SOUTHERN CROSS ELECTRICAL ENGINEERING LTD — Interim / Quarterly Report 2008

Feb 19, 2008

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SOUTHERN CROSS ELECTRICAL ENGINEERING LIMITED and Controlled Entities A.C.N. 009 307 046

Interim Financial Report for the Half Year Ended 31 December 2007

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046)

Contents to Financial Report

Corporate Information	3
Directors' Report	4
Auditors Independence Declaration	6
Income Statement	7
Balance Sheet	8
Statement of Changes in Equity	9
Cash Flow Statement	10
Notes to the Consolidated Financial Statements	11
Directors' Declaration	16
Audit Report	17

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046)

Corporate Information A.C.N 009 307 046

Directors

Mr Gianfranco Tomasi (Chairman) Mr Brian Carman Mr John Cooper - appointed 30 October 2007 Mr Douglas Fargher - appointed 30 October 2007 Mr David Tomasi - resigned 31 October 2007

Company Secretary Mr Michael Silbert

Registered Office

41 Macedonia Street Naval Base, Perth, WA 6165

Principal Place of Business

41 Macedonia Street Naval Base, Perth, WA 6165 Phone: (08) 9410 1833

Share Register

Computershare Investor Services Pty Ltd Level 2 45 St Georges Terrace Perth WA 6000 Phone: (08) 9323 2000

Southern Cross Electrical Engineering Limited shares are listed on the Australian Stock Exchange. (ASX Code: SXE)

Legal Advisor Deacons

Auditors

Grant Thorton (WA) Partnership

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046)

DIRECTORS' REPORT

The Directors of Southern Cross Electrical Engineering Limited ("Southern Cross "or "SCEE") A.C.N. 009 307 046 present the financial statements of the Southern Cross Group, the consolidated entity, for the half-year ended 31 December 2007 and in accordance with a resolution of the Directors, report as follows:

DIRECTORS

The Directors of Southern Cross Electrical Engineering Limited at the date of this report are:

Director	Main Duties
Gianfranco (Frank) Tomasi	Executive Chairman &
	Chief Executive Office
John Cooper*	Non-Executive Director
Brian Carman*	Non-Executive Director
Douglas Fargher*	Non-Executive Director

*Messrs Cooper, Carman and Fargher were elected as Directors of the Company on 30 October 2007, and remain Directors up to the date of this report. Mr Tomasi was a Director for the entire half-year period and up to the date of this report.

REVIEW OF OPERATIONS

The net profit attributable to SCEE's Australian operations for the half-year was $6,804,296 after deducting income tax expense of $1,894,302.

The result for the six months reflects continued strong performance experienced in the previous period. The successful completion of the Dampier Port Upgrade Phase B and Ravensthorpe Nickel Projects leading into the Hope Downs Project were the main drivers. Strong contributions were also realised from Newman Hub and Cape Lambert infrastructure works. A new major contract award for the Cape Lambert 80mtpa Upgrade Project was a highlight towards the end of the period. In Peru the Cerro Corona Project has increased substantially due to additional scope of works.

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OPTIONS

Simon Buchhorn was granted 500,000 options in SCEE on 28 November 2007 as part of the Company's Senior Management Long Term Incentive Plan.

ROUNDING

SCEE is a company of the kind referred to in Class Order 98/0100 issued by the Australian Securities and Investments Commission, relating to the "rounding off" of amounts in the Directors' Report and Financial Report. All amounts have been rounded off to the nearest dollar.

AUDITORS' INDEPENDENCE DECLARATION

In accordance with section 307 of the Corporations Act 2001, the Directors have obtained a declaration of independence from Grant Thornton (WA) Partnership, the consolidated entity's auditors.

Signed in accordance with a resolution of the Board of Directors:

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Dated this 18[th] day of February 2008

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Chartered Accountants Business Advisers and Consultants

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18[th] February 2008

The Board of Directors Southern Cross Electrical Engineering Limited 41 Macedonia Street NAVAL BASE WA 6165

Dear Directors,

SOUTHERN CROSS ELECTRICAL ENGINEERING LIMITED AUDITORS’ INDEPENDENCE DECLARATION

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

As lead audit partner for the half-year review of the financial statements of Southern Cross Electrical Engineering Limited for the half-year ended 31 December 2007, I declare that to the best of my knowledge and belief, there have been no contraventions of:

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

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

Yours sincerely,

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GRANT THORNTON (WA) PARTNERSHIP

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L1, 10 Kings Park Road West Perth WA 6005 PO Box 570 West Perth WA 6872

MICHAEL HILLGROVE PARTNER

T +61 8 9480 2000 F +61 8 9322 7787 E admin@gtwa.com.au W www.grantthornton.com.au

Grant Thornton (WA) Partnership ABN 17 735 344 518

Liability limited by a scheme approved under Professional Standards Legislation.

