AUSTRALIAN AGRICULTURAL PROJECTS LIMITED - Annual Report 2007

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ANNUAL REPORT for the year ended 30 June 2007

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C O R P O R A T E D I R E C T O R Y

Directors

Mr Andrew Boris Konowalous – Managing Director Mr Paul Robert Challis – Executive Director Mr Phillip John Grimsey –Non-Executive Director Mr Anthony Ho – Non-Executive Director Mr Paul Henry Miller – Non-Executive Director

Company Secretary

Mr Kimberley Arnold Hogg

Principal and Registered Office

Level 3, Mercury House 33 Richardson Street West Perth, Western Australia 6005

Auditor

Stantons International Level 1, 1 Havelock Street West Perth, Western Australia 6005

Solicitors

Steinepreis Paganin Level 4 16 Milligan Street Perth, Western Australia 6000

Stock Exchange

Australian Securities Exchange Limited Exchange Plaza 2 The Esplanade Perth, Western Australia 6000

Telephone: (61-8) 9481 4911 Facsimile: (61-8) 9226 0866

ASX Code: RLA

Share Registry

Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St George's Terrace Perth, Western Australia 6000

Telephone: (61-8) 9323 2000 Facsimile: (61-8) 9323 2033

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C O N T E N T S

	Page
Corporate Directory
Managing Director’s Review	1
Directors' Report	6
Remuneration Report	12
Corporate Governance Statement	19
Consolidated Financial Statements	23
Directors' Declaration	51
Independent Audit Report	52
Auditor’s Independence Letter	54
Shareholder Information	55

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M A N A G I N G D I R E C T O R ’ S R E V I E W

Dear Shareholder

During the year the Company focussed heavily on achieving a rapid and successful entry into the very large and promising US olive oil market. The program began with the signing of the first major US supermarket account in July 2006 and RLA is pleased to announce that just over a year later the redisland brand has a US customer base which is more than three times the size of its Australian base and is still growing rapidly. Sales have again more than doubled and in the final quarter of the financial year the operating cashflow generated by increasing sales was close to neutral. In the second half of the year US sales exceeded Australian sales and retail sales data from the US continued its positive upwards trend.

The year saw many major milestones achieved and it culminated in the negotiation of a strategic merger with Australian Agricultural Investments Limited, one of the country’s leading olive growers.

This review summarises the key developments in the business during FY2007 and includes an outlook for FY2008 and beyond.

The milestone achievements and developments for RLA included:

Strategic merger to fundamentally enhance the RLA business
Annual sales up 248% to $10M
Near cashflow neutral operations in Q4 FY07
US sales exceed Australian sales in second half of FY07
US store count up to 7,417 compared with just over 2,000 in Australia

RLA’s business will change in FY08. The strategic merger with AAI will open up new paths to increased margins and new revenue channels. As a fully integrated business linking end product distribution with high value production RLA can expect to underpin its continued rapid growth with different sources of cashflow and earnings.

Half Yearly Sales Growth

June 2005 to June 2007

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A$ m's
$7.0
$6.0
$5.87
$5.0
$4.0
$4.10
$3.0
$2.0 $2.40
$1.62
$1.0
$1.06
$0.0
To Jun 05 To Dec 05 To Jun 06 To Dec 06 To Jun 07
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M A N A G I N G D I R E C T O R ’ S R E V I E W ( c o n t ’ d )

Merger Transaction

At the end of July 2007 the Company announced that it had agreed to merge with Australian Agricultural Investments Limited (AAI), one of Australia’s most innovative and productive olive grove management companies. The merger, which is only conditional upon shareholder approval, will link high volume consumer market distribution with production. The key features of the transaction are:

After the merger RLA will become the leading fully integrated olive oil company combining the leading brands with high quality and efficient production know-how
The merger will secure RLA’s oil supply and lift margins for the rapidly growing redisland brand
RLA will have an effective platform from which to examine further industry consolidation opportunities
Synergies and vertical integration should significantly enhance earnings, EPS and cashflow. The entire operation will move to Victoria saving transport costs
The new shareholders will hold approximately 43% of post-merger issued shares.

US Program

The Company has been focussed on achieving a successful and rapid entry into the US olive oil market. The US remains the largest consumer market for olive oil outside Europe and continues to experience growth. RLA has a management team based in the US and uses third party service providers to cover retail markets in every US state. Entry into the US market has required substantial non-recurrent investment and the level of product distribution achieved in RLA’s first year of operations in the US is exceptional. Retail sales data shows positive trends in consumer pull-though and the FY07 sales do not yet reflect the full year effect of the majority of US redisland stores. The following points summarise the status of the US program:

Total US stores signed lift to 7,417 compared with the original target of 4,000 set early in FY08
US sales accounted for more than 50% of sales for the second half. US sales exceed Australian sales as anticipated
US retail consumer sales data shows positive upward trends
US inventory levels have now been optimised significantly reducing deployment of working capital to inventory
The adverse USD exchange rate movement has put some pressure on RLA margins however most brands on sale in the US are imported and share the same underlying reasons to increase prices. RLA has provided for adverse exchange rate movement and has implemented opportunistic hedging contracts in light of recent favourable exchange rate movements
RLA’s coverage of the US retail market now extends across all US states. Company infrastructure on the ground in the US now sufficient to cope with significantly increasing sales.

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M A N A G I N G D I R E C T O R ’ S R E V I E W ( c o n t ’ d )

Summary of Store Distribution Increases During FY07

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8000
7000 Authorised
Ordered
6000
On Shelf
5000
4000
3000
2000
1000
0
Oct 2006 Feb 2007 May 2007 July 2007
Authorised means a US retailer has agreed to stock redisland products
Ordered means stock has been shipped to the retailer’s warehouse
On Shelf means retail sales data shows the product is on the shelves of a retailer’s store
Number of Stores
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Australian Operations

The 2007 crop ended with production of approximately 10 million litres of olive oil. This represented an increase over the previous year but was significantly down on expectations due to climatic issues. Some regions were more affected than others however the ongoing drought on the east coast of Australia does not appear to represent a fundamental long term problem for olive growers.

Retail prices stabilised after a prolonged period of price increases. Redisland prices increased approximately 5% during the year but this increase was still less than the level of price increases introduced by most major European competitors.

The redisland brand extended its overall lead as Australia’s leading brand of Australian olive oil during the year.

Subsequent to the announcement of the proposed merger with AAI, RLA commenced the process of moving its production operations to Victoria. This decision was taken both in anticipation of shareholder approval but also because north west Victoria is emerging as the key regions for olive oil production over the short to medium term. RLA is pleased to advise that its new bottling and logistics facility in the Melbourne suburb of Braeside is already operational and has commenced shipment of finished goods. When fully operational the new bottling facility will have capacity to meet RLA’s needs for several years to come.

During the year the Australian Taxation Office and the Federal Government announced proposed changes to the taxation treatment of non-forestry managed investment schemes. RLA previously stated that it did not support this change however the Company reports that despite the uncertainty created by the this issue, new investment structures have emerged which look likely to allow the continued investment in olive groves without reliance on tax incentives. RLA plans to further investigate opportunities in this area once the proposed merger has settled.

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M A N A G I N G D I R E C T O R ’ S R E V I E W ( c o n t ’ d )

Financials

Revenues for the full financial year were $10.0M, up from $4.1M the previous year, with US sales contributing more than 50% of sales during the second half. RLA has invested heavily in securing distribution and consumer acceptance for its products in the US. However, investments in the Company’s core assets, which are its brands and distribution networks, have not been capitalised. Abnormals and provisions including US market entry costs, brand development investment and unrealised FX movements and employee options expense totalled $3.9M in FY07.

The Company’s financial result for the year was a loss of $4.7M including the non-recurrent items mentioned above. The Directors believe the investment in brands, distribution and consumer acceptance have placed the Company in a unique position in the Australian olive industry. The investments made to date have created a valuable platform for growth and have paved the way for vertical integration by way of the proposed merger with AAI. The Directors expect that the value of the Company’s achievements to date will become apparent with positive earnings, cashflow and ongoing rapid growth.

Annual Sales Growth

July 2004 to June 2007

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A$ m's
$12.0
$10.0
$9.97
$8.0
$6.0
$4.0
$4.02
$2.0
$1.91
$-
FY05 FY06 FY07
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Looking Forward to FY08

There should be some key developments in the RLA business over the next year including:

Accelerated US expansion
New product line development accelerated
Expansion of orchard management activities
Benefits of relocating the merged business to Melbourne realised
More new industry-leading growing, harvesting and production methods researched and implemented.

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M A N A G I N G D I R E C T O R ’ S R E V I E W ( c o n t ’ d )

Conclusion

In just three full years of operations RLA has made exceptional progress in achieving its stated goals. These include:
Creation and launch of Australia’s leading olive oil brand
Confirmation that there is domestic and global demand for branded Australian olive oil
Achievement of extensive distribution into the critical US consumer market
Combined US and Australian distribution greater than most of the rest of the other Australian brands combined
Establishment of a high quality and efficient bottling and logistics facility with capacity to meet the Company’s needs for years to come
Establishment of production, sales and support infrastructure sufficient to meet the needs of the Company for years to come
Vertical integration with leading Australian olive grove managers AAI
Creation of a platform for future growth which can be leveraged through the olive oil and other food staples sectors.

The Directors take this opportunity to sincerely thank management and staff for achieving so much this year as in previous years. The Directors also wish to thank investors for their patience and expect to report excellent achievements in FY08.

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Andrew Konowalous Managing Director

Perth, Western Australia

27 September 2007

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D I R E C T O R S ’ R E P O R T

The directors present their report together with the financial report of Redisland Australia Limited (the “Company”) and of the consolidated entity, being the Company and its subsidiaries, for the financial year ended 30 June 2007 and the auditor’s report thereon.

Directors

The directors of the Company at any time during the year and to the date of this report are:

Mr Andrew Konowalous

Managing Director - Appointed 30 April 2003

Mr Konowalous is an olive oil specialist who has over 15 years experience in senior management and logistics. He was a director of the industry’s peak body the Australian Olive Association and the Western Australian Olive Council.

Prior to forming Redisland Australia, Mr Konowalous was the general manager of another olive oil group listed on ASX, and in the earlier part of his career, was a senior executive in one of Australia’s largest privately owned retail businesses. Mr Konowalous has also spent over 4 years working in the area of finance in London and is familiar with the business environment in the United Kingdom.

Mr Paul Challis

Executive Director – Appointed 12 September 2007

Mr Challis is an accountant with 20 years’ experience in the finance, health and agricultural industries. Mr Challis is a director of the Australian olive industry’s peak body – the Australian Olive Association and has been instrumental in driving its renewed strategy for growth. In addition to his key role as Finance Director, Mr Challis will continue to oversee grove operations as new projects develop.

Mr Phillip Grimsey

Non-Executive Director – Appointed 12 September 2007

Mr Grimsey is the founding partner of Grimsey Pty Ltd, a CPA practice specialising in the provision of an integrated financial services package to its predominantly professional client base. He has been actively involved in the development, structuring and marketing of the financial services of the group and has been a key contributor to the growth of the AAI Group.

Mr Anthony Ho

Non-Executive Director – Appointed 30 April 2003

Mr Ho graduated in 1980 with a Bachelor of Commerce from the University of Western Australia. He qualified as a Chartered Accountant in 1983. Mr Ho is presently the principal of a public practice, specialising in providing corporate and financial services to companies listed on ASX.

Mr Paul Miller

Non-Executive and Independent Director – Appointed 29 March 2004

Mr Miller is a consultant horticulturalist with specialist experience in the viticulture and olive oil industries. He is the current President of the Australian Olive Association and is a regular presenter at conferences on key technical and product marketing issues facing the Australian olive industry. As President of the AOA, Mr Miller represents the Australian Olive Industry in global issues promoted by the International Olive Oil Council.

Mr Miller will be retiring by rotation and seeking re-election by shareholders at the 2007 Annual General Meeting.

Mr Robert Hance

Non- Executive Director - Appointed 2 June 2004, Resigned 8 May 2007

Mr Darren Lipton

Alternate Director to Mr Hance - Appointed 2 June 2004, Resigned 21 March 2007

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Company Secretary

Mr Kim Hogg

Company Secretary – Appointed 18 November 2003

Mr Hogg has worked in the private sector for the past 15 years, predominantly in the coordination and documentation of capital raisings and as company secretary for both listed and unlisted companies. Mr Hogg is currently the secretary of a number of companies listed on ASX.

