LYCOPODIUM LIMITED — Annual Report 2010

Aug 22, 2010

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Lycopodium Limited

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ABN 83 098 556 159

Level 5, 1 Adelaide Terrace East Perth, Western Australia 6004 Australia

PO Box 6832 East Perth, Western Australia 6892 Australia T: +61 (0) 8 6210 5222 www.lycopodium.com.au

ASX RELEASE

LYCOPODIUM LIMITED 2009/10 RESULTS

23 August 2010

Revenue : $120.3 million, down 18.0% from 2009 result Profit Before Tax : $18.7 million, down 7.4% from 2009 result Profit After Tax : $16.0 million, up 13.3% from 2009 result Earnings Per Share : 41.6 cents per share, up 11.2% from 2009 Total Dividend : 27 cents per share, up 8% from 2009 Final Dividend : 22 cents per share, up 10% from 2009

The Directors of Lycopodium are pleased to be able to report a solid performance for the 2009/10 financial year despite the lingering effects of the global financial crisis. The exceptional efforts of our staff during this period and the continued support from our valued clients have underpinned the current year’s results.

During the financial year ended 30 June 2010, Lycopodium realised revenues of $120 million, an 18% decrease from $147 million in the previous financial year. However net profit after tax was $16 million, as compared to $14.2 million in the previous financial year, a 13% increase. Net profit after tax was favourably impacted by the resolution of the tax dispute in Tanzania, which was highlighted in the previous financial year, as well as the finalisation of a prior year contract which enabled the release of a performance provision. The underlying operating profit before tax was $16 million, down from $20 million in the prior year.

In addition to the new segment reporting format in the Appendix 4E report, we are also including our prior segment reporting format.

Basic earnings per share increased from 37.4 cents for the previous financial year to 41.6 cents and in accordance with the lower end of the company’s dividend policy the Directors have resolved to pay a final dividend of 22 cents fully franked. The total dividend for the year is 27 cents fully franked.

The market for Lycopodium’s services in 2010/11 remains unsettled and difficult to accurately forecast.

The first half of the 2010/11 financial year will see the completion of a number of major feasibility studies. Subject to favourable conditions, there is the prospect of select projects continuing into the execution phase which will provide a forward pipeline of work for the company. In the event that these projects are delayed in approval then the prospects for a material increase in revenues in 2010/11 will be limited. At present the company has adopted the view there will be a modest increase to the company’s financial performance in 2010/11, forecasting revenues of $135 million and profit after tax of $13.0 million.

Dividend Entitlements

The final dividend of 22.0 cents per share fully franked will be paid to shareholders on 15 October 2010, with a record date of 1 October 2010.

For further information: Rod Leonard Managing Director T: +61 8 6210 5222

Lycopodium Ltd Segment reporting FYE 30 June 2010

EPCM Design & construct (lump sum) Study services Project services Unallocated revenue Unallocated revenue less unallocated expenses Profit before income tax expense Income tax expense Profit for the half-year Less: profit attributable to minority interest Profit attributable to members of Lycopodium Ltd	Jun-10 Jun-09 34,109,503 72,849,440 4,390,655 1,654,157 31,959,598 35,181,000 48,630,280 34,431,369 119,090,036 144,115,966 1,244,479 2,719,681 120,334,514 146,835,647 Segment revenues	Jun-10 Jun-09 9,498,627 11,666,321 1,113,718 343,367 5,019,694 4,176,787 9,965,890 5,478,699 Segment results
		25,597,929 21,665,174 0 0
		25,597,929 21,665,174 (6,886,151) (1,462,432)
		18,711,778 20,202,742 (2,653,312) (5,425,487)
		16,058,466 14,777,255 0 (606,837)
		16,058,466 14,170,418

G:\Document Files\Lycopodium Limited\Accounts\2009-10\Full Year Jun-10\Segment Note\Lyco Ltd Segment Note (Old Format) Jun 10

Lycopodium Limited and Controlled Entities ABN 83 098 556 159

Appendix 4E - Preliminary final report for the year ended 30 June 2010

83 098 556 159 Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary final report - 30 June 2010

