ENERGY FOR SUSTAINABLE FUTURE

					                       ENERGY FOR A
                  SUSTAINABLE FUTURE




                                                       ANNUAL REPORT 2007




                                                                     leaders in clean energy




LANDFILL GAS • COAL MINE METHANE • REMOTE AREA SOLUTIONS • LIQUEFIED NATURAL GAS/COMPRESSED NATURAL GAS
ENERGY	DEVELOPMENTS	LIMITED
ABN	84	053	410	263




enerGY For A SUStAInABLe FUtUre
‘Energy	for	a	sustainable	future’	is	the	theme	of	this	year’s	annual	report.	
       	ects	the	Company’s	understanding	that	sustainability	underpins	the	
This	refl
Company’s	business	model	and	the	long-term	viability	of	its	projects.




   CONTENTS
   2007 achievements and outlook           1
   – financial and non-financial
      highlights and forecasts

   Chairman’s review                       2
   – strategic overview by Chairman,            For Energy Developments, sustainability means operating in a manner that
     Michael Brown                              enhances outcomes for employees, shareholders, business partners, the
                                                environment and the many communities where the Company does business.
   Managing Director’s report              4
                                                The Company is at the forefront of the renewable and clean energy industry in Australia
   – operational review by Managing
                                                and internationally. With the right balance of assets, technologies, geographic locations
     Director, Chris Laurie
                                                and people, Energy Developments has the energy for a long-term sustainable future.
   Energy Developments’ business           6    Energy Developments is an international provider of renewable energy and low greenhouse
   – overview of the Company’s                  gas (GHG) emission energy. The Company operates in Australia, the United Kingdom,
     operations, customers and                  Europe and the United States, providing services in four main areas of power generation
     markets                                    and associated energy solutions: landfill gas (LFG) power, coal mine methane (CMM) power,
                                                remote area power, and liquefied natural gas (LNG) and compressed natural gas (CNG) power.
   Energy for a sustainable future         8
   – operational performance and
     outlook

   Sustainable performance                12
   – environmental initiatives and
      outlook

   Connected communities                  14
   – community engagement activities
     and outlook

   Empowered people                       16
   – human resources activities and
     outlook

   Company leadership                     18
                                                PURPOSE OF THE ANNUAL REPORT
   – Directors’ and corporate                   The annual report 2007 presents Energy Developments’ main activities and performance
     management team’s profiles                  highlights for the year ended 30 June 2007 (shown as 2007 in the annual report).
                                                This includes financial and non-financial information about Energy Developments Limited,
   Corporate governance                   20
                                                its subsidiary companies and other controlled entities (referred to as Energy Developments
   – Company management policies                or Company).
      and systems
                                                Energy Developments has prepared this report for individuals and groups who share an
   Financial statements                   27    interest in the Company’s achievements and future direction. If you have any comments or
                                                suggestions about the design or content of the annual report, please email the corporate
   Definition of key terms Inside Back Cover
                                                administration team at corporate.admin@edl.com.au or the Company Secretary at
   Contact information      Inside Back Cover   secretary.legal@edl.com.au or telephone + 61 7 3275 5555.




ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                                                2007	ACHIEVEMENTS	AND	OUTLOOK




2007 ACHIeveMentS
AnD oUtLooK

                                                 German Creek CMM power station opening,
                                        from left Neville Sneddon, CEO Anglo Coal Australia,
                                        Geoff Wilson, Queensland Mines and Energy Minister
                                                 and Chris Laurie, MD Energy Developments.




                                                                                                                                     FINANCIAL POSITION
        KEY ACHIEVEMENTS IN 2007                                                                                                     • Achieved net profit after tax
                                                                                                                                       (excluding specific items) of
        • Reduced the Company’s lost time injury frequency rate                                                                        $27.1 million. Although this
          by 52% to 3.5.                                                                                                               net profit was up slightly on
                                                                                                                                       the $26.5 million reported for
        • Opened the German Creek CMM power station at Anglo Coal’s                                                                    2006, the inclusion of non-
          Grasstree coal mine in central Queensland’s Bowen Basin.                                                                     recurring specific items totalling
                                                                                                                                       $43.7 million resulted in
        • Signed a Memorandum of Understanding with Anglo Coal for                                                                     an underlying net loss of
          the development of a new 45 MW CMM power project at the                                                                      $16.6 million.

          Moranbah North coal mine in the Bowen Basin.                                                                               • Increased sales revenue by
                                                                                                                                       15% to $177.0 million and
        • Produced 2,464 GWh of renewable or low GHG emission energy                                                                   net operating cash flows by
          worldwide, representing a 4% increase from 2006.                                                                             7% to $76.9 million.

        • Commenced commercial operations at the West Kimberley Power                                                                • Declared an increased final
                                                                                                                                       dividend of 5.0 cents per
          Project’s (WKPP) first power station at Looma, Western Australia.                                                             share (cps) franked to 20%,
        • Captured and utilised GHGs estimated at 8.5 million tonnes of                                                                taking the total dividend
                                                                                                                                       paid for the year to 7.5 cps
          carbon dioxide equivalent from its LFG and CMM projects                                                                      (2006: 4.0 cps).
          around the world.
                                                                                                                                     • Retained healthy cash reserves
                                                                                                                                       of $98.6 million at 30 June 2007.


                                                                                                                                     OUTLOOK
                                       183.0                                         27.1*                            18.2 * 18.5*
                                                                             26.5*
                                                                                                                                     In the 2008 financial year
                              158.8*                                                                                                 (hereafter shown as 2008), Energy
                      145.9                                                                    14.6* 14.4 * 14.7                     Developments expects to commence
                                                                      20.2
             128.1*                                          18.6 *                                                                  full commercial operations of WKPP
    117.4*                                                                                                                           in Australia. The Company will
                                                     16.8*
                                                                                                                                     also develop the 45 MW Moranbah
                                                                                                                                     North CMM Project which is
                                                                                                                                     scheduled for completion in
                                                                                                                                     December quarter, 2008.

                                                                                                                                     By December 2007, the Company
                                                                                                                                     expects to increase installed
                                                                                                                                     capacity by more than 13% to
                                                                                                                                     550 MW with the completion of
    2003     2004     2005    2006 2007             2003     2004     2005   2006 2007         2003    2004   2005    2006 2007      the WKPP and other incremental
    REVENUE                                         PROFIT AFTER TAX                           EARNINGS PER SHARE                    LFG projects already underway
    ($ million) year ended 30 June                  ($ million) year ended 30 June             (cents) year ended 30 June            in France and the United Kingdom.

    * results exclude specific items




	                                                                                            ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED                                1
ENERGY	FOR	A	SUSTAINABLE	FUTURE




CHAIrMAn’S revIeW
The	past	year	has	been	a	demanding	one	for	Energy	Developments.	The	diffi	culties	
experienced	in	the	timely	completion	of	the	Company’s	West	Kimberley	Power	Project	
have	overshadowed	a	solid	operating	performance	...




                                    DEAR SHAREHOLDERS                               experienced a moderate improvement in our
                                                                                    financial results.
                                    The past year has been a demanding one
                                    for Energy Developments. The difficulties        Energy Development’s businesses in Europe,
                                    experienced in the timely completion of the     both in the United Kingdom and our LFG
                                    Company’s West Kimberley Power Project          joint ventures in France and Greece, have
                                    have overshadowed a solid operating             been the stand out performers. Our Australian
                                    performance, the commencement of the            business delivered a solid result when
                                    32 MW German Creek coal mine methane            allowance is made for the decline in the
                                    and Yulara CNG transport projects, and our      market price of green credits in the latter
                                    recent commitment to build a 45 MW CMM          part of the financial year.
                                    power project at Anglo Coal’s Moranbah          In the United States, where the Company is
                                    North coal mine in central Queensland.          continuing to experience low levels of returns
                   Michael Brown,
                        Chairman    Chris Laurie and his management team            from our LFG business, the initiatives required
                                    are fully focussed on the timely completion     to improve operations have been clearly
                                    of the West Kimberley Power Project and         identified and are actively being pursued by
                                    the commencement of the 20 year power           management. A rapid turnaround is unlikely
                                    purchase agreement for the towns of Broome,     due to the extent of low priced power sales
                                    Derby, Fitzroy Crossing, Halls Creek and        agreements currently in place, but, in due
                                    Looma. I look forward to providing a positive   course, progressive access to higher electricity
                                    update on progress to all shareholders at our   prices as the current sales agreements mature,
                                    2007 AGM to be held on 5 November.              should deliver the long-term sustainable
                                                                                    returns expected by all shareholders.
                                    All of us in the Company share our
                                    shareholders’ disappointment that the delays    The Board is pleased with the Company’s
                                    and cost overruns associated with West          health and safety performance over the
                                    Kimberley, plus our exit from our Taiwanese     course of the year. The health and safety of all
                                    LFG business, have necessitated an after tax    employees and stakeholders in the Company
                                    charge of some $43.7 million in the 2007        remains a key focus of the Board and
                                    financial results. Without this, we would have   management and is paramount to all we do.

                                                                                    The final dividend to be paid in October
                                                                                    2007 was increased to 5.0 cents per share,
         We	expect	that	further	profi 	t	growth	associated	                          franked to 20%, bringing the total dividend

           with	the	Company’s	new	projects	coming	on	                               paid and declared for the 2007 year to
                                                                                    7.5 cps (2006 4.0 cps).
            stream,	an	increased	franking	balance,	and	                             We expect that further profit growth

         solid	cash	position	will	provide	the	opportunity	                          associated with the Company’s new projects
                                                                                    coming on stream, an increased franking
           to	increase	the	Company’s	franked	dividend	                              balance, and solid cash position will provide
                                                                                    the opportunity to increase the Company’s
                                payout	in	coming	years.                             franked dividend payout in coming years.




2   ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                                      CHAIRMAN’S	REVIEW




                                                                                Broome fuel storage facility
                                                                                vaporisers.




The Company’s financial position remains
healthy, with $98.6 million of cash on hand,
                                                  At the same time we are seeking new
                                                  possibilities in our other geographies,
                                                                                                           The	growing	recognition,	
and $133 million of undrawn financing lines        particularly in the United States, where landfill         in	Australia	and	around	
available at 30 June 2007. The Company            gas and coal mine methane have significant
plans to refinance its quality Australian asset    further development potential, and where we              the	world,	of	the	
portfolio in the coming year; this is likely to
incorporate financing of the new 45 MW
                                                  are now see increasing legislative demands
                                                  to increase renewable energy supply.                     importance	of	cleaner	
Moranbah North Project. The refinancing is
expected to release substantial further funds
                                                  This opportunity supports our current
                                                  perseverance in the United States LFG market.
                                                                                                           and	renewable	energy	
for other purposes.
                                                  I thank shareholders for your continued
                                                                                                           sources	plays	to	the	
These factors, combined with demonstrably
strong operating cashflows, provide the
                                                  support in what has been a problematic
                                                  year for the Company.
                                                                                                           strengths	of	Energy	
Company with considerable financial
                                                  I would also like to thank all employees for
                                                                                                           Developments.
capacity to complete projects already
                                                  all their efforts in successfully delivering key
underway, to consider acquisitions in the
                                                  projects such as the German Creek CMM
Company’s core business streams and to
                                                  and Yulara CNG projects during the course
consider capital management activities,
                                                  of the year, and maintaining returns from
subject to market conditions.
                                                  our existing businesses.
This year was one of stability for your Board,
                                                  The directors look forward to working
with no changes to the Board membership.
                                                  with you in the coming year to deliver
The Company is in compliance with the ASX         the Company’s exciting future.
Corporate Governance Council’s Principles of
Good Corporate Governance and Best Practice
Recommendations, and next year will look to
report against the new revised Principles which
do not officially take effect until the 2009
financial year.

The growing recognition, in Australia and
around the world, of the importance of
cleaner and renewable energy sources plays        Michael Brown,
to the strengths of Energy Developments.          Chairman
Success in the West Kimberley Power Project
brings with it the efficient utilisation of
LNG as a viable alternative to diesel fired
power generation. We believe this very
important energy source has much broader
application in the Australian marketplace,
most specifically in remote areas for power
generation, and potentially in transport
applications. The Company is seeking further
opportunities to exploit this capability.




	                                                                           ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED           3
ENERGY	FOR	A	SUSTAINABLE	FUTURE




MAnAGInG DIreCtor’S revIeW
Completion	of	the	WKPP	within	the	revised	schedule	and	capital	estimates	
made	in	August	2007	remains	the	Company’s	primary	focus.




                                            The underlying operating result of                   with Anglo Coal, which will underpin the
                                            $27.1 million was solid, however the                 development of the new 45 MW power station
                                            inclusion of non-recurring specific items             to be constructed at Anglo Coal’s Moranbah
                                            totalling $43.7 million after tax produced           North coal mine approximately 140 kms from
                                            a disappointing net loss of $16.6 million.           the German Creek project. The proximity to
                                                                                                 German Creek will offer significant synergies
                                            These after-tax charges comprised a
                                                                                                 in the operation and maintenance of both
                                            $42 million impairment provision against
                                                                                                 projects. A construction contract for the
                                            the Company’s West Kimberley Power Project
                                                                                                 new power station was awarded to Clarke
                                            and a $1.7 million net loss arising from the
                                                                                                 Energy in August 2007 and work has already
                                            sale of the Taiwan landfill gas business in the
                                                                                                 commenced. The new power station is
                                            first half of 2007.
                                                                                                 scheduled for completion and operation in
                       Chris Laurie,        The WKPP project has been a very challenging         the December quarter of calendar 2008.
                  Managing Director         one for the Company. At the time of last year’s
                                                                                                 Work continues on LNG/CNG business
                                            Annual Report the first phase of the project,
                                                                                                 development opportunities throughout Australia.
                                            commencement of the Broome power station,
                                            was expected to take place in April 2007.
                                      485
                                            However, the Company has faced critical              GREEN CREDITS UPDATE
                                            shortages of skilled labour, accommodation and
                                445                                                              Almost without exception governments around
                  420    426                materials in the remote Pilbara and Kimberley
                                                                                                 the world are acknowledging the need for the
            389                             regions of Western Australia. These issues have
                                                                                                 establishment of schemes to address global
                                            not only delayed the project, but resulted in
                                                                                                 warming and, in particular, to encourage
                                            significant cost over-runs. As a result, at 30 June
                                                                                                 reduction in greenhouse gas emissions.
                                            2007 the Company was obliged to create a
                                            provision for impairment against the project.        In Australia, both the Commonwealth
                                                                                                 Government and the Australian Labor Party
                                            At the time of writing, the commissioning of
                                                                                                 are committed to the establishment of a
                                            the LNG plant at Karratha was well advanced
                                                                                                 national emissions trading scheme by 2011 at
                                            and the power stations at Broome (34 MW)
                                                                                                 the latest. The early determination of broad
                                            and Derby (15 MW) are complete. Construction
                                                                                                 guidelines for such a scheme is essential in
                                            of the smaller power station at Halls Creek
                                                                                                 order to remove investment uncertainty within
                                            is virtually complete with commissioning
                                                                                                 the energy industry and especially for the
           2003   2004   2005   2006 2007   underway and construction at Fitzroy Crossing
                                                                                                 clean energy and renewable energy sectors.
                                            is well advanced. The 1 MW diesel-fuelled
           GENERATING                                                                            Incorporation of appropriate grandfathering
           CAPACITY                         power station at Looma started commercial
                                                                                                 and the transitioning of existing schemes will
           (MW) year ended 30 June          operation in June 2007 and is operating well.
                                                                                                 also be important to ensure that ‘early-start’
                                            When completed the project will deliver              participants are not disadvantaged.
                                            stable operating revenues and cash flows
                                                                                                 The United Kingdom continues to lead the
                                            over its initial 20-year life with the majority
                                                                                                 way with its renewable energy target of
                                            to come from capacity charges similar to the
                                                                                                 20% by 2020. As a consequence it is widely
                                            Company’s other remote power projects.
                                                                                                 acknowledged as one of the most vibrant
                                            The Company completed the 32 MW                      renewable energy markets in the world. The
                                            German Creek CMM project and the Yulara              Company’s United Kingdom LFG business is a
                                            CNG project in the first half of 2007 and I           key contributor to meeting these targets.
                                            am pleased to report that both projects are
                                                                                                 Momentum is increasing in the United States
                                            operating well, in line with expectations.
                                                                                                 with pressure mounting for the establishment
                                            In August 2007, we were delighted to                 of a federally mandated renewable
                                            execute a long-term gas purchase agreement           portfolio standard (RPS) with the House of




4   ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
	                                                                                                                  MANAGING	DIRECTOR’S	REVIEW




                                                                                Broome LNG power station,
                                                                                West Kimberley Power Project,
                                                                                Australia.




                                                                                                                         CMM scrubbers at German Creek
                                                                                                                         CMM power station, Australia.




Representatives recently passing a Bill requiring   refinanced with a £60 million facility in              There are considerable expansion opportunities
utilities to produce 15% of their electricity       September 2006 reflecting the strong                   at our existing United States sites, however,
from renewable energy. Around 22 states have        underlying cash flows derived from the                 implementation of these is contingent on
already introduced some form of mandatory or        business.                                             installation of gas conditioning.
voluntary RPS scheme.
                                                    We are also pleased with the improved
                                                    performance of our LFG Joint Ventures in
SAFETY                                              Greece and France (Company share 50%).
                                                    During the course of 2007 the 10 MW                         LOOKING AHEAD
Safety is a key focus for Energy Developments       expansion of the Ano Liossia LFG project
and positive results have been achieved for                                                                     The immediate task for the Company
                                                    in Athens was completed and operations                      is the completion and commencement
the year. The Company’s lost time injury rate       progressively ramped up. We expect
(LTIFR) was reduced by 52% to 3.5, with lost                                                                    of commercial operation of WKPP.
                                                    considerable growth in earnings and returns
time incidents reduced from five to three, a                                                                     All relevant Company resources are
                                                    during 2008.
record performance. This reflects the continued                                                                  dedicated to this task and we look
commitment of all Company employees to              Our French LFG portfolio is currently                       forward to the key milestones of
ensure the observance of safe working practices.    undergoing a site optimisation program                      producing LNG from our Karratha
                                                    with six new 1 MW projects scheduled for                    plant and powering the vibrant
                                                    completion in the coming year. The new                      communities in the West Kimberley
REGIONAL PERFORMANCE                                renewable electricity tariff recently introduced            region in the near future.
OVERVIEW                                            by the French Government for new LFG
                                                                                                                We will also develop the Moranbah
                                                    projects provides a strong platform to
                                                                                                                North CMM Project over the next
Australia                                           underpin profitable LFG growth in France.
                                                                                                                year and look forward to working
The performance of our Australian operating                                                                     with Anglo Coal and our construction
business was satisfactory with the strong second
                                                    United States                                               provider, Clarke Energy, to bring the
half contribution from the 32 MW German Creek                                                                   project to fruition.
                                                    The performance of our United States
CMM project offsetting the impact of falling        LFG business continues to be impacted by                    I would like to thank the Board for
green prices in the last quarter of the year and    Deutz engine reliability and operational                    their continued and valuable support
higher depreciation and corporate charges.          support difficulties together with gas quality               through what has been a difficult
                                                    issues. Deutz is taking steps to improve its                year and to thank all employees for
The Australian business is expected to deliver
                                                    operational support. However, the installation              their sterling efforts. I look forward to
higher operating earnings and cash flows in
                                                    of appropriate gas conditioning systems will                returning the Company to bottom-
the coming year as a result of the full-year
                                                    be necessary at key sites before there is a                 line profitability and lifting returns to
contribution from German Creek and the
                                                    significant improvement in engine availability.              shareholders over the course of the
impending commencement of the WKPP in
                                                    Investigations and trials are continuing on a               coming year.
the first half of the financial year.
                                                    number of gas conditioning options.

Europe                                              Notwithstanding the operational challenges,
                                                    the longer term fundamentals for the business
Our United Kingdom LFG business was                 are improving, with electricity prices trending
again a stand-out performer during the year         higher in the United States along with growing
reflecting full-year earnings from the Pitsea LFG    momentum at both the State and Federal
Project, higher prices achieved for non-NFFO        levels, for the introduction of voluntary green
electricity generation and increased operating      schemes or carbon abatement regimes.
efficiencies. Further earnings growth is expected                                                          Chris Laurie,
                                                    While it will be some time before the Company
in the coming year, with several incremental                                                              Managing Director
                                                    can access the higher electricity pricing
expansions and other optimisation activities
                                                    available in the market, we remain confident of
either already underway or planned for 2008.
                                                    the longer term future of our United States LFG
As foreshadowed in the last annual report           business, especially given the long-dated nature
our United Kingdom LFG portfolio was                of our LFG gas reserves.




	                                                                            ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED                                 5
ENERGY	FOR	A	SUSTAINABLE	FUTURE




enerGY DeveLoPMentS’ BUSIneSS
Energy	Developments’	vision	is	to	create	shareholder	value	by	applying	
experience	and	competencies	to	designing,	integrating	and	operating	
competitive,	innovative	energy	and	environmental	solutions.




CORE BUSINESS ACTIVITIES
Energy Developments is a leading
independent electricity producer, owning
64 power generation facilities across
Australia, the United Kingdom, Europe
and the United States. As at 30 June 2007,
the Company had a total installed generation
capacity of 485 MW.

The Company was founded in Australia in
1988 and was listed on the Australian Stock
Exchange in 1993.

Energy Developments has demonstrated
balanced growth, primarily due to its focus
on developing assets and providing services
in four core areas of business:

• LFG power generation;

• CMM power generation;
                                                 Fitzroy Crossing LNG power station, West Kimberley Power Project, Australia.
• remote area power generation; and

• LNG and CNG power generation and
  associated energy solutions.
                                                 CURRENT OPERATIONS – AS AT 30 JUNE 2007
The Company has the ability to design,
construct and operate infrastructure that
                                                                                                                                         Proportion
produces cost-efficient, reliable, clean energy
                                                                                                                                 Total    of owned
for its customers.                                                                Number                      Type of       generating   generating
                                                 Country                         of plants                     plants        capacity*     capacity
Energy Developments employs a 348-strong
workforce, primarily based in Australia (where   Australia                               21              Landfill gas             82 MW        17%
the corporate headquarters and majority                                                             power generation
of power stations are located), the United                                                6   Remote area and LNG/              116 MW        24%
Kingdom, Europe and the United States.                                                        CNG power generation
                                                                                          3      Coal mine methane              129 MW        27%
REVENUE STREAMS                                                                                    power generation
                                                 United States                           10              Landfill gas             72 MW        15%
The Company generates revenue from:                                                                 power generation
• providing and selling electricity to direct    United Kingdom                          11              Landfill gas             61 MW        12%
  customers such as large energy retailers                                                          power generation
  and mining companies;                          France                                  12              Landfill gas             13 MW         3%
                                                                                                    power generation
• generating and selling environmental
  credits in international, national and         Greece                                   1              Landfill gas             12 MW         2%
                                                                                                    power generation
  state based schemes; and
                                                 Total                                   64                                     485 MW       100%
• managing LFG fields on behalf of
  landfill owners.                                * Energy Developments’ share of generating capacity.




6     ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                       ENERGY	DEVELOPMENTS’	BUSINESS




                                                                         Appin CMM power station,
                                                                         Australia.




CUSTOMERS                                      • Energy Developments pioneered the                  • Energy Developments has an active
                                                 collection and use of CMM for power                  presence in the development of regulatory
Energy Developments’ customers are               generation through the adaptation of                 processes to formulate emissions reduction
typically large ‘blue chip’ public companies     its LFG extraction and handling                      schemes into the future and is well placed
including AGL, Anglo Coal, BHP Billiton,         technologies. The Company has operated               to take advantage of new or enhanced
Horizon Power, Npower, Power and Water           one of the world’s largest CMM power                 GHG reduction/green credit schemes,
Corporation and Xstrata, and corporatised        generation projects at Appin and Tower               whatever form they may take; and
government bodies such as state-based            in New South Wales, Australia since
energy retailers and landfill owners.             1996 and in 2007 completed the                     Replacement of diesel fuels
                                                 32 MW German Creek CMM Project
The Company traditionally reduces the                                                               with natural gas
                                                 in central Queensland, Australia;
commercial risk from power generation by
negotiating long-term power purchase and                                                            • the Company will continue to pursue
power supply agreements for the supply         Participation in green credit schemes                  opportunities to assist customers to
of electricity/energy from renewable or                                                               switch from diesel fuels to LNG and
                                               • authorities around the world are urgently            CNG as viable, alternative long-term
clean sources.
                                                 seeking new and better ways to reduce                energy sources for power generation
                                                 GHG emissions, leading to significant                 and transport. This market opportunity
MARKET OPPORTUNITIES                             growth in GHG reduction and green credit             has been created by the widening gap
                                                 schemes. These schemes are designed                  between the global price of diesel/oil fuels
Energy Developments aims to maximise             to encourage ‘cleaner, greener power                 and natural gas in certain markets. This
opportunities in four key areas:                 generation’. Governments generally set               strategy is particularly relevant in remote
                                                 targets for the amount of renewable                  areas where there is limited or no existing
Energy from LFG                                  or clean energy to be generated as a                 energy infrastructure such as gas pipelines
                                                 proportion of the overall energy                     or electricity grids;
• LFG occurs at landfills (rubbish dumps)
                                                 mix and are likely in the future to place
  due to the decomposition of organic                                                               • at Karratha, Energy Developments is
                                                 limits on the allowable volumes of
  waste. LFG contains methane and CO2                                                                 presently commissioning an onshore
                                                 GHG emissions;
  which are harmful to the environment;                                                               LNG production facility as part of the
                                               • Energy Developments’ projects participate            WKPP. This project has allowed Energy
• the Company pioneered the reliable
                                                 in GHG reduction/green credit schemes                Developments to secure long-term power
  extraction, processing and reuse of LFG
                                                 throughout the world, with credits derived           supply contracts in the booming Kimberley
  in the Australian power generation
                                                 from its LFG and CMM projects. The                   region of Western Australia;
  marketplace; and
                                                 Company is now an Australian leader
                                                 in this area and has been recognised               • the Company has developed an
• Energy Developments receives an
                                                 by several environmentally-focused                   innovative haulage system for delivering
  annuity-style cash flow from long-term
                                                 investment groups for its contribution               CNG to remote power stations that
  LFG power purchase agreements with
                                                 to GHG reduction;                                    service mining operations and remote
  direct customers;
                                                                                                      communities. Trucks used for haulage
                                               • the Company’s 32 MW German Creek                     also run on CNG; and
Energy from CMM                                  CMM Project’s contribution to the
                                                 environment was recently recognised as             • Energy Developments is also actively
• CMM gases are released by underground                                                               supporting the development of
                                                 a recipient of an Australian Government
  coal mining operations. CMM has more                                                                technologies to displace diesel with LNG
                                                 Greenhouse Gas Abatement Programme
  than 20 times the global warming                                                                    and CNG as fuels for heavy vehicles.
                                                 Award; and
  potential of CO2 in the atmosphere
  and is therefore considered much more
  harmful; and




	                                                                     ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED                             7
ENERGY	FOR	A	SUSTAINABLE	FUTURE




enerGY For A SUStAInABLe FUtUre
Energy	Developments	entered	a	major	project	delivery	phase	in	2007	with	the	
completion	of	the	German	Creek	CMM	Project	and	the	progressive	delivery	of	WKPP.	
By	December	2007,	the	Company’s	installed	capacity	is	expected	to	increase	by	
more	than	13%	to	550	MW.




                                           AUSTRALIA                                               The project comprises: the construction of
                                                                                                   a 200-tonne-a-day LNG plant at Karratha,
    KEY ACHIEVEMENTS                       Energy Developments’ Australian operations              in the Pilbara region of Western Australia;
    IN 2007                                produced a solid performance with all power             the haulage of LNG to four remote West
                                           stations continuing to perform well and                 Kimberley communities; and the construction
    • Successful commissioning             growth in installed capacity to 327 MW.                 of four power stations using this fuel to
      and commencement of operations                                                               service those communities. The power
      at the 32 MW German Creek            Important milestones were achieved at
                                                                                                   stations are at Broome (34 MW), Derby
      CMM and Yulara CNG projects          major projects (discussed in the following
                                                                                                   (15 MW), Fitzroy Crossing (6 MW) and
      in Australia                         project profiles) and the Company’s engine
                                                                                                   Halls Creek (5 MW).
                                           rebuild facility at Appin in New South Wales
    • Exclusive Memorandum of              overhauled 23 engines.                                  A fifth 1 MW power station at Looma,
      Understanding executed for a                                                                 which uses distillate fuel, is now operational
      new 45 MW CMM power station                                                                  and the other plants are in the final stages of
                                           West Kimberley Power Project
      at Anglo Coal’s Moranbah                                                                     commissioning. Commercial operations
      North coal mine in the Bowen         The West Kimberley Power Project is Energy              at the other West Kimberley power stations
      Basin, with project construction     Developments’ most ambitious project to date            are expected to commence in October/
      now underway.                        and is a major part of the emerging domestic            November 2007.
                                           LNG business. Australia’s demand for LNG
    • Successful completion of the                                                                 The electricity produced will be sold to
                                           is expected to grow rapidly as an alternative
      10 MW expansion of the Ano                                                                   Horizon Power under a long-term power
                                           fuel source for remote power stations and
      Liossia LFG Project in Greece                                                                purchase agreement. The haulage trucks will
                                           the transport industry in coming years and
      (Company share 50%).                                                                         also be fuelled by LNG.
                                           the experience gained from the development
    • First power station in the West      of WKPP places the Company in an excellent              This project is being delivered in a particularly
      Kimberley Power Project at           position to capitalise on that growth.                  challenging environment given the current
      Looma, commenced commercial                                                                  boom in the mining and construction
      operations in June 2007.

    • Site expansions at Mucking, Pitsea
      and Poole LFG projects in the
      United Kingdom completed ahead
      of schedule and within budget.

    • Asset optimisation and stronger
      green credit pricing delivered
      increased returns for United
      Kingdom LFG.




                                           Derby LNG power station, West Kimberley Power Project, Australia.




8     ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                         ENERGY	FOR	A	SUSTAINABLE	FUTURE




                                                                              German Creek CMM power
                                                                              station, Australia.