Directorships in other listed entities

Directorships of other listed entities held by directors of the Company during the last 3 years immediately before the end of the year are as follows:

		Period of	directorship
Director	Company	From	To
Mr A Konowalous	Nil	-	-
Mr P Challis	Nil	-	-
Mr P Grimsey	Nil	-	-
Mr R Hance	Timbercorp Limited	2002	Present
Mr A Ho	Capitol Health Limited	2005	Present
	Brumby Resources Limited	2006	Present
	Vmoto Limited	2002	30 June 2006
Mr P Miller	Coonawarra Australian Property Trust	2003	Present

Directors’ Meetings

The number of directors’ meetings and the number of meetings attended by each of the directors of the Company during the year are:

		Board Meetings
Director	Held	Attended
Mr A Konowalous	4	4
Mr R Hance	4	4
Mr A Ho	4	4
Mr P Miller	4	4

There is presently no audit committee, as the directors prefer all audit issues to be addressed by the full Board.

Principal Activity

The principal activity of the consolidated entity during the year was the development of an olive oil distribution and marketing business.

Operating and Financial Review

Operating review

The year saw many major milestones achieved and it culminated in the negotiation of a strategic merger with Australian Agricultural Investments Limited, one of the country’s leading olive growers.

The milestone achievements and developments for RLA included:

Strategic merger to fundamentally enhance the Company’s business;
Annual sales up 248% to $10M
Near cashflow neutral operations in Q4 FY07;
US sales exceed Australian sales in second half of FY07;
US store count up to 7,417 compared with just over 2,000 in Australia.

Further details of the operating activities of the consolidated entity are set out in the Managing Director’s Review.

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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )

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Operating and Financial Review (cont’d)

Financial review

Revenues for the full financial year were $10.0M, up from $4.1M the previous year, with US sales contributing more than 50% of sales during the second half. RLA has invested heavily in securing distribution and consumer acceptance for its products in the US. However, investments in the Group’s core assets, which are its brands and distribution networks, have not been capitalised. Abnormals and provisions including US market entry costs, brand development investment and unrealised FX movements and employee options expense totalled $3.9M in FY07.

The Group’s financial result for the year was a loss of $4.7M including the non-recurrent items mentioned above. The Directors believe the investment in brands, distribution and consumer acceptance have placed the Group in a unique position in the Australian olive industry. The investments made to date have created a valuable platform for growth and have paved the way for vertical integration by way of the proposed merger with AAI. The Directors expect that the value of the Group’s achievements to date will become apparent with positive earnings, cashflow and ongoing rapid growth.

Impact of legislation and other external requirements

The consolidated entity’s operations are not subject to any significant environmental regulations under either Commonwealth or State legislation. However, the Board believes that the consolidated entity has adequate systems in place for the management of its environmental regulations and is not aware of any breach of those environmental requirements as they apply to the consolidated entity.

There were no changes in environmental or other legislative requirements during the year that have significantly affected the results or operations of the consolidated entity.

Significant Changes in the State of Affairs

The consolidated entity’s net assets decreased by $439,285 to $2,045,985 (2006: $2,485,270) over the year. The decrease in net assets principally comprised:

the issue of 12,000,000 shares at 35 cents each to provide additional working capital of $3,843,980 (net of costs)
net operating loss of $4,733,843 being incurred for the year
increase in reserves comprising currency translation differences and share based payments aggregating to $450,578.

Results

The consolidated entity incurred a loss of $4,733,843 (2006: $2,747,179) after income tax for the year.

Dividends

No dividend has been declared or paid by the Company to the date of this Report.

Events Subsequent to Balance Date

Other than any matters described in these financial statements, there has not arisen in the interval between the end of the year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )

Likely Developments

The consolidated entity will continue to develop its olive oil distribution and marketing business. The Operating and Financial Review above and the Managing Director’s Review set out more details about likely developments in the operations of the consolidated entity in future financial years.

Further information about likely developments in the operations of the consolidated entity and the expected results of those operations in future financial years have not been included in this report because disclosure of such information would likely result in unreasonable prejudice to the consolidated entity.

Directors’ Interests

The relevant interest of each director in the shares and options issued by the companies within the consolidated entity at the date of this report is as follows:

	Ordinary	Unlisted	Class C		Class D	Class E
Director	shares	Options	Options		Options	Options
Mr A Konowalous1	9,400,000	5,025,000		-	-	-
Mr P Challis2	12,473,845	-		-	-	-
Mr P Grimsey3	33,263,585	-		-	-	-
Mr A Ho	2,000,001	1,000,000		-	-	-
Mr P Miller	-	-		-	-	-

includes 3,400,000 shares and 3,025,000 options held indirectly by A & L Konowalous as trustees for The Darlington Family Trust, of which Mr Konowalous is a beneficiary.
includes 12,473,845 shares held indirectly by Patrac Holdings Pty Ltd as trustee for the Challis Family Trust, of which Mr Challis is director, shareholder and beneficiary.
includes 33,263,585 shares held indirectly by Grimfam Holdings Pty Ltd as trustee for the Grimsey Family Trust, of which Mr Grimsey is director, shareholder and beneficiary.

Options

Options granted during the year

During or since the end of the financial year, the Company granted the following options over unissued ordinary shares:

Class	Expiry Date	Exercise Price	Number of Options
Employee Option Scheme	17 August 2011	45 cents	450,000
Employee Option Scheme	17 August 2011	50 cents	450,000
Employee Option Scheme	17 August 2011	60 cents	450,000
Employee Option Scheme	17 August 2011	70 cents	450,000

Unissued shares under option

At the date of this report, unissued ordinary shares of the Company under option are:

Class	Expiry Date	Exercise Price	Number of Options
Unlisted	31 December 2007	20 cents	9,775,000
Class C	30 April 2008	35 cents	2,500,000
Class D	30 April 2009	40 cents	1,500,000
Class E	30 April 2010	45 cents	1,500,000
Employee Option Scheme	19 May 2010	42 cents	410,000
Employee Option Scheme	17 August 2011	45 cents	417,500
Employee Option Scheme	17 August 2011	50 cents	392,500
Employee Option Scheme	17 August 2011	60 cents	402,500
Employee Option Scheme	17 August 2011	70 cents	427,500

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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )

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Options (cont’d)

None of these options were exercised during the year and up to the date of this report. These options do not entitle the holder to participate in any share issue of the Company or any other entity.

Further details of the options issued under the Redisland Australia Limited Employee Option Scheme are included under the Remuneration Report.

Lapse of options

During or since the end of the financial year, the following options lapsed:

Class	Expiry Date	Exercise Price	Number of Options
Class B	30 April 2007	30 cents	2,250,000
Employee Option Scheme	19 May 2010	42 cents	40,000
Employee Option Scheme	17 August 2011	45 cents	32,500
Employee Option Scheme	17 August 2011	50 cents	57,500
Employee Option Scheme	17 August 2011	60 cents	47,500
Employee Option Scheme	17 August 2011	70 cents	22,500

Indemnification and Insurance of Officers

Indemnification

The Company has agreed to indemnify the current Directors of the Company against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as directors of the Company, except where the liability arises out of conduct involving a lack of good faith.

The agreement stipulates that the Company will meet to the maximum extent permitted by law, the full amount of any such liabilities, including costs and expenses.

Insurance Premiums

As at the date of this report no insurance policies have been entered into.

Non-audit services

During the year, Stantons International, the Company’s auditor has not performed any other services in addition to their statutory duties.

The Board has considered the non-audit services provided during the previous financial years by the auditor and is satisfied that the provision of these non-audit services during the year by the auditor is compatible with, and did not compromise, the audit independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Board to ensure they do not impact the integrity and objectivity of the auditor.
the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

A copy of the auditors’ independence declaration as required under Section 307C of the Corporations Act is included on page 54 of the financial report.

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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )

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Non-audit services (cont’d)

Details of the amounts paid to the auditor of the Company, Stantons International, and its related practices for audit and non-audit services provided during the year are set out below. In addition, amounts paid to other auditors for the statutory audit have been disclosed:

audit have been disclosed:
Statutory audit: Auditors of the Company - audit and review of financial reports Other auditors - audit and review of financial reports Services other than statutory audit: Other services - taxation compliance services	Consolidated 2007 $ 53,000 - 53,000 -	Consolidated 2006 $ 37,142
		-
		37,142
		-

Remuneration Report

The remuneration report is set out on pages 12 to 18 and forms part of the Directors’ Report.

Auditor’s Independence Declaration

The auditor’s independence declaration is set out on page 54 of the financial report.

Dated at Perth, Western Australia this 27[th] day of September 2007.

Signed in accordance with a resolution of the directors:

____ Andrew Konowalous Managing Director

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R E M U N E R A T I O N R E P O R T

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

A: Principles used to determine the nature and amount of remuneration

B: Service agreements

C: Details of remuneration

D: Share-based compensation

E: Additional information

The information provided in Sections A to D includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures . These disclosures have been transferred from the financial report and have been audited. The disclosures in Section E are additional disclosures required by the Corporations Act 2001 and the Corporations Regulations 2001 which have not been audited.

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

Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company and the consolidated entity, including directors of the Company and other executives. Key management personnel comprise the directors of the Company and executives for the Company and the consolidated entity.

Compensation levels for key management personnel of the Company and the consolidated entity are competitively set to attract and retain appropriately qualified and experienced directors and executives.

The remuneration structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The compensation structures take into account:

the capability and experience of the key management personnel
the key management personnel’s ability to control the relevant segments performance
the consolidated entity’s performance including:
the consolidated entity’s earnings
the growth in share price and delivering constant returns on shareholder wealth
the amount of incentives within each key management person’s compensation.

Compensation packages include a mix of fixed and variable compensation and short-term and long-term performancebased incentives designed to reward key management personnel for meeting or exceeding their financial and personal objectives. In addition to their salaries, the consolidated entity also provides non-cash benefits to its key management personnel. The consolidated entity does not have any scheme relating to retirement benefits for its key management personnel.

Fixed compensation

Fixed compensation consists of base compensation, as well as employer contributions to superannuation funds. Compensation levels are reviewed annually by the Board through a process that considers individual, segment and overall performance of the consolidated entity.

Benefits

Key management personnel may receive benefits such as car allowances, and the Company pays fringe benefits tax on these benefits.

Short-term incentives

Certain key management personnel receive short-term incentives (STI) in the form of cash. Each year, the Board considers the appropriate targets and key performance indicators (KPIs). The Board is also responsible for assessing whether the KPIs are met.

Long-term incentives

Long-term incentives are provided to key management personnel via the Redisland Australia Limited Employee Option Scheme (refer to Note 16 to the financial statements).

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R E M U N E R A T I O N R E P O R T ( c o n t ’ d )

Non-executive directors’ fees

Total remuneration for all non-executive directors, last voted upon by shareholders at the 2003 General Meeting, is not to exceed $100,000 per annum.

The Company does not have any scheme relating to retirement benefits for non-executive Directors.

B: Service agreements (audited)

The consolidated entity has entered into service agreements with each key management person. The service contracts outline the components of compensation paid to the key management personnel and are reviewed on an annual basis.

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	Value of options as proportion of remuneration %	- - - - - - - - - -

	Proportion of remuneration performance related %	- - - - - - - - - - -

POST- EMPLOYMENT SHARE-BASED PAYMENTS	Superannuation benefits $ Options2 $ Total $	10,000 12,000 12,000 12,000 - - 12,000 12,000 - 17,256 151,250 151,363	185,250 204,619
		- - - - - - - - - - - -	- -
		- - - - - - - - - 802 11,250 11,363	11,250 12,165
SHORT TERM	Other benefits $
		- - - - - - - - - 290 15,000 15,000	15,000 15,290

	STI cash bonus1
		- - - - - - - - - - - -	- -

	Salary & fees $
		10,000 12,000 12,000 12,000 - - 12,000 12,000 - 16,164 125,000 125,000	159,000 177,164

		Directors Non-executive Mr R Hance (resigned 8 May 2007) 2007 2006 Mr A Ho 2007 2006 Mr D Lipton (resigned 21 March 2007) 2007 2006 Mr P Miller 2007 2006 Mr D Hancey (resigned 21 April 2006) 2007 2006 Executive Mr A Konowalous 2007 2006	Total, all directors 2007 2006

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	Value of options as proportion of remuneration %	10.27 1.88 14.47 - 7.15 -	10.16 0.88	7.21 0.51
		- - 8.22 - - -
	Proportion of remuneration performance related %		2.29 -	1.63 -

POST- EMPLOYMENT SHARE-BASED PAYMENTS	Superannuation benefits $ Options and rights(a) $ Total $	10,426 14,460 140,732 10,800 2,500 133,300 8,100 18,280 126,315 7,200 - 87,200 - 13,337 186,432 - - 63,680	453,479 284,180	638,729 488,799
			46,077 2,500	46,077 2,500
			18,526 18,000	29,776 30,165
SHORT TERM	Other benefits $	- - - - 7,637 -
			7,637 -	22,637 15,290

	STI cash bonus1	- - 10,385 - - -
			10,385 -	10,385 -

	Salary & fees $	115,846 120,000 89,550 80,000 165,458 63,680
			370,854 263,680	529,854 440,844

		Executives Consolidated Mr M Konowalous General Manager 2007 2006 Mr R Turner National Business Manager 2007 (appointed 16 May 2005) 2006 Mr C Solly National Sales Executive 2007 (appointed 21 February 2006) 2006	Total, all executives 2007 2006	Total, all directors and executives 2007 2006

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R E M U N E R A T I O N R E P O R T ( c o n t ’ d )

Notes in relation to the table of remuneration

The short-term incentive bonus is for performance during the 30 June 2007 financial year using the criteria set out on page 12. The amount was determined after performance reviews were completed.
The fair value of the options is calculated at the date of grant using a Black-Sholes model and allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the portion of the fair value of the options recognised in this reporting period.

