For personal use only - ASX · 9/24/2010 · Solid plans are in place to develop our Village portfolio, extend our ... Village restaurants, gyms, bars, shops and recreational facilities

The MAC Services Group Limited ABN: 53 003 657 510 | T: +61 2 8346 9200 | F: +61 2 9697 0162 | www.themac.com.au A: Level 3, 5-13 Rosebery Ave, Rosebery NSW 2018 | P: PO Box 191, Brighton Le Sands NSW 2216 Australia

24 September 2010 The Manager Company Notices Section Australian Securities Exchange Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir 2010 ANNUAL REPORT

Pursuant to the requirements under Listing Rule 17.5 we herewith enclose an electronic copy of our company’s annual report for the financial year ended 30 June 2010.

Yours faithfully

David A. Rowland Secretary

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ANNUALREPORT

2010

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ANNUAL GENERAL MEETING

The MAC Services Group Limited Annual General Meeting will be held on Tuesday 23 November 2010. Full details will be contained in the Notice of Meeting sent to all shareholders.

2010: A YEAR OF TRANSFORMATION

WHO WE ARE

360º BUSINESS MODEL

OUR VILLAGES: GROWING OUR HOSPITALITY

OUR VISION

CHAIRMAN’S REPORT

MANAGING DIRECTOR’S REPORT

FINANCIAL HIGHLIGHTS

BOARD OF DIRECTORS

CORPORATE GOVERNANCE STATEMENT

ANNUAL FINANCIAL REPORT

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

SHAREHOLDER INFORMATION

CORPORATE DIRECTORY

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THE MAC SERVICES GROUP LIMITEDAND CONTROLLED ENTITIES ABN 53 003 657 510

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01The MAC Services Group Limited ABN 53 003 657 510 | Annual Report 2010

BRIGHT BRAND:

A NEW LOOK FOR OUR FUTURE

FY2010 marked an exciting milestone for The MAC brand. The re-branding of our image, Vision, Strategy, Core Purpose and Values shapes the strong professional brand that is ‘The MAC’.

As we grow and diversify, The MAC brand solidifi es who we are and where we are going – a professional company bringing a new generation of remote-area accommodation to the resources industry.

SUSTAINABLE GROWTH:

PLANNING LONG TERM TO ENSURE SUSTAINABILITY

FY2010 saw yet another year of strong earnings growth despite some industry uncertainty arising from the economic downturn. Driven by conservative decisions to develop on existing business, we concentrated on our core business model, cementing extended term contracts and forward bookings on future long-term projects.

Growth plans include an additional 1050 contracted rooms in the Bowen Basin to be installed in FY2011 and expansion into other areas with a number of Greenfi eld projects under review in key markets within New South Wales, Queensland and Western Australia.

FRESH FUTURE:

OUR AMBITION DRIVES OUR THINKING TO THE FUTURE

The MAC’s outlook shows an exciting future on the horizon. Solid plans are in place to develop our Village portfolio, extend our service offering and diversify the Company’s market position.

Extending The MAC’s suite of guest services will remain our focus. Comprehensive sports facilities, medical and retail services, education and training programs, and other resort-style services we foresee as the next-generation of MAC Villages. For our client, this results in increased employee productivity and for our guests, a greater work/life balance.

Progression in building design and construction keeps us at the forefront of our industry. Multiple-storey buildings, larger rooms and self-contained 2 & 3 bedroom cabins are being researched to meet the growing needs of our clients and guests. As the industry grows, The MAC will continue to lead the way through our innovative and unique approach.

2010:A YEAR OF TRANSFORMATION

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The MAC Services Group Limited (The MAC) is Australia’s largest publicly-traded owner/operator of remote area mining accommodation villages. With a company purpose of ‘Helping People Live Their Best’ we develop, own and operate high quality villages for people who work in remote and regional areas where major projects are being developed and operated. The MAC currently has over 400 staff and approximately 4800 permanent rooms under management in the Bowen Basin (Queensland) and Kambalda (Western Australia).

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The MAC’s unique ‘Develop-Own-Operate’ (DOO) business model provides a streamlined end-to-end accommodation and lifestyle solution for the resources industry. It incorporates site selection and property acquisition, design and construction, through to the operation and hospitality management of accommodation villages.

MANUFACTURINGVILLAGE CONSTRUCTION

SELECT AVILLAGE LOCATION

PROPERTYACQUISITION

VILLAGE DESIGN& REGULATORYAPPROVALS

CLIENTSERVICES

MANAGEMENTAND HOSPITALITY

360º BUSINESS MODEL

SELECT VILLAGE LOCATION

In-depth evaluations are conducted to choose the most suitable and sustainable site locations.

PROPERTY ACQUISITION

Overseeing all negotiations, land purchases and lease agreements, The MAC liaises directly with councils for Village development.

VILLAGE DESIGN AND REGULATORY APPROVALS

Working closely with clients and local authorities to deliver client-specifi c solutions.

MANUFACTURING

All transportable Village rooms and buildings are manufactured at our state-of-the-art manufacturing facility in Adelaide.

VILLAGE CONSTRUCTION

The MAC manages the complete construction process of our Villages. Construction, installation and project management.

MANAGEMENT AND HOSPITALITY

On-site management including housekeeping and catering deliver a superior service to our guests.

CLIENT SERVICES

Village restaurants, gyms, bars, shops and recreational facilities provide guests with a ‘home away from home’ experience.

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OUR VILLAGES: GROWING OUR HOSPITALITY

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The MAC sets the benchmark for remote-living accommodation.Offering guests more than just accommodation, The MACis known for bringing the facilities, comforts and livingexperiences to people working in remote areas that areoften taken for granted in urban areas.

The MAC currently owns and operates fi ve Villagesin Central Queensland’s Bowen Basin and oneVillage in Western Australia. We plan to grow ourhospitality, diversifying into new regions and marketswith new development sites in New South Wales,Queensland and Western Australia.

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The MAC Services Group Limited ABN 53 003 657 510 | Annual Report 2010

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THE MAC VILLAGE

LAND BANKED SITES

CONTRACT EXCHANGED

POTENTIAL DEVELOPMENT SITE

1 Nebo, QLD2 Moranbah, QLD3 Coppabella, QLD4 Dysart, QLD5 Middlemount, QLD 6 Kambalda, WA7 Calliope, QLD8 Wandoan, QLD9 Muswellbrook, NSW10 Narrabri, NSW11 Potters Land, QLD12 Karratha, WA


RAAG (ROAD ACCIDENT ACTIONGROUP) MAJOR SPONSORSHIPIn 2009 the Bowen Basin recorded the highest road fatalities in 25 years. In an effort to alleviate this toll and raise awareness of road safety, The MAC has partnered with RAAG to assist with the coordination of community road safety initiatives. Our aim is to contribute to the increased safety of our local communities, families and employees who travel on our local roads.

POWER SAVINGQuantum titan commercial solar systems are used for water heating at the Villages, saving up to 75% of power compared to standard systems. Energy-effi cient lights and appliances are used in cabin construction. All accommodation cabins are installed with insulated walls, ceiling, under-fl oor insulation and laminated glass windows with UV light refl ective foil.

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To be the leading accommodation service provider to the resources industry in all key regional areas of Australia by 2015.We are a leading national brand. The company known for bringing the facilities, comforts and living experiences to people in remote areas that are often taken for granted in urban areas.Our Villages are hubs in the communities we support.

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OUR VALUES

PEOPLE

People’s wellbeing is our passion

GREAT SERVICE

Our service and innovative solutions exceed expectations

RELATIONSHIPS

Relationships are the soul of our business

KNOWLEDGE

We have inquiring minds and act with knowledge

FUTURE MINDED

Our ambition drives our thinking to the future

WE DELIVER

Commitment, discipline, accountability

THE MAC WAY

The development of The MAC’s Core Purpose and Core Values, ‘The MAC Way’ has been a careful and thorough discovery process. Our Core Purpose ‘Helping People Live Their Best’ refl ects The MAC’s soul and idealistic motivations for doing the work we do. Our Core Values are the characteristics that have contributed to The MAC’s success over the years. They guide our behaviour in the future and are integrated into all facets of the business, underpinning everything we do, as ‘The MAC Way’.

OUR EXECUTIVE MANAGEMENT TEAM:

This year we introduced some new faces to our executive and management team. The expanded team will provide the company with a solid foundation to accelerate business growth over the next two years in line with our strategy.

CHIEF EXECUTIVE & MANAGING DIRECTORMark Maloney

CHIEF FINANCIAL OFFICERPeter McCann

COMPANY SECRETARY & GENERAL COUNSELDavid Rowland

CHIEF DEVELOPMENT OFFICER Andrew Maloney

CHIEF OPERATIONS OFFICERChris Jury

EXECUTIVE GENERAL MANAGER HUMAN RESOURCESLesley Jolly

EXECUTIVE GENERAL MANAGER MARKETING & COMMUNICATIONSRachel Maloney

ISO 9001 QUALITY MANAGEMENTSYSTEM CERTIFICATION

The MAC recently received ISO 9001 Quality Management System Certifi cation for its Operations Division. Gaining ISO certifi cation across a number of business areas including food service, quality and environment will be a focus in FY2011.

Quality ISO 9001

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“ The pleasing aspect for The MAC is not only that we comfortably exceeded prospectus forecasts made at the time of listing, but we have maintained a consistent record of performance improvement year-on-year across a range of measures.”

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Annual Actual Actual Actual Actual Average FY2007 FY2008 FY2009 FY2010 Growth

Revenue 1 $61m $80m $107m $114m 24%

EBITDA 1 $26m $36m $48m $57m 30%

NPAT 1 $12m $18m $24m $28m 34%

EPS 10.81 cents 12.76 cents 14.88 cents 16.67 cents 16%

Dividend 2.75 cents 6.25 cents 8.5 cents 9.25 cents 50%

Room numbers 3365 4245 4973 4854 2 13%

1 Rounded to nearest $1m 2 Between 2007 and 2010 we replaced 1068 single, non-ensuited rooms with with new ensuited rooms

Faced with challengingmarket conditions in2010, we demonstratedthe robustness ofThe MAC’s businessmodel by delivering a solidfi nancial performance and preparing thebusiness for its next phase of growth.On behalf of the Board, management and staff, I am pleased to announce that The MAC achieved a record net profi t after tax for 2010 of $27.5 million, which is an increase of 15.8 per cent over the same period last year.

Revenue for 2010 was $113.5 million which represents an increase of 6 per cent from $107 million in the 2009 fi nancial year. Earnings per share were 16.67 cents, an increase of 12 per cent from 14.88 cents in the prior year.

Our gearing ratio (debt divided by debt plus equity) continued to improve to 20 per cent, compared with 27 per cent the previous year. Net debt at 30 June 2010 was $38.2 million and $86.8 million of the Company’s $125 million bank facilities was undrawn.

During the 2010 fi nancial year, banking facilities were increased to $125 million from $100 million, which provides us with signifi cant fl exibility to fund our planned capital expenditure program for the 2011 fi nancial year.

This result was achieved during a period in which global commodity markets were seriously impacted by a fi nancial crisis of unparalleled severity. It is testament to the robustness of our business model and the decision by the Board and management to contain recurrent expenditure and limit capital outfl ows to projects that had reasonable certainty to contribute to earnings growth.

DIVIDEND

Directors have declared a fully franked fi nal dividend of 4.75 cents per share. Together with the interim dividend of 4.50 cents per share, this brings the total dividend for the year to 9.25 cents per share. The record date for the fi nal dividend is 1 October and payment will be made to all shareholders on 15 October 2010.

SHAREHOLDER RETURN

The table below has been extracted from the key fi nancial indicators that we regularly publish in our annual reports.

These results demonstrate a consistent record of performance improvement year-on-year across a range of measures.

Given the economic uncertainties of the past few years, it is not surprising that a number of fi nancial commentators have recommended that investors focus on companies with a record of stable revenue, profi t and dividend growth.

The MAC’s performance over the last four years demonstrates the value in having a clearly defi ned business plan and sticking to a model which has a proven track record.

INDUSTRY OUTLOOK

As we have reported previously to shareholders, The MAC has begun an expansion programme in the Bowen Basin to service the needs of major mining companies. In addition, we have a number of greenfi eld projects under review in Karratha (WA), Muswellbrook and Narrabri (NSW) and Gladstone and Wandoan (QLD).

The current outlook for international commodity markets, especially coal markets, reinforces our confi dence in these expansion plans and the future performance of The MAC.

Demand for Australian commodities continues to strengthen, led by rising imports in China, India and the recovering developed economies of Asia. This fuels the expansion of the Australian mining industry which in turn supports our own growth plans.

Asian nations are forecast to account for more than 90% of global coal demand growth in the next two decades, and Australia will continue to build its position as the chief supplier of seaborne coal.

This outlook supports our decision to continue to invest in servicing the needs of Australia’s major coal producers. Equally, it reinforces the importance of our commitment to the long-term objective of diversifying into other commodity markets.

I would like to extend my thanks to all of the staff, management and my fellow directors of The MAC. The positive result delivered for the Company and shareholders in 2010 has relied upon their commitment and hard work.

Yours sincerely

K W MaloneyChairman

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“ Achieving a 16 per cent increase in profi t has been an excellent result for The MAC. This outcome refl ects strategic cost control and careful capital allocation through this period. Underwriting growth with contracted forward bookings against long-term projects has stood us in good stead and refl ects the strength of our core business model.”

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2010 was a transformativeyear for The MAC as westrengthened the businessto position the Companyfor future growth. We tookthis opportunity to beddown our foundations andcapture opportunities forimprovement within thebusiness. Our team atThe MAC achieved theseimpressive results byaddressing the challengesfaced by the globalfi nancial crisis, to deliver a solid profi t result.

FINANCIAL OVERVIEW

The resources industry faced continued uncertainty during the past twelve months. In this environment, achieving a 16 per cent increase in profi t has been an excellent result for The MAC. This outcome refl ects strategic cost control and careful capital allocation through this period. Underwriting growth with contracted forward bookings against long-term projects has stood us in good stead and refl ects the strength of our core business model. As a result, we increased profi t with close to the same number of rooms in our portfolio as we had in the 2009 fi nancial year.

OPERATIONAL PERFORMANCE

ON BOARD WITH SAFETY

Through our ‘On Board with Safety’ culture we have implemented a number of safety-focused initiatives to ensure our employees, contractors, clients and guests return home safely. As a precursor to us gaining AS/NZS 4801 Occupational Health and Safety Management System Certifi cation, we engaged the National Safety Council of Australia to conduct an external Health and Safety operations audit. Findings highlighted that our Occupational Health and Safety Management system provides an excellent foundation for an effective and positive performance going forward.

I am pleased to report that our commitment to safety has seen improvements in FY2010 including a 27% decrease in the Lost Time Injury Frequency Rate (LTIFR). Comprehensive lead indicator data around safety training and safety observations and a concentration on ‘near miss’ reporting combined with a safety culture survey will be the focus for the coming year. Such tools empower our people to embrace The MAC’s safety culture and help us work towards our vision of an incident and injury-free workplace.

THE MAC PURPOSE, VISION AND VALUES

During the year, the management team invested time in developing our company Purpose, Vision, Values and fi ve-year business Strategy. All of these elements have been integrated into a refreshed brand identity showcasing The MAC as the strong, optimistic and professional company it is. This has been an important and valuable discovery process that gives us a clear sense of direction for the years ahead.

VILLAGE OPERATIONS

In the last year, The MAC streamlined supply and service operations. We provided 1.6 million reserved room nights, delivered serviced accommodation and food to more than 10,000 workers, purchased and processed 300 tonnes of meat and 500 tonnes of fresh vegetables, served 3 million meals and 5 million drinks and washed 2,700 tonnes of linen.

We continue to invest in our service offering to ensure our guests and clients receive the best available service and value for money. This investment covers all operational areas of the Villages from arrival to departure including the quality of the meals and the cleanliness of rooms and linen. We introduced benchmarking surveys in 2010 to listen to the views of our clients and guests. We upgraded our reservations and billing systems that make the day-to-day business of operating the Villages easier and more convenient for our clients, our guests and our Village managers. As part of a comprehensive program of business process improvement, we also achieved ISO quality accreditation for the Village operations.

Aligning with our overarching growth strategy, contracts were confi rmed in July 2010 for an additional 1,050 new rooms to be installed at The MAC’s Bowen Basin Villages during the 2011 fi nancial year. Of those, 400 remain subject to Development Application approval.

Three major contracts were renewed for a total of 2,050 rooms at The MAC’s Villages in Moranbah, Dysart and Nebo, further improving the contracted forward revenue profi le.

DEVELOPMENT ANDCONSTRUCTION

The group’s Development and Construction Division was conservative over this period, manufacturing and installing approximately 150 new rooms to replace and upgrade older non-ensuited rooms. Some Villages received facility upgrades including new kitchens and gymnasiums, improved landscaping, lighting and signage. The total capital cost of this program was $15.6 million. These programs further enhance the quality of our Villages and solidifi es our position as market leader.

The Development and Construction team is now focused on delivering recently announced Village expansion programs and completing development and planning for the proposed Villages. The program is progressing well and we expect to deliver the planned expansion on schedule and on budget.

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MANAGING DIRECTOR’S REPORT (CONTINUED)

Giving Great Service, The MAC Village, Dysart Dreamtime Mural at The MAC Village, Middlemount Site Selection, The MAC Development

COMMUNITY INVOLVEMENT

Creating solid and meaningful local relationships is paramount to our business, as we move from supporting to fully integrating into our communities.

We make a conscious effort to employ local people where we can and form relationships with local suppliers, so that we make an economic contribution to the sustainable growth of the communities in which we live and work. In the 2010 fi nancial year, we purchased approximately $8.3m of produce from local suppliers.

We also support our local communities through corporate contributions. The MAC supported more than 50 community groups and charities through sponsorship initiatives in 2010. Plans are developing for a more strategic community integration plan to be launched in 2011.

