EVZ LIMITED — Annual Report 2007

Aug 19, 2007

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A.C.N.010550357 A.B.N.87010550357

Level 7, 410 Collins Street, Melbourne Vic 3000 phone: 03 9670 4545 fax: 03 9670 6670

20 August 2007

The Manager Company Announcements Office Australian Stock Exchange Limited 20 Bridge Street Sydney NSW 2000

Dear Sir / Madam

ENVIROZEL LIMITED – PROFIT ANNOUNCEMENT Appendix 4E - Preliminary Final Report

The Directors of Envirozel Limited (ASX: EVZ) are pleased to announce that the company has achieved an after tax profit in 2006-07 of $5,959,653.

Executive Chairman Gordon McKern stated:

“The company recorded a pre tax profit of $5,500,472 which was in excess of the previously announced forecast pre tax profit range of $4.9 to $5.2 million,.

The after tax profit is well ahead of the company’s maiden profit of $1,548,910 announced for the 2005-06 financial year and includes the recognition of previously unrecorded benefits relating to carry forward tax losses. In addition the profit includes an amount of $237,600 from the sale of assets.

Revenue from ordinary activities has also risen by 249% from the previous year to $48,362,408 and earnings per share has doubled to 3.56 cents per share”

The result was achieved by an excellent profit from a full year of ownership, from Brockman Engineering, a continued strong performance from the Syfon Systems business and an outstanding six months contribution from Danum Engineering (acquired on 1[st] January 2007). National Engineering which was acquired on 1[st] June 2007 had a minimal impact on the 2006-07 profit.

Mr McKern further stated:

“The company continues to maintain a strong balance sheet with group assets increasing to $46.6 million. The company maintains moderate gearing and is well positioned for continued expansion.”

.

1

Finally, Mr. McKern commented on the following initiatives completed or currently being addressed by the company:

”The company has introduced an employee share plan to reward the efforts and incentivise our staff of over 500, the majority of whom are highly skilled tradesmen.

The company anticipates announcing in due course a fully franked maiden dividend which will be payable prior to the end of the current calendar year. Prior to this shareholder approval will be sought for the introduction of a dividend reinvestment plan.

To ensure shareholders can participate in this exciting period in the company’s growth, the company is considering offering existing shareholders a means of increasing their stake in the company, either through a share purchase plan or a rights issue”.

The Appendix 4E - Preliminary Final Report is attached.

Yours faithfully

Ian Wallace Company Secretary

For further information, please contact:

Gordon McKern Executive Chairman Envirozel Limited Tel: +61 3 9670 4545 E: gordon.mckern@envirozel.com

About Envirozel Limited

Envirozel is an emerging industrial group with a portfolio of specialist businesses operating in the infrastructure, water and engineering industries. The company’s operations currently encompass four successful businesses, Syfon Systems, Brockman Engineering, Danum Engineering and National Engineering. These businesses have strong positions in their respective markets with exceptional growth opportunities. In addition the company recently announced the execution of an agreement to acquire the business of TSF Engineering. The company’s strategy is to grow by acquisition targeting strong, established and profitable strategic businesses where generational change or succession issues have become a constraint on growth.

For further information, please visit: www.envirozel.com.au

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Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

Results for announcement to the market

				$A
Revenue from ordinary activities	up	249%	to	48,362,408
Profit from ordinary activities after tax	Up from a	288%	to	5,959,653
attributable to members	previous loss
Net Profit for the period attributable to	Up from a	285%	to	5,959,653
members	previous loss
Amount per security and franked				Nil
amount per security of final and interim
dividends
Record date for determining				Not applicable
entitlements to dividends

Brief explanation of any of the above figures necessary to enable the figures to be understood

Refer to attached letter from the Chairman

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Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

