SCHOOLBLAZER LIMITED — Annual Report 2007

Nov 26, 2007

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~~2007~~

CONTENTS

1 > Chairman’s and Chief Executive’s Review

6 > Business Overview

• 7 > Summary of Results

• 8 > Summary of Listed Shares

• 9 > Acquisition Criteria

10 > Financial Statements

HGL LIMITED > ABN 25 009 657 961

hgl iNvESTS iN AND DEvElOPS ThE POTENTiAl OF SmAll AND mEDium SizED buSiNESSES. hiSTOriCAlly hgl ACquirED buSiNESSES ThrOugh liSTED COmPANy TAkEOvErS AND PrivATE COmPANy ACquiSiTiONS. ThiS hAS lED hgl TO FOCuS ON imPOrTErS AND DiSTribuTOrS OF brANDED gOODS, FuND mANAgEmENT COmPANiES AND A SmAll liSTED ShArE POrTFOliO.

gENErAlly hgl ENTErS iNTO PArTNErShiPS wiTh ThE PEOPlE whO ruN ThE buSiNESSES iN whiCh iT iNvESTS. ThrOugh ThiS APPrOACh ThE PEOPlE ruNNiNg EACh buSiNESS hAvE A SubSTANTiAl iNCENTivE TO ENSurE ThEir buSiNESS PrOSPErS. ThiS EquiTy PArTiCiPATiON PhilOSOPhy iS mirrOrED AT hgl wiTh juST uNDEr 10% OF ThE CAPiTAl bEiNg hElD by hEAD OFFiCE mANAgEmENT.

hgl iNvESTS FOr ThE lONg TErm AND DOES NOT PlAN TO SEll buSiNESSES. hgl CONTribuTES wiDEr buSiNESS EXPEriENCE AND ASSiSTS ThE PEOPlE ruNNiNg EACh buSiNESS TO mANAgE grOwTh AND riSk AND PlAN FOr mANAgEmENT SuCCESSiON. ThiS APPrOACh PrOviDES lONg TErm SECuriTy FOr ShArEhOlDErS, CuSTOmErS, SuPPliErS AND STAFF. hgl iS wEll PlACED TO CONTiNuE DEvElOPiNg iTS buSiNESSES AND PurSuiNg FurThEr ACquiSiTiONS.

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250
hgl rETurNS
200
All OrDiNAriES
ACCumulATiON
150 iNDEX
100
50
0
01 02 03 04 05 06 07
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ChAirmAN’S AND ChiEF EXECuTivE’S

REVIEW

EArNINGs pEr sHArE INcrEAsED By 71% To 32.4 cENTs (2006: 18.9 cENTs), corE EArNINGs pEr sHArE INcrEAsED By 24% To 19.2 cENTs (2006: 15.5 cENTs). DIVIDENDs pEr sHArE INcrEAsED 24% To 14.4 cENTs (2006: 11.6 cENTs). THE FINAL DIVIDEND WILL BE INcrEAsED By 32% To 8.2 cENTs pEr sHArE (2006: 6.2 cENTs).

overview

It is pleasing to report on another successful year for HGL. Profit after tax was $15.6 million (2006: $9.1 million) while core profit increased by 24% to $9.3 million (2006: $7.5 million). A significant non core item is the profit after tax of $6.7 million from the sale of our 37% equity interest in MMC Asset Management Limited and the cancellation of our management agreement with MMC Contrarian Limited (ASX code: MMA). The results are described in more detail on page 7.

Import and distribution businesses

The earnings before interest and tax (EBIT) from our import and distribution businesses increased by 15% to $14.9 million (2006: $13.0 million), excluding the $0.7 million contribution of Biante which was acquired in April 2007.

We are continuing to search for additional businesses to acquire. Our acquisition criteria are set out on page 9.

return on capital

The total return on shareholders funds excluding the $6.7 million profit from the disposal of MMC was 25% (2006: 21%). Including the $6.7 million profit the return on shareholders’ funds was 34%.

Listed shares

From 1 October 2003 when the Company adopted its current strategy, realised and unrealised profits on our listed shares have averaged 11.6 cents per share per annum. This return is in addition to our core earnings which this year were 19.2 cents.

This year realised after tax gains from our listed shares were $2.6 million (2006: $1.1 million) this is included within non core profits. Our listed shares also increased in value by $8.1 million after tax (2006: $4.6 million). As required by Australian Accounting Standards, this unrealised profit is recognised directly into reserves and not included within profit after tax.

people, health and safety

At 30 September 2007 the group employed 455 people (2006: 477). Our businesses mainly operate in low risk workplace environments however management of each business is aware of their occupational health and safety obligations and strive to ensure each workplace remains safe.

Both the impressive results and the positive outlook for the future arise from the efforts of our employees and joint venture partners. The board thanks them for their continuing effort and contribution.

PrOFiTS AND gAiNS

	2007 $millions	cents per share 15.5 3.4 18.9 9.6 28.5 7.5 1.6 9.1 4.6 13.7 2006 $millions
Core profit Non coreprofit	9.3 6.3
Profit after tax Unrealisedgains	15.6 8.1
Profits and gains	cents per share 23.7
Core profit Non coreprofit	19.2 13.2
Profit after tax Unrealisedgains	32.4 16.8
Profits and gains	49.2

DiviDENDS

DiviDENDS
	6.2 5.4 8.2 6.2 14.4 11.6 cents per share cents per share
Interim Final
Total

> 1

ChAirmAN’S AND ChiEF EXECuTivE’S rEviEw > C O N T i N u E D

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Import and distribution businesses
07 $68m
m The earnings before interest and tax (EBIT)
of the businesses owned throughout both 06 $57m
the current and prior year increased by 15%. 05 $47m
$68
> invested in 12 import and Our businesses are described on page 62. 04 $41m
distribution businesses 03 $40m
03 04 05 06 07
At 30 September 2007 $68 million (2006:
>
EBIT to capital employed
$57 million) was invested in 12 (2006: 11) 25% 30%
return of import and distribution businesses. The
%
in 2007 return from the import and distribution 23%
businesses exceeds the target return of
25 29%
20% as illustrated.
29%
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Fund management interests

Our investment in fund management is $57 million (2006: $19 million), the increase is due to the acquisition of MMC Contrarian (ASX code: MMA) shares and the 68% increase in the value of Hunter Hall (ASX code: HHL).

MMc contrarian

As previously described, during the year we sold our 37% equity interest in MMC Asset Management and cancelled our management agreement with MMC Contrarian in return for $15.3 million of equity in MMC Contrarian.

The benefit of this rearrangement is the investment is now largely supported by cash and assets that can be easily turned into cash rather than being mainly goodwill. An additional $19 million has been invested to increase our shareholding to 13%.

Hunter Hall

We own 6% of Hunter Hall with a market value of $23 million (2006: $14 million). Hunter Hall was established in 1993 by HGL and Peter Hall, and listed on the ASX in 2001.

During the year its funds under management increased by 54% to $2.7 billion (2006: $1.7 billion) and its earnings per share increased by 44%. Hunter Hall is cementing its position as a leading Australian domiciled global equities manager. Hunter Hall anticipate that 2008 should see solid growth.

> 2

ChAirmAN’S AND ChiEF EXECuTivE’S rEviEw > C O N T i N u E D

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CORE EARNINGS PER SHARE DIVIDENDS PER SHARE
19.2 14.4
15.5 11.6
14.7
10.2
9.0
11.3 8.6
5.1
03 04 05 06 07 03 04 05 06 07
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shareholder return

Dividends

The final dividend will be increased by 32% to 8.2 cents fully franked per share (2006: 6.2 cents fully franked) and will be paid on 18 December 2007. The total dividend for the year is 14.4 cents per share (2006: 11.6 cents fully franked) an increase of 24%. The full year dividend represents a dividend payout ratio of 75% (2006: 75%) of core profits. The Board policy is to distribute between 70% and 80% of core profits as dividends.

Dividend income grossed up for franking credits combined with share price growth for the year was 18%. The All Ordinaries Accumulation Index (AOAI) increased by 33% in the year. Since 2001 our total shareholder return being dividend income and share price growth, has been 20% compared to the AOAI which increased by 19% over the same period.

> Core earnings per share increased by to 19.2 cents

> Dividends per share increased by to 14.4 cents

Listed shares

We manage our listed share investments with the aim of exceeding a 15% per annum return over the medium term.

This year our listed shares produced a return of 45%. Over the last three years our listed shares have generated a 19% per annum return.

> 3

ChAirmAN’S AND ChiEF EXECuTivE’S rEviEw > C O N T i N u E D

significant developments during the year

HGL strategy

HGL typically invests in both import and distribution businesses and fund management activities in conjunction with the people who run these businesses. For twenty years we have invested on the Australian Stock Exchange and acquired import and distribution businesses through takeover offers and by acquiring privately owned businesses.

HGL shareholders access a diversified portfolio of investments in small and medium sized unlisted businesses and a select number of listed companies identified by an experienced head office team. This diversified mix of investments mitigates the risk that we have in a single industry sector and underpins the robustness of our earnings.

In October 2006 the Chief Executive of J Leutenegger became a 20% owner of the business. This is consistent with our strategy of enabling the senior management of the businesses we own to have an equity stake in the business they manage. While the nature of the equity participation varies from business to business they are all structured to provide management with the financial incentive to grow their business while managing the risks.

In February 2007 we disposed of our 37% equity interest in MMC Asset Management and cancelled our management agreement with MMC Contrarian Limited in return for $15.3 million of equity in MMC Contrarian. In addition, a further $19 million has been invested in MMC Contrarian. Currently HGL owns 13% of MMC Contrarian and is one of the largest shareholders. Kevin Eley, our Chief Executive Officer, has recently accepted the position as the Chairman of MMC Contrarian.

In April 2007 J Leutenegger acquired 100% of Biante, Australia’s leading importer and distributor of collector model cars for $8 million. During our initial period of ownership Biante has performed well and we expect significant growth from this business in 2008.

In July 2007 we increased our equity stake in Amcla from 80% to 92% and strengthened the management team by the introduction of additional executives experienced in improving businesses. Management believe these changes will lead to the improved performance of the business. This business, which we acquired in April 2005 for $5 million, has not performed as we would have wished and a $2 million goodwill impairment expense was recognised this year.

other developments:

• The value of our 6% investment in Hunter Hall increased by 68% to $23 million (2006: $14 million).

• JSB which was acquired during 2006 and distributes specialist lighting equipment, increased its profitability by 53%. A long term incentive and retention plan has been implemented for JSB’s senior management team which we believe will assist in ensuring JSB continues to prosper.

• Aarque Graphics New Zealand’s leading digital print business increased its profits by 47% and we expect additional growth in 2008 as new products become available.

• SPOS which was acquired during 2004 and is Australia’s leading point-of-purchase solutions business increased its profitability by 53%. 2008 is forecast to be another excellent year due in part to the focus of the company on providing sustainable and environmentally sound solutions to its customers.

• Amcla reported a loss of $0.4 million due largely to restructuring costs.

• In aggregate the profitability of our other businesses was at the same level as the previous year. These businesses generated an excellent EBIT to capital employed return of 25%.

> 4

ChAirmAN’S AND ChiEF EXECuTivE’S rEviEw > C O N T i N u E D

Foreign exchange

To varying degrees our businesses have benefited from the strength of the Australian dollar. However, as the competitors to our businesses have received the same benefit market forces tend to result in the majority of these foreign exchange gains being passed onto consumers or retained by suppliers. Likewise when the Australian dollar weakens market forces trend to allow price increases to occur.

Funding and balance sheet

The balance sheet remains strong with a conservative level of debt.

• Total assets have increased by 46% to $188 million (2006: $129 million);

• Shareholders funds have increased by 26% to $93 million (2006: $74 million); and

• Net debt has increased to $27 million (2006: $1 million) with gearing at 20%.

The increase in total assets is mainly due to the purchase of Biante and MMC Contrarian together with the increase in value of Hunter Hall. The increase in net debt is mainly due to the purchase of MMC Contrarian shares and the acquisition of Biante.

Goals for 2008

Our goals for next year include:

• increasing core earnings and dividends per share;

• ensuring borrowings remain conservative;

• developing our fund management interests;

• increasing the amount invested in businesses whilst ensuring the return exceeds 20%; and

• generating a return in excess of 15% from our listed securities.

outlook

Our strategy combined with the successful year just ended gives the board and management confidence that the company will continue to deliver results that will reward shareholders over the long term. Next year, with stable economic conditions, the Board anticipates a further increase in both core profitability and dividends.

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peter Miller Chairman

Kevin Eley Director and Chief Executive Officer

27 November 2007

> 5

buSiNESS OvErviEw

HGL invests in businesses with most of the following characteristics:

• Expected maintainable returns in excess of 20% calculated by reference to earnings before interest and tax (EBIT) to capital employed;

• A track record of robust past profitability with either growth or growth potential;

• A capable management team that can grow the business;

• Equity participation of management team to bind key employees to the business and to encourage decision making that properly reflects risk and return; and

• Diversification across suppliers and/or customers.

HGL invests in businesses for the long term. We do not buy a business with an intent to sell.

Equity partnership

Our way of doing business is to enter into equity partnerships with the people who run the businesses in which we invest. This is achieved through either bringing in an equity partner on acquisition or structuring an arrangement with the current owners that enables us to gradually invite management to become part owners over time. Through this approach the people running each business have a substantial incentive to ensure the business prospers.

Generally we find management with equity or quasi equity assists in enhancing returns and in creating structures that will also build value over the medium to long term through properly managing opportunities and risk.

Business approach

HGL develops the potential of Australian businesses. We build businesses for the long term benefit of our shareholders, customers, suppliers, staff and joint venture partners. With our long term investment strategy we do not anticipate to sell businesses. The management team of each business, led by its chief executive, are specialists in their market while HGL contributes wider business experience and a detachment from the day to day operation of the business.

HGL provides the majority of the finance to our businesses and ensures there are proper financial and business processes in place. We support each chief executive in ensuring the business is run in a manner that should lead to increased long term value. We act as a sounding board for the chief executive of each business and our involvement is formally through monthly board meetings and informally on a more frequent basis.

Our businesses recognise the importance of building the value of the brands they import. This is achieved through developing a rapport with customers that inspires them to trust and rely on our products, brands and first class service. All the HGL businesses aim to provide both their customers and suppliers with trouble free and profitable transactions. We support this process through encouraging appropriate training, advertising, marketing and promotions.

HGL builds the Australian sales of brands and tends to enter into medium to long term distribution agreements with suppliers which give the supplier comfort that we are prepared to make a long term commitment to their brand.

>

>

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invested in twelve import and distribution businesses

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Total Shareholder Return since 2001

> 6

SummAry OF rESulTS

y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7

			capital		Capital
		Earnings	employed	Earnings	Employed
		2007	2007	2006	2006
	NOTE	$’000	$’000	$’000	$’000
Import and distribution businesses	1	15,563	67,838	12,956	57,437
Fund management businesses	2	4,236	57,272	3,291	19,191
Central items	3	(2,412)	875	(1,589)	(772)
Borrowings		(1,414)	(27,486)	(386)	(1,240)
Profit before tax		15,973	98,499	14,272	74,616
Tax	4	(4,002)	(8,640)	(4,365)	(2,893)
Partners’ equity interests		(2,662)	(13,363)	(2,469)	(13,106)
core profit		9,309	76,496	7,438	58,617
Non core profit	5	6,344	16,217	1,613	15,542
profit after tax		15,653	92,713	9,051	74,159
Revaluation gains recognised in equity	6	8,134		4,696
Other equity movements		94		(89)
Profits and gains after tax		23,881	92,713	13,658	74,159
Core earnings per share (cents)	7	19.2		15.5
Dividend per share (cents) - fully franked		14.4		11.6
Reported earnings per share (cents)	7	32.4		18.9
Profits and gains per share (cents)	7	49.2		28.5

1. Biante was acquired in April 2007 and contributed an EBIT of $0.7 million and has capital employed of $8.3 million.

2. In February 2007 MMC Asset Management was sold and the management contract with MMC Contrarian was cancelled in return for $15.3 million of equity in MMC Contrarian. Earnings comprise our share of the pre tax profit of MMC Asset Management of $0.7 million (2006: $1.6 million) and the management fee income from MMC Contrarian of $0.3 million (2006: $0.9 million) together with fully franked dividend income from Hunter Hall of $1.0 million (2006: $0.7 million) and MMC Contrarian of $2.2 million (2006: $nil). Capital employed comprises the market value of the investments in Hunter Hall and MMC Contrarian, the comparative figure also includes the value of the investment in MMC Asset Management.

3. These costs mainly comprise head office expenses and salaries. The main constituents of capital employed are property of $4.9 million (2006: $4.6 million), deferred consideration of $4.1 million (2006: $5.3 million) for JSB, employee share scheme loans of $1.7 million (2006: $1.5 million) and the SPOS equity liability of $1.6 million (2006: $1.2 million).

4. The tax liability of $8.6 million (2006: $2.9 million) includes deferred tax on the unrealised revaluation surplus from Hunter Hall and MMC Contrarian of $6.8 million (2006: $4.0 million).

