Annual review 2007clients.weblink.com.au › news › asx_pdf_loader3.asp?articleID=32835… · Level 6, 27 Currie Street, Adelaide, SA 5000 GPO Box 551 Adelaide SA 5001 Telephone:

Level 6, 27 Currie Street, Adelaide, SA 5000 GPO Box 551 Adelaide SA 5001 Telephone: (08) 8425 4999 Facsimile: (08) 8410 1597

Futuris Corporation Limited A.B.N. 34 004 336 636

21 September 2007 Company Announcements Platform Australian Securities Exchange Limited

ANNUAL REVIEW & TOP 20 In accordance with Listing Rule 4.5.1, please find attached Futuris Annual Review and Top 20 Shareholder listing for the year ended 30 June 2007. Sonya Furey Company Secretary

2 0 0 7 A n n u A l R e v i e w

The future is now.Tomorrow’s challenge is today’s opportunity.

Futuris Corporation limitedABN 34 004 336 636

Annual General Meeting The 2007 annual general meeting of Futuris Corporation Limited will be held on Tuesday 23 October at the Adelaide Festival Centre commencing at 9.30am Central Standard Time. A formal notice of meeting has been mailed to shareholders. Additional copies can be obtained from the Company’s registered office or down loaded from its website at www.futuris.com.au

Terms and Abbreviations This report uses terms and abbreviations relevant to the Company’s activities and financial accounts. The terms

“the Company”, “Futuris Corporation” and “Futuris” are used in this report to refer to Futuris Corporation Limited and or its subsidiaries. The terms “the year” and

“2007” refer to the twelve months ended 30 June 2007 unless otherwise stated. Similarly, references to 2006 or 2008 refer to the twelve months to 30 June of that year. Unless otherwise specified, the term “30 June” refers to 30 June 2007.

Annual Report This publication is one of two documents published by Futuris to report on the Company’s performance in the year to 30 June 2007:

– the Annual Review provides an overview of the Company, discussion of its results and a Concise Report. It also includes a Directors’ Report and Auditor’s Report.

– the Annual Financial Report provides a complete set of financial statements for the year.

The Concise Report does not, and cannot be expected to, provide as full an understanding of the financial performance and position and financing and investing activities of the consolidated entity as the complete set of financial statements contained in the Annual Financial Report.

Shareholders may elect to receive either or both of the reports free of charge upon request.

Shareholders wishing to arrange or alter the mailing of these reports can do so by notifying the Company’s share registry (at the address provided in the Company Directory on the inside back cover of this report) or by contacting the Company on 61 (0)8 8425 4999.

Copies of either the Annual Review or the Annual Financial report can be down loaded from our website at www.futuris.com.au.

is building businesses to commercially meet the challenges of the future.

These challenges: • sustainability; • the need to produce greater volumes

of food, paper and wood from fi nite resources;

• innovation with, and productiveadoption of, new technology;

• product integrity, traceability and quality; • varietal improvement;• balancing global integration with

local capabilities, and• maintaining the vitality and

economic health of our rural andregional communities;

are themes through which our businesses are growing in signifi cance and value.

2

3

Futuris is building businesses that are finding sustainable solutions for the needs of day-to-day living.

Our forestry operations are reducing the demands made on the world’s high conservation forests and reducing atmospheric carbon levels.

Our rural service and agriculture operations are helping farmers access varieties that are productive and more suited to modern Australian conditions.

Our aquaculture interests are researching large scale production of seafood to help satisfy growing demand for protein through a sustainable alternative to the depletion of natural aquatic resources.

Futuris is carbon negative.

The future is

sustainable.

Left: On the Baboo Pastoral Company property at Green Range, Western Australia, Tasmanian Blue Gum trees are grown in addition to traditional crops such as canola (foreground). Pulpwood produced by plantation such as these is helping replace supply from native forests.

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Futuris is building businesses which create value by helping rural and regional communities integrate into global information matrices and improving the effi ciency of supply chains and access to markets for producers.

Our telecommunications interests have won the tender to build and operate Australia’s rural and regional broadband network.

Elders Rural Services is restructuring supply chains for wool and grain producers, providing growers with new and more effi cient routes to market. Farm input supply chains are being optimised to give growers the benefi t of speedy and more cost effective delivery of the best inputs for their endeavours.

The future is

better connected.

Left: High capacity fi bre-optic cable being laid near Roseworthy, South Australia. Amcom Telecommunications extended its broadband network to Roseworthy where Elders Roseworthy branch will be one of a number of locations where the Company will showcase and pioneer broadband applications.

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Futuris links strong local presence in the Australian rural and regional sector with global markets.

Our rural services businesses are matching the production capabilities of Australian farmers with domestic and international buyers of wool, grain, meat and livestock and horticulture. We pioneered offshore wool auctions, taking the sale of fine Australian wool to its largest market, and the export of livestock to offshore markets.

Our forestry operations are establishing plantations in regions identified as being the most appropriate by a comprehensive national profiling exercise.

Our financial services operations give rural and regional Australians local service in banking, insurance and wealth management with a range of products designed to meet their needs.

Backing it all up is a network of approximately 400 locations around Australia linking country Australia with international primary produce buyers.

The future is local presence and a global vision.

Left: Kylie Kemp of Elders Roseworthy branch assists a client with an order. Roseworthy, which is one of 400 Elders locations around Australia, serves an area of approximately 20,000 square kilometres for clients engaged in cropping, viticulture, horticulture, wool and livestock production.

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is focussed on the Australian rural and regional sector and the value it generates in Australia and internationally through:

• world class production of food and fi bre• sustainable forestry and carbon management• responsible land management• varietal improvement• and best practice supply of inputs and services to successful primary producers and the growing regional population.

Review of operationsOur Businesses

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Additional income in FY2007 was also sourced from interests held in the automotive sector and from property development operations divested during the year.

Our Business is developing around four key business streams within the rural and regional value chain, and is supplemented by interests in leading corporate food producers.

Management of one of Australia’s largest hardwood timber plantation estates. Processing and sale of value-added hardwood timber products.

ForestryF07 EBIT: $57 millionEBIT share: 35%

Rural ServicesFarm inputs, servicesand supply chain to andfrom farm-gate through Elders, Australia’s leading rural retailer.

F07 EBIT: $49 millionEBIT share: 30%

TelecommunicationsRetail to rural and regional consumers through Elders.

Won tender to build and operate government funded wholesale broadband network to rural and regional Australia.

49% shareholder Amcom Telecommunications.

Not material in FY08.

To be reported separately from FY08

Banking, Insurance and wealth management by APRA licensed and prudentially regulated entities.

Financial ServicesF07 EBIT: $27 millionEBIT share: 16%

F07 $7 million (equ. acc. NPAT)

NPAT share: 7%

Beef, Horticulture and AquacultureFuturis is Australia’s largest individual interest holder in corporate production of beef, fi sh and horticulture.

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The year in briefRecord earnings in a tough year.

FinancialHighest ever underlying profit

• Sales revenue down 4% to $3,228.5 million• Record underlying profi t to shareholders up 15% of $101.7 million• Reported profi t to shareholders of $100.7 million• Year end gearing of 24%

Elders Rural ServicesSolid performance in drought affected year

• Underlying EBITDA up 1% to $64.3 million• EBIT of $49.1 million, 5% lower• Increased contribution from Wool, Real Estate and Distribution of Financial Services • Commissioning of Shangdong wool processing operations

Financial Services Ongoing growth

• Earnings before tax up 5% to $39.5 million• Elders Rural Bank profi t up 11%• Insurance earnings before tax maintained at $24 million

ForestryImproved processing operations, increased MIS sales

• ITC increases EBIT by 43% to $56.9 million• Acquisition of 9,000 hectares of plantation to bring estate size to 160,000 hectares• MIS sales increase 30% • Processing operations lift performance and profi t• 5% increase in woodchip prices secured

TelecommunicationsStrategy rewarded with funding for new business stream

• Elders Optus joint venture wins $958 million funding from Australian Government to build and operate rural and regional broadband network

• Shareholding in Amcom increased to 49.1% Corporate DevelopmentTransition to rural and regional focus advanced

• Property Development operations divested• Aquaculture interests expanded• Increased shareholding in Webster, Forest Enterprises Australia

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Year ended 30 June

$ million unless otherwise indicated 2007 2006 Change

Sales revenue 3,228.5 3,355.8 -4%

EBIT underlying 164.7 157.1 5%

Net interest 40.0 39.0 3%

Profi t before tax underlying 124.7 118.2 5%

Tax on underlying profi t (20.2) (29.9) -32%

Minority interests 2.8 9.0 -69%

Underlying profi t to shareholders 101.7 88.3 15%

Non-recurring items after tax (1.0) (0.9) n/m

Net profi t after tax and minority interests 100.7 87.4 15%

Cash fl ow from operating activities 85.0 127.4 -33%

Borrowings 609.2 739.5 -18%

Net debt 364.9 202.0 +81%

Net Assets 1,186.5 1,227.9 -3%

Dividend per share (cents) 9.5 9.0 6%

Earnings per share (underlying cents) 14.00 13.18 6%

Earnings per share reported (cents) 13.86 13.06 6%

Gearing (% net debt/net debt+equity) 24 14 n/m

Employees (no) 5,928 6,033 -2%

Share price ($ per share) 2.78 2.10 32%

48

7.65

9.57

14.0013.18

10.86

Earnings per share(cents underlying)

63

102

88

72

Profi t after tax (underlying $ million)

2464

1.68 1.58

2.78

2.10

1.82

Share Price ($ per share)

2707

32293356

3175

2003 2004 2005 2006 2007

Sales revenue ($ million)

8496

165157

131

EBIT(underlying $ million)

2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

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Stephen GerlachChairman

Dear Shareholder

I am pleased to report that your Company has completed one of its most challenging years with one of its best ever profit results.

Futuris recorded a statutory profi t of $100.7 million in 2007, 15% higher than the previous year’s result of $87.4 million. The 2007 fi nancial results included non-recurring items totalling $1.0 million after tax ($0.9 million in 2006), which are detailed in the Discussion and Analysis of the Income Statement.

After exclusion of non-recurring items, the underlying profi t to shareholders for the year was $101.7 million, 15% above the 2006 result of $88.3 million.

As I have noted above, these results were achieved in testing circumstances, with the majority of Australian agricultural regions suffering protracted and severe rainfall defi ciency that extended for nearly 10 months of the year, brought by a recurrence of the El Nino weather pattern.

The impact of this drought on the rural economy and Futuris was signifi cant. In previous comparable El Nino events, the Company suffered earnings contraction as a result. But in 2007, Futuris was able to take its underlying profi t to new levels because its businesses with low seasonal exposure continued to grow whilst those sensitive to seasonal conditions have performed well in diffi cult markets.

From the Chairman

Strategic direction and operations

The strategic direction taken by the Company to build its business around the Australian rural and regional sector is being increasingly refl ected in its asset base as new initiatives are completed each year.

This process is being supported by ongoing changes to reporting structures to maintain appropriate concentration of management and governance and to provide transparency of performance for key elements of its strategy.

In 2007, the Company commenced separate reporting of Elders Rural Services (which incorporates Elders’ traditional agency, supply chain and farm supply operations) and Elders Financial Services operations.

The performance of Elders Rural Services was appropriate given the circumstances. These operations recorded a 5% drop in EBIT, a result which shows the progress that has been made since the comparable El Nino event of 2002/03 when EBIT contracted by more than 20%.

Elders Financial Services operations have continued to advance and increase their contribution to the Company. Elders Rural Bank recorded another year of strong growth. Insurance operations broadly maintained their earnings before tax at $24 million.

Integrated Tree Cropping (ITC) became a wholly-owned subsidiary of Futuris during the year and achieved improvement across its operations. ITC’s plantation estate and harvest volumes expanded further, while the income from timber processing increased.

ITC’s development is progressing in line with Futuris’ vision for the business as Australia’s leading supplier of sustainably produced timber and woodfi bre.

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contributors to the Company’s long term development from a small company to today’s position. On behalf of the Board and all shareholders I would like to record our appreciation and thanks for their considerable contributions to Futuris.

Mr Ian MacDonald was appointed to the Board in November 2006 as a non-executive director. Mr MacDonald has joined Futuris after a long and successful career in banking.

Conclusion and outlook

Futuris has concluded 2007 with strong fi nancial results and positive momentum in its businesses.

The Company’s Financial Services and Forestry businesses are growing, while its Rural Services operations are positioned to benefi t from improved seasonal conditions.

At a more general level, the leading positions held by the Company’s businesses mean that Futuris expects to be a benefi ciary of the rising demand for agricultural and forestry produce, the introduction of broadband telecommunications to rural and regional Australia and economic recognition of carbon impacts. Futuris has a promising outlook and, given normal business and seasonal conditions, expects to generate earnings improvement for the foreseeable future.

In closing, I would like to acknowledge the efforts of the Company’s employees, thank them for their efforts and wish them every success in the newfi nancial year.

Stephen GerlachChairman

ITC is now the lead negotiator for certifi ed plantation woodchip exports from Australia to Japan and its signifi cance as a supplier is set to rise as its existing plantations mature and sales volumes rise to exceed 1 million tonnes per annum. As the manager of one of Australia’s largest hardwood plantation estates, ITC is positioned to be one of the nation’s larger generators of carbon credits.

The development of the Company’s rural and regional and telecommunications assets and strategy means that its remaining automotive operations account for a much smaller share of Futuris’ asset base and earnings than has been the case. These assets are being managed and developed according to a medium term strategy proven with Air International’s Global Thermal division.

Financial results from Futuris Automotive in 2007 refl ect conditions in the local passenger vehicle sector. However, the business made good progress with the key element of its strategy - the development of a well-founded business in China.

Futuris is now no longer involved in property development following the sale of Caversham Property during the year. The sale enabled the Company to bring forward profi t and capital realisation from its Property assets and to reallocate those funds to help meet the needs of its growing rural and regional assets.

The Company has continued to achieve improvement in its occupational health and safety outcomes. Ongoing improvement is being sought in all areas of our operations.

Sustainability is a common consideration in the Company’s development as it builds its businesses. The Company has an overall

commitment to environmentally responsible conduct across all of its operations and also supports initiatives to promote sustainability and the communities in which it operates.

During the year Elders made a major commitment to support sustainable land use through a 5 year partnership with Landcare Australia. The Elders Landcare Farming Partnership is designed to promote environmental sustainability in the rural sector.

Corporate Governance

Futuris supports the spirit of the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations. A comparison of the Company’s corporate governance polices and practices against the Council’s Recommendations is included in the Corporate Governance Report of this document.

The Company’s governance practices comply in all substantial respects with the Council’s Recommendations. Futuris has appropriate corporate governance policies and practices and a Board of Directors who exercise independent judgement in the best interests of the Company.

Board of Directors

During the year Mr Alan Newman retired from the Board of Directors due to ill health. Mr Newman served as Managing Director from 1989 to 2003 and subsequently as a non-executive Director.

Deputy Chairman Mr Walter Johnson has advised that he will not seek reappointment to the Board at the forthcoming AGM and, accordingly, will retire from the Board in October 2007 after nearly 26 years service as a Director.

Mr Johnson and Mr Newman have both been major and long term

Futuris has concluded 2007 with strong fi nancial results, positive momentum in its businesses and having successfully executed strategic corporate development initiatives.

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Chief Executive’s Report

Performance overview

Futuris’ corporate strategy over the last four years has sought to deliver consistent and reliable earnings growth while restructuring the Company’s asset base towards the leading assets in the Australian rural and regional sector. In doing so, the Company has balanced the need to consistently deliver satisfactory annual fi nancial growth with the investment and business building required for medium to long term performance.

In 2007, your Company maintained its record of meeting these twin objectives, and did so emphatically, setting new profi t and share price benchmarks and taking initiatives that have signifi cantly advanced our strategic position.

In respect of earnings, the 2007 underlying profi t to shareholders of $101.7 million is the highest yet recorded by Futuris and the fourth successive annual result to feature double-digit growth rates. More importantly, earnings growth has been achieved on a per-share basis with Futuris’ underlying basic EPS having grown at a compound rate of 16% per annum over the four years to 30 June 2007.

This performance has been sustained despite indifferent to extremely poor seasonal conditions for Australian farmers over the past 3 years, highlighting the momentum provided by the Company’s initiatives in new business streams.

Through building its share of earnings from areas such as fi nancial services, regional property management and forestry, Futuris has increased the quantum and share of its earnings which carry low seasonal exposure – while retaining the potential for seasonal upside through its traditional agricultural service operations.

The results achieved in 2007 have demonstrated the progress and benefi ts of this strategy.

Strategic initiatives and corporate development

Corporate development during the year saw Futuris largely complete the transition in its asset base towards the rural and regional sector. As a result of this, non-related assets now account for 6% of the Company’s earnings base.

Ongoing corporate development will focus largely on building leading businesses and positions in the Company’s target sectors of rural services, fi nancial services, forestry and telecommunications and its agricultural producing associates.

2007 ranks as one of the most signifi cant years in Futuris’ corporate development. The initiatives undertaken during the year have had 4 major outcomes:

1) Futuris is positioned to be a lead player in rural and regional telecommunications Elders, in joint venture with Optus, was selected by the Australian Government as the sole successful tenderer for funding to build and operate a wholesale broadband network to service rural and regional Australia. The initiative is subject to the completion of funding and joint venture agreements.

The OPEL (Optus Elders joint venture) network is expected to be the principal operating asset of Futuris’ telecommunications operations and will substantially broaden our exposure and involvement in the Australian rural and regional economy.

Les WozniczkaChief Executive Offi cer

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In many respects, telecommunications has parallels with banking and the Company’s initiative in forming Elders Rural Bank. Both are critical services where regional and rural communities have experienced declining local presence and a widening gap in service levels relative to the major population centres. The success of Elders Rural Bank has demonstrated the effectiveness of Elders staff and network in satisfying the local service needs of rural and regional communities. Similar opportunities exist in telecommunications.

Futuris’ position in the sector is also supported by its shareholding in Amcom, one of Australia’s leading second tier telecommunications fi bre owner/operator. During the year Futuris increased its shareholding to 49.1% as a result of fi nancing transactions to support Amcom’s acquisition of a 19.98% interest in iiNet, Australia’s third largest internet service provider (ISP) and the largest independent ISP to rural and regional Australia.

2) Capital is being realised from business activities that are ancillary to corporate strategyThe Company divested its property development operations.

Sale of the property development operations resulted in proceeds of $121 million during the year with a further estimated $60 million to be realised on completion of conditions.

3) The Company has reinforced its growing Forestry sector positionForestry is forecast to be a source of rising income generation within Australia due to the expansion of export volumes enabled by the maturation of plantation estates, structural changes in demand and supply and rising consumption by Asian economies.

The emerging importance of forestry for carbon management is forecast to be an added source of value.

Futuris reinforced its position in the industry in 2007 through ITC’s investment of a total of $63.1 million in plantation and processing assets and an increase in its investment in Forest Enterprises Australia (FEA).

These investments will all generate incremental earnings in the new year with the processing assets having already contributed to the better results achieved from ITC Timber in 2007.

4) Further development of the Company’s interest in aquaculture

Futuris expects corporate aquaculture will account for a growing share of regional food supply as it proves to be a sustainable, clean, quality-assured source of supply that eases pressure on wild fi sh resources.

Futuris is, through the Company’s interest in Webster Limited, the major shareholder in Tassal Limited, Australia’s largest salmon producer. Futuris increased its interest in aquaculture in 2007 through:

• increasing its interest in Webster Limited to 26.9% (now 29.5%). Webster’s interests include a 28% shareholding in Tassal, Australia’s largest salmon producer.

• acquiring a cornerstone (5.5%, fully diluted) shareholding in Clean Seas Tuna Limited, which is pioneering commercial breeding of southern bluefi n tuna; and

• acquiring a 50% interest in Aqa Oysters, one of Australia’s largest producers of Pacifi c Oysters. Aqa Oysters is engaged in consolidating production interests in what is a highly fragmented industry with the object of achieving the mass and economies that permit export of farm produced oysters to high value international markets.

The positions taken in Clean Seas Tuna and Aqa Oysters are essentially exploratory and involve modest fi nancial capital commitment of $12.9 million in total. Through involvement at the formative stage of these enterprises, Futuris has been able to economically secure participation in operations with strong potential and which complement the Company’s interest in Tassal.

Review of operations

Futuris has realigned its reporting segments to refl ect the key elements of the Company’s corporate strategy.

The new reporting framework means that the progress of our strategic plan can be readily assessed as can the performance of businesses in each sector.

The 2007 accounts are the fi rst to provide separate reporting of Elders Rural Services and Elders Financial Services, which had previously been reported within the Elders result. Telecommunications will be reported separately in the 2008 fi nancial year following OPEL’s operational commencement.

Elders Rural ServicesElders Rural Services recorded a relatively strong performance considering the severe drought conditions that affected Australia for most of 2007.

Its underlying EBIT contribution of $49.1 million, compares favourably to the previous year’s result of $51.9 million and is a demonstrably stronger result than recorded in the last comparable El Nino event in the 2002/03 fi nancial year.

The strength of the result is attributable to the building of supplementary earnings streams with low sensitivity to seasonal conditions, such as property

Earnings growth has been achieved on a per-share basis with Futuris’ underlying basic EPS having grown at a compound rate of 16% per annum over the four years.

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Webster Limited increased its equity accounted profi t contribution from $1.8 million to $2.0 million. Webster gives Futuris participation in aquaculture (through its shareholding in Tassal Group Limited) and horticulture operations.

Elders Financial ServicesElders Financial Services generated underlying earnings before tax of $39.5 million, 5% higher than its 2006 contribution of $37.6 million.

2007 was the fi rst full year the fi nancial services operations have operated under dedicated reporting and management structures. The change has been benefi cial in increasing focus on the fi nancial services entities and the development of management plans and strategies for operations.

The performance of Elders Rural Bank over the diffi cult seasons of 2006 and 2007 has been exemplary and a telling indication of the quality of its credit policy and business model.

Insurance operations, while benefi ting from a lower incidence of catastrophe claims, bore additional distribution costs of $6 million introduced to recognise commercially based service delivery fees by the Elders Rural Services network.

The capital funding requirements for ongoing growth of these operations has been material with the Company having invested a total of $57.1 million in the past 4 years. However, the Company has been rewarded, with the performance of the fi nancial services operations having been one of the most signifi cant factors in the Company’s achievement of ongoing profi t growth despite variable seasonal conditions.

management, real estate and distribution of fi nancial services as well as an increased contribution from wool operations.

Merchandise operations fi nished a demanding year with strong momentum, achieving record sales in May and June following the rains in southern and eastern Australia.

As is customary following drought conditions, livestock and wool operations are expected to experience tighter markets.

Agricultural Producing AssociatesThe Rural Services segment result includes the equity-accounted profi ts from the Company’s agricultural producing associates Australian Agricultural Company (AACo) (43.1% interest) and Webster.

AACo provides Futuris with excellent exposure to the Australian premium beef production assets. Futuris holds a 43% interest in AACo. AACo contributed $5.2 million to the 2007 profi t compared with $6.1 million in 2006.

AACo’s year to year fi nancial results will vary with cattle prices and short term market fl uctuations, but the underlying value of the business is growing steadily as the market value of its prime cattle production properties increases and the expansion of herd numbers, particularly in the high value Wagyu herd.

This non-cash capital appreciation is not refl ected in annual fi nancial results but has been recognised by the share market in AACo’s share price. The market value of the Company’s share-holding in AACo rose by $109 million in the twelve months to 30 June.

AACo’s assets and production capability are expected to acquire increasing signifi cance and value over the long term as regional demand for traceable, quality assured beef rises and supply of pastoral land tightens.

EBIT $ million 2006 2007

Forestry 39.9 56.9

Elders Rural Services 51.9 49.1

Elders Financial Services 26.9 27.2

AACo/WBA 7.9 7.2

Property 18.2 21.5

Futuris Automotive 20.8 9.5

Investment & other -8.4 -6.7

$ million 2007

Forestry 174

Elders Rural Services 2,309

Elders Financial Services 204

Property 138

Futuris Automotive 330

Investment & Other 74

Sales Revenue by business stream

Earnings by business stream

EBIT $ million

2006 2007

200

150

100

50

0

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ForestryITC’s results refl ect the expansion of its plantation operations and the turnaround achieved in its timber processing operations.

With timber markets having been affected by weak demand and excess stock, considerable effort has been made to lift the effi ciency and returns from ITC’s timber processing operations. The success of these efforts is evident in the improved fi nancial results.

Investments made in processing assets are contributing to better returns. The hardwood sawmilling sector is undergoing consolidation. This process, and improving market conditions, are being refl ected in sales and reduced industry stock levels.

Plantation operations expanded during the year to an estate totalling 160,000 hectares. A further 12,700 hectares will be established for Managed Investment Scheme (MIS) projects sold during the year. ITC’s commitment to a comprehensive review and reform of its MIS development and sale function was rewarded with the Company lifting sales by 30% despite industry sales being broadly in line with 2006.

The plantation timber industry is assuming a greater level of signifi cance as the volume of woodfi bre produced by maturing plantations increases. Plantation grown forest products now account for approximately 57% of Australian production. Plantation grown product is now priced separately, and at a premium, to that sourced from native forests.

In 2007 ITC secured a 4.6% rise in the benchmark price for certifi ed plantation grown hardwood woodchips. The increase, the most signifi cant for several years, is a positive indication of the demand outlook for ITC’s woodchips.

It now appears likely that some form of market-based carbon management schemes will be introduced by Australian and other international governments within 5 years. The implementation of such schemes has the potential to increase the value of ITC’s plantation estate through the economic value attributed to the estate’s carbon sequestration capability.

Until the relevant carbon management schemes are fi nalised, it is not possible to reliably attribute a fi nancial value for the carbon sequestration performed by ITC’s tree plantations.

