SOUTHERN CROSS ELECTRICAL ENGINEERING LTD — Annual Report 2008

Aug 24, 2008

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SOUTHERN CROSS
ELECTRICAL
ENGINEERING LIMITED
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ASX Release

25 August 2008

Southern Cross Electrical Engineering Exceeds Prospectus Earnings

Electrical and instrumentation construction specialist, Southern Cross Electrical Engineering Limited (ASX:SXE) today announced its proforma net profit after tax for the year ended 30 June 2008 of $14.3 million which exceeded its prospectus earnings by $2.1 million.

The financial highlights for the Company are:

prospectus earnings by $2.1 million. The financial highlights for the Company are:
Proforma Results	Actual	Prospectus	Variance
Earnings before interest, tax, depreciation and amortisation ($ million)	21.0	18.5	2.5
Net profit after tax ($ million)	14.3	12.2	2.1
Earnings per share	12.8 cps	10.9 cps	1.9 cps
Dividend per share	6.0 cps	5.0 cps	1.0 cps
Return on capital employed	42.5%	38.8%	3.7%
Operational highlights include:

• Winning the national excellence award for safety;

• Winning the national excellence award for quality;

• 0 lost time injuries;

• First oil and gas team successfully established; and

• Experienced executive team appointed.

SXE chairman Frank Tomasi said he was very pleased that the Company had been so successful over the last 12 months was due to the strong performance against the prospectus was driven by client demand for additional works, improved margins and a tight control on overheads.

“I attribute this achievement to a dedicated team who are focussed on delivering high quality services to our customers” Mr Tomasi said.

These results have enabled the Company to declare a final fully franked dividend on 4 cents per share which takes the full year fully franked dividend to 6 cents per share. This is 20% higher than the full year fully franked prospectus dividend of 5 cents per share.

A.B.N. 92 009 307 046 EC001681

41 MACEDONIA STREET, NAVAL BASE, WESTERN AUSTRALIA 6165 TELEPHONE: 61 8 9410 1833 FAX No: 61 8 9410 2504 EMAIL: scee@scee.com.au

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After the successful listing of the Company and the strong earnings results SXE is in a net cash position of $24.4 million which underpins a robust balance sheet. The operating activities of the business generated proforma cash flows of $16.6m. This provides the Company with a solid financial platform to take advantage of future growth opportunities.

The outlook for FY09 is positive with the level of infrastructure investment underway in Australia by resource companies. Given this backdrop and the experienced team in place the Company is expecting to increase revenue by 43% to $120 million. To date SXE has contracted revenue of $70 million which is a record start to the year for the Company.

Newly appointed Managing Director, Mr Stephen Pearce said:

“Given the outstanding history of SXE, I am excited to join the team and believe that the addition of myself and Mr Stephen Fewster as CFO complements the existing management team which in the current environment places us well to pursue growth opportunities.”

For further information contact:

Mr Stephen Pearce Managing Director Southern Cross Electrical Engineering Limited + 61 (8) 9410 1833 www.scee.com.au

Mr Stephen Fewster Chief Financial Officer Southern Cross Electrical Engineering Limited + 61 (8) 9410 1833 www.scee.com.au

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Southern Cross Electrical Engineering Limited

2008 Full Year Result and

Preliminary Final Report

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CONTENTS

RESULTS FOR ANNOUNCEMENT TO THE MARKET	RESULTS FOR ANNOUNCEMENT TO THE MARKET	3
CONSOLIDATED INCOME STATEMENT		4
CONSOLIDATED BALANCE SHEET		5
CONSOLIDATED STATEMENT OF CASH FLOWS		6
1	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	7
2	REVENUE AND EXPENSES	7
3	SEGMENT REPORTING	7
4	CASH	8
5	CONTRIBUTED EQUITY	9
6	DIVIDENDS PAID AND PROPOSED	9
7	ACQUISITION OF CONTROLLED ENTITIES AND BUSINESSES	10
8	EVENTS AFTER THE BALANCE SHEET DATE	10

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Results for Announcement to the Market

Results for Announcement to the Market
	Percentage Change Increase $
Revenue and Net Profit Revenue from ordinary activities Profit from ordinary activities after tax attributable to members Net profit for the full year attributable to members	Up 3.8% 3,118,066 Up 7.0% 769,003 Up 7.0% 769,003
	Amount per security Franked amount per security
Dividends Interim dividend Final dividend Record date for determining entitlements to the dividend Date the final dividend is payable Details of dividend or distribution re-investment plan – The Company does not operate a dividend re-investment plan.	2 cents 2 cents 4 cents 4 cents 12thSeptember 2008 26thSeptember 2008
NTA Backing	Year Ended 30 June 2008 Year Ended 30 June 2007
Net tangible asset backing per security (cents per share)	28.1 cps 12.8 cps

Details of entities over which control has been gained or lost during the period

During the period there was no change of control of any entities within the consolidated group of Southern Cross Electrical Engineering Ltd.

