SERVICE STREAM LIMITED — Interim / Quarterly Report 2011

Feb 21, 2011

ABN 46 072 369 870

Appendix 4D Half-Year Ended 31 December 2010

(Previous corresponding period: Half-year ended 31 December 2009)

Results For Announcement to the Market

Half year to		31 Dec 10 \$'000	% change	31 Dec 09 \$'000
Revenue from ordinary activities	Up	300,329	12.7%	266,442
Profit/(Loss) from ordinary activities after tax attributable to members	Up	7,789	n/a	(8,647)
Net profit/(loss) attributable to members	Up	7,789	n/a	(8,647)

Dividends

No interim dividend has been declared by the board for the half year ended 31 December 2010 (31 December 2009: nil).

Net Tangible Asset Backing	31 Dec 10	30 Jun 10	31 Dec 09
	\$	\$	\$
Consolidated net tangible assets per share	0.1311	0.0999	0.0793

Service Stream Limited Level 1, 355 Spencer Street West Melbourne, VIC, 3003 PO Box 14570 Melbourne, VIC 8001 www.servicestream.com.au

Tel: 61 3 9677 8888 Fax: 61 3 9677 8888 ABN: 46 072 369 870

ASX & Media Release 22 February 2011

Service Stream returns to profitability with a strong outlook

Service Stream Limited (ASX: SSM) today confirmed its results for the half year ended 31 December 2010.

Half-Year Results Highlights

• Revenue of \$300.3 million
• EBITDA of \$16.1 million
• Revenue from the AMRS business up 154.4% due to new environmental programs
• Revenues from the Telstra A&AS contract up 6.9% on the back of new Western Region patches
• Increase in EBITDA margin from 5.1% to 5.4%

Financial Results

Half-Year to 31 December	2010 (\$ million)	2009 (\$ million)	Change (\$ million)	Change %
Revenue	300.3	266.4	 33.9	12.7%
Underlying EBITDA	16.1	13.7	 02.4	17.5%
Reported EBITDA	16.1	(5.1)	 21.2	n/a
EBIT	13.0	(8.6)	 21.6	n/a
NPAT	7.8	(8.6)	 16.4	n/a
EPS (cents)	2.75	(3.74)	 6.49	n/a

Results Commentary

The result for the six months to December 2010 reflects a period of improved performance. Revenue for the period of \$300.3 million was up by \$33.9 million or 12.7% against the prior corresponding period. This increase was driven primarily by the metering and environmental services business (AMRS) within the company's Specialist Field Services segment. This business grew revenue by \$51.1 million due primarily to new environmental programs with Origin Energy (installation of residential solar systems) and Local Government Infrastructure Services (Queensland ClimateSmart Home Service program).

The Company reported EBITDA of \$16.1 million, up \$2.4 million or 17.5% compared to the underlying result for the previous corresponding period. This result was underpinned by solid performances from all the businesses within the Specialist Field Services segment.

Operational Summary

Specialist Field Services

The Specialist Field Services segment delivered an improved result with an EBITDA contribution of \$18.2 million on operating revenue of \$271.9 million. The EBITDA margin of 6.7% was a positive improvement on the 6.2% recorded in the prior comparative period.

AMRS provided the largest contribution to the increase in both revenue and EBITDA. Revenue and EBITDA increased by 154.4% and 78.9% respectively in AMRS due to new environmental programs with Origin Energy and LGIS. During the period AMRS signed three significant contracts; a new two year contract with Origin with targeted volume of 48,000 residential solar system installations at a contract value likely to exceed \$300.0 million, extensions to install more than 750,000 smart meters across the Jemena, United Energy and Citipower / Powercor distribution networks as part of the Victorian Government's Advanced Metering Infrastructure (AMI) roll-out to be completed by June 2013, worth in excess of \$40.0 million, and a four year meter reading contract with WA Gas Networks worth \$8.0 million.

The Communications business delivered EBITDA of \$7.1 million on revenue of \$137.9 million which were both in line with the prior comparative period. Additional earnings generated from the new Western Region patches under the Telstra Access and Associated Services (A&AS) contract were offset by reduced earnings from Payphones and non-recurring fibre cable roll out work undertaken in the comparative period.

The TCI business (including Infrastructure Services) delivered EBITDA of \$4.3 million (up 43.3%) on revenue of \$49.8 million which was slightly down on the six months to December 2009. The decrease in revenue is the result of the closure of the non-performing McCourt Dando and GPG businesses, whilst the improved EBITDA result reflects the strength of the core TCI business which continued to grow due to high customer demand for the business' mobile telephony expertise.