ITC is, like the Company’s fi nancial services operations, a growing business which requires capital to fund its development. Ongoing capital expenditure is anticipated in the medium term to build ITC’s estate to the point where economies of scale are realised and the estate is self-sustaining after the rotation of harvested plantations.

Futuris Automotive Futuris Automotive is the last of the manufacturing assets still held by the Company and is the subject of a business development program designed to capture value inherent in its capabilities. A key element of this program is the leveraging of Futuris Automotive’s capability in the manufacture and supply of automotive interior systems into the rapidly growing Chinese automotive industry.

During 2007 the Company, through a 70% owned joint venture, completed construction and commissioning of a manufacturing facility to supply seating to emerging Chinese manufacturer Chery Automobile Co. Production from the facility commenced late in the fi nancial year and is expected to ramp up over the course of 2008.

Underlying EBIT of $9.5 million was generated by Futuris Automotive in 2007, lower than the previous year’s result of $20.8 million due to the costs of restructuring Australian operations, reduced demand levels and a lower contribution from associates.

Balance sheet and capital Management

The Company reduced its gross debt levels by 18% over the course of the year. However reduced cash balances resulted in higher net debt and gearing fi gures.

At 30 June Futuris had net debt of $364.9 million and a gearing ratio of 24%, which compares to the corresponding fi gures of $202.0 million and 14% at the beginning of the year.

Conclusion

In conclusion, the Company’s results for 2007 have highlighted its capacity to perform in both favourable and unfavourable conditions.

Futuris’ rural and regional asset base combines a balanced mix of established market leading businesses, newer businesses building market share and earnings and exciting areas of opportunity. All made good progress in 2007, and have the market position, strategy and opportunities from which shareholders can reasonably expect ongoing growth.

Les Wozniczka

Chief Executive Offi cer

Futuris’ rural and regional asset base combines a balanced mix of established market leading businesses, newer businesses building market share and earnings and exciting areas of opportunity.

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$ million unless otherwise indicated 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998

Profitability

Sales revenue 3,228.5 3,355.8 3,174.7 2,707.3 2,464.3 2,145.8 1,968.4 1,759.7 1,482.2 1,211.6

Total revenue 3,366.9 3,422.6 3,232.0 2,791.0 2,844.8 2,537.6 2,177.7 1,832.6 1,570.5 1,469.7

Reported EBIT*

Rural Services1 56.3 65.8 26.8 19.0 152.3 47.3 101.0 86.7 72.6 46.2

Financial Services1 27.2 26.9 - - - - - - - -

Forestry 56.9 39.9 32.2 10.9 - - - - - -

Automotive Systems 9.5 16.3 99.3 19.5 19.3 30.7 22.4 21.1 21.4 25.3

Property 30.4 16.3 -3.3 7.5 0.3 4.8 1.4 - - -

Other -16.2 -8.4 -11.8 -5.0 -5.5 17.1 3.2 11.6 2.9 12.5

Total EBIT 164.1 156.8 143.2 51.9 166.4 99.9 128 119.4 96.9 84.0

Underlying** EBIT 164.7 157.1 131.3 96.1 84.0 91.9 88.6 108.9 91.4 69.9

Underlying** profi t before tax 124.7 118.2 106.4 86.1 65.0 71.2 65.2 81.1 81.0 63.6

Abnormal & non-recurring items -1.0 -0.9 -13.2 -44.2 82.4 8.0 39.4 10.5 12.2 72

Tax expense 20.5 -21.4 -47.9 -12.2 -38.5 -13.9 -18.1 -12.3 -19.6 -17.3

Minority interests -2.8 -9.0 -11.8 -5.9 -6.9 -2.9 -6.5 -5.1 -5.3 -4.3

Statutory profi t 100.7 87.4 58.6 23.8 102.0 62.4 80.0 74.2 68.3 114.0

Underlying profi t after tax 101.7 88.3 71.8 62.8 48.0 56.5 55.8 61.5 64.0 53.4

Cash flow from operating activities 85.0 127.4 -9.3 121.1 -55.6 113.8 188.8 64.7 75.0 34.8

Shareholder’s equity 1,186.5 1,227.9 970.3 961.2 843.6 749.1 723.0 692.4 612.0 569.4

Share information

Dividend per share (cents)

Interim 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 3.6 2.9

Final 5.5 5.0 5.0 4.0 4.0 4.0 4.0 4.0 3.6 3.9

Total 9.5 9.0 9.0 8.0 8.0 8.0 8.0 8.0 7.2 6.8

Dividend provided for or paid# 65.4 59.9 53.7 52.3 50.6 48.7 48.4 47.9 37.4 36.2

Hybrid distribution 8.9 1.8 - - - - - - - -

Share price^ ($ per share) 2.78 2.1 1.82 1.58 1.68 1.36 2.64 1.8 1.97 1.27

Market capitalisation^ 2,045 1,514 1,207 1,041 1,096 836 1,595 1,087 1,013 636

Number of shareholders^ 31,956 33,337 35,394 40,028 42,625 45,508 30,844 28,233 22,499 18,939

Ordinary shares on issue^ 735,640,128 720,911,089 663,243,696 659,138,427 652,293,766 614,870,776 605,136,707 604,159,207 514,065,747 500,151,804

Share issues Dividend Dividend Dividend Dividend Dividend Dividend Dividend Dividend Conversion Dividend reinvestment reinvestment reinvestment reinvestment reinvestment reinvestment reinvestment reinvestment of options reinvestment plan, plan, plan, plan, plan, private plan plan, plan, and notes, and bonus conversion conversion conversion conversion placement conversion conversion conversion 10% bonus share plans of options, of options of options of options conversion of options of options of options conversion Convertible notes institutional of options of options conversion placement and notes

Ratios and statistics

Reported earnings per share (cents) 13.9 13.1 8.9 3.6 16.2 10.2 13.2 12.9 12.2 21

Net tangible assets per share ($) 1.21 1.17 0.82 0.94 0.88 0.8 0.85 0.84 0.81 0.85

Gearing %† 24 14 23 1 0 15 33 37 51 49

Dividend payout ratio % 68 69 65 222 49 78 61 62 59 32

1 Prior to 2006 Financial services result reported within Rural Services

* Reported earnings before interest and tax (inclusive of non-recurring and abnormal items).

** Underlying profi t and earnings results excluding abnormal and non-recurring items (includes material profi t/loss on asset disposal)

# In respect of dividends declared for the fi nancial year.

^ As at 30 June.

† As measured by ratio of net interest-bearing debt/shareholders equity+net interest-bearing debt.

10 Year Summary Financial Results

19

Report of OperationsRural Services

Key financial results

$ million 2007 2006

Sales 2,309.5 2,364.5

Underlying EBITDA 64.3 63.5

Depreciation & Amortisation 15.2 11.6

Total underlying EBIT 49.1 51.9

Non-recurring items - 6.1

EBIT reported 49.1 58.0

Main features and outcomes

Sales revenue affected by drought, down 2%EBITDA up 1%Underlying EBIT 5% lower to $49 millionIncreased contribution from Wool, Real Estate and Financial Services distributionGrain business developing

•

••

•

•

Elders Rural Services’ underlying EBIT for the year of $49.1 million was 5% lower than the previous year’s result of $51.9 million. The movement in EBIT and sales is due to the impact of drought conditions on merchandise and meat and livestock operations. Contribution from wool, real estate operations and the distribution of fi nancial services products increased.

Operations

Elders’ business involves the delivery of an integrated suite of products and services to the rural and regional sector through an Australia-wide branch network of 298 branches. In addition, Elders has approximately 150 franchised real estate agencies, located in major capital cities.

Elders livestock agent Ray Norman (centre) fl anked by Albany Branch Manager Tom Marron (left) and Brad Preston, Territory Sales Manager, Donnybrook conducting Elders’ weekly trade sale at Albany. Elders is Australia’s largest livestock agent.

20

Business Development

Elders seeks to develop its business through a strategy which leverages the value of its network, relationships with approximately 100,000 farmers and the goodwill that the business has earned through 167 years of service. Business growth is being pursued through three avenues:

(1) increasing the value transacted through the network through increasing sales under existing product areas and developing new products;

(2) capitalising on Elders’ presence and goodwill as a regional service provider; and

(3) extending participation along the value chain upstream and downstream of the farm gate where appropriate.

Performance

Sales revenue of $2,309 million was 2% lower than in the preceding year.

The major factors in the movement were lower merchandise sales and lower revenue from wool operations. All other product areas recorded increased revenue.

Key features of Elders’ operations and performance in individual product areas is as follows:

Elders has six principal product areas: farm merchandise (supply of farm inputs), livestock production and marketing services, wool production and marketing services, real estate and banking and insurance, which are delivered via exclusive distribution agreements with Elders Rural Bank and Elders Insurance. Product streams are also being developed in grain accumulation.

Elders supports its network operations through participating in the value chain upstream and downstream of ‘the farm gate’ through its initiatives in meat and livestock, grain, horticultural produce, wool and farm inputs. These initiatives include:

• Supply chain activities whereby the Elders network provides a conduit for buyers seeking to source Australian agricultural produce that meets their specifi cations.

• Operations through which Elders participates in value-adding sectors of the supply chain. These initiatives include Elders involvement in feedlots, live export, sale of animal and plant genetics, conduct of wool auctions and exchanges in Australia and overseas, wool trading and processing (through BWK) and wool dumping and handling (Australian Wool Handlers joint venture).

• Participation in commercial operations such as HiFert to support competitive supply arrangements and share in earnings generated at the wholesale level of the farm services sector.

Elders is building its grain accumulation and sale operations as the progressive deregulation of the Australian grain sector permits. In 2007 Elders executed grain sales of 920,000 tonnes, 19% higher than the preceding year’s executed sales of 770,000 tonnes.

$ million 2007

Merchandise 1039

Meat & Livestock 526

Wool 423

Real Estate 88

Grain 176

Financial products distribution 40

Other 17

Sales Revenue

21

MerchandiseElders retails farm inputs including fertiliser, agricultural chemicals, animal health products, seed, fencing and other general merchandise used in farming operations. Elders also participates in wholesale fertiliser distribution through an equity-accounted 50% shareholding in HiFert.

Elders’ sales of merchandise fell by 7% to $1,039 million due to the contraction in expenditure on agricultural chemicals, fertiliser, seed and general merchandise caused by seasonal conditions.

Meat and LivestockElders’ meat and livestock operations include its traditional stock agent services and its initiatives which extend its presence in the supply chain within Australia and internationally.

Contribution from meat and livestock operations fell compared with the previous year due to the impact of the drought on livestock prices. Elders sold a total of 2.50 million cattle in 2007 compared with 2.51 million in 2006. Sheep volumes sold were largely unchanged at 14.08 million compared with 14.03 million.

Feedlot operations recorded another year of solid performance, but income from meat and livestock supply chain initiatives was below the levels of the previous year.

Wool Elders’ wool operations comprise its traditional agency operations and supply chain initiatives which extend from operation of independent auctions and wool exchanges, trading operations, handling, dumping and storage of greasy wool through to early stage wool processing.

Wool operations benefi ted from higher prices and sales volumes. Elders sold a total of 745,200 bales in 2007, compared with 725,300 in the previous

year. The average price received rose from $758.60 per bale to $915.10 per bale. Trading operations benefi ted from the stronger market conditions.

Elders continued the process of restructuring BWK’s wool processing operations to a status which is sustainable in current and anticipated textile market conditions. Commissioning of the wool plant relocated to the Yantai BWK joint venture was completed prior to year-end. Production by the 50:50 joint venture with Chinese wool processor Shandong Nanshan Industrial Company will commence in 2008.

Real EstateElders Real Estate comprises real estate services delivered through the network of Elders branches and stores throughout rural and regional Australia and the franchise of a further 150 real estate businesses in metropolitan locations under the Elders Real Estate brand. Property management provides an additional source of income.

Elders’ real estate operations increased their fi nancial contribution in 2007. Revenue generated rose by 14%, as increased residential sales and property management enabled Elders to offset lower broadacre sales.

Elders sold 1,837 broadacre and 6,455 residential properties compared with 2,022 broadacre, and 5,714 residential properties in the previous year. Elders had 13,015 properties under management at year-end.

GrainElders is building its grain accumulation and sale operations as the progressive deregulation of the Australian grain sector permits. In 2007 Elders executed grain sales of 920,000 tonnes, 19% higher than the preceding years executed sales of 770,000 tonnes.

The deregulation of the South Australian barley market was announced during the year, providing further market opportunity for the Company in 2008. The formation of a grain accumulation and marketing joint venture with Toepfer International Asia, announced subsequent to year-end, will increase the options and capacity available to Elders as it builds its position in grain.

Sustainability

EnvironmentElders’ feedlots at Charlton (Victoria) and Killara (New South Wales) are subject to local and state government environmental and animal welfare legislation.

Operations at both feedlots are quality assured under the National Feedlot Accreditation Scheme, which is independently administered and audited annually by Aus-Meat. In addition, the operations are conducted under the provisions of the Australian Code of Practice for the Welfare of Cattle in Beef Feedlots (1996) and the Australian Model Code of Practice for the Welfare of Animals - Cattle (1992).

No breaches of any of the relevant acts, codes of practice or accreditation schemes under which Killara or Charlton feedlots are approved and operate were reported during the year ended 30 June 2007 or to the date of this report.

Certain states have state and local government regulations that apply to saleyards owned and/or operated by Elders, in particular, in relation to effl uent run-off, dust and noise. These regulations vary from state to state and generally only apply to saleyards above a prescribed size.

No breaches of these environmental regulations were reported during the year ended 30 June 2007 or to the date of this report.

22

Units), was launched in conjunction with Southern Cross University with 70 participants. This program prepares targeted managers by further exposing them to a range of business concepts, disciplines and skills they require to operate effectively at a senior level.

The continuing development of the Company’s e-learning capability is reaching well beyond the induction and compliance arena into role specifi c training that includes best practice ‘blended learning’ solutions. The number of e-learning modules available rose by over 90% to over 120 during the year. Enrolments exceeded 100,000 and voluntary completion rates exceeded 65%.

Occupational health and safety was also incorporated into the Elders Compliance program to enable auditing of key OHS compliance activities and increased accountability. The strategic approach to safety management is being driven by an OH&S Strategic Plan developed during the year. Additional resources were committed to the development of risk reduction strategies.

The incidence of workplace injuries declined (from 444 to 428) during the year. However, a valued employee lost their life in the course of their duties as a result of a criminal offence committed within an Elders real estate property management offi ce. Elders supported staff members who were witness to the incident, with the resultant lost time being the reason for an increase in the lost time injury frequency rate during the year from 4.54 per million hours worked in 2006 to 5.40 in 2007.

Elders maintains a large motor vehicle fl eet as well as a dedicated forklift operation to conduct its operations throughout rural and regional Australia. A range of initiatives including driver training, vehicle effi ciency, vehicle

Elders’ merchandise operations are subject to state environmental regulations governing the storage, handling and transportation of dangerous goods such as agricultural and veterinary chemicals and fertilisers.

The majority of Elders’ merchandise operations are accredited under the Agsafe co-regulatory accreditation program. The program provides accreditation for premises and training and accreditation for individuals in the safe transport, handling and storage of agricultural and veterinary chemicals.

Licences for the handling and storage of dangerous goods are obtained and maintained by Elders wherever necessary as part of the Agsafe process.

No material incidents were reported in relation to the handling and storage of dangerous goods during the year.

Human ResourcesElders (comprising Elders Rural Services and Elders Financial Services Group) employed 4,430 people, at 30 June, representing 3,374 full time equivalent employees; virtually unchanged from the previous year’s level of 4,400 persons (3,475 full time equivalents).

Elders aims to employ and develop capable people within in a progressive and fair workplace. In 2007, $2.7 million was invested in a range of training initiatives designed to support and achieve these outcomes.

Over 90 staff started the Elders Frontline Management Program, now a full Cert IV status program and approved for 1 full unit credit at MBA level. This program gives the Elders manager an excellent grounding in the disciplines and processes they need to lead teams effectively.

The Senior Manager Program, a 2 year, Graduate Certifi cate program (4 MBA

benchmarking, detailed business performance reporting and accident and incident management systems support the safe operation of the vehicle fl eet.

CommunityAs a rural service organisation, Elders is committed to supporting the communities which it serves. Elders provides employment and a range of services to its network of branches throughout Australia. Elders‘ branches support local initiatives and charities and Elders’ staff members participate in community service organisations.

As noted by the Chairman, Elders made a $2.5 million, fi ve-year commitment to work in partnership with Landcare Australia during the year to help promote environmental sustainability amongst Australian farmers. Elders’ initiatives supported a number of charities including the Royal Flying Doctor Service, and the McGrath Foundation whichfunds breast care nurses primarily in the rural areas. Through Futuris, Elders was also a principal sponsor of the Australian String Quartet’s 2007 Regional Performance Program.

Elders made a $2.5 million, fi ve year commitment to work in partnership with Landcare Australia to help promote environmental sustainability amongst Australian farmers.

23

Financial ServicesMain features and outcomes

Underlying and reported EBIT up 1% to $27 millionEarnings before tax up 5%Introduction of new insurance distribution fee arrangementElders Rural Bank increased profi t contribution 15%Underlying improvement from insurance operations

•••••


$ million 2007 2006

Sales revenue 204.0 185.7

Reported EBIT 27.2 26.9

Insurance investment interest 12.3 11.6

Earnings before tax 39.5 37.6

OperationsElders Financial Services Group comprises the Company’s prudentially regulated operations in banking, insurance and wealth management.

Elders Rural Bank is the holder of APRA authorisation to operate as an authorised deposit taking institution under the terms of the Banking Act 1959. The bank is a 50:50 joint venture of Futuris and Bendigo Bank Limited. Elders Rural Bank concentrates on rural lending, with its products and services being distributed through the Elders network under an exclusive distribution agreement. The bank’s funding requirements are overwhelmingly sourced from retail deposits. Elders Rural Bank is reported as an equity-accounted joint venture within the Company’s fi nancial report.

Insurance operations consist of underwriting through Elders Insurance Limited, an APRA licensed insurer, and insurance agency services. Insurance products are distributed through the Elders network in a business model based on local presence and prompt local service. Elders’ insurance operations are supported by a franchise network of 207 agents and salespeople throughout Australia.

Wealth management operations are conducted through 32 licensed fi nancial advisors providing fi nancial planning and advice to rural and regional clients.

Elders Rural Bank

Elders Rural Bank contributed equity accounted profi t of $17.9 million in 2007, 15% above its previous year’s contribution of $15.5 million. The bank achieved strong growth in profi t and loans whilst maintaining credit quality.

Gross loans at 30 June of $3.2 billion were 14% higher than the 2006 comparative of $2.8 billion. Deposits rose by 12% to $3.2 billion compared with $2.9 billion in the previous year. The ratio of net non-performing loans was 0.36%.

Notwithstanding drought conditions, the bank has received upgrades in its credit rating and outlook since the 2006 year end. Standard and Poors’ upgrade of Elders Rural Bank’s outlook from ‘Stable’ to ‘Positive’ in the fi rst half was followed shortly after year-end with an upgrade of its short term and long term credit ratings. The upgrade resulted in Elders Rural Bank moving from its initial rating of BBB-A2 to BBB A3.

Insurance

Insurance operations contributed earnings before tax of $23.9 million compared with $24.6 million in the previous year. However, it should be noted the 2007 result incorporates $6 million of distribution fees introduced during 2007. Exclusion of these fees to enable a like-for-like comparison, results in earnings growth in 2007 of 27%.

Gross Written Premium of $427.8 million was 4% higher than the 2006 comparative of $413.2 million. Results benefi ted from lower than average claims, with natural disaster incidence being signifi cantly lower than in 2006. Net loss ratio for the year was 68.0% compared with 70.1% in 2006.

Interest earned on insurance reserves was $12.3 million compared with $11.6 million in the previous year.

Right: Peter Hassell, Elders District Banking Manager, Albany, Western Australia (left) with clients, the Smith Family of Baboo Pastoral Company at Green Range Western Australia.

24

Financial results from processing operations (ITC Timber) improved signifi cantly, rising from an EBITDA contribution of $0.3 million to $3.8 million. The improvement follows successful integration of new resource and processing assets and restructuring of operations. ITC Timber increased sales revenue from $49.6 million to $61.5 million.

Equity accounting of ITC’s share of Forest Enterprises Australia’s (FEA) and the SmartFibre joint venture contributed $6.4 million to ITC’s earnings compared with $5.5 million in 2006. ITC increased its shareholding in FEA to 30.7% during the year.

Sustainability

EnvironmentITC’s approach to its environmental responsibilities form a key component of the Company’s forward strategy. No signifi cant breaches of relevant environmental legislation or regulations occurred during the period covered by this report.

ITC holds ISO14001:1996 accreditation in respect of its environmental management system for its Forestry division and is pursuing certifi cation to Safety Standard AS4801.

The Company was successfully audited under its Forest Stewardship Council (FSC) certifi cation during the year. Approximately 80% of the Company’s plantations under management are now FSC certifi ed. ITC is also pursuing FSC certifi cation for its Queensland plantations.

ITC continued its corporate partnership with leading environmental organisation, WWF-Australia. The partnership was established to encourage sustainable forestry management practices and has seen the establishment of the Australia Forest and Trade Network (AFTN) a group of like-minded producers and

ITC is also engaged in the export of woodfi bre and operation of associated facilities. In Tasmania, ITC is a 50% interest holder in the SmartFibre joint venture with FEA. In Western Australia, ITC is also a 50% interest holder in the Plantation Pulpwoods Terminals joint venture, which owns and operates the 1 million tonne per annum capacity Albany Chip Terminal handling and loading facility in Albany, Western Australia.

ITC harvested and sold woodfi bre from approximately 3,000 hectares of plantations located in the Bunbury and Albany regions during the year.

Processing operations involve the harvest, sawmilling and value-adding of regrowth native timber under sustainable management practices in Victoria and Tasmania.

Financial Results

ITC’s underlying EBIT rose from $39.9 million to $56.9 million in 2007 with higher earnings being generated by all operations. Revenue increased by 19% to be $200.8 million.

Plantation operations benefi ted from higher MIS sales, a 9,000 hectare expansion in areas under management and improved harvest and land valuations. A 5% increase in the benchmark price for Australian plantation grown woodchip was negotiated with Japanese buyers during the year. The new price has increased the premium for certifi ed plantation grown product and is indicative of favourable near term demand outlook for ITC’s end-product.

ITC’s 2007 MIS product offering achieved sales of $61.5 million, which will fund the planting of an estimated 12,700 hectares of pulpwood, teak, red mahogany and sandalwood. Approximately 56% of the 2007 MIS sales will be carried forward and recognised as revenue in future years.

ITC contributes to the communities where it operates through support for local sporting, cultural and charity events and organisations.

Forestry

Main features and outcomes

43% increase in EBITPlantation estate increased to 160,000 hectaresMIS sales up 30% to $61.5 millionImproved returns from processing5% price increase in woodchip price

••

•

•

•


12 months to 30 June

$ million 2007 2006

Revenue 200.8 168.6

EBITDA 61.9 43.5


EBIT 56.9 39.9

Non-recurring items - -


Operations

ITC is an integrated forestry and timber company engaged in forestry management, the harvest, handling and export sale of woodfi bre and the sustainable production of value-added hardwood timber products.

Plantation operations consist of hardwood forest, managed on behalf of investors, who have funded the estate through subscription to managed investment schemes (MIS) or through direct investment. Plantations are predominantly eucalypt and eucalypt hybrids, with smaller plantings in sandalwood, teak and red mahogany. ITC had 160,000 hectares of plantation under management at 30 June. Plantations are located in southern Western Australia, Kununurra, the Green Triangle region and northern Queensland.

25

purchasers of sustainable forest products. Through the AFTN, ITC and WWF-Australia are working together to develop and promote strategies for best practice sustainable forest management and enhancing consumer and market awareness of sustainable, forest products.

CommunityITC contributes to the regional communities where it operates through participation, and support for local sporting, cultural and charity events and organisations. ITC provided in-kind support and sponsorship for over 50 events and organisations in 2007. Through Futuris, ITC was also a sponsor of the Australian String Quartet’s 2007 Regional Performance Program.

Human resources and safety managementITC had 389 employees as at 30 June compared with 332 at the beginning of the year.

ITC’s safety performance standards are benchmarked against the Australian Safety Standards. ITC recorded 58 lost time injuries during the year.

Right: 8 year old eucalypts at ITC’s Wimbush plantation, near Albany, Western Australia.

26

Futuris’ telecommunications interests comprise its shareholding in Amcom Telecommunications Limited, its 50% interest in the OPEL joint venture and retail of telecommunications services conducted through the Elders network.

Financial results from these operations are included under the category of Investment and Other in the 2007 accounts, but will be reported separately from 2008 onwards.

Amcom Telecommunications

Amcom owns and operates telecommunications fi bre in Perth, Adelaide and Darwin for a client base that principally consists of government and corporate users and other carriers. Amcom is the second largest fi bre owner in Perth and Adelaide.

Amcom is also a 19.98% shareholder in iiNet, Australia’s third largest internet service provider. During 2007 Futuris increased its shareholding in Amcom to 49.1% following the provision of equity backed fi nance to Amcom to fund the acquisition of its shareholding in iiNet.

Amcom is listed on the ASX under the ticker code AMM.

OPEL Networks

OPEL is a 50:50 joint venture of Futuris and Optus, formed to bid for federal funding to build and operate a new broadband network for rural and regional Australia.

In June OPEL was advised that it was the sole successful tenderer for funding and would be offered a total of $958 million (comprising $600 million from the Broadband Guarantee Infrastructure Program and further funding of $358 million) to build its proposed network. The initiative is subject to the completion of funding and joint venture agreements.