                                                                                                                    Mugga Lane LFG power station,
                                                                                                                    Australia.




industries in the Kimberley and Pilbara            The project is an outstanding example of an         This power project will provide Energy
regions of Western Australia. The protracted       innovative solution to reduce the GHG               Developments with the opportunity to extend
boom has created dramatic skilled labour           emission impacts of one of Australia’s most         the skills and expertise developed during
and accommodation shortages which have             important export industries. It has been            the German Creek CMM Project. It will also
hampered the Company’s efforts to complete         nominated for a number of awards.                   reinforce the Company as Australia’s foremost
the project in a timely manner.                    Most recently, the project was a finalist            owner and operator of CMM power projects
                                                   in the 2007 Banksia Environmental Awards            with a total of 174 MW. Energy Developments
The shortage and cost of critical resources
                                                   and was also the recipient of an Australian         is well placed to be the leading player in
have resulted in delays and cost overruns
                                                   Government Greenhouse Gas Abatement                 developing further CMM projects in Australia
which required careful management to
                                                   Programme Award.                                    and elsewhere in the world.
mitigate more serious impacts and ensure
project delivery.
                                                   Moranbah North CMM                                  Yulara CNG Transport Project
The project will deliver considerable benefits
                                                   Power Project                                       The Alice Springs CNG plant and associated
to West Kimberley communities through
the provision of more reliable and cleaner         Energy Developments has commenced                   trucking and unloading station at Yulara,
power. LNG availability in the townships may       development of the 45 MW Moranbah North             near Uluru, started commercial operations
also provide a new fuel source for a range         CMM Project following execution of a long-          in 2007. The CNG plant can produce up to
of industrial and domestic applications.           term gas supply agreement with Anglo Coal           250 tetrajoules of compressed natural gas
This project has created a virtual pipeline        and other approvals.                                which is then trucked 440 kilometres to fuel
connecting these communities with Western                                                              the Yulara CNG power station.
                                                   The $60 million project, which largely follows
Australia’s vast offshore natural gas resources.                                                       The project delivers significant environmental
                                                   the commercial framework of the successful
                                                   32 MW German Creek CMM Project, will be             and financial benefits by reducing diesel fuel
German Creek CMM Power Project                     built under a separate construction contract        needs for transport and power generation.
                                                   with Clarke Energy. The project is scheduled
The 32 MW German Creek CMM power                                                                       The project has developed significant
                                                   to be completed and operating in late
station in central Queensland commenced                                                                innovation in the way CNG is stored for
                                                   calendar 2008.
operations in late calendar 2006, following                                                            transport. This storage innovation creates
progressive commissioning of the generation        The power station will have the capacity to         efficiencies through reducing overall
units. The power plant consists of 16 gas          export up to 350 GWh of electricity into the        transport costs.
engines, each with a nominal electrical            Queensland power grid. This will have the
                                                                                                       The Company is also working with
output of 2 MW. The plant is located adjacent      effect of reducing GHG emissions by up to
                                                                                                       technology providers to commercialise
to Anglo Coal’s Grasstree coal mine at             1.4 million tonnes of CO2e per annum, the
                                                                                                       technologies allowing diesel engines to
German Creek. The power plant has capacity         equivalent of taking 430,000 cars off the
                                                                                                       use natural gas fuel.
to provide up to 240 GWh to the Queensland         road. The project received pre-accreditation
power grid each year. This capacity is sold        for the NSW Greenhouse Abatement Scheme.
to an electricity retailer under a power
purchase agreement.

The plant’s gas engines utilise mine methane       Energy	Developments’	Australian	operations	
drained from nearby coal mining operations.
By using methane to generate electricity, the
                                                   produced	a	solid	performance	with	power	
plant reduces the amount of GHG emitted            stations	continuing	to	increase	output	...
by up to 1.1 million tonnes of carbon dioxide
equivalent (CO2e) each year. This abatement
is accredited by the NSW Greenhouse
Abatement Scheme.




	                                                                          ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED                             9
ENERGY	FOR	A	SUSTAINABLE	FUTURE




enerGY For A SUStAInABLe FUtUre
(CONTINUED)




AUSTRALIA         (CONTINUED)                     UNITED KINGDOM                                      FRANCE
                                                  Expansions at the Mucking, Pitsea and Poole         The Company invested additional resources
Web-based telemetry measures up                   LFG sites were completed during 2007                in France during 2007. This investment
The Company has introduced new web-based          ahead of schedule and within budget. These          allowed Energy Developments to take
telemetry around the world to further improve     expansions increased the capacity in the Essex      advantage of new opportunities available
the reliability and efficiency of its generating   area to 43 MW and new/further expansion             under the French Government’s revised
engines and turbines.                             potential is expected in North London.              biogas tariffs. These government measures
                                                                                                      are designed to facilitate energy generation
This Power Station Management System              The LFG fleet of Jenbacher, Caterpillar and
                                                                                                      from clean sources. Energy Developments
provides information on electricity generation,   Deutz gas and steam turbines performed
                                                                                                      has benefited from the opportunity to
gas flow, outage and asset downtime at             ahead of expectations during the past year.
                                                                                                      relocate generation between existing and
15 minute intervals. This information is used     Improvements in engine reliability, availability,
                                                                                                      new landfill sites.
by operations personnel and management to         operating costs and electricity output followed
monitor ongoing power station performance.        an extensive remediation program to address         Projects approved during 2007 included
                                                  performance issues. Energy Developments has         expansions at new sites using relocated
The Company has also commenced                    committed additional resources to this area to      equipment.
studying power station ‘choke points’ or          maximise its potential returns.
‘single points of failure’ to resolve these                                                           During the past year, two new sites
issues and prepare contingency plans for          The United Kingdom Government has                   were commissioned with a total capacity
the purpose of maintaining optimal levels         strengthened its position as one of the world       of 2.3 MW.
of electricity generation.                        leaders in combating climate change and
                                                  continues to implement stricter measures on
                                                                                                      GREECE
                                                  emissions.
Engine rebuild plant powers ahead
                                                  The Company continued to benefit from the            The Ano Liossia LFG Project’s 10 MW
Energy Developments’ purpose-built engine                                                             expansion was commissioned during
                                                  Renewable Obligation Scheme agreement
rebuild facility at Appin, New South Wales,                                                           2007 and expects to move to full operation
                                                  and extended its Renewable Obligation
overhauled 22 gas engines and one diesel                                                              during 2008 following completion of new
                                                  Certificates capacity. The United Kingdom
engine as well as engine heads, blowers                                                               gasfield works.
                                                  Government has published a White Paper on
and attenuators during 2007. This brings
                                                  Energy which includes a review of the scheme.       The Ano Liossia expansion project has received
the total number of engines overhauled
                                                  This paper has confirmed the Government’s            grant funding from the European Union
since the facility opened in 2002 to 139.
                                                  ongoing support for the scheme.                     and has also been financed through a local
The engines overhauled at the plant are                                                               construction debt facility.
used to drive generators in the Company’s
Australian power stations.

The Company will continue to focus on
extending engine operating times before
rebuilding is required.




                                                  Air inlet and exhaust systems, Ano Liossia LFG
                                                  power station, Greece.




10    ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                          ENERGY	FOR	A	SUSTAINABLE	FUTURE




                                                                             Taylor County LFG power station,
                                                                             United States.




                                                                                                                    Middlepoint LFG power station,
                                                                                                                    United States.




UNITED STATES
LFG business returns in the United States                                                                   2008 OUTLOOK
during 2007 were disappointing.
                                                                                                            • Completion of WKPP remains
Management is working hard to improve the                                                                     a key priority with the four
operating performance and is focusing on                                                                      remaining LNG-fuelled power
the following three key factors to enhance                                                                    plants expected to commence
business returns over the medium term:                                                                        commercial operations in October/
• improvement in Deutz engine reliability                                                                     November 2007.
  and operational support at the larger                                                                     • Contributions from WKPP and
  United States LFG sites;                                                                                    full year of German Creek CMM
• the introduction of gas conditioning at                                                                     and Yulara projects are expected
  key sites to address gas issues currently                                                                   to deliver earnings and cash-flow
  impacting on maintenance costs; and                                                                         growth.

• access to higher electricity pricing.                                                                     • Australian development will focus
                                                                                                              on remote power generation,
Good progress is being made on each of                                                                        diesel substitution with LNG/CNG
these aspects with gas conditioning tests                                                                     and CMM power generation.
and investigations well advanced and
market evidence highlighting electricity
prices trending higher. The Company is also
                                                Lorain LFG power station operating under adverse
favourably positioned for the continuing        blizzard conditions, United States.
development of green credit schemes
particularly on the east coast of the
United States.                                  Pressure is now mounting for the
                                                establishment of a federally-mandated
                                                                                                       The	United	States	House	
The Company has considerable brownfield
expansion potential at existing sites which
                                                renewable portfolio standard (RPS) in the              of	Representatives	has	
                                                United States.
will be selectively exploited as LFG business
fundamentals improve.                           The United States House of Representatives
                                                                                                       passed	a	Bill	in	early	
Energy Developments’ sale of LFG rights
                                                passed a Bill in early August 2007, requiring          August	2007,	requiring	
                                                utilities to produce 15% of their electricity
in King County, Seattle, Washington,            from renewable sources.                                utilities	to	produce	15%	
for US$6 million in August 2007 is indicative
of the strong and growing interest in           Some 22 states have now introduced some                of	their	electricity	from	
                                                form of mandatory or voluntary RPS. The
viable carbon abatement technologies
and alternative uses of LFG, especially from    Company is now selling voluntary emissions             renewable	sources.
infrastructure funds and energy companies.      credits from a number of its United States
The Company will book an estimated net          LFG projects.
profit of US$4.2 million (A$4.9 million) on
the sale in the first half of 2008 with a
further US$1 million deferred.




	                                                                        ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED                              11
ENERGY	FOR	A	SUSTAINABLE	FUTURE




SUStAInABLe PerForMAnCe
GHG	capture	in	2007	was	estimated	at	8.5	million	tonnes	of	carbon	dioxide	
equivalent	from	the	Company’s	LFG	and	CMM	projects	around	the	world,	
equivalent	to	removing	2.7	million	cars	from	the	road.




                                          AUSTRALIAN LEADER IN                                                                         GHG emissions. The Company is actively
                                          GREEN AND CLEAN ENERGY                                                                       pursuing ways to further reduce emissions and
     KEY ACHIEVEMENTS                                                                                                                  to ensure the sustainability of its operations.
     IN 2007                              Energy Developments is one of Australia’s
                                          leaders in renewable and clean energy,
     • Produced 1,938 GWh of green        having delivered more than one million                                                       INVOLVEMENT IN GHG
       energy worldwide, an increase of   MWh of green energy to the national                                                          REDUCTION SCHEMES
       6% from 2006.                      power grid in 2007.
                                                                                                                                       Energy Developments continues to participate
     • Created more than 190,000          Almost 70% of electricity generated by                                                       in the increasing number of GHG reduction/
       Renewable Energy Certificates       Energy Developments’ Australian operations                                                   green credit schemes around the world.
       and 1.4 million New South          was from LFG and CMM sources. These gases
       Wales Greenhouse Abatement         contain substantial amounts of methane                                                       These schemes generally set targets for the
       Certificates (NGACs) from           which has more than 20 times the global                                                      amount of renewable and clean energy to
       Australia LFG and CMM projects.    warming potential of CO2, if released into                                                   be generated as a percentage of the overall
     • Captured 8.5 million tonnes of     the atmosphere.                                                                              energy mix and/or to establish limits for GHG
       CO2e at Company LFG and                                                                                                         emission volumes from power generation.
                                          The other 30% of the electricity generated by
       CMM projects. This is equivalent   the Company comes from natural gas which                                                     Energy Developments is currently involved
       to removing approximately          produces a third of the GHG emissions of                                                     in three main schemes in Australia and
       2.7 million cars from the road.    conventional power generation fuels, such                                                    the UK, being:
     • No incidents of environmental      as coal and diesel.
                                                                                                                                       • the Australian Mandatory Renewable
       harm in Australia.                 The Company produced enough electricity                                                        Energy Target scheme (MRET);
     • Trialed the online environmental   to power more than 200,000 homes and in
                                          GHG net reduction terms avoided 3.9 million                                                  • the New South Wales Greenhouse
       manuals to improve accessibility
       and reduce paper use at power      tonnes of CO2e emissions.                                                                      Abatement scheme; and
       station sites.                     Energy Developments believes the energy                                                      • the United Kingdom Renewable
     • Rolled out the existing            sector has a responsibility to strive to reduce                                                Obligation scheme.
       Environmental Management
       System (EMS) for the Northern
       Territory sites.                                                                                                        5.1
                                                                                           5.0               4.9                                                   5.0               4.9
                                                                                                                                                 4.8                                                               4.7
     • Expanded the existing EMS to                                      4.5
       cover Yulara and German Creek.                                                                                    4.1                                                                           4.3
                                                       4.2
                                                                                     4.0               4.0                                                                                                     3.9
                                                                                                                                                             3.9               3.8
                                                                                                                                           3.8
                                                                   3.6
                                                 3.4                                                                                                                                             3.4




                                                                                                                   1.0               1.0               1.1               1.1
                                                             0.9               1.0               0.9                                                                                       0.9
                                           0.8                                                                                                                                                               0.8




                                             1998              1999              2000              2001              2002              2003              2004              2005              2006             2007

                                           GREENHOUSE GAS IMPACT – AVOIDED EMISSIONS (AUSTRALIA)
                                           million tonnes – year ended 30 June
                                                 GHG released                                          net GHG reduction                                Gross GHG reduction




12     ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                                SUSTAINABLE	PERFORMANCE




                                                                              Greenhouse Gas Abatement
                                                                              Programme Award being presented
                                                                              to Energy Developments by the
                                                                              Department of Environment and
                                                                              Water Resources.




In 2007, Energy Developments created more        monthly checks, systematic testing, accurate
than 190,000 Renewable Energy Certificates        data collection and regular reporting to ensure
and 1.4 million NGACs from Australian            the Company is achieving its environmental              2008 OUTLOOK
operations. Green credit revenue for 2007        and sustainability goals.
across the Company’s global operations                                                                   • Energy Developments will continue
was $33 million which was some 62%               In 2008, Energy Developments will apply                   to provide expert assistance and
higher than 2006.                                this system to all WKPP sites in line with all            customer service throughout
                                                 regulatory and environmental requirements.                Australia and pro-actively seek
                                                                                                           environmental solutions.
THE IMPORTANCE OF
                                                 ENVIRONMENTAL
SUSTAINABILITY                                                                                           • The Company will continuously
                                                 IMPROVEMENTS IN THE                                       review its environmental policy
Sustainability drives Energy Developments’       KIMBERLEYS                                                with reference to changing
business model and the long-term viability                                                                 community standards and
of its projects.                                 The benefits of clean energy to the
                                                                                                           expectations and reaffirm
                                                 environment are significant. Clean energy
For Energy Developments, sustainability                                                                    environmental performance
                                                 forms an integral part of the long-term
means operating in a way that improves                                                                     commitments.
                                                 solution to climate change.
outcomes for employees, shareholders,
                                                                                                         • Existing compliance systems will
business partners, the environment and the       However, there are significant challenges
                                                 related to the production of reliable, base-load          be expanded to include new
communities where we do business.
                                                 power in the quantities required to sustain               project developments such as
As well as improving outcomes for our                                                                      Moranbah North and the West
                                                 society’s increasing energy demands.
stakeholders and the environment,                                                                          Kimberley Power Project.
sustainability is also improving the Company’s   A suite of interim technologies is required to
efficiency and profitability as it works toward    bridge this gap. WKPP is a perfect illustration         • Chemical storage facilities will be
becoming a leader in the international           of such technology with inefficient diesel                 enhanced across selected LFG sites.
renewable and clean energy marketplace.          power stations being replaced by more                   • Existing systems will be expanded
                                                 efficient LNG facilities.                                  in preparation for a national
Energy Developments manages a diverse
portfolio of LFG, CMM, remote, LNG and           As a low-emission technologies specialist,                carbon trading scheme.
CNG energy solutions across most states and      Energy Developments has taken up the
territories of Australia, the United Kingdom,    challenge to replace traditional fossil fuels with
Europe and the United States.                    cleaner energy sources, such as natural gas.
The Company is committed to the further          Natural gas is the cleanest, most-viable energy
enhancement of its customised EMS.               source available, given the West Kimberley
The Company’s comprehensive EMS                  region’s proximity to the gas-rich North West
provides a structured approach and is            Shelf and the Dampier-Bunbury gas pipeline.
focused on minimising risk to the                The displacement of diesel-fuelled power
environment at the Company.                      generation in the West Kimberley region may
Energy Developments’ EMS has been                contribute to improved air quality by reducing
progressively upgraded over recent years         airborne particulates and nitrogen oxide and
and the system has benefited from both            sulphur emissions.
industry developments and the regulatory
environment under which the Company
                                                 FOCUS ON APPIN AND TOWER POWER STATIONS
operates. The system has also drawn on the
Company’s extensive operational experience
and stakeholder involvement.                      The Appin and Tower CMM power stations are internationally recognised as among the largest
The EMS includes regular performance              CMM power generation projects in the world.
assessment against benchmarks as part             In 2007, these stations abated 2.1 million tonnes of CO2e, making them one of the largest
of a continuous improvement regime.
                                                  single abatement contributors in Australia.
Fundamental aspects of the system include




	                                                                         ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED                         13
ENERGY	FOR	A	SUSTAINABLE	FUTURE




ConneCteD CoMMUnItIeS
Energy	Developments	strongly	supports	sustainable	development	through	the	
Company’s	community,	environmental	and	social	programs.	The	Company	contributes	
advice,	resources	and	services	to	assist	host	communities	achieve	positive	social,	
economic	and	environmental	outcomes.




                                          NEW PROJECTS BOOST                              COMMUNITY SUPPORT
                                          BENEFITS                                        FOR WEST KIMBERLEY
     KEY ACHIEVEMENTS
                                                                                          POWER PROJECT
     IN 2007                              As Energy Developments expands its
                                          project reach, the Company expects to           Energy Developments is presently
     The Company continued its            provide significant social, economic and         commissioning infrastructure to supply
     community engagement activities      environmental benefits to the communities        electricity to the towns of Broome, Camballin/
     related to WKPP. Feedback from       where it operates.                              Looma, Derby, Fitzroy Crossing and Halls
     community members demonstrates                                                       Creek in the West Kimberley region of
     strong project support.              The Company aims to develop clean energy
                                                                                          Western Australia.
                                          operations designed to have minimal impact
     Energy Developments participated     on the environment and local communities.       This project involves the construction of five
     in the North West Expo in Broome                                                     new power stations and an LNG plant in
     (as a silver sponsor), the Derby     In local areas, the Company aims to:            the region, and providing electricity to local
     Business Awards and the Shinju       • match power generation technologies with      customers for at least the next 20 years.
     Matsuri Festival under its program     the particular needs of the surrounding       Energy Developments appreciates the strong
     of social activities supporting        communities. This often provides more         support it receives from regional communities
     the community.                         reliable, efficient and cleaner electricity    across Australia and internationally.
                                            supplies than those previously available;
                                                                                          A contributing factor towards the Company’s
                                          • introduce clean power sources to reduce       positive engagement with these communities
                                            local GHG emissions;                          is the effort made to ensure stakeholders
                                                                                          are informed and consulted about Energy
                                          • install low-noise plant to minimise
                                                                                          Developments’ activities.
                                            operational impacts on neighbouring
                                            communities;                                  In the case of WKPP, the Company has
                                                                                          conducted community engagement activities
                                          • directly employ local people for
                                                                                          since 2004 to identify and address potential
                                            development projects and create additional
                                                                                          project impacts on residents, businesses and
                                            service and support industry positions; and
                                                                                          special interest groups. Activities included:
                                          • purchase local services and materials
                                                                                          • providing project briefings to Shire
                                            during the construction phases of the           Councillors and Council executives;
                                            projects, wherever possible.
                                                                                          • consulting local indigenous groups to
                                          On a global scale, Energy Developments            develop appropriate cultural heritage
                                          improves the sustainability of the world’s        management processes and to create
                                          communities by transforming substances that       training and development opportunities
                                          are harmful to the environment, such as LFG       for the local indigenous people;
                                          and CMM, into clean energy.
                                                                                          • working with representatives of the
                                                                                            Kimberley Development Commission to
                                                                                            maximise local development opportunities;

                        Our	approach	to	sustaining	business	                              • giving presentations to local Chamber
                                                                                            of Commerce meetings and seeking
               performance	by	strengthening	the	communities	                                expressions of interest from members

               in	which	we	operate	...	will	ultimately	serve	to	                            regarding their involvement in the
                                                                                            project; and
                               increase	shareholder	returns.                              • distributing written project information to
                                                                                            local residents throughout the planning
                                                                                            and construction phases of the project.




14     ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                               CONNECTED	COMMUNITIES




                                                                                                                 Broome township.




In 2007, Energy Developments continued                  BENEFITS TO ENERGY
with these activities. Highlights included              DEVELOPMENTS
participation in the North West Expo                                                                    2008 OUTLOOK
in Broome (as a silver sponsor), the                    Energy Developments is also benefiting
Derby Business Awards and the Shinju                                                                    The Company will continue to
                                                        from this sustainable development
                                                                                                        engage local communities during the
Matsuri Festival.                                       approach through:
                                                                                                        development and operational phases
In particular, the North West Expo has                  • improved relationships with local             of major projects.
provided an opportunity to engage with                    communities and regulators;
                                                                                                        Energy Developments will continue
industry, the tourism sector and members
                                                        • greater resource efficiency;                   to provide training and development
of the community. Feedback from such
                                                                                                        opportunities for indigenous
events has indicated widespread interest                • an improving environmental performance;       groups and maximise employment
and support for the development of the
                                                        • stronger employee relationships which in      prospects for other members of
local power stations.
                                                          turn promote the Company as a better          local communities.
                                                          workplace in an increasingly competitive      Further WKPP community benefit
COMMUNITY DEVELOPMENT                                     employment marketplace; and                   fund recipients will be identified.
CONTRIBUTIONS
                                                        • enhanced planning and preparation for
Energy Developments has continued to                      likely issues and changes to regulatory
provide financial and in-kind support for                  requirements by maintaining effective
disaster relief programs and community                    dialogue with stakeholders.
development projects in operating regions.
The Company has committed $1 million for                Our approach to sustaining business
a new community benefit fund to be jointly               performance by strengthening the
administered by Energy Developments and                 communities in which we operate, improving
the Western Australian Office of Energy. The             business efficiency, and developing
fund will be used for community development             stakeholder relationships, will ultimately
projects in the West Kimberley region.                  serve to increase shareholder returns.



                                                                                                     On	a	global	scale,	
                                                                                                     Energy	Developments	
                                                                                                     improves	the	sustainability	
                                                                                                     of	the	world’s	communities	
                                                                                                     by	transforming	substances	
                                                                                                     that	are	harmful	to	the	
                                                                                                     environment,	such	as	
                                                                                                     LFG	and	CMM,	into	
                                                                                                     clean	energy.

Energy Developments participated in the North West Expo in Broome as a silver sponsor.




	                                                                                  ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED             15
ENERGY	FOR	A	SUSTAINABLE	FUTURE




eMPoWereD PeoPLe
Our	most	important	asset	is	our	people	and	safety	is	a	
top	priority	in	all	of	Energy	Developments’	activities.




                                                   EMERGENCY RESPONSE PLAN                           HEALTH AND SAFETY
                                                   KEEPS PERSONNEL SAFE                              SYSTEMS GOAL
     HEALTH AND SAFETY
                                                   DURING CYCLONES
     RECORD                                                                                          Energy Developments has maintained a
                                                   The West Kimberley Power Project                  focus on the continuous improvement of its
     Energy Developments’ most important           experienced the combined impact of Tropical       workplace health and safety management
     asset is its people and health and            Cyclones George and Jacob in March 2007.          systems and processes.
     safety remains a top priority across
     all business activities.                      The LNG plant at Karratha received heavy rain     The Company is seeking independent
                                                   and strong winds but was not in the direct        accreditation of its safety management systems
     A focus on the continuous improve-            path of these cyclones. The third cyclone,        in accordance with AS/NZS 4801 Occupational
     ment of its workplace health and safety       Cyclone Kara, dissipated off the Pilbara coast.   Health and Safety Management Systems.
     systems and processes has helped the
     Company to achieve a 52% reduction            As a result of these cyclones, site evacuations   An independent audit of the Company’s
     in the lost time injury frequency rate        were carried out under the direction of           safety management systems was conducted
     (LTIFR). The LTIFR dropped from 7.3           the Fire Emergency Services Authority of          in early 2006. As a result, the Company has
     in 2006 to 3.5 in 2007 and lost time          Western Australia.                                implemented a range of documented protocols
     incidents fell from five to three.                                                               and procedures as part of the overarching
                                                   During these cyclones, the Company’s              Health and Safety Management System.
     This was a pleasing result for Energy         emergency response plan was activated to
     Developments and demonstrates the             secure all equipment and safely evacuate all      These protocols and procedures are also
     dedication of the Company and its             personnel from the site.                          embodied within the Company’s Occupational
     people to reducing safety risks and                                                             Health and Safety Manual, National and State
     incidents. The Company remains                                                                  Emergency Response Plans and Safety Reports
     committed to seeking further                                                                    to State Regulators as prescribed by legislation.
     improvements.




                  15                                  17




                                                                      11



                                 7
                                                               7              7.3
                          6
                                       5


                                               3                                       3.5




                 2003   2004   2005   2006 2007     2003    2004     2005    2006 2007

                 LOST TIME INCIDENTS                HISTORIC LTIFR
                 year ended 30 June                 year ended 30 June
                                                    the lost time injury frequency rate
                                                    (LtIFr) is the number of injuries incurred
                                                    per one million hours worked that
                                                    resulted in a lost day or shift.




16     ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                                        EMPOWERED	PEOPLE




Training packages governing all new and            NEW TRAINING INITIATIVES                        The Leaders of Tomorrow program accepted
improved safety systems have been developed                                                        its second employee intake during 2007.
and are being delivered to all operational sites   An independent human resources group            There are now 17 people engaged in this
throughout Australia.                              was appointed in 2006 to deliver tailored       program. Energy Developments is looking to
                                                   leadership programs over a two year period.     develop today’s managers into tomorrow’s
Energy Developments is committed to the
                                                                                                   business leaders.
continual improvement of safety through            The training has been designed to help senior
both a reduction in lost time injuries and a       employees develop a strategic management        For new recruits at proposed or recently
commitment to an education and awareness           focus and identify ways of adding value to      opened Company power stations,
campaign to ensure the safety of all workers.      Company operations in addition to individual    intensive training was conducted in
                                                   personal development.                           2007 to enable these employees to learn
                                                                                                   preferred operating procedures and
LABOUR SHORTAGE                                    The Developing Managers training program
                                                                                                   preventative maintenance techniques.
                                                   was developed to provide management
Attracting and retaining quality personnel are     skills to supervisory and technical staff.
vital for Energy Developments. The Company         There are presently 10 people involved in
has successfully attracted and engaged             this training program.
qualified employees for its project delivery
program, despite the current shortage of
qualified engineers and technical workers in
the Australian marketplace. This shortage is
                                                                                                   Energy	Developments	
primarily due to unprecedented demand for                                                          has	maintained	a	
employees during the current resources boom,
particularly in remote regions.                                                                    focus	on	the	continuous	
The Company’s continued success in this                                                            improvement	of	its	
area is based on researching remuneration
trends and through promoting the diversity                                                         workplace	health	and	
of opportunities available at its projects to
prospective employees.
                                                                                                   safety	management	
                                                                                                   systems	and	processes.
EMPLOYEE RETENTION
STRATEGIES
Energy Developments has continued to
strengthen its employee retention strategies.

Non-financial incentives for employees include
opportunities to participate in training and
development programs such as Developing
Managers and Leaders of Tomorrow. These
recently-established programs aim to support
and develop the skills of talented individuals
at all levels of the organisation.




	                                                                         ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED                      17
ENERGY	FOR	A	SUSTAINABLE	FUTURE


                                                                                                         BOARD OF
                                                                                                         DIRECTORS

CoMPAnY LeADerSHIP
Energy	Developments’	directors	offer	signifi	cant	experience	and	                                                               Michael Brown
                                                                                                                               Chairman
expertise	and	they	will	continue	to	provide	strong	leadership	
and	direction	to	the	Company	as	it	strives	to	achieve	its	strategic	
objectives	to	ensure	a	sustainable	future.




BOARD OF DIRECTORS                                Chris Laurie,                                      Greg Martin,
                                                  Managing Director                                  Non-Executive Director
Michael Brown,                                    BE (Elec), RPEng, FNZIM, FIOD (NZ)                 BEc, LLB, FAIM, MAICD
Chairman                                          Chris Laurie has extensive experience in           Greg Martin has more than 25 years of
MBA, BEc                                          the commercial management of electricity           experience working in the energy sector.
                                                  and gas industry organisations as well as          He has held senior roles in Australia and
Michael Brown has more than 20 years of
                                                  involvement in retail, technology and              overseas with The Australian Gas Light
experience in the energy industry, including
                                                  contracting businesses. Chris was Managing         Company (AGL) including five years as the
senior management positions at Exxon
                                                  Director of energy retailing and distribution      company’s Managing Director and Chief
Corporation’s operations in Australia, the
                                                  company Southpower NZ Ltd for 10 years             Executive Officer. He currently holds a senior
United States, Japan and Malaysia. In addition
                                                  and Managing Director of electricity               executive position with the Challenger
to his role at Energy Developments, Michael
                                                  distribution company Orion New Zealand             Financial Services Group where he serves as
is a non-executive director of Innamincka
                                                  Limited for five years before joining               Chief Executive responsible for the Group’s
Petroleum Limited and Wattyl Limited.
                                                  Energy Developments.                               infrastructure-related activities.
He is a former director of Brambles
Industries Limited and several other                                                                 Greg is an executive director of Challenger
Australian public companies.                      Dr Peter Cassidy,                                  Management Services Limited and is the
                                                  Non-Executive Director                             Chairman of the New South Wales Royal
Dr Bruce Harker,                                  PhD, CEng, BSc (Eng), FAusIMM                      Botanic Gardens and Domain Trust.
Deputy Chairman                                                                                      He was a previous Chairman of the former
                                                  Dr Peter Cassidy is a metallurgical engineer
                                                                                                     New Zealand listed energy company
PhD (Elec Eng), BE (Hons)                         with more than 35 years of experience in the
                                                                                                     NGC Holdings Limited and served as the
                                                  resources industry in Australia, South-East Asia
Dr Bruce Harker is a director of investment                                                          inaugural Chairman of the Energy Supply
                                                  and North America. This experience includes
bank and fund manager, Morrison & Co,                                                                Association of Australia Limited.
                                                  15 years serving on the boards of major
and heads its energy sector advisory group.
                                                  Australian public companies. Peter is currently
In this role, Bruce is responsible for managing                                                      Greg Pritchard,
                                                  a non-executive director of Sino Gold Mining
the electricity sector investments of Infratil                                                       Finance Director/Company Secretary
                                                  Limited and a non-executive director of
Limited, a New Zealand listed company.
                                                  Lihir Gold Limited, Oxiana Limited and             MAppFin, BCom, FCA
Throughout his career, he has been engaged
                                                  Zinifex Limited.
in major energy sector transactions and                                                              Greg Pritchard is an experienced finance
projects in Australia, the United Kingdom                                                            executive whose previous positions include
and New Zealand. He is former Chairman            Dr Richard Gregson,                                Chief Financial Officer of QCT Resources
of Victorian generator Southern Hydro and         Non-Executive Director                             Limited and QNI Limited. He has held various
current Deputy Chairman of New Zealand            PhD, MBA, BSc (Hons)                               senior posts at KPMG and Wardley James
listed company TrustPower Limited,                                                                   Capel in Australia, the United Kingdom
                                                  Dr Richard Gregson is the co-founder and a
Chairman of Melbourne-based electricity                                                              and Europe.
                                                  partner at private equity funds management
retailer Victoria Electricity Pty Ltd and
                                                  group Equity Partners. In this capacity,
Chairman of Melbourne-based generator
                                                  Richard has assisted with the development
Infratil Energy Australia Pty Ltd.
                                                  and expansion of many small to medium
                                                  sized enterprises since 1989. He is a non-
                                                  executive director of public companies
                                                  Traffic Technologies Limited and Portland
                                                  Orthopaedic Limited. Richard has been a
                                                  non-executive director of private companies
                                                  in several industries including healthcare,
                                                  logistics, resources and financial services.