Lodged with the ASX under listing Rule 4.3A Contents

	Page
Results for Announcement to the Market	1
Preliminary statement of comprehensive income	2
Preliminary balance sheet	3
Preliminary statement of changes in equity	4
Preliminary cash flow statement	5
Notes to the consolidated financial statements	6
Supplementary Appendix 4E information	19

Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report For the year ended 30 June 2010

Results for Announcement to the Market 30 June 2010	Results for Announcement to the Market 30 June 2010	Results for Announcement to the Market 30 June 2010	Results for Announcement to the Market 30 June 2010	Results for Announcement to the Market 30 June 2010	Results for Announcement to the Market 30 June 2010
					$
Revenuefrom continuing operations (Appendix 4E item 2.1)	down	% 18.0	to		120,334,515
Profit / (loss)from continuing operations after tax attributable to members (Appendix 4E item 2.2)	up	% 13.3	to		16,058,466
Profit / (loss)for the period attributable to members (Appendix 4E item 2.3)	up	% 13.3	to		16,058,466
Dividends / distributions (Appendix 4E item 2.4)	Amount per security		Franked amount per security
Final dividend (cents)	22.0			22.0
Key Ratios	2010			2009
	June			June
Basic earnings per share (cents)	41.6			37.4
Net tangible assets per share (cents)	100.1			91.6
Record datefor determining entitlements to the final dividend
				1 October 2010

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Lycopodium Limited Appendix 4E - Preliminary Final Report Preliminary Statement of Comprehensive Income For the year ended 30 June 2010

Revenue from operations 3 Other income 4 Employee benefits expense Depreciation and amortisation expense 5 Other project expenses Equipment and materials Contractors Administration and management costs Loss on disposal of asset Finance costs 5 Share of net profit of associate accounted for using the equity method Profit before income tax Income tax expense 6 Profit for the year Other comprehensive income Changes in fair value of available-for-sale financial assets Exchange differences on translation of foreign operations Income tax relating to components of other comprehensive income Other comprehensive income for the year, net of tax Total comprehensive income for the year Profit is attributable to: Owners of Lycopodium Limited Profit attributable to minority interest Total comprehensive income for the year is attributable to: Owners of Lycopodium Limited Profit attributable to minority interest Earnings per share attributable to the ordinary equity holders of the parent entity: Basic earnings per share Diluted earnings per share

Consolidated 2010 2009 $ $ 120,334,515 146,835,647 466,947 2,900,166 (62,205,327) (64,927,703) (1,608,491) (1,841,544) (446,985) (6,904,017) (417,512) (626,000) (26,832,329) (44,206,915) (9,889,072) (10,745,710) (868) - (715,142) (374,678) 26,042 93,496 18,711,778 20,202,742 (2,653,312) (5,425,487) 16,058,466 14,777,255 (17,000) (49,000) 6,813 349,963 5,100 14,700 (5,087) 315,663 16,053,379 15,092,918 16,058,466 14,170,418 - 606,837 16,058,466 14,777,255 16,053,379 14,486,081 - 606,837 16,053,379 15,092,918 Cents Cents 41.6 37.4 41.4 37.3

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

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Preliminary Balance Sheet As at 30 June 2010

Notes ASSETS Current assets Cash and cash equivalents Trade and other receivables Current tax receivables Other current assets Total current assets Non-current assets Other receivables Investments accounted for using the equity method Available-for-sale financial assets Property, plant and equipment 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 7(a) Retained profits 7(b) Parent entity interest Non-controlling interest 8 Total equity

Consolidated 2010 2009 $ $ 23,395,487 26,362,861 27,665,267 24,100,564 1,374,991 - 1,415,739 1,415,308 53,851,484 51,878,733 1,858,515 - - 440,344 33,000 50,000 3,147,532 3,548,705 2,152,651 2,921,830 6,018,211 5,063,182 13,209,909 12,024,061 67,061,393 63,902,794 18,994,066 16,344,344 782,003 837,249 - 2,849,913 475,000 1,757,267 20,251,069 21,788,773 1,473,918 1,931,273 616,973 455,448 2,090,891 2,386,721 22,341,960 24,175,494 44,719,433 39,727,300 18,730,297 17,656,497 (134,501) (158,143) 26,123,637 21,622,524 44,719,433 39,120,878 - 606,422 44,719,433 39,727,300

