfortheyearwouldhavebeen$104,683higher/lower

–IftheUSDhadstrengthened/weakenedby10%againsttheNZD,post-taxprofitfortheyearwouldhavebeen$118,351lower/higher

–IftheUSDhadstrengthened/weakenedby10%againsttheIDR,post-taxprofitfortheyearwouldhavebeen$35,449lower/higher

ParentSensitivity

Asat30June2009,thepost-taxprofitoftheparententitywouldchangebythefollowingamountsasaresultofmovementsindifferentexchangerates:

–IftheAUDhadstrengthened/weakenedby10%againsttheGBP,post-taxprofitfortheyearwouldhavebeen$2,174,564lower/higher

–IftheAUDhadstrengthened/weakenedby10%againsttheUSD,post-taxprofitfortheyearwouldhavebeen$1,199,756lower/higher

CreditRisk

Creditriskreferstotheriskthatacounterpartywilldefaultonitscontractualobligationsresultinginfinanciallosstotheconsolidatedentity.Certainbusinesseswithintheconsolidatedentityarelargelyreliantonasmallnumberofcustomerswhichincreasestheconcentrationofcreditrisk.However,astheconsolidatedentitydealsmainlywithlargereputableclients,theconcentrationofcreditriskisminimised.Managementdoesnotexpectanylossesasaresultofcounterpartydefault.

Creditriskismanagedthroughthecreditapprovalprocessinstigatedbymanagementatheadofficeandbymonitoringcounterpartiesperiodically.

Atreportingdate,therewasnosignificantconcentrationofcreditriskatGrouplevel.Themaximumexposuretocreditriskisrepresentedbythecarryingamountofeachfinancialasset,includingderivativesinthebalancesheet.

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Thebreakdownofdebtorsbycurrencyandageingisincludedbelow(balancesareinforeigndenominatedcurrency):

Consolidated

Individual CurrencyCurrent

‘000

Past Due But Not Impaired

‘000

Past Due and Impaired

‘000Total ‘000

UnitedStatesDollars 5,397 3,000 - 8,397

AustralianDollars 10,341 2,657 - 12,998

GreatBritishPounds 4,932 367 - 5,299

SingaporeDollars 19 - - 19

NewZealandDollars 377 - - 377

Consolidated

Australian Dollar EquivalentCurrent

‘000


‘000


‘000Total ‘000

UnitedStatesDollars 6,650 3,698 - 10,348


GreatBritishPounds 10,123 753 - 10,876

SingaporeDollars 16 - - 16

NewZealandDollars 304 - - 304

27,434 7,108 - 34,542

Parent Entity

Parent EntityCurrent

$000


‘000


‘000Total $000


3,003 1,321 - 4,324

TheGrouptradesonlywithrecognised,creditworthyparties.TodatesalesmadetothesepartieshavenotresultedintheGroupbeingexposedtoanybaddebts.

LiquidityRisk

Liquidityriskistheinabilitytoaccessfunds,bothanticipatedandunforeseen,whichmayleadtotheGroupbeingunabletomeetitsobligationsinanorderlymannerastheyarise.

TheGroup’sliquiditypositionismanagedtoensuresufficientfundsareavailabletomeetfinancialcommitmentsinatimelyandcost-effectivemanner.TheGroupisprimarilyfundedthroughon-goingcashflow,debtfundingandequitycapitalraisings,asandwhenrequired.

Managementregularlymonitorsactualandforecastcashflowstomanageliquidityrisk.

(b) Financial Instruments

InterestRateSwaps

InterestrateswaptransactionsareenteredintobytheconsolidatedGrouptoexchangevariableinterestpaymentobligationstoprotectlong-termborrowingsfromtheriskofincreasinginterestrates.TheconsolidatedGrouphasvariableinterestratedebtandentersintoswapcontractstopayinterestatfixedrates.

Thesettlementdatesoftheswapcontractscorrespondwithinterestpaymentdatesoftheborrowings.Theswapcontractsrequiresettlementofthenetinterestpayableandarebroughttoaccountasanadjustmenttoborrowingcosts.

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Atbalancedate,thedetailsofinterestrateswapcontractsare:

Effective Average Interest Rate Payable Notional Principal

2009 %

2008 %

2009 $000

2008 $000

Lessthan1year 5.99% 5.50% 2,800 1,406

1to2years 5.99% 5.50% 2,800 1,406

2to5years 5.99% 5.50% 10,000 1,543

15,600 4,355

Financial Instrument Composition and Maturity Analysis

Thetablebelowreflectstheundiscountedcontractualsettlementtermsforfinancialinstrumentsofafixedperiodofmaturity,aswellasmanagement’sexpectationsofthesettlementperiodforallotherfinancialinstruments.Assuch,theamountsmaynotreconciletothebalancesheet.

