Appendix 4E

Preliminary Final Report

For the Year Ended 30 June 2007

Service Stream Limited (formerly Total

Communications Infrastructure Limited)

ABN 46 072 369 870

This preliminary final report is provided to the Australian Stock Exchange (ASX) under ASX Listing Rule 4.3A.

In accordance with ASX Listing Rule 4.3C.2, this Preliminary Final Report should be read in conjunction with the most recent annual financial report, being 30 June 2006.

Current Reporting Period: Financial year ended 30 June 2007 Previous Corresponding Period: Financial year ended 30 June 2006

Appendix 4E

Preliminary Final Report

Name of entity

SERVICE STREAM LIMITED

DETAILS OF THE REPORTING PERIOD

ABN or equivalent company reference Financial year ended

ABN 46 072 369 870 30 June 2007

Comparative period – 30 June 2006

The consolidated results are that of the Service Stream Holdings Pty Ltd and the company results are that of Service Stream Limited.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Net Tangible Assets per Share	30 June 2007	30 June 2006
For a brief explanation of the figures above please refer to the Announcement on the results for the year ended 30 June 2007. The comments should be read in conjunction with the details and explanations provided herewith.
Record date for determining entitlements to dividends	05 October 2007

Previous corresponding period	\$0.050	30% (Fully franked)
Interim dividend	\$0.030	30% (Fully franked)
Final dividend	\$0.045	30% (Fully franked)
Dividends (Distributions)	Amount per security	Franked amount per security
Net profit attributable to members	Up 158.2%	to \$11,235,000
Profit from ordinary activities after tax attributable to members	Up 158.2%	to \$11,235,000
Revenues from ordinary activities	Up 44.5%	to \$247,108,000
Profit from ordinary activities after tax attributable to members (excluding non operating items)	Up from \$4,352,000	to \$11,235,000
Operating revenue	Up from \$170,983,000	to \$247,108,000

Net tangible assets as at 30 June 2007 of (\$19,250,183) consists of Net Assets of \$139,310,521 less Intangible Assets of \$158,560,704.

Consolidated net tangible assets per share (\$0.1367) \$0.1399

PRO FORMA RESULTS *

Operating revenue	Up from \$170,983,000	to \$292,483,000
Profit from ordinary activities after tax attributable to members (excluding non operating items)	Up from \$4,352,000	to \$17,480,000
Revenues from ordinary activities	Up 71.1%	to \$292,483,000
Profit from ordinary activities after tax attributable to members	Up 301.6%	to \$17,480,000
Net profit attributable to members	Up 301.6%	to \$17,480,000

* FY 2007 result for the TCI / Service Stream Group.

Commentary on pro forma result

2006-07 saw Service Stream again surpass revenue and earnings targets.

Total annualised revenue increased by 71.1% from last year to \$292.5 million for the current period.

Pro forma Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) was \$30.1 million (up 244.3%), whilst Net Profit After Tax (NPAT) was 301.6% higher at \$17.5 million.

Revenues from our Tickets of Work activities (\$116.5 million) continued to grow throughout the year and the recent awarding of the Payphones Contract will further enhance this.

Installs and maintenance continues to expand its revenue base with over 1.2 million tickets of work delivered in 2006 – 07 (1.0 million tickets last year). This further highlights our ability to deliver quality work in a timely manner into an increasing larger market share.

Our Field Services activities performed strongly, with solid growth in both revenues and profitability. Work under our Specialist Services Contract got into full swing during the period delivering solid revenues and above expectations for profitability.

Resourcing Solutions concentrated on consolidating existing clients plus a strong focus on building and growing new relationships outside of its traditional base.

Milcom's first full year under the Service Stream umbrella was excellent with excellent profitability driven by a solid revenue base.

Our Contact Centre Solutions business experienced a sustained solid revenue performance of \$58.2 million for 2006- 07. Retaining and expanding our activities with existing customers together with winning the Federal Government's Do Not Call Register both contributed significantly to a profitable performance.

Service Stream acquired the businesses of Radhaz, Fibercom and General Purpose Group (GPG) in July 2006, August 2006 and January 2007 respectively.

The creation of Infrastructure Services was born out of the merger with Total Communications Infrastructure (TCI), along with the acquisitions of the Fibercom and GPG businesses. These three operations, together with Recoverable Works, the recently won Energex contracts and the Serviceworks businesses form the backbone of our activities in this area.

TCI continued to develop ongoing relationships whilst expanding operations into India via a 3-way joint venture with a local business and infrastructure specialists based in Singapore.

The contributions of both GPG and Fibercom were good and provide Service Stream with a strong suite of capabilities in the Infrastructure sector.

Total annualised revenues of \$116.2 million and strong profitability auger well for continuing growth of our Infrastructure division as Service Stream looks to expand further into the broader Utilities industry.

Service Stream Limited (formerly Total Communications Infrastructure Limited)

ABN 46 072 369 870

Financial report for the financial year ended 30 June 2007

Annual financial report for the financial year ended 30 June 2007

Corporate governance statement 1 Directors' report 7 Auditor's independence declaration 22 Independent audit report 23 Directors' declaration 25 Income statement 26 Balance sheet 27 Statement of changes in equity 28 Cash flow statement 29 Notes to the financial statements 30 – 65

Corporate governance statement

This statement summarises the main corporate governance practices of Service Stream Limited.

The Board of Directors of Service Stream Limited ("the Company") is committed to high standards of corporate governance and supports the principles of good corporate governance and best practice recommendations as published by the ASX Corporate Governance Council in March 2003.

ASX Listing Rule 4.10 requires the Company to disclose the extent to which it has followed these best practice recommendations. This statement outlines the key corporate governance practices of the Company as they relate to the recommendations of the ASX Corporate Governance Council.

The Board recognises that some practices are more relevant to larger companies. The Board has adopted practices that it believes will maximise long-term shareholder value given the Company's specific circumstances.

1. Roles of the Board and management

The Board of Directors guide and monitor the business and affairs of the Company on behalf of shareholders, by whom the Directors are elected and to whom they are accountable.

The Board's focus is on setting the strategic direction for the Company and overseeing its longterm performance. It monitors financial performance, legal compliance and ethical standards. The Board is also involved in assessing business risk, providing broad policy guidelines and setting objectives for, and monitoring the performance of, the Managing Director and the senior management team.

The agenda for meetings is prepared in conjunction with the Chairman and the Managing Director. Standing items include safety, financial and operational reports. Submissions are circulated in advance.

The responsibility for the day-to-day operation and administration of the economic entity is delegated by the Board to the Managing Director who is accountable to the Board. The Managing Director is supported by a senior management team who meet regularly (usually at least weekly) to review progress and initiate or coordinate the development and implementation of the Company's strategies, plans, standards, policies and programs.

2. Structure of the Board

Currently, the Board is composed of an independent non-executive chairman, one independent non-executive director, two non-executive directors and three executive directors. The Board believes that, at present, this structure combines the skills, experience and efficiency of operation best suited to governing the Company.

The Board regards a director as independent if he or she is free from any material interest in, or other material relationship with, the Company, other than as a director, which could reasonably be perceived to materially interfere with the director's ability to exercise independent judgement with respect to the matter being considered. Independence and materiality are considered by the Board in the context of all of the relevant circumstances.

The Board has a policy of separating the role of Chairman and Chief Executive.

The Board acknowledges the recommendation of the ASX Corporate Governance Council that the Board should comprise a majority of independent directors. However, the Board believes

that the wealth of knowledge and expertise of the current non-executive directors make the composition appropriate at present.

The Board believes that all of its directors exercise due care and skill with respect to the matters that they consider, and bring independent judgement to bear in decision making.

The Board has adopted a retirement age for directors of 72 years although this may be varied with approval of shareholders on a year-to-year basis beyond the age of 72 years.

Under current practice, there is a minimum of 11 scheduled Board meetings per year. Other meetings are convened as required to consider specific or urgent matters.

Committees

The Board of Directors, as part of its responsibility to oversee the strategic direction of the Company, has established guidelines and will use committees to ensure that its business operates ethically and fairly and to ensure that the assets of the Company are properly protected.

The Audit and Governance Committee was established in 2005.

In 2006 the Board established a Remuneration and Nomination Committee, and in 2007 an Investment and Strategy Committee and an Environment and Safety Committee were also established.

The Board's formal charter states that, as appropriate, the Company shall establish a Risk Management Committee. During the year ended 30 June 2007 the full Board had the responsibility for the functions and responsibilities of the Risk Management Committee.

Appointment of directors

At present, all directors consider the composition of the Board and the nomination and appointment of new directors. Given the size of the Company and its requirements, the Board has considered this to be a satisfactory arrangement to date.

In appointing directors, the Board aims to obtain a balanced mix of qualifications, age, skill and experience desirable to achieving the most favourable outcome for the Company in the context of its future requirements. The conditions relating to a director's appointment are provided to the director in writing prior to appointment. Apart from the Managing Director, all directors are subject to re-election by rotation at least every three years in accordance with the Company's constitution. Shareholders are encouraged to participate in the re-election of directors.

Each director has the right of access to all relevant Company information and to the Company's executives. In addition, the Company's policy is to allow directors to obtain independent professional advice, at the Company's expense, on matters arising in the course of their Board duties. Directors must obtain the Chairman's approval prior to seeking advice, which cannot be unreasonably withheld. A copy of the advice received by the director is made available to all other members of the Board.

The other information with respect to the structure of the Board noted in The ASX Guide to Reporting on Principle 2 has been provided in the Director's Report as the Board believes this a more appropriate place to disclose such information.

3. Ethical business practices

The Company is committed to being a socially responsible corporate citizen, using honest and fair business practices of the highest standard.

The Company has a formal Code of Conduct actively promoting ethical and responsible decision-making. This is supported by the Company's 'Whistle Blower Protection' policy. The Company maintains that the Board and the senior management team, through their own actions, promote and foster an ethical corporate culture. To this end, the Board promotes open and honest disclosure and discussion, together with consideration and respect for the interests of all legitimate stakeholders, at all Board and management meetings.

In addition, the Board and the senior management of the Company regularly consider relevant matters including conflicts of interest, corporate opportunities, confidentiality, fair dealing, complaints handling, protection and proper use of the Company's assets, compliance with laws and regulations and reporting unlawful and unethical behaviour.

In accordance with the Corporations Act 2001 and the Company's Board Charter, directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists, the Director concerned does not receive the relevant Board papers and is not present at the meeting whilst the relevant item is considered.

The Board has ultimate responsibility for resolving all matters concerning ethical and responsible decision-making.

These procedures are designed to ensure that the integrity of the Company is maintained and that investor confidence is enhanced.

Dealing in Company shares by directors, officers and employees

The Constitution permits directors to acquire shares in the Company and the Board encourages directors, officers and employees to own shares in the Company to further link their interests with the interests of all shareholders. However, all directors, officers and employees are prohibited from buying or selling shares within one month prior to, and the day of, an announcement by the Company of its full year and half year results (unless approval is obtained from the Chairman to deal in the Company's shares during these periods) or when the individual is in possession of price sensitive information.

In accordance with the provisions of the Corporations Act 2001 and the Listing Rules of Australian Securities Exchange Limited ("ASX"), directors advise the ASX of any transactions conducted by them in shares in the Company.

4. Safeguard integrity

The Board established an Audit and Governance Committee to assist the Board in fulfilling its responsibilities relating to the accounting, reporting and compliance obligations of the Company, to examine matters of financial and regulatory significance and monitor corporate risk assessment processes. This committee also reviews audit scopes, assesses the performance of and fees paid to the external auditors, liaises with the external auditors to ensure that the annual audit and half-year statutory review are conducted in an effective manner and considers whether non-audit services provided by the external auditors are consistent with maintaining the external auditors' independence.

The Audit and Governance Committee of the Company is composed of non-executive directors. The Board considers that this structure maintains integrity and has been operationally effective for a Company at its present size and Board composition. The Independent Chairman and Independent Non-executive Director are now members of the Audit and Governance Committee.

The external auditors were appointed as auditors for the Company in November 2006. Prior to this they had been auditors for Service Stream Holdings Pty Ltd since 1 July 1992. The lead external audit engagement partner has led this engagement from 2005. The external audit firm has a policy of rotating off the engagement of the lead external audit engagement partner every five years.

The Managing Director, the Chief Financial Officer and the Company's senior management state in writing to the Board that the Company's financial reports present a true and fair view, in all material respects, of the Company's financial condition and operational results and are in accordance with the relevant accounting standards.

The other information with respect to safeguarding the integrity of financial reporting noted in The ASX Guide to Reporting on Principle 4 has been provided in the Directors' Report as the Board believes this is a more appropriate place at which to disclose such information.

5. Timely and balanced disclosure of material matters

The Company's aim is to ensure timely, balanced and continuous disclosure to the market of all material matters concerning the Company in accordance with the Corporations Act and the ASX continuous disclosure regime. The Board believes that all shareholders and investors should have equal access to the Company's information.

The policies and procedures designed to ensure compliance with the Corporations Act and the ASX continuous disclosure requirements and to ensure accountability at a senior management level for that compliance are as follows:

the Company must notify the market, via the ASX continuous disclosure regime, of any price sensitive information;
the directors and the Company Secretary are designated as disclosure officers who are responsible for reviewing potential disclosures and deciding what information should be disclosed;
only a disclosure officer may authorise communication with external parties on behalf of the Company thereby safeguarding confidentiality of corporate information;
the onus is on all executives to inform a disclosure officer of all potential disclosures as soon as they become aware of the information. The senior management team is responsible for ensuring staff understand and comply with this policy; and
ASX and media releases must be approved by a director who is a disclosure officer.

6. Rights of shareholders

The shareholders of the Company are responsible for voting on the election of directors at the Annual General Meeting in accordance with the Company's constitution. The Annual General Meeting also provides shareholders with the opportunity to express their views on matters concerning the Company and to vote on other items of business for resolution by shareholders. The Company's policy is to encourage effective shareholder participation at general meetings.

The Company requests that the engagement partner of the firm of external auditors attends the Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the Auditors' Report.

The Company has a policy of effective communication with shareholders through:

the Annual Report which is distributed to all shareholders;
disclosures made to the ASX;
notices and explanatory memoranda in relation to resolutions to be put to a vote; and
Annual General Meetings at which shareholders are given an opportunity to participate.

7. Risk management

The Company has in place procedures designed to safeguard the Company's assets and interests and ensure the integrity of its reporting. These include accounting, financial reporting, internal control and internal audit, safety and health, property and environmental procedures. Policies also specify who may authorise transactions and segregate duties amongst those carrying them out.

At present, the identification, assessment, monitoring and management of business risks and these internal control procedures are considered by the senior management team of the Company on an ongoing basis as part of their regular (usually at least weekly) meetings.

The Managing Director and ultimately the Board have the responsibility for ensuring that the risk mitigation actions and internal controls recommended at these meetings are implemented.

