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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Foreword
Welcome to the 2007 edition of Endeavour (International) Limited Half-year Financial Report. This 2007 edition continues Ernst & Youngs commitment to raising industry standards, driving accounting excellence and providing clients with the latest developments in financial reporting practices. This edition illustrates the half-year financial report for an Australian entity applying AASB 134 Interim Financial Reporting and the half-year reporting requirements of the Corporations Act 2001 for a 30 June 2007 reporting date (also applicable for 31 December 2007 half-year financial reports). Endeavour (International) Limited is designed to assist you with preparing your half-year financial report in accordance with Australian Accounting Standards that are equivalent to international financial reporting standards (AIFRS). It is an illustrative example of the most common and significant disclosure requirements. It also provides insightful guidance on interpreting the requirements of AIFRS. We hope this edition of Endeavour (International) Limited assists you in preparing your half-year financial report. Should you require further assistance, please turn to the next page to find your local Ernst & Young contact. Please also refer to our website www.ey.com/au/ifrs, for a complete listing of our tools and resources.

John O'Grady Partner and National Leader Technical Consulting Group Ernst & Young Australia 1 May 2007

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Introduction
This publication presents the half-year financial report of a fictitious publicly listed Australian company, Endeavour (International) Limited, an industrial company with subsidiaries (the Group) incorporated and listed in Australia with a half-year reporting date of 30 June 2007. The Groups functional and presentation currency is AUD ($). The enclosed half-year financial report is intended to illustrate a half-year financial report prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. Users of this publication are cautioned to verify that there have been no further amendments to the requirements of AASB 134 that would be applicable to their half-year financial report. Each part of the half-year financial report is cross-referenced to the source authoritative literature, which is included within the report. The half-year financial report is illustrative only, and does not attempt to show all possible accounting and disclosure requirements and, as such, should not be regarded as a comprehensive checklist of all accounting and disclosure requirements. This publication serves as a general guide and reference in preparing a half-year financial report and must be adapted to the specific circumstances of the entity. AASB Standards applicable as at 30 April 2007 The AASB Standards and Interpretations applied in this half-year financial report are those that were in effect as at 30 April 2007 (refer Appendix A for listing). It is important to note that this half-year financial report will require continual update as standards are issued and/or revised by the AASB. The AASBs latest developments can be accessed on the AASB website: http://www.aasb.com.au. Whats new in this update? Endeavour (International) Limited has elected in this edition to early adopt the amendments to Australian Accounting Standards in ED 151 Australian Additions to, and Deletions from, IFRSs approved by the board as an amending standard at its 30 April 2007 meeting. Appendix B also provides an example segment reporting disclosure as required by AASB 8 Operating Segments. The example disclosure provides an illustration of a segment reporting disclosure for an annual financial report and is provided as guidance for entities that may wish to early adopt AASB 8 or better understand the requirements of the standard. Caveat The names of people and corporations included in this illustrative financial report are fictitious and have been created for the purpose of instruction only. Any resemblance to any person or business is purely coincidental. This financial report is illustrative only, and does not attempt to show all possible accounting and disclosure requirements. In case of doubt as to the requirements, it is essential to refer to the relevant source and, where necessary, to seek appropriate professional advice. Although the illustrative financial report attempts to show the most likely disclosure requirements of industrial companies, it should not be regarded as a comprehensive checklist of accounting and disclosure requirements. Abbreviations The following styles of abbreviation are used in the half-year financial report of Endeavour (International) Limited: AASB 134.2 CA 300A Reg.2M.3.03(1) Authors Note ASIC CO ASIC PN ASX 4.10.5 Australian Accounting Standard No. 134, paragraph 2 Corporations Act 2001, section 300A Corporations Regulations 2001, Chapter 2M, Regulation 3.03, paragraph 1 Authors notes are aimed at explaining how the requirements of AIFRS have been interpreted in arriving at the illustrative disclosures Australian Securities and Investments Commission Class Order Australian Securities and Investments Commission Practice Note Australian Securities Exchange Listing Rules, Chapter 4, Rule 10.5

Key Each section of the financial report of the Group is cross-referenced to commentary. Source references to the authoritative literature are also provided. The commentary follows the disclosure contained in each section of the financial report and is intended to highlight disclosure requirements of the note or to explain the particular decisions made in providing the illustrative disclosures in this report.

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Contents
Corporate Information Directors Report Balance Sheet Income Statement Statement of Recognised Income and Expense1 Cash Flow Statement Notes to the Financial Statements Directors Declaration Independent Review Report Appendix A - List of Standards and Interpretations applicable to 30 June 2007 half years Appendix B - AASB 8 Operating Segments Illustrative Disclosure 4 5 10 11 12 13 14 21 22 24 27

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Corporate Information
ABN 00 000 000 000 Directors J. Barraclough Chairman M.P. Boiteau Chief Executive C.P. Muller S.K. Pinelli S.E. Sippo C. Smart P.R. Garca Company Secretary G.K. Dellas Registered office Homefire House Ashdown Square Australia Principal place of business Bush Avenue Mulberry Park Australia Phone: 61 3 9876 5432 Share Register Everest Registry Services 23rd Floor 560 Smith Street Australia Phone: 61 3 9876 5431 Endeavour (International) Limited shares are listed on the Australian Stock Exchange Solicitors Solicitors & Co 7 Scott Street Australia Bankers Bank Limited George Street Australia Auditors Ernst & Young Australia
ASX 4.10.12 ASX 4.10.10 CA 153

ASX 4.10.11

ASX 4.10.13

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Directors Report
Your directors submit their report for the half year ended 30 June 2007.1,5,9,10 DIRECTORS2 The names of the companys directors in office during the half year and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated. J. Barraclough (Chairman) M.P. Boiteau (Director and Chief Executive Officer) C.P. Muller (Finance Director) F. Van den Berg (resigned 15 January 2007) S.K. Pinelli S.E. Sippo C. Smart P.R. Garcia (alternate director) REVIEW AND RESULTS OF OPERATIONS2 The Group experienced a slight decrease in both revenue and profits during the half year. Sales revenue for the half year was $107,235 (2006: $120,019), representing a decrease of 10.65%. This was largely a result of the strategic decision to remove discount lines from the electronics segment. Gross profit remained steady for the half year at $25,327 (2006: $25,365). Consolidated net profit from continuing operations after income tax for the half year was $5,178 (2006: $7,442), down 30.42% on the previous corresponding period. This was largely the result of the increased costs of concentrated marketing efforts in both television and newspaper mediums as well as the additional administrative costs of establishing and providing on-site child care and gymnasium facilities so as to ensure the wellbeing of our staff. We firmly believe that these additional costs will provide ongoing benefits in the form of lower staff turnover and improved productivity. ROUNDING8 The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (unless otherwise stated) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies.
ASIC 98/0100 CA 306(1)(a) CA 306(1)(b) CA 302(a)

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Directors Report (continued)

AUDITORS INDEPENDENCE DECLARATION3,6,7 We have obtained the following independence declaration from our auditors, Ernst & Young.
CA 306(2)

Auditors Independence Declaration to the Directors of Endeavour (International) Limited In relation to our review of the financial report of Endeavour (International) Limited for the half year ended 30 June 2007, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

D. G. Brown Partner Melbourne 29 July 2007

Ernst & Young

Liability limited by a scheme approved under Professional Standards Legislation.