Consolidated Floating Interest Rate Maturing Fixed Interest Rate Maturing

Average Effective Interest Rate

Within Year $000

1 to 5 years $000

Within Year $000

2009 2008 2009 2008 2009 2008 2009 2008

Financial Assets:

Cashandcashequivalents - - 24,277 18,155 - - - -

Receivables - - - - - - - -

Total Financial Assets 24,277 18,155 - - - -

Financial Liabilities:

Bankloansandoverdrafts 5.09% 5.50% 2,800 - 20,100 - 4,960 1,406

Debtorsfacility 4.75% - 3,833 - - - - -

Tradeandsundrypayables - - - - - - - -

Leaseliabilitiesandother 9.32% 8.93% - - - - 1,243 688

Derivatives 5.99% - - - - - 205 -

Total Financial Liabilities 6,633 - 20,100 - 6,408 2,094

Fixed Interest Rate Maturing

1 to 5 Years $000

Non Interest Bearing $000

Total $000

2009 2008 2009 2008 2009 2008

Financial Assets:

Cashandcashequivalents - - - - 24,277 18,155

Receivables - - 39,353 21,357 39,353 21,357

Total Financial Assets - - 39,353 21,357 63,630 39,512


Bankloansandoverdrafts 3,668 2,949 - - 31,528 4,355

Debtorsfacility - - - - 3,833 -

Tradeandsundrypayables - - 59,382 39,508 59,382 39,508

Leaseliabilitiesandother 566 596 - - 1,809 1,284

Derivatives 275 - - - 480 -

Total Financial Liabilities 4,509 3,545 59,382 39,508 97,032 45,147

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Parent Entity Floating Interest Rate Maturing Fixed Interest Rate Maturing

Average Effective Interest Rate

Within Year $000

1 to 5 years $000

Within Year $000

2009 2008 2009 2008 2009 2008 2009 2008

Financial Assets:

Cashandcashequivalents - - 9,887 10,857 - - - -

Receivables - - - - - - - -

Total Financial Assets 9,887 10,857 - - - -


Bankloansandoverdrafts 5.09% 5.50% 2,800 - 20,100 - 2,053 -

Debtorsfacility 4.75% - 3,833 - - - - -

Tradeandsundrypayables - - - - - - - -

Leaseliabilitiesandother 8.35% 8.91% - - - - 852 456

Derivatives 5.99% - - - - - 205 -

Total Financial Liabilities 6,633 - 20,100 - 3,110 456

Fixed Interest Rate Maturing

1 to 5 Years $000

Non Interest Bearing $000

Total $000

2009 2008 2009 2008 2009 2008

Financial Assets:

Cashandcashequivalents - - - - 9,887 10,857

Receivables - - 76,203 83,478 76,203 83,478

Total Financial Assets - - 76,203 83,478 86,090 94,335


Bankloansandoverdrafts 3,592 - - - 28,545 -

Debtorsfacility - - - - 3,833 -

Tradeandsundrypayables - - 32,614 26,682 32,614 26,682

Leaseliabilitiesandother 132 213 - - 984 669

Derivatives 275 - - - 480 -

Total Financial Liabilities 3,999 213 32,614 26,682 66,456 27,351

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NOTE 32 BUSINESS COMBINATIONS

(iii) Net Fair Values

Thefinancialassetsandliabilitiesincludedinassetsandliabilitiesinthebalancesheetarecarriedatamountsthatapproximatenetfairvalues,determinedinaccordancewithgenerallyacceptedmodelsbasedondiscountedcashflowtheory.

Thecarryingamountsandnetfairvaluesoffinancialassetsandliabilitiesasatthereportingdateareasfollows:

2009 2008

Carrying Amount

$000

Net Fair Value $000

Carrying Amount

$000

Net Fair Value $000

Financial Assets


Loansandreceivables 39,353 39,353 21,357 21,357

63,630 63,630 39,512 39,512


Bankloans 31,528 31,528 4,355 4,355

Debtorsfacility 3,833 3,833 - -

Interestbearingliabilities 1,052 1,052 914 914

Otherfinancearrangements 757 757 370 370

Tradeandotherpayables 59,382 59,382 39,508 39,508

Derivatives 480 480 - -

97,032 97,032 45,147 45,147

Access Management (WA) Pty Ltd

AcquisitionofAccessManagement(WA)PtyLtdandsubsidiaryAccessManagementPteLtd

On1stJuly,2008,NeptuneMarineServicesLimitedacquiredPerth-basedAccessManagement(WA)PtyLtd,aspecialistaccesscompany.Neptuneacquired100%oftheissuedcapitalofAccessManagementforaninitialcashpaymentof$3.6millionandissued2,122,222fullypaidordinarysharesat42.43centseach,valuedat$900,459tothetrusteesofsuperannuationfundscontrolledbythevendor.Theshareswillbeheldinvoluntaryescrowfor12months.

Inaddition,Neptunewillpaythevendorsearnoutpaymentsunderanearnoutarrangementforthenextthreeyears.Theearnoutwillbepaid80%incashand20%inNeptuneordinaryshares.Aspartoftheacquisitionthevendor,MrMcCarthy,hasagreedtoremainwiththecompanyforaminimumofthreeyears.Similarly,allofAccessManagement’sfull-timeemployeeswillalsoremainwiththebusiness.AccessManagementalsooperatesaSingaporesubsidiarywhichNeptuneplanstoexpandaspartoftheCompany’sfocusontheSouthEastAsianregion.

Recognised on Acquisition $

Cashandcashequivalents 5,191

Tradereceivables 1,967,397

Plantandequipment 717,855

Inventories 295,109

Tradepayables (1,654,695)

Fairvalueofidentifiablenetassets 1,330,857

Goodwillarisingonacquisition 8,564,102

9,894,959

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Cost of Combination

Sharesissued,atfairvalue 900,459

Cashpaid 3,602,200

Deferredsettlement 5,272,910

Directcostsrelatingtotheacquisition 119,390

Totalcostofthecombination 9,894,959

Thecashoutflowonacquisitionisasfollows:

Cashpaid (3,721,590)

Netcashacquiredwiththesubsidiary 5,191

Netconsolidatedcashoutflow (3,716,399)

Fromthedateofacquisition,AccessManagementhascontributed$1,283,341(excludingcorporateoverheads)tothenetprofitoftheGroup.