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

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Preliminary Statement of Changes in Equity For the year ended 30 June 2010

Notes Total equity at the beginning of the financial year Total comprehensive income for the year Transactions with equity holders in their capacity as equity holders: Contributions of equity, net of transaction costs Senior Manager Share Acquisition Plan Dividends provided for or paid 9 Director performance share reserve 7 Exercise of director performance rights 7 Acquisition of minority interests 10 Unreconciled difference Total equity at the end of the financial year Total recognised income and expense for the year is attributable to: Equity holders of Lycopodium Limited Non-controlling interest

Consolidated 2010 2009 $ $ 39,727,300 33,849,700 16,053,379 15,092,918 1,073,800 - (1,858,515) - (9,663,775) (9,460,000) 102,529 244,682 (73,800) - (2,500,000) - (12,919,761) (9,215,318) 1,858,515 - 44,719,433 39,727,300 16,053,379 14,486,496 - 606,422 16,053,379 15,092,918

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

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Preliminary Cash Flow Statement For the year ended 30 June 2010

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 Loans provided under the senior manager share acquisition plan Income taxes paid Net cash inflow from operating activities 12 Cash flows from investing activities Payment for purchase of business, net of cash acquired 10 Payment for acquisition of minority interest 10 Payments for property, plant and equipment Proceeds from sale of property, plant and equipment Payments for intangible assets Proceeds from sale of property, plant and equipment Net cash (outflow) / inflow from investing activities Cash flows from financing activities Repayment of hire purchase and lease liabilities Repayment of borrowings Dividends paid to company’s shareholders 9 Net cash outflow from financing activities Net (decrease) / increase 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 2010 2009 $ $ 123,545,411 163,250,285 (105,358,861) (133,845,811) 18,186,550 29,404,474 632,640 668,168 (470,593) (104,495) (1,858,515) - (5,172,935) (6,170,948) 11,317,147 23,797,199 (870,132) - (1,500,000) - (378,469) (681,758) - 5,100,000 (54,717) (159,979) 51,144 - (2,752,174) 4,258,263 (1,045,577) (1,072,098) (829,223) (1,400,000) (9,663,775) (9,460,000) (11,538,575) (11,932,098) (2,973,602) 16,123,364 26,362,861 9,987,106 6,228 252,391 23,395,487 26,362,861

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

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010

1 Summary of significant accounting policies

(a) Basis of preparation

This preliminary financial report has been prepared in accordance with Australian Securities Exchange Listing Rules as they relate to Appendix 4E and in accordance with the recognition and measurement requirements of the 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 2009 and with any public announcements made by Lycopodium Limited during the period in accordance with the disclosure requirements of the Corporations Act 2001.

The principal accounting policies adopted in the preparation of the financial report are consistent with those of the previous financial year except as set out below.

Changes in accounting policy

Lycopodium Limited had to change some of its accounting policies as the result of new or revised accounting standards which became operative for the annual reporting period commencing on 1 July 2009.

The affected policies and standards are:

• Principles of consolidation - revised AASB 127 Consolidated and Separate Financial Statements and changes made by AASB 2008-7 Amendments to Australian Accounting Standards - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

• Business combinations - revised AASB 3 Business Combinations

• Segments - new AASB 8 Operating Segments

Principles of consolidation

AASB 127 (revised) requires the effects of all transactions with non controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. This is different to the Group’s previous accounting policy where transactions with minority interests were treated as transactions with parties external to the group.

The standard also specifies the accounting when control is lost. Any remaining interest in the entity must now be remeasured to fair value and a gain or loss is recognised in profit or loss. This is consistent with the entity’s previous accounting policy if significant influence is not retained.

The Group will in future allocate losses to the non controlling interest in its subsidiaries even if the accumulated losses should exceed the non controlling interest in the subsidiary's equity. Under the previous policy, excess losses were allocated to the parent entity.

Lastly, dividends received from investments in subsidiaries, jointly controlled entities or associates after 1 July 2009 are recognised as revenue even if they are paid out of pre acquisition profits. However, the investment may need to be tested for impairment as a result of the dividend payment. Under the entity’s previous policy, these dividends would have been deducted from the cost of the investment.