Signed in accordance with a resolution of the directors.4

CA 306(3)(a) CA 306(3)(c)

J. Barraclough Director Melbourne, 29 July 2007

CA 306(3)(b)

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Commentary - Directors Report Disclosing entity - CA 302(A) 1. A disclosing entity must prepare a financial report and directors report for each half year. Content of directors report - CA 306(1)(a), (b) 2. The directors report for a half year consists of: - a review of the entitys (or consolidated entitys) operations and results of those operations during the half year; and - the name of each person who has been a director at any time during or since the end of the half year and the period for which they were a director. Auditors independence declaration - CA 306(2) 3. The directors report must include a copy of the auditors declaration under CA 307C in relation to the audit or review of the financial report for the half year. Dating and signing - CA 306(3)(a), (b), (c) 4. The report must: - be made in accordance with a resolution of the directors; - specify the date on which the report is made; and - be signed by a director. Transfer of information - ASIC CO 98/2395, ASIC CO 05/0641 5. Any or all of the disclosure requirements for the directors report may be transferred to the financial report or to another document attached to the directors report, except as follows: - The following disclosures can only be transferred to an attached document, e.g. a Chairmans Report, but are not permitted to be transferred to the financial report: auditors independence declaration under CA 306(2); and the management discussion and analysis for listed companies under CA 299A. A cross-reference to the page numbers to which the disclosures have been transferred must be provided in the directors report. Signing of auditors independence declaration ASIC CO 05/83, ASIC CO 05/910 6. ASIC CO 05/83 allows the auditors independence declaration under CA 307C to be signed up to seven days before the directors report, and allows the auditors report on the financial report to be signed up to seven days after the directors report. The Class Order requires the auditor to provide an update to the independence declaration by way of an additional statement in the auditors report where applicable. 7. Auditors are granted an exemption under ASIC CO 05/910 from the requirement to make an independence declaration under CA 307C where the declaration would be required to set out details of any contraventions of s324CE(2), 324CF(2) or 324CG(2). This exemption is available provided that the auditor had reasonable grounds to believe that at the time of the contravention there was a system of quality control in place monitoring compliance with independence requirements in Subdivision B of Division 3 of Part 2m.4 of the Act. Auditors must still provide the directors with a written statement detailing any contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable codes of professional conduct, other than those arising in the sections noted above. Rounding of amounts - ASIC CO 98/0100 8. If the company is of the kind referred to in ASIC CO 98/0100, dated 10 July 1998, and has consequently rounded the amounts in the directors report and the half-year financial report (e.g. to the nearest hundred, thousand or million dollars), that fact must be disclosed in the directors report. This disclosure is not required if it has been included in the notes to the financial statements. ASIC lodgement date CA 320 9. ASIC requires disclosing entities to lodge the report within 75 days after the end of the half year. ASX lodgement date ASX 4.2B 10. ASX requires an entity to lodge the report within two months after the end of the half year unless it is a mining exploration entity. Mining exploration entities must lodge the report within 75 days after the end of the half year.

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

****We highly recommend that you read the following commentary before preparing your half-year financial report****
Commentary Preparation of the Half-year Financial Report Content of an interim financial report AASB 134.6, 134.7 1. AASB 134 defines the minimum content of an interim financial report as including condensed financial statements and selected explanatory notes. The interim financial report is intended to provide an update on the latest annual report. Accordingly, it focuses on new activities, events and circumstances and, except for comparatives, does not duplicate information previously reported. 2. Nothing in AASB 134 is intended to prohibit or discourage an entity from publishing a complete financial report (as described in AASB 101 Presentation of Financial Statements) as its interim financial report, rather than a condensed financial report. Nor does AASB 134 prohibit or discourage an entity from including in condensed interim financial reports more than the minimum line items or selected explanatory notes as set out in AASB 134. The recognition and measurement guidance in AASB 134 applies also to complete financial reports presented as interim financial reports for an interim period, and such reports would include all of the disclosures required by AASB 134 as well as those required by other Australian Accounting Standards. Minimum components AASB 134.8 3. An interim financial report shall include, at a minimum, the following components: - a condensed balance sheet; - a condensed income statement; - a condensed statement of changes in equity showing either: all changes in equity; or changes in equity other than those arising from transactions with equity holders acting in their capacity as equity holders; - a condensed cash flow statement; and - selected explanatory notes (as outlined in AASB 134.16 and highlighted in this illustrative half-year financial report). Publication of a complete financial report AASB 134.9 4. If an entity publishes a complete financial report as its interim financial report, the form and content of that report shall conform to the requirements of AASB 101 for a financial report. Publication of a condensed financial report AASB 134.10 5. If an entity publishes a condensed financial report as its interim financial report, that condensed report shall include, at a minimum, each of the headings and subtotals that were included in its most recent annual financial report and the selected explanatory notes as required by this Standard. Additional line items or notes shall be included if their omission would make the condensed interim financial report misleading. Use of the term condensed in the heading of financial statements 6. This edition of Endeavour has been prepared as a condensed financial report with full financial statements consistent with those contained in the previous annual financial report, plus selected explanatory notes. The term condensed has been excluded from the heading of each financial statement as the line items in those statements are the same as those in the most recent annual financial statements. Note: Ernst and Young believes that a condensed statement is any presentation of the applicable financial statement that has fewer line items than those required under AASB 101. In such cases the applicable statement should be titled condensed. If the statements comply with AASB 101, there is no requirement to use the term condensed in the heading of the statement. See note 5 above for the minimum requirements of a condensed statement. Additional/voluntary disclosures AASB 134.17(a)-(j) 7. AASB 134.17 provides a list of example disclosures that may be made in an interim report in addition to the minimum disclosure requirements. These additional disclosures would be made as a result of the nature and amount of items affecting assets, liabilities, equity, profit or loss, or cash flows that are unusual because of their nature, size or incidence. Example disclosures include: - the write-down of inventories to net realisable value and the reversal of such write-downs; - recognition of a loss from the impairment of property, plant and equipment, intangible assets, or other assets, and the reversal of such impairment losses; - the reversal of any provision for the costs of restructuring; - acquisitions and disposals of property, plant and equipment; - commitments for the purchase of property, plant and equipment; - litigation settlements; - corrections of prior period errors; - any loan default or breach of a loan agreement that has not been remedied on or before the reporting date; and - related party transactions.
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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Commentary Preparation of the Half-year Financial Report Materiality AASB 134.23 8. In deciding how to recognise, measure, classify or disclose an item for interim financial reporting purposes, materiality shall be assessed in relation to the interim period financial data. In making assessments of materiality, the fact that interim measurements may rely on estimates to a greater extent than measurements of annual financial data shall be considered. Comparatives AASB 134.20(a)-(d) 9. An entity shall apply the same accounting policies in its interim financial report as are applied in its annual financial report, except for accounting policy changes made after the date of the most recent annual financial report that are to be reflected in the next annual financial report. Comparative information for a highly seasonal business AASB 134.21 10. For an entity whose business is highly seasonal, financial information for the 12 months ending on the interim reporting date and comparative information for the prior 12-month period may be useful. Accordingly, entities whose businesses are highly seasonal are encouraged to consider reporting such information in addition to the information called for in AASB 134.20. Restatement of previously reported interim periods AASB 134.43 11. A change in accounting policy, other than one for which the transition is specified by a new Australian Accounting Standard, shall be reflected by restating the financial statements of prior interim periods of the current annual reporting period and the comparable interim periods of any prior annual reporting periods. When a re-statement of comparative information has taken place due either to transition to a new Australian Accounting Standard or an error, the reader should be made aware by describing the re-statement in the notes. Ernst & Young does not believe that comparative information needs to be titled, re-stated on the face of the affected financial statement/s (however, an entity may choose to use the term re-stated on the face of its financial statement/s).