18    ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                                     COMPANY	LEADERSHIP




Dr Bruce Harker             Chris Laurie         Dr Peter Cassidy         Dr Richard Gregson     Greg Martin               Greg Pritchard
Deputy Chairman



                    CORPORATE
              MANAGEMENT TEAM




                                                 David Kent               Chris Murray           Peter Shaw                Jon Thomas



CORPORATE                                        Chris Murray,                                   Peter Shaw,
MANAGEMENT TEAM                                  Executive General Manager –                     General Manager –
                                                 Australia and Project Director –                Project Developments
The corporate management team                    West Kimberley Power Project                    BE (Elect), BEc, MBA, DipAppFin&Invest,
implements worldwide programs that               BE (Mech) (Hons), CPEng, GAICD                  CPEng, MAIM, FFin
are aligned with the Board’s vision for
Energy Developments.                             Chris is the Executive General Manager          Peter has had more than 30 years of
                                                 – Australia and Project Director for West       experience in the design and delivery of
Chris Laurie,                                    Kimberley Power Project. He joined Energy       projects in the power and mining industries.
Managing Director                                Developments in February 2002 as the            Peter joined Energy Developments in October
                                                 Group General Manager – Technical Services,     2006 to oversee the delivery of capital
(refer to directors’ profiles)
                                                 where he had an overall global management       projects. He has considerable experience in
                                                 responsibility for manufacturing, engineering   feasibility studies together with the technical
Greg Pritchard,                                  and technology development.                     and financial evaluation of proposed and
Finance Director/Company Secretary                                                               existing industrial assets. Peter has previously
                                                 Prior to this, Chris was Managing Director
(refer to directors’ profiles)                                                                    held senior management positions at principal
                                                 of a former subsidiary company of Energy
                                                                                                 level in a number of the leading power
                                                 Developments – Biomass Energy Service &
David Kent,                                                                                      industry consulting firms in Queensland
                                                 Technology Pty Limited. During his career
General Manager – Europe                                                                         and New South Wales.
                                                 spanning more than 20 years, Chris has held
BA (Ec) (Hons), ACA, DipGenMgt                   various engineering and consulting positions
                                                 at managerial and principal levels and has      Jon Thomas,
Since 1998, David Kent has worked to
                                                 worked in the power, mining, manufacturing      President – Energy Developments, Inc
establish efficient regulatory compliance and
                                                 and chemical industries. He was a founder,      (United States)
business systems and services for Energy                                                         MA (Arts, Sciences), BA (Int Relations)
                                                 and for five years, principal of an
Developments’ United Kingdom subsidiary.
                                                 engineering consultancy.
David initially joined the organisation as                                                       Jon Thomas’ career includes more than
Financial Controller but was appointed                                                           20 years of experience working with
General Manager – Europe in June 2004.           Ian McInnes,                                    energy-related and technology companies.
He has 18 years of financial management           Executive General Manager –                     He was appointed to his current position
experience in various industry sectors and       Global Operations Strategy                      with Energy Developments in July 2005.
previously held senior financial administration   AFNZIM, MID                                     Jon has held several CEO and senior
positions at London’s Design Council and                                                         executive positions, including CEO of
                                                 Subsequent to the issuance of the directors’
the Royal Ballet School. David is a Chartered                                                    CIC Global LLC, a partnership between
                                                 report (pages 28 to 38), Ian McInnes resigned
Accountant who earned his qualifications                                                          United States’ Exelon Energy Corporation
                                                 as Executive General Manager – Global
working in the audit department of major                                                         and Orion New Zealand Limited. He has
                                                 Operations Strategy on 31 August 2007.
United Kingdom chartered accountancy                                                             served as a United States diplomat and
firm Baker Tilly.                                                                                 an Assistant Secretary of State under
                                                                                                 President Reagan. He has also been an
                                                                                                 Adjunct Professor of International Business
                                                                                                 at Belmont University.




	                                                                        ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED                        19
ENERGY	FOR	A	SUSTAINABLE	FUTURE




CorPorAte GovernAnCe




ASX Listing Rule 4.10.3 requires Energy Developments to disclose the extent to which it complies with the 10 Principles of
Good Corporate Governance and Best Practice Recommendations (Guidelines) issued by the ASX Corporate Governance Council in
March 2003. There are 10 Principles and 28 Recommendations contained in the Guidelines, which are reported on in this section.
Throughout the year ended 30 June 2007, the Company complied with the Guidelines in all respects.


PRINCIPLE 1: LAY SOLID FOUNDATIONS                                   PRINCIPLE 2: STRUCTURE THE BOARD
FOR MANAGEMENT AND OVERSIGHT                                         TO ADD VALUE

Recommendation 1.1: Formalise and disclose the                       Recommendation 2.1: A majority of the board
functions reserved to the board and those delegated                  should be independent directors
to management                                                        The Board presently comprises five non-executive directors and two
The Company complies with this Recommendation. The Board has         executive directors. The personal and professional details of the directors
formally adopted a Board & Governance Charter (available on the      for the year ended 30 June 2007 are located in the section entitled
Company website) which outlines the key responsibilities of the      Company Leadership in the annual report (pages 18 to 19).
Board and those responsibilities delegated to management.
                                                                     The details of office of each director is as follows:
The key responsibilities of the Board are to:

• review, advance and approve the Company’s:                                                          Annual
   – objectives and strategies;                                                                       general
   – plans, budgets and investments; and                                                             meeting          Retiring
                                                                                                    at which          at 2007
   – capital management;
                                                                                                  retirement           annual
• monitor the Company’s businesses, financial performance             Director             Date of by rotation         general
  and corporate governance;                                          name            appointment is required          meeting Independent
• oversee the financial position of the Company;                      R P Gregson       25 Oct 1991           2009           No             Yes
• report to shareholders;                                            M R Brown         1 Mar 2001            2007           Yes            Yes
• ensure effective control, accountability and compliance            G J Pritchard      24 Jul 2001          2008           No              No
  systems are in place;
                                                                     B J Harker         27 Jul 2002          2008           No              No
• appoint, and appraise the performance of, the Managing Director;
                                                                     C S Laurie         27 Jul 2002           Not        Not                No
• review risk management procedures and policies;                                       (as director)   applicable applicable
• oversee the senior management team in terms of:                                      29 Jan 2003
                                                                                      (as Managing
   – review of performance evaluation;
                                                                                            Director)
   – succession planning; and
                                                                     P W Cassidy        3 Apr 2003           2009           No             Yes
   – remuneration;
                                                                     G J W Martin     16 May 2006            2009           No             Yes
• establish a culture of high ethical, environmental,
  health and safety standards; and
• ensure the Board is effective.                                     Of the non-executive directors, Michael Brown, Peter Cassidy, Richard
                                                                     Gregson and Greg Martin meet the definition of independence set
                                                                     out in the Guidelines. Bruce Harker is associated with Infratil Australia
                                                                     Limited and associates (Infratil), a substantial shareholder in the
                                                                     Company. Bruce Harker brings significant experience to the Company
                                                                     in the major areas of Company business. In the vast majority of matters
                                                                     considered by the Board, there is complete alignment of the interests of
                                                                     Infratil and the Company and their respective shareholders. Therefore,
                                                                     Bruce Harker may be considered independent in such matters.




20    ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                                      CORPORATE	GOVERNANCE




The Board & Governance Charter contains a section entitled Board
Procedures that requires all directors to bring an independent judgement       Information in accordance with Annual report or website
to bear in decision-making. Where conflicts may arise, affected directors       the Guidelines (continued)     reference (continued)
excuse themselves from Board deliberations and decisions.                      The names of members of the          This function is carried out by
                                                                               nomination committee and their       the Board under the Board &
Recommendation 2.2: The chairperson should be                                  attendance at meetings of the        Governance Charter.
                                                                               committee.
an independent director
                                                                               An explanation of any departures     The Company complies with
The Company complies with this Recommendation.                                 from Recommendation 2.1, 2.2,        Recommendations 2.2, 2.3, 2.4
                                                                               2.3, 2.4 or 2.5.                     and 2.5. The status with respect to
                                                                                                                    Recommendation 2.1 is explained
Recommendation 2.3: The role of chairperson and
                                                                                                                    in the Company’s response to
chief executive officer should not be exercised by                                                                   Recommendation 2.1 on page 20.
the same individual
                                                                               A description of the procedure for The Board & Governance Charter,
The Company complies with this Recommendation.                                 the selection and appointment of available on the website under
                                                                               new directors to the board.        Corporate Governance, contains
                                                                                                                  details of the principles applied in
Recommendation 2.4: The board should establish                                                                    the appointment of directors to
a nomination committee                                                                                            the Board.
As noted in the Guidelines, smaller boards may not find it efficient to          The charter of the nomination        This function is described in the
have a separate nomination committee. Accordingly, the Board as a              committee or a summary of the        Board & Governance Charter.
whole acts as a nomination committee. The processes for nominations            role, rights, responsibilities and
are contained within the Company’s Board & Governance Charter.                 membership requirements for
                                                                               that committee.
                                                                               The nomination committee’s           This function is described in the
Recommendation 2.5: Provide the information indicated                          policy for the appointment           Board & Governance Charter.
in the Guide to Reporting on Principle 2                                       of directors.
The following table contains the recommended information:
                                                                               PRINCIPLE 3: PROMOTE ETHICAL AND
    Information in accordance            Annual report or website              RESPONSIBLE DECISION-MAKING
    with the Guidelines                  reference
    The skills, experience and expertise Refer to the directors’ profiles       Recommendation 3.1: Establish a code of conduct
    relevant to the position of director on pages 18 to 19 of the
    held by each director in office at    annual report.
                                                                               to guide the directors, the chief executive officer (or
    the date of the annual report.                                             equivalent), the chief financial officer (or equivalent)
    The names of the directors           Refer to the Company response to      and any other key executives as to:
    considered by the board to           Recommendation 2.1 on page 20.        3.1.1 the practices necessary to maintain confidence in the
    constitute independent directors                                           company’s integrity; and
    and the company’s materiality
    thresholds.                                                                3.1.2 the responsibility and accountability of individuals for
    A statement as to whether there is   In accordance with the Board          reporting and investigating reports of unethical practices.
    a procedure agreed by the board      & Governance Charter, where           The Company complies with this Recommendation.
    for directors to take independent    reasonably necessary the directors
    professional advice at the expense   may obtain independent advice         The Company has adopted a Code of Conduct (available on the
    of the company.                      after notifying the Chairman.         Company website) which is applicable to all employees and directors.
    The term of office held by each       Refer to the Company response to      Further details of the Company’s Code of Conduct are contained in the
    director in office at the date of the Recommendation 2.1 on page 20.        response to Recommendation 10.1 (page 26).
    annual report.




	                                                                             ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED                            21
ENERGY	FOR	A	SUSTAINABLE	FUTURE




CorPorAte GovernAnCe
(CONTINUED)




PRINCIPLE 3: PROMOTE ETHICAL AND                                         PRINCIPLE 4: SAFEGUARD INTEGRITY IN
RESPONSIBLE DECISION-MAKING (CONTINUED)                                  FINANCIAL REPORTING

Recommendation 3.2: Disclose the policy                                  Recommendation 4.1: Require the chief executive
concerning trading in company securities by                              officer (or equivalent) and the chief financial officer
directors, officers and employees                                         (or equivalent) to state in writing to the board that the
The Company complies with this Recommendation.
                                                                         company’s financial reports present a true and fair view,
                                                                         in all material respects, of the company’s financial
The Company has adopted a Securities Trading Policy (available on the    condition and operational results and are in
Company website) which applies to all employees and directors. The
                                                                         accordance with relevant accounting standards
policy provides guidance to employees and directors on the purchase
and sale of Company securities so that breaches of the Corporations      The Company complies with this Recommendation.
Act 2001 do not occur, and to ensure that dealings by employees and
                                                                         Adoption of the Company’s financial statements for the year ended
directors in Company securities are fair and are seen to be fair.
                                                                         30 June 2007 followed written representations from the Managing
                                                                         Director and Finance Director, in accordance with section 295A of
Recommendation 3.3: Provide the information indicated                    the Corporations Act 2001.
in the Guide to Reporting on Principle 3
The following table contains the recommended information:                Recommendation 4.2: The board should establish
                                                                         an audit committee
Information in accordance           Annual report or website             The Company complies with this Recommendation.
with the Guidelines                 reference
An explanation of any departures    The Company complies with            Recommendation 4.3: Structure the audit committee
from Recommendation 3.1,            Recommendations 3.1, 3.2
                                                                         so that it consists of:
3.2 or 3.3.                         and 3.3.
Any applicable code of conduct or The Company’s Code of Conduct          • only non-executive directors;
a summary of its main provisions. is available on the Company            • a majority of independent directors;
                                  website under Corporate
                                  Governance.                            • an independent chairperson, who is not
The trading policy or a summary     The Company’s Securities Trading       chairperson of the board; and
of its main provisions.             Policy is available on the Company
                                    website under Corporate
                                                                         • at least three members.
                                    Governance.                          The Company complies with this Recommendation.

                                                                         The present members of the Audit Committee are Peter Cassidy
                                                                         (Chairman), Michael Brown and Bruce Harker.


                                                                         Recommendation 4.4: The audit committee should
                                                                         have a formal charter
                                                                         The Company complies with this Recommendation.

                                                                         The Company has adopted an Audit Committee Charter which is
                                                                         available on the Company website. The Audit Committee provides
                                                                         advice and assistance to the Board in fulfilling its responsibilities.




22    ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                                   CORPORATE	GOVERNANCE




Recommendation 4.5: Provide the information indicated                        PRINCIPLE 5: MAKE TIMELY AND
in the Guide to Reporting on Principle 4                                     BALANCED DISCLOSURE
The following table contains the recommended information:
                                                                             Recommendation 5.1: Establish written policies
    Information in accordance          Annual report or website
                                                                             and procedures designed to ensure compliance
    with the Guidelines                reference                             with ASX Listing Rule disclosure requirements and
    Details of the names and           Refer to the Company’s response
                                                                             to ensure accountability at a senior management
    qualifications of those appointed   to Recommendation 4.3 above.          level for that compliance
    to the audit committee, or where
                                                                             The Company complies with this Recommendation.
    an audit committee has not been
    formed, those who fulfil the                                              The Company has adopted a Continuous Disclosure Policy (available
    functions of an audit committee.                                         on the Company website) to ensure that investors are able to make
    The number of meetings of the      There were five Audit Committee        informed investment decisions
    audit committee and the names      meetings held during the
    of the attendees.                  reporting period. Peter Cassidy       Recommendation 5.2: Provide the information indicated
                                       (as Chairman), Michael Brown
                                       and Bruce Harker attended all         in the Guide to Reporting on Principle 5
                                       meetings.                             The following table contains the recommended information:
    An explanation of any departures   The Company complies with
    from Recommendation 4.1, 4.2,      Recommendations 4.1, 4.2, 4.3,
                                                                             Information in accordance with Annual report or website
    4.3, 4.4 or 4.5.                   4.4 and 4.5.
                                                                             the Guidelines                 reference
    The audit committee charter.       The Audit Committee Charter is
                                                                             Explanation of any departures   The Company complies with
                                       available on the Company website
                                                                             from Recommendation 5.1 or 5.2. Recommendations 5.1 and 5.2.
                                       under Corporate Governance.
                                                                             A summary of the policies and      The Company’s Continuous
    Information on procedures for      The Audit Committee Charter
                                                                             procedures designed to guide       Disclosure Policy is available on
    the selection and appointment      provides for the Committee’s
                                                                             compliance with ASX Listing Rule   the Company website under
    of the external auditor, and for   review, at least annually, of the
                                                                             disclosure requirements.           Corporate Governance.
    the rotation of external audit     performance of external auditors.
    engagement partners.               The Committee may recommend
                                       changes in the selection of
                                       external auditors as it deems
                                       appropriate. The Committee
                                       also obtains and reviews, at least
                                       annually, a report by the external
                                       auditor describing the external
                                       auditor’s internal quality control
                                       and independence procedures.




	                                                                           ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED                          23
ENERGY	FOR	A	SUSTAINABLE	FUTURE




CorPorAte GovernAnCe
(CONTINUED)




PRINCIPLE 6: RESPECT THE RIGHTS                                           Recommendation 7.2: The chief executive officer (or
OF SHAREHOLDERS                                                           equivalent) and the chief financial officer (or equivalent)
                                                                          should state to the board in writing that:
Recommendation 6.1: Design and disclose a                                 7.2.1 the statement given in accordance with Best Practice
communications strategy to promote effective                              Recommendation 4.1 (the integrity of financial statements)
communication with shareholders and encourage                             is founded on a sound system of risk management and internal
effective participation at general meetings                               compliance and control which implements the policies adopted
                                                                          by the board; and
The Company complies with this Recommendation.
                                                                          7.2.2 the company’s risk management and internal compliance
The Board & Governance Charter outlines the Company’s approach            and control system is operating efficiently and effectively in all
to market disclosure and shareholder communications. These are            material respects.
designed to ensure immediate communication of all material events to
shareholders in accordance with continuous disclosure requirements.       The Company complies with this Recommendation.

                                                                          The adoption of the Company’s financial statements for the year
Recommendation 6.2: Request the external auditor                          ended 30 June 2007 followed written representations from the
to attend the annual general meeting and be available                     Managing Director and Finance Director made in accordance with
to answer shareholder questions about the conduct                         Recommendation 7.2 and in accordance with section 295A of the
                                                                          Corporations Act 2001.
of the audit and the preparation and content of the
auditor’s report
                                                                          Recommendation 7.3: Provide the information indicated
The Company complies with this Recommendation. The auditor is also
                                                                          in the Guide to Reporting on Principle 7
required by section 250RA of the Corporations Act 2001 to attend the
annual general meeting.                                                   The following table contains the recommended information:


PRINCIPLE 7: RECOGNISE AND MANAGE RISK                                    Information in accordance          Annual report or website
                                                                          with the Guidelines                reference
Recommendation 7.1: The board or appropriate                              Explanation of any departures      The Company complies with
                                                                          from Recommendation 7.1,           Recommendations 7.1,
board committee should establish policies on risk
                                                                          7.2 or 7.3.                        7.2 and 7.3.
oversight and management
                                                                          A description of the company’s     The Company’s Risk Management
The Company complies with this Recommendation.                            risk management policy and         Policy is available on the Company
                                                                          internal compliance and            website under Corporate
The Company has adopted a Risk Management Policy (available on
                                                                          control procedures.                Governance.
the Company website) to recognise and manage risk. The objective of
the policy is to create and maintain shareholder value and successfully
execute the Company’s strategies. Based on reviews of each segment of
the Company’s business, an overall risk profile has been established.      PRINCIPLE 8: ENCOURAGE ENHANCED
                                                                          PERFORMANCE

                                                                          Recommendation 8.1: Disclose the process for
                                                                          performance evaluation of the board, its committees
                                                                          and individual directors, and key executives
                                                                          The Company complies with this Recommendation.




24    ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
                                                                                                                   CORPORATE	GOVERNANCE




The Board & Governance Charter states that key responsibilities of the     Recommendation 9.2: The board should establish
Board are to:                                                              a remuneration committee
• ensure the Board is effective;                                           The Company complies with this Recommendation.
• appoint, and appraise the performance of, the Managing Director;
                                                                           As at 30 June 2007, the members of the Remuneration Committee were
  and
                                                                           Michael Brown (Chairman), Richard Gregson and Greg Martin. During
• oversee the senior management team by reviewing performance              the year ended 30 June 2007, Peter Cassidy resigned as a member of the
  evaluation and succession planning.                                      Remuneration Committee and Greg Martin was appointed in his place.
Further, at least every two years the Chairman conducts a performance      The Company has adopted a Remuneration Committee Charter which
review of the Board, supported by a formal questionnaire completed by      is available on the Company website. The Remuneration Committee
all Board members. The review is focused on:                               provides assistance to the Board in relation to remuneration policies and
• the overall effectiveness and competencies of the Board;                 practices and the remuneration of the Managing Director, other senior
                                                                           executives and non-executive directors. It also links remuneration with
• the availability and contribution of each individual director;
                                                                           specific goals and objectives. Salaries are in accordance with prevailing
• effectiveness of directors’ training and orientation; and                market rates. Bonuses and options granted are subject to the fulfilment
• succession planning.                                                     of performance conditions.

A performance evaluation for the Board and its members was carried
out by the Chairman during the year ended 30 June 2006.                    Recommendation 9.3: Clearly distinguish the
                                                                           structure of non-executive directors’ remuneration
PRINCIPLE 9: REMUNERATE FAIRLY                                             from that of executives
AND RESPONSIBLY                                                            The Company complies with this Recommendation.

                                                                           The basis and background to the Company’s remuneration policies
Recommendation 9.1: Provide disclosure in relation to                      and the remuneration of non-executive directors are contained in
the company’s remuneration policies to enable investors                    the remuneration report included in the Directors’ Report at
to understand (i) the costs and benefits of those policies                  pages 28 to 39 of the annual report.
and (ii) the link between remuneration paid to directors
and key executives and corporate performance                               Recommendation 9.4: Ensure that payment of equity-
                                                                           based executive remuneration is made in accordance with
The Company complies with this Recommendation. The Company is
also required by section 300A of the Corporations Act 2001 to provide      thresholds set in plans approved by shareholders
this information.                                                          The Company complies with this Recommendation.
The basis and background of the Company’s remuneration policies            The Company operates an employee share option plan (Employee Plan)
and the remuneration of the directors and key executives are contained     and an employee tax exempt share acquisition plan (Tax Plan). The
in the remuneration report included in the Directors’ Report at            Employee Plan and Tax Plan were approved by shareholders at the 2005
pages 28 to 39 of this annual report.                                      annual general meeting. The Remuneration Committee is responsible for
Further details are also provided in the Remuneration Committee Charter    the oversight of offers under the Employee Plan. Offers in the form of
which is available on the Company website.                                 performance rights were made to eligible executives under the Tax Plan
                                                                           during the reporting period. Further details of the offer are set out in
                                                                           Note 25 to the financial statements included in the annual report.

                                                                           Options/performance rights granted to executive directors are subject to
                                                                           shareholder approval.




	                                                                         ANNUAL	REPORT	2007	ENERGY DEVELOPMENTS LIMITED                        25
ENERGY	FOR	A	SUSTAINABLE	FUTURE




CorPorAte GovernAnCe
(CONTINUED)




PRINCIPLE 9: REMUNERATE FAIRLY                                          PRINCIPLE 10: RECOGNISE THE LEGITIMATE
AND RESPONSIBLY (CONTINUED)                                             INTERESTS OF STAKEHOLDERS

Recommendation 9.5: Provide the information indicated                   Recommendation 10.1: Establish and disclose a code
in the Guide to Reporting on Principle 9                                of conduct to guide compliance with legal and other
The following table contains the recommended information:
                                                                        obligations to legitimate stakeholders
                                                                        The Company complies with this Recommendation.
Information in accordance            Annual report or website           The Company’s Code of Conduct sets out the standards expected of
with the Guidelines                  reference                          all employees (including directors). It follows best practice guidelines in
Disclosure of the company’s          Refer to the Company’s response    that it contains provisions relating to compliance, conflicts, fair dealing,
remuneration policies referred to    to Recommendation 9.1 above.       company assets and property, confidential information, employment
in Recommendation 9.1 and in                                            practices, gifts and entertainment, and reporting. The reporting
Box 9.1 of the Guidelines                                               provision requires employees to report any circumstance which the
The names of the members of          There were two meetings of the     employee believes in good faith to be a breach of the law or the
the remuneration committee and       Remuneration Committee during      Code of Conduct.
their attendance at meetings of      the reporting period. Michael
the committee.                       Brown and Richard Gregson
                                     attended both meetings. Peter
                                     Cassidy and Greg Martin attended
                                     one meeting each. Subsequent to
                                     the end of the reporting period,
                                     Greg Martin succeeded Michael
                                     Brown as Chairman of the
                                     Remuneration Committee.
The existence and terms of           There are no schemes for
any schemes for retirement           retirement benefits, other than
benefits, other than statutory        statutory superannuation, for
superannuation, for non-executive    non-executive directors.
directors.
An explanation of any departures     The Company complies with
from Recommendation 9.1, 9.2,        Recommendations 9.1, 9.2, 9.3,
9.3, 9.4 or 9.5                      9.4 and 9.5.
The remuneration committee           The Company’s Remuneration
charter or a summary of the          Committee Charter is available
role, rights, responsibilities and   on the website under Corporate
membership requirements of           Governance.
that committee.




26    ENERGY DEVELOPMENTS LIMITED ANNUAL	REPORT	2007
FINANCIAL STATEMENTS
for the year ended 30 June 2007




  CONTENTS
  Directors’ Report                                                           28
  Auditor’s Independence Declaration                                          39
  Income Statement                                                            40
  Balance Sheet                                                               41
  Statement of Changes in Equity                                              42
  Cash Flow Statement                                                         44
  Notes to the Financial Statements                                           45
    Note 1: Summary of Significant Accounting Policies                          45
    Note 2: Profit and Loss Items                                               50
    Note 3: Income Tax                                                         51
    Note 4: Dividends                                                          53
    Note 5: Earnings Per Share                                                 53
    Note 6: Receivables (Current)                                              53
    Note 7: Inventories (Current)                                              53
    Note 8: Receivables (Non-current)                                          54
    Note 9: Financial Instruments – Derivatives                                54
    Note 10: Property, Plant and Equipment                                     54
    Note 11: Other Assets (Non-current)                                        56
    Note 12: Payables (Current)                                                56
    Note 13: Borrowings (Current)                                              56
    Note 14: Financial Instruments – Derivatives (Current)                     56
    Note 15: Provisions (Current)                                              56
    Note 16: Borrowings (Non-current)                                          56
    Note 17: Deferred Tax Liabilities (Non-current)                            57
    Note 18: Provisions (Non-current)                                          58
    Note 19: Financial Instruments – Derivatives (Non-current)                 58
    Note 20: Contributed Equity                                                59
    Note 21: Minority Interests                                                60
    Note 22: Notes to the Cash Flow Statement                                  60
    Note 23: Expenditure Commitments                                           62
    Note 24: Segment Information                                               63
    Note 25: Share Based Payments                                              64
    Note 26: Directors and Executive Disclosures                               68
    Note 27: Remuneration of Auditors                                          73
    Note 28: Related Party Disclosures                                         73
    Note 29: Investments Accounted for Using the Equity Method                 74
    Note 30: Controlled Entities                                               75
    Note 31: Financial Instruments                                             77
    Note 32: Contingent Liability                                              81
    Note 33: Subsequent Events                                                 81

  Directors’ Declaration                                                      82
  Independent Audit Report                                                    83
  Shareholder Information                                                     84




                                                                 ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED   27
DIRECTORS’ REPORT
for the year ended 30 June 2007




Your directors submit their report for the year ended 30 June 2007.            Principal activities
Directors                                                                      The continuing principal activities of the Consolidated Entity during the
                                                                               year were the development and operation of power generation projects.
The names and details of the Company’s directors in office during the
financial year and until the date of this report are as follows. Directors      Results
were in office for this entire period unless otherwise stated.
                                                                               The consolidated net loss of the Consolidated Entity for the financial
M R Brown MBA, BEc                                                             year was $16,600,000 (2006: net profit of $24,404,000).
P W Cassidy PhD, CEng, BSc (Eng), FAusIMM
R P Gregson PhD, MBA, BSc (Hons)                                               Dividends
B J Harker PhD (Elec Eng), BE (Hons)                                           In respect of the year ended 30 June 2006, as detailed in the directors’
C S Laurie BE (Elec), RPEng, FNZIM, FIOD (NZ)                                  report for that financial year, a final dividend of 2.0 cents per share was
G J W Martin BEc, LLB, FAIM, MAICD                                             paid to the holders of fully paid ordinary shares on 4 October 2006.
G J Pritchard MAppFin, BCom, FCA                                               In respect of the year ended 30 June 2007, an interim dividend of
                                                                               2.5 cents per share was paid to holders of fully paid ordinary shares
Directors’ interests                                                           on 30 March 2007.
As at the date of this report, the interests of directors in shares, options
                                                                               In respect of the year ended 30 June 2007, the directors recommend
and performance rights (PR) of the Company were:
                                                                               the payment of a final dividend of 5.0 cents per share, franked to 20%,
                                                                               to the holders of fully paid ordinary shares on 4 October 2007.