The changes were implemented prospectively from 1 July 2009. There has been no impact on the current period as none of the non controlling interests have a deficit balance. There have also been no transactions whereby an interest in an entity is retained after the loss of control of that entity, no transactions with non controlling interests and no dividends paid out of pre acquisition profits.

Business combinations

AASB 3 (revised) continues to apply the acquisition method to business combinations, but with some significant changes.

All payments to purchase a business are now recorded at fair value at the acquisition date, with contingent payments classified as debt and subsequently remeasured through the profit and loss. Under the Group’s previous policy, contingent payments were only recognised when the payments were probable and could be measured reliably and were accounted for as an adjustment to the cost of acquisition.

Acquisition related costs are expensed as incurred. Previously, they were recognised as part of the cost of acquisition and therefore included in goodwill.

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010

(continued)

1 Summary of significant accounting policies (continued)

(a) Basis of preparation (continued)

Non-controlling interests in an acquiree are now recognised either at fair value or at the non controlling interest’s proportionate share of the acquiree’s net assets. This decision is made on an acquisition by acquisition basis. Under the previous policy, the non controlling interest was always recognised at its share of the acquiree’s net assets.

If the Group recognises acquired deferred tax assets after the initial acquisition accounting there will no longer be any adjustment to goodwill. As a consequence, the recognition of the deferred tax asset will increase the Group’s net profit after tax.

The changes were implemented prospectively from 1 July 2009 and affected the accounting for the acquisition of Sherwood Utilities Pty Ltd as disclosed in Note 10.

Segment reporting

The Group has applied AASB 8 Operating Segments from 1 July 2009. AASB 8 requires a ‘management approach’ under which segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in a decrease in the number of reportable segments presented, as the previously reported segments have now been adjusted to adhere to the requirements of AASB 8.

Operating segments are now reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors that makes strategic decisions.

2 Segment information

(a) Description of segments

Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions.

The Board considers the business from both a product and geographic perspective and has identified nine operating segments of which two are reportable in accordance with the requirements of AASB 8.

The Corporate Services segment consists of managerial and legal services provided to the group in addition to strategic investment holdings.

The Minerals segment consists of engineering and related services provided to the extractive mining industry. The clients, including junior exploration companies and major multinational producers, are developing projects for a wide range of commodities. These projects range in scope from large greenfield projects involving process plant and equipment, civil and building works, control systems, services and infrastructure to small skid mounted pilot plants.

• All other operating segments are not reportable operating segments, as they fall under the quantitative thresholds of AASB 8. The results of these operations are included in the 'Other' column.

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010

(continued)

2 Segment information (continued)

(b) Segment information provided to the Board of Directors

The segment information provided to the Board of Directors for the reportable segments for the year ended 30 June 2010 and 2009 are as follows:

		Corporate
2010		Services	Minerals	Other	Total
Total segment revenue Inter-segment revenue Revenue from external customers Segment net profit before tax Depreciation and amortisation Income tax expense Share of profit of associate Total segment assets Additions to non-current assets (other than financial assets and deferred tax) Total segment liabilities		$ 8,563,387 (8,251,717) 311,670 (530,956) (631,943) (10,750) 26,042 11,429,478 - (2,282,391)	$ 111,868,242 (8,670,996) 103,197,246 16,409,671 (619,259) (2,036,351) - 38,130,396 462,855 (14,419,380)	$ 22,286,590 (5,460,991) 16,825,599 2,821,301 (312,288) (619,710) - 14,360,016 241,595 (7,917,089)	$ 142,718,219 (22,383,704) 120,334,515 18,700,016 (1,563,490) (2,666,811) 26,042 63,919,890 704,450 (24,618,860)

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010 (continued)

2 Segment information (continued)

(b) Segment information provided to the Board of Directors (continued)