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Balance Sheet
AS AT 30 JUNE 2007 ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Derivative financial instruments Other current assets Non-current assets classified as held for sale Assets of disposal group classified as held for sale Total Current Assets Non-current Assets Receivables Investments in associates Available-for-sale financial assets Derivative financial instruments Property, plant and equipment Investment properties Deferred tax assets Intangible assets Goodwill Pension asset Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Deferred settlement on acquisition of business Interest-bearing loans and borrowings Income tax payable Provisions Derivative financial instruments Government grants Liabilities of disposal group classified as held for sale Total Current Liabilities Non-current Liabilities Interest-bearing loans and borrowings Deferred tax liabilities Provisions Convertible redeemable preference shares Government grants Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Equity attributable to equity holders of the parent Contributed equity Retained earnings Reserves Parent interest Minority interest TOTAL EQUITY
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AASB 134.8(a)

NOTE

Consolidated 30 June 2007 31 Dec 2006 $'000 $'000

AASB 134.20(a)

19,189 20,906 44,918 475 165 85,653 1,545 87,198

16,460 22,762 39,937 325 79,484 200 79,684

3,250 797 1,855 385 36,453 8,986 927 4,290 3,200 4 60,147 147,345

3,549 764 1,604 450 31,474 8,893 747 4,352 1,700 4 53,537 133,221

44,029 8,650 2,550 545 685 505 599 57,563 57,563

45,197 2,889 1,645 784 750 149 51,414 51,414

15,578 2,485 396 2,568 1,500 22,527 80,090 67,255

10,828 2,792 400 2,503 2,000 18,523 69,937 63,284

17,933 47,400 1,212 66,545 710 67,255

17,933 43,304 1,199 62,436 848 63,284

ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Income Statement
FOR THE HALF YEAR ENDED 30 JUNE 2007 Continuing operations Sale of goods Rendering of services Rental revenue Other revenue Revenue Cost of sales Gross profit Other income Distribution expenses Marketing expenses Occupancy expenses Administrative expenses Other expenses Finance costs Share of profit of an associate Profit from continuing operations before income tax Income tax expense Profit from continuing operations after income tax Discontinued operations Loss from discontinued operations after income tax Net profit for the period Attributable to: Minority interest Members of the parent Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the parent: Basic earnings per share Diluted earnings per share Earnings per share for profit attributable to the ordinary equity holders of the parent: Basic earnings per share Diluted earnings per share 4 3 95,876 10,131 702 526 107,235 (81,908) 25,327 634 (5,338) (2,467) (1,400) (8,083) (1,775) (683) 33 6,248 (1,070) 5,178 5,178 (138) 5,316 110,313 8,455 506 745 120,019 (94,654) 25,365 1,248 (5,245) (1,350) (1,854) (7,435) (1,401) (597) 81 8,812 (1,370) 7,442 (188) 7,254 (239) 7,493
NOTE

AASB 134.8(b)

Consolidated 2007 2006 $'000 $'000

AASB 134.20(b)

AASB 134.11

26.16 24.50

39.61 36.19

26.16 24.50

35.29 31.87

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Statement of Recognised Income and Expense1

FOR THE HALF YEAR ENDED 30 JUNE 2007 Net gains on available-for-sale financial assets Cash flow hedges: Gain/(loss) taken to equity Transferred to balance sheet Net gain on hedge of net investment Foreign currency translation Actuarial gain/(loss) on defined benefit plans Revaluation of land and buildings to fair value Depreciation transfer Income tax/(expense) on items taken directly to or transferred from equity Net income/(loss) recognised directly in equity Profit for the period Total recognised income/(expense) for the period Attributable to: Equity holders of the parent Minority interest Consolidated 2007 2006 $'000 $'000 81 28 (63) 118 (201) (1) 86 (35) 13 5,178 5,191 5,329 (138) 5,191 123 (34) (25) 48 (225) 2 43 (80) (22) (170) 7,254 7,084 7,323 (239) 7,084

AASB 134.8(c)(ii) AASB 134.13

AASB 134.20(c)

Commentary - Statement of Recognised Income and Expense Same format as annual report AASB 134.13 1. An entity follows the same format in its interim statement of changes in equity as it did in its most recent annual statement. For example, if an entity included a Statement of Changes in Equity in its most recent annual report then this is the format it must use for its next interim report.

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Cash Flow Statement

FOR THE HALF YEAR ENDED 30 JUNE 2007 Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest paid Income tax paid Receipt of government grants Net cash flows from/(used in) operating activities Cash flows from investing activities Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Proceeds from sale of available-for-sale financial assets Payments for available-for-sale financial assets Interest received Dividends received Purchase of investment property Acquisition of subsidiary, net of cash acquired Proceeds on disposal of subsidiary, net of cash disposed Net cash flows from/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from borrowings Repayment of borrowings Repayment of finance lease liability Equity dividends paid Dividends paid to minority interest Net cash flows from financing activities Net increase in cash and cash equivalents Net foreign exchange differences Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Note Consolidated 2007 2006 $'000 $'000 107,961 (106,865) (615) (3,546) (3,065) 910 (642) 29 (222) 265 56 (370) 142 168 5,411 (1,000) (350) 1,220 5,281 2,384 130 15,683 18,197 116,820 (114,049) (515) (2,898) 1,552 910 2,032 (2,214) 134 (568) 308 185 (1,786) (1,909) 200 4,135 (1,784) (295) 1,166 (24) 3,398 2,399 89 12,286 14,774

AASB 134.8(d)

AASB 134.20(d)

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Notes to the Financial Statements

FOR THE HALF YEAR ENDED 30 JUNE 2007 1 BASIS OF PREPARATION AND ACCOUNTING POLICIES Basis of preparation This general purpose condensed financial report for the half year ended 30 June 2007 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. 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 the half-year financial report be read in conjunction with the annual report for the year ended 31 December 2006 and considered together with any public announcements made by Endeavour (International) Limited during the half year ended 30 June 2007 in accordance with the continuous disclosure obligations of the ASX listing rules. Apart from the changes in accounting policy noted below, the accounting policies and methods of computation are the same as those adopted in the most recent annual financial report. Changes in Accounting Policy1 Since 1 January 2007 the 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 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

AASB 134.8(e)

AASB 134.19

Not Mandatory

AASB 134(16)(a)

AASB 134.16(a)

The Group has also early adopted the amendments to Australian Accounting Standards as set out in AASB 2007-xx Amendments to Australian Accounting Standards (AASB xx,xx,xx,)*
*ED 151 Australian Additions to, and Deletions from, IFRSs was approved by the board as an amending standard at its 30 April 2007 meeting, after the publication of this document. As such we have not been able to provide the complete reference for the amending standard.