8. Encourage enhanced performance

The Board of the Company and the senior management team monitor the performance of the Company utilising monthly management accounts. The monthly management accounts are compared with monthly budgets and the performance of the Company in previous corresponding periods. The Company's budgets include key performance indicators against which the monthly performance of the Company is measured. The monitoring of the Company's performance by the Board and management assists in identifying the areas where additional attention is required.

The Board undertakes to objectively assess its performance and that of its committees and individual members. During the year ending 30 June 2008, the Board will be conducting performance reviews on all directors. Similarly, the Board and the Managing Director evaluate the performance of the senior management team throughout the year and on a formal basis once per year.

The Board believes that the shareholders of the Company ultimately assess the performance of the Board, its committees, individual directors and senior management based on the financial performance of the Company in the context of the commercial, legal and ethical framework within which the Company operates.

9. Fair and responsible remuneration

The Remuneration and Nomination Committee reviews senior executive remuneration structures, reviews senior management succession plans and monitors directors' remuneration levels to ensure they are in line with current standards. The Remuneration and Nomination Committee then provides a recommendation to the Board which, in turn, has ultimate responsibility for fair and responsible remuneration.

The Board engages appropriately qualified consultants to provide it with advice and recommendations.

Executive directors receive salaries and employee benefits. They do not receive additional fees for their services as directors. Discussions are undertaken between non-executive and executive directors with regard to setting appropriate levels of remuneration. No executive director or other executive participates in any decision relating to their own remuneration.

Non-executive directors are remunerated by way of fees, statutory superannuation and reasonable retirement benefits. Discussions are undertaken between executive and nonexecutive directors with regard to setting appropriate levels of remuneration. Non-executive directors do not participate in any decision relating to their own remuneration.

Additional information with respect to remuneration noted in The ASX Guide to Reporting on Principle 9 has been provided in the Directors' Report as the Board believes this is a more appropriate place to disclose such information.

10. Stakeholder interests

The Company is aware of its legal and other obligations to all legitimate stakeholders. The Board believes that appropriate recognition of these interests will enhance shareholder value in the long term.

In terms of a formal Code of Conduct, the Board refers to its earlier statements in Section 3 of this Corporate Governance Statement under the heading Ethical Business Practices.

Directors' report

The directors of Service Stream Limited submit herewith the annual financial report of the company for the financial year ended 30 June 2007. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

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

Current Directors
Name John Llewellyn (Lyn) Davies Chairman	Particulars Mr Lyn Davies joined the Service Stream Group on 25 August 2005 as Chairman. Upon completion of the merger with Service Stream Limited, he was appointed Chairman of the merged Group. He is a member of the Company's Audit and Governance Committee and is Chairman of the Remuneration and Nomination Committee.
	Mr Davies is a Company Director and a Business Consultant. He is a Fellow of the Australian Institute of Company Directors, a Fellow of the Australian Institute of Management and a Life Member of the Australian Institute of Agricultural Science and Technology.
	Mr Davies is also Chairman of Citywide Service Solutions Pty Ltd and is a Director of Mackay Consolidated Industries Pty Limited and of ParaQuad Victoria.
	He has previously been Chairman of HRL Limited, The Nordia Group, Floriana Pty Limited and Collins Booksellers Group and was a Director of Castle Bacon Pty Ltd. He was also Chairman of the Board of Yarra Valley Grammar.
	Mr Davies has acted as an advisor on commercial matters to boards in a wide range of industries and he brings highly developed commercial and corporate governance skills to the Board.
	His previous business experience includes more than 20 years at executive director level with Elders IXL Limited, Wattie Limited and Goodman Fielder Limited. His qualifications include a Diploma of Agriculture and a Diploma from the Australian Institute of Company Directors.
Patrick Flannigan Managing Director and Chief Executive Officer	Mr Flannigan joined the Service Stream Group in January 2004. He was appointed Managing Director and Chief Executive Officer of Service Stream Holdings Ltd on 3 September 2004. Upon completion of the merger with Service Stream Limited, he was appointed Managing Director and Chief Executive Officer of the merged Group. He is an ex officio member of all board committees. Mr Flannigan has more than 20 years of commercial experience across a broad range of industries.
	Before joining Service Stream he was co-founder and Non-Executive Chairman of Integrated Maintenance Services, a successful maintenance services company specialising in the provision of services to the manufacturing, aviation and construction industries. Prior to this he spent 11 years with Skilled Engineering Ltd in various roles including General Manager.
	Mr Flannigan's wide experience incorporates project management, customer service, financial management and industrial relations. This is complemented by in-depth knowledge of the customer premises equipment and maintenance services industry in Australia.
	Mr Flannigan has led Service Stream through its rapid growth over the past three years and has been instrumental in the identification and successful negotiation of Service Stream's acquisitions.
	With a business degree from Victoria University, he is a Director of the Australian Grand Prix Corporation, Director and Chairman of the Finance Committee for Western Chances, a Fellow of the Australian Institute of Management and a Fellow of the Australian Institute of Company Directors.

Michael Doery Executive Director and Chief Financial Officer

Mr Doery joined the Service Stream Group in July 2004 and was appointed as an Executive Director and Chief Financial Officer of Service Stream Holdings Pty Ltd. Upon completion of the merger with Service Stream Limited, he was appointed Executive Director and Chief Financial Officer of the merged Group. He is an ex officio member of the Audit and Governance Committee, the Environment and Safety Committee and the Investment and Strategy Committee.

Mr Doery has a Bachelor of Financial Administration from the University of New England and is a Fellow of the Institute of Chartered Accountants in Australia with 24 years experience at KPMG, including 14 years as a partner.

Mr Doery's focus has been in the telecommunications, IT and services sectors with significant exposure to the areas of customer service, outsourcing and infrastructure projects. He has a wealth of experience in capital raisings, mergers and acquisitions, risk management, change management, corporate governance and general management. Mr Doery has also been involved in developing and managing corporate strategic, financial and operational activities.

Mr Doery has been instrumental in the management and integration of Service Stream's acquisitions. He played a key role in the highly successful merger in December 2006.

Mr Doery is also a Director of Bill Express and aside from his corporate responsibilities, he is actively involved at director level with various charities including the Australian Drug Foundation.

Rodney Stanton Executive Director Mr Stanton joined the Service Stream Group as Executive Director when Total Communications Infrastructure Limited merged with Service Stream Limited in December 2006. He maintains responsibility for the performance of TCI as Managing Director.

Mr Stanton commenced with TCI in September 1998 managing national wireless deployment projects for carriers including Optus and Vodafone. He progressed through to General Manager and ultimately Chief Executive Officer following the public listing of TCI in December 2004. His experience as a civil engineer, together with 20 years of project management experience, has ensured the successful development and growth of the company, which is recognised as an industry leader. While Mr Stanton's primary focus has been on the wireless telecommunications industry. He is now extending this expertise into other sectors within the broader Service Stream business.

Prior to joining TCI, Mr Stanton spent 12 years with Lend Lease in their construction division. During this time he acquired extensive business and project management experience, managing large-scale industrial and commercial projects within the Sydney region.

Mr Stanton holds a degree in Civil Engineering from the University of Sydney.

Adrian Field Non-Executive Director	Mr Field was a co-founding Director of Service Stream Group when it listed in January 2004. Upon completion of the merger with Service Stream Limited, he was appointed a Non-Executive Director of the merged Group.
	He is a member of the Investment and Strategy Committee and former Chairman of the Environment and Safety Committee. He is actively involved in the business development strategy of Service Stream.
	Mr Field has extensive experience in the telecommunications, electrical and construction industries with over 20 years in the areas of business ownership, general management, operations management, sales and account management with Skilled Communications Services Pty Ltd and Communications Services Australia Pty Ltd.
	Mr Field is Chairman and a major shareholder of Star Services International Pty Ltd, a company he founded in 2007. Star Services operates in the industrial and retail packaging industry.
	Mr Field co-founded Hyperion Capital, a private equity fund operating in the small cap marketplace.
	Previously, Mr Field undertook a successful business venture within the banking industry as co-founder of Direct Cash Pty Ltd culminating in its sale to Cashcard.
Russell Small Non-Executive Director	Mr Small was a co-founding Director of Service Stream Group when it listed in January 2004. Upon completion of the merger with Service Stream Limited, he was appointed a Non-Executive Director of the merged Group.
	He is Chairman of the Company's Audit and Governance Committee and the Investment and Strategy Committee and a member of the Remuneration and Nomination Committee.
	Mr Small has extensive experience in the telecommunications industry with over 20 years in the areas of business ownership, general management, operations management, sales and account management with Fujitsu, Honeywell, Skilled Communications Services Pty Ltd and Communications Services Australia Pty Ltd.
	Mr Small co-founded Hyperion Capital, a private equity fund operating in the small cap market place.
	Previously, Mr Small undertook a successful business venture within the banking industry as co-founder of Direct Cash Pty Ltd culminating in its sale to Cashcard.
	Mr Small holds a Diploma of Business Studies (Valuations).
	Aside from his corporate responsibilities, Mr Small is Chairman of the Australian National Water Polo League and a Director of Australian Water Polo Inc.

Stephe Wilks Non-Executive Director Mr Wilks joined the Service Stream Group as Non-Executive Director when Total Communications Infrastructure Limited merged with Service Stream Limited in December 2006. Prior to the merger he had been a Director of TCI for two years. He is Chairman of the Environment and Safety Committee and has been appointed as a member of the Audit and Governance Committee.

Mr Wilks has over 20 years' hands on experience in the telecommunications industry both within Australia and overseas.

Currently Mr Wilks holds non-executive directorships in Longreach Group Limited, Tel.Pacific Limited and People Telecom Limited. He is on the advisory board of the Network Insight Group and consults to a number of companies, offering advice in relation to the telecommunications, media and technology industries.

Mr Wilks has previously held senior executive positions with BT Asia Pacific, Optus, Hong Kong Telecom, Nextgen Networks and Personal Broadband Australia. He was also a consulting director with investment bank, NM Rothschild.

He holds degrees in science and laws from Macquarie University and a Master of Laws from the University of Sydney.

Former Directors

Jim Cooney Mr Cooney is a Chartered Engineer with over 20 years experience in Engineering and Telecommunications in Australia and the UK. Mr Cooney founded TCI in 1996. Mr Cooney holds a Bachelor of Engineering (University of Sydney), Master of Science (University of London) and the Diploma of the Imperial College (London). Mr Cooney has been admitted as a Chartered Engineer to the Institution of Structural Engineers (UK), the Institution of Engineers Australia, and the Institution of Civil Engineers (UK). Mr Cooney is a non-executive director of Personal Broadband Australia Limited. Mr Cooney resigned as Director of TCI on 20 December 2006 upon completion the merger with Service Stream Holdings Pty Ltd.
Trevor Duff Mr Duff has more than 25 years experience in the telecommunications services industry, in Australia and internationally. Mr Duff holds a Bachelor's Degree in Commerce (Economics)(Merit), from the University of New South Wales. Mr Duff resigned as Director of Total Communications Infrastructure (TCI) on 20 December 2006 upon completion the merger with Service Stream Holdings Pty Ltd.
Mark Stackpool Mr Stackpool is a Chartered Accountant with over 20 years experience in corporate administration, financial & management accounting, audit and taxation. Mr Stackpool holds a Commerce degree from the University of New South Wales and was admitted as a member of the Australian Institute of Chartered Accountants in 1985. Mr Stackpool resigned as a Secretary and Director of Total Communications Infrastructure (TCI) on 20 December 2006 upon completion the merger with Service Stream Holdings Pty Ltd.
Ian Thorley Mr Thorley has over 25 years experience as a senior executive in the services sector and has held a wide range of operational and strategic positions. Mr Thorley has had extensive experience in business development, organisational restructuring, strategic planning and government relations. He has graduate qualifications in Health Administration, a Masters Degree in Commerce. Mr Thorley resigned as Director of Total Communications Infrastructure (TCI) on 20 December 2006 upon completion the merger with Service Stream Holdings Pty Ltd.

The above named Directors held office during or since the end of the of the financial year except for:

John Llewellyn (Lyn) Davies appointed 20 December 2006
Patrick Flannigan appointed 20 December 2006
Michael Doery appointed 20 December 2006
Adrian Field appointed 20 December 2006
Russell Small appointed 20 December 2006
James Cooney resigned 20 December 2006
Trevor Duff resigned 20 December 2006
Mark Stackpool resigned 20 December 2006
Ian Thorley resigned 20 December 2006

Directorships of other listed companies

No current director has held a directorship of another listed company in the 3 years immediately before the end of the financial year, except as disclosed above.

Company Secretary

Stephen Campbell

Company Secretary and Group Financial Controller

Mr Campbell joined Service Stream Group in January 2005 and was appointed Company Secretary on 20 December 2006. As Group Financial Controller and Company Secretary, he is responsible for the corporate administration, accounting and corporate governance practices of the group.

With over 20 years' experience in various senior roles within the accounting profession and, more recently in commerce, with listed organisations as well as large proprietary companies, Mr Campbell has worked extensively across a broad range of industries including manufacturing, distribution, property, gaming and financial services. He has also been involved with capital raisings, due diligence reports, acquisitions and prospectus forecasts.

Mr Campbell has a Bachelor of Business in Accounting (B.Bus), a Master of Business Administration (Advanced) and a Graduate Diploma in Applied Corporate Governance. He is also a Chartered Accountant (CA) and a Chartered Secretary (ACIS).

Principal activities

The Service Stream Group provides services to infrastructure based industries predominantly in the telecommunications and utilities sectors providing specialist end-to-end services including fixed line & wireless infrastructure design, maintenance, deployment and management; contact centre activities and logistics.

Review of operations

2006-07 saw Service Stream again surpass revenue and earnings targets.

Total revenue increased by 44.5% from last year to \$247.1million for the current period.

Earnings before Interest, Tax, Depreciation and Amotisation (EBITDA) was \$21.2 million (up 142.6%), whilst Net Profit After Tax (NPAT) was 158.2% higher at \$11.2million.

Revenues from our Tickets of Work activities (\$116.5million) continued to grow throughout the year and the recent awarding of the Payphones Contract will further enhance this.

Resourcing Solutions concentrated on consolidating existing clients plus a strong focus on building and growing new relationships outside of its traditional base.

Milcom's first full year under the Service Stream umbrella was excellent with excellent profitability driven by a solid revenue base.

Our Contact Centre Solutions business experienced a sustained solid revenue performance of \$58.2 million for 2006-07. Retaining and expanding our activities with existing customers together with winning the Federal Government's Do Not Call Register both contributed significantly to a profitable performance.

Service Stream acquired the businesses of Radhaz, Fibercom and GPG in July 2006, August 2006 and January 2007 respectively.

The creation of Infrastructure Services was born out of the merger with TCI, along with the acquisitions of the Fibercom and GPG businesses. These 3 operations, together with Recoverable Works, the recently won Energex contracts and the Serviceworks businesses form the backbone of our activities in this area. TCI continued to develop ongoing relationships whilst expanding operations into India via a 3-way joint venture with a local India business and infrastructure specialists based in Singapore. The contributions of both GPG and Fibercom were good and provide Service Stream with a strong suite of capabilities in the Infrastructure sector.