INCOME STATEMENT

Revenue Other income Expenses: Marketing expense Cost of sales Corporate and administration Finance costs Impairment costs New business development costs Corporate restructure Profit/(loss) before income tax Income tax expense/(benefit) Profit from continuing operations Profit from discontinued operations Profit for the year Profit attributable to minority interest Profit attributable to members of the parent entity Overall operations Basic earnings per share Diluted earnings per share Continuing operations Basic earnings per share Diluted earnings per share	Economic Entity 2007 $ Economic Entity 2006 $ 48,362,408 13,849,635 237,600 45,579 (454,302) (190,170) (36,218,761) (9,601,702) (5,264,256) (2,184,199) (518,275) (248,383) - - (643,942) (230,146) - 20,000
	5,500,472 1,460,614 (459,181) (74,335)
	5,959,653 1,534,949 - 13,961
	5,959,653 1,548,910 - -
	5,959,653 1,548,910
	Cents Cents 3.56 1.36 3.55 1.35 3.56 1.34 3.55 1.34

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Envirozel Limited

Appendix 4E Preliminary final report Year Ended 30 June 2007

BALANCE SHEET

As at 30 June 2007

CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Financial Assets Plant and Equipment Deferred Tax Assets Intangible Assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Current tax liabilities Short-term borrowings TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Long-term borrowings Deferred tax liabilities Other long term provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued Capital Reserves Accumulated losses TOTAL EQUITY	Economic Entity 2007 $ Economic Entity 2006 $ 8,275,124 1,728,400 13,017,676 4,744,532 2,566,334 1,121,119
	23,859,134 7,594,051
	338,730 425,337 25,000 25,000 5,439,545 2,093,057 2,180,273 312,637 14,769,867 3,956,761
	22,753,415 6,812,792
	46,612,549 14,406,843
	17,071,151 3,195,541 961,333 4,361 304,938 2,018,951
	18,337,422 5,218,853
	6,032,864 2,101,518 3,817 4,098 96,467 22,910
	6,133,148 2,128,526
	24,470,570 7,347,379
	22,141,979 7,059,464
	33,430,541 24,279,368 194,632 222,943 (11,483,194) (17,442,847)
	22,141,979 7,059,464

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Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

STATEMENT OF CHANGES IN EQUITY

ECONOMIC ENTITY

Balance at 1 July 2005 Shares issued during the year Profit attributable to members of parent entity Adjustments from translation of foreign controlled entities Sub-total Dividends paid or provided for Balance at 30 June 2006 Balance at 1 July 2006 Shares issued during the year Profit attributable to members of parent entity Adjustments from translation of foreign controlled entities Sub-total Dividends paid or provided for Balance at 30 June 2007	Issued Capital $ Accumulated Losses $ Capital Reserves $ Foreign Currency Translation Reserve $ Total $ 21,380,498 (18,991,757) 198,700 5,527 2,592,968 2,898,870 - - - 2,898,870 - 1,548,910 - - 1,548,910 - - - 18,716 18,716
	24,279,368 (17,442,847) 198,700 24,243 7,059,464 - - - - -
	24,279,368 (17,442,847) 198,700 24,243 7,059,464
	24,279,368 (17,442,847) 198,700 24,243 7,059,464 9,151,173 - - - 9,151,173 - 5,959,653 - - 5,959,653 - - - (28,311) (28,311)
	33,430,541 (11,483,194) 198,700 (4,068) 22,141,979 - - - - -
	33,430,541 (11,483,194) 198,700 (4,068) 22,141,979