Commentary Basis of Preparation and Accounting Policies Applying new accounting standards and interpretations to interim financial reports AASB 134.28 1. Entities preparing their financial reports are required to adopt in those interim reports any new or amended Standards and Interpretations that are required to be applied in their next annual financial statements. For example, if a Standard or Interpretation is applicable for annual periods beginning on or after 1 January 2007, a company with a December year end preparing an interim financial report for the half year ended 30 June 2007 would be required to adopt and apply the requirements of the Standard or Interpretation in that interim financial report.

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Notes to the Financial Statements (continued)

FOR THE HALF YEAR ENDED 30 JUNE 2007 2 SEGMENT INFORMATION1 The primary reporting format for the group is business segments. Business segment The following table presents revenue and profit information for business segments for the half years ended 30 June 2007 and 30 June 2006.
Continuing Operations Fire Investment Electronics prevention property equipment $'000 $'000 $'000 Half year ended 30 June 2007 Revenue Sales to external customers Other revenues from external customers Other revenue Inter-segment sales Total segment revenue Inter-segment elimination Unallocated revenue Total consolidated revenue Result Segment result Unallocated expenses/income Net profit/(loss) before income tax Half year ended 30 June 2006 Revenue Sales to external customers Other revenues from external customers Other revenues Inter-segment sales Total segment revenue Inter-segment elimination Unallocated revenue Total consolidated revenue Result Segment results Unallocated expenses/income Net profit/(loss) before income tax Total $'000 Discontinued Total Operations Operations Rubber equipment $'000 $'000

AASB 134.8(e)

AASB 134.16(g)

31,842 3,377 4,518 39,737

64,034 6,754 70,788

702 93 795

95,876 10,833 93 4,518 111,320 (4,518) 433 107,235

95,876 10,833 93 4,518 111,320 (4,518) 433 107,235

1,778

4,381

138

6,297 (49) 6,248

6,297 (49) 6,248

36,636 2,793 3,768 43,197

73,677 5,662 79,339

506 125 631

110,313 8,961 125 3,768 123,167 (3,768) 620 120,019

15,206 15,206 15,206

125,519 8,961 125 3,768 138,373 (3,768) 620 135,225

2,363

5,633

165

8,161 651 8,812

(193) (193)

7,968 651 8,619

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Notes to the Financial Statements (continued)

FOR THE HALF YEAR ENDED 30 JUNE 2007

AASB 134.8(e)

Commentary - Segment Information Minimum requirements - AASB 134.16(g) 1. An entity shall include the following information, as a minimum (assuming the entity has not early adopted AASB 8 in which case, see Appendix B for half-year disclosure requirements): - segment revenue and segment result for business segments or geographical segments, whichever is the entitys primary basis of segment reporting (disclosure of segment data is required in an entitys interim financial report only if AASB 114 Segment Reporting requires that entity to disclose segment data in its annual financial report). Impact of AASB 8 Operating Segments 2. AASB 8 has been approved and will be applicable for reporting periods beginning on or after 1 January 2009. AASB 8 will supersede AASB 114, is only applicable to listed entities and is available for early adoption. A non-listed entity may adopt AASB 8 early and as such would not have to provide segment reporting disclosures. For those listed entities choosing to early adopt AASB 8, we have provided in Appendix B an illustrative example of a Segment Information Note with disclosure being based on both a full-year annual financial report and a half-year financial report. Consolidated 2007 2006 $'000 $'000 3 REVENUE, INCOME AND EXPENSES1 (a) Other Revenue Interest Fair value gain on hedged loan Fair value gain on investment property Dividends Other 265 15 93 56 97 526 50 29 455 100 634 245 530 1,000 1,775 308 25 125 185 102 745 847 180 221 1,248 285 185 470 461 1,401

(b) Other Income Government grants released Net gains on disposal of available for sale investments Net gains on disposal of property, plant and equipment Net gain on held for trading derivatives

(c) Other Expenses Net loss on held for trading derivatives Direct operating expenses from rental earnings Consulting Research on product development

Commentary Revenue, Income and Expenses Selected explanatory notes - AASB 134.16(c) 1. Although AASB 134.16(c) only requires an entity to disclose events or transactions that are material, it is recommended that additional disclosure be provided to assist users in understanding the half-year financial report. Ernst & Young believes that reconciliations of the above items are useful to the users of financial statements but notes that they are not mandatory disclosures.

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Notes to the Financial Statements (continued)

FOR THE HALF YEAR ENDED 30 JUNE 2007 4 DISCONTINUED OPERATIONS No components of the entity have been disposed of or classified as held for sale in the current half-year reporting period. On 22 September 2005, the Board of Directors entered into a sale agreement to dispose of Pipe Limited, a company that manufactures rubber hosepipes. The disposal was completed on 28 February 2006, on which date control of the business passed to the acquirer. In addition to this, the Board of Directors decided to dispose of Hose Limited, a company that also manufactures rubber hosepipes. Endeavour (International) Limited announced this decision publicly on 1 May 2006. The disposal was completed on 1 December 2006, on which date control of the business passed to the acquirer. Both Pipe Limited and Hose Limited formed the rubber equipment segment that was part of the Australian operations. These businesses had been operating in an unpredictable product environment, making it difficult for management to achieve any real growth and profitability from the segment. The results of the discontinued operations for the period of the half year until disposal are presented below: Consolidated 2006 Hose Ltd Pipe Ltd Total $'000 $'000 $'000 7,124 8,082 15,206 (7,190) (8,132) (15,322) (66) (50) (116) 6 6 (50) (33) (83) (116) (77) (193) 3 (113) 2 (75) 5 (188)

AASB 134.8(e)

AASB 134.16(i)

Revenue Expenses Gross profit/(loss) Gain on disposal Finance costs Loss before tax from discontinued operations Income tax Loss for the year from discontinued operations after tax

Commentary - Discontinued Operations Required disclosure - AASB 134.16(i) 1. AASB 134.16(i) requires that an entity provide information on the effect of changes in its composition, including discontinued operations. However, AASB 134 does not provide guidance on what level of disclosure is required for discontinued operations for the half-year financial report. The disclosures provided above are not the complete disclosures required by AASB 5 Non-current Assets Held for Sale and Discontinued Operations. Each entity will need to make an assessment of the appropriate level of disclosure required and this will depend on the size and economic value of the discontinued operations. Please see Endeavour (International) Limited 31 December 2006, Note 11, for an illustrative example of the complete disclosures required by AASB 5 in a full financial report.

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Notes to the Financial Statements (continued)

FOR THE HALF YEAR ENDED 30 JUNE 2007 Consolidated 2007 $'000 5 CASH AND CASH EQUIVALENTS For the purpose of the half-year cash flow statement, cash and cash equivalents are comprised of the following: Cash at bank and in hand Short-term deposits Bank overdrafts 2006 $'000

AASB 134.8(e)

13,393 5,796 19,189 (992) 18,197

12,669 5,085 17,754 (2,980) 14,774

Commentary Cash and Cash Equivalents Selected explanatory notes - AASB 134.16(c) 1. Although AASB 134.16(c) requires an entity to disclose only those events or transactions that are material, it is recommended that additional disclosure be provided to assist users in understanding the half-year financial report. A reconciliation of cash in the cash flow statement and the balance sheet may be useful to users of the financial statements, but it is not a mandatory disclosure.