Total revenues of \$71.1million and strong profitability auger well for continuing growth of our Infrastructure division as Service Stream looks to expand further into the broader Utilities industry.

Changes in state of affairs

During the financial year the merger between Service Stream Limited and Service Stream Holdings Pty Ltd became effective (refer note 4 for further details).

Other than the merger there was no significant change in the state of affairs of members of the consolidated entity other than that referred to in the financial statements or notes thereto.

Subsequent events

Refer to note 35 of the notes to the financial statements for details of the subsequent events.

Future developments

Disclosure of information regarding likely developments in the operations of the consolidated entity in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the consolidated entity. Accordingly, this information has not been disclosed in this report.

Environmental regulations

The consolidated entity is not required to hold any Environmental Protection Authority licenses.

Dividends

In respect of the financial year ended 30 June 2006, a final dividend of 5.0 cents per share franked to 100% at 30% corporate income tax rate was paid to the holders of fully paid ordinary shares on 29 September 2006.

In respect of the financial year ended 30 June 2007, an interim dividend of 3.0 cents per share franked to 100% at 30% corporate income tax rate was paid to the holders of fully paid ordinary shares on 12 April 2007.

In respect of the financial year ended 30 June 2007, the directors recommend the payment of a final dividend of 4.5 cents per share franked to 100% at 30% corporate income tax rate to the holders of fully paid ordinary shares on 5 October 2007 (to be paid on 19 October 2007).

Share options

Executive share options carry no rights to dividends and no voting rights. In accordance with the terms of the executive share option scheme, options issued during the year ended 30 June 2007 vest at various times up to 30 September 2009.

The directors can, at their discretion, issue share options to key management personnel as part of the group's remuneration policy.

The following share-based payment arrangements were in existence during the current and comparative reporting periods:

Options series	Number	Grant date	Expiry date	Exercise price \$	Fair value at grant date \$

Series 1	6,800,000	04/01/2007	31/12/2007	0.6250	-
Series 2	3,352,000	04/01/2007	31/10/2009	0.6250	-
Series 3	924,000	04/01/2007	31/10/2009	0.9375	4,032
Series 4	924,000	04/01/2007	31/10/2009	1.2500	4
Series 5	96,000	04/01/2007	01/01/2010	0.6250	10,240
Series 6	32,000	04/01/2007	01/01/2010	0.9375	202
Series 7	32,000	04/01/2007	01/01/2010	1.2500	-
Series 8	200,000	04/01/2007	01/03/2011	0.6250	26,253
Series 9	80,000	04/01/2007	07/03/2010	0.6500	9,876
Series 10	200,000	04/01/2007	31/10/2009	0.9750	7,465
Series 11	20,000	04/01/2007	31/10/2009	0.6250	6,393
Series 12	2,020,000	04/01/2007	01/01/2011	0.9900	572,184
Series 13	2,020,000	04/01/2007	01/01/2011	1.0800	475,762
Series 14	2,020,000	04/01/2007	01/01/2011	1.2000	366,597
Series 15	500,000	04/01/2007	31/10/2011	1.1250	38,340
Series 16	730,000	04/01/2007	31/10/2011	1.6800	73,445
	19,950,000

Option Series 1 to Series 11 were issued as a result of the merger between Service Stream Limited and Service Stream Holdings Pty Ltd. The exercise price was calculated in accordance with the scheme of arrangement. The weighted average fair value of the share options Series 12 to Series 16 is \$0.2093. All options have vested.

Options were priced using a Black Scholes model. Where relevant, 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 behavioral considerations. Expected volatility is based on the historical share price volatility over the past 2 years. To allow for the effects of early exercise, it was assumed that employees would exercise the options after vesting date when the share price was two and half times the exercise price.

	Option series
Inputs into the model	Series 12	Series 13	Series 14	Series 15	Series 16
Grant date share price (cents)	1.30	1.30	1.30	0.980	1.46
Exercise price	0.99	1.08	1.20	1.125	1.68
Expected volatility	20%	20%	20%	20%	20%
Option life (years)	4.8	4.8	4.8	4.8	4.8
Dividend yield	3.6%	3.6%	3.6%	6.0%	6.6%
Risk-free interest rate	5.1%	5.1%	5.1%	5.1%	5.1%

The following reconciles the outstanding share options granted under the executive share option plan at the beginning and end of the financial year:

		2006
Number of options	Weighted average exercise price \$	Number of options	Weighted average exercise price \$
-	-	30,900,000	0.231
12,660,000	0.7015	-
7,290,000	1.1515	750,000	0.363
(200,000)	0.6250	-
-		-
19,750,000	0.8684	31,650,000	0.280
13,690,000	0.7568	29,260,000	0.262
		2007

(i) Exercised during the financial year

The following share options granted under the executive share option plan were exercised during the financial year:

2007 Options series	Number exercised	Exercise date	Share price at exercise date \$
Series 8	200,000	29/06/2007	\$1.88

2006 Options series	Number exercised	Exercise date	Share price at exercise date \$
Nil	-	-	-

(ii) Balance at end of the financial year

The share options outstanding at the end of the financial year had an exercise price of \$0.868 and a weighted average remaining contractual life of 894 days.

Share options granted to directors and executives

During and since the end of the financial year an aggregate of 6,560,000 share options were granted to the following directors and executives of the company:

Directors and executives	Number of options granted	Issuing entity	Number of ordinary shares under option
Patrick Flannigan	2,400,000	Service Stream Limited	2,400,000
Michael Doery	2,160,000	Service Stream Limited	2,160,000
Rod Stanton	2,000,000	Service Stream Limited	2,000,000

The holder of such options does not have the right, by virtue of the option, to participate in any share issue or interest issue of any other body corporate or registered scheme.

Indemnification of officers and auditors

During the financial year, the company paid a premium in respect of a contract insuring the directors of the company, and all office bearers of the company and of any related body corporate against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the company or of any related body corporate against a liability incurred as such an officer or auditor.

Directors' meetings

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). During the financial year, 15 board meetings, 4 audit and governance committee and 2 remuneration and nomination committee meetings were held.

		Board of directors		Audit and Governance committee		Remuneration and Nomination committee
Directors	Held*	Attended**	Held*	Attended**	Held*	Attended**
JL Davies	6	6	2	2	1	1
P Flannigan	6	6	-	-	-	-
M Doery	6	6	-	-	-	-
A Field	6	5	-	-	-	-
R Small	6	6	2	2	1	1
R Stanton	15	15	-	-	-	-
S Wilks	15	15	-	-	-	-
J Cooney	9	8	2	2	1	1
T Duff	9	9	2	2	1	1
M Stackpool	9	9	-	-	-	-
I Thorley	9	9	2	2	1	1

* The number of meetings held refers to the number held whilst a director.

** The number of meetings attended refers to the number attended whilst a director.

Service Stream Limited (formerly Total Communications Infrastructure Limited) Directors' report

Remuneration report

Director and executive details

The directors of Service Stream Limited during the year were:

JL Davies (appointed 20 December 2006) (Chairman)
P Flannigan (appointed 20 December 2006) (Managing Director & Chief Executive Officer)
M Doery (appointed 20 December 2006) (Executive Director & Chief Financial Officer)
A Field (appointed 20 December 2006) (Non-Executive Director)
R Small (appointed 20 December 2006) (Non-Executive Director)
R Stanton (Executive Director)
S Wilks (Independent Non-Executive Director)
J Cooney (resigned 20 December 2006)
T Duff (resigned 20 December 2006)
M Stackpool (resigned 20 December 2006)
I Thorley (resigned 20 December 2006)

The group executives of Service Stream Limited during the year were:

S Campbell (Company Secretary & Group Financial Controller Service Stream Limited)
J Caporale (Executive General Manager Service Stream Communications Pty Ltd)
J Gramc (Executive General Manager Service Stream Solutions Pty Ltd)
G Kenyon (Group Human Resources Executive Service Stream Holdings Pty Ltd)
A Legge (Group Technology Executive Service Stream Holdings Pty Ltd)
I Millner (Executive General Manager Milcom Communications Pty Ltd)

Remuneration policy for directors and executives

The board, through the Remuneration and Nomination Committee, reviews the remuneration packages of all directors, senior executives and senior managers on an annual basis. Remuneration packages are reviewed and determined with due regard to current market rates, and are benchmarked against comparable industry salaries, adjusted by a performance factor to reflect changes in the performance of the company.

In order to retain and attract executives of sufficient calibre facilitate the efficient and effective management of the company's operations, the board seeks the advice of external advisers in connection with the structure of remuneration packages.

Service Stream's Remuneration Framework is based on the concept of Total Employee Reward ("TER"). This encompasses the three components of:

1. fixed remuneration;
1. variable remuneration (at risk remuneration); and
1. reward and recognition or non financial reward.

Fixed Remuneration

Service Stream's principal remuneration strategy is to align Fixed Remuneration with the medians of comparable industry positions. Fixed remuneration will be expressed as Total Fixed Remuneration ("TFR"). TFR includes salary and superannuation entitlements, and is used as a basis for remuneration review; leave payments on termination and redundancy payments.

Benefits such as mobile phones, incentive payments, work vehicles etc. are excluded from this figure. Salary Sacrifice choices that an employee may choose to make out of pre-tax salary do not impact overall TFR.

The range of remuneration for each position will be determined by market data, which the Job

Evaluation has determined the role to fit within. From time to time, where a need arises, other more specific market data may be used for certain positions. Service Stream does not incorporate cost of living differentials into its remuneration policy.

Variable Remuneration

Variable Remuneration is comprised of Short Term Incentive Plans and Long Term Incentive Plans.

Short Term Incentive Plan ("STIP").

Employees invited to participate in the STIP have the opportunity to earn an annual lump sum incentive payment through the achievement of annual goals established with their manager and approved by the Salary and Reward Committee or Remuneration and Nomination Committee as appropriate at the beginning of each financial year.

The annual goals that are established are considered outside the normal scope of the employee's duties and/or requiring performance significantly above the average. The Short Term Incentive Plan performance goals are tied directly to annual objectives of Service Stream, which are linked directly to the overall group strategy. All eligible employees' STIP is comprised of four set performance goals: 1. group financial goals;

1. company financial goals;
1. business unit goals; and,
1. individual goals.

Long Term Incentive Payments ("LTIP")

From time to time employees in senior management roles may be invited, with approval from the Board, to participate in a Long Term Incentive Plan. The LTIP utilises the facility known as the Service Stream Executive Option Plan ("EOP"). The Salary and Reward Committee administer the LTIP and EOP. The size of individual Options grants is recommended by the CEO and reviewed by the Remuneration Committee, which will then, if appropriate, make recommendations to the Board for approval.

Reward and Recognition or Non Financial Reward

High Performance Recognition

From time to time an employee or team of employees, may work beyond the call of duty to meet a challenging objective, or may substantially exceed expectations. Service Stream encourages recognition and reward for such behaviours.

Service Stream may choose to recognise high performance in a number of ways.

Discretionary Bonuses

A discretionary bonus may be payable where performance has been well above and beyond the expectations of an employee's usual position and has a significant positive financial impact on Service Stream. A business case needs to be prepared showing a clear connection between the employee's contribution, the financial results achieved and the proposed bonus.

The Remuneration and Nomination Committee reviews the remuneration packages of all directors and executive officers on an annual basis and makes recommendations to the board.

Remuneration packages are reviewed with due regard to performance, data on remuneration paid by comparable companies and where appropriate, the remuneration committee may receive expert independent advice regarding remuneration levels required to attract and compensate directors and executives, given the nature of their work and responsibilities

Elements of remuneration related to performance

The Salary and Reward Committee and the Remuneration and Nomination Committee does have the discretion to incentives employees through the STIP and LTIP programs outlined above and through discretionary bonuses. Discretionary bonuses may be in the form of cash or reward through other means. However there are no specific performance related metrics included within any employment contracts.

The employment contracts of M Doery and P Flannigan provide for the following specific performance related elements:

the issue of ordinary shares issued on the successful implementation of a Milestone Project. A Milestone Project is one that is defined as such by the Board;
payment of 35% of their annual remuneration as a bonus if the agreed STIP, as determined by the Remuneration and Nomination Committee on an annual basis, are met.

Elements of director and executive remuneration

Remuneration packages contain the following key elements:

primary benefits: salary, fees and bonuses;
post-employment benefits: including superannuation; and
equity: share options granted under the executive share option plan as disclosed in Note 31 to the financial statements.

The following table discloses the remuneration of the directors of the company whilst directors:

	Short-term employee benefits			Post employment	Sub Total	Equity		Total
	Salary & fees	Bonus	Non monetary	Superannuat ion		Shares (i)	Options
2007	\$	\$	\$	\$	\$	\$	\$	\$
J L Davies	147,500	-	-	13,275	160,775	-	-	160,775
P J Flannigan (i)	320,992	157,500	57,986	62,612	599,090	570,000	273,719	1,442,809
M Doery (i)	338,589	133,000	13,940	20,487	506,016	570,000	246,347	1,322,363
A Field	57,087	-	-	5,137	62,224	-	-	62,224
R Small	98,337	-	-	8,850	107,187	-	-	107,187
R Stanton	314,961	145,454	-	44,315	504,730	-	53,929	558,659
S Wilks	202,250	-	-	-	202,250	-	-	202,250
J Cooney	23,611	-	-	2,124	25,735	-	-	25,735
T Duff	23,611	-	-	2,124	25,735	-	-	25,735
M Stackpool (ii)	131,250	109,091	-	13,124	253,465	-	-	253,465
I Thorley	-	-	-	25,735	25,735	-	-	25,735
	1,658,188	545,045	71,926	197,783	2,472,942	1,140,000	573,995	4,186,937

(i) Includes a milestone project bonus of \$570,000 in shares related to the successful completion of the merger between Service Stream Holdings Pty Ltd and Service Stream Limited. (ii) Mr. Stackpool resigned as a director on 20 December 2006, but remains an employee of the Service Stream

Group. The information in the above table is for the period whilst Mr. Stackpool was a director.

All other bonuses have been made in line with the company's policy in relation to remuneration.