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Envirozel Limited

Appendix 4E Preliminary final report Year Ended 30 June 2007

STATEMENT OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of GST) Payments to Suppliers & Employees (inclusive of GST) Income tax paid Interest received Finance costs NET CASH FLOWS USED BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of controlled entities Proceeds from sale of land Proceeds from sale of plant and equipment Purchase of plant and equipment NET CASH FLOWS USED BY INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Shares Issued Convertible Loan Repaid Proceeds - Loans Repayment of Loans Proceeds from Lease Financing Payments for Lease Financing NET CASH FLOWS GENERATED FROM FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH HELD Net Cash Balance Acquired Add Opening Cash Brought Forward CLOSING CASH BALANCE	Economic Entity 2007 $ Economic Entity 2006 $ 50,082,633 14,216,791 (42,544,686) (13,765,229) (17,696) (15,111) 158,587 36,920 (518,275) (248,383)
	7,160,563 224,988
	(11,232,056) (1,738,821) - 38,652 14,091 81,688 (439,417) (186,172)
	(11,657,382) (1,804,653)
	7,851,173 2,548,870 - (801,516) 5,200,000 2,050,000 (3,100,000) (660,889) 95,480 - (32,179) (112,368)
	10,014,474 3,024,097
	5,517,655 1,444,432 1,029,069 - 1,728,400 283,968
	8,275,124 1,728,400

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Appendix 4E Preliminary final report Year Ended 30 June 2007

Envirozel Limited

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

Basis of Preparation

The accounting policies set out below have been consistently applied to all years presented.

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Accounting Policies

(a) Principles of Consolidation

A controlled entity is any entity Envirozel Limited has the power to control the financial and operating policies of so as to obtain benefits from its activities.

All controlled entities have a June financial year-end.

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

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Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(b) Income Tax

The charge for current income tax expense is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Envirozel Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. Envirozel Limited is responsible for recognising the current tax liabilities for the tax consolidated group. The group notified the Australian Taxation Office that it had formed an income tax consolidated group to apply from 7 June 2004. The tax consolidated group has entered a tax sharing arrangement whereby each company in the group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group.

(c) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials, direct labour and an appropriate portion of variable and fixed overheads. Overheads are applied on the basis of normal operating capacity. Costs are assigned on the basis of weighted average costs.

(d) Construction Contracts and Work in Progress

Construction work in progress is valued at cost, plus profit recognised to date less any provision for anticipated future losses. Cost includes both variable and fixed costs relating to specific contracts, and those costs that are attributable to the contract activity in general and that can be allocated on a reasonable basis.

Construction profits are recognised on the stage of completion basis and measured using the proportion of costs incurred to date as compared to expected actual costs. Where losses are anticipated they are provided for in full. Construction revenue has been recognised on the basis of the terms of the contract adjusted for any variations or claims allowable under the contract

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Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

• (e) Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.

Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The cost of fixed assets constructed within the economic entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation reserve in shareholders' equity. Decreases that offset previous increases of the same asset are charged against fair value reserves directly in equity; all other decreases are charged to the income statement. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to the income statement and depreciation based on the asset's original cost is transferred from the revaluation reserve to retained earnings.

Depreciation

The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line basis over their useful lives to the economic entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:	The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset	Depreciation Rate
Leasehold improvements	5 to 30%
Plant and equipment	5 to 30%

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

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

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Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(f) Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that are transferred to entities in the economic entity are classified as finance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis over their estimated useful lives.

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

(g) Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Financial assets at fair value through profit and loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management and within the requirements of AASB 139: Recognition and Measurement of Financial Instruments. Derivatives are also categorised as held for trading unless they are designated as hedges. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

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Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(g) Financial Instruments (Continued)

Held-to-maturity investments

These investments have fixed maturities, and it is the group's intention to hold these investments to maturity. Any held-to-maturity investments held by the group are stated at amortised cost using the effective interest rate method.

Available-for-sale financial assets

Available-for-sale financial assets include any financial assets not included in the above categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

Financial liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Derivative instruments

Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to the income statement unless they are designated as hedges.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement.

(h) Impairment of Assets

At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(i) Intangibles

Goodwill

Goodwill and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(j) Foreign Currency Transactions and Balances Functional and presentation currency

The functional currency of each of the group's entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the yearend exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.

Group companies

The financial results and position of foreign operations whose functional currency is different from the group's presentation currency are translated as follows:

• assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

• income and expenses are translated at average exchange rates for the period; and

• retained profits are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.

