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(Australasia) Limited Since 1856

Annual Report 2007

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2007 Report to Shareholders

DIRECTORS	RONALD J. DRURY(Resigned)
	WILLIAM R. STOKES
	GORDON B. ELKINGTON
	JOHN HACKETT (Appointed)
SECRETARY	GORDON B. ELKINGTON
AUDITOR	ERNST & YOUNG
SOLICITORS	BLAKE DAWSON WALDRON
	AUGHTERSONS
REGISTERED OFFICE	24 PALMERSTON ROAD
	RINGWOOD, VICTORIA 3134
	TEL: (03) 9845 8300
	FAX: (03) 9874 1077
	WEB SITE: www.stokes-aus.com.au
	EMAIL: [email protected]
SHARE REGISTRY	COMPUTERSHARE INVESTOR SERVICES PTY.
	LIMITED
	452 JOHNSTON STREET
	ABBOTSFORD, VICTORIA 3067
	G.P.O. BOX 2975
	MELBOURNE, VICTORIA 3001
	INVESTOR ENQUIRIES: 1300 850 505
	TEL: (03) 9415 4000
	FAX: (03) 9473 2500
AUSTRALIAN BUSINESS NUMBER	24 004 554 929

1)	Our Employees and Products........................................................................ 1 - 4
2)	Directors’ Report.......................................................................................... 5 - 14
3)	Income Statement............................................................................................. 15
4)	Balance Sheet .................................................................................................. 16
5)	Cash Flow Statement........................................................................................ 17
6)	Statement of Changes in Equity ................................................................ 18 - 19
7)	Notes to the Year End Financial Statements ............................................. 20 - 49
8)	Directors’ Declaration........................................................................................ 50
9)	Formal Declarations................................................................................... 51 - 53
10)	Comparative Results for the Years 2004 – 2007 .............................................. 54
11)	Shareholder Analysis and other Stock Exchange Requirements............... 55 - 56

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Stokes Synertec

Stokes Industrial Heating specialises in supplying solutions to industrial heating applications throughout Australia and South East Asia. Over the years we have gained a reputation as a quality manufacturer and supplier of electric heating elements plus custom made systems, covering a wide range of industrial heating products. Typical applications from heating small to large 1 million litre storage tanks and multi element duct units. Stokes will continue to pursue this market with the aim of securing our position as a major supplier.

Terry Harris Sales Manager Synertec

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Brendon Cherry National Sales Manager Appliance Parts

Stokes Appliance Parts

Stokes Appliance Parts has established itself as a market leader in the supply and distribution of quality spare parts throughout Australia, New Zealand and Papua New Guinea. With offices and agents around Australia it offers a service and range of spares that customers are looking for in today’s climate, reliable and at the right price. Stokes Appliance Parts has been supplying quality spares for most makes and models and now includes in its range, popular makes such as LG, Whirlpool, Maytag, Fisher & Paykel, and an assortment of parts for European brands and continues to develop and improve its range as new brands come on to the market. Rest assured Stokes Appliance Parts intends on continuing its high standard of customer service and quality spares to the industry for many years to come.

Stokes (Australasia) Limited Our People and Products

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Don Lai Badges Sales Manager

Stokes Badges

Stokes Badges provides a vast and diverse range of products, such as Badges, Medallions, Name Tags, Custom Badges, School and Office Bars, Prestige Medals, Corporate Awards, Laser Cutting (Gaskets models etc) and Engraving. A name tag or a custom Badge is still the best way for your BUSINESS - SCHOOL - CLUB - ASSOCIATION to lift their public image. Stokes have been producing badges for over 100 years and always of the highest quality. Our time and effort right down to the finest details ensure our customers get what they need, on time and on budget.

We also have an upcoming brochure on the way, to enhance more sales and an effective visual merchandise for our buyers to select from our vast range. We are in the process of updating our customer files to enable us to quickly and easily access their information for future sales and repeat orders.

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Mick Cartwright Valves and Camlocks Sales Manager

Stokes Valves & Camlocks

Stokes Valves and Camlocks have been supplying the petrochemical industry since the early 1950s and have expanded into the agricultural and mining industries with air and electrically operated Ball, Gate and Butterfly Valves, Camlocks, Non-Return Valves and Brass Fittings. Stokes have supplied Liquid Handling products to companies all around the world from Russia to the Philippines. We are always on the look out for quality, new and innovative products to add to our range, ensuring we remain market leaders well into the future. Stokes also distribute the Banjo™ products range i.e. Dry-Mate valves in poly and stainless steel and Norval™ Non-Return Valves.

Stokes Customer Care Centre & Sales

Brendon Cherry, Raelene Parsons and staff in the Melbourne office. Over 400 calls and faxes a day from Customers, Agents and Distributors are processed daily in the national call centre.

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Stokes Badges and Medallions

Don Lai and Staff preparing name tags for companies like Red Rooster and Coles. Stokes not only produce badges, medallions and name tags, we also do Engraving, Custom Key Rings and Prestige Medals. “If you belong to a club or organization, Stokes can lift your profile with a custom badge, name tag or key ring.”

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Distribution / Warehouse

Yogan Kandasamy and staff in the Ringwood distribution warehouse. Despatching between 200 and 300 orders a day to local and interstate customers. Over 2000 different products are packaged and stored here.

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Stokes Industrial Manufacturing

Terry Harris, Michael Walters and staff in the industrial manufacturing section. Stokes Recently completed large flanged Heaters for a Darwin Palm Oil project.

Stokes .. 2 / 189 Port Hacking Rd, Miranda NSW

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Stokes Sydney and S/Aust Offices & Warehouses

Our Sydney Office and Warehouse located in Miranda NSW. Geoff Morgan, Doug Cameron and staff handle sales from our NSW customers. Danny Miller manages our office / warehouse in Richmond South Australia.

Stokes .. 4 / 197 Richmond Rd, Richmond S/Aust

Ron Drury’s Retirement

John Hackett with William Stokes at Ron Drury’s retirement presentation.

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Stokes (Australasia) Limited

Directors’ Report

(a) Directors

The names of each of the Directors of the Company in office during or since the end of the financial year until the date of this report are set out below, together with their qualifications, experience and special responsibilities. The Directors were in office for this entire period unless otherwise stated.

William R. Stokes, B. Comm., Age 63

Mr. Stokes has been a Director since 1967 and was the Managing Director from 1974 until 2004. He is now the Company’s Chairman. He is also a Director of Stokes (New Zealand) Limited and Stokes Investments Pty. Limited, a former Director of The Australian Electrical and Electronics Manufacturers Association, and a former General Councillor of the Victorian Branch of the Australian Industry Group.

Gordon B. Elkington, B.Sc., M.Sc., Ph.D., LL.M., Age 61

Mr. Elkington has been a Director and the Company Secretary since 2003. He trained in science, engineering and law at the University of Sydney. He is a Barrister of the Supreme Court of New South Wales and a former Senior Lecturer in Law at the University of Sydney. He is also a Director of Stokes (New Zealand) Limited, and a Director of each of Winpar Holdings Limited, Pritchard Equity Limited and Penrose Club Holdings Limited.

Ronald J. Drury, Age 65

Mr. Drury was appointed a Director in 2005. He had had senior management experience in structural and mechanical engineering, with special emphasis during recent years in the automotive, whitegoods and associated component manufacturing industries. Mr. Drury retired from the board on 30 June 2007.

John M. Hackett, B.Bus. Studies, C.P.A., Age 59

Mr. Hackett was appointed a Director on 1 July 2007. He has worked at Stokes since 1990 and is now Group General Manager. He was formerly the Company’s Chief Finance Officer. For 10 years before that he was an Accountant at Dulux Paints Pty. Limited.

(b) Principal activities

The principal activities of the consolidated entity in the course of the year were the merchandising and distribution of appliance spare parts, valves and camlocks, badges and medallions, electrical switches and controls, and the manufacture of electric heating elements and metal components.

(c) Operating results

The group made a loss of $156,398 for the year ended 30 June 2007 (2006: profit of $485,406). Sales for the year were $20.0 million (2006: $21.1 million).

The group’s net operating cash flow for the year ended 30 June 2007 was $1,046,350 (2006: $779,000), which enabled borrowings to be reduced from $2.4 million to $1.7 million.

Market conditions in Australia have continued to be difficult. The Company is now trading with a strong positive cash flow, and its liquidity is no longer under threat. However, it is still not achieving a satisfactory return on shareholders funds. Trading results were near break even for the year, prior to a one-off additional write down of $259,000 for obsolete and slow moving stock.

Stokes (Australasia) Limited

Directors’ Report

(d) Sales

In recent years sales of appliance parts have been falling by between 7 and 10 percent annually, largely because of the progressive phasing out of components no longer used in modern appliances, and it has clearly became necessary to devote more resources towards developing new products, attracting new principals and refreshing existing product lines.

The new Group General Manager, Mr. John Hackett, has already taken the following measures to address the problem of declining sales:

The numbers of customer service staff have been increased, enabling senior managers to spend more time on promoting sales.
A product development manager has been appointed, enabling the Company’s product range to be refreshed.
More resources have been allocated to the production and distribution of promotional and advertising material.

Costs are being correspondingly reduced in the factory, warehouse and administration, and the Company is moving to source an increasing range of generic elements overseas rather than manufacturing them locally.

Stock reductions are continuing, and the Company now has the financial and operational resources to take on additional agency lines to broaden its product range.

After allowing for the additional marketing costs the Company is budgeting for a small profit in the next financial year.