The following factors and assumptions were used in determining the fair value of options on grant date:

Fair value Exercise	Price of	Non listed
	shares on Estimated Risk free Dividend	status
Grant date Expiry Date per option price	grant date volatility interest rate yield	discount
19 May 2005 19 May 2010 $0.10 $0.42 $0.38 21.40% 5.37% 0.00% - 17 Aug 2006 17 Aug 2011 $0.0629 $0.45 $0.35 30.00% 5.75% 0.00% 35.00% 17 Aug 2006 17 Aug 2011 $0.0541 $0.50 $0.35 30.00% 5.75% 0.00% 35.00% 17 Aug 2006 17 Aug 2011 $0.0403 $0.60 $0.35 30.00% 5.75% 0.00% 35.00% 17 Aug 2006 17 Aug 2011 $0.0304 $0.70 $0.35 30.00% 5.75% 0.00% 35.00%

D: Share-based compensation (audited)

All options refer to options over ordinary shares of Redisland Australia Limited, which are exercisable on a one-for-one basis under the Redisland Australia Employee Option Scheme (“Scheme”).

Options and rights over equity instruments granted as compensation

Details on options over ordinary shares in the Company that were granted as compensation to each key management person during the reporting period and details on options that vested during the reporting period are as follows:

	Number of					Number of
	options		Fair value	Exercise		options
	granted during		per option	price per		vested during
	2007	Grant date	at grant date	option	Expiry date	2007
Executives
Mr M Konowalous	155,000	17 Aug 2006	$0.0541	$0.50	17 Aug 2011	77,500
Mr M Konowalous	152,500	17 Aug 2006	$0.0403	$0.60	17 Aug 2011	76,250
Mr M Konowalous	92,500	17 Aug 2006	$0.0304	$0.70	17 Aug 2011	46,250
Mr C Solly	100,000	17 Aug 2006	$0.0541	$0.50	17 Aug 2011	50,000
Mr C Solly	150,000	17 Aug 2006	$0.0403	$0.60	17 Aug 2011	75,000
Mr C Solly	150,000	17 Aug 2006	$0.0304	$0.70	17 Aug 2011	75,000
Mr R Turner	350,000	17 Aug 2006	$0.0629	$0.45	17 Aug 2011	175,000

No options have been granted since the end of the financial year. The options were provided at no cost to the recipient.

All options expire on the earlier of their expiry date or 30 days after the termination of the individual’s employment. The vesting terms of the options are as follows:

Portion	Vesting date
25%	Immediately (17 August 2006)
25%	6 months (17 February 2007)
25%	12 months (17 August 2007)
25%	24 months (17 August 2008)

No options have been exercised during the year and up to the date of this report.

Further details, including grant dates regarding options granted to executives under the Scheme are in Note 16 to the financial statements.

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R E M U N E R A T I O N R E P O R T ( c o n t ’ d )

Modification of terms of equity-settled share-based payment transactions

No terms of equity-settled share-based payment transactions (including options and rights granted as compensation to a key management person) have been altered or modified by the issuing entity during the reporting period or the prior period.

E: Additional information (unaudited)

Analysis of options and rights over equity instruments granted as compensation

Details of vesting profile of the options granted to each key management person of the Company and the consolidated entity are detailed below:

	Options granted	Options granted			Financial years	Value yet to vest	Value yet to vest
			% vested	% forfeited	in which
	Number	Date	inyear	inyear1	grant vests	Min2	Max
Executives
Mr M Konowalous	50,000	19 May 2005	50%	-	19 May 2007	Nil	Nil
	155,000	17 Aug 2006	50%	-	17 August 2008	Nil	$4,193
	152,500	17 Aug 2006	50%	-	17 August 2008	Nil	$3,073
	92,500	17 Aug 2006	50%	-	17 August 2008	Nil	$1,406
Mr C Solly	100,000	17 Aug 2006	50%	-	17 August 2008	Nil	$2,705
	150,000	17 Aug 2006	50%	-	17 August 2008	Nil	$3,023
	150,000	17 Aug 2006	50%	-	17 August 2008	Nil	$2,280
Mr R Turner	350,000	17 Aug 2006	50%	-	17 August 2008	Nil	$11,008

The % forfeited in the year represents the reduction from the maximum number of options available to vest due to the service criteria not being achieved.
The minimum value of options yet to vest is $nil as the service criteria may not be met and consequently the options may not vest.

Analysis of movements in options granted as compensation

The movement during the reporting period, by value of options over ordinary shares in the Company held by each key management person of the Company and the consolidated entity are detailed below:

	Granted in year1	Exercised in year	Forfeited in year	Total option value in year
	$	$	$	$
Executives
Mr M Konowalous	17,343	-	-	17,343
Mr C Solly	16,015	-	-	16,015
Mr R Turner	22,015	-	-	22,015

The value of options granted in the year is the fair value of the options calculated at grant date using a Black-Sholes model. The total value of the options granted is included in the table above. This amount is allocated to remuneration over the vesting period (ie. in years 17 August 2006 to 17 August 2008).

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R E M U N E R A T I O N R E P O R T ( c o n t ’ d )

Analysis of bonuses included in remuneration

Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to each key management person of the Company and the consolidated entity are detailed below:

	Short-term incentive bonus
	Included in remuneration1 % vested inyear % forfeited inyear2
Executives Mr R Turner 10,385 100% -

Amounts included in remuneration for the financial year represent the amount that vested in the financial year based on achievement of personal goals and satisfaction of specified performance criteria. No amounts vest in future financial years in respect of the bonus schemes for the 2007 financial year.
The amounts forfeited are due to the performance or service criteria not being met in relation to the current financial year.

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C O R P O R A T E G O V E R N A N C E S T A T E M E N T

This statement summarises the corporate governance practices adopted by the Board. Redisland Australia’s objective is to achieve best practice in corporate governance, and the Company’s officers and employees are committed to achieving this objective.

In addition to the information contained in this statement, the Company’s website at www.redislandaustralia.com contains details of its corporate governance procedures and practices.

ASX Best Practice Recommendations

The ASX Listing Rules require listed companies to include in their Annual Report a statement disclosing the extent to which they have complied with the ASX Best Practice Recommendations in the reporting year. The recommendations are not prescriptive and if a company considers that a recommendation is inappropriate having regard to its particular circumstances, the Company has the flexibility not to adopt it. Where the Company considered it was not appropriate to presently comply with a particular recommendation the reasons are set out in the latter part of this statement.

Board of Directors

Role of the Board

The Board’s primary responsibility is to oversee the Company’s business activities and management for the benefit of shareholders by:

(i) setting objectives, goals and strategic direction with management with a view to maximising shareholder value;
(ii) overseeing the financial position and monitoring the business and affairs of the Company;
(iii) establishing corporate governance, ethical, environmental and health and safety standards;
(iv) ensuring significant business risks are identified and appropriately managed; and
(v) ensuring the composition of the Board is appropriate, selecting directors for appointment to the Board and reviewing the performance of the Board and the contributions of individual directors.

The Board has delegated responsibilities and authorities to management to enable management to conduct the Company’s day to day activities. Matters which are not covered by these delegations, such as approvals which exceed certain limits, require Board approval.

Board composition

The Board comprises five directors including one as Managing Director.

The Directors are subject to election by shareholders. All Directors, apart from the Managing Director, are subject to reelection by rotation within every three years. The Company’s Constitution provides that one-third of the Directors retire by rotation at each AGM. Those Directors who are retiring may submit themselves for re-election by shareholders, including any Director appointed to fill a casual vacancy since the date of the previous AGM. The composition of the Board is reviewed at least annually to ensure the balance of skills and experience is appropriate. The Directors have a broad range of qualifications, experience and expertise in the olive oil and finance industries. The skills, experience and expertise of Directors are set out in the Directors’ Report.

The names of the Directors in office at the date of this Report, the date of their appointment, their status as non-executive, executive or independent Directors, whether they are retiring by rotation and seeking re-election by shareholders at the 2007 AGM, are set out in the Directors’ Report.

Independence of non-executive directors

The Board considers an independent director to be a non-executive director who meets the criteria for independence included in the ASX Best Practice Recommendations. The Board considers that Mr Paul Miller meets these criteria. He has no material business or contractual relationship with the Company, other than as a director, and no conflicts of interest which could interfere with the exercise of independent judgement. Accordingly, he is considered to be independent.

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C O R P O R A T E G O V E R N A N C E S T A T E M E N T ( c o n t ’ d )

Independent professional advice

The Board has adopted a formal policy on access to independent professional advice which provides that Directors are entitled to seek independent professional advice for the purposes of the proper performance of their duties. The advice is at the Company’s expense, subject to the prior approval of the Chairman. Advice so obtained is to be made available to all Directors.

Meetings

The Board held 4 scheduled meetings during the reporting year and no unscheduled meetings were held during that year. Senior management attended and made presentations at the Board Meetings as considered appropriate and were available for questioning by Directors.

Board committees

The Board has not formally constituted an audit committee. The entire board currently undertakes the duties of an audit committee which includes:

supervising the engagement of the external auditor and monitoring their performance;
reviewing the effectiveness of management information and other systems of internal control;
reviewing all areas of significant financial risk and arrangements in place to contain those to acceptable levels;
reviewing significant transactions that are not a normal part of the Company’s business;
reviewing the year-end and interim financial information and ASX reporting statements;
monitoring the internal controls and accounting compliance with the Corporations Act, ASX Listing Rules, external audit reports and ensure prompt remedial action where required; and
reviewing the Company’s financial statements and accounting procedures.

The Company’s auditor is invited to attend the annual general meeting and the Company supports the principle of the auditor being available to answer questions on the conduct of the audit and the content of the audit report.

The Board has not formally constituted a nomination committee or remuneration committee. The whole Board conducts the functions of a nomination committee and remuneration committee.

Evaluation of Board performance

During the reporting year an evaluation of the Board and key executive was carried out on an informal basis. As the activities of the Company develop, it will establish more formal evaluation procedures, including quantitative measures of performance.

Remuneration policies

Executive Directors and key executives are remunerated by way of a salary or consultancy fees, commensurate with their required level of services. Non-executive Directors receive a fixed monthly fee for their services. Non-executive Directors’ fees are capped at $100,000 per annum.

Attendance at Board and Committee meetings

The attendance of Directors at Board meetings during the year is detailed in the Directors’ Report.

Managing business risks and internal control framework

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility the Board has instigated an internal control framework that includes the following:

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C O R P O R A T E G O V E R N A N C E S T A T E M E N T ( c o n t ’ d )

Financial reporting – there is a comprehensive budgeting and forecasting system with updates provided to the Board at each Board meeting. Periodic reports are provided to the Board. Quarterly, half yearly and annual reports are prepared in accordance with the Corporations Act and ASX Listing Rules.
The Managing Director and the Company Secretary are required to confirm in writing that the Company’s financial reports present a true and fair view, in all material respects, of the Company’s financial condition and operational results are in accordance with relevant accounting standards.
The Company has written policies covering health, safety and the environment.

Ethical standards

The Board is committed to promoting the practice of high ethical standards. All directors and employees are expected to act with the utmost integrity and objectivity striving at all times to enhance the reputation and performance of the Company, in the following areas:

professional conduct;
dealings with suppliers, advisers and regulators;
dealings with the community; and
dealings with other employees.

Trading in the Company’s securities by directors and employees

The Board has adopted a policy in relation to dealings in the securities of the Company which applies to all Directors and employees. Under the policy, Directors are prohibited from short term trading in the Company’s securities whilst in possession of price sensitive information. The Board must be notified of any proposed transaction and must give clearance for the transaction to proceed.

Privacy

The Company has resolved to comply with the National Privacy Principles contained in the Privacy Act 1988, to the extent required for a company the size and nature of Redisland Australia Limited.