Thegoodwillrecognisedontheacquisitionisattributablemainlytothehistoric,presentandprojectedearningsofthebusiness.

Subsea Engineering Services Ltd

AcquisitionofSubseaEngineeringServicesLtd

On12thJanuary,2009,NeptuneMarineServicesLimitedacquiredUK-basedSubseaEngineeringServicesLtd(SES),aspecialistproviderofsubseaconsultancyandprojectservicestotheglobaloilandgasindustry.Neptuneacquired100%oftheissuedcapitalofSESforaninitialcashpaymentofGBP4.012million(AUD$8.629million*)andissued6,820,532fullypaidordinarysharesat$0.305944centseach,valuedatGBP1million(AUD$2.086million*)tothevendors.Theshareswillbeheldinvoluntaryescrowuntil30December2009.

Inaddition,Neptunewillpaythevendorsearnoutpaymentsunderanearnoutarrangementforthenextthreeyears.Theearnoutwillbepaid80%incashand20%inNeptuneordinaryshares.AspartoftheacquisitiontheSESDirectors,AllisterFraserandHughParker,haveagreedtoremainwiththecompanytohelpdriveitsfuturegrowthanddevelopment.Similarly,allofSES’sfull-timeemployeeswillalsoremainwiththebusiness.

*Foreignexchangerateof$2.151asat9January2009forGBP1:BritishPoundequivalent


Cashandcashequivalents 3,248,333

Tradereceivables 2,308,937

Plantandequipment 50,326

Tradepayables (1,742,535)

Fairvalueofidentifiablenetassets 3,865,061

Goodwillarisingonacquisition 14,209,798

18,074,859

Cost of Combination

Sharesissued,atfairvalue 2,086,701

Cashpaid 11,204,577

Deferredsettlement 4,333,040

Directcostsrelatingtotheacquisition 450,541

Totalcostofthecombination 18,074,859

Thecashoutflowonacquisitionisasfollows:

Cashpaid (11,655,118)

Netcashacquiredwiththesubsidiary 3,248,333

Netconsolidatedcashoutflow (8,406,785)

Fromthedateofacquisition,SubseaEngineeringServicesLtdhascontributed$985,703(excludingcorporateoverheads)tothenetprofitoftheGroup.Theannualisedunauditedcontributionwouldhavebeen$1,971,406(excludingcorporateoverheads)tothenetprofitoftheGroup.

Thegoodwillrecognisedontheacquisitionisattributablemainlytothehistoric,presentandprojectedearningsofthebusiness.

NOTE 32 BUSINESS COMBINATIONS cont

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NOTE 33 COMPANY DETAILS

DIRECTOR’S DECLARATION

tHe RegisteRed office of tHe compAnY is:


Level16,140StGeorge’sTerrace

PerthWesternAustralia6000

tHe pRincipAl plAce of neptune mARine seRvices limited is:


Level16,140StGeorge’sTerrace

PerthWesternAustralia6000

Thedirectorsofthecompanydeclarethat:

1. thefinancialstatements,notes,andtheremunerationreportfoundintheDirectorsReportofthecompanyand

consolidatedGroup,areinaccordancewiththeCorporationsAct2001and:

(a) complywithAccountingStandardsandtheCorporationsRegulations2001;and

(b) giveatrueandfairviewofthefinancialpositionasat30June2009andoftheperformancefortheyearended

onthatdateofthecompanyandconsolidatedGroup;

2. theChiefExecutiveOfficerandChiefFinanceOfficerhaveeachdeclaredthat:

(a) thefinancialrecordsofthecompanyforthefinancialyearhavebeenproperlymaintainedinaccordancewith

section286oftheCorporationsAct2001;

(b) thefinancialstatementsandnotesforthefinancialyearcomplywiththeInternationalFinancialandReporting

Standards(IFRS);and

(c) thefinancialstatementsandnotesforthefinancialyeargiveatrueandfairview.

3. inthedirectorsopiniontherearereasonablegroundstobelievethatthecompanywillbeabletopayitsdebtsasand

whentheybecomedueandpayable.

ThisdeclarationismadeinaccordancewitharesolutionoftheBoardofDirectors.

Mr Ross Kennan

Chairman

Datedthis24thdayofSeptember2009

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INDEPENDENT AUDITOR’S REPORT

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INDEPENDENT AUDITOR’S REPORT cont

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ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

ThefollowingadditionalinformationisrequiredbytheAustralianSecuritiesExchangeLtdinrespectoflistedpubliccompaniesonly.

b) The number of shareholdings held in less than marketable parcels is 286,409.

c) The name of the substantial shareholder listed in the holding company’s register as at 10 September 2009 is:

Shareholder Number Ordinary

WestozFundsManagementPtyLtd 20,125,423

d) Voting Rights

Thevotingrightsattachedtoeachclassofequitysecurityareasfollows:

Ordinaryshares-Eachordinaryshareisentitledtoonevotewhenapolliscalled,otherwiseeachmemberpresentatameetingorbyproxyhasonevoteonashowofhands.

Redeemableandconvertingpreferenceshares-Theseshareshavenovotingrights.