                                             Options/                          Review of operations
                                             ordinary
                           Ordinary         shares on                          A review of the operations of the Consolidated Entity during the
                             shares        conversion               PR         financial year is set out on pages 2 to 17 of the annual report.
                           Number            Number             Number
                                                                               Significant changes in the state of affairs
M R Brown                     28,170                -                 -
P W Cassidy                   13,591                -                 -        Other than matters mentioned in this report, there were no significant
R P Gregson                   35,207                -                 -        changes in the state of affairs of the Consolidated Entity during the
B J Harker                         -                -                 -        financial year.
C S Laurie                    11,394        1,000,000           250,000
G J W Martin                       -                -                 -
                                                                               Likely developments and expected results
G J Pritchard                 13,334          700,000           100,000        Likely developments in and expected results of the operations of
                                                                               the Consolidated Entity are discussed generally in the annual report.
No director is a party entitled to a benefit under a contract giving a right    In the opinion of the directors, it would prejudice the interests of
to call for shares in the Company.                                             the Consolidated Entity if any further disclosure of information
                                                                               was included.
Directors’ meetings
                                                                               Share options/PR
The number of meetings of directors (including meetings of committees
of directors) held and attended by each director during the year was           Details of options/PR granted to directors or relevant officers as part
as follows:                                                                    of their remuneration are set out in the section of this report headed
                                                                               remuneration report. Details of shares and interests under options and
                                                                               PR are also set out in Note 25 and 26 to the financial statements and
                                                              Remun-           form part of this report.
                                              Audit            eration
                               Board      Committee         Committee
Number of
meetings held                      11                 5                 2
Number of
meetings attended
M R Brown                          11                 5                 2
P W Cassidy*                       11                 5                 1
R P Gregson                        11                 -                 2
B J Harker                         11                 5                 -
C S Laurie                         11                 -                 -
G J W Martin*                      11                 -                 1
G J Pritchard                      11                 -                 -

* During the year directors attended all committee meetings of which
  they were a member.



28   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
DIRECTORS’ REPORT
for the year ended 30 June 2007




REMUNERATION REPORT (AUDITED)                                              Non-executive director remuneration
This report forms part of the directors’ report for the year ended         The Board seeks to set aggregate remuneration at a level which
30 June 2007 and outlines the remuneration arrangements in place           provides the Company with the ability to attract and retain directors
for directors and executives of Energy Developments Limited.               of the highest calibre, whilst incurring a cost which is acceptable
                                                                           to shareholders.
This remuneration report outlines the director and executive
remuneration arrangements of the Company and the Consolidated              Non-executive directors’ fees are determined within the aggregate
Entity in accordance with the requirements of the Corporations Act         directors’ fee pool limit, which is periodically recommended for approval
2001 and its regulations. It also provides the remuneration disclosures    by shareholders. The current limit is $850,000 per annum and this was
required by paragraphs Aus 25.4 to Aus 25.7.2 of AASB 124 Related          approved by shareholders at the 2005 annual general meeting (AGM).
Party Disclosures, which have been transferred to the remuneration
                                                                           Non-executive directors’ annual fees are set out as follows (inclusive of
report in accordance with Corporations Regulation 2M.6.04. For the
                                                                           compulsory superannuation where relevant):
purposes of this report, key management personnel of the Consolidated
Entity are defined as those persons having authority and responsibility     • Chairman                               $240,000;
for planning, directing and controlling the major activities of the        • Deputy Chairman                        $120,000;
Company and the Consolidated Entity, directly or indirectly, including
any director (whether executive or otherwise) of the parent company,       • non-executive director                 $85,000; and
and includes the five executives in the parent company and the              • non-executive director                 $100,000.
Consolidated Entity receiving the highest remuneration.                      (Audit Committee Chairman)

For the purpose of this report, the term ‘executive’ encompasses the       Until November 2001, non-executive directors were from time to time
Managing Director, senior executives, general managers and secretaries     granted unlisted share options, subject to shareholder approval in
of the parent company and the Consolidated Entity.                         general meetings, but did not receive retirement benefits. Non-executive
                                                                           director remuneration is now confined to annual fees set at a level
Approach to remuneration                                                   which recognises the absence of any other form of remuneration.
The performance of the Company is critically dependent upon the            Senior management and executive director (senior executives)
quality of its directors and executives. To prosper, the Company must
                                                                           remuneration
attract, motivate and retain highly skilled directors and executives.
                                                                           In consultation with external consultants, the Company has structured
The objective of the Company’s executive reward framework is to
                                                                           a senior executive remuneration framework that is market competitive
ensure that reward for performance is competitive and appropriate for
                                                                           and complementary to the reward strategies of the Company. The
the results delivered. To this end, the Company embodies the following
                                                                           framework is reviewed on an annual basis by the Remuneration
principles in its reward framework:
                                                                           Committee.
• provide competitive rewards to attract high calibre executives;
                                                                           The senior executive pay and reward framework has four components:
• link executive reward to shareholder value;
                                                                           • base pay and benefits;
• significant portion of executive remuneration is ‘at risk’ depending
  on meeting pre-determined performance benchmarks;                        • short-term performance incentives;
• establish appropriate and demanding performance hurdles in relation      • long-term incentives through the assignment of share options
  to variable remuneration; and                                              and/or performance rights; and
• transparency of policies and outcomes.                                   • other remuneration such as superannuation.
                                                                           Base pay and benefits
Remuneration Committee
                                                                           Base pay and benefits are structured as a total employment cost
The Board has delegated certain authority to the Remuneration
                                                                           package which may be delivered as a mix of cash and limited prescribed
Committee. The Remuneration Committee is responsible for assisting
                                                                           non-financial benefits at the senior executives’ discretion. External
the Board by reviewing and making recommendations in relation to
                                                                           remuneration consultants provide analysis and advice to ensure base pay
the Company’s overall human resource policies and strategies,
                                                                           is set to reflect the market for a comparable role. Base pay for senior
specifically including overall remuneration policy guidelines, and the
                                                                           executives is reviewed annually to ensure that senior executives’ pay is
structure and level of the remuneration of the Managing Director and
                                                                           competitive with the market. Senior executives’ pay is also reviewed on
of non-executive directors. In doing so, it reviews relevant employment
                                                                           promotion. There are no guaranteed base pay increases in any senior
market conditions and receives independent professional advice. The
                                                                           executives’ contracts.
members of the Remuneration Committee at the date of this report are
G J W Martin (Chairman), M R Brown and R P Gregson.                        The fixed remuneration component of the five most highly remunerated
                                                                           senior executives is detailed in the table on page 32.
Remuneration structure
In accordance with best practice corporate governance, the structure
of non-executive director and senior manager remuneration is separate
and distinct.




                                                                          ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                           29
DIRECTORS’ REPORT
for the year ended 30 June 2007




REMUNERATION REPORT (AUDITED)                           (CONTINUED)           Grants to eligible senior executives and executive directors (subsequent
                                                                              to shareholder approval at the 2005 AGM) now take the form of PR
Senior management and executive director (senior executives)                  issued under the Employee Plan with each right being equivalent to one
remuneration (continued)                                                      share in the Company and not traditional share options.

Short-term performance incentives (STI)                                       The terms and conditions of PR grants, including relevant performance
                                                                              hurdles, to eligible senior executives and executive directors are set
The objective of the STI program is to link the achievement of the            by the Board and, in the case of executive directors, are subject to
Company’s operational targets with the remuneration received by the           shareholder approval under Listing Rule 10.14 at an AGM.
senior executives charged with meeting those targets and to retain key
Company executives. The total potential STI available are set at a level so   The two current executive directors, C S Laurie and G J Pritchard,
as to provide sufficient incentive to the senior executive to achieve the      received PR entitlements under the Employee Plan in 2005 which were
prescribed targets and such that the cost to the Company is reasonable.       approved by shareholders at the 2005 AGM.

Each year, the Remuneration Committee considers the STI targets               The vesting of PR granted under the Employee Plan is subject to the
applicable to senior executives on an individual basis. This includes         satisfaction of performance hurdles to be determined by the Board from
setting the maximum payout for an incentive payment and the                   time to time.
minimum performance required to trigger a payment. Each senior                PR were issued to eligible senior executives in November 2006 (2007
executive has different STI targets depending on the accountability of        PR issue) and December 2005 (2006 PR issue). Further details of
their role and impact on the Company or business unit performance.            the 2007 PR issue and 2006 PR issue are included in Note 26 to the
The STI are usually paid by way of a cash bonus and may be adjusted           financial statements. The PR issues are subject to separate external
up or down in line with under or over achievement against the target          (total shareholder return – TSR) and internal (earnings per share – EPS)
performance levels.                                                           performance benchmarks with the proportion of PR which become
Long-term incentives (LTI) through the assignment of share                    exercisable dependent on the progressive achievement of these targets
options and/or performance rights (PR)                                        within specified performance periods.

The objective of the Company’s LTI plan is to reward senior executives in     To date, all PR issues to eligible senior executives have been split 50%
a manner which aligns this element of remuneration with the creation          with an external hurdle and 50% with an internal hurdle.
of shareholder wealth.
                                                                              PR issued to executive directors are solely subject to an external
As such, LTI grants are only made to senior executives who are able to        performance benchmark.
influence the generation of shareholder wealth and thus have a direct
                                                                              TSR performance hurdles
impact on the Company’s performance against the relevant long-term
performance hurdles set by the Board.                                         The Company uses a relative TSR for the external performance
                                                                              benchmark. The use of a relative TSR based performance benchmark is
Up to 2003, the Company delivered LTI benefits in the form of
                                                                              considered to be market best practice as it ensures alignment between
traditional share options to executive directors and senior executives
                                                                              the comparative shareholder return and the reward for senior managers.
as follows:
                                                                              To measure the TSR performance, the Company receives independent
• executive directors were eligible to receive traditional options over
                                                                              data from Standard & Poor’s which provides both the Company TSR
  unissued shares in the Company on terms and conditions specified
                                                                              growth from the commencement date of each grant and that of the
  by the Board and specifically approved by shareholders in general
                                                                              selected peer group. The peer group chosen for comparative purposes
  meeting. Each option entitles the holder to subscribe for one fully
                                                                              comprises companies listed in the ASX 100–300 Companies Index,
  paid ordinary share at various exercise prices. The options vest over
                                                                              excluding mining companies and property trusts.
  a two or three year period based on the achievement of certain key
  performance criteria and lapse after five years;                             Each company in the peer group is ranked in order of relative TSR
• the two current executive directors, C S Laurie and G J Pritchard, last     growth from the commencement of the grant over the respective
  received option grants in 2003 which were approved by shareholders          performance period. Fifty percent of the relevant PR tranche becomes
  at the 2003 AGM; and                                                        exercisable when the Company achieves a TSR ranking of greater
                                                                              than 50% over the respective performance period and increases
• other senior executives were entitled to the issue of traditional
                                                                              proportionally as the TSR ranking increases as illustrated in the
  options under the Company’s employee share option plan (Employee
                                                                              table below:
  Plan). No options have been issued under the Employee
  Plan since 2002.
The Employee Plan was originally approved by shareholders in 1999,
                                                                              TSR ranking in
re-approved in 2002, and amended and approved by shareholders at the          ASX 100-300               <50% 50% 55% 60% 65% 70% 75%
2005 AGM.
                                                                              Proportion of PR
                                                                              subject to TSR hurdle
                                                                              that will be awarded         0% 50% 60% 70% 80% 90% 100%




30   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
DIRECTORS’ REPORT
for the year ended 30 June 2007




REMUNERATION REPORT (AUDITED)                          (CONTINUED)          Over the last three years to 30 June 2007, the Consolidated Entity has
                                                                            increased the dividends paid to shareholders each year. The table below
Senior management and executive director (senior executives)                shows the dividends paid per share each financial year for the last three
remuneration (continued)                                                    years and also details the share price on 30 June over those years:

EPS performance hurdles
The Company uses the compound growth of EPS over the performance                                   Year ended       Year ended        Year ended
period as its internal performance benchmark. Fifty percent of the                                30 June 2007     30 June 2006      30 June 2005
relevant PR tranche becomes exercisable when the Company achieves           Total dividends
compound growth in EPS of greater than 10% per annum over the               paid/declared
respective performance period and increases proportionally as the           per share (cents)                7.5              4.0               3.5
compound growth in EPS increases as illustrated in the table below. The     Share price ($)                 4.50             3.80              4.20
calculation of compound EPS growth is approved by the Board and may
be different from data published in the Company’s financial statements
                                                                            Employment agreements
– eg to remove the impact of non-recurring significant items on the
Company’s published operating results.                                      The Managing Director, Mr C S Laurie is employed under contract
                                                                            which commenced on 28 January 2003. Either party can terminate
                                                                            the employment contract by the giving of six months’ written notice
Compound EPS                                                                to the other party. The termination sum payable to Mr Laurie for any
growth per annum         <10% 10% 11% 12% 13% 14% 15%                       reason other than dismissal for cause is equal to one year’s base annual
                                                                            salary inclusive of compulsory superannuation contributions. Mr Laurie
Proportion of PR                                                            is also entitled to other benefits and entitlements owing up to the
subject to EPS Hurdle                                                       date of termination. Any LTI options/PR vested to Mr Laurie at the date
that will be awarded        0% 50% 60% 70% 80% 90% 100%
                                                                            of termination will be released. Any unvested LTI options/PR will be
                                                                            forfeited, subject to their terms of issue.
The PR issued to executive directors in October 2006 have a vesting
period of three years (December 2005: vesting period of two and a           The Finance Director, Mr G J Pritchard, is employed under contract.
half to three years) and are subject to the satisfaction of an external     The current employment contract commenced on 25 June 2001.
performance hurdle: the Company’s relative TSR ranking. The TSR is          Mr Pritchard may resign from his position by providing three months’
considered to be the appropriate benchmark by which to measure              written notice. On resignation, Mr Pritchard is entitled to any base salary,
executive director performance for the purpose of the plan given that       other benefits and entitlements owing up to the date of resignation.
vesting of the PR will only occur subject to superior performance by the    Any LTI options/PR that have vested will be released. LTI options/PR that
Company relative to its peers.                                              have not vested will be forfeited, subject to the terms of issue. The
                                                                            Company may terminate this employment contract by providing nine
The Board reviews the appropriateness of the Company’s LTI plan on a        months’ written notice or payment in lieu of the notice period (based
regular basis with the assistance of independent advisers.                  on base salary and benefits).
Company performance                                                         All other executives are employed under permanent contracts.
At 30 June 2007, the Consolidated Entity has recorded a net                 Executives may resign under these contract by providing three months’
impairment provision of $42,000,000 after tax in relation to its West       written notice. On resignation, executives are entitled to any base
Kimberley Power Project. This has resulted in the Consolidated Entity       salary, other benefits and leave entitlements owing up to the date of
reporting a net loss of $16,600,000 for the year, in comparison to a        resignation. Any LTI options/PR that have vested will be released. LTI
profit of $24,404,000 reported for the year ended 30 June 2006. The          options/PR that have not vested will be forfeited, subject to the rules
impairment of the assets has contributed to the 7% decrease in net          of the Employee Plan.
tangible assets, and a fall in EPS from 16.8 to (11.3) cents per share
from the prior financial year. Net operating cash flows increased by          Details of executives
7% to $76,893,000, over the year.                                           D Kent         General Manager – Europe
Due to the impact of adopting Australian equivalents to International       J W McInnes Executive General Manager – Global Operations Strategy
Financial Reporting Standards in the year ended 30 June 2005, a             C R Murray     Executive General Manager – Australia and
comparison of current year results to years before that ended                              Project Director – West Kimberley Power Project
30 June 2005 has not been made.
                                                                            J A Snow       Executive General Manager – Development
                                                                                           (resigned 27 October 2006)
                                                                            J Thomas       President – Energy Developments, Inc (United States)




                                                                           ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                           31
DIRECTORS’ REPORT
for the year ended 30 June 2007


REMUNERATION REPORT (AUDITED)                          (CONTINUED)

Directors’ and executives’ remuneration
Details of the nature and amount of each element of the remuneration of each director of the Company and each of the five executive officers of the
Company and the Consolidated Entity receiving the highest remuneration for the financial year are as follows:

Remuneration of directors and other key management personnel

                                                                                    POST
                                                                                   EMPLOY-
                                         SHORT-TERM BENEFITS                        MENT          EQUITY         TOTAL

                                                                                                  Options/                  Options/PR*
                                 Base                                              Pensions/        PR* at                     as % of     Perform-
                                salary       Non-                                     super-     amortised                     remun-          ance
                              and fees    monetary       Bonuses         Other    annuation           cost          Total      eration      related
                                     $             $            $            $             $             $              $             %           %
Year ended
30 June 2007
Directors
M R Brown                     134,993             -            -              -     105,007             -       240,000               -            -
P W Cassidy                    50,000             -            -              -      50,000             -       100,000               -            -
R P Gregson                         -             -            -              -      85,000             -        85,000               -            -
B J Harker                    120,000             -            -              -           -             -       120,000               -            -
C S Laurie                    654,512             -      287,500              -     130,694       111,523     1,184,229              10           34
G J W Martin                   77,982             -            -              -       7,018             -        85,000               -            -
G J Pritchard                 393,264        54,716      150,000              -      53,818        61,661       713,459               9           30
                            1,430,751        54,716      437,500              -     431,537       173,184     2,527,688
Executives
D Kent                        307,213             -       65,129       18,187        31,745         27,212      449,486                6          21
J W McInnes                   314,731        17,500       75,000            -        71,489         27,212      505,932                5          20
C R Murray                    249,824             -       75,000            -        61,245         27,212      413,281                7          25
J A Snow^                     112,435             -       55,000      268,372        39,223              -      475,030                -           -
J Thomas                      250,626        24,946       38,166            -         8,664         25,977      348,379                7          18
                            1,234,829        42,446      308,295      286,559       212,366       107,613     2,192,108
Year ended
30 June 2006
Directors
M R Brown                     202,594             -            -              -      18,233              -      220,827                -           -
P W Cassidy                    85,504             -            -              -           -              -       85,504                -           -
R P Gregson                         -             -            -              -      75,588              -       75,588                -           -
B J Harker                    106,021             -            -              -           -              -      106,021                -           -
C S Laurie                    525,127        19,864      250,000              -     100,490         58,591      954,072                6          32
G J W Martin                   10,148             -            -              -         913              -       11,061                -           -
G J Pritchard                 320,793        32,859      120,000              -      33,702         51,554      558,908                9          31
R A Sutton^^                   17,500             -            -              -           -              -       17,500                -           -
                            1,267,687        52,723      370,000              -     228,926       110,145     2,029,481
Executives
D Kent                        279,059             -       47,540       17,590        26,147         22,879      393,215               6           18
J W McInnes                   221,181        17,491       60,000            -        22,479         22,879      344,030               7           24
C R Murray                    222,104        12,174       60,000            -        22,479         22,879      339,636               7           24
J A Snow                      275,000             -            -            -        24,750         63,381      363,131              17           17
J Thomas                      193,564        11,543        5,031            -         3,270              -      213,408               -            2
                            1,190,908        41,208      172,571       17,590        99,125       132,018     1,653,420

*    PR granted as part of senior manager remuneration have been valued using a Binomial pricing model, which takes account of factors such as the
     Company’s dividend yield, the current level and volatility of the underlying share price, the time to maturity and the market based performance
     conditions for vesting of the PR. The PR value amortised represents the pro-rata apportionment of the theoretical option value to the reporting
     period and takes account of the period to vesting. For more details of the valuation of PR including assumptions used, refer to Note 25 to the
     financial statements. There have been no alterations to the terms and conditions of PR granted as remuneration since their grant date.
^    J A Snow resigned on 27 October 2006. Other benefits include amounts paid upon termination of employment.
^^   R A Sutton resigned on 3 November 2005.
Further information on options, PR and share holdings of directors and other key management personnel is provided in Note 26 to the financial statements.


32   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
DIRECTORS’ REPORT
for the year ended 30 June 2007


REMUNERATION REPORT (AUDITED)                         (CONTINUED)

Options, PR and share holdings of directors and other key management personnel
(a)     Options
(i)  Options granted and/or vested during the year
No options were granted to directors during the financial year. The following options vested during the year:

                                                                                                                        VESTED NUMBER

                                                                                                                          2007          2006
Directors
G J Pritchard                                                                                                          150,000       150,000
Executive
C R Murray                                                                                                              55,000        30,000

(ii)    Option holdings of directors and other key management personnel

                                                                                                                    VESTED AT 30 JUNE 2007

                                                          Balance at the      Options expired     Balance at the
                                                        beginning of the           during the         end of the
                                                           financial year        financial year      financial year
                                                                Number               Number             Number            Total   Exercisable
Year ended 30 June 2007
Directors
M R Brown                                                         200,000             (200,000)                -              -            -
P W Cassidy                                                             -                    -                 -              -            -
R P Gregson                                                             -                    -                 -              -            -
B J Harker                                                              -                    -                 -              -            -
C S Laurie                                                      1,000,000                    -         1,000,000      1,000,000    1,000,000
G J W Martin                                                            -                    -                 -              -            -
G J Pritchard                                                     700,000                    -           700,000        550,000      550,000
Executives Options
D Kent                                                             50,000                     -            50,000       50,000        50,000
J W McInnes                                                             -                     -                 -            -             -
C R Murray                                                         55,000                     -            55,000       55,000        55,000
J Thomas                                                                -                     -                 -            -             -
Total                                                           2,005,000             (200,000)        1,805,000      1,655,000    1,655,000

                                                                                                                    VESTED AT 30 JUNE 2006

                                                          Balance at the      Options expired     Balance at the
                                                        beginning of the           during the         end of the
                                                           financial year        financial year      financial year
                                                                Number               Number             Number            Total   Exercisable
Year ended 30 June 2006
Directors
M R Brown                                                         200,000                     -          200,000        200,000      200,000
P W Cassidy                                                             -                     -                -              -            -
R P Gregson                                                             -                     -                -              -            -
B J Harker                                                              -                     -                -              -            -
C S Laurie                                                      1,000,000                     -        1,000,000      1,000,000    1,000,000
G J Pritchard                                                     700,000                     -          700,000        400,000      400,000
Executives Options
D Kent                                                             50,000                     -            50,000       50,000        50,000
J W McInnes                                                             -                     -                 -            -             -
C R Murray                                                         55,000                     -            55,000       55,000        55,000
J A Snow^                                                               -                     -                 -            -             -
Total                                                           2,005,000                     -        2,005,000      1,705,000    1,705,000

^ J A Snow resigned on 27 October 2006.
No options were granted or exercised during the current or prior financial year.


                                                                            ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                 33
DIRECTORS’ REPORT
for the year ended 30 June 2007


REMUNERATION REPORT (AUDITED)                          (CONTINUED)

Options, PR and share holdings of directors and other key management personnel (continued)
(b)    PR

(i)   PR granted and/or vested during the year
PR were granted to specified directors on 4 and 5 October 2006, and executives on 28 November 2006, under the LTI plan as equity compensation
benefits, as disclosed below. The PR were issued at a nil exercise price per share and expire on 5 October 2016 and 28 November 2016 respectively.
Each PR entitles the holder to one fully paid ordinary share in the Company once certain key performance criteria are achieved within a specified
performance period (three years).


                                                                                                                     Value of PR                First
                                                                                                           Granted at grant date             exercise
                                                                                                           Number              $                date

Year ended 30 June 2007
Directors
C S Laurie                                                                                                  100,000          230,122     30 Jun 2009
G J Pritchard                                                                                                50,000          115,061     30 Jun 2009
Executives
D Kent                                                                                                       40,000           91,141     28 Nov 2009
J W McInnes                                                                                                  40,000           91,141     28 Nov 2009
C R Murray                                                                                                   40,000           91,141     28 Nov 2009
J Thomas                                                                                                     40,000           91,141     28 Nov 2009

On 5 December 2005, PR under the LTI plan were granted as equity compensation benefits to specified directors and executives as disclosed below.
The PR were issued at a nil exercise price per share and expire on 5 December 2015. Each PR entitles the holder to one fully paid ordinary share in the
Company once certain key performance criteria are achieved within a specified performance periods (two and a half to three years).


                                                                                                                         Value of PR            First
                                                                                                          Granted      at grant date         exercise
                                                                                                          Number                   $            date

Year ended 30 June 2006
Directors
C S Laurie                                                                                                 150,000           209,010     30 Jun 2008
G J Pritchard                                                                                               50,000            69,670     30 Jun 2008
Executives
D Kent                                                                                                      20,000            36,075      5 Dec 2008
J W McInnes                                                                                                 20,000            36,075      5 Dec 2008
C R Murray                                                                                                  20,000            36,075      5 Dec 2008
J A Snow^                                                                                                   20,000            36,075      5 Dec 2008

^ J A Snow resigned on 27 October 2006.




34    ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
DIRECTORS’ REPORT
 for the year ended 30 June 2007


REMUNERATION REPORT (AUDITED)                         (CONTINUED)

Options, PR and share holdings of directors and other key management personnel (continued)
(b)     PR (continued)

(ii)    PR holdings of directors and other key management personnel



                                                                                                      Granted as
                                                                                   Balance at the   remuneration        Balance at
                                                                                 beginning of the      during the   the end of the
                                                                                    financial year   financial year    financial year
                                                                                         Number          Number           Number*

Year ended 30 June 2007
Directors
C S Laurie                                                                               150,000         100,000         250,000
G J Pritchard                                                                             50,000          50,000         100,000
Executives
D Kent                                                                                    48,000          40,000           88,000
J W McInnes                                                                               48,000          40,000           88,000
C R Murray                                                                                48,000          40,000           88,000
J Thomas                                                                                       -          40,000           40,000
Total                                                                                    344,000         310,000         654,000
Year ended 30 June 2006
Directors
C S Laurie                                                                                      -        150,000         150,000
G J Pritchard                                                                                   -         50,000          50,000
Executives
D Kent                                                                                    28,000          20,000          48,000
J W McInnes                                                                               28,000          20,000          48,000
C R Murray                                                                                28,000          20,000          48,000
J A Snow^                                                                                 85,000          20,000         105,000
Total                                                                                    169,000         280,000         449,000

* No PR were vested at the end of the period.
^ J A Snow resigned on 27 October 2006.




                                                                      ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED           35
DIRECTORS’ REPORT
for the year ended 30 June 2007


REMUNERATION REPORT (AUDITED)                        (CONTINUED)

Options, PR and share holdings of directors and other key management personnel (continued)
(c)     Shares

(i)     Share holdings of directors and other key management personnel



                                                             Balance at the                                                 Balance at the
                                                           beginning of the        Granted as   On exercise   Net change        end of the
                                                              financial year      remuneration    of options         other    financial year
                                                                        Ord              Ord            Ord          Ord               Ord

Year ended 30 June 2007
Directors
M R Brown                                                            28,170                 -             -           -            28,170
P W Cassidy                                                          13,461                 -             -         130            13,591
R P Gregson                                                          34,868                 -             -         339            35,207
B J Harker                                                                -                 -             -           -                 -
C S Laurie                                                           11,284                 -             -         110            11,394
G J W Martin                                                              -                 -             -           -                 -
G J Pritchard                                                        26,668                 -             -     (13,334)           13,334
Executives
D Kent                                                                   4,000              -             -           -             4,000
J M McInnes                                                                750              -             -           -               750
C R Murray                                                               8,747              -             -          85             8,832
J Thomas                                                                     -              -             -           -                 -
Total                                                               127,948                 -             -     (12,670)          115,278




36    ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
DIRECTORS’ REPORT
for the year ended 30 June 2007


REMUNERATION REPORT (AUDITED)                         (CONTINUED)

Options, PR and share holdings of directors and other key management personnel (continued)
(c)     Shares (continued)

(i)     Share holdings of directors and other key management personnel (continued)



                                                             Balance at the                                                        Balance at the
                                                           beginning of the       Granted as       On exercise      Net change         end of the
                                                              financial year     remuneration        of options            other     financial year
                                                                        Ord             Ord                Ord             Ord                Ord

Year ended 30 June 2006
Directors
M R Brown                                                             27,000                  -                -         1,170             28,170
P W Cassidy                                                           12,164                  -                -         1,297             13,461
R P Gregson                                                           33,362                  -                -         1,506             34,868
B J Harker                                                                 -                  -                -             -                  -
C S Laurie                                                            10,038                  -                -         1,246             11,284
G J W Martin                                                               -                  -                -             -                  -
G J Pritchard                                                         24,328                  -                -         2,340             26,668
R A Sutton^^                                                               -                  -                -             -                  -
Executives
D Kent                                                                 4,000                  -                -             -              4,000
J M McInnes                                                                -                  -                -           750                750
C R Murray                                                             7,497                  -                -         1,250              8,747
J A Snow^                                                                  -                  -                -             -                  -
J Thomas                                                                   -                  -                -             -                  -
Total                                                                118,389                  -                -         9,559            127,948

^       J A Snow resigned on 27 October 2006.
^^      R A Sutton resigned on 3 November 2005.

All equity transactions with key management personnel other than those arising from the exercise of remuneration options have been entered into
under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s length.

(d) Other transactions with directors and other key management personnel
Dr B J Harker is a director of investment bank and fund manager, Morrison & Co. Consulting services were provided by Morrison & Co for a total value
of $103,372 (2006: $12,622) during the current financial year. This transaction was conducted on commercial terms and conditions.




                                                                          ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                          37
DIRECTORS’ REPORT
for the year ended 30 June 2007




Indemnification of officers
During the financial year, a related body corporate paid an insurance premium in respect of a contract insuring the company’s directors against
liabilities arising as a result of work performed in their capacity as directors. The directors have not included details of the nature of the liabilities
covered or the amount of the premium paid in respect of directors’ and officers’ liability insurance contracts, as such disclosure is prohibited under
the terms of the contract.

Environmental regulation and performance
The Consolidated Entity’s operations in Australia, Europe, Asia and the United States are subject to environmental laws in these jurisdictions. The
Consolidated Entity operates a rigorous environmental compliance program, and reports to the appropriate authorities against relevant compliance
standards. During the year, no member of the Consolidated Entity was prosecuted nor was any fine imposed on it for breach of environmental laws
in any jurisdiction.

Auditor’s independence declaration
Refer to the following page (39) for the auditor’s independence declaration.

Audit services
In addition to the audit fees, the Consolidated Entity paid $25,487 to the auditors, Ernst & Young, in relation to a review of the Consolidated Entity’s
information technology systems and grant audits.