PEOPLE

Our key focus in FY2010 was to develop The MAC employees at every level and increase the bench strength of the management ranks by the recruitment of key strategic personnel in areas such as fi nance, IT and Construction. These highly skilled recruits bring a wide range of experience and skills to the team.

In Operations, almost 100 of our employees participated in training courses designed, in collaboration with Mackay TAFE, to extend the skills relevant to their roles.

We have also been rigorous in reviewing all our people practices to ensure total compliance with The Fair Work Act.

OUTLOOK

While FY2010 was a period of consolidation, we expect the next two years will be a period of solid growth.

Bookings at all of The MAC’s Villages are solid and the additional 1,050 contracted rooms to be installed in the Bowen Basin Villages during the 2011 fi nancial year will support revenue and profi t growth through the second half and into FY2012.

We are progressing with plans to expand our Village portfolio through new developments in key markets in New South Wales, Queensland and Western Australia.

NEW SOUTH WALES

We have a major focus on pursuing identifi ed opportunities in the Hunter Valley. Potential Village sites have been purchased at Muswellbrook and Narrabri to service the Upper Hunter Valley coal industry. Negotiations are continuing with major operators and contractors in these areas. The demand indicators are positive and development planning is proceeding for both sites.

QUEENSLAND

The planning process is continuing for The MAC’s proposed Village sites at Calliope (Gladstone) and Wandoan to service coal and LNG industries in the Surat Basin and associated infrastructure developments. The fi nal decision on developing the new Villages is dependent on securing long-term contracts for major projects. Negotiations are continuing with potential customers.

WESTERN AUSTRALIA

In Western Australia, negotiations are proceeding to start the long proposed development of a Village in Karratha. The proposed Village development is for approximately 1,200 rooms to be developed in four stages, subject to contracted demand. This represents a small fraction of the estimated 20,000 workforce accommodation rooms in the Pilbara region and it will provide a good entry for The MAC into a large market.

Overall it has been a strong year for The MAC. I would like to thank all our staff and the management team for the work and dedication they have shown in continuing to build the company. The MAC’s future looks bright and by developing and delivering our unique service offering at our Villages, we will continue to grow and succeed.

Yours sincerely

M K MaloneyManaging Director

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NPAT UP 16% TO $27.5 MILLION

REVENUE UP 6% TO $113.5 MILLION

EPS UP 12% TO 16.67 CENTS

FINAL DIVIDEND1 OF 4.75 CENTS A SHARE, TAKING THE FULL-YEAR PAYOUT TO 9.25 CENTS

FREE CASHFLOW OF $39 MILLION

NET DEBT OF $38 MILLION

GEARING REDUCED TO 20%


FINANCIAL HIGHLIGHTS

1 Fully franked

REVENUE ($M)

2010

2009

2008

2007

114

107

80

61

EBITDA ($M)

57

48

36

26

NPAT ($M) EPS (CENTS)

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7

14.8

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12.7

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10.8

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2009

2008

2007

2010

2009

2008

2007

2010

2009

2008

2007

IN AN AVERAGE WEEK WE HAVE:

Booked 28,169 room nights Prepared 63,404 meals Spent a total of 1208 hours cleaning rooms Washed 4605 towels, 7745 sheets and 3872 pillow slips

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14 The MAC Services Group Limited ABN 53 003 657 510 | Annual Report 2010

BOARD OF DIRECTORS

KEVIN W. MALONEY

Age 63 – Chairman and Executive DirectorAppointed Chairman and Executive Director in 1988

Kevin is the founder and Executive Chairman of The MAC Services Group Limited. Kevin has had an extensive career in retail banking, fi nance, and resources. Kevin joined Elders Resources in 1981 after spending 20 years with the ANZ Bank. During his time at Elders Resources, Kevin held numerous positions including Chief Executive Offi cer of Elders Resources Finance Limited.

Kevin brings with him a wealth of experience in the resources and fi nance industries and has been heavily involved in all stages of The MAC’s growth, including its move into mining services accommodation in 1996.

Other current listed public company directorships: non-executive Chairman of Altona Mining Limited and non-executive Director of Northern Energy Limited.

Former listed public company directorships held in previous 3 years: Queensland Mining Corporation Limited.

Special responsibilities: Member of the Remuneration and Nomination Committee.

DARYL (DARCE) W. CORSIEB. ENGINEERING (CIVIL), M.B.A.

Age 63 – Non-Executive DirectorAppointed March 2007

Over the last 36 years, Darce has held senior positions in services companies, the infrastructure sector, investment banking and construction. He was previously a director of project fi nance at Deutsche Bank before joining Transfi eld Services Limited in 2000 where as CFO, he played a lead role in the fl oat of the company.

Darce was a senior executive of Infrastructure Investments with Transfi eld Services Limited. Darce was also a director of a number of private companies associated with investments and joint ventures of Transfi eld Services Limited.

Other current listed public company directorships: None

Former listed public company directorships held in previous 3 years: None

Special responsibilities: Chairman of the Audit and Risk Management Committee and a member of the Remuneration and Nomination Committee.

MARK K. MALONEYB. BUSINESS (HONS)

Age 38 – Executive DirectorAppointed February 2007

Mark is Managing Director and Chief Executive Offi cer of The MAC.

Mark has been a Director of the Group since its inception and has been heavily involved in its development.

Prior to this position Mark was Chief Executive Offi cer of Tulla Group, the Maloney family’s private holding company. In this position he was responsible for the Group’s businesses which spanned a variety of industries including Resources, Transport, Food, Investment and Property. Mark also has 16 years’ experience in fi nancial markets, having held senior management positions with JPMorgan and Goldman Sachs in both London and Sydney.


Former listed public company directorships held in previous 3 years: Imperial Corporation Limited

Special responsibilities: Chairman of the Executive Management Group.

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JOHN C. TAYLORLLB, GRAD DIP ACG, ACIS

Age 56 – Non-Executive DirectorAppointed February 2007

Founding partner of Taylors Solicitors, Mackay, a Senior Counsellor of the Queensland Law Society and a member of the North Queensland Law Association, John has a strong legal background and a keen understanding of the Central Bowen Basin region.

John’s previous appointments include former Board membership of Tourism Mackay and Mackay Regional Economic Development Bureau; and non-executive Director of Mackay Port Authority (Chairman).


Former listed public company directorships held in previous 3 years: None

Special responsibilities: Chairman of the Remuneration and Nomination Committee and a Member of the Audit and Risk Management Committee.

TERRENCE J. STRAPPCPA, FFIN, MAICD

Age 66 — Non-Executive DirectorAppointed September 2007

Terry has extensive experience in mining, fi nance and corporate risk management and has been actively involved in these industries for the last 31 years.

He has held numerous positions on private and public company boards and is Chairman of the Wesley College Endowment Fund.

Other current public company directorships: Ausdrill Limited

Former listed public company directorships held in previous 3 years: Chairman, Mercator Gold PLC.

Special responsibilities: Member of the Audit and Risk Management Committee and the Remuneration and Nomination Committee.

ANDREW W MALONEY B.BCM

Age 32 – Alternate Director for Kevin W. Maloney Appointed May 2006

Andrew is Chief Development Offi cer of The MAC and an Alternate Director for Kevin Maloney. He has been with the Group for more than 8 years and has accumulated extensive experience across a variety of senior management roles including development, project management, manufacturing and maintenance.

Under his direction, the Company has delivered a number of successful mining accommodation developments. Andrew has been instrumental in creating the high-quality product unique to The MAC Services Group.

Other current public company directorships: None

Former public company directorships held in previous 3 years: None

Special responsibilities: Chairman of the Management Investment Committee.

The interest of each Director in shares and options in the Company is detailed in the Directors Report.

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OVERVIEW

Corporate Governance is the process by which companies are directed and managed. Strong corporate governance aids effective management and decision-making. The Company is committed to sustaining and improving corporate governance systems and reports in accordance with the 2007 ASX Corporate Governance Principles and Recommendations.

The Company’s position with respect to each of the relevant ASX Recommendations is described below. Unless disclosed, all the best-practice recommendations of the ASX Corporate Governance Council have been applied for the entire fi nancial year ended 30 June 2010.

The Company’s website contains a range of information on governance practices and policies including:

Core Values, Vision and Purpose Board Charter Remuneration and Nomination Committee Charter Audit and Risk Management Committee Charter Code of Conduct Communications Policy Director Independence Policy Disclosure Policy Trading Policy Privacy Policy Occupational Health and Safety Policy

The Charters and Policies, and the process by which they are adopted in the functioning of the Board and management, and the Core Values, Vision and Purpose, form the core of the Company’s corporate governance system. We have not summarised the Charters and Policies in this report but commented on the relevance of each to the ASX Recommendations. To view these documents please visit the company’s website: www.themac.com.au.

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

The role of the Board is to represent the interest of stakeholders, to provide strategic guidance to and effective oversight of management, to foster a culture of good governance, and to promote a safe and healthy working environment within the Company. The specifi c responsibilities of the Board are described in the Board Charter. In performing its role, the Board at all times will endeavour to act:

1) in a manner designed to create and continue to build sustainable value for shareholders;

2) honestly, fairly and in accordance with the law in serving the interest of the Company, its shareholders, employees and other stakeholders;

3) in accordance with the duties and obligations imposed upon Directors by the Company’s Constitution and applicable laws;

4) in accordance with the Charters and Policies as approved by the Board; and

5) with integrity and objectivity, consistent with ‘best practice’ ethical and professional standards applicable to directors of an ASX Listed company.

Responsibility to shareholders extends to other stakeholders with equity interests including option holders and employees with equity rights.

Executive manager evaluationThe Board has established a Remuneration and Nomination Committee, which is an amalgamation of the formerly separate Remuneration Committee and Nomination Committee. The new Committee provides recommendations for the Company’s remuneration and nomination practices. The Committee is comprised of a majority of independent Directors and is chaired by an independent Director. The performance-based remuneration system applicable to senior executives is referred to in the comments regarding Principle 8. It is described in more detail in the Remuneration Report which forms part of the Directors’ Report. The specifi c responsibilities of this Committee are described in the Committee Charter.

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

Board nominationsThe Remuneration and Nomination Committee provides recommendations to the Board on all matters concerning the selection, appointment and review of Directors. The Committee is comprised of a majority of independent Directors and is chaired by an independent Director. The specifi c responsibilities of this Committee are described in the Committee Charter.

IndependenceIt is Board policy and is specifi ed in the Board Charter that, ordinarily, the majority of non-executive Directors should be independent and free of any relationship that may confl ict with the interests of the Company. The Company continues to have a majority of independent Directors.

Every Director has contracted with the Company to disclose any relationships, duties or interests held that may give rise to a potential confl ict of interest in a matter to be considered by the Board. Directors who have declared a confl ict of interest on a particular issue are excluded from voting on that issue.

Experience and skills of the BoardDetails of each current Director’s skills, qualifi cations, experience, relevant expertise and dates of appointment are set out in the Director biographies in this report.

The Charter of the Remuneration and Nomination Committee specifi es the selection criteria for new appointments which includes an evaluation of experience, professional skills and expertise that best complement the Board.

The Board discussed and considered the performance of the Board during the year, which was facilitated by independent experts.

CORPORATE GOVERNANCE STATEMENT

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PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE (CONTINUED)

Board structureThe Board has established two Board committees to facilitate the execution of its responsibilities. The Committees provide a forum for a more detailed analysis of key issues and interaction with management. Each Committee reports its deliberations and recommendations to the next Board meeting. The current Committees are:

Remuneration and Nomination Committee:

Members: Mr John Taylor (Chair), Mr Darce Corsie, Mr Terry Strapp and Mr Kevin Maloney.

Function: The Committee Charter sets out the role and responsibilities, composition, structure and membership requirements of the Committee. The key areas of focus of the Committee regarding remuneration are to ensure the Company has appropriate remuneration policies in place which are designed to meet the needs of the Company so that the Company can comply with relevant governance rules and enhance company and individual performance. The Committee also assists and advises the Board in relation to the implementation of the Remuneration Policy.

The key areas of focus of the Committee regarding nominations to the Board are to administer and examine the Director selection and appointment practices of the Company and to assist with performance evaluation of the Board in accordance with the Committee Charter. The Committee also assists and advises the Board in relation to the implementation of the Director Independence Policy.

Audit and Risk Management Committee

Members: Mr Darce Corsie (Chair), Mr John Taylor and Mr Terry Strapp.

Function: The Committee Charter sets out the role and responsibilities, composition, structure and membership requirements of the Committee. The key areas of focus of the Committee are particular issues relating to verifying and safeguarding the integrity of the Company’s fi nancial reporting, risk oversight and management and internal controls.

Independent professional advice and access to Company informationAs specifi ed in the Board Charter and individual letters of appointment, Directors have the right of access to all relevant Company information and to Company executives. Subject to prior consultation with the Chairman, Directors may seek independent advice from a suitably qualifi ed adviser at the Company’s expense.

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING

The Board and the Company’s employees are expected to uphold the highest level of integrity and professional behaviour in their relationships with all the Company’s stakeholders. During the year the Company developed and adopted a set of Core Values. The Core Values, Vision and Purpose are found on the Company’s website. Employees and other members of the workforce are made aware of acceptable behaviour through ongoing training, development and contact with senior management, who are encouraged to lead by example.

In addition to living these Values, the Company has specifi c policies and procedures that are designed to promote and support ethical and responsible decision-making. Directors’ decisions are governed by the cycle of regular Board and Board Committee meetings and by recording the decisions made at those meetings.

Employees are accountable for their conduct under a range of Company policies and procedures, including the policies listed above and available for review on the company’s website.

Trading in Company sharesTo safeguard against insider trading, the Company’s Trading Policy prohibits Directors and employees from trading the Company securities if they are aware of any price-sensitive information. For Directors, other designated offi cers and senior employees, this Policy allows for a 30-day trading window commencing from the business day following a results announcement or other signifi cant public announcements. Trading outside a 30-day window is allowed only in exceptional circumstances and with specifi ed internal approval. The Company discloses to the ASX any trading in the Company securities conducted by the Directors in accordance with ASX Listing Rules.

PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

The existence and functioning of the Audit and Risk Management Committee in accordance with its Charter is a key mechanism to safeguard the integrity in the Company’s fi nancial reporting. The Committee Charter includes roles and responsibilities in relation to the internal and external audit functions and reviewing the integrity of fi nancial reporting. The Committee considers that the external audit fi rm process of partner rotation is suffi cient to maintain the independence of external auditors. In addition, the Company employs a team of professionals reporting to the Chief Financial Offi cer to ensure appropriate fi nancial reporting systems and controls are in place.

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PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE

The Company seeks to provide relevant up-to-date information to its shareholders and the broader investment community in accordance with the continuous disclosure requirements under the ASX Listing Rules. The Board has implemented a Disclosure Policy to ensure that information considered potentially material to the share price or its value is lodged with the ASX as soon as practicable. Other relevant information, including Company presentations, updates by senior management, fi nancial results announcements and commentary on fi nancial results are also subject to internal reviews and are disclosed to the ASX in accordance with ASX Listing Rules.

PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS

The Company has adopted a Communications Policy that aims to promote effective communications with shareholders and promote shareholder participation. Communication with shareholders is facilitated by the Company’s website, the direct shareholder access to information concerning their shareholding via Computershare, the production of the Annual Report, public announcements and the Annual General Meeting. The Company believes that through the current announcement procedures and distribution methods, shareholders have the opportunity to be fully informed of signifi cant Company activities.

All shareholders are encouraged to attend the Annual General Meeting and use the opportunity to ask questions. The Company makes every endeavour to respond to these questions. The external auditor attends the meeting and is available to answer questions.

PRINCIPLE 7: RECOGNISE AND MANAGE RISK

The Board believes that risk management and compliance are fundamental to sound management, and that overseeing such matters is an important responsibility of the Board.

The fi nancial reporting and control mechanisms are assessed during the year by management, the Audit and Risk Management Committee and the external auditors. Before releasing its audited annual fi nancial results, the Board receives a declaration from the Managing Director and the Chief Financial Offi cer, provided in accordance with section 295A of the Corporation Act 2001 (Cth), that the Company’s fi nancial statements are founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to fi nancial reporting risks.

The Company also has policies in place dealing with risks in the areas of Health and Safety, Environment and Employee Relations.

The Company commenced an enterprise-wide risk and risk management assessment during the 2010 fi nancial year. Independent risk management experts assisted with this review. This project is expected to deliver over two years enhanced risk reporting and control mechanisms. The mechanisms are designed to ensure that strategic, operational, legal, reputational and fi nancial risks and opportunities are identifi ed, assessed and managed. Material business risks will be identifi ed and evaluated as part of this program, which is expected to improve current risk management and reporting systems.

PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY

Board RemunerationThe remuneration of the non-executive Directors is fi xed rather than variable. There are no retirement benefi ts paid to non-executive Directors. Independent expert remuneration advice is considered from time to time to determine remuneration for the Managing Director and CEO, direct reports to the CEO and non-executive Directors. For the 2011 fi scal year, non-executive Directors have determined not to increase their fees.

Executive RemunerationThe Remuneration and Nomination Committee provides recommendations for the Company’s remuneration policies and practices. It utilises independent expert advice and market surveys (as appropriate) to benchmark executive remuneration, packaging, and remuneration practices across the Company. The Committee ensures that a signifi cant proportion of each executive’s remuneration is linked to his or her performance and the Company’s performance in the form of short and long-term components. Short-term incentives are aligned to achievement of specifi c corporate and individual targets and goals directed at creating value and/or mitigating business risks. Long-term incentives are linked to specifi c performance targets set under the Company’s LTI Plan. Those targets as applied in 2010 are detailed in the Remuneration Report.

Further details in relation to Director and executive remuneration are set out in the Remuneration Report which is published as part of the Directors’ Report.

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ANNUAL FINANCIAL REPORTFor the Year Ended 30 June 2010

DIRECTORS’ REPORT

AUDITOR’S INDEPENDENCE DECLARATION

STATEMENT OF FINANCIAL POSITION

STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF CHANGES IN EQUITY

STATEMENT OF CASH FLOWS

NOTES TO THE FINANCIAL STATEMENTS

DIRECTORS’ DECLARATION

INDEPENDENT AUDIT REPORT

The MAC Services Group Limited ABN 53 003 657 510 Annual Report 2010

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The Board of Directors of The MAC Services Group Limited (the “Company”) submit their report for the Company and its subsidiaries (together referred to as the “Group”) for the year ended 30 June 2010.

DIRECTORS

Names, qualifi cations, experience and special responsibilitiesThe names of the directors of the Company in offi ce during the fi nancial year and particulars of their qualifi cations, experience, other directorships and special responsibilities are set out on pages 14 to 15. Directors were in offi ce for this entire period unless otherwise stated.

Interests in the shares and options of the company

Number of Number of Number of Options Over Unvested Rights Ordinary Ordinary Over Ordinary Shares Shares 1 Shares 2

Kevin W Maloney 86,755,566 3 Nil —John C Taylor 230,834 Nil —Daryl W Corsie 259,168 Nil —Terrence J Strapp 50,000 66,667 —Mark K Maloney 86,776,390 3 Nil 156,960Andrew W Maloney 4 87,193,057 3 Nil 62,163

1) Options issued under Employee Share Option Scheme. See further information in the Remuneration Report.

2) Long Term Incentive rights. See further information in the Remuneration Report.

3) Includes 86,555,556 shares held by Marley Holdings Pty Ltd as trustee for The Maloney Family Trust.

4) Alternate director for Mr Kevin W Maloney.

COMPANY SECRETARY

Mr Stephen L Law was appointed Company Secretary in 1993. He has 30 years’ experience as company secretary/corporate counsel. Mr Law has been involved in equity and debt capital raising, prospectus preparation, management of public company listings, capital reconstruction, asset acquisitions and disposals. Mr Law retired on 1 July 2010.

Mr David A Rowland (B.Juris LLB MAICD) was appointed as Company Secretary and General Counsel on 1 July 2010. He has extensive legal experience with leading corporate law fi rms in Melbourne and Sydney and has also worked as General Counsel and Company Secretary of ASX listed companies.

DIVIDENDS

Dividends paid or declared for payment during the current fi nancial year are as follows: 2010 $

Final ordinary dividend for 2009 of $0.0425 paid on 16 October 2009 7,001,321Interim ordinary dividend for 2010 of $0.045 paid on 14 April 2010 7,459,350Final ordinary dividend for 2010 of $0.0475 per share recommendedby the Directors payable on 15 October 2010 7,883,418

PRINCIPAL ACTIVITIES

The principal activity of the Group during the fi nancial year was the supply of accommodation services to the mining, construction and resource industries. No signifi cant change in the nature of these activities has occurred during the year.

DIRECTORS’ REPORTF

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OPERATING AND FINANCIAL REVIEW

Operating Results 2010 2009 Change $ $ %

Revenue 113,488,000 107,053,000 6.01Net profi t after tax 27,517,000 23,765,000 15.79Basic earnings per share (cents) 16.67 14.88 12.03

The increase in all key fi nancial results is a strong endorsement of the Company’s business model of underwriting growth with contracted forward bookings against viable long term projects. The improved earnings result also refl ects tight cost control in the current fi nancial year and more importantly provides a solid base to continue to grow earnings as we roll out our expansion plans in future fi nancial years.

Financial Position 2010 2009 Change $ $ %

Net assets 152,178,000 135,747,000 12.10Operating cash fl ow 38,907,000 29,285,000 32.86Gearing 20.07% 27.00% (25.67%)

The increase in net assets of the Group of 12.1% from the prior fi nancial year is due to capital expenditure programs to expand villages at the Bowen Basin and upgrades to existing Village facilities carried out during the current fi nancial year. Land purchases have also been made at Muswellbrook and Gladstone.

Net debt at 30 June 2010 was $38,200,000. The increase in the Group’s banking facilities from $100,000,000 to $125,000,000 post year end will provide greater funding fl exibility for future fi nancial year capital expenditure programs, including the planned installation of 1,050 contracted rooms at the Company’s Bowen Basin Villages.


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DIRECTORS’ REPORT

FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

Expansion plans for existing and new Villages have provided a considerable pipeline of opportunities that will provide strong revenue and profi t growth in future fi nancial years. The strength of the Group’s fi nancial position should enable the Group to respond to increased demand at existing Villages and expansion into other regions.

These expansion plans, together with the current strategy of continuous improvement and commitment to quality control in existing markets are expected to assist in the achievement of the Group’s long-term goals and the development of new business opportunities.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no signifi cant changes in the state of affairs of the Group during the fi nancial year.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

Subsequent to year end, the Company has received credit approval from National Australia Bank to increase its banking facilities from $100,000,000 to $125,000,000. Of that total facility, $40,000,000 remains on its current term of December 2012 and $85,000,000 has been extended to 30 June 2013.

Other than the matter noted above, the Group has not entered into any material transactions, nor had any items, matters or circumstances that have arisen since the end of the fi nancial year which 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 future fi nancial years.

ENVIRONMENTAL REGULATION AND PERFORMANCE

Environmental sustainability is important to the Group and is evident in the design and development of Villages and continuing operations, to meet or exceed industry standards. The MAC takes an active role in minimising its environmental impact by implementing a number of sustainable initiatives to conserve water and power, reduce pollution, fuel, waste and carbon emissions.

The Group’s operations are not regulated by environmental regulation to a signifi cant extent under a law of the Commonwealth or of a State or Territory.

SHARE OPTIONS AND RIGHTS

As at the date of this report, there were 100,001 (2009: 1,678,685) unissued ordinary shares under option. These options are the fi nal outstanding options issued under the Company’s Employee Share Option Plan (“ESOP”). Option holders under ESOP do not have any right, by virtue of the option, to participate in any share issue of the company or any related body corporate.

During the fi nancial year, employees and executives have exercised options issued under ESOP to acquire 1,229,674 (2009: nil) fully paid ordinary shares in the Company at a weighted average exercise price of $2.20 per share.

On 1 July, the Company issued 401,276 rights to senior executives under the Executive Long Term Incentive Plan (“LTI Plan”). A senior executive will only acquire any legal title or interest to ordinary shares in the Company that may vest in accordance with the LTI Plan rules. An allocation of rights to a senior executive will vest over a three year period or on cessation of the senior executives employment with the Group and will be subject to performance hurdles.

Refer to the Remuneration Report for further details of ESOP options outstanding and rights outstanding under the LTI Plan, including in relation to shareholder approval for LTI Plan rights issued to executive Directors.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Group has liability insurance policies for all Directors and Offi cers of the Group. The policy agreement prohibits disclosure of the policy terms and the premium paid. Directors and Offi cers are also indemnifi ed by the Company against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as Directors or Offi cers of the Group. The insurance cover and indemnity is not applicable where the liability arises out of conduct involving a lack of good faith.

PROCEEDINGS ON BEHALF OF COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the Company and the Group or to intervene in any proceedings to which the Company and the Group is a party for the purpose of taking responsibility on behalf of the Company and the Group for all or any part of those proceedings. The Group was not a party to any such proceedings during the year.

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DIRECTORS MEETINGS

The number of meetings of Directors (including meetings of Committees of Directors) held during the year and the number of meetings attended by each Director were as follows:

Directors’ Meetings Meetings of Committees

Audit and Risk Remuneration and Management Committee Nomination Committee

Number Number Number Eligible Number Eligible Number Eligible to Attend Attended to Attend Attended to Attend Attended

Kevin W Maloney 10 9 1 — — — —John C Taylor 10 10 3 3 3 3Daryl W Corsie 10 10 3 3 3 3Terrence J Strapp 10 10 3 3 3 3Mark K Maloney 10 10 — — — —Andrew W Maloney 1 1 1 — — — —

1) alternate Director for Mr Kevin W Maloney.

ROUNDING

The amounts contained in this report and in the fi nancial report have been rounded to the nearest $1,000 (where rounding is applicable and where noted ($’000)) under the option available to the Company under ASIC CO 98/0100. The Company is an entity to which the class order applies.

AUDITOR’S INDEPENDENCE DECLARATION

The lead auditor’s independence declaration under s307C of the Corporations Act 2001 can be found on page 31 of the Annual Financial Report and forms part of the Directors’ Report for the year ended 30 June 2010.

NON-AUDIT SERVICES

The following non-audit services were provided by the Company’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 by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

2010 $

Tax and compliance services 8,000Consulting and advisory services 222,724

230,724


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REMUNERATION REPORT (AUDITED)

This Remuneration Report for the year ended 30 June 2010 outlines the remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as required by Section 308(3C) of the Act.

The Remuneration Report details the remuneration arrangements for Key Management Personnel (“KMP”) who are defi ned as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Company, and includes the fi ve executives in the Company and the Group receiving the highest remuneration.

Individual key management personnel disclosuresDetails of Key Management Personnel including the top fi ve remunerated executives of the Parent and Group are set out below:

i) Directors

Kevin W Maloney ChairmanGeoffrey F Lord Director – non executive (retired 30 June 2009)Daryl W Corsie Director – non executiveJohn C Taylor Director – non executiveTerrence J Strapp Director – non executiveMark K Maloney Director – executiveAndrew W Maloney Alternate Director – Chief Development Offi cer

i) ExecutivesStephen L Law Company Secretary & General Counsel (retired 1 July 2010)Richard H Saunders Chief Financial Offi cer (resigned 11 January 2010)Peter L McCann Chief Financial Offi cer (appointed 11 January 2010)Christopher H Jury Chief Operating Offi cerRod Cunningham General Manager – Operations (resigned 30 August 2009)Lesley Jolly Executive General Manager – Human ResourcesRachel Maloney Executive General Manager –

Marketing & Communications (appointed to Executive Committee on 1 July 2009)

DIRECTORS’ REPORT

Remuneration strategyThe Group’s remuneration policy has been designed to align Director and executive objectives with shareholder and business objectives by providing a fi xed remuneration component and offering specifi c short-term and long-term incentives based on key performance areas affecting the Group’s operating performance and fi nancial results. The Board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and Directors to run and manage the Group.

The Remuneration and Nomination Committee reviews executive packages annually by reference to the Group’s performance, executive performance and comparable information from industry sectors and other ASX listed companies in similar industries. The remuneration policy put forward by the Committee, setting the terms and conditions for the executive Directors and other senior executives, is approved by the Board after seeking professional advice from independent external consultants.

The performance of executives is measured against criteria agreed annually with each executive and is based predominantly on the forecast growth of the Group’s profi ts and shareholder value. All short term and long term incentives must be linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation to approving short term and long term incentives and can recommend changes to the Committees recommendations. Any changes must be justifi ed by reference to measurable performance criteria. The policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth and shareholder wealth.

The remuneration policy has been tailored to promote the interests of all stakeholders, including shareholders and executives. There have been two methods applied in achieving this aim, the fi rst being a performance-based short term incentive based on KPIs, and the second being the issue of equity rights in the form of options and/or shares subject to achievement of specifi c performance hurdles. The Directors believe this policy has been effective in increasing shareholder wealth.

Fixed compensationFixed compensation consists of base compensation which is calculated on a total cost basis and includes any Fringe Benefi ts Tax (FBT) charges related to employee benefi ts, including motor vehicles, as well as employer contributions to superannuation funds. Additional retirement benefi ts are not provided to key management personnel in addition to superannuation contributions.

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REMUNERATION REPORT (AUDITED) (CONTINUED)

Performance-linked compensationPerformance-linked compensation includes both short and long term incentives and is designed to reward key management personnel for meeting or exceeding their fi nancial and personal objectives. The short term incentive (STI) is an “at risk” component of total remuneration provided in the form of cash, while the long term incentive consists of the Executive Long Term Incentive Plan and the Employee Share Option Plan.

Short term incentivesEach year, the Remuneration and Nomination Committee recommends to the Board the key performance indicators (KPIs) for the key management personnel. The KPIs generally include measures relating to the Group and the individual, and include fi nancial, strategic and people measures. The measures are chosen as they directly align the individual’s reward to the KPIs of the Group and to its strategy and performance.

The STI is set as a percentage of Total Fixed Remuneration, which includes base salary and superannuation benefi ts. The STI, as a percentage of remuneration, ranges from 20% to 50% depending on the responsibility of each individual within the Group. The STI has linked fi nancial and non-fi nancial objectives which must be met by the Group and each individual.

The fi nancial performance objective for STIs is NPAT growth on the previous comparative fi nancial year. That component is payable pro-rata on NPAT growth from 8% to 12% A stretch performance component is payable pro-rata on NPAT growth between 12% and 17% in determining whether or not a KPI has been achieved,

Once the fi nancial performance objective has been met, non-fi nancial objectives are measured. Non-fi nancial objectives vary with position and responsibility and include measures such as achieving strategic outcomes, safety and staff development.

Long-term incentivesDuring the year, the Group implemented the Executive Long Term Incentive Plan (“LTI Plan”) for its senior executives. Under the LTI Plan, senior executives receive rights equal to a proportion of the senior executive total fi xed remuneration at the time of issue divided by the volume weighted average share price as set out in the LTI Plan documentation. A senior executive will only acquire any legal title or interest to ordinary shares in the Company for rights that vest in accordance with the LTI Plan rules. An allocation of rights to a senior executive will vest over a three to fi ve year period (the performance period).

The LTI Plan is subject to two performance hurdles. For the FY10 issue, this was a TSR performance hurdle and EPS performance hurdle. TSR measures the change in share price plus dividends reinvested during the performance period.

DIRECTORS’ REPORT

The Company’s TSR is benchmarked against a comparator group comprising constituents of the S&P/ASX 300 at the date of allocation of rights to the senior executive. The EPS performance hurdle is the basic earnings per share calculated under Australian Accounting Standards, adjusted for any non-recurring or non-trading items, at the discretion of the Board. EPS growth is measured as the annual compound increase in EPS over the performance period.

In addition to the LTI Plan, the Group previously issued options to key management personnel and Directors under the Employee Share Option Plan. The options issued enable key management personnel to take up one fully paid ordinary share in the Company at a pre-determined exercise price. These options are running off and no issues have been made since 2007. There are currently only 100,001 options outstanding under this Plan.

Non-executive DirectorsThe maximum aggregate amount of fees that can be paid to all Directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive Directors are not linked to the performance of the Group. However, to align Directors’ interest with that of the shareholders, the Directors are encouraged to hold shares in the Company. Non-executive Directors are not eligible to participate in the executive LTI Plan.

The Board policy is to remunerate non-executive Directors at market rates for comparable companies for time, commitment and responsibilities. The Remuneration and Nomination Committee determines payments to the non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability.

Company performance and the link to remunerationThe remuneration strategy and policy of the Group is designed and administered to provide a link between remuneration and company performance. A signifi cant proportion of senior executive remuneration is at risk. The operation of this performance based system means the proportion of remuneration related to performance varies between individuals. The setting of individual KPIs for the STI component of executive remuneration encourages achievement of specifi c goals that have been given a high level of importance in relation to the future growth and profi tability of the Group. The Remuneration and Nomination Committee reviews the level of achievement of KPIs annually to ensure STI payments are calculated against measured achievement of the specifi ed performance targets. KPIs are adjusted annually to align to the Group’s operational and fi nancial performance targets for the relevant year.

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DIRECTORS’ REPORT


Company performance and the link to remuneration (Continued)The following table shows the gross revenue, profi ts, dividends and share price for the last four years for the Group at the end of the respective fi nancial years. Analysis of the actual fi gures shows an increase in profi ts each year as well as an increase or maintenance of dividends paid to shareholders. The improvement in the Company’s performance over the last four years has been refl ected in the Company’s share price with an increase each year, with the exception of 2009 where the ASX dropped across all sectors as a result of global economic conditions. The Board is of the opinion that these results can be attributed, in part, to the previously described remuneration policy.

2007 ($) 2008 ($) 2009 ($) 2010 ($)

Revenue 60.9m 80.2m 107.1m 113.5m

Net profi t 11.7m 18.3m 23.8m 27.5m

Dividends paid 0.0275 0.0625 0.0850 0.092

Share price at year end 2.40 2.46 1.17 2.40

Employment contracts of directors and senior executivesThe employment conditions of the Managing Director and CEO, Mr Mark Maloney, and specifi ed executives are formalised in contracts of employment. All executives are permanent employees of the Company. Mr Mark Maloney is employed under a contract which commenced on 25 November 2008 and is ongoing.

The Company’s standard executive employment contract stipulates the Company may terminate without cause by providing three months’ notice, with the exception of Mr Mark Maloney who must receive six months’ notice, or payment in lieu of notice. Termination payments are generally not payable on resignation or dismissal for serious misconduct. In the instances of serious misconduct, the Company may terminate employment at any time.

Allocation of long term incentives for the year ended 30 June 2010Subject to shareholder approval being obtained at the next Annual General Meeting of the Company, the Company intends to issue to Mr Mark Maloney 156,960 rights (being 50% of his fi xed annual remuneration) and to Mr Andrew Maloney 62,163 Rights (being 35% of his fi xed annual remuneration). The start of the performance period for these grants is intended to be 1 July 2009. Due to the uncertainty as regards to the taxation of equity incentives, it was not possible to grant these rights earlier but they are intended to operate as if issued during the year ended 30 June 2010. The terms of these grants will be set out in the Notice of Annual General Meeting 2010. In addition, further grants for the year ended 30 June 2011 will be put before shareholders for approval at the same time.

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Remuneration of Key Management Personnel

Table 1: Remuneration for the Year Ended 30 June 2010

Post- Share Employment Based Short-Term Benefi ts Benefi ts Payments

Non Salary & Cash Monetary Super- Options & Total Performance Fees Bonus Benefi ts Annuation Rights Related $ $ $ $ $ $ %

Non-executive DirectorsKevin W Maloney 262,500 — 21,149 23,538 1,800 308,987 —Daryl W Corsie 67,452 — — 5,850 1,500 74,802 —John C Taylor 62,692 — — 5,608 1,200 69,500 —Terrence J Strapp 62,250 — — — 23,629 85,879 —

Total non-executive Directors 454,894 — 21,149 34,996 28,129 539,168

Executive DirectorsMark K Maloney 441,452 287,368 — 50,403 49,596 828,819 40.66Andrew W Maloney 240,098 113,811 10,255 25,339 20,967 410,470 32.84

Other key management personnelStephen L Law 197,660 48,629 — 18,201 1,800 266,290 18.94Richard H Saunders 129,242 — — 6,692 1,800 137,734 1.31Peter L McCann 149,667 58,782 — 6,396 8,052 222,897 29.98Christopher H Jury 273,265 122,034 — 32,332 22,352 449,983 32.09Rod Cunningham 25,022 — — 3,115 — 28,137 —Lesley Jolly 212,640 64,390 — 18,739 8,675 304,444 24.00Rachel Maloney 134,041 34,746 — 14,478 4,989 188,254 21.11

Total executive KMP 1,803,087 729,760 10,255 175,695 118,231 2,837,028

Totals 2,257,981 729,760 31,404 210,691 146,360 3,376,196


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DIRECTORS’ REPORT


Remuneration of Key Management Personnel (Continued)

Table 2: Remuneration for the Year Ended 30 June 2009

Post- Share Employment Based Short-Term Benefi ts Benefi ts Payments

Non Salary & Cash Monetary Super- Options & Total Performance Fees Bonus Benefi ts Annuation Rights Related $ $ $ $ $ $ %

Non-executive DirectorsKevin W Maloney 384,000 — 21,000 35,000 5,000 445,000 —Geoff F Lord 55,000 — — — 4,000 59,000 —Daryl W Corsie 50,000 — — 5,000 4,000 59,000 —John C Taylor 50,000 — — 5,000 4,000 59,000 —Terrence J Strapp 55,000 — — — 9,000 64,000 —

Total non-executive Directors 594,000 — 21,000 40,000 26,000 686,000

Executive DirectorsMark K Maloney 188,000 — — 17,000 4,000 209,000 1.91Andrew W Maloney 235,000 65,000 20,000 21,000 6,000 347,000 20.46

Other key management personnelStephen L Law 120,000 50,000 — 82,000 6,000 258,000 21.71Richard H Saunders 264,000 65,000 — 24,000 6,000 359,000 19.78Christopher H Jury 259,000 75,000 — 23,000 6,000 363,000 22.31Rod Cunningham 145,000 — — 13,000 — 158,000 —Lesley Jolly 198,000 25,000 — 21,000 — 244,000 10.25

Total executive KMP 1,409,000 280,000 20,000 201,000 28,000 1,938,000

Totals 2,003,000 280,000 41,000 246,000 54,000 2,624,000

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Equity Instruments

Table 3: Options and Rights Awarded and Vested During the Year (Consolidated)

Fair Value Per Option At Exercise First Last Awarded Award Grant Date Price Exercise Exercise Vested Vested30 June 2010 No. Date $ $ Date Date No. %

Non-executive DirectorsKevin W Maloney 100,000 27.11.07 0.092 2.20 15.03.10 12.04.10 100,000 100%Daryl W Corsie 83,334 27.11.07 0.092 2.20 15.03.10 12.04.10 83,334 100%John C Taylor 66,667 27.11.07 0.092 2.20 15.03.10 12.04.10 66,667 100%Terrence J Strapp 66,667 27.11.07 0.105 3.21 13.09.09 10.10.09 66,667 100% 66,667 27.11.07 0.170 3.45 13.09.10 10.10.10 — —

Executive DirectorsMark K Maloney 66,667 27.11.07 0.092 2.20 15.03.10 12.04.10 66,667 100% 156,960 01.07.09 0.925 — 30.06.12 30.06.13 — —Andrew W Maloney 100,000 12.04.07 0.092 2.20 15.03.10 12.04.10 100,000 100% 62,163 01.07.09 0.925 — 30.06.12 30.06.13 — —

Other key management personnelStephen L Law 100,000 12.04.07 0.092 2.20 15.03.10 12.04.10 100,000 100%Richard H Saunders 100,000 12.04.07 0.092 2.20 15.03.10 12.04.10 100,000 100%Peter L McCann 26,115 01.07.09 0.925 — 30.06.12 30.06.13 — —Christopher H Jury 100,000 12.04.07 0.092 2.20 15.03.10 12.04.10 100,000 100% 66,655 01.07.09 0.925 — 30.06.12 30.06.13 — —Lesley Jolly 28,136 01.07.09 0.925 — 30.06.12 30.06.13 — —Rachel Maloney 14,233 01.07.09 0.925 — 30.06.12 30.06.13 — —

1,270,931 850,002


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DIRECTORS’ REPORT


Equity Instruments (Continued)

Table 4: Value of Options and Rights Awarded, Exercised and Lapsed During the Year (Consolidated)

Value of Remuneration Options Value of Consisting of Value Of Rights Exercised Options Options and Granted During During Lapsed During Rights for the Year the Year the Year the Year30 June 2010 $ $ $ %

Non-executive DirectorsKevin W Maloney — 9,200 — 0.58Daryl W Corsie — 7,667 — 2.01John C Taylor — 6,133 — 1.73Terrence J Strapp — — 7,000 27.51

Executive DirectorsMark K Maloney 48,396 6,133 — 5.98Andrew W Maloney 19,167 9,200 — 5.11

Other key management personnelStephen L Law — 9,200 — 0.68Richard H Saunders — — 9,200 1.31Peter L McCann 8,052 — — 3.61Christopher H Jury 20,552 9,200 — 4.97Lesley Jolly 8,675 — — 2.85Rachel Maloney 4,389 3,067 — 2.65

109,231 59,800 16,200

There were no alterations to the terms and conditions of options awarded as remuneration since their award date.

Table 5: Shares Issued on Exercise of Options (Consolidated)

Shares Issued Paid Per Share Unpaid Per Share30 June 2010 No. $ $

Non-executive DirectorsKevin W Maloney 100,000 2.20 —Daryl W Corsie 83,334 2.20 —John C Taylor 66,667 2.20 —

Executive DirectorsMark K Maloney 66,667 2.20 —Andrew W Maloney 100,000 2.20 —

Other key management personnelStephen L Law 100,000 2.20 —Christopher H Jury 100,000 2.20 —Rachel Maloney 33,334 2.20 —

650,002 —

Signed in accordance with a resolution of the directors:

M K MaloneyDirector

Sydney, 24 August 2010

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Auditor’s Independence Declaration to the Directors of The MAC Services Group Limited

In relation to our audit of the fi nancial report of The MAC Services Group Limited for the fi nancial year ended 30 June 2010, 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

Paul FlynnPartnerSydney24 August 2010

Liability limited by a scheme approved under Professional Standards Legislation

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STATEMENT OF FINANCIAL POSITIONAs at 30 June 2010

Consolidated

2010 2009 Note $000 $000

Assets

Current assets Cash and cash equivalents 9 3,389 1,533Trade and other receivables 10 19,171 19,994Inventories 11 773 683Land held for resale — 1,246

Total current assets 23,333 23,456

Non-current assetsReceivables 10 1,143 1,472Property, plant and equipment 12 185,626 182,990Intangible assets 13 595 602

Total non-current assets 187,364 185,064

Total assets 210,697 208,520

Current liabilitiesTrade and other payables 14 9,758 14,607Interest bearing loans and borrowings 15 609 654Income tax payable 6d) 1,619 966Provisions 16 1,474 2,926

Total current liabilities 13,460 19,153

Non-current liabilitiesInterest bearing loans and borrowings 15 41,000 51,085Deferred tax liability 6e) 3,368 1,149Provisions 16 118 208Derivative fi nancial instruments 17 573 1,178

Total non-current liabilities 45,059 53,620

Total liabilities 58,519 72,773

Net assets 152,178 135,747

EquityContributed equity 18 110,448 107,743Retained earnings 41,547 28,490Reserves 19 183 (486)

Total equity 152,178 135,747

The accompanying notes form part of these fi nancial statements.

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The MAC Services Group Limited ABN 53 003 657 510 | Annual Report 2010 33

STATEMENT OF COMPREHENSIVE INCOMEFor the Year Ended 30 June 2010

Consolidated

2010 2009 Note $000 $000

Rendering of services 82,323 75,988Sale of goods 30,287 29,859Rental revenue 437 748Other revenue 4 441 458

Total revenue 113,488 107,053

Changes in inventories of fi nished goods and work in progress (91) (277)Raw materials and consumables used (23,655) (21,422)Depreciation and amortisation expenses 5b) (14,368) (11,964)Consultants and advisors (1,365) (628)Employee benefi ts expense 5c) (24,289) (26,162)Freight and travel expenses (1,023) (569)Rent and occupancy costs (2,214) (1,823)Repairs and maintenance expense (2,019) (2,551)Other expenses (1,877) (5,479)Finance costs 5d) (3,737) (2,212)

Profi t before income tax 38,850 33,966

Income tax expense 6a) (11,333) (10,201)

Profi t after income tax 27,517 23,765

Other comprehensive incomeUnrealised gain/(loss) from cash fl ow hedges, net of tax 424 (1,537)

Total comprehensive income for the period 27,941 22,228

Earnings per share for profi t attributable to ordinary equity holders of the parentBasic earnings per share (cents per share) 8 16.67 14.88Diluted earnings per share (cents per share) 8 16.63 14.88


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STATEMENT OF CHANGES IN EQUITYFor Year Ended 30 June 2010

Contributed Retained Option Hedge equity Earnings Reserve Reserve Total

$000 $000 $000 $000 $000

Consolidated

Balance at 1 July 2009 107,743 28,490 339 (825) 135,747

Profi t for the year — 27,517 — — 27,517Other comprehensive income — — — 424 424

Total comprehensive income for the period — 27,517 — 424 27,941

Transactions with owners in their capacity as ownersIssue of ordinary shares 2,705 — — — 2,705Equity settled share based payments — — 245 — 245Dividends — (14,460) — — (14,460)

Total transactions with owners 2,705 (14,460) 245 — (11,510)

Balance at 30 June 2010 110,448 41,547 584 (401) 152,178

Balance at 1 July 2008 63,377 17,516 338 712 81,943

Profi t for the year — 23,765 — — 23,765Other comprehensive income — — — (1,537) (1,537)

Total comprehensive income for the period — 23,765 — (1,537) 22,228

Transactions with owners in their capacity as ownersIssue of ordinary shares 45,000 — — — 45,000Associated transaction costs (634) — — — (634)Equity settled share based payments — — 1 — 1Dividends — (12,791) — — (12,791)

Total transactions with owners 44,366 (12,791) 1 — 31,576

Balance at 30 June 2009 107,743 28,490 339 (825) 135,747


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The MAC Services Group Limited ABN 53 003 657 510 | Annual Report 2010 35

STATEMENT OF CASH FLOWS For the Year Ended 30 June 2010

Consolidated

2010 2009 Note $000 $000

Cash fl ows from operating activitiesReceipts from customers 125,292 107,574Payments to suppliers and employees (74,189) (67,195)Interest received 197 226Finance costs (3,737) (2,212)Income tax paid (8,656) (9,108)

Net cash provided by operating activities 20a) 38,907 29,285

Cash fl ows from investing activitiesPayment for property, plant and equipment (15,872) (66,177)Proceeds from the sale of property, plant and equipment 232 124Payment for intangible assets — (38)

Net cash used in investing activities (15,640) (66,091)

Cash fl ows from fi nancing activitiesPayment for share issue costs — (906)Proceeds from the issue of shares 2,705 45,000Proceeds from borrowings 10,000 51,269Repayment of borrowings (20,130) (44,566)Proceeds from the repayment of share scheme loans 345 —Dividends paid (14,331) (12,791)

Net cash (used in)/provided by fi nancing activities (21,411) 38,006

Net increase in cash held 1,856 1,200Cash at beginning of year 9 1,533 333

Cash at end of year 9 3,389 1,533


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ii) AASB 8 Operating Segments effective 1 July 2009 The Group has applied AASB 8 Operating Segments from

1 July 2009. The Group determines and presents operating segments based on the information that is provided internally to the Board of Directors, who are the Group’s chief operating decision makers. Comparative segment information has been re-presented in conformity with the transitional requirements of AASB 8: Segment Reporting. The change only impacts presentation and disclosure aspects.

iii) AASB 101 Presentation of Financial Statements (revised 2007) effective 1 July 2009

The revised Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with non-owner changes in equity presented in a reconciliation of each component of equity and included in the new statement of comprehensive income. The statement of comprehensive income presents all items of recognised income and expense. The change only impacts presentation and disclosure aspects.

iv) AASB 3 Business Combinations (2008) and amended AASB 127 Consolidated and Separate Financial Statements (2008) effective 1 July 2009

The Group has adopted revised AASB 3 Business Combinations (2008) and amended AASB 127 Consolidated and Separate Financial Statements (2008) for business combinations occurring in the fi nancial year starting 1 July 2009. All business combinations occurring on or after 1 July 2009 are accounted for by applying the acquisition method. The change in accounting policy is applied prospectively and had no material impact on earnings.

Certain Australian Accounting Standards and UIG interpretations have recently been issued that will be effective from the Group’s fi nancial year beginning 1 July 2010. The directors have not early adopted any of these new or amended standards or legislation. The directors have not yet fully assessed the impact of these new standards (to the extent relevant) and interpretations.

c) Basis of consolidationThe consolidated fi nancial statements comprise the fi nancial statements of The MAC Services Group Limited and its subsidiaries as at and for the period ended 30 June 2010.

Subsidiaries are all those entities over which the Group has the power to govern the fi nancial and operating policies so as to obtain benefi ts from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether a group controls another entity.

NOTE 1: CORPORATE INFORMATION

The MAC Services Group Limited (the “Company”) is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange. The nature of the operations and principal activities of The MAC Services Group Limited and its subsidiaries (together referred to as the “Group”) are described in the directors’ report.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Basis of preparationThe fi nancial report is a general purpose fi nancial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The fi nancial report has also been prepared on a historical cost basis, except for derivative fi nancial instruments, which have been measured at fair value.

The fi nancial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000) unless otherwise stated.

The fi nancial report complies with Australian Accounting Standards and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

b) New accounting Standards and InterpretationsThe Group has adopted the following new and amended Australian Accounting Standards and AASB interpretations as of 1 July 2009:

i) AASB 7 Financial Instruments: Disclosures effective 1 July 2009

The amended Standard requires additional disclosures about fair value measurement. Fair value measurements related to all fi nancial instruments recognised and measured at fair value are to be disclosed by source of inputs using a three level fair value hierarchy, by class. In addition, a reconciliation between the beginning and ending balance for level three fair value measurements is now required, as well as signifi cant transfers between levels in the fair value hierarchy. The change only impacts presentation and disclosure aspects.

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Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However, an operating segment that does not meet the quantitative criteria is still reported separately where information about the segment would be useful to users of the fi nancial statements.

Information about other business activities and operating segments that are below the quantitative criteria are combined and disclosed in a separate category for ‘all other segments’.

e) Cash and cash equivalentsCash and cash equivalents in the statement of fi nancial position comprise cash at bank and in hand and short-term deposits that are readily convertible to known amounts of cash and which are subject to an insignifi cant risk of changes in value.

For the purposes of the statement of cash fl ows, cash and cash equivalents consist of cash and cash equivalents as defi ned above, net of outstanding bank overdrafts. Bank overdrafts are included within interest-bearing loans and borrowings in current liabilities on the statement of fi nancial position.

f) Trade and other receivablesTrade receivables, which generally have 30 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment.

Collectability of trade receivables is reviewed on an ongoing basis at an operating unit level. Individual debts that are known to be uncollectible are written off when identifi ed. An impairment provision is recognised when there is objective evidence that the Group will not be able to collect the receivable. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash fl ows, discounted at the original effective interest rate.

g) InventoriesInventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Costs are assigned on the basis of weighted average costs.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

c) Basis of consolidation (continued)The fi nancial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated fi nancial statements, all intercompany balances and transactions, income and expenses and profi t and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of accounting involves recognising at acquisition date, separately from goodwill, the identifi able assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The identifi able assets acquired and the liabilities assumed are measured at their acquisition date fair value.

The difference between the above items and the fair value of the consideration (including the fair value of any pre-existing investment in the acquiree) is goodwill or a discount on acquisition.

d) Operating segmentsAn operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete fi nancial information is available. This includes start up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the board of directors.

Operating segments have been identifi ed based on the information provided to the chief operating decision makers – being the board of directors.

The Group aggregates two or more operating segments when they have similar economic characteristics, and the segments are similar in each of the following respects:

i) Nature of the products and services;

ii) Nature of the production processes;

iii) Type or class of customer for the products and services;

iv) Methods used to distribute the products or provide services and if applicable;

v) Nature of the regulatory environment.For

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j) Other fi nancial assetsFinancial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either fi nancial assets at fair value through profi t or loss, loans and receivables, held-to-maturity investments, or available-for-sale fi nancial assets. The classifi cation depends on the purpose for which the investments were acquired or originated.

When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair value through profi t or loss, directly attributable transaction costs.

Recognition and derecognitionAll purchases and sales of fi nancial assets are recognised on the date that the Group commits to purchase the asset (trade date). Financial assets are derecognised when the right to receive cash fl ows from the fi nancial assets has expired or when the entity transfers substantially all the risks and rewards of the fi nancial assets. If the entity neither retains nor transfers substantially all of the risks and rewards, it derecognises the asset if it has transferred control of the assets.

Subsequent measurementi) Financial assets at fair value through profi t or loss Financial assets classifi ed as held for trading are included

in the category “fi nancial assets at fair value through profi t or loss”. Financial assets are classifi ed as held for trading if they are acquired for the purpose of selling in the near term with the intention of making a profi t. Derivatives are also classifi ed as held for trading unless they are designated as effective hedging instruments. Gains or losses on fi nancial assets held for trading are recognised in profi t or loss and the related assets are classifi ed as current assets in the statement of fi nancial position.

ii) Held-to-maturity investments Held-to-maturity investments are non-derivative fi nancial

assets that have fi xed maturities and fi xed or determinable payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost using the effective interest rate method.

iii) Loans and receivables Loans and receivables including loan notes and loans to key

management personnel are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in profi t or loss when the loans and receivables are derecognised or impaired. These are included in current assets, except for those with maturities greater than twelve months after balance date, which are classifi ed as noncurrent.

iv) Available-for-sale fi nancial assets Available-for-sale fi nancial assets are those non-derivative

fi nancial assets, principally equity securities, that are designated as available-for-sale or are not classifi ed as any of the three preceding categories. After initial recognition available-for sale fi nancial assets are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profi t or loss.


h) Derivative fi nancial instruments and hedgingThe Group uses derivative fi nancial instruments to hedge its risks associated with interest rate fl uctuations. Such derivative fi nancial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value. Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative.

Derivative assets and liabilities are classifi ed as non-current when the remaining maturity is more than twelve months, or current when the remaining maturity is less than twelve months.

Any gains or losses arising from changes in the fair value of derivatives, except for those that qualify as cash fl ow hedges, are taken directly to profi t or loss for the year.

Hedges that meet the strict criteria for hedge accounting are accounted for as follows:

i) Cash fl ow hedges Cash fl ow hedges are hedges of the Group’s exposure to

variability in cash fl ows that are attributable to a particular risk associated with a recognised asset or liability or to a forecast transaction and that could affect profi t or loss. The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is recognised in profi t or loss.

Amounts taken to equity are transferred out of equity and included in the measurement of the hedged transaction when the forecast transaction occurs.

At each balance date, the Group measures ineffectiveness. Any ineffective portion relating to interest rate hedges is taken to other expenses in the statement of comprehensive income.

If the forecast transaction is no longer expected to occur, amounts recognised in equity are transferred to the statement of comprehensive income. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked (due to it being ineffective), amounts previously recognised in equity remain in equity until the forecast transaction occurs.

i) Non-current assets held for saleNon-current assets are classifi ed as held for sale and measured at the lower of their carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction instead of use. They are not depreciated or amortised. For an asset to be classifi ed as held for sale, it must be available for immediate sale in its present condition and its sale must be highly probable.F

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The estimated useful lives for the current and comparative periods are as follows:

Class of Fixed Asset Depreciation Rate

Buildings 6.7-30%

Plant and equipment 7.5-50%

Leasehold Improvements 20-33%

Depreciation methods, useful lives and residual values are reviewed at each fi nancial year-end and adjusted if appropriate.

l) LeasesLeases in terms of which the Group assumes substantially all the risks and rewards of ownership are classifi ed as fi nance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to the asset.

Other leases are operating leases and are not recognised in the Group’s statement of fi nancial position.

m) Impairment of non-fi nancial assets other than goodwill and indefi nite life intangiblesNon-fi nancial assets other than goodwill and indefi nite life intangibles are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The Group conducts an annual internal review of asset values, which is used as a source of information to assess for any indicators of impairment. External factors, such as changes in expected future processes, technology and economic conditions, are also monitored to assess for indicators of impairment. If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifi able cash infl ows that are largely independent of the cash infl ows from other assets or groups of assets (cash-generating units). Non-fi nancial assets other than goodwill that suffered an impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed.


k) Property, plant and equipmentPlant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fi xed or variable overheads.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within other income in profi t or loss.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profi t and loss during the fi nancial period in which they are incurred.

DepreciationDepreciation is calculated on the depreciable amount, which is the cost of the asset, or other amount substituted for cost, less its residual value.

Depreciation is recognised in profi t or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely refl ects the expected pattern of consumption of the future economic benefi ts embodied in the asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated.

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The useful lives of intangible assets are assessed to be either fi nite or indefi nite. Intangible assets with fi nite lives are amortised over their useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a fi nite useful life is reviewed at least at each fi nancial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefi ts embodied in the asset are accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with fi nite lives is recognised in profi t or loss in the expense category consistent with the function of the intangible asset.

Intangible assets with indefi nite useful lives are tested for impairment annually either individually or at the cash-generating unit level consistent with the methodology outlined for goodwill above. Such intangibles are not amortised. The useful life of an intangible asset with an indefi nite life is reviewed each reporting period to determine whether indefi nite life assessment continues to be supportable. If not, the change in the useful life assessment from indefi nite to fi nite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis.

o) Trade and other payablesTrade and other payables are carried at amortised cost and due to their short-term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the fi nancial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

p) Interest bearing loans and borrowingsAll loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid on the establishment of loan facilities that are yield related are included as part of the carrying amount of the loans and borrowings.

Borrowings are classifi ed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.


n) Goodwill and intangibles

GoodwillGoodwill acquired in a business combination is initially measured at cost of the business combination being the excess of the consideration transferred over the fair value of the Group’s net identifi able assets acquired and liabilities assumed. If this consideration transferred is lower than the fair value of the net identifi able assets of the subsidiary acquired, the difference is recognised in profi t or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefi t from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes, and is not larger than an operating segment determined in accordance with AASB 8 Operating Segments.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash generating units), to which the goodwill relates.

At each reporting date, the Group performs its impairment testing using the value in use methodology. When the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. When goodwill forms part of a cash-generating unit (group of cash-generating units) and an operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Impairment losses recognised for goodwill are not subsequently reversed.

IntangiblesIntangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in profi t or loss in the year in which the expenditure is incurred.F

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The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognised as an expense, with a corresponding increase in liabilities, over the period that the employees unconditionally become entitled to the payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised as personnel expense in profi t or loss.

s) Contributed equityOrdinary shares are classifi ed as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

t) Revenue recognitionRevenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefi ts will fl ow to the Group and the revenue can be reliably measured. The following specifi c recognition criteria must also be met before revenue is recognised:

i) Rendering of services Revenue from the provision of services is recognised

when the services are provided or when entitlement exists to accrue the revenue.

ii) Sale of goods Revenue from the sale of goods includes food and beverage

and other sundry operating revenue. Revenue is recognised when there has been a transfer of risks and rewards to the customer, no further work or processing is required, the quantity and quality of the goods has been determined, the price is fi xed and generally title has passed.

iii) Rental revenue Rental revenue from investment properties is accounted for

on a straight-line basis over the lease term. Contingent rental income is recognised as income in the periods in which it is earned. Lease incentives granted are recognised as an integral part of the total rental income.

iv) Interest revenue Revenue is recognised as interest accrues using the

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


q) Provisions and employee benefi tsProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value refl ects current market assessments of the time value of money and the risks specifi c to the liability. The increase in the provision resulting from the passage of time is recognised in fi nance costs.

Employee leave benefi tsi) Wages, salaries and annual leave Liabilities for wages and salaries, including non-monetary

benefi ts, and annual leave expected to be settled within twelve months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled.

ii) Long service leave The liability for long service leave is recognised and

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

r) Share-based payment transactionsThe grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to awards. The amount recognised as an expense is adjusted to refl ect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do not meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to refl ect such conditions and there is no true-up for differences between expected and actual outcomes.

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Tax consolidation legislationThe MAC Services Group Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under tax consolidation legislation. Each entity in the consolidated group recognises its own current and deferred tax assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax liabilities (assets) and deferred tax assets arising from unused tax losses and tax credits in the subsidiaries are immediately transferred to the head entity.

The consolidated group notifi ed the Australian Tax Offi ce that it had formed an income tax consolidated group to apply from 1 July 2006. The tax consolidated group has entered a tax funding arrangement whereby each company in the consolidated group contributes to the income tax payable by the consolidated group in proportion to their contribution to the consolidated group’s taxable income. Differences between the amounts of net tax assets and liabilities derecognised and the net amounts recognised pursuant to the funding arrangement are recognised as either a contribution by, or distribution to the head entity.

v) Goods and Services Tax (“GST”)Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of fi nancial position.

Cash fl ows are included in the statement of cash fl ows on a gross basis. The GST components of cash fl ows arising from investing and fi nancing activities which are recoverable from, or payable to, the ATO are classifi ed as operating cash fl ows.

w) Earnings per shareThe MAC Services Group Limited presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profi t or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profi t or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share rights granted to employees.


u) Income taxCurrent tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

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

Deferred income tax liabilities are recognised for all taxable temporary differences except when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profi t nor taxable profi t or loss.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profi t will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profi t nor taxable profi t or loss.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that suffi cient taxable profi t will be available to allow all or part of the deferred income tax asset to be utilised.

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

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

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

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NOTE 3: OPERATING SEGMENTS

a) Identifi cation of reportable segmentsThe group has identifi ed its operating segments based on the internal reports that are reviewed and used by the board of directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

The operating segments are identifi ed by management based on the manner in which the product is sold, the nature of the service provided and the identity of service line manager. Discrete fi nancial information about each of these operating businesses is reported to the board of directors on at least a monthly basis.

The reportable segments are based on aggregated operating segments determined by the similarity of the products produced and sold and/or the services provided, as these are the sources of the Group’s major risks and have the most effect on the rates of return.

b) Types of products and servicesi) Accommodation Services The accommodation business provides accommodation

and ancillary services to the mining industry in Australia. Ancillary services primarily consist of the supply of meals to guests of the accommodation business.

ii) Other Other segment revenue and result relates to the supply

of laundry services to our accommodation business, manufacturing services to the mining industry in Australia and other Corporate overhead expenditure.

c) Accounting policies and intersegment transactionsIntersegment pricing is determined on an arm’s-length basis. Segment result and assets include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Elimination adjustments are made to eliminate intersegment revenues from the total consolidated revenues.

d) Major customersThere are two major customers in the Group’s Accommodation Services segment representing approximately $25,477,000 or 22.4% and $17,192,000 or 15.1% (2009: $15,177,000 or 14.2% and $11,056,000 or 10.3%) of the Group’s total revenues.

e) Customers and assets by areaThe Group’s Accommodation Services and Other segment are managed wholly within Australia. Segment revenue is based on the geographical location of customers, who are wholly within Australia. Segment assets are based on the geographical location of the assets, which are wholly held within Australia.


x) Signifi cant accounting judgements, estimates and assumptionsThe preparation of the fi nancial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the fi nancial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources.

Management has identifi ed the following critical accounting policies for which signifi cant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect fi nancial results or the fi nancial position reported in future periods.

i) Impairment of non-fi nancial assets other than goodwill and indefi nite life intangibles

The Group assesses impairment of all assets at each reporting date by evaluating conditions specifi c to the Group and to the particular asset that may lead to impairment. These include product and manufacturing performance, technology, economic and political environments and future product expectations. If an impairment trigger exists the recoverable amount of the asset is determined.

ii) Impairment of goodwill and intangibles with indefi nite useful lives

The Group determines whether goodwill and intangibles with indefi nite useful lives are impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating units, using a value in use discounted cash fl ow methodology, to which the goodwill and intangibles with indefi nite useful lives are allocated.

iii) Share-based payment transactions The Group measures the cost of equity-settled transactions

with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined with the assistance of an external valuer using a Black-Scholes model. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.

The Group measures the cost of cash-settled share-based payments at fair value at the grant date using the Black-Scholes formula and a Monte-Carlo simulation model, taking into account the terms and conditions upon which the instruments were granted.F

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NOTE 3: OPERATING SEGMENTS (CONTINUED)

Accommodation Consolidated Services Other Segment Total Eliminations Total

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000

Revenue

Revenue from rendering of services 79,298 72,716 3,025 3,272 82,323 75,988 — — 82,323 75,988

Revenue from sale of goods 28,808 27,655 1,479 2,204 30,287 29,859 — — 30,287 29,859

Other revenue 679 961 199 245 878 1,206 — — 878 1,206

External segment revenue 108,785 101,332 4,703 5,721 113,488 107,053 — — 113,488 107,053

Inter-segment revenue 366 1,485 1,025 1,534 1,391 3,019 (1,391) (3,019) — —

Total segment revenue 109,151 102,817 5,728 7,255 114,879 110,072 (1,391) (3,019) 113,488 107,053

Result

EBITDA 67,502 64,861 (10,515) (16,507) 56,987 48,354 (32) (212) 56,955 48,142

Depreciation (13,117) (10,451) (1,251) (1,513) (14,368) (11,964) — — (14,368) (11,964)

EBIT 54,385 54,410 (11,766) (18,020) 42,619 36,390 (32) (212) 42,587 36,178

Financing costs (3,737) (2,212)

Profi t before income tax 38,850 33,966

Income tax expense (11,333) (10,201)

Profi t after income tax 27,517 23,765

Segment assets 202,549 200,701 8,148 7,819 210,697 208,520 — — 210,697 208,520

Capital expenditure 14,307 63,425 1,565 2,752 15,872 66,177 — — 15,872 66,177

Segment liabilities 52,294 60,807 6,225 11,966 58,519 72,773 — — 58,519 72,773

NOTE 4: OTHER REVENUE Consolidated

2010 2009 $000 $000

Interest 197 226Other 244 232

441 458

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NOTE 5: EXPENSES Consolidated

2010 2009 $000 $000

a) Cost of sales 23,746 21,699

b) Depreciation and amortisation included in statement of comprehensive income Depreciation 14,325 11,936 Amortisation of leasehold improvements 43 28

14,368 11,964

c) Employee benefi ts expense Wages and salaries 23,172 24,847 Share-based payments expense 245 1 Other employee benefi ts expense 872 1,314

24,289 26,162

d) Finance costs Interest expense on fi nancial liabilities 3,737 2,212

e) Rental expense on operating leases Minimum lease payments 1,178 940

NOTE 6: INCOME TAX Consolidated

2010 2009 $000 $000

a) Income tax expense The major components of income tax expense are: Current income tax Current income tax charge 8,919 9,263 Adjustments in respect of current income tax of previous years (395) — Deferred income tax Relating to the origination and reversal of temporary differences 2,809 938

Income tax expense reported in the statement of comprehensive income 11,333 10,201

b) Amounts charged or credited directly to equity Net gain/(loss) on revaluation of cash fl ow hedges 181 (659)

Income tax expense reported in equity 181 (659)

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NOTE 6: INCOME TAX (CONTINUED) Consolidated

2010 2009 $000 $000

c) Numerical reconciliation between aggregate tax expense recognised in the statement of comprehensive income and tax expense calculated per the statutory income tax rate

Total accounting profi t before income tax 38,850 33,966

At the Parent Entity’s statutory income tax rate of 30% (2009: 30%) 11,655 10,190 Adjustments in respect of current income tax expense of previous years (395) — Entertainment 8 5 Share based payments 73 1 Other (8) 5

Aggregate income tax expense 11,333 10,201

d) Recognised current income tax Opening balance (966) (656) Charged to income (8,919) (9,263) Adjustments in respect of current income tax expense of previous income years (390) — Other payments 8,656 8,953 Closing balance (1,619) (966)

e) Recognised deferred income tax Opening balance (1,149) (1,140) Charged to income (2,809) (938) Adjustments in respect of current income tax expense of previous income years 772 — Charged to equity (182) 929 Closing balance (3,368) (1,149)

Deferred income tax relates at balance date relates to the following: i) Deferred tax asset Provisions and accrued expenses 1,104 2,122 Derivatives 172 353 Transaction costs on equity issue 410 799 Other 124 84

1,810 3,358

ii) Deferred tax liabilities Property, plant and equipment 5,178 4,507

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NOTE 7: DIVIDENDS PAID AND PROPOSED Consolidated

2010 2009 $000 $000

a) Recognised amounts Declared and paid during the year: Final franked dividend for 2009: $0.0425 (2008: $0.04) per share franked at a rate of 30% (2008: 30%) 7,001 5,790 Interim franked dividend for 2010 $0.045 (2009: $0.0425) per share franked at a rate of 30% (2009: 30%) 7,459 7,001

14,460 12,791

b) Unrecognised amounts Final franked dividend for 2010: $0.0475 (2009: $0.0425) per share franked at a rate of 30% (2009: 30%) 7,883 7,001

After reporting date, the above dividends were proposed for approval at the Company’s Annual General Meeting. These amounts have not been recognised as a liability as at 30 June 2010 but will be brought to account subsequent to balance date.

c) Franking credit balance The amount of franking credits available for the subsequent fi nancial year are: i) Franking account balance as at the end of the fi nancial year at 30% (2009: 30%) 9,821 5,099 ii) Franking credits that will arise from the payment of income tax payable

as at the end of the fi nancial year 1,619 3,206

11,440 8,305 The amount of franking credits available for future periods: i) Impact on the franking account of dividends proposed or declared before the

fi nancial report was authorised for issue but not recognised as a distribution to equity holders during the period (3,378) (3,001)

8,062 5,304

NOTE 8: EARNINGS PER SHARE Consolidated

2010 2009 $000 $000

a) Earnings used in calculating earnings per share Net profi t attributable to ordinary equity holders of the parent 27,517 23,765

Earnings used in the calculation of basic and diluted EPS 27,517 23,765

b) Weighted average number of shares Weighted average number of ordinary shares for basic earnings per share 165,053 159,751 Effect of dilution: Share rights 401 —

Weighted average number of ordinary shares adjusted for the effect of dilution 165,454 159,751

Rights granted under the Long Term Incentive Scheme to employees are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent they are dilutive.

100,001 (2009: 1,875,648) options that could potentially dilute basic earnings per share in the future have not been included in the calculation of diluted earnings per share due to being anti-dilutive for the period.F

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NOTE 9: CASH AND CASH EQUIVALENTS Consolidated

2010 2009 $000 $000

Cash at bank and in hand 3,389 1,533

Reconciliation to statement of cash fl owsFor the purposes of the statement of cash fl ows, cash and cash equivalents comprise the following at 30 June:Cash and cash equivalents 3,389 1,533

NOTE 10: TRADE AND OTHER RECEIVABLES Consolidated

2010 2009 Note $000 $000

CurrentTrade receivables 19,204 19,111Allowance for impairment loss 10a) (767) (219)

18,437 18,892Prepayments 422 298Other receivables 311 692Related party receivables: Other related parties 1 112

19,171 19,994

Non-CurrentOther receivables 35 19Share scheme loan 1,108 1,453

1,143 1,472

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NOTE 10: TRADE AND OTHER RECEIVABLES (CONTINUED)

a) Allowance for impairment loss

Trade receivables are non-interest bearing and are generally on 30 day terms. A provision for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired. An impairment loss of $767,000 (2009: $219,000) has been recognised by the Group. These amounts have been included in other expenses in the statement of comprehensive income.

Consolidated

2010 2009 $000 $000

Movements in the provision for impairment loss were as follows:As at 1 July 219 120Charge for the year 915 512Receivables written off (367) (413)

As at 30 June 767 219

At 30 June, the ageing analysis of trade receivables is as follows:

Consolidated

2010 2009 Gross Allowance Gross Allowance $000 $000 $000 $000

Not past due 10,419 60 8,828 —Past due 0-30 days 4,282 46 6,473 15Past due 31-60 days 1,418 41 1,973 —Past due 61-90 days 313 9 573 4Past due +90 days 2,772 611 1,264 200

19,204 767 19,111 219

The carrying amount of receivables past due but not considered impaired are $8,078,000 (2009: $10,064,000) for the Group. These comprise customers who have a good debt history and are considered recoverable.

b) Fair value and credit risk

Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.

The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group’s policy to transfer (on-sell) receivables to special purpose entities.

NOTE 11: INVENTORIES Consolidated

2010 2009 $000 $000

CurrentConsumables 773 683

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NOTE 12: PROPERTY, PLANT AND EQUIPMENT Consolidated

2010 2009 $000 $000

Total freehold land at cost 10,540 5,159Buildings at cost 204,845 195,228Less: accumulated depreciation (37,684) (25,474)

Total buildings 167,161 169,754

Total land and buildings 177,701 174,913

Leasehold improvementsLeasehold improvements at cost 174 167Less: accumulated amortisation (154) (111)

Total leasehold improvements 20 56

Plant and equipmentPlant and equipment at cost 16,451 14,736Less: accumulated depreciation (9,643) (8,097)

6,808 6,639

Leased plant and equipmentCapitalised lease assets 1,814 1,818Less: accumulated depreciation (717) (436)

1,097 1,382

Total property, plant and equipment 185,626 182,990

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

Freehold Leasehold Plant and Equipment Land Buildings Improvements Owned Leased Total $000 $000 $000 $000 $000 $000

At 1 July 2008 net of accumulated depreciation 6,426 117,120 56 6,024 703 130,329Additions 18 62,181 30 2,974 974 66,177Disposals (39) (2) (2) (263) — (306)Transfers to assets held for sale (1,246) — — — — (1,246)Depreciation charge for the year — (9,545) (28) (2,096) (295) (11,964)

At 30 June 2009 net of accumulated depreciation 5,159 169,754 56 6,639 1,382 182,990

Additions 4,135 9,528 7 2,175 27 15,872Disposals — (12) — (83) (19) (114)Depreciation charge for the year — (12,109) (43) (1,923) (293) (14,368)Transfer from assets held for sale 1,246 — — — — 1,246

At 30 June 2010 net of accumulated depreciation 10,540 167,161 20 6,808 1,097 185,626

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NOTE 13: INTANGIBLE ASSETS Consolidated

2010 2009 $000 $000

Goodwill at cost 554 554Licences at cost 41 48

595 602

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

Goodwill Licences $000 $000

Year ended 30 June 2009At 1 July 2008 net of accumulated amortisation and impairment 554 9Additions — 39

At 30 June 2009 net of accumulated amortisation and impairment 554 48

Year ended 30 June 2010At 1 July 2009 net of accumulated amortisation and impairment 554 48Additions — —Disposals — (7)

At 30 June 2010 net of accumulated amortisation and impairment 554 41

b) Impairment tests for goodwill and intangibles with indefi nite useful lives

Goodwill acquired through business combinations and licences have been allocated to and are tested at the level of groups of cash generating units at which goodwill is monitored. The Group has two cash generating units being accommodation services and laundry services.

Consolidated

2010 2009 $000 $000

Accommodation services 82 89Laundry services 513 513

595 602

The recoverable amount of the cash generating units are determined based on a value in use calculation using cash fl ow projections as at 30 June based on fi nancial budgets approved by management.

The pre-tax risk-adjusted discount rate applied to these projections is 14.7% (2009: 13.7%).

The long-term growth rate used to extrapolate cash fl ows beyond the budget period is 4.0% (2009: 3.75%) for Accommodation services and 2.9% (2009: 3.75%) for Laundry services.

With regard to the assessment of the value in use of each cash generating unit, management believe that no reasonable possible change in any of the above key assumptions would cause the carrying value of the cash generating unit to materially exceed its recoverable amount.

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NOTE 14: TRADE AND OTHER PAYABLES Consolidated

2010 2009 $000 $000

CurrentTrade payables 5,915 10,238Other payables and accrued expenses 3,843 4,181Income received in advance — 188

9,758 14,607

Fair valueDue to the short-term nature of these payables, their carrying value is assumed to approximate their fair value.

NOTE 15: INTEREST BEARING LOANS AND BORROWINGS Consolidated

2010 2009 $000 $000

CurrentSecured liabilitiesLease liability 609 654

Non-CurrentSecured liabilitiesBank loan 40,729 50,300Lease liability 271 785

41,000 51,085

a) Fair values

The carrying amount of the Group’s current and non-current borrowings approximate their fair value.

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NOTE 15: INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)

b) Assets pledged as security

The carrying amounts of assets pledged as security for current and non-current interest-bearing liabilities are:

Consolidated

2010 2009 Note $000 $000

CurrentFloating chargeCash and cash equivalents 9 3,389 1,533Trade and other receivables 10 19,171 19,994Inventories 11 773 683First mortgageLand held for resale — 1,246

Total current assets pledged as security 23,333 23,456

Non-CurrentFirst mortgageFreehold land and buildings 12 177,701 174,913Finance leaseLeased plant and equipment 12 1,097 1,382Floating chargeReceivables 10 1,143 1,472Other property, plant and equipment 6,828 6,695Intangible assets 13 595 602

Total non-current assets pledged as security 187,364 185,064

Total assets pledged as security 210,697 208,520

The bank loan is secured by a registered fi rst mortgage over the freehold properties and a fl oating charge over all assets of the Group and the Company. The covenants within the bank loans require that, the ratio of debt to EBITDA not exceed 2.5:1, the ratio of EBITDA to interest of not less than 4.0:1, and a gearing ratio of not more than 0.5:1.

Lease liabilities are secured over the relevant fi nanced asset.

c) Defaults and breaches

During the current and prior years, there were no defaults or breaches on any of the loans.

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NOTE 16: PROVISIONS Consolidated

2010 2009 Note $000 $000

CurrentWarranties — 183Manufacturing contracts — 900Re-structuring costs — 431Annual leave 1,420 1,412Long service leave 54 —

1,474 2,926

Non-currentLong service leave 118 208

a) Analysis of total provisionsCurrent 1,474 2,926Non-current 118 208

1,592 3,134

b) Movements in provisions

Movements in each class of provision during the fi nancial year, other than provisions relating to employee benefi ts, are set out below:

Consolidated

Manufacturing Restructuring Warranties Contracts Costs Total $000 $000 $000 $000

At 1 July 2009 183 900 431 1,514Utilised — (900) (431) (1,331)Unused amounts reversed (183) — — (183)

At 30 June 2010 — — — —

Provision for WarrantiesA provision has been recognised for warranty claims relating to manufactured buildings sold where a twelve-month warranty exists. In calculating the present value of future cash fl ows in respect of warranty claims, the probability of claims and the amount of the claim has been based upon industry norms in the absence of historical data.

Provision for Manufacturing ContractsA provision has been recognised for the present value of projected cash outfl ows in excess of projected cash infl ows for manufacturing commitments at the end of the fi nancial period.

Provision for Restructuring CostsA provision for restructuring costs has been recognised for the costs associated with the projected cash outfl ows associated with a reorganisation that was resolved to occur during the fi nancial year ended 30 June 2009.

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NOTE 17: DERIVATIVE FINANCIAL INSTRUMENTS Consolidated

2010 2009 $000 $000

Non-Current LiabilitiesInterest rate swap contracts – cash fl ow hedges 573 1,178

Interest-bearing loans of the Group currently bear an average variable interest rate of 7% (2009: 8%). In order to protect against rising interest rates the Group has entered into interest rate swap contract under which it has a right to receive interest at variable rates and to pay interest at fi xed rates. Swaps in place cover approximately 61% (2009: 50%) of the principal outstanding. The settlement date of the swap contract approximately corresponds with interest payment dates of borrowings.

The swaps are matched directly against the appropriate loan and interest expense and as such are considered highly effective. They are settled on a net basis. The swaps are measured at fair value and all gains and losses attributable to the hedged risk are taken directly to equity and re-classifi ed into profi t or loss when the interest expense is recognised.

At 30 June, the applicable interest rate, notional principal amounts and period of expiry of the interest rate swap contracts are as follows:

Effective Average Interest Rate Payable Consolidated

2010 2009 % %

1-2 years 9.00 9.00

Notional Principal Consolidated

2010 2009 $000 $000

1-2 years 25,000 25,000

NOTE 18: CONTRIBUTED EQUITY Consolidated

2010 2009 $000 $000

165,966,692 (2009: 164,737,018) fully paid ordinary shares 110,448 107,743

a) Movement in ordinary shares on issueBalance at beginning of year 107,743 63,377Shares issued:i) 1,229,674 (2009: Nil) on exercise of options under Employee Share Option Plan 2,705 —ii) Nil (2009: 20,000,000) as part of equity raising — 45,000Associated transaction costs — (634)

Balance at end of year 110,448 107,743

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

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NOTE 18: CONTRIBUTED EQUITY (CONTINUED)

b) Capital risk management

When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefi ts for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.

Management effectively manages the Group’s capital by assessing the Group’s fi nancial risks and adjusting its capital structure in response to changes in these risks and in fi nancial markets These responses include the management of debt levels, distributions to shareholders and share issues.

During 2010, management paid dividends of $14,460,000 (2009: $12,791,000). Management target for future dividend payments are 55% of net profi t after tax.

There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year. This strategy is to target a leverage ratio where gross debt does not exceed 2.5 times EBITDA, and a gearing ratio of 50%. This target gearing ratio is a long-term objective, and the Group remains well below this debt sizing criteria.

Management monitor capital through the gearing ratio (net debt/total capital). The gearing ratios at balance date were as follows:

Consolidated

2010 2009 Note $000 $000

Total borrowings 15 41,609 51,739Less cash and cash equivalents 9 (3,389) (1,533)

Net debt 38,220 50,206Total equity 152,178 135,747

Total capital 190,398 185,953

Gearing ratio 20.07% 27.00%

NOTE 19: RESERVES Consolidated

2010 2009 $000 $000

Option reserve 584 339Hedge reserve (401) (825)

183 (486)

Option reserveThe option reserve is used to record the value of share based payments provided to employees, including Key Management Personnel as part of their remuneration.

Hedge reserveThe hedge reserve records the portion of the gain or loss on a hedging instrument in a cash fl ow hedge that is determined to be an effective hedge.

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NOTE 20: CASH FLOW STATEMENT RECONCILIATION Consolidated

2010 2009 $000 $000

a) Reconciliation of net profi t after tax to net cash fl ows from operationsNet profi t 27,517 23,765Adjustments for:Depreciation 14,325 11,936Amortisation 43 28Net (profi t)/loss on disposal of property, plant and equipment (107) 182Share-based payments expense 245 —Interest on share scheme loans (133) —Changes in assets and liabilities:Decrease/(increase) in trade and other receivables 807 (9,231)(Increase) in inventories (90) (277)(Decrease)/increase in trade and other payables (4,849) 38(Decrease)/increase in provisions (1,542) 1,750Increase in current tax liability 653 1,045Increase in deferred taxes payable 2,038 49

Cash fl ows from operations 38,907 29,285

NOTE 21: RELATED PARTY DISCLOSURES

a) Subsidiaries

The consolidated fi nancial statements include the fi nancial statements of The M AC Services Group Limited and the subsidiaries listed in the following table.

Country of % Equity InterestName Note incorporation 2010 2009

The MAC Linen Pty Ltd Australia 100 100The MAC Travel Pty Ltd (i) Australia — 100MSL Nominees Pty Ltd Australia 100 100MSL Nominees (Karratha) Pty Ltd Australia 100 100The MAC Middlemount Property Trust Australia 100 100The MAC Muswellbrook Property Trust (ii) Australia 100 100The MAC Wandoan Property Trust Australia 100 100The MAC Middlemount Property Trust Australia 100 100The Karratha Property Trust Australia 100 100

(i) The MAC Travel Pty Ltd was disposed on 31 October 2009.(ii) The Muswellbrook Property Trust previously known as The Mackay Property Trust.

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NOTE 21: RELATED PARTY DISCLOSURES (CONTINUED)

b) Ultimate parent

The ultimate parent of The MAC Services Group Limited is Marley Holdings Pty Limited which owns 52.15% of the ordinary shares.

Consolidated

2010 2009 $000 $000

c) Transactions with related parties

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Purchases made by the Group with other related parties:

JLM Transport & Logistics Pty Ltd (“JLM”) A shared services agreement for shared premises and a transport services arrangement

exists between The MAC Services Group Ltd and JLM, a company owned by Marley Holdings Pty Ltd of which Mr MK & KW Maloney have control and a benefi cial interest 894 3,721

Tulla Group Pty Limited A shared services agreement exists between The MAC Services Group Ltd and Tulla Group

Pty Ltd. Mr KW & MK Maloney control and have a benefi cial interest in Tulla Group Pty Ltd 7 24

Taylors Solicitors Fees for legal services and advice were paid to Taylors Solicitors, a fi rm of which

Mr JC Taylor is a partner. 35 40

KLM Group Limited A fi xed supply of subcontract building services arrangement was entered into between The MAC

Services Group Ltd and KLM Group limited of which Mr G Lord is a non-executive Director — 405

Fish’n’Fresh Delites The supply of goods by Fish’n’Fresh Delites to The MAC Services Group Ltd. Fish’n’Fresh Delites

is an entity of which Mr KW & Mr MK Maloney have an interest. 195 48

NOTE 22: KEY MANAGEMENT PERSONNEL

a) Key management personnel summary

The following were the key management personnel of the Group at any time during the reporting period and unless otherwise indicated were key management personnel for the entire period.

Key Management Person PositionKevin W Maloney Chairman Geoffrey F Lord Director – Non Executive (retired 30 June 2009)Daryl W Corsie Director – Non ExecutiveJohn C Taylor Director – Non ExecutiveTerrence J Strapp Director – Non ExecutiveMark K Maloney Director – ExecutiveAndrew W Maloney Alternate Director – Chief Development Offi cer Stephen L Law Company Secretary & General CounselRichard H Saunders Chief Financial Offi cer (retired 11 January 2010)Peter L McCann Chief Financial Offi cer (appointed 11 January 2010)Christopher H Jury Chief Operating Offi cerRod Cunningham General Manager – Operations (retired 30 August 2009)Lesley Jolly Executive General Manager – Human ResourcesRachel Maloney Executive General Manager – Marketing & Communications

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NOTE 22: KEY MANAGEMENT PERSONNEL (CONTINUED)

Consolidated

2010 2009 $ $

b) Compensation for key management personnelShort-term employee benefi ts 3,019,145 2,324,000Post-employment benefi ts 210,691 246,000Share based payment 146,360 54,000

3,376,196 2,624,000

c) Option and right holdings of key management personnel Not

Balance at Net Balance at Total Vested Exercisable Exercisable 1 July Granted as Options Change 30 June 30 June 30 June 30 June 2009 Remuneration1 Exercised Other 2 2010 2010 2010 2010

DirectorsKevin W Maloney 100,000 — (100,000) — — — — —Daryl W Corsie 83,334 — (83,334) — — — — —John C Taylor 66,667 — (66,667) — — — — —Terrence Strapp 133,334 — — (66,667) 66,667 — — 66,667Mark K Maloney 66,667 156,960 (66,667) — 156,960 — — 156,960Andrew W Maloney 100,000 62,163 (100,000) — 62,163 — — 62,163

ExecutivesStephen L Law 100,000 — (100,000) — — — — —Richard H Saunders 100,000 — — (100,000) — — — —Peter M McCann — 26,115 — — 26,115 — — 26,115Christopher H Jury 100,000 66,655 (100,000) — 66,655 — — 66,655Lesley Jolly — 28,136 — — 28,136 — — 28,136Rachel Maloney 33,334 14,233 (33,334) — 14,233 — — 14,233

883,336 354,262 (650,002) (166,667) 420,929 — — 420,929

1) Granted as Remuneration refl ected above includes rights granted under the Executive Long Term Incentive Plan.2) Net Change Other refl ected above includes those options that have been forfeited/lapsed by holders during the year under review.

Not Balance at Net Balance at Total Vested Exercisable Exercisable 1 July Granted as Options Change 30 June 30 June 30 June 30 June 2008 Remuneration Exercised Other 1 2009 2009 2009 2009

DirectorsKevin W Maloney 200,000 — — (100,000) 100,000 — — 100,000Geoffrey F Lord 133,334 — — (66,667) 66,667 — — 66,667Daryl W Corsie 166,668 — — (83,334) 83,334 — — 83,334John C Taylor 133,334 — — (66,667) 66,667 — — 66,667Terrence Strapp 200,001 — — (66,667) 133,334 — — 133,334Mark K Maloney 133,334 — — (66,667) 66,667 — — 66,667Andrew W Maloney 200,000 — — (100,000) 100,000 — — 100,000

ExecutivesStephen L Law 200,000 — — (100,000) 100,000 — — 100,000Richard H Saunders 200,000 — — (100,000) 100,000 — — 100,000Christopher H Jury 200,000 — — (100,000) 100,000 — — 100,000

1,766,671 — — (850,002) 916,669 — — 916,669

1) Net Change Other refl ected above includes those options that have been forfeited/lapsed by holders during the year under review.

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d) Shareholdings of key management personnel Ordinary shares held in The MAC Services Group Limited (number) Balance at Received as On Exercise Net Change Balance at

1 July 2009 Compensation of Options Other 2 30 June 2010

DirectorsKevin W Maloney 1 86,655,556 1 — 100,000 — 86,755,556Daryl W Corsie 195,834 — 83,334 (20,000) 259,168John C Taylor 164,167 — 66,667 — 230,834Terrence J Strapp 50,000 — — — 50,000Mark K Maloney 1 86,709,723 1 — 66,667 — 86,776,390Andrew W Maloney 1 87,093,056 1 — 100,000 — 87,193,056

ExecutivesStephen L Law 556,904 — 100,000 (236,904) 420,000Richard H Saunders 162,500 — — (162,500) —Christopher H Jury 200,000 — 100,000 (300,000) —Rachel Maloney 208,334 33,334 — 241,668

88,884,962 — 650,002 (719,404) 88,815,560

1) Includes shares held by Marley Holdings Pty Limited. All totals include one entry for Marley Holdings Pty Limited. The affected holdings are noted with an asterix above.

2) Net Change Other refers to shares purchased or sold during the fi nancial year.

Ordinary shares held in The MAC Services Group Limited (number)

Balance at Received as On Exercise Net Change Balance at 1 July 2008 Compensation of Options Other 2 30 June 2009

DirectorsKevin W Maloney 1 86,655,556 1 — — — 86,655,556*Geoffrey F Lord 4,598,611 — — (2,673,212) 1,925,399Daryl W Corsie 195,834 — — — 195,834John C Taylor 164,167 — — — 164,167Terrence J Strapp 50,000 — — — 50,000Mark K Maloney 1 86,709,723 1 — — — 86,709,723*Andrew W Maloney 1 87,093,056 1 — — — 87,093,056*

ExecutivesStephen L Law 537,500 — — 19,404 556,904Richard H Saunders 272,500 — — (110,000) 162,500Christopher H Jury 300,000 — — (100,000) 200,000

93,465,724 — — (2,863,808) 90,602,027

1) Includes shares held by Marley Holdings Pty Limited. All totals include one entry for Marley Holdings Pty Limited. The affected holdings are noted with an asterix above.

2) Net Change Other refers to shares purchased or sold during the fi nancial year.

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e) Loans to key management personnel

i) Details of aggregates of loans to key management personnel are as follows: Balance at Interest Interest Balance at

Beginning of Period Charged Not Charged Write-off End of Period Number of $000 $000 $000 $000 $000 Individuals

2010 854 133 — — 790 52009 1,000 103 — — 854 5

Loans made to key management personnel relate to the issue of options under the Employee Share Option Plan.

ii) Details of key management personnel with loans above $100,000 in the reporting period are as follows: Loans Highest

Balance at Interest Interest Balance at Balance During 1 July 2009 Charged Not Charged Write-off 30 June 2010 the Period $000 $000 $000 $000 $000 $000

DirectorsAndrew W Maloney 350 39 — — 350 350

ExecutivesStephen L Law 204 18 — — 160 204Christopher H Jury 160 — — — — 160

Loans Highest Balance at Interest Interest Balance at Balance During 1 July 2008 Charged Not Charged Write-off 30 June 2009 the Period $000 $000 $000 $000 $000 $000

DirectorsAndrew W Maloney 350 36 — — 350 350

ExecutivesStephen L Law 350 36 — — 204 350Christopher H Jury 160 17 — — 160 160

(iii) Terms and conditions of loans to key management personnelLoans to key management personnel are unsecured and incurred interest at 11.25% (2009: 10.31%) per annum payable half-yearly in arrears.

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NOTE 23: SHARE-BASED PAYMENTS

a) Employee Share Option Plan – consolidated

i) Terms of the Employee Share Option Plan1) On 12 April 2007, 4,575,057 share options were granted to employees by the Company under the Employee Share Option

Plan to take up ordinary shares in three rounds at different exercise prices. Each round granted the option to take up one-third of these shares. The fi rst round was exercisable between 15 March 2008 and 11 April 2008 at an exercise price of $1.80 each. The second round was exercisable between 15 March 2009 and 11 April 2009 at an exercise price of $2.05 each. The third round is exercisable between 15 March 2010 and 11 April 2010 at an exercise price of $2.20 each. The options have no voting rights and are not transferable and at balance date no share options were redeemable.

2) On 25 September 2007, 100,002 share options were granted to employees by the Company under the Employee Share Option Plan to take up ordinary shares in three rounds at different exercise prices. Each round granted the option to take up one-third of these shares. The fi rst round is exercisable between 13 September 2008 and 10 October 2008 at an exercise price of $2.82 each. The second round is exercisable between 13 September 2009 and 10 October 2009 at an exercise price of $3.21 each. The third round is exercisable between 13 September 2010 and 10 October 2010 at an exercise price of $3.45 each. The options have no voting rights and are not transferable and at balance date no share options were redeemable.

3) On 27 November 2007, 1,150,005 share options were granted to Directors by the Company under the Employee Share Option Plan to take up ordinary shares in three rounds at different exercise prices. Each round granted the option to take up one-third of these shares. The fi rst round was exercisable between 15 March 2008 and 11 April 2008 at an exercise price of $1.80 each. The second round is exercisable between 15 March 2009 and 11 April 2008 at an exercise price of $2.05 each. The third round is exercisable between 15 March 2010 and 11 April 2010 at an exercise price of $2.20 each. The options have no voting rights and are not transferable and at balance date no share options were redeemable.

4) On 27 November 2007, 200,001 share options were granted to employees by the Company under the Employee Share Option Plan to take up ordinary shares in three rounds at different exercise prices. Each round granted the option to take up one-third of these shares. The fi rst round is exercisable between 13 September 2008 and 10 October 2008 at an exercise price of $2.82 each. The second round is exercisable between 13 September 2009 and 10 October 2009 at an exercise price of $3.21 each. The third round is exercisable between 13 September 2010 and 10 October 2010 at an exercise price of $3.45 each. The options have no voting rights and are not transferable and at balance date no share options were redeemable.

ii) Option pricing modelThe fair value of options is ascertained using a Black-Scholes pricing model taking into account the terms and conditions upon which the options were granted. Options granted under the Employee Share Option plan are equity settled.

iii) Movement in the number of share options held by employees under the Employee Share Option Plan

2010 2010 2009 2009 No. WAEP No. WAEP

Outstanding at the beginning of the year 1,678,684 2.33 3,510,703 2.26Exercised during the year (1,229,674) 2.20 — —Lapsed during the year (349,009) 2.20 (1,832,019) 2.09

Outstanding at the end of the year 100,001 3.45 1,678,684 2.33

The options outstanding at 30 June 2010 had an exercise price of $3.45 and a remaining contractual life of 0.16 years. No options were issued during the year.

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NOTE 23: SHARE-BASED PAYMENTS (CONTINUED)

b) Executive Long Term Incentive Plan

i) Terms of the Executive Long Term Incentive Plan On 1 July 2009, the Group implemented the Executive Long Term Incentive Plan (“LTI Plan”) for its senior executives. Under the

LTI plan, senior executives receive rights equal to a proportion of the senior executive total fi xed remuneration at the time of issue divided by the volume weighted average share price as set out in the LTI Plan documentation. The relevant volume weighted average price for the issue on 1 July 2009 was $1.66.

A senior executive will only acquire any legal title or interest to ordinary shares in the Company that may vest in accordance with the LTI Plan rules. An allocation of rights to a senior executive will vest over a three year period (the performance period) or on cessation of the senior executive’s employment with the Group and will be subject to the following performance hurdles:

TSR Performance Hurdle 50% of the rights received by each senior executive will be subject to the TSR Performance Hurdle. TSR measures the change

in share price plus dividends reinvested during the performance period. The Company’s TSR is benchmarked against a Comparator Group comprising constituents of the S&P/ASX 300 at the date of allocation of rights to the senior executive.

The proportion of the TSR performance hurdle available to vest in respect of a particular allocation will be:

TSR Relative to the Comparator Group Over the Performance Period % of TSR Grant Vesting

Less than the 51st percentile 0%At the 51st percentile 50%Above the 51st percentile and less than the 75th percentile Pro rata between 50% and 100%At or above the 75th percentile 100%At or above the 90th percentile 120% (additional 20% rights allocated)

EPS Performance Hurdle 50% of the rights received by each senior executive will be subject to the EPS Performance Hurdle. EPS is the basic earnings

per share calculated under Australian Accounting Standards, adjusted for any non-recurring or non-trading items, at the discretion of the Board. EPS growth is measured as the annual compound increase in EPS over the performance period.

The proportion of the TSR performance hurdle available to vest in respect of a particular allocation will be:

Compound EPS Growth Over the Performance Period % of EPS Grant Vesting

Less than 8% 0%8% 50%More than 8% and up to 12% Pro rata between 50% and 100%12% and up to 15% 100%15% or greater 120% (additional 20% rights allocated)

ii) Option pricing model Rights allocated under the Executive Long Term Incentive Plan and attaching to the EPS performance hurdle were valued using

a Black-Scholes option valuation model. The rights allocated under the Executive Long Term Incentive Plan and attaching to the TSR performance hurdle were valued using a Monte-Carlo simulation model.

Rights granted under the Executive Long Term Incentive Plan are equity settled.

iii) Movement in the number of rights held by employees under the Executive Long Term Incentive Plan 2010 2009 No. No.

Outstanding at the beginning of the year — — Granted during the year 401,276 —

Outstanding at the end of the year 401,276 —For

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NOTE 24: COMMITMENTS

a) Leasing commitmentsThe Group has entered into commercial property leases. These leases have an average life of between two and fi ve years.Options exist to renew these leases at the end of the lease term. The leases allow for subletting of all lease areas.

Future minimum rentals payable under non-cancellable operating leases are as follows:

Consolidated

2010 2009 $000 $000

Within one year 996 1,375 After one year but not more than fi ve years 332 1,492

1,328 2,867

b) Finance lease and hire purchase commitmentsThe Group has entered into a number of hire purchase agreements on equipment.These leases have an average life of between three and fi ve years with option to purchase clauses.

Consolidated

2010 2009 Note $000 $000

Within one year 651 654After one year but not more than fi ve years 279 920

Total minimum lease payments 930 1,574Less amounts representing fi nance charges (50) (135)

Present value of minimum lease payments 880 1,439

Included in the fi nancial statements as:Current interest bearing loans and borrowings 16 609 654Non-current interest bearing loans and borrowings 16 271 785

880 1,439

c) Commitments relating to capital expenditureThe Company and Group have contractual obligations principally relating to labour and materialsfor the construction of new accommodation units as follows:

Consolidated

2010 2009 $000 $000

Capital expenditure commitments contracted for:Within one year 1,987 4,934

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NOTE 25: CONTINGENCIES Consolidated

2010 2009 $000 $000

Estimates of the potential fi nancial effect contingent liabilities that may become payable:

Secured: Guarantee provided by the Company’s bankers supported by a fl oating charge over the Company and the Consolidated Group’s assets for the performance of lease obligations. 1,189 1,189

Unsecured:Two service providers have made a claim for services provided, both of which are disputed. The amount of the maximum potential cost if successful — 350

NOTE 26: FINANCIAL RISK MANAGEMENT OBJECTIVES AND PRINCIPLESThe Group’s principal fi nancial instruments comprise receivables, payables, bank loans, fi nance leases, cash and short-term deposits and derivatives.

Risk exposures and responsesThe Group’s activities expose it to a variety of fi nancial risks being market risk (including fair value and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of fi nancial markets and seeks to minimise potential adverse effects on the fi nancial performance of the Group.

The Group uses derivative fi nancial instruments such as interest rate swaps to hedge certain risk exposures. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, and other price risks, and ageing analysis for credit risk.

Risk management is carried out by the Audit Committee under policies approved by the Board of Directors. The Audit Committee identifi es, evaluates and hedges fi nancial risks in co-operation with the operating units. The Board provides written principles for overall risk management, as well as policies covering specifi c areas, such as interest rate risk, credit risk, use of derivative fi nancial instruments and non-derivative fi nancial instruments, and investment of excess liquidity.

The Audit Committee’s overall risk management strategy seeks to assist the Group in meeting its fi nancial targets, whilst minimising potential adverse effects on fi nancial performance.

i) Interest rate riskThe Group’s exposure to market interest rates relates primarily to the Group’s long-term debt obligations. The level of debt is disclosed in note 15.

At balance date, the Group had the following mix of fi nancial assets and liabilities exposed to Australia variable interest rate risk that are not designated as cash fl ow hedges:

Consolidated

2010 2009 $000 $000

Financial assetsCash and cash equivalents 3,389 1,533Share scheme loan 1,108 1,453

Financial liabilitiesBank loans 1 (15,729) (25,300)

Net exposure (11,232) (22,314)

1) Bank loans disclosed above exclude borrowings at a fi xed rate under the interest rate swap of $25,000,000 (2009: $25,000,000).For

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NOTE 26: FINANCIAL RISK MANAGEMENT OBJECTIVES AND PRINCIPLES (CONTINUED)

i) Interest rate risk (continued)Interest rate swap contracts outlined in note 17, with a fair value of $573,000 (2009: $1,178,000) are exposed to fair value movements if interest rates change.

The Group’s policy is to manage its fi nance costs using a mix of fi xed and variable rate debt. The Group’s policy is to maintain a portion of its borrowings at fi xed rates which are carried at amortised cost and it is acknowledged that fair value exposure is a by product of the Group’s attempt to manage its cash fl ow volatility arising from interest rate changes. To manage this mix in a cost-effi cient manner, the Group enters into interest rate swaps, in which the Group agrees to exchange, at specifi ed intervals, the difference between fi xed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are designated to hedge underlying debt obligations. At 30 June 2010, after taking into account the effect of interest rate swaps, approximately 61% (2009: 50%) of the Group’s borrowings are at a fi xed rate of interest.

The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date. At 30 June 2010, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profi t and other comprehensive income would have been affected as follows:

Consolidated

2010 2009 $000 $000

Change in post tax profi t+1% (100 basis points) 86 166–1% (100 basis points) (86) (166)

Change in other comprehensive income+1% (100 basis points) 210 721–1% (100 basis points) (214) (721)

The movements in net profi t are due to higher/lower interest costs from variable rate debt and cash balances. The movement in other comprehensive income is due to an increase/decrease in the fair value of derivative instruments designated as cash fl ow hedges.

In performing the interest rate sensitivity analysis the Group has considered reasonably possible movements in interest rates based on the Group’s current credit rating, relationships with fi nancial institutions, the level of debt that is expected to be renewed as well as economic forecast expectations. A price sensitivity of derivatives has been based on a reasonably possible movement of interest rates at balance dates by applying the change as a parallel shift in the forward curve.

ii) Foreign currency riskThe Group is not exposed to any material foreign currency risk as it currently operates in one geographical location.

iii) Price riskThe Group is not exposed to any commodity and equity security price risk.

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iv) Credit riskCredit risk arises from the fi nancial assets of the Group, which comprise cash and cash equivalents, trade and other receivables, derivative instruments and the granting of fi nancial guarantees. The Group’s exposure to credit risk arises from potential default of the counterparty, with a maximum exposure equal to the carrying amount of the fi nancial assets (as outlined in each applicable note) as well as $1,189,000 (2009: $ 1,189,000) in relation to fi nancial guarantees granted. The Group does not hold any credit derivatives to offset its credit exposure.

The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitise its trade and other receivables. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verifi cation procedures including an assessment of their independent credit rating, fi nancial position, past experience and industry reputation. Receivable balances are monitored on an ongoing basis with the result that the Group’s experience of bad debts has not been signifi cant. The Group has two major customers, disclosed in Note 3, resulting in a concentration of credit risk.

Credit quality of fi nancial assets is detailed below (consolidated):

Equivalent S&P Rating Internally Rated

Not Closely A+ and Externally Monitored No Default Above Rated Customers Customers Total $000 $000 $000 $000 $000

30 June 2010Current fi nancial assetsCash and cash equivalents 3,389 — — — 3,389Trade and other receivables — — 941 18,230 19,171

3,389 — 941 18,230 22,560

Non-current fi nancial assetsReceivables — 1,143 — — 1,143

30 June 2009Current fi nancial assetsCash and cash equivalents 1,533 — — — 1,533Trade and other receivables — — 1,290 18,704 19,994

1,533 — 1,290 18,704 21,527

Non-current fi nancial assetsReceivables — 1,472 — — 1,472

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v) Liquidity riskLiquidity risk arises from the fi nancial liabilities of the Group and the Group’s subsequent ability to meet their obligations to repay their fi nancial liabilities as and when they fall due.

The Group’s objective is to maintain a balance between continuity of funding and fl exibility through the use of bank overdrafts, bank loans, fi nance leases and committed available credit lines. The Group manages its liquidity risk by monitoring the total cash infl ows and outfl ows expected on a weekly basis.

The following liquidity risk disclosures refl ect all contractually fi xed pay-offs, repayments and interest resulting from recognised fi nancial liabilities and fi nancial guarantees as at balance date. For the other obligations the respective undiscounted cash fl ows for the respective upcoming fi scal years are presented. The timing of cash fl ows for liabilities is based on the contractual terms of the underlying contract.

However, where the counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Group can be required to pay. When the Group is committed to make amounts available in instalments, each instalment is allocated to the earliest period in which the Group is required to pay. For fi nancial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee can be called.

The risk implied from the values shown in the table below, refl ects a balanced view of cash infl ows and outfl ows of fi nancial instruments. Leasing obligations, trade payables and other fi nancial liabilities mainly originate from the fi nancing of assets used in the Group’s ongoing operations such as property, plant, equipment and investments in working capital (eg, inventories and trade receivables).

Liquid assets comprising cash and receivables are considered in the Group’s overall liquidity risk. The Group ensures that suffi cient liquid assets are available to meet all the required short term cash payments.

Consolidated

Carrying Contractual Amount Cash Flows <6 Months 6-12 Months 1-5 Years $000 $000 $000 $000 $000

30 June 2010Liquid fi nancial assetsCash and cash equivalents 3,389 3,389 3,389 — —Trade and other receivables 19,546 19,546 18,598 — 948

Non-derivative fi nancial liabilitiesTrade and other payables (9,758) (9,758) (9,758) — —Interest bearing borrowings (41,609) (48,745) (1,738) (1,733) (45,274)Financial guarantees — (1,189) (1,189) — —

Derivative fi nancial liabilitiesInterest rate swap contracts (573) (586) (202) (202) (182)

(29,005) (37,343) 9,100 (1,935) (44,508)

30 June 2009Liquid fi nancial assetsCash and cash equivalents 1,533 1,533 1,533 — —Trade and other receivables 20,457 20,457 19,349 — 1,108

Non-derivative fi nancial liabilitiesTrade and other payables (14,607) (14,607) (14,607) — —Interest bearing borrowings (51,739) (61,600) (1,705) (1,859) (58,036)Financial guarantees — (1,189) (1,189) — —

Derivative fi nancial liabilitiesInterest rate swap contracts (1,178) (1,271) (398) (287) (586)

(45,534) (56,677) 2,983 (2,146) (57,514)

It is not expected that the cash fl ows included in the maturity analysis could occur signifi cantly earlier, or at signifi cantly different amounts.

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vi) Fair valueThe Group uses various methods in estimating the fair value of a fi nancial instrument. The methods comprise:

i) Level 1 – the fair value is calculated using quoted prices in active markets.

ii) Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).

iii) Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.

The fair value of the fi nancial instruments as well as the methods used to estimate the fair value are summarised in the table below.

Consolidated

Level 1 Level 2 Level 3 Total $000 $000 $000 $000

30 June 2010Financial liabilitiesDerivative instruments — 573 — 573

30 June 2009Financial liabilitiesDerivative instruments — 1,178 — 1,178

For fi nancial instruments not quoted in active markets, the Group uses valuation techniques such as present value techniques, comparison to similar instruments for which market observable prices exist and other relevant models used by market participants. These valuation techniques use both observable and unobservable market inputs.

Financial instruments that use valuation techniques with only observable market inputs or unobservable inputs that are not signifi cant to the overall valuation include interest rate swaps.

The fair value of other investments that do not have an active market are based on valuation techniques using market data that is not observable.

Transfer between categoriesThere were no transfers between Level 1, Level 2 and Level 3 categories during the year.

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NOTE 27: EVENTS AFTER BALANCE SHEET DATE Subsequent to year end, the Company has received credit approval from National Australia Bank to increase its banking facilities from $100,000,000 to $125,000,000. Of that total facility, $40,000,000 remains on its current term of December 2012 and $85,000,000 has been extended to 30 June 2013.

Other than the matter noted above, the Group has not entered into any material transactions, nor had any items, matters or circumstances that have arisen since the end of the fi nancial year which 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 future fi nancial years.

NOTE 28: AUDITORS’ REMUNERATIONThe auditor of The MAC Services Group Limited from 1 July 2009 is Ernst & Young. The auditor of The MAC Services Group Limited in the comparative period was PKF Chartered Accountants.

Consolidated

2010 2009 $ $

Remuneration of the auditor of the parent entity for:Audit and review of fi nancial reports 118,450 172,506Remuneration of the auditor of the parent entity for:Taxation services 8,000 —Consulting services 222,724 —

349,174 172,506

NOTE 29: PARENT ENTITY INFORMATIONThe following information relates to The MAC Services Group Limited, the parent entity:

2010 2009 $000 $000

Current assets 22,737 21,774Total assets 212,597 210,524Current liabilities 13,153 18,997Total liabilities 58,239 72,639

Issued capital 110,448 107,743Retained earnings 43,727 30,628Option reserve 584 339Hedge reserve (401) (825)

Total shareholders’ equity 154,358 137,885

Profi t of the parent entity 27,561 25,164

Total comprehensive income of the parent entity 27,985 23,627

All guarantees, contingent liabilities and contractual commitments for the acquisition of property, plant and equipment, as disclosed in notes 24 and 25 for the Group, relate wholly to the parent entity.

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DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of The MAC Services Group Limited, I state that:

In the opinion of the directors:

a) The fi nancial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:

i) Giving a true and fair view of the consolidated entity’s fi nancial position as at 30 June 2010 and of its performance for the year ended on that date; and

ii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

b) The fi nancial statements and notes comply with International Financial Reporting Standards as disclosed in note 2(a).

c) There are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable.

d) This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the fi nancial year ending 30 June 2010.

On behalf of the Board

M K MaloneyDirector

Sydney, 24 August 2010

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Independent auditor’s report to the members of The MAC Services Group Limited

Report on the Financial ReportWe have audited the accompanying fi nancial report of The MAC Services Group Limited, which comprises the statement of fi nancial position as at 30 June 2010, and the statement of comprehensive income, statement of changes in equity and statement of cash fl ows for the year ended on that date, a summary of signifi cant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the fi nancial year.

Directors’ Responsibility for the Financial ReportThe directors of the company are responsible for the preparation and fair presentation of the fi nancial report in accordance with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the fi nancial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 2, the directors also state that the fi nancial report, comprising the fi nancial statements and notes, complies with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Auditor’s ResponsibilityOur responsibility is to express an opinion on the fi nancial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These 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 is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial report. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the fi nancial report, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation and fair presentation of the fi nancial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the fi nancial report.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

IndependenceIn 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, a copy of which is included in the directors’ report. The Auditor’s Independence Declaration would have been expressed in the same terms if it had been given to the directors at the date this auditor’s report was signed. In addition to our audit of the fi nancial report, we were engaged to undertake the services disclosed in the notes to the fi nancial statements. The provision of these services has not impaired our independence.


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Auditor’s OpinionIn our opinion:

1. the fi nancial report of The MAC Services Group Limited is in accordance with the Corporations Act 2001, including:

i giving a true and fair view of the consolidated entity’s fi nancial position at 30 June 2010 and of its performance for the year ended on that date; and

ii complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

2. the fi nancial report also complies with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Report on the Remuneration ReportWe have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2010. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s OpinionIn our opinion the Remuneration Report of The MAC Services Group Limited for the year ended 30 June 2010, complies with section 300A of the Corporations Act 2001.

Ernst & Young

Paul FlynnPartnerSydney24 August 2010


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1. Shareholder information

a) Distribution of shareholders as at 31 July 2010

Category (size of holding) Number of Ordinary Shares

1-1,000 221,878 1,001-5,000 2,893,003 5,001-10,000 3,057,035 10,001-100,000 9,359,625 100,001 and over 150,435,151

b) The number of shares held in less than marketable parcels is 91.

c) The name of the substantial shareholder listed in the holding company’s register as at 31 July 2010 is:

Shareholder Number of Ordinary Shares %

Marley Holdings Pty Ltd 86,555,556 52.15 Olbia Investments (Tenix Pty Ltd) 9,400,000 5.70 BT Investment Management 8,298,537 5.00

d) Voting Rights Each ordinary share, as at 31 July 2010, is entitled to one vote when a poll is called, otherwise each member present

at a meeting or by proxy has one vote on a show of hands.

e) 20 largest shareholders – ordinary shares as at 31 July 2010 Number % Held of Ordinary of Issued Fully Paid Ordinary Name Shares Held shares

1 MARLEY HOLDINGS PTY LTD 86,555,556 52.15

2 CITICORP NOMINEES PTY LTD 13,515,455 8.14

3 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 8,484,463 5.11

4 J P MORGAN NOMINEES AUSTRALIA LIMITED 7,992,385 4.82

5 NATIONAL NOMINEES LIMITED 7,786,655 4.69

6 COGENT NOMINEES PTY LIMITED 6,048,597 3.64

7 UBS NOMINEES PTY LIMITED 4,785,374 2.88

8 ANZ NOMINEES LIMITED <CASH INCOME A/C> 2,871,622 1.73

9 EQUITY TRUSTEES LIMITED <SGH PI SMALLER CO’S FUND> 1,742,759 1.05

10 CITICORP NOMINEES PTY LIMITED <CFSIL CWLTH SMALL CO 7 A/C> 1,067,445 0.64

11 BKI INVESTMENT COMPANY LIMITED 845,035 0.51

12 KRATZCO PTY LTD <STARK SUPER FUND A/C> 590,000 0.36

13 QUEENSLAND INVESTMENT CORPORATION 539,398 0.33

14 MR ANDREW MALONEY 537,500 0.32

15 CITICORP NOMINEES PTY LIMITED < CWLTH SMALL CO FD 2 A/C> 448,229 0.27

16 CITICORP NOMINEES PTY LIMITED <CFSIL CWLTH SML COS 1 A/C> 420,246 0.25

17 PASAGEAN PTY LIMITED 400,000 0.24

18 AUDANT INVESTMENTS LIMITED 394,000 0.24

19 QUOTIDIAN NO 2 PTY LIMITED 358,959 0.22

20 QUOTIDIAN NO 2 PTY LIMITED 331,785 0.20

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2. Company Secretary The Company Secretary is Mr David Rowland.

3. Registered Offi ce The address of the principal registered offi ce in Australia

is Level 3, 5-13 Rosebery Avenue, Rosebery NSW 2018. Telephone (02) 8346 9200.

4. Company Register Registers of securities are held in Australia at the

following address:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne VIC 3001

Shareholders can access information and update information about your holdings in the Company via the Internet by visiting Computershare Investor Services website www.computershare.com.au

Some of the services available online include: check current and previous holding balances, update address details, update bank details, confi rm whether you have lodged your TFN, ABN or exemption, check the share prices and graphs.

5. Stock Exchange Listing Quotation has been granted for all the ordinary shares of the

Company on all Member Exchanges of the ASX Limited.

6. Unquoted Securities Options over Unissued shares

A total of 100,001 options are on issue to two employees under the Company Series 3 Employee Share Option Plan.

7. Shareholdings in Voluntary Escrow There exist no shareholdings subject to escrow.

8. Dividends The fi nal dividend for the 2010 year of 4.75 cents per

share will be paid on 15 October 2010 to the shareholders registered on 1 October 2010. The dividend will be fully franked.

9. Tax File Number (TFN), Australian Business Number (ABN) or exemption

Shareholders are strongly advised to lodge your TFN, ABN or exemption. If you choose not to lodge these details with the share registry, then the Company is obliged to deduct tax at the highest marginal rate (plus the Medicare levy) from the unfranked portion of any distribution payment. Certain pensioners are exempt from supplying their TFN’s. Shareholders can confi rm whether you have lodged your TFN, ABN or exemption via the Internet at www.computershare.com.au. Shareholders are reminded to bank dividend cheques as soon as possible. Dividend cheques that are not banked are required to be handed over to the State Trustee under the Unclaimed Monies Act. If you wish your dividends to be paid directly to a bank, building society or credit union accounts in Australia contact the share registry or visit their website at www.computershare.com.au for an application form. The payments are electronically credited on the dividend payment date and confi rmed by payment advices mailed to the shareholder’s registered address. All instructions received remain in force until amended or cancelled in writing.

10. Forms of Shareholdings Two forms of uncertifi cated holdings are available to the

Company shareholders:

Issuer Sponsored Holdings: This type of holding is sponsored by the Company and provides shareholders with the advantages of uncertifi cated holdings without the need to be sponsored by any particular stockbroker.

Broker Sponsored Holdings (CHESS): Shareholders may arrange to be sponsored by a stockbroker (or certain other fi nancial institutions) and are required to sign a sponsorship agreement appointing the sponsor as their “controlling participant” for the purposes of CHESS. This type of holding is likely to attract regular stock market traders or those shareholders who have their share portfolio managed by a stockbroker.

Holding statements are issued to shareholders not later than fi ve business days after the end of any month in which transactions alter the balance of a holding. Shareholders requiring replacement holding statements should be directed to their controlling participant.

Shareholders communicating with the share registry should have handy their Security Holder reference number (SRN) or Holder Identifi cation number (HIN) as it appears on the Issuer Sponsored/CHESS holding statements or dividend advices. For security reasons, shareholders should keep their Security Holder reference numbers confi dential.

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SHAREHOLDER INFORMATION

ANNUAL GENERAL MEETING

The Annual General Meeting of The MAC Services Group Limited will be held at 4pm on Tuesday 23 November 2010. Full details of the meeting including the venue will be contained in the Notice of Meeting sent to all shareholders.

VOTING RIGHTS

Shareholders are encouraged to attend the Annual General Meeting, however, when this is not possible, they are encouraged to use the Proxy Form by which they can express their views.

Every shareholder, proxy or shareholder’s representative has one vote on a show of hands, except where a shareholder appoints two proxies, in which case neither proxy is entitled to vote on a show of hands. In the case of a poll, each share held by every shareholder, proxy or representative is entitled to one vote for each fully-paid share.

STOCK EXCHANGE LISTING

The MAC Services Group Limited shares are listed on the Australian Securities Exchange under the code ‘MSL’.

SHARE REGISTER AND OTHER ENQUIRIES

If you have any questions in relation to your shareholding, share transfers or dividends, please contact our share registry:

Computershare Investor Services Pty Limited

GPO BOX 242Melbourne Victoria 3001

Telephone: 1300 850 505 (within Australia)61 3 9415 4000 (outside Australia)

Facsimile: 1800 783 44 (within Australia) +61 3 9473 2555 (outside Australia)

Website: www.computershare.com.au

Please include your shareholder reference number (SRN) or holder identifi cation number (HIN) in all correspondence to the share registry.

For enquiries relating to the operations of the Company, please contact:

Telephone: + 61 2 8346 9200

Facsimile: +61 2 9697 0162

Email: [email protected]

Website: www.themac.com.au

PO Box 191Brighton Le Sands NSW 2216

ELECTRONIC COMMUNICATIONS

The MAC Services Group Limited has an online share registry facility where shareholders can:

Check their current and previous holding balances Choose and change their preferred Annual Report election and delivery method

Check or update their address details Check or update their bank details Review their dividend history Confi rm whether they have lodged a TFN/ABN exemption Download commonly-used forms Elect to receive email notifi cation when dividend statements and issuer sponsored holding statements are available to review online.

Just log onto www.themac.com.au, go to the Investor Relations section of the website and click on Investor Centre. For security and privacy reasons, shareholders will be required to verify their identity before they can view their records.

DIVIDENDS

A fi nal dividend of 4.75 cents per share will be paid on 15 October 2010 to shareholders registered on 1 October 2010. For Australian taxation purposes, the dividend will be 100 per cent franked at the 30 per cent company tax rate.

Shareholders can elect to have dividends paid directly into a bank account anywhere in Australia, New Zealand and the United Kingdom. Direct Credit forms are available on request from the share registry or via the Company’s online share registry.

TAX FILE NUMBERS, AUSTRALIAN BUSINESS NUMBERS OR EXEMPTIONS

Australian taxpayers who do not provide details of their tax fi le number will have dividends subjected to the top marginal personal tax rate plus Medicare levy. It may be in the interests of shareholders to ensure that tax fi le numbers have been supplied to the share registry. Forms are available from the share registry should you wish to notify the registry of your tax fi le number or Australian business number or tax exemption details. Shareholders may access the Company’s online registry to download a personalised form.

CHANGE OF ADDRESS

It is important for shareholders to notify the share registry in writing promptly of any change of address. As a security measure, the old address should also be quoted as well as your shareholder reference number (SRN). Shareholders may access the Company’s online share registry to download a personalised form.

KEY DATES

1 October 2010Record date (books closing) for 2010 fi nal dividend.

15 October 2010 Despatch date of fi nal dividend payments.

23 November 2010Annual General Meeting

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CORPORATE DIRECTORY

THE MAC SERVICES GROUP LIMITED

ABN 53 003 657 510

DIRECTORSCHAIRMAN

Kevin W Maloney

NON-EXECUTIVE DIRECTORS

Darce W CorsieTerrence J StrappJohn C Taylor

EXECUTIVE DIRECTOR

Mark K Maloney

COMPANY SECRETARY

David A Rowland

REGISTERED OFFICE

Level 35 – 13 Rosebery AveROSEBERY NSW 2018

Tel: 02 8346 9200Fax: 02 9697 0162Email: [email protected]

AUDITOR

Ernst & YoungErnst & Young Centre680 George StreetSYDNEY NSW 2000

SHARE REGISTRY

Computershare Investor Services Pty LimitedLevel 3, 60 Carrington StreetSydney NSW 2000

Tel: 1300 855 080Website: www.computershare.com.au

ASX

Code: MSL

The MAC Services Group Limited ABN 53 003 657 510

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