Preparation of the bid and establishment of the OPEL joint venture resulted in expenditure of $9.5 million which has been recorded as a non-recurring item in the 2007 accounts.

It is proposed that OPEL build and operate a broadband network for a period of 10 years commencing in the current fi nancial year. The OPEL network, which has a projected capital cost of $1.3 billion, will use a combination of ADSL2+ and wireless technologies to service a network footprint that takes in approximately 9 million premises in rural, regional and outer metropolitan regions over 600,000 square kilometres. OPEL’s primary market will be the majority of underserved homes and businesses within rural and regional Australia that are currently unable to access sustainable metro-comparable broadband service.

OPEL’s proposal is to operate an open access wholesale network providing primary voice and data services to retailers that will include Optus, Elders and local independent service providers. Network build is forecast to take two years to complete. OPEL will be reported within the Futuris accounts as an equity accounted joint venture.

Main features and outcomesOptus Elders joint venture wins Broadband Connect fundingIncreased shareholding in Amcom

•

•

Telecommunications

OPEL’s primary market will be the majority of underserved homes and businesses within rural and regional Australia that are currently unable to access sustainable metro-comparable broadband service.Senator the Hon Helen Coonan, Minister for Communications, Information Technology and the Arts (centre), fl anked by the Prime Minister, the Hon John Howard, Deputy Prime Minister, the Hon Mark Vaille, with Futuris CEO Les Wozniczka (far right), General Manager, Elders Telecommunications, Jason Horley (second from right) and staff of Elders Goulburn branch at the announcement of the OPEL joint venture successful tender.

27

Automotive

Key fi nancial results

12 months to 30 June

$ million 2007 2006

Sales 329.9 457.2

Underlying EBITDA 27.7 40.3


EBIT

Futuris Automotive 10.7 16.0

Associates (equity acc) (1.2) 4.7

Underlying EBIT 9.5 20.8

Non-recurring items - (4.5)


Futuris Automotive is engaged in the design, development and manufacture of interior systems (seat systems, seat hardware, fl oor carpets, headliners, steering columns, pedal assemblies and after market products) for passenger vehicles.

Operations are conducted in Australia, under long term contracts to local vehicle manufacturers including General Motors Holden and Ford Australia, and in China, through the Futuris Automotive Interiors (Anhui) joint venture and in South Africa through a joint venture with Feltex. The Chinese joint venture is contracted to supply seating for emerging Chinese manufacturer Chery Automobile Co. Futuris Automotive also has a US design offi ce in Detroit, Michigan.

Futuris Automotive also holds a 35% interest in Air International Global Thermal Systems, a supplier of passenger vehicle thermal systems to the Australian, US and Chinese automotive sectors.

Financial results

Futuris Automotive recorded lower sales revenue in 2007 than the previous year due to the transfer of Rail and Bus reporting (which contributed sales of

$66 million in 2006) and reduced demand from Australian passenger vehicle producers. Sales revenue from Interior Systems was 15% lower due to the lower demand levels. Results from the Rail and Bus operations are now reported within the Investment and Other segment.

EBIT from Interior systems operations was also adversely affected by costs of $9.0 million incurred in restructuring during the year to achieve effi ciency through plant consolidation.

Equity accounted associates (which includes Global Thermal and Futuris Automotive Interiors (Anhui)) contributed a loss of $1.2 million. The loss is attributable to a lower contribution from Global Thermal and start up of the Anhui joint venture.

Business development

Consolidation of Australian operations at the Edinburgh Park and Campbellfi eld plants was substantially advanced during the year. The restructuring, which involves the relocation and outsourcing of plant functions previously performed at Golden Grove is scheduled for completion shortly after the 2008 fi rst half.

Futuris Automotive added interior trim to its product offering during the year, and is supplying door and headliner trim to Australian vehicle manufacturers.

In China, the Automotive Interiors (Anhui) Company Limited joint venture completed construction of a production facility for the production of seating to fulfi ll its supply contracts with Chery Automobile Co. The facility was completed in the fi nal quarter of the year and has commenced operations. Production volumes are forecast to escalate over the course of 2008.

Sustainability

Futuris Automotive conducts its operations within the parameters of management plans to ensure its day-to-day activities are completed safely and in an environmentally and socially responsible manner.

EnvironmentFuturis Automotive’s key manufacturing plants in Australia are all accredited to ISO 14001 certifi cation.

The organisation’s operating facilities are subject to relevant environmental protection legislation and regulation in the areas in which they operate. There were no reportable incidents or breaches of applicable environmental legislation arising from Futuris Automotive’s operations during the year.

SafetySafety is managed through a series of safety committees at each operation which report to senior management on performance. During the 12 months to 30 June 2007, Futuris Automotive recorded a lost time injury frequency rate of 8.5 per million hours worked compared to the preceding year’s rate of 20 per million hours worked.

Human ResourcesFuturis Automotive employed a total of 861 people in Australia at 30 June compared with 1,085 at the same time in the previous year. This reduction was due to lower production volumes from Australian customers and operational restructuring initiatives undertaken.

As of the same date, Futuris Automotive employed a further 220 people in China as at 30 June (65 people as at 30 June 2006) with the increase being attributable to the commencement of operations by the Anhui joint venture. Futuris Automotive also employed 3 people in the US.

Main features and outcomesLower sales due to reduced demand Plant consolidation advancedNew plant constructed and commissioned in China

•••

28

Board of DirectorsMr Stephen Gerlach LLB Chairman Mr Gerlach age 62 - Non-Executive member of the Board since November 1996 and Chairman since July 2003. He chairs the Company’s Nomination & Prudential and Remuneration Committees. Formerly Managing Partner of Adelaide legal fi rm Finlaysons, Mr Gerlach has extensive experience as a corporate advisor and company director. Mr Gerlach also holds directorships at Santos Limited (Chairman), Santos Finance Ltd (Chairman) and Challenger Listed Investments Ltd. He is the Chairman of Foodbank SA Inc., a Director of Foodbank Australia Ltd and a Trustee of the Australian Cancer Research Foundation. During the past three years, Mr Gerlach served as a director of the following listed companies: Beston Pacifi c Vineyard Management Limited (1997-2005) and Southcorp Limited (1994-2005). Mr Gerlach is a resident of South Australia.

Mr Charles Bright, BA MA(Oxon) Mr Bright age 62 - Non-Executive member of the Board since May 2002. He is a member of Nomination & Prudential Committee and a director Integrated Tree Cropping Ltd, APT Projects Limited and ITC Project Management Limited. Mr Bright has over 30 years’ experience in investment banking with positions including Chairman of Potter Warburg Securities and Head of Corporate Finance for HSBC in Australia. Mr Bright is also a director of Australian Agricultural Company Limited, Tassal Group Limited and Webster Limited. During the past three years, Mr Bright served as a director of Australian Plantation Timber Limited (2002-2005). Mr Bright is a resident of Victoria.

Dr James Charles Fox BE, MEngSci, PhD Dr Fox age 55 - Non-Executive member of the Board since July 1985. He is a member of Remuneration and Nomination & Prudential Committees. Mr Fox has extensive experience in the development and operation of technology-based product businesses in international markets. He was the Managing Director of Vision Systems Limited from December 1993 until December 2006 when an on-market takeover of the company by USA-based Danaher Corporation was completed. He is a director of Air New Zealand Ltd and TTP Group p/c (UK). Mr Fox is a resident of Victoria.

Mr Leslie Peter Wozniczka MBA, BSc(Hon) Mr Wozniczka age 52 - Executive Director of the Board since January 2002. He is the Chief Executive and Managing Director of the Futuris Group. He is a member of the Remuneration and Nomination & Prudential Committees and a director on all main operating subsidiary boards including: Elders Australia Ltd, Elders Financial Services Group Pty Ltd, Elders Insurance Ltd, Integrated Tree Cropping Limited and Futuris Automotive Group Ltd. Prior to joining the Board, Mr Wozniczka served in the role of Chief Operating Offi cer of Futuris from January 1999. Prior to joining Futuris, Mr Wozniczka managed private investment interests and held senior management positions within the corporate service and investment banking sectors including the position of Director Corporate, Potter Warburg. Mr Wozniczka also holds directorships in Australian Agricultural Company Limited, Hi Fert Pty Ltd, Amcom Ltd and Forest Enterprises Australia Limited. Mr Wozniczka is a resident of South Australia.

Mr Graham Walters AM, FCA Mr Walters age 65 - Non-Executive member of the Board since January 2002. He is Chairman of the Audit Committee and a Director of Elders Insurance Ltd, Elders Insurance Brokers Pty Ltd, Elders Trustee Ltd and Elders Financial Services Group Pty Ltd. Mr Walters has extensive experience in accounting, having formerly held roles as Chairman of Partners at KPMG South Australia and Member of the National Board of KPMG. Mr Walters also holds directorships of Australian Rail Track Corporation Limited, Minelab International Pty Ltd (Chairman) and Royal Automobile Association of South Australia. He is also Chairman of the South Australian Executive Committee of Westpac Banking Corporation. Mr Walters is a resident of South Australia.

Mr Anthoni Salim, B Bus Mr Salim age 58 - Non-Executive member of the Board since March 2003. He is President and Chief Executive Offi cer of Salim Group, one of Indonesia’s leading business groups. Salim Group holds extensive interests in the importation, manufacture and distribution of food and foodstuffs. Mr Salim is a director of First Pacifi c Company Limited, Chief Executive of PT Indofood Sukses Makmur and a member of the advisory board for Allianz Group, one of the world’s leading insurance groups. Mr Salim is a resident of Jakarta, Indonesia.

Mr Ian MacDonald SF Fin Mr MacDonald age 53 – Non-Executive member of the Board since November 2006. He is a director of Elders Insurance Ltd, Elders Rural Bank Ltd, Elders Insurance Brokers Pty Ltd, Elders Trustee Ltd and Elders Financial Services Group Pty Ltd. He is also a member of the Australian Institute of Company Directors and Senior Fellow of Financial Services Institute of Australasia. Mr MacDonald has had an extensive career in banking both in Australia and Internationally, having served National Australia Bank Ltd for 34 years including performance of a number of senior management roles, including Chief Operating Offi cer, Yorkshire Bank, Executive General Manager, Financial Services Australia, and Group Chief Information Offi cer. Mr MacDonald is a director of Arab Bank Australia Ltd and CPT Global Ltd. Mr MacDonald is a resident of Victoria.

Mr Walter Hubert Johnson ASA (Deputy Chairman) Mr Johnson age 64 - Deputy Chairman and has been a Non-Executive member of the Board since 1981. He is also a member of the Audit Committee. Mr Johnson has extensive accounting and business experience in a number of areas including primary production, forestry management and saw-milling and has served on the board of a number of public and private companies. Mr Johnson is a resident of Western Australia.

Mr Raymond G Grigg, F.SAE-I., F.A.I.C.D. Mr Grigg age 66 - Non-Executive Member of the Company since February 2004. He is also Chairman of Futuris Automotive Group of companies, and a member of Futuris Audit committee. Mr Grigg has extensive experience in senior management within the automotive industry, having joined the Board following a 47 year career with General Motors Corporation where Mr Grigg held a number of senior positions both in Australia and overseas. At retirement Mr Grigg was President and Representative Director, General Motors Asia Pacifi c (Japan) as well as Chairman, CEO and Representative Director of GM Japan. Mr Grigg is a non-executive director of Adtrans Group Limited and a Board member of the Royal Automobile Association of SA Inc and Bedford Industries Ltd. Mr Grigg is a resident of South Australia.

Company Secretaries - Mr Michael Peter Sadlon LLB Mr Sadlon has been Director, Corporate for Futuris since late 2005 and Company Secretary since July 2000. Previously Mr Sadlon was Legal Counsel for Futuris and Manager, Legal Services for the Elders Group. Mr Sadlon holds a Bachelor of Laws from the University of Adelaide and, prior to joining Futuris, worked in private commercial practice.Ms Sonya Catherine Furey BEc(Acc) LLM FCA Ms Furey was appointed Group Tax Manager in December 1999 and Company Secretary in December 2002. Prior to joining Futuris, Ms Furey held a management role at KPMG, Corporate Tax Consulting. Ms Furey holds a Bachelor of Economics (Accounting) from the Flinders University of South Australia and a Masters of Laws (Corporate and Commercial) from the University of Adelaide. She is also a Fellow of the Institute of Chartered Accountants and a Fellow of the Taxation Institute of Australia.

29

Corporate Governance

This statement discloses the key elements of the Company’s governance framework during the reporting period and to the date of this report.

The Board has in place a charter that consolidates the principles, policies and practices of its governance framework as refl ected in this statement (“Board Charter”).

Throughout this statement, the Company’s relevant governance practices are cross referenced to the ASX Corporate Governance Council’s Best Practice Recommendations. The Company’s governance practices comply in all substantial respects with the Best Practice Recommendations.

Objectives

The Board is responsible for the corporate governance of the Company.

The Board has implemented policies and practices to provide for governance of the Company’s affairs that:

• provide clear accountability;• protect the rights and interests of

shareholders and other stakeholders; • provide for proper management of

the Company’s assets; • support the achievement of the

Company’s fi duciary, environmental, safety, social and other obligations;

• preserve and enhance the Company’s reputation and standing in the community; and

• support the achievement of shareholder value within a framework of appropriate risk assessment and management.

The corporate governance policiesand procedures are reinforced bya commitment by the Company tothe highest standards of legislative compliance and fi nancial andethical behaviour.

Management and Oversight

BoardThe Board Charter provides that the main responsibilities of the Board are to:

• provide input into, and adopt, the strategic plan and budget of the Company as prepared by management;

• monitor performance against the business plan and budget;

• approve and monitor the progress of all material acquisitions, divestments, contracts and capital expenditure;

• approve capital raisings (debt or equity) by the Company;

• oversee the audit, compliance and fi nancial and operational risk management functions of the Company;

• oversee the Company’s fi nancial reporting and communication to the Company’s shareholders and the investment community and shareholder-relations generally;

• appoint and remove the Chief Executive and determine that person’s remuneration (including termination benefi ts);

• review the performance of the Board as a whole and of individual directors; and

• monitor and assess the performance of the Chief Executive and the Company’s senior executive team.

(ASX Best Practice Recommendation 1.1)

Committees

The Board has established a number of board committees (Nomination and Prudential Committee, Remuneration Committee and Audit Committee) to increase the Board’s effi ciency and effectiveness in fulfi lling these responsibilities. The role and responsibilities of these Committees are detailed in formal charters. In addition, a Corporate Risk and Compliance Committee comprising

senior executives of the Company operates under a Board-endorsed risk management policy and reports to the Board on a regular basis. The responsibilities and composition of these committees are detailed below.

Chief ExecutiveThe Board delegates responsibility for the day-to-day operation and administration of the Company to the Chief Executive. The Board monitors the Chief Executive’s performance on an ongoing basis through regular reporting and through the fi ndings of the Audit Committee and the Corporate Risk and Compliance Committee as reported at Board meetings. The Company has in place a comprehensive delegation of authority under which the Chief Executive and the executive team operate. The Chief Executive and Chief Financial Offi cer each have an employment contract detailing their term of offi ce, duties, rights and responsibilities and entitlements on termination.

Subsidiary BoardsThe Company maintains subsidiary company boards in respect of the Group’s major operating divisions to assist in the oversight function. The oversight functions delegated to the subsidiary boards are recorded in formal charters and their authority in the delegation of authority referred to above.

Company SecretaryUnder the Board Charter, the Company Secretary(s) is accountable to (and reports directly to) the Board (through the Chairman if appropriate) on all governance matters.

(ASX Best Practice Recommendations 1.1 and 8.1)

30

ownership interest in Elders Rural Bank Ltd, an authorised deposit taking institution for the purposes of the Banking Act 1959 – further detail is set out in the Nominations section below.

• by Board policy:

The Board Charter prescribes that:

- the majority of the Board must comprise independent directors.

In determining whether or not a director is to be considered independent, the Board will have regard to whether the director:

› is a substantial shareholder in the Company;

› within the last 3 years, has been an employee of the Company, a material adviser to the Company or a principal or employee of any material adviser to the Company;

› is a material supplier to, or a material customer of, the Company;

› is directly or indirectly associated with any of the above persons;

› is otherwise free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the Company; and

› is of independent character and judgment.

Whether an interest, relationship or business is ‘material’ is considered having regard to the nature, circumstances and activities of the director and from the perspective of the Company, the persons and entities with whom the director has an affi liation and the director.

The Board does not believe that the period of service of a director necessarily hinders the director’s ability to act in the best interests of the Company. The directors believe

that experience and knowledge of the Company’s operations are important contributors to the effi cient working of the Board and the best interests of the Company as is the director’s ability to bring independence of judgement to Board decisions.

- the Board is comprised of individuals with an appropriate mix and depth of skills, experience and knowledge in order to meet the Board’s responsibilities and objectives.

The Board of Directors currently comprises an independent non-executive chairman who is elected by the full Board, seven non-executive directors and a managing director/chief executive. The qualifi cations, experience, special responsibilities and period of offi ce of each director may be found on pages 28 of this report.

The Board Charter prescribes that:

- the Chairman should be an independent director and details his responsibilities; and

- a director must disclose to the Chairman any matter that may, or has the potential to, give rise to a confl ict between the interests of the director and the Company as soon as the matter arises.

The Board confers without management present regularly and on a needs basis.

(ASX Best Practice Recommendation 2.5.)

Subsidiary Boards – Main Operating DivisionsAs stated above, the Company maintains subsidiary company boards in respect of the Group’s major operating divisions to assist in the oversight function and to comply with prudential obligations of prudentially regulated entities within the Group. Board policy requires that, where appropriate, a non-executive board director sit on the subsidiary company

Board StructureComposition, Independence & Oversight

BoardThe composition of the Board is determined:

• by the Company’s Constitution:

The Company’s Constitution prescribes as follows:

- the number of directors may not be less than 3 and not more than 12. The Board has determined that, at the current stage of the Company’s development, the optimum number of directors is 9 (inclusive of the Chief Executive);

- at each annual general meeting of the Company, one third of directors (other than the managing director and directors who have been appointed to fi ll casual vacancies since the previous annual general meeting) and any other director who, if he or she does not retire, will at the conclusion of the meeting have been in offi ce for 3 or more years and for 3 or more annual general meetings since he or she was last elected to offi ce are required to retire and may stand for re-election;

- directors who have fi lled casual vacancies are required to be elected at the fi rst annual general meeting following their appointment to the Board;

- the majority of directors must be non-executive; and

- directors (and prospective directors) must satisfy a number of prudential criteria at all times arising from the Company’s undertaking to comply with all requirements of specifi ed regulators in respect of licences the Company holds, including the Company’s undertaking to comply with APRA Policy Statements, Policy Framework or Prudential Standards relating to the Prudential Supervision of conglomerates in respect of its

31

board of each main operating division to extend independent oversight down to those boards. Where appropriate, non-executive directors with appropriate experience relevant to the division have been appointed.

The current subsidiary boards of the Company’s main operating divisions comprise:

Rural Services (Elders Australia Ltd): Mr R McLean (Chairman), Mr D Mutton (non-executive directors), Mr G Hunt,Mr L Wozniczka (acting subsidiary managing director) and Mr P Zachert.

Financial Services (Elders Financial Services Group Pty Ltd): Mr D Malcolm (Chairman), Mr G Walters, Mr I MacDonald, Mr K Court, Mr M Ormsby, Mr M Tozer (non-executive directors), Mr G Hunt,Mr L Wozniczka and Mr T Plant (subsidiary managing director).

Forestry (Integrated Tree Cropping Ltd): Mr D Watt (Chairman), Mr C Bright, Mr T Davies, Mr P Toyne (non-executive directors), Mr Wozniczka and Mr V Erasmus (subsidiary managing director).

Futuris Automotive (Futuris Automotive Group Ltd): Mr R Grigg (Chairman) (non-executive director), Mr L Wozniczka, Mr P Zachert, Mr M Sadlon and Mr B Griffi ths (subsidiary managing director).

Subsidiary Boards – Prudentially Regulated/Supervised EntitiesThe boards of the Company’s prudentially supervised interests, Elders Rural Bank Limited (50% interest), Elders Insurance Limited (100% interest) and Mutual Benefi t Consulting Pty Ltd (100% interest) are maintained in accordance with requirements and guidelines of the Australian Prudential Regulation Authority (APRA), the governmental regulatory body responsible for the prudential regulation of authorised

deposit taking institutions, general insurance companies and superannuation funds in Australia.

As a result, a number of directors independent of the shareholders (the Company and Bendigo Bank Limited in the case of Elders Rural Bank and the Company in the case of Elders Insurance Limited) sit on these boards and one of those independent directors is appointed Chairman and the Board is comprised of individuals with special skills and knowledge.

The Company, through wholly owned subsidiaries, also holds a variety of Australian Financial Services Licences as authorised by the Corporations Act 2001 and supervised by the Australian Securities and Investment Commission (ASIC).

The Company, through its subsidiary Elders Trustees Ltd, is an authorised Trustee under the Trustees Act (1988), South Australia.

The current boards of prudentially regulated interests of the Company comprise:

Elders Rural Bank:Mr J Hazel (Chairman), Mr J Patton, Mr B Walters (independent directors), Mr I MacDonald, Mr T Plant, Mr M Ormsby, (as representatives of the Company), Mr R Johanson, Mr J Hirst and Mr R Hunt (representatives of Bendigo Bank) and Mr P Hutchinson (Managing Director).

Elders Financial Services Group: Mr D Malcolm (Chairman), Mr M Tozer, Mr K Court, Mr G Walters, I MacDonald (independent directors), L Wozniczka, Mr G Hunt, Mr T Plant (Managing Director) and Mr M Ormsby (as representatives of the Company).

Elders Insurance Limited and Elders Trustees Ltd have the same board composition as Elders Financial Services Group Pty Limited.

Mutual Benefi t Consulting Pty Ltd: Mr M Ormsby (Chairman), Mr M Stevens, Mr M Wilson, Mr D Butterly and Ms H Lorigan.

Boards of Other Entities in which the Company has an InterestWhere appropriate, a non-executive board director sits on the board of other entities in which the Company has an interest to extend independent oversight down to those boards, for example, Mr Bright sits on the boards of Australian Agricultural Company Limited (43% interest) and Webster Limited (30% interest).

Other Activities/InvolvementIn addition to the time spent in the preparation for and attendance at Board and committee meetings, non-executive directors visit operational sites and assist the Company in local, national and international industry matters. Non-executive directors are also involved in business and strategic planning meetings.

Mr G Walters chairs the trustee company of the Company’s superannuation fund.

Access to Independent Professional Advice & Other ResourcesDirectors may obtain independent, professional advice relevant to the Company’s affairs to assist them in carrying out their duties as directors at the Company’s expense following notifi cation to the Chairman.

Any director shall have direct access to and may seek information directly from the Company’s External and Internal Auditors provided that all such enquiries are fi rst advised to the Chairman and the Chief Executive.

Directors have access to the Company’s management and Company information through the Chief Executive to assist them in carrying out their duties as directors.

(ASX Best Practice Recommendation 2.5 and 8.1)

32

Attendance at meetings by Directors13 Board meetings are scheduled each year, of which only 10 meetings have full board agendas. Additional meetings may be called to consider specifi c matters, as required. Attendance by directors at board and committee meetings held during the year ended 30 June 2007 is detailed below.

Nominations and Review

ObjectivesThe Board’s objective is to ensure that:

• the Company has adopted selection, appointment and review practices that result in a board:

- with an effective composition, size, mix of skill sets and experience and commitment to adequately discharge its responsibilities and duties and add value to the Company and its shareholders;

- that has a proper understanding of, and competence to deal with, the current and emerging issues of the

Board of Directors Audit Committee Nomination and Prudential Committee

Remuneration Committee

Attended Maximum Possible Attended




C. E. Bright 12 15 - - 2 2 - -

J.C. Fox 14 15 - - 2 2 2 2

S. Gerlach 15 15 - - 2 2 2 2

R. Grigg 14 15 8 8 - - - -

W.H. Johnson 14 15 8 8 - - - -

I. MacDonald^ 9 9 - - - - - -

A.L. Newman# 9 11 - - - - - -

A. Salim* 6 15 - - - - - -

G. Walters 14 15 8 8 - - - -

L. Wozniczka 15 15 - - 2 2 2 2 * Based overseas# Retired from the Board 28/02/07^ Joined the Board 28/11/06

Where directors are unable to attend meetings either in person or by telephone (eg if they are overseas) the Chairman or the Chief Executive endeavours to canvass their views on key matters prior to the meeting in order to represent their views at the meeting.


businesses of the Company; and- can effectively review and challenge

the performance of management and exercise independent judgement.

• shareholders and other stakeholders understand and have confi dence in those selection, appointment and review practices.

• the prudential criteria that directors must satisfy at all times arising out of the Company’s undertaking to comply with the requirements of specifi ed regulators to protect the value of the Company’s substantial assets allocated to fi nancial services activities, including the assets of:

- Elders Rural Bank Ltd, an authorised deposit taking institution under the Banking Act 1959 (Specifi ed Regulator: APRA);

- Elders Insurance Ltd, an authorised insurance business under the Insurance Act 1973 (Specifi ed Regulator: APRA);

- Mutual Benefi t Consulting Pty Ltd, a Registerable Superannuation Entity

licensed to carry on business as an extended public offer entity (Specifi ed Regulator: APRA);

- ITC Project Management Ltd, APT Projects Ltd, Elders Ltd, Elders Trustees Ltd, Mutual Benefi t Consulting Pty Ltd, The Australian Superannuation Group Ltd, Elders Risk Management Ltd, Elders Rural Bank Ltd, Elders Insurance Ltd, all authorised entities to provide fi nancial products or provide fi nancial advice under the Corporations Act 2001 (Specifi ed Regulator: ASIC);

- Elders Trustees Ltd, an entity authorised to invest trust funds under the Trustee Act 1936 (South Australia) (Specifi ed Regulator: State Government of South Australia).