Significant matters since year end
On 6 August 2007, the Company announced the completion of the sale of Cedar Hills landfill gas rights in King County, Seattle, Washington,
United States to Industrial Power Generating Company, LLC (Ingenco) for US$6 million (A$7.1 million).
The US$6 million price is payable in instalments with the Consolidated Entity receiving US$5 million (A$5.9 million) on completion of the sale.
Payment of the remaining US$1 million (A$1.2 million) will be deferred until commercial operation of the high-Btu gas facility, currently forecast for
late 2008. Recognition of the US$1 million will be deferred until this time. The net profit of the sale is estimated at US$4.2 million (A$4.9 million), and
will be recognised in the Company’s half year results for the six months to 31 December 2007.
On 7 August 2007, the Company executed a gas supply agreement with Anglo Coal which will underpin a 45 MW coal mine methane power project
at Anglo Coal’s Moranbah North Mine in Queensland’s Bowen Basin. The project will be constructed under a contract with Clarke Energy, which was
also signed on 7 August 2007.
On 27 August 2007, the directors declared a franked final dividend of 5.0 cents per share on ordinary shares partially franked to 20% in respect of the
2007 financial year. The total amount of the dividend is $7.4 million. The dividend has not been provided for in the 30 June 2007 financial statements.

Directors’ profiles
The directors’ qualifications, experience and special responsibilities are included in pages 18 to 19 of the annual report.




Signed in accordance with a resolution of the directors:




C S Laurie                                          G J Pritchard
Director                                            Director
Brisbane, 27 August 2007




38   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
DIRECTORS’ REPORT
for the year ended 30 June 2007




AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF ENERGY DEVELOPMENTS LIMITED

In relation to our audit of the financial report of Energy Developments Limited and its controlled entities for the financial year ended 30 June 2007, to
the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or
any applicable code of professional conduct.




Ernst & Young




Mark Hayward
Partner


Brisbane
27 August 2007




                                                                            ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                          39
INCOME STATEMENT
for the year ended 30 June 2007


                                                                                     CONSOLIDATED              COMPANY

                                                                                      2007          2006      2007         2006
                                                                             Note     $’000         $’000     $’000       $’000

Sales revenue                                                                   2   176,981     154,086            -          -
Cost of sales excluding depreciation and amortisation
of operating assets                                                                 (71,142)    (58,611)           -          -
Gross profit                                                                         105,839      95,475           -           -
Other income                                                                    2      3,510       2,138         18         244
Corporate and general expenses including provisions                             2     (6,097)     (5,978)      (714)       (616)
Development expense                                                             2     (9,571)     (8,032)         -           -
Deutz settlement expense                                                        2          -      (2,897)         -           -
Loss on sale of Taiwan associate                                                2     (1,697)          -     (1,697)          -
Provision for impairment                                                        2   (60,000)           -          -           -
Share of net results of associates and joint venture partnership
accounted for using the equity method                                        2,29     2,497         2,622          -          -
Profit/(loss) from continuing operations before depreciation, amortisation,
interest income, borrowing costs and income tax                                      34,481      83,328       (2,393)      (372)
Depreciation and amortisation                                                   2   (38,609)    (33,563)           -          -
Interest income                                                                 2     6,966       7,189      31,170      23,557
Borrowing costs                                                                 2   (25,147)    (21,654)    (14,003)     (8,392)
(Loss)/profit from continuing operations before income tax                           (22,309)     35,300     14,774       14,793

Income tax credit/(expense)                                                     3     5,709     (10,896)     (4,677)     (2,426)
Net (loss)/profit attributable to members of the Company                             (16,600)     24,404     10,097       12,367
Basic earnings per share (cents)                                                5      (11.3)        16.8
Diluted earnings per share (cents)                                              5      (11.3)        16.7

The accompanying notes form an integral part of this income statement.




40   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
BALANCE SHEET
as at 30 June 2007


                                                                               CONSOLIDATED              COMPANY

                                                                                 2007         2006      2007         2006
                                                                      Note       $’000        $’000     $’000        $’000

Current assets
Cash assets                                                             22      98,572     96,798        409           163
Receivables                                                              6      27,978     27,294          -             -
Inventories                                                              7       5,825      4,764          -             -
Current tax receivable                                                               -        550          -           550
Green credits held for sale                                                     16,354     11,730          -             -
Financial instruments – derivatives                                      9       2,542          -          -             -
Other assets                                                                     6,462      3,124          -             -
Total current assets                                                           157,733    144,260        409           713
Non-current assets
Cash assets                                                             22           -      2,318           -            -
Receivables                                                              8         475        315     432,469      381,139
Deferred tax assets                                                     17           -          -      17,684       26,439
Investments accounted for using the equity method                       29      33,125     36,532           -            -
Investments at cost                                                                320        320         320        5,318
Financial instruments – derivatives                                      9       8,257      1,295           -            -
Property, plant and equipment                                           10     617,390    513,540           -            -
Investment in controlled entities                                                    -          -     230,000      230,000
Other assets                                                            11         126         72           -            -
Total non-current assets                                                       659,693    554,392     680,473      642,896
Total assets                                                                   817,426    698,652     680,882      643,609
Current liabilities
Payables                                                                12      45,893     32,700          -             -
Borrowings                                                              13      67,644     26,736          -             -
Financial instruments – derivatives                                     14           -          7          -             -
Provisions                                                              15       4,243      3,340         95             -
Current tax liability                                                            1,576          -        657             -
Unearned grant income                                                              776        263          -             -
Deferred income                                                                      -        565          -             -
Payables to controlled entities                                                      -          -          -        19,528
Total current liabilities                                                      120,132     63,611        752        19,528
Non-current liabilities
Payables                                                                         4,579      4,087           -          104
Borrowings                                                              16     381,760    297,351           -            -
Deferred tax liabilities                                                17       7,742     11,351           -            -
Provisions                                                              18       1,598      1,074         116            -
Unearned grant income                                                           14,106      8,763           -            -
Financial instruments – derivatives                                     19           -      5,093           -            -
Payables to controlled entities                                                      -          -     196,319      148,575
Total non-current liabilities                                                  409,785    327,719     196,435      148,679
Total liabilities                                                              529,917    391,330     197,187      168,207
Net assets                                                                     287,509    307,322     483,695      475,402
Equity
Contributed equity                                                      20     423,439     419,060    423,439      419,060
Reserves                                                                           878       1,880      8,177        7,770
Retained profits/(accumulated losses)                                          (136,808)   (113,618)    52,079       48,572
Total equity attributable to members of the Company                            287,509    307,322     483,695      475,402
Minority interests in controlled entities
Contributed equity                                                      21      13,449      13,449          -            -
Accumulated losses                                                      21     (13,449)    (13,449)         -            -
Total minority interest                                                              -            -         -            -
Total equity                                                                   287,509    307,322     483,695      475,402

The accompanying notes form an integral part of this balance sheet.
                                                                      ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED    41
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2007


                                                                                       CONSOLIDATED

                                                                                                       Deferred
                                                                                                            loss/
                                                                 Foreign                               (gain) on               Retained
                                                                currency                   Employee     financial                profits/
                                                   Employee        trans-    Capital           share      instru-                 (accu-
                                         Issued       share        lation     profits        benefits        ments       Total   mulated        Total
                                         capital      loans      reserve     reserve         reserve     reserve    reserves      losses)    equity
                                          $’000       $’000        $’000       $’000          $’000       $’000       $’000       $’000       $’000

At 1 July 2005                          407,609         (704)    (11,013)      6,720            681             -    (3,612)   (132,259)    271,034
Adjustment on adoption of
AASB 132 and AASB 139                          -           -            -              -           -     (7,296)     (7,296)         23      (7,273)
Currency translation differences               -           -       7,456               -           -          -       7,456            -      7,456
Net gains on cash flow hedges                   -           -           -               -           -      4,963       4,963            -      4,963
Total income for the period
recognised directly in equity                  -           -       7,456               -           -      4,963      12,419          -       12,419
Profit for the period                           -           -           -               -           -          -           -     24,404       24,404
Total income for the period                    -           -       7,456               -           -      4,963      12,419     24,404       36,823
Issue of share capital                   11,880           -             -              -          -             -         -           -      11,880
Repayment of share loan                       -         275             -              -          -             -         -           -         275
Equity dividends                              -           -             -              -          -             -         -      (5,786)     (5,786)
Cost of share based payments                  -           -             -              -        369             -       369           -         369
At 30 June 2006                         419,489         (429)     (3,557)      6,720          1,050      (2,333)      1,880    (113,618)    307,322
At 1 July 2006                          419,489         (429)     (3,557)      6,720          1,050      (2,333)      1,880    (113,618)    307,322
Currency translation differences               -           -     (11,491)              -           -          -     (11,491)           -    (11,491)
Net gains on cash flow hedges                   -           -           -               -           -     10,082      10,082            -     10,082
Total (expense)/income for the
period recognised directly in equity           -           -     (11,491)              -           -     10,082      (1,409)          -      (1,409)
Loss for the period                            -           -           -               -           -          -           -     (16,600)    (16,600)
Total (expense)/income for the period          -           -     (11,491)              -           -     10,082      (1,409)    (16,600)    (18,009)
Issue of share capital                    4,267           -             -              -          -             -         -           -       4,267
Repayment of share loan                       -         112             -              -          -             -         -           -         112
Equity dividends                              -           -             -              -          -             -         -      (6,590)     (6,590)
Cost of share based payments                  -           -             -              -        407             -       407           -         407
At 30 June 2007                         423,756         (317)    (15,048)      6,720          1,457       7,749         878    (136,808)    287,509

The accompanying notes form an integral part of this statement of changes in equity.




42   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2007


                                                                                                      COMPANY

                                                                                                      Employee
                                                                             Employee       Capital       share
                                                                   Issued       share        profits    benefits           Total   Retained      Total
                                                                   capital      loans       reserve     reserve       reserves     profits     equity
                                                                    $’000        $’000       $’000        $’000         $’000      $’000       $’000

At 1 July 2005                                                    407,609         (704)      6,720          681         7,401     41,991     456,297
Profit for the period                                                     -             -          -            -             -    12,367      12,367
Total income for the period                                              -             -          -            -             -    12,367      12,367
Issue of share capital                                             11,880            -            -           -             -           -     11,880
Repayment of share loan                                                 -          275            -           -             -           -         275
Equity dividends                                                        -            -            -           -             -      (5,786)     (5,786)
Cost of share based payments                                            -            -            -         369           369           -         369
At 30 June 2006                                                   419,489         (429)      6,720        1,050         7,770     48,572     475,402
At 1 July 2006                                                    419,489         (429)      6,720        1,050         7,770     48,572     475,402
Profit for the period                                                     -             -          -            -             -    10,097      10,097
Total income for the period                                              -             -          -            -             -    10,097      10,097
Issue of share capital                                              4,267            -            -           -             -           -      4,267
Repayment of share loan                                                 -          112            -           -             -           -        112
Equity dividends                                                        -            -            -           -             -      (6,590)    (6,590)
Cost of share based payments                                            -            -            -         407           407           -        407
At 30 June 2007                                                   423,756         (317)      6,720        1,457         8,177     52,079     483,695

The accompanying notes form an integral part of this statement of changes in equity.

Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve was used to record exchange differences arising from the translation of the financial statements
of foreign operations.

Capital profits reserve
The capital profits reserve is used to record the difference between issue and buy-back prices of preference shares.

Employee share benefits reserve
The employee share benefits reserve is used to record the value of equity benefits provided to employees and directors as part of their remuneration.

Deferred (loss)/gain on financial instruments reserve
The deferred (loss)/gain on financial instruments reserve records the portion of the movements in the fair value of cash flow hedges under
AASB 139 Financial Instruments: Recognition and Measurement requirements.




                                                                             ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                        43
CASH FLOW STATEMENT
for the year ended 30 June 2007


                                                                                    CONSOLIDATED                COMPANY

                                                                                      2007         2006        2007          2006
                                                                           Note       $’000        $’000       $’000        $’000

                                                                                   Inflows/(outflows)          Inflows/(outflows)

Cash flows from operating activities
Receipts from customers                                                            175,753      159,308           18            6
Grant revenue                                                                        10,006        1,976           -            -
Payments to suppliers and employees                                                 (90,486)     (73,799)          -            -
Interest received                                                                     5,264        4,862      31,177       23,557
Interest and other finance costs paid                                                (23,619)     (20,043)    (14,003)      (8,392)
Income tax refunded/(paid)                                                               (25)       (389)        550         (389)
Net operating cash flows                                                    22(b)    76,893       71,915       17,742       14,782
Cash flows from investing activities
Payments for property, plant and equipment                                         (217,807)    (140,118)          -              -
Proceeds from the sale of property, plant and equipment                                  66          269           -              -
Proceeds from the sale of Taiwan associate                                            3,290            -       3,290              -
Joint venture partnership distributions                                                 311          825           -              -
Dividends received                                                                        -          238           -            238
Net investing cash flows                                                            (214,140)    (138,786)      3,290            238
Cash flows from financing activities
Proceeds from issue of shares                                                            110        9,366        110        9,366
Proceeds from borrowings                                                            286,568       82,465           -            -
Repayment of borrowings                                                            (144,924)     (32,381)          -            -
Dividends paid                                                                        (2,649)      (3,485)    (2,649)      (3,485)
Repayments from/(Loans to) equity accounted investments                               (1,073)       2,445          -            -
Loans to controlled entities                                                               -            -    (18,249)     (21,540)
Other                                                                                   (384)      (1,923)         2          275
Net financing cash flows                                                             137,648       56,487      (20,786)     (15,384)
Net increase/(decrease) in cash held                                                   401       (10,384)       246             (364)
Cash at the beginning of the financial year                                          99,116      108,625         163              527
Effects of exchange rate changes on cash                                              (945)          875          -                -
Cash at the end of the financial year                                       22(a)    98,572       99,116         409             163

The accompanying notes form an integral part of this cash flow statement.




44   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007




NOTE 1: SUMMARY OF SIGNIFICANT                                               Where the grant relates to an asset, the fair value is credited to a
                                                                             deferred income account and is released to the income statement over
ACCOUNTING POLICIES                                                          the expected useful life of the relevant asset by annual instalments.
(a) Basis of preparation                                                     (iv)   Borrowing costs
The financial report is a general purpose financial report, which has been     Borrowing costs are expensed as incurred except where they relate to
prepared in accordance with the requirements of the Corporations Act         the financing of projects under development, in which case they are
2001 and Australian Accounting Standards. The financial report has also       capitalised up to the date of commissioning or sale.
been prepared on an historical cost basis, except for derivative financial
instruments which have been measured at fair value. The financial             (v)    Income tax
report of Energy Developments Limited for the year ended 30 June 2007
was authorised for issue in accordance with a resolution of the board of     Deferred income tax is provided on all temporary differences at the
directors on 27 August 2007.                                                 balance sheet date between the tax bases of assets and liabilities and
                                                                             their carrying amounts for financial reporting purposes.
(b) Statement of compliance                                                  Deferred income tax liabilities are recognised for all taxable temporary
The financial report complies with Australian Accounting Standards,           differences except where the deferred income tax liability arises from
which include Australian equivalents to International Financial              the initial recognition of an asset or liability in a transaction that is not a
Reporting Standards (AIFRS). The remuneration disclosures required           business combination and, at the time of the transaction, affects neither
by AASB 124 Related Party Disclosures are presented in the Directors’        the accounting profit nor taxable profit or loss.
Report commencing on page 28 of these financial statements in the             Deferred income tax assets are recognised for all deductible temporary
remuneration report. Energy Developments Limited has presented this          differences, and carry-forward of unused tax assets and unused tax
information in accordance with Australian Securities and Investments         losses, to the extent that it is probable that taxable profit will be
Commission Class Order 06/50.                                                available against which the deductible temporary differences, and the
A number of revisions exist to current AIFRS with future application         carry-forward of unused tax assets and unused tax losses can be utilised,
dates for the Consolidated Entity. Additionally, the new standard            except where the deferred income tax asset relating to the deductible
AASB 7 Financial Instrument Disclosures will be implemented by               temporary differences arises from the initial recognition of an asset or
the Consolidated Entity for the year beginning 1 July 2007 and               liability in a transaction that is not a business combination and, at the
AASB 8 Operating Segments will be implemented for the year beginning         time of the transaction, affects neither the accounting profit nor taxable
1 July 2009. These standards are currently being reviewed, but the           profit or loss.
impacts are considered to be immaterial.                                     The carrying amount of deferred income tax assets is reviewed at
                                                                             each balance sheet date and reduced to the extent that it is no longer
(c)    Summary of significant accounting policies                             probable that sufficient taxable profit will be available to allow all or part
                                                                             of the deferred income tax asset to be utilised.
(i)    Basis of consolidation
                                                                             Deferred income tax assets and liabilities are measured at the tax rates
The consolidated financial statements include the financial statements of
                                                                             that are expected to apply to the year when the asset is realised or
the Company, Energy Developments Limited and its controlled entities,
                                                                             the liability is settled, based on tax rates (and tax laws) that have been
referred to collectively throughout these financial statements as the
                                                                             enacted or substantively enacted at the balance sheet date.
Consolidated Entity.
                                                                             Income taxes relating to items recognised directly in equity are
Minority interests in the results and equity of controlled entities are
                                                                             recognised in equity and not in the income statement.
shown separately in the consolidated income statement and balance
sheet respectively.                                                          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
All inter-entity balances and transactions have been eliminated. Where
                                                                             liabilities and the deferred tax assets and liabilities relate to the same
an entity either began or ceased to be controlled during the year, the
                                                                             taxable entity and the same taxation authority.
results are included only from the date control commenced or up to the
date control ceased.                                                         (vi)   Goods and services tax (GST)
Financial statements of foreign controlled entities and associates           Revenues, expenses and assets are recognised net of the amount of GST
presented in accordance with overseas accounting principles are, for         except where the GST incurred on a purchase of goods and services is
consolidation purposes, adjusted to comply with Consolidated Entity          not recoverable from the taxation authority, in which case the GST is
policy and Australian Accounting Standards.                                  recognised as part of the cost of acquisition of the asset or as part of
                                                                             the expense item as applicable.
(ii)   Sales revenue
                                                                             Receivables and payables are stated with the amount of GST included.
Sales revenue represents revenue earned from the sale of electricity
                                                                             The net amount of GST recoverable from, or payable to, the taxation
and separate sale of green credits. Electricity revenue is recognised
                                                                             authority is included as part of receivables or payables in the balance
or accrued at the time of supply. Green credit revenue is recognised
                                                                             sheet. Cash flows are included in the cash flow statement on a gross
as earned.
                                                                             basis and the GST component of cash flows arising from investing
(iii) Government grants                                                      and financing activities, which is recoverable from, or payable to, the
                                                                             taxation authority is classified as operating cash flows. Commitments
Government grants are recognised at their fair value where there is          and contingencies are disclosed net of the amount of GST recoverable
reasonable assurance that the grant will be received and all attaching       from, or payable to, the taxation authority.
conditions will be complied with.
When the grant relates to an expense item, it is recognised as income
over the periods necessary to match the grant on a systematic basis to
the costs that it is intended to compensate.




                                                                            ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                              45
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007




NOTE 1: SUMMARY OF SIGNIFICANT                                                (xi)   Property, plant and equipment
ACCOUNTING POLICIES (CONTINUED)                                               Property, plant and equipment are measured at cost and depreciated
                                                                              or amortised over their useful economic lives as follows:
(c)    Summary of significant accounting policies (continued)
(vii) Foreign currency translation
                                                                                                                                 Life          Method
Both the functional and presentation currency of Energy Developments
                                                                               Owned plant and equipment:
Limited and its Australian controlled entities is Australian dollars (A$).
                                                                               – power plants and associated facilities       20-30 years     straight line
Transactions in foreign currencies are initially recorded in the functional    – other                                          2-9 years     straight line
currency at the exchange rates ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are          Leased plant and equipment                       3-5 years     straight line
retranslated at the rate of exchange ruling at the balance sheet date.
                                                                              Depreciation or amortisation is charged from the commencement of
All exchange differences in the consolidated financial report are taken
                                                                              the following month after the property, plant and equipment are placed
to the income statement.
                                                                              in service.
Non-monetary items that are measured in terms of historical costs in a
                                                                              Major spares purchased specifically for particular plant are capitalised
foreign currency are translated using the exchange rate as at the date
                                                                              and depreciated on the same basis as the plant to which they relate.
of the initial transaction.
                                                                              Major items of plant and equipment, comprising a number of
Non-monetary items measured at fair value in a foreign currency are
                                                                              components that have different useful lives, are accounted for as
translated using the exchange rates at the date when the fair value was
                                                                              separate assets. The components may be replaced during the useful
determined.
                                                                              life of the complex asset and are then depreciated over their estimated
The functional currencies of the overseas controlled entities (EDL            useful lives.
Holdings (UK) Limited and EDL Holdings (US), Inc.) are Great British
pounds (GBP) and United States dollars (US$) respectively.                    Impairment

As at the reporting date, the assets and liabilities of these overseas        The carrying values of property, plant and equipment are reviewed
controlled entities are translated into the presentation currency of          for impairment at each reporting date when events or changes in
Energy Developments Limited at the rate of exchange ruling at the             circumstances indicate the carrying value may not be recoverable.
balance sheet date and the income statements are translated at the            For an asset that does not generate largely independent cash inflows,
weighted average exchange rates for the period.                               the recoverable amount is determined for the cash generating unit to
The exchange differences arising on the retranslation are taken directly      which the asset belongs.
to a separate component of equity.                                            Where the carrying values exceed the estimated recoverable amount,
On disposal of a foreign entity, the deferred cumulative amount               the assets or cash generating units are written down to their recoverable
recognised in equity relating to that particular foreign operation            amount and included as an other expense in the income statement.
is recognised in the income statement.                                        The recoverable amount of property, plant and equipment is the greater
                                                                              of fair value less costs to sell, and value in use. In assessing value in use,
(viii) Cash
                                                                              the estimated future cash flows are discounted to their present value
Cash includes cash on hand and in banks and deposits at call, which           using a pre-tax discount rate that reflects current market assessments
are readily convertible to cash on hand and which are used in the             of the time value of money and the risks specific to the asset.
cash management function on a day-to-day basis, net of outstanding
                                                                              An item of property, plant and equipment is derecognised upon disposal
bank overdrafts.
                                                                              or when no future economic benefits are expected to arise from the
(ix)   Inventories                                                            continued use of the asset.

Inventories are valued at the lower of cost and net realisable value.         Any gain or loss arising on derecognition of the asset (calculated as the
Cost is assigned on a first-in-first-out basis.                                 difference between the net disposal proceeds and the carrying amount
                                                                              of the item) is included in the income statement in the period the item
(x)    Trade and other receivables                                            is derecognised.
Trade receivables, which generally have 21-30 day terms, are recognised
and carried at original invoice amount.




46     ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007




NOTE 1: SUMMARY OF SIGNIFICANT                                                   (xvi) Interest bearing loans and borrowings
ACCOUNTING POLICIES (CONTINUED)                                                  All loans and borrowings are initially recognised at cost, being the fair
                                                                                 value of the consideration received net of issue costs associated with
(c)   Summary of significant accounting policies (continued)                      the borrowing.
(xii) Leases                                                                     After initial recognition, interest bearing loans and borrowings are
                                                                                 subsequently measured at amortised cost using the effective interest
The determination of whether an arrangement is or contains a lease is
                                                                                 method. Amortised cost is calculated by taking into account any
based on the substance of the arrangement and requires an assessment
                                                                                 establishment costs for facilities, and any discount or premium
of whether the fulfilment of the arrangement is dependent on the use
                                                                                 on settlement.
of a specific asset or assets and the arrangement conveys a right to use
the asset.                                                                       Gains and losses are recognised in the income statement when
                                                                                 the liabilities are derecognised and as well as through the
Finance leases, which transfer to the Consolidated Entity substantially
                                                                                 amortisation process.
all the risks and benefits incidental to ownership of the leased item,
are capitalised at the inception of the lease at the fair value of the           (xvii) Provisions
leased property or, if lower, at the present value of the minimum
lease payments.                                                                  Provisions are recognised when the Consolidated Entity has a present
                                                                                 obligation (legal or constructive) as a result of a past event, it is probable
Lease payments are apportioned between the finance charges and                    that an outflow of resources embodying economic benefits will be
reduction of the lease liability so as to achieve a constant rate of interest    required to settle the obligation and a reliable estimate can be made
on the remaining balance of the liability. Finance charges are recognised        of the amount of the obligation.
as an expense in the income statement.
                                                                                 If the effect of the time value of money is material, provisions are
Capitalised leased assets are depreciated over the shorter of the                determined by discounting the expected future cash flows at a pre-tax
estimated useful life of the asset or the lease term.                            rate that reflects current market assessments of the time value of money
Leases where the lessor retains substantially all the risks and benefits          and, where appropriate, the risks specific to the liability.
of ownership of the asset are classified as operating leases.                     (xviii) Employee benefits
Operating lease payments are recognised as an expense in the income
statement on a straight line basis over the lease term.                          Wages and salaries, annual leave and sick leave
                                                                                 Liabilities for wages and salaries, including non-monetary benefits and
(xiii) Development expenditure                                                   annual leave expected to be settled within 12 months of the reporting
Development expenditure is capitalised when it is incurred for a                 date, are recognised in other payables in respect of employees’ services
specific project and when it is probable that future economic benefits             up to the reporting date and are measured at the amounts expected to
attributable to the project will flow to the Consolidated Entity.                 be paid when the liabilities are settled. Liabilities for non-accumulating
These costs incurred for specific projects are amortised from the                 sick leave are recognised when the leave is taken and measured at the
commencement of commercial production on a straight line basis over              rates paid or payable.
the period of expected benefit.
                                                                                 Long service leave
(xiv) Investments in associates                                                  The liability for long service leave expected to be settled within
Interests in associates are included in non-current investments and              12 months of the reporting date is recognised in the provision for
brought to account using the equity method. Under this method,                   employee benefits and is measured in accordance with (i) above.
investments are initially recorded at cost of acquisition and the carrying       The liability for long service leave expected to be settled more than
value is subsequently adjusted for increases or decreases in the investor’s      12 months from the reporting date is recognised in the provision for
share of post-acquisition results and reserves of the associates. The            employee benefits and measured as the present value of expected future
investments in associates are decreased by the amount of dividends               payments to be made in respect of services provided by the employees
received or receivable. Investments in associates are carried at the             up to the reporting date. Consideration is given to expected future
lower of the equity accounted amount and recoverable amount of the               wage and salary levels, experience of employee departures and periods
Consolidated Entity’s share of the investee company.                             of service. Expected future payments are discounted using market yields
                                                                                 at the reporting date on national government bonds with terms to
(xv) Impairment of financial assets                                               maturity and currencies that match, as closely as possible, the future
                                                                                 cash outflows.
If there is objective evidence that an impairment loss on receivables
carried at amortised cost has been incurred, the amount of the loss is           Employee benefit on-costs
measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows discounted at the financial           Employee benefit on-costs, including payroll tax, are recognised and
asset’s original effective interest rate (ie the effective interest rate         included in employee benefit liabilities and costs when the employee
computed at initial recognition). The carrying amount of the asset would         benefits to which they relate are recognised as liabilities.
be reduced either directly or through use of an allowance account. The
amount of the loss would be recognised in profit or loss.




                                                                                ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                             47
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007




NOTE 1: SUMMARY OF SIGNIFICANT                                                In valuing equity-settled transactions, no account is taken of any
                                                                              performance conditions, other than conditions linked to the price of the
ACCOUNTING POLICIES (CONTINUED)                                               shares of Energy Developments Limited (market conditions) if applicable.
(c)   Summary of significant accounting policies (continued)                   The cost of equity-settled transactions is recognised, together with
                                                                              a corresponding increase in equity, over the period in which the
(xix) Share based payment transactions
                                                                              performance and/or service conditions are fulfilled, ending on the date
The Consolidated Entity provides benefits to employees (including key          on which the relevant employees become fully entitled to the award
management personnel) of the Consolidated Entity in the form of               (vesting date).
share based payments, whereby employees render services in exchange
                                                                              The cumulative expense recognised for equity-settled transactions at
for shares or rights over shares (equity-settled transactions).
                                                                              each reporting date until vesting date reflects (i) the extent to which
Employee share plan established in 1993                                       the vesting period has expired and (ii) the Consolidated Entity’s best
                                                                              estimate of the number of equity instruments that will ultimately vest.
An employee share plan was established in 1993. Under this plan,              No adjustment is made for the likelihood of market performance
interest free loans were provided to employees of the Consolidated            conditions being met as the effect of these conditions is included in the
Entity to assist in the purchase of ordinary shares in the Company.           determination of fair value at grant date. The income statement charge
The plan was suspended during the 2000 financial year. No issue has            or credit for a period represents the movement in cumulative expense
been made under this plan since 1999.                                         recognised as at the beginning and end of that period.
Employee tax exempt share acquisition plan                                    No expense is recognised for equity-settled transactions that do not
                                                                              ultimately vest, except for such transactions where vesting is only
This plan was established in June 2005 pursuant to which eligible             conditional upon a market condition.
employees can apply for up to $1,000 of fully paid shares in the
Company per annum at nil cost. During the current year, 59,769                If the terms of an equity-settled award are modified, as a minimum an
(2006: 55,806) shares were issued to employees pursuant to the plan           expense is recognised as if the terms had not been modified. In addition,
at a price of $4.35 (2006: $3.81) paid for by the Company. Shares are         an expense is recognised for any modification that increases the total
subject to a holding lock until the earlier of three years from the date of   fair value of the share based payment arrangement, or is otherwise
acquisition or until the employee ceases to be an employee.                   beneficial to the employee, as measured at the date of modification.