Details of associates and joint venture entities

The company has no interest in any associates or joint ventures.

Audit

This report is based on accounts which are in the process of being audited.

Previous Corresponding Reporting Period

The previous corresponding reporting period is the year ended 30 June 2007.

Commentary on the Results for the Period

A commentary on the results for the period is contained in the ASX release accompanying this statement.

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Consolidated Income Statement

Consolidated Income Statement
	Note	2008 2007 $ $
Continuing operations Revenue Cost of sales Gross profit Other income Employee benefits expenses Occupancy expenses Administration expenses Other expenses Depreciation expenses Results from operating activities Finance income Finance expenses Net finance expense Profit before income tax Income tax expense Profit from continuing operations Earnings per share (cents per share) for profit attributable to the ordinary equity holders of the Company: - basic - diluted	2 2 2	84,173,883 81,055,817 (53,936,523) (55,768,244)
		30,237,360 25,287,573 1,284,751 99,244 (7,425,325) (6,813,197) (528,544) (485,701) (1,548,473) (736,725) (4,704,091) (1,114,421) (1,130,563) (862,291)
		16,185,115 15,374,482 832,360 415,538 (838,884) (334,469)
		(6,524) 81,069
		16,178,591 15,455,551 (4,432,322) (4,478,285)
		11,746,269 10,977,266
		10.5 11.0 10.5 11.0

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Consolidated Balance Sheet

Consolidated Balance Sheet
Note	2008 2007 $ $
Assets Cash and cash equivalents 4 Trade and other receivables Inventories Work in progress 1 Derivatives Prepayments Total current assets Other investments, including derivatives Investment property Property, plant and equipment Deferred tax assets Other receivables Total non-current assets Total assets Liabilities Trade and other payables Loans and borrowings Employee benefits Current tax payable Total current liabilities Trade and other payables Loans and borrowings Total non-current liabilities Total liabilities Net assets Equity Share capital 5 Reserves Retained earnings Total equity attributable to equity holders of the Company Minority interest Total equity 5	25,689,555 9,179,161 10,817,972 11,749,891 365,513 - 1,571,837 668,589 612,827 - 1,114,683 -
	40,172,387 21,597,641
	671,375 671,375 5,891,341 5,014,889 1,222,061 491,930 172,672 -
	7,957,449 6,178,194
	48,129,836 27,775,835
	8,135,750 8,331,561 821,932 800,900 2,145,922 1,837,307 2,558,388 2,911,607
	13,661,992 13,881,375
	396,782 396,782 325,105 665,309
	721,887 1,062,091
	14,383,879 14,943,466
	33,745,957 12,832,369
	19,792,706 750,002 174,337 60,957 13,778,914 11,789,123
	33,745,957 12,600,082 - 232,287
	33,745,957 12,832,369

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Consolidated Statement of Cash Flows

Consolidated Statement of Cash Flows
Note	2008 2007 $ $
Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Interest received Interest paid Income taxes paid Net cash from (used in) operating activities 4 Cash flows from investing activities Proceeds from sale of assets Acquisition of property, plant and equipment Net cash from (used in) investing activities Cash flows from financing activities Proceeds from issue of share capital Proceeds from borrowings Repayment of borrowings Dividends paid Net cash from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at 1 July Effect of exchange rate fluctuations on cash held Cash and cash equivalents at 30 June	85,698,272 79,872,309 (70,300,217) (62,016,218) 832,360 415,538 (838,884) - (5,515,672) (2,804,078)
	9,875,859 15,467,551
	152,108 22,864 (2,079,668) (1,856,192)
	(1,927,560) (1,833,328)
	19,042,704 - - 1,566,898 (724,131) (879,956) (9,756,478) (7,115,043)
	8,562,095 (6,428,101)
	16,510,394 7,206,122 9,179,161 1,967,483 - 5,556
	25,689,555 9,179,161

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1 Summary of Significant Accounting Policies

These preliminary consolidated financial statements relate to Southern Cross Electrical Engineering Limited and the entities it controlled at the end of, or during the year ended 30 June 2008. The accounting policies adopted are consistent with those of the previous financial year.