1. Shareholding

a) Distribution of Shareholders Category (size of holding)

Range Total Holders Units % of Issued Capital

1-1,000 1,941 1,123,282 0.27

1,001-5,000 2,994 9,052,258 2.17

5,001-10,000 2,101 16,756,828 4.02

10,001-100,000 3,671 104,360,457 25.02

100,001-9,999,999,999 308 285,763,219 68.52

Rounding 0.00

Total 11,015 417,056,044 100.00

Unmarketable Parcels Minimum Parcel Size Holders Units

Minimum$500.00parcelat$0.80perunit 625 1047 290381

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ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES cont

e) 20 Largest Shareholders - Ordinary Shares

Name

Number of Ordinary Fully Paid

Shares Held

% Held of Issued

Ordinary Capital

1. NationalNomineesLtd 51,694,080 12.4

2. ZeroNomineesPtyLtd 29,750,000 7.13

3. ANZNomineesLtd(CashIncomeA/C) 22,697,812 5.44

4. JPMorganNomineesAustraliaLtd 13,467,822 3.23

5. HSBCCustodyNominees(Australia)Ltd 7,868,837 1.89

6. BondStreetCustodiansLtd(SmallerCo'sA/C) 5,854,685 1.4

7. RBCDexiaInvestorServices(Aus)Nom(PIICA/C) 5,462,054 1.31

8. SandhurstTrusteesLtd(JMAssetManagementA/C) 5,158,275 1.24

9. HSBCCustodyNominees(Australia)Ltd(Acct2) 4,843,374 1.16

10. CogentNomineesPtyLtd 4,707,400 1.13

11. MrMichaelErinakes 4,218,450 1.01

12. RBCDexiaInvestorServices(Aus)Nom(PIPOOLED) 3,913,604 0.94

13. MrDavidHusband&MsNinaLandsnes 3,292,858 0.79

14. RBCDexiaInvestorServices(Aus)Nom(PISELECT) 3,107,802 0.75

15. QuotidianNo2PtyLtd 2,991,926 0.72

16. MrKennethMadden 2,860,632 0.69

17. CiticorpNomineesPtyLtd(CwlthBankOffSuperA/C) 2,776,388 0.67

18. MrMarkLindsay(TheDiamondFundA/C) 2,528,109 0.61

19. CiticorpNomineesPtyLtd 2,450,965 0.59

20. CollinsIndustriesPtyLtd(CollinsFamilyA/C) 2,387,858 0.57

182,032,931 43.67

f) Listedoptionsexpiring31/12/10@$0.20asof30Sep2009

Range Total Holders Units % of Issued Capital

1-1,000 9 4,949 0.03

1,001-5,000 105 434,989 2.83

5,001-10,000 94 777,940 5.07

10,001-100,000 191 6,721,647 43.80

100,001-9,999,999,999 34 7,408,197 48.27

Rounding 0.00

Total 433 15,347,722 100.00

Unmarketable Parcels Minimum Parcel Size Holders Units

Minimum$500.00parcelat$0.58perunit 863 6 2048

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ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES cont

g) 20 Largest option holders - Listed Options

Rank Name Units % of Units

1. ZeroNomineesPtyLtd 650,758 4.24

2. MrGeorgeMcDougall+MsGeraldineFrancesElmes<GMDSuperFundA/C> 550,000 3.58

3. JFRInvestmentsPtyLtd<JFRiesSuperFundA/C> 483,666 3.15

4. MrsShirleyAnnStarr 330,000 2.15

5. MrAndrewEdwinPark 299,350 1.95

6. MrRohanWilliamThomasLloyd 295,132 1.92

7. MrWilliamDavie 261,700 1.71

8. MrsDianneBailey 250,000 1.63

9. MrMacGregorJamesScott 249,294 1.62

10. MrDavidLawrenceFogarty+MsLesleyAnnFogarty<FogartySuperFundA/C> 230,000 1.50

11. BDGodmanPtyLtd 228,300 1.49

12. MrRonaldLeslieJacobs+MsNuribenaHarefaJacobs<RLJacobsSuperFundA/C> 227,500 1.48

13. MrJasonWilliamToy 227,000 1.48

14. KleinertHomesPtyLtd 200,000 1.30

15. MrMatthewJamesThomas 200,000 1.30

16. MrSamRistovski 190,000 1.24

17. MrJohnWalterO'Brien+MrsMaryAgnesO'Brien<O'BrienRetirementFundA/C> 188,000 1.22

18. MrRobinCliveHigginson 169,330 1.10

19. MissMichelleNosek 165,000 1.08

20. ThompsonHorticulturalServicesPtyLtd<RThompsonSuperFundA/C> 156,500 1.02

5,551,530 36.16

TotalRemainingHoldersBalance 9,796,192 63.84

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CORPORATE GOvERNANCE REPORT 2009

Principle Corporate Governance Best Practice Recommendation Compliance How We Comply

1.1 EstablishanddisclosethefunctionsreservedtotheBoardandthosedelegatedtoseniorexecutives

✓ TheBoardhasestablishedaCorporateGovernanceStatementwhichsummariestheroleanddutiesoftheBoard.TheCompanyisintheprocessofreviewingandupdatingtheCorporateGovernanceStatement.