Information disclosure

The Board is committed to the promotion of investor confidence by ensuring that trading in the Company’s securities takes place in an efficient, competitive and informed market. In accordance with the continuous disclosure requirements under the ASX Listing Rules, the Company has procedures in place to ensure that all price sensitive information is identified, reviewed by management and disclosed to the ASX in a timely manner and that all information provided to the ASX is immediately available to shareholders and the market on the Company’s website.

Analysts and press briefings may be conducted following the release of half-year results, full-year results and major announcements and, from time to time, briefings with major shareholders may be conducted in order to promote a better understanding of the Company. In conducting briefings, the Company takes care to ensure that any price sensitive information included in the content of briefings has already been made available to all shareholders and the market.

Shareholders

The Board aims to ensure that shareholders are kept informed of all major developments affecting the Company. Information is communicated to shareholders through:

continuous disclosure in the form of public announcements on ASX;
annual and quarterly reports to shareholders;
investor briefings;
the Chairman’s address delivered at the Annual General Meeting; and
notices of all meetings of shareholders and explanatory notes of proposed resolutions.

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C O R P O R A T E G O V E R N A N C E S T A T E M E N T ( c o n t ’ d )

In addition, information for shareholders is available on Redisland Australia’s website: www.redislandaustralia.com, including recent announcements, presentations, past and current reports to shareholders, biographical information on Directors and information relating to operations.

Shareholders are encouraged at annual general meetings to ask questions of Directors and senior management and also the Company’s external auditors, who are required to be in attendance.

Retirement benefits for non-executive directors

The Company does not have any scheme relating to retirement benefits for non-executive Directors.

ASX Guidelines on Corporate Governance

Pursuant to ASX Listing Rules the Company must provide a statement disclosing the extent to which the ASX best practice recommendations have been not been followed in the reporting year. The Company sets out below an explanation of the areas where Redisland Australia does not presently comply with ASX best practice recommendations.

Composition of the Board

A majority of the Board of directors is not comprised of independent directors under the ASX definition of independence, as set out in the ASX Corporate Governance Council Best Practice Recommendations. The Company is in its early stages of development and does not consider it appropriate nor cost effective to adopt this recommendation.

Each individual member of the Board is satisfied that whilst the Company may not comply with best practice recommendations 2.1, 2.2 and 2.3, the Board always acts with independence and in accordance with the Statement of Corporate Governance.

Website

The ASX guidelines also prescribe that the Company should maintain a dedicated corporate governance information section on its website. Such a dedicated information section is not presently available on the Company’s website, although the annual financial report will be posted to the website and the Statement of Corporate Governance can be viewed there.

Board committees

The Company does not presently have a separate audit, nomination or remuneration committee as required by best practice recommendations 4.2, 2.4 and 9.2, respectively. The Company is in its early stages of development and as such, the entire Board conducts the function of such committees. The duties of such committees have been considered and adopted by the Board. The board invites persons with relevant industry and financial experience when required to carry out the functions of such committees.

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C O N S O L I D A T E D I N C O M E S T A T E M E N T S

f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 7

Note Revenue 2 Cost of sales Gross profit Other income 3 Operational expenses Depreciation Marketing and distribution expenses Corporate and administrative expenses Occupancy expenses Borrowing expenses Provision for diminution in value of investments in controlled entities Provision against recovery of loans to controlled entities Other expenses 4 Loss before income tax Income tax 7 Net loss for the year Attributable to: Equity holders of the Company Minority interest Basic loss per share Ordinary shares (cents) 23	Consolidated Consolidated 2007 $ 2006 $ 9,756,304 4,024,361 (5,863,857) (2,510,601) 3,892,447 1,513,760 197,441 111,885 (1,506,258) (1,464,347) (129,695) (89,218) (5,905,218) (1,953,110) (219,182) (525,073) (142,830) (134,138) (141,891) (82,648) - - - - (778,657) (52,843) (4,733,843) (2,675,732) - - (4,733,843) (2,675,732) (4,733,843) (2,747,179) - 71,447 (5.16) (3.71)	Company Company 2007 $ 2006 $ - - - -
		- -
		73,875 153,301 (171,120) - - - (7,787) - (174,110) (512,888) (21,786) (43,480) (7,910) - - 128,655 (3,801,879) (2,073,209) - -
		(4,110,717) (2,347,621) - -
		(4,110,717) (2,347,621)
		(4,110,717) (2,347,621) - -

These income statements are to be read in conjunction with the accompanying notes.

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C O N S O L I D A T E D B A L A N C E S H E E T S

a s a t 3 0 J u n e 2 0 0 7

Note CURRENT ASSETS Cash and cash equivalents 8 Trade and other receivables 9 Inventories 10 Other 11 Total Current Assets NON CURRENT ASSETS Property, plant & equipment 12 Other financial assets 13 Total Non Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 14 Employee benefits 15 Loans and borrowings 17 Total Current Liabilities NON CURRENT LIABILITIES Other payables 14 Loans and borrowings 17 Total Non Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 18 Reserves 18 Accumulated losses 19 Total equity attributable to equity holders of the parent Minority interests 20 TOTAL EQUITY	Consolidated 2007 $ 2006 $ 315,805 1,556,551 1,510,315 1,232,358 2,841,079 2,447,407 - 44,558 4,667,199 5,280,874 513,469 557,746 - - 513,469 557,746 5,180,668 5,838,620 1,780,327 2,397,239 90,522 75,894 1,044,667 727,097 2,915,516 3,200,230 - - 219,167 153,120 219,167 153,120 3,134,683 3,353,350 2,045,985 2,485,270 12,412,727 8,568,747 519,953 69,375 (10,978,301) (6,244,458) 1,954,379 2,393,664 91,606 91,606 2,045,985 2,485,270	Company 2007 $ 2006 $ 118,272 827,102 4,260 4,168 - - - -
		122,532 831,270
		10,400 - 2,952,040 2,095,732
		2,962,440 2,095,732
		3,084,972 2,927,002
		115,354 78,081 - - 307,910 -
		423,264 78,081
		- - - -
		- -
		423,264 78,081
		2,661,708 2,848,921
		12,412,727 8,568,747 148,899 69,375 (9,899,918) (5,789,201)
		2,661,708 2,848,921 - -
		2,661,708 2,848,921

These balance sheets are to be read in conjunction with the accompanying notes.

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C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S

f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 7

Note Cash flows from operating activities Cash receipts in the course of operations Cash payments in the course of operations Interest received *Net cash (used in)/from operating* *activities* 27 Cash flows from investing activities Payments for investments in controlled entities Net cash acquired in controlled entity Payments for loans to controlled entities Payments for property, plant and equipment *Net cash used in investing activities* Cash flows from financing activities Net proceeds from issue of shares Proceeds from borrowings Repayment of borrowings *Net cash provided by financing* *activities* Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 July Effect of exchange rate fluctuations on cash held Cash and cash equivalents at 30 June 8	Consolidated 2007 $ 2006 $ 9,264,924 4,130,262 (14,943,305) (7,346,364) 222,159 51,913 (5,456,222) (3,164,189) - - - - - - (105,165) (221,371) (105,165) (221,371) 3,843,980 4,615,175 8,102,757 2,077,052 (7,628,561) (2,185,896) 4,318,176 4,506,331 (1,243,211) 1,120,771 1,556,551 435,780 2,465 - 315,805 1,556,551	Company 2007 $ 2006 $ - 110,000 (257,883) (506,972) 73,874 43,302
		(184,010) (353,670)
		- (1,345) - 1,345 (4,658,400) (3,284,611) (10,400) -
		(4,668,800) (3,284,611)
		3,843,980 4,615,175 300,000 625,000 - (1,000,000)
		4,143,980 4,240,175
		(708,830) 601,894 827,102 225,208 - -
		118,272 827,102

These statements of cash flows are to be read in conjunction with the accompanying notes.

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Total	Equity	$	505,827	(2,675,732)	5,000,000	(384,825)	40,000	2,485,270	(4,733,843)	4,200,000	(356,020)	79,524	371,054	2,045,985		541,367	(2,347,621)	5,000,000	(384,825)	40,000	2,848,921	(4,110,717)	4,200,000	(356,020)	79,524	2,661,708
Minority	Interest	$	20,159	71,447	-	-	-	91,606	-	-	-	-	-	91,606		-	-	-	-	-	-	-	-	-	-	-
Accumulated	Issued Capital Reserves Losses Total	$ $ $ $	3,953,572 29,375 (3,497,279) 485,668	- - (2,747,179) (2,747,179)	5,000,000 - - 5,000,000	(384,825) - - (384,825)	- 40,000 - 40,000	8,568,747 69,375 (6,244,458) 2,393,664	- - (4,733,843) (4,733,843)	4,200,000 - - 4,200,000	(356,020) - - (356,020)	- 79,524 - 79,524	- 371,054 - 371,054	12,412,727 519,953 (10,978,301) 1,954,379		3,953,572 29,375 (3,441,580) 541,367	- - (2,347,621) (2,347,621)	5,000,000 - - 5,000,000	(384,825) - - (384,825)	- 40,000 - 40,000	8,568,747 69,375 (5,789,201) 2,848,921	- - (4,110,717) (4,110,717)	4,200,000 - - 4,200,000	(356,020) - - (356,020)	- 79,524 - 79,524	12,412,727 148,899 (9,899,918) 2,661,708	These statements of changes in equity are to be read in conjunction with the accompanying notes.
		Consolidated	Balance as at 1 July 2005	Loss for the year	Issue of share capital	Transaction costs from issue of shares	Cost of share based payment	At 30 June 2006	Loss for the year	Issue of share capital	Transaction costs from issue of shares	Cost of share based payment	Currency translation differences	At 30 June 2007	Company	Balance as at 1 July 2005	Loss for the year	Issue of share capital	Transaction costs from issue of shares	Cost of share based payment	At 30 June 2006	Loss for the year	Issue of share capital	Transaction costs from issue of shares	Cost of share based payment	At 30 June 2007

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N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 7

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Reporting entity

RedIsland Australia Limited (the “Company”) is a company domiciled in Australia. The consolidated financial report of the Company for the financial year ended 30 June 2007 comprises the Company and its subsidiaries (together referred to as the “consolidated entity”).

Basis of preparation

Statement of compliance

The financial report is a general-purpose financial report, which has been prepared in accordance with the Australian Accounting Standards (”AASBs”) (including Australian interpretations) adopted by the Australian Accounting Standards Board (”AASB”) and the Corporations Act 2001. The consolidated financial report of the consolidated entity also complies with the International Financial Reporting Standards (”IFRSs”) and interpretations adopted by the International Accounting Standards Board.

The financial statements were approved by the Board of Directors on 27 September 2007.

Basis of measurement

The financial report is prepared on the accruals basis and the historical cost basis.

Going concern basis

The directors have prepared the financial statements on the basis of going concern, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The directors believe this to be appropriate for the following reasons:

Subsequent to balance date, the Company acquired 100% interest in Australian Agricultural Investments Limited and its controlled entities (The AAI Group). This acquisition is expected to generate positive cashflow and profitable operations for the consolidated entity in the 2008 financial year;
The AAI Group has experienced consistent and substantial growth in the past two years, and the Board believes that it is reasonable to expect this to continue and contribute to Redisland’s working capital and operating results;
The corporate and administrative cost overheads of Redisland will be spread over a greater number of business units, hence improving cost efficiencies;
The acquisition of the AAI Group will result in an increase in net asset position of over $7.0m and will facilitate the sourcing of additional bank financing to fund its continuing expansion of Redisland sales in the US and other markets.

Based on the above, the directors are confident that the consolidated entity will be able to continue operations into the foreseeable future.

Functional and presentation currency

These consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency and the functional currency of the majority of the consolidated entity.

Use of estimates and judgements

The preparation of a financial report in conformity with AASBs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. These accounting policies have been consistently applied by each entity in the consolidated entity.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

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Basis of preparation (cont’d)

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes:

(a) Note 16 – measurement of share-based payments
(b) Note 17 – accounting for an arrangement containing a lease

Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by all entities in the consolidated entity.

The consolidated entity has elected to apply the following pronouncement to the annual reporting period beginning 1 July 2006:

revised AASB 101 Presentation of Financial Statements (issued October 2006).

This includes applying the pronouncement to the comparatives in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors . No adjustments to any of the financial statements were required for the above pronouncement, but certain disclosures are no longer required and have therefore been omitted.

New standards and interpretations not yet adopted

The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2007, but have not been applied in preparing this financial report:

AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendments to Australian Accounting Standards [AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 and AASB 1038]. AASB & and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. The consolidated entity has not adopted the standards early. Application of the standards will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to the consolidated entity’s and the parent entity’s financial instruments.
AASB-I 10 Interim Financial Reporting and Impairment . AASB-I 10 is applicable to reporting periods commencing on or after 1 November 2006. The consolidated entity has not recognised an impairment loss in relation to goodwill or financial assets carried at cost in an interim reporting period but subsequently reversed the impairment loss in the annual report. Application of the interpretation will therefore have no impact on the consolidated entity’s or the parent entity’s financial statements.