Customer Care

The Customer Care segment performed in line with expectations with an EBITDA contribution of \$1.9 million on revenue of \$30.5 million. Revenue was down 27.8% due to the relocation of the Vodafone call centre offshore, whilst EBITDA fell 36.7% largely as a result of reduced margins in the mobile handset insurance business. Under the recently signed Origin Energy contract, Customer Care will be providing the end to end customer interface, including sales, customer liaison in respect to the scheduling of residential solar system installations and post installation contact. Service Stream's ability to offer this range of customer care is unique within the residential solar system installation industry and provides Service Stream with a key point of differentiation.

Capital Management

The substantial growth in revenue along with traditional H1:H2 timings on certain expenditures negatively impacted the company's working capital by \$11.2 million during the period. Despite these impacts, the company reported a modest operating cash inflow of \$2.3 million for the six months compared to an operating cash outflow of (\$0.9m) for the prior corresponding period.

The directors do not propose to pay an interim dividend since additional revenue growth from existing businesses and new opportunities such as NBN are likely to impact working capital further.

Income Tax

As a result of an amendment to the income tax legislation in 2010, Service Stream has lodged a series of objections with the Australian Tax Office in relation to the tax treatment of acquisitions made in the past. The amount of the additional tax deductions being claimed by Service Stream in respect of prior years is \$40.5m which, if approved in full, would result in a tax refund to the company of \$12.1m. The amount of the tax claim relevant to current and future years' deductions is \$0.5m.

No amounts have been recorded in the consolidated entity's financial statements for the half year ended 31 December 2010 as the matter is pending review by the ATO. Service Stream expects the outcome of the claim to be clarified prior to the announcement of the 2011 full year results.

Outlook

Service Stream is optimistic about its growth prospects in the medium term. A return to core capabilities, together with an anticipated rebound in demand suggests a return to solid growth. The company expects full year EBITDA for the 2011 financial year to be \$34.0 million and an NPAT of approximately \$16.1 million, excluding any impact of the one-time tax benefit referred to above.

For further details contact:

Service Stream Limited Service Stream Limited Graeme Sumner, Managing Director Bob Grant, Chief Financial Officer Tel: (61 3) 9677 8817 Tel: (61 3) 9677 8817

About Service Stream Limited:

Service Stream is a public company listed on the Australian Stock Exchange (Code: SSM) with annualised revenues approaching A\$600 million. The company is an industrial services enterprise with proven outsourced infrastructure deployment, management and service capabilities across 55 locations throughout Australia. Service Stream's technical staff of over 4,000 supports large asset owners on the deployment, management and servicing of essential network infrastructure in the telecommunication, electricity, water and gas sectors. For more information please visit the Company's website at www.servicestream.com.au.

ABN 46 072 369 870

Financial report for the half-year ended 31 December 2010

Financial report for the half-year ended 31 December 2010

Page Number

Directors' report	1
Auditor's independence declaration	2
Independent review report	3
Directors' declaration	4
Condensed consolidated statement of comprehensive income	5
Condensed consolidated statement of financial position	6
Condensed consolidated statement of changes in equity	7
Condensed consolidated statement of cash flows	8
Notes to the condensed consolidated financial statements	9 - 11

Directors' Report

The directors of Service Stream Limited and its subsidiaries (the "Company") submit herewith the financial report of the Company for the half-year ended 31 December 2010. In order to comply with the provisions of the Corporations Act 2001, the directors' report as follows:

The names of the directors of the Company during or since the end of the half-year are:

Mr P Dempsey (appointed 1 November 2010) Mr B Gallagher Mrs D Page (appointed 21 September 2010) Mr R Small (resigned 7 October 2010) Mr G Sumner Mr S Wilks Mr R Grant (appointed as alternate director for Mr Sumner on 23 December 2010)

Review of Operations

For a detailed review of operations for the half-year ended 31 December 2010 refer to the commentary in the Appendix 4D. Highlights for the half year include:

Half-Year to 31 December	2010 (\$ million)	2009 (\$ million)	Change (\$ million)	Change %
Revenue	300.3	266.4	 33.9	12.7%
Underlying EBITDA	16.1	13.7	 02.4	17.5%
Reported EBITDA	16.1	(5.1)	 21.2	n/a
EBIT	13.0	(8.6)	 21.6	n/a
NPAT	7.8	(8.6)	 16.4	n/a
EPS (cents)	2.75	(3.74)	 6.49	n/a

Auditor's Independence Declaration

The auditor's independence declaration is included on page 2 of the half-year financial report.