5. Non core items are:

6. $6.7 million profit on the disposal of MMC Asset Management and the cancellation of the management contract (2006: $nil)

7. $2.6 million profit on the sale of listed securities (2006: $1.1 million)

8. $2.0 million goodwill impairment expense

9. $0.4 million option expense on the grant of an equity settled option in J Leutenegger Pty Limited (2006: $nil)

10. $0.4 million expense to increase the value of the equity liability of SPOS (2006: decrease $0.6 million)

11. Capital employed is the market value of our listed securities, excluding Hunter Hall and MMC Contrarian being $19.2 million (2006: $17.1 million) less deferred tax on the unrealised revaluation surplus of $3.0 million (2006: $1.6 million).

12. After tax revaluation gains mainly comprise Hunter Hall $6.6 million (2006: $3.4 million), Calliden $1.7 million (2006: $0.1 million) and Credit Corp $0.7 million (2006: $0.7 million).

13. The weighted average number of shares on issue is 48,366,000 (2006: 47,866,000).

> 7

SummAry OF liSTED ShArES

our INVEsTMENT IN LIsTED sHArEs HAs INcrEAsED By $45 MILLIoN DurING THE yEAr DuE MAINLy To THE $34 MILLIoN INVEsTMENT IN MMc coNTrArIAN sHArEs AND THE $9 MILLIoN INcrEAsE IN THE VALuE oF HuNTEr HALL.

1. MMC Contrarian (ASX code: MMA). HGL owns 13% of MMC Contrarian a boutique fund manager with $570 million of funds under management. Market value of MMC Contrarian $1.04 a share at 30 September 2007. $15.3 million of equity issued in consideration for the sale of MMC Asset Management and the cancellation of the management agreement with MMC Contrarian and $19 million acquired on market.

2. Hunter Hall (ASX code: HHL). HGL owns 6% of Hunter Hall a boutique fund manager with $2.7 billion of funds under management. Market value of Hunter Hall $15.90 a share at 30 September 2007 and $9.45 a share at 30 September 2006.

3. Calliden Group (ASX code: CIX). HGL owns 7% of Calliden Group a general insurer. Market value of Calliden $0.58 at 30 September 2007 and $0.40 a share at 30 September 2006.

4. Credit Corp (ASX code: CCP). Market price of Credit Corp $10.98 a share at 30 September 2007 and $8.10 a share at 30 September 2006.

5. During the year the units in the MMC Small Companies Fund were sold and a pre tax profit of $1.9 million was realised.

6. During the period $7.4 million of shares were acquired and $6.6 million were sold realising a pre tax profit of $1.8 million.

7. The total increase in value of the portfolio was $15.3 million before tax, $3.7 million of profit was realised and recognised in the income statement, the balance of $11.6 million is unrealised profit and is recognised directly into reserves after deducting deferred tax at 30%. At 30 September 2007 total unrealised gains are $32.8 million (2006: $21.2 million) and the deferred tax provided in respect of this future taxable gain is $9.8 million (2006: $6.4 million).

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AMOUNT INVESTED
RETURN OF LISTED SHARES IN LISTED SHARES
76m
200
HGL
150
AOAI
100
31m
26m
22m
50
14m
0
03 04 05 06 07 03 04 05 06 07
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		market value	Acquisitions/	Increase	Market value
	Note	Sept-07	(disposals)	in value	Sept-06
		$’000	$’000	$’000	$’000
MMC Contrarian	1	34,183	34,188	(20)	15
Hunter Hall	2	23,089	–	9,367	13,722
Fund management interests		57,272	34,188	9,347	13,737
Calliden Group	3	9,080	324	2,751	6,005
Credit Corp	4	**3,749 **	–	984	2,765
MMC Small Companies Fund	5	–	(4,977)	259	4,718
Others	6	6,012	402	1,996	3,614
		18,841	(4,251)	5,990	17,102
Total	7	76,113	29,937	15,337	30,839

> 8

ACquiSiTiON CriTEriA

> Pre-tax profit of $2.0 million to $10.0 million

HGL is seeking established businesses with a track record of profitability. Businesses with less than $2.0 million of pre tax profit are of interest where the business can be integrated into one of our existing operations. HGL does not invest in start-ups. HGL targets a return on capital employed of 20%.

> Business type

HGL’s existing equity partnerships include:

• importers and distributors of branded products; and

• light manufacturers.

HGL is most attracted to businesses that are not overly capital or labour intensive.

> Fees

HGL will pay an appropriate fee where a successful transaction occurs.

WHAT MAKEs HGL AN IDEAL pArTNEr

> Experience

Over 15 years experience working with our partners to solve business problems and improve financial performance.

> Ownership by management

HGL creates structures in each of its businesses enabling management to share in the value they help create.

> Long term focus

HGL invests for the long term, this provides stability and confidence for staff, customers and suppliers.

> Profitable

Strong profit history which mirrors the success of our equity partners.

> Capital

Listed on the ASX with a significant and supportive shareholder base, strong balance sheet and long standing banking relationships.

Do you know of a business that meets hgl’s acquisition criteria and may represent an investment opportunity?

If you do we would appreciate discussing it with you.

Please contact Kevin Eley or Michael Mahoney on (02) 9221 7155 or kevineley@hgl.com.au. or michaelmahoney@hgl.com.au

HGL will pay an appropriate fee where a successful transaction occurs.

In April 2007 we acquired Biante following an indirect introduction from an HGL shareholder. As a result of the acquisition an introductory fee of $80,000 was paid to this shareholder.

> 9

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 - c o n t i n u e d

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30 SEPTEMBER 2007

• 11 > Directors’ Report

• 16 > Auditor’s Independence Declaration 17 > Corporate Governance Report

• 19 > Income Statement

• 20 > Balance Sheet

• 21 > Statement of Changes in Equity

• 22 > Statement of Cash Flows

• 23 > Notes to the Financial Statements

• 57 > Directors’ Declaration

• 58 > Independent Auditor’s Report

• 60 > Shareholder Information

• 62 > Current Businesses and HGL’s Equity Ownership

• 63 > Financial Summary

• 64 > Directory and Calendar

> 10 HGL LIMITED > ABN 25 009 657 961

DirECTOrS’ rEPOrT

The Directors of HGL Limited present their annual financial report for the year ended 30 September 2007.

Directors

The names and particulars of the directors of the Company during or since the end of the financial year are:

Name	particulars
pG Miller, FCA	Chairman, 60, Non executive director since 2000. A member of the Audit and Nomination and Remuneration Committees.
	Chartered Accountant with over 30 years experience in public practice.
KJ Eley, CA, F FIN	Chief Executive, 58, Executive director since 1985. Chartered Accountant. Prior to joining HGL over 10 years of business
	experience gained in management consulting, financing and corporate advice at a major international firm of Chartered
	Accountants and two investment banks. A member of the Nomination and Remuneration Committee. Current chairman
	of MMC Contrarian Limited (appointed as a director September 2003).
FM Wolf, BA (Hons), PhD	54, Non executive director since 2000. Chairman of Audit Committee. Current director of Abacus Property Group
	(appointed December 1997), with over 20 years of experience in strategic planning, financing and corporate advice.
JD constable	48, Non executive director since 2003. A member of the Audit Committee. Authorised representative of Bell Potter
	Securities Limited. Over 20 years experience in the stockbroking industry.

Meetings of directors

The following table sets out the number of directors’ meetings, including meetings of committees of directors, held during the financial year and the number of meetings attended by each director while they were a director or committee member.

		Board	Board	Audit	committee	Nomination	and
						remuneration committee
		Number	Attended	Number	Attended	Number	Attended
PG	Miller	18	18	5	5	3	3
KJ	Eley	18	18	–	–	3	3
FM	Wolf	18	18	5	5	–	–
JD	Constable	18	18	5	5	–	–

Directors’ interests in securities

As at the date of this report the interests of directors in the shares of the Company are as follows:

	Beneficial Interest	Non Beneficial Interest
PG Miller	39,723	7,756,304
KJ Eley	2,972,595	–
FM Wolf	291,377	–
JD Constable	44,000	625

company secretaries

Michael Mahoney ACA (England and Wales), CA and Peter Caldelis CA act as joint company secretaries for the Company. Mr Mahoney has been an employee of the Company for 20 years and has acted as company secretary for the same period. Mr Caldelis has been an employee of the Company for 13 years and has acted as company secretary for 10 years.

review of operations

The Directors report a consolidated profit before income tax and minority interests of $26,175,000 (2006: $15,893,000). Further details are in the Chairman’s and Chief Executive’s Review.

> 11

DirECTOrS’ rEPOrT > C O N T i N u E D

principal activities

The principal activities of the consolidated entity during the year were:

• import and distribution of branded products;

• funds management; and

• purchase and sale of listed investments.

Dividends

The Directors have declared a final fully franked dividend of 8.2 cents per share (2006: 6.2 cents per share fully franked). Interim fully franked dividends of 6.2 cents per share were paid during the year (2006: 5.4 cents per share fully franked). The board policy is to distribute between 70% and 80% of core profit.

	2007	2006
ordinary shares	$’000	$’000
Interim dividend paid 5 July 2007 (2006: paid 6 July 2006)	3,188	2,736
Final dividend payable on 18 December 2007 (2006: paid 20 December 2006)	4,233	3,163
	7,421	5,899

Included in the above are dividends paid on equity settled options issued under the Employee Share Scheme. Refer to note 21 in the financial statements for more details on the Scheme.

Dividend reinvestment plan

The Dividend Reinvestment Plan (DRP) was established by the Directors to provide shareholders with the opportunity of reinvesting their dividends in ordinary shares in the Company. The Directors have resolved for the final dividend payable on 18 December 2007, shares will be allotted to eligible shareholders participating in the DRP with nil discount from the market price of the Company’s shares as defined in the DRP (2006: nil discount). No brokerage is payable if shares are allotted under the DRP. During the year the total number of shares issued under the DRP was 734,994 (2006: 704,250). This includes 168,665 (2006: 136,721) DRP shares issued on equity settled options under the Employee Share Scheme. Refer to note 21 in the financial statements for more details on the Scheme.

share buy-back

The Company operates an unlimited duration on-market share buy-back. During the year 129,830 ordinary shares (2006: 170,735) were acquired at an average price of $2.04 (2006: $1.80) pursuant to the buy-back.

Events subsequent to balance date

No matters or circumstances have arisen since the end of the financial year which have significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in subsequent financial years, other than those referred to in the Chairman’s and Chief Executive’s Review and in note 33 to the Financial Statements.

significant changes in the state of affairs and future developments

There were no significant changes in the state of affairs of the consolidated entity other than those referred to in the Chairman’s and Chief Executive’s Review. Likely developments in operations and operating results are detailed in the Chairman’s and Chief Executive’s Review.

Auditor independence and non audit services

The Directors have received an independence declaration from the auditor, a copy is on page 16.

Deloitte Touche Tohmatsu received or are due to receive the following amounts for non audit services: tax advice $112,031 (2006: $107,023). The Directors are satisfied that the nature and scope of the non audit services did not compromise auditor independence, as the services are compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

> 12

DirECTOrS’ rEPOrT > C O N T i N u E D

rEMuNErATIoN rEporT

The remuneration report provides an overview of the consolidated entity’s remuneration policies and practices and explains the links between rewards and company performance. The report also gives detailed information about the remuneration arrangements for the key management personnel of the company and consolidated entity and other executives of the consolidated entity.

principles of remuneration

The consolidated entity’s executive remuneration strategy seeks to match the goals of the key management personnel to those of the shareholders. This is effected through combining conservative levels of guaranteed remuneration with attractive incentive payments. These incentive payments are only paid on attainment of previously agreed performance targets.

Remuneration packages are reviewed with due regard to performance and other relevant factors. In order to retain and attract executives of sufficient calibre to facilitate the effective and efficient management of the Company’s operations the Nomination and Remuneration Committee, when necessary, seeks the advice of external advisers in connection with the structure of remuneration packages.

structure and remuneration of Directors and Executives

Non executive Directors

Non executive Directors are remunerated by fees with the aggregate limit approved by shareholders from time to time. The remuneration of non executive Directors does not depend on company performance. Currently, the aggregate amount of Directors’ fees will not exceed $300,000 per annum. Directors’ fees can be paid as superannuation contributions.

Executives

The key management personnel of the company and consolidated entity, listed below, are those persons having authority and responsibility for planning, directing and controlling the activities of the entity. Terms of employment are formalised in employment letters to each of the executive key management personnel. There are no fixed term contracts in place. The payment of any termination benefit is at the discretion of the Nomination and Remuneration Committee.

and Remuneration Committee.
Name of key management personnel	office
PG Miller	Non Executive Chairman
FM Wolf	Non Executive Director
JD Constable	Non Executive Director
KJ Eley	HGL Chief Executive Officer and Director
MP Mahoney	HGL Operations Manager
AJ Whittles	HGL Chief Financial Officer
PS Caldelis	HGL Group Controller

In addition to the above, the following executives are included in the remuneration report due to the fact that they are amongst the five highest remunerated executives of the consolidated entity during the year in accordance with s300A of the Corporations Act 2001.

Name of executive	office
2007
MR Farley	Chief Executive Officer of SPOS
CJ Roche	Chief Executive Officer of J Leutenegger and Biante
D Hewitt	Chief Executive Officer of JSB Lighting
2006
MR Farley	Chief Executive Officer of SPOS
SS Caganoff	Chief Executive Officer of Thalgo
CE Wagstaff	Chief Executive Officer of Anitech

> 13

DirECTOrS’ rEPOrT > C O N T i N u E D

2007	short term employee benefits	short term employee benefits	short term employee benefits	post employment benefits	Long term employee benefits $	share based payment	Total $
	salary/fees $	Bonus $	Non monetary and other benefits $	superannuation $		Equity settled options $
Mr Farley KJ Eley cJ roche D Hewitt Mp Mahoney AJ Whittles ps caldelis pG Miller FM Wolf JD constable	99,620 252,294 140,359 145,000 183,711 133,384 110,141 82,270 21,500 47,088	– 231,000 – 275,000 195,000 181,000 80,000 – – –	400,000 44,263 7,009 18,000 – 2,394 25,979 – – –	149,980 12,797 12,632 13,050 44,289 44,289 9,632 7,730 30,000 4,412	4,965 9,215 9,861 3,355 6,711 3,910 3,569 – – –	– – 371,277 – – – – – – –	654,565 549,569 541,138 454,405 429,711 364,977 229,321 90,000 51,500 51,500
	1,215,367	962,000	497,645	328,811	41,586	371,277	3,416,686

2006	Short term employee benefits	Short term employee benefits	Short term employee benefits	Post employment benefits	Long term employee benefits $	Share based payment	Total $
	Salary/fees $	Bonus $	Non monetary and other benefits $	Superannuation $		Equity settled options $
KJ Eley MP Mahoney AJ Whittles SS Caganoff MR Farley CE Wagstaff PS Caldelis PG Miller JD Constable FM Wolf	234,279 177,984 132,440 201,004 174,420 182,724 116,475 72,800 39,130 43,000	107,916 88,872 82,524 – – – 38,088 – – –	49,444 – 1,477 20,000 – 15,000 13,092 – – –	12,276 41,016 41,016 11,676 65,580 12,276 10,432 7,200 3,870 –	27,459 21,924 4,258 11,885 4,368 6,327 8,906 – – –	52,342 41,874 31,405 – – – 15,703 – – –	483,716 371,670 293,120 244,565 244,368 216,327 202,696 80,000 43,000 43,000
	1,374,256	317,400	99,013	205,342	85,127	141,324	2,222,462

components of remuneration

Not at risk remuneration

Base remuneration is structured as a total employment cost package paid in cash and benefits at the executive’s discretion and includes superannuation contributions. Base remuneration is reviewed but not necessarily increased each year. The base remuneration is at the lower end of the market rate for the role and the individual. Total remuneration above the market rate can be achieved through the attainment of previously agreed performance targets.

At risk remuneration

Short term incentives for KJ Eley, MP Mahoney, AJ Whittles and PS Caldelis are determined in accordance with the HGL Bonus Scheme which operates for four years to 30 September 2010. Short term incentives are determined by the profits of the consolidated entity so aligning the incentive of the executive with the creation of value for the HGL shareholders.

Long term employee benefits is the amount of long service leave entitlements accrued during the year.

> 14

DirECTOrS’ rEPOrT > C O N T i N u E D

HGL Bonus scheme

22% of core profits above an earnings per share hurdle are paid into the bonus pool. The hurdle in 2007 was 15.6 cents and the hurdle increases by 12% a year to 2010 when the hurdle will be 21.9 cents. In addition 5% of non core profits are paid into the bonus pool. The incentives are paid to the executives in December each year. Incentive payments are capped at 200% of the executive’s base remuneration for the year.

other schemes

Bonuses to MR Farley, CJ Roche, D Hewitt, CE Wagstaff and SS Caganoff are based on the performance of the relevant business. $127,500 of D Hewitt’s bonus is calculated by reference to the performance of JSB over 3 years. The amount will be paid in December 2009, although the exact amount payable at that time will depend on the profitability of JSB in 2008 and 2009. If D Hewitt ceases to be employed by JSB any accrued bonus is forfeitted.