Principles of consolidation

Subsidiaries

Subsidiaries are entities controlled by the consolidated entity. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date control commences until the date control ceases.

In the Company’s financial statements, investments in subsidiaries are carried at cost.

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

Transactions eliminated on consolidation

Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

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Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of consolidated entity entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the foreign exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Australian dollars at exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to Australian dollars at exchange rates at the dates of the transactions.

The income and expenses of foreign operations in hyperinflationary economies are translated to Australian dollars at the exchange rate at the reporting date. Prior to translating the financial statements of foreign operations in hyperinflationary economies, its financial statements for the current period are restated to account for changes in the general purchasing power of the local currency. The restatement is based on relevant price indices at the reporting date.

Foreign currency translation differences arising on translation of foreign operations are recognised directly in equity. Since 1 January 2004, the consolidated entity’s date of transition to AASBs, such differences have been recognised in the foreign currency translation reserve (FCTR). When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit or loss.

Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition nonderivative financial instruments are measured as described below.

A financial instrument is recognised if the consolidated entity becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the consolidated entity’s contractual rights to the cash flows from the financial assets expire or if the consolidated entity transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the consolidated entity commits itself to purchase or sell the asset. Financial liabilities are derecognised if the consolidated entity’s obligations specified in the contract expire or are discharged or cancelled.

Cash and cash equivalents comprise cash balances and call deposits.

Share capital

Incremental costs directly attributable to issue of ordinary shares and share options are recognised as a deduction from equity, net of any related income tax benefit.

Property, plant and equipment

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset.

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Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the consolidated entity and its cost can be measured reliably. The costs of day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Depreciation

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The estimated useful lives are as follows:

Plant and equipment 1 to 3 years Motor vehicles 10 years Office furniture and equipment 5 to 10 years Leasehold improvements 3 to 5 years

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

Leased assets

Leases under which the consolidated entity assumes substantially all the risks and benefits of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to the initial recognition, the asset is accounted for in accordance with the accounting policy applicable to the asset.

Other leases are operating leases and the leased assets are not recognised in the consolidated entity’s balance sheet.

The consolidated entity adopted Interpretation 4 Determining whether an Arrangement Contains a Lease , which is mandatory for annual reports beginning on or after 1 January 2006, in its 2006 consolidated financial statements.

Impairment

Financial assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised.

Non-financial assets

The carrying amounts of the consolidated entity’s non-financial assets, other than inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date.

An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognized in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognised.

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Inventories

Inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price

Employee Benefits

Wages and salaries, annual leave, sick leave and long service leave

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave when it is probable that settlement will be required and are capable of being measured reliably.

Provisions made in respect of wages and salaries, annual leave and sick leave expected to be settled within 12 months are measured at their nominal values based on expected rates of pay. The provision for long service leave is measured as at present value of the estimated future cash flows.

Share-based payments

The consolidated entity provides benefits to employees (including directors) of the consolidated entity in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares.

The Company operates an incentive scheme to provide these benefits, known as the Redisland Australia Employee Option Scheme (“Scheme”) approved at the general meeting on 30 May 2003.

The cost of these share-based payment transactions is measured by reference to the fair value at the date at which they are granted. The fair value is determined using a binomial or Black-Sholes model.

In valuing share-based payment transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Redisland Australia Limited (‘market conditions’).

The cost of share-based payment transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’).

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the consolidated, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

Revenue

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) payable to the taxation authority. Exchange of goods of services of the same nature with any cash consideration is not recognised as revenue.

Services

Revenue from services is recognised in profit or loss.

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Interest income

Interest income is recognised as it accrues.

Lease payments

Payments made under operating leases are recognised in profit or loss on a straight line basis over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Income tax

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences:

except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:

except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

Redisland Australia Limited and its subsidiaries have unused tax losses. However, no deferred tax balances have been recognised, as it is considered that asset recognition criteria have not been met at this time.

Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet.

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Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

Loans and borrowings

Loans are recognised at their principal amount, subject to set-off arrangements. Borrowing costs are recognised as an expense when incurred.

Payables

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the consolidated entity. Trade accounts payable are normally settled within 60 days.

Earnings per share

The consolidated entity presents basic earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to the ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted loss per share does not show an inferior view of the earnings performance of the consolidated entity than is shown by EPS and is not disclosed for this reason.

Segment reporting

A segment is a distinguishable component of the consolidated entity that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The consolidated entity’s primary format for segment reporting is based on business segments.

Determination of fair values

A number of the consolidated entity’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Property, plant and equipment

The fair value of property, plant and equipment recognised as a result of business combination is based on market values. The market value of items of plant, equipment, fixtures and fittings is based on the quoted market prices for similar items.

Inventory

The fair value of inventory acquired in a business combination is determined based on its estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventory.

Trade and other receivables

The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted a the market rate of interest at the reporting date.

Share-based payment transactions

The fair value of incentive options is measured using the Black-Sholes model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.

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		Consolidated	Consolidated	Company
		2007	2006	2007	2006
		$	$	$	$
2.	REVENUE
	Sales	9,756,304	4,024,361	-	-
3.	OTHER INCOME
	Freight charged	147	554	-	-
	Interest income	57,349	54,856	53,745	43,301
	Other	139,945	56,475	20,130	110,000
		197,441	111,885	73,875	153,301
4.	OTHER EXPENSES
	Write down of inventories	122,010	55,378	-	-
	Increase/(decrease) in provision for
	doubtful debts	3,690	(2,535)	-	-
	Foreign currency losses	652,957	-	-	-
		778,657	52,843	-	-
5.	PERSONNEL EXPENSES
	Wages and salaries costs	1,175,070	1,308,108	-	-
	Superannuation costs	102,711	103,919	-	-
	Increase in liability for annual leave	19,046	38,648	-	-
	Expense of share based payments	79,524	40,000	-	-
		1,376,351	1,490,675	-	-
6.	AUDITOR’S REMUNERATION
	Audit services:
	Auditors of the Company
	Stantons International
	- audit and review of financial reports	53,000	37,142	53,000	37,142
	Other auditors
	- audit and review of financial reports	-	-	-	-
		53,000	37,142	53,000	37,142

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7. INCOME TAX (a) Income tax benefit (b) Numerical reconciliation between tax benefit and pre-tax net loss Loss before income tax benefit Income tax benefit calculated at 30% Tax effect on amounts which are not tax deductible: Amounts provided against loans to controlled entities Sundry amounts Capital raising costs Future income tax benefit not brought to account Income tax credit (c) Tax losses Unused tax losses for which no deferred tax asset has been recognised (as recovery is currently not probable) Potential at 30% (2006: 30%) (d) Unrecognised temporary differences Temporary differences for which deferred tax assets have not been recognised: Employee benefits provision Accrued expenses Provision for doubtful receivables Capital raising costs Unrecognised deferred tax assets relating to the above temporary differences	Consolidated 2007 $ 2006 $ - - (4,733,843) (2,747,179) (1,420,152) (824,154) - - (5,406) 139,754 (44,451) (23,089) 1,470,009 707,489 - - 1,470,009 707,489 27,157 22,768 14,084 179,318 3,000 1,800 154,713 92,358 198,954 296,244	Company 2007 $ 2006 $ - -
		(4,110,717) (2,347,621)
		(1,233,215) (704,286) 1,140,564 621,963 (44,451) 364 (1,138) (23,089) 138,240 105,049
		- -
		138,240 105,049
		- - 10,458 13,500 2,636,158 1,495,594 154,713 92,358
		2,801,329 1,601,628

(e) Tax Rates

The potential tax benefit at 30 June 2007 in respect of tax losses not brought into account has been calculated at 30% for Australian entities. These same rates applied for the year ended 30 June 2006.

8. CASH AND CASH EQUIVALENTS

Cash at bank and on deposit 315,805 1,556,551 118,272 827,102

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9. TRADE AND OTHER RECEIVABLES Current Trade receivables _Less:_Provision for doubtful debts Other receivables 10. INVENTORIES Finished goods Raw materials 11. OTHER CURRENT ASSETS Prepayments Other	Consolidated 2007 $ 2006 $ 1,472,559 1,198,259 (10,000) (6,000) 1,462,559 1,192,259 47,756 40,099 1,510,315 1,232,358 1,684,261 1,776,063 1,156,818 671,344 2,841,079 2,447,407 - 30,269 - 14,289 - 44,558	Company 2007 $ 2006 $ - - - -
		- 4,260 4,168
		4,260 4,168
		- - - -
		- -
		- - - -
		- -

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								Total		-	10,400	-		-		10,400		10,400	-	10,400			-	-	-		-		-		-	-	-
							Leasehold	improvements		-	-	-		-		-		-	-	-			-	-	-		-		-		-	-	-
A B N 1 9 1 0 4 5 5 5 4 5 5		N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )	f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 7	12. PROPERTY, PLANT & EQUIPMENT	Consolidated Company	Office Office	Plant & Motor furniture & Leasehold Plant & Motor furniture &	Year ended 30 June 2007 equipment vehicles equipment improvements Total equipment vehicles equipment	At 1 July 2006, net of	accumulated depreciation 410,369 65,217 65,525 16,635 557,746 - - -	Additions 51,976 5,402 63,313 - 120,691 - - 10,400	Disposals - (35,273) - - (35,273) - - -	Depreciation charge for the	year (63,336) (4,665) (60,540) (1,154) (129,695) - - -	At 30 June 2007, net of	accumulated depreciation 399,009 30,681 68,298 15,481 513,469 - - 10,400	At 30 June 2007	Cost 540,309 40,240 196,242 19,417 796,208 - - 10,400	Accumulated depreciation (141,300) (9,559) (127,944) (3,936) (282,739) - - -	Net carrying amount 399,009 30,681 68,298 15,481 513,469 - - 10,400	Year ended 30 June 2006	At 1 July 2005, net of	accumulated depreciation 276,198 48,014 85,677 16,194 426,083 - - -	Additions 177,944 24,720 19,765 1,722 224,151 - - -	Disposals - - (3,270) - (3,270) - - -	Depreciation charge for the	year (43,773) (7,517) (36,647) (1,281) (89,218) - - -	At 30 June 2006, net of	accumulated depreciation 410,369 65,217 65,525 16,635 557,746 - - -	At 30 June 2006	Cost 488,334 75,513 138,455 19,417 721,719 - - -	Accumulated depreciation (77,965) (10,296) (72,930) (2,782) (163,973) - - -	Net carrying amount 410,369 65,217 65,525 16,635 557,746 - - -

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13. OTHER FINANCIAL ASSETS Investments in controlled entities: Shares in EVOO Australia Pty Ltd (100% owned) – at cost Shares in AOX Pty Ltd (100% owned) – at cost Shares in Njoi Australian Foods Pty Ltd (100% owned) – at cost Shares in Oilpack Australia Pty Ltd (51% owned) – at cost Shares in Red Island Australian Food Corporation (100% owned) – at cost Less: Provision for diminution in value of investment Loans to controlled entities: Unsecured loan to controlled entities Less: Provision for non-recovery 14. TRADE AND OTHER PAYABLES Current Trade creditors Other creditors and accruals Non- current Unsecured loan owing to controlled entity 15. EMPLOYEE BENEFITS Liability for annual leave 16. SHARE BASED PAYMENTS	Consolidated 2007 $ 2006 $ - - - - - - - - - - - - - - - - - - - - - - - - 1,097,136 1,698,886 683,191 698,353 1,780,327 2,397,239 - - 90,522 75,894	Company 2007 $ 2006 $ - - 30,000 30,000 20,000 20,000 150,000 150,000 1,345 1,345
		201,345 201,345 (51,345) (51,345)
		150,000 150,000
		11,589,233 6,931,046 (8,787,193) (4,985,314)
		2,802,040 1,945,732
		2,952,040 2,095,732
		80,494 33,081 34,860 45,000
		115,354 78,081
		- -
		- -

The Company operates an incentive scheme known as the Redisland Australia Employee Option Scheme (“Scheme”) approved at the general meeting on 30 May 2003.

The maximum number of options that can be granted under the Scheme is restricted to 5% of the total issued shares as at the date of the grant of options. There is no issue price for any options granted under the Scheme.

Each option is convertible to one ordinary share. The exercise price of the options, determined in accordance with the terms of the plan, is the highest of:

110% of the market price of the Company’s shares on the date on which the options are issued;
20 cents; or
any greater price determined by the Directors.