6 DIVIDENDS PAID (a) Dividends declared and paid during the half year on ordinary shares: Final franked dividend for the financial year ended 31 December 2006: 5.9 cents, paid 15 February 2007 (2005: 5.81 cents) (b) Dividends proposed and not yet recognised as a liability Interim franked dividend for the half year ended 30 June 2007: 5.65 cents, proposed to be paid 15 August 2007 (2006: 5.42 cents) 7 COMMITMENTS AND CONTINGENCIES The only changes to the commitments and contingencies disclosed in the most recent annual financial report are specified below. Capital commitments At 30 June 2007 the Group had commitments of $4,590 (2006: $4,500) relating principally to the completion of Sprinklers Inc. operating facilities and commitments of $310 (2006: $516) relating to the Groups interest in the jointly controlled operation, Showers Pty Ltd. These commitments are for the acquisition of new machinery. Legal claim An overseas customer has commenced an action against the Group in respect of equipment claimed to be defective. The liability, should the action be successful, is estimated to be $850. A trial date has not yet been set and therefore it is not possible to estimate the timing of any payment. The Group has been advised by its Counsel that it is possible, but not probable, that the action will succeed and accordingly no liability has been recognised in these financial statements.

AASB 134.16(f)

1,220 890

1,166
Not Mandatory

851

AASB 134.16(j)

AASB 134.17(e)

AASB 134.17(f)

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Notes to the Financial Statements (continued)

FOR THE HALF YEAR ENDED 30 JUNE 2007 8 BUSINESS COMBINATION Acquisition of Extinguishers Limited On 1 June 2007, Endeavour (International) Limited acquired 100% of the voting shares of Extinguishers Limited, an unlisted public company based in Australia specialising in the manufacture of fire retardant fabrics. The total cost of the combination was $9,250 and comprised costs of $600 and a deferred settlement of $8,650 to be paid on 15 July 2007. At the date of acquisition, Endeavour (International) Limited was involved in the manufacture of protective fire clothing. As part of the purchase negotiations it was agreed that the manufacture of such clothing would be discontinued as soon as possible after the acquisition. The fair value of the identifiable assets and liabilities of Extinguishers Limited as at the date of acquisition are: Consolidated Recognised Carrying on acquisition value $'000 $'000 Property, plant and equipment Deferred tax asset Cash and cash equivalents Trade receivables Inventories Patents Trade payables Provision for maintenance warranties Provision for restructuring Deferred tax liability Fair value of identifiable net assets Goodwill arising on acquisition Cost of the combination: Deferred cash payment to be made 15 July 2007 Costs associated with the acquisition Total cost of the combination The cash outflow on acquisition to date is as follows: Net cash acquired with the subsidiary Cash paid Net cash outflow 7,042 300 230 1,736 3,678 1,200 14,186 (3,380) (400) (500) (2,156) (6,436) 7,750 1,500 9,250 8,650 600 9,250 230 (600) (370) 5,384 300 230 1,736 2,179 9,829 (3,380) (325) (500) (1,322) (5,527) 4,302

AASB 134.8(e)

AASB 134.16(i) AASB 3.66 AASB 3.67,68

From the date of acquisition, Extinguishers Limited has contributed $50 to the net profit of the Group. If the combination had taken place at the beginning of the half year, the profit for the Group would have been $8,567 and revenue from continuing operations would have been $139,856. The provision for restructuring of $500 relates to certain product lines that Extinguishers Limited had, prior to the acquisition, decided to eliminate.

AASB 3.70

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Notes to the Financial Statements (continued)

FOR THE HALF YEAR ENDED 30 JUNE 2007

AASB 134.8(e)

Commentary - Business Combination Selected explanatory notes - AASB 134.16(i) 1. An entity shall include the following information, as a minimum: - the effect of changes in the composition of the entity during the interim period, including business combinations. In the case of business combinations, the entity shall disclose the information required to be disclosed under paragraphs 66-73 of AASB 3 Business Combinations. Please see Endeavour (International) Limited illustrative annual report for the year ended 31 December 2006, commentary on Note 40 for further information.

9 EVENTS AFTER THE BALANCE SHEET DATE On 14 July 2007, a building with a net book value of $1,695 was severely damaged by an earthquake. It is expected that insurance proceeds will fall short of the costs of rebuilding and loss of inventories by $750.
AASB 134.16(h)

Not Mandatory

Commentary Disclosures not Illustrated in the Half-year Financial Report Required disclosures not illustrated - AASB 134.16(b), (d), (e) The following mandatory disclosures were not illustrated in the half-year financial report for Endeavour (International) Limited as they were not relevant to the Groups business or would not have materially affected the Groups operations for the interim period. 1. An entity shall include the following information, as a minimum, in the notes to the interim financial statements, if material and if not disclosed elsewhere in the interim financial report. The information shall normally be reported on an annual reporting period-to-date basis. However, the entity shall also disclose any events or transactions that are material to an understanding of the current interim period: explanatory comments about the seasonality or cyclicality of interim operations. An example disclosure would be: Due to the seasonal nature of the Electronics segment, higher revenues and operating profits are expected in the second half of the year compared with the first six months. Higher sales during the period July to September are mainly attributable to the increased demand for aviation electronic equipment as this coincides with the timing of major maintenance works by airlines. the nature and amount of changes in estimates of amounts reported in prior interim periods of the current annual reporting period or changes in estimates of amounts reported in prior annual reporting periods, if those changes have a material effect in the current interim period (see Endeavour (International) Limited annual report for the year ended 31 December 2006 page 87 for an example disclosure of a change in estimates). issuances, repurchases, and repayments of debt and equity securities. If this were to be applicable to an entity, a reconciliation and description of the movements as contained in the annual report would be an appropriate disclosure (see Endeavour (International) Limited annual report for the year ended 31 December 2006 page 151 for an example disclosure).

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Directors Declaration
In accordance with a resolution of the directors of Endeavour (International) Limited, I state that: In the opinion of the directors: (a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position as at 30 June 2007 and the performance for the half year ended on that date of the consolidated entity; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

CA 303(1)(c)

CA 303(5)(a)

CA 303(4)(d)(ii)

(ii) (b)

CA 303(4)(d)(i)

there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

CA 303(4)(c)

On behalf of the Board,

J. Barraclough Director Melbourne, 29 July 2007

CA 303(5)(c)

CA 303(5)(b)

Commentary Directors Declaration CA 303(1)(c) 1. The financial report for a half year includes the directors declaration about the financial statements and notes to the financial statements. CA 303(4)(c), (d)(i), (d)(ii) 2. The directors declaration is a declaration by the directors as to whether, in the directors opinion: - there are reasonable grounds to believe that the disclosing entity will be able to pay its debts as and when they become due and payable; and - the financial statements and notes are in accordance with the Corporations Act 2001, including: CA 304 (compliance with accounting standards); and CA 305 (true and fair view). CA 303(5)(a), (b), (c) 3. The directors declaration must be: - made in accordance with a resolution of the directors; - dated the day on which the declaration is made; and - signed by a director.

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Independent Review Report

To the members of Endeavour (International) Limited Report on the Half-year Condensed Financial Report We have reviewed the accompanying condensed half-year financial report of Endeavour (International) Limited and the entities it controlled during the half year, which comprises the balance sheet as at 30 June 2007 and the income statement, statement of recognised income and expense and cash flow statement for the half year ended on that date, other selected explanatory notes and the directors declaration. Directors responsibility for the half-year Financial Report The directors of the company 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: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the half-year financial report to ensure that it 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. Auditors responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of 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 entitys financial position as the 30 June 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 and other mandatory financial reporting requirements in Australia. As the auditor of Endeavour (International) Limited and the entities it controlled during the half year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

CA 309(1)

Liability limited by a scheme approved under Professional Standards Legislation.

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Independence In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditors Independence Declaration, a copy of which is included in the Directors Report. The Auditors Independence Declaration would have been expressed in the same terms had it been given to the directors at the date that this auditors report is signed. Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Endeavour (International) Limited and the entities it controlled during the half year is not in accordance with: (a) the Corporations Act 2001, including: (i) (ii) (b) giving a true and fair view of the financial position as at 30 June 2007 and of 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; and

other mandatory financial reporting requirements in Australia.

Ernst & Young

D.G. Brown Partner Melbourne Date: 29 July 2007

Commentary - Independent Review Report Audit opinion CA 309(4), (5) 1. An auditor who reviews the financial report for a half year must report to members on whether the auditor became aware of any matter in the course of the review that made the auditor believe that the financial report does not comply with Division 2.

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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Appendix A - List of Standards and Interpretations applicable to 30 June 2007 half years
AUSTRALIAN ACCOUNTING STANDARDS The Australian Accounting Standards are sequentially listed as follows: IFRS-equivalent standards are numbered from AASB 1 99; IAS-equivalent standards are numbered from AASB 101 199; Australian-specific standards are numbered as AASB 10XX; and Standards issued to amend accounting standards are numbered in a series using the year of issue and a generic title (AASB 200X-XX).

Reference Framework AASB 1 AASB 2 AASB 3 AASB 4 AASB 5 AASB 6 AASB 7 AASB 8 AASB 101 AASB 102 AASB 107 AASB 108 AASB 110 AASB 111 AASB 112 AASB 114 AASB 116 AASB 117 AASB 118 AASB 119 AASB 120 AASB 121 AASB 123 AASB 124 AASB 127 AASB 128 AASB 129 AASB 130 AASB 131 AASB 132 AASB 133 AASB 134 AASB 136 AASB 137 AASB 138 AASB 139 AASB 140 AASB 141 AASB 1004 AASB 1023 AASB 1031

Title Framework for the Preparation and Presentation of Financial Statements First-time Adoption of Australian Equivalents to International Financial Reporting Standards Share-based Payment Business Combinations Insurance Contracts Non-current Assets Held for Sale and Discontinued Operations Exploration for and Evaluation of Mineral Resources Financial Instruments: Disclosures Operating Segments applicable to annual reporting periods beginning on or after 1 January 2009 Presentation of Financial Statements Inventories Cash Flow Statements Accounting Policies, Changes in Accounting Estimates and Errors Events after the Balance Sheet Date Construction Contracts Income Taxes Segment Reporting Property, Plant and Equipment Leases Revenue Employee Benefits Accounting for Government Grants and Disclosure of Government Assistance The Effects of Changes in Foreign Exchange Rates Borrowing Costs Related Party Disclosures Consolidated and Separate Financial Statements Investments in Associates Financial Reporting in Hyperinflationary Economies Disclosure in the Financial Statements of Banks and Similar Financial Institutions Interests in Joint Ventures Financial Instruments: Presentation Earnings per Share Interim Financial Reporting Impairment of Assets Provisions, Contingent Liabilities and Contingent Assets Intangible Assets Financial Instruments: Recognition and Measurement Investment Property Agriculture Contributions General Insurance Contracts Materiality
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ENDEAVOUR (INTERNATIONAL) LIMITED HALF-YEAR REPORT

Appendix A - List of Standards and Interpretations applicable to 30 June 2007 half years (cont)
Reference AASB 1038 AASB 1039 AASB 1045 AASB 1048 AASB 1049 AASB 2007-1 AASB 2007-2 Title Life Insurance Contracts Concise Financial Reports Land Under Roads: Amendments to AAS 27A, 29A and AAS 31A Interpretation and Application of Standards Financial Reporting of General Government Sectors by Governments applicable to annual reporting periods beginning on or after 1 July 2008 Amendments to Australian Accounting Standards (AASB 2) applicable to annual reporting periods beginning on or after 1 March 2007 with early adoption required if AASB Interpretation 11 is applied to the period Amendments to Australian Accounting Standards (AASB 1, 117, 118, 120, 121, 127, 131, 139) applicable to annual reporting periods beginning on or after 1 January 2008 with early adoption required if AASB Interpretation 12 is applied to the period Amendments to Australian Accounting Standards (AASB 5, 6, 102, 107, 119, 127, 134, 136, 1023, 1038) applicable to annual reporting periods beginning on or after 1 January 2009 with early adoption required if AASB 8 is applied to the period Amendments to Australian Accounting Standards (AASB xx,xx,xx) applicable to annual reporting periods beginning on or after 1 July 2007 with early adoption being permitted to annual reporting periods beginning on or after 1 January 2005.
*ED 151 Australian Additions to, and Deletions from, IFRSs was approved by the board as an amending standard at its 30 April 2007 meeting, after the publication of this document. As such we have not been able to provide the complete reference for the amending standard.

AASB 2007-3

AASB 2007-xx

AAS 25 AAS 27 AAS 29 AAS 31

Financial Reporting by Superannuation Plans Financial Reporting by Local Governments Financial Reporting by Government Departments Financial Reporting by Governments

