LYCOPODIUM LIMITED — Annual Report 2007

Aug 23, 2007

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Level 5, 1 Adelaide Terrace East Perth, Western Australia 6004 PO Box 6832, East Perth Western Australia 6892 Tel +618 6210 5222 Fax +618 6210 5201 www.lycopodium.com.au

ASX RELEASE

Revenue : : $105 million Profit before Tax : $12.4 million Profit After Tax : $8.9 million Earnings per Share : 23.6 cents Final Dividend : 12.5 cents

Consulting engineering company Lycopodium has exceeded its mid year forecast in reporting an after tax profit of $8.9 million for the 12 month period to June 30 2007, an increase of 17% over the previous corresponding period. This was achieved on revenue of $105 million.

The Board has declared a final dividend of 12.5 cents per share taking the total dividend to 17.5 cents per share fully franked.

“2006/2007 has been a dynamic year for Lycopodium as the deferral of the Akyem Project announced in October 2006 lead to a major reallocation of staff. The management is to be commended for the result which saw an improvement in the second half in spite of the deferral”, Mick Caratti, Chairman of Lycopodium said.

Recent project developments include the full approval in July by the board of Barrick Gold Corporation of the US$400 million Buzwagi Gold Project in Tanzania and in August the approval by the Rio Tinto Investment Committee of the Hope Downs South Project. The award of these projects to Lycopodium had been announced previously subject to board approval.

The demand for Lycopodium’s services remains strong and growth is constrained principally by the worldwide shortage of skilled engineers. However, Lycopodium staff numbers have grown to 530 from 450 during the period and recruiting is a constant focus.

Dividend Entitlements

The final dividend of 12.5 cents per share fully franked will be paid to shareholders on 15 October 2007 with a record date of 2 October 2007.

Further information: Mick Caratti, Chairman Laurie Marshall, Managing Director Lycopodium Limited Phone: +61 8 6210 5222

24 August 2007

Lycopodium Limited ASX Preliminary final report ABN 83 098 556 159

for the year ended 30 June 2007

ABN 83 098 556 159 Lycopodium Limited ASX Preliminary final report - 30 June 2007

Lodged with the ASX under listing Rule 4.3A

Contents

	Page
Results for Announcement to the Market	1
Preliminary consolidated income statement	2
Preliminary consolidated balance sheet	3
Preliminary consolidated statement of changes in equity	4
Preliminary consolidated cash flow statement	5
Notes to the preliminary consolidated financial statements	6
Supplementary Appendix 4E information	13

For the year ended 30 June 2007 (Previous corresponding period: Year ended 30 June 2006) Results for Announcement to the Market 30 June 2007

					30 June 2007
					$
Revenuefrom operations (Appendix 4E item 2.1)	up	% 24.4	to		104,647,440
Profit / (loss)from operations after tax attributable to members (Appendix 4E item 2.2)	up	% 17.2	to		8,897,663
Profit / (loss)for the period attributable to members (Appendix 4E item 2.3)	up	% 17.2	to		8,897,663
Dividends / distributions (Appendix 4E item 2.4)	Amount per security		Franked amount per security
Final dividend (cents)	12.5			12.5
Key Ratios	2007			2006
	June			June
Basic earnings per share (cents)	23.6			20.2
Net tangible assets per share (cents) 59.4				53.2
Record datefor determining entitlements to the final dividend
				2 October 2007

Explanation of Revenue (Appendix 4E item 2.6) Refer to attached Company Update

Explanation of Profit/(loss) from continuing operations after tax (Appendix 4E item 2.6) Refer to attached Company Update

Explanation of Net Profit/(loss) (Appendix 4E item 2.6) Refer to attached Company Update

Explanation of Dividends (Appendix 4E item 2.6) Refer to attached Company Update

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Lycopodium Limited Preliminary consolidated income statement For the year ended 30 June 2007

Notes Revenue from operations 3 Other income 4 Employee benefits expense Depreciation and amortisation expense 5 Other project expenses Equipment and materials used Contractors Administration and management costs Loss on disposal of asset Finance costs 5 Share of net profits of associates accounted for using the equity method Profit before income tax Income tax expense Profit for the year Earnings per share for profit attributable to the ordinary equity holders of the company: Basic earnings per share 10 Diluted earnings per share 10

Consolidated 2007 2006 $ $ 104,647,440 84,155,042 51,673 179,580 (34,654,571) (32,755,888) (1,079,497) (882,575) (7,048,887) (5,165,292) (146,494) (958,886) (42,535,029) (26,193,213) (6,726,159) (7,558,254) (11,795) (7,215) (186,401) (197,180) 95,964 - 12,406,244 10,616,119 (3,508,581) (3,022,043) 8,897,663 7,594,076 Cents Cents 23.6 20.2 23.5 20.1

The above preliminary consolidated income statement should be read in conjunction with the accompanying notes.