		Short-term employee benefits		Post Sub Total employment	Equity	Total
	Salary & fees	Bonus	Non monetary	Superannuat ion		Shares (i)	Options
2006	\$	\$	\$	\$	\$	\$	\$	\$
R Stanton	310,000	-	15,490	40,560	366,050	-	-	366,050
S Wilks	75,375	-	-	-	75,375	-	-	75,375
J Cooney	45,500	-	-	4,095	49,595	-	-	49,595
T Duff	45,500	-	-	4,095	49,595	-	-	49,595
M Stackpool (ii)	256,466	-	31,732	40,560	328,758	-	-	328,758
I Thorley	33,000	-	-	16,595	49,595	-	-	49,595
	765,841	-	47,222	105,905	918,968	-	-	918,968

The following table discloses the remuneration of the highest remunerated executives of the company and group executives of the consolidated entity during the year:

	Short-term employee benefits			Post Sub Total employment	Equity	Total
	Salary & fees	Bonus	Non monetary	Superannuat ion		Shares (i)	Options
2007	\$	\$	\$	\$	\$	\$	\$	\$
S Campbell	126,981	45,871	-	24,770	197,622	-	-	197,622
J Caporale	202,562	276,337	44,223	14,633	537,755	-	-	537,755
J Gramc	134,044	87,500	18,896	97,059	337,499	-	-	337,499
G Kenyon	100,689	14,678	42,322	3,665	161,354	-	-	161,354
A Legge	169,724	34,000	-	15,275	218,999	-	-	218,999
I Millner	158,256	-	-	14,243	172,499	-	-	172,499
	892,256	458,386	105,441	169,645	1,625,728	-	-	1,625,728

		Short-term employee benefits		Post Sub Total employment		Equity	Total
	Salary & fees	Bonus	Non monetary	Superannuat ion		Shares (i)	Options
2006	\$	\$	\$	\$	\$	\$	\$	\$
C Evans	118,333	60,000	14,913	14,603	207,849	-	-	207,849
J Webster	120,000	60,000	20,542	14,603	215,145	-	-	215,145
S Jones	115,183	60,000	20,416	14,603	210,202	-	-	210,202
J Myers	118,333	4,000	8,231	12,180	142,744	-	-	142,744
J Piper	127,583	20,000	14,627	14,482	176,692	-	-	176,692
	599,432	204,000	78,729	70,471	952,632	-	-	952,632

Bonus is performance cash payment incentive paid, or declared and payable.

Value of options issued to directors and executives

The following table discloses the value of options granted, exercised or lapsed during the year:

	Options Granted Value at grant date	Options Exercised Value at exercise date	Options Lapsed Value at time of lapse	Total value of options granted, exercised and lapsed	Value of options included in remuneration for the year	Percentage of total remuneration for the year that consists of options
	\$	\$	\$	\$	\$	%
P Flannigan	676,026	-	-	676,026	273,719	18.97
M Doery	608,585	-	-	608,585	246,347	18.63
R Stanton	129,753	-	-	129,753	53,929	9.65

Value of options - basis of calculation

The value of options were calculated using the Black Scholes model.

Directors and executive equity holdings

	Balance@	Granted as	Received on	Net other	Balance@
	1/7/06	remunerati on	exercise of options	change (i)	30/06/07
2007	No.	No.	No.	No.	No.
Directors
P. Flannigan	-	400,000	-	403,052	803,052
M. Doery	-	400,000	-	603,052	1,003,052
A. Field	-	-	-	2,671,026	2,671,026
R. Small	-	-	-	2,621,026	2,621,026
J. Davies	-	-	-	100,000	100,000
S. Wilks	-	-	-	-	-
R. Stanton	400,000	-	-	60,000	460,000
J. Cooney	49,324,308	-	-	(49,324,308)	-
T. Duff	58,000	-	-	-	58,000
M. Stackpool	300,000	-	-	-	300,000
I. Thorley	100,000	-	-	-	100,000
	50,182,308	800,000	-	(42,866,152)	8,116,156
Executives
S . Campbell	-	-	-	60,478	60,478
J. Gramc	-	-	200,000	-	200,000
Total	-	-	200,000	60,478	260,478

Fully paid ordinary shares of Service Stream Limited

(i) These shares were issued as a result of the merger between Service Stream Limited and Service Stream Holdings Pty Ltd.

Share options of Service Stream Limited

	Bal @ 30/06/06	Granted as remuneration	Net other change	Exercised	Bal @ 30/06/07	Bal vested @ 30/06/07	Vested subject to performance	Balance Vested and exercisable	Options vested during year 2007
2007							conditions
	No.	No.	No.	No.	No.	No.	No.	No.	No.
Directors
P.	-	2,400,000	1,800,000	-	4,200,000	4,200,000	2,400,000	1,800,000	4,200,000
Flannigan
M. Doery	-	2,160,000	1,640,000	-	3,800,000	3,800,000	2,160,000	1,640,000	3,800,000
A. Field	-	-	2,266,667	-	2,266,667	2,266,667	-	2,266,667	2,266,667
R. Small	-	-	2,266,667	-	2,266,667	2,266,667	-	2,266,667	2,266,667
R. Stanton	-	2,000,000	-	-	2,000,000	2,000,000	1,500,000	500,000	2,000,000
Total	-	6,560,000	7,973,334	-	14,533,334	14,533,334	6,060,000	8,473,334	14,533,334
Executives
S.	-	-	40,000	-	40,000	40,000	-	40,000	40,000
Campbell
J. Gramc	-	-	200,000	(200,000)	-	-	-	-	-
Total	-	-	240,000	(200,000)	40,000	40,000	-	40,000	40,000

All executive share options issued to key management personnel during the financial year were made in accordance with the provisions of the executive share option plan.

Income statement for the financial year ended 30 June 2007

		Consolidated			Company
	Note	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
Revenue	7	245,765	170,847	74,072	77,909
Other income	9	1,343	136	-	(87)
Company administration and insurance
expenses		(5,336)	(3,400)	(1,907)	(948)
Site and construction costs		(21,363)	-	(45,499)	(42,262)
Salaries and employee benefits		(66,236)	(51,578)	(10,192)	(9,689)
Temporary staff costs and subcontractor
fees		(89,450)	(66,930)	(2,321)	(2,061)
Changes in inventory of finished goods		(29,633)	(28,306)	-	-
Motor vehicles expenses		(2,104)	(1,586)	(583)	(780)
Consulting and directors' fees		(642)	(407)	(209)	(543)
External technology services		(1,660)	(1,251)	-	-
Occupancy expenses		(3,327)	(2,721)	(630)	(722)
Finance costs	8	(2,102)	(998)	-	-
Depreciation and amortisation	9	(2,684)	(1,547)	(237)	(430)
Other expenses		(5,973)	(5,999)	-	(195)
Profit before tax		16,598	6,260	12,494	20,192
Income tax expense	10	(5,363)	(1,908)	(4,141)	(6,128)
Profit for the year		11,235	4,352	8,353	14,064
Attributable to the equity holders of
the parent		11,235	4,352	8,353	14,064
Earnings per share:
Basic (cents per share)	24	10.66	6.97
Diluted (cents per share)	24	9.57	5.81

Balance sheet as at 30 June 2007

2007 2006 2007 2006 Note \$'000 \$'000 \$'000 \$'000 Current assets Cash and cash equivalents 29 5,248 2,048 415 11,770 Trade and other receivables 11 57,342 24,889 23,546 27,951 Inventories 12 1,427 838 - - Other 13 23,205 7,265 12,664 2,817 Total current assets 87,222 35,040 36,625 42,538 Non-current assets Trade and other receivables 11 - - 7,058 - Other financial assets 14 700 962 105,705 - Property, plant and equipment 15 5,210 3,467 159 348 Deferred tax assets 10 2,431 1,040 1,289 900 Goodwill 16 155,703 18,551 - - Other intangible assets 17 2,858 348 - - Total non-current assets 166,902 24,368 114,211 1,248 Total assets 254,124 59,408 150,836 43,786 Current liabilities Trade and other payables 18 61,229 20,726 23,157 21,240 Borrowings 19 4,654 707 - - Current tax liabilities 10 5,177 1,197 4,013 3,308 Provisions 20 8,189 1,652 514 454 Total current liabilities 79,249 24,282 27,684 25,002 Non-current liabilities Trade and other payables 18 3,571 - - - Borrowings 19 30,803 5,798 - - Provisions 20 1,190 643 278 209 Total non-current liabilities 35,564 6,441 278 209 Total liabilities 114,813 30,723 27,962 25,211 Net assets 139,311 28,685 122,874 18,575 Equity Issued capital 21 130,755 25,867 113,996 9,055 Reserves 22 725 65 686 -			Consolidated		Company

































	Retained earnings	23	7,831	2,753	8,192	9,520
Total equity 139,311 28,685 122,874 18,575

Statement of changes in equity for the financial year ended 30 June 2007

			Consolidated	Company
	Note	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
(a) Retained earnings	23
Balance at the beginning of the year		2,753	(294)	9,520	10,362
Profit for the year		11,236	4,352	8,353	14,064
Dividends paid		(6,158)	(1,305)	(9,681)	(14,906)
Balance at end of financial year		7,831	2,753	8,192	9,520
(b) Reserves	22
Reserves at beginning of year		65	27	-	-
Equity-settled share based payment		686	38	686	-
Transfer to share capital		(26)	-	-	-
Balance at end of financial year		725	65	686	-
(c) Issued capital	21
Share capital at beginning of year:		25,867	14,412	9,055	9,055
Issue of shares in accordance with the
Scheme of arrangement		-	-	103,955	-
Net costs associated with share issues		(52)	(289)	-	-
Issue of share capital		103,928	9,490	-	-
Exercise of options		126	-	126	-
Transfer from employee equity-settled
benefits reserve		26	-	-	-
Issue of shares as partial consideration for acquisition of Service Stream
Communications Pty Ltd		-	1,477	-	-
Issue of shares for acquisition of Milcom
Communications Pty Ltd		-	500	-	-
Issue of shares in dividend reinvestment
plan		860	277	860	-
Share capital at end of the year
140,831,382 fully paid ordinary shares		130,755	25,867	113,996	9,055
Refer note 4 for details on the accounting for the acquisition.
(d) Total recognised income and expenses for the period
Net profit for the year		11,235	4,352	8,353	14,064

Cash flow statement for the financial year ended 30 June 2007

		Consolidated		Company
	Note	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000

Cash flows from operating activities
Receipts from customers		224,068	165,971	64,710	64,838
Payments to suppliers and employees		(214,583)	(156,764)	(52,543)	(53,746)
Dividends received		76	-	-
Interest received		173	64	381	747
Interest and other costs of finance paid		(2,048)	(923)	-	-
Income tax paid		(2,479)	(659)	(6,352)	(4,689)
Net cash provided by operating activities	29(e)	5,207	7,689	6,196	7,150
Cash flows from investing activities
Payment for equity instruments		(700)	(962)	-	-
Payment for property, plant and equipment		(2,888)	(1,877)	(48)	(46)
Proceeds from sale of property, plant and
equipment		349	295	-	24
Proceeds on sale of equity instruments		2,285	-	-	-
Payment for intangible assets		(3,267)	(348)	-	-
Payment for businesses	29(b)	(20,659)	(3,774)	(1,050)	-
Net cash used in investing activities		(24,880)	(6,666)	(1,098)	(22)
Cash flows from financing activities
Proceeds from share issue		125	9,490	125	-
Payment for share issue costs		-	(340)	-	-
Proceeds from borrowings		65,632	24,029	-	-
Repayment of borrowings		(36,210)	(32,200)	-	-
Finance lease repayments		(1,377)	(401)	-	-
Payment to controlled entities		-	-	(7,758)	-
Dividends paid		(5,297)	(1,028)	(8,820)	(14,906)
Net cash provided by/(used in) financing activities		22,873	(450)	(16,453)	(14,906)

Net increase/(decrease) in cash and cash equivalents		3,200	573	(11,355)	(7,778)
Cash and cash equivalents at the beginning of the financial year		2,048	1,475	11,770	19,548

Cash and cash equivalents at the end of	29(a)
the financial year		5,248	2,048	415	11,770

Notes to the financial statements for the financial year ended 30 June 2007

1. General information

Service Stream Limited (the company) is a listed public company, incorporated and operating in Australia. Service Stream Limited's registered office and its principal place of business are as follows:

Registered office	Principal place of business
555 Lonsdale Street	555 Lonsdale Street
Melbourne	Melbourne
VIC	VIC
3000	3000

2. Adoption of new and revised Accounting Standards

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of these new and revised Standards and Interpretations did not have any material financial impact on the financial statements of the Company or the consolidated entity.

At the date of authorisation of the financial report, the following Standards and Interpretations were in issue but not yet effective:

•	AASB 7 'Financial Instruments: Disclosures' and consequential amendments to other accounting standards resulting from its issue	Effective for annual reporting periods beginning on or after 1 January 2007
•	AASB 101 'Presentation of Financial Statements' - revised standard	Effective for annual reporting periods beginning on or after 1 January 2007
•	AASB 8 'Operating Segments'	Effective for annual reporting periods beginning on or after 1 January 2009
•	Interpretation 10 'Interim Financial Reporting and Impairment'	Effective for annual reporting periods beginning on or after 1 November 2006
•	Interpretation 11	Effective for annual reporting periods beginning on or after 1 March 2007
•	Interpretation 12	Effective for annual reporting periods beginning on or after 1 January 2008
•	Interpretation 13	Effective for annual reporting periods beginning on or after 1 July 2008
•	Interpretation 14	Effective for annual reporting periods beginning on or after 1 January 2008

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material financial impact on the financial statements of the company or the group. The circumstances addressed by Interpretation 10, which prohibits the reversal of certain impairment losses, do not affect either the company's or the group's previously reported results and accordingly, there will be no impact to these financial statements on adoption of the Interpretation.

2. Adoption of new and revised Accounting Standards (continued)

The application of AASB 101 (revised), AASB 7 and AASB 2005-10 will not affect any of the amounts recognised in the financial statements, but will change the disclosures presently made in relation to the company's and the group's financial instruments and the objectives, policies and processes for managing capital.

These Standards and Interpretations will be first applied in the financial report of the group that relates to the annual reporting period beginning after the effective date of each pronouncement, which will be the company's annual reporting period beginning on 1 July 2007.

3. Summary of accounting policies

Statement of compliance

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

The financial report includes the separate financial statements of the company and the consolidated financial statements of the Group.

Accounting Standards include Australian equivalents to International Financial Reporting Standards ('A-IFRS'). Compliance with A-IFRS ensures that the financial statements and notes of the Group comply with International Financial Reporting Standards ('IFRS'). The parent entity 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 parent entity 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 23 August 2007.

Basis of preparation

The financial report has been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

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

The accounting policies and methods of computation adopted in the presentation of the financial report are consistent with those adopted and disclosed in the Service Stream Holdings Pty Ltd's 2006 Annual Report for the financial year ended 30 June 2006.

On 20 December 2006 the merger between Service Stream Limited and Service Stream Holdings Pty Ltd became effective. The transaction has been accounted for using the guidelines as set out in AASB 3 'Business Combinations' . In line with the guidelines of that standard, the transaction has been accounted for as a reverse acquisition. Refer Note 4 for further details.

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

(a) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries) (referred to as 'the Group' in these financial statements). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefit from its activities. Refer to note 4 for details on the acquisition accounting.

The results of subsidiaries acquired during the year are included in the consolidated income statement from the effective date of acquisition.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. In the separate financial statements of the Company, intra-group transactions ('common control transactions') are generally accounted for by reference to the existing (consolidated) book value of the items. Where the transaction value of common control transactions, the difference is recognised as a contribution or distribution to equity participants by the transacting entities.

(b) Borrowings

Borrowings are recorded initially at fair value, net of transaction costs.