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Appendix A - List of Standards and Interpretations applicable to 30 June 2007 half years (cont)
AASB INTERPRETATIONS (INTERPRETATION) The Interpretations are listed in numerical order as follows: IFRIC-equivalent interpretations are numbered from Interpretation 1 99; SIC-equivalent interpretations are numbered from Interpretation 101 199; and Australian-specific interpretations are numbered as Interpretation 10XX. Reference Interpretation 1 Interpretation 2 Interpretation 4 Interpretation 4 (revised) Interpretation 5 Interpretation 6 Interpretation 7 Interpretation 8 Interpretation 9 Interpretation 10 Interpretation 11 Interpretation 12 Interpretation 107 Interpretation 110 Interpretation 112 Interpretation 113 Interpretation 115 Interpretation 121 Interpretation 125 Interpretation 127 Interpretation 129 Interpretation 129 (revised) Interpretation 131 Interpretation 132 Interpretation 1001 Interpretation 1002 Interpretation 1013 Interpretation 1017 Interpretation 1019 Interpretation 1030 Interpretation 1031 Interpretation 1038 Interpretation 1039 Interpretation 1042 Interpretation 1047 Interpretation 1052 Interpretation 1055 Title Changes in Existing Decommissioning, Restoration and Similar Liabilities Members Shares in Co-operative Entities and Similar Instruments Determining whether an Arrangement contains a Lease Determining whether an Arrangement contains a Lease applicable to annual reporting periods beginning on or after 1 January 2008 with early adoption required if AASB Interpretation 12 is applied to the period Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment Applying the Restatement Approach under AASB 129 Scope of AASB 2 Reassessment of Embedded Derivatives Interim Financial Reporting and Impairment AASB 2 Group and Treasury Share Transactions applicable to annual reporting periods beginning on or after 1 March 2007 Service Concession Arrangements applicable to annual reporting periods beginning on or after 1 January 2008 Introduction of the Euro Government Assistance No Specific Relation to Operating Activities Consolidation Special Purpose Entities Jointly Controlled Entities Non-Monetary Contributions by Venturers Operating Leases Incentives Income Taxes Recovery of Revalued Non-Depreciable Assets Income Taxes Changes in the Tax Status of an Entity or its Shareholders Evaluating the Substance of Transactions Involving the Legal Form of a Lease Disclosure Service Concession Arrangements Service Concession Arrangements: Disclosures applicable to annual reporting periods beginning on or after 1 January 2008 with early adoption required if AASB Interpretation 12 is applied to the period Revenue Barter Transactions Involving Advertising Services Intangible Assets Web Site Costs Consolidated Financial Reports in relation to Pre-Date-of-Transition Dual Listed Company Arrangements Post-Date-of-Transition Stapling Arrangements Consolidated Financial Reports in relation to Pre-Date-Of-Transition Stapling Arrangements Developer and Customer Contributions for Connection to a Price-Regulated Network The Superannuation Contributions Surcharge Depreciation of Long-lived Physical Assets: Condition-Based Depreciation and Related Methods Accounting for the Goods and Services Tax (GST) Contributions by Owners Made to Wholly-Owned Public Sector Entities Substantive Enactment of Major Tax Bills in Australia Subscriber Acquisition Costs in the Telecommunications Industry Professional Indemnity Claims Liabilities in Medical Defence Organisations Tax Consolidation Accounting Accounting for Road Earthworks
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Appendix B - AASB 8 Operating Segments Illustrative Disclosure

(The following is an illustrative disclosure of the requirements of AASB 8 for a full-year financial report. Comparatives have not been included for the purpose of this illustration; however, they would be required. The numbers used are based on those included in the 31 December 2006 version of Endeavour (International) Limited. That version illustrates a Segment Reporting note prepared in accordance with AASB 114, and comparison of the two different illustrative disclosures may be useful in the preparation/selection of your operating segments under AASB 8. NOTE XX SEGMENT INFORMATION Identification of reportable segments The Group has identified its reportable operating segments based on the internal reports that are reviewed and used by the chief executive officer and her management team in assessing performance and in determining the allocation of resources. The reportable operating segments are based on the similarity of the products produced and sold and/or the services provided, as these are the sources of the Groups major risks and have the most effect on the rates of return. The separate groups of similar products and services are divided into operating businesses and these businesses are then further segmented into operating segments based on the manner in which the product is sold, whether retail or wholesale, and the nature of the services provided. The operating performance of each of these groups is reported to the chief executive officer and her management team on at least a monthly basis. Types of products and services Electronics The electronics business is a producer and supplier of electronic equipment for defence, aviation and electrical safety markets. The products are used in the areas of electronics, safety, thermal and electrical architecture. The equipment produced and sold is similar in size, price and nature and as such is grouped as one operating segment. In addition, the electronics business provides services in the form of installation of equipment as well as ongoing support and maintenance. These services are provided under existing contracts as well as on an ad-hoc basis, however the ad-hoc service revenue is immaterial and as such is not reported separately. Instead, it is grouped with contract service for the purpose of reporting operating segments. Fire prevention equipment The fire prevention equipment business is a producer of fire prevention equipment and fire retardant fabrics for industrial markets. The equipment produced and sold is, due to its nature, grouped as one operating segment. In addition, the fire prevention business provides services in the form of assessment, installation of equipment, training and ongoing support and maintenance. The services are provided under contract and are grouped for the purpose of reporting operating segments. Investment property The investment property business leases offices and manufacturing sites owned by the Group that are surplus to the Groups requirements. It does not actively trade in the investment property market.
AASB 8.22(b) AASB 8.22(a)

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Appendix B - AASB 8 Operating Segments Illustrative Disclosure (cont)

Rubber equipment The rubber equipment business, which comprised Hose Limited and Pipe Limited prior to their discontinuance, produced rubber hosepipes for industrial application. The rubber equipment segment was disposed of during the period and as a result ceased to be an operating segment. It has been included as part of discontinued operations in the segment reporting table. Please refer to the Discontinued Operations note xx for further information. Accounting policies and inter-segment transactions The accounting policies used by the Group in reporting operating segments are the same as those contained in note 1 to the accounts and in the prior period. The following items are not allocated to operating segments as they are not considered part of the core operations of any segment: Interest revenue Dividend revenue Fair value gains/losses on held-for-trading derivatives Fair value gains on hedged loan Net gains on disposal of available-for-sale investments Finance costs including adjustments to provisions due to discounting Impairment of assets impairment losses on non-financial assets including goodwill are not included in the measurement of segment profit or loss where they are not considered part of continuing operations and are not expected to recur. In the current period, the Group incurred losses due to a fire at a manufacturing facility (refer note xx), which are not included in the measure of segment profit or loss as they are not expected to recur Income tax expense Gains/losses on pension asset/liability.
AASB 8.27

So as to ensure there are no asymmetrical allocations to reportable segments, the following assets and liabilities have been excluded from operating segments: Cash and cash equivalents Assets and liabilities held within the disposal group Current and deferred tax balances Interest bearing loans and borrowings Convertible redeemable preference shares Loan notes receivable Held-for-trading derivatives Pension asset Goodwill.

Transfer prices between business segments are set on an arms length basis in a manner similar to transactions with third parties. Major customers The Group has a number of customers to which it provides both products and services. The Group does not rely on any of these customers and none of them amount to 10% or more of external revenue. The most significant client accounts for 5% of external revenue and the next most significant client accounts for only 2% of external revenue.
AASB 8.34

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Appendix B - AASB 8 Operating Segments Illustrative Disclosure (cont)

YEAR ENDED 31 DECEMBER 2006 Electronics sales $'000 Revenue Sales to external customers Other revenues from external customers Other revenue Interest revenue Inter-segment sales Total segment revenue Inter-segment elimination Total consolidated revenue from continuing operations Revenue from discontinued operations Total consolidated revenue Result Segment results Share of profit of associate Finance costs Write off of assets destroyed in fire Other expenses/income Profit /(loss) before income tax from continuing operations Income tax expense Profit from continuing operations Discontinued operations after income tax Net profit for the period Assets and liabilities Segment assets Investments in associate and joint ventures Discontinued operations Total assets Segment liabilities Discontinued operations Total liabilities Electronics services $'000 Fire prevention equipment sales $'000 Fire prevention equipment services $'000

Investment property $'000

Total Unallocated operations items $'000 $'000

38,211 2,284 4,524 45,019

25,474 3,426 4,511 33,411

76,840 4,569 1,265 82,674

51,227 6,852 365 58,444

1,404 68 1,472

207 600 807

191,752 18,535 275 600 10,665 221,827 (10,665)

AASB 8.23(a), .32

AASB 8.23(c ) AASB 8.23(b)