On 4 October 2006 CJ Roche beneficially acquired 20% of the equity in J Leutenegger for $250,000. Under AASB2 Share-based Payment this beneficial equity interest is treated as an option as the purchase was funded through a loan made by HGL Limited that was secured on the J Leutenegger equity. A one off option expense of $371,277 has been recognised in the year. MR Farley has an effective 20% equity interest in the increase in the value of SPOS, the $400,000 non monetary and other benefit is the estimated increase in the value of this option during the year.

Information subject to audit

The Structure and Remuneration of Directors and Executives and Components of Remuneration above have been subject to audit.

executives under the Scheme. The amount disclosed as equity will never be paid to the executive by the Company.

As the Scheme Shares and associated loans have similar characteristics to a call option the values have been estimated utilising the BlackScholes model. There are many variables in the model however the key criteria affecting the value are the life of the non recourse loan and the volatility of the HGL share price. The directors have estimated the life of the non recourse loans to be seven years, being the earliest the company can demand repayment unless the executive dies or ceases to be an employee. The directors have estimated the volatility to be 28% being the actual volatility of HGL shares over the seven years prior to the 2004 issue of shares.

Indemnification of directors, officers and auditors

During the year, the Company purchased Directors’ and Officers’ Liability Insurance to provide cover in respect of claims made against the directors and officers in office during the financial year and at the date of this report, as far as is allowable by the Corporations Act 2001. The policy also covers the Company for reimbursement of directors’ and officers’ expenses associated with such claims if the defence to the claim is successful. The total amount of insurance premium paid and the nature of the liability are not disclosed due to a confidentiality clause within the agreement. As at the date of this report, no amounts have been claimed or paid in respect of this indemnity and insurance, other than the premium referred to above.

The Company has not otherwise, during or since the financial period, indemnified or agreed to indemnify an officer or the auditor of the Company against a liability incurred as an officer or auditor.

rounding of amounts

Employee share scheme

The Directors believe that it is important to link the remuneration of eligible key management personnel to the long term success of the Company by supporting the acquisition of shares through the Company’s Employee Share Scheme (Scheme). The Scheme rules are posted on the HGL website, www.hgl.com.au. The maximum number of shares in the Scheme is 10% of HGL’s total issued shares.

To enable each of the eligible key management personnel to acquire shares, non recourse loans (Scheme Loans) were made in accordance with the terms of the Scheme. As at 30 September 2007 there were 4,720,140 Scheme Shares (2006: 4,428,164 Scheme Shares) and Scheme Loans of $7,539,844 (2006: $6,863,409). The interest rate on the Scheme Loan is equal to the dividends paid by HGL on Scheme Shares. During 2007 100,000 (2006: nil) shares were issued under the Scheme.

The consolidated entity is of a kind referred to in ASIC Class Order 98/0100 dated 10 July 1998 and in accordance with that Class Order amounts in this report, and the financial report, have been rounded off to the nearest thousand dollars, unless otherwise indicated.

Signed in accordance with a resolution of the Board of Directors made pursuant to section 298(2) of the Corporations Act 2001.

For and on behalf of the Board of Directors of HGL Limited:

==> picture [221 x 75] intentionally omitted <==

----- Start of picture text -----

PG Miller KJ Eley
Chairman Director
----- End of picture text -----

Refer to Note 21 in the financial statements for more detail on the Scheme.

The amount disclosed as equity settled options in 2006 are estimates of the possible value, over seven years, of the shares issued in 2004 to the

Sydney 27 November 2007

> 15

AuDiTOr’S iNDEPENDENCE DEClArATiON

Deloitte Touche Tohmatsu ABN 74 490 121 060

Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1217 Australia

DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au

The Board of Directors HGL Limited Level 5, 34 Hunter Street SYDNEY NSW 2000

27 November 2007

Dear Board Members

HGL Limited

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

As lead audit partner for the audit of the financial statements of HGL Limited for the financial year ended 30 September 2007, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• (ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

==> picture [168 x 18] intentionally omitted <==

DELOITTE TOUCHE TOHMATSU

==> picture [76 x 38] intentionally omitted <==

Mark Rossetti Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation.

> 16

COrPOrATE gOvErNANCE rEPOrT

corporate Governance report

The Board of Directors of HGL Limited are responsible for the consolidated entity’s corporate governance. The Board guides and monitors the business and affairs of the consolidated entity on behalf of shareholders, by whom they are elected and to whom they are accountable. To ensure the Board is well equipped to discharge its responsibilities, it has established guidelines for the nomination and selection of Directors and for the operation of the Board. Various charters and policy documents are available to shareholders on request and have been posted on our website www.hgl.com.au.

The Australian Stock Exchange Corporate Governance Council issued its revised Corporate Governance Principles and Recommendations in August 2007. HGL will be required to first report against the revised recommendations for the financial year ended 30 September 2009.

Board composition and primary functions

As of the date of this report, the Board is comprised of four Directors (one Executive and three non-Executive members). Mr FM Wolf is the sole independent director, as defined by the ASX Corporate Governance Council (CGC) in their paper titled “Principles of Good Corporate Governance and Best Practice Recommendations” dated March 2003. The board does not have a majority of independent directors.

As the chairman of the board is associated with a substantial shareholder he is not deemed independent in accordance with the CGC paper referred to above. The Chairman is on the board of a substantial shareholder, but he does not benefit financially from its shareholding in HGL Limited.

The board has considered its composition and believes the current composition is in the interests of shareholders.

The Board meets on a monthly basis with its primary functions including:

• establishment of long-term goals for the Company and strategic and operational plans to achieve those goals;

• allocation of capital and funding;

• review and adoption of annual strategic and operational budgets for

• the performance of the Company and all its operating businesses;

• monitoring of the performance on a monthly basis of the Company and

• its operating businesses against its operating and strategic plans;

• ensuring that the Company has implemented adequate systems of

Board responsibilities

The Board is elected to act on behalf of the Company’s shareholders, and is therefore accountable to them. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks. The responsibility for the operation and administration of the consolidated entity is delegated by the Board to the Chief Executive and his executive team. The Board ensures that this team is appropriately qualified and experienced to discharge this responsibility. The Board is responsible for ensuring that management’s objectives are aligned with the expectations and the risks identified by the Board. The Board discharges this responsibility via several mechanisms that it has in place. In addition to the Committees referred to below, these mechanisms include:

• approval by the Board of the consolidated entity’s strategic plan;

• establishment and monitoring of key performance indicators, both

• financial and non-financial;

• establishment of guidelines to report on trade practices legislation compliance, occupational health and safety and environmental issues;

• establishment and maintenance of sound ethical standards; and

• monitoring the board’s performance, shareholder communication and continuous disclosure.

Monitoring of Board’s performance, shareholder communication and continuous disclosure

The performance of the Board members is reviewed annually by the Chairman to ensure that the Board discharges its responsibilities.

The Board aims to ensure that shareholders, on whose behalf they act, are informed of all information necessary to assess the performance of the Company. Information is communicated to the shareholders through:

• compliance with Australian Stock Exchange reporting and disclosure requirements;

• the annual and interim reports; and

• the Annual General Meeting and any other meetings so called to

• obtain approval for Board action as appropriate.

The company secretaries are responsible for communications with the Australian Stock Exchange. Details of the qualifications and experience of the company secretaries are included in the directors’ report.

• internal control and risk management;

• approval of the half yearly and annual financial reports;

• ensuring effective external disclosure policies so that the market is fully informed on all matters that may influence the share price; and

• monitoring corporate governance.

> 17

COrPOrATE gOvErNANCE rEPOrT > C O N T i N u E D

Audit committee

It is the Board’s ultimate responsibility to ensure that effective internal controls exist within the consolidated entity. To this end the Board has established an Audit Committee. As at the date of this report, the Committee consisted of the following non-Executive Directors: FM Wolf (Chairman) JD Constable

PG Miller

The Chairman of this committee is an independent director. Committee meetings are usually held four times a year. The functions of the Committee are to:

• consider the half yearly and annual financial reports before they are approved by the Board;

• ensure the effectiveness of management information systems and systems of internal control;

• review the appointment of the external auditors, the terms of their engagement, the scope and quality of the audit and the auditor’s independence;

• establish and maintain the framework of internal control;

• ensure compliance with statutory, Australian Stock Exchange and other reporting requirements; and

• review corporate governance compliance.

The Audit Committee generally invites the Chief Executive Officer, Chief Financial Officer, Company Secretary and external auditors to attend Audit Committee meetings.

The external auditors can meet privately with the committee. The partner managing the audit was appointed for the September 2006 audit and will be rotated after a maximum of five years. It is the policy of the external auditors to provide an annual declaration of their independence to the Committee.

The external auditor attends the annual general meeting and is available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

Nomination and remuneration committee

The Company also has a Nomination and Remuneration Committee. As at the date of this report the Committee consisted of the following Directors:

PG Miller (Chairman)

KJ Eley

The primary functions of the Nomination and Remuneration Committee are to review:

• the composition of the Board on a regular basis and make recommendations to the Board, when considered necessary, to ensure that the Board comprises a majority of non executive Directors with the appropriate mix of skills and experience; and

• the remuneration packages of all Directors, the Chief Executive and senior HGL managers (key management personnel) on an annual basis and make recommendations to the Board.

Remuneration packages are reviewed with due regard to performance and other relevant factors. In order to retain and attract executives of sufficient calibre to facilitate the effective and efficient management of the Company’s operations the Committee, when necessary, seeks the advice of external advisers in connection with the structure of remuneration packages.

Packages contain the following key elements:

• salary/fees;

• benefits - including the provision of motor vehicles, subscriptions and superannuation;

• performance related incentives; and

• employee share scheme.

risk assessment and management

The Board is responsible for ensuring the risk management systems are effective. The board has sole discretion to approve each proposed business acquisition. Proposed new business acquisitions are analysed by management, this includes a risk assessment and extensive due diligence. Businesses that meet the Company’s return and risk parameters are presented in a formal proposal document to the Board for consideration.

Independent professional advice

All Directors have the right to seek independent legal and financial advice, at the expense of the Company, concerning any aspect of the consolidated entities operations or undertakings. However, prior approval of the Chairman is required, which is not unreasonably withheld.

share trading policy

The Company does not have trading windows, Directors and employees of the Company are permitted to deal in the securities of the Company at any time, subject to the insider trading provisions of the Corporations Act 2001. The insider trading provisions of the Corporations Act have been drawn to the attention of all Directors and employees of the Company. Prior to dealing in HGL shares Directors and employees must notify the Chairman of the number of shares involved, the proposed date of the transaction and whether it is a sale or a purchase. The Directors and employees must consider any views expressed by the Chairman. Notification to the Chairman does not constitute approval. It is the responsibility of the person dealing in the HGL shares to ensure it does not constitute insider trading and to ensure the proposed dealing preserves the reputation of each of HGL, the Directors and employees and is not only fair but seen to be fair. Dealings of the Chairman must be notified to the Chairman of the Audit Committee. The share trading policy relates not only to those HGL shares held directly but also to HGL shares where the Director or employee of HGL has in substance, rather than form, the ability or power, whether direct or indirect, to dominate the decision about the trading of HGL shares.

> 18

iNCOmE STATEmENT

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7

		CONSOLIDATED	CONSOLIDATED		COMPANY
		2007	2006	2007	2006
	NOTE	$’000	$’000	$’000	$’000
Revenue	2	164,016	132,638	29,640	4,920
Share of associates’ profit	6	992	1,867	–	–
Other income	2	1,180	583	–	–
Change in inventories of finished goods and work in progress		(1,653)	(3,796)	–	–
Raw materials and consumables used		(77,526)	(62,674)	–	–
Employee benefits expense	2	(35,307)	(31,643)	(2,903)	(1,377)
Goodwill impairment	9	(2,000)	–	–	–
Freight, packaging and distribution expense		(3,342)	(3,525)	–	–
Depreciation expense	2	(1,823)	(1,697)	(27)	(15)
Advertising and marketing expense		(2,786)	(2,932)	–	–
Operating lease expense	2	(3,490)	(3,296)	(53)	(115)
Interest expense	2	(2,016)	(907)	(1,733)	(664)
Other expenses		(10,070)	(8,725)	(430)	(551)
profit before income tax expense		26,175	15,893	24,494	2,198
Income tax expense	3	(8,029)	(4,373)	(1,598)	(561)
profit for the period		18,146	11,520	22,896	1,637
Profit attributable to minority interests		(2,493)	(2,469)	–	–
profit attributable to members of HGL Limited		15,653	9,051	22,896	1,637

		cENTs	CENTS
Basic earnings per share	20	32.4	18.9
Diluted earnings per share	20	32.1	18.8

Notes to the financial statements are included on pages 23 to 56.

> 19

bAlANCE ShEET

A S AT 3 0 S E P T E m b E r 2 0 0 7

		CONSOLIDATED	CONSOLIDATED		COMPANY
		2007	2006	2007	2006
	NOTE	$’000	$’000	$’000	$’000
current Assets
Cash and cash equivalents		10,858	6,438	5,579	2,426
Trade and other receivables	4	30,658	24,052	1,877	855
Inventories	5	28,967	26,301	–	–
Total current Assets		70,483	56,791	7,456	3,281
Non-current Assets
Investments accounted for using the equity method	6	2,042	6,916	–	–
Other financial assets	7	78,120	32,984	107,307	56,706
Property, plant and equipment	8	9,517	9,485	122	146
Intangibles	9	28,154	22,640	–	–
Deferred tax assets	13	–	–	–	1,635
Total Non-current Assets		117,833	72,025	107,429	58,487
Total Assets		188,316	128,816	114,885	61,768
current Liabilities
Trade and other payables	10	24,041	21,065	3,193	3,077
Borrowings	11	34,468	3,794	40,592	7,631
Current tax liabilities	12	2,689	534	2,143	281
Provisions	15	4,608	4,207	2,137	1,367
Total current Liabilities		65,806	29,600	48,065	12,356
Non-current Liabilities
Borrowings	11	3,876	3,883	–	–
Deferred tax liabilities	13	8,967	3,916	469	–
Provisions	14 and 15	3,591	4,152	2,753	3,742
Total Non-current Liabilities		16,434	11,951	3,222	3,742
Total Liabilities		82,240	41,551	51,287	16,098
Net Assets		106,076	87,265	63,598	45,670
Equity
Issued capital	16	31,389	30,371	31,389	30,371
Reserves	17	24,761	16,897	2,437	2,442
Retained earnings	18	36,563	26,891	29,772	12,857
HGL Limited Equity Interest		92,713	74,159	63,598	45,670
Minority Interest		13,363	13,106	–	–
Total Equity		106,076	87,265	63,598	45,670

Notes to the financial statements are included on pages 23 to 56.

> 20

STATEmENT OF ChANgES iN EquiTy

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7

		CONSOLIDATED	CONSOLIDATED		COMPANY
		2007	2006	2007	2006
	NOTE	$’000	$’000	$’000	$’000
Total equity at beginning of financial year		87,265	77,090	45,670	48,415
Available for sale investments:
Revaluation gain/(loss) recognised directly in equity, net of tax	17	10,736	5,727	(15)	–
Land and buildings revaluation reserve:
Revaluation gain recognised directly in equity, net of tax	17	106	–	–	–
Translation of foreign operations:
Exchange differences recognised directly in equity, net of tax	17	(12)	(89)	–	–
Net income/(expense) recognised directly in equity		10,830	5,638	(15)	–
Profit transferred to the income statement on sale of available for
sale investments, net of tax	17	(2,602)	(1,031)	–	–
Profit for the period		18,146	11,520	22,896	1,637
Total recognised income and expense for the period		26,374	16,127	22,881	1,637
Transactions with equity holders in their capacity as equity holders:
Dividend paid	19	(5,981)	(5,350)	(5,981)	(5,350)
Dividend Reinvestment Plan shares issued	16	1,220	1,078	1,220	1,078
Shares bought back and cancelled	16	(265)	(305)	(265)	(305)
Shares issued to Employee Share Scheme participants	16	63	54	63	54
Employee share scheme reserve	17	10	141	10	141
Purchase of equity interest	17	(374)	–	–	–
Minority interest		(2,236)	(1,570)	–	–
		(7,563)	(5,952)	(4,953)	(4,382)
Total equity at end of financial year		106,076	87,265	63,598	45,670
Total recognised income and expense is attributable to:
Equity holders of the parent		23,881	13,658	22,881	1,637
Minority interest		2,493	2,469	–	–
		26,374	16,127	22,881	1,637

Notes to the financial statements are included on pages 23 to 56.