TheCompanyconsidersthattheprimaryresponsibilityoftheBoardistooverseetheCompany’sbusinessactivitiesandmanagementforthebenefitoftheshareholdersby:

−settingobjectives,goalsandstrategicdirectionwithmanagementwithaviewtomaximisingshareholdervalue

−overseeingthefinancialpositionandmonitoringthebusinessandaffairsoftheCompany

−establishingcorporategovernance,ethical,environmentalandhealthandsafetystandards

−ensuringsignificantbusinessrisksareidentifiedandappropriatelymanaged

−ensuringthecompositionoftheBoardisappropriate,selectingdirectorsforappointmenttotheBoardandreviewingtheperformanceoftheBoardandthecontributionsofindividualdirectors

TheBoardhasdelegatedresponsibilitiesandauthoritiestomanagementtoenablemanagementtoconducttheCompany’sdaytodayactivities.SeniorexecutiveshaveahighlevelofauthoritycommensuratewiththeirpositionintheCompany.Authoritylevelsforallmanagementissetoutinwritingandformafundamentalpartoftheiremploymentconditions.ThemanagementstructureoftheCompanyandthesuitabilityofauthoritylevelsaredeterminedandreviewedbytheBoard.

MatterswhicharenotcoveredbythedelegationsrequireBoardapproval.

TheCorporateGovernanceStatementisavailableontheCompany’swebsiteintheInvestorCentresection.

1.2 Disclosetheprocessforevaluatingtheperformanceofseniorexecutives

✓ TheBoardregularlyevaluatestheperformanceoftheBoard,itscommittees,individualdirectorsandkeyseniorexecutives.

TheBoardhasestablishedaHumanResourcesandCompensationCommitteetoassistitinexercisingitsreviewsofitskeyseniorexecutives.

TheperformanceoftheChiefExecutiveOfficerismonitoredandevaluatedbytheBoard(actingupontherecommendationsoftheHumanResourcesandCompensationCommitteewhichundertakestheformalreview)onaformalbasisannuallybyreferencetoagreedkeyperformanceindicators,whichareregularlyreviewedbytheBoard.

Theperformanceofotherseniorexecutives(includingtheChiefFinancialOfficer)isreviewedannuallybytheHumanResourcesandCompensationCommittee.

RefertotheDirectors’ReportforasummaryofperformanceoftheChiefExecutiveOfficerandChiefFinancialOfficer.

TheCompanyhasaformalinductionprocessforitsseniorexecutives.

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Best Practice Recommendation Compliance How We Comply

1.3 Providethefollowinginformationintheannualreport:

1.3.1 Anexplanationofanydeparturefromrecommendations1.1,1.2and1.3

Notapplicable.

1.3.2 Whetheraperformanceevaluationforseniorexecutiveshastakenplaceinthereportingperiodandwhetheritwasinaccordancewiththeprocessdisclosed.

✓ FormalevaluationsoftheperformanceoftheChiefExecutiveOfficerandChiefFinancialOfficerhaveoccurredandwereinaccordancewiththeprocessdisclosedat1.2above.Refertoremunerationreport.

2.1 AmajorityoftheBoardshouldbeindependentdirectors

✓ ThemajorityoftheBoardisindependent.TheBoardconsidersanindependentdirectortobeanon-executivedirectorwhomeetsthecriteriaforindependenceincludedintheASXBestPracticeRecommendations.TheBoardconsidersthatMrRossKennan,MrGeoffNewman,MrDavidAgostiniandMrRobertScottmeetthesecriteria.

2.2 Thechairpersonshouldbeanindependentdirector

✓ TheChairman,MrRossKennan,isconsideredbytheBoardtobeindependent.

2.3 Therolesofchairpersonandchiefexecutiveofficershouldnotbeexercisedbythesameindividual

✓ TheChairman,MrRossKennan,facilitatestherelationshipbetweentheBoardand,MrChristianLange,theChiefExecutiveOfficer.

2.4 TheBoardshouldestablishanominationcommittee

✗ TheCompanydoesnotpresentlyhaveaseparatenominationorremunerationcommitteeasrequiredbyBestPracticeRecommendations2.4.ThesizeoftheCompanyandBoarddoesnotwarranttheestablishmentofaseparatenominationcommittee.ThedutiesofsuchcommitteehavebeenconsideredandadoptedbytheBoard.

TheCompanydoesnothaveadocumentedprocedurefortheselectionandappointmentofdirectors.TheBoardinformallyreviewstheskillsetofandmarketexpectationsforitsdirectorsonaregularbasisandconsidersthesefactorswhenappointing/re-electingdirectors.TheBoardinvitespersonswithrelevantindustryexperienceandfinancialexperiencetoassistitinitsappointmentofdirectors.

2.5 TheprocessforevaluatingtheperformanceoftheBoard,itscommitteesandindividualdirectorsshouldbedisclosed.

✓ TheCompanydoesnothaveadocumentedprocedurefortheevaluatingtheperformanceoftheBoard,itscommitteesanddirectors.

AnevaluationoftheperformanceoftheBoardanditsdirectorsisundertakeninformallyeachyear.TheChairmanoftheBoardisthedriverofthisprocess.ThisyearaquestionnairewascompletedbyeachdirectorregardingindividualperformanceaswellastheperformanceoftheBoardasawhole.InpreviousyearstheChairmanhasconductedinterviewswitheachdirector.

TheevaluationoftheperformanceoftheBoard’svariouscommitteesisundertakenonanexceptionbasis.ThisisalsoaninformalprocesswhichisdrivenbytheChairmanoftheBoard.


2.6.1 Theskills,expertiseandexperiencerelevanttothepositionofdirectorheldbyeachdirectorinofficeatthedateoftheannualreport

✓ RefertoDirectors’Report.

CORPORATE GOvERNANCE REPORT 2009 cont

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2.6.2 ThenamesofthedirectorsconsideredbytheBoardtobeindependentdirectorsandtheCompany’smateriallythresholds

✓ RefertoDirector’sReport.