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Lycopodium Limited Preliminary consolidated balance sheet As at 30 June 2007

Notes ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Other current assets Total current assets Non-current assets Investments accounted for using the equity method Available-for-sale financial assets Property, plant and equipment Investment properties Deferred tax assets Intangible assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Borrowings Current tax liabilities Provisions Total current liabilities Non-current liabilities Borrowings Provisions Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves 6(a) Retained profits 6(b) Total equity

Consolidated 2007 2006 $ $ 13,405,517 13,478,543 22,695,353 17,451,611 94,914 498,341 1,000,373 349,397 37,196,157 31,777,892 295,965 1 120,000 100,000 2,414,049 2,856,514 975,564 994,245 1,828,959 1,535,252 5,908,859 5,275,081 11,543,396 10,761,093 48,739,553 42,538,985 15,134,769 13,331,075 1,173,133 443,389 1,957,929 1,122,427 189,290 150,000 18,455,121 15,046,891 1,754,925 2,027,100 222,639 205,537 1,977,564 2,232,637 20,432,685 17,279,528 28,306,868 25,259,457 17,546,497 17,486,497 (288,967) (33,215) 11,049,338 7,806,175 28,306,868 25,259,457

The above preliminary consolidated balance sheet should be read in conjunction with the accompanying notes.

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Lycopodium Limited Preliminary consolidated statement of changes in equity For the year ended 30 June 2007

Notes Total equity at the beginning of the financial year Changes in the fair value of available-for-sale financial assets, net of tax 6 Exchange differences on translation of foreign operations 6 Net income recognised directly in equity Profit for the year Total recognised income and expense for the year Transactions with equity holders in their capacity as equity holders: Contributions of equity, net of transaction costs Dividends provided for or paid 7 Total equity at the end of the financial year

Consolidated 2007 2006 $ $ 25,259,457 22,603,158 20,000 (20,000) (275,752) 28,725 (255,752) 8,725 8,897,663 7,594,076 8,641,911 7,602,801 60,000 882,948 (5,654,500) (5,829,450) (5,594,500) (4,946,502) 28,306,868 25,259,457

The above preliminary consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

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Lycopodium Limited Preliminary consolidated cash flow statement For the year ended 30 June 2007

Notes Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) Payments to suppliers and employees (inclusive of goods and services tax) Interest received Interest paid Income taxes (paid)/received Net cash inflow from operating activities 9 Cash flows from investing activities Payments for property, plant and equipment Payments for investment property Proceeds from sale of property, plant and equipment Payments for intangible assets Payments for available-for-sale financial assets Payments for investments accounted for using the equity method Proceeds from sale of available-for-sale financial assets Net cash (outflow)/inflow from investing activities Cash flows from financing activities Proceeds from issues of shares and other equity securities Repayment of hire purchase and lease liabilities Share issue and buy-back transaction costs Repayment of borrowings Dividends paid to company’s shareholders 7 Net cash (outflow)/inflow from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of year

Consolidated 2007 2006 $ $ 106,529,885 81,539,368 (96,520,425) (71,106,439) 10,009,460 10,432,929 677,727 580,235 (161,226) (204,569) (2,966,786) (2,427,921) 7,559,175 8,380,674 (174,732) (425,385) - (8,849) 7,200 134,153 (907,217) (364,660) (28,715) - (200,000) - 72,989 144,025 (1,230,475) (520,716) 60,000 900,000 (538,873) (525,385) - (17,048) - (373,697) (5,654,500) (5,829,450) (6,133,373) (5,845,580) 195,327 2,014,378 13,478,543 11,435,442 (268,353) 28,723 13,405,517 13,478,543

The above preliminary consolidated cash flow statement should be read in conjunction with the accompanying notes.