> 21

STATEmENT OF CASh FlOwS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7

		CONSOLIDATED	CONSOLIDATED		COMPANY
		2007	2006	2007	2006
	NOTE	$’000	$’000	$’000	$’000
cash flows from operating activities
Receipts from customers		153,347	142,158	5,284	2,717
Payments to suppliers and employees		(140,080)	(129,716)	(3,848)	(2,430)
Dividends received		2,473	1,974	5,162	1,625
Income tax paid		(4,421)	(5,045)	(1,872)	(1,789)
Interest received		612	516	4,576	2,440
Interest paid		(2,016)	(907)	(1,733)	(664)
Net cash inflow from operating activities	30	9,915	8,980	7,569	1,899
cash flows from investing activities
Payment for purchase of property, plant and equipment		(2,161)	(2,298)	(3)	(62)
Proceeds from sale of property, plant and equipment		415	287	–	–
Proceeds from redemption of preference shares		423	1,398	–	–
Payment for purchase of listed securities		(25,958)	(3,755)	(18,594)	–
Payment for purchase of associate		–	–	–	(4,324)
Payment for purchase of controlled entities	24	(12,204)	(5,324)	(1,841)	–
Cash in acquired entity	24	321	920	–	–
Proceeds from sale of listed securities		11,615	3,243	–	–
Loan to controlled entities		–	–	(14,536)	(10,734)
Loan repaid by controlled entities		–	–	7,938	12,270
Loan to other entities		(830)	(266)	(165)	(142)
Loan repaid by other entities		238	1	–	–
Net cash inflow/(outflow) from investing activities		(28,141)	(5,794)	(27,201)	(2,992)
cash flows from financing activities
Payment for share buy back		(265)	(305)	(265)	(305)
Proceeds from borrowings		83,224	20,645	79,111	20,466
Repayment of borrowings		(54,189)	(16,850)	(51,300)	(14,921)
Dividends paid:
Members of the parent entity		(4,761)	(4,272)	(4,761)	(4,272)
Minority interests		(1,366)	(1,357)	–	–
Net cash inflow/(outflow) from financing activities		22,643	(2,139)	22,785	968
Net increase/(decrease) in cash held		4,417	1,047	3,153	(125)
Cash and cash equivalents at the beginning of the financial year		6,438	5,386	2,426	2,551
Effects of exchange rate changes on the balance of cash held in	foreign currencies	3	5	–	–
cash and cash equivalents at the end of the financial year		10,858	6,438	5,579	2,426

Notes to the financial statements are included on pages 23 to 56.

> 22

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7

1 - summary of significant Accounting policies

Basis of preparation

The financial report is a general purpose financial report which as been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and complies with other requirements of the law.

The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets.

In the application of Accounting Standards including Australian equivalents to International Financial Reporting Standards (AIFRS) management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgments made by management in the application of AIFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements.

statement of compliance

Compliance with AIFRS ensures that the financial statements and notes of the consolidated entity comply with International Financial Reporting Standards (IFRS). The Company’s financial statements and notes also comply with IFRS except for the disclosure requirements in IAS 32 Financial Instruments: Disclosure and Presentation as the Australian equivalent Accounting Standard, AASB 132 Financial Instruments: Disclosure and Presentation does not require such disclosures to be presented by the Company where its separate financial statements are presented together with the consolidated financial statements of the Group.

The financial statements were authorised for issue by the directors on 27 November 2007.

The principal accounting policies adopted by HGL Limited and its controlled entities are stated to assist in a general understanding of this financial report. These policies have been consistently applied by the consolidated entity except as otherwise indicated.

(a) principles of consolidation

The Company and its controlled entities together are referred to in these financial statements as the “consolidated entity”. The consolidated financial statements are prepared by combining the financial statements of all entities that comprise the consolidated entity, being HGL Limited (“the Company”) and its subsidiaries as defined in Accounting Standard AASB 127 “Consolidated and Separate Financial Statements”. Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements.

On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. If, after reassessment, the fair values of the identifiable net assets acquired exceed the cost of acquisition, the deficiency is credited to profit or loss in the period of acquisition. The effects of all transactions between entities included in the consolidated financial statements are eliminated in full.

Minority interests are shown separately in the consolidated income statement and consolidated balance sheet.

Where controlled entities are acquired, their results are included only from the date control commenced. For controlled entities disposed of, their results are included up to the date control ceased.

(b) Intangibles

Intangible assets acquired in a business combination

All potential intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair value can be measured reliably.

Goodwill

Goodwill, representing the excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities acquired in a business combination, is recognised as an asset and not amortised, but tested for impairment annually and whenever there is an indication that the goodwill may be impaired. Any impairment is recognised immediately in the income statement and cannot subsequently be reversed.

In the event that settlement of all or part of the purchase consideration is deferred or is dependent on future events the cost is determined by discounting the best estimate of amounts payable in the future to their present value as at the date of acquisition.

> 23

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F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

(c) Impairment of assets

At each reporting date, the consolidated entity reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the consolidated entity estimates the recoverable amount of the cash generating unit to which the asset belongs.

Goodwill is tested for impairment annually and whenever there is an indication that the asset may be impaired. An impairment of goodwill cannot subsequently be reversed. The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash generating unit is reduced to its recoverable amount. An impairment loss is recognised in the income statement immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease, to the extent of any existing revaluation reserve in respect of the same class of asset.

For any asset other than goodwill, where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash generating unit in prior years. A reversal of an impairment loss is recognised in the income statement immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

(d) Financial assets

Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned and are initially measured at fair value, net of transaction costs.

Subsequent to initial recognition, investments in associates are accounted for under the equity method in the consolidated financial statements and the cost method in the company financial statements. Subsequent to initial recognition, investment in subsidiaries are measured at cost in the company financial statements.

Other financial assets are classified as either available for sale financial assets or loans and receivables according to the nature and purpose of the financial assets. This determination is made at the time of initial recognition.

Available for sale

The consolidated entity’s listed securities are classified as available for sale (AFS) under AASB 139 Financial Instruments: Recognition and Measurement. Under AASB 139 financial instruments classified as AFS are recorded at fair value. Gains and losses arising from changes in fair value are recognised directly in the AFS revaluation reserve, until the investment is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in the AFS revaluation reserve is included in the income statement for the period.

Loans and receivables

Trade receivables, loans and other receivables are recorded at amortised cost less impairment.

(e) Financial instruments issued by the company and consolidated entity

Debt and equity instruments

Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement.

Interest and dividends

Interest and dividends are classified as expenses or as distributions of profit consistent with the balance sheet classification of the related debt or equity instruments. (f) Inventories

Inventories are stated at the lower of cost and net realisable value. Costs comprise direct materials, direct labour and an appropriate portion of overheads. Cost is based on a weighted average cost. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

(g) property, plant and equipment

Land and buildings are measured at fair value. Fair value is determined on the basis of independent valuation prepared by external valuation experts. The fair values are recognised in the financial statements of the consolidated entity and are reviewed at the end of each reporting period to ensure that the carrying value of land and buildings is not materially different from their fair values.

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F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

Any revaluation increase arising on the revaluation of land and buildings is credited to the land and buildings revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense in profit or loss, in which case the increase is credited to the income statement to the extent of the decrease previously charged. A decrease in the carrying amount arising on the revaluation of land and buildings is charged as an expense in profit or loss to the extent that it exceeds the balance, if any, held in the land and buildings revaluation reserve relating to a previous revaluation of that asset.

On the subsequent sale, the attributable revaluation surplus remaining in the land and buildings revaluation reserve, net of any related deferred taxes, is transferred directly to the retained earnings.

Plant and equipment, leasehold improvements and equipment under finance lease are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item.

(h) Depreciation

Buildings are depreciated over their estimated useful lives using the straight line method. Items of plant and equipment are depreciated over their estimated useful lives using the reducing balance method. The estimated useful lives and depreciation method is reviewed at the end of each reporting period.

The following estimated useful lives are used in the calculation of depreciation: buildings – 40 years; plant and equipment – 3 to 10 years; and leased plant and equipment – 3 to 5 years. The cost of improvements to or on leasehold properties is depreciated over the lesser of the period of the lease or the estimated useful life of the improvement.

(i) Leased assets

Finance leases, which effectively transfer to the consolidated entity substantially all the risks and benefits incidental to ownership of leased items, are capitalised at the lower of fair value or present value of the minimum lease payments, disclosed as property, plant and equipment and amortised over the period during which the consolidated entity is expected to benefit from use of the leased assets.

Operating lease payments, where the lessor effectively retains substantially all the risks and benefits incidental to ownership of the leased items, are charged to the income statement in the period in which they are incurred.

(j) Employee benefits

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave when it is probable that settlement will be required and are capable of being measured reliably. Employee benefits expected to be settled within 12 months are measured at their nominal values using the remuneration rate expected to apply at time of settlement. Employee benefit provisions, which are not expected to be settled within 12 months, are measured at the present value of the estimated future cash outflows to be made by the consolidated entity in respect of services provided by employees up to the reporting date.

Contributions to defined contribution superannuation plans are expensed when incurred.

(k) share based payments

Equity settled share based payments granted after 7 November 2002 that were unvested as of 1 January 2005, are measured at fair value at the date of grant. Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The fair value determined at the grant date of the equity-settled share based payments is expensed on a straight line basis over the vesting period.

(l) revenue recognition

Service contract revenue is brought to account by reference to the expired period of the contract. Amounts received and receivable in relation to the unexpired period of contracts at year end are treated as deferred revenue. Revenue from the sale of goods and profit on the disposal of other assets is recognised when the consolidated entity has transferred to the buyer the significant risks and rewards of ownership of the goods or assets. Dividend revenue is recognised on a receivable basis. Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

(m) Derivative financial instruments

The consolidated entity enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risk, including foreign exchange contracts.

The consolidated entity has elected not to adopt hedge accounting under AASB 139, except for retranslations of amounts receivable or payable in foreign currencies where there is an associated foreign exchange contract. Any material changes in the fair value of any derivative instruments are recognised immediately in the income statement.

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F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

(n) Foreign currency

Foreign currency transactions

Foreign currency transactions are translated into Australian currency at the rate of exchange at the date of the transaction. Amounts receivable or payable in foreign currencies are translated at the rates of exchange ruling at balance date. Resulting exchange differences are brought to account in determining the profit for the year, except that exchange differences on transactions entered into in order to hedge the purchase or sale of specific goods and services are deferred and included in the measurement of the purchase or sale.

Translation of foreign controlled entities

For the consolidated entity’s foreign operations, the assets and liabilities are translated into Australian currency at rates of exchange current at balance date while their revenue and expenses are translated at the average rates ruling during the year. Exchange differences arising on translation are taken directly to the foreign currency translation reserve and are recognised in profit or loss on disposal of the foreign operation.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset and liability give rise to them are realised or settled, based on the tax rates (and tax laws) that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the consolidated entity expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the consolidated entity intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the period

Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

(o) Income tax

Current tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability or asset to the extent that it is unpaid or refundable.

Deferred tax

Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches, associates and joint ventures except where the consolidated entity is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

Tax consolidation

The Company and its wholly owned Australian controlled entities have entered into tax funding and tax sharing agreements.

The head entity, HGL Limited, and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in its own right, adjusted for intercompany transactions.

In addition to the current and deferred tax amounts, HGL Limited also recognises the current tax liabilities (or assets) and the deferred tax assets from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Assets or liabilities, recorded at the tax equivalent amount, arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the group.

(p) Accounts payable

Trade payables and other accounts payable are recognised when the consolidated entity becomes obliged to make future payments resulting from the purchase of goods and services.

(q) cash

For purposes of the cash flow statement, cash includes deposits at call which are readily convertible to cash on hand and which are used in the cash management function on a day-to-day basis, net of outstanding bank overdrafts.

> 26

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F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

(r) provisions

Provisions are recognised when the consolidated entity has a present obligation, the future sacrifice of economic benefits is probable and the amount of the provision can be measured reliably. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

(s) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST) except:

• (i) where the amount of GST incurred is not recoverable from the taxation authority; and

iii) AASB 2007-7 Amendments to Australian Accounting Standards – effective 1 July 2007. The objective of AASB 2007-7 is to enhance the disclosure requirements in relation to the presentation of the financial statements of the Company and the consolidated entity. It will not impact on the results of the Company or the consolidated entity; and

• iv) AASB 8 Operating Segments – effective on or after 1 January 2009. The objective of AASB 8 is to enhance the disclosure requirements in relation to the operating segment of the Company and the consolidated entity. It will not impact on the results of the Company or the consolidated entity.

(u) Adoption of revised AAsB Accounting standard

In the current year, the consolidated entity has adopted AASB 101 Presentation of Financial Statements (October 2006). The objective of the revised AASB 101 is to enhance the disclosure requirements in relation to the presentation of the financial statements of the Company and the consolidated entity. It has not impacted the results of the Company or the consolidated entity.

• (ii) for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

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

(t) AAsB Accounting standards issued but not yet effective

The following accounting standards have been issued by the AASB but have not been adopted by the consolidated entity as they are not effective until annual reporting periods beginning on or after 1 November 2006, 1 January 2007, 1 July 2007 or 1 January 2009:

• i) AASB Interpretation 10 Interim Financial Reporting and Impairment – effective 1 November 2006. This standard clarifies that an entity cannot reverse an impairment loss recognised in a previous interim period in relation to either goodwill or an investment in an equity instrument or in a financial asset carried at cost. It will not impact on the results of the Company or the consolidated entity;

• ii) AASB 7 Financial Instruments: Disclosures – effective on or after 1 January 2007. The objective of AASB 7 is to combine and enhance the disclosure requirements in relation to the risk exposures arising from financial instruments used by the Company and the consolidated entity. It will not impact on the results of the Company or the consolidated entity;

> 27

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

		CONSOLIDATED	CONSOLIDATED		COMPANY
		2007	2006	2007		2006
	NOTE	$’000	$’000	$’000		$’000
2 - profit from operations
a) revenue
Sales revenue - sale of goods		145,480	128,495	–		–
Net income from MMC Contrarian Limited		343	859	343		859
Sale of securities:
Profit on redemption of preference shares		106	214	–		–
Profit on sale of MMC Asset Management and cancellation
of management agreement	6	9,992	–	5,053		–
Profit on sale of listed securities		3,717	1,474	–		–
Dividends:
Controlled entities		–	–	17,559		1,130
Associates		–	–	–		39
Partnership distribution		–	–	262		448
Other entities		3,776	1,076	1,847		–
Interest:
Controlled entities		–	–	4,225		2,177
Other entities		413	357	162		104
Employee Share Scheme:
Executive key management personnel		189	163	189		163
		164,016	132,638	29,640		4,920
b) profit/(Loss) before income tax
Profit/(Loss) before income tax has been arrived at after
crediting/(charging) the following gains and losses:
Profit/(Loss) on sale of property, plant and equipment		31	(92)	–		–
Foreign exchange gain		1,149	675	–		–
		1,180	583	–		–
c) Expenses
Cost of sales		79,179	66,470	–		–
Interest:
Controlled entities		–	–	74		135
Associates		28	51	–		–
Other entities		1,884	564	1,659		365
Unwinding of deferred consideration interest		–	164	–		164
Finance charges relating to finance leases		104	128	–		–
		2,016	907	1,733		664
Depreciation:
Buildings		56	67	–		–
Leased plant and equipment		465	528	–		–
Leasehold improvements		102	91	6		5
Plant and equipment		1,200	1,011	21		10
		1,823	1,697	27		15

> 28

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F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

		CONSOLIDATED	CONSOLIDATED		COMPANY
		2007	2006	2007	2006
	NOTE	$’000	$’000	$’000	$’000
2 - profit from operationsc o N T I N u E D
Employee benefits expense:
Salary and wages		32,450	29,996	2,754	1,098
Defined contribution superannuation plans		2,076	2,056	139	138
Movement in equity liability	15	400	(550)	–	–
Equity settled share based payments		381	141	10	141
		35,307	31,643	2,903	1,377
Doubtful debts arising from:
Other entities		(26)	(14)	–	–
Writedown of inventory to net realisable value		847	72	–	–
Operating lease expenses:
Minimum lease payments		3,490	3,296	53	115
d) Employee numbers		Number	Number	Number	Number
Number of employees at end of financial year		455	477	10	10
3 - Income Tax
(a) Income tax recognised in profit or loss
Tax expense comprises:
Current tax expense		6,408	3,710	(669)	(172)
Prior year under provision		50	41	159	57
Deferred tax expense		1,571	622	2,108	676
		8,029	4,373	1,598	561
The prima facie income tax expense on pre-tax accounting profit reconciles to the income tax expense in the financial				statements as follows:
prima facie income tax expense on profit from ordinary
activities at 30% (2006: 30%)		7,853	4,768	7,348	659
Fully franked dividends		(1,072)	(254)	(561)	(351)
Tax rate differential relating to overseas controlled entities		89	56	–	–
Equity share of associates’ profit		(148)	(369)	–	–
Equity settled share based payments		114	42	3	42
Income on scheme loans recognised directly in equity		111	94	111	94
Unwinding of discount on deferred consideration		–	50	–	50
Utilisation of prior year unbooked deferred tax asset		–	63	–	213
Movement in equity liability		120	(165)	–	–
Amortisation and depreciation on buildings		17	20	–	–
Non-allowable expenses		28	27	1	2
Goodwill impairment		600	–	–	–
Capital gain on restructure		267	–	25	–
Prior year under provision		50	41	159	57
Non-assessable amount related to transactions within
the tax consolidated group		–	–	(5,488)	(205)
		8,029	4,373	1,598	561

> 29

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F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

	CONSOLIDATED	CONSOLIDATED		COMPANY
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
3 - Income Taxc o N T I N u E D
(b) Income tax recognised directly in equity
The following deferred amounts were charged directly to equity during the period:
Deferred tax	3,480	2,013	(4)		–
4 - Trade and other receivables
current
Trade receivables	26,002	20,945	–		–
Less: Allowance for doubtful debts	(211)	(234)	–		–
	25,791	20,711	–		–
Other debtors	4,867	3,341	1,877		855
	30,658	24,052	1,877		855
5 - Inventories
current
Raw materials - at cost	3,014	2,365	–		–
Work in progress - at cost	438	355	–		–
Finished goods - at cost	22,770	22,547	–		–
Finished goods - at net realisable value	2,745	1,034	–		–
Finished goods	25,515	23,581	–		–
	28,967	26,301	–		–

6 - Investments Accounted for using the Equity Method

		OWNERSHIP	INTEREST	CARRYING	AMOUNT
		CONSOLIDATED		CONSOLIDATED
		2007	2006	2007	2006
NAME OF ENTITY	PRINCIPAL ACTIVITY	%	%	$’000	$’000
MMC Asset Management Limited1	Funds Manager	–	36.7	–	5,153
Safilo Australia Partnership2	Optical Frame Distribution	19.5	19.5	1,944	1,708
				1,944	6,861
Other immaterial associates				98	55
				2,042	6,916

1 The statutory reporting date of MMC Asset Management Limited is 30 June - sold 1 February 2007

2 The statutory reporting date of Safilo Australia Partnership is 31 December

HGL sold its 36.7% equity interest in MMC Asset Management and cancelled its management agreement with MMC Contrarian in return for $15.3 million of equity in MMC Contrarian. HGL recognised a $10.0 million profit on this transaction.