(e) The next five years

The Company is aiming within five years to be the leading supplier of appliance spare parts in Australasia, and to establish Stokes as the company of choice for everybody involved in the spare parts industry. Participants include manufacturers of appliance parts who are seeking a company to represent them and market their products, wholesalers who distribute appliance parts to contractors, and contractors who repair appliances in customers homes.

The Company also aims to be the leading designer, manufacturer and supplier of specialised electric heating systems using tubular elements. These elements are used in a wide variety of commercial and industrial applications, including applications in the mining industry.

The Company will continue to supply badges and individual name bars to clubs, schools and retailers. It has been a well known supplier of badges and medallions for the whole of its 150 year history.

The Company will deliver exceptional customer service, providing a wide range of high quality products and services in both domestic and international markets. Stokes will focus on sharing and improving relationships with customers, suppliers, principals, employees and shareholders.

(f) R. W. Winning Pty. Limited

In April 2007 the Company acquired the customer base of R. W. Winning Pty. Limited, which had for some years been a distributor of Stokes’ appliance parts in New South Wales. The operations of R. W. Winning have been relocated to Miranda in New South Wales.

The Board will be actively looking for further acquisitions that are compatible with our existing businesses

(g) Stokes (New Zealand) Limited

Stokes (New Zealand) Limited made a profit of $289,202 for the year ended 30 June 2007 (2006: $210,477). This result was helped by a stronger value of the New Zealand dollar, as most of the company’s raw materials and merchandised lines are imported.

On 15 December 2006 the Directors declared a dividend of 35 cents per share. Refer Note 26 (iii).

Stokes (Australasia) Limited

Directors’ Report

During the year Stokes (New Zealand) Limited purchased 40,000 of the 160,000 shares in the company held by Walter and Ulrika Haller for $93,485. These shares were cancelled, and as a result the interest of Stokes (Australasia) Limited in Stokes (New Zealand) Limited increased from 72 percent to 75 percent. There is an agreement in place between Stokes (New Zealand) Limited and Walter and Ulrika Haller, previously announced, under which Stokes (New Zealand) Limited will progressively purchase all of the shares held by Walter and Ulrika Haller.

(h) Retirement of Mr. Ron Drury

Mr. Ron Drury retired as Chief Executive Officer of the group on 30 June 2007. He also resigned from the Boards of Stokes (Australasia) Limited, Stokes Investments Pty. Limited and Stokes (New Zealand) Limited.

Mr. Drury joined Stokes in 2003 and took over as Chief Executive Officer on 1 July 2004. At that time the Company was losing money, and its viability was threatened. Mr. Drury drew upon his considerable experience in the manufacturing industry to restructure the group’s Australian operations and to put the Company on a stronger financial footing. The Board is appreciative of Mr. Drury’s efforts and achievement, and wishes him well in his retirement.

(i) Appointment of Mr. John Hackett

The Company’s Chief Financial Officer, Mr. John Hackett, was appointed as Acting Group General Manager when Mr. Drury became ill in April 2007. Following Mr. Drury’s retirement, Mr. Hackett was appointed as Group General Manager on 1 July 2007 and joined the Board as a Director.

(j) Dividends

No dividends have been paid or are payable by Stokes (Australasia) Limited in respect of the year ended 30 June 2007 or the year ended 30 June 2006.

(k) Significant changes in state of affairs

During the financial year there was no significant change in the state of affairs of the consolidated entity, other than as referred to in the financial statements, the notes thereto and elsewhere in this report.

(l) Significant events after balance date

There has not been any matter or circumstance, other than as referred to in the financial statements, notes thereto, or elsewhere in this report, that has arisen since the end of the financial year, 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 financial years.

(m) Likely developments and expected results

Because of the continuing improvement in the Company’s cash position, the Company now has sufficient working capital to take on new products for marketing and distribution if the opportunity to do so arises.

Stokes (Australasia) Limited

Directors’ Report

(n) Directors’ meetings

The number of Directors’ meetings and Audit Committee meetings held during the financial year and the number of meetings attended by each Director (while they were a director or committee member) are as follows:

Director	Directors Meetings Audit Committee Meetings
	Held Attended Held Attended
William R. Stokes Ronald J. Drury Gordon B. Elkington	12 12 2 2 12 8 2 2 12 12 2 2

(o) Indemnification and insurance of officers and auditors

The Constitution of the Company provides that, to the extent permitted by the Corporations Act “every officer and employee of the Company and its wholly-owned subsidiaries shall be indemnified out of the funds of the Company (to the extent that the officer or employee is not otherwise indemnified) against all liabilities incurred as such an officer or employee, including all liabilities incurred as a result of appointment or nomination by the Company or the subsidiary as a trustee or as an officer or employee of another corporation.”

The Directors of the Company who held office during the past year, Messrs. W. R. Stokes, R. J. Drury and G. B. Elkington have the benefit of the above indemnity. The indemnity also applies to executive officers of the Company who are concerned, or take part, in the management of the Company.

The Company has not paid any insurance premiums in respect of any past or present Directors, other than as required by law.

(p) Auditor independence and non audit services

The Directors have received a declaration from the auditor of Stokes (Australasia) Limited, Ernst & Young, which is included on pages 51-53 of this report. Ernst & Young had provided tax compliance services to the Company. The Directors are satisfied that the provision of those services was compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The nature and scope of the non-audit services provided was not such that auditor independence was compromised.

(q) Staff

The Board appreciates the support it continues to have from the Company’s staff, and acknowledges with thanks the efforts they have all made to assist the Company through a difficult period.

Stokes (Australasia) Limited

Remuneration Report (Audited)

The Remuneration Report outlines the director and executive remuneration arrangements of the company and the group in accordance with the requirements of the Corporations Act 2001 and its Regulations. It also provides the remuneration disclosures required by paragraphs Aus 25.4 to Aus 25.7.2 of AASB 124 Related Party Disclosures, which have been transferred to the Remuneration Report in accordance with Corporations Regulation 2M.6.04. For the purposes of the report Key Management Personnel (KMP) of the group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the company and the group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and the five executives in the parent and the group receiving the highest remuneration.

Remuneration philosophy

The Board is committed to remunerating its management fairly and responsibly. Executive remuneration is primarily by way of salaries, which are determined by the Board by reference to the market place and by reference also to performance, having regard to the Company’s overall achievement and to its financial resources. Executive salaries do not presently include incentive payments or contractual performance bonuses, although this policy is constantly under review.

Non-executive directors are paid a directors fee which is considered appropriate by reference to the responsibility of their role as well as the financial resources of the Company.

There are no retirement schemes in place for directors other than statutory contributions to superannuation.

Employment contracts

Mr. G. B. Elkington, non-executive Director, received director’s fees and 9 percent superannuation guarantee levy. He has no employment contract.

Mr. W. R. Stokes, non-executive Director, received director’s fees and 9 percent superannuation guarantee levy. He has no employment contract.

Mr. R. J. Drury, executive Director and Chief Executive Officer, received a salary together with director’s fees and 9 percent superannuation guarantee levy. His employment contract stated that three months notice of employment termination must be given by either party.

Mr. J. M. Hackett, Chief Finance Officer, received a salary which was not performance related and 13 percent superannuation guarantee levy. His employment contract stated that one month’s notice of employment termination must be given by either party.

Group performance

There is no link between company performance and key management personnel remuneration as they all receive either director’s fees or a salary and superannuation, as described above.

Stokes (Australasia) Limited

Remuneration Report (Audited)

Remuneration of key management personnel

Director		Short-term Long-term Post- employment Total 2007
		Salary and fees Long service leave Superannuation and Long service leave $ $ $ $
William R. Stokes Gordon B. Elkington Ronald J. Drury John M. Hackett		25,000 - 2,250 27,250 25,000 - 2,250 27,250 200,450 - 20,253 220,703 70,442 20,297 9,749 100,488

Executive		Short-term Long-term Post- employment Total 2007
		Salary and fees Long service leave Superannuation $ $ $ $
Walter Haller		134,922 NA NA 134,922

Director	Short-term Long-term Post- employment Total 2006
	Salary and fees Long service leave Superannuation $ $ $ $
William R. Stokes Gordon B. Elkington Ronald J. Drury	25,000 - 2,600 27,600 25,000 - 2,250 27,250 182,935 8,919 14,428 206,282

Executive	Short-term Long-term Post- employment Total 2006
	Salary and fees Long service leave Superannuation $ $ $ $
Walter Haller	130,609 NA NA 130,609

1 1

Stokes (Australasia) Limited

CORPORATE GOVERNANCE STATEMENT

Stokes (Australasia) Limited supports the A.S.X. Corporate Governance Council’s Principles of Good Corporate Governance , and has complied with the Council’s Best Practice Recommendations to the extent considered appropriate, given the Company’s relative size and other circumstances

The following information is provided in relation to each of the Council’s 10 Principles .

1. Management and oversight

The Board has the overall responsibility for the Company’s operations. The Board sets the Company’s direction, monitors its performance and its reporting systems, and approves capital expenditure. The General Manager is responsible for the Company’s day-to-day operations, and reports regularly to the Board.

The Board meets regularly to review the Company’s performance.

2. Structure of the Board

The Board has considered the role of each of its members and has reviewed its present composition. It is satisfied that each member of the Board brings with him individual skills which are not duplicated, and that the composition of the Board is appropriate, having regard to the size and history of the Company.