These criteria are as follows:

• any director or proposed director of the Company must comply with appropriate prudential standards formulated by the Company which refl ect APRA’s or another specifi ed

33

regulators prudential standards and guidelines (Prudential Criteria);

• any director who does not comply with those Prudential Criteria (or who is the subject of an adverse determination by a specifi ed regulator is disqualifi ed from continuing to hold the offi ce of director;

• limits are imposed on board representation by directors affi liated with any one substantial shareholder to prevent any substantial shareholder from exercising an undue measure of control and infl uence over the policies or operations of the Company and Elders Rural Bank Limited;

• a standing committee of the Board (the Nomination and Prudential Committee) formulates, reviews and administers appropriate Prudential Criteria; and

• the key principles of the Prudential Criteria adopted by the Company are that directors and certain senior executives of the Group should be able to meet the following compliance requirements:

- possess the confi dence, character, diligence, honesty, integrity and judgement to perform properly the duties of the responsible person position held;

- the person is not disqualifi ed under the Banking Act 1959, the Insurance Act 1973 or the Superannuation Industry (Supervision) Act 1993 from holding their position; and

- the person has either no confl ict of interest in performing their duties or if the person has a confl ict of interest, it would be prudent for the Company to conclude that the confl ict will not create a material risk that the person will fail to perform properly their duties.

• In addition to these general criteria, the Company will also apply (but not be restricted to) the following specifi c criteria for an individual to qualify as a “fi t and proper” person.

That they have never:

- failed to discharge responsibilities as a director or manager of, or a professional service provider to, a body corporate, statutory body, partnership, trust, or commercial or professional enterprise of any kind (entity) with diligence, honesty, integrity or judgement;

- been the subject of justifi able criticism, discipline, punishment, adverse fi ndings, directions or orders, by a court, tribunal, offi cial inquiry, regulatory agency, complaints handling body, dispute resolution body, or professional or industry body concerning conduct in relation to:› the management of an entity; or› commercial or professional

activities.- been the subject of civil or criminal

proceedings, or enforcement action, in relation to:› the management of an entity; or› commercial or professional

activities.- been expelled or excluded from, or

refused admission to, a professional or industry body, or a clearing house or exchange;

- been involved with the affairs of an entity that was expelled or excluded from, or refused admission to, a professional or industry body, or a clearing house or exchange;

- been refused a licence or authorisation relating to a commercial or professional activity, or had such a licence or authorisation revoked;

- been involved with the affairs of an entity that was refused a licence or authorisation relating to a commercial or professional activity, or had such a licence or authorisation revoked;

- had their appointment terminated, or resigned or been asked to resign, from a position as director or manager of, or professional service provider to, an entity in circumstances which refl ected adversely on their competence, character, diligence,

honesty, integrity or judgement in discharging their responsibilities in the position;

- seriously or persistently failed to manage their debts or fi nancial affairs in accordance with contractual or other legal obligations in circumstances where such failure caused loss to others;

- been, or acted as, a director or manager of, or professional advisor to, an entity that:› was, or later came to be, insolvent;› was, or later came to be, under

insolvency administration;› was, or later came to be, under

statutory or judicial management; or› failed to repay, or otherwise failed to

meet its fi nancial obligations to, creditors or benefi ciaries;

and engaged in unreasonable or unlawful conduct that caused or contributed to the insolvency, placement under insolvency administration or statutory or judicial management, or failure to repay or otherwise meet obligations to creditors or benefi ciaries;

- contravened any regulatory requirement or professional standard relating to:› the management of an entity; or› commercial or professional

activities;- been unreasonably or improperly

obstructive of, or misleading or untruthful in dealing with, a court, tribunal, offi cial inquiry, regulator, complaints handling body, dispute resolution body, or professional or industry body;

- breached a fi duciary obligation or other legal or professional obligation involving trust or confl ict of interest or perpetrated or participated in negligent, deceitful or otherwise discreditable business or professional practices; or

- failed to comply with a fi t and proper policy of an APRA-regulated institution.

34

The Nomination and Prudential Committee assists the Board in meeting its objectives.

The ProcessThe composition of the Board is reviewed on an annual basis coinciding with the annual general meeting cycle to ensure that the Board has the appropriate mix of expertise and experience.

When a vacancy exists, or when it is considered that the Board would benefi t from the services of a new director with particular skills, the Board requests the Nomination and Prudential Committee to select a panel of candidates with appropriate expertise and experience for consideration by the full Board. The Committee may seek advice from external consultants if necessary. The Committee also takes into account the Prudential Criteria in selecting candidates for board positions. The Board then appoints the most suitable candidate who must stand for election at the next general meeting of the shareholders and re-election at three yearly intervals.

Formal letters of appointment setting out key terms and conditions are in place for directors.

The Board Charter prescribes that, upon appointment, new directors shall be given a detailed briefi ng by the Chairman and/or his nominee(s) on key board issues and be provided with appropriate background documentation. These issues shall include:

• the Company’s fi nancial, strategic, operational and risk management position;

• directors’ rights, duties and responsibilities; and

• the role of the Board and the Board committees.

The Board reviews its own performance on an ongoing basis. The Chairman also holds individual discussions with each

director to discuss their performance on a needs basis. The non-executive directors are responsible for evaluating the performance of the Chief Executive, who in turn evaluates the performance of all other senior executives. The evaluations are based on specifi c criteria, including the Company’s business performance, whether long-term strategic objectives are being achieved and the achievement of individual performance objectives. This process was followed in respect of the 2007 fi nancial year.

The Board Charter prescribes that before a director is recommended for re-election, the Chairman consults with the other directors regarding the director’s effectiveness. Based upon the outcome of these consultations, the Board shall then determine whether or not to recommend the director for re-election.

The Nomination and Prudential Committee assists in this review process.

ASX Best Practice Recommendations 1.1 and 8.1.

Nomination and Prudential Committee

MembershipThe members of the Nomination and Prudential Committee at the date of this Report are:Mr S Gerlach (Chairman)Mr CE BrightDr J FoxMr LP Wozniczka

The Nomination and Prudential Committee must comprise at least three directors, the majority being independent directors (one of whom must be appointed chairman), and shall include the Chairman of the Board and the Chief Executive Offi cer. The Chief Executive Offi cer may participate in discussions with respect to matters concerning the main board of the Company but has no voting

rights with respect to such matters. Members are appointed for an initial term of three years but are eligible for re-appointment.


Responsibilities and Nomination & Prudential Committee CharterThe Nomination and Prudential Committee operates under a formal charter adopted by the Board.

The Committee’s principal responsibilities are to regularly review and make recommendations to the Board on:

• the necessary and desirable competencies of members of the Board and its committees including, without limitation, the appropriate mix of skills, experience and other qualities and the time commitment required from a non-executive director;

• appropriate processes for the review of the performance of the Board;

• appropriate policies with respect to the maximum period of service and retirement age for directors;

• appropriate succession plans for the Board and the Chief Executive Offi cer;

• the appropriate size of the Board so as to encourage effi cient decision-making;

• recommendations for the appointment (including re-appointment in the case of directors retiring by rotation) and removal of directors of the Company;

• the scope and content of letters of appointment of non-executive directors; and

• appropriate induction procedures designed to allow new directors to participate fully and actively in board decision-making at the earliest opportunity and the effectiveness of those procedures.

With respect to subsidiary boards, similar processes are undertaken by the

35

Chief Executive who consults with the Chairman and the Chairman of the relevant subsidiary board, as appropriate.


Remuneration

Remuneration Policy

ObjectivesThe Board’s objective is to ensure that the Company has adopted remuneration policies that meet the needs of the Company and encourage a performance oriented culture. Discussion of the policies and remuneration structure is contained in the Directors’ Report.

Chief Executive A summary of the key terms of the Chief Executive’s employment contract, including termination arrangements, were disclosed to the market via ASX at the time of appointment and updated with respect to material changes via ASX. The remuneration components including termination benefi ts, were fi nalised following advice from an independent remuneration expert.


Non-Executive DirectorsThe Board determines the fees payable to non-executive directors with the assistance of the Remuneration Committee.

Non-executive directors are not entitled to performance-based bonuses or to participate in the Company’s employee incentive scheme.

The Board resolved to dispense with retirement allowances for any non-executive directors appointed after 30 June 2004 and to freeze retirement allowances as at 30 June 2004 for all other current directors. Accrued entitlements will be paid at the time of retirement.


Details of indemnity and insurance arrangements for directors and offi cers appear at page 44 of this report.

Remuneration Committee

MembershipThe members of the Remuneration Committee at the date of this Report are:Mr S Gerlach (Chairman)Dr J FoxMr LP Wozniczka

The Remuneration Committee must comprise at least three directors, the majority being independent directors (one of whom must be appointed chairman), and shall include the Chairman of the Board and the Chief Executive Offi cer. The Chief Executive Offi cer shall not be present during those periods of meetings in which consideration is being given to his compensation arrangements. Members are appointed for an initial term of three years but are eligible for re-appointment.

Responsibilities and Remuneration Committee CharterThe Remuneration Committee operates under a formal charter adopted by the Board.

The Committee’s principal responsibilities are to review and make recommendations to the Board on:

• the remuneration framework for Directors and, specifi cally, whether that remuneration framework, in the case of non-executive directors, refl ects the responsibilities and risk involved in being an effective director;

• the remuneration package for the Chief Executive Offi cer and Managing Director of the Company and, specifi cally, whether the remuneration package promotes the long-term growth of shareholder value and is reasonable in comparison with industry or other yardsticks; and

• equity incentives and non standard employment contracts.

With respect to subsidiary boards, similar processes are undertaken by the Chief Executive, who consults with the Chairman of the Company and the Chairman of the relevant subsidiary, as appropriate.

(ASX Best Practice Recommendation 9.2 and 9.3 and 9.5)

Integrity of Financial ReportingThe Board is concerned to ensure the integrity of the Company’s fi nancial reporting is independently verifi ed and has established the Audit Committee to assist it in achieving this objective.

Audit Committee

MembershipThe members of the Audit Committee at the date of this Report are:Mr G Walters (Chairman)Mr W JohnsonMr R Grigg

All members of the Audit Committee must be independent, non-executive directors and the chairman must not be the Chairman of the Board. At least one member of the Committee must be a qualifi ed accountant or other fi nancial professional with experience of accounting and fi nancial matters. Members are appointed for an initial term of three years but are eligible for re-appointment.

Details of the members’ qualifi cations can be found on page 28 of this report.

Representatives of Company’s management attend meetings from time to time at the discretion and invitation of the Committee.

Responsibilities and Audit Committee CharterThe Audit Committee operates under a formal charter adopted by the Board. Its primary functions are to:

36

• assist the Board to discharge its responsibility to exercise due care, diligence and skill in relation to:

− true and fair reporting of fi nancial information to users of fi nancial reports;

− application of accounting policies;− fi nancial management;− internal control and risk management

systems;− business policies and practices;− protection of the entity’s assets; and− compliance with applicable laws,

regulations, standards and best practice guidelines.

Where appropriate the Committee may delegate responsibility to subsidiary board audit committees to:

• improve the credibility and objectivity of the accountability process;

• improve the effectiveness of the internal and external audit functions and being a forum for improving communication between the Board and the external auditors and, where applicable, the internal auditors;

• facilitate the maintenance of the independence of the external auditor;

• provide a structured reporting line for internal audit facilitating the maintenance of the objectivity of the internal audit functions; and

• improve the quality of external reporting of fi nancial information and reports and assist in establishing the objectives, and the assessment of the performance, of the internal audit function.

(ASX Best Practice Recommendation 4.2, 4.3, 4.4, 4.5 and 7.1)

External Audit Independence Policy The Company has in place a formal policy that:

• details the Group’s position in respect of the key issues which may impair, or appear to impair, external audit independence;

• details the internal procedures implemented to ensure the independence of auditors; and

• establishes a framework that enables the Audit Committee to evaluate compliance with the policy and report to the Board on compliance.

The key principles are:

• an auditor is not independent if:

- an employment relationship exists or could be deemed to exist, between the Company and the auditor, its offi cers or former offi cers, employees or former employees, certain relatives;

- a fi nancial relationship exits between the auditor and the Company; and

- specifi c non-audit services (including information technology and human resources services) are provided to the Company by the auditor.

• in relation to the provision of other non-audit services the following guidelines must be followed:

- management must consider the actual, perceived and potential impact upon the independence of external audit prior to engaging external audit to undertake any non-audit service;

- the outsourcing of any internal audit project to the external auditors or the undertaking of any joint internal / external audit review, will require prior Audit Committee approval;

- the Audit Committee must consider whether the provision of such non-audit services is compatible with maintaining the external auditors’ independence, by obtaining assurance and confi rmation that the additional services provided by the external auditor are not in confl ict with the audit process. In order to assist with this assessment, management will provide the Audit Committee with details of the amount of non-audit services undertaken by the external auditors as a proportion of all audit

and non-audit engagements, entered into by the Group for the period; and

- as a general rule, the Company does not utilise external auditors for internal audit purposes or consulting matters, other than services which are in the nature of audit, such as review of tax compliance.

The Audit Committee is responsible for ongoing review of the policy and reports to the Board on the continuing suitability of the policy and recommended changes to the existing policy as and when required.

(ASX Best Practice Recommendations 4.4 and 4.5)

Risk Management

The Board has in place a Risk Management Policy that establishes a framework to assist the Company in achieving its risk management objectives – to ensure the Group’s assets are protected against fi nancial loss, business risks are identifi ed and properly managed and legal and regulatory obligations are satisfi ed and business risks are appropriately monitored by the Board.

The Corporate Risk and Compliance Committee (CRCC) operates to assist the Board by applying and monitoring compliance with the Company’s Risk Management Policy and reporting to the Board on a regular basis.

Under the policy, the Audit Committee is responsible for assessing the internal process for determining and managing key risk areas.

Elders’ trading operations operate under formal charters supervised by the CRCC.

The Group’s prudentially regulated entities, Elders Rural Bank Limited, Elders Insurance Limited and Mutual Benefi t Consulting Pty Ltd, have each adopted risk management policies that

37

specifi cally address the risks and risk management issues faced by those entities and maintain risk management committees to apply and monitor compliance with those policies.

Corporate Risk and Compliance Committee

MembershipThe Corporate Risk and Compliance Committee comprises senior executives of the Company and includes representatives of the main operating divisions as invitees. The CRCC reports to the Chief Executive and a copy of the minutes of the CRCC are provided to the next Board meeting and Audit Committee meeting following the CRCC meeting.

ResponsibilitiesThe Committee operates under the Risk Management Policy and is responsible for:

• reviewing the Group’s risk position on a consolidated basis;

• establishing, approving and reviewing corporate risk management strategies;

• ensuring these strategies are in line with the Group’s broader objectives;

• monitoring the risk management activities of business divisions and subsidiaries, including specifi c exposures, transactions and instruments used;

• ensuring accurate, timely and comprehensive risk management reports are presented to the Board and the Audit Committee on a regular basis;

• reviewing market, operational, credit and insurance risk matters; and

• reviewing the Group’s health, safety and environmental responsibilities.

The Committee is also responsible for ongoing review of the policy and reports to the Board on the continuing suitability of the policy and

recommended changes to the existing policy as and when required.

Management Certifi catesThe Board Charter provides that prior to approving the fi nancial reports of the Company, the Board will have received from the Chief Executive and the Chief Financial Offi cer a certifi cate stating that:

• the Company’s fi nancial reports present a true and fair view, in all material respects, of the Company’s fi nancial condition and operational results and are in accordance with the Corporations Act and relevant accounting standards;

• the Company’s risk management and compliance system, to the extent that it relates to fi nancial reporting, is operating effectively in all material respects; and

• where the above statements cannot be made in an unqualifi ed manner, an explanation of the facts contributing to such a circumstance and the implications of these facts for both the fi nancial reports and the Company.

(ASX Best Practice Recommendations 4.1, 7.1 and 7.3)

Treasury PolicyThe Company’s treasury operation is responsible for managing currency and interest rate risks together with managing the Company’s fi nance facilities.

Treasury operates within formal policies, and compliance with key policies is regularly reported to the Board.

The primary objectives are to have an appropriate debt maturity profi le to fund on-going working capital and liquidity needs and to prudently manage exposures to variable interest rates and foreign exchange movements.

Conduct and Ethics

Code of ConductThe Board is committed to promoting conduct and behaviour that is honest, fair, legal and ethical and respects the rights of the Company’s shareholders and other stakeholders in the Company, including clients and customers, suppliers, creditors and employees. The Board has adopted a code of conduct that details the conduct and behaviour it expects from its members and the employees of the Company.

The code details the Company’s position with respect to dealings with parties with whom the Company engages, use of position and company information, gifts and gratuities and confl icts of interest and the principles the Company promotes with respect to honesty and integrity, occupational health and safety, equal opportunity, legal compliance, competition, privacy, environment and community.

The Board has also adopted an unacceptable conduct policy that addresses the issues associated with alleged improper conduct including reporting, responsibility, confi dentiality and effective investigation.

(ASX Best Practice Recommendation 3.1, 3.3 and 10.1)

Share Trading PolicyThe Board encourages non-executive directors to own the Company’s securities to further align their interests with the interests of other shareholders. Details of directors’ shareholdings in the Company can be found on page 42 of this report.

The Company has in place a share trading policy that prescribes that directors and senior executives may only deal in the Company’s securities for a period of six weeks after:

• the announcement of the Company’s full year results;

38

• the announcement of the Company’s half year results;

• the Company’s Annual General Meeting; and

• any rights trading period applying in respect of a prospectus issued by the Company.

other than in exceptional circumstances.

A director or senior executive must not deal in the Company’s securities during this six week period, if the director or senior executive is in possession of unpublished information that, if generally available, might materially affect the price of the Company’s securities. Prior to dealing, a director must notify the Chairman and the Company Secretary and senior executives must notify the Company Secretary.

(ASX Best Practice Recommendation 3.1, 3.3 and 10.1)

Communication with the Market & Shareholders

The Board is committed to managing disclosure of its affairs and communicating effectively with its shareholders so as to retain investor confi dence and to encourage full and fair value for the Company’s securities. This commitment is enacted through the application of an External Disclosure and Market Communications Policy and a Communications strategy and the application of supporting procedures.

Each year the Company communicates to the Company’s shareholders and the investment markets through a program of regular announcements to fulfi l its periodic reporting obligations, supplemented by announcements made on an ad-hoc basis to fulfi l continuous disclosure obligations.

In addition:

• the Company releases briefi ngs on Company developments and events to the market as a whole;

• the Company’s senior management interacts with members of the investment community and fi nancial and business media through a variety of forums including results briefi ngs, ‘one on one’ meetings and discussions; and

• background and technical information is provided to institutional investors, market analysts and the fi nancial and business media to support major announcements made to the ASX and minor announcements made about the Company’s on-going business activities.

External Disclosure and Market Communications PolicyUnder the policy the Company has instituted (and monitors) procedures designed to ensure:

• the Company’s compliance with continuous disclosure obligations contained in applicable ASX Listing Rules and the Corporations Act 2001. Procedures followed to achieve this include the formation of a Disclosure Advisory Group that works with the Chief Executive in the consideration of disclosure issues, the communication of disclosure requirements and procedures to senior management and procedures to facilitate the timely fl ow of relevant information to the Disclosure Advisory Group;

• the appropriate release and dissemination of information (within the requirements of continuous disclosure obligations) necessary for the timely formation of an informed and balanced view of the Company;

• information disclosed in investor or media briefi ngs is not “market sensitive”. If such information is market sensitive it is disclosed and immediately released to the market at large through the ASX; and

• that stakeholders have equal opportunity, subject to reasonable means, to access information issued externally by the Company. This is

addressed through a broad range of media including the Company’s website, webcasts of the Company’s Annual General Meeting and full year and half year results briefi ngs (which are also archived and available for view on the Company’s website), and an information subscription service through which interested parties can register for electronic advice of announcements. All public releases are archived and available for view on the Company’s website at www.futuris.com.au.

The Board is also concerned to ensure that shareholders are in a position to participate effectively in general meetings and to this end:

• the Company has adopted in all substantial respects the ASX Corporate Governance Council guidelines for notices of meeting; and

• it is a term of engagement of the Company’s external auditors that they attend the Company’s Annual General Meetings and are available to answer questions about the conduct of the audit of the Company and the preparation and content of the auditor’s report in respect of the relevant reporting period.

(ASX Best Practice Recommendation 5.1, 5.2, 6.1 and 6.2)

Disclosure of Governance Information

Information concerning the Company’s governance framework and practices, principles and policies is posted on the Company’s website at www.futuris.com.au in the section marked: Investor Centre: Corporate Governance, as and when introduced or amended.

(ASX Best Practice Recommendations 1.1, 2.5, 3.3, 4.5, 5.2, 6.2, 7.3, 8.1, 9.5 and 10.1).

39

Directors’ Report

Directors

The Directors of the Group in offi ce at the date of this report are:

Non-Executive DirectorsStephen Gerlach (Chairman)Walter Hubert Johnson (Deputy Chairman)Charles Ernest BrightJames Charles FoxRaymond George Grigg Ian Graham MacDonaldAnthoni SalimGraham Douglas Walters

Executive DirectorLeslie Peter Wozniczka (Chief Executive Offi cer and Managing Director)

I MacDonald joined the Board on 28 November 2006. A Newman retired from the Board on 28 February 2007.

All other directors held their position as director for the whole of the year and up to the date of this report.

Company SecretariesMichael Peter SadlonSonya Catherine Furey

A summary of the experience, qualifi cations and special responsibilities of each director and each Group secretary is provided on page 28.

Principal Activities

The principal activities of the consolidated entity during the year were the:

(a) Provision of services and inputs to the rural sector;

(b) Provision of fi nancial and other services to rural and regional customers; and

(c) Management of investor-funded hardwood plantations and manufacture of quality sawn timber products.

The Group also operated smaller businesses engaged in the supply of automotive components and property development (divested during the course of the year).

Results and review of operations

The profi t of the Group for the year, after tax and outside equity interest, was $100,715,000 (2006: $87,439,000) representing an increase of 15% from the previous year. A review of the operations and results of the consolidated entity and its principal businesses during the year are contained in pages 12 to 27 of this report.

Share and other equity issues during the year

The following information summarises the equity issues made by the Company during the year.

1,670,000 employee options were exercised during the year resulting in the issue of 1,670,000 fully paid ordinary shares in the Company.

3,285,635 convertible notes were converted during the year resulting in the issue of 3,341,595 fully paid ordinary shares in the Company.

As previously disclosed, the off-market takeover of Integrated Tree Cropping Ltd was completed in August 2006. The scrip consideration was funded by the issue of 3,968,633 fully paid ordinary shares in the Company, of which 1,326,335 fully paid ordinary shares were issued during the year.

5,451,257 fully paid ordinary shares were issued under the Company’s employee share plan.

2,939,852 fully paid ordinary shares were issued in accordance with the terms of the Company’s dividend reinvestment plan.

No other equity issues were made during the year.

The Directors present their report for the year ended 30 June 2007.

40

Dividends and other equity distributions

Details of dividends paid or payable in respect of the year are as follows:

Dividends paid on fully paid ordinary shares: $000

Final 2006 dividend of 5 cents paid on 25 October 2006 (franked to 100%) 36,160

Interim 2007 dividend of 4 cents paid on 5 April 2007 (franked to 100%) 29,233

Final 2007 dividend of 5.5 cents payable on 24 October 2007 (franked to 100%) 40,463

Distributions paid on Futuris Hybrids: $000

Quarterly distribution of 1.4433 cents paid on 30 September 2006 (franked to 100%) 2,165

Quarterly distribution of 1.4774 cents paid on 31 December 2006 (franked to 100%) 2,216

Quarterly distribution of 1.4798 cents paid on 31 March 2007 (franked to 100%) 2,219

Quarterly distribution of 1.5189 cents paid on 30 June 2007* (franked to 100%) 2,279

(*NB distribution was paid 2 July 2007 due to 30 June 2007 falling on a Saturday)

Signifi cant Changes in the State of Affairs

In the opinion of Directors, there were no signifi cant changes in the state of affairs of the consolidated entity during the year other than those referred to on pages 12 to 27 of this report.

Events Subsequent to Balance Date

Subsequent to year end, Futuris and an associated entity, Webster Limited, reached an in-principle agreement, subject to shareholder approvals, the successful divestment of Webster’s non-core industrial operations, due diligence and valuations, to:

• transfer Futuris’ aquaculture and horticulture interests to Webster for a purchase price of $37.6m in exchange for 26,857,143 ordinary shares in Webster at $1.40 per share.

• provide Webster with $25m secured loan facility convertible at $1.40 per ordinary share.

• make a conditional cash offer for all of the ordinary shares of Webster at $1.40 per share.

No other matter or circumstance has arisen since the end of the fi nancial year which is not otherwise dealt with in this report or in the consolidated fi nancial statements, that has signifi cantly affected or may signifi cantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent fi nancial years.

Likely Developments and Future Results

Discussion of likely developments in the operations of the consolidated entity and the expected results for those operations in future fi nancial years is included in the information on pages 12 to 27 of this report. Further information about the likely developments in the operations of the consolidated entity and the expected results for those operations in subsequent fi nancial years has not been included in this report because, in the opinion of the Directors, their inclusion would prejudice the interests of the consolidated entity.

Share Options

Share options are one element of the Group’s remuneration policy. Information on this policy and associated procedures is provided in the Remuneration Report section of this report.

Share options are issued to selected executives as a form of long term incentive which is directly related to long term performance in the Group’s share price and thereby aligns Group and executive interests.

As noted in the Remuneration Report discussion, share options issued by the Group are: either subject to performance hurdles or have been issued in consequence of the achievement of performance criteria and, with the exception of the CEO, have a three year vesting period.