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Appendix 4E Preliminary final report Year Ended 30 June 2007

Envirozel Limited

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(k) Employee Benefits

Provision is made for the company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related oncosts. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

(l) Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(m) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of two months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.

(n) Revenue

Revenue from the sale of goods is recognised upon the delivery of goods to customers.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from associates and joint venture entities are accounted for in accordance with the equity method of accounting.

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.

(o) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in income in the period in which they are incurred.

(p) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(q) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

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Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(r) Critical accounting estimates and judgments

• The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Key estimates — Impairment

The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

No impairment has been recognised in respect of goodwill and property plant and equipment for the year ended 30 June 2007.

PROFIT (a) REVENUE Sales Interest Received or Receivable Sundry Income (b) OTHER INCOME Gain on disposal of property, plant and equipment Gain on sale of Investments (c) PROFIT FOR THE YEAR Expenses: Provision for Impairment of Receivables Movement in Employee Benefits Bad Debts Operating Lease Payments Finance Costs - External Finance Costs – Related Parties Depreciation of Plant & Equipment	Economic Entity 2007 $ Economic Entity 2006 $ 48,147,725 13,742,209 158,587 36,920 56,096 70,506
	48,362,408 13,849,635
	- 45,579 237,600 -
	237,600 45,579
	- (10,179) 200,533 147,860 82,000 29,168 380,421 168,875 518,275 239,580 - 8,803 396,109 110,677

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Envirozel Limited

Appendix 4E Preliminary final report Year Ended 30 June 2007

INCOME TAX a. The prima facie tax on profit from ordinary activities before income tax is reconciled to income tax as follows: Profit/(Loss) before Income Tax Income tax calculated at 30% (2006: 30%) Tax effect of permanent differences Underprovision/(overprovision) in prior years Taxation paid by offshore subsidiary Deferred tax assets not previously brought to account Prior year tax losses not previously brought to account Deferred tax assets not brought to account Income Tax Expense/(Benefit) b. The components of tax expense comprise: Current tax Deferred tax Deferred tax assets not previously brought to account Prior year tax losses not previously brought to account	Economic Entity 2007 $ Economic Entity 2006 $ 5,500,472 1,474,575
	1,650,142 442,373 70,206 34,153 - (25,867) 17,696 15,111 (7,538) (33,843) (2,189,687) (711,467) - 205,205
	(459,181) (74,335)
	1,797,966 465,770 (59,922) 205,205 (7,538) (33,843) (2,189,687) (711,467)
	(459,181) (74,335)

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Envirozel Limited

Appendix 4E Preliminary final report Year Ending on 30 June 2007

Economic Economic Entity Entity 2007 $ 2006 $ ISSUED CAPITAL Issued and Paid Up 181,558,894 ordinary shares (2006: 138,349,626 ordinary shares) 33,430,541 24,279,368 Economic Entity (a) Issued and Fully Paid Up 2007 $ Opening balance 24,279,368 Shares Issued During the year 11 August 2006 2,375,442 8 December 2006 5,076,281 10 January 2007 1,300,000 27 March 2007 279,450 15 May 2007 120,000 Closing balance 33,430,541 2007 No. Opening balance 138,349,626 Shares Issued During the year 11 August 2006 17,875,500 8 December 2006 18,233,768 10 January 2007 5,200,000 27 March 2007 1,500,000 15 May 2007 400,000 Closing balance 181,558,894 Economic Economic Entity Entity 2007 $ 2006 $ Accumulated Losses Accumulated losses at the beginning of the (17,442,847) (18,991,757) financial year Net Profit after Income tax 5,959,653 1,548,910 Accumulated losses at the end of the financial year (11,483,194) (17,442,847)

17

Envirozel Limited

Appendix 4E Preliminary final report Year Ending on 30 June 2007

EARNINGS PER SHARE (a) Weighted average number of ordinary shares outstanding during the year used in calculation of Basic Earnings Per Share (b) Weighted average number of ordinary shares outstanding during the year used in calculation of Diluted Earnings Per Share	Economic Entity 2007 No. Economic Entity 2006 No. 167,350,405 114,147,086
	167,950,405 115,647,086

SUBSEQUENT EVENTS

th Subsequent to 30 June 2007, the company announced the acquisition of the TSF Engineering business. TSF Engineering specialises in the design and installation of power generation equipment, communications equipment and marine installations. TSF operates throughout Australia, Asia and the Pacific region. The company has a history of profitability and has completed significant contracts for an impressive client list. The TSF Engineering business revenue for 2006-07 was approximately $33 million.