Employee share option plan                                                    If an equity-settled award is cancelled, it is treated as if it had vested on
                                                                              the date of cancellation, and any expense not yet recognised for the
In 1999, the Company established an employee share option plan.               award is recognised immediately. However, if a new award is substituted
Under the plan, the Company may, at the discretion of the Board,              for the cancelled award and designated as a replacement award on
grant options or performance rights (PR) over the ordinary shares in          the date that it is granted, the cancelled and new award are treated as
the Company or PR to executives and certain members of staff of               if they were a modification of the original award, as described in the
the Consolidated Entity. The options, issued for nil consideration, are       previous paragraph.
granted in accordance with plan rules approved by shareholders in
general meeting.                                                              The dilutive effect, if any, of outstanding options or PR is reflected in
                                                                              the computation of earnings per share.
No options as described in the previous paragraph were issued
during the financial year. During the year, 708,000 (2006: 546,000)            The fair value of cash-settled transactions is expensed over the period
PR were issued for a term of 10 years and are exercisable subject             until vesting with recognition of a corresponding liability. The liability is
to the satisfaction of certain performance hurdles and other rules            remeasured at each balance sheet date up to and including settlement
of the plan. The PR issued to overseas employees entitle the holder           date with changes in fair value recognised in the income statement.
to receive the cash equivalent of ordinary shares in the Company
                                                                              (xx) Financial instruments – derivatives
(cash-settled transactions).
                                                                              The Consolidated Entity uses financial instruments such as foreign
Equity and cash-settled transactions                                          currency contracts and interest rate swaps to hedge its risk associated
The cost of equity and cash-settled transactions with employees is            with interest rate and foreign currency fluctuations. Such derivative
measured by reference to the fair value of the equity instruments at          financial instruments are stated at fair value.
the date at which they are granted. The fair value of PR and options is       The fair value of forward exchange contracts is calculated by reference
determined using the Binomial pricing model and Black Scholes model           to current forward exchange rates for contracts with similar maturity
respectively. These models take into account factors such as option           profiles. The fair value of interest rate swap contracts is determined by
exercise price, the current level and volatility of the underlying share      reference to market values for similar instruments.
price, and time to maturity of the options and PR. In determining the fair
value of PR, the Binomial pricing model also takes into account market        For the purposes of accounting, these are classified as cash flow
based performance conditions for vesting of these rights.                     hedges where they hedge exposure to variability in cash flows that is
                                                                              attributable either to a particular risk associated with a recognised asset
                                                                              or liability or a forecast transaction.




48    ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007




NOTE 1: SUMMARY OF SIGNIFICANT                                                  (xxiii) Earnings per share
ACCOUNTING POLICIES (CONTINUED)                                                 Basic earnings per share is calculated as net profit attributable to
                                                                                members of the Company, adjusted to exclude any costs of servicing
(c)   Summary of significant accounting policies (continued)                     equity (other than dividends) divided by the weighted average number
                                                                                of ordinary shares, adjusted for any bonus element.
(xx) Financial instruments – derivatives (continued)
                                                                                Diluted earnings per share is calculated as net profit attributable
In relation to cash flow hedges (forward exchange contracts and interest
                                                                                to members of the Company, adjusted for:
rate swaps) to hedge firm commitments which meet the conditions for
special hedge accounting, the portion of the gain or loss on the hedging        • costs of servicing equity (other than dividends);
instrument that is determined to be an effective hedge is recognised            • the after-tax effect of dividends and interest associated with dilutive
directly in equity and the ineffective portion is recognised in the               potential ordinary shares, that have been recognised as expenses;
income statement.                                                                 and
At the inception of a hedge relationship, the Consolidated Entity               • other non-discretionary changes in revenues or expenses during
formally designates and documents the hedge relationship to which                 the period that would result from the dilution of potential
the Consolidated Entity wishes to apply hedge accounting and the risk             ordinary shares.
management objective and strategy for undertaking the hedge. The
documentation includes identification of the hedging instrument, the             divided by the weighted average number of ordinary shares and dilutive
hedged item or transaction, the nature of the risk being hedged, and            potential ordinary shares, adjusted for any bonus element.
how the entity will assess the hedging instrument’s effectiveness in
                                                                                (xxiv) Significant accounting judgements, estimates and
offsetting the exposure to changes in the hedged item’s fair value or
                                                                                       assumptions
cash flows attributable to the hedged risk. Such hedges are expected
to be highly effective in achieving offsetting changes in fair value or         The carrying amounts of certain assets and liabilities are often
cash flows and are assessed on an ongoing basis to determine that they           determined based on estimates and assumptions of future events.
actually have been highly effective throughout the financial reporting           The key estimates and assumptions that have a significant risk of
periods for which they were designated.                                         causing material adjustment to the carrying amounts of certain assets
                                                                                and liabilities within the next annual reporting period are:
When the hedged firm commitment results in the recognition of a
non-financial asset or a non-financial liability, then at the time the            Share based payment transactions
asset or liability is recognised, the associated gains or losses that
had previously been recognised in equity are included in the initial            The Consolidated Entity measures the cost of equity-settled transactions
measurement of the acquisition cost or other carrying amount of the             with employees by reference to the fair value of the equity instruments
asset or liability.                                                             at the date at which they are granted. The fair value is determine using
                                                                                the assumptions detailed in Note 25.
For all other cash flow hedges, the gains or losses that are recognised
in equity are transferred to the income statement in the same year in           The Consolidated Entity measures the cost of cash-settled share based
which the hedged firm commitment affects the net profit or loss                   payments at fair value at the grant date using the Binomial pricing
eg when a forecast purchase actually occurs.                                    model taking into account the terms and conditions upon
                                                                                which the instruments were granted, as discussed in Note 25.
For financial instruments that do not qualify for hedge accounting, any
gains or losses arising from changes in fair value are taken directly to the    (xxv) Rounding of amounts
income statement.
                                                                                The Company is a kind referred to in Class Order 98/100 issued by
Hedge accounting is discontinued when the hedging instrument expires            the Australian Securities and Investments Commission relating to
or is sold, terminated or exercised, or no longer qualifies for hedge            the ‘rounding off’ of amounts in the financial report. Amounts in
accounting. At that point in time, any cumulative gain or loss on the           the financial report have been rounded off in accordance with that
hedging instrument recognised in equity is retained in equity until             class order to the nearest thousand dollars, or in certain cases to the
the forecast transaction occurs. If the hedged transaction is no longer         nearest dollar.
expected to occur, the net cumulative gain or loss recognised in equity
is transferred to the income statement.

(xxi) Derecognition of financial instruments
The derecognition of a financial instrument takes place when the
Consolidated Entity no longer controls the contractual rights that
comprise the financial instrument, which is normally the case when the
instrument is sold, or all the cash flows attributable to the instrument
are passed through to an independent third party.

(xxii) Contributed equity
Ordinary shares are classified 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.




                                                                               ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                             49
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                    CONSOLIDATED              COMPANY

                                                                      2007         2006      2007         2006
                                                             Note     $’000        $’000     $’000       $’000

NOTE 2: PROFIT AND LOSS ITEMS
(Loss)/Profit from continuing operations is after crediting
the following revenues:
Sales revenue
Electricity sales                                                   143,962   133,733            -           -
Green credit revenue                                                 33,019    20,353            -           -
                                                                    176,981   154,086            -           -
Other income
Other                                                                 3,510        2,138       18         244
                                                                      3,510        2,138       18         244
Share of net results of associates and joint venture
partnership accounted for using the equity method
Share of net results of associates                             29     1,674        1,657         -           -
Share of net results of joint venture partnership              29       823          965         -           -
                                                                      2,497        2,622         -           -
Total income                                                        182,988   158,846          18         244
Profit from continuing operations is after charging
the following expenses:
Corporate and general expenses including provisions
Corporate and general expenses                                        6,022        6,307      714         616
Foreign exchange losses/(gains)                                          75         (329)       -           -
                                                                      6,097        5,978      714         616
Borrowing costs
Interest and finance charges paid or payable to:
– unrelated corporations                                             23,193    20,359            -           -
– controlled entities                                                     -         -       14,003       8,392
Amortisation of borrowing costs                                       1,526     1,274            -           -
Finance charges related to leases                                       428        21            -           -
                                                                     25,147    21,654       14,003       8,392
Interest income
Interest received or receivable from:
– associates                                                          1,060        1,090    31,170      23,557
– unrelated corporations                                              5,906        6,099         -           -
                                                                      6,966        7,189    31,170      23,557
Specific items
Deutz settlement expense                                                  -        2,897         -           -
Provision for impairment of West Kimberley Power Project             60,000            -         -           -
Loss on sale of Taiwan associate                                      1,697            -     1,697           -
                                                                     61,697        2,897     1,697           -
Other expense items
Employee benefits:
– wages and salaries                                                 24,246    27,331           -           -
– workers’ compensation costs                                           339       341           -           -
– long service leave provision                                          191       439           -           -
– other employee benefits                                                672       696           -           -
– share based payment expense                                           783       688         709         616
                                                                     26,231    29,495         709         616
Net loss on sale of non-current assets                                   28          678         -           -
Operating lease rentals                                               3,224        2,579         -           -



50   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                                CONSOLIDATED              COMPANY

                                                                                  2007         2006      2007       2006
                                                                       Note       $’000        $’000     $’000      $’000

NOTE 2: PROFIT AND LOSS ITEMS                      (CONTINUED)
Depreciation and amortisation
Depreciation and amortisation of property, plant and equipment                   38,609     33,563           -            -
                                                                                 38,609     33,563           -            -
Allocation of depreciation and amortisation by function
Cost of sales including depreciation and amortisation                           108,941     91,978           -            -
Corporate and general expenses including provisions,
depreciation and amortisation                                                     6,907        6,900      714           616
Development expense including depreciation and amortisation                       9,571        8,144        -             -
                                                                                125,419    107,022        714           616
Reconciles to the following items disclosed in the income statement:
Cost of sales (including amortisation of leased assets)                          71,142     58,611          -             -
Corporate and general expenses including provisions                               6,097      6,816        714           616
Development expense                                                               9,571      8,032          -             -
Depreciation and amortisation                                                    38,609     33,563          -             -
                                                                                125,419    107,022        714           616

NOTE 3: INCOME TAX
(a) Income tax (credit)/expense
Current tax                                                                       1,947          -      (4,234)     (1,622)
Deferred tax                                                                     (7,378)    11,017       9,300       6,139
Underprovided in prior years – current tax                                          346          -          88           -
Overprovided in prior years – deferred tax                                         (624)      (121)       (477)     (2,091)
                                                                                 (5,709)    10,896       4,677      2,426
Income tax (credit)/expense is attributable to:
Profit/(loss) from continuing operations                                          (5,709)    10,896       4,677      2,426
Aggregate income tax (credit)/expense                                            (5,709)    10,896       4,677      2,426
Deferred income tax (revenue)/expense included in income
tax (credit)/expense comprises:
Increase/decrease in deferred tax assets                                 17     (12,145)       3,184     8,823      4,048
Increase in deferred tax liabilities                                     17       4,143        7,712         -          -
                                                                                 (8,002)    10,896       8,823      4,048




                                                                       ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED    51
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                                            CONSOLIDATED                          COMPANY

                                                                                               2007            2006              2007             2006
                                                                                              $’000           $’000             $’000            $’000

NOTE 3: INCOME TAX                 (CONTINUED)

(b) Numerical reconciliation of income tax (credit)/expense
    to prima facie tax payable
(Loss)/profit from continuing operations before income tax                                   (22,309)         35,300            14,774           14,793
Tax at the Australian tax rate of 30% (2006: 30%)                                            (6,693)         10,590             4,432            4,438
Tax effect of amounts which are not (taxable)/deductible
in calculating taxable income:
– non-assessable income                                                                            -              (35)               -              (71)
– non-deductible expenses                                                                         92               23                -                -
– other deductible expenses                                                                      (72)           (938)              (33)             (35)
– depreciation and amortisation                                                                (324)             438                 -                -
– share of net results of associates                                                           (261)            (165)                -                -
– loss on sale of investment                                                                    513                 -             513                 -
– share based payments                                                                          154              185              154              185
– unrecognised tax losses and temporary differences                                           1,714              820                 -                -
– other                                                                                           89               98                -                -
– sundry items                                                                                    12                5                -                -
                                                                                             (4,776)         11,021             5,066             4,517
Change in overseas tax rates                                                                   (655)               -                -                 -
Over provision in prior years                                                                  (278)           (121)             (389)           (2,091)
Prior year tax losses not recognised now recouped                                                 -               (4)               -                 -
Income tax (credit)/expense attributable to profit/(loss) from
continuing operations                                                                        (5,709)         10,896             4,677            2,426

(c)   Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting
period and not recognised in net profit or loss but directly charged
or credited to equity:
Deferred tax – charged/(credited) directly to equity                                          4,520           (1,026)              (68)                  -
                                                                                              4,520           (1,026)              (68)                  -

(d) Deferred tax asset not taken into account
The potential deferred tax asset in a controlled entity, which is a
company, arising from tax losses and temporary differences has
not been recognised as a net asset because recovery of the tax
losses and temporary difference is not probable at 30 June 2007:
Tax losses carried forward                                                                  28,974           30,108                  -                   -
Temporary differences                                                                        (3,727)          (1,491)                -                   -
                                                                                            25,247           28,617                  -                   -

(e)   Tax consolidation
Energy Developments Limited and its 100% wholly owned Australian resident controlled entities formed a tax consolidated group with effect from
1 July 2003. Energy Developments Limited is the head entity of the tax consolidated group. Members of the group have entered into a tax sharing
arrangement that provides for the allocation of income tax liabilities between the entities based on individual tax obligations should the head entity
default on its tax payment obligations. At balance date, the possibility of default is remote.
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides for the allocation of current
taxes to members of the tax consolidated group in accordance with their accounting profit for the period, while deferred taxes are allocated to
members of the tax consolidated group in accordance with the principles of AASB 112 Income Taxes.
The head entity, Energy Developments Limited, and the members of the tax consolidated group continue to account for their own current and
deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in
its own right.




52    ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                                           CONSOLIDATED                          COMPANY

                                                                                              2007             2006             2007             2006
                                                                                             $’000            $’000            $’000            $’000

NOTE 4: DIVIDENDS
Final dividends paid
Ordinary shares – unfranked, 2.0 cents (2006: 2.0 cents, unfranked) per share                2,925            2,869            2,925            2,869
Interim dividends paid
Ordinary shares – unfranked, 2.5 cents (2006: 2.0 cents) per share                           3,665            2,917            3,665            2,917
                                                                                             6,590            5,786            6,590            5,786

Franking account
The balance of the franking account is nil at 30 June 2007 (2006: $140,000). The impact on the franking account of the dividend recommended
by the directors since year end but not recognised as a liability at year end will be reduction to the franking account of $631,000 (2006: nil).
Subsequent event
Since the end of the financial year, the directors have declared a final dividend of 5.0 cents per share franked to 20%, payable to the holders of fully
paid ordinary shares on 4 October 2007. The financial effect of this dividend has not been brought to account for the year ended 30 June 2007.

                                                                                                                              CONSOLIDATED

                                                                                                                                2007             2006


NOTE 5: EARNINGS PER SHARE
Basic earnings per share                                                                                      Cents             (11.3)            16.8
Diluted earnings per share                                                                                    Cents             (11.3)            16.7
Weighted average number of shares on issue used in the calculation
of basic earnings per share                                                                                Number       146,618,892      145,189,808
Weighted average number of shares on issue used in the calculation
of diluted earnings per share                                                                              Number       147,189,852      145,873,529
Earnings used in calculating basic and diluted earnings per share                                           $’000            (16,600)         24,404

793,000 options (2006: 1,017,000) and 1,302,400 PR (2006: 288,600) to acquire ordinary shares were not considered dilutive at 30 June 2007.

                                                                                           CONSOLIDATED                          COMPANY

                                                                                              2007             2006             2007             2006
                                                                                             $’000            $’000            $’000            $’000


NOTE 6: RECEIVABLES (CURRENT)
Trade debtors                                                                               25,760          22,476                   -               -
Non-trade amounts owing by related parties;
– associates                                                                                   848              876                  -               -
Grant                                                                                            -            2,915                  -               -
Other                                                                                        1,370            1,027                  -               -
                                                                                            27,978          27,294                   -               -

Terms and conditions
(i) Trade debtors are non-interest bearing and generally on 30 day terms.
(ii) Amounts owing by related parties are on commercial terms (refer to Note 28).
(iii) Details regarding the credit risk of current receivables are disclosed in Note 31.

NOTE 7: INVENTORIES (CURRENT)
Spares at cost                                                                               5,825            4,764                  -               -
                                                                                             5,825            4,764                  -               -




                                                                                  ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                    53
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                       CONSOLIDATED               COMPANY

                                                                        2007          2006       2007          2006
                                                               Note     $’000         $’000      $’000        $’000

NOTE 8: RECEIVABLES (NON-CURRENT)
Non-trade amounts owing by related parties:
– wholly owned controlled entities                                           -           -     432,469      381,139
Other                                                                      475         315           -            -
                                                                           475         315     432,469      381,139

Terms and conditions
(i) Loans to wholly owned controlled entities are interest
     bearing at commercial rates.
(ii) Other loans are non interest bearing and have repayment
     terms of less than 24 months.

NOTE 9: FINANCIAL INSTRUMENTS – DERIVATIVES
Interest rate swaps (current)                                    31     2,542             -          -            -
Interest rate swaps (non-current)                                31     8,257         1,295          -            -
                                                                       10,799         1,295          -            -

NOTE 10: PROPERTY, PLANT AND EQUIPMENT
Freehold land at cost                                                      448         448           -            -
Plant and equipment
Cost
Opening balance                                                       613,971      558,232           -            -
Additions                                                               88,670      59,156           -            -
Disposals                                                                 (869)      (4,592)         -            -
Transfers to leased assets                                                (204)           -          -            -
Transfers to plant and equipment under construction                           -      (9,505)         -            -
Currency translation differences                                       (20,211)       9,324          -            -
Other                                                                       (85)      1,356          -            -
Closing balance                                                       681,272      613,971           -            -
Accumulated depreciation and amortisation
Opening balance                                                       218,772      193,054           -            -
Depreciation and amortisation                                          38,972       33,563           -            -
Disposals                                                                 (764)      (3,645)         -            -
Transfers to leased assets                                                (141)           -          -            -
Transfers to plant and equipment under construction                           -      (7,488)         -            -
Currency translation differences                                        (4,276)       1,932          -            -
Other                                                                       (85)      1,356          -            -
Closing balance                                                       252,478      218,772           -            -
Accumulated impairment losses
Opening balance                                                       (14,657)     (14,043)          -            -
Currency translation differences                                        2,049         (614)          -            -
Closing balance                                                       (12,608)     (14,657)          -            -
Net book value                                                        416,186      380,542           -            -




54   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                                          CONSOLIDATED                          COMPANY

                                                                                             2007             2006             2007             2006
                                                                                            $’000            $’000            $’000            $’000

NOTE 10: PROPERTY, PLANT AND EQUIPMENT
(CONTINUED)
Plant and equipment under construction
Cost
Opening balance                                                                          132,380            44,352                 -                -
Additions                                                                                234,801          150,067                  -                -
Transfers to plant and equipment                                                          (88,269)         (58,294)                -                -
Transfers from plant and equipment                                                               -            2,017                -                -
Transfers to other assets/liabilities                                                     (12,006)                -                -                -
Sales to associates and external parties                                                    (4,747)          (6,296)               -                -
Impairment loss                                                                           (60,000)                -                -                -
Currency translation differences                                                            (1,446)             534                -                -
Closing balance                                                                          200,713          132,380                  -                -
Plant and equipment under lease
Cost
Opening balance                                                                             1,371            1,368                 -                -
Disposals                                                                                      (65)              (7)               -                -
Transfers from plant and equipment                                                            204                 -                -                -
Currency translation differences                                                               (21)             10                 -                -
Closing balance                                                                             1,489            1,371                 -                -
Accumulated amortisation
Opening balance                                                                             1,201            1,049                 -                -
Amortisation                                                                                  187              138                 -                -
Disposals                                                                                      (62)              -                 -                -
Transfers from plant and equipment                                                            141                -                 -                -
Currency translation differences                                                               (21)             14                 -                -
Closing balance                                                                             1,446            1,201                 -                -
Net book value                                                                                 43              170                 -                -
Total property, plant and equipment at cost                                              883,922          748,170                  -                -
Total property, plant and equipment net                                                  617,390          513,540                  -                -

Plant and equipment includes $15,265,000 (2006: $6,639,000) of capitalised interest. These costs are capitalised to the asset up to the date the plant
and equipment are commissioned as operational. Interest costs capitalised during the year to plant and equipment were $9,879,000 (2006: nil).
The Consolidated Entity carried out a review of the recoverable amount of its West Kimberley Power Project, having regard to the increase in
construction and financing costs and delays in the project commencement. As a result of the capital cost increase, the Consolidated Entity has
recognised a provision for impairment of $60,000,000 to the carrying value of the project. At 30 June 2007, a post-tax impairment provision of
$42,000,000 has been recognised in the income statement.
The recoverable amount of the West Kimberley Power Project assets has been determined on the basis of their value in use. A post-tax discount rate
of 6.8% has been used to measure the value in use of the assets.




                                                                            ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                        55
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                                        CONSOLIDATED            COMPANY

                                                                                          2007         2006    2007        2006
                                                                               Note       $’000        $’000   $’000      $’000

NOTE 11: OTHER ASSETS (NON-CURRENT)
Prepaid expenses                                                                           126           72        -          -
                                                                                           126           72        -          -

NOTE 12: PAYABLES (CURRENT)
Trade creditors and accruals                                                             45,600    32,161          -          -
Interest payable                                                                            293       539          -          -
                                                                                         45,893    32,700          -          -

Terms and conditions
(i) Trade creditors are non-interest bearing and normally settled on
     30 day terms.
(ii) Interest is generally payable with quarterly repayments.

NOTE 13: BORROWINGS (CURRENT)
Project borrowings(i)                                                                    66,895    25,134          -          -
Other bank loans(ii)                                                                        749     1,504          -          -
Finance lease liability(ii)                                                    23(a)          -        98          -          -
                                                                                         67,644    26,736          -          -

(i)     Projects are generally debt financed on a limited recourse basis
        post construction, with lender recourse limited primarily to the
        relevant operating controlled entities and their assets; interest
        payments and principal repayments under project borrowings
        will be funded by the respective project operating revenues
        under existing contractual arrangements for electricity sales.
(ii)    Other bank loans are secured by a company guarantee at
        commercial interest rates (refer to Note 31 for actual rates).
(iii)   Lease liabilities are effectively secured as the right to the leased
        assets recognised in the financial statements reverts to the lessor
        in the event of default.

NOTE 14: FINANCIAL INSTRUMENTS –
DERIVATIVES (CURRENT)
Derivatives                                                                      31           -           7        -          -
                                                                                              -           7        -          -

NOTE 15: PROVISIONS (CURRENT)
Employee benefits                                                                          4,236        3,332     95           -
Other                                                                                         7            8      -           -
                                                                                          4,243        3,340     95           -

NOTE 16: BORROWINGS (NON-CURRENT)
Project borrowings                                                             13(i)    377,973   292,984          -          -
Other bank loans                                                               13(ii)     2,787     3,367          -          -
Other loans – unsecured                                                                   1,000     1,000          -          -
                                                                                        381,760   297,351          -          -




56       ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                        CONSOLIDATED              COMPANY

                                                                           2007         2006      2007        2006
                                                                          $’000        $’000     $’000       $’000

NOTE 17: DEFERRED TAX LIABILITIES (NON-CURRENT)
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Inventories                                                                 808        682            -           -
Development expenditure                                                   3,850      2,021            -           -
Depreciation                                                             40,169     39,683            -           -
Finance leases                                                                -         23            -           -
Accrued revenue                                                           4,958      3,538            -           -
                                                                         49,785     45,947            -           -
Amounts recognised directly in equity
Interest rate swaps                                                       2,970            -          -           -
                                                                          2,970            -          -
Deferred tax liabilities – closing balance at 30 June                    52,755     45,947            -           -
Movements
Deferred tax liabilities – opening balance at 1 July                     45,947     38,131            -           -
Credited to the income statement                                          4,143      7,712            -           -
Credited to equity                                                        2,970          -            -           -
Credited to foreign currency translation reserve                           (305)       104            -           -
Deferred tax liabilities – closing balance at 30 June                    52,755     45,947            -           -

Deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Accrued expenses                                                            245         57           -           -
Provision for employee benefits                                            1,540      1,112           -           -
Provision for impairment of West Kimberley Power Project                 18,000          -           -           -
Deferred revenue                                                          4,465      1,913           -           -
Interest in joint ventures                                                  819        943           -           -
Other                                                                        30         59           -           -
Tax losses*                                                              19,846     28,982      17,616      26,439
                                                                         44,945     33,066      17,616      26,439
Amounts recognised directly in equity
Amortisation of share issue costs                                            68            -        68            -
Cash flow hedges                                                               -            2         -            -
Interest rate swaps                                                           -        1,528         -            -
Deferred tax assets – closing balance at 30 June                         45,013     34,596      17,684      26,439
Movements
Deferred tax assets – opening balance at 1 July                          34,596     36,570      26,439      30,487
Charged to the income statement                                          12,145      (3,184)     (8,823)     (4,048)
Credited to equity                                                        (1,549)     1,530          68           -
Charged to foreign currency translation reserve                             (179)      (320)          -           -
Deferred tax asset – closing balance at 30 June                          45,013     34,596      17,684      26,439

* The deferred tax asset attributable to tax losses does
  not exceed taxable amounts arising from the reversal
  of existing assessable temporary differences.

Net deferred tax asset/(liability)                                       (7,742)    (11,351)    17,684      26,439




                                                               ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED    57
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                        CONSOLIDATED             COMPANY

                                                                        2007           2006     2007        2006
                                                                 Note   $’000          $’000    $’000      $’000

NOTE 18: PROVISIONS (NON-CURRENT)
Employee benefits                                                        1,303           763      116           -
Other                                                                     295           311        -           -
                                                                        1,598          1,074     116           -
Movements
Movements in each class of provision during the financial year,
other than employee benefits, are set out below:
Other (non-current)
Balance at the beginning of the financial year                             311            414        -          -
Reversal of unused provision                                               (16)         (103)       -          -
Balance at the end of the financial year                                   295           311         -          -

NOTE 19: FINANCIAL INSTRUMENTS
– DERIVATIVES (NON-CURRENT)
Interest rate swaps                                                31        -         5,093        -          -
                                                                             -         5,093        -          -




58   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                                           CONSOLIDATED                          COMPANY

                                                                                              2007             2006             2007             2006
                                                                                             $’000            $’000            $’000            $’000

NOTE 20: CONTRIBUTED EQUITY
Issued share capital
Attributable to members of the Company:
Ordinary shares1                                                                          423,074          419,067          423,074          419,067
Employee share loan                                                                          (317)            (429)            (317)            (429)
Employee shares1                                                                              682              422              682              422
Total contributed equity attributable to members of the Company                           423,439          419,060          423,439          419,060

                                                                                            2007             2006              2007             2006
                                                                                          Number           Number              $’000            $’000

Movements in contributed equity for the year
Ordinary shares
Opening balance                                                                       146,236,813      143,418,430          419,489          407,609
Issued under share purchase plan                                                                -        2,193,501                -            9,366
Transaction costs associated with share issue                                                   -                -               68                -
Issued under dividend reinvestment plan                                                   839,471          569,076            3,939            2,301
Issued under employee tax exempt share acquisition plan                                    59,769           55,806              260              213
Closing balance                                                                       147,136,053      146,236,813          423,756          419,489

                                                                                              2007             2006             2007             2006
                                                                                             $’000            $’000            $’000            $’000

Employee share loans
Opening balance                                                                               (429)            (704)            (429)            (704)
Repayment of share loans                                                                       112              275              112              275
Closing balance                                                                               (317)            (429)            (317)            (429)
Total contributed equity attributable to members of the Company                           423,439          419,060          423,439          419,060

A total of 899,240 (2006: 2,818,383) ordinary shares were issued by the Company during the financial year as follows:


2007 Purpose of issue                               Date issued                                      Number issued                        Issue price

Dividend reinvestment plan                          4 October 2006                                         350,555                              $4.25
Dividend reinvestment plan                          30 March 2007                                          488,916                              $5.01
Employee tax exempt share acquisition plan          27 June 2007                                            59,769                              $4.35
                                                                                                           899,240


2006 Purpose of issue                               Date issued                                      Number issued                        Issue price

Dividend reinvestment plan                          4 October 2005                                         260,502                              $4.38
Share purchase plan                                 24 October 2005                                      2,193,501                              $4.27
Dividend reinvestment plan                          24 March 2006                                          308,574                              $3.76
Employee tax exempt share acquisition plan          29 June 2006                                            55,806                              $3.81
                                                                                                         2,818,383

Employee options over ordinary shares in the Company
Information relating to the Company employee share option plan, including details of options issued, exercised and lapsed during the financial year
and options outstanding at the end of the financial year are set out in Note 25.

1   Terms and conditions
    Ordinary shares are fully paid and have the right to receive dividends as declared and, in the event of winding up the Company, to participate
    in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle
    their holder to one vote, either in person or by proxy, at a meeting of the Company. Employee shares have the same terms and conditions as
    ordinary shares.




                                                                             ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                          59
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                                CONSOLIDATED             COMPANY

                                                                                  2007          2006     2007        2006
                                                                                 $’000         $’000    $’000       $’000

NOTE 21: MINORITY INTERESTS
Interest in:
Partnership contributions                                                        13,449     13,449          -           -
Accumulated losses                                                              (13,449)   (13,449)         -           -
                                                                                      -            -        -           -

NOTE 22: NOTES TO THE CASH FLOW STATEMENT
(a) Reconciliation of cash
For the purposes of the cash flow statement, cash includes cash on hand and
in banks and deposits at call, which are readily convertible to cash on
hand and which are used in the cash management function on a day-to-day
basis, net of outstanding bank overdrafts.
Cash at the end of the financial year as shown in the cash flow statement
is reconciled to the related items in the balance sheet as follows:
Current deposits with banks                                                     98,572     96,798        409         163
Non-current deposits with banks                                                      -      2,318          -           -
Total cash                                                                      98,572     99,116        409         163

Call deposits with banks are paying interest at current bank deposit rates;
details of the average rates are disclosed in Note 31.
Under certain project borrowing facilities, there are restrictions imposed on
the timing of cash movements. These restrictions relate to a requirement
to maintain funds to meet minimum debt servicing requirements and security
for project borrowings. This amount is $56.3 million at 30 June 2007
(2006: $55.2 million).