The total quantity of options issued as at 30 June 2007 represented 2.52% of the Group’s issued ordinary shares. Details of options granted to directors or relevant offi cers as part of their remuneration are set out in the section of this report headed Directors’ Interests.

41

Details of options over unissued shares at the date of this report are as follows:

1) Options on Issue

All options listed in this table are subject to minimum tenure restrictions of 3 years.

250,000

250,000

2,650,000

200,000

228,000

3,565,000

150,000

100,000

4,820,000

1,950,000

200,000

1,000,000

2,000,000

1,500,000

1,500,000

(#1)

(#2)

(#3)

(*1)

(*2)

(*2)

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

250,000

250,000

2,650,000

200,000

228,000

3,565,000

150,000

100,000

4,820,000

1,950,000

200,000

1,000,000

2,000,000

1,500,000

1,500,000

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

$1.23

$1.71

$1.68

$2.00

$2.25

$2.06

$1.83

$1.92

$2.02

$2.17

$2.17

$2.54

$1.37

$2.06

$2.06

by

by

by

by

by

by

by

by

by

by

by

by

by

by

by

24/10/2007

7/10/2008

27/10/2009

31/03/2010

8/08/2010

4/10/2010

31/10/2011

31/10/2011

31/10/2011

31/10/2011

31/10/2011

31/08/2012

1/07/2013

25/10/2015

31/10/2016

20,363,000 20,363,000

(*1) 1,000,000 of these options are subject to performance hurdles, details of which are disclosed in Directors’ Interests below

(*2) All of these options are subject to performance hurdles, details of which are disclosed in Directors’ Interests below

(# 1) 750,000 of these options are subject to performance hurdles

(# 2) 1,350,000 of these options are subject to performance hurdles

(# 3) 1,950,000 of these options are subject to performance hurdles

2) Options issued since the end of the previous fi nancial year

120,000

200,000

228,000

750,000

150,000

100,000

5,265,000

1,950,000

200,000

1,000,000

1,500,000

(#1)

(#2)

(#3)

(*1)

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

120,000

200,000

228,000

750,000

150,000

100,000

5,265,000

1,950,000

200,000

1,000,000

1,500,000

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

$2.25

$2.00

$2.25

$2.06

$1.83

$1.92

$2.02

$2.17

$2.17

$2.54

$2.06

by

by

by

by

by

by

by

by

by

by

by

31/12/2006

31/03/2010

8/08/2010

4/10/2010

31/10/2011

31/10/2011

31/10/2011

31/10/2011

31/10/2011

31/08/2012

31/10/2016

11,463,000 11,463,000

(*1) These options are subject to performance hurdles, details of which are disclosed in Directors’ Interests below

(#1) 750,000 of these options are subject to performance hurdles

(#2) 1,350,000 of these options are subject to performance hurdles

(#3) 1,950,000 of these options are subject to performance hurdles

42

3) Options exercised since the end of the previous fi nancial year

450,000

300,000

750,000

100,000

50,000

50,000

20,000

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

exerciseable for

450,000

300,000

750,000

100,000

50,000

50,000

20,000

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

$1.68

$1.23

$1.51

$1.71

$2.02

$2.06

$2.02

by

by

by

by

by

by

by

1/10/2006

24/10/2007

31/10/2007

7/10/2008

27/10/2009

4/10/2010

25/10/2011

1,720,000 1,720,000

4) Options lapsed since the end of previous fi nancial year

120,000

425,000

500,000

425,000

exerciseable for

exerciseable for

exerciseable for

exerciseable for

120,000

425,000

500,000

425,000

ordinary shares at

ordinary shares at

ordinary shares at

ordinary shares at

$2.25

$1.68

$2.06

$2.02

by

by

by

by

31/12/2006

27/10/2009

4/10/2010

25/10/2011

1,470,000 1,470,000

Directors’ Interests

At the date of this report, the interests of the directors in shares and other equity securities of the Group are:

No. of ordinary shares No. of unsecured redeemable convertible notes

No. of Futuris Hybrids

Benefi cial Interest Non-benefi cial Interest



Non-Executive Directors

C.E. Bright

J.C. Fox

S. Gerlach

R.G. Grigg

W.H. Johnson

A. Salim

G.D. Walters

I.G. MacDonald

103,492

26,765

478,491

31,560

2,000

33,545,578

21,000

60,000

-

-

-

-

23,546,181

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Executive Directors

L.P. Wozniczka 4,513,071 8,470 37,000 12,600 1,000 500

At the date of this report, the following options are on issue to directors.

Year of Grant No. of options Exercise Price ExpiryNo. of options

vestedNo. of options

exercised in year

L.P. Wozniczka

L.P. Wozniczka

L.P. Wozniczka

2003

2003

2003

2,000,000 (a)

1,500,000 (a)

1,500,000 (a)

$1.37

$2.06

$2.06

1/7/2013

25/10/2015

25/10/2016

1,000,000

Nil

Nil

Nil

Nil

Nil

(a) Each option issue is made up of 2 equal tranches of options and each tranche is (or has been) subject to performance hurdles.

Options are issued to Mr Wozniczka on terms designed to provide an incentive to him to deliver ongoing improvements in the Group’s performance. A fundamental feature is that no benefi t will accrue to Mr Wozniczka under the long term incentive unless there are increases in the Group’s TSR (Tranche 1 performance hurdle) and EPS (Tranche 2 performance hurdle).

The options issued to Mr Wozniczka have been approved by shareholders.

43

The performance hurdle in respect of Tranche 1 (TSR) of the 2003 grant are unlikely to be met. For these options to vest, assuming constant dividend and constant S&P/ASX 200 growth rates, the Futuris share price must reach at least $5.00 by 30 June 2008 or $10.40 by 30 June 2009 for 50% of the options to vest and $6.50 by 30 June 2008 or $17.60 by 30 June 2009 for 100% of the options to vest.

The performance hurdle in respect of Tranche 2 (EPS) of the 2003 grant has been met. These options have not been exercised by L Wozniczka. The options expire on 1 July 2013.

Total Shareholder Return (TSR)

50% of each tranche of options held by Mr Wozniczka are subject to a TSR performance hurdle as detailed in the table below. TSR for the Group is defi ned as share price growth plus dividends assuming the dividends are reinvested into the Group’s ordinary shares (the Group’s “Accumulation Index”).

Percentile Ranking of Futuris Corporation Limited’s growth in its Accumulation Index Relative to such growth for the S&P/ASX 200 Accumulation Index including Futuris Corporation Limited over the measurement period Cumulative % of Options that become exercisable

Less than 50th percentile Nil

At 50th percentile One half (50%) of Options

50th to 75th percentile Pro-rata

At 75th percentile 100%

The Group’s TSR performance is to be measured over an initial three year period commencing on the 1 July immediately preceding the issue of the options and ending on the third anniversary of that date and then three monthly thereafter until the sixth anniversary of that date (with the measurement period becoming 39 months, 42 months etc up to 72 months). Any options that have not become exercisable at the end of the measurement period (that is, the sixth anniversary) will lapse. No options in the TSR tranche vest until the Group’s performance is equivalent to the 50th percentile of the constituent companies in the S&P/ASX 200, at which stage 50% of the options vest, with the balance vesting on a pro rata basis between the 51st and 75th percentiles (that is, 2% of the outstanding options for each 1% incremental improvement in the Group’s relative TSR).

At the 75th percentile 100% of the options in relation to the TSR tranche would vest.

Any Option not exercised within 10 years of the grant will lapse.

Earnings Per Share (EPS)

The other 50% of each tranche of options held by Mr Wozniczka are subject to an EPS performance hurdle as detailed in the following table:

Futuris Corporation Limited’s Average Annual Growth in itsEPS over the measurement period Cumulative % of Options to become exerciseable

Below 8% Nil

8% One half (50%) of Options

Between 8% and 12% Pro-rata

12% or more 100%

The minimum requirement for options subject to the EPS performance hurdles to vest is set at a compound EPS growth of 8%, at which 50% of the options vest, with all the options vesting on a pro rata basis between 8% and 12%, such that 100% of the options subject to the EPS performance hurdle will vest if over the measurement period the Group meets the EPS performance condition.

The Group’s performance in EPS will be measured over an initial three year period commencing immediately after the 31 August immediately preceding the issue of the options and ending on the third anniversary of that date and then six monthly thereafter (that is, on 28 February and 31 May) until the sixth anniversary of that date (with the measurement period becoming 42 months, 48 months etc up to 72 months).

Therefore, if the Group’s average annual growth in its EPS is 8% on the third anniversary of the 31 August immediately preceding the issue of the options subject to the EPS performance hurdle, Mr Wozniczka will be entitled to exercise 50% of the relevant tranche of options and if at any of the subsequent measurement dates the Group’s Growth is at a higher percentage, Mr Wozniczka will be entitled to exercise additional options on a pro-rata basis. For example, if after fi ve years the Group’s Growth is 12%, Mr Wozniczka will be entitled to exercise the remaining options in the relevant tranche. Any options that have not become exercisable at the end of the measurement period will lapse.

To avoid distortion, EPS for the purposes of the long term incentive will be calculated excluding the impacts of acquisitions and divestments by the Group.

44

Directors’ Meetings

Details of the number of meetings held by the Board of Directors, audit and other board committees and the attendance at those meetings is provided in the Corporate Governance section of this report on page 32.

Indemnifi cation of Offi cers and Auditors

Insurance arrangements established in the previous year concerning offi cers of the consolidated entity were renewed during the year.

The consolidated entity paid an insurance premium in respect of a contract insuring each of the directors of the Company named earlier in this report and each full time executive offi cer, director and secretary of Australian Group entities against all liabilities and expenses arising as a result of work performed in their respective capacities, to the extent permitted by law. The terms of the policy prohibit the disclosure of the premiums paid.

Each director has entered into a Deed of Access, Insurance and Indemnity which provides:

• that the Company will maintain an insurance policy insuring the director against any liability incurred by the director in the director’s capacity as an offi cer of the Company to the maximum extent allowed by law;

• for indemnity against liability as a director, except to the extent of indemnity under the insurance policy or where prohibited by law; and

• for access to company documents and records, subject to undertakings as to confi dentiality.

The consolidated entity has not entered into any agreement to indemnify its auditor.

45

Remuneration Report

This report details the remuneration arrangements in place for directors and senior executives of the Group. In compiling this report the Group has met the disclosure requirements of Australian accounting standard AASB 124 Related Party Disclosures as well as those prescribed by the Corporations Act 2001.

Section 1. Board Remuneration Committee

The Company’s overall objective is to generate attractive returns for shareholders and to deliver shareholder value performance in the short and longer terms. To achieve those objectives the Company needs to have the best, brightest and most experienced people available to it. The Company’s remuneration strategy is key in delivering the Company’s overall objective.

The Remuneration Committee assists the Board to ensure that Futuris Corporation Limited (‘Futuris’) and each individual operating company establish and maintain remuneration strategies and policies that are aligned with the Company’s overall objectives and accord with best practice as set down in the ASX Corporate Governance Principles. The Company’s remuneration strategy seeks to:

• attract and retain high calibre executives and Directors and to motivate them to pursue sustainable long term growth and success for Futuris, the operating subsidiary company and shareholders;

• be consistent with the needs of each operating subsidiary company and the Group; and

• demonstrate a clear relationship between executive performance and remuneration.

A Group remuneration strategy has been developed which allows for the autonomy of each operating subsidiary company to manage remuneration policies and procedures within the framework established and in-line with budget settings. All remuneration determinations for executives above a predetermined level or that otherwise fall outside the framework established must be individually approved by the Chief Executive, the Futuris Remuneration Committee or the Board, as appropriate.

Section 2. Non-executive directors’ remuneration

A. Board policy The disclosures in this section relate to the remuneration for the Company’s non-executive directors who are regarded as ‘key management personnel’ for the purposes of Australian Accounting Standard AASB 124.

Non-executive directors are remunerated by way of fees in the form of cash and superannuation, and generally in accordance with Recommendation 9.2 of the ASX Governance Principles.

Non-executive directors do not participate in the Company’s cash or equity incentive plans and Board appointments after 30 June 2004 do not receive retirement benefi ts other than superannuation contributions disclosed in this report. Appointments to the Board prior to 30 June 2004 are entitled to receive $150,000 on retirement after 3 years of service attained on or before 30 June 2004. Only three directors are eligible for this retirement benefi t.

Non-executive directors’ have formal letters of appointment with the Company. Tenure is governed by the Company’s Constitution and the Australian Securities Exchange Listing Rules, which provides that all non-executive directors’ are subject to shareholder re-election every three years.

B. Non-executive director’ remunerationThe Board determines fees payable to non-executive directors, taking into account the qualifi cations and time commitment of each director, supported by advice from external remuneration consultants. The fees paid are generally consistent with those paid to non-executive directors of comparable companies, while remaining within the aggregate fee limit of $1,800,000 per annum, as approved by shareholders at the Company’s Annual General Meeting on 24 October 2006. Consulting fees paid to associates of directors and statutory superannuation guarantee contribution amounts are not included in the aggregate fee limit.

As at the date of this report, the annual base fee amount paid to each non-executive director, other than the Chairman and the Deputy Chairman, is $90,000 per annum. The Chairman receives an annual composite fee of $350,000 and the Deputy Chairman receives an annual fee of $130,000. Additional fees are payable to non-executive directors who sit on Board committees.

Further, it is Board policy that, where appropriate, at least one non-executive director sit on subsidiary boards of each of the Company’s main operating divisions to extend oversight to those subsidiary boards. Additional fees are paid to non-executive directors who sit on subsidiary boards. The base fee for non-executive directors on subsidiary boards depends on the scale and complexity of the operating divisions and the estimated time commitment. Currently, fees range from $50,000 to $75,000 per annum. Additional fees are also paid to some non-executive directors who sit on subsidiary board committees.

46

Table 2a (A$) Short Term Payments (9)

Base Fee OtherPost Employment

SuperannuationTotal

S. Gerlach (Chairman) (9)(10) (12) 2007

2006

350,000

225,000

-

-

12,686

26,730

362,686

251,730

W H Johnson(Deputy Chairman) (10) (13)

2007

2006

130,000

112,500

16,000 (5)

12,000

12,686

11,205

158,686

135,705

C E Bright (9) (11) 2007

2006

90,000

75,000

60,000 (2)

50,000

12,686

6,750

162,686

131,750

J C Fox (9)(10) (11) 2007

2006

90,000

75,000

50,000 (3)

-

12,600

6,750

152,600

81,750

R Grigg (9) (11) 2007

2006

90,000

75,000

66,000 (4)

62,000

12,686

12,768

168,686

149,768

I MacDonald (11) 2007

2006

60,000 (1)

-

40,833 (6)

-

12,052

-

112,885

-

A L Newman (11) 2007

2006

60,000 (7)

75,000

633,333 (7)

950,000

12,686

6,750

706,019

1,031,750

A Salim (11) 2007

2006

90,000

75,000

-

-

-

-

90,000

75,000

G D Walters (9) (11) 2007

2006

90,000

75,000

106,500 (8)

73,000

12,686

40,570

209,186

188,570

Total 2007

2006

1,050,000

787,500

972,666

1,147,000

100,768

111,523

2,123,434

2,046,023

Notes:

(1) I MacDonald joined the Board on 28 November 2006. Futuris Board base fee $90,000, pro-rated 8 months.

(2) C Bright is a Futuris Board representative on the main operating subsidiary board Integrated Tree Cropping Ltd and received Integrated Tree Cropping subsidiary board fees of $50,000 and Integrated Tree Cropping Research and Development Committee fees of $10,000.

(3) J Fox is a Futuris Board representative on the Elders Telecommunications Steering Committee and received Committee fees of $50,000.

(4) R Grigg is a member of the Futuris Board Audit Committee and received a Futuris Board Audit Committee fee of $16,000. R Grigg is also a Futuris Board representative on the main operating subsidiary board Futuris Automotive Group Ltd and received a Futuris Automotive subsidiary board fee of $50,000.

(5) W Johnson is a member of the Futuris Board Audit Committee and received a Futuris Board Audit Committee fee of $16,000.

(6) I MacDonald is a Futuris Board representative on the main operating subsidiary board, Elders Financial Services Group Pty Ltd and received an Elders Financial Services Group Pty Ltd subsidiary board fee of $70,000 (pro-rated 7 months).

(7) A Newman retired as a director on 28 February 2007. Futuris Board base fee $90,000, pro-rated 8 months. A Newman provided consulting services to Futuris and received a pro-rated fee of $633,333.

(8) G Walters is Chairman of the Futuris Board Audit Committee and received a Futuris Board Audit Committee fee of $24,000. G Walters is also a Futuris Board representative on the main operating subsidiary board, Elders Financial Services Group Pty Ltd and received an Elders Financial Services subsidiary board fee of $70,000 and for his role as Chairman of the Elders Financial Services Group Audit Committee received a fee of $12,500.

(9) In addition to statutory superannuation guarantee contributions, Directors may salary sacrifi ce their short term payments into superannuation. A number of directors have chosen to do so and are marked (9). For simplicity we have not split the short term payments to disclose the salary sacrifi ced superannuation portion.

(10) Each director marked (10) has an entitlement of $150,000 to be paid on retirement. Retirement benefi ts ceased from 30 June 2004.

(11) The base fee for directors was increased from $75,000 to $90,000 for 2007. This increase was based on independent benchmark analysis and independent advice.

(12) The Chairman’s base fee was increased from $225,000 to a composite fee of $350,000 for 2007. This increase was based on independent benchmark analysis and independent advice

(13) The Deputy Chairman’s base fee was increased from $112,500 to $130,000 for 2007. This increase was based on independent benchmark analysis and independent advice.

47

Section 3. Executive director and senior executive remuneration

The disclosure in this section relates to the remuneration of key management personnel of both the Company and the consolidated entity (being those persons with authority and responsibility for planning, directing and controlling the activities of the Company during the fi nancial year).

A. Board policyThe Board seeks to align employee remuneration with the commercial needs of each operating subsidiary company and the overall objectives of the consolidated entity as a whole.

The Board has delegated to the Remuneration Committee oversight of the Company’s remuneration policies and practices. Remuneration polices and practices are benchmarked to the market by external, independent consultants to ensure that remuneration for executives meet a number of criteria, including:

• The levels of remuneration properly refl ect the duties and responsibilities of those executives

• An appropriate mix between fi xed and variable components is maintained

• Superior or upper quartile remuneration is only paid for demonstrable superior performance

• Remuneration is competitive when compared to both internal and external relativities

The structure of remuneration, as explained below, aims to support this policy.

B. Remuneration structureExecutives’ remuneration is comprised of three main elements, as follows:

• Fixed remuneration – including salary, non-monetary benefi ts (including Fringe Benefi ts Tax (FBT) grossed-up) and superannuation;

• Short-term incentives; and

• Long-term incentives.

A description of each component is set out below. Remuneration packages are strategically structured to ensure a portionof an executive’s reward depends on meeting individual, business unit or group targets and objectives, including maximising returns for shareholders. Generally, the portion of ‘at risk’ remuneration (being short- and long-term incentive elements) increases with seniority.

The Company’s strategic remuneration structure by level is set out in the following Table 3a.

Table 3a - Remuneration structure illustrated by executive level

CEO Senior Senior (Tier I) Executive Management (Tier II) (Tier III)

100%

80%

60%

40%

20%

0%

Threshold long-term incentive

Budgeted short-term incentive

Fixed remuneration

48

C. Fixed Remuneration

Fixed remuneration refers to total remuneration on a fully costed basis and includes any benefi ts that the executive has nominated to receive as part of his or her package. These may include motor vehicle leases, car parking, and any additional superannuation contributions beyond that required by the Company. The balance comprises a cash salary and mandatory superannuation contributions, being the 9% superannuation guarantee amount.

Executives may also receive non-monetary benefi ts in addition to their stated total remuneration. These may include product allowances and other miscellaneous benefi ts, and FBT associated with such benefi ts.

The level of fi xed remuneration is set by reference to the market and is determined by the scope of the role and the level of knowledge, skill and experience required of the individual.

Fixed remuneration is reviewed annually to refl ect each executive’s performance over the previous year, as assessed through each subsidiary’s Performance Management Evaluation program. This program assesses employee performance against a number of agreed key performance objectives.

D. Short-term incentives

All executives participate in one or other of Futuris’ Group or divisional Short Term Incentive Plans (STIP). The objective of the relevant STIP is to encourage executives to meet their own individual and business unit performance targets, while also supporting the Futuris Group overall business objectives set.

Under the relevant STIP, each participant has a target opportunity, set as a percentage of fi xed remuneration, which is typically between 30 and 60 per cent for senior executives (but may be up to 150% per cent for the Chief Executive Offi cer).

Actual payments are determined by:

1. Business fi nancial performance, based on key business measures determined; and2. Individual performance, based on a range of Key Performance Criteria (KPI) set.

Measuring business performanceThe measures used to assess group performance may vary from year to year and from operating subsidiary to operating subsidiary, depending on changing business objectives.

Current year performance measures used are summarised below (excluding the Property Division which was divested during the year):

Futuris Corporate Offi ce

Elders Rural Services Group

Elders Financial Services Group

ITC Group Other (including Futuris Auto Group)

Futuris Chief Executive Offi cer

Budgeted NPAT,Balance Sheet and Cashfl ow - 50%Other KPI - 50% - - - -

Futuris Chief Financial Offi cer

Budgeted NPAT - 100%

- - - -

Tier I executives* - Budgeted EBIT - 50% EBIT over budget - 50%

Budgeted EBIT - 25%EBIT over budget - 25%Other KPI - 50%

Budgeted NPAT - 31%NPAT over budget - 31%Other KPI - 38%

RONA - 60%Individual KPI - 40%

Tier II executives** Other KPI - 100% Mix of Divisional EBIT, NPAT and individual KPI

Mix of Divisional EBIT, NPAT and individual KPI


RONA – 80%Individual KPI - 20%

Tier III executives***

- Mix of Divisional EBIT, NPAT and individual KPI



RONA - 50%Individual KPI - 50%

* Divisional Managing Director Key:** Futuris Executives, Divisional CFOs, NPAT - Net Profi t after Tax Divisional General Managers KPI - Key Performance Indicators*** Divisional Key Functional Managers: EBIT - Earnings before Interest and Tax RONA - Return on Net Assets

All short-term incentive plan payments are made after the signing of the annual audited accounts of the Company.

The Chief Executive (except in relation to himself), in conjunction with the Chairman, has the authority to make discretionary bonus payments when superior performance warrants additional reward.

49

E. Long-term incentives

Futuris Corporation Limited has a number of long term equity participation and incentive programs in place. These plans are summarised below.

Name of Plan Purpose Eligibility Criteria

Number of Current Participants

as at 30th June 2007

Number of Shares/Options Outstanding as at 30th June 2007

Futuris Loan Share Plan (FLSP)

The FLSP is designed to provide an equity participation opportunity for all selected eligible group employees, including executives. Shares are provided and paid for by way of a non-recourse, interest free loan. Dividends are used to repay the loan. Shares do not vest for three years, but there are no performance conditions once issued.

Invitation only. Offers range from $3,000 to $17,500 per annum per employee depending on seniority and current year performance.

3,737 19,643,895

Futuris ‘Save as You Earn’ Plan (SAYE)

The SAYE, a qualifying Division 13A (ITAA 36) deferred benefi t employee share scheme, is designed to enable selected executives to ‘sacrifi ce’ remuneration entitlements on a pre-tax basis and receive Futuris shares in-lieu. Tax on these shares can be deferred for up to 10 years. Futuris makes no contribution to this plan other than supporting the costs of administration.

Invitation only 72 3,435,337

Futuris Employee Share Option Plan (FESOP)

FESOP is a qualifying Division 13A (ITAA 36) employee option scheme. Options to acquire Futuris shares are granted to selected eligible group executives at market (or premium) price, subject to a minimum of three years service and performance conditions (see below) determined by the Board at the time of grant.

Invitation only for eligible group executives.

91 18,488,000

The FESOP is the principal Long Term Incentive Plan (LTIP) for executives and is designed to reward executives for delivering long-term shareholder returns. The plan was last approved by shareholders in October 2005. Under the plan, participants may be entitled to newly issued ordinary shares in the Company if certain performance standards are met (and subject to continued employment).

Participation in all plans is at the Board’s discretion, and, with the exception of Tier I and Tier II employees (CEO, CFO and Divisional managing directors), no individual has a contractual right to participate in the plan or to receive any guaranteed benefi t under any plan. In the case of the CEO, options are only issued after shareholder approval is given.

50

The specifi c performance conditions and allocation ranges of each executive category, and the relationship between the rewards under these plans and Futuris’ fi nancial performance are set out below.

Performance Conditions under FESOP

Executive Category Performance Conditions Available Allocation Ranges

Tier I - CEO For the CEO, two equal Tranches are offered and each Tranche is subject to a separate performance hurdle, as follows:

Tranche 1 (50%) – Relative Total Shareholder Return (TSR)The percentile ranking of Futuris Corporation Limited’s growth in its Accumulation Index relative to such growth in the S&P/ASX 200 Accumulation Index must equal or exceed the prescribed ranking in order for Tranche 1 options to vest. % of Tranche 1 options that vestLess than 50th percentile (median) NilAt the 50th percentile 50%50th to 75th percentile Pro-rataAt 75th percentile 100%

TSR performance is measured over an initial three year period commencing on 1 July immediately preceding the issue of the options and ending on the third anniversary of that date and then re-tested quarterly thereafter until the sixth anniversary of that date. All unvested options will lapse on the sixth anniversary.

2003 - 1,000,000 granted

2005 - 1,500,000 granted

Tranche 2 (50%) – Earnings Per Share* (EPS)Futuris’ Cumulative Average Annual Growth Rate (CAGR) in EPS must equal or exceed the compound hurdle rate set for Tranche 2 options to vest, as follows: % of Tranche 2 options that vestBelow 8% Nil8% 50%Between 8% and 12% Pro-rata12% or more 100%

* Adjusted for acquisitions and divestments, if relevant.