Rounding off of Amounts

The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the directors' report and the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

The directors' report is signed in accordance with a resolution of the directors made pursuant to s.306(3) of the Corporations Act 2001.

On behalf of the Directors

Peter Dempsey Graeme Sumner Chairman Managing Director Melbourne Melbourne 21 February 2011 21 February 2011

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Deloitte Touche Tohmatsu ABN 74 490 121 060

550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

DX 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au

The Board of Directors Service Stream Limited Level 1, 355 Spencer Street WEST MELBOURNE VIC 3003

21 February 2011

Dear Board Members

Auditors Independence Declaration to Service Stream Limited

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

As lead audit partner for the review of the half year financial statements of Service Stream Limited for the half year ended 31 December 2010, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review
• (ii) any applicable code of professional conduct in relation to the review.

Yours faithfully

DELOITTE TOUCHE TOHMATSU

David A Watson Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu

Deloitte Touche Tohmatsu ABN 74 490 121 060

550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

DX 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au

Independent Auditor's Review Report to the members of Service Stream Limited

We have reviewed the accompanying half-year financial report of Service Stream Limited, which comprises the condensed consolidated statement of financial position as at 31 December 2010, and the condensed consolidated statement of comprehensive income, the condensed consolidated statement of cash flows and the condensed consolidated statement of changes in equity for the half-year ended on that date, selected explanatory notes and, the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year or from time to time during the half-year as set out on pages 4 to 11.

Directors' Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of Service Stream Limited's financial position as at 31 December 2010 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Service Stream Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Auditor's Independence Declaration

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

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the halfyear financial report of Service Stream Limited is not in accordance with the Corporations Act 2001, including:

• (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

DELOITTE TOUCHE TOHMATSU

David A Watson Partner Chartered Accountants Melbourne, 21 February 2011

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu

Directors' Declaration

The directors declare that:

• (a) in the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
• (b) in the directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity.

Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001.

On behalf of the Directors,

Peter Dempsey Graeme Sumner Melbourne Melbourne

21 February 2011 21 February 2011

-------------------------------- -------------------------------- Chairman Managing Director

Condensed Consolidated Statement of Comprehensive Income for the half-year ended 31 December 2010

	Consolidated
	Half-year ended
	31 Dec 2010	31 Dec 2009
	\$'000	\$'000
Continuing Operations
Revenue	300,576	266,538
Other Income	(247)	(96)
	300,329	266,442
Share of profits/(losses) in investment in associate	13	(86)
Company administration and insurance expenses	(4,224)	(3,194)
Site and construction costs	(16,291)	(16,381)
Salaries and employee benefits	(61,148)	(66,159)
Subcontractor and temporary staff costs	(129,030)	(123,546)
Raw materials and finished goods used	(54,618)	(26,919)
Motor vehicle expenses	(3,656)	(3,442)
Consulting and directors' fees	(1,466)	(1,127)
Technology and communication services	(3,352)	(2,728)
Occupancy expenses	(4,320)	(4,131)
Interest expense	(2,926)	(3,471)
Depreciation and amortisation	(3,091)	(3,460)
Other expenses	(5,936)	(8,019)
Write down in respect of McCourt Dando GCDA claim	-	(15,800)
Profit/(Loss) Before Tax	10,284	(12,021)
Income tax (expense)/benefit	(2,495)	3,374
Profit/(Loss) for the period from continuing operations	7,789	(8,647)
Other Comprehensive Income
Exchange differences on translation of foreign operations	(133)	137
Total comprehensive income for the period	7,656	(8,510)
Profit/(Loss) attributable to equity holders of the parent	7,789	(8,647)
Total comprehensive income attributable to equity holders of the parent	7,656	(8,510)
Earnings per Share: From continuing operations Basic (cents per share) Diluted (cents per share)	2.75 2.75	(3.74) (3.74)

Condensed Consolidated Statement of Financial Position

as at 31 December 2010

			Consolidated
		31 Dec 2010	30 June 2010
	Note	\$'000	\$'000
Current Assets
Cash and cash equivalents		-	-
Trade and other receivables		72,168	72,003
Inventories		19,776	14,936
Other		63,842	50,817
Total Current Assets		155,786	137,756
Non-Current Assets
Investments accounted for using the equity method		1,325	1,445
Property, plant and equipment		10,331	13,193
Deferred tax assets		7,003	5,121
Goodwill		205,362	205,362
Other intangible assets		2,360	2,250
Total Non-Current Assets		226,381	227,371
Total Assets		382,167	365,127
Current Liabilities
Trade and other payables		66,752	58,973
Borrowings	5	4,563	4,917
Current tax liabilities		3,631	611
Provisions		7,279	8,308
Total Current Liabilities		82,225	72,809
Non-Current Liabilities
Borrowings	5	53,035	54,422
Provisions		2,023	1,978
Total Non-Current Liabilities		55,058	56,400
Total Liabilities		137,283	129,209
Net Assets		244,884	235,918
Equity
Issued capital	4	228,416	227,106
Reserves		1,134	1,267
Retained earnings		15,334	7,545
Total Equity		244,884	235,918

Notes to the condensed financial statements are included on pages 9 to 11

Condensed consolidated statement of changes in equity for the half-year ended 31 December 2010

	Consolidated
	Share capital	Employee equity settled benefits reserve	Foreign currency translation reserve	Retained earnings	Total
	\$'000	\$'000	\$'000	\$'000	\$'000
Balance at 1 July 2010	227,106	1,540	(273)	7,545	235,918
Profit for the period	-	-	-	7,789	- 7,789
Other comprehensive income	-	-	(133)	-	(133)
Total comprehensive income for the period	-	-	(133)	7,789	7,656
Tax adjustment in relation to the cost of shares issued in prior periods	1,310	-	-	-	1,310
As at 31 December 2010	228,416	1,540	(406)	15,334	244,884

	Consolidated
	Share capital	Employee equity settled benefits reserve	Foreign currency translation reserve	Retained earnings	Total
	\$'000	\$'000	\$'000	\$'000	\$'000
Balance at 1 July 2009	191,960	1,540	(520)	10,100	203,080 -
(Loss) for the period	-	-	-	(8,647)	(8,647)
Other comprehensive income	-	-	137	-	137
Total comprehensive income for the period	-	-	137	(8,647)	(8,510)
Issue of share capital Issue of shares as consideration for	32,908	-	-	-	32,908
business acquisitions Costs associated with issue of shares net of	4,000	-	-	-	4,000
tax	(1,392)	-	-	-	(1,392)
As at 31 December 2009	227,476	1,540	(383)	1,453	230,086

Notes to the condensed financial statements are included on pages 9 to 11

Condensed Consolidated Statement of Cash Flows for the half-year ended 31 December 2010

		Consolidated
	Half-year ended
	31 Dec 2010	31 Dec 2009
	\$'000	\$'000
Cash flows from operating activities
Receipts from customers (including GST)	322,332	322,598
Payments to suppliers and employees (including GST)	(317,307)	(317,574)
Cash generated from operations	5,025	5,024
Interest received	178	16
Interest paid	(2,824)	(3,470)
Income tax paid	(47)	(2,488)
Net cash provided by/(used in) operating activities	2,332	(918)
Cash flows from investing activities
Payments for plant and equipment	(1,796)	(1,501)
Proceeds from sale of plant and equipment	1,909	1,297
Payments for businesses	-	(4,900)
Payments for intangible assets	(704)	(381)
Net cash used in investing activities	(591)	(5,485)
Cash flows from financing activities
Proceeds from issue of shares	-	32,908
Payment for share issue costs	-	(1,512)
Proceeds of borrowings	15,000	5,000
Repayment of borrowings	(18,672)	(38,513)
Net cash used in financing activities	(3,672)	(2,117)
Net decrease in cash and cash equivalents	(1,931)	(8,520)
Cash and cash equivalents at beginning of the period	(691)	9,034
Cash and cash equivalents at end of the period	(2,622)	514

Notes to the condensed consolidated financial statements

1. Significant accounting policies

Statement of compliance

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 'Interim Financial Reporting'. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. The half-year financial report does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent annual financial report.

Basis of preparation

The condensed consolidated financial statements have 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 10 July 1998, and in accordance with that class order amounts in the Directors' Report and the half-year financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in Service Stream Limited's 2010 Annual Report for the financial year ended 30 June 2010, except for the impact of the Standards and Interpretations described below. Comparative figures have been adjusted to conform to changes in presentation for the current half year. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

The Company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current reporting period.

The adoption of these new and revised Standards and Interpretations has not resulted in any changes to the Company's accounting policies and has no affect on the amounts reported for the current or prior periods.

2. Segment information

Products and services within each operating segment

AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. For management purposes, the Group is organised into two main operating segments – Specialist Field Services and Customer Care. These segments are the basis on which the Group reports its primary segment information. The principal products and services of each of these segments are as follows:

Specialist Field Services	Maintenance, construction and provision of infrastructure assets and services to the telecommunications and utilities sectors.
Customer Care	Specialist end-to-end services management; Contact centre activities and logistics services.

Notes to the condensed consolidated financial statements

2. Segment information (continued)

	Segment revenue Half-year ended		Segment result Half year ended
	31 Dec 2010 \$'000	31 Dec 2009 \$'000	31 Dec 2010 \$'000	31 Dec 2009 \$'000
Specialist Field Services	271,928	224,128	18,174	(3,862)
Customer Care	30,530	42,299	1,869	2,950
Total of all segments	302,458	266,427	20,043	(912)
Eliminations	(2,308)	-	-	-
Unallocated	-	-	(3,921)	(4,193)
Earnings before interest, tax, depreciation and amortisation	-	-	16,122	(5,105)
Net interest received/(paid)	179	15	(2,747)	(3,456)
Depreciation/Amortisation	-	-	(3,091)	(3,460)
Revenue from rendering of services	300,329	266,442	-	-
Profit/(Loss) before income tax expense			10,284	(12,021)
Income tax (expense)/benefit			(2,495)	3,374
Profit/(Loss) for the period			7,789	(8,647)

The company carries out its business entirely within Australia except for a joint venture arrangement with Total Comm Infra Services Pvt Ltd incorporated in India.

3. Dividends

No interim dividend has been paid or declared by the board during or for the half year ended 31 December 2010 (31 December 2009: nil).

4. Issuances, Repurchases and Repayment of Equity Securities

Fully Paid Ordinary Shares

	31 Dec 2010		31 Dec 2009
	No. '000	\$'000	No. '000	\$'000
Balance at 1 July	283,419	227,106	186,432	191,960
Issue of share capital	-	-	86,600	32,908
Costs associated with issue of shares net of tax	-	-	-	(1,392)
Tax adjustment in relation to the cost of shares issued in prior periods	-	1,310	-	-
Issue of shares in consideration for business acquisitions	-	-	10,387	4,000
Balance at end half-year 31 December	283,419	228,416	283,419	227,476

The company issued no share options in either the current or the prior interim reporting periods.

Notes to the condensed consolidated financial statements

5. Financing Facilities
	31 Dec 2010 \$'000	30 June 2010 \$'000
Secured bank guarantees:
 amount used	8,048	8,624
 amount unused	1,952	1,376
	10,000	10,000
Secured bank overdraft:
 amount used	2,622	691
 amount unused	7,378	9,309
	10,000	10,000
Secured bank bill and equipment finance facilities with various maturity dates through to July 2012 and which may be extended by mutual agreement:
 amount used	54,976	58,648
 amount unused	23,319	22,626
	78,295	81,274

6. Contingent assets and liabilities

TCI Ericsson Jersey dispute

In 2006, the Company and Ericsson Australia Pty Limited ("Ericsson") entered into a contract for the installation of telecommunications services at sites in Queensland and New South Wales.

Ericsson has sought to recover part of the \$50 million remitted to Service Stream for this project and arbitration has commenced. Whilst the Company expects to be successful at arbitration, the Company has not recognised the full amount received as revenue, with \$45 million recognised to date. The balance of \$5 million has been provided in trade and other payables as at balance date.

Tax Consolidation

As a result of amendments to tax legislation via enacting of the Australian Tax Laws Amendment (2010 Measures No.1) Act 2010, Service Stream Limited has lodged a series of objections with the Australian Taxation Office in relation to the tax treatment of acquisitions made by it in the past. The amount of the additional tax deductions being claimed by Service Stream in respect of prior years is \$40.5m which, if approved in full, would result in a tax refund to the Company of \$12.1m. The amount of the tax claim relevant to current and future years' deductions is \$0.5m.

No amounts have been recorded in the consolidated entity's financial statements for the half year ended 31 December 2010 as the matter is pending review by the ATO and the likely outcome of the claim is uncertain. Service Stream expects the outcome of the claim to be clarified prior to the announcement of the 2011 full year results.

Subsequent events

There has not been any other matter or circumstance occurring subsequent to the end of the period that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future periods.

Corporate Directory

Directors

Peter Dempsey (Chairman) Brett Gallagher Deborah Page Graeme Sumner Stephe Wilks Robert Grant (Alternate)

Company Secretary

Jessica Lyons

Registered Office

Level 1 355 Spencer Street West Melbourne Victoria, 3003 Tel: +61 3 9677 8888 Fax: +61 3 9677 8877 www.servicestream.com.au

Bankers

Westpac Banking Corporation Commonwealth Bank of Australia

Share Registry

Computershare Investors Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford, Victoria 3067 Tel: 1300 850 505 (within Australia) +61 3 9415 4000 (outside Australia) Fax: +61 3 9473 2500

Auditors

Deloitte Touche Tohmatsu