Subsequent to initial recognition, borrowings are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the borrowing using the effective interest rate method.

Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination in measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any cost directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under AASB3 'Business Combinations' are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are held for resale in accordance with AASB 5 'Non-current Assets Held for Sale and Discontinued Operations', which are recognised and measured at fair values less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

(d) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

(e) Employee benefits

A liability is recognised 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 they are capable of being measured reliably.

Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to the reporting date.

Defined contribution plans

Contributions to defined contribution superannuation plans are expensed when incurred.

(f) Financial assets

Loans and receivables

Trade receivables, loans, and other receivables that have a fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

(g) Financial instruments issued by the company

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.

Financial liabilities

Financial liabilities are classified as either financial liabilities 'at fair value through profit or loss' or other financial liabilities.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in the profit or loss . The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Fair value is determined in the manner described in note 30.

(h) Foreign currency

The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Australian dollars, which is the functional currency of Service Stream Limited, and the presentation of the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in other currencies other than the entity's functional currency (foreign currency) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise.

(i) Goodwill

Goodwill acquired in a business combination is initially measured at it cost, being the excess of the cost of the business combination over the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. Goodwill is subsequently measured at its cost less any impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units (CGUs), or groups of CGUs, expected to benefit from the synergies of the business combination. CGUs (or groups of CGUs) to which goodwill has been allocated are tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired.

If the recoverable amount of the CGU (or group of CGUs) is less than the carrying amount of the CGU (or groups of CGUs), the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or groups of CGUs) and then to the other assets of the CGU of CGUs pro-rata on the basis of the carrying amount of each asset in the CGU (or groups of CGUs). An impairment loss recognised for goodwill is recognised immediately in profit or loss and is not reversed in a subsequent period.

On disposal of an operation within a CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal of the operation.

(j) Impairment of other tangible and intangible assets

At each reporting date, the Group reviews the carrying amounts of its tangible and intangible 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 Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be impaired.

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 (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately.

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 profit or loss 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 (refer note 16).

(k) 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 balance sheet liability method. Temporary differences are differences between the tax base of an asset or liability and its carrying amount in the balance sheet. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. 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 the initial recognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches and associates, and interests in joint ventures except where the Group 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. Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group 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 company/Group 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.

Tax consolidation

The company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. Service Stream Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using a 'group allocation' approach based on the allocation specified in the tax funding arrangement. The tax funding arrangement requires a notional current and deferred tax calculation for each entity as if it were a taxpayer in its own right, except that unrealised profits, distributions made and received and capital gains and losses and similar items arising on transactions within the tax-consolidated group are treated as having no tax consequences. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax-consolidated group are recognised by the company (as head entity in the tax consolidated group).

Due to the existence of a tax funding arrangement between entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the company and each member of the group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax-consolidated group in accordance with the arrangement. Further information about the tax funding arrangement is detailed in note 10 to the financial statements. Where the tax contribution amount recognised by each member of the tax-consolidated group for a particular period is different to the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credits in respect of that period, the difference is recognised as a contribution from (or distribution to) equity participants.

(l) Intangible assets

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.

Software

Software is recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight line basis over their estimated useful lives of 3 years. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period.

(m) Inventories

Inventories are valued at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a first in first out basis. Net realisable value represents the estimated selling price less all estimated costs of completion and costs necessary to make the sale.

(n) Jointly controlled entities

Interests in jointly controlled entities in which the Group is a venturer (and so has joint control) are accounted for under the equity method in the consolidated financial statements and the cost method in the company financial statements.

(o) Leased assets

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group's general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.

Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

Lease incentives

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefits of incentives are recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(p) Plant and equipment

Plant and equipment, leasehold improvements, equipment under finance lease and motor vehicles are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.

Depreciation is provided on plant and equipment. Depreciation is calculated on a straight-line basis so as to write off the net cost of each asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and depreciation method is reviewed at the end of each annual reporting period, with the effect of any changes recognised on a prospective basis.

The following estimated useful lives are used in the calculation of depreciation:

•	Leasehold improvements	2 - 5 years
•	Plant and equipment	2 - 5 years
•	Equipment under finance lease	2 - 5 years
•	Motor Vehicles	3 – 7 years

(q) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

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 cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.

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 reimbursement will be received and the amount of the receivable can be measured reliably.

(r) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, stock rotation, price protection, rebates and other similar allowances.

Rendering of services

Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract. The stage of completion of the contract is determined as follows:

installation fees are recognised by reference to the stage of completion of the installation, determined as the proportion of the total time expected to install that has elapsed at reporting date
revenue from time and material contracts is recognised at the contractual rates as labour hours are delivered and direct expenses are incurred.

Construction contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date, as measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.

Where the outcome of the construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as am expense immediately.

Dividend and interest revenue

Dividend revenue from investments is recognised when the shareholder's right to receive payment has been established.

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

(s) Share-based payments

Equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the equity instrument at the grant date. Fair value is measured by use of a 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. Further details on how the fair value of equity settled transactions has been determined can be found in note 33.

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, based on the Group's estimate of shares that will eventually vest.

The above policy is applied to all equity-settled share-based payments that were granted after 7 November 2002 that vested after 1 January 2005. No amount has been recognised in the financial statements in respect of the other equity-settled share-based payments.

Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. For cash-settled share-based payments, a liability equal to the portion of the goods and services received is recognised at the current value determined at each reporting date.

(t) 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, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or

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.

(u) Comparatives

On 20 December 2006 the merger between Service Stream Limited (formerly Total Communications Infrastructure Limited) and Service Stream Holdings Limited (formerly Service Stream Limited) became effective. The transaction has been accounted for as a reverse acquisition using the guidelines set out in AASB 3 'Business Combinations'. The comparative information has been prepared to comply with that standard.

The comparatives of the consolidated entity are those of Service Stream Holdings Limited (formerly Service Stream Limited) for the year ended 30 June 2006, as disclosed in the Annual Report.
The comparatives of the Company are those of Service Stream Limited (formerly Total Communications Infrastructure Limited) for the year ended 30 June 2006.

The format of the Income statement previously adopted by the parent entity, Service Stream Limited (formerly Total Communications Infrastructure Limited), differs from the format adopted by the Consolidated Group. Therefore it has been necessary to reclassify a number of balances on the Income statement from that previously disclosed in the financial statements. There is nil overall profit affect.

4. Merger Transaction Summary

On 20 December 2006 the Scheme of Arrangement between Service Stream Limited and Service Stream Holdings Pty Ltd became effective. The Supreme Court of Victoria made orders pursuant to section 411 of the Corporations Act approving the Scheme of Arrangement ("Scheme") between Service Stream Holdings Pty Ltd and each of its ordinary shareholders to effect the merger in accordance with the terms set out in the Scheme Booklet dated 24 October 2006.

The approval from the court follows Service Stream Holdings Pty Ltd's Scheme Meeting on 12 December 2006 and Service Stream Limited's Extraordinary General Meeting on 18 December 2006, both of which strongly supported the merger. The former shareholders of Service Stream Holdings Limited now hold approximately 50.5% of the merged group.

The merger was achieved by:

a scheme of arrangement under which Service Stream Limited acquired all of the shares in Service Stream Holdings Pty Ltd;
the acquisition by Service Stream Holdings Pty Ltd of a substantial shareholding in Service Stream Limited for \$32.2 million in cash and \$10 million in deferred consideration; and
the subsequent cancellation of the shares in Service Stream Limited by Service Stream Holdings Pty Ltd.

4. Merger Transaction Summary (continued)

The transaction has been accounted for using the guidelines as set out in AASB 3 'Business Combinations'. In line with the guidelines of that standard, the transaction has been accounted for as a reverse acquisition. As part of the reverse acquisition accounting requirements a notional cost of equity of \$104 million was deemed to be issued by Service Stream Holdings Pty Ltd and has been included in the cost of business combination.

• As part of the merger 12,660,000 fully vested share options and 70,717,971 ordinary shares in Service Stream Holdings were reissued in Service Stream Limited.

Key matters to note in relation to accounting for the merger as a reversed acquisition include:

Comparative Information:

• Comparative information presented in the consolidated financial statements is that of Service Stream Holdings Pty Ltd.

Income Statement:

The Consolidated Income Statement for the year ended 30 June 2007 comprises the consolidated results of Service Stream Holdings, as the accounting acquiror, for the year ended 30 June 2007 and those of Service Stream Limited as from the date of acquisition.
The consolidated comparative results are that of Service Stream Holdings.
The company results for the years ended 30 June 2007 and 2006 are that of Service Stream Limited, being the legal parent entity.

Reserves:

The amount recognised as issued capital in the consolidated entity is that of Service Stream Holdings (the accounting acquiror) while the number of shares disclosed is that of Service Stream Limited (the legal parent).
Opening retained earnings for the consolidated entity is that of Service Stream Holdings.
The equity-settled share based payment reserve for the consolidated entity consists of Service Stream Holdings' opening balance together with movements relating to Service Stream Holdings up to the date of acquisition and Service Stream Limited post acquisition.

Dividends:

Dividends paid in the consolidated results are that of Service Stream Holdings pre acquisition and Service Stream Limited post acquisition.
Dividends paid in the company results are that of Service Stream Limited for the 12 month period.

Taxation:

The head entity of the Tax Consolidated Group pre acquisition is Service Stream Holdings.
The head entity of the Tax Consolidated Group post acquisition is Service Stream Limited.

Earnings per share:

Number of ordinary shares outstanding at the beginning of the period is the number of shares issued by Service Stream Limited to the owners of Service Stream Holdings.
Comparative period earnings per share has been recalculated using the number of ordinary shares issued by Service Stream Limited to the owners of Service Stream Holdings.

5. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group's accounting policies, which are described in note 3, 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 judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out as appropriate in the Notes to the Financial Statements.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates and underlying assumptions 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.

6. Business and geographical segments

Information on business segments

Products and services within each business segment

For management purposes, the Group is organised into three main operating divisions – Contact Centre Solutions, Tickets of Work and Infrastructure Services. These divisions are the basis on which the Group reports its primary segment information. The principal products and services of each of these divisions are as follows:

Contact Centre	Specialist end-to-end services management; Contact centre activities and logistics
Solutions	services to the telecommunications industry.
Tickets of Work	Field based jobs issued and completed within 48 hours.
Infrastructure	Provides turnkey and project management solutions in the construction of
Services	telecommunications infrastructure.

Segment revenues

		External sales	Inter-segment (i)		Total
	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
Contact Centre Solutions	58,160	56,353	-	-	58,160	56,353
Tickets of Work	116,507	95,633	-	-	116,507	95,633
Infrastructure Services	71,098	18,861	-	-	71,098	18,861
Other	-	-	-	-	-	-
Total of all segments					245,765	170,847
Eliminations					-	-
Unallocated					-	-
Consolidated revenue					245,765	170,847

(i) Inter-segment sales are recorded at amounts equal to competitive market prices charged to external customers of similar goods.

Segment result

	2007 \$'000	2006 \$'000
Contact Centre Solutions	3,718	4,544
Tickets of Work	10,412	4,470
Infrastructure Services	7,574	1,238
Other	-	-
	21,704	10,252
Eliminations	-	-
Unallocated	(5,106)	(3,992)
Profit before tax	16,598	6,260
Income tax expense	(5,363)	(1,908)
Profit for the year	11,235	4,352

Segment assets and liabilities

		Assets		Liabilities
	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
Contact Centre Solutions	14,887	5,671	11,891	8,083
Tickets of Work	22,564	20,061	11,853	7,361
Infrastructure Services	53,727	6,592	34,005	4,536
Total of all segments	91,178	32,324	57,749	19,980
Eliminations	-	-	-	-
Unallocated	162,946	27,084	57,064	10,743
Consolidated	254,124	59,408	114,813	30,723

The company carries out its business entirely within Australia.

7. Revenue

An analysis of the Group's revenue for the year is as follows:

		Consolidated		Company
		2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
	Revenue from the rendering of services	245,504	170,699	73,691	77,162
	Interest revenue:
	Bank interest	173	64	381	747
	Dividends:
	Other entities	76	-	-	-
	Other	12	84	-	-
	Total revenue from ordinary activities	245,765	170,847	74,072	77,909
8.	Finance costs
	Interest on bank overdrafts and loans	1,836	847	-	-
	Interest on obligations under finance leases	244	99	-	-
	Other interest expense	22	52	-	-
		2,102	998	-	-
9.	Profit for the year
	(a) Gains and losses Profit/(loss) for the year has been arrived at after crediting/(charging) the following gains and losses:
	Gain/(loss) from sales of plant & equipment	82	136	-	(87)
	Gain on disposal of investments	1,261	-	-	-
		1,343	136	-	(87)
	(b) Other expenses
	Profit for the year include the following expenses: Changes in inventory of finished goods	29,633	28,306	-	-
	Depreciation of non-current assets	1,927	1,547	237	430
	Amortisation of non-current assets	757 2,684	- 1,547	- 237	- 430
	Operating lease rental expenses:
	Minimum lease payments	2,860	1,997	836	48
	Employee benefit expense:
	Post employment benefits:
	Defined contribution plans Share-based payments:	4,240	3,174	817	907
	Equity settled share-based payments	1,825	38	1,825	-

10. Income taxes

	Consolidated		Company
	2007	2006	2007	2006
	\$'000	\$'000	\$'000	\$'000
Income tax recognised in profit or loss
Tax expense comprises:
Current tax expense	6,806	1,770	4,530	6,379
Deferred tax expense/(income) relating to the
origination and reversal of temporary differences	(1,443)	97	(389)	(254)
Adjustments recognised in the current year in
relation to the current tax of prior years	-	41	-	3
Total tax expense	5,363	1,908	4,141	6,128

The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows:

Profit from ordinary activities	16,598	6,260	12,494	20,192
Income tax expense calculated at 30%	4,979	1,878	3,748	6,058
Effect of expenses that are not deductible in
determining taxable profit	454	76	393	566
Items deducted for tax purposes only	(52)	(51)	-	(499)
Other	(18)	(36)	-	-
	5,363	1,867	4,141	6,125
Adjustments recognised in the current year in
relation to the current tax of prior years	-	41	-	3
	5,363	1,908	4,141	6,128

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law. There has been no change in the corporate tax rate when compared with the previous reporting period.

	Consolidated		Company
	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
Income tax recognised directly in equity
The following current amounts were charged directly to equity during the period:
Share issue expense	122	174	-	-
Current tax liabilities
Income tax payable attributable to:
Parent entity	1,487	(1,140)	1,487	3,308
Entities in the tax-consolidated group	3,690	2,337	2,526	-
	5,177	1,197	4,013	3,308

Refer note 4 for details on the accounting for the acquisition.