2.6.3 AstatementastowhetherthereisaprocedureagreedbytheBoardofdirectorstotakeindependentprofessionaladviceattheexpenseoftheCompany

✓ TheBoardanditsCommitteesmayseekadvicefromindependentexpertswheneveritisconsideredappropriate.TheadviceisattheCompany’sexpense,subjecttothepriorapprovaloftheBoard.

2.6.4 TheBoardshouldstateitsreasonsifitconsidersadirectortobeindependentnotwithstandingthatthedirectordoesnotmeetthedefinitionofindependencecontainedintheASXGuidelines

✓ Referaboveat2.1

2.6.5 Theperiodofofficeheldbyeachdirectorinofficeatthedateoftheannualreport

✓ RefertoDirector’sReport.

2.6.6 Thenamesofmembersofthenominationcommitteeandtheirattendanceatmeetingsofthecommittee

✗ Referaboveat2.4

2.6.7 WhetheraperformanceevaluationfortheBoard,itscommitteesanddirectorshastakenplaceinthereportingperiodandwhetheritwasinaccordancewiththeprocessdisclosed

✓ AnevaluationoftheBoard,itscommitteesanddirectorswasundertakenandwasinaccordancewiththeprocessdisclosedat2.5

2.6.8 Anexplanationofanydeparturefromrecommendations2.1,2.2,2.3,2.4and2.5

Thefollowingmaterialshouldbemadepubliclyavailable,ideallyontheCompany’swebsiteinaclearlymarkedcorporategovernancesection:

Referaboveat2.4and2.6.6

(a)adescriptionoftheprocedurefortheselectionandappointmentofnewdirectorstotheBoard

✗ Referaboveat2.4

(b)thecharterofthenominationcommitteeorasummaryoftherole,rights,responsibilitiesandmembershiprequirementsforthecommittee

✗ Referaboveat2.4

(c)thenominationcommittee’spolicyfortheappointmentofdirectors

✗ Referaboveat2.4

3.1 Establishacodeofconductanddisclosethecodeorasummaryofthecodeasto:

(a)thepracticesnecessarytomaintainconfidenceintheCompany’sintegrity

(b)thepracticesnecessarytotakeintoaccounttheirlegalobligationsandthereasonableexpectationsoftheirstakeholders

(c)theresponsibilityandaccountabilityofindividualsforreportingandinvestigatingreportsofunethicalpractices

✓ TheBoardhasadoptedaCodeofConduct.ThecodeoutlinestheCompany’spositiononarangeofethicalandlegalissuesincludingfinancialinducements,conflictsofinterestandaccountabilityandaddresses:

−thepracticesnecessarytomaintainconfidenceinthecompany’sintegrity

−thepracticesnecessarytotakeintoaccounttheirlegalobligationsandtheexpectationsoftheirstakeholders

−responsibilityandaccountabilityofindividualsforreportingandinvestigatingreportsofunethicalpractices

Thecodeappliestodirectors,employees,andanyonewhoworkswiththeCompany.


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3.2 EstablishapolicyconcerningtradinginCompanysecuritiesbydirectors,seniorexecutivesandemployeesanddisclosethepolicyorasummaryofthepolicy

✓ TheBoardhasadoptedapolicyonDealingRulesforEmployeesandDirectors.DirectorsandemployeesmustnotdealintheCompany’ssecuritiesduringdesignatedprohibitedperiodsandatanytimetheyhaveunpublishedpricesensitivematerial.


3.3.1 Anexplanationofanydeparturefromrecommendations3.1,3.2and3.3

Notapplicable.


(a)anyappliancecodeofconductorasummaryofitsmainprovisions

(b)thetradingpolicyorsummaryofitsmainprovisions

✓ TheCodeofConductisavailableontheCompany’swebsiteintheInvestorCentresection.

ThepolicyonDealingRulesforEmployeesandDirectorsisavailableontheCompany’swebsiteintheInvestorCentresection.

4.1 TheBoardshouldestablishanauditcommittee

✓ TheBoardhasestablishedanAuditandGovernanceCommitteetoassistitinexercisingitsauthority.

4.2 Structuretheauditcommitteesothatitconsistsof:

ThecommitteecomplieswiththestructureasrequiredbytheBestPracticeRecommendation4.2.

a)onlynon-executivedirectors ✓b)majorityofindependentdirectors ✓c)independentchairperson,whoisnotthechairpersonoftheBoard

✓

d)atleastthreemembers ✓

4.3 Theauditcommitteeshouldhaveaformalcharter

✓ TheAuditandGovernanceCommitteehasaformalcharterthatcanbefoundattheCompany’swebsite.


(a)Detailsofthenamesandqualificationsofthoseappointedtotheauditcommitteeandtheirattendanceatmeetingsofthecommittee

✓ RefertoDirector’sReport

(b)Thenumberofmeetingsoftheauditcommittee

✓ RefertoDirector’sReport


(c)theauditcommitteecharter ✓ ThecharteroftheAuditandGovernanceCommitteeisavailableattheCompany’swebsiteintheInvestorCentresection.

(d)informationonproceduresfortheselectionandappointmentoftheexternalauditor,andfortherotationofexternalauditengagementpartners

✓ ThecommitteemanagestherelationshipbetweentheCompanyandexternalauditoronbehalfoftheBoard.ItrecommendstotheBoardpotentialauditorsforappointment,re-appointmentorreplacement,thetermsofengagementandremunerationoftheexternalauditor.