2 Revenue and Expenses

2 Revenue and Expenses
	Consolidated 2008 2007 $ $
Other Income Net gain on foreign exchange Net gain on currency derivatives Net loss on sale of property, plant and equipment Other Employee Benefits Expense Remuneration, bonuses and on-costs Amounts provided for employee entitlements Share based payments expense Other Expenses Costs associated with listing the Company Repairs and maintenance Motor vehicles Other	751,378 9,332 612,827 - (79,454) 3,835 - 86,077
	1,284,751 99,244
	7,040,196 6,878,904 308,615 (65,707) 76,514 0
	7,425,325 6,813,197
	3,684,403 0 126,503 246,720 583,962 281,127 309,223 586,574
	4,704,091 1,114,421

3 Segment Reporting

3 Segment Reporting
	Australia		South	America	Total
	2008	2007	2008	2007	2008	2007
Revenue from external customers	65,264,599	75,989,127	18,909,284	5,066,690	84,173,883	81,055,817
Net profit after tax	7,860,238	9,771,937	3,886,031	1,205,329	11,746,269	10,977,266
Segment assets	42,793,732	25,793,830	5,336,104	1,982,005	48,129,836	27,775,835
Capital expenditure	1,480,061	1,766,998	599,607	89,194	2,079,668	1,856,192

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4 Cash

Cash and Cash Equivalents

Cash and Cash Equivalents
	Consolidated 2008 2007
Bank balances Short term deposits (i)	4,354,120 4,072,188 21,335,435 5,106,973
	25,689,555 9,179,161

(i) Included in the short term deposits is a term deposit of $5,000,000 which is held as security by the Commonwealth Banking of Australia as security for the Bank Guarantees it issues on behalf of Southern Cross Electrical Engineering Limited.

Cash Flow Statement Reconciliation

Profit for the period Adjustments for: Depreciation Gain on sale of property, plant and equipment Equity-settled share-based payment transactions Net (gain)/loss on foreign exchange Other non-cash items (Increase)/decrease in assets Change in trade and other receivables Change in inventories Change in work in progress Change in derivatives Change in prepayments Increase/(decrease) in liabilities Change in trade and other payables Change in provisions and employee benefits Change in income tax payable Change in deferred income tax Net cash from operating activities

11,746,269 10,977,266 1,130,563 886,315 (79,453) (3,835) 76,514 - 36,864 - - 828,905 931,919 (995,782) (365,513) - (903,248) (668,589) (612,827) - (1,114,683) - (195,811) 3,531,227 308,615 (168,338) (353,219) 1,431,565 (730,131) (351,183)

9,875,859 15,467,551

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5 Contributed Equity

5 Contributed Equity
			Note		Number	$
Movement in ordinary shares on issue (number)
On issue at 1 July					750,002		750,002
Conversion of ordinary shares			(i)		99,249,998		0
Issued for cash			(ii)		20,000,000	19,042,704
On issue at 31 June – fully paid					120,000,000	19,792,706
(i) There was a conversion of 750,002 shares to		100,000,000 shares in			accordance with a Members’
resolution.
(ii) Issued 20,000,000 shares on 26th	November 2007	as part of the initial listing of the Company’s securities on
the Australian Stock Exchange
Statement of Changes in Equity
	Share	Retained	Reserve for			Minority
	Capital	Earnings	own Shares		Reserves	Interest	Total Equity
Balance as at 1 July 2007	750,002	11,789,123		0	60,957	232,287	12,832,369
Profit for the period		11,746,269					11,746,269
Acquisition of minority interest						(232,287)	(232,287)
Currency translation differences					36,866		36,866
Cost of share based payment			76,514				76,514
Issue of ordinary shares	19,042,704						19,042,704
Dividends to equity holders		(9,756,478)					(9,756,478)
	19,792,706	13,778,914	76,514		97,823	0	33,745,957

6 Dividends Paid and Proposed

6 Dividends Paid and Proposed
	Consolidated
	2008	2007
Declared and paid during the period (fully franked at
30%)
Fully franked dividend for 2007 of 7.1 cents per share paid		7,115,043
prior to listing
Interim franked dividend for 2008 of 5.06 cents per share
paid to members prior to listing	5,056,475
Interim franked dividend for 2008 of 2.3 cents per share
paid to members prior to listing	2,300,000
Interim franked dividend for 2008 of 2.0 cents per share
paid to members subsequent to listing	2,400,000
Proposed and not recognised as a liability (fully
franked at 30%)
Final franked dividend for 2008 of 4.0 cents per share	4,800,000

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7 Acquisition of Controlled Entities and Businesses

Gianfranco Tomasi (1%) and David Tomasi (1%) sold their respective shares in Cruz Del Sur Ingeneria Electra (Peru) S.A. Limited to Southern Cross Electrical Engineering (WA) Pty Ltd at their historical cost. Southern Cross Electrical Engineering (WA) Pty Ltd was incorporated on 4 October 2007 and is a 100% subsidiary of Southern Cross Electrical Engineering Limited. Southern Cross Electrical Engineering Limited therefore, indirectly acquired the remaining 2% of Cruz Del Sur Ingeneria Electra (Peru) S.A. Limited during the year ended 30 June 2008.

8 Events after the Balance Sheet Date

On 25[th] August 2008, the directors of Southern Cross Electrical Engineering Limited declared a final dividend on ordinary shares in respect of the 2008 financial year. The total amount of the dividend is $4,800,000, which represents a fully franked dividend of 4.0 cents per share.

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