Grant Thornton (WA) Partnership is an independent business entitled to trade under the international name Grant Thornton. Grant Thornton is a trademark owned by Grant Thornton International and used under licence by independent firms and entities throughout the world.

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046) Income Statement

for the half year ended 31 December 2007

Revenues Operating activities Rendering of services Non-operating activities Interest received Other Expenses Cost of sales Administration Expenses Depreciation and amortisation Finance Costs Profit Before Income Tax Expense Income tax expense Profit for the half-year Profit attributable to minority interests Profit attributable to members of the Parent Entity Basic earnings per share (cents) Diluted earnings per share (cents)

CONSOLIDATED 31-Dec-07 31-Dec-06 $ $ 49,757,483 44,871,235 201,033 126,442 58,343 17,437 50,016,859 45,015,114 31,566,931 30,215,335 9,065,789 5,330,497 496,357 369,109 189,184 68,740 41,318,261 35,983,681 8,698,598 9,031,433 (1,894,302) (2,301,189)

6,804,296 6,730,244 - (134,605) 6,804,296 6,595,639 5.67 6.73 5.67 6.73

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046) Balance Sheet as at 31 December 2007

CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Investment properties Deferred tax assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Interest bearing liabilities Provisions Income tax payable TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Trade and other payables Interest bearing liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Retained earnings Reserves Parent Interest Minority Interest TOTAL EQUITY

CONSOLIDATED 31-Dec-07 30-Jun-07 $ $ 25,061,562 9,179,161 8,621,370 11,749,891 209,320 - 33,892,252 20,929,052 5,273,602 5,014,889 671,375 671,375 1,703,093 491,930 7,648,070 6,178,194 41,540,322 27,107,246 6,094,351 8,331,561 932,780 800,900 1,635,932 1,837,307 1,193,475 2,711,030 9,856,538 13,680,798 396,782 396,782 707,399 665,309 1,104,181 1,062,091 10,960,719 14,742,889 30,579,603 12,364,357 19,490,402 750,002 11,001,217 11,321,111 87,984 60,957 30,579,603 12,132,070 - 232,287 30,579,603 12,364,357

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046) Consolidated Statement of Changes in Equity For the Half Year Ended 31 December 2007

Consolidated

Consolidated
	Issued Capital	Foreign Currency	Options	Retained	Minority	Total
		Translation Reserve	Reserve	Earnings	Equity Interest
	$	$	$	$	$	$
Balance at 1 July 2006	750,002	(12,578)	-	7,539,908	153,618	8,430,950
Profit attributable to
equity shareholders				6,595,639	134,605	6,730,244
Dividends paid or provided
for
Adjustments				997,806		997,806
Transfers to/(from) reserves		580,981				580,981
Shares issued (net)					32,221	32,221
Balance at 31 December 2006 750,002		568,403	-	15,133,353	320,444	16,772,202
Balance at 1 July 2007	750,002	60,957	-	11,321,111	232,287	12,364,357
Profit attributable to
equity shareholders				7,036,582	(232,287)	6,804,295
Dividends paid or provided	for			(7,356,476)		(7,356,476)
Adjustments						-
Transfers to/(from) reserves		21,281	5,746			27,027
Shares issued (net)	18,740,400					18,740,400
Balance at 31 December 200719,490,402		82,238	5,746	11,001,217	-	30,579,603

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046) Consolidated Cash Flow Statement For the Half Year Ended 31 December 2007

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest paid Income tax paid Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment Dividends received Payments for property, plant and equipment Net cash provided by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of borrowings Issue of shares Costs of issue of shares Dividends paid Repayment of financial liabilities Net cash provided by (used in) financing activities Net increase (decrease) in cash held Net foreign exchange difference Cash at beginning of year Cash at end of year

CONSOLIDATED 31-Dec-07 31-Dec-06 $ $ 53,364,406 47,178,703 (43,606,478) (27,363,501) 201,033 126,442 154 - (4,184,865) (1,858,836) 5,774,250 18,082,808 130,580 20,863 - - (1,565,834) (1,881,249) (1,435,254) (1,860,386) (25,013) (781,388) 20,000,000 - (1,259,600) - (7,356,476) (7,115,043) 173,971 670,139 11,532,882 (7,226,292) 15,871,878 8,996,130 10,523 - 9,179,161 1,967,483 25,061,562 10,963,613

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046) Notes to the Financial Statements For the Half Year Ended 31 December 2007

1. BASIS OF PREPARATION

This general purpose condensed financial report for the half year ended 31 December 2007 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. Southern Cross Electrical Engineering Limited is a company limited by shares, incorporated and domiciled in Australia.