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6 - Investments Accounted for using the Equity Method c o N T I N u E D

	CARRYING	AMOUNT
	CONSOLIDATED
	2007	2006
	$’000	$’000
summarised financial position of associates
Current assets	14,870	16,343
Non current assets	447	2,217
Total assets	15,317	18,560
Current liabilities	(4,978)	(6,425)
Non current liabilities	(167)	(287)
Total liabilities	(5,145)	(6,712)
Net assets	10,172	11,848
revenue	27,448	32,779
profit after tax	3,955	6,550
share of associates’ profit or loss:
Share of profit before income tax	1,204	2,323
Income tax expense1	(212)	(456)
Share of associates’ profit	992	1,867

1 The income tax expense excludes taxation arising on the Safilo Australia partnership. This tax expense is recognised by HGL.

During the year, the consolidated entity received dividends of $nil (2006: $875,000) from its associates and distributions of $262,000 (2006: $448,000) from the Safilo Australia partnership.

The principal activity of the Safilo Australia partnership is the distribution of imported spectacle frames and sunglasses. During the 2005 financial year HGL’s interest in the Safilo Australia partnership fell from 24.5% to 19.5%. The consideration given to HGL for the reduction in its partnership interest was a deferral of the exercise date of the call option held by Safint, a wholly owned subsidiary of Safilo S.p.A., under which Safint can acquire all of HGL’s interest in the Safilo Australia partnership. Following the deferral, the earliest date that the call option can now be exercised is 1 January 2010 and the amount payable to HGL on exercise of the call option would be 19.5% of the sum of:

• $4.412 million; and

• 60% of the average net profit before tax of the Safilo Australia partnership for the five years prior to the date on which the call option is exercised.

> 31

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F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

		CONSOLIDATED	CONSOLIDATED		COMPANY
		2007	2006	2007	2006
	NOTE	$’000	$’000	$’000	$’000
7 - other financial assets
Non-current
At cost:
Shares in controlled entities		–	–	29,532	24,432
Shares in associates		–	–	40	346
		–	–	29,572	24,778
At fair value:
Available for sale shares		76,118	30,829	34,183	–
At amortised cost:
Non interest bearing loans to controlled entities		–	–	11,718	12,757
Unlisted 8% preference shares		–	316	–	–
Interest bearing loans advanced to:
Executive key management personnel	21	1,682	1,525	1,682	1,525
Other entities		320	314	320	314
Controlled entities		–	–	29,832	17,332
		2,002	2,155	43,552	31,928
		78,120	32,984	107,307	56,706

8 - property, plant and Equipment

8 - property, plant and Equipment
			CONSOLIDATED
	LAND &	LEASEHOLD	PLANT &	LEASED PLANT
	BUILDINGS	IMPROVEMENTS	EQUIPMENT	& EQUIPMENT	TOTAL
	$’000	$’000	$’000	$’000	$’000
Gross carrying Amount
Balance at 30 September 2005	5,079	1,046	5,344	2,256	13,725
Additions	–	86	1,669	615	2,370
Acquisition of businesses	–	–	181	–	181
Disposals	–	–	(532)	(524)	(1,056)
Net foreign currency exhange difference	(112)	(18)	(55)	–	(185)
Balance at 30 september 2006	4,967	1,114	6,607	2,347	15,035
Additions	–	37	1,023	358	1,418
Acquistion of businesses	–	–	543	–	543
Disposals	–	–	(541)	(795)	(1,336)
Net revaluation increments	425	–	–	–	425
Net foreign currency exchange difference	(75)	(14)	(48)	–	(137)
Balance at 30 september 2007	5,317	1,137	7,584	1,910	15,948

> 32

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

8 - property, plant and Equipment c o N T I N u E D

8 - property, plant and Equipmentc o N	T I N u E D
			CONSOLIDATED
	LAND &	LEASEHOLD	PLANT &	LEASED PLANT
	BUILDINGS	IMPROVEMENTS	EQUIPMENT	& EQUIPMENT	TOTAL
	$’000	$’000	$’000	$’000	$’000
Accumulated Depreciation
Balance at 30 September 2005	(290)	(689)	(2,865)	(648)	(4,492)
Disposals	–	–	380	295	675
Disposal of controlled entity	–	–	(94)	–	(94)
Depreciation expense	(67)	(91)	(1,011)	(528)	(1,697)
Net foreign currency exchange difference	9	11	38	–	58
Balance at 30 september 2006	(348)	(769)	(3,552)	(881)	(5,550)
Disposals	–	–	368	526	894
Depreciation expense	(56)	(102)	(1,200)	(465)	(1,823)
Net foreign currency exchange difference	8	10	30	–	48
Balance at 30 september 2007	(396)	(861)	(4,354)	(820)	(6,431)
Net Book Value
As at 30 september 2007	4,921	276	3,230	1,090	9,517
As at 30 September 2006	4,619	345	3,055	1,466	9,485

The fair value of the land and buildings was reviewed at 30 September 2007 resulting in a revaluation of one of the properties. It was determined the carrying value of the remaining land and buildings were not materially different to the fair value. The carrying values are based on independent valuations made by Bristow Barbour & Walker Ltd (MJ Bristow FPINZ, FNZIV) in September 2007 and by Fitzroys Pty Limited (CB Mason AAPI) and Carritt Taylor Valuations Pty Limited (C Taylor FAPI) in June 2003, based on market value.

	CONSOLIDATED	CONSOLIDATED
	2007	2006
	$’000	$’000
The carrying amount of land and buildings had they
been recognised under the cost model	4,131	4,195

Aggregate depreciation allocated during the year is recognised as an expense and disclosed in note 2 to the financial statements.

			COMPANY
	LAND &	LEASEHOLD	PLANT &	LEASED PLANT
	BUILDINGS	IMPROVEMENTS	EQUIPMENT	& EQUIPMENT	TOTAL
	$’000	$’000	$’000	$’000	$’000
Gross carrying Amount
Balance at 30 September 2005	–	178	141	–	319
Additions	–	–	62	–	62
Disposals	–	–	(2)	–	(2)
Balance at 30 september 2006	–	178	201	–	379
Additions	–	–	3	–	3
Disposals	–	–	(74)	–	(74)
Balance at 30 september 2007	–	178	130	–	308

> 33

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

8 – property, plant and Equipment c o N T I N u E D

			COMPANY
	LAND &	LEASEHOLD	PLANT &	LEASED PLANT
	BUILDINGS	IMPROVEMENTS	EQUIPMENT	& EQUIPMENT	TOTAL
	$’000	$’000	$’000	$’000	$’000
Accumulated Depreciation
Balance at 30 September 2005	–	(141)	(79)	–	(220)
Disposals	–	–	2	–	2
Depreciation expense	–	(5)	(10)	–	(15)
Balance at 30 september 2006	–	(146)	(87)	–	(233)
Disposals	–	–	74	–	74
Depreciation expense	–	(6)	(21)	–	(27)
Balance at 30 september 2007	–	(152)	(34)	–	(186)
Net Book Value
As at 30 september 2007	–	26	96	–	122
As at 30 September 2006	–	32	114	–	146

9 – Intangibles

9 – Intangibles
		CONSOLIDATED			COMPANY
		2007	2006	2007		2006
	NOTE	$’000	$’000	$’000		$’000
Goodwill
Net book value at the beginning of the financial year		22,640	14,760	–		–
Acquisiton of businesses	24	6,860	7,905	–		–
Net foreign currency exchange difference		(5)	(25)	–		–
Impairment of goodwill		(2,000)	–	–		–
Adjustment to deferred consideration		659	–	–		–
Net book value at the end of the financial year		28,154	22,640	–		–

Goodwill has been allocated for impairment testing purposes to each of the following cash generating units:

	CONSOLIDATED	CONSOLIDATED
	2007	2006
	$’000	$’000
JSB	8,565	7,905
Biante	6,358	–
Thalgo	5,908	5,746
Amcla	2,780	4,780
SPOS	2,813	2,801
Other1	1,730	1,408
	28,154	22,640

1 Other comprises Mountcastle Pty Ltd, J Leutenegger Pty Ltd and Aarque Graphics New Zealand Limited. The movement mainly arises due to the acquisiton of Varden Hats by Mountcastle Pty Ltd.

> 34

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

9 – Intangibles c o N T I N u E D

Impairment testing

During the year ended 30 September 2007 the consolidated entity determined that a $2.0 million impairment charge was required in respect of Amcla.

The cash generating unit impairment tests are based on value in use calculations. The value in use calculations use cash flow projections based on the financial budgets approved by management on a one year basis and extrapolated over five years using a growth rate appropriate for the markets in which the businesses operate (growth rates range between 3% and 5%). The discount rate applied to the cash flow projections is 11.7%.

The key assumptions used in the value in use calculations have been determined based on management’s understanding of each cash generating unit. The assumptions are consistent with past performance.

10 – Trade and other payables

10 – Trade and other payables
		CONSOLIDATED			COMPANY
		2007	2006	2007		2006
	NOTE	$’000	$’000	$’000		$’000
Trade payables and accruals		21,374	18,725	1,556		1,229
Deferred consideration	24	1,630	1,840	1,630		1,840
Goods and services tax		1,037	500	7		8
		24,041	21,065	3,193		3,077
11 – Borrowings
current
unsecured at amortised cost:
Interest bearing loans from controlled entities		–	–	2,015		3,108
Non interest bearing loans from controlled entities		–	–	4,577		1,373
secured at amortised cost:
Lease liabilities1	27	468	644	–		–
Bank loans2	29	34,000	3,150	34,000		3,150
		34,468	3,794	40,592		7,631
Non current
secured at amortised cost:
Bank loans3	29	3,165	2,986	–		–
Lease liabilities1	27	711	897	–		–
		3,876	3,883	–		–

1 Lease liabilities are secured by the respective assets acquired.

2 Loans are secured by a fixed and floating charge over certain assets of the group.

3 Bank facilities are secured by a mortgage over properties.

> 35

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

	CONSOLIDATED	CONSOLIDATED		COMPANY
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
12 – current tax liabilities
Income tax payable attributable to:
Parent entity	(759)	(332)	(759)		(332)
Entities in the tax consolidated group	2,902	613	2,902		613
Other entities not in tax consolidated group	546	253	–		–
	2,689	534	2,143		281
The company and its wholly-owned Australian resident entities have formed a tax consolidated group		with effect from 1 October 2002.		The accounting
policy on implementation of the legislation is set out in Note 1(o). The head entity within the tax consolidated group is HGL Limited.
13 – Deferred tax assets and liabilities
Deferred tax assets comprise:
Tax losses – capital	–	–	–		775
Temporary differences	–	–	–		860
	–	–	–		1,635
Deferred tax liabilities comprise:
Temporary differences	8,967	3,916	469		–
	OPENING	CHARGED	CHARGED	CLOSING
	BALANCE	TO INCOME	TO EQUITY	BALANCE
	$’000	$’000	$’000		$’000
consolidated 2007
Gross deferred tax assets
Employee provisions	1,124	123	–		1,247
Other provisions	972	897	50		1,919
Tax losses – capital	775	(775)	–		–
	2,871	245	50		3,166
Gross deferred tax liabilities
Land and buildings	416	–	46		462
Other provisions	–	175	–		175
Rollover relief	–	1,641	–		1,641
Available for sale investments	6,371	–	3,484		9,855
	6,787	1,816	3,530	12,133
	3,916	1,571	3,480		8,967

> 36

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

	OPENING	CHARGED	CHARGED	CLOSING
	BALANCE	TO INCOME	TO EQUITY	BALANCE
	$’000	$’000	$’000	$’000
13 – Deferred tax assets and liabilitiesc o N T I N u E D
consolidated 2006
Gross deferred tax assets
Employee provisions	963	161	–	1,124
Other provisions	1,154	(182)	–	972
Tax losses – capital	1,376	(601)	–	775
	3,493	(622)	–	2,871
Gross deferred tax liabilities
Land and buildings	416	–	–	416
Available for sale investments	4,358	–	2,013	6,371
	4,774	–	2,013	6,787
	1,281	622	2,013	3,916
company 2007
Gross deferred tax assets
Employee provisions	148	(11)	–	137
Other provisions	712	319	–	1,031
Tax losses – capital	775	(775)	–	–
	1,635	(467)	–	1,168
Gross deferred tax liabilities
Rollover relief	–	1,641	–	1,641
Available for sale investments	–	–	(4)	(4)
	–	1,641	(4)	1,637
	1,635	(2,108)	4	(469)
company 2006
Gross deferred tax assets
Employee provisions	168	(20)	–	148
Other provisions	767	(55)	–	712
Tax losses – capital	1,376	(601)	–	775
	2,311	(676)	–	1,635

> 37

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

		CONSOLIDATED	CONSOLIDATED		COMPANY
		2007	2006	2007		2006
	NOTE	$’000	$’000	$’000		$’000
14 – provisions
Non-current
Deferred consideration		2,443	3,414	2,443		3,414
Deferred consideration
Balance at beginning of financial year		3,414	–	3,414		–
Additional deferred consideration provided	24	495	3,250	495		3,250
Transfer to current payable	10	(1,630)	–	(1,630)		–
Unwinding of discount		164	164	164		164
Balance at end of financial year		2,443	3,414	2,443		3,414

15 – Employee Benefits

	CONSOLIDATED	CONSOLIDATED		COMPANY
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
current
Employee benefits	3,008	3,007	147		167
Provision for equity liabilities	1,600	1,200	1,990		1,200
	4,608	4,207	2,137		1,367
Non-current
Employee benefits	1,148	738	310		328
Total employee benefits	5,756	4,945	2,447		1,695

> 38

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

	CONSOLIDATED	CONSOLIDATED		COMPANY
	2007	2006	2007	2006
	$’000	$’000	$’000	$’000
16 – Issued capital
Issued share capital
48,577,234 (2006: 48,107,512) fully paid ordinary shares	31,389	30,371	31,389	30,371

During the year the following changes occurred in fully paid ordinary shares:

	CONSOLIDATED AND	CONSOLIDATED AND	CONSOLIDATED AND	CONSOLIDATED AND
		COMPANY		COMPANY
	2007	2007	2006	2006
	NuMBEr	$’000	NUMBER	$’000
Balance at beginning of financial year	48,107,512	30,371	47,681,742	29,544
Allotted pursuant to HGL Dividend Reinvestment Plan	566,329	1,220	567,529	1,078
Cancellation of capital pursuant to the on-market share buy-back1	(129,830)	(265)	(170,735)	(305)
Shares issued to Employee Share Scheme participants	33,225	63	28,976	54
Balance at end of financial year	48,577,236	31,389	48,107,512	30,371

1 The company currently operates an on-market share buy-back. During the year 129,830 (2006: 170,735) ordinary shares were purchased at an average price of $2.04 (2006: $1.80) pursuant to the on-market share buy-back.

reconciliation of Total share capital

In accordance with AASB 2 Share-based Payment the shares issued to the executive key management personnel after November 2002 under the Employee Share Scheme are recognised as equity settled options.

	CONSOLIDATED	CONSOLIDATED	CONSOLIDATED	CONSOLIDATED
	2007	2007	2006	2006
	NuMBEr	$’000	NUMBER	$’000
Issued capital at end of financial year	48,577,236	31,389	48,107,512	30,371
Shares issued to Employee Share Scheme participants after November 2002	3,143,773	5,858	2,908,333	5,339
Total share capital at end of finanical year	51,721,009	37,247	51,015,845	35,710

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

Details of the HGL Dividend Reinvestment Plan are disclosed in the Shareholder Information on page 61.