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16. SHARE BASED PAYMENTS (cont’d)

All options expire on the earlier of their expiry date or termination of the employee’s employment. The vesting terms of the options granted on 17 August 2006 are as follows:

Options may be exercised in the proportions listed in Column A below at any time between the corresponding period listed in Column B below and 17 August 2011:

Column A	Column B
25%	Immediately (17 August 2006)
25%	6 months (17 February 2007)
25%	12 months (17 August 2007)
25%	24 months (17 August 2008)

There are no voting or dividend rights attaching to the options. There are no voting rights attached to the unissued ordinary shares. Voting rights will be attached to the unissued ordinary shares when the options have been exercised.

The fair value of the options is calculated at the date of grant using a Black-Scholes model and allocated to each reporting period evenly over the period from grant date to vesting date . The value disclosed is the portion of the fair value of the options allocated to this reporting period. The following table gives the assumptions made in determining the fair value of options on grant date:

the fair value of options on grant	date:
Grant date	17 August 2006	17 August 2006	17 August 2006	17 August 2006
Number of options	450,000	450,000	450,000	450,000
Expiry date	17 August 2011	17 August 2011	17 August 2011	17 August 2011
Fair value per option	6.29 cents	5.41 cents	4.03 cents	3.04 cents
Exercise price	45 cents	50 cents	60 cents	70 cents
Price of shares on grant date	35 cents	35 cents	35 cents	35 cents
Estimated volatility	30.00%	30.00%	30.00%	30.00%
Risk-free interest rate	5.75%	5.75%	5.75%	5.75%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Non listed status discount	35.00%	35.00%	35.00%	35.00%

The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.

During the year ended 30 June 2007 there were no options exercised (2006: nil).

The number and weighted average exercise prices (“WAEP”) of options are as follows:

Outstanding at the beginning of the year Forfeited during the year Exercised during the year Granted during the year Outstanding at the end of the year Exercisable at the end of the year Employee expenses Share options granted – equity settled	2007 Number 2007 WAEP 450,000 $0.42 (200,000) $0.56 - - 1,800,000 $0.56 2,050,000 $0.53 1,230,000 $0.53 Consolidated 2007 $ 2006 $ 79,524 40,000	2006 Number 2006 WAEP 1,175,000 $0.42 (725,000) $0.42 - - - -
		450,000 $0.42
		225,000 $0.42
		Company 2007 $ 2006 $ 77,634 40,000

A B N 1 9 1 0 4 5 5 5 4 5 5 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S ( c o n t ’ d ) f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 7

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17. LOANS AND BORROWINGS

This note provides information about the contractual terms of the Company’s and the consolidated entity’s interestbearing loans and borrowings. For more information about the Company’s and the consolidated entity’s exposure to interest rate risk, see note 21.

Current Finance lease liabilities Secured bank facilities Unsecured loan facility Non-current Finance lease liabilities	Consolidated 2007 $ 2006 $ 100,022 63,298 636,735 663,799 307,910 - 1,044,667 727,097 219,167 153,120	Company 2007 $ 2006 $ - - - - 307,910 -
		307,910 -
		- -

Terms of loans and borrowings

Finance lease facility

The finance lease liabilities are secured by the leased assets, as in the event of default, the assets revert to the lessor. The finance lease facility is secured by a guarantee from the Company.

Finance lease liabilities of the Company and the consolidated entity are payable as follows:

Less than one year Between one and five years	Consolidated Consolidated Minimum lease payments Interest Principal Minimum lease payments Interest Principal 2007 2007 2007 2006 2006 2006 121,687 21,655 100,022 76,780 13,095 63,685 255,184 36,017 219,167 184,140 31,407 152,733
	376,871 57,672 319,189 260,920 44,502 216,418

The Company has no finance lease liabilities.

Secured bank facilities

These facilities include a revolving debtors financing facility. The limit of this facility increases in line with the level of debtors balance. In addition to this facility, the consolidated entity has facilities to finance export sales by the use of letters of credit. The bank facilities are secured by a guarantee from the Company and a mortgage debenture over EVOO Australia Pty Ltd.

Unsecured loan facility

This unsecured facility bears interest at 10.0% pa.

A B N 1 9 1 0 4 5 5 5 4 5 5

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N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S ( c o n t ’ d ) f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 7

Consolidated 2007 $ 2006 $ 18. ISSUED CAPITAL AND RESERVES Issued capital 92,516,668 [2006: 80,516,668] fully paid ordinary shares 12,412,727 8,568,747 The following movements in issued capital occurred during the year: Number of Shares 2007 Number of Shares 2006 Balance at beginning of year 80,516,668 63,850,001 Issue of shares at $0.35 each 12,000,000 - Issue of shares at $0.30 each - 16,666,667 Issue of shares at $0.25 each - - Share issue costs - - Balance at end of year 92,516,668 80,516,668	Company 2007 $ 2006 $ 12,412,727 8,568,747
	2007 $ 2006 $ 8,568,747 3,953,572 4,200,000 - - 5,000,000 - - (356,020) (384,825)
	12,412,727 8,568,747

Consolidated
2007
$
2006
$
18. ISSUED CAPITAL AND RESERVES
Issued capital
92,516,668 [2006: 80,516,668] fully paid
ordinary shares
12,412,727
8,568,747
The following movements in issued capital occurred during the year:
Number of
Shares
2007
Number of
Shares
2006
Balance at beginning of year
80,516,668
63,850,001
Issue of shares at $0.35 each
12,000,000
-
Issue of shares at $0.30 each
-
16,666,667
Issue of shares at $0.25 each
-
-
Share issue costs
-
-
Balance at end of year
92,516,668
80,516,668

Company
2007
$
2006
$
12,412,727
8,568,747

2007
$
2006
$
8,568,747
3,953,572
4,200,000
-
-
5,000,000
-
-
(356,020)
(384,825)

12,412,727
8,568,747

Options

Options granted during the year

During the year, the Company granted the following options over unissued ordinary shares:

Class	Expiry Date	Exercise Price	Number of Options
Employee Option Scheme	17 August 2011	45 cents	450,000
Employee Option Scheme	17 August 2011	50 cents	450,000
Employee Option Scheme	17 August 2011	60 cents	450,000
Employee Option Scheme	17 August 2011	70 cents	450,000

All options were granted during the financial year. No options have been granted since the end of the financial year.

Unissued shares under option

At balance date, unissued ordinary shares of the Company under option are:

Class	Expiry Date	Exercise Price	Number of Options
Unlisted	31 December 2007	20 cents	9,775,000
Class C	30 April 2008	35 cents	2,500,000
Class D	30 April 2009	40 cents	1,500,000
Class E	30 April 2010	45 cents	1,500,000
Employee Option Scheme	19 May 2010	42 cents	410,000
Employee Option Scheme	17 August 2011	45 cents	417,500
Employee Option Scheme	17 August 2011	50 cents	392,500
Employee Option Scheme	17 August 2011	60 cents	402,500
Employee Option Scheme	17 August 2011	70 cents	427,500

None of these options were exercised during the year. These options do not entitle the holder to participate in any share issue of the Company or any other entity.

Further details of the options issued under the Redisland Australia Limited Employee Option Scheme are included under the Remuneration Report.

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18. ISSUED CAPITAL AND RESERVES (cont’d)

Lapse of options

During the financial year, the following options lapsed:

Class	Expiry Date	Exercise Price	Number of Options
Class B	30 April 2007	30 cents	2,250,000
Employee Option Scheme	19 May 2010	42 cents	40,000
Employee Option Scheme	17 August 2011	45 cents	32,500
Employee Option Scheme	17 August 2011	50 cents	57,500
Employee Option Scheme	17 August 2011	60 cents	47,500
Employee Option Scheme	17 August 2011	70 cents	22,500

Reserves Share based payments reserve Balance at the beginning of the year Share based payment Balance at the end of the year Foreign currency translation reserve Balance at the beginning of the year Currency translation differences Balance at the end of the year Reserves	Consolidated 2007 $ 2006 $ 69,375 29,375 79,524 40,000 148,899 69,375 - - 371,054 - 371,054 - 519,953 69,375	Company 2007 $ 2006 $ 69,375 29,375 79,524 40,000
		148,899 69,375
		- - - -
		- -
		148,899 69,375

Share based payments reserve

This reserve is used to record the value of share based payments provided to employees and directors as part of their remuneration. Refer to note 16 for further details of share based payments.

Foreign currency translation reserve

This reserve is used to record the value of exchange differences arising on translation of the foreign controlled entity.

19. ACCUMULATED LOSSES

Accumulated losses at the beginning of the year Loss for the year Accumulated losses at the end of the year	(6,244,458) (3,497,279) (4,733,843) (2,747,179) (10,978,301) (6,244,458)	(5,789,201) (3,441,580) (4,110,717) (2,347,621)
		(9,899,918) (5,789,201)

MINORITY INTERESTS Minority interests in controlled entities comprise: Interest in share capital Share of accumulated losses at the beginning of the year Share of profit/(loss) from ordinary activities after income tax Total minority interests	Consolidated 2007 $ 2006 $ 100,154 100,154 (8,548) (79,995) - 71,447
	91,606 91,606

20. MINORITY INTERESTS

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21. FINANCIAL INSTRUMENTS DISCLOSURE

The consolidated entity’s principal financial instruments comprise bank loans, finance leases, cash and short-term deposits. The main purpose of these financial instruments is to raise finance for the consolidated entity’s operations.

The consolidated entity has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations.

It is, and has been throughout the period under review, the consolidated entity’s policy that no trading in financial instruments shall be undertaken.

The main risks arising from the consolidated entity’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.

Interest rate risk

The consolidated entity’s exposure to market risk for changes in interest rates relates primarily to the consolidated entity’s long term debt obligations.

Cash includes funds held in term deposits and cheque accounts during the year, which earned interest at rates ranging between 0% and 5.50%, depending on account balances.

The following annual interest rates apply to the consolidated entity’s credit facilities:

Bank debtors financing facilities 11.60% Lease liabilities 4.69% to 7.81%

All other financial assets and liabilities are non-interest bearing.

Foreign currency risk

The consolidated entity is exposed to foreign currency on sales, purchases and borrowings that are denominated in a currency other than Australian Dollars. The currencies giving rise to this risk are primarily Euro and US Dollars.

At this stage, the consolidated entity does not seek to hedge this exposure.

Credit risk

The credit risk on financial assets of the consolidated entity which have been recognised on the balance sheet is generally the carrying amount, net of any provision for doubtful debts.

The consolidated entity continuously monitors credit risks arising from its trade receivables which are principally with significant and reputable companies.

The total credit risk exposure of the consolidated entity could be considered to include the difference between the carrying amount of the receivable and the realisable amount. At balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.

Liquidity risk

The consolidated entity’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, and finance leases.

Sensitivity analysis

In managing interest rate and currency risks the Group’s endeavours to reduce the impact of short-term fluctuations on the Group’s earnings. Over the longer term, however, permanent changes in foreign exchange and interest rates will have an impact on consolidated earnings, although the extent of that impact will depend on the level of cash resources held by the consolidated entity. A general increase of one percentage point in interest rates would not be expected to materially impact earnings.

Fair values

The directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values (2006: net fair value).

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21. FINANCIAL INSTRUMENTS DISCLOSURE (cont’d)

The following table details the fair value of financial assets and liabilities:

Consolidated 2007 Carrying amount $ Fair Value $ Financial assets Cash and cash equivalents 315,805 315,805 Trade and other receivables 1,510,315 1,510,315 Total financial assets 1,826,120 1,826,120 Financial liabilities Trade and other payables 1,780,327 1,780,327 Interest bearing loans 1,263,834 1,263,834 Total financial liabilities 3,044,161 3,044,161 Net financial assets/ (liabilities) (1,218,041) (1,218,041) Company 2007 Carrying amount $ Fair Value $ Financial assets Cash and cash equivalents 118,272 118,272 Trade and other receivables 4,260 4,260 Other financial assets 2,952,040 2,952,040 Total financial assets 3,074,572 3,074,572 Financial liabilities Trade and other payables 115,354 115,354 Interest bearing loans 307,910 307,910 Total financial liabilities 423,264 423,264 Net financial assets/ (liabilities) 2,651,308 2,651,308 Consolidated 22. COMMITMENTS 2007 $ 2006 $ Operating lease commitments Future operating lease rentals not provided for in the financial statements and payable: Not later than one year 59,880 104,790 Later than one year but not later than five years 98,830 114,720 158,710 219,510	Consolidated 2007 Carrying amount $ Fair Value $ Financial assets Cash and cash equivalents 315,805 315,805 Trade and other receivables 1,510,315 1,510,315 Total financial assets 1,826,120 1,826,120 Financial liabilities Trade and other payables 1,780,327 1,780,327 Interest bearing loans 1,263,834 1,263,834 Total financial liabilities 3,044,161 3,044,161 Net financial assets/ (liabilities) (1,218,041) (1,218,041) Company 2007 Carrying amount $ Fair Value $ Financial assets Cash and cash equivalents 118,272 118,272 Trade and other receivables 4,260 4,260 Other financial assets 2,952,040 2,952,040 Total financial assets 3,074,572 3,074,572 Financial liabilities Trade and other payables 115,354 115,354 Interest bearing loans 307,910 307,910 Total financial liabilities 423,264 423,264 Net financial assets/ (liabilities) 2,651,308 2,651,308 Consolidated 22. COMMITMENTS 2007 $ 2006 $ Operating lease commitments Future operating lease rentals not provided for in the financial statements and payable: Not later than one year 59,880 104,790 Later than one year but not later than five years 98,830 114,720 158,710 219,510	Consolidated 2006 Carrying amount $ Fair Value $ 1,556,551 1,556,551 1,232,358 1,232,358 2,788,909 2,788,909 2,397,239 2,397,239 880,217 880,217 3,277,456 3,277,456 (488,547) (488,547) Company 2006 Carrying amount $ Fair Value $ 827,102 827,102 4,168 4,168 2,095,732 2,095,732 2,927,002 2,927,002 78,081 78,081 - - 78,081 78,081 2,848,921 2,848,921 Company 2007 $ 2006 $ 31,200 19,110 10,400 -
	1,826,120




	3,074,572




158,710 219,510		41,600 19,110

The consolidated entity leases property under non-cancellable operating leases expiring from one to four years. Leases generally provide the consolidated entity with a right of renewal at which time all terms are renegotiated.