The TSF business client list includes; the Department of Defence, Telstra, St. George Bank, I.B.M., Global Switch, Investa, Westpac, and Tenix.

In the last two years TSF Engineering has generated an average profit of approximately $5.5 million per annum.

The consideration to be paid for the TSF Engineering business is $14 million and will be majority funded by a share placement, with the balance through bank funding. In addition the vendors may receive a bonus payment after twelve months based on the TSF business achieving 2007/08 earnings in excess of stipulated targets.

The acquisition will be effective from 1 July 2007 and is subject only to finalisation of due diligence prior to settlement, which is scheduled for 31st August 2007.

Other than the matters noted above there have not been any matters or circumstances, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the economic entity, the results of those operations, or the state of affairs of the economic entity in future financial years after the financial year.

18

Envirozel Limited

Appendix 4E Preliminary final report Year Ended 30 June 2007

		Economic	Economic
		Entity	Entity
		2007 $	2006 $
	STATEMENT OF CASH FLOWS
**(i) **	Cash balances comprise:
	Cash on Hand	8,275,124	1,728,400
	Closing Cash Balance	8,275,124	1,728,400
**(ii) **	Reconciliation of the Operating Profit/(Loss)
	after Tax to Net Cash flows from
	Operations:
	Operating profit/(loss) after Tax	5,959,653	1,548,910
	Provision for impairment of receivables	-	(10,179)
	Gain/loss on sale of property, plant and	36,064
	equipment		(45,579)
	Depreciation
	- plant and equipment	396,109	110,677
	Foreign Currency Translation	(22,966)	15,530
	Changes in assets and liabilities
	adjusted for effects of acquisition/disposal of
	operations during financial year
	Increase / (Decrease) in provisions for
	employee entitlements	200,533	147,860
	(Increase) / Decrease in inventories	1,186,996	(165,133)
	(Increase) / Decrease in trade and other
	receivables	(4,993,303)	(469,555)
	(Increase) / Decrease in deferred tax assets	(1,438,210)	(76,297)
	Increase / (Decrease) in payables	4,878,996	(836,432)
	Increase / (Decrease) in current tax payable	956,972	4,361
	Increase / (Decrease) in deferred tax liabilities	(281)	825
	Net Cash Inflow/(Outflow) from Operating
	Activities	7,160,563	224,988

19

Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

SEGMENT REPORTING

Business Segments REVENUE Revenue - external Total revenue Depreciation and Amortisation Impairment Costs RESULT Segment Result pre tax Net Profit ASSETS Segment Assets LIABILITIES Segment Liabilities ACQUISITION OF NON CURRENT ASSETS	Roof Drainage Roof Drainage Tank Constructio n Tank Constructio n Engineering Services Engineering Services Steel Fabrication Steel Fabrication 2007 $ 2006 $ 2007 $ 2006 $ 2007 $ 2006 $ 2007 $ 2006 $ 11,145,640 9,342,533 18,561,855 3,849,601 17,635,043 - 958,480 -
	11,145,640 9,342,533 18,561,855 3,849,601 17,635,043 - 958,480 -
	88,257 72,593 141,470 34,294 147,418 - 15,365 -
	- - - - - - - -
	2,471,582 2,269,305 3,102,214 124,841 1,876,895 - (13,475) - 6,361,476 5,453,321 7,943,209 5,685,487 20,355,532 - 6,916,253 -
	1,757,572 2,369,179 5,881,338 5,598,098 19,146,870 - 6,943,185 -
	222,501 151,676 176,696 2,703,993 10,360,340 - 4,273,286 -