> 39

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

	CONSOLIDATED	CONSOLIDATED		COMPANY
	2007	2006	2007	2006
	$’000	$’000	$’000	$’000
17 – reserves
Available for sale revaluation reserve	22,998	14,864	(15)	–
Employee share scheme reserve	2,452	2,442	2,452	2,442
Land and buildings revaluation reserve	494	388	–	–
Foreign currency translation reserve	(151)	(139)	–	–
Other reserve	(1,032)	(658)	–	–
	24,761	16,897	2,437	2,442
Available for sale revaluation reserve
Balance at beginning of financial year	14,864	10,168	–	–
Revaluation of listed securities, net of tax	10,736	5,727	(15)	–
Transferred to the income statement on sale of financial assets, net of tax	(2,602)	(1,031)	–	–
Balance at end of financial year	22,998	14,864	(15)	–
Employee share scheme reserve
Balance at beginning of financial year	2,442	2,301	2,442	2,301
Equity settled share based payments	10	141	10	141
Balance at end of financial year	2,452	2,442	2,452	2,442
Land and buildings revaluation reserve
Balance at beginning of financial year	388	388	–	–
Revaluation of land and buildings, net of tax	106	–	–	–
Balance at end of financial year	494	388	–	–
Foreign currency translation reserve
Balance at beginning of financial year	(139)	(50)	–	–
Translation of overseas controlled entities, net of tax	(12)	(89)	–	–
Balance at end of financial year	(151)	(139)	–	–
The foreign currency translation reserve arises on the retranslation of the opening net assets of overseas		subsidiaries, at year end rates of exchange,
net of tax.
other reserve
Balance at beginning of financial year	(658)	(658)	–	–
Purchase of equity interest	(374)	–	–	–
Balance at end of financial year	(1,032)	(658)	–	–

The foreign currency translation reserve arises on the retranslation of the opening net assets of overseas subsidiaries, at year end rates of exchange, net of tax.

The other reserve arose on HGL increasing its equity interests in J Leutenegger Pty Limited and Amcla Pty Limited, neither met the definition of a business combination under AASB 3 Business Combinations as there was no change of control. Consequently, the excess of the purchase consideration over the share of net assets acquired was adjusted directly to reserves rather than recognised as an increase to goodwill.

> 40

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

		CONSOLIDATED	CONSOLIDATED		COMPANY
		2007	2006	2007	2006
	NOTE	$’000	$’000	$’000	$’000
18 – retained earnings
Balance at beginning of financial year		26,891	23,190	12,857	16,570
Net profit attributable to members of the entity		15,653	9,051	22,896	1,637
Dividends paid	19	(5,981)	(5,350)	(5,981)	(5,350)
Balance at end of financial year		36,563	26,891	29,772	12,857

19 – Dividends – company

19 – Dividends – company
			COMPANY
		2007	2006
		$’000	$’000
ordinary shares
Interim 2007 dividend paid 5 July 2007 (2006: 6 July 2006)
6.2 cents per share 100% franked at 30% (2006: 5.4 cents 100% franked at 30%)		2,983	2,585
Final 2006 dividend paid 20 December 2006 (2006: 20 December	2005)
6.2 cents per share 100% franked at 30% (2006: 5.8 cents 100%	franked at 30%)	2,998	2,765
Total dividends paid		5,981	5,350
Dividends actually paid or satisfied by the issue of shares under the	Dividend Reinvestment Plan during the	year ended 30 September 2007 were as
follows:
Paid in cash		4,761	4,272
Satisfied by issue of shares	31	1,220	1,078
Dividends actually paid		5,981	5,350

In accordance with Australian Tax Law the company maintains the franking account on a tax paid basis. At September 2007 the consolidated entity has $6,593,000 of franking credits (2006: $5,086,000) sufficient to pay fully franked dividends of 29.7 cents per share (2006: 23.3 cents).

Final dividend

In accordance with AASB 110 Events after Balance Sheet Date, HGL Limited has not provided for the final dividend. The final dividend of 8.2 cents per share 100% franked at 30% will be payable on 18 December 2007.

The dividend policy is to distribute between 70% and 80% of core earnings per share.

> 41

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

	2007	2006
	cENTs pEr	CENTS PER
	sHArE	SHARE
20 – Earnings per share
Basic earnings per share	32.4	18.9
Diluted earnings per share	32.1	18.8
BAsIc EArNINGs pEr sHArE	$’000	$’000
Earnings used in calculating basic earnings per share	15,653	9,051
	2007	2006
	NuMBEr ’000	NUMBER ’000
Weighted average number of ordinary shares for the purposes of basic earnings per share	48,366	47,866
	2007	2006
DILuTED EArNINGs pEr sHArE	$’000	$’000
Earnings used in calculating diluted earnings per share	15,653	9,051
	2007	2006
	NuMBEr ’000	NUMBER ’000
Weighted average number of ordinary shares for the purposes of diluted earnings per share	48,811	48,059

21 – Employee share scheme

The Directors believe it is important to link the remuneration of HGL’s executives to the long term success of the Company by supporting the acquisition of shares (Scheme Shares) through the Employee Share Scheme (Scheme). To support this aim eligible employees may acquire HGL shares, with the cost being financed by non-recourse, interest bearing loans from HGL (Scheme Loans). The Scheme is available to be viewed in full on the HGL website, www.hgl.com.au.

During the year 100,000 (2006: nil) shares were issued under the Scheme.

Under the terms of the Scheme, the Scheme Shares have the same rights as apply to the other shares of HGL, including the rights to dividends and voting. The interest rate on the Scheme Loans is equivalent to the dividend rate. The interest is required to be paid by the participant within 5 days of the receipt of a dividend. If the participant elects to reinvest dividends using the DRP then the Company capitalises interest up to the amount reinvested. Any interest so capitalised will be added to the principal of the participants Scheme Loans and bear interest accordingly. In addition any benefit of franking credits must be paid by the participant to the Company.

Repayments are made on the last day of each calendar year. At this time an amount equal to the sum of franking credits received under the Scheme multiplied by one minus the top tax rate (including the Medicare levy) and profit from sales of any such shares shall be used in partial discharge of the Scheme Loan.

No demand for repayment of the principal shall be made before the earliest to occur of:

(a) the expiration of six months after the participant ceases, for any reason other than death, to be an employee of the Company or controlled entity;

(b) the expiration of twelve months after death; and

(c) the seventh anniversary of the making of the Scheme Loan.

> 42

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

21 – Employee share scheme c o N T I N u E D

If all the Scheme Shares are sold and the proceeds are insufficient to discharge the Scheme Loan, the participant has no further liability to repay the Scheme Loan, and the amount outstanding would be written off as an equity adjustment with no effect on profit or loss. If a participant has more than one Scheme Loan each Scheme Loan is treated separately from any other Scheme Loan.

The Company retains a holding lock in respect of the Scheme Shares registered in the name of the participant. Any loans repaid by the participants are released from the holding lock.

		2007	2007	2006	2006
		NuMBEr oF	scHEME	NUMBER OF	SCHEME
		scHEME	LoANs	SCHEME	LOANS
	NOTE	sHArEs	$’000	SHARES	$’000
Summary of Share Loans and Scheme Shares movements during the financial year:
Balance at beginning of financial year		4,428,164	6,864	4,264,420	6,521
DRP participation and capitalised interest		256,425	553	222,444	425
Interest on Scheme Loans		–	6	–	52
Interest repaid on Scheme Loans		–	(6)	–	(52)
Shares issued during the year		100,000	218	–	–
Repayment of Loans and release of Scheme Shares		(64,449)	(95)	(58,700)	(82)
Balance at end of financial year		4,720,140	7,540	4,428,164	6,864
In accordance with AASB 2 Share-based Payment the shares	issued after November	2002 are recognised as equity		settled options. These are the
shares issued under loans 3, 4, 5 and 6.
Recognised as shares	7	1,576,367	1,682	1,519,831	1,525
Recognised as equity settled options		3,143,773	5,858	2,908,333	5,339
		4,720,140	7,540	4,428,164	6,864

In accordance with AASB 2 Share-based Payment the shares issued after November 2002 are recognised as equity settled options. These are the shares issued under loans 3, 4, 5 and 6.

Details of scheme shares and scheme Loans as at 30 september 2007

	KJ ELEy	Mp MAHoNEy	AJ WHITTLEs
	NuMBEr oF scHEME sHArEs scHEME LoANs $ MArKET VALuE 30.09.07 $	NuMBEr oF scHEME sHArEs scHEME LoANs $ MArKET VALuE 30.09.07 $	NuMBEr oF scHEME sHArEs scHEME LoANs $ MArKET VALuE 30.09.07 $
Loan 1 Loan 2 Loan 3 Loan 4 Loan 5 Loan 6	774,718 811,758 1,665,644 450,872 483,967 969,375 393,579 714,170 846,195 375,142 725,642 806,555 354,656 687,969 762,510 – – –	269,174 283,291 578,724 81,603 103,033 175,446 321,159 524,314 690,492 300,113 580,513 645,243 283,725 550,376 610,009 – – –	– – – – – – 240,871 393,235 517,873 225,086 435,386 483,935 212,794 412,782 457,507 – – –
	2,348,967 3,423,506 5,050,279	1,255,774 2,041,527 2,699,914	678,751 1,241,403 1,459,315

> 43

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21 – Employee share scheme c o N T I N u E D

	ps cALDELIs	oTHEr	ToTAL
	NuMBEr oF scHEME sHArEs scHEME LoANs $ MArKET VALuE 30.09.07 $	NuMBEr oF scHEME sHArEs scHEME LoANs $ MArKET VALuE 30.09.07 $	NuMBEr oF scHEME sHArEs scHEME LoANs $ MArKET VALuE 30.09.07 $
Loan 1 Loan 2 Loan 3 Loan 4 Loan 5 Loan 6	– – – – – – 120,439 196,618 258,944 109,810 212,719 236,091 106,399 206,391 228,758 – – –	– – – – – – – – – – – – – – – 100,000 217,680 215,000	1,043,892 1,095,049 2,244,368 532,475 587,000 1,144,821 1,076,048 1,828,337 2,313,504 1,010,151 1,954,260 2,171,824 957,574 1,857,518 2,058,784 100,000 217,680 215,000
	336,648 615,728 723,793	100,000 217,680 215,000	4,720,140 7,539,844 10,148,301

The market value of HGL shares as at 30 September 2007 was $2.15 (2006: $1.98).

Loans 1 & 2 were issued pursuant to the HGL Limited Employee Share Scheme (1999).

Loans 3, 4, 5 and 6 were issued pursuant to the Employee Share Scheme as amended at the 2004 Annual General Meeting.

The options under Loan 3 to MP Mahoney, AJ Whittles and PS Caldelis were granted at $1.69 and vested on 1 December 2003. The Black-Scholes model creates a fair value of this right of $0.82 per share. The options under Loan 3 issued to KJ Eley were granted at $1.9256 and vested on 6 February 2004. The Black-Scholes model creates a fair value of this right of $1.056 per share.

The options under Loans 4 to KJ Eley, MP Mahoney, AJ Whittles and PS Caldelis were granted at $1.9256 on 6 February 2004 and vested on 6 February 2005. The Black-Scholes model creates a fair value of this right of $0.90 per share.

The options under Loans 5 to KJ Eley, MP Mahoney, AJ Whittles and PS Caldelis were granted at $1.9256 on 6 February 2004 and vested on 6 February 2006. The Black-Scholes model creates a fair value of this right of $0.90 per share.

The options under Loan 6 were granted at $2.18 on 28 May 2007 and will vest on 28 May 2010. The Black-Scholes model creates a fair value of this right of $0.88 per share.

Details of scheme shares and scheme Loans as at 30 september 2006

	KJ ELEY	MP MAHONEY	AJ WHITTLES
	NUMBER OF SCHEME SHARES SCHEME LOANS $ MARKET VALUE 30.09.06 $	NUMBER OF SCHEME SHARES SCHEME LOANS $ MARKET VALUE 30.09.06 $	NUMBER OF SCHEME SHARES SCHEME LOANS $ MARKET VALUE 30.09.06 $
Loan 1 Loan 2 Loan 3 Loan 4 Loan 5	747,204 734,527 1,479,464 434,630 439,029 860,567 375,902 675,048 744,287 358,287 688,354 709,408 338,889 653,059 671,000	259,588 256,458 513,984 78,411 94,907 155,254 307,128 492,378 608,113 286,630 550,682 567,528 271,113 522,448 536,804	– – – – – – 230,346 369,283 456,085 214,973 413,013 425,647 203,334 391,836 402,601
	2,254,912 3,190,017 4,464,726	1,202,870 1,916,873 2,381,683	648,653 1,174,132 1,284,333

> 44

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21 – Employee share scheme c o N T I N u E D

	PS CALDELIS	TOTAL
	NUMBER OF SCHEME SHARES SCHEME LOANS $ MARKET VALUE 30.09.06 $	NUMBER OF SCHEME SHARES SCHEME LOANS $ MARKET VALUE 30.09.06 $
Loan 1 Loan 2 Loan 3 Loan 4 Loan 5	– – – – – – 115,177 184,642 228,050 104,885 201,827 207,672 101,667 195,918 201,301	1,006,792 990,985 1,993,448 513,041 533,936 1,015,821 1,028,553 1,721,351 2,036,535 964,775 1,853,876 1,910,255 915,003 1,763,261 1,811,706
	321,729 582,387 637,023	4,428,164 6,863,409 8,767,765

22 – related party Disclosures

a) Key management personnel compensation (company and consolidated)

The table below provides a total of the remuneration received by the key management personnel. For further details regarding remuneration of key management personnel see the Remuneration Report which forms part of the Directors’ Report.

	SHORT TERM	POST		LONG TERM
	EMPLOYEE	EMPLOYMENT	SHARE BASED	EMPLOYEE
	BENEFITS	BENEFITS	PAYMENTS	BENEFITS	TOTAL
	$	$	$	$	$
2007	1,590,024	153,149	–	23,405	1,766,578
2006	1,197,521	115,810	141,324	62,547	1,517,202

b) Loans to key management personnel

There were no loans made to key management personnel of the consolidated entity and their related entities other than loans that are in-substance options and are non-recourse to the consolidated entity. For details of the loans in relation to the Employee Share Scheme refer to Note 21.

c) Key management personnel equity holdings

The key management personnel and their relevant interest in the fully paid ordinary shares of the Company as at year end are as follows:

		NUMBER OF ORDINARY	SHARES HELD
		NON-	DIRECT	INDIRECT
	BENEFICIALLY	BENEFICIALLY	INTEREST	INTEREST
PG Miller	39,723	7,756,304	39,723	7,756,304
FM Wolf	291,377	–	–	291,377
JD Constable	44,000	625	44,625	–
KJ Eley	623,630	–	623,630	–
MP Mahoney	42,603	–	42,603	–
AJ Whittles	16,335	–	16,335	–
PS Caldelis	8,032	–	8,032	–

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22 – related party Disclosures c o N T I N u E D

2007 movement in shareholdings of key management personnel:

	NUMBER OF SHARES	REPAYMENT OF				NUMBER OF SHARES
	AT BEGINNING	SCHEME LOANS	EXERCISE	DRP SHARES		AT END
	OF PERIOD	1 AND 2	OF OPTIONS	ISSUED	OTHER	OF PERIOD
KJ Eley	587,209	24,479	11,942	–	–	623,630
MP Mahoney	23,976	6,745	10,025	1,857	–	42,603
AJ Whittles	8,136	–	7,518	681	–	16,335
PS Caldelis	3,958	–	3,740	334	–	8,032

There were no other movements in personnel equity holdings of key management personnel other than those listed above. Key management personnel received or were entitled to receive dividends from the Company during the year ended 30 September 2007 on shares held in the Company in their own names and their associated entities. These transactions were on the same basis as with other shareholders.

2006 movement in shareholdings of key management personnel:

	NUMBER OF SHARES	REPAYMENT OF				NUMBER OF SHARES
	AT BEGINNING	SCHEME LOANS	EXERCISE	DRP SHARES		AT END
	OF PERIOD	1 AND 2	OF OPTIONS	ISSUED	OTHER 1	OF PERIOD
KJ Eley	803,477	23,357	10,375	–	(250,000)	587,209
MP Mahoney	7,585	6,367	8,755	1,269	–	23,976
AJ Whittles	1,174	–	6,566	396	–	8,136
PS Caldelis	572	–	3,280	106	–	3,958

1 During 2006 KJ Eley disposed of 250,000 shares in an off market sale as a result of a termination of a defacto relationship.

There were no other movements in personnel equity holdings of key management personnel other than those listed above. Key management personnel received or were entitled to receive dividends from the Company during the year ended 30 September 2006 on shares held in the Company in their own names and their associated entities. These transactions were on the same basis as with other shareholders.

d) other transactions with key management personnel

During the year, HGL Limited bought back shares pursuant to the on-market buy-back and listed security trades through Bell Potter, the firm where JD Constable works as a broker. There were $1,115 (2006: $1,527) of brokerage fees paid in the ordinary course of business for the on-market buy-back. Brokerage fees were paid in the ordinary course of business, totalling $60,510 (2006: $4,306) for listed securities.

e) Transactions with other related parties

• (1) Transactions between the Company, its controlled entities and its associated entities relate to inter-entity loan account balances. The amount of interest has been disclosed in Note 2 and balances at year end are disclosed in Notes 7 and 11.