		Corporate
2009		Services	Minerals	Other	Total
Total segment revenue Inter-segment revenue Revenue from external customers Segment net profit before tax Depreciation and amortisation Income tax expense Share of profit of associate Total segment assets Total assets includes: Investment in associate Additions to non-current assets (other than financial assets and deferred tax) Total segment liabilities		$ 21,402,228 (21,033,247) 368,981 1,312,347 (827,282) (252,974) 93,496 19,419,884 240,343 10,840 (2,627,898)	$ 138,184,500 (6,824,131) 131,360,369 17,745,701 (681,880) (4,850,083) - 35,226,748 - 621,995 (20,377,153)	$ 21,676,779 (6,570,482) 15,106,297 1,051,200 (332,382) (322,430) - 9,611,990 - 444,587 (5,870,251)	$ 181,263,507 (34,427,860) 146,835,647 20,109,248 (1,841,544) (5,425,487) 93,496 64,258,622 240,343 1,077,422 (28,875,302)

(c) Other segment information

(i) Segment revenue Sales between segments are carried out at arm's length and are eliminated on consolidation. The revenue from external parties reported to the Board of Directors is measured in a manner consistent with that in the statement of comprehensive income.

Segment revenue reconciles to total revenue from operations as per the preliminary statement of comprehensive income as follows:

Reportable segment revenue Intersegment eliminations Revenue as per the statement of comprehensive income	Consolidated 2010 2009 $ $ 142,718,219 181,263,507 (22,383,704) (34,427,860) 120,334,515 146,835,647

The entity is domiciled in Australia. The amount of its revenue from external customers in Australia is $67,050,000 (2009 - $73,682,000), and the total revenue from external customers in other countries is $53,285,000 (2009 - $73,154,000). Segment revenues are allocated based on the country in which the customer is located.

Revenues of approximately $47,503,000 (2009 - $98,113,000) are derived from the group's top 3 customers. These revenues are attributable to the Minerals segment.

(ii) Segment profit before tax

The Board of Directors assesses the performance of the operating segments based on a measure of profit before tax.

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010 (continued)

2 Segment information (continued)

(c) Other segment information (continued)

A reconciliation of reportable segment profit before tax to the profit before tax in the preliminary statement of comprehensive income is provided as follows:

Reportable segment profit before tax Amortisation of customer relationships Share of net profit of associate accounted for using the equity method Other Profit before tax as per the preliminary statement of comprehensive income	Consolidated 2010 2009 $ $ 18,700,016 20,109,246 (45,000) - 26,042 93,496 30,720 - 18,711,778 20,202,742

(iii) Segment assets

The amounts provided to the Board of Directors with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset.

Reportable segments' assets are reconciled to total assets in the preliminary balance sheet as follows:

Segment assets Intersegment eliminations Investments accounted for using the equity method Intangibles arising on consolidation Deferred tax arising on consolidation Total assets as per the preliminary balance sheet	Consolidated 2010 2009 $ $ 63,919,890 64,258,622 (2,565,077) (4,993,517) - 240,343 5,787,580 4,397,346 (81,000) - 67,061,393 63,902,794

The total of non-current assets located in Australia is $8,799,000 (2009 - $8,051,000), and the total of these non-current assets located in other countries is $367,000 (2009 - $561,000). Segment assets are allocated to countries based on where the assets are located.

(iv) Segment liabilities

The amounts provided to the Board of Directors with respect to total liabilities are measured in a manner consistent with that of the financial statements. These liabilities are allocated based on the operations of the segment.

Reportable segments' liabilities are reconciled to total liabilities as per the preliminary balance sheet as follows:

Segment liabilities Intersegment eliminations Total liabilities as per the preliminary balance sheet	Consolidated 2010 2009 $ $ 24,618,860 28,875,302 (2,276,900) (4,699,808) 22,341,960 24,175,494

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010

(continued)

3 Revenue

From operations Sales revenue Contract revenue Other revenue Rents and sub-lease rentals Bank interest Other revenue Total revenue from operations	Consolidated 2010 2009 $ $ 119,570,470 145,929,840 36,080 173,161 646,893 693,933 81,072 38,713 764,045 905,807 120,334,515 146,835,647

4 Other income

Net gain on disposal of property, plant and equipment Gain on step-up of investment in associate (note 10) 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 Customer contracts and relationships Total amortisation Total depreciation and amortisation Finance costs Interest and finance charges paid/payable

Consolidated 2010 2009 $ $ - 2,900,166 466,947 - 466,947 2,900,166 Consolidated 2010 2009 $ $ - 29,297 301,588 373,003 18,561 21,834 320,149 424,134 83,964 115,396 694,252 728,916 465,126 573,098 45,000 - 1,288,342 1,417,410 1,608,491 1,841,544 715,142 374,678

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010

(continued)

5 Expenses (continued)

5 Expenses (continued)
	Consolidated
	2010	2009
	$	$
Rental expense relating to operating leases
Minimum lease payments	4,329,130	4,404,748

6 Income tax expense

(a) Income tax expense Current tax Deferred tax Adjustments for current tax of prior periods - overprovision of prior year income tax Adjustments for current tax of prior periods - research and development concessions Adjustments for current tax of prior periods - Non-assessable, non-exempt income and related non-deductible expenses Deferred income tax (revenue) included in income tax expense comprises: Decrease / (Increase) in deferred tax assets Increase / (Decrease) in deferred tax liabilities (b) Numerical reconciliation of income tax expense to prima facie tax payable Profit before income tax expense Tax at the Australian tax rate of 30% (2009 - 30%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Non deductible depreciation and amortisation Share based payment Sundry items Non-assessable, non-exempt income and related non-deductible expenses relating to foreign jurisdiction Adjustments for current tax of prior periods - research and development concessions Adjustments for current tax of prior periods - overprovision of prior year income tax Adjustments for current tax of prior periods - Non-assessable, non-exempt income and related non-deductible expenses Difference in overseas tax rates Previously unrecognised tax losses now recouped to reduce current tax expense Movement in exchange rates Total income tax expense

Consolidated 2010 2009 $ $ 6,127,823 6,359,819 749,844 (392,653) (158,247) - (180,239) (541,679) (3,885,869) - 2,653,312 5,425,487 598,465 (396,751) 151,379 4,098 749,844 (392,653) 18,711,778 20,202,742 5,613,533 6,060,823 2,992 5,860 30,759 73,405 117,223 64,496 804,196 - 6,568,703 6,204,584 (180,239) (559,587) (158,247) - (3,885,869) - 431,682 4,358 (122,128) (223,868) (590) - 2,653,312 5,425,487

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010

(continued)

6 Income tax expense (continued)

(c) Amounts recognised directly in equity Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss but directly debited or credited to equity Net deferred tax - (credited) directly to equity (d) Tax losses Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 30% All unused tax losses were incurred by Australian entities. 7 Reserves and retained profits (a) Reserves Director performance share reserve Foreign currency translation reserve Available-for-sale investments revaluation reserve Movements: Available-for-sale investments revaluation reserve Balance 1 July Revaluation - gross Deferred tax Balance 30 June

Consolidated 2010 2009 $ $ (5,100) (14,700) Consolidated 2010 2009 $ $ 1,969,435 - 590,831 - Consolidated 2010 2009 $ $ 273,411 244,682 (347,012) (353,825) (60,900) (49,000) (134,501) (158,143) Consolidated 2010 2009 $ $ (49,000) (14,700) (17,000) (49,000) 5,100 14,700 (60,900) (49,000)

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010

(continued)

7 Reserves and retained profits (continued)

Movements: Director performance share reserve Balance 1 July Transfer to share capital (rights exercised) Director performance share plan expense Balance 30 June Movements: Foreign currency translation reserve Balance 1 July Currency translation differences arising during the year Balance 30 June	Consolidated 2010 2009 $ $ 244,682 - (73,800) - 102,529 244,682 273,411 244,682 Consolidated 2010 2009 $ $ (353,825) (703,788) 6,813 349,963 (347,012) (353,825)

(b) Retained profits

Movements in retained profits were as follows:

Balance 1 July Net profit for the year Dividends Transfer from minority interest Acquisition of minority interest Balance 30 June	Consolidated 2010 2009 $ $ 21,622,524 16,912,106 16,058,466 14,170,418 (9,663,775) (9,460,000) 606,422 - (2,500,000) - 26,123,637 21,622,524

8 Minority interest

Interest in: Share capital Retained profits Transfer to retained earnings	Consolidated 2010 2009 $ $ 35 35 606,387 606,387 (606,422) - - 606,422

The minority interest was transferred to retained profits following the acquisition of the remaining 25% minority interest in Lycopodium Minerals QLD Pty Ltd as noted in Note 10.

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010

(continued)

9 Dividends

(a) Ordinary shares Final dividend for the year ended 30 June 2009 of 20.0 cents (2008 - 20.0 cents) per fully paid share paid on 16 October 2009 (2008 - 17 October 2008) Fully franked based on tax paid @ 30% (2008 - 30%) Interim dividend for the year ended 30 June 2010 of 5.0 cents (2009 - 5.0 cents) per fully paid share paid 15 April 2010 (2009 - 15 April 2009) Fully franked based on tax paid @ 30% (2008 - 30%) Total dividends provided for or paid Dividends paid in cash during the year 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 22.0 cents per fully paid ordinary share (2009 - 20.0 cents), fully franked based on tax paid at 30% (2009 - 30%). The aggregate amount of the proposed dividend expected to be paid on 15 October 2010 out of Group retained profits at 30 June 2010, but not recognised as a liability at year end, is

Parent entity 2010 2009 $ $ 7,731,021 7,568,000 1,932,754 1,892,000 9,663,775 9,460,000 9,663,775 9,460,000 Parent entity 2010 2009 $ $ 8,504,123 7,731,021

10 Business combination

Acquisition of remaining 60% interest in Sherwood Utilities Pty Ltd

(a) Summary of acquisition

On 31 August 2009 Lycopodium Ltd acquired the remaining 60% of the issued share capital of its associate Sherwood Utilities Pty Ltd not held by it.

The acquired business contributed revenues of $5,750,000 and net profit of $510,000 to the Group for the period from 31 August 2009 to 30 June 2010. If the acquisition had occurred on 1 July 2009, consolidated revenue and consolidated profit for the year ended 30 June 2010 would have been $121,406,000 and $16,127,000 respectively. These amounts have been calculated using the Group's accounting policies and by adjusting the results of the subsidiary to reflect the additional amortisation that would have been charged assuming the fair value adjustments to intangible assets (customer contracts and relationships) had applied from 1 July 2009, together with the consequential tax effects.

Details of the fair value of the assets and liabilities acquired and goodwill are as follows:

Purchase consideration Cash paid Earn out right Fair value of net identifiable assets acquired (60% of $1,238,284) (refer to (c) below) Goodwill in respect of 60% interest acquired	1,400,000 - 742,971
	657,029

The goodwill arises on the acquisition of the remaining 60% interest in Sherwood Utilities Pty Ltd.

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010 (continued)

10 Business combination (continued)

The goodwill is attributable to Sherwood Utilities Pty Ltd's profitability and synergies expected to arise after the company's acquisition of the new subsidiary.

Based on the above purchase consideration, the value of the previously equity accounted investment was revalued. A gain of $466,947 (2009: Nil) is included in the profit for the year.

(b) Purchase consideration

Outflow of cash to acquire business, net of cash acquired Cash consideration Less: Balances acquired Cash Outflow of cash	Consolidated 2010 2009 $ $ 1,400,000 - 529,868 - 870,132 -

(c) Assets and liabilities acquired

The assets and liabilities recognised as a result of the acquisition are as follows:

Cash and cash equivalents Trade and other receivables Property, plant and equipment Intangibles Trade and other payables Employee benefit liabilities, including superannuation Borrowings Net deferred tax asset (liability) Net assets Net identifiable assets acquired	Acquiree's carrying amount $ 529,868 841,858 121,356 390 (251,705) (231,591) (61,869) 69,477 1,017,784	Fair value $ 529,868 841,858 121,356 315,390 (251,705) (231,591) (61,869) (25,023)
		1,238,284
		1,238,284

Earn out right

The earn out right arrangement requires Lycopodium Limited to pay the former owners of Sherwood Utilities Pty Ltd 60% of five times the after tax profit of Sherwood Utilities Pty Ltd for the financial year ended 30 June 2010 up to a maximum undiscounted amount of $745,000.

At the end of 30 June 2010, the earn out right criteria was not met and as a result, no earn out right was payable. This has been accounted for accordingly in the accounting for this business combination.

Acquired receivables

The fair value of acquired trade and other receivables is $841,858 and includes trade receivable with a fair value of $811,768. The gross contractual amount for trade receivables due is $811,768, of which the full amount is expected to be collectible.