10. Income taxes (continued)

Deferred tax balances

Deferred tax assets/(liabilities) arise from the following:

Consolidated	Opening balance	Charged to income	Charged to equity	Closing balance
2007	\$'000	\$'000	\$'000	\$'000
Temporary differences:
Trade and other receivables	93	877	-	970
Other intangible assets	368	(315)	-	53
Trade, other payables and provision	405	881	-	1,286
Share issue costs	174	-	(52)	122
	1,040	1,443	(52)	2,431

Company	Opening balance	Charged to income	Closing balance
2007	\$'000	\$'000	\$'000
Temporary differences:
Trade and other receivables	480	619	1,099
Trade, other payables and provision	420	(230)	190
	900	389	1,289

Consolidated	Opening balance	Charged to income	Charged to equity	Closing balance
2006	\$'000	\$'000	\$'000	\$'000
Temporary differences:
Trade and other receivables	35	58	-	93
Other intangible assets	-	368	-	368
Trade, other payables and provision	928	(523)	-	405
Share issue costs	-	-	174	174
	963	(97)	174	1,040

10. Income taxes (continued)

Company	Opening balance	Charged to income	Closing balance
2006	\$'000	\$'000	\$'000
Temporary differences:
Trade and other receivables	311	169	480
Trade, other payables and provision	335	85	420
	646	254	900

Deferred tax assets comprise:

	Consolidated		Company
	2007	2006	2007	2006
	\$'000	\$'000	\$'000	\$'000
Temporary differences
Parent entity	1,289	247	1,289	900
Entities in the tax-consolidated group	1,142	793	-	-
	2,431	1,040	1,289	900

Tax consolidation

Relevance of tax consolidation to the Group

The company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from 20 December 2006 and are therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is Service Stream Limited. The members of the tax-consolidated group are identified at note 27.

Nature of tax funding arrangements and tax sharing agreements

Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax-sharing agreement with the head entity. Under the terms of the TFA, Service Stream Limited and each of the entities in the tax-consolidated group will agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-consolidated group.

The tax sharing agreement entered into between members of the tax-consolidated group will provide for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations or if an entity should leave the tax-consolidated group. The effect of the tax sharing agreement is that each member's liability for tax payable by the tax consolidated group is limited to the amount payable to the head entity under the tax funding arrangement.

Notes to the financial statements

		Consolidated		Company
		2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
11.	Trade and other receivables
	Trade receivables (i)	57,730	23,743	26,143	28,906
	Allowance for doubtful debts	(3,233)	(311)	(3,173)	(1,603)
		54,497	23,432	22,970	27,303
	Goods and services tax (GST) recoverable	2,335	1,184	554	648
	Other	510	273	22	-
		57,342	24,889	23,546	27,951
	Amounts receivable from wholly-owned
	controlled entities	-	-	7,058	-
		-	-	7,058	-
		57,342	24,889	30,604	27,951
	Disclosed in the financial statements as:
	Current trade and other receivables	57,342	24,889	23,546	27,951
	Non-current trade and other receivables	-	-	7,058	-
		57,342	24,889	30,604	27,951

(i) The average credit period on sales of goods is 30 days. No interest is charged on trade receivables.

		Consolidated		Company
		2007	2006	2007	2006
		\$'000	\$'000	\$'000	\$'000
12.	Inventories
	Finished goods:
	At cost	1,427	838	-	-
13.	Other assets
	Accrued Income	22,259	7,046	12,501	2,243
	Prepayments	803	23	121	335
	Other	143	196	42	239
		23,205	7,265	12,664	2,817
14.	Other financial assets
	Non-current
	Shares in controlled entities – at cost	-	-	105,005	-
	Shares in other entities – at fair value	-	962	-	-
	Other equity investments	700	-	700	-
		700	962	105,705	-

15. Plant and equipment

Consolidated

	Leasehold improve ments at cost	Plant and equipment at cost	Equipment under finance lease at cost	Motor Vehicles at cost	Total
	\$'000	\$'000	\$'000	\$'000	\$'000
Gross carrying amount
Balance at 1 July 2005	981	1,162	641	940	3,724
Additions	15	1,046	158	658	1,877
Disposals	(3)	(57)	(125)	(256)	(441)
Acquisitions through business
combinations	21	29	-	12	62
Balance at 1 July 2006	1,014	2,180	674	1,354	5,222
Additions	1,506	970	-	412	2,888
Disposals	(1)	-	(566)	(168)	(735)
Acquisitions through business
combinations	29	495	-	525	1,049
Balance at 30 June 2007	2,548	3,645	108	2,123	8,424
Accumulated depreciation
Balance at 1 July 2005	(97)	(246)	(79)	(68)	(490)
Disposals	3	57	35	187	282
Depreciation expense	(414)	(576)	(138)	(419)	(1,547)
Balance at 1 July 2006	(508)	(765)	(182)	(300)	(1,755)
Disposals	-	-	322	146	468
Depreciation expense	(466)	(656)	(177)	(628)	(1,927)
Balance at 30 June 2007	(974)	(1,421)	(37)	(782)	(3,214)
Net book value
As at 30 June 2006	506	1,415	492	1,054	3,467
As at 30 June 2007	1,574	2,224	71	1,341	5,210

Company

	Leasehold improve ments at cost	Plant and equipment at cost	Equipment under finance lease at cost	Motor Vehicles at cost	Total
	\$'000	\$'000	\$'000	\$'000	\$'000
Gross carrying amount
Balance at 1 July 2005	68	1,721	-	-	1,789
Additions	-	46	-	-	46
Disposals	(47)	(215)	-	-	(262)
Balance at 1 July 2006	21	1,552	-	-	1,573
Additions	-	48	-	-	48
Balance at 30 June 2007	21	1,600	-	-	1,621
Accumulated depreciation
Balance at 1 July 2005	(21)	(925)	-	-	(946)
Depreciation expense	(9)	(421)	-	-	(430)
Disposals	15	136	-	-	151
Balance at 1 July 2006	(15)	(1,210)	-	-	(1,225)
Depreciation expense	(3)	(234)	-	-	(237)
Balance at 30 June 2007	(18)	(1,444)	-	-	(1,462)
Net book value
As at 30 June 2006	6	342	-	-	348
As at 30 June 2007	3	156			159

Service Stream Limited (formerly Total Communications Infrastucture Limited) Notes to the financial statements

15. Plant and equipment (continued)

The following useful lives are used in the calculation of depreciation:

•	Leasehold improvements	2 - 5 years
•	Plant and equipment	2 - 5 years
•	Equipment under finance lease	2 - 5 years
•	Motor Vehicles	3 - 7 years

Aggregate depreciation allocated during the year, recognised as an expense during the year:

	Consolidated		Company
	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000

Leasehold improvements	466	414	3	9
Plant and equipment	656	576	234	421
Equipment under finance lease	177	138	-	-
Motor vehicles	628	419	-	-
	1,927	1,547	237	430

Assets pledged as security

In accordance with the security arrangements of liabilities, as disclosed in note 19 to the financial statements, Service Stream Limited has granted a registered mortgage debenture over all assets and uncalled capital in favour of Westpac Banking Corporation. Each wholly-owned subsidiary of Service Stream Limited has granted a guarantee and indemnity of the obligations of Service Stream Limited of Westpac Banking Corporation.

Assets under lease are pledged as security for the associated lease liability.

		Consolidated		Company
		2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
16.	Goodwill
	Gross carrying amount
	Balance at beginning of financial year	18,551	16,379	-	-
	Additional amounts recognised from business
	combinations occurring during the period	137,152	2,172	-	-
	Balance at end of financial year	155,703	18,551	-	-
	Net book value
	At the beginning of the financial year	18,551	16,379	-	-
	At the end of the financial year	155,703	18,551	-	-

The recoverable amount of goodwill was assessed by reference to the cash-generating units' value in use. A discount factor of 9.5% (2006: 9.5%) was applied in the value in use model.

Allocation of goodwill to cash-generating units

Goodwill has been allocated for impairment testing purposes to 3 major cash-generating units, as follows: Cash-generating units ('CGU') identified are:

Solutions Division, including customer contact centre operations
Ticket of Work, including home installations
Infrastructure Services, including turnkey project management solutions in the construction of telecommunication infrastructure services and other industry verticals

Service Stream Limited (formerly Total Communications Infrastucture Limited)

Notes to the financial statements

		Consolidated			Company
		2007	2006	2007	2006
		\$'000	\$'000	\$'000	\$'000
17.	Other intangible assets
	Software:
	Gross carrying amount
	Balance at beginning of financial year	348	-	-	-
	Additions	3,267	348		-
	Balance at end of financial year	3,615	348		-
	Accumulated amortisation
	Balance at beginning of financial year	-	-	-	-
	Amortisation expense	757	-		-
	Balance at end of financial year	757	-		-
	Net book value
	At the beginning of the financial year	348	-	-	-
	At the end of the financial year	2,858	348		-

The software was installed and ready for use on 1 July 2006. There was no amortisation expense for the year ended 30 June 2006.

		Consolidated		Company
		2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
18.	Trade and other payables
	Current
	Trade creditors (i)	24,202	6,587	14,091	9,216
	Deferred purchase consideration (note 28)	12,570	-	-	-
	Goods and services tax (GST) payable	4,502	2,600	1,085	2,793
	Sundry creditors & accruals	19,206	10,468	7,981	9,231
	Income in advance	749	1,071	-	-
		61,229	20,726	23,157	21,240
	Non-current
	Deferred purchase consideration (note 28)	3,571	-	-	-
		64,800	20,726	23,157	21,240

(i) No interest is charged on the trade payables for the first 30 days from the date of the invoice. The consolidated entity has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

Notes to the financial statements

		Consolidated		Company
		2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
19.	Borrowings
	Secured – at amortised cost
	Current
	Commercial bills (ii)	3,300	-	-	-
	Finance lease liabilities (i) (note 26)	1,354	707	-	-
		4,654	707	-	-
	Non-current
	Commercial bills (ii)	28,875	5,000	-	-
	Finance lease liabilities (i) (note 26)	1,928	798	-	-
		30,803	5,798	-	-
		35,457	6,505	-	-
	Disclosed in the financial statements as:
	Current borrowings	4,654	707	-	-
	Non-current borrowings	30,803	5,798	-	-
		35,457	6,505	-	-

(i) Secured by the assets leased and hire-purchased, the current value of which exceeds the value of the finance lease liability and hire purchase liability.

(ii) Commercial bills secured have maturity dates over a 5 year period.

			Company
	2007	2006	2007	2006 \$'000
Provisions
Current
Employee benefits	8,189	1,652	514	454
Non-current
Employee benefits	1,190	643	278	209
	9,379	2,295	792	663

	2007	2006	2007	2006 \$'000
Issued capital
140,831,382 fully paid ordinary shares (2006: 174,794,445, being the number of fully paid
ordinary shares for Service Stream Holdings Pty Ltd)	130,755	25,867	113,996	9,055
		\$'000 \$'000	Consolidated \$'000 Consolidated \$'000	\$'000 Company \$'000

In accordance with AASB 3 "Business Combinations" the number of fully paid ordinary shares recognised is that of the legal parent (Service Stream Limited) with the value of the shares being that of the acquirer as identified in the reverse acquisition (Service Stream Holdings Limited).

Changes to the then Corporations Law abolished the authorized capital and par value concept in relation to share capital from 1 July 1998. Therefore, the company does not have a limited amount of authorised capital and issued shares do not have a par value.

21. Issued capital (continued)

	2007 No.	2006 No.
	'000	'000
Consolidated
Fully paid ordinary shares Balance at beginning of financial year	109,610	123,476
Issue of shares in accordance with the Scheme of
arrangement (refer note 4)	70,717	-
Reduction of share capital	(40,324)	-
Issue of shares during the year	-	42,178
Exercise of options	200	-
Issues of shares as partial consideration for the
acquisition of Communication Services Australia
Consulting Pty Ltd, and in facilitating the acquisition of
Service Stream Communications Pty Ltd.	-	6,591
Issue of shares on acquisition of Milcom Communications
Pty Ltd	-	1,736
Dividend reinvestment plan	628	813
Balance at end of financial year	140,831	174,794
	2007	2006
	\$'000	\$'000
Consolidated

Fully paid ordinary shares
Balance at beginning of financial year	25,867	14,412
Issue of shares during the year	103,928	9,490
Net costs associated with issue of shares	(52)	(289)
Exercise of options	126	-
Transfer from employee equity-settled reserve	26	-
Issues of shares as partial consideration for the
acquisition of Communication Services Australia
Consulting Pty Ltd, and in facilitating the
acquisition of Service Stream Communications
Pty Ltd.	-	1,477
Issue of shares on acquisition of Milcom
Communications Pty Ltd	-	500
Dividend reinvestment plan Balance at end of financial year	860 130,755	277 25,867

Fully paid ordinary shares carry one vote per share and carry the right to dividends. Refer note 4 for details on the accounting for the acquisition.

21. Issued capital (continued)

Share options

As at 30 June 2007, founders and employees have 19,750,000 options over ordinary shares

(of which 6,060,000 are vested but not yet exercisable), in aggregate, with 12,220,000 of those options expiring up to 31 October 2009, and the remainder expiring up to 31 October 2011.

19,750,000 share options carry no rights to dividends and no voting rights. Further details of the sharebased payment scheme are contained in the Directors Report.

		Consolidated		Company
		2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
22.	Reserves
	Employee equity-settled benefits reserve
	Balance at beginning of financial year	65	27	-	-
	Share-based payment	686	38	686	-
	Transfer to share capital	(26)	-	-	-
	Balance at end of financial year	725	65	686	-

The equity-settled employee benefits reserve arises on the grant of share options to executives and senior employees under the employee share option plan. Amounts are transferred out of the reserve and into issued capital when the options are exercised. Further information about share-based payments to employees is made in note 33 to the financial statements.

Also refer note 4 for details on the accounting for the acquisition.

		Consolidated		Company
		2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
23.	Retained earnings
	Balance at beginning of financial year	2,753	(294)	9,520	10,363
	Net profit attributable to members of the parent
	entity	11,236	4,352	8,353	14,064
	Dividends paid (note 25)	(6,158)	(1,305)	(9,681)	(14,907)
	Balance at end of financial year	7,831	2,753	8,192	9,520

Refer note 4 for details on the accounting for the acquisition.

24. Earnings per share

	Consolidated
	2007 2006 Cents per Cents per share share
Basic earnings per share:
Total basic earnings per share	10.66 6.97
Diluted earnings per share:
Total diluted earnings per share	9.57 5.81

Basic earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

	2007 \$'000	2006 \$'000
Earnings (a)	11,235	4,352
	2007 No.'000	2006 No.'000
Weighted average number of shares	105,407	62,405

24. Earnings per share (continued)

(a) Earnings used in the calculation of total basic earnings per share and basic earnings reconciles to net profit in the income statement as follows:

		Consolidated
	2007 \$'000	2006 \$'000
Net profit	11,235	4,352
Earnings used in the calculation of basic EPS	11,235	4,352

Diluted earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:

	2007 \$'000	2006 \$'000
Earnings (a)	11,235	4,352
	2007 No. '000	2006 No. '000
Weighted average number of shares (b)	121,621	74,921

In accordance with AASB3 'Business Combinations' the prior year comparative has been amended. Refer note 4 for details on the accounting for the acquisition.