Futuris’ CAGR is measured over an initial three year period commencing immediately after 31 August immediately preceding the issue of options and ending on the third anniversary of that date and then re-tested six monthly thereafter until the six anniversary of that date. All unvested options will lapse on the sixth anniversary.

2003 - 1,000,000 granted

2005 - 1,500,000 granted

Tier IICFO and Divisional Managing Directorsand selected Futuris executives

For the CFO and divisional managing directors three equal Tranches of options are offered and each Tranche is subject to a separate performance hurdle, as follows:

Tranche 1 (33%) – RONA, NPAT and/or EBIT (First fi nancial year after options are issued)Tranche 2 (33%) – RONA, NPAT and/or EBIT (Second fi nancial year after options are issued)Tranche 3 (33%) – RONA, NPAT and/or EBIT (Third fi nancial year after options are issued)

The hurdles are cumulative across the three years over which the performance hurdle is measured. This means that if the hurdle is not met in respect of the fi rst fi nancial year, and, for example, the fi rst and second fi nancial year performance when added together exceeds the sum of the fi rst and second year fi nancial hurdle, the Tranche 1 hurdle will be satisfi ed.

If the performance hurdle in respect of each Tranche is met, the options may only be exercisable during the period 3 years to 5 years of their date of issue. All unvested and unexercised options will lapse on their fi fth anniversary.

200,000 to 250,000

Tier IIIKey Functional Managers and Key Other

Options may be issued within strict limits, at the discretion of the Board, to selected deserving employees based on excellent performance over the preceding 12 months. No future performance conditions are imposed in respect of these options.

Options may only be exercisable during the period 3 years to 5 years of their date of issue. All unvested and unexercised options will lapse on their fi fth anniversary.

25,000 to 100,000

51

Relationship between Futuris’ Financial Performance and Executive Rewards under long term equity incentives

Total Shareholder Returns (TSR)

Futuris has in 2007 outperformed the S&P/ASX 200 Accumulation Index (All and Industrials) over every measurement period. Accordingly, at least a portion of the CEO’s Tranche 1 options, granted in 2005, are likely to vest. Tranche 1 options issued to the CEO (1 million) granted in 2003 are unlikely to vest. For these options to vest, assuming constant dividend and constant S&P/ASX 200 growth rates, the Futuris share price must reach at least $5.00 by 30 June 2008 or $10.40 by 30 June 2009 for 50% of the options to vest and $6.50 by 30 June 2008 or $17.60 by 30 June 2009 for 100% of the options to vest.

Futuris’ relative TSR performance against two comparator groups (S&P/ASX 200 and S&P/ASX 200 Industrials only) is set out as follows:

Comparison of Futuris’ 1, 3 and 5 year TSR performance relative to the S&P/ASX 200 (All)

Period Measured Measurement Period Futuris TSR Total S&P/ASX 200 Median S&P/ASX 200 Futuris Rank (Quartile)

2007 1 year 38.3% 23.7% 28.5% 2nd

2005 to 2007 3 years 95.7% 77.4% 111.6% 3rd

2003 to 2007 5 years 160.8% 94.4% 176.6% 3rd

Comparison of Futuris’ 1, 3 and 5 year TSR performance relative to the S&P/ASX 200 (Industrials only)

Period Measured Measurement Period Futuris TSR Total S&P/ASX 200Industrials only

Median S&P/ASX 200Industrials only

Futuris Rank (Quartile)

2007 1 year 38.3% 29.2% 25.8% 2nd

2005 to 2007 3 years 95.7% 85.6% 89.5% 2nd

2003 to 2007 5 years 160.8% 116.5% 147.4% 2nd

Against a selected Peer Group comprised of Adelaide Bank Limited, ABB Grain Limited, AWB Limited, Bendigo Bank Limited, Bank of Queensland Limited, Gunns Limited, Great Southern Limited and Timbercorp Limited, the Company has performed strongly in terms of relative TSR by moving from a ranking of sixth (6th) over the 5 year measurement period 1 July 2002 to 30 June 2007 to fi rst (1st) in respect of the 2007 year.

Earnings per share

Based on Futuris’ Compound Annual Growth Rate (CAGR) the CEO’s Tranche 2 options, granted in 2005 are likely to vest.

Reported Underlying EPS for the period from 2003 to 2007 was as follows:

2007 2006 2005 2004 2003

Reported Underlying EPS 14.00 cents 13.18 cents 10.86 cents 9.57 cents 7.65 cents

UnderlyingEPS Growth (Annual) 6.3% 21.4% 13.5% 25.2% (17.2)%

UnderlyingEPS CAGR (3 years) 13.5% 19.9% 5.5% 1.2% (10.5)%

52

Section 4. Nominated executives’ contract terms

A summary of the key terms of employment contracts for nominated executives is outlined below.

Contracts for nominated executives, other than Mr Griffi ths, have no fi xed term. Participation in various Short Term Incentive Plans is at the Board’s discretion. Participation in the Long Term Incentive Plans is also at the Board’s discretion and subject to shareholder approval in the case of the CEO. Participants who cease employment before either the performance or service conditions have been met will forfeit all unvested entitlements, unless otherwise determined by the Board in circumstances such as death, redundancy, total and permanent disability and retirement.

Futuris may terminate employment contracts immediately for cause, in which case the executive is not entitled to any payment other than the value of fi xed remuneration up to the termination date.

Table 4a. Summary of the key terms of employment contracts for nominated executives

Name Employing Company

Date of Contract

Duration of Contract

Termination by Futuris (without cause)

Termination by Employee

Termination Payments (only where Termination by Company)

Short Term Incentive

Long Term Incentive

L Wozniczka Futuris Corporation Ltd

26 February 2004 (as amended)

No Fixed Term

12 months notice

12 months notice

Payment in lieu of notice based on Base Salary.Discretion of Board to pay portion of STI and LTI

Refer Section 3D above

Employee Options – Refer section 3E above

V Erasmus Integrated Tree Cropping Ltd

23 March 2006 (as amended)

No Fixed Term

12 months notice

12 months notice

Payment in lieu of notice based on Base Salary.Discretion of CEO to pay portion of STI and LTI


Employee Options – Refer section 3E above $1 million NPAT out performance for 2010.

B Griffi ths Futuris Automotive Group Ltd

30 August 2005 (as amended)

42 Months from 1 July 2004

12 weeks notice

4 weeks Payment of $2 million.


2% to 3% of any increases in value of Company’s Automotive Operations

P Hall (1) Futuris Corporation Ltd

14 August 1997 (as amended) and 5th April 2007

- - - - - -

G Hunt Elders Australia Ltd

27 September 2002 (as amended)

No Fixed Term

12 months notice

4 weeks Payment in lieu of notice based on Base Salary



T Plant Elders Financial Services Group Pty Ltd

9 August 2006 (as amended)

No Fixed Term

12 months notice

6 months notice

Payment in lieu of notice based on Base Salary.Discretion of CEO to pay portion of STI and LTI



P Zachert Futuris Corporation Ltd

18 December 2002 (as amended)

No Fixed Term

12 months notice

6 months notice

Payment in lieu of notice based on Base Salary



Notes:

(1) Ceased to be an employee 10 May 2007

(2) The Chief Executive (except in relation to himself), in consultation with the Chairman and the chairman of the relevant main operating subsidiary, has the authority to amend the terms of employment contracts where circumstances warrant.

53

Section 5. Remuneration disclosure tables

Details of executive directors’ and key management personnel remuneration for the 2006 and 2007 fi nancial year are set out in Table 5a.

Table 5a (A$) Short Term Payments Base Salary Bonus Other Non Monetary

Share Based PaymentsOptions Shares

Post EmploymentSuperannuation

Total

L P Wozniczka 2007

2006

1,245,000

1,129,040

1,100,000 (1)

1,100,000 (1)

12,551

22,820

710,550

571,599

-

-

186,750

172,500

3,254,851

2,995,959

V Erasmus 2007

2006

407,615

137,953

230,918 (2)

85,000 (2)

-

-

62,529

61,310

5,801

-

42,385

12,416

749,248

296,679

B Griffi ths 2007

2006

630,550

623,119

195,500 (1)

382,500 (1)

22,143

40,957

39,310

32,125

849

5,223

91,175

56,081

979,527

1,140,005

P Hall 2007

2006

285,863

333,511

4,170,000 (3)

550,000 (1)

77,835

79,910

-

-

-

-

26,595

30,016

4,560,293

993,437

G Hunt 2007

2006

589,631

416,478

275,000 (1)

252,000 (1)

141,580

156,598

83,103

61,064

5,801

5,223

53,119

53,119

1,148,234

944,482

T Plant (5) 2007

2006

537,314

not applicable

247,500 (2)

not applicable (1)

16,568

not applicable

81,813

not applicable

5,801

not applicable

12,686

not applicable

901,682

not applicable

P Zachert 2007

2006

524,814

493,750

500,000 (1)

300,000 (1)

19,432

22,811

142,644

133,799

5,801

764

12,686

36,139

1,205,378

987,263

Total 2007

2006

4,220,787

3,133,851

6,718,918 (1)

2,669,500 (1)

290,109

323,096

1,119,949

859,897

24,053

11,210

425,396

360,271

12,799,213

7,357,825

Notes:

(1) L Wozniczka and P Zachert have elected to take any short term bonus in fully paid ordinary shares in lieu of cash. The shares are purchased on market and allocated to L Wozniczka and P Zachert at their average market cost and in accordance with the terms of the Company’s Employee Share – Save As You Earn Plan. This is refl ected in Table 6a below. A similar election was made in respect of the prior year.

(2) T Plant and V Erasmus have elected to take 50% of their short term bonus in fully paid ordinary shares in lieu of cash. The shares are purchased on market and allocated to T Plant and V Erasmus at their average market cost and in accordance with the terms of the Company’s Employee Share – Save As You Earn Plan. This is refl ected in Table 6a below.

(3) P Hall’s bonus for 2007 includes a longer term incentive payment related to the crystallisation of the increase in the value of the Group’s Property Division.

(4) Details relating to J Neville Smith, reported as Key Management in 2006, have not been disclosed in the above table. J Neville Smith is no longer an employee of the Group.

(5) T Plant was not Key Management in 2006.

54

Section 6. Equity instruments in relation to directors & executives

Table 6a. Share movements: directors and executives

Shares held at start of year

Shares acquired during the year

as part ofremuneration

Shares acquired during the year

through the vesting of LTIP

Other shares acquired/

(disposed of) during the year

Other changes during the year

Balance of shares held at

end of year

Balance of shares held at reporting date

Non-executive Directors

S Gerlach 20072006

428,491328,491

--

--

50,000100,000

--

478,491428,491

478,491428,491

W Johnson 20072006

23,548,18123,548,181

--

--

--

--

23,548,18123,548,181

23,548,18123,548,181

C E Bright 20072006

103,492103,492

--

--

--

--

103,492103,492

103,492103,492

J C Fox 20072006

26,76526,765

--

--

--

--

26,76526,765

26,76526,765

R G Grigg 20072006

20,00020,000

--

--

11,560-

--

31,56020,000

31,56020,000

I MacDonald 20072006

--

--

--

60,000-

--

60,000-

60,000-

A L Newman 20072006

6,353,3276,353,327

--

--

(4,353,327)-

--

2,000,0006,353,327

2,000,0006,353,327

A Salim 20072006

32,920,57832,920,578

--

--

625,000-

--

33,545,57832,920,578

33,545,57832,920,578

G D Walters 20072006

21,00021,000

--

--

--

--

21,00021,000

21,00021,000

L P Wozniczka 20072006

4,019,8032,779,731

497,738552,764

--

4,000687,308

--

4,521,5414,019,803

4,521,5414,019,803

V Erasmus 20072006

--

52,244-

--

9,669-

--

61,913-

61,913-

B Griffi ths 20072006

1,539,0241,527,312

--

200,000500,000

(1,327,878)(488,288)

--

411,1461,539,024

411,1461,539,024

P Hall 20072006

13,33913,339

--

--

(13,119)-

--

22013,339

22013,339

G Hunt 20072006

699,668100,943

--

-550,000

9,86148,725

--

709,529699,668

709,529699,668

T Plant (2) 20072006

58,700-

55,995-

--

--

--

114,695-

114,695-

P Zachert 20072006

1,049,757372,179

226,244150,754

250,000500,000

(202,634)26,824

--

1,323,3671,049,757

1,323,3671,049,757

Total 20072006

70,802,12568,115,338

832,221703,518

450,0001,550,000

(5,126,868)372,569

--

66,957,47870,741,425

66,957,47870,741,425

Notes:

(1) Details relating to J Neville Smith, reported as Key Management in 2006, have not been disclosed in the above table. J Neville Smith is no longer an employee of the Group.

(2) T Plant was not Key Management in 2006.

55

Table 6b. Aggregate Long Term Incentive Plan opportunities received and changes

Option holdings of Directors and Key Management Personnel

2007 (Number)

Balance at beginning of

periodOptions

ExercisedOptions Granted

OptionsLapsed

Balance at end of period

Vested at 30 June 2007

Exercisable Not exercisable

Directors

L P Wozniczka 5,000,000 - - - 5,000,000 1,000,000 -

Key Management Personnel

V Erasmus 750,000 - - - 750,000 - 350,000

B Griffi ths 400,000 (200,000) 100,000 - 300,000 - 300,000

G Hunt 1,250,000 - - - 1,250,000 - 687,500

T Plant (1) 1,100,000 - - - 1,100,000 - 600,000

P Zachert 1,000,000 (250,000) - - 750,000 - 500,000

Total 9,500,000 (450,000) 100,000 - 9,150,000 1,000,000 2,437,500

(1) Mr Plant was not Key Management in 2006.

2006 (Number)

Directors

L P Wozniczka 2,000,000 - 3,000,000 (750,000) 4,250,000 - -


V Erasmus - - 750,000 - 750,000 - 150,000

B Griffi ths 800,000 (500,000) 100,000 - 400,000 - 400,000

G Hunt 675,000 (550,000) 1,000,000 - 375,000 - 500,000

P Zachert 750,000 (500,000) - - 250,000 - 250,000

Total 4,225,000 (1,550,000) 4,850,000 (750,000) 6,025,000 - 1,300,000

(2) Mr J Neville Smith, reported as Key Management in 2006, is no longer an employee of the Group.

(3) The differences between the closing balance for 2006 and the opening balance for 2007 relates to the addition of T Plant as Key Management in 2007 and additional options approved in 2007 relating to 2006.

56

Table 6c. Current Long Term Incentive Plan opportunities (by offer)

Granted Options

(Number)Vested Options

(Number) Grant DateValue at Grant

Date ($) (2)

Exercise Price ($)

First Exercise Date

Expiry and Last Exercise Date

2007


V Erasmus - 200,000 - - - - -

B Griffi ths 100,000 - 28 Aug 07 0.47 2.45 5 Oct 10 5 Oct 12

G Hunt - 187,500 - - - - -

T Plant - 250,000 - - - - -

P Zachert - 250,000 - - - - -

2006

Directors

Les Wozniczka 3,000,000 - 25 Oct 05 0.47 2.06 31 Aug 08 25 Oct 15


V Erasmus 600,000 (1) - 29 Aug 06 0.19 2.02 4 Oct 09 4 Oct 11

V Erasmus 150,000 - 29 Aug 06 0.45 1.83 4 Oct 09 4 Oct 11

B Griffi ths 100,000 200,000 29 Aug 06 0.39 2.02 4 Oct 09 4 Oct 11

G Hunt 250,000 250,000 29 Aug 06 0.39 2.02 4 Oct 09 4 Oct 11

G Hunt 750,000 (1) - 29 Aug 06 0.19 2.02 4 Oct 09 4 Oct 11

P Zachert - 375,000 - - - - -

Notes:

(1) Exercisable subject to meeting performance hurdles.

(2) The valuation of the options was prepared independently based on the Trinomial methodology.

All equity transactions with directors and key executives other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arms length.

57

Environmental Regulation Performance

Details regarding the Group’s Environmental Regulation Performance can be found on pages 21, 24 and 27.

Rounding of Amounts

The parent entity is a Group of the kind specifi ed in Australian Securities and Investments Commission class order 98/0100. In accordance with that class order, amounts in the fi nancial report and Directors’ report have been rounded to the nearest thousand dollars unless specifi cally stated to be otherwise.

Auditor Independence and Non-Audit Services

The Directors received the following confi rmation from the Group’s auditor:

Auditor’s Independence Declaration to the Directors of Futuris Corporation Limited and the consolidated entity

In relation to our audit of the fi nancial report of Futuris Corporation Limited and the consolidated entity for the fi nancial 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.

Ernst & Young

Alan HeraldPartner

Adelaide6 September 2007

Non-Audit Services

The following non-audit services were provided by the Group’s auditor, Ernst & Young. The Directors are satisfi ed that the provision of non-audit services is compatible with the general standard of independence for auditors imposed under the Corporations Act. The nature and scope of each type of non-audit services provided means that auditor independence was not compromised.

Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:

Tax services (primarily compliance) $345,858Other compliance and assurance services $158,076

This report has been made in accordance with a resolution of directors.

S. GerlachChairman

L.P. WozniczkaDirector

Adelaide6 September 2007

58

Concise Report

Discussion and Analysis of Income Statement

Continuing and discontinuing operationsDuring the year the Company divested its property development operations. The divestment was settled in May 2007, and the results of the property development operations for the year to settlement are reported separately under the classifi cation of discontinued operations.

This discussion and analysis discusses the Company’s aggregate fi nancial results as a whole. Discussion and detail of the individual contributions of the continuing operations is contained in the Chief Executive’s Report and Review of Operations printed earlier in this document.

Profi tFuturis Corporation has recorded an Underlying Profi t to Shareholders of $101.7 million for the 2007 fi nancial year, 15% higher than the corresponding result of $88.3 million.

The underlying profi t to shareholders incorporates non-recurring items totalling $1.0 million after tax, which are detailed below. Inclusive of these items, Futuris’ Reported Profi t to Shareholders was $100.7 million. In comparison, the 2006 Reported Profi t of $87.4 million was unfavourably affected by non-recurring items totalling $0.9 million after tax.

Profi t attributable to minority interests was 69% lower than in 2006 due to the takeover of ITC minority interests at the start of the 2007 fi nancial year.

Underlying profi t before tax rose 6% to be $124.7 million, compared with $118.2 million in the previous year.

Non-recurring itemsThe 2007 reported profi t includes a number of non-recurring items which total a loss of $0.6 million before tax. These items include:

• Profi t before tax of $8.9 million on the sale of the Company’s property development operations, which were divested during the period. The gain on sale does not incorporate profi t to be earned pending the completion of contractual conditions anticipated in the 2008 fi nancial year or shortly thereafter.

• One-off costs and charges of $9.5 million incurred by Elders in the preparation of the successful Optus Elders (OPEL) joint venture bid for Federal Government funding to build Australia’s rural and regional broadband network.

The 2006 result included a non-recurring charge totalling $0.9 million after tax, comprising gains arising from the acquisition of a shareholding in HiFert and restructuring and redundancy costs.

Revenue and expensesSignifi cant revenue and expense outcomes for the year include:

Total sales revenue declined by 4% to be $3,228.5 million ($3,355.8 million in 2006). The reduction is due to lower sales from Elders Rural Services, Property (due to divestiture) and automotive operations.

Income contribution from associates and joint ventures rose at the underlying level from $38.8 million to $41.2 million, with the former excluding the non-recurring gain of $10.4 million increase in shareholding in HiFert. The increase in underlying equity-accounted income is the result of increased earnings by Elders Rural Bank, Australian Wool Handlers, Forest Enterprises Australia (FEA) and Webster Limited.

Borrowing costs net of interest received rose from $39.0 million to $40.0 million due to higher average interest rates.

Depreciation and amortisation charge was largely unchanged at $37.6 million compared with $36.7 million. Increased depreciation by Forestry and the since divested Property operations was offset by lower depreciation and amortisation by Futuris Automotive and Elders.

59

Income Statement for the Year Ended 30 June 2007 Consolidated

Note2007$000

2006$000

Continuing operations

Sales revenue 2 3,090,792 3,176,844

Cost of sales (2,278,243) (2,342,463)

Other revenues 2 67,752 44,443

Other expenses 2 (794,067) (797,421)

Share of net profi ts/(losses) of associates and joint ventures accounted for using the equity method 7 41,205 49,187

Profi t/(loss) on sale of non current assets 2 6,218 7,273

Profi t/(loss) before net fi nance costs and income tax expense 133,657 137,863

Interest revenue 2 13,905 20,210

Finance costs 2 (54,003) (59,171)

Profi t/(loss) from continuing operations before income tax expense 93,559 98,902

Income tax (expense)/benefi t 4 (11,610) (16,234)

Profi t/(loss) from continuing operations after income tax expense 81,949 82,668

Net profi t of discontinued operations and gain on disposal of discontinued operations, net of tax 13 21,535 13,747

Net profi t/(loss) for the year 103,484 96,415

Attributable to:

Minority interest 2,769 8,976

Members of the parent 6 100,715 87,439

Reported Operations

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

Continuing Operations



Discontinued Operations



8

8

8

8

8

8

13.86¢

12.95¢

10.90¢

10.43¢

2.96¢

2.52¢

13.06¢

12.82¢

11.01¢

11.02¢

2.05¢

1.80¢

60

Discussion and Analysis of Balance Sheet

Futuris completed the year with lower borrowings and a moderately geared balance sheet despite the year’s seasonal conditions resulting in lower cash balances than has been customary.

Borrowings of $609.2 million were 18% lower than at the beginning of the year. Borrowings include $40.5 million arising from fi nancial instruments on debt.

Net debt rose from $202.0 million to $364.9 million as a result of lower cash balances than at the previous year. Cash at year end was $244.3 million, compared with $537.5 million at 30 June 2006, with the latter fi gure including funds of $136.2 million being held at the time for payment for ITC minority shareholdings in July 2006.

Gearing was 24% at 30 June, higher than the corresponding fi gure of 14% at 30 June 2006 due to the lower gearing and the reduction to shareholders’ equity made by the $85.9 million adjustment to bring the carrying value of AACo into line with Futuris land valuation policies (discussed below).

Year-end cash includes insurance reserves and cash held in trust totalling $183.2 million. If this restricted cash is excluded, net debt at year-end would be $548.1 million and gearing 35%.

Signifi cant movements in the balance sheet during the year included:

• Current inventories of $358.0 million were 21% lower due to the divestment of property development operations. Non-current inventories were also reduced by the divestment.

• Investments accounted for using the equity method declined from $598.8 million to $576.2 million. During the year accounting adjustments of ($85.9) million were made to align recognition of AACo land revaluations within Futuris group policy. Under the Group’s accounting policy, land used for carrying on a business is reported at cost whereas AACo policy revalues land to market value. The major increments to investments accounted for using the equity method were from reinvestment within Elders Rural Bank and investment in Aqa Oysters.

• Other fi nancial assets rose from $5.7 million to $38.7 million, with investments in Aspen Property Trust (made as part of the property divestment) and Clean Seas Tuna being the major factors.

• Property, plant and equipment rose by 11%, with the increments attributable to Elders and ITC.

• Investment properties rose from $192.6 million to $248.3 million, largely due to expansion of ITC’s land estate.

61

Balance Sheet as at 30 June 2007Consolidated

Note2007$000

2006$000

Current Assets

Cash and cash equivalents

Trade and other receivables

Livestock

Inventories

Derivative fi nancial instruments

Held for trading fi nancial assets

Other

244,310

633,465

55,121

357,978

3,031

-

112,581

537,521

594,566

71,898

451,454

5,096

20,341

107,574

Total Current Assets 1,406,486 1,788,450

Non Current Assets

Receivables

Forestry

Inventories

Other fi nancial assets

Investments in associates and joint ventures

Property, plant and equipment

Investment properties

Intangibles

Deferred tax assets

Other

4

190,310

21,421

1,638

38,736

576,150

220,448

248,257

288,323

79,813

26,853

153,647

17,164

33,814

5,662

598,819

198,345

192,591

270,641

76,675

25,646

Total Non Current Assets 1,691,949 1,573,004

Total Assets 3,098,435 3,361,454

Current Liabilities

Trade and other payables

Interest bearing loans and borrowings

Current tax payable

Provisions

4

889,567

214,204

61,341

204,455

985,757

235,413

26,100

193,231

Total Current Liabilities 1,369,567 1,440,501

Non Current Liabilities

Interest bearing loans and borrowings

Derivative fi nancial instruments

Deferred tax liabilities

Provisions

4

354,466

41,731

57,865

88,309

474,962

30,881

102,441

84,744

Total Non Current Liabilities 542,371 693,028

Total Liabilities 1,911,938 2,133,529

Net Assets 1,186,497 1,227,925

Equity

Contributed equity

Convertible notes – equity portion

Hybrid equity

Reserves

Retained earnings 6

608,493

54,263

145,151

(22,408)

392,959

577,717

57,384

145,151

63,843

371,367

Total Parent Entity Interest In Equity 1,178,458 1,215,462

Minority interest 8,039 12,463

Total Equity 1,186,497 1,227,925

62

Discussion and Analysis of Cash Flow Statement

Operating activities generated net cash fl ows of $85.0 million in 2007 compared with $127.4 million. Lower operating cash fl ow from Rural Services and Automotive due to lower sales activity was responsible for the reduction. All divisions, with the exception of the Property operations, generated positive operating cash fl ow.