• (2) Transactions between the Company and its controlled entities and amongst the various controlled entities consist of the payment and receipt of dividends, the transfer of funds amongst the entities for day-to-day financing and investment of surplus funds, and the payment and receipt of interest on inter-entity balances. Such balances are unsecured.

> 46

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23 – segment reporting

23 – segment reporting
	IMPORT AND	FUND	SEGMENT		CONSOLIDATED
	DISTRIBUTION	MANAGEMENT	TOTAL	UNALLOCATED*	TOTAL
Business segments1	$’000	$’000	$’000	$’000	$’000
30 september 2007
revenue
Segment Revenue	145,480	17,934	163,414	602	164,016
segment result
Profit before income tax	15,564	18,386	33,950	(7,775)	26,175
Income tax	–	–	–	(8,029)	(8,029)
Profit after income tax	15,564	18,386	33,950	(15,804)	18,146
segment Assets	92,320	76,118	168,438	19,878	188,316
segment Liabilities	(24,482)	–	(24,482)	(57,758)	(82,240)
Net Assets	67,838	76,118	143,956	(37,880)	106,076
other segment information:
Depreciation expense	1,796	–	1,796	27	1,823
Acquistion of segment assets	1,958	–	1,958	3	1,961
Carrying value of equity accounted investments	2,042	–	2,042	–	2,042
Share of associates profit	541	451	992	–	992
Profit on sale of securities	–	3,823	3,823	–	3,823
Profit on sale of unlisted securities and management contract	–	9,992	9,992	–	9,992
Net income from MMC Contrarian Limited	–	343	343	–	343
other significant revenue:
Dividends	–	3,776	3,776	–	3,776
Foreign exchange	1,149	–	1,149	–	1,149
other significant expenses:
Goodwill impairment	–	–	–	2,000	2,000
Movement in equity liability	–	–	–	400	400
Equity settled share based payments	–	–	–	381	381

• Unallocated refers to tax assets, tax liabilities and tax expenses, net borrowings, properties, head office items and the employee share scheme.

1 The import and distribution businesses obtain branded products mainly from overseas and distribute these products mainly within Australia. Fund management comprises the listed investments, the equity accounted investment in MMC Asset Management Limited and net management fee income from MMC Contrarian Limited. The consolidated entity’s main business is carried on in Australia. There are no material geographical segments to report.

> 47

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23 – segment reporting c o N T I N u E D

23 – segment reportingc o N T I N u E D
	IMPORT AND	FUND	SEGMENT		CONSOLIDATED
	DISTRIBUTION	MANAGEMENT	TOTAL	UNALLOCATED*	TOTAL
Business segments1	$’000	$’000	$’000	$’000	$’000
30 september 2006
revenue
Segment Revenue	128,495	3,623	132,118	520	132,638
segment result
Profit before income tax	12,956	4,660	17,616	(1,723)	15,893
Income tax	–	–	–	(4,373)	(4,373)
Profit after income tax	12,956	4,660	17,616	(6,096)	11,520
segment Assets	78,506	36,298	114,804	14,012	128,816
segment Liabilities	(21,069)	–	(21,069)	(20,482)	(41,551)
Net Assets	57,437	36,298	93,735	(6,470)	87,265
other segment information:
Depreciation expense	1,682	–	1,682	15	1,697
Acquistion of segment assets	2,308	–	2,308	62	2,370
Carrying value of equity accounted investments	1,763	5,153	6,916	–	6,916
Share of associates profit	636	1,231	1,867	–	1,867
Profit on sale of securities	–	1,688	1,688	–	1,688
Net income from MMC Contrarian Limited	–	859	859	–	859
other significant revenue:
Dividends	–	1,076	1,076	–	1,076
Foreign exchange	675	–	675	–	675
other significant expenses:
Movement in equity liability	–	–	–	(550)	(550)

• Unallocated refers to tax assets, tax liabilities and tax expenses, net borrowings, properties, head office items and the employee share scheme.

1 The import and distribution businesses obtain branded products mainly from overseas and distribute these products mainly within Australia. Fund management comprises the listed investments, the equity accounted investment in MMC Asset Management Limited and net management fee income from MMC Contrarian Limited. The consolidated entity’s main business is carried on in Australia. There are no material geographical segments to report.

> 48

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24 – Acquisition of Businesses

Acquisition of Biante

On 17 April 2007 J Leutenegger, a subsidiary of HGL, acquired 100% of Biante Pty Limited, a Perth based importer and distributor of collector model cars for $8.2 million paid in cash.

When preparing accounts for the business combination of Biante the consolidated entity is required to recognise identifiable intangible assets separately from goodwill. Goodwill of $6.4 million for the acquisition of Biante is anticipated. There have been no identifiable intangibles recognised. The accounting for the acquisition has been determined provisionally.

If HGL had owned Biante from 1 October 2006, the Group’s profit after tax and minorities would have been $16.0 million and the Group’s revenue would have been $171.8 million.

The contribution of Biante to profit after tax and minorities was $0.39 million after the interest cost associated with funding the acquisition.

The preliminary estimated fair value of identifiable assets and liabilities of Biante as at the date of acquisition are:

	CONSOLIDATED
	2007
	$’000
Consideration	8,000
Cost of acquisition	225
Total consideration	8,225
Net assets acquired:
current assets
Cash	321
Trade and other receivables	304
Inventories	1,208
Current tax assets	59
Non-current assets
Other financial assets	8
Plant and equipment	544
current liabilities
Trade and other liabilities	(121)
Current tax liabilities	(259)
Provisions	(23)
Non-current liabilities
Provisions	(174)
Net Assets	1,867
Goodwill	6,358
	8,225

J Leutenegger pty Ltd

On 3 October 2006 HGL increased its equity interest in J Leutenegger Pty Limited to 100% from 85% for $1,560,000 paid in cash, the associated reserve adjustment was $326,000. Refer to note 17 for details.

On 4 October 2006 Chris Roche, the Chief Executive Officer, beneficially acquired 20% of the equity in J Leutenegger Pty Ltd for $250,000. Under AASB 2 Share-based Payment this beneficial equity interest is treated as an option as Chris Roche funded the equity purchase through a loan made by HGL Limited that was secured on his J Leutenegger Pty Ltd equity. A one off option expense of $371,277 has been recognised in the year.

Amcla pty Ltd

On 4 July 2007 HGL’s interest in AMCLA was increased to 92% from 80% by the conversion of debt into equity, the associated reserve adjustment was $48,000. Refer to note 17 for details.

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24 – Acquisition of Businesses c o N T I N u E D

other

During the year there have been two small acquisitions, the business assets of Essie Cosmetics and Varden Hats were acquired for a total of $0.6 million resulting in $0.5m of goodwill.

JsB Lighting

On 4 October 2005 HGL acquired 100% of JSB Lighting (JSB), a Sydney based importer and distributor of specialist commercial lighting equipment. JSB was acquired for an upfront payment of $4.0 million and an obligation to pay additional consideration based on earnings over the next three years.

JSB assists in the design and development of lighting solutions and its products are specified by professional consultants and installed in prime positions within hotels, offices, showrooms and retail areas.

When preparing accounts for the business combination of JSB the consolidated entity is required to recognise identifiable intangible assets separately from goodwill. Goodwill of $8.6 million for the acquisition of JSB has been recognised. There have been no identifiable intangibles recognised. JSB contributed $1.4 million to the net profit of the group during the 2006 year.

The fair value of identifiable assets and liabilities of JSB as at the date of acquisition were:

		CONSOLIDATED
		2006
	NOTE	$’000
Consideration		5,821
Cost of acquisition		331
		6,152
Estimate for deferred consideration	14	3,414
Additional deferred consideration provided	14	495
Total consideration		10,061
Net assets acquired:
current assets
Cash		920
Trade and other receivables		2,357
Inventories		278
Non-current assets
Plant and equipment		87
current liabilities
Trade and other liabilities		(1,667)
Current tax liabilities		(340)
Provisions		(139)
Net Assets		1,496
Goodwill		8,565
		10,061

> 50

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25 – Investment in controlled Entities

25 – Investment in controlled Entities
	COUNTRY OF	OWNERSHIP	INTEREST
	INCORPORATION/FORMATION	2007	2006
		%	%
company
HGL Limited	Australia	–	–
Import & Distribution Businesses
Baker & McAuliffe Holdings Pty Ltd (trading as JSB Lighting)	Australia	100	100
Amcla Pty Ltd	Australia	92	80
BLC Cosmetics Pty Limited (trading as Thalgo)	Australia	60	60
BOC Ophthalmic Instruments Unit Trust	Australia	50**	50
Createc Pty Limited (trading as Anitech)	Australia	50**	50
Hamlon Pty Limited (trading as Sydney Point of Sale (SPOS))	Australia	100	100
The Point-of-Sale Centre (New Zealand) Ltd (SPOS)*	NZ	100	100
Kinsole Pty Limited (trading as XLN Fabrics)	Australia	50**	50
J Leutenegger Pty Limited	Australia	100	85
Biante Pty Limited	Australia	100	–
Mountcastle Pty Limited	Australia	50**	50
Aarque Graphics New Zealand Limited*	NZ	50**	50
Head office Entities
HGL Company Six Pty Limited	Australia	100	100
HGL Group Pty Limited	Australia	100	100

• Controlled entities of which Deloitte Touche Tohmatsu has not acted as auditors.

• ** These entities are controlled by the Company as the Directors believe that the Company has the capacity to dominate decision making in relation to the financial and operating policies of the entity, in order to pursue the objectives of the Company.

The acquisition of SPOS was structured so that its CEO has an effective 20% equity interest in the increase in value of SPOS if the value is crystallised by a sale or similar event, accordingly a provision for equity liability has been recorded, refer to note 15.

The Chief Executive of J Leutenegger has an option to acquire 20% of J Leutenegger and Biante.

Certain immaterial entities have not been disclosed in the above listing of controlled entities.

Acquisition of businesses

Refer to note 24 for details of changes in ownership.

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F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

	CONSOLIDATED	CONSOLIDATED		COMPANY
	2007	2006	2007	2006
	$	$	$	$
26 – Auditors’ remuneration
Auditor of the parent entity
Audit and review of the financial reports	353,486	361,211	126,500	132,877
Taxation services	112,031	107,023	86,665	82,013
	465,517	468,234	213,165	214,890
other auditors
Audit and review of the financial reports	33,988	25,979	–	–
Taxation services	26,922	9,032	–	–
AIFRS transition	–	12,500	–	–
	60,910	47,511	–	–

The auditor of HGL Limited is Deloitte Touche Tohmatsu.

27 – Lease commitments

27 – Lease commitments
		CONSOLIDATED			COMPANY
		2007	2006	2007		2006
	NOTE	$’000	$’000	$’000		$’000
Finance leases
Plant and equipment		1,304	1,718	–		–
Payable not later than one year		529	747	–		–
Payable later than one, not later than five years		775	971	–		–
		1,304	1,718	–		–
Less: Future finance charges		(125)	(177)	–		–
provided for in the financial statements		1,179	1,541	–		–
Representing lease liabilities:
Current	11	468	644	–		–
Non-current	11	711	897	–		–
		1,179	1,541	–		–
The finance leases are for employee motor vehicles. The leases expire at various future dates up to five years.
Aggregate lease expenditure contracted for at balance date but not provided for in the financial statements:
operating leases
Land and buildings		8,822	9,875	475		548
Motor vehicles		439	482	–		–
		9,261	10,357	475		548
Payable not later than one year		3,512	3,120	133		116
Payable later than one, not later than five years		5,749	7,237	342		432
		9,261	10,357	475		548

The land and building operating leases are in respect of warehouses and offices occupied by group companies. The leases expire at various future dates and a number contain option provisions.

> 52

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28 – Financial Instruments

significant Accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which revenues and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements.

(a) Forward Foreign Exchange contracts

It is the policy of the consolidated entity to enter into forward foreign exchange contracts to cover specific foreign currency payments and receipts. The consolidated entity also enters into forward foreign exchange contracts to manage the risk associated with anticipated transactions out to 6 months and longer.

The following table details the forward foreign exchange contracts outstanding as at the reporting date.

	AVERAGE	EXCHANGE RATE	CONTRACT	VALUE
			2007	2006
	2007	2006	$’000	$’000
Buy us Dollars
Less than 3 months	0.80	0.75	264	613
3 to 6 months	–	0.75	–	226
			264	839
Buy Euros
Less than 3 months	0.62	0.59	810	971
Buy New Zealand dollars
Less than 3 months	–	1.12	–	18
Buy Japanese yen
Less than 3 months	96.33	86.50	406	460

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28 – Financial Instruments c o N T I N u E D

(b) Interest rate risks

The following table details the consolidated entity’s exposure to interest rate risk as at the balance date:

			FIXED INTEREST	RATE MATURITY
	AVERAGE	VARIABLE	LESS THAN	ONE TO	NON INTEREST
	INTEREST RATE	INTEREST RATE	ONE YEAR	FIVE YEARS	BEARING	TOTAL
	%	$’000	$’000	$’000	$’000	$’000
year 2007
Financial Assets
Cash	6.00	10,858	–	–	–	10,858
Trade receivables	–	–	–	–	25,791	25,791
Loans to key executive management personnel	6.50	1,682	–	–	–	1,682
Loan to other entities	7.30	320	–	–	–	320
		12,860	–	–	25,791	38,651
Financial Liabilities
Trade payables and accruals	–	–	–	–	22,411	22,411
Bank loans	6.53	37,165	–	–	–	37,165
Employee entitlements	–	–	–	–	5,756	5,756
Finance lease liabilities	9.02	–	468	711	–	1,179
Deferred consideration	6.00	–	–	2,443	–	2,443
Deferred consideration	–	–	–	–	1,630	1,630
		37,165	468	3,154	29,797	70,584
year 2006
Financial assets
Cash	5.50	6,438	–	–	–	6,438
Trade receivables	–	–	–	–	24,052	24,052
Loans to key executive management personnel	5.88	1,525	–	–	–	1,525
Loan to other entities	5.50	314	–	–	–	314
Unlisted 8% preference shares	8.00	–	–	316	–	316
		8,277	–	316	24,052	32,645
Financial Liabilities
Trade payables and accruals	–	–	–	–	19,225	19,225
Bank loans	6.53	6,136	–	–	–	6,136
Employee entitlements	–	–	–	–	4,945	4,945
Finance lease liabilities	8.03	–	644	897	–	1,541
Deferred consideration	6.00	–	–	3,414	–	3,414
Deferred consideration	–	–	–	–	1,840	1,840
		6,136	644	4,311	26,010	37,101

> 54

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

28 – Financial Instruments c o N T I N u E D

(c) credit risk

The consolidated entity has adopted the policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The consolidated entity measures credit risk on a fair value basis.

The consolidated entity does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.

The carrying value of financial assets recorded in the financial report, net of any provision for losses, represents the consolidated entity’s maximum exposure to credit risk.

(d) Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, who has built an appropriate risk management framework for the management of the group’s short, medium and long term funding and liquidity management requirements. The group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

29 – Financing Facilities

29 – Financing Facilities
		CONSOLIDATED
		2007	2006
	NOTE	$’000	$’000
Unrestricted access was available at balance date to the following
lines of credit:
Total facilities
Bank bill facilities		43,165	20,344
utilised
Bank bill facilities	11	37,165	6,136
unused at balance date
Bank bill facilities		6,000	14,208

Subject to compliance with the Bank’s terms and conditions, the bank bill facilities may be drawn at any time. The maturity period for the bills is subject to the annual review of the consolidated entity’s banking facilities. The bank facilities may be drawn at any time and may be terminated by the bank without notice. Interest rates on all facilities are variable at prevailing market rates.

> 55

NOTES TO ThE FiNANCiAl STATEmENTS

F O r T h E F i N A N C i A l y E A r E N D E D 3 0 S E P T E m b E r 2 0 0 7 > C O N T i N u E D

30 – reconciliation of profit after Income Tax to Net cash Inflow from operating Activities

	CONSOLIDATED	CONSOLIDATED		COMPANY
	2007	2006	2007		2006
	$’000	$’000	$’000		$’000
Profit from operations	18,146	11,520	22,896		1,637
Share of associates’ (profit)	(992)	(1,867)	–		–
Depreciation expense	1,823	1,697	27		15
Goodwill impairment	2,000	–	–		–
Equity settled share based payments	381	141	10		141
Movement in equity liability	400	(550)	–		–
(Profit)/loss on foreign currency translation	(180)	83	–		–
	21,578	11,024	22,933		1,793
(Profit)/loss on sale of investments and property,
plant and equipment	(13,846)	(1,596)	(5,053)		–
(Increase)/decrease in receivables and other assets	(6,302)	1,160	(16,373)		150
(Increase)/decrease in inventories	(1,458)	(1,923)	–		–
Increase/(decrease) in accounts payable and other liabilities	4,892	(2,320)	3,958		(720)
Increase/(decrease) in deferred tax provisions	5,051	2,635	2,104		676
	2,183	(448)	(10,311)		106
Net cash inflow from operating activities	9,915	8,980	7,569		1,899
31 – Non-cash Financing and Investing Activities
Acquisition of plant and equipment by means of finance leases	358	615	–		–
Dividend satisfied by the issue of shares under the Dividend Reinvestment Plan	1,220	1,078	1,220		1,078

32 – contingent Liabilities and capital commitments

There are no contingent liabilities or capital commitments.