(a) Earnings used in the calculation of total diluted earnings per share reconciles to net profit in the income statement as follows:

	2007 \$'000	2006 \$'000
Net profit	11,235	4,352
Earnings used in the calculation of diluted EPS	11,643	4,352

(b) The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:

	Consolidated
	2007 No. '000	2006 No. '000
Weighted average number of ordinary shares used in the calculation of basic EPS	105,407	62,405
Shares deemed to be issued for no consideration in respect of:
Options	16,214	12,516
Weighted average number of ordinary shares used in the calculation of diluted EPS	121,621	74,921

Notes to the financial statements

		2007		2006
		Cents per share	Total \$'000	Cents per share	Total \$'000
25.	Dividends
	Recognised amounts
	Fully paid ordinary shares
	Interim dividend:	3.0	4,200	4.7	5,152
	Special dividend:	-	-	1.7	1,863
	Franked to 100 % (Prior year: 100%)	3.0	4,200	6.4	7,015
	Unrecognised amounts
	Fully paid ordinary shares
	Final dividend
	Franked to 100% (Prior year: 100% )	4.5	6,337	7.2	7,892

Refer note 4 for details on the accounting for the acquisition.

On 23 August 2007, the directors declared a fully franked final dividend of 4.5 cents per share to the holders of fully paid ordinary shares in respect of the financial year ended 30 June 2007, to be paid to shareholders on 19 October 2007. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. If approved, the dividend will be paid to all shareholders on the Register of Members on 5 October 2007. The total estimated dividend to be paid is \$6,337 thousand.

	Company
	2007 \$'000	2006 \$'000
Adjusted franking account balance as at 30 June	6,026	5,674
Impact on franking account balance of dividends not recognised	(3,017)	(2,349)
Income tax consequences of unrecognised dividends	-	-

26. Leases

Finance leases

Leasing arrangements

The Group leases a number of motor vehicles with lease terms of between 1 to 4 years.

The Group has options to purchase the vehicles for a nominal amount at the conclusion of the lease agreements.

Finance lease liabilities

		Minimum future lease payments				Present value of minimum future lease payments
	Consolidated		Company		Consolidated		Company
	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
Not longer than 1 year	1,581	807	-	-	1,581	807	-
Later than 1 year and not later than 5 years	2,116	863	-	-	2,116	863	-
Total minimum lease payment*	3,697	1,670	-	-	3,697	1,670	-
Less future finance charges	(415)	(165)	-	-	(415)	(165)	-
Lease liability	3,282	1,505	-	-	3,282	1,505	-
Included in the financial statements as:
Interest-bearing liabilities
Current liabilities (Note 19)					1,354	707	-
Non-current liabilities (note 19)					1,928	798	-
					3,282	1,505	-

* Minimum future lease payments includes the aggregate of all lease payments and any guaranteed residual.

26. Leases (continued)

Operating leases

Leasing arrangements

The consolidated entity leases a number of premises throughout Australia. The rental period of each individual lease agreement varies between 1 and 6 years with the renewal options ranging from 1 to 6 years. The majority of lease agreements are subject to rental adjustments in line with movements in the Consumer Price Index or market rentals.

	Consolidated			Company
	2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
Non-cancellable operating lease commitments
Not later than 1 year	3,013	1,367	559	897
Later than 1 year and not later than 5 years	7,863	325	448	802
	10,876	1,692	1,007	1,699

27. Subsidiaries

		Ownership interest
	Country of	2007	2006
Name of entity	incorporation	%	%
Parent entity
Service Stream Limited (i) (ii)	Australia
Subsidiaries
Service Stream Holdings Pty Ltd (iii) (v) (vi)	Australia	100	100
Service Stream Communications Pty Ltd (iii) (v) (vi)	Australia	100	100
Resourcing Solutions Pty (iii) (iv) (vii)	Australia	100	100
Total Communications Infrastructure Pty Limited (formerly	Australia	100	100
Communication Services Australia Consulting Pty Ltd) (iii) (iv)
(vi)
Service Stream Solutions Pty Ltd (iii) (v) (vi)	Australia	100	100
Radhaz Consulting Pty Ltd (iii) (iv)	Australia	100	-
General Purpose Group Pty Ltd (iii) (iv) (vi)	Australia	100	-
Fibercom Technology Pty Limited (iii) (iv) (vi)	Australia	100	-
Service Stream Infrastructure Services Pty Ltd (iii) (iv) (vi)	Australia	100	-
Milcom Communications Pty Ltd (iii) (iv) (vi)	Australia	100	100
Total Communications Infrastructure (Singapore) Pte Ltd (viii)	Singapore	100	-

(i) On 20 December 2006, the merger between Service Stream Limited and Service Stream Holdings Limited was completed. On this date, Service Stream Limited became the legal parent of Service Stream Holdings Limited (refer note 4).

(ii) Service Stream Limited is the head entity within the tax consolidated group.

(iii) These companies are members of the tax consolidated group.

(iv) These controlled entities are classified as small proprietary companies and, in accordance with the Corporations Act 2001, are relieved from the requirement to prepare, audit and lodge financial reports.

(v) These controlled entities are classified as large proprietary companies and, in accordance with the Corporations Act 2001, are required to prepare, audit and lodge financial reports.

(vi) These companies are wholly owned subsidiary of Service Stream Holdings Pty Ltd.

(vii) This company is a wholly owned subsidiary of Service Stream Communications Pty Ltd

(viii) This company was incorporated in June 2007.

28. Acquisition of businesses

		Date of	Proportion of shares	Cost of acquisition
Names of businesses acquired	Principal activity	acquisition	acquired (%)	\$'000
2006
Milcom Communications Pty Ltd	Registered Training Organisation	4 Jan 2006	100%	3,054
2007
Fibercom Technology Pty Ltd	Services in Telecommunications Industry	1 Jul 2006	100%	2,372
Service Stream Limited Refer note 4	Services in Telecommunications Industry	20 Dec 2006	50.5%	147,580
General Purpose Group Pty Ltd	Services in Telecommunications Industry	10 Jan 1007	100%	4,365

(a) Acquisition of the Milcom Communications Pty Limited

Consideration for the acquisition of Milcom Communications Pty Ltd was represented by \$1.5 million in cash, shares of \$0.5m and deferred cash consideration, are contingent upon the business achieving certain performance targets, of \$1.0m. Included in the net profit for the period is \$0.78 million attributable to the additional business generated by Milcom Communications Pty Ltd. Had these business combinations been effected at 1 July 2005, the revenue of the consolidated entity would increase to \$1.612 million and net profit would increase to \$0.15 million.

This acquisition has now been finalised.

		Milcom Communications Pty Ltd
Net assets acquired	Book value \$'000	Fair value adjust ment \$'000	Fair value on acquisi tion \$'000	Total fair value on acquisition \$'000
Current assets
Cash	80	-	80	80
Receivables	180	-	180	180
Other	28	-	28	28
Current liabilities
Payables	(129)	-	(129)	(129)
Other	(172)	13	(159)	(159)
	(13)	13	-	-
Goodwill on acquisition				3,054
Total consideration				3,054

The group has paid a premium for the acquiree as it believes the acquisition will create synergistic benefits to its existing operations.

28. Acquisition of businesses (continued)

(b) Acquisition of Fibercom Technology Pty Ltd

Consideration of the acquisition of Fibercom Technology Pty Ltd consists of \$1.43 million in cash and deferred cash consideration, are contingent upon the business achieving certain performance targets, of \$0.94 million.

The Group result includes a full year of the results of Fibercom Technology Pty Ltd. Included in the net profit for the period is \$0.1 million and revenue of \$3.30 million attributable to the additional business generated by Fibercom Technology Pty Ltd.

This acquisition has now been finalised.

		Fibercom Technology Pty Ltd
	Book	Fair	Fair
	value	value	value on	Total fair
		adjust	acquisi	value on
Net assets acquired	\$'000	ment \$'000	tion \$'000	acquisition \$'000
Current assets
Cash	342	-	342	342
Receivables	551	-	551	551
Other	177	36	213	213
Non-current assets
Plant and equipment	428	-	428	428
Current liabilities
Payables	(580)	(9)	(589)	(589)
Borrowings	(561)	-	(561)	(561)
Other	(269)	(75)	(344)	(344)
	88	(48)	40	40
Goodwill on acquisition				2,332
Total consideration				2,372

The group has paid a premium for the acquiree as it believes the acquisition will create synergistic benefits to its existing operations.

(c) The Merger of Service Stream Limited and Service Stream Holdings Pty Ltd

As stated in note 4, the Merger of Service Stream Limited and Service Stream Holdings Limited became effective on 20 December 2006. Service Stream Holdings Limited has been deemed the accounting acquirer in the business combination. Consideration for the acquisition of Service Stream Limited consists of \$33.65 million in cash, deferred cash consideration of \$10.0 million payable during December 2008 and \$103.93 million in notional cost of equity instruments issued.

Included in the net profit for the period was \$4.5 million attributable to the additional business generated by Service Stream Limited and revenue of \$33.87 million. Had the business combination been effected from 1 July 2006, the revenue of the consolidated entity would increase by \$42.37 million and net profit would increase by \$8.42 million.

As at 30 June 2007 the acquisition has been provisionally determined.

	Service Stream Ltd
	Book	Fair	Fair
	value	value adjust	value on acquisi	Total fair value on
		ment	tion	acquisition
Net assets acquired	\$'000	\$'000	\$'000	\$'000
Current assets
Cash	14,441	-	14,441	14,441
Receivables	4,354	-	4,354	4,354
Other	18,382	(560)	17,822	17,822
Non-current assets
Plant and equipment	304	-	304	304
Current liabilities
Payables	(16,969)	(303)	(17,272)	(17,272)
Other	(1,752)	-	(1,752)	(1,752)
	18,760	(863)	17,897	17,897
Goodwill on acquisition				129,683
Total consideration				147,580

28. Acquisition of businesses (continued)

The group has paid a premium for the acquiree as it believes the acquisition will create synergistic benefits to its existing operations.

(d) Acquisition of General Purpose Group Pty Ltd

Consideration of the acquisition of General Purpose Group Pty Ltd consists of \$0.70 million in cash and deferred cash consideration, based on contingent upon the business achieving certain performance targets, of \$3.66 million.

Included in the net profit for the period is \$0.21 million and revenues of \$2.57 million attributable to the additional business generated by General Purpose Group Pty Ltd. Had these business combinations been effected from 1 July 2006, the revenue of the consolidated entity would increase by \$3.00 million and net profit would increase by \$0.54 million. As at 30 June 2007 the acquisition has been provisionally determined.

	General Purpose Group Pty Ltd
	Book value	Fair value adjust ment	Fair value on acquisi tion	Total fair value on acquisition
Net assets acquired	\$'000	\$'000	\$'000	\$'000
Current assets
Cash	289	-	289	289
Receivables	1,046	-	1,046	1,046
Other	381	-	381	381
Non-current assets
Plant and equipment	317	-	317	317
Current liabilities
Payables	(437)	-	(437)	(437)
Borrowings	(329)	-	(329)	(329)
Other	(337)	-	(337)	(337)
	930	-	930	930
Goodwill on acquisition				3,435
Total consideration				4,365

The group has paid a premium for the acquiree as it believes the acquisition will create synergistic benefits to its existing operations.

\$'000

2006 \$'000

2007 \$'000

2006 \$'000

Consolidated Company

29. Notes to the cash flow statement

(a) Reconciliation of cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the cash flow statement is reconciled to the related items in the statement of financial position as follows:

2007

Bank Balances	5,248	2,048	415	7,770
Call Deposits	-	-	-	4,000
Cash and cash equivalents	5,248	2,048	415	11,770

29. Notes to the cash flow statement (continued)

(b) Businesses acquired

During the financial year the group acquired 3 entities. The net cash outflow on acquisition was \$20.6 million. Refer to note 28 for further details of these acquisitions.

(c) Non-cash financing and investing activities

As disclosed in note 4, the notional cost of equity of \$104 million was deemed to be issued by Service Stream Holdings Pty Ltd

			Consolidated		Company
		2007 \$'000	2006 \$'000	2007 \$'000	2006 \$'000
(d)	Financing facilities
	Secured bank guarantee:
	• amount used	2,358	1,395	-	-
	• amount unused	1,642	605	-	-
		4,000	2,000	-	-
	Secured bank bill and equipment finance facilities with various maturity dates through to 31 August 2010 and which may be extended by mutual agreement:
	• amount used	35,457	5,000	-	-
	• amount unused	22,043	13,000	-	-
		57,500	18,000	-	-
(e)	Reconciliation of profit for the period to net cash flows from operating activities
	Profit for the period	11,235	4,352	8,353	14,064
	Net (profit)/loss on disposal of fixed assets	(82)	(136)	-	87
	Net profit on sale of shares	(1,262)	-	-	-
	Depreciation and amortisation of non
	current assets	2,684	1,547	237	430
	Equity settled share-based payment	686	38	686	-
	Doubtful debts	(212)	201	1,569	(1,036)
	Bad debts	12	-	-	-
	(Increase)/decrease in deferred tax assets	4	97	(389)	(254)
	Increase/(decrease) in current tax liability	3,109	1,120	705	1,693
	Add back/(subtract) changes in operating assets and liabilities. (Increase)/decrease in assets:
	Current receivables	(25,298)	(5,060)	3,078	(12,071)
	Current inventories	(504)	(219)	-	-
	Other current assets	1,162	(1,911)	(10,089)	2,168
	Increase/(decrease) in liabilities:
	Current payables	11,953	5,800	2,047	2,105
	Current provisions	1,478	1,583	(48)	(75)
	Non-current provisions
	Other non-current liabilities	242	277	47	39
	Net cash provided/(used by) operating
	activities	5,207	7,689	6,196	7,150

30. Financial instruments

(a) Financial risk management objectives

The consolidated entity's corporate treasury function provides services to the business and manages the financial risks relating to the operations of the consolidated entity.

The consolidated entity does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The use of financial derivatives is governed by the consolidated entity's policies approved by the board of directors, which provide written principles on the use of financial derivatives. Compliance with policies and exposure limits is reviewed by the directors on a continuous basis.

(b) 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 income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements.

(c) Interest rate risk management

The consolidated entity is exposed to interest rate risk as it borrows funds at both fixed and floating interest rates. The risk is managed by maintaining an appropriate mix between fixed and floating rate borrowings.