Cash of $190.8 million was applied to investing activities during the year with property plant and equipment ($105.1 million) and investments ($77.0 million) being the principal applications. Forestry ($63.2 million, largely being for land and processing assets) and Elders ($27.0 million) were the major targets of capital expenditure activity. Payment for investments of $77.0 million included subscription to FEA rights, capital contribution to Elders Rural Bank, investment in the Chery Joint venture in China by Automotive and investments in aquaculture interests. Payment for ITC minorities resulted in a cash outfl ow of $136.2 million. Proceeds from the sale of property development operations resulted in an infl ow of $121.0 million.

63

Cash Flow Statement for the Year Ended 30 June 2007Consolidated

Note

2007$000

Infl ows (Outfl ows)

2006$000

Infl ows (Outfl ows)

Cash Flows From Operating Activities

Receipts from customers

Payments to suppliers and employees

Dividends received

Interest received

Interest and other costs of fi nance paid

GST (paid)/refunded

Income taxes (paid)/refunded

Other operating infl ows

8,858,049

(8,785,525)

33,843

13,979

(54,003)

(18,580)

4,915

32,347

8,876,564

(8,727,061)

26,276

20,210

(60,110)

(11,690)

(22,531)

25,698

Net operating cash fl ows 5 85,025 127,356

Cash Flows from Investing Activities

Payment for property, plant and equipment

Payment for investments

Payment for design and development

Proceeds from sale of property, plant and equipment

Proceeds from sale of investments

Loans to associated entities

Repayment of loans by related parties

Loans to growers

Loans repaid by growers

Loans to employees

Payment for minority interests in controlled entity

Payment for controlled entities, net of cash acquired

Proceeds from disposal of controlled entity

11(a)

11(b)

(105,147)

(77,013)

(6,252)

9,921

26,642

(22,932)

597

(4,909)

3,567

-

(136,222)

-

120,959

(137,689)

(70,324)

(7,385)

29,168

2,647

(26,924)

-

(2,811)

20,233

(10,991)

(42,659)

(5,416)

1,556

Net investing cash fl ows (190,789) (250,595)

Cash Flows From Financing Activities

Proceeds from issue of shares and other equity

Proceeds from borrowings

Repayment of borrowings

Proceeds from leasing

Principal repayments of lease liabilities

Dividends paid

Proceeds from rights issue by controlled entity (net)

2,570

95,904

(212,042)

636

(2,784)

(71,731)

-

265,762

175,269

(92,568)

3,521

(1,763)

(69,457)

14,193

Net fi nancing cash fl ows (187,447) 294,957

Net increase/(decrease) in cash held

Cash/(overdraft) at the beginning of the fi nancial year

(293,211)

537,521

171,718

365,803

Cash/(overdraft) at the end of the fi nancial year 244,310 537,521

64

Statement of Changes in Equity Year Ended 30 June 2007

Consolidated ($000) Issued Capital

Convertible Notes

Reserves Hybrid Equity

Retained Earnings

Minority Interest

Total Equity

As at 1 July 2006 577,717 57,384 63,843 145,151 371,367 12,463 1,227,925

Currency translation differences

Cash fl ow hedge reserve

Acquisition of minority interests in controlled entity

Partnership profi ts

-

-

-

-

-

-

-

-

(4,151)

2,140

-

-

-

-

-

-

-

-

-

-

-

-

(5,273)

(1,920)

(4,151)

2,140

(5,273)

(1,920)

Total income and expense for the period recognised directly in equity - - (2,011) - - (7,193) (9,204)

Profi t for year - - - - 100,715 2,769 103,484

Total income and expense for the period

Attributable to:

Equity holders of the parent

Minority Interest

- - (2,011) - 100,715 (4,424) 94,280

91,511

2,769

Equity Transactions:

Issue of share capital, employee share plan

Exercise of options

Cost of share based payments

Shares vested to employees (net)

Scrip consideration

Dividend Reinvestment Plan

Dividends to shareholders

Hybrid Equity Distribution

Convertible notes converted

Fair value revaluations of associate’s land and buildings (Note 1)

Recognition of share of reserve for losses in associate

11,542

2,571

-

-

2,984

5,793

-

-

7,886

-

-

-

-

-

-

-

-

-

-

(3,121)

-

-

-

-

3,726

(6,937)

-

-

-

-

-

(85,880)

4,851

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(65,393)

(8,879)

-

-

(4,851)

-

-

-

-

-

-

-

-

-

-

-

11,542

2,571

3,726

(6,937)

2,984

5,793

(65,393)

(8,879)

4,765

(85,880)

-

As at 30 June 2007 608,493 54,263 (22,408) 145,151 392,959 8,039 1,186,497

65

Statement of Changes in Equity Year Ended 30 June 2007 (continued)

Consolidated ($000) Issued Capital

Convertible Notes

Reserves Hybrid Equity

Retained Earnings

Minority Interest

Total Equity

As at 1 July 2005 454,420 54,576 46,616 - 355,081 121,627 1,032,320

Currency translation differences

Cash fl ow hedge reserve

Partnership profi ts

-

-

-

-

-

-

3,670

(5,396)

-

-

-

-

-

-

-

-

-

1,288

3,670

(5,396)

1,288

Total income and expense for the period recognised directly in equity

Profi t for year

-

-

-

-

(1,726)

-

-

-

-

87,439

1,288

8,976

(438)

96,415

Total income and expense for the period

Attributable to:

Equity holders of the parent

Minority Interest

- - (1,726) - 87,439 10,264 95,977

87,001

8,976

Equity Transactions:

Issue of share capital

Exercise of options


Shares vested to employees (net)

Share placement

Share placement direct costs

Issue of Hybrid Equity

Hybrid equity direct costs

Scrip consideration

Dividend Reinvestment Plan

Dividends to shareholders

Hybrid Equity Distribution

Fair value revaluations of associate’s land and buildings

Fair value revaluations of livestock carrier

Convertible notes reissued

Acquisition of minority interests in controlled entity

Recognition of share of reserve for losses in associate

-

5,646

-

-

112,000

(2,729)

-

-

5,694

2,686

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

2,808

-

-

-

-

5,035

(5,059)

-

-

-

-

-

-

-

-

24,237

(4,270)

-

-

(990)

-

-

-

-

-

-

150,000

(4,849)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(70,307)

(1,836)

-

-

-

-

990

14,193

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(133,621)

-

14,193

5,646

5,035

(5,059)

112,000

(2,729)

150,000

(4,849)

5,694

2,686

(70,307)

(1,836)

24,237

(4,270)

2,808

(133,621)

-

As at 30 June 2006 577,717 57,384 63,843 145,151 371,367 12,463 1,227,925

66

Notes to the Concise Report for the year ended 30 June 2007

Note 1. Basis of Preparation

This concise fi nancial report has been derived from the annual fi nancial statements which comply with the Corporations Act 2001, Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and Urgent Issues Group Consensus Views. This concise fi nancial report has been prepared in accordance with accounting standard AASB 1039 “Concise Financial Reports”, and the relevant provisions of the Corporations Act 2001. A full description of the accounting policies adopted by Futuris Corporation Ltd is provided in the annual fi nancial statements.

The accounting policies and disclosures are consistent with those of the previous fi nancial year, except for the following change:

Change in recognition of landTo 30 June 2006, land revaluations recognised by Australian Agricultural Company Limited (“AACo”), an associate, were also recognised by Futuris, through Futuris taking up its percentage ownership share of the revaluations through the Asset Revaluation Reserve. From 1 July 2006, Futuris has revised its land valuation policy, whereby all land that is used for the purposes of production or supply of goods is recognised at cost. Therefore in the Futuris accounts, adjustments have been made to the value reported by AACo for land revaluations. Accordingly, asset revaluations made by AACo will no longer be taken up by Futuris and all revaluations previously taken up, will be reversed. The effect is a reduction in the Asset Revaluation Reserve of $85,880,000, a reduction in the Deferred Tax Liability balance of $36,806,000 and a reduction in the investment in AACo of $122,686,000. Prior year comparatives have not been restated.

As a result of this adjustment there is no change to reported net income.

Note 2. Revenue and Expenses Consolidated

Note2007$000

2006$000

Sales revenue:


Sale of goods

Sale of biological assets

Commission and other selling charges

Construction contract revenue

Insurance premium revenue

Other sales related income

1,862,986

450,542

540,238

-

182,254

54,772

2,207,591

377,301

389,330

504

164,202

37,916

Discontinued operations 13

3,090,792

137,719

3,176,844

178,974

3,228,511 3,355,818

Other revenue:


Change in fair value of fi nancial assets

Dividends - other persons

Other

15,025

404

52,323

10,224

259

33,960


67,752

331

44,443

2,095

68,083 46,538

Interest revenue:


- Associated entities

- Other persons

389

13,516

398

19,812


13,905

74

20,210

-

13,979 20,210

67

Note 2. Revenue and Expenses (continued) Consolidated

Note2007$000

2006$000

Other expenses:


Distribution expenses

Marketing expenses

Occupancy expenses

Administrative expenses

Insurance claims & related expenses

Other expenses

418,239

26,100

11,692

101,985

165,680

70,371

412,514

34,742

13,052

106,677

150,148

80,288


794,067

8,474

797,421

8,513

802,541 805,934

Depreciation and amortisation:

Property, plant and equipment

Leased assets

Design and development

Patents, trademarks and other

29,593

1,563

4,576

1,857

26,579

1,518

7,863

767

37,589 36,727

Finance costs:

Interest expense - other persons

Finance lease charges

Other fi nance costs

58,347

727

2,296

65,635

875

2,759

Less borrowing costs capitalised

61,370

(7,367)

69,269

(10,098)

54,003 59,171

Specifi c net gains and (expenses):

Profi t (loss) on sale of non current assets

- Property, plant and equipment

- Profi t on sale of investments

- Profi t on sale of controlled entity

2,993

3,225

-

4,230

1,622

1,421

6,218 7,273

Telecommunications bid and establishment costs

Caversham sale

Hi-Fert acquisition benefi t

Redundancies and restructuring costs - Automotive

Write down of Westralia Property Trust (share of equity loss)

(9,566)

8,920

-

-

-

-

-

10,400

(8,800)

(1,931)

(646) (331)

Employee benefi t expense

- Wages and salaries

- Post employment benefi ts including superannuation

- Workers compensation

- Share based payments

(277,774)

(25,005)

(5,173)

(4,212)

(273,551)

(26,713)

(4,866)

(3,371)

(312,164) (308,501)

Impairment losses

Impairment reversals

(7,714)

7,445

-

-

(269) -


68

Note 2. Revenue and Expenses (continued) Consolidated

2007$000

2006$000

Discount on acquisitions - gain

Redundancies and restructuring costs

Research and development costs charged directly to expenses

Operating leases - minimum lease payments

Foreign exchange net gains/(losses)

Provision for doubtful debts and bad debts written off

4,100

(11,732)

-

(60,151)

(436)

1,315

-

-

(200)

(60,299)

1,444

(978)

Note 3. Dividends

a) Dividends proposed

Fully franked dividend of 5.5¢ per share (2006: 5¢ per share, fully franked) 40,463 36,046

This fi nal dividend was declared by Directors after year end and is payable on 24 October 2007.

b) Dividends paid during the year

Current year interim- fully franked dividend of 4¢ per share (2006: 4¢ per share, partly franked)

Previous year fi nal- fully franked dividend of 5¢ per share (2006: 5¢ per share, fully franked)

Hybrid distribution fully franked

29,233

36,160

8,879

26,656

33,200

1,836

74,272 61,692

Subsidiary Equity dividends on ordinary shares:

Dividends paid to external parties during the year

- Fully franked dividend of 5¢ per share paid or provided for as at 30 June 2006 - 10,451

74,272 72,143


69

Note 4. Income Tax Consolidated

2007$000

2006$000

(a) Major components of income tax expense are:

Income Statement

Current income tax

Current income tax charge

Reconciliation to tax returns

Deferred income tax

Origination and reversal of temporary differences

15,812

(5,877)

10,610

6,609

(4,312)

19,149

Income tax expense reported in income statement 20,545 21,446

Statement of Changes in Equity

Deferred income tax

Net loss on revaluation of cash fl ow hedges

Net gain on revaluation of land & buildings

Net gain on fair value revaluations of associate’s land and buildings

(2,624)

-

(36,806)

(2,319)

8,558

-

Income tax expense/(benefi t) reported in equity (39,430) 6,239

(b) A reconciliation of income tax expense applicable to accounting profi t before income tax at the statutory income tax rate to income tax expense at the Group’s effective income tax rate is as follows:

Accounting profi t before tax from:

- Continuing Operations

- Discontinuing Operations

93,559

30,470

98,902

18,959

Total Accounting profi t before tax 124,029 117,861

Income tax expense at 30% (2006: 30%)

Reconciliation to tax returns

Share of associate (profi ts)/losses

Non assessable (profi ts)/losses

Non deductible depreciation and amortisation

Non deductible other expenses

Concessional deductions

Employee Share Plan

Other

37,209

(5,877)

(8,405)

(2,636)

993

248

(500)

1,577

(2,064)

35,358

(4,312)

(14,756)

-

601

1,032

(140)

880

2,783

Income tax expense as reported in income statement 20,545 21,446

Aggregate Income tax expense is attributable to:

- Continuing Operations

- Discontinuing Operations

11,610

8,935

16,234

5,212

20,545 21,446

Current tax payable 61,341 26,100


70

Note 4. Income Tax (continued) Balance Sheet Income Statement

2007$000

2006$000

2007$000

2006$000

Deferred income tax at 30 June relates to the following:

Consolidated

Deferred income tax liabilities

Revaluations of investment properties to fair value

Revaluations of associate’s assets

Revaluations of foreign exchange contracts (cash fl ow hedges) to fair value

Deferred expenses

Shares in associated entities

Exchange rates to fair value

Non-assessable accrued income

Forestry assets (standing timber)

Plant and equipment temporary differences

Prepayments

Research and development

Other debtors

Other

(4,508)

-

(2,089)

(742)

(3,748)

(3,957)

(7,948)

(4,010)

(5,532)

(170)

(12,192)

-

(12,969)

(326)

(36,756)

2,438

(11,503)

(3,849)

(1,032)

(19,061)

(1,913)

(7,505)

4,155

(10,599)

(5,309)

(11,181)

-

-

1,903

(575)

(101)

2,925

(9,320)

2,097

4,077

4,325

1,593

(1,328)

2,380

346

-

(119)

9,532

3,849

882

10,653

104

6,980

(4,280)

(2,479)

5,145

4,884

Gross deferred income tax liabilities (57,865) (102,441) 7,976 35,497

Deferred income tax assets

Losses available to offset against future taxable income

Provision for employee entitlements

Other provisions

Forestry product investment income

Accrued expenditure

Deferred borrowing costs

Other capitalised expenses

Other

20,972

16,685

15,585

12,068

1,107

1,156

2,065

10,175

23,226

19,128

16,106

11,545

1,621

1,141

1,056

2,852

2,254

2,443

521

(523)

514

(15)

(1,009)

(1,551)

(4,171)

1,134

(9,515)

4,492

(355)

(1,141)

(431)

(6,361)

Gross deferred income tax assets 79,813 76,675 2,634 (16,348)

Deferred income tax charge 10,610 19,149


71

Note 5. Notes to the Cashflow Statement Consolidated

2007$000

2006$000

(a) Reconciliation of net profi t after tax to net cash fl ows from operations

Profi t after income tax expense

Depreciation and amortisation

Share of associates and joint venture (profi t)

Dividends from associates

Fair value adjustments to fi nancial assets

Impairment of assets

Movement in provision for:

- doubtful debts

- employee entitlements

- redundancy provision

- other provisions

Deferred tax asset

Deferred income tax

Provision for tax

Net profi t on sale of non-current assets

Net profi t on sale of controlled entity


Other non cash items

103,484

37,589

(41,205)

33,843

(15,025)

269

(2,035)

4,102

-

7,372

(3,138)

(7,770)

35,241

(6,218)

(8,920)

3,726

(13,055)

96,415

36,727

(49,187)

26,017

(11,867)

6,289

(1,737)

10,902

(454)

632

(15,065)

41,963

(5,497)

(5,852)

(1,421)

5,035

(5,171)

Operational cash fl ow generated 128,260 127,729

Change in operating assets and liabilities net of effects of acquisitions and disposals of entities and the consolidation of controlled entities:

- (Increase)/decrease in receivables and other assets

- (Increase)/decrease in inventories

- Increase/(decrease) in payables and accruals

(30,230)

(21,145)

8,140

(50,493)

71,372

(21,252)

Net cash fl ows from operating activities 85,025 127,356

(b) Non cash fi nancing and investing activities

During the fi nancial year the following non-cash transactions occurred. These transactions are not refl ected in the cash fl ow statement:

• the issue of 2,939,852 ordinary shares for the value of $5.8m under the terms of the dividend reinvestment plan (2006: 1,226,603 ordinary shares for $2.7m).

• receivables of $20.5m were settled by way of conversion into an equity interest in 2007.

Note 6. Retained Earnings

Retained earnings at the beginning of the fi nancial year

Application of AASB 132 and AASB 139, 1 July 2005

Net profi t attributable to members

Dividends provided for or paid

Movements in equity (refer to Statement of Changes in Equity)

371,367

-

100,715

(74,272)

(4,851)

351,397

3,684

87,439

(72,143)

990

Retained earnings at the end of the fi nancial year 392,959 371,367


72

Note 7. Details of Equity Accounted Associates and Joint Ventures

Name of Associate or Joint VenturePrincipal activity of Associate or Joint Venture Ownership Interest

Contribution to net profi t or (loss)

2007%

2006%

2007$000

2006$000

Air International Thermal (US) Holdings Inc Automotive 35 35 389 6,405

Air International Thermal (Belgium) NC Automotive 35 35 - (1,598)

Australian Agricultural Company Ltd Beef production 43 43 5,210 6,057

AWH Pty Ltd (formerly Australian Wool Handlers Pty Ltd)

Wool processing 50 50 6,116 4,992

Elders Rural Bank Ltd Financial Services 50 50 17,864 15,476

Forest Enterprises Australia Ltd Forestry 31 27 6,400 5,500

Hi-Fert Pty Ltd Fertiliser 50 50 803 11,855

Webster Ltd Agribusiness 27 25 2,000 1,800

Amcom Ltd Telecommunications 49 30 3,000 1,000

Other (577) (2,300)

41,205 49,187


73

Note 8. Earnings per Share Consolidated

2007$000

2006$000

The following refl ects the net profi t and share data used in the calculations of earnings per share (EPS):

Reported Operations

Basic

Net profi t attributable to members (after tax)

Dilutive

Operating profi t after tax

Interest on convertible notes

100,715

100,715

10,148

87,439

87,439

10,148

Net profi t attributable to members (after tax) adjusted for the effect of convertible notes 110,863 97,587

Continuing Operations

Basic

Net profi t attributable to members (after tax)

Less: Net profi t of discontinued operations (net of tax)

100,715

(21,535)

87,439

(13,747)

Net profi t of continued operations (net of tax) 79,180 73,692

Dilutive

Net profi t of continued operations (net of tax)

Interest on convertible notes

79,180

10,148

73,692

10,148

Net profi t of continued operations (net of tax) adjusted for the effect of convertible notes 89,328 83,840

Discontinuing Operations

Net profi t of discontinued operations (net of tax) 21,535 13,747

Weighted average number of ordinary shares (‘000) used in calculating basic EPS 726,666 669,604

Dilutive share options (‘000) 129,568 91,485

Adjusted weighted average number of ordinary shares used in calculating dilutive EPS (‘000) 856,234 761,089

Convertible notes of 57,119,165 have been included in the calculation of dilutive EPS, as they are believed to be dilutive, given the current share price compared with the conversion price.

Hybrid notes have been included in the calculation of dilutive EPS, as they are believed to be dilutive.

Basic underlying earnings per share (cents per share) 14.00¢ 13.18¢

Diluted underlying earnings per share (cents per share) 13.07¢ 12.93¢

Underlying earnings are earnings from ordinary activities adjusted for specifi c non recurring items.

Non recurring items (net of tax) used in calculating underlying basic and dilutive EPS is $1,047,000 (2006: $811,000).


74

Note 9. Segment Information

The Group is organised and managed separately according to the nature of the products and services provided. The consolidated entity comprises the following distinguishable components; Rural Services, Financial Services, Forestry, Automotive Components, Property and Investment & Other.

Rural Services include the provision of a range of agricultural products and services through a common distribution channel and its associate Australian Agricultural Company Ltd (2006: Rural Services included Financial Services as one segment, comparatives have been restated to refl ect this change).

Financial Services include the provision of a range of fi nancial services through a common distribution channel and its associate Elders Rural Bank (2006: Financial Services was included in Rural Services as one segment, comparatives have been restated to refl ect this change).

Forestry includes the Group’s interests in forestry plantations and processing.

Automotive Components include the manufacturing and sales of Automotive components of which the key components are seating, heating ventilating and air-conditioning systems (2006: includes the Rail and Bus division).

Property includes the sale and development of land and commercial developments (2006: included an equity interest in a listed property trust now recognised in Investment & Other). During the 2007 fi nancial year, the Property division was sold.

The Investment & Other segment includes the general investment activities not associated with the other business segments and the administrative corporate offi ce activities, this includes the Rail and Bus division for 2007 (2006: included in Automotive components).

Segment results have been determined on a consolidated basis and represent the earnings before corporate net borrowing costs and income tax expense.

The Group operates predominantly within Australia. All other geographical operations are not material to the fi nancial statements.


75

Note 9. Segment Information (continued)

Business Segments

Rural Services

Financial Services

Forestry Automotive Components

Property Investment & Other

Total

2007 $000 $000 $000 $000 $000 $000 $000

External sales 2,309,531 203,961 173,850 329,871 137,719 73,579 3,228,511

Other revenue 29,281 12,272 20,575 16,334 407 18,331 97,200

Share of net profi t (loss) of associates 12,844 17,864 6,365 (1,242) - 5,374 41,205

Total revenue 2,351,656 234,097 200,790 344,963 138,126 97,284 3,366,916

Underlying EBIT 56,289 27,192 56,929 9,520 21,476 (6,707) 164,699

Signifi cant items - - - - 8,920 (9,566) (646)

Segment Result 56,289 27,192 56,929 9,520 30,396 (16,273) 164,053

Earnings before interest, tax, depreciation & amortisation 71,501 27,259 61,899 27,752 30,450 (17,219) 201,642

Depreciation & amortisation (15,212) (67) (4,970) (18,232) (54) 946 (37,589)

Segment Result 56,289 27,192 56,929 9,520 30,396 (16,273) 164,053

Corporate net interest expense (40,024)

Profi t from ordinary activities before tax 124,029

Segment assets 1,134,287 615,490 672,106 197,639 - 337,346 2,956,868

Unallocated assets (including tax assets) - - - - - - 141,567

Segment liabilities 566,807 390,662 81,165 82,428 - 62,412 1,183,474

Unallocated liabilities (including tax liabilities) - - - - - - 728,464

Carrying value of equity investments 274,431 129,497 85,526 18,354 - 68,342 576,150

Acquisition of property, plant & equipment, intangible assets and other non current assets, including design and development 39,768 2,688 93,180 38,148 - 6,244 180,028

Non cash expenses other than depreciation and amortisation (2,262) - 612 (7,732) 9 (197) (9,570)

Profi t/(loss) on sale of investments (146) - - - - 3,371 3,225


76

Note 9. Segment Information (continued)

Business Segments

Rural Services

Financial Services



Total

2006 $000 $000 $000 $000 $000 $000 $000

External sales 2,364,538 185,672 159,239 457,225 189,144 - 3,355,818

Other revenue 36,602 10,674 3,881 16,717 1,263 9,511 78,648

Share of net profi t (loss) of associates 25,883 15,476 5,500 4,717 (1,444) (945) 49,187

Total revenue 2,427,023 211,822 168,620 478,659 188,963 8,566 3,483,653

Underlying EBIT 59,691 26,939 39,922 20,758 18,230 (8,387) 157,153

Signifi cant items 6,100 - - (4,500) (1,931) - (331)

Segment Result 65,791 26,939 39,922 16,258 16,299 (8,387) 156,822

Earnings before interest, tax, depreciation & amortisation 77,347 28,854 43,480 35,761 16,463 (8,356) 193,549

Depreciation & amortisation (11,556) (1,915) (3,558) (19,503) (164) (31) (36,727)

Segment Result 65,791 26,939 39,922 16,258 16,299 (8,387) 156,822

Corporate net interest expense (38,961)

Profi t from ordinary activities before tax 117,861

Segment assets 1,212,803 663,136 512,578 216,388 257,684 55,901 2,918,490

Unallocated assets (including tax assets) - - - - - - 442,964

Segment liabilities 517,586 387,788 91,484 108,091 16,900 133,294 1,255,143

Unallocated liabilities (including tax liabilities) - - - - - - 878,386

Carrying value of equity investments 390,322 133,888 50,372 2,621 20,571 1,045 598,819

Acquisition of property, plant & equipment, intangible assets and other non current assets, including design and development 30,361 2,873 104,884 18,169 - 43 156,330

Non cash expenses other than depreciation and amortisation 4,973 (165) 22 3,121 1,088 1,065 10,104

Profi t/(loss) on sale of investments 784 - - - - 2,259 3,043


77

Note 10. Supplementary Statement Of Net Debt By Segment

Business Segments

Rural Services

Financial Services



Total

2007 $000 $000 $000 $000 $000 $000 $000

Earnings before interest & tax


Equity accounted earnings

Dividends received from associates

Profi t/loss on sale of property, plant & equipment

Profi t on sale of investments

Profi t on sale of controlled entities

Profi t on sale of investment properties

Discount on acquisition

Interest (net)

Tax (paid)/refund

Share based payments

Impairment losses/(reversals)

Fair value adjustments on fi nancial assets

Provisions and other

56,289

15,212

(12,844)

20,430

(3,736)

146

-

-

-

(4,307)

2,968

2,625

(1,851)

-

(15,041)

27,192

67

(17,864)