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Lycopodium Limited Notes to the preliminary consolidated financial statements 30 June 2007

1 Summary of significant accounting policies

(a) Basis of preparation of preliminary financial report

This preliminary financial report has been prepared in accordance with the Australian Stock Exchange Listing Rules as they relate to Appendix 4E and in accordance with the measurement requirements of Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

As such, this preliminary financial report does not include all the notes of the type included in an annual financial report and accordingly, should be read in conjunction with the annual report for the year ended 30 June 2006 and with any public announcements made by Lycopodium Limited during the reporting period in accordance with the disclosure requirements of the Corporations Act 2001.

The accounting policies have been consistently applied to all the years presented, unless otherwise stated.

Changes in accounting policies - tax consolidation

Lycopodium Limited and its wholly-owned Australian controlled entities implemented the tax consolidation legislation as of 1 July 2006, for the half-year ended 31 December 2006, as published in the most recent interim financial report. Subsequent to the date of the interim report the Board, upon independent external advice, has decided to abandon the policy under tax consolidation and revert back to the income tax accounting policy used in the annual report for the year ended 30 June 2006.

The abandonment of tax consolidation has resulted in a reversal of those entries recognised in the interim report for the half-year ended 31 December 2006. The derecognition of these tax consolidation entries has therefore resulted in an increase in income tax expense by $180,726 and a decrease of the deferred tax assets by the same amount.

The decision to consolidate for tax purposes was never formally notified to the Australian Taxation Office.

2 Segment information

(a) Description of segments

Business segments

The consolidated entity is organised into the following divisions by product and service type.

Engineering, Procurement and Construction Management (EPCM)

This industry segment comprises assignments for delivery of the full suite of project delivery services comprising project management, all disciplines of engineering, drafting, procurement, construction management and commissioning. EPCM services are provided on either an hourly rates or fixed fee basis.

Design and Construct (Lump Sum)

This industry segment comprises the delivery of turn key projects comprising EPCM services together with supply and installation of the plant and equipment. Turn key projects are provided on a fixed lump sum basis.

Study Services

This industry segment comprises the delivery of the services required to prepare project studies. These project studies range from concept studies through to definitive feasibility studies and require delivery of a wide range of services comprising study management, all disciplines of engineering, drafting, procurement, estimating, financial modelling and secretarial. Study services are provided on either an hourly rates or fixed fee basis.

Project Services

This industry segment comprises the delivery of selected project services required to assist others with the delivery of a project. These project services range from providing superintendent services through to preparation of complete design packages and therefore comprise selected EPCM services. Project services are provided on either an hourly rates or fixed fee basis.

Geographical segments

The consolidated entity operates in two main geographical areas.

Australia

The home country of the parent entity and three of its subsidiaries.

Africa

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Lycopodium Limited Notes to the preliminary consolidated financial statements 30 June 2007 (continued)

2 Segment information (continued)

(b) Primary reporting format - business segments

2007	2007	EPCM $	Design and Construct (Lump Sum) $	Study Services $	Project Services $	Total $
Segment revenue
Sales to external customers Total segment revenue Intersegment elimination Unallocated revenue Consolidated revenue		53,335,713 53,335,713	27,351,818 27,351,818	13,276,902 13,276,902	10,636,473 10,636,473	104,600,906 104,600,906 (975,687) 1,022,221 104,647,440
Segment result
Segment result Intersegment elimination Unallocated revenue less unallocated expenses Profit before income tax Income tax expense Profit for the year		14,102,712	886,895	2,855,215	2,738,617	20,583,439 (18,995) (8,158,200) 12,406,244 (3,508,581) 8,897,663
Segment assets and liabilities
Segment assets Intersegment elimination Unallocated assets Total assets Segment liabilities Intersegment elimination Unallocated liabilities Total liabilities		12,405,536 3,563,862	5,362,507 5,473,941	4,314,446 818,081	2,565,182 1,400,255	24,647,671 (412,984) 24,504,866 48,739,553 11,256,139 (200,770) 9,377,316 20,432,685
Other segment information
Investments in associates and joint venture partnership Share of net profits of associates and joint venture partnership Acquisitions of property, plant and equipment, intangibles and other non-current segment assets Unallocated Total acquisitions Depreciation and amortisation expense Unallocated Total depreciation and amortisation		- - 348,366 524,166	- - 25,514 71,317	- - 100,431 135,735	295,965 95,964 49,112 70,404	295,965 95,964 523,423 753,916 1,277,339 801,622 277,875 1,079,497

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Lycopodium Limited Notes to the preliminary consolidated financial statements 30 June 2007 (continued)

2 Segment information (continued)

2 Segment information (continued)	2 Segment information (continued)
2006		EPCM $	Design and Construct (Lump Sum) $	Study Services $	Project Services $	Total $
Segment revenue
Sales to external customers Total segment revenue Intersegment elimination Unallocated revenue Consolidated revenue		59,727,994 59,727,994	6,853,194 6,853,194	6,934,373 6,934,373	12,686,262 12,686,262	86,201,823 86,201,823 (3,048,693) 1,001,912 84,155,042
Segment result
Segment result Unallocated revenue less unallocated expenses Profit before income tax Income tax expense Profit for the year		11,154,946	16,467	1,459,943	2,157,540	14,788,896 (4,172,777) 10,616,119 (3,022,043) 7,594,076
Segment assets and liabilities
Segment assets Intersegment elimination Unallocated assets Total assets Segment liabilities Intersegment elimination Unallocated liabilities Total liabilities		18,090,016 4,885,090	2,128,999 528,132	1,739,860 538,197	2,062,779 1,039,725	24,021,654 (489,691) 19,007,022 42,538,985 6,991,144 (205,585) 10,493,969 17,279,528
Other segment information
Investments in associates and joint venture partnership Share of net profits of associates and joint venture partnership Acquisitions of property, plant and equipment, intangibles and other non-current segment assets Unallocated Total acquisitions Depreciation and amortisation expense Unallocated Total depreciation and amortisation		- - 1,063,524 633,026	- - 122,463 72,892	- - 124,797 74,281	1 - 219,669 130,750	1 - 1,530,453 (47,670) 1,482,783 910,949 (28,374) 882,575

(i) Inter-segment transfers Segment revenues, expenses and results include transfers between segments. Such transfers are priced on an ''arm’slength'' basis and are eliminated on consolidation.

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Lycopodium Limited Notes to the preliminary consolidated financial statements 30 June 2007 (continued)

3 Revenue

From continuing operations Contract revenue Other revenue Rents and sub-lease rentals Bank interest Other revenue	Consolidated 2007 2006 $ $ 103,657,877 83,153,130 216,886 170,978 677,727 580,234 94,950 250,700 989,563 1,001,912 104,647,440 84,155,042

4 Other income

Net gain on sale of available-for-sale financial assets Foreign exchange gains (net) 5 Expenses Profit before income tax includes the following specific expenses: Depreciation Buildings Plant and equipment Motor Vehicles Total depreciation Amortisation Leasehold improvements Leased plant and equipment Computer software Total amortisation Finance costs Interest and finance charges paid/payable Net loss on disposal of property, plant and equipment

Consolidated 2007 2006 $ $ 44,274 144,025 7,399 35,555 51,673 179,580 Consolidated 2007 2006 $ $ 39,206 39,286 401,317 392,652 16,236 30,245 456,759 462,183 62,132 59,246 192,421 173,605 368,185 187,541 622,738 420,392 186,401 197,180 11,795 7,214

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Lycopodium Limited Notes to the preliminary consolidated financial statements 30 June 2007 (continued)

5 Expenses (continued)

Rental expense relating to operating leases Minimum lease payments 6 Reserves and retained profits (a) Reserves Foreign currency translation reserve Available-for-sale investments revaluation reserve Movements: Foreign currency translation reserve Balance 1 July Currency translation differences arising during the year Balance 30 June Movements: Available-for-sale investments revaluation reserve Balance 1 July Revaluation movement Balance 30 June

Consolidated 2007 2006 $ $ 2,092,053 1,866,984 Consolidated 2007 2006 $ $ (288,967) (13,215) - (20,000) (288,967) (33,215) Consolidated 2007 2006 $ $ (13,215) (41,939) (275,752) 28,724 (288,967) (13,215) Consolidated 2007 2006 $ $ (20,000) - 20,000 (20,000) - (20,000)

(b) Retained profits

Movements in retained profits were as follows:

Balance 1 July Profit for the year Dividends Balance 30 June

Consolidated	Consolidated
2007	2006
$	$
7,806,175	6,041,549
8,897,663	7,594,076
(5,654,500)	(5,829,450)
11,049,338	7,806,175

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Lycopodium Limited Notes to the preliminary consolidated financial statements 30 June 2007 (continued)

7 Dividends

(a) Ordinary shares Final dividend for the year ended 30 June 2006 of 10 cents (2005 - 10.5 cents) per fully paid share paid on 15 November 2006 (2005 - 15 November 2005) Fully franked based on tax paid @ 30% - 10 cents (2005 - 10.5 cents) per share Interim dividend for the year ended 30 June 2007 of 5 cents (2006 - 5 cents) per fully paid share paid 13 April 2007 (2006 - 13 April 2006) Fully franked based on tax paid @ 30% Total dividends provided for or paid Dividends paid in cash during the years ended 30 June 2007 and 2006 were as follows: (b) Dividends not recognised at year end In addition to the above dividends, since year end the directors have recommended the payment of a final dividend of 12.5 cents per fully paid ordinary share (2006 - 10 cents), fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 15 October 2007 out of Group retained profits at 30 June 2007, but not recognised as a liability at year end, is

Parent 2007 2006 $ $ 3,768,000 3,946,950 1,886,500 1,882,500 5,654,500 5,829,450 5,654,500 5,829,450 4,716,250 3,767,000

8 Events occurring after the balance sheet date

(a) Establishment of Lycopodium Engineering Qld Pty Ltd

A new subsidiary was established by the parent entity, with Lycopodium Limited holding a 75% interest in Lycopodium Engineering Qld Pty Ltd. Lycopodium Engineering Qld Pty Ltd commenced operations on 6 August 2007 with its operations involving the supply of consulting services within Queensland and the Pacific region.

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Lycopodium Limited Notes to the preliminary consolidated financial statements 30 June 2007 (continued)

9 Reconciliation of profit after income tax to net cash inflow from operating activities

Profit for the year Depreciation and amortisation Net loss on sale of non-current assets Net gain on sale of available-for-sale financial assets Share of profits of associates not received as dividends or distributions Non cash operating expenses Net exchange differences Change in operating assets and liabilities (Increase) decrease in trade debtors and other receivables Decrease (increase) in inventories (Increase) decrease in deferred tax assets (Increase) decrease in other operating assets Increase (decrease) in trade creditors and other payables Increase (decrease) in other operating liabilities Increase (decrease) in current tax liabilities Increase (decrease) in other provisions Net cash (outflow) inflow from operating activities

Consolidated 2007 2006 $ $ 8,897,663 7,594,076 1,079,497 882,575 11,795 7,214 (44,274) (144,025) (95,964) - 25,175 47,441 (7,399) (29,160) (5,243,742) (4,611,764) 403,427 467,157 (293,707) (528,305) (650,976) (172,087) 1,803,694 2,328,019 782,092 1,306,664 835,502 1,122,427 56,392 110,442 7,559,175 8,380,674

10 Earnings per share

		Consolidated	Consolidated
		2007	2006
		Cents	Cents
(a)	Basic earnings per share
Profit attributable to the ordinary equity holders of the company		23.6	20.2
(b)	Diluted earnings per share
Profit attributable to the ordinary equity holders of the company		23.5	20.1

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Lycopodium Limited Supplementary Appendix 4E information 30 June 2007

Additional dividend/distribution information (Appendix 4E item 6)

Details of dividends/distributions declared or paid during or subsequent to the year ended are as follows:

Record date	Payment date	Type	Amount per security	Total dividend	Franked amount per security
1 November 2006	15 November 2006	Final	10.0 cents	$ 3,768,000	10.0 cents
3 April 2007	13 April 2007	Interim	5.0 cents	$ 1,886,500	5.0 cents
2 October 2007	15 October 2007	Final	12.5 cents	$ 4,716,250	12.5 cents

Retained Earnings (Appendix 4E item 8)

Balance 1 July Net profit for the year Dividends	2007 2006 $ $ 7,806,175 6,041,549 8,897,663 7,594,076 (5,654,500) (5,829,450) 11,049,338 7,806,175

NTA Backing (Appendix 4E item 9)

NTA Backing(Appendix 4E item 9)
	2007	2006
Net tangible asset backing per ordinary share (cents)	59	53

Associates and Joint Venture entities(Appendix 4D item 7) Name Ownership interest	Associates and Joint Venture entities(Appendix 4D item 7) Name Ownership interest	Associates and Joint Venture entities(Appendix 4D item 7) Name Ownership interest	Aggregate share of profits/(losses),where material	Aggregate share of profits/(losses),where material
	2007	2006	2007	2006
	%	%	$	$
MLH Management Pty Ltd	33	33	-	-
Sherwood Utilities Pty Ltd	40	-	95,964	-

Other significant information (Appendix 4E item 12) Refer to attached Company Update

Audit Alert (Appendix 4E items 15 - 17)

This report is based on accounts which are in the process of being audited.

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