Directors are considered independent when they are free of management and free from any business or other relationship that could materially interfere with, or could be reasonably perceived to materially interfere with, the exercise of their unfettered and independent judgement. In this context, materiality is considered from both the Company’s and the individual director’s perspective. The determination of materiality requires consideration of both quantitative and qualitative factors. An item is presumed to be immaterial if it is equal to or less than 5 percent of the appropriate base amount. It is presumed to be material if it is equal to or greater than 10 percent of the appropriate base amount. Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature of the relationship, the contractual or other arrangements governing it and other factors which point to the actual ability of the director in question to shape the direction of the Company’s loyalty.

In accordance with this definition of independence and the materiality thresholds set, Gordon B. Elkington is considered to be an independent director.

The Board has not sought to appoint additional independent directors as this would result in additional cost to the Company.

The Company’s Constitution requires that directors appointed by the Board submit themselves for re-election at the first meeting of shareholders following their appointment. Under the Constitution, one third of the directors must retire by rotation each year and submit themselves for re-election by shareholders.

A separate nomination committee has not been established, and the Board itself is responsible for succession planning and the identification of new Board members.

3. Ethical decision making

The Board requires its members to keep it advised of any interests that might conflict with those of the Company. Where there is a conflict in relation to any matter, the director concerned does not participate at any meeting where the matter is being considered.

The Board has adopted guidelines for dealings in the Company’s shares which define periods during which dealings may normally occur and the procedures for notifying the Board prior to any dealing.

Stokes (Australasia) Limited

4. Integrity in financial reporting

The Board requires the Chief Executive Officer and the Chief Financial Officer to confirm in writing that the Company’s financial reports present a true and fair view of the Company’s financial position.

The Board has a formally established Audit Committee which presently comprises all of the Board members. The function of the Audit Committee is to review the Company’s financial reports, liaise with the external auditor, review the auditor’s reports, and ensure that any necessary action is taken by management in relation to those reports.

The Audit Committee is also responsible for monitoring compliance with the Corporations Act and ASX Listing Rules as well as monitoring any related party transactions of the Company.

In fulfilling its responsibilities, the Committee receives regular reports from management and the external auditor. It also meets with the external auditor at least twice a year.

Attendances at Audit Committee meetings by directors are set out in the Directors’ Report.

5. Timely and balanced disclosure

The Secretary has the responsibility for ensuring that material matters are disclosed to the market. The Secretary has regular contact with management, who are required to report any material matters to him in relation to the Company’s day-to-day operations.

6. Respect for the rights of shareholders

The Company has only one class of shareholders, and recognises them at all times as the ultimate owners of the Company in the way it conducts its affairs.

The Company encourages its shareholders to participate at general meetings.

The Company has developed a website which facilitates communication with shareholders.

7. Recognition and management of risk

The Board is provided with detailed management and financial reports on a regular basis, and reviews these with particular reference to risk management. The Chief Executive Officer and the Chief Financial Officer report personally at Board meetings.

Specific procedures to recognize and manage risks include:

consideration of and approval by the Board each year of the Company’s annual budget and business plan;
ensuring, via delegated authorities, that capital expenditure commitments exceeding certain limits are submitted to the Board for approval;
requiring comprehensive monthly reporting to the Board on operating and financial performance; and
requiring regular reporting by management concerning the Company’s systems to ensure compliance with environmental and occupational health and safety requirements.

Stokes (Australasia) Limited

8. Encouragement of enhanced performance

The Board is committed to encouraging good performance, and all directors have free access to the Company’s operations and to its management. Directors are expected to contribute to the Company’s operations on a continuing basis, and there is free communication between the directors and the Secretary at all times.

No performance evaluation of the Board has been undertaken during the year.

With the approval of the Board, any director may seek independent professional advice at the Company’s expense in the furtherance of their duties.

9. Fair and responsible remuneration

There are no retirement schemes in place for directors other than statutory contributions to superannuation.

10. Legitimate interests of stakeholders

The Company recognizes its legal and moral obligations to its employees, its customers and the community generally, and is committed to dealing properly and fairly with all of these stakeholders.

The Company takes pride in the quality and reputation of its products, and the standard of its services, and is committed to maintaining and improving them.

Stokes (Australasia) Limited

Income Statement

Year ended 30 June 2007

Year ended 30 June 2007
Note	CONSOLIDATED 2007 2006 $ $		COMPANY 2007 2006 $ $
Sales revenue (sale of goods) 3(a) Cost of sales Gross Profit Other income 3(b),(c) Distribution expenses Selling expenses Occupancy expenses Administration expenses Finance costs 3(c) Other expenses (Loss)/ profit Before Income Tax Expense Income tax expense 5 (Loss)/ profit After Income Tax Expense Net (loss)/Profit Attributable to Minority Interests (Loss)/ profit Attributable to Members of the Parent Entity 23 Basic (loss) earnings per share 23	19,997,790 (14,158,365) 5,839,425 36,567 (1,382,660) (1,735,027) (394,141) (2,170,061) (224,397) 265 (30,029) (126,369) (156,398) (156,398) (83,462) (239,860) Cents per share (4.2)	21,122,919 (14,648,418) 6,474,501 71,422 (1,309,886) (1,804,412) (375,015) (2,190,115) (281,598) - 584,897 (99,491) 485,406 485,406 (59,876) 425,530 Cents per share 7.5	17,702,098 (13,042,310) 4,659,788 217,922 (1,342,819) (1,438,617) (332,449) (1,783,391) (222,085) - (241,651) - (241,651) (241,651) - (241,651)	18,863,505 (13,508,787)
				5,354,718 65,375 (1,244,406) (1,507,380) (315,012) (1,776,009) (276,457) -
				300,829 -
				300,829
				300,829
				-
				300,829

Notes to the financial statements are included on pages 20 to 49

Stokes (Australasia) Limited

Balance Sheet

As at 30 June 2007

CONSOLIDATED 2007 2006 $ $ 266,389 195,074 3,226,088 3,394,012 4,016,500 4,598,926 59,203 61,170 7,568,180 8,249,182 - - 796,477 932,874 796,477 932,874 8,364,657 9,182,056 2,088,217 1,983,270 42,640 19,963 2,994 2,694 936,847 926,939 - 130,000 3,070,698 3,062,866 1,659,475 2,247,337 62,373 83,732 - - 1,721,848 2,331,069 4,792,546 5,393,935 3,572,111 3,788,121 5,895,000 5,895,000 16,366 (65,999) (2,488,740) (2,248,880) 3,422,626 3,580,121 149,485 208,000	CONSOLIDATED 2007 2006 $ $ 266,389 195,074 3,226,088 3,394,012 4,016,500 4,598,926 59,203 61,170 7,568,180 8,249,182 - - 796,477 932,874 796,477 932,874 8,364,657 9,182,056 2,088,217 1,983,270 42,640 19,963 2,994 2,694 936,847 926,939 - 130,000 3,070,698 3,062,866 1,659,475 2,247,337 62,373 83,732 - - 1,721,848 2,331,069 4,792,546 5,393,935 3,572,111 3,788,121 5,895,000 5,895,000 16,366 (65,999) (2,488,740) (2,248,880) 3,422,626 3,580,121 149,485 208,000	COMPANY 2007 2006 $ $ 87,152 70,533 2,954,502 3,161,751 3,668,507 4,263,834 112,641 70,488 6,822,802 7,566,606 2,192,005 2,192,005 742,593 849,044 2,934,598 3,041,049 9,757,400 10,607,655 1,906,938 1,800,453 42,640 19,963 - - 897,140 895,685 - 130,000 2,846,718 2,846,101 1,844,857 2,432,719 62,373 83,732 2,000,000 2,000,000 3,907,230 4,516,451 6,753,948 7,362,552 3,003,452 3,245,103 5,895,000 5,895,000 - - (2,891,548) (2,649,897) 3,003,452 3,245,103 - -	COMPANY 2007 2006 $ $ 87,152 70,533 2,954,502 3,161,751 3,668,507 4,263,834 112,641 70,488 6,822,802 7,566,606 2,192,005 2,192,005 742,593 849,044 2,934,598 3,041,049 9,757,400 10,607,655 1,906,938 1,800,453 42,640 19,963 - - 897,140 895,685 - 130,000 2,846,718 2,846,101 1,844,857 2,432,719 62,373 83,732 2,000,000 2,000,000 3,907,230 4,516,451 6,753,948 7,362,552 3,003,452 3,245,103 5,895,000 5,895,000 - - (2,891,548) (2,649,897) 3,003,452 3,245,103 - -
			7,566,606
			2,192,005 849,044
			3,041,049
			10,607,655
			1,800,453 19,963 - 895,685 130,000
			2,846,101
			2,432,719 83,732 2,000,000
			4,516,451
			7,362,552
			3,245,103
			5,895,000 - (2,649,897)
			3,245,103 -
3,572,111	3,788,121	3,003,452	3,245,103