(b) Reconciliation of net (loss)/profit to net cash flows from
    operating activities
Net (loss)/profit                                                                (16,600)   24,404      10,097      12,367
Adjustments
Provision for impairment of West Kimberley Power Project                        60,000           -          -          -
Depreciation and amortisation                                                   38,609     33,563           -          -
Share of net results of associates and joint venture partnership                 (2,497)    (2,622)         -          -
Loss on sale of Taiwan associate                                                  1,697          -      1,697          -
Share based payments                                                                783        688        709        616
Other                                                                            (1,145)     1,579          -          -
Changes in assets and liabilities
Receivables decrease                                                              2,741      4,687          -           -
Green credits on hand increase                                                   (4,624)    (4,624)         -           -
Other assets increase                                                            (3,031)      (246)         -        (238)
Inventories increase                                                               (732)      (443)         -           -
Other payables increase                                                           1,045      1,193          -           -
Interest payable increase                                                           173        335          -           -
Deferred income increase                                                          5,292      1,976          -           -
Deferred income tax liability (decrease)/ increase                               (5,734)   10,507       5,239       2,037
Provisions increase                                                                 916        918          -           -
Net operating cash flows                                                         76,893     71,915      17,742      14,782




60   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 22: NOTES TO THE CASH FLOW STATEMENT                                   (CONTINUED)

(c)     Finance facilities
At 30 June 2007, the Consolidated Entity had access to total financing facilities of $611,568,000 (2006: $571,997,000), of which $133,123,000 was
unused at balance date (2006: $227,912,000). Details of these facilities in Australian dollars include:


.                                                           AS AT 30 JUNE 2007                         AS AT 30 JUNE 2006

                                                       Facility      Facility     Facility        Facility       Facility     Facility
                                Denominated          available       utilised   unutilised      available        utilised   unutilised         Expiry
                                    Currency           A$‘000        A$‘000       A$‘000          A$‘000         A$‘000       A$‘000            Date

Bank Loan                                   A$        221,593       215,393          6,200        247,668       207,308         40,360           2008
Other Loan                                  A$          1,000         1,000              -          1,000         1,000              -              -
Bank Loan                                   A$        202,000       133,812         68,188        202,000        52,381        149,619           2017
Bank Loan                                   A$          3,000         3,000              -          3,000         3,000              -           2006
Bank Loan                                  GBP        135,857        88,233         47,624         60,865        34,744         26,121           2015
Bank Loan                                  US$         22,582        22,582              -         30,495        30,495              -           2013
Bank Loan                                  US$            536           536              -          1,871         1,871              -           2007
                                                      586,568       464,556        122,012        546,899       330,799        216,100
Lease                                       A$                -             -              -            94            94              -          2006
Lease                                      US$                -             -              -             4             4              -             -
                                                              -             -              -            98            98              -
Letters of credit/overdraft                  A$        25,000         13,889        11,111         25,000         13,188        11,812           2006
Total facilities                                      611,568       478,445        133,123        571,997       344,085        227,912

(d) Financial guarantees
The Consolidated Entity has provided guarantees to external parties which commit the Consolidated Entity to make payments on behalf of these
entities upon failure to complete the contract. The fair value of these guarantees is considered to be immaterial, and the likelihood of not completing
the contracts is minimal.




                                                                             ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                         61
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                                 CONSOLIDATED             COMPANY

                                                                                   2007          2006     2007       2006
                                                                          Note    $’000         $’000    $’000      $’000

NOTE 23: EXPENDITURE COMMITMENTS
(a) Finance lease expenditures are payable as follows:
Plant and equipment
Not later than one year                                                               -          119         -          -
                                                                                      -          119         -          -
Less: future finance charges                                                           -           (21)       -          -
Net finance lease liability                                                            -           98         -          -
Reconciled to:
Current liability                                                           13        -           98         -          -
                                                                                      -           98         -          -

Finance leases are entered into as a means of funding the acquisition
of plant and equipment used for construction. Rental payments are fixed.

(b) Operating lease expenditures (non-cancellable)
    are payable as follows:
Plant and equipment
Not later than one year                                                           2,038         2,285        -          -
Later than one year but not later than five years                                  3,883         4,500        -          -
Later than five years                                                              1,601         2,702        -          -
                                                                                  7,522         9,487        -          -

Operating leases have an average lease term of three to five years.
Assets that are the subject of operating leases include vehicles
and office equipment.

(c)   Capital expenditure commitments are payable as follows:
Plant and equipment
Not later than one year                                                          24,624     64,659           -          -

Capital expenditure commitments represent expenditure to be
incurred on major energy projects over the next financial year.




62    ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 24: SEGMENT INFORMATION
Geographical segments
The Consolidated Entity’s geographical segments are determined based on the location of the assets and operations.
Inter-segment sales/purchases are at cost.

Primary segment – geographical

                                                                                                         ELIMINATION
                                AUSTRALIA/ASIA            UK/EUROPE             UNITED STATES               ENTRIES                  TOTAL

                                   2007      2006         2007        2006        2007       2006         2007         2006        2007       2006
                                  $’000      $’000       $’000       $’000       $’000      $’000        $’000        $’000       $’000      $’000

Segment revenue
– Electricity and
  green credit sales            116,347    102,600      41,694     31,637       18,940     19,849            -             -    176,981    154,086
– Inter-segment                   1,186      4,046           -          -            -          -       (1,186)       (4,046)         -          -
– Other income                    1,773        548       1,059        846          678        743            -             -      3,510      2,138
– Share of net results of
  associate and joint
  venture partnership                  -       391       2,497       2,231            -           -          -             -      2,497      2,622
Total segment revenue           119,306    107,585      45,250     34,714       19,618     20,592       (1,186)       (4,046)   182,988    158,846
Segment result
(before interest, tax
and specific items)               42,303     39,426      18,031     14,201       (2,765)       (965)          -             -     57,569     52,662
Specific items                   (61,697)    (2,710)          -         (90)          -          (97)         -             -    (61,697)     (2,897)
Segment result (before
interest & tax)                 (19,394)    36,716      18,031     14,111       (2,765)     (1,062)          -             -     (4,128)    49,765
Net borrowing costs                                                                                                             (18,181)   (14,465)
Consolidated Entity
(loss)/profit from continuing
operations before income
tax expense                                                                                                                     (22,309)    35,300
Income tax credit/(expense)                                                                                                       5,709    (10,896)
Net (loss)/profit                                                                                                                (16,600)    24,404
Segment cash                     85,680     84,730       9,819     12,016        3,073      2,370            -             -     98,572     99,116
Current tax receivable                                                                                                                -        550
Carrying amount of
investments in associates
and joint venture partnership         -      4,984      33,125     31,548            -          -           -              -     33,125     36,532
Segment other assets            486,780    403,316     102,866     98,625       71,692     86,997      24,391        (26,484)   685,729    562,454
Total assets                                                                                                                    817,426    698,652
Segment liabilities
– financing                      342,608    257,420      83,677     42,771       23,119     50,160            -       (26,264)   449,404    324,087
Segment liabilities
– operating                      54,475     39,501       8,078       7,295       9,231      9,316         (589)         (220)    71,195     55,892
Tax liabilities                                                                                                                   9,318     11,351
Total liabilities                                                                                                               529,917    391,330
Acquisition of
segment assets                  218,667    121,007      14,610     17,363        1,671     12,559         254              -    235,202    150,929
Depreciation and
amortisation                     27,612     23,787       6,094       5,355       4,903      4,421            -             -     38,609     33,563




                                                                          ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                         63
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 25: SHARE BASED PAYMENTS
(a) Employee share and option plans
Employee share plan established in 1993
An employee share plan was established in 1993. Under this plan, interest free loans were provided to employees of the Consolidated Entity to
assist in the purchase of ordinary shares in the Company. The plan was suspended during the 2000 financial year. No issue has been made under
this plan since 1999.
Employee tax exempt share acquisition plan
This plan was established in June 2005 pursuant to which eligible employees can apply for up to $1,000 of fully paid shares in the Company
per annum at nil cost. During the current year, 59,769 (2006: 55,806) shares were issued to employees pursuant to the plan at a price of $4.35
(2006: $3.81) paid for by the Company. Shares are subject to a holding lock until the earlier of three years from the date of acquisition or until the
employee ceases to be an employee.
Employee share option plan
In 1999, the Company established an employee share option plan. Under the plan, the Company may, at the discretion of the Board, grant options
or PR over the ordinary shares of the Company or PR to executives and certain members of staff of the Consolidated Entity. The options, issued for nil
consideration, are granted in accordance with plan rules approved by shareholders in general meeting. The options are issued for a term of 7–10 years
and are exercisable beginning on the third anniversary of the date of grant.
No options as described in the previous paragraph were issued during the financial year. During the year, 708,000 (2006: 546,000) PR were issued for
a term of 10 years to executives and other members of staff and are exercisable subject to the satisfaction of certain performance hurdles and other
rules of the plan. At the 2005 AGM, the shareholders approved the modifications to the employee share option plan to allow for executive directors
to be eligible for participation under this plan. Refer to (c)(ii) hereafter for details of PR issued to directors under this plan. Further details of PR issues
are discussed in Note 26. PR issued to overseas employees are cash settled.

(b) Grants/issues made under employee share option plan (excluding grants to directors – see below for details)
(i)   Options


                                                                                                 Balance at the             Forfeited         Balance at the
                                                                            Weighted           beginning of the            during the             end of the
                                                                            average               financial year          financial year         financial year
Grant date                      Expiry date           Vesting date          exercise price          Number***             Number***             Number***

Year ended 30 June 2007
7 Jul 2000                      7 Jul 2010            7 Jul 2003            *                             457,000                (16,000)             441,000
29 Nov 2001                     2 Nov 2011            2 Nov 2004            *                              33,000                  (5,000)             28,000
19 Feb 2002                     19 Feb 2012           19 Feb 2005           $6.13                          25,000                       -              25,000
25 Nov 2002                     25 Nov 2012           25 Nov 2005           **                             52,000                  (3,000)             49,000
                                                                                                          567,000                (24,000)             543,000
Weighted average
exercise price                                                                                               $7.21                 $7.19                $7.21

Year ended 30 June 2006
7 Jul 2000                      7 Jul 2010            7 Jul 2003            *                             758,000^             (301,000)              457,000
29 Nov 2001                     2 Nov 2011            2 Nov 2004            *                              62,000^               (29,000)              33,000
19 Feb 2002                     19 Feb 2012           19 Feb 2005           $6.13                          25,000^                     -               25,000
25 Nov 2002                     25 Nov 2012           25 Nov 2005           **                            252,000              (200,000)               52,000
                                                                                                        1,097,000              (530,000)              567,000
Weighted average
exercise price                                                                                               $6.89                 $6.56                $7.21

*     Options were issued at an exercise price of $7.50 plus 15% of any surplus over $7.50 in the market price of ordinary shares when exercised.
**    Options were issued at an exercise price of $5.00 plus 15% of any surplus over $5.00 in the market price of ordinary shares when exercised.
***   Does not include directors.
^     The amortisation of these options has not been recognised as an expense in accordance with AASB 2 Share Based Payment as the options were
      granted on or before 7 November 2002 and terms and conditions have not been subsequently modified.

No options were granted or exercised during the current or prior year.




64    ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 25: SHARE BASED PAYMENTS                            (CONTINUED)

(b) Grants/issues made under employee share option plan (excluding grants to directors – see below for details)
       (continued)

(ii)   PR


                                                                  Weighted  Balance at the       Granted        Forfeited Balance at the
                                                                  average beginning of the     during the      during the     end of the
                                                                  exercise   financial year   financial year   financial year financial year
Grant date                    Expiry date       Vesting date      price           Number         Number          Number         Number

Year ended 30 June 2007
                                                Subject to
                                                satisfaction of
                                                conditions
2 Feb 2005                    2 Feb 2015        of plan           $0.01            510,400               -       (149,600)      360,800
                                                Subject to
                                                satisfaction of
                                                conditions
5 Dec 2005                    2 Dec 2015        of plan           -                322,000               -        (66,000)      256,000
                                                Subject to
                                                satisfaction of
                                                conditions
28 Nov 2006                   28 Nov 2016       of plan           -                      -        558,000         (42,000)      516,000
Year ended 30 June 2006
                                                Subject to
                                                satisfaction of
                                                conditions
2 Feb 2005                    2 Feb 2015        of plan           $0.01            674,800               -       (164,400)      510,400
                                                Subject to
                                                satisfaction of
                                                conditions
5 Dec 2005                    5 Dec 2015        of plan           -                      -        346,000         (24,000)      322,000

No PR were exercised during the current or prior year.




                                                                          ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED              65
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 25: SHARE BASED PAYMENTS                         (CONTINUED)

(c)   Grants made to directors
In previous years, the Company issued share options to non-executive directors in lieu of retirement benefits – this practice has now ceased. Options
have also been issued to executive directors on approval by shareholders at an AGM. At the 2005 AGM, the shareholders approved the modifications
of the employee share option plan to allow for executive directors to be eligible for participation under this plan. During the year, 150,000 PR were
issued for a term of 10 years to executive directors and are exercisable subject to satisfaction of certain performance hurdles and other rules of the
plan. Refer to (c)(ii) hereafter and Note 26 for further details.
(i)   Options


                                                                                                Balance at the            Expired Balance at the
                                                                                              beginning of the         during the     end of the
                                                                                     Exercise    financial year       financial year financial year
Name                          Grant date        Expiry date       Vesting date       price            Number             Number         Number

Year ended 30 June 2007
M R Brown                     8 Nov 2001        8 Nov 2006        8 Nov 2003         $10.16               200,000^        (200,000)                -
C S Laurie                    28 Jan 2003       28 Jan 2008       28 Jan 2005        $2.87              1,000,000                -         1,000,000
G J Pritchard                 25 Jun 2001       25 Jun 2011       25 Jun 2004        $8.56                250,000^*              -           250,000
G J Pritchard                 1 Oct 2003        1 Oct 2008        1 Oct 2005         $2.87                150,000                -           150,000
G J Pritchard                 1 Oct 2003        1 Oct 2008        1 Oct 2006         $3.11                150,000                -           150,000
G J Pritchard                 1 Oct 2003        1 Oct 2008        1 Oct 2007         $3.24                150,000                -           150,000
                                                                                                        1,900,000         (200,000)        1,700,000
Weighted average
exercise price                                                                                              $4.43           $10.16             $3.76
Year ended 30 June 2006
M R Brown                     8 Nov 2001        8 Nov 2006        8 Nov 2003         $10.16               200,000^               -           200,000
R P Gregson                   1 Jun 2000        1 Jun 2005        1 Jun 2002         $10.00               200,000^        (200,000)                -
C S Laurie                    28 Jan 2003       28 Jan 2008       28 Jan 2005        $2.87              1,000,000                -         1,000,000
G J Pritchard                 25 Jun 2001       25 Jun 2011       25 Jun 2004        $8.56                250,000^*              -           250,000
G J Pritchard                 1 Oct 2003        1 Oct 2008        1 Oct 2005         $2.87                150,000                -           150,000
G J Pritchard                 1 Oct 2003        1 Oct 2008        1 Oct 2006         $3.11                150,000                -           150,000
G J Pritchard                 1 Oct 2003        1 Oct 2008        1 Oct 2007         $3.24                150,000                -           150,000
                                                                                                        2,100,000         (200,000)        1,900,000
Weighted average
exercise price                                                                                              $4.96           $10.00             $4.43

^ The amortisation of these options has not been recognised as an expense in accordance with AASB 2 Share Based Payment as the options were
   granted on or before 7 November 2002.
* Issued under employee share option plan.
No options were granted to or exercised by directors during the current or prior year.




66    ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 25: SHARE BASED PAYMENTS                             (CONTINUED)

(c)    Grants made to directors (continued)
(ii)   PR


                                                                                  Weighted             Balance at the            Granted Balance at the
                                                                                   average           beginning of the          during the    end of the
                                                                                   exercise             financial year        financial year financial year
Name                            Grant date         Expiry date       Vesting date     price                  Number              Number        Number

Year ended 30 June 2007
C S Laurie                      5 Dec 2005         5 Dec 2015        30 Jun 2008                 -              150,000                 -            150,000
G J Pritchard                   5 Dec 2005         5 Dec 2015        30 Jun 2008                 -               50,000                 -             50,000
C S Laurie                      4 Oct 2006         5 Oct 2016        30 Jun 2009                 -                    -           100,000            100,000
G J Pritchard                   5 Oct 2006         5 Oct 2016        30 Jun 2009                 -                    -            50,000             50,000
Year ended 30 June 2006
C S Laurie                      5 Dec 2005         5 Dec 2015        30 Jun 2008                 -                       -        150,000            150,000
G J Pritchard                   5 Dec 2005         5 Dec 2015        30 Jun 2008                 -                       -         50,000             50,000

No PR were exercised by directors during the current year.

(d) Weighted average remaining life and fair value of options/PR outstanding at reporting dates
The weighted average remaining contractual life of share options outstanding at the end of the period was 1.3 years (2006: 2.6 years). The weighted
average remaining contractual life of PR outstanding at the end of the reporting period was 8.4 years (2006: 8.6 years). The weighted average fair
value of PR granted during the financial year is $3.83 (2006: $2.38).

(e)    Fair value of options granted
The fair value of equity-settled share options is estimated at date of grant using the Black Scholes model taking into account the exercise price, the
term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, and the risk free
interest rate for the term of the option. The expected price volatility reflects the assumption that the historical volatility is indicative of future trends
which may not necessarily be the actual outcome. No options were granted during the current or prior financial year.

(f)    Fair value of PR granted
The fair value of equity-settled PR granted to employees is estimated at the date of the grant using a Binomial pricing model taking into account
the terms and conditions upon which the PR were granted.
The following table lists the inputs into the model used for the years ended 30 June 2007 and 30 June 2006:



                                                                                                                  2007                                2006

Dividend yield (per annum)                                                                                           1%                                1%
Expected volatility                                                                                                 28%                               29%
PR exercise price                                                                                                $0.00                             $0.00
Share price at grant date                                                                                        $4.56                             $3.89
Interest rate (per annum)                                                                                          5.8%                       5.20%–5.38%

The fair value of the cash-settled PR is measured at the grant date using the Binomial pricing model taking into account the terms and conditions
upon which the instruments were granted. The services received and a liability to pay for those services are recognised over the expected vesting
period. Until the liability is settled, it is remeasured at each reporting date with changes in fair value recognised in profit and loss.
The carrying amount of the liability relating to the cash-settled share based payment at 30 June 2007 is $212,647 (2006: $104,000).




                                                                                ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                               67
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 25: SHARE BASED PAYMENTS                          (CONTINUED)

(g) Expenses arising from share based payment transactions
Total expenses arising from share based payment transactions recognised during the period as part of employee benefit expense were as follows:

                                                                                          CONSOLIDATED                      COMPANY

                                                                                            2007                2006        2007            2006
                                                                                           $’000               $’000       $’000           $’000

Shares issued under employee tax exempt share acquisition plan                               260                213          186                141
Amortisation of options issued under employee share option plan                                -                 25            -                 25
Amortisation of PR issued under employee share option plan                                   509                418          509                418
Amortisation of options issued to directors                                                   14                 32           14                 32
                                                                                             783                688          709                616

NOTE 26: DIRECTORS AND EXECUTIVES DISCLOSURES
(a) Details of directors and other key management personnel
(i)     Directors
M R Brown            Chairman (non-executive)
P W Cassidy          Director (non-executive)
R P Gregson          Director (non-executive)
B J Harker           Deputy Chairman (non-executive)
C S Laurie           Managing Director
G J W Martin         Director (non-executive)
G J Pritchard        Finance Director

(ii)    Executives
D Kent               General Manager – Europe
J W McInnes          Executive General Manager – Global Operations Strategy
C R Murray           Executive General Manager – Australia and
                     Project Director – West Kimberley Power Project
J Thomas             President – Energy Developments, Inc (United States)

(b) Key management personnel compensation
In accordance with the Corporations Regulation 2M.6.04, the remuneration disclosures required by paragraphs Aus 25.4 to Aus 25.7.2
of AASB 124 Related Party Disclosures have been transferred to the remuneration report.

Options, PR and share holdings of directors and other key management personnel

(c)    Options
(i)    Options granted and/or vested during the year
No options were granted to directors during the financial year. The following options vested during the year:

                                                                                                                         VESTED NUMBER

                                                                                                                           2007            2006

Directors
G J Pritchard                                                                                                           150,000         150,000
Executive
C R Murray                                                                                                               55,000           30,000




68     ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 26: DIRECTORS AND EXECUTIVES DISCLOSURES                                     (CONTINUED)

(c)     Options (continued)
(ii)    Option holdings of directors and other key management personnel

                                                                                                                  VESTED AT 30 JUNE 2007

                                                          Balance at the      Options expired    Balance at the
                                                        beginning of the           during the        end of the
                                                           financial year        financial year     financial year
                                                                Number               Number       30 June 2007          Total   Exercisable

Year ended 30 June 2007
Directors
M R Brown                                                         200,000            (200,000)               -              -            -
P W Cassidy                                                             -                   -                -              -            -
R P Gregson                                                             -                   -                -              -            -
B J Harker                                                              -                   -                -              -            -
C S Laurie                                                      1,000,000                   -        1,000,000      1,000,000    1,000,000
G J W Martin                                                            -                   -                -              -            -
G J Pritchard                                                     700,000                   -          700,000        550,000      550,000
Executives
D Kent                                                             50,000                   -           50,000        50,000        50,000
J W McInnes                                                             -                   -                -             -             -
C R Murray                                                         55,000                   -           55,000        55,000        55,000
J Thomas                                                                -                   -                -             -             -
Total                                                           2,005,000            (200,000)       1,805,000      1,655,000    1,655,000

                                                                                                                  VESTED AT 30 JUNE 2006

                                                          Balance at the      Options expired    Balance at the
                                                        beginning of the           during the        end of the
                                                           financial year        financial year     financial year
                                                                Number               Number       30 June 2007          Total   Exercisable

Year ended 30 June 2006
Directors
M R Brown                                                         200,000                   -          200,000        200,000      200,000
P W Cassidy                                                             -                   -                -              -            -
R P Gregson                                                             -                   -                -              -            -
B J Harker                                                              -                   -                -              -            -
C S Laurie                                                      1,000,000                   -        1,000,000      1,000,000    1,000,000
G J Pritchard                                                     700,000                   -          700,000        400,000      400,000
Executives
D Kent                                                             50,000                   -           50,000        50,000        50,000
J W McInnes                                                             -                   -                -             -             -
C R Murray                                                         55,000                   -           55,000        55,000        55,000
J A Snow^                                                               -                   -                -             -             -
Total                                                           2,005,000                   -        2,005,000      1,705,000    1,705,000

^ J A Snow resigned on 27 October 2006.
No options were granted or exercised during the current or prior financial year.




                                                                            ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED               69
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 26: DIRECTORS AND EXECUTIVES DISCLOSURES                                    (CONTINUED)

(d) PR
(i)   PR granted and/or vested during the year
PR were granted to specified directors on 4 and 5 October 2006, and executives on 28 November 2006, under the long-term incentive plan as equity
compensation benefits, as disclosed below. The PR were issued at a nil exercise price per share and expire on 5 October and 28 November 2016.
Each PR entitles the holder to one fully paid ordinary share in the Company once certain key performance criteria are achieved within specified
performance periods (three years).



                                                                                                                    Value of PR               First
                                                                                                          Granted at grant date            exercise
                                                                                                          Number              $               date

Year ended 30 June 2007
Directors
C S Laurie                                                                                                100,000          230,122     30 Jun 2009
G J Pritchard                                                                                              50,000          115,061     30 Jun 2009
Executives
D Kent                                                                                                      40,000          91,141     28 Nov 2009
J W McInnes                                                                                                 40,000          91,141     28 Nov 2009
C R Murray                                                                                                  40,000          91,141     28 Nov 2009
J Thomas                                                                                                    40,000          91,141     28 Nov 2009

On 5 December 2005, PR under the long-term incentive plan were granted as equity compensation benefits to specified directors and executives
as disclosed below. The PR were issued at a nil exercise price per share and expire on 5 December 2015. Each PR entitles the holder to one fully
paid ordinary share in the Company once certain key performance criteria are achieved within specified performance periods (two and a half
to three years).


                                                                                                                       Value of PR            First
                                                                                                         Granted     at grant date         exercise
                                                                                                         Number                  $            date

Year ended 30 June 2006
Directors
C S Laurie                                                                                               150,000           209,010     30 Jun 2008
G J Pritchard                                                                                             50,000            69,670     30 Jun 2008
Executives
D Kent                                                                                                     20,000           36,075      5 Dec 2008
J W McInnes                                                                                                20,000           36,075      5 Dec 2008
C R Murray                                                                                                 20,000           36,075      5 Dec 2008
J A Snow^                                                                                                  20,000           36,075      5 Dec 2008

^ J A Snow resigned on 27 October 2006.




70    ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 26: DIRECTORS AND EXECUTIVES DISCLOSURES                            (CONTINUED)

(d) PR (continued)
(ii)    PR holdings of directors and other key management personnel



                                                                                                      Granted as
                                                                                   Balance at the   remuneration        Balance at
                                                                                 beginning of the      during the   the end of the
                                                                                    financial year   financial year    financial year
                                                                                         Number          Number           Number*

Year ended 30 June 2007
Directors
C S Laurie                                                                               150,000         100,000         250,000
G J Pritchard                                                                             50,000          50,000         100,000
Executives
D Kent                                                                                    48,000          40,000           88,000
J W McInnes                                                                               48,000          40,000           88,000
C R Murray                                                                                48,000          40,000           88,000
J Thomas                                                                                       -          40,000           40,000
Total                                                                                    344,000         310,000         654,000
Year ended 30 June 2006
Directors
C S Laurie                                                                                      -        150,000         150,000
G J Pritchard                                                                                   -         50,000          50,000
Executives
D Kent                                                                                    28,000          20,000          48,000
J W McInnes                                                                               28,000          20,000          48,000
C R Murray                                                                                28,000          20,000          48,000
J A Snow^                                                                                 85,000          20,000         105,000
Total                                                                                    169,000         280,000         449,000

* No PR were vested at the end of the period.
^ J A Snow resigned on 27 October 2006.




                                                                      ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED           71
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 26: DIRECTORS AND EXECUTIVES DISCLOSURES                                   (CONTINUED)

(e)     Shares
(i)     Share holdings of directors and other key management personnel



                                                             Balance at the                                                        Balance at the
                                                           beginning of the       Granted as       On exercise      Net change         end of the
                                                              financial year     remuneration        of options            other     financial year
                                                                        Ord             Ord                Ord             Ord                Ord

Year ended 30 June 2007
Directors
M R Brown                                                             28,170                  -                -             -             28,170
P W Cassidy                                                           13,461                  -                -           130             13,591
R P Gregson                                                           34,868                  -                -           339             35,207
B J Harker                                                                 -                  -                -             -                  -
C S Laurie                                                            11,284                  -                -           110             11,394
G J W Martin                                                               -                  -                -             -                  -
G J Pritchard                                                         26,668                  -                -       (13,334)            13,334
Executives
D Kent                                                                 4,000                  -                -             -              4,000
J M McInnes                                                              750                  -                -             -                750
C R Murray                                                             8,747                  -                -            85              8,832
J Thomas                                                                   -                  -                -             -                  -
Total                                                                127,948                  -                -       (12,670)           115,278
Year ended 30 June 2006
Directors
M R Brown                                                             27,000                  -                -         1,170             28,170
P W Cassidy                                                           12,164                  -                -         1,297             13,461
R P Gregson                                                           33,362                  -                -         1,506             34,868
B J Harker                                                                 -                  -                -             -                  -
C S Laurie                                                            10,038                  -                -         1,246             11,284
G J W Martin                                                               -                  -                -             -                  -
G J Pritchard                                                         24,328                  -                -         2,340             26,668
R A Sutton^^                                                               -                  -                -             -                  -
Executives
D Kent                                                                 4,000                  -                -             -              4,000
J M McInnes                                                                -                  -                -           750                750
C R Murray                                                             7,497                  -                -         1,250              8,747
J A Snow^                                                                  -                  -                -             -                  -
J Thomas                                                                   -                  -                -             -                  -
Total                                                                118,389                  -                -         9,559            127,948

^       J A Snow resigned on 27 October 2006.
^^      R A Sutton resigned on 3 November 2005.

All equity transactions with key management personnel other than those arising from the exercise of remuneration options have been entered into
under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s length.

(f)     Other transactions with directors and other key management personnel
Dr B J Harker is a director of investment bank and fund manager, Morrison & Co. Consulting services were provided by Morrison & Co for a total value
of $103,372 (2006: $12,622) during the current financial year. This transaction was conducted on commercial terms and conditions.




72    ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


                                                                                             CONSOLIDATED                      COMPANY

                                                                                               2007           2006            2007                2006
                                                                                                  $              $               $                   $

NOTE 27: REMUNERATION OF AUDITORS
Amounts received or due and receivable by the auditor for
audit or review of the financial report
Ernst & Young (Australia)                                                                    347,500       348,000                 -                  -
Ernst &Young affiliates:
– Ernst & Young (United Kingdom)                                                             184,320       170,356                 -                  -
– Ernst & Young (United States)                                                                    -             -                 -                  -
– Ernst & Young (Greece)                                                                      11,629        23,204                 -                  -
                                                                                             543,449       541,560                 -                  -
Amounts received or due and receivable by the auditor
for other services*
Ernst & Young (Australia)                                                                     25,847        12,281                 -                  -
                                                                                              25,847        12,281                 -                  -

* Other services primarily represent audit work performed in relation to regulatory reviews and a review of the Consolidated Entity’s information
  technology systems.

NOTE 28: RELATED PARTY DISCLOSURES
(a) Transactions with other related parties


                                                                  Interest
                                                                received/                                                                  Repayments
                                                Purchases      receivable        Interest       Amounts       Amounts      Loans              received
                                   Sales to          from            from         paid to       owed by       owed to advanced to                 from
                                    related       related          related        related        related       related    related              related
                                    parties        parties         parties        parties        parties       parties    parties               parties
Related parties                       $’000         $’000            $’000          $’000          $’000         $’000      $’000                $’000

Year ended 30 June 2007
Consolidated
Associates                            3,370               -         1,165                -        28,151                 -             -         4,951
Company
Controlled entities                        -              -        31,170         14,003         432,469       196,319                 -              -
Year ended 30 June 2006
Consolidated
Associates                            5,423               -         1,090                -        28,414                37             -         2,408
Company
Controlled entities                        -              -        23,557           8,392        381,139       168,103                 -              -

For disclosures relating to directors and other key management personnel, refer to Note 26.
Terms and conditions of transactions with related parties
All transactions with other related parties are conducted on commercial terms and conditions.
No allowances for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised in respect
of bad or doubtful debts due from related parties.
Loans to related parties are unsecured.

(b) Ultimate controlling entity
The ultimate controlling entity of the Consolidated Entity is Energy Developments Limited, incorporated in Australia.