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5.1 EstablishwrittenpoliciesandproceduresdesignedtoensurecompliancewithASXListingRuledisclosurerequirementsandtoensureaccountabilityataseniorexecutivelevelforthatcompliance.Thesepoliciesorasummaryofthepoliciesshouldbedisclosed.

✓ TheBoardrecognisesthatshareholdersandtheinvestmentmarketgenerallyshouldbeinformedofallmajorbusinesseventsthatinfluencetheCompanyinatimelyandwidelyavailablemanner.TosafeguardtheeffectivedisseminationofinformationtheCompanyhasadoptedanInformationDisclosurePolicy.ThePolicyoutlineshowtheCompanyidentifiesanddistributesinformationtoshareholdersandmarketparticipantsandhasbeendesignedtoensure:

−compliancewithASXListingRuledisclosure

−accountabilityataseniorexecutivelevelforthatcompliance


5.2.1 Anexplanationofanydeparturesfromrecommendations5.1and5.2andreasonsforthedeparture

Notapplicable.

5.2.2 Thefollowingmaterialshouldbepubliclyavailable,ideallyontheCompany’swebsiteinaclearlymarkedcorporategovernancesection:

•asummaryofthepoliciesandproceduresdesignedtoguidecompliancewithListingRuledisclosurerequirements

✓ TheCompany’sInformationDisclosurePolicyisavailableontheCompany’swebsiteintheInvestorCentresection.

6.1 Designanddiscloseacommunicationsstrategytopromoteeffectivecommunicationwithshareholdersandencourageeffectiveparticipationatgeneralmeetings

✓ TheCompany’scommunicationstrategyformspartoftheCompany’sInformationDisclosurePolicy.TheBoardaimstoensurethatthemarketandshareholdersareinformedofallmajordevelopmentsaffectingtheCompany.TheCompany’swebsitecontainsasectionforshareholdersandinvestors(InvestorCentre).AllannouncementsandcorporatematerialofinteresttoshareholdersandthemarketgenerallycanbefoundontheInvestorCentre.TheCompany’scommunicationstrategyhasbeendesignedto:

−promoteeffectivecommunicationwithshareholders

−encourageshareholderparticipationatAGMs


6.2.1 Anexplanationofanydeparturesfromrecommendationandreasonsforthedeparture

Notapplicable.

6.2.2 TheCompanyshoulddescribehowitwillcommunicatewithitsshareholderspublicly,ideallybypostingthisinformationonthecompany’swebsiteinaclearlymarkedcorporategovernancesection.

✓ Referaboveat6.1


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7.1 TheCompanyshouldestablishpoliciesforriskoversightandmanagement

✓ BoardManagementisresponsibleforthemanagementandoversightofmaterialbusinessrisks.TheAuditandGovernanceCommitteeandBoardhasassistedmanagementinexercisingitsresponsibilitiesforriskoversightmanagement.

Risk Management Committee

TheBoardhasrecentlythroughmanagementestablishedaseparateRiskManagementCommitteecomprisingofseniorexecutivestooverseetheimplementationofpoliciesfortheoversightandmanagementofmaterialbusinessrisks.ThatcharterandstatementofdutiesandresponsibilitiesfortheRiskManagementCommitteehasbeendraftedandissubjecttoapprovalbythecommittee.ThemainresponsibilitiesoftheRiskManagementCommitteeare:

1.RecommendtotheBoardandthenformallyannounce,implementandmaintainasoundsystemofriskoversight,managementandinternalcontrolwhich:

(a)identifies,assesses,managesandmonitorsrisk

(b)allowsinvestorsandotherstakeholderstobeinformedofmaterialchangestotheCompany’sriskprofile

TheriskmanagementdutiesoftheCommitteeinclude:

1.AssessmentoftheCompany’sriskprofileandkeyareasofriskinparticular.

2.RecommendingtotheBoardandadoptingriskassessmentandratingprocedures.

3.ExamininganddeterminingthesufficiencyoftheCompany’sinternalprocessesforreportingonandmanagingkeyriskareas.

4.AssessingandrecommendingtotheBoardacceptablelevelsofrisk.

5.Developmentandimplementationofariskmanagementframeworkandinternalcontrolsystem.

6.Onanannualbasis,agreeingwiththeAuditandGovernanceCommitteewhichaspectsoftheinternalauditarenon-financialaspectstobemonitoredbytheCommittee.

7.Initiatingandmonitoringspecialinvestigationsintoareasofcorporateriskandbreak-downsininternalcontrol.

8.Reviewingthenatureandlevelofinsurancecoverage.

ThegovernancedutiesoftheCommitteeinclude:

1.Monitoringlegalandregulatorycompliancegenerally,includingcompliancewiththe:

(a)CorporationsAct2001(Cth)

(b)TradePracticesAct1974(Cth)

(c)ListingrulesoftheASX

(d)OtherapplicableAustralianandoverseaslaws.


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2.ReviewingandrecommendingtotheBoardchangestotheCompany’sCodeofConduct,otherpolicies(“CompanyPolicies”)andothermaterialdesignedtoguidetheCompany’sdirectors,executivesandotheremployeesasto:

(a)compliancewithlegalandotherobligationstolegitimatestakeholderssuchasshareholdersandemployees

(b)theethicalstandardsandpracticesnecessarytomaintainconfidenceintheCompany’sintegrity

(c)theresponsibilityandaccountabilityofindividualsforreportingandinvestigatingreportsofunlawfulandunethicalpractices

(d)thebehaviourexpectedofthemandtheCompany’scorporateculturegenerally

3MonitoringcompliancewithCompanyPoliciesandinvestigatingallegationsofbreachesofthosepolicies.