Notes to the financial statements are included on pages 20 to 49

Stokes (Australasia) Limited

Cash Flow Statement

For the Year ended 30 June 2007

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest and other costs of finance paid Dividend received Income tax paid Net cash provided from operating activities 27(c) Cash flows from investing activities Payment for property, plant and equipment 10 Proceeds from sale of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Dividend paid Finance Lease Payments Proceeds from borrowings - external Repayment of borrowing – related parties Share buyback Repayment of borrowings Net cash used in financing activities Net increase in cash held Cash at the beginning of the financial year Cash at the end of the financial year 27(a)	CONSOLIDATED 2007 2006 $ $ 20,240,257 21,446,127 (18,828,172) (20,170,695) 17,740 20,937 (224,397) (281,598) - - (126,069) (222,518) 1,079,359 792,253 (130,482) (140,216) 9,439 - (121,043) (140,216) (77,289) - (33,009) (12,687) 92,267 56,251 (130,000) (20,000) (81,518) (90,000) (657,452) (522,464) (887,001) (588,900) 71,315 63,137 195,074 131,737 266,389 195,074	COMPANY 2007 2006 $ $ 17,880,610 19,094,000 (16,994,667) (18,139,313) - - (222,283) (276,000) 203,949 - - - 867,609 678,687 (123,796) (102,000) 1,000 - (122,796) (102,000) - - (33,009) (12,687) 92,267 56,251 (130,000) (20,000) - - (657,452) (587,000) (728,194) (563,436) 16,619 13,251 70,533 57,282 87,152 70,533	COMPANY 2007 2006 $ $ 17,880,610 19,094,000 (16,994,667) (18,139,313) - - (222,283) (276,000) 203,949 - - - 867,609 678,687 (123,796) (102,000) 1,000 - (122,796) (102,000) - - (33,009) (12,687) 92,267 56,251 (130,000) (20,000) - - (657,452) (587,000) (728,194) (563,436) 16,619 13,251 70,533 57,282 87,152 70,533
			678,687
			(102,000) -
			(102,000)
			- (12,687) 56,251 (20,000) - (587,000)
			(563,436)
			13,251 57,282 70,533

Notes to the financial statements are included on pages 20 to 49

Stokes (Australasia) Limited

Statement of Changes in Equity

FOR THE YEAR ENDED 30 JUNE 2007

CONSOLIDATED At 1 July 2005 Foreign currency translation Total recognised income /(expense) for the year Profit for the period Total income and expense for the period Equity Transactions: Share buy back by subsidiary At 30 June 2006	Attributable to equity holders of the parent Minority Interest Total equity Contributed Equity Accumulated Losses Other reserves Total $ 5,895,000 (2,674,410) 5,062 3,225,652 216,348 3,442,000
	- - (43,061) (43,061) (7,000) (50,061)
	- - (43,061) (43,061) (7,000) (50,061) - 425,530 - 425,530 60,652 486,182
	- 425,530 (43,061) 382,469 53,652 436,121 - - (28,000) (28,000) (62,000) (90,000)
	5,895,000 (2,248,800) (65,999) 3,580,121 208,000 3,788,121

YEAR ENDED 30 JUNE 2007

CONSOLIDATED At 1 July 2006 Foreign currency translation Total recognised income /(expense) for the year Loss for the period Total income and expense for the period Equity Transactions: Share buy back by subsidiary Dividend paid by New Zealand At 30 June 2007	Attributable to equity holders of the parent Minority Interest Total equity
	Contributed Equity Accumulated Losses Other reserves Total $ 5,895,000 (2,248,880) (65,999) 3,580,121 208,000 3,788,121
	- - 102,506 102,506 (3,311) 99,195
	- - 102,506 102,506 (3,311) 99,195 - (239,860) - (239,860) 83,462 (156,398)
	- (239,860) 102,506 (137,354) 80,151 57,203 - - (20,141) (20,141) (61,377) (81,518) (77,289) (77,289)
	5,895,000 (2,488,740) 16,366 3,422,626 149,485 3,572,111

Stokes (Australasia) Limited

Statement of Changes in Equity

YEAR ENDED 30 JUNE 2006

YEAR ENDED 30 JUNE 2006
COMPANY At 1 July 2005 Net Profit for the period	Attributable to equity holders of the parent Minority Interest Total equity
	Contributed Equity Accumulated losses Other reserves Total $ 5,895,000 (2,950,726) - 2,944,274 - 2,944,274 - 300,829 - 300,829 - 300,829
At 30 June 2006	5,895,000 (2,649,897) - 3,245,103 - 3,245,103

YEAR ENDED 30 JUNE 2007

YEAR ENDED 30 JUNE 2007
COMPANY At 1 July 2006 Net loss for the period	Attributable to equity holders of the parent Minority Interest Total equity
	Contributed Equity Accumulated losses Other reserves Total $ 5,895,000 (2,649,897) - 3,245,103 - 3,245,103 - (241,651) - (241,651) - (241,651)
At 30 June 2007	5,895,000 (2,891,548) - 3,003,452 - 3,003,452

Stokes (Australasia) Limited

Notes to the year end financial statements 30 June 2007

1 Corporate information

The financial report of Stokes (Australasia) Limited for the year ended 30 June 2007 was authorised for issue in accordance with a resolution of the directors on 20 September 2007.

Stokes (Australasia) Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange.

The principal activities of the consolidated entity were the merchandising and distribution of appliance spare parts, valve and camlocks, badges and medallions, electrical switches and controls, and the manufacture of electric elements and metal components.

2 Summary of significant accounting policies

(a) Basis of preparation

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

The financial report has also been prepared in accordance with the historical cost convention, except for plant and equipment which have been measured at recoverable amount. The financial report is presented in Australian dollars.

(b) Statement of compliance

The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). The financial report also complies with International Financial Reporting Standards (IFRS).

Except for the amendments to AASB 101 Presentation of Financial Statements and AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments , which the Group has early adopted, Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ending 30 June 2007. These are outlined in the table below.

Reference	Title	Summary	Application date of *standard **	Impact on Group financial report	Application date for *Group **
AASB 2005-10	Amendments to Australian Accounting Standards [AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 &AASB 1038]	Amending standard issued as a consequence of AASB 7_Financial Instruments: _Disclosures.	1 January 2007	AASB 7 is a disclosure standard so will have no direct impact on the amounts included in the Group’s financial statements. However, the amendments will result in changes to the financial instrument disclosures included in the Group’s financial report.	1 July 2007
AASB 2007-3	Amendments to Australian Accounting Standards arising from AASB 8 [AASB 5, AASB, AASB 6, AASB 102, AASB 107, AASB 119, AASB 127, AASB 134, AASB 136, AASB 1023 & AASB 1038]	Amending standard issued as a consequence of AASB 8_Operating Segments_.	1 January 2009	AASB 8 is a disclosure standard so will have no direct impact on the amounts included in the Group's financial statements. However the amendments may have an impact on the Group’s segment disclosures as segment information included in internal management reports is more detailed than is currently reported under AASB 114 Segment Reporting.	1 July 2009

Stokes (Australasia) Limited

Reference	Title	Summary	Application date of *standard **	Impact on Group financial report	Application date for *Group **
AASB 2007-4	Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments [AASB 1, 2, 3, 4, 5, 6, 7, 102, 107, 108, 110, 112, 114, 116, 117, 118, 119, 120, 121, 127, 128, 129, 130, 131, 132, 133, 134, 136, 137, 138, 139, 141, 1023 & 1038]	Amendments arising as a result of the AASB decision that, in principle, all options that currently exist under IFRSs should be included in the Australian equivalents to IFRSs and additional Australian disclosures should be eliminated, other than those now considered particularly relevant in the Australian reporting environment.	1 July 2007	These amendments are expected to reduce the extent of some disclosures in the Group's financial report.	1 July 2007
AASB 2007-6	Amendments to Australian Accounting Standards arising from AASB 123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12]	Amending standard issued as a consequence of revisions to AASB 123 Borrowing Costs.	1 January 2009	The amendments to AASB 123 require that all borrowing costs associated with a qualifying asset be capitalised. The Group has no borrowing costs associated with qualifying assets and as such the amendments are not expected to have any impact on the Group's financial report.	1 July 2009
AASB 2007-7	Amendments to Australian Accounting Standards [AASB 1, AASB 2, AASB 4, AASB 5, AASB 107 & AASB 128]	Amending standards for wording errors, discrepancies and inconsistencies.	1 July 2007	The amendments are minor and do not affect the recognition, measurement or disclosure requirements of the standards. Therefore the amendments are not expected to have any impact on the Group's financial report.	1 July 2007
AASB 7	Financial Instruments: Disclosures	New standard replacing disclosure requirements of AASB 130_Disclosures in_ the Financial Statements of Banks and Similar Financial Institutions_and AASB 132_Financial Instruments: Disclosure and Presentation.	1 January 2007	Refer to AASB 2005-10 above.	1 July 2007
AASB 8	Operating Segments	New standard replacing AASB 114_Segment_ Reporting, which adopts a management approach to segmentreporting.	1 January 2009	Refer to AASB 2007-3 above.	1 July 2009
AASB 123 (amended)	Borrowing Costs	The amendments to AASB 123 require that all borrowing costs associated with a qualifying asset must be capitalised.	1 January 2009	Refer to AASB 2007-6 above.	1 July 2009
AASB Interpretation 10	Interim Financial Reporting and Impairment	Addresses an inconsistency between AASB 134_Interim Financial_ Reporting_and the impairment requirements relating to goodwill in AASB 136_Impairment of _Assets_and equity instruments classified as	1 November 2006	The prohibitions on reversing impairment losses in AASB 136 and AASB 139, which are to take precedence over the more general statement in AASB 134, are not expected to have any impact on the Group’s financial report.	1 July 2007

Stokes (Australasia) Limited

Reference	Title	Summary	Application date of *standard **	Impact on Group financial report	Application date for *Group **
		available for sale in AASB 139_Financial Instruments: _Recognition and Measurement.

*designates the beginning of the applicable annual reporting period

(c) Going concern basis of accounting

The financial report has been prepared in accordance with generally accepted accounting principles which are based on the company and consolidated entity continuing as going concerns.

During the year ended 30 June 2007 the company was compliant with all lending covenants. The current finance facility was renewed for a further three years in November 2006.

(d) Basis of consolidation

The consolidated financial statements comprise the financial statements of Stokes (Australasia) Limited and its subsidiaries, Stokes Investments Pty. Limited and Stokes (New Zealand) Limited, (‘the Group’) as at 30 June each year.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

In preparing the financial statements, all inter-company balances and transactions, income and expenses and profits and losses resulting from intra-group transactions have been eliminated in full.