The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2007 and any public announcements made by Southern Cross Electrical Engineering Limited and its controlled entities during the half-year in accordance with continuous disclosure requirements arising under the ASX Listing Rules.

The accounting policies have been consistently applied by the entities in the consolidated group are are consistent with those in the 30 June 2007 financial report. The half-year report does not include full disclosures of the type normally included in an annual financial report.

Reporting Basis and Conventions

The half-year report has been prepared on an accruals basis and is based on historical costs and does not take into account changing money values, or except where stated, current valuations of non current assets. Cost is based of the fair values given in consideration for assets.

Changes in Accounting Policy

Since 1 January 2007, the consolidated group has adopted the following Standards and Interpretations, mandatory for annual periods beginning on or after 1 January 2007. Adoption of these Standards and Interpretations did not have any effect on the financial position or performance of the consolidated group.

• AASB 7 Financial Instruments: Disclosures

• AASB 2005-10 Amendments to Australian Accounting Standards (AASB 132, 101, 114, 117, 133, 139, 1, 4, 1023 and 1038)

• Interpretation 8 Scope of AASB 2 Share-based Payment

• Interpretation 9 Reassessment of Embedded Derivatives

• Interpretation 10 Interim Financial Reporting and Impairment

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046) Notes to the Financial Statements

For the Half Year Ended 31 December 2007

2. DIVIDENDS PAID

	CONSOLIDATED	CONSOLIDATED
	31-Dec-07	31-Dec-06
	$	$
Interim dividend of 5.06c per share in respect of
the year ended 30 June 2008 paid on 22
November 2007	5,056,475	Nil
Interim dividend of 2.30c per share in respect of
the year ended 30 June 2008 paid on 23	2,300,000	Nil
November 2007

3.

ISSUED CAPITAL

a) Paid up capital 120,000,000 (2006: 750,002) ordinary shares b) Movements No. of shares Balance 1 July 2007 750,002 Conversion of ordinary shares (a) 99,249,998 Issue of new shares 20,000,000 120,000,000 Less: Expenses of issues (b)	- - Paid Up Capital $750,002 $0 $20,000,000 ($1,259,600) $19,490,402

• (a) There was a conversion of 750,002 shares to 100,000,000 shares in accordance with a Member's resolution.

• (b) Other IPO costs of $3,679,002 were recognised in the income statement.

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046) Notes to the Financial Statements For the Half Year Ended 31 December 2007

4. ACQUISITION OF CONTROLLED ENTITIES AND BUSINESSES

Gianfranco Tomasi (1%) and David Tomasi (1%) sold their respective shares in Cruz Del Sur Ingenieria Electra (Peru) S.A. Limited to Southern Cross Electrical Engineering Limited (WA) Pty Ltd. The shares were sold at their historical cost. Southern Cross Electrical Engineering (WA) Pty Ltd was incorporated on 4 October 2007 and is a 100% owned subsidiary of Southern Cross Electrical Engineering Limited. Southern Cross Electrical Engineering Limited therefore indirectly acquired the remaining 2% of Cruz Del Sur Ingenieria Electra S.A. Limited during the half-year ended 31 December 2007.

Due to the time required for processing share transfers in Tanzania, SCEE is currently only the registered holder of 50% of the shares in Southern Cross Electrical Engineering (Tanzania) Limited ("SCEE Tanzania"). The remaining shares in SCEE Tanzania are held by Mr Frank Tomasi and his associates who have entered into binding commitments with the Company to do all things necessary to complete the full transfer of their shares in SCEE Tanzania to the Company as soon as practicable.

5. CONTINGENT LIABILITIES

Southern Cross Electrical Engineering Limited is entitled to bank guarantees and an overdraft facility to the value of $15 million. The bank guarantee facility was previously secured by a First Registered Mortgage over industrial and commercial property owned by Gianfranco Tomasi and spouse. This security has now been removed and the facility is unsecured. The company is required to hold a $5 million interest bearing term deposit with the bank in consideration of no security.

The Company at 31 December 2007 has drawn $4,446,745 of this facility.

6. SEGMENT REPORTING

The consolidated group's primary segment reporting format is geographical segments.

The consolidated group's geographical segments are determined based on the location of the group's assets.

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046) Notes to the Financial Statements For the Half Year Ended 31 December 2007

6. SEGMENT REPORTING continued

The following tables present revenue information regarding geographical segments for the year ended 31 December 2007 and 31 December 2006

		Australia	South America	Total
	Year ended 31 December 2007
	Revenue
	Sales to external customers	42,279,027	7,478,456	49,757,483
	Total segment revenue	42,279,027	7,478,456	49,757,483
	Result
	Segment Result	8,037,393	661,205	8,698,598
	Net profit/(loss) before income tax	8,037,393	661,205	8,698,598
	Year ended 31 December 2006
	Revenue
	Sales to external customers	41,190,622	3,680,613	44,871,235
	Total segment revenue	41,190,622	3,680,613	44,871,235
	Result
	Segment Result	7,670,633	1,360,801	9,031,434
	Net profit/(loss) before income tax	7,670,633	1,360,801	9,031,434
7.	RELATED PARTY DISCLOSURES

The following table provides the total amount of transactions that were entered into with related parties for the relevant half-year.

		Purchases from	Amounts owed
		related parties	to related parties
PARENT
Frank Tomasi Nominees Pty Ltd
Properties - Rental Income	2007	142,800	-
	2006	147,792	-

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046) Notes to the Financial Statements For the Half Year Ended 31 December 2007

7. RELATED PARTY DISCLOSURES continued

Frank Tomasi Nominees Pty Ltd ATF The Frank Tomasi Family Trust owns property which is leased by Southern Cross Electrical Engineering Limited.

The table above shows the rental income transactions for the properties leased.

Gianfranco Tomasi and spouse are the sole directors of Frank Tomasi Nomiees Pty Ltd.

Gianfranco Tomasi and spouse own 100% of Frank Tomasi Nominees Pty Ltd.

8. SUBSEQUENT EVENTS

On the 14th February 2008 the Directors declared a dividend (franked 100%) at 2c per share.

No other material event subsequent to the end of the interim period and the date of this report has arisen that has not been recognised in the half year accounts.

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Southern Cross Electrical Engineering Limited and Controlled Entities (A.C.N. 009 307 046) Directors' Declaration

For the Half Year Ended 31 December 2007

In the opinion of the Directors of Southern Cross Electrical Engineering Limited:

• 1 The financial statements and notes there to set out on pages 7 to 15 are in accordance with the Corporations Act 2001; and

• (a) Comply with Accounting Standard AASB 134 "Interim Financial Reporting" and the Corporations Regulations 2001; and

• (b) Giving a true and fair view of the financial position of the consolidated entity as at 31 December 2007 and of its performance, as represented by the results of its operations, changes in equity and cash flows for the half year ended on that date.

• 2 There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

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[Chartered Accountants ] Business Advisers and Consultants

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INDEPENDENT AUDITOR’S REVIEW REPORT

TO THE MEMBERS OF SOUTHERN CROSS ELECTRICAL ENGINEERING LIMITED AND CONTROLLED ENTITIES

Report on the half-year financial report

We have reviewed the accompanying half-year financial report of Southern Cross Electrical Engineering Limited (the Company) and the entities it controlled (the consolidated entity), which comprises the balance sheet as at 31 December 2007, and the income statement, statement of changes in equity and cash flow statement for the half-year ended on that date, a statement of accounting policies, and other selected explanatory notes. The consolidated entity comprises both the Company and the entities it controlled during that half-year.

Directors’ responsibility for the half-year financial report

The directors of the consolidated entity are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards including the Australian Accounting Interpretations and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagement ASRE 2410: Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Southern Cross Electrical Engineering Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

L1, 10 Kings Park Road West Perth WA 6005 PO Box 570 West Perth WA 6872 T +61 8 9480 2000 F +61 8 9322 7787 E admin@gtwa.com.au W www.grantthornton.com.au

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

Grant Thornton (WA) Partnership ABN 17 735 344 518

Liability limited by a scheme approved under Professional Standards Legislation.

Grant Thornton (WA) Partnership is an independent business entitled to trade under the international name Grant Thornton. Grant Thornton is a trademark owned by Grant Thornton International and used under licence by independent firms and entities throughout the world.

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Independence

In conducting our review, we complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors of Southern Cross Electrical Engineering Limited on 31 December 2007, would be in the same terms if provided to the directors as at the date of this auditor’s review report.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Southern Cross Electrical Engineering Limited and its controlled entities is not in accordance with the Corporations Act 2001, including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and of its performance for the half-year ended on that date.

• (b) complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations Regulations 2001.

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GRANT THORNTON (WA) PARTNERSHIP

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M H Hillgrove Partner Perth

Date: 18[th] February 2008