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23. LOSS PER SHARE

Basic loss per share

The calculation of basic loss per share at 30 June 2007 was based on the loss attributable to ordinary shareholders of $4,733,843 (2006: $2,747,179) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June 2007 of 91,727,627 (2006: 73,996,120) calculated as follows:

Loss attributable to ordinary shareholders Net loss for the year Issued ordinary shares at 1 July Effect of shares issued on 6 August 2004 Effect of shares issued on 8 November 2004 Effect of shares issued on 7 February 2005 Effect of shares issued on 9 May 2005 Effect of shares issued on 15 August 2005 Effect of shares issued on 25 January 2006 Effect of shares issued on 25 July 2006 Weighted average issued ordinary shares at 30 June	Consolidated 2007 $ 2006 $ (4,733,843) (2,747,179) Number 2007 Number 2006 80,516,668 63,850,001 - - - - - - - - - 5,844,749 - 4,301,370 11,210,959 - 91,727,627 73,996,120	Consolidated 2007 $ 2006 $ (4,733,843) (2,747,179)	Consolidated 2007 $ 2006 $ (4,733,843) (2,747,179)
			Number 2006 63,850,001 - - - - 5,844,749 4,301,370 -
			73,996,120

Diluted loss per share does not show an inferior view of the earnings performance of the Group than is shown by loss per share and is not disclosed for this reason.

24. CONTROLLED ENTITIES

	Country of	Entity interest	Entity interest
	Incorporation	2007	2006
Parent entity
Redisland Australia Limited	Australia	-	-
Controlled entities
AOX Pty Ltd	Australia	100%	100%
EVOO Australia Pty Ltd	Australia	100%	100%
Njoi Australian Food Pty Ltd	Australia	100%	100%
Oilpack Australia Pty Ltd	Australia	51%	51%
Red Island Australian Food Corporation	USA	100%	100%

In the financial statements of the Company, investments in subsidiaries are measured at cost.

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25. RELATED PARTIES

Details of key management personnel

The following were key management personnel of the consolidated entity at any time during the reporting period and unless otherwise indicated were key management personnel for the entire period:

Directors

Mr Andrew Konowalous Mr Anthony Ho Mr Paul Miller Mr Robert Hance

Managing Director (Executive) Director (Non-Executive) Director (Non-Executive) Director (Non-Executive) – resigned 8 May 2007

Executives

Mr Michael Konowalous Mr Rod Turner Mr Chris Solly

General Manager National Business Manager National Sales Executive

Key management personnel remuneration

The key management personnel remuneration included in “personnel expenses” (see note 5) is as follows:

Short-term employee benefits Post-employment benefits Share-based payments	Consolidated 2007 $ 2006 $ 562,876 456,134 29,776 30,165 46,077 2,500 638,729 488,799	Company 2007 $ 2006 $ 174,000 192,454 11,250 12,165 - -
		185,250 204,619

Individual directors and executives compensation disclosures

Information regarding individual directors and executives remuneration and some equity instruments disclosures as permitted by Corporations Regulations 2M.3.03 and 2M.6.04 are provided in the Remuneration Report on pages 12 to 18.

Apart from the details disclosed in the Remuneration Report, no director has entered into a material contract with the Company or the consolidated entity since the end of the previous financial year.

Other key management personnel transactions with the Company or its controlled entities

A number of key management persons, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities.

A number of those entities transacted with the Company or its subsidiaries during the financial year. The terms and conditions of those transactions were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to unrelated entities on an arm’s length basis.

The aggregate amounts recognised during the year relating to key management personnel and their related parties were as follows:

			Transactions value	Transactions value	Balance outstanding	Balance outstanding
			year ended 30 June		as at 30	June
			2007	2006	2007	2006
	Transaction	Note	$	$	$	$
Directors
Mr A Ho	Secretarial and accounting fees	(i)	56,544	68,191	21,133	3,185

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25. RELATED PARTIES (cont’d)

Notes in relation to the table of related party transactions

(i) A company associated with Mr Ho, provides company secretarial services in connection with the operations of the consolidated entity. Terms for such services are based on market rates, and amounts are payable on a monthly basis.

Options and rights over equity instruments

The movement during the reporting period in the number of options over ordinary shares in Redisland Australia Limited held, directly, indirectly or beneficially by each key management person, including their related entities, is as follows:

follows:
									Vested and
								Vested	exercisable
	Held at	Granted as					Held at	during the	at 30 June
	30 June2006	remuneration	Exercised		Other changes		30 June2007	year	2007
Directors
Mr A Konowalous	5,025,000	-		-		-	5,025,000	-	5,025,000
Mr A Ho	1,000,000	-		-		-	1,000,000	-	1,000,000
Executives
Mr M Konowalous	1,050,000	400,000		-		-	1,450,000	212,500	1,250,000
Mr C Solly	-	400,000		-		-	400,000	200,000	200,000
Mr R Turner	-	350,000		-		-	350,000	175,000	175,000
									Vested and
								Vested	exercisable
	Held at	Granted as					Held at	during the	at 30 June
	30 June2005	remuneration	Exercised		Otherchanges		30 June2006	year	2006
Directors
Mr A Konowalous	5,025,000	-		-		-	5,025,000	-	5,025,000
Mr R Hance1 Mr R Hance1	2,250,000 2,250,000	- -		- -	(2,250,000) (2,250,000)		- -	- -	- -
Mr R Hance1	2,500,000	-		-	(2,500,000)		-	-	-
Mr A Ho	1,000,000	-		-		-	1,000,000	-	1,000,000
Executives
Mr M Konowalous	1,050,000	-		-		-	1,050,000	37,500	1,037,500

No options held by key management personnel are vested but not exercisable at 30 June 2006 or 2007.

At 30 June 2005, Mr Hance’s holdings in shares and options in the Company is represented by the holding of Timbercorp Limited (“Timbercorp”) in such shares and options. At 30 June 2005, Mr Hance and his associates had a relevant interest of more than 20% in the voting shares of Timbercorp. During the year ended 30 June 2006, Mr Hance’s interest in the voting shares of Timbercorp was reduced to below 20% and accordingly, he is no longer deemed to have a relevant interest in the shares and options of the Company. Timbercorp has not disposed of any securities in Redisland Australia during the 2006 year.

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25. RELATED PARTIES (cont’d)

Movements in shares

The movement during the reporting period in the number of ordinary shares in Redisland Australia Limited held, directly, indirectly or beneficially by each key management person, including their personally-related entities, is as follows:

follows:
Held at 30 June2006 Purchases	Received on exercise of options Otherchanges Held at date of resignation Held at 30 June2007
Directors Mr A Konowalous 9,400,000 - - - N/A 9,400,000 Mr R Hance1 - - - - - N/A Mr A Ho 2,000,001 - - - N/A 2,000,001 Mr P Miller - - - - N/A - Executives Mr M Konowalous 4,003,000 4,003,000 4,003,000 4,003,000 N/A 4,003,000 Mr C Solly - - - - N/A - Mr R Turner - - - - N/A -

Held at 30 June2005 Purchases	Received on exercise of options Other changes Held at date of resignation Held at 30 June2006
Directors Mr A Konowalous 9,400,000 - - - N/A 9,400,000 Mr R Hance1 7,000,000 666,667 - (7,666,667) N/A - Mr D Hancey 1,587,500 - - - 1,587,500 N/A Mr A Ho 2,000,001 - - - N/A 2,000,001 Mr P Miller - - - - N/A - Executives Mr M Konowalous 4,003,000 - - - N/A 4,003,000 Mr C Solly - - - - N/A - Mr R Turner - - - - N/A -

No shares were granted to key management personnel during the reporting period as compensation in 2006 or 2007.

Non-key management personnel disclosures

Loans are made by the Company to its wholly owned subsidiary for capital purchases and working capital purposes. The loans outstanding between the Company and its subsidiary has no fixed date of repayment and is non-interest bearing. Details of the Company’s interest in its subsidiary are set out in Note 24.

Aggregate amounts receivable from the subsidiary are as follows (Note 13):

Non-current Unsecured loans to controlled entity Provision for non recovery	Company 2007 $ 2006 $ 11,589,233 6,931,046 (8,787,193) (4,985,314)
	2,802,040 1,945,732

No dividends were received from the subsidiary in the 2007 or 2006 financial year.

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4,081,390 54,856	4,081,390 54,856	4,136,246	(2,675,732) -	(2,675,732) -	(2,675,732)	(89,218)	5,838,620 -	5,838,620 -	5,838,620	3,353,350 -	3,353,350 -	3,353,350

9,896,396	57,349	9,953,745	(4,733,843)	-	(4,733,843)	(129,695)	5,180,668	-	5,180,668	3,134,683	-	3,134,683

31,257	(16,286)			-			-	-

-			-			-	-			-

790,060	(488,527)			-			(388,809)	280,899

4,154,474			(4,144,591)			-	1,948,961			294,275

-	(14,053)			-			-	-

-			-			-	-			-

3,260,073	(2,156,866)			(89,218)			6,227,429	3,072,451

5,741,922			(589,252)			(129,695)	3,231,707			2,840,408

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A B N 1 9 1 0 4 5 5 5 4 5 5

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S ( c o n t ’ d ) f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 7

	Consolidated	Consolidated	Company	Company
	2007	2006	2007	2006
	$	$	$	$
27. RECONCILIATION OF CASH FLOWS FROM/
(USED IN) OPERATING ACTIVITIES
Cash flows from operating activities
Loss for the period	(4,733,843)	(2,675,732)	(4,110,717)	(2,347,621)
Adjustments for:
Amortisation	1,155	1,280	-	-
Amounts set aside to provisions	18,628	(35,885)	3,801,879	1,944,554
Depreciation	117,612	87,937	-	-
Share based payment expenses	79,524	40,000	79,524	40,000
Operating loss before changes in working
capital and provisions	(4,516,924)	(2,582,400)	(229,314)	(363,067)
Change in trade and other receivables	(281,957)	(743,512)	-	-
Change in inventories	(393,672)	(1,730,969)	-	-
Change in other assets	44,558	(9,993)	(92)	(4,168)
Change in trade and other payables	(457,893)	1,902,685	76,768	13,565
Net cash from/(used in) operating activities	(5,605,888)	(3,164,189)	(152,638)	(353,670)

28. EVENTS SUBSEQUENT TO REPORTING DATE

Subsequent to balance date the Company entered into a Share Sale Agreement under which it acquired a 100% interest in Australian Agricultural Investments Limited (“AAI”). The consideration for the acquisition was $10,602,768 to be satisfied by the issue of 70,685,120 fully paid ordinary shares in the Company, at a deemed issue price of 15 cents per share. The acquisition of the business was approved by shareholders on 10 September 2007.

The financial effect of the above transaction has not been brought to account in the financial statements for the year ended 30 June 2007.

A B N 1 9 1 0 4 5 5 5 4 5 5 D I R E C T O R S ’ D E C L A R A T I O N

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In the opinion of the directors of Redisland Australia Limited:

(a) the financial statements set out on pages 23 to 50 and notes and the remuneration disclosures that are set out in Sections A to D of the Remuneration Report, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s and the consolidated entity’s financial position as at 30 June 2007 and their performance, for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards;
(c) the remuneration disclosures that are set out in Sections A to D of the Remuneration Report comply with Australian Accounting Standard AASB 124 Related Party Disclosures ; and
(d) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2007.