33 – subsequent Events

There have been no events subsequent to balance date.

> 56

DirECTOrS’ DEClArATiON

The Directors declare that:

• (a) in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;

• (b) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the company and the consolidated entity; and

• (c) the directors have been given the declarations required by s.295A of the Corporations Act 2001.

Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001.

On behalf of the Directors:

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----- Start of picture text -----

PG Miller KJ Eley
Chairman Director
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Sydney 27 November 2007

> 57

iNDEPENDENT AuDiTOr’S rEPOrT TO ThE mEmbErS OF hgl limiTED

Deloitte Touche Tohmatsu ABN 74 490 121 060

Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1217 Australia

DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au

report on the Financial report and AAsB 124 compensation Disclosures in the Directors’ report

We have audited the accompanying financial report of HGL Limited, which comprises the balance sheet as at 30 September 2007, and the income statement, cash flow statement and statement of changes in equity for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year as set out on pages 19 to 57.

We have also audited the compensation disclosures contained in the directors’ report. As permitted by the Corporations Regulations 2001, the company has disclosed information about the compensation of key management personnel (“compensation disclosures”) as required by paragraphs Aus 25.4 to Aus 25.7.2 of Accounting Standard AASB 124 Related Party Disclosures (“AASB 124”), under the heading “remuneration report” on pages 13 to 15 of the directors’ report, and not in the financial report. These compensation disclosures are identified in the directors’ report as being subject to audit. The remuneration report also contains information not subject to audit.

Directors’ responsibility for the Financial report and the AAsB 124 compensation Disclosures contained in the Directors’ report

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

Auditor’s responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report and the compensation disclosures contained in the directors’ report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report and the compensation disclosures contained in the directors’ report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report and the compensation disclosures contained in the directors’ report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the compensation disclosures contained in the directors’ report.

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

Liability limited by a scheme approved under Professional Standards Legislation.

> 58

iNDEPENDENT AuDiTOr’S rEPOrT TO ThE mEmbErS OF hgl limiTED > C O N T i N u E D

Deloitte Touche Tohmatsu ABN 74 490 121 060

Grosvenor Place 225 George Street Sydney NSW 2000

PO Box N250 Grosvenor Place Sydney NSW 1217 Australia

DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au

Auditor’s Independence Declaration

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

Auditor’s opinion on the Financial report

In our opinion:

• (a) the financial report of HGL Limited is in accordance with the Corporations Act 2001, including:

• (i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 September 2007 and of their performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;

and

• (b) the consolidated financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1.

Auditor’s opinion on the AAsB 124 compensation Disclosures contained in the Directors’ report

In our opinion, the compensation disclosures that are contained on pages 13 to 15 under the heading “remuneration report” of the directors’ report and identified as being subject to audit, comply with paragraphs Aus 25.4 to Aus 25.7.2 of Accounting Standard AASB 124 Related Party Disclosures.

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DELOITTE TOUCHE TOHMATSU

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Mark Rossetti Partner Chartered Accountants Sydney, 27 November 2007

Liability limited by a scheme approved under Professional Standards Legislation.

> 59

ShArEhOlDEr iNFOrmATiON

On 9 November 2007 there were 2,516 shareholders. All of the shares of the company are ordinary and fully paid carrying one vote.

Distribution of shareholders

			NuMBEr oF	NUMBER
CATEGORY			sHArEHoLDErs	OF SHARES
1	-	1,000	546	261,223
1,001	-	5,000	968	2,742,709
5,001	-	10,000	463	3,513,167
10,001	-	100,000	481	11,932,148
100,001	-	and over	58	33,271,762
			2,516	51,721,009

Number of shareholders holding less than a marketable parcel (232 shares) is 147. Percentage of the total holdings of the 20 largest shareholders is 55.48%.

Twenty largest ordinary shareholders

		NuMBEr oF	% OF TOTAL
NAME		sHArEs HELD	ISSUED CAPITAL
1	Sery Pty Ltd	6,426,187	12.42
2	Constable Investments Group Ltd	5,679,653	10.98
3	Kevin Eley	2,972,595	5.75
4	Jancon Pty Ltd	1,476,930	2.85
5	Extra Edge Pty Ltd	1,416,000	2.74
6	Knarsdale Pty Ltd	1,400,001	2.71
7	Michael Mahoney	1,298,377	2.51
8	LPO Investments Pty Ltd	1,297,809	2.51
9	ANZ Trustees Limited Queensland Common Fund A/C	929,088	1.80
10	HSBC Custody Nominees (Australia) Limited	730,837	1.41
11	Andrew Whittles	695,086	1.34
12	Citicorp Nominees Pty Limited	611,709	1.18
13	Ida Lichter	600,000	1.16
14	George Edward Curphy	564,405	1.09
15	Jennifer Anne Drummond	515,026	1.00
16	Kitwood Pty Limited	487,634	0.94
17	ANZ Nominees Limited Cash Income A/C	437,866	0.85
18	Mr Alister John Forsyth	409,512	0.79
19	Oscarsborg Fort Pty Ltd	375,717	0.73
20	Australasian & General Securities Ltd	372,111	0.72
		28,696,543	55.48

substantial shareholders

The following information is extracted from the Company’s Register of Substantial Shareholders as at 9 November 2007:

		NuMBEr oF sHArEs
NAME		As pEr NoTIcE
1	Sery Pty Limited and its associates	8,233,669
2	Constable Investments Group Limited and its associates	6,160,456
3	Kevin Eley	2,871,559

> 60

ShArEhOlDEr iNFOrmATiON > C O N T i N u E D

security holder information

Voting rights

Subject to the Constitution:

• a) at meetings of shareholders each shareholder is entitled to vote in person, by proxy, by attorney, or by representative;

• b) on a show of hands each shareholder present in person, by proxy, by attorney, or by representative has one vote; and

• c) on a poll each shareholder present in person, by proxy, by attorney, or by representative shall have one vote for every share held by the shareholder.

In the case of joint holdings, only one joint holder may vote.

Voting by proxy

Voting by proxy is a way shareholders can vote without attending a meeting in person.

All shareholders are encouraged to complete and return the proxy form that accompanies the Notice of Meeting.

If you appoint a proxy and attend the meeting, you automatically revoke your proxy.

Shareholders may appoint a proxy or attorney to represent them at the meeting.

A corporate shareholder may appoint a representative, the instrument of appointment must be under common seal of the company where necessary.

payment direct to a bank, building society or credit union

Security holders may have their dividend entitlements paid directly into any bank, building society or credit union within Australia. The necessary form is available from the registry. Once your payment details have been recorded on your holding, they will remain in force until you notify the registry of their alteration or cancellation.

• (e) no brokerage, commission, stamp duty, or administration costs are payable by shareholders; and

• (f) participants may withdraw from the plan at any time by notice in writing to the Registry. Shareholders wanting to participate should contact the Company’s registry for an explanatory booklet and an application form.

change of address

All changes of address or other particulars for issuer-sponsored holders, must be notified in writing to the registry. Broker sponsored holders must advise all changes directly to their broker. Your securityholder reference number should always be quoted in either case.

share registry

Computershare Investor Services Pty Limited

Ph: toll free 1300 855 080 Ph: international +61 3 9415 4000 Facsimile: (03) 9473 2500 Level 3, 60 Carrington Street, Sydney NSW 2000

stock exchange listing

HGL Limited is traded on the Australian Stock Exchange (ASX). The symbol under which the shares are traded is HNG (note: not HGL). Details of trading activity are usually published in most daily newspapers under the HNG abbreviation. HGL Limited is a participant in the ASX’s Flexible Accelerated Security System (FAST).

requests for publications and media and public relations enquiries should be directed to:

Jenny Dinneen, HGL Limited Tel: (02) 9221 7155 Fax: (02) 9233 2713 Email: hgl@hgl.com.au Level 5, 34 Hunter Street, Sydney NSW 2000 GPO Box 4406, Sydney NSW 2001

Dividend reinvestment plan

Brief details of the Plan are:

• (a) shareholders are eligible to participate, except where local legislation prevents it;

• (b) participation is optional;

• (c) full or partial participation is available;

• (d) payment is made through the allotment of shares, rather than cash, at a discount of up to 7.5% on the average market price of the Company’s ordinary shares;

> 61

CurrENT buSiNESSES AND hgl’S EquiTy OwNErShiP

Aarque Graphics(50%)	distributes specialist imaging equipment and associated consumables. The business is based in Auckland, New
	Zealand and has a national branch network. Our partners are the senior management team led by Mr Peter Bult.
	www.aarque.co.nz
Anitech(50%)	supplies specialist imaging equipment and associated consumables and services. Provides maintenance and service
	support for a wide variety of computer based equipment. The business is based in Sydney, NSW and has branches
	in all major Australian cities. Our partners are the senior management team, who acquired 50% of the business from
	HGL in December 2002, led by the Chief Executive Mr Chris Wagstaff. www.anitech.com.au
Amcla(92%)	imports and distributes general pharmacy items. Mr Ian Garrow is the Chief Executive and our partner. AMCLA was
	acquired in April 2005. www.amcla.com.au.
Biante(80%)	Australia’s leading importer and distributor of collector model cars. This company was acquired by J Leutenegger in
	April 2007. www.biante.com.au
BLc cosmetics(60%)	exclusively imports and distributes Thalgo beauty and skin care products in Australia and Fiji. The business is based
	in Sydney, NSW. Our partner is Mr Sol Caganoff, the Chief Executive. BLC Cosmetics was acquired in July 2003.
	www.thalgo.com.au
Boc(50%)	imports and distributes ophthalmic equipment to retail optometrists. Exclusive agencies include Nidek. The business
	is based in Sydney, NSW and our partner is Mr Tony Cosentino, the Chief Executive. www.bocinstruments.com.au
J Leutenegger(80%)	imports and distributes fabric and haberdashery in conjunction with its 100% owned subsidiary Radda. Exclusive
	agencies include DMC, Prym, Zweigart and Beutron. The business is based in Sydney, NSW. Our partner is the Chief
	Executive Mr Chris Roche, who has an option to acquire 20% of the business. www.leutenegger.com.au
JsB Lighting(100%)	importer and distributor of specialist commercial lighting equipment. Dudley Hewitt is the Chief Executive and our
	partner. JSB was acquired in October 2005. www.jsblighting.com.au
Mountcastle(50%)	imports, distributes and manufactures specialist headwear and is the market leader in supplying contract headwear to
	organisations such as the police, defence forces and schools. The business is based in Brisbane, Queensland. Our
	partners are the management team of Mr James Baldwin and Mr Larry Gould. www.mountcastle.com.au
safilo(19.5%)	imports and distributes spectacle frames and sunglasses. Safilo brands include Gucci, Christian Dior, Giorgio Armani,
	Emporio Armani and Carrera. The business is based in Sydney, NSW. Our partners are Mr Roger Chick, the Chief
	Executive, and Safilo S.p.A. www.safilo.com.au
spos(80%)	imports and distributes a wide range of price ticketing, shelf management systems, merchandising and promotional
	display products. Exclusive agencies include HL Display. The business is based in Sydney, NSW. Our partner is Mr
	Mike Farley, the Chief Executive, who has an option to acquire 20% of the business. SPOS was acquired in April 2003.
	www.spos.com.au
XLN Fabrics(50%)	imports and distributes patchwork and quilting fabrics. Exclusive agencies include Marcus Brothers and Benartex.
	The business is based in Western Sydney, NSW. Our partner is Mr Vince Parry, the Chief Executive. www.xln.com.au

> 62

FiNANCiAl SummAry

Amounts in 2007, 2006 and 2005 are reported under Australian equivalents to International Financial Reporting Standards. All prior periods are reported under previous Australian Accounting Standards.

		2007	2006	2005	2004	2003	2002	2001	2000	1999	1998
Core profit($’000)	(a)	9,309	7,438	7,033	5,580	2,386
Core earnings per share(cents)	(a)	19.2	15.5	14.7	11.3	5.1
Capital profit and
revaluations($’000)	(a)	6,344	1,613	343	4,953	7,552
Reported profit($’000)		15,653	9,051	7,376	10,533	9,938	8,013	6,112	6,066	6,264	6,052
Reported earnings
per share(cents)		32.4	18.9	15.4	21.4	21.2	17.2	13.2	13.2	13.5	13.2
Dividend per share(cents)	(b)	14.4	11.6	10.2	9.0	8.6	12.0	10.3	10.3	8.0	7.8
Shares on issue(’000)		48,577	48,108	47,682	50,443	47,213	46,583	46,507	46,110	46,346	46,288
Total shareholders’ equity($’000)		106,076	87,265	77,090	80,132	65,744	54,451	57,599	55,860	52,567	49,781
HGL shareholders’ equity($’000)		92,713	74,159	64,883	67,478	55,149	46,638	43,274	43,075	41,252	38,783
Net cash/(debt)($’000)	(c)	(27,486)	(1,239)	1,416	7,596	8,678	5,968	(7,187)	(10,719)	(16,683)	(16,172)
Core return on shareholders’
funds(%)	(d)	13	12	11	10	5
Return on shareholders’ funds(%)	(e)	21	14	11	19	21	19	14	15	16	17

Notes

(a) Separately identified from 2003 following decision to build core profit. Core profit is profit after tax and minorities before revaluations and capital gains.

(b) All dividends are fully franked other than 6.5 cents in both 2000 and 2001 and 12 cents in 2002.

(c) Comprises cash, bank borrowings and leases.

(d) Core profit divided by opening HGL shareholders’ equity.

(e) Reported profit divided by opening HGL shareholders’ equity.

> 63

DirECTOry

Directors

PG Miller, FCA (Chairman) KJ Eley, CA, F FIN (Chief Executive) JD Constable FM Wolf, BA (Hons), PhD

chief Executive KJ Eley, CA, F FIN

Joint company secretary and operations Manager MP Mahoney, ACA (England and Wales), CA

chief Financial officer AJ Whittles, ACA (England and Wales)

Joint company secretary PS Caldelis, CA

Acquisitions Manager Paul Rajendran

Head office and registered office Level 5, 34 Hunter Street, Sydney NSW 2000 GPO Box 4406, Sydney NSW 2001 Ph: (02) 9221 7155 Fax: (02) 9233 2713 Email: hgl@hgl.com.au Web site: www.hgl.com.au

FiNANCiAl CAlENDAr

other web sites

HGL Group web sites

hgl limited www.hgl.com.au

hunter hall www.hunterhall.com.au

Aarque graphics www.aarque.co.nz

mmC Contrarian www.mmccontrarian.com.au

Anitech www.anitech.com.au

share registry

Computershare Investor Services Pty Limited Level 3, 60 Carrington Street, Sydney NSW 2000 Ph: toll free 1300 855 080 Ph: international +61 3 9415 4000

Amcla www.amcla.com.au

biante www.biante.com.au

bOC instruments www.bocinstruments.com.au

Auditors Deloitte Touche Tohmatsu

j leutenegger www.leutenegger.com.au jSb lighting www.jsblighting.com.au mountcastle www.mountcastle.com.au

Bankers

ANZ Banking Group Limited

solicitors Dibbs Abbott Stillman

Safilo Australia www.safilo.com

stock Exchange Listing

Australian Stock Exchange Code: HNG (not HGL)

SPOS www.spos.com.au

Thalgo www.thalgo.com.au

XlN Fabrics www.xln.com.au

ANNuAl gENErAl mEETiNg

dates are subject to change

Final Dividend > 18 December 2007

Annual General Meeting > 5 February 2008

The one hundred and fourth Annual general meeting of shareholders of hgl limited will be held in the Seminar room, level 8, 123 Pitt Street, Sydney NSw 2000 at 11:00 am on 5 February 2008.

Half year End > 31 March 2008

Half year report > May 2008

Interim Dividend > July 2008

year End > 30 September 2008

Annual report > November 2008

> 64

This report is printed on Expression Super Smooth, manufactured with renewable, non-polluting wind-generated electricity and made carbon neutral. 100% of the electricity used in the manufacturing of this paper is entirely offset by Green-e certified wind certificates. This paper is certified by Green Seal and by Smartwood in accordance with the rules of Forest Stewardship Council (FSC), which promote environmentally appropriate, socially beneficial and economically viable management of the worlds forests. Using this paper on the annual report is the equivalent to planting 52 trees.

hgl limited ASX CODE > hNg ABN 25 009 657 961 INCORPORATED IN QUEENSLAND

Level 5, 34 Hunter Street, Sydney NSW 2000 GPO Box 4406 Sydney NSW 2001 P (02) 9221 7155 F (02) 9233 2713 E hgl@hgl.com.au www.hgl.com.au