Maturity profile of financial instruments

The maturity profile of financial assets and financial liabilities held by the Group are as follows:

	Weighted	Variable			Fixed maturity dates				Non
	average	interest	Less	1-2	2-3	3-4	4-5	5+ years	interest	Total
	effective	rate	than 1	years	years	years	years		bearing
	interest rate		year
2007	%	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Financial assets:
Cash	4.1%	5,248	-	-	-	-	-	-	-	5,248
Receivables		-	-	-	-	-	-	-	57,342	57,342
Investments		-	-	-	-	-	-	-	700	700
		5,248	-	-	-	-	-	-	58,042	63,290
Financial liabilities:
Trade payables		-	-	-	-	-	-	-	47,910	47,910
Deferred purchase
consideration	6.2%	-	12,570	3,571	-	-	-	-	-	16,141
Commercial bills	7.9%	-	3,300	3,300	3,300	3,300	3,300	15,675	-	32,175
Finance lease/hire
purchase liabilities	7.7%	-	1,354	1,157	771	-	-	-	-	3,282
Employee benefits									9,379	9,379
		-	17,224	8,028	4,071	3,300	3,300	15,675	57,289	108,887

	Weighted	Variable			Fixed maturity dates				Non
	average effective interest rate	interest rate	Less than 1 year	1-2 years	2-3 years	3-4 years	4-5 years	5+ years	interest bearing	Total
2006	%	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000	\$'000
Financial assets:
Cash	3.0%	2,042	-	-	-	-	-	-	6	2,048
Receivables		-	-	-	-	-	-	-	24,889	24,889
Investments		-	-	-	-	-	-	-	962	962
		2,042	-	-	-	-	-	-	25,857	27,899
Financial liabilities:
Trade payables		-	-	-	-	-	-	-	19,455	19,455
Commercial bills Finance lease/hire	6.7%	-	-	-	5,000	-	-	-	-	5,000
purchase liabilities	7.9%	-	-	-	1,505	-	-	-	-	1,505
Employee benefits		-	-	-	-	-	-	-	2,295	2,295
		-	-	-	6,505	-	-	-	21,750	28,255

30. Financial instruments (continued)

(d) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The consolidated entity exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded are spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the audit committee annually. The consolidated entity measures credit risk on a fair value basis.

Trade accounts receivable consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased.

The consolidated entity does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the consolidated entity's maximum exposure to credit risk without taking account of the value of any collateral obtained.

(e) Fair value of financial instruments

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

The fair values and net fair values of financial assets and financial liabilities are determined as follows:

• the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices.

The financial statements include holdings in unlisted subsidiaries (note 27). Fair value is estimated using a discounted cash flow model, which includes some assumptions that are not supportable by observable market prices or rates. Changes in these assumptions do not significantly change the fair value recognised.

Transaction costs are included in the determination of net fair value.

(f) Liquidity risk management

The consolidated entity 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.

31. Executive share option plan

The directors can, at their discretion, issue share options to key management personnel as part of the group's remuneration policy.

31. Executive share option plan (continued)

The following share-based payment arrangements were in existence during the current and comparative reporting periods:

Options series	Number	Grant date	Expiry date	Exercise price \$	Fair value at grant date \$

Series 1	6,800,000	04/01/2007	31/12/2007	0.6250	-
Series 2	3,352,000	04/01/2007	31/10/2009	0.6250	-
Series 3	924,000	04/01/2007	31/10/2009	0.9375	4,032
Series 4	924,000	04/01/2007	31/10/2009	1.2500	4
Series 5	96,000	04/01/2007	01/01/2010	0.6250	10,240
Series 6	32,000	04/01/2007	01/01/2010	0.9375	202
Series 7	32,000	04/01/2007	01/01/2010	1.2500	-
Series 8	200,000	04/01/2007	01/03/2011	0.6250	26,253
Series 9	80,000	04/01/2007	07/03/2010	0.6500	9,876
Series 10	200,000	04/01/2007	31/10/2009	0.9750	7,465
Series 11	20,000	04/01/2007	31/10/2009	0.6250	6,393
Series 12	2,020,000	04/01/2007	01/01/2011	0.9900	572,184
Series 13	2,020,000	04/01/2007	01/01/2011	1.0800	475,762
Series 14	2,020,000	04/01/2007	01/01/2011	1.2000	366,597
Series 15	500,000	04/01/2007	31/10/2011	1.1250	38,340
Series 16	730,000	04/01/2007	31/10/2011	1.6800	73,445
	19,950,000

All options have vested.

	Option series
Inputs into the model	Series 12	Series 13	Series 14	Series 15	Series 16
Grant date share price (cents)	1.30	1.30	1.30	0.980	1.46
Exercise price	0.99	1.08	1.20	1.125	1.68
Expected volatility	20%	20%	20%	20%	20%
Option life (years)	4.8	4.8	4.8	4.8	4.8
Dividend yield	3.6%	3.6%	3.6%	6.0%	6.6%
Risk-free interest rate	5.1%	5.1%	5.1%	5.1%	5.1%

31. Executive share option plan (continued)

The following reconciles the outstanding share options granted under the executive share option plan at the beginning and end of the financial year:

	2007		2006
	Number of options	Weighted average exercise price \$	Number of options	Weighted average exercise price \$
Balance at beginning of the financial year	-	-	30,900,000	0.231
Issued as part of merger	12,660,000	0.7015	-
Granted during the financial year	7,290,000	1.1515	750,000	0.363
Exercised during the financial year (i)	(200,000)	0.6250	-
Expired during the financial year	-		-
Balance at end of the financial year (ii)	19,750,000	0.8684	31,650,000	0.280
Exercisable at end of the financial year	13,690,000	0.7568	29,260,000	0.262

(i) Exercised during the financial year

The following share options granted under the executive share option plan were exercised during the financial year:

2007 Options series	Number exercised	Exercise date	Share price at exercise date \$
Series 8	200,000	29/06/2007	\$1.88

2006	Number		Share price at exercise date
Options series	exercised	Exercise date	\$
Nil	-	-	-

(ii) Balance at end of the financial year

The share options outstanding at the end of the financial year had an exercise price of \$0.868 and a weighted average remaining contractual life of 894 days.

32. Key management personnel compensation

The key management personnel of Service Stream Limited during the year were:
J L Davies (Chairman)
P J Flannigan (Managing Director & Chief Executive Officer)
M Doery (Executive Director & Chief Financial Officer)
A Field (Non-executive Director)
R Small (Non-executive Director)
R Stanton (Executive Director)
S Wilks (Non-executive Director)
J Cooney (resigned 20 December 2006)
T Duff (resigned 20 December 2006)
M Stackpool (resigned as Director 20 December 2006)
I Thorley (resigned 20 December 2006)
S Campbell (Company Secretary & Group Financial Controller Service Stream Limited)
J Caporale (Executive General Manager Service Stream Communications Pty Ltd)
J Gramc (Executive General Manager Service Stream Solutions Pty Ltd)
G Kenyon (Group Human Resources Executive Service Stream Limited)
A Legge (Group Technology Executive Service Stream Limited)
I Millner (Executive General Manager Milcom Communications Pty Ltd)

32. Key management personnel compensation (continued)

The aggregate compensation of the key management personnel of the consolidated entity and the company is set out below:

		Consolidated		Company
	2007 \$	2006 \$	2007 \$	2006 \$
Short-term employee benefits	3,443,679	2,513,705	950,228	1,695,224
Post-employment benefits	324,321	132,013	87,422	176,376
Share-based payment	1,713,995	1,493	573,995	-
	5,481,995	2,647,211	1,611,645	1,871,600

Refer to Directors' report for further details.

33. Related party disclosures

(a) Equity interests in related parties

Equity interests in subsidiaries

Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 27 to the financial statements.

(b) Transactions with key management personnel

(i) Key management personnel equity holdings

Details of key management personnel equity holdings are as follows:

Fully paid ordinary shares issued in Service Stream Limited

	Balance@ 1/7/06	Granted as remuneration	Received on exercise of options	Net other change	Balance@ 30/06/07
2007	No.	No.	No.	No.	No.
Directors
J. Davies	-	-	-	100,000	100,000
P. Flannigan	-	400,000	-	403,052	803,052
M. Doery	-	400,000	-	603,052	1,003,052
A. Field	-	-	-	2,671,026	2,671,026
R. Small	-	-	-	2,621,026	2,621,026
R. Stanton	400,000	-	-	60,000	460,000
J. Cooney	49,324,308	-	-	(49,324,308)	-
T. Duff	58,000	-	-	-	58,000
M. Stackpool	300,000	-	-	-	300,000
I. Thorley	100,000	-	-	-	100,000
	50,182,308	800,000	-	(42,866,152)	8,116,156

2007	Balance@ 1/7/06	Granted as remuneration	Received on exercise of options	Net other change	Balance@ 30/06/06
	No.	No.	No.	No.	No.
Executives
S . Campbell	-	-	-	60,478	60,478
J. Gramc	-	-	200,000	-	200,000
Total	-	-	200,000	60,478	260,478

Notes to the financial statements

33. Related party disclosures (continued)

	Balance@ 1/7/05	Granted as remuneration	Received on exercise of options	Net other change	Balance@ 30/06/06
2006	No.	No.	No.	No.	No.
Directors
R. Stanton	400,000	-	-	-	400,000
J. Cooney	49,324,308	-	-	-	49,324,308
T. Duff	58,000	-	-	-	58,000
M. Stackpool	330,000	-	-	(30,000)	300,000
I. Thorley	100,000	-	-	-	100,000
	50,212,308	-	-	(30,000)	50,182,308

Share options issued in Service Stream Limited

	Bal @ 30/06/06	Granted as remuneration	Net other change	Exercised	Bal @ 30/06/07	Bal vested @ 30/06/07	Vested but not exerci	Balance Vested and	Options vested
							sable	exercisable	during year 2007
2007
	No.	No.	No.	No.	No.	No.	No.	No.	No.
Directors
P. Flannigan	-	2,400,000	1,800,000	-	4,200,000	4,200,000	2,400,000	1,800,000	4,200,000
M. Doery	-	2,160,000	1,640,000	-	3,800,000	3,800,000	2,160,000	1,640,000	3,800,000
A. Field	-	-	2,266,667	-	2,266,667	2,266,667	-	2,266,667	2,266,667
R. Small	-	-	2,266,667	-	2,266,667	2,266,667	-	2,266,667	2,266,667
R. Stanton	-	2,000,000	-	-	2,000,000	2,000,000	1,500,000	500,000	2,000,000
Total	-	6,560,000	7,973,334	-	14,533,334	14,533,334	6,060,000	8,473,334	14,533,334
Executives
S. Campbell	-	-	40,000	-	40,000	40,000	-	40,000	40,000
J. Gramc	-	-	200,000	(200,000)	-	-	-	-	-
Total	-	-	240,000	(200,000)	40,000	40,000	-	40,000	40,000

All executive share options issued to key management personnel during the financial year were made in accordance with the provisions of the executive share option plan. As at 30 June 2006, there were no share options in existence.

(c) Other transactions with key management personnel (and their related parties) of Service Stream Limited

Consulting fees of \$225,000 (2006: \$360,000) were paid to Communication Services Australia (Holdings) Pty Ltd, in which Mr Small and Mr Field have a beneficial interest. This is in accordance with the consultancy agreement.

(d) Transactions with other related parties

Other related parties include:

the parent entity;
subsidiaries; and
other related parties.

Details of write-downs of receivables in respect of transactions with these related parties are disclosed in note 9 to the financial statements. No amounts were provided for doubtful debts relating to debts due from related parties at reporting date (2006: nil).

33. Related party disclosures (continued)

Transactions involving the legal parent entity

During the financial year, Service Stream Limited recognised a net receivable of \$2.5m (2006: \$2.3ml) from its wholly-owned subsidiaries for their tax payable for the current period.

During the financial year, Service Stream Limited rented premises from an associate at commercial rates totaling \$77,000 (2006: \$77,000).

(e) Parent entities

As outlined in note 4, the acquiring entity in the consolidated entity is Service Stream Holdings Pty Ltd. The legal parent entity is Service Stream Limited

		Consolidated		Company
		2007	2006	2007	2006
34.	Remuneration of auditors	\$	\$	\$	\$
	Auditor of the parent entity
	Audit or review of the financial report	236,000	198,076	50,000	42,909
	Other non-audit related services (i)	40,200	-	-	1,500
		276,200	198,076	50,000	44,409

(i) Non-audit services relates to IT systems security reviews

The auditor of Service Stream Limited is Deloitte Touche Tohmatsu. In the prior year the auditor of the parent entity was V J Ryan & Co. During the year V J Ryan & Co resigned as auditor. The directors appointed Deloitte Touche Tohmatsu as their successor.

35. Subsequent events

Effective 1 July 2007 Service Stream Limited acquired the metering division of Serviceworks Management Pty Ltd. The consideration for this acquisition was \$0.28 million in cash. An additional purchase consideration of up to \$2.22 million is contingent upon the business achieving certain performance targets.

AI assistant

SERVICE STREAM LIMITED — Annual Report 2007

65865_rns_2007-08-22_763d8f55-a3be-45db-b7b8-19f7a05e80db.pdf

Service Stream Limited (formerly Total

Appendix 4E

SERVICE STREAM LIMITED

DETAILS OF THE REPORTING PERIOD

RESULTS FOR ANNOUNCEMENT TO THE MARKET

PRO FORMA RESULTS *

Commentary on pro forma result

Service Stream Limited (formerly Total Communications Infrastructure Limited)

Annual financial report for the financial year ended 30 June 2007

Page

Corporate governance statement

1. Roles of the Board and management

2. Structure of the Board

Committees

Appointment of directors

3. Ethical business practices

Dealing in Company shares by directors, officers and employees

4. Safeguard integrity

5. Timely and balanced disclosure of material matters

6. Rights of shareholders

7. Risk management

8. Encourage enhanced performance

9. Fair and responsible remuneration

10. Stakeholder interests

Directors' report

Former Directors

Directorships of other listed companies

Company Secretary

Stephen Campbell

Principal activities

Review of operations

Changes in state of affairs

Subsequent events

Future developments

Environmental regulations

Dividends

Share options

(i) Exercised during the financial year

(ii) Balance at end of the financial year

Share options granted to directors and executives

Indemnification of officers and auditors

Directors' meetings

Remuneration report

Director and executive details

Remuneration policy for directors and executives

Fixed Remuneration

Variable Remuneration

Short Term Incentive Plan ("STIP").

Long Term Incentive Payments ("LTIP")

Reward and Recognition or Non Financial Reward

High Performance Recognition

Discretionary Bonuses

Elements of remuneration related to performance

Elements of director and executive remuneration

The following table discloses the remuneration of the directors of the company whilst directors:

Value of options issued to directors and executives

The following table discloses the value of options granted, exercised or lapsed during the year:

Value of options - basis of calculation

Directors and executive equity holdings

Share options of Service Stream Limited

Income statement for the financial year ended 30 June 2007

Balance sheet as at 30 June 2007

Statement of changes in equity for the financial year ended 30 June 2007

Cash flow statement for the financial year ended 30 June 2007

Notes to the financial statements for the financial year ended 30 June 2007

1. General information

2. Adoption of new and revised Accounting Standards

2. Adoption of new and revised Accounting Standards (continued)

3. Summary of accounting policies

Statement of compliance

Basis of preparation

Defined contribution plans

(f) Financial assets

Loans and receivables

Debt and equity instruments

Financial liabilities

Financial liabilities at fair value through profit or loss

SERVICE STREAM LIMITED Annual Report 2007