4.ReviewingandrecommendingtotheBoardpoliciestoavoidconflictsofinterestbetweentheCompanyanditsexecutives.

TheCompanyalsohasaseparateHealth,Safety,EnvironmentandQuality(HSEQ)CommitteewhichreportstotheBoardandwhichisresponsiblefortheoversightandmanagementofrisksassociatedwithHSEQ.ThiscommitteereportstotheBoardonamonthlybasis.

Theannualreportdetailsmaterialfinancialriskswhicharoseduringthereportingperiod(seenotestofinancialstatements).

7.2 TheBoardshouldrequiremanagementtodesignandimplementtheriskmanagementandinternalcontrolsystemtomanagethecompany’smaterialrisksandreporttoitonwhetherthoserisksarebeingmanagedeffectively.TheBoardshoulddisclosethatmanagementhasreportedtoitastotheeffectivenessofthecompany’smanagementofitsmaterialbusinessrisks.

✓ Asdetailedat7.1theBoardestablishedaseparateRiskManagementCommitteecomprisingofseniormanagementtodesignandimplementariskmanagementandinternalcontrolsystemtobettermanagetheCompany’smaterialrisks.TheRiskManagementCommitteereportsdirectlytotheBoard.

PriortotheestablishmentoftheRiskManagementCommittee,theBoardrequiredseniormanagementandtheAuditandGovernanceCommitteetoreporttoitontheeffectivenessoftheCompany’smanagementofitsmaterialbusinessrisks.Thiswasdoneonaninformalandadhocbasis.

ManagementhasreportedtotheBoardastotheeffectivenessoftheCompany’smanagementofmaterialbusinessrisksduringtherelevantreportingperiod.

7.3 TheBoardshoulddisclosewhetherithasreceivedassurancefromtheChiefExecutiveOfficerandtheChiefFinancialOfficerthatthedeclarationprovidedinaccordancewithsection295AoftheCorporationsActisfoundedonasoundsystemofriskmanagementandinternalcontrolandthatthesystemisoperatingeffectivelyinallmaterialrespectsinrelationtofinancialreportingrisks.

✓ TheBoardhasreceivedassurancefromtheChiefExecutiveOfficerandChiefFinancialOfficerthatthes295Adeclarationisfoundedonasoundsystemofriskmanagementandinternalcontrolandthesystemisoperatingeffectivelyinallmaterialrespectsinrelationtofinancialrisks.



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7.4.1 Anexplanationofanydeparturesfromrecommendations7.1,7.2,7.3and7.4andreasonsforthedeparture

Notapplicable.

7.4.2 WhethertheBoardhasreceivedthereportfrommanagementunderrecommendation7.2

✓ TheBoardhasreceivedthereportfrommanagementpursuanttorecommendation7.2.

7.4.3 WhethertheBoardhasreceivedassurancefromtheChiefExecutiveOfficerandChiefFinancialOfficerunderrecommendation7.3

✓ TheBoardhasreceivedtheassuranceinaccordancewithrecommendation7.3.


•asummaryoftheCompany’spoliciesonriskoversightandmanagementofmaterialbusinessrisks

✓ ThecurrentCharterfortheAuditandGovernanceCommitteeCharterisaccessibleontheCompany’swebsiteintheInvestorCentresection.

OncethedraftcharterandstatementofresponsibilitiesanddutiesoftheRiskManagementCommitteehasbeenfinalisedandapproveditwillbeavailableontheCompany’swebsiteintheInvestorCentresection.

8.1 TheBoardshouldestablisharemunerationcommittee

✓ TheBoardhasestablishedaHumanResourcesandCompensationCommittee.TheCommittee’sroleistoassisttheBoardinestablishinghumanresourcesandcompensationpoliciesandpracticesfordirectors,keyexecutivesandemployees.

8.2 Companiesshouldclearlydistinguishthestructureofnon-executivedirectors’remunerationfromthatofexecutivedirectorsandseniorexecutives

✓ ReferDirectors’Report


8.3.1 Thenamesofthemembersoftheremunerationcommitteeandtheirattendanceatmeetingsofthecommittee,orwheretheCompanydoesnothavearemunerationcommittee,howthefunctionsofaremunerationscommitteearecarriedout


8.3.2 Theexistenceandtermsofanyschemesforretirementbenefits,otherthansuperannuation,fornon-executivedirectors


8.3.3 Anexplanationofanydeparturesfromrecommendation8.1,8.2and8.3andreasonsforthedeparture


(a)thecharteroftheremunerationcommitteeorasummaryoftherole,rights,responsibilitiesandmembershiprequirementsforthatcommittee

(b)asummaryofthecompany’spolicyonprohibitingenteringintotransactionsinassociatedproductswhichlimittheeconomicriskofparticipatinginunvestedentitlementsunderanyequity-basedremunerationschemes

TheCharterestablishingtheHumanResourcesandCompensationCommitteeisavailableontheCompany’swebsiteintheInvestorCentresection.


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NEPTUNE MARINE SERVICES LIMITED

LeveL 16, 140 St GeorGeS terracePertH, WeSterN aUStraLIa 6000

teLePHoNe: +61 (0) 8 9424 1111FacSIMILe: +61 (0) 8 9424 1110

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www neptunems com...highlight the fact that shareholders support the company’s growth strategy....

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