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010 (continued)

10 Business combination (continued)

Acquisition of remaining 25% minority interest in Lycopodium Minerals QLD Pty Ltd

(a) Summary of acquisition

On 13 July 2009 Lycopodium Limited completed the acquisition of all the minority interests' shares in its subsidiary Lycopodium Minerals QLD Pty Ltd pursuant to the exercise of an existing option, for a total consideration of $2,500,000.

Details of the fair value of the assets and liabilities acquired and goodwill are as follows:

Purchase consideration Cash paid Fully paid ordinary shares in Lycopodium Limited Total purchase consideration	1,500,000 1,000,000
	2,500,000

In addition, a maximum of five equal installments of $200,000 per annum is payable on successive anniversary dates of completion of the business combination. These payments are considered to be post acquisition employment benefits and will be recognised as part of employee benefits expense in the period to which the service relates.

The Group recognised a decrease in minority interest of $606,422 (2009: Nil) as noted in Note 8.

11 Events occurring after the reporting period

With the exception the dividends as noted in note 9(b), no other matter or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect:

(a) the consolidated entity's operations in future financial years, or

(b) the results of those operations in future financial years, or

(c) the consolidated entity's state of affairs in future financial years.

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

	Consolidated 2010 2009 $ $
Profit for the year	16,058,466 14,777,255
Depreciation and amortisation	1,608,491 1,841,544
Non-cash employee benefits expense-share-based payments	102,529 244,682
Loans provided under the senior manager share acquisition plan	(1,858,515) -
Net (profit) loss on sale of non-current assets	- (2,900,166)
Gain on step-up of investment in associate	(466,947) -
Share of profit of associate not received as dividends or distributions	(26,042) (93,496)
Net exchange differences	4,353 (19,670)
Non cash interest expense	221,728 283,489
Change in operating assets and liabilities
(Increase) / Decrease in trade and other receivables	(2,722,845) 7,241,713
Decrease / (Increase) in deferred tax assets	769,179 (392,653)
Decrease / (Increase) in other operating assets	805,970 (100,310)
Increase in trade creditors and other payables	2,166,426 1,783,290
(Decrease) / Increase in provision for income taxes payable	(4,224,904) (346,444)
(Decrease) / Increase in other provisions	(1,120,742) 1,477,965
Net cash inflow from operating activities	11,317,147 23,797,199

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Notes to the financial statements 30 June 2010 (continued)

13 Earnings per share (a) Basic earnings per share Profit attributable to the ordinary equity holders of the company (b) Diluted earnings per share Profit attributable to the ordinary equity holders of the company (c) Reconciliations of earnings used in calculating earnings per share Basic earnings per share Profit from operations (Profit) loss from operations attributable to minority interests Diluted earnings per share Profit attributable to the ordinary equity holders of the company used in calculating basic earnings per share Profit attributable to the ordinary equity holders of the company used in calculating diluted earnings per share (d) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options Performance rights Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share

Consolidated 2010 2009 Cents Cents 41.6 37.4 41.4 37.3 Consolidated 2010 2009 16,058,467 14,777,255 - (606,837) 16,058,467 14,170,418 16,058,467 14,170,418 16,058,467 14,170,418 Consolidated 2009 Number 2008 Number 38,617,878 37,840,000 - - 164,807 181,233 38,782,685 38,021,233

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Lycopodium Limited and Controlled Entities Appendix 4E - Preliminary Final Report Supplementary Appendix 4E information 30 June 2010

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

Details of dividends/distributions declared or paid during or subsequent to the year ended 30 June 2010 are as follows:

Record date	Payment date	Type	Amount per security	Total dividend	Franked amount per security
1 October 2009	16 October 2009	Final	20.0 cents	$ 7,731,021	20.0 cents
1 April 2010	15 April 2010	Interim	5.0 cents	$ 1,932,754	5.0 cents
1 October 2010	15 October 2010	Final	22.0 cents	$ 8,504,123	22.0 cents

Associates and Joint Venture entities(Appendix 4D item 7)	Associates and Joint Venture entities(Appendix 4D item 7)
		Ownership interest		Aggregate share of profits/(losses),where material
		2010	2009	2010	2009
		%	%	$	$
MLH Management Pty Ltd		-	33	-	-
Sherwood Utilities Pty Ltd		100	40	26,042	93,496

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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