Dated at Perth, Western Australia this 27[th] day of September 2007.

Signed in accordance with a resolution of the directors:

____ Andrew Konowalous Managing Director

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF REDISLAND AUSTRALIA LIMITED

Report on the Financial Report

We have audited the accompanying financial report of Redisland Australia Limited, which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

As permitted by the Corporations Regulations 2001, the Company has disclosed the information about the remuneration of directors and executives (“remuneration disclosures”), required by Australian Accounting Standard AASB 124 Related Party Disclosures, under the heading “Remuneration report” in the Directors’ report and not the financial report. We have audited these remuneration disclosures.

Directors’ Responsibility for the Financial Report and the AASB 124 remuneration disclosures contained in the Directors’ Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In note 1, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report of the Group, comprising the financial statements and notes, complies with International Financial Reporting Standards.

The directors of the Company are also responsible for the remuneration disclosures contained in the Directors’ report.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. Our responsibility is also to express an opinion that the remuneration disclosures contained in the Directors’ report comply with Australian Accounting Standard AASB 124.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report and the remuneration disclosures contained in the Directors’ report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report and the remuneration disclosures contained in the Directors’ report, whether due to fraud or error. In making those risk assessments,

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the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report and the remuneration disclosures contained in the Directors’ report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the remuneration disclosures contained in the Directors’ report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

Auditor’s Opinion

In our opinion:
(a) the financial report of Redisland Australia Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.
(b) the financial report of the Group also complies with International Financial Reporting Standards as disclosed in note 1.
(c) the remuneration disclosures required by paragraphs Aus 25.4 to Aus 25.7.2 of Australian Accounting Standard AASB 124 Related Party Disclosures that are contained in the Remuneration report in the Directors’ report comply with Australian Accounting Standard AASB 124 Related Party Disclosures.

STANTONS INTERNATIONAL (An Authorised Audit Company)

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J P Van Dieren

Director

West Perth, Western Australia 27 September 2007

Red island June IAR 2007.doc

A B N 1 9 1 0 4 5 5 5 4 5 5

S H A R E H O L D E R I N F O R M A T I O N

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Details of shares and options as at 19 October 2007:

Voting Rights

The voting rights attaching to ordinary shares are:

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

Options do not carry any voting rights.

Substantial shareholders

The number of shares held by substantial shareholders and their associates are set out below:

Substantial shareholder	Number of Shares
Grimfam Holdings Pty Ltd	33,263,585
Patrac Holdings Pty Ltd	12,473,845
Madfam Holdings Pty Ltd	12,473,845
Petto Holdings Pty Ltd	12,473,845
Acorn Capital Limited	12,333,333
Mr A Konowalous & Ms L Konowalous	9,400,000
Timbercorp Limited	8,666,667

On-Market Buy Back

There is no current on-market buy-back.

Distribution schedules

Distribution of each class of security as at 19 October 2007:

Ordinary fully paid shares Range Holders Units % 1 - 1,000 4 206 0.00 1,001 - 5,000 62 198,244 0.12 5,001 - 10,000 146 1,389,177 0.85 10,001 - 100,000 196 7,831,468 4.80 100,001 - Over 88 153,782,693 94.23 Total 496 163,201,788 100.00	Unlisted Options Range Holders Units %
	1 - 1,000 - - 0.00 1,001 - 5,000 - - 0.00 5,001 - 10,000 - - 0.00 10,001 - 100,000 - - 0.00 100,001 - Over 6 9,775,000 100.00
	Total 6 9,775,000 100.00

Class C Options

Class D Options

Range Holders Units % 1 - 1,000 - - 0.00 1,001 - 5,000 - - 0.00 5,001 - 10,000 - - 0.00 10,001 - 100,000 - - 0.00 100,001 - Over 1 2,500,000 100.00 Total 1 2,500,000 100.00	Range Holders Units %
	1 - 1,000 - - 0.00 1,001 - 5,000 - - 0.00 5,001 - 10,000 - - 0.00 10,001 - 100,000 - - 0.00 100,001 - Over 1 1,500,000 100.00
	Total 1 1,500,000 100.00

S H A R E H O L D E R I N F O R M A T I O N ( c o n t ’ d )

Distribution schedules (cont’d)

Class E Options

Employee Option Scheme

Options exercisable at $0.42 each on or before 19 May 2010

	Options exercisable at $0.42 each on or before 19 May 201
Range Holders Units % 1 - 1,000 - - 0.00 1,001 - 5,000 - - 0.00 5,001 - 10,000 - - 0.00 10,001 - 100,000 - - 0.00 100,001 - Over 1 1,500,000 100.00 Total 1 1,500,000 100.00	Range Holders Units %
	1 - 1,000 - - 0.00 1,001 - 5,000 - - 0.00 5,001 - 10,000 - - 0.00 10,001 - 100,000 1 50,000 12.20 100,001 - Over 3 360,000 87.80
	Total 4 410,000 100.00

Employee Option Scheme Options exercisable at $0.45 each on or before 17 Aug 2011

	Range	Range	Holders	Units	%
1	-	1,000	-	-	0.00
1,001	-	5,000	2	10,000	2.40
5,001	-	10,000	6	57,500	13.77
10,001	-	100,000	-	-	0.00
100,001	-	Over	1	350,000	83.83
Total			9	417,500	100.00

Employee Option Scheme

Options exercisable at $0.50 each on or before 17 Aug 2011

Range	Range	Range	Holders	Units	%
1	-	1,000	-	-	0.00
1,001	-	5,000	1	5,000	1.27
5,001	-	10,000	-	-	0.00
10,001	-	100,000	5	232,500	59.24
100,001	-	Over	1	155,000	39..49
Total			7	392,500	100.00

Employee Option Scheme Options exercisable at $0.60 each on or before 17 Aug 2011

Employee Option Options exercisable at $0.70 each on or before 17 Aug 2011

Range Holders Units % 1 - 1,000 - - 0.00 1,001 - 5,000 2 10,000 2.48 5,001 - 10,000 - - 0.00 10,001 - 100,000 4 90,000 22.36 100,001 - Over 2 302,500 75.16 Total 8 402,500 100.00	Range Holders Units %
	1 - 1,000 - - 0.00 1,001 - 5,000 2 10,000 2.34 5,001 - 10,000 - - 0.00 10,001 - 100,000 5 267,500 62.57 100,001 - Over 1 150,000 35.09
	Total 8 427,500 100.00

Unmarketable parcels

Holdings less than a marketable parcel of ordinary shares (being 1,409 as at 19 October 2007):

Holders	Units
48	4,762

S H A R E H O L D E R I N F O R M A T I O N ( c o n t ’ d )

Top holders

The 20 largest registered holders of each class of security as at 19 October 2007 were:

Fully paid ordinary shares

Fully paid ordinary shares
Name	No. of Shares %
1. Grimfam Holdings Pty Ltd 2. Madfam Holdings Pty Ltd 3. Patrac Holdings Pty Ltd 4. Petto Holdings Pty Ltd 5. National Nominees Limited 6. Timbercorp Limited 7. Mr Andrew Konowalous 8. Ms Kelly Andrea 9. Saracen Properties Pty Ltd 10. Mr Andrew Konowalous & Ms Lesley Konowalous 11. Joefield Company Limited 12. Citicorp Nominees Pty Limited 13. Citicorp Nominees Pty Ltd 14. VBS Exchange Pty Ltd 15. Dasi Investments Pty Ltd 16. Mr Anthony Ho 17. Nefcorp Pty Ltd 18. JP Morgan Nominees Australia Limited 19. Beaver Super Pty Ltd < The Beaver S/F A/C> 20. Rapcorp Pty Ltd	33,263,585 20.38 12,473,845 7.64 12,473,845 7.64 12,473,845 7.64 7,995,154 4.90 7,666,667 4.70 6,000,000 3.68 4,665,600 2.86 4,000,000 2.45 3,400,000 2.08 2,755,000 1.69 2,397,500 1.47 2,243,333 1.37 2,176,737 1.33 2,150,000 1.32 2,000,001 1.23 1,883,582 1.15 1,870,000 1.15 1,746,500 1.07 1,617,900 0.99
	125,253,094 76.74

Options exercisable at 20 cents on or before 31 December 2007 (“Unlisted Options”)

		No. of
	Name	Options	%
1.	Mr Andrew Konowalous & Ms Lesley Konowalous	3,025,000	30.95
2.	Mr Andrew Konowalous	2,000,000	20.45
3.	Ms Serng Yee Liew	1,500,000	15.35
4.	Mr Anthony Ho	1,000,000	10.23
5.	Konocorp Pty Ltd	1,000,000	10.23
6.	Mr Enzo Almonte	500,000	5.12
7.	Lim Goay Choo	500,000	5.12
8.	Tarney Holdings Pty Ltd	250,000	2.55
		9,775,000	100.00

Options exercisable at 30 cents on or before 30 April 2008 (“Class C Options”)

Options exercisable at 30 cents on or before 30 April 2008 (“Class C Options”)
Name	No. of Options %
Timbercorp Limited Options exercisable at 40 cents on or before 30 April 2009 (“Class D Options”) Name	2,500,000 100.00
	2,500,000 100.00
	No. of Options %
Timbercorp Limited	1,500,000 100.00
	1,500,000 100.00

Options exercisable at 45 cents on or before 30 April 2010 (“Class E Options”)

Options exercisable at 45 cents on or before 30 April 2010 (“Class E Options”)
Name	No. of Options %
Timbercorp Limited	1,500,000 100.00
	1,500,000 100.00

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27 September 2007

Board of Directors Redisland Australia Limited Level 3, Mercury House, 33 Richardson Street West Perth WA 6005

Dear Directors

RE: REDISLAND AUSTRALIA LIMITED

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Redisland Australia Limited.

As Audit Director for the audit of the financial statements of Redisland Australia Limited for the year ended 30 June 2007, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

STANTONS INTERNATIONAL (Authorised Audit Company)

John Van Dieren Director

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AI assistant

AUSTRALIAN AGRICULTURAL PROJECTS LIMITED — Annual Report 2007

64275_rns_2007-10-28_181efd22-2f01-46e8-ac7f-8cac7f0b7025.pdf

C O R P O R A T E D I R E C T O R Y

Directors

Company Secretary

Principal and Registered Office

Auditor

Solicitors

Stock Exchange

Share Registry

C O N T E N T S

M A N A G I N G D I R E C T O R ’ S R E V I E W

Dear Shareholder

Half Yearly Sales Growth

June 2005 to June 2007

M A N A G I N G D I R E C T O R ’ S R E V I E W ( c o n t ’ d )

Merger Transaction

US Program

M A N A G I N G D I R E C T O R ’ S R E V I E W ( c o n t ’ d )

Australian Operations

M A N A G I N G D I R E C T O R ’ S R E V I E W ( c o n t ’ d )

Financials

Annual Sales Growth

Looking Forward to FY08

M A N A G I N G D I R E C T O R ’ S R E V I E W ( c o n t ’ d )

Conclusion

D I R E C T O R S ’ R E P O R T

Directors

Mr Andrew Konowalous

Managing Director - Appointed 30 April 2003

Mr Paul Challis

Mr Phillip Grimsey

Mr Anthony Ho

Mr Paul Miller

Mr Robert Hance

Mr Darren Lipton

Company Secretary

Mr Kim Hogg

Directorships in other listed entities

Directors’ Meetings

Principal Activity

Operating and Financial Review

Operating review

Operating and Financial Review (cont’d)

Financial review

Impact of legislation and other external requirements

Significant Changes in the State of Affairs

Results

Dividends

Events Subsequent to Balance Date

D I R E C T O R S ’ R E P O R T ( c o n t ’ d )

Likely Developments

Directors’ Interests

Options

Options granted during the year

Unissued shares under option

Options (cont’d)

Lapse of options

Indemnification and Insurance of Officers

Indemnification

Insurance Premiums

Non-audit services

Non-audit services (cont’d)

Remuneration Report

Auditor’s Independence Declaration

R E M U N E R A T I O N R E P O R T

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

Fixed compensation

Benefits

Short-term incentives

Long-term incentives

R E M U N E R A T I O N R E P O R T ( c o n t ’ d )

B: Service agreements (audited)

R E M U N E R A T I O N R E P O R T ( c o n t ’ d )

Notes in relation to the table of remuneration

D: Share-based compensation (audited)

Options and rights over equity instruments granted as compensation

R E M U N E R A T I O N R E P O R T ( c o n t ’ d )

E: Additional information (unaudited)

AUSTRALIAN AGRICULTURAL PROJECTS LIMITED Annual Report 2007