20

Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

SEGMENT REPORTING (continued)

Business Segments REVENUE Revenue - external Total revenue Depreciation and Amortisation Impairment Costs RESULT Segment Result Unallocated Corporate Expenses Profit from ordinary activities Income Tax Expense/(benefit) Net Profit ASSETS Segment Assets LIABILITIES Segment Liabilities ACQUISITION OF NON CURRENT ASSETS	Water Treatment Water Treatment Corporate 2007 $ 2006 $ 2007 $ 319 631,234 61,071	Corporate Eliminations 2006 $ 2007 $ 26,267 -	Eliminations 2006 $ -	Consolidated Consolidated 2007 $ 2006 $ 48,362,408 13,849,635
	319 631,234 61,071	26,267 -	-	48,362,408 13,849,635
	- - 3,599	3,790 -	-	396,109 110,677
	- - -	- -	-	- -
	(479,737) (230,146) - (1,457,007) 55,277 55,537 28,053,524	- - (689,425) 9,457,042 (23,072,722)	- 6,957,479 2,164,000 (1,457,007) (689,425) 5,500,472 1,474,575 (459,181) (74,335) 5,959,653 1,548,910 (6,244,544) 46,612,549 14,406,843	6,957,479 2,164,000 (1,457,007) (689,425)
				5,500,472 1,474,575 (459,181) (74,335)
				5,959,653 1,548,910
	1,258,909 725,638 11,941,177	4,299,364 (22,458,481)	(5,644,900) 24,470,570 7,347,379
	- - 4,602	3,015 -	- 15,037,425 2,858,684

21

Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

SEGMENT REPORTING (Continued)

Geographical Segment External Segment Revenue Segment assets by location of assets Acquisition of non current assets	Australia Australia Malaysia Malaysia Economic Entity Economic Entity 2007 $ 2006 $ 2007 $ 2006 $ 2007 $ 2006 $ 46,550,862 12,610,801 1,811,546 1,238,834 48,362,408 13,849,635 45,280,270 13,545,465 1,332,279 861,378 46,612,549 14,406,843 14,977,742 2,819,096 59,683 39,588 15,037,425 2,858,684

22

Envirozel Limited

Appendix 4E Preliminary final report Year Ended 30 June 2007

Additional Information:

	30 June	30 June
	2007	2006
Net tangible assets per ordinary share	4.06cents	2.24cents

Details of entities over which control has been gained or lost during the period

Name of entity

Control gained/lost

Danum Engineering Pty Ltd and National Engineering Pty Ltd Gained

Date of gain/loss of control Danum Engineering Pty Ltd - 1 January 2007 National Engineering Pty Ltd – 1 June 2007

Where material,

• contribution of entity to the reporting entity’s profit from ordinary activities before tax during the period

• profit/(loss) of entity during the whole of the previous corresponding period

• Danum Engineering Pty Ltd $1,876,895 National Engineering Pty Ltd – ($13,475)

Not applicable

	Dividends and Distributions	Not applicable
	Date on which each dividend or distribution is payable
	Amount per security of foreign sourced dividend or distribution
	Details of dividend or distribution reinvestment plans	Not applicable

23

Envirozel Limited Appendix 4E Preliminary final report Year Ended 30 June 2007

Material interests in entities which are not controlled entities

Name of entity	Percentage of ownership interest held at end of period or date of disposal	Percentage of ownership interest held at end of period or date of disposal	Contribution to net profit (loss)	Contribution to net profit (loss)
Equity accounted associates and joint venture entities	Current period	Previous correspon ding period	Current period $A	Previous correspond ing period - $A
Total
Other material interests Waste Technologies of Australia Pty Ltd	0%	5%	Nil	Nil
Total

Compliance Statement:

The accounts are in the process of being audited.

24