                                                                             ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                          73
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 29: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Details of interests in material associates and the joint venture partnership are as follows:

     COUNTRY OF INCORPORATION                                                              OWNERSHIP INTEREST             CARRYING AMOUNT

                                                       Country of incorporation/                2007          2006             2007            2006
Name and principal activities                                         formation                   %             %              $’000           $’000

Cleanaway Energy Services Limited*                                           Taiwan               -             49                 -           4,983
Greece**                                                                     Greece              50             50             6,724           5,993
– Beal EPE
– Tomi ED1 Operations EPE
Gastec SNC**                                                                 France              50             50           24,464           24,012
Gastec Packington Partnership**                                                 UK               50             50            1,937            1,544
                                                                                                                             33,125           36,532

* On 16 February 2007, the Company disposed of its 49% stake in Cleanaway Energy Services Limited in Taiwan to the Veolia Group. A loss of
   $1,697,000 has been recognised in the financial year.
** Associates and partnerships have the same reporting date as the Consolidated Entity. Principal activity is the development and operation of landfill
   gas power projects.

                                                                                                                             CONSOLIDATED

                                                                                                                                2007            2006
                                                                                                                               $’000           $’000

Share of associates’ net results
Profit from continuing operations before income tax                                                                             2,192           2,188
Income tax expense                                                                                                              (518)           (531)
Share of net results of associates                                                                                             1,674           1,657
Revenues                                                                                                                      12,930          14,250
Expenses                                                                                                                     (11,256)        (12,593)
Share of net results of associates                                                                                             1,674           1,657
Share of associates’ assets and liabilities
Current assets                                                                                                                  5,676           7,080
Non-current assets                                                                                                            45,005          51,539
Current liabilities                                                                                                            (5,783)         (6,582)
Non-current liabilities                                                                                                      (39,795)        (41,836)
Net assets                                                                                                                     5,103          10,201
Share of joint venture partnership’s net results
Profit from continuing operations before income tax                                                                               823             965
Income tax expense                                                                                                                 -               -
Share of net results of joint venture partnership                                                                                823             965
Revenues                                                                                                                       5,367            4,648
Expenses                                                                                                                      (4,544)          (3,683)
Share of net results of joint venture partnership                                                                                823             965
Share of joint venture partnership’s assets and liabilities
Current assets                                                                                                                 2,505            2,074
Non-current assets                                                                                                               941              999
Current liabilities                                                                                                           (1,609)          (1,785)
Non-current liabilities                                                                                                         (193)              (78)
Net assets                                                                                                                     1,644           1,210




74   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 30: CONTROLLED ENTITIES
The consolidated financial statements include the following controlled entities:

                                                                                                                       % OF SHARES/
                                                                                                                      INTERESTS HELD

Name of controlled entity                                                         Place of incorporation/formation     2007            2006

EDL CNG (NT) Pty Ltd                                                                                      Australia      100         100
EDL CSM (NSW) Pty Ltd                                                                                     Australia      100         100
EDL CSM (QLD) Pty Ltd                                                                                     Australia      100         100
EDL Holdings (Australia) Pty Ltd                                                                          Australia      100         100
EDL Developments (Australia) Pty Ltd                                                                      Australia      100         100
Brightstar Environmental Holdings Pty Limited                                                             Australia      100         100
Brightstar Environmental Partnership                                                                      Australia   88.125      88.125
Coal Seam Power Pty Limited                                                                               Australia      100         100
Cosmo Power Pty Ltd                                                                                       Australia      100         100
EDL Group Operations Pty Ltd                                                                              Australia      100         100
EDL International Holdings Pty Limited                                                                    Australia      100         100
EDL LFG (ACT) Pty Ltd                                                                                     Australia      100         100
EDL Operations (Belrose) Pty Ltd                                                                          Australia      100         100
EDL Operations (Berwick) Pty Ltd                                                                          Australia      100         100
EDL Operations (Broadmeadows) Pty Ltd                                                                     Australia      100         100
EDL Operations (Brooklyn) Pty Ltd                                                                         Australia      100         100
EDL LFG (Qld) Pty Ltd                                                                                     Australia      100         100
EDL LFG (Vic) Pty Ltd                                                                                     Australia      100         100
EDL Operations (Corio) Pty Ltd                                                                            Australia      100         100
EDL Operations (Eastern Creek) Pty Ltd                                                                    Australia      100         100
EDL NGD (WA) Pty Ltd                                                                                      Australia      100         100
EDL Operations (Highbury) Pty Ltd                                                                         Australia      100         100
EDL LFG (NSW) Pty Ltd                                                                                     Australia      100         100
EDL Operations (Lucas Heights) Pty Ltd                                                                    Australia      100         100
EDL Operations (Lyndhurst) Pty Ltd                                                                        Australia      100         100
EDL Operations (Pedler Creek) Pty Ltd                                                                     Australia      100         100
EDL Operations (Tea Tree Gully) Pty Ltd                                                                   Australia      100         100
EDL LFG (SA) Pty Ltd                                                                                      Australia      100         100
EDL Operations Pty Limited                                                                                Australia      100         100
EDL Operations (Australia) Pty Ltd                                                                        Australia      100         100
EDL Properties Pty Ltd                                                                                    Australia      100         100
EDL Technologies Pty Ltd                                                                                  Australia      100         100
Energy Corridors (Holdings) Pty Ltd                                                                       Australia      100         100
Energy Developments International Pty Ltd                                                                 Australia      100         100
Karumba Power Pty Ltd                                                                                     Australia      100         100
EDL Projects (Australia) Pty Ltd (formerly Lawn Hill Power Pty Ltd)                                       Australia      100         100
EDL NGD (NT) Pty Ltd                                                                                      Australia      100         100
EDL LNG (WA) Pty Ltd                                                                                      Australia      100         100
EDL NGD (Qld) Pty Ltd                                                                                     Australia      100         100
Tower Energy Pty Limited                                                                                  Australia      100         100
Whytes Gully Environmental Pty Ltd                                                                        Australia   88.125      88.125
Bio Energy (UK) Limited                                                                            United Kingdom        100         100
Bio Energy II (UK) Limited                                                                         United Kingdom        100         100
Brightstar Environmental Investments Limited                                                       United Kingdom        100         100
Brightstar Environmental Partnership                                                               United Kingdom     88.125      88.125




                                                                            ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED               75
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 30: CONTROLLED ENTITIES               (CONTINUED)

                                                                                              % OF SHARES/
                                                                                             INTERESTS HELD

Name of controlled entity                                Place of incorporation/formation     2007            2006

EDL Holdings (UK) Limited                                                 United Kingdom       100             100
EDL Operations (Barling) Limited                                          United Kingdom       100             100
EDL Operations (Bellhouse) Limited                                        United Kingdom       100             100
EDL Generation Ltd                                                        United Kingdom       100             100
EDL Operations (Cromwell Bottom) Limited                                  United Kingdom       100             100
EDL Operations (LFG 1) Limited                                            United Kingdom       100             100
EDL Operations (Lower Spen) Limited                                       United Kingdom       100             100
EDL Operations (Mucking) Limited                                          United Kingdom       100             100
EDL Operations (Ockendon) Limited                                         United Kingdom       100             100
EDL Operations (Packington) Limited                                       United Kingdom       100             100
EDL Operations (Pitsea) Limited                                           United Kingdom       100             100
EDL Operations (Poole) Limited                                            Untied Kingdom       100             100
EDL Operations (Rainham) Limited                                          United Kingdom       100             100
EDL Operations (Sandy Lane) Limited                                       United Kingdom       100             100
EDL Operations (Sugden End) Limited                                       United Kingdom       100             100
EDL Operations (Water Hall) Limited                                       United Kingdom       100             100
EDL Operations (West Riding) Limited                                      United Kingdom       100             100
EDL Operations (Withyhedge) Limited                                       United Kingdom       100             100
EDL (UK) LFG Generation Ltd                                               United Kingdom       100               -
Energy Developments (Operations) Limited                                  United Kingdom       100             100
Energy Developments (UK) Limited                                          United Kingdom       100             100
Ryton Energy Limited                                                      United Kingdom       100             100
EDL Hellas Monoprosopi EPE                                                         Greece      100             100
EDL Holdings (Europe) BV                                                  The Netherlands      100             100
Bio Energie (France) EURL                                                           France     100             100
EDL Holding (France) SARL                                                           France     100             100
Bio Energy (I), LLC                                                          United States     100             100
Bio Energy (II), LLC                                                         United States     100             100
Bio Energy (III), LLC                                                        United States     100             100
Bio Energy (Austin) LLC                                                      United States     100             100
Bio Energy (Austin II) LLC                                                   United States     100             100
Bio Energy (Azusa), LLC                                                      United States     100             100
Bio Energy (California), LLC                                                 United States     100             100
Bio Energy (Georgia), LLC                                                    United States     100             100
Bio Energy (Chateau Fresno), LLC                                             United States     100             100
Bio Energy (Illinois), LLC                                                   United States     100             100
Bio Energy (Keller Canyon), LLC                                              United States     100             100
Bio Energy (Ohio), LLC                                                       United States     100             100
Bio Energy (Ohio II), LLC                                                    United States     100             100
Bio Energy (Pennsylvania), LLC                                               United States     100             100
Bio Energy (Tennessee), LLC                                                  United States     100             100
Bio Energy (Texas), LLC                                                      United States     100             100
Bio Energy (Tower Road), LLC                                                 United States     100             100
Bio Energy (US), LLC                                                         United States     100             100
Bio Energy (Washington), LLC                                                 United States     100             100
Bio Energy (Wisconsin) LLC                                                   United States     100             100




76   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 30: CONTROLLED ENTITIES                       (CONTINUED)

                                                                                                                                  % OF SHARES/
                                                                                                                                 INTERESTS HELD

Name of controlled entity                                                        Place of incorporation/formation                  2007               2006

EDL Holdings (US), Inc                                                                                   United States              100                 100
Energy Developments, Inc                                                                                 United States              100                 100
Energy Developments (Operations), Inc                                                                    United States              100                 100
Brightstar Environmental, LLC                                                                            United States           88.125              88.125
Brightstar Environmental Holdings, LLC                                                                   United States              100                 100
BSC Holding Co                                                                                           United States               65                  65
BSC Projects (Texas) Co1                                                                                 United States               65                  65
BSC Technology Co1                                                                                       United States               65                  65
Brightstar Synfuels Co1                                                                                  United States               65                  65
Brightstar – Jasper Co1                                                                                  United States               65                  65
Broadlands Energy Limited 2                                                                                  Sri Lanka            52.63               52.63

The financial year of all controlled entities is the same as that of the Company, unless otherwise noted.
1 Controlled entity which is 100% owned by BSC Holding Co.
2 The minority interests in the profit and equity of Broadlands Energy Limited are nominal amounts.


NOTE 31: FINANCIAL INSTRUMENTS
Financial risk management objectives and policies
Objectives for holding derivative financial instruments
The Consolidated Entity’s principal financial instruments, other than derivatives, comprise bank loans and overdrafts, finance leases, cash and deposits.
The main purpose of these financial instruments is to raise finance for the Consolidated Entity’s operations. The Consolidated Entity has various other
financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.
The Consolidated Entity also enters into derivative transactions, including principally interest rate swaps and forward exchange contracts. The purpose
is to manage the interest rate and currency risks arising from the Consolidated Entity’s operations and its sources of finance. It is, and has been
throughout the period under review, the Consolidated Entity’s policy that no speculative trading in financial instruments shall be undertaken.
The main risks arising from the Consolidated Entity’s financial instruments are cash flow interest rate risk, foreign currency risk and credit risk.
The Board reviews and agrees policies for managing each of these risks and they are summarised below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on
which revenue and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1.

(a) Cash flow interest rate risk
The Consolidated Entity’s exposure to the risk of changes in market interest rates relates primarily to the Consolidated Entity’s long and short-term
debt obligations with a floating interest rate.
The Consolidated Entity’s policy is to manage its interest cost using interest rate swap agreements. These swap agreements are used to convert
floating interest rate exposures on certain debt to fixed rates. These swaps also entitle the Consolidated Entity to receive, or oblige it to pay, the
amounts if any, by which actual interest payments on nominated loan amounts exceed or fall below specified interest amounts. The Consolidated
Entity’s policy is to keep at least 70% of its borrowings at fixed rates of interest.

Cash flow hedge – interest rate swaps
At 30 June 2007, the Consolidated Entity had interest rate swap agreements in place with a notional amount of $393,238,000 (2006: $254,746,000)
whereby it receives a fixed rate of interest and pays a variable rate equal to the BBSW on the notional amount. The secured loans and interest rate
swaps have the same critical terms.




                                                                              ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                             77
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 31: FINANCIAL INSTRUMENTS                           (CONTINUED)

(b) Foreign currency risk
The Consolidated Entity has transactional currency exposures arising from project commitments denominated in currencies other than the
Consolidated Entity’s functional currency (A$). The Consolidated Entity requires the use of forward exchange contracts to reduce currency exposures
on such project commitments where the unhedged commitments exceed US$5 million at any one time and the timing of the commitments are firmly
established. It is the Consolidated Entity’s policy not to enter forward contracts until a firm commitment is in place. At 30 June 2007, no unhedged
project commitments exceeding US$5 million were in place.

Cash flow hedges
At 30 June 2007, the Consolidated Entity held no forward exchange contracts designated as hedges of contracted future project commitments.
At 30 June 2006, the Consolidated Entity had entered into forward contracts to buy US$3.71 million at a fixed exchange rate of US$/A$0.74785 with
maturity dates from July 2006 to December 2006 to hedge expected future project commitments.
The terms of the forward exchange contracts were negotiated to match the terms of the commitments.
The cash flow hedges of the expected future purchases were assessed to be effective and as at 30 June 2006, a net unrealised loss of $7,000 with
a related deferred tax benefit of $2,000 was included in equity in respect of these forward contracts.

(c)   Credit risk exposures
Credit exposure represents the extent of credit-related losses that the Consolidated Entity may be subject to on amounts to be exchanged under the
derivatives or to be received from financial assets. The notional amounts of derivatives are not a measure of this exposure. The Consolidated Entity
minimises concentration of credit risk by undertaking transactions with a large number of customers from across the range of segments in which the
Consolidated Entity operates. The Consolidated Entity, while exposed to credit-related losses in the event of non-performance by counterparties to
financial instruments, does not expect any counterparties to fail to meet their obligations given their high credit quality.

(d) Commodity price risk
The Consolidated Entity’s exposure to price risk is minimal.

(e)   Net fair value of derivative financial assets and liabilities
The carrying amounts and estimated net fair values of financial assets and financial liabilities held at balance date are the same in 2007 and 2006. The
net fair value of interest rate swaps is estimated by discounting the anticipated future cash flows to their present value, based on interest rates existing
at balance date less an allowance for estimated disposal costs.

                                                    CONSOLIDATED                                                      COMPANY

                                      2007            2007           2006            2006            2007           2007            2006           2006
                                  Carrying         Net fair      Carrying         Net fair       Carrying        Net fair       Carrying        Net fair
                                   amount           value         amount            value         amount          value          amount           value
                                     $’000           $’000          $’000           $’000           $’000          $’000           $’000          $’000

Derivatives
Forward exchange contracts                -              -               (7)             (7)              -              -               -              -
Interest rate swaps                  10,799         10,799          (3,798)         (3,798)               -              -               -              -
                                     10,799         10,799          (3,805)         (3,805)               -              -               -              -




78    ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 31: FINANCIAL INSTRUMENTS                             (CONTINUED)

(e)     Net fair value of derivative financial assets and liabilities (continued)

Interest rate risk
The following table summarises interest rate risk for the Consolidated Entity, together with effective interest rates as at balance date:

                                                                                                                                    WEIGHTED AVERAGE
                                                                                                                                    EFFECTIVE INTEREST
                                                             MATURING IN                                                                RATE (pa)1

                                                Over 1      Over 2     Over 3      Over 4        More         Non-
                                     1 year     year to    years to   years to    years to        than     interest
                                     or less    2 years     3 years    4 years     5 years     5 years     bearing        Total     Floating2   Fixed
                                      $’000       $’000       $’000      $’000       $’000       $’000        $’000       $’000           %        %

Year ended 30 June 2007
Financial assets
Cash assets:
– Australia                          85,680            -          -           -           -           -          -       85,680             -   5.81%
– United Kingdom                      9,819            -          -           -           -           -          -        9,819             -        -
– United States                       3,073            -          -           -           -           -          -        3,073             -        -
Receivables (current)                     -            -          -           -           -           -     27,978       27,978             -        -
Receivables (non-current)                 -            -          -           -           -           -        475          475             -        -
                                     98,572            -          -           -           -           -     28,453      127,025
Financial liabilities
Payables (current)                         -           -          -           -           -           -     45,893       45,893             -        -
Payables (non-current)                     -           -          -           -           -           -      4,579        4,579             -        -
Project borrowings:
– Australia                          63,521    196,135       5,112       5,501      5,890      73,046              -    349,205       7.75%          -
– United States                       3,770      3,770       3,770       3,770      3,770       3,732              -     22,582       6.85%          -
– United Kingdom                      2,202      3,504       4,058       4,290     74,179           -              -     88,233       6.93%          -
Other borrowings:
– Australia                             213         451        485         523         563         765       1,000        4,000       7.69%          -
– United States                         536           -          -           -           -           -           -          536       6.36%          -
Interest payable:
– Australia                             242            -          -           -           -           -            -         242            -        -
– United States                          29            -          -           -           -           -            -          29            -        -
– United Kingdom                         22            -          -           -           -           -            -          22            -        -
                                     70,535    203,860      13,425      14,084     84,402      77,543       51,472      515,321
Interest rate swaps
– Australia                          25,630    120,317      13,881      11,416       8,909    115,383              -    295,536             -   6.06%
– United States                       2,531      2,690       2,721       2,760       2,818      3,034              -     16,554             -   3.64%
– United Kingdom                      1,797      3,475       3,711       4,268       3,565     64,332              -     81,148             -   5.49%
                                     29,958    126,482      20,313      18,444     15,292     182,749              -    393,238

1     Both fixed and floating rates for financial liabilities include a weighted average effective interest rate margin.
2     The floating interest rate represents the most recently determined rate applicable to the instrument at balance date.




                                                                               ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                       79
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 31: FINANCIAL INSTRUMENTS                             (CONTINUED)

(e)     Net fair value of derivative financial assets and liabilities (continued)

                                                                                                                                   WEIGHTED AVERAGE
                                                                                                                                   EFFECTIVE INTEREST
                                                             MATURING IN                                                               RATE (pa)1

                                                Over 1      Over 2     Over 3      Over 4       More         Non-
                                     1 year     year to    years to   years to    years to       than     interest
                                     or less    2 years     3 years    4 years     5 years    5 years     bearing        Total     Floating2   Fixed
                                      $’000       $’000       $’000      $’000       $’000      $’000        $’000       $’000           %        %

Year ended 30 June 2006
Financial assets
Cash assets:
– Australia                          82,412       1,523        795            -           -           -          -      84,730            -    5.81%
– United States                      11,950           -          -            -           -           -          -      11,950            -         -
– United Kingdom                      2,370           -          -            -           -           -          -       2,370            -         -
– Greece                                 66           -          -            -           -           -          -          66            -         -
Receivables (current)                     -           -          -            -           -           -     27,294      27,294            -         -
Receivables (non-current)                 -           -          -            -           -           -        315         315            -         -
                                     96,798       1,523        795            -           -           -     27,609     126,725
Financial liabilities
Payables (current)                        -            -          -           -           -           -     32,700      32,700            -         -
Payables (non-current)                    -            -          -           -           -           -      4,087       4,087            -         -
Finance lease liability                  98            -          -           -           -           -          -          98            -    6.95%
Project borrowings:
– Australia                          22,667     22,896     165,192       1,896       2,032     45,006             -    259,689       6.93%          -
– United States                       3,767      3,767       3,767       3,767       3,767     11,660             -     30,495       5.81%          -
– United Kingdom                          -          -           -           -           -     34,744             -     34,744       6.25%          -
Other borrowings:
– Australia                             257         359        386         416         448      1,134        1,000       4,000       6.99%          -
– United States                       1,247         624          -           -           -          -            -       1,871       5.12%          -
Interest payable:
– Australia                             516            -          -           -           -           -           -          516          -         -
– United States                          13            -          -           -           -           -           -           13          -         -
– United Kingdom                         10            -          -           -           -           -           -           10          -         -
                                     28,575     27,646     169,345       6,079       6,247     92,544       37,787     368,223
Interest rate swaps
– Australia                          15,866     17,258      98,352      10,011       8,410     70,348             -    220,245            -    6.76%
– United States                       2,789      3,109       3,137       3,186       3,234      5,194             -     20,649            -    3.64%
– United Kingdom                        211          -           -           -           -     13,641             -     13,852            -    6.44%
                                     18,866     20,367     101,489      13,197     11,644      89,183             -    254,746

1     Both fixed and floating rates for financial liabilities include a weighted average effective interest rate margin.
2     The floating interest rate represents the most recently determined rate applicable to the instrument at balance date.




80     ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2007


NOTE 32: CONTINGENT LIABILITY
There are no contingent liabilities at 30 June 2007.

NOTE 33: SUBSEQUENT EVENTS
On 6 August 2007, the Company announced the completion of the sale of Cedar Hills landfill gas rights in King County, Seattle, Washington, United
States to Industrial Power Generating Company, LLC (Ingenco) for US$6 million (A$7.1 million).
The US$6 million price is payable in instalments with the Consolidated Entity receiving US$5 million (A$5.9 million) on completion of the sale.
Payment of the remaining US$1 million (A$1.2 million) will be deferred until commercial operation of the high-Btu gas facility, currently forecast for
late 2008. Recognition of the US$1 million will be deferred until this time. The net profit from the sale is estimated at US$4.2 million (A$4.9 million),
and will be recognised in the Company’s half year results for the six months to 31 December 2007.
On 7 August 2007, the Company executed a gas supply agreement with Anglo Coal which will underpin a 45 MW coal mine methane power project
at Anglo Coal’s Moranbah North Mine in Queensland’s Bowen Basin. The project will be constructed under a contract with Clarke Energy, which was
also signed on 7 August 2007.
On 27 August 2007, the directors declared a final dividend of 5.0 cents per share on ordinary shares partially franked to 20% in respect of the 2007
financial year. The total amount of the dividend is $7.4 million. The dividend has not been provided for in the 30 June 2007 financial statements.




                                                                              ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                          81
DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of Energy Developments Limited, we state that in the opinion of the directors:
(a) the financial statements, notes and the remuneration report of the Company and of the Consolidated Entity are in accordance with the
    Corporations Act 2001, including:
     (i) giving a true and fair view of the Company’s and the Consolidated Entity’s financial position as at 30 June 2007 and of their performance
         for the year ended on that date; and
     (ii) complying with Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
This declaration 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 year ended 30 June 2007.
On behalf of the Board:




C S Laurie                                        G J Pritchard
Director                                          Director


Brisbane, 27 August 2007




82   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
INDEPENDENT AUDIT REPORT
for the year ended 30 June 2007


INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ENERGY DEVELOPMENTS LIMITED
We have audited the accompanying financial report of Energy Developments Limited (the company), which comprises the balance sheet as at
30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of
significant 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 financial year.
The company has disclosed information about the remuneration of directors and executives (“remuneration disclosures”), as required by Accounting
Standard AASB 124 Related Party Disclosures, under the heading “remuneration report” in the directors’ report, as permitted by Corporations
Regulation 2M.6.04. These remuneration disclosures are identified in the directors’ report as being subject to audit.

Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial 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 financial report that is free from material misstatement,
whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances. The directors are also responsible for the remuneration disclosures contained in the directors’ report.

Auditor’s Responsibility
Our responsibility is to express an opinion on the financial 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 financial report is free from material misstatement and that the remuneration disclosures comply
with Accounting Standard AASB 124 Related Party Disclosures.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected
depend on our judgment, including the assessment of the risks of material misstatement of the financial 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 financial 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 financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence
In conducting our audit we have met the independence requirements of the Corporations Act 2001. We have given to the directors of the company
a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report. In addition to our audit of the financial report and
the remuneration disclosures, we were engaged to undertake the services disclosed in the notes to the financial statements. The provision of these
services has not impaired our independence.

Auditor’s Opinion
In our opinion:
1. the financial report of Energy Developments Limited is in accordance with:
    (a) the Corporations Act 2001, including:
        (i) giving a true and fair view of the financial position of Energy Developments Limited and the consolidated entity at 30 June 2007 and of
            their performance for the year ended on that date; and
        (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations); and
    (b) other mandatory financial reporting requirements in Australia.
2. the remuneration disclosures that are contained in the directors’ report comply with Accounting Standard AASB 124 Related Party Disclosures.




Ernst & Young




Mark Hayward
Partner

Brisbane
27 August 2007

                                                                             ANNUAL REPORT 2007 ENERGY DEVELOPMENTS LIMITED                           83
SHAREHOLDER INFORMATION
SUBSTANTIAL SHAREHOLDERS AS AT 31 AUGUST 2007
The following information is extracted from the notices of substantial shareholders.

                                                                                           FULLY PAID ORDINARY SHARES

Name                                                                                             Number                     %

Infratil Australia Limited                                                                     37,492,639              25.58%
National Australia Bank Limited Group                                                           9,530,671               6.65%
MIR Investment Management Limited                                                               9,690,873               6.59%
J P Morgan Chase & Co and its affiliates                                                         9,029,701               6.14%
Coopers Investment Pty Limited                                                                  7,987,682               5.43%
Investors Mutual Limited                                                                        7,409,430               5.04%


TOP 20 HOLDERS OF FULLY PAID ORDINARY SHARES AS AT 31 AUGUST 2007

                                                                                           FULLY PAID ORDINARY SHARES

Name                                                                                             Number                     %

Infratil Australia Limited                                                                     26,613,710                18.12
HSBC Custody Nominees (Australia) Limited                                                      17,241,047                11.74
J P Morgan Nominees Australia Limited                                                          14,356,841                 9.75
Citicorp Nominees Pty Limited                                                                  12,173,425                 8.29
National Nominees Limited                                                                      12,146,736                 8.27
ANZ Nominees Limited (Income Reinvest Plan A/C)                                                12,132,400                 8.26
RBC Dexia Investor Services Australia Nominees Pty Limited                                      7,512,558                 5.12
Australian Foundation Investment Company Limited                                                4,605,721                 3.14
HSBC Custody Nominees (Australia) Limited (A/C 2)                                               3,262,598                 2.22
Cogent Nominees Pty Limited                                                                     2,747,111                 1.87
ANZ Nominees Limited (Cash Income A/C)                                                          2,590,124                 1.76
Citicorp Nominees Pty Limited (CFSIL CFS WS Small Comp A/C)                                     2,191,831                 1.49
AMP Life Limited                                                                                1,876,327                 1.28
Queensland Investment Corporation                                                               1,804,844                 1.23
Fleet Nominees Pty Limited                                                                      1,064,923                 0.73
Cogent Nominees Pty Limited (SMP Accounts)                                                        938,419                 0.64
Mirrabooka Investments Limited                                                                    750,000                 0.51
McNeil Nominees Pty Limited                                                                       502,164                 0.34
Citicorp Nominees Pty Limited (CFSIL CWLTH AUST SHS 14 A/C)                                       366,670                 0.25
IAG Nominees Pty Limited                                                                          353,642                 0.24


DISTRIBUTION OF SHAREHOLDINGS AS AT 31 AUGUST 2007

                                                                                       Number of ordinary   Number of ordinary
Size of Holding                                                                             shareholders       option holders

1 to 1,000                                                                                          2,514                  15
1,001 to 5,000                                                                                      3,363                  56
5,001 to 10,000                                                                                       729                  15
10,001 to 100,000                                                                                     338                   8
100,001 and over                                                                                       36                   4




84   ENERGY DEVELOPMENTS LIMITED ANNUAL REPORT 2007
DEFINITIONS                                                                  CONTACT
OF KEY TERMS                                                                 INFORMATION
TERM               DEFINITION                                                REGISTERED OFFICE
CNG                Compressed natural gas.                                   Building 17
coal mine          Gas trapped in coal seams that can be released by         2404 Logan Road
methane            coal mining operations. If the gas is released into the   Eight Mile Plains Queensland 4113
(CMM)              atmosphere, it has an estimated 21 times the global       PO Box 4046
                   warming potential of carbon dioxide. The gas can          Eight Mile Plains Queensland 4113
                   be extracted from coal mines by ventilation or direct
                   drainage methods and used to produce electricity.         Telephone: +61 7 3275 5555
CO2                Carbon dioxide; a greenhouse gas.                         Fax: + 61 7 3341 5150

Deutz              Engine manufacturer, Deutz AG, and its associates.        Email: secretary.legal@edl.com.au
                                                                             Website: www.energydevelopments.com.au
$                  Australian dollars.
GHG                Greenhouse gas emissions, such as CO2.                    INVESTOR ENQUIRIES
GW                 Gigawatt. A measurement of energy.                        Telephone: 1300 552 270
                   One gigawatt = 1,000 megawatts.                           Email: secretary.legal@edl.com.au
GWh                Gigawatt hour. A measurement of energy used
                   over time.                                                AUDITOR
Landfill gas        Gas created by the anaerobic decomposition of             Ernst & Young
(LFG)              organic refuse deposited in landfills (rubbish dumps).     1 Eagle Street
                   The gas mostly consists of methane and carbon             Brisbane Queensland 4000
                   dioxide and, after impurities are removed, can be
                   used to produce electricity.
                                                                             SHARE REGISTRY
LNG                Liquefied natural gas.
                                                                             Computershare Investor Services Pty Ltd
Lost time injury   An occurrence that results in time lost from work of      Level 19 CPA Building
                   one shift or more, not counting the shift in which the    307 Queen Street
                   injury occurred.                                          Brisbane Queensland 4000
Lost time injury   The number of lost time injuries incurred per one
frequency rate     million hours worked that resulted in a lost day or       STOCK EXCHANGE LISTING
(LTIFR)            shift.
                                                                             Australia
MW                 Megawatt. A measurement of energy.                        Stock exchange code: ENE
                   One megawatt = 1,000,000 watts.
NFFO               Non Fossil Fuel Obligation .                              ANNUAL GENERAL MEETING
Power purchase     Contract between a generator and a counter-party          Monday 5 November 2007 at 2.00pm
agreement          to purchase electricity for an agreed price over an       Redlands/Lockyer Room, Level 5
                   agreed time period.                                       Hilton Hotel
Tetrajoule         A measure of energy.                                      190 Elizabeth Street
                   One tetrajoule = 1,000,000 joules.                        Brisbane Queensland 4000
WKPP               West Kimberley Power Project.
        leaders in clean energy

   www.energydevelopments.com

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