Subsidiaries are fully consolidated from the date at which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group.

Minority interests represent the portion of net loss/profit after tax and net assets in Stokes (New Zealand) Limited not held by the Group and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet.

(e) Foreign currency translation

Both the functional and presentation currencies of Stokes (Australasia) Limited and its Australian subsidiary are Australian dollars (A$). Stokes (New Zealand) Limited determines its own functional currency and items included in its financial statements are measured using that functional currency.

Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.

All exchange differences in the consolidated financial report are taken to the income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction.

The functional currency of Stokes (New Zealand) Limited is New Zealand dollars (NZ$). As at the reporting date the assets and liabilities of this overseas subsidiary are translated into the presentation currency of Stokes (Australasia) Limited at the rate of exchange ruling at the balance sheet date and the income statement is translated at the weighted average exchange rate for the period. The exchange differences arising on the retranslation are taken directly to a separate component of equity and are not recognised in profit or loss until the foreign operation is disposed of.

Stokes (Australasia) Limited

Notes (continued)

(f) Segment reporting

A geographical segment is a distinguishable component of the entity that is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different than those of segments operating in other economic environments.

(g) Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated on a straight-line basis or diminishing value over the estimated useful life of the asset as follows:

Plant and equipment – over 3 to 10 years Leased assets – over 3 to 10 years

The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

Impairment

The carrying values of property, plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount is the higher of an assets 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 an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cashgenerating unit to which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value.

An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount.

Disposal

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

(h) Finance costs

Finance costs are recognised as an expense when incurred.

(i) Investment

The investment in subsidiary is carried at cost.

Stokes (Australasia) Limited

Notes (continued)

(j) Inventories

Inventories are valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

Raw materials – average purchase cost. The cost of purchase comprises the purchase price, import duties and other taxes, transport, handling and other costs directly attributable to the acquisition of raw materials. Finished goods and work-in-progress – average cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

(k) Trade and other receivables

Trade receivables, which generally have 30-60 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.

An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off as incurred.

(l) Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above.

(m) Trade and other payables

Trade payables and other payables are carried at amortised cost. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

(n) Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Refer to note 26 for related party disclosures.

(o) Provisions and employee leave benefits

Employee leave benefits

(i) Wages, salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

Stokes (Australasia) Limited

Notes (continued)

(o) Provisions and employee leave benefits (continued)

(ii) Long service leave

The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(p) Leases

The determination of whether an arrangement contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets.

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as an expense in the income statement.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.

(q) Revenue recognition

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Sale of goods

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer.

Interest revenue

Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Dividends

Revenue is recognised when the Group’s right to receive the payment is established.

(r) Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Stokes (Australasia) Limited

Notes (continued)

(r) Income tax (continued)

Deferred income tax liabilities are recognised for all taxable temporary differences except:

when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(s) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.

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

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

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

Stokes (Australasia) Limited

Notes (continued)

(t) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(u) Earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

The company does not have any dilutive equity instruments.

(v) Significant accounting judgements, estimates and assumptions

In applying the Group’s accounting policies management continually evaluates judgements, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact on the Group. All judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management. Actual results may differ from the judgements, estimates and assumptions. Significant judgements, estimates and assumptions made by management in the preparation of these financial statements are outlined below:

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences.

Long service leave

As discussed in note 2(o), the liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at balance date. In determining the present value of the liability, attrition rates and pay increases through promotion and inflation have been taken into account.

Estimation of useful lives of assets

The estimation of the useful lives of assets has been based on historical experience as well as manufacturers’ warranties (for plant and equipment), lease terms (for leased equipment) and turnover policies (for motor vehicles). In addition, the condition of the assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful life are made when considered necessary. Depreciation charges are included in note 10.

Stokes (Australasia) Limited

Notes (continued)

Notes_(continued) _
3. INCOME AND EXPENSES (a) Sales revenue Sales revenue – sale of goods Bad Debts Recovered Total (b) Other Revenue Interest revenue Dividend income Royalties income Total other revenue (c) Other Income Net foreign exchange gain/(loss) Sundry income Net gain on disposal of assets: -Non-current plant and machinery Total other income Total other revenue & income (d) Expenses Finance Costs: Interest - other entities Finance leases - Finance charges Depreciation and amortisation of non-current assets: Plant and equipment Leased plant and equipment	CONSOLIDATED 2007 2006 $ $		COMPANY 2007 2006 $ $
	19,929,502 68,288 19,997,790 17,740 - - 17,740 (12,539) 36,047 (4,681) 18,827 36,567 217,867 6,530 224,397 237,891 14,869	21,122,919 - 21,122,919 20,937 - 32,160 53,097 (44,475) 62,800 - 18,325 71,422 278,745 2,853 281,598 297,000 7,000	17,633,810 68,288 17,702,098 - 203,949 - 203,949 (21,454) 36,047 (620) 13,973 217,922 215,555 6,530 222,085 213,756 14,869	18,863,505 -
				18,863,505
				(807) - 32,160
				31,353
				(28,778) 62,800 -
				34,022
				65,375
				273,745 2,712
				276,457 254,708 7,000

Stokes (Australasia) Limited

Notes (continued)

Notes_(continued) _
3. INCOME AND EXPENSES (continued) (d) Expenses (continued) Net bad and doubtful debts Inventory -Write-downs and other losses Operating lease rental expenses (e) Employee Benefits Wages and salaries Superannuation	CONSOLIDATED COMPANY 2007 2006 2007 2006 $ $ $ $
	(64,181) (36,052) (60,096) 106,000 391,753 107,000 401,497 111,000 410,679 422,000 353,915 370,000 3,092,622 3,093,000 2,602,311 2,576,000 586,215 552,981 586,215 552,981

4. KEY MANAGEMENT PERSONNEL DISCLOSURES

(a) Details of Key Management Personnel

(i) Directors G. B. Elkington Director (non-executive) and Company Secretary R. J. Drury Chief Executive Officer and Director (executive) (Resigned 30 June 2007) W. R. Stokes Director (non-executive) J. M. Hackett Chief Executive Officer and Director (Appointed 1 July 2007) (ii) Other Executives W. Haller General Manager and Director of Stokes (New Zealand)

(b) Remuneration by Category: Key Management Personnel

Short-term employee benefits Long-term employee benefits Post-employment Employee benefits Total	CONSOLIDATED PARENT 2007 $ 2006 $ 2007 $ 2006 $
	455,814 428,056 320,892 297,447 30,046 34,618 34,896 34,618 24,753 18,928 19,903 18,928
	510,613 481,601 375,691 350,992

Stokes (Australasia) Limited has applied the option under Corporations Amendments Regulation 2006 to transfer key management personnel remuneration disclosures required by AASB 124 Related Party Disclosures paragraphs Aus 25.4 to Aus 25.7.2 to the Remuneration Report section of the Directors’ report. These transferred disclosures have been audited.

Stokes (Australasia) Limited

Notes (continued)

4. KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)

(c) Key Management Personnel Equity Holdings

As at 30 June 2007, the key management personnel had relevant interests in the following number of ordinary shares in Stokes (Australasia) Limited:

NAME	DIRECTLY	OTHER	TOTAL
	OWNED
William R. Stokes	743,944	332,650 (1)	1,076,594
Ronald J. Drury	-	-	-
Gordon B. Elkington	100,122	-	100,122
John M. Hackett	-	-	-

(1) Held by director related entity.

William R. Stokes also holds 11% of the issued capital of Stokes (New Zealand) Ltd via a director related entity.

During the financial year William R. Stokes acquired 194,500 ordinary shares. No other ordinary shares were purchased by key management personnel or their related parties.

During the financial year no ordinary shares were redeemed, exercised or bought back (2005: nil) from key management personnel other than as described in Note 22.

(d) Transactions with Key Management Personnel

During the year, repayments of $130,000 were made to Gordon Elkington in relation to the loan provided to the company by him. The loan was repaid in November 2006 and disclosed in Note 15.

Stokes (Australasia) Limited

Notes (continued)

Notes_(continued) _
	CONSOLIDATED		COMPANY
	2007	2006	2007	2006
	$	$	$	$
5. INCOME TAX
(a) A reconciliation between tax
expense/(benefit) and the product of
accounting profit/(loss) before income tax
expense/(benefit) multiplied by the Group's
applicable income tax rate is as follows:
Accounting (loss)/ profit before income tax	(30,029)	585,797	(241,651)	300,829
Income tax expense/(benefit) calculated at 30%	(9,009)	175,739	(72,495)	90,249
Temporary differences and tax losses not
brought to account as future income tax	135,378	75,798	72,495	90,249
benefits (Note 5(b))
	126,369	99,941	-	-
(b) The following deferred tax assets have
not been recognised as recovery is not
considered probable:
Attributable to temporary differences	446,849	362,000	446,849	362,000
Attributable to tax losses	1,518,845	1,561,000	1,518,845	1,561,000
	1,965,694	1,923,000	1,965,694	1,923,000
(d) The major components of income tax expense
are:
Current income tax expense	126,369	99,941	-	-
Temporary differences	-	-	-	-
Income tax expenses reported in the	126,369	99,941	-	-
income statement:

Stokes (Australasia) Limited

CONSOLIDATED 2007 2006 $ $	CONSOLIDATED 2007 2006 $ $	COMPANY 2007 2006 $ $	COMPANY 2007 2006 $ $
3,292,442 - (66,354) 3,226,088 964,407 378,428 2,673,665 4,016,500 59,203 -	3,504,002 (64,181) (45,809) 3,394,012 889,541 314,626 3,394,759 4,598,926 61,170 -	3,020,856 - (66,354) 2,954,502 783,497 378,428 2,506,582 3,668,507 112,641 2,192,005	3,267,656 (60,096) (45,809)
			3,161,751
			707,514 314,626 3,241,694
			4,263,834
			70,488
			2,192,005

Stokes (Australasia) Limited

Notes (continued)

10. PROPERTY, PLANT & EQUIPMENT

(a) Reconciliation of carrying amounts at the beginning and end of the period

Year ended 30 June 2007 At 1 July 2006, net of accumulated depreciation and impairment Additions Disposals Depreciation charge for the year At 30 June 2007 net of accumulated depreciation and impairment At 30 June 2007 Cost or fair value Accumulated depreciation and impairment Net carrying amount Year ended 30 June 2006 At 1 July 2005, net of accumulated depreciation and impairment Additions Depreciation charge for the year At 30 June 2006 net of accumulated depreciation and impairment At 30 June 2006 Cost or fair value Accumulated depreciation and impairment Net carrying amount	CONSOLIDATED
	Plant and Equipment Leased TOTAL $ 859,874 73,000 932,874 38,215 92,267 130,482 (14,119) - (14,119) (237,891) (14,869) (252,760)
	646,079 150,398 796,477
	8,092,380 448,267 8,540,647 (7,446,301) (297,869) (7,744,170)
	646,079 150,398 796,477
	CONSOLIDATED
	Plant and Equipment Leased TOTAL $ 1,074,091 24,000 1,098,091 84,216 56,000 140,216 (298,433) (7,000) (305,433)
	859,874 73,000 932,874
	8,097,000 356,000 8,453,000 (7,237,126) (283,00) (7,520,126)
	859,874 73,000 932,874

Stokes (Australasia) Limited

Notes (continued)

10. PROPERTY, PLANT & EQUIPMENT (continued)

(a) Reconciliation of carrying amounts at the beginning and end of the period

Year ended 30 June 2007 At 1 July 2006, net of accumulated depreciation and impairment Additions Disposals Depreciation charge for the year At 30 June 2007 net of accumulated depreciation and impairment At 30 June 2007 Cost or fair value Accumulated depreciation and impairment Net carrying amount Year ended 30 June 2006 At 1 July 2005, net of accumulated depreciation and impairment Additions Depreciation charge for the year At 30 June 2006 net of accumulated depreciation and impairment At 30 June 2006 Cost or fair value Accumulated depreciation and impairment Net carrying amount	COMPANY
	Plant and Equipment Leased TOTAL $ 776,044 73,000 849,044 31,527 92,267 123,794 (1,620) - (1,620) (213,756) (14,869) (228,625)
	592,195 150,398 742,593
	7,742,573 448,267 8,190,840 (7,150,378) (297,869) (7,448,247)
	592,195 150,398 742,593
	COMPANY
	Plant and Equipment Leased TOTAL $ 984,750 24,000 1,008,750 46,000 56,000 102,000 (254,706) (7,000) (261,706)
	776,044 73,000 849,044
	7,718,044 356,000 8,074,044 (6,942,000) (283,000) (7,225,000)
	776,044 73,000 849,044

Stokes (Australasia) Limited

Notes (continued)

10. PROPERTY, PLANT & EQUIPMENT (Continued)

Aggregate depreciation allocated during the year is recognised as an expense and disclosed in Note 3 to the financial statements.

Assumptions made in respect to recoverable amount

CONSOLIDATED 2007 2006 $ $ 11. CURRENT TRADE AND OTHER PAYABLES Trade payables 1,733,392 1,692,270 Accruals 218,399 186,000 Goods and services tax (GST) 96,426 105,000 2,088,217 1,983,270 (a) Trade payables: Trade payables are non-interest bearing and are normally settled on 60-day terms 12. CURRENT INTEREST-BEARING LOANS AND BORROWINGS Secured: Finance lease liability (i) – (Note 19) 42,640 19,963 (i) Effectively secured by the assets leased. 13. CURRENT TAX LIABILITIES Income tax payable 2,994 2,694 14. CURRENT PROVISIONS Employee benefits 936,847 926,939 15. OTHER CURRENT FINANCIAL LIABILITIES Unsecured: Loan: non-interest bearing (Note 4(d)) - 130,000	COMPANY 2007 2006 $ $ 1,651,269 1,601,451 175,414 107,294 80,255 91,718 1,906,938 1,800,453 42,640 19,963 - - 897,140 895,685 - 130,000	COMPANY 2007 2006 $ $ 1,651,269 1,601,451 175,414 107,294 80,255 91,718 1,906,938 1,800,453 42,640 19,963 - - 897,140 895,685 - 130,000
		1,800,453
		19,963
		-
		895,685
		130,000

Stokes (Australasia) Limited

Notes (continued)

2006 $	COMPANY 2007 $	2006 $
53,742 2,193,595 2,247,337 - 2,247,337 83,732 - -	97,101 1,562,374 1,659,475 185,382 1,844,857 62,373 2,000,000 2,000,000	53,742 2,193,595
		2,247,337 185,382
		2,432,719
		83,732
		2,000,000
		2,000,000

Stokes (Australasia) Limited

Notes ( continued )

CONSOLIDATED 2007 2006 $ $	CONSOLIDATED 2007 2006 $ $	COMPANY 2007 2006 $ $	COMPANY 2007 2006 $ $
56,847 43,884 72,351 173,082 (33,341) 139,741 42,640 97,101 139,741	22,000 53,742 8,000 83,742 (10,037) 73,705 19,963 53,742 73,705	56,847 43,884 72,351 173,082 (33,341) 139,741 42,640 97,101 139,741	22,000 53,742 8,000
			83,742 (10,037)
			73,705
			19,963 53,742
			73,705

The finance leases for plant and equipment and motor vehicles have terms of between three and five years and do not include renewal options although new leases may be executed for those items previously leased.

Stokes (Australasia) Limited

Notes (continued)

Notes(continued)
20. CONTRIBUTED EQUITY 5,651,250 ordinary shares (2006: 5,651,250)	CONSOLIDATED COMPANY 2007 2006 2007 2006 $ $ $ $
	5,895,000 5,895,000 5,895,000 5,895,000

Fully Paid Ordinary Shares

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

Effective 1 July 1998, the Corporations legislation abolished the concepts of authorised capital and par value shares. Accordingly the Company does not have authorised capital nor par value in respect of its issued capital.

21. RESERVES Reserves comprise: Foreign currency translation reserve (ii) Share buy back reserve (Note 23) (i)Foreign Currency Translation reserve Balance at beginning of financial Year Translation of foreign operations Balance at end of financial year (ii)Share Buy back Reserve Balance at beginning of financial Year Buyback Balance at end of financial year The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.	64,507 (48,141) 16,366 (37,999) 102,506 64,507 (28,000) (20,141) (48,141)	(37,999) (28,000) (65,999) 5,062 (43,061) (37,999) - (28,000) (28,000)	- - - - - - - - -	- -
				-
				- -
				-
				- -
				-

Stokes (Australasia) Limited

Notes ( continued )

	CONSOLIDATED	CONSOLIDATED		COMPANY
	2007	2006	2007		2006
	$	$	$		$
22. MINORITY INTERESTS
Minority interests in controlled
entity comprise:
Issued capital	62,120	97,000		-		-
Reserves	(2,311)	1,000		-		-
Share buyback	(39,664)	(32,859)		-		-
Retained earnings	129,340	143,000		-		-
	149,485	208,000		-		-
SHARE BUYBACK: STOKES (NEW ZEALAND) LIMITED

On the 1 October 2006, Stokes (New Zealand) Limited bought back 40,000 shares @ $2.34 (NZD2.68) per share, of the parcel of 200,000 shares originally purchased by W. & U.G. Haller. Mr. W. Haller is a director of Stokes (New Zealand) Limited.

This transaction reduced the Haller holding to 120,000 shares and the total number of shares issued from 925,000 to 885,000.

The cost of the share buyback to Stokes (New Zealand) Limited was $93,485.

The amount debited to the minority interest in paid up capital was $34,880.
The amount debited to the minority interest in retained earnings was $19,833.
The amount debited to the minority interest in the share buyback reserve was $6,664.
The amount debited to the Group's share buy-back reserve was $20,141.

A further share buyback of 40,000 shares from W. & U.G. Haller is planned in October 2007, 40,000 in October 2008, and 40,000 in October 2009. Future amounts are unable to be reliably estimated.

EARNINGS PER SHARE	2007	2006
	Cents	Cents
Basic earnings per share (cents per share)	(4.2)	7.5
Diluted earnings per share (cents per share)	(4.2)	7.5
Earnings used in the calculation of basic
earnings per share Gain / (Loss)	(239,860)	425,530

Stokes (Australasia) Limited

Notes (continued)

CONSOLIDATED 2007 $ 23. EARNINGS PER SHARE (cont’d) The weighted average number of ordinary shares on issue used in the calculation of basic earnings per share 5,651,520 Diluted earnings per share is not applicable because the Company has no potentially dilutive ordinary shares outstanding. 24. COMMITMENTS FOR EXPENDITURE Operating lease commitments: Non-cancellable operating leases Property: (i) Not later than one year 385,606 Later than one year but not later than two years 211,309 Later than two years but not later than five years 42,321 639,236 Plant and equipment: (ii) Not later than one year 36,299 Later than one year but not later than two years 36,299 Later than two years but not later than five years 35,860 108,457 747,693 Leasing Arrangements	2006 $ 5,651,520 340,585 170,701 17,329 528,615 78,253 27,187 7,348 112,788 641,403	COMPANY 2007 $ 328,842 154,545 23,400 506,786 36,299 36,299 35,860 108,457 615,244	2006 $ 288,600 118,715 -
			407,315
			78,253 27,187 7,348
			112,788
			520,103

(i) The consolidated entity leases a number of premises throughout Australasia. The rental period of each lease agreement varies between two and five years with renewal options ranging from none to five years. The majority of lease agreements are subject to rental adjustments, some annually or bi-annually, in line with market rates, Consumer Price Index or fixed increases.

(ii) Relates to a motor vehicle, is for a fixed period, at a fixed rate with no renewal options.

Stokes (Australasia) Limited

Notes (continued)

25. CONTROLLED ENTITIES

Name of Company Country of Incorporation	Investment Ownership %
	2007 2006 2007 2006
Parent Entity - Stokes (Australasia) Limited Australia (Vic.) Controlled Entities – Stokes Investments (1) Australia Pty. Limited (Vic.) Stokes (New Zealand) (2) New Zealand Limited	2,000,000 2,000,000 100 100 192,005 192,005 74.9 71.9

(1) This controlled entity was dormant during the financial year.
(2) This controlled entity carries out business in New Zealand and is audited by UHY Hayne Norton.

26. OTHER RELATED PARTY INFORMATION

(a) Ownership interests in related parties

The parent entity’s interest in controlled entities is shown in Note 25.

(b) Transactions with controlled entities
(i) During the financial year a partly controlled entity of Stokes (Australasia) Limited purchased goods from this Company on normal commercial terms and conditions, totalling $150,412, (2006: $136,000).
(ii) During the financial year a partly owned controlled entity of Stokes (Australasia) Limited sold goods to the parent company on normal terms and conditions totalling $47,674 (2006: $65,000).
(iii) During the financial year a partly controlled entity of Stokes (Australasia) Limited, Stokes (New Zealand) Limited declared a Dividend of NZ 35 cents per share, which amounted to $281,238. This amount paid or payable to the Parent Entity was $203,949. Refer Note 25.
(iv) The amount payable to Stokes Investments is disclosed in Note 18. The loan is unsecured and interest free.
(v) The amounts payable to Stokes (New Zealand) Limited is disclosed in Note 16. The loan is unsecured with an interest rate of 9.5%.
(vi) The controlled entity has provided a $4,000,000 guarantee for the parent entity’s financing.
(c) Stokes (Australasia) Limited is the ultimate parent entity in the consolidated entity.

Stokes (Australasia) Limited

Notes ( continued )

Notes(continued)
27. CASH FLOW STATEMENT (a) Reconciliation of Cash Cash at the end of the financial year as shown in the cash flow statement is reconciled to the related items in the Balance Sheet as follows: Cash on hand (b) Financing Facilities (i) (iv) Available at the end of the financial year Bank and other loans (ii) Overdraft Facilities in use at the end of the financial year (i) Bank and other loans Overdraft	CONSOLIDATED 2007 2006 $ $		COMPANY 2007 2006 $ $
	266,389 4,000,000 270,000 4,270,000 1,562,374 - 1,562,374	195,074 6,000,000 270,000 6,270,000 2,193,595 - 2,193,595	87,152 4,000,000 - 4,000,000 1,562,374 - 1,562,374	70,533
				6,000,000 -
				6,000,000
				2,193,595 -
				2,193,595

(i) At the date of this report, the financier continues to provide financial facilities.

(ii) While there is a facility in place for $4,000,000, there are certain conditions outlined in the Facility Agreement which limit the use of this facility. The amount which is able to be used for the facility in general terms is 85% of Accounts Receivable, less Ineligibles such as Debtors 90 days & over, and Bank guarantees.

(iii) The controlled entity has provided a $4,000,000 guarantee for the parent entity’s financing.

(iv) Facilities are all secured and subject to periodic review (note 16).

Stokes (Australasia) Limited

Notes ( continued )

		CONSOLIDATED	CONSOLIDATED	COMPANY	COMPANY
		2007	2006	2007	2006
		$	$	$	$
27.	STATEMENT OF CASH FLOWS (continued)
	(c) Reconciliation of net cash provided
	by operating activities to net (loss)/profit
	after income tax.
	Net (loss)/profit after taxation	(156,398)	485,406	(241,651)	300,829
	(Profit)/loss on disposal of
	non-current assets	4,681	-	620	-
	Depreciation and amortisation of non-
	current assets	252,760	305,433	228,825	261,706
	Change in net assets and liabilities
	(Increase)/decrease in assets:
	Current receivables	200,906	332,988	207,249	258,249
	Current inventories	628,026	329,074	595,327	381,168
	Other current assets	1,967	219,830	(42,153)	97,512
	Increase/(decrease) in liabilities:
	Current trade payables	158,568	(740,043)	139,494	(607,194)
	Current tax liability	300	(122,106)	-	-
	Provisions	(11,451)	(18,329)	(19,904)	(13,583)
	Net cash provided by operating activities	1,079,359	792,253	867,609	678,687

28. FINANCIAL INSTRUMENTS

(a) Significant Accounting Policies

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

(b) Financial risk management objectives and policies

The Group’s principal financial instruments comprise bank loans, finance leases and cash.

The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

It is the policy of the consolidated entity to regularly review foreign currency exposures.

The degree to which the foreign exchange risk is managed will vary depending on circumstances that prevail at the time the risk is known or anticipated.

There are no foreign currency contracts outstanding at the reporting date (2006: Nil).

Stokes (Australasia) Limited

Notes (continued)

28. FINANCIAL INSTRUMENTS (continued)

(b) Financial risk management objectives and policies (continued)

Cash flow interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with a floating interest rate.

Liquidity risk

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and finance leases.

Credit risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has adopted the policy of only dealing with creditworthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults.

The consolidated entity does not have any significant concentrations of credit risk that arise from exposures to a single debtor or to a group of debtors having a similar characteristic such that their ability to meet their obligations is expected to be affected similarly by changes in economic or other conditions.

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

Stokes (Australasia) Limited

Notes (continued)

28. FINANCIAL INSTRUMENTS (continued)

(c) Interest Rate Risk

The following table details the consolidated entity’s exposure to interest rate risk as at 30 June 2007:

Weighted average interest rate % Year ended 30 June 2007 Financial Assets Cash 3.75 Current receivables Financial Liabilities Trade and other payables Accruals Bank loans 9.2 Finance lease liability 7.3 Year ended 30 June 2006 Financial Assets Cash 3.75 Current receivables Financial Liabilities Trade and other payables Accruals Bank loans 9.6 Unsecured loan Finance lease liability 9.9	CONSOLIDATED Variable interest rate Fixed Interest Rate Maturity Non- interest bearing Total Less than 1 year 2 to 5 years $ 266,389 - - - 266,389 - - - 3,226,088 3,226,088
	266,389 - - 3,226,088 3,492,477
	- - - 1,869,818 1,869,818 - - - 218,399 218,399 1,562,374 - 2,706 - 1,565,080 - 42,640 97,101 - 139,741
	1,562,374 42,640 99,807 2,088,217 3,793,038
	195,074 - - - 195,074 - - - 3,394,012 3,394,012
	195,074 - - 3,394,012 3,589,086
	- - - 1,692,270 1,692,270 - - - 186,000 186,000 2,193,595 - - - 2,193,595 - - - 130,000 130,000 - 19,963 53,742 - 73,705
	2,193,595 19,963 53,742 1,853,270 414,030

Stokes (Australasia) Limited

Notes (continued)

28. FINANCIAL INSTRUMENTS (continued)

(c) Interest Rate Risk

The following table details the parent entity’s exposure to interest rate risk as at 30 June 2007:

Weighted average interest rate % Year ended 30 June 2007 Financial Assets Cash 3.75 Current receivables Financial Liabilities Trade and other payables Accruals Bank loans 9.2 Finance lease liability 7.3 Year ended 30 June 2006 Financial Assets Cash 3.75 Current receivables Financial Liabilities Trade and other payables Accruals Bank loans 9.6 Unsecured loan Finance lease liability 9.9	COMPANY Variable interest rate Fixed Interest Rate Maturity Non- interest bearing Total Less than 1 year 2 to 5 years $ 87,152 - - - 87,152 - - - 2,954,502 2,954,502
	87,152 - - 2,954,502 3,041,654
	- - - 1,731,524 1,731,524 - - - 175,414 175,414 1,562,374 - - - 1,562,374 - 42,640 97,101 - 139,741
	1,562,374 42,640 97,101 1,906,938 3,609,053
	70,533 - - - 70,533 - - - 3,161,751 3,161,751
	70,533 - - 3,161,751 3,232,284
	- - - 1,693,159 1,693,159 - - - 107,294 107,294 2,193,595 - - - 2,193,595 - - - 130,000 130,000 - 19,963 53,742 - 73,705
	2,193,595 19,963 53,742 1,930,453 4,197,753

Stokes (Australasia) Limited

Notes (continued)

(d) Fair Value

The carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their respective fair values, determined in accordance with the accounting policies disclosed in Note 1 to the financial statements.

29. REMUNERATION OF AUDITORS (a) Auditors of the Parent Entity & Group: Amounts received or due and receivable by Ernst & Young (Australia) for: Audit or review of the financial report of the entity Tax compliance services (b)Amounts received or due and receivable by non Ernst & Young audit firms for: Audit of the financial report Other non-audit services	CONSOLIDATED 2007 2006 $ $ 61,000 58,000 8,000 10,000 69,000 68,000 8,171 9,000 2,150 8,000 10,321 17,000 79,321 85,000	COMPANY 2007 2006 $ $ 61,000 58,000 6,000 10,000 67,000 68,000 8,000 8,000 - - 8,000 8,000 75,000 76,000	COMPANY 2007 2006 $ $ 61,000 58,000 6,000 10,000 67,000 68,000 8,000 8,000 - - 8,000 8,000 75,000 76,000
			68,000
			8,000 -
			8,000
			76,000

30. SUBSEQUENT EVENTS/CONTINGENT ASSETS AND LIABILITIES

Notes (continued)

31. SEGMENT INFORMATION

SEGMENT REVENUES

For management purposes, the consolidated entity is organised into two geographical segments. These segments are the basis on which the consolidated entity reports its Australia and New Zealand results.

Australia - Goods manufactured and bought in for resale in Australia.

New Zealand - Goods manufactured and bought in for resale in New Zealand.

Australia New Zealand Inter-segment revenues Interest Eliminations	External Sales	External Sales
	2007 $	2006 $
	17,702,098 2,295,692 198,086	18,863,505 2,259,414 201,000
	20,195,876 (198,086)	21,323,919 (201,000)
		21,122,919
Consolidated sales revenue	19,997,790

SEGMENT RESULTS

Australia New Zealand Total of all segments Eliminations (Loss)/ profit before income tax expense Income tax expense	2007 $	2006 $
	(445,600) 415,571	300,829 309,068
	(30,029) -	609,897 (25,000)
	(30,029) (126,369)	584,897 (99,941)
		485,406
Net (loss)/ profit	(156,398)

Stokes (Australasia) Limited

Notes (continued)

31. SEGMENT INFORMATION (continued)

SEGMENT ASSETS AND LIABILITIES

Australia New Zealand Eliminations	Assets	Assets	Liabilities	Liabilities
	2007 $	2006 $	2007 $	2006 $
	9,757,400 1,068,469	10,607,655 965,000	6,753,948 307,805	(7,362,552) (229,884)
	10,825,869 (2,461,212)	11,572,655 (2,390,599)	7,061,753 (2,269,207)	(7,592,436) 2,198,501
				(5,393,935)
Consolidated	8,364,657	9,182,056	4,792,546

OTHER SEGMENT INFORMATION

	Acquisition of segment assets Depreciation and amortisation of segment assets	Australia	Australia	New Zealand	New Zealand
		2007 $	2006 $	2007 $	2006 $
		123,996 (228,625)	102,000 (261,000)	6,486 (23,935)	37,000 (43,000)

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Stokes (Australasia) Limited

Comparative Results for the years 2004 - 2007

	2007	2006	2005	2004
	$	$	$	$
Revenue
Operating profit/(loss) before income tax	(35,400)	584,897	(348,326)	456,000
Income tax	126,369	99,491	123,989	132,654
Operating profit/(loss) after income tax	(161,769)	485,406	(472,315)	323,346
Dividends perShare	-	-	-	-
Balance sheet
Current assets	7,562,809	8,249,182	9,100,587	11,081,000
Less: Current liabilities	3,070,698	3,062,866	3,730,798	4,725,000
	4,492,111	5,186,316	5,369,788	6,356,000
Fixed assets	796,477	932,874	1,097,851	1,635,049
Other non-current assets	-	-	-	52,000
	5,288,588	6,119,190	6,467,640	8,043,049
_Less:_Non-current liabilities	1,721,848	2,331,069	3,025,327	3,968,159
Total net assets	3,566,740	3,788,121	3,442,313	4,074,890
Issued capital	5,895,000	5,895,000	5,894,521	5,894,521
Reserves and retained profits/(losses)	(2,555,034)	(2,314,879)	(2,670,336)	(2,125,000)
Outside equityinterests	226,774	208,000	218,128	305,369
Total share capital and reserves	3,566,740	3,788,121	3,442,313	4,074,890

Stokes (Australasia) Limited

Shareholder Analysis and Other Stock Exchange Requirements

Statement of security holders as at 31 August 2007

(a) Distribution of shareholders by sizes of holdings
1 - 1,000	185
1,001 - 5,000	61
5,001 - 10,000	15
10,001 - 100,000	30
100,001 and over	13
Total	304
Holding less than a marketable parcel	139

Voting rights - Ordinary shares

Each ordinary share carries one vote.

(b) Twenty Largest Shareholders

Shareholder William R. Stokes National Exchange Pty Ltd Superfund Account Ian P. Alexander National Exchange Pty Ltd David G.M. Welsh Jaws Pty Ltd Milly Elkington Joanna M. Eccleston Isabella F. Green National Exchange Pty Ltd Ian P. Alexander Gordon B. Elkington McNeil Nominees Pty Ltd Winpar Holdings Ltd DGMW Pty Ltd. HSBC Custody Nominees (Australia) Ltd B J & P L Hoff (Berend Hoff Super Fund) Honan Business Services Pty Ltd (Honan Superfund Account) Ago Pty Ltd. Ian D. Mackie	Number Percentage 743,944 13.16 683,322 12.09 553,632 9.80 446,827 7.91 401,676 7.11 332,650 5.89 301,443 5.33 278,463 4.93 250,786 4.44 198,530 3.51 110,640 1.96 100,122 1.77 100,000 1.77 93,270 1.65 80,000 1.42 64,000 1.13 63,350 1.12 40,500 0.72 40,000 0.71 32,917 0.58
	4,916,072 87.00

Shareholder
William R. Stokes
National Exchange Pty Ltd Superfund Account
Ian P. Alexander
National Exchange Pty Ltd
David G.M. Welsh
Jaws Pty Ltd
Milly Elkington
Joanna M. Eccleston
Isabella F. Green
National Exchange Pty Ltd
Ian P. Alexander
Gordon B. Elkington
McNeil Nominees Pty Ltd
Winpar Holdings Ltd
DGMW Pty Ltd.
HSBC Custody Nominees (Australia) Ltd
B J & P L Hoff (Berend Hoff Super Fund)
Honan Business Services Pty Ltd (Honan Superfund Account)
Ago Pty Ltd.
Ian D. Mackie

Number
Percentage
743,944
13.16
683,322
12.09
553,632
9.80
446,827
7.91
401,676
7.11
332,650
5.89
301,443
5.33
278,463
4.93
250,786
4.44
198,530
3.51
110,640
1.96
100,122
1.77
100,000
1.77
93,270
1.65
80,000
1.42
64,000
1.13
63,350
1.12
40,500
0.72
40,000
0.71
32,917
0.58

4,916,072
87.00

Stokes (Australasia) Limited

Name	Number of Ordinary Shares to which
	Person Entitled
National Exchange Pty Ltd	1,393,049
William Stokes	1,084,694
Ian P. Alexander	662,272
David G. M. Welsh	481,676
Milly Elkington	301,443

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(Australasia) Limited Since 1856

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AI assistant

SKS TECHNOLOGIES GROUP LIMITED — Annual Report 2007

65805_rns_2007-09-20_9123c412-8437-46ae-839f-24538c8b5585.pdf

Annual Report 2007

2007 Report to Shareholders

Table of Contents

Stokes Synertec

Stokes Appliance Parts

Stokes (Australasia) Limited Our People and Products

Stokes Badges

Stokes Valves & Camlocks

Stokes Customer Care Centre & Sales

Stokes Badges and Medallions

Distribution / Warehouse

Stokes Industrial Manufacturing

Stokes Sydney and S/Aust Offices & Warehouses

Ron Drury’s Retirement

Directors’ Report

(a) Directors

William R. Stokes, B. Comm., Age 63

Gordon B. Elkington, B.Sc., M.Sc., Ph.D., LL.M., Age 61

Ronald J. Drury, Age 65

John M. Hackett, B.Bus. Studies, C.P.A., Age 59

(b) Principal activities

(c) Operating results

Directors’ Report

(d) Sales

(e) The next five years

(f) R. W. Winning Pty. Limited

(g) Stokes (New Zealand) Limited

Directors’ Report

(h) Retirement of Mr. Ron Drury

(i) Appointment of Mr. John Hackett

(j) Dividends

(k) Significant changes in state of affairs

(l) Significant events after balance date

(m) Likely developments and expected results

Directors’ Report

(n) Directors’ meetings

(o) Indemnification and insurance of officers and auditors

(p) Auditor independence and non audit services

(q) Staff

Remuneration Report (Audited)

Remuneration philosophy

Employment contracts

Group performance

Remuneration Report (Audited)

CORPORATE GOVERNANCE STATEMENT

1. Management and oversight

2. Structure of the Board

3. Ethical decision making

4. Integrity in financial reporting

5. Timely and balanced disclosure

6. Respect for the rights of shareholders

7. Recognition and management of risk

8. Encouragement of enhanced performance

9. Fair and responsible remuneration

10. Legitimate interests of stakeholders

Income Statement

Balance Sheet

As at 30 June 2007

Cash Flow Statement

Statement of Changes in Equity

Statement of Changes in Equity

YEAR ENDED 30 JUNE 2006

YEAR ENDED 30 JUNE 2007

Notes to the year end financial statements 30 June 2007

1 Corporate information

2 Summary of significant accounting policies

(a) Basis of preparation

(b) Statement of compliance

(c) Going concern basis of accounting

(d) Basis of consolidation

(e) Foreign currency translation

Notes (continued)

(f) Segment reporting

(g) Property, plant and equipment

Impairment

Disposal

(h) Finance costs

SKS TECHNOLOGIES GROUP LIMITED Annual Report 2007