211,162 42,809 253,971

AASB 8.28(a)

AASB 8.28(a)

3,121

2,081

6,153 83

4,102

321

15,778 83 (1,366) (956) 238

AASB 8.23(g) AASB 8.23(d) AASB 8.23(f),(i)

(1,366) (956) 238

(3,755)

13,777 (3,755) 10,022 (19) 10,003

AASB 8.28(b) AASB 8.23(h)

AASB 8.23(f)

21,750

14,500

28,221 764

18,815

12,051

24,309

119,646 764 12,811 133,221

AASB 8 24(a) AASB 8.28( c )

7,070

4,713

10,728

7,152

3,704

22,943

56,310 13,627 69,937

AASB 8.28 (d)

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Appendix B - AASB 8 Operating Segments Illustrative Disclosure (cont)

YEAR ENDED 31 DECEMBER 2006 Electronics sales $'000 Other segment information Capital expenditure Depreciation and amortisation Impairment losses Increase in fair value of investment properties Write off of assets destroyed in fire Other non-cash expenses Cash flow information Net cash flow from operating activities Net cash flow from investing activities Net cash flow from financing activities Electronics services $'000 Fire prevention equipment sales $'000 Fire prevention equipment services $'000 Investment property $'000 Unallocated Total items operations $'000 $'000

2,380 773 54

1,588 515 35

5,554 1,081 39

3,704 720 26

338 454 68 6

207 956 36 (a) 4,199 (4,830) (1,654)

13,564 3,543 207 68 956 196

AASB 8.24(b) AASB 8.23(e) AASB 8.23(i) AASB 8.23(i) AASB 8.23(i) AASB 8.23(i)

3,500 (1,496) (1,508)

2,290 (641) (646)

9,523 (5,781) (1,133)

4,082 (1,927) (486)

1,238 (338) -

24,832 (15,013) (5,427)

AASB 107.50(d) Not Mandatory

(a) For the purpose of reconciling total cash flows to the cash flow statement, this column also includes cash flows that relate to discontinued operations.

Geographical segments The Groups geographical segments are determined based on the location of the Groups assets. The following table presents revenue, expenditure and certain asset information regarding geographical segments for the years ended 31 December 2006 and 31 December 2005.
YEAR ENDED 31 DECEMBER 2006 Australia $'000 United States $'000 Total $'000

Revenue Sales to external customers * Discontinued operations Geographic segment revenue

157,935 42,809 200,744

33,817 33,817

191,752 42,809 234,561

AASB 8.33(a)

*Revenues are allocated to geographic segment based on the location of the customer. Other segment information Geographic non-current assets

AASB 8.33(a)

39,886

9,154

49,040

AASB 8.33(b)

Commentary - Appendix B Scope of application AASB 8 1. AASB 8 applies to for-profit entities whose debt or equity instruments are traded in a public market or that files, or is in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market. 2. Application date is for annual reporting periods beginning on or after 1 January 2009 with early adoption permitted for annual reporting periods beginning on or after 1 January 2005. The early adoption option also applies to non-listed reporting entities that are currently required to apply AASB 114 Segment Reporting. As soon as these entities elect to adopt AASB 8, they will no longer be required to apply AASB 114 and because they are scoped out of AASB 8 they will no longer be required to present segment information in their financial reports.
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Appendix B - AASB 8 Operating Segments Illustrative Disclosure (cont)

Commentary - Appendix B Core principle AASB 8.1 3. An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates. Identification of segments AASB 8.5, .6 4. An operating segment is defined as a component of an entity: that engages in business activities from which it may earn revenues and expenses (including revenues and expenses relating to transactions with other components of the same entity); whose operating results are regularly reviewed by the entitys chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and for which discrete financial information is available. Under this definition Ernst & Young would expect most entities applying AASB 8 to identify more reportable operating segments than would have been the case under AASB 114. 5. An operating segment may be a business activity that is yet to earn revenue i.e. a start-up operation. Alternatively not every part of an entity would be considered an operating segment, for example a corporate headquarters. An entitys post-employment benefit plans are not operating segments for the purpose of AASB 8. Chief operating decision maker AASB 8.7, .8 6. The term chief operating decision maker identifies a function, not necessarily a manager with a specific title. That function is to allocate resources to and assess the performance of the operating segments of an entity. Often the chief operating decision maker of an entity is its chief executive officer or chief operating officer but it may be a group of executives or others. 7. If the chief operating decision maker uses more than one set of segment information, other factors may identify a single set of components as constituting an entitys operating segments, including the nature of the business activities of each component, the existence of managers responsible for them, and information presented to the board of directors. Aggregation of operating segments AASB 8.12, .16 8. Two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the core principle of this standard and the segments have similar economic characteristics. AASB 8.16 also allows the aggregation of immaterial segments into an all other segment category. Quantitative thresholds AASB 8.13, .15, .19 9. An entity shall report separately information about an operating segment that meets any of the following quantitative thresholds: its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10% or more of the combined revenue, internal and external, of all operating segments; the absolute amount of its reported profit or loss is 10% or more of the greater, in absolute amount, of (i) the combined reported profit of all operating segments that did not report a loss and (ii) the combined reported loss of all operating segments that reported a loss; or its assets are 10% or more of all combined assets of all operating segments. 10. If the total external revenue reported by operating segments constitutes less than 75% of the entitys revenue, additional operating segments shall be identified as reportable segments (even if they do not meet the criteria in note 9, above) until at least 75% of the entitys revenue is included in reportable segments. AASB 8.19 notes that disclosure of more than 10 operating segments is impractical and in such cases the entity should reconsider its operating segments. Measurement of segment items AASB 8.25, .28 11. The amount of each segment item reported shall be the measure reported to the chief operating decision maker. Adjustments and eliminations made in preparing an entitys financial statements and allocations of revenues, expenses, gains or losses, assets and liabilities shall be included in determining reported segment profit or loss only if they are included in the measure of the segments profit or loss that is used by the chief operating decision maker. AASB 8.28 requires you to provide reconciliations of operating segment revenues, profit or loss, assets and liabilities to those reported by the entity in the financial statements.

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Appendix B - AASB 8 Operating Segments Illustrative Disclosure (cont)

Commentary - Appendix B Interim Reporting AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 12. If AASB 8 is early adopted, an entity would also need to apply the related amendments to paragraph 16(g) of AASB 134 set out in AASB 2007-3, namely the requirement to disclose the following segment information: revenues from external customers, if included in the measure of segment profit or loss reviewed by the chief operating decision maker or otherwise regularly provided to the chief operating decision maker; intersegment revenues, if included in the measure of segment profit or loss reviewed by the chief operating decision maker or otherwise regularly provided to the chief operating decision maker; a measure of segment profit or loss; total assets for which there has been a material change from the amount disclosed in the last annual financial report; a description of the differences from the last annual financial report in the basis of segmentation or in the basis of measurement of segment profit or loss; a reconciliation of the total of the reportable segments measures of profit or loss to the entitys profit or loss before tax expense and discontinued operations. However, if an entity allocates to reportable segments items such as tax expense (tax income), the entity may reconcile the total of the segments measures of profit or loss to profit or loss after those items. Material reconciling items shall be separately identified and described in that reconciliation.

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