11,630

4

-

-

-

-

12,272

(5,864)

149

1,311

-

2,392

56,929

4,970

(6,365)

1,235

(276)

-

-

(235)

(1,600)

683

504

588

599

(15,025)

(20,654)

9,520

17,142

1,345

-

1,015

-

-

-

(2,500)

82

(2,756)

626

(2,467)

-

10,452

30,396

54

-

-

-

-

(8,920)

-

-

(74)

-

40

-

-

(15,583)

(16,273)

144

(5,477)

548

-

(3,371)

-

-

-

(48,680)

10,063

(302)

2,677

-

37,478

164,053

37,589

(41,205)

33,843

(2,993)

(3,225)

(8,920)

(235)

(4,100)

(40,024)

4,915

3,726

269

(15,025)

(956)

Operating cash fl ow before movements in working capital

Movement in working capital

59,891

42,219

31,289

(7,526)

21,353

(16,001)

32,459

(11,556)

5,913

(24,665)

(23,193)

(25,158)

127,712

(42,687)

Operating cash fl ow 102,110 23,763 5,352 20,903 (18,752) (48,351) 85,025

Capital expenditure

Proceeds on sale of property, plant and equipment

Proceeds sale of investments

Proceeds sale of controlled entity

Payments for investments and other

D&D capitalised

Loans to associated parties (net)

Loans from growers (net)

Acquisition of controlled entity (net)

(27,042)

5,447

68

-

(15,414)

-

(18,715)

-

(5,361)

(734)

13

-

-

(7,650)

-

-

-

-

(63,156)

4,138

-

-

(30,024)

-

597

(1,342)

-

(14,215)

323

-

-

(20,300)

(6,252)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

26,574

120,959

(3,625)

-

(4,217)

-

(130,861)

(105,147)

9,921

26,642

120,959

(77,013)

(6,252)

(22,335)

(1,342)

(136,222)

Investing cash fl ow (61,017) (8,371) (89,787) (40,444) - 8,830 (190,789)


Dividends paid

-

-

-

-

-

(5,532)

-

-

-

-

2,570

(66,199)

2,570

(71,731)

Other fl ows - - (5,532) - - (63,629) (69,161)

Total 41,093 15,392 (89,967) (19,541) (18,752) (103,150) (174,925)

Opening net debt

Total fl ows

Convertible notes classifi ed as debt converted to equity during the year (non cash movement)

Fair value adjustments to debt

(202,012)

(174,925)

4,765

7,224

Closing net debt (364,948)


78

Note 10. Supplementary Statement Of Net Debt By Segment (continued)

Business Segments

Rural Services

Financial Services



Total

2006 $000 $000 $000 $000 $000 $000 $000

Earnings before interest & tax


Equity accounted earnings

Dividends received from associates

Profi t/loss on sale of property, plant & equipment

Profi t on sale of investments

Profi t on sale of controlled entities

Interest (net)

Tax (paid)/refund

Share based payments

Impairment losses

Fair value adjustments

Provisions and other

65,232

11,556

(25,883)

13,423

(3,816)

(784)

-

(10,845)

(26,521)

2,754

-

(16,555)

(18,060)

27,498

1,915

(15,476)

11,800

-

-

-

12,084

427

138

166

-

31,655

39,922

3,558

(5,500)

794

(392)

-

-

(2,761)

(13,783)

322

-

4,627

1,382

16,258

19,503

(4,717)

-

(22)

-

-

50

(1,631)

674

332

-

(7,397)

16,299

164

1,444

-

-

-

-

(33)

-

120

1,164

-

2,743

(8,387)

31

945

-

-

(838)

(1,421)

(38,395)

18,977

1,027

-

61

22,443

156,822

36,727

(49,187)

26,017

(4,230)

(1,622)

(1,421)

(39,900)

(22,531)

5,035

1,662

(11,867)

32,224

Operating cash fl ow before movements in working capital

Movement in working capital

(10,041)

136,742

70,207

(38,566)

28,169

(50,005)

23,050

17,528

21,901

(47,253)

(5,557)

(18,819)

127,729

(373)

Operating cash fl ow 126,701 31,641 (21,836) 40,578 (25,352) (24,376) 127,356

Capital expenditure

Proceeds on sale of property, plant and equipment

Proceeds sale of investments

Proceeds sale of controlled entity

Payments for investments and other

D&D capitalised

Loans to associated parties (net)

Loans from growers (net)

Loans to employees

Acquisition of controlled entity (net)

(20,752)

23,000

879

-

(36,736)

-

(2,869)

-

(9,059)

(17,184)

(1,226)

-

-

-

(1,647)

-

-

-

-

-

(104,884)

6,125

-

-

(11,179)

-

(3,607)

17,422

-

(532)

(10,784)

43

-

-

(2,131)

(7,385)

-

-

(1,515)

-

-

-

-

-

-

-

-

-

(139)

-

(43)

-

1,768

1,556

(18,631)

-

(20,448)

-

(278)

(30,359)

(137,689)

29,168

2,647

1,556

(70,324)

(7,385)

(26,924)

17,422

(10,991)

(48,075)

Investing cash fl ow (62,069) (3,525) (96,655) (21,772) (139) (66,435) (250,595)


Dividends paid

-

-

-

-

14,193

(10,451)

-

-

-

-

268,448

(61,692)

282,641

(72,143)

Other fl ows - - 3,742 - - 206,756 210,498

Total 64,632 28,116 (114,749) 18,806 (25,491) 115,945 87,259

Opening net debt

Total fl ows

Reclassifi cation of debt to equity

Fair value adjustments to debt

(314,761)

87,259

54,576

(29,086)

Closing net debt (202,012)


79

Note 11. Changes in the Composition of the Entity

(a) Controlled Entities Acquired

The following controlled entities were acquired by the Group at the date stated and their operating results have been included within the income statement from the relevant date.

Consolidated

Equity and cash consideration paidDate

Controlled

Proportion of Shares

Controlled

2007

$000 2006$000

PlantTech Pty Limited 2/9/05 100% - 5,416

- 5,416

The consolidated entity also acquired during the fi nancial year the remaining minority interest in controlled entity, Integrated Tree Cropping Ltd.

The aggregate amounts of assets and liabilities acquired by major class are:

Cash - (3,351)

Receivables - 2,133

Inventories - 2,976

Investments - 971

Property, plant and equipment - 127

Goodwill - 3,672

Other assets - 64

Tax assets and liabilities - 1,606

Creditors and provisions - (6,133)

- 2,065

Outfl ow of cash to acquire the entities, net of cash acquired:

Cash consideration - (2,065)

Cash balance acquired - (3,351)

Net outfl ow of cash - (5,416)

The fair value of the assets and liabilities recognised on acquisition required no changes from the carrying value of the assets and liabilities acquired.

(b) Controlled Entities Disposed

On 10 May 2007, the Group sold certain Caversham companies, taking a 25% interest in the Aspen Development Fund. The companies disposed of were as follows:

Caversham Property Pty Ltd

Caversham Property Developments Pty Ltd

Bradwell Pty Ltd


80

Note 11. Changes in the Composition of the Entity (continued)

(b) Controlled Entities Disposed (continued)

Details of the disposals are as follows:

Consolidated

2007$000

2006$000

Proceeds received on disposal of shares

Cash

Deferred settlement

Investment in Aspen Development Fund

Less costs of disposal

120,959

63,418

22,500

(27,653)

1,556

-

-

-

179,224 1,556

The carrying amounts of assets and liabilities disposed of by major class are:

Receivables

Inventories

Other assets

Property, plant & equipment

Investment properties

Payables

Provisions

6,686

158,622

-

139

9,352

(4,366)

(129)

2,366

5,753

806

1,389

-

(12,284)

(631)

Net assets/(liabilities) of entity sold

Unrealised amounts eliminated

170,304

-

(2,601)

4,022

Profi t on disposal (before tax) 8,920 1,421

In 2006, the Group sold down equity in Australian Fine China, retaining 48% equity interest.

Note 12. Subsequent Events

Subsequent to year end, Futuris and an associated entity, Webster Limited, have reached an in-principle agreement, subject to shareholder approvals, successful divestment of Webster’s non-core industrial operations, due diligence and valuations, to:

• transfer Futuris’ aquaculture and horticulture interests to Webster for a purchase price of $37.6m in exchange for 26,857,143 ordinary shares in Webster at $1.40 per share.

• provide Webster with $25m secured loan facility convertible at $1.40 per ordinary share.

No other matter or circumstance has arisen since the end of the fi nancial year which is not otherwise dealt with in this report or in the consolidated fi nancial statements, that has signifi cantly affected or may signifi cantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent fi nancial years.


81

Note 13. Discontinued Operations and Businesses Disposed

Particular companies within the Property division were disposed of on 10 May 2007 and is reported as a discontinued operation. This note shows the results of the continuing businesses and the discontinued business.

For the year ended 30 June

Continuing2007$000

Discontinued2007$000

Consolidated2007$000

Continuing2006$000



Sales revenue 3,090,792 137,719 3,228,511 3,176,844 178,974 3,355,818

Cost of sales (2,278,243) (108,100) (2,386,343) (2,342,463) (153,597) (2,496,060)

Other revenues 67,752 331 68,083 44,443 2,095 46,538

Other expenses (794,067) (8,474) (802,541) (797,421) (8,513) (805,934)

Share of net profi ts of associates and joint ventures accounted for using the equity method 41,205 - 41,205 49,187 - 49,187

Profi t on sale of non current assets 6,218 8,920 15,138 7,273 - 7,273

Profi t before net borrowing costs and tax expense 133,657 30,396 164,053 137,863 18,959 156,822

Interest revenue 13,905 74 13,979 20,210 - 20,210

Borrowing costs (54,003) - (54,003) (59,171) - (59,171)

Profi t before tax expense 93,559 30,470 124,029 98,902 18,959 117,861

Income tax expense (11,610) (8,935) (20,545) (16,234) (5,212) (21,446)

Net profi t for year 81,949 21,535 103,484 82,668 13,747 96,415

Net profi t attributable to minority interest (2,769) - (2,769) (8,976) - (8,976)

Net profi t attributable to members of the parent entity 79,180 21,535 100,715 73,692 13,747 87,439

Revenue and Expenses

Sales revenue:

Sale of goods 2,313,528 43,068 2,356,596 2,584,892 63,855 2,648,747

Commission and other selling charges 540,238 - 540,238 389,330 - 389,330

Construction contract revenue - 93,634 93,634 504 115,119 115,623

Insurance premium revenue 182,254 - 182,254 164,202 - 164,202

Other sales related income 54,772 1,017 55,789 37,916 - 37,916

3,090,792 137,719 3,228,511 3,176,844 178,974 3,355,818

Other expenses:

Distribution expenses 418,239 - 418,239 412,514 - 412,514

Marketing expenses 26,100 - 26,100 34,742 94 34,836

Occupancy expenses 11,692 283 11,975 13,052 339 13,391

Administrative expenses 101,985 8,191 110,176 106,677 6,342 113,019

Insurance claims & related expenses 165,680 - 165,680 150,148 - 150,148

Other expenses 70,371 - 70,371 80,288 1,738 82,026

794,067 8,474 802,541 797,421 8,513 805,934


82

Note 13. Discontinued Operations and Businesses Disposed (continued)

Revenue and Expenses (continued)

Continuing2007$000



Continuing2006$000



Profi t on sale of non current assets

- property, plant and equipment

- investments

- controlled entities

2,993

3,225

-

-

-

8,920

2,993

3,225

8,920

4,230

1,622

1,421

-

-

-

4,230

1,622

1,421

6,218 8,920 15,138 7,273 - 7,273

Cash fl ow information – discontinued operations

The net cash fl ow of the divested Property Division are as follows:

Operating activities

Net cash infl ow

2007$000

7,640

7,640

Note 14. Changes in Contingent Liabilities and Assets

Taxation

During the year the Group received amended assessments denying capital losses previously utilised. The capital losses in dispute arose from the sale of the goodwill and other intangibles associated with the Elders wool handling business in 1998. The Group is of the opinion that no provisioning is required in respect of the amended assessments.

The Group has previously advised of the audit by the Australian Taxation Offi ce (ATO) of the tax treatment of the sale of the Building Products Division in October 1997, for which amended assessments were issued. The Group objected to the amended assessments. The Group has also successfully challenged the validity of one of the assessments in the Full Federal Court of Australia. The ATO have fi led an application for leave to the High Court of Australia on the matter. At 30 June 2007, the provision for taxation is suffi cient to cover any anticipated payments under the assessments, should the ATO be ultimately successful.

The Group’s tax returns for 2002 and 2003 are being audited as part of the ATO’s large business audit program. Except as disclosed above, no other amended assessment have been received.

Other guarantees

(a) Futuris Corporation Limited has entered into a Deed of Cross Guarantee with certain controlled entities. The effect of this Deed is that Futuris Corporation Limited and each of these controlled entities has guaranteed to pay any defi ciency of any of the companies party to the Deed in the event of any of those companies being wound up.

(b) Futuris Corporation Limited and certain entities in the Group are parties to various guarantees and indemnities pursuant to bank facilities and operating lease facilities extended to the Group and commitments under the convertible and unsecured notes on issue.

Note 15. Full Financial Report

Further fi nancial information can be obtained from the full fi nancial report, which is available, free of charge, on request from the company. This concise report cannot be expected to provide as full an understanding of the fi nancial performance, fi nancial position and fi nancing and investing activities of the consolidated entity as the full fi nancial report. A copy may be requested by calling (08) 8425 4999. Alternatively, both the full fi nancial report and the concise report can be accessed at our website at www.futuris.com.au


83

Directors’ Declaration

In the opinion of the directors of Futuris Corporation Limited the accompanying concise fi nancial report of the consolidated entity, comprising Futuris Corporation Limited and its controlled entities for the year ended 30 June 2007,

(a) has been derived from or is consistent with the full fi nancial report for the fi nancial year; and

(b) complies with Accounting Standard AASB 1039 Concise Financial Reports.

Signed in accordance with a resolution of directors.

G D WaltersDirector

L P WozniczkaDirector

Adelaide 6 September 2007

84

Independent audit report to members of Futuris Corporation Limited

Report on the Concise Financial Report

The accompanying concise fi nancial report of Futuris Corporation Limited comprises the balance sheet as at 30 June 2007, the income statement, cash fl ow statement and statement of changes in equity for the year then ended and related notes, derived from the audited fi nancial report of Futuris Corporation Limited for the year ended 30 June 2007. The concise report also includes the discussion and analysis and the directors’ declaration. The concise fi nancial report does not contain all the disclosures required by Australian Accounting Standards.

Directors’ Responsibility for the Concise Financial Report

The directors are responsible for the preparation and fair presentation of the concise fi nancial report in accordance with Accounting Standard AASB 1039 Concise Financial Reports and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of a concise fi nancial report; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on the concise fi nancial report based on our audit procedures. We have conducted an independent audit, in accordance with Australian Auditing Standards, of the fi nancial report of Futuris Corporation Limited for the year ended 30 June 2007. Our audit report on the full fi nancial report was signed on 6 September 2007. The Australian Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the fi nancial report for the year is free from material misstatement.

Our procedures in respect of the concise fi nancial report included testing that the information in the concise fi nancial report is derived from, and is consistent with, the fi nancial report for the year, and examination on a test basis, of evidence supporting the amounts, discussion and analysis and other disclosures which were not directly derived from the fi nancial report for the year. These procedures have been undertaken to form an opinion whether, in all material respects, the concise fi nancial report complies with Accounting Standard AASB 1039 Concise Financial Reports and whether the discussion and analysis complies with the requirements laid down in AASB 1039 Concise Financial Reports.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have met the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, signed on 6 September 2007, a copy of which is included in the Directors’ Report. In addition to our audit of the full and concise fi nancial reports, we were engaged to undertake the services disclosed in the notes to the full fi nancial report. The provision of these services has not impaired our independence.

Auditor’s Opinion

In our opinion the concise fi nancial report, including the discussion and analysis and directors’ declaration, of Futuris Corporation Limited for the year ended 30 June 2007 complies with Accounting Standard AASB 1039 Concise Financial Reports.

Ernst & Young

Alan HeraldPartnerAdelaide6 September 2007

85

Share Registry

Computershare Investor Services Pty LtdLevel 5, 115 Grenfell Street, Adelaide, South Australia, 5000Telephone: 1300 55 61 61 Facsimile: +61 (0)8 8236 2305Website: www.computershare.com.au

Enquiries and share registry address

Shareholders with enquiries about their shareholdings should contact the Company’s share registry, Computershare Investor Services Pty Ltd, on telephone: 1300 55 61 61

Online shareholder information

Shareholders can obtain information about their holdings or view their account instructions online, as well as download forms to update their holder details. For identifi cation and security purposes, you will need to know your Holder Identifi cation (HIN/SRN), Surname/Company Name and Post/Country Code to access. This service is accessible via the Investor Centre on the Company’s website or direct via the Computershare website.

Dividends

The fi nal dividend of 5.5 cents per share will be paid on 24 October 2007, to shareholders entitled to receive dividends and registered in the books of the Company at the close of business on 8 October 2007. The dividend will be franked to 5.5 cents per share for Australian tax purposes. No Australian withholding tax will be deducted from dividends paid to shareholders who are resident overseas.

Change of address

Shareholders who have changed their address should advise Computersharein writing. Written notifi cation can be mailed or faxed to Computershare at the address given above and must include both old and new addresses and the security reference number (SRN) of the holding. Change of address forms are available for download from either the Company’s or Computershare’s website. Alternatively, holders can amend their details on-line via Computershare’s website. Shareholders who have broker sponsored holdings (HIN) should contact their broker to update these details.

Forms for download

All forms relating to amendment of holding details and holder instructions to the Company are available for download from either the Company’s or Computershare’s website.

Investor information

Information about the Company is available from a number of sources:

• Website: www.futuris.com.au

• E-news: Shareholders can nominate to receive company information electronically. This service is hosted by Computershare and holders can register via the Investor Centre on the Company’s website or direct via Computershare’s website.

• Publications: the annual report is the major printed source of company information. The annual report comprises two documents: the Annual Review and the Annual Financial Report. Other publications include the Half-yearly report, company press releases, presentations and Open Briefi ngs. All publications can be obtained either through the Company website or by contacting the Company.

• Direct enquiry with the Manager, Investor Relations, Mr Don Murchland by telephone 08 8425 4617 or via email [email protected]. Securities analysts, institutional and other potential investors seeking information about the Company should contact Don Murchland.

Shareholder Information

Tax and dividend/interest payments

Futuris is obliged to deduct tax from dividend/interest payments (which are not fully franked) to holders registered in Australia who have not quoted their tax fi le number (TFN) to the Company. Shareholders who have not already quoted their TFN can do so by contacting Computershare. A notifi cation form is available from either the Company’s or Computershare’s website.

Direct payment to bank accounts

Dividend and interest payments may be paid direct to bank, building society or credit union accounts in Australia. Shareholders who wish their dividends/interest payments to be paid this way must advise Computershare in writing. Direct credit advice forms can be obtained upon request from Computershare or via either the Company’s or Computershare’s website. Instructions relating to the 2007 fi nal dividend must be received by the record date of 8 October 2007.

Annual Report mailing List

Shareholders who wish to vary their annual report mailing arrangements should advise Computershare in writing. Electronic versions of the report are available to all via the Company’s website. Annual Review or Annual Financial Reports will be mailed to all shareholders who elect to be placed on the mailing list for these documents. Report election forms can be downloaded from either the Company’s or Computershare’s website.

Shareholders’ Calendar*

2007

July 1 Start of 2008 fi nancial year

August 9 Announcement of full year result and fi nal dividend

October 8 Record date for fi nal dividend/DRP participation

October 23 Annual General Meeting

October 24 Payment of fi nal dividend

December 18-24 Final Conversion Period – 7% subordinated unsecured redeemable convertible notes

December 31 Convertible Notes Mature

2008

February 7 Announcement of half-year fi nancial results

June 30 End of fi nancial year

August 7 Announcement of 2008 full year results

*Dates may be subject to change

86

(a) Distribution of Equity Securities as at 20 August 2007

Ordinary Shares Convertible Notes Hybrids

1 - 1000 8,405 239 2,475

1,001 - 5000 13,718 871 93

5,001 - 10000 6,577 517 11

10,001 - 100000 4,488 359 14

100,001 - maximum 207 22 0

33,395 2008 2,593

The number of holders holding less than a marketable parcel 222 9 0

(b) Voting rights i) Ordinary Shares: all ordinary shares carry one vote per share without restriction. ii) Convertible Notes: Convertible notes do not carry any voting rights under the Company’s constitution iii) Futuris Hybrids: Hybrids do not carry any voting rights under the Company’s constitution.

(c) Stock Exchange quotation The company’s ordinary shares, 7.0% subordinated unsecured redeemable convertible notes and Futuris Hybrids are listed on the Australian Securities Exchange. The home exchange in Melbourne.

(d) Twenty Largest Shareholders as at 20 August 2007 The twenty largest holders of ordinary shares, 7% subordinated unsecured redeemable convertible notes and Futuris Hybrids.

Shareholder No. of Shares No. of Notes Hybrids

HSBC Custody Nominees (Australia) Limited 112,618,144 3,079,999 84,128J P Morgan Nominees Australia Limited 85,752,686 12,977,203 68,697National Nominees Limited 63,392,460 914,432 75,873Citicorp Nominees Pty Limited 69,930,466 4,293,115 35,541Pacifi c Agrifoods P/l 33,545,578 - -Cogent Nominees Pty Limited 26,106,431 - - ANZ Nominees Limited 26,181,284 3,162,097 52,131Studio Nominees Pty Ltd 23,546,181 - - Ms Helen Elizabeth Watkins 8,403,579 - -Ms Lucy Pamela Christian 7,193,579 - - AMP Life Limited 6,911,726 907,466 - Queensland Investment Corporation 5,700,295 - - Jalnex Pty Limited 3,189,065 - - CPU Share Plans Pty Ltd 3,181,937 - - UBS Wealth Management Australia Nominees Pty Ltd 3,053,225 - - Mccusker Holdings Pty Ltd 2,500,000 402,000 -UBS Nominees Pty Ltd 2,367,690 - 56,909Plan B Trustees Limited 2,200,000 - - Argo Investments Limited 2,000,000 1,000,000 -Ambre Nominees Pty Ltd 1,893,443 - - Brispot Nominees Pty Ltd - 6,506,579 -Pan Australian Nominees Pty Limited - 3,523,144 -RBC Dexia Investor Services Australia Nominees Pty Limited - 1,981,815 22,490Goldman Sachs Jbwere Capital Markets Ltd - 1,111,925 - Questor Financial Services Limited - 964,875 - Invia Custodian Pty Limited - 447,482 - Warbont Nominees Pty Ltd - 259,000 - Andros Nominees Pty Ltd - 210,000 - Australian Executor Trustees Limited - 191,741 17,350 The Wyatt Benevolent Institution Inc - 128,900 - Australian Pioneer Pty Ltd - 120,000 - Sisters Of Mercy Melbourne Congregation - 100,000 - The Australian National University - - 50,000M F Custodians Ltd - - 29,955Bond Street Custodians Limited - - 22,072NSF Nominees Pty Ltd - - 20,970Equity Trustees Limited - - 20,500Cogent Nominees Pty Limited - - 12,750Tree Pot Pty Ltd - - 10,000 Executor Trustee Australia Limited - - 8,900Perpetual Trustees Consolidated Limited - - 8,798Clough Superannuation Pty Ltd - - 7,853Trustees of the De La Salle Brothers - - 7,267Mrs Janine Heather Goldberg - - 6,000

Total 489,667,769 42,281,773 618,184

Total held by twenty largest ordinary shareholders as a percentage of this class is 66.56%

(e) The number of shares held by the substantial shareholders listed in the Company’s register of substantial shareholder were:Shareholder Number of shares

IOOF Holdings Limited 39,148,093 Taube Hodson Stonex Partners Limited 38,423,440 Challenger Financial Services Group Limited 37,132,518

ASX Additional Information

Company Directory

Directors S. Gerlach, LLB, Chairman W.H. Johnson, ASA, Deputy Chairman C.E. Bright, BA MA(Oxon) J.C. Fox, BE, MEngSci, PhD R.G. Grigg, FSAE-I, FAICD I.G. MacDonald, SF Fin A.Salim, BBus G.D. Walters, AM, FCA L.P. Wozniczka, BSc(Hons) MBA

Secretaries M.P. Sadlon, LLB S.C. Furey, BEc(Acc),FCA, LLM

Registered Office Level 6, 27 Currie Street Adelaide, South Australia, 5000 Telephone: (08) 8425 4999 Facsimile: (08) 8410 1597 Email: [email protected] Website: www.futuris.com.au

investor Registry Computershare Investor Services Pty Ltd Level 5, 115 Grenfell Street Adelaide, South Australia, 5000 Telephone: 1300 55 61 61 Facsimile: +61 (0)8 8236 2305 Website: www.computershare.com.au

Auditors Ernst & Young

Bankers Australia & New Zealand Banking Group BNP Paribas Citigroup Commonwealth Bank of Australia National Australia Bank Westpac Banking Corporation

Stock exchange listings Futuris Corporation Limited ordinary shares, subordinated redeemable convertible notes (Notes) and subordinated convertible unsecured notes (Futuris Hybrids) are listed on the Australian Stock Exchange.

Trustee for Convertible note Holders Permanent Nominees (Aust.) Limited 151 Rathdowne Street Carlton South, Victoria, 3053

Trustee for Futuris Hybrids Permanent Trustee Company Limited 151 Rathdowne Street Carlton South, Victoria, 3053

Documents

Annual review 2007clients.weblink.com.au › news › asx_pdf_loader3.asp?articleID=32835… · Level 6, 27 Currie Street, Adelaide, SA 5000 GPO Box 551 Adelaide SA 5001 Telephone: