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NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1 — SIGNIFICANT ACCOUNTING
POLICIES

Amalgamated Holdings Limited (“Parent Entity” or “Company”) is
a company domiciled in Australia. The consolidated financial
report of the Company for the year ended 30 June 2007
comprise the Parent Entity and its subsidiaries (collectively
referred to as the “Group”) and the Group’s interest in
associates and partnerships.

Amalgamated Holdings Limited is a company incorporated
in Australia and limited by shares. The shares are publicly
traded on the Australian Securities Exchange. The nature
of the operations and principal activities of the Group are
described in Note 2.

The financial report was authorised by the Board of Amalgamated
Holdings Limited for issuance on 23 August 2007.

(a) Statement of Compliance
The financial report is a general purpose financial report which
has been prepared in accordance with Australian Accounting
Standards (“AASBs”) adopted by the Australian Accounting
Standards Board and the Corporations Act 2001.

The consolidated financial report of the Group also complies
with IFRSs and interpretations adopted by the International
Accounting Standards Board. Due to specific exemption
granted to parent entities under AASB 132 Financial
Instruments: Disclosure and Presentation, the Company’s
financial report does not comply with IFRSs in respect of
certain disclosure requirements.

(b) Basis of Preparation
The financial report is presented in Australian dollars.

The financial report is prepared on the historical cost basis
except that the following assets and liabilities are stated at their
fair value: derivative financial instruments, financial instruments
classified as available-for-sale, share-based payments expense
and investment properties.

Assets held for sale are stated at the lower of carrying amount
and fair value less costs to sell.

The preparation of a financial report in conformity with
Australian Accounting Standards requires management to
make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets, or
liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various
other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making
the judgements about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results
may differ from these estimates.

The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.

Judgements made by management in the application of AASBs
that have a significant effect on the financial report and estimates
with a significant risk of material adjustment in the next year
are discussed in Note 1(z).

The accounting policies set out below have been applied
consistently to all periods presented in these financial statements.

The Company and the Group have applied AASB 2005-9

Amendments to Australian Accounting Standards — Financial
Guarantee Contracts (AASB 2005-9) for the first time from
1 July 2006. Under AASB 2005-9, liabilities arising from
financial guarantee contracts, including company guarantees
of subsidiaries through deeds of cross guarantee, are initially
recognised at fair value and subsequently at the higher of the
amount determined in accordance with the measurement
requirements of a provision (see Note 1(q)) and the amount initially
recognised less accumulated amortisation. Previously, such
contracts were recognised as a provision only if settlement
was considered probable.

The change in accounting policy was applied retrospectively
to financial guarantee contracts in existence as at or since
1 July 2005. The application did not have an impact on the
financial results of the Parent Entity or the Group.

The accounting policies have been applied consistently by all
entities in the Group.

The Company is of a kind referred to in ASIC Class Order
98/100 dated 10 July 1998 (updated by Class Order 05/641
effective 28 July 2005 and Class Order 06/51 effective
31 January 2006) and in accordance with the Class Order,
amounts in the financial report and directors’ report have
been rounded off to the nearest thousand dollars, unless
otherwise stated.

The following standards, amendments to standards and
interpretations have been identified as those which may
impact the Group in the period of initial application. They were
available for early adoption at 30 June 2007, but have not been
applied by the Group in preparing these financial statements:

•
AASB 7 Financial Instruments: Disclosures (August 2005)
replaces the presentation requirements of financial
instruments in AASB 132. AASB 7 is applicable for annual
reporting periods beginning on or after 1 January 2007,
and will require additional disclosures with respect to the
Group’s financial instruments;
•
AASB 2005-10 Amendments to Australian Accounting
Standards (September 2005) makes consequential
amendments to a number of standards including AASB
132 Financial Instruments: Disclosure and Presentation,
AASB 101 Presentation of Financial Statements, AASB
114 Segment Reporting, AASB 117 Leases, AASB 133
Earnings Per Share, AASB 139 Financial Instruments:
Recognition and Measurement, and AASB 1 First-time
Adoption of Australian Equivalents to International Financial
Reporting Standards, arising from the release of AASB 7.
AASB 2005-10 is applicable for annual reporting periods
beginning on or after 1 January 2007 and is expected to
only impact disclosures contained within the consolidated
financial report;
•
AASB 8 Operating Segments replaced the presentation
requirements of segment reporting in AASB 114 Segment
Reporting. AASB 8 is applicable for annual reporting
periods beginning on or after 1 January 2009 and is not
expected to have an impact on the financial results of the
Group or Company as the standard is only concerned
with disclosure;

NOTE 1 — SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

•
AASB 2007-3 Amendments to Australian Accounting
Standards arising from AASB 8 makes amendments to
a number of standards including AASB 5 Non-current
Assets Held for Sale and Discontinued Operations,
AASB 6 Exploration for and Evaluation of Mineral
Resources, AASB 102 Inventories, AASB 107 Cash Flow
Statements, AASB 119 Employee Benefits, AASB 127
Consolidated and Separate Financial Statements, AASB
134 Interim Financial Reporting and AASB 136 Impairment
Assets. AASB 2007-3 is applicable for annual reporting
periods beginning on or after 1 January 2009 and must be
adopted in conjunction with AASB 8. This standard is only
expected to impact disclosures contained within the
financial report;
•
Interpretation 10 Interim Financial Reporting and Impairment
prohibits the reversal of an impairment loss recognised in a
previous interim period in respect of goodwill, an investment
in an equity instrument or a financial asset carried at cost.
Interpretation 10 will become mandatory for the Group’s
30 June 2008 financial year, and will apply to goodwill,
investments in equity instruments, and financial assets
carried at cost prospectively from the date that the
Group first applied the measurement criteria of AASB
136 and AASB 139 respectively (i.e. 1 July 2004 and
1 July 2005, respectively). If Interpretation 10 was to be
adopted at 30 June 2007, it would not result in any
retrospective adjustments;
•
AASB 2007-2 Amendments to Australian Accounting
Standards arising from AASB Interpretation 12 makes
amendments to AASB 1 First-time Adoption of Australian
Equivalents to International Financial Reporting Standards,
AASB 117 Leases, AASB 118 Revenue, AASB 120
Accounting for Government Grants and Disclosure
of Government Assistance, AASB 121 The Effects
of Changes in Foreign Exchange Rates, AASB 127
Consolidated and Separate Financial Statement, AASB
131 Interests in Joint Ventures, and AASB 139 Financial
Instruments: Recognition and Measurement. AASB 2007-2
is applicable for the Group’s 30 June 2009 financial year;
•
AASB 2007-2 Amendments to Australian Accounting
Standards also amends references to “UIG Interpretation”
to Interpretation. This amending standard is applicable to
the Group’s 30 June 2008 financial year; and
•
AASB 2007-4 Amendments to Australian Accounting
Standards which is to introduce various accounting policy
options, delete various disclosures presently required, and
make a number of editorial amendments. AASB 2007-4 is
applicable to annual reporting periods beginning on or after
1 July 2007 and must therefore be applied by the Group in
its financial statements for the year ending 30 June 2008.
The Group does not intend to change any of its current
accounting policies on adoption of AASB 2007-4;
accordingly, there will be no financial impact to these
financial statements. However, in the Group’s financial
statements for the
year ending 30 June 2008, certain information may no
longer be disclosed, or may be disclosed in an alternative
manner, due to amendments made by 2007-4 to the
disclosure requirements of various Accounting Standards.

(c) Basis of Consolidation
The consolidated financial statements comprise the financial
statements of Amalgamated Holdings Limited (“Parent Entity”
or “Company”) and its subsidiaries (collectively referred to as
the “Group”) as at 30 June each year end.

(i)
Subsidiaries
Subsidiaries are entities controlled by the Parent Entity.
Control exists when the Parent Entity has the power, directly
or indirectly, to govern the financial and operating policies
of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that are presently
exercisable or convertible are taken into account. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that
control commences until the date that control ceases.

Investments in subsidiaries are carried at their cost of
acquisition, less any impairment losses recognised, in
the Parent Entity’s financial statements.

(ii)
Associates
Associates are those entities for which the Group has
significant influence, but not control, over the financial and
operating policies. The consolidated financial statements
include the Group’s share of the total recognised gains
and losses of associates on an equity accounted basis,
from the date that significant influence commences until
the date that significant influence ceases. The Group’s
share of movements in reserves is recognised directly
in consolidated reserves. When the Group’s share of losses
exceeds its interest in an associate, the Group’s carrying
amount is reduced to nil and recognition of further losses
is discontinued except to the extent that the Group has
incurred legal or constructive obligations or made
payments on behalf of an associate.

In the Parent Entity’s financial statements, investments in
associates are initially recognised at cost, being the fair
value of the consideration given and including acquisition
charges associated with the investment. Where necessary,
the cost is adjusted for any subsequent impairment.

(iii) Partnerships
In the consolidated financial statements, investments in
partnerships are accounted for using equity accounting
principles. Investments in partnerships are carried at the
lower of the equity accounted amount and recoverable
amount after adjustment for revisions arising from notional
adjustments made at the date of acquisition.

The Group’s share of partnerships’ net profit or loss is
recognised in the consolidated Income Statement from the
date joint control commenced until the date joint control
ceases. The Group’s share of movements in reserves are
